in order for the trial court to acquire jurisdiction over her permissive counterclaim, petitioner is
bound to pay the prescribed docket fees. There is obviously no need to file an answer until
THIRD DIVISION
[G.R. No. 138822. January 23, 2001.]
EVANGELINE ALDAY, petitioner, vs. FGU INSURANCE CORPORATIO
N, respondent.
Cruz Durian Alday & Cruz-Matters for petitioner.
Jacinto Jimenez for respondent.
SYNOPSIS
On 5 May 1989, respondent FGU Insurance Corporation filed a complaint with the
Regional Trial Court of Makati alleging that petitioner Evangeline K. Alday owed it P114,650.76
representing unliquidated cash advances, unremitted costs of her work as an insurance agent
for respondent. Petitioner filed her answer and by way of counterclaim, asserted her right for the
payment of P104,893.45, representing direct commissions, profit commissions, and contingent
bonuses earned from 1 July 1986 to 7 December 1986, and for accumulated premium, reserves
amounting to P500,000. In addition, petitioner prayed for attorney's fees, litigation expenses,
moral damages and exemplary damages for the allegedly unfounded action filed by respondent.
On 11 April 1990, respondent filed a motion top dismiss petitioner's counterclaim, contending
that the trial court never acquired jurisdiction over the same because of the non-payment of
docket fees by petitioner. In response, petitioner asked the trial court to declare her
counterclaim as exempt from payment of docket fees since it is compulsory and that
respondent be declared in default for having failed to answer such counterclaim. The trial court
granted respondent's motion to dismiss petitioner's counterclaim and consequently denied
petitioner's motion. The court found petitioner's counterclaim to be merely permissive in nature
and held that petitioner's failure to pay docket fees prevented the court from acquiring
jurisdiction over the same. The Court of Appeals sustained the trial court's findings. Hence, this
petition. cHCIDE
The Court ruled that petitioner's counterclaim for commissions, bonuses, and
accumulated premium reserves is merely permissive. The evidence required to prove
petitioner's claim differred from that needed to establish respondent's demands for the recovery
of cash accountabilities from petitioner, such as cash advances and costs of premium. The
recovery of respondent's claim is not contingent or dependent upon establishing petitioner's
counterclaim, such that conducting separate trials will not result in the substantial duplicate of
the time and effort of the court and the parties. However, petitioner's claims for damages,
allegedly suffered as a result of the filing by respondent of its complaint, are compulsory. There
is no need for petitioner to pay docket fees for her compulsory counterclaim. On the other hand,
petitioner has paid the prescribed docket fees for only then shall the court acquire jurisdiction
over such claim. Meanwhile, the compulsory counterclaim of petitioner for damages based on
the filing by respondent of an allegedly unfounded and malicious suit need not be answered
since it is inseparable from the claims of respondent. If respondent will not answer the
compulsory counterclaim of petitioner, it would merely result in the former pleading the same
facts raised in its complaint. ADaSEH
SYLLABUS
1. REMEDIAL LAW; COURTS; JURISDICTION; ESTOPPEL; NOT APPLICABLE
WHEN THE PARTY ASSAILING THE TRIAL COURT'S JURISDICTION RAISED IT WITH THE
TRIAL COURT ITSELF EVEN BEFORE THE PRESENTATION OF ANY EVIDENCE. —
Estoppel by laches arises from the negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either has abandoned or
declined to assert it. In the case at bar, respondent cannot be considered as estopped from
assailing the trial court's jurisdiction over petitioner's counterclaim since this issue was raised
by respondent with the trial court itself — the body where the action is pending — even before
the presentation of any evidence by the parties and definitely, way before any judgment could
be rendered by the trial court. cEaDTA
2. ID.; ID.; ID.; ID.; APPLICABLE WHEN THE PARTY RAISING IT HAS ACTIVELY
TAKEN PART IN THE VERY PROCEEDING WHICH HE QUESTIONS; CASE AT BAR. —
Meanwhile, respondent questions the jurisdiction of the Court of Appeals over the appeal filed
by petitioner from the 18 September 1990 and 28 February 1991 orders of the trial court. It is
significant to note that this objection to the appellate court's jurisdiction is raised for the first time
before this Court; respondent never having raised this issue before the first time before the
appellate court. Although the lack of jurisdiction of a court may be raised at any stage of the
action, a party may be estopped from raising such question if he has actively taken part in the
very proceedings which he questions, belatedly objecting to the court's jurisdiction in the event
that that the judgment or order subsequently rendered is adverse to him. In this case,
respondent actively took part in the proceedings before the Court of Appeals by filing its
appellee's brief with the same. Its participation, when taken together with is failure to object to
the appellate court's jurisdiction during the entire duration of the proceedings before such court,
demonstrates a willingness to abide by the resolution of the case by such tribunal and
accordingly, respondent is now most decidedly estopped from objecting to the Court of Appeals'
assumption of jurisdiction over petitioner's appeal.
3. ID.; CIVIL PROCEDURE; PLEADINGS; COUNTERCLAIM; COMPULSORY
COUNTERCLAIM; DEFINED. — A compulsory counterclaim is one which, being cognizable by
the regular courts of justice, arises out of or is connected with the transaction or occurrence
constituting the subject matter of the opposing party's claim and does not require for its
adjudication the presence of third parties of whom the court cannot acquire
jurisdiction. caSEAH
 4. ID.; ID.; ID.; ID.; TESTS WHETHER IT IS COMPULSORY OR PERMISSIVE. —
In Valencia v. Court of Appeals, this Court capsulized the criteria or tests that may be used in
determining whether a counterclaim is compulsory or permissive, summarized as follows: 1.
Are the issue of fact and law raised by the claim and counterclaim largely the same? 2.
Would res judicata bar a subsequent suit on defendant's claim absent the compulsory
counterclaim rule? 3. Will substantially the same evidencesupport or refute plaintiff's claim as
well as defendant's counterclaim? 4. Is there any logical relation between the claim and the
counterclaim? Another test, applied in the recent case of Quintanilla v. Court of Appeals, is the
"compelling test of compulsoriness" which requires "a logical relationship between the claim
and counterclaim, that is, where conducting separate trials of the respective claims of the
parties would entail a substantial duplication of effort and time by the parties and the court."
5. ID.; ID.; ID.; ID.; PERMISSIBLE COUNTERCLAIM; DEFENDANT IS BOUND TO
PAY THE PRESCRIBED DOCKET FEES IN ORDER FOR THE TRIAL COURT TO ACQUIRE
JURISDICTION. — Petitioner's counterclaim for commission, bonuses, and accumulated
premium reserves is merely permissive. The evidence required to prove petitioner's claims
differs from that needed to establish respondent's demands for the recovery of cash
accountabilities from petitioner, such as cash advances and costs of premiums. The recovery of
respondent's claims is not contingent or dependent upon establishing petitioner's counterclaim,
such that conducting separate trials will not result in the substantial duplication of the time and
effort of the court and the parties. One would search the records in vain for a logical connection
between the parties' claims. This conclusion is further reinforced by petitioner's own admissions
since she declared in her answer that respondent's cause of action, unlike her own, was not
based upon the Special Agent's Contract. . . . In order for the trial court to acquire jurisdiction
over her permissive counterclaim, petitioner is bound to pay the prescribed docket
fees. EHTIDA
6. ID.; ID.; ID.; ID.; COMPULSORY COUNTERCLAIM; NO NEED FOR DEFENDANT
TO PAY DOCKET FEES. — [P]etitioner's claims for damages, allegedly suffered as a result of
the filing by respondent of its complaint, are compulsory. There is no need for petitioner to pay
docket fees for her compulsory counterclaim.
7. ID.; LEGAL FEES; RULE ON PAYMENT OF FILING FEES. — The rule on the
payment of filing fees has been laid down by the Court in the case of Sun InsuranceOffice,
Ltd. v. Hon. Maximiano Asuncion — 1. It is not simply the filing of the complaint or appropriate
initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with
jurisdiction over the subject-matter or nature of the action. Where the filing of the initiatory
pleading is not accompanied by payment of the docket fee, the court may allow payment of the
fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary
period. 2. The same rule applies to permissive counterclaims, third-party claims and similar
pleadings, which shall not be considered filed until and unless the filing fee prescribed therefor
is paid. The court may allow payment of said fee within a reasonable time but also in no case
beyond its applicable prescriptive or reglementary period. 3. Where the trial court acquires
jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed
filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if
specified the same has been left for determination by the court, the additional filing fee therefor
shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his
duly authorized deputy to enforce said lien and assess and collect the additional fee. cTECIA
8. ID.; ID.; ID.; NON-PAYMENT DOES NOT RESULT IN THE AUTOMATIC
DISMISSAL OF THE CASE PROVIDED THE DOCKET FEES ARE PAID WITHIN THE
APPLICABLE PRESCRIPTIVE OR REGLEMENTARY PERIOD. — The above mentioned
ruling is Sun Insurance has been reiterated in the recent case of Suson v. Court of Appeals.
InSuson, the Court explained that although the payment of the prescribed docket fees is a
jurisdictional requirement, its non-payment does not result in the automatic dismissal of the
case provided the docket fees are paid within the applicable prescriptive or reglementary
period.
9. ID.; ID.; ID.; ID.; APPLICABLE IN CASE AT BAR. — Coming now to the case at bar,
it has not been alleged by respondent and there is nothing in the records to show that petitioner
has attempted to evade the payment of the proper docket fees for her permissive counterclaim.
As a matter of fact, after respondent filed its motion to dismiss petitioner's counterclaim based
on her failure to pay docket fees, petitioner immediately filed a motion with the trial court, asking
it to declare her counterclaim as compulsory in nature and therefore exempt from docket fees
and, in addition, to declare that respondent was in default for its failure to answer her
counterclaim. However, the trial court dismissed petitioner's counterclaim. Pursuant to this
Court's ruling in Sun Insurance, the trial court should have instead given petitioner a reasonable
time, but in no case beyond the applicable prescriptive or reglementary period, to pay the filing
fees for her permissive counterclaim.
10. ID.; CIVIL PROCEDURE; PLEADINGS; COUNTERCLAIM; PERMISSIVE
COUNTERCLAIM; NO NEED TO FILE AN ANSWER UNTIL THE DEFENDANT HAS PAID
THE PRESCRIBED DOCKET FEES. — Insofar as the permissive counterclaim of petitioner is
concerned, there is obviously no need to file an answer until petitioner has paid the prescribed
docket fees for only then shall the court acquire jurisdiction over such claim. ASHICc
11. ID.; ID.; ID.; ID.; COMPULSORY COUNTERCLAIM; DAMAGES BASED ON THE
FILING OF AN ALLEGEDLY UNFOUNDED AND MALICIOUS SUIT NEED NOT BE
ANSWERED. — The compulsory counterclaim of petitioner for damages based on the filing by
respondent of an allegedly unfounded and malicious suit need not be answered since it is
inseparable from the claims of respondent. If respondent were to answer the compulsory
counterclaim of petitioner, it would merely result in the former pleading the same facts raised in
its complaint.
DECISION
GONZAGA-REYES, J p:
On 5 May 1989, respondent FGU Insurance Corporation filed a complaint with the
Regional Trial Court of Makati, 1 alleging that petitioner Evangeline K. Aldayowed it
P114,650.76, representing unliquidated cash advances, unremitted costs of premiums and
other charges incurred by petitioner in the course of her work as aninsurance agent for
respondent. 2 Respondent also prayed for exemplary damages, attorney's fees, and costs of
suit. 3 Petitioner filed her answer and by way of counterclaim, asserted her right for the
payment of P104,893.45, representing direct commissions, profit commissions and contingent
bonuses earned from 1 July 1986 to 7 December 1986, and for accumulated premium reserves
amounting to P500,000.00. In addition, petitioner prayed for attorney's fees, litigation expenses,
moral damages and exemplary damages for the allegedly unfounded action filed by
respondent. 4 On 23 August 1989, respondent filed a "Motion to Strike Out Answer With
Compulsory Counterclaim And To Declare Defendant In Default" because petitioner's answer
was allegedly filed out of time. 5 However, the trial court denied the motion on 25 August 1989
and similarly rejected respondent's motion for reconsideration on 12 March 1990. 6 A few
weeks later, on 11 April 1990, respondent filed a motion to dismiss petitioner's counterclaim,
contending that the trial court never acquired jurisdiction over the same because of the
non-payment of docket fees by petitioner. 7 In response, petitioner asked the trial court to
declare her counterclaim as exempt from payment of docket fees since it is compulsory and that
respondent be declared in default for having failed to answer such counterclaim. 8
In its 18 September 1990 Order, the trial court 9 granted respondent's motion to
dismiss petitioner's counterclaim and consequently, denied petitioner's motion. The court found
petitioner's counterclaim to be merely permissive in nature and held that petitioner's failure to
pay docket fees prevented the court from acquiring jurisdiction over the same. 10 The trial court
similarly denied petitioner's motion for reconsideration on 28 February 1991. DCcAIS
On 23 December 1998, the Court of Appeals 11 sustained the trial court, finding that
petitioner's own admissions, as contained in her answer, show that her counterclaim is merely
permissive. The relevant portion of the appellate court's decision 12 is quoted herewith —
Contrary to the protestations of appellant, mere reading of the
allegations in the answer a quo will readily show that her counterclaim can
in no way be compulsory. Take note of the following numbered paragraphs
in her answer:
"(14) That, indeed, FGU's cause of action which is not
supported by any document other than the self-serving
'Statement of Account' dated March 28,1988 . . .
(15) That it should be noted that the cause of action
of FGU is not the enforcement of the Special Agent's Contract but
the alleged cash accountabilities which are not based on written
agreement . . . .
xxx xxx xxx
(19) . . . A careful analysis of FGU's three-page
complaint will show that its cause of action is not for specific
performance or enforcement of the Special Agent's Contract
rather, it is for the payment of the alleged cash accountabilities
incurred by defendant during the period form [sic] 1975 to 1986
which claim is executory and has not been ratified. It is the
established rule that unenforceable contracts, like this purported
money claim of FGU, cannot be sued upon or enforced unless
ratified, thus it is as if they have no effect. . . . ."
To support the heading "Compulsory Counterclaim" in her
answer and give the impression that the counterclaim is compulsory
appellant alleged that "FGU has unjustifiably failed to remit to defendant
despite repeated demands in gross violation of their Special Agent's
Contract . . . ." The reference to said contract was included purposely to
mislead. While on one hand appellant alleged that appellee's cause of
action had nothing to do with the Special Agent's Contract, on the other
hand, she claim that FGU violated said contract which gives rise of [sic]
her cause of action. Clearly, appellants cash accountabilities cannot be the
offshoot of appellee's alleged violation of the aforesaid contract.
On 19 May 1999, the appellate court denied petitioner's motion for
reconsideration, 13 giving rise to the present petition.
Before going into the substantive issues, the Court shall first dispose of some
procedural matters raised by the parties. Petitioner claims that respondent is estopped from
questioning her non-payment of docket fees because it did not raise this particular issue when it
filed its first motion — the "Motion to Strike out Answer With Compulsory Counterclaim And To
Declare Defendant In Default" — with the trial court; rather, it was only nine months after
receiving petitioner's answer that respondent assailed the trial court's lack of jurisdiction over
petitioner's counterclaims based on the latter's failure to pay docket fees. 14 Petitioner's
position is unmeritorious. Estoppel by laches arises from the negligence or omission to assert a
right within a reasonable time, warranting a presumption that the party entitled to assert it either
has abandoned or declined to assert it. 15 In the case at bar, respondent cannot be considered
as estopped from assailing the trial court's jurisdiction over petitioner's counterclaim since this
issue was raised by respondent with the trial court itself — the body where the action is pending
— even before the presentation of any evidence by the parties and definitely, way before any
judgment could be rendered by the trial court. DaTEIc
Meanwhile, respondent questions the jurisdiction of the Court of Appeals over the
appeal filed by petitioner from the 18 September 1990 and 28 February 1991 orders of the trial
court. It is significant to note that this objection to the appellate court's jurisdiction is raised for
the first time before this Court; respondent never having raised this issue before the appellate
court. Although the lack of jurisdiction of a court may be raised at any stage of the action, a party
may be estopped from raising such questions if he has actively taken part in the very
proceedings which he questions, belatedly objecting to the court's jurisdiction in the event that
the judgment or order subsequently rendered is adverse to him. 16 In this case, respondent
actively took part in the proceedings before the Court of Appeals by filing its appellee's brief with
the same. 17 Its participation, when taken together with its failure to object to the appellate
court's jurisdiction during the entire duration of the proceedings before such court,
demonstrates a willingness to abide by the resolution of the case by such tribunal and
accordingly, respondent is now most decidedly estopped from objecting to the Court of Appeals'
assumption of jurisdiction over petitioner's appeal. 18
 The basic issue for resolution in this case is whether or not the counterclaim of
petitioner is compulsory or permissive in nature. A compulsory counterclaim is one which, being
cognizable by the regular courts of justice, arises out of or is connected with the transaction or
occurrence constituting the subject matter of the opposing party's claim and does not require for
its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. 19
In Valencia v. Court of Appeals, 20 this Court capsulized the criteria or tests that may
be used in determining whether a counterclaim is compulsory or permissive, summarized as
follows:
1. Are the issues of fact and law raised by the claim and
counterclaim largely the same?
2. Would res judicata bar a subsequent suit on defendant's claim
absent the compulsory counterclaim rule?
3. Will substantially the same evidence support or refute plaintiff's
claim as well as defendant's counterclaim?
4. Is there any logical relation between the claim and the
counterclaim?
Another test, applied in the more recent case of Quintanilla v. Court of Appeals, 21 is the
"compelling test of compulsoriness" which requires "a logical relationship between the
claim and counterclaim, that is, where conducting separate trials of the respective claims of
the parties would entail a substantial duplication of effort and time by the parties and the
court."
As contained in her answer, petitioner's counterclaims are as follows:
(20) That defendant incorporates and repleads by reference all
the foregoing allegations as may be material to her Counterclaim
against FGU.
(21) That FGU is liable to pay the following just, valid and
legitimate claims of defendant:
(a) the sum of at least P104,893.45 plus maximum
interest thereon representing, among others, direct commissions,
profit commissions and contingent bonuses legally due to
defendant; and
(b) the minimum amount of P500,000.00 plus the
maximum allowable interest representing defendant's
accumulated premium reserve for 1985 and previous years,
which FGU has unjustifiably failed to remit to defendant despite
repeated demands in gross violation of their Special Agent's Contract and
in contravention of the principle of law that "every person must, in the
exercise of his rights and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good faith."
(22) That as a result of the filing of this patently baseless,
malicious and unjustified Complaint, and FGU's unlawful, illegal and
vindictive termination of their Special Agent's Contract, defendant was
unnecessarily dragged into this litigation and to defense [sic] her side and
assert her rights and claims against FGU, she was compelled to hire the
services of counsel with whom she agreed to pay the amount of
P30,000.00 as and for attorney's fees and stands to incur litigation
expenses in the amount estimated to at least P20,000.00 and for
which FGU should be assessed and made liable to pay
defendant. IEDHAT
(23) That considering further the malicious and unwarranted
action of defendant in filing this grossly unfounded action, defendant has
suffered and continues to suffer from serious anxiety, mental anguish,
fright and humiliation. In addition to this, defendant's name, good
reputation and business standing in theinsurance business as well as in
the community have been besmirched and for which FGU should be
adjudged and made liable to pay moral damages to defendant in the
amount of P300,000.00 as minimum.
(24) That in order to discourage the filing of groundless and
malicious suits like FGU's Complaint, and by way of serving [as] an
example for the public good,FGU should be penalized and assessed
exemplary damages in the sum of P100,000.00 or such amount as the
Honorable Court may deem warranted under the circumstances. 22
Tested against the abovementioned standards, petitioner's counterclaim for
commissions, bonuses, and accumulated premium reserves is merely permissive. The
evidence required to prove petitioner's claims differs from that needed to establish respondent's
demands for the recovery of cash accountabilities from petitioner, such as cash advances and
costs of premiums. The recovery of respondent's claims is not contingent or dependent upon
establishing petitioner's counterclaim, such that conducting separate trials will not result in the
substantial duplication of the time and effort of the court and the parties. One would search the
records in vain for a logical connection between the parties' claims. This conclusion is further
reinforced by petitioner's own admissions since she declared in her answer that respondent's
cause of action, unlike her own, was not based upon the Special Agent's Contract. 23 However,
petitioner's claims for damages, allegedly suffered as a result of the filing by respondent of its
complaint, are compulsory. 24
There is no need for petitioner to pay docket fees for her compulsory
counterclaim. 25 On the other hand, in order for the trial court to acquire jurisdiction over her
permissive counterclaim, petitioner is bound to pay the prescribed docket fees. 26 The rule on
the payment of filing fees has been laid down by the Court in the case of Sun Insurance Office,
Ltd. v. Hon. Maximiano Asuncion 27
1. It is not simply the filing of the complaint or appropriate
initiatory pleading, but the payment of the prescribed docket fee, that vests
a trial court with jurisdiction over the subject-matter or nature of the action.
 Where the filing of the initiatory pleading is not accompanied by payment of counterclaim of petitioner for damages filed in Civil Case No. 89-3816 is ordered REINSTATED.
the docket fee, the court may allow payment of the fee within a reasonable Meanwhile, the Regional Trial Court of Makati (Branch 134) is ordered to require petitioner to
time but in no case beyond the applicable prescriptive or reglementary pay the prescribed docket fees for her permissive counterclaim (direct commissions, profit
period. commissions, contingent bonuses and accumulated premium reserves), after ascertaining that
the applicable prescriptive period has not yet set in. 33
2. The same rule applies to permissive counterclaims, third-party
claims and similar pleadings, which shall not be considered filed until and SO ORDERED. TCDHaE
unless the filing fee prescribed therefor is paid. The court may allow
payment of said fee within a reasonable time but also in no case beyond its Melo, Vitug, Panganiban and Sandoval-Gutierrez, JJ., concur.
applicable prescriptive or reglementary period. ||| (Alday v. FGU Insurance Corp., G.R. No. 138822, [January 23, 2001], 402 PHIL 962-976)
3. Where the trial court acquires jurisdiction over a claim by the
filing of the appropriate pleading and payment of the prescribed filing fee
but, subsequently, the judgment awards a claim not specified in the
pleading, or if specified the same has been left for determination by the
court, the additional filing fee therefor shall constitute a lien on the
judgment. It shall be the responsibility of the Clerk of Court or his duly
authorized deputy to enforce said lien and assess and collect the
additional fee.

The above mentioned ruling in Sun Insurance has been reiterated in the recent case
of Suson v. Court of Appeals. 28 In Suson, the Court explained that although the payment of
the prescribed docket fees is a jurisdictional requirement, its non-payment does not result in the
automatic dismissal of the case provided the docket fees are paid within the applicable
prescriptive or reglementary period. Coming now to the case at bar, it has not been alleged by
respondent and there is nothing in the records to show that petitioner has attempted to evade
the payment of the proper docket fees for her permissive counterclaim. As a matter of fact, after
respondent filed its motion to dismiss petitioner's counterclaim based on her failure to pay
docket fees, petitioner immediately filed a motion with the trial court, asking it to declare her
counterclaim as compulsory in nature and therefore exempt from docket fees and, in addition,
to declare that respondent was in default for its failure to answer her counterclaim. 29 However,
the trial court dismissed petitioner's counterclaim. Pursuant to this Court's ruling
in Sun Insurance, the trial court should have instead given petitioner a reasonable time, but in
no case beyond the applicable prescriptive or reglementary period, to pay the filing fees for her
permissive counterclaim.

Petitioner asserts that the trial court should have declared respondent in default for
having failed to answer her counterclaim. 30 Insofar as the permissive counterclaim of
petitioner is concerned, there is obviously no need to file an answer until petitioner has paid the
prescribed docket fees for only then shall the court acquire jurisdiction over such
claim. 31 Meanwhile, the compulsory counterclaim of petitioner for damages based on the filing
by respondent of an allegedly unfounded and malicious suit need not be answered since it is
inseparable from the claims of respondent. If respondent were to answer the compulsory
counterclaim of petitioner, it would merely result in the former pleading the same facts raised in
its complaint. 32

WHEREFORE, the assailed Decision of the Court of Appeals promulgated on 23

December 1998 and its 19 May 1999 Resolution are hereby MODIFIED. The compulsory
 SECOND DIVISION
[G.R. No. 143581. January 7, 2008.]
KOREA TECHNOLOGIES CO., LTD., petitioner, vs. HON. ALBERTO
A. LERMA, in his capacity as Presiding Judge of Branch 256 of
Regional Trial Court of Muntinlupa City, and PACIFIC GENERAL
STEEL MANUFACTURING CORPORATION, respondents.
DECISION
VELASCO, JR., J p:
In our jurisdiction, the policy is to favor alternative methods of resolving disputes,
particularly in civil and commercial disputes. Arbitration along with mediation, conciliation,
and negotiation, being inexpensive, speedy and less hostile methods have long been
favored by this Court. The petition before us puts at issue an arbitration clause in a contract
mutually agreed upon by the parties stipulating that they would submit themselves to
arbitration in a foreign country. Regrettably, instead of hastening the resolution of their
dispute, the parties wittingly or unwittingly prolonged the controversy.
Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation which
is engaged in the supply and installation of Liquefied Petroleum Gas (LPG) Cylinder
manufacturing plants, while private respondent Pacific General Steel Manufacturing Corp.
(PGSMC) is a domestic corporation.
On March 5, 1997, PGSMC and KOGIES executed a Contract 1 whereby
KOGIES would set up an LPG Cylinder Manufacturing Plant in Carmona, Cavite. The
contract was executed in the Philippines. On April 7, 1997, the parties executed, in Korea,
an Amendment for Contract No. KLP-970301 dated March 5, 1997 2amending the terms of
payment. The contract and its amendment stipulated that KOGIES will ship the machinery
and facilities necessary for manufacturing LPG cylinders for which PGSMC would pay
USD 1,224,000. KOGIES would install and initiate the operation of the plant for which
PGSMC bound itself to pay USD 306,000 upon the plant's production of the 11-kg. LPG
cylinder samples. Thus, the total contract price amounted to USD 1,530,000.
On October 14, 1997, PGSMC entered into a Contract of Lease 3 with Worth
Properties, Inc. (Worth) for use of Worth's 5,079-square meter property with a
4,032-square meter warehouse building to house the LPG manufacturing plant. The
monthly rental was PhP322,560 commencing on January 1, 1998 with a 10% annual
increment clause. Subsequently, the machineries, equipment, and facilities for the
manufacture of LPG cylinders were shipped, delivered, and installed in the Carmona plant.
PGSMC paid KOGIES USD 1,224,000.
However, gleaned from the Certificate 4 executed by the parties on January 22,
1998, after the installation of the plant, the initial operation could not be conducted as
PGSMC encountered financial difficulties affecting the supply of materials, thus forcing the
parties to agree that KOGIES would be deemed to have completely complied with the
terms and conditions of the March 5, 1997 contract. SDHacT
For the remaining balance of USD306,000 for the installation and initial operation
of the plant, PGSMC issued two postdated checks: (1) BPI Check No. 0316412 dated
January 30, 1998 for PhP4,500,000; and (2) BPI Check No. 0316413 dated March 30,
1998 for PhP4,500,000. 5
When KOGIES deposited the checks, these were dishonored for the reason
"PAYMENT STOPPED." Thus, on May 8, 1998, KOGIES sent a demand letter 6 to
PGSMC threatening criminal action for violation of Batas Pambansa Blg. 22 in case of
nonpayment. On the same date, the wife of PGSMC's President faxed a letter dated May 7,
1998 to KOGIES' President who was then staying at a Makati City hotel. She complained
that not only did KOGIES deliver a different brand of hydraulic press from that agreed upon
but it had not delivered several equipment parts already paid for.
On May 14, 1998, PGSMC replied that the two checks it issued KOGIES were
fully funded but the payments were stopped for reasons previously made known to
KOGIES. 7
On June 1, 1998, PGSMC informed KOGIES that PGSMC was canceling their
Contract dated March 5, 1997 on the ground that KOGIES had altered the quantity and
lowered the quality of the machineries and equipment it delivered to PGSMC, and that
PGSMC would dismantle and transfer the machineries, equipment, and facilities installed
in the Carmona plant. Five days later, PGSMC filed before the Office of the Public
Prosecutor an Affidavit-Complaint for Estafa docketed as I.S. No. 98-03813 against Mr.
Dae Hyun Kang, President of KOGIES.
On June 15, 1998, KOGIES wrote PGSMC informing the latter that PGSMC could
not unilaterally rescind their contract nor dismantle and transfer the machineries and
equipment on mere imagined violations by KOGIES. It also insisted that their disputes
should be settled by arbitration as agreed upon in Article 15, the arbitration clause of their
contract.
On June 23, 1998, PGSMC again wrote KOGIES reiterating the contents of its
June 1, 1998 letter threatening that the machineries, equipment, and facilities installed in
the plant would be dismantled and transferred on July 4, 1998. Thus, on July 1, 1998,
KOGIES instituted an Application for Arbitration before the Korean Commercial Arbitration
Board (KCAB) in Seoul, Korea pursuant to Art. 15 of the Contract as amended.
On July 3, 1998, KOGIES filed a Complaint for Specific Performance, docketed
as Civil Case No. 98-117 8 against PGSMC before the Muntinlupa City Regional Trial
Court (RTC). The RTC granted a temporary restraining order (TRO) on July 4, 1998, which
was subsequently extended until July 22, 1998. In its complaint, KOGIES alleged that
PGSMC had initially admitted that the checks that were stopped were not funded but later
on claimed that it stopped payment of the checks for the reason that "their value was not
received" as the former allegedly breached their contract by "altering the quantity and
lowering the quality of the machinery and equipment" installed in the plant and failed to
make the plant operational although it earlier certified to the contrary as shown in a January
22, 1998 Certificate. Likewise, KOGIES averred that PGSMC violated Art. 15 of their
Contract, as amended, by unilaterally rescinding the contract without resorting to
arbitration. KOGIES also asked that PGSMC be restrained from dismantling and
transferring the machinery and equipment installed in the plant which the latter threatened
to do on July 4, 1998.
On July 9, 1998, PGSMC filed an opposition to the TRO arguing that KOGIES
was not entitled to the TRO since Art. 15, the arbitration clause, was null and void for being
against public policy as it ousts the local courts of jurisdiction over the instant controversy.
On July 17, 1998, PGSMC filed its Answer with Compulsory
Counterclaim 9 asserting that it had the full right to dismantle and transfer the machineries
and equipment because it had paid for them in full as stipulated in the contract; that
KOGIES was not entitled to the PhP9,000,000 covered by the checks for failing to
completely install and make the plant operational; and that KOGIES was liable for
damages amounting to PhP4,500,000 for altering the quantity and lowering the quality of
the machineries and equipment. Moreover, PGSMC averred that it has already paid
PhP2,257,920 in rent (covering January to July 1998) to Worth and it was not willing to
further shoulder the cost of renting the premises of the plant considering that the LPG
cylinder manufacturing plant never became operational. EcaDCI
After the parties submitted their Memoranda, on July 23, 1998, the RTC issued an
Order denying the application for a writ of preliminary injunction, reasoning that PGSMC
had paid KOGIES USD 1,224,000, the value of the machineries and equipment as shown
in the contract such that KOGIES no longer had proprietary rights over them. And finally,
the RTC held that Art. 15 of the Contract as amended was invalid as it tended to oust the
trial court or any other court jurisdiction over any dispute that may arise between the parties.
KOGIES' prayer for an injunctive writ was denied. 10 The dispositive portion of the Order
stated:
WHEREFORE, in view of the foregoing consideration, this
Court believes and so holds that no cogent reason exists for this Court to
grant the writ of preliminary injunction to restrain and refrain defendant
from dismantling the machineries and facilities at the lot and building of
Worth Properties, Incorporated at Carmona, Cavite and transfer the
same to another site: and therefore denies plaintiff's application for a writ
of preliminary injunction.
On July 29, 1998, KOGIES filed its Reply to Answer and Answer to
Counterclaim. 11 KOGIES denied it had altered the quantity and lowered the quality of the
machinery, equipment, and facilities it delivered to the plant. It claimed that it had
performed all the undertakings under the contract and had already produced certified
samples of LPG cylinders. It averred that whatever was unfinished was PGSMC's fault
since it failed to procure raw materials due to lack of funds. KOGIES, relying on Chung Fu
Industries (Phils.), Inc. v. Court of Appeals, 12 insisted that the arbitration clause was
without question valid.
After KOGIES filed a Supplemental Memorandum with Motion to
Dismiss 13 answering PGSMC's memorandum of July 22, 1998 and seeking dismissal of
PGSMC's counterclaims, KOGIES, on August 4, 1998, filed its Motion for
Reconsideration 14 of the July 23, 1998 Order denying its application for an injunctive writ
claiming that the contract was not merely for machinery and facilities worth USD 1,224,000
but was for the sale of an "LPG manufacturing plant" consisting of "supply of all the
machinery and facilities" and "transfer of technology" for a total contract price of USD
1,530,000 such that the dismantling and transfer of the machinery and facilities would
result in the dismantling and transfer of the very plant itself to the great prejudice of
KOGIES as the still unpaid owner/seller of the plant. Moreover, KOGIES points out that the
arbitration clause under Art. 15 of the Contract as amended was a valid arbitration
stipulation under Art. 2044 of the Civil Code and as held by this Court in Chung Fu
Industries (Phils.), Inc. 15
In the meantime, PGSMC filed a Motion for Inspection of Things 16 to determine
whether there was indeed alteration of the quantity and lowering of quality of the
machineries and equipment, and whether these were properly installed. KOGIES opposed
the motion positing that the queries and issues raised in the motion for inspection fell under
the coverage of the arbitration clause in their contract.
On September 21, 1998, the trial court issued an Order (1) granting PGSMC's
motion for inspection; (2) denying KOGIES' motion for reconsideration of the July 23, 1998
RTC Order; and (3) denying KOGIES' motion to dismiss PGSMC's compulsory
counterclaims as these counterclaims fell within the requisites of compulsory
counterclaims.
On October 2, 1998, KOGIES filed an Urgent Motion for Reconsideration 17 of
the September 21, 1998 RTC Order granting inspection of the plant and denying dismissal
of PGSMC's compulsory counterclaims.
Ten days after, on October 12, 1998, without waiting for the resolution of its
October 2, 1998 urgent motion for reconsideration, KOGIES filed before the Court of
Appeals (CA) a petition for certiorari 18 docketed as CA-G.R. SP No. 49249, seeking
annulment of the July 23, 1998 and September 21, 1998 RTC Orders and praying for the
issuance of writs of prohibition, mandamus, and preliminary injunction to enjoin the RTC
and PGSMC from inspecting, dismantling, and transferring the machineries and equipment
in the Carmona plant, and to direct the RTC to enforce the specific agreement on
arbitration to resolve the dispute.
In the meantime, on October 19, 1998, the RTC denied KOGIES' urgent motion
for reconsideration and directed the Branch Sheriff to proceed with the inspection of the
machineries and equipment in the plant on October 28, 1998. 19
Thereafter, KOGIES filed a Supplement to the Petition 20 in CA-G.R. SP No.
49249 informing the CA about the October 19, 1998 RTC Order. It also reiterated its prayer
for the issuance of the writs of prohibition, mandamus and preliminary injunction which was
not acted upon by the CA. KOGIES asserted that the Branch Sheriff did not have the
technical expertise to ascertain whether or not the machineries and equipment conformed
to the specifications in the contract and were properly installed. TaISDA
 On November 11, 1998, the Branch Sheriff filed his Sheriff's Report 21 finding c. DECREEING PRIVATE RESPONDENT'S
that the enumerated machineries and equipment were not fully and properly installed. COUNTERCLAIMS TO BE ALL COMPULSORY NOT
NECESSITATING PAYMENT OF DOCKET FEES AND
The Court of Appeals affirmed the trial court and declared
CERTIFICATION OF NON-FORUM SHOPPING;
the arbitration clause against public policy
d. RULING THAT THE PETITION WAS FILED
On May 30, 2000, the CA rendered the assailed Decision 22 affirming the RTC
PREMATURELY WITHOUT WAITING FOR THE RESOLUTION OF
Orders and dismissing the petition for certiorari filed by KOGIES. The CA found that the
THE MOTION FOR RECONSIDERATION OF THE ORDER DATED
RTC did not gravely abuse its discretion in issuing the assailed July 23, 1998 and
SEPTEMBER 21, 1998 OR WITHOUT GIVING THE TRIAL COURT AN
September 21, 1998 Orders. Moreover, the CA reasoned that KOGIES' contention that the
OPPORTUNITY TO CORRECT ITSELF; aHIEcS
total contract price for USD 1,530,000 was for the whole plant and had not been fully paid
was contrary to the finding of the RTC that PGSMC fully paid the price of USD 1,224,000, e. PROCLAIMING THE TWO ORDERS DATED JULY 23 AND
which was for all the machineries and equipment. According to the CA, this determination SEPTEMBER 21, 1998 NOT TO BE PROPER SUBJECTS
by the RTC was a factual finding beyond the ambit of a petition for certiorari. OF CERTIORARI AND PROHIBITION FOR BEING
"INTERLOCUTORY IN NATURE;"
On the issue of the validity of the arbitration clause, the CA agreed with the lower
court that an arbitration clause which provided for a final determination of the legal rights of f. NOT GRANTING THE RELIEFS AND REMEDIES PRAYED
the parties to the contract by arbitration was against public policy. FOR IN HE (SIC) PETITION AND, INSTEAD, DISMISSING THE SAME
FOR ALLEGEDLY "WITHOUT MERIT."23
On the issue of nonpayment of docket fees and non-attachment of a certificate of
non-forum shopping by PGSMC, the CA held that the counterclaims of PGSMC were The Court's Ruling
compulsory ones and payment of docket fees was not required since the Answer with
The petition is partly meritorious.
counterclaim was not an initiatory pleading. For the same reason, the CA said a certificate
of non-forum shopping was also not required. Before we delve into the substantive issues, we shall first tackle the procedural
issues.
Furthermore, the CA held that the petition for certiorari had been filed prematurely
since KOGIES did not wait for the resolution of its urgent motion for reconsideration of the The rules on the payment of docket fees for counterclaims
September 21, 1998 RTC Order which was the plain, speedy, and adequate remedy and cross claims were amended effective August 16, 2004
available. According to the CA, the RTC must be given the opportunity to correct any
alleged error it has committed, and that since the assailed orders were interlocutory, these KOGIES strongly argues that when PGSMC filed the counterclaims, it should
cannot be the subject of a petition forcertiorari. have paid docket fees and filed a certificate of non-forum shopping, and that its failure to do
so was a fatal defect.
Hence, we have this Petition for Review on Certiorari under Rule 45.
We disagree with KOGIES.
The Issues
As aptly ruled by the CA, the counterclaims of PGSMC were incorporated in its
Petitioner posits that the appellate court committed the following errors: Answer with Compulsory Counterclaim dated July 17, 1998 in accordance with Section 8 of
Rule 11, 1997 Revised Rules of Civil Procedure, the rule that was effective at the time the
a. PRONOUNCING THE QUESTION OF OWNERSHIP OVER
Answer with Counterclaim was filed. Sec. 8 on existing counterclaim or cross-claim states,
THE MACHINERY AND FACILITIES AS "A QUESTION OF FACT"
"A compulsory counterclaim or a cross-claim that a defending party has at the time he files
"BEYOND THE AMBIT OF A PETITION
his answer shall be contained therein."
FOR CERTIORARI" INTENDED ONLY FOR CORRECTION OF
ERRORS OF JURISDICTION OR GRAVE ABUSE OF DISCRETION On July 17, 1998, at the time PGSMC filed its Answer incorporating its
AMOUNTING TO LACK OF (SIC) EXCESS OF JURISDICTION, AND counterclaims against KOGIES, it was not liable to pay filing fees for said counterclaims
CONCLUDING THAT THE TRIAL COURT'S FINDING ON THE SAME being compulsory in nature. We stress, however, that effective August 16, 2004 under Sec.
QUESTION WAS IMPROPERLY RAISED IN THE PETITION BELOW; 7, Rule 141, as amended by A.M. No. 04-2-04-SC, docket fees are now required to be paid
in compulsory counterclaim or cross-claims.
b. DECLARING AS NULL AND VOID THE ARBITRATION
CLAUSE IN ARTICLE 15 OF THE CONTRACT BETWEEN THE As to the failure to submit a certificate of forum shopping, PGSMC's Answer is not
PARTIES FOR BEING "CONTRARY TO PUBLIC POLICY" AND FOR an initiatory pleading which requires a certification against forum shopping under Sec.
OUSTING THE COURTS OF JURISDICTION; 5 24 of Rule 7, 1997 Revised Rules of Civil Procedure. It is a responsive pleading, hence,
the courts a quo did not commit reversible error in denying KOGIES' motion to dismiss
PGSMC's compulsory counterclaims.
Interlocutory orders proper subject of certiorari
Citing Gamboa v. Cruz, 25 the CA also pronounced that "certiorari and
Prohibition are neither the remedies to question the propriety of an interlocutory order of
the trial court." 26 The CA erred on its reliance on Gamboa. Gamboa involved the denial of
a motion to acquit in a criminal case which was not assailable in an action
for certiorari since the denial of a motion to quash required the accused to plead and to
continue with the trial, and whatever objections the accused had in his motion to quash can
then be used as part of his defense and subsequently can be raised as errors on his appeal
if the judgment of the trial court is adverse to him. The general rule is that interlocutory
orders cannot be challenged by an appeal. 27 Thus, in Yamaoka v. Pescarich
Manufacturing Corporation, we held:
The proper remedy in such cases is an ordinary appeal from an
adverse judgment on the merits, incorporating in said appeal the
grounds for assailing the interlocutory orders. Allowing appeals from
interlocutory orders would result in the 'sorry spectacle' of a case being
subject of a counterproductive ping-pong to and from the appellate court
as often as a trial court is perceived to have made an error in any of its
interlocutory rulings. However, where the assailed interlocutory order
was issued with grave abuse of discretion or patently erroneous and the
remedy of appeal would not afford adequate and expeditious relief, the
Court allowscertiorari as a mode of redress. 28
Also, appeals from interlocutory orders would open the floodgates to endless
occasions for dilatory motions. Thus, where the interlocutory order was issued without or in
excess of jurisdiction or with grave abuse of discretion, the remedy is certiorari. 29 HDcaAI
The alleged grave abuse of discretion of the respondent court equivalent to lack
of jurisdiction in the issuance of the two assailed orders coupled with the fact that there is
no plain, speedy, and adequate remedy in the ordinary course of law amply provides the
basis for allowing the resort to a petition for certiorari under Rule 65.
Prematurity of the petition before the CA
Neither do we think that KOGIES was guilty of forum shopping in filing the petition
for certiorari. Note that KOGIES' motion for reconsideration of the July 23, 1998 RTC Order
which denied the issuance of the injunctive writ had already been denied. Thus, KOGIES'
only remedy was to assail the RTC's interlocutory order via a petition for certiorari under
Rule 65.
While the October 2, 1998 motion for reconsideration of KOGIES of the
September 21, 1998 RTC Order relating to the inspection of things, and the allowance of
the compulsory counterclaims has not yet been resolved, the circumstances in this case
would allow an exception to the rule that before certiorari may be availed of, the petitioner
must have filed a motion for reconsideration and said motion should have been first
resolved by the court a quo. The reason behind the rule is "to enable the lower court, in the
first instance, to pass upon and correct its mistakes without the intervention of the higher
court." 30
The September 21, 1998 RTC Order directing the branch sheriff to inspect the
plant, equipment, and facilities when he is not competent and knowledgeable on said
matters is evidently flawed and devoid of any legal support. Moreover, there is an urgent
necessity to resolve the issue on the dismantling of the facilities and any further delay
would prejudice the interests of KOGIES. Indeed, there is real and imminent threat of
irreparable destruction or substantial damage to KOGIES' equipment and machineries. We
find the resort to certiorari based on the gravely abusive orders of the trial court sans the
ruling on the October 2, 1998 motion for reconsideration to be proper.
The Core Issue: Article 15 of the Contract
We now go to the core issue of the validity of Art. 15 of the Contract, the
arbitration clause. It provides:
Article 15. Arbitration. — All disputes, controversies, or
differences which may arise between the parties, out of or in relation to
or in connection with this Contract or for the breach thereof, shall finally
be settled by arbitration in Seoul, Korea in accordance with the
Commercial Arbitration Rules of the Korean Commercial Arbitration
Board. The award rendered by the arbitration(s) shall be final and
binding upon both parties concerned. (Emphasis supplied.)
Petitioner claims the RTC and the CA erred in ruling that the arbitration clause is
null and void.
Petitioner is correct.
Established in this jurisdiction is the rule that the law of the place where the
contract is made governs. Lex loci contractus. The contract in this case was perfected here
in the Philippines. Therefore, our laws ought to govern. Nonetheless, Art. 2044 of the Civil
Code sanctions the validity of mutually agreed arbitral clause or the finality and binding
effect of an arbitral award. Art. 2044 provides, "Any stipulation that the arbitrators'
award or decision shall be final, is valid, without prejudice to Articles 2038, 2039 and
2040." (Emphasis supplied.)
Arts. 2038, 31 2039, 32 and 2040 33 abovecited refer to instances where a
compromise or an arbitral award, as applied to Art. 2044 pursuant to Art. 2043, 34 may be
voided, rescinded, or annulled, but these would not denigrate the finality of the arbitral
award.
The arbitration clause was mutually and voluntarily agreed upon by the parties. It
has not been shown to be contrary to any law, or against morals, good customs, public
order, or public policy. There has been no showing that the parties have not dealt with each
other on equal footing. We find no reason why the arbitration clause should not be
respected and complied with by both parties. In Gonzales v. Climax Mining Ltd., 35 we
held that submission to arbitration is a contract and that a clause in a contract providing
that all matters in dispute between the parties shall be referred to arbitration is a
contract. 36 Again in Del Monte Corporation-USA v. Court of Appeals, we likewise ruled
that "[t]he provision to submit to arbitration any dispute arising therefrom and the
relationship of the parties is part of that contract and is itself a contract." 37 CAacTH
Arbitration clause not contrary to public policy
The arbitration clause which stipulates that the arbitration must be done in
Seoul, Korea in accordance with the Commercial Arbitration Rules of the KCAB, and that
the arbitral award is final and binding, is not contrary to public policy. This Court has
sanctioned the validity of arbitration clauses in a catena of cases. In the 1957 case
of Eastboard Navigation Ltd. v. Juan Ysmael and Co., Inc., 38 this Court had occasion to
rule that an arbitration clause to resolve differences and breaches of mutually agreed
contractual terms is valid. In BF Corporation v. Court of Appeals, we held that "[i]n this
jurisdiction, arbitration has been held valid and constitutional. Even before the approval on
June 19, 1953 of Republic Act No. 876, this Court has countenanced the settlement of
disputes through arbitration. Republic Act No. 876was adopted to supplement the New
Civil Code's provisions on arbitration." 39 And in LM Power Engineering Corporation v.
Capitol Industrial Construction Groups, Inc., we declared that:
Being an inexpensive, speedy and amicable method of settling
disputes, arbitration — along with mediation, conciliation and negotiation
— is encouraged by the Supreme Court. Aside from unclogging judicial
dockets, arbitration also hastens the resolution of disputes, especially of
the commercial kind. It is thus regarded as the "wave of the future" in
international civil and commercial disputes. Brushing aside a contractual
agreement calling for arbitration between the parties would be a step
backward.
Consistent with the above-mentioned policy of encouraging
alternative dispute resolution methods, courts should liberally construe
arbitration clauses. Provided such clause is susceptible of an
interpretation that covers the asserted dispute, an order to arbitrate
should be granted. Any doubt should be resolved in favor of
arbitration. 40
Having said that the instant arbitration clause is not against public policy, we
come to the question on what governs an arbitration clause specifying that in case of any
dispute arising from the contract, an arbitral panel will be constituted in a foreign country
and the arbitration rules of the foreign country would govern and its award shall be final and
binding.
RA 9285 incorporated the UNCITRAL Model law
to which we are a signatory
For domestic arbitration proceedings, we have particular agencies to arbitrate
disputes arising from contractual relations. In case a foreign arbitral body is chosen by the
parties, the arbitration rules of our domestic arbitration bodies would not be applied. As
signatory to the Arbitration Rules of the UNCITRAL Model Law on International
Commercial Arbitration 41 of the United Nations Commission on International Trade Law
(UNCITRAL) in the New York Convention on June 21, 1985, the Philippines committed
itself to be bound by the Model Law. We have even incorporated the Model Law
in Republic Act No. (RA) 9285, otherwise known as theAlternative Dispute Resolution Act
of 2004 entitled An Act to Institutionalize the Use of an Alternative Dispute Resolution
System in the Philippines and to Establish the Office for Alternative Dispute Resolution,
and for Other Purposes, promulgated on April 2, 2004. Secs. 19 and 20 of Chapter 4 of the
Model Law are the pertinent provisions:
CHAPTER 4 — INTERNATIONAL COMMERCIAL
ARBITRATION
SEC. 19. Adoption of the Model Law on International
Commercial Arbitration. — International commercial arbitration shall be
governed by the Model Law on International Commercial Arbitration (the
"Model Law") adopted by the United Nations Commission on
International Trade Law on June 21, 1985 (United Nations Document
A/40/17) and recommended for enactment by the General Assembly in
Resolution No. 40/72 approved on December 11, 1985, copy of which is
hereto attached as Appendix "A". cEATSI
SEC. 20. Interpretation of Model Law. — In interpreting the
Model Law, regard shall be had to its international origin and to the need
for uniformity in its interpretation and resort may be made to the travaux
preparatories and the report of the Secretary General of the United
Nations Commission on International Trade Law dated March 25, 1985
entitled, "International Commercial Arbitration: Analytical Commentary
on Draft Trade identified by reference number A/CN. 9/264."
While RA 9285 was passed only in 2004, it nonetheless applies in the instant
case since it is a procedural law which has a retroactive effect. Likewise, KOGIES filed its
application for arbitration before the KCAB on July 1, 1998 and it is still pending because
no arbitral award has yet been rendered. Thus, RA 9285 is applicable to the instant case.
Well-settled is the rule that procedural laws are construed to be applicable to actions
pending and undetermined at the time of their passage, and are deemed retroactive in that
sense and to that extent. As a general rule, the retroactive application of procedural laws
does not violate any personal rights because no vested right has yet attached nor arisen
from them. 42
Among the pertinent features of RA 9285 applying and incorporating the
UNCITRAL Model Law are the following:
(1) The RTC must refer to arbitration in proper cases
Under Sec. 24, the RTC does not have jurisdiction over disputes that are properly
the subject of arbitration pursuant to an arbitration clause, and mandates the referral to
arbitration in such cases, thus:
SEC. 24. Referral to Arbitration. — A court before which an
action is brought in a matter which is the subject matter of an arbitration
agreement shall, if at least one party so requests not later than the
pre-trial conference, or upon the request of both parties thereafter, refer
 the parties to arbitration unless it finds that the arbitration agreement is
null and void, inoperative or incapable of being performed.
(2) Foreign arbitral awards must be confirmed by the RTC
Foreign arbitral awards while mutually stipulated by the parties in the arbitration
clause to be final and binding are not immediately enforceable or cannot be implemented
immediately. Sec. 35 43 of the UNCITRAL Model Law stipulates the requirement for the
arbitral award to be recognized by a competent court for enforcement, which court under
Sec. 36 of the UNCITRAL Model Law may refuse recognition or enforcement on the
grounds provided for. RA 9285 incorporated these provisos to Secs. 42, 43, and 44 relative
to Secs. 47 and 48, thus:
SEC. 42. Application of the New York Convention. — The New
York Convention shall govern the recognition and enforcement of
arbitral awards covered by said Convention.
The recognition and enforcement of such arbitral awards shall
be filed with the Regional Trial Court in accordance with the rules of
procedure to be promulgated by the Supreme Court. Said procedural
rules shall provide that the party relying on the award or applying for its
enforcement shall file with the court the original or authenticated copy of
the award and the arbitration agreement. If the award or agreement is
not made in any of the official languages, the party shall supply a duly
certified translation thereof into any of such languages.
The applicant shall establish that the country in which foreign
arbitration award was made in party to the New York Convention.
xxx xxx xxx
SEC. 43. Recognition and Enforcement of Foreign Arbitral
Awards Not Covered by the New York Convention. — The recognition
and enforcement of foreign arbitral awards not covered by the New York
Convention shall be done in accordance with procedural rules to be
promulgated by the Supreme Court. The Court may, on grounds of
comity and reciprocity, recognize and enforce a non-convention award
as a convention award. IEHaSc
SEC. 44. Foreign Arbitral Award Not Foreign Judgment. — A
foreign arbitral award when confirmed by a court of a foreign country,
shall be recognized and enforced as a foreign arbitral award and not as
a judgment of a foreign court.
A foreign arbitral award, when confirmed by the Regional Trial
Court, shall be enforced in the same manner as final and executory
decisions of courts of law of the Philippines.
xxx xxx xxx
SEC. 47. Venue and Jurisdiction. — Proceedings for
recognition and enforcement of an arbitration agreement or for vacations,
setting aside, correction or modification of an arbitral award, and any
application with a court for arbitration assistance and supervision shall
be deemed as special proceedings and shall be filed with the Regional
Trial Court (i) where arbitration proceedings are conducted; (ii) where
the asset to be attached or levied upon, or the act to be enjoined is
located; (iii) where any of the parties to the dispute resides or has his
place of business; or (iv) in the National Judicial Capital Region, at the
option of the applicant.
SEC. 48. Notice of Proceeding to Parties. — In a special
proceeding for recognition and enforcement of an arbitral award, the
Court shall send notice to the parties at their address of record in the
arbitration, or if any part cannot be served notice at such address, at
such party's last known address. The notice shall be sent al least fifteen
(15) days before the date set for the initial hearing of the application.
It is now clear that foreign arbitral awards when confirmed by the RTC are
deemed not as a judgment of a foreign court but as a foreign arbitral award, and when
confirmed, are enforced as final and executory decisions of our courts of law.
Thus, it can be gleaned that the concept of a final and binding arbitral award is
similar to judgments or awards given by some of our quasi-judicial bodies, like the National
Labor Relations Commission and Mines Adjudication Board, whose final judgments are
stipulated to be final and binding, but not immediately executory in the sense that they may
still be judicially reviewed, upon the instance of any party. Therefore, the final foreign
arbitral awards are similarly situated in that they need first to be confirmed by the RTC.
(3) The RTC has jurisdiction to review foreign arbitral awards
Sec. 42 in relation to Sec. 45 of RA 9285 designated and vested the RTC with
specific authority and jurisdiction to set aside, reject, or vacate a foreign arbitral award on
grounds provided under Art. 34 (2) of the UNCITRAL Model Law. Secs. 42 and 45 provide:
SEC. 42. Application of the New York Convention. — The New
York Convention shall govern the recognition and enforcement of
arbitral awards covered by said Convention.
The recognition and enforcement of such arbitral awards shall
be filed with the Regional Trial Court in accordance with the rules of
procedure to be promulgated by the Supreme Court. Said procedural
rules shall provide that the party relying on the award or applying for its
enforcement shall file with the court the original or authenticated copy of
the award and the arbitration agreement. If the award or agreement is
not made in any of the official languages, the party shall supply a duly
certified translation thereof into any of such languages.
The applicant shall establish that the country in which foreign
arbitration award was made is party to the New York Convention.
 If the application for rejection or suspension of enforcement of
an award has been made, the Regional Trial Court may, if it considers it
proper, vacate its decision and may also, on the application of the party
claiming recognition or enforcement of the award, order the party to
provide appropriate security. ADHcTE
xxx xxx xxx
SEC. 45. Rejection of a Foreign Arbitral Award. — A party to a
foreign arbitration proceeding may oppose an application for recognition
and enforcement of the arbitral award in accordance with the procedures
and rules to be promulgated by the Supreme Court only on those
grounds enumerated under Article V of the New York Convention. Any
other ground raised shall be disregarded by the Regional Trial Court.
Thus, while the RTC does not have jurisdiction over disputes governed by
arbitration mutually agreed upon by the parties, still the foreign arbitral award is subject to
judicial review by the RTC which can set aside, reject, or vacate it. In this sense, what this
Court held in Chung Fu Industries (Phils.), Inc. relied upon by KOGIES is applicable insofar
as the foreign arbitral awards, while final and binding, do not oust courts of jurisdiction
since these arbitral awards are not absolute and without exceptions as they are still
judicially reviewable. Chapter 7 of RA 9285 has made it clear that all arbitral awards,
whether domestic or foreign, are subject to judicial review on specific grounds provided for.
(4) Grounds for judicial review different in domestic and foreign arbitral awards
The differences between a final arbitral award from an international or foreign
arbitral tribunal and an award given by a local arbitral tribunal are the specific grounds or
conditions that vest jurisdiction over our courts to review the awards.
For foreign or international arbitral awards which must first be confirmed by the
RTC, the grounds for setting aside, rejecting or vacating the award by the RTC are
provided under Art. 34 (2) of the UNCITRAL Model Law.
For final domestic arbitral awards, which also need confirmation by the RTC
pursuant to Sec. 23 of RA 876 44 and shall be recognized as final and executory decisions
of the RTC, 45 they may only be assailed before the RTC and vacated on the grounds
provided under Sec. 25 of RA 876. 46
(5) RTC decision of assailed foreign arbitral award appealable
Sec. 46 of RA 9285 provides for an appeal before the CA as the remedy of an
aggrieved party in cases where the RTC sets aside, rejects, vacates, modifies, or corrects
an arbitral award, thus:
SEC. 46. Appeal from Court Decision or Arbitral Awards. — A
decision of the Regional Trial Court confirming, vacating, setting aside,
modifying or correcting an arbitral award may be appealed to the Court
of Appeals in accordance with the rules and procedure to be
promulgated by the Supreme Court.
The losing party who appeals from the judgment of the court
confirming an arbitral award shall be required by the appellate court to
post a counterbond executed in favor of the prevailing party equal to the
amount of the award in accordance with the rules to be promulgated by
the Supreme Court.
Thereafter, the CA decision may further be appealed or reviewed before this
Court through a petition for review under Rule 45 of the Rules of Court.
PGSMC has remedies to protect its interests
Thus, based on the foregoing features of RA 9285, PGSMC must submit to the
foreign arbitration as it bound itself through the subject contract. While it may have
misgivings on the foreign arbitration done in Korea by the KCAB, it has available remedies
under RA 9285. Its interests are duly protected by the law which requires that the arbitral
award that may be rendered by KCAB must be confirmed here by the RTC before it can be
enforced.
With our disquisition above, petitioner is correct in its contention that an arbitration
clause, stipulating that the arbitral award is final and binding, does not oust our courts of
jurisdiction as the international arbitral award, the award of which is not absolute and
without exceptions, is still judicially reviewable under certain conditions provided for by the
UNCITRAL Model Law on ICA as applied and incorporated in RA 9285. aHSCcE
Finally, it must be noted that there is nothing in the subject Contract which
provides that the parties may dispense with the arbitration clause.
Unilateral rescission improper and illegal
Having ruled that the arbitration clause of the subject contract is valid and binding
on the parties, and not contrary to public policy; consequently, being bound to the contract
of arbitration, a party may not unilaterally rescind or terminate the contract for whatever
cause without first resorting to arbitration.
What this Court held in University of the Philippines v. de Los Angeles 47 and
reiterated in succeeding cases, 48 that the act of treating a contract as rescinded on
account of infractions by the other contracting party is valid albeit provisional as it can be
judicially assailed, is not applicable to the instant case on account of a valid stipulation on
arbitration. Where an arbitration clause in a contract is availing, neither of the parties can
unilaterally treat the contract as rescinded since whatever infractions or breaches by a
party or differences arising from the contract must be brought first and resolved by
arbitration, and not through an extrajudicial rescission or judicial action.
The issues arising from the contract between PGSMC and KOGIES on whether
the equipment and machineries delivered and installed were properly installed and
operational in the plant in Carmona, Cavite; the ownership of equipment and payment of
the contract price; and whether there was substantial compliance by KOGIES in the
production of the samples, given the alleged fact that PGSMC could not supply the raw
materials required to produce the sample LPG cylinders, are matters proper for arbitration.
Indeed, we note that on July 1, 1998, KOGIES instituted an Application for Arbitration
before the KCAB in Seoul, Korea pursuant to Art. 15 of the Contract as amended. Thus, it
is incumbent upon PGSMC to abide by its commitment to arbitrate.
Corollarily, the trial court gravely abused its discretion in granting PGSMC's
Motion for Inspection of Things on September 21, 1998, as the subject matter of the motion
is under the primary jurisdiction of the mutually agreed arbitral body, the KCAB in Korea.
In addition, whatever findings and conclusions made by the RTC Branch Sheriff
from the inspection made on October 28, 1998, as ordered by the trial court on October 19,
1998, is of no worth as said Sheriff is not technically competent to ascertain the actual
status of the equipment and machineries as installed in the plant.
For these reasons, the September 21, 1998 and October 19, 1998 RTC Orders
pertaining to the grant of the inspection of the equipment and machineries have to be
recalled and nullified.
Issue on ownership of plant proper for arbitration
Petitioner assails the CA ruling that the issue petitioner raised on whether the total
contract price of USD 1,530,000 was for the whole plant and its installation is beyond the
ambit of a Petition for Certiorari.
Petitioner's position is untenable.
It is settled that questions of fact cannot be raised in an original action
for certiorari. 49 Whether or not there was full payment for the machineries and equipment
and installation is indeed a factual issue prohibited by Rule 65.
However, what appears to constitute a grave abuse of discretion is the order of
the RTC in resolving the issue on the ownership of the plant when it is the arbitral body
(KCAB) and not the RTC which has jurisdiction and authority over the said issue. The
RTC's determination of such factual issue constitutes grave abuse of discretion and must
be reversed and set aside.
RTC has interim jurisdiction to protect the rights of the parties
Anent the July 23, 1998 Order denying the issuance of the injunctive writ paving
the way for PGSMC to dismantle and transfer the equipment and machineries, we find it to
be in order considering the factual milieu of the instant case. AcDaEH
Firstly, while the issue of the proper installation of the equipment and machineries
might well be under the primary jurisdiction of the arbitral body to decide, yet the RTC
under Sec. 28 of RA 9285 has jurisdiction to hear and grant interim measures to protect
vested rights of the parties. Sec. 28 pertinently provides:
SEC. 28. Grant of interim Measure of Protection. — (a) It is not
incompatible with an arbitration agreement for a party to request,
before constitution of the tribunal, from a Court to grant such
measure. After constitution of the arbitral tribunal and during arbitral
proceedings, a request for an interim measure of protection, or
modification thereof, may be made with the arbitral or to the extent that
the arbitral tribunal has no power to act or is unable to act
effectivity, the request may be made with the Court. The arbitral
tribunal is deemed constituted when the sole arbitrator or the third
arbitrator, who has been nominated, has accepted the nomination and
written communication of said nomination and acceptance has been
received by the party making the request.
(b) The following rules on interim or provisional relief shall be
observed:
Any party may request that provisional relief be granted against
the adverse party.
Such relief may be granted:
(i) to prevent irreparable loss or injury;
(ii) to provide security for the performance of any obligation;
(iii) to produce or preserve any evidence; or
(iv) to compel any other appropriate act or omission.
(c) The order granting provisional relief may be conditioned
upon the provision of security or any act or omission specified in the
order.
(d) Interim or provisional relief is requested by written
application transmitted by reasonable means to the Court or arbitral
tribunal as the case may be and the party against whom the relief is
sought, describing in appropriate detail the precise relief, the party
against whom the relief is requested, the grounds for the relief, and the
evidence supporting the request.
(e) The order shall be binding upon the parties.
(f) Either party may apply with the Court for assistance in
implementing or enforcing an interim measure ordered by an arbitral
tribunal.
(g) A party who does not comply with the order shall be liable
for all damages resulting from noncompliance, including all expenses,
and reasonable attorney's fees, paid in obtaining the order's judicial
enforcement. (Emphasis ours.)
Art. 17 (2) of the UNCITRAL Model Law on ICA defines an "interim measure" of
protection as:
Article 17. Power of arbitral tribunal to order interim measures
xxx xxx xxx
(2) An interim measure is any temporary measure, whether in
the form of an award or in another form, by which, at any time prior to the
 issuance of the award by which the dispute is finally decided, the arbitral
tribunal orders a party to:
(a) Maintain or restore the status quo pending determination of
the dispute;
(b) Take action that would prevent, or refrain from taking action
that is likely to cause, current or imminent harm or prejudice to the
arbitral process itself;DTISaH
(c) Provide a means of preserving assets out of which a
subsequent award may be satisfied; or
(d) Preserve evidence that may be relevant and material to the
resolution of the dispute.
Art. 17 J of UNCITRAL Model Law on ICA also grants courts power and
jurisdiction to issue interim measures:
Article 17 J. Court-ordered interim measures
A court shall have the same power of issuing an interim
measure in relation to arbitration proceedings, irrespective of whether
their place is in the territory of this State, as it has in relation to
proceedings in courts. The court shall exercise such power in
accordance with its own procedures in consideration of the specific
features of international arbitration.
In the recent 2006 case of Transfield Philippines, Inc. v. Luzon Hydro
Corporation, we were explicit that even "the pendency of an arbitral proceeding does not
foreclose resort to the courts for provisional reliefs." We explicated this way:
As a fundamental point, the pendency of arbitral proceedings
does not foreclose resort to the courts for provisional reliefs. The Rules
of the ICC, which governs the parties' arbitral dispute, allows the
application of a party to a judicial authority for interim or conservatory
measures. Likewise, Section 14 of Republic Act (R.A.) No. 876 (The
Arbitration Law) recognizes the rights of any party to petition the court to
take measures to safeguard and/or conserve any matter which is the
subject of the dispute in arbitration. In addition, R.A. 9285, otherwise
known as the "Alternative Dispute Resolution Act of 2004," allows the
filing of provisional or interim measures with the regular courts whenever
the arbitral tribunal has no power to act or to act effectively. 50 AacCIT
It is thus beyond cavil that the RTC has authority and jurisdiction to grant interim
measures of protection.
Secondly, considering that the equipment and machineries are in the possession
of PGSMC, it has the right to protect and preserve the equipment and machineries in the
best way it can. Considering that the LPG plant was non-operational, PGSMC has the right
to dismantle and transfer the equipment and machineries either for their protection and
||| (Korea Technologies Co., Ltd. v. Lerma, G.R. No. 143581, [January 7, 2008], 566 PHIL 1-39)
preservation or for the better way to make good use of them which is ineluctably within the
management discretion of PGSMC.
Thirdly, and of greater import is the reason that maintaining the equipment and
machineries in Worth's property is not to the best interest of PGSMC due to the prohibitive
rent while the LPG plant as set-up is not operational. PGSMC was losing PhP322,560 as
monthly rentals or PhP3.87M for 1998 alone without considering the 10% annual rent
increment in maintaining the plant.
Fourthly, and corollarily, while the KCAB can rule on motions or petitions relating
to the preservation or transfer of the equipment and machineries as an interim measure,
yet on hindsight, the July 23, 1998 Order of the RTC allowing the transfer of the equipment
and machineries given the non-recognition by the lower courts of the arbitral clause, has
accorded an interim measure of protection to PGSMC which would otherwise been
irreparably damaged.
Fifth, KOGIES is not unjustly prejudiced as it has already been paid a substantial
amount based on the contract. Moreover, KOGIES is amply protected by the arbitral action
it has instituted before the KCAB, the award of which can be enforced in our jurisdiction
through the RTC. Besides, by our decision, PGSMC is compelled to submit to arbitration
pursuant to the valid arbitration clause of its contract with KOGIES.
PGSMC to preserve the subject equipment and machineries
Finally, while PGSMC may have been granted the right to dismantle and transfer
the subject equipment and machineries, it does not have the right to convey or dispose of
the same considering the pending arbitral proceedings to settle the differences of the
parties. PGSMC therefore must preserve and maintain the subject equipment and
machineries with the diligence of a good father of a family 51 until final resolution of the
arbitral proceedings and enforcement of the award, if any.
WHEREFORE, this petition is PARTLY GRANTED, in that:
(1) The May 30, 2000 CA Decision in CA-G.R. SP No. 49249 is REVERSED and
SET ASIDE;
(2) The September 21, 1998 and October 19, 1998 RTC Orders in Civil Case No.
98-117 are REVERSED and SET ASIDE;
(3) The parties are hereby ORDERED to submit themselves to the arbitration of
their dispute and differences arising from the subject Contract before the KCAB; and
(4) PGSMC is hereby ALLOWED to dismantle and transfer the equipment and
machineries, if it had not done so, and ORDERED to preserve and maintain them until the
finality of whatever arbitral award is given in the arbitration proceedings.
No pronouncement as to costs. IEAHca
SO ORDERED.
Quisumbing, Carpio, Carpio-Morales and Tinga, JJ., concur.
 FIRST DIVISION
[G.R. No. 169576. October 17, 2008.]
LEONIDES MERCADO, represented by his heirs: RACQUEL
D. MERCADO, JIMMY D. MERCADO, HENRY D. MERCADO,
LOURICAR D. MERCADO and VIRGILIO
D. MERCADO, petitioners, vs. COURT OF APPEALS and SAN
MIGUEL CORPORATION, respondents.
RESOLUTION
CORONA, J p:
Leonides Mercado had been distributing respondent San Miguel Corporation's
(SMC's) beer products in Quiapo, Manila since 1967. In 1991, SMC extended to him a P7.5
million credit line allowing him to withdraw goods on credit. To secure his
purchases, Mercado assigned three China Banking Corporation (CBC)
certificates of deposit amounting to P5 million 1 to SMC and executed a continuing
hold-out agreement stating: DcCITS
Any demand made by [SMC] on [CBC], claiming default on
my/our part shall be conclusive on [CBC] and shall serve as absolute
authority for [CBC] to encash the [CBC certificates of deposit] in
accordance with the third paragraph of this Hold-Out Agreement,
whether or not I/we have in fact defaulted on any of my/our obligations
with [SMC], it being understood that the issue of whether or not there
was factual default must be threshed out solely between me/us and
[SMC]
He also submitted three surety bonds from Eastern Assurance and Surety Corporation
(EASCO) totaling P2.6 million. 2
On February 10, 1992, SMC notified CBC that Mercado failed to pay for the items
he withdrew on credit. Consequently, citing the continuing hold-out agreement, it asked
CBC to release the proceeds of the assigned certificates of deposit. CBC approved SMB's
request and informed Mercado. SacTCA
On March 2, 1992, Mercado filed an action to annul the continuing hold-out
agreement and deed of assignment in the Regional Trial Court (RTC) of Manila, Branch
55. 3 He claimed that the continuing hold-out agreement allowed forfeiture without the
benefit of foreclosure. It was therefore void pursuant to Article 2088of the Civil
Code. 4 Moreover, Mercado argued that he had already settled his recent purchases on
credit but SMC erroneously applied the said payments to his old accounts not covered by
the continuing hold-out agreement (i.e., purchases made prior to the extension of the
credit line).
On March 18, 1992, SMC filed its answer with counterclaim against Mercado. It
contended that Mercado delivered only two CBC certificates of deposit amounting to P4.5
million 5 and asserted that the execution of the continuing hold-out agreement and
deed of assignment was a recognized business practice. Furthermore,
because Mercado admitted his outstanding liabilities, SMC sought payment of the lees
products he withdrew (or purchased on credit) worth P7,468,153.75. 6
On April 23, 1992, SMC filed a third-party complaint against EASCO. 7 It sought
to collect the proceeds of the surety bonds submitted by Mercado. CcEHaI
On September 14, 1994, Mercado filed an urgent manifestation and motion
seeking the dismissal of the complaint. He claimed that he was no longer interested in
annulling the continuing hold-out agreement and deed of assignment. The RTC, however,
denied the motion. 8 Instead, it set the case for pre-trial. Thereafter, trial ensued.
During trial, Mercado acknowledged the accuracy of SMC's computation of his
outstanding liability as of August 15, 1991. Thus, the RTC dismissed the complaint and
ordered Mercado and EASCO (to the extent of P2.6 million or the value of its bonds) to
jointly and severally pay SMC the amount of P7,468,153.75. 9
Aggrieved, Mercado and EASCO appealed to
the Court of Appeals (CA) 10 insisting that Mercado did not default in the payment of his
obligations to SMC. CAIaHS
On December 14, 2004, the CA affirmed the RTC decision in
toto. 11 Mercado and EASCO both moved for reconsideration but their respective motions
were denied. 12
On October 28, 2005, EASCO filed a petition for review on certiorari in
this Court 13 but eventually agreed to settle its liability with SMC. 14 The petition was
terminated on September 19, 2007. 15
Meanwhile, Mercado passed away and was substituted by his heirs, petitioners
Racquel D. Mercado, Jimmy D. Mercado, Henry D. Mercado, Louricar D.Mercado and
Virgilio D. Mercado. TEDaAc
Petitioners subsequently filed this petition asserting that the CA erred in affirming
the RTC decision in toto. The said decision (insofar as it ordered Mercado to pay SMC
P7,468,153.75) was void. SMC's counterclaim was permissive in nature. Inasmuch as
SMC did not pay docket fees, the RTC never acquired jurisdiction over the counterclaim.
We deny the petition.
A counterclaim (or a claim which a defending party may have against any
party) 16 may be compulsory 17 or permissive. A counterclaim that (1) arises out of (or is
necessarily connected with) the transaction or occurrence that is the subject matter of the
opposing party's claim; (2) falls within the jurisdiction of the court and (3) does not require
for its adjudication the presence of third parties over whom the court cannot acquire
jurisdiction, is compulsory. 18 Otherwise, a counterclaim is merely permissive.
 When Mercado sought to annul the continuing hold-out agreement and
deed of assignment (which he executed as security for his credit purchases), he in effect
sought to be freed from them. While he admitted having outstanding obligations, he
nevertheless asserted that those were not covered by the assailed accessory contracts.
For its part, aside from invoking the validity of the said agreements, SMC therefore sought
to collect the payment for the value of goodsMercado purchased on credit.
Thus, Mercado's complaint and SMC's counterclaim both touched the issues of whether
the continuing hold-out agreement and deedof assignment were valid and
whether Mercado had outstanding liabilities to SMC. The same evidence would essentially
support or refute Mercado's claim and SMC's counterclaim. SDTIHA
Based on the foregoing, had these issues been tried separately, the efforts of the
RTC and the parties would have had to be duplicated. Clearly, SMC's counterclaim, being
logically related to Mercado's claim, was compulsory in nature. 19 Consequently, the
payment of docket fees was not necessary for the RTC to acquire jurisdiction over the
subject matter.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioners.
SO ORDERED.
Puno, C.J., Carpio, Azcuna and Leonardo-de Castro, JJ., concur.

||| (Mercado v. Court of Appeals, G.R. No. 169576 (Resolution), [October 17, 2008], 590 PHIL
524-530)
 THIRD DIVISION Second Cause of Action 171,120.53

Third Cause of Action 529,189.80

[G.R. No. 151242. June 15, 2005.]
–––––––––––––

PROTON PILIPINAS CORPORATION, AUTOMOTIVE PHILIPPINES, $1,544,984.40

ASEA ONE CORPORATION and AUTOCORP, petitioners, vs.
BANQUE NATIONALE DE PARIS, 1 respondent. 5% as Attorney's Fees $77,249.22

–––––––––––––

TOTAL $1,622,233.62
DECISION
Conversion rate to peso x 43

–––––––––––––
CARPIO MORALES, J p:
TOTAL P69,756,000.00 (round-off)
It appears that sometime in 1995, petitioner Proton Pilipinas Corporation (Proton)
availed of the credit facilities of herein respondent, Banque Nationale de Paris (BNP). To
Computation based on Rule 141:
guarantee the payment of its obligation, its co-petitioners Automotive Corporation Philippines
(Automotive), Asea One Corporation (Asea) and Autocorp Group (Autocorp) executed a
corporate guarantee 2 to the extent of US$2,000,000.00. BNP and Proton subsequently
entered into three trust receipt agreements dated June 4, 1996, 3 January 14, 1997, 4 and April COURT JDF
24, 1997. 5

Under the terms of the trust receipt agreements, Proton would receive imported
passenger motor vehicles and hold them in trust for BNP. Proton would be free to sell the P69,756,000.00 P69,606,000.00
vehicles subject to the condition that it would deliver the proceeds of the sale to BNP, to be
applied to its obligations to it. In case the vehicles are not sold,Proton would return them to BNP, - 150,000.00 x .003
together with all the accompanying documents of title.
–––––––––––– –––––––––––––
Allegedly, Proton failed to deliver the proceeds of the sale and return the unsold motor
69,606,000.00 208,818.00
vehicles.
x .002 + 450.00
Pursuant to the corporate guarantee, BNP demanded from Automotive, Asea and
Autocorp the payment of the amount of US$1,544,984.40 6 representingProton's total –––––––––––– –––––––––––––
outstanding obligations. These guarantors refused to pay, however. Hence, BNP filed on
September 7, 1998 before the Makati Regional Trial Court (RTC) a complaint against 139,212.00 P209,268.00
petitioners praying that they be ordered to pay (1) US$1,544,984.40 plus accrued interest and
other related charges thereon subsequent to August 15, 1998 until fully paid and (2) an amount + 150.00
equivalent to 5% of all sums due from petitioners as attorney's fees.
––––––––––––
The Makati RTC Clerk of Court assessed the docket fees which BNP paid at
P139,362.00
P352,116.30 7 which was computed as follows: 8
LEGAL: P139,362.00

+ 209,268.00
First Cause of Action $844,674.07
 –––––––––––
P348,630.00 x 1% = P3,486.30
P139,362.00
+ 209,268.00
3,486.00
––––––––––
P352,116.30 — Total fees paid by the plaintiff
To the complaint, the defendants-herein petitioners filed on October 12, 1998 a Motion
to Dismiss 9 on the ground that BNP failed to pay the correct docket fees to thus prevent the
trial court from acquiring jurisdiction over the case. 10 As additional ground, petitioners raised
prematurity of the complaint, BNP not having priorly sent any demand letter. 11
By Order 12 of August 3, 1999, Branch 148 of the Makati RTC denied petitioners'
Motion to Dismiss, viz:
Resolving the first ground relied upon by the defendant, this court
believes and so hold that the docket fees were properly paid. It is the Office
of the Clerk of Court of this station that computes the correct docket fees,
and it is their duty to assess the docket fees correctly, which they
did. EICSTa
Even granting arguendo that the docket fees were not properly
paid, the court cannot just dismiss the case. The Court has not yet
ordered (and it will not in this case) to pay the correct docket fees, thus the
Motion to dismiss is premature, aside from being without any legal basis.
As held in the case of National Steel Corporation vs. CA, G.R. No.
123215, February 2, 1999, the Supreme Court said:
xxx xxx xxx
Although the payment of the proper docket fees is a
jurisdictional requirement, the trial court may allow the plaintiff in
an action to pay the same within a reasonable time within the
expiration of applicable prescription or reglementary period. If the
plaintiff fails to comply with this requirement, the defendant
should timely raise the issue of jurisdiction or else he would be
considered in estoppel. In the latter case, the balance between
appropriate docket fees and the amount actually paid by the
plaintiff will be considered a lien or (sic) any award he may obtain
in his favor.
As to the second ground relied upon by the defendants, in that a
review of all annexes to the complaint of the plaintiff reveals that there is
not a single formal demand letter for defendants to fulfill the terms and
conditions of the three (3) trust agreements.
In this regard, the court cannot sustain the submission of
defendant. As correctly pointed out by the plaintiff, failure to make a formal
demand for the debtor to pay the plaintiff is not among the legal grounds for
the dismissal of the case. Anyway, in the appreciation of the court, this is
simply evidentiary.
xxx xxx xxx
WHEREFORE, for lack of merit, the Motion to Dismiss interposed
by the defendants is hereby DENIED. 13 (Underscoring supplied)
Petitioners filed a motion for reconsideration 14 of the denial of their Motion to Dismiss,
but it was denied by the trial court by Order 15 of October 3, 2000.
Petitioners thereupon brought the case on certiorari and mandamus 16 to the Court of
Appeals which, by Decision 17 of July 25, 2001, denied it in this wise:
. . . Section 7(a) of Rule 141 of the Rules of Court excludes
interest accruing from the principal amount being claimed in the pleading in
the computation of the prescribed filing fees. The complaint was submitted
for the computation of the filing fee to the Office of the Clerk of Court of the
Regional Trial Court of Makati City which made an assessment that
respondent paid accordingly. What the Office of the Clerk of Court did and
the ruling of the respondent Judge find support in the decisions of the
Supreme Court in Ng Soon vs. Alday and Tacay vs. RTC of Tagum, Davao
del Norte. In the latter case, the Supreme Court explicitly ruled that "where
the action is purely for recovery of money or damages, the docket fees are
assessed on the basis of the aggregate amount claimed, exclusive only of
interests and costs."
Assuming arguendo that the correct filing fees was not made, the
rule is that the court may allow a reasonable time for the payment of the
prescribed fees, or the balance thereof, and upon such payment, the
defect is cured and the court may properly take cognizance of the action
unless in the meantime prescription has set in and consequently barred
the right of action. Here respondent Judge did not make any finding, and
rightly so, that the filing fee paid by private respondent was insufficient.
On the issue of the correct dollar-peso rate of exchange, the
Office of the Clerk of Court of the RTC of Makati pegged it at P43.21 to
US$1. In the absence of any office guide of the rate of exchange which
said court functionary was duty bound to follow, the rate he applied is
presumptively correct. THADEI
Respondent Judge correctly ruled that the matter of demand
letter is evidentiary and does not form part of the required allegations in a
 complaint. Section 1, Rule 8 of the 1997 Rules of Civil Procedure
pertinently provides:
"Every pleading shall contain in a methodical and logical
form, a plain, concise and direct statement of the ultimate facts on
which the party pleading relies for his claim or defense, as the
case may be, omitted the statement of mere evidentiary facts."
Judging from the allegations of the complaint particularly
paragraphs 6, 12, 18, and 23 where allegations of imputed demands were
made upon the defendants to fulfill their respective obligations, annexing
the demand letters for the purpose of putting up a sufficient cause of action
is not required.
In fine, respondent Judge committed no grave abuse of discretion
amounting to lack or excess of jurisdiction to
warrant certiorari and mandamus. 18(Underscoring supplied)
Their Motion for Reconsideration 19 having been denied by the Court of
Appeals, 20 petitioners filed the present petition for review on certiorari 21 and pray for the
following reliefs:
WHEREFORE, in view of all the foregoing, it is most respectfully
prayed of this Honorable Court to grant the instant petition by REVERSING
and SETTING ASIDE the questioned Decision of July 25, 2001 and the
Resolution of December 18, 2001 for being contrary to law,
to Administrative Circular No. 11-94 and Circular No. 7 and instead direct
the court a quo to require Private Respondent Banque to pay the correct
docket fee pursuant to the correct exchange rate of the dollar to the peso
on September 7, 1998 and to quantify its claims for interests on the
principal obligations in the first, second and third causes of actions in its
Complaint in Civil Case No. 98-2180. 22 (Underscoring supplied)
Citing Administrative Circular No. 11-94, 23 petitioners argue that BNP failed to pay
the correct docket fees as the said circular provides that in the assessment thereof, interest
claimed should be included. There being an underpayment of the docket fees, petitioners
conclude, the trial court did not acquire jurisdiction over the case.
Additionally, petitioners point out that the clerk of court, in converting BNP's claims
from US dollars to Philippine pesos, applied the wrong exchange rate of US $1 = P43.00, the
exchange rate on September 7, 1998 when the complaint was filed having been pegged at US
$1 = P43.21. Thus, by petitioners' computation, BNP's claim as of August 15, 1998 was actually
P70,096,714.72, 24 not P69,756,045.66.
Furthermore, petitioners submit that pursuant to Supreme Court Circular No. 7, 25 the
complaint should have been dismissed for failure to specify the amount of interest in the prayer.
Circular No. 7 reads:
TO: JUDGES AND CLERKS OF COURT OF THE COURT OF TAX
APPEALS, REGIONAL TRIAL COURTS,
METROPOLITAN TRIAL COURTS IN CITIES,
MUNICIPAL TRIAL COURTS, MUNICIPAL CIRCUIT
TRIAL COURTS, SHARI'A DISTRICT COURTS; AND
THE INTEGRATED BAR OF THE PHILIPPINES
SUBJECT: ALL COMPLAINTS MUST SPECIFY AMOUNT OF
DAMAGES SOUGHT NOT ONLY IN THE BODY OF
THE PLEADING, BUT ALSO IN THE PRAYER IN
ORDER TO BE ACCEPTED AND ADMITTED FOR
FILING. THE AMOUNT OF DAMAGES SO SPECIFIED
IN THE COMPLAINT SHALL BE THE BASIS FOR
ASSESSING THE AMOUNT OF THE FILING
FEES. IaEHSD
In Manchester Development Corporation vs. Court of Appeals,
No. L-75919, May 7, 1987, 149 SCRA 562, this Court condemned the
practice of counsel who in filing the original complaint omitted from the
prayer any specification of the amount of damages although the amount of
over P78 million is alleged in the body of the complaint. This Court
observed that "(T)his is clearly intended for no other purpose than to evade
the payment of the correct filing fees if not to mislead the docket clerk, in
the assessment of the filing fee. This fraudulent practice was compounded
when, even as this Court had taken cognizance of the anomaly and
ordered an investigation, petitioner through another counsel filed an
amended complaint, deleting all mention of the amount of damages being
asked for in the body of the complaint. . . ."
For the guidance of all concerned, the WARNING given by the
court in the afore-cited case is reproduced hereunder:
"The Court serves warning that it will take drastic action
upon a repetition of this unethical practice.
To put a stop to this irregularity, henceforth all
complaints, petitions, answers and other similar
pleadings should specify the amount of damages being
prayed for not only in the body of the pleading but also in
the prayer, and said damages shall be considered in the
assessment of the filing fees in any case. Any pleading
that fails to comply with this requirement shall not be
accepted nor admitted, or shall otherwise be expunged from
the record.
The Court acquires jurisdiction over any case only upon
the payment of the prescribed docket fee. An amendment of the
complaint or similar pleading will not thereby vest jurisdiction in
 the Court, much less the payment of the docket fee based on the
amount sought in the amended pleading. The ruling in the
Magaspi case (115 SCRA 193) in so far as it is inconsistent with
this pronouncement is overturned and reversed."
Strict compliance with this Circular is hereby enjoined.
Let this be circularized to all the courts hereinabove named and to
the President and Board of Governors of the Integrated Bar of the
Philippines, which is hereby directed to disseminate this Circular to all its
members.
March 24, 1988.
(Sgd). CLAUDIO
TEEHANKEE
Chief Justice
5. On ALL THE CAUSES OF ACTION —
Defendants AUTOMOTIVE CORPORATION PHILIPPINES,
ASEA ONE CORPORATION and AUTOCORP GROUP to be ordered to
pay Plaintiff BNP the aggregate sum of (i) US DOLLARS ONE MILLION
FIVE HUNDRED FORTY FOUR THOUSAND NINE HUNDRED EIGHTY
FOUR AND FORTY CENTS (US$1,544,984.40) (First through Third
Causes of Action), plus accrued interest and other related charges thereon
subsequent to August 15, 1998 until fully paid; and (ii) an amount
equivalent to 5% of all sums due from said Defendants, as and for
attorney's fees. 26
Moreover, respondent posits that the amount of US$1,544,984.40 represents not only
the principal but also interest and other related charges which had accrued as of August 15,
1998. Respondent goes even further by suggesting that in light of Tacay v. Regional Trial Court
of Tagum, Davao del Norte 27 where the Supreme Court held,

(Emphasis and underscoring supplied)
On the other hand, respondent maintains that it had paid the filing fee which was
assessed by the clerk of court, and that there was no violation of Supreme Court Circular No. 7
because the amount of damages was clearly specified in the prayer, to wit:
2. On the FIRST CAUSE OF ACTION —
(c) Defendant PROTON be ordered to pay the sum of (i) US
DOLLARS EIGHT HUNDRED FORTY FOUR THOUSAND SIX
HUNDRED SEVENTY FOUR AND SEVEN CENTS (US$ 844,674.07),
plus accrued interests and other related charges thereon subsequent to
August 15, 1998, until fully paid; and (ii) an amount equivalent to 5% of all
sums due from said Defendant, as and for attorney's fees;
3. On the SECOND CAUSE OF ACTION —
Where the action is purely for the recovery of money or damages,
the docket fees are assessed on the basis of the aggregate amount
claimed, exclusive only of interests and costs. 28 (Emphasis and
underscoring supplied),
it made an overpayment.
When Tacay was decided in 1989, the pertinent rule applicable was Section 5 (a) of
Rule 141 which provided for the following:
SEC. 5. Clerks of Regional Trial Courts. — (a) For filing an action
or proceeding, or a permissive counter-claim or cross-claim not arising out
of the same transaction subject of the complaint, a third-party complaint
and a complaint in intervention and for all services in the same, if the sum
claimed, exclusive of interest, of the value of the property in litigation,
or the value of the estate, is:

(d) Defendant PROTON be ordered to pay the sum of (i) US 1. Less than P5,000.00 P32.00
DOLLARS ONE HUNDRED TWENTY AND FIFTY THREE CENTS
2. P5,000.00 or more but less than P10,000.00 48.00
(US$171,120.53), plus accrued interests and other related charges
thereon subsequent to August 15, 1998 until fully paid; and (ii) an amount 3. P10,000.00 or more but less than P20,000.00 64.00
equivalent to 5% of all sums due from said Defendant, as and for attorney's
fees; DHAcET 4. P20,000.00 or more but less than P40,000.00 80.00

4. On the THIRD CAUSE OF ACTION — 5. P40,000.00 or more but less than P60,000.00 120.00

(e) Defendant PROTON be ordered to pay the sum of (i) US 6. P60,000.00 or more but less than P80,000.00 160.00
DOLLARS FIVE HUNDRED TWENTY NINE THOUSAND ONE
HUNDRED EIGHTY NINE AND EIGHTY CENTS (US$529,189.80), plus 7. P80,000.00 or more but less than P150,000.00 200.00
accrued interests and other related charges thereon subsequent to August
8. And for each P1,000.00 in excess of P150,000.00 4.00
15, 1998 until fully paid; and (ii) an amount equivalent to 5% or all sums
due from said Defendant, as and for attorney's fees;
9. When the value of the case cannot be estimated
10. When the case does not concern property
(naturalization, adoption, legal separation, etc.)
11. In forcible entry and illegal detainer cases appealed
from inferior courts
If the case concerns real estate, the assessed value thereof shall
be considered in computing the fees. cSIHCA
In case the value of the property or estate or the sum claim is less
or more in accordance with the appraisal of the court, the difference of fees
shall be refunded or paid as the case may be.
When the complaint in this case was filed in 1998, however, as correctly pointed out
by petitioners, Rule 141 had been amended by Administrative Circular No. 11-94 29 which
provides:
BY RESOLUTION OF THE COURT, DATED JUNE 28, 1994,
PURSUANT TO SECTION 5 (5) OF ARTICLE VIII OF THE
CONSTITUTION, RULE 141, SECTION 7 (a) AND (d), and SECTION 8 (a)
and (b) OF THE RULES OF COURT ARE HEREBY AMENDED TO READ
AS FOLLOWS:
RULE 141
LEGAL FEES
xxx xxx xxx
Sec. 7. Clerks of Regional Trial Courts
(a) For filing an action or a permissive counterclaim or money
claim against an estate not based on judgment, or for filing with leave of
court a third-party, fourth-party, etc. complaint, or a complaint in
intervention, and for all clerical services in the same, if the total sum
claimed, inclusive of interest, damages of whatever kind, attorney's
fees, litigation expenses, and costs, or the stated value of the
property in litigation, is:
1. Not more than P100,000.00
2. P100,000.00, or more but not more than P150,000.00
3. For each P1,000.00 in excess of P150,000.00
xxx xxx xxx
Sec. 8. Clerks of Metropolitan and Municipal Trial Courts
400.00 (a) For each civil action or proceeding, where the value of the
subject matter involved, or the amount of the demand, inclusive of
interest, damages or whatever kind, attorney's fees, litigation
expenses, and costs, is:
64.00
1. Not more than P20,000.00 P120.00
2. More than P20,000.00 but not more than P100,000.00 400.00
40.00
3. More than P100,000.00 but not more than P200,000.00 850.00
(Emphasis and underscoring supplied)
The clerk of court should thus have assessed the filing fee by taking into consideration
"the total sum claimed, inclusive of interest, damages of whatever kind, attorney's fees,
litigation expenses, and costs, or the stated value of the property in litigation." Respondent's
and the Court of Appeals' reliance then on Tacay was not in order.
Neither was, for the same reason, the Court of Appeals' reliance on the 1989 case
of Ng Soon v. Alday, 30 where this Court held:
. . . The failure to state the rate of interest demanded was not
fatal not only because it is the Courts which ultimately fix the same, but
also because Rule 141, Section 5(a) of the Rules of Court, itemizing
the filing fees, speaks of "the sum claimed, exclusive of interest."
This clearly implies that the specification of the interest rate is not
that indispensable.
Factually, therefore, not everything was left to "guesswork" as
respondent Judge has opined. The sums claimed were ascertainable,
sufficient enough to allow a computation pursuant to Rule 141, section
5(a).
Furthermore, contrary to the position taken by respondent
Judge, the amounts claimed need not be initially stated with
mathematical precision. The same Rule 141, section 5(a) (3rd
paragraph), allows an appraisal "more or less." 31 Thus:
"In case the value of the property or estate or the sum claimed is
less or more in accordance with the appraisal of the court, the difference of
P400.00 fee shall be refunded or paid as the case may be."
600.00 In other words, a final determination is still to be made by the
Court, and the fees ultimately found to be payable will either be additionally
5.00 paid by the party concerned or refunded to him, as the case may be. The
above provision clearly allows an initial payment of the filing fees
corresponding to the estimated amount of the claim subject to adjustment
as to what later may be proved.
 ". . . there is merit in petitioner's claim that the third paragraph of
Rule 141, Section 5(a) clearly contemplates a situation where an amount is
alleged or claimed in the complaint but is less or more than what is later
proved. If what is proved is less than what was claimed, then a refund will
be made; if more, additional fees will be exacted. Otherwise stated, what is
subject to adjustment is the difference in the fee and not the whole amount"
(Pilipinas Shell Petroleum Corp., et als., vs. Court of Appeals, et als., G.R.
No. 76119, April 10, 1989). 32 (Emphasis and underscoring
supplied) IaEACT
Respecting the Court of Appeals' conclusion that the clerk of court did not err when he
applied the exchange rate of US$1 = P43.00 "[i]n the absence of any office guide of the rate of
exchange which said court functionary was duty bound to follow,[hence,] the rate he applied is
presumptively correct," the same does not lie. The presumption of regularity of the clerk of
court's application of the exchange rate is not conclusive. 33 It is disputable. 34 As such, the
presumption may be overturned by the requisite rebutting evidence. 35 In the case at bar,
petitioners have adequately proven with documentary evidence 36 that the exchange rate
when the complaint was filed on September 7, 1998 was US$1 = P43.21.
In fine, the docket fees paid by respondent were insufficient.
With respect to petitioner's argument that the trial court did not acquire jurisdiction over
the case in light of the insufficient docket fees, the same does not lie.
True, in Manchester Development Corporation v. Court of Appeals, 37 this Court held
that the court acquires jurisdiction over any case only upon the payment of the prescribed
docket fees, 38 hence, it concluded that the trial court did not acquire jurisdiction over the case.
It bears emphasis, however, that the ruling in Manchester was clarified in Sun
Insurance Office, Ltd. (SIOL) v. Asuncion 39 when this Court held that in the former there was
clearly an effort to defraud the government in avoiding to pay the correct docket fees, whereas
in the latter the plaintiff demonstrated his willingness to abide by paying the additional fees as
required.
The principle in Manchester could very well be applied in the
present case. The pattern and the intent to defraud the government of the
docket fee due it is obvious not only in the filing of the original complaint but
also in the filing of the second amended complaint.
However, in Manchester, petitioner did not pay any additional
docket fee until the case was decided by this Court on May 7,
1987. Thus, in Manchester, due to the fraud committed on the
government, this Court held that the court a quo did not acquire
jurisdiction over the case and that the amended complaint could not
have been admitted inasmuch as the original complaint was null and
void.
In the present case, a more liberal interpretation of the rules
is called for considering that, unlike Manchester, private respondent
demonstrated his willingness to abide by the rules by paying the
additional docket fees as required. The promulgation of the decision
in Manchester must have had that sobering influence on private
respondent who thus paid the additional docket fee as ordered by the
respondent court. It triggered his change of stance by manifesting his
willingness to pay such additional docket fee as may be ordered.
Nevertheless, petitioners contend that the docket fee that was
paid is still insufficient considering the total amount of the claim. This is a
matter which the clerk of court of the lower court and/or his duly authorized
docket clerk or clerk in charge should determine and, thereafter, if any
amount is found due, he must require the private respondent to pay the
same.
Thus, the Court rules as follows:
1. It is not simply the filing of the complaint or appropriate
initiatory pleading, but the payment of the prescribed docket fee, that vests
a trial court with jurisdiction over the subject-matter or nature of the action.
Where the filing of the initiatory pleading is not accompanied by payment of
the docket fee, the court may allow payment of the fee within a reasonable
time but in no case beyond the applicable prescriptive or reglementary
period.
2. The same rule applies to permissive counterclaims, third-party
claims and similar pleadings, which shall not be considered filed until and
unless the filing fee prescribed therefor is paid. The court may also allow
payment of said fee within a reasonable time but also in no case beyond its
applicable prescriptive or reglementary period. ASHaTc
3. Where the trial court acquires jurisdiction over a claim by the
filing of the appropriate pleading and payment of the prescribed filing fee
but, subsequently, the judgment awards a claim not specified in the
pleading, or if specified the same has been left for determination by the
court, the additional filing fee therefor shall constitute a lien on the
judgment. It shall be the responsibility of the Clerk of Court or his duly
authorized deputy to enforce said lien and assess and collect the
additional fee. 40 (Emphasis and underscoring supplied)
The ruling in Sun Insurance Office was echoed in the 2005 case of Heirs of Bertuldo
Hinog v. Hon. Achilles Melicor: 41
Plainly, while the payment of the prescribed docket fee is a
jurisdictional requirement, even its non-payment at the time of filing does
not automatically cause the dismissal of the case, as long as the fee is paid
within the applicable prescriptive or reglementary period, more so when
the party involved demonstrates a willingness to abide by the rules
prescribing such payment. Thus, when insufficient filing fees were
initially paid by the plaintiffs and there was no intention to defraud
 the government, the Manchester rule does not apply. (Emphasis and
underscoring supplied; citations omitted)
In the case at bar, respondent merely relied on the assessment made by the clerk of
court which turned out to be incorrect. Under the circumstances, the clerk of court has the
responsibility of reassessing what respondent must pay within the prescriptive period, failing
which the complaint merits dismissal.
Parenthetically, in the complaint, respondent prayed for "accrued interest . . .
subsequent to August 15, 1998 until fully paid." The complaint having been filed on September
7, 1998, respondent's claim includes the interest from August 16, 1998 until such date of filing.
Respondent did not, however, pay the filing fee corresponding to its claim for interest
from August 16, 1998 until the filing of the complaint on September 7, 1998. As priorly
discussed, this is required under Rule 141, as amended by Administrative Circular No. 11-94,
which was the rule applicable at the time. Thus, as the complaint currently stands, respondent
cannot claim the interest from August 16, 1998 until September 7, 1998, unless respondent is
allowed by motion to amend its complaint within a reasonable time and specify the precise
amount of interest petitioners owe from August 16, 1998 to September 7, 1998 42 and pay the
corresponding docket fee therefor.
pleading for then it will not be possible for the claimant to specify nor
speculate as to the amount thereof. 44 (Emphasis and underscoring
supplied; citation omitted) DaIACS
WHEREFORE, the petition is GRANTED in part. The July 25, 2001 Decision and the
December 18, 2001 Resolution of the Court Appeals are hereby MODIFIED. The Clerk of Court
of the Regional Trial Court of Makati City is ordered to reassess and determine the docket fees
that should be paid by respondent, BNP, in accordance with the Decision of this Court, and
direct respondent to pay the same within fifteen (15) days, provided the applicable prescriptive
or reglementary period has not yet expired. Thereafter, the trial court is ordered to proceed with
the case with utmost dispatch.
SO ORDERED.
Panganiban, Sandoval-Gutierrez, Corona and Garcia, JJ., concur.
||| (Proton Pilipinas Corp. v. Banque Nationale de Paris, G.R. No. 151242, [June 15, 2005], 499
PHIL 247-267)

With respect to the interest accruing after the filing of the complaint, the same can only
be determined after a final judgment has been handed down. Respondent cannot thus be made
to pay the corresponding docket fee therefor. Pursuant, however, to Section 2, Rule 141, as
amended by Administrative Circular No. 11-94, respondent should be made to pay additional
fees which shall constitute a lien in the event the trial court adjudges that it is entitled to interest
accruing after the filing of the complaint.

Sec. 2. Fees as lien. — Where the court in its final judgment

awards a claim not alleged, or a relief different or more than that claimed in
the pleading, the party concerned shall pay the additional fees which shall
constitute a lien on the judgment in satisfaction of said lien. The clerk of
court shall assess and collect the corresponding fees.

In Ayala Corporation v. Madayag, 43 in interpreting the third rule laid down in Sun
Insurance regarding awards of claims not specified in the pleading, this Court held that the
same refers only to damages arising after the filing of the complaint or similar pleading
as to which the additional filing fee therefor shall constitute a lien on the judgment.

. . . The amount of any claim for damages, therefore, arising on or

before the filing of the complaint or any pleading should be specified. While
it is true that the determination of certain damages as exemplary or
corrective damages is left to the sound discretion of the court, it is the duty
of the parties claiming such damages to specify the amount sought on the
basis of which the court may make a proper determination, and for the
proper assessment of the appropriate docket fees. The exception
contemplated as to claims not specified or to claims although
specified are left for determination of the court is limited only to any
damages that may arise after the filing of the complaint or similar
 THIRD DIVISION TCT No. Purchase Price

[G.R. No. 175914. February 10, 2009.]

38376 P9,340,000.00

RUBY SHELTER BUILDERS AND REALTY DEVELOPMENT 29918 P28,000,000.00

CORPORATION, petitioner, vs. HON. PABLO C. FORMARAN III,
Presiding Judge of Regional Trial Court Branch 21, Naga City, as 38374 P12,000,000.00
Pairing Judge for Regional Trial Court Branch 22, Formerly Presided 39232 P1,600,000.00
By HON. NOVELITA VILLEGAS-LLAGUNO (Retired 01 May 2006),
ROMEO Y. TAN, ROBERTO L. OBIEDO and ATTY. TOMAS A. 39225 P1,600,000.00
REYES, respondents.

Petitioner could choose to pay off its indebtedness with individual or all five parcels of
land; or it could redeem said properties by paying respondents Tan and Obiedo the following
DECISION
prices for the same, inclusive of interest and penalties:

TCT No. Redemption Price

CHICO-NAZARIO, J p:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules
of Court seeking the reversal of the Decision 1 dated 22 November 2006 of the Court of
Appeals in CA-G.R. SP No. 94800. The Court of Appeals, in its assailed Decision, affirmed
the Order 2 dated 24 March 2006 of the Regional Trial Court (RTC), Branch 22, of Naga
City, in Civil Case No. RTC-2006-0030, ordering petitioner Ruby Shelter Builders and
Realty Development Corporation to pay additional docket/filing fees, computed based on
Section 7 (a) of Rule 141 of the Rules of Court, as amended.
The present Petition arose from the following facts:
Petitioner obtained a loan 3 in the total amount of P95,700,620.00 from
respondents Romeo Y. Tan (Tan) and Roberto L. Obiedo (Obiedo), secured by real estate
mortgages over five parcels of land, all located in Triangulo, Naga City, covered by
Transfer Certificates of Title (TCTs) No. 38376, 4 No. 29918, 5 No. 38374, 6 No.
39232, 7 and No. 39225, 8 issued by the Registry of Deeds for Naga City, in the name of
petitioner. When petitioner was unable to pay the loan when it became due and
demandable, respondents Tan and Obiedo agreed to an extension of the same. CHATEa
In a Memorandum of Agreement 9 dated 17 March 2005, respondents Tan and
Obiedo granted petitioner until 31 December 2005 to settle its indebtedness, and
condoned the interests, penalties and surcharges accruing thereon from 1 October 2004 to
31 December 2005 which amounted to P74,678,647.00. The Memorandum of Agreement
required, in turn, that petitioner execute simultaneously with the said Memorandum, "by
way of dacion en pago", Deeds of Absolute Sale in favor of respondents Tan and Obiedo,
covering the same parcels of land subject of the mortgages. The Deeds of Absolute Sale
would be uniformly dated 2 January 2006, and state that petitioner sold to respondents Tan
and Obiedo the parcels of land for the following purchase prices:
38376 P25,328,939.00
29918 P35,660,800.00
38374 P28,477,600.00
39232 P6,233,381.00
39225 P6,233,381.00
In the event that petitioner is able to redeem any of the afore-mentioned parcels of
land, the Deed of Absolute Sale covering the said property shall be nullified and have no
force and effect; and respondents Tan and Obiedo shall then return the owner's duplicate
of the corresponding TCT to petitioner and also execute a Deed of Discharge of Mortgage.
However, if petitioner is unable to redeem the parcels of land within the period agreed upon,
respondents Tan and Obiedo could already present the Deeds of Absolute Sale covering
the same to the Office of the Register of Deeds for Naga City so respondents Tan and
Obiedo could acquire TCTs to the said properties in their names. ACDTcE
The Memorandum of Agreement further provided that should petitioner contest,
judicially or otherwise, any act, transaction, or event related to or necessarily connected
with the said Memorandum and the Deeds of Absolute Sale involving the five parcels of
land, it would pay respondents Tan and Obiedo P10,000,000.00 as liquidated damages
inclusive of costs and attorney's fees. Petitioner would likewise pay respondents Tan and
Obiedo the condoned interests, surcharges and penalties. 10 Finally, should a contest
arise from the Memorandum of Agreement, Mr. Ruben Sia (Sia), President of petitioner
corporation, personally assumes, jointly and severally with petitioner, the latter's monetary
obligation to respondent Tan and Obiedo.
Respondent Atty. Tomas A. Reyes (Reyes) was the Notary Public who notarized
the Memorandum of Agreement dated 17 March 2005 between respondent Tan and
Obiedo, on one hand, and petitioner, on the other.
Pursuant to the Memorandum of Agreement, petitioner, represented by Mr. Sia,
executed separate Deeds of Absolute Sale, 11 over the five parcels of land, in favor of
respondents Tan and Obiedo. On the blank spaces provided for in the said Deeds,
somebody wrote the 3rd of January 2006 as the date of their execution. The Deeds were
again notarized by respondent Atty. Reyes also on 3 January 2006.
Without payment having been made by petitioner on 31 December 2005,
respondents Tan and Obiedo presented the Deeds of Absolute Sale dated 3 January 2006
before the Register of Deeds of Naga City on 8 March 2006, as a result of which, they were
able to secure TCTs over the five parcels of land in their names.
On 16 March 2006, petitioner filed before the RTC a Complaint 12 against
respondents Tan, Obiedo, and Atty. Reyes, for declaration of nullity of deeds of sales and
damages, with prayer for the issuance of a writ of preliminary injunction and/or temporary
restraining order (TRO). The Complaint was docketed as Civil Case No. 2006-0030.
On the basis of the facts already recounted above, petitioner raised two causes of
action in its Complaint. cSIACD
As for the first cause of action, petitioner alleged that as early as 27 December
2005, its President already wrote a letter informing respondents Tan and Obiedo of the
intention of petitioner to pay its loan and requesting a meeting to compute the final amount
due. The parties held meetings on 3 and 4 January 2006 but they failed to arrive at a
mutually acceptable computation of the final amount of loan payable. Respondents Tan
and Obiedo then refused the request of petitioner for further dialogues. Unbeknownst to
petitioner, despite the ongoing meetings, respondents Tan and Obiedo, in evident bad faith,
already had the pre-executed Deeds of Absolute Sale notarized on 3 January 2006 by
respondent Atty. Reyes. Atty. Reyes, in connivance with respondents Tan and Obiedo,
falsely made it appear in the Deeds of Absolute Sale that Mr. Sia had personally
acknowledged/ratified the said Deeds before Atty. Reyes.
Asserting that the Deeds of Absolute Sale over the five parcels of land were
executed merely as security for the payment of its loan to respondents Tan and Obiedo;
that the Deeds of Absolute Sale, executed in accordance with the Memorandum of
Agreement, constituted pactum commisorium and as such, were null and void; and that the
acknowledgment in the Deeds of Absolute Sale were falsified, petitioner averred:
13. That by reason of the fraudulent actions by the [herein
respondents], [herein petitioner] is prejudiced and is now in danger of
being deprived, physically and legally, of the mortgaged properties without
benefit of legal processes such as the remedy of foreclosure and its
attendant procedures, solemnities and remedies available to a mortgagor,
while [petitioner] is desirous and willing to pay its obligation and have the
mortgaged properties released. 13
In support of its second cause of action, petitioner narrated in its Complaint that
on 18 January 2006, respondents Tan and Obiedo forcibly took over, with the use of armed
men, possession of the five parcels of land subject of the falsified Deeds of Absolute Sale
and fenced the said properties with barbed wire. Beginning 3 March 2006, respondents
Tan and Obiedo started demolishing some of the commercial spaces standing on the
parcels of land in question which were being rented out by petitioner. Respondents Tan
and Obiedo were also about to tear down a principal improvement on the properties
consisting of a steel-and-concrete structure housing a motor vehicle terminal operated by
petitioner. The actions of respondents Tan and Obiedo were to the damage and prejudice
of petitioner and its tenants/lessees. Petitioner, alone, claimed to have suffered at least
P300,000.00 in actual damages by reason of the physical invasion by respondents Tan
and Obiedo and their armed goons of the five parcels of land. SIcEHC
Ultimately, petitioner's prayer in its Complaint reads:
WHEREFORE, premises considered, it is most respectfully
prayed of this Honorable Court that upon the filing of this complaint, a
72-hour temporary restraining order be forthwith issued ex parte:
(a) Restraining [herein respondents] Tan and Obiedo, their
agents, privies or representatives, from committing act/s tending to
alienate the mortgaged properties from the [herein petitioner] pending the
resolution of the case, including but not limited to the acts complained of in
paragraph "14", above;
(b) Restraining the Register of Deeds of Naga City from
entertaining moves by the [respondents] to have [petitioner's] certificates
of title to the mortgaged properties cancelled and changed/registered in
[respondents] Tan's and Obiedo's names, and/or released to them;
(c) After notice and hearing, that a writ of preliminary injunction be
issued imposing the same restraints indicated in the next preceding two
paragraphs of this prayer; and
(d) After trial, judgment be rendered:
1. Making the injunction permanent;
2. Declaring the provision in the Memorandum of Agreement
requiring the [petitioner] to execute deed of sales (sic) in favor of the
[respondents Tan and Obiedo] as dacion en pago in the event of
non-payment of the debt as pactum commissorium; TEaADS
3. Annulling the Deed[s] of Sale for TCT Nos. 29918, 38374,
38376, 39225 and 39232, all dated January 3, 2006, the same being in
contravention of law;
 4. Ordering the [respondents] jointly and solidarily to pay the
[petitioner] actual damages of at least P300,000.00; attorney's fees in the
amount of P100,000.00 plus P1,000.00 per court attendance of counsel as
appearance fee; litigation expenses in the amount of at least P10,000.00
and exemplary damages in the amount of P300,000.00, plus the costs.
[Petitioner] further prays for such other reliefs as may be proper,
just and equitable under the premises. 14
Upon filing its Complaint with the RTC on 16 March 2006, petitioner paid the sum
of P13,644.25 for docket and other legal fees, as assessed by the Office of the Clerk of
Court. The Clerk of Court initially considered Civil Case No. 2006-0030 as an action
incapable of pecuniary estimation and computed the docket and other legal fees due
thereon according to Section 7 (b) (1), Rule 141 of the Rules of Court.
Only respondent Tan filed an Answer 15 to the Complaint of petitioner.
Respondent Tan did admit that meetings were held with Mr. Sia, as the representative of
petitioner, to thresh out Mr. Sia's charge that the computation by respondents Tan and
Obiedo of the interests, surcharges and penalties accruing on the loan of petitioner was
replete with errors and uncertainties. However, Mr. Sia failed to back up his accusation of
errors and uncertainties and to present his own final computation of the amount due.
Disappointed and exasperated, respondents Tan and Obiedo informed Mr. Sia that they
had already asked respondent Atty. Reyes to come over to notarize the Deeds of Absolute
Sale. Respondent Atty. Reyes asked Mr. Sia whether it was his signature appearing above
his printed name on the Deeds of Absolute Sale, to which Mr. Sia replied yes. On 4 January
2006, Mr. Sia still failed to establish his claim of errors and uncertainties in the computation
of the total amount which petitioner must pay respondent Tan and Obiedo. Mr. Sia, instead,
sought a nine-month extension for paying the loan obligation of petitioner and the reduction
of the interest rate thereon to only one percent (1%) per month. Respondents Tan and
Obiedo rejected both demands. HASDcC
Respondent Tan maintained that the Deeds of Absolute Sale were not executed
merely as securities for the loan of petitioner. The Deeds of Absolute Sale over the five
parcels of land were the consideration for the payment of the total indebtedness of
petitioner to respondents Tan and Obiedo, and the condonation of the 15-month interest
which already accrued on the loan, while providing petitioner with the golden opportunity to
still redeem all or even portions of the properties covered by said Deeds. Unfortunately,
petitioner failed to exercise its right to redeem any of the said properties.
Belying that they forcibly took possession of the five parcels of land, respondent
Tan alleged that it was Mr. Sia who, with the aid of armed men, on board a Sports Utility
Vehicle and a truck, rammed into the personnel of respondents Tan and Obiedo causing
melee and disturbance. Moreover, by the execution of the Deeds of Absolute Sale, the
properties subject thereof were, ipso jure, delivered to respondents Tan and Obiedo. The
demolition of the existing structures on the properties was nothing but an exercise of
dominion by respondents Tan and Obiedo.
Respondent Tan, thus, sought not just the dismissal of the Complaint of petitioner,
but also the grant of his counterclaim. The prayer in his Answer is faithfully reproduced
below:
Wherefore, premises considered, it is most respectfully prayed
that, after due hearing, judgment be rendered dismissing the complaint,
and on the counterclaim, [herein petitioner] and Ruben Sia, be ordered to
indemnify, jointly and severally [herein respondents Tan and Obiedo] the
amounts of not less than P10,000,000.00 as liquidated damages and the
further sum of not less than P500,000.00 as attorney's fees. In the
alternative, and should it become necessary, it is hereby prayed that
[petitioner] be ordered to pay herein [respondents Tan and Obiedo] the
entire principal loan of P95,700,620.00, plus interests, surcharges and
penalties computed from March 17, 2005 until the entire sum is fully paid,
including the amount of P74,678,647.00 foregone interest covering the
period from October 1, 2004 to December 31, 2005 or for a total of fifteen
(15) months, plus incidental expenses as may be proved in court, in the
event that Annexes "G" to "L" be nullified. Other relief and remedies as are
just and equitable under the premises are hereby prayed for. 16 CacTIE
Thereafter, respondent Tan filed before the RTC an Omnibus Motion in which he
contended that Civil Case No. 2006-0030 involved real properties, the docket fees for
which should be computed in accordance with Section 7 (a), not Section 7 (b) (1), of Rule
141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC which took effect on 16
August 2004. Since petitioner did not pay the appropriate docket fees for Civil Case No.
2006-0030, the RTC did not acquire jurisdiction over the said case. Hence, respondent Tan
asked the RTC to issue an order requiring petitioner to pay the correct and accurate docket
fees pursuant to Section 7 (a), Rule 141 of the Rules of Court, as amended; and should
petitioner fail to do so, to deny and dismiss the prayer of petitioner for the annulment of the
Deeds of Absolute Sale for having been executed in contravention of the law or of the
Memorandum of Agreement as pactum commisorium.
As required by the RTC, the parties submitted their Position Papers on the matter.
On 24 March 2006, the RTC issued an Order 17 granting respondent Tan's Omnibus
Motion. In holding that both petitioner and respondent Tan must pay docket fees in
accordance with Section 7 (a), Rule 141 of the Rules of Court, as amended, the RTC
reasoned:
It must be noted that under paragraph (b) 2. of the said Section
7, it is provided that QUIETING OF TITLE which is an action classified as
beyond pecuniary estimation "shall be governed by paragraph (a)". Hence,
the filing fee in an action for Declaration of Nullity of Deed which is also
classified as beyond pecuniary estimation, must be computed based on
the provision of Section 7(A) herein-above, in part, quoted. SHDAEC
Since [herein respondent], Romeo Tan in his Answer has a
counterclaim against the plaintiff, the former must likewise pay the
necessary filling (sic) fees as provided for under Section 7 (A) of
 Amended Administrative Circular No. 35-2004 issued by the Supreme
Court. 18
Consequently, the RTC decreed on the matter of docket/filing fees:
WHEREFORE, premises considered, the [herein petitioner] is
hereby ordered to pay additional filing fee and the [herein respondent],
Romeo Tan is also ordered to pay docket and filing fees on his
counterclaim, both computed based on Section 7(a) of the Supreme Court
Amended Administrative Circular No. 35-2004 within fifteen (15) days from
receipt of this Order to the Clerk of Court, Regional Trial Court, Naga City
and for the latter to compute and to collect the said fees accordingly. 19
Petitioner moved 20 for the partial reconsideration of the 24 March 2006 Order of
the RTC, arguing that Civil Case No. 2006-0030 was principally for the annulment of the
Deeds of Absolute Sale and, as such, incapable of pecuniary estimation. Petitioner
submitted that the RTC erred in applying Section 7 (a), Rule 141 of the Rules of Court, as
amended, to petitioner's first cause of action in its Complaint in Civil Case No. 2006-0030.
In its Order 21 dated 29 March 2006, the RTC refused to reconsider its 24 March
2006 Order, based on the following ratiocination:
Analyzing, the action herein pertains to real property, for as
admitted by the [herein petitioner], "the deeds of sale in question pertain to
real property" . . . . The Deeds of Sale subject of the instant case have
already been transferred in the name of the [herein respondents Tan and
Obiedo]. STIEHc
Compared with Quieting of Title, the latter action is brought when
there is cloud on the title to real property or any interest therein or to
prevent a cloud from being cast upon title to the real property (Art. 476,
Civil Code of the Philippines) and the plaintiff must have legal or
equitable title to or interest in the real property which is the subject matter
of the action (Art. 447, ibid.), and yet plaintiff in QUIETING OF TITLE is
required to pay the fees in accordance with paragraph (a) of Section 7 of
the said Amended Administrative Circular No. 35-2004, hence, with more
reason that the [petitioner] who no longer has title to the real properties
subject of the instant case must be required to pay the required fees in
accordance with Section 7(a) of the Amended Administrative Circular
No. 35-2004 afore-mentioned.
Furthermore, while [petitioner] claims that the action for
declaration of nullity of deed of sale and memorandum of agreement is one
incapable of pecuniary estimation, however, as argued by the [respondent
Tan], the issue as to how much filing and docket fees should be paid was
never raised as an issue in the case ofRussell vs. Vestil, 304 SCRA
738. aSITDC
xxx xxx xxx
WHEREFORE, the Motion for Partial Reconsideration is hereby
DENIED. 22
In a letter dated 19 April 2006, the RTC Clerk of Court computed, upon the
request of counsel for the petitioner, the additional docket fees petitioner must pay for in
Civil Case No. 2006-0030 as directed in the afore-mentioned RTC Orders. Per the
computation of the RTC Clerk of Court, after excluding the amount petitioner previously
paid on 16 March 2006, petitioner must still pay the amount of P720,392.60 as docket
fees. 23
Petitioner, however, had not yet conceded, and it filed a Petition for Certiorari with
the Court of Appeals; the petition was docketed as CA-G.R. SP No. 94800. According to
petitioner, the RTC 24 acted with grave abuse of discretion, amounting to lack or excess of
jurisdiction, when it issued its Orders dated 24 March 2006 and 29 March 2006 mandating
that the docket/filing fees for Civil Case No. 2006-0030, an action for annulment of deeds of
sale, be assessed under Section 7 (a), Rule 141 of the Rules of Court, as amended. If the
Orders would not be revoked, corrected, or rectified, petitioner would suffer grave injustice
and irreparable damage.
On 22 November 2006, the Court of Appeals promulgated its Decision wherein it held
that:
Clearly, the petitioner's complaint involves not only the annulment
of the deeds of sale, but also the recovery of the real properties identified in
the said documents. In other words, the objectives of the petitioner in filing
the complaint were to cancel the deeds of sale and ultimately, to recover
possession of the same. It is therefore a real action.
Consequently, the additional docket fees that must be paid
cannot be assessed in accordance with Section 7(b). As a real action,
Section 7(a) must be applied in the assessment and payment of the proper
docket fee. EIDTAa
Resultantly, there is no grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of the court a quo. By grave abuse
of discretion is meant capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, and mere abuse of discretion is not
enough — it must be grave. The abuse must be grave and patent, and it
must be shown that the discretion was exercised arbitrarily and
despotically.
Such a situation does not exist in this particular case. The
evidence is insufficient to prove that the court a quo acted despotically in
rendering the assailed orders. It acted properly and in accordance with law.
Hence, error cannot be attributed to it. 25
Hence, the fallo of the Decision of the appellate court reads:
WHEREFORE, the petition for certiorari is DENIED. The assailed
Orders of the court a quo are AFFIRMED. 26
 Without seeking reconsideration of the foregoing Decision with the Court of
Appeals, petitioner filed its Petition for Review on Certiorari before this Court, with a lone
assignment of error, to wit:
18. The herein petitioner most respectfully submits that the Court
of Appeals committed a grave and serious reversible error in affirming the
assailed Orders of the Regional Trial Court which are clearly contrary to
the pronouncement of this Honorable Court in the case of Spouses
De Leon v. Court of Appeals, G.R. No. 104796, March 6, 1998, not to
mention the fact that if the said judgment is allowed to stand and not
rectified, the same would result in grave injustice and irreparable damage
to herein petitioner in view of the prohibitive amount assessed as a
consequence of said Orders. 27 CcADHI
In Manchester Development Corporation v. Court of Appeals, 28 the Court
explicitly pronounced that "[t]he court acquires jurisdiction over any case only upon the
payment of the prescribed docket fee". Hence, the payment of docket fees is not only
mandatory, but also jurisdictional.
In Sun Insurance Office, Ltd. (SIOL) v. Asuncion, 29 the Court laid down
guidelines for the implementation of its previous pronouncement in Manchester under
particular circumstances, to wit:
1. It is not simply the filing of the complaint or appropriate
initiatory pleading, but the payment of the prescribed docket fee, that vests
a trial court with jurisdiction over the subject matter or nature of the action.
Where the filing of the initiatory pleading is not accompanied by payment of
the docket fee, the court may allow payment of the fee within a reasonable
time but in no case beyond the applicable prescriptive or reglementary
period.
2. The same rule applies to permissive counterclaims, third-party
claims and similar pleadings, which shall not be considered filed until and
unless the filing fee prescribed therefor is paid. The court may also allow
payment of said fee within a reasonable time but also in no case beyond its
applicable prescriptive or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by the
filing of the appropriate pleading and payment of the prescribed filing fee
but, subsequently, the judgment awards a claim not specified in the
pleading, or if specified the same has been left for determination by the
court, the additional filing fee therefor shall constitute a lien on the
judgment. It shall be the responsibility of the Clerk of Court or his duly
authorized deputy to enforce said lien and assess and collect the
additional fee. aIHCSA
In the Petition at bar, the RTC found, and the Court of Appeals affirmed, that
petitioner did not pay the correct amount of docket fees for Civil Case No. 2006-0030.
According to both the trial and appellate courts, petitioner should pay docket fees in
accordance with Section 7 (a), Rule 141 of the Rules of Court, as amended. Consistent
with the liberal tenor of Sun Insurance, the RTC, instead of dismissing outright petitioner's
Complaint in Civil Case No. 2006-0030, granted petitioner time to pay the additional docket
fees. Despite the seeming munificence of the RTC, petitioner refused to pay the additional
docket fees assessed against it, believing that it had already paid the correct amount
before, pursuant to Section 7 (b) (1), Rule 141 of the Rules of Court, as amended.
Relevant to the present controversy are the following provisions under Rule 141
of the Rules of Court, as amended by A.M. No. 04-2-04-SC 30 and Supreme Court
Amended Administrative Circular No. 35-2004: 31
SEC. 7. Clerks of Regional Trial Courts. —
(a) For filing an action or a permissive OR COMPULSORY
counterclaim, CROSS-CLAIM, or money claim against an estate not based
on judgment, or for filing a third-party, fourth-party, etc. complaint, or a
complaint-in-intervention, if the total sum claimed, INCLUSIVE OF
INTERESTS, PENALTIES, SURCHARGES, DAMAGES OF WHATEVER
KIND, AND ATTORNEY'S FEES, LITIGATION EXPENSES AND COSTS
and/or in cases involving property, the FAIR MARKET value of the REAL
property in litigation STATED IN THE CURRENT TAX DECLARATION OR
CURRENT ZONAL VALUATION OF THE BUREAU OF INTERNAL
REVENUE, WHICHEVER IS HIGHER, OR IF THERE IS NONE, THE
STATED VALUE OF THE PROPERTY IN LITIGATION OR THE VALUE
OF THE PERSONAL PROPERTY IN LITIGATION OR THE VALUE OF
THE PERSONAL PROPERTY IN LITIGATION AS ALLEGED BY THE
CLAIMANT, is: IHcSCA
[Table of fees omitted.]
If the action involves both a money claim and relief pertaining to
property, then THE fees will be charged on both the amounts claimed and
value of property based on the formula prescribed in this paragraph a.
(b) For filing:
1. Actions where the value of the subject matter cannot
be estimated
2. Special civil actions, except judicial foreclosure of
mortgage, EXPROPRIATION PROCEEDINGS, PARTITION
AND QUIETING OF TITLE which will *
3. All other actions not involving property
[Table of fees omitted.]
The docket fees under Section 7 (a), Rule 141, in cases involving real property
depend on the fair market value of the same: the higher the value of the real property, the
higher the docket fees due. In contrast, Section 7 (b) (1), Rule 141 imposes a fixed or flat
rate of docket fees on actions incapable of pecuniary estimation. HCDAcE
In order to resolve the issue of whether petitioner paid the correct amount of
docket fees, it is necessary to determine the true nature of its Complaint.
Thedictum adhered to in this jurisdiction is that the nature of an action is determined by the
allegations in the body of the pleading or Complaint itself, rather than by its title or
heading. 32 However, the Court finds it necessary, in ascertaining the true nature of Civil
Case No. 2006-0030, to take into account significant facts and circumstances beyond the
Complaint of petitioner, facts and circumstances which petitioner failed to state in its
Complaint but were disclosed in the preliminary proceedings before the court a quo.
Petitioner persistently avers that its Complaint in Civil Case No. 2006-0030 is
primarily for the annulment of the Deeds of Absolute Sale. Based on the allegations and
reliefs in the Complaint alone, one would get the impression that the titles to the subject
real properties still rest with petitioner; and that the interest of respondents Tan and Obiedo
in the same lies only in the Deeds of Absolute Sale sought to be annulled.
What petitioner failed to mention in its Complaint was that respondents Tan and
Obiedo already had the Memorandum of Agreement, which clearly provided for the
execution of the Deeds of Absolute Sale, registered on the TCTs over the five parcels of
land, then still in the name of petitioner. After respondents Tan and Obiedo had the Deeds
of Absolute Sale notarized on 3 January 2006 and presented the same to Register of
Deeds for Naga City on 8 March 2006, they were already issued TCTs over the real
properties in question, in their own names. Respondents Tan and Obiedo have also
acquired possession of the said properties, enabling them, by petitioner's own admission,
to demolish the improvements thereon.
It is, thus, suspect that petitioner kept mum about the afore-mentioned facts and
circumstances when they had already taken place before it filed its Complaint before the
RTC on 16 March 2006. Petitioner never expressed surprise when such facts and
circumstances were established before the RTC, nor moved to amend its Complaint
accordingly. Even though the Memorandum of Agreement was supposed to have long
been registered on its TCTs over the five parcels of land, petitioner did not pray for the
removal of the same as a cloud on its title. In the same vein, although petitioner alleged that
respondents Tan and Obiedo forcibly took physical possession of the subject real
properties, petitioner did not seek the restoration of such possession to itself. And despite
learning that respondents Tan and Obiedo already secured TCTs over the subject
properties in their names, petitioner did not ask for the cancellation of said titles. The only
logical and reasonable explanation is that petitioner is reluctant to bring to the attention of
the Court certain facts and circumstances, keeping its Complaint safely worded, so as to
institute only an action for annulment of Deeds of Absolute Sale. Petitioner deliberately
avoided raising issues on the title and possession of the real properties that may lead the
Court to classify its case as a real action.
No matter how fastidiously petitioner attempts to conceal them, the allegations
and reliefs it sought in its Complaint in Civil Case No. 2006-0030 appears to be ultimately a
real action, involving as they do the recovery by petitioner of its title to and possession of
the five parcels of land from respondents Tan and Obiedo. AcSEHT
A real action is one in which the plaintiff seeks the recovery of real property; or, as
indicated in what is now Section 1, Rule 4 of the Rules of Court, a real action is an action
affecting title to or recovery of possession of real property. 33
Section 7, Rule 141 of the Rules of Court, prior to its amendment by A.M. No.
04-2-04-SC, had a specific paragraph governing the assessment of the docket fees for real
action, to wit:
In a real action, the assessed value of the property, or if there is
none, the estimated value thereof shall be alleged by the claimant and
shall be the basis in computing the fees.
It was in accordance with the afore-quoted provision that the Court, in Gochan v.
Gochan, 34 held that although the caption of the complaint filed by therein respondents
Mercedes Gochan, et al. with the RTC was denominated as one for "specific performance
and damages", the relief sought was the conveyance or transfer of real property, or
ultimately, the execution of deeds of conveyance in their favor of the real properties
enumerated in the provisional memorandum of agreement. Under these circumstances,
the case before the RTC was actually a real action, affecting as it did title to or possession
of real property. Consequently, the basis for determining the correct docket fees shall be
the assessed value of the property, or the estimated value thereof as alleged in the
complaint. But sinceMercedes Gochan failed to allege in their complaint the value of the
real properties, the Court found that the RTC did not acquire jurisdiction over the same for
non-payment of the correct docket fees. EASIHa
Likewise, in Siapno v. Manalo, 35 the Court disregarded the title/denomination of
therein plaintiff Manalo's amended petition as one for Mandamus with Revocation of Title
and Damages; and adjudged the same to be a real action, the filing fees for which should
have been computed based on the assessed value of the subject property or, if there was
none, the estimated value thereof. The Court expounded in Siapno that:
In his amended petition, respondent Manalo prayed that NTA's
sale of the property in dispute to Standford East Realty Corporation and
the title issued to the latter on the basis thereof, be declared null and void.
In a very real sense, albeit the amended petition is styled as one
for "Mandamus with Revocation of Title and Damages", it is, at bottom, a
suit to recover from Standford the realty in question and to vest in
respondent the ownership and possession thereof. In short, the amended
petition is in reality an action in res or a real action. Our pronouncement
in Fortune Motors (Phils.), Inc. vs. Court of Appeals is instructive. There,
we said: ADcHES
A prayer for annulment or rescission of contract
does not operate to efface the true objectives and nature of
the action which is to recover real property. (Inton, et al., v.
Quintan, 81 Phil. 97, 1948)
An action for the annulment or rescission of a sale
of real property is a real action. Its prime objective is to
 recover said real property. (Gavieres v. Sanchez, 94 Phil. 760,
1954)
An action to annul a real estate mortgage foreclosure
sale is no different from an action to annul a private sale of real
property. (Muñoz v. Llamas, 87 Phil. 737, 1950).
While it is true that petitioner does not directly seek
the recovery of title or possession of the property in
question, his action for annulment of sale and his claim for
damages are closely intertwined with the issue of ownership
of the building which, under the law, is considered
immovable property, the recovery of which is petitioner's
primary objective. The prevalent doctrine is that an action
for the annulment or rescission of a sale of real property
does not operate to efface the fundamental and prime
objective and nature of the case, which is to recover said
real property. It is a real action.
Unfortunately, and evidently to evade payment of the correct
amount of filing fee, respondent Manalo never alleged in the body of his
amended petition, much less in the prayer portion thereof, the assessed
value of the subject res, or, if there is none, the estimated value thereof, to
serve as basis for the receiving clerk in computing and arriving at the
proper amount of filing fee due thereon, as required under Section 7 of this
Court's en banc resolution of 04 September 1990 (Re: Proposed
Amendments to Rule 141 on Legal Fees). aCTHEA
Even the amended petition, therefore, should have been
expunged from the records.
In fine, we rule and so hold that the trial court never acquired
jurisdiction over its Civil Case No. Q-95-24791. 36
It was in Serrano v. Delica, 37 however, that the Court dealt with a complaint that
bore the most similarity to the one at bar. Therein respondent Delica averred that undue
influence, coercion, and intimidation were exerted upon him by therein petitioners
Serrano, et al. to effect transfer of his properties. Thus, Delica filed a complaint before the
RTC against Serrano, et al., praying that the special power of attorney, the affidavit, the
new titles issued in the names of Serrano, et al., and the contracts of sale of the disputed
properties be cancelled; that Serrano, et al. be ordered to pay Delica, jointly and severally,
actual, moral and exemplary damages in the amount of P200,000.00, as well as attorney's
fee of P200,000.00 and costs of litigation; that a TRO and a writ of preliminary injunction be
issued ordering Serrano,et al. to immediately restore him to his possession of the parcels
of land in question; and that after trial, the writ of injunction be made permanent. The Court
dismissed Delica's complaint for the following reasons:
A careful examination of respondent's complaint is that it is a real
action. In Paderanga vs. Buissan, we held that "in a real action, the plaintiff
seeks the recovery of real property, or, as stated in Section 2(a), Rule 4 of
the Revised Rules of Court, a real action is one 'affecting title to real
property or for the recovery of possession of, or for partition or
condemnation of, or foreclosure of a mortgage on a real property.'"
Obviously, respondent's complaint is a real action involving not
only the recovery of real properties, but likewise the cancellation of the
titles thereto.
Considering that respondent's complaint is a real action, the Rule
requires that "the assessed value of the property, or if there is none, the
estimated value thereof shall be alleged by the claimant and shall be the
basis in computing the fees." ECSHAD
We note, however, that neither the "assessed value" nor the
"estimated value" of the questioned parcels of land were alleged by
respondent in both his original and amended complaint. What he stated in
his amended complaint is that the disputed realties have a "BIR zonal
valuation" of P1,200.00 per square meter. However, the alleged "BIR zonal
valuation" is not the kind of valuation required by the Rule. It is
the assessed value of the realty. Having utterly failed to comply with the
requirement of the Rule that he shall allege in his complaint the assessed
value of his real properties in controversy, the correct docket fee cannot be
computed. As such, his complaint should not have been accepted by the
trial court. We thus rule that it has not acquired jurisdiction over the present
case for failure of herein respondent to pay the required docket fee. On this
ground alone, respondent's complaint is vulnerable to dismissal. 38
Brushing aside the significance of Serrano, petitioner argues that said decision,
rendered by the Third Division of the Court, and not by the Court en banc,cannot modify or
reverse the doctrine laid down in Spouses De Leon v. Court of Appeals. 39 Petitioner relies
heavily on the declaration of this Court in Spouses De Leon that an action for annulment or
rescission of a contract of sale of real property is incapable of pecuniary estimation.
The Court, however, does not perceive a contradiction between Serrano and
the Spouses De Leon. The Court calls attention to the following statement inSpouses De
Leon: "A review of the jurisprudence of this Court indicates that in determining whether an
action is one the subject matter of which is not capable of pecuniary estimation, this Court
has adopted the criterion of first ascertaining the nature of the principal action or remedy
sought". Necessarily, the determination must be done on a case-to-case basis, depending
on the facts and circumstances of each. What petitioner conveniently ignores is that
in Spouses De Leon, the action therein that private respondents instituted before the RTC
was "solely for annulment or rescission" of the contract of sale over a real
property. 40 There appeared to be no transfer of title or possession to the adverse party.
Their complaint simply prayed for:
1. Ordering the nullification or rescission of the Contract of
Conditional Sale (Supplementary Agreement) for having violated the rights
of plaintiffs (private respondents) guaranteed to them under Article 886 of
 the Civil Code and/or violation of the terms and conditions of the said over the disputed real properties. Moreover, even though the Court exempts individuals, as
contract. ADHaTC indigent or pauper litigants, from paying docket fees, it has never extended such an
exemption to a corporate entity.
2. Declaring void ab initio the Deed of Absolute Sale for being
absolutely simulated; and WHEREFORE, premises considered, the instant Petition for Review is hereby
DENIED. The Decision, dated 22 November 2006, of the Court of Appeals in CA-G.R. SP
3. Ordering defendants (petitioners) to pay plaintiffs (private No. 94800, which affirmed the Orders dated 24 March 2006 and 29 March 2006 of the RTC,
respondents) attorney's fees in the amount of P100,000.00. 41 Branch 22, of Naga City, in Civil Case No. RTC-2006-0030, ordering petitioner Ruby
Shelter Builders and Realty Development Corporation to pay additional docket/filing fees,
As this Court has previously discussed herein, the nature of Civil Case No.
computed based on Section 7 (a), Rule 141 of the Rules of Court, as amended, is hereby
2006-0030 instituted by petitioner before the RTC is closer to that of Serrano, rather than
AFFIRMED. Costs against the petitioner. IcADSE
of Spouses De Leon, hence, calling for the application of the ruling of the Court in the
former, rather than in the latter. SO ORDERED.
It is also important to note that, with the amendments introduced by A.M. No. Ynares-Santiago, Austria-Martinez, Nachura and Peralta, JJ., concur.
04-2-04-SC, which became effective on 16 August 2004, the paragraph in Section 7, Rule
141 of the Rules of Court, pertaining specifically to the basis for computation of docket fees ||| (Ruby Shelter Builders and Realty Development Corporation v. Formaran III, G.R. No.
for real actions was deleted. Instead, Section 7 (1) of Rule 141, as amended, provides that 175914, [February 10, 2009], 598 PHIL 105-131)
"in cases involving real property, the FAIR MARKET value of the REAL property in
litigation STATED IN THE CURRENT TAX DECLARATION OR CURRENT ZONAL
VALUATION OF THE BUREAU OF INTERNAL REVENUE, WHICH IS HIGHER, OR IF
THERE IS NONE, THE STATED VALUE OF THE PROPERTY IN LITIGATION . . ." shall
be the basis for the computation of the docket fees. Would such an amendment have an
impact on Gochan, Siapno, and Serrano? The Court rules in the negative.
A real action indisputably involves real property. The docket fees for a real action
would still be determined in accordance with the value of the real property involved therein;
the only difference is in what constitutes the acceptable value. In computing the docket
fees for cases involving real properties, the courts, instead of relying on the assessed or
estimated value, would now be using the fair market value of the real properties (as
stated in the Tax Declaration or the Zonal Valuation of the Bureau of Internal Revenue,
whichever is higher) or, in the absence thereof, the stated value of the same.
In sum, the Court finds that the true nature of the action instituted by petitioner
against respondents is the recovery of title to and possession of real property. It is a real
action necessarily involving real property, the docket fees for which must be computed in
accordance with Section 7 (1), Rule 141 of the Rules of Court, as amended. The Court of
Appeals, therefore, did not commit any error in affirming the RTC Orders requiring
petitioner to pay additional docket fees for its Complaint in Civil Case No.
2006-0030. TAcSaC
The Court does not give much credence to the allegation of petitioner that if the
judgment of the Court of Appeals is allowed to stand and not rectified, it would result in
grave injustice and irreparable injury to petitioner in view of the prohibitive amount
assessed against it. It is a sweeping assertion which lacks evidentiary support. Undeniably,
before the Court can conclude that the amount of docket fees is indeed prohibitive for a
party, it would have to look into the financial capacity of said party. It baffles this Court that
herein petitioner, having the capacity to enter into multi-million transactions, now stalls at
paying P720,392.60 additional docket fees so it could champion before the courts its rights
 THIRD DIVISION
[G.R. No. 187104. August 3, 2010.]
SAINT LOUIS UNIVERSITY, INC., petitioner, vs. EVANGELINE C.
COBARRUBIAS, respondent.
DECISION
BRION, J p:
We resolve the present petition for review on certiorari 1 filed by petitioner Saint
Louis University, Inc. (SLU), to challenge the decision 2 and the resolution 3 of the Court of
Appeals (CA) in CA-G.R. SP No. 101708. 4 DaTISc
The Factual Background
The facts of the case, gathered from the records, are briefly summarized below.
Respondent Evangeline C. Cobarrubias is an associate professor of the
petitioner's College of Human Sciences. She is an active member of the Union of Faculty
and Employees of Saint Louis University (UFESLU).
The 2001-2006 5 and 2006-2011 6 Collective Bargaining
Agreements (CBAs) between SLU and UFESLU contain the following common provision
on forced leave:
Section 7.7. For teaching employees in college who fail the yearly
evaluation, the following provisions shall apply:
(a) Teaching employees who are retained for three (3) cumulative
years in five (5) years shall be on forced leave for one (1)
regular semester during which period all benefits due
them shall be suspended. 7
SLU placed Cobarrubias on forced leave for the first semester of School
Year (SY) 2007-2008 when she failed the evaluation for SY 2002-2003, SY 2005-2006,
and SY 2006-2007, with the rating of 85, 77, and 72.9 points, respectively, below the
required rating of 87 points.
To reverse the imposed forced leave, Cobarrubias sought recourse from the
CBA's grievance machinery. Despite the conferences held, the parties still failed to settle
their dispute, prompting Cobarrubias to file a case for illegal forced leave or illegal
suspension with the National Conciliation and Mediation Board of the Department of Labor
and Employment, Cordillera Administrative Region, Baguio City. When circulation and
mediation again failed, the parties submitted the issues between them for voluntary
arbitration before Voluntary Arbitrator (VA) Daniel T. Fariñas.
Cobarrubias argued that the CA already resolved the forced leave issue in a prior
case between the parties, CA-G.R. SP No. 90596, 8 ruling that the forced leave for
teachers who fail their evaluation for three (3) times within a five-year period should be
coterminous with the CBA in force during the same five-year period. 9
SLU, for its part, countered that the CA decision in CA-G.R. SP No. 90596 cannot
be considered in deciding the present case since it is presently on appeal with this Court
(G.R. No. 176717) 10 and, thus, is not yet final. It argued that the forced leave provision
applies irrespective of which CBA is applicable, provided the employee fails her evaluation
three (3) times in five (5) years. 11
The Voluntary Arbitrator Decision
On October 26, 2007, VA Daniel T. Fariñas dismissed the case. 12 He found that
the CA decision in CA-G.R. SP No. 90596 is not yet final because of the pending appeal
with this Court. He noted that the CBA clearly authorized SLU to place its teaching
employees on forced leave when they fail in the evaluation for three (3) years within a
five-year period, without a distinction on whether the three years fall within one or two CBA
periods. Cobarrubias received the VA' s decision on November 20, 2007. 13
On December 5, 2007, Cobarrubias filed with the CA a petition for review under
Rule 43 of the Rules of Court, but failed to pay the required filing fees and to attach to the
petition copies of the material portions of the record. 14
Thus, on January 14, 2008, the CA dismissed the petition outright for
Cobarrubias' procedural lapses. 15 Cobarrubias received the CA resolution, dismissing
her petition, on January 31, 2008. 16
On February 15, 2008, Cobarrubias filed her motion for reconsideration, arguing
that the ground cited is technical. She, nonetheless, attached to her motion copies of the
material portions of the record and the postal money orders for P4,230.00. She maintained
that the ends of justice and fair play are better served if the case is decided on its merits. 17
On July 30, 2008, the CA reinstated the petition. It found that Cobarrubias
substantially complied with the rules by paying the appeal fee in full and attaching the
proper documents in her motion for reconsideration. 18
SLU insisted that the VA decision had already attained finality for Cobarrubias'
failure to pay the docket fees on time.
The CA Decision
The CA brushed aside SLU's insistence on the finality of the VA decision and
annulled it, declaring that the "three (3) cumulative years in five (5) years" phrase in
Section 7.7 (a) of the 2006-2011 CBA means within the five-year effectivity of the CBA.
Thus, the CA ordered SLU to pay all the benefits due Cobarrubias for the first semester of
SY 2007-2008, when she was placed on forced leave. 19
 When the CA denied 20 the motion for reconsideration that followed, 21 SLU filed
the present petition for review on certiorari. 22
The Petition
SLU argues that the CA should not have reinstated the appeal since Cobarrubias
failed to pay the docket fees within the prescribed period, and rendered the VA decision
final and executory. Even if Cobarrubias' procedural lapse is disregarded, SLU submits
that Section 7.7 (a) of the 2006-2011 CBA should apply irrespective of the five-year
effectivity of each CBA. 23
The Case for Cobarrubias
Cobarrubias insists that the CA settled the appeal fee issue, in its July 30, 2008
resolution, when it found that she had substantially complied with the rules by subsequently
paying the docket fees in full. She submits that the CA's interpretation of Section 7.7 (a) of the
2006-2011 CBA is more in accord with law and jurisprudence. 24
The Issues
The core issues boil down to whether the CA erred in reinstating Cobarrubias'
petition despite her failure to pay the appeal fee within the reglementary period, and in
reversing the VA decision. To state the obvious, the appeal fee is a threshold issue that
renders all other issues unnecessary if SLU's position on this issue is correct.
The Court's Ruling
We find the petition meritorious.
Payment of Appellate Court Docket Fees
Appeal is not a natural right but a mere statutory privilege, thus, appeal must be
made strictly in accordance with the provision set by law. 25 Rule 43 of theRules of
Court provides that appeals from the judgment of the VA shall be taken to the CA, by filing
a petition for review within fifteen (15) days from the receipt of the notice of
judgment. 26 Furthermore, upon the filing of the petition, the petitioner shall pay to the CA
clerk of court the docketing and other lawful fees; 27 non-compliance with the procedural
requirements shall be a sufficient ground for the petition's dismissal. 28 Thus, payment in
full of docket fees within the prescribed period is not only mandatory, but also
jurisdictional. 29 It is an essential requirement, without which, the decision appealed from
would become final and executory as if no appeal has been filed. 30 DCScaT
As early as the 1932 case of Lazaro v. Endencia and Andres, 31 we stressed that
the payment of the full amount of the docket fee is an indispensable step for the perfection
of an appeal. In Lee v. Republic, 32 we decided that even though half of the appellate court
docket fee was deposited, no appeal was deemed perfected where the other half was
tendered after the period within which payment should have been made. In Aranas v.
Endona, 33 we reiterated that the appeal is not perfected if only a part of the docket fee is
deposited within the reglementary period and the remainder is tendered after the expiration
of the period.
The rulings in these cases have been consistently reiterated in subsequent
cases: Guevarra v. Court of Appeals, 34 Pedrosa v. Spouses Hill, 35 Gegare v. Court of
Appeals, 36 Lazaro v. Court of Appeals, 37 Sps. Manalili v. Sps. de Leon, 38 La Salette
College v. Pilotin, 39 Saint Louis University v. Spouses Cordero, 40 M.A. Santander
Construction, Inc. v. Villanueva, 41 Far Corporation v. Magdaluyo, 42 Meatmasters Int'l.
Corp. v. Lelis Integrated Dev't. Corp., 43 Tamayo v. Tamayo, Jr., 44 Enriquez v.
Enriquez, 45 KLT Fruits, Inc. v. WSR Fruits, Inc., 46 Tan v. Link, 47 Ilusorio v.
Ilusorio-Yap, 48 and most recently in Tabigue v. International Copra Export Corporation
(INTERCO), 49 and continues to be the controlling doctrine.
In the present case, Cobarrubias filed her petition for review on December 5,
2007, fifteen (15) days from receipt of the VA decision on November 20, 2007, but paid her
docket fees in full only after seventy-two (72) days, when she filed her motion for
reconsideration on February 15, 2008 and attached the postal money orders for P4,230.00.
Undeniably, the docket fees were paid late, and without payment of the full docket fees,
Cobarrubias' appeal was not perfected within the reglementary period.
Exceptions to the Rule on Payment of
Appellate Court Docket Fees not applicable
Procedural rules do not exist for the convenience of the litigants; the rules were
established primarily to provide order to and enhance the efficiency of our judicial
system. 50 While procedural rules are liberally construed, the provisions on reglementary
periods are strictly applied, indispensable as they are to the prevention of needless delays,
and are necessary to the orderly and speedy discharge of judicial business. 51
Viewed in this light, procedural rules are not to be belittled or dismissed simply
because their non-observance may have prejudiced a party's substantive rights; like all
rules, they are required to be followed. However, there are recognized exceptions to their
strict observance, such as: (1) most persuasive and weighty reasons; (2) to relieve a
litigant from an injustice not commensurate with his failure to comply with the prescribed
procedure; (3) good faith of the defaulting party by immediately paying within a reasonable
time from the time of the default; (4) the existence of special or compelling circumstances;
(5) the merits of the case; (6) a cause not entirely attributable to the fault or negligence of
the party favored by the suspension of the rules; (7) a lack of any showing that the review
sought is merely frivolous and dilatory; (8) the other party will not be unjustly prejudiced
thereby; (9) fraud, accident, mistake or excusable negligence without the appellant's fault;
(10) peculiar, legal and equitable circumstances attendant to each case; (11) in the name
of substantial justice and fair play; (12) importance of the issues involved; and (13)
exercise of sound discretion by the judge, guided by all the attendant
circumstances. 52 Thus, there should be an effort, on the part of the party invoking
liberality, to advance a reasonable or meritorious explanation for his/her failure to comply
with the rules.
In Cobarrubias' case, no such explanation has been advanced. Other than
insisting that the ends of justice and fair play are better served if the case is decided on its
merits, Cobarrubias offered no excuse for her failure to pay the docket fees in full when she
filed her petition for review. To us, Cobarrubias' omission is fatal to her cause.
 We, thus, find that the CA erred in reinstating Cobarrubias' petition for review
despite the nonpayment of the requisite docket fees within the reglementary period. The
VA decision had lapsed to finality when the docket fees were paid; hence, the CA had no
jurisdiction to entertain the appeal except to order its dismissal.
WHEREFORE, the present petition is GRANTED. The assailed decision and
resolution of the Court of Appeals in CA-G.R. SP No. 101708 are hereby DECLARED
VOID and are consequently SET ASIDE. The decision of the voluntary arbitrator, that the
voided Court of Appeals decision and resolution nullified, stands. No pronouncement as to
costs.
SO ORDERED.

Carpio Morales, Bersamin, Abad * and Villarama, Jr., JJ., concur.

||| (Saint Louis University, Inc. v. Cobarrubias, G.R. No. 187104, [August 3, 2010], 640 PHIL
682-693)
 SECOND DIVISION
[G.R. No. 177425. June 18, 2014.]
ALONZO GIPA, IMELDA MAROLLANO, JUANITO LUDOVICE,
VIRGILIO GOJIT, DEMAR BITANGCOR, FELIPE MONTALBAN AND
DAISY M.
PLACER, 1petitioners, vs. SOUTHERN LUZON INSTITUTE as
represented by its Vice-President for Operations and Corporate
Secretary, RUBEN G. ASUNCION,respondent.
DECISION
DEL CASTILLO, J p:
Suffice it to say that "[c]oncomitant to the liberal interpretation of the rules of procedure
should be an effort on the part of the party invoking liberality to adequately explain his failure to
abide by the rules." 2 Those who seek exemption from the application of the rule have the
burden of proving the existence of exceptionally meritorious reasons warranting such
departure. 3
Assailed in this Petition for Review on Certiorari is the December 20, 2006
Resolution 4 of the Court of Appeals (CA) in CA-G.R. CV No. 85215 which dismissed for
non-perfection herein petitioners' appeal from the January 5, 2005 Decision 5 of the Regional
Trial Court (RTC), Branch 65, Sorsogon City in Civil Case No. 547-37. Likewise questioned is
the CA Resolution 6 dated March 30, 2007 which denied the Motion for Reconsideration
thereto.
Factual Antecedents
On February 26, 1996, respondent Southern Luzon Institute (SLI), an educational
institution in Bulan, Sorsogon, filed a Complaint 7 for Recovery of Ownership and Possession
with Damages against petitioners Alonzo Gipa, Imelda Marollano, Juanito Ludovice, Demar
Bitangcor, Virgilio Gojit, Felipe Montalban and four others namely, Arturo Rogacion, Virgilio
Gracela, Rosemarie Alvarez and Rosita Montalban (Rosita). During trial, defendant Rosita
executed a Special Power of Attorney 8 in favor of her sister Daisy M. Placer (Placer)
authorizing the latter to represent her in the case and to sign any and all papers in relation
thereto.
SLI alleged that it is the absolute owner of a 7,516-square meter parcel of land
situated in Brgy. Poblacion, Bulan, Sorsogon covered by Original Certificate of Title (OCT) No.
P-28928. However, petitioners and their co-defendants who had been informally occupying a
portion of the said property refused to vacate the same despite demand. Hence, SLI sought that
they be ordered to immediately vacate the premises, turn over the same to SLI, and pay
compensatory damages, attorney's fees and cost of suit. ETAICc
In their Answer with Counterclaim, 9 petitioners and their co-defendants asserted that
they did not heed SLI's demand to vacate as they believed that they have the right to stay on the
said property. They relied on their occupation thereof and that of their predecessors-in-interest
which, according to them, dates back to as early as 1950. Impugning SLI's claims, petitioners
and their co-defendants averred that SLI had not even for a single moment taken possession of
the subject property and was merely able to procure a title over the same thru fraud, bad faith
and misrepresentation. By way of counterclaim, they prayed that they be declared the lawful
possessors of the property; that OCT No. P-28928 be declared null and void; and, that SLI be
ordered to pay them moral damages and litigation expenses.
Ruling of the Regional Trial Court
Finding SLI to have proven its ownership of the property by preponderance of
evidence, the RTC rendered a Decision 10 in its favor on January 5, 2005. The said court gave
weight to SLI's documentary evidence showing the grant of its Miscellaneous Sales Application
(MSA) over the subject property which became the basis for the issuance of title under its name,
and the testimony of the Supervising Draftsman of the National Housing Authority (NHA) who
categorically stated that the houses occupied by petitioners and their co-defendants were within
the property of SLI per NHA's survey. It rejected, on the other hand, petitioners and their
co-defendants' claim of title to the property. For one, the fact that SLI had an existing MSA over
the property as far back as 1969 could not have been unknown to them. This is because several
of the petitioners and their co-defendants filed Revocable Permit Applications over the same
property which were denied on March 4, 1964, precisely because the areas applied for were
already included in SLI's MSA. For another, the documentary evidence submitted by them
consisted mostly of tax declarations and other documents which were self-serving and could
not be considered as conclusive evidence of ownership. Hence, the RTC ruled:
WHEREFORE, premises considered, judgment is hereby
rendered —
a) Declaring plaintiff-SLI as absolute owner of that portion of Lot
4705 containing an area of SEVEN THOUSAND FIVE
HUNDRED SIXTEEN (7,516) SQUARE METERS
covered by "Katibayan ng Orihinal na Titulo Blg.
P-28928".
b) Ordering herein defendants to vacate and relinquish the
portions of lot 4705 belonging to the SLI that they are
presently occupying illegally and to demolish the
residential houses existing thereon at their own
expense.
c) To pay attorney's fee in the amount of Php10,000.00 jointly.
d) And to pay the costs.
SO ORDERED. 11
 Petitioners and their co-defendants filed a Notice of Appeal 12 which was granted by
the RTC in its Order 13 of January 27, 2005.
Ruling of the Court of Appeals
The CA, however, dismissed the appeal in its Resolution 14 of August 26, 2005 since
it was not shown that the appellate court docket fees and other lawful fees were
paid. 15 Petitioners and their co-defendants promptly filed a Motion for Reconsideration 16 to
which they attached a Certification 17 from the RTC that they paid the appeal fee in the amount
of P3,000.00 under Official Receipt No. 18091130 dated January 25, 2005. In view of this, the
CA granted the said motion and consequently reinstated the appeal through a
Resolution 18 dated November 2, 2005. HAEDCT
Subsequently, however, the CA further required petitioners and their co-defendants,
through a Minute Resolution 19 dated March 1, 2006, to remit within ten days from notice the
amount of P30.00 for legal research fund, which apparently was not included in the P3,000.00
appeal fee previously paid by them. Copy of the said resolution was received on March 13,
2006 by petitioners' counsel, Atty. Jose G. Gojar of the Public Attorney's Office. 20
Despite the lapse of nine months from their counsel's receipt of the said resolution,
petitioners and their co-defendants, however, failed to comply with the CA's directive. Hence,
the said court dismissed the appeal through its Resolution 21 of December 20, 2006 in this
wise:
Jurisprudence is replete that the nonpayment of the docket and
other lawful fees within the reglementary period as provided under Section
4 of Rule 41 of the Revised Rules of [C]ourt is a ground for the dismissal of
an appeal, as provided for under Section 1(c)[,] Rule 50 of the same Rule.
We quote:
SECTION 1. Grounds for dismissal of appeal. — An
appeal may be dismissed by the Court of Appeals, on its
own motion or on that of the appellee, on the following grounds:
xxx xxx xxx
c. Failure of the appellant to pay the docket and
other lawful fees as provided in Section 4 of Rule 41; . . .
xxx xxx xxx
In the instant case, appellants were given sufficient time to
complete the payment of the appeal fees. Unfortunately, appellants still
failed to comply with the said directive [despite the fact] that the amount of
P30.00 involved is very little. Hence, appellants failed to perfect their
appeal for failure to fully pay the appeal fees. They are deemed to have
lost interest over the instant appeal.
xxx xxx xxx
WHEREFORE, premises considered, the instant Appeal is
hereby DISMISSED.
SO ORDERED. 22
Petitioners and their co-defendants filed a Motion for Reconsideration 23 invoking the
principle of liberality in the application of technical rules considering that they have paid the
substantial amount of P3,000.00 for docket and other legal fees and fell short only by the
meager amount of P30.00. As compliance, they attached to the said motion a postal money
order in the sum of P30.00 payable to the Clerk of Court of the CA. 24
The CA, however, was not swayed, hence, the denial of the Motion for
Reconsideration in its Resolution 25 of March 30, 2007.
Issue
Petitioners and Placer now file this Petition for Review on Certiorari raising the lone
issue of:
WHETHER THE COURT OF APPEALS GRAVELY ERRED IN
DISMISSING THE APPEAL FILED BY THE PETITIONERS FOR
FAILURE TO REMIT THE MEAGER AMOUNT OF THIRTY PESOS
(P30.00) AFTER HAVING ADVANCED A SUBSTANTIAL PORTION OF
THE DOCKET FEES. 26
It must, however, be noted at the outset that the caption of the present Petition
includes Placer as one of the petitioners. In fact, the other petitioners even authorized her to
sign the verification and certification of non-forum shopping in their behalf. 27 A review of the
records, however, shows that she was not one of the defendants before the RTC. Her only
participation therein was that she represented her sister Rosita as one of the defendants by
virtue of a Special Power of Attorney which the latter executed in her favor. 28 Notably in the
present Petition, Placer appears to have been impleaded in her personal capacity and not as
Rosita's representative. This cannot be done. It bears emphasizing that an appeal on certiorari,
as in this case, is a continuation of the original suit. 29 Hence, the parties in the original suit
must also be the parties in such an appeal. 30 Placer, therefore, not being a party in the
complaint before the RTC has no personality to continue the same on appeal and cannot be
considered as a petitioner. At the most, her only role in this Petition was to sign the verification
and certification of non-forum shopping for and in behalf of petitioners. ESTCDA
The Parties' Arguments
Initially, petitioners invoke the liberal application of technical rules 31 and contend that
the fact that only the amount of P30.00 was not paid justifies relaxation of the same. Later in
their Reply, 32 however, petitioners concede that the payment of docket fees is not a mere
technicality. Nevertheless, they point out that while full payment of docket fees is indispensable
in the perfection of an appeal, the same admits of exceptions. 33 Their case falls under one of
the exceptions, that is, in the name of substantial justice and fair play. According to petitioners,
the dismissal of their appeal for failure to pay P30.00 runs counter to substantial justice and fair
play as the same would deprive them of their right to justice and render ineffective the amount
of P3,000.00, which despite being indigents, they undertook to pay. To support their case,
petitioners cited Andrea Camposagrado v. Pablo Camposagrado 34 and Spouses Gutierrez v.
Spouses Valiente 35 wherein the Court excused the insufficient payment of docket fees.
Moreover, petitioners raise in the said Reply, albeit for the first time, the argument that
while Republic Act (RA) No. 9406 36 was still inexistent at the time their appeal was filed before
the CA, Section 6 37 thereof which exempts PAO clients like themselves from the payment of
docket and other fees should be given retroactive application.
For its part, SLI argues that since petitioners' appeal was not perfected due to
insufficient payment of docket and other legal fees, the January 5, 2005 Decision of the RTC
had already become final and executory. Further, the CA correctly dismissed petitioners' appeal
because aside from the fact that petitioners failed to comply with the CA's directive to pay the
lacking amount of P30.00 for a period of more than nine months from their counsel's receipt of
notice, no plausible explanation was tendered by them for such failure.
Our Ruling
The Petition fails.
Payment of the full amount of appellate
court docket and lawful fees is
mandatory and jurisdictional;
Relaxation of the rule on payment of
appeal fee is unwarranted in this case.
Section 4, Rule 41 of the Rules of Court provides:
Sec. 4. Appellate court docket and other lawful fees. — Within
the period for taking an appeal, the appellant shall pay to the clerk of
court which rendered the judgment or final order appealed from, the full
amount of the appellate court docket and other lawful fees. Proof of
payment of said fees shall be transmitted to the appellate court together
with the original record or the record on appeal. (Emphases supplied)
In Gonzales v. Pe, 38 the Court's explanation anent the requirement of full payment
of docket and other lawful fees under the above-quoted provision was iterated, viz.:
In Far Corporation v. Magdaluyo, as with other subsequent cases
of the same ruling, the Court explained that 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 paying 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. 39 aITDAE
Here, petitioners concede that payment of the full amount of docket fees within the
prescribed period is not a mere technicality of law or procedure but a jurisdictional requirement.
Nevertheless, they want this Court to relax the application of the rule on the payment of the
appeal fee in the name of substantial justice and equity.
The Court is not persuaded.
The liberality which petitioners pray for has already been granted to them by the CA at
the outset. It may be recalled that while petitioners paid a substantial part of the docket fees,
they still failed to pay the full amount thereof since their payment was short of P30.00. Based
on the premise that the questioned Decision of the RTC has already become final and
executory due to non-perfection, the CA could have dismissed the appeal outright. But owing to
the fact that only the meager amount of P30.00 was lacking and considering that the CA may
opt not to proceed with the case until the docket fees are paid, 40 it still required petitioners,
even if it was already beyond the reglementary period, to complete their payment of the appeal
fee within 10 days from notice. Clearly, the CA acted conformably with the pronouncement
made in Camposagrado, a case cited by petitioners, that "[a] party's failure to pay the appellate
docket fee within the reglementary period confers only a discretionary and not a mandatory
power to dismiss the proposed appeal. Such discretionary power should be used in the
exercise of the court's sound judgment in accordance with the tenets of justice and fair play with
great deal of circumspection, considering all attendant circumstances and must be exercised
wisely and prudently, never capriciously, with a view to substantial justice." 41
The CA's leniency over petitioners' cause did not end there. Although they were given
only 10 days to remit the P30.00 deficiency, the said court allowed an even longer period of nine
months to lapse, apparently in the hope that petitioners' compliance would be on its way. But as
no payment was remitted, it was constrained to finally dismiss the appeal for non-perfection.
Surprisingly, petitioners were again heard of when they filed a Motion for Reconsideration to
which they attached a postal money order of P30.00. Nevertheless, they did not offer any
plausible explanation either as to why they, at the start, failed to pay the correct docket fees or
why they failed to comply with the CA's directive for them to remit the P30.00-deficiency.
Instead, they focused on begging the CA for leniency, arguing that the meager amount of the
deficiency involved justifies relaxation of the rules. What is worse is that even if the CA already
took note of the lack of such explanation in its Resolution denying petitioners' motion for
reconsideration, petitioners, up to now, have not attempted to tender one in this Petition and
instead continue to capitalize on substantial justice, fair play and equity to secure a reversal of
the dismissal of their appeal. The Court cannot, therefore, help but conclude that there is really the Court sees no need to belabor the issue of the retroactive application of Section 6 of RA
no plausible reason behind the said omission. 9406.

Suffice it to say that "[c]oncomitant to the liberal interpretation of the rules of procedure All told, the Court finds the CA's dismissal of the appeal interposed by petitioners in
should be an effort on the part of the party invoking liberality to adequately explain his failure to order.
abide by the rules." 42 Those who seek exemption from the application of the rule have the
burden of proving the existence of exceptionally meritorious reason warranting such WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed
departure. 43 Petitioners' failure to advance any explanation as to why they failed to pay the Resolutions dated December 20, 2006 and March 30, 2007 of the Court of Appeals in CA-G.R.
correct docket fees or to complete payment of the same within the period allowed by the CA is CV No. 85215 are AFFIRMED.
thus fatal to their cause. Hence, a departure from the rule on the payment of the appeal fee is SO ORDERED.
unwarranted.
||| (Gipa v. Southern Luzon Institute, G.R. No. 177425, [June 18, 2014], 736 PHIL 515-531)
Neither do the cases cited by petitioners help because they are not in point. Unlike in
this case, the CA in Camposagrado no longer required the petitioners therein to complete the
payment of the appeal fee by remitting the P5.00 deficiency but just dismissed the appeal
outright. Moreover, a justifiable reason for the insufficient payment was tendered by petitioners
in the said case, i.e., that they relied on the assessment made by the collection officer of the
court and honestly believed that the amount collected from them was that which is mandated by
the Rules.

The same thing goes true with Gutierrez. In fact, the pronouncement made in Sun
Insurance Office, Ltd. v. Asuncion, 44 as cited in Gutierrez, even militates against petitioners.
It was reiterated therein that the rule that "a court acquires jurisdiction over any case only upon
payment of the prescribed docket fees does not apply where the party does not deliberately
intend to defraud the court in payment of docket fees, and manifests its willingness to abide by
the rules by paying additional docket fees when required by the court." 45 As may be
recalled, petitioners in this case did not immediately remit the deficient amount of P30.00 when
required by the CA and only did so after the lapse of more than nine months when their appeal
was already dismissed. SaAcHE

The Court need not belabor the issue of

the retroactive application of Section 6
of RA 9406.
"The purpose of a reply is to deny or allege facts in denial of new matters alleged by
way of defense in the answer," 46 or in this case, in the comment to the petition. "It is not the
office or function of a reply to set up or introduce a new [issue] or to amend or amplify the
[Petition]." 47 The issue of whether Section 6 of RA 9406should be given retroactive application
in order to exempt petitioners from payment of docket fees was therefore improperly introduced
in petitioners' Reply. Moreover, "[t]he rule in pleadings and practice is that no new issue in a
case can be raised in a pleading which by due diligence could have been raised in previous
pleadings." 48 Here, petitioners at the outset could have very well raised the said issue in the
Petition since at the time of its filing on June 7, 2007, RA 9406 was already in
effect. 49 However, they failed to do so. Besides, for this Court to take cognizance of the same
is to offend the basic rules of fair play, justice and due process since SLI had no chance to
propound its argument in connection thereto. This is because even if it wanted to, SLI could not
anymore do so in its Memorandum as no new issues or arguments may be raised in the said
pleading, it being only the summation of the parties' previous pleadings. 50 For these reasons,
 THIRD DIVISION
[G.R. No. 193034. July 20, 2015.]
RODGING REYES, petitioner, vs. PEOPLE OF THE PHILIPPINES and
SALUD M. GEGATO, respondents.
DECISION
PERALTA, J p:
For this Court's resolution is the Petition for Review on Certiorari under Rule 45 of
the Rules of Court, dated August 17, 2010, of petitioner Rodging Reyesassailing the
Resolution 1 dated November 23, 2009 of the Court of Appeals in CA-G.R. CR No.
00421-MIN.
The facts are the following:
Petitioner, in a complaint filed by private respondent Salud M. Gegato, was
charged with Grave Threats before the Municipal Circuit Trial Court (MCTC) of Bayugan
and Sibagat, Bayugan, Agusan del Sur, which reads as follows:
That on or about the 16th day of October 2001, at about 5:10
o'clock in the afternoon, more or less, in the premises and vicinity,
particularly at Avon Store, situated at Atis Street, Poblacion, in the
municipality of Bayugan, province of Agusan del Sur, Philippines, and
within the jurisdiction of this Honorable Court, the above-named
Accused, with deliberate intent, moved by personal resentment and
hatred, did then and there willfully, unlawfully and feloniously threatened
the life of Mrs. Salud Gegato, speak and utter by telephone the following
threatening words, to wit; "SALUD, UNDANGA ANG IMONG PAGSIGI
UG TSISMIS SA AKONG ASAWA, KAY MAULAWAN ANG AKONG
ASAWA. WARNINGAN TAKA AYAW PANG HILABOT SA AMONG
KINABUHI KAY BASIN PATYON TAKA," meaning (Salud, stop your
rumor against my wife because she will be embarrassed. I'm warning
you, don't mind our lives for I might kill you), which acts cast fear and
danger upon the life of the victim Salud Gegato, to the damage and
prejudice consisting of actual, moral and compensatory damages.
CONTRARY TO LAW.
Bayugan, Agusan del Sur, Philippines, October 23, 2001. 2
Before arraignment, petitioner filed a Motion to Quash based on the ground of
jurisdiction and that the crime is not Grave Threats under Article 282 of theRevised Penal
Code, but Other Light Threats under Article 285, paragraph 2 of the same Code. IAETDc
The MCTC, in its Order dated June 3, 2002, denied the motion. Petitioner's
motion for reconsideration was also denied by the same court in an Order dated July 25,
2002.
On September 13, 2002, petitioner filed a Motion to Inhibit the presiding judge on
the ground that private respondent is the Court Interpreter of the same court, but it was
denied in the court's Order dated September 16, 2002 based on the Order of this Court
dated July 3, 2002 regarding the same motion for inhibition of the same presiding judge
filed earlier by the petitioner with this Court. Based on that Order of this Court, the basis of
the inhibition does not fall within the absolute disqualification rule under Section 1, Rule
137 of the Rules of Court,and neither does it appear to be a just or valid reason under
paragraph 2 thereof. This Court also ordered the presiding judge to set aside the Order of
Inhibition and directed the same presiding judge to hear and decide the case with dispatch
applying the Rules on Summary Procedure. 3
The MCTC, in a Decision 4 dated August 10, 2005, found petitioner guilty beyond
reasonable doubt of the crime charged. The dispositive portion of the Decision reads:
In view of the foregoing, this Court finds the Accused GUILTY
beyond reasonable doubt of the crime of GRAVE THREATS under
Paragraph 1 (2) imposing condition, without the offender attaining his
purpose, and is hereby sentenced to suffer imprisonment, considering
one (1) mitigating circumstance, the medium period of arresto mayor or
a period of two (2) months and one (1) day to four (4) months.
In addition, he is ordered to pay Private Complainant [the]
following civil liabilities.
a. The amount of ONE HUNDRED THOUSAND (P100,000.00)
Pesos as moral damages.
b. the amount of TWENTY THOUSAND (P20,000.00) Pesos
for litigation expenses and for Attorney's Fees as it is clear from the trials
that complainant was assisted by a Private Prosecutor for a fee.
SO ORDERED.
On appeal, the Regional Trial Court, in its Decision 5 dated April 2, 2007, denied
petitioner's appeal but found petitioner guilty beyond reasonable doubt of the crime of
Other Light Threats under Article 285, par. 2 of the Revised Penal Code, instead of Grave
Threats as originally adjudged by the MCTC. The RTC ruled that:
WHEREFORE, accused is hereby sentenced to suffer
imprisonment of 10 days of arresto menor and the moral damages of
P100,000.00 be reduced to P50,000.00, attorney's fee of P20,000.00
stands.
The original decision is hereby modified.
 If accused does not file an appeal within the reglementary
period, let the entire records be returned back to the Court of origin for
proper disposition thereat. 6
Petitioner filed a Motion for Reconsideration, and in its Amended
Decision 7 dated May 16, 2007, the RTC denied the motion and modified its original
decision reducing the amount of moral damages to P10,000.00 and the attorney's fees to
P10,000.00.
Thus, petitioner filed with the Court of Appeals a Motion for Extension of Time to
File a Petition for Review. However, instead of filing a petition for review within the 15-day
period allowed by the CA, petitioner filed a second Motion for Extension of Time asking for
another 15 days within which to file his petition for review. Afterwhich, petitioner filed his
petition.
Thereafter, the CA, in its Resolution 8 dated August 2, 2007, dismissed the
petition. The Resolution partly reads, as follows:
Petitioner's first Motion for Extension of Time to File Petition for
Review asking for fifteen (15) days from June 6, 2007 or until June 21,
2007 is DENIED for failure to pay the full amount of the docket fees
pursuant to Sec. 1, Rule 42 of the Rules of Court. His second motion for
extension is likewise DENIED as no further extension may be granted
except for most compelling reason.
The petition subsequently filed is, however, NOTED but
DISMISSED on the following grounds:
1. Filed beyond the reglementary period;
2. Failure of petitioner to pay complete
docket fees as prescribed by law. It is deficient by
P3,530.00;
3. Failure of petitioner to indicate a complete
statement of material dates as required under the
Rules. Petitioner did not mention in the body of the
petition when he received the RTC's Order dated May
16, 2007 denying his Motion for Reconsideration;
4. Failure of petitioner to attach pertinent
documents material in the petition. No copy of the
May 16, 2007 Order denying his Motion for
Reconsideration was attached to the petition.
On August 14, 2007, petitioner filed a Motion for Reconsideration, but it was
denied by the CA in its Resolution dated October 17, 2008 for failure of the petitioner to
furnish copies to the Solicitor General and the private respondent. DcHSEa
Thus, petitioner filed a Second Motion for Reconsideration. The CA, in its
Resolution dated November 23, 2009, denied the said motion, the dispositive portion of
which, reads:
ACCORDINGLY, the Court RESOLVES to:
1. DISPENSE with the Offices of the Solicitor
General's comment on the petitioner's second Motion
for Reconsideration dated 13 November 2008;
2. GRANT the petitioner's second Motion for
Reconsideration dated 13 November 2008, and
RECONSIDER and SET ASIDE the Court's 17
October 2008 Resolution dismissing the petitioner's
first Motion for Reconsideration dated 13 August 2007;
and
3. DENY the petitioner's first Motion for
Reconsideration dated 13 August 2007; and
4. DISMISS with finality the instant petition
for review.
SO ORDERED. 9
On December 28, 2009, petitioner filed a third Motion for Reconsideration, but
was resolved by the CA on June 24, 2010, as follows:
The Court RESOLVES to merely NOTE WITHOUT ACTION
the petitioner's third Motion for Reconsideration, in view of Our 23
November 2009 Resolution dismissing this petition with finality. 10
Hence, the present petition.
Petitioner insists that the CA erred in favoring procedural technicalities over his
constitutional right to due process.
It must be remembered that petitioner filed three (3) successive Motions for
Reconsideration before the CA on August 14, 2007, November 13, 2008, and December
28, 2009.
In its Resolution dated November 23, 2009, the CA granted the petitioner's
second Motion for Reconsideration setting aside its previous Resolution dated October 17,
2008 and dismissing the first Motion for Reconsideration dated August 13, 2007. The CA,
in the same Resolution, discussed the other grounds for the dismissal of the petition as
contained in its first Resolution dated August 2, 2007. Thus, the CA not only denied the first
Motion for Reconsideration dated August 13, 2007 but also dismissed the Petition for
Review filed earlier.
However, as keenly pointed out by the OSG in its Comment 11 dated January 11,
2011, instead of elevating the present case before this Court within the period provided
under Rule 45 of the Rules of Court, petitioner opted to file a third motion for
reconsideration, which was filed without leave of court and notwithstanding the express
declaration of the CA that petitioner's first Motion for Reconsideration dated August 13,
2007 was denied and the case already dismissed with finality. 12
 At the outset, the Court emphasizes that second and subsequent motions for
reconsideration are, as a general rule, prohibited. Section 2, Rule 52 of the Rules of
Court provides that "no second motion for reconsideration of a judgment or final resolution
by the same party shall be entertained." The rule rests on the basic tenet of immutability of
judgments. "At some point, a decision becomes final and executory and, consequently, all
litigations must come to an end." 13
The general rule, however, against second and subsequent motions for
reconsideration admits of settled exceptions. In Neypes v. Court of Appeals, 14 the Court
declared:
In setting aside technical infirmities and thereby giving due
course to tardy appeals, we have not been oblivious to or unmindful of
the extraordinary situations that merit liberal application of the Rules. In
those situations where technicalities were dispensed with, our decisions
were not meant to undermine the force and effectivity of the periods set
by law. But we hasten to add that in those rare cases where procedural
rules were not stringently applied, there always existed a clear need to
prevent the commission of a grave injustice. Our judicial system and the
courts have always tried to maintain a healthy balance between the strict
enforcement of procedural laws and the guarantee that every litigant be
given the full opportunity for the just and proper disposition of his
cause. 15
The circumstances surrounding this case do not warrant the relaxation of the
rules. Petitioner failed to present compelling justification or reason to relax the rules of
procedure. The CA ruled that, "[t]he petitioner's attribution to inadvertence (as the cause)
of his failure to indicate a complete statement of material dates and to attach pertinent
documents material to the petition is not compelling or reasonable enough for the Court to
disregard the mandate in Rule 42, Sec. 3 of the Rules, . . . ." 16
It must be noted that the CA has acted favorably upon petitioner's second motion
for reconsideration. However, that does not mean that petitioner is already right in arguing
that the reglementary period for the filing of the present petition before this Court should be
reckoned from his receipt of the denial of his third Motion for Reconsideration. As correctly
observed by the OSG, "[t]o condone such a procedurally irregular practice would lead into
an absurd situation where petitioner would, in effect, be rewarded for unilaterally
suspending the running of the reglementary period to appeal by filing prohibited
pleadings." 17 This is in consonance with this Court's ruling in Securities and Exchange
Commission v. PICOP Resources, Inc., 18 thus:
The same issue was the focal point in Obando v. Court of
Appeals. 19 In Obando, this Court maintained the prohibitory nature of a
second motion for reconsideration and its gnawing implications in the
appeal process. Said the court: SCaITA
. . . [T]he Rules of Court are explicit that a second
motion for reconsideration shall not be allowed. In this
case, petitioners filed not only a second motion for
reconsideration, but a third motion for reconsideration
as well. Since the period to appeal began to run
from the denial of the first motion for
reconsideration, the notice of appeal which
petitioners filed six months after the denial of their first
motion for reconsideration was correctly denied for
having been filed late. (Emphasis supplied)
Since the second motion for reconsideration was not allowed,
this Court ruled that it did not toll the running of the period to appeal.
More so, would a third motion for reconsideration.
In Dinglasan v. Court of Appeals, 20 this Court explained the
reason why it is unwise to reckon the period of finality of judgment from
the denial of the second motion for reconsideration.
To rule that finality of judgment shall be
reckoned from the receipt of the resolution or order
denying the second motion for reconsideration would
result to an absurd situation whereby courts will be
obliged to issue orders or resolutions denying what is
a prohibited motion in the first place, in order that
the period for finality of judgments shall run, thereby,
prolonging the disposition of cases. Moreover, such a
ruling would allow a party to forestall the running of
the period for finality of judgments by virtue of filing a
prohibited pleading; such a situation is not only
illogical but also unjust to the winning party.
xxx xxx xxx
The overt consequence of the introduction of a prohibited
pleading was pointed out succinctly by this Court in Land Bank of the
Phillipines v. Ascot Holdings and Equities, Inc.: 21
It is obvious that a prohibited pleading
cannot toll the running of the period to appeal since
such pleading cannot be given any legal effect
precisely because of its being prohibited.
Clearly, a second motion for reconsideration does not suspend
the running of the period to appeal and neither does it have any legal
effect. 22
Hence, the CA did not commit any error when it properly noted without action the
petitioner's third motion for reconsideration for being a prohibited pleading, as well as
merely a reiteration of his arguments in his first motion for reconsideration. Therefore, the
said motion for reconsideration is a mere scrap of paper that does not deserve any
consideration and the filing of the same did not toll the running of the prescriptive period for
filing a petition based on Rule 45. 23
 It is significant to emphasize that the CA dismissed the petition due to the Clearly, there are pre-requisites before a motion for extension
following procedural infirmities: (1) it was filed beyond the reglementary period; (2) to file a Rule 42 petition for review could even be granted. The petitioner
petitioner failed to pay the complete docket fee; (3) the petition failed to indicate a complete must pay the full amount of the docket and other lawful fees and the
statement of material dates since petitioner did not mention in the body of the petition when deposit for costs before the expiration of the reglementary period. This
he received the RTC's Order dated May 16, 2007 denying his Motion for Reconsideration; requirement was not met by the petitioner as the docket fees he had paid
and (4) petitioner failed to attach pertinent documents material in the petition as no copy of are actually deficient by Three Thousand Five Hundred Thirty Pesos
the May 16, 2007 Amended Decision was attached to the petition. (3,530.00). Granting the petitioner's two (2) motions for extension of time
to file petition for review would have been beyond the pale of the limits
Section 1, Rule 42 of the Rules of Court states the need to pay docket fees, thus:
allowed by the Rules for the Court in that instance, considering that the
Section 1. How appeal taken; time for filing. — A party desiring petitioner failed to fulfill a requirement. 31
to appeal from a decision of the Regional Trial Court rendered in the
Petitioner now begs this Court for leniency in the interest of justice. While there is
exercise of its appellate jurisdiction may file a verified petition for review
a crying need to unclog court dockets, on the one hand, there is, on the other, a greater
with the Court of Appeals, paying at the same time to the clerk of said
demand for resolving genuine disputes fairly and equitably, 32 for it is far better to dispose
court the corresponding docket and other lawful fees, depositing the
of a case on the merit which is a primordial end, rather than on a technicality that may result
amount of P500.00 for costs, . . . .
in injustice. 33 However, [i]t is only when persuasive reasons exist that the Rules may be
The rule is that payment in full of the docket fees within the prescribed period is relaxed to spare a litigant of an injustice not commensurate with his failure to comply with
mandatory. 24 In Manchester v. Court of Appeals, 25 it was held that a court acquires the prescribed procedure. 34 In the present case, petitioner failed to convince this Court of
jurisdiction over any case only upon the payment of the prescribed docket fee. The strict the need to relax the rules and the eventual injustice that he will suffer if his prayer is not
application of this rule was, however, relaxed two (2) years after in the case of Sun granted.
Insurance Office, Ltd. v. Asuncion, 26 wherein the Court decreed that where the initiatory
Nevertheless, granting that this Court would decide the merits of this case, the
pleading is not accompanied by the payment of the docket fee, the court may allow
petition would still be denied. In its petition, the arguments presented by petitioners are
payment of the fee within a reasonable period of time, but in no case beyond the applicable
factual in nature. The well-entrenched rule is that only errors of law and not of fact are
prescriptive or reglementary period. This ruling was made on the premise that the plaintiff
reviewable by this Court in petitions for review on certiorariunder Rule 45 under which this
had demonstrated his willingness to abide by the rules by paying the additional docket fees
petition is filed. It is not the Court's function under Rule 45 to review, examine and evaluate
required. 27 Thus, in the more recent case of United Overseas Bank v. Ros, 28 the Court
or weigh once again the probative value of the evidence presented. 35
explained that where the party does not deliberately intend to defraud the court in payment
of docket fees, and manifests its willingness to abide by the rules by paying additional WHEREFORE, the Petition for Review on Certiorari under Rule 45 of the Rules of
docket fees when required by the court, the liberal doctrine enunciated in Sun Insurance Court, dated August 17, 2010, of petitioner Rodging Reyes is hereby DENIEDfor lack of
Office, Ltd., and not the strict regulations set in Manchester, will apply. merit. Thus, the Resolution dated November 23, 2009 of the Court of Appeals is
hereby AFFIRMED.
Admittedly, this rule is not without recognized qualifications. The Court has
declared that in appealed cases, failure to pay the appellate court docket fee within the SO ORDERED.
prescribed period warrants only discretionary as opposed to automatic dismissal of the
Velasco, Jr., Villarama, Jr., Perez * and Jardeleza, JJ., concur.
appeal and that the court shall exercise its power to dismiss in accordance with the tenets
of justice and fair play, and with great deal of circumspection considering all attendant ||| (Reyes v. People, G.R. No. 193034, [July 20, 2015])
circumstances. 29
In that connection, the CA, in its discretion, may grant an additional period of
fifteen (15) days only within which to file the petition for review upon proper motion and the
payment of the full amount of the docket and other lawful fees and the deposit for costs
before the expiration of the reglementary period and that no further extension shall be
granted except for the most compelling reason and in no case to exceed fifteen (15)
days. 30 Therefore, the grant of any extensions for the filing of the petition is discretionary
and subject to the condition that the full amount of the docket and lawful fees are paid
before the expiration of the reglementary period to file the petition. In its Resolution dated
November 23, 2009, the CA clearly explained its denial of petitioner's motion for extension
of time to file a petition for review, thus: aTHCSE
 EN BANC and Head of the Procuring Entity in Protest Case No.
BPC-01-06 entitled "Dynamic Builders & Construction
Company (Phil.), Inc. v. Bids and Awards Committee,
[G.R. No. 174202. April 7, 2015.] Municipality of Valladolid, Negros Occidental" by the
respondents, or their agents, or anyone acting in their
DYNAMIC BUILDERS & CONSTRUCTION CO. (PHIL.), behalf, or anyone who stands to benefit from such order,
INC., petitioner, vs. HON. RICARDO P. PRESBITERO, JR., MAYOR in any manner, during the pendency of the proceedings
AND HEAD OF PROCURING UNIT OF THE MUNICIPALITY OF in Civil Case No. 1459 in order not to render further
VALLADOLID, NEGROS OCCIDENTAL; BIDS AND AWARDS proceedings in Civil Case No. 1459 moot and academic
COMMITTEE, MUNICIPALITY OF VALLADOLID, NEGROS and any judgment in the said case ineffectual;
OCCIDENTAL; AND HENRY L. JORDAN AND/OR HLJ (b) the implementation of the award of the Construction Shoreline
CONSTRUCTION AND ENTERPRISE, respondents. Protection Project subject of Protest Case No.
BPC-01-06, during the pendency of Civil Case No. 1459,
by the respondents, or their agents, or anyone acting in
their behalf, or anyone who stands to benefit from such
DECISION implementation, in any manner, during the pendency of
the proceedings in Civil Case No. 1459 in order not to
render further proceedings in Civil Case No. 1459 moot
and any judgment in the said case ineffectual; and
LEONEN, J p:
2. Thereafter, a writ of prohibition be issued and/or the
Republic Act No. 8975 does not sanction splitting a cause of action in order for a
preliminary injunction be made permanent and continuing, during the
party to avail itself of the ancillary remedy of a temporary restraining order from this court.
pendency of Civil Case No. 1459 before the Regional Trial Court of Bago
Also, this law covers only national government infrastructure projects. This case involves a
City.
local government infrastructure project.
Other reliefs just and equitable in the premises are likewise
For local government infrastructure projects, Regional Trial Courts may issue
prayed for. 2
provisional injunctive reliefs against government infrastructure projects only when (1) there
are compelling and substantial constitutional violations; (2) there clearly exists a right in On December 28, 2005, the Municipality of Valladolid, Negros Occidental,
esse; (3) there is a need to prevent grave and irreparable injuries; (4) there is a through its Bids and Awards Committee, published an invitation to bid for the construction
demonstrable urgency to the issuance of the injunctive relief; and (5) when there are public of a 1,050-lineal-meter rubble concrete seawall along the municipality's shoreline. 3 This
interest at stake in restraining or enjoining the project while the action is pending that far infrastructure venture is known as the "Construction Shoreline Protection Project." 4
outweighs (a) the inconvenience or costs to the party to whom the project is awarded and
On January 17, 2006, the Bids and Awards Committee conducted a pre-bid
(b) the public benefits that will result from the completion of the project. The time periods for
conference attended by six (6) prospective contractors including Dynamic Builders. 5
the validity of temporary restraining orders issued by trial courts should be strictly followed.
No preliminary injunction should issue unless the evidence to support the injunctive relief is On January 31, 2006, three (3) out of the seven (7) contractors that had secured
clear and convincing. bidding documents in order to bid "submitted letters of withdrawal." 6 Thus, only the
remaining four (4) bidders "were considered during the opening of the bids." 7 The prices
We are asked by Dynamic Builders & Construction Co. (Phil.), Inc. (Dynamic
offered were the following: 8
Builders) through this Petition for prohibition with application for issuance of a temporary
restraining order and/or writ of preliminary injunction 1 that: Mig-wells Const. Corp. P35,561,015.33 Highest Bidder
1. Upon the filing of this petition, a temporary restraining order ADP Const. & Supply P34,778,496.72 3rd Lowest Bidder
and/or writ of preliminary injunction be immediately issued restraining
and enjoining: Dynamic Builders & Const. P29,750,000.00 Lowest Bidder
(a) the enforcement or execution of the 12 June 2006 Decision HLJ Const. & Ent. P31,922,420.27 2nd Lowest Bidder
and the 30 June 2006 Resolution by the Hon. Ricardo P.
Presbitero, Jr., Mayor of the Municipality of Valladolid

On March 27, 2006, the Bids and Awards Committee issued Resolution No. 6
recommending the award in favor of HLJ Construction and Enterprise. 9
On April 18, 2006, the Municipality of Valladolid received its "NO OBJECTION"
letter from World Bank through the LOGOFIND 10 project director, advising the Bids and
Awards Committee to proceed with the issuance of the notice of award, letter of
acceptance, signing of contract, and notice to proceed. 11
On April 21, 2006, the Bids and Awards Committee issued Resolution No. 7
affirming the award of contract to HLJ Construction and Enterprise for the construction of
the 1,050-lineal-meter Construction Shoreline Protection Project amounting to
P31,922,420.37. 12
On April 25, 2006, Bids and Awards Committee Chairperson Celina C. Segunla
wrote Engr. Raul F. Balandra of Dynamic Builders and the other participating losing
bidders, ADP Construction and Mig-Wells Construction Corporation, to inform them of the
Bids and Awards Committee's findings and decision. 13 Dynamic Builders was informed
that "its bid proposal had been found to be 'not substantially responsive.'" 14 Dynamic
Builders received this decision on May 11, 2006. 15
Dynamic Builders alleged that on May 5, 2006, it submitted the letter dated April 7,
2006 containing a request for the Bids and Awards Committee to furnish it with all
submitted bid documents and relevant Bids and Awards Committee resolutions, but this
was denied by the letter dated May 5, 2006 invoking confidentiality under Section 2.46 of
the LOGOFIND guidelines. 16
On May 15, 2006, the Bids and Awards Committee received the letter from
Dynamic Builders seeking reconsideration of the April 25, 2006 decision declaring
Dynamic Builders' bid as not substantially responsive. 17
On May 22, 2006, the Bids and Awards Committee wrote Dynamic Builders
denying the request for reconsideration. It informed Dynamic Builders of the
post-evaluation examination results showing Dynamic Builders' failure in its Financial
Contracting Capability. 18
On June 6, 2006, Dynamic Builders lodged a formal protest with the head of the
procuring entity, Mayor Ricardo P. Presbitero, Jr. (Mayor Presbitero), to set aside the Bids
and Awards Committee decision declaring Dynamic Builders' bid as not substantially
responsive. 19
Mayor Presbitero dismissed the protest in the Decision 20 dated June 12, 2006.
According to Mayor Presbitero's June 12, 2006 Decision, the bidders underwent
preliminary examination and were "subjected to the criteria of Verification, Eligibility, Bid
Security, Completeness of Bid, Substantial Responsiveness, and Acceptance for Detailed
Examination[.]" 21 Mig-wells Construction Corporation did not pass the preliminary
examination, while the remaining three that passed were subjected to detailed examination.
All three passed and qualified for post-evaluation examination. 22
The June 12, 2006 Decision also stated that during the post-evaluation
examination, the three bidders submitted their financial statements for the last five (5)
years and other documents expressly provided in Volume 2 of the Procurement Guidelines
Manual of LOGOFIND World Bank. 23 The examination showed that Dynamic Builders
had a negative Financial Contracting Capability of P64,579,119.13 due to numerous other
contractual commitments or balance of works. 24 HLJ Construction and Enterprise had a
positive Financial Contracting Capability of P30,921,063.86, while ADP Construction had a
positive Financial Contracting Capability of only P12,770,893.78. 25 Section 4.5.e of the
Instruction to Bidders requires a minimum Financial Contracting Capability of
P13,000,000.00. 26
Mayor Presbitero denied Dynamic Builders' Motion for Reconsideration in the
Resolution 27 dated June 30, 2006.
On September 4, 2006 and pursuant to Article XVII, Section 58 of Republic Act
No. 9184, otherwise known as the Government Procurement Reform Act, Dynamic
Builders filed the Petition for Certiorari before the Regional Trial Court of Bago City,
Negros Occidental, assailing Mayor Presbitero's Decision and Resolution. 28
Simultaneously, Dynamic Builders filed this Petition 29 dated September 4, 2006
for prohibition with application for temporary restraining order and/or writ of preliminary
injunction before this court. 30 This was received by this court on September 6, 2006. 31
Petitioner Dynamic Builders submits that Article XVII, Section 58 of Republic Act
No. 9184 implicitly allowed it to simultaneously file a Petition for Certioraribefore the
Regional Trial Court assailing the protest case on the merits, and another Petition before
this court for injunctive remedies. 32
Petitioner argues that in Section 58, the "law conferring on the Supreme Court the
sole jurisdiction to issue temporary restraining orders and injunctions relating to
Infrastructure Project of Government" refers to Republic Act No. 8975 33 in relation
to Presidential Decree No. 1818. 34 Petitioner then submits that "whileR.A. No.
8975 appears to apply only to national government infrastructure projects . . . the resulting
amendment to P.D. No. 1818 (by virtue of Sections 3 and 9 of R.A. No. 8975) removing
any restriction upon the Honorable Supreme Court to issue injunctive relief, would similarly
apply to the infrastructure projects . . . subject of, or covered by, P.D. No. 1818, which
would include those infrastructure projects undertaken for or by local governments." 35
Petitioner asserts that J.V. Lagon Construction v. Pangarungan 36 clarified that
Regional Trial Courts can issue injunctive relief when it is of "extreme urgency involving a
constitutional issue." 37 Nevertheless, petitioner argues that this ruling was an obiter
dictum, and J.V. Lagon involved a national government project. 38Thus, it only exercised
prudence when it took twin remedial routes. 39
The Petition alleges that respondent HLJ Construction and Enterprise already
commenced construction and "obtained the release of the 15% advance . . . for
mobilization costs as well as partial payments for the portion . . . completed." 40 Petitioner
argues that the issuance of a temporary restraining order and/or preliminary injunction was
of extreme urgency, as it was illegally deprived of its constitutional rights to due process
and equal protection of law. 41
 The Petition then incorporates by reference its Civil Case No. 1459 Petition's
discussion on the following arguments:
(1) Petitioner was denied due process when the contract was awarded to
private respondent HLJ Construction and Enterprise without first
giving the former an opportunity to avail itself of the remedies
under R.A. No. 9184[;]
(2) The award of the contract to private respondent HLJ Construction and
Enterprise violated Section 57 of R.A. No. 9184[;]
(3) Contrary to the findings of public respondents, the bid submitted by
petitioner was responsive[;] [and]
(4) For having in fact submitted the Lowest Calculated Responsive Bid,
petitioner should be awarded the contract for the Construction of
1,050 Lineal Meter Rubble Concrete Seawall of the Municipality
of Valladolid, Negros Occidental. 42
By Resolution dated September 18, 2006, this court ordered the parties
to "MAINTAIN THE STATUS QUO as of September 18, 2006 effective immediately until
further orders from the Court." 43
In their Comment 44 on the Petition, public respondents counter that petitioner
"grossly violated the rules against splitting a single cause of action, multiplicity of suits, and
forum shopping . . . [and] availed of an improper remedy and disregarded the rule on
'hierarchy of courts[.]"' 45 The project undertaken by HLJ Construction and Enterprise was
almost near completion, and prohibition "[was] not intended to provide a remedy for acts
already executed or accomplished." 46Petitioner should have asked for injunctive relief in
Civil Case No. 1459 filed before the trial court. 47
Public respondents argue that Article XVII, Section 58 of Republic Act No.
9184, Presidential Decree No. 1818, and Republic Act No. 8975 do not envision
simultaneous resort to remedies before the trial court and this court. 48 They submit that
Section 58 provides for alternative remedies between an action under Rule 65 before the
Regional Trial Court and a proper action directly before this court. 49
Public respondents agree that Republic Act No. 8975 only governs national
government projects but disagree insofar as petitioner's submission that sinceRepublic Act
No. 8975 amended Presidential Decree No. 1818 by removing the restriction on this court
to issue injunctive relief, it now covers local government projects. 50
Respondent HLJ Construction and Enterprise similarly raises the issue of
petitioner's forum shopping. 51 It adds that due process was not denied, as public
respondent notified petitioner of its findings and decision, heard petitioner's arguments,
and entertained petitioner's motion for reconsideration. 52 Respondent HLJ Construction
and Enterprise stresses that the Construction Shoreline Protection Project's delay will only
result in grave injustice and irreparable injury affecting the people of the Municipality of
Valladolid, Negros Occidental. 53
On December 13, 2006, petitioner filed a verified Petition to Cite Respondents for
Contempt, 54 alleging that respondents did not cease work on the project in disregard of
this court's status quo order. 55 Respondents filed their respective comments. 56
The issues for our resolution are as follows:
First, whether Article XVII, Section 58 of Republic Act No. 9184 contemplates
simultaneous filing of a petition for prohibition seeking injunctive reliefs from this court and
a petition for certiorari before the Regional Trial Court; consequently:
a) Whether petitioner violated the rules against the splitting of a cause of action,
multiplicity of suits, and forum shopping;
b) Whether petitioner violated the doctrine on hierarchy of courts; and
c) Whether petitioner resorted to an improper remedy when it filed a petition for
prohibition with this court.
Second, whether Article XVII, Section 58 of Republic Act No. 9184, in relation
to Republic Act No. 8975 and Presidential Decree No. 1818, allows Regional Trial Courts
to issue injunctive relief subject to the presence of certain conditions; and
Lastly, whether respondents violated this court's September 18, 2006 status
quo Order in relation to the ongoing Construction Shoreline Protection Project.
I
We proceed with the procedural issue of whether petitioner availed itself of the
wrong remedy in simultaneously filing (1) a petition for certiorari before the trial court
alleging that public respondent gravely abused its discretion in rendering its June 12, 2006
Decision and June 30, 2006 Resolution and (2) a petition for prohibition seeking injunctive
reliefs from this court to enjoin the enforcement of public respondent's June 12, 2006
Decision and June 30, 2006 Resolution during the pendency of the case before the trial
court.
Public respondents submit that a simple reading of the Petition in Civil Case No.
1459 readily reveals that petitioner also asked the trial court to nullify the same Decision
and Resolution on the identical ground of grave abuse of discretion amounting to lack or
excess of jurisdiction. 57
Petitioner counters that it was compelled to file the separate petitions pursuant to,
and in view of, Article XVII, Section 58 of Republic Act No. 9184: 58
Sec. 58. Report to Regular Courts; Certiorari. — Court action may be
resorted to only after the protests contemplated in this Article shall have
been completed. Cases that are filed in violation of the process specified
in this Article shall be dismissed for lack of jurisdiction. The regional
trial court shall have jurisdiction over final decisions of the head of
the procuring entity. Court actions shall be governed by Rule 65 of
the 1997 Rules of Civil Procedure.
 This provision is without prejudice to any law conferring on the
Supreme Court the sole jurisdiction to issue temporary restraining
orders and injunctions relating to Infrastructure Projects of
Government. (Emphasis supplied)
Section 58 could not have envisioned a simultaneous resort to this court by one
that had already filed an action before the Regional Trial Court without violating the basic
rules on proscription against the splitting of a cause of action, multiplicity of suits, and
forum shopping.
Rule 2, Section 3 of the Rules of Court provides that "[a] party may not institute
more than one suit for a single cause of action." Moreover, Section 4 discusses the splitting
of a single cause of action in that "if two or more suits are instituted on the basis of the
same cause of action, the filing of one or a judgment upon the merits in any one is available
as a ground for the dismissal of the others." The splitting of a cause of action "violate[s] the
policy against multiplicity of suits, whose primary objective [is] to avoid unduly burdening
the dockets of the courts." 59
This Petition seeks to enjoin the execution of public respondent's Decision and
Resolution on the protest — the same Decision and Resolution sought to be set aside in
the Petition before the Regional Trial Court. In essence, petitioner seeks the same relief
through two separate Petitions filed before separate courts. This violates the rule against
forum shopping.
Rule 7, Section 5 of the Rules of Court requires the plaintiff or principal party to
certify under oath that he or she has not commenced any action involving the same issues
in any court. This court has discussed this rule against forum shopping:
In essence, forum shopping is the practice of litigants resorting
to two different fora for the purpose of obtaining the same relief, to
increase their chances of obtaining a favorable judgment. In determining
whether forum shopping exists, it is important to consider the vexation
caused to the courts and the parties-litigants by a person who asks
appellate courts and/or administrative entities to rule on the same
related causes and/or to grant the same or substantially the same relief,
in the process creating the possibility of conflicting decisions by the
different courts or fora on the same issues. We have ruled that forum
shopping is present when, in two or more cases pending, there is identity
of (1) parties (2) rights or causes of action and reliefs prayed for and (3)
the identity of the two preceding particulars is such that any judgment
rendered in the other action, will, regardless of which party is successful,
amount to res judicata in the action under consideration. 60
Private respondent alleges that petitioner did not even notify the Regional Trial
Court of Bago City, Negros Occidental, of its Petition filed before this court. 61
The second paragraph of Article XVII, Section 58 of Republic Act No. 9184 simply
means it does not preclude a direct filing before this court in proper cases.
The Rules of Court provides for original concurrent jurisdiction by the Regional
Trial Court, the Court of Appeals, and this court in entertaining petitions
forcertiorari, prohibition, or mandamus. 62 However, parties must adhere to the principle
of hierarchy of courts. This was discussed in Dimson (Manila), Inc., et al. v. Local Water
Utilities Administration: 63
Clearly, the proper recourse to a court action from decisions of
the BAC, such as this one, is to file a certiorari not before the Supreme
Court but before the regional trial court which is vested by R.A. No. 9184
with jurisdiction to entertain the same. In the recent case of First United
Constructors Corporation v. Poro Point Management Corporation, we
held that while indeed the certiorari jurisdiction of the regional trial court
is concurrent with this Court's, that fact alone does not allow an
unrestricted freedom of choice of the court forum. But since this is not an
iron-clad rule and the full discretionary power to take cognizance of and
assume jurisdiction over special civil actions for certiorari directly filed
with the Court may actually be exercised by it, it is nevertheless
imperative that the Court's intervention be called for by exceptionally
compelling reasons or be warranted by the nature of the issues involved.
In other words, a direct invocation of the Supreme Court's original
jurisdiction to issue the writ will be allowed only when there are special
and important reasons clearly and specifically set out in the
petition. 64 (Citations omitted)
The hierarchy of courts must be respected. The doctrine with respect to hierarchy
of courts was designed so that this court will have more time to focus on its constitutional
tasks without the need to deal with causes that also fall within the lower courts'
competence. 65 This court acts on petitions for extraordinary writs under Rule 65 "only
when absolutely necessary or when serious and important reasons exist to justify an
exception to the policy." 66
Consistent with these rules and doctrines, the remedy contemplated by Article
XVII, Section 58 of Republic Act No. 9184 is either an action under Rule 65 before the
Regional Trial Court or the proper action filed before this court. However, direct resort to
this court can prosper only when the requisites for direct invocation of this court's original
jurisdiction are present.
II
Prohibition is a preventive remedy. This court has held that injunctive remedies
will not lie for acts already accomplished. 67
The acts sought to be enjoined in this case included the implementation of the
Construction Shoreline Protection Project awarded to private respondent HLJ Construction
and Enterprise. The project had already commenced and had been ongoing at the time
petitioner filed this case.
Moreover, the issue of whether these acts infringed on petitioner's rights is a
matter interrelated with the issues raised in the Petition before the trial court, emphasizing
the existence of the splitting of a cause of action.
 In any case, this court has stressed that extraordinary writs
of certiorari, prohibition, and mandamus are "prerogative writs of equity[.]" 68 It is within
the court's sound discretion whether these writs should be granted, and it will need to
ensure that there is a clear right to the relief. 69
Prohibition is defined as "an extraordinary remedy available to compel any
tribunal, corporation, board, or person exercising judicial or ministerial functions, to desist
from further [proceeding] in an action or matter when the proceedings in such tribunal,
corporation, board or person are without or in excess of jurisdiction or with grave abuse of
discretion[.]" 70
Grave abuse of discretion will prosper as a ground for prohibition when it is shown
that "there was . . . capricious and whimsical exercise of judgment. . . equivalent to lack of
jurisdiction or that the tribunal, corporation, board or person has exercised its power in an
arbitrary or despotic manner by reason of passion or personal hostility." 71
First, public respondent had jurisdiction to rule on the protest since it was then
head of the procuring entity. 72
Second, this court need not look into petitioner's allegation that its Petition before
the Regional Trial Court raised grounds warranting the reversal of public respondent's
Decision. 73 The merits of whether there was grave abuse of discretion by public
respondent were already subject of the Petition before the trial court. Petitioner cannot be
allowed to seek the same relief from this court.
Rule 65 likewise requires that there be "no appeal or any . . . plain, speedy, [or]
adequate remedy in the ordinary course of law." 74 Section 3 of Republic Act No.
8975 provides for such a remedy when it gave an exception to the general rule prohibiting
lower courts from issuing provisional injunctive relief against national government projects:
Sec. 3. Prohibition on the Issuance of Temporary Restraining Orders,
Preliminary Injunctions and Preliminary Mandatory Injunctions. — No
court, except the Supreme Court, shall issue any temporary restraining
order, preliminary injunction or preliminary mandatory injunction against
the government, or any of its subdivisions, officials or any person or
entity, whether public or private, acting under the government's direction,
to restrain, prohibit or compel the following acts:
xxx xxx xxx
This prohibition shall apply in all cases, disputes or
controversies instituted by a private party, including but not limited to
cases filed by bidders or those claiming to have rights through such
bidders involving such contract/project. This prohibition shall not apply
when the matter is of extreme urgency involving a constitutional issue,
such that unless a temporary restraining order is issued, grave injustice
and irreparable injury will arise. The applicant shall file a bond, in an
amount to be fixed by the court, which bond shall accrue in favor of the
government if the court should finally decide that the applicant was not
entitled to the relief sought. (Emphasis supplied)
When the matter is of "extreme urgency involving a constitutional issue," even
Regional Trial Courts may grant injunctive reliefs as explained in Republic v. Nolasco: 75
Republic Act No. 8975 definitively enjoins all courts, except the
Supreme Court, from issuing any temporary restraining order,
preliminary injunction, or preliminary mandatory injunction against the
government, or any of its subdivisions, officials or any person or entity to
restrain, prohibit or compel the bidding or awarding of a contract or
project of the national government, precisely the situation that obtains in
this case with respect to the Agno River Project. The only exception
would be if the matter is of extreme urgency involving a
constitutional issue, such that unless the temporary restraining
order is issued, grave injustice and irreparable injury will
arise. 76 (Emphasis supplied, citations omitted)
Considering that petitioner alleges that this matter is "of extreme urgency,
involving as it does the . . . constitutional right[s] to due process and equal protection of the
law," 77 it should have prayed for injunctive relief before the trial court where its Petition
for Certiorari via Rule 65 was pending, together with a bond fixed by the court.
Mere allegation or invocation that constitutionally protected rights were violated
will not automatically result in the issuance of injunctive relief. The plaintiff or the petitioner
should discharge the burden to show a clear and compelling breach of a constitutional
provision. Violations of constitutional provisions are easily alleged, but trial courts should
scrutinize diligently and deliberately the evidence showing the existence of facts that
should support the conclusion that a constitutional provision is clearly and convincingly
breached. In case of doubt, no injunctive relief should issue. In the proper cases, the
aggrieved party may then avail itself of special civil actions and elevate the matter.
This court adheres to the policy behind the prohibition under Republic Act No.
8975 and even issued Administrative Circular No. 11-2000 entitled Re: Ban on the
Issuance of Temporary Restraining Orders or Writs of Preliminary Prohibitory or
Mandatory Injunctions in Cases Involving Government Infrastructure Projects.This circular
enjoins lower court judges to strictly comply with Republic Act No. 8975.
However, the issue here does not involve the propriety of a lower court's issuance
or non-issuance of provisional injunctive relief, but petitioner's insistence that only this
court can issue such injunctive relief in justifying its simultaneous Petitions before the
Regional Trial Court and this court.
Petitioner hinges its erroneous simultaneous Petitions on its reading of Republic
Act No. 8975 in relation to Presidential Decree No. 1818.
III
Petitioner submits that only this court has the power to issue injunctions to enjoin
government infrastructures including those of local government. 78
Petitioner explains that the "laws" referred to in Article XVII, Section 58
of Republic Act No. 9184 refer to Republic Act No. 8975 that prohibits courts, except the
Supreme Court, from issuing temporary restraining orders and injunctions against
government infrastructure projects. It adds that Republic Act No. 8975 must be taken in
relation to Presidential Decree No. 1818 prohibiting the issuances by the courts of
restraining orders or injunctions involving infrastructure projects. 79 The full text
of Presidential Decree No. 1818 promulgated in 1981 reads:
PRESIDENTIAL DECREE NO. 1818
PROHIBITING COURTS FROM ISSUING RESTRAINING ORDERS
OR PRELIMINARY INJUNCTIONS IN CASES
INVOLVING INFRASTRUCTURE AND NATURAL RESOURCE
DEVELOPMENT PROJECTS OF, AND PUBLIC UTILITIES
OPERATED BY, THE GOVERNMENT
WHEREAS, Presidential Decree No. 605 prohibits the
issuance by the courts of restraining orders or injunctions in cases
involving concessions, licenses, and other permits issued by
administrative officials or bodies for the exploitation, development and
utilization of natural resources of the country;
WHEREAS, it is in the public interest to adopt a similar
prohibition against the issuance of such restraining orders or injunctions
in other areas of activity equally critical to the economic development
effort of the nation, in order not to disrupt or hamper the pursuit of
essential government projects;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President
of the Philippines, by virtue of the powers vested in me by the
Constitution, do hereby decree and order as follows:
Section 1. No court in the Philippines shall have jurisdiction to
issue any restraining order, preliminary injunction, or preliminary
mandatory injunction in any case, dispute, or controversy involving an
infrastructure project, or a mining, fishery, forest or other natural
resource development project of the government, or any public utility
operated by the government, including among others public utilities for
the transport of the goods or commodities, stevedoring and arrastre
contracts, to prohibit any person or persons, entity or government official
from proceeding with, or continuing the execution or implementation of
any such project, or the operation of such public utility, or pursuing any
lawful activity necessary for such execution, implementation or
operation.
Section 2. This decree shall take effect immediately.
(Emphasis supplied)
In 2000, Republic Act No. 8975 was passed. Section 3 of the law provides:
Sec. 3. Prohibition on the Issuance of Temporary Restraining Orders,
Preliminary Injunctions and Preliminary Mandatory Injunctions. — No
court, except the Supreme Court, shall issue any temporary restraining
order, preliminary injunction or preliminary mandatory injunction against
the government or any of its subdivisions, officials or any person or entity,
whether public or private, acting under the government's direction, to
restrain, prohibit or compel the following acts:
(a) Acquisition, clearance and development of the right-of-way
and/or site or location of any national government
project;
(b) Bidding or awarding of contract/project of
the national government as defined under Section 2
hereof;
(c) Commencement, prosecution, execution, implementation,
operation of any such contract or project;
(d) Termination or rescission of any such contract/project; and
(e) The undertaking or authorization of any other lawful activity
necessary for such contract/project.
This prohibition shall apply in all cases, disputes or controversies
instituted by a private party, including but not limited to cases filed by
bidders or those claiming to have rights through such bidders involving
such contract/project. This prohibition shall not apply when the matter is
of extreme urgency involving a constitutional issue, such that unless a
temporary restraining order is issued, grave injustice and irreparable
injury will arise. The applicant shall file a bond, in an amount to be fixed
by the court, which bond shall accrue in favor of the government if the
court should finally decide that the applicant was not entitled to the relief
sought.
If after due hearing the court finds that the award of the contract is null
and void, the court may, if appropriate under the circumstances, award
the contract to the qualified and winning bidder or order a rebidding of
the same, without prejudice to any liability that the guilty party may incur
under existing laws. (Emphasis supplied)
Petitioner submits that since the repealing clause of Republic Act No. 8975 has
"amended accordingly" Presidential Decree No. 1818, the prohibition no longer extends to
this court. 80 Section 9 reads:
Sec. 9. Repealing Clause. — All laws, decrees, including Presidential
Decree Nos. 605, 1818 and Republic Act No. 7160, as amended, orders,
rules and regulations or parts thereof inconsistent with this Act are
hereby repealed or amended accordingly. 81
Petitioner argues that even if Republic Act No. 8975 only
mentions national government infrastructure projects, Section 9 has accordingly
amendedPresidential Decree No. 1818, such that the projects covered by this earlier law,
like those undertaken by local governments, are similarly covered by the removal of the
prohibition against this court. 82
 In other words, petitioner contends that based on these laws, only this court can
issue injunctive relief against local government infrastructure projects. Thus, it was
constrained to simultaneously file two separate Petitions before the Regional Trial Court
and this court.
We cannot agree.
There is nothing in Republic Act No. 8975 or in Presidential Decree No. 1818 that
allows the simultaneous availment of legal remedies before the Regional Trial Court and
this court.
Republic Act No. 8975, even when read with Presidential Decree No. 1818, does
not sanction the splitting of a cause of action in order for a party to avail itself of the ancillary
remedy of a temporary restraining order from this court.
Petitioner's reading of Republic Act No. 8975's repealing clause, such that only
this court can issue injunctive relief, fails to persuade.
This court has set the limit on the prohibition found in Presidential Decree No.
1818 by explaining that lower courts are not prohibited from enjoining administrative acts
when questions of law exist and the acts do not involve administrative discretion in
technical cases:
Although Presidential Decree No. 1818 prohibits any court
from issuing injunctions in cases involving infrastructure projects, the
prohibition extends only to the issuance of injunctions or restraining
orders against administrative acts in controversies involving facts or the
exercise of discretion in technical cases. On issues clearly outside this
dimension and involving questions of law, this Court declared that courts
could not be prevented from exercising their power to restrain or prohibit
administrative acts. In such cases, let the hammer fall and let it fall
hard. 83 (Emphasis supplied, citations omitted)
We also consider the second paragraph of Republic Act No. 8975, Section 3 on
the exception to the prohibition:
This prohibition shall apply in all cases, disputes or controversies
instituted by a private party, including but not limited to cases filed by
bidders or those claiming to have rights through such bidders involving
such contract/project. This prohibition shall not apply when the matter is
of extreme urgency involving a constitutional issue, such that unless a
temporary restraining order is issued, grave injustice and irreparable
injury will arise. The applicant shall file a bond, in an amount to be fixed
by the court, which bond shall accrue in favor of the government if the
court should finally decide that the applicant was not entitled to the relief
sought. (Emphasis supplied)
In other words, the Regional Trial Court can issue injunctive relief against
government infrastructure projects, even those undertaken by local governments,
considering that the prohibition in Section 3 of Republic Act No. 8975 only
mentions national government projects. These courts can issue injunctive relief when
there are compelling constitutional violations — only when the right is clear, there is a need
to prevent grave and irreparable injuries, and the public interest at stake in restraining or
enjoining the project while the action is pending far outweighs the inconvenience or costs
to the party to whom the project is awarded.
Republic Act No. 8975 mentions the constitutional provision in that "[t]he use of
property bears a social function, and all economic agents shall contribute to the common
good." 84
Statute cannot be interpreted as to violate protected rights. Thus, the above
conditions safeguard against lower court issuances of provisional injunctive relief in cases
not falling within the exception.
These safeguards are also consistent with the law's policy for the expeditious
implementation of government projects that ultimately benefit the public:
Section 1. Declaration of Policy. — Article XII, Section 6 of
the Constitution states that the use of property bears a social function,
and all economic agents shall contribute to the common good. Towards
this end, the State shall ensure the expeditious and efficient
implementation and completion of government infrastructure projects to
avoid unnecessary increase in construction, maintenance and/or repair
costs and to immediately enjoy the social and economic benefits
therefrom. 85(Emphasis supplied)
There is no need for this court to labor on petitioner's arguments regarding
violations of due process and equal protection of the law and the alleged grave injustice
and irreparable injury petitioner suffered. The Petition's incorporation of its discussion on
these arguments, as made in its Petition before the Regional Trial Court docketed as Civil
Case No. 1459, only emphasizes the splitting of a cause of action committed.
In any event, the general rule of prohibition under Republic Act No. 8975 does not
preclude lower courts from assuming jurisdiction when the ultimate relief prayed for is to
nullify a national government infrastructure project and its implementation:
However, it must be clarified that Republic Act No. 8975 does
not ordinarily warrant the outright dismissal of any complaint or petition
before the lower courts seeking permanent injunctive relief from the
implementation of national government infrastructure projects. What is
expressly prohibited by the statute is the issuance of the provisional
reliefs of temporary restraining orders, preliminary injunctions, and
preliminary mandatory injunctions. It does not preclude the lower courts
from assuming jurisdiction over complaints or petitions that seek as
ultimate relief the nullification or implementation of a national
government infrastructure project. A statute such as Republic Act No.
8975 cannot diminish the constitutionally mandated judicial power to
determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of government. Section 3 of the law in fact mandates,
thus:
 If after due hearing the court finds that the Relying in good faith on the ordinary meaning of status quo as differentiated
award of the contract is null and void, the court may, if from status quo ante, respondents pushed through with the construction, which had been
appropriate under the circumstances, award the the existing state of affairs at the time the September 18, 2006 Resolution was issued.
contract to the qualified and winning bidder or order a
This is consistent with Republic Act No. 8975's policy that "the State shall ensure
rebidding of the same, without prejudice to any liability
the expeditious and efficient implementation and completion of government infrastructure
that the guilty party may incur under existing laws.
projects to avoid unnecessary increase in construction, maintenance and/or repair costs
Thus, when a court is called upon to rule on an initiatory and to immediately enjoy the social and economic benefits therefrom." 97 This policy
pleading assailing any material aspect pertinent to a national declaration does not distinguish between national and local government infrastructure
government infrastructure project, the court ordinarily may not dismiss projects. Delay in the project will only mean additional costs for the government and
the action based solely on Republic Act No. 8975 but is merely enjoined prejudice to the people of the Municipality of Valladolid who will directly benefit from the
from granting provisional reliefs. If no other ground obtains to dismiss Construction Shoreline Protection Project.
the action, the court should decide the case on the merits. 86 (Emphasis
WHEREFORE, considering the foregoing, the Petition is DISMISSED for lack of
supplied, citation omitted)
merit. The verified Petition to Cite Respondents for Contempt dated December 11, 2006 is
IV likewise DISMISSED for lack of merit.
We decide on petitioner's verified Petition to Cite Respondent for Contempt SO ORDERED.
alleging violation of this court's September 18, 2006 status quo Order.
Sereno, C.J., Carpio, Velasco, Jr., Leonardo-de Castro, Brion, Peralta, Bersamin,
In its Comment, private respondent HLJ Construction and Enterprise explains Del Castillo, Perez, Mendoza, Reyes and Jardeleza, JJ., concur.
that it has no intention to disobey the Resolution. Its decision to continue the Construction
Villarama, Jr., * J., is on official leave.
Shoreline Protection Project was based on the definition of "status quo," meaning the
"present, current, existing state of affairs." 87 ||| (Dynamic Builders & Construction Co. (Phil.), Inc. v. Presbitero, Jr., G.R. No. 174202, [April 7,
2015])
"The present[,] existing condition on September 18, 2006, was the ongoing
construction." 88 Moreover, petitioner's rights were not violated as its bid was declared as
"not substantially responsive." 89 In the absence of a clear legal right, no injunction can be
granted. 90
Similarly, public respondent contends in its Comment that the Construction
Shoreline Protection Project commenced as early as May 8, 2006. 91 At the time the
Petition was filed in September 2006, the Construction Shoreline Protection Project had
been ongoing for four (4) months. 92 Thus, the status quo as of the September 18, 2006
Resolution was that the project was ongoing. 93
This court has explained that status quo should be the one existing at the time of
the filing of the case:
The status quo should be that existing at the time of the filing of
the case. The status quo usually preserved by a preliminary injunction is
the last actual, peaceable and uncontested status which preceded the
actual controversy. The status quo ante litem is, ineluctably, the state of
affairs which is existing at the time of the filing of the case. Indubitably,
the trial court must not make use of its injunctive power to alter such
status. 94 (Emphasis supplied, citations omitted)
The ordinary meaning of status quo is "the existing state of
affairs[,]" 95 while status quo ante refers to "the state of affairs that existed previously." 96
 FIRST DIVISION
[G.R. No. 138497. January 16, 2002.]
IMELDA RELUCIO, petitioner, vs. ANGELINA MEJIA
LOPEZ, respondent.
Roco Buñag Kapunan & Migallos, R. T. Capulong & Associates and Benitez Parlade
Africa & Barinaga Law Office for petitioner.
Abello Concepcion Regala & Cruz for private respondent.
SYNOPSIS
Respondent Angelina Lopez filed a petition for Appointment as Sole Administratrix of
Conjugal Partnership of Properties, Forfeiture, etc. against Alberto Lopez and petitioner Imelda
Relucio. Allegedly, when Alberto abandoned his legal wife Angelina and their children, Alberto
maintained an illicit relationship with Imelda and used the conjugal property of Angelina and
Alberto in amassing properties. Angelina and her children, however, never benefited from the
same.
The issue is whether Angelina has a cause of action against Imelda. The Court ruled in
the negative. The causes of the action here are for the judicial appointment of Angelina as
administratrix of the conjugal partnership arising from her marriage to Alberto; for the
accounting of the conjugal partnership; for the forfeiture of Alberto's share in the co-owned
property acquired during his illicit relationship with Imelda; for support and moral damages. To
all these, Imelda is a complete stranger. The administration of the property of the marriage is
entirely between the spouses, to the exclusion of all other persons. Hence, the cause of action
pertains only to Alberto. Imelda is not a real party in interest, neither can she be an
indispensable party, nor a necessary party in the petition filed by Angelina.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; CAUSE OF ACTION; ELUCIDATED. —
First issue: whether a cause of action exists against petitioner in the proceedings below. "A
cause of action is an act or omission of one party the defendant in violation of the legal right of
the other." The elements of a cause of action are: 1) a right in favor of the plaintiff by whatever
means and under whatever law it arises or is created; 2) an obligation on the part of the named
defendant to respect or not to violate such right; and (3) an act or omission on the part of such
defendant in violation of the right of the plaintiff or constituting a breach of the obligation of the
defendant to the plaintiff for which the latter may maintain an action for recovery of damages. A
cause of action is sufficient if a valid judgment may be rendered thereon if the alleged facts
were admitted or proved. In order to sustain a motion to dismiss for lack of cause of action, the
complaint must show that the claim for relief does not exist, rather than that a claim has been
merely defectively stated or is ambiguous, indefinite or uncertain.
2. ID.; ID.; ID.; NOT PRESENT AGAINST A COMPLETE STRANGER IN AN ACTION
FOR JUDICIAL APPOINTMENT OF ABANDONED WIFE AS ADMINISTRATRIX OF THE
CONJUGAL PARTNERSHIP. — The first cause of action is for judicial appointment of
respondent as administratrix of the conjugal partnership or absolute community property arising
from her marriage to Alberto J. Lopez. Petitioner is a complete stranger to this cause of action.
Article 128 of the Family Code refers only to spouses, to wit: "If a spouse without just cause
abandons the other or fails to comply with his or her obligations to the family, the aggrieved
spouse may petition the court for receivership, for judicial separation of property, or for authority
to be the sole administrator of the conjugal partnership property . . ." The administration of the
property of the marriage is entirely between them, to the exclusion of all other persons.
Respondent alleges that Alberto J. Lopez is her husband. Therefore, her first cause of action is
against Alberto J. Lopez. There is no right-duty relation between petitioner and respondent that
can possibly support a cause of action. In fact, none of the three elements of a cause of action
exists. cDAEIH
3. ID.; ID.; ID.; NOT PRESENT AGAINST A COMPLETE STRANGER IN AN ACTION
FOR ACCOUNTING OF CONJUGAL PARTNERSHIP. — The second cause of action is for an
accounting "by respondent husband." The accounting of conjugal partnership arises from or is
an incident of marriage. Petitioner has nothing to do with the marriage between respondent
Alberto J. Lopez. Hence, no cause of action can exist against petitioner on this ground.
4. ID.; ID.; ID.; NOT PRESENT AGAINST A COMPLETE STRANGER IN AN ACTION
FOR FORFEITURE OF HUSBAND'S SHARE IN PROPERTY CO-OWNED WITH THE
STRANGER. — Respondent's alternative cause of action is for forfeiture of Alberto J. Lopez'
share in the co-owned property "acquired during his illicit relationship and cohabitation with
[petitioner]" and for the "dissolution of the conjugal partnership of gains between him [Alberto J.
Lopez] and the [respondent]." The third cause of action is essentially for forfeiture of Alberto J.
Lopez' share in property co-owned by him and petitioner. It does not involve the issue of validity
of the co-ownership between Alberto J. Lopez and petitioner. The issue is whether there is
basis in law to forfeit Alberto J. Lopez' share, if any there be, in property co-owned by him with
petitioner. Respondent's asserted right to forfeit extends to Alberto J. Lopez' share alone.
Failure of Alberto J. Lopez to surrender such share, assuming the trial court finds in
respondent's favor, results in a breach of an obligation to respondent and gives rise to a cause
of action. Such cause of action, however, pertains to Alberto J. Lopez, not petitioner.
5. ID.; ID.; ID.; NOT PRESENT AGAINST A COMPLETE STRANGER IN AN ACTION
FOR SUPPORT, MORAL DAMAGES. — The respondent also sought support. Support cannot
be compelled from a stranger. As to the moral damages, respondent's claim for moral damages
is against Alberto J. Lopez, not petitioner. To sustain a cause of action for moral damages, the
complaint must have the character of an action for interference with marital or family relations
under the Civil Code.
 6. ID.; ID.; PARTIES; ONE WHO IS NOT A REAL PARTY IN INTEREST CANNOT BE
AN INDISPENSABLE PARTY, NOR BE A NECESSARY PARTY. — A real party in interest is
one who stands "to be benefited or injured by the judgment of the suit." In this case, petitioner
would not be affected by any judgment in Special Proceedings No. M-3630. If petitioner is not a
real party in interest, she cannot be an indispensable party. An indispensable party is one
without whom there can be no final determination of an action. Petitioner's participation in
Special Proceedings M-3630 is not indispensable. Nor can petitioner be a necessary party in
Special Proceedings M-3630. A necessary party as one who is not indispensable but who ought
to be joined as party if complete relief is to be accorded those already parties, or for a complete
determination or settlement of the claim subject of the action.
DECISION
PARDO, J p:
The Case
The case is a petition for review on certiorari 1 seeking to set aside the decision 2 of
the Court of Appeals that denied a petition for certiorari assailing the trial court's order denying
petitioner's motion to dismiss the case against her inclusion as party defendant therein.
The Facts
The facts, as found by the Court of Appeals, are as follows:
"On September 15, 1993, herein private respondent Angelina
Mejia Lopez (plaintiff below) filed a petition for "APPOINTMENT AS SOLE
ADMINISTRATRIX OF CONJUGAL PARTNERSHIP OF PROPERTIES,
FORFEITURE, ETC.," against defendant Alberto Lopez and petitioner
Imelda Relucio, docketed as Spec. Proc. M-3630, in the Regional Trial
Court of Makati, Branch 141. In the petition, private-respondent alleged
that sometime in 1968, defendant Lopez, who is legally married to the
private respondent, abandoned the latter and their four legitimate children;
that he arrogated unto himself full and exclusive control and administration
of the conjugal properties, spending and using the same for his sole gain
and benefit to the total exclusion of the private respondent and their four
children; that defendant Lopez, after abandoning his family, maintained an
illicit relationship and cohabited with herein petitioner since 1976.
"It was further alleged that defendant Lopez and petitioner
Relucio, during their period of cohabitation since 1976, have amassed a
fortune consisting mainly of stockholdings in Lopez-owned or controlled
corporations, residential, agricultural, commercial lots, houses, apartments
and buildings, cars and other motor vehicles, bank accounts and jewelry.
These properties, which are in the names of defendant Lopez and
petitioner Relucio singly or jointly or their dummies and proxies, have been
acquired principally if not solely through the actual contribution of money,
property and industry of defendant Lopez with minimal, if not nil, actual
contribution from petitioner Relucio.
"In order to avoid defendant Lopez obligations as a father and
husband, he excluded the private respondent and their four children from
sharing or benefiting from the conjugal properties and the income or fruits
there from. As such, defendant Lopez either did not place them in his name
or otherwise removed, transferred, stashed away or concealed them from
the private-respondent. He placed substantial portions of these conjugal
properties in the name of petitioner Relucio.
"It was also averred that in the past twenty five years since
defendant Lopez abandoned the private-respondent, he has sold,
disposed of, alienated, transferred, assigned, canceled, removed or
stashed away properties, assets and income belonging to the conjugal
partnership with the private-respondent and either spent the proceeds
thereof for his sole benefit and that of petitioner Relucio and their two
illegitimate children or permanently and fraudulently placed them beyond
the reach of the private-respondent and their four children.
"On December 8, 1993, a Motion to Dismiss the Petition was filed
by herein petitioner on the ground that private respondent has no cause of
action against her.
"An Order dated February 10, 1994 was issued by herein
respondent Judge denying petitioner Relucio's Motion to Dismiss on the
ground the she is impleaded as a necessary or indispensable party
because some of the subject properties are registered in her name and
defendant Lopez, or solely in her name.
"Subsequently thereafter, petitioner Relucio filed a Motion for
Reconsideration to the Order of the respondent Judge dated February 10,
1994 but the same was likewise denied in the Order dated May 31,
1994." 3
On June 21, 1994, petitioner filed with the Court of Appeals a petition
for certiorari assailing the trial court's denial of her motion to dismiss. 4
On May 31, 1996, the Court of Appeals promulgated a decision denying the
petition. 5 On June 26, 1996, petitioner filed a motion for reconsideration. 6 However, on April 6,
1999, the Court of Appeals denied petitioner's motion for reconsideration. 7
Hence, this appeal. 8
The Issues
 1. Whether respondent's petition for appointment as sole administratrix of
the conjugal property, accounting, etc. against her husband
Alberto J. Lopez established a cause of action against petitioner.
2. Whether petitioner's inclusion as party defendant is essential in the
proceedings for a complete adjudication of the controversy. 9
The Court's Ruling
We grant the petition. We resolve the issues in seriatim.
First issue: whether a cause of action exists against petitioner in the proceedings
below. "A cause of action is an act or omission of one party the defendant in violation of the
legal right of the other." 10 The elements of a cause of action are:
(1) a right in favor of the plaintiff by whatever means and under whatever
law it arises or is created;
(2) an obligation on the part of the named defendant to respect or not to
violate such right; and
(3) an act or omission on the part of such defendant in violation of the right
of the plaintiff or constituting a breach of the obligation of the
defendant to the plaintiff for which the latter may maintain an
action for recovery of damages. 11
A cause of action is sufficient if a valid judgment may be rendered thereon if the
alleged facts were admitted or approved. 12
In order to sustain a motion to dismiss for lack of cause of action, the complaint must
show that the claim for relief does not exist, rather than that a claim has been merely defectively
stated or is ambiguous, indefinite or uncertain. 13
Hence, to determine the sufficiency of the cause of action alleged in Special
Proceedings M-3630, we assay its allegations.
In Part Two on the "Nature of [the] Complaint," respondent Angelina Mejia Lopez
summarized the causes of action alleged in the complaint below.
The complaint is by an aggrieved wife against her husband.
Nowhere in the allegations does it appear that relief is sought against petitioner.
Respondent's causes of action were all against her husband.
The first cause of action is for judicial appointment of respondent as administratrix of
the conjugal partnership or absolute community property arising from her marriage to Alberto J.
Lopez. Petitioner is a complete stranger to this cause of action. Article 128 of the Family Code
refers only to spouses, to wit: cSTHAC
"If a spouse without just cause abandons the other or fails to
comply with his or her obligations to the family, the aggrieved spouse may
petition the court for receivership, for judicial separation of property, or for
authority to be the sole administrator of the conjugal partnership
property . . ."
The administration of the property of the marriage is entirely between them, to the
exclusion of all other persons. Respondent alleges that Alberto J. Lopez is her husband.
Therefore, her first cause of action is against Alberto J. Lopez. There is no right-duty relation
between petitioner and respondent that can possibly support a cause of action. In fact, none of
the three elements of a cause of action exists.
The second cause of action is for an accounting "by respondent husband." 14 The
accounting of conjugal partnership arises from or is an incident of marriage.
Petitioner has nothing to do with the marriage between respondent Alberto J. Lopez.
Hence, no cause of action can exist against petitioner on this ground.
Respondent's alternative cause of action is for forfeiture of Alberto J. Lopez' share in
the co-owned property "acquired during his illicit relationship and cohabitation with
[petitioner]" 15 and for the "dissolution of the conjugal partnership of gains between him
[Alberto J. Lopez] and the [respondent]."
The third cause of action is essentially for forfeiture of Alberto J. Lopez' share in
property co-owned by him and petitioner. It does not involve the issue of validity of the
co-ownership between Alberto J. Lopez and petitioner. The issue is whether there is basis in
law to forfeit Alberto J. Lopez' share, if any there be, in property co-owned by him with
petitioner.
Respondent's asserted right to forfeit extends to Alberto J. Lopez' share alone. Failure
of Alberto J. Lopez to surrender such share, assuming the trial court finds in respondent's favor,
results in a breach of an obligation to respondent and gives rise to a cause of action. 16 Such
cause of action, however, pertains to Alberto J. Lopez, not petitioner.
The respondent also sought support. Support cannot be compelled from a stranger.
The action in Special Proceedings M-3630 is, to use respondent Angelina M. Lopez'
own words, one by "an aggrieved wife against her husband." 17 References to petitioner in the
common and specific allegations of the fact in the complaint are merely incidental, to set forth
facts and circumstances that prove the causes of action alleged against Alberto J. Lopez.
Finally, as to the moral damages, respondent's claim for moral damages is against
Alberto J. Lopez, not petitioner.
To sustain a cause of action for moral damages, the complaint must have the
character of an action for interference with marital or family relations under the Civil Code.
A real party in interest is one who stands "to be benefited or injured by the judgment of
the suit." 18 In this case, petitioner would not be affected by any judgment in Special
Proceedings M-3630.
If petitioner is not a real party in interest, she cannot be an indispensable party. An
indispensable party is one without whom there can be no final determination of an
action. 19 Petitioner's participation in Special Proceedings M-3630 is not indispensable.
Certainly, the trial court can issue a judgment ordering Alberto J. Lopez to make an accounting
of his conjugal partnership with respondent, and give support to respondent and their children,
and dissolve Alberto J. Lopez' conjugal partnership with respondent, and forfeit Alberto J.
Lopez' share in property co-owned by him and petitioner. Such judgment would be perfectly
valid and enforceable against Alberto J. Lopez.

Nor can petitioner be a necessary party in Special Proceedings M-3630. A necessary

party is one who is not indispensable but who ought to be joined as party if complete relief is to
be accorded those already parties, or for a complete determination or settlement of the claim
subject of the action. 20 In the context of her petition in the lower court, respondent would be
accorded complete relief if Alberto J. Lopez were ordered to account for his alleged conjugal
partnership property with respondent, give support to respondent and her children, turn over his
share in the co-ownership with petitioner and dissolve his conjugal partnership or absolute
community property with respondent.

The Judgment
WHEREFORE, the Court GRANTS the petition and REVERSES the decision of the
Court of Appeals. 21 The Court DISMISSES Special Proceedings M-3630 of the Regional Trial
Court, Makati Branch 141 as against petitioner. cHDAIS

No costs.

SO ORDERED.

Davide, Jr., C.J., Puno, Kapunan and Ynares-Santiago, JJ., concur.

||| (Relucio v. Lopez, G.R. No. 138497, [January 16, 2002], 424 PHIL 617-627)
 SECOND DIVISION
[G.R. No. 141463. August 6, 2002.]
VICTOR ORQUIOLA and HONORATA ORQUIOLA, petitioners, vs.
HON. COURT OF APPEALS, HON. VIVENCIO S. BACLIG, Presiding
Judge, Regional Trial Court, Branch 77, Quezon City, THE SHERIFF
OF QUEZON CITY and HIS/HER DEPUTIES and PURA KALAW
LEDESMA, substituted by TANDANG SORA DEVELOPMENT
CORPORATION, respondents.
Rene V. Sarmiento for petitioners.
Ongkiko Kalaw Manhit & Acorda Law Offices for respondent P.K. Ledesma.
SYNOPSIS
Petitioners purchased a registered parcel of land from Mariano Lising. Subsequently,
private respondent, the registered owner of Lot 689, filed Civil Case No. Q-12918 against
Herminigilda Pedro and Mariano Lising for allegedly encroaching upon her lot. The trial court
adjudged Pedro and Lising to pay damages, remove all constructions and relocate the
boundaries. Petitioners filed a petition for prohibition with the CA to prohibit the judge from
issuing a writ of demolition and the sheriff from implementing the alias writ of execution against
their property. They claimed that they were not impleaded in Civil Case No. Q-12918, hence,
they would be deprived of their property without due process of law. The CA dismissed the
petition ruling that as buyers of Mariano Lising, petitioners were privies and could be reached by
the execution order. EHCaDS
The Supreme Court granted the petition and thereby reversed and set aside the
assailed decision. The Court noted that petitioners acquired the lot before the commencement
of Civil Case No. Q-12918. They could reasonably rely on Mariano Lising's certificate of title
because at the time of purchase, it was still free from any third party claim. As builders in good
faith and innocent purchasers for value, petitioners are proper parties in any case involving
subject property. But since private respondents failed to implead them in Civil Case No.
Q-12918, petitioners cannot be reached by the decision in said case.
SYLLABUS
1. CIVIL LAW; LAND REGISTRATION; PERSON DEALING WITH REGISTERED
PROPERTY IS CHARGED WITH NOTICE ONLY OF CLAIMS AS ARE ANNOTATED ON THE
TITLE; CASE AT BAR. — Where a case like the present one involves a sale of a parcel of land
under the Torrens system, the person dealing with the registered property need not go beyond
the certificate of title; he can rely solely on the title and he is charged with notice only of such
burdens and claims as are annotated on the title. It is our view here that the petitioners, spouses
Victor and Honorata Orquiola, are fully entitled to the legal protection of their lot by the Torrens
system.
2. REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT; WRIT OF EXECUTION MAY
ISSUE ONLY AGAINST A PARTY AND NOT AGAINST ONE WHO DID NOT HAVE HIS DAY
IN COURT; CASE AT BAR. — As builders in good faith and innocent purchasers for value,
petitioners have rights over the subject property and hence are proper parties in interest in any
case thereon. Consequently, private respondents should have impleaded them in Civil Case No.
Q-12918. Since they failed to do so, petitioners cannot be reached by the decision in said case.
No man shall be affected by any proceeding to which he is a stranger, and strangers to a case
are not bound by any judgment rendered by the court. In the same manner, a writ of execution
can be issued only against a party and not against one who did not have his day in court. Only
real parties in interest in an action are bound by the judgment therein and by writs of execution
and demolition issued pursuant thereto. In our view, the spouses Victor and Honorata Orquiola
have valid and meritorious cause to resist the demolition of their house on their own titled lot,
which is tantamount to a deprivation of property without due process of law. STaCcA
DECISION
QUISUMBING, J p:
This petition for review seeks the reversal of the decision 1 of the Court of Appeals
dated January 28, 1999 in CA-G.R. SP No. 47422, which dismissed the petition to prohibit
Judge Vivencio Baclig of the Regional Trial Court of Quezon City, Branch 77, from issuing a writ
of demolition against petitioners, and the sheriff and deputy sheriff of the same court from
implementing an alias writ of execution. Also assailed is the resolution 2 of the Court of Appeals
dated December 29, 1999 which denied petitioners' motion for reconsideration. SEDICa
The facts are as follows:
Pura Kalaw Ledesma was the registered owner of Lot 689, covered by TCT Nos.
111267 and 111266, in Tandang Sora, Quezon City. This parcel of land was adjacent to certain
portions of Lot 707 of the Piedad Estates, namely, Lot 707-A and 707-B, registered in the name
of Herminigilda Pedro under TCT Nos. 16951 and 16952, respectively. On October 29, 1964,
Herminigilda sold Lot 707-A and 707-B to Mariano Lising who then registered both lots and Lot
707-C in the name of M.B. Lising Realty and subdivided them into smaller lots.
Certain portions of the subdivided lots were sold to third persons including herein
petitioners, spouses Victor and Honorata Orquiola, who purchased a portion of Lot 707-A-2, Lot
5, Block 1 of the subdivision plan (LRC), Psd-42965. The parcel is now #33 Doña Regina St.,
Regina Village, Tandang Sora, Quezon City. The other portions were registered in the name of
the heirs of Pedro, heirs of Lising, and other third persons.
Sometime in 1969, Pura Kalaw Ledesma filed a complaint, docketed as Civil Case No.
Q-12918, with the Regional Trial Court of Quezon City against Herminigilda Pedro and Mariano
Lising for allegedly encroaching upon Lot 689. During the pendency of the action, Tandang
Sora Development Corporation replaced Pura Kalaw Ledesma as plaintiff by virtue of an
assignment of Lot 689 made by Ledesma in favor of said corporation. Trial continued for three
decades.
On August 21, 1991, the trial court finally adjudged defendants Pedro and Lising jointly
and severally liable for encroaching on plaintiff's land and ordered them:
(a) to solidarily pay the plaintiff Tandang Sora Dev. Corp. actual damages
in the amount of P20,000 with interest from date of filing of the
complaint;
(b) to remove all construction, including barbed wires and fences, illegally
constructed by defendants on plaintiff's property at defendants'
expense;
(c) to replace the removed concrete monuments removed by defendants,
at their own expense;
(d) to pay attorney's fees in the amount of FIVE THOUSAND PESOS
(P5,000.00) with interest computed from the date of filing of the
complaint;
(e) to relocate the boundaries to conform with the Commissioners' Report,
particularly, Annexes "A" and "B" thereof, at the expense of the
defendants. 3
As a result, in February 1998, the Deputy Sheriff of Quezon City directed petitioners,
through an alias writ of execution, to remove the house they constructed on the land they were
occupying.
On April 2, 1998, petitioners received a Special Order dated March 30, 1998, from the
trial court stating as follows:
Before the Court for resolution is the "Ex-Parte Motion For The
Issuance of A Writ of Demolition," filed by plaintiff, through counsel,
praying for the issuance of an Order directing the Deputy Sheriff to cause
the removal and/or demolition of the structures on the plaintiff's property
constructed by defendants and/or the present occupants. The
defendants-heirs of Herminigilda Pedro filed their comment on the said
Motion.
Considering that the decision rendered in the instant case had
become final and executory, the Court, in its Order of November 14, 1997,
directed the issuance of an alias writ of execution for the enforcement of
the said decision. However, despite the service of the said writ to all the
defendants and the present occupants of the subject property, they failed
to comply therewith, as per the Partial Sheriff's Return, dated February 9,
1998, issued by the Deputy Sheriff of this branch of the Court. Thus, there
is now a need to demolish the structures in order to implement the said
decision.
WHEREFORE, the defendants are hereby directed to remove, at
their expense, all constructions, including barbed wires and fences, which
defendants constructed on plaintiff's property, within fifteen (15) days from
notice of this Order; otherwise, this Court will issue a writ of demolition
against them.
SO ORDERED. 4
To prohibit Judge Vivencio Baclig of the Regional Trial Court of Quezon City from
issuing a writ of demolition and the Quezon City sheriff from implementing thealias writ of
execution, petitioners filed with the Court of Appeals a petition for prohibition with prayer for a
restraining order and preliminary injunction on April 17, 1998. 5 Petitioners alleged that they
bought the subject parcel of land in good faith and for value, hence, they were parties in interest.
Since they were not impleaded in Civil Case No. Q-12918, the writ of demolition issued in
connection therewith cannot be enforced against them because to do so would amount to
deprivation of property without due process of law.
The Court of Appeals dismissed the petition on January 28, 1999. It held that as
buyers and successors-in-interest of Mariano Lising, petitioners were considered privies who
derived their rights from Lising by virtue of the sale and could be reached by the execution order
in Civil Case No. Q-12918. Thus, for lack of merit, the petition was ordered dismissed. 6
Petitioners' motion for reconsideration was denied. Hence, this petition, where
petitioners aver that:
I.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT
THE DECISION IN CIVIL CASE NO. Q-12918 CAN ALSO BE
ENFORCED AGAINST THE PETITIONERS EVEN IF THEY WERE NOT
IMPLEADED AS PARTIES THERETO.
II.
THE HONORABLE COURT OF APPEALS ERRED IN NOT UPHOLDING
PETITIONERS' TITLE DESPITE THEIR BEING BUILDER IN GOOD
FAITH AND INNOCENT PURCHASER AND FOR VALUE.
III.
PETITIONERS ARE ENTITLED TO INJUNCTIVE RELIEF
CONSIDERING THAT THEY STAND TO SUFFER GRAVE AND
IRREPARABLE INJURY IF ALIAS WRIT OF EXECUTION AND THE
 SPECIAL ORDER ISSUED BY THE COURT A QUO IN CIVIL CASE NO.
Q-12918 FOR THE DEMOLITION OF ALL THE STRUCTURES ON THE
DISPUTED PROPERTY WERE ENFORCED AGAINST THE
PETITIONERS WHO WERE NOT EVEN GIVEN THEIR DAY IN
COURT. 7
For our resolution are the following issues: (1) whether the alias writ of execution may
be enforced against petitioners; and (2) whether petitioners were innocent purchasers for value
and builders in good faith.
On the first issue, petitioners claim that the alias writ of execution cannot be enforced
against them. They argue that the appellate court erred when it relied heavily on our ruling
in Vda. de Medina vs. Cruz 8 in holding that petitioners are successors-in-interest of Mariano
Lising, and as such, they can be reached by the order of execution in Civil Case No. Q-12918
even though they were not impleaded as parties thereto. Petitioners submit that Medina is not
applicable in this case because the circumstances therein are different from the circumstances
in the present case.
In Medina, the property in dispute was registered under Land Registration Act No.
496 in 1916 and Original Certificate of Title No. 868 was issued in the name of Philippine Realty
Corporation (PRC). In 1949, Benedicta Mangahas and Francisco Ramos occupied and built
houses on the lot without the PRC's consent. In 1959, PRC sold the lot to Remedios Magbanua.
Mangahas and Ramos opposed and instituted Civil Case No. C-120 to annul the sale and to
compel PRC to execute a contract of sale in their favor. The trial court dismissed the complaint
and ordered Mangahas and Ramos to vacate the lot and surrender possession thereof to
Magbanua. The judgment became final and executory. When Magbanua had paid for the land
in full, PRC executed a deed of absolute sale in her favor and a new title was consequently
issued in her name. Magbanua then sought the execution of the judgment in Civil Case No.
C-120. This was opposed by petitioner Medina who alleged that she owned the houses and lot
subject of the dispute. She said that she bought the houses from spouses Ricardo and
Eufrocinia de Guzman, while she purchased the lot from the heirs of the late Don Mariano San
Pedro y Esteban. The latter held the land by virtue of a Titulo de Composicion Con El Estado
Num. 4136, dated April 29, 1894. In opposing the execution, Medina argued that the trial court
did not acquire jurisdiction over her, claiming that she was not a party in Civil Case No. C-120,
thus, she could not be considered as "a person claiming under" Ramos and Mangahas.
When Medina reached this Court, we held that the decision in Civil Case No. C-120,
which had long become final and executory, could be enforced against petitioner even though
she was not a party thereto. We found that the houses on the subject lot were formerly owned
by Mangahas and Ramos who sold them to spouses de Guzman, who in turn sold them to
Medina. Under the circumstances, petitioner was privy to the two judgment debtors Mangahas
and Ramos, and thus Medina could be reached by the order of execution and writ of demolition
issued against the two. As to the lot under dispute, we sustained Magbanua's ownership over it,
she being the holder of a Torrens title. We declared that a Torrens title is generally conclusive
evidence of ownership of the land referred to therein, and a strong presumption exists that a
Torrens title was regularly issued and valid. A Torrens title is incontrovertible against
any informacion possessoria, or other title existing prior to the issuance thereof not annotated
on the Torrens title. Moreover, persons dealing with property covered by a Torrens certificate of
title are not required to go beyond what appears on its face.
Medina markedly differs from the present case on major points. First, the petitioner
in Medina acquired the right over the houses and lot subject of the disputeafter the original
action was commenced and became final and executory. In the present case, petitioners
acquired the lot before the commencement of Civil Case No. Q-12918. Second, the right over
the disputed land of the predecessors-in-interest of the petitioner in Medina was based on a title
of doubtful authenticity, allegedly aTitulo de Composicion Con El Estado issued by the Spanish
Government in favor of one Don Mariano San Pedro y Esteban, while the right over the land of
the predecessors-in-interest of herein petitioners is based on a fully recognized Torrens
title. Third, petitioners in this case acquired the registered title in their own names, while the
petitioner in Medina merely relied on the title of her predecessor-in-interest and tax declarations
to prove her alleged ownership of the land.
We must stress that where a case like the present one involves a sale of a parcel of
land under the Torrens system, the applicable rule is that a person dealing with the registered
property need not go beyond the certificate of title; he can rely solely on the title and he is
charged with notice only of such burdens and claims as are annotated on the title. 9 It is our
view here that the petitioners, spouses Victor and Honorata Orquiola, are fully entitled to the
legal protection of their lot by the Torrens system, unlike the petitioner in the Medina case who
merely relied on a mere Titulo de Composicion.
Coming now to the second issue, were petitioners purchasers in good faith and for
value? A buyer in good faith is one who buys the property of another without notice that some
other person has a right to or interest in such property. He is a buyer for value if he pays a full
and fair price at the time of the purchase or before he has notice of the claim or interest of some
other person in the property. 10 The determination of whether one is a buyer in good faith is a
factual issue which generally is outside the province of this Court to determine in a petition for
review. An exception is when the Court of Appeals failed to take into account certain relevant
facts which, if properly considered, would justify a different conclusion. 11 The instant case is
covered by this exception to the general rule. As found by the Court of Appeals and not refuted
by private respondent, petitioners purchased the subject land in 1964 from Mariano
Lising. 12 Civil Case No. Q-12918 was commenced sometime in 1969. The Court of Appeals
overlooked the fact that the purchase of the land took place prior to the institution of Civil Case
No. Q-12918. In other words, the sale to petitioners was made before Pura Kalaw Ledesma
claimed the lot. Petitioners could reasonably rely on Mariano Lising's Certificate of Title which at
the time of purchase was still free from any third party claim. Hence, considering the
circumstances of this case, we conclude that petitioners acquired the land subject of this
dispute in good faith and for value.
The final question now is: could we consider petitioners builders in good faith? We
note that this is the first time that petitioners have raised this issue. As a general rule, this could
not be done. Fair play, justice, and due process dictate that parties should not raise for the first
time on appeal issues that they could have raised but never did during trial and even during
proceedings before the Court of Appeals. 13 Nevertheless, we deem it proper that this issue be
resolved now, to avoid circuitous litigation and further delay in the disposition of this case. On
this score, we find that petitioners are indeed builders in good faith.
 A builder in good faith is one who builds with the belief that the land he is building on is
his, and is ignorant of any defect or flaw in his title. 14 As earlier discussed, petitioner spouses
acquired the land in question without knowledge of any defect in the title of Mariano Lising.
Shortly afterwards, they built their conjugal home on said land. It was only in 1998, when the
sheriff of Quezon City tried to execute the judgment in Civil Case No. Q-12918, that they had
notice of private respondent's adverse claim. The institution of Civil Case No. Q-12918 cannot
serve as notice of such adverse claim to petitioners since they were not impleaded therein as
parties.

As builders in good faith and innocent purchasers for value, petitioners have rights
over the subject property and hence they are proper parties in interest in any case
thereon. 15 Consequently, private respondents should have impleaded them in Civil Case No.
Q-12918. Since they failed to do so, petitioners cannot be reached by the decision in said case.
No man shall be affected by any proceeding to which he is a stranger, and strangers to a case
are not bound by any judgment rendered by the court. In the same manner, a writ of execution
can be issued only against a party and not against one who did not have his day in court. Only
real parties in interest in an action are bound by the judgment therein and by writs of execution
and demolition issued pursuant thereto. 16 In our view, the spouses Victor and Honorata
Orquiola have valid and meritorious cause to resist the demolition of their house on their own
titled lot, which is tantamount to a deprivation of property without due process of law. ACTaDH

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals dated
January 28, 1999, and its resolution dated December 29, 1999, in CA-G.R. SP No. 47422, are
REVERSED and SET ASIDE. Respondents are hereby enjoined from enforcing the decision in
Civil Case No. Q-12918 through a writ of execution and order of demolition issued against
petitioners. Costs against private respondent.

SO ORDERED.

Bellosillo, Mendoza and Corona, JJ., concur.

||| (Orquiola v. Court of Appeals, G.R. No. 141463, [August 6, 2002], 435 PHIL 323-333)
 SECOND DIVISION
[G.R. No. 135796. October 3, 2002.]
CHINA BANKING CORPORATION, petitioner, vs. MERCEDES M.
OLIVER, respondent.
Lim Vigilia Alcala Dumlao and Orencia for petitioner.
The Law Firm of Antonio A. Navarro III & Assoc. for private respondent M. Oliver.
SYNOPSIS
Pangan Lim, Jr. and a certain Mercedes M. Oliver obtained a loan from petitioner bank
secured by a real estate mortgage on the property covered by TCT No. S-50195 in the name of
Oliver. Thereafter, respondent, claiming that she is Mercedes M. Oliver, filed an action for
annulment of mortgage and cancellation of title with damages against petitioner bank. She
alleged that she is the registered and lawful owner of the subject property and that she did not
apply for a loan or surrender her title to petitioner bank. Petitioner moved to dismiss the case for
lack of cause of action and non-joinder of an indispensable party, the mortgagor Oliver. The trial
court, however, dismissed petitioner's motion to dismiss. Instead of filing an answer, petitioner
filed a petition for certiorari with the Court of Appeals. On motion of respondent Oliver, the trial
court declared petitioner bank in default for failure to file an answer within the reglementary
period. Consequently. petitioner filed a supplemental petition seeking annulment of the trial
court's order of default. It argued that the special civil action for certiorari filed in the Court of
Appeals interrupted the proceedings before the trial court, thereby staying the period for filing
the answer. The Court of Appeals, however, sustained the dismissal of petitioner's motion to
dismiss ruling that Rule 6, Section 11 of the Rules of Court allows petitioner bank to file a
third-party complaint against mortgagor Oliver. Anent the default order, the appellate court
affirmed the same holding that the special civil action for certiorari did not interrupt the period to
file an answer, there being no temporary restraining order or writ of preliminary injunction
issued. Hence, this petition for review. SCHIcT
An indispensable party is a party in interest, without whom no final determination can
be had on an action. In denying the petition, the Supreme Court held that mortgagor Oliver is
not an indispensable party in the case filed by respondent Oliver. It is true that mortgagor Oliver
is a party in interest, for she will be affected by the outcome of the case. However, mortgagor
Oliver's absence from the case does not hamper the trial court in resolving the dispute between
respondent Oliver and petitioner bank. A perusal of respondent Oliver's allegations in the
complaint below showed that it was for annulment of mortgage due to petitioner's negligence in
determining the actual ownership of the property, resulting in the mortgage's annotation on TCT
No. S-50195 in the Registry of Deeds' custody. To support said allegations, respondent Oliver
had to prove (1) that she is the real Mercedes M. Oliver referred to in the TCT, and (2) that she
is not the same person using the name who entered into a deed of mortgage with the petitioner.
This, respondent Oliver can do in her complaint without necessarily impleading the mortgagor
Oliver. Thus, since mortgagor Oliver is not an indispensable party, the Court held that Section
11, Rule 3 of the Rules of Court applies.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; PARTIES; INDISPENSABLE PARTY;
DEFINED; CASE AT BAR. — An indispensable party is a party in interest, without whom no
final determination can be had of an action. It is true that mortgagor Oliver One is a party in
interest, for she will be affected by the outcome of the case. She stands to be benefited in case
the mortgage is declared valid, or injured in case her title is declared fake. However, mortgagor
Oliver One's absence from the case does not hamper the trial court in resolving the dispute
between respondent Oliver Two and petitioner. A perusal of Oliver Two's allegations in the
complaint below shows that it was for annulment of mortgage due to petitioner's negligence in
not determining the actual ownership of the property, resulting in the mortgage's annotation on
TCT No. S-50195 in the Registry of Deeds' custody. To support said allegations, respondent
Oliver Two had to prove (1) that she is the real Mercedes M. Oliver referred to in the TCT, and
(2) that she is not the same person using that name who entered into a deed of mortgage with
the petitioner. This, respondent Oliver Two can do in her complaint without necessarily
impleading the mortgagor Oliver One. Hence, Oliver One is not an indispensable party in the
case filed by Oliver Two. EcDSHT
2. ID.; ID.; ID.; PARTY IS NOT INDISPENSABLE IF HIS INTEREST IN THE
CONTROVERSY IS DISTINCT AND DIVISIBLE FROM INTEREST OF THE OTHER PARTIES.
— InNoceda vs. Court of Appeals, et al., 313 SCRA 504 (1999), we held that a party is not
indispensable to the suit if his interest in the controversy or subject matter is distinct and
divisible from the interest of the other parties and will not necessarily be prejudiced by a
judgment which does complete justice to the parties in court. In this case, Chinabank has
interest in the loan which, however, is distinct and divisible from the mortgagor's interest, which
involves the land used as collateral for the loan.
3. ID.; ID.; ID.; A PARTY IS NOT INDISPENSABLE IF HIS PRESENCE WILL SIMPLY
AVOID MULTIPLE LITIGATION; CASE AT BAR. — Further, a declaration of the mortgage's
nullity in this case will not necessarily prejudice mortgagor Oliver One. The bank still needs to
initiate proceedings to go after the mortgagor, who in turn can raise other defenses pertinent to
the two of them. A party is also not indispensable if his presence would merely permit complete
relief between him and those already parties to the action, or will simply avoid multiple litigation,
as in the case of Chinabank and mortgagor Oliver One. The latter's participation in this case will
simply enable petitioner Chinabank to make its claim against her in this case, and hence, avoid
the institution of another action. Thus, it was the bank who should have filed a third-party
complaint or other action versus the mortgagor Oliver One.
4. ID.; ID.; ID.; NON-JOINDER OF PARTIES; NOT A GROUND FOR DISMISSAL OF
AN ACTION; PERSON NOT A PARTY TO AN ACTION MAY BE IMPLEADED BY THE
DEFENDANT EITHER ON THE BASIS OF LIABILITY TO HIMSELF OR ON THE GROUND
OF DIRECT LIABILITY TO THE PLAINTIFF. — As to the second issue, since mortgagor Oliver
One is not an indispensable party, Section 7, Rule 3 of the 1997 Rules of Civil Procedure, which
requires compulsory joinder of indispensable parties in a case, does not apply. Instead, it is
Section 11, Rule 3, that applies. Nonjoinder of parties is not a ground for dismissal of an action.
Parties may be added by order of the court, either on its own initiative or on motion of the parties.
Hence, the Court of Appeals committed no error when it found no abuse of discretion on the
part of the trial court for denying Chinabank's motion to dismiss and, instead, suggested that
petitioner file an appropriate action against mortgagor Oliver One. A person who is not a party
to an action may be impleaded by the defendant either on the basis of liability to himself or on
the ground of direct liability to the plaintiff. DISaEA
5. ID.; SPECIAL CIVIL ACTIONS; PETITION FOR CERTIORARI; FILING THEREOF
DOES NOT INTERRUPT THE COURSE OF THE PRINCIPAL CASE UNLESS AN
INJUNCTIVE RELIEF IS ISSUED. — Now, the third issue, did the Court of Appeals err when it
sustained the trial court's ruling that petitioner Chinabank was in default? As found by the Court
of Appeals, petitioner did not file its answer, although it received the March 13, 1997 order
denying the motion to dismiss. Instead, petitioner filed a petition for certiorari under Rule 65 of
the Rules of Court. Said petition, however, does not interrupt the course of the principal case
unless a temporary restraining order or writ of preliminary injunction is issued. No such order or
writ was issued in this case. Hence, Chinabank as defendant below was properly declared in
default by the trial court, after the 15-day period to file its answer or other responsive pleading
lapsed.
6. ID.; APPEAL; PETITION FOR REVIEW; LIMITED ONLY TO QUESTIONS OF LAW.
— Lastly, were the withdrawal and consequent dismissal of the complaint against officials of the
Registry of Deeds conclusive of the authenticity of mortgagor Oliver One's copy of TCT No.
S-50195? This is a question of fact, which is not a proper subject for review in this petition. Here,
we are limited only to questions of law, as a general rule. Petitioner failed to show that this case
falls under any of the exceptions to this rule. We need not tarry on this issue now.
RESOLUTION
QUISUMBING, J p:
This petition for review 1 seeks the reversal of the decision dated June 1, 1998, of the
Court of Appeals in CA-G.R. SP No. 43836, dismissing China Banking Corporation's petition
for certiorari to annul the two orders of the Regional Trial Court of Muntinlupa City, Branch 276,
which earlier denied petitioner's motion to dismiss and then declared the bank in default in Civil
Case No. 96-219. The appellate court also denied petitioner's motion for reconsideration in a
resolution dated September 30, 1998.
The facts of this case are culled from the records.
In August 1995, Pangan Lim, Jr. and a certain Mercedes M. Oliver opened a joint
account in China Banking Corporation (hereinafter Chinabank) at EDSA Balintawak Branch.
Lim introduced Oliver to the bank's branch manager as his partner in the rice and palay trading
business. Thereafter, Lim and Oliver applied for a P17 million loan, offering as collateral a 7,782
square meter lot located in Tunasan, Muntinlupa and covered by TCT No. S-50195 in the name
of Oliver. The bank approved the application. On November 17, 1995, Lim and Oliver executed
in favor of Chinabank a promissory note for P16,650,000, as well as a Real Estate Mortgage on
the property. The mortgage was duly registered and annotated on the original title under the
custody of the Registry of Deeds of Makati and on the owner's duplicate copy in the bank's
possession. The mortgage document showed Mercedes Oliver's address to be No. 95 Malakas
Street, Diliman, Quezon City. For brevity, she is hereafter referred to as "Oliver One."
On November 18, 1996, respondent claiming that she is Mercedes M. Oliver with
postal office address at No. 40 J.P. Rizal St., San Pedro, Laguna, filed an action for annulment
of mortgage and cancellation of title with damages against Chinabank, Register of Deeds Atty.
Mila G. Flores, and Deputy Register of Deeds Atty. Ferdinand P. Ignacio. Respondent, whom
we shall call as "Oliver Two," claimed that she was the registered and lawful owner of the land
subject of the real estate mortgage; that the owner's duplicate copy of the title had always been
in her possession; and that she did not apply for a loan or surrender her title to
Chinabank. 2 She prayed that: (1) the owner's duplicate copy surrendered to Chinabank as well
as the original title with the Registry of Deeds be cancelled; (2) the mortgage be declared null
and void; and (3) the Registry of Deeds be ordered to issue a new and clean title in her name. 3
On January 31, 1997, Chinabank moved to dismiss the case for lack of cause of action
and non-joinder of an indispensable party, the mortgagor.
On March 13, 1997, Judge Norma C. Perello issued an order denying the motion to
dismiss, stating that:
A reading of the COMPLAINT which of course is hypothetically
admitted, will show that a valid judgment can be rendered against
defendant. Plaintiff having sufficiently averred that defendants negligently
failed to ascertain the genuineness or not (sic) of the title of the land
mortgaged to it upon the claim of ownership by the mortgagors.
Furthermore, the matters alleged in the MOTION TO DISMISS are all
evidentiary which Defendants may substantiate at the appointed hours. 4
On April 7, 1997, Chinabank filed with the Court of Appeals a petition for certiorari with
prayer for the issuance of a writ of preliminary injunction and/or restraining order to enjoin
enforcement of the March 13, 1997 order and further action on the case. The Court of Appeals
directed respondent Oliver Two to file her comment and deferred action on the prayer for the
issuance of the preliminary injunction pending submission of the comment.
On June 30, 1997, respondent Oliver Two moved to declare petitioner Chinabank in
default. She pointed out that since petitioner received the order denying the motion to dismiss
on March 21, 1997, it had only until April 7, 1997 to file its answer to the complaint. However,
until the filing of the motion for default, no answer had been filed yet. The trial court granted the
motion and declared petitioner in default in its order dated July 17, 1997, thus:
 Acting on the Motion To Declare Defendant Bank in Default, and
finding the same to be legally tenable is granted.
Accordingly, the Defendant Bank is declared in default as
summons was served on It as early as December 16, 1996, but until date
they have not filed an Answer nor any responsive pleading and instead, It
filed a Motion to Dismiss, which was denied by this Court on March 13,
1997.
The filing of a CERTIORARI to question the Orders by this Court
did not toll the period for Defendants to answer the complaint.
Therefore, the reglementary period for the filing of responsive
pleading has long expired.
Let the case be submitted for Decision based on the complaint.
It is SO ORDERED. 5
Consequently, petitioner Chinabank filed a supplemental petition on August 11, 1997,
seeking annulment of the July 17, 1997 order. It argued that the special civil action
for certiorari filed in the Court of Appeals interrupted the proceedings before the trial court,
thereby staying the period for filing the answer.
On June 1, 1998, the Court of Appeals promulgated the assailed decision, finding no
grave abuse of discretion committed by the trial judge in ruling that the Rules of Court provided
the manner of impleading parties to a case and in suggesting that petitioner file an appropriate
action to bring the mortgagor within the court's jurisdiction. The appellate court said that Rule 6,
Section 11 of the Rules of Court allows petitioner to file a third-party complaint against the
mortgagor. As to the judgment by default, the Court of Appeals said that an order denying the
motion to dismiss is interlocutory and may not be questioned through a special civil action
forcertiorari. The defendant must proceed with the case and raise the issues in his motion to
dismiss when he appeals to a higher court. In this case, petitioner Chinabank should have filed
its answer when it received the March 13, 1997 order denying the motion to dismiss. The
special civil action for certiorari with the Court of Appeals did not interrupt the period to file an
answer, there being no temporary restraining order or writ of preliminary injunction issued.
The Court of Appeals denied petitioner's motion for reconsideration. Hence, this
petition anchored on the following grounds:
I COURT.
SEC. 11, RULE 3, OF THE 1997 RULES OF CIVIL PROCEDURE DOES
NOT APPLY WHERE THE PARTY WHO WAS NOT IMPLEADED IS AN
INDISPENSABLE PARTY; INSTEAD, SECTION 7, RULE 3 THEREOF,
APPLIES.
II
THE MORTGAGOR MERCEDES M. OLIVER IS AN INDISPENSABLE
PARTY UNDER SECTION 7, RULE 3, OF THE 1997 RULES OF CIVIL
PROCEDURE, AND MUST THEREFORE INDISPENSABLY BE JOINED
AS A PARTY-DEFENDANT.
III
RESPONDENT'S CAUSE OF ACTION IS ANCHORED ON HER CLAIM
AS THE REGISTERED AND LAWFUL OWNER OF THE PROPERTY IN
QUESTION AND THAT HER OWNER'S DUPLICATE COPY OF THE
TITLE (ANNEX "A") IS THE TRUE AND GENUINE TITLE. THUS, THE
ACTION BEFORE THE HONORABLE COURT-A-QUO IS A LAND
DISPUTE BETWEEN TWO (2) PERSONS CLAIMING
OWNERSHIP. aHSTID
IV
THE ANNULMENT OF THE MORTGAGE AND THE CANCELLATION OF
ANNEXES "B" AND "C" AS PRAYED FOR IN THE COMPLAINT IN CIVIL
CASE NO. 96-219 ARE INEXTRICABLY INTERTWINED WITH THE
ISSUE OF OWNERSHIP, HENCE, THE LATTER MUST FIRST BE
RESOLVED TO DETERMINE THE FORMER.
V
THE OWNER'S DUPLICATE COPY OF THE TITLE OF MORTGAGOR
MERCEDES M. OLIVER OWNER'S DUPLICATE COPY CANNOT, IN
HER ABSENCE, BE DECLARED NULL AND VOID. CONSEQUENTLY,
INASMUCH AS THE MORTGAGE IN FAVOR OF PETITIONER IS
DEPENDENT UPON THE OWNER'S DUPLICATE COPY OF THE
MORTGAGOR, THE COMPLAINT IN CIVIL CASE NO. 96-219 CAN NOT
RESOLVE THE CONTROVERSY WITH FINALITY.
VI
THE CASE OF CHURCH OF CHRIST VS. VALLESPIN, G.R. NO. 53726,
AUGUST 15, 1988, DOES NOT APPLY INASMUCH AS THE USE OF
TERM "INDISPENSABLE PARTY" IN SAID CASE WAS LOOSELY USED
AND IN TRUTH WAS INTENDED TO MEAN "PARTIES-IN-INTEREST"
AS CONTEMPLATED BY SECTION 2, RULE 3 OF THE RULES OF
VII
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
SANCTIONED THE TRIAL COURT'S ERROR IN DECLARING
DEFENDANT CBC IN DEFAULT FOR FAILURE TO FILE AN ANSWER,
NOTWITHSTANDING THE SETTLED DOCTRINE THAT WHERE AN
INDISPENSABLE PARTY IS NOT IN COURT, THE TRIAL COURT
 SHOULD NOT PROCEED BUT INSTEAD SHOULD DISMISS THE
CASE.
VIII
THE DISMISSAL/WITHDRAWAL OF THE COMPLAINT AGAINST
DEFENDANTS REGISTER AND DEPUTY REGISTER OF DEEDS
NECESSARILY GIVE RISE TO, AND BOLSTERS, THE CONCLUSION
THAT THE OWNER'S DUPLICATE COPY OF TCT NO. S-50195 OF
MORTGAGOR MERCEDES M. OLIVER IS THE GENUINE AND
AUTHENTIC COPY. 6
For a clearer discussion of the issues in this controversy, we may state them as
follows:
1. Is the mortgagor who goes by the name of Mercedes M. Oliver, herein
called Oliver One, an indispensable party in Civil Case No.
96219?
2. Should Section 7 Rule 3 of the 1997 Rules of Civil Procedure 7 apply in
this case?
3. Did the Court of Appeals err when it sustained the trial court's
declaration that petitioner was in default?
4. Were the withdrawal and consequent dismissal of the complaint against
the Registry of Deeds' officials indicative of the authenticity of
mortgagor Oliver One's copy of TCT No. S-50195?
Petitioner Chinabank alleges that there are two owner's duplicate copies of TCT No.
S-50195 involved in this case and two persons claiming to be the real "MERCEDES
MARAVILLA OLIVER." One is the mortgagor, Oliver One. The other is the respondent, Oliver
Two. Respondent's complaint before the trial court was one for cancellation of the transfer
certificate of title in petitioner's possession (Annex B). According to petitioner, the issue below is
the genuineness of the titles, which is intertwined with the issue of ownership. This being the
case, said the petitioner, the mortgagor Oliver One must necessarily be impleaded for she is the
registered owner under Annex "B". Petitioner argues that mortgagor Oliver One is in a better
position to defend her title. She stands to suffer if it is declared fake. Further, petitioner claims
that the validity and enforceability of the mortgage entirely depends on the validity and
authenticity of Annex "B". The mortgage cannot be declared a nullity without the trial court
declaring Annex "B" a nullity. Hence, mortgagor Oliver One's participation in the suit is
indispensable, according to petitioner. In brief, what petitioner Chinabank is saying is that it was
indispensable for respondent Oliver Two to implead mortgagor Oliver One in the case before
the trial court. Failing to do that, the complaint of herein respondent Oliver Two should have
been dismissed.
Petitioner's contention is far from tenable. An indispensable party is a party in interest,
without whom no final determination can be had of an action. 8 It is true that mortgagor Oliver
One is a party in interest, for she will be affected by the outcome of the case. She stands to be
benefited in case the mortgage is declared valid, or injured in case her title is declared
fake. 9 However, mortgagor Oliver One's absence from the case does not hamper the trial court
in resolving the dispute between respondent Oliver Two and petitioner. A perusal of Oliver
Two's allegations in the complaint below shows that it was for annulment of mortgage due to
petitioner's negligence in not determining the actual ownership of the property, resulting in the
mortgage's annotation on TCT No. S-50195 in the Registry of Deeds' custody. To support said
allegations, respondent Oliver Two had to prove (1) that she is the real Mercedes M. Oliver
referred to in the TCT, and (2) that she is not the same person using that name who entered into
a deed of mortgage with the petitioner. This, respondent Oliver Two can do in her complaint
without necessarily impleading the mortgagor Oliver One. Hence, Oliver One is not an
indispensable party in the case filed by Oliver Two.
In Noceda vs. Court of Appeals, et al., 313 SCRA 504 (1999), we held that a party is
not indispensable to the suit if his interest in the controversy or subject matter is distinct and
divisible from the interest of the other parties and will not necessarily be prejudiced by a
judgment which does complete justice to the parties in court. In this case, Chinabank has
interest in the loan which, however, is distinct and divisible from the mortgagor's interest, which
involves the land used as collateral for the loan.
Further, a declaration of the mortgage's nullity in this case will not necessarily
prejudice mortgagor Oliver One. The bank still needs to initiate proceedings to go after the
mortgagor, who in turn can raise other defenses pertinent to the two of them. A party is also not
indispensable if his presence would merely permit complete relief between him and those
already parties to the action, or will simply avoid multiple litigation, as in the case of Chinabank
and mortgagor Oliver One. 10 The latter's participation in this case will simply enable petitioner
Chinabank to make its claim against her in this case, and hence, avoid the institution of another
action. Thus, it was the bank who should have filed a third-party complaint or other action
versus the mortgagor Oliver One.
As to the second issue, since mortgagor Oliver One is not an indispensable party,
Section 7, Rule 3 of the 1997 Rules of Civil Procedure, which requires compulsory joinder of
indispensable parties in a case, does not apply. Instead, it is Section 11, Rule 3, that
applies. 11 Non-joinder of parties is not a ground for dismissal of an action. Parties may be
added by order of the court, either on its own initiative or on motion of the parties. 12 Hence, the
Court of Appeals committed no error when it found no abuse of discretion on the part of the trial
court for denying Chinabank's motion to dismiss and, instead, suggested that petitioner file an
appropriate action against mortgagor Oliver One. A person who is not a party to an action may
be impleaded by the defendant either on the basis of liability to himself or on the ground of direct
liability to the plaintiff. 13
Now, the third issue, did the Court of Appeals err when it sustained the trial court's
ruling that petitioner Chinabank was in default? As found by the Court of Appeals, petitioner did
not file its answer, although it received the March 13, 1997 order denying the motion to dismiss.
Instead, petitioner filed a petition for certiorariunder Rule 65 of the Rules of Court. Said petition,
however, does not interrupt the course of the principal case unless a temporary restraining
order or writ of preliminary injunction is issued. 14 No such order or writ was issued in this case.
Hence, Chinabank as defendant below was properly declared in default by the trial court, after
the 15-day period to file its answer or other responsive pleading lapsed.
 Lastly, were the withdrawal and consequent dismissal of the complaint against
officials of the Registry of Deeds conclusive of the authenticity of mortgagor Oliver One's copy
of TCT No. S-50195? This is a question of fact, which is not a proper subject for review in this
petition. Here, we are limited only to questions of law, 15 as a general rule. Petitioner failed to
show that this case falls under any of the exceptions to this rule. We need not tarry on this issue
now.

WHEREFORE, the petition is DENIED for lack of merit. The assailed decision dated
June 1, 1998 and the resolution dated September 30, 1998 of the Court of Appeals in CA-G.R.
SP No. 43836 are AFFIRMED. Costs against petitioner.

SO ORDERED. EHASaD

Bellosillo, Austria-Martinez and Callejo, Sr., JJ., concur.

Mendoza, J., is on official leave.

||| (China Banking Corp. v. Oliver, G.R. No. 135796 (Resolution), [October 3, 2002], 439 PHIL
50-62)
 FIRST DIVISION
[G.R. No. 166302. July 28, 2005.]
LOTTE PHIL. CO., INC., petitioner, vs. ERLINDA DELA CRUZ,
LEONOR MAMAUAG, LOURDES CAUBA, JOSEPHINE DOMANAIS,
ARLENE CAGAYAT, AMELITA YAM, VIVIAN DOMARAIS, MARILYN
ANTALAN, CHRISTOPHER RAMIREZ, ARNOLD SAN PEDRO,
MARISSA SAN PEDRO, LORELI JIMENEZ, JEFFREY BUENO,
CHRISTOPHER CAGAYAT, GERARD CABILES, JOAN ENRIQUEZ,
JOSEPH DE LA CRUZ, NELLY CLERIGO, DULCE NAVARETTE,
ROWENA BELLO, DANIEL RAMIREZ, AILEEN BAUTISTA and
BALTAZAR FERRERA, respondents.
Francisco Gerardo C. Llamas & Paul A. Bernardino for petitioner.
Tagle-Chua Cruz & Aquino for respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; PARTIES TO CIVIL ACTIONS;
INDISPENSABLE PARTIES; THE PRESENCE OF INDISPENSABLE PARTIES IS
NECESSARY TO VEST THE COURT WITH JURISDICTION; CASE AT BAR. — An
indispensable party is a party in interest without whom no final determination can be had of an
action, and who shall be joined either as plaintiffs or defendants. The joinder of indispensable
parties is mandatory. The presence of indispensable parties is necessary to vest the court with
jurisdiction, which is "the authority to hear and determine a cause, the right to act in a case".
Thus, without the presence of indispensable parties to a suit or proceeding, judgment of a court
cannot attain real finality. The absence of an indispensable party renders all subsequent
actions of the court null and void for want of authority to act, not only as to the absent parties but
even as to those present. In the case at bar, 7J is an indispensable party. It is a party in interest
because it will be affected by the outcome of the case. The Labor Arbiter and the NLRC found
7J to be solely liable as the employer of respondents. The Court of Appeals however rendered
Lotte jointly and severally liable with 7J who was not impleaded by holding that the former is the
real employer of respondents. Plainly, its decision directly affected 7J.
2. ID.; ID.; ID.; ID.; COMPULSORY JOINDER OF INDISPENSABLE PARTIES;
NON-JOINDER OF INDISPENSABLE PARTIES IS NOT A GROUND FOR THE DISMISSAL
OF THE ACTION. — In Domingo v. Scheer, we held that the non-joinder of indispensable
parties is not a ground for the dismissal of an action and the remedy is to implead the non-party
claimed to be indispensable. Parties may be added by order of the court on motion of the party
or on its own initiative at any stage of the action and/or such times as are just. If the petitioner
refuses to implead an indispensable party despite the order of the court, the latter may dismiss
the complaint/petition for the petitioner/plaintiff's failure to comply therefor.
3. ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — Although 7J was a co-party in the case
before the Labor Arbiter and the NLRC, respondents failed to include it in their petition for
certiorari in the Court of Appeals. Hence, the Court of Appeals did not acquire jurisdiction over
7J. No final ruling on this matter can be had without impleading 7J, whose inclusion is
necessary for the effective and complete resolution of the case and in order to accord all parties
with due process and fair play.
DECISION
YNARES-SANTIAGO, J p:
This petition for review on certiorari 1 assails the July 9, 2004 decision 2 of the Court
of Appeals in CA-G.R. SP No. 72732 and its November 26, 2004 resolution 3denying
reconsideration thereof.
The established facts of this case are as follows:
Private respondent (petitioner herein) Lotte Phils., Inc. (Lotte) is a
domestic corporation. Petitioners (respondents herein) are among those
who were hired and assigned to the confectionery facility operated by
private respondent.
On December 14, 1995 — and yearly thereafter until the year
2000 — 7J Maintenance and Janitorial Services ("7J") entered into a
contract with private respondent to provide manpower for needed
maintenance, utility, janitorial and other services to the latter. In
compliance with the terms and conditions of the service contract, and to
accommodate the needs of private respondent for personnel/workers to do
and perform "piece works," petitioners, among others, were hired and
assigned to private respondent as repackers or sealers.
However, either in October, 1999 or on February 9, 2000, private
respondent dispensed with their services allegedly due to the
expiration/termination of the service contract by respondent with 7J. They
were either told "hwag muna kayong pumasok at tatawagan na lang kung
may gawa"; or were asked to wait "pag magrereport sila sa trabaho."
Unfortunately, petitioners were never called back to work again.
Aggrieved, petitioners lodged a labor complaint against
both private respondent Lotte and 7J, for illegal dismissal, regularization,
payment of corresponding backwages and related employment benefits,
13th month pay, service incentive leave, moral and exemplary damages
and attorney's fees based on total judgment award. 4
 On February 28, 2001, Labor Arbiter Cresencio G. Ramos, Jr., rendered
judgment 5 declaring 7J as employer of respondents. 6 The arbiter also found 7J guilty of illegal
dismissal 7 and ordered to reinstate respondents, 8 pay P2,374,710.00 as backwages,
P713,648.00 as 13th month pay and P117,000.00 as service incentive leave pay. 9
Respondents appealed to the National Labor Relations Commission (NLRC) praying
that Lotte be declared as their direct employer because 7J is merely a labor-only contractor. In
its decision 10 dated April 24, 2002, the NLRC found no cogent reason to disturb the findings of
the labor arbiter and affirmed its ruling that 7J is the employer of respondents and solely liable
for their claims.
Respondents' motion for reconsideration was denied by the NLRC in a resolution
dated June 18, 2002.
Undaunted, they filed a petition for certiorari in the Court of Appeals 11 against the
NLRC and Lotte, insisting that their employer is Lotte and not 7J.
Lotte, however, denied that respondents were its employees. It prayed that the petition
be dismissed for failure to implead 7J who is a party interested in sustaining the proceedings in
court, pursuant to Section 3, Rule 46 of the Revised Rules of Civil Procedure.
On July 9, 2004, the Court of Appeals reversed and set aside the rulings of the Labor
Arbiter and the NLRC. In its decision, the Court of Appeals declared Lotte as the real employer
of respondents and that 7J who engaged in labor-only contracting was merely the agent of Lotte.
Respondents who performed activities directly related to Lotte's business were its regular
employees under Art. 280 of the Labor Code. As such, they must be accorded security of
tenure and their services terminated only on "just" and "authorized" causes. DSHcTC
Lotte's motion for reconsideration was denied, hence this petition, on the following
issues:
8. Whether or not petitioner herein had the burden of proof to
establish before the proceedings in the Court of Appeals that 7J
Maintenance and Janitorial Service was not a labor-only contractor.
8.1. Whether or not the Petition in CA-G.R. SP No. 72732 is
dismissible for failure to comply with Section 3, Rule 46 in relation to
Section 5, Rule 65 of the 1997 Rules of Civil Procedure. 12
We first resolve the procedural issue raised by petitioner. Lotte asserts that 7J is an
indispensable party and should have been impleaded in respondents' petition in the Court of
Appeals. It claims that the petition before the Court of Appeals was dismissible for failure to
comply with Section 3, 13 Rule 46 in relation to Section 5 14 of Rule 65 of the Revised Rules of
Civil Procedure. cITCAa
Petitioner's contention is tenable.
An indispensable party is a party in interest without whom no final determination can
be had of an action, 15 and who shall be joined either as plaintiffs or defendants. 16 The joinder
of indispensable parties is mandatory. 17 The presence of indispensable parties is necessary
to vest the court with jurisdiction, which is "the authority to hear and determine a cause, the right
to act in a case". 18 Thus, without the presence of indispensable parties to a suit or proceeding,
judgment of a court cannot attain real finality. 19 The absence of an indispensable party
renders all subsequent actions of the court null and void for want of authority to act, not only as
to the absent parties but even as to those present. 20
In the case at bar, 7J is an indispensable party. It is a party in interest because it will be
affected by the outcome of the case. The Labor Arbiter and the NLRC found 7J to be solely
liable as the employer of respondents. The Court of Appeals however rendered Lotte jointly and
severally liable with 7J who was not impleaded by holding that the former is the real employer of
respondents. Plainly, its decision directly affected 7J.
In Domingo v. Scheer, 21 we held that the non-joinder of indispensable parties is not a
ground for the dismissal of an action 22 and the remedy is to implead the non-party claimed to
be indispensable. 23 Parties may be added by order of the court on motion of the party or on its
own initiative at any stage of the action and/or such times as are just. If the petitioner refuses to
implead an indispensable party despite the order of the court, the latter may dismiss the
complaint/petition for the petitioner/plaintiff's failure to comply therefor. 24
Although 7J was a co-party in the case before the Labor Arbiter and the NLRC,
respondents failed to include it in their petition for certiorari in the Court of Appeals. Hence, the
Court of Appeals did not acquire jurisdiction over 7J. No final ruling on this matter can be had
without impleading 7J, whose inclusion is necessary for the effective and complete resolution of
the case and in order to accord all parties with due process and fair play. IaTSED
In light of the foregoing, the Court sees no need to discuss the second issue raised by
petitioner.
WHEREFORE, the July 9, 2004 decision of the Court of Appeals in CA-G.R. SP No.
72732 and the November 26, 2004 resolution, are SET ASIDE. Let the case be REMANDED to
the Court of Appeals to include 7J Maintenance and Janitorial Services as an indispensable
party to the case for further proceedings.
SO ORDERED.
Davide, Jr., C.J., Quisumbing, Carpio and Azcuna, JJ., concur.
||| (Lotte Phil. Co., Inc. v. Dela Cruz, G.R. No. 166302, [July 28, 2005], 502 PHIL 816-822)
 THIRD DIVISION
[G.R. No. 190823. April 4, 2011.]
DOMINGO CARABEO, petitioner, vs. SPOUSES NORBERTO and
SUSAN DINGCO, respondents.
DECISION
CARPIO MORALES, J p:
On July 10, 1990, Domingo Carabeo (petitioner) entered into a contract
denominated as "Kasunduan sa Bilihan ng Karapatan sa Lupa" 1 (kasunduan) with
Spouses Norberto and Susan Dingco (respondents) whereby petitioner agreed to sell his
rights over a 648 square meter parcel of unregistered land situated in Purok III, Tugatog,
Orani, Bataan to respondents for P38,000.
Respondents tendered their initial payment of P10,000 upon signing of the
contract, the remaining balance to be paid on September 1990.
Respondents were later to claim that when they were about to hand in the
balance of the purchase price, petitioner requested them to keep it first as he was yet to
settle an on-going "squabble" over the land.
Nevertheless, respondents gave petitioner small sums of money from time to time
which totaled P9,100, on petitioner's request according to them; due to respondents'
inability to pay the amount of the remaining balance in full, according to petitioner.
By respondents' claim, despite the alleged problem over the land, they insisted on
petitioner's acceptance of the remaining balance of P18,900 but petitioner remained firm in
his refusal, proffering as reason therefor that he would register the land first.
Sometime in 1994, respondents learned that the alleged problem over the land
had been settled and that petitioner had caused its registration in his name on December
21, 1993 under Transfer Certificate of Title No. 161806. They thereupon offered to pay the
balance but petitioner declined, drawing them to file a complaint before the Katarungan
Pambarangay. No settlement was reached, however, hence, respondent filed a complaint
for specific performance before the Regional Trial Court (RTC) of Balanga,
Bataan. AEIHCS
Petitioner countered in his Answer to the Complaint that the sale was void for lack
of object certain, the kasunduan not having specified the metes and bounds of the land. In
any event, petitioner alleged that if the validity of the kasunduan is upheld, respondents'
failure to comply with their reciprocal obligation to pay the balance of the purchase price
would render the action premature. For, contrary to respondents' claim, petitioner
maintained that they failed to pay the balance of P28,000 on September 1990 to thus
constrain him to accept installment payments totaling P9,100.
After the case was submitted for decision or on January 31, 2001, 2 petitioner
passed away. The records do not show that petitioner's counsel informed Branch 1 of the
Bataan RTC, where the complaint was lodged, of his death and that proper substitution
was effected in accordance with Section 16, Rule 3, Rules of Court. 3
By Decision of February 25, 2001, 4 the trial court ruled in favor of respondents,
disposing as follows:
WHEREFORE, premises considered, judgment is hereby
rendered ordering:
1. The defendant to sell his right over 648 square meters of land pursuant
to the contract dated July 10, 1990 by executing a Deed of Sale
thereof after the payment of P18,900 by the plaintiffs;
2. The defendant to pay the costs of the suit.
SO ORDERED. 5
Petitioner's counsel filed a Notice of Appeal on March 20, 2001.
By the herein challenged Decision dated July 20, 2009, 6 the Court of
Appeals affirmed that of the trial court.
Petitioner's motion for reconsideration having been denied by Resolution of
January 8, 2010, the present petition for review was filed by Antonio Carabeo, petitioner's
son, 7 faulting the appellate court:
(A)
. . . in holding that the element of a contract, i.e., an object certain
is present in this case.
(B)
. . . in considering it unfair to expect respondents who are not
lawyers to make judicial consignation after herein petitioner allegedly
refused to accept payment of the balance of the purchase price.
(C)
. . . in upholding the validity of the contract, "Kasunduan sa
Bilihan ng Karapatan sa Lupa," despite the lack of spousal consent,
(underscoring supplied) TCaEIc
and proffering that
(D)
 [t]he death of herein petitioner causes the dismissal of the action and binding upon petitioner's legal representatives or successors-in-interest, insofar as his
filed by respondents; respondents' cause of action being an action in interest in the property subject of the action is concerned. 13 SAaTHc
personam. (underscoring supplied)
In another vein, the death of a client immediately divests the counsel of
The petition fails. authority. 14 Thus, in filing a Notice of Appeal, petitioner's counsel of record had no
personality to act on behalf of the already deceased client who, it bears reiteration, had not
The pertinent portion of the kasunduan reads: 8 been substituted as a party after his death. The trial court's decision had thereby become
xxx xxx xxx final and executory, no appeal having been perfected.

Na ako ay may isang partial na lupa na matatagpuan sa Purok WHEREFORE, the petition is DENIED.
111, Tugatog, Orani Bataan, na may sukat na 27 x 24 metro kuwadrado, SO ORDERED.
ang nasabing lupa ay maysakop na dalawang punong santol at isang
punong mangga, kaya't ako ay nakipagkasundo sa mag-asawang ||| (Carabeo v. Spouses Dingco, G.R. No. 190823, [April 4, 2011], 662 PHIL 565-571)
Norby Dingco at Susan Dingco na ipagbili sa kanila ang karapatan ng
nasabing lupa sa halagang P38,000.00.

xxx xxx xxx (underscoring supplied)

That the kasunduan did not specify the technical boundaries of the property did
not render the sale a nullity. The requirement that a sale must have for its object a
determinate thing is satisfied as long as, at the time the contract is entered into, the object
of the sale is capable of being made determinate without the necessity of a new or further
agreement between the parties. 9 As the above-quoted portion of the kasunduan shows,
there is no doubt that the object of the sale is determinate.
Clutching at straws, petitioner proffers lack of spousal consent. This was raised
only on appeal, hence, will not be considered, in the present case, in the interest of fair play,
justice and due process. 10
Respecting the argument that petitioner's death rendered respondents' complaint
against him dismissible, Bonilla v. Barcena 11 enlightens:
The question as to whether an action survives or not depends on
the nature of the action and the damage sued for. In the causes of action
which survive, the wrong complained [of] affects primarily and
principally property and property rights, the injuries to the person being
merely incidental, while in the causes of action which do not survive,
the injury complained of is to the person, the property and rights of
property affected being incidental. (emphasis and underscoring supplied)

In the present case, respondents are pursuing a property right arising from
the kasunduan, whereas petitioner is invoking nullity of the kasunduan to protect his
proprietary interest. Assuming arguendo, however, that the kasunduan is deemed void,
there is a corollary obligation of petitioner to return the money paid by respondents, and
since the action involves property rights, 12 it survives.
It bears noting that trial on the merits was already concluded before petitioner
died. Since the trial court was not informed of petitioner's death, it may not be faulted for
proceeding to render judgment without ordering his substitution. Its judgment is thus valid
 SECOND DIVISION
[G.R. No. 153788. November 27, 2009.]
ROGER V. NAVARRO, petitioner, vs. HON. JOSE L. ESCOBIDO,
Presiding Judge, RTC Branch 37, Cagayan de Oro City, and KAREN T.
GO, doing business under the name KARGO
ENTERPRISES, respondents.
DECISION
BRION, J p:
This is a petition for review on certiorari 1 that seeks to set aside the Court of
Appeals (CA) Decision 2 dated October 16, 2001 and Resolution 3 dated May 29, 2002 in
CA-G.R. SP. No. 64701. These CA rulings affirmed the July 26, 2000 4 and March 7,
2001 5 orders of the Regional Trial Court (RTC), Misamis Oriental, Cagayan de Oro City,
denying petitioner Roger V. Navarro's (Navarro) motion to dismiss.
BACKGROUND FACTS
On September 12, 1998, respondent Karen T. Go filed two complaints, docketed
as Civil Case Nos. 98-599 (first complaint) 6 and 98-598 (second complaint), 7before the
RTC for replevin and/or sum of money with damages against Navarro. In these complaints,
Karen Go prayed that the RTC issue writs of replevin for the seizure of two (2) motor
vehicles in Navarro's possession.
The first complaint stated:
1. That plaintiff KAREN T. GO is a Filipino, of legal age, married
to GLENN O. GO, a resident of Cagayan de Oro City and doing business
under the trade name KARGO ENTERPRISES, an entity duly registered
and existing under and by virtue of the laws of the Republic of the
Philippines, which has its business address at Bulua, Cagayan de Oro City;
that defendant ROGER NAVARRO is a Filipino, of legal age, a resident of
62 Dolores Street, Nazareth, Cagayan de Oro City, where he may be
served with summons and other processes of the Honorable Court; that
defendant "JOHN DOE" whose real name and address are at present
unknown to plaintiff is hereby joined as party defendant as he may be the
person in whose possession and custody the personal property subject
matter of this suit may be found if the same is not in the possession of
defendant ROGER NAVARRO;
2. That KARGO ENTERPRISES is in the business of, among
others, buying and selling motor vehicles, including hauling trucks and
other heavy equipment; SEHACI
3. That for the cause of action against defendant
ROGER NAVARRO, it is hereby stated that on August 8, 1997, the said
defendant leased [from] plaintiff a certain motor vehicle which is more
particularly described as follows —
Make/Type FUSO WITH MOUNTED CRANE
Serial No. FK416K-51680
Motor No. 6D15-338735
Plate No. GHK-378
as evidenced by a LEASE AGREEMENT WITH OPTION TO
PURCHASE entered into by and between KARGO ENTERPRISES,
then represented by its Manager, the aforementioned GLENN O. GO,
and defendant ROGER NAVARRO . . .; that in accordance with the
provisions of the above LEASE AGREEMENT WITH OPTION TO
PURCHASE, defendant ROGER NAVARRO delivered unto plaintiff six (6)
post-dated checks each in the amount of SIXTY-SIX THOUSAND THREE
HUNDRED THIRTY-THREE & 33/100 PESOS (P66,333.33) which were
supposedly in payment of the agreed rentals; that when the fifth and sixth
checks, i.e., PHILIPPINE BANK OF COMMUNICATIONS-CAGAYAN DE
ORO BRANCH CHECKS NOS. 017112 and 017113, respectively dated
January 8, 1998 and February 8, 1998, were presented for payment and/or
credit, the same were dishonored and/or returned by the drawee bank for
the common reason that the current deposit account against which the
said checks were issued did not have sufficient funds to cover the amounts
thereof; that the total amount of the two (2) checks, i.e., the sum of ONE
HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED SIXTY-SIX &
66/100 PESOS (P132,666.66) therefore represents the principal liability of
defendant ROGER NAVARRO unto plaintiff on the basis of the provisions
of the above LEASE AGREEMENT WITH RIGHT TO PURCHASE;
that demands, written and oral, were made of
defendant ROGER NAVARRO to pay the amount of ONE HUNDRED
THIRTY-TWO THOUSAND SIX HUNDRED SIXTY-SIX & 66/100 PESOS
(P132,666.66), or to return the subject motor vehicle as also provided for in
the LEASE AGREEMENT WITH RIGHT TO PURCHASE, but said
demands were, and still are, in vain to the great damage and injury of
herein plaintiff; . . .
 4. That the aforedescribed motor vehicle has not been the subject
of any tax assessment and/or fine pursuant to law, or seized under an
execution or an attachment as against herein plaintiff;
xxx xxx xxx
8. That plaintiff hereby respectfully applies for an order of the
Honorable Court for the immediate delivery of the above-described motor
vehicle from defendants unto plaintiff pending the final determination of
this case on the merits and, for that purpose, there is attached hereto an
affidavit duly executed and bond double the value of the personal property
subject matter hereof to answer for damages and costs which defendants
may suffer in the event that the order for replevin prayed for may be found
out to having not been properly issued.
The second complaint contained essentially the same allegations as the first
complaint, except that the Lease Agreement with Option to Purchase involved is dated
October 1, 1997 and the motor vehicle leased is described as follows:
Make/Type FUSO WITH MOUNTED CRANE
Serial No. FK416K-510528
Motor No. 6D14-423403
The second complaint also alleged that Navarro delivered three post-dated
checks, each for the amount of P100,000.00, to Karen Go in payment of the agreed rentals;
however, the third check was dishonored when presented for payment. 8 SAHIDc
On October 12, 1998 9 and October 14, 1998, 10 the RTC issued writs of replevin
for both cases; as a result, the Sheriff seized the two vehicles and delivered them to the
possession of Karen Go.
In his Answers, Navarro alleged as a special affirmative defense that the two
complaints stated no cause of action, since Karen Go was not a party to the Lease
Agreements with Option to Purchase (collectively, the lease agreements) — the actionable
documents on which the complaints were based.
On Navarro's motion, both cases were duly consolidated on December 13, 1999.
In its May 8, 2000 order, the RTC dismissed the case on the ground that the
complaints did not state a cause of action.
In response to the motion for reconsideration Karen Go filed dated May 26,
2000, 11 the RTC issued another order dated July 26, 2000 setting aside the order of
dismissal. Acting on the presumption that Glenn Go's leasing business is a conjugal
property, the RTC held that Karen Go had sufficient interest in his leasing business to file
the action against Navarro. However, the RTC held that Karen Go should have included
her husband, Glenn Go, in the complaint based on Section 4, Rule 3 of the Rules of
Court (Rules). 12 Thus, the lower court ordered Karen Go to file a motion for the inclusion
of Glenn Go as co-plaintiff.
When the RTC denied Navarro's motion for reconsideration on March 7,
2001, Navarro filed a petition for certiorari with the CA, essentially contending that the RTC
committed grave abuse of discretion when it reconsidered the dismissal of the case and
directed Karen Go to amend her complaints by including her husband Glenn Go as
co-plaintiff. According to Navarro, a complaint which failed to state a cause of action could
not be converted into one with a cause of action by mere amendment or supplemental
pleading.
On October 16, 2001, the CA denied Navarro's petition and affirmed the RTC's
order. 13 The CA also denied Navarro's motion for reconsideration in its resolution of May
29, 2002, 14 leading to the filing of the present petition.
THE PETITION
Navarro alleges that even if the lease agreements were in the name of Kargo
Enterprises, since it did not have the requisite juridical personality to sue, the actual parties
to the agreement are himself and Glenn Go. Since it was Karen Go who filed the
complaints and not Glenn Go, she was not a real party-in-interest and the complaints failed
to state a cause of action.
Navarro posits that the RTC erred when it ordered the amendment of the
complaint to include Glenn Go as a co-plaintiff, instead of dismissing the complaint outright
because a complaint which does not state a cause of action cannot be converted into one
with a cause of action by a mere amendment or a supplemental pleading. In effect, the
lower court created a cause of action for Karen Go when there was none at the time she
filed the complaints.
Even worse, according to Navarro, the inclusion of Glenn Go as co-plaintiff
drastically changed the theory of the complaints, to his great prejudice. Navarroclaims that
the lower court gravely abused its discretion when it assumed that the leased vehicles are
part of the conjugal property of Glenn and Karen Go. Since Karen Go is the registered
owner of Kargo Enterprises, the vehicles subject of the complaint are her paraphernal
properties and the RTC gravely erred when it ordered the inclusion of Glenn Go as a
co-plaintiff.
Navarro likewise faults the lower court for setting the trial of the case in the same
order that required Karen Go to amend her complaints, claiming that by issuing this order,
the trial court violated Rule 10 of the Rules.
Even assuming the complaints stated a cause of action against
him, Navarro maintains that the complaints were premature because no prior demand was
made on him to comply with the provisions of the lease agreements before the complaints
for replevin were filed.
Lastly, Navarro posits that since the two writs of replevin were issued based on
flawed complaints, the vehicles were illegally seized from his possession and should be
returned to him immediately.
 Karen Go, on the other hand, claims that it is misleading for Navarro to state that
she has no real interest in the subject of the complaint, even if the lease agreements were
signed only by her husband, Glenn Go; she is the owner of Kargo Enterprises and Glenn
Go signed the lease agreements merely as the manager of Kargo Enterprises. Moreover,
Karen Go maintains that Navarro's insistence that Kargo Enterprises is Karen Go's
paraphernal property is without basis. Based on the law and jurisprudence on the matter,
all property acquired during the marriage is presumed to be conjugal property. Finally,
Karen Go insists that her complaints sufficiently established a cause of action
against Navarro. Thus, when the RTC ordered her to include her husband as co-plaintiff,
this was merely to comply with the rule that spouses should sue jointly, and was not meant
to cure the complaints' lack of cause of action.
THE COURT'S RULING
We find the petition devoid of merit.
Karen Go is the real party-in-interest
The 1997 Rules of Civil Procedure requires that every action must be prosecuted
or defended in the name of the real party-in-interest, i.e., the party who stands to be
benefited or injured by the judgment in the suit, or the party entitled to the avails of the
suit. 15
Interestingly, although Navarro admits that Karen Go is the registered owner of
the business name Kargo Enterprises, he still insists that Karen Go is not a real
party-in-interest in the case. According to Navarro, while the lease contracts were in Kargo
Enterprises' name, this was merely a trade name without a juridical personality, so the
actual parties to the lease agreements were Navarro and Glenn Go, to the exclusion of
Karen Go.
As a corollary, Navarro contends that the RTC acted with grave abuse of
discretion when it ordered the inclusion of Glenn Go as co-plaintiff, since this in effect
created a cause of action for the complaints when in truth, there was none.
We do not find Navarro's arguments persuasive.
The central factor in appreciating the issues presented in this case is the business
name Kargo Enterprises. The name appears in the title of the Complaint where the plaintiff
was identified as "KAREN T. GO doing business under the name KARGO
ENTERPRISES", and this identification was repeated in the first paragraph of the
Complaint. Paragraph 2 defined the business KARGO ENTERPRISES undertakes.
Paragraph 3 continued with the allegation that the defendant "leased from plaintiff a certain
motor vehicle" that was thereafter described. Significantly, the Complaint specifies and
attaches as its integral part the Lease Agreement that underlies the transaction between
the plaintiff and the defendant. Again, the name KARGO ENTERPRISES entered the
picture as this Lease Agreement provides:
This agreement, made and entered into by and
between: AHDaET
GLENN O. GO, of legal age, married, with post office address
at . . ., herein referred to as the LESSOR-SELLER; representing KARGO
ENTERPRISES as its Manager,
xxx xxx xxx
thus, expressly pointing to KARGO ENTERPRISES as the principal that Glenn O. Go
represented. In other words, by the express terms of this Lease Agreement, Glenn Go did
sign the agreement only as the manager of Kargo Enterprises and the latter is clearly the
real party to the lease agreements.
As Navarro correctly points out, Kargo Enterprises is a sole proprietorship, which
is neither a natural person, nor a juridical person, as defined by Article 44 of the Civil
Code:
Art. 44. The following are juridical persons:
(1) The State and its political subdivisions;
(2) Other corporations, institutions and entities for public interest
or purpose, created by law; their personality begins as
soon as they have been constituted according to law;
(3) Corporations, partnerships and associations for private
interest or purpose to which the law grants a juridical
personality, separate and distinct from that of each
shareholder, partner or member.
Thus, pursuant to Section 1, Rule 3 of the Rules, 16 Kargo Enterprises cannot be
a party to a civil action. This legal reality leads to the question: who then is the proper party
to file an action based on a contract in the name of Kargo Enterprises?
We faced a similar question in Juasing Hardware v. Mendoza, 17 where we said:
Finally, there is no law authorizing sole proprietorships like
petitioner to bring suit in court. The law merely recognizes the existence of
a sole proprietorship as a form of business organization conducted for
profit by a single individual, and requires the proprietor or owner thereof to
secure licenses and permits, register the business name, and pay taxes to
the national government. It does not vest juridical or legal personality upon
the sole proprietorship nor empower it to file or defend an action in court.
Thus, the complaint in the court below should have been filed in
the name of the owner of Juasing Hardware. The allegation in the body
of the complaint would show that the suit is brought by such person as
proprietor or owner of the business conducted under the name and
style Juasing Hardware. The descriptive words "doing business
as Juasing Hardware" may be added to the title of the case, as is
customarily done. 18 [Emphasis supplied.]
 This conclusion should be read in relation with Section 2, Rule 3 of the Rules,
which states: DECSIT
SEC. 2. Parties in interest. — A real party in interest is the party
who stands to be benefited or injured by the judgment in the suit, or
the party entitled to the avails of the suit. Unless otherwise authorized
by law or these Rules, every action must be prosecuted or defended in the
name of the real party in interest.
As the registered owner of Kargo Enterprises, Karen Go is the party who will
directly benefit from or be injured by a judgment in this case. Thus, contrary toNavarro's
contention, Karen Go is the real party-in-interest, and it is legally incorrect to say that her
Complaint does not state a cause of action because her name did not appear in the Lease
Agreement that her husband signed in behalf of Kargo Enterprises. Whether Glenn Go can
legally sign the Lease Agreement in his capacity as a manager of Kargo Enterprises, a
sole proprietorship, is a question we do not decide, as this is a matter for the trial court to
consider in a trial on the merits.
Glenn Go's Role in the Case
We find it significant that the business name Kargo Enterprises is in the name of
Karen T. Go, 19 who described herself in the Complaints to be "a Filipino, of legal age,
married to GLENN O. GO, a resident of Cagayan de Oro City, and doing business under
the trade name KARGO ENTERPRISES". 20 That Glenn Go and Karen Go are married to
each other is a fact never brought in issue in the case. Thus, the business name KARGO
ENTERPRISES is registered in the name of a married woman, a fact material to the side
issue of whether Kargo Enterprises and its properties are paraphernal or conjugal
properties. To restate the parties' positions,Navarro alleges that Kargo Enterprises is
Karen Go's paraphernal property, emphasizing the fact that the business is registered
solely in Karen Go's name. On the other hand, Karen Go contends that while the business
is registered in her name, it is in fact part of their conjugal property.
The registration of the trade name in the name of one person — a woman — does
not necessarily lead to the conclusion that the trade name as a property is hers alone,
particularly when the woman is married. By law, all property acquired during the marriage,
whether the acquisition appears to have been made, contracted or registered in the name
of one or both spouses, is presumed to be conjugal unless the contrary is proved. 21 Our
examination of the records of the case does not show any proof that Kargo Enterprises and
the properties or contracts in its name are conjugal. If at all, only the bare allegation
of Navarro to this effect exists in the records of the case. As we emphasized in Castro v.
Miat: 22
Petitioners also overlook Article 160 of the New Civil Code. It
provides that "all property of the marriage is presumed to be conjugal
partnership, unless it be prove[n] that it pertains exclusively to the husband
or to the wife". This article does not require proof that the property was
acquired with funds of the partnership. The presumption applies even
when the manner in which the property was acquired does not
appear. 23 [Emphasis supplied.]
Thus, for purposes solely of this case and of resolving the issue of whether Kargo
Enterprises as a sole proprietorship is conjugal or paraphernal property, we hold that it is
conjugal property.
Article 124 of the Family Code, on the administration of the conjugal property,
provides:
Art. 124. The administration and enjoyment of the conjugal
partnership property shall belong to both spouses jointly. In case of
disagreement, the husband's decision shall prevail, subject to recourse to
the court by the wife for proper remedy, which must be availed of within five
years from the date of the contract implementing such decision. ESTDcC
xxx xxx xxx
This provision, by its terms, allows either Karen or Glenn Go to speak and act with
authority in managing their conjugal property, i.e., Kargo Enterprises. No need exists,
therefore, for one to obtain the consent of the other before performing an act of
administration or any act that does not dispose of or encumber their conjugal property.
Under Article 108 of the Family Code, the conjugal partnership is governed by the
rules on the contract of partnership in all that is not in conflict with what is expressly
determined in this Chapter or by the spouses in their marriage settlements. In other words,
the property relations of the husband and wife shall be governed primarily by Chapter 4 on
Conjugal Partnership of Gains of the Family Code and, suppletorily, by the spouses'
marriage settlement and by the rules on partnership under the Civil Code. In the absence
of any evidence of a marriage settlement between the spouses Go, we look at the Civil
Code provision on partnership for guidance.
A rule on partnership applicable to the spouses' circumstances is Article 1811 of
the Civil Code, which states:
Art. 1811. A partner is a co-owner with the other partners of specific
partnership property.
The incidents of this co-ownership are such that:
(1) A partner, subject to the provisions of this Title and to any
agreement between the partners, has an equal right
with his partners to possess specific partnership
property for partnership purposes; . . .
Under this provision, Glenn and Karen Go are effectively co-owners of Kargo
Enterprises and the properties registered under this name; hence, both have an equal right
to seek possession of these properties. Applying Article 484 of the Civil Code, which
states that "in default of contracts, or special provisions, co-ownership shall be governed
by the provisions of this Title", we find further support in Article 487 of the Civil Code that
allows any of the co-owners to bring an action in ejectment with respect to the co-owned
property.
 While ejectment is normally associated with actions involving real property, we
find that this rule can be applied to the circumstances of the present case, following our
ruling in Carandang v. Heirs of De Guzman. 24 In this case, one spouse filed an action for
the recovery of credit, a personal property considered conjugal property, without including
the other spouse in the action. In resolving the issue of whether the other spouse was
required to be included as a co-plaintiff in the action for the recovery of the credit, we said:
Milagros de Guzman, being presumed to be a co-owner of the
credits allegedly extended to the spouses Carandang, seems to be either
an indispensable or a necessary party. If she is an indispensable party,
dismissal would be proper. If she is merely a necessary party, dismissal is
not warranted, whether or not there was an order for her inclusion in the
complaint pursuant to Section 9, Rule 3.
Article 108 of the Family Code provides:
Art. 108. The conjugal partnership shall be governed by
the rules on the contract of partnership in all that is not in conflict
with what is expressly determined in this Chapter or by the
spouses in their marriage settlements. CDcaSA
This provision is practically the same as the Civil Code provision
it superseded:
Art. 147. The conjugal partnership shall be governed by
the rules on the contract of partnership in all that is not in conflict
with what is expressly determined in this Chapter.
In this connection, Article 1811 of the Civil Code provides that "[a]
partner is a co-owner with the other partners of specific partnership
property". Taken with the presumption of the conjugal nature of the funds
used to finance the four checks used to pay for petitioners' stock
subscriptions, and with the presumption that the credits themselves are
part of conjugal funds, Article 1811 makes Quirino and Milagros de
Guzman co-owners of the alleged credit.
Being co-owners of the alleged credit, Quirino and Milagros de
Guzman may separately bring an action for the recovery thereof. In the
fairly recent cases ofBaloloy v. Hular and Adlawan v. Adlawan, we held
that, in a co-ownership, co-owners may bring actions for the
recovery of co-owned property without the necessity of joining all
the other co-owners as co-plaintiffs because the suit is presumed to
have been filed for the benefit of his co-owners. In the latter case and
in that of De Guia v. Court of Appeals, we also held that Article 487 of the
Civil Code, which provides that any of the co-owners may bring an action
for ejectment,covers all kinds of action for the recovery of
possession.
In sum, in suits to recover properties, all co-owners are real
parties in interest. However, pursuant to Article 487 of the Civil Code and
relevant jurisprudence, any one of them may bring an action, any kind of
action, for the recovery of co-owned properties. Therefore, only one of
the co-owners, namely the co-owner who filed the suit for the
recovery of the co-owned property, is an indispensable party thereto.
The other co-owners are not indispensable parties. They are not even
necessary parties, for a complete relief can be accorded in the suit even
without their participation, since the suit is presumed to have been filed for
the benefit of all co-owners. 25 [Emphasis supplied.]
Under this ruling, either of the spouses Go may bring an action against Navarro to
recover possession of the Kargo Enterprises-leased vehicles which they co-own. This
conclusion is consistent with Article 124 of the Family Code, supporting as it does the
position that either spouse may act on behalf of the conjugal partnership, so long as they
do not dispose of or encumber the property in question without the other spouse's consent.
On this basis, we hold that since Glenn Go is not strictly an indispensable party in
the action to recover possession of the leased vehicles, he only needs to be impleaded as
a pro-forma party to the suit, based on Section 4, Rule 4 of the Rules, which states:
Section 4. Spouses as parties. — Husband and wife shall sue or
be sued jointly, except as provided by law.
Non-joinder of indispensable parties
not ground to dismiss action
Even assuming that Glenn Go is an indispensable party to the action, we have
held in a number of cases 26 that the misjoinder or non-joinder of indispensable parties in
a complaint is not a ground for dismissal of action. As we stated in Macababbad v.
Masirag: 27
Rule 3, Section 11 of the Rules of Court provides that neither
misjoinder nor nonjoinder of parties is a ground for the dismissal of an
action, thus:
Sec. 11. Misjoinder and non-joinder of parties. —
Neither misjoinder nor non-joinder of parties is ground for
dismissal of an action. Parties may be dropped or added by order
of the court on motion of any party or on its own initiative at any
stage of the action and on such terms as are just. Any claim
against a misjoined party may be severed and proceeded with
separately. TAHIED
In Domingo v. Scheer, this Court held that the proper remedy
when a party is left out is to implead the indispensable party at any stage of
the action. The court, either motu proprio or upon the motion of a party,
may order the inclusion of the indispensable party or give the plaintiff
opportunity to amend his complaint in order to include indispensable
parties. If the plaintiff to whom the order to include the indispensable party
 is directed refuses to comply with the order of the court, the complaint may leased motor vehicles. Navarro's position that a demand is necessary and has not been
be dismissed upon motion of the defendant or upon the court's own motion. made is therefore totally unmeritorious. acCITS
Only upon unjustified failure or refusal to obey the order to include or to
WHEREFORE, premises considered, we DENY the petition for review for lack of
amend is the action dismissed.
merit. Costs against petitioner Roger V. Navarro.
In these lights, the RTC Order of July 26, 2000 requiring plaintiff Karen Go to join her SO ORDERED.
husband as a party plaintiff is fully in order.
Demand not required prior ||| (Navarro v. Escobido, G.R. No. 153788, [November 27, 2009], 621 PHIL 1-21)
to filing of replevin action
In arguing that prior demand is required before an action for a writ of replevin is
filed, Navarro apparently likens a replevin action to an unlawful detainer.
For a writ of replevin to issue, all that the applicant must do is to file an affidavit
and bond, pursuant to Section 2, Rule 60 of the Rules, which states:
Sec. 2. Affidavit and bond. —

The applicant must show by his own affidavit or that of some

other person who personally knows the facts:

(a) That the applicant is the owner of the property claimed, particularly
describing it, or is entitled to the possession thereof;

(b) That the property is wrongfully detained by the adverse party,

alleging the cause of detention thereof according to the best of his
knowledge, information, and belief;

(c) That the property has not been distrained or taken for a tax assessment
or a fine pursuant to law, or seized under a writ of execution or
preliminary attachment, or otherwise placed under custodia
legis, or if so seized, that it is exempt from such seizure or
custody; and

(d) The actual market value of the property.

The applicant must also give a bond, executed to the adverse

party in double the value of the property as stated in the affidavit
aforementioned, for the return of the property to the adverse party if such
return be adjudged, and for the payment to the adverse party of such sum
as he may recover from the applicant in the action.

We see nothing in these provisions which requires the applicant to make a prior
demand on the possessor of the property before he can file an action for a writ of replevin.
Thus, prior demand is not a condition precedent to an action for a writ of replevin.
More importantly, Navarro is no longer in the position to claim that a prior demand
is necessary, as he has already admitted in his Answers that he had received the letters
that Karen Go sent him, demanding that he either pay his unpaid obligations or return the
 SPECIAL SECOND DIVISION
[G.R. No. 191667. April 22, 2015.]
LAND BANK OF THE PHILIPPINES, petitioner, vs. EDUARDO
M. CACAYURAN, respondent.
MUNICIPALITY OF AGOO, LA UNION, intervenor.
AMENDED DECISION
PERLAS-BERNABE, J p:
Before the Court are the following motions: (a) the Motion for
Reconsideration 1 dated May 22, 2013, filed by petitioner Land Bank of the Philippines
(LBP) assailing the Decision 2 dated April 17, 2013 of the Court (April 17, 2013 Decision),
which upheld the Decision 3 dated March 26, 2010 of the Court of Appeals (CA) in CA-G.R.
CV. No. 89732 affirming with modification the Decision 4 dated April 10, 2007 of the
Regional Trial Court of Agoo, La Union, Branch 31 in Civil Case No. A-2473; (b) the Motion
for Leave to Intervene with Pleading-in-Intervention Attached 5 dated July 8, 2013, filed by
the Municipality of Agoo, La Union (Municipality) praying that it be allowed to intervene in
this case; and (c) the Motion for Reconsideration-in-Intervention 6 dated July 8, 2013, filed
by the Municipality seeking that the Court set aside its April 17, 2013 Decision and
promulgate a new one in its stead dismissing the case (subject motions).
The Facts
The instant case arose from two (2) loans (Subject Loans) entered into by the
Municipality with LBP in order to finance the Redevelopment Plan of the Agoo Public Plaza
(Public Plaza). Through Resolution Nos. 68-2005 7 and 139-2005, 8 the Sangguniang
Bayan of the Municipality (Sangguniang Bayan) authorized its then-Mayor Eufranio Eriguel
(Mayor Eriguel) to enter into a P4,000,000.00-loan with LBP, the proceeds of which were
used to construct ten (10) kiosks at the Public Plaza. Around a year later, the SB issued
Resolution Nos. 58-2006 9 and 128-2006, 10 this time authorizing Mayor Eriguel to obtain
a P28,000,000.00-loan from LBP for the construction of a commercial center named "Agoo
People's Center" within the premises of the Public Plaza. In order to secure the Subject
Loans, the Municipality used as collateral, among others, a 2,323.75-square meter lot
situated at the south eastern portion of the Public Plaza (Plaza Lot). 11
However, a group of residents, led by respondent Eduardo
M. Cacayuran (Cacayuran), opposed the redevelopment of the Public Plaza, as well as the
funding therefor thru the Subject Loans, claiming that these were "highly irregular, violative
of the law, and detrimental to public interests, and will result to wanton desecration of the
[Public Plaza]." 12 Further, Cacayuran requested the municipal officers to furnish him with
the various documents relating to the Public Plaza's redevelopment, which, however, went
unheeded. 13 Thus, Cacayuran, invoking his right as a taxpayer, filed a
complaint 14 against LBP and various officers of the Municipality, including Mayor Eriguel
(but excluding the Municipality itself as party-defendant), assailing the validity of the
aforesaid loan agreements and praying that the commercialization of the Public Plaza be
enjoined. 15
Initially, the municipal officers moved for the outright dismissal of the complaint,
which was denied, thus constraining them to file their respective answers. For its part, LBP
asserted, inter alia, that Cacayuran did not have any cause of action since he was not privy
to the loan agreements entered into by LBP and the Municipality. 16
During the pendency of the proceedings, the construction of the Agoo People's
Center was completed. Later on, the Sangguniang Bayan passed Municipal Ordinance No.
02-2007 17 declaring the area where such building stood as patrimonial property of the
Municipality. 18
The RTC Ruling
In a Decision 19 dated April 10, 2007, the RTC declared the Subject Loans null
and void, finding that the resolutions approving the procurement of the same were passed
in a highly irregular manner and thus, ultra vires. As such, it pronounced that the
Municipality was not bound by the Subject Loans and that the municipal officers should,
instead, be held personally liable for the same. Further, it ruled that since the Plaza Lot is a
property for public use, it cannot be used as collateral for the Subject Loans. 20
Aggrieved, LBP and the municipal officers appealed 21 to the CA. However, the
appeal of the municipal officers was deemed abandoned and dismissed for their failure to
file an appellants' brief despite due notice. 22 Thus, only LBP's appeal was given due
course by the CA. 23
The CA Ruling
In a Decision 24 dated March 26, 2010, the CA affirmed the ruling of the RTC,
with modification excluding then-Vice Mayor Antonio Eslao from personal liability arising
from the Subject Loans. It held that: (a) Cacayuran had locus standi to file the instant
complaint, considering that he is a resident of the Municipality and the issue at hand
involved public interest of transcendental importance; (b) Resolution Nos. 68-2005,
138-2005, 58-2006, 126-2006 were invalidly passed due to non-compliance with certain
provisions of Republic Act No. 7160, 25 otherwise known as the Local Government Code
of 1991 (LGC); (c) the Plaza Lot is property of public dominion, and thus, cannot be used
as collateral; and (d) the procurement of the Subject Loans were ultra vires acts for having
been entered into without proper authority and that the collaterals used therefor constituted
improper disbursement of public funds. 26
Dissatisfied, LBP filed a petition for review on certiorari 27 before this Court.
Proceedings Before the Court
 In a Decision 28 dated April 17, 2013 the Court denied LBP's petition, and
accordingly, affirmed the ruling of the CA. Agreeing with the CA, the Court held
that:(a) Cacayuran had legal standing to institute a taxpayer's suit; 29 (b) Resolution Nos.
68-2005, 139-2005, 58-2006, 126-2006 cannot be relied upon to validate the Subject
Loans, as the LGC requires the passing of an ordinance in order for any loan agreement to
be valid; 30 and (c) the procurement of the Subject Loans are ultra vires acts of the
municipal officers who approved the same, and thus, liability therefor shall devolve upon
them. 31
Undaunted, LBP moved for reconsideration, basically reiterating its earlier
position that Cacayuran had no legal standing to sue, and that Resolution Nos. 68-2005,
139-2005, 58-2006, and 126-2006 may be relied upon in validating the Subject Loans. 32
Meanwhile, the Municipality filed a Motion for Leave to Intervene with
Pleading-In-Intervention Attached 33 dated July 8, 2013 and a Motion for Reconsideration
in-Intervention 34 of even date, praying that it be included as a party-litigant to the instant
case. It contends that as a contracting party to the Subject Loans, it is an indispensable
party to the action filed by Cacayuran. As such, there cannot be any "real disposition" of
the instant suit by reason of its exclusion from the same.
In opposition, 35 Cacayuran maintains that LBP did not raise any new matter to
warrant reconsideration of the April 17, 2013 Decision. Anent the Municipality's motion to
intervene, Cacayuran insists that the Municipality is not a real party-in-interest to the
instant case as his complaint is against the municipal officers in their personal capacity for
their ultra vires acts which are not binding on the Municipality.
Finally, in its Comment on the Motion for Leave to Intervene and Motion for
Reconsideration-in-Intervention 36 dated May 6, 2014, LBP agrees with the Municipality
that the latter is an indispensable party to the instant case and as such, should be included
herein.
The Issue Before the Court
The core issue for the Court's resolution is whether or not the Municipality should
be deemed as an indispensable party to the instant case, and thus, be ordered impleaded
herein.
The Court's Ruling
The Court rules in the affirmative.
Section 7, Rule 3 of the Rules of Court mandates that all indispensable parties
should be joined in a suit, viz.:
SEC. 7. Compulsory joinder of indispensable parties. —
Parties-in-interest without whom no final determination can be had of an
action shall be joined either as plaintiffs or defendants.
"An indispensable party is one whose interest will be affected by the court's action
in the litigation, and without whom no final determination of the case can be had. The
party's interest in the subject matter of the suit and in the relief sought are so inextricably
intertwined with the other parties' that his legal presence as a party to the proceeding is an
absolute necessity. In his absence, there cannot be a resolution of the dispute of the
parties before the court which is effective, complete, or equitable." 37 Thus, the absence of
an indispensable party renders all subsequent actions of the court null and void, for want of
authority to act, not only as to the absent parties but even as to those present. 38
Nevertheless, it must be stressed that the failure to implead any indispensable
party to a suit does not necessarily result in the outright dismissal of the complaint. In Heirs
of Mesina v. Heirs of Fian, Sr., 39 the Court definitively explained that in instances of
non-joinder of indispensable parties, the proper remedy is to implead them and not to
dismiss the case:
The non-joinder of indispensable parties is not a ground
for the dismissal of an action. At any stage of a judicial proceeding
and/or at such times as are just, parties may be added on the motion of a
party or on the initiative of the tribunal concerned. If the plaintiff refuses
to implead an indispensable party despite the order of the court, that
court may dismiss the complaint for the plaintiff's failure to comply with
the order. The remedy is to implead the non-party claimed to be
indispensable. 40 (Emphases and underscoring supplied)
In this case, a judicious review of the records reveals that Cacayuran's complaint
against LBP and the municipal officers primarily prays that the commercialization of the
Public Plaza be enjoined and also, that the Subject Loans be declared null and void for
having been unlawfully entered into by the said officers. However, Cacayuran failed to
implead in his complaint the Municipality, a real party-in-interest 41 and an indispensable
party that stands to be directly affected by any judicial resolution on the case, considering
that: (a) the contracting parties to the Subject Loans are LBP and the Municipality;
and (b) the Municipality owns the Public Plaza as well as the improvements constructed
thereon, including the Agoo People's Center. As the Municipality aptly points out: 42
3. To recapitulate: The case had its beginnings in the two (2)
Loans obtained by [the Municipality] from [LBP] and by the Board
Resolutions passed and adopted by the Sangguniang Bayan of Agoo,
La Union, together with the Mayor and Vice-Mayor of the Municipality.
xxx xxx xxx
3d. The two (2) Loans were covered and evidenced by
separate Loan Agreements and Mortgage/Assignment Documents. The
parties which entered into and executed the covering documents
were [LBP] as lender and [the Municipality] as borrower.
3e. When the construction was about 40% complete,
[Cacayuran] as a taxpayer filed the case against the: (i) Mayor; (ii)
Vice-Mayor; and (iii) Ten (10) Members [of] the Sangguniang Bayan [of]
Agoo, La Union, as defendants. [The Municipality] was excluded, and
was not impleaded as a defendant in the case.
xxx xxx xxx
 Indeed, [the Municipality] [on whose lands stands and is SO ORDERED.
found the Agoo Public Plaza, where the Kiosks and Commercial
||| (Land Bank of the Phils. v. Cacayuran, G.R. No. 191667, [April 22, 2015])
Building were under construction and which constructions were
sought to be restrained] stands to be benefited or injured by the
judgment in the case so filed or the party entitled to the avails of
the case and is, therefore, the real party-in-interest.
xxx xxx xxx
3k. Without having to say so, the RTC dispositions as
affirmed with modification by the CA Decision which, in turn was
affirmed by the SC Decision must not be binding upon [the
Municipality], the real party-in-interest, the indispensable party in
fact, not impleaded as defendant in this case. 43(Emphases and
underscoring supplied).
The Court observes that it is only now that the issue of the Municipality's exclusion
from the instant case, despite its status as an indispensable party, became apparent. This
recent finding may be credited to the fact that the initial parties before the Court, i.e., LBP
and Cacayuran, have dissimilar interests from that of the Municipality, and, hence, had no
incentive to raise the issue of the latter's status as an indispensable party. On the one
hand, Cacayuran's interest to the case is centered on the declaration of nullity of the
Subject Loans, as well as the enjoinment of the commercialization of the Public Plaza; and
on the other hand, LBP's interest to the case is anchored on its capacity as creditor to the
Subject Loans. To the mind of the Court, the municipal officers would have been in the best
position to raise this issue; however, they were unable to do so because their appeal
before the CA was deemed abandoned for their failure to file an appellants' brief on time.
Be that as it may, the Court is not precluded from taking cognizance of the
Municipality's status as an indispensable party even at this stage of the proceedings.
Indeed, the presence of indispensable parties is necessary to vest the court with
jurisdiction 44 and, corollarily, the issue on jurisdiction may be raised at any stage of the
proceedings. 45 Thus, as it has now come to the fore that any resolution of this case would
not be possible and, hence, not attain any real finality due to the non-joinder of the
Municipality, the Court is constrained to set aside all subsequent actuations of the courts a
quo in this case, including that of the Court's, and remand the case all the way back to the
RTC for the inclusion of all indispensable parties to the case and its immediate disposition
on the merits. 46 With this, the propriety of the Municipality's present intervention is now
mooted.
WHEREFORE, the subject motions are PARTLY GRANTED. The Decision
dated April 17, 2013 of the Court, which upheld the Decision dated March 26, 2010 of the
Court of Appeals in CA-G.R. CV. No. 89732 affirming with modification the Decision dated
April 10, 2007 of the Regional Trial Court of Agoo, La Union, Branch 31 in Civil Case No.
A-2473 is hereby SET ASIDE. Accordingly, the instant case is REMANDED to the court a
quo, which is hereby DIRECTED to order respondent Eduardo M. Cacayuran to implead
all indispensable parties and thereafter, PROCEED with the resolution of the case on the
merits WITH DISPATCH.
 FIRST DIVISION
[G.R. No. 196750. March 11, 2015]
MA. ELENA R. DIVINAGRACIA, as Administratrix of the ESTATE OF
THE LATE SANTIAGO C.
DIVINAGRACIA, petitioner, vs. CORONACION PARILLA, CELESTIAL
NOBLEZA, CECILIA LELINA, CELEDONIO NOBLEZA, and MAUDE
NOBLEZA, respondents.
DECISION
PERLAS-BERNABE, J p:
Assailed in this petition for review on certiorari 1 are the Decision 2 dated March
26, 2009 and the Resolution 3 dated April 6, 2011 of the Court of Appeals (CA) in CA-G.R.
CV. No. 80167, which set aside the Decision 4 dated November 29, 2002 and the
Order 5 dated April 4, 2003 of the Regional Trial Court of Iloilo City, Branch 31 (RTC) in
Civil Case No. 19003 and, consequently, dismissed Santiago C. Divinagracia's (Santiago)
complaint for judicial partition.
The Facts
Conrado Nobleza, Sr. (Conrado, Sr.) owned a 313-square meter parcel of land
located at Cor. Fuentes-Delgado Streets, Iloilo City denominated as Lot 133-B-1-A and
covered by Transfer Certificate of Title (TCT) No. T-12255 (subject land). 6 During his
lifetime, he contracted two marriages: (a) the first was with Lolita Palermo with whom he
had two (2) children, namely, Cresencio and Conrado, Jr.; and (b) the second was with
Eusela Niangar with whom he had seven (7) children, namely, Mateo, Sr., Coronacion,
Cecilia, Celestial, Celedonio, Ceruleo, 7 and Cebeleo, Sr. Conrado, Sr. also begot three (3)
illegitimate children, namely, Eduardo, Rogelio, and Ricardo. 8 Mateo, Sr. pre-deceased
Conrado, Sr. and was survived by his children Felcon, Landelin, Eusela, Giovanni, Mateo,
Jr., Tito, and Gaylord. Cebeleo, Sr. also pre-deceased his father and was survived by his
wife, Maude, and children Cebeleo, Jr. and Neobel. 9
According to Santiago, upon Conrado, Sr.'s death, Cresencio, Conrado, Jr.,
Felcon (in representation of his father, Mateo, Sr., and his siblings), Coronacion, Celestial,
Cecilia, Rogelio, Eduardo, and Ricardo sold their respective interests over the subject land
to Santiago for a consideration of P447,695.66, as embodied in a Deed of Extrajudicial
Settlement or Adjudication with Deed of Sale 10 dated November 22, 1989 (subject
document), 11 which was, however, not signed by the other heirs who did not sell their
respective shares, namely, Ceruleo, Celedonio, and Maude (in representation of his
husband, Cebeleo, Sr., and their children). 12 On December 22, 1989, the same parties
executed a Supplemental Contract 13 whereby the vendors-heirs and Santiago agreed
that out of the aforesaid consideration, only P109,807.93 will be paid up front, and that
Santiago will only pay the remaining balance of P337,887.73 upon the partition of the
subject land. 14 However, Santiago was not able to have TCT No. T-12255 cancelled and
the subject document registered because of Ceruleo, Celedonio, and Maude's refusal to
surrender the said title. This fact, coupled with Ceruleo, Celedonio, and Maude's failure to
partition the subject land, prompted Santiago to file a Complaint 15 dated January 3, 1990
for judicial partition and for receivership. 16
For their part, Ceruleo, Celedonio, and Maude maintained that Santiago had no
legal right to file an action for judicial partition nor compel them to surrender TCT No.
T-12255 because, inter alia: (a) Santiago did not pay the full purchase price of the shares
sold to him; and (b) the subject land is a conjugal asset of Conrado Sr. and Eusela Niangar
and, thus, only their legitimate issues may validly inherit the same. 17
The RTC Ruling
In a Decision 18 dated November 29, 2002, the RTC ordered, among others, the
partition of the subject land between Santiago on the one hand, and Ceruleo, Celedonio,
Maude, and the heirs of Mateo, Sr. (i.e., Felcon, et al.) on the other hand and,
consequently, the cancellation of TCT No. T-12255 and the issuance of a new owner's
duplicate certificate in favor of Santiago and the group of Ceruleo, Celedonio, Maude, and
the heirs of Mateo, Sr. 19 The RTC found that through the subject document, Santiago
became a co-owner of the subject land and, as such, has the right to demand the partition
of the same. However, the RTC held that Santiago did not validly acquire Mateo, Sr.'s
share over the subject land, considering that Felcon admitted the lack of authority to bind
his siblings with regard to Mateo, Sr.'s share thereon. 20
On reconsideration 21 of Ceruleo and herein respondents Celedonio, Maude,
Celestial, Coronacion, and Cecilia (respondents), the RTC issued an Order 22 dated April
4, 2003 further ordering Santiago to comply with the provisions of the Supplemental
Contract dated December 22, 1989 by paying the amount of P337,887.73 upon the
partition of the subject land.
Dissatisfied, respondents appealed 23 to the CA. Records are bereft of any
showing that the other heirs made similar appeals thereto.
The CA Ruling
In a Decision 24 dated March 26, 2009, the CA set aside the RTC Rulings and,
consequently, dismissed Santiago's complaint for judicial partition. 25 It held that Felcon's
siblings, as well as Maude's children, are indispensable parties to the judicial partition of
the subject land and, thus, their non-inclusion as defendants in Santiago's complaint would
necessarily result in its dismissal. 26
Aggrieved, the heirs of Santiago 27 moved for reconsideration 28 which was,
however, denied in a Resolution 29 dated April 6, 2011, hence, this petition instituted by
herein petitioner, Ma. Elena R. Divinagracia, as administratrix of Santiago's estate.
The Issues Before the Court
 The issues for the Court's resolution are whether or not the CA correctly: (a) ruled
that Felcon's siblings and Cebeleo, Sr. and Maude's children are indispensable parties to
Santiago's complaint for judicial partition; and (b) dismissed Santiago's complaint for his
failure to implead said omitted heirs.
The Court's Ruling
The petition is partly meritorious.
An indispensable party is one whose interest will be affected by the court's action
in the litigation, and without whom no final determination of the case can be had. The
party's interest in the subject matter of the suit and in the relief sought are so inextricably
intertwined with the other parties' that his legal presence as a party to the proceeding is an
absolute necessity. In his absence, there cannot be a resolution of the dispute of the
parties before the court which is effective, complete, or equitable. 30 Thus, the absence of
an indispensable party renders all subsequent actions of the court null and void, for want of
authority to act, not only as to the absent parties but even as to those present. 31
With regard to actions for partition, Section 1, Rule 69 of the Rules of
Court requires that all persons interested in the property shall be joined as defendants,viz.:
SEC. 1. Complaint in action for partition of real estate. — A
person having the right to compel the partition of real estate may do so
as provided in this Rule, setting forth in his complaint the nature and
extent of his title and an adequate description of the real estate of which
partition is demanded and joining as defendants all other persons
interested in the property. (Emphasis and underscoring supplied)
Thus, all the co-heirs and persons having an interest in the property are
indispensable parties; as such, an action for partition will not lie without the joinder of the
said parties. 32
In the instant case, records reveal that Conrado, Sr. has the following heirs,
legitimate and illegitimate, who are entitled to a pro-indiviso share in the subject land,
namely: Conrado, Jr., Cresencio, Mateo, Sr., Coronacion, Cecilia, Celestial, Celedonio,
Ceruleo, Cebeleo, Sr., Eduardo, Rogelio, and Ricardo. However, both Mateo, Sr. and
Cebeleo, Sr. pre-deceased Conrado, Sr. and, thus, pursuant to the rules on representation
under the Civil Code, 33 their respective interests shall be represented by their children,
namely: (a) for Mateo, Sr.: Felcon, Landelin, Eusela, Giovanni, Mateo, Jr., Tito, and
Gaylord; and (b) for Cebeleo, Sr.: Cebeleo, Jr. and Neobel. 34
The aforementioned heirs — whether in their own capacity or in representation of
their direct ascendant — have vested rights over the subject land and, as such, should be
impleaded as indispensable parties in an action for partition thereof. However, a reading of
Santiago's complaint shows that as regards Mateo, Sr.'s interest, only Felcon was
impleaded, excluding therefrom his siblings and co-representatives. Similarly, with regard
to Cebeleo, Sr.'s interest over the subject land, the complaint impleaded his wife, Maude,
when pursuant to Article 972 35 of the Civil Code, the proper representatives to his
interest should have been his children, Cebeleo, Jr. and Neobel. Verily, Santiago's
omission of the aforesaid heirs renders his complaint for partition defective.
Santiago's contention that he had already bought the interests of the majority of
the heirs and, thus, they should no longer be regarded as indispensable parties deserves
no merit. As correctly noted by the CA, in actions for partition, the court cannot properly
issue an order to divide the property, unless it first makes a determination as to the
existence of co-ownership. The court must initially settle the issue of ownership, which is
the first stage in an action for partition. 36Indubitably, therefore, until and unless this issue
of co-ownership is definitely and finally resolved, it would be premature to effect a partition
of the disputed properties. 37
In this case, while it is conceded that Santiago bought the interests of majority of
the heirs of Conrado, Sr. as evidenced by the subject document, as a vendee, he merely
steps into the shoes of the vendors-heirs. Since his interest over the subject land is merely
derived from that of the vendors-heirs, the latter should first be determined as co-owners
thereof, thus necessitating the joinder of all those who have vested interests in such
land, i.e., the aforesaid heirs of Conrado, Sr., in Santiago's complaint.
In fine, the absence of the aforementioned indispensable parties in the instant
complaint for judicial partition renders all subsequent actions of the RTC null and void for
want of authority to act, not only as to the absent parties, but even as to those
present. 38 Therefore, the CA correctly set aside the November 29, 2002 Decision and the
April 4, 2003 Order of the RTC.
However, the CA erred in ordering the dismissal of the complaint on account of
Santiago's failure to implead all the indispensable parties in his complaint. InHeirs of
Mesina v. Heirs of Fian, Sr., 39 the Court definitively explained that in instances of
non-joinder of indispensable parties, the proper remedy is to implead them and not to
dismiss the case, to wit:
The non-joinder of indispensable parties is not a ground
for the dismissal of an action. At any stage of a judicial proceeding
and/or at such times as are just, parties may be added on the motion of a
party or on the initiative of the tribunal concerned. If the plaintiff refuses
to implead an indispensable party despite the order of the court, that
court may dismiss the complaint for the plaintiff's failure to comply with
the order. The remedy is to implead the non-party claimed to be
indispensable. . . . 40 (Underscoring supplied; emphases in the
original)
In view of the foregoing, the correct course of action in the instant case is to order
its remand to the RTC for the inclusion of those indispensable parties who were not
impleaded and for the disposition of the case on the merits. 41
WHEREFORE, the petition is PARTLY GRANTED. Accordingly, the Decision
dated March 26, 2009 and the Resolution dated April 6, 2011 of the Court of Appeals in
CA-G.R. CV. No. 80167, setting aside the Decision dated November 29, 2002 and the
Order dated April 4, 2003 of the Regional Trial Court of Iloilo City, Branch 31 in Civil Case
No. 19003, are hereby AFFIRMED with MODIFICATION REMANDING the instant case to
the court a quo, which is hereby DIRECTED to implead all indispensable parties and,
thereafter, PROCEED with the resolution of the case on the merits WITH DISPATCH.
 SO ORDERED.
||| (Divinagracia v. Parilla, G.R. No. 196750, [March 11, 2015])
 THIRD DIVISION New Westminster, B.C.
Canada V3L 5L5

[G.R. No. 166920. February 19, 2007.] Tokyo 7 January 1998

Dear Mr. Schonfeld,

PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. and JENS
PETER HENRICHSEN, petitioners, vs. KLAUS Letter of Employment
K. SCHONFELD, respondent.
This Letter of Employment with the attached General Conditions of
Employment constitutes the agreement under which you will be engaged
by our Company on the terms and conditions defined hereunder. In case of
DECISION any discrepancies or contradictions between this Letter of Employment
and the General Conditions of Employment, this Letter of Employment will
prevail. THDIaC

You will, from the date of commencement, be ["seconded"] to our

CALLEJO, SR., J p:
subsidiary Pacicon Philippines, Inc. in Manila, hereinafter referred as
Pacicon. Pacicon will provide you with a separate contract, which will
Before us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of define that part of the present terms and conditions for which Pacicon is
Court of the Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 76563. The CA responsible. In case of any discrepancies or contradictions between the
decision reversed the Resolution of the National Labor Relations Commission (NLRC) in NLRC present Letter of Employment and the contract with Pacicon Philippines,
NCR CA No. 029319-01, which, in turn, affirmed the Decision of the Labor Arbiter in NLRC NCR Inc. or in the case that Pacicon should not live up to its obligations, this
Case No. 30-12-04787-00 dismissing the complaint of respondent Klaus K. Schonfeld. Letter of Employment will prevail.
The antecedent facts are as follows: 1. Project Country: The Philippines with possible
Respondent is a Canadian citizen and was a resident of New Westminster, British short-term
Columbia, Canada. He had been a consultant in the field of environmental engineering and assignments in other countries.
water supply and sanitation. Pacicon Philippines, Inc. (PPI) is a corporation duly established
and incorporated in accordance with the laws of the Philippines. The primary purpose of PPI 2. Duty Station: Manila, the Philippines.
was to engage in the business of providing specialty and technical services both in and out of
the Philippines. 2 It is a subsidiary of Pacific Consultants International of Japan (PCIJ). The 3. Family Status: Married.
president of PPI, Jens Peter Henrichsen, who was also the director of PCIJ, was based in
4. Position: Sector Manager, Water and Sanitation.
Tokyo, Japan. Henrichsen commuted from Japan to Manila and vice versa, as well as in other
countries where PCIJ had business. 5. Commencement: 1st October 1997.
In 1997, PCIJ decided to engage in consultancy services for water and sanitation in 6. Remuneration: US$7,000.00 per month. The amount
the Philippines. In October 1997, respondent was employed by PCIJ, through Henrichsen, as will be
Sector Manager of PPI in its Water and Sanitation Department. However, PCIJ assigned him as
PPI sector manager in the Philippines. His salary was to be paid partly by PPI and PCIJ. paid partly as a local salary
(US$2,100.00
On January 7, 1998, Henrichsen transmitted a letter of employment to respondent in
Canada, requesting him to accept the same and affix his conformity thereto. Respondent made per month) by Pacicon and partly as an
some revisions in the letter of employment and signed the contract. 3 He then sent a copy to
Henrichsen. The letter of employment reads: offshore salary (US$4,900.00) by PCI
to bank
Mr. Klaus K. Schonfeld
II-365 Ginger Drive accounts to be nominated by you.
 A performance related component (Sgd.)

corresponding to 17.6% of the total Klaus Schonfeld

annual
as annotated and initialed 4
remuneration, subject to satisfactory
Section 21 of the General Conditions of Employment appended to the letter of
performance against agreed tasks and employment reads:
targets,
21 Arbitration
paid offshore.
Any question of interpretation, understanding or fulfillment of the
7. Accommodation: The company will provide partly conditions of employment, as well as any question arising
furnished between the Employee and the Company which is in
consequence of or connected with his employment with the
accommodation to a rent including Company and which can not be settled amicably, is to be finally
association settled, binding to both parties through written submissions, by
the Court of Arbitration in London. 5
fees, taxes and VAT not exceeding the
Pesos Respondent arrived in the Philippines and assumed his position as PPI Sector
Manager. He was accorded the status of a resident alien.
equivalent of US$2,900.00 per month.
As required by Rule XIV (Employment of Aliens) of the Omnibus Rules Implementing
8. Transportation: Included for in the remuneration. the Labor Code, PPI applied for an Alien Employment Permit (Permit) for respondent before the
Department of Labor and Employment (DOLE). It appended respondent's contract of
9. Leave Travels: You are entitled to two leave travels
employment to the application. IHAcCS
per year.
On February 26, 1999, the DOLE granted the application and issued the Permit to
10. Shipment of Personal
respondent. It reads:
Effects: The maximum allowance is
Republic of the Philippines
US$4,000.00.
Department of Labor & Employment
11. Mobilization National Capital Region

Travel: Mobilization travel will be from New ALIEN EMPLOYMENT PERMIT

Westminster, B.C., Canada. ISSUED TO: SCHONFELD, KLAUS KURT

DATE OF BIRTH: January 11, 1942 NATIONALITY: Canadian
POSITION: VP — WATER & SANITATION
EMPLOYER: PACICON PHILIPPINES, INC.
This letter is send (sic) to you in duplicate; we kindly request you to sign ADDRESS: 27/F Rufino Pacific Towers Bldg.,
and return one copy to us. Ayala Ave., Makati City
Yours sincerely, PERMIT
Pacific Consultants International ISSUED ON: February 26, 1999 SIGNATURE OF BEARER:
Jens Peter Henrichsen VALID UNTIL: January 7, 2000 (Sgd.)
APPROVED: BIENVENIDO S. LAGUESMA
Above terms and conditions accepted
By: MAXIMO B. ANITO
Date: 2 March 1998 REGIONAL DIRECTOR
 (Emphasis supplied) 6
Respondent received his compensation from PPI for the following periods: February to
June 1998, November to December 1998, and January to August 1999. He was also
reimbursed by PPI for the expenses he incurred in connection with his work as sector manager.
He reported for work in Manila except for occasional assignments abroad, and received
instructions from Henrichsen. 7
On May 5, 1999, respondent received a letter from Henrichsen informing him that his
employment had been terminated effective August 4, 1999 for the reason that PCIJ and PPI
had not been successful in the water and sanitation sector in the Philippines. 8 However, on
July 24, 1999, Henrichsen, by electronic mail, 9 requested respondent to stay put in his job after
August 5, 1999, until such time that he would be able to report on certain projects and discuss
all the opportunities he had developed. 10 Respondent continued his work with PPI until the
end of business hours on October 1, 1999.
Respondent filed with PPI several money claims, including unpaid salary, leave pay,
air fare from Manila to Canada, and cost of shipment of goods to Canada. PPI partially settled
some of his claims (US$5,635.99), but refused to pay the rest.
On December 5, 2000, respondent filed a Complaint 11 for Illegal Dismissal against
petitioners PPI and Henrichsen with the Labor Arbiter. It was docketed as NLRC-NCR Case No.
30-12-04787-00.
In his Complaint, respondent alleged that he was illegally dismissed; PPI had not
notified the DOLE of its decision to close one of its departments, which resulted in his dismissal;
and they failed to notify him that his employment was terminated after August 4, 1999.
Respondent also claimed for separation pay and other unpaid benefits. He alleged that the
company acted in bad faith and disregarded his rights. He prayed for the following reliefs:
1. Judgment be rendered in his favor ordering the respondents to
reinstate complainant to his former position without loss of seniority and
other privileges and benefits, and to pay his full backwages from the time
compensation was with held (sic) from him up to the time of his actual
reinstatement. In the alternative, if reinstatement is no longer feasible,
respondents must pay the complainant full backwages, and separation pay
equivalent to one month pay for every year of service, or in the amount of
US$16,400.00 as separation pay;
2. Judgment be rendered ordering the respondents to pay the
outstanding monetary obligation to complainant in the amount of
US$10,131.76 representing the balance of unpaid salaries, leave pay, cost
of his air travel and shipment of goods from Manila to Canada;
and SHCaEA
3. Judgment be rendered ordering the respondent company to
pay the complainant damages in the amount of no less than US
$10,000.00 and to pay 10% of the total monetary award as attorney's fees,
and costs.
Other reliefs just and equitable under the premises are, likewise,
prayed for. 12
Petitioners filed a Motion to Dismiss the complaint on the following grounds: (1) the
Labor Arbiter had no jurisdiction over the subject matter; and (2) venue was improperly laid. It
averred that respondent was a Canadian citizen, a transient expatriate who had left the
Philippines. He was employed and dismissed by PCIJ, a foreign corporation with principal office
in Tokyo, Japan. Since respondent's cause of action was based on his letter of employment
executed in Tokyo, Japan dated January 7, 1998, under the principle of lex loci contractus, the
complaint should have been filed in Tokyo, Japan. Petitioners claimed that respondent did not
offer any justification for filing his complaint against PPI before the NLRC in the Philippines.
Moreover, under Section 12 of the General Conditions of Employment appended to the letter of
employment dated January 7, 1998, complainant and PCIJ had agreed that any
employment-related dispute should be brought before the London Court of Arbitration. Since
even the Supreme Court had already ruled that such an agreement on venue is valid, Philippine
courts have no jurisdiction. 13
Respondent opposed the Motion, contending that he was employed by PPI to work in
the Philippines under contract separate from his January 7, 1998 contract of employment with
PCIJ. He insisted that his employer was PPI, a Philippine-registered corporation; it is
inconsequential that PPI is a wholly-owned subsidiary of PCIJ because the two corporations
have separate and distinct personalities; and he received orders and instructions from
Henrichsen who was the president of PPI. He further insisted that the principles of forum non
conveniens and lex loci contractus do not apply, and that although he is a Canadian citizen,
Philippine Labor Laws apply in this case.
Respondent adduced in evidence the following contract of employment dated January
9, 1998 which he had entered into with Henrichsen:
Mr. Klaus K. Schonfeld
II-365 Ginger Drive
New Westminster, B.C.
Canada V3L 5L5
Manila 9 January, 1998
Dear Mr. Schonfeld,
Letter of Employment
This Letter of Employment with the attached General Conditions of
Employment constitutes the agreement, under which you will be engaged
by Pacicon Philippines, Inc. on the terms and conditions defined
hereunder.
1. Project Country: The Philippines with possible
assignments in other countries.
2. Duty Station: Manila, the Philippines. 10. Mobilization Travel: Mobilization travel will be from New

Westminster, B.C., Canada.

3. Family Status: Married.

This letter is send (sic) to you in duplicate; we kindly request you to sign
and return one copy to us.
4. Position: Sector Manager — Water and
Sanitation Yours sincerely,
Pacicon Philippines, Inc.
Sector.
Jens Peter Henrichsen
President 14

5. Commencement: 1 January, 1998. According to respondent, the material allegations of the complaint, not petitioners'
defenses, determine which quasi-judicial body has jurisdiction. Section 21 of the Arbitration
Clause in the General Conditions of Employment does not provide for an exclusive venue
6. Remuneration: US$3,100.00 per month payable to a where the complaint against PPI for violation of the Philippine Labor Laws may be filed.
bank Respondent pointed out that PPI had adopted two inconsistent positions: it was first alleged that
he should have filed his complaint in Tokyo, Japan; and it later insisted that the complaint
account to be nominated by you. should have been filed in the London Court of Arbitration. 15

7. Accommodation: The company will provide partly
furnished accommodation to a rent
including association fees, taxes and
VAT not exceeding the Pesos
equivalent
of US$2300.00 per month.
In their reply, petitioners claimed that respondent's employer was PCIJ, which had
exercised supervision and control over him, and not PPI. Respondent was dismissed by PPI via
a letter of Henrichsen under the letterhead of PCIJ in Japan. 16 The letter of employment dated
January 9, 1998 which respondent relies upon did not bear his (respondent's) signature nor that
of Henrichsen.
On August 2, 2001, the Labor Arbiter rendered a decision granting petitioners' Motion
to Dismiss. The dispositive portion reads:
WHEREFORE, finding merit in respondents' Motion to Dismiss,
the same is hereby granted. The instant complaint filed by the complainant
is dismissed for lack of merit.

SO ORDERED. 17
8. Transportation: Included for in the remuneration.
The Labor Arbiter found, among others, that the January 7, 1998 contract of
employment between respondent and PCIJ was controlling; the Philippines was only the "duty
station" where Schonfeld was required to work under the General Conditions of Employment.
9. Shipment of Personal The maximum allowance is PCIJ remained respondent's employer despite his having been sent to the Philippines. Since
US$2500.00 the parties had agreed that any differences regarding employer-employee relationship should
be submitted to the jurisdiction of the court of arbitration in London, this agreement is
Effects: in connection with initial shipment of controlling.
personal effects from Canada. On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and affirmed
the latter's decision in toto. 18
 Respondent then filed a petition for certiorari under Rule 65 with the CA where he February 26, 1999, he is an employee of PPI. It was PPI president Henrichsen who terminated
raised the following arguments: his employment; PPI also paid his salary and reimbursed his expenses related to transactions
abroad. That PPI is a wholly-owned subsidiary of PCIJ is of no moment because the two
I corporations have separate and distinct personalities.
WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR The CA found the petition meritorious. Applying the four-fold test 21 of determining an
RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION employer-employee relationship, the CA declared that respondent was an employee of PPI. On
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT the issue of venue, the appellate court declared that, even under the January 7, 1998 contract
AFFIRMED THE LABOR ARBITER'S DECISION CONSIDERING THAT: of employment, the parties were not precluded from bringing a case related thereto in other
A. PETITIONER'S TRUE EMPLOYER IS venues. While there was, indeed, an agreement that issues between the parties were to be
NOT PACIFIC CONSULTANTS INTERNATIONAL OF resolved in the London Court of Arbitration, the venue is not exclusive, since there is no
JAPAN BUT RESPONDENT COMPANY, AND stipulation that the complaint cannot be filed in any other forum other than in the Philippines.
THEREFORE, THE LABOR ARBITER HAS On November 25, 2004, the CA rendered its decision granting the petition, the
JURISDICTION OVER THE INSTANT CASE; decretal portion of which reads:
AND cHCIEA
WHEREFORE, the petition is GRANTED in that the assailed
B. THE PROPER VENUE FOR THE PRESENT COMPLAINT IS Resolutions of the NLRC are hereby REVERSED and SET ASIDE. Let this
THE ARBITRATION BRANCH OF THE NLRC AND case be REMANDED to the Labor Arbiter a quo for disposition of the case
NOT THE COURT OF ARBITRATION IN LONDON. on the merits.
II SO ORDERED. 22
WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR A motion for the reconsideration of the above decision was filed by PPI and
RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION Henrichsen, which the appellate court denied for lack of merit. 23
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT
AFFIRMED THE DISMISSAL OF THE COMPLAINT CONSIDERING In the present recourse, PPI and Henrichsen, as petitioners, raise the following issues:
THAT PETITIONER'S TERMINATION FROM EMPLOYMENT IS
ILLEGAL: I

A. THE CLOSURE OF RESPONDENT COMPANY'S WATER THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT AN
AND SANITATION SECTOR WAS NOT BONA FIDE. EMPLOYMENT RELATIONSHIP EXISTED BETWEEN PETITIONERS
AND RESPONDENT DESPITE THE UNDISPUTED FACT THAT
B. ASSUMING ARGUENDO THAT THE CLOSURE OF RESPONDENT, A FOREIGN NATIONAL, WAS HIRED ABROAD BY A
RESPONDENT COMPANY'S WATER AND FOREIGN CORPORATION, EXECUTED HIS EMPLOYMENT
SANITATION SECTOR WAS JUSTIFIABLE, CONTRACT ABROAD, AND WAS MERELY "SECONDED" TO
PETITIONER'S DISMISSAL WAS INEFFECTUAL AS PETITIONERS SINCE HIS WORK ASSIGNMENT WAS IN
THE DEPARTMENT OF LABOR AND EMPLOYMENT MANILA. AScTaD
(DOLE) AND PETITIONER WAS NOT NOTIFIED
THIRTY (30) DAYS BEFORE THE ALLEGED II
CLOSURE. 19 THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE
Respondent averred that the absence or existence of a written contract of employment LABOR ARBITER A QUO HAS JURISDICTION OVER RESPONDENT'S
is not decisive of whether he is an employee of PPI. He maintained that PPI, through its CLAIM DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A
president Henrichsen, directed his work/duties as Sector Manager of PPI; proof of this was his FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN
letter-proposal to the Development Bank of the Philippines for PPI to provide consultancy CORPORATION, EXECUTED HIS EMPLOYMENT CONTRACT
services for the Construction Supervision of the Water Supply and Sanitation component of the ABROAD, AND HAD AGREED THAT ANY DISPUTE BETWEEN THEM
World Bank-Assisted LGU Urban Water and Sanitation Project. 20 He emphasized that as "SHALL BE FINALLY SETTLED BY THE COURT OF ARBITRATION IN
gleaned from Alien Employment Permit (AEP) No. M-029908-5017 issued to him by DOLE on LONDON." 24
 Petitioners fault the CA for reversing the findings of the Labor Arbiter and the NLRC.
Petitioners aver that the findings of the Labor Arbiter, as affirmed by the NLRC, are conclusive
on the CA. They maintain that it is not within the province of the appellate court in a petition
for certiorari to review the facts and evidence on record since there was no conflict in the factual
findings and conclusions of the lower tribunals. Petitioners assert that such findings and
conclusions, having been made by agencies with expertise on the subject matter, should be
deemed binding and conclusive. They contend that it was the PCIJ which employed respondent
as an employee; it merely seconded him to petitioner PPI in the Philippines, and assigned him
to work in Manila as Sector Manager. Petitioner PPI, being a wholly-owned subsidiary of PCIJ,
was never the employer of respondent.
Petitioners assert that the January 9, 1998 letter of employment which respondent
presented to prove his employment with petitioner PPI is of doubtful authenticity since it was
unsigned by the purported parties. They insist that PCIJ paid respondent's salaries and only
coursed the same through petitioner PPI. PPI, being its subsidiary, had supervision and control
over respondent's work, and had the responsibilities of monitoring the "daily administration" of
respondent. Respondent cannot rely on the pay slips, expenses claim forms, and
reimbursement memoranda to prove that he was an employee of petitioner PPI because these
documents are of doubtful authenticity.
Petitioners further contend that, although Henrichsen was both a director of PCIJ and
president of PPI, it was he who signed the termination letter of respondent upon instructions of
PCIJ. This is buttressed by the fact that PCIJ's letterhead was used to inform him that his
employment was terminated. Petitioners further assert that all work instructions came from
PCIJ and that petitioner PPI only served as a "conduit." Respondent's Alien Employment Permit
stating that petitioner PPI was his employer is but a necessary consequence of his being
"seconded" thereto. It is not sufficient proof that petitioner PPI is respondent's employer. The
entry was only made to comply with the DOLE requirements.
There being no evidence that petitioner PPI is the employer of respondent, the Labor
Arbiter has no jurisdiction over respondent's complaint.
Petitioners aver that since respondent is a Canadian citizen, the CA erred in ignoring
their claim that the principlesof forum non conveniens and lex loci contractusare applicable.
They also point out that the principal office, officers and staff of PCIJ are stationed in Tokyo,
Japan; and the contract of employment of respondent was executed in Tokyo, Japan.
Moreover, under Section 21 of the General Conditions for Employment incorporated in
respondent's January 7, 1998 letter of employment, the dispute between respondent and PCIJ
should be settled by the court of arbitration of London. Petitioners claim that the words used
therein are sufficient to show the exclusive and restrictive nature of the stipulation on venue.
Petitioners insist that the U.S. Labor-Management Act applies only to U.S. workers
and employers, while the Labor Code of the Philippines applies only to Filipino employers and
Philippine-based employers and their employees, not to PCIJ. In fine, the jurisdictions of the
NLRC and Labor Arbiter do not extend to foreign workers who executed employment
agreements with foreign employers abroad, although "seconded" to the Philippines. 25
In his Comment, 26 respondent maintains that petitioners raised factual issues in their
petition which are proscribed under Section 1, Rule 45 of the Rules of Court. The finding of the
CA that he had been an employee of petitioner PPI and not of PCIJ is buttressed by his
documentary evidence which both the Labor Arbiter and the NLRC ignored; they erroneously
opted to dismiss his complaint on the basis of the letter of employment and Section 21 of the
General Conditions of Employment. In contrast, the CA took into account the evidence on
record and applied case law correctly. SETAcC
The petition is denied for lack of merit.
It must be stressed that in resolving a petition for certiorari, the CA is not proscribed
from reviewing the evidence on record. Under Section 9 of Batas Pambansa Blg. 129, as
amended by R.A. No. 7902, the CA is empowered to pass upon the evidence, if and when
necessary, to resolve factual issues. 27 If it appears that the Labor Arbiter and the NLRC
misappreciated the evidence to such an extent as to compel a contrary conclusion if such
evidence had been properly appreciated, the factual findings of such tribunals cannot be given
great respect and finality. 28
Inexplicably, the Labor Arbiter and the NLRC ignored the documentary evidence
which respondent appended to his pleadings showing that he was an employee of petitioner
PPI; they merely focused on the January 7, 1998 letter of employment and Section 21 of the
General Conditions of Employment.
Petitioner PPI applied for the issuance of an AEP to respondent before the DOLE. In
said application, PPI averred that respondent is its employee. To show that this was the case,
PPI appended a copy of respondent's employment contract. The DOLE then granted the
application of PPI and issued the permit.
It bears stressing that under the Omnibus Rules Implementing the Labor Code, one of
the requirements for the issuance of an employment permit is the employment contract. Section
5, Rule XIV (Employment of Aliens) of the Omnibus Rules provides:
SECTION 1. Coverage. — This rule shall apply to all aliens
employed or seeking employment in the Philippines and the present or
prospective employers.
SECTION 2. Submission of list. — All employers employing
foreign nationals, whether resident or non-resident, shall submit a list of
nationals to the Bureau indicating their names, citizenship, foreign and
local address, nature of employment and status of stay in the Philippines.
SECTION 3. Registration of resident aliens. — All employed
resident aliens shall register with the Bureau under such guidelines as may
be issued by it.
SECTION 4. Employment permit required for entry. — No
alien seeking employment, whether as a resident or non-resident, may
enter the Philippines without first securing an employment permit from the
Ministry. If an alien enters the country under a non-working visa and
 wishes to be employed thereafter, he may only be allowed to be employed
upon presentation of a duly approved employment permit.
SECTION 5. Requirements for employment permit
applicants. — The application for an employment permit shall be
accompanied by the following:
(a) Curriculum vitae duly signed by the applicant
indicating his educational background, his work experience and
other data showing that he possesses technical skills in his trade
or profession.
(b) Contract of employment between the employer and
the principal which shall embody the following, among others:
1. That the non-resident alien worker shall comply with
all applicable laws and rules and regulations of the Philippines;
2. That the non-resident alien worker and the employer
shall bind themselves to train at least two (2) Filipino
understudies for a period to be determined by the Minister; and
3. That he shall not engage in any gainful employment
other than that for which he was issued a permit. IcAaSD
(c) A designation by the employer of at least two (2)
understudies for every alien worker. Such understudies must be
the most ranking regular employees in the section or department
for which the expatriates are being hired to insure the actual
transfer of technology.
Under Section 6 of the Rule, the DOLE may issue an alien employment permit based
only on the following:
(a) Compliance by the applicant and his employer with the
requirements of Section 2 hereof;
(b) Report of the Bureau Director as to the availability or
non-availability of any person in the Philippines who is competent and
willing to do the job for which the services of the applicant are desired;
(c) His assessment as to whether or not the employment of the
applicant will redound to the national interest;
(d) Admissibility of the alien as certified by the Commission on
Immigration and Deportation;
(e) The recommendation of the Board of Investments or other
appropriate government agencies if the applicant will be employed in
preferred areas of investments or in accordance with the imperative of
economic development.
Thus, as claimed by respondent, he had an employment contract with petitioner PPI;
otherwise, petitioner PPI would not have filed an application for a Permit with the DOLE.
Petitioners are thus estopped from alleging that the PCIJ, not petitioner PPI, had been the
employer of respondent all along.
We agree with the conclusion of the CA that there was an employer-employee
relationship between petitioner PPI and respondent using the four-fold test. Jurisprudence is
firmly settled that whenever the existence of an employment relationship is in dispute, four
elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the
employee's conduct. It is the so-called "control test" which constitutes the most important index
of the existence of the employer-employee relationship — that is, whether the employer
controls or has reserved the right to control the employee not only as to the result of the work to
be done but also as to the means and methods by which the same is to be accomplished.
Stated otherwise, an employer-employee relationship exists where the person for whom the
services are performed reserves the right to control not only the end to be achieved but also the
means to be used in reaching such end. 29 We quote with approval the following ruling of the
CA:
[T]here is, indeed, substantial evidence on record which would
erase any doubt that the respondent company is the true employer of
petitioner. In the case at bar, the power to control and supervise
petitioner's work performance devolved upon the respondent company.
Likewise, the power to terminate the employment relationship was
exercised by the President of the respondent company. It is not the
letterhead used by the company in the termination letter which controls,
but the person who exercised the power to terminate the employee. It is
also inconsequential if the second letter of employment executed in the
Philippines was not signed by the petitioner. An employer-employee
relationship may indeed exist even in the absence of a written contract, so
long as the four elements mentioned in the Mafincocase are all present. 30
The settled rule on stipulations regarding venue, as held by this Court in the vintage
case of Philippine Banking Corporation v. Tensuan, 31 is that while they are considered valid
and enforceable, venue stipulations in a contract do not, as a rule, supersede the general rule
set forth in Rule 4 of the Revised Rules of Court in the absence of qualifying or restrictive words.
They should be considered merely as an agreement or additional forum, not as limiting venue to
the specified place. They are not exclusive but, rather permissive. If the intention of the parties
were to restrict venue, there must be accompanying language clearly and categorically
expressing their purpose and design that actions between them be litigated only at the place
named by them. 32
In the instant case, no restrictive words like "only," "solely," "exclusively in this court,"
"in no other court save —," "particularly," "nowhere else but/except —," or words of equal
import were stated in the contract. 33 It cannot be said that the court of arbitration in London is
an exclusive venue to bring forth any complaint arising out of the employment contract. aITDAE
 Petitioners contend that respondent should have filed his Complaint in his place of
permanent residence, or where the PCIJ holds its principal office, at the place where the
contract of employment was signed, in London as stated in their contract. By enumerating
possible venues where respondent could have filed his complaint, however, petitioners
themselves admitted that the provision on venue in the employment contract is indeed merely
permissive.

Petitioners' insistence on the application of the principle of forum non

conveniens must be rejected. The bare fact that respondent is a Canadian citizen and was a
repatriate does not warrant the application of the principle for the following reasons:

First. The Labor Code of the Philippines does not include forum non conveniens as a
ground for the dismissal of the complaint. 34

Second. The propriety of dismissing a case based on this principle requires a factual
determination; hence, it is properly considered as defense. 35

Third. In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of

Appeals, 36 this Court held that:

. . . [a] Philippine Court may assume jurisdiction over the case if it

chooses to do so; provided, that the following requisites are met: (1) that
the Philippine Court is one to which the parties may conveniently resort to;
(2) that the Philippine Court is in a position to make an intelligent decision
as to the law and the facts; and, (3) that the Philippine Court has or is likely
to have power to enforce its decision. . . .

Admittedly, all the foregoing requisites are present in this case.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in

CA-G.R. SP No. 76563 is AFFIRMED. This case is REMANDED to the Labor Arbiter for
disposition of the case on the merits. Cost against petitioners.

SO ORDERED.

||| (Pacific Consultants International Asia, Inc. v. Schonfeld, G.R. No. 166920, [February 19,
2007], 545 PHIL 116-137)
 SECOND DIVISION When Ernesto failed to settle the above-mentioned loans on its
due date, respondent bank through counsel sent him a written demand on
September 28, 1999. The amount due as of September 30, 1999 had
[G.R. No. 161417. February 8, 2007.] already reached ONE MILLION EIGHTY THOUSAND SIX HUNDRED
SEVENTY SIX AND FIFTY CENTAVOS (P1,080,676.50).
MA. TERESA CHAVES BIACO, petitioner, vs. PHILIPPINE
The written demand, however, proved futile.
COUNTRYSIDE RURAL BANK, respondent.
On February 22, 2000, respondent bank filed a complaint for
foreclosure of mortgage against the spouses Ernesto and Teresa Biaco
before the RTC of Misamis Oriental. Summons was served to the spouses
DECISION Biaco through Ernesto at his office (Export and Industry Bank) located at
Jofelmor Bldg., Mortola Street, Cagayan de Oro City. EASCDH

Ernesto received the summons but for unknown reasons, he

TINGA, J p: failed to file an answer. Hence, the spouses Biaco were declared in default
upon motion of the respondent bank. The respondent bank was allowed to
Petitioner, Ma. Teresa Chaves Biaco, seeks a review of the Decision 1 of the Court of present its evidence ex parte before the Branch Clerk of Court who was
Appeals in CA-G.R. No. 67489 dated August 27, 2003, which denied her petition for annulment then appointed by the court as Commissioner.
of judgment, and the Resolution 2 dated December 15, 2003 which denied her motion for
reconsideration. Arturo Toring, the branch manager of the respondent bank,
testified that the spouses Biaco had been obtaining loans from the bank
The facts as succinctly stated by the Court of Appeals are as follows: since 1996 to 1998. The loans for the years 1996-1997 had already been
paid by the spouses Biaco, leaving behind a balance of P1,260,304.33
Ernesto Biaco is the husband of petitioner Ma. Teresa Chaves representing the 1998 loans. The amount being claimed is inclusive of
Biaco. While employed in the Philippine Countryside Rural Bank (PCRB) interests, penalties and service charges as agreed upon by the parties.
as branch manager, Ernesto obtained several loans from the respondent The appraisal value of the land subject of the mortgage is only
bank as evidenced by the following promissory notes: P150,000.00 as reported by the Assessor's Office.
Feb. 17, 1998 P65,000.00 Based on the report of the Commissioner, the respondent judge
ordered as follows:
Mar. 18, 1998 30,000.00
WHEREFORE, judgment is hereby rendered ordering
May 6, 1998 60,000.00
defendants spouses ERNESTO R. BIACO and MA. THERESA
May 20, 1998 350,000.00 [CHAVES] BIACO to pay plaintiff bank within a period of not less
than ninety (90) days nor more than one hundred (100) days from
July 30, 1998 155,000.00 receipt of this decision the loan of ONE MILLION TWO
HUNDRED SIXTY THOUSAND THREE HUNDRED FOUR
Sept. 8, 1998 40,000.00
PESOS and THIRTY THREE CENTAVOS (P1,260,304.33) plus
Sept. 8, 1998 120,000.00 litigation expenses in the amount of SEVEN THOUSAND SIX
HUNDRED FORTY PESOS (P7,640.00) and attorney's fees in
the amount of TWO HUNDRED FIFTY TWO THOUSAND
THIRTY PESOS and FORTY THREE CENTAVOS (P252,030.43)
As security for the payment of the said loans, Ernesto executed a and cost of this suit.
real estate mortgage in favor of the bank covering the parcel of land
described in Original Certificate of Title (OCT) No. P-14423. The real In case of non-payment within the period, the Sheriff of
estate mortgages bore the signatures of the spouses Biaco. this Court is ordered to sell at public auction the mortgaged Lot, a
parcel of registered land (Lot 35802, Cad. 237 {Lot No. 12388-B,
Csd-10-002342-D}), located at Gasi, Laguindingan, Misamis
 Oriental and covered by TCT No. P-14423 to satisfy the mortgage
debt, and the surplus if there be any should be delivered to the
defendants spouses ERNESTO and MA. THERESA [CHAVES]
BIACO. In the event however[,] that the proceeds of the auction
sale of the mortgage[d] property is not enough to pay the
outstanding obligation, the defendants are ordered to pay any
deficiency of the judgment as their personal liability.
SO ORDERED.
On July 12, 2000, the sheriff personally served the
above-mentioned judgment to Ernesto Biaco at his office at Export and
Industry Bank. The spouses Biaco did not appeal from the adverse
decision of the trial court. On October 13, 2000, the respondent bank filed
an ex parte motion for execution to direct the sheriff to sell the mortgaged
lot at public auction. The respondent bank alleged that the order of the
court requiring the spouses Biaco to pay within a period of 90 days had
passed, thus making it necessary to sell the mortgaged lot at public auction,
as previously mentioned in the order of the court. The motion for execution
was granted by the trial court per Order dated October 20, 2000.
On October 31, 2000, the sheriff served a copy of the writ of
execution to the spouses Biaco at their residence in #92 9th Street,
Nazareth, Cagayan de Oro City. The writ of execution was personally
received by Ernesto. By virtue of the writ of execution issued by the trial
court, the mortgaged property was sold at public auction in favor of the
respondent bank in the amount of ONE HUNDRED FIFTY THOUSAND
PESOS (P150,000.00).
The amount of the property sold at public auction being
insufficient to cover the full amount of the obligation, the respondent bank
filed an "ex parte motion for judgment" praying for the issuance of a writ of
execution against the other properties of the spouses Biaco for the full
settlement of the remaining obligation. Granting the motion, the court
ordered that a writ of execution be issued against the spouses Biaco to
enforce and satisfy the judgment of the court for the balance of ONE
MILLION THREE HUNDRED SIXTY NINE THOUSAND NINE HUNDRED
SEVENTY FOUR PESOS AND SEVENTY CENTAVOS
(P1,369,974.70). ITcCSA
The sheriff executed two (2) notices of levy against properties
registered under the name of petitioner Ma. Teresa Chaves Biaco.
However, the notices of levy were denied registration because Ma. Teresa
had already sold the two (2) properties to her daughters on April 11,
2001. 3
Petitioner sought the annulment of the Regional Trial Court decision contending that
extrinsic fraud prevented her from participating in the judicial foreclosure proceedings.
According to her, she came to know about the judgment in the case only after the lapse of more
than six (6) months after its finality. She claimed that extrinsic fraud was perpetrated against her
because the bank failed to verify the authenticity of her signature on the real estate mortgage
and did not inquire into the reason for the absence of her signature on the promissory notes.
She moreover asserted that the trial court failed to acquire jurisdiction because summons were
served on her through her husband without any explanation as to why personal service could
not be made.
The Court of Appeals considered the two circumstances that kept petitioner in the dark
about the judicial foreclosure proceedings: (1) the failure of the sheriff to personally serve
summons on petitioner; and (2) petitioner's husband's concealment of his knowledge of the
foreclosure proceedings. On the validity of the service of summons, the appellate court ruled
that judicial foreclosure proceedings are actions quasi in rem. As such, jurisdiction over the
person of the defendant is not essential as long as the court acquires jurisdiction over the res.
Noting that the spouses Biaco were not opposing parties in the case, the Court of Appeals
further ruled that the fraud committed by one against the other cannot be considered extrinsic
fraud.
Her motion for reconsideration having been denied, petitioner filed the instant Petition
for Review, 4 asserting that even if the action is quasi in rem, personal service of summons is
essential in order to afford her due process. The substituted service made by the sheriff at her
husband's office cannot be deemed proper service absent any explanation that efforts had
been made to personally serve summons upon her but that such efforts failed. Petitioner
contends that extrinsic fraud was perpetrated not so much by her husband, who did not inform
her of the judicial foreclosure proceedings, but by the sheriff who allegedly connived with her
husband to just leave a copy of the summons intended for her at the latter's office.
Petitioner further argues that the deficiency judgment is a personal judgment which
should be deemed void for lack of jurisdiction over her person.
Respondent Philippine Countryside Rural Bank (PCRB) filed its
Comment, 5 essentially reiterating the appellate court's ruling. Respondent avers that service
of summons upon the defendant is not necessary in actions quasi in rem it being sufficient that
the court acquire jurisdiction over the res. As regards the alleged conspiracy between
petitioner's husband and the sheriff, respondent counters that this is a new argument which
cannot be raised for the first time in the instant petition.
We required the parties to file their respective memoranda in the Resolution 6 dated
August 18, 2004. Accordingly, petitioner filed her Memorandum 7 dated October 10, 2004,
while respondent filed its Memorandum for Respondent 8 dated September 9, 2004.
Annulment of judgment is a recourse equitable in character, allowed only in
exceptional cases as where there is no available or other adequate remedy. Jurisprudence and
Sec. 2, Rule 47 of the 1997 Rules of Civil Procedure (Rules of Court) provide that judgments
may be annulled only on grounds of extrinsic fraud and lack of jurisdiction or denial of due
process. 9
Petitioner asserts that extrinsic fraud consisted in her husband's concealment of the
loans which he obtained from respondent PCRB; the filing of the complaint for judicial
foreclosure of mortgage; service of summons; rendition of judgment by default; and all other
proceedings which took place until the writ of garnishment was served. 10
Extrinsic fraud exists when there is a fraudulent act committed by the prevailing
party outside of the trial of the case, whereby the defeated party was prevented from presenting
fully his side of the case by fraud or deception practiced on him by the prevailing
party. 11 Extrinsic fraud is present where the unsuccessful party had been prevented from
exhibiting fully his case, by fraud or deception practiced on him by his opponent, as by keeping
him away from court, a false promise of a compromise; or where the defendant never had
knowledge of the suit, being kept in ignorance by the acts of the plaintiff; or where an attorney
fraudulently or without authority assumes to represent a party and connives at his defeat; or
where the attorney regularly employed corruptly sells out his client's interest to the other side.
The overriding consideration is that the fraudulent scheme of the prevailing litigant prevented a
party from having his day in court. 12
With these considerations, the appellate court acted well in ruling that there was no
fraud perpetrated by respondent bank upon petitioner, noting that the spouses Biaco were
co-defendants in the case and shared the same interest. Whatever fact or circumstance
concealed by the husband from the wife cannot be attributed to respondent bank.
Moreover, petitioner's allegation that her signature on the promissory notes was
forged does not evince extrinsic fraud. It is well-settled that the use of forged instruments during
trial is not extrinsic fraud because such evidence does not preclude the participation of any
party in the proceedings. 13
The question of whether the trial court has jurisdiction depends on the nature of the
action, i.e., whether the action is in personam, in rem, or quasi in rem. The rules on service of
summons under Rule 14 of the Rules of Court likewise apply according to the nature of the
action.
An action in personam is an action against a person on the basis of his personal
liability. An action in rem is an action against the thing itself instead of against the person. An
action quasi in rem is one wherein an individual is named as defendant and the purpose of the
proceeding is to subject his interest therein to the obligation or lien burdening the property. 14
In an action in personam, jurisdiction over the person of the defendant is necessary for
the court to validly try and decide the case. In a proceeding in rem orquasi in rem, jurisdiction
over the person of the defendant is not a prerequisite to confer jurisdiction on the court provided
that the court acquires jurisdiction over theres. Jurisdiction over the res is acquired either (1) by
the seizure of the property under legal process, whereby it is brought into actual custody of the
law; or (2) as a result of the institution of legal proceedings, in which the power of the court is
recognized and made effective. 15
Nonetheless, summons must be served upon the defendant not for the purpose of
vesting the court with jurisdiction but merely for satisfying the due process requirements. 16
A resident defendant who does not voluntarily appear in court, such as petitioner in
this case, must be personally served with summons as provided under Sec. 6, Rule 14 of the
Rules of Court. If she cannot be personally served with summons within a reasonable time,
substituted service may be effected (1) by leaving copies of the summons at the defendant's
residence with some person of suitable age and discretion then residing therein, or (2) by
leaving the copies at defendant's office or regular place of business with some competent
person in charge thereof in accordance with Sec. 7, Rule 14 of the Rules of Court.
In this case, the judicial foreclosure proceeding instituted by respondent PCRB
undoubtedly vested the trial court with jurisdiction over the res. A judicial foreclosure
proceeding is an action quasi in rem. As such, jurisdiction over the person of petitioner is not
required, it being sufficient that the trial court is vested with jurisdiction over the subject
matter. DCAHcT
There is a dimension to this case though that needs to be delved into. Petitioner avers
that she was not personally served summons. Instead, summons was served to her through her
husband at his office without any explanation as to why the particular surrogate service was
resorted to. The Sheriff's Return of Service dated March 21, 2000 states:
xxx xxx xxx
That on March 16, 2000, the undersigned served the copies of
Summons, complaint and its annexes to the defendants Sps. Ernesto R. &
Ma. Teresa Ch. Biacothru Ernesto R. Biaco[,] defendant of the
above-entitled case at his office EXPORT & INDUSTRY BANK,
Jofelmore Bldg.[,] Mortola St., Cagayan de Oro City and he acknowledged
receipt thereof as evidenced with his signature appearing on the original
copy of the Summons. 17 [Emphasis supplied]
Without ruling on petitioner's allegation that her husband and the sheriff connived to
prevent summons from being served upon her personally, we can see that petitioner was
denied due process and was not able to participate in the judicial foreclosure proceedings as a
consequence. The violation of petitioner's constitutional right to due process arising from want
of valid service of summons on her warrants the annulment of the judgment of the trial court.
There is more, the trial court granted respondent PCRB's ex-parte motion for
deficiency judgment and ordered the issuance of a writ of execution against the spouses Biaco
to satisfy the remaining balance of the award. In short, the trial court went beyond its jurisdiction
over the res and rendered a personal judgment against the spouses Biaco. This cannot be
countenanced.
In Sahagun v. Court of Appeals, 18 suit was brought against a non-resident defendant,
Abelardo Sahagun, and a writ of attachment was issued and subsequently levied on a house
and lot registered in his name. Claiming ownership of the house, his wife, Carmelita Sahagun,
filed a motion to intervene. For failure of plaintiff to serve summons extraterritorially upon
Abelardo, the complaint was dismissed without prejudice.
Subsequently, plaintiff filed a motion for leave to serve summons by publication upon
Abelardo. The trial court granted the motion. Plaintiff later filed an amended complaint against
Abelardo, this time impleading Carmelita and Rallye as additional defendants. Summons was
served on Abelardo through publication in theManila Evening Post. Abelardo failed to file an
answer and was declared in default. Carmelita went on certiorari to the Court of Appeals
assailing as grave abuse of discretion the declaration of default of Abelardo. The Court of
Appeals dismissed the petition and denied reconsideration.

In her petition with this Court, Carmelita raised the issue of whether the trial court
acquired jurisdiction over her husband, a non-resident defendant, by the publication of
summons in a newspaper of general circulation in the Philippines. The Court sustained the
correctness of extrajudicial service of summons by publication in such newspaper.

The Court explained, citing El Banco Español-Filipino v. Palanca, 19 that foreclosure

and attachment proceedings are both actions quasi in rem. As such, jurisdiction over the
person of the (non-resident) defendant is not essential. Service of summons on a non-resident
defendant who is not found in the country is required, not for purposes of physically acquiring
jurisdiction over his person but simply in pursuance of the requirements of fair play, so that he
may be informed of the pendency of the action against him and the possibility that property
belonging to him or in which he has an interest may be subjected to a judgment in favor of a
resident, and that he may thereby be accorded an opportunity to defend in the action, should he
be so minded. CDaTAI

Significantly, the Court went on to rule, citing De Midgely v. Ferandos, et

al. 20 and Perkins v. Dizon, et al., 21 that in a proceeding in rem or quasi in rem, the only relief
that may be granted by the court against a defendant over whose person it has not acquired
jurisdiction either by valid service of summons or by voluntary submission to its jurisdiction, is
limited to the res.

Similarly, in this case, while the trial court acquired jurisdiction over the res, its
jurisdiction is limited to a rendition of judgment on the res. It cannot extend its jurisdiction
beyond the res and issue a judgment enforcing petitioner's personal liability. In doing so without
first having acquired jurisdiction over the person of petitioner, as it did, the trial court violated her
constitutional right to due process, warranting the annulment of the judgment rendered in the
case.

WHEREFORE, the instant petition is GRANTED. The Decision dated August 27, 2003
and the Resolution dated December 15, 2003 of the Court of Appeals in CA-G.R. SP No. 67489
are SET ASIDE. The Judgment dated July 11, 2000 and Order dated February 9, 2001 of the
Regional Trial Court of Cagayan de Oro City, Branch 20, are likewise SET ASIDE.

SO ORDERED.

||| (Biaco v. Philippine Countryside Rural Bank, G.R. No. 161417, [February 8, 2007], 544 PHIL
45-58)
 FIRST DIVISION
[G.R. No. 175796. July 22, 2015.]
BPI FAMILY SAVINGS BANK, INC., petitioner, vs. SPOUSES
BENEDICTO & TERESITA YUJUICO, respondents.
DECISION
BERSAMIN, ** J p:
An action to recover the deficiency after extrajudicial foreclosure of a real property
mortgage is a personal action because it does not affect title to or possession of real
property, or any interest therein.
The Case
This appeal is taken by the petitioner to overturn the decision promulgated on
March 31, 2006, 1 whereby the Court of Appeals (CA) set aside the orders issued by the
Regional Trial Court, Branch 60, in Makati City (Makati RTC) on October 17, 2003 2 and
February 1, 2005 3 dismissing their action against the respondents to recover the
deficiency after the extrajudicial foreclosure of their mortgage (Civil Case No. 03-450) on
the ground of improper venue. IAETDc
Antecedents
On August 22, 1996, the City of Manila filed a complaint against the respondents
for the expropriation of five parcels of land located in Tondo, Manila and registered in the
name of respondent Teresita Yujuico. Two of the parcels of land, covered by Transfer
Certificate of Title (TCT) No. 261331 and TCT No. 261332, were previously mortgaged to
Citytrust Banking Corporation, the petitioner's predecessor-in-interest, under a First Real
Estate Mortgage Contract. 4 On June 30, 2000, the Regional Trial Court in Manila (Manila
RTC) rendered its judgment declaring the five parcels of land expropriated for public use.
The judgment became final and executory on January 28, 2001 and was entered in the
book of entries of judgment on March 23, 2001. 5 The petitioner subsequently filed
a Motion to Intervene in Execution with Partial Opposition to Defendant's Request to
Release, but the RTC denied the motion for having been "filed out of time." Hence, the
petitioner decided to extrajudicially foreclose the mortgage constituted on the two parcels
of land subject of the respondents' loan. After holding the public auction, the sheriff
awarded the two lots to the petitioner as the highest bidder at P10,000,000.00. 6
Claiming a deficiency amounting to P18,522,155.42, the petitioner sued the
respondents to recover such deficiency in the Makati RTC (Civil Case No. 03-450). The
respondents moved to dismiss the complaint on several grounds, namely: that the suit was
barred by res judicata; that the complaint stated no cause of action; and that the plaintiff's
claim had been waived, abandoned, or extinguished. 7
In its order issued on October 17, 2003, the Makati RTC denied the respondents'
motion to dismiss, ruling that there was no res judicata; that the complaint stated a
sufficient cause of action to recover the deficiency; and that there was nothing to support
the claim that the obligation had been abandoned or extinguished apart from the
respondents' contention that the properties had been subjected to expropriation by the City
of Manila. 8
On November 4, 2003, the respondents moved for reconsideration, reiterating
their grounds earlier made in their motion to dismiss. 9
In turn, the petitioner adopted its comment/opposition to the motion to dismiss. 10
The respondents then filed their reply, 11 in which they raised for the first time
their objection on the ground of improper venue. They contended that the action for the
recovery of the deficiency, being a supplementary action of the extrajudicial foreclosure
proceedings, was a real action that should have been brought in the Manila RTC because
Manila was the place where the properties were located. 12
On February 1, 2005, the Makati RTC denied the respondents' motion for
reconsideration for its lack of merit; and held on the issue of improper venue that:
It would be improper for this Court to dismiss the plaintiff's
complaint on the ground of improper venue, assuming that the venue is
indeed improperly laid, since the said ground was not raised in the
defendant's Motion to Dismiss. On this point, it was held in the case
of Malig, et al., vs. Bush, L-22761, May 31, 1969 that "an action cannot
be dismissed on a ground not alleged in the motion therefore even if said
ground, e.g., prescription, is provided in Role 16. 13
Decision of the CA
Not satisfied, the respondents assailed the orders dated October 17, 2003 and
February 1, 2005 by petition for certiorari. 14 They submitted for consideration by the CA
the following issues, namely:
. . . (WHETHER OR NOT) RESPONDENT TRIAL COURT COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION WHEN IT ISSUED ITS ASSAILED
ORDERS CONSIDERING THAT:
A. THE COMPLAINT A QUO IS BARRED
BY RES JUDICATA.
B. THE COMPLAINT STATED NO CAUSE
OF ACTION.
C. PRIVATE RESPONDENT'S CLAIM HAS
BEEN WAIVED, ABANDONED OR OTHERWISE
EXTINGUISHED.
 D. VENUE WAS IMPROPERLY LAID. 15
On March 31, 2006, the CA granted the petition for certiorari of the respondents
on the basis of the fourth issue, opining:
xxx xxx xxx
Thus, a suit for recovery of the deficiency after the
foreclosure of a mortgage is in the nature of a mortgage action
because its purpose is precisely to enforce the mortgage contract;
it is upon a written contract and upon an obligation of the
mortgage-debtor to pay the deficiency which is created by law. As
such, the venue of an action for recovery of deficiency must necessarily
be the same venue as that of the extrajudicial foreclosure of mortgage.
xxx xxx xxx
In this regard, We take note that the parcels of land subject of
the mortgage contract are located in Tondo, Manila, under Transfer
Certificates of Title Nos. 216331 and 216332. On the other hand, the
extrajudicial foreclosure of the real estate mortgage took place at the
RTC of Manila on January 28, 2003. Thus, the suit for judgment on
the deficiency filed by respondent BPI against petitioners Yujuico,
being an action emanating from the foreclosure of the real estate
mortgage contract between them, must necessarily be filed also at
the RTC of Manila, not at the RTC of Makati.
xxx xxx xxx 16
The CA denied the respondents' Motion for Partial Reconsideration and the
petitioner's Partial Motion for Reconsideration on December 7, 2006. 17
Issues
Hence, this appeal by the petitioner, to assail the CA's dismissal of Civil Case No.
03-450 on the ground of improper venue upon the following grounds, 18namely:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS'
DENIAL OF THE PETITIONER'S PARTIAL MOTION FOR
RECONSIDERATION ON THE GROUND OF IMPROPER VENUE AS
A RESULT DISMISSED THE COMPLAINT FOR SUM OF MONEY IS
CONTRARY TO LAW.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS['] ACT
OF APPRECIATING THE ADDITIONAL GROUND OF IMPROPER
VENUE, ONLY RAISED IN THE MOTION FOR RECONSIDERATION
FILED IN THE LOWER COURT AFTER IT DENIED RESPONDENTS'
MOTION TO DISMISS, IS CONTRARY TO LAW AND
JURISPRUDENCE. 19
Ruling of the Court
We grant the petition for review on certiorari.
It is basic that the venue of an action depends on whether it is a real or a personal
action. The determinants of whether an action is of a real or a personal nature have been
fixed by the Rules of Court and relevant jurisprudence. According to Section 1, Rule 4 of
the Rules of Court, a real action is one that affects title to or possession of real property, or
an interest therein. Thus, an action for partition or condemnation of, or foreclosure of
mortgage on, real property is a real action. 20The real action is to be commenced and tried
in the proper court having jurisdiction over the area wherein the real property involved, or a
portion thereof, is situated, which explains why the action is also referred to as a local
action. In contrast, the Rules of Court declares all other actions as personal
actions. 21 Such actions may include those brought for the recovery of personal property,
or for the enforcement of some contract or recovery of damages for its breach, or for the
recovery of damages for the commission of an injury to the person or property. 22 The
venue of a personal action is the place where the plaintiff or any of the principal plaintiffs
resides, or where the defendant or any of the principal defendants resides, or in the case of
a non-resident defendant where he may be found, at the election of the plaintiff, 23 for
which reason the action is considered a transitory one. SaCIDT
Based on the distinctions between real and personal actions, an action to recover
the deficiency after the extrajudicial foreclosure of the real property mortgage is a personal
action, for it does not affect title to or possession of real property, or any interest therein.
It is true that the Court has said in Caltex Philippines, Inc. v. Intermediate
Appellate Court 24 that "a suit for the recovery of the deficiency after the foreclosure of a
mortgage is in the nature of a mortgage action because its purpose is precisely to enforce
the mortgage contract." However, the CA erred in holding, upon the authority of Caltex
Philippines, Inc., that the venue of Civil Case No. 03-450 must necessarily be Manila, the
same venue as that of the extrajudicial foreclosure of mortgage. An examination of Caltex
Philippines, Inc. reveals that the Court was thereby only interpreting the prescriptive period
within which to bring the suit for the recovery of the deficiency after the foreclosure of the
mortgage, and was not at all ruling therein on the venue of such suit or on the nature of
such suit being either a real or a personal action.
Given the foregoing, the petitioner correctly brought Civil Case No. 03-450 in the
Makati RTC because Makati was the place where the main office of the petitioner was
located.
Moreover, the Makati RTC observed, and the observation is correct in our view,
that it would be improper to dismiss Civil Case No. 03-450 on the ground of improper venue,
assuming that the venue had been improperly laid, considering that the respondents had
not raised such ground in their Motion to Dismiss. As earlier indicated, they came to raise
the objection of improper venue for the first time only in their reply to the petitioner's
comment on their Motion for Reconsideration. They did so belatedly.
 We underscore that in civil proceedings, venue is procedural, not jurisdictional,
and may be waived by the defendant if not seasonably raised either in a motion to dismiss
or in the answer. 25 Section 1, Rule 9 of the Rules of Court thus expressly stipulates that
defenses and objections not pleaded either in a motion to dismiss or in the answer are
deemed waived. As it relates to the place of trial, indeed, venue is meant to provide
convenience to the parties, rather than to restrict their access to the courts. 26 In other
words, unless the defendant seasonably objects, any action may be tried by a court despite
its being the improper venue.
WHEREFORE, we GRANT the petition for review
on certiorari; REVERSE and SET ASIDE the decision promulgated by the Court of
Appeals on March 31, 2006;REINSTATE the orders dated October 17, 2003 and February
1, 2005 of the Regional Trial Court, Branch 60, in Makati City; and ORDER the
respondents to pay the costs of suit.
SO ORDERED.
||| (BPI Family Savings Bank, Inc. v. Spouses Yujuico, G.R. No. 175796, [July 22, 2015])
 SECOND DIVISION
[G.R. No. 147800. November 11, 2003.]
UNITED COCONUT PLANTERS BANK, petitioner, vs. TEOFILO C.
RAMOS, respondent.
Tan Acut & Lopez for petitioner.
Carmelito Montano for respondent.
SYNOPSIS
Respondent instituted a complaint for damages against petitioner Bank before the
Regional Trial Court of Makati City. Respondent alleged that he was the owner of a parcel of
land covered by TCT No. 275167; that he was not the judgment debtor in Civil Case No. 16453
but Teofilo Ramos, Sr.; that without any legal basis, the petitioner and sheriff Villapana caused
the annotation of a notice of levy in the TCT of his aforesaid property which caused the
disapproval of the loan from the UCPB and, thus made him lose an opportunity to participate in
the bidding of a considerable project; that by reason of such wrongful annotation of notice of
levy, he suffered sleepless nights, moral shock, mental anguish and almost a heart attack due
to high blood pressure. Petitioner admitted that it made a mistake in causing the annotation of
notice of levy on the TCT of the respondent, but claimed that it was not motivated by malice or
bad faith; that the respondent was not the party-in-interest to file the action for damages, as he
was not the one who applied for a loan from UCPB and PDB but Ramdustrial Corporation of
which he was merely the President and Chairman of the Board of Directors; that it took the
respondent quite a long time to file a motion to cancel the levy. The RTC eventually ruled for the
respondent. On appeal, its decision was affirmed by the Court of Appeals. Hence, this petition
for review on certiorari.
The Supreme Court ruled that the petitioner acted negligently when it caused the
annotation of the notice of levy in the title of the respondent despite doubts as to the identity of
the respondent vis-a-vis its judgment debtor. According to the Court, the petitioner as a bank
and a financial institution engaged in the grant of loans, is expected to ascertain and verify the
identities of the persons it transacts business with. Here, petitioner knew that the sureties to the
loan granted to ZDC and the defendants in Civil Case No. 16453 were the Spouses Teofilo
Ramos, Sr. and Amelita Ramos. The name of the judgment debtor in Civil Case No. 16453 was
Teofilo Ramos, Sr., as appearing in the judgment of the court and in the writ of execution issued
by the trial court. The name of the owner of the property covered by TCT No. 275167 was
Teofilo C. Ramos. It behooves the petitioner to ascertain whether the defendant Teofilo Ramos,
Sr. in Civil Case No. 16453 was the same person who appeared as the owner of the property
covered by the said title. If the petitioner had done so, it would have surely discovered that the
respondent and the surety and judgment debtor Teofilo Ramos Sr., were not one and the same
person. Thus, by reason of petitioner's negligent act, a wrong levy was made, causing physical,
mental and psychological injuries on the person of the respondent entitling him to an award of
moral damages and attorney's fees. Therefore, regardless of the fact that the respondent was
not the loan applicant and the business opportunities lost were those of Ramdustrial
Corporation, respondent as registered owner of the property whose ownership had been
unlawfully disturbed and limited by the unlawfulannotation of the notice of levy on his TCT, had
the legal personality and cause of action to file an action for damages. Not even the
respondent's failure to have the annotation cancelled immediately after he came to know of the
said wrongful levy negated his cause of action.
SYLLABUS
1. COMMERCIAL LAW; BANKS; SHOULD GUARD AGAINST LOSS DUE TO
NEGLIGENCE OR BAD FAITH; EXPECTED TO ASCERTAIN AND VERIFY THE IDENTITIES
OF THE PERSONS IT TRANSACTS BUSINESS WITH; CASE AT BAR.— We rule that the
petitioner acted negligently when it caused the annotation of the notice of levy in TCT No.
275167. It bears stressing that the petitioner is a banking corporation, a financial institution with
power to issue its promissory notes intended to circulate as money (known as bank notes); or to
receive the money of others on general deposit, to form a joint fund that shall be used by the
institution for its own benefit, for one or more of the purposes of making temporary loans and
discounts, of dealing in notes, foreign and domestic bills of exchange, coin bullion, credits, and
the remission of money; or with both these powers, and with the privileges, in addition to these
basic powers, of receiving special deposits, and making collection for the holders of negotiable
paper, if the institution sees fit to engage in such business. In funding these businesses, the
bank invests the money that it holds in trust of its depositors. For this reason, we have held that
the business of a bank is one affected with public interest, for which reason the bank should
guard against loss due to negligence or bad faith. In approving the loan of an applicant, the
bank concerns itself with proper informations regarding its debtors. The petitioner, as a bank
and a financial institution engaged in the grant of loans, is expected to ascertain and verify the
identities of the persons it transacts business with. In this case, the petitioner knew that the
sureties to the loan granted to ZDC and the defendants in Civil Case No. 941822 were the
Spouses Teofilo Ramos, Sr. and Amelita Ramos. The names of the Spouses Teofilo Ramos, Sr.
and Amelita Ramos were specified in the writ of execution issued by the trial court. The
petitioner, with Atty. Bordalba as the Chief of LED and handling lawyer of Civil Case No. 16453,
in coordination with the sheriff, caused the annotation of notice of levy in the respondent's title
despite its knowledge that the property was owned by the respondent and his wife Rebecca
Ramos, who were not privies to the loan availment of ZDC nor parties-defendants in Civil Case
No. 16453. Even when the respondent informed the petitioner, through counsel, that the
property levied by the sheriff was owned by the respondent, the petitioner failed to have the
annotation cancelled by the Register of Deeds.
2. ID.; ID.; TEST TO DETERMINE EXISTENCE OF NEGLIGENCE; CASE AT BAR.
— In determining whether or not the petitioner acted negligently, the constant test is: "Did the
defendant in doing the negligent act use that reasonable care and caution which an ordinarily
prudent person would have used in the same situation? If not, then he is guilty of negligence."
Considering the testimonial and documentary evidence on record, we are convinced that the
petitioner failed to act with the reasonable care and caution which an ordinarily prudent person
would have used in the same situation.
3. ID.; ID.; ID.; NEGLIGENCE OF PETITIONER IS THE PROXIMATE CAUSE OF
THE DAMAGES SUSTAINED BY THE RESPONDENT IN CASE AT BAR. — In this case, the
name of the judgment debtor in Civil Case No. 16453 was Teofilo Ramos, Sr., as appearing in
the judgment of the court and in the writ of execution issued by the trial court. The name of the
owner of the property covered by TCT No. 275167 was Teofilo C. Ramos. It behooved the
petitioner to ascertain whether the defendant Teofilo Ramos, Sr. in Civil Case No. 16453 was
the same person who appeared as the owner of the property covered by the said title. If the
petitioner had done so, it would have surely discovered that the respondent was not the surety
and the judgment debtor in Civil Case No. 16453. The petitioner failed to do so, and merely
assumed that the respondent and the judgment debtor Teofilo Ramos, Sr. were one and the
same person. We find that the petitioner acted negligently in causing the annotation of notice of
levy in the title of the herein respondent, and that its negligence was the proximate cause of the
damages sustained by the respondent.
4. CIVIL LAW; LAND TITLES AND DEEDS; IDENTITY OF REGISTERED OWNER
OF A PROPERTY; MIDDLE NAME IS DECISIVE IN A CASE IN WHICH THE ISSUE IS AS
BETWEEN TWO PERSONS WHO HAVE THE SAME FIRST NAME AND SURNAME, DID
THE ACT COMPLAINED OF, OR IS INJURED OR SUED OR THE LIKE; CASE AT BAR. —
The petitioner has access to more facilities in confirming the identity of their judgment debtors. It
should have acted more cautiously, especially since some uncertainty had been reported by the
appraiser whom the petitioner had tasked to make verifications. It appears that the petitioner
treated the uncertainty raised by appraiser Eduardo C. Reniva as a flimsy matter. It placed
more importance on the information regarding the marketability and market value of the
property, utterly disregarding the identity of the registered owner thereof. It should not be amiss
to note that the judgment debtor's name was Teofilo Ramos, Sr. We note, as the Supreme
Court of Washington in 1909 had, that a legal name consists of one given name and one
surname or family name, and a mistake in a middle name is not regarded as of consequence.
However, since the use of initials, instead of a given name, before a surname, has become a
practice, the necessity that these initials be all given and correctly given in court proceedings
has become of importance in every case, and in many, absolutely essential to a correct
designation of the person intended. A middle name is very important or even decisive in a case
in which the issue is as between two persons who have the same first name and surname, did
the act complained of, or is injured or sued or the like.
5. ID.; ID.; REGISTERED OWNER OF THE PROPERTY HAS A RIGHT OF ACTION
AGAINST THE HOLDER AND POSSESSOR THEREOF IN ORDER TO RECOVER IT. — The
respondent very clearly stated in his complaint that as a result of the unlawful levy by the
petitioner of his property, he suffered sleepless nights, moral shock, and almost a heart attack
due to high blood pressure. It must be underscored that the registered owner of the property
which was unlawfully levied by the petitioner is the respondent. As owner of the property, the
respondent has the right to enjoy, encumber and dispose of his property without other
limitations than those established by law. The owner also has a right of action against the holder
and possessor of the thing in order to recover it. Necessarily, upon the annotation of the notice
of levy on the TCT, his right to use, encumber and dispose of his property was diminished, if not
negated. He could no longer mortgage the same or use it as collateral for a loan.
6. ID.; ID.; REGISTERED OWNER OF PROPERTY WHOSE OWNERSHIP HAD
BEEN UNLAWFULLY DISTURBED AND LIMITED BY THE UNLAWFUL ANNOTATION OF
NOTICE OF LEVY ON HIS TITLE HAS THE LEGAL STANDING TO FILE AN ACTION FOR
DAMAGES. — Arising from his right of ownership over the said property is a cause of action
against persons or parties who have disturbed his rights as an owner. As an owner, he is one
who would be benefited or injured by the judgment, or who is entitled to the avails of the suit for
an action for damages against one who disturbed his right of ownership. Hence, regardless of
the fact that the respondent was not the loan applicant with the UCPB and PDB, as the
registered owner of the property whose ownership had been unlawfully disturbed and limited by
the unlawful annotation of notice of levy on his TCT, the respondent had the legal standing to
file the said action for damages. In both instances, the respondent's property was used as
collateral of the loans applied for by Ramdustrial Corporation. Moreover, the respondent,
together with his wife was a surety of the aforesaid loans. While it is true that the loss of
business opportunities cannot be used as a reason for an action for damages arising from loss
of business opportunities caused by the negligent act of the petitioner, the respondent, as a
registered owner whose right of ownership had been disturbed and limited, clearly has the legal
personality and cause of action to file an action for damages. Not even the respondent's failure
to have the annotation cancelled immediately after he came to know of the said wrongful levy
negates his cause of action.
7. ID.; DAMAGES; AWARD OF MORAL DAMAGES; REQUISITES; ESTABLISHED
IN CASE AT BAR. — For the award of moral damages to be granted, the following must exist:
(1) there must be an injury clearly sustained by the claimant, whether physical, mental or
psychological; (2) there must be a culpable act or omission factually established; (3) the
wrongful act or omission of the defendant is the proximate cause of the injury sustained by the
claimant; and (4) the award for damages is predicated on any of the cases stated in Article 2219
of the Civil Code. In the case at bar, although the respondent was not the loan applicant and the
business opportunities lost were those of Ramdustrial Corporation, all four requisites were
established. First, the respondent sustained injuries in that his physical health and
cardio-vascular ailment were aggravated; his fear that his one and only property would be
foreclosed, hounded him endlessly; and his reputation as mortgagor had been tarnished.
Second, the annotation of notice of levy on the TCT of the private respondent was wrongful,
arising as it did from the petitioner's negligent act of allowing the levy without verifying the
identity of its judgment debtor. Third, such wrongful levy was the proximate cause of the
respondent's misery. Fourth, the award for damages is predicated on Article 2219 of the Civil
Code, particularly, number 10 thereof.
8. ID.; ID.; AWARD OF EXEMPLARY DAMAGES; REQUISITE. — Although the
respondent was able to establish the petitioner's negligence, we cannot, however, allow the
award for exemplary damages, absent the private respondent's failure to show that the
petitioner acted with malice and bad faith. It is a requisite in the grant of exemplary damages
that the act of the offender must be accompanied by bad faith or done in a wanton, fraudulent or
malevolent manner.
 9. ID.; ID.; ATTORNEY'S FEES; WHEN MAY BE AWARDED. — Attorney's fees may
be awarded when a party is compelled to litigate or to incur expenses to protect his interest by
reason of an unjustified act of the other party. In this case, the respondent was compelled to
engage the services of counsel and to incur expenses of litigation in order to protect his interest
to the subject property against the petitioner's unlawful levy. The award is reasonable in view of
the time it has taken this case to be resolved.
DECISION
CALLEJO, SR., J p:
Before us is a petition for review on certiorari of the March 30, 2001 Decision 1 of the
Court of Appeals in CA-G.R. CV No. 56737 which affirmed the Decision 2 of the Regional Trial
Court (RTC) of Makati City, Branch 148, in Civil Case No. 94-1822.
The Antecedents
On December 22, 1983, the petitioner United Coconut Planters Bank (UCPB) granted
a loan of P2,800,000 to Zamboanga Development Corporation (ZDC) with Venicio Ramos and
the Spouses Teofilo Ramos, Sr. and Amelita Ramos as sureties. Teofilo Ramos, Sr. was the
Executive Officer of the Iglesia ni Cristo. In March 1984, the petitioner granted an additional
loan to ZDC, again with Venicio Ramos and the Spouses Teofilo Ramos and Amelita Ramos as
sureties. 3 However, the ZDC failed to pay its account to the petitioner despite demands. The
latter filed a complaint with the RTC of Makati against the ZDC, Venicio Ramos and the
Spouses Teofilo Ramos, Sr. for the collection of the corporation's account. The case was
docketed as Civil Case No. 16453. On February 15, 1989, the RTC of Makati, Branch 134,
rendered judgment in favor of the petitioner and against the defendants. The decretal portion of
the decision reads:
1. To pay plaintiff the sum of THREE MILLION ONE HUNDRED FIFTY
THOUSAND PESOS (P3,150,000.00) plus interest, penalties
and other charges;
2. To pay plaintiff the sum of P20,000.00 for attorney's fees; and
3. To pay the cost of suit. 4
The decision became final and executory. On motion of the petitioner, the court issued
on December 18, 1990 a writ of execution for the enforcement of its decision ordering Deputy
Sheriff Pioquinto P. Villapaña to levy and attach all the real and personal properties belonging
to the aforesaid defendants to satisfy the judgment. 5 In the writ of execution, the name of one
of the defendants was correctly stated as Teofilo Ramos, Sr.
To help the Sheriff implement the writ, Atty. Cesar Bordalba, the head of the Litigation
and Enforcement Division (LED) of the petitioner, requested Eduardo C. Reniva, an appraiser
of the petitioner's Credit and Appraisal Investigation Department (CAID) on July 17, 1992 to
ascertain if the defendants had any leviable real and personal property. The lawyer furnished
Reniva with a copy of Tax Declaration B-023-07600-R covering a property in Quezon City. 6 In
the course of his investigation, Reniva found that the property was a residential lot, identified as
Lot 12, Block 5, Ocampo Avenue, Don Jose Subdivision, Quezon City, with an area of 400
square meters, covered by TCT No. 275167 (PR-13108) under the name of Teofilo C. Ramos,
President and Chairman of the Board of Directors of the Ramdustrial Corporation, married to
Rebecca F. Ramos. 7 The property was covered by Tax Declaration No. B-023-07600-R under
the names of the said spouses. Reniva went to the property to inspect it and to verify the identity
of the owner thereof. He saw workers on the property constructing a bungalow. 8 However, he
failed to talk to the owner of the property. Per information gathered from the neighborhood,
Reniva confirmed that the Spouses Teofilo C. Ramos and Rebecca Ramos owned the property.
On July 22, 1992, Reniva submitted a report on his appraisal of the property. He stated
therein that the fair market value of the property as of August 1, 1992 was P900,000 and that
the owner thereof was Teofilo C. Ramos, married to Rebecca Ramos. When appraised by the
petitioner of the said report, the Sheriff prepared a notice of levy in Civil Case No. 16453
stating, inter alia, that the defendants were Teofilo Ramos, Sr. and his wife Amelita Ramos and
caused the annotation thereof by the Register of Deeds on the said title. 9
Meanwhile, in August of 1993, Ramdustrial Corporation applied for a loan with the
UCPB, a sister company of the petitioner, using the property covered by TCT No. 275167
(PR-13108) as collateral therefor. The Ramdustrial Corporation intended to use the proceeds of
the loan as additional capital as it needed to participate in a bidding project of San Miguel
Corporation. 10 In a meeting called for by the UCPB, the respondent was informed that upon
verification, a notice of levy was annotated in TCT No. 275167 in favor of the petitioner as
plaintiff in Civil Case No. 16453, entitled United Coconut Planters Bank v. Zamboanga Realty
Development Corporation, Venicio A. Ramos and Teofilo Ramos, Sr., because of which the
bank had to hold in abeyance any action on its loan application. DTAESI
The respondent was shocked by the information. He was not a party in the said case;
neither was he aware that his property had been levied by the sheriff in the said case. His blood
temperature rose so much that immediately after the meeting, he proceeded to his doctor, Dr.
Gatchalian, at the St. Lukes Medical Center, who gave the respondent the usual treatment and
medication for cardio-vascular and hypertension problems. 11
Upon advise from his lawyer, Atty. Carmelito Montano, the respondent executed an
affidavit of denial 12 declaring that he and Teofilo Ramos, Sr., one of the judgment debtors in
Civil Case No. 16453, were not one and the same person. On September 30, 1993, the
respondent, through counsel, Atty. Carmelito A. Montano, wrote Sheriff Villapaña, informing
him that a notice of levy was annotated on the title of the residential lot of the respondent,
covered by TCT No. 275167 (PR-13108); and that such annotation was irregular and unlawful
considering that the respondent was not Teofilo Ramos, Sr. of Iglesia ni Cristo, the defendant in
Civil Case No. 16453. He demanded that Sheriff Villapaña cause the cancellation of the said
annotation within five days from notice thereof, otherwise the respondent would take the
appropriate civil, criminal or administrative action against him. Appended thereto was the
respondent's affidavit of denial. For his part, Sheriff Villapaña furnished the petitioner with a
copy of the said letter.

In a conversation over the phone with Atty. Carmelito Montano, Atty. Cesar Bordalba,
the head of the petitioner's LED, suggested that the respondent file the appropriate pleading in
Civil Case No. 16453 to prove his claim that Atty. Montano's client, Teofilo C. Ramos, was not
defendant Teofilo Ramos, Sr., the defendant in Civil Case No. 16453.
On October 21, 1993, the respondent was informed by the UCPB that Ramdustrial
Corporation's credit line application for P2,000,000 had been approved. 13Subsequently, on
October 22, 1993, the respondent, in his capacity as President and Chairman of the Board of
Directors of Ramdustrial Corporation, and Rebecca F. Ramos executed a promissory note for
the said amount payable to the UCPB in installments for a period of 180
days. 14 Simultaneously, the respondent and his wife Rebecca F. Ramos acted as sureties to
the loan of Ramdustrial Corporation. 15 However, the respondent was concerned because
when the proceeds of the loan were released, the bidding period for the San Miguel Corporation
project had already elapsed. 16 As business did not go well, Ramdustrial Corporation found it
difficult to pay the loan. It thus applied for an additional loan with the UCPB which was, however,
denied. The corporation then applied for a loan with the Planters Development Bank (PDB), the
proceeds of which would be used to pay its account to the UCPB. The respondent offered to
use his property covered by TCT No. 275167 as collateral for its loan. PDB agreed to pay off the
outstanding loan obligation of Ramdustrial Corporation with UCPB, on the condition that the
mortgage with the latter would be released. UCPB agreed. Pending negotiations with UCPB,
the respondent discovered that the notice of levy annotated on TCT No. 275167 (PR-13108) at
the instance of the petitioner had not yet been cancelled. 17 When apprised thereof, PDB
withheld the release of the loan pending the cancellation of the notice of levy. The account of
Ramdustrial Corporation with UCPB thus remained outstanding. The monthly amortization on
its loan from UCPB became due and remained unpaid. When the respondent went to the
petitioner for the cancellation of the notice of levy annotated on his title, the petitioner's counsel
suggested to the respondent that he file a motion to cancel the levy on execution to enable the
court to resolve the issue. The petitioner assured the respondent that the motion would not be
opposed. Rather than wait for the petitioner to act, the respondent, through counsel, filed the
said motion on April 8, 1994. As promised, the petitioner did not oppose the motion. The court
granted the motion and issued an order on April 12, 1994 ordering the Register of Deeds to
cancel the levy. The Register of Deeds of Quezon City complied and cancelled the notice of
levy. 18
Despite the cancellation of the notice of levy, the respondent filed, on May 26, 1994, a
complaint for damages against the petitioner and Sheriff Villapaña before the RTC of Makati
City, raffled to Branch 148 and docketed as Civil Case No. 94-1822. Therein, the respondent
(as plaintiff) alleged that he was the owner of a parcel of land covered by TCT No. 275167; that
Teofilo Ramos, Sr., one of the judgment debtors of UCPB in Civil Case No. 16453, was only his
namesake; that without any legal basis, the petitioner and Sheriff Villapaña caused the
annotation of a notice to levy on the TCT of his aforesaid property which caused the disapproval
of his loan from UCPB and, thus made him lose an opportunity to participate in the bidding of a
considerable project; that by reason of such wrongful annotation of notice of levy, he suffered
sleepless nights, moral shock, mental anguish and almost a heart attack due to high blood
pressure. He thus prayed:
WHEREFORE, premises considered, it is most respectfully
prayed of the Honorable Regional Trial Court that after due hearing,
judgment be rendered in his favor by ordering defendants jointly and
severally, to pay as follows:
1. P3,000,000.00 as moral damages;
2. 300,000.00 as exemplary damages;
3. 200,000.00 as actual damages;
4. 200,000.00 as attorney's fees;
5. Cost of suit. 19
In its answer, the petitioner, while admitting that it made a mistake in causing the
annotation of notice of levy on the TCT of the respondent, denied that it was motivated by
malice and bad faith. The petitioner alleged that after ascertaining that it indeed made a mistake,
it proposed that the respondent file a motion to cancel levy with a promise that it would not
oppose the said motion. However, the respondent dilly-dallied and failed to file the said motion;
forthwith, if any damages were sustained by the respondent, it was because it took him quite a
long time to file the motion. The petitioner should not thus be made to suffer for the
consequences of the respondent's delay.
The petitioner further asserted that it had no knowledge that there were two persons
bearing the same name Teofilo Ramos; it was only when Sheriff Villapaña notified the petitioner
that a certain Teofilo C. Ramos who appeared to be the registered owner of TCT No. 275167
that it learned for the first time the notice of levy on the respondent's property; forthwith, the
petitioner held in abeyance the sale of the levied property at public auction; barred by the failure
of the respondent to file a third-party claim in Civil Case No. 16453, the petitioner could not
cause the removal of the levy; in lieu thereof, it suggested to the respondent the filing of a
motion to cancel levy and that the petitioner will not oppose such motion; surprisingly, it was
only on April 12, 1994 that the respondent filed such motion; the petitioner was thus surprised
that the respondent filed an action for damages against it for his failure to secure a timely loan
from the UCPB and PDB. The petitioner thus prayed:
WHEREFORE, in view of the foregoing premises, it is respectfully
prayed of this Honorable Court that judgment be rendered in favor of
defendant UCPB, dismissing the complaint in toto and ordering the plaintiff
to:
1. pay moral damages in the amount of PESOS: THREE
MILLION P3,000,000.00 and exemplary damages in the
amount of PESOS: FIVE HUNDRED THOUSAND
P500,000.00;
2. pay attorney's fees and litigation expenses in an amount of not
less than PESOS: TWO HUNDRED THOUSAND
P200,000.00;
 Other reliefs and remedies deemed just and equitable under the The CA ruled that the petitioner was negligent in causing the annotation of notice of
premises are also prayed for. 20 levy on the title of the petitioner for its failure to determine with certainty whether the defendant
Teofilo Ramos, Sr. in Civil Case No. 16453 was the registered owner of the property covered by
In the meantime, in 1995, PDB released the proceeds of the loan of Ramdustrial TCT No. 275167, and to inform the sheriff that the registered owners of the property were the
Corporation which the latter remitted to UCPB. respondent and his wife Rebecca Ramos, and thereafter request for the cancellation of the
On March 4, 1997, the RTC rendered a decision in favor of the respondent. The motion of levy on the property.
complaint against Sheriff Villapaña was dismissed on the ground that he was merely performing Disappointed, the petitioner filed this instant petition assigning the following errors:
his duties. The decretal part of the decision is herein quoted:
I
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiff and against the defendant UCPB, and the IN AFFIRMING THE TRIAL COURT'S ORDER, THE COURT OF
latter is hereby ordered to pay the following: APPEALS COMMITTED MANIFESTLY MISTAKEN INFERENCES AND
EGREGIOUS MISAPPREHENSION OF FACTS AND GRAVE ERRORS
(1) P800,000.00 as moral damages; cCAIES OF LAW, CONSIDERING THAT:
(2) P100,000.00 as exemplary damages; A. ON THE EVIDENCE, THE BORROWER OF THE LOAN,
(3) P100,000.00 as attorney's fees; WHICH RESPONDENT RAMOS CLAIMED HE TRIED
TO OBTAIN, WAS RAMDUSTRIAL CORPORATION.
(4) Cost of suit. 21 HENCE, ANY DAMAGE RESULTING FROM THE
ANNOTATION WAS SUFFERED BY THE
The trial court found that contrary to the contention of the petitioner, it acted with CORPORATION AND NOT BY RESPONDENT
caution in looking for leviable properties of the judgment debtors/defendants in Civil Case No. RAMOS.
16453, it proceeded with haste as it did not take into consideration that the defendant Teofilo
Ramos was married to Amelita Ramos and had a "Sr." in his name, while the respondent was
married to Rebecca Ramos and had "C" for his middle initial. The investigation conducted by
CAID appraiser Eduardo C. Reniva did not conclusively ascertain if the respondent and Teofilo B. THE DELAY IN THE CANCELLATION OF THE
Ramos, Sr. were one and the same person. ANNOTATION WAS OF RESPONDENT RAMOS'S
(SIC) OWN DOING.
The trial court further stated that while it was Ramdustrial Corporation which applied
for a loan with UCPB and PDB, the respondent, as Chairman of Ramdustrial Corporation, with C. THE LOAN APPLICATIONS WITH UNITED COCONUT
his wife Rebecca Ramos signed in the promissory note and acted as sureties on the said SAVINGS BANK AND PLANTERS DEVELOPMENT
obligations. Moreover, the property which was levied was the respondent's only property where BANK WERE GRANTED PRIOR TO THE
he and his family resided. Thus, the thought of losing it for reasons not of his own doing gave CANCELLATION OF THE ANNOTATION ON THE
rise to his entitlement to moral damages. TITLE OF THE SUBJECT PROPERTY.

The trial court further ruled that the mere fact that the petitioner did not file an II
opposition to the respondent's motion to cancel levy did not negate its negligence and bad faith. THE COURT OF APPEALS' DECISION AFFIRMING THE TRIAL
However, the court considered the cancellation of annotation of levy as a mitigating factor on COURT'S AWARD OF MORAL DAMAGES TO RESPONDENT RAMOS
the damages caused to the respondent. For failure to show that he suffered actual damages, IN THE AMOUNT OF P800,000 ON A FINDING OF NEGLIGENCE IS
the court a quo dismissed the respondent's claim therefor. CONTRARY TO LAW AND EVIDENCE.
Dissatisfied, the petitioner interposed an appeal to the Court of Appeals (CA). On A. UCPB WAS NOT NEGLIGENT WHEN IT CAUSED THE
March 30, 2001, the CA rendered a decision affirming, in toto, the decision of the trial court, the LEVY ON THE SUBJECT PROPERTY.
decretal portion of which is herein quoted:
B. AS A MATTER OF LAW, MORAL DAMAGES CANNOT BE
WHEREFORE, based on the foregoing premises, the assailed AWARDED ON A FINDING OF MERE NEGLIGENCE.
decision is hereby AFFIRMED. 22
 C. IN ANY EVENT, THE AWARD OF MORAL DAMAGES TO
RESPONDENT RAMOS WAS UNREASONABLE AND
OPPRESSIVE.
III
THE AWARD OF EXEMPLARY DAMAGES AND ATTORNEY'S FEES IS
CONTRARY TO LAW SINCE THE AWARD OF MORAL DAMAGES WAS
IMPROPER IN THE FIRST PLACE. 23
UCPB prayed that:
WHEREFORE, petitioner UNITED COCONUT PLANTERS
BANK respectfully prays that this Honorable Court render judgment
reversing and setting aside the Court of Appeals' Decision dated 30 March
2001, and ordering the dismissal of respondent Ramos' Complaint dated
05 May 1994. 24
In his comment, the respondent alleged that the CA did not err in affirming, in toto, the
decision of the trial court. He prayed that the petition be denied due course.
The issues posed for our resolution are the following: (a) whether or not the petitioner
acted negligently in causing the annotation of levy on the title of the respondent; (b) if so,
whether or not the respondent was the real party-in-interest as plaintiff to file an action for
damages against the petitioner considering that the loan applicant with UCPB and PDB was
RAMDUSTRIAL CORPORATION; (c) if so, whether or not the respondent is entitled to moral
damages, exemplary damages and attorney's fees.
On the first issue, we rule that the petitioner acted negligently when it caused the
annotation of the notice of levy in TCT No. 275167.
It bears stressing that the petitioner is a banking corporation, a financial institution with
power to issue its promissory notes intended to circulate as money (known as bank notes); or to
receive the money of others on general deposit, to form a joint fund that shall be used by the
institution for its own benefit, for one or more of the purposes of making temporary loans and
discounts, of dealing in notes, foreign and domestic bills of exchange, coin bullion, credits, and
the remission of money; or with both these powers, and with the privileges, in addition to these
basic powers, of receiving special deposits, and making collection for the holders of negotiable
paper, if the institution sees fit to engage in such business. 25 In funding these businesses, the
bank invests the money that it holds in trust of its depositors. For this reason, we have held that
the business of a bank is one affected with public interest, for which reason the bank should
guard against loss due to negligence or bad faith. 26 In approving the loan of an applicant, the
bank concerns itself with proper informations regarding its debtors. The petitioner, as a bank
and a financial institution engaged in the grant of loans, is expected to ascertain and verify the
identities of the persons it transacts business with. 27 In this case, the petitioner knew that the
sureties to the loan granted to ZDC and the defendants in Civil Case No. 94-1822 were the
Spouses Teofilo Ramos, Sr. and Amelita Ramos. The names of the Spouses Teofilo Ramos, Sr.
and Amelita Ramos were specified in the writ of execution issued by the trial court.
The petitioner, with Atty. Bordalba as the Chief of LED and handling lawyer of Civil
Case No. 16453, in coordination with the sheriff, caused the annotation of notice of levy in the
respondent's title despite its knowledge that the property was owned by the respondent and his
wife Rebecca Ramos, who were not privies to the loan availment of ZDC nor parties-defendants
in Civil Case No. 16453. Even when the respondent informed the petitioner, through counsel,
that the property levied by the sheriff was owned by the respondent, the petitioner failed to have
the annotation cancelled by the Register of Deeds. ISDCaT
In determining whether or not the petitioner acted negligently, the constant test is: "Did
the defendant in doing the negligent act use that reasonable care and caution which an
ordinarily prudent person would have used in the same situation? If not, then he is guilty of
negligence." 28 Considering the testimonial and documentary evidence on record, we are
convinced that the petitioner failed to act with the reasonable care and caution which an
ordinarily prudent person would have used in the same situation.
The petitioner has access to more facilities in confirming the identity of their judgment
debtors. It should have acted more cautiously, especially since some uncertainty had been
reported by the appraiser whom the petitioner had tasked to make verifications. It appears that
the petitioner treated the uncertainty raised by appraiser Eduardo C. Reniva as a flimsy matter.
It placed more importance on the information regarding the marketability and market value of
the property, utterly disregarding the identity of the registered owner thereof.
It should not be amiss to note that the judgment debtor's name was Teofilo Ramos, Sr.
We note, as the Supreme Court of Washington in 1909 had, that a legal name consists of one
given name and one surname or family name, and a mistake in a middle name is not regarded
as of consequence. However, since the use of initials, instead of a given name, before a
surname, has become a practice, the necessity that these initials be all given and correctly
given in court proceedings has become of importance in every case, and in many, absolutely
essential to a correct designation of the person intended. 29 A middle name is very important or
even decisive in a case in which the issue is as between two persons who have the same first
name and surname, did the act complained of, or is injured or sued or the like.30
In this case, the name of the judgment debtor in Civil Case No. 16453 was Teofilo
Ramos, Sr., as appearing in the judgment of the court and in the writ of execution issued by the
trial court. The name of the owner of the property covered by TCT No. 275167 was Teofilo C.
Ramos. It behooved the petitioner to ascertain whether the defendant Teofilo Ramos, Sr. in
Civil Case No. 16453 was the same person who appeared as the owner of the property covered
by the said title. If the petitioner had done so, it would have surely discovered that the
respondent was not the surety and the judgment debtor in Civil Case No. 16453. The petitioner
failed to do so, and merely assumed that the respondent and the judgment debtor Teofilo
Ramos, Sr. were one and the same person.
In sum, we find that the petitioner acted negligently in causing the annotation of notice
of levy in the title of the herein respondent, and that its negligence was the proximate cause of
the damages sustained by the respondent.
On the second issue, the petitioner insists that the respondent is not the real
party-in-interest to file the action for damages, as he was not the one who applied for a loan
from UCPB and PDB but Ramdustrial Corporation, of which he was merely the President and
Chairman of the Board of Directors.
We do not agree. The respondent very clearly stated in his complaint that as a result of
the unlawful levy by the petitioner of his property, he suffered sleepless nights, moral shock,
and almost a heart attack due to high blood pressure. 31
It must be underscored that the registered owner of the property which was unlawfully
levied by the petitioner is the respondent. As owner of the property, the respondent has the right
to enjoy, encumber and dispose of his property without other limitations than those established
by law. The owner also has a right of action against the holder and possessor of the thing in
order to recover it. 32 Necessarily, upon the annotation of the notice of levy on the TCT, his
right to use, encumber and dispose of his property was diminished, if not negated. He could no
longer mortgage the same or use it as collateral for a loan.
Arising from his right of ownership over the said property is a cause of action against
persons or parties who have disturbed his rights as an owner. 33 As an owner, he is one who
would be benefited or injured by the judgment, or who is entitled to the avails of the suit 34 for
an action for damages against one who disturbed his right of ownership.
Hence, regardless of the fact that the respondent was not the loan applicant with the
UCPB and PDB, as the registered owner of the property whose ownership had been unlawfully
disturbed and limited by the unlawful annotation of notice of levy or his TCT, the respondent had
the legal standing to file the said action for damages. In both instances, the respondent's
property was used as collateral of the loans applied for by Ramdustrial Corporation. Moreover,
the respondent, together with his wife was a surety of the aforesaid loans.
While it is true that the loss of business opportunities cannot be used as a reason for
an action for damages arising from loss of business opportunities caused by the negligent act of
the petitioner, the respondent, as a registered owner whose right of ownership had been
disturbed and limited, clearly has the legal personality and cause of action to file an action for
damages. Not even the respondent's failure to have the annotation cancelled immediately after
he came to know of the said wrongful levy negates his cause of action.
On the third issue, for the award of moral damages to be granted, the following must
exist: (1) there must be an injury clearly sustained by the claimant, whether physical, mental or
psychological; (2) there must be a culpable act or omission factually established; (3) the
wrongful act or omission of the defendant is the proximate cause of the injury sustained by the
claimant; and (4) the award for damages is predicated on any of the cases stated in Article 2219
of the Civil Code. 35
In the case at bar, although the respondent was not the loan applicant and the
business opportunities lost were those of Ramdustrial Corporation, all four requisites were
established. First, the respondent sustained injuries in that his physical health and
cardio-vascular ailment were aggravated; his fear that his one and only property would be
foreclosed, hounded him endlessly; and his reputation as mortgagor had been tarnished.
Second, the annotation of notice of levy on the TCT of the private respondent was wrongful,
arising as it did from the petitioner's negligent act of allowing the levy without verifying the
identity of its judgment debtor. Third, such wrongful levy was the proximate cause of the
respondent's misery. Fourth, the award for damages is predicated on Article 2219 of the Civil
Code, particularly, number 10 thereof. 36
Although the respondent was able to establish the petitioner's negligence, we cannot,
however, allow the award for exemplary damages, absent the private respondent's failure to
show that the petitioner acted with malice and bad faith. It is a requisite in the grant of
exemplary damages that the act of the offender must be accompanied by bad faith or done in a
wanton, fraudulent or malevolent manner. 37
Attorney's fees may be awarded when a party is compelled to litigate or to incur
expenses to protect his interest by reason of an unjustified act of the other party. In this case,
the respondent was compelled to engage the services of counsel and to incur expenses of
litigation in order to protect his interest to the subject property against the petitioner's unlawful
levy. The award is reasonable in view of the time it has taken this case to be resolved. 38
In sum, we rule that the petitioner acted negligently in levying the property of the
respondent despite doubts as to the identity of the respondent vis-a-vis its judgment debtor. By
reason of such negligent act, a wrongful levy was made, causing physical, mental and
psychological injuries on the person of the respondent. Such injuries entitle the respondent to
an award of moral damages in the amount of P800,000. No exemplary damages can be
awarded because the petitioner's negligent act was not tainted with malice and bad faith. By
reason of such wrongful levy, the respondent had to hire the services of counsel to cause the
cancellation of the annotation; hence, the award of attorney's fees.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 56737 is
AFFIRMED WITH MODIFICATION. The award for exemplary damages is deleted. No costs.
SO ORDERED. ScAaHE
||| (United Coconut Planters Bank v. Ramos, G.R. No. 147800, [November 11, 2003], 461 PHIL
277-299)

THIRD DIVISION
[G.R. No. 198752. January 13, 2016.]
ARTURO C. ALBA, JR., duly represented by his attorneys-in-fact,
ARNULFO B. ALBA and ALEXANDER
C. ALBA, petitioner, vs. RAYMUND D.MALAPAJO, RAMIL
D. MALAPAJO and the Register of Deeds for the City of
Roxas, respondents.
DECISION
PERALTA, J p:
Assailed in this petition for review on certiorari are the Resolution 1 dated
February 28, 2011 and the Resolution 2 dated August 31, 2011 issued by the Court of
Appeals (CA) Cebu City, in CA-G.R. SP No. 05594.
The antecedents are as follows:
On October 19, 2009, petitioner Arturo C. Alba, Jr., duly represented by his
attorneys-in-fact, Arnulfo B. Alba and Alexander C. Alba, filed with the Regional Trial Court
(RTC) of Roxas City, Branch 15, a Complaint 3 against respondents Raymund
D. Malapajo, Ramil D. Malapajo and the Register of Deeds of Roxas City for recovery of
ownership and/or declaration of nullity or cancellation of title and damages alleging, among
others, that he was the previous registered owner of a parcel of land consisting of 98,146
square meters situated in Bolo, Roxas City, covered by TCT No. T-22345; that his title was
subsequently canceled by virtue of a deed of sale he allegedly executed in favor of
respondents Malapajo for a consideration of Five Hundred Thousand Pesos
(P500,000.00); that new TCT No. T-56840 was issued in the name of
respondents Malapajo; that the deed of sale was a forged document which
respondents Malapajo were the co-authors of.
Respondents Malapajo filed their Answer with Counterclaim 4 contending that
they were innocent purchasers for value and that the deed was a unilateral document
which was presented to them already prepared and notarized; that before the sale,
petitioner had, on separate occasions, obtained loans from them and their mother which
were secured by separate real estate mortgages covering the subject property; that the two
real estate mortgages had never been discharged. Respondents counterclaimed for
damages and for reimbursement of petitioner's loan from them plus the agreed monthly
interest in the event that the deed of sale is declared null and void on the ground of forgery.
Petitioner filed a Reply to Answer and Answer to (Permissive)
Counterclaim 5 stating, among others, that the court had not acquired jurisdiction over the
nature of respondents' permissive counterclaim; and, that assuming without admitting that
the two real estate mortgages are valid, the rate of five percent (5%) per month uniformly
stated therein is unconscionable and must be reduced. Respondents filed their
Rejoinder 6 thereto.
Petitioner filed a Motion to Set the Case for Preliminary Hearing as if a Motion to
Dismiss had been Filed 7 alleging that respondents' counterclaims are in the nature of a
permissive counterclaim, thus, there must be payment of docket fees and filing of a
certification against forum shopping; and, that the supposed loan extended by
respondents' mother to petitioner, must also be dismissed as respondents are not the real
parties-in-interest. Respondents filed their Opposition 8thereto.
On June 4, 2010, the RTC issued an Order 9 denying petitioner's motion finding
that respondents' counterclaims are compulsory. Petitioner's motion for reconsideration
was denied in an Order 10 dated September 30, 2010.
Petitioner filed a petition for certiorari with the CA which sought the annulment of
the RTC Orders dated June 4, 2010 and September 30, 2010.
In a Resolution dated February 28, 2011, the CA dismissed the petition
for certiorari saying that there was no proper proof of service of the petition to the
respondents, and that only the last page of the attached copy of the RTC Order was signed
and certified as a true copy of the original while the rest of the pages were mere machine
copies. cHDAIS
Petitioner filed a motion for reconsideration which the CA denied in a Resolution
dated August 31, 2011 based on the following findings:
Nevertheless, while petitioner filed with the Petition his Affidavit
of Service and incorporated the registry receipts, petitioner still failed to
comply with the requirement on proper proof of service. Post office
receipt is not the required proof of service by registered mail. Section 10,
Rule 13 of the 1997 Rules of Civil Procedure specifically stated that
service by registered mail is complete upon actual receipt by the
addressee, or after five (5) days from the date he received the first notice
of the postmaster, whichever is earlier. Verily, registry receipts cannot
be considered sufficient proof of service; they are merely evidence of the
mail matter with the post office of the sender, not the delivery of said mail
matter by the post office to the addressee. Moreover, Section 13, Rule
13 of the 1997 Rules of Civil Procedure specifically stated that the proof
of personal service in the form of an affidavit of the party serving shall
contain a full statement of the date, place and manner of service, which
was not true in the instant petition. 11
 Petitioner filed the instant petition for review raising the following assignment of
errors:
I. CONTRARY TO THE ERRONEOUS RULING OF THE COURT A
QUO, THE COUNTERCLAIMS INTERPOSED BY
RESPONDENTS MALAPAJO IN THEIR ANSWER WITH
COUNTERCLAIM ARE, BASED ON APPLICABLE LAW AND
JURISPRUDENCE, PERMISSIVE IN NATURE, NOT COMPULSORY,
AND THEREFORE, SUCH ANSWER WITH RESPECT TO SUCH
COUNTERCLAIMS IS IN REALITY AN INITIATORY PLEADING
WHICH SHOULD HAVE BEEN ACCOMPANIED BY A Since the case was dismissed outright on technicality, the arguments raised in the
CERTIFICATION AGAINST FORUM SHOPPING AND
CORRESPONDING DOCKET FEES, THEREFORE, SHOULD HAVE
BEEN PAID, FAILING IN WHICH THE COUNTERCLAIMS SHOULD
HAVE BEEN ORDERED DISMISSED. MOREOVER, AS REGARDS
THE LOAN ALLEGEDLY EXTENDED BY THEIR MOTHER TO
PETITIONER, WHICH UP TO NOW IS SUPPOSEDLY STILL UNPAID,
RESPONDENTS MALAPAJO ARE NOT THE REAL
PARTIES-IN-INTEREST AND IS, THEREFORE, DISMISSIBLE ON
THIS ADDITIONAL GROUND; and
II. THE HONORABLE COURT OF APPEALS COMMITTED A VERY
SERIOUS ERROR WHEN IT DISMISSED THE PETITION
FOR CERTIORARI BASED ON PURE TECHNICALITY, THEREBY
GIVING MORE PREMIUM AND MORE WEIGHT ON TECHNICALITIES
RATHER THAN SUBSTANCE AND DISREGARDING THE MERITS OF
THE PETITION. 12
We find that the CA erred in denying petitioner's petition for certiorari after the
latter had clearly shown compliance with the proof of service of the petition as required
under Section 13 of Rule 13 of the 1997 Rules of Civil Procedure, which provides:
Sec. 13. Proof of service. —
Proof of personal service shall consist of a written admission of
the party served, or the official return of the server, or the affidavit of the
party serving, containing a full statement of the date, place and manner
of service. If the service is by ordinary mail, proof thereof shall consist of
an affidavit of the person mailing of facts showing compliance with
section 7 of this Rule. If service is made by registered mail, proof shall be
made by such affidavit and the registry receipt issued by the mailing
office. The registry return card shall be filed immediately upon its receipt
by the sender, or in lieu thereof the unclaimed letter together with the
certified or sworn copy of the notice given by the postmaster to the
addressee.
Clearly, service made through registered mail is proved by the registry receipt
issued by the mailing office and an affidavit of the person mailing of facts showing
compliance with the rule. In this case, Nerissa Apuyo, the secretary of petitioner's counsel,
had executed an affidavit 13 of personal service and service by registered mail which she
attached to the petition marked as original filed with the CA. She stated under oath that she
personally served a copy of the petition to the RTC of Roxas City on December 6, 2010, as
evidenced by a stamp mark of the RTC on the corresponding page of the petition; that she
also served copies of the petition by registered mail to respondents' counsels on December
6, 2010 as evidenced by registry receipts numbers "PST 188" and "PST 189", both issued
by the Roxas City Post Office. The registry receipts issued by the post office were attached
to the petition filed with the CA. Petitioner had indeed complied with the rule on proof of
service.
petition for certiorari were not at all considered. However, we will now resolve the issue on
the merits so as not to delay further the disposition of the case instead of remanding it to
the CA.
The issue for resolution is whether respondents' counterclaim, i.e.,
reimbursement of the loan obtained from them in case the deed of absolute sale is
declared null and void on the ground of forgery, is permissive in nature which requires the
payment of docket fees and a certification against forum shopping for the trial court to
acquire jurisdiction over the same.
A counterclaim is any claim which a defending party may have against an
opposing party. 14 A compulsory counterclaim is one which, being cognizable by the
regular courts of justice, arises out of or is connected with the transaction or occurrence
constituting the subject matter of the opposing party's claim and does not require for its
adjudication the presence of third parties of whom the court cannot acquire jurisdiction.
Such a counterclaim must be within the jurisdiction of the court both as to the amount and
the nature thereof, except that in an original action before the Regional Trial Court,
necessarily connected with the subject matter of the opposing party's claim or even where
there is such a connection, the Court has no jurisdiction to entertain the claim or it requires
for adjudication the presence of third persons over whom the court acquire
jurisdiction. 15 A compulsory counterclaim is barred if not set up in the same action.
A counterclaim is permissive if it does not arise out of or is not necessarily
connected with the subject matter of the opposing party's claim. 16 It is essentially an
independent claim that may be filed separately in another case. ISHCcT
To determine whether a counterclaim is compulsory or permissive, we have
devised the following tests: (a) Are the issues of fact and law raised by the claim and by the
counterclaim largely the same? (b) Would res judicata bar a subsequent suit on
defendants' claims, absent the compulsory counterclaim rule? (c) Will substantially the
same evidence support or refute plaintiffs' claim as well as the defendants' counterclaim?
and (d) Is there any logical relation between the claim and the counterclaim? 17 A positive
answer to all four questions would indicate that the counterclaim is compulsory. 18
Based on the above-mentioned tests, we shall determine the nature of
respondents' counterclaim. Respondents anchored their assailed counterclaim on the
following allegations in their affirmative defenses in their Answer with Counterclaim, thus:
xxx xxx xxx
 10. The plaintiff's cause of action is based on his allegation that
his signature on the Deed of Absolute Sale was forged.
The Deed of Absolute Sale is a unilateral instrument, i.e., it was
signed only by the vendor, who is the plaintiff in this case and his
instrumental witnesses, who are his parents in this case. It was
presented to defendants already completely prepared, accomplished
and notarized. Defendants had no hand in its preparation,
accomplishment and notarization.
While the plaintiff claims that his signature on the instrument is
forged, he never questioned the genuineness of the signatures of his
instrumental witnesses, his parents Arturo P. Alba, Sr. and Norma
C. Alba, who signed the said instrument below the words "SIGNED IN
THE PRESENCE OF" and above the words "Father" and "Mother,"
respectively.
Furthermore, plaintiff acknowledged in par. 7 of his Complaint
that the stated consideration in the Deed of Absolute Sale is
P500,000.00 and he never categorically denied having received the
same.
11. Before the plaintiff sold the property to the defendants, he
secured a loan from them in the sum of Six Hundred Thousand Pesos
(P600,000.00) payable on or before November 10, 2008. The loan is
evidenced by a Promissory Note and secured by a Real Estate
Mortgage dated September 11, 2008, both executed by him, covering
the parcel of land subject of this case, Lot 2332-D, Psd 06-000738. Like
the Deed of Absolute Sale, the Real Estate Mortgage is a unilateral
instrument, was signed solely by the plaintiff, and furthermore, his
parents affixed their signatures thereon under the heading "WITH MY
PARENTAL CONSENT", and above the words, "Father" and "Mother,"
respectively. DHITCc
Prior to this, or as early as July 25, 2008, the plaintiff also
obtained a loan payable on or before September 6, 2008 from
defendants' mother, Alma D. David, and already mortgaged to her Lot
2332-D, Psd 06-000738. The loan is evidenced by a Promissory Note
and a Real Estate Mortgage, both of which were executed by plaintiff.
Again, the Real Estate Mortgage is an unilateral instrument, was signed
solely by the plaintiff and furthermore, his parents also affixed their
signatures thereon under the heading, "WITH MY PARENTAL
CONSENT" and above the words, "Father" and "Mother," respectively.
In both instances, the plaintiff was always represented by his
parents, who always manifested their authority to transact in behalf of
their son the plaintiff.
As in the case with the Deed of Absolute Sale, the defendants
or their mother did not have any hand in the preparation,
accomplishment or notarization of the two Promissory Notes with
accompanying Real Estate Mortgages, . . . .
Neither of the two Real Estate Mortgages have been
discharged or extinguished.
12. Considering the foregoing, the plaintiff's allegation that his
signature on the Deed of Absolute Sale was forged, and that the
defendants are the "co-authors" of the said forgery, are absolutely false
and baseless.
13. If the Deed of Absolute Sale is declared null and void on the
ground of forgery, then the plaintiff should reimburse the defendants the
loan he obtained from them, which he did not deny having obtained, plus
the agreed monthly interest. 19
Petitioner seeks to recover the subject property by assailing the validity of the
deed of sale on the subject property which he allegedly executed in favor of
respondents Malapajo on the ground of forgery. Respondents counterclaimed that, in case
the deed of sale is declared null and void, they be paid the loan petitioner obtained from
them plus the agreed monthly interest which was covered by a real estate mortgage on the
subject property executed by petitioner in favor of respondents. There is a logical
relationship between the claim and the counterclaim, as the counterclaim is connected with
the transaction or occurrence constituting the subject matter of the opposing party's claim.
Notably, the same evidence to sustain respondents' counterclaim would disprove
petitioner's case. In the event that respondents could convincingly establish that petitioner
actually executed the promissory note and the real estate mortgage over the subject
property in their favor then petitioner's complaint might fail. Petitioner's claim is so related
logically to respondents' counterclaim, such that conducting separate trials for the claim
and the counterclaim would result in the substantial duplication of the time and effort of the
court and the parties. 20
Since respondents' counterclaim is compulsory, it must be set up in the same
action; otherwise, it would be barred forever. 21 If it is filed concurrently with the main
action but in a different proceeding, it would be abated on the ground of litis pendentia; if
filed subsequently, it would meet the same fate on the ground of res judicata. 22 There is,
therefore, no need for respondents to pay docket fees and to file a certification against
forum shopping for the court to acquire jurisdiction over the said counterclaim.
We agree with the RTC's disquisition in finding that respondents' counterclaim is
compulsory, to wit:
The arguments of the plaintiffs that this transaction is a
permissive counterclaim do not convince.
By the manner in which the answer pertaining to this
transaction was phrased, the real estate mortgage was the origin of the
Deed of Absolute Sale after the loan of P600,000.00 using the same
property as security for the payment thereof was not settled. In short, it is
one of defendants' defenses and controverting evidence against
 plaintiffs' allegations of falsification of the Deed of Absolute Sale, the
property subject of the Deed of Sale being one and the same property
subject of the mortgage. 23
xxx xxx xxx
Can the Court adjudicate upon the issues [of whether or not the
plaintiff could recover ownership and or whether or not the title to the
property in question may be canceled or declared null and void, and
damages] without the presence of the mother of defendants in whose
favor the Real Estate Mortgage of the property subject of this action was
executed?
Definitely, this Court can. That there was an allegation
pertaining to the mortgage of the property in question to defendants'
mother is only some sort of a backgrounder on why a deed of sale was
executed by plaintiff in defendants' favor, the truth or falsity of which will
have to be evidentiary on the part of the parties hereto. In short, the
Court does not need the presence of defendants' mother before it can
adjudicate on whether or not the deed of absolute sale was genuine or
falsified and whether or not the title to the property may be cancelled. 24
WHEREFORE, premises considered, the instant petition is PARTIALLY
GRANTED. The Resolutions dated February 28, 2011 and August 31, 2011 issued by the
Court of Appeals in CA-G.R. SP No. 05594 dismissing the petition for certiorari and
denying reconsideration thereof, respectively, for failure to show proper proof of service of
the petition to respondents, are SET ASIDE. Acting on the petition for certiorari, we resolve
to DENY the same and AFFIRM the Order dated June 4, 2010 of the Regional Trial Court
of Roxas City, Branch 15, denying petitioner's motion to set the case for hearing as if a
motion to dismiss had been filed, and the Order dated September 30, 2010 denying
reconsideration thereof.
SO ORDERED. cEaSHC
||| (Alba, Jr. v. Malapajo, G.R. No. 198752, [January 13, 2016])
 THIRD DIVISION
[G.R. No. 155701. March 11, 2015.]
LIM TECK CHUAN, petitioner, vs. SERAFIN UY and LEOPOLDA
CECILIO, LIM SING CHAN @ HENRY LIM, respondents.
DECISION
REYES, J p:
Before this Court is a petition for review on certiorari 1 under Rule 45 filed by Lim Teck
Chuan (petitioner) assailing the Orders dated April 25, 2002 2 and October 21, 2002 3 of the
Regional Trial Court (RTC) of Lapu-lapu City, Branch 27, in Civil Case No. 4786-L, which
dismissed the case upon a joint motion of respondents Serafin Uy (Serafin) and Leopolda
Cecilio (Leopolda) despite an opposition and manifestation of the petitioner to have his
counterclaim prosecuted in the same action, and denied the petitioner's motion for
reconsideration for being barren of merit, respectively.
The antecedent facts are as follows:
The subject matter of the present controversy is a piece of land known as Lot 5357
with an area of 33,610 square meters, covered by Transfer Certificate of Title (TCT) No. T-0500,
situated in Barrio Agus, Lapu-lapu City, Cebu, owned and registered under the name of Antonio
Lim Tanhu (Antonio), married to Dy Ochay.
Lot 5357 was sold by Antonio to the spouses Francisco Cabansag (Francisco) and
Estrella Cabansag (Spouses Cabansag) as evidenced by a Deed of Sale executed on January
8, 1966. Apparently, Francisco failed to transfer the title of the property to their names because
of his work and frequent travels abroad. 4
In 1988, Spouses Cabansag sold the lot to Serafin, as evidenced by a Deed of Sale
dated April 8, 1988. To pave the way for the transfer of title to Serafin's name, Spouses
Cabansag attempted to have the same transferred under their names first. However, Francisco
failed to do so as he lost the owner's copy of TCT No. T-0500 together with other documents
pertaining to the sale of the subject lot. This prompted Serafin to exert efforts to secure copies
of the lost documents himself. On May 15, 1996, Serafin filed a petition before the RTC,
docketed as Cadastral Case No. 21 praying for the issuance of a new owner's duplicate TCT in
his name, thereby cancelling TCT No. T-0500 in the name of Antonio. 5
Serafin's petition for the issuance of a new owner's copy of TCT No. T-0500 was
raffled to the RTC of Lapu-lapu City, Branch 27, then sitting as a cadastral court (Cadastral
Court). After due notice and hearing, the Cadastral Court issued an Order 6 on June 14, 1996
directing the Register of Deeds of Lapu-lapu City to issue a new owner's duplicate copy of TCT
No. T-0500.
However, the aforesaid order was recalled and nullified on September 3, 1996 7 on
the ground that the petitioner filed an Opposition and/or Motion for Reconsideration with
Manifestation for Special Appearance 8 dated August 22, 1996 alleging that he is one of the six
legitimate descendants of Antonio; and that the original owner's copy of TCT No. T-0500 was
not lost and has always been in his custody. The court further directed the petitioner to deposit
the said owner's copy of TCT No. T-0500 with said court. aCHDST
In the meantime, on August 2, 1996, Lim Sing Chan alias Henry Lim (Henry) executed
an Affidavit of Sole Adjudication/Settlement of the Estate of Antonio Lim Tanhu with Deed of
Sale 9 (Affidavit of Self-Adjudication) claiming that he is the only surviving heir of Antonio. In the
same document, Henry sold Lot 5357 to Leopolda in the amount of P500,000.00.
With this turn of events, Serafin filed on July 25, 1997 a Complaint 10 for quieting of
title, surrender of owner's copy of certificate of title, declaration of nullity of affidavit of
adjudication and sale, annulment of tax declaration, and other reliefs with a prayer for
preliminary injunction before the RTC, docketed as Civil Case No. 4786-L. Impleaded as
defendants were Leopolda, Henry, and the herein petitioner.
Leopolda filed her Answer 11 (with counterclaim, and cross-claim against Henry),
asserting that she was the buyer in good faith and for value of Lot 5357. She alleged that the
said property was never encumbered to any person during the lifetime of Antonio; that the deed
of sale in favor of Spouses Cabansag was simulated and spurious; and that the said document
was never registered with the proper government agency, nor was it ever annotated on the
certificate of title covering the said property. She claimed that the lot in question was sold to her
as evidenced by the Affidavit of Self-Adjudication executed by Henry; that she caused the
issuance of a new tax declaration over the said property in her name; that since then, she has
been in open, actual and material possession of the subject lot in the concept of an owner.
For his part, the petitioner averred in his Answer 12 (with counterclaim, and
cross-claims against Leopolda and Henry), that Lot 5357 was never transferred nor
encumbered to any person during Antonio's lifetime. The deed of sale in favor of Spouses
Cabansag was simulated and spurious, and was intended to defraud the estate of Antonio.
Furthermore, the petitioner questioned Henry's claim that he was an heir of Antonio, much less
the only surviving heir of the latter. Corollarily, the petitioner questioned the validity of Henry's
Affidavit of Self-Adjudication and Leopolda's claim of title to the subject property.
On November 11, 1997, Leopolda filed her Answer 13 to the petitioner's cross-claim.
She basically reiterated her allegations raised in her Answer to Serafin's complaint.
Henry did not file an answer to any of the claims against him.
On December 22, 1998, the pre-trial conference 14 was conducted where the parties
agreed to the following stipulation of facts:
[T]hat Antonio Lim Tanhu was the registered owner of Lot 5357 of
the Cadastral Survey of Opon located in Lapu-lapu City[;] that Antonio Lim
 Tanhu died on April 13, 1991[;] that Antonio Lim Tanhu was succeeded
upon his death by his six children, namely, the defendant Lim Teck Chuan,
Lim Sing Tai, Helen Lim, Lenesita Lim, Warlito Lim and Michael Lim Tan
Ho[;] that the defendant Lim Sing Chan is actually a fictitious person[;] that
there exists an ancient document denominated as Deed of Absolute Sale
of Lot 5357 executed on January 8, 1966 by Antonio Lim Tanhu in favor of
the spouses Francisco Cabansag and Estrella M. Cabansag (Exhibit A)[;]
that there also exists a document denominated as Deed of Absolute Sale
(Exhibit B) of Lot 5357 executed on April 8, 1988 by the spouses Francisco
Cabansag and Estrella M. Cabansag in favor of the plaintiff[;] and that
there exists, too, a document denominated as Affidavit of [Sale]
Adjudication/Settlement of Estate of Antonio Lim Tanhu with Deed of Sale
executed on May 2, 1996 by a certain Lim Sing Chan (Exhibit
1-Cecilio). . . . . 15
The parties also agreed to the following issues: IcHDCS
1. Whether or not the plaintiff has valid causes of action for quieting of title,
declaration of nullity of documents of sale and tax declarations,
reconveyance of title and damages against the defendants[;]
2. Whether or not the defendants Leopolda Cecilio and Lim Teck Chuan
have valid counterclaims against the plaintiff; and
3. Whether or not the defendant Lim Teck Chuan has a valid cross-claim
against the defendant Leopolda Cecilio. 16
Thereafter, the pre-trial order was amended such that it should not be considered as
established and stipulated facts that Henry is a fictitious person and that the Deed of Sale of Lot
5357 purportedly executed by Antonio on January 8, 1966 is genuine and authentic since there
were actually no admissions made on these circumstances. 17
In the same Order 18 dated July 17, 1999, the RTC denied Serafin's motion for
summary judgment 19 because under the circumstances, there were actually genuine issues of
fact to be resolved and passed upon by the court.
Eventually, the RTC set the initial trial of the case on March 28, 2001. 20 However, it
was postponed upon motion of Leopolda's counsel and upon the manifestation of Serafin's
counsel that there was an on-going negotiation for an amicable settlement. For his part, the
petitioner's counsel manifested that the petitioner was not involved in any negotiation for
amicable settlement. The scheduled hearing was reset to July 11, 2001 21 and later to
November 12, 2001. 22
On September 20, 2001, Serafin and Leopolda submitted a Joint Motion to
Dismiss. 23 They averred that:
1. That the case at [bench] is filed by the Plaintiff Serafin Uy against the
defendants for "quieting of title, surrender of owner of certificate
of title, declaration of nullity of affidavit of adjudication and sale
annulment of tax declaration, and other reliefs consistent with law,
justice and equity[ ];
2. That in the case at bench, Plaintiff Serafin Uy seeks the quieting of title
on his right over Lot 5357 of the Cadastral Survey of Opon
situated at Barangay Agus, Lapu-lapu City, in view of the affidavit
of adjudication and Sale dated August 2, 1996 (Annex "F") of the
Complaint, and Tax Decl. No. 01532 issued in the name of
Leopolda Cecilio both of which documents affected Lot 5357
(Annex G to the Complaint);
3. That Plaintiff Serafin Uy and Defendant Leopolda Cecilio have amicably
settled their differences in the case at bench and Def. Leopolda
Cecilio has agreed to waive her counterclaim for damages in the
instant case;
4. That Plaintiff Serafin Uy has already secured a certificate of title to Lot
No. 5357 in his name dated July 26, 2001, and has also agreed
for the cancellation of the same, and for issuance of a new one,
over said Lot 5357, in their common names;
5. That whatever claim defendant Lim Teck Chuan may have on said Lot
No. 5357, the same may be ventilated by said defendant in an
appropriate independent action that he may initiate and file[.]
PRAYER
WHEREFORE, this Honorable Court is most respectfully prayed
and humbly implored to dismiss the Complaint and the respective
counterclaims of the defendants in the case at bench. 24
On October 4, 2001, the petitioner filed his Opposition/Comment 25 praying for the
denial of the Joint Motion to Dismiss on the ground of bad faith, and to prohibit Serafin and
Leopolda from undertaking any further transaction involving the subject lot. The pertinent
portion of his opposition reads as follows: HcSaAD
1. That the [petitioner] opposes the 'Joint Motion to Dismiss' filed
by [Serafin] and [Leopolda] on the grounds:
1.1. that there [is] BAD FAITH on the part of [Serafin] and
[Leopolda];
1.2. That the [petitioner] was not involved in any amicable
settlements between [Serafin] and [Leopolda] because
both [Serafin] and [Leopolda] connived to MISLEAD this
Honorable Court and to DEFRAUD the estate of
[Antonio];
1.3. That the [petitioner] has valid counterclaims against [Serafin]
for moral damages of P5,000,000[.00]; exemplary
 damages of P1,200,000[.00]; and Attorney's fees of
P50,000[.00]; on the ground that [Serafin] maliciously
and deliberately presented to this Honorable Court the
FALSIFIED AND FICTITIOUS 'deed of sale'
PURPORTEDLY executed by [Antonio] in favor of
[Francisco];
1.4. That the [petitioner] has valid cross[-]claims against
Cross-defendants Lim Sing Chan alias Henry Lim
whose real name is Henry Lim Ormoc, and [Leopolda]
for moral damages of P5,000,000[.00] each, attorney's
fees of P50,000[.00] each, and exemplary damages of
P1,000,000[.00] for [Henry] and P1,600,000[.00] for
[Leopolda] because [Henry] and [Leopolda] connived
with each other to defraud the estate of [Antonio] on the
ground that [Henry] MISREPRESENTED himself as an
heir of [Antonio] while [Leopolda] has KNOWLEDGE of
such MISREPRESENTATION;
1.5. That the [petitioner] manifest[s] to this Honorable Court
of his preference that the above-counterclaims and
cross-claims be resolved in the present case[.] 26
The petitioner further averred that the transfer of Antonio's title under TCT No. T-0500
in the name of Serafin is irregular and illegal since the true owner's copy of TCT No. T-0500
remained in his possession.
Henry continued to remain silent.
On October 10, 2001, Serafin filed his Reply 27 to the comment/opposition of the
petitioner. He substantially averred that:
1. With the end in view of registering Lot 5357 in his name, he instituted the
instant case due to the existence of certain documents affecting
his title thereto, namely: Henry's Affidavit of Self-Adjudication
with Deed of Sale dated August 2, 1996 naming Leopolda as the
buyer, and Tax Declaration No. 01532 issued in the name of the
latter;
2. Under his Affidavit of Self-Adjudication, Henry already transferred
whatever right and interest he had on the subject lot to Leopolda.
On the other hand, by reason of the amicable settlement between
him (Serafin) and Leopolda, the latter waived and abandoned all
her rights to Lot 5357. Ergo, as far as Leopolda is concerned, her
waiver negated all the legal consequences of Tax Declaration No.
01532 and Henry's Affidavit of Self-Adjudication. Since the same
were the very documents that cast clouds on his (Serafin) title
over Lot 5357, his main causes of action in the case at bench had
become moot and academic as his title to the said lot had been
quieted;
3. The petitioner was impleaded because of the following points: a) he
alleged that he is one of the heirs of the late Antonio; b) he
contested the claim of Henry that the latter is the only surviving
heir of said decedent, and prayed upon the court to declare Henry
as an impostor; and c) he challenged the genuineness and due
execution of the deed of absolute sale between Antonio and
Spouses Cabansag; cHDEaC
4. Aside from his claim for damages, the petitioner's counterclaim sought
the nullification of the Deed of Absolute Sale dated January 8,
1966 between Antonio and Spouses Cabansag which required
the impleading of persons who were not parties in the case.
These persons included Spouses Cabansag who was
indispensable party to any action for the annulment of the deed
which was executed in their favor. However, to implead the said
persons, there was a need to summon them so that the court can
acquire jurisdiction over them — and in order that they can be
summoned, there was a need for the petitioner to file a formal
complaint against them;
5. Moreover, the cross-claim of the petitioner against Henry can also be
resolved in a separate action for the declaration of the true heirs
of Antonio wherein all the heirs of the latter will be impleaded, and
where the petitioner can prove that he was indeed one of the
heirs of said decedent — especially so that there is yet no judicial
or extra-judicial declaration as to who were Antonio's heirs;
6. The dismissal of the case will not affect the rights of the petitioner
because whatever claim he had on the subject lot and against
any party may be ventilated in an appropriate and separate
action.
On November 6, 2001, the petitioner, through counsel, filed his Motion to Implead
Indispensable Parties and Supplemental Opposition to Joint Motion to Dismiss.28 Invoking
Section 11 29 of Rule 3 of the Rules of Court, the petitioner averred that there is a need to
implead Spouses Cabansag in order that a final determination of all the issues could be had in
the case.
Acting on the Joint Motion to Dismiss, the RTC issued the assailed Order 30 dated
April 25, 2002 granting the same and denying the petitioner's motion to implead Spouses
Cabansag. The order is quoted as follows:
Going over the arguments of the parties, the Court finds the
arguments of the movants as tenable. For what is the use of so
continuously litigating this case when [Serafin] admits and confirms that
the principal reliefs he prayed for have already been met or satisfied as his
 title to the property in question has already been quieted with him having
"already secured a certificate of title to Lot No. 5357 in his name dated July
26, 2001, and has also agreed for the cancellation of the same, and for the
issuance of a new one, over said Lot 5357, in their common names." In fact,
even without said reliefs having been met or satisfied, nobody, not even
the courts of justice, can compel a party-litigant in a civil action like [Serafin]
to so continuously litigate his case if he does not want to anymore.
Finding therefore, the subject motion to dismiss to be proper and
in order, this case is ordered dismissed so with the respective
counterclaims of the defendants. Considering however, that [the petitioner]
is not a party and even opposed the subject motion to dismiss, the
dismissal of his counterclaims and cross-claim is without prejudice to give
him his day in court. And with this pronouncement of dismissal, the motion
to implead indispensable parties of [the petitioner] becomes moot and
academic and therefore is denied. 31
On May 30, 2002, the petitioner filed a Motion for Reconsideration 32 which was
denied in the Order 33 dated October 21, 2002.
Aggrieved, the petitioner went up to this Court via a petition for review
on certiorari under Rule 45 raising the lone assignment of error that:
THE LOWER COURT ERRED IN DISMISSING CIVIL CASE
4786-L UPON A JOINT MOTION TO DISMISS FILED BY THE
RESPONDENTS WHO ARE PLAINTIFF AND ONE OF THE
DEFENDANTS, RESPECTIVELY, IN THE AFOREMENTIONED CASE
DESPITE THE OPPOSITION BY HEREIN PETITIONER AND THE
MANIFESTATION OF THE LATTER OF HIS PREFERENCE MADE
WITHIN FIFTEEN (15) DAYS FROM THE JOINT MOTION TO DISMISS,
TO HAVE HIS COUNTERCLAIM, AS WELL AS HIS CROSS-CLAIM,
PROSECUTED IN THE SAME ACTION, IN ACCORDANCE WITH
SECTION 2, RULE 17 OF THE 1997 RULES OF CIVIL PROCEDURE. 34
The petitioner faults the RTC for dismissing the case in its entirety in spite of his
counterclaim and cross-claim. He asserts that within 15 days from notice of the filing of the joint
motion to dismiss, he filed his opposition thereto and expressed his preference to have
his counterclaim and cross-claim be resolved in the same action. Therefore, pursuant to the
provisions of Section 2, Rule 17 of the Rules of Court, his timely expression of such preference
should be enough for the trial court not to dismiss the case in its entirety, and to limit its action to
the dismissal of the complaint.
Preliminarily, the respondents question the petitioner's recourse to this Court in filing
the instant petition alleging that no appeal may be taken from an order of the RTC dismissing an
action without prejudice. 35 Nonetheless, the Rules of Court do not prohibit any of the parties
from filing a Rule 45 petition with this Court in case only questions of law are raised or
involved. 36 In Bukidnon Doctors' Hospital, Inc. v. Metropolitan Bank & Trust Co., 37 the Court
explained that:
Section 2(c), Rule 41 of the Rules of Court categorically provides
that in all cases where only questions of law are raised, the appeal from a
decision or order of the Regional Trial Court shall be to the Supreme Court
by petition for review on certiorari in accordance with Rule 45. Section 2(c)
of Rule 41 of the Rules of Court reads:
SEC. 2. Modes of appeal. —
(a) Ordinary appeal. — The appeal to the Court of
Appeals in cases decided by the Regional Trial Court in the
exercise of its original jurisdiction shall be taken by filing a notice
of appeal with the court which rendered the judgment or final
order appealed from and serving a copy thereof upon the adverse
party. No record on appeal shall be required except in special
proceedings and other cases of multiple or separate appeals
where the law or these Rules so require. In such cases, the
record on appeal shall be filed and served in like
manner. SECAHa
(b) Petition for review. — The appeal to the Court of
Appeals in cases decided by the Regional Trial Court in the
exercise of its appellate jurisdiction shall be by petition for review
in accordance with Rule 42.
(c) Appeal by certiorari. — In all cases where only
questions of law are raised or involved, the appeal shall be to the
Supreme Court by petition for review on certiorari in accordance
with Rule 45.
Section 1 of Rule 45 provides:
SECTION 1. Filing of petition with Supreme Court. — A
party desiring to appeal by certiorari from a judgment or final
order or resolution of the Court of Appeals, the Sandiganbayan,
the Regional Trial Court or other courts whenever authorized by
law, may file with the Supreme Court a verified petition for review
on certiorari. The petition shall raise only questions of law which
must be distinctly set forth.
A question of law exists when the doubt or controversy concerns
the correct application of law or jurisprudence to a certain set of facts; or
when the issue does not call for an examination of the probative value of
the evidence presented, the truth or falsehood of facts being admitted. A
question of fact exists when the doubt or difference arises as to the truth or
falsehood of facts or when the query invites calibration of the whole
evidence considering mainly the credibility of the witnesses, the existence
and relevancy of specific surrounding circumstances, as well as their
relation to each other and to the whole, and the probability of the
situation. 38 (Citation omitted)
 Considering that the issue in the instant case is clearly one of law as it calls for the
correct application of the Rules of Court, the petitioner's direct resort to this Court is proper.
The Court now looks into the propriety of the order of the RTC in dismissing the case.
Needless to state, the Court is again confronted with the issue of whether the dismissal of the
complaint, specifically upon motion of the plaintiff under Section 2 of Rule 17 of the Rules of
Court also calls for the dismissal of the defendant's counterclaim, as in the case at bar.
Rule 17 of the Rules of Civil Procedure provides the following:
SECTION 1. Dismissal upon notice by plaintiff. — A complaint
may be dismissed by the plaintiff by filing a notice of dismissal at any time
before service of the answer or of a motion for summary judgment. Upon
such notice being filed, the court shall issue an order confirming the
dismissal. Unless otherwise stated in the notice, the dismissal is without
prejudice, except that a notice operates as an adjudication upon the merits
when filed by a plaintiff who has once dismissed in a competent court an
action based on or including the same claim.
SECTION 2. Dismissal upon motion of plaintiff. — Except as
provided in the preceding section, a complaint shall not be dismissed at the
plaintiff's instance save upon approval of the court and upon such terms
and conditions as the court deems proper. If a counterclaim has been
pleaded by a defendant prior to the service upon him of the plaintiff's
motion for dismissal, the dismissal shall be limited to the complaint. The
dismissal shall be without prejudice to the right of the defendant to
prosecute his counterclaim in a separate action unless within fifteen (15)
days from notice of the motion he manifests his preference to have his
counterclaim resolved in the same action. Unless otherwise specified in
the order, a dismissal under this paragraph shall be without prejudice. A
class suit shall not be dismissed or compromised without the approval of
the court. aIcDCT
SECTION 3. Dismissal due to fault of plaintiff. — If, for no
justifiable cause, the plaintiff fails to appear on the date of the presentation
of his evidence in chief on the complaint, or to prosecute his action for an
unreasonable length of time, or to comply with these Rules or any order of
the court, the complaint may be dismissed upon motion of the defendant or
upon the court's own motion, without prejudice to the right of the defendant
to prosecute his counterclaim in the same or in a separate action. This
dismissal shall have the effect of an adjudication upon the merits, unless
otherwise declared by the court.
SECTION 4. Dismissal of counterclaim, cross-claim, or
third-party complaint. — The provisions of this Rule shall apply to the
dismissal of any counterclaim, cross-claim, or third-party complaint. A
voluntary dismissal by the claimant by notice as in Section 1 of this Rule,
shall be made before a responsive pleading or a motion for summary
judgment is served or, if there is none, before the introduction of evidence
at the trial or hearing.
The RTC granted the Joint Motion to Dismiss upon the behest of Serafin, the plaintiff
therein on the main ground that the case had become moot and academic since his title to Lot
5357 had been allegedly quieted and the reliefs prayed for were obtained. In the Order dated
October 21, 2002 denying the motion for reconsideration, the RTC elucidated that:
The Court in issuing the dismissal order dated April 25, 2002 had
already made its position on the matter very clearly such that it finds no
reason to disturb the subject order. As clarified, a party-litigant in a civil
action like the plaintiff herein, cannot be compelled to so continuously
litigate his case if he does not want to anymore as was obtaining in this
case. More so that the principal reliefs prayed for in the complaint had
already been served as was so admitted by the plaintiff. Being so, this
Court finds it repugnant to go on with the hearing of movant's-defendant's
counterclaim for what is to be countered by the movant when the claim of
the plaintiff, at his own instance, had already been dismissed it having
been served and satisfied as aforestated. And this is so because what is
contemplated under the Rules authorizing the hearing of defendant's
counterclaim is when the dismissal is not at the instance of the plaintiff. 39
As can be gleaned from the assailed orders, the RTC erred when it dismissed the case
when the present rules state that the dismissal shall be limited only to the complaint. A
dismissal of an action is different from a mere dismissal of the complaint. For this reason, since
only the complaint and not the action is dismissed, the defendant in spite of said dismissal may
still prosecute his counterclaim in the same action. 40 The case of Pinga v. Heirs of German
Santiago 41 is quite instructive which this Court finds worth reiterating. In Pinga, the Court
clearly stated that the dismissal of the complaint does not necessarily result to the dismissal of
the counterclaim, abandoning the rulings in Metals Engineering Resources Corporation v.
Court of Appeals, 42 International Container Terminal Services, Inc. v. Court of
Appeals, 43 and BA Finance Corporation v. Co. 44 The Court held that:
At present, even Section 2, concerning dismissals on motion of
the plaintiff, now recognizes the right of the defendant to prosecute the
counterclaim either in the same or separate action notwithstanding the
dismissal of the complaint, and without regard as to the permissive or
compulsory nature of the counterclaim.
In his commentaries on the 1997 Rules of Civil Procedure,
Justice Regalado expounds on the effects of the amendments to Sections
2 and 3 of Rule 17: AaHTIE
2. Under this revised section [2], where
the plaintiff moves for the dismissal of his complaint to which a
counterclaim has been interposed, the dismissal shall be limited
to the complaint. Such dismissal shall be without prejudice to the
right of the defendant to either prosecute his counterclaim in a
 separate action or to have the same resolved in the same action.
Should he opt for the first alternative, the court should render the
corresponding order granting and reserving his right to prosecute
his claim in a separate complaint. Should he choose to have his
counterclaim disposed of in the same action wherein the
complaint had been dismissed, he must manifest such
preference to the trial court within 15 days from notice to him of
plaintiff's motion to dismiss.These alternative remedies of the
defendant are available to him regardless of whether his
counterclaim is compulsory or permissive. . . . . 45 (Italics in the
original)
In the instant case, the petitioner's preference to have his counterclaim (and
cross-claims) be prosecuted in the same action was timely manifested. The records show that
Serafin and Leopolda furnished the petitioner's counsel with a copy of their Joint Motion to
Dismiss by posting it (via registered mail) on September 19, 2001.46 Said motion was filed in
court the following day. 47 On October 4, 2001, the petitioner filed
his Opposition/Comment thereto. 48 Copies of the said opposition were personally served
upon the opposing parties on the same date. 49 In paragraph 1.5 50 of said opposition, the
petitioner expressed his preference to have his counterclaim and cross-claim prosecuted in the
same case, as he thus stated:
1.5 That the undersigned defendant manifest to this Honorable Court of his
preference that the above[ ] counterclaims and cross-claims be
resolved in the present case. 51
which was why he impleaded the petitioner in this case. Then, the Joint Motion to Dismiss was
filed by Serafin and Leopolda on the ground that both parties were able to settle their
differences. It is rather intriguing that in said joint motion, it was alleged that Serafin was already
able to secure a certificate of title in his name dated July 26, 2001 and that both parties agreed
for its cancellation and have a title over said property issued in their common names. 52 Clearly,
the petitioner was peremptorily left out of the picture. From the case's inception, the petitioner's
interests and that of his siblings over the subject property were vigilantly defended as
evidenced by the numerous and exchange of pleadings made by the parties. It can not
therefore be denied that the petitioner has certainly valid defenses and enforceable claims
against the respondents for being dragged into this case. Thus, the petitioner's manifestation of
his preference to have his counterclaim prosecuted in the same action is valid and in
accordance with Section 2, Rule 17 of the Rules of Court.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The
Orders dated April 25, 2002 and October 21, 2002 of the Regional Trial Court of Lapu-lapu City,
Branch 27 in Civil Case No. 4786-L are MODIFIED in that the counterclaim of Lim Teck Chuan
as defendant in Civil Case No. 4786-L is REINSTATED. The Regional Trial Court
is ORDERED to hear and decide Lim Teck Chuan's counterclaim with dispatch.
SO ORDERED.
||| (Chuan v. Uy, G.R. No. 155701, [March 11, 2015])

There are valid reasons why the petitioner vehemently objected to the dismissal of the
case upon the joint motion of Serafin and Leopolda and insisted to have his counterclaim
prosecuted in the same action.

Serafin instituted the instant case due to the existence of certain documents affecting
his title, namely: Henry's Affidavit of Self-Adjudication with Deed of Sale which names Leopolda
as the buyer; and Tax Declaration No. 01532 which was issued in the name of the latter. In his
Affidavit of Self-Adjudication, Henry transferred whatever right and interest he had on the
subject lot to Leopolda. Subsequently, by reason of the amicable settlement between Serafin
and Leopolda, the latter waived and abandoned all her rights to Lot 5357.

On the other hand, the petitioner asserts that the subject property was never
transferred nor encumbered to any person during Antonio's lifetime. He insists that the deed of
sale in favor of Spouses Cabansag is simulated and spurious, and was intended to defraud the
estate of Antonio. Further, he asserts that said Spouses Cabansag are mere creations of
Serafin.

Forthwith, the foregoing contentions touch on the very merits of the case which this
Court is not prepared to rule upon for want of sufficient factual basis since this case was
dismissed by the RTC even before the parties were able to present their evidence on the merits.
Nonetheless, the records show that Serafin had been aware of the petitioner's claim over the
property as descendants of Antonio and Dy Ochay even before the institution of this case,
 THIRD DIVISION 4 281736 (BD-225/97) 12-Aug-97 P291,

5 281737 (BD-226/97) 12-Aug-97 P157,

[G.R. No. 200567. June 22, 2015.]
6 281745 (BD-229/97) 22-Aug-97 P449,

METROPOLITAN BANK AND TRUST7 281747 (BDS-94854.696.00.999) 3-Sep-97 P105,

COMPANY, petitioner, vs. CPR PROMOTIONS AND MARKETING, INC.
and SPOUSES CORNELIO P. REYNOSO, JR. and LEONIZA * F. 8 281749 (BD-236/97) 11-Sep-97 P525,
REYNOSO, respondents. 9 281750 (BD-238/97) 12-Sep-97 P1,310,

10 473410 (BD-239/97) 19-Sep-97 P251,

DECISION 11 473414 (BD-240/97) 19-Sep-97 P288,

12 473412 (BD-244/97) 26-Sep-97 P62,

13 473411 (BD-245/97) 26-Sep-97 P156,

VELASCO, JR., J p:
The Case 14 473413 (BD-251/97) 3-Oct-97 P767,

Before Us is a Petition for Review on Certiorari under Rule 45 of the 15

Rules of 473431 (BD-252/97) 6-Oct-97 P557,
Court assailing the September 28, 2011 Decision 1 and February 13, 2012 Resolution 2 of
–––––––
the Court of Appeals (CA) rendered in CA-G.R. CV No. 91424. Said rulings dismissed
petitioner Metropolitan Banking and Trust Company's (MBTC's) claim for deficiency TOTAL PRINCIPAL AMOUNT 12,891,
payment upon foreclosing respondents' mortgaged properties and ordered the bank,
instead, to return to respondent mortgagors the excess amount of ======
PhP722,602.22. HTcADC
The Facts
To secure the loans, the spouses Reynoso executed two deeds of real estate
The facts of the case, as culled from the records, are as follows: mortgage on separate dates. The first mortgage, securing the amount of PhP6,500,000,
From February to October 1997, respondent CPR Promotions and Marketing, Inc. was executed on February 2, 1996 over real estate covered by Transfer Certificate of Title
(CPR Promotions) obtained loans from petitioner MBTC. These loans were covered by (TCT) No. 624835; 3 the other was executed on July 18, 1996 over properties covered by
fifteen (15) promissory notes (PNs) all signed by respondents, spouses Leoniza F. TCT Nos. 565381, 4 263421, 5 and 274682 6 to secure the amount of PhP2,500,000. All
Reynoso and Cornelio P. Reynoso, Jr. (spouses Reynoso), as Treasurer and President of the mortgaged properties are registered under the spouses Reynoso's names, except
of CPR Promotions, respectively. The issued PNs are as follows: for TCT No. 565381, which is registered under CPR Promotions. 7
Thereafter, on December 8, 1997, the spouses Reynoso executed a continuing
surety agreement 8 binding themselves solidarily with CPR Promotions to pay any and all
PN No. Date Amount loans CPR Promotions may have obtained from petitioner MBTC, including those covered
by the said PNs, but not to exceed PhP13,000,000.
Upon maturity of the loans, respondents defaulted, prompting MBTC to file a
277894 (BDS-143/97) 7-Feb-97 P6,500,000.00
petition for extra-judicial foreclosure of the real estate mortgages, pursuant toAct No.
3135, 9 as amended. MBTC's request for foreclosure, 10 dated March 6, 1998, pertinently
281728 (BD-216/97) 21-Jul-97 P959,034.20
reads:
281735 (BD-222/97) 31-Jul-97 P508,580.83 We have the honor to request your good Office to
conduct/undertake extra-judicial foreclosure sale proceedings under Act
 No. 3135, as amended, and other applicable laws on the properties
covered by two Real Estate Mortgages executed
by CPR PROMOTIONS & MARKETING, INC., represented by its
President Mr. Cornelio P. Reynoso and Treasurer Leoniza F. Reynoso
and SPOUSES CORNELIO P. REYNOSO, JR., AND LEONIZA F.
REYNOSO in favour of the mortgagee, METROPOLITAN BANK AND
TRUST COMPANY, to secure fifteen (15) loans with a total principal
amount of TWELVE MILLION EIGHT HUNDRED NINETY ONE
THOUSAND THREE HUNDRED NINETY SEVEN PESOS AND
SEVENTY EIGHT CENTAVOS (P12,891,397.78), for breach of the
terms of said mortgage. 11
xxx xxx xxx
As Annex "R", a copy of the Statement of Account, showing
that the total amount due on the loans of the borrowers/mortgagers
which remains unpaid and outstanding as of February 10, 1998
was ELEVEN MILLION TWO HUNDRED SIXTEEN THOUSAND
SEVEN HUNDRED EIGHTY THREE PESOS AND NINETY NINE
CENTAVOS (P11,216,783.99) . . . . 12 (emphasis in the original)
Subsequently, on May 5, 1998, the mortgaged properties covered by TCT Nos.
624835 and 565381 were sold at a public auction sale. MBTC participated therein and
submitted the highest bid in the amount of PhP10,374,000. The day after, on May 6, 1998,
petitioner again participated and won in the public auction sale of the remaining mortgaged
properties, having submitted the highest bid amounting to PhP3,240,000. As a result,
petitioner was issued the corresponding Certificates of Sale on July 15 and 16, 1998,
covering the properties subjected to the first and second public auctions, respectively.
Notwithstanding the foreclosure of the mortgaged properties for the total amount
of PhP13,614,000, petitioner MBTC alleged that there remained a deficiency balance of
PhP2,628,520.73, plus interest and charges as stipulated and agreed upon in the PNs and
deeds of real estate mortgages. Despite petitioner's repeated demands, however,
respondents failed to settle the alleged deficiency. Thus, petitioner filed an action for
collection of sum of money against respondents, docketed as Civil Case No. 99-230,
entitled Metropolitan Bank and Trust Company v. CPR Promotions and Marketing, Inc.
and Spouses Cornelio Reynoso, Jr. and Leoniza F. Reynoso.
Ruling of the Regional Trial Court
In its Decision 13 dated October 11, 2007, the Regional Trial Court, Branch 59 in
Makati City (RTC) ruled in favor of petitioner that there, indeed, was a balance of
PhP2,628,520.73, plus interest and charges, as of September 18, 1998, and that
respondents are liable for the said amount, as part of their contractual obligation. 14The
court disposed of the case in this wise:
WHEREFORE, premises considered, judgment is hereby
rendered ordering [respondents], jointly and severally, to pay
[petitioner] Metrobank, as follows:
a] the amount of PhP2,628,520.73 plus stipulated interest and
penalty charges stipulated in the Promissory Notes marked as Exhibits
A to O until full payment thereof; and aScITE
b] the costs of the suit.
SO ORDERED.
Respondents timely moved for reconsideration of the RTC's Decision, which was
denied through the trial court's February 7, 2008 Order. Aggrieved, respondents elevated
the case to the CA.
Ruling of the Court of Appeals
The appellate court, through the assailed Decision, reversed the court a quo and
ruled in favor of respondents. The fallo of the said Decision reads:
Wherefore, in view of the foregoing, the decision appealed from
is reversed, and the plaintiff-appellee Metrobank is ordered to refund or
return to the defendants-appellants Cornelio and Leoniza Reynoso the
amount of PhP722,602.22 representing the remainder of the proceeds
of the foreclosure sale, with legal interest of six percent per annum from
the date of filing of the answer with counterclaim on March 26, 1999,
until paid.
SO ORDERED. 15
Supporting the reversal is the CA's finding that there was a sudden change in the
terminology used, from "total amount due" to "principal amount." 16According to the CA,
from February to May 1998, the amount sought to be collected ballooned from
PhP11,216,783.99 to PhP12,891,397.78. From this apparently unexplained increase, the
CA deduced that the increased amount must mean the principal and interest and other
charges. Furthermore, the appellate court found that petitioner failed to prove that there
was a deficiency, since the records failed to corroborate the claimed amount. As noted by
the CA, "[Petitioner] did not even introduce the continuing surety agreement on which the
trial court gratuitously based its decision."
On October 24, 2011, petitioner filed a motion for reconsideration of the assailed
Decision, which the appellate court denied in its assailed February 13, 2012 Resolution.
The Issues
Hence this recourse, on the following issues:
Whether or not the CA gravely abused its discretion when it failed to consider the
continuing surety agreement presented in evidence and in ruling that petitioner MBTC
failed to prove that the spouses Reynoso are solidarily liable with
respondent CPR Promotions.
Whether or not the CA gravely abused its discretion when it grossly
misappreciated the promissory notes, real estate mortgages, petition for extrajudicial
foreclosure of mortgage, certificates of sale and statement of account marked in evidence
and ruled that petitioner MBTC failed to prove that a deficiency balance resulted after
conducting the extrajudicial foreclosure sales of the mortgaged properties.
The Arguments
Anent the first issue, MBTC faults the appellate court for finding that it did not
introduce the continuing surety agreement on which the RTC based its ruling that
respondent spouses are solidarily liable with respondent CPR Promotions. 17
As regards the second issue, petitioner asserts that the CA's grant of a refund
valued at PhP722,602.22 plus legal interest of six percent (6%) in favor of respondents is
erroneous for two reasons: first, respondents never set up a counterclaim for refund of any
amount; 18 and second, the total outstanding obligation as of February 10, 1998, to which
the full amount of the bid prices was applied, is PhP11,216,783.99 and not
PhP12,891,397.78, which was used by the CA in its computation. 19
Lastly, petitioner claims that respondents should be made to answer for certain
specific expenses connected with the foreclosure, i.e., filing fees, publication expense,
Sheriff's Commission on Sale, stipulated attorney's fee, registration fee for the Certificate
of Sale, insurance premium and other miscellaneous expenses, in the amounts of
PhP1,373,238.04 and PhP419,166.67 for the first and second foreclosure sales,
respectively. 20
In their Comment, 21 respondents maintained the propriety of the CA's grant of a
refund, arguing that in their Answer with Compulsory Counterclaim, they laid-down in detail
the excess of the prices of the foreclosed properties over their obligation. 22 Respondents
then went on and argued that "from the beginning of the instant case in the trial court, [they]
have already raised in issue the fact of [petitioner's] taking-over of [their] lands with values
over and above the latter's financial liabilities." 23 Thus, they postulate that the CA did right
when it touched on the issue and ruled thereon. 24
Furthermore, respondents insist that there is actually no difference between the
PhP12,891,397.78 and the PhP11,261,783.99 amounts except for the accumulated
interest, penalties, and other charges. 25 Too, according to them, this is the reason why
what respondent CPR owed petitioner at that time increased substantially from that on
February 10, 1998, when the amount was just PhP11,216,783.99. 26
The Court's Ruling
We partially grant the petition. While We fully agree with the CA that MBTC was
not able to prove the amount claimed, We however, find that neither were respondents
able to timely setup their claim for refund.
Respondents belatedly raised
their compulsory counterclaim
Rule 6 of the Rules of Court defines a compulsory counterclaim as follows:
Section 7. Compulsory counterclaim. — A compulsory
counterclaim is one which, being cognizable by the regular courts of
justice, arises out of or is connected with the transaction or occurrence
constituting the subject matter of the opposing party's claim and does
not require for its adjudication the presence of third parties of whom the
court cannot acquire jurisdiction. Such a counterclaim must be within the
jurisdiction of the court both as to the amount and the nature thereof,
except that in an original action before the Regional Trial Court, the
counterclaim may be considered compulsory regardless of the amount.
Accordingly, a counterclaim is compulsory if: (a) it arises out of or is necessarily
connected with the transaction or occurrence which is the subject matter of the opposing
party's claim; (b) it does not require for its adjudication the presence of third parties of
whom the court cannot acquire jurisdiction; and (c) the court has jurisdiction to entertain the
claim both as to its amount and nature, except that in an original action before the RTC, the
counterclaim may be considered compulsory regardless of the amount. 27
In determining whether a counterclaim is compulsory or permissive, We have, in
several cases, utilized the following tests: 28
(1) Are the issues of fact or law raised by the claim and the counterclaim largely
the same?
(2) Would res judicata bar a subsequent suit on defendant's claims, absent the
compulsory counterclaim rule? HEITAD
(3) Will substantially the same evidence support or refute plaintiff's claim as well
as the defendant's counterclaim?
(4) Is there any logical relation between the claim and the counterclaim, such that
the conduct of separate trials of the respective claims of the parties would entail a
substantial duplication of effort and time by the parties and the court? This test is the
"compelling test of compulsoriness." 29
Based on the above tests, it is evident that a claim for recovery of the excess in
the bid price vis-à-vis the amount due should be interposed as a compulsory counterclaim
in an action for recovery of a deficiency filed by the mortgagee against the
debtor-mortgagor. First, in both cases, substantially the same evidence is needed in order
to prove their respective claim. Second, adjudication in favor of one will necessarily bar the
other since these two actions are absolutely incompatible with each other; a debt cannot be
fully paid and partially unpaid at the same time. Third, these two opposing claims arose
from the same set of transactions. And finally, if these two claims were to be the subject of
separate trials, it would definitely entail a substantial and needless duplication of effort and
time by the parties and the court, for said actions would involve the same parties, the same
transaction, and the same evidence. The only difference here would be in the findings of
the courts based on the evidence presented with regard to the issue of whether or not the
bid prices substantially cover the amounts due.
Having determined that a claim for recovery of an excess in the bid price should
be set up in the action for payment of a deficiency as a compulsory counterclaim, We rule
that respondents failed to timely raise the same.
 It is elementary that a defending party's compulsory counterclaim should be By simply adding the figures stated in the PNs as the principal sum, it can readily
interposed at the time he files his Answer, 30 and that failure to do so shall effectively bar be seen that the amount of PhP12,891,397.78 actually pertains to the aggregate value of
such claim. 31 As it appears from the records, what respondents initially claimed herein the fifteen (15) PNs, viz.:
were moral and exemplary damages, as well as attorney's fees.32 Then, realizing, based
on its computation, that it should have sought the recovery of the excess bid price,
respondents set up another counterclaim, this time in their Appellant's Brief filed before the PN No. Amount
CA. 33 Unfortunately, respondents' belated assertion proved fatal to their cause as it did
not cure their failure to timely raise such claim in their Answer. Consequently, respondents'
claim for the excess, if any, is already barred. With this, We now resolve the substantive
issues of this case. 1 277894 (BDS-143/97) 38 P6,500,0

The CA erred in ruling that the total 2 281728 (BD-216/97) 39 P959,0

amount due was PhP12,891,397.78
3 281735 (BD-222/97) 40 P508,5
Basic is the rule that a Petition for Review on Certiorari under Rule 45 of the
Rules of Court should only cover questions of law. 34 Moreover, findings of fact of 4the CA 281736 (BD-225/97) 41 P291,7
are generally final and conclusive and this Court will not review them on appeal. 35 This
5 281737 (BD-226/97) 42 P157,1
rule, however, admits of several exceptions, 36 such as when the findings of fact are
conflicting, manifestly mistaken, unsupported by evidence or the result 6 of a 281745 (BD-229/97) 43 P449,8
misapprehension of acts, or when the findings are contrary to that of the trial court, as in
this case. 7 281747 (BDS-94854.696.00.999) 44 P105,0

To recall, the CA, in its assailed Decision, made the following findings as regards
8 281749 (BD-236/97) 45 P525,2
the amount due on the loan against which the proceeds from the auction sales are to be
applied: 9 281750 (BD-238/97) 46 P1,310,0

In the application for extrajudicial foreclosure sale dated March 10 473410 (BD-239/97) 47 P251,7
6, 1998, the total amount due as of February 10, 1998 was stated to be
P11,216,783.99. The plaintiff categorically declared that 11 473414 (BD-240/97) 48 P288,9
P11,216,783.99 was the total amount due on February 10, 1998. By the 12 473412 (BD-244/97) 49 P62,9
time the auction sales were conducted, in May 1998, as reflected in the
certificate of Sale, the principal amount was said to be P12,891,397.78. 13 473411 (BD-245/97) 50 P156,0
What is the meaning of the change from total amount due to principal
amount?If from February to May 1998, a. matter of three months, the 14 473413 (BD-251/97) 51 P767,5
amount sought to be collected ballooned to P12,891,397.78, the
15 473431 (BD-252/97) 52 P557,4
increase could have resulted from no other source than the interest and
other charges under the promissory notes after the defendants incurred ––––––––
in default. Thus, the amount of P12,891,397.78 as of May 1998, must
mean the principal and interest and other charges. The statement in TOTAL PRINCIPAL AMOUNT 12,891,3
the certificates of sale that it is the principal amount is a subtle change in
language, a legerdemain to suggest that the amount does not include =======
the interest and other charges. 37 (emphasis added, citations omitted)
In short, the CA concluded that the amount of PhP12,891,397.78 is actually
This belies the findings of the CA that PhP12,891,397.78 is the resulting value of
comprised of the PhP11,216,783.99 due as of February 10, 1998, plus additional interest
PhP11,216,783.99 plus interest and other charges. Consequently, the CA's conclusion
and other charges that became due from February 10, 1998 until the date of foreclosure on
that there is an excess of PhP722,602.22, after deducting the amount of
May 5, 1998.
PhP12,891,397.78 from the total bid price of PhP13,614,000, is erroneous. TIADCc
The appellate court is mistaken.
 Nevertheless, while the CA's factual finding as to the amount due is flawed, –––––––––––– –––––––––––––
petitioner, as discussed below, is still not entitled to the alleged deficiency balance of
PhP2,628,520.73. TOTAL 12,450,652.22 1,111,986.53

MBTC failed to prove that there is a –––––––––––– –––––––––––––

deficiency balance of PhP2,628,520.73
GRAND TOTAL 14,310,498.19
To support its deficiency claim, petitioner presented a Statement of
Account, 53 which refers to the amounts due as of May 5, 1998, the date of the first ===========
foreclosure sale, to wit:

Applying the proceeds from the auction sales to the foregoing amount, according
Statement of Account as of May 05, 1998
to petitioner, would result in a deficiency balance of PhP2,443,143.43. Afterwards, the said
PN No. Principal Amt. Outs. PDI amount allegedly earned interest for four (4) months in the amount of
Penalty
PhP185,377.30, 54 bringing petitioner's claim for deficiency judgment to a total of
PhP2,628,520.73. 55

D#216/97 489,219.20 54,808.77 We are not convinced.

49,166.53
We have already ruled in several cases 56 that in extrajudicial foreclosure of
D#222/97 167,289.35 18,613.61 16,310.71
mortgage, where the proceeds of the sale are insufficient to pay the debt, the mortgagee
D#225/97 291,732.50 32,683.72 has the27,422.86
right to recover the deficiency from the debtor. 57 In ascertaining the deficit amount,
Sec. 4, Rule 68 of the Rules of Court is elucidating, to wit:
D#226/97 44,694.50 5,007.24 4,201.28
Section 4. Disposition of proceeds of sale. — The amount
D#229/97 435,229.25 48,760.10 realized from the foreclosure sale of the mortgaged property shall, after
44,393.38
deducting the costs of the sale, be paid to the person foreclosing
D#238/97 365,238.55 40,918.83 33,236.71
the mortgage, and when there shall be any balance or residue, after
paying off the mortgage debt due, the same shall be paid to junior
D#233/97 105,000.00 11,763.50 9,082.50
encumbrancers in the order of their priority, to be ascertained by the
D#244/97 62,982.53 7,056.13 court, or if there be no such encumbrancers or there be a balance or
5,290.53
residue after payment to them, then to the mortgagor or his duly
D#236/97 497,649.70 56,135.10 38,070.20
authorized agent, or to the person entitled to it. (emphasis added)
D#240/97 145,950.00 16,463.20 Verily, there can only be a deficit when the proceeds of the sale is not sufficient to
11,165.18
cover (1) the costs of foreclosure proceedings; and (2) the amount due to the creditor,
D#245/97 156,038.85 17,481.55 11,897.43
inclusive of interests and penalties, if any, at the time of foreclosure.
D#239/97 210,421.50 22,605.52 15,360.77
a. Petitioner failed to prove
the amount due at the time
D#251/97 572,470.15 64,574.86 38,232.57 of foreclosure

D#252/97 557,497.45 47,896.46 31,110.63

Having alleged the existence of a deficiency balance, it behooved petitioner to
prove, at the very least, the amount due at the date of foreclosure against which the
DS#143/97 6,500,000.00 573,681.89 336,818.28
proceeds from the auction sale would be applied. Otherwise, there can be no basis for
DS#218/97 1,800,000.00 93,536.05 awarding the claimed deficiency balance. Unfortunately for petitioner, it failed to
74,401.15
substantiate the amount due as of May 5, 1998 as appearing in its Statement of
e Insurance 49,238.69 0 Account.1,698.73
cSEDTC
 To recall, MBTC admitted that the amount due as of February 10, 1998 is
PhP11,216,783.99, inclusive of interests and charges. As alleged in the petition:
57. Firstly, it should be noted that respondents' total unpaid obligations
inclusive of interest and penalties as of 10 February 1998 amounted to
Php11,216,783.99. This amount was the subject of
petitioner Metrobank's Petitions for Extrajudicial Foreclosure of
Mortgage and NOT Php12,891,397.78 which is the total principal
amount of respondents' loan obligations at the time when they obtained
said loans as shown in the Promissory Notes and the Certificates of Sale.
After the execution of the Promissory Notes, payments were made,
although insufficient, which resulted in the balance of
PhP11,216,783.99 as of February 1198 inclusive of interest and
penalties. 58 . . .
If the total amount due as of February 10, 1998 is PhP11,216,783.99 is already
inclusive of interests and penalties, the principal amount, exclusive of interests and
charges, would naturally be lower than the PhP11,216,783.99 threshold. How petitioner
made the determination in its Statement of Account that the principal amount due on the
date of the auction sale is PhP12,450,652.22 is then questionable, nay impossible, unless
respondents contracted another loan anew.
Moreover, the amounts petitioner itself supplied would result in the following
computation:
PhP11,216,783.99 Total outstanding obligation as of February 10, 1998
1,373,238.04 Add: Alleged May 5, 1998 public auction sale expenses
consistent data) Add: Additional interests and charges earned between
February 10, 1998 to May 5, 1998
consistent data) Subtotal: Amount due as of May 5, 1998
10,374,000.00 Less: May 5 Bid Price to be applied to the amount due
419,166.67 Add: Alleged May 6, 1998 public auction sale expenses
o consisted data) Add: Interests and charges earned from May 5 to 6, 1998
3,240,000.00 Less: May 6 Bid Price to be applied to the amount due
PhP2,443,143.43 Total: Deficiency reflected in the Statement of Account
from May 5 to September 18, 1998
As can be gleaned, petitioner failed to sufficiently explain during the proceedings
how it came up with the alleged "deficiency" in the amount of PhP2,443,143.43, as per the
Statement of Account. Reversing the formula, petitioner's claim would only be
mathematically possible if the missing interest and penalties for the three-month
period — from February 10, 1998 to May 6, 1998 — amounted to
PhP3,047,954.73, 59 which is inconsistent with MBTC's declaration in its Statement of
Account as of May 5, 1998. 60 Needless to say, this amount is not only unconscionable, it
also finds no support from any of the statement of accounts and loan stipulations agreed
upon by the parties.
Given MBTC's conflicting, if not irreconcilable, allegations as to the amount due
as of the date of foreclosure — as noted in the statement of accounts, the petition for
foreclosure, and the promissory notes — the computation offered by MBTC cannot be
accepted at face value. Consequently, there can then be no basis for determining the value
of the additional interests and penalty charges that became due, and, more importantly,
whether or not there was indeed a deficiency balance at the time the mortgaged properties
were foreclosed.
In addition, it is noticeable that petitioner's presentation of the computation is
circuitous and needlessly lengthened. As a matter of fact, nowhere in the petition, in its
complaint, 61 reply, 62 pre-trial brief, 63 among others, did it make a simple computation
of respondents' obligation as well as the amounts to be applied to it, or even a summary
thereof, when it could have easily done so.
b. Petitioner failed to prove
the amount of expenses
incurred in foreclosing the
mortgaged properties
Another obstacle against petitioner's claim for deficiency balance is the burden of
proving the amount of expenses incurred during the foreclosure sales. To recall, petitioner
alleged that it incurred expenses totaling PhP1,373,238.04 and PhP419,166.67 for the first
and second public auction sales, respectively. However, in claiming that there is a
deficiency, petitioner only submitted the following pieces of evidence, to wit:
1. The fifteen (15) promissory notes (Exhibits A to O);
2. Continuing Surety Agreement (Exhibit P);
3. Real Estate Mortgage (Exhibits Q & R);
4. Petition for Sale under Act No. 3135, as amended (Exhibit S);
5. Notices of Sheriff's Sale (Exhibits T & U);
6. Affidavits of Publication (Exhibits V & W);
7. Certificates of Posting and a Xerox copy thereof (Exhibits X & Y);
8. Certificates of Sale (Exhibits Z & AA);
9. Demand Letters (Exhibits BB & CC); and
 10. Statement of Account (Exhibit DD). the value of the property affected by the controversy, or involved in the
employment; the skill and experience called for in the performance of the
Curiously, petitioner never offered as evidence receipts proving payment of filing
service; the professional standing of the attorney; the results secured;
fees, publication expenses, Sheriff's Commission on Sale, attorney's fee, registration fee
and whether or not the fee is contingent or absolute, it being a
for the Certificate of Sale, insurance premium and other miscellaneous expenses, all of
recognized rule that an attorney may properly charge a much larger fee
which MBTC claims that it incurred. Instead, petitioner urges the Court to take judicial
when it is to be contingent than when it is not. From the stipulation in the
notice of the following expenses: 64
mortgage contract earlier quoted, it appears that the agreed fee is 10%
May 5, 1998 auction sale expenses of the total indebtedness, irrespective of the manner the
foreclosure of the mortgage is to be effected.The agreement is
PhP52,084.00
perhaps fair enough in case the foreclosure proceedings is prosecuted
cation Expenses judicially but, surely, it is unreasonable when, as in this case, the
24,267.75
mortgage was foreclosed extra-judicially, and all that the attorney
ff's Commission on Sale did was to file a petition for foreclosure with the sheriff
207,560.00
concerned. . . . (emphasis added)
stration fee and other Miscellaneous Expenses 32,644.50
Similarly, in Bank of the Philippine Islands, Inc. v. Spouses Norman and Angelina
ney's Fees (10% of total amount claimed) Yu,1,005,744.37
66 the Court reduced the claim for attorney's fees from 10% to 1% based on the
following reasons: (1) attorney's fee is not essential to the cost of borrowing, but a mere
nsurance 50,937.42
incident of collection; (2) 1% is just and adequate because the mortgagee bank had
already charged foreclosure expenses; (3) attorney's fee of 10% of the total amount due is
––––––––––––––
onerous considering the rote effort that goes into extrajudicial foreclosures.
Sub-totalPhP1,373,238.04
Second, the Court cannot also take judicial notice of the expenses incurred by
auction sale expenses petitioner in causing the publication of the notice of foreclosure and the cost of insurance.
This is so because there are no standard rates cited or mentioned by petitioner that would
cation Expenses allow 24,267.75
Us to take judicial notice of such expenses. It is not unthinkable that the cost of
publication would vary from publisher to publisher, and would depend on several factors,
ff's Commission on Sale 64,880.00
including the size of the publication space. Insurance companies also have their own
computations on the insurance premiums to be paid by the insurer, which the courts cannot
stration fee and other Miscellaneous Expenses 16,593.00
be expected to be knowledgeable of. To be sure, in arguing for the Court to take judicial
ney's Fees (10% of total amount claimed) notice of the alleged expenses, MBTC merely cited Sec. 3 of Act 3135 requiring publication
313,425.92
and the mortgage agreement provision on the insurance requirement, without
––––––––––––––
more. 67 Said provisions never expressly provided for the actual cost of publication and
insurance, nor any formulae for determining the same. Thus, the claims for publication and
Sub-total PhP419,166.67
insurance expenses ought to be disallowed.
Third, the claims for registration fees and miscellaneous expenses were also
never substantiated by receipts.
Petitioner's argument is untenable.
In sum, given petitioner's failure to establish the sum due at the time the
First, the Court cannot take judicial notice of the attorney's fees being claimed by mortgaged properties were foreclosed and sold via public auction, as well as the expenses
petitioner because although 10% was the rate agreed upon by the parties, We have, in a incurred in those foreclosure proceedings, it would be impossible for the Court to
line of cases, held that the percentage to be charged can still be fixed by the Court. For determine whether or not there is, indeed, a deficiency balance petitioner would have been
instance, in Mambulao Lumber Company v. Philippine National Bank, 65 the Court entitled to.
held: SDAaTC
Conclusion
In determining the compensation of an attorney, the following
In demanding payment of a deficiency in an extrajudicial foreclosure of mortgage,
circumstances should be considered: the amount and character of the
proving that there is indeed one and what its exact amount is, is naturally a precondition
services rendered; the responsibility imposed; the amount of money or
 thereto. The same goes with a claim for reimbursement of foreclosure expenses, as here.
In this regard, it is elementary that the burden to prove a claim rests on the party asserting
such. Ei incumbit probatio qui dicit, non qui negat. He who asserts, not he who denies,
must prove. 68 For having failed to adequately substantiate its claims, We cannot sustain
the finding of the trial court that respondents are liable for the claimed deficiency, inclusive
of foreclosure expenses. Neither can We sustain the CA's finding that respondents are
entitled to the recovery of the alleged excess payment.
In light of the foregoing, the Court need not belabor the other assigned errors.
WHEREFORE, premises considered, the instant petition is hereby PARTIALLY
GRANTED. Accordingly, the Decision of the Court of Appeals dated September 28, 2011
in CA-G.R. CV No. 91424 and its February 13, 2012 Resolution are
hereby AFFIRMED with MODIFICATION. The award of refund in favor of respondents in
the amount of P722,602.22 with legal interest of six percent (6%) per annum is
hereby DELETED.
No pronouncement as to costs.
SO ORDERED.
||| (Metropolitan Bank and Trust Co. v. CPR Promotions and Marketing, Inc., G.R. No. 200567,
[June 22, 2015])
 EN BANC
[A.C. No. 7353. November 16, 2015.]
NELSON P. VALDEZ, complainant, vs. ATTY. ANTOLIN
ALLYSON DABON, JR., respondent.
DECISION
Per Curiam p:
This is an administrative complaint for disbarment filed by Nelson
P. Valdez (Nelson) against Atty. Antolin Allyson M. Dabon, Jr. (Atty. Dabon) anchored on
the ground of grossly immoral and indecent conduct which transgressed the high moral
standards required for membership in the Bar.
The Position of the Complainant
Complainant Nelson charged respondent Atty. Dabon, a Division Clerk of Court of
the Court of Appeals (CA), with gross immorality for allegedly carrying on an adulterous
relationship with his wife, Sonia Romero Valdez (Sonia), which was made possible by
sexual assaults and maintained through threat and intimidation.
In his Affidavit-Complaint, 1 dated September 13, 2006, Nelson averred, among
others, that he married Sonia on January 28, 1998 in Paniqui, Tarlac; that Sonia was
employed as Court Stenographer of the CA from 1992 until her resignation on May 15,
2006; 2 that Sonia admitted to have had an adulterous and immoral relationship with
Atty. Dabon, from 2000 to 2006, a span of more than five years; that he came to know of
the relationship only on April 18, 2006 after receiving an anonymous text message
hinting/stating about the existence of an illicit affair between the two; and that initially,
Sonia denied the affair but eventually broke down and admitted her sexual liaison with
Atty. Dabon when confronted with a text message he received from Atty.
Jocelyn Dabon (Atty. Joy), the wife of the respondent, on May 4, 2006 at about 9:47 o'clock
in the morning, which stated:
Nelson, Jun and I were separating I will file an annulment
anytime soon, although I'm in great pain, I ask for your apology and
forgiveness for everything he is leaving for US and I hope he evolves
into a strong and mature person there. D cya masamang tao, just
emotional and easily manipulated. Sana don't blame him entirely bec. he
is d type that never initiate things. He is passive and tame. He was
honest with me and I hope Sonia would find d courage to tell d truth to
you. I just pray for peace and fresh start for all of us. I just want to go on
with my life and use above all these for my son's sake. I love jun and I
appeal to you n asana wala ka maisip sa atin lahat. Just as I have
accepted everything. Salamat sa panahon at pangunawa. God
bless. 3 TIADCc
Nelson also asserted that Sonia confessed her infidelity and described her
extramarital affair with Atty. Dabon to have been attended by sexual assaults and
maintained through intimidation and threats of exposure, humiliation and embarrassment.
In her own Affidavit, 4 dated September 13, 2006 and attached to the complaint,
Sonia narrated that her illicit relationship with Atty. Dabon started sometime in November
2000 and ended in March 2006 when she, bothered by her conscience, decided to break it
off; that Atty. Dabon relentlessly pursued her for years and even admitted that he fell in
love with her the first time he laid eyes on her; that on November 13, 2000,
Atty. Dabon lured her to what appeared to be a mere friendly lunch date, managed to put
sleep-inducing drug into her food or drink causing her to feel drowsy and weak and,
thereafter, brought her to Victoria Court Motel where he sexually molested her while she
was asleep; that she opted to keep silent about the incident for fear of its adverse
repercussions of shame and embarrassment to her and her family; that she pleaded with
Atty. Dabon to leave her and forget what had happened, but the respondent instead
taunted her by laughing at her misery; that since then, Atty. Dabon succeeded in having
repeated carnal knowledge of her once or twice a week through intimidation and threats;
that Atty. Dabon threatened her that he would tell everyone that she had been playing
around with him, if she would not yield to his lascivious cravings; and that she suffered in
silence for years and submitted herself to the bestial desires of Atty. Dabon, until she even
thought that she was in love with him.
Sonia further claimed that after years of living in deception and infidelity, she
decided to call it quits with Atty. Dabon sometime in March 2006 but he could not let go of
their relationship; that Atty. Dabon started pestering and threatening her through phone
calls and handwritten messages in vile attempts to persuade her to continue their illicit
affair; that despite their break-up, Atty. Dabon still pursued his lustful quest by bringing her
to Anito Motel, along Quirino Avenue on March 10, 2006, but she foiled his plan when she
went ballistic prompting the respondent to drive her back to the CA; that on March 13, 2006,
Atty. Dabon forcibly boarded her car and pleaded for forgiveness and reconciliation but
she remained firm in her resolve to end the affair; that she had to seek the assistance of her
officemates, Atty. Heiddi Venecia Barrozo (Atty. Barrozo) and Atty. Aileen T. Ligot (Atty.
Ligot), just to convince Atty. Dabon to alight from her car as the said incident had already
drawn the attention of several employees within the vicinity of the CA parking lot; that
Atty. Dabon used the members of his staff to relay his messages and deliver his
handwritten letters to her; that Atty. Dabon, angered by her repeated rejection, went
berserk and sent her a letter which stated, among others, that he could no longer stand her
constant avoidance of him and that he would divulge their illicit relationship to her husband;
that it numbed her with fright, so she called Atty. Joy, without disclosing her identity, and
told her that Atty. Dabon was harassing an employee at the CA; that Atty. Dabon sent a
text message to Nelson telling him of the extramarital affair; that Atty. Joy called up Nelson
and informed him that her husband, Atty. Dabon, had confessed to her the illicit
relationship; and that when she was asked by Nelson, she initially denied the affair for fear
of reprisal but, afterwards, admitted the truth and explained to him that she was merely a
victim of Atty.Dabon's threat and intimidation which led to their illicit relationship.
Nelson further stated that Atty. Dabon's willful, flagrant and shameless conduct
was in gross defiance of the customs, values and sense of morality of the community. He
prayed for the disbarment of Atty. Dabon whose immoral acts showed his lack of moral
character, honesty, probity, and good demeanor and, hence, unworthy to continue as an
officer of the court. Nelson alleged that he had previously filed an administrative complaint
for "Gross Immorality" against Atty. Dabonbefore the CA.
Together with Sonia's Affidavit, Nelson also attached to his Affidavit-Complaint for
disbarment, the Joint Affidavit 5 executed by Atty. Barrozo and Atty. Ligot on May 19, 2006;
the Affidavit 6 of Virginia D. Ramos (Ramos), dated May 19, 2006; and the Affidavit 7 of
Marie Iris Magdalene Minerva (Minerva), dated May 22, 2006, wherein the said affiants
corroborated the declaration of Sonia in her affidavit.
The Position of Atty. Dabon
Respondent Atty. Dabon strongly refuted the accusation against him claiming
that the same was baseless and unfounded and that the complaint for disbarment was
merely calculated to harass, annoy and besmirch his reputation.
In his Comment, 8 Atty. Dabon denied the charges of grossly immoral and
unlawful acts through sexual assaults, abuses, threats and intimidation. He posited that the
allegations of spouses Nelson and Sonia in their respective affidavits were nothing but
pure fabrication solely intended to malign his name and honor. In support of his prayer for
the dismissal of the present disbarment case, Atty. Dabon proffered the following
arguments:
First, complainant Nelson had no personal knowledge of the alleged illicit
relationship between him and Sonia. He relied heavily on the sworn statement of Sonia
which was replete with inconsistencies and incredible and preposterous claims which
defied logic and common sense, thus, revealing the fallacy of the subject complaint. He
contended that it was highly improbable for him, a married lawyer at that, to suddenly turn
crazy and abandon all cares just to satisfy his purported lustful hungerness by sexually
assaulting Sonia, "an ordinary plain-looking 43-year old woman with two (2) teen aged
children." 9 AIDSTE
Second, nowhere in the administrative complaint of Nelson previously filed before
the CA was there any mention of any sexual assault he allegedly committed against Sonia
or of an adulterous relationship that was maintained through threats and intimidation.
Surprisingly, such allegations were included in the present complaint for disbarment. He
also pointed out that Nelson did not attach to his administrative complaint before the CA
the September 13, 2006 Affidavit of Sonia containing grave imputations against him. Such
omissions were indicative that the serious charges against him were mere concoctions and
afterthoughts designed to attain Nelson's desire to come up with a graver accusation
against him. The filing of the complaint for disbarment was motivated by vengeance
against him as Nelson was consummed by his suspicion that he had seduced Sonia which
led to the deterioration of their marriage. He was a victim caught in the crossfire between
the troubled couple, Nelson and Sonia.
Third, there was no truth to Sonia's allegation that he was attracted to her from the
first time he saw her much less pursued her relentlessly. He and Sonia were just close
friends. He was Sonia's confidante. She would usually confide in him her personal woes
and problems especially those concerning her husband, Nelson. It was Sonia who
aggressively sought his companionship and frequented his office, bringing food, fruits and
other goodies. The said visits were attested to by Mary Jane Tulalian and Imelda Adan in
their respective affidavits, 10 both dated April 30, 2008. His friendship with Sonia turned
sour when she learned of his plan to settle for good in the United States with his family.
Sonia began to avoid him. He exerted efforts to make her understand his decision, but to
no avail.
Fourth, the cards expressing Sonia's affection towards him as well as the
expensive gifts she gave him belied her claim that she was sexually assaulted and that she
resisted his alleged sexual advances.
Fifth, it was unlikely that Sonia would not tell anyone the grave injustice and
abuses that she allegedly suffered in his hands or report the matter to the police
considering her length of service in the Judiciary and her familiarity on how the criminal
justice system worked.
Sixth, he denied Nelson's allegation that he confessed to his wife, Atty. Joy, his
illicit relationship with Sonia. He also denied that the alleged text messages, quoted by
Nelson and Sonia in their respective affidavits, were sent by him or his wife. All were part of
an elaborate scheme to force him to immediately resign as Division Clerk of Court from the
CA.
Lastly, it was not true that he harassed Sonia through text messages and phone
calls. It was he who was the victim of harassment from Nelson, who orchestrated a series
of events that compelled him to leave the country earlier than scheduled for fear that an
untoward incident might happen to him.
On August 15, 2007, the Court referred the case to the Integrated Bar of the
Philippines (IBP) for investigation, report and recommendation. 11
After the parties had submitted their respective verified position papers,
Investigating Commissioner Manuel T. Chan (Investigating Commissioner Chan) of the
IBP Commission on Bar Discipline (IBP-CBD) rendered his Report and
Recommendation, 12 dated October 2, 2008, finding that the charge against respondent
Atty.Dabon had been sufficiently proven. The recommendatory portion of the report reads:
WHEREFORE, this Commissioner, after a thorough and
exhaustive review of the facts and applicable legal provisions,
recommends that respondent be found guilty of gross immoral conduct
and, accordingly, be disbarred and dropped from the Roll of
Attorneys. 13
 On December 11, 2008, the Board of Governors of the IBP adopted and approved
the recommendation and issued Resolution No. XVIII-2008-653, the pertinent portion of
which reads:
RESOLVED to ADOPT and APPROVE, as it is hereby
unanimously ADOPTED and APPROVED the Report and
Recommendation of the Investigating Commissioner of the
above-entitled case, herein made part of this Resolution as Annex "A";
and, finding the recommendation fully supported by the evidence on
record and the applicable laws and rules, and finding Respondent guilty
of gross immoral conduct, Atty. Antolin Allyson M. Dabon, Jr. is hereby
DISBARRED and his name be stricken off from the Roll of Attorneys. 14
Atty. Dabon filed a motion for reconsideration of Resolution No. XVIII-2008-653,
but it was denied by the IBP Board of Governors in its Resolution No.
XX-2012-550, 15 dated December 14, 2012.
After due consideration, the Court resolves to adopt the findings and
recommendation of the IBP-CBD.
Lawyers have been repeatedly reminded by the Court that possession of good
moral character is both a condition precedent and a continuing requirement to warrant
admission to the Bar and to retain membership in the legal profession. This proceeds from
the lawyer's bounden duty to observe the highest degree of morality in order to safeguard
the Bar's integrity, 16 and the legal profession exacts from its members nothing less.
Lawyers are called upon to safeguard the integrity of the Bar, free from misdeeds and acts
constitutive of malpractice. Their exalted positions as officers of the court demand no less
than the highest degree of morality. 17
The Court explained in Arnobit v. Atty. Arnobit 18 that "as officers of the court,
lawyers must not only in fact be of good moral character but must also be seen to be of
good moral character and leading lives in accordance with the highest moral standards of
the community. A member of the bar and an officer of the court is not only required to
refrain from adulterous relationships or keeping a mistress but must also so behave himself
as to avoid scandalizing the public by creating the impression that he is flouting those
moral standards." Consequently, any errant behavior of the lawyer, be it in his public or
private activities, which tends to show deficiency in moral character, honesty, probity or
good demeanor, is sufficient to warrant suspension or disbarment. 19 AaCTcI
In the case at bench, the Court subscribes to the IBP's opinion that there was
substantial evidence showing that Atty. Dabon did have an illicit relationship with Nelson's
legal wife.
To begin with, the Court notes from the respondent's Comment that he appeared
to be perplexed as to whether or not he would admit his extramarital liaisons with Sonia. As
Investigating Commissioner Chan stated in his report, Atty. Dabon interposed a blanket
denial of the romantic involvement but at the same time, he seemed to have tacitly
admitted the illicit affair only that it was not attended by sexual assaults, threats and
intimidations. The Court also observed that he devoted considerable effort to demonstrate
that the affair did not amount to gross immoral conduct and that no sexual abuse, threat or
intimidation was exerted upon the person of Sonia, but not once did he squarely deny the
affair itself.
In other words, the respondent's denial is a negative pregnant, a denial coupled
with the admission of substantial facts in the pleading responded to which are not squarely
denied. Stated otherwise, a negative pregnant is a form of negative expression which
carries with it an affirmation or at least an implication of some kind favorable to the adverse
party. Where a fact is alleged with qualifying or modifying language and the words of the
allegation as so qualified or modified are literally denied, it has been held that the qualifying
circumstance alone is denied while the fact itself is admitted. 20 It is clear from
Atty. Dabon's Comment that his denial only pertained as to the existence of a forced illicit
relationship. Without a categorical denial thereof, he is deemed to have admitted his
consensual affair with Sonia.
More telling of the existence of a romantic relationship are the notes and
cards 21 that Sonia sent to Atty. Dabon containing personal and intimate messages in her
own handwriting. The messages conveyed Sonia's affection towards him as she even
referred to him as "hon" or "honey." There were also gifts she gave him on special
occasions such as signature shoes, watch and shirts. It also appeared that Sonia
frequently visited him in his office either to bring him food, fruits and other goodies or to
invite him to lunch which apparently displayed her emotional attachment to him. Curiously,
the foregoing was never refuted by Sonia. Such "ego-boosting admissions" 22 of
Atty. Dabon indeed proved that a consensual relationship between him and Sonia existed.
It has not escaped the Court's attention either that Atty. Dabon really tried hard to
win back Sonia because he could not let go of their relationship, even to the point of
pestering her with his persistent pleas for reconciliation. In one instance,
Atty. Dabon boarded Sonia's car and refused to alight unless she would talk to him. Sonia
had to seek the assistance of her officemates, Atty. Barrazo and Atty. Ligot, who pleaded
with him to alight from the vehicle. Moreover, Atty. Dabon made several attempts to
communicate with Sonia in the hope of rekindling their relationship through letters and
phone calls but she remained firm in her stand to avoid him. Such incident was recounted
by Ramos and Minerva in their respective affidavits. Incidentally, vis-a-vis Nelson's
overwhelming evidence of said harassments, he offered only denials which was
self-serving and weak under the law on evidence. Other than his general claim that Atty.
Barrazo, Atty. Ligot, Ramos, and Minerva were biased witnesses because they were
former officemates of Sonia, the respondent did not even bother to proffer his own version
of the supposed harassment incidents.
In light of the above disquisition, the Court finds Sonia's allegation that the illicit
relationship was made possible by sexual assaults and maintained through threat and
intimidations, to be untrue. Certainly, a sexually abused woman could not be expected to
lavish her oppressor with expensive gifts or pay him affectionate compliments or words of
endearment. The natural reaction of a victim of a sexual molestation would be to avoid her
ravisher. In this case, however, it appeared that Sonia continually remained in the
company of Atty. Dabon for more than five years, even inviting him for lunch-outs and
frequenting his office to bring food whenever the latter was preoccupied with his workload
and could not go out with her to eat. Verily, Sonia's actuations towards Atty. Dabon are in
stark contrast to the expected demeanor of one who had been repeatedly sexually abused.
Further, the Court cannot fathom why Sonia never reported the alleged sexual
abuse to the police, if such was the truth. She could have placed the respondent behind
bars and put an end to her claimed misery. Also, the Court cannot lend credence to Sonia's
claim that she merely succumbed to the respondent's sexual advances because of his
continuous threats of public exposure and humiliation. It must be stressed that
Atty. Dabon would be in a much more precarious situation if he would carry out such
threats, as this would exposed himself to countless criminal and administrative charges.
The Court believes that Nelson's allegation of sexual assaults and continuing threat and
intimidation was not established by clear preponderant evidence. The Court is left with the
most logical conclusion that Sonia freely and wittingly entered into an illicit and immoral
relationship with Atty. Dabon sans any threat and intimidation.
Consequently, the Court quotes with approval the following observations of
Investigating Commissioner Chan on this score, thus:
Sorting out the maze of technicalities, denials and evasions of
the respondent as well as the oftentimes exaggerated language of
complainant or his wife, Sonia, and the self-exculpatory declarations of
Sonia, this Commissioner considers the following facts as
established: EcTCAD
1. Respondent and Sonia are both married, not to each other, but
to other persons, and each is aware of this fact, or
should have known such fact at the start of their illicit
relationship because they were officemates at that time;
2. Respondent and Sonia engaged in an intimate and sexual
relationship, intermittent perhaps, for a period of about
six years starting 2000 up to 2006;
3. Respondent and Sonia, despite protestations of Sonia that
respondent assaulted her using drugs and employing
threats and blackmail to maintain the relationship,
appeared to have entered into such illicit relationship
voluntarily and also appeared to have been fueled by
their deep emotional needs, if not mutual lust, as shown
by the fact that the illicit relationship lasted for six long
years;
4. Respondent and Sonia, despite the protestation of Sonia to the
contrary, were not really ready to give up the illicit
relationship even if they were fully aware of its
immorality or its devastating effect on their respective
marriages and careers as shown by the fact that both
respondent and Sonia did not voluntarily confess to their
respective spouses their dark secret, but were only
discovered by complainant through other channels. 23
For what ethical breaches then may Atty. Dabon be held liable?
The Code of Professional Responsibility provides:
Rule 1.01 — A lawyer shall not engage in unlawful, dishonest, immoral
or deceitful conduct.
Canon 7 — A lawyer shall at all times uphold the integrity and dignity of
the legal profession, and support the activities of the Integrated Bar.
Rule 7.03 — A lawyer shall not engage in conduct that adversely reflects
on his fitness to practice law, nor should he, whether in public or private
life, behave in a scandalous manner to the discredit of the legal
profession.
Morality in our liberal society today is probably a far cry from what it used to be.
Notwithstanding this permissiveness, lawyers, as keepers of public faith, are burdened
with a high degree of social responsibility and, hence, must handle their personal affairs
with greater caution. 24 Indeed, those who have taken the oath to assist in the
dispensation of justice should be more possessed of the consciousness and the will to
overcome the weakness of the flesh.
It has been repeatedly held that to justify suspension or disbarment, the act
complained of must not only be immoral, but grossly immoral. 25 A grossly immoral act is
one that is so corrupt as to constitute a criminal act, or so unprincipled as to be
reprehensible to a high degree or committed under such scandalous or revolting
circumstances as to shock the common sense of decency. It is willful, flagrant, or
shameless as to show indifference to the opinion of good and respectable members of the
community. 26
In the case at bench, Atty. Dabon's intimate relationship with a woman other than
his wife showed his moral indifference to the opinion of the good and respectable members
of the community. It manifested his disrespect for the laws on the sanctity of marriage and
for his own marital vow of fidelity. It showed his utmost moral depravity and low regard for
the fundamental ethics of his profession. Indeed, he has fallen below the moral bar. Such
detestable behavior warrants a disciplinary sanction. Even if not all forms of extramarital
relations are punishable under penal law, sexual relations outside of marriage are
considered disgraceful and immoral as they manifest deliberate disregard of the sanctity of
marriage and the marital vows protected by the Constitution and affirmed by our laws. 27
In Advincula v. Macabata, 28 the Court elucidated as to what disciplinary
sanction should be imposed against a lawyer found guilty of misconduct. Thus:
. . . . When deciding upon the appropriate sanction, the Court
must consider that the primary purposes of disciplinary proceedings are
to protect the public; to foster public confidence in the Bar; to preserve
the integrity of the profession; and to deter other lawyers from similar
misconduct. Disciplinary proceedings are means of protecting the
 administration of justice by requiring those who carry out this important
function to be competent, honorable and reliable men in whom courts
and clients may repose confidence. While it is discretionary upon the
Court to impose a particular sanction that it may deem proper against an
erring lawyer, it should neither be arbitrary and despotic nor motivated
by personal animosity or prejudice, but should ever be controlled by the
imperative need to scrupulously guard the purity and independence of
the bar and to exact from the lawyer strict compliance with his duties to
the court, to his client, to his brethren in the profession and to the public.
The power to disbar or suspend ought always to be exercised
on the preservative and not on the vindictive principle, with great caution
and only for the most weighty reasons and only on clear cases of
misconduct which seriously affect the standing and character of the
lawyer as an officer of the court and member of the Bar. Only those acts
which cause loss of moral character should merit disbarment or
suspension, while those acts which neither affect nor erode the moral
character of the lawyer should only justify a lesser sanction unless they
are of such nature and to such extent as to clearly show the lawyer's
unfitness to continue in the practice of law. The dubious character of the
act charged as well as the motivation which induced the lawyer to
commit it must be clearly demonstrated before suspension or
disbarment is meted out. The mitigating or aggravating circumstances
that attended the commission of the offense should also be
considered. HSAcaE
The penalty for maintaining an illicit relationship may either be suspension or
disbarment, depending on the circumstances of the case. 29 In case of suspension, the
period would range from one year 30 to indefinite suspension, as in the case of Cordova v.
Cordova, 31 where the lawyer was found to have maintained an adulterous relationship for
two years and refused to support his family. On the other hand, there is a string of cases
where the Court meted out the extreme penalty of disbarment, to wit:
In Toledo v. Toledo, 32 a lawyer was disbarred from the practice of law, when he
abandoned his lawful wife and cohabited with another woman who had borne him a child.
In Obusan v. Obusan, Jr., 33 a lawyer was disbarred after the complainant
proved that he had abandoned her and maintained an adulterous relationship with a
married woman. The Court declared that the respondent failed to maintain the highest
degree of morality expected and required of a member of the Bar.
In Cojuangco, Jr. v. Palma, 34 the respondent lawyer was disbarred when he
abandoned his lawful wife and three children, lured an innocent woman into marrying him
and misrepresented himself as a "bachelor" so he could contract marriage in a foreign
land.
In Dantes v. Dantes, 35 disbarment was imposed as a penalty on the respondent
lawyer who maintained illicit relationships with two different women during the subsistence
of his marriage to the complainant. The Complainant's testimony, taken in conjunction with
the documentary evidence, sufficiently established that the respondent breached the high
and exacting moral standards set for members of the law profession.
In Villatuya v. Tabalingcos, 36 the respondent lawyer was disbarred because he
was found to have entered into marriage twice while his first marriage was still subsisting.
The Court declared that he exhibited a deplorable lack of that degree of morality required of
him as a member of the Bar. He made a mockery of marriage, a sacred institution
demanding respect and dignity.
In the case at bench, Atty. Dabon's misconduct and unrepentant demeanor
clearly showed a serious flaw in his character, his moral indifference to the sanctity of
marriage and marital vows, and his outright defiance of established norms. All these could
not but put the legal profession in disrepute and place the integrity of the administration of
justice in peril. Accordingly, the Court finds the need for the imposition of the extreme
administrative penalty of disbarment.
WHEREFORE, finding the respondent Atty. Antolin Allyson M. Dabon,
Jr. GUILTY of Gross Immorality, the Court hereby DISBARS him from the practice of law.
Let respondent's name be stricken from the Roll of Attorneys immediately.
Furnish the Bar Confidant, the Integrated Bar of the Philippines and all court throughout the
country with copies of this Decision.
SO ORDERED.
Sereno, C.J., Carpio, Velasco, Jr., Leonardo-de Castro, Brion, Peralta, Bersamin,
Del Castillo, Villarama, Jr., Perez, Mendoza, Reyes, Perlas-Bernabe,
Leonen andJardeleza, JJ., concur.
Separate Opinions
LEONEN, J., concurring:
This court resolves an administrative Complaint for disbarment filed by
complainant Nelson P. Valdez (Nelson) against respondent Atty. Antolin Allyson M.Dabon,
Jr., (Atty. Dabon) for gross immoral and indecent conduct unbecoming of a member of the
Bar. 1
Nelson claims that he and his wife, Sonia Romero Valdez (Sonia), were married
on January 28, 1998 in Paniqui, Tarlac. 2 Sonia was a Court Stenographer at the Court of
Appeals from 1992 to 2006. 3 She admitted that she had an adulterous and immoral
relationship with Atty. Dabon, a Division Clerk of Court of the Court of Appeals, from 2000
to 2006. 4 According to Nelson, Sonia told him that the illicit affair was carried out through
Atty. Dabon's sexual assaults, intimidation, and threats on Sonia. 5
Sonia's affidavit was attached to Nelson's Complaint. In her affidavit, Sonia claims
that her sexual relationship with Atty. Dabon started when they had a friendly lunch date on
November 13, 2000. 6 Unknown to her, Atty. Dabon put a sleep-inducing substance in
either her food or drink, which caused her to feel drowsy and weak. 7 Atty. Dabon then
brought her to a motel and took advantage of her. 8 He sexually assaulted her while she
was unconscious. 9

Sonia felt ashamed of what had happened; thus, she kept the incident to
herself. 10 She also feared the ramifications of the incident on her and her family. 11Sonia
asked Atty. Dabon to forget about the incident and leave her alone. However,
Atty. Dabon threatened her that he would tell everyone they knew about it. 12From then on,
Atty. Dabon was successful in having carnal knowledge with her once to twice a
week. 13 This went on for several years. 14
In March 2006, Sonia ended her affair with Atty. Dabon. 15 This resulted in a
series of unpleasant occasions where Sonia and Atty. Dabon publicly clashed in a motel
and inside the Court of Appeals and involved other employees of the judiciary as well as
their spouses. 16 HESIcT
For his part, Atty. Dabon denies the allegations in the Complaint. He denies the
acts constituting gross immoral conduct imputed by Nelson and Sonia. He also denies
being attracted to Sonia and drugging and sexually assaulting her. 17 At most, they were
just good friends. 18 Atty. Dabon also points to the alleged inconsistencies in the claims of
Sonia and her husband. 19 Sonia's true feelings for him are evident in the cards she signed
and sent to him, together with the expensive gifts such as signature shoes, watches, and
shirts she gave him. 20 Sonia even spent time in the United States with him and his
sons. 21
Atty. Dabon further alleges that Sonia had become emotionally dependent on him
since he was always there to listen to her problems. 22 According to Atty.Dabon, Sonia
started to act strangely when she learned of his plans to settle in the United States for
good. 23
Atty. Dabon also claims that Nelson and Sonia are good friends with the Court of
Appeals Presiding Justice Ruben Reyes as Sonia had worked as Court Stenographer for
him for three (3) years. 24 The Presiding Justice had allegedly asked Atty. Dabon to resign,
else cases would be filed against him. 25
Moreover, contrary to Nelson and Sonia's claims, it was actually Atty. Dabon who
was harassed through text messages and phone calls, which prompted him to leave the
country earlier than scheduled. 26
On August 15, 2007, this court referred the Complaint to the Integrated Bar of the
Philippines for investigation, report, and recommendation. 27
In his October 2, 2008 Report and Recommendation, Integrated Bar of the
Philippines Investigating Commissioner Manuel T. Chan found Atty. Dabon guilty of gross
immoral conduct. 28 The Commissioner recommended that Atty. Dabon be disbarred and
dropped from the Roll of Attorneys. 29
On December 11, 2008, the Integrated Bar of the Philippines Board of Governors
issued Resolution No. XVIII-2008-653, which adopted and approved the recommendations
of the Investigating Commissioner:
RESOLVED to ADOPT and APPROVE, as it is hereby
unanimously ADOPTED and APPROVED the Report and
Recommendation of the Investigating Commissioner of the
above-entitled case, herein made part of this Resolution as Annex "A";
and, finding the recommendation fully supported by the evidence on
record and the applicable laws and rules, and finding Respondent guilty
of gross immoral conduct, Atty. Antolin Allyson M. Dabon, Jr. is hereby
DISBARRED and his name be stricken off from the Roll of Attorneys. 30
Atty. Dabon filed his motion for reconsideration of the Resolution. 31 However,
this was denied by the Integrated Bar of the Philippines Board of Governors in Resolution
No. XX-2012-550 dated December 4, 2012:
RESOLVED to unanimously DENY Respondent's Motion for
Reconsideration there being no cogent reason to reverse the findings of
the Commission and it being a mere reiteration of the matters which had
already been threshed out and taken into consideration. Thus,
Resolution No. XVIII-2008-653 dated December 11, 2008 is hereby
AFFIRMED. 32
I concur with this court's finding that Atty. Dabon is guilty of gross immoral
conduct. 33
The ponencia declares that Atty. Dabon's illicit relationship with Nelson's wife
amounts to gross immoral conduct that transgresses the Code of Professional
Responsibility, 34 thus:
In the case at bench, Atty. Dabon's intimate relationship with a
woman other than his wife showed his moral indifference to the opinion
of the good and respectable members of the community. It manifested
his disrespect for the laws on the sanctity of marriage and for his own
marital vow of fidelity. It showed his utmost moral depravity and low
regard for the fundamental ethics of his profession. Indeed, he has fallen
below the moral bar. Such detestable behavior warrants a disciplinary
sanction. Even if not all forms of extramarital relations are punishable
under penal law, sexual relations outside of marriage are considered
disgraceful and immoral as they manifest deliberate disregard of the
sanctity of marriage and the marital vows protected by the
Constitution and affirmed by our laws. 35
However, the ponencia also declared that Sonia's claims of sexual assaults,
threats, and intimidation are false:
In light of the above disquisition, the Court finds Sonia's
allegation that the illicit relationship was made possible by sexual
assaults and maintained through threat and intimidations, to be untrue.
Certainly, a sexually abused woman could not be expected to lavish her
oppressor with expensive gifts or pay him affectionate compliments or
words of endearment. The natural reaction of a victim of a sexual
molestation would be to avoid her ravisher. In this case, however, it
appeared that Sonia continually remained in the company of
Atty. Dabon for more than five years, even inviting him for lunch-outs
 and frequenting his office to bring whenever the latter was preoccupied
with his workload and could not go out with her to eat. Verily, Sonia's
actuations towards Atty. Dabon are in stark contrast to the expected
demeanor of one who had been repeatedly sexually abused.
Further, the Court cannot fathom why Sonia never reported the
alleged sexual abuse to the police, if such was the truth. She could have
placed the respondent behind bars and put an end to her claimed misery.
Also, the Court cannot lend credence to Sonia's claim that she merely
succumbed to the respondent's sexual advances because of his
continuous threats of public exposure and humiliation. It must be
stressed that Atty. Dabon would be in a much more precarious situation
if he would carry out such threats, as this would exposed [sic] himself to
countless criminal and administrative charges. The Court believes that
Nelson's allegation of sexual assaults and continuing threat and
intimidation was not established by clear and preponderant
evidence. The Court is left with the most logical conclusion that Sonia
freely and wittingly entered into an illicit and immoral relationship with
Atty. Dabon sans any threat and intimidation. 36 (Emphasis
supplied) caITAC
The relationship between Atty. Dabon and Sonia was consensual. Relationships
between men and women traditionally involve power exerted by one against the other.
In Garcia v. Drilon, 37 this court recognized the unequal power relationship between a
man and a woman, justifying the valid classification provided under Republic Act No.
9262: 38
I. R.A. 9262 rests on substantial distinctions.
The unequal power relationship between women and men; the
fact that women are more likely than men to be victims of violence; and
the widespread gender bias and prejudice against women all make
for real differences justifying the classification under the law. As Justice
McIntyre succinctly states, "the accommodation of differences . . . is the
essence of true equality."
A. Unequal power relationship between men and women
According to the Philippine Commission on Women (the
National Machinery for Gender Equality and Women's Empowerment),
violence against women (VAW) is deemed to be closely linked with
the unequal power relationship between women and men otherwise
known as "gender-based violence". Societal norms and traditions dictate
people to think men are the leaders, pursuers, providers, and take on
dominant roles in society while women are nurturers, men's companions
and supporters, and take on subordinate roles in society. This
perception leads to men gaining more power over women. With power
comes the need to control to retain that power. And VAW is a form of
men's expression of controlling women to retain power.
The United Nations, which has long recognized VAW as a
human rights issue, passed its Resolution 48/104 on the Declaration on
Elimination of Violence Against Women on December 20, 1993 stating
that "violence against women is a manifestation of historically unequal
power relations between men and women, which have led to
domination over and discrimination against women by men and to the
prevention of the full advancement of women, and that violence against
women is one of the crucial social mechanisms by which women are
forced into subordinate positions, compared with men." 39 (Emphasis in
the original, citations omitted)
"Sexual harassment in the workplace is not about a man taking advantage of a
woman by reason of sexual desire — it is about power being exercised by a superior officer
over his women subordinates." 40 The superior can cause the removal of the subordinate
from the workplace if the latter refuses his or, in certain cases, her amorous
advances. 41 These acts, which necessarily result in an intimidating, hostile, and offensive
working environment for subordinates, constitute sexual harassment. 42
Under A.M. No. 03-03-13-SC (Re: Rule on Administrative Procedure in Sexual
Harassment Cases and Guidelines on Proper Work Decorum in the Judiciary),
work-related sexual harassment is defined as an act of:
an official or employee in the Judiciary who, having authority, influence
or moral ascendancy over another in a work environment, demands,
requests or otherwise requires any sexual favor from the other,
regardless of whether the demand, request or requirement for
submission is accepted by the latter. 43
It is committed when:
(a) The sexual favor is made as a condition in the hiring or in the
employment, re-employment or continued employment of said individual,
or in granting said individual favorable compensation, terms, conditions,
promotions, or privileges; or the refusal to grant the sexual favor results
in limiting, segregating or classifying the employee which in any way
would discriminate, deprive or diminish employment opportunities or
otherwise adversely affect said employee. It shall include, but shall not
be limited to, the following modes:
1. Physical, such as malicious touching, overt sexual
advances, and gestures with lewd insinuation.
2. Verbal, such as requests or demands for sexual
favors, and lurid remarks.
3. Use of objects, pictures or graphics, letters or
written notes with sexual underpinnings.
4. Other acts analogous to the foregoing.
 (b) The above acts would impair the employee's rights or privileges
under existing laws; or
(c) The above acts would result in an intimidating, hostile or offensive
environment for the employee. 44
While Sonia was technically not a subordinate of Atty. Dabon, his actions
nevertheless resulted in an intimidating, hostile, and offensive working environment for
Sonia, especially towards the end of their illicit relationship. The gravity of Atty. Dabon's
actions should be considered in determining the proper penalty to be imposed in this
disbarment case for gross immoral conduct. ICHDca
As the Integrated Bar of the Philippines found, Atty. Dabon refused to accept that
his relationship with Sonia had already ended, to the point of harassing Sonia publicly
several times:
It has not escaped the Court's attention either that
Atty. Dabon really tried hard to win back Sonia because he could not let
go of their relationship, even to the point of pestering her with his
persistent pleas of reconciliation. In one instance, Atty. Dabon boarded
Sonia's car and refused to alight unless she would talk to him. Sonia had
to seek the assistance of her officemates, Atty. Barrazo and Atty. Ligot,
who pleaded with him to alight from the vehicle. Moreover,
Atty. Dabon made several attempts to communicate with Sonia in the
hope of rekindling their relationship through letters and phone calls but
she remained firm in her stand to avoid him. Such incident was
recounted by Ramos and Minerva in their respective affidavits.
Incidentally, vis-à-vis Nelson's overwhelming evidence of said
harassments, he offered only denials which was [sic] self-serving and
weak under the law on evidence. Other than his general claim that Atty.
Barrazo, Atty. Ligot, Ramos, and Minerva were biased witnesses
because they were former officemates of Sonia, the respondent did not
even bother to proffer his own version of the supposed harassment
incidents. 45
Conduct is immoral when it is "so willful, flagrant, or shameless as to show
indifference to the opinion of good and respectable members of the
community." 46Further:
[The] conduct [to warrant disciplinary action] must not only be immoral,
but grossly immoral. . . . [I]t must be so corrupt as to constitute a criminal
act or so unprincipled as to be reprehensible to a high degree or
committed under such scandalous or revolting circumstances as to
shock the common sense of decency." 47
Good moral character is a continuing requirement to maintain one's good
standing in the legal profession. 48 "It is the bounden duty of law practitioners to observe
the highest degree of morality in order to safeguard the integrity of the Bar." 49
There is no fixed standard of what constitutes gross immoral conduct, or "moral
delinquency and obliquity which render a lawyer unworthy of continuing as a member of
the bar." 50 Hence, "what appears to be unconventional behavior to the straight-laced may
not be the immoral conduct that warrants disbarment." 51
Disbarment is clearly warranted for gross immoral conduct that entails abuse of
power of whatever kind or nature.
In Barrientos v. Daarol, 52 the respondent was held guilty of gross immoral
conduct and was disbarred for inducing a female half his age to have sexual relations with
him after promising marriage, despite him being married already, and later on abandoning
the woman and his child.
In Tucay v. Tucay, 53 this court held that having an illicit affair with a married
woman, regardless of whether a bigamous marriage was contracted, constitutes gross
immoral conduct that merits the extreme penalty of disbarment.
In Arnobit v. Arnobit, 54 this court disbarred the respondent for abandoning his
wife and 12 children to cohabit with another woman.
In Garrido v. Garrido, 55 two lawyers who engaged in an extra-marital affair were
disbarred since their actions established a "pattern of grave and immoral misconduct that
demonstrates their lack of mental and emotional fitness and moral character to qualify
them for the responsibilities and duties imposed on lawyers as professionals and as
officers of the court." 56
In his Comment, Atty. Dabon averred that there could not have been an illicit
affair between him and Sonia since Sonia was merely "an ordinary plain-looking middle
aged woman with two (2) teen aged children." 57 He alleged that:
It is an outrage for herein respondent for the complainant and
Ms. Valdez to accuse him of sexually assaulting the latter. There is
absolutely no iota of truth to this incredible claim of the Valdezes. Why
would a man like the respondent, a married lawyer at that with no prior
encounter with the law, would suddenly turn crazed with lust despite the
aloofness and coldness of Ms. Valdez towards him as alleged in her
affidavit, drugging her — then dragging her to his car and sexually
assaulting her in a motel? Is Ms. Valdez that irresistibly attractive
and compelling that would turn the respondent into an unthinking
sex pervert and criminal, risking everything just to get her to
satisfy his alleged lust for her? 58 (Emphasis in the original)
This statement is nothing but an attempt to obviate the consequence of his
actions by degrading the appearance of another human being. This strongly reveals
Atty. Dabon's character and the extent to which he is willing to go to gain impunity for his
infractions.
Atty. Dabon carried out illicit relations with Sonia, a married woman and his
co-worker in the judiciary, for at least five (5) years. Atty. Dabon's blasé attitude towards
the affair and its aftermath not only made a mockery of the position he holds as member of
the bar and an employee of the judiciary, but also showed his utter disregard for laws
 protecting and respecting the dignity of women. He failed to meet the high standard of
morality required of his profession. He is unfit to be a member of the bar.
ACCORDINGLY, I vote that respondent Atty. Antolin Allyson Dabon, Jr.
be DISBARRED and his name be stricken from the Roll of Attorneys.
||| (Valdez v. Dabon, Jr., A.C. No. 7353, [November 16, 2015])
 EN BANC
[G.R. No. 152154. July 15, 2003.]
REPUBLIC OF THE
PHILIPPINES, petitioner,vs.HONORABLE SANDIGANBAYAN (SPECIA
L FIRST DIVISION),FERDINAND E. MARCOS (REPRESENTED BY HIS
ESTATE/HEIRS: IMELDA R. MARCOS, MARIA IMELDA [IMEE]
MARCOS-MANOTOC, FERDINAND R. MARCOS, JR. AND IRENE
MARCOS-ARANETA) AND IMELDA ROMUALDEZ
MARCOS, respondents.
The Solicitor General for petitioner.
Baldomero S.P. Gatbonton, Jr. and Michelle B. Lazaro for F.R. Marcos, Jr.
Ponce Enrile Reyes & Manalastas for Imelda R. Marcos.
Robert A.C. Sison for Irene R. Marcos-Araneta.
Sales De Leon Tecoon & Desiderio for F.R. Marcos, Jr. and Imelda (Imee)
Marcos-Manotoc.
SYNOPSIS
In an earlier decision involving a forfeiture proceeding, the Sandiganbayan granted
petitioner's motion for summary judgment, ruling the amount of about US$658 M held in escrow
in the PNB as ill-gotten wealth of the late President Ferdinand Marcos and thus forfeited the
same in favor of the Republic of the Philippines. Later, however, the Sandiganbayan reversed
the said decision, and, hence, this petition.
Whether the respondent heirs of Marcos raised any genuine issue of fact in their
pleadings in the forfeiture proceedings that would negate the summary judgment, the Court
ruled in the negative. The defenses of "lack of knowledge for lack of privity," or "(inability to)
recall because it happened a long time ago," or that "the funds were lawfully acquired" were
insufficient to tender genuine issues. Whether petitioner was able to prove its case for forfeiture
in accordance with Sections 2 and 3 of RA 1379, the Court ruled that the prima
facie presumption is that a property was unlawfully acquired, hence, subject to forfeiture, if its
amount was manifestly disproportionate to the lawful income of the public officer who owns it.
Here, all the elements therein were sufficiently established.
SYLLABUS
1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; ILL-GOTTEN
WEALTH CASES DECIDED BY THE SANDIGANBAYAN AND BROUGHT TO THE
SUPREME COURT VIA CERTIORARI INSTEAD OF APPEAL, TOLERATED. — At the outset,
we would like to stress that we are treating this case as an exception to the general rule
governing petitions for certiorari.Normally, decisions of the Sandiganbayan are brought before
this Court under Rule 45, not Rule 65. But where the case is undeniably ingrained with
immense public interest, public policy and deep historical repercussions, certiorari is allowed
notwithstanding the existence and availability of the remedy of appeal.
2. ID.; CIVIL PROCEDURE; SUMMARY JUDGMENT: PROPER IN THE ABSENCE
OF GENUINE ISSUE. — In the early case of Auman vs. Estenzo,summary judgment was
described as a judgment which a court may render before trial but after both parties have
pleaded. It is ordered by the court upon application by one party, supported by affidavits,
depositions or other documents, with notice upon the adverse party who may in turn file an
opposition supported also by affidavits, depositions or other documents. This is after the court
summarily hears both parties with their respective proofs and finds that there is no genuine
issue between them. Summary judgment is sanctioned in this jurisdiction by Section 1, Rule 35
of the 1997 Rules of Civil Procedure: SECTION 1. Summary judgment for claimant. — A party
seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory relief
may, at any time after the pleading in answer thereto has been served, move with supporting
affidavits, depositions or admissions for a summary judgment in his favor upon all or any part
thereof. Summary judgment is proper when there is clearly no genuine issue as to any material
fact in the action. The theory of summary judgment is that, although an answer may on its face
appear to tender issues requiring trial, if it is demonstrated by affidavits, depositions or
admissions that those issues are not genuine but sham or fictitious, the Court is justified in
dispensing with the trial and rendering summary judgment for petitioner Republic. A genuine
issue is an issue of fact which calls for the presentation of evidence as distinguished from an
issue which is fictitious and contrived, set up in bad faith or patently lacking in substance so as
not to constitute a genuine issue for trial. Respondents' defenses of "lack of knowledge for lack
of privity" or "(inability to) recall because it happened a long time ago" or, on the part of Mrs.
Marcos, that "the funds were lawfully acquired" are fully insufficient to tender genuine issues.
Respondent Marcoses' defenses were a sham and evidently calibrated to compound and
confuse the issues.
3. ID.;ID.;ID.;ALLEGATIONS IN PLEADINGS; SPECIFIC DENIAL, CONSTRUED. —
Section 10, Rule 8 of the 1997 Rules of Civil Procedure, provides: A defendant must specify
each material allegation of fact the truth of which he does not admit and, whenever practicable,
shall set forth the substance of the matters upon which he relies to support his denial. Where a
defendant desires to deny only a part of an averment, he shall specify so much of it as is true
and material and shall deny the remainder. Where a defendant is without knowledge or
information sufficient to form a belief as to the truth of a material averment made in the
complaint, he shall so state, and this shall have the effect of a denial. The purpose of requiring
respondents to make a specific denial is to make them disclose facts which will disprove the
allegations of petitioner at the trial, together with the matters they rely upon in support of such
denial. Our jurisdiction adheres to this rule to avoid and prevent unnecessary expenses and
waste of time by compelling both parties to lay their cards on the table, thus reducing the
controversy to its true terms.
 4. ID.;ID.;ID.;ID.;ID.;STATEMENT THAT A PARTY IS WITHOUT KNOWLEDGE OF
THE MATERIAL AVERMENT IN THE COMPLAINT, NOT SUFFICIENT WHERE
ALLEGATIONS ARE SERIOUS AND SPECIFIC. — It is true that one of the modes of specific
denial under the rules is a denial through a statement that the defendant is without knowledge
or information sufficient to form a belief as to the truth of the material averment in the complaint.
The question, however, is whether the kind of denial in respondents' answer qualifies as the
specific denial called for by the rules. We do not think so. In Morales vs. Court of Appeals,this
Court ruled that if an allegation directly and specifically charges a party with having done,
performed or committed a particular act which the latter did not in fact do, perform or commit, a
categorical and express denial must be made. Here, despite the serious and specific
allegations against them, the Marcoses responded by simply saying that they had no
knowledge or information sufficient to form a belief as to the truth of such allegations. Such a
general, self-serving claim of ignorance of the facts alleged in the petition for forfeiture was
insufficient to raise an issue. Respondent Marcoses should have positively stated how it was
that they were supposedly ignorant of the facts alleged. When matters regarding which
respondents claim to have no knowledge or information sufficient to form a belief are plainly and
necessarily within their knowledge, their alleged ignorance or lack of information will not be
considered a specific denial. An unexplained denial of information within the control of the
pleader, or is readily accessible to him, is evasive and is insufficient to constitute an effective
denial. The form of denial adopted by respondents must be availed of with sincerity and in good
faith, and certainly not for the purpose of confusing the adverse party as to what allegations of
the petition are really being challenged; nor should it be made for the purpose of delay.In the
instant case, the Marcoses did not only present unsubstantiated assertions but in truth
attempted to mislead and deceive this Court by presenting an obviously contrived defense.
Simply put, a profession of ignorance about a fact which is patently and necessarily within the
pleader's knowledge or means of knowing is as ineffective as no denial at all.Respondents'
ineffective denial thus failed to properly tender an issue and the averments contained in the
petition for forfeiture were deemed judicially admitted by them.
5. ID.;ID.;ID.;ID.;ID.;NEGATIVE PREGNANT; ALLEGATIONS NOT SPECIFICALLY
DENIED DEEMED ADMITTED. — Negative pregnant is a denial pregnant with the admission
of the substantial facts in the pleading responded to which are not squarely denied. It was in
effect an admission of the averments it was directed at. Stated otherwise, a negative pregnant
is a form of negative expression which carries with it an affirmation or at least an implication of
some kind favorable to the adverse party. It is a denial pregnant with an admission of the
substantial facts alleged in the pleading. Where a fact is alleged with qualifying or modifying
language and the words of the allegation as so qualified or modified are literally denied, it has
been held that the qualifying circumstances alone are denied while the fact itself is admitted.
The allegations in the petition for forfeiture on the existence of the Swiss bank deposits in the
sum of about US$356 million, not having been specifically denied by respondents in their
answer, were deemed admitted by them pursuant to Section 11, Rule 8 of the 1997 Revised
Rules on Civil Procedure: Material averment in the complaint, ...shall be deemed admitted
when not specifically denied. ...As held in Galofa vs. Nee Bon Sing,if a defendant's denial is a
negative pregnant, it is equivalent to an admission.
6. ID.;ID.;PRE-TRIAL BRIEF; REQUISITES; DOCUMENTS TO BE PRESENTED,
PURPOSE THEREOF, NUMBER AND NAMES OF WITNESSES AND SUBSTANCE OF
THEIR TESTIMONIES, NOT COMPLIED WITH. — The pre-trial brief of Mrs. Marcos was
adopted by the three Marcos children. In said brief, Mrs. Marcos stressed that the funds
involved were lawfully acquired. But, as in their answer, they failed to state and substantiate
how these funds were acquired lawfully. They failed to present and attach even a single
document that would show and prove the truth of their allegations. Section 6, Rule 18 of the
1997 Rules of Civil Procedure provides: The parties shall file with the court and serve on the
adverse party, ...their respective pre-trial briefs which shall contain, among others: ...(d) the
documents or exhibits to be presented, stating the purpose thereof; ...(f) the number and names
of the witnesses, and the substance of their respective testimonies. It is unquestionably within
the court's power to require the parties to submit their pre-trial briefs and to state the number of
witnesses intended to be called to the stand, and a brief summary of the evidence each of them
is expected to give as well as to disclose the number of documents to be submitted with a
description of the nature of each. The tenor and character of the testimony of the witnesses and
of the documents to be deduced at the trial thus made known, in addition to the particular issues
of fact and law, it becomes apparent if genuine issues are being put forward necessitating the
holding of a trial. Likewise, the parties are obliged not only to make a formal identification and
specification of the issues and their proofs, and to put these matters in writing and submit them
to the court within the specified period for the prompt disposition of the action.
7. ID.;ID.;SUMMARY JUDGMENT; MOTION AND PROCEEDINGS THEREIN;
ADVERSE PARTY TO SERVE OPPOSING AFFIDAVITS, DEPOSITIONS OR ADMISSIONS;
ABSENCE THEREOF DEMONSTRATE THAT OPPOSING AVERMENTS NOT GENUINE. —
The opposition filed by Mrs. Marcos to the motion for summary judgment of
petitioner Republic was merely adopted by the Marcos children as their own opposition to the
said motion. However, it was again not accompanied by affidavits, depositions or admissions as
required by Section 3, Rule 35 of the 1997 Rules on Civil Procedure: ...The adverse party may
serve opposing affidavits, depositions, or admissions at least three (3) days before hearing.
After hearing, the judgment sought shall be rendered forthwith if the pleadings, supporting
affidavits, depositions, and admissions on file, show that, except as to the amount of damages,
there is no genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law. The absence of opposing affidavits, depositions and admissions to
contradict the sworn declarations in the Republic's motion only demonstrated that the
averments of such opposition were not genuine and therefore unworthy of belief.
8. ID.;ID.;ID.;ABSENCE OF GENUINE ISSUE MANIFESTED BY DOCUMENTS AND
MERE DENIALS. — It is the law itself which determines when summary judgment is called for.
Under the rules, summary judgment is appropriate when there are no genuine issues of fact
requiring the presentation of evidence in a full-blown trial. Even if on their face the pleadings
appear to raise issue, if the affidavits, depositions and admissions show that such issues are
not genuine, then summary judgment as prescribed by the rules must ensue as a matter of law.
In sum, mere denials, if unaccompanied by any fact which will be admissible in evidence at a
hearing, are not sufficient to raise genuine issues of fact and will not defeat a motion for
summary judgment. A summary judgment is one granted upon motion of a party for an
expeditious settlement of the case, it appearing from the pleadings, depositions, admissions
and affidavits that there are no important questions or issues of fact posed and, therefore, the
movant is entitled to a judgment as a matter of law. A motion for summary judgment is premised
on the assumption that the issues presented need not be tried either because these are
patently devoid of substance or that there is no genuine issue as to any pertinent fact. It is a
method sanctioned by the Rules of Court for the prompt disposition of a civil action where there
exists no serious controversy. Summary judgment is a procedural device for the prompt
disposition of actions in which the pleadings raise only a legal issue, not a genuine issue as to
any material fact. The theory of summary judgment is that, although an answer may on its face
appear to tender issues requiring trial, if it is established by affidavits, depositions or admissions
that those issues are not genuine but fictitious, the Court is justified in dispensing with the trial
and rendering summary judgment for petitioner.
9. ID.;ID.;ID.;PERIOD FOR THE MOTION OF SUMMARY JUDGMENT; CASE AT
BAR. — Rule 35 of the 1997 Rules of Civil Procedure provides: Rule 35 Summary Judgment
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. Section 2.
Summary judgment for defending party. — A party against whom a claim, counterclaim, or
cross-claim is asserted or a declaratory relief is sought may, at any time,move with supporting
affidavits, depositions or admissions for a summary judgment in his favor as to all or any part
thereof. (Italics ours) Under the rule, the plaintiff can move for summary judgment "at any time
after the pleading in answer thereto (i.e.,in answer to the claim, counterclaim or cross-claim)
has been served." No fixed reglementary period is provided by the Rules. In the case at bar,
petitioner moved for summary judgment after pre-trial and before its scheduled date for
presentation of evidence. Respondent Marcoses argue that, by agreeing to proceed to trial
during the pre-trial conference, petitioner "waived" its right to summary judgment. This
argument must fail in the light of the New York Supreme Court ruling which we apply by analogy
to this case. InEcker,the defendant opposed the motion for summary judgment on a ground
similar to that raised by the Marcoses. If, as correctly ruled by the New York court, plaintiff was
allowed to move for summary judgment even after trial and submission of the case for
resolution, more so should we permit it in the present case where petitioner moved for summary
judgment before trial. Therefore, the phrase "anytime after the pleading in answer thereto has
been served" in Section 1, Rule 35 of our Rules of Civil Procedure means "at any stage of the
litigation." Whenever it becomes evident at any stage of the litigation that no triable issue exists,
or that the defenses raised by the defendant(s) are sham or frivolous, plaintiff may move for
summary judgment. A contrary interpretation would go against the very objective of the Rule on
Summary Judgment which is to "weed out sham claims or defenses thereby avoiding the
expense and loss of time involved in a trial." This interpretation conforms with the guiding
principle enshrined in Section 6, Rule 1 of the 1997 Rules of Civil Procedure that the "[r]ules
should be liberally construed in order to promote their objective of securing a just, speedy and
inexpensive disposition of every action and proceeding."
10. ID.;ID.;ID.;ESTOPPEL BY LACHES; NOT APPLICABLE IN CASE AT BAR. —
Estoppel by laches is the failure or neglect for an unreasonable or unexplained length of time to
do that which, by exercising due diligence, could or should have been done earlier, warranting a
presumption that the person has abandoned his right or declined to assert it. In effect, therefore,
the principle of laches is one of estoppel because "it prevents people who have slept on their
rights from prejudicing the rights of third parties who have placed reliance on the inaction of the
original parties and their successors-in-interest." A careful examination of the records, however,
reveals that petitioner was in fact never remiss in pursuing its case against respondent
Marcoses through every remedy available to it, including the motion for summary judgment. In
invoking the doctrine of estoppel by laches, respondents must show not only unjustified inaction
but also that some unfair injury to them might result unless the action is barred. But even
assuming for the sake of argument that laches had already set in, the doctrine of estoppel or
laches does not apply when the government sues as a sovereign or asserts governmental
rights. Nor can estoppel validate an act that contravenes law or public policy. As a final point, it
must be emphasized that laches is not a mere question of time but is principally a question of
the inequity or unfairness of permitting a right or claim to be enforced or asserted. Equity
demands that petitioner Republic should not be barred from pursuing the people's case against
the Marcoses.
11. CRIMINAL LAW; (RA 1379) FORFEITURE OF UNLAWFULLY ACQUIRED
PROPERTY BY PUBLIC SERVANT; WHERE AMOUNT OF PROPERTY MANIFESTLY
DISPROPORTIONATE TO THE LAWFUL INCOME OF THE PUBLIC SERVANT; CASE AT
BAR. — The law raises the prima facie presumption that a property is unlawfully acquired,
hence subject to forfeiture, if its amount or value is manifestly disproportionate to the official
salary and other lawful income of the public officer who owns it. Under Sections 2 and 6 of RA
1379, the following facts must be established in order that forfeiture or seizure of the Swiss
deposits may be effected: (1) ownership by the public officer of money or property acquired
during his incumbency, whether it be in his name or otherwise, and (2) the extent to which the
amount of that money or property exceeds, i.e., is grossly disproportionate to the legitimate
income of the public officer. Here, the sum of $304,372.43 should be held as the only known
lawful income of respondents since they did not file any Statement of Assets and Liabilities
(SAL), as required by law, from which their net worth could be determined. Besides, under
the 1935 Constitution, Ferdinand E. Marcos as President could not receive "any other
emolument from the Government or any of its subdivisions and instrumentalities." Likewise,
under the 1973 Constitution, Ferdinand E. Marcos as President could "not receive during his
tenure any other emolument from the Government or any other source." In fact, his
management of businesses, like the administration of foundations to accumulate funds, was
expressly prohibited under the 1973 Constitution. Their only known lawful income of
$304,372.43 can therefore legally and fairly serve as basis for determining the existence of
a prima facie case of forfeiture of the Swiss funds. Section 9 of the PCGG Rules and
Regulations provides that, in determining prima facie evidence of ill-gotten wealth, the value of
the accumulated assets, properties and other material possessions of those covered
by Executive Order Nos. 1 and 2 must be out of proportion to the known lawful incomeof such
persons. The respondent Marcos couple did not file any Statement of Assets and Liabilities
(SAL) from which their net worth could be determined. Their failure to file their SAL was in itself
a violation of law and to allow them to successfully assail the Republic for not presenting their
SAL would reward them for their violation of the law. Further, contrary to the claim of
respondents, the admissions made by them in their various pleadings and documents were
valid. It is of record that respondents judicially admitted that the money deposited with the Swiss
banks belonged to them.
12. REMEDIAL LAW; EVIDENCE; JUDICIAL ADMISSIONS, EXPLAINED. — Section
4, Rule 129 of the Rules of Court provides that: Section 4. — Judicial admissions — An
admission, verbal or written, made by a party in the course of the proceedings in the same case
does not require proof. The admission may be contradicted only by showing that it was made
through palpable mistake or that no such admission was made. It is settled that judicial
admissions may be made: (a) in the pleadings filed by the parties; (b) in the course of the trial
either by verbal or written manifestations or stipulations; or (c) in other stages of judicial
proceedings, as in the pre-trial of the case. Thus, facts pleaded in the petition and answer, as in
the case at bar, are deemed admissions of petitioner and respondents, respectively, who are
not permitted to contradict them or subsequently take a position contrary to or inconsistent with
such admissions. We have always adhered to the familiar doctrine that an admission made in
the pleadings cannot be controverted by the party making such admission and becomes
conclusive on him, and that all proofs submitted by him contrary thereto or inconsistent
therewith should be ignored, whether an objection is interposed by the adverse party or not.
13. ID.; ID.; RULES OF ADMISSIBILITY; WRITTEN STATEMENT COMPETENT AS
ADMISSION EVEN IF CONTAINED IN A DOCUMENT WHICH IS NOT ITSELF EFFECTIVE
FOR THE PURPOSE FOR WHICH IT IS MADE. — Respondents make much capital of the
pronouncement by this Court that the General and Supplemental Agreements were null and
void. They insist that nothing in those agreements could thus be admitted in evidence against
them because they stood on the same ground as an accepted offer which, under Section 27,
Rule 130 of the 1997 Rules of Civil Procedure, provides that "in civil cases, an offer of
compromise is not an admission of any liability and is not admissible in evidence against the
offeror." We find no merit in this contention. The declaration of nullity of said agreements was
premised on the following constitutional and statutory infirmities: (1) the grant of criminal
immunity to the Marcos heirs was against the law; (2) the PCGG's commitment to exempt from
all forms of taxes the properties to be retained by the Marcos heirs was against the Constitution;
and (3) the government's undertaking to cause the dismissal of all cases filed against the
Marcoses pending before the Sandiganbayan and other courts encroached on the powers of
the judiciary. The reasons relied upon by the Court never in the least bit even touched on the
veracity and truthfulness of respondents' admission with respect to their ownership of the Swiss
funds.Besides, having made certain admissions in those agreements, respondents cannot now
deny that they voluntarily admitted owning the subject Swiss funds, notwithstanding the fact
that the agreements themselves were later declared null and void. The following observation
of Sandiganbayan Justice Catalino Castañeda, Jr. in the decision dated September 19, 2000
could not have been better said: ...The declaration of nullity of the two agreements rendered the
same without legal effects but it did not detract from the admissions of the respondents
contained therein. Otherwise stated, the admissions made in said agreements, as quoted
above, remain binding on the respondents. A written statement is nonetheless competent as an
admission even if it is contained in a document which is not itself effective for the purpose for
which it is made, either by reason of illegality, or incompetency of a party thereto, or by reason
of not being signed, executed or delivered. Accordingly, contracts have been held as competent
evidence of admissions, although they may be unenforceable.
14. ID.; ID.; JUDICIAL ADMISSIONS; TESTIMONY ON WITNESS STAND IS
FORMAL JUDICIAL ADMISSION WHEN PARTY CATEGORICALLY TESTIFIES TO A FACT
PECULIARLY WITHIN HIS KNOWLEDGE. — Ferdinand, Jr.'s pronouncements, taken in
context and in their entirety, were a confirmation of respondents' recognition of their ownership
of the Swiss bank deposits. Admissions of a party in his testimony are receivable against him. If
a party, as a witness, deliberately concedes a fact, such concession has the force of a judicial
admission. It is apparent from Ferdinand Jr.'s testimony that the Marcos family agreed to
negotiate with the Philippine government in the hope of finally putting an end to the problems
besetting the Marcos family regarding the Swiss accounts. This was doubtlessly an
acknowledgment of ownership on their part. The rule is that the testimony on the witness stand
partakes of the nature of a formal judicial admission when a party testifies clearly and
unequivocally to a fact which is peculiarly within his own knowledge.
15. ID.;CIVIL PROCEDURE; ALLEGATIONS IN PLEADINGS; GENUINENESS OF
DOCUMENTS NOT SPECIFICALLY DENIED IS JUDICIALLY ADMITTED. — Her claim that
she is merely a beneficiary of the Swiss deposits is belied by her own signatures on the
appended copies of the documents substantiating her ownership of the funds in the name of the
foundations. That failure of Imelda Marcos to specifically deny the existence, much less the
genuineness and due execution, of the instruments bearing her signature, was tantamount to a
judicial admission of the genuineness and due execution of said instruments, in accordance
with Section 8, Rule 8 of the 1997 Rules of Civil Procedure.
16. ID.;ID.;RULES OF ADMISSIBILITY; ADMISSION BY CO-PARTNER OR AGENT
AND ADMISSION BY PRIVIES. — The individual and separate admissions of each respondent
bind all of them pursuant to Sections 29 and 31, Rule 130 of the Rules of Court: SEC.
29. Admission by co-partner or agent.— The act or declaration of a partner or agent of the party
within the scope of his authority and during the existence of the partnership or agency, may be
given in evidence against such party after the partnership or agency is shown by evidence other
than such act or declaration. The same rule applies to the act or declaration of a joint owner,
joint debtor, or other person jointly interested with the party. SEC. 31. Admission by privies.—
Where one derives title to property from another, the act, declaration, or omission of the latter,
while holding the title, in relation to the property, is evidence against the former. The
declarations of a person are admissible against a party whenever a "privity of estate" exists
between the declarant and the party, the term "privity of estate" generally denoting a
succession in rights. Consequently, an admission of one in privity with a party to the record is
competent. Without doubt, privity exists among the respondents in this case. And where several
co-parties to the record are jointly interested in the subject matter of the controversy, the
admission of one is competent against all. IASCTD
17. CRIMINAL LAW; (RA 1379) FORFEITURE OF UNLAWFULLY ACQUIRED
PROPERTY BY PUBLIC SERVANT; PRIMA FACIE PRESUMPTION OF UNLAWFULLY
ACQUIRED PROPERTY; ESTABLISHED. — Section 2 of RA 1379 explicitly states that
"whenever any public officer or employee has acquired during his incumbency an amount of
property which is manifestly out of proportion to his salary as such public officer or employee
and to his other lawful income and the income from legitimately acquired property, said property
shall be presumed prima facie to have been unlawfully acquired. ..." The elements which must
concur for this prima faciepresumption to apply are: (1) the offender is a public officer or
employee: (2) he must have acquired a considerable amount of money or property during his
incumbency; and (3) said amount is manifestly out of proportion to his salary as such public
officer or employee and to his other lawful income and the income from legitimately acquired
property. Considering that the total amount of the Swiss deposits was considerably out of
proportion to the known lawful income of the Marcoses, the presumption that said dollar
deposits were unlawfully acquired was duly established. It was sufficient for the petition for
forfeiture to state the approximate amount of money and property acquired by the respondents,
and their total government salaries. Section 9 of the PCGG Rules and Regulations
states: Prima Facie Evidence. — Any accumulation of assets, properties, and other material
possessions of those persons covered by Executive Orders No. 1 and No. 2,whose value is out
of proportion to their known lawful income is prima facie deemed ill-gotten wealth. Indeed, the
burden of proof was on the respondents to dispute this presumption and show by clear and
convincing evidence that the Swiss deposits were lawfully acquired and that they had other
legitimate sources of income. A presumption is prima facie proof of the fact presumed and,
unless the fact thus prima facie established by legal presumption is disproved, it must stand as
proved. In the face of undeniable circumstances and the avalanche of documentary evidence
against them, respondent Marcoses failed to justify the lawful nature of their acquisition of the
said assets. Hence, the Swiss deposits should be considered ill-gotten wealth and forfeited in
favor of the State in accordance with Section 6 of RA 1379: SEC. 6. Judgment.— If the
respondent is unable to show to the satisfaction of the court that he has lawfully acquired the
property in question, then the court shall declare such property forfeited in favor of the State,
and by virtue of such judgment the property aforesaid shall become property of the State ....
18. REMEDIAL LAW; CIVIL PROCEDURE; PARTIES; COMPULSORY JOINDER OF
INDISPENSABLE PARTIES; NON-COMPLIANCE THEREWITH DOES NOT DIVEST COURT
OF JURISDICTION. — The Court finds that petitioner Republic did not err in not impleading the
foreign foundations. Section 7, Rule 3 of the 1997 Rules of Civil Procedure, taken from Rule
19b of the American Federal Rules of Civil Procedure, provides for the compulsory joinder of
indispensable parties. Generally, an indispensable party must be impleaded for the complete
determination of the suit. However, failure to join an indispensable party does not divest the
court of jurisdiction since the rule regarding indispensable parties is founded on equitable
considerations and is not jurisdictional. Thus, the court is not divested of its power to render a
decision even in the absence of indispensable parties, though such judgment is not binding on
the non-joined party. Although there are decided cases wherein the non-joinder of
indispensable parties in fact led to the dismissal of the suit or the annulment of judgment, such
cases do not jibe with the matter at hand. The better view is that non-joinder is not a ground to
dismiss the suit or annul the judgment. The rule on joinder of indispensable parties is founded
on equity. And the spirit of the law is reflected in Section 11, Rule 3 of the 1997 Rules of Civil
Procedure. It prohibits the dismissal of a suit on the ground of non-joinder or misjoinder of
parties and allows the amendment of the complaint at any stage of the proceedings, through
motion or on order of the court on its own initiative. Likewise, jurisprudence on the Federal
Rules of Procedure, from which our Section 7, Rule 3 on indispensable parties was copied,
allows the joinder of indispensable parties even after judgment has been entered if such is
needed to afford the moving party full relief. Mere delay in filing the joinder motion does not
necessarily result in the waiver of the right as long as the delay is excusable. The court had
jurisdiction to render judgment which, even in the absence of indispensable parties, was
binding on all the parties before it though not on the absent party.
19. ID.; ID.; ID.; ID.; INDISPENSABLE PARTIES. — An indispensable party has been
defined as one: [who] must have a direct interest in the litigation; and if this interest is such that
it cannot be separated from that of the parties to the suit, if the court cannot render justice
between the parties in his absence, if the decree will have an injurious effect upon his interest,
or if the final determination of the controversy in his absence will be inconsistent with equity and
good conscience. There are two essential tests of an indispensable party: (1) can relief be
afforded the plaintiff without the presence of the other party? and (2) can the case be decided
on its merits without prejudicing the rights of the other party? There is, however, no fixed
formula for determining who is an indispensable party; this can only be determined in the
context and by the facts of the particular suit or litigation. In the present case, there was an
admission by respondent Imelda Marcos in her Manifestation before theSandiganbayan that
she was the sole beneficiary of 90% of the subject matter in controversy with the remaining 10%
belonging to the estate of Ferdinand Marcos. Viewed against this admission, the foreign
foundations were not indispensable parties. Their non-participation in the proceedings did not
prevent the court from deciding the case on its merits and according full relief to
petitioner Republic.
DECISION
CORONA, J p:
This is a petition for certiorari under Rule 65 of the Rules of Court seeking to (1) set
aside the Resolution dated January 31, 2002 issued by the Special First Division of
the Sandiganbayan in Civil Case No. 0141 entitled Republic of the Philippines vs. Ferdinand E.
Marcos, et. al., and (2) reinstate its earlier decision dated September 19, 2000 which forfeited in
favor of petitioner Republic of the Philippines (Republic) the amount held in escrow in the
Philippine National Bank (PNB) in the aggregate amount of US$658,175,373.60 as of January
31, 2002. CDHacE
BACKGROUND OF THE CASE
On December 17, 1991, petitioner Republic, through the Presidential Commission on
Good Government (PCGG),represented by the Office of the Solicitor General (OSG),filed a
petition for forfeiture before the Sandiganbayan, docketed as Civil Case No. 0141
entitled Republic of the Philippines vs. Ferdinand E. Marcos, represented by his Estate/Heirs
and Imelda R. Marcos, pursuant to RA 1379 1 in relation to Executive Order Nos.
1, 2 2, 3 14 4 and 14-A. 5
In said case, petitioner sought the declaration of the aggregate amount of US$356
million (now estimated to be more than US$658 million inclusive of interest) deposited in
escrow in the PNB, as ill-gotten wealth. The funds were previously held by the following five
account groups, using various foreign foundations in certain Swiss banks:
(1) Azio-Verso-Vibur Foundation accounts;
(2) Xandy-Wintrop: Charis-Scolari-Valamo-Spinus-Avertina Foundation
accounts;
 (3) Trinidad-Rayby-Palmy Foundation accounts;
(4) Rosalys-Aguamina Foundation accounts and
(5) Maler Foundation accounts.
In addition, the petition sought the forfeiture of US$25 million and US$5 million in
treasury notes which exceeded the Marcos couple's salaries, other lawful income as well as
income from legitimately acquired property. The treasury notes are frozen at the Central Bank
of the Philippines, now Bangko Sentral ng Pilipinas, by virtue of the freeze order issued by the
PCGG.
On October 18, 1993, respondents Imelda R. Marcos, Maria Imelda M. Manotoc, Irene
M. Araneta and Ferdinand R. Marcos, Jr. filed their answer.
Before the case was set for pre-trial, a General Agreement and the Supplemental
Agreements 6 dated December 28, 1993 were executed by the Marcos children and then
PCGG Chairman Magtanggol Gunigundo for a global settlement of the assets of the Marcos
family. Subsequently, respondent Marcos children filed a motion dated December 7, 1995 for
the approval of said agreements and for the enforcement thereof.
The General Agreement/Supplemental Agreements sought to identify, collate, cause
the inventory of and distribute all assets presumed to be owned by the Marcos family under the
conditions contained therein. The aforementioned General Agreement specified in one of its
premises or "whereas clauses" the fact that petitioner "obtained a judgment from the Swiss
Federal Tribunal on December 21, 1990, that the Three Hundred Fifty-six Million U.S. dollars
(US$356 million) belongs in principle to the Republic of the Philippines provided certain
conditionalities are met . . . ." The said decision of the Swiss Federal Supreme Court affirmed
the decision of Zurich District Attorney Peter Consandey, granting petitioner's request for legal
assistance. 7 Consandey declared the various deposits in the name of the enumerated
foundations to be of illegal provenance and ordered that they be frozen to await the final verdict
in favor of the parties entitled to restitution.
Hearings were conducted by the Sandiganbayan on the motion to approve the
General/Supplemental Agreements. Respondent Ferdinand, Jr. was presented as witness for
the purpose of establishing the partial implementation of said agreements.
On October 18, 1996, petitioner filed a motion for summary judgment and/or judgment
on the pleadings. Respondent Mrs. Marcos filed her opposition thereto which was later adopted
by respondents Mrs. Manotoc, Mrs. Araneta and Ferdinand, Jr.
In its resolution dated November 20, 1997, the Sandiganbayan denied petitioner's
motion for summary judgment and/or judgment on the pleadings on the ground that the motion
to approve the compromise agreement "(took) precedence over the motion for summary
judgment."
Respondent Mrs. Marcos filed a manifestation on May 26, 1998 claiming she was not
a party to the motion for approval of the Compromise Agreement and that she owned 90% of
the funds with the remaining 10% belonging to the Marcos estate.
Meanwhile, on August 10, 1995, petitioner filed with the District Attorney in Zurich,
Switzerland, an additional request for the immediate transfer of the deposits to an escrow
account in the PNB. The request was granted. On appeal by the Marcoses, the Swiss Federal
Supreme Court, in a decision dated December 10, 1997, upheld the ruling of the District
Attorney of Zurich granting the request for the transfer of the funds. In 1998, the funds were
remitted to the Philippines in escrow. Subsequently, respondent Marcos children moved that
the funds be placed in custodia legis because the deposit in escrow in the PNB was allegedly in
danger of dissipation by petitioner. The Sandiganbayan, in its resolution dated September 8,
1998, granted the motion.
After the pre-trial and the issuance of the pre-trial order and supplemental pre-trial
order dated October 28, 1999 and January 21, 2000, respectively, the case was set for trial.
After several resettings, petitioner, on March 10, 2000, filed another motion for summary
judgment pertaining to the forfeiture of the US$356 million, based on the following grounds:
I
THE ESSENTIAL FACTS WHICH WARRANT THE FORFEITURE OF
THE FUNDS SUBJECT OF THE PETITION UNDER R.A. NO. 1379 ARE
ADMITTED BY RESPONDENTS IN THEIR PLEADINGS AND OTHER
SUBMISSIONS MADE IN THE COURSE OF THE PROCEEDING.
II
RESPONDENTS' ADMISSION MADE DURING THE PRE-TRIAL THAT
THEY DO NOT HAVE ANY INTEREST OR OWNERSHIP OVER THE
FUNDS SUBJECT OF THE ACTION FOR FORFEITURE TENDERS NO
GENUINE ISSUE OR CONTROVERSY AS TO ANY MATERIAL FACT IN
THE PRESENT ACTION, THUS WARRANTING THE RENDITION OF
SUMMARY JUDGMENT. 8
Petitioner contended that, after the pre-trial conference, certain facts were established,
warranting a summary judgment on the funds sought to be forfeited.
Respondent Mrs. Marcos filed her opposition to the petitioner's motion for summary
judgment, which opposition was later adopted by her co-respondents Mrs. Manotoc, Mrs.
Araneta and Ferdinand, Jr.
On March 24, 2000, a hearing on the motion for summary judgment was conducted.
In a decision 9 dated September 19, 2000, the Sandiganbayan granted petitioner's
motion for summary judgment:
CONCLUSION
There is no issue of fact which calls for the presentation of
evidence.
The Motion for Summary Judgment is hereby granted.
 The Swiss deposits which were transmitted to and now held in BUT ALSO THE EXTENT OF THEIR SALARIES AS SUCH
escrow at the PNB are deemed unlawfully acquired as ill-gotten wealth. PUBLIC OFFICIALS, WHO UNDER THE CONSTITUTION,
WERE PROHIBITED FROM ENGAGING IN THE
DISPOSITION MANAGEMENT OF FOUNDATIONS.
WHEREFORE, judgment is hereby rendered in favor of B. PRIVATE RESPONDENTS ALSO ADMITTED THE EXISTENCE OF
the Republic of the Philippines and against the respondents, declaring the THE SWISS DEPOSITS AND THEIR OWNERSHIP THEREOF:
Swiss deposits which were transferred to and now deposited in escrow at
the Philippine National Bank in the total aggregate value equivalent to 1. ADMISSIONS IN PRIVATE RESPONDENTS’ ANSWER;
US$627,608,544.95 as of August 31, 2000 together with the increments
thereof forfeited in favor of the State. 10 2. ADMISSION IN THE GENERAL/SUPPLEMENTAL
AGREEMENTS THEY SIGNED AND SOUGHT TO
Respondent Mrs. Marcos filed a motion for reconsideration dated September 26, 2000. IMPLEMENT;
Likewise, Mrs. Manotoc and Ferdinand, Jr. filed their own motion for reconsideration dated
October 5, 2000. Mrs. Araneta filed a manifestation dated October 4, 2000 adopting the motion 3. ADMISSION IN A MANIFESTATION OF PRIVATE
for reconsideration of Mrs. Marcos, Mrs. Manotoc and Ferdinand, Jr. RESPONDENT IMELDA R. MARCOS AND IN THE
MOTION TO PLACE THE RES IN CUSTODIA
Subsequently, petitioner filed its opposition thereto. LEGIS;AND

In a resolution 11 dated January 31, 2002, the Sandiganbayan reversed its 4. ADMISSION IN THE UNDERTAKING TO PAY THE HUMAN
September 19, 2000 decision, thus denying petitioner's motion for summary judgment: RIGHTS VICTIMS.

CONCLUSION C. PETITIONER HAS PROVED THE EXTENT OF THE LEGITIMATE

INCOME OF FERDINAND E. MARCOS AND IMELDA R.
In sum, the evidence offered for summary judgment of the case MARCOS AS PUBLIC OFFICIALS.
did not prove that the money in the Swiss Banks belonged to the Marcos
spouses because no legal proof exists in the record as to the ownership by D. PETITIONER HAS ESTABLISHED A PRIMA FACIE PRESUMPTION
the Marcoses of the funds in escrow from the Swiss Banks. OF UNLAWFULLY ACQUIRED WEALTH.

The basis for the forfeiture in favor of the government cannot be II

deemed to have been established and our judgment thereon, perforce,
must also have been without basis.
WHEREFORE, the decision of this Court dated September 19,
2000 is reconsidered and set aside, and this case is now being set for
further proceedings. 12
SUMMARY JUDGMENT IS PROPER SINCE PRIVATE RESPONDENTS
HAVE NOT RAISED ANY GENUINE ISSUE OF FACT CONSIDERING
THAT:
A. PRIVATE RESPONDENTS' DEFENSE THAT SWISS DEPOSITS
WERE LAWFULLY ACQUIRED DOES NOT ONLY FAIL TO
TENDER AN ISSUE BUT IS CLEARLY A SHAM; AND

Hence, the instant petition. In filing the same, petitioner argues that
the Sandiganbayan, in reversing its September 19, 2000 decision, committed grave abuse of
discretion amounting to lack or excess of jurisdiction considering that —
I JUDGMENT.
PETITIONER WAS ABLE TO PROVE ITS CASE IN ACCORDANCE
WITH THE REQUISITES OF SECTIONS 2 AND 3 OF R.A. NO. 1379:
A. PRIVATE RESPONDENTS CATEGORICALLY ADMITTED NOT ONLY
THE PERSONAL CIRCUMSTANCES OF FERDINAND E.
MARCOS AND IMELDA R. MARCOS AS PUBLIC OFFICIALS
B. IN SUBSEQUENTLY DISCLAIMING OWNERSHIP OF THE SWISS
DEPOSITS, PRIVATE RESPONDENTS ABANDONED THEIR
SHAM DEFENSE OF LEGITIMATE ACQUISITION, AND THIS
FURTHER JUSTIFIED THE RENDITION OF A SUMMARY
III
THE FOREIGN FOUNDATIONS NEED NOT BE IMPLEADED.
IV
 THE HONORABLE PRESIDING JUSTICE COMMITTED GRAVE ABUSE
OF DISCRETION IN REVERSING HIMSELF ON THE GROUND THAT
ORIGINAL COPIES OF THE AUTHENTICATED SWISS DECISIONS
AND THEIR "AUTHENTICATED TRANSLATIONS" HAVE NOT BEEN
SUBMITTED TO THE COURT, WHEN EARLIER
THE SANDIGANBAYANHAS QUOTED EXTENSIVELY A PORTION OF
THE TRANSLATION OF ONE OF THESE SWISS DECISIONS IN HIS
"PONENCIA" DATED JULY 29, 1999 WHEN IT DENIED THE MOTION
TO RELEASE ONE HUNDRED FIFTY MILLION US DOLLARS
($150,000,000.00) TO THE HUMAN RIGHTS VICTIMS.
V Likewise, Mrs. Manotoc and Ferdinand, Jr.,in their comment, prayed for the dismissal
PRIVATE RESPONDENTS ARE DEEMED TO HAVE WAIVED THEIR
OBJECTION TO THE AUTHENTICITY OF THE SWISS FEDERAL
SUPREME COURT DECISIONS. 13
Petitioner, in the main, asserts that nowhere in the respondents’ motions for
reconsideration and supplemental motion for reconsideration were the authenticity, accuracy
and admissibility of the Swiss decisions ever challenged. Otherwise stated, it was incorrect for
the Sandiganbayan to use the issue of lack of authenticated translations of the decisions of the
Swiss Federal Supreme Court as the basis for reversing itself because respondents
themselves never raised this issue in their motions for reconsideration and supplemental
motion for reconsideration. Furthermore, this particular issue relating to the translation of the
Swiss court decisions could not be resurrected anymore because said decisions had been
previously utilized by the Sandiganbayan itself in resolving a "decisive issue" before it.
Petitioner faults the Sandiganbayan for questioning the non-production of the
authenticated translations of the Swiss Federal Supreme Court decisions as this was a
marginal and technical matter that did not diminish by any measure the conclusiveness and
strength of what had been proven and admitted before theSandiganbayan, that is, that the
funds deposited by the Marcoses constituted ill-gotten wealth and thus belonged to the Filipino
people.
In compliance with the order of this Court, Mrs. Marcos filed her comment to the
petition on May 22, 2002. After several motions for extension which were all granted, the
comment of Mrs. Manotoc and Ferdinand, Jr. and the separate comment of Mrs. Araneta were
filed on May 27, 2002.
Mrs. Marcos asserts that the petition should be denied on the following grounds:
A.
PETITIONER HAS A PLAIN, SPEEDY, AND ADEQUATE REMEDY AT
THE SANDIGANBAYAN.
B.
THE SANDIGANBAYAN DID NOT ABUSE ITS DISCRETION IN
SETTING THE CASE FOR FURTHER PROCEEDINGS. 14
Mrs. Marcos contends that petitioner has a plain, speedy and adequate remedy in the
ordinary course of law in view of the resolution of the Sandiganbayan dated January 31, 2000
directing petitioner to submit the authenticated translations of the Swiss decisions. Instead of
availing of said remedy, petitioner now elevates the matter to this Court. According to Mrs.
Marcos, a petition for certiorari which does not comply with the requirements of the rules may
be dismissed. Since petitioner has a plain, speedy and adequate remedy, that is, to proceed to
trial and submit authenticated translations of the Swiss decisions, its petition before this Court
must be dismissed. Corollarily, the Sandiganbayan's ruling to set the case for further
proceedings cannot and should not be considered a capricious and whimsical exercise of
judgment.
of the petition on the grounds that:
(A)
BY THE TIME PETITIONER FILED ITS MOTION FOR SUMMARY
JUDGMENT ON 10 MARCH 2000, IT WAS ALREADY BARRED FROM
DOING SO.
(1) The Motion for Summary Judgment was based on private respondents’
Answer and other documents that had long been in the records of
the case. Thus, by the time the Motion was filed on 10 March
2000, estoppel by laches had already set in against petitioner.
(2) By its positive acts and express admissions prior to filing the Motion for
Summary Judgment on 10 March 1990, petitioner had legally
bound itself to go to trial on the basis of existing issues. Thus, it
clearly waived whatever right it had to move for summary
judgment.
(B)
EVEN ASSUMING THAT PETITIONER WAS NOT LEGALLY BARRED
FROM FILING THE MOTION FOR SUMMARY JUDGMENT,
THE SANDIGANBAYAN IS CORRECT IN RULING THAT PETITIONER
HAS NOT YET ESTABLISHED A PRIMA FACIE CASE FOR THE
FORFEITURE OF THE SWISS FUNDS.
(1) Republic Act No. 1379, the applicable law, is a penal statute. As such,
its provisions, particularly the essential elements stated in
Section 3 thereof, are mandatory in nature. These should be
strictly construed against petitioner and liberally in favor of private
respondents.
(2) Petitioner has failed to establish the third and fourth essential elements
in Section 3 of R.A. 1379 with respect to the identification,
ownership, and approximate amount of the property which the
Marcos couple allegedly "acquired during their incumbency."
 (a) Petitioner has failed to prove that the Marcos couple
"acquired" or own the Swiss funds.
(b) Even assuming, for the sake of argument, that the fact of
acquisition has been proven, petitioner has categorically
admitted that it has no evidence showing how much of
the Swiss funds was acquired "during the incumbency"
of the Marcos couple from 31 December 1965 to 25
February 1986.
(3) In contravention of the essential element stated in Section 3 (e) of R.A.
1379, petitioner has failed to establish the other proper earnings
and income from legitimately acquired property of the Marcos
couple over and above their government salaries.
(4) Since petitioner failed to prove the three essential elements provided
in paragraphs (c) 15 (d) 16 and (e) 17 of Section 3, R.A. 1379,
the inescapable conclusion is that the prima facie presumption of
unlawful acquisition of the Swiss funds has not yet attached.
There can, therefore, be no premature forfeiture of the funds.
(C)
IT WAS ONLY BY ARBITRARILY ISOLATING AND THEN TAKING
CERTAIN STATEMENTS MADE BY PRIVATE RESPONDENTS OUT OF
CONTEXT THAT PETITIONER WAS ABLE TO TREAT THESE AS
"JUDICIAL ADMISSIONS" SUFFICIENT TO ESTABLISH A PRIMA
FACIE AND THEREAFTER A CONCLUSIVE CASE TO JUSTIFY THE
FORFEITURE OF THE SWISS FUNDS.
(1) Under Section 27, Rule 130 of the Rules of Court, the General and
Supplemental Agreements, as well as the other written and
testimonial statements submitted in relation thereto, are
expressly barred from being admissible in evidence against
private respondents.
(2) Had petitioner bothered to weigh the alleged admissions together with
the other statements on record, there would be a demonstrable
showing that no such "judicial admissions" were made by private
respondents.
(D)
SINCE PETITIONER HAS NOT (YET) PROVEN ALL THE ESSENTIAL
ELEMENTS TO ESTABLISH A PRIMA FACIE CASE FOR FORFEITURE,
AND PRIVATE RESPONDENTS HAVE NOT MADE ANY JUDICIAL
ADMISSION THAT WOULD HAVE FREED IT FROM ITS BURDEN OF
PROOF, THE SANDIGANBAYAN DID NOT COMMIT GRAVE ABUSE OF
DISCRETION IN DENYING THE MOTION FOR SUMMARY
JUDGMENT. CERTIORARI,THEREFORE, DOES NOT LIE,
ESPECIALLY AS THIS COURT IS NOT A TRIER OF FACTS. 18
For her part, Mrs. Araneta, in her comment to the petition, claims that obviously
petitioner is unable to comply with a very plain requirement of respondentSandiganbayan. The
instant petition is allegedly an attempt to elevate to this Court matters, issues and incidents
which should be properly threshed out at theSandiganbayan. To respondent Mrs. Araneta, all
other matters, save that pertaining to the authentication of the translated Swiss Court decisions,
are irrelevant and impertinent as far as this Court is concerned. Respondent Mrs. Araneta
manifests that she is as eager as respondent Sandiganbayan or any interested person to have
the Swiss Court decisions officially translated in our known language. She says the
authenticated official English version of the Swiss Court decisions should be presented. This
should stop all speculations on what indeed is contained therein. Thus, respondent Mrs.
Araneta prays that the petition be denied for lack of merit and for raising matters which, in
elaborated fashion, are impertinent and improper before this Court.
PROPRIETY OF PETITIONER'S
ACTION FOR CERTIORARI
But before this Court discusses the more relevant issues, the question regarding the
propriety of petitioner Republic's action for certiorari under Rule 65 19 of the 1997 Rules of Civil
Procedure assailing the Sandiganbayan Resolution dated January 21, 2002 should be
threshed out.
At the outset, we would like to stress that we are treating this case as an exception to
the general rule governing petitions for certiorari. Normally, decisions of theSandiganbayan are
brought before this Court under Rule 45, not Rule 65. 20 But where the case is undeniably
ingrained with immense public interest, public policy and deep historical
repercussions, certiorari is allowed notwithstanding the existence and availability of the remedy
of appeal. 21
One of the foremost concerns of the Aquino Government in February 1986 was the
recovery of the unexplained or ill-gotten wealth reputedly amassed by former President and Mrs.
Ferdinand E. Marcos, their relatives, friends and business associates. Thus, the very first
Executive Order (EO) issued by then President Corazon Aquino upon her assumption to office
after the ouster of the Marcoses was EO No. 1, issued on February 28, 1986. It created the
Presidential Commission on Good Government (PCGG) and charged it with the task of
assisting the President in the "recovery of all ill-gotten wealth accumulated by former President
Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates,
whether located in the Philippines or abroad, including the takeover or sequestration of all
business enterprises and entities owned or controlled by them during his administration, directly
or through nominees, by taking undue advantage of their public office and/or using their powers,
authority, influence, connections or relationship." The urgency of this undertaking was tersely
described by this Court in Republic vs. Lobregat 22 :
surely ...an enterprise "of great pith and moment";it was attended
by "great expectations";it was initiated not only out of considerations of
simple justice but also out of sheer necessity — the national coffers were
empty, or nearly so.
 In all the alleged ill-gotten wealth cases filed by the PCGG, this Court has seen fit to
set aside technicalities and formalities that merely serve to delay or impede judicious resolution.
This Court prefers to have such cases resolved on the merits at the Sandiganbayan. But
substantial justice to the Filipino people and to all parties concerned, not mere legalisms or
perfection of form, should now be relentlessly and firmly pursued. Almost two decades have
passed since the government initiated its search for and reversion of such ill-gotten wealth. The
definitive resolution of such cases on the merits is thus long overdue. If there is proof of illegal
acquisition, accumulation, misappropriation, fraud or illicit conduct, let it be brought out now. Let
the ownership of these funds and other assets be finally determined and resolved with dispatch,
free from all the delaying technicalities and annoying procedural sidetracks. 23
We thus take cognizance of this case and settle with finality all the issues therein.
ISSUES BEFORE THIS COURT
The crucial issues which this Court must resolve are: (1) whether or not respondents
raised any genuine issue of fact which would either justify or negate summary judgment; and (2)
whether or not petitioner Republic was able to prove its case for forfeiture in accordance with
Sections 2 and 3 of RA 1379.
(1) THE PROPRIETY OF SUMMARY JUDGMENT
We hold that respondent Marcoses failed to raise any genuine issue of fact in their
pleadings. Thus, on motion of petitioner Republic, summary judgment should take place as a
matter of right.
In the early case of Auman vs. Estenzo, 24 summary judgment was described as a
judgment which a court may render before trial but after both parties have pleaded. It is ordered
by the court upon application by one party, supported by affidavits, depositions or other
documents, with notice upon the adverse party who may in turn file an opposition supported
also by affidavits, depositions or other documents. This is after the court summarily hears both
parties with their respective proofs and finds that there is no genuine issue between them.
Summary judgment is sanctioned in this jurisdiction by Section 1, Rule 35 of the 1997 Rules of
Civil Procedure:
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. 25
Summary judgment is proper when there is clearly no genuine issue as to any material
fact in the action. 26 The theory of summary judgment is that, although an answer may on its
face appear to tender issues requiring trial, if it is demonstrated by affidavits, depositions or
admissions that those issues are not genuine but sham or fictitious, the Court is justified in
dispensing with the trial and rendering summary judgment for petitioner Republic.
The Solicitor General made a very thorough presentation of its case for forfeiture:
xxx xxx xxx
4. Respondent Ferdinand E. Marcos (now deceased and
represented by his Estate/Heirs) was a public officer for several decades
continuously and without interruption as Congressman, Senator, Senate
President and President of the Republic of the Philippines from December
31, 1965 up to his ouster by direct action of the people of EDSA on
February 22-25, 1986.
5. Respondent Imelda Romualdez Marcos (Imelda, for short) the
former First Lady who ruled with FM during the 14-year martial law regime,
occupied the position of Minister of Human Settlements from June 1976 up
to the peaceful revolution in February 22-25, 1986. She likewise served
once as a member of the Interim Batasang Pambansa during the early
years of martial law from 1978 to 1984 and as Metro Manila Governor in
concurrent capacity as Minister of Human Settlements. . . .
xxx xxx xxx
11. At the outset, however, it must be pointed out that based on
the Official Report of the Minister of Budget, the total salaries of former
President Marcos as President from 1966 to 1976 was P60,000 a year and
from 1977 to 1985, P100,000 a year; while that of the former First Lady,
Imelda R. Marcos, as Minister of Human Settlements from June 1976 to
February 22-25, 1986 was P75,000 a year. ....
ANALYSIS OF RESPONDENTS
LEGITIMATE INCOME
xxx xxx xxx
12. Based on available documents, the ITRs of the Marcoses for
the years 1965-1975 were filed under Tax Identification No. 1365-055-1.
For the years 1976 until 1984, the returns were filed under Tax
Identification No. M 6221-J 1117-A-9.
13. The data contained in the ITRs and Balance Sheet filed by the
"Marcoses are summarized and attached to the reports in the following
schedules:
Schedule A:
Schedule of Income (Annex "T" hereof);
Schedule B:
Schedule of Income Tax Paid (Annex "T-1" hereof);
Schedule C:
Schedule of Net Disposable Income (Annex "T-2" hereof);
Schedule D:
 Schedule of Networth Analysis (Annex "T-3" hereof).
14. As summarized in Schedule A (Annex "T" hereof), the
Marcoses reported P16,408,442.00 or US$2,414,484.91 in total income
over a period of 20 years from 1965 to 1984. The sources of income are as
follows:
Official Salaries - P2,627,581.00 - 16.01%
Legal Practice - 11,109,836.00 - 67.71%
Farm Income - 149,700.00 - .91%
Others - 2,521,325.00 - 15.37%
——————— ————
Total P16,408,442.00 - 100.00%
15. FM's official salary pertains to his compensation as Senate
President in 1965 in the amount of P15,935.00 and P1,420,000.00 as
President of the Philippines during the period 1966 until 1984. On the other
hand, Imelda reported salaries and allowances only for the years 1979 to
1984 in the amount of P1,191,646.00. The records indicate that the
reported income came from her salary from the Ministry of Human
Settlements and allowances from Food Terminal, Inc.,National Home
Mortgage Finance Corporation, National Food Authority Council, Light Rail
Transit Authority and Home Development Mutual Fund.
16. Of the P11,109,836.00 in reported income from legal practice,
the amount of P10,649,836.00 or 96% represents "receivables from prior
years" during the period 1967 up to 1984.
17. In the guise of reporting income using the cash method under
Section 38 of the National Internal Revenue Code, FM made it appear that
he had an extremely profitable legal practice before he became a
President (FM being barred by law from practicing his law profession
during his entire presidency) and that, incredibly, he was still receiving
payments almost 20 years after. The only problem is that in his Balance
Sheet attached to his 1965 ITR immediately preceding his ascendancy to
the presidency he did not show any Receivables from client at all, much
less the P10,65-M that he decided to later recognize as income. There are
no documents showing any withholding tax certificates. Likewise, there is
nothing on record that will show any known Marcos client as he has no
known law office. As previously stated, his networth was a mere
P120,000.00 in December, 1965. The joint income tax returns of FM and
Imelda cannot, therefore, conceal the skeletons of their kleptocracy.
18. FM reported a total of P2,521,325.00 as Other Income for the
years 1972 up to 1976 which he referred to in his return as "Miscellaneous
Items" and "Various Corporations." There is no indication of any payor of
the dividends or earnings.
19. Spouses Ferdinand and Imelda did not declare any income
from any deposits and placements which are subject to a 5% withholding
tax. The Bureau of Internal Revenue attested that after a diligent search of
pertinent records on file with the Records Division, they did not find any
records involving the tax transactions of spouses Ferdinand and Imelda in
Revenue Region No. 1, Baguio City, Revenue Region No. 4A, Manila,
Revenue Region No. 4B1, Quezon City and Revenue No. 8, Tacloban,
Leyte. Likewise, the Office of the Revenue Collector of Batac. Further, BIR
attested that no records were found on any filing of capital gains tax return
involving spouses FM and Imelda covering the years 1960 to 1965.
20. In Schedule B, the taxable reported income over the
twenty-year period was P14,463,595.00 which represents 88% of the
gross income. The Marcoses paid income taxes totaling P8,233,296.00 or
US$1,220,667.59. The business expenses in the amount of P861,748.00
represent expenses incurred for subscription, postage, stationeries and
contributions while the other deductions in the amount of P567,097.00
represents interest charges, medicare fees, taxes and licenses. The total
deductions in the amount of P1,994,845.00 represents 12% of the total
gross income.
21. In Schedule C, the net cumulative disposable income
amounts to P6,756,301.00 or US$980,709.77. This is the amount that
represents that portion of the Marcoses income that is free for
consumption, savings and investments. The amount is arrived at by adding
back to the net income after tax the personal and additional exemptions for
the years 1965-1984, as well as the tax-exempt salary of the President for
the years 1966 until 1972.
22. Finally, the networth analysis in Schedule D, represents the
total accumulated networth of spouses, Ferdinand and Imelda.
Respondent's Balance Sheet attached to their 1965 ITR, covering the year
immediately preceding their ascendancy to the presidency, indicates an
ending networth of P120,000.00 which FM declared as Library and
Miscellaneous assets. In computing for the networth, the income approach
was utilized. Under this approach, the beginning capital is increased or
decreased, as the case may be, depending upon the income earned or
loss incurred. Computations establish the total networth of spouses
Ferdinand and Imelda, for the years 1965 until 1984 in the total amount
of US$957,487.75,assuming the income from legal practice is real and
valid ....
G. THE SECRET MARCOS DEPOSITS
IN SWISS BANKS
 23. The following presentation very clearly and overwhelmingly
show in detail how both respondents clandestinely stashed away the
country's wealth to Switzerland and hid the same under layers upon layers
of foundations and other corporate entities to prevent its detection.
Through their dummies/nominees, fronts or agents who formed those
foundations or corporate entities, they opened and maintained numerous
bank accounts. But due to the difficulty if not the impossibility of detecting
and documenting all those secret accounts as well as the enormity of the
deposits therein hidden, the following presentation is confined to five
identified accounts groups, with balances amounting to about $356-M with
a reservation for the filing of a supplemental or separate forfeiture
complaint should the need arise.
H. THE AZIO-VERSO-VIBUR
FOUNDATION ACCOUNTS
24. On June 11, 1971, Ferdinand Marcos issued a written order
to Dr. Theo Bertheau, legal counsel of Schweizeresche Kreditanstalt or
SKA, also known as Swiss Credit Bank, for him to establish the AZIO
Foundation.On the same date, Marcos executed a power of attorney in
favor of Roberto S. Benedicto empowering him to transact business in
behalf of the said foundation. Pursuant to the said Marcos mandate, AZIO
Foundation was formed on June 21, 1971 in Vaduz. Walter Fessler and
Ernst Scheller, also of SKA Legal Service, and Dr. Helmuth Merling from
Schaan were designated as members of the Board of Trustees of the said
foundation. Ferdinand Marcos was named first beneficiary and the Marcos
Foundation, Inc. was second beneficiary. On November 12, 1971, FM
again issued another written order naming Austrahil PTY Ltd. In Sydney,
Australia, as the foundation's first and sole beneficiary. This was recorded
on December 14, 1971.
25. In an undated instrument, Marcos changed the first and sole
beneficiary to CHARIS FOUNDATION. This change was recorded on
December 4, 1972.
26. On August 29, 1978, the AZIO FOUNDATION was renamed
to VERSO FOUNDATION. The Board of Trustees remained the same. On
March 11, 1981, Marcos issued a written directive to liquidated VERSO
FOUNDATION and to transfer all its assets to account of FIDES TRUST
COMPANY at Bank Hofman in Zurich under the account "Reference
OSER." The Board of Trustees decided to dissolve the foundation on June
25, 1981.
27. In an apparent maneuver to bury further the secret deposits
beneath the thick layers of corporate entities, FM effected the
establishment of VIBUR FOUNDATION on May 13, 1981 in Vaduz. Atty.
Ivo Beck and Limag Management, a wholly-owned subsidiary of Fides
Trust, were designated as members of the Board of Trustees. The account
was officially opened with SKA on September 10, 1981. The beneficial
owner was not made known to the bank since Fides Trust Company acted
as fiduciary. However, comparison of the listing of the securities in the safe
deposit register of the VERSO FOUNDATION as of February 27, 1981
with that of VIBUR FOUNDATION as of December 31, 1981 readily
reveals that exactly the same securities were listed.
28. Under the foregoing circumstances, it is certain that the
VIBUR FOUNDATION is the beneficial successor of VERSO
FOUNDATION.
29. On March 18, 1986, the Marcos-designated Board of
Trustees decided to liquidate VIBUR FOUNDATION. A notice of such
liquidation was sent to the Office of the Public Register on March 21, 1986.
However, the bank accounts and respective balances of the said VIBUR
FOUNDATION remained with SKA. Apparently, the liquidation was an
attempt by the Marcoses to transfer the foundation's funds to another
account or bank but this was prevented by the timely freeze order issued
by the Swiss authorities. One of the latest documents obtained by the
PCGG from the Swiss authorities is a declaration signed by Dr. Ivo Beck
(the trustee) stating that the beneficial owner of VIBUR FOUNDATION is
Ferdinand E. Marcos.Another document signed by G. Raber of SKA shows
that VIBUR FOUNDATION is owned by the "Marcos Families."
30. As of December 31, 1989, the balance of the bank accounts
of VIBUR FOUNDATION with SKA, Zurich, under the General Account No.
469857 totaled $3,597,544.00.
I. XANDY-WINTROP: CHARIS-SCOLARI-
VALAMO-SPINUS-AVERTINA
FOUNDATION ACCOUNTS
31. This is the most intricate and complicated account group. As
the Flow Chart hereof shows, two (2) groups under the foundation
organized by Marcos dummies/nominees for FM's benefit, eventually
joined together and became one (1) account group under the AVERTINA
FOUNDATION for the benefit of both FM and Imelda. This is the biggest
group from where the $50-M investment fund of the Marcoses was drawn
when they bought the Central Bank's dollar-denominated treasury notes
with high-yielding interests.
32. On March 20, 1968, after his second year in the presidency,
Marcos opened bank accounts with SKA using an alias or pseudonym
WILLIAM SAUNDERS,apparently to hide his true identity. The next day,
March 21, 1968, his First Lady, Mrs. Imelda Marcos also opened her own
bank accounts with the same bank using an
American-sounding alias,JANE RYAN. Found among the voluminous
documents in Malacañang shortly after they fled to Hawaii in haste that
fateful night of February 25, 1986, were accomplished forms for
"Declaration/Specimen Signatures" submitted by the Marcos couple.
Under the caption "signature(s)" Ferdinand and Imelda signed their real
names as well as their respective aliases underneath. These accounts
were actively operated and maintained by the Marcoses for about two (2)
years until their closure sometime in February, 1970 and the balances
transferred to XANDY FOUNDATION.
33. The XANDY FOUNDATION was established on March 3,
1970 in Vaduz. C.W. Fessler, C. Souviron and E. Scheller were named as
members of the Board of Trustees.
34. FM and Imelda issued the written mandate to establish the
foundation to Markus Geel of SKA on March 3, 1970. In the handwritten
Regulations signed by the Marcos couple as well as in the type-written
Regulations signed by Markus Geel both dated February 13, 1970, the
Marcos spouses were named the first beneficiaries, the surviving spouse
as the second beneficiary and the Marcos children – Imee, Ferdinand, Jr.
(Bongbong) and Irene – as equal third beneficiaries.
35. The XANDY FOUNDATION was renamed WINTROP
FOUNDATION on August 29, 1978. The Board of Trustees remained the
same at the outset. However, on March 27, 1980, Souviron was replaced
by Dr. Peter Ritter. On March 10, 1981, Ferdinand and Imelda Marcos
issued a written order to the Board of Wintrop to liquidate the foundation
and transfer all its assets to Bank Hofmann in Zurich in favor of FIDES
TRUST COMPANY. Later, WINTROP FOUNDATION was dissolved.
36. The AVERTINA FOUNDATION was established on May 13,
1981 in Vaduz with Atty. Ivo Beck and Limag Management, a
wholly-owned subsidiary of FIDES TRUST CO., as members of the Board
of Trustees. Two (2) account categories, namely: CAR and NES, were
opened on September 10, 1981. The beneficial owner of AVERTINA was
not made known to the bank since the FIDES TRUST CO. acted as
fiduciary. However, the securities listed in the safe deposit register of
WINTROP FOUNDATION Category R as of December 31, 1980 were the
same as those listed in the register of AVERTINA FOUNDATION Category
CAR as of December 31, 1981. Likewise, the securities listed in the safe
deposit register of WINTROP FOUNDATION Category S as of December
31, 1980 were the same as those listed in the register of Avertina Category
NES as of December 31, 1981. Under the circumstances, it is certain that
the beneficial successor of WINTROP FOUNDATION is AVERTINA
FOUNDATION. The balance of Category CAR as of December 31, 1989
amounted to US$231,366,894.00 while that of Category NES as of
12-31-83 was US$8,647,190.00. Latest documents received from Swiss
authorities included a declaration signed by IVO Beck stating that the
beneficial owners of AVERTINA FOUNDATION are FM and Imelda.
Another document signed by G. Raber of SKA indicates that Avertina
Foundation is owned by the "Marcos Families."
37. The other groups of foundations that eventually joined
AVERTINA were also established by FM through his dummies, which
started with the CHARIS FOUNDATION.
38. The CHARIS FOUNDATION was established in VADUZ on
December 27, 1971. Walter Fessler and Ernst Scheller of SKA and Dr.
Peter Ritter were named as directors. Dr. Theo Bertheau, SKA legal
counsel, acted as founding director in behalf of FM by virtue of the
mandate and agreement dated November 12, 1971. FM himself was
named the first beneficiary and Xandy Foundation as second beneficiary in
accordance with the handwritten instructions of FM on November 12, 1971
and the Regulations. FM gave a power of attorney to Roberto S. Benedicto
on February 15, 1972 to act in his behalf with regard to Charis Foundation.
39. On December 13, 1974, Charis Foundation was renamed
Scolari Foundation but the directors remained the same. On March 11,
1981 FM ordered in writing that the Valamo Foundation be liquidated and
all its assets be transferred to Bank Hofmann, AG in favor of Fides Trust
Company under the account "Reference OMAL." The Board of Directors
decided on the immediate dissolution of Valamo Foundation on June 25,
1981.
40. The SPINUS FOUNDATION was established on May 13,
1981 in Vaduz with Atty. Ivo Beck and Limag Management, a
wholly-owned subsidiary of Fides Trust Co.,as members of the
Foundation's Board of Directors. The account was officially opened with
SKA on September 10, 1981. The beneficial owner of the foundation was
not made known to the bank since Fides Trust Co. acted as fiduciary.
However, the list of securities in the safe deposit register of Valamo
Foundation as of December 31, 1980 are practically the same with those
listed in the safe deposit register of Spinus Foundation as of December 31,
1981. Under the circumstances, it is certain that the Spinus Foundation is
the beneficial successor of the Valamo Foundation.
41. On September 6, 1982, there was a written instruction from
Spinus Foundation to SKA to close its Swiss Franc account and transfer
the balance to Avertina Foundation. In July/August, 1982, several transfers
from the foundation's German marks and US dollar accounts were made to
Avertina Category CAR totaling DM 29.5-M and $58-M, respectively.
Moreover, a comparison of the list of securities of the Spinus Foundation
as of February 3, 1982 with the safe deposit slips of the Avertina
Foundation Category CAR as of August 19, 1982 shows that all the
securities of Spinus were transferred to Avertina.
J. TRINIDAD-RAYBY-PALMY
FOUNDATION ACCOUNTS
42. The Trinidad Foundation was organized on August 26, 1970
in Vaduz with C.W. Fessler and E. Scheller of SKA and Dr. Otto Tondury
 as the foundation's directors. Imelda issued a written mandate to establish
the foundation to Markus Geel on August 26, 1970. The regulations as well
as the agreement, both dated August 28, 1970 were likewise signed by
Imelda. Imelda was named the first beneficiary and her children Imelda
(Imee),Ferdinand, Jr. (Bongbong) and, Irene were named as equal second
beneficiaries.
43. Rayby Foundation was established on June 22, 1973 in
Vaduz with Fessler, Scheller and Ritter as members of the board of
directors. Imelda issued a written mandate to Dr. Theo Bertheau to
establish the foundation with a note that the foundation’s capitalization as
well as the cost of establishing it be debited against the account of Trinidad
Foundation. Imelda was named the first and only beneficiary of Rayby
foundation. According to written information from SKA dated November 28,
1988, Imelda apparently had the intention in 1973 to transfer part of the
assets of Trinidad Foundation to another foundation, thus the
establishment of Rayby Foundation. However, transfer of assets never
took place. On March 10, 1981, Imelda issued a written order to transfer all
the assets of Rayby Foundation to Trinidad Foundation and to
subsequently liquidate Rayby. On the same date, she issued a written
order to the board of Trinidad to dissolve the foundation and transfer all its
assets to Bank Hofmann in favor of Fides Trust Co. Under the account
"Reference Dido," Rayby was dissolved on April 6, 1981 and Trinidad was
liquidated on August 3, 1981.
44. The PALMY FOUNDATION was established on May 13,
1981 in Vaduz with Dr. Ivo Beck and Limag Management, a wholly-owned
subsidiary of Fides Trust Co.,as members of the Foundation’s Board of
Directors. The account was officially opened with the SKA on September
10, 1981. The beneficial owner was not made known to the bank since
Fides Trust Co. acted as fiduciary. However, when one compares the
listing of securities in the safe deposit register of Trinidad Foundation as of
December 31, 1980 with that of the Palmy Foundation as of December 31,
1980, one can clearly see that practically the same securities were listed.
Under the circumstances, it is certain that the Palmy Foundation is the
beneficial successor of the Trinidad Foundation.
45. As of December 31, 1989, the ending balance of the bank
accounts of Palmy Foundation under General Account No. 391528 is
$17,214,432.00.
46. Latest documents received from Swiss Authorities included a
declaration signed by Dr. Ivo Beck stating that the beneficial owner of
Palmy Foundation is Imelda. Another document signed by Raber shows
that the said Palmy Foundation is owned by "Marcos Families."
K. ROSALYS-AGUAMINA
FOUNDATION ACCOUNTS
47. Rosalys Foundation was established in 1971 with FM as the
beneficiary. Its Articles of Incorporation was executed on September 24,
1971 and its By-Laws on October 3, 1971. This foundation maintained
several accounts with Swiss Bank Corporation (SBC) under the general
account 51960 where most of the bribe monies from Japanese suppliers
were hidden.
48. On December 19, 1985, Rosalys Foundation was liquidated
and all its assets were transferred to Aguamina Corporation’s (Panama)
Account No. 53300 with SBC. The ownership by Aguamina Corporation of
Account No. 53300 is evidenced by an opening account documents from
the bank. J. Christinaz and R.L. Rossier, First Vice-President and Senior
Vice President, respectively, of SBC, Geneva issued a declaration dated
September 3, 1991 stating that the by-laws dated October 3, 1971
governing Rosalys Foundation was the same by-law applied to Aguamina
Corporation Account No. 53300. They further confirmed that no change of
beneficial owner was involved while transferring the assets of Rosalys to
Aguamina. Hence, FM remains the beneficiary of Aguamina Corporation
Account No. 53300.
As of August 30, 1991, the ending balance of Account No. 53300
amounted to $80,566,483.00.
L. MALER FOUNDATION ACCOUNTS
49. Maler was first created as an establishment. A statement of
its rules and regulations was found among Malacañang documents. It
stated, among others, that 50% of the Company’s assets will be for sole
and full right disposal of FM and Imelda during their lifetime, which the
remaining 50% will be divided in equal parts among their children. Another
Malacañang document dated October 19, 1968 and signed by Ferdinand
and Imelda pertains to the appointment of Dr. Andre Barbey and Jean
Louis Sunier as attorneys of the company and as administrator and
manager of all assets held by the company. The Marcos couple, also
mentioned in the said document that they bought the Maler Establishment
from SBC, Geneva. On the same date, FM and Imelda issued a letter
addressed to Maler Establishment, stating that all instructions to be
transmitted with regard to Maler will be signed with the word "JOHN
LEWIS." This word will have the same value as the couple’s own personal
signature. The letter was signed by FM and Imelda in their signatures and
as John Lewis.
50. Maler Establishment opened and maintained bank accounts
with SBC, Geneva. The opening bank documents were signed by Dr.
Barbey and Mr. Sunnier as authorized signatories.
51. On November 17, 1981, it became necessary to transform
Maler Establishment into a foundation. Likewise, the attorneys were
 changed to Michael Amaudruz, et al.However, administration of the assets
was left to SBC. The articles of incorporation of Maler Foundation
registered on November 17, 1981 appear to be the same articles applied to
Maler Establishment. On February 28, 1984, Maler Foundation cancelled
the power of attorney for the management of its assets in favor of SBC and
transferred such power to Sustrust Investment Co.,S.A.
52. As of June 6, 1991, the ending balance of Maler Foundation's
Account Nos. 254,508 BT and 98,929 NY amount SF 9,083,567 and SG
16,195,258, respectively, for a total of SF 25,278,825.00. GM only until
December 31, 1980. This account was opened by Maler when it was still
an establishment which was subsequently transformed into a foundation.
53. All the five (5) group accounts in the over-all flow chart have a
total balance of about Three Hundred Fifty Six Million Dollars
($356,000,000.00) as shown by Annex "R-5" hereto attached as integral
part hereof.
xxx xxx xxx. 27
Respondents Imelda R. Marcos, Maria Imelda M. Manotoc, Irene M. Araneta and
Ferdinand Marcos, Jr.,in their answer, stated the following:
xxx xxx xxx
4. Respondents ADMIT paragraphs 3 and 4 of the Petition.
5. Respondents specifically deny paragraph 5 of the Petition in so
far as it states that summons and other court processes may be served on
Respondent Imelda R. Marcos at the stated address the truth of the matter
being that Respondent Imelda R. Marcos may be served with summons
and other processes at No. 10-B Bel Air Condominium 5022 P. Burgos
Street, Makati, Metro Manila, and ADMIT the rest.
xxx xxx xxx
10. Respondents ADMIT paragraph 11 of the Petition.
11. Respondents specifically DENY paragraph 12 of the Petition
for lack of knowledge sufficient to form a belief as to the truth of the
allegation since Respondents were not privy to the transactions and that
they cannot remember exactly the truth as to the matters alleged.
12. Respondents specifically DENY paragraph 13 of the Petition
for lack of knowledge or information sufficient to form a belief as to the truth
of the allegation since Respondents cannot remember with exactitude the
contents of the alleged ITRs and Balance Sheet.
13. Respondents specifically DENY paragraph 14 of the Petition
for lack of knowledge or information sufficient to form a belief as to the truth
of the allegation since Respondents cannot remember with exactitude the
contents of the alleged ITRs.
14. Respondents specifically DENY paragraph 15 of the Petition
for lack of knowledge or information sufficient to form a belief as to the truth
of the allegation since Respondents cannot remember with exactitude the
contents of the alleged ITRs.
15. Respondents specifically DENY paragraph 16 of the Petition
for lack of knowledge or information sufficient to form a belief as to the truth
of the allegation since Respondents cannot remember with exactitude the
contents of the alleged ITRs.
16. Respondents specifically DENY paragraph 17 of the Petition
insofar as it attributes willful duplicity on the part of the late President
Marcos, for being false, the same being pure conclusions based on pure
assumption and not allegations of fact; and specifically DENY the rest for
lack of knowledge or information sufficient to form a belief as to the truth of
the allegation since Respondents cannot remember with exactitude the
contents of the alleged ITRs or the attachments thereto.
17. Respondents specifically DENY paragraph 18 of the Petition
for lack of knowledge or information sufficient to form a belief as to the truth
of the allegation since Respondents cannot remember with exactitude the
contents of the alleged ITRs.
18. Respondents specifically DENY paragraph 19 of the Petition
for lack of knowledge or information sufficient to form a belief as to the truth
of the allegation since Respondents cannot remember with exactitude the
contents of the alleged ITRs and that they are not privy to the activities of
the BIR.
19. Respondents specifically DENY paragraph 20 of the Petition
for lack of knowledge or information sufficient to form a belief as to the truth
of the allegation since Respondents cannot remember with exactitude the
contents of the alleged ITRs.
20. Respondents specifically DENY paragraph 21 of the Petition
for lack of knowledge or information sufficient to form a belief as to the truth
of the allegation since Respondents cannot remember with exactitude the
contents of the alleged ITRs.
21. Respondents specifically DENY paragraph 22 of the Petition
for lack of knowledge or information sufficient to form a belief as to the truth
of the allegation since Respondents cannot remember with exactitude the
contents of the alleged ITRs.
22. Respondents specifically DENY paragraph 23 insofar as it
alleges that Respondents clandestinely stashed the country's wealth in
 Switzerland and hid the same under layers and layers of foundation and
corporate entities for being false, the truth being that Respondents
aforesaid properties were lawfully acquired.
23. Respondents specifically DENY paragraphs 24, 25, 26, 27,
28, 29 and 30 of the Petition for lack of knowledge or information sufficient
to form a belief as to the truth of the allegation since Respondents were not
privy to the transactions regarding the alleged Azio-Verso-Vibur
Foundation accounts, except that as to Respondent Imelda R. Marcos she
specifically remembers that the funds involved were lawfully acquired.
24. Respondents specifically DENY paragraphs 31, 32, 33, 34,
35, 36, 37, 38, 39, 40, and 41 of the Petition for lack of knowledge or
information sufficient to form a belief as to the truth of the allegations since
Respondents are not privy to the transactions and as to such transaction
they were privy to they cannot remember with exactitude the same having
occurred a long time ago, except that as to Respondent Imelda R. Marcos
she specifically remembers that the funds involved were lawfully acquired.
25. Respondents specifically DENY paragraphs 42, 43, 44, 45,
and 46, of the Petition for lack of knowledge or information sufficient to
form a belief as to the truth of the allegations since Respondents were not
privy to the transactions and as to such transaction they were privy to they
cannot remember with exactitude the same having occurred a long time
ago, except that as to Respondent Imelda R. Marcos she specifically
remembers that the funds involved were lawfully acquired.
26. Respondents specifically DENY paragraphs 49, 50, 51 and
52, of the Petition for lack of knowledge or information sufficient to form a
belief as to the truth of the allegations since Respondents were not privy to
the transactions and as to such transaction they were privy to they cannot
remember with exactitude the same having occurred a long time ago,
except that as to Respondent Imelda R. Marcos she specifically
remembers that the funds involved were lawfully acquired.
Upon careful perusal of the foregoing, the Court finds that respondent Mrs. Marcos
and the Marcos children indubitably failed to tender genuine issues in their answer to the
petition for forfeiture. A genuine issue is an issue of fact which calls for the presentation of
evidence as distinguished from an issue which is fictitious and contrived, set up in bad faith or
patently lacking in substance so as not to constitute a genuine issue for trial. Respondents'
defenses of "lack of knowledge for lack of privity" or "(inability to) recall because it happened a
long time ago" or, on the part of Mrs. Marcos, that "the funds were lawfully acquired" are fully
insufficient to tender genuine issues. Respondent Marcoses' defenses were a sham and
evidently calibrated to compound and confuse the issues.
The following pleadings filed by respondent Marcoses are replete with indications of a
spurious defense:
(a) Respondents' Answer dated October 18, 1993;
(b) Pre-trial Brief dated October 4, 1999 of Mrs. Marcos, Supplemental
Pre-trial Brief dated October 19, 1999 of Ferdinand, Jr. and Mrs.
Imee Marcos-Manotoc adopting the pre-trial brief of Mrs. Marcos,
and Manifestation dated October 19, 1999 of Irene
Marcos-Araneta adopting the pre-trial briefs of her co-
respondents;
(c) Opposition to Motion for Summary Judgment dated March 21, 2000,
filed by Mrs. Marcos which the other respondents (Marcos
children) adopted;
(d) Demurrer to Evidence dated May 2,2000 filed by Mrs. Marcos and
adopted by the Marcos children;
(e) Motion for Reconsideration dated September 26, 2000 filed by Mrs.
Marcos; Motion for Reconsideration dated October 5, 2000 jointly
filed by Mrs. Manotoc and Ferdinand, Jr.,and Supplemental
Motion for Reconsideration dated October 9, 2000 likewise jointly
filed by Mrs. Manotoc and Ferdinand, Jr.;
(f) Memorandum dated December 12, 2000 of Mrs. Marcos and
Memorandum dated December 17, 2000 of the Marcos children;
(g) Manifestation dated May 26, 1998; and
(h) General/Supplemental Agreement dated December 23, 1993.
An examination of the foregoing pleadings is in order.
RESPONDENTS' ANSWER DATED OCTOBER 18, 1993.
In their answer, respondents failed to specifically deny each and every allegation
contained in the petition for forfeiture in the manner required by the rules. All they gave were
stock answers like "they have no sufficient knowledge" or "they could not recall because it
happened a long time ago," and, as to Mrs. Marcos, "the funds were lawfully acquired," without
stating the basis of such assertions.
Section 10, Rule 8 of the 1997 Rules of Civil Procedure, provides:
A defendant must specify each material allegation of fact the truth
of which he does not admit and, whenever practicable, shall set forth the
substance of the matters upon which he relies to support his denial. Where
a defendant desires to deny only a part of an averment, he shall specify so
much of it as is true and material and shall deny the remainder. Where a
defendant is without knowledge or information sufficient to form a belief as
to the truth of a material averment made in the complaint, he shall so state,
and this shall have the effect of a denial. 28
The purpose of requiring respondents to make a specific denial is to make them
disclose facts which will disprove the allegations of petitioner at the trial, together with the
matters they rely upon in support of such denial. Our jurisdiction adheres to this rule to avoid
and prevent unnecessary expenses and waste of time by compelling both parties to lay their
cards on the table, thus reducing the controversy to its true terms. As explained in Alonso vs.
Villamor, 29
A litigation is not a game of technicalities in which one, more
deeply schooled and skilled in the subtle art of movement and position,
entraps and destroys the other. It is rather a contest in which each
contending party fully and fairly lays before the court the facts in issue and
then, brushing aside as wholly trivial and indecisive all imperfections of
form and technicalities of procedure, asks that justice be done upon the
merits. Lawsuits, unlike duels, are not to be won by a rapier's thrust.
On the part of Mrs. Marcos, she claimed that the funds were lawfully acquired.
However, she failed to particularly state the ultimate facts surrounding the lawful manner or
mode of acquisition of the subject funds. Simply put, she merely stated in her answer with the
other respondents that the funds were "lawfully acquired" without detailing how exactly these
funds were supposedly acquired legally by them. Even in this case before us, her assertion that
the funds were lawfully acquired remains bare and unaccompanied by any factual support
which can prove, by the presentation of evidence at a hearing, that indeed the funds were
acquired legitimately by the Marcos family.
Respondents' denials in their answer at the Sandiganbayan were based on their
alleged lack of knowledge or information sufficient to form a belief as to the truth of the
allegations of the petition.
It is true that one of the modes of specific denial under the rules is a denial through a
statement that the defendant is without knowledge or information sufficient to form a belief as to
the truth of the material averment in the complaint. The question, however, is whether the kind
of denial in respondents’ answer qualifies as the specific denial called for by the rules. We do
not think so. In Morales vs. Court of Appeals, 30 this Court ruled that if an allegation directly
and specifically charges a party with having done, performed or committed a particular act
which the latter did not in fact do, perform or commit, a categorical and express denial must be
made.
Here, despite the serious and specific allegations against them, the Marcoses
responded by simply saying that they had no knowledge or information sufficient to form a belief
as to the truth of such allegations. Such a general, self-serving claim of ignorance of the facts
alleged in the petition for forfeiture was insufficient to raise an issue. Respondent Marcoses
should have positively stated how it was that they were supposedly ignorant of the facts
alleged. 31
To elucidate, the allegation of petitioner Republic in paragraph 23 of the petition for
forfeiture stated:
23. The following presentation very clearly and overwhelmingly
show in detail how both respondents clandestinely stashed away the
country's wealth to Switzerland and hid the same under layers upon layers
of foundations and other corporate entities to prevent its detection.
Through their dummies/nominees, fronts or agents who formed those
foundations or corporate entities, they opened and maintained numerous
bank accounts. But due to the difficulty if not the impossibility of detecting
and documenting all those secret accounts as well as the enormity of the
deposits therein hidden, the following presentation is confined to five
identified accounts groups, with balances amounting to about $356-M with
a reservation for the filing of a supplemental or separate forfeiture
complaint should the need arise.32
Respondents' lame denial of the aforesaid allegation was:
22. Respondents specifically DENY paragraph 23 insofar as it
alleges that Respondents clandestinely stashed the country’s wealth in
Switzerland and hid the same under layers and layers of foundations and
corporate entities for being false, the truth being that Respondents’
aforesaid properties were lawfully acquired. 33
Evidently, this particular denial had the earmark of what is called in the law on
pleadings as a negative pregnant, that is, a denial pregnant with the admission of the
substantial facts in the pleading responded to which are not squarely denied. It was in effect an
admission of the averments it was directed at. 34 Stated otherwise, a negative pregnant is a
form of negative expression which carries with it an affirmation or at least an implication of some
kind favorable to the adverse party. It is a denial pregnant with an admission of the substantial
facts alleged in the pleading. Where a fact is alleged with qualifying or modifying language and
the words of the allegation as so qualified or modified are literally denied, it has been held that
the qualifying circumstances alone are denied while the fact itself is admitted. 35
In the instant case, the material allegations in paragraph 23 of the said petition were
not specifically denied by respondents in paragraph 22 of their answer. The denial contained in
paragraph 22 of the answer was focused on the averment in paragraph 23 of the petition for
forfeiture that "Respondents clandestinely stashed the country's wealth in Switzerland and hid
the same under layers and layers of foundations and corporate entities." Paragraph 22 of the
respondents' answer was thus a denial pregnant with admissions of the following substantial
facts:
(1) that the Swiss bank deposits existed and
(2) that the estimated sum thereof was US$356 million as of December,
1990.
Therefore, the allegations in the petition for forfeiture on the existence of the Swiss
bank deposits in the sum of about US$356 million, not having been specifically denied by
respondents in their answer, were deemed admitted by them pursuant to Section 11, Rule 8 of
the 1997 Revised Rules on Civil Procedure:
Material averment in the complaint, ...shall be deemed admitted
when not specifically denied. .... 36
 By the same token, the following unsupported denials of respondents in their answer
were pregnant with admissions of the substantial facts alleged in theRepublic's petition for
forfeiture:
23. Respondents specifically DENY paragraphs 24, 25, 26, 27,
28, 29 and 30 of the Petition for lack of knowledge or information sufficient
to form a belief as to the truth of the allegation since respondents were not
privy to the transactions regarding the alleged Azio-Verso-Vibur
Foundation accounts, except that, as to respondent Imelda R. Marcos, she
specifically remembers that the funds involved were lawfully acquired.
24. Respondents specifically DENY paragraphs 31, 32, 33, 34,
35, 36, 37, 38, 39, 40, 41 of the Petition for lack of knowledge or
information sufficient to form a belief as to the truth of the allegations since
respondents were not privy to the transactions and as to such transactions
they were privy to, they cannot remember with exactitude the same having
occurred a long time ago, except as to respondent Imelda R. Marcos, she
specifically remembers that the funds involved were lawfully acquired.
25. Respondents specifically DENY paragraphs 42, 43, 45, and
46 of the petition for lack of knowledge or information sufficient to from a
belief as to the truth of the allegations since respondents were not privy to
the transactions and as to such transaction they were privy to, they cannot
remember with exactitude, the same having occurred a long time ago,
except that as to respondent Imelda R. Marcos, she specifically
remembers that the funds involved were lawfully acquired.
26. Respondents specifically DENY paragraphs 49, 50, 51 and
52 of the petition for lack of knowledge and information sufficient to form a
belief as to the truth of the allegations since respondents were not privy to
the transactions and as to such transaction they were privy to they cannot
remember with exactitude the same having occurred a long time ago,
except that as to respondent Imelda R. Marcos, she specifically
remembers that the funds involved were lawfully acquired.
The matters referred to in paragraphs 23 to 26 of the respondents’ answer pertained to
the creation of five groups of accounts as well as their respective ending balances and attached
documents alleged in paragraphs 24 to 52 of the Republic’s petition for forfeiture. Respondent
Imelda R. Marcos never specifically denied the existence of the Swiss funds. Her claim that "the
funds involved were lawfully acquired" was an acknowledgment on her part of the existence of
said deposits. This only reinforced her earlier admission of the allegation in paragraph 23 of the
petition for forfeiture regarding the existence of the US$356 million Swiss bank
deposits. TADaCH
The allegations in paragraphs 47 37 and 48 38 of the petition for forfeiture referring to
the creation and amount of the deposits of the Rosalys-Aguamina Foundation as well as the
averment in paragraph 52-a 39 of the said petition with respect to the sum of the Swiss bank
deposits estimated to be US$356 million were again not specifically denied by respondents in
their answer. The respondents did not at all respond to the issues raised in these paragraphs
and the existence, nature and amount of the Swiss funds were therefore deemed admitted by
them. As held in Galofa vs. Nee Bon Sing, 40 if a defendant's denial is a negative pregnant, it is
equivalent to an admission.
Moreover, respondents' denial of the allegations in the petition for forfeiture "for lack of
knowledge or information sufficient to form a belief as to the truth of the allegations since
respondents were not privy to the transactions" was just a pretense. Mrs. Marcos' privity to the
transactions was in fact evident from her signatures on some of the vital
documents 41 attached to the petition for forfeiture which Mrs. Marcos failed to specifically
deny as required by the rules. 42
It is worthy to note that the pertinent documents attached to the petition for forfeiture
were even signed personally by respondent Mrs. Marcos and her late husband, Ferdinand E.
Marcos, indicating that said documents were within their knowledge. As correctly pointed out
by Sandiganbayan Justice Francisco Villaruz, Jr. in his dissenting opinion:
The pattern of: 1) creating foundations, 2) use of pseudonyms
and dummies, 3) approving regulations of the Foundations for the
distribution of capital and income of the Foundations to the First and
Second beneficiary (who are no other than FM and his family), 4) opening
of bank accounts for the Foundations, 5) changing the names of the
Foundations, 6) transferring funds and assets of the Foundations to other
Foundations or Fides Trust, 7) liquidation of the Foundations as
substantiated by the Annexes U to U-168, Petition [for forfeiture] strongly
indicate that FM and/or Imelda were the real owners of the assets
deposited in the Swiss banks, using the Foundations as dummies. 43
How could respondents therefore claim lack of sufficient knowledge or information
regarding the existence of the Swiss bank deposits and the creation of five groups of accounts
when Mrs. Marcos and her late husband personally masterminded and participated in the
formation and control of said foundations? This is a fact respondent Marcoses were never able
to explain.
Not only that. Respondents' answer also technically admitted the genuineness and
due execution of the Income Tax Returns (ITRs) and the balance sheets of the late Ferdinand E.
Marcos and Imelda R. Marcos attached to the petition for forfeiture, as well as the veracity of the
contents thereof.
The answer again premised its denials of said ITRs and balance sheets on the ground
of lack of knowledge or information sufficient to form a belief as to the truth of the contents
thereof. Petitioner correctly points out that respondents' denial was not really grounded on lack
of knowledge or information sufficient to form a belief but was based on lack of recollection. By
reviewing their own records, respondent Marcoses could have easily determined the
genuineness and due execution of the ITRs and the balance sheets. They also had the means
and opportunity of verifying the same from the records of the BIR and the Office of the President.
They did not.
 When matters regarding which respondents claim to have no knowledge or
information sufficient to form a belief are plainly and necessarily within their knowledge, their
alleged ignorance or lack of information will not be considered a specific denial. 44 An
unexplained denial of information within the control of the pleader, or is readily accessible to
him, is evasive and is insufficient to constitute an effective denial. 45
The form of denial adopted by respondents must be availed of with sincerity and in
good faith, and certainly not for the purpose of confusing the adverse party as to what
allegations of the petition are really being challenged; nor should it be made for the purpose of
delay. 46 In the instant case, the Marcoses did not only present unsubstantiated assertions but
in truth attempted to mislead and deceive this Court by presenting an obviously contrived
defense.
Simply put, a profession of ignorance about a fact which is patently and necessarily
within the pleader’s knowledge or means of knowing is as ineffective as no denial at
all. 47 Respondents’ ineffective denial thus failed to properly tender an issue and the
averments contained in the petition for forfeiture were deemed judicially admitted by them.
As held in J.P. Juan & Sons, Inc. vs. Lianga Industries, Inc.:
Its "specific denial" of the material allegation of the petition
without setting forth the substance of the matters relied upon to support its
general denial, when such matters were plainly within its knowledge and it
could not logically pretend ignorance as to the same, therefore, failed to
properly tender on issue. 48
Thus, the general denial of the Marcos children of the allegations in the petition for
forfeiture "for lack of knowledge or information sufficient to form a belief as to the truth of the
allegations since they were not privy to the transactions" cannot rightfully be accepted as a
defense because they are the legal heirs and successors-in-interest of Ferdinand E. Marcos
and are therefore bound by the acts of their father vis-a-vis the Swiss funds.
PRE-TRIAL BRIEF DATED OCTOBER 18, 1993
The pre-trial brief of Mrs. Marcos was adopted by the three Marcos children. In said
brief, Mrs. Marcos stressed that the funds involved were lawfully acquired. But, as in their
answer, they failed to state and substantiate how these funds were acquired lawfully. They
failed to present and attach even a single document that would show and prove the truth of their
allegations. Section 6, Rule 18 of the 1997 Rules of Civil Procedure provides:
The parties shall file with the court and serve on the adverse
party, ...their respective pre-trial briefs which shall contain, among others:
xxx xxx xxx
(d) the documents or exhibits to be presented, stating the
purpose thereof;
xxx xxx xxx
(f) the number and names of the witnesses, and the substance of
their respective testimonies. 49
It is unquestionably within the court’s power to require the parties to submit their
pre-trial briefs and to state the number of witnesses intended to be called to the stand, and a
brief summary of the evidence each of them is expected to give as well as to disclose the
number of documents to be submitted with a description of the nature of each. The tenor and
character of the testimony of the witnesses and of the documents to be deduced at the trial thus
made known, in addition to the particular issues of fact and law, it becomes apparent if genuine
issues are being put forward necessitating the holding of a trial. Likewise, the parties are
obliged not only to make a formal identification and specification of the issues and their proofs,
and to put these matters in writing and submit them to the court within the specified period for
the prompt disposition of the action. 50
The pre-trial brief of Mrs. Marcos, as subsequently adopted by respondent Marcos
children, merely stated:
xxx xxx xxx
WITNESSES
4.1 Respondent Imelda will present herself as a witness and
reserves the right to present additional witnesses as may be necessary in
the course of the trial.
xxx xxx xxx
DOCUMENTARY EVIDENCE
5.1 Respondent Imelda reserves the right to present and
introduce in evidence documents as may be necessary in the course of the
trial.
Mrs. Marcos did not enumerate and describe the documents constituting her evidence.
Neither the names of witnesses nor the nature of their testimony was stated. What alone
appeared certain was the testimony of Mrs. Marcos only who in fact had previously claimed
ignorance and lack of knowledge. And even then, the substance of her testimony, as required
by the rules, was not made known either. Such cunning tactics of respondents are totally
unacceptable to this Court. We hold that, since no genuine issue was raised, the case became
ripe for summary judgment.
OPPOSITION TO MOTION FOR SUMMARY JUDGMENT DATED MARCH 21,
2000
The opposition filed by Mrs. Marcos to the motion for summary judgment dated March
21, 2000 of petitioner Republic was merely adopted by the Marcos children as their own
opposition to the said motion. However, it was again not accompanied by affidavits, depositions
or admissions as required by Section 3, Rule 35 of the 1997 Rules on Civil Procedure:
 ...The adverse party may serve opposing affidavits, depositions,
or admissions at least three (3) days before hearing. After hearing, the
judgment sought shall be rendered forthwith if the pleadings, supporting
affidavits, depositions, and admissions on file, show that, except as to the
amount of damages, there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law. 51
The absence of opposing affidavits, depositions and admissions to contradict the
sworn declarations in the Republic’s motion only demonstrated that the averments of such
opposition were not genuine and therefore unworthy of belief.
DEMURRER TO EVIDENCE DATED MAY 2,2000; 52 MOTIONS FOR
RECONSIDERATION; 53 AND MEMORANDA OF MRS. MARCOS AND THE MARCOS
CHILDREN 54
All these pleadings again contained no allegations of facts showing their lawful
acquisition of the funds. Once more, respondents merely made general denials without alleging
facts which would have been admissible in evidence at the hearing, thereby failing to raise
genuine issues of fact.
Mrs. Marcos insists in her memorandum dated October 21, 2002 that, during the
pre-trial, her counsel stated that his client was just a beneficiary of the funds, contrary to
petitioner Republic’s allegation that Mrs. Marcos disclaimed ownership of or interest in the
funds.
This is yet another indication that respondents presented a fictitious defense because,
during the pre-trial, Mrs. Marcos and the Marcos children deniedownership of or interest in the
Swiss funds:
PJ Garchitorena:
Make of record that as far as Imelda Marcos is concerned through the
statement of Atty. Armando M. Marcelo that the US$360 million
more or less subject matter of the instant lawsuit as allegedly
obtained from the various Swiss Foundations do not belong to the
estate of Marcos or to Imelda Marcos herself. That’s your
statement of facts?
Atty. MARCELO:
Yes, Your Honor.
PJ Garchitorena:
That's it. Okay. Counsel for Manotoc and Ferdinand, Jr. What is your point
here? Does the estate of Marcos own anything of the $360 million
subject of this case.
Atty. TECSON:
We joined the Manifestation of Counsel.
PJ Garchitorena:
You do not own anything?
Atty. TECSON:
Yes, Your Honor.
PJ Garchitorena:
Counsel for Irene Araneta?
Atty. SISON:
I join the position taken by my other compañeros here, Your Honor.
xxx xxx xxx
Atty. SISON:
Irene Araneta as heir do (sic) not own any of the amount, Your Honor. 55
We are convinced that the strategy of respondent Marcoses was to confuse
petitioner Republic as to what facts they would prove or what issues they intended to pose for
the court's resolution. There is no doubt in our mind that they were leading petitioner Republic,
and now this Court, to perplexity, if not trying to drag this forfeiture case to eternity.
MANIFESTATION DATED MAY 26, 1998 FILED BY MRS. MARCOS;
GENERAL/SUPPLEMENTAL COMPROMISE AGREEMENT DATED DECEMBER 28, 1993
These pleadings of respondent Marcoses presented nothing but feigned defenses. In
their earlier pleadings, respondents alleged either that they had no knowledge of the existence
of the Swiss deposits or that they could no longer remember anything as it happened a long
time ago. As to Mrs. Marcos, she remembered that it was lawfully acquired.
In her Manifestation dated May 26, 1998, Mrs. Marcos stated that:
COMES NOW undersigned counsel for respondent Imelda R.
Marcos, and before this Honorable Court, most respectfully manifests:
That respondent Imelda R, Marcos owns 90% of the subject
matter of the above-entitled case, being the sole beneficiary of the dollar
deposits in the name of the various foundations alleged in the case;
That in fact only 10% of the subject matter in the above-entitled
case belongs to the estate of the late President Ferdinand E. Marcos.
In the Compromise/Supplemental Agreements, respondent Marcoses sought to
implement the agreed distribution of the Marcos assets, including the Swiss deposits.This was,
to us, an unequivocal admission of ownership by the Marcoses of the said deposits.
But, as already pointed out, during the pre-trial conference, respondent Marcoses
denied knowledge as well as ownership of the Swiss funds.
 Anyway we look at it, respondent Marcoses have put forth no real defense. The "facts"
pleaded by respondents, while ostensibly raising important questions or issues of fact, in reality
comprised mere verbiage that was evidently wanting in substance and constituted no genuine
issues for trial.
We therefore rule that, under the circumstances, summary judgment is proper.
In fact, it is the law itself which determines when summary judgment is called for.
Under the rules, summary judgment is appropriate when there are no genuine issues of fact
requiring the presentation of evidence in a full-blown trial. Even if on their face the pleadings
appear to raise issue, if the affidavits, depositions and admissions show that such issues are
not genuine, then summary judgment as prescribed by the rules must ensue as a matter of
law. 56
In sum, mere denials, if unaccompanied by any fact which will be admissible in
evidence at a hearing, are not sufficient to raise genuine issues of fact and will not defeat a
motion for summary judgment. 57 A summary judgment is one granted upon motion of a party
for an expeditious settlement of the case, it appearing from the pleadings, depositions,
admissions and affidavits that there are no important questions or issues of fact posed and,
therefore, the movant is entitled to a judgment as a matter of law. A motion for summary
judgment is premised on the assumption that the issues presented need not be tried either
because these are patently devoid of substance or that there is no genuine issue as to any
pertinent fact. It is a method sanctioned by the Rules of Court for the prompt disposition of a civil
action where there exists no serious controversy. 58 Summary judgment is a procedural device
for the prompt disposition of actions in which the pleadings raise only a legal issue, not a
genuine issue as to any material fact. The theory of summary judgment is that, although an
answer may on its face appear to tender issues requiring trial, if it is established by affidavits,
depositions or admissions that those issues are not genuine but fictitious, the Court is justified
in dispensing with the trial and rendering summary judgment for petitioner. 59
In the various annexes to the petition for forfeiture, petitioner Republic attached sworn
statements of witnesses who had personal knowledge of the Marcoses' participation in the
illegal acquisition of funds deposited in the Swiss accounts under the names of five groups or
foundations. These sworn statements substantiated the ill-gotten nature of the Swiss bank
deposits. In their answer and other subsequent pleadings, however, the Marcoses merely
made general denials of the allegations against them without stating facts admissible in
evidence at the hearing, thereby failing to raise any genuine issues of fact.
Under these circumstances, a trial would have served no purpose at all and would
have been totally unnecessary, thus justifying a summary judgment on the petition for forfeiture.
There were no opposing affidavits to contradict the sworn declarations of the witnesses of
petitioner Republic, leading to the inescapable conclusion that the matters raised in the
Marcoses' answer were false.
Time and again, this Court has encountered cases like this which are either only
half-heartedly defended or, if the semblance of a defense is interposed at all, it is only to delay
disposition and gain time. It is certainly not in the interest of justice to allow respondent
Marcoses to avail of the appellate remedies accorded by the Rules of Court to litigants in good
faith, to the prejudice of the Republic and ultimately of the Filipino people. From the beginning,
a candid demonstration of respondents' good faith should have been made to the court below.
Without the deceptive reasoning and argumentation, this protracted litigation could have ended
a long time ago.
Since 1991, when the petition for forfeiture was first filed, up to the present, all
respondents have offered are foxy responses like "lack of sufficient knowledge or lack of privity"
or "they cannot recall because it happened a long time ago" or, as to Mrs. Marcos, "the funds
were lawfully acquired." But, whenever it suits them, they also claim ownership of 90% of the
funds and allege that only 10% belongs to the Marcos estate. It has been an incredible charade
from beginning to end.
In the hope of convincing this Court to rule otherwise, respondents Maria Imelda
Marcos-Manotoc and Ferdinand R. Marcos, Jr. contend that "by its positive acts and express
admissions prior to filing the motion for summary judgment on March 10, 2000,
petitioner Republic had bound itself to go to trial on the basis of existing issues. Thus, it had
legally waived whatever right it had to move for summary judgment." 60
We do not think so. The alleged positive acts and express admissions of the petitioner
did not preclude it from filing a motion for summary judgment.
Rule 35 of the 1997 Rules of Civil Procedure provides:
Rule 35
Summary Judgment
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.
Section 2. Summary judgment for defending party. — A party
against whom a claim, counterclaim, or cross-claim is asserted or a
declaratory relief is sought may, at any time,move with supporting
affidavits, depositions or admissions for a summary judgment in his favor
as to all or any part thereof. (Emphasis and italics ours) 61
Under the rule, the plaintiff can move for summary judgment "at any time after the
pleading in answer thereto (i.e.,in answer to the claim, counterclaim or cross-claim) has been
served." No fixed reglementary period is provided by the Rules. How else does one construe
the phrase "any time after the answer has been served?"
This issue is actually one of first impression. No local jurisprudence or authoritative
work has touched upon this matter. This being so, an examination of foreign laws and
jurisprudence, particularly those of the United States where many of our laws and rules were
copied, is in order.
 Rule 56 of the Federal Rules of Civil Procedure provides that a party seeking to
recover upon a claim, counterclaim or cross-claim may move for summary judgment at any time
after the expiration of 20 days from the commencement of the action or after service of a motion
for summary judgment by the adverse party, and that a party against whom a claim,
counterclaim or cross-claim is asserted may move for summary judgment at any time.
However, some rules, particularly Rule 113 of the Rules of Civil Practice of New York,
specifically provide that a motion for summary judgment may not be made until issues have
been joined, that is, only after an answer has been served. 62 Under said rule, after issues
have been joined, the motion for summary judgment may be made at any stage of the
litigation. 63 No fixed prescriptive period is provided.
Like Rule 113 of the Rules of Civil Practice of New York, our rules also provide that a
motion for summary judgment may not be made until issues have been joined, meaning, the
plaintiff has to wait for the answer before he can move for summary judgment. 64 And like the
New York rules, ours do not provide for a fixed reglementary period within which to move for
summary judgment.
This being so, the New York Supreme Court's interpretation of Rule 113 of the Rules
of Civil Practice can be applied by analogy to the interpretation of Section 1, Rule 35, of our
1997 Rules of Civil Procedure.
Under the New York rule, after the issues have been joined, the motion for summary
judgment may be made at any stage of the litigation. And what exactly does the phrase "at any
stage of the litigation" mean? In Ecker vs. Muzysh, 65 the New York Supreme Court ruled:
"PER CURIAM.
Plaintiff introduced her evidence and the defendants rested on
the case made by the plaintiff. The case was submitted. Owing to the
serious illness of the trial justice, a decision was not rendered within sixty
days after the final adjournment of the term at which the case was tried.
With the approval of the trial justice, the plaintiff moved for a new trial under
Section 442 of the Civil Practice Act. The plaintiff also moved for summary
judgment under Rule 113 of the Rules of Civil Practice.The motion was
opposed mainly on the ground that, by proceeding to trial, the
plaintiff had waived her right to summary judgment and that the
answer and the opposing affidavits raised triable issues. The amount due
and unpaid under the contract is not in dispute. The Special Term granted
both motions and the defendants have appealed.
The Special Term properly held that the answer and the opposing
affidavits raised no triable issue. Rule 113 of the Rules of Civil Practice
and the Civil Practice Act prescribe no limitation as to the time when
a motion for summary judgment must be made. The object of Rule
113 is to empower the court to summarily determine whether or not a
bona fide issue exists between the parties, and there is no limitation
on the power of the court to make such a determination at any stage
of the litigation." (emphasis and italics ours)
On the basis of the aforequoted disquisition, "any stage of the litigation" means that "even
if the plaintiff has proceeded to trial, this does not preclude him from thereafter moving for
summary judgment." 66
In the case at bar, petitioner moved for summary judgment after pre-trial and before its
scheduled date for presentation of evidence. Respondent Marcoses argue that, by agreeing to
proceed to trial during the pre-trial conference, petitioner "waived" its right to summary
judgment.
This argument must fail in the light of the New York Supreme Court ruling which we
apply by analogy to this case. In Ecker, 67 the defendant opposed the motion for summary
judgment on a ground similar to that raised by the Marcoses, that is, "that plaintiff had waived
her right to summary judgment" by her act of proceeding to trial. If, as correctly ruled by the New
York court, plaintiff was allowed to move for summary judgment even after trial and submission
of the case for resolution, more so should we permit it in the present case where petitioner
moved for summary judgment before trial.
Therefore, the phrase "anytime after the pleading in answer thereto has been served"
in Section 1, Rule 35 of our Rules of Civil Procedure means "at any stage of the litigation."
Whenever it becomes evident at any stage of the litigation that no triable issue exists, or that the
defenses raised by the defendant(s) are sham or frivolous, plaintiff may move for summary
judgment. A contrary interpretation would go against the very objective of the Rule on Summary
Judgment which is to "weed out sham claims or defenses thereby avoiding the expense and
loss of time involved in a trial." 68
In cases with political undertones like the one at bar, adverse parties will often do
almost anything to delay the proceedings in the hope that a future administration sympathetic to
them might be able to influence the outcome of the case in their favor. This is rank injustice we
cannot tolerate.
The law looks with disfavor on long, protracted and expensive litigation and
encourages the speedy and prompt disposition of cases. That is why the law and the rules
provide for a number of devices to ensure the speedy disposition of cases. Summary judgment
is one of them.
Faithful therefore to the spirit of the law on summary judgment which seeks to avoid
unnecessary expense and loss of time in a trial, we hereby rule that petitioner Republic could
validly move for summary judgment any time after the respondents’ answer was filed or, for that
matter, at any subsequent stage of the litigation. The fact that petitioner agreed to proceed to
trial did not in any way prevent it from moving for summary judgment, as indeed no genuine
issue of fact was ever validly raised by respondent Marcoses.
This interpretation conforms with the guiding principle enshrined in Section 6, Rule 1
of the 1997 Rules of Civil Procedure that the "[r]ules should be liberally construed in order to
promote their objective of securing a just, speedy and inexpensive disposition of every action
and proceeding." 69
Respondents further allege that the motion for summary judgment was based on
respondents' answer and other documents that had long been in the records of the case. Thus,
by the time the motion was filed on March 10, 2000, estoppel by laches had already set in
against petitioner.
We disagree. Estoppel by laches is the failure or neglect for an unreasonable or
unexplained length of time to do that which, by exercising due diligence, could or should have
been done earlier, warranting a presumption that the person has abandoned his right or
declined to assert it. 70 In effect, therefore, the principle of laches is one of estoppel because "it
prevents people who have slept on their rights from prejudicing the rights of third parties who
have placed reliance on the inaction of the original parties and their successors-in-interest." 71
A careful examination of the records, however, reveals that petitioner was in fact never
remiss in pursuing its case against respondent Marcoses through every remedy available to it,
including the motion for summary judgment.
Petitioner Republic initially filed its motion for summary judgment on October 18, 1996.
The motion was denied because of the pending compromise agreement between the Marcoses
and petitioner. But during the pre-trial conference, the Marcoses denied ownership of the Swiss
funds, prompting petitioner to file another motion for summary judgment now under
consideration by this Court. It was the subsequent events that transpired after the answer was
filed, therefore, which prevented petitioner from filing the questioned motion. It was definitely
not because of neglect or inaction that petitioner filed the (second) motion for summary
judgment years after respondents' answer to the petition for forfeiture.
In invoking the doctrine of estoppel by laches, respondents must show not only
unjustified inaction but also that some unfair injury to them might result unless the action is
barred. 72
This, respondents failed to bear out. In fact, during the pre-trial conference, the
Marcoses disclaimed ownership of the Swiss deposits. Not being the owners, as they claimed,
respondents did not have any vested right or interest which could be adversely affected by
petitioner's alleged inaction.
But even assuming for the sake of argument that laches had already set in, the
doctrine of estoppel or laches does not apply when the government sues as a sovereign or
asserts governmental rights. 73 Nor can estoppel validate an act that contravenes law or public
policy. 74
As a final point, it must be emphasized that laches is not a mere question of time but is
principally a question of the inequity or unfairness of permitting a right or claim to be enforced or
asserted. 75 Equity demands that petitioner Republic should not be barred from pursuing the
people's case against the Marcoses.
(2) THE PROPRIETY OF FORFEITURE
The matter of summary judgment having been thus settled, the issue of whether or not
petitioner Republic was able to prove its case for forfeiture in accordance with the requisites of
Sections 2 and 3 of RA 1379 now takes center stage.
The law raises the prima facie presumption that a property is unlawfully acquired,
hence subject to forfeiture, if its amount or value is manifestly disproportionate to the official
salary and other lawful income of the public officer who owns it. Hence, Sections 2 and 6 of RA
1379 76 provide:
xxx xxx xxx
Section 2. Filing of petition. — Whenever any public officer or
employee has acquired during his incumbency an amount or property
which is manifestly out of proportion to his salary as such public officer or
employee and to his other lawful income and the income from legitimately
acquired property, said property shall be presumed prima facie to have
been unlawfully acquired.
xxx xxx xxx
Sec. 6. Judgment. — If the respondent is unable to show to the
satisfaction of the court that he has lawfully acquired the property in
question, then the court shall declare such property in question, forfeited in
favor of the State, and by virtue of such judgment the property aforesaid
shall become the property of the State.Provided,That no judgment shall be
rendered within six months before any general election or within three
months before any special election. The Court may, in addition, refer this
case to the corresponding Executive Department for administrative or
criminal action, or both.
From the above-quoted provisions of the law, the following facts must be established
in order that forfeiture or seizure of the Swiss deposits may be effected:
(1) ownership by the public officer of money or property acquired during his
incumbency, whether it be in his name or otherwise, and
(2) the extent to which the amount of that money or property
exceeds, i.e.,is grossly disproportionate to, the legitimate income
of the public officer.
That spouses Ferdinand and Imelda Marcos were public officials during the time
material to the instant case was never in dispute. Paragraph 4 of respondent Marcoses' answer
categorically admitted the allegations in paragraph 4 of the petition for forfeiture as to the
personal circumstances of Ferdinand E. Marcos as a public official who served without
interruption as Congressman, Senator, Senate President and President of the Republic of the
Philippines from December 1, 1965 to February 25, 1986. 77 Likewise, respondents admitted in
their answer the contents of paragraph 5 of the petition as to the personal circumstances of
Imelda R. Marcos who once served as a member of the Interim Batasang Pambansa from 1978
to 1984 and as Metro Manila Governor, concurrently Minister of Human Settlements, from June
1976 to February 1986. 78
Respondent Mrs. Marcos also admitted in paragraph 10 of her answer the allegations
of paragraph 11 of the petition for forfeiture which referred to the accumulated salaries of
respondents Ferdinand E. Marcos and Imelda R. Marcos. 79 The combined accumulated
salaries of the Marcos couple were reflected in the Certification dated May 27, 1986 issued by
then Minister of Budget and Management Alberto Romulo. 80 The Certification showed that,
from 1966 to 1985, Ferdinand E. Marcos and Imelda R. Marcos had accumulated salaries in the
amount of P1,570,000 and P718,750, respectively, or a total of P2,288,750:
FERDINAND E. MARCOS, AS PRESIDENT
1966-1976 at P60,000/year P660,000
1977-1984 at P100,000/year 800,000
1985 at P110,000/year 110,000
————
P1,570,000
IMELDA R. MARCOS, AS MINISTER
June 1976-1985 at P75,000/year P718,000
In addition to their accumulated salaries from 1966 to 1985 are the Marcos couple’s
combined salaries from January to February 1986 in the amount of P30,833.33. Hence, their
total accumulated salaries amounted to P2,319,583.33. Converted to U.S. dollars on the basis
of the corresponding peso-dollar exchange rates prevailing during the applicable period when
said salaries were received, the total amount had an equivalent value of $304,372.43.
The dollar equivalent was arrived at by using the official annual rates of exchange of
the Philippine peso and the US dollar from 1965 to 1985 as well as the official monthly rates of
exchange in January and February 1986 issued by the Center for Statistical Information of
the Bangko Sentral ng Pilipinas.
Prescinding from the aforesaid admissions, Section 4, Rule 129 of the Rules of Court
provides that:
Section 4. — Judicial admissions — An admission, verbal or
written, made by a party in the course of the proceedings in the same case
does not require proof. The admission may be contradicted only by
showing that it was made through palpable mistake or that no such
admission was made. 81
It is settled that judicial admissions may be made: (a) in the pleadings filed by the
parties; (b) in the course of the trial either by verbal or written manifestations or stipulations; or
(c) in other stages of judicial proceedings, as in the pre-trial of the case. 82 Thus, facts pleaded
in the petition and answer, as in the case at bar, are deemed admissions of petitioner and
respondents, respectively, who are not permitted to contradict them or subsequently take a
position contrary to or inconsistent with such admissions. 83
The sum of $304,372.43 should be held as the only known lawful income of
respondents since they did not file any Statement of Assets and Liabilities (SAL),as required by
law, from which their net worth could be determined. Besides, under the 1935 Constitution,
Ferdinand E. Marcos as President could not receive "any other emolument from the
Government or any of its subdivisions and instrumentalities." 84 Likewise, under the 1973
Constitution, Ferdinand E. Marcos as President could "not receive during his tenure any other
emolument from the Government or any other source." 85 In fact, his management of
businesses, like the administration of foundations to accumulate funds, was expressly
prohibited under the 1973 Constitution:
Article VII, Sec. 4(2) — The President and the Vice-President
shall not, during their tenure, hold any other office except when otherwise
provided in thisConstitution,nor may they practice any profession,
participate directly or indirectly in the management of any business, or be
financially interested directly or indirectly in any contract with, or in any
franchise or special privilege granted by the Government or any other
subdivision, agency, or instrumentality thereof, including any government
owned or controlled corporation.
Article VII, Sec. 11 — No Member of the National Assembly shall
appear as counsel before any court inferior to a court with appellate
jurisdiction, ....Neither shall he, directly or indirectly, be interested
financially in any contract with, or in any franchise or special privilege
granted by the Government, or any subdivision, agency, or instrumentality
thereof including any government owned or controlled corporation during
his term of office. He shall not intervene in any matter before any office of
the government for his pecuniary benefit.
Article IX, Sec. 7 — The Prime Minister and Members of the
Cabinet shall be subject to the provision of Section 11, Article VIII hereof
and may not appear as counsel before any court or administrative body, or
manage any business, or practice any profession, and shall also be
subject to such other disqualification as may be provided by law.
Their only known lawful income of $304,372.43 can therefore legally and fairly serve
as basis for determining the existence of a prima facie case of forfeiture of the Swiss funds.
Respondents argue that petitioner was not able to establish a prima facie case for the
forfeiture of the Swiss funds since it failed to prove the essential elements under Section 3,
paragraphs (c), (d) and (e) of RA 1379. As the Act is a penal statute, its provisions are
mandatory and should thus be construed strictly against the petitioner and liberally in favor of
respondent Marcoses.
We hold that it was not for petitioner to establish the Marcoses' other lawful income or
income from legitimately acquired property for the presumption to apply because, as between
petitioner and respondents, the latter were in a better position to know if there were such other
sources of lawful income. And if indeed there was such other lawful income, respondents
should have specifically stated the same in their answer. Insofar as petitioner Republic was
concerned, it was enough to specify the known lawful income of respondents.
Section 9 of the PCGG Rules and Regulations provides that, in determining prima
facie evidence of ill-gotten wealth, the value of the accumulated assets, properties and other
material possessions of those covered by Executive Order Nos. 1 and 2 must be out of
proportion to the known lawful income of such persons. The respondent Marcos couple did not
file any Statement of Assets and Liabilities (SAL) from which their net worth could be
determined. Their failure to file their SAL was in itself a violation of law and to allow them to
successfully assail the Republic for not presenting their SAL would reward them for their
violation of the law.
Further, contrary to the claim of respondents, the admissions made by them in their
various pleadings and documents were valid. It is of record that respondents judicially admitted
that the money deposited with the Swiss banks belonged to them.
We agree with petitioner that respondent Marcoses made judicial admissions of their
ownership of the subject Swiss bank deposits in their answer, the General/Supplemental
Agreements, Mrs. Marcos' Manifestation and Constancia dated May 5, 1999, and the
Undertaking dated February 10, 1999. We take note of the fact that the Associate Justices of
the Sandiganbayan were unanimous in holding that respondents had made judicial admissions
of their ownership of the Swiss funds.
In their answer, aside from admitting the existence of the subject funds, respondents
likewise admitted ownership thereof. Paragraph 22 of respondents' answer stated:
22. Respondents specifically DENY PARAGRAPH 23 insofar as
it alleges that respondents clandestinely stashed the country's wealth in
Switzerland and hid the same under layers and layers of foundations and
corporate entities for being false, the truth being that respondents'
aforesaid properties were lawfully acquired.(italics supplied)
By qualifying their acquisition of the Swiss bank deposits as lawful, respondents
unwittingly admitted their ownership thereof.
Respondent Mrs. Marcos also admitted ownership of the Swiss bank deposits by
failing to deny under oath the genuineness and due execution of certain actionable documents
bearing her signature attached to the petition. As discussed earlier, Section 11, Rule 8 86 of the
1997 Rules of Civil Procedure provides that material averments in the complaint shall be
deemed admitted when not specifically denied.
The General 87 and Supplemental 88 Agreements executed by petitioner and
respondents on December 28, 1993 further bolstered the claim of petitioner Republicthat its
case for forfeiture was proven in accordance with the requisites of Sections 2 and 3 of RA 1379.
The whereas clause in the General Agreement declared that:
WHEREAS, the FIRST PARTY has obtained a judgment from the
Swiss Federal Tribunal on December 21, 1990, that the $356 million
belongs in principle to theRepublic of the Philippines provided certain
conditionalities are met, but even after 7 years, the FIRST PARTY has not
been able to procure a final judgment of conviction against the PRIVATE
PARTY.
While the Supplemental Agreement warranted, inter alia,that:
In consideration of the foregoing, the parties hereby agree that
the PRIVATE PARTY shall be entitled to the equivalent of 25% of the
amount that may be eventually withdrawn from said $356 million Swiss
deposits.
The stipulations set forth in the General and Supplemental Agreements undeniably
indicated the manifest intent of respondents to enter into a compromise with petitioner.
Corollarily, respondents’ willingness to agree to an amicable settlement with the Republic only
affirmed their ownership of the Swiss deposits for the simple reason that no person would
acquiesce to any concession over such huge dollar deposits if he did not in fact own them.
Respondents make much capital of the pronouncement by this Court that the General
and Supplemental Agreements were null and void. 89 They insist that nothing in those
agreements could thus be admitted in evidence against them because they stood on the same
ground as an accepted offer which, under Section 27, Rule 130 90 of the 1997 Rules of Civil
Procedure, provides that "in civil cases, an offer of compromise is not an admission of any
liability and is not admissible in evidence against the offeror."
We find no merit in this contention. The declaration of nullity of said agreements was
premised on the following constitutional and statutory infirmities: (1) the grant of criminal
immunity to the Marcos heirs was against the law; (2) the PCGG's commitment to exempt from
all forms of taxes the properties to be retained by the Marcos heirs was against the Constitution;
and (3) the government’s undertaking to cause the dismissal of all cases filed against the
Marcoses pending before theSandiganbayan and other courts encroached on the powers of
the judiciary. The reasons relied upon by the Court never in the least bit even touched on the
veracity and truthfulness of respondents' admission with respect to their ownership of the Swiss
funds.Besides, having made certain admissions in those agreements, respondents cannot now
deny that they voluntarily admitted owning the subject Swiss funds, notwithstanding the fact
that the agreements themselves were later declared null and void.
The following observation of Sandiganbayan Justice Catalino Castañeda, Jr. in the
decision dated September 19, 2000 could not have been better said:
...The declaration of nullity of the two agreements rendered the
same without legal effects but it did not detract from the admissions of the
respondents contained therein. Otherwise stated, the admissions made in
said agreements, as quoted above, remain binding on the respondents. 91
A written statement is nonetheless competent as an admission even if it is contained in
a document which is not itself effective for the purpose for which it is made, either by reason of
illegality, or incompetency of a party thereto, or by reason of not being signed, executed or
delivered. Accordingly, contracts have been held as competent evidence of admissions,
although they may be unenforceable. 92
The testimony of respondent Ferdinand Marcos, Jr. during the hearing on the motion
for the approval of the Compromise Agreement on April 29, 1998 also lent credence to the
allegations of petitioner Republic that respondents admitted ownership of the Swiss bank
accounts. We quote the salient portions of Ferdinand Jr.'s formal declarations in open court:
ATTY. FERNANDO:
Mr. Marcos, did you ever have any meetings with PCGG Chairman
Magtanggol C. Gunigundo?
F. MARCOS, JR.:
Yes. I have had very many meetings in fact with Chairman.
ATTY. FERNANDO:
Would you recall when the first meeting occurred?
PJ GARCHITORENA:
In connection with what?
ATTY. FERNANDO:
In connection with the ongoing talks to compromise the various cases
initiated by PCGG against your family?
F. MARCOS, JR.:
The nature of our meetings was solely concerned with negotiations
towards achieving some kind of agreement between the
Philippine government and the Marcos family. The discussions
that led up to the compromise agreement were initiated by our
then counsel Atty. Simeon Mesina .... 93
xxx xxx xxx
ATTY. FERNANDO:
What was your reaction when Atty. Mesina informed you of this
possibility?
F. MARCOS, JR.:
My reaction to all of these approaches is that I am always open, we are
always open, we are very much always in search of resolution to
the problem of the family and any approach that has been made
us, we have entertained. And so my reaction was the same as
what I have always ...why not? Maybe this is the one that will
finally put an end to this problem. 94
xxx xxx xxx
ATTY. FERNANDO:
Basically, what were the true amounts of the assets in the bank?
PJ GARCHITORENA:
So, we are talking about liquid assets here? Just Cash?
F. MARCOS, JR.:
Well, basically, any assets. Anything that was under the Marcos name in
any of the banks in Switzerland which may necessarily be not
cash. 95
xxx xxx xxx
PJ GARCHITORENA:
...What did you do in other words, after being apprised of this contract in
connection herewith?
F. MARCOS, JR.:
I assumed that we are beginning to implement the agreement because
this was forwarded through the Philippine government lawyers
through our lawyers and then, subsequently, to me. I was a little
surprised because we hadn't really discussed the details of the
transfer of the funds, what the bank accounts, what the
mechanism would be. But nevertheless, I was happy to see that
as far as the PCGG is concerned, that the agreement was
perfected and that we were beginning to implement it and that
was a source of satisfaction to me because I thought that finally it
will be the end. 96
Ferdinand Jr.'s pronouncements, taken in context and in their entirety, were a
confirmation of respondents’ recognition of their ownership of the Swiss bank deposits.
Admissions of a party in his testimony are receivable against him. If a party, as a witness,
deliberately concedes a fact, such concession has the force of a judicial admission. 97 It is
apparent from Ferdinand Jr.'s testimony that the Marcos family agreed to negotiate with the
Philippine government in the hope of finally putting an end to the problems besetting the Marcos
family regarding the Swiss accounts. This was doubtlessly an acknowledgment of ownership on
their part. The rule is that the testimony on the witness stand partakes of the nature of a formal
judicial admission when a party testifies clearly and unequivocally to a fact which is peculiarly
within his own knowledge. 98
 In her Manifestation 99 dated May 26, 1998, respondent Imelda Marcos furthermore
revealed the following:
That respondent Imelda R. Marcos owns 90% of the subject
matter of the above-entitled case, being the sole beneficiary of the dollar
deposits in the name of the various foundations alleged in the case;
That in fact only 10% of the subject matter in the above-entitled
case belongs to the estate of the late President Ferdinand E. Marcos;
xxx xxx xxx
Respondents' ownership of the Swiss bank accounts as borne out by Mrs. Marcos'
manifestation is as bright as sunlight. And her claim that she is merely a beneficiary of the Swiss
deposits is belied by her own signatures on the appended copies of the documents
substantiating her ownership of the funds in the name of the foundations. As already mentioned,
she failed to specifically deny under oath the authenticity of such documents, especially those
involving "William Saunders" and "Jane Ryan" which actually referred to Ferdinand Marcos and
Imelda Marcos, respectively. That failure of Imelda Marcos to specifically deny the existence,
much less the genuineness and due execution, of the instruments bearing her signature, was
tantamount to a judicial admission of the genuineness and due execution of said instruments, in
accordance with Section 8, Rule 8 100 of the 1997 Rules of Civil Procedure.
Likewise, in her Constancia 101 dated May 6, 1999, Imelda Marcos prayed for the
approval of the Compromise Agreement and the subsequent release and transfer of the $150
million to the rightful owner. She further made the following manifestations:
xxx xxx xxx
2. The Republic's cause of action over the full amount is its
forfeiture in favor of the government if found to be ill-gotten. On the other
hand, the Marcoses defend that it is a legitimate asset.Therefore, both
parties have an inchoate right of ownership over the account. If it turns out
that the account is of lawful origin, theRepublic may yield to the Marcoses.
Conversely, the Marcoses must yield to the Republic. (italics supplied)
xxx xxx xxx
3. Consistent with the foregoing, and the Marcoses having
committed themselves to helping the less fortunate, in the interest of peace,
reconciliation and unity, defendant MADAM IMELDA ROMUALDEZ
MARCOS, in firm abidance thereby, hereby affirms her agreement with
the Republic for the release and transfer of the US Dollar 150 million for
proper disposition, without prejudice to the final outcome of the litigation
respecting the ownership of the remainder.
Again, the above statements were indicative of Imelda's admission of the Marcoses'
ownership of the Swiss deposits as in fact "the Marcoses defend that it (Swiss deposits) is a
legitimate (Marcos) asset."
On the other hand, respondents Maria Imelda Marcos-Manotoc, Ferdinand Marcos, Jr.
and Maria Irene Marcos-Araneta filed a motion 102 on May 4, 1998 asking
the Sandiganbayan to place the res (Swiss deposits) in custodia legis:
7. Indeed, the prevailing situation is fraught with danger! Unless
the aforesaid Swiss deposits are placed in custodia legis or within the
Court's protective mantle, its dissipation or misappropriation by the
petitioner looms as a distinct possibility.
Such display of deep, personal interest can only come from someone who believes
that he has a marked and intimate right over the considerable dollar deposits. Truly, by filing
said motion, the Marcos children revealed their ownership of the said deposits.
Lastly, the Undertaking 103 entered into by the PCGG, the PNB and the Marcos
foundations on February 10, 1999, confirmed the Marcoses’ ownership of the Swiss bank
deposits. The subject Undertaking brought to light their readiness to pay the human rights
victims out of the funds held in escrow in the PNB. It stated:
WHEREAS, the Republic of the Philippines sympathizes with the
plight of the human rights victims-plaintiffs in the aforementioned litigation
through the Second Party, desires to assist in the satisfaction of the
judgment awards of said human rights victims-plaintiffs, by releasing,
assigning and or waiving US$150 million of the funds held in escrow under
the Escrow Agreements dated August 14, 1995, although the Republic is
not obligated to do so under final judgments of the Swiss courts dated
December 10 and 19, 1997, and January 8, 1998;
WHEREAS, the Third Party is likewise willing to release, assign
and/or waive all its rights and interests over said US$150 million to the
aforementioned human rights victims-plaintiffs.
All told, the foregoing disquisition negates the claim of respondents that "petitioner
failed to prove that they acquired or own the Swiss funds" and that "it was only by arbitrarily
isolating and taking certain statements made by private respondents out of context that
petitioner was able to treat these as judicial admissions." The Court is fully aware of the
relevance, materiality and implications of every pleading and document submitted in this case.
This Court carefully scrutinized the proofs presented by the parties. We analyzed, assessed
and weighed them to ascertain if each piece of evidence rightfully qualified as an admission.
Owing to the far-reaching historical and political implications of this case, we considered and
examined, individually and totally, the evidence of the parties, even if it might have bordered on
factual adjudication which, by authority of the rules and jurisprudence, is not usually done by
this Court. There is no doubt in our mind that respondent Marcoses admitted ownership of the
Swiss bank deposits.
We have always adhered to the familiar doctrine that an admission made in the
pleadings cannot be controverted by the party making such admission and becomes conclusive
on him, and that all proofs submitted by him contrary thereto or inconsistent therewith should be
ignored, whether an objection is interposed by the adverse party or not. 104 This doctrine is
embodied in Section 4, Rule 129 of the Rules of Court:
 SEC. 4. Judicial admissions. — An admission, verbal or written,
made by a party in the course of the proceedings in the same case, does
not require proof. The admission may be contradicted only by showing that
it was made through palpable mistake or that no such admission was
made. 105
In the absence of a compelling reason to the contrary, respondents' judicial admission
of ownership of the Swiss deposits is definitely binding on them.
The individual and separate admissions of each respondent bind all of them pursuant
to Sections 29 and 31, Rule 130 of the Rules of Court:
SEC. 29. Admission by co-partner or agent. — The act or
declaration of a partner or agent of the party within the scope of his
authority and during the existence of the partnership or agency, may be
given in evidence against such party after the partnership or agency is
shown by evidence other than such act or declaration. The same rule
applies to the act or declaration of a joint owner, joint debtor, or other
person jointly interested with the party. 106
SEC. 31. Admission by privies. — Where one derives title to
property from another, the act, declaration, or omission of the latter, while
holding the title, in relation to the property, is evidence against the
former. 107
The declarations of a person are admissible against a party whenever a "privity of
estate" exists between the declarant and the party, the term "privity of estate" generally
denoting a succession in rights. 108 Consequently, an admission of one in privity with a party to
the record is competent. 109 Without doubt, privity exists among the respondents in this case.
And where several co-parties to the record are jointly interested in the subject matter of the
controversy, the admission of one is competent against all. 110
Respondents insist that the Sandiganbayan is correct in ruling that
petitioner Republic has failed to establish a prima facie case for the forfeiture of the Swiss
deposits.
We disagree. The sudden turn-around of the Sandiganbayan was really strange, to
say the least, as its findings and conclusions were not borne out by the voluminous records of
this case.
Section 2 of RA 1379 explicitly states that "whenever any public officer or employee
has acquired during his incumbency an amount of property which is manifestly out of proportion
to his salary as such public officer or employee and to his other lawful income and the income
from legitimately acquired property, said property shall be presumed prima facie to have been
unlawfully acquired. ..."
The elements which must concur for this prima facie presumption to apply are:
(1) the offender is a public officer or employee;
(2) the must have acquired a considerable amount of money or property
during his incumbency; and
(3) said amount is manifestly out of proportion to his salary as such public
officer or employee and to his other lawful income and the income
from legitimately acquired property.
It is undisputed that spouses Ferdinand and Imelda Marcos were former public officers.
Hence, the first element is clearly extant.
The second element deals with the amount of money or property acquired by the
public officer during his incumbency. The Marcos couple indubitably acquired and owned
properties during their term of office. In fact, the five groups of Swiss accounts were admittedly
owned by them. There is proof of the existence and ownership of these assets and properties
and it suffices to comply with the second element.
The third requirement is met if it can be shown that such assets, money or property is
manifestly out of proportion to the public officer’s salary and his other lawful income. It is the
proof of this third element that is crucial in determining whether a prima facie presumption has
been established in this case.
Petitioner Republic presented not only a schedule indicating the lawful income of the
Marcos spouses during their incumbency but also evidence that they had huge deposits
beyond such lawful income in Swiss banks under the names of five different foundations. We
believe petitioner was able to establish the prima faciepresumption that the assets and
properties acquired by the Marcoses were manifestly and patently disproportionate to their
aggregate salaries as public officials. Otherwise stated, petitioner presented enough evidence
to convince us that the Marcoses had dollar deposits amounting to US $356 million
representing the balance of the Swiss accounts of the five foundations, an amount way, way
beyond their aggregate legitimate income of only US$304,372.43 during their incumbency as
government officials.
Considering, therefore, that the total amount of the Swiss deposits was considerably
out of proportion to the known lawful income of the Marcoses, the presumption that said dollar
deposits were unlawfully acquired was duly established. It was sufficient for the petition for
forfeiture to state the approximate amount of money and property acquired by the respondents,
and their total government salaries. Section 9 of the PCGG Rules and Regulations states:
Prima Facie Evidence. – Any accumulation of assets, properties,
and other material possessions of those persons covered by Executive
Orders No. 1 and No.2,whose value is out of proportion to their known
lawful income is prima facie deemed ill-gotten wealth.
Indeed, the burden of proof was on the respondents to dispute this presumption and
show by clear and convincing evidence that the Swiss deposits were lawfully acquired and that
they had other legitimate sources of income. A presumption is prima facie proof of the fact
presumed and, unless the fact thus prima facieestablished by legal presumption is disproved, it
must stand as proved. 111
 Respondent Mrs. Marcos argues that the foreign foundations should have been
impleaded as they were indispensable parties without whom no complete determination of the
issues could be made. She asserts that the failure of petitioner Republic to implead the
foundations rendered the judgment void as the joinder of indispensable parties was a sine qua
non exercise of judicial power. Furthermore, the non-inclusion of the foreign foundations
violated the conditions prescribed by the Swiss government regarding the deposit of the funds
in escrow, deprived them of their day in court and denied them their rights under the
Swiss constitution and international law. 112
The Court finds that petitioner Republic did not err in not impleading the foreign
foundations. Section 7, Rule 3 of the 1997 Rules of Civil Procedure, 113 taken from Rule 19b of
the American Federal Rules of Civil Procedure, provides for the compulsory joinder of
indispensable parties. Generally, an indispensable party must be impleaded for the complete
determination of the suit. However, failure to join an indispensable party does not divest the
court of jurisdiction since the rule regarding indispensable parties is founded on equitable
considerations and is not jurisdictional. Thus, the court is not divested of its power to render a
decision even in the absence of indispensable parties, though such judgment is not binding on
the non-joined party. 114
An indispensable party 115 has been defined as one:
[who] must have a direct interest in the litigation; and if this
interest is such that it cannot be separated from that of the parties to the
suit, if the court cannot render justice between the parties in his absence, if
the decree will have an injurious effect upon his interest, or if the final
determination of the controversy in his absence will be inconsistent with
equity and good conscience.
There are two essential tests of an indispensable party: (1) can relief be afforded the
plaintiff without the presence of the other party? and (2) can the case be decided on its merits
without prejudicing the rights of the other party? 116 There is, however, no fixed formula for
determining who is an indispensable party; this can only be determined in the context and by
the facts of the particular suit or litigation.
In the present case, there was an admission by respondent Imelda Marcos in her May
26, 1998 Manifestation before the Sandiganbayan that she was the sole beneficiary of 90% of
the subject matter in controversy with the remaining 10% belonging to the estate of Ferdinand
Marcos. 117 Viewed against this admission, the foreign foundations were not indispensable
parties. Their non-participation in the proceedings did not prevent the court from deciding the
case on its merits and according full relief to petitioner Republic. The judgment ordering the
return of the $356 million was neither inimical to the foundations’ interests nor inconsistent with
equity and good conscience. The admission of respondent Imelda Marcos only confirmed what
was already generally known: that the foundations were established precisely to hide the
money stolen by the Marcos spouses from petitioner Republic. It negated whatever illusion
there was, if any, that the foreign foundations owned even a nominal part of the assets in
question.
The rulings of the Swiss court that the foundations, as formal owners, must be given
an opportunity to participate in the proceedings hinged on the assumption that they owned a
nominal share of the assets. 118 But this was already refuted by no less than Mrs. Marcos
herself. Thus, she cannot now argue that the ruling of theSandiganbayan violated the
conditions set by the Swiss court. The directive given by the Swiss court for the foundations to
participate in the proceedings was for the purpose of protecting whatever nominal interest they
might have had in the assets as formal owners. But inasmuch as their ownership was
subsequently repudiated by Imelda Marcos, they could no longer be considered as
indispensable parties and their participation in the proceedings became unnecessary.
In Republic vs. Sandiganbayan, 119 this Court ruled that impleading the firms which
are the res of the action was unnecessary:
"And as to corporations organized with ill-gotten wealth, but are
not themselves guilty of misappropriation, fraud or other illicit conduct — in
other words, the companies themselves are not the object or thing involved
in the action, the res thereof — there is no need to implead them either.
Indeed, their impleading is not proper on the strength alone of their having
been formed with ill-gotten funds, absent any other particular wrongdoing
on their part ...
Such showing of having been formed with, or having received
ill-gotten funds, however strong or convincing, does not, without more,
warrant identifying the corporations in question with the person who
formed or made use of them to give the color or appearance of lawful,
innocent acquisition to illegally amassed wealth — at the least, not so as
place on the Government the onus of impleading the former with the latter
in actions to recover such wealth. Distinguished in terms of juridical
personality and legal culpability from their erring members or stockholders,
said corporations are not themselves guilty of the sins of the latter, of the
embezzlement, asportation, etc.,that gave rise to the Government’s cause
of action for recovery; their creation or organization was merely the result
of their members' (or stockholders') manipulations and maneuvers to
conceal the illegal origins of the assets or monies invested therein. In this
light, they are simply the res in the actions for the recovery of illegally
acquired wealth, and there is, in principle, no cause of action against them
and no ground to implead them as defendants in said actions."
Just like the corporations in the aforementioned case, the foreign foundations here
were set up to conceal the illegally acquired funds of the Marcos spouses. Thus, they were
simply the res in the action for recovery of ill-gotten wealth and did not have to be impleaded for
lack of cause of action or ground to implead them.
Assuming arguendo,however, that the foundations were indispensable parties, the
failure of petitioner to implead them was a curable error, as held in the previously cited case
of Republic vs. Sandiganbayan: 120
 "Even in those cases where it might reasonably be argued that
the failure of the Government to implead the sequestered corporations as
defendants is indeed a procedural aberration, as where said firms were
allegedly used, and actively cooperated with the defendants, as
instruments or conduits for conversion of public funds and property or illicit
or fraudulent obtention of favored government contracts, etc.,slight
reflection would nevertheless lead to the conclusion that the defect is not
fatal, but one correctible under applicable adjective rules — e.g.,Section
10, Rule 5 of the Rules of Court [specifying the remedy of amendment
during trial to authorize or to conform to the evidence];Section 1, Rule 20
[governing amendments before trial],in relation to the rule respecting
omission of so-called necessary or indispensable parties, set out in
Section 11, Rule 3 of the Rules of Court. It is relevant in this context to
advert to the old familiar doctrines that the omission to implead such
parties "is a mere technical defect which can be cured at any stage of the
proceedings even after judgment";and that, particularly in the case of
indispensable parties, since their presence and participation is essential to
the very life of the action, for without them no judgment may be rendered,
amendments of the complaint in order to implead them should be freely
allowed, even on appeal, in fact even after rendition of judgment by this
Court, where it appears that the complaint otherwise indicates their identity
and character as such indispensable parties." 121
Although there are decided cases wherein the non-joinder of indispensable parties in
fact led to the dismissal of the suit or the annulment of judgment, such cases do not jibe with the
matter at hand. The better view is that non-joinder is not a ground to dismiss the suit or annul
the judgment. The rule on joinder of indispensable parties is founded on equity. And the spirit of
the law is reflected in Section 11, Rule 3 122 of the 1997 Rules of Civil Procedure. It prohibits
the dismissal of a suit on the ground of non-joinder or misjoinder of parties and allows the
amendment of the complaint at any stage of the proceedings, through motion or on order of the
court on its own initiative. 123
Likewise, jurisprudence on the Federal Rules of Procedure, from which our Section 7,
Rule 3 124 on indispensable parties was copied, allows the joinder of indispensable parties
even after judgment has been entered if such is needed to afford the moving party full
relief. 125 Mere delay in filing the joinder motion does not necessarily result in the waiver of the
right as long as the delay is excusable. 126 Thus, respondent Mrs. Marcos cannot correctly
argue that the judgment rendered by the Sandiganbayan was void due to the non-joinder of the
foreign foundations. The court had jurisdiction to render judgment which, even in the absence of
indispensable parties, was binding on all the parties before it though not on the absent
party. 127 If she really felt that she could not be granted full relief due to the absence of the
foreign foundations, she should have moved for their inclusion, which was allowable at any
stage of the proceedings. She never did. Instead she assailed the judgment rendered.
In the face of undeniable circumstances and the avalanche of documentary evidence
against them, respondent Marcoses failed to justify the lawful nature of their acquisition of the
said assets. Hence, the Swiss deposits should be considered ill-gotten wealth and forfeited in
favor of the State in accordance with Section 6 of RA 1379:
SEC. 6. Judgment. — If the respondent is unable to show to the
satisfaction of the court that he has lawfully acquired the property in
question, then the court shall declare such property forfeited in favor of the
State, and by virtue of such judgment the property aforesaid shall become
property of the State ....
THE FAILURE TO PRESENT AUTHENTICATED
TRANSLATIONS OF THE SWISS DECISIONS
Finally, petitioner Republic contends that the Honorable Sandiganbayan Presiding
Justice Francis Garchitorena committed grave abuse of discretion in reversing himself on the
ground that the original copies of the authenticated Swiss decisions and their authenticated
translations were not submitted to the court a quo.Earlier PJ Garchitorena had quoted
extensively from the unofficial translation of one of these Swiss decisions in his ponencia dated
July 29, 1999 when he denied the motion to release US$150 Million to the human rights victims.
While we are in reality perplexed by such an incomprehensible change of heart, there
might nevertheless not be any real need to belabor the issue. The presentation of the
authenticated translations of the original copies of the Swiss decision was not de rigueur for the
public respondent to make findings of fact and reach its conclusions. In short,
the Sandiganbayan’s decision was not dependent on the determination of the Swiss courts. For
that matter, neither is this Court's.
The release of the Swiss funds held in escrow in the PNB is dependent solely on the
decision of this jurisdiction that said funds belong to the petitioner Republic. What is important is
our own assessment of the sufficiency of the evidence to rule in favor of either
petitioner Republic or respondent Marcoses. In this instance, despite the absence of the
authenticated translations of the Swiss decisions, the evidence on hand tilts convincingly in
favor of petitioner Republic.
WHEREFORE, the petition is hereby GRANTED. The assailed Resolution of
the Sandiganbayan dated January 31, 2002 is SET ASIDE. The Swiss deposits which were
transferred to and are now deposited in escrow at the Philippine National Bank in the estimated
aggregate amount of US$658,175,373.60 as of January 31, 2002, plus interest, are hereby
forfeited in favor of petitioner Republic of the Philippines.
SO ORDERED.
Davide, Jr.,C .J .,Bellosillo, Panganiban, Ynares-Santiago, Austria-Martinez, Carpio
Morales, Callejo, Sr.,Azcuna, and Tinga, JJ ., concur.
Puno and Vitug, JJ .,in the result.
Quisumbing and Sandoval-Gutierrez, JJ ., on official leave.
Carpio, J ., took no part. While Presidential Legal Counsel, acted as chair of a
committee that oversaw the transfer of these funds to the Philippines.
||| (Republic v. Sandiganbayan, G.R. No. 152154, [July 15, 2003], 453 PHIL 1059-1150)
 THIRD DIVISION
[G.R. No. 142896. September 12, 2007.]
CANELAND SUGAR CORPORATION, petitioner, vs. HON. REYNALDO
M. ALON, LAND BANK OF THE PHILIPPINES, and ERIC B. DE
VERA, respondents.
DECISION
AUSTRIA-MARTINEZ, J p:
On July 15, 1999, Caneland Sugar Corporation (petitioner) filed with the Regional
Trial Court (RTC) of Silay City, Branch 40, a complaint for damages, injunction, and nullity
of mortgage against the Land Bank of the Philippines (respondent) and Sheriff Eric B. de
Vera, docketed as Civil Case No. 2067-40, praying for the following reliefs: issuance of a
temporary restraining order enjoining respondent and the Sheriff from proceeding with the
auction sale of petitioner's property; declaration of nullity of any foreclosure sale to be held;
declaration of nullity of the mortgage constituted over petitioner's property covered by TCT
No. T-11292 in favor of respondent; and award of damages. 1 TAScID
On July 21, 1999, the RTC issued an Order holding in abeyance the auction sale
set on July 23, 1999, as agreed upon by the parties. 2 Notwithstanding said directive,
another foreclosure sale was scheduled on October 15, 1999. Per RTC Order dated
October 14, 1999, the October 15 scheduled sale was held in abeyance; but re-scheduled
the sale on November 15, 1999, for the following reasons:
However, P.D. 385 provides that it shall be mandatory for
government financial institution to foreclose collaterals and/or securities for
any loan, credit accommodations and/or guarantees granted by them
whenever the arrearages on such account, including accrued interest and
other charges amount to at least 20% of the total outstanding obligation as
appearing in the books of the financial institution. Moreover, no restraining
order, temporary or permanent injunction shall be issued by the court
against any government financial institution in any action taken by such
institution in compliance with the mandatory foreclosure provided by said
law. . . The defendant Land Bank of the Philippines and Eric B. De Vera,
Sheriff of this Court, are hereby authorized to proceed with the extrajudicial
foreclosure sale on November 15, 1999. 3
Petitioner filed a Motion for Reconsideration of the trial court's Order, but this was
denied per Order dated November 8, 1999. 4
Petitioner then filed with the Court of Appeals (CA) a Petition for Certiorari and
Prohibition with Injunction, docketed as CA-G.R. SP No. 56137. In a Decision 5dated
March 22, 2000, the CA, finding that the RTC did not commit any grave abuse of discretion,
denied due course and dismissed the petition for lack of merit. 6Petitioner sought
reconsideration of the Decision, which was eventually denied by the CA in a Resolution
dated April 17, 2000. 7
Hence, the present Petition for Review on Certiorari under Rule 45 of the Rules of
Court.
Petitioner contends in the main that the RTC's act of authorizing the foreclosure of
its property amounts to a prejudgment of the case since it amounts to a ruling that
respondent has a valid mortgage in its favor. Petitioner also argues, among others,
that Presidential Decree (P.D.) No. 385 is not applicable inasmuch as at the time of the
lease to Sunnix, Inc., the management and control of its operations has already been
virtually taken over by respondent. cDCaHA
On the other hand, respondent maintains that: P.D. No. 385 prohibits the
issuance of an injunctive order against government financial institutions; the CA did not
commit any grave abuse of discretion; the RTC Order merely dealt with the propriety of the
injunctive order and not the validity of the mortgage; and the issue of the propriety of the
injunctive order has been rendered moot and academic by the foreclosure sale conducted
and the issuance of a certificate of sale by the sheriff.8
Based on the arguments of the parties, the principal issue is whether the CA erred
in finding that the RTC did not commit grave abuse of discretion in not enjoining the
extrajudicial foreclosure of the properties subject of this case. CSDcTH
Without first resolving the foregoing issue, the Court finds that the petition should
be denied for the sole reason that the act sought to be enjoined by petitioner is already fait
accompli. In Transfield Philippines, Inc. v. Luzon Hydro Corporation, 9 the Court held that
—
[I]njunction would not lie where the acts sought to be enjoined have
already become fait accompli or an accomplished or consummated act.
In Ticzon v. Video Post Manila, Inc. this Court ruled that where the period
within which the former employees were prohibited from engaging in or
working for an enterprise that competed with their former employer — the
very purpose of the preliminary injunction — has expired, any declaration
upholding the propriety of the writ would be entirely useless as there would
be no actual case or controversy between the parties insofar as the
preliminary injunction is concerned. 10
Records show that the foreclosure sale which petitioner sought to be enjoined by
the RTC has already been carried out by the Sheriff, and in fact, a Certificate of Sale dated
June 26, 2000 was issued to respondent. 11 There is, therefore, no more actual case or
controversy between the parties insofar as the RTC's refusal to enjoin the sale is
concerned, and any resolution by the Court of the impropriety or propriety of the RTC's
refusal to issue any restraining or injunctive relief against the foreclosure sale will serve no
purpose but merely lend further addle to Civil Case No. 2067-40 pending before the
RTC. DHACES
Nevertheless, even if petitioner's quest for the issuance of an injunctive relief has
been rendered moot and academic by the holding of the foreclosure sale and issuance of
Certificate of Sale, the Court finds it necessary to resolve the merits of the principal issue
raised for the future guidance of both bench and bar. As the Court stated in Acop v.
Guingona, Jr., 12 "courts will decide a question otherwise moot and academic if it is
'capable of repetition, yet evading review.'"
Petitioner does not dispute its loan obligation with respondent. Petitioner's bone
of contention before the RTC is that the promissory notes are silent as to whether they
were covered by the Mortgage Trust Indenture and Mortgage Participation on its property
covered by TCT No. T-11292. 13 It does not categorically deny that these promissory
notes are covered by the security documents. These vague assertions are, in fact,
negative pregnants, i.e., denials pregnant with the admission of the substantial facts in the
pleading responded to which are not squarely denied. As defined in Republic of the
Philippines v. Sandiganbayan, 14 a negative pregnant is a "form of negative expression
which carries with it an affirmation or at least an implication of some kind favorable to the
adverse party. It is a denial pregnant with an admission of the substantial facts alleged in
the pleading. Where a fact is alleged with qualifying or modifying language and the words
of the allegation as so qualified or modified are literally denied, has been held that the
qualifying circumstances alone are denied while the fact itself is admitted."
Petitioner's allegations do not make out any justifiable basis for the granting of
any injunctive relief. Even when the mortgagors were disputing the amount being sought
from them, upon the non-payment of the loan, which was secured by the mortgage, the
mortgaged property is properly subject to a foreclosure sale. This is in consonance with the
doctrine that to authorize a temporary injunction, the plaintiff must show, at least prima
facie, a right to the final relief. 15
The foregoing conclusion finds greater force in light of the provisions of P.D. No.
385, 16 Section 1 of which, provides for a mandatory foreclosure, viz.:
Section 1. It shall be mandatory for government financial
institutions, after the lapse of sixty (60) days from the issuance of this
Decree, to foreclose the collaterals and/or securities for any loan, credit,
accommodation, and/or guarantees granted by them whenever the
arrearages on such account, including accrued interest and other charges,
amount to at least twenty (20%) of the total outstanding obligations,
including interest and other charges, as appearing in the books of account
and/or related records of the financial institution concerned. This shall be
without prejudice to the exercise by the government financial institution of
such rights and/or remedies available to them under their respective
contracts with their debtors, including the right to foreclose on loans,
credits, accommodations, and or guarantees on which the arrearages are
less than twenty percent (20%). CITaSA
while Section 2 prohibits the issuance of restraining orders or injunctions against
government financial institutions in any foreclosure action taken by such institutions, to wit:
Section 2. No restraining order, temporary or permanent
injunction shall be issued by the court against any government financial
institution in any action taken by such institution in compliance with the
mandatory foreclosure provided in Section 1 hereof whether such
restraining order, temporary or permanent injunction is sought by the
borrower(s) or any third party or parties, except after due hearing in which
it is established by the borrower and admitted by the government financial
institution concerned that twenty percent (20%) of the outstanding
arrearages had been paid after the filing of foreclosure
proceedings. TICDSc
Petitioner cannot find any solace in its contention that the case of Filipinas Marble
Corporation v. Intermediate Appellate Court 17 is applicable to the present case.
In Filipinas Marble, it was the DBP-imposed management of FMC that brought the
corporation to ruin, not to mention that there were prima facie findings of mismanagement
and misappropriation of the loan proceeds by DBP and Bancom. Moreover, the liability of
FMC for the loan, which was the basis of the mortgage being foreclosed, was not yet
settled. These circumstances prompted the Court to grant an injunction against the
foreclosure sale. The Court ruled —
. . . P.D. 385 was never meant to protect officials of government
lending institutions who take over the management of a borrower
corporation, lead that corporation to bankruptcy through mismanagement
or misappropriation of its funds, and who, after ruining it, use the
mandatory provisions of the decree to avoid the consequences of their
misdeeds. SDHAEC
The designated officers of the government financing institution
cannot simply walk away and then state that since the loans were obtained
in the corporation's name, then P.D. 385 must be peremptorily applied and
that there is no way the borrower corporation can prevent the automatic
foreclosure of the mortgage on its properties once the arrearages reach
twenty percent (20%) of the total obligation no matter who was
responsible. 18
In the case at bench, petitioner does not deny its liability. While petitioner alleged
that the management and control of its operations has already been virtually taken over by
respondent, thus, implying that it was respondent that caused petitioner's present
miserable financial state, this allegation is obviously merely an attempt to place itself under
the Filipinas Marble situation in order to preempt the operation of P.D. No. 385. Petitioner's
claim is more appropriately threshed out and determined after trial on the merits. DcCITS
The Court likewise cannot sustain petitioner's argument that the RTC's refusal to grant
any injunctive relief amounts to a prejudgment of the issues before it. The RTC's sole basis for
allowing the foreclosure sale to proceed is P.D. No. 385. It did not make any finding or
disposition on the issue of the validity of the mortgage.
 In any event, such issue of the validity of the mortgage, not to mention the issue of the
nullity of the foreclosure sale as well as petitioner's prayer for damages, still has to be resolved
in the trial court. EAICTS

As ruled in Philippine National Bank v. Court of Appeals, 19 to wit:

In the instant case, aside from the principal action for damages,
private respondent sought the issuance of a temporary restraining order
and writ of preliminary injunction to enjoin the foreclosure sale in order to
prevent an alleged irreparable injury to private respondent. It is settled that
these injunctive reliefs are preservative remedies for the protection of
substantive rights and interests. Injunction is not a cause of action in
itself but merely a provisional remedy, an adjunct to a main suit.
When the act sought to be enjoined ha[d] become fait accompli, only
the prayer for provisional remedy should be denied. However, the
trial court should still proceed with the determination of the principal
action so that an adjudication of the rights of the parties can be
had. 20 (Emphasis supplied)

WHEREFORE, the petition is DENIED.

Costs against petitioner.

SO ORDERED.

||| (Caneland Sugar Corp. v. Alon, G.R. No. 142896, [September 12, 2007], 559 PHIL 462-471)
 FIRST DIVISION
[G.R. No. 158239. January 25, 2012.]
PRISCILLA ALMA JOSE, petitioner, vs. RAMON C. JAVELLANA, ET
AL., respondents.
DECISION
BERSAMIN, J p:
The denial of a motion for reconsideration of an order granting the defending
party's motion to dismiss is not an interlocutory but a final order because it puts an end to
the particular matter involved, or settles definitely the matter therein disposed of, as to
leave nothing for the trial court to do other than to execute the order. 1 Accordingly, the
claiming party has a fresh period of 15 days from notice of the denial within which to appeal
the denial. 2
Antecedents
On September 8, 1979, Margarita Marquez Alma Jose (Margarita) sold for
consideration of P160,000.00 to respondent Ramon Javellana by deed of conditional sale
two parcels of land with areas of 3,675 and 20,936 square meters located in Barangay
Mallis, Guiguinto, Bulacan. They agreed that Javellana would pay P80,000.00 upon the
execution of the deed and the balance of P80,000.00 upon the registration of the parcels of
land under the Torrens System (the registration being undertaken by Margarita within a
reasonable period of time); and that should Margarita become incapacitated, her son and
attorney-in-fact, Juvenal M. AlmaJose (Juvenal), and her daughter, petitioner Priscilla
M. Alma Jose, would receive the payment of the balance and proceed with the application
for registration. 3
After Margarita died and with Juvenal having predeceased Margarita without
issue, the vendor's undertaking fell on the shoulders of Priscilla, being Margarita's sole
surviving heir. However, Priscilla did not comply with the undertaking to cause the
registration of the properties under the Torrens System, and, instead, began to improve the
properties by dumping filling materials therein with the intention of converting the parcels of
land into a residential or industrial subdivision. 4 Faced with Priscilla's refusal to
comply, Javellana commenced on February 10, 1997 an action for specific performance,
injunction, and damages against her in the Regional Trial Court in Malolos, Bulacan (RTC),
docketed as Civil Case No. 79-M-97 entitled Ramon C. Javellana, represented by Atty.
Guillermo G. Blanco v. Priscilla Alma Jose.cASTED
In Civil Case No. 79-M-97, Javellana averred that upon the execution of the deed
of conditional sale, he had paid the initial amount of P80,000.00 and had taken possession
of the parcels of land; that he had paid the balance of the purchase price to Juvenal on
different dates upon Juvenal's representation that Margarita had needed funds for the
expenses of registration and payment of real estate tax; and that in 1996, Priscilla had
called to inquire about the mortgage constituted on the parcels of land; and that he had told
her then that the parcels of land had not been mortgaged but had been sold to him. 5
Javellana prayed for the issuance of a temporary restraining order or writ of
preliminary injunction to restrain Priscilla from dumping filling materials in the parcels of
land; and that Priscilla be ordered to institute registration proceedings and then to execute
a final deed of sale in his favor. 6
Priscilla filed a motion to dismiss, stating that the complaint was already barred by
prescription; and that the complaint did not state a cause of action. 7
The RTC initially denied Priscilla's motion to dismiss on February 4,
1998. 8 However, upon her motion for reconsideration, the RTC reversed itself on June 24,
1999 and granted the motion to dismiss, opining that Javellana had no cause of action
against her due to her not being bound to comply with the terms of the deed of conditional
sale for not being a party thereto; that there was no evidence showing the payment of the
balance; that he had never demanded the registration of the land from Margarita or Juvenal,
or brought a suit for specific performance against Margarita or Juvenal; and that his claim
of paying the balance was not credible. 9
Javellana moved for reconsideration, contending that the presentation of
evidence of full payment was not necessary at that stage of the proceedings; and that in
resolving a motion to dismiss on the ground of failure to state a cause of action, the facts
alleged in the complaint were hypothetically admitted and only the allegations in the
complaint should be considered in resolving the motion. 10 Nonetheless, he attached to
the motion for reconsideration the receipts showing the payments made to
Juvenal. 11 Moreover, he maintained that Priscilla could no longer succeed to any rights
respecting the parcels of land because he had meanwhile acquired absolute ownership of
them; and that the only thing that she, as sole heir, had inherited from Margarita was the
obligation to register them under the Torrens System. 12
On June 21, 2000, the RTC denied the motion for reconsideration for lack of any
reason to disturb the order of June 24, 1999. 13
Accordingly, Javellana filed a notice of appeal from the June 21, 2000
order, 14 which the RTC gave due course to, and the records were elevated to the Court of
Appeals (CA). SEAHcT
In his appeal (C.A.-G.R. CV No. 68259), Javellana submitted the following as
errors of the RTC, 15 to wit:
I
THE TRIAL COURT GRIEVOUSLY ERRED IN NOT CONSIDERING THE
FACT THAT PLAINTIFF-APELLANT HAD LONG COMPLIED WITH THE
 FULL PAYMENT OF THE CONSIDERATION OF THE SALE OF THE
SUBJECT PROPERTY AND HAD IMMEDIATELY TAKEN ACTUAL AND
PHYSICAL POSSESSION OF SAID PROPERTY UPON THE SIGNING
OF THE CONDITIONAL DEED OF SALE;
II
THE TRIAL COURT OBVIOUSLY ERRED IN MAKING TWO
CONFLICTING INTERPRETATIONS OF THE PROVISION OF THE CIVIL
[CODE], PARTICULARLY ARTICLE 1911, IN THE LIGHT OF THE
TERMS OF THE CONDITIONAL DEED OF SALE;
III
THE TRIAL COURT ERRED IN HOLDING THAT
DEFENDANT-APPELLEE BEING NOT A PARTY TO THE CONDITIONAL
DEED OF SALE EXECUTED BY HER MOTHER IN FAVOR OF
PLAINTIFF-APPELLANT IS NOT BOUND THEREBY AND CAN NOT BE
COMPELLED TO DO THE ACT REQUIRED IN THE SAID DEED OF
CONDITIONAL SALE;
IV
THE TRIAL COURT ERRED IN DISMISSING THE AMENDED
COMPLAINT WITHOUT HEARING THE CASE ON THE MERITS.
Priscilla countered that the June 21, 2000 order was not appealable; that the
appeal was not perfected on time; and that Javellana was guilty of forum shopping. 16
It appears that pending the appeal, Javellana also filed a petition for certiorari in
the CA to assail the June 24, 1999 and June 21, 2000 orders dismissing his complaint
(C.A.-G.R. SP No. 60455). On August 6, 2001, however, the CA dismissed the petition
for certiorari, 17 finding that the RTC did not commit grave abuse of discretion in issuing
the orders, and holding that it only committed, at most, an error of judgment correctible by
appeal in issuing the challenged orders. cAEDTa
On November 20, 2002, the CA promulgated its decision in C.A.-G.R. CV No.
68259, 18 reversing and setting aside the dismissal of Civil Case No. 79-M-97, and
remanding the records to the RTC "for further proceedings in accordance with law." 19 The
CA explained that the complaint sufficiently stated a cause of action; that Priscilla, as sole
heir, succeeded to the rights and obligations of Margarita with respect to the parcels of land;
that Margarita's undertaking under the contract was not a purely personal obligation but
was transmissible to Priscilla, who was consequently bound to comply with the obligation;
that the action had not yet prescribed due to its being actually one for quieting of title that
was imprescriptible brought by Javellana who had actual possession of the properties; and
that based on the complaint, Javellana had been in actual possession since 1979, and the
cloud on his title had come about only when Priscilla had started dumping filling materials
on the premises. 20
On May 9, 2003, the CA denied the motion for reconsideration, 21 stating that it
decided to give due course to the appeal even if filed out of time becauseJavellana had no
intention to delay the proceedings, as in fact he did not even seek an extension of time to
file his appellant's brief; that current jurisprudence afforded litigants the amplest
opportunity to present their cases free from the constraints of technicalities, such that even
if an appeal was filed out of time, the appellate court was given the discretion to
nonetheless allow the appeal for justifiable reasons.
Issues
Priscilla then brought this appeal, averring that the CA thereby erred in not
outrightly dismissing Javellana's appeal because: (a) the June 21, 2000 RTC order was not
appealable; (b) the notice of appeal had been filed belatedly by three days; and
(c) Javellana was guilty of forum shopping for filing in the CA a petition forcertiorari to
assail the orders of the RTC that were the subject matter of his appeal pending in the CA.
She posited that, even if the CA's decision to entertain the appeal was affirmed, the RTC's
dismissal of the complaint should nonetheless be upheld because the complaint stated no
cause of action, and the action had already prescribed.
On his part, Javellana countered that the errors being assigned by Priscilla
involved questions of fact not proper for the Court to review through petition for review
on certiorari; that the June 21, 2000 RTC order, being a final order, was appealable; that
his appeal was perfected on time; and that he was not guilty of forum shopping because at
the time he filed the petition for certiorari the CA had not yet rendered a decision in
C.A.-G.R. CV No. 68259, and because the issue of ownership raised in C.A.-G.R. CV No.
68259 was different from the issue of grave abuse of discretion raised in C.A.-G.R. SP No.
60455.
Ruling
The petition for review has no merit. AEIHCS
I
Denial of the motion for reconsideration of the
order of dismissal was a final order and appealable
Priscilla submits that the order of June 21, 2000 was not the proper subject of an
appeal considering that Section 1 of Rule 41 of the Rules of Court provides that no appeal
may be taken from an order denying a motion for reconsideration.
Priscilla's submission is erroneous and cannot be sustained.
First of all, the denial of Javellana's motion for reconsideration left nothing more to
be done by the RTC because it confirmed the dismissal of Civil Case No. 79-M-97. It was
clearly a final order, not an interlocutory one. The Court has distinguished between final
and interlocutory orders in Pahila-Garrido v. Tortogo, 22thuswise:
The distinction between a final order and an interlocutory order is
well known. The first disposes of the subject matter in its entirety or
terminates a particular proceeding or action, leaving nothing more to be
done except to enforce by execution what the court has determined, but
 the latter does not completely dispose of the case but leaves something
else to be decided upon. An interlocutory order deals with preliminary
matters and the trial on the merits is yet to be held and the judgment
rendered. The test to ascertain whether or not an order or a judgment is
interlocutory or final is: does the order or judgment leave something to be
done in the trial court with respect to the merits of the case? If it does, the
order or judgment is interlocutory; otherwise, it is final.
And, secondly, whether an order is final or interlocutory determines whether
appeal is the correct remedy or not. A final order is appealable, to accord with thefinal
judgment rule enunciated in Section 1, Rule 41 of the Rules of Court to the effect that
"appeal may be taken from a judgment or final order that completely disposes of the case,
or of a particular matter therein when declared by these Rules to be appealable;" 23 but the
remedy from an interlocutory one is not an appeal but a special civil action for certiorari.
The explanation for the differentiation of remedies given in Pahila-Garrido v. Tortogo is
apt:
. . . The reason for disallowing an appeal from an interlocutory
order is to avoid multiplicity of appeals in a single action, which necessarily
suspends the hearing and decision on the merits of the action during the
pendency of the appeals. Permitting multiple appeals will necessarily delay
the trial on the merits of the case for a considerable length of time, and will
compel the adverse party to incur unnecessary expenses, for one of the
parties may interpose as many appeals as there are incidental questions
raised by him and as there are interlocutory orders rendered or issued by
the lower court. An interlocutory order may be the subject of an appeal, but
only after a judgment has been rendered, with the ground for appealing the
order being included in the appeal of the judgment itself.
The remedy against an interlocutory order not subject of an
appeal is an appropriate special civil action under Rule 65, provided that
the interlocutory order is rendered without or in excess of jurisdiction or
with grave abuse of discretion. Then is certiorari under Rule 65 allowed to
be resorted to. TCDHIc
Indeed, the Court has held that an appeal from an order denying a motion for
reconsideration of a final order or judgment is effectively an appeal from the final order or
judgment itself; and has expressly clarified that the prohibition against appealing an order
denying a motion for reconsideration referred only to a denial of a motion for
reconsideration of an interlocutory order. 24
II
Appeal was made on time pursuant to Neypes v. CA
Priscilla insists that Javellana filed his notice of appeal out of time. She points out
that he received a copy of the June 24, 1999 order on July 9, 1999, and filed his motion for
reconsideration on July 21, 1999 (or after the lapse of 12 days); that the RTC denied his
motion for reconsideration through the order of June 21, 2000, a copy of which he received
on July 13, 2000; that he had only three days from July 13, 2000, or until July 16, 2000,
within which to perfect an appeal; and that having filed his notice of appeal on July 19, 2000,
his appeal should have been dismissed for being tardy by three days beyond the expiration
of the reglementary period.
Section 3 of Rule 41 of the Rules of Court provides:
Section 3. Period of ordinary appeal. — The appeal shall be
taken within fifteen (15) days from notice of the judgment or final order
appealed from. Where a record on appeal is required, the appellant shall
file a notice of appeal and a record on appeal within thirty (30) days from
notice of the judgment or final order.
The period of appeal shall be interrupted by a timely motion
for new trial or reconsideration. No motion for extension of time to
file a motion for new trial or reconsideration shall be allowed. (n)
Under the rule, Javellana had only the balance of three days from July 13, 2000,
or until July 16, 2000, within which to perfect an appeal due to the timely filing of his motion
for reconsideration interrupting the running of the period of appeal. As such, his filing of the
notice of appeal only on July 19, 2000 did not perfect his appeal on time, as Priscilla insists.
The seemingly correct insistence of Priscilla cannot be upheld, however,
considering that the Court meanwhile adopted the fresh period rule in Neypes v. Court of
Appeals, 25 by which an aggrieved party desirous of appealing an adverse judgment or
final order is allowed a fresh period of 15 days within which to file the notice of appeal in the
RTC reckoned from receipt of the order denying a motion for a new trial or motion for
reconsideration, to wit: DTISaH
The Supreme Court may promulgate procedural rules in all courts.
It has the sole prerogative to amend, repeal or even establish new rules for
a more simplified and inexpensive process, and the speedy disposition of
cases. In the rules governing appeals to it and to the Court of Appeals,
particularly Rules 42, 43 and 45, the Court allows extensions of time,
based on justifiable and compelling reasons, for parties to file their appeals.
These extensions may consist of 15 days or more.
To standardize the appeal periods provided in the Rules and to
afford litigants fair opportunity to appeal their cases, the Court deems it
practical to allow a fresh period of 15 days within which to file the notice of
appeal in the Regional Trial Court, counted from receipt of the order
dismissing a motion for a new trial or motion for reconsideration.
Henceforth, this "fresh period rule" shall also apply to Rule 40
governing appeals from the Municipal Trial Courts to the Regional Trial
Courts; Rule 42 on petitions for review from the Regional Trial Courts to
the Court of Appeals; Rule 43 on appeals from quasi-judicial agencies to
the Court of Appeals and Rule 45 governing appeals by certiorari to the
Supreme Court. The new rule aims to regiment or make the appeal period
uniform, to be counted from receipt of the order denying the motion for new
 trial, motion for reconsideration (whether full or partial) or any final order or
resolution. 26
The fresh period rule may be applied to this case, for the Court has already
retroactively extended the fresh period rule to "actions pending and undetermined at the
time of their passage and this will not violate any right of a person who may feel that he is
adversely affected, inasmuch as there are no vested rights in rules of
procedure." 27 According to De los Santos v. Vda. de Mangubat: 28
Procedural law refers to the adjective law which prescribes rules
and forms of procedure in order that courts may be able to administer
justice. Procedural laws do not come within the legal conception of a
retroactive law, or the general rule against the retroactive operation of
statues — they may be given retroactive effect on actions pending and
undetermined at the time of their passage and this will not violate any right
of a person who may feel that he is adversely affected, insomuch as there
are no vested rights in rules of procedure.
The "fresh period rule" is a procedural law as it prescribes a fresh
period of 15 days within which an appeal may be made in the event that the
motion for reconsideration is denied by the lower court. Following the rule
on retroactivity of procedural laws, the "fresh period rule" should be applied
to pending actions, such as the present case. DICcTa
Also, to deny herein petitioners the benefit of the "fresh period
rule" will amount to injustice, if not absurdity, since the subject notice of
judgment and final order were issued two years later or in the year 2000,
as compared to the notice of judgment and final order in Neypes which
were issued in 1998. It will be incongruous and illogical that parties
receiving notices of judgment and final orders issued in the year 1998 will
enjoy the benefit of the "fresh period rule" while those later rulings of the
lower courts such as in the instant case, will not. 29
Consequently, we rule that Javellana's notice of appeal was timely filed pursuant
to the fresh period rule.
III
No forum shopping was committed
Priscilla claims that Javellana engaged in forum shopping by filing a notice of
appeal and a petition for certiorari against the same orders. As earlier noted, he denies that
his doing so violated the policy against forum shopping.
The Court expounded on the nature and purpose of forum shopping in In Re:
Reconstitution of Transfer Certificates of Title Nos. 303168 and 303169 and Issuance of
Owner's Duplicate Certificates of Title In Lieu of Those Lost, Rolando Edward G. Lim,
Petitioner: 30
Forum shopping is the act of a party litigant against whom an
adverse judgment has been rendered in one forum seeking and possibly
getting a favorable opinion in another forum, other than by appeal or the
special civil action of certiorari, or the institution of two or more actions or
proceedings grounded on the same cause or supposition that one or the
other court would make a favorable disposition. Forum shopping happens
when, in the two or more pending cases, there is identity of parties, identity
of rights or causes of action, and identity of reliefs sought. Where the
elements of litis pendentia are present, and where a final judgment in one
case will amount to res judicata in the other, there is forum shopping.
For litis pendentia to be a ground for the dismissal of an action, there must
be: (a) identity of the parties or at least such as to represent the same
interest in both actions; (b) identity of rights asserted and relief prayed for,
the relief being founded on the same acts; and (c) the identity in the two
cases should be such that the judgment which may be rendered in one
would, regardless of which party is successful, amount to res judicata in
the other. AcHSEa
For forum shopping to exist, both actions must involve the same
transaction, same essential facts and circumstances and must raise
identical causes of action, subject matter and issues. Clearly, it does not
exist where different orders were questioned, two distinct causes of action
and issues were raised, and two objectives were sought.
Should Javellana's present appeal now be held barred by his filing of the petition
for certiorari in the CA when his appeal in that court was yet pending?
We are aware that in Young v. Sy, 31 in which the petitioner filed a notice of
appeal to elevate the orders concerning the dismissal of her case due to non-suit to the CA
and a petition for certiorari in the CA assailing the same orders four months later, the Court
ruled that the successive filings of the notice of appeal and the petition for certiorari to
attain the same objective of nullifying the trial court's dismissal orders constituted forum
shopping that warranted the dismissal of both cases. The Court said:
Ineluctably, the petitioner, by filing an ordinary appeal and a
petition for certiorari with the CA, engaged in forum shopping. When the
petitioner commenced the appeal, only four months had elapsed prior to
her filing with the CA the Petition for Certiorari under Rule 65 and which
eventually came up to this Court by way of the instant Petition (re:
Non-Suit). The elements of litis pendentia are present between the two
suits. As the CA, through its Thirteenth Division, correctly noted, both suits
are founded on exactly the same facts and refer to the same subject matter
— the RTC Orders which dismissed Civil Case No. SP-5703 (2000) for
failure to prosecute. In both cases, the petitioner is seeking the reversal of
the RTC orders. The parties, the rights asserted, the issues professed, and
the reliefs prayed for, are all the same. It is evident that the judgment of
one forum may amount to res judicata in the other.
xxx xxx xxx
 The remedies of appeal and certiorari under Rule 65 are mutually
exclusive and not alternative or cumulative. This is a firm judicial policy.
The petitioner cannot hedge her case by wagering two or more appeals,
and, in the event that the ordinary appeal lags significantly behind the
others, she cannot post facto validate this circumstance as a
demonstration that the ordinary appeal had not been speedy or adequate
enough, in order to justify the recourse to Rule 65. This practice, if adopted,
would sanction the filing of multiple suits in multiple fora, where each one,
as the petitioner couches it, becomes a "precautionary measure" for the
rest, thereby increasing the chances of a favorable decision. This is the
very evil that the proscription on forum shopping seeks to put right.
In Guaranteed Hotels, Inc. v. Baltao, the Court stated that the grave evil
sought to be avoided by the rule against forum shopping is the rendition by
two competent tribunals of two separate and contradictory decisions.
Unscrupulous party litigants, taking advantage of a variety of competent
tribunals, may repeatedly try their luck in several different fora until a
favorable result is reached. To avoid the resultant confusion, the Court
adheres strictly to the rules against forum shopping, and any violation of
these rules results in the dismissal of the case. 32
appeal to stave off his caretaker's eviction from the parcels of land and to prevent the
development of them into a residential or commercial subdivision pending the appeal. In
the petition for certiorari, Javellana explicitly averred that his appeal was "inadequate and
not speedy to prevent private respondent Alma Jose and her transferee/assignee . . . from
developing and disposing of the subject property to other parties to the total deprivation of
petitioner's rights of possession and ownership over the subject property," and that the
dismissal by the RTC had "emboldened private respondents to fully develop the property
and for respondent Alma Jose to file an ejectment case against petitioner's
overseer . . . ." 35 Thereby, it became far-fetched that Javellana brought the petition
forcertiorari in violation of the policy against forum shopping.
WHEREFORE, the Court DENIES the petition for review
on certiorari; AFFIRMS the decision promulgated on November 20, 2002;
and ORDERS the petitioner to pay the costs of suit.
SO ORDERED.
||| (Jose v. Javellana, G.R. No. 158239, [January 25, 2012], 680 PHIL 10-27)

The same result was reached in Zosa v. Estrella, 33 which likewise involved the
successive filing of a notice of appeal and a petition for certiorari to challenge the same
orders, with the Court upholding the CA's dismissals of the appeal and the petition
for certiorari through separate decisions. SacDIE
Yet, the outcome in Young v. Sy and Zosa v. Estrella is unjust here even if the
orders of the RTC being challenged through appeal and the petition for certiorariwere the
same. The unjustness exists because the appeal and the petition for certiorari actually
sought different objectives. In his appeal in C.A.-G.R. CV No. 68259,Javellana aimed to
undo the RTC's erroneous dismissal of Civil Case No. 79-M-97 to clear the way for his
judicial demand for specific performance to be tried and determined in due course by the
RTC; but his petition for certiorari had the ostensible objective "to prevent (Priscilla) from
developing the subject property and from proceeding with the ejectment case until his
appeal is finally resolved," as the CA explicitly determined in its decision in C.A.-G.R. SP
No. 60455. 34
Nor were the dangers that the adoption of the judicial policy against forum
shopping designed to prevent or to eliminate attendant. The first danger, i.e., the
multiplicity of suits upon one and the same cause of action, would not materialize
considering that the appeal was a continuity of Civil Case No. 79-M-97, whereas C.A.-G.R.
SP No. 60455 dealt with an independent ground of alleged grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the RTC. The second danger, i.e.,
the unethical malpractice of shopping for a friendly court or judge to ensure a favorable
ruling or judgment after not getting it in the appeal, would not arise because the CA had not
yet decided C.A.-G.R. CV No. 68259 as of the filing of the petition for certiorari.
Instead, we see the situation of resorting to two inconsistent remedial approaches
to be the result of the tactical misjudgment by Javellana's counsel on the efficacy of the
 SECOND DIVISION
[G.R. No. 186720. February 8, 2012.]
ELSA D. MEDADO, petitioner, vs. HEIRS OF THE LATE ANTONIO
CONSING, as represented by DR. SOLEDAD CONSING, respondents.
DECISION
REYES, J p:
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, which seeks to annul and set aside the following issuances of the Court of
Appeals (CA) in the case docketed as CA-G.R. SP No. 02660, entitled "Heirs of the Late
Antonio Consing as represented by Dra. Soledad Consing v. Hon. Renato D. Muñez, Presiding
Executive Judge, Regional Trial Court, Branch 60, Cadiz City, Spouses Meritus Rey Medado,
the Sheriff IV, Balbino B. Germinal, Regional Trial Court, Branch 60, Cadiz City and Land Bank
of the Philippines":
(1) the Decision 1 dated September 26, 2008, reversing and setting aside
the order 2 of the Regional Trial Court (RTC), Branch 60, Cadiz
City, in Civil Case No. 797-C, an action for injunction; and
(2) the Resolution 3 dated January 21, 2009, denying the motion for
reconsideration of the decision dated September 26, 2008.
The Factual Antecedents
Sometime in 1996, petitioner Meritus Rey Medado and Elsa Medado (Spouses
Medado) and the estate of the late Antonio Consing (Estate of Consing), as represented by
Soledad Consing (Soledad), executed Deeds of Sale with Assumption of Mortgage for the
former's acquisition from the latter of the property in Cadiz City identified as Hacienda Sol.
Records indicate that the sale included the parcels of land covered by OCT No. P-498, TCT No.
T-31275, TCT No. T-31276 and TCT No. T-31277. As part of the deal, Spouses Medado
undertook to assume the estate's loan with Philippine National Bank (PNB). THIAaD
Subsequent to the sale, however, the Estate of Consing offered the subject lots to the
government via the Department of Agrarian Reform's Voluntary Offer to Sell (VOS) program.
On November 22, 2000, the Estate of Consing also instituted with the RTC, Branch 44 of
Bacolod City an action for rescission and damages, docketed as Civil Case No. 00-11320
against Spouses Medado, PNB and the Register of Deeds of Cadiz City, due to the alleged
failure of the spouses to meet the conditions in their agreement.
In the meantime that Civil Case No. 00-11320 for rescission was pending, Land Bank
of the Philippines (LBP) issued in favor of the Estate of Consing a certificate of deposit of cash
and agrarian reform bonds, as compensation for the lots covered by the VOS. Spouses
Medado feared that LBP would release the full proceeds thereof to the Estate of Consing. They
claimed to be the ones entitled to the proceeds considering that they had bought the properties
through the Deeds of Sale with Assumption of Mortgage which they and the Estate of Consing
had earlier executed.
The foregoing prompted Spouses Medado to institute Civil Case No. 797-C, an action
for injunction with prayer for the issuance of a temporary restraining order, with the RTC,
Branch 60 of Cadiz City. They asked that the following be issued by the trial court: (a) writ of
prohibitory injunction to restrain LBP from releasing the remaining amount of the VOS proceeds
of the lots offered by the Estate of Consing, and restraining the Estate of Consing from receiving
these proceeds; and (b) writ of mandatory injunction to compel LBP to release the remaining
amount of the VOS to the spouses.
On March 9, 2007, the RTC of Cadiz City issued an Order 4 granting Spouses
Medado's application for the issuance of writs of preliminary prohibitory and mandatory
injunction. The order's dispositive portion reads:
WHEREFORE, finding the application for the issuance of a writ of
preliminary prohibitory injunction and preliminary mandatory injunction of
the plaintiffs to be MERITORIOUS, the same is hereby GRANTED.
Let therefore a Writ of Preliminary Prohibitory and Mandatory
Injunction be issued against defendant Land Bank, its agents, lawyers and
all other persons acting in its behalf to cease and desist from releasing the
balance of the VOS Proceeds to defendant Heirs of the Late Antonio
Consing as represented by Dra. Soledad Consing and restraining said
defendant Consing, her agents, lawyers, successors-in-interest, and all
other persons acting in its behalf from receiving the same and to maintain
the STATUS QUO ANTE BELLUM while defendant Land Bank of the
Philippines is hereby ordered to release and pay the whole of the
remaining balance of the VOS Proceeds held by the said defendant to the
plaintiffs after the posting of a bond by the plaintiffs in the amount of FIVE
MILLION PESOS (P5,000,000.00) executed in favor of the defendants
conditioned upon the payment to the said defendants by the plaintiffs [of]
all damages which the former may sustain by reason of the issuance of the
writ of preliminary prohibitory and mandatory injunction in case this Court
should finally decide that the plaintiffs are not entitled thereto. DAHEaT
Furnish copies of this Order to all counsels and parties.
SO ORDERED. 5
Feeling aggrieved, the heirs of the late Antonio Consing (Consing) questioned the
RTC's order via a petition for certiorari filed with the CA, against Hon. Renato D. Muñez,
Presiding Executive Judge, RTC, Branch 60 of Cadiz City, Spouses Medado, Sheriff IV Balbino
B. Germinal of RTC, Branch 60 of Cadiz City and LBP. They sought, among other reliefs, the
dismissal of the complaint for injunction for violation of the rules on litis pendentia and forum
shopping. On the matter of the absence of a motion for reconsideration of the trial court's order
before resorting to a petition for certiorari, the heirs explained that the implementation of the
questioned writs through LBP's release of the VOS proceeds' balance to the sheriff on March
29, 2007, notwithstanding: (a) the pendency of motions for reconsideration and dissolution of
the writs filed by the heirs, and (b) the fact that the writs were immediately implemented even if
a hearing on the motions was already scheduled for March 30, 2007, prompted the heirs'
withdrawal of their motions for being already moot and academic. The heirs argued that their
case was within the exceptions to the general rule that a petition under Rule 65 will not lie
unless a motion for reconsideration is first filed before the lower court.
In their comment on the petition, Spouses Medado questioned, among other matters,
the authority of Soledad to sign the petition's certification of non-forum shopping on behalf of
her co-petitioners.
The Ruling of the CA
On September 26, 2008, the CA rendered the assailed decision, 6 the dispositive
portion of which reads:
WHEREFORE, the petition being impressed with merit
is GRANTED. The assailed Order dated March 9, 2007
is NULLIFIED and SET ASIDE and the complaint in Civil Case No.
797-C DISMISSED. Private respondents are directed to return
P3,743,825.88 to Land Bank of the Philippines to await a final ruling in Civil
Case No. 00-1320.
No costs.
SO ORDERED. 7
The CA ruled that the RTC gravely abused its discretion in taking cognizance of Civil
Case No. 797-C for injunction during the pendency of Civil Case No. 00-11320 for rescission
and damages as this violates the rule against forum shopping. ECaTDc
Spouses Medado's motion for reconsideration of the decision of September 26, 2008
was denied by the CA via its Resolution 8 dated January 21, 2009. Hence, this petition.
The Present Petition
This petition was instituted by petitioner Elsa Medado without naming her husband as
co-petitioner, due to their alleged separation de facto. 9 It presents the following issues for this
Court's determination:
I. Whether or not the CA correctly admitted the petition for certiorari filed
before it, notwithstanding alleged deficiencies in its verification
and certification against forum shopping;
II. Whether or not the CA correctly admitted the petition for certiorari filed
before it even if no motion for reconsideration of the RTC's Order
dated March 9, 2007 was filed with the lower court; and
III. Whether or not the CA correctly held that the rule against forum
shopping was violated by the filing of the complaint for injunction
during the pendency of the action for rescission and damages.
In their comment on the petition, the respondents also raise as an issue the failure of
the petitioner to join her husband as a party to the petition, considering that the action affects
conjugal property.
This Court's Ruling
After due study, this Court finds the petition bereft of merit.
The requirements for verification and certification against forum shopping in the CA
petition were substantially complied with, following settled jurisprudence.
Before us, the petitioner contended that the consolidated verification and certification
against forum shopping of the petition filed with the CA was defective: first, for being signed only
by Soledad, instead of by all the petitioners, and second, its jurat cites a mere community tax
certificate of Soledad, instead of a government-issued identification card required under the
2004 Rules on Notarial Practice. The second ground was never raised by herein petitioner in
her comment on the CA petition, thus, it cannot be validly raised by the petitioner at this
stage. SIEHcA
As regards the first ground, records show that Soledad signed the verification and
certification against forum shopping on behalf of her co-petitioners by virtue of a Special Power
of Attorney 10 (SPA) attached to the petition filed with the CA. The SPA, signed by her co-heirs
Ma. Josefa Consing Saguitguit, Ma. Carmela Consing Lopez, Ma. Lourdes Consing Gonzales
and Mary Rose Consing Tuason, provides that their attorney-in-fact Soledad is authorized:
To protect, sue, prosecute, defend and adopt whatever action
necessary and proper relative and with respect to our right, interest and
participation over said properties, particularly those described in previous
titles under TCT No. T-498, TCT No. T-31275, TCT No. T-31276 and TCT
No. T-31277 of the [R]egister of Deeds, Cadiz City, covering a total area of
73.6814 square meters, and declared in the name of said Antonio Consing
and located in Brgy. Magsaysay, Cadiz City, Negros Occidental, the same
parcels of land are the subject of judicial litigation before the [R]egional
Trial [Court], Branch 44, Bacolod City, docketed as Civil [C]ase No. 11320,
entitled"Soledad T. Consing, for herself and as Administratix of the estate
of Antonio Consing, plaintiffs, versus, Spouses Meritus Rey and Elsa
Medado, et al., defendants," and Regional Trial Court, Branch 60, Cadiz
City and docketed as Civil Case No. 797-C, entitled, ["]Spouse[s] Meritus
Rey Medado and Elsa Medado, plaintiffs, versus, Land Bank of the
Philippines and heirs of the Late Antonio Consing as represented by Dra.
Soledad Consing, defendants"; pending in said court and which cases may
at anytime be elevated to the Court of Appeals and/or Supreme Court as
the circumstances so warrant; 11
As may be gleaned from the foregoing, the authority of Soledad includes the filing of
an appeal before the CA, including the execution of a verification and certification against forum
shopping therefor, being acts necessary "to protect, sue, prosecute, defend and adopt
whatever action necessary and proper" in relation to their rights over the subject properties.
In addition, the allegations and contentions embodied in the CA petition do not deviate
from the claims already made by the heirs in Civil Case Nos. 00-11320 and 797-C, both
specifically mentioned in the SPA. We emphasize that the verification requirement is simply
intended to secure an assurance that the allegations in the pleading are true and correct, and
not the product of the imagination or a matter of speculation, and that the pleading is filed in
good faith. 12 We rule that there was no deficiency in the petition's verification and certification
against forum shopping filed with the CA.
In any case, we reiterate that where the petitioners are immediate relatives, who share
a common interest in the property subject of the action, the fact that only one of the petitioners
executed the verification or certification of forum shopping will not deter the court from
proceeding with the action. In Heirs of Domingo Hernandez, Sr. v. Mingoa, Sr., 13 we
held: HAEDCT
Even if only petitioner Domingo Hernandez, Jr. executed the
Verification/Certification against forum-shopping, this will not deter us from
proceeding with the judicial determination of the issues in this petition. As
we ratiocinated in Heirs of Olarte v. Office of the President:
The general rule is that the certificate of non-forum
shopping must be signed by all the plaintiffs in a case and the
signature of only one of them is insufficient. However, the Court
has also stressed that the rules on forum shopping were
designed to promote and facilitate the orderly administration of
justice and thus should not be interpreted with such absolute
literalness as to subvert its own ultimate and legitimate objective.
The rule of substantial compliance may be availed of with respect
to the contents of the certification. This is because the
requirement of strict compliance with the provisions regarding the
certification of non-forum shopping merely underscores its
mandatory nature in that the certification cannot be altogether
dispensed with or its requirements completely disregarded. Thus,
under justifiable circumstances, the Court has relaxed the rule
requiring the submission of such certification considering that
although it is obligatory, it is not jurisdictional.
In HLC Construction and Development Corporation v.
Emily Homes Subdivision Homeowners Association, it was held
that the signature of only one of the petitioners in the certification
against forum shopping substantially complied with [the] rules
because all the petitioners share a common interest and invoke a
common cause of action or defense.
The same leniency was applied by the Court in Cavile v.
Heirs of Cavile, because the lone petitioner who executed the
certification of non-forum shopping was a relative and co-owner
of the other petitioners with whom he shares a common
interest. . . .
xxx xxx xxx
Here, all the petitioners are immediate relatives who share a
common interest in the land sought to be reconveyed and a common
cause of action raising the same arguments in support thereof. There was
sufficient basis, therefore, for Domingo Hernandez, Jr. to speak for and in
behalf of his co-petitioners when he certified that they had not filed any
action or claim in another court or tribunal involving the same issues. Thus,
the Verification/Certification that Hernandez, Jr. executed constitutes
substantial compliance under the Rules. 14 (citations omitted) AaCTID
Furthermore, we have consistently held that verification of a pleading is a formal, not a
jurisdictional, requirement intended to secure the assurance that the matters alleged in a
pleading are true and correct. Thus, the court may simply order the correction of unverified
pleadings or act on them and waive strict compliance with the rules. It is deemed substantially
complied with when one who has ample knowledge to swear to the truth of the allegations in the
complaint or petition signs the verification; and when matters alleged in the petition have been
made in good faith or are true and correct. 15 It was based on this principle that this Court had
also allowed herein petitioner, via our Resolution 16 dated April 22, 2009, a chance to submit a
verification that complied with Section 4, Rule 7 of the Rules of Court, as amended, instead of
us dismissing the petition outright.
There are recognized exceptions permitting resort to a special civil action
of certiorari even without first filing a motion for reconsideration.
On the second issue, the CA did not err in accepting the petition for certiorari even if
the motion for reconsideration of the RTC Order of March 9, 2007 was withdrawn by herein
respondents before the RTC could act thereon. It is settled that the requirement on the filing of
a motion for reconsideration prior to the institution of a petition for certiorari under Rule 65 of the
Rules of Court admits of several exceptions, such as when the filing of a motion appears to be
useless given the circumstances attending the action. Thus, we have repeatedly held:
The general rule is that a motion for reconsideration is a
condition sine qua non before a petition for certiorari may lie, its purpose
being to grant an opportunity for the court a quo to correct any error
attributed to it by re-examination of the legal and factual circumstances of
the case. There are, however, recognized exceptions permitting a resort to
the special civil action for certiorari without first filing a motion for
reconsideration. In the case of Domdom v. Sandiganbayan, it was written:
"The rule is, however, circumscribed by well-defined
exceptions, such as where the order is a patent nullity because
the court a quo had no jurisdiction; where the questions raised in
the certiorari proceeding have been duly raised and passed upon
by the lower court, or are the same as those raised and passed
 upon in the lower court; where there is an urgent necessity for the
resolution of the question, and any further delay would prejudice
the interests of the Government or of the petitioner, or the subject
matter of the action is perishable; where, under the
circumstances, a motion for reconsideration would be
useless; where the petitioner was deprived of due process and
there is extreme urgency of relief; where, in a criminal case, relief
from an order of arrest is urgent and the grant of such relief by the
trial court is improbable; where the proceedings in the lower court
are a nullity for lack of due process; where the proceedings
were ex parte or in which the petitioner had no opportunity to
object; and where the issue raised is one purely of law or where
public interest is involved." 17 (emphasis supplied, and citations
and underscoring omitted) SDAaTC
As correctly held by the CA, a motion for reconsideration, or the resolution of the trial
court thereon, had become useless given that the particular acts which the movants sought to
prevent by the filing of the motion were already carried out. Significantly, the heirs of the late
Consing had filed a motion for reconsideration of the RTC's order, but withdrew it only after the
trial court had decided to implement the writs notwithstanding the pendency of the motion and
just a day before the scheduled hearing on said motion.
Forum-shopping exists when the elements of litis pendentia concur.
On the third issue, there is forum shopping when the elements of litis pendentia are
present, i.e., between actions pending before courts, there exist: (1) identity of parties, or at
least such parties as represent the same interests in both actions, (2) identity of rights asserted
and relief prayed for, the relief being founded on the same facts, and (3) the identity of the two
preceding particulars is such that any judgment rendered in the other action will, regardless of
which party is successful, amount to res judicata in the action under consideration; said
requisites are also constitutive of the requisites for auter action pendant or lis
pendens. 18 Applying the foregoing, there was clearly a violation of the rule against forum
shopping when Spouses Medado instituted Civil Case No. 797-C for injunction notwithstanding
the pendency of Civil Case No. 00-11320 for rescission of contract and damages.
All elements of litis pendentia are present with the filing of the two cases. There is no
dispute that there is identity of parties representing the same interests in the two actions, both
involving the estate and heirs of the late Consing on one hand, and Spouses Medado on the
other. The rescission case names "Soledad T. Consing, for herself and as administratrix of the
estate of Antonio Consing" as plaintiff, with "Spouses Meritus Rey and Elsa Medado, [PNB] and
the Register of Deeds of Cadiz City" as respondents. The injunction case, on the other hand,
was instituted by Spouses Medado, against "(LBP) and the Heirs of the Late Antonio Consing,
as represented by Dra. Soledad Consing." The primary litigants in the two action, and their
interests, are the same.
The two other elements are likewise satisfied. There is an identity of rights asserted
and reliefs prayed for in the two cases, with the reliefs being founded on the same set of facts.
In both cases, the parties claim their supposed right as owners of the subject properties. They
all anchor their claim of ownership on the deeds of absolute sale which they had executed, and
the law applicable thereto. They assert their respective rights, with Spouses Medado as buyers
and the heirs as sellers, based on the same set of facts that involve the deeds of sale's contents
and their validity. Both actions necessarily involve a ruling on the validity of the same contract
as against the same parties. Thus, the identity of the two cases is such as would render the
decision in the rescission case res judicata in the injunction case, and vice versa.aSCHIT
It does not even matter that one action is for the enforcement of the parties'
agreements, while the other action is for the rescission thereof. In the similar case ofVictronics
Computers, Inc. v. RTC, Branch 63, Makati, 19 we discussed:
Civil Case No. 91-2069 actually involves an action for specific
performance; it thus upholds the contract and assumes its validity. Civil
Case No. 91-2192, on the other hand, is for the nullification of the contract
on the grounds of fraud and vitiated consent. While ostensibly the cause
of action in one is opposite to that in the other, in the final analysis,
what is being determined is the validity of the contract. . . . Thus, the
identity of rights asserted cannot be disputed. Howsoever viewed, it is
beyond cavil that regardless of the decision that would be promulgated in
Civil Case No. 91-2069, the same would constitute res judicata on Civil
Case No. 91-2192 and vice versa. 20 (emphasis supplied)
This was further explained in Casil v. CA, 21 where we ruled:
The Court of Appeals held that there can be no res
adjudicata because there is no identity of causes of action between the two
cases. We do not agree. In the two cases, both petitioner and private
respondent brought to fore the validity of the agreement dated May 4, 1994.
Private respondent raised this point as an affirmative defense in her
answer in the First Case. She brought it up again in her complaint in the
Second Case. A single issue cannot be litigated in more than one forum.
As held in Mendiola vs. Court of Appeals:
The similarity between the two causes of action is only
too glaring. The test of identity of causes of action lies not in the
form of an action but on whether the same evidence would
support and establish the former and the present causes of action.
The difference of actions in the aforesaid cases is of no
moment. In Civil Case No. 58713, the action is to enjoin PNB
from foreclosing petitioner's properties, while in Civil Case No.
60012, the action is one to annul the auction sale over the
foreclosed properties of petitioner based on the same
grounds. Notwithstanding a difference in the forms of the two
actions, the doctrine of res judicata still applies considering that
the parties were litigating for the same thing, i.e. lands covered by
TCT No. 27307, and more importantly, the same contentions and
evidence as advanced by herein petitioner in this case were in
fact used to support the former cause of action." 22 IaESCH
 The CA was then correct in ordering the dismissal of the complaint in Civil Case No.
797-C for violation of the rule against forum shopping. The issue on the validity of the subject
deeds of absolute sale can best be addressed in the action for rescission, as against the case
for injunction filed by Spouses Medado. In a line of cases, we have set the relevant factors that
courts must consider when they have to determine which case should be dismissed, given the
pendency of two actions, to wit:

(1) the date of filing, with preference generally given to the first action filed
to be retained;

(2) whether the action sought to be dismissed was filed merely to preempt
the latter action or to anticipate its filing and lay the basis for its
dismissal; and

(3) whether the action is the appropriate vehicle for litigating the issues
between the parties. 23

We emphasize that the rules on forum shopping are meant to prevent such
eventualities as conflicting final decisions. 24 This Court has consistently held that the costly
consequence of forum shopping should remind the parties to ever be mindful against abusing
court processes. 25 In addition, the principle of res judicatarequires that stability be accorded to
judgments. Controversies once decided on the merits shall remain in repose for there should be
an end to litigation which, without the doctrine, would be endless. 26

Given the foregoing grounds already warranting the denial of this petition, we deem it
no longer necessary to take any action or to now rule on the issue of the non-joinder of the
petitioner's husband in the petition.

WHEREFORE, premises considered, the instant petition for review on certiorari is

hereby DENIED. Accordingly, the Court of Appeal's Decision dated September 26, 2008, which
reversed and set aside the order of the Regional Trial Court, Branch 60, Cadiz City, dated
March 09, 2007, is perforce AFFIRMED.

SO ORDERED. CacEIS

||| (Medado v. Heirs of Consing, G.R. No. 186720, [February 8, 2012], 681 PHIL 536-553)
 EN BANC
[G.R. No. 172623. March 3, 2010.]
COMMISSION ON APPOINTMENTS, represented herein by its
Secretary HON. ARTURO L. TIU, petitioner, vs. CELSO M.
PALER, 1 respondent.
DECISION
CORONA, J p:
This is a petition for review under Rule 45 of the Rules of Court assailing the
decision 2 dated December 20, 2005 and resolution dated April 27, 2005 rendered by the
Court of Appeals (CA) in CA-G.R. SP No. 90360.
The facts are undisputed.
Respondent Celso M. Paler was a Supervising Legislative Staff Officer II
(SG-24) 3 with the Technical Support Service of the Commission on Appointments. 4 On
April 8, 2003, he submitted a request for vacation leave for 74 working days — from August
1, 2003 to November 14, 2003. 5 In a memorandum dated April 22, 2003, Ramon C.
Nghuatco, Director III of Technical Support Service, submitted to the Commission
Secretary his comments/recommendation on Paler's application:
"1. The request to go on leave of Mr. Paler is contingent upon the
completion of his various Committee assignments.
2. We have already acted favorably on his Leave Applications for 09 June
2003-30 July 2003, which may already cover his reasons
enumerated under items 1-5.
3. Mr. Paler's Sick Leave Application shall require a medical certificate
from the attending physician advising him of the need to undergo
medical operation and the treatment and recuperation period
therefor.
Mr. Paler's Application for Leave may be acted upon
depending on the completion of his work load and
submission of the medical certificate." 6(Emphasis
supplied) HEIcDT
Since he already had an approved leave from June 9 to July 30, 2003, Paler left
for the United States on June 8, 2003, without verifying whether his application for leave
(for August 1-November 14, 2003) was approved or denied.
In a letter dated September 16, 2003, the Commission Chairman informed Paler
that he was being dropped from the roll of employees effective said date, due to his
continuous 30-day absence without leave and in accordance with Section 63, Civil Service
Commission (CSC) Memorandum Circular No. 14, s. 1999. 7 Paler's son received the
letter on September 23, 2003. 8
Paler moved for reconsideration but this was denied on February 20, 2004, on the
ground that it was filed beyond the 15-day reglementary period. 9 The denial was received
by Paler's son on March 18, 2004.
On appeal, the CSC reversed and set aside the Commission Chairman's decision
dated September 16, 2003 per resolution 04-1214 dated November 9, 2004. 10The
dispositive portion of the resolution read:
WHEREFORE, the appeal of Celso M. Paler is hereby
GRANTED. Accordingly, the decision dated September 16, 2003 of
Commission on Appointments Chairman Franklin M. Drilon dropping Celso
M. Paler from the rolls; and the decision dated February 20, 2004 denying
his motion for reconsideration are REVERSED and SET ASIDE. It is
directed that Celso M. Paler be immediately reinstated as Committee
Secretary of the Commission on Appointments and shall be considered to
be on leave with pay until the exhaustion of his vacation leave credits.
Quezon City, Nov. 09, 2004. 11
The Commission filed a motion for reconsideration but this was denied by the
CSC per resolution No. 050833 dated June 23, 2005.
This constrained petitioner to file with the CA a petition for review under Rule 43 of
the Rules of Court.
Since Paler had in the meantime already reached the compulsory age of
retirement on July 28, 2005 and was no longer entitled to reinstatement, the CA affirmed
with modification CSC resolution 04-1214 dated November 9, 2004 and resolution No.
050833 dated June 23, 2005. The dispositive portion of the assailed decision dated
December 20, 2005 provided:
WHEREFORE, the assailed Resolutions of the Civil Service
Commission are AFFIRMED with the MODIFICATION that the order of
reinstatement is DELETED. In lieu thereof, Paler should be awarded
backwages, retirement benefits and other privileges that accrued to him
from the time of his dismissal up to the date of his retirement.
SO ORDERED. 12
Petitioner filed a motion for reconsideration but this was denied by the CA in the
assailed resolution dated April 27, 2005. HDAaIc
 Hence, this petition based on the following grounds:
A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
GIVING DUE COURSE TO THE APPEAL OF RESPONDENT
PALER WITH THE RESPONDENT CIVIL SERVICE
COMMISSION DESPITE THE FACT THAT IT WAS FILED OUT
OF TIME.
B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT THE LEAVE APPLICATIONS OF
RESPONDENT PALER WAS DEEMED APPROVED ON A
MISTAKEN INTERPRETATION OF SEC. 49, RULE XVI OF THE
OMNIBUS RULE ON LEAVE AS AMENDED. 13
Petitioner's contentions are basically the same as those it presented to the
CSC 14 and the CA, 15 viz.: (1) the CSC should not have entertained Paler's appeal since
it was filed beyond the 15-day reglementary period; there were no meritorious reasons to
relax the procedural rules, specially since there was bad faith and misrepresentation on
Paler's part in filing staggered applications for leave; (2) the Commission Chairman's
decision to drop Paler from the roll of employees was in accord with Section 63 of CSC
Memorandum Circular No. 14, series of 1999 and (3) Paler's application for leave was not
"deemed approved" as petitioner acted on his application by holding it in abeyance in view
of the contingencies of his work and the submission of a medical certificate. 16 ATCEIc
In his comment, Paler, aside from arguing that the CA did not commit any error in
sustaining the CSC resolutions, also assails Atty. Arturo L. Tiu's authority to file the petition
and sign the verification and certification of non-forum shopping on behalf of the
Commission Chairman. 17
The CSC, represented by the Office of the Solicitor General (OSG), maintains the
correctness of the CSC and CA judgments.
ISSUES
This petition involves both procedural and substantive issues.
On the procedural aspect, Paler questions the authority of the Commission
Secretary to file the petition and sign the verification and certification of non-forum
shopping in behalf of the Commission Chairman. On the other hand, the Commission
disputes the CSC's grant of Paler's appeal despite having been filed beyond the
reglementary period.
On the substantive aspect, was Paler's application for leave "deemed approved"
within the purview of Section 49, Rule XVI of the Omnibus Rules on Leave?
AUTHORITY TO FILE PETITION
First, we tackle Atty. Tiu's authority to file the petition and sign the verification and
certification of non-forum shopping.
The petitioner in this case is the Commission on Appointments, a government
entity created by the Constitution, and headed by its Chairman. 18 There was no need for
the Chairman himself to sign the verification. Its representative, lawyer or any person who
personally knew the truth of the facts alleged in the petition could sign the
verification. 19 With regard, however, to the certification of non-forum shopping, the
established rule is that it must be executed by the plaintiff or any of the principal parties and
not by counsel. 20 In this case, Atty. Tiu failed to show that he was specifically authorized
by the Chairman to sign the certification of non-forum shopping, much less file the petition
in his behalf. There is nothing on record to prove such authority. Atty. Tiu did not even
bother to controvert Paler's allegation of his lack of authority. This renders the petition
dismissible. 21
Furthermore, the petition is bereft of merit as it merely restates the arguments
presented before the CSC and CA. It does not advance any cogent reason that will
convince this Court to deviate from the rulings of both tribunals. aTIEcA
THE ISSUE OF
LATE FILING
Section 72 of CSC Memorandum Circular No. 19, s. 1999, 22 provides for the
period of appeal for non-disciplinary actions, to wit:
Section 72. When and Where to File. — A decision or ruling of a
department or agency may be appealed within fifteen (15) days from
receipt thereof by the party adversely affected to the Civil Service Regional
Office and finally, to the Commission Proper within the same period.
xxx xxx xxx
Paler's son received the letter from the Commission Chairman denying Paler's
motion for reconsideration on March 18, 2004. Thus, Paler's had until April 2, 2004 within
which to file his appeal with the CSC. It was filed, however, only on April 5,
2004. 23 Nevertheless, the CSC entertained the appeal in the interest of substantial
justice. 24
We agree with the CSC. We uphold its decision to relax the procedural rules
because Paler's appeal was meritorious. This is not the first time that the Court has upheld
such exercise of discretion. In Rosales, Jr. v. Mijares 25 involving Section 49 (a) of the
CSC Revised Rules of Procedure, the Court ruled:
On the contention of the petitioner that the appeal of the
respondent to the CSC was made beyond the period therefor under
Section 49(a) of the CSC Revised Rules of Procedure, the CSC correctly
ruled that:
Movant claims that Mijares' appeal was filed way
beyond the reglementary period for filing appeals. He, thus,
contends that the Commission should not have given due course
to said appeal.
The Commission need not delve much on the dates
when Mijares was separated from the service and when he
assailed his separation. Suffice it to state that the
 Commission found his appeal meritorious. This being the
case, procedural rules need not be strictly observed. This
principle was explained by in the case of Mauna vs. CSC, 232
SCRA 388, where the Supreme Court ruled, to wit:
"Assuming for the sake of argument that the
petitioner's appeal was filed out of time, it is within the
power of this Court to temper rigid rules in favor of
substantial justice. While it is desirable that
the Rules of Court be faithfully and even
meticulously observed, courts should not be so
strict about procedural lapses that do not really
impair the proper administration of justice. If the
rules are intended to ensure the orderly conduct of
litigation, it is because of the higher objective they
seek which is the protection of substantive rights of
the parties. As held by the Court in a number of
cases: IcDCaT
xxx xxx xxx
It bears stressing that the case before the CSC involves the
security of tenure of a public officer sacrosanctly protected by the
Constitution. Public interest requires a resolution of the merits of the
appeal instead of dismissing the same based on a strained and inordinate
application of Section 49(a) of the CSC Revised Rules of
Procedure. 26 (Emphasis supplied)
Constantino-David v. Pangandaman-Gania 27 likewise sustained the CSC when
it modified an otherwise final and executory resolution and awarded backwages to the
respondent, in the interest of justice and fair play. The Court stated —
No doubt, the Civil Service Commission was in the legitimate
exercise of its mandate under Sec. 3, Rule I, of the Revised Uniform Rules
on Administrative Cases in the Civil Service that "[a]dministrative
investigations shall be conducted without necessarily adhering strictly to
the technical rules of procedure and evidence applicable to judicial
proceedings." This authority is consistent with its powers and functions to
"[p]rescribe, amend and enforce rules and regulations for carrying into
effect the provisions of the Civil Service Law and other pertinent laws"
being the central personnel agency of the Government.
Furthermore, there are special circumstances in accordance with
the tenets of justice and fair play that warrant such liberal attitude on the
part of the CSC and a compassionate like-minded discernment by this
Court. . . . 28
When substantial justice dictates it, procedural rules may be relaxed in order to
arrive at a just disposition of a case. The purpose behind limiting the period of appeal is to
avoid unreasonable delay in the administration of justice and to put an end to controversies.
A one-day delay, as in this case, does not justify denial of the appeal where there is
absolutely no indication of intent to delay justice on the part of Paler 29 and the pleading is
meritorious on its face.
Petitioner harps on Paler's alleged bad faith and misrepresentation in filing his
previous applications for leave. However, as correctly found by the CSC and CA, the basis
for Paler's dismissal was his continuous absence without leave, not bad faith and
misrepresentation. The CSC even noted that Paler never misrepresented or misled
petitioner as to where he was spending his vacation leave. He clearly stated in his
application for leave dated April 17, 2003 that he was spending it not only in the Philippines
but also in the U.S. 30 According to the CA, "to utilize Paler's alleged misrepresentation in
his previously approved applications for leave as basis for his separation from work, even
in the absence of opportunity for him to controvert the matter, would constitute a violation of
the fundamental requirements of fairness and equity and the constitutional guarantee of
due process." 31 The Court finds no reason to deviate from the findings of both the CSC
and CA, given that they concur with each other and should be accorded great weight and
respect. 32 DCcTHa
The CSC and CA were also correct in ruling that Paler could not be considered
absent without leave (AWOL) for the period of August 1, 2003 to November 14, 2003.
Paler was dropped from the roll of employees pursuant to Section 63, Rule XVI of
the Omnibus Rules on Leave:
An official or an employee who is continuously absent without
approved leave for at least thirty (30) calendar days shall be considered
on absence without official leave (AWOL) and shall be separated from the
service or dropped from the rolls without prior notice. He shall, however, be
informed, at his address appearing on his 201 files of his separation from
the service, not later than five (5) days from its effectivity. (Emphasis and
underscoring supplied)
AWOL means that the employee has left or abandoned his post for a continuous
period of thirty (30) calendar days or more without any justifiable reason and notice to his
employer. 33
The bone of contention in this case is whether or not Paler had an approved
leave.
Section 49, Rule XVI of the Omnibus Rules on Leave requires that an application
for leave should be acted upon within 5 working days from receipt, otherwise, such
application is deemed approved. 34 The CSC interpreted said provision in this wise —
It is explicit from the aforequoted rule that an application for leave
of absence which had not been acted upon — either by approving or
disapproving — by the head of agency or his/her authorized representative
within five (5) working days from the date of its filing shall be deemed
approved. 35 (Italics supplied)
 The CSC also ruled that "Section 49 calls for a specific action to be done by the SO ORDERED.
head of the agency or his duly authorized representative on the application for leave filed
||| (Commission on Appointments v. Paler, G.R. No. 172623, [March 3, 2010], 628 PHIL 26-39)
which is either to approve or to deny the same." 36
Being the central agency mandated to "prescribe, amend, and enforce rules and
regulations for carrying into effect the provisions of the Civil Service Law and other THIRD DIVISION
pertinent laws," the CSC has the power to interpret its own rules and any phrase contained
in them, with its interpretation significantly becoming part of the rules themselves. 37 The
Court has consistently yielded and accorded great respect to the interpretation by [G.R. Nos. 174365-66. February 4, 2015.]
administrative agencies of their own rules unless there is an error of law, abuse of power,
lack of jurisdiction or grave abuse of discretion clearly conflicting with the letter and spirit of ROMEO BASAN, DANILO DIZON, JAIME L. TUMABIAO, JR.,
the law. 38 ROBERTO DELA RAMA, JR., RICKY S. NICOLAS, CRISPULO D.
The CA added its own reading of Section 49 which the Court now DONOR, GALO FALGUERA, and NATIONAL LABOR RELATIONS
sustains: caAICE COMMISSION, petitioners, vs. COCA-COLA BOTTLERS
PHILIPPINES, * respondent.
. . . The action contemplated therein connotes a clear and explicit
exercise of discretion. It pertains to an absolute and unequivocal
"approval" or "disapproval" of the request for leave and not one which is
merely "recommendatory" in nature. If the rule were otherwise, the DECISION
authority to act on the application for leave would not have been vested on
the head of the agency or the CA [Commission on Appointments]
Chairman's authorized representative. Needless to state, the purpose of
the provision is for the applicant to be immediately informed of the status of PERALTA, J p:
his application, whether it has been approved or denied, so that he can act
accordingly. . . . 39 Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking to reverse and set aside the Decision 1 dated August 31, 2005 and
Clearly, Atty. Nghuatco's memorandum did not cover the action contemplated by Resolution 2 dated August 24, 2006 of the Court of Appeals (CA) in CA-G.R. SP Nos. 80977 &
Section 49. For one, it did not bear the imprimatur of the Commission Chairman (or his duly 87071, which reversed the Resolutions dated January 30, 2003 3 and September 24, 2003 4 of
authorized representative) who was the proper party to grant or deny the application, as the National Labor Relations Commission (NLRC) in NLRC 00-02-01419-97.
dictated by Section 52 of the Omnibus Rules on Leave. 40 For another, it only submitted to
the Commission Secretary Atty. Nghuatco's comments and/or recommendations on The factual antecedents are as follows.
Paler's application. It was merely preliminary and did not propose any definitive action
(i.e., approval or disapproval) on Paler's application, and simply recommended what action On February 18, 1997, petitioners Romeo Basan, Danilo Dizon, Jaime L. Tumabiao,
to take. It was obviously not controlling and the Chairman could have agreed or disagreed Jr., Roberto Dela Rama, Jr., Ricky S. Nicolas, Crispulo D. Donor, Galo Falguera filed a
with the recommended action. In fact, the memorandum clearly provided that Paler's complaint for illegal dismissal with money claims against respondent Coca-Cola Bottlers
request was still to be referred to the Legal Service for comment, 41 and that the Philippines, alleging that respondent dismissed them without just cause and prior written notice
application "(could) be acted upon depending on the completion of his work load and required by law. In their position paper, petitioners provided for the following material dates: 5
submission of the medical certificate." 42 These circumstances plainly meant that further Name of Petitioner Date of Hiring Date of Dismissal
action was yet to be made on the application. And since there was no final approval or
disapproval of Paler's application within 5 working days from receipt as required by Section
49, the application was deemed approved. Paler, therefore, could not be considered on
AWOL. Dela Rama November 16, 1995 February 13, 1997

All told, the CA committed no error in affirming, with modification, CSC Resolution Dizon October 1988 December 15, 1996
Nos. 04-1214 dated November 9, 2004 and 050833 dated June 23, 2005.
Tumabiao February 02, 1992 February 13, 1997
WHEREFORE, the petition is DENIED.
No costs.
Basan July 13, 1996 January 31, 1997
Donor September 16, 1995 February 13, 1997
Nicolas May 10, 1996 January 30, 1997
Falguera January 15, 1991 April 1996
Respondent corporation, however, countered that it hired petitioners as temporary
route helpers to act as substitutes for its absent regular route helpers merely for a fixed period in
anticipation of the high volume of work in its plants or sales offices. 6 As such, petitioners'
claims have no basis for they knew that their assignment as route helpers was temporary in
duration.
On August 21, 1998, the Labor Arbiter ruled in favor of petitioners and found that since
they were performing activities necessary and desirable to the usual business of petitioner for
more than the period for regularization, petitioners are considered as regular employees, and
thus, their dismissal was done contrary to law in the absence of just cause and prior written
notice. 7 Thus, it ordered respondent to reinstate petitioners with full backwages from the time
their salaries were withheld until their actual reinstatement and to pay their lump sum increase
extended to them in their collective bargaining agreement, their accrued vacation and sick
leave benefits, as well as monetary awards and attorney's fees. 8
On January 30, 2003, the NLRC affirmed the Labor Arbiter's decision and rejected
respondent's contention that petitioners were merely employed for a specific project or
undertaking the completion or termination of which has been determined at the time of their
engagement. It stressed that nowhere in the records of the case was it shown that petitioners
were hired as project or seasonal employees, respondent having failed to submit any contract
of project or other similar proof thereof. 9 It also noted that neither can petitioners be
considered as probationary employees for the fact that they had performed their services for
more than six (6) months. In addition, the NLRC upheld the Labor Arbiter's ruling that petitioners,
as route helpers, performed work directly connected or necessary and desirable in
respondent's ordinary business of manufacturing and distributing its softdrink products. Thus,
respondent failed to overcome petitioners' assertion that they were regular employees. As such,
their employment could only be terminated with just cause and after the observance of the
required due process. Thereafter, the subsequent motion for reconsideration filed by
respondent was further denied by the NLRC on September 24, 2003. ISaCTE
On December 9, 2003, respondent filed a petition for certiorari 10 with the CA alleging
grave abuse of discretion on the part of the NLRC in finding that petitioners were regular
employees. In the meantime, petitioners filed before the Labor Arbiter a Motion for Issuance of
a Writ of Execution 11 dated December 15, 2003, to which respondent filed a Manifestation and
Motion with attached Opposition. 12 On March 25, 2004, the Labor Arbiter ordered that the Writ
of Execution be issued, which was affirmed by the NLRC on June 21, 2004. Consequently,
respondent filed another petition for certiorari 13 on October 22, 2004, claiming that the NLRC
committed grave abuse of discretion in directing the execution of a judgment, the propriety and
validity of which was still under determination of the appellate court.
In its Decision dated August 31, 2005, the CA consolidated respondent's two (2)
petitions for certiorari and reversed the rulings of the NLRC and the Labor Arbiter in the
following wise:
That the respondents "performed duties which are necessary or
desirable in the usual trade or business of Coca-Cola," is of no moment.
This is not the only standard for determining the status of one's
employment. Such fact does not prevent them from being considered as
fixed term employees of Coca-Cola whose engagement was "fixed" for a
specific period. The respondent's repeated hiring for various periods
(ranging from more than six months for private respondent Basan to eight
years in the case of private respondent Dizon) would not automatically
categorize them as REGULAR EMPLOYEES. IacHAE
xxx xxx xxx
It being supported by facts on record and there being no showing
that the employment terms were foisted on the employees through
circumstances vitiating or diminishing their consent, following Brent School,
Inc. vs. Zamora (G.R. No. 48494, Feb. 5, 1990), the respondents must be
considered as fixed term employees whose "seasonal employment" or
employment for a "period" have been "set down." After all, as conceded
by Brent, fixed term employment continues to be allowed and enforceable
in this jurisdiction. Not being permanent regular employees, it must be held
that the respondents are not entitled to reinstatement and payment of full
backwages. 14
Petitioners sought a reconsideration of the CA's Decision on procedural and
substantive grounds. On the procedural, they alleged that respondent, in filing its appeal of the
Labor Arbiter's August 21, 1998 decision with the NLRC only on December 20, 1998, rendered
the Decision of the Labor Arbiter final and executory, and thus, deprived the CA of jurisdiction to
alter the final judgment. 15 They also claimed that the Resolutions of the NLRC have become
final and executory in view of the Entries of Judgment dated December 16, 2003 and
September 16, 2004 issued by the NLRC. As to the substantial matter, petitioners assert that
they are regular employees entitled to security of tenure.
On August 24, 2006, the CA denied petitioners' motion for reconsideration in saying
that it is no longer necessary to discuss whether respondent was able to timely appeal the
Labor Arbiter's decision to the NLRC, in view of the fact that the latter had already given due
course to said appeal by deciding the case on the merits and, more importantly, petitioners'
failure to raise the alleged infirmity before the NLRC in opposition to respondent's appeal.
Hence, the instant petition invoking the following grounds:
I.
THE HONORABLE COURT OF APPEALS SERIOUSLY AND
PATENTLY ERRED AND COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO THE LACK OR EXCESS OF
 JURISDICTION IN RULING THAT THE PETITIONERS WERE NOT
REGULAR EMPLOYEES.
1 month From January 15, 1997
II.
to January 31, 1997
THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR IN THE CHALLENGED DECISIONS AS TO WARRANT THE
EXERCISE OF THE COURT'S DISCRETIONARY APPELLATE
Donor 1 month From February 15, 1996
JURISDICTION. cTSDAH
to March 15, 1996
Petitioners essentially maintain that contrary to the findings of the CA, they were
continuously hired by respondent company to perform duties necessary and desirable in the
usual trade or business and are, therefore, regular employees. They allege that if their services
had really been engaged for fixed specific periods, respondent should have at least provided 1 month From December 15, 1996
the contracts of employment evidencing the same.
to January 15, 1997
For its part, respondent contends that the petition should be denied due course for its
verification and certification of non-forum shopping was signed by only one of the petitioners. It
alleges that even assuming the validity of the same, it should still be dismissed for the appellate
Nicolas 8.5 months In 1996 and 1997
court aptly found that petitioners were fixed-term employees who were hired intermittently.
Respondent also asserts that petitioners failed to completely substantiate their claims, for
during the hearing conducted before the Labor Arbiter on March 11, 1998, the payslips
presented by petitioners merely established the following employment terms: Falguera 6 months From 1992

Name of Petitioner Length of Service Dates to 1997

Dela Rama 5 months, 4 months Between November 30, 1995 Considering that the evidence presented showed that petitioners merely rendered their
services for periods of less than a year, respondent claims that petitioners could not have
and March 31, 1996
attained regular employment status. It added that its failure to present petitioners'
employment contracts was due to a fire that destroyed its Manila Plant where said
contracts were kept. Nevertheless, respondent persistently asserts that where a fixed
Dizon 4 months In 1993 period of employment was agreed upon knowingly and voluntarily by the petitioners, the
duration of which was made known to them at the time of their engagement, petitioners
2 months In 1994 cannot now claim otherwise. In addition, it disagrees with the contention that petitioners, as
route helpers, were performing functions necessary or desirable to its business. AICHaS
9 months In 1996
The petition is impressed with merit.

On the procedural issue, We hold that while the general rule is that the verification and
Tumabiao 3 months From November 15, 1996 certification of non-forum shopping must be signed by all the petitioners in a case, the signature
of only one of them, petitioner Basan in this case, appearing thereon may be deemed
to January 31, 1997
substantial compliance with the procedural requirement. Jurisprudence is replete with rulings
that the rule on verification is deemed substantially complied with when one who has ample
knowledge to swear to the truth of the allegations in the complaint or petition signs the
Basan 6.5 months From May 15, 1996 verification, and when matters alleged in the petition have been made in good faith or are true
and correct. 16 Similarly, this Court has consistently held that when under reasonable or
to December 31, 1996 justifiable circumstances, as when all the petitioners share a common interest and invoke a
common cause of action or defense, as in this case, the signature of only one of them in the
certification against forum shopping substantially complies with the certification
requirement. 17 Thus, the fact that the petition was signed only by petitioner Basan does not
necessarily result in its outright dismissal for it is more in accord with substantial justice to
overlook petitioners' procedural lapses. 18 Indeed, the application of technical rules of
procedure may be relaxed in labor cases to serve the demand of justice. 19 ICTDEa
As for the primordial issue in this case, it must be noted that the same has already
been resolved in Magsalin v. National Organization of Working Men, 20 wherein this Court has
categorically declared that the nature of work of route helpers hired by Coca-Cola Bottlers
Philippines, Inc. is necessary and desirable in its usual business or trade thereby qualifying
them as regular employees, to wit:
Coca-Cola Bottlers Phils., Inc., is one of the leading and largest
manufacturers of softdrinks in the country. Respondent workers have long
been in the service of petitioner company. Respondent workers, when
hired, would go with route salesmen on board delivery trucks and
undertake the laborious task of loading and unloading softdrink products of
petitioner company to its various delivery points.
Even while the language of law might have been more definitive,
the clarity of its spirit and intent, i.e., to ensure a "regular" worker's security
of tenure, however, can hardly be doubted. In determining whether an
employment should be considered regular or non-regular, the applicable
test is the reasonable connection between the particular activity performed
by the employee in relation to the usual business or trade of the employer.
The standard, supplied by the law itself, is whether the work undertaken is
necessary or desirable in the usual business or trade of the employer, a
fact that can be assessed by looking into the nature of the services
rendered and its relation to the general scheme under which the business
or trade is pursued in the usual course. It is distinguished from a specific
undertaking that is divorced from the normal activities required in carrying
on the particular business or trade. But, although the work to be performed
is only for a specific project or seasonal, where a person thus engaged has
been performing the job for at least one year, even if the performance is
not continuous or is merely intermittent, the law deems the repeated and
continuing need for its performance as being sufficient to indicate the
necessity or desirability of that activity to the business or trade of the
employer. The employment of such person is also then deemed to be
regular with respect to such activity and while such activity exists.
The argument of petitioner that its usual business or trade is
softdrink manufacturing and that the work assigned to respondent
workers as sales route helpers so involves merely "postproduction
activities," one which is not indispensable in the manufacture of its
products, scarcely can be persuasive. If, as so argued by petitioner
company, only those whose work are directly involved in the
production of softdrinks may be held performing functions
necessary and desirable in its usual business or trade, there would
have then been no need for it to even maintain regular truck sales
route helpers. The nature of the work performed must be viewed
from a perspective of the business or trade in its entirety and not on
a confined scope.
The repeated rehiring of respondent workers and the
continuing need for their services clearly attest to the necessity or
desirability of their services in the regular conduct of the business or
trade of petitioner company. The Court of Appeals has found each of
respondents to have worked for at least one year with petitioner
company. While this Court, in Brent School, Inc. vs. Zamora, has
upheld the legality of a fixed-term employment, it has done so,
however, with a stern admonition that where from the circumstances
it is apparent that the period has been imposed to preclude the
acquisition of tenurial security by the employee, then it should be
struck down as being contrary to law, morals, good customs, public
order and public policy. The pernicious practice of having
employees, workers and laborers, engaged for a fixed period of few
months, short of the normal six-month probationary period of
employment, and, thereafter, to be hired on a day-to-day basis,
mocks the law. Any obvious circumvention of the law cannot be
countenanced. The fact that respondent workers have agreed to be
employed on such basis and to forego the protection given to them on their
security of tenure, demonstrate nothing more than the serious problem of
impoverishment of so many of our people and the resulting unevenness
between labor and capital. A contract of employment is impressed with
public interest. The provisions of applicable statutes are deemed written
into the contract, and "the parties are not at liberty to insulate themselves
and their relationships from the impact of labor laws and regulations by
simply contracting with each other." 21 HITEaS
In fact, in Pacquing, et al. v. Coca-Cola Philippines, Inc., 22 this Court applied the
ruling cited above under the principle of stare decisis et non quieta movere (follow past
precedents and do not disturb what has been settled). It was held therein that since petitioners,
as route helpers, were performing the same functions as the employees in Magsalin, which are
necessary and desirable in the usual business or trade of Coca-Cola Philippines, Inc., they are
considered as regular employees entitled to security of tenure.
Here, respondent, in its position paper, expressly admitted that petitioners were
employed as route helpers in anticipation of the high volume of work in its plants and sales
offices. 23 As such, respondent's contention that petitioners could not have attained regular
employment status for they merely rendered services for periods of less than a year cannot be
sustained in view of the Magsalin doctrine previously cited. Indeed, the "pernicious practice" of
engaging employees for a fixed period short of the six-month probationary period of
employment, and again, on a day-to-day basis thereafter, mocks the law.
 At this point, it is worth recalling that Article 280 of the Labor Code, as amended,
provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT. — The
provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement of
the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered
by the preceding paragraph: Provided, That, any employee who has
rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment
shall continue while such activity exists.
Thus, pursuant to the Article quoted above, there are two kinds of regular employees,
namely: (1) those who are engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer; and (2) those who have rendered at
least one year of service whether continuous or broken, with respect to the activities in which
they are employed. 24 Simply stated, regular employees are classified into: (1) regular
employees by nature of work; and (2) regular employees by years of service. The former refers
to those employees who perform a particular activity which is necessary or desirable in the
usual business or trade of the employer, regardless of their length of service; while the latter
refers to those employees who have been performing the job, regardless of the nature thereof,
for at least a year. 25 ASEcHI
Petitioners, in this case, fall under the first kind of regular employee above. As route
helpers who are engaged in the service of loading and unloading softdrink products of
respondent company to its various delivery points, which is necessary or desirable in its usual
business or trade, petitioners are considered as regular employees. That they merely rendered
services for periods of less than a year is of no moment since for as long as they were
performing activities necessary to the business of respondent, they are deemed as regular
employees under the Labor Code, irrespective of the length of their service.
Nevertheless, respondent, as in Magsalin, also asserts that even assuming that
petitioners were performing activities which are usually necessary or desirable in its usual
business or trade, they were employed not as regular employees but only for a fixed period,
which is well within the boundaries of the law, as ruled in Brent School, Inc. v. Zamora, 26 viz.:
There is, on the other hand, the Civil Code, which has always
recognized, and continues to recognize, the validity and propriety of
contracts and obligations with a fixed or definite period, and imposes no
restraints on the freedom of the parties to fix the duration of a contract,
whatever its object, be it specie, goods or services, except the general
admonition against stipulations contrary to law, morals, good customs,
public order or public policy. Under the Civil Code, therefore, and as a
general proposition, fixed-term employment contracts are not limited,
as they are under the present Labor Code, to those by nature
seasonal or for specific projects with pre-determined dates of
completion; they also include those to which the parties by free
choice have assigned a specific date of termination.
xxx xxx xxx
Accordingly, and since the entire purpose behind the
development of legislation culminating in the present Article 280 of
the Labor Code clearly appears to have been, as already observed, to
prevent circumvention of the employee's right to be secure in his tenure,
the clause in said article indiscriminately and completely ruling out all
written or oral agreements conflicting with the concept of regular
employment as defined therein should be construed to refer to the
substantive evil that the Code itself has singled out: agreements entered
into precisely to circumvent security of tenure. It should have no
application to instances where a fixed period of employment was
agreed upon knowingly and voluntarily by the parties, without any
force, duress or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his consent,
or where it satisfactorily appears that the employer and employee
dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former over the latter.
Unless thus limited in its purview, the law would be made to apply to
purposes other than those explicitly stated by its framers; it thus becomes
pointless and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences. 27
Thus, under the above Brent doctrine, while it was not expressly mentioned in the
Labor Code, this Court has recognized a fixed-term type of employment embodied in a contract
specifying that the services of the employee shall be engaged only for a definite period, the
termination of which occurs upon the expiration of said period irrespective of the existence of
just cause and regardless of the activity the employee is called upon to perform. 28 Considering,
however, the possibility of abuse by employers in the utilization of fixed-term employment
contracts, this Court, in Brent, laid down the following criteria to prevent the circumvention of
the employee's security of tenure: CHcESa
1) The fixed period of employment was knowingly and voluntarily
agreed upon by the parties without any force, duress, or improper pressure
being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or
 2) It satisfactorily appears that the employer and the employee their actual reinstatement; (2) allowances and other benefits, or their monetary equivalent, at
dealt with each other on more or less equal terms with no moral dominance the time of their dismissal; (3) attorney's fees equivalent to ten percent (10%) of the monetary
exercised by the former or the latter. 29 awards; and (4) interest at six percent (6%) per annum of the total monetary awards, computed
from the finality of this Decision until their full satisfaction. For this purpose, the records of this
Unfortunately, however, the records of this case is bereft of any proof which will show case are hereby REMANDED to the Labor Arbiter for proper computation of said awards,
that petitioners freely entered into agreements with respondent to perform services for a deducting amounts already received. Costs against petitioner.
specified length of time. In fact, there is nothing in the records to show that there was any
agreement at all, the contracts of employment not having been presented. While respondent SO ORDERED.
company persistently asserted that petitioners knowingly agreed upon a fixed period of
employment and repeatedly made reference to their contracts of employment, the expiration ||| (Basan v. Coca-Cola Bottlers Philippines, G.R. Nos. 174365-66, [February 4, 2015])
thereof being made known to petitioners at the time of their engagement, respondent failed to
present the same in spite of all the opportunities to do so. Notably, it was only at the stage of its
appeal to the CA that respondent provided an explanation as to why it failed to submit the
contracts they repeatedly spoke of. 30 Even granting that the contracts of employment were
destroyed by fire, respondent could have easily submitted other pertinent files, records,
remittances, and other similar documents which would show the fixed period of employment
voluntarily agreed upon by the parties. They did not, however, aid this Court with any kind of
proof which might tend to show that petitioners were truly engaged for specified periods,
seemingly content with the convenient excuse that the contracts were destroyed by fire. Indeed,
respondent's failure to submit the necessary documents, which as employers are in their
possession, gives rise to the presumption that their presentation is prejudicial to its cause. 31

While fixed term employment is not per se illegal or against public policy, the criteria
above must first be established to the satisfaction of this Court. Yet, the records of this case
reveal that for years, petitioners were repeatedly engaged to perform functions necessary to
respondent's business for fixed periods short of the six-month probationary period of
employment. If there was really no intent to circumvent security of tenure, respondent should
have made it clear to petitioners that they were being hired only for fixed periods in an
agreement freely entered into by the parties. To this Court, respondent's act of hiring and
re-hiring petitioners for periods short of the legal probationary period evidences its intent to
thwart petitioner's security of tenure, especially in view of an awareness that ordinary workers,
such as petitioners herein, are never on equal terms with their employers. 32 It is rather
unjustifiable to allow respondent to hire and rehire petitioners on fixed terms, never attaining
regular status. 33 Hence, in the absence of proof showing that petitioners knowingly agreed
upon a fixed term of employment, We uphold the findings of the Labor Arbiter and the NLRC
and so rule that petitioners are, indeed, regular employees, entitled to security of tenure.
Consequently, for lack of any clear, valid, and just or authorized cause in terminating
petitioners' employment, We find respondent guilty of illegal dismissal. ADaECI

WHEREFORE, premises considered, the instant petition is GRANTED. The assailed

Decision dated August 31, 2005 and Resolution dated August 24, 2006 of the Court of Appeals
in CA-G.R. SP Nos. 8097 & 87071 are SET ASIDE. The Resolutions dated January 30, 2003
and September 24, 2003 of the NLRC in NLRC 00-02-01419-97, affirming in toto the Decision
dated August 21, 1998 of the Labor Arbiter are REINSTATED with MODIFICATION. Taking
into account petitioners' reinstatement in 199934 and petitioner Falguera's receipt of
P792,815.64 separation pay, 35 respondent is hereby ORDERED to pay petitioners the
following: (1) backwages computed from the date their salaries were withheld from them until
 THIRD DIVISION
[G.R. No. 173186. September 16, 2015.]
ANICETO UY, petitioner, vs. COURT OF APPEALS, MINDANAO
STATION, CAGAYAN DE ORO CITY, CARMENCITA NAVAL-SAI, REP.
BY HER ATTORNEY-IN-FACT RODOLFO FLORENTINO, respondents.
DECISION
JARDELEZA, J p:
This is a Petition for Review on Certiorari 1 under Rule 45 of the Revised Rules of
Court assailing the Decision 2 dated January 26, 2006 of the Court of Appeals, Mindanao
Station, Cagayan de Oro City in CA-G.R. CV No. 70648, and its Resolution 3 dated May 18,
2006 denying petitioner's motion for reconsideration.
The Facts
In 1979, private respondent Carmencita Naval-Sai (Naval-Sai) acquired
ownership of a parcel of land described as Lot No. 54-B (LRC) Psd 39172 and covered by
Transfer Certificate of Title (TCT) No. T-19586 from her brother. The land was later
subdivided, with the corresponding titles issued in Naval-Sai's name in the Register of
Deeds of North Cotabato. 4 Two of these subdivided lots, Lots No. 54-B-8 (LRC) Psd
173106 and No. 54-B-9 (LRC) Psd 173106, covered by TCTs No. T-58334 and No.
T-58335, 5 respectively, are the subject of this case.
Subsequently, Naval-Sai sold Lot No. 54-B-7 6 (LRC) Psd 173106 to a certain
Bobby Adil on installment, on the condition that the absolute deed of sale will be executed
only upon full payment. Adil failed to pay the amortization, forcing him to sell his unfinished
building on the property to spouses Francisco and Louella Omandac. 7
Meanwhile, Naval-Sai borrowed money from a certain Grace Ng. As security,
Naval-Sai delivered to Ng TCTs No. T-58334 and No. T-58335 covering Lots No. 54-B-8
and No. 54-B-9, respectively. Ng, on the other hand, borrowed money from petitioner and
also delivered to the latter the two titles to guarantee payment of the loan. 8
Sometime thereafter, Naval-Sai learned that petitioner filed a case for recovery of
possession (Civil Case No. 1007) against Francisco Omandac. Branch 17 of the Regional
Trial Court (RTC) in Kidapawan City ruled in favor of petitioner. 9 Naval-Sai filed a motion
for new trial before the Court of Appeals, arguing that her signature in the purported deed
of sale presented in the case between her and petitioner was a forgery. Civil Case No.
1007, however, became final and executory in 2001. 10 The spouses Omandac were
ejected from the property and petitioner gained possession of the same. 11
In July 1999, Naval-Sai filed a Complaint for Annulment of Deed with
Damages 12 before the same Branch 17 of the RTC in Kidapawan City against petitioner.
The subject of the complaint was the deed of sale allegedly executed between Naval-Sai
and petitioner involving Lots No. 54-B-8 and No. 54-B-9. Naval-Sai prayed that the deed of
sale be declared null and void ab initio because the alleged sale between her and
petitioner was a forgery. Naval-Sai argued that she never sold the lots and that her
signature in the purported deed of sale is spurious.
Naval-Sai filed an Amended Complaint 13 dated July 29, 1999. She asserted that
the subject TCTs were already cancelled by virtue of the deed of sale. TCT No. T-62446
was issued in lieu of TCT No. T-58334 and TCT No. T-62447 replaced TCT No. T-58335.
Hence, the Amended Complaint added as a relief the declaration of TCTs No. T-62446 and
No. T-62447, which were registered in the name of petitioner, as null and void ab initio.
Unlike the original complaint, however, the Amended Complaint was not signed by
Naval-Sai, but by her counsel.
In his Answer with Counterclaim 14 dated October 4, 1999, petitioner specifically
denied that the two TCTs were delivered to him by Ng as a guaranty for payment of her
loan. Petitioner claimed that he and Naval-Sai entered into a valid contract of sale in 1981
and that the lots were sold for value. The corresponding TCTs were issued in his name
shortly thereafter and since then, he had been in complete control of the properties. When
Francisco Omandac constructed a house in one of the properties, petitioner filed Civil Case
No. 1007.
Petitioner also raised special and affirmative defenses of, among others,
non-compliance with the requisite certification of non-forum shopping and prescription. He
asserted that jurisdiction has never been acquired over the parties and the subject matter
because the certification against forum shopping in the Amended Complaint was defective,
for having been merely signed by Naval-Sai's counsel. He further claimed that the action
for annulment of deed of sale is already barred by the statute of limitations and that
Naval-Sai is guilty of estoppel and laches. EATCcI
The RTC dismissed the complaint on the grounds of prescription and a defective
certification against forum shopping. The dispositive portion of its order reads:
WHEREFORE, finding the defendant's defense meritorious,
this Court hereby orders the dismissal of the instant complaint without
prejudice to the prosecution in the same action of the counterclaim
pleaded in the answer pursuant to Section 6 Rule 16 of the Rules of
Court.
Let the hearing on the counterclaim be set on March 30, 2001.
SO ORDERED. 15
The RTC found the action for annulment of deed of sale to be a collateral attack
on the titles, which is prohibited by law under the principle of indefeasibility of title after the
lapse of one year from registration. The RTC explained that Naval-Sai's complaint was not
only for the annulment of deed of sale but, ultimately, for the cancellation of the titles in the
name of petitioner, thus:
 It is true that an action to set aside a contract which is void [ab
initio] does not prescribe. However, a closer glance on the substance of
the plaintiff's claim would reveal that its ultimate thrust is to have the
Transfer Certificate of Title Nos. T-62446 and T-62447 cancelled. This is
evidenced by the plaintiff's prayer asking for the declaration of TCT Nos.
T-62446 and TCT No. 62447 registered in the name of the defendant as
null and void [ab initio] in addition to her prayer for the declaration of
nullity of the subject deed of sale. . . .
Under the Land Registration Act, a title is valid and effective
until annulled or reviewed in a direct proceeding and not in a collateral
one, which review must be made within one year from the issuance of
the title. After the lapse of such period, the title would be conclusive
against the whole world including the government. In other words, the
title, after the lapse of one year from registration become[s]
indefeasible. 16
On the issue of non-compliance with the required certification on non-forum
shopping, the RTC noted that Naval-Sai did not explain why she failed to comply with the
Rules. The RTC cited the case of Five Star Bus Company, Inc. v. Court of
Appeals 17 where we, faced with the similar issue of whether or not to dismiss a petition on
the ground that the certification was signed by counsel, ruled that there was
non-compliance with the Supreme Court Revised Circular No. 28-91 18 and that
substantial compliance cannot be applied. 19
The Court of Appeals set aside the order of the RTC in the now assailed
Decision 20 dated January 26, 2006. The Court of Appeals ruled that there was substantial
compliance with the requirement of verification and certification of non-forum shopping. It
noted that the original complaint has a proper verification and certification of non-forum
shopping signed by Naval-Sai herself. What was signed by Naval-Sai's counsel was the
amended complaint dated July 29, 1999. Its verification and certification carries the
statement ". . . that this [a]mended [c]omplaint should be taken and read together with the
original complaint; . . ." 21 which the Court of Appeals found to be a "cautionary move"
tantamount to substantial compliance. 22 The Court of Appeals further explained that the
rule on certification against forum shopping was complied with in the original complaint
because although an amended complaint supersedes the pleading that it amends, it is not
an initiatory pleading contemplated under the Rules of Court. 23
On the issue of whether the action is a collateral attack in relation to prescription,
the Court of Appeals ruled that it is neither a direct nor a collateral attack. According to the
Court of Appeals, the action is a direct attack when the object of an action is to annul or set
aside the judgment in the registration proceeding. On the other hand, a collateral attack is
when, in an action to obtain a different relief, an attack on the judgment or registration
proceeding is nevertheless made as an incident thereof.
Here, however, Naval-Sai is seeking a relief for an annulment of the deed of sale,
which is not an attack on the judgment or registration proceeding pursuant to which the
titles were decreed. It does not seek to set aside the judgment of registration of titles nor
does it seek to nullify the title by challenging the judgment or proceeding that decreed its
issuance. The action is in reality one for reconveyance, which is imprescriptible when
based on a void contract. Thus:
A perusal of the records of the case shows that the caption of
appellant's Complaint before the RTC is annulment of deed. However
considering that the ultimate relief sought is for the appellee to "return"
the subject property to him, it is in reality an action for reconveyance.
In De Guzman [v.] Court of Appeals, the Court held that, "the essence of
an action for reconveyance is that the decree of registration is respected
as incontrovertible but what is sought instead is the transfer of the
property which has been wrongfully or erroneously registered in another
person's name, to its rightful owner or to one with a better right."
xxx xxx xxx
An action for reconveyance on the ground that the certificate of
title was obtained by means of a fictitious or forged deed of sale is
virtually an action for the declaration of the nullity of the forged deed,
hence, it does not prescribe. . . . 24
However, the Court of Appeals emphasized that despite its discussion on the
prescriptibility of the action, it has not made a finding that the deed of sale is indeed
fictitious or forged because it is for the RTC to rule on after evidence has been presented
and evaluated. Thus, the relevant dispositive portion of the Court of Appeals' decision
reads: CAacTH
WHEREFORE, premises considered, the petition is GRANTED.
The assailed Order of dismissal dated 30 March 2001 is hereby SET
ASIDE and deemed of no effect.
Let this case be remanded to the lower court for further
proceedings.
SO ORDERED. 25
Petitioner filed a Motion for Reconsideration 26 on March 3, 2006, which was
denied by the Court of Appeals in its Resolution 27 dated May 18, 2006.
Hence, this petition, which raises the following issues:
I.
THE COURT OF APPEALS ERRED WHEN IT RULED THAT THERE
WAS SUBSTANTIAL COMPLIANCE WITH THE REQUIREMENTS ON
CERTIFICATION FOR NON-FORUM SHOPPING.
II.
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
ACTION HAS PRESCRIBED AND/OR THE PRIVATE RESPONDENT
IS GUILTY OF INACTION, LACHES OR ESTOPPEL.
Our Ruling
There was substantial
compliance with the
requirements on certification
against forum shopping.
A certification against forum shopping is a peculiar and personal responsibility of
the party, an assurance given to the court or other tribunal that there are no other pending
cases involving basically the same parties, issues and causes of action. 28 It must be
executed by the party-pleader, not by his counsel. If, however, for reasonable or justifiable
reasons, the party-pleader is unable to sign, he must execute a Special Power of Attorney
(SPA) designating his counsel of record to sign on his behalf. 29
Here, the original complaint contained a proper verification and certification
against forum shopping duly signed by Naval-Sai as plaintiff. The verification and
certification in the amended complaint, on the other hand, was only signed by her counsel,
Atty. Norberto L. Ela. Atty. Ela was not authorized to sign on behalf of Naval-Sai, as in fact,
she assigned one Rodolfo Florentino as agent. 30 The Court of Appeals pointed out that in
the certification in the amended complaint, Atty. Ela specified that it should be taken and
read together with the original complaint. The Court of Appeals took this as a cautionary
move on the part of Naval-Sai, justifying the relaxation of the rules on the ground of
substantial compliance. We find, however, that this cautionary move is ineffectual because
under the Rules of Civil Procedure, an amended complaint supersedes the original
complaint. 31 For all intents and purposes, therefore, the original complaint and its
verification and certification ceased to exist. This, notwithstanding, we find there was still
substantial compliance with the Rules.
In the case of Far Eastern Shipping Company v. Court of Appeals, 32 while we
said that, strictly, a certification against forum shopping by counsel is a defective
certification, the verification, signed by petitioner's counsel in said case, is substantial
compliance because it served the purpose of the Rules of informing the Court of the
pendency of another action or proceeding involving the same issues. We then explained
that procedural rules are instruments in the speedy and efficient administration of justice
which should be used to achieve such end and not to derail it. 33
We also find that the prima facie merits of the case serve as a special
circumstance or a compelling reason to relax the rules on certification against forum
shopping.
In Sy Chin v. Court of Appeals, 34 we recognized the flaw in the certification
against forum shopping which was signed only by the counsel, and not by the party. In LDP
Marketing, Inc. v. Monter, 35 there was initially no proof that the one who signed the
certification was authorized to do so in behalf of the corporation. In these two cases, we
nonetheless chose to overlook the procedural lapses in the interest of substantial justice
and the existence of prima facie merit in the petitions.
We have ruled that the general rule is that non-compliance or a defect in the
certification is not curable by its subsequent submission or correction. However, there are
cases where we exercised leniency and relaxed the rules on the ground of substantial
compliance, the presence of special circumstances or compelling reasons. 36 The rules on
forum-shopping are designed to promote and facilitate the orderly administration of justice
and "should not be interpreted with such absolute literalness as to subvert its own ultimate
and legitimate objective or the goal of all rules of procedure — which is to achieve
substantial justice as expeditiously as possible." 37
The nature of Naval-Sai's
action is an action for
reconveyance based on a void
contract, which does not
prescribe.
Petitioner argues that Naval-Sai's action has already prescribed because her
action should have been filed within one year from the time of the registration of the titles.
He asserts that even if the action is in reality one for reconveyance as found by the Court of
Appeals, the same is still barred by prescription based on judicial pronouncements that an
action for reconveyance of registered land based on implied trust prescribes in ten (10)
years. Petitioner also accuses Naval-Sai guilty of laches and estoppel for her failure to
assert her right over the two lots for more than eighteen (18) years. IAETDc
In order to arrive at a conclusion on whether the action has prescribed, we have to
determine the nature of the action.
We agree with the Court of Appeals that the action of Naval-Sai is one for
reconveyance. Although the designation of the complaint is annulment of deed, and does
not include reconveyance, the facts alleged and reliefs sought show that reconveyance is
the end goal. What determines the nature of the action are the allegations in the complaint.
The cause of action in a complaint is not determined by the designation given by the
complaint, but by what the allegations in the body of the complaint define or
describe, 38 as well as the character of the relief sought. 39
An action for reconveyance is a legal and equitable remedy granted to the rightful
owner of land which has been wrongfully or erroneously registered in the name of another
for the purpose of compelling the latter to transfer or reconvey the land to him. 40 In an
action for reconveyance, the decree of registration is respected as incontrovertible. What is
sought instead is the transfer of the property, which has been wrongfully or erroneously
registered in another person's name, to its rightful and legal owner, or to one with a better
right. 41 However, such recourse cannot be availed of once the property has passed to an
innocent purchaser for value. For an action for reconveyance to prosper, the property
should not have passed into the hands of an innocent purchaser for value. 42
Here, Naval-Sai does not only seek to annul the purported deed of sale but also to
cancel TCTs No. T-62446 and No. 62447 in the name of petitioner. If the reliefs are granted
and the TCTs are cancelled, the titles to the lots will revert to Naval-Sai as she was the
previously registered owner. Thus, a ruling in favor of Naval-Sai would be equal to what an
action for reconveyance seeks to accomplish.
An action for reconveyance is based on Section 53, paragraph 3 of Presidential
Decree (PD) No. 1529, 43 which provides:
 In all cases of registration procured by fraud, the owner may pursue all
his legal and equitable remedies against the parties to such fraud
without prejudice, however, to the rights of any innocent holder for value
of a certificate of title. . . .
In Caro v. Court of Appeals, 44 we said that this provision should be read in
conjunction with Article 1456 of the Civil Code, which provides:
Article 1456. If property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for
the benefit of the person from whom the property comes.
The law creates the obligation of the trustee to reconvey the property and its title
in favor of the true owner. Correlating Section 53, paragraph 3 of PD No. 1529 and Article
1456 of the Civil Code with Article 1144 (2) of the Civil Code, 45 the prescriptive period for
the reconveyance of fraudulently registered real property is ten (10) years reckoned from
the date of the issuance of the certificate of title. 46 This ten-year prescriptive period
begins to run from the date the adverse party repudiates the implied trust, which
repudiation takes place when the adverse party registers the land. 47 An exception to this
rule is when the party seeking reconveyance based on implied or constructive trust is in
actual, continuous and peaceful possession of the property involved. 48 Prescription does
not commence to run against him because the action would be in the nature of a suit for
quieting of title, an action that is imprescriptible. 49
The foregoing cases on the prescriptibility of actions for reconveyance apply
when the action is based on fraud, or when the contract used as basis for the action is
voidable. Under Article 1390 of the Civil Code, a contract is voidable when the consent of
one of the contracting parties is vitiated by mistake, violence, intimidation, undue influence
or fraud. When the consent is totally absent and not merely vitiated, the contract is
void. 50 An action for reconveyance may also be based on a void contract. 51 When the
action for reconveyance is based on a void contract, as when there was no consent on the
part of the alleged vendor, the action is imprescriptible. 52 The property may be
reconveyed to the true owner, notwithstanding the TCTs already issued in another's name.
The issuance of a certificate of title in the latter's favor could not vest upon him or her
ownership of the property; neither could it validate the purchase thereof which is null and
void. Registration does not vest title; it is merely the evidence of such title. Our land
registration laws do not give the holder any better title than what he actually has. Being null
and void, the sale produces no legal effects whatsoever. 53
Whether an action for reconveyance prescribes or not is therefore determined by
the nature of the action, that is, whether it is founded on a claim of the existence of an
implied or constructive trust, or one based on the existence of a void or inexistent contract.
This is evident in several of our past decisions. In Casipit v. Court of Appeals, 54 we
rejected the claim of imprescriptibility and applied the 10-year prescription where the action
filed was based on fraud:
There is no dispute that an action for reconveyance based on a
void contract is imprescriptible (Castillo, et al. v. Madrigal, et al., G.R. No.
62650, June 27, 1991;Baranda, et al. v. Baranda, et al., G.R. No. 73275,
May 20, 1987, 150 SCRA 59). However, We simply cannot apply this
principle to the present case because the action filed by petitioner before
the trial court was 1) for reconveyance based on fraud since the
ownership of private respondents over the questioned property was
allegedly established on "false assertions, misrepresentations and
deceptive allegations" (p. 182, Records); and 2) for rescission of the
"Kasulatan ng Pagmamana at Paghahati" (pp. 173, 187, records). . . . 55
On the other hand, in Daclag v. Macahilig, 56 we rejected the claim of petitioners
that prescription is applicable because the action was based on fraud. We ruled that the
action was not subject to prescription because it was, in fact, based on a deed of sale that
was null and void. Thus: DcHSEa
However, a review of the factual antecedents of the case
shows that respondents' action for reconveyance was not even subject
to prescription.
The deed of sale executed by Maxima in favor of petitioners
was null and void, since Maxima was not the owner of the land she sold
to petitioners, and the one-half northern portion of such land was owned
by respondents. Being an absolute nullity, the deed is subject to attack
anytime, in accordance with Article 1410 of the Civil Code that an action
to declare the inexistence of a void contract does not prescribe. . . . An
action for reconveyance based on a void contract is imprescriptible. As
long as the land wrongfully registered under the Torrens system is still in
the name of the person who caused such registration, an action in
personam will lie to compel him to reconvey the property to the real
owner. 57 (Citations omitted)
In Santos v. Heirs of Dominga Lustre, 58 the complaint alleged that the deed of
sale was simulated by forging the signature of the original registered owner. We ruled in
favor of imprescribility applying the doctrine that the action for reconveyance on the ground
that the certificate of title was obtained by means of a fictitious deed of sale is virtually an
action for the declaration of its nullity, which does not prescribe.
Also, and more illustrative of the discussion above, in Castillo v. Heirs of Vicente
Madrigal, 59 it was alleged by the plaintiffs that they never signed any document. We ruled
as follows:
Petitioners allege that a reading of paragraphs 9 and 10 of their
complaint reveals that they impugn the existence and validity of the
alleged deed of sale. As contained therein, petitioners never entered into
any transaction with any person conveying the subject property. They
did not sign any document in favor of [anyone] neither did they give
[anyone] authorization for that purpose. Therefore, consent and cause
did not exist in the execution of the deed of sale, invoking Articles 1318,
1352 and 1409(3), of the Civil Code.And, pursuant to Article 1410 of the
Civil Code, an action for the declaration of the inexistence of a contract
does not prescribe.
 In dismissing petitioners' complaint on the ground of
prescription, the trial court opined (p. 123, Rollo):
". . ., any action for annulment of the deed
and TCT 72066 should have been instituted within ten
(10) years from the accrual of the cause of action,
that, (sic) is, ten years from 1943 when the deed was
executed at the earliest, or ten years from 1944 at the
latest. This action was filed on December 17, 1979, or
after more than 30 years from 1943 and 1944. The
action, therefore, has long prescribed. . . . ."
The Court of Appeals expressed the same
opinion (p. 51, Rollo):
". . ., even as We consider that there was
fraud in the registration and the issuance of title in
favor of defendant Madrigal creating thereby a
constructive trust in favor of the plaintiffs, the remedy
of the plaintiffs is an action for reconveyance within
ten (10) years from the registration of the property in
the name of defendant Madrigal (Alzona v. Capunitan,
4 SCRA 450; Gonzales v. Jimenez, 13 SCRA, 80).
Again, the filing of the complaint was way beyond the
ten-year period of limitation."
Both courts ruled incorrectly. It is evident in paragraphs 9, 10 and 12 of
the complaint, supra, that petitioners sought the declaration of the
inexistence of the deed of sale because of the absence of their consent.
Thus, following the provision of Article 1410 of the Civil Code, this kind of
action is imprescriptible. The action for reconveyance is likewise
imprescriptible because its basis is the alleged void contract of
sale. . . . 60 (Citations omitted)
resolved to decide the case on available records and pleadings, in order to avoid further
delay, due to several resettings and motions for postponement filed by the parties one after
another. The lack of factual findings on the alleged forgery from the lower courts prevents
us from ruling on the issue of prescription. SCaITA
Since it is apparent that the complaint on its face does not show that the action
has already prescribed, the RTC erred in dismissing it. We emphasize once more that a
summary or outright dismissal of an action is not proper where there are factual matters in
dispute, which require presentation and appreciation of evidence. 64
Applying the foregoing cases and without prejudging the issue of forgery, the
action for reconveyance will not be subject to prescription if the trial court finds that the
deed of sale is indeed forged, because the action would now be based on a fictitious and
void contract. If the trial court finds otherwise, then the issue of prescription would not
matter as the sale would stand and remain binding between Naval-Sai and petitioner.
Similarly, the elements of laches must be proven positively. Laches is evidentiary
in nature, a fact that cannot be established by mere allegations in the
pleadings. 65 Therefore, at this stage, the dismissal on the ground of laches would be
premature. The issues must be resolved in the trial on the merits.
Moreover, laches is a doctrine in equity, and applied only in the absence of, and
never against, statutory law. 66 The positive mandate of Article 1410 of the Civil
Code conferring imprescriptibility to actions or defense for the declaration of the
inexistence of a contract should pre-empt and prevail over all abstract arguments based
only on equity. 67
WHEREFORE, the petition is DENIED. Let the records of this case be remanded
for further proceedings to the Regional Trial Court of Kidapawan City, Branch 17, which is
hereby ORDERED to try and decide the case with dispatch.
SO ORDERED. cHECAS
||| (Uy v. Court of Appeals, G.R. No. 173186, [September 16, 2015])

We conclude that, contrary to the claim of petitioner, the action for reconveyance
is based neither on an implied or constructive trust nor fraud. Naval-Sai alleged that the
purported deed of sale, which became the basis to transfer the titles in petitioner's name,
was an absolute forgery because she never sold the two lots to any person. 61 Naval-Sai
also alleged that her signature and that of her husband's, in the deed of sale are
forgeries. 62 These allegations make the action one based on a void or inexistent contract
for lack of consent on the part of the alleged vendor, Naval-Sai. Based on the complaint,
Naval-Sai only consented to use the titles of the two lots as security to a loan she obtained
from Ng. 63
Resolution of the issue of prescription hinges on whether the deed of sale was
indeed forged and, thus, void. Unfortunately, both the RTC and the Court of Appeals did
not make actual findings on the alleged forgery. No full-blown trial occurred in the RTC to
prove that the deed of sale was indeed simulated and that the signatures were forgeries.
The case was dismissed based on the pleadings of the parties. The Court of Appeals also
 THIRD DIVISION
[G.R. No. 202446. September 16, 2015.]
EDUARDO BANDILLION, ERNESTO BAYLON, represented by his
sister GERTRUDES BAYLON; ALFREDO BRAGA; BALTAZAR
BUCAYAN; TERESITO CAPILLO; ROLANDO CAYAPADO (deceased),
represented by his wife FELICITAS CAYAPADO; JONELL
CLEMENTE, ROMEO COLOCAR, CARLOS CONSULAR, WILHIM
CONVOCAR, CEAZAR CORTEZ, GODOFREDO DABLEO,
represented by his wife PATRICIA DABLEO; CHRISTOPHER DAGPIN,
ALTER DAYADAY, NORMAN DIAMANTE, EDUARDO ESMERALDA
(deceased), represented by his daughter EDNA ESMERALDA;
RICARDO GARCIA, ELEIZER HARI-ON (deceased), represented by
his brother TITO HARI-ON; ROBERTO HARI-ON, TITO HARI-ON,
PEDRO LARA; (deceased), represented by his wife JOCELYN LARA,
FERNANDO MADIS, JR., AQUILINO MATUS, JR., RODRIGO ORLINA,
represented by his wife, ROSALINDA ORLINA; ROMEO PADERNAL
(deceased), represented by his wife CORAZON PADERNAL; JUNNY
PANCHITA; (deceased), represented by his wife LEDILLA PANCHITA,
RODOLFO PANGANTIHON, REINERIO PASOLES, ROMUALDO
PASOLES, SR., RONALDO PAYDA, IRENEO PORCAL, ROEL RAMOS,
MARCELINO SINSORO, WILFREDO SINSORO, ERNESTO
TABLASON (deceased), represented by his son JOEMARIE
TABLASON; REY TABLASON, BENZON ZANTE, and BIENVENIDO
ZANTE, petitioners, vs. LA FILIPINA UYGONGCO CORPORATION
(LFUC), respondent.
DECISION
PERALTA, J p:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking to annul and set aside the Court of Appeals' Decision 1 dated September 13,
2011 and Resolution 2 dated May 24, 2012 in CA-G.R. SP No. 03690, which ordered a
remand of the case to the Department of Labor and Employment(DOLE) Regional Director
for the reception of evidence and re-computation of monetary awards therein.
The facts of the case follow.
Petitioners Eduardo Bandillion, et al. (employees) are truck drivers and
employees of respondent La Filipina Uygongco Corporation (LFUC). They filed a
complaint for violation of labor standard laws against the latter before the DOLE Region
VI. 3 Upon inspection, a finding of "no violation" was made by the Labor Enforcement
Officer, a finding that was upheld on appeal to the DOLE-VI Regional Director, who stated
the same in an Order dated December 1, 1998. 4
The employees filed an appeal with the Secretary of Labor and
Employment (DOLE Secretary). Thus, on June 4, 2003, Acting DOLE Secretary Manuel G.
Imson issued an Order overturning the previous order of the DOLE-VI Regional Director.
The dispositive portion of the decision states:
WHEREFORE, the Order dated December 01, 1998 is hereby
SET ASIDE and VACATED and a new one is entered finding the
appellee, Iloilo La Filipina Uygongco Corporation liable for
underpayment of wages, non-payment of holiday pay, rest day pay, and
overtime pay.
Let the case be REMANDED to the DOLE-Regional Office VI
for the appropriate computation of the workers' individual entitlements as
above-stated.
All other claims of appellants are DISMISSED for lack of merit.
SO ORDERED. 5
Upon a denial of its motion for reconsideration by DOLE Secretary Patricia A. Sto. Tomas,
LFUC filed a petition for certiorari with the Court of Appeals. The appellate court denied the
petition, however, and affirmed the decision of the DOLE Secretary. The motion for
reconsideration filed by LFUC was likewise denied by the court.CAIHTE
Thus, the case was elevated to this Court via a petition for certiorari where it was
captioned and docketed as Iloilo La Filipina Uygongco Corporation v. Court of
Appeals, 6 but the same was dismissed by this Court. LFUC's motion for reconsideration
was likewise denied with finality in a Resolution dated February 27, 2008. 7Then, Entry of
Judgment was issued by this Court on July 8, 2008. 8
Consequently, as the employees filed a Motion for Execution before the DOLE
Region VI to enforce the DOLE Secretary's Order of June 4, 2003, it was discovered that
Regional Director Carlos L. Boteros, on August 28, 2006, had already issued an Order
directing LFUC to pay the total amount of Three Million Three Hundred Forty-Five
Thousand Six Hundred Fifty-Seven Pesos and Ninety-Four Centavos (Php3,345,657.94),
or Eighty-Eight Thousand Forty Three-Pesos and Sixty-Three Centavos (Php88,043.63)
for each of the employees in differentials on wages, holiday pay, rest day pay and overtime
pay. 9 The dispositive portion of the Order states:
WHEREFORE, premises considered, respondent/appellee
Iloilo La Filipina Uygongco Corporation is hereby ordered within ten (10)
days from receipt hereof, to pay its thirty-eight (38) employees the total
sum of THREE MILLION THREE HUNDRED FORTY-FIVE
THOUSAND SIX HUNDRED FIFTY SEVEN and 94/100 PESOS
(P3,345,657.94) representing their differentials on wages, holiday pay,
rest day pay and overtime pay distributed as follows:
 Total amount of 25. Padernal, Romeo 88,043.63

# Name of Employees Benefits 26. Panchita, Junny 88,043.63

27. Pangantihon, Rodolfo 88,043.63

1. Bandillon, Eduardo P88,043.63 28. Pasoles, Reinerio 88,043.63

2. Baylon, Ernesto 88,043.63 29. Pasoles, Renwaldo, Sr. 88,043.63

3. Braga, Alfredo 88,043.63 30. Payda, Ronaldo 88,043.63

4. Bucayan, Baltazar 88,043.63 31. Porcal, Ireneo 88,043.63

5. Capillo, Teresito 88,043.63 32. Ramos, Roel 88,043.63

6. Cayapado, Rolando 88,043.63 33. Sinsoro, Marcelino 88,043.63

7. Clemente, Jonell 88,043.63 34. Sinsoro, Wilfredo 88,043.63

8. Colocar, Romeo 88,043.63 35. Tablason, Ernesto 88,043.63

9. Consula, Carlos 88,043.63 36. Tablason, Rey 88,043.63

10. Convocar, Wilhim 88,043.63 37. Zante, Benzon 88,043.63

11. Cortez, Ceazar 88,043.63 38. Zante, Bienvenido 88,043.63

12. Dableo, Godofredo 88,043.63 ––––––––––––––

13. Dagpin, Christopher 88,043.63 Grand Total P3,345,657.94 10

14. Dayaday, Alter 88,043.63 =============

15. Diamante, Norman 88,043.63

16. Esmeralda, Eduardo 88,043.63 The Order complies with the DOLE Secretary's Order of June 4, 2003 which called for the
17. Garcia, Ricardo 88,043.63 "appropriate computation of the workers' individual entitlements."
The DOLE Region VI then issued a Writ of Execution 11 on July 15, 2008. The
18. Hari-On, Eleizar 88,043.63
writ directed the enforcement of the Order of August 28, 2006 by Director Boteros for LFUC
19. Harion, Robert 88,043.63 to pay the employees Three Million Three Hundred Forty-Five Thousand Six Hundred
Fifty-Seven Pesos and Ninety-Four Centavos (Php3,345,657.94), or Eighty-Eight
20. Harion, Tito 88,043.63 Thousand Forty-Three Pesos and Sixty-Three Centavos (Php88,043.63) for each
employee in various forms of unpaid wages and other pays. 12
21. Lara, Pedro 88,043.63
LFUC moved for the writ to be recalled, but the same was merely "noted without
22. Madis, Fernando, Jr. 88,043.63 action" by the DOLE-VI Regional Director, in a letter dated August 1, 2008. 13
23. Matus, Aquilino, Jr. 88,043.63 After being served with the writ, LFUC filed a Petition 14 for certiorari and
injunction dated August 15, 2008 with the Court of Appeals, seeking to set aside the writ of
24. Orlina, Rodrigo 88,043.63 execution, on the grounds that: (1) the same was immediately issued without first issuing a
"compliance order" which is provided for in Section 18 of Rule II of the Rules on the
Disposition of Labor Standard Contests; and (2) grave abuse was committed by the
Regional Director in denying LFUC's motion to recall the writ. 15LFUC posited that the
correct procedure was the issuance of a Compliance Order prior to the issuance of a writ of
execution. 16 Allegedly, a computation of the money due to the employees was all that
was required by the Order of June 4, 2003 by the DOLE Secretary; hence, LFUC theorized
that such computation should have been made first, followed by the issuance of a
Compliance Order, before execution was ordered. 17 It also claimed that some of the
employees have since been dismissed; thus, they should not have been included in the
computation. 18
Apparently, LFUC was not yet served with the Order dated August 28, 2006 of the
DOLE-VI Regional Director when it filed the petition for certiorari before the Court of
Appeals. HEITAD
Subsequently, however, LFUC was served a copy of the Order dated August 28,
2006. Thus, on September 30, 2008, LFUC filed with DOLE Region VI a Motion for
Reconsideration (treated as an Appeal) 19 of the Order dated August 28, 2006 of Regional
Director Boteros, wherein it called the said order a "Compliance Order" that was allegedly
issued in grave abuse of discretion for it deprived LFUC of its right to due process since the
latter was not given the opportunity to adduce evidence to refute the workers' allegations,
specifically the latter's monetary claims. 20 It alleged that the employees were piece-rate
truck drivers and, thus, were not entitled to overtime, holiday and rest day pay as well as
wage differentials, and that some already had executed waivers and quitclaims. 21
The motion for reconsideration filed before DOLE Region VI was denied by
Regional Director Aida Estabillo in a Decision 22 dated December 15, 2008. From that
decision, LFUC filed an appeal to the DOLE Secretary via a Notice of Appeal and a
Memorandum of Appeal 23 dated December 30, 2008.
Meanwhile, the petition before the Court of Appeals was duly opposed by the
employees as well as by the DOLE-VI Regional Director, who alleged that the petition had
been rendered moot and academic by LFUC's filing of a motion for reconsideration of the
Order dated August 28, 2006. 24
In an Order 25 dated August 2, 2010, DOLE Undersecretary Lourdes M.
Trasmonte, acting for the DOLE Secretary, denied the appeal of LFUC and affirmed the
Order of December 15, 2008 by the DOLE-VI Regional Director which, in turn, is also an
affirmation of the Order of August 28, 2006 by the same office.
LFUC filed a Motion for Reconsideration of the Order, but the same was denied in
a Resolution 26 dated August 19, 2011, also signed by Undersecretary Trasmonte.
On March 5, 2012, the DOLE issued an Entry of Judgment, 27 stating that the
foregoing Resolution dated August 19, 2011 had become final and executory on October 7,
2011 and thereby was recorded in the Book of Entries of Judgments.
Thereafter, the DOLE-VI Regional Director-Officer-in-Charge (OIC) issued
another Writ of Execution, 28 dated November 21, 2011, essentially ordering the Sheriff to
proceed to LFUC's address and require the latter's compliance with the Order of August 28,
2006 of the said office to pay a total of Three Million Three Hundred Forty-Five Thousand
Six Hundred Fifty-Seven Pesos and Ninety-Four Centavos (Php3,345,657.94) to its
employees-claimants.
Meanwhile, on July 8, 2011, the Court of Appeals issued a Resolution 29 denying
LFUC's application for Temporary Restraining Order (TRO) and submitting the case for
decision.
On September 13, 2011, the Court of Appeals promulgated its assailed Decision,
the dispositive portion of which states:
WHEREFORE, premises considered, let this case be
REMANDED to the DOLE Regional Director, Region VI for the reception
of evidence for all the parties, and the re-computation of monetary
awards.
SO ORDERED. 30
The Court of Appeals found that the office of the DOLE-VI Regional Director arrived at its
computations of the payment due to the workers without any evidence from the parties,
and without considering the fact that the National Labor Relations
Commission (NLRC) has a final decision upholding as valid the dismissal of most of the
employees. 31 Hence, the appellate court held that due process was not observed and
ordered the case remanded to the DOLE-VI Regional Director for the reception of evidence
in order to properly compute the monetary claims of the employees. 32
The employees filed a motion for reconsideration of the appellate court's decision
but, in the other assailed Resolution 33 dated May 24, 2012, the same was denied.
Hence, this petition for review on certiorari filed by the employees.
The petitioners-employees Bandillion, et al. maintain that LFUC's petition before
the Court of Appeals was rendered moot and academic by its filing of a motion for
reconsideration of the August 28, 2006 Order before the Regional Director. 34 Thus, for
the petitioners, it follows that the petition for certiorari filed by LFUC was improper as there
was another adequate remedy available to it. 35 Further, petitioners deny that LFUC was
denied due process, as it was in fact served with asubpoena duces tecum to produce
employment records. 36 Petitioners also accuse LFUC of violating the rule against forum
shopping in its filing of the petition while a motion for reconsideration was pending. 37
In its Comment, respondent LFUC first presented some procedural challenges to
the petition. It reported that a number of the employees did not sign the Special Power of
Attorney for them to be represented in this petition by their union president, Ronaldo C.
Payda. 38 In addition, the employees who died were allegedly not properly
substituted. 39 Lastly, LFUC alleges that the copies of the assailed resolutions that were
attached in the petition were mere "machine copies" and not certified true copies as
required by Section 1, Rule 65, of the Rules of Court.
As to the merits of the petition, respondent LFUC contends that its filing of a
motion for reconsideration of the August 28, 2006 Order of the DOLE-VI Regional Director
did not render as moot and academic the petition for certiorari it earlier filed with the Court
of Appeals. 40 There is allegedly no "identity of relief" between the motion for
reconsideration and the petition for certiorari. 41 It theorizes that a motion for
reconsideration is "a mere tool (for) seeing the review of arguments and evidence" and
does not affect the petition for certiorari. 42 LFUC also denies committing forum shopping,
stating that the elements of litis pendentia are not present and that a judgment in one case
would not amount to res judicata in the other. 43 ATICcS
Respondent LFUC claims that it was after it filed its petition with the Court of
Appeals that it received, on September 24, 2008, the Compliance Order (dated August 28,
2006), which it immediately appealed to the DOLE Secretary. 44 Thus, it claims that it was
a "supervening event" so that the filing of the petition did not bar the appeal and
vice-versa. 45 LFUC also alleges that the employees never before raised the issue of
forum shopping and did so for the first time only after the decision of the Court of Appeals
was adverse to them. 46 Then, LFUC refutes the employees' charge that the Court of
Appeals' assailed decision was based only on "assumptions, conjectures and
suppositions," noting that it was the compliance order of the DOLE-Region VI that was
issued without evidence of data and figures from the parties. 47
The singular issue to resolve is whether or not the case decided by the Court of
Appeals in CA-G.R. SP No. 03690 has been rendered moot by herein respondent LFUC's
filing of a motion for reconsideration (treated as an appeal) of the Order dated August 28,
2006 of the DOLE-VI Regional Director.
First, We discuss the procedural matters.
Respondent LFUC alleges that several of the concerned employees did not sign
the Special Power of Attorney (SPA) 48 authorizing their union president and co-petitioner,
Ronaldo C. Payda, to file this petition, and to sign the verification and certification against
forum shopping for such purpose, which allegedly rendered the said petition defective.
This contention lacks merit. According to prevailing jurisprudence, neither the fact
that Payda alone signed the petition's verification and certification against forum shopping,
nor the fact that the SPA authorizing the filing of the petition was not signed by all
petitioners, invalidate nor render the petition defective, as the present case is one of those
instances when the rules are interpreted more liberally in order to attain substantial justice.
We hold that Payda's lone signature and the SPA signed by most of the petitioners already
substantially comply with the requirements for a properly and validly filed petition.
Indeed, Payda alone signed the verification and certification against forum
shopping — as the person authorized in the SPA to do so — but instead of rendering the
petition defective or invalid, this Court, as it has previously ruled in Altres, et al. v. Empleo,
et al. 49 regards the same as already in substantial compliance with the rules. In that case,
it was held that in certain instances, the signature of even just one person out of many
petitioners in the verification and certification against forum shopping can be deemed as
enough to meet the requirements of the rules. In sum, the Court laid down the guidelines as
follows:
For the guidance of the bench and bar, the Court restates in
capsule form the jurisprudential pronouncements already reflected
above respecting non-compliance with the requirements on, or
submission of defective, verification and certification against forum
shopping:
1) A distinction must be made between non-compliance with the
requirement on or submission of defective verification,
and non-compliance with the requirement on or
submission of defective certification against forum
shopping.
2) As to verification, non-compliance therewith or a defect therein
does not necessarily render the pleading fatally
defective. The court may order its submission or
correction or act on the pleading if the attending
circumstances are such that strict compliance with the
Rule may be dispensed with in order that the ends of
justice may be served thereby.
3) Verification is deemed substantially complied with when
one who has ample knowledge to swear to the truth
of the allegations in the complaint or petition signs
the verification, and when matters alleged in the
petition have been made in good faith or are true and
correct.
4) As to certification against forum shopping, 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."
5) The certification against forum shopping must be signed by all
the plaintiffs or petitioners in a case; otherwise, those
who did not sign will be dropped as parties to the
case. Under reasonable or justifiable circumstances,
however, as when all the plaintiffs or petitioners
share a common interest and invoke a common
cause of action or defense, the signature of only
one of them in the certification against forum
shopping substantially complies with the Rule.
6) Finally, the certification against forum shopping must be
executed by the party-pleader, not by his counsel. If,
however, for reasonable or justifiable reasons, the
party-pleader is unable to sign, he must execute a
Special Power of Attorney designating his counsel of
record to sign on his behalf. . . . 50
In the case at bar, the subject SPA is an authorization granted by the employees in favor of
their union president Payda to, among other things, "file the appropriate petition before the
Supreme Court relative to the Court of Appeals' Decision and Resolution dated September
13, 2011 and May 24, 2012, respectively," and to sign the petition's verification and
certification against forum shopping for such purpose. The said employees, who are the
SPA's principals, along with Payda himself, became the petitioners in the petition, which is
the case that is now being resolved. Payda performed his mandate under the SPA and, for
himself and for on behalf of his principals, filed the instant petition and alone signed the
accompanying verification and certification against forum shopping. The SPA was signed
by the great majority of the persons named as petitioners in the case. 51 We hold the same
to have duly complied with the jurisprudential guidelines on the rules on verification and
certification against forum shopping as outlined above. TIADCc
While Payda alone signed, per the SPA, the petition is neither invalid nor
defective as LFUC alleges because, as for the verification requirement, Payda signed as
one who has "ample knowledge to swear to the truth of the petition's allegations," being
himself a petitioner and the employees' union president who personally knows the story
and facts of the case; and as for the certification against forum shopping, Payda, as a
co-employee of his co-petitioners, "shares a common interest and invokes a common
cause of action or defense" as the rest and, as their attorney-in-fact tasked to initiate the
action, he himself has the knowledge of whether or not he has initiated similar actions or
proceedings in different courts or agencies. Both already satisfy the guidelines'
requirements on when a lone signature of a petitioner substantially complies with the
requirements for a valid verification and certification against forum shopping.
But more importantly, unlike other lone signatories in jurisprudence 52 whose
petitions were declared improperly filed by this Court due to lack of authority from their
co-petitioners to file such action on the latter's behalf, Payda, in the case at bar, is armed
with such an authority — the SPA signed by his co-petitioners. It has been held that when
an SPA was constituted precisely to authorize the agent to file and prosecute suits on
behalf of the principal, then it is such agent who has actual and personal knowledge
whether he or she has initiated similar actions or proceedings before various courts on the
same issue on the principal's behalf, thus satisfying the requirements for a valid
certification against forum shopping. 53 In such a case, when it is the agent or
attorney-in-fact who initiated the action on the principal's behalf and who signed the
certification against forum shopping, the rationale behind the rule that it must be the
"petitioner or principal party himself" who should sign such certification does not apply; the
rule on the certification against forum shopping has been properly complied with. 54
We treat the instant case in this manner in part due to the particular
circumstances of the petitioners in the case at bar. First, the petitioners are so numerous
that their filing of a single petition through a representative is in fact a commendable act
compared to the alternative of flooding this Court with a multiplicity of suits involving the
same parties, subject matter, cause and relief. Second, as claimed by LFUC itself, 55 most
of the petitioners have since been separated from LFUC's employment, the natural
consequence of which is that the employees have now changed employment and
residences, a development which, combined with their meager monetary resources,
presents logistical difficulties to them as litigants unless they choose, as they did, the
practical and cost-effective option of appointing a representative, in this case their union
president Payda, via the SPA, to represent them and file a petition in this case on their
behalf. The Court is not unmindful of such pragmatic nature of petitioners' stance so that it
is one more reason, in addition to supporting jurisprudence, to allow the petition instead of
dismissing it based on the grounds raised by respondent LFUC.
We also consider LFUC's allegation that the petition was defective because the
SPA was not signed by all petitioners, or that it was signed by some only through
unauthorized representatives, to hold no water. In the case at bar, the SPA was signed by
everyone but five (5) of the petitioners. 56 According to Altres v. Empleo, the only
consequence of such an incomplete signing is that "the non-signing petitioners (as to the
certification against forum shopping) are dropped as parties to the case." 57 However, the
petition itself survives and not rendered invalid, especially as to the petitioners who signed,
who would remain as parties therein. As for those petitioners who are not deceased but
who signed through representatives, they, too, remain as parties, because the acts of such
representatives may be ratified by these petitioners or the representatives may belatedly
submit proof of their authority to act on the petitioners' behalf. 58 As for LFUC's allegation
that the deceased employees were not properly substituted, this Court already had
occasion to rule that the formal substitution of a deceased worker is not necessary when
his heir already had voluntarily appeared and participated in the proceedings before the
labor tribunals. 59 The Court held further that the rule on substitution by heirs is not a
matter of jurisdiction, but a requirement of due process; it is only when there is a denial of
due process, as when the deceased is not represented by any legal representative or heir,
that the court nullifies the trial proceedings and the resulting judgment therein. 60 In the
case at bar, there is no such denial of due process as the heirs of the six (6) deceased
workers are considered to have voluntarily appeared before this Court by signing the SPA
authorizing the filing of this petition. Presumably, they will likewise do the same voluntary
appearance or formal substitution in all the succeeding proceedings of the case, including
execution. This Court has already ruled that formal substitution of parties is not necessary
when the heirs themselves voluntarily appeared, participated, and presented evidence
during the proceedings. 61 AIDSTE
Lastly, We find as false LFUC's allegation that copies of the assailed decision and
resolution of the Court of Appeals (dated September 13, 2011 and May 24, 2012,
respectively) that were attached in the instant petition were mere "machine copies" and not
certified true copies as required by the rules. We examined therollo and contrary to what
respondent LFUC alleges, We found that the concerned decision and resolution were
properly and duly marked as "certified true copies" by the clerk of court of the appellate
court. In sum, the procedural requirements have been duly complied with.
We now discuss the case's substantive aspects.
The contention of petitioners is that the petition for certiorari and injunction filed
by LFUC before the Court of Appeals to assail the writ of execution issued by the DOLE-VI
Regional Director was rendered moot and academic by LFUC's subsequent filing of a
motion for reconsideration of the same Regional Director's Order dated August 28, 2006. In
addition, petitioners allege that certiorari was improper as there was another adequate
remedy available to LFUC. The latter's acts, allegedly, amount to forum shopping.
Petitioners also assail the finding that LFUC was denied due process, as the latter was,
according to petitioners, adequately required to produce its own evidence such as
employment records.
Respondent LFUC disagrees with petitioners. It contends that it did not commit
forum shopping and that the motion for reconsideration it filed did not render as moot and
academic its petition for certiorari before the Court of Appeals. It claims that there is no
"identity of relief" between the two and that the elements of litis pendentia are not present
and that a judgment in one case would not amount to res judicata in the other.
We find for petitioners.
LFUC's petition for certiorari filed with the Court of Appeals assailed the writ of
execution dated July 15, 2008, as well as the letter dated August 1, 2008 of the DOLE-VI
Regional Director (which "noted without action" LFUC's Motion to Recall Writ of Execution)
and, in the process, made the following arguments and allegations:
1) that writ of execution was issued in grave abuse of discretion
because it was issued while there was not yet a "compliance order" as
specified in the Rules on the Disposition of Labor Standards Cases; 62
2) that the issuance of the writ amounts to a denial of LFUC's
right to due process, as the issuance was made without hearing LFUC's
side on the computation of the correct amount due and without a
compliance order; then, the DOLE-VI Regional Director merely "noted
without action" LFUC's Motion to Recall Writ of Execution; 63 and
3) that most of the petitioners who are employees-truck drivers
have been declared validly dismissed by the Labor Arbiter. 64
However, shortly after the filing of the petition with the Court of Appeals, LFUC
went to the DOLE-VI Regional Director and filed a Motion for Reconsideration of that
office's Order dated August 28, 2006. In that motion, which was treated as an appeal by the
said Regional Director, LFUC complained:
1) that the computation contained in the August 28, 2006
order of Three Million Three Hundred Forty Five Thousand Six Hundred
Fifty Seven Pesos and Ninety Four Centavos (Php3,345,657.94) due to
all workers, or Eighty Eight Thousand Forty Three Pesos and Sixty
Three Centavos (Php88,043.63) per worker, was "wrong" and
"characterized by grave abuse of discretion" because LFUC was
allegedly "deprived of due process" when it was not allowed to adduce
evidence to refute the employees' claims; 65
2) that the employees as piece-rate truck drivers were not
entitled to overtime, holiday and rest day pay as well as wage
differentials, and that some already had executed waivers and
quitclaims; 66 and AaCTcI
3) that the Order of August 28, 2006 was a "Compliance
Order" that was "baseless" and "void ab initio" and which should be
vacated by the said office. 67
As previously stated, the Court of Appeals granted the above petition
for certiorari of LFUC, 68 a decision which is now being assailed in this petition before Us.
Meanwhile, the DOLE-VI Regional Director denied LFUC's motion for reconsideration of
the Order dated August 28, 2006, a denial which was affirmed on appeal by the DOLE
Secretary. 69
We agree with petitioners and find that respondent LFUC's filing of a motion for
reconsideration before the DOLE-VI Regional Director rendered moot and academic its
petition for certiorari then pending with the Court of Appeals; as such, LFUC's failure to
withdraw the petition or to even notify the appellate court of the motion for reconsideration
filed before the DOLE amounts to a violation of the rules against forum shopping.
There is no question that as a result of LFUC's pursuit of the two simultaneous
remedies, the rulings of the Court of Appeals on the petition for certiorari and the DOLE
Secretary on LFUC's motion for reconsideration are now essentially conflicting, as the
former bars any execution and instead directs a further hearing of certain evidence, while
the latter states that such evidence had the chance to be heard and execution should now
proceed as a matter of course. Such conflict is exactly the scenario that the rules against
forum shopping try to avert.
Forum shopping is the act of a litigant who "repetitively avails of several judicial
remedies in different courts, simultaneously or successively, all substantially founded on
the same transactions and the same essential facts and circumstances, and all raising
substantially the same issues either pending in or already resolved adversely by some
other court to increase his chances of obtaining a favorable decision if not in one court,
then in another. 70 It is a practice currently prohibited by Section 5, Rule 7 of the Rules of
Court. 71 Forum shopping exists where the elements of litis pendentia are present or
where a final judgment in one case will amount to res judicata in the other. 72 We have
repeatedly maintained that forum shopping is an act of malpractice, as the litigants who
commit such trifle with the courts and abuse their processes. 73 It degrades the
administration of justice and adds to the already congested court dockets. 74 Acts of willful
and deliberate forum shopping shall be a ground for summary dismissal of the case with
prejudice. 75
In numerous cases, this Court has defined what constitutes litis pendentia. The
essential elements of litis pendentia are as follows: (1) identity of parties or representation
in both cases; (2) identity of rights asserted and reliefs prayed for; (3) reliefs founded on the
same facts and the same basis; and (4) identity of the two preceding particulars should be
such that any judgment, which may be rendered in the other action, will, regardless of
which party is successful, amount to res judicata in the action under consideration. 76
Forum shopping is considered anathema to the orderly administration of justice
due to the vexation it causes to the courts and the parties-litigants when a person who asks
appellate courts and/or administrative entities to rule on the same related causes and/or
to grant the same or substantially the same relief, in the process creating the possibility of
conflicting decisions by the different courts or fora on the same issues. 77 This is clearly
exemplified in the case at bar where, as one court stops execution and instead remands
the case for the "reception of evidence for all the parties . . . . and a re-computation of
monetary awards," another tribunal orders execution since, according to it, reception of
evidence had been performed and consummated and the only thing left to be done is the
payment of the already computed monetary awards to the winning parties. The two rulings
are clearly inconsistent and cannot be performed at the same time.
Therefore, it can be clearly derived from the above that LFUC and its counsel
clearly committed the abhorrent practice of forum shopping when they availed of two
remedies before two courts or tribunals by raising the same causes and praying for
substantially the same relief, against the same opponent, thus causing the likelihood and
eventual issuance of two conflicting rulings. It can be observed in the two cases that LFUC
concurrently pursued what it essentially pleaded as "deprivation of due process" in not
being allowed to "present its own evidence" in two simultaneous fora. Also, its ultimate
objective behind both acts was to stop the execution of the Regional Director's final order
and have that office hear the evidence of the parties anew and re-compute the monetary
sums awarded. Such an act should not be allowed, however. This Court has previously
and emphatically held that, along with identical or closely identical causes of action, one of
the keys to determining whether forum shopping exists is whether the "ultimate objective"
of the party filing the actions is the same, although the relief prayed for in the said actions
were differently worded. 78 SDHTEC
In sum, the elements of litis pendentia, are present in the case at bar since, in
both the petition with the Court of Appeals as well as in the motion filed with the DOLE-VI
Regional Director, the parties are inarguably the same, the causes of action and the reliefs
prayed for are essentially the same, the factual scenarios under which the reliefs are
prayed for are the same and the identity of these is such that a decision in one case would
amount to res judicata in the other action, the elements of res judicata being: (1) the
judgment sought to bar the new action must be final; (2) the decision must have been
rendered by a court having jurisdiction over the subject matter and the parties; (3) the
disposition of the case must be a judgment on the merits; and (4) there must be as between
the first and second action, identity of parties, subject matter, and causes of
action. 79 Truly, in the case at bar, the disposition of the Court of Appeals in the petition
for certiorari would bar any pending resolution of the subject motion by the DOLE-VI
Regional Director, or vice-versa, as they both delve with the same parties, the same cause
of action, and essentially the same relief, so that the two remedies can not co-exist and
only the appropriate one should remain.
As previously stated, LFUC's filing of a motion for reconsideration with the
DOLE-VI Regional Director rendered as moot and academic the petition for certiorarithat
LFUC earlier filed with the Court of Appeals, an act which should have led to the dismissal
of the said petition. It must be noted that the petition largely bewailed the issuance of a writ
of execution by the DOLE Region VI despite the alleged lack of a "compliance order"
issued beforehand. However, LFUC later itself acknowledged, in the motion for
reconsideration it filed with the DOLE-VI Regional Director, that the Order dated August 28,
2006 was a "compliance order," a statement that clearly contradicts its key argument in the
petition pending with the Court of Appeals. The said petition has been rendered moot and
academic and, thus, subject to dismissal. In addition, LFUC also had been able to raise its
concerns over due process and its alleged inability to present its own evidence (as it raised
with the appellate court) in the more suitable forum of the DOLE Region VI office.
Therefore, the petition for certiorari before the Court of Appeals was reduced into an empty,
duplicate exercise.
Hence, with the filing of the said motion before DOLE Region VI, the pending
petition for certiorari in the appellate court served no more valid purpose, and should have
been dismissed, if not withdrawn by the petitioner therefrom as it had become moot and
there evidently was already a better, plain, speedier and adequate remedy available to
LFUC. The requirements for a valid petition for certiorari were no longer being met and it
was, in fact, LFUC's obligation as written in its certification against forum shopping filed
with the appellate court to report to the said court within five (5) days of knowing that it had
filed the same or similar remedy with the DOLE. LFUC did not comply with such an
obligation and must be penalized therefor by the dismissal of its petition.
LFUC's acts of forum shopping are willful and deliberate and the penalty therefor
is that both its petition with the Court of Appeals and motion for reconsideration before the
DOLE-VI Regional Director should face dismissal or denial. 80 But even if there were no
such "willfulness and deliberateness" on LFUC's part, the penalty for forum shopping is still
dismissal of one of the actions but not necessarily of the newer one. In the case at bar,
although the motion for reconsideration with the Regional Director came later than the
petition for certiorari filed with the Court of Appeals, We have previously held that in such a
situation, it is the earlier action — the petition for certiorari — that must be dismissed. We
have ruled that the petition for certiorari is, in fact, an act of forum shopping that must yield
to the motion for reconsideration (treated by DOLE-VI Regional Director as an appeal)
which is the appropriate and adequate remedy. 81 The Court held further that: HSAcaE
Section 1, Rule 65 of the Rules of Court, clearly provides that a
petition for certiorari is available only when "there is no appeal, or any
plain, speedy and adequate remedy in the ordinary course of law." A
petition for certiorari cannot co-exist with an appeal or any other
adequate remedy. The existence and the availability of the right to
appeal are antithetical to the availment of the special civil action
for certiorari. As the Court has held, these two remedies are "mutually
exclusive."
xxx xxx xxx
It has been held that "what is determinative of the propriety
of certiorari is the danger of failure of justice without the writ, not the
mere absence of all other legal remedies." The Court is satisfied that the
denial of the Petition for Certiorari by the Court of Appeals will not result
in a failure of justice, for petitioner's rights are adequately and, in fact,
more appropriately addressed in the appeal. 82
What is more, as previously discussed, the resulting rulings of the Court of Appeals in the
petition for certiorari and that of DOLE Region VI in the motion for reconsideration are
contradictory, so that only one of them can be legally correct and enforceable. They may
not co-exist. Such conflicting rulings are precisely what the rules against forum shopping Regional Director explained that the DOLE Secretary had already ruled in her Order dated
seek to prevent. In such a situation, We choose to uphold the ruling of DOLE Region VI September 18, 2003 that even piece-rate workers are still entitled to payment of holiday
because it is issued by the proper and primary agency to rule on the same, 83 because it is pay, rest day pay and overtime pay because they are "supervised workers" and ply their
the adequate remedy in the ordinary course of law, 84 because certiorari is an routes "upon clear instructions," otherwise, they are subject to disciplinary actions. This
extraordinary remedy that must be availed of only if there is manifest grave abuse of order by the DOLE Secretary was among those that was already affirmed with finality by
discretion, 85 and because declaring otherwise will amount to rewarding LFUC's own this Court in the previous case of Iloilo La Filipina Uygongco Corporation v. Court of
disobedience to the rules against forum shopping. Appeals 90 and, thus, is no longer open to disputation or revision. As for the waivers and
quitclaims, the Regional Director likewise explained that such may not be given credence
As for LFUC's allegation that the petitioners never before raised the issue of
as they were executed in violation of Administrative Order No. 105, series of 1995, which
forum shopping and did so for the first time only after the adverse decision of the Court of
requires such waivers or quitclaims to be executed, among others, in the presence of the
Appeals came out, We find the same to be without merit. Both the herein petitioners, as
Regional Director or his duly authorized representatives. The waivers and quitclaims were
well as then DOLE-VI Regional Director Aida M. Estabillo, the respondents in the petition
not so executed. 91 Such were simply not taken account of and disregarded without valid
for certiorari before the Court of Appeals, filed their respective comments thereto raising
explanation by the Court of Appeals.
the issue of mootness and forum shopping as a result of LFUC's filing of a motion for
reconsideration of the Order dated August 28, 2006 before the DOLE Region VI. 86 Both Also, the DOLE Secretary, in her Order dated August 2, 2010 noted that
comments prayed for the immediate dismissal of the petition for certiorari on such grounds. a Subpoena Duces Tecum dated August 5, 2004 was in fact served on LFUC directing it to
Hence, the allegation that the issue of forum shopping was raised only for the first time produce copies of the payrolls and daily time records for the years 1996 to 1998 on August
after the adverse decision of the appellate court is simply untrue. 5, 2004, which LFUC did not comply with. 92 In the same Order, the DOLE Secretary
stated that the DOLE-VI Regional Director wrote LFUC on September 1, 2004 to warn the
We likewise examined the reasoning of the Court of Appeals in granting LFUC's
latter that computation of the employees' wages and monetary benefits would be based on
petition for certiorari and found the same to be completely not in agreement with what is on
available records absent LFUC's submission of the required documents. LFUC, however,
record. Its factual findings contradict those of the DOLE and DOLE Region VI and, upon
still did not heed the warning. Consequently, the Order dated August 28, 2006 of DOLE-VI
Our examination, We find that the latter finds greater support from the evidence presented.
Regional Director Boteros came out which LFUC assailed in its Motion for Reconsideration
It is also established that except when there are cogent reasons, this Court will not alter,
of the same. Still, LFUC's motion for reconsideration did not contain such documents.
modify or reverse the factual findings of the Secretary of Labor (or her subordinates)
Neither did its appeal before the DOLE Secretary after the denial of its motion for
because, by reason of her official position, she is considered to have acquired expertise as
reconsideration contain the said documents.
her jurisdiction is confined to specific matters. 87 For the same reason, We likewise find
LFUC's contentions in the case at bar as regards the alleged denial of its right to due As for the allegation by LFUC that six (6) of the employees have been declared
process to be without merit. HESIcT validly dismissed by the Labor Arbiter, the petitioners sufficiently explained in their
Comment to the petition for certiorari, before the Court of Appeals that the Labor Arbiter's
First, the appellate court ruled that "no evidence was submitted by the parties
ruling had been reversed by the appellate court itself, which reversal was effectively upheld
prior to the issuance of the Order dated August 28, 2006 by then (DOLE-VI) Regional
by the Supreme Court when it denied with finality the appeal of LFUC. 93 In addition, We
Director Carlos Boteros." However, the court only precipitately arrived at this conclusion,
see no reason how such dismissal is relevant to the case at bar, as the money claims that
while failing to note and omitting to discuss the explanations made by the DOLE and
were heard before the DOLE-VI Regional Director involved unpaid wages and other pays
DOLE-VI Regional Director on the issue.
incurred prior to such dismissal. caITAC
For example, the Court of Appeals sustained wholesale LFUC's allegations that it
The appellate court's failure to address these factual narrations and findings of
was not given the opportunity to present evidence to refute the monetary claims of the
the labor tribunals put its own ruling on a dubious footing, as it now rests on nothing but
complaining workers; that the employees were piece-rate truck drivers so that there was no
"assumptions, conjectures and suppositions" as the petition alleges. We have no reason to
legal basis for them to claim underpayment of wages, non-payment of holiday pay, rest day
depart from the presumption that the labor officials performed their official duties in a
pay and overtime pay; and that many of the employees have executed waivers and
regular manner, absent any evidence from respondent that this was not the case. We have
quitclaims which makes them no longer entitled to their claims. However, in its Decision
also previously recognized the Secretary of Labor's distinct expertise in the study and
dated December 15, 2008, 88 the DOLE-VI Regional Director already had adequately
settlement of labor disputes falling under his power of compulsory arbitration and that the
addressed the same, stating that LFUC had its "several opportunities to submit
factual findings of labor administrative officials, if supported by substantial evidence, are
evidence . . . . that the workers were given their minimum wage," during the numerous
entitled not only to great respect but even to finality. 94 Therefore, as between the bare
times that the case was heard in its various stages with the DOLE Region VI all the way to
conclusions of the appellate court, and the findings of the labor offices, which are
the appeal to the DOLE Secretary. 89 LFUC could have presented its evidence in those
supported by substantial evidence, We are inclined to uphold the latter.
fora, at any stage of the proceedings, but it did not. Then, as for the piece-rate workers, the
 WHEREFORE, the petition is GRANTED. The Court of Appeals' Decision dated
September 13, 2011 and Resolution dated May 24, 2012 in CA-G.R. SP No. 03690
are REVERSED and SET ASIDE. The Department of Labor and Employment and DOLE
Region VI are ORDERED TO PROCEED WITH DISPATCH IN THE ENFORCEMENTof
the Writ(s) of Execution subject of this case.
SO ORDERED.
||| (Bandillion v. La Filipina Uygongco Corp., G.R. No. 202446, [September 16, 2015])
 THIRD DIVISION
[G.R. No. 207041. November 9, 2015.]
PEOPLE OF THE PHILIPPINES, represented by the Office of the City
Prosecutor, Department of Justice, Roxas City, petitioner, vs. JESUS
A.ARROJADO, respondent.
DECISION
PERALTA, J p:
Before the Court is a petition for review on certiorari seeking to set aside the
Decision 1 and Resolution 2 of the Court of Appeals (CA), dated September 8, 2011 and
April 18, 2013, respectively, in CA-G.R. SP No. 04540. The assailed Decision affirmed the
Orders of the Regional Trial Court (RTC) of Makati City, Branch 16, dated July 2, 2009 and
July 23, 2009 in Criminal Case No. C-75-09, while the questioned Resolution denied
petitioners' Motion for Reconsideration.
The pertinent factual and procedural antecedents of the case are as follows:
In an Information dated March 23, 2009, herein respondent was charged with the
crime of murder by the Office of the City Prosecutor of Roxas City, Capiz. The case was
docketed as Criminal Case No. C-75-09 and was raffled off to Branch 16 of the Regional
Trial Court of Roxas City, Iloilo (RTC of Roxas City).
On June 16, 2009, respondent filed a Motion to Dismiss 3 the Information filed
against him on the ground that the investigating prosecutor who filed the said Information
failed to indicate therein the number and date of issue of her Mandatory Continuing Legal
Education (MCLE) Certificate of Compliance, as required byBar Matter No. 1922 (B.M. No.
1922) which was promulgated by this Court via an En Banc Resolution dated June 3,
2008. 4
Herein petitioner filed its Comment/Opposition 5 to respondent's Motion to
Dismiss contending that: (1) the Information sought to be dismissed is sufficient in form and
substance; (2) the lack of proof of MCLE compliance by the prosecutor who prepared and
signed the Information should not prejudice the interest of the State in filing charges
against persons who have violated the law; and (3) an administrative edict cannot prevail
over substantive or procedural law, by imposing additional requirements for the sufficiency
of a criminal information.
On July 2, 2009, the RTC of Roxas City issued an Order 6 dismissing the subject
Information without prejudice. Respondent filed a Motion for Reconsideration, 7but the trial
court denied it in its Order 8 dated July 23, 2009. aDSIHc
Respondent then filed a petition for certiorari and/or mandamus with the CA
assailing the July 2, 2009 and July 23, 2009 Orders of the RTC of Roxas City.
In its presently assailed Decision, the CA denied respondent's petition and
affirmed the questioned RTC Orders. Respondent's Motion for Reconsideration was
likewise denied by the CA in its disputed Resolution.
Hence, the present petition for review on certiorari raising a sole Assignment of
Error, to wit:
THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED
THAT THE FAILURE OF THE INVESTIGATING PROSECUTOR TO
INDICATE HER MCLE COMPLIANCE NUMBER AND DATE OF
ISSUANCE THEREOF IN THE INFORMATION AGAINST
RESPONDENT JESUS A. ARROJADO WARRANTED THE
DISMISSAL OF THE SAME. 9
Petitioner contends that: (1) the term "pleadings" as used in B.M. No. 1922 does
not include criminal Informations filed in court; (2) the failure of the investigating prosecutor
to indicate in the Information the number and date of issue of her MCLE Certificate of
Compliance is a mere formal defect and is not a valid ground to dismiss the subject
Information which is otherwise complete in form and substance.
The petition lacks merit.
Pertinent portions of B.M. No. 1922, provide as follows:
xxx xxx xxx
The Court further Resolved, upon the recommendation of the
Committee on Legal Education and Bar Matters, to REQUIRE practicing
members of the bar to INDICATEin all pleadings filed before the
courts or quasi-judicial bodies, the number and date of issue of their
MCLE Certificate of Compliance or Certificate of Exemption, as may be
applicable, for the immediately preceding compliance period. Failure to
disclose the required information would cause the dismissal of the case
and the expunction of the pleadings from the records.
xxx xxx xxx 10
Section 1, Rule 6 of the Rules of Court,as amended, defines pleadings as the
written statements of the respective claims and defenses of the parties submitted to the
court for appropriate judgment. Among the pleadings enumerated under Section 2 thereof
are the complaint and the answer in a civil suit. On the other hand, under Section 4, Rule
110 of the same Rules, an information is defined as an accusation in writing charging a
person with an offense, subscribed by the prosecutor and filed with the court. In
accordance with the above definitions, it is clear that an information is a pleading since the
allegations therein, which charge a person with an offense, is basically the same as a
complaint in a civil action which alleges a plaintiff's cause or cause of action. In this respect,
the Court quotes with approval the ruling of the CA on the matter, to wit:
xxx xxx xxx
 [A]n information is, for all intents and purposes, considered an initiatory
pleading because it is a written statement that contains the cause of
action of a party, which in criminal cases is the State as represented by
the prosecutor, against the accused. Like a pleading, the Information is
also filed in court for appropriate judgment. Undoubtedly then, an
Information falls squarely within the ambit of Bar Matter No. 1922, in
relation to Bar Matter 850. 11
Even under the rules of criminal procedure of the United States, upon which our
rules of criminal procedure were patterned, an information is considered a pleading. Thus,
Rule 12 (a), Title IV of the United States Federal Rules of Criminal Procedure, states that:
"[t]he pleadings in a criminal proceeding are the indictment, the information, and the pleas
of not guilty, guilty, and nolo contendere." Thus, the Supreme Court of Washington held
that:
An information is a pleading. It is the formal statement on the
part of the state of the facts constituting the offense which the defendant
is accused of committing. In other words, it is the plain and concise
statement of the facts constituting the cause of action. It bears the same
relation to a criminal action that a complaint does to a civil action; and,
when verified, its object is not to satisfy the court or jury that the
defendant is guilty, nor is it for the purpose of evidence which is to be
weighed and passed upon, but is only to inform the defendant of the
precise acts or omissions with which he is accused, the truth of which is
to be determined thereafter by direct and positive evidence upon a trial,
where the defendant is brought face to face with the witnesses. 12
In a similar manner, the Supreme Court of Illinois ruled that "[a]n indictment in a criminal
case is a pleading, since it accomplishes the same purpose as a declaration in a civil suit,
pleading by allegation the cause of action in law against [a] defendant." 13
As to petitioner's contention that the failure of the investigating prosecutor to
indicate in the subject Information the number and date of issue of her MCLE Certificate of
Compliance is a mere formal defect and is not a valid ground to dismiss such Information,
suffice it to state that B.M. No. 1922 categorically provides that "[f]ailure to disclose the
required information would cause the dismissal of the case and the expunction of the
pleadings from the records." In this regard, petitioner must be reminded that it assailed the
trial court's dismissal of the subject Information via a special civil action for certiorari filed
with the CA. The writ ofcertiorari is directed against a tribunal, board or officer exercising
judicial or quasi-judicial functions that acted without or in excess of its or his jurisdiction or
with grave abuse of discretion. 14 Grave abuse of discretion means such capricious or
whimsical exercise of judgment which is equivalent to lack of jurisdiction. 15 To justify the
issuance of the writ of certiorari, the abuse of discretion must be grave, as when the power
is exercised in an arbitrary or despotic manner by reason of passion or personal hostility,
and it must be so patent and gross as to amount to an evasion of a positive duty or to a
virtual refusal to perform the duty enjoined, or to act at all, in contemplation of law, as to be
equivalent to having acted without jurisdiction. 16 Since the trial court's dismissal of the
subject Information was based on a clear and categorical provision of a rule issued by this
Court, the court a quo could not have committed a capricious or whimsical exercise of
judgment nor did it exercise its discretion in an arbitrary or despotic manner. Thus, the CA
did not commit error in dismissing petitioner's petition for certiorari. ETHIDa
In harping on its contention that the ends of justice would be best served if the
criminal case would be allowed to proceed in order to determine the innocence or
culpability of the accused, petitioner sounds as if the dismissal of the Information left the
prosecution with no other recourse or remedy so as to irreversibly jeopardize the interests
of the State and the private offended party. On the contrary, the Court agrees with the CA
that the dismissal of the Information, without prejudice, did not leave the prosecution
without any other plain, speedy and adequate remedy. To avoid undue delay in the
disposition of the subject criminal case and to uphold the parties' respective rights to a
speedy disposition of their case, the prosecution, mindful of its duty not only to prosecute
offenders but more importantly to do justice, could have simply re-filed the Information
containing the required number and date of issue of the investigating prosecutor's MCLE
Certificate of Compliance, instead of resorting to the filing of various petitions in court to
stubbornly insist on its position and question the trial court's dismissal of the subject
Information, thereby wasting its time and effort and the State's resources.
The Court is neither persuaded by petitioner's invocation of the principle on liberal
construction of procedural rules by arguing that such liberal construction "may be invoked
in situations where there may be some excusable formal deficiency or error in a pleading,
provided that the same does not subvert the essence of the proceeding and connotes at
least a reasonable attempt at compliance with the Rules." The prosecution has never
shown any reasonable attempt at compliance with the rule enunciated under B.M. No.
1922. Even when the motion for reconsideration of the RTC Order dismissing the subject
Information was filed, the required number and date of issue of the investigating
prosecutor's MCLE Certificate of Compliance was still not included nor indicated. Thus, in
the instant case, absent valid and compelling reasons, the requested leniency and liberality
in the observance of procedural rules appear to be an afterthought, hence, cannot be
granted.
In any event, to avoid inordinate delays in the disposition of cases brought about
by a counsel's failure to indicate in his or her pleadings the number and date of issue of his
or her MCLE Certificate of Compliance, this Court issued an En Banc Resolution, dated
January 14, 2014 which amended B.M. No. 1922 by repealing the phrase "Failure to
disclose the required information would cause the dismissal of the case and the expunction
of the pleadings from the records" and replacing it with "Failure to disclose the required
information would subject the counsel to appropriate penalty and disciplinary action." Thus,
under the amendatory Resolution, the failure of a lawyer to indicate in his or her pleadings
the number and date of issue of his or her MCLE Certificate of Compliance will no longer
result in the dismissal of the case and expunction of the pleadings from the records.
Nonetheless, such failure will subject the lawyer to the prescribed fine and/or disciplinary
action.
In light of the above amendment, while the same was not yet in effect at the time
that the subject Information was filed, the more prudent and practical thing that the trial
 court should have done in the first place, so as to avoid delay in the disposition of the case,
was not to dismiss the Information but to simply require the investigating prosecutor to
indicate therein the number and date of issue of her MCLE Certificate of Compliance.
WHEREFORE, the instant petition is DENIED. The Decision and Resolution of
the Court of Appeals, dated September 8, 2011 and April 18, 2013, respectively, in CA-G.R.
SP No. 04540 are AFFIRMED.
SO ORDERED.
||| (People v. Arrojado, G.R. No. 207041, [November 9, 2015])
 FIRST DIVISION According to the petitioner, the respondent paid only P67,357,683.23 of its total
obligation of P123,901,650.00, leaving unpaid the sum of P54,654,195.54. 7However, on
February 11, 2009, the petitioner and the respondent, respectively represented by Rafael
[G.R. No. 207970. January 20, 2016.] P. Fernando and Guillermo T. Maglaya, Sr., entered into an agreement, 8 whereby the
former agreed to reduce its claim to only P50,400,000.00, and allowed the latter to pay the
FERNANDO MEDICAL ENTERPRISES, adjusted obligation on installment basis within 36 months. 9 AHDacC
INC., petitioner, vs. WESLEYAN UNIVERSITY PHILIPPINES, In the letter dated May 27, 2009, 10 the respondent notified the petitioner that its
INC., respondent. new administration had reviewed their contracts and had found the contracts defective and
rescissible due to economic prejudice or lesion; and that it was consequently declining to
recognize the February 11, 2009 agreement because of the lack of approval by its Board of
Trustees and for having been signed by Maglaya whose term of office had expired.
DECISION
On June 24, 2009, the petitioner sent a demand letter to the respondent. 11
Due to the respondent's failure to pay as demanded, the petitioner filed its
BERSAMIN, J p: complaint for sum of money in the RTC, 12 averring as follows:

The trial court may render a judgment on the pleadings upon motion of the
claiming party when the defending party's answer fails to tender an issue, or otherwise
admits the material allegations of the adverse party's pleading. For that purpose, only the
pleadings of the parties in the action are considered. It is error for the trial court to deny the
motion for judgment on the pleadings because the defending party's pleading in another
case supposedly tendered an issue of fact.
The Case
The petitioner appeals the decision promulgated on July 2, 2013, 1 whereby the
Court of Appeals (CA) affirmed the order issued on November 23, 2011 by the Regional
Trial Court (RTC), Branch 1, in Manila, denying its motion for judgment on the pleadings in
Civil Case No. 09-122116 entitled Fernando Medical Enterprises,
Inc. v. Wesleyan University-Philippines. 2
Antecedents
From January 9, 2006 until February 2, 2007, the petitioner, a domestic
corporation dealing with medical equipment and supplies, delivered to and
installedmedical equipment and supplies at the respondent's hospital under the following
contracts:
a. Memorandum of Agreement dated January 9, 2006 for the supply
of medical equipment in the total amount of P18,625,000.00; 3
b. Deed of Undertaking dated July 5, 2006 for the installation
of medical gas pipeline system valued at P8,500,000.00; 4
c. Deed of Undertaking dated July 27, 2006 for the supply of one unit of
Diamond Select Slice CT and one unit of Diamond Select CV-P
costing P65,000,000.00; 5 and
d. Deed of Undertaking dated February 2, 2007 for the supply of
furnishings and equipment worth P32,926,650.00. 6
xxx xxx xxx
2. On January 9, 2006, plaintiff supplied defendant with
hospital medical equipment for an in consideration of P18,625,000.00
payable in the following manner: (2.1) for nos. 1 to 9 of items to be
sourced from Fernando Medical Equipment, Inc. (FMEI) — 30% down
payment of P17,475,000 or P5,242,500 with the balance of P12,232,500
or 70% payable in 24 equal monthly instalments of P509,687.50 and
(2.2.) cash transaction amounting to P1,150,000.00 (2.3) or an initial
cash payment of P6,392,500.00 with the remaining balance payable in
24 equal monthly installments every 20th day of each month until paid,
as stated in the Memorandum of Agreement, copy of which is hereto
attached as Annex "A";
3. On July 5, 2006, plaintiff installed defendants medical gas
pipeline system in the latter's hospital building complex for and in
consideration of P8,500,000.00 payable upon installation thereof under
a Deed of Undertaking, copy of which is hereto attached as Annex "B";
4. On July 27, 2006, plaintiff supplied defendant one (1) unit
Diamond Select Slice CT and one (1) unit Diamond Select CV-9 for and
in consideration of P65,000,000.00 thirty percent (30%) of which shall be
paid as down payment and the balance in 30 equal monthly instalments
as provided in that Deed of Undertaking, copy of which is hereto
attached as Annex "C";
5. On February 2, 2007, plaintiff supplied defendants hospital
furnishings and equipment for an in consideration of P32,926,650.00
twenty percent (20%) of which was to be paid as downpayment and the
balance in 30 months under a Deed of Undertaking, copy of which is
hereto attached as Annex "D";
 6. Defendant's total obligation to plaintiff was P123,901,650.00
as of February 15, 2009, but defendant was able to pay plaintiff the sum
of P67,357,683.23 thus leaving a balance P54,654,195.54 which has
become overdue and demandable;
7. On February 11, 2009, plaintiff agreed to reduce its claim to
only P50,400,000.00 and extended its payment for 36 months provided
defendants shall pay the same within 36 months and to issue 36
postdated checks therefor in the amount of P1,400,000.00 each to which
defendant agreed under an Agreement, copy of which is hereto attached
as Annex "E";
8. Accordingly, defendant issued in favor of plaintiff 36
postdated checks each in the [a]mount of P1,400,000.00 but after four (4)
of the said checks in the sum of P5,600,000.00 were honored defendant
stopped their payment thus making the entire obligation of defendant
due and demandable under the February 11, 2009 agreement;
9. In a letter dated May 27, 2009, defendant claimed that all of
the first four (4) agreements may be rescissible and one of them is
unenforceable while the Agreement dated February 11, 2009 was
without the requisite board approval as it was signed by an agent whose
term of office already expired, copy of which letter is hereto attached
as Annex "F".
10. Consequently, plaintiff told defendant that if it does not
want to honor the February 11, 2009 contract then plaintiff will
insists [sic] on its original claim which is P54,654,195.54 and made a
demand for the payment thereof within 10 days from receipt of its letter
copy of which is hereto attached as Annex "G";
11. Defendant received the aforesaid letter on July 6, 2009 but
to date it has not paid plaintiff any amount, either in the first four
contracts nor in the February 11, 2009 agreement, hence, the latter was
constrained to institute the instant suit and thus incurred attorney's fee
equivalent to 10% of the overdue account but only after endeavouring to
resolve the dispute amicable and in a spirit of friendship[;] IDSEAH
12. Under the February 11, 2009 agreement the parties agreed
to bring all actions or proceedings thereunder or characterized therewith
in the City of Manila to the exclusion of other courts and for defendant to
pay plaintiff 3% per months of delay without need of demand; 13
xxx xxx xxx
The respondent moved to dismiss the complaint upon the following
grounds, 14 namely: (a) lack of jurisdiction over the person of the defendant; (b) improper
venue; (c) litis pendentia; and (d) forum shopping. In support of the ground of litis
pendentia, it stated that it had earlier filed a complaint for the rescission of the four
contracts and of the February 11, 2009 agreement in the RTC in Cabanatuan City; and that
the resolution of that case would be determinative of the petitioner's action for
collection. 15
After the RTC denied the motion to dismiss on July 19, 2009, 16 the respondent
filed its answer (ad cautelam), 17 averring thusly:
xxx xxx xxx
2. The allegations in Paragraphs Nos. 2, 3, 4, and 5 of the
complaint are ADMITTED subject to the special and affirmative
defenses hereafter pleaded;
3. The allegations in Paragraphs Nos. 6, 7 and 8 of the
complaint are DENIED for lack of knowledge or information sufficient to
form a belief as to the truth or falsity thereof, inasmuch as the alleged
transactions were undertaken during the term of office of the past
officers of defendant Wesleyan University-Philippines. At any rate,
these allegations are subject to the special and affirmative defenses
hereafter pleaded;
4. The allegations in Paragraphs Nos. 9 and 10 of the
complaint are ADMITTED subject to the special and affirmative
defenses hereafter pleaded;
5. The allegations in Paragraphs Nos. 11 and 12 of the
complaint are DENIED for being conclusions of law. 18
xxx xxx xxx
The petitioner filed its reply to the answer. 19
On September 28, 2011, the petitioner filed its Motion for Judgment Based on the
Pleadings, 20 stating that the respondent had admitted the material allegations of its
complaint and thus did not tender any issue as to such allegations.
The respondent opposed the Motion for Judgment Based on the Pleadings,
arguing that it had specifically denied the material allegations in the complaint, particularly
paragraphs 6, 7, 8, 11 and 12. 21 HCaDIS
On November 23, 2011, the RTC issued the order denying the Motion for
Judgment Based on the Pleadings of the petitioner, to wit:
At the hearing of the "Motion for Judgment Based on the
Pleadings" filed by the plaintiff thru counsel, Atty. Jose Mañacop on
September 28, 2011, the court issued an Order dated October 27, 2011
which read in part as follows:
xxx xxx xxx
Considering that the allegations stated on
the Motion for Judgment Based on the Pleadings, are
evidentiary in nature, the Court, instead of acting on
the same, hereby sets this case for pre-trial,
 considering that with the Answer and the Reply,
issues have been joined.
xxx xxx xxx
In view therefore of the Order of the Court dated October 27,
2011, let the Motion for Judgment Based on the Pleadings be hereby
ordered DENIED on reasons as abovestated and hereto reiterated.
xxx xxx xxx
SO ORDERED. 22
The petitioner moved for reconsideration, 23 but its motion was denied on
December 29, 2011. 24
The petitioner assailed the denial in the CA on certiorari. 25
Judgment of the CA
On July 2, 2013, the CA promulgated its decision. Although observing that the
respondent had admitted the contracts as well as the February 11, 2009 agreement, viz.:
It must be remembered that Private Respondent admitted the
existence of the subject contracts, including Petitioner's fulfilment of its
obligations under the same, but subjected the said admission to the
"special and affirmative defenses" earlier raised in its Motion to Dismiss.
xxx xxx xxx
Obviously, Private Respondent's special and affirmative
defenses are not of such character as to avoid Petitioner's claim. The
same special and affirmative defenses have been passed upon by the
RTC in its Order dated July 19, 2010 when it denied Private
Respondent's Motion to Dismiss. As correctly found by the RTC, Private
Respondent's special and affirmative defenses of lack of jurisdiction
over its person, improper venue, litis pendentia and wilful and deliberate
forum shopping are not meritorious and cannot operate to dismiss
Petitioner's Complaint. Hence, when Private Respondent subjected its
admission to the said defenses, it is as though it raised no defense at all.
Not even is Private Respondent's contention that the rescission
case must take precedence over Petitioner's Complaint for Sum of
Money tenable. To begin with, Private Respondent had not yet proven
that the subject contracts are rescissible. And even if the subject
contracts are indeed rescissible, it is well-settled that rescissible
contracts are valid contracts until they are rescinded. Since the subject
contracts have not yet been rescinded, they are deemed valid contracts
which may be enforced in legal contemplation.
In effect, Private Respondent admitted that it entered into the
subject contracts and that Petitioner had performed its obligations under
the same.
As regards Private Respondent's denial by disavowal of
knowledge of the Agreement dated February 11, 2009, We agree with
Petitioner that such denial was made in bad faith because such
allegations are plainly and necessarily within its knowledge.
In its letter dated May 27, 2009, Private Respondent made
reference to the Agreement dated February 11, 2009, viz.:
"The Agreement dated 11 February 2009, in
particular, was entered into by an Agent of the
University without the requisite authority from the
Board of Trustees, and executed when said agent's
term of office had already expired. Consequently,
such contract is, being an unenforceable contract."
Also, Private Respondent averred in page 5 of its Complaint for
Rescission, which it attached to its Motion to Dismiss, that:
"13. On 6 February 2009, when the terms of
office of plaintiff's Board of Trustess chaired by
Dominador Cabasal, as well as of Atty. Guillermo C.
Maglaya as President, had already expired, thereby
rendering them on a hold-over capacity, the said
Board once again authorized Atty. Maglaya to enter
into another contract with defendant FMEI, whereby
the plaintiff was obligated to pay and deliver to
defendant FMEI the amount of Fifty Million Four
Hundred Thousand Pesos (Php50,400,000.00) in
thirty five (35) monthly instalments of One Million Four
Hundred Thousand Pesos (Php1,400,000.00),
representing the balance of the payment for
the medical equipment supplied under the afore-cited
rescissible contracts. This side agreement, executed
five (5) days later, or on 11 February 2009, and
denominated as "AGREEMENT", had no object as a
contract, but was entered into solely for the purpose of
getting the plaintiff locked-in to the payment of the
balance price under the rescissible
contracts; . . ." AHCETa
From the above averments, Private Respondent cannot deny
knowledge of the Agreement dated February 11, 2009. In one case, it
was held that when a respondent makes a "specific denial" of a material
allegation of the petition without setting forth the substance of the
matters relied upon to support its general denial, when such
 matters where plainly within its knowledge and the defendant could not
logically pretend ignorance as to the same, said defendant fails to
properly tender an issue. 26
the CA ruled that a judgment on the pleadings would be improper because the outstanding
balance due to the petitioner remained to be an issue in the face of the allegations of the
respondent in its complaint for rescission in the RTC in Cabanatuan City, to wit:
However, Private Respondent's disavowal of knowledge of its
outstanding balance is well-taken. Paragraph 6 of Petitioner's Complaint
states that Private Respondent was able to pay only the amount of
P67,357,683.23. Taken together with paragraph 8, which states that
Private Respondent was only able to make good four (4) check
payments worth P1,400,000.00 or a total of P5,600,000.00, Private
Respondent's total payments would be, in Petitioner's
view, P72,957,683.23. However, in its Complaint for Rescission,
attached to its Motion to Dismiss Petitioner's Complaint for Sum of
Money. Private Respondent alleged that:
"16. To date, plaintiff had already paid
defendant the amount of Seventy Eight Million Four
Hundred One Thousand Six Hundred Fifty Pesos
(P78,401,650.00)"
It is apparent that Private Respondent's computation and
Petitioner's computation of the total payments made by Private
Respondent are different. Thus, Private Respondent tendered an issue
as to the amount of the balance due to Petitioner under the subject
contracts. 27
Hence, this appeal.
Issue
The petitioner posits that the CA erred in going outside of the respondent's
answer by relying on the allegations contained in the latter's complaint for rescission; and
insists that the CA should have confined itself to the respondent's answer in the action in
order to resolve the petitioner's motion for judgment based on the pleadings.
In contrast, the respondent contends that it had specifically denied the material
allegations of the petitioner's complaint, including the amount claimed; and that the CA only
affirmed the previous ruling of the RTC that the pleadings submitted by the parties
tendered an issue as to the balance owing to the petitioner.
Did the CA commit reversible error in affirming the RTC's denial of the petitioner's
motion for judgment on the pleadings?
Ruling of the Court
The appeal is meritorious.
The rule on judgment based on the pleadings is Section 1, Rule 34 of the Rules of
Court, which provides thus:
Section 1. Judgment on the pleadings. — Where an answer
fails to tender an issue, or otherwise admits the material allegations of
the adverse party's pleading, the court may, on motion of that party,
direct judgment on such pleading. . . .
The essential query in resolving a motion for judgment on the pleadings is
whether or not there are issues of fact generated by the pleadings. 28 Whether issues of
fact exist in a case or not depends on how the defending party's answer has dealt with the
ultimate facts alleged in the complaint. The defending party's answer either admits or
denies the allegations of ultimate facts in the complaint or other initiatory pleading. The
allegations of ultimate facts the answer admit, being undisputed, will not require evidence
to establish the truth of such facts, but the allegations of ultimate facts the answer properly
denies, being disputed, will require evidence.
The answer admits the material allegations of ultimate facts of the adverse party's
pleadings not only when it expressly confesses the truth of such allegations but also when
it omits to deal with them at all. 29 The controversion of the ultimate facts must only be by
specific denial. Section 10, Rule 8 of the Rules of Courtrecognizes only three modes by
which the denial in the answer raises an issue of fact. The first is by the defending party
specifying each material allegation of fact the truth of which he does not admit and,
whenever practicable, setting forth the substance of the matters upon which he relies to
support his denial. The second applies to the defending party who desires to deny only a
part of an averment, and the denial is done by the defending party specifying so much of
the material allegation of ultimate facts as is true and material and denying only the
remainder. The third is done by the defending party who is without knowledge or
information sufficient to form a belief as to the truth of a material averment made in the
complaint by stating so in the answer. Any material averment in the complaint not so
specifically denied are deemed admitted except an averment of the amount of unliquidated
damages. 30
In the case of a written instrument or document upon which an action or defense
is based, which is also known as the actionable document, the pleader of such document is
required either to set forth the substance of such instrument or document in the pleading,
and to attach the original or a copy thereof to the pleading as an exhibit, which shall then be
deemed to be a part of the pleading, or to set forth a copy in the pleading. 31 The adverse
party is deemed to admit the genuineness and due execution of the actionable document
unless he specifically denies them under oath, and sets forth what he claims to be the facts,
but the requirement of an oath 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. 32 ScHADI
In Civil Case No. 09-122116, the respondent expressly admitted paragraphs no.
2, 3, 4, 5, 9 and 10 of the complaint. The admission related to the petitioner's allegations
on: (a) the four transactions for the delivery and installation of various hospital
equipment; (b) the total liability of the respondent; (c) the payments made by the
respondents; (d) the balance still due to the petitioner; and (e) the execution of the
February 11, 2009 agreement. The admission of the various agreements, especially the
February 11, 2009 agreement, significantly admitted the petitioner's complaint. To recall,
the petitioner's cause of action was based on the February 11, 2009 agreement, which was
the actionable document in the case. The complaint properly alleged the substance of the
February 11, 2009 agreement, and contained a copy thereof as an annex. Upon the
express admission of the genuineness and due execution of the February 11, 2009
agreement, judgment on the pleadings became proper. 33 As held in Santos v.
Alcazar: 34
There is no need for proof of execution and authenticity with
respect to documents the genuineness and due execution of which are
admitted by the adverse party. With the consequent admission
engendered by petitioners' failure to properly deny the Acknowledgment
in their Answer, coupled with its proper authentication, identification and
offer by the respondent, not to mention petitioners' admissions in
paragraphs 4 to 6 of their Answer that they are indeed indebted to
respondent, the Court believes that judgment may be had solely on the
document, and there is no need to present receipts and other
documents to prove the claimed indebtedness. The Acknowledgment,
just as an ordinary acknowledgment receipt, is valid and binding
between the parties who executed it, as a document evidencing the loan
agreement they had entered into. The absence of rebutting evidence
occasioned by petitioners' waiver of their right to present evidence
renders the Acknowledgment as the best evidence of the transactions
between the parties and the consequential indebtedness incurred.
Indeed, the effect of the admission is such that a prima facie case is
made for the plaintiff which dispenses with the necessity of evidence on
his part and entitled him to a judgment on the pleadings unless a special
defense of new matter, such as payment, is interposed by the
defendant. 35 (citations omitted)
The respondent denied paragraphs no. 6, 7 and 8 of the complaint "for lack of
knowledge or information sufficient to form a belief as to the truth or falsity thereof,
inasmuch as the alleged transactions were undertaken during the term of office of the past
officers of defendant Wesleyan University-Philippines." Was the manner of denial effective
as a specific denial?
We answer the query in the negative. Paragraph no. 6 alleged that the
respondent's total obligation as of February 15, 2009 was P123,901,650.00, but its balance
thereafter became only P54,654,195.54 because it had since then paid P67,357,683.23 to
the petitioner. Paragraph no. 7 stated that the petitioner had agreed with the respondent on
February 11, 2009 to reduce the balance to only P50,400,000.00, which the respondent
would pay in 36 months through 36 postdated checks of P1,400,000.00 each, which the
respondent then issued for the purpose. Paragraph no. 8 averred that after four of the
checks totalling P5,600,000.00 were paid the respondent stopped payment of the rest,
rendering the entire obligation due and demandable pursuant to the February 11, 2009
agreement. Considering that paragraphs no. 6, 7 and 8 of the complaint averred matters
that the respondent ought to know or could have easily known, the answer did not
specifically deny such material averments. It is settled that denials based on lack of
knowledge or information of matters clearly known to the pleader, or ought to be known to
it, or could have easily been known by it are insufficient, and constitute ineffective 36 or
sham denials. 37
That the respondent qualified its admissions and denials by subjecting them to its
special and affirmative defenses of lack of jurisdiction over its person, improper venue, litis
pendentia and forum shopping was of no consequence because the affirmative defenses,
by their nature, involved matters extrinsic to the merits of the petitioner's claim, and thus did
not negate the material averments of the complaint.
Lastly, we should emphasize that in order to resolve the petitioner's Motion for
Judgment Based on the Pleadings, the trial court could rely only on the answer of the
respondent filed in Civil Case No. 09-122116. Under Section 1, Rule 34 of the Rules of
Court, the answer was the sole basis for ascertaining whether the complaint's material
allegations were admitted or properly denied. As such, the respondent's averment of
payment of the total of P78,401,650.00 to the petitioner made in its complaint for rescission
had no relevance to the resolution of the Motion for Judgment Based on the Pleadings. The
CA thus wrongly held that a factual issue on the total liability of the respondent remained to
be settled through trial on the merits. It should have openly wondered why the respondent's
answer in Civil Case No. 09-122116 did not allege the supposed payment of the
P78,401,650.00, if the payment was true, if only to buttress the specific denial of its alleged
liability. The omission exposed the respondent's denial of liability as insincere.
WHEREFORE, the Court REVERSES and SETS ASIDE the decision
promulgated on July 2, 2013; DIRECTS the Regional Trial Court, Branch 1, in Manila to
resume its proceedings in Civil Case No. 09-122116
entitled Fernando Medical Enterprises, Inc. v. Wesleyan University-Philippines, and to
forthwith act on and grant theMotion for Judgment Based on the Pleadings by rendering
the proper judgment on the pleadings; and ORDERS the respondent to pay the costs of
suit. aICcHA
SO ORDERED.
Sereno, C.J., Leonardo-de Castro, Perlas-Bernabe and Jardeleza, * JJ., concur.
Footnotes
*Pursuant to Special Order No. 2311, effective January 16, 2016.
1.Rollo, pp. 91-100; penned by Associate Justice Florito S. Macalino, with the concurrence
of Associate Justice Sesinando E. Villon and Associate Justice Pedro R.
Corales.
2.CA rollo, pp. 106-107.
||| (Fernando Medical Enterprises, Inc. v. Wesleyan University Phils., Inc., G.R. No. 207970,
[January 20, 2016])
 FIRST DIVISION In their Answer with Counterclaim 18 (Answer), petitioners merely stated that
they "specifically deny" 19 the allegations under the complaint. Of particular note is their
denial of the execution of the loan agreement, the PN, and the CSA "for being self-serving
[G.R. No. 187487. June 29, 2015.] and pure conclusions intended to suit [respondent's] purposes." 20By way of special and
affirmative defenses, petitioners argued, among others, that: (a) the real party-in-interest
GO TONG ELECTRICAL SUPPLY CO., INC. and GEORGE C. should be DBS and not respondent; (b) no demand was made upon them; and (c) Go
GO, petitioners, vs. BPI FAMILY SAVINGS BANK, INC., substituted by cannot be held liable under the CSA since there was supposedly no solidarity of
PHILIPPINE INVESTMENT ONE [SPV-AMC], INC., * respondent. debtors. 21 Petitioners further interposed counterclaims for the payment of moral and
exemplary damages, as well as litigation and attorney's fees in the total amount of
P1,250,000.00. 22
During trial, respondent presented Ricardo O. Suñio 23 (Suñio), the Account
DECISION
Officer handling petitioners' loan accounts, as its witness. Sunio attested to the existence
of petitioners' loan obligation in favor of respondent, 24 and identified a Statement of
Account 25 which shows the amount due as of June 16, 2004 as follows:
PERLAS-BERNABE, J p: SUMMARY
Assailed in this petition for review on certiorari 1 are the Decision 2 dated PRINCIPAL P40,491,051.65
February 17, 2009 and the Resolution 3 dated April 13, 2009 of the Court of Appeals (CA)
in CA-G.R. CV No. 86749 which affirmed the Decision 4 dated September 6, 2005 of the PAST DUE INTEREST P31,437,800.28
Regional Trial Court of Makati City, Branch 143 (RTC) in Civil Case No. 02-1203, an action
for collection of sum of money, rendered in favor of respondent BPI Family Savings Bank, PENALTY P47,473,042.27
Inc. (respondent).
———————
The Facts
SUB-TOTAL P119,401,894.20
On October 4, 2002, respondent filed a complaint 5 against petitioners Go Tong
Electrical Supply Co., Inc. (Go Tong Electrical) and its President, George C. Go (Go; PLUS
collectively petitioners), docketed as Civil Case No. 02-1203, seeking that the latter be held
UNPAID INTEREST P1,805,507.21
jointly and severally liable to it for the payment of their loan obligation in the aggregate
amount of P87,086,398.71, inclusive of the principal sum, interests, and penalties as of UNPAID PENALTY P1,776,022.80
May 28, 2002, as well as Attorney's fees, litigation expenses, and costs of suit. 6 As
alleged by respondent, as early as 1996, Go Tong Electrical had applied for and was SUB-TOTAL P122,983,424.21
granted financial assistance by the then Bank of South East Asia (BSA). Subsequently,
DBS 7 Bank of the Philippines, Inc. (DBS) became the successor-in-interest of BSA. The LESS: PAYMENTS -1,877,286.08
application for financial assistance was renewed on January 6, 1999 through a Credit ————————
Agreement. 8 On even date, Go Tong Electrical, represented by Go, among others,
obtained a loan from DBS in the principal amount of P40,491,051.65, for which Go Tong P121,106,138.13 26
Electrical executed Promissory Note No. 82-91-00176-7 9 (PN) for the same amount in
favor of DBS, maturing on February 5, 2000. 10 Under the PN's terms, Go Tong Electrical ==============
bound itself to pay a default penalty interest at the rate of one percent (1%) per month in
addition to the current interest rate, 11 as well as attorney's fees equivalent to twenty-five
percent (25%) of the amount sought to be recovered. 12 As additional security, Go On cross-examination, Suñio nonetheless admitted that he had no knowledge of
executed a Comprehensive Surety Agreement 13 (CSA) covering any and all obligations how the PN was prepared, executed, and signed, nor did he witness its signing. 27
undertaken by Go Tong Electrical, including the aforesaid loan. 14 Upon default of
petitioners, DBS — and later, its successor-in-interest, herein respondent 15 — demanded For their part, petitioners presented Go Tong Electrical's Finance Officer, Jocelyn
payment from petitioners, 16 but to no avail, 17 hence, the aforesaid complaint. CAIHTE Antonette Lim, who testified that Go Tong Electrical was able to pay its loan, albeit partially.
However, she admitted that she does not know how much payments were made, nor does
she have a rough estimate thereof, as these were allegedly paid for in dollars. 28
The RTC Ruling
In a Decision 29 dated September 6, 2005, the RTC ruled in favor of respondent,
thereby ordering petitioners to jointly and severally pay the former: (a) the principal sum of
P40,491,051.65, with legal interest to be reckoned from the filing of the
Complaint; (b) penalty interest of one percent (1%) per month until the obligation is fully
paid; and (c) attorney's fees in the sum of P50,000.00. 30
It found that respondent had amply demonstrated by competent evidence that it
was entitled to the reliefs it prayed for. Particularly, respondent's documentary evidence —
the authenticity of which the RTC observed to be undisputed — showed the existence of
petitioners' valid and demandable obligation. On the other hand, petitioners failed to
discharge the burden of proving that they had already paid the same, even
partially. 31 Further, the RTC debunked petitioners' denial of the demands made by
respondent since, ultimately, the Credit Agreement, PN, and CSA clearly stated that no
demand was needed to render them in default. 32 Likewise, the argument that Go could
not be held solidarily liable was not sustained since he bound himself as a surety under the
CSA, which was executed precisely to induce respondent's predecessor-in-interest, DBS,
to grant the loan. 33 Separately, the RTC found the penalty interest at three percent (3%)
per month sought by respondent to be patently iniquitous and unconscionable and thus,
was reduced to twelve percent (12%) per annum, or one percent (1%) per month.
Attorney's fees were also tempered to the reasonable amount of P50,000.00. 34
Unconvinced, petitioners appealed 35 to the CA.
The CA Ruling
In a Decision 36 dated February 17, 2009, the CA sustained the RTC's ruling in
toto, finding the following facts to be beyond cavil: (a) that Go Tong Electrical applied for
and was granted a loan accommodation from DBS in the amount of P40,491,051.65 after
the execution of the Credit Agreement and the PN dated January 6, 1999, maturing on
February 5, 2000; (b) that as additional security, Go executed the CSA binding himself
jointly and severally to pay the obligation of Go Tong Electrical; and (c) that petitioners
failed to pay the loan obligation upon maturity, despite written demands from then DBS,
now, herein respondent. 37 In this relation, the CA discredited petitioners' argument that
respondent's sole witness, Suñio, was incompetent to testify on the documentary evidence
presented as he had no personal knowledge of the loan documents' execution, 38 given
that petitioners, in their Answer, did not deny under oath the genuineness and due
execution of the PN and CSA and, hence, are deemed admitted under Section 8, Rule 8 of
the Rules of Court (Rules). 39 Besides, the CA observed that, despite the aforesaid
admission, respondent still presented the testimony of Suñio who, having informed the
court that the loan documents were in his legal custody as the designated Account Officer
when DBS merged with herein respondent, had personal knowledge of the existence of the
loan documents. 40 It added that, although he was not privy to the execution of the same, it
does not significantly matter as their genuineness and due execution were already
admitted. 41 DETACa
Petitioners filed a motion for reconsideration, 42 which was, however, denied in a
Resolution 43 dated April 13, 2009, hence, this petition.
The Issue Before the Court
The issue for the Court's resolution is whether or not the CA erred in upholding the
RTC's ruling.
The Court's Ruling
The petition lacks merit.
The Court concurs with the CA Decision holding that the genuineness and due
execution of the loan documents in this case were deemed admitted by petitioners under
the parameters of Section 8, Rule 8 of the Rules which provides:
SEC. 8. How to contest 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 the
requirement of an oath 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)
A reading of the Answer shows that petitioners failed to specifically deny the
execution of the Credit Agreement, PN, and CSA under the auspices of the above-quoted
rule. The mere statement in paragraph 4 of their Answer, i.e., that they "specifically deny"
the pertinent allegations of the Complaint "for being self-serving and pure conclusions
intended to suit plaintiff's purposes," 44 does not constitute an effective specific denial as
contemplated by law. 45 Verily, a denial is not specific simply because it is so qualified by
the defendant. Stated otherwise, a general denial does not become specific by the use of
the word "specifically." 46 Neither does it become so by the simple expedient of coupling
the same with a broad conclusion of law that the allegations contested are "self-serving" or
are intended "to suit plaintiff's purposes."
In Permanent Savings & Loan Bank v. Velarde 47 (Permanent Savings & Loan
Bank), citing the earlier case of Songco v. Sellner, 48 the Court expounded on how to deny
the genuineness and due execution of an actionable document, viz.:
This means that the defendant must declare under oath that he did
not sign the document or that it is otherwise false or fabricated.
Neither does the statement of the answer to the effect that the
instrument was procured by fraudulent representation raise any issue as
to its genuineness or due execution. On the contrary such a plea is an
admission both of the genuineness and due execution thereof, since it
seeks to avoid the instrument upon a ground not affecting
either. 49(Emphasis supplied)
 To add, Section 8, Rule 8 of the Rules further requires that the defendant "sets too is the Court's disquisition in Jison v. CA 55 on the evidentiary burdens attendant in a
forth what he claims to be the facts," which requirement, likewise, remains absent from civil proceeding, to wit: aDSIHc
the Answer in this case.
Simply put, he who alleges the affirmative of the issue has the burden of
Thus, with said pleading failing to comply with the "specific denial under oath" proof, and upon the plaintiff in a civil case, the burden of proof never
requirement under Section 8, Rule 8 of the Rules, the proper conclusion, as arrived at by parts. However, in the course of trial in a civil case, once plaintiff makes
the CA, is that petitioners had impliedly admitted the due execution and genuineness of the out a prima facie case in his favor, the duty or the burden of evidence
documents evidencing their loan obligation to respondent. shifts to defendant to controvert plaintiff'sprima facie case, otherwise, a
verdict must be returned in favor of plaintiff. Moreover, in civil cases, the
To this, case law enlightens that "[t]he admission of the genuineness and due
party having the burden of proof must produce a preponderance of
execution of a document means that the party whose signature it bears admits that he
evidence thereon, with plaintiff having to rely on the strength of his own
voluntarily signed the document or it was signed by another for him and with his authority;
evidence and not upon the weakness of the defendant's. The concept of
that at the time it was signed it was in words and figures exactly as set out in the pleading of
"preponderance of evidence" refers to evidence which is of greater
the party relying upon it; that the document was delivered; and that any formalities required
weight, or more convincing, that which is offered in opposition to it; at
by law, such as a seal, an acknowledgment, or revenue stamp, which it lacks, are waived
bottom, it means probability of truth. 56
by him. Also, it effectively eliminated any defense relating to the authenticity and due
execution of the document, e.g., that the document was spurious, counterfeit, or of Finally, the Court finds as untenable petitioners' theory on Go's supposed
different import on its face as the one executed by the parties; or that the signatures non-liability. As established through the CSA, Go had clearly bound himself as a surety to
appearing thereon were forgeries; or that the signatures were unauthorized." 50 Go Tong Electrical's loan obligation. Thus, there is no question that Go's liability thereto is
solidary with the former. As provided in Article 2047 57 of the Civil Code, "the surety
Accordingly, with petitioners' admission of the genuineness and due execution of
undertakes to be bound solidarily with the principal obligor. That undertaking makes a
the loan documents as above-discussed, the competence of respondent's witness Suñio to
surety agreement an ancillary contract as it presupposes the existence of a principal
testify in order to authenticate the same is therefore of no moment. As the Court similarly
contract. Although the contract of a surety is in essence secondary only to a valid principal
pointed out in Permanent Savings & Loan Bank, "[w]hile Section [20], 51 Rule 132 of the
obligation, the surety becomes liable for the debt or duty of another although it possesses
[Rules] requires that private documents be proved of their due execution and authenticity
no direct or personal interest over the obligations nor does it receive any benefit therefrom.
before they can be received in evidence,i.e., presentation and examination of witnesses to
Let it be stressed that notwithstanding the fact that the surety contract is secondary to the
testify on this fact; in the present case, there is no need for proof of execution and
principal obligation, the surety assumes liability as a regular party to the
authenticity with respect to the loan documents because of respondent's implied
undertaking," 58 as Go in this case.
admission thereof." 52
However, while petitioners' liability has been upheld in this case, the Court finds it
The Court clarifies that while the "[f]ailure to deny the genuineness and due
proper to modify the RTC's ruling, as affirmed by the CA, with respect to the following:
execution of an actionable document does not preclude a party from arguing against it by
evidence of fraud, mistake, compromise, payment, statute of limitations, estoppel and First, the partial payment made by Go Tong Electrical on June 16, 2004 in the
want of consideration [nor] bar a party from raising the defense in his answer or reply and amount of P1,877,286.08, as admitted by respondent through a Statement of
prove at the trial that there is a mistake or imperfection in the writing, or that it does not Account, 59 formally offered as Exhibit "G" and duly identified by Suñio during trial, should
express the true agreement of the parties, or that the agreement is invalid or that there is be deducted from the principal amount of P40,491,051.65 due respondent.
an intrinsic ambiguity in the writing," 53 none of these defenses were adequately argued or
Second, with respect to the interests and penalties:
proven during the proceedings of this case.
(a) petitioners should be held liable for the twenty percent (20%) per annum
Of particular note is the affirmative defense of payment raised during the
stipulated interest rate reckoned 31 days from January 6, 1999, as agreed upon in the
proceedings a quo. While petitioners insisted that they had paid, albeit partially, their loan
PN, 60 until its maturity date on February 5, 2000, which period is regarded as the initial
obligation to respondent, the fact of such payment was never established by petitioners in
period in said PN. Said interest rate should be upheld as this was stipulated by the parties,
this case. Jurisprudence abounds that, in civil cases, one who pleads payment has the
and the rate cannot be considered unconscionable. 61 The same shall be computed based
burden of proving it; the burden rests on the defendant, i.e., petitioners, to prove payment,
on the entire principal amount due, i.e., P40,491,051.65, since the records disclose that
rather than on the plaintiff, i.e., respondent, to prove non-payment. When the creditor is in
the admitted partial payment of P1,877,286.08 was still unpaid before the complaint was
possession of the document of credit, proof of non-payment is not needed for it is
filed on October 4, 2002, 62or before the February 5, 2000 maturity date; and
presumed. 54 Here, respondent's possession of the Credit Agreement, PN, and CSA,
especially with their genuineness and due execution already having been admitted, (b) the reduced interest rate of one percent (1%) per month and penalty rate of
cements its claim that the obligation of petitioners has not been extinguished. Instructive one percent (1%) per month are upheld, 63 but should accrue from the PN's February 5,
 2000 maturity date 64 until June 16, 2004, or the date when the partial payment of
P1,877,286.08 has been made by Go Tong Electrical, and computed based on the entire
principal amount of P40,491,051.65. Interest and penalty, at the same reduced rate, due
thereafter (i.e., from June 17, 2004 until full payment) shall be computed based on the net
amount of P38,613,765.57 (i.e., the amount arrived at after deducting the partial payment
of P1,877,286.08 from the principal amount of P40,491,051.65).
WHEREFORE, the petition is DENIED. The Decision dated February 17, 2009
and the Resolution dated April 13, 2009 of the Court of Appeals in CA-G.R. CV No. 86749
are hereby AFFIRMED with the abovestated MODIFICATIONS.
SO ORDERED.
||| (Go Tong Electrical Supply Co., Inc. v. BPI Family Savings Bank, Inc., G.R. No. 187487,
[June 29, 2015])
 SECOND DIVISION
[G.R. No. 117434. February 9, 2001.]
BENGUET EXPLORATION, INC., petitioner, vs. COURT OF APPEALS,
SWITZERLAND GENERAL INSURANCE, CO., LTD., and SEAWOOD
SHIPPING, INC.,respondents.
Quasha Ancheta Pena & Nolasco for petitioner.
Ricafrente Sanvicente & Cacho Law Firm for private respondent.
Salvacion M. Manalo for respondent Seawood Shipping, Inc.
SYNOPSIS
Petitioner chartered respondent Seawood Shipping to transport its copper
concentrates to Japan. The bill of lading stated that the cargo, consisting of 2,243.496 wet
metric tons of copper concentrates, was loaded on boat Sangkulirang No. 3 at Poro Point, San
Fernando, La Union. It was insured by respondent Switzerland Insurance. When the cargo was
unloaded in Japan, however, petitioner received a report that the cargo was 355 metric tons
short of the amount stated in the bill oflading. Petitioner made a formal demand for the
value of the alleged shortage to private respondents. When both private respondents refused
the demand, petitioner filed separate complaints for damages against respondent Seawood
Shipping and Switzerland Insurance. Switzerland Insurance filed a third party complaint against
Seawood Shipping. After joint trial of the cases, the Regional Trial Court of Makati rendered a
decision dismissing petitioner's complaint as well as Switzerland Insurance's third-party
complaint against Seawood Shipping. On appeal, its decision was affirmed by
the Court of Appeals ruling that petitioner failed to establish the loss or shortage of the subject
cargo.
Hence this petition.
Petitioner Benguet contends that the loss was sufficiently established by documentary
and testimonial evidence, as well as the admissions of private respondents.
The Supreme Court finds no basis for concluding that both the trial court and
the Court of Appeals misappreciated the evidence in this case.
Respondents presented evidence which casts doubt on the veracity of Bill of Lading,
Certificate of Weight, Certificate of Loading, and Mate's Receipt. Switzerland Insurance
presented Export Declaration No. 1131/85 which petitioner's own witness, Rogelio Lumibao,
prepared, in which it was stated that the copper concentrates to be transported to Japan had a
gross weight of only 2,050 wet metric tons or 1,845 dry metric tons, 10 percent more or less. On
the other hand, Certified Adjusters, Inc., to which Switzerland Insurance had referred
petitioner's claim, prepared a report which showed that a total of 2,451.630 wet metric
tons of copper concentrates were delivered at Poro Point. Considering the discrepancies in the
various documents showing the actual amount of copper concentrates transported to Poro
Point and loaded in the vessel, there is no evidence of the exact amount of copper
concentrates shipped. Thus, whatever presumption of regularity in the transactions might have
risen from the genuineness and due execution of said documents was successfully rebutted by
the evidence presented by respondent Switzerland Insurance which showed disparities in the
actual weight of the cargo transported to Poro Point and loaded on the vessel. This fact is
compounded by the admissions of petitioner's own witnesses Rogelio Lumibao and Ernesto
Cayabyab that they had no personal knowledge of the actual amount of copper concentrates
loaded on the vessel.
The decision of the Court of Appeals is affirmed.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS OF THE
TRIAL COURT ACCORDED HIGHEST RESPECT EVEN FINALITY UNLESS
UNSUPPORTED BY EVIDENCE. — It is settled that only questions of law may be raised on
appeal by certiorari under Rule 45. The trial court, having heard the witnesses and observed
their demeanor and manner of testifying, is in a better position to decide the question of their
credibility. Hence, unless the factual findings complained of are not supported by the evidence
on record or the assailed judgment is based on a misapprehension of facts, the findings of the
trial court must be accorded the highest respect, even finality, by thisCourt. It is noteworthy that
the Court of Appeals made the same factual findings as did the trial court.
2. ID.; ID.; HEARSAY EVIDENCE; NO PROBATIVE VALUE UNLESS SHOWN THAT
THE EVIDENCE FALLS WITHIN THE EXCEPTIONS TO HEARSAY EVIDENCE RULE; CASE
AT BAR. — It is evident that petitioners witnesses had no personal knowledge of the actual
weight of copper concentrates loaded on the vessel and discharge in Japan. Lumibao had no
part in the preparation of the Bill of Lading (Exh. A) and the draft survey Report prepared by
OMIC (Exh. B). Nor was he present when the copper concentrates were loaded on the vessel or
when the cargo was unloaded in Japan. He merely relied on the declarations made by other
persons that 2,243.496 wet metric tons were indeed loaded on Sangkulirang No. 3 and that the
cargo was short by 355 metric tons when unloaded in Japan. The same may be said of witness
Cayabyab. While present at the loading site and familiar with the procedure followed in loading
the cargo, he admitted that he could not state for certain that no spillage occurred as his
attention was not at all times focused on the loading operation. Moreover, none of the
documents he identified, i.e., Certificate of Loading, Certificate ofWeight, and Mate's Receipt,
were signed by him. He only witnessed the signing of these documents by other people. Hence,
he was in no position to testify as to the truth or falsify of the figures contained therein. The
testimonies of these witness were thus hearsay. It has been held: Any evidence, whether oral
or documentary, is hearsay if its probative value is not based on the personal knowledge of the
witness but on the knowledge of another person who is not on the witness stand. Hearsay
evidence, whether objected to or not, has no probative value unless the proponent can show
that the evidence falls within the exceptions to the hearsay evidence rule.
3. ID.; ID.; ADMISSIONS OF DUE EXECUTION AND GENUINENESS OF A
DOCUMENTS, CONSTRUED; DEFENDANT NOT BARRED FROM INTRODUCING ANY
DEFENSE ON THE MERITS WHICH DOES NOT CONTRADICT THE EXECUTION OF THE
INSTRUMENT. — The admission of the due execution and genuineness of a document simply
means that "the party whose signature it bears admits that he signed it or that it was signed by
another for him with his authority; that at the time it was signed it was in words and figures
exactly as set out in the pleading of the party relying upon it; that the document was delivered;
and that any formal requisites required by law, such as a seal, an acknowledgement, or
revenue stamp, which it lacks, are waived by him." In another case, we held that "When the law
makes use ofthe phrase genuineness and due execution of the instrument' it means nothing
more than that the instrument is not spurious, counterfeit, or of different import on its face from
the one executed." It is equally true, however, that — Execution can only refer to the actual
making and delivery, but it cannot involve other matters without enlarging its meaning beyond
reason. The only object of the rule was to enable a plaintiff to make out a prima facie, not a
conclusive case, and it cannot preclude a defendant from introducing any defense on the merits
which does not contradict the execution of the instrument introduced in evidence. CcEHaI
4. ID.; ID.; GENUINENESS AND DUE EXECUTION OF DOCUMENTS;
PRESUMPTION OF REGULARITY IN THE TRANSACTIONS MAY BE REBUTTED BY
EVIDENCE TO THE CONTRARY; RECITALS IN THE BILL OF LADING RAISE ONLY A
REBUTTABLE PRESUMPTION THAT THE GOODS WERE DELIVERED. — Considering the
discrepancies in the various documents showing the actual amount of copper concentrates
transported to Poro Point and loaded in the vessels, there is no evidence of the exact
amount of copper concentrates shipped. Thus, whatever presumption of regularity in the
transactions might have risen from the genuineness and due execution of the Bill of Lading,
Certificate of Weight, Certificate of Loading, and Mate's Receipt was successfully rebutted by
the evidence presented by respondent Switzerland Insurance which showed disparities in the
actual weight of the cargo transported to Poro Point and loaded on the vessel. This fact is
compounded by the admissions made by Lumibao and Cayabyab that they had no personal
knowledge of the actual amount of copper concentrates loaded on the vessel. Correctly did
the Court of Appeals rule: In the face of these admissions, appellant's claim of loss or shortage
is placed in serious doubt, there being no other way of verifying the accuracy of the figures
indicated in appellant's documentary evidence that could confirm the alleged loss of 355.736
MT. Notwithstanding the figure stated in Bill of Lading No. PP/0-1 (Exhibit A) that 2,243.496
WMT of copper concentrates was loaded by appellant at the port of origin, it should be stressed
that this is merely prima facie evidence of the receipt by the carrier of said cargo as described
in the bill of lading. Thus, it has been held that recitals in the bill of lading as to the goods
shipped raise only a rebuttable presumption that such goods were delivered for shipment and
as between the consignor and a receiving carrier, the fact must outweigh the recital
(Saludo vs. Court ofAppeals, 207 SCRA 498, 509 [1992]. Resultingly, the admissions elicited
from appellant's witnesses that they could not confirm the accuracy of the figures indicated in
their documentary evidence with regard to the actual weight of the cargo loaded at the
port of origin and that unloaded at the port of destination, in effect rebuts the presumption in
favor of the figure indicated in the bill of lading.
DECISION
MENDOZA, J p:
This is a petition for review on certiorari of the decision, dated June 30, 1994, and
resolution, dated September 29, 1994, of the Court of Appeals 1 which affirmed the
decision of the Regional Trial Court, Branch 149, Makati, dismissing the complaints filed by
petitioner against herein private respondents, and denied petitioner's motion for
reconsideration, respectively.
The background of this case is as follows: AHCTEa
On November 29, 1985, petitioner Benguet Exploration, Inc. (Benguet) filed a
complaint for damages against Seawood Shipping, Inc. (Seawood Shipping) with the Regional
Trial Court of Makati, which was docketed as Civil Case No. 12394 and assigned to Branch
149. 2 On March 4, 1986, petitioner Benguet filed another complaint for damages against
respondent Switzerland General Insurance, Co., Ltd. (Switzerland Insurance), which was
docketed as Civil Case No. 13085 3 and assigned to Branch 148 of the court.
The two cases were consolidated. Switzerland Insurance filed a third-party complaint
against Seawood Shipping, praying that the latter be ordered to indemnify it for whatever might
be adjudged against it in favor of petitioner. 4 Thereafter, the cases were jointly tried, during
which petitioner Benguet presented its employees, Rogelio Lumibao and Ernesto Cayabyab,
as witnesses.
Rogelio Lumibao, marketing assistant of Benguet, was in charge of exportation. His
responsibilities included the documentation of export products, presentations with banks, and
other duties connected with the export of products. He explained that private respondent
Seawood Shipping was chartered by petitioner Benguet to transport copper concentrates. The
bill of lading (Exh. A) stated that the cargo, consisting of 2,243.496 wet metric tons of copper
concentrates, was loaded on boardSangkulirang No. 3 at Poro Point, San Fernando, La Union.
It was insured by Switzerland Insurance (marine insurance policy was marked Exh. C). When
the cargo was unloaded in Japan, however, Rogelio Lumibao received a report (Exh. B), dated
August 19, 1985, from a surveyor in Japan stating that the cargo was 355 metric tons
short of the amount stated in the bill of lading. For this reason, petitioner Benguet made a
claim of the loss to Seawood Shipping and Switzerland Insurance. In its letter, dated August 21,
1985 (Exh. D), petitioner Benguet made a formal demand for the value of the alleged shortage.
As both Seawood Shipping and Switzerland Insurance refused the demand,
petitioner Benguet brought these cases against Seawood Shipping and Switzerland
Insurance. 5
On cross-examination, Lumibao admitted that he did not see the actual loading of the
cargo at Poro Point and that his knowledge was limited to what was contained in the
bill of lading which he received about two days after the loading. Lumibao testified that at Camp
6, Kennon Road, Baguio, the copper concentrates were weighed prior to being transported to
Poro Point, where they were once more weighed before being loaded on the vessel. But again
he admitted that he had not seen the actual weighing and loading of the copper concentrates
because he was not the one in charge of the operation. Nor was he in Japan when the cargo
was unloaded. He also did not know how to perform the procedure for weighing cargo. Thus, he
could not determine the truth or falsity of the contents of the draft survey. He only knew that
there was in fact a shortage based on his reading of the draft report. 6 Further, Lumibao
testified that, although he prepared the export declaration, he did not prepare the bill of lading.
The bill of lading was made on the basis of the draft survey conducted by the Overseas
Merchandise Inspection Co., Ltd. or OMIC. 7 Some other person undertook the weighing of the
cargo, and Lumibao was only informed by telephone of the cargo's weight during its loading
and unloading.
Lumibao had nothing to do with the preparation of the bill of lading, the
weighing of the copper concentrates, and the shipment of the cargo. He did not accompany the
trucks which transferred the cargo from Baguio to Poro Point. He was not on the ship when the
cargo was loaded at Poro Point. Nor did he know if spillage occurred during the loading or
unloading of the copper concentrates.
Lumibao said that the buyer of the copper concentrates was the Brandeis Intsel Co.,
Inc. Upon receipt of the cargo, Brandeis Intsel Co., Inc. paid for the cargo based on its weight in
dry metric tons, or 90 percent more or less of the price of 2,243.496 tons, the weight of the
cargo in wet metric tons. With regard to the insurance policy, he testified that
petitioner Benguet made no objection to any of the terms stated on the face of the policy. 8
Ernesto Cayabyab next testified for petitioner. He had been with Benguet for 13 years
and, at the time of his testimony, he was secretary of Nil Alejandre, manager of Benguet.
According to Cayabyab, on July 28, 1985, he was sent to the warehouse (bodega) at Poro Point,
La Union to assist in the loading of the copper concentrates. These copper concentrates were
to be loaded on the ship Sangkulirang No. 3. Cayabyab said he was present when the cargo
was loaded on the ship, as evidenced by the Certificate of Loading (Exh. E),
Certificate of Weight (Exh. F), and the Mate's Receipt (Exh. G), all dated July 28, 1985.
According to Cayabyab, the Marine Surveyor and the Chief Mate would go around the boat to
determine how much was loaded on the ship. Cayabyab stated that he saw petitioner Benguet's
representative and his immediate superior, Mr. Alejandre, and the Inspector of Customs, Mr.
Cardenas, sign the Certificate of Weight. Cayabyab also witnessed the ship captain sign the
Certificate of Weight, 9 which stated therein that 2,243.496 wet metric tons of copper
concentrates were loaded on the ship. 10 Cayabyab likewise confirmed the authenticity of the
Mate's Receipt, saying that he witnessed the Chief Mate sign the document. 11
When cross-examined, Cayabyab said that, as a secretary, his duties included
computing the company's daily main production in the mine site and accompanying his superior,
Mr. Alejandre, during shipments. He explained that the copper concentrates were transported
by dump trucks from the mining site to Poro Point for over a month, possibly even three to six
months. Cayabyab went to Poro Point on July 27, 1985 to witness the loading of the copper
concentrates on the vessel Sangkulirang No. 3. But the copper concentrates had already been
delivered and stored in a bodega when he arrived. These concentrates were placed on the
cemented ground inside the bodega after their weight was recorded. Describing the procedure
for weighing, he said that the trucks, without the copper concentrates, were weighed. Then,
after they had been loaded with copper concentrates, the trucks were placed in the bodega and
weighed again. To determine the weight of the copper concentrates, the weight of the trucks
was deducted from the weight of the trucks loaded with copper concentrates. The copper
concentrates were then loaded on the ship by means of a conveyor at the average rate of 400
tons an hour. Cayabyab did not know, however, how many trucks were used to load the entire
cargo of the copper concentrates nor did he know exactly how many hours were spent loading
the copper concentrates to the ship. He could only remember that he reported for work in the
morning and that he worked overtime because he had to wait until the loading of the cargo was
finished before he could leave. During the loading, he moved from place to place, and his
attention was sometimes distracted. Thus, he could not tell with certainty that no spillage took
place during the loading. The figureof 2,243.496 wet metric tons was computed by the Marine
Surveyor and the Chief Mate. 12
Respondent Switzerland Insurance then presented its evidence. Three witnesses,
Eduardo Pantoja, Anastacio Fabian, and Edgardo Diño, testified for it.
Eduardo Pantoja, assistant branch manager of respondent Switzerland Insurance in
the Philippines, testified that he prepared the data and conditions of the marine insurance
policy of petitioner Benguet using information furnished by the latter, although some of the
conditions attached to the policy were conditions Switzerland Insurance attached to all the
marine policies issued by it. Pantoja stated that the figure of 2,243.496 wet metric tons
contained in the policy of Benguet was taken from the latter's declaration. Switzerland
Insurance relied on the value of the cargo declared by the insured on the basis of the
principle of uberrimae fidei, i.e., the insured must act in the utmost good faith. 13 One of the
conditions set forth in the marine policy (Exh. 8) was that the "[w]arranted vessel is equipped
with steel centerline bulk head." According to Pantoja, this condition was specifically included in
the policy because the nature of the cargo warranted the same, and Switzerland Insurance
would not have accepted the policy had such condition not been attached. The purpose of the
centerline bulkhead was to prevent the copper concentrates from shifting while being
transported on the ship. Upon verification by Certified Adjusters, Inc., adjusters of Switzerland
Insurance, it was found that the vesselSangkulirang No. 3 did not have a steel centerline
bulkhead. Pantoja identified a letter, dated February 13, 1986, sent by his company to
petitioner Benguet canceling its insurance contract because the carrying vessel was not
equipped with a steel centerline bulkhead as warranted under the policy (Exh. 7-a). Enclosed
was Check No. HSBC 419463 for P98,174.43 representing the refund by Switzerland
Insurance of the premium payments, documentary stamps, and premium taxes paid by
petitionerBenguet (Exh. 7). He testified that Switzerland Insurance paid its legal counsel
P40,000.00 as attorney's fees plus appearance fees. 14
On cross-examination, Pantoja explained that the company had its own
system of determining various rates of insurance. Several factors were taken into consideration,
such as the nature of the goods, the manner by which they were packed, and the
destination of the cargo. For example, Switzerland Insurance would anticipate pilferage if the
cargo involved household goods or, in the case of chemicals, it would consider the
possibility of spillage. Pantoja, however, stated that he did not make any investigation in this
case but used only his previous experience and project knowledge in dealing with similar cases.
He admitted that Switzerland Insurance checked whether the ship had a steel centerline
bulkhead only after a claim had been made by petitioner Benguet. He explained, however, that
it was impossible for them to make the investigation before the execution of the marine policy
because they had only one day to check whether the ship had a steel centerline bulkhead and
the ship at that time was not in Manila but in Poro Point. He reiterated that good faith dealing
with the insured included relying on the truth of the latter's representations. There was little risk
involved in relying on the insured's representations because the company would not have
accepted the risk if it found that the conditions in the policy had not been complied with.
Switzerland Insurance refused Benguet's demand because non-compliance with the condition
that the ship be equipped with a steel centerline bulkhead rendered the marine insurance policy
null and void from the beginning. This is why Switzerland Insurance refunded the premium paid
by petitioner Benguet. Pantoja stated that petitioner Benguet did not claim that the loss was
caused by the shipping of the cargo because it did not know the cause of the shortage. 15
Another witness for Switzerland Insurance was Anastacio Fabian, the marine
manager of Certified Adjusters, Inc. He testified that he went to Poro Point where the shipment
was loaded for transport to Japan. It took him almost two months to finish his investigation and
to come up with a written report (Exh. 12). He prepared a letter, dated January 31, 1986,
seeking a certification from Capt. Jae Jang of Sangkulirang No. 3 on whether the ship was
equipped with a steel centerline bulkhead (Exh. 5). In response thereto, respondent Seawood
Shipping sent a letter, dated February 1, 1986, stating therein that the vessel was not equipped
with a steel centerline bulkhead (Exh. 6). This steel centerline bulkhead was a steel
separation of a vessel for the purpose of preventing the vessel from sinking, especially in heavy
weather. Pictures of the ship were taken by Wise Insurance showing that the vessel did not
have a steel centerline bulkhead (Exhs. 15 to 15-H).
Fabian also identified petitioner Benguet's export declaration (Exh. 11) which provides
therein that the cargo loaded on the ship weighed 2,050 wet metric tons or 1,845 dry metric
tons. 16 On further direct examination, he testified that Certified Adjusters, Inc.'s president, Mr.
Edgardo Diño, wrote a letter, dated January 13, 1986, to the shipping company inquiring as to
the circumstances surrounding the loss of the cargo (Exh. 17). Seawood Shipping responded
to Certified Adjusters, Inc. in a letter, dated January 16, 1986, explaining that the weight of the
cargo might have been increased by the rains which occurred during the loading, and that the
shortage upon unloading might be due to the moisture which evaporated during the voyage
from the Philippines to Japan. Fabian testified that the moisture on the copper concentrates
increased the weight of the cargo.
Fabian said that during his investigation he asked how and when the shipment was
loaded in the vessel and where it was loaded. He also checked records of the loading of the
cargo. Although he admitted that the records show that a shortage of the copper concentrates
had occurred when these reached Japan, he attributed it to the rains which occurred during the
loading of the copper concentrates which increased their weight, although he conceded that it
was not possible that the rains would cause a shortage of around 300 metric tons. He did not
know what could have caused the shortage. 17
The last witness to testify for the defense was Edgardo Diño, president and general
manager of Certified Adjusters, Inc. He testified that his company conducted an investigation
and found that the vessel Sangkulirang No. 3 was not equipped with a steel centerline
bulkhead. The main function of the steel centerline bulkhead was to prevent shifting of the
copper concentrates during transport. If there was no steel centerline bulkhead, the vessel was
liable to sink. He stated that the ship had two holds, one of which was loaded with
petitioner Benguet's copper concentrates and the other with a Lepanto shipment. Diño
identified photographs showing that only a wooden partition separated the two cargoes on both
holds (Exhs. 15-A to 15-G). He testified that his company wrote a letter to the shipping company
inquiring about the shortage which occurred on petitioner Benguet's copper concentrates. He
expressed doubt that the loss of moisture of the copper concentrates caused the shortage
because these were actually mixed with some water to keep them from heating up or to prevent
spontaneous combustion. According to Diño, it was possible that some shifting of the cargo
occurred as indicated by the photographs of the ship. 18 cAEaSC
Based on the evidence presented, the trial court rendered its decision on July 2, 1990
dismissing petitioner's complaint as well as Switzerland Insurance's third-party complaint
against Seawood Shipping.
On appeal, its decision was affirmed by
the Court of Appeals. 19 Petitioner Benguet moved for reconsideration, but its motion was
denied. 20 Hence this petition.
Petitioner Benguet contends that the Court of Appeals gravely erred in ruling that it
failed to establish the loss or shortage of the subject cargo because such loss was sufficiently
established by documentary and testimonial evidence, as well as the admissions of private
respondents. 21 Petitioner argues that documents regarding the tonnage of the copper
concentrates have been properly identified and that the bill of lading (Exh. A), the
Certificate of Weight (Exh. F), and the Mate's Receipt (Exh. G), all of which stated that
2,243.496 wet metric tons of copper concentrates were loaded on the ship, create a prima facie
presumption that such amount was indeed what was loaded on the vessel. Petitioner asserts
that the Draft Survey Report of OMIC (Exh. B) was sufficient evidence to prove that the cargo
which arrived in Japan had a shortage of 355 wet metric tons.
We find petitioner's contentions to be without merit.
First. It is settled that only questions of law may be raised on appeal by certiorari under
Rule 45. The trial court, having heard the witnesses and observed their demeanor and
manner of testifying, is in a better position to decide the question of their credibility. Hence,
unless the factual findings complained of are not supported by the evidence on record or the
assailed judgment is based on a misapprehension of facts, the findings of the trial court must
be accorded the highest respect, even finality, by this Court. 22 It is noteworthy that
the Court of Appeals made the same factual findings as did the trial court. 23
Contrary to this rule, petitioner is raising questions of facts as it seeks an
evaluation of the evidence presented by the parties. However, we find no basis for concluding
that both the trial court and the Court of Appeals misappreciated the evidence in this case. To
the contrary, we find that petitioner failed to present evidence to prove that the weight of the
copper concentrates actually loaded on the ship Sangkulirang No. 3 was 2,243.496 wet metric
tons and that there was a shortage of 355 metric tons when the cargo was discharged in Japan.
Petitioner's own witness, Rogelio Lumibao, admitted that he was not present at the
actual loading of the cargo at Poro Point, his information being limited to what was contained in
the bill of lading. As he was not in charge of the operation, he did not see the actual weighing
and loading of the copper concentrates. Nor did he prepare the bill of lading. He only verified A We were advised by the OMIC surveyor that the weight was loaded.
the weight of the cargo, from the time it was loaded on the ship to the time it was unloaded in
Japan, through the telephone. Neither was he present when the cargo was discharged in Q Did you personally verify if these figures are true?
Japan. 24 Thus, Lumibao testified: A Yes, by phone.
Q Now Exhibit A is a bill of lading which you identified? Q Did you participate in weighing?
A Yes, sir. A No, sir. Just by phone.
Q Do you have anything to do in the preparation of this bill of lading? Q In other words somebody else made the weighing not you?
A None, sir. A Yes, sir.
Q In other words, you did not verify if the weight stated in the bill of lading Q Did you personally do the verification of the actual weight loaded in the
was the actual weight of the copper concentrate loaded in the ship?
ship of the defendant Seawood Shipping Inc.?
xxx xxx xxx
xxx xxx xxx.
A Yes, sir by phone.
A The bill of lading is prepared on the basis of the draft survey. That is the
procedure. Q So you are informed [of] the weight actually loaded by phone?

Q And who undertakes the draft survey? A Yes, sir.

A For that particular shipment we required or hired the services of OMIC. Q Do you always verify by phone?

Q In other words, your draft survey is from the point of origin to Poro Point A That is only preliminary, while waiting what is the concluding things. (sic)
up to the point of destination, Onahama, Japan, was done by That is after the surveyor has submitted the report to us.
OMIC?
Q So in other words, all the time you have been basing your testimony on
A Yes, sir. reports prepared by other person?

Q And you have nothing to do with OMIC? A Yes, sir.

A None, sir. Q In fact, you have nothing to do with the preparation of the Bill of Lading?

Q You are not an employee of OMIC? A Yes, sir.

A No, sir. Q You have nothing to do with the weighing of the copper
concentrate? . . . . You have nothing to do [with] the
Q Are you connected with it in any way? transport of the copper concentrate from Camp 6, Baguio to Poro
A No, sir. Point?

Q In the Bill of Lading, you identified this document a xerox copy of the A None, sir.
supposed original Bill of Lading and marked as Exh. A, are the Q You did not even accompany the truck?
wordings and figures "copper concentrate 2,243.496 WMT" this
means weight per metric ton? A No, sir.

A Yes, sir. Q You were not at the shipside when this copper concentrate was loaded?

Q Did you have it [verified] if this was the actual weight loaded on the A No, sir.
ship of the defendant Seawood, Shipping, Inc.?
 Q You did not know whether there was spillage when or while loading
copper concentrates?
A Yes, sir.
Q Neither were you on the ship on its way to Japan, were you?
A No, sir.
Q You were not at Onahama, Japan, the port of destination?
A No, sir. 25
On the other hand, Ernesto Cayabyab testified that he was at Poro Point when the
copper concentrates were being loaded on the ship. Although he was present when the
Certificate of Loading (Exh. E), Certificate of Weight (Exh. F), and the Mate's Receipt (Exh. G)
were signed at the loading site, 26 he admitted that he could not say for certain that no spillage
occurred during the loading of the cargo on the ship because his attention was not on the cargo
at all times. 27
It is evident that petitioner's witnesses had no personal knowledge of the actual
weight of copper concentrates loaded on the vessel and discharged in Japan. Lumibao had no
part in the preparation of the bill of lading (Exh. A) and the Draft Survey Report prepared by
OMIC (Exh. B). Nor was he present when the copper concentrates were loaded on the vessel or
when the cargo was unloaded in Japan. He merely relied on the declarations made by other
persons that 2,243.496 wet metric tons were indeed loaded on Sangkulirang No. 3and that the
cargo was short by 355 metric tons when unloaded in Japan. The same may be said of witness
Cayabyab. While present at the loading site and familiar with the procedure followed in loading
the cargo, he admitted that he could not state for certain that no spillage occurred as his
attention was not at all times focused on the loading operation. Moreover, none of the
documents he identified, i.e., Certificate of Loading, Certificate ofWeight, and Mate's Receipt,
were signed by him. He only witnessed the signing of these documents by other people. Hence,
he was in no position to testify as to the truth or falsity of the figures contained therein. The
testimonies of these witnesses were thus hearsay. It has been held:
Any evidence, whether oral or documentary, is hearsay if its
probative value is not based on the personal knowledge of the witness but
on the knowledge ofanother person who is not on the witness stand.
Hearsay evidence, whether objected to or not, has no probative value
unless the proponent can show that the evidence falls within the
exceptions to the hearsay evidence rule. 28
Second. Petitioner contends that the genuineness and due execution of the
documents presented, i.e., Bill of Lading, Certificate of Loading, Certificate of Weight, Mate's
Receipt, were properly established by the testimony of its witness, Ernesto Cayabyab, and that
as a result, there is a prima facie presumption that their contents are true.
This contention has no merit. The admission of the due execution and
genuineness of a document simply means that "the party whose signature it bears admits that
he signed it or that it was signed by another for him with his authority; that at the time it was
signed it was in words and figures exactly as set out in the pleading ofthe party relying upon it;
that the document was delivered; and that any formal requisites required by law, such as a seal,
an acknowledgment, or revenue stamp, which it lacks, are waived by him." 29 In another case,
we held that "When the law makes use of the phrase 'genuineness and due execution of the
instrument' it means nothing more than that the instrument is not spurious, counterfeit,
or of different import on its face from the one executed." 30 It is equally true, however, that —
Execution can only refer to the actual making and delivery, but it
cannot involve other matters without enlarging its meaning beyond reason.
The only object ofthe rule was to enable a plaintiff to make out a prima
facie, not a conclusive case, and it cannot preclude a defendant from
introducing any defense on the merits which does not contradict the
execution of the instrument introduced in evidence. 31
In this case, respondents presented evidence which casts doubt on the
veracity of these documents. Respondent Switzerland Insurance presented Export Declaration
No. 1131/85 (Exh. 11) 32 which petitioner's own witness, Rogelio Lumibao, prepared, 33 in
which it was stated that the copper concentrates to be transported to Japan had a gross
weight of only 2,050 wet metric tons or 1,845 dry metric tons, 10 percent more or less. 34 On
the other hand, Certified Adjusters, Inc., to which Switzerland Insurance had referred
petitioner's claim, prepared a report which showed that a total of 2,451.630 wet metric
tons of copper concentrates were delivered at Poro Point. 35 As the report stated:
It is to be pointed out that there were no actual weighing made
at Benguet Exploration, Inc.'s site. The procedure done was that after
weighing the trucks before and after unloading at Philex Poro Point
Installation, the weight of the load was determined and entered on "Philex"
Trip Ticket which was later on copied and entered by the truck driver
on Benguet Exploration, Inc.'s Transfer Slip. 36
Considering the discrepancies in the various documents showing the actual
amount of copper concentrates transported to Poro Point and loaded in the vessel, there is no
evidence of the exact amount of copper concentrates shipped. Thus, whatever
presumption of regularity in the transactions might have risen from the genuineness and due
execution of the Bill of Lading, Certificate of Weight, Certificate of Loading, and Mate's Receipt
was successfully rebutted by the evidence presented by respondent Switzerland Insurance
which showed disparities in the actual weight of the cargo transported to Poro Point and loaded
on the vessel. This fact is compounded by the admissions made by Lumibao and Cayabyab
that they had no personal knowledge of the actual amount of copper concentrates loaded on
the vessel. Correctly did the Court of Appeals rule:
In the face of these admissions, appellant's claim of loss or
shortage is placed in serious doubt, there being no other way of verifying
the accuracy of the figures indicated in appellant's documentary evidence
that could confirm the alleged loss of 355.736 MT. Notwithstanding the
figure stated in Bill of Lading No. PP/0-1 (Exhibit A) that 2,243.496
WMT of copper concentrates was loaded by appellant at the port of origin,
it should be stressed that this is merely prima facie evidence of the receipt
 by the carrier of said cargo as described in the bill of lading. Thus, it has
been held that recitals in the bill of lading as to the goods shipped raise
only a rebuttable presumption that such goods were delivered for shipment
and as between the consignor and a receiving carrier, the fact must
outweigh the recital (Saludo vs. Court ofAppeals, 207 SCRA 498, 509
[1992]). Resultingly, the admissions elicited from appellant's witnesses
that they could not confirm the accuracy of the figures indicated in their
documentary evidence with regard to the actual weight of the cargo loaded
at the port of origin and that unloaded at the port of destination, in effect
rebuts the presumption in favor of the figure indicated in the
bill of lading. 37

WHEREFORE, the decision of the Court of Appeals is AFFIRMED.

SO ORDERED.

||| (Benguet Exploration, Inc. v. Court of Appeals, G.R. No. 117434, [February 9, 2001], 404
PHIL 270-289)
 SECOND DIVISION
Becthel Overseas Corporation (Becthel). In its answer, ACDC admitted its indebtedness to
MEC in the amount of P5,071,335.86 but alleged the following special and affirmative defenses:
[G.R. No. 160242. May 17, 2005.]
ASIAN CONSTRUCTION AND DEVELOPMENT
CORPORATION, petitioner, vs. COURT OF APPEALS and MONARK
EQUIPMENT CORPORATION,respondents.
DECISION
alleged that:
CALLEJO, SR., J p:
On March 13, 2001, Monark Equipment Corporation (MEC) filed a Complaint 1 for a
sum of money with damages against the Asian Construction and Development Corporation
(ACDC) with the Regional Trial Court (RTC) of Quezon City. The complaint alleged the
following: ACDC leased Caterpillar generator sets and Amida mobile floodlighting systems from
MEC during the period of March 13 to July 15, 1998 but failed, despite demands, to pay the
rentals therefor in the total amount of P4,313,935.00; from July 14 to August 25, 1998, various
equipments from MEC were, likewise, leased by ACDC for the latter's power plant in Mauban,
Quezon, and that there was still a balance of P456,666.67; and ACDC also purchased and took
custody of various equipment parts from MEC for the agreed price of P237,336.20 which,
despite demands, ACDC failed to pay.
MEC prayed that judgment be rendered in its favor, thus:
1. Ordering defendant to pay the plaintiff the total amount of FIVE MILLION
SEVENTY-ONE THOUSAND THREE HUNDRED THIRTY-FIVE
[PESOS] & 86/100 (P5,071,335.86);
2. Ordering defendant to pay the plaintiff legal interest of 12% per annum
on the principal obligations in the total amount of FIVE MILLION
SEVENTY-ONE THOUSAND THREE HUNDRED THIRTY-FIVE
[PESOS] & 86/100 (P5,071,335.86) computed from the date the
obligations became due until fully paid;
3. Ordering defendant to pay attorney's fees in the amount equivalent to 15%
of the amount of claim;
4. Ordering defendant to pay all costs of litigation.
Plaintiff prays for such other reliefs as may be just and equitable under the premises. 2
ACDC filed a motion to file and admit answer with third-party complaint against
5. Defendant has incurred an obligation with plaintiff, in the amount of
P5,071,335.86. But third-party defendant fails and refuses to pay
its overdue obligation in connection with the leased equipment
used by defendant to comply with its contracted services;
6. The equipment covered by the lease were all used in the construction
project of Becthel in Mauban, Quezon, and Expo in Pampanga
and defendant was not yet paid of its services that resulted to the
non-payment of rentals on the leased equipment. 3
And by way of third-party complaint against Becthel as third-party defendant, ACDC
7. Third-party plaintiff repleads the foregoing allegations in the preceding
paragraphs as may be material and pertinent hereto;
8. Third-party BECTHEL OVERSEAS CORPORATION (herein called
"Becthel") is a corporation duly organized and existing under the
laws of the United States of America but may be served with
summons at Barangay Cagsiay I, Mauban, Quezon 4330,
Philippines;
9. Third-party defendant Becthel contracted the services of third-party
plaintiff to do construction work at its Mauban, Quezon project
using the leased equipment of plaintiff Monark;
10. With the contracted work, third-party plaintiff rented the equipment of
the plaintiff Monark;
11. Third-party plaintiff rendered and complied with its contracted works
with third-party defendant using plaintiff's (Monark) rented
equipment. But, third-party defendant BECTHEL did not pay for
the services of third-party plaintiff ASIAKONSTRUKT that
resulted to the non-payment of plaintiff Monark's claim;
12. Despite repeated demands, third-party defendant failed and refused to
pay its overdue obligation to third-party plaintiff
ASIAKONSTRUKT, and third-party defendant needs to be
impleaded in this case for contribution, indemnity, subrogation or
other reliefs to off-set or to pay the amount of money claim of
plaintiff Monark on the leased equipment used in the Mauban,
Quezon project in the total amount of P456,666.67;
13. By reason thereof, third-party plaintiff was compelled to prosecute its
claim against third-party defendant and hired the services of
undersigned counsel for an attorney's fees of P500,000.00. 4
 ACDC prayed that judgment be rendered in its favor dismissing the complaint and
ordering the third-party defendant (Becthel) to pay P456,666.67 plus interest thereon and
attorney's fees. 5
MEC opposed the motion of ACDC to file a third-party complaint against Becthel on
the ground that the defendant had already admitted its principal obligation to MEC in the
amount of P5,071,335.86; the transaction between it and ACDC, on the one hand, and between
ACDC and Becthel, on the other, were independent transactions. Furthermore, the allowance
of the third-party complaint would result in undue delays in the disposition of the case. 6
MEC then filed a motion for summary judgment, alleging therein that there was no
genuine issue as to the obligation of ACDC to MEC in the total amount of P5,071,335.86, the
only issue for the trial court's resolution being the amount of attorney's fees and costs of
litigation. 7
ACDC opposed the motion for summary judgment, alleging that there was a genuine
issue with respect to the amount of P5,071,335.86 being claimed by MEC, and that it had a
third-party complaint against Becthel in connection with the reliefs sought against it which had
to be litigated. 8
In its reply, MEC alleged that the demand of ACDC in its special and affirmative
defenses partook of the nature of a negative pregnant, and that there was a need for a hearing
on its claim for damages. aETDIc
On August 2, 2001, the trial court issued a Resolution denying the motion of ACDC for
leave to file a third-party complaint and granting the motion of MEC, which the trial court
considered as a motion for a judgment on the pleadings. The fallo of the resolution reads:
ACCORDINGLY, this Court finds defendant Asian Construction
and Development Corporation liable to pay plaintiff Monark Equipment
Corporation and is hereby ordered to pay plaintiff the amount of FIVE
MILLION SEVENTY-ONE THOUSAND AND THREE HUNDRED
THIRTY-FIVE & 86/100 PESOS (P5,071,335.86) plus 12% interest from
the filing of the complaint until fully paid.
SO ORDERED. 9
ACDC appealed the resolution to the Court of Appeals (CA), alleging that —
I. THE LOWER COURT ERRED IN DENYING THE MOTION TO FILE
AND ADMIT ANSWER WITH THIRD-PARTY COMPLAINT;
II. THE LOWER COURT ERRED IN GRANTING THE MOTION FOR
SUMMARY JUDGMENT;
III. THE LOWER COURT ERRED WHEN IT DENIED THE THIRD-PARTY
COMPLAINT AND ORDERED DEFENDANT TO PAY THE
AMOUNT OF P5,071,335.86 PLUS INTEREST OF 12% PER
ANNUM. 10
On July 18, 2001, the CA rendered judgment dismissing the appeal and affirming the
assailed decision. The appellate court ruled that since MEC had prayed for judgment on the
pleadings, it thereby waived its claim for damages other than the amount of P5,071,335.86;
hence, there was no longer a genuine issue to be resolved by the court which necessitated trial.
The appellate court sustained the disallowance of the third-party complaint of ACDC against
Becthel on the ground that the transaction between the said parties did not arise out of the
same transaction on which MEC's claim was based.
Its motion for reconsideration of the decision having been denied, ACDC, now the
petitioner, filed the present petition for review on certiorari, and raises the following issues:
I. WHETHER OR NOT A THIRD-PARTY COMPLAINT IS PROPER; AND
II. WHETHER OR NOT JUDGMENT ON THE PLEADINGS IS
PROPER. 11
Citing the rulings of this Court in Allied Banking Corporation v. Court of
Appeals 12 and British Airways v. Court of Appeals, 13 the petitioner avers that the CA erred in
ruling that in denying its motion for leave to file a third-party complaint, the RTC acted in
accordance with the Rules of Court and case law. The petitioner maintains that it raised
genuine issues in its answer; hence, it was improper for the trial court to render judgment on the
pleadings:
With due respect, the judgment on the pleadings affirmed by the
Court of Appeals is not, likewise, proper considering that the Answer with
Third-Party Complaint, although it admitted the obligation to respondent,
tendered an issue of whether the respondent's claim is connected with the
third-party claim.
As alleged in the Answer with Third-Party Complaint, it is
admitted then by respondent, for purposes of judgment on the pleadings,
that failure to pay respondent was in connection of Becthel Overseas
Corporation's failure to pay its obligation to petitioner and that the
equipment leased was used in connection with the Becthel Overseas
Corporation project.
This tendered issue could not just be disregarded in the light of
the third-party complaint filed by herein petitioner and third-party plaintiff
which, as argued in the first discussion/argument, is proper and should
have been given due course. 14
The petition is denied for lack of merit.
Section 11, Rule 6 of the Rules of Court provides:
Sec. 11. Third (fourth, etc.)-party complaint. — A third (fourth, etc.)
— party complaint is a claim that a defending party may, with leave of court,
file against a person not a party to the action, called the third (fourth, etc.)
— party defendant, for contribution, indemnity, subrogation or any other
relief, in respect of his opponent's claim.
 Furthermore, Section 1, Rule 34 of the Rules of Court provides that the Court may
render judgment on the pleadings, as follows:
Section 1. Judgment on the pleadings. — Where an answer fails
to tender an issue, or, otherwise, admits the material allegations of the
adverse party's pleading, the court may, on motion of that party, direct
judgment on such pleading. However, in actions for declaration of nullity or
annulment of marriage or for legal separation, the material facts alleged in
the complaint shall always be proved. DcIHSa
The purpose of Section 11, Rule 6 of the Rules of Court is to permit a defendant to
assert an independent claim against a third-party which he, otherwise, would assert in another
action, thus preventing multiplicity of suits. All the rights of the parties concerned would then be
adjudicated in one proceeding. This is a rule of procedure and does not create a substantial
right. Neither does it abridge, enlarge, or nullify the substantial rights of any litigant. 15 This
right to file a third-party complaint against a third-party rests in the discretion of the trial court.
The third-party complaint is actually independent of, separate and distinct from the plaintiff's
complaint, such that were it not for the rule, it would have to be filed separately from the original
complaint. 16
A prerequisite to the exercise of such right is that some substantive basis for a
third-party claim be found to exist, whether the basis be one of indemnity, subrogation,
contribution or other substantive right. 17 The bringing of a third-party defendant is proper if he
would be liable to the plaintiff or to the defendant or both for all or part of the plaintiff's claim
against the original defendant, although the third-party defendant's liability arises out of another
transaction. 18 The defendant may implead another as third-party defendant (a) on an
allegation of liability of the latter to the defendant for contribution, indemnity, subrogation or any
other relief; (b) on the ground of direct liability of the third-party defendant to the plaintiff; or (c)
the liability of the third-party defendant to both the plaintiff and the defendant. 19 There must be
a causal connection between the claim of the plaintiff in his complaint and a claim for
contribution, indemnity or other relief of the defendant against the third-party defendant.
In Capayas v. Court of First Instance, 20 the Court made out the following tests: (1) whether it
arises out of the same transaction on which the plaintiff's claim is based; or whether the
third-party claim, although arising out of another or different contract or transaction, is
connected with the plaintiff's claim; (2) whether the third-party defendant would be liable to the
plaintiff or to the defendant for all or part of the plaintiff's claim against the original defendant,
although the third-party defendant's liability arises out of another transaction; and (3) whether
the third-party defendant may assert any defenses which the third-party plaintiff has or may
have to the plaintiff's claim.
The third-party complaint does not have to show with certainty that there will be
recovery against the third-party defendant, and it is sufficient that pleadings show possibility of
recovery. 21 In determining the sufficiency of the third-party complaint, the allegations in the
original complaint and the third-party complaint must be examined. 22 A third-party complaint
must allege facts which prima facie show that the defendant is entitled to contribution,
indemnity, subrogation or other relief from the third-party defendant. 23
It bears stressing that common liability is the very essence for contribution.
Contribution is a payment made by each, or by any of several having a common liability of his
share in the damage suffered or in the money necessarily paid by one of the parties in behalf of
the other or others. 24 The rule on common liability is fundamental in the action for
contribution. 25 The test to determine whether the claim for indemnity in a third-party complaint
is, whether it arises out of the same transaction on which the plaintiff's claim is based, or the
third-party plaintiff's claim, although arising out of another or different contract or transaction, is
connected with the plaintiff's claim. 26
In this case, the claims of the respondent, as plaintiff in the RTC, against the petitioner
as defendant therein, arose out of the contracts of lease and sale; such transactions are
different and separate from those between Becthel and the petitioner as third-party plaintiff for
the construction of the latter's project in Mauban, Quezon, where the equipment leased from the
respondent was used by the petitioner. The controversy between the respondent and the
petitioner, on one hand, and that between the petitioner and Becthel, on the other, are thus
entirely distinct from each other. There is no showing in the proposed third-party complaint that
the respondent knew or approved the use of the leased equipment by the petitioner for the said
project in Quezon. Becthel cannot invoke any defense the petitioner had or may have against
the claims of the respondent in its complaint, because the petitioner admitted its liabilities to the
respondent for the amount of P5,075,335.86. The barefaced fact that the petitioner used the
equipment it leased from the respondent in connection with its project with Becthel does not
provide a substantive basis for the filing of a third-party complaint against the latter. There is no
causal connection between the claim of the respondent for the rental and the balance of the
purchase price of the equipment and parts sold and leased to the petitioner, and the failure of
Becthel to pay the balance of its account to the petitioner after the completion of the project in
Quezon. 27
We note that in its third-party complaint, the petitioner alleged that Becthel should be
ordered to pay the balance of its account of P456,666.67, so that the petitioner could pay the
same to the respondent. However, contrary to its earlier plea for the admission of its third-party
complaint against Becthel, the petitioner also sought the dismissal of the respondent's
complaint. The amount of P456,666.67 it sought to collect from Becthel would not be remitted to
the respondent after all.
The rulings of this Court in Allied Banking Corporation and British Airways are not
applicable in this case since the factual backdrops in the said cases are different.
In Allied Banking Corporation, Joselito Yujuico obtained a loan from General Bank and
Trust Company. The Central Bank of the Philippines ordered the liquidation of the Bank. In a
Memorandum Agreement between the liquidation of the Bank and Allied Banking Corporation,
the latter acquired the receivables from Yujuico. Allied Banking Corporation then sued Yujuico
for the collection of his loan, and the latter filed a third-party complaint against the Central Bank,
alleging that by reason of its tortious interference with the affairs of the General Bank and Trust
Company, he was prevented from performing his obligation under the loan. This Court allowed
the third-party complaint based on the claim of the defendant therein, thus:
. . . In the words of private respondent, he "[s]eeks to transfer
liability for the default imputed against him by the petitioner to the proposed
 third-party defendants because of their tortious acts which prevented him
from performing his obligations." Thus, if at the outset the issue appeared
to be a simple maker's liability on a promissory note, it became complex by
the rendition of the aforestated decision. 28
In British Airways, the Court allowed the third-party complaint of British Airways
against its agent, the Philippine Airlines, on the plaintiff's complaint regarding his luggage,
considering that a contract of carriage was involved. The Court ruled, thus:
Considering that the petitioner admitted its liability for the principal claim of the
respondent in its Answer with Third-Party Complaint, the trial court did not err in rendering
judgment on the pleadings against it.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs
against the petitioner.
SO ORDERED.

Undeniably, for the loss of his luggage, Mahtani is entitled to ||| (Asian Construction and Development Corp. v. Court of Appeals, G.R. No. 160242, [May 17,
damages from BA, in view of their contract of carriage. Yet, BA adamantly 2005], 498 PHIL 36-48)
disclaimed its liability and instead imputed it to PAL which the latter
naturally denies. In other words, BA and PAL are blaming each other for
the incident.

In resolving this issue, it is worth observing that the contract of air

transportation was exclusively between Mahtani and BA, the latter merely
endorsing the Manila to Hongkong leg of the former's journey to PAL, as its
subcontractor or agent. In fact, the fourth paragraph of the "Conditions of
Contracts" of the ticket issued by BA to Mahtani confirms that the contract
was one of continuous air transportation from Manila to Bombay.

"4. . . . carriage to be performed hereunder by several successive

carriers is regarded as a single operation."

Prescinding from the above discussion, it is undisputed that PAL,

in transporting Mahtani from Manila to Hongkong acted as the agent of BA.

Parenthetically, the Court of Appeals should have been cognizant

of the well-settled rule that an agent is also responsible for any negligence
in the performance of its function and is liable for damages which the
principal may suffer by reason of its negligent act. Hence, the Court of
Appeals erred when it opined that BA, being the principal, had no cause of
action against PAL, its agent or sub-contractor. AcTDaH

Also, it is worth mentioning that both BA and PAL are members of

the International Air Transport Association (IATA), wherein member
airlines are regarded as agents of each other in the issuance of the tickets
and other matters pertaining to their relationship. Therefore, in the instant
case, the contractual relationship between BA and PAL is one of agency,
the former being the principal, since it was the one which issued the
confirmed ticket, and the latter the agent. 29

It goes without saying that the denial of the petitioner's motion with leave to file a
third-party complaint against Becthel is without prejudice to its right to file a separate complaint
against the latter.
 SECOND DIVISION
[G.R. No. 199990. February 4, 2015.]
SPOUSES ROLANDO and HERMINIA SALVADOR, petitioners, vs.
SPOUSES ROGELIO AND ELIZABETH RABAJA and ROSARIO
GONZALES, respondents.
DECISION
MENDOZA, J p:
This is a petition for review on certiorari seeking to reverse and set aside the August
22, 2011 Decision 1 and the January 5, 2012 Resolution 2 of the Court of Appeals (CA) in
CA-G.R. CV No. 90296 which affirmed with modification the March 29, 2007 Decision of the
Regional Trial Court Branch 214 (RTC-Branch 214),Mandaluyong City in Civil Case No.
MC-03-2175, for rescission of a contract (rescission case).
The Facts
This case stemmed from a dispute involving the sellers, petitioner spouses Rolando
and Herminia Salvador (Spouses Salvador); the sellers' agent, Rosario
Gonzales (Gonzales); and the buyers, respondent Spouses Rogelio and
Elizabeth Rabaja (Spouses Rabaja), over a parcel of land situated at No. 25, Merryland Village,
375 Jose Rizal Street, Mandaluyong City (subject property), covered by Transfer Certificate of
Title (TCT) No. 13426 and registered in the names of Spouses Salvador. From 1994 until 2002,
Spouses Rabaja were leasing an apartment in the subject lot.
Sometime in July 1998, Spouses Rabaja learned that Spouses Salvador were looking
for a buyer of the subject property. Petitioner Herminia Salvador (Herminia)personally
introduced Gonzales to them as the administrator of the said property. Spouses Salvador even
handed to Gonzales the owner's duplicate certificate of title over the subject property. On July,
3, 1998, Spouses Rabaja made an initial payment of P48,000.00 to Gonzales in the presence
of Herminia. Gonzales then presented the Special Power of Attorney 3 (SPA), executed by
Rolando Salvador (Rolando) and dated July 24, 1998. On the same day, the parties executed
the Contract to Sell 4which stipulated that for a consideration of P5,000,000.00,
Spouses Salvador sold, transferred and conveyed in favor of Spouses Rabaja the subject
property. SpousesRabaja made several payments totalling P950,000.00, which were received
by Gonzales pursuant to the SPA provided earlier as evidenced by the check vouchers signed
by Gonzales and the improvised receipts signed by Herminia.
Sometime in June 1999, however, Spouses Salvador complained to
Spouses Rabaja that they did not receive any payment from Gonzales. This prompted
SpousesRabaja to suspend further payment of the purchase price; and as a consequence, they
received a notice to vacate the subject property from Spouses Salvador for non-payment of
rentals.
Thereafter, Spouses Salvador instituted an action for ejectment against
Spouses Rabaja. In turn, Spouses Rabaja filed an action for rescission of contract against
Spouses Salvador and Gonzales, the subject matter of the present petition.
In the action for ejectment, the complaint was filed before the Metropolitan Trial Court
of Mandaluyong City, Branch 60 (MeTC), where it was docketed as Civil Case No. 17344. In its
August 14, 2002 Decision, 5 the MeTC ruled in favor of Spouses Salvador finding that valid
grounds existed for the eviction of Spouses Rabaja from the subject property and ordering
them to pay back rentals. Spouses Salvador were able to garnish the amount of
P593,400.00 6 from Spouses Rabaja's time deposit account pursuant to a writ of execution
issued by the MeTC. 7 Spouses Rabaja appealed to the Regional Trial Court, Branch 212,
Mandaluyong City (RTC-Br. 212) which reversed the MeTC ruling in its March 1, 2005
decision. 8 The RTC-Br. 212 found that no lease agreement existed between the parties.
Thereafter, Spouses Salvador filed an appeal with the CA which was docketed as CA-G.R. SP
No. 89259. On March 31, 2006, the CA ruled in favor of Spouses Salvador and reinstated the
MeTC ruling ejecting Spouses Rabaja. 9 Not having been appealed, the CA decision in
CA-G.R. SP No. 89259 became final and executory on May 12, 2006. 10 CcHDaA
Meanwhile, the rescission case filed by Spouses Rabaja against
Spouses Salvador and Gonzales and docketed as Civil Case No. MC No. 03-2175 was also
raffled to RTC-Br. 212. In their complaint, 11 dated July 7, 2003, Spouses Rabaja demanded
the rescission of the contract to sell praying that the amount of P950,000.00 they previously
paid to Spouses Salvador be returned to them. They likewise prayed that damages be awarded
due to the contractual breach committed by SpousesSalvador.
Spouses Salvador filed their answer with counterclaim and cross-claim 12 contending
that there was no meeting of the minds between the parties and that the SPA in favor of
Gonzales was falsified. In fact, they filed a case for falsification against Gonzales, but it was
dismissed because the original of the alleged falsified SPA could not be produced. They further
averred that they did not receive any payment from Spouses Rabaja through Gonzales. In her
defense, Gonzales filed her answer 13stating that the SPA was not falsified and that the
payments of Spouses Rabaja amounting to P950,000.00 were all handed over to
Spouses Salvador.
The pre-trial conference began but attempts to amicably settle the case were
unsuccessful. It was formally reset to February 4, 2005, but Spouses Salvador and their
counsel failed to attend. Consequently, the RTC issued the pre-trial order 14 declaring
Spouses Salvador in default and allowing Spouses Rabaja to present their evidence ex
parte against Spouses Salvador and Gonzales to present evidence in her favor.
A motion for reconsideration, 15 dated March 28, 2005, was filed by
Spouses Salvador on the said pre-trial order beseeching the liberality of the court. The
rescission case was then re-raffled to RTC-Br. 214 after the Presiding Judge of RTC-Br. 212
inhibited herself. In the Order, 16 dated October 24, 2005, the RTC-Br. 214 denied the motion
for reconsideration because Spouses Salvador provided a flimsy excuse for
non-appearance in the pre-trial conference.
Thereafter, trial proceeded and Spouses Rabaja and Gonzales presented their
respective testimonial and documentary evidence.
RTC Ruling
On March 29, 2007, the RTC-Br. 214 rendered a decision 17 in favor of
Spouses Rabaja. It held that the signature of Spouses Salvador affixed in the contract to sell
appeared to be authentic. It also held that the contract, although denominated as "contract to
sell," was actually a contract of sale because Spouses Salvador, as vendors, did not reserve
their title to the property until the vendees had fully paid the purchase price. Since the contract
entered into was a reciprocal contract, it could be validly rescinded by Spouses Rabaja, and in
the process, they could recover the amount of P950,000.00 jointly and severally from
Spouses Salvador and Gonzales. The RTC stated that Gonzales was undoubtedly the
attorney-in-fact of Spouses Salvador absent any taint of irregularity. Spouses Rabaja could not
be faulted in dealing with Gonzales who was duly equipped with the SPA from
Spouses Salvador.
The RTC-Br. 214 then ruled that the amount of P593,400.00 garnished from the time
deposit account of Spouses Rabaja, representing the award of rental arrearages in the
separate ejectment suit, should be returned by Spouses Salvador. 18 The court viewed that
such amount was part of the purchase price of the subject property which must be returned. It
also awarded moral and exemplary damages in favor of Spouses Rabaja and attorney's fees in
favor of Gonzales. The dispositive portion of the said decision reads:
WHEREFORE, this court renders judgment as follows:
a. Ordering the "Contract to Sell" entered into by the plaintiff and
defendant spouses Rolando and Herminia Salvador on
July 24, 1998 as RESCINDED;
b. Ordering defendant spouses Rolando and
Herminia Salvador and defendant Rosario S. Gonzales
jointly and severally liable to pay plaintiffs:
1. the amount of NINE HUNDRED FIFTY THOUSAND
PESOS (P950,000.00), representing the
payments made by the latter for the purchase
of subject property;
2. the amount of TWENTY THOUSAND PESOS
(P20,000.00), as moral damages;
3. the amount of TWENTY THOUSAND PESOS
(P20,000.00), as exemplary damages;
4. the amount of ONE HUNDRED THOUSAND PESOS
(P100,000.00), as attorney's fees;
their 5. the cost of suit.
c. Ordering defendant Spouses Rolando and
Herminia Salvador to pay plaintiffs the amount of FIVE
HUNDRED NINETY THREE THOUSAND PESOS
(P593,000.00) (sic), representing the amount garnished
from the Metrobank deposit of plaintiffs as payment for
their alleged back rentals;
d. Ordering the defendant Spouses Rolando and
Herminia Salvador to pay defendant Rosario Gonzales
on her cross-claim in the amount of ONE HUNDRED
THOUSAND PESOS (P100,000.00);
e. Dismissing the counterclaims of the defendants against the
plaintiff.
SO ORDERED. 19 ACaDTH
Gonzales filed a motion for partial reconsideration, but it was denied by the RTC-Br.
114 in its Order, 20 dated September 12, 2007. Undaunted, Spouses Salvadorand Gonzales
filed an appeal before the CA.
CA Ruling
On March 29, 2007, the CA affirmed the decision of the RTC-Br. 114 with
modifications. It ruled that the "contract to sell" was indeed a contract of sale and that Gonzales
was armed with an SPA and was, in fact, introduced to Spouses Rabaja by
Spouses Salvador as the administrator of the property. Spouses Rabaja could not be blamed if
they had transacted with Gonzales.
The CA then held that Spouses Salvador should return the amount of P593,400.00
pursuant to a separate ejectment case, reasoning that Spouses Salvador misled the court
because an examination of CA-G.R. SP No. 89260 showed that Spouses Rabaja were not
involved in that case. CA-G.R. SP No. 59260 was an action between Spouses Salvador and
Gonzales only and involved a completely different residential apartment located at 302-C
Jupiter Street, Dreamland Subdivision, Mandaluyong City.
The CA, however, ruled that Gonzales was not solidarily liable with Spouses Salvador.
The agent must expressly bind himself or exceed the limit of his authority in order to be
solidarily liable. It was not shown that Gonzales as agent of Spouses Salvador exceeded her
authority or expressly bound herself to be solidarily liable. The decretal portion of the CA
decision reads:
WHEREFORE, the appeal is PARTLY GRANTED. The assailed
Decision dated March 29, 2007 and the Order dated September 12, 2007,
of the Regional Trial Court, Branch 214, Mandaluyong City, in Civil Case
No. MC-03-2175, are AFFIRMED with MODIFICATION in that Rosario
Gonzalez is not jointly and severally liable to pay Spouses Rabaja the
 amounts enumerated in paragraph (b) of the Decision dated March 29,
2007.
SO ORDERED. 21
Spouses Salvador filed a motion for reconsideration but it was denied by the CA in its
January 5, 2012 Resolution.
Hence, this petition.
ASSIGNMENT OF ERRORS
I THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
THE COURT OF APPEALS ERRED IN NOT FINDING THAT
THE LOWER COURT GRAVELY ABUSED ITS DISCRETION IN
DECLARING PETITIONERS IN DEFAULT AND IN DEPRIVING THEM
OF THE OPPORTUNITY TO CROSS-EXAMINE RESPONDENTS
SPS. RABAJA AS WELL AS TO PRESENT EVIDENCE FOR AND IN
THEIR BEHALF, GIVEN THE MERITORIOUS DEFENSES RAISED IN
THEIR ANSWER THAT CATEGORICALLY AND DIRECTLY DISPUTE
RESPONDENTS SPS. RABAJA'S CAUSE OF ACTION.
II
THE COURT OF APPEALS ERRED IN NOT FINDING THAT
THE TRIAL COURT GRAVELY ERRED IN GIVING CREDENCE TO THE
TESTIMONY OF RESPONDENT GONZALES THAT PAYMENTS WERE
INDEED REMITTED TO AND RECEIVED BY PETITIONER
HERMINIA SALVADOR EVEN AS THE IMPROVISED RECEIPTS
WERE EVIDENTLY MADE UP AND FALSIFIED BY RESPONDENT
GONZALES. aCcSDT
III
THE COURT OF APPEALS ERRED IN NOT FINDING THAT
THE TRIAL COURT GRAVELY ERRED IN RESCINDING THE
CONTRACT TO SELL WHEN THERE IS NOTHING TO RESCIND AS
NO VALID CONTRACT TO SELL WAS ENTERED INTO, AND IN
DIRECTING THE REFUND OF THE AMOUNT OF P950,000.00 WHEN
THE EVIDENCE CLEARLY SHOWS THAT SAID AMOUNT WAS PAID
TO AND RECEIVED BY RESPONDENT GONZALES ALONE WHO
MISAPPROPRIATED THE SAME.
IV
THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL
COURT'S DECISION FOR PETITIONERS TO RETURN THE AMOUNT
OF P543,400.00 REPRESENTING RENTALS IN ARREARS
GARNISHED OR WITHDRAWN BY VIRTUE OF A WRIT OF
EXECUTION ISSUED IN AN EJECTMENT CASE WHICH WAS TRIED
AND DECIDED BY ANOTHER COURT.
V
THE COURT OF APPEALS ERRED IN NOT FINDING THAT
THE LOWER COURT GRAVELY ERRED IN AWARDING DAMAGES
TO RESPONDENTS SPS. RABAJA, THERE BEING NO FACTUAL
AND LEGAL BASES FOR SUCH AWARD.
VI
THE TRIAL COURT GRAVELY ERRED IN AWARDING P100,000.00 TO
RESPONDENT GONZALES AS ATTORNEY'S FEES WHEN
RESPONDENT GONZALES, IN FACT, COMMITTED FORGERY AND
FALSIFICATION IN DEALING WITH THE PROPERTY OF
PETITIONERS AND MISAPPROPRIATED THE MONIES PAID TO HER
BY RESPONDENTS SPS. RABAJA, THUS GIVING PREMIUM TO HER
FRAUDULENT ACTS. 22
The foregoing can be synthesized into three main
issues. First, Spouses Salvador contend that the order of default must be lifted because
reasonable grounds exist to justify their failure to attend the pre-trial conference on February 4,
2005. Second, Spouses Salvador raise in issue the veracity of the receipts given by Gonzales,
the SPA and the validity of the contract to sell. They claim that the improvised receipts should
not be given credence because these were crude and suspicious, measuring only by 2 x 2
inches which showed that Gonzales misappropriated the payments of Spouses Rabaja for
herself and did not remit the amount of P950,000.00 to them. As there was no consideration,
then no valid contract to sell existed. Third, Spouses Salvador argue that the ejectment case,
from which the amount of P593,400.00 was garnished, already became final and executory and
could not anymore be disturbed. Lastly, the award of damages in favor of Spouses Rabaja and
Gonzales was improper absent any legal and factual bases.
On January 21, 2013, Spouses Salvador filed their supplemental petition 23 informing
the Court that RTC-Br. 213 had rendered a decision in Civil Case No. MC00-1082, an action for
rescission of the SPA. The said decision held that Spouses Salvador properly revoked the SPA
in favor of Gonzales due to loss of trust and confidence. On September 11, 2013, Gonzales
filed her comment to the supplemental petition, 24 contending that the RTC-Branch 213
decision had no bearing because it had not yet attained finality. On even date,
Spouses Rabaja filed their Comment, 25 asserting that the present petition is a mere rehash of
the previous arguments of Spouses Salvador before the CA. On November 15, 2013,
Spouses Salvador replied that they merely wanted to show that the findings by the RTC-Br. 213
should be given weight as a full-blown trial was conducted therein. 26
The Court's Ruling
As a general rule, the Court's jurisdiction in a Rule 45 petition is limited to the review of
pure questions of law. A question of law arises when the doubt or difference exists as to what
the law is on a certain state of facts. Negatively put, Rule 45 does not allow the review of
questions of fact. A question of fact exists when the doubt or difference arises as to the truth or
falsity of the allegations. 27
The present petition presents questions of fact because it requires the Court to
examine the veracity of the evidence presented during the trial, such as the improvised receipts,
the SPA given to Gonzales and the contract to sell. Even the petitioner spouses themselves
concede and ask the Court to consider questions of fact,28 but the Court finds no reason to
disturb the findings of fact of the lower courts absent any compelling reason to the contrary.
The failure of Spouses Salvador
to attend pre-trial conference
warrants the presentation of
evidence ex parte by Spouses
Rabaja
On the procedural aspect, the Court reiterates the rule that the failure to attend the
pre-trial conference does not result in the default of an absent party. Under the 1997 Rules of
Civil Procedure, a defendant is only declared in default if he fails to file his Answer within the
reglementary period. 29 On the other hand, if a defendant fails to attend the pre-trial conference,
the plaintiff can present his evidence ex parte. Sections 4 and 5, Rule 18 of the Rules of
Court provide: ScAHTI
Sec. 4. Appearance of parties. —
It shall be the duty of the parties and their counsel to appear at the
pre-trial. The non-appearance of a party may be excused only if a valid
cause is shown therefor or if a representative shall appear in his behalf
fully authorized in writing to enter into an amicable settlement, to submit to
alternative modes of dispute resolution, and to enter into stipulations or
admissions of facts and of documents.
Sec. 5. Effect of failure to appear. —
The failure of the plaintiff to appear when so required pursuant to
the next preceding section shall be cause for dismissal of the action. The
dismissal shall be with prejudice, unless otherwise ordered by the court. A
similar failure on the part of the defendant shall be cause to allow the
plaintiff to present his evidenceex parte and the court to render
judgment on the basis thereof.
[Emphasis supplied]
The case of Philippine American Life & General Insurance Company v. Joseph
Enario 30 discussed the difference between the non-appearance of a defendant in a pre-trial
conference and the declaration of a defendant in default in the present Rules of Civil Procedure.
The decision instructs:
Prior to the 1997 Revised Rules of Civil Procedure, the phrase
"as in default" was initially included in Rule 20 of the old rules, and which
read as follows:
Sec. 2. A party who fails to appear at a pre-trial
conference may be non-suited or considered as in default.
It was, however, amended in the 1997 Revised Rules of Civil
Procedure. Justice Regalado, in his book, REMEDIAL LAW
COMPENDIUM, explained the rationale for the deletion of the phrase "as
in default" in the amended provision, to wit:
1. This is a substantial reproduction of Section 2 of the
former Rule 20 with the change that, instead of defendant being
declared "as in default" by reason of his non-appearance, this
section now spells out that the procedure will be to allow the ex
parte presentation of plaintiff's evidence and the rendition of
judgment on the basis thereof. While actually the procedure
remains the same, the purpose is one of semantical propriety or
terminological accuracy as there were criticisms on the use of the
word "default" in the former provision since that term is identified
with the failure to file a required answer, not appearance in court.
Still, in the same book, Justice Regalado clarified that while the
order of default no longer obtained, its effects were retained, thus:
Failure to file a responsive pleading within the
reglementary period, and not failure to appear at the hearing, is
the sole ground for an order of default, except the failure to
appear at a pre-trial conference wherein the effects of a default
on the part of the defendant are followed, that is, the plaintiff shall
be allowed to present evidence ex parte and a judgment based
thereon may be rendered against defendant.
From the foregoing, the failure of a party to appear at the pre-trial has indeed adverse
consequences. If the absent party is the plaintiff, then his case shall be dismissed. If it is the
defendant who fails to appear, then the plaintiff is allowed to present his evidence ex parte and
the court shall render judgment based on the evidence presented. Thus, the plaintiff is given the
privilege to present his evidence without objection from the defendant, the likelihood being that
the court will decide in favor of the plaintiff, the defendant having forfeited the opportunity to
rebut or present its own evidence. 31 The stringent application of the rules on pre-trial is
necessitated from the significant role of the pre-trial stage in the litigation process. Pre-trial is an
answer to the clarion call for the speedy disposition of cases. Although it was discretionary
under the 1940 Rules of Court, it was made mandatory under the 1964 Rules and the
subsequent amendments in 1997. 32 "The importance of pre-trial in civil actions cannot be
overemphasized." 33 TASCDI
There is no dispute that Spouses Salvador and their counsel failed to attend the
pre-trial conference set on February 4, 2005 despite proper notice. SpousesSalvador aver that
their non-attendance was due to the fault of their counsel as he forgot to update his
calendar. 34 This excuse smacks of carelessness, and indifference to the pre-trial stage. It
simply cannot be considered as a justifiable excuse by the Court. As a result of their
inattentiveness, Spouses Salvador could no longer present any evidence in their favor.
Spouses Rabaja, as plaintiffs, were properly allowed by the RTC to present evidence ex
parte against Spouses Salvador as defendants. Considering that Gonzales as co-defendant
was able to attend the pre-trial conference, she was allowed to present her evidence. The RTC
could only render judgment based on the evidence presented during the trial.
Gonzales, as agent of Spouses
Salvador, could validly receive
the payments of Spouses
Rabaja
Even on the substantial aspect, the petition does not warrant consideration. The Court
agrees with the courts below in finding that the contract entered into by the parties was
essentially a contract of sale which could be validly rescinded. Spouses Salvador insist that
they did not receive the payments made by Spouses Rabajafrom Gonzales which totalled
P950,000.00 and that Gonzales was not their duly authorized agent. These contentions,
however, must fail in light of the applicable provisions of the New Civil Code which state:
Art. 1900. So far as third persons are concerned, an act is
deemed to have been performed within the scope of the agent's authority,
if such act is within the terms of the power of attorney, as written, even if
the agent has in fact exceeded the limits of his authority according to an
understanding between the principal and the agent.
xxx xxx xxx
Art. 1902. A third person with whom the agent wishes to contract
on behalf of the principal may require the presentation of the power of
attorney, or the instructions as regards the agency. Private or secret orders
and instructions of the principal do not prejudice third persons who have
relied upon the power of attorney or instructions shown them.
xxx xxx xxx
Art. 1910. The principal must comply with all the obligations which
the agent may have contracted within the scope of his authority.
Persons dealing with an agent must ascertain not only the fact of agency, but also the
nature and extent of the agent's authority. A third person with whom the agent wishes to
contract on behalf of the principal may require the presentation of the power of attorney, or the
instructions as regards the agency. The basis for agency is representation and a person dealing
with an agent is put upon inquiry and must discover on his own peril the authority of the
agent. 35
According to Article 1990 of the New Civil Code, insofar as third persons are
concerned, an act is deemed to have been performed within the scope of the agent's authority,
if such act is within the terms of the power of attorney, as written. In this case,
Spouses Rabaja did not recklessly enter into a contract to sell with Gonzales. They required her
presentation of the power of attorney before they transacted with her principal. And when
Gonzales presented the SPA to Spouses Rabaja, the latter had no reason not to rely on it.
The law mandates an agent to act within the scope of his authority which what appears
in the written terms of the power of attorney granted upon him. 36 The Court holds that, indeed,
Gonzales acted within the scope of her authority. The SPA precisely stated that she could
administer the property, negotiate the sale and collect any document and all payments related
to the subject property. 37 As the agent acted within the scope of his authority, the principal
must comply with all the obligations. 38 As correctly held by the CA, considering that it was not
shown that Gonzales exceeded her authority or that she expressly bound herself to be liable,
then she could not be considered personally and solidarily liable with the principal,
Spouses Salvador. 39 cTDaEH
Perhaps the most significant point which defeats the petition would be the fact that it
was Herminia herself who personally introduced Gonzalez to SpousesRabaja as the
administrator of the subject property. By their own ostensible acts, Spouses Salvador made
third persons believe that Gonzales was duly authorized to administer, negotiate and sell the
subject property. This fact was even affirmed by Spouses Salvador themselves in their petition
where they stated that they had authorized Gonzales to look for a buyer of their property. 40 It is
already too late in the day for Spouses Salvador to retract the representation to unjustifiably
escape their principal obligation.
As correctly held by the CA and the RTC, considering that there was a valid SPA, then
Spouses Rabaja properly made payments to Gonzales, as agent of SpousesSalvador; and it
was as if they paid to Spouses Salvador. It is of no moment, insofar as Spouses Rabaja are
concerned, whether or not the payments were actually remitted to Spouses Salvador. Any
internal matter, arrangement, grievance or strife between the principal and the agent is theirs
alone and should not affect third persons. If Spouses Salvador did not receive the payments or
they wish to specifically revoke the SPA, then their recourse is to institute a separate action
against Gonzales. Such action, however, is not any more covered by the present proceeding.
The amount of P593,400.00
should not be returned by
Spouses Salvador
Nevertheless, the assailed decision of the CA must be modified with respect to the
amount of P593,400.00 garnished by Spouses Salvador and ordered returned to
Spouses Rabaja. The RTC ordered the return of the amount garnished holding that it
constituted a part of the purchase price. The CA ruled that Spouses Salvadormisled the Court
when they improperly cited CA-G.R. SP No. 89260 to prove their entitlement to the said amount.
Both courts erred in their ruling.
First, the garnishment of the amount of P593,400.00 against Spouses Rabaja was
pursuant to the CA decision in CA-G.R. SP No. 89259, an entirely different case involving an
action for ejectment, and it does not concern the rescission case which is on appeal before this
Court. Moreover, the decision on the ejectment case is final and executory and an entry of
judgment has already been made. 41 Nothing is more settled in law than that when a final
judgment is executory, it thereby becomes immutable and unalterable. The judgment may no
longer be modified in any respect, even if the modification is meant to correct what is perceived
to be an erroneous conclusion of fact or law, and regardless of whether the modification is
attempted to be made by the court which rendered it or by the highest Court of the land. The
doctrine is founded on consideration of public policy and sound practice that, at the risk of
occasional errors, judgments must become final at some definite point in time. 42
The March 31, 2006 CA decision 43 in CA-G.R. SP No. 89259 has long been final
and executory and cannot any more be disturbed by the Court. Public policy dictates that once
a judgment becomes final, executory and unappealable, the prevailing party should not be
denied the fruits of his victory by some subterfuge devised by the losing party. Unjustified delay
in the enforcement of a judgment sets at naught the role and purpose of the courts to resolve
justiciable controversies with finality.44
Meanwhile, in ruling that the garnishment was improper and thus ordering the return of
the garnished amount, the CA referred to its decision in CA-G.R. SP No. 89260.
Spouses Salvador, however, clarified in its motion for reconsideration 45 before the CA and in
the present petition 46 that the garnishment was pursuant to CA-G.R. SP No. 89259, and not
CA-G.R. SP No. 89260, another ejectment case involving another property. A perusal of the
records reveals that indeed the garnishment was pursuant to the ejectment case in the MeTC,
docketed as Civil Case No. 17344, 47 where Spouses Rabaja were the defendants. The MeTC
decision was then reinstated by the CA in CA-G.R. SP No. 89259, not CA-G.R. SP No. 89260.
There, a writ of execution 48 and notice of pay 49 were issued against
Spouses Rabaja in the amount of P591,900.00.
Second, Spouses Rabaja's appeal with the RTC never sought relief in returning the
garnished amount. 50 Such issue simply emerged in the RTC decision. This is highly improper
because the court's grant of relief is limited only to what has been prayed for in the complaint or
related thereto, supported by evidence, and covered by the party's cause of action. 51
If Spouses Rabaja would have any objection on the manner and propriety of the
execution, then they must institute their opposition to the execution proceeding a separate case.
Spouses Rabaja can invoke the Civil Code provisions on legal compensation or set-off under
Articles 1278, 1279 and 1270. 52 The two obligations appear to have respectively offset each
other, compensation having taken effect by operation of law pursuant to the said provisions of
the Civil Code, since all the requisites provided in Art. 1279 of the said Code for automatic
compensation are duly present.
No award of actual, moral and
exemplary damages
The award of damages to Spouses Rabaja cannot be sustained by this Court. The
filing alone of a civil action should not be a ground for an award of moral damages in the same
way that a clearly unfounded civil action is not among the grounds for moral
damages. 53 Article 2220 of the New Civil Code provides that to award moral damages in a
breach of contract, the defendant must act fraudulently or in bad faith. In this case,
Spouses Rabaja failed to sufficiently show that SpousesSalvador acted in a fraudulent manner
or with bad faith when it breached the contract of sale. Thus, the award of moral damages
cannot be warranted. cDaEAS
As to the award of exemplary damages, Article 2229 of the New Civil Code provides
that exemplary damages may be imposed by way of example or correction for the public good,
in addition to the moral, temperate, liquidated or compensatory damages. 54 The claimant
must first establish his right to moral, temperate, liquidated or compensatory damages. In this
case, considering that Spouses Rabaja failed to prove moral or compensatory damages, then
there could be no award of exemplary damages.
With regard to attorney's fees, neither Spouses Rabaja nor Gonzales is entitled to the
award. The settled rule is that no premium should be placed on the right to litigate and that not
every winning party is entitled to an automatic grant of attorney's fees. 55 The RTC reasoned
that Gonzales was forced to litigate due to the acts of Spouses Salvador. The Court does not
agree. Gonzales, as agent of Spouses Salvador, should have expected that she would be
called to litigation in connection with her fiduciary duties to the principal.
In view of all the foregoing, the CA decision should be affirmed with the following
modifications:
1. The order requiring defendant Spouses Rolando and
Herminia Salvador to pay plaintiffs the amount of Five Hundred
Ninety Three Thousand (P593,000.00) Pesos, representing the
amount garnished from the Metrobank deposit of plaintiffs as for
their back rentals should be deleted;
2. The award of moral damages in the amount of Twenty Thousand
(P20,000.00) Pesos; exemplary damages in the amount of
Twenty Thousand (P20,000.00) Pesos, and attorney's fees in the
amount of One Hundred Thousand (P100,000.00) Pesos in favor
of Spouses Rabaja should be deleted; and
3. The award of attorney's fees in amount of One Hundred Thousand
(P100,000.00) Pesos in favor of Gonzales should be deleted.
The other amounts awarded are subject to interest at the legal rate of 6% per annum,
to be reckoned from the date of finality of this judgment until fully paid.
WHEREFORE, the petition is PARTLY GRANTED. The March 29, 2007 Decision of
the Regional Trial Court, Branch 214, Mandaluyong City, in Civil Case No. MC-03-2175,
is MODIFIED to read as follows:
"WHEREFORE, this Court renders judgment as follows:
a. Ordering the "Contract to Sell" entered into by Spouses
Rogelio and Elizabeth Rabaja and Spouses Rolando
and Herminia Salvador on July 24, 1998 as
RESCINDED;
b. Ordering Spouses Rolando and Herminia Salvador to pay
Spouses Rogelio and Elizabeth Rabaja:
 1. The amount of Nine Hundred Fifty Thousand
(P950,000.00) Pesos, representing the
payments made by the latter for the purchase
of the subject property; and

2. The cost of suit;

c. Dismissing the counterclaims of Spouses Rolando and

Herminia Salvador and Rosario Gonzales against
Spouses Rogelio and Elizabeth Rabaja.

The amounts awarded are subject to interest at the legal rate of 6%

per annum to be reckoned from the date of finality of this judgment until
fully paid."

As aforestated, this is without prejudice to the invocation by either party of the Civil
Code provisions on legal compensation or set-off under Articles 1278, 1279 and 1270.

SO ORDERED.

||| (Spouses Salvador v. Spouses Rabaja, G.R. No. 199990, [February 4, 2015])
 THIRD DIVISION
[G.R. No. 181235. July 22, 2009.]
BANCO DE ORO-EPCI, INC. (formerly Equitable PCI
Bank), petitioner, vs. JOHN TANSIPEK, respondent.
DECISION
CHICO-NAZARIO, J p:
Before Us is a Petition for Review on Certiorari assailing the Decision 1 of the
Court of Appeals in CA-G.R. CV No. 69130 dated 18 August 2006 and the Resolution of
the same court dated 9 January 2008.
The facts of the case are as follows:
J. O. Construction, Inc. (JOCI), a domestic corporation engaged in the
construction business in Cebu City, filed a complaint against Philippine Commercial and
Industrial Bank (PCIB) in the Regional Trial Court (RTC) of Makati City docketed as Civil
Case No. 97-508. The Complaint alleges that JOCI entered into a contract with Duty Free
Philippines, Inc. for the construction of a Duty Free Shop in Mandaue City. As actual
construction went on, progress billings were made. Payments were received by JOCI
directly or through herein respondent John Tansipek, its authorized collector. Payments
received by respondent Tansipek were initially remitted to JOCI. However, payment
through PNB Check No. 0000302572 in the amount of P4,050,136.51 was not turned over
to JOCI. Instead, respondent Tansipek endorsed said check and deposited the same to his
account in PCIB, Wilson Branch, Wilson Street, Greenhills, San Juan, Metro Manila. PCIB
allowed the said deposit, despite the fact that the check was crossed for the deposit to
payee's account only, and despite the alleged lack of authority of respondent Tansipek to
endorse said check. PCIB refused to pay JOCI the full amount of the check despite
demands made by the latter. JOCI prayed for the payment of the amount of the check
(P4,050,136.51), P500,000.00 in attorney's fees, P100,000.00 in expenses, P50,000.00
for costs of suit, and P500,000.00 in exemplary damages.
PCIB filed a Motion to Dismiss the Complaint on the grounds that (1) an
indispensable party was not impleaded, and (2) therein plaintiff JOCI had no cause of
action against PCIB. The RTC denied PCIB's Motion to Dismiss.
PCIB filed its answer alleging as defenses that (1) JOCI had
clothed Tansipek with authority to act as its agent, and was therefore estopped from
denying the same; (2) JOCI had no cause of action against PCIB; (3) failure to
implead Tansipek rendered the proceedings taken after the filing of the complaint void; (4)
PCIB's act of accepting the deposit was fully justified by established bank practices; (5)
JOCI's claim was barred by laches; and (6) the damages alleged by JOCI were
hypothetical and speculative. PCIB incorporated in said Answer its counterclaims for
exemplary damages in the amount of P400,000.00, and litigation expenses and attorney's
fees in the amount of P400,000.00. CDcaSA
PCIB likewise moved for leave for the court to admit the former's third-party
complaint against respondent Tansipek. The third-party complaint alleged that
respondent Tansipek was a depositor at its Wilson Branch, San Juan, Metro Manila, where
he maintained Account No. 5703-03538-3 in his name and/or that of his wife, Anita.
Respondent Tansipek had presented to PCIB a signed copy of the Minutes of the meeting
of the Board of Directors of JOCI stating the resolution that —
Checks payable to J.O. Construction, Inc. may be deposited to
Account No. 5703-03538-3 under the name of John and/or Anita Tansipek,
maintained at PCIB, Wilson Branch. 2
Respondent Tansipek had also presented a copy of the Articles of Incorporation of JOCI
showing that he and his wife, Anita, were incorporators of JOCI, with Anita as Treasurer. In
the third-party complaint, PCIB prayed for subrogation and payment of attorney's fees in
the sum of P400,000.00.
PCIB filed a Motion to Admit Amended Third-Party Complaint. The amendment
consisted in the correction of the caption, so that PCIB appeared as Third-Party Plaintiff
and Tansipek as Third-Party Defendant.
Upon Motion, respondent Tansipek was granted time to file his Answer to the
Third-Party Complaint. He was, however, declared in default for failure to do so. The
Motion to Reconsider the Default Order was denied.
Respondent Tansipek filed a Petition for Certiorari with the Court of Appeals
assailing the Default Order and the denial of the Motion for Reconsideration. The Petition
was docketed as CA-G.R. SP No. 47727. On 29 May 1998, the Court of Appeals dismissed
the Petition for failure to attach the assailed Orders. On 28 September 1998, the Court of
Appeals denied respondent Tansipek's Motion for Reconsideration for having been filed
out of time.
Pre-trial on the main case ensued, wherein JOCI and PCIB limited the issues as
follows:
1. Whether or not the defendant bank erred in allowing the
deposit of Check No. 0302572 (Exh. "A") in the amount of P4,050,136.51
drawn in favor of plaintiff JO Construction, Inc. in John Tansipek's account
when such check was crossed and clearly marked for payee's account
only.
2. Whether the alleged board resolution and the articles of
Incorporation are genuine and a valid defense against plaintiff's effort to
collect the amount of P4,050,136.51.
 On 14 July 2000, the RTC promulgated its Decision in Civil Case No. 97-508, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the
plaintiff [JOCI] and against the defendant bank [PCIB] ordering the latter to
pay to the plaintiff the sum of P4,050,136.51 with interest at the rate of
twelve percent (12%) per annum from the filing of this complaint until fully
paid plus costs of suit. The other damages claimed by the plaintiff are
denied for being speculative.
On the third party complaint, third-party defendant
John Tansipek is ordered to pay the third-party plaintiff Philippine
Commercial and Industrial Bank all amounts said defendant/third-party
plaintiff shall have to pay to the plaintiff on account of this case. 3
Respondent Tansipek appealed the Decision to the Court of Appeals. The case
was docketed as CA-G.R. CV No. 69130. Respondent Tansipek assigned the following
alleged errors:
a) The trial court's decision upholding the order of default and the
consequent ex-parte reception of appellee's evidence was anchored on
erroneous and baseless conclusion that:
1) The original reglementary period to plead has already
expired. ACaTIc
2) The ten day extended period to answer has likewise expired.
3) There is no need to pass upon a second motion to plead much
less, any need for a new motion for extended period to
plead.
b) The trial court erred in utterly depriving the appellant of his day
in court and in depriving constitutional, substantive and procedural due
process premised solely on pure and simple technicality which never
existed and are imaginary and illusory.
c) The trial court erred in ordering the third-party
defendant-appellant John Tansipek to pay the third party plaintiff-appellee
PCIBank all amounts said bank shall have to pay to the plaintiff-appellee
by way of subrogation since appellant if allowed to litigate in the trial court,
would have obtained a favorable judgment as he has good, valid and
meritorious defenses. 4
On 18 August 2006, the Court of Appeals issued the assailed Decision finding
that it was an error for the trial court to have acted on PCIB's motion to declare
respondent Tansipek in default. The Court of Appeals thus remanded the case to the RTC
for further proceedings, to wit:
WHEREFORE, premises considered, the appeal is GRANTED.
The decision relative to the third party complaint is REVERSED and SET
ASIDE. The case is ordered REMANDED to the trial court for further
proceedings on the third party complaint. 5
The Court of Appeals denied the Motion for Reconsideration of PCIB in a Resolution dated
9 January 2008.
Petitioner Banco de Oro-EPCI, Inc., as successor-in-interest to PCIB, filed the
instant Petition for Review on Certiorari, assailing the above Decision and Resolution of
the Court of Appeals, and laying down a lone issue for this Court's consideration:
WHETHER OR NOT THE COURT OF APPEALS CAN
REVERSE ITS DECISION HANDED DOWN EIGHT YEARS BEFORE. 6
To recapitulate, upon being declared in default, respondent Tansipek filed a
Motion for Reconsideration of the Default Order. Upon denial thereof, Tansipekfiled a
Petition for Certiorari with the Court of Appeals, which was dismissed for failure to attach
the assailed Orders. Respondent Tansipek's Motion for Reconsideration with the Court of
Appeals was denied for having been filed out of time. Respondent Tansipek did not appeal
said denial to this Court.
Respondent Tansipek's remedy against the Order of Default was erroneous from
the very beginning. Respondent Tansipek should have filed a Motion to Lift Order of
Default, and not a Motion for Reconsideration, pursuant to Section 3 (b), Rule 9 of the
Rules of Court:
(b) Relief from order of default. — A party declared in default may
at any time after notice thereof and before judgment file a motion under
oath to set aside the order of default upon proper showing that his failure to
answer was due to fraud, accident, mistake or excusable negligence and
that he has a meritorious defense. In such case, the order of default may
be set aside on such terms and conditions as the judge may impose in the
interest of justice.
A Motion to Lift Order of Default is different from an ordinary motion in that the
Motion should be verified; and must show fraud, accident, mistake or excusable neglect,
and meritorious defenses. 7 The allegations of (1) fraud, accident, mistake or excusable
neglect, and (2) of meritorious defenses must concur. 8 AaCcST
Assuming for the sake of argument, however, that respondent Tansipek's Motion
for Reconsideration may be treated as a Motion to Lift Order of Default, his Petition
for Certiorari on the denial thereof has already been dismissed with finality by the Court of
Appeals. Respondent Tansipek did not appeal said ruling of the Court of Appeals to this
Court. The dismissal of the Petition for Certiorari assailing the denial of
respondent Tansipek's Motion constitutes a bar to the retrial of the same issue of default
under the doctrine of the law of the case.
In People v. Pinuila, 9 we held that:
 "Law of the case" has been defined as the opinion delivered on a
former appeal. More specifically, it means that whatever is once
irrevocably established as the controlling legal rule of decision between the
same parties in the same case continues to be the law of the case, whether
correct on general principles or not, so long as the facts on which such
decision was predicated continue to be the facts of the case before the
court.
It may be stated as a rule of general application that, where the
evidence on a second or succeeding appeal is substantially the
same as that on the first or preceding appeal, all matters, questions,
points, or issues adjudicated on the prior appeal are the law of the
case on all subsequent appeals and will not be considered or
readjudicated therein.
xxx xxx xxx
As a general rule a decision on a prior appeal of the same case is
held to be the law of the case whether that decision is right or wrong, the
remedy of the party deeming himself aggrieved being to seek a rehearing.
Questions necessarily involved in the decision on a former appeal
will be regarded as the law of the case on a subsequent appeal, although
the questions are not expressly treated in the opinion of the court, as the
presumption is that all the facts in the case bearing on the point decided
have received due consideration whether all or none of them are
mentioned in the opinion. (Emphasis supplied.)
The issue of the propriety of the Order of Default had already been adjudicated
in Tansipek's Petition for Certiorari with the Court of Appeals. As such, this issue cannot be
readjudicated in Tansipek's appeal of the Decision of the RTC on the main case. Once a
decision attains finality, it becomes the law of the case, whether or not said decision is
erroneous. 10 Having been rendered by a court of competent jurisdiction acting within its
authority, the judgment may no longer be altered even at the risk of legal infirmities and
errors it may contain. 11
Respondent Tansipek counters that the doctrine of the law of the case is not
applicable, inasmuch as a Petition for Certiorari is not an appeal.
RespondentTansipek further argues that the Doctrine of the Law of the Case applies only
when the appellate court renders a decision on the merits, and not when such appeal was
denied due to technicalities.
We are not persuaded.
In Buenviaje v. Court of Appeals, 12 therein respondent Cottonway Marketing
Corporation filed a Petition for Certiorari with this Court assailing the Decision of the
National Labor Relations Commission (NLRC) ordering, inter alia, the reinstatement of
therein petitioners and the payment of backwages from the time their salaries were
withheld up to the time of actual reinstatement. The Petition for Certiorari was dismissed by
this Court. The subsequent Motion for Reconsideration was likewise denied. However, the
Labor Arbiter then issued an Order limiting the amount of backwages that was due to
petitioners. The NLRC reversed this Order, but the Court of Appeals reinstated the same.
This Court, applying the Doctrine of the Law of the Case, held:
The decision of the NLRC dated March 26, 1996 has become
final and executory upon the dismissal by this Court of Cottonway's
petition for certiorariassailing said decision and the denial of its
motion for reconsideration. Said judgment may no longer be disturbed
or modified by any court or tribunal. It is a fundamental rule that when a
judgment becomes final and executory, it becomes immutable and
unalterable, and any amendment or alteration which substantially affects a
final and executory judgment is void, including the entire proceedings held
for that purpose. Once a judgment becomes final and executory, the
prevailing party can have it executed as a matter of right, and the issuance
of a writ of execution becomes a ministerial duty of the court. A decision
that has attained finality becomes the law of the case regardless of
any claim that it is erroneous. The writ of execution must therefore
conform to the judgment to be executed and adhere strictly to the very
essential particulars. 13 (Emphases supplied.) EaICAD
Furthermore, there is no substantial distinction between an appeal and a Petition
for Certiorari when it comes to the application of the Doctrine of the Law of the Case. The
doctrine is founded on the policy of ending litigation. The doctrine is necessary to enable
the appellate court to perform its duties satisfactorily and efficiently, which would be
impossible if a question once considered and decided by it were to be litigated anew in the
same case upon any and every subsequent appeal. 14
Likewise, to say that the Doctrine of the Law the Case applies only when the
appellate court renders a decision on the merits would be putting a premium on the fault or
negligence of the party losing the previous appeal. In the case at bar,
respondent Tansipek would be awarded (1) for his failure to attach the necessary
requirements to his Petition for Certiorari with the Court of Appeals; (2) for his failure to file
a Motion for Reconsideration in time; and (3) for his failure to appeal the Decision of the
Court of Appeals with this Court. The absurdity of such a situation is clearly apparent.
It is important to note that a party declared in default — respondent Tansipek in
this case — is not barred from appealing from the judgment on the main case, whether or
not he had previously filed a Motion to Set Aside Order of Default, and regardless of the
result of the latter and the appeals therefrom. However, the appeal should be based on the
Decision's being contrary to law or the evidence already presented, and not on the alleged
invalidity of the default order. 15
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 69130
dated 18 August 2006 and the Resolution of the same court dated 9 January 2008 are
hereby REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Makati
City in Civil Case No. 97-508 dated 14 July 2000 is hereby REINSTATED. No
pronouncement as to costs.
 SO ORDERED.

||| (Banco de Oro-EPCI, Inc. v. Tansipek, G.R. No. 181235, [July 22, 2009], 611 PHIL 90-100)
 SECOND DIVISION
[G.R. No. 212256. December 9, 2015.]
FARIDA YAP BITTE AND THE HEIRS OF BENJAMIN D. BITTE,
namely: JACOB YAP BITTE, SHAIRA DAYANARA YAP BITTE,
FATIMA YAP BITTE and ALLAN ROBERT
YAP BITTE, petitioners, vs. SPOUSES FRED AND ROSA ELSA
SERRANO JONAS, respondents.
DECISION
MENDOZA, J p:
In this petition for review on certiorari 1 under Rule 45 of the Rules of Court,the
petitioners, Farida Yap Bitte and Heirs of Benjamin Bitte (the petitioners), seek the review
of the September 26, 2013 Decision 2 and February 26, 2014 Resolution 3 of the Court of
Appeals (CA) in CA-G.R. CV No. 01596-MIN, which reversed the January 18, 2007 Joint
Decision 4 of the Regional Trial Court, Branch 13, Davao (RTC-Branch 13), arrived at in
favor of respondents, Spouses Fred and Rosa Elsa Serrano Jonas (Spouses Jonas).
Factual Antecedents
This controversy stemmed from two civil cases filed by the parties against each
other relative to a purported contract of sale involving a piece of property situated at 820
corner Jacinto Street and Quezon Boulevard, Davao City (subject property). It was initially
covered by TCT No. T-112717 in the name of Rosa Elsa Serrano Jonas (Rosa Elsa) and
presently by TCT No. T-315273 under the name of Ganzon Yap, married to Haima
Yap (Spouses Yap).
On July 19, 1985, before Rosa Elsa went to Australia, she had executed a Special
Power of Attorney (SPA) authorizing her mother, Andrea C. Serrano (Andrea), to sell the
property.
Sometime in May 1996, Cipriano Serrano (Cipriano), son of Andrea and brother
of Rosa Elsa, offered the property for sale to Spouses Benjamin and Farida
YapBitte (Spouses Bitte) showing them the authority of Andrea. On September 3, 1996,
Cipriano received from Spouses Bitte the amount of P200,000.00 as advance payment for
the property. Later on, on September 10, 1996, he received the additional amount of
P400,000.00. CAIHTE
Spouses Bitte sought a meeting for final negotiation with Rosa Elsa, the
registered owner of the subject property. At that time, Rosa Elsa was in Australia and had
no funds to spare for her travel to the Philippines. To enable her to come to the country,
Spouses Bitte paid for her round trip ticket.
On October 10, 1996, shortly after her arrival here in the Philippines, Rosa Elsa
revoked the SPA, through an instrument of even date, and handed a copy thereof to
Andrea.
The next day, on October 11, 1996, the parties met at Farida Bitte's office, but no
final agreement was reached. The next day, Rosa Elsa withdrew from the transaction.
On October 17, 1996, Spouses Bitte filed before the RTC a Complaint for Specific
Performance with Damages seeking to compel Rosa Elsa, Andrea and Cipriano to transfer
to their names the title over the subject property. The case was docketed as Civil Case No.
24,771-96 and raffled to RTC-Branch 13.
While the case was pending, Andrea sold the subject property to Spouses Bitte,
through a deed of absolute sale, dated February 25, 1997, and notarized by one Atty.
Bernardino Bolcan, Jr.
Immediately thereafter, Rosa Elsa asked Andrea about the sale. Her questions
about the sale, however, were ignored and her pleas for the cancellation of the sale and
restoration of the property to her possession were disregarded.
Undisputed by the parties is the fact that Rosa Elsa earlier mortgaged the subject
property to Mindanao Development Bank. Upon failure to pay the loan on maturity, the
mortgage was foreclosed and sold at a public auction on December 14, 1998 as evidenced
by the annotation on the title, Entry No. 1173153. 5
Armed with the deed of absolute sale executed by Andrea, Spouses Bitte were
able to redeem the property on September 14, 1998 from the highest bidder, Thelma Jean
Salvana, for P1.6 Million Pesos.
Thereafter, Spouses Bitte sold the property to Ganzon Yap (Ganzon), married to
Haima Yap. 6
Civil Case No. 24,771-96
(Spouses Bitte v. Rosa Elsa
Serrano Jonas, Andrea C.
Serrano and Cipriano Serrano,
Jr.)
As earlier recited, on October 17, 1996, Spouses Bitte filed before the RTC Civil
Case No. 24,771-96, a Complaint for Specific Performance with Damages seeking to
compel Rosa Elsa, Andrea and Cipriano to transfer the title of the subject property to their
names. DETACa
In their Complaint, Spouses Bitte alleged that sometime in May 1996, the
property was offered to them for sale by Cipriano, who showed them the SPA in favor of
Andrea; that on September 3, 1996 and September 10, 1996, Cipriano received from them
the respective amounts of P200,000.00 and then P400,000.00 as advance payments for
the property; that they sought a meeting for final negotiation with Rosa Elsa, then the
registered owner of the subject property; that at that time, Rosa Elsa was in Australia and
had no funds to spare in order to return to the Philippines; that to enable her to come to the
country, they paid for her round trip ticket; that on October 11, 1996, they and Rosa Elsa
met at Farida Bitte's office; that an agreement of sale of the subject property for the total
purchase price of P6.2 Million Pesos was reached; that P5 Million thereof would be paid on
October 18, 1996 and the balance, thirty (30) days thereafter; that on the following day,
Rosa Elsa withdrew from the transaction; and that on the same date, they demanded,
through a letter, the execution of the necessary documents to effect the transfer of the
property to their names, but to no avail.
On October 18, 1996, RTC-Branch 13 granted the prayer for the issuance of a
Temporary Restraining Order (TRO) preventing Rosa Elsa and her agents from disposing
the subject property. Subsequently, on November 8, 1996, a Writ of Preliminary
Injunction (WPI) was issued in favor of Spouses Bitte.
In response, Rosa Elsa countered that despite her appointment of her mother,
Andrea, as her attorney-in-fact/agent, she later gave her instructions not to sell the
property; that her revocation barred the consummation of the contract to sell; that it was her
belief that her return to the Philippines was in connection with the sale of another property
situated in Cawag, San Isidro, Davao Oriental; that it was a surprise to her when she
learned that Cipriano was still negotiating for the sale of the subject property; that for said
reason, she asked for a meeting with Spouses Bitte to discuss the issue; that in the
meeting, upon learning of the source of her air fare, she offered to refund it and to return
the unused ticket for her return trip, but Spouses Bitte refused her offer; that no authority
was given to Cipriano to receive any advance payment for the property; and that Andrea's
authority was revoked through a Deed of Revocation of the Special Power of
Attorney (SPA), dated October 10, 1996.
During the pre-trial conference held on July 30, 1999, Spouses Bitte failed to
appear. Consequently, RTC-Branch 13 dismissed their complaint and set the reception of
Rosa Elsa's counterclaim for hearing.
Later on, Benjamin Bitte manifested the withdrawal of their counsel. RTC-Branch
13 then cancelled the reception of Rosa Elsa's evidence without reconsidering the
dismissal of the complaint. aDSIHc
Civil Case No. 27,667-99
(Spouses Fred Jonas and Rosa
Elsa Serrano Jonas v. Sps.
Benjamin Bitte and Farida Yap
Bitte, Andrea C. Serrano, Reg.
of Deeds and the Clerk of
Court, RTC, Davao City)
On November 16, 1999, Spouses Jonas filed before the RTC Civil Case No.
27,667-99, a complaint for Annulment of Deed of Absolute Sale, Cancellation of TCT and
Recovery of Possession, Injunction, and Damages against Spouses Bitte.
In the Complaint, Spouses Jonas alleged that Rosa Elsa acquired the property
before marriage; that on July 19, 1985, when she decided to leave for Australia to reside
there, she executed an SPA of even date, granting her mother, Andrea, the authority to sell
the subject property; that while in Australia, she decided that she would no longer sell the
property; that she instructed her mother to stop offering the property to prospective buyers;
that upon arrival here in the Philippines in 1996, she revoked the SPA, through an
instrument, dated October 10, 1996, and handed a copy thereof to Andrea; that later, she
received information that the property was subsequently sold to Spouses Bitte, through a
Deed of Absolute Sale, dated February 25, 1997, signed by her mother, Andrea; and that
she then pleaded for the return of the property, but Andrea repeatedly ignored her.
Spouses Jonas eventually sought judicial recourse through the filing of a
complaint for the Annulment of the Deed of Absolute Sale and Reconveyance of the
Property which was raffled to RTC-Branch 9.
On November 17, 1999, Branch 9 issued a 20-day TRO restraining
Spouses Bitte from selling or disposing the subject property. On December 6, 1999, after
hearing, it issued a WPI for the same purpose.
On July 11, 2000, Rosa Elsa moved for the admission of an Amended Complaint
in order to implead Spouses Yap because the title over the subject property had been
subsequently registered in their names. ETHIDa
Consolidation of the
Two Cases
As earlier recited, RTC-Branch 13 dismissed the complaint of Spouses Bitte and
set the reception of Rosa Elsa's counterclaim for hearing. Later on, RTC-Branch 13
cancelled the reception of Rosa Elsa's evidence without reconsidering the dismissal of the
complaint.
Nonetheless, on May 26, 2000, RTC-Branch 13 reconsidered its earlier ruling
after seeing the need to consolidate Civil Case No. 27,667-99 with Civil Case No.
24,771-99 pending before the RTC, Branch 9, Davao (RTC-Branch 99). In the October 4,
2001 Order, the cases were ordered consolidated and were thereafter scheduled to be
jointly heard before Branch 13.
On April 17, 2002, Spouses Bitte were again declared in default by RTC-Branch
13 for their failure to attend the pre-trial.
On January 4, 2003, the counsel of Spouses Bitte withdrew and a new one
entered his appearance and then filed a verified motion for reconsideration.
On August 21, 2003, Spouses Bitte once again failed to appear in the pre-trial
and were, thus, declared non-suited. Rosa Elsa then presented her evidence ex parte.
Joint Decision of the RTC-Branch 13
On January 18, 2007, RTC-Branch 13 rendered a Joint Decision, 7 confirming the
dismissal of Civil Case No. 24,771-96 and directing Spouses Bitte to pay Rosa Elsa the
amount of P1,546,752.80, representing the balance of the sale of the subject. The
dispositive portion of the Joint Decision reads:
WHEREFORE, judgment is hereby rendered in these cases as
follows: cSEDTC
 a. Reiterating the dismissal of Civil Case No. 24,771-96;
b. Directing spouses Benjamin and Farida Bitte to pay Rosa Elsa
Serrano Jonas the amount of P1,546,752.80 (one million five
hundred forty-six thousand seven hundred fifty two and 80/100
pesos) representing the balance of the sale of the property
subject of this case to them;
c. Directing spouses Benjamin and Farida Bitte to pay interest on the
balance at the rate of 12% per annum from the date of this
decision until fully paid.
SO ORDERED. 8
Ruling of the CA
Aggrieved, Spouses Jonas appealed to the CA. On September 26, 2013, the
CA reversed the RTC-Branch 13 Joint Decision. In so ruling, the CA focused on the validity
and enforceability of the deed of absolute sale executed by Andrea in the name of Rosa
Elsa. The CA explained:
1. Andrea's execution on behalf of Rosa Elsa of the deed of absolute sale in favor
of Spouses Bitte was void and unenforceable as the authority to represent Rosa Elsa had
already been revoked as early as October 10, 1996. Without the authority to effect the
conveyance, the contract was without effect to Rosa Elsa, who was a stranger to the
conveyance in favor of Spouses Bitte. Rosa Elsa did not consent to the transaction either.
2. Considering that no valid conveyance was effected, Spouses Bitte had no right
to redeem the foreclosed property because they were not among those persons who could
redeem a property under Sec. 6 of Act No. 3135 and Section 27 of Rule 39 of the Rules of
Court. They could not be considered successors-in-interest or transferees because no
right was conveyed by Rosa Elsa on account of the revocation of the authority given to
Andrea.
3. Ganzon, the one who subsequently purchased the property from Spouses Bitte,
was not an innocent purchaser of the property as the conveyance was attended with
circumstances which should have alerted him of the fallibility of the title over the property.
Ganzon transacted with Spouses Bitte, who were then not yet the registered owners of the
property. He should have made inquiries first as to how Spouses Bitte acquired the rights
over the property. SDAaTC
Thus, the CA disposed as follows:
WHEREFORE, premises considered, the instant appeal is
hereby GRANTED and the Joint Decision, dated 18 January 2007 of the
RTC, Eleventh Judicial Region, Branch 13, Davao City, insofar as it
pertains to Civil Case No. 27,667-99 is hereby REVERSED and SET
ASIDE. Accordingly,
a) The Deed of Absolute Sale dated 25 February 1997 is hereby
declared NULL and VOID.
b) Transfer Certificate of Title (TCT) No. T-315273 in the name of
Ganzon Yap, married to Haima Yap, is
declared NULL and VOID, and the Registry of Deeds of
Davao City is hereby DIRECTED to cancel TCT No.
T-315273, and to issue a new title reinstating TCT No.
T-112717 in the name of Rosa Elsa S. Serrano; and
c) Ganzon and Haima Yap and/or whoever is in possession of the
subject property, or their agents and those acting for in
their behalf are hereby DIRECTEDto VACATE the
subject property and surrender the possession of the
same to plaintiff-appellant Rosa Elsa Serrano-Jonas.
SO ORDERED. 9
Aggrieved, Spouses Bitte moved for reconsideration, but their motion was denied
by the CA on February 26, 2014. 10
Hence, this petition by the petitioners, Farida Yap Bitte and the Heirs of
Benjamin Bitte: 11 acEHCD
ISSUES
I
WHETHER OR NOT THE COURT OF APPEALS-MINDANAO
STATION DEPARTED FROM THE ACCEPTED AND USUAL
COURSE OF JUDICIAL PROCEEDINGS WHEN IT ALLOWED THE
APPELLANTS BRIEF FILED BY RESPONDENTS IN VIOLATION OF
SECTION 7, RULE 44 OF THE RULES OF COURT
II
WHETHER OR NOT THE RULING OF THE COURT OF APPEALS
FINDING THE REVOCATION OF THE SPA, DESPITE LACK OF
BASIS, ENFORCEABLE AGAINST THIRD PERSONS IS IN ACCORD
WITH LAW.
III
WHETHER OR NOT THE RULING OF THE COURT OF APPEALS
FINDING THE DEED OF SALE INVALID IS SUPPORTED BY
STRONG AND CONCLUSIVE EVIDENCE AS REQUIRED BY LAW.
IV
WHETHER OR NOT THE RULING OF THE COURT OF APPEALS
DISREGARDING THE LEGAL EFFECTS OF THE FORECLOSURE
SALE IS A DEPARTURE FROM THE ESTABLISHED JURIDICIAL
PRONOUNCEMENTS.
V
 WHETHER OR NOT THE RULING OF THE COURT OF APPEALS
NOT FINDING GANZON YAP AS INNOCENT PURCHASER FOR
VALUE IS CONSISTENT WITH THE PRINCIPLE OF
INDEFEASIBILITY OF TITLE. 12
In advocacy of their positions, the petitioners submit the following arguments:
1. The deed of absolute sale executed by Andrea was valid and legal because the
SPA was not validly revoked as the revocation was not registered in the
Office of the Register of Deeds of Davao City. Thus, Andrea's authority
to transact with them on behalf of Rosa Elsa subsisted. SDHTEC
2. The CA decision, declaring the deed of absolute sale null and void, directing
the cancellation of TCT No. T-315273, and reinstating TCT No.
T-112717, without attacking the auction sale and redemption made by
Spouses Bitte was a highly questionable act.
3. Considering that the deed of absolute sale was valid, they could redeem the
property pursuant to Act No. 3135, as amended, and Sec. 27 of Rule 39
of the Rules of Court.
4. No evidence was presented showing that Ganzon indeed bought the property
in bad faith considering that the TCT No. T-112717 did not bear any
annotation that should have alarmed him before buying the property.
Ganzon could not have been expected to go beyond the title and look for
vices or defects that could have rendered him not a purchaser in good
faith and for value.
In their Comment, 13 Spouses Jonas called the attention of the Court to the fact
that Spouses Bitte had been declared in default by the RTC. Spouses Jonascontended
that, being in default, Spouses already lost the legal personality to resort to this petition.
They also averred that the questions presented in this petition are one of facts and not of
law. Not being a trier of facts, this Court must deny the petition.
On the merits, they argued that the SPA was not enforceable; that the deed of
absolute sale executed by Andrea was a nullity because it was made with knowledge on
the part of Spouses Bitte of the revocation of Andrea's authority; and that Spouses Yap
could not be considered purchasers in good faith as they failed to verify the authority of the
vendors, Spouses Bitte, considering that the certificate of title was still under Rosa Elsa's
name. AScHCD
In their Reply, 14 Spouses Bitte reiterated their positions as set out in their
petition.
Ruling of the Court
The Court denies the petition.
Procedural Issues
Before tackling the substantive issues, a few procedural matters must first be
threshed out.
The first is on the issue of the personality of the petitioners to file this petition.
Spouses Jonas claim that the door to any reliefs for Spouses Bitte, be it through a motion
for reconsideration or this subject petition, was closed by the finality and immutability of the
RTC declaration of their default. In other words, it is their stand that the petitioners do not
have the right to obtain recourse from this Court.
Spouses Jonas are mistaken.
The rule is that "right to appeal from the judgment by default is not lost and can be
done on grounds that the amount of the judgment is excessive or is different in kind from
that prayed for, or that the plaintiff failed to prove the material allegations of his complaint,
or that the decision is contrary to law." 15 If a party who has been declared in default has in
his arsenal the remedy of appeal from the judgment of default on the basis of the decision
having been issued against the evidence or the law, that person cannot be denied the
remedy and opportunity to assail the judgment in the appellate court. Despite being
burdened by the circumstances of default, the petitioners may still use all other remedies
available to question not only the judgment of default but also the judgment on appeal
before this Court. Those remedies necessarily include an appeal by certiorari under Rule
45 of the Rules of Court.
The second is on the propriety of the questions raised in the petition.
Spouses Jonas claims that that the issues raised here, being factual, are inappropriate for
being beyond the inquiry of this Court; that the factual findings of the CA could no longer be
modified or even reviewed citing the long standing rule that they are final and conclusive.
Although the rule admits of exceptions, they insist that none of them obtains in this
case. AcICHD
Indeed, the questions forwarded by Spouses Bitte are without doubt factual
issues. This Court, being not a trier of facts, has no recourse but to give credence to the
findings of the CA. Although it is true that there are exceptions as enumerated
in Development Bank of the Philippines v. Traders Royal Bank, 16 none of these were
invoked or cited in the petition.
On that score alone, this petition should be denied outright.
Substantive Issues
The Genuineness and Due Execution
of the Deed of Sale in favor of
Spouses Bitte were not proven
The Court agrees with the CA that the genuineness and due execution of the
deed of sale in favor Spouses Bitte were not established. Indeed, a notarized document
has in its favor the presumption of regularity. Nonetheless, it can be impugned by strong,
complete and conclusive proof of its falsity or nullity on account of some flaws or defects on
the document. 17
In the case at bench, it is on record that the National Archives, Records
Management and Archives Office, Regional Archives Division, Davao City, certified that it
had no copy on file of the Deed of Absolute Sale, dated February 25, 1997, sworn before
Atty. Bernardino N. Bolcan, Jr., denominated as Doc. No. 988, Page No. 198, Book No. 30,
Series of 1997. Their record shows that, instead, the document executed on said date with
exactly the same notarial entries pertained to a Deed of Assignment of Foreign Letter of
Credit in favor of Allied Banking Corporation. 18 Such irrefutable fact rendered doubtful
that the subject deed of absolute sale was notarized.
Article 1358 of the New Civil Code requires that the form of a contract transmitting
or extinguishing real rights over immovable property should be in a public document.
Pertinently, Section 19, Rule 132 of the Rules of Court reads:
Section 19. Classes of documents. — For the purposes of their
presentation in evidence, documents are either public or private.
Public documents are: TAIaHE
(a) The written official acts, or records of the official acts of the
sovereign authority, official bodies and tribunals, and
public officers, whether of the Philippines, or of a foreign
country;
(b) Documents acknowledged before a notary public except last
wills and testaments; and
(c) Public records, kept in the Philippines, of private documents
required by law to be entered therein.
All other writings are private.
Not having been properly and validly notarized, the deed of sale cannot be
considered a public document. It is an accepted rule, however, that the failure to observe
the proper form does not render the transaction invalid. It has been settled that a sale of
real property, though not consigned in a public instrument or formal writing is, nevertheless,
valid and binding among the parties, for the time-honored rule is that even a verbal contract
of sale or real estate produces legal effects between the parties. 19
Not being considered a public document, the deed is subject to the requirement of
proof under Section 20, Rule 132, which reads:
Section 20. Proof of private document. — Before any private
document offered as authentic is received in evidence its due execution
and authenticity must be proved either:
(a) By anyone who saw the document executed or written; or
(b) By evidence of the genuineness of the signature or
handwriting of the maker.
Any other private document need only be identified as that
which it is claimed to be.
Accordingly, the party invoking the validity of the deed of absolute sale had the
burden of proving its authenticity and due execution. Unfortunately, SpousesBitte were
declared as in default and, for said reason, they failed to discharge such burden in the court
below. Thus, the Court agrees with the CA that the RTC erred in applying the presumption
of regularity that attaches only to duly notarized documents as distinguished from private
documents. cDHAES
Without the presumption of regularity accorded to the deed coupled with the
default of the party relying much on the same, the purported sale cannot be considered. It
is as if there was no deed of sale between Spouses Bitte and Spouses Jonas.
The genuineness and due execution of the deed of sale in favor of
Spouses Bitte not having been established, the said deed can be considered non-existent.
Spouses Bitte, however, are questioning the "non-existent" deed of sale.
Granting that its genuineness and
due of execution were proven, the
deed of sale is still unenforceable;
Doctrine of Apparent Authority
Granting arguendo that the deed of sale may still be considered, the transaction
is, nevertheless, unenforceable.
In this regard, petitioners posit that the deed must be recognized and enforced for
the reason that, despite the revocation of the authority of Andrea prior to the execution of
the deed, they should not be bound by that revocation for lack of notice. Consequently,
they contend that as far as they are concerned, the contract of sale should be given effect
for having been executed by someone appearing to them as authorized to sell.
They further argue that the failure of Rosa Elsa to register, file and enter the deed
of revocation in the Registry of Deeds did not bind Spouses Bitte under Section 52 of
the Property Registration Decree. Said section provides that "[e]very conveyance,
mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered
land shall, if registered, filed or entered in the Office of the Register of Deeds for the
province or city where the land to which it relates lies, be constructive notice to all persons
from the time of such registering, filing or entering." It is their position that without the
registration of the revocation, they cannot be bound by it and the Court must respect the
sale executed by her agent, Andrea. ASEcHI
The Court is not persuaded.
Basic is the rule that the revocation of an agency becomes operative, as to the
agent, from the time it is made known to him. Third parties dealing bona fidewith one who
has been accredited to them as an agent, however, are not affected by the revocation of
the agency, unless notified of such revocation. 20 This refers to the doctrine of apparent
authority. Under the said doctrine, acts and contracts of the agent within the apparent
scope of the authority conferred on him, although no actual authority to do such acts or has
been beforehand withdrawn, revoked or terminated, bind the principal. 21 Thus, as to a
third person, "apparent authority, when present, trumps restrictions that the principal has
privately imposed on the agent. The relevant appearance is that the principal has conferred
authority on an agent. An actor may continue to possess apparent authority although the
principal has terminated the actor's actual authority or the agency relationship between
them. This is so because a third party may reasonably believe that the actor continues to
act as an agent and within the scope of actual authority on the basis of manifestations
previously made by the principal. Such a manifestation, once made, remains operative
until the third party has notice of circumstances that make it unreasonable to believe that
the actor continues to have actual authority." 22 Hence, apparent authority may survive the
termination of actual authority or of an agency relationship. 23
To persons who relied in good faith on the appearance of authority, no prejudice
must be had by virtue of such reliance on what appeared to them as perfectly in
accordance with the observable authority of an agent. It must not be disturbed unless it can
be shown that they had been notified or became aware of the termination of the agency.
Stated differently, a third party cannot be bound by a revocation unless he had notice or
knowledge of such revocation.
The notice or knowledge may be actual or implied. In either case, there is no
apparent authority to speak of and all contracts entered into by the former agent with a third
person cannot bind the principal. The reason behind this is that a third person cannot feign
ignorance of facts which should have put him on guard and which he had a means of
knowing. "Apparent authority ends when it is no longer reasonable for the third party with
whom an agent deals to believe that the agent continues to act with actual
authority." 24 In Cervantes v. Court of Appeals, 25 the Court wrote that "when the third
person, knows that the agent was acting beyond his power or authority, the principal
cannot be held liable for the acts of the agent." ITAaHc
Generally, implied notice, also known as constructive notice, is attributed to third
persons through the registration of the termination in the Registry of Deeds.
Under Article 1924 of the New Civil Code, "an agency is revoked if the principal
directly manages the business entrusted to the agent, dealing directly with third persons."
Logic dictates that when a principal disregards or bypasses the agent and directly deals
with such person in an incompatible or exclusionary manner, said third person is deemed
to have knowledge of the revocation of the agency. They are expected to know
circumstances that should have put them on guard as to the continuing authority of that
agent. The mere fact of the principal dealing directly with the third person, after the latter
had dealt with an agent, should be enough to excite the third person's inquiring mind on the
continuation of his authority.
In the case at bench, records show that Spouses Bitte initially transacted with
Andrea as Rosa Elsa's agent on the basis of the SPA, dated July 19, 1985. Thereafter,
however, Rosa Elsa returned to the Philippines and directly negotiated with them on
October 11, 1996. Rosa Elsa's act of taking over in the actual negotiation for the sale of the
property only shows that Andrea's authority to act has been revoked pursuant to Article
1924. At that point, Spouses Bitte had information sufficient enough to make them believe
that Andrea was no longer an agent or should have compelled them to make further
inquiries. No attempt was shown that Spouses Bitte took the necessary steps to inquire if
Andrea was still authorized to act at that time. Despite their direct negotiation with Rosa
Elsa, they still entered into a contract with Andrea on February 25, 1997. CHTAIc
Persons dealing with an agent are bound at their peril, if they
would hold the principal liable, to ascertain not only the fact of agency
but also the nature and extent of the agents authority, and in case either
is controverted, the burden of proof is upon them to establish it. 26
Legal Consequence
"It is a basic axiom in civil law embodied in our Civil Code that no one may
contract in the name of another without being authorized by the latter, or unless he has by
law a right to represent him. A contract entered into in the name of another by one who has
no authority or legal representation, or who has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it
has been executed, before it is revoked by the other contracting party." 27 Considering that
the sale was executed by an agent whose authority, be it actual or apparent, had been
revoked, the transaction isunenforceable pursuant to Article 1317 and 1403 (1) of the
Civil Code which read: cHDAIS
Article 1317. No one may contract in the name of another
without being authorized by the latter, or unless he has by law a right to
represent him.
A contract entered into in the name of another by one who has
no authority or legal representation, or who has acted beyond his
powers, shall beunenforceable, unless it is ratified, expressly or
impliedly, by the person on whose behalf it has been executed, before it
is revoked by the other contracting party. (1259a)
ART. 1403. The following contracts are unenforceable, unless
they are ratified:
(1) Those entered into the name of another person by one who
has been given no authority or legal representation, or who has acted
beyond his powers;
xxx xxx xxx. [Emphases Supplied]
Considering that the deed of absolute sale was executed at a time when
Spouses Bitte were deemed notified of the termination of the agency, the sale must be
treated as having been entered into by Andrea in her personal capacity. One can sell only
what one owns or is authorized to sell, and the buyer can acquire no more right than what
the seller can transfer legally. 28 Accordingly, Spouses Bitte acquired no better title than
what Andrea had over the property, which was nil.
In sum, the deed of absolute sale executed by Andrea in favor of Spouses Bitte is
unenforceable against Rosa Elsa because of their notice of the revocation of the agency.
Spouses Bitte did not possess
the required personality to
redeem the subject property
Obviously, Spouses Bitte acquired no interest in the subject property because the
deed that they were anchoring their claims on did not bind Rosa Elsa. Hence, they did not
have the personality to redeem the foreclosed property as provided under Act No. 3135, as
amended by Act No. 4118, and of Section 27, Rule 39 of theRules of Court. ISHCcT
 Act No. 3135, as amended, provides:
SEC. 6. In all cases in which an extrajudicial sale is made
under the special power hereinbefore referred to, the debtor,
his successors in interest or anyjudicial creditor or judgment
creditor of said debtor, or any person having a lien on the property
subsequent to the mortgage or deed of trust under which the property is
sold, may redeem the same at any time within the term of one year from
and after the date of the sale; and such redemption shall be governed by
the provisions of sections four hundred and sixty-four to four hundred
and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these
are not inconsistent with the provisions of this Act.
[Emphases Supplied]
Section 27 of Rule 39 of the Rules of Court enumerates the persons who may
exercise the right of redemption of a foreclosed property: DHITCc
Section 27. Who may redeem real property so sold. — Real
property sold as provided in the last preceding section, or any part
thereof sold separately, may be redeemed in the manner hereinafter
provided, by the following persons:
(a) The judgment obligor; or his successor in interest in the whole
or any part of the property; and
(c) A creditor having a lien by virtue of an attachment, judgment
or mortgage on the property sold, or on some part
thereof, subsequent to the lien under which the property
was sold. Such redeeming creditor is termed a
redemptioner.
In Castro v. IAC, 29 as correctly cited by the CA, "only such persons as are
authorized to do so by statute can redeem from an execution sale." Spouses Bittewere not
so authorized considering that they were not among those enumerated in Act No.
3135 and Section 27 of Rule 39.
Spouses Yap were also not
Purchasers in Good Faith and
for Value
After the purported "transfer" to Spouses Yap, the subject property was registered
and a new title was issued in their names. Despite being impleaded in the case, however,
they were silent and did not even join Spouses Bitte in the subject petition. It is
Spouses Bitte who have been taking the cudgels for them.
On the issue, Spouses Bitte contend that Spouses Yap were purchasers in good
faith and for value, and, for that reason, should have been recognized to have good title
over the subject property.
Settled is the rule that the burden of proving the status of a purchaser in good faith
and for value lies upon one who asserts that status. 30 This onus probandicannot be
discharged by mere invocation of the ordinary presumption of good faith. 31 Considering
that the title was still registered in the name of Rosa Elsa when Spouses Yap bought it from
Spouses Bitte, the burden was on them to prove that they were purchasers in good faith. In
this regard, they failed. Not an iota of evidence was adduced by them to prove their
ignorance of the true situation. cEaSHC
Through Spouses Bitte, Spouses Yap are invoking good faith for want of notice
on their part that Andrea's authority had already been revoked. They point out that Ganzon,
being a layman, could not have been expected to know the intricacies of the law for which
reason that he could not attribute any fault in the deed of sale executed by a person with a
SPA.
The Court is not persuaded.
Spouses Yap were not purchasers in good faith and for value. Significantly,
Ganzon transacted with someone who was not even the registered owner of the property.
At the time of the transfer, the property was still registered in the name of Rosa Elsa.
The rule is that a person who buys from one who is not the registered owner is
expected to "examine not only the certificate of title but all factual circumstances necessary
for [one] to determine if there are any flaws in the title of the transferor, or in [the] capacity
to transfer the land. A higher degree of prudence is thus expected from that person even if
the land object of the transaction is registered." 32
Here, no evidence was presented to show that Spouses Yap exerted that
required diligence in determining the factual circumstances relating to the title and authority
of Spouses Bitte as sellers of the property. The records are bereft of any proof that
Spouses Yap showed eagerness to air their side despite being impleaded.
Hence, the protection the law accords to purchasers in good faith and for value
cannot be extended to them. They have failed to show the required diligence needed in
protecting their rights as buyers of property despite knowledge of facts that should have led
them to inquire and investigate the possible defects in the title of the seller. Thus, in the
same way that Spouses Bitte cannot claim valid title over the property, Spouses Yap
cannot also do the same. CTIEac
A purchaser cannot close his eyes to facts which should put a
reasonable man upon his guard, and then claim that he acted in good
faith under the belief that there was no defect in the title of the vendor. 33
In sum, the transfer to Spouses Yap was null and void as Spouses Bitte had
nothing to sell or transfer to them.
WHEREFORE, the petition is DENIED.
SO ORDERED.
||| (Bitte v. Spouses Jonas, G.R. No. 212256, [December 9, 2015])
 FIRST DIVISION
[G.R. No. 211113. June 29, 2015.]
ADERITO Z. YUJUICO, petitioner, vs. UNITED RESOURCES ASSET
MANAGEMENT, INC., ATTY. RICHARD J. NETHERCOTT and ATTY.
HONORATO R. MATABAN, respondents.
DECISION
PEREZ, J p:
This case is an appeal 1 from the Decision 2 dated 12 August 2013 and
Resolution 3 dated 29 January 2014 of the Court of Appeals in CA-G.R. SP No.
117431. HTcADC
The antecedents:
Prelude
The Strategic Alliance Development Corporation (STRADEC) is a domestic
corporation operating as a business development and investment company.
In 2000, several stockholders 4 of STRADEC executed Pledge
Agreements 5 whereby they pledged a certain amount of their stocks 6 in the said
company in favor of the respondent United Resources Asset Management, Inc. (URAMI).
These pledges were meant to secure the loan obligations of STRADEC to URAMI under
theirLoan Agreement 7 of 28 December 2000.
One of the stockholders of STRADEC who so pledged his shares in STRADEC
was petitioner Aderito Z. Yujuico.
The Notice and Civil Case No. 70027
Apparently, STRADEC had not been able to comply with its payment obligations
under the Loan Agreement.
On 18 June 2004, STRADEC and its stockholders received a notice 8 informing
them about an impending auction sale of the stocks pledged under the Pledge
Agreements in order to satisfy STRADEC's outstanding obligations 9 under the Loan
Agreement. The notice was sent and signed by respondent Atty. Richard J. Nethercott
(Atty. Nethercott), who claimed to be the attorney-in-fact of URAMI.
The notice stated that, pursuant to the request 10 earlier filed by Atty. Nethercott
before "the notary public of Bayambang, Pangasinan," the public auction of the pledged
STRADEC stocks had been set at 8:30 in the morning of 23 June 2004 in front of the
municipal building of Bayambang, Pangasinan. 11
On 21 June 2004, petitioner filed before the Regional Trial Court (RTC) of Pasig
City an injunction complaint 12 seeking to enjoin the sale at public auction mentioned in
Atty. Nethercott's notice. Impleaded as defendants in such complaint were URAMI, Atty.
Nethercott and herein respondent Atty. Honorato R. Mataban (Atty. Mataban) — the notary
public referred to in the notice as the one requested by Atty. Nethercott to conduct the
auction of the pledged stocks.
In the complaint, petitioner argued that the planned auction sale of the stocks
pledged under the Pledge Agreements is void as the same suffers from a multitude of fatal
defects; one of which is the supposed lack of authority of Atty. Nethercott to initiate such a
sale on behalf of URAMI. As petitioner elaborated:
(k) [Atty. Nethercott] has no valid authority to represent URAMI for any
purpose. . . . . He is neither the counsel nor the agent of URAMI, whose
authorized representative under Section 9, paragraph 10 of the Loan
Agreement is its Chief Operating Officer, Ms. Lorna P. Feliciano. There
has been no modification of this provision in accordance with paragraph
9.04 of the same provision. 13 CAIHTE
The injunction complaint, which also contained prayers for the issuance of a
temporary restraining order and of a writ of preliminary injunction, was docketed in the RTC
as Civil Case No. 70027.
The Sale and URAMI's Answer with Counterclaim
As the RTC did not issue a temporary restraining order in Civil Case No. 70027,
the public auction of the pledged STRADEC stocks pushed through, as scheduled, on 23
June 2004. In that auction, URAMI emerged as the winning bidder for all of the stocks
pledged under the Pledge Agreements.
On 5 July 2004, however, the RTC issued a writ of preliminary injunction, which
effectively prevented URAMI from appropriating the stocks it had purchased during the
auction sale. On the same day, Atty. Nethercott filed his answer denying the material
allegations of the injunction complaint.
More than a year later, or on 21 April 2006, URAMI — which until then was still not
able to file an answer of its own — filed with the RTC a motion for leave to file an answer.
Attached to the motion was a copy of URAMI's answer. 14 On 5 September 2006, the RTC
granted URAMI's motion and allowed the admission of its answer.
In its answer, URAMI agreed with the petitioner that the 23 June 2004 auction
sale was void; URAMI admitted that it never authorized Atty. Nethercott to cause the sale
of the stocks pledged under the Pledge Agreements. URAMI, however, pointed out that,
since it never sanctioned the 23 June 2004 auction sale, it similarly cannot be held liable to
the petitioner for any prejudice that may be caused by the conduct of such auction
sale, viz.:
 4.1 The [injunction complaint] dated 28 June 2004 fails to state a cause answer was meant to supplant URAMI's original answer, which had been prepared by the
of action only insofar as it seeks judgment ordering URAMI to pay VGD law firm.
[petitioner] the amounts of Five Hundred Thousand Pesos
In its amended answer, URAMI still vouched for the dismissal of the injunction
(Php500,000.00) as attorney's fees and One Hundred Thousand Pesos
complaint but reneged from its previous admissions under the original answer. This time,
(Php100,000.00) as legal expenses.
URAMI claimed that the 23 June 2004 auction sale was valid and that it duly authorized
4.1.1. It bears emphasizing that the extra-judicial Atty. Nethercott to initiate such sale on its behalf. 21
foreclosure of the pledged shares conducted by [Atty.
On 12 March 2009, petitioner filed with the RTC a motion to strike out
Nethercott] was without valid authority from URAMI.
URAMI's amended answer on the grounds that: (1) it was not timely filed; (2) it was filed
Consequently, it cannot be made liable for the acts of
without leave of court; and (3) its admission would prejudice petitioner's rights. In an order
another.
of even date, however, the RTC denied petitioner's motion and allowed admission of
4.1.2. URAMI never sanctioned or directed the URAMI's amended answer.
questioned auction sale. Neither did URAMI give its
On 27 March 2009, petitioner filed with the RTC a motion for reconsideration of
consent, explicit or otherwise, to said foreclosure or
the order allowing admission of URAMI's amended answer. DETACa
any subsequent acts of [Atty. Nethercott] pursuant
thereto. Hence, no liability whatsoever may be On 18 August 2009, the RTC issued an order granting petitioner's motion for
imputed to URAMI. reconsideration and setting aside its earlier order allowing admission of URAMI'samended
answer. In the said order, the RTC explained that the amended answer could not be
4.1.3. If at all, the recourse of the plaintiff is solely
admitted just yet as the same had been filed by URAMI without first securing leave of court.
against [Atty. Nethercott]. 15
Thus, on 21 September 2009, URAMI filed with the RTC a motion for leave to file
Hence, overall, URAMI prayed for the dismissal of the injunction complaint
an amended answer (motion for leave). 22 In the said motion, URAMI formally asked
against it.
permission from the RTC to allow it to file the amended answer explaining that the original
Petitioner's Motion for Summary Judgment and the Suspension of Civil answer filed by its previous counsel "does not bear truthful factual allegations and is
Case No. 70027 indubitably not supported by evidence on record." 23
On 29 May 2007, petitioner filed with the RTC a motion for summary On 10 November 2009, the RTC issued an Order 24 granting URAMI's motion for
judgment 16 arguing that, in view of the admissions made by URAMI in its answer leave.
regarding Atty. Nethercott's lack of authority to cause the auction sale of pledged stocks,
Petitioner filed a motion for reconsideration against the 10 November 2009 Order,
there was no longer any genuine issue left to be resolved in trial.
but the same was denied by the RTC in its Order 25 of 27 September 2010.
URAMI and Atty. Nethercott both filed comments on petitioner's motion for
CA-G.R. SP No. 117431 and the Present Appeal
summary judgment.
Defeated but undeterred, petitioner next challenged the Orders dated 10
The resolution of petitioner's motion for summary judgment, however, was
November 2009 and 27 September 2010 of the RTC through a certiorari petition before the
deferred when, on 25 July 2007, this Court issued in G.R. No. 177068 17 a temporary
Court of Appeals. This certiorari petition was docketed in the Court of Appeals as CA-G.R.
restraining order 18 calling to a halt the conduct of further proceedings in Civil Case No.
SP No. 117431.
70027. This temporary restraining order remained in effect for more than a year until it was
finally lifted by this Court on 13 October 2008. 19 On 12 August 2013, the Court of Appeals rendered a Decision 26 sustaining the
challenged orders of the RTC and dismissing petitioner's certiorari petition. Petitioner
Thereafter, proceedings in Civil Case No. 70027 resumed.
moved for reconsideration, but the Court of Appeals remained steadfast. 27
URAMI's Change of Counsel and Amended Answer
Hence, the present appeal.
On 26 January 2009, URAMI changed its counsel of record for Civil Case No.
In the present appeal, petitioner argues that the Court of Appeals erred in
70027. The law firm Villanueva, Gabionza & De Santos (VGD law firm), which hitherto had
sustaining the orders of the RTC allowing URAMI to file its amended answer.Petitioner
been URAMI's counsel of record, was thus replaced by Atty. Edward P. Chico (Atty. Chico).
argues that URAMI should not have been so allowed for the following reasons: 28
Under the counsel of Atty. Chico, URAMI filed with the RTC an amended answer
with compulsory counterclaim (amended answer) 20 on 23 February 2009. Theamended
 1. URAMI had not shown that the admissions it made under the original answer
were made through "palpable mistake." Hence, pursuant to Section 4 of
Rule 129 of the Rules of Court,29 URAMI is barred from contradicting
such admissions through the filing of its amended answer.
2. The amended answer is merely a ploy of URAMI to further delay the
proceedings in Civil Case No. 70027.
Thus, petitioner prays that we set aside the decision of the Court of Appeals,
disallow URAMI's amended answer and direct the RTC in Civil Case No. 70027 to resolve
his motion for summary judgment with dispatch. 30
OUR RULING
Our rules of procedure allow a party in a civil action to amend his pleading as
a matter of right, so long as the pleading is amended only once and before a responsive
pleading is served (or, if the pleading sought to be amended is a reply, within ten days after
it is served). 31 Otherwise, a party can only amend his pleading upon prior leave of
court. 32
As a matter of judicial policy, courts are impelled to treat motions for leave to file
amended pleadings with liberality. 33 This is especially true when a motion for leave is filed
during the early stages of proceedings or, at least, before trial. 34 Our case law had long
taught that bona fide amendments to pleadings should be allowed in the interest of justice
so that every case may, so far as possible, be determined on its real facts and the
multiplicity of suits thus be prevented. 35 Hence, as long as it does not appear that the
motion for leave was made with bad faith or with intent to delay the proceedings, 36 courts
are justified to grant leave and allow the filing of an amended pleading. Once a court grants
leave to file an amended pleading, the same becomes binding and will not be disturbed on
appeal unless it appears that the court had abused its discretion. 37
In this case, URAMI filed its motion for leave seeking the admission of
its amended answer more than two (2) years after it filed its original answer. Despite the
considerable lapse of time between the filing of the original answer and the motion for
leave, the RTC still granted the said motion. Such grant was later affirmed on appeal by the
Court of Appeals.
Petitioner, however, opposes the grant of leave arguing that URAMI is precluded
from filing an amended answer by Section 4 of Rule 129 of the Rules of Courtand claiming
that URAMI's amended answer was only interposed for the purpose of delaying the
proceedings in Civil Case No. 70027.
We rule in favor of allowing URAMI's amended answer. Hence, we deny the
present appeal.
First. We cannot subscribe to petitioner's argument that Section 4 of Rule 129 of
the Rules of Court precludes URAMI from filing its amended answer. To begin with, the
said provision does not set the be-all and end-all standard upon which amendments to
pleadings may or may not be allowed. Matters involving the amendment of pleadings are
primarily governed by the pertinent provisions of Rule 10 and not by Section 4 of Rule 129
of the Rule of Court. Hence, allegations (and admissions) in a pleading — even if not
shown to be made through "palpable mistake" — can still be corrected or amended
provided that the amendment is sanctioned under Rule 10 of the Rules of Court. aDSIHc
Nevertheless, even if we are to apply Section 4 of Rule 129 to the present case,
we still find the allowance of URAMI's amended answer to be in order. To our mind, a
consideration of the evidence that URAMI plans to present during trial indubitably reveals
that the admissions made by URAMI under its original answer were a product of clear and
patent mistake.
One of the key documents that URAMI plans to present during trial, which it also
attached in its amended answer as "Annex 8" thereof, is URAMI's Board
Resolution 38 dated 21 June 2004 that evinces Atty. Nethercott's authority to cause the
foreclosure on the pledged stocks on behalf of URAMI. With the existence of such board
resolution, the statement in URAMI's original answer pertaining to the lack of authority of
Atty. Nethercott to initiate the 23 June 2004 auction sale thus appears mistaken, if not
entirely baseless and unfounded. Hence, we find it only right and fair, that URAMI should
be given a chance to file its amended answer in order to rectify such mistakes in its original
answer.
Second. We also cannot agree with the petitioner's accusation that the amended
answer was only interposed to further delay the proceedings in Civil Case No. 70027. As
the previous discussion reveal, the amended answer aims to correct certain allegations of
fact in the original answer which, needless to state, are crucial to a full and proper
disposition of Civil Case No. 70027. It is, therefore, in the best interest of justice and equity
that URAMI should be allowed to file the amended answer.
Third. The mere fact that URAMI filed its motion for leave years after the original
answer is also not reason enough in itself to discredit the amended answer as a sheer
dilatory measure. Readily observable from the established facts is that the perceived delay
between the filing of the motion for leave and the filing of the original answer is not purely
attributable to URAMI. It must be remembered that some time after the original answer was
filed, we issued a temporary restraining order in G.R. No. 177068 that effectively
suspended the proceedings in Civil Case No. 70027 for more than a year. Thus, even if it
wanted to, URAMI really could not have filed a motion for leave to file amended
answer sooner than it already had. On this score, we note that it only took URAMI a little
over three months after the lifting of the temporary restraining order to replace its previous
counsel of record in Civil Case No. 70027 and to file its amended answer.
Fourth. All in all, we find absolutely no cause to overrule the grant of leave
granted to URAMI to file its amended answer. The said grant is consistent with our
time-honored judicial policy of affording liberal treatment to amendments to pleadings,
especially those made before the conduct of trial.
We should always remember that our rules of procedure are mere tools designed
to facilitate the attainment of justice. Their application should never be allowed to frustrate
the truth and the promotion of substantial justice. 39 Were we to succumb to petitioner's
arguments today, however, we would have sanctioned an outcome totally inconsistent with
the underlying purpose of our procedural laws. That, we simply cannot countenance.
 WHEREFORE, premises considered, the petition is hereby DENIED. The
Decision dated 12 August 2013 and Resolution dated 29 January 2014 of the Court of
Appeals in CA-G.R. SP No. 117431 are hereby AFFIRMED.
SO ORDERED.
||| (Yujuico v. United Resources Asset Management, Inc., G.R. No. 211113, [June 29, 2015])
 THIRD DIVISION
[G.R. No. 143264. April 23, 2012.]
LISAM ENTERPRISES, INC. represented by LOLITA A. SORIANO, and
LOLITA A. SORIANO, petitioners, vs. BANCO DE ORO UNIBANK, INC.
(formerly PHILIPPINE COMMERCIAL INTERNATIONAL
BANK), * LILIAN S. SORIANO, ESTATE OF LEANDRO A. SORIANO,
JR., REGISTER OF DEEDS OF LEGASPI CITY, and JESUS L.
SARTE, respondents.
DECISION
PERALTA, J p:
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of
Court, praying that the Resolution 1 of the Regional Trial Court of Legaspi City (RTC),
dated November 11, 1999, dismissing petitioners' complaint, and its Order 2 dated May 15,
2000, denying herein petitioners' Motion for Reconsideration and Motion to Admit
Amended Complaint, be reversed and set aside.
The records reveal the following antecedent facts.
On August 13, 1999, petitioners filed a Complaint against respondents for
Annulment of Mortgage with Prayer for Temporary Restraining Order & Preliminary
Injunction with Damages with the RTC of Legaspi City. Petitioner Lolita A. Soriano alleged
that she is a stockholder of petitioner Lisam Enterprises, Inc. (LEI) and a member of its
Board of Directors, designated as its Corporate Secretary. The Complaint also alleged the
following:
4. Sometime in 1993, plaintiff LEI, in the course of its business
operation, acquired by purchase a parcel of residential land with
improvement situated at Legaspi City, covered by Transfer Certificate of
Title No. 37866, copy attached as Annex "A," which property is more
particularly described as follows: DaACIH
xxx xxx xxx
5. On or about 28 March 1996, defendant Lilian S. Soriano and
the late Leandro A. Soriano, Jr., as husband and wife (hereafter "Spouses
Soriano"), in their personal capacity and for their own use and benefit,
obtained a loan from defendant PCIB (Legaspi Branch) (now known as
Banco de Oro Unibank, Inc.) in the total amount of P20 Million;
6. That as security for the payment of the aforesaid credit
accommodation, the late Leandro A. Soriano, Jr. and defendant Lilian S.
Soriano, as president and treasurer, respectively of plaintiff LEI, but
without authority and consent of the board of said plaintiff and with the use
of a falsified board resolution, executed a real estate mortgage on 28
March 1996, over the above-described property of plaintiff LEI in favor of
defendant PCIB, and had the same registered with the Office of the
Registry of Deeds, Legaspi City, copy of the Real Estate Mortgage is
hereto attached and marked as Annex "B," and made part hereof, to the
prejudice of plaintiffs;
7. That specifically, the Spouses Soriano, with intent to defraud
and prejudice plaintiff LEI and its stockholders, falsified the signatures of
plaintiff Lolita A. Soriano as corporate secretary and director of plaintiff LEI,
in a document denominated as board resolution purportedly issued by the
board of plaintiff LEI on 6 November 1995, making it appear that plaintiff
LEI's Board met and passed a board resolution on said date authorizing
the Spouses Soriano to mortgage or encumber all or substantially all of the
properties of plaintiff LEI, when in fact and in truth, no resolution of that
nature was ever issued by the board of plaintiff LEI, nor a meeting was
called to that effect, copy of the resolution in question is hereto attached
and marked as Annex "C," and made part hereof;
8. That plaintiff Lolita A. Soriano as Corporate Secretary of
plaintiff LEI, had never signed a board resolution nor issued a Secretary's
Certificate to the effect that on 6 November 1995 a resolution was passed
and approved by plaintiff LEI authorizing the Spouses Soriano as president
and treasurer, respectively, to mortgage the above-described property of
plaintiff LEI, neither did she appear personally before a notary public on 28
March 1996 to acknowledge or attest to the issuance of a supposed board
resolution issued by plaintiff LEI on 6 November 1995;
9. That defendant PCIB, knowing fully well that the property being
mortgaged by the Spouses Soriano belongs to plaintiff LEI, a corporation,
negligently and miserably failed to exercise due care and prudence
required of a banking institution. Specifically, defendant PCIB failed to
investigate and to delve into the propriety of the issuance of or due
execution of subject board resolution, which is the very foundation of the
validity of subject real estate mortgage. Further, it failed to verify the
genuineness of the signatures appearing in said board resolution nor to
confirm the fact of its issuance with plaintiff Lolita A. Soriano, as the
corporate secretary of plaintiff LEI. Furthermore, the height of its
negligence was displayed when it disregarded or failed to notice that the
questioned board resolution with a Secretary's Certificate was notarized
only on 28 March 1996 or after the lapse of more than four (4) months from
its purported date of issue on 6 November 1995. That these circumstances
should have put defendant PCIB on notice of the flaws and infirmities of the
questioned board resolution. Unfortunately, it negligently failed to exercise
due care and prudence expected of a banking institution; HADTEC
10. That having been executed without authority of the board of
plaintiff LEI said real estate mortgage dated 28 March 1996 executed by
the Spouses Soriano, as officers of plaintiff LEI in favor of defendant PCIB,
is the null and void and has no legal effect upon said plaintiff.
Consequently, said mortgage deed cannot be used nor resorted to by
defendant PCIB against subject property of plaintiff LEI as no right or rights
whatsoever were created nor granted thereunder by reason of its nullity;
11. Worst, sometime in August 1998, in order to remedy the
defects in the mortgage transaction entered by the Spouses Soriano and
defendant PCIB, the former, with the unlawful instigation of the latter,
signed a document denominated as "Deed of Assumption of Loans and
Mortgage Obligations and Amendment of Mortgage"; wherein in said
document, plaintiff LEI was made to assume the P20 Million personal
indebtedness of the Spouses Soriano with defendant PCIB, when in fact
and in truth it never so assumed the same as no board resolution duly
certified to by plaintiff Lolita A. Soriano as corporate secretary was ever
issued to that effect, copy of said Deed is hereto attached and marked as
Annex "D," and made part hereof;
12. Moreover, to make it appear that plaintiff LEI had consented
to the execution of said deed of assumption of mortgage, the Spouses
Soriano again, through the unlawful instigation and connivance of
defendant PCIB, falsified the signature of plaintiff Lolita A. Soriano as
corporate secretary of plaintiff LEI in a document denominated as
"Corporate Resolution to Borrow," to make it appear that plaintiff LEI so
authorized the Spouses Soriano to perform said acts for the corporation,
when in fact and in truth no such authority or resolution was ever issued
nor granted by plaintiff LEI, nor a meeting called and held for said purpose
in accordance with its By-laws; copy of which is hereto attached and
marked as Annex "E" and made part hereof;
13. That said irregular transactions of defendant Lilian S. Soriano
and her husband Leandro A. Soriano, Jr., on one hand, and defendant
PCIB, on the other, were discovered by plaintiff Lolita A. Soriano sometime
in April 1999. That immediately upon discovery, said plaintiff, for herself
and on behalf and for the benefit of plaintiff LEI, made demands upon
defendants Lilian S. Soriano and the Estate of Leandro A. Soriano, Jr., to
free subject property of plaintiff LEI from such mortgage lien, by paying in
full their personal indebtedness to defendant PCIB in the principal sum of
P20 Million. However, said defendants, for reason only known to them,
continued and still continue to ignore said demands, to the damage and
prejudice of plaintiffs;
14. Hence, on 25 June 1999, plaintiffs commenced a derivative
suit against defendants Lilian S. Soriano and the Estate of Leandro A.
Soriano, Jr., before the Securities and Exchange Commission, docketed
as SEC Case No. 06-99-6339 for "Fraudulent Scheme and Unlawful
Machination with Damages" in order to protect and preserve the rights of
plaintiffs, copy of said complaint is hereto attached as Annex"F";
15. That plaintiffs, in order to seek complete relief from the
unauthorized mortgage transaction between the Spouses Soriano and
defendant PCIB, were further compelled to institute this instant case to
seek the nullification of the real estate mortgage dated 28 March 1999.
Consequently, plaintiffs were forced to retain the services of a lawyer with
whom they contracted to pay P100,000.00 as and for attorney's fee;
16. That unfortunately, the plaintiffs learned that on 30 July 1999,
defendant Sarte, in his capacity as Notary Public of Daraga, Albay and
upon application of defendant PCIB, issued a notice of
Auction/Foreclosure Sale of the property subject of the mortgage in
question and has set the auction sale on 7 September 1999 . . .;HTDAac
17. That by reason of the fraudulent and surreptitious schemes
perpetrated by defendant Lilian S. Soriano and her husband, the late
Leandro A. Soriano, Jr., in unlawful connivance and through the gross
negligence of defendant PCIB, plaintiff Lolita A. Soriano, as stockholder,
suffered sleepless nights, moral shock, wounded feeling, hurt pride and
similar injuries, hence, should be awarded moral damages in the amount
of P200,000.00.
After service of summons on all defendants, the RTC issued a temporary
restraining order on August 25, 1990 and, after hearing, went on to issue a writ of
preliminary injunction enjoining respondent PCIB (now known as Banco de Oro Unibank,
Inc.) from proceeding with the auction sale of the subject property.
Respondents Lilian S. Soriano and the Estate of Leandro A. Soriano, Jr. filed an
Answer dated September 25, 1999, stating that the Spouses Lilian and Leandro Soriano,
Jr. (Spouses Soriano) were duly authorized by LEI to mortgage the subject property; that
proceeds of the loan from respondent PCIB were for the use and benefit of LEI; that all
notarized documents submitted to PCIB by the Spouses Soriano bore the genuine
signature of Lolita Soriano; and that although the Spouses Soriano indeed received
demands from petitioner Lolita Soriano for them to pay the loan, they gave satisfactory
explanations to the latter why her demands could not be honored. It was, likewise, alleged
in said Answer that it was respondent Lilian Soriano who should be entitled to moral
damages and attorney's fees.
On September 28, 1999, respondent PCIB filed a Motion to Dismiss the
Complaint on grounds of lack of legal capacity to sue, failure to state a cause of action,
and litis pendencia. Petitioners filed an Opposition thereto, while PCIB's co-defendants
filed a Motion to Suspend Action. SDHETI
 On November 11, 1999, the RTC issued the first assailed Resolution dismissing
petitioners' Complaint. Petitioners then filed a Motion for Reconsideration of said
Resolution. While awaiting resolution of the motion for reconsideration, petitioners also
filed, on January 4, 2000, a Motion to Admit Amended Complaint, amending paragraph 13
of the original complaint to read as follows:
13. That said irregular transactions of defendant Lilian S. Soriano
and her husband Leandro A. Soriano, Jr., on one hand, and defendant
PCIB, on the other, were discovered by plaintiff Lolita A. Soriano sometime
in April 1999. That immediately upon discovery, said plaintiff, for herself
and on behalf and for the benefit of plaintiff LEI, made demands upon
defendant Lilian S. Soriano and the Estate of Leandro A. Soriano, Jr., to
free subject property of plaintiff LEI from such mortgage lien, by paying in
full their personal indebtedness to defendant PCIB in the principal sum of
P20 Million. However, said defendants, for reason only known to them,
continued and still continue to ignore said demands, to the damage and
prejudice of plaintiffs; that plaintiff Lolita A. Soriano likewise made
demands upon the Board of Directors of Lisam Enterprises, Inc., to make
legal steps to protect the interest of the corporation from said fraudulent
transaction, but unfortunately, until now, no such legal step was ever taken
by the Board, hence, this action for the benefit and in behalf of the
corporation;
On May 15, 2000, the trial court issued the questioned Order denying both the
Motion for Reconsideration and the Motion to Admit Amended Complaint. The trial court
held that no new argument had been raised by petitioners in their motion for
reconsideration to address the fact of plaintiffs' failure to allege in the complaint that
petitioner Lolita A. Soriano made demands upon the Board of Directors of Lisam
Enterprises, Inc. to take steps to protect the interest of the corporation against the
fraudulent acts of the Spouses Soriano and PCIB. The trial court further ruled that the
Amended Complaint can no longer be admitted, because the same absolutely changed
petitioners' cause of action. aATHIE
Petitioners filed the present petition with this Court, alleging that what are involved
are pure questions of law, to wit:
FIRST, WHETHER OR NOT THE COURT COMMITTED A
REVERSIBLE ERROR WHEN IT DISMISSED THE ACTION ON THE
GROUND THAT PETITIONER LOLITA A. SORIANO HAS NO LEGAL
CAPACITY TO SUE AS SHE IS NOT A REAL PARTY-IN-INTEREST;
SECOND, WHETHER OR NOT THE COURT COMMITTED A
REVERSIBLE ERROR WHEN IT DISMISSED THE ACTION ON THE
GROUND THAT THERE IS ANOTHER ACTION PENDING BETWEEN
THE SAME PARTIES FOR THE SAME CAUSE;
THIRD, WHETHER OR NOT THE COURT COMMITTED A
REVERSIBLE ERROR WHEN IT DISMISSED THE ACTION ON THE
GROUND THAT THE COMPLAINT STATES NO CAUSE OF ACTION;
FOURTH, WHETHER OR NOT THE COURT COMMITTED A
REVERSIBLE ERROR WHEN IT DENIED THE ADMISSION OF
PETITIONERS' AMENDED COMPLAINT FILED AS A MATTER OF
RIGHT, AFTER THE ORDER OF DISMISSAL WAS ISSUED BUT
BEFORE ITS FINALITY.
FIFTH, WHETHER OR NOT THE COURT ERRED IN
DISMISSING THE ACTION, INSTEAD OF MERELY SUSPENDING THE
SAME FOLLOWING THE DOCTRINE LAID DOWN IN UNION GLASS. 3
The petition is impressed with merit.
The Court shall first delve into the matter of the propriety of the denial of the
motion to admit amended complaint. Pertinent provisions of Rule 10 of the Rules of
Court provide as follows:
Sec. 2. Amendments as a matter of right. — A party may amend
his pleadings once as a matter of right at any time before a responsive
pleading is served . . . .
Sec. 3. Amendments by leave of court. — Except as provided in
the next preceding section, substantial amendments may be made only
upon leave of court. But such leave may be refused if it appears to the
court that the motion was made with intent to delay. . . .
It should be noted that respondents Lilian S. Soriano and the Estate of Leandro A. Soriano,
Jr. already filed their Answer, to petitioners' complaint, and the claims being asserted were
made against said parties. A responsive pleading having been filed, amendments to the
complaint may, therefore, be made only by leave of court and no longer as a matter of right.
However, in Tiu v. Philippine Bank of Communications, 4 the Court discussed this rule at
length, to wit: THIcCA
. . . [A]fter petitioners have filed their answer, Section 3, Rule 10
of the Rules of Court specifically allows amendment by leave of court. The
said Section states:
SECTION 3. Amendments by leave of court. — Except
as provided in the next preceding section, substantial
amendments may be made only upon leave of court. But such
leave may be refused if it appears to the court that the motion was
made with intent to delay. Orders of the court upon the matters
provided in this section shall be made upon motion filed in court,
and after notice to the adverse party, and an opportunity to be
heard.
This Court has emphasized the import of Section 3, Rule 10 of
the 1997 Rules of Civil Procedure in Valenzuela v. Court of Appeals, thus:
Interestingly, Section 3, Rule 10 of the 1997 Rules of
Civil Procedure amended the former rule in such manner that the
 phrase "or that the cause of action or defense is substantially
altered" was stricken-off and not retained in the new rules. The
clear import of such amendment in Section 3, Rule 10 is that
under the new rules, "the amendment may (now) substantially
alter the cause of action or defense." This should only be true,
however, when despite a substantial change or alteration in the
cause of action or defense, the amendments sought to be made
shall serve the higher interests of substantial justice, and prevent
delay and equally promote the laudable objective of the rules
which is to secure a "just, speedy and inexpensive disposition of
every action and proceeding."
The granting of leave to file amended pleading is a matter
particularly addressed to the sound discretion of the trial court; and that
discretion is broad, subject only to the limitations that the amendments
should not substantially change the cause of action or alter the theory of
the case, or that it was not made to delay the action. Nevertheless, as
enunciated in Valenzuela, even if the amendment substantially alters the
cause of action or defense, such amendment could still be allowed when it
is sought to serve the higher interest of substantial justice, prevent delay,
and secure a just, speedy and inexpensive disposition of actions and
proceedings.
The courts should be liberal in allowing amendments to
pleadings to avoid a multiplicity of suits and in order that the real
controversies between the parties are presented, their rights
determined, and the case decided on the merits without unnecessary
delay. This liberality is greatest in the early stages of a lawsuit,
especially in this case where the amendment was made before the
trial of the case, thereby giving the petitioners all the time allowed by
law to answer and to prepare for trial.
Furthermore, amendments to pleadings are generally favored
and should be liberally allowed in furtherance of justice in order that every
case, may so far as possible, be determined on its real facts and in order to
speed up the trial of the case or prevent the circuitry of action and
unnecessary expense. That is, unless there are circumstances such as
inexcusable delay or the taking of the adverse party by surprise or the like,
which might justify a refusal of permission to amend. 5
Since, as explained above, amendments are generally favored, it would have
been more fitting for the trial court to extend such liberality towards petitioners by admitting
the amended complaint, which was filed before the order dismissing the original complaint
became final and executory. It is quite apparent that since trial proper had not yet even
begun, allowing the amendment would not have caused any delay. Moreover, doing so
would have served the higher interest of justice as this would provide the best opportunity
for the issues among all parties to be thoroughly threshed out and the rights of all parties
finally determined. Hence, the Court overrules the trial court's denial of the motion to admit
the amended complaint, and orders the admission of the same. SEHTIc
With the amendment stating "that plaintiff Lolita A. Soriano likewise made
demands upon the Board of Directors of Lisam Enterprises, Inc., to make legal steps to
protect the interest of the corporation from said fraudulent transaction, but unfortunately,
until now, no such legal step was ever taken by the Board, hence, this action for the benefit
and in behalf of the corporation," does the amended complaint now sufficiently state a
cause of action? In Hi-Yield Realty, Incorporated v. Court of Appeals, 6 the Court
enumerated the requisites for filing a derivative suit, as follows:
a) the party bringing the suit should be a shareholder as of the
time of the act or transaction complained of, the number of his shares not
being material;
b) he has tried to exhaust intra-corporate remedies, i.e., has
made a demand on the board of directors for the appropriate relief but the
latter has failed or refused to heed his plea; and
c) the cause of action actually devolves on the corporation, the
wrongdoing or harm having been, or being caused to the corporation and
not to the particular stockholder bringing the suit. 7
A reading of the amended complaint will reveal that all the foregoing requisites had been
alleged therein. Hence, the amended complaint remedied the defect in the original
complaint and now sufficiently states a cause of action.
Respondent PCIB should not complain that admitting the amended complaint
after they pointed out a defect in the original complaint would be unfair to them. They
should have been well aware that due to the changes made by the 1997 Rules of Civil
Procedure, amendments may now substantially alter the cause of action or defense. It
should not have been a surprise to them that petitioners would redress the defect in the
original complaint by substantially amending the same, which course of action is now
allowed under the new rules.
The next question then is, upon admission of the amended complaint, would it still
be proper for the trial court to dismiss the complaint? The Court answers in the negative.
Saura v. Saura, Jr. 8 is closely analogous to the present case. In Saura, 9 the
petitioners therein, stockholders of a corporation, sold a disputed real property owned by
the corporation, despite the existence of a case in the Securities and Exchange
Commission (SEC) between stockholders for annulment of subscription, recovery of
corporate assets and funds, etc. The sale was done without the knowledge of the other
stockholders, thus, said stockholders filed a separate case for annulment of sale,
declaration of nullity of deed of exchange, recovery of possession, etc., against the
stockholders who took part in the sale, and the buyer of the property, filing said case with
the regular court (RTC). Petitioners therein also filed a motion to dismiss the complaint for
annulment of sale filed with the RTC, on the ground of forum shopping, lack of jurisdiction,
lack of cause of action, and litis pendentia among others. The Court held that the complaint
for annulment of sale was properly filed with the regular court, because the buyer of the
 property had no intra-corporate relationship with the stockholders, hence, the buyer could
not be joined as party-defendant in the SEC case. To include said buyer as a
party-defendant in the case pending with the SEC would violate the then existing rule on
jurisdiction over intra-corporate disputes. The Court also struck down the argument that
there was forum shopping, ruling that the issue of recovery of corporate assets and funds
pending with the SEC is a totally different issue from the issue of the validity of the sale, so
a decision in the SEC case would not amount to res judicata in the case before the regular
court. Thus, the Court merely ordered the suspension of the proceedings before the RTC
until the final outcome of the SEC case. EDATSC
The foregoing pronouncements of the Court are exactly in point with the issues in
the present case. Here, the complaint is for annulment of mortgage with the mortgagee
bank as one of the defendants, thus, as held in Saura, 10 jurisdiction over said complaint is
lodged with the regular courts because the mortgagee bank has no intra-corporate
relationship with the stockholders. There can also be no forum shopping, because there is
no identity of issues. The issue being threshed out in the SEC case is the due execution,
authenticity or validity of board resolutions and other documents used to facilitate the
execution of the mortgage, while the issue in the case filed by petitioners with the RTC is
the validity of the mortgage itself executed between the bank and the corporation,
purportedly represented by the spouses Leandro and Lilian Soriano, the President and
Treasurer of petitioner LEI, respectively. Thus, there is no reason to dismiss the complaint
in this case.
IN VIEW OF THE FOREGOING, the Resolution of the Regional Trial Court of
Legaspi City, Branch 4, dated November 11, 1999, dismissing petitioners' complaint in Civil
Case No. 9729, and its Order dated May 15, 2000, denying herein petitioners' Motion for
Reconsideration and Motion to Admit Amended Complaint, are
hereby REVERSED and SET ASIDE. The Regional Trial Court of Legaspi City, Branch 4,
is hereby DIRECTED to ADMIT the Amended Complaint. ScTCIE
Considering further, that this case has been pending for some time and,
under R.A. No. 8799, it is now the regular courts which have jurisdiction over
intra-corporate disputes, the Regional Trial Court of Legaspi City, Branch 4 is
hereby DIRECTED to PROCEED with dispatch in trying Civil Case No. 9729.
SO ORDERED.
||| (Lisam Enterprises, Inc. v. Banco De Oro Unibank, Inc., G.R. No. 143264, [April 23, 2012],
686 PHIL 293-308)
 THIRD DIVISION
[G.R. No. 151932. August 19, 2009.]
HENRY CHING TIU, CHRISTOPHER HALIN GO, and GEORGE
CO, petitioners, vs. PHILIPPINE BANK OF COMMUNICATIONS, respon
dent.
DECISION
PERALTA, J. p
This is a petition for review on certiorari, under Rule 45 of the Rules of Court,
seeking to annul and set aside the Decision 1 dated September 28, 2001, rendered by the
Court of Appeals (CA) in CA-G.R. SP No. 57732, dismissing the petition and affirming the
assailed Orders of the Regional Trial Court (RTC) of Cagayan de Oro City, Branch 21 in
Civil Case No. 99-352, dated December 14, 1999 and January 11, 2000.
The factual and procedural antecedents are as follows:
In June 1993, Asian Water Resources, Inc. (AWRI), represented by herein
petitioners, applied for a real estate loan with
the Philippine Bank of Communications(PBCOM) to fund its purified water distribution
business. In support of the loan application, petitioners submitted a Board
Resolution 2 dated June 7, 1993. The loan was guaranteed by collateral over the property
covered by Transfer Certificate of Title No. T-13020. 3 The loan was eventually
approved. 4
In August 1996, AWRI applied for a bigger loan from PBCOM for additional
capitalization using the same Board Resolution, but without any additional real estate
collateral. Considering that the proposed additional loan was unsecured, PBCOM required
all the members of the Board of Directors of AWRI to become sureties. Thus, on August
16, 1996, a Surety Agreement 5 was executed by its Directors and acknowledged by a
notary public on the same date. All copies of the Surety Agreement, except two, were kept
by PBCOM. Of the two copies kept by the notary public, one copy was retained for his
notarial file and the other was sent to the Records Management and Archives Office,
through the Office of the RTC Clerk of Court. 6 cDSAEI
Thereafter, on December 16, 1998, AWRI informed the bank of its desire to
surrender and/or assign in its favor, all the present properties of the former to apply
as dacion en pago for AWRI's existing loan obligation to the bank. 7 On January 11, 1999,
PBCOM sent a reply denying the request. On May 12, 1999, PBCOM sent a letter to
petitioners demanding full payment of its obligation to the bank. 8
Its demands having remained unheeded, PBCOM instructed its counsel to file a
complaint for collection against petitioners. The case was docketed as Civil Case No.
99-352.
On July 3, 1999, petitioners filed their Answer. It alleged, among other things, that
they were not personally liable on the promissory notes, because they signed the Surety
Agreement in their capacities as officers of AWRI. They claimed that the Surety Agreement
attached to the complaint as Annexes "A" to "A-2" 9 were falsified, considering that when
they signed the same, the words "In his personal capacity" did not yet appear in the
document and were merely intercalated thereon without their knowledge and consent. 10
In support of their allegations, petitioners attached to their Answer a certified
photocopy of the Surety Agreement issued on March 25, 1999 by the Records
Management and Archives Office in Davao City, 11 showing that the words "In his
personal capacity" were not found at the foot of page two of the document where their
signatures appeared. 12
Because of this development, PBCOM's counsel searched for and retrieved the
file copy of the Surety Agreement. The notarial copy showed that the words "In his
personal capacity" did not appear on page two of the Surety Agreement. 13
Petitioners' counsel then asked PBCOM to explain the alteration appearing on the
agreement. PBCOM subsequently discovered that the insertion was ordered by
the bank auditor. It alleged that when the Surety Agreement was inspected by
the bank auditor, he called the attention of the loans clerk, Kenneth Cabahug, as to why
the words "In his personal capacity" were not indicated under the signature of each surety,
in accordance with bank standard operating procedures. The auditor then ordered Mr.
Cabahug to type the words "In his personal capacity" below the second
signatures of petitioners. However, the notary public was never informed ofthe
insertion. 14 Mr. Cabahug subsequently executed an affidavit 15 attesting to the
circumstances why the insertion was made. THESAD
PBCOM then filed a Reply and Answer to Counterclaim with Motion for
Leave of Court to Substitute Annex "A" of the Complaint, 16 wherein it attached the
duplicate original copy retrieved from the file of the notary public. PBCOM also admitted its
mistake in making the insertion and explained that it was made without the knowledge and
consent of the notary public. PBCOM maintained that the insertion was not a falsification,
but was made only to speak the truth of the parties' intentions. PBCOM also contended
that petitioners were already primarily liable on the Surety Agreement whether or not the
insertion was made, having admitted in their pleadings that they voluntarily executed and
signed the Surety Agreement in the original form. PBCOM, invoking a liberal
application of the Rules, emphasized that the motion incorporated in the pleading can be
treated as a motion for leave of court to amend and admit the amended complaint pursuant
to Section 3, Rule 10 of the Rules of Court.
On December 14, 1999, the RTC issued an Order 17 allowing the
substitution of the altered document with the original Surety Agreement, the pertinent
portionof which reads:
 August 16, 1996 attached as Annexes "A" to "A-2" of the reply
and answer Resolving the Motion to Substitute Annexes "A" to "A-2" of the
complaint and the opposition thereto by the defendant, this Court, in the
interest of justice, hereby allows the substitution of said Annexes "A" to
"A-2" of the complaint with the duplicate original of notarial copy of the
Agreement dated to counter-claim.
SO ORDERED.
Petitioners filed a motion for reconsideration, 18 but it was denied in the
Order 19 dated January 11, 2000, to wit:
Resolving the motion for reconsideration and the opposition
thereto, the Court finds the motion substantially a reiteration of the
opposition to plaintiff's motion.
Additionally, the instant motion for reconsideration treats on
evidentiary matter which can be properly ventilated in the trial proper,
hence, there is no cogent reason to disturb the Court's order of December
14, 1999.
SO ORDERED. TEDaAc
Aggrieved, petitioners sought recourse before the CA via a petition
for certiorari under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No. 57732.
Petitioners claimed that the RTC acted without or in excess of jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction in denying their
motion for reconsideration and in allowing PBCOM to substitute the altered copy of the
Surety Agreement with the duplicate original notarial copy thereof considering that the
latter's cause of action was solely and principally founded on the falsified document
marked as Annexes "A" to "A-2". 20
On September 28, 2001, the CA rendered a Decision dismissing the petition for
lack of merit, the decretal portion of which reads:
WHEREFORE, foregoing considered, the instant petition is
hereby DENIED DUE COURSE and, accordingly, DISMISSED for
lack of merit. The assailed Orders dated December 14, 1999 and January
11, 2000 of the Regional Trial Court of Cagayan de Oro City, Branch 21,
are hereby AFFIRMED in toto.
SO ORDERED. 21
Hence, the petition assigning the following errors:
I "substitution" of the document would not be nullified, because the falsified document would
THE COURT COMMITTED A REVERSIBLE ERROR IN AFFIRMING IN
TOTO THE ORDER OF THE LOWER COURT ALLOWING THE
SUBSTITUTION OF THE FALSIFIED DOCUMENT BY RELYING ON
THE PROVISION OF SECTION 3, RULE 10 OF THE
RULES OF COURT.
II
ACTING AS THE COURT ON THE PETITION FOR CERTIORARI, THE
COURT COMMITTED A REVERSIBLE ERROR HAVING NO
JURISDICTION TO RULE ON THE OBLIGATION OFTHE PETITIONERS
BASED ON THE FALSIFIED DOCUMENT
III
THE COURT ERRED IN GIVING CREDENCE TO THE
ALLEGATION OF RESPONDENT BANK THAT FROM AUGUST 15 TO
DECEMBER 9, 1997 ASIAN WATER RESOURCES INC. OBTAINED
SEVERAL AVAILMENTS OF NEW BIGGER AND ADDITIONAL LOANS
TOTALLING P2,030,000.00 EVIDENCED BY 4 PROMISSORY NOTES
MARKED AS ANNEXES "B", "B-1", "B-2" AND "B-3". IcHTCS
IV
THE COURT FAILED TO CONSIDER THE MISAPPLICATION OF THE
PRINCIPLE OF EQUITY COMMITTED BY THE LOWER COURT IN
ORDERING THE SUBSTITUTION OF THE FALSIFIED DOCUMENT. 22
Petitioners argue that the CA committed a reversible error in affirming the
Order of the RTC allowing the substitution of the document by relying on Section 3, Rule
10 of the Rules of Court. Petitioners assert that the Rules do not allow the withdrawal and
substitution of a "falsified document" once discovered by the opposing party.
Petitioners maintain that PBCOM's cause of action was solely and principally
founded on the alleged "falsified document" originally marked as Annexes "A" to "A-2".
Thus, the "withdrawal" of the document results in the automatic withdrawal of the whole
complaint on the ground that there is no more cause of action to be maintained or enforced
by plaintiff against petitioners. Also, petitioners argue that if the substitution will be allowed,
their defenses that were anchored on Annexes "A" to "A-2" would be gravely affected.
Moreover, considering that the said document was already removed, withdrawn, and
disregarded by the RTC, the withdrawal and substitution of the document would prevent
petitioners from introducing the falsified documents during the trial as part of their
evidence. 23
Petitioners submit that the RTC misapplied the principle of equity when it allowed
PBCOM to substitute the document with the original agreement. Petitioners also claim that
the remedy of appeal after the termination of the case in the RTC would become
ineffective and inadequate if the Order of the RTC allowing the "withdrawal" and
no longer be found in the records of the case during the appeal. 24
Petitioners contend that the CA went beyond the issue raised before it when it
interpreted the provisions of the Surety Agreement, particularly paragraph 4 thereof, and
then ruled on the obligations of the parties based on the document. Petitioners posit that
the CA prematurely ruled on petitioners' obligations, considering that their obligations
should be determined during trial on the merits, after the parties have been given the
opportunity to present their evidence in support of their respective claims. Petitioners
stress that the CA went into the merit of the case when it gave credence to the
statement of fact of PBCOM that "From August 15 to December 9, 1997, Asian Water
Resources, Inc. obtained several availments on its additional loans totalling P2,030,000.00
as evidenced by 4 promissory notes marked as Annexes B, B-1, B-2, and B-3". Thus, the
conclusion of the CA in declaring the petitioners liable as sureties violated their right to due
process. 25 aDHCAE
For its part, PBCOM argues that since the complaint is based on an actionable
document, i.e., the surety agreement, the original or a copy thereof should be attached to
the pleading as an exhibit, which shall be deemed part of the pleading. Considering that
the surety agreement is annexed to the complaint, it is an integral part thereof and its
substitution with another copy is in the nature of a substantial amendment, which is
allowed by the Rules, but with prior leave of court.
Moreover, PBCOM alleges that since the Rules provides that substantial
amendments may be made upon leave of court, the authority of the RTC to allow the
amendment is discretionary. Thus, the CA correctly held that the act of granting the said
substitution was within the clear and proper discretion of the RTC.
The petition is without merit.
As to the substitution of the earlier surety agreement that was annexed to the
complaint with the original thereof, this Court finds that the RTC did not err in allowing the
substitution.
The pertinent rule on actionable documents is found in Section 7, Rule 8 of the
Rules of Court, which provides that when the cause of action is anchored on a document,
its substance must be set forth, and the original or a copy thereof "shall" be attached to the
pleading as an exhibit and deemed a part thereof, to wit:
Section 7. Action or defense based on document. — Whenever
an action or defense is based upon a written instrument or document, the
substance of such instrument or document shall be set forth in the
pleading, and the original or a copy thereof shall be attached to the
pleading as an exhibit, which shall be deemed to be a part of the pleading,
or said copy may with like effect be set forth in the pleading.
With respect to PBCOM's right to amend its complaint, including the documents
annexed thereto, after petitioners have filed their answer, Section 3, Rule 10 ofthe
Rules of Court specifically allows amendment by leave of court. The said Section states:
SECTION 3. Amendments by leave of court. — Except as
provided in the next preceding section, substantial amendments may be
made only upon leave ofcourt. But such leave may be refused if it appears
to the court that the motion was made with intent to delay. Orders of the
court upon the matters provided in this section shall be made upon motion
filed in court, and after notice to the adverse party, and an opportunity to be
heard. TAIEcS
This Court has emphasized the import of Section 3, Rule 10 of the 1997
Rules of Civil Procedure in Valenzuela v. Court of Appeals, 26 thus:
Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil
Procedure amended the former rule in such manner that the phrase "or
that the cause of action or defense is substantially altered" was stricken-off
and not retained in the new rules. The clear import of such amendment in
Section 3, Rule 10 is that under the new rules, "the amendment may (now)
substantially alter the cause of action or defense". This should only be true,
however, when despite a substantial change or alteration in the
cause of action or defense, the amendments sought to be made shall
serve the higher interests of substantial justice, and prevent delay and
equally promote the laudable objective of the rules which is to secure a
"just, speedy and inexpensive disposition of every action and
proceeding". 27
The granting of leave to file amended pleading is a matter particularly addressed
to the sound discretion of the trial court; and that discretion is broad, subject only to the
limitations that the amendments should not substantially change the cause of action or
alter the theory of the case, or that it was not made to delay the action. 28 Nevertheless, as
enunciated in Valenzuela, even if the amendment substantially alters the cause of action
or defense, such amendment could still be allowed when it is sought to serve the higher
interest of substantial justice; prevent delay; and secure a just, speedy and inexpensive
disposition of actions and proceedings.
The courts should be liberal in allowing amendments to pleadings to avoid a
multiplicity of suits and in order that the real controversies between the parties are
presented, their rights determined, and the case decided on the merits without
unnecessary delay. This liberality is greatest in the early stages of a lawsuit, especially in
this case where the amendment was made before the trial of the case, thereby giving the
petitioners all the time allowed by law to answer and to prepare for trial. 29
Furthermore, amendments to pleadings are generally favored and should be
liberally allowed in furtherance of justice in order that every case, may so far as possible,
be determined on its real facts and in order to speed up the trial of the case or prevent the
circuity of action and unnecessary expense. That is, unless there are circumstances such
as inexcusable delay or the taking of the adverse party by surprise or the like, which might
justify a refusal of permission to amend. 30
In the present case, there was no fraudulent intent on the part of PBCOM in
submitting the altered surety agreement. In fact, the bank admitted that it was a mistake on
their part to have submitted it in the first place instead of the original agreement. It also
admitted that, through inadvertence, the copy that was attached to the complaint was the
copy wherein the words "IN HIS PERSONAL CAPACITY" were inserted to conform to
the bank's standard practice. This alteration was made without the knowledge of the notary
public. PBCOM's counsel had no idea that what it submitted was the altered document,
thereby necessitating the substitution ofthe surety agreement with the original thereof, in lack of power to exercise authority. Excess of jurisdiction occurs when the court
order that the case would be judiciously resolved. DTEScI transcends its power or acts without any statutory authority; or results when an act, though
within the general power of a tribunal, board or officer (to do) is not authorized, and is
Verily, it is a cardinal rule of evidence, not just one of technicality
invalid with respect to the particular proceeding, because the conditions which alone
but of substance, that the written document is the best evidence of its own contents. It is
authorize the exercise of the general power in respectof it are wanting. Grave
also a matter of both principle and policy that when the written contract is established as
abuse of discretion implies such capricious and whimsical exercise of judgment as to be
the repository of the parties' stipulations, any other evidence is excluded, and the same
equivalent to lack or excess of jurisdiction; simply put, power is exercised in an arbitrary or
cannot be used to substitute for such contract, or even to alter or contradict the
despotic manner by reason of passion, prejudice, or personal hostility; and such exercise
latter. 31 The original surety agreement is the best evidence that could establish the
is so patent or so gross as to amount to an evasion of a positive duty or to a virtual refusal
parties' respective rights and obligations. In effect, the RTC merely allowed the
either to perform the duty enjoined or to act at all in contemplation of law. 35
amendment of the complaint, which consequently included the substitution of the altered
surety agreement with a copy of the original. The present case failed to comply with the above-stated requisites. In the instant
case, the soundness of the RTC's Order allowing the substitution of the document involves
It is well to remember at this point that rules of procedure are but mere tools
a matter of judgment and discretion, which cannot be the proper subject of a petition
designed to facilitate the attainment of justice. Their strict and rigid application that would
for certiorari under Rule 65. This rule is only intended to correct defects of jurisdiction and
result in technicalities that tend to frustrate rather than promote substantial justice must
always be avoided. 32 Applied to the instant case, this not only assures that it would be not to correct errors of procedure or matters in the trial court's findings or conclusions.
resolved based on real facts, but would also aid in the speedy disposition of the case by However, this Court agrees with the petitioners' contention that the CA should not
utilizing the best evidence possible to determine the rights and obligations of the have made determinations as regards the parties' respective rights based on the surety
party-litigants. agreement. The CA went beyond the issues brought before it and effectively preempted
Moreover, contrary to petitioners' contention, they could not be prejudiced by the the RTC in making its own determinations. It is to be noted that the present case is still
substitution since they can still present the substituted documents, Annexes "A" to A-2", as pending determination by the RTC. The CA should have been more cautious and not have
gone beyond the issues submitted before it in the petition for certiorari; instead, it should
part of the evidence of their affirmative defenses. The substitution did not prejudice
petitioners or delay the action. On the contrary, it tended to expedite the have squarely addressed whether or not there was grave abuse of discretion on the
part of the RTC in issuing the Orders dated December 14, 1999 and January 11, 2000.
determination of the controversy. Besides, the petitioners are not precluded from filing the
appropriate criminal action against PBCOM for attaching the altered copy of the surety WHEREFORE, premises considered, the petition is DENIED. Subject to the
agreement to the complaint. The substitution of the documents would not, in any way, above disquisitions, the Decision of the Court of Appeals in CA-G.R. SP No. 57732, dated
erase the existence of falsification, if any. The case before the RTC is civil in nature, while September 28, 2001, and the Orders of the Regional Trial Court of Cagayan de Oro City,
the alleged falsification is criminal, which is separate and distinct from another. Thus, the Branch 21, in Civil Case No. 99-352, dated December 14, 1999 and January 11, 2000,
RTC committed no reversible error when it allowed the substitution of the altered surety are AFFIRMED. EICSTa
agreement with that of the original.
SO ORDERED.
A Petition for Certiorari under Rule 65 of the Rules of Court is intended for the
correction of errors of jurisdiction only or grave abuse of discretion amounting to lack or ||| (Tiu v. Philippine Bank of Comunications, G.R. No. 151932, [August 19, 2009], 613 PHIL
excess of jurisdiction. Its principal office is only to keep the inferior court within the 56-72)
parameters of its jurisdiction or to prevent it from committing such a grave
abuse of discretion amounting to lack or excess of jurisdiction. 33 CITSAc
For a petition for certiorari to prosper, the essential requisites that have to concur
are: (1) the writ is directed against a tribunal, a board or any officer exercising judicial or
quasi-judicial functions; (2) such tribunal, board or officer has acted without or in
excess of jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction; and (3) there is no appeal or any plain, speedy and adequate
remedy in the ordinary course of law. 34
The phrase without jurisdiction means that the court acted with absolute
lack of authority or want of legal power, right or authority to hear and determine a cause or
causes, considered either in general or with reference to a particular matter. It means
 FIRST DIVISION
[G.R. No. 133657. May 29, 2002.]
REMINGTON INDUSTRIAL SALES CORPORATION, petitioner, vs.
THE COURT OF APPEALS and BRITISH STEEL (ASIA),
LTD., respondents.
Renato H. Collado for petitioner.
Romulo Mabanta, Buenaventura, Sayoc & De los Angeles for private respondent.
SYNOPSIS
Petitioner filed a complaint for collection of a sum of money and damages against
Industrial Steels, Ltd. (ISL) with Ferro Trading GMBH (Ferro) and respondent British Steel
(Asia), Ltd. ISL and respondent moved to dismiss for failure to state a cause of action; but was
dismissed by the trial court. ISL then filed its answer to the complaint, while respondent filed a
petition for certiorari and prohibition before the Court of Appeals. Meanwhile, petitioner sought
to amend its complaint with the trial court and prayed that the proceedings in the
appellate court be suspended. The trial court noted the amended complaint, while the
appellate court dismissed the complaint without prejudice. Petitioner's motion for
reconsideration was denied, hence, the present recourse.
A pleading may be amended as a matter of right before a responsive pleading is
served and is not precluded by the filing of a motion to dismiss. In cases where there are
several defendants but not all have answered, the complaint may still be amended in respect to
claims asserted solely against the non-answering defendants.
SYLLABUS
1. REMEDIAL LAW; ACTIONS; PLEADINGS; MAY BE AMENDED, AS A
MATTER OF RIGHT, BEFORE A RESPONSIVE PLEADING IS SERVED; RATIONALE. —
Section 2, Rule 10 of the Revised Rules of Court explicitly states that a pleading may be
amended as a matter of right before a responsive pleading is served. This only means that prior
to the filing of an answer, the plaintiff has the absolute right to amend the complaint whether a
new cause of action or change in theory is introduced. The reason for this rule is implied in the
subsequent Section 3 of Rule 10. Under this provision, substantial amendment of the complaint
is not allowed without leave of court after an answer has been served, because any material
change in the allegations contained in the complaint could prejudice the rights of the defendant
who has already set up his defense in the answer. Conversely, it cannot be said that the
defendant's rights have been violated by changes made in the complaint if he has yet to file an
answer thereto. In such an event, the defendant has not presented any defense that can be
altered or affected by the amendment of the complaint in accordance with Section 2 of Rule 10.
The defendant still retains the unqualified opportunity to address the allegations against him by
properly setting up his defense in the answer. Considerable leeway is thus given to the plaintiff
to amend his complaint once, as a matter of right, prior to the filing of an answer by the
defendant.
2. ID.; ID.; ID.; RIGHT TO AMEND COMPLAINT BEFORE AN ANSWER HAS BEEN
SERVED, NOT PRECLUDED BY FILING OF MOTION TO DISMISS. — The right granted to
the plaintiff under procedural law to amend the complaint before an answer has been served is
not precluded by the filing of a motion to dismiss or any other proceeding contesting its
sufficiency. Were we to conclude otherwise, the right to amend a pleading under Section 2,
Rule 10 will be rendered nugatory and ineffectual, since all that a defendant has to do to
foreclose this remedial right is to challenge the adequacy of the complaint before he files an
answer. cTDECH
3. ID.; ID.; AMENDMENT OF PLEADINGS, FAVORED AND LIBERALLY ALLOWED.
— Moreover, amendment of pleadings is favored and should be liberally allowed in the
furtherance of justice in order to determine every case as far as possible on its merits without
regard to technicalities. This principle is generally recognized to speed up trial and save party
litigants from incurring unnecessary expense, so that a full hearing on the merits of every case
may be had and multiplicity of suits avoided. AHTICD
4. ID.; ID.; ID.; RULE WHERE THERE ARE SEVERAL DEFENDANTS AND SOME
HAVE NOT ANSWERED. — The fact that the other defendants below has filed their answers to
the complaint does not bar petitioner's right to amend the complaint as against respondent.
Indeed, where some but not all the defendants have answered, the plaintiff may still amend its
complaint once, as a matter of right, in respect to claims asserted solely against the
non-answering defendant, but not as to claims asserted against the other defendants. DaEcTC
DECISION
YNARES-SANTIAGO, J p:
Before us is a petition for review under Rule 45 of the Rules of Court assailing the
decision of the Court of Appeals in CA-G.R. SP No. 44529 dated February 24, 1998 1 , which
granted the petition for certiorari filed by respondent British Steel Asia Ltd. (British Steel) and
ordered the dismissal of petitioner Remington Industrial Sales Corporation's (Remington)
complaint for sum of money and damages. Also assailed in this petition is the
resolution 2 of the Court of Appeals denying petitioner's motion for reconsideration.
The facts of the case, as culled from the records, are as follows:
 On August 21, 1996, petitioner filed a complaint 3 for sum of money and damages
arising from breach of contract, docketed as Civil Case No. 96-79674, before the sala of Judge
Marino M. De la Cruz of the Regional Trial Court of Manila, Branch 22. Impleaded as principal
defendant therein was Industrial Steels, Ltd. (ISL), with Ferro Trading GMBH (Ferro) and
respondent British Steel as alternative defendants. aESIDH
ISL and respondent British Steel separately moved for the dismissal of the complaint
on the ground that it failed to state a cause of action against them. On April 7, 1997, the RTC
denied the motions to dismiss, 4 as well as the ensuing motion for reconsideration. 5 ISL then
filed its answer to the complaint.
On the other hand, respondent British Steel filed a petition for certiorari and prohibition
before the Court of Appeals, 6 docketed as CA-G.R. SP No. 44529. Respondent claimed
therein that the complaint did not contain a single averment that respondent committed any act
or is guilty of any omission in violation ofpetitioner's legal rights. Apart from the allegation in the
complaint's "Jurisdictional Facts" that:
1.05. Defendants British Steel (Asia) Ltd. and Ferro Trading
Gmbh, while understood by the plaintiff as mere suppliers of goods for
defendant ISL, are impleaded as party defendants pursuant to Section 13,
Rule 3 of the Revised Rules of Court. 7
no other reference was made to respondent that would constitute a valid cause of action
against it. Since petitioner failed to plead any cause of action against respondent as alternative
defendant under Section 13, Rule 3, 8 the trial court should have ordered the dismissal of the
complaint insofar as respondent was concerned.
Thereafter, on February 24, 1998, the Court of Appeals rendered the assailed
decision in CA-G.R. SP No. 44529 as follows: EATcHD
WHEREFORE, this Court grants the writ of certiorari and orders
the respondent judge to dismiss without prejudice the Complaint in Civil
Case No. 96-79674 against petitioner British Steel (Asia) Ltd. Costs
against private respondent.
SO ORDERED. 13
In the same decision, the Court of Appeals addressed petitioner's prayer for
suspension of proceedings in this wise:
The incident which transpired after the filing of the instant petition
for certiorari and prohibition are immaterial in the resolution of this petition.
What this Courtis called upon to resolve is whether the
lower court committed grave abuse of discretion when it denied
petitioner's motion to dismiss the complaint against it. The admission or
rejection by the lower court of said amended complaint will not, insofar as
this Court is concerned, impinge upon the issue of whether or not
said courtgravely abused its discretion in denying petitioner's motion to
dismiss. 14
Petitioner filed a motion for reconsideration of the appellate court's decision, which
was denied in a resolution dated April 28, 1998. Hence, this petition, anchored on the following
grounds:

Meanwhile, petitioner sought to amend its complaint by incorporating therein I

additional factual allegations constitutive of its cause of action against respondent. Pursuant to
THE HON. COURT OF APPEALS ERRED IN ORDERING THE
Section 2, Rule 10 9 of the Rules of Court, petitioner maintained that it can amend the
DISMISSAL OF THE COMPLAINT AGAINST THE PRIVATE
complaint as a matter of right because respondent has not yet filed a responsive pleading
thereto. 10 RESPONDENT FOR LACK OF CAUSE OF ACTION UNDER THE
ORIGINAL COMPLAINT EVEN AS SAID COMPLAINT WAS ALREADY
Subsequently, petitioner filed a Manifestation and Motion 11 in CA-G.R. SP No. 44529 AMENDED AS A MATTER OF RIGHT AND SUFFICIENT
stating that it had filed a Motion to Admit Amended Complaint together with said Amended CAUSES OF ACTION ARE AVERRED IN THE AMENDED COMPLAINT,
Complaint before the trial court. Hence, petitioner prayed that the proceedings in the special IN GROSS VIOLATION OF SEC. 2, RULE 10 OF THE 1997
civil action be suspended. RULES OF CIVIL PROCEDURE.

On January 29, 1998, the trial court ruled on petitioner's Motion to Admit Amended II
Complaint thus:
THE HON. COURT OF APPEALS ERRED IN HOLDING THAT IF THE
WHEREFORE, the Amended Complaint is NOTED and further PETITIONER WANTS TO PURSUE ITS CASE AGAINST THE PRIVATE
proceedings thereon and action on the other incidents as aforementioned RESPONDENT, IT HAS TO REFILE THE COMPLAINT, THUS
are hereby held in abeyance until final resolution by the PRE-EMPTING THE RIGHT OF THE LOWER COURT TO RULE ON
Honorable Court of Appeals (Special 6th Division) of the petition THE AMENDED COMPLAINT AND COMPELLING THE PETITIONER TO
for certiorari and prohibition of petitioner (defendant British) and/or LITIGATE ITS CAUSES OF ACTION AGAINST THE PRIVATE
Manifestations and Motions of therein private respondent, herein plaintiff. RESPONDENT AS AN ALTERNATIVE DEFENDANT IN A SEPARATE
ACTION, THEREBY ABETTING MULTIPLICITY OF SUITS. 15
SO ORDERED. 12
 The basic issue in this case is whether or not the Court of Appeals, by granting the
extraordinary writ of certiorari, correctly ordered the dismissal of the complaint for failure to
state a cause of action, despite the fact that petitioner exercised its right to amend the defective
complaint under Section 2, Rule 10 of the Rules of Court. Stated differently, the query posed
before us is: can a complaint still be amended as a matter of right before an answer has been
filed, even if there was a pending proceeding for its dismissal before the higher court?
Section 2, Rule 10 16 of the Revised Rules of Court explicitly states that a pleading
may be amended as a matter of right before a responsive pleading is served. This only means
that prior to the filing of an answer, the plaintiff has the absolute right to amend the complaint
whether a new cause of action or change in theory is introduced. 17 The reason for this rule is
implied in the subsequent Section 3 of Rule 10. 18 Under this provision, substantial
amendment of the complaint is not allowed without leave of court after an answer has been
served, because any material change in the allegations contained in the complaint could
prejudice the rights of the defendant who has already set up his defense in the answer.
Conversely, it cannot be said that the defendant's rights have been violated by
changes made in the complaint if he has yet to file an answer thereto. In such an event, the
defendant has not presented any defense that can be altered 19 or affected by the
amendment of the complaint in accordance with Section 2 of Rule 10. The defendant still
retains the unqualified opportunity to address the allegations against him by properly setting up
his defense in the answer. Considerable leeway is thus given to the plaintiff to amend his
complaint once, as a matter of right, prior to the filing of an answer by the defendant.
matter of right, in respect to claims asserted solely against the non-answering defendant, but
not as to claims asserted against the other defendants. 22
Furthermore, we do not agree with respondent's claim that it will be prejudiced by the
admission of the Amended Complaint because it had spent time, money and effort to file its
petition before the appellate court. 23 We cannot see how the result could be any different for
respondent, if petitioner merely re-filed the complaint instead of being allowed to amend it. As
adverted to earlier, amendment would even work to respondent's advantage since it will
undoubtedly speed up the proceedings before the trial court. Consequently, the amendment
should be allowed in the case at bar as a matter of right in accordance with the rules. IDCScA
WHEREFORE, the petition is GRANTED. The assailed decision and
resolution of the Court of Appeals in CA-G.R. SP No. 44529 dated February 24, 1998 and April
28, 1998, respectively, are REVERSED and SET ASIDE. The Regional Trial Court of Manila,
Branch 22 is further ordered to ADMIT petitioner's Amended Complaint in Civil Case No.
96-79674 and to conduct further proceedings in said case.
SO ORDERED.
||| (Remington Industrial Sales Corp. v. Court of Appeals, G.R. No. 133657, [May 29, 2002], 432
PHIL 255-263)

The right granted to the plaintiff under procedural law to amend the complaint before
an answer has been served is not precluded by the filing of a motion to dismiss 20 or any other
proceeding contesting its sufficiency. Were we to conclude otherwise, the right to amend a
pleading under Section 2, Rule 10 will be rendered nugatory and ineffectual, since all that a
defendant has to do to foreclose this remedial right is to challenge the adequacy of the
complaint before he files an answer.

Moreover, amendment of pleadings is favored and should be liberally allowed in the

furtherance of justice in order to determine every case as far as possible on its merits without
regard to technicalities. This principle is generally recognized to speed up trial and save party
litigants from incurring unnecessary expense, so that a full hearing on the merits of every case
may be had and multiplicity of suits avoided. 21

In this case, the remedy espoused by the appellate court in its assailed judgment will
precisely result in multiple suits, involving the same set of facts and to which the defendants
would likely raise the same or, at least, related defenses. Plainly stated, we find no practical
advantage in ordering the dismissal of the complaint against respondent and for petitioner to
re-file the same, when the latter can still clearly amend the complaint as a matter of right. The
amendment of the complaint would not prejudice respondents or delay the action, as this would,
in fact, simplify the case and expedite its disposition.

The fact that the other defendants below has filed their answers to the complaint does
not bar petitioner's right to amend the complaint as against respondent. Indeed, where some
but not all the defendants have answered, the plaintiff may still amend its complaint once, as a
 SECOND DIVISION
[G.R. No. 193650. October 8, 2014.]
GEORGE PHILIP P. PALILEO and JOSE DE LA
CRUZ, petitioners, vs. PLANTERS DEVELOPMENT BANK, respondent.
DECISION
DEL CASTILLO, J p:
This Petition for Review on Certiorari 1 assails the July 28, 2009 Amended
Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No. 01317-MIN,
entitled "PlantersDevelopment Bank, Petitioner, versus Hon. Eddie R. Roxas (in his capacity as
the former Pairing Judge), Hon. Panambulan M. Mimbisa (in his capacity as the Presiding
Judge of RTC, Branch 37, General Santos City), Sheriff Marilyn P. Alano, Sheriff Ramon A.
Castillo, George Philip P. Palileo, and Jose Dela Cruz, Respondents,"as well as its August 23,
2010 Resolution 3 denying reconsideration of the assailed amended judgment.
Factual Antecedents
In a June 15, 2006 Decision 4 rendered by the Regional Trial Court (RTC) of General
Santos City, Branch 37, in an action for specific performance/sum of money with damages
docketed as Civil Case No. 6474 and entitled "George Philip P. Palileo and Jose Dela Cruz,
Plaintiffs, versus, Planters Development Bank, Engr. Edgardo R. Torcende, Arturo R. delos
Reyes, Benjamin N. Tria, Mao Tividad and Emmanuel Tesalonia, Defendants," it was held thus:
Before this Court is a complaint for specific performance and/or
sum of money and damages with prayer for the issuance of writs of
preliminary attachment and preliminary injunction filed by Plaintiff George
Philip Palileo and Jose L. Dela Cruz against Engr. Edgardo R.
Torcende, Planters Development Bank (defendant Bank), Arturo R. Delos
Reyes, Benjamin N. Tria, Mao Tividad, and Emmanuel Tesalonia on 22
December 1998.
After summons together with the verified Complaint and its
annexes were duly served upon defendants, the latter answered. During
Pre-Trial conference defendant Bank manifested [its] intention of settling
the case amicably and several attempts to explore the said settlement
[were] made as per records of this case. In the last pre-trial hearing dated
17 November 2000, only plaintiffs[,] George Philip Palileo and Jose L. Dela
Cruz[,] and their counsel appeared, thus, the latter move [sic]for the
presentation of evidence ex parte, which was granted by the Court with the
reservation of verifying the return card [to determine] whether the order for
the pre-trial was indeed received by defendants. Finally, [at the] 21
November 2001 hearing, . . . defendants [again] failed to appear and their
failure to file pre-trial brief was noted; thus [plaintiffs were] allowed to
present evidence ex parte before the Clerk of Court.
xxx xxx xxx
IN LIGHT OF THE FOREGOING, defendants are hereby
ORDERED to jointly and severally PAY plaintiffs as follows:
i) Actual Damages;
a) Plaintiff George Philip Palileo[,] the amount of Two
Million Six Hundred Five Thousand Nine [sic] Seventy Two
Pesos and Ninety Two Centavos (P2,605,972.92), with 12%
compounded interest [per annum] reckoned from the filing of this
case until full settlement thereof;
b) Plaintiff Jose R. Dela Cruz[,] the amount of One
Million Five Hundred Twenty Nine Thousand Five Hundred Eight
Thousand [sic] and Eighty Centavos (P1,529,508.80), with 12%
compounded interest [per annum] reckoned from the filing of this
case until full settlement thereof;
ii) Moral damages in the amount of Five Hundred Thousand
Pesos (P500,000.00) each;
iii) Exemplary Damages in the amount of Five Hundred Thousand
Pesos (P500,000.00) each; DcCASI
iv) Attorney's Fees in the amount of Five Hundred Thousand
[Pesos] (P500,000.00) each . . . and to pay the costs.
SO ORDERED. 5
Respondent Planters Development Bank (PDB) received a copy of the RTC Decision on July
17, 2006.
On July 31, 2006, PDB filed by private courier service — specifically LBC 6 — an
Omnibus Motion for Reconsideration and for New Trial, 7 arguing therein that the trial court's
Decision was based on speculation and inadmissible and self-serving pieces of evidence; that it
was declared in default after its counsel failed to attend the pre-trial conference on account of
the distance involved and difficulty in booking a flight to General Santos City; that it had
adequate and sufficient defenses to the petitioners' claims; that petitioners' claims are only
against its co-defendant, Engr. Edgardo R. Torcende [Torcende]; that the award of damages
and attorney's fees had no basis; and that in the interest of justice, it should be given the
opportunity to cross-examine the petitioners' witnesses, and thereafter present its evidence.
 Petitioners' copy of the Omnibus Motion for Reconsideration and for New Trial was
likewise sent on July 31, 2006 by courier service through LBC, but in their address of record —
Tupi, South Cotabato — there was no LBC service at the time.
On August 2, 2006, PDB filed with the RTC another copy of the Omnibus Motion for
Reconsideration and for New Trial via registered mail; another copy thereof was simultaneously
sent to petitioners by registered mail as well.
Meanwhile, petitioners moved for the execution of the Decision pending appeal.
In an August 30, 2006 Order, 8 the RTC denied the Omnibus Motion for
Reconsideration and for New Trial, while it granted petitioners' motion for execution pending
appeal, which it treated as a motion for the execution of a final and executory judgment. The
trial court held, as follows:
Anent the first motion, records show that the Omnibus Motion for
Reconsideration and for New Trial dated 28 July 2006 was initially filed via
an LBC courier on 28 July 2006 and was actually received by the Court on
31 July 2006, which was followed by filing of the same motion thru
registered mail on 2 August 2006. Said motion was set for hearing by the
movant on 18 August 2006 or 16 days after its filing.
The motion fails to impress. Section 5, Rule 15 9 of the 1997
Rules of Civil Procedure as amended is pertinent thus:
Section 5. Notice of hearing. — The notice of hearing
shall be addressed to all parties concerned, and shall specify the
time and date of the hearingwhich must not be later than ten (10)
days after the filing of the motion. (Underscoring and italics
supplied)
The aforesaid provision requires [that] every motion shall be
addressed to all parties concerned, and shall specify the time and date of
the hearing NOT later than ten (10) days after the filing of the motion.
Being a litigated motion, the aforesaid rule should have been complied
[with]. Its noncompliance renders it defective.
[The] Rule is settled that a motion in violation thereof is pro
forma and a mere scrap of paper. It presents no question which the court
could decide [upon]. In fact, the court has NO reason to consider it[;]
neither [does] the clerk of court [have] the right to receive the same.
Palpably, the motion is nothing but an empty formality deserving no judicial
cognizance. Hence, the motion deserves a short shrift and peremptory
denial for being procedurally defective.
As such, it does not toll the running of the reglementary period
thus making the assailed decision final and executory. This supervening
situation renders the Motion for Execution pending appeal academic but at
the same time it operates and could serve [as] well as a motion for
execution of the subject final and executory decision. Corollarily, it now
becomes the ministerial duty of this Court to issue a writ of execution
thereon.
IN LIGHT OF THE FOREGOING, the Omnibus Motion for
Reconsideration and New Trial is hereby DENIED, and the Motion for
Execution Pending Appeal (which is treated as a motion for execution of a
final and executory judgment) is also GRANTED as explained above.
Accordingly, let A WRIT OF EXECUTION be issued against herein
defendants to enforce the FINAL and EXECUTORY Decision dated 15
June 2006.
SO ORDERED. 10
PDB received a copy of the above August 30, 2006 Order on September 14, 2006. 11
On August 31, 2006, a Writ of Execution 12 was issued. PDB filed an Urgent Motion to
Quash Writ of Execution, 13 arguing that it was prematurely issued as the June 15, 2006
Decision was not yet final and executory; that its counsel has not received a copy of the writ;
and that no entry of judgment has been made with respect to the trial court's Decision. Later on,
it filed a Supplemental Motion to Quash Writ of Execution, 14 claiming that the writ was
addressed to its General Santos branch, which had no authority to accept the writ. CSTcEI
On September 7, 2006, PDB filed a Notice of Appeal. 15
In an October 6, 2006 Order, 16 the RTC denied the motion to quash the writ of
execution.
On October 9, 2006, the RTC issued a second Writ of Execution. 17
Ruling of the Court of Appeals
On October 11, 2006, PDB filed with the CA an original Petition for Certiorari, which
was later amended, 18 assailing 1) the trial court's August 30, 2006 Order — which denied the
omnibus motion for reconsideration of the RTC Decision and for new trial; 2) its October 6, 2006
Order — which denied the motion to quash the writ of execution; and 3) the August 31, 2006
and October 9, 2006 writs of execution.
On May 31, 2007, the CA issued a Decision 19 dismissing PDB's Petition for lack of
merit. It sustained the trial court's pronouncement, that by setting the hearing of the Omnibus
Motion for Reconsideration and for New Trial on August 18, 2006 — or 16 days after its filing on
August 2, 2006 — PDB violated Section 5, Rule 15 of theRules of Court which categorically
requires that the notice of hearing shall specify the time and date of the hearing which must not
be later than 10 days after the filing of the motion. Citing this Court's ruling in Bacelonia v.
Court of Appeals, 20 the CA declared that the 10-day period prescribed in Section 5 is
mandatory, and a motion that fails to comply therewith is pro forma and presents no question
which merits the attention and consideration of the court.
The appellate court further characterized PDB's actions as indicative of a deliberate
attempt to delay the proceedings, noting that it did not timely move to reconsider the trial court's
November 17, 2000 ruling 21 allowing petitioners to present their evidence ex parte, nor did it
move to be allowed to present evidence in support of its defense. It was only after the RTC
rendered its June 15, 2006 Decision that PDB moved to be allowed to cross-examine
petitioners' witnesses and to present its evidence on defense.
The CA likewise held that the RTC did not err in ruling that the omnibus motion for
reconsideration did not toll the running of the prescriptive period, which thus rendered the June
15, 2006 Decision final and executory. It noted as well that PDB's September 7, 2006 notice of
appeal was tardy.
The CA found no irregularity with respect to the writs of execution, which contained
the fallo of the June 15, 2006 Decision of the RTC — thus itemizing the amount of the judgment
obligation. Additionally, it held that the fact that the judgment debtors are held solidarily liable
does not require that the writs should be served upon all of the defendants; that it is not true that
the sheriffs failed to make a demand for the satisfaction of judgment upon PDB, as the mere
presentation of the writ to it operated as a demand to pay; and that PDB failed to attach the
Sheriff's Return to its Petition, which thus prevents the appellate court from resolving its claim
that the writs were not validly served.
PDB filed a Motion for Reconsideration, 22 arguing that Rule 15, Section 5 of
the Rules of Court should be relaxed in view of the fact that judgment against it was based on a
technicality — and not on a trial on the merits; that there was no deliberate intention on its part
to delay the proceedings; that the court acted with partiality in declaring that the Omnibus
Motion for Reconsideration and for New Trial was pro forma; that its notice of appeal was timely;
and that the writs of execution are null and void.
On July 28, 2009, the CA made a complete turnaround and issued the assailed
Amended Decision, which decreed thus:
WHEREFORE, the motion for reconsideration is GRANTED. This
Court's May 31, 2007 Decision is SET ASIDE and a new one is rendered
GRANTING the petition forcertiorari. The trial court's Order dated August
30, 2006 is SET ASIDE and the Writ of Execution issued by the trial court is
QUASHED. The trial court is ORDERED to hear and rule on the merits of
petitioner's "Omnibus Motion for Reconsideration and New Trial."
SO ORDERED. 23
The CA reversed its original finding that the Omnibus Motion for Reconsideration and
for New Trial was pro forma. This time, it held just the opposite, ruling that PDB's "tacit
argument" that the "distances involved in the case at bench call for a relaxation of the
application of Section 5, Rule 15 of the Rules of Court" deserved consideration. It held that
Section 5 should be read together with Section 4 24 of the same Rule, thus:
When a pleading is filed and served personally, there is no
question that the requirements in Sections 4 and 5 of Rule 15 of
the Revised Rules of Civil Procedurepose no problem to the party pleading.
Under this mode of service and filing of pleadings, the party pleading is
able to ensure receipt by the other party of his pleading at least three days
prior to the date of hearing while at the same time setting the hearing on a
date not later than ten days from the filing of the pleading. LexLib
When, as in the case at bench, the address of the trial court as
well as that of the opposing counsel is too distant from the office of the
counsel of the party pleading to personally effect the filing and service of
the pleading, the latter counsel faces a real predicament. In a perfect world
with the best postal service possible, it would be problematic enough to
ensure that both requisites are fully met: that opposing counsel receives
the pleading at least three days before the date of hearing and that the
date of hearing is no more than ten days after the filing (mailing) of the
pleading. But, as a matter of fact, given the state of the postal service today
— a matter the Court takes judicial notice of — the party pleading often
finds himself [locked] between the horns of a dilemma.
The case at bench presents the Court with the novel issue of
whether the same rigid application of the cited Sections-and-Rule is
warranted when the filing and service of pleadings is by mail. The Court is
of the opinion that when confronted between [sic]the demands of sufficient
notice and due process on the one hand and the requirement that the date
of hearing be set no later than ten days from filing, the stringent application
of the Rules is not warranted and a liberal posture is more in keeping with
Section 6, Rule 1 of the 1997 Rules of Civil Procedure which provides:
SECTION 6. Construction. — These Rules shall be
liberally construed in order to promote their objective of securing
a just, speedy, and inexpensive disposition of every action and
proceeding. 25
The CA further sustained PDB's argument that since judgment against it was arrived
at by mere default or technicality, it is correspondingly entitled to a relaxation of the Rules, in
line with the principles of substantial justice. It likewise held that PDB counsel's act of setting the
hearing of the Omnibus Motion for Reconsideration and for New Trial 16 days after its filing was
an excusable lapse; that no scheme to delay the case is evident from PDB's actions; that more
telling is the trial court's "blurring in cavalier fashion" the distinction between Sections 1 and 2 of
Rule 39 of the Rules of Court,26 as well as its unequal treatment of the parties from its strict
application of Section 5, Rule 15 against respondent, while it bent backward to accommodate
petitioners by converting the latter's motion for execution pending appeal into a motion for
execution of a final and executory judgment.
Lastly, the appellate court concluded that the trial court committed grave abuse of
discretion, which thus warrants the grant of PDB's Petition for Certiorari.
Petitioners filed their Urgent Motion for Reconsideration, 27 which the CA denied
through its assailed August 23, 2010 Resolution. Hence, the instant Petition.
Issues
Petitioners frame the issues involved in this Petition, as follows:
 Being assailed herein is the refusal of the Court of Appeals, which
is a patent error, for not giving credence to petitioners-appellants'
arguments that the respondent-appellees' special civil action
for certiorari before it is clearly devoid of merit as (i) the Decision dated
June 15, 2006 of the RTC, Branch 37, General Santos City had become
final and executory before the special civil action for Certiorari was filed
before it which should have been dismissed outright, and which issue of
"finality" was never ruled upon, (ii) granting arguendo that
a certiorari proceeding could still be had, the same should be filed under
Rule 45 instead of Rule 65 of the1997 Rules of Civil Procedure, (iii) the
alleged attendant abuse of discretion on the part of the public respondent
judges, even granting arguendo that it exist [sic], were[sic] not grave but
on the contrary were purely errors of judgment and, (iv) the substantial and
glaring defects of the petition in the special civil action for certioraribefore
the Court of Appeals were consistently and clearly called to its attention but
were unjustifiably ignored by it. 28
Petitioners' Arguments
In their Petition and Reply, 29 petitioners seek to reverse the assailed CA dispositions
and to reinstate the appellate court's original May 31, 2007 Decision, arguing that the trial
court's June 15, 2006 Decision became final and executory on account of PDB's failure to
timely file its Omnibus Motion for Reconsideration and for New Trial, as it properly filed the
same only on August 2, 2006 — or beyond the 15-day period allowed by the Rules of Court.
Petitioners argue that PDB's filing of its Omnibus Motion for Reconsideration and for
New Trial on July 31, 2006 by courier service through LBC was improper, since there was no
LBC courier service in Tupi, South Cotabato at the time; naturally, they did not receive a copy of
the omnibus motion. This is precisely the reason why PDB re-filed its omnibus motion on
August 2, 2006 through registered mail, that is, to cure the defective service by courier; but by
then, the 15-day period within which to move for reconsideration or new trial, or to file a notice of
appeal, had already expired, as the last day thereof fell on August 1, 2006 — counting from
PDB's receipt of the trial court's Decision on July 17, 2006. ADSTCa
Petitioners add that PDB's notice of appeal — which was filed only on September 7,
2006 — was tardy as well; that PDB's resort to an original Petition forCertiorari to assail the trial
court's August 30, 2006 Order denying the Omnibus Motion for Reconsideration and for New
Trial was improper, for as provided under Section 9, Rule 37 of the Rules of Court,30 an order
denying a motion for new trial or reconsideration is not appealable, the remedy being an appeal
from the judgment or final order; that certiorari was resorted to only to revive PDB's appeal,
which was already lost; and that it was merely a face-saving measure resorted to by PDB to
recover from its glaring blunders, as well as to delay the execution of the RTC Decision. They
also assert that certiorari is not an available remedy, since PDB did not file a motion for
reconsideration with respect to the other assailed orders of the trial court.
Petitioners maintain as well that the CA erred in relaxing the application of the Rules of
Court as to PDB, a banking institution with adequate resources to engage counsel within
General Santos City and not relegate Civil Case No. 6474 to its Manila lawyers who are thus
constrained by the distance involved.
Respondent's Arguments
Seeking the denial of the Petition, PDB in its Comment 31 maintains that the CA did
not err in declaring that its Omnibus Motion for Reconsideration and for New Trial was not pro
forma; that there are justifiable grounds to move for reconsideration and/or new trial; that it had
no intention to delay the proceedings; that it was correct for the appellate court to relax the
application of Section 5, Rule 15; and that the CA is correct in finding that the trial court
committed grave abuse of discretion in misapplying the Rules and in exhibiting partiality.
Our Ruling
The Court grants the Petition.
The proceedings in the instant case would have been greatly abbreviated if the court a
quo and the CA did not overlook the fact that PDB's Omnibus Motion for Reconsideration and
for New Trial was filed one day too late. The bank received a copy of the trial court's June 15,
2006 Decision on July 17, 2006; thus, it had 15 days — or up to August 1, 2006 — within which
to file a notice of appeal, motion for reconsideration, or a motion for new trial, pursuant to
the Rules of Court. 32 Yet, it filed the omnibus motion for reconsideration and new trial only on
August 2, 2006.
Indeed, its filing or service of a copy thereof to petitioners by courier service cannot be
trivialized. Service and filing of pleadings by courier service is a mode not provided in the
Rules. 33 This is not to mention that PDB sent a copy of its omnibus motion to an address or
area which was not covered by LBC courier service at the time. Realizing its mistake, PDB
re-filed and re-sent the omnibus motion by registered mail, which is the proper mode of service
under the circumstances. By then, however, the 15-day period had expired.
PDB's Notice of Appeal, which was filed only on September 7, 2006, was tardy; it had
only up to August 1, 2006 within which to file the same. The trial court therefore acted regularly
in denying PDB's notice of appeal.
Since PDB's Omnibus Motion for Reconsideration and for New Trial was filed late and
the 15-day period within which to appeal expired without PDB filing the requisite notice of
appeal, it follows that its right to appeal has been foreclosed; it may no longer question the trial
court's Decision in any other manner. "Settled is the rule that a party is barred from assailing the
correctness of a judgment not appealed from by him." 34 The "presumption that a party who did
not interject an appeal is satisfied with the adjudication made by the lower court" 35 applies to it.
There being no appeal taken by PDB from the adverse judgment of the trial court, its Decision
has become final and can no longer be reviewed, much less reversed, by this Court. "Finality of
a judgment or order becomes a fact upon the lapse of the reglementary period to appeal if no
appeal is perfected, and is conclusive as to the issues actually determined and to every matter
which the parties might have litigated and have . . . decided as incident to or essentially
connected with the subject matter of the litigation, and every matter coming within the legitimate
purview of the original action both in respect to matters of claim and of defense." 36 And "[i]n
this jurisdiction, the rule is that when a judgment becomes final and executory, it is the
ministerial duty of the court to issue a writ of execution to enforce the judgment;" 37 "execution
will issue as a matter of right . . . (a) when the judgment has become final and executory; (b) Branch 37 is ORDERED to proceed with the execution of its June 15, 2006 Decision in Civil
when the judgment debtor has renounced or waived his right of appeal; [or] (c) when the period Case No. 6474.
for appeal has lapsed without an appeal having been filed . . . ." 38
SO ORDERED.
Neither can the Court lend a helping hand to extricate PDB from the effects of its
mistake; indeed, PDB erred more than once during the course of the proceedings. For one, it ||| (Palileo v. Planters Development Bank, G.R. No. 193650, [October 8, 2014], 745 PHIL
did not attempt to set right its failure to appear during pre-trial, which prompted the court to allow 144-161)
petitioners to present evidence ex parte and obtain a favorable default
judgment. Second, assuming for the sake of argument that it timely filed its Omnibus Motion for
Reconsideration and for New Trial, it nonetheless violated the ten-day requirement on the
notice of hearing under Section 5 of Rule 15. Third, even before it could be notified of the trial
court's resolution of its omnibus motion on September 14, 2006 — assuming it was timely filed,
it filed a notice of appeal on September 7, 2006 — which thus implies that it abandoned its bid
for reconsideration and new trial, and instead opted to have the issues resolved by the CA
through the remedy of appeal. If so, then there is no Omnibus Motion for Reconsideration and
for New Trial that the trial court must rule upon; its August 30, 2006 Order thus became moot
and academic and irrelevant. "[W]here [an action] or issue has become moot and academic,
there is no justiciable controversy, so that a declaration thereon would be of no practical use or
value." 39

Fourth, instead of properly pursuing its appeal to free itself from the unfavorable
effects of the trial court's denial of its notice of appeal, PDB chose with disastrous results to
gamble on its Omnibus Motion for Reconsideration and for New Trial by filing an original
Petition for Certiorari to assail the trial court's denial thereof. Time and again, it has been said
that certiorari is not a substitute for a lost appeal, especially if one's own negligence or error in
one's choice of remedy occasioned such loss. 40

What remains relevant for this Court to resolve, then, is the issue relative to the trial
court's October 6, 2006 Order — which denied the motion to quash the writ of execution — and
the August 31, 2006 and October 9, 2006 writs of execution. The Court observes that the
October 6, 2006 Order and the August 31, 2006 and October 9, 2006 writs of execution were
set aside and quashed merely as a necessary consequence of the CA's directive in the
Amended Decision for the trial court to hear and rule on the merits of PDB's Omnibus Motion for
Reconsideration and for New Trial. Other than this singular reason, the CA would have
sustained them, and this is clear from a reading of both its original May 31, 2007 Decision and
its subsequent Amended Decision. Now, since the Court has herein declared that PDB's
omnibus motion may not be considered for being tardy and for having been superseded by the
bank's filing of a notice of appeal, then the CA's original pronouncement regarding the October
6, 2006 Order and the August 31, 2006 and October 9, 2006 writs of execution should
necessarily be reinstated as well.

In light of the above conclusions, the Court finds no need to further discuss the other
issues raised by the parties. They are rendered irrelevant by the above pronouncements.

WHEREFORE, the Petition is GRANTED. The assailed July 28, 2009 Amended
Decision and August 23, 2010 Resolution of the Court of Appeals in CA-G.R. SP No.
01317-MIN are REVERSED and SET ASIDE. The Regional Trial Court of General Santos City,
 SECOND DIVISION corresponding to their shares, and for the said heirs to divide
among themselves the aforesaid amount as follows:

[G.R. No. 179638. July 8, 2013.] 1/13 to CIRILA MIRANDA

1/13 to CORNELIO MIRANDA STHAID

HEIRS OF NUMERIANO MIRANDA, SR., namely: CIRILA (deceased),
CORNELIO, NUMERIANO, JR., ERLINDA, LOLITA, RUFINA, DANILO, 1/13 to NUMERIANO MIRANDA, JR.
ALEJANDRO, FELIMON, TERESITA, ELIZABETH and ANALIZA, all
1/13 to ERLINDA MIRANDA
surnamed MIRANDA, petitioners, vs. PABLO
R. MIRANDA, respondent. 1/13 to LOLITA MIRANDA

1/13 to RUFINA MIRANDA

DECISION 1/13 to DANILO MIRANDA

1/13 to ALEJANDRO MIRANDA

1/13 to FELIMON MIRANDA

DEL CASTILLO, J p:
An action for revival of a judgment cannot modify, alter, or reverse the original
judgment, which is already final and executory. 1
This Petition for Review on Certiorari 2 under Rule 45 of the Rules of Court assails
the Decision 3 dated June 14, 2007 and the Resolution 4 dated September 11, 2007 of the
Court of Appeals (CA) in CA-G.R. SP No. 97350.
Factual Antecedents
In 1994, petitioners Cirila, Cornelio, Numeriano, Jr., Erlinda, Lolita, Rufina, Danilo,
Alejandro, Felimon, Teresita, Elizabeth, and Analiza, all surnamed Miranda, representing
themselves as the heirs of Numeriano Miranda, Sr., filed before the Regional Trial Court
(RTC) of Muntinlupa City, a Complaint 5 for Annulment of Titles and Specific Performance,
docketed as Civil Case No. 94-612, against the heirs of Pedro Miranda, namely: Pacita and
Oscar Miranda; the heir of Tranquilino Miranda, RogelioMiranda; and the spouses respondent
Pablo Miranda and Aida Lorenzo.
1/13 to TERESITA MIRANDA
1/13 to ELIZABETH MIRANDA
1/13 to ANALIZA MIRANDA
3. Ordering Plaintiffs Lolita Miranda, Alejandro Miranda,
Teresita Miranda, Rufina Miranda and all persons claiming rights
under them to immediately vacate the abovementioned
residential house and to jointly and severally pay to the spouses
Pablo and Aida Miranda a monthly rental of P2,000.00 from the
date of notice of the promulgation of this judgment up to the time
that they have actually vacated the property;
4. Proclaiming that ROGELIO MIRANDA is not the
biological son or child by nature of TRANQUILINO MIRANDA,
and therefore is not entitled to inherit from the latter;

After trial, the RTC, Branch 256, rendered a Decision 6 dated August 30, 1999, the 5. Declaring CORNELIO MIRANDA,
NUMERIANO MIRANDA, JR., ERLINDA MIRANDA,
dispositive portion of which reads:
LOLITA MIRANDA, RUFINA MIRANDA, DANIL[O] MIRANDA,
WHEREFORE, premises considered, this court resolves: ALEJANDRO MIRANDA, FELIMON MIRANDA,
TERESITA MIRANDA, ELIZABETH MIRANDA,
1. To [u]phold and [s]ustain the validity of TCT Nos. ANALIZA MIRANDA, PABLO MIRANDA and
186011, 186012, and 186013; PACITA MIRANDA as the lawful legal heirs of the deceased
TRANQUILINO MIRANDA and ordering them to partition among
2. Ordering Pablo Miranda to indemnify all
themselves Lot 826-A-1 covered by TCT No. 186011 registered
other heirs of NUMERIANO MIRANDA the amount equivalent to
in the name of TRANQUILINO MIRANDA, containing an
12/13 fair market value of the co-owned residential house,
area of 213 square meters, as follows:
erected on the lot 826-A-3 covered by TCT No. 186013
1/13 aliquot share to Cornelio Miranda
 1/13 aliquot share to Numeriano Miranda, Jr.
1/13 aliquot share to Erlinda Miranda
1/13 aliquot share to Lolita Miranda
1/13 aliquot share to Rufina Miranda
1/13 aliquot share to Danilo Miranda
1/13 aliquot share to Alejandro Miranda
1/13 aliquot share to Felimon Miranda
1/13 aliquot share to Teresita Miranda
1/13 aliquot share to Elizabeth Miranda
1/13 aliquot share to Analiza Miranda cTCaEA
1/13 aliquot share to Pablo Miranda
1/13 aliquot share to Pacita Miranda
6. Ordering all the abovenamed heirs to commission the
survey of Lot 826-A-1 or to authorize in writing, one of them to
commission such survey, in order to avoid a chaotic situation
similar to the case at bar. Should they not agree as to what
particular portion shall belong to one another, they may agree
that it be allotted to one or two or several of them, who shall
indemnify the others at a price agreed upon by all of them.
Should they not agree as to whom shall the property be allotted,
to sell the property to a third person at [a] price agreed upon by a
majority of all [of] them, and to partition the proceeds of the sale
in accordance with No. 5 above.
SO ORDERED. 7
Petitioners did not file any appeal hence the Decision became final and executory. 8
On December 11, 2001, the RTC issued a Writ of Execution, 9 which was not
implemented. 10
On July 8, 2005, respondent filed an Ex-parte Motion 11 praying that the RTC issue a
"Break-Open and Demolition Order" in order to compel the petitioners to vacate his
property. 12 But since more than five years have elapsed from the time the Writ of Execution
should have been enforced, the RTC denied the Motion in its Order 13 dated August 16, 2005.
This prompted respondent to file with the RTC a Petition 14 for Revival of Judgment,
which was docketed as Civil Case No. 05-131. Petitioners opposed the revivalof judgment
assailing, among others, the jurisdiction of the RTC to take cognizance of the Petition for
Revival of Judgment. 15
On June 20, 2006, the RTC rendered a Decision 16 granting the Petition. Thus:
WHEREFORE, finding the instant petition to be meritorious, the
petition is hereby GRANTED. Pursuant to Rule 39, Section 6 of the Rules
of Court,the Decision dated August 30, 1999 in Civil Case No. 94-612 is
hereby REVIVED.
SO ORDERED. 17
On July 13, 2006, petitioners filed a Notice of Appeal 18 via LBC, 19 which was
opposed by respondent on the ground that the Decision dated August 30, 1999 has long
become final and executory. 20 Petitioners, in turn, moved for the transmittal of the original
records of the case to the CA, insisting that respondent's opposition is without merit. 21
Ruling of the Regional Trial Court
Finding the appeal barred by prescription, the RTC denied the Notice of Appeal in
its Order 22 dated October 10, 2006, to wit:
WHEREFORE, in view of the foregoing, the notice of appeal
herein filed is hereby DENIED for lack of merit.
SO ORDERED. 23
Feeling aggrieved, petitioners filed a Petition for Mandamus 24 with the CA praying
that their Notice of Appeal be given due course. 25
Ruling of the Court of Appeals
On June 14, 2007, the CA denied the Petition for Mandamus on the ground that the
Notice of Appeal was filed out of time. 26 The dispositive portion of the Decision
reads: CDHAcI
WHEREFORE, premises considered, the petition is DENIED.
The appeal is hereby DISMISSED for having been filed out of time.
SO ORDERED. 27
Petitioners moved for reconsideration but the same was denied by the CA in its
Resolution 28 dated September 11, 2007.
Issues
Hence, this recourse, with petitioners raising the following issues:
1. WHETHER . . . THE APPEAL WAS PERFECTED ON TIME?
2. WHETHER . . . THE LATE (ONE DAY) FILING WAS JUSTIFIED?
3. WHETHER . . . AN ACTION FOR REVIVAL OF JUDGMENT IS
APPEALABLE?
4. WHETHER THE APPEAL IS MERITORIOUS?
 a. Whether the [RTC] below has exclusive original jurisdiction
over an action for revival of judgment?
b. Whether . . . respondent herein, plaintiff therein, as one of the
judgment creditors can file the said action for revival
ALONE?
c. Whether subsequent events or laws have rendered the
judgment sought to be revived modified [or] altered[,] or
prevent its enforcement?
d. Whether res judicata or laches has seeped in, other judgment
creditors not suing for any such implementation of the
1999 judgment, ONLY PLAINTIFF ALONE?
e. Whether . . . the Petitioners are entitled to damages? 29
Petitioners' Arguments
Petitioners assert that an action to revive judgment is appealable, 30 and that their
appeal was perfected on time. 31 They insist that the Notice of Appeal, which they filed on the
15th day via LBC, was seasonably filed since the law does not require a specific
mode of service for filing a notice of appeal. 32
Besides, even if their appeal was belatedly filed, it should still be given due course in
the interest of justice, 33 considering that their counsel had to brave the storm and the floods
caused by typhoon "Florita" just to file their Notice of Appeal on time. 34
Petitioners further contend that their appeal is meritorious. 35 They insist that it is the
Metropolitan Trial Court (MeTC), not the RTC, which has jurisdiction over the Petition for
Revival of Judgment since the amount in the tax declarations of the properties involved is less
than Fifty Thousand Pesos (P50,000.00). 36 They likewise assail the Decision dated August 30,
1999, claiming that the deeds and certificates of title subject of Civil Case No. 94-612 were
falsified. 37
Respondent's Arguments
Respondent, on the other hand, maintains that the Notice of Appeal was belatedly
filed, 38 and that the revival of judgment is unappealable as it is barred by prescription. 39
Our Ruling
The Petition lacks merit.
The Notice of Appeal was belatedly
filed.
It is basic and elementary that a Notice of Appeal should be filed "within fifteen (15)
days from notice of the judgment or final order appealed from." 40 cAaDHT
Under Section 3, 41 Rule 13 of the Rules of Court,pleadings may be filed in court
either personally or by registered mail. In the first case, the date of filing is the date of receipt. In
the second case, the date of mailing is the date of receipt.
In this case, however, the counsel for petitioners filed the Notice of Appeal via a
private courier, a mode of filing not provided in the Rules. Though not prohibited by the Rules,
we cannot consider the filing of petitioners' Notice of Appeal via LBC timely filed. It is
established jurisprudence that "the date of delivery of pleadings to a private letter-forwarding
agency is not to be considered as the date of filing thereof in court;" instead, "the date of actual
receipt by the court . . . is deemed the date offiling of that pleading." 42 Records show that the
Notice of Appeal was mailed on the 15th day and was received by the court on the 16th day or
one day beyond the reglementary period. Thus, the CA correctly ruled that the Notice of Appeal
was filed out of time.
Neither can petitioners use typhoon "Florita" as an excuse for the belated filing of the
Notice of Appeal because work in government offices in Metro Manila was not suspended on
July 13, 2006, the day petitioners' Notice of Appeal was mailed via LBC. 43
And even if we, in the interest of justice, give due course to the appeal despite its late
filing, the result would still be the same. The appeal would still be denied for lack of merit.
The Decision dated August 30, 1999 is
already final and executory.
An action for revival of judgment is a new and independent action. 44 It is different and
distinct from the original judgment sought to be revived or enforced. 45 As such, a party
aggrieved by a decision of a court in an action for revival of judgment may appeal the decision,
but only insofar as the merits of the action for revival is concerned. The original judgment, which
is already final and executory, may no longer be reversed, altered, or modified. 46
In this case, petitioners assail the Decision dated August 30, 1999, which is the
original judgment sought to be revived or enforced by respondent. Considering that the said
Decision had already attained finality, petitioners may no longer question its correctness. As we
have said, only the merits of the action for revival may be appealed, not the merits of the
original judgment sought to be revived or enforced.
RTC has jurisdiction over the Petition
for Revival of Judgment.
As to whether the RTC has jurisdiction, we rule in the affirmative. An action for
revival of judgment may be filed either "in the same court where said judgment was rendered or
in the place where the plaintiff or defendant resides, or in any other place designated by the
statutes which treat of the venue of actions in general." 47In this case, respondent filed the
Petition for Revival of Judgment in the same court which rendered the Decision dated August
30, 1999.
All told, we find no error on the part of the CA in denying the Petition and dismissing
the appeal for having been filed out of time.
 WHEREFORE, the Petition is hereby DENIED. The Decision dated June 14, 2007 and
the Resolution dated September 11, 2007 of the Court of Appeals in CA-G.R. SP No. 97350
are hereby AFFIRMED.

SO ORDERED.

||| (Heirs of Miranda, Sr. v. Miranda, G.R. No. 179638, [July 8, 2013], 713 PHIL 541-552)
 SECOND DIVISION
[G.R. No. 108538. January 22, 1996.]
LOURDES A. VALMONTE and ALFREDO
D. VALMONTE, petitioners, vs. THE
HONORABLE COURT OF APPEALS, THIRD DIVISION and ROSITA
DIMALANTA, respondents. cdasia
Alfredo D. Valmonte and Cirilo E. Doronia, for petitioners.
Balgos & Perez, for private respondent.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS; SERVICE REQUIRED IN
ACTION IN PERSONAM. — In an action in personam, personal service of summons or, if this
is not possible and he cannot be personally served, substituted service, as provided in Rule 14,
§ 7-8 is essential for the acquisition by the court of jurisdiction over the person of a defendant
who does not voluntarily submit himself to the authority of the court. If defendant cannot be
served with summons because he is temporarily abroad, but otherwise he is a Philippine
resident, service of summons may, by leave of court, be made by publication. Otherwise stated,
a resident defendant in an action in personam, who cannot be personally served with summons,
may be summoned either by means of substituted service in accordance with Rule 14, § 8 or by
publication as provided in § 17 and 18 of the same Rule.
2. ID.; ID.; ID.; ID.; DEFENDANT MUST BE RESIDENT OF PHILIPPINES. — In
all of these cases, it should be noted, defendant must be a resident of the Philippines,
otherwise an action in personam cannot be brought because jurisdiction over his person is
essential to make a binding decision.
3. ID.; ID.; ACTION IN REM; NON-RESIDENT DEFENDANT MAY BE SERVED
WITH SUMMONS EXTERRITORIALLY. — On the other hand, if the action is in rem orquasi in
rem, jurisdiction over the person of the defendant is not essential for giving the court jurisdiction
so long as the court acquires jurisdiction over the res. If the defendant is a nonresident and he
is not found in the country, summons may be served exterritorially in accordance with Rule 14,
§ 17. In such cases, what gives thecourt jurisdiction in an action in rem or quasi in rem is that it
has jurisdiction over the res, i.e. the personal status of the plaintiff who is domiciled in the
Philippines or the property litigated or attached.
4. ID.; ID.; ID.; ID.; PURPOSE. — Service of summons in the manner provided in § 17
is not for the purpose of vesting it with jurisdiction but for complying with the requirements of fair
play or due process, so that he will be informed of the pendency of the action against him and
the possibility that property in the Philippines belonging to him or in which he has an interest
may be subjected to a judgment in favor of the plaintiff and he can thereby take steps to protect
his interest if he is so minded.
5. ID.; ID.; ID.; ID.; MODES. — As petitioner Lourdes A. Valmonte is a nonresident
who is not found in the Philippines, service of summons on her must be in accordance with Rule
14, § 17. Such service, to be effective outside the Philippines, must be made either (1) by
personal service; (2) by publication in a newspaper ofgeneral circulation in such places and for
such time as the court may order, in which case a copy of the summons and
order of the court should be sent by registered mail to the last known address of the defendant;
or (3) in any other manner which the court may deem sufficient.
6. ID.; ID.; ID.; ID.; ID.; SERVICE OF SUMMONS ON DEFENDANT'S HUSBAND
AND COUNSEL IN PHILIPPINES, NOT VALID. — Since in the case at bar, the
serviceof summons upon petitioner Lourdes A. Valmonte was not done by means of any of the
first two modes, the question is whether the service on her attorney, petitioner Alfredo
D. Valmonte, can be justified under the third mode, namely, "in any . . . manner the court may
deem sufficient." We hold it cannot. This mode of service, like the first two, must be made
outside the Philippines, such as through the Philippine Embassy in the foreign country where
the defendant resides. Moreover, there are several reasons why the service of summons on
Atty. Alfredo A. Valmonte cannot be considered a valid service of summons on petitioner
Lourdes A. Valmonte. In the first place, service of summons on petitioner Alfredo
D. Valmonte was not made upon the order of the court as required by Rule 14, § 17 and
certainly was not a mode deemed sufficient by the court which in fact refused to consider the
service to be valid and on that basis declare petitioner Lourdes A. Valmonte in default for her
failure to file an answer. In the second place, service in the attempted manner on petitioner was
not made upon prior leave of the trial court as required also in Rule 14, § 17. As provided in §
19, such leave must be applied for by motion in writing, supported by affidavit of the plaintiff or
some person on his behalf and setting forth the grounds for the application.
DECISION
MENDOZA, J p:
Petitioner Lourdes A. Valmonte is a foreign resident. The question is whether in an
action for partition filed against her and her husband, who is also her attorney, summons
intended for her may be served on her husband, who has a law office in the Philippines. The
Regional Trial Court of Manila, Branch 48, said no and refused to declare Lourdes
A. Valmonte in default, but the Court of Appeals said yes. Hence this petition for review on
certiorari.
The facts of the case are as follows:
Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are husband and wife.
They are both residents of 90222 Carkeek Drive South Seattle, Washington, U.S.A. Petitioner
Alfredo D. Valmonte, who is a member of the Philippine bar, however, practices his profession
in the Philippines, commuting for this purpose between his residence in the state of Washington
and Manila, where he holds office at S-304 Gedisco Centre, 1564 A. Mabini, Ermita,
Manila. cdasia
On March 9, 1992, private respondent Rosita Dimalanta, who is the sister of petitioner
Lourdes A. Valmonte, filed a complaint for partition of real property and accounting of rentals
against petitioners Lourdes A. Valmonte and Alfredo D. Valmonte before the Regional
Trial Court of Manila, Branch 48. The subject of the action is a three-door apartment located in
Paco, Manila.
In her Complaint, private respondent alleged:
The plaintiff is of legal age, a widow and is at present a
resident of 14823 Conway Road, Chesterfield, Missouri, U.S.A., while the
defendants are spouses, of legal age and at present residents of 90222
Carkeek Drive, South Seattle, Washington, U.S.A., but, for
purposes of this complaint may be served with summons at Gedisco
Center, Unit 304, 1564 A. Mabini St., Ermita, Manila where defendant
Alfredo D. Valmonte as defendant Lourdes Arreola Valmonte's spouse
holds office and where he can be found. cdtai
Apparently, the foregoing averments were made on the basis of a letter previously sent by
petitioner Lourdes A. Valmonte to private respondent's counsel in which, in regard to the
partition of the property in question, she referred private respondent's counsel to her
husband as the party to whom all communications intended for her should be sent. The
letter reads:
July 4, 1991
Dear Atty. Balgos:
This is in response to your letter, dated 20 June 1991, which I
received on 3 July 1991. Please address all communications to my lawyer,
Atty. Alfredo D. Valmonte, whose address, telephone and fax numbers
appear below. cdasia
c/o Prime Marine
Gedisco Center, Unit 304
1564 A. Mabini, Ermita
Metro Manila
Telephone: 521-1736
Fax: 521-2095
Service of summons was then made upon petitioner Alfredo D. Valmonte, who at the
time, was at his office in Manila. Petitioner Alfredo D. Valmonte accepted the summons, insofar
as he was concerned, but refused to accept the summons for his wife, Lourdes A. Valmonte, on
the ground that he was not authorized to accept the process on her behalf. Accordingly the
process server left without leaving a copy of the summons and complaint for petitioner Lourdes
A. Valmonte.
Petitioner Alfredo D. Valmonte thereafter filed his Answer with Counterclaim.
Petitioner Lourdes A. Valmonte, however, did not file her Answer. For this reason private
respondent moved to declare her in default. Petitioner Alfredo D. Valmonte entered a special
appearance in behalf of his wife and opposed the private respondent's motion. cdtai
In its Order dated July 3, 1992, the trial court, denied private respondent's motion to
declare petitioner Lourdes A. Valmonte in default. A motion for reconsideration was similarly
denied on September 23, 1992. Whereupon, private respondent filed a petition for certiorari,
prohibition and mandamus with the Court ofAppeals.
On December 29, 1992, the Court of Appeals rendered a decision granting the
petition and declaring Lourdes A. Valmonte in default. A copy of the appellatecourt's decision
was received by petitioner Alfredo D. Valmonte on January 15, 1993 at his Manila office and on
January 21, 1993 in Seattle, Washington. Hence, this petition.
The issue at bar is whether in light of the facts set forth above, petitioner Lourdes
A. Valmonte was validly served with summons. In holding that she had been,
theCourt of Appeals stated: 1 cdt
[I]n her above-quoted reply, Mrs. Valmonte clearly and
unequivocally directed the aforementioned counsel of Dimalanta to
address all communications(evidently referring to her controversy with her
sister Mrs. Dimalanta over the Paco property, now the subject of the
instant case) to her lawyer who happens also to be her husband. Such
directive was made without any qualification just as was her
choice/designation of her husband Atty. Valmonte as her lawyer likewise
made without any qualification or reservation. Any disclaimer therefore on
the part of Atty. Valmonte as to his being his wife's attorney (at least with
regard to the dispute vis-a-vis (sic) the Paco property) would appear to be
feeble or trifling, if not incredible.
This view is bolstered by Atty. Valmonte's subsequent alleged
special appearance made on behalf of his wife. Whereas
Mrs. Valmonte had manifestly authorized her husband to serve as her
lawyer relative to her dispute with her sister over the Paco property and to
receive all communications regarding the same and subsequently to
appear on her behalf by way of a so-called special appearance, she would
nonetheless now insist that the same husband would nonetheless had
absolutely no authority to receive summons on her behalf. In effect, she is
asserting that representation by her lawyer (who is also her husband) as
far as the Paco property controversy is concerned, should only be made by
him when such representation would be favorable to her but not otherwise.
It would obviously be inequitable for this Court to allow private respondent
Lourdes A. Valmonte to hold that her husband has the authority to
represent her when an advantage is to be obtained by her and to deny
 such authority when it would turn out to be her disadvantage. If this be
allowed, Our Rules of Court, instead of being an instrument to promote
justice would be made use of to thwart or frustrate the same.
xxx xxx xxx
Turning to another point, it would not do for Us to overlook the fact
that the disputed summons was served not upon just an ordinary
lawyer of private respondent Lourdes A. Valmonte, but upon her lawyer
husband. But that is not all, the same lawyer/husband happens to be also
her co-defendant in the instant case which involves real property which,
according to her lawyer/husband/co-defendant, belongs to the conjugal
partnership of the defendants (the spouses Valmonte). It is highly
inconceivable and certainly it would be contrary to human nature for the
lawyer/husband/co-defendant to keep to himself the fact that they (the
spousesValmonte) had been sued with regard to a property which he
claims to be conjugal. Parenthetically, there is nothing in the records of the
case before Us regarding any manifestation by private respondent
Lourdes A. Valmonte about her lack of knowledge about the case
instituted against her and her lawyer/husband/co-defendant by her sister
Rosita. . . . aisadc
PREMISES CONSIDERED, the instant petition for certiorari,
prohibition and mandamus is given due course. This Court hereby
Resolves to nullify the orders of thecourt a quo dated July 3, 1992 and
September 23, 1992 and further declares private respondent Lourdes
Arreola Valmonte as having been properly served with summons.
Petitioners assail the aforequoted decision, alleging that the Court of Appeals erred (1)
in refusing to apply the provisions of Rule 14, § 17 of the Revised Rules ofCourt and applying
instead Rule 14, § 8 when the fact is that petitioner Lourdes A. Valmonte is a nonresident
defendant; and (2) because even if Rule 14, § 8 is the applicable provision, there was no valid
substituted service as there was no strict compliance with the requirement by leaving a
copy of the summons and complaint with petitioner Alfredo D. Valmonte. Private respondent,
upon the other hand, asserts that petitioners are invoking a technicality and that strict
adherence to the rules would only result in a useless ceremony.
We hold that there was no valid service of process on Lourdes A. Valmonte.
To provide perspective, it will be helpful to determine first the nature of the action filed
against petitioners Lourdes A. Valmonte and Alfredo D. Valmonte by private respondent,
whether it is an action in personam, in rem or quasi in rem. This is because the rules on
service of summons embodied in Rule 14 apply according to whether an action is one or the
other of these actions. cdta
In an action in personam, personal service of summons or, if this is not possible and
he cannot be personally served, substituted service, as provided in Rule 14, § 7-8 2 is essential
for the acquisition by the court of jurisdiction over the person of a defendant who does not
voluntarily submit himself to the authority of the court. 3 If defendant cannot be served with
summons because he is temporarily abroad, but otherwise he is a Philippine resident,
service of summons may, by leave of court, be made by publication. 4 Otherwise stated, a
resident defendant in an action in personam, who cannot be personally served with summons,
may be summoned either by means of substituted service in accordance with Rule 14, § 8 or by
publication as provided in § 17 and 18 of the same Rule. 5
In all of these cases, it should be noted, defendant must be a resident of the
Philippines, otherwise an action in personam cannot be brought because jurisdiction over his
person is essential to make a binding decision.
On the other hand, if the action is in rem or quasi in rem, jurisdiction over the
person of the defendant is not essential for giving the court jurisdiction so long as
the court acquires jurisdiction over the res. If the defendant is a nonresident and he is not found
in the country, summons may be served extraterritorially in accordance with Rule 14, § 17,
which provides: cdasia
§ 17. Extraterritorial service. — When the defendant does not
reside and is not found in the Philippines and the action affects the
personal status of the plaintiff or relates to, or the subject of which is,
property within the Philippines, in which the defendant has or claims a lien
or interest, actual or contingent, or in which the relief demanded consists,
wholly or in part, in excluding the defendant from any interest therein, or
the property of the defendant has been attached within the Philippines,
service may, by leave of court, be effected out of the Philippines by
personal service as under Section 7; or by publication in a
newspaper of general circulation in such places and for such time as
the court may order, in which case a copy of the summons and
order of the court shall be sent by registered mail to the last known
address of the defendant, or in any other manner the court may deem
sufficient. Any order granting such leave shall specify a reasonable time,
which shall not be less than sixty (60) days after notice, within which the
defendant must answer.
In such cases, what gives the court jurisdiction in an action in rem or quasi in rem is
that it has jurisdiction over the res, i.e. the personal status of the plaintiff who is domiciled in the
Philippines or the property litigated or attached.
Service of summons in the manner provided in § 17 is not for the purpose of vesting it
with jurisdiction but for complying with the requirements of fair play or due process, so that he
will be informed of the pendency of the action against him and the possibility that property in the
Philippines belonging to him or in which he has an interest may be subjected to a judgment in
favor of the plaintiff and he can thereby take steps to protect his interest if he is so
minded. 6 cdtai
Applying the foregoing rules to the case at bar, private respondent's action, which is
for partition and accounting under Rule 69, is in the nature of an action quasi in rem. Such an
action is essentially for the purpose of affecting the defendant's interest in a specific property
and not to render a judgment against him. As explained in the leading case of Banco Español
Filipino v. Palanca: 7
[An action quasi in rem is] an action which while not strictly
speaking an action in rem partakes of that nature and is substantially
such. . . . The action quasi in rem differs from the true action in rem in the
circumstance that in the former an individual is named as defendant and
the purpose of the proceeding is to subject his interest therein to the
obligation or lien burdening the property. All proceedings having for their
sole object the sale or other disposition of the property of the defendant,
whether by attachment, foreclosure, or other form of remedy, are in a
general way thus designated. The judgment entered in these proceedings
is conclusive only between the parties.
As petitioner Lourdes A. Valmonte is a nonresident who is not found in the Philippines,
service of summons on her must be in accordance with Rule 14, §17. Such service, to be
effective outside the Philippines, must be made either (1) by personal service; (2) by publication
in a newspaper of general circulation in such places and for such time as the court may order,
in which case a copy of the summons and order of the court should be sent by registered mail
to the last known address of the defendant; or (3) in any other manner which the court may
deem sufficient. cdtai
Since in the case at bar, the service of summons upon petitioner Lourdes
A. Valmonte was not done by means of any of the first two modes, the question is whether the
service on her attorney, petitioner Alfredo D. Valmonte, can be justified under the third mode,
namely, "in any . . . manner the court may deem sufficient."
We hold it cannot. This mode of service, like the first two, must be made outside the
Philippines, such as through the Philippine Embassy in the foreign country where the defendant
resides. 8 Moreover, there are several reasons why the service of summons on Atty. Alfredo
D. Valmonte cannot be considered a valid service ofsummons on petitioner Lourdes
A. Valmonte. In the first place, service of summons on petitioner Alfredo D. Valmonte was not
made upon the order of the court as required by Rule 14, § 17 and certainly was not a mode
deemed sufficient by the court which in fact refused to consider the service to be valid and on
that basis declare petitioner Lourdes A. Valmonte in default for her failure to file an answer.
In the second place, service in the attempted manner on petitioner was not made upon
prior leave of the trial court as required also in Rule 14, § 17. As provided in § 19, such leave
must be applied for by motion in writing, supported by affidavit of the plaintiff or some person on
his behalf and setting forth the grounds for the application. cdt
Finally, and most importantly, because there was no order granting such leave,
petitioner Lourdes A. Valmonte was not given ample time to file her Answer which, according to
the rules, shall be not less than sixty (60) days after notice. It must be noted that the period to
file an Answer in an action against a resident defendant differs from the period given in an
action filed against a nonresident defendant who is not found in the Philippines. In the former,
the period is fifteen (15) days from service of summons, while in the latter, it is at least sixty (60)
days from notice.
Strict compliance with these requirements alone can assure observance of due
process. That is why in one case, 9 although the Court considered publication in the
Philippines of the summons (against the contention that it should be made in the foreign state
where defendant was residing) sufficient, nonetheless the service was considered insufficient
because no copy of the summons was sent to the last known correct address in the Philippines.
Private respondent cites the ruling in De Leon v. Hontanosas, 67 SCRA 458, 462-463
(1975), in which it was held that service of summons upon the defendant's husband was
binding on her. But the ruling in that case is justified because summons were served upon
defendant's husband in their conjugal home in Cebu City and the wife was only temporarily
absent, having gone to Dumaguete City for a vacation. The action was for collection of a
sum of money. In accordance with Rule 14, § 8, substituted service could be made on any
person of sufficient discretion in the dwelling place of the defendant, and certainly defendant's
husband, who was there, was competent to receive the summons on her behalf. In any event, it
appears that defendant in that case submitted to the jurisdiction of the court by instructing her
husband to move for the dissolution of the writ of attachment issued in that case. aisadc
On the other hand, in the case of Gemperle v. Schenker, 10 it was held that service on
the wife of a nonresident defendant was found sufficient because the defendant had appointed
his wife as his attorney-in-fact. It was held that although defendant Paul Schenker was a Swiss
citizen and resident of Switzerland, service ofsummons upon his wife Helen Schenker who was
in the Philippines was sufficient because she was her husband's representative and
attorney-in-fact in a civil case, which he had earlier filed against William Gemperle. In fact
Gemperle's action was for damages arising from allegedly derogatory statements contained in
the complaint filed in the first case. As this Court said, "[i]n other words, Mrs. Schenker had
authority to sue, and had actually sued, on behalf of her husband, so that she was, also,
empowered to represent him in suits filed against him, particularly in a case, like the one at bar,
which is a consequence of the action brought by her on his behalf." 11Indeed, if instead of filing
an independent action Gemperle filed a counterclaim in the action brought by Mr. Schenker
against him, there would have been no doubt that the trial court could have acquired jurisdiction
over Mr. Schenker through his agent and attorney-in-fact, Mrs. Schenker.
In contrast, in the case at bar, petitioner Lourdes A. Valmonte did not appoint her
husband as her attorney-in-fact. Although she wrote private respondent's attorney that "all
communications" intended for her should be addressed to her husband who is also her lawyer
at the latter's address in Manila, no power of attorney to receive summons for her can be
inferred therefrom. In fact the letter was written seven months before the filing of this case
below, and it appears that it was written in connection with the negotiations between her and
her sister, respondent Rosita Dimalanta, concerning the partition of the property in question. As
is usual in negotiations of this kind, the exchange of correspondence was carried on by counsel
for the parties. But the authority given to petitioner's husband in these negotiations certainly
cannot be construed as also including an authority to represent her in any litigation.
For the foregoing reasons, we hold that there was no valid service on petitioner
Lourdes A. Valmonte in this case. cdta
 WHEREFORE, the decision appealed from is REVERSED and the orders dated July 3,
1992 and September 23, 1992 of the Regional Trial Court of Manila, Branch 48 are
REINSTATED.

SO ORDERED.

||| (Spouses Valmonte v. Court of Appeals, G.R. No. 108538, [January 22, 1996], 322 PHIL
96-111)
 SECOND DIVISION
[G.R. No. 131724. February 28, 2000.]
MILLENNIUM INDUSTRIAL COMMERCIAL
CORPORATION, petitioner, vs. JACKSON TAN, respondent.
A. S. Dy & Associates for petitioner.
Fernan Mercado Cordero De La Torre & Bael for private respondent.
SYNOPSIS
Petitioner Millennium Industrial Commercial Corporation executed a Deed of Real
Estate Mortgage over its real property covered by TCT No. 24069 in favor of Jackson Tan
to secure petitioner's indebtedness to respondent in the amount of P2 million. When the
loan was not paid at maturity, petitioner filed a complaint for foreclosure of mortgage in the
trial court, Branch 6, Cebu City. Summons and a copy of the complaint were served upon
petitioner through a certain Lynverd Cinches. Petitioner moved for the dismissal on the
ground that there was no valid service of summons upon it, as a result of which the trial
court did not acquire jurisdiction over it. Petitioner invoked Rule 14, Section 13 of the 1964
Rules of Court, and contended that service on Lynverd Cinches as alleged in the sheriff's
return, was invalid as he is not one of the authorized persons on whom summons may be
served and that, in fact, he was not even an employee. The trial court denied petitioner's
motion to dismiss. Petitioner moved for reconsideration but its motion was denied by the
trial court. Petitioner then filed a petition for certiorari in the Court of Appeals, assailing the
aforesaid orders of the trial court. The Court of Appeals dismissed the petition. The
appellate court ruled that although petitioner denied Lynverd Cinches' authority to receive
summons for it, its actual receipt of the summons could be inferred from its filing of a
motion to dismiss. Hence, the present petition. AaSIET
The Supreme Court found petitioner's contention meritorious. The Court ruled
that not even the substantial compliance doctrine found application in the present case.
The most important requisite of the doctrine, i.e., "there must be actual receipt of the
summons by the corporation through the person on whom the summons was actually
served," is not present in this case because there is no direct proof that Lynverd Cinches
actually turned over the summons to any of the officers of the corporation. The Court
stressed that for there to be substantial compliance, actual receipt of the summons by the
corporation must be shown and where a corporation only learns of the service of the
summons and the filing of complaint against it through some person or means other than
the person actually served, the service of summons becomes meaningless.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS; WHERE A
CORPORATION ONLY LEARNS OF THE SERVICE OF THE SUMMONS AND FILING
OF COMPLAINT AGAINST IT THROUGH SOME PERSON OR MEANS OTHER THAN
THE PERSON ACTUALLY SERVED, THE SERVICE OF SUMMONS BECOMES
MEANINGLESS. — In Porac Trucking, Inc. v. Court of Appeals, this Court enumerated the
requisites for the application of the doctrine of substantial compliance, to wit: (a) there must
be actual receipt of the summons by the person served, i.e., transferring possession of the
copy of the summons from the Sheriff to the person served; (b) the person served must
sign a receipt or the sheriff's return; and (c) there must be actual receipt of the summons by
the corporation through the person on whom the summons was actually served. The third
requisite is the most important for it is through such receipt that the purpose of the rule on
service of summons is attained. In this case, there is no dispute that the first and second
requisites were fulfilled. With respect to the third, the appellate court held that petitioner's
filing of a motion to dismiss the foreclosure suit is proof that it received the copy of the
summons and the complaint. There is, however, no direct proof of this or that Lynverd
Cinches actually turned over the summons to any of the officers of the corporation. In
contrast, in our cases applying the substantial compliance rule, there was direct evidence,
such as the admission of the corporation's officers, of receipt of summons by the
corporation through the person upon whom it was actually served. The question is whether
it is allowable to merely infer actual receipt of summons by the corporation through the
person on whom summons was served. We hold that it cannot be allowed. For there to be
substantial compliance, actual receipt of summons by the corporation through the person
served must be shown. Where a corporation only learns of the service of summons and the
filing of the complaint against it through some person or means other than the person
actually served, the service of summons becomes meaningless. This is particularly true in
the present case where there is serious doubt if Lynverd Cinches, the person on whom
service of summons was effected, is in fact an employee of the corporation. Except for the
sheriff's return, there is nothing to show that Lynverd Cinches was really a draftsman
employed by the corporation.
2. ID.; ID.; ID.; RECEIPT BY PETITIONER OF THE SUMMONS AND
COMPLAINT CANNOT BE INFERRED FROM THE FACT THAT IT FILED A MOTION TO
DISMISS. — Respondent casts doubt on petitioner's claim that it came to know about the
summons and the complaint against it only after it learned that there was a pending
foreclosure of its mortgage. There is nothing improbable about this claim. Petitioner was in
default in the payment of its loan. It had received demand letters from respondent. Thus, it
had reason to believe that a foreclosure suit would be filed against it. The appellate court
was, therefore, in error in giving weight to respondent's claims. Receipt by petitioner of the
summons and complaint cannot be inferred from the fact that it filed a Motion to Dismiss
the case.
3. ID.; JURISDICTION; DOCTRINE OF ESTOPPEL BY JURISDICTION MUST
BE UNEQUIVOCAL AND INTENTIONAL. — Both the trial court and the Court of Appeals
held that by raising the affirmative defense of payment and by praying for other reliefs in its
Motion to Dismiss, petitioner in effect waived its objection to the trial court's jurisdiction over
it. We think this is error. Our decision in La Naval Drug Corporation v. Court of
Appeals settled this question. The rule prior to La Naval was that if a defendant, in a motion
to dismiss, alleges grounds for dismissing the action other than lack of jurisdiction, he
would be deemed to have submitted himself to the jurisdiction of the court. This rule no
longer holds true. Noting that the doctrine of estoppel by jurisdiction must be unequivocal
and intentional, we ruled in La Naval: Jurisdiction over the person must be seasonably
raised, i.e., that it is pleaded in a motion to dismiss or by way of an affirmative defense.
Voluntary appearance shall be deemed a waiver of this defense. The assertion, however,
of affirmative defenses shall not be construed as an estoppel or as a waiver of such
defense.
4. ID.; ID.; ID.; IT WOULD BE ABSURD TO HOLD THAT DEFENDANT
UNEQUIVOCALLY AND INTENTIONALLY SUBMITTED ITSELF TO THE JURISDICTION
OF THE COURT BY SEEKING OTHER RELIEFS TO WHICH IT MIGHT BE ENTITLED
WHEN THE ONLY RELIEF THAT IT CAN PROPERLY ASK FROM THE TRIAL COURT IS
THE DISMISSAL OF THE COMPLAINT. — Finally, we turn to the effect of petitioner's
prayer for "other reliefs" in its Motion to Dismiss. In De Midgely v. Fernandos, it was held
that, in a motion to dismiss, the allegation of grounds other than lack of jurisdiction over the
person of the defendant, including a prayer "for such other reliefs as" may be deemed
"appropriate and proper" amounted to voluntary appearance. This, however, must be
deemed superseded by the ruling in La Naval that estoppel by jurisdiction must be
unequivocal and intentional. It would be absurd to hold that petitioner unequivocally and
intentionally submitted itself to the jurisdiction of the court by seeking other reliefs to which
it might be entitled when the only relief that it can properly ask from the trial court is the
dismissal of the complaint against it.
DECISION
MENDOZA, J p:
In December 1994, Millennium Industrial Commercial Corporation, petitioner
herein, executed a Deed of Real Estate Mortgage 1 over its real property covered by TCT
No. 24069 in favor of respondent Jackson Tan. The mortgage was executed to secure
payment of petitioner's indebtedness to respondent in the amount of P2 million, without
monthly interest, but which, at maturity date on June 10, 1995, was payable in the amount
of P4 million. LLjur
On November 9, 1995, respondent filed against petitioner a complaint for
foreclosure of mortgage in the Regional Trial Court, Branch 6, Cebu City. On November 21,
1995, summons and a copy of the complaint were served upon petitioner trough a certain
Lynverd Cinches, described in the sheriff's return, dated November 23, 1995, as "a
Draftsman, a person of sufficient age and (discretion) working therein, he is the highest
ranking officer or Officer-in-Charge of defendant's Corporation, to receive processes of the
Court." 2
Petitioner moved for the dismissal of the complaint on the ground that there was
no valid service of summons upon it, as a result of which the trial court did not acquire
jurisdiction over it. Petitioner invoked Rule 14, §13 of the 1964 Rules of Court and
contended that service on Lynverd Cinches, as alleged in the sheriff's return, was invalid as
he is not one of the authorized persons on whom summons may be served and that, in fact,
he was not even its employee. 3
Petitioner also sought the dismissal of the complaint against it on the ground that
it had satisfied its obligation to respondent when the latter opted to be paid in shares of
stock under the following stipulation in the mortgage contract: LibLex
That in the remote possibility of failure on the part of the
mortgagor to pay the mortgage obligation and interest in cash, the
MORTGAGEE at his option may demand that payment be made in the
form of shares of stock of Millennium Industrial Commercial Corporation
totaling at least 4,000,000 shares. 4
Petitioner further prayed for "other reliefs just and equitable under the
premises." 5
On December 15, 1995, the trial court denied petitioner's Motion to Dismiss. Its
order stated:
This refers to the Motion to Dismiss, dated December 4, 1995, by
defendant anchored on the following grounds:
1. That the Court had not acquired jurisdiction over the person of
the defendant corporation because summons was served upon a person
who is not known to or an employee of the defendant corporation.
2. That the obligation sought to be collected was already paid and
extinguished.
By interposing the second ground, the defendant has availed of
an affirmative defense on the basis of which the Court has to hear and
receive evidence. For the Court to validly decide the said plea of the
defendant it necessarily had to acquire jurisdiction over the person of the
defendant. Thus, defendant is considered to have then abandoned its first
ground and is deemed to have voluntarily submitted itself to the jurisdiction
of the Court. It is a legal truism that voluntary appearance cures the defect
of the summons, if any. The defendant's filing of the motion to dismiss by
pleading therein the second ground amounts to voluntary appearance and
it indeed cured the defect. LibLex
Wherefore, Motion to Dismiss is hereby denied for lack of merit. 6
Petitioner moved for reconsideration, but its notion was denied by the trial court in
its order, dated January 16, 1996, for failure of petitioner to raise any new ground.
Petitioner then filed a petition for certiorari in the Court of Appeals, assailing the aforesaid
orders of the trial court.
 On September 18, 1997, the Court of Appeals dismissed the petition. 7 The
appellate court ruled that although petitioner denied Lynverd Cinches' authority to receive
summons for it, its actual receipt of the summons could be inferred from its filing of a
motion to dismiss, hence, the purpose for issuing summons had been substantially
achieved. Moreover, it was held, by including the affirmative defense that it had already
paid its obligation and praying for other reliefs in its Motion to Dismiss, petitioner voluntarily
submitted to the jurisdiction of the court. 8
Hence, this petition for review. Petitioner raises the following issues:
I. WHETHER OR NOT SERVICE OF SUMMONS UPON A MERE
DRAFTSMAN WHO IS NOT OF THOSE UPON WHOM
SUMMONS MAY BE SERVED IN CASE OF A DEFENDANT
CORPORATION AS MENTIONED IN THE RULES IS VALID.
II. WHETHER OR NOT THE INCLUSION OF ANOTHER AFFIRMATIVE
RELIEF IN A MOTION TO DISMISS ABANDONS AND WAIVES
THE GROUND OF LACK OF JURISDICTION OVER THE
PERSON OF THE DEFENDANT THEREIN ALSO PLEADED
UNDER PREVAILING LAW AND JURISPRUDENCE. cda
III. WHETHER OR NOT THERE IS A LEGAL GROUND TO GRANT
PETITIONER'S MOTION TO DISMISS THE COMPLAINT
BELOW.
First. Petitioner objects to the application of the doctrine of substantial compliance
in the service of summons for two reasons: (1) the enumeration of persons on whom
service of summons on a corporation may be effected in Rule 14, §13, is exclusive and
mandatory; and (2) even assuming that substantial compliance is based on an unfounded
speculation because there is nothing in the records to show that Lynverd Cinches actually
turned over the summons to any of the officers of the corporation. 9 Petitioner contends
that it was able to file a motion to dismiss only because of its timely discovery of the
foreclosure suit against it when it checked the records of the case in the trial court.
The contention is meritorious.
Summons is the means by which the defendant in a case is notified of the
existence of an action against him and, thereby, the court is conferred jurisdiction over the
person of the defendant. 10 If the defendant is a corporation, Rule 14, §13 requires that
service of summons be made upon the corporation's president, manager, secretary,
cashier, agent, or any of its directors. 11 The rationale of the rule is that service must be
made on a representative so integrated with the corporation sued as to make it
a priori presumable that he will realize his responsibilities and know what he should do with
any legal papers received by him. 12
Petitioner contends that the enumeration in Rule 14, §13 is exclusive and that
service of summons upon one who is not enumerated therein is invalid. This is the general
rule. 13 However, it is settled that substantial compliance by serving summons on persons
other than those mentioned in the above rule may be justified. In G & G Trading
Corporation v. Court of Appeals, 14 we ruled that although the service of summons was
made on a person not enumerated in Rule 14, §13, if it appears that the summons and
complaint were in fact received by the corporation, there is substantial compliance with the
rule as its purpose has been attained. LLpr
In Porac Trucking, Inc. v. Court of Appeals, 15 this Court enumerated the
requisites for the application of the doctrine of substantial compliance, to wit: (a) there must
be actual receipt of the summons by the person served, i.e., transferring possession of the
copy of the summons from the Sheriff to the person served; (b) the person served must
sign a receipt or the sheriff's return; and (c) there must be actual receipt of the summons by
the corporation through the person on whom the summons was actually served. 16 The
third requisite is the most important for it is through such receipt that the purpose of the rule
on service of summons is attained.
In this case, there is no dispute that the first and second requisites were fulfilled.
With respect to the third, the appellate court held that petitioner's filing of a motion to
dismiss the foreclosure suit is proof that it received the copy of the summons and the
complaint. There is, however, no direct proof of this or that Lynverd Cinches actually turned
over the summons to any of the officers of the corporation. In contrast, in our cases
applying the substantial compliance rule, 17 there was direct evidence, such as the
admission of the corporation's officers, of receipt of summons by the corporation through
the person upon whom it was actually served. The question is whether it is allowable to
merely infer actual receipt of summons by the corporation through the person on whom
summons was served. We hold that it can not be allowed. For there to be substantial
compliance, actual receipt of summons by the corporation through the person served must
be shown. Where a corporation only learns of the service of summons and the filing of the
complaint against it through some person or means other than the person actually served,
the service of summons becomes meaningless. This is particularly true in the present case
where there is serious doubt if Lynverd Cinches, the person on whom service of summons
was effected, is in fact an employee of the corporation. Except for the sheriff's return, there
is nothing to show that Lynverd Cinches was really a draftsman employed by the
corporation. cdasia
Respondent casts doubt on petitioner's claim that it came to know about the
summons and the complaint against it only after it learned that there was a pending
foreclosure of its mortgage. There is nothing improbable about this claim. Petitioner was in
default in the payment of its loan. It had received demand letters from respondent. Thus, it
had reason to believe that a foreclosure suit would be filed against it. The appellate court
was, therefore, in error in giving weight to respondent's claims. Receipt by petitioner of the
summons and complaint cannot be inferred from the fact that it filed a Motion to Dismiss
the case. cdll
Second. We now turn to the issue of jurisdiction by estoppel. Both the trial court
and the Court of Appeals held that by raising the affirmative defense of payment and by
praying for other reliefs in its Motion to Dismiss, petitioner in effect waived its objection to
the trial court's jurisdiction over it. We think this is error.
Our decision in La Naval Drug Corporation v. Court of Appeals 18 settled this
question. The rule prior to La Naval was that if a defendant, in a motion to dismiss, alleges
grounds for dismissing the action other than lack of jurisdiction, he would be deemed to
 have submitted himself to the jurisdiction of the court. 19 This rule no longer holds true.
Noting that the doctrine of estoppel by jurisdiction must be unequivocal and intentional, we
ruled in La Naval: cdll
Jurisdiction over the person must be seasonably raised, i.e., that
it is pleaded in a motion to dismiss or by way of an affirmative defense.
Voluntary appearance shall be deemed a waiver of this defense. The
assertion, however, of affirmative defenses shall not be construed as an
estoppel or as a waiver of such defense. 20

Third. Finally, we turn to the effect of petitioner's prayer for "other reliefs" in its
Motion to Dismiss. In De Midgely v. Fernandos, 21 it was held that, in a motion to dismiss,
the allegation of grounds other than lack of jurisdiction over the person of the defendant,
including a prayer "for such other reliefs as" may be deemed "appropriate and proper"
amounted to voluntary appearance. This, however, must be deemed superseded by the
ruling in La Naval that estoppel by jurisdiction must be unequivocal and intentional. It
would be absurd to hold that petitioner unequivocally and intentionally submitted itself to
the jurisdiction of the court by seeking other reliefs to which it might be entitled when the
only relief that it can properly ask from the trial court is the dismissal of the complaint
against it. cdtai
WHEREFORE, the decision of the Court of Appeals is REVERSED and the
complaint against petitioner is DISMISSED.
SO ORDERED.
||| (Millennium Industrial Commercial Corp. v. Tan, G.R. No. 131724, [February 28, 2000], 383
PHIL 468-479)
 THIRD DIVISION
[G.R. No. 136426. August 6, 1999.]
E.B. VILLAROSA & PARTNER CO., LTD., petitioner, vs. HON.
HERMINIO I. BENITO, in his capacity as Presiding Judge, RTC,
Branch 132, Makati City and IMPERIAL DEVELOPMENT
CORPORATION, respondent.
Capuyan Quimpo & Salazar for petitioner.
Ermitaño Sangco Manzano & Associates for private respondent.
SYNOPSIS
In this instant petition, E.B. Villarosa and Partner Co., Ltd. contended that the trial
court did not acquire jurisdiction over its person because the summons intended for it was
improperly served on its Branch Manager.
The Court agreed with petitioner. Designation of persons or officers who are
authorized to accept summons for a domestic corporation or partnership is now limited and
more clearly specified in the 1997 Rules of Civil Procedure. The rule must be strictly observed,
service must be made to one named in the statute.
Petitioner's filing of a motion to dismiss, precisely objecting to the jurisdiction of the
court over the person of the defendant, can by no means be deemed a submission to the
jurisdiction of the court.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS; "AGENTS" NO LONGER
AUTHORIZED TO RECEIVE SUMMONS FOR CORPORATION. — Earlier cases have uphold
service of summons upon a construction project manager; a corporation's assistant manager;
ordinary clerk of a corporation; private secretary of corporate executives; retained counsel;
officials who had charge or control of the operations of the corporation, like the assistant
general manager; or the corporations Chief Finance and Administrative Officer. In these cases,
these persons were considered as "agent" within the contemplation of the old rule. Notably,
under the new Rules, service of summons upon an agent of the corporation is no longer
authorized.
2. ID.; ID.; ID.; DESIGNATION OF PERSONS OR OFFICERS AUTHORIZED TO
RECEIVE SUMMONS FOR DOMESTIC CORPORATIONS, LIMITED. — The designation of
persons or officers who are authorized to accept summons for a domestic corporation or
partnership is now limited and more clearly specified in Section 11, Rule 14 of the 1997 Rules of
Civil Procedure. The rule now states "general manager" instead of only "manager"; "corporate
secretary" instead of "secretary"; and "treasurer" instead of "cashier." The phrase "agent, or any
of its directors" is conspicuously deleted in the new rule, . . . It should be noted that even prior to
the effectivity of the 1997 Rules of Civil Procedure, strict compliance with the rules has been
enjoined. (Delta Motor Sales Corporation vs. Mangosing, 70 SCRA 598 [1976])
3. ID.. ID.; ID.; JURISDICTION NOT ACQUIRED WHERE SERVICE OF SUMMONS
WAS MADE ON BRANCH MANAGER. — Accordingly, we rule that the service of summons
upon the branch manager of petitioner at its branch office at Cagayan de Oro, instead of upon
the general manager at its principal office at Davao City is improper. Consequently, the trial
court did not acquire jurisdiction over the person of the petitioner.
4. ID.; ID.; ID.; INEFFECTIVE SERVICE OF SUMMONS; FILING OF MOTION TO
DISMISS DOES NOT CONSTITUTE VOLUNTARY APPEARANCE. — The fact that defendant
filed a belated motion to dismiss did not operate to confer jurisdiction upon its person. There is
no question that the defendant's voluntary appearance in the action is equivalent to service of
summons. Before, the rule was that a party may challenge the jurisdiction of the court over his
person by making a special appearance through a motion to dismiss and if in the same motion,
the movant raised other grounds or invoked affirmative relief which necessarily involves the
exercise of the jurisdiction of the court, the party is deemed to have submitted himself to the
jurisdiction of the court. This doctrine has been abandoned in the case ofLa Naval Drug
Corporation vs. Court of Appeals, et al.; which became the basis of the adoption of a new
provision in the former Section 23, which is now Section 20 of Rule 14 of the 1997 Rules,
Section 20 now provides that "the inclusion in a motion to dismiss of other grounds aside from
lack of jurisdiction over the person of the defendant shall not be deemed a voluntary
appearance." The emplacement of this rule clearly underscores the purpose to enforce strict
enforcement of the rules on summons. Accordingly, the filing of a motion to dismiss, whether or
not belatedly filed by the defendant, his authorized agent or attorney, precisely objecting to the
jurisdiction of the court over the person of the defendant can by no means be deemed a
submission to the jurisdiction of the court. There being no proper service of summons, the trial
court cannot take cognizance of a case for lack of jurisdiction over the person of the defendant.
Any proceeding undertaken by the trial court will consequently be null and void.
DECISION
GONZAGA-REYES, J p:
Before this Court is a petition for certiorari and prohibition with prayer for the issuance
of a temporary restraining order and/or writ of preliminary injunction seeking to annul and set
aside the Orders dated August 5, 1998 and November 20, 1998 of the public respondent Judge
Herminio I. Benito of the Regional Trial Court of Makati City, Branch 132 and praying that the
public respondent court be ordered to desist from further proceeding with Civil Case No.
98-824. LLjur
Petitioner E.B. Villarosa & Partner Co., Ltd. is a limited partnership with principal office
address at 102 Juan Luna St., Davao City and with branch offices at 2492 Bay View Drive,
Tambo, Parañaque, Metro Manila and Kolambog, Lapasan, Cagayan de Oro City. Petitioner
and private respondent executed a Deed of Sale with Development Agreement wherein the
former agreed to develop certain parcels of land located at Barrio Carmen, Cagayan de Oro
belonging to the latter into a housing subdivision for the construction of low cost housing units.
They further agreed that in case of litigation regarding any dispute arising therefrom, the venue
shall be in the proper courts of Makati.
On April 3, 1998, private respondent, as plaintiff, filed a Complaint for Breach of
Contract and Damages against petitioner, as defendant, before the Regional Trial Court of
Makati allegedly for failure of the latter to comply with its contractual obligation in that, other
than a few unfinished low cost houses, there were no substantial developments therein. 1
Summons, together with the complaint, were served upon the defendant, through its
Branch Manager Engr. Wendell Sabulbero at the stated address at Kolambog, Lapasan,
Cagayan de Oro City 2 but the Sheriff's Return of Service 3 stated that the summons was duly
served "upon defendant E.B. Villarosa & Partner Co., Ltd. thru its Branch Manager Engr.
WENDELL SABULBERO on May 5, 1998 at their new office Villa Gonzalo, Nazareth, Cagayan
de Oro City, and evidenced by the signature on the face of the original copy of the summons."
On June 9, 1998, defendant filed a Special Appearance with Motion to
Dismiss 4 alleging that on May 6, 1998, "summons intended for defendant" was served upon
Engr. Wendell Sabulbero, an employee of defendant at its branch office at Cagayan de Oro City.
Defendant prayed for the dismissal of the complaint on the ground of improper service of
summons and for lack of jurisdiction over the person of the defendant. Defendant contends that
the trial court did not acquire jurisdiction over its person since the summons was improperly
served upon its employee in its branch office at Cagayan de Oro City who is not one of those
persons named in Section 11, Rule 14 of the 1997 Rules of Civil Procedure upon whom service
of summons may be made.
Meanwhile, on June 10, 1998, plaintiff filed a Motion to Declare Defendant in
Default 5 alleging that defendant has failed to file an Answer despite its receipt allegedly on
May 5, 1998 of the summons and the complaint, as shown in the Sheriff's Return.
On June 22, 1998, plaintiff filed an Opposition to Defendant's Motion to
Dismiss 6 alleging that the records show that defendant, through its branch manager, Engr.
Wendell Sabulbero actually received the summons and the complaint on May 8, 1998 as
evidenced by the signature appearing on the copy of the summons and not on May 5, 1998 as
stated in the Sheriff's Return nor on May 6, 1998 as stated in the motion to dismiss; that
defendant has transferred its office from Kolambog, Lapasan, Cagayan de Oro to its new office
address at Villa Gonzalo, Nazareth, Cagayan de Oro; and that the purpose of the rule is to bring
home to the corporation notice of the filing of the action.
On August 5, 1998, the trial court issued an Order 7 denying defendant's Motion to
Dismiss as well as plaintiff's Motion to Declare Defendant in Default. Defendant was given ten
(10) days within which to file a responsive pleading. The trial court stated that since the
summons and copy of the complaint were in fact received by the corporation through its branch
manager Wendell Sabulbero, there was substantial compliance with the rule on service of
summons and consequently, it validly acquired jurisdiction over the person of the
defendant. cdasia
On August 19, 1998, defendant, by Special Appearance, filed a Motion for
Reconsideration 8 alleging that Section 11, Rule 14 of the new Rules did not liberalize but, on
the contrary, restricted the service of summons on persons enumerated therein; and that the
new provision is very specific and clear in that the word "manager" was changed to "general
manager", "secretary" to "corporate secretary", and excluding therefrom agent and director.
On August 27, 1998, plaintiff filed an Opposition to defendant's Motion for
Reconsideration 9 alleging that defendant's branch manager "did bring home" to the
defendant-corporation the notice of the filing of the action and by virtue of which a motion to
dismiss was filed; and that it was one (1) month after receipt of the summons and the complaint
that defendant chose to file a motion to dismiss.
On September 4, 1998, defendant, by Special Appearance, filed a
Reply 10 contending that the changes in the new rules are substantial and not just general
semantics.
Defendant's Motion for Reconsideration was denied in the Order dated November 20,
1998. 11
Hence, the present petition alleging that respondent court gravely abused its
discretion tantamount to lack or in excess of jurisdiction in denying petitioner's motions to
dismiss and for reconsideration, despite the fact that the trial court did not acquire jurisdiction
over the person of petitioner because the summons intended for it was improperly served.
Petitioner invokes Section 11 of Rule 14 of the 1997 Rules of Civil Procedure.
Private respondent filed its Comment to the petition citing the cases of Kanlaon
Construction Enterprises Co., Inc. vs. NLRC 12 wherein it was held that service upon a
construction project manager is valid and in Gesulgon vs. NLRC 13 which held that a
corporation is bound by the service of summons upon its assistant manager.
The only issue for resolution is whether or not the trial court acquired jurisdiction over
the person of petitioner upon service of summons on its Branch Manager.
When the complaint was filed by Petitioner on April 3, 1998, the 1997 Rules of Civil
Procedure was already in force. 14
Section 11, Rule 14 of the 1997 Rules of Civil Procedure provides that:
"When the defendant is a corporation, partnership or association
organized under the laws of the Philippines with a juridical personality,
service may be made on the president, managing partner, general
manager, corporate secretary, treasurer, or in-house counsel."
(underscoring supplied).
This provision revised the former Section 13, Rule 14 of the Rules of Court which provided that:
"SECTION 13. Service upon private domestic corporation or
partnership. — If the defendant is a corporation organized under the laws
of the Philippines or a partnership duly registered, service may be made on
the president, manager, secretary, cashier, agent, or any of its directors."
(underscoring supplied).
Petitioner contends that the enumeration of persons to whom summons may be
served is "restricted, limited and exclusive" following the rule on statutory
construction expressio unios est exclusio alterius and argues that if the Rules of Court Revision
Committee intended to liberalize the rule on service of summons, it could have easily done so
by clear and concise language.
We agree with petitioner.
Earlier cases have uphold service of summons upon a construction project
manager 15 ; a corporation's assistant manager 16 ; ordinary clerk of a corporation 17 ; private
secretary of corporate executives 18 ; retained counsel 19 ; officials who had charge or control
of the operations of the corporation, like the assistant general manager 20 ; or the corporation's
Chief Finance and Administrative Officer 21 . In these cases, these persons were considered
as "agent" within the contemplation of the old rule. 22 Notably, under the new Rules, service of
summons upon an agent of the corporation is no longer authorized. cdrep
The cases cited by private respondent are therefore not in point.
In the Kanlaon case, this Court ruled that under the NLRC Rules of Procedure,
summons on the respondent shall be served personally or by registered mail on the party
himself; if the party is represented by counsel or any other authorized representative or agent,
summons shall be served on such person. In said case, summons was served on one Engr.
Estacio who managed and supervised the construction project in Iligan City (although the
principal address of the corporation is in Quezon City) and supervised the work of the
employees. It was held that as manager, he had sufficient responsibility and discretion to
realize the importance of the legal papers served on him and to relay the same to the president
or other responsible officer of petitioner such that summons for petitioner was validly served on
him as agent and authorized representative of petitioner. Also in the Gesulgon case cited by
private respondent, the summons was received by the clerk in the office of the Assistant
Manager (at principal office address) and under Section 13 of Rule 14 (old rule), summons may
be made upon the clerk who is regarded as agent within the contemplation of the rule.
The designation of persons or officers who are authorized to accept summons for a
domestic corporation or partnership is now limited and more clearly specified in Section 11,
Rule 14 of the 1997 Rules of Civil Procedure. The rule now states "general manager" instead of
only "manager"; "corporate secretary" instead of "secretary"; and "treasurer" instead of
"cashier." The phrase "agent, or any of its directors" is conspicuously deleted in the new rule.
The particular revision under Section 11 of Rule 14 was explained by retired Supreme
Court Justice Florenz Regalado, thus: 23
". . . the then Sec. 13 of this Rule allowed service upon a
defendant corporation to 'be made on the president, manager, secretary,
cashier, agent or any of its directors.' The aforesaid terms were obviously
ambiguous and susceptible of broad and sometimes illogical
interpretations, especially the word 'agent' of the corporation. The Filoil
case, involving the litigation lawyer of the corporation who precisely
appeared to challenge the validity of service of summons but whose very
appearance for that purpose was seized upon to validate the defective
service is an illustration of the need for this revised section with limited
scope and specific terminology. Thus the absurd result in the Filoil case
necessitated the amendment permitting service only on the in-house
counsel of the corporation who is in effect an employee of the corporation,
as distinguished from an independent practitioner." (underscoring
supplied)
Retired Justice Oscar Herrera, who is also a consultant of the Rules of Court Revision
Committee, stated that "(T)he rule must be strictly observed. Service must be made to one
named in (the) statute . . .". 24
It should be noted that even prior to the effectivity of the 1997 Rules of Civil Procedure,
strict compliance with the rules has been enjoined. In the case of Delta Motor Sales
Corporation vs. Mangosing, 25 the Court held:
"A strict compliance with the mode of service is necessary to
confer jurisdiction of the court over a corporation. The officer upon whom
service is made must be one who is named in the statute; otherwise the
service is insufficient. . . . .
The purpose is to render it reasonably certain that the corporation
will receive prompt and proper notice in an action against it or to insure that
the summons be served on a representative so integrated with the
corporation that such person will know what to do with the legal papers
served on him. In other words, 'to bring home to the corporation notice of
the filing of the action.' . . . .
The liberal construction rule cannot be invoked and utilized as a
substitute for the plain legal requirements as to the manner in which
summons should be served on a domestic corporation. . . . ." (underscoring
supplied).
Service of summons upon persons other than those mentioned in Section 13 of Rule
14 (old rule) has been held as improper. 26 Even under the old rule, service upon a general
manager of a firm's branch office has been held as improper as summons should have been
served at the firm's principal office. In First Integrated Bonding & Ins. Co., Inc. vs. Dizon, 27 it
was held that the service of summons on the general manager of the insurance firm's Cebu
branch was improper; default order could have been obviated had the summons been served at
the firm's principal office.
 And in the case of Solar Team Entertainment, Inc. vs. Hon. Helen Bautista Ricafort, et
al. 28 the Court succinctly clarified that, for the guidance of the Bench and Bar, "strictest"
compliance with Section 11 of Rule 13 of the 1997 Rules of Civil Procedure (on Priorities in
modes of service and filing) is mandated and the Court cannot rule otherwise, lest we allow
circumvention of the innovation by the 1997 Rules in order to obviate delay in the administration
of justice. cdtai

Accordingly, we rule that the service of summons upon the branch manager of
petitioner at its branch office at Cagayan de Oro, instead of upon the general manager at its
principal office at Davao City is improper. Consequently, the trial court did not acquire
jurisdiction over the person of the petitioner.

The fact that defendant filed a belated motion to dismiss did not operate to confer
jurisdiction upon its person. There is no question that the defendant's voluntary appearance in
the action is equivalent to service of summons. 29 Before, the rule was that a party may
challenge the jurisdiction of the court over his person by making a special appearance through
a motion to dismiss and if in the same motion, the movant raised other grounds or invoked
affirmative relief which necessarily involves the exercise of the jurisdiction of the court, the party
is deemed to have submitted himself to the jurisdiction of the court. 30 This doctrine has been
abandoned in the case of La Naval Drug Corporation vs. Court of Appeals, et al., 31 which
became the basis of the adoption of a new provision in the former Section 23, which is now
Section 20 of Rule 14 of the 1997 Rules. Section 20 now provides that "the inclusion in a motion
to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall
not be deemed a voluntary appearance." The emplacement of this rule clearly underscores the
purpose to enforce strict enforcement of the rules on summons. Accordingly, the filing of a
motion to dismiss, whether or not belatedly filed by the defendant, his authorized agent or
attorney, precisely objecting to the jurisdiction of the court over the person of the defendant can
by no means be deemed a submission to the jurisdiction of the court. There being no proper
service of summons, the trial court cannot take cognizance of a case for lack of jurisdiction over
the person of the defendant. Any proceeding undertaken by the trial court will consequently be
null and void. 32

WHEREFORE, the petition is hereby GRANTED. The assailed Orders of the public
respondent trial court are ANNULLED and SET ASIDE. The public respondent Regional Trial
Court of Makati, Branch 132 is declared without jurisdiction to take cognizance of Civil Case No.
98-824, and all its orders and issuances in connection therewith are hereby ANNULLED and
SET ASIDE.

SO ORDERED.

||| (E.B. Villarosa & Partner Co., Ltd. v. Benito, G.R. No. 136426, [August 6, 1999], 370 PHIL
921-932)
 SECOND DIVISION
[G.R. No. 144662. October 13, 2003.]
SPOUSES EFREN MASON and DIGNA MASON, petitioners, vs. THE
HONORABLE COURT OF APPEALS and COLUMBUS PHILIPPINES
BUS CORPORATION, respondents.
Gramata & Sarte Law Firm for petitioners.
Romulo, Mabanta, Buenaventura, Sayoc & Delos Angeles for respondent.
SYNOPSIS
Petitioners entered into a lease agreement with private respondent. As private
respondent failed to comply with its obligation under the contract, petitioners initiated a
complaint for rescission of contract with damages before the Regional Trial Court of Pasay City.
Summons was thereafter served upon private respondent through its filing clerk. However,
private respondent failed to file its answer. Hence, the trial court, on motion of the petitioners,
declared private respondent in default. Thereafter, the trial court rendered judgment by default
in favor of petitioners. Private respondent moved to lift the order of default, but it was denied by
the trial court. Its subsequent motion to lift the writ of execution was likewise denied. On appeal,
the Court of Appeals set aside the decision of the trial court, ruling that the trial courtdid not
acquire jurisdiction over private respondent because it was not properly served with summons.
Hence, this petition for review where petitioners maintained that there was a valid
service of summons conformably with the substantial compliance rule. ACcEHI
The Supreme Court ruled that service of summons upon private respondent through
its filing clerk cannot be considered valid. Consequently, all the subsequent proceedings held
before it, including the order of default was null and void because the RTC did not acquire
jurisdiction over private respondent. According to the Court, notice to enable the other party to
be heard and to present evidence is not a mere technicality or a trivial matter in any
administrative or judicial proceedings. The service of summons is a vital and indispensable
ingredient of due process. The Court will deprive private respondent of its right to present its
defense in this multi-million peso suit, if it disregards compliance with the rules on
service of summons. Thus, the petition was denied. AaSTIH
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS; SERVICE OF SUMMONS;
VITAL AND INDISPENSABLE INGREDIENT OF DUE PROCESS. — Neither can herein
petitioners invoke our ruling in Millennium to support their position for said case is not on all
fours with the instant case. We must stress that Millennium was decided when the 1964
Rules of Court were still in force and effect, unlike the instant case which falls under the new
rule. Hence, the cases cited by petitioners where we upheld the doctrine of substantial
compliance must be deemed overturned by Villarosa, which is the later case. At this juncture, it
is worth emphasizing that notice to enable the other party to be heard and to present evidence
is not a mere technicality or a trivial matter in any administrative or judicial proceedings. The
service of summons is a vital and indispensable ingredient of due process. We will deprive
private respondent of its right to present its defense in this multi-million peso suit, if we
disregard compliance with the rules on service of summons. SCaTAc
2. ID.; ID.; ID.; SERVICE OF SUMMONS UPON CORPORATION THROUGH ITS
FILING CLERK NOT VALID; EFFECT. — Since we have ruled that service of summons upon
private respondent through its filing clerk cannot be considered valid, it necessarily follows
therefore that the Regional Trial Court of Pasay City did not acquire jurisdiction over private
respondent. Consequently, all the subsequent proceedings held before it, including the
order of default, are null and void. As private respondent points out, the second issue has
become moot and academic. CTHaSD
DECISION
QUISUMBING, J p:
This petition for review assails the decision, 1 dated May 12,
2000, of the Court of Appeals and its resolution 2 dated August 25, 2000 in CA-G.R. SP No.
54649 denying petitioners' motion for reconsideration. The decision set aside the
decision 3 of the Regional Trial Court of Pasay City, Branch 112, in Civil Case No. 98-1567 and
directed said court to conduct further proceedings on the complaint for rescission of lease
contract.
The antecedent facts of the case, as found by the Court of Appeals, are as follows:
Petitioners spouses Efren and Digna Mason owned two parcels of land located along
Epifanio delos Santos Avenue in Pasay City. On March 30, 1993, petitioners and private
respondent Columbus Philippines Bus Corporation (hereafter Columbus) entered into a lease
contract, under which Columbus undertook to construct a building worth ten million pesos
(P10,000,000) at the end of the third year of the lease. Because private respondent failed to
comply with this stipulation, the petitioners on November 13, 1998, filed a complaint for
rescission of contract with damages against private respondent before the Regional
Trial Court of Pasay City, docketed as Civil Case No. 98-1567. Summons was served upon
private respondent through a certain Ayreen Rejalde. While the receiving copy of the summons
described Rejalde as a secretary of Columbus, the sheriff's return described Rejalde as a
secretary to the corporate president, duly authorized to receive legal processes.
 Private respondent failed to file its answer or other responsive pleading, hence
petitioners filed a motion to declare private respondent in default. The motion was granted and
petitioners were allowed to present evidence ex parte. Thereafter, the case was submitted for
decision.
On April 22, 1999, the trial court rendered its decision whose dispositive portion reads:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiffs and against defendant declaring the
contract of lease rescinded, terminated and cancelled, and ordering
defendant:
1. To pay plaintiffs the amount of P10 Million which is the
value of the building which defendant failed to construct on the leased
properties, as and by way [of] actual damages;
2. To pay plaintiffs the amount of P63,862.57 beginning
November 1998 until defendant and the sub-lessee vacate the leased
property by way of reasonable compensation for the use of the properties;
3. and all other persons and entities claiming rights under it, to
surrender possession to plaintiffs and to vacate the leased premises;
4. to pay plaintiffs the amount of P300,000.00 as and by
way of moral damages;
5. to pay plaintiffs the amount of P100,000.00 as and by
way of exemplary damages;
6. to pay plaintiffs attorney's fees in the amount of P100,000.00;
and
7. to pay the cost of suit.
SO ORDERED. 4
That decision became final on May 12, 1999. The following day, private respondent
filed a motion to lift order of default, which was opposed by petitioners. The trial court ordered
the parties to submit their respective memoranda. However, without waiting for the same, the
trial court on May 26, 1999, denied the motion to lift order of default, thus:
It appearing that the decision rendered by this Court on April 27,
1999 became final and executory on May 12, 1999, defendant's Motion to
Lift Order of Default is hereby DENIED. Concomitant thereto, plaintiffs'
Motion for Execution is hereby GRANTED.
The Order of this Court on May 21, 1999 allowing the parties to
file their respective memoranda within ten (10) days from May 21, 1999 is
hereby revoked and set aside, since the incidents can be resolved based
on the records.
WHEREFORE, let a writ of execution issue to enforce and
implement the final and executory decision rendered by this Court on April
7, 1999.
SO ORDERED. 5
Private respondent filed a motion for reconsideration, which was denied. Undaunted,
private respondent filed a manifestation and motion to lift the writ ofexecution. It suffered the
same fate as the motion for reconsideration for being dilatory. The branch sheriff was directed
to proceed with the enforcement of the decision.
Private respondent appealed to the Court of Appeals, which ruled in its favor, thus:
WHEREFORE, the petition is GRANTED; the decision in Civil
Case No. 98-1567 and all the proceedings therein, including the
order of default and writ of execution, are SET ASIDE. The court a quo is
ORDERED to require petitioner to file its answer and thereafter to conduct
further appropriate proceedings with reasonable dispatch.
SO ORDERED. 6
The Court of Appeals held that the trial court erred when it denied private
respondent's motion to lift order of default. The appellate court pointed out that private
respondent was not properly served with summons, thus it cannot be faulted if it failed to file an
Answer. Section 11, 7 Rule 14 of the 1997 Rules of Civil Procedure requires that
service of summons upon domestic private juridical entity shall be made through its president,
managing partner, general manager, corporate secretary, treasurer or in-house counsel. Since
service upon private respondent was made through a certain Ayreen Rejalde, a mere filing clerk
in private respondent's office, as evidenced by the latter's employment record, such service
cannot be considered valid. Consequently, the subsequent proceedings, including the
order of default, judgment by default and its execution, were also invalid because the
trial court did not acquire jurisdiction over private respondent. Besides judgments by default are
not favored, especially so when there is a prima facie showing that the defaulting party has a
meritorious defense, which in this case was grounded on the contract oflease sued upon, said
the Court of Appeals.
Petitioner filed a motion for reconsideration, but to no avail. Hence, this petition for
review averring that the Court of Appeals erred in:
I. . . . HOLDING THAT THERE WAS NO VALID SERVICE OF SUMMONS
UPON PRIVATE RESPONDENT COLUMBUS PHILIPPINES
BUS CORPORATION
II. . . . NOT HOLDING THAT THERE WAS VALID
SERVICE OF SUMMONS CONFORMABLY WITH THE
SUBSTANTIAL COMPLIANCE RULE.
 III. . . . HOLDING THAT WITH THE ADOPTION OF SECTION 11, RULE
14 OF THE 1997 RULES OF CIVIL PROCEDURE, THE
SUBSTANTIAL COMPLIANCE RULE NO LONGER APPLIES.
IV. . . . NOT HOLDING THAT JURISDICTION WAS ACQUIRED OVER
PRIVATE RESPONDENT COLUMBUS PHILIPPINES BUS
CORPORATION AND THAT ITS MOTION TO LIFT
ORDER OF DEFAULT LACKS MERIT. 8
The issues in this case may be succinctly stated as follows:
a. Whether there was valid service of summons on private respondent for
the trial court to acquire jurisdiction, and
b. Whether private respondent's motion to lift order of default was in order.
On the first issue, petitioners contend that while Section 11, Rule 14 of the 1997
Rules of Civil Procedure clearly specifies the persons authorized to receive summons on
behalf of a private juridical entity, said provision did not abandon or render inapplicable the
substantial compliance rule. Petitioners cite Millennium Industrial Commercial Corporation v.
Tan, 9 and maintain that this Court, by referring to E.B Villarosa & Partner Co., Ltd. v. Judge
Benito, 10 effectively ruled that said provision is the statement of the general rule on
service of summons upon corporation and the substantial compliance rule is the exception.
Petitioners claim that thisCourt, in an array of cases, upheld the substantial compliance rule
when it allowed the validity of the service of summons on the corporation's employee other than
those mentioned in the Rule where said summons and complaint were in fact seasonably
received by the corporation from said employee. Petitioners insist that technicality must not
defeat speedy justice.
Petitioners stress that even though the summons was received by a mere filing clerk in
private respondent's corporation, there was substantial compliance with Section 11, Rule 14
because the summons actually reached private respondent. This can be gleaned from private
respondent's motion to lift order of default where private respondent did not question the
validity of the service of summons but explained in paragraph three thereof that its failure to
answer the complaint was due to its impression that the case would not be pursued by
petitioners because the corporation already made payments to them. 11
From said averment, according to petitioners, private respondent in effect admitted
that it received the summons. Notwithstanding this, private respondent did not file its answer to
the complaint, said the petitioners. This is tantamount to negligence which the court cannot
tolerate, petitioners conclude. There being valid serviceof summons, the Regional
Trial Court acquired jurisdiction over private respondent, according to petitioners.
Petitioners further contend that the Court of Appeals' reliance on E.B Villarosa &
Partner Co., Ltd. v. Judge Benito, 12 in denying their motion for reconsideration was misplaced,
because the factual milieu in said case was different from that in the instant case. In Villarosa,
according to them, there was no showing of actual receipt by the defendant corporation of the
summons while in this case, private respondent actually received the summons.
Private respondent counters that nowhere in the Millennium case did
this Court expressly state or remotely imply that we have not abandoned the
doctrine ofsubstantial compliance. Private respondent claims that petitioners misquoted the
portion of the Millennium decision where this Court cited the Villarosa case, to make it appear
that the Villarosa ruling, which provides an interpretation of Section 11, Rule 14 of the 1997
Rules of Civil Procedure, states the general rule on the service ofsummons upon corporations
where the substantial compliance rule is the exception. Private respondent avers that what
this Court discussed in the Millennium case was the rule on service of summons under the old
Rules of Court prior to the promulgation and effectivity of the 1997 Rules of Civil Procedure.
The Millennium case held that as a general rule, service upon one who is not enumerated
in Section 13, 13 Rule 14 of the then Rules of Court is invalid, according to private respondent.
An exception is when the summons is actually received by the corporation, which means that
there was substantial compliance with the rule. Private respondent stresses that since the
exception referred to the old rule, it cannot be made to apply to the new rule, which clearly
specifies and limits the persons authorized to receive the summons in behalf of the corporation.
Neither can petitioners rely on Millennium to justify their theory, adds private
respondent, because at the time the complaint in this case was filed with the trialcourt, the 1997
Rules of Civil Procedure were already in effect. The case law applicable in the instant case,
contends private respondent, is Villarosa which squarely provides for the proper
interpretation of the new rule on the service of summons upon domestic corporation, thus:
The designation of persons or officers who are authorized to
accept summons for a domestic corporation or partnership is now limited
and more clearly specified in Section 11, Rule 14 of the 1997 Rules of Civil
Procedure. The rule now states "general manager" instead of only
"manager"; "corporate secretary" instead of"secretary"; and "treasurer"
instead of "cashier." The phrase "agent, or any of its directors" is
conspicuously deleted in the new rule. 14
According to private respondent, service through Ayreen Rejalde, a mere filing
clerk of private respondent and not one of those enumerated above, is invalid.
We find private respondent's submission on this issue meritorious.
The question of whether the substantial compliance rule is still applicable under
Section 11, Rule 14 of the 1997 Rules of Civil Procedure has been settled inVillarosa which
applies squarely to the instant case. In the said case, petitioner E.B. Villarosa & Partner Co.
Ltd. (hereafter Villarosa) with principal office address at 102 Juan Luna St., Davao City and with
branches at 2492 Bay View Drive, Tambo, Parañaque, Metro Manila and Kolambog, Lapasan,
Cagayan de Oro City, entered into a sale with development agreement with private respondent
Imperial Development Corporation. As Villarosa failed to comply with its contractual obligation,
private respondent initiated a suit for breach of contract and damages at the Regional
Trial Court of Makati. Summons, together with the complaint, was served upon Villarosa
through its branch manager at Kolambog, Lapasan, Cagayan de Oro City. Villarosa filed a
Special Appearance with Motion to Dismiss on the ground of improper serviceof summons and
lack of jurisdiction. The trial court denied the motion and ruled that there was substantial
compliance with the rule, thus, it acquired jurisdiction over Villarosa. The latter questioned the
denial before us in its petition for certiorari. We decided in Villarosa's favor and declared the WHEREFORE, the instant petition is DENIED. The questioned decision, as well as the
trial court without jurisdiction to take cognizance of the case. We held that there was no valid resolution, of the Court of Appeals in CA-G.R. SP No. 54649 are AFFIRMED. Costs against
service of summons on Villarosa as service was made through a person not included in the petitioners. TcSHaD
enumeration in Section 11, Rule 14 of the 1997 Rules of Civil Procedure, which revised the
Section 13, Rule 14 of the 1964 Rules of Court. We discarded the trial court's basis for denying SO ORDERED.
the motion to dismiss, namely, private respondent's substantial compliance with the rule on ||| (Spouses Mason v. Court of Appeals, G.R. No. 144662, [October 13, 2003], 459 PHIL
service of summons, and fully agreed with petitioner's assertions that the enumeration under 689-700)
the new rule is restricted, limited and exclusive, following the rule in statutory construction
that expressio unios est exclusio alterius. Had the Rulesof Court Revision Committee intended
to liberalize the rule on service of summons, we said, it could have easily done so by clear and
concise language. Absent a manifest intent to liberalize the rule, we stressed strict compliance
with Section 11, Rule 14 of the 1997 Rules of Civil Procedure.

Neither can herein petitioners invoke our ruling in Millennium to support their position
for said case is not on all fours with the instant case. We must stress thatMillennium was
decided when the 1964 Rules of Court were still in force and effect, unlike the instant case
which falls under the new rule. Hence, the cases 15 cited by petitioners where we upheld the
doctrine of substantial compliance must be deemed overturned by Villarosa, which is the later
case.

At this juncture, it is worth emphasizing that notice to enable the other party to be
heard and to present evidence is not a mere technicality or a trivial matter in any administrative
or judicial proceedings. The service of summons is a vital and indispensable ingredient of due
process. 16 We will deprive private respondent of its right to present its defense in this
multi-million peso suit, if we disregard compliance with the rules on service of summons.

On the second issue,petitioners claim that private respondent's motion to lift

order of default was not in order for it was filed late, contrary to the provision insub-paragraph
(b), Section 3, 17 Rule 9 of the 1997 Rules of Civil Procedure, which requires filing of the
motion after notice but before judgment. Also, the motion was (a) not under oath; (b) did not
show the fraud, accident, mistake or excusable neglect that caused private respondent's failure
to answer; and (c) did not show private respondent's meritorious defense.

Private respondent, in turn, argues that since service upon it was invalid, the
trial court did not acquire jurisdiction over it. Hence, all the subsequent proceedings in the
trial court are null and void, including the order of default. This renders the second issue now
moot and academic.

We find merit in private respondent's submissions. Since we have ruled that

service of summons upon private respondent through its filing clerk cannot be considered valid,
it necessarily follows therefore that the Regional Trial Court of Pasay City did not acquire
jurisdiction over private respondent. 18 Consequently, all the subsequent proceedings held
before it, including the order of default, are null and void. 19 As private respondent points out,
the second issue has become moot and academic.
 THIRD DIVISION
[G.R. No. 147369. October 23, 2003.]
Spouses PATRICK JOSE and RAFAELA JOSE, petitioners, vs.
Spouses HELEN BOYON and ROMEO BOYON, respondents.
SYNOPSIS
In the complaint for specific performance filed by petitioners Spouses Patrick and
Rafaela Jose against respondents Spouses Helen and Romeo Boyon, the summons was
effected through substituted service and by publication because the process server alleged that
he cannot serve it personally. Consequently, respondents failed to file their answer, were
declared in default by the trial court, and after the ex parte presentation of evidence, a
resolution in favor of petitioners was issued. Upon learning of the resolution, respondent
Helen Boyon, who was then residing in the United States, filed an Ad Cautelam motion
questioning the validity of service of summons. However, the motion was denied by the trial
court on the ground that by respondents' default they loss their standing in court. Thus, she filed
a petition for certiorari with the Court of Appeals which ruled that the trial court never acquired
jurisdiction over respondents because of the invalid service of summons. Hence, this petition.
In denying the petition, the Court ruled that the Return of Summons showed that no
effort was actually exerted and no positive step was taken by either the process server or
petitioners to locate and serve the summons personally on respondents. Certainly, without
specifying the details of the attendant circumstances or of the efforts exerted to serve the
summons, a general statement that such efforts were made will not suffice for purposes of
complying with the rules of substituted service of summons.
It must also be noted that extraterritorial service of summons or summons by
publication applies only when the action is in rem or quasi in rem. In the instant case, what was
filed before the trial court was an action for specific performance directed against respondents.
While the suit incidentally involved a piece of land, the ownership or possession thereof was not
put in issue, since they did not assert any interest or right over it. Moreover, this Court has
consistently declared that an action for specific performance is an action in personam. Having
failed to serve the summons on respondents properly, the RTC did not validly acquire
jurisdiction over their persons. Consequently, due process demands that all the proceedings
conducted subsequent thereto should be deemed null and void.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS; SERVICE THEREOF MAY
BE DONE BY PERSONAL OR SUBSTITUTION SERVICE WHERE THE ACTION IS IN
PERSONAM AND THE DEFENDANT IS IN THE COUNTRY. — In general, trial court acquire
jurisdiction over the person of the defendant by the service of summons. Where the action is in
personam and the defendant is in the Philippines, such service may be done by personal or
substituted service, following the procedures laid out in Sections 6 and 7 of Rule 14 of the
Revised Rules of Court.
2. ID.; ID.; ID.; SUBSTITUTED SERVICE; CAN BE RESORTED TO ONLY IF THE
PERSONAL SERVICE CANNOT BE MADE PROMPTLY. — [P]ersonal service of summons is
prefer to substituted service. Only if the former cannot be made promptly can the process
server resort to the latter. Moreover, the proof of service of summons must (a) indicate the
impossibility of service of summons within a reasonable time (b) specify the efforts exerted to
locate the defendant; and (c) state that the summons was served upon a person of sufficient
age and discretion who is in residing in the address, or who i charge of the office or regular
place of business, of defendant. It is likewise required that the pertinent facts proving these
circumstances be stated in the proof of service or in the officer's return. The failure to comply
faithfully, strictly and fully with all the foregoing requirements of substituted service renders the
service of summons ineffective.
3. ID.; ID.; ID.; ID.; GENERAL STATEMENT THAT EFFORTS WHO MADE WILL
NOT SUFFICE FOR PURPOSES COMPLYING WITH THE RULES THEREOF. — In the
instant case, it appears that the process server hastily and capriciously resorted to substituted
service of summons without actually exerting any genuine effort to locate respondents. A
review of the records reveals that the only effort he exerted was to go to No. 32 Ariza Drive,
Camella Homes, Alabang on July 22, 1998, to try to serve the summons personally on
respondents. While the Return of Summons states that efforts to do so were ineffectual and
unavailing because Helen Boyon was in the United States and Romeo Boyon was in Bicol, it
did not mention exactly what efforts - if any - were undertaken to find respondents. Furthermore,
it did not specify where or from whom the process server obtained the information on their
whereabouts. . . . The Return of Summons shows that no effort was actually exerted and no
positive step taken by either the process server or petitioners to locate and serve the summons
personally on respondents. At best, the Return merely states the alleged whereabouts of
respondents without indicating that such information was verified from a person who had
knowledge thereof. Certainly, without specifying the details of the attendant circumstances or of
the efforts exerted to serve the summons, a general statement that such efforts were made will
not suffice for purposes of complying with the rules of substituted service of summons.
4. ID.; ID.; ID.; ID.; PERTINENT FACTS AND CIRCUMSTANCES ATTENDANT TO
THE SERVICE OF SUMMONS MUST BE STATED IN THE PROOF OF SERVICE OR
OFFICER'S RETURN. — The necessity of stating in the process server's Return or Proof of
Service the material facts and circumstances sustaining the validity of substituted service was
explained by this Court in Hamilton v. Levy, from which we quote: ". . . The pertinent facts and
circumstances attendant to the service of summons must be stated in the proof of service or
Officer's Return; otherwise, any substituted service made in lieu of personal service cannot be
upheld. This is necessary because substituted service is in derogation of the usual method of
service. It is a method extraordinary in character and hence may be used only as prescribed
and in the circumstances authorized by statute. Here, no such explanation was made. Failure to
faithfully, strictly, and fully comply with the requirements of substituted service renders said
service ineffective."
 5. ID.; ID.; ID.; ID.; ID.; FAILURE TO COMPLY THEREWITH WOULD INVALIDATE
ALL SUBSEQUENT PROCEEDINGS. — The requirements of substituted service of summons
and the effect of noncompliance with the subsequent proceedings therefor were discussed
in Madrigal v. Court of Appeals as follows: "In a long line of cases, this Court held that the
impossibility of personal service justifying availment of substituted service should be explained
in the proof of service why efforts exerted towards personal service failed. The pertinent facts
and circumstances attendant to the service of summons must be stated in the proof of service
or Officer's Return; otherwise, the substituted service cannot be upheld It bears stressing that
since service of summons, especially, for actions in personam, is essential for the acquisition o
jurisdiction over the person of the defendant, the resort to substituted service must be duly
justified. Failure to do so would invalidate all subsequent proceedings on jurisdictional
grounds."
6. ID.; ID.; ID.; EXTRA-TERRITORIAL SERVICE OF SUMMONS OR SUMMONS BY
PUBLICATION APPLIES ONLY WHET THE ACTION IS IN REM OR QUASI IN REM. — It
must be noted that extraterritorial service of summons or summons by publication applies only
when the action is in rem or quasi in rem. The first is an action against the thing itself instead of
against the defendant's person; in the latter, an individual is named as defendant, and the
purpose is to subject that individual's interest in a piece of property to the obligation of loan
burdening it.
7. ID.; ID.; ID.; SERVICE BY PUBLICATION; NOT PROPER IN AN ACTION IN
PERSONAM; CASE AT BAR. — In the instant case, what was filed before the trial court was an
action for specific performance directed against respondents. While the suit incidentally
involved a piece of land, the ownership or possession thereof was not put in issue, since they
did not assert any interest or right over it. Moreover, this Court has consistently declared that an
action for specific performance is an action in personam. Having failed to serve the summons
on respondents properly, the RTC did not validly acquire jurisdiction over their persons.
Consequently, due process: demands that all the proceedings conducted subsequent thereto
should be deemed null and void.
DECISION
PANGANIBAN, J p:
In general, substituted service can be availed of only after a clear showing that
personal service of summons was not legally possible. Also, service by publication is applicable
in actions in rem and quasi in rem, but not in personal suits such as the present one which is for
specific performance.
The Case
Before the Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of
Court, assailing the February 26, 2001 Decision 2 of the Court of Appeals (CA) in CA-GR SP
No. 60888. The dispositive portion of the CA Decision is worded as follows:
"WHEREFORE, on the basis of what prescinds, the assailed
resolution and orders issued by the public respondent are perforce
ANNULLED and SET ASIDE. This pronouncement is nonetheless
rendered without prejudice to the refiling of the same case by the private
respondents with the court a quo." 3
The Facts
The factual antecedents of the case are narrated by the CA in this wise:
"On July 2, 1998, [petitioners] Patrick and Rafaela Jose lodged a
complaint for specific performance against [respondents] Helen and
Romeo Boyon to compel them to facilitate the transfer of ownership of a
parcel of land subject of a controverted sale. The action was lodged before
the Regional Trial Court of Muntinlupa which is presided by herein public
respondent Judge N.C. Perello. On July 21, 1998, respondent judge,
through the acting Branch Clerk of Court of Branch 276 of the RTC of
Muntinlupa City, issued summons to the [respondents]. As per return of the
summons, substituted service was resorted to by the process server
allegedly because efforts to serve the summons personally to the
[respondents] failed. On December 9, 1998, [petitioners] filed before the
trial court an Ex-parte Motion for Leave of Court to Effect Summons by
Publication. On December 28, 1998, public respondent issued an Order
granting the Ex-parte Motion for Leave of Court to Effect Summons by
Publication. On July 30, 1999, the respondent judge, sans a written motion,
issued an Order declaring herein [respondent] in default for failure to file
their respective answers. As a consequence of the declaration of default,
[petitioners] were allowed to submit their evidence ex-parte. Ultimately, on
December 7, 1999, respondent judge issued the assailed resolution, the
dispositive portion of which reads as follows:
'. . . Therefore, Spouses Helen and Romeo Boyon are
directed to execute the necessary document with the effect of
withdrawing the Affidavit of Loss they filed and annotated with the
Register of Deeds of Makati City so that title 'to the parcel of land
subject of the Deed of Absolute Sale in favor of the Plaintiffs be
transferred in their names. Thereafter the Register of Deeds of
Makati City or Muntinlupa City may cancel Transfer of Certificate
of Title No. 149635 of the Defendants and issue another to
Plaintiff under the deed of sale, clean and free of any reported
encumbrance.
'Defendants are also directed to pay Plaintiffs actual
expenses in the amount of P20,000 and attorney's fees of
P20,000 including costs of this suit.'
 xxx xxx xxx
"On January 5, 2000, [respondent] Helen Boyon, who was then
residing in the United States of America, was surprised to learn from her
sister Elizabeth Boyon, of the resolution issued by the respondent court.
On January 18, 2000, [respondents] filed an Ad Cautelam motion
questioning, among others, the validity of the service of summons effected
by the court a quo. On March 17, 2000, the public respondent issued an
Order denying the said motion on the basis of the defaulted [respondents']
supposed loss of standing in court. On March 29, 2000, the [respondents]
once again raised the issue of jurisdiction of the trial court via a motion for
reconsideration. On June 22, 2000, however, an Order was issued by the
public respondent denying the said motion. The [petitioners] moved for the
execution of the controverted judgment which the respondent judge
ultimately granted." 4
Thereafter, respondents filed before the CA a Petition for certiorari under Rule 65 of
the Revised Rules of Civil Procedure, questioning the jurisdiction of the regional trial court
(RTC).
Ruling of the Court of Appeals
The CA held that the trial court had no authority to issue the questioned Resolution
and Orders. According to the appellate court, the RTC never acquired jurisdiction over
respondents because of the invalid service of summons upon them. First, the sheriff failed to
comply with the requirements of substituted service of summons, because he did not specify in
the Return of Summons the prior efforts he had made to locate them and the impossibility of
promptly serving the summons upon them by personal service. Second, the subsequent
summons by publication was equally infirm, because the Complaint was a suit for specific
performance and therefore an action in personam. Consequently, the Resolution and the
Orders were null and void, since the RTC had never acquired jurisdiction over respondents.
Hence, this Petition. 5
Issues
In their Memorandum, petitioners raise the following issues for
consideration: ITADaE
"A. The Honorable Court of Appeals erred in not holding that the
assailed Resolution dated December 7, 1999 was already final and
executory
"B. The Honorable Court of Appeals erred in giving due course to
the Petition for Certiorari of private respondents despite the pendency of
an appeal earlier filed
"C. The Honorable Court erred in not holding that the Petition for
Certiorari was time barred
"D. The Honorable Court of Appeals erred in holding that the
proceedings in the lower court are null and void due to invalid and
defective service of summons and the court did not acquire jurisdiction
over the person of the respondents." 6
In sum, the main issue revolves around the validity of the service of summons on
respondents.
The Court's Ruling
The Petition has no merit.
Main Issue:
Validity of the Service of Summons
Petitioners aver that the CA erred in ruling that the service of summons on
respondents was invalid. They submit that although the case filed before the trial court was
denominated as an action for specific performance, it was actually an action quasi in rem,
because it involved a piece of real property located in the Philippines. They further argue that in
actions quasi in rem involving ownership of a parcel of land, it is sufficient that the trial court
acquire jurisdiction over the res. Thus, the summons by publication, which they effected
subsequent to the substituted service of summons, was allegedly sufficient.
On the other hand, respondents maintain that the proceedings in the trial court were
null and void because of the invalid and defective service of summons. According to them, the
Return of Summons issued by the process server of the RTC failed to state that he had exerted
earnest efforts to effect the service of summons. He allegedly tried to serve it personally on
them on July 22, 1998 at No. 32 Ariza Drive, Camella Homes, Alabang. He, however, resorted
to substituted service on that same day, supposedly because he could not find respondents in
the above address. They further allege that the person to whom he gave the summons was not
even a resident of that address.
Respondents contend that when summons is served by substituted service, the return
must show that it was impossible to serve the summons personally, and that efforts had been
exerted toward that end. They add that noncompliance with the rule on substituted service
our renders invalid all proceedings relative thereto.
As to the summons by publication subsequently effected by petitioners, respondents
argue that the case filed before the trial court was an action for specific performance and,
therefore, an action in personam. As such, the summons by publication was insufficient to
enable the trial court to acquire jurisdiction over the persons of respondents.
Respondents conclude that even granting that the service of summons by publication
was permissible under the circumstances, it would still be defective and invalid because of the
failure of petitioners to observe the requirements of law, like an Affidavit attesting that the latter
deposited in the post office a copy of the summons and of the order of publication, paid the
postage, and sent the documents by registered mail to the former's last known address.
We agree with respondents. In general, trial courts acquire jurisdiction over the person
of the defendant by the service of summons. Where the action is in personam and the
defendant is in the Philippines, such service may be done by personal or substituted service,
following the procedures laid out in Sections 6 and 7 of Rule 14 of the Revised Rules of Court,
which read:
"Section 6. Service in person on defendant. — Whenever
practicable, the summons shall be served by handing a copy thereof to the
defendant in person, or, if he refuses to receive and sign for it, by tendering
it to him.
"Section 7. Substituted service. — If, for justifiable causes, the
defendant cannot be served within a reasonable time as provided in the
preceding section, service may be effected (a) by leaving copies of the
summons at the defendant's residence with some person of suitable age
and discretion then residing therein, or (b) by leaving the copies at
defendant's office or regular place of business with some competent
person in charge thereof."
As can be gleaned from the above-quoted Sections, personal service of summons is
preferred to substituted service. Only if the former cannot be made promptly can the process
server resort to the latter. Moreover, the proof of service of summons must (a) indicate the
impossibility of service of summons within a reasonably time; (b) specify the efforts exerted to
locate the defendant; and (c) state that the summons was served upon a person of sufficient
age and discretion who is residing in the address, or who is in charge of the office or regular
place of business, of the defendant. 7 It is likewise required that the pertinent facts proving
these circumstances be stated in the proof of service or in the officer's return. The failure to
comply faithfully, strictly and fully with all the foregoing requirements of substituted service
renders the service of summons ineffective. 8
Defective Personal Service of Summons
In the instant case, it appears that the process server hastily and capriciously resorted
to substituted service of summons without actually exerting any genuine effort to locate
respondents. A review of the records 9 reveals that the only effort he exerted was to go to No.
32 Ariza Drive, Camella Homes, Alabang on July 22, 1998, to try to serve the summons
personally on respondents. While the Return of Summons states that efforts to do so were
ineffectual and unavailing because Helen Boyonwas in the United States and
Romeo Boyon was in Bicol, it did not mention exactly what efforts — if any — were undertaken
to find respondents. Furthermore, it did not specify where or from whom the process server
obtained the information on their whereabouts. The pertinent portion of the Return of Summons
is reproduced as follows:
"That efforts to serve the said Summons personally upon
defendants Sps. Helen and Romeo Boyon were made but the same were
ineffectual and unavailing for the reason that defendant Helen Boyon is
somewhere in the United States of America and defendant
Romeo Boyon is in Bicol thus substituted service was made in accordance
with Section 7, Rule 14, of the Revised Rules of Court." 10
The Return of Summons shows that no effort was actually exerted and no positive
step taken by either the process server or petitioners to locate and serve the summons
personally on respondents. At best, the Return merely states the alleged whereabouts of
respondents without indicating that such information was verified from a person who had
knowledge thereof. Certainly, without specifying the details of the attendant circumstances or of
the efforts exerted to serve the summons, a general statement that such efforts were made will
not suffice for purposes of complying with the rules of substituted service of summons.
The necessity of stating in the process server's Return or Proof of Service the material
facts and circumstances sustaining the validity of substituted service was explained by this
Court in Hamilton v. Levy, 11 from which we quote:
". . . The pertinent facts and circumstances attendant to the
service of summons must be stated in the proof of service or Officer's
Return; otherwise, any substituted service made in lieu of personal service
cannot be upheld. This is necessary because substituted service is in
derogation of the usual method of service. It is a method extraordinary in
character and hence may be used only as prescribed and in the
circumstances authorized by statute. Here, no such explanation was made.
Failure to faithfully, strictly, and fully comply with the requirements of
substituted service renders said service ineffective." 12
Moreover, the requirements of substituted service of summons and the effect of
noncompliance with the subsequent proceedings therefor were discussed inMadrigal v. Court
of Appeals 13 as follows:
"In a long line of cases, this Court held that the impossibility of
personal service justifying availment of substituted service should be
explained in the proof of service; why efforts exerted towards personal
service failed. The pertinent facts and circumstances attendant to the
service of summons must be stated in the proof of service or Officer's
Return; otherwise, the substituted service cannot be upheld. It bears
stressing that since service of summons, especially for actions in
personam, is essential for the acquisition of jurisdiction over the person of
the defendant, the resort to a substituted service must be duly justified.
Failure to do so would invalidate all subsequent proceedings on
jurisdictional grounds." 14
Summons by Publication Improper
It must be noted that extraterritorial service of summons or summons by publication
applies only when the action is in rem or quasi in rem. The first is an action against the thing
itself instead of against the defendant's person; in the latter, an individual is named as
defendant, and the purpose is to subject that individual's interest in a piece of property to the
obligation or loan burdening it. 15
 In the instant case, what was filed before the trial court was an action for specific
performance directed against respondents. While the suit incidentally involved a piece of land,
the ownership or possession thereof was not put in issue, since they did not assert any interest
or right over it. Moreover, this Court has consistently declared that an action for specific
performance is an action in personam. 16

Having failed to serve the summons on respondents properly, the RTC did not validly
acquire jurisdiction over their persons. Consequently, due process demands that all the
proceedings conducted subsequent thereto should be deemed null and void. 17

WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution
AFFIRMED. Costs against petitioners.

SO ORDERED. DSATCI

||| (Spouses Jose v. Spouses Boyon, G.R. No. 147369, [October 23, 2003], 460 PHIL 354-366)
 THIRD DIVISION
[G.R. No. 130974. August 16, 2006.]
MA. IMELDA M. MANOTOC, petitioner, vs. HONORABLE COURT OF
APPEALS and AGAPITA TRAJANO on behalf of the Estate of
ARCHIMEDES TRAJANO, respondents.
DECISION
VELASCO, JR., J p:
The court's jurisdiction over a defendant is founded on a valid service of summons.
Without a valid service, the court cannot acquire jurisdiction over the defendant, unless the
defendant voluntarily submits to it. The defendant must be properly apprised of a pending
action against him and assured of the opportunity to present his defenses to the suit. Proper
service of summons is used to protect one's right to due process.
The Case
This Petition for Review on Certiorari 1 under Rule 45 presents the core issue whether
there was a valid substituted service of summons on petitioner for the trial court to acquire
jurisdiction. Petitioner Manotoc claims the court a quoshould have annulled the proceedings in
the trial court for want of jurisdiction due to irregular and ineffective service of summons.
The Facts
Petitioner is the defendant in Civil Case No. 63337 entitled Agapita Trajano, pro se,
and on behalf of the Estate of Archimedes Trajano v. Imelda 'Imee' R. Marcos-Manotoc 2 for
Filing, Recognition and/or Enforcement of Foreign Judgment. Respondent Trajano seeks the
enforcement of a foreign court's judgment rendered on May 1, 1991 by the United States
District Court of Honolulu, Hawaii, United States of America, in a case entitled Agapita Trajano,
et al. v. Imee Marcos-Manotoc a.k.a. Imee Marcos, Civil Case No. 86-0207 for wrongful death
of deceased Archimedes Trajano committed by military intelligence officials of the Philippines
allegedly under the command, direction, authority, supervision, tolerance, sufferance and/or
influence of defendant Manotoc, pursuant to the provisions of Rule 39 of the then RevisedRules
of Court.
Based on paragraph two of the Complaint, the trial court issued a Summons 3 on July
6, 1993 addressed to petitioner at Alexandra Condominium Corporation or Alexandra Homes,
E2 Room 104, at No. 29 Meralco Avenue, Pasig City.
On July 15, 1993, the Summons and a copy of the Complaint were allegedly served
upon (Mr.) Macky de la Cruz, an alleged caretaker of petitioner at the condominium unit
mentioned earlier. 4 When petitioner failed to file her Answer, the trial court declared her in
default through an Order 5 dated October 13, 1993. AICTcE
On October 19, 1993, petitioner, by special appearance of counsel, filed a Motion to
Dismiss 6 on the ground of lack of jurisdiction of the trial court over her person due to an invalid
substituted service of summons. The grounds to support the motion were: (1) the address of
defendant indicated in the Complaint (Alexandra Homes) was not her dwelling, residence, or
regular place of business as provided in Section 8, Rule 14 of the Rules of Court; (2) the party
(de la Cruz), who was found in the unit, was neither a representative, employee, nor a resident
of the place; (3) the procedure prescribed by the Rules on personal and substituted service of
summons was ignored; (4) defendant was a resident of Singapore; and (5) whatever judgment
rendered in this case would be ineffective and futile.
During the hearing on the Motion to Dismiss, petitioner Manotoc presented Carlos
Gonzales, who testified that he saw defendant Manotoc as a visitor in Alexandra Homes only
two times. He also identified the Certification of Renato A. de Leon, which stated that Unit
E-2104 was owned by Queens Park Realty, Inc.; and at the time the Certification was issued,
the unit was not being leased by anyone. Petitioner also presented her Philippine passport and
the Disembarkation/Embarkation Card 7 issued by the Immigration Service of Singapore to
show that she was a resident of Singapore. She claimed that the person referred to in plaintiff's
Exhibits "A" to "EEEE" as "Mrs. Manotoc" may not even be her, but the mother of Tommy
Manotoc, and granting that she was the one referred to in said exhibits, only 27 out of 109
entries referred to Mrs. Manotoc. Hence, the infrequent number of times she allegedly entered
Alexandra Homes did not at all establish plaintiff's position that she was a resident of said place.
On the other hand, Agapita Trajano, for plaintiffs' estate, presented Robert Swift, lead
counsel for plaintiffs in the Estate of Ferdinand Marcos Human Rights Litigation, who testified
that he participated in the deposition taking of Ferdinand R. Marcos, Jr.; and he confirmed that
Mr. Marcos, Jr. testified that petitioner's residence was at the Alexandra Apartment,
Greenhills. 8 In addition, the entries 9 in the logbook of Alexandra Homes from August 4, 1992
to August 2, 1993, listing the name of petitioner Manotoc and the Sheriff's Return, 10 were
adduced in evidence.
On October 11, 1994, the trial court rejected Manotoc's Motion to Dismiss on the
strength of its findings that her residence, for purposes of the Complaint, was Alexandra Homes,
Unit E-2104, No. 29 Meralco Avenue, Pasig, Metro Manila, based on the documentary
evidence of respondent Trajano. The trial court relied on the presumption that the sheriff's
substituted service was made in the regular performance of official duty, and such presumption
stood in the absence of proof to the contrary. 11
On December 21, 1994, the trial court discarded Manotoc's plea for reconsideration
for lack of merit. 12
Undaunted, Manotoc filed a Petition for Certiorari and Prohibition 13 before the Court
of Appeals (CA) on January 20, 1995, docketed as CA-G.R. SP No. 36214 seeking the
annulment of the October 11, 1994 and December 21, 1994 Orders of Judge Aurelio C.
Trampe.
Ruling of the Court of Appeals
 On March 17, 1997, the CA rendered the assailed Decision, 14 dismissing the Petition
for Certiorari and Prohibition. The court a quo adopted the findings of the trial court that
petitioner's residence was at Alexandra Homes, Unit E-2104, at No. 29 Meralco Avenue, Pasig,
Metro Manila, which was also the residence of her husband, as shown by the testimony of Atty.
Robert Swift and the Returns of the registered mails sent to petitioner. It ruled that the
Disembarkation/Embarkation Card and the Certification dated September 17, 1993 issued by
Renato A. De Leon, Assistant Property Administrator of Alexandra Homes, were hearsay, and
that said Certification did not refer to July 1993 — the month when the substituted service was
effected.
In the same Decision, the CA also rejected petitioner's Philippine passport as proof of
her residency in Singapore as it merely showed the dates of her departure from and arrival in
the Philippines without presenting the boilerplate's last two (2) inside pages where petitioner's
residence was indicated. The CA considered the withholding of those pages as suppression of
evidence. Thus, according to the CA, the trial court had acquired jurisdiction over petitioner as
there was a valid substituted service pursuant to Section 8, Rule 14 of the old Revised Rules of
Court. IaEACT
On April 2, 1997, petitioner filed a Motion for Reconsideration 15 which was denied by
the CA in its Resolution 16 dated October 8, 1997.
Hence, petitioner has come before the Court for review on certiorari.
The Issues
Petitioner raises the following assignment of errors for the Court's consideration:
I. RESPONDENT COURT OF APPEALS COMMITTED [A] SERIOUS
ERROR IN RENDERING THE DECISION AND RESOLUTION IN
QUESTION (ANNEXES A AND B) IN DEFIANCE OF LAW AND
JURISPRUDENCE IN RULING THAT THE TRIAL COURT ACQUIRED
JURISDICTION OVER THE PERSON OF THE PETITIONER THROUGH
A SUBSTITUTED SERVICE OF SUMMONS IN ACCORDANCE WITH
SECTION 8, RULE 14 OF THE REVISED RULES OF COURT.
II. RESPONDENT COURT OF APPEALS COMMITTED [A] SERIOUS
ERROR WHEN IT RULED THAT THERE WAS A VALID SERVICE OF
SUMMONS ON AN ALLEGED CARETAKER OF PETITIONER'S
RESIDENCE IN COMPLETE DEFIANCE OF THE RULING IN CASTILLO
VS. CFI OF BULACAN, BR. IV, G.R. NO. L-55869, FEBRUARY 20, 1984,
127 SCRA 632 WHICH DEFINES THE PROPRIETY OF SUCH SERVICE
UPON MERE OVERSEERS OF PREMISES WHERE A PARTY
SUPPOSEDLY RESIDES.
III. RESPONDENT COURT OF APPEALS COMMITTED [A] SERIOUS
ERROR IN CONCLUDING THAT THE RESIDENCE OF THE HUSBAND
IS ALSO THE RESIDENCE OF HIS WIFE CONTRARY TO THE RULING
IN THE BANK OF THE PHILIPPINE ISLANDS VS. DE COSTER, G.R. NO.
23181, MARCH 16, 1925, 47 PHIL. 594.
IV. RESPONDENT COURT OF APPEALS COMMITTED [A] SERIOUS
ERROR IN FAILING TO APPLY THE RULE ON EXTRA-TERRITORIAL
SERVICE OF SUMMONS UNDER SECTIONS 17 AND 18, RULE 14 OF
THE REVISED RULES OF COURT. 17
The assigned errors bring to the fore the crux of the disagreement — the validity of the
substituted service of summons for the trial court to acquire jurisdiction over petitioner.
The Court's Ruling
We GRANT the petition.
Acquisition of Jurisdiction
Jurisdiction over the defendant is acquired either upon a valid service of summons or
the defendant's voluntary appearance in court. When the defendant does not voluntarily submit
to the court's jurisdiction or when there is no valid service of summons, "any judgment of the
court which has no jurisdiction over the person of the defendant is null and void." 18 In an action
strictly in personam, personal service on the defendant is the preferred mode of service, that is,
by handing a copy of the summons to the defendant in person. If defendant, for excusable
reasons, cannot be served with the summons within a reasonable period, then substituted
service can be resorted to. While substituted service of summons is permitted, "it is
extraordinary in character and in derogation of the usual method of service." 19 Hence, it must
faithfully and strictly comply with the prescribed requirements and circumstances authorized by
the rules. Indeed, "compliance with the rules regarding the service of summons is as much
important as the issue of due process as of jurisdiction." 20
Requirements for Substituted Service
Section 8 of Rule 14 of the old Revised Rules of Court which applies to this case
provides:
SEC. 8. 21 Substituted service. — If the defendant cannot be
served within a reasonable time as provided in the preceding section
[personal service on defendant], service may be effected (a) by leaving
copies of the summons at the defendant's residence with some person of
suitable age and discretion then residing therein, or (b) by leaving the
copies at defendant's office or regular place of business with some
competent person in charge thereof. IDAESH
We can break down this section into the following requirements to effect a valid
substituted service:
(1) Impossibility of Prompt Personal Service
The party relying on substituted service or the sheriff must show that defendant cannot
be served promptly or there is impossibility of prompt service. 22 Section 8, Rule 14 provides
that the plaintiff or the sheriff is given a "reasonable time" to serve the summons to the
defendant in person, but no specific time frame is mentioned. "Reasonable time" is defined as
"so much time as is necessary under the circumstances for a reasonably prudent and diligent
man to do, conveniently, what the contract or duty requires that should be done, having a
regard for the rights and possibility of loss, if any[,] to the other party." 23 Under the Rules, the
service of summons has no set period. However, when the court, clerk of court, or the plaintiff
asks the sheriff to make the return of the summons and the latter submits the return of
summons, then the validity of the summons lapses. The plaintiff may then ask for an alias
summons if the service of summons has failed. 24 What then is a reasonable time for the sheriff
to effect a personal service in order to demonstrate impossibility of prompt service? To the
plaintiff, "reasonable time" means no more than seven (7) days since an expeditious processing
of a complaint is what a plaintiff wants. To the sheriff, "reasonable time" means 15 to 30 days
because at the end of the month, it is a practice for the branch clerk of court to require the sheriff
to submit a return of the summons assigned to the sheriff for service. The Sheriff's Return
provides data to the Clerk of Court, which the clerk uses in the Monthly Report of Cases to be
submitted to the Office of the Court Administrator within the first ten (10) days of the succeeding
month. Thus, one month from the issuance of summons can be considered "reasonable time"
with regard to personal service on the defendant.
Sheriffs are asked to discharge their duties on the service of summons with due care,
utmost diligence, and reasonable promptness and speed so as not to prejudice the expeditious
dispensation of justice. Thus, they are enjoined to try their best efforts to accomplish personal
service on defendant. On the other hand, since the defendant is expected to try to avoid and
evade service of summons, the sheriff must be resourceful, persevering, canny, and diligent in
serving the process on the defendant. For substituted service of summons to be available, there
must be several attempts by the sheriff to personally serve the summons within a reasonable
period [of one month] which eventually resulted in failure to prove impossibility of prompt
service. "Several attempts" means at least three (3) tries, preferably on at least two different
dates. In addition, the sheriff must cite why such efforts were unsuccessful. It is only then that
impossibility of service can be confirmed or accepted.
(2) Specific Details in the Return
The sheriff must describe in the Return of Summons the facts and circumstances
surrounding the attempted personal service. 25 The efforts made to find the defendant and the
reasons behind the failure must be clearly narrated in detail in the Return. The date and time of
the attempts on personal service, the inquiries made to locate the defendant, the name/s of the
occupants of the alleged residence or house of defendant and all other acts done, though futile,
to serve the summons on defendant must be specified in the Return to justify substituted
service. The form on Sheriff's Return of Summons on Substituted Service prescribed in the
Handbook for Sheriffs published by the Philippine Judicial Academy requires a narration of the
efforts made to find the defendant personally and the fact of failure. 26 Supreme Court
Administrative Circular No. 5 dated November 9, 1989 requires that "impossibility of prompt
service should be shown by stating the efforts made to find the defendant personally and the
failure of such efforts," which should be made in the proof of service. TIEHSA
(3) A Person of Suitable Age and Discretion
If the substituted service will be effected at defendant's house or residence, it should
be left with a person of "suitable age and discretion then residing therein." 27A person of
suitable age and discretion is one who has attained the age of full legal capacity (18 years old)
and is considered to have enough discernment to understand the importance of a summons.
"Discretion" is defined as "the ability to make decisions which represent a responsible choice
and for which an understanding of what is lawful, right or wise may be presupposed". 28 Thus,
to be of sufficient discretion, such person must know how to read and understand English to
comprehend the import of the summons, and fully realize the need to deliver the summons and
complaint to the defendant at the earliest possible time for the person to take appropriate action.
Thus, the person must have the "relation of confidence" to the defendant, ensuring that the
latter would receive or at least be notified of the receipt of the summons. The sheriff must
therefore determine if the person found in the alleged dwelling or residence of defendant is of
legal age, what the recipient's relationship with the defendant is, and whether said person
comprehends the significance of the receipt of the summons and his duty to immediately deliver
it to the defendant or at least notify the defendant of said receipt of summons. These matters
must be clearly and specifically described in the Return of Summons.
(4) A Competent Person in Charge
If the substituted service will be done at defendant's office or regular place of business,
then it should be served on a competent person in charge of the place. Thus, the person on
whom the substituted service will be made must be the one managing the office or business of
defendant, such as the president or manager; and such individual must have sufficient
knowledge to understand the obligation of the defendant in the summons, its importance, and
the prejudicial effects arising from inaction on the summons. Again, these details must be
contained in the Return.
Invalid Substituted Service in the Case at Bar
Let us examine the full text of the Sheriff's Return, which reads:
THIS IS TO CERTIFY that on many occasions several
attempts were made to serve the summons with complaint and annexes
issued by this Honorable Court in the above entitled case, personally upon
the defendant IMELDA 'IMEE' MARCOS-MANOTOC located
at Alexandra Condominium Corporation [sic] or Alexandra Homes
E-2 Room 104 No. 29 Meralco [sic] Ave., Pasig, Metro-Manila at
reasonable hours of the day but to no avail for the reason that said
defendant is usually out of her place and/or residence or premises. That on
the 15th day of July, 1993, substituted service of summons was resorted to
in accordance with the Rules of Courtin the Philippines leaving copy of
said summons with complaint and annexes thru [sic] (Mr) Macky de la
Cruz, caretaker of the said defendant, according to (Ms) Lyn Jacinto,
Receptionist and Telephone Operator of the said building, a person of
suitable age and discretion, living with the said defendant at the given
address who acknowledged the receipt thereof of said processes but he
refused to sign (emphases supplied).
WHEREFORE, said summons is hereby returned to this
Honorable Court of origin, duly served for its record and information.
Pasig, Metro-Manila July 15, 1993. 29
 A meticulous scrutiny of the aforementioned Return readily reveals the absence of
material data on the serious efforts to serve the Summons on petitioner Manotoc in person.
There is no clear valid reason cited in the Return why those efforts proved inadequate, to reach
the conclusion that personal service has become impossible or unattainable outside the
generally couched phrases of "on many occasions several attempts were made to serve the
summons . . . personally," "at reasonable hours during the day," and "to no avail for the reason
that the said defendant is usually out of her place and/or residence or premises." Wanting in
detailed information, the Return deviates from the ruling — in Domagas v. Jensen 30 and other
related cases 31 — that the pertinent facts and circumstances on the efforts exerted to serve
the summons personally must be narrated in the Return. It cannot be determined how many
times, on what specific dates, and at what hours of the day the attempts were made. Given the
fact that the substituted service of summons may be assailed, as in the present case, by a
Motion to Dismiss, it is imperative that the pertinent facts and circumstances surrounding the
service of summons be described with more particularity in the Return or Certificate of
Service. ESTCDA
Besides, apart from the allegation of petitioner's address in the Complaint, it has not
been shown that respondent Trajano or Sheriff Cañelas, who served such summons, exerted
extraordinary efforts to locate petitioner. Certainly, the second paragraph of the Complaint only
states that respondents were "informed, and so [they] allege" about the address and
whereabouts of petitioner. Before resorting to substituted service, a plaintiff must demonstrate
an effort in good faith to locate the defendant through more direct means. 32 More so, in the
case in hand, when the alleged petitioner's residence or house is doubtful or has not been
clearly ascertained, it would have been better for personal service to have been pursued
persistently.
In the case Umandap v. Sabio, Jr., 33 it may be true that the Court held that a Sheriff's
Return, which states that "despite efforts exerted to serve said process personally upon the
defendant on several occasions the same proved futile," conforms to the requirements of valid
substituted service. However, in view of the numerous claims of irregularities in substituted
service which have spawned the filing of a great number of unnecessary special civil actions
of certiorari and appeals to higher courts, resulting in prolonged litigation and wasteful legal
expenses, the Court rules in the case at bar that the narration of the efforts made to find the
defendant and the fact of failure written in broad and imprecise words will not suffice. The facts
and circumstances should be stated with more particularity and detail on the number of
attempts made at personal service, dates and times of the attempts, inquiries to locate
defendant, names of occupants of the alleged residence, and the reasons for failure should be
included in the Return to satisfactorily show the efforts undertaken. That such efforts were
made to personally serve summons on defendant, and those resulted in failure, would prove
impossibility of prompt personal service.
Moreover, to allow sheriffs to describe the facts and circumstances in inexact terms
would encourage routine performance of their precise duties relating to substituted service —
for it would be quite easy to shroud or conceal carelessness or laxity in such broad terms. Lastly,
considering that monies and properties worth millions may be lost by a defendant because of an
irregular or void substituted service, it is but only fair that the Sheriff's Return should clearly and
convincingly show the impracticability or hopelessness of personal service.
Granting that such a general description be considered adequate, there is still a
serious nonconformity from the requirement that the summons must be left with a "person of
suitable age and discretion" residing in defendant's house or residence. Thus, there are two (2)
requirements under the Rules: (1) recipient must be a person of suitable age and discretion;
and (2) recipient must reside in the house or residence of defendant. Both requirements were
not met. In this case, the Sheriff's Return lacks information as to residence, age, and discretion
of Mr. Macky de la Cruz, aside from the sheriff's general assertion that de la Cruz is the
"resident caretaker" of petitioner as pointed out by a certain Ms. Lyn Jacinto, alleged
receptionist and telephone operator of Alexandra Homes. It is doubtful if Mr. de la Cruz is
residing with petitioner Manotoc in the condominium unit considering that a married woman of
her stature in society would unlikely hire a male caretaker to reside in her dwelling. With the
petitioner's allegation that Macky de la Cruz is not her employee, servant, or representative, it is
necessary to have additional information in the Return of Summons. Besides, Mr. Macky de la
Cruz's refusal to sign the Receipt for the summons is a strong indication that he did not have the
necessary "relation of confidence" with petitioner. To protect petitioner's right to due process by
being accorded proper notice of a case against her, the substituted service of summons must
be shown to clearly comply with the rules.
It has been stated and restated that substituted service of summons must faithfully
and strictly comply with the prescribed requirements and in the circumstances authorized by the
rules. 34
Even American case law likewise stresses the principle of strict compliance with
statute or rule on substituted service, thus:
The procedure prescribed by a statute or rule for substituted or
constructive service must be strictly pursued. 35 There must be strict
compliance with the requirements of statutes authorizing substituted or
constructive service. 36
Where, by the local law, substituted or constructive service is in
certain situations authorized in the place of personal service when the
latter is inconvenient or impossible, a strict and literal compliance with the
provisions of the law must be shown in order to support the judgment
based on such substituted or constructive service. 37 Jurisdiction is not to
be assumed and exercised on the general ground that the subject matter
of the suit is within the power of the court. The inquiry must be as to
whether the requisites of the statute have been complied with, and such
compliance must appear on the record. 38 The fact that the defendant had
actual knowledge of attempted service does not render the service
effectual if in fact the process was not served in accordance with the
requirements of the statute. 39
 Based on the above principles, respondent Trajano failed to demonstrate that there
was strict compliance with the requirements of the then Section 8, Rule 14 (now Section 7, Rule
14 of the 1997 Rules of Civil Procedure). cSCTEH

Due to non-compliance with the prerequisites for valid substituted service, the
proceedings held before the trial court perforce must be annulled.

The court a quo heavily relied on the presumption of regularity in the performance of
official duty. It reasons out that "[t]he certificate of service by the proper officer is prima
facie evidence of the facts set out herein, and to overcome the presumption arising from said
certificate, the evidence must be clear and convincing." 40

The Court acknowledges that this ruling is still a valid doctrine. However, for the
presumption to apply, the Sheriff's Return must show that serious efforts or attempts were
exerted to personally serve the summons and that said efforts failed. These facts must be
specifically narrated in the Return. To reiterate, it must clearly show that the substituted service
must be made on a person of suitable age and discretion living in the dwelling or residence of
defendant. Otherwise, the Return is flawed and the presumption cannot be availed of. As
previously explained, the Return of Sheriff Cañelas did not comply with the stringent
requirements of Rule 14, Section 8 on substituted service.

In the case of Venturanza v. Court of Appeals, 41 it was held that ". . .

the presumption of regularity in the performance of official functions by the sheriff is not
applicable in this case where it is patent that the sheriff's return is defective (emphasis
supplied)." While the Sheriff's Return in the Venturanza case had no statement on the effort or
attempt to personally serve the summons, the Return of Sheriff Cañelas in the case at bar
merely described the efforts or attempts in general terms lacking in details as required by the
ruling in the case of Domagas v. Jensen and other cases. It is as if Cañelas' Return did not
mention any effort to accomplish personal service. Thus, the substituted service is void.

On the issue whether petitioner Manotoc is a resident of Alexandra Homes, Unit

E-2104, at No. 29 Meralco Avenue, Pasig City, our findings that the substituted service is void
has rendered the matter moot and academic. Even assuming that Alexandra Homes Room 104
is her actual residence, such fact would not make an irregular and void substituted service valid
and effective.

IN VIEW OF THE FOREGOING, this Petition for Review is hereby GRANTED and the
assailed March 17, 1997 Decision and October 8, 1997 Resolution of the Court of Appeals and
the October 11, 1994 and December 21, 1994 Orders of the Regional Trial Court, National
Capital Judicial Region, Pasig City, Branch 163 are hereby REVERSED and SET ASIDE. No
costs. EHSITc

SO ORDERED.

||| (Manotoc v. Court of Appeals, G.R. No. 130974, [August 16, 2006], 530 PHIL 454-477)
 SECOND DIVISION
[G.R. No. 168723. July 9, 2008.]
DOLE PHILIPPINES, INC. (TROPIFRESH DIVISION), petitioner, vs.
HON. REINATO G. QUILALA in his capacity as pairing judge of
Branch 150, RTC-Makati City, and ALL SEASON FARM,
CORP., respondents.
DECISION
QUISUMBING, J p:
This petition for review assails the Decision 1 dated May 20, 2005 of the Court of
Appeals in CA-G.R. SP No. 87723 and its Resolution 2 dated June 28, 2005, denying the
motion for reconsideration. The appellate court had affirmed the Order 3 dated February 6,
2004 of the Regional Trial Court (RTC) of Makati City, Branch 150, in Civil Case No.
03-093 and its Order 4 dated September 16, 2004 denying the motion for partial
reconsideration. acCETD
The factual antecedents of this case are as follows.
In a complaint filed with the RTC of Makati City, presided over by Pairing Judge
Reinato Quilala, private respondent All Season Farm Corporation ("All Season") sought
the recovery of a sum of money, accounting and damages from petitioner Dole Philippines,
Inc. (Tropifresh Division) ("Dole") and several of its officers. According to Dole, an alias
summons was served upon it through a certain Marifa Dela Cruz, a legal assistant
employed by Dole Pacific General Services, Ltd., which is an entity separate from
Dole. ADcSHC
On May 20, 2003, Dole filed a motion to dismiss the complaint on the following
grounds: (a) the RTC lacked jurisdiction over the person of Dole due to improper service of
summons; (b) the complaint failed to state a cause of action; (c) All Season was not the real
party in interest; and (d) the officers of Dole cannot be sued in their personal capacities for
alleged acts performed in their official capacities as corporate officers of Dole. 5 In its
Order dated February 6, 2004, the RTC denied said motion. Dole moved for partial
reconsideration raising the same issues but its motion was denied.
Thereafter, Dole filed a petition for certiorari with the Court of Appeals contending
that the alias summons was not properly served. The appellate court, however, ruled
otherwise. It reasoned that Dole's president had known of the service of the alias summons
although he did not personally receive and sign it. It also held that in today's corporate
setup, documents addressed to corporate officers are received in their behalf by their
staff. 6 Dole sought reconsideration, but its motion was likewise denied.
Hence, this petition where petitioner raises the lone issue:
WHETHER OR NOT THE COURT OF APPEALS COMMITTED AN
ERROR OF LAW WHEN IT ALLOWED SUBSTITUTED SERVICE ON A
PRIVATE CORPORATION WHEN IT HELD THAT DOLE WAS VALIDLY
SERVED WITH SUMMONS IN SPITE OF THE FACT THAT SUMMONS
WAS NOT SERVED ON ITS PRESIDENT, MANAGING PARTNER,
GENERAL MANAGER, CORPORATE SECRETARY, TREASURER OR
IN-HOUSE COUNSEL THEREBY IGNORING THE RULE ON SERVICE
OF SUMMONS ON PRIVATE DOMESTIC CORPORATIONS. 7 cTCEIS
Simply stated, the issue in this case is whether there was a valid service of
summons on petitioner for the trial court to acquire jurisdiction over the person of the
corporate defendant below, now the petitioner herein.
Petitioner contends that for the court to validly acquire jurisdiction over a domestic
corporation, summons must be served only on the corporate officers enumerated in
Section 11, 8 Rule 14 of the 1997 Rules of Civil Procedure. Petitioner maintains that the
alias summons was not validly served on it since the alias summons was served on Marifa
Dela Cruz, an employee of Dole Pacific General Services, Ltd., which is an entity separate
and distinct from petitioner. It further avers that even if she were an employee of the
petitioner, she is not one of the officers enumerated under Section 11, Rule 14. Thus, the
RTC, without proper service of summons, lacks jurisdiction over petitioner as defendant
below. IDATCE
Private respondent All Season, for its part, contends that the trial court had
acquired jurisdiction over petitioner, since petitioner received the alias summons through
its president on April 23, 2003. According to private respondent, there was full compliance
with Section 11, Rule 14, when Marifa Dela Cruz received the summons upon instruction of
petitioner's president as indicated in the Officer's Return. 9 More so, petitioner had
admitted that it received the alias summons in its Entry of Appearance with Motion for
Time 10 filed on May 5, 2003.
Well-settled is the rule that service of summons on a domestic corporation is
restricted, limited and exclusive to the persons enumerated in Section 11, Rule 14 of the
1997 Rules of Civil Procedure, following the rule in statutory construction that expressio
unios est exclusio alterius. 11 Service must therefore be made on the president, managing
partner, general manager, corporate secretary, treasurer, or in-house counsel. IcAaEH
In this case, it appears that on April 23, 2003, Marifa Dela Cruz, a legal assistant,
received the alias summons. 12 Contrary to private respondent's claim that it was received
upon instruction of the president of the corporation as indicated in the Officer's Return,
such fact does not appear in the receiving copy of the alias summons which Marifa Dela
Cruz signed. There was no evidence that she was authorized to receive court processes in
behalf of the president. Considering that the service of summons was made on a legal
assistant, not employed by herein petitioner and who is not one of the designated persons
under Section 11, Rule 14, the trial court did not validly acquire jurisdiction over petitioner.
 However, under Section 20 of the same Rule, a defendant's voluntary
appearance in the action is equivalent to service of summons. 13 As held previously by this
Court, the filing of motions seeking affirmative relief, such as, to admit answer, for
additional time to file answer, for reconsideration of a default judgment, and to lift order of
default with motion for reconsideration, are considered voluntary submission to the
jurisdiction of the court. 14 aTAEHc
Note that on May 5, 2003, petitioner filed an Entry of Appearance with Motion for
Time. It was not a conditional appearance entered to question the regularity of the service
of summons, but an appearance submitting to the jurisdiction of the court by
acknowledging the receipt of the alias summons and praying for additional time to file
responsive pleading. 15 Consequently, petitioner having acknowledged the receipt of the
summons and also having invoked the jurisdiction of the RTC to secure affirmative relief in
its motion for additional time, petitioner effectively submitted voluntarily to the jurisdiction of
the RTC. It is estopped now from asserting otherwise, even before this Court. 16 The RTC
therefore properly took cognizance of the case against Dole Philippines, Inc., and we agree
that the trial and the appellate courts committed no error of law when Dole's contentions
were overruled.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated May
20, 2005 of the Court of Appeals in CA-G.R. SP No. 87723 and its Resolution dated June
28, 2005 are AFFIRMED. Costs against petitioner.
SO ORDERED.
||| (Dole Philippines, Inc. v. Quilala, G.R. No. 168723, [July 9, 2008], 579 PHIL 700-706)
 FIRST DIVISION
[G.R. No. 170943. September 23, 2008.]
PEDRO T. SANTOS, JR., petitioner, vs. PNOC EXPLORATION
CORPORATION, respondent.
DECISION
CORONA, J p:
This is a petition for review 1 of the September 22, 2005 decision 2 and
December 29, 2005 resolution 3 of the Court of Appeals in CA-G.R. SP No.
82482. HDCTAc
On December 23, 2002, respondent PNOC Exploration Corporation filed a
complaint for a sum of money against petitioner Pedro T. Santos, Jr. in the Regional Trial
Court of Pasig City, Branch 167. The complaint, docketed as Civil Case No. 69262, sought
to collect the amount of P698,502.10 representing petitioner's unpaid balance of the car
loan 4 advanced to him by respondent when he was still a member of its board of directors.
Personal service of summons to petitioner failed because he could not be located
in his last known address despite earnest efforts to do so. Subsequently, on respondent's
motion, the trial court allowed service of summons by publication.
Respondent caused the publication of the summons in Remate, a newspaper of
general circulation in the Philippines, on May 20, 2003. Thereafter, respondent submitted
the affidavit of publication of the advertising manager of Remate 5 and an affidavit of
service of respondent's employee 6 to the effect that he sent a copy of the summons by
registered mail to petitioner's last known address.
When petitioner failed to file his answer within the prescribed period, respondent
moved that the case be set for the reception of its evidence ex parte. The trial court granted
the motion in an order dated September 11, 2003.
Respondent proceeded with the ex parte presentation and formal offer of its
evidence. Thereafter, the case was deemed submitted for decision on October 15, 2003.
On October 28, 2003, petitioner filed an "Omnibus Motion for Reconsideration
and to Admit Attached Answer". He sought reconsideration of the September 11, 2003
order, alleging that the affidavit of service submitted by respondent failed to comply with
Section 19, Rule 14 of the Rules of Court as it was not executed by the clerk of court. He
also claimed that he was denied due process as he was not notified of the September 11,
2003 order. He prayed that respondent's evidence ex parte be stricken off the records and
that his answer be admitted.
Respondent naturally opposed the motion. It insisted that it complied with the
rules on service by publication. Moreover, pursuant to the September 11, 2003 order,
petitioner was already deemed in default for failure to file an answer within the prescribed
period.
In an order dated February 6, 2004, the trial court denied petitioner's motion for
reconsideration of the September 11, 2003 order. It held that the rules did not require the
affidavit of complementary service by registered mail to be executed by the clerk of court. It
also ruled that due process was observed as a copy of the September 11, 2003 order was
actually mailed to petitioner at his last known address. It also denied the motion to admit
petitioner's answer because the same was filed way beyond the reglementary period.
Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004
orders of the trial court in the Court of Appeals via a petition for certiorari. He contended
that the orders were issued with grave abuse of discretion. He imputed the following errors
to the trial court: taking cognizance of the case despite lack of jurisdiction due to improper
service of summons; failing to furnish him with copies of its orders and processes,
particularly the September 11, 2003 order, and upholding technicality over equity and
justice.
During the pendency of the petition in the Court of Appeals, the trial court
rendered its decision in Civil Case No. 69262. It ordered petitioner to pay P698,502.10 plus
legal interest and costs of suit. 7
Meanwhile, on September 22, 2005, the Court of Appeals rendered its
decision 8 sustaining the September 11, 2003 and February 6, 2004 orders of the trial
court and dismissing the petition. It denied reconsideration. 9 Thus, this petition.
Petitioner essentially reiterates the grounds he raised in the Court of Appeals,
namely, lack of jurisdiction over his person due to improper service of summons, failure of
the trial court to furnish him with copies of its orders and processes including the
September 11, 2003 order and preference for technicality rather than justice and equity. In
particular, he claims that the rule on service by publication under Section 14, Rule 14 of the
Rules of Court applies only to actions in rem, not actions in personam like a complaint for a
sum of money. He also contends that the affidavit of service of a copy of the summons
should have been prepared by the clerk of court, not respondent's messenger.
The petition lacks merit.
PROPRIETY OF
SERVICE BY PUBLICATION
Section 14, Rule 14 (on Summons) of the Rules of Court provides:
SEC. 14. Service upon defendant whose identity or
whereabouts are unknown. — In any action where the defendant is
designated as an unknown owner, or the like, or whenever his
whereabouts are unknown and cannot be ascertained by diligent
 inquiry, service may, by leave of court, be effected upon him by
publication in a newspaper of general circulation and in such places
and for such times as the court may order. (emphasis supplied) STcEIC
Since petitioner could not be personally served with summons despite diligent
efforts to locate his whereabouts, respondent sought and was granted leave of court to
effect service of summons upon him by publication in a newspaper of general circulation.
Thus, petitioner was properly served with summons by publication.
Petitioner invokes the distinction between an action in rem and an action in
personam and claims that substituted service may be availed of only in an action in rem.
Petitioner is wrong. The in rem/in personam distinction was significant under the old rule
because it was silent as to the kind of action to which the rule was applicable. 10 Because
of this silence, the Court limited the application of the old rule to in rem actions only. 11
This has been changed. The present rule expressly states that it applies "[i]n any
action where the defendant is designated as an unknown owner, or the like, or whenever
his whereabouts are unknown and cannot be ascertained by diligent inquiry." Thus, it now
applies to any action, whether in personam, in rem or quasi in rem. 12
Regarding the matter of the affidavit of service, the relevant portion of Section
19, 13 Rule 14 of the Rules of Court simply speaks of the following:
. . . an affidavit showing the deposit of a copy of the summons
and order for publication in the post office, postage prepaid, directed to
the defendant by registered mail to his last known address.
Service of summons by publication is proved by the affidavit of the printer, his
foreman or principal clerk, or of the editor, business or advertising manager of the
newspaper which published the summons. The service of summons by publication is
complemented by service of summons by registered mail to the defendant's last known
address. This complementary service is evidenced by an affidavit "showing the deposit of a
copy of the summons and order for publication in the post office, postage prepaid, directed
to the defendant by registered mail to his last known address."
The rules, however, do not require that the affidavit of complementary service be
executed by the clerk of court. While the trial court ordinarily does the mailing of copies of
its orders and processes, the duty to make the complementary service by registered mail is
imposed on the party who resorts to service by publication.
Moreover, even assuming that the service of summons was defective, the trial
court acquired jurisdiction over the person of petitioner by his own voluntary
appearance in the action against him. In this connection, Section 20, Rule 14 of the
Rules of Court states:
SEC. 20. Voluntary appearance. — The defendant's
voluntary appearance in the action shall be equivalent to service of
summons. The inclusion in a motion to dismiss of other grounds aside
from lack of jurisdiction over the person of the defendant shall not be
deemed a voluntary appearance. (emphasis supplied)
Petitioner voluntarily appeared in the action when he filed the "Omnibus Motion
for Reconsideration and to Admit Attached Answer". 14 This was equivalent to service of
summons and vested the trial court with jurisdiction over the person of petitioner.
ENTITLEMENT TO
NOTICE OF PROCEEDINGS
The trial court allowed respondent to present its evidence ex parte on account of
petitioner's failure to file his answer within the prescribed period. Petitioner assails this
action on the part of the trial court as well as the said court's failure to furnish him with
copies of orders and processes issued in the course of the proceedings.
The effects of a defendant's failure to file an answer within the time allowed
therefor are governed by Sections 3 and 4, Rule 9 (on Effect of Failure to Plead) of the
Rules of Court:
SEC. 3. Default; declaration of. — If the defending party fails
to answer within the time allowed therefor, the court shall, upon
motion of the claiming party with notice to the defending party, and
proof of such failure, declare the defending party in
default. Thereupon, the court shall proceed to render judgment granting
the claimant such relief as his pleading may warrant, unless the court in
its discretion requires the claimant to submit evidence. Such reception of
evidence may be delegated to the clerk of court.
SEC. 4. Effect of order of default. — A party in default shall
be entitled to notice of subsequent proceedings but not to take part
in the trial. (emphasis supplied)
If the defendant fails to file his answer on time, he may be declared in default upon
motion of the plaintiff with notice to the said defendant. In case he is declared in default, the
court shall proceed to render judgment granting the plaintiff such relief as his pleading may
warrant, unless the court in its discretion requires the plaintiff to submit evidence. The
defaulting defendant may not take part in the trial but shall be entitled to notice of
subsequent proceedings.
In this case, even petitioner himself does not dispute that he failed to file his
answer on time. That was in fact why he had to file an "Omnibus Motion for
Reconsideration and to Admit Attached Answer". But respondent moved only for the ex
parte presentation of evidence, not for the declaration of petitioner in default. In its
February 6, 2004 order, the trial court stated: ADSTCa
The disputed Order of September 11, 2003 allowing the
presentation of evidence ex-parte precisely ordered that "despite and
notwithstanding service of summons by publication, no answer has been
filed with the Court within the required period and/or
forthcoming.["] Effectively[,] that was a finding that the defendant
[that is, herein petitioner] was in default for failure to file an answer
or any responsive pleading within the period fixed in the publication
as precisely the defendant [could not] be found and for which reason,
 service of summons by publication was ordered. It is simply illogical to ||| (Santos, Jr. v. PNOC Exploration Corp. , G.R. No. 170943, [September 23, 2008], 587 PHIL
notify the defendant of the Order of September 11, 2003 simply on 713-724)
account of the reality that he was no longer residing and/or found on his
last known address and his whereabouts unknown — thus the
publication of the summons. In other words, it was reasonable to expect
that the defendant will not receive any notice or order in his last known
address. Hence, [it was] impractical to send any notice or order to
him. Nonetheless, the record[s] will bear out that a copy of the
order of September 11, 2003 was mailed to the defendant at his last
known address but it was not claimed. (emphasis supplied)
As is readily apparent, the September 11, 2003 order did not limit itself to
permitting respondent to present its evidence ex parte but in effect issued an order of
default. But the trial court could not validly do that as an order of default can be made only
upon motion of the claiming party. 15 Since no motion to declare petitioner in default was
filed, no default order should have been issued.
To pursue the matter to its logical conclusion, if a party declared in default is
entitled to notice of subsequent proceedings, all the more should a party who has not been
declared in default be entitled to such notice. But what happens if the residence or
whereabouts of the defending party is not known or he cannot be located? In such a case,
there is obviously no way notice can be sent to him and the notice requirement cannot
apply to him. The law does not require that the impossible be done. 16 Nemo tenetur ad
impossibile. The law obliges no one to perform an impossibility. 17 Laws and rules must be
interpreted in a way that they are in accordance with logic, common sense, reason and
practicality. 18
Hence, even if petitioner was not validly declared in default, he could not
reasonably demand that copies of orders and processes be furnished him. Be that as it
may, a copy of the September 11, 2003 order was nonetheless still mailed to petitioner at
his last known address but it was unclaimed.
CORRECTNESS OF
NON-ADMISSION OF ANSWER
Petitioner failed to file his answer within the required period. Indeed, he would not
have moved for the admission of his answer had he filed it on time. Considering that the
answer was belatedly filed, the trial court did not abuse its discretion in denying its
admission.
Petitioner's plea for equity must fail in the face of the clear and express language
of the rules of procedure and of the September 11, 2003 order regarding the period for
filing the answer. Equity is available only in the absence of law, not as its
replacement. 19 Equity may be applied only in the absence of rules of procedure, never in
contravention thereof.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
SO ORDERED.
 EN BANC
[G.R. No. 213525. November 21, 2017.]
FORTUNE LIFE INSURANCE COMPANY,
INC., petitioner, vs. COMMISSION ON AUDIT (COA)
PROPER; COA REGIONAL OFFICE NO. VI-WESTERN
VISAYAS; AUDIT GROUP LGS-B, PROVINCE OF ANTIQUE; and
PROVINCIAL GOVERNMENT OF ANTIQUE, respondents.
RESOLUTION
BERSAMIN, J p:
A party and its counsel who make offensive and disrespectful statements in their
motion for reconsideration may be properly sanctioned for indirect contempt of court.
We hereby resolve the following submissions of the petitioner, namely: (a) Joint
Explanation; 1 (b) Manifestation with Motion for Leave to File Second Motion for
Reconsideration; 2 and (c) Second Motion for Reconsideration. 3
To recall the antecedents, the Court issued a resolution on January 27, 2015
denying the petitioner's Motion for Reconsideration 4 on the following grounds, namely: (a)
failure to comply with the rule on proof of service; (b) late filing; (c) failure to file a verified
declaration under the Efficient Use of Paper Rule; and (d) failure to prove grave abuse of
discretion on the part of respondent Commission on Audit (COA).
In the same resolution, however, the Court required the petitioner and its counsel,
Atty. Eduardo S. Fortaleza, to show cause why they should not be punished for indirect
contempt of court for using in the petitioner's Motion for Reconsideration dated October 1,
2014 harsh and disrespectful language towards the Court; and further required Atty.
Fortaleza to explain why he should not be disbarred, disposing thusly:
WHEREFORE, the Court DENIES the Motion for
Reconsideration for its lack of merit; ORDERS the petitioner and its
counsel, Atty. Eduardo S. Fortaleza, to show cause in writing within ten
(10) days from notice why they should not be punished for indirect
contempt of court; and FURTHER DIRECTS Atty. Fortaleza to show
cause in the same period why he should not be disbarred.
SO ORDERED. 5
In the Joint Explanation dated March 9, 2015, the petitioner and Atty. Fortaleza,
both now represented by former Senate President Aquilino Q. Pimentel, Jr., have
apologized for the statements made in the Motion for Reconsideration, but have stated
nonetheless that they had been constrained to attach cut print-outs of registry receipt
numbers because the Makati City Central Post Office (MCPO) stopped issuing registry
receipts and had adopted an electronic system instead; 6 that they thought that the Court,
in mentioning proof of service, had been referring to the non-submission of the affidavit of
service; 7 that Atty. Fortaleza had been only lacking in finesse in the formulation of his
submissions; that the petitioner honestly believed that it had faithfully complied with the
requirements of the Rules of Court on the service of pleadings; 8 and that because of time
constraints Atty. Fortaleza had not been able to sufficiently go over the Motion for
Reconsideration. 9
Atty. Fortaleza has prayed that he be spared from disbarment, stressing his not
being some wayward member of the Integrated Bar of the Philippines (IBP), but had in fact
served the IBP by handling pro bono cases in his home province of Antique. 10
Additionally, the petitioner has filed its so-called Manifestation with Motion for
Leave to file Second Motion for Reconsideration, attaching therewith its Second Motion for
Reconsideration. It has contended in the Second Motion for Reconsideration that the final
order referred to in Neypes v. Court of Appeals 11 applied to the 30-day period mentioned
in Section 3, Rule 64 of the Rules of Court as to make such period be reckoned from notice
of the denial by the COA of its Motion for Reconsideration; and that the reckoning of the
30-day period ought to be from July 14, 2014, the date when it received the denial by
the COA of its Motion for Reconsideration. 12
On the substantive issue, the petitioner has maintained that whether or not
the Local Government Code (LGC) allowed provincial governments to provide group
insurance for barangay officials was a question of law; that the interpretation of Atty.
Pimentel as the Senator who had authored the LGC had been unjustly ignored by
the COA; 13 and that the COA had consequently gravely abused its discretion in
interpreting the LGC during the pre-audit. 14
The petitioner has further maintained that it had complied with the requirement of
publication under the Government Procurement Act; that it did not furnish the proof of
publication of the notice to bid to the COA because the term bidding
documents in Republic Act No. 9184 did not include the proof of publication; 15 that the
insurance program had been a laudable initiative of former Gov. Salvacion Zaldivar Perez
that had been stopped by Auditor Yolanda TM Veñegas, a known ally of Gov. Exequiel B.
Javier, the successor of Gov. Zaldivar; and that the Province of Negros Occidental had
been implementing the same insurance program without any issue. 16
In its comment, 17 the COA, through the Office of the Solicitor General (OSG),
has countered that the Second Motion for Reconsideration, being a prohibited motion,
should be denied; 18 that the Fresh Period Rule enunciated in Neypes did not apply to
petitions for certiorari filed under Rule 64 of the Rules of Court; 19 that the petitioner's
interpretation of the term final order would contradict and render meaningless the last
sentence of Section 3 of Rule 64; 20 that the distance between the petitioner's Makati
office and its counsel's office in the Province of Antique was not sufficient to excuse the
belated filing of the petition for certiorari; 21 that the petitioner did not submit proof of
service of its petition for certiorari and the verified declaration required by the Efficient Use
of Paper Rule; 22 that the supposed adoption by the MCPO of an electronic system in the
processing of mail matter did not inspire belief because the explanation came from the
petitioner's own staff who did not have personal knowledge of the supposed adoption of the
new system of the MCPO; 23 that the Court affirmed the grounds cited by the COA for
disallowing the money claim; 24 that the unchallenged giving of insurance coverage by the
Provincial Government of Negros Occidental did not validate the petitioner's claim because
a violation of law could not be excused by any practice to the contrary; 25 and that the
petitioner should have presented the question of publication to the COA when it sought the
reconsideration. 26
Ruling of the Court
IPetitioner and Atty. Fortaleza were
guilty of indirect contempt of court
The concept and objective of the power to punish contempt of court have been
expounded in Lorenzo Shipping Corporation v. Distribution Management Association of
the Philippines, 27 viz.:
Contempt of court has been defined as a willful disregard or
disobedience of a public authority. In its broad sense, contempt is a
disregard of, or disobedience to, the rules or orders of a legislative or
judicial body or an interruption of its proceedings by disorderly behavior
or insolent language in its presence or so near thereto as to disturb its
proceedings or to impair the respect due to such a body. In its restricted
and more usual sense, contempt comprehends a despising of the
authority, justice, or dignity of a court. The phrase contempt of court is
generic, embracing within its legal signification a variety of different acts.
The power to punish for contempt is inherent in all courts,
and need not be specifically granted by statute. It lies at the core of
the administration of a judicial system. Indeed, there ought to be
no question that courts have the power by virtue of their very
creation to impose silence, respect, and decorum in their presence,
submission to their lawful mandates, and to preserve themselves
and their officers from the approach and insults of pollution. The
power to punish for contempt essentially exists for the
preservation of order in judicial proceedings and for the
enforcement of judgments, orders, and mandates of the courts,
and, consequently, for the due administration of justice. The
reason behind the power to punish for contempt is that respect of
the courts guarantees the stability of their institution; without such
guarantee, the institution of the courts would be resting on a very
shaky foundation. 28 (Bold underscoring supplied for emphasis)
Bearing the foregoing exposition in mind, the Court felt impelled to require the
petitioner and Atty. Fortaleza to show cause why they should not be punished for contempt
of court for the offensive and disrespectful statements contained in their Motion for
Reconsideration dated October 1, 2014, 29 to wit:
xxx xxx xxx
24. Second, with regard to the PROOF OF SERVICE required
under Section 2(c), Rule 56 in relation to Section 13, 1997 Rules of Civil
Procedures, as amended,even a perfunctory scrutiny of the present
PETITION and its annexes would have yielded the observation that the
last document attached to the PETITION is the AFFIDAVIT OF
SERVICE dated August 12, 2014, by Marcelino T. Pascua, Jr., x x x in
compliance with Sections 5, 6, 7, 8, 11, & 13, RULE 13 of the 1997
REVISED RULES OF CIVIL PROCEDURE. A copy of the AFFIDAVIT
OF SERVICE is attached hereto as ANNEX "B," and made an integral
part hereof;
25. Apparently, the staff of the Justice-in-charge failed to
verify the PETITION and its annexes up to its last page, thus, the
erroneous finding that there were non-submission of the proof of
service;
26. In turn, the same omission was hoisted upon the other
members of this Honorable Court who took the observation from
the office of the Justice-in-charge, to be the obtaining fact, when in
truth and in fact, it is not;
27. There is therefore need for this Honorable Court to rectify
its foregoing finding; 30 (Bold underscoring supplied for emphasis)
xxx xxx xxx
The Court subsequently observed in the resolution promulgated on January 27,
2015 as follows:
The petitioner and its counsel thereby exhibited their plain
inability to accept the ill consequences of their own shortcomings, and
instead showed an unabashed propensity to readily lay blame on others
like the Court and its Members. In doing so, they employed harsh and
disrespectful language that accused the Court and its Members of
ignorance and recklessness in the performance of their function of
adjudication.
We do not tolerate such harsh and disrespectful language
being uttered against the Court and its Members. We consider the
accusatory language particularly offensive because it was
unfounded and undeserved. As this resolution earlier clarifies, the
 petition for certiorari did not contain a proper affidavit of service.
We do not need to rehash the clarification. Had the petitioner and
its counsel been humbler to accept their self-inflicted situation and
more contrite, they would have desisted from their harshness and
disrespect towards the Court and its Members. Although we are
not beyond error, we assure the petitioner and its counsel that our
resolutions and determinations are arrived at or reached with
much care and caution, aware that the lives, properties and rights
of the litigants are always at stake. If there be errors, they would be
unintended, and would be the result of human oversight. But in
this instance the Court and its Members committed no error. The
petition bore only cut reproductions of the supposed registry
receipts, which even a mere "perfunctory scrutiny" would not pass
as the original registry receipts required by the Rules of
Court. 31 (Bold underscoring supplied for emphasis)
Although the petitioner and Atty. Fortaleza are now apologizing for their offensive
and disrespectful statements, they insist nonetheless that the statements arose from their
honest belief of having complied with the rule on proof of service. They also attribute their
procedural error to the supposed adoption by the MCPO of an electronic system in the
processing of mail matter.
The Court finds and declares the petitioner and Atty. Fortaleza guilty of indirect
contempt of court.
The administration of justice is an important function of the State. It is
indispensable to the maintenance of order in the Society. It is a duty lodged in this Court,
and in all inferior courts. For the Court and all other courts of the land to be able to
administer and dispense evenhanded justice, they should be free from harassment and
disrespect.
The statements of the petitioner and Atty. Fortaleza unquestionably tended to
attribute gross inefficiency and negligence to the Court and its staff. It is worse because the
statements were uncalled for and unfounded. As such, the statements should be quickly
deterred and gravely sanctioned for actually harming and degrading the administration of
justice by the Court itself. 32 The wrong the statements wrought on the reputation and
prestige of the Court and its operating staff must by all means be vindicated, and even
undone if that was at all possible.
Moreover, we cannot but view and consider the attempt to shift the blame to the
postal system as the manifestation of the unwillingness of the petitioner and Atty. Fortaleza
to take personal responsibility for their harsh and disrespectful statements. We must reject
the attempt, firstly, because it reflected their lack of remorse for a grave contempt of court
they committed, and, secondly, because their shifting of blame was not even proved
reliably. It appears, indeed, that they were content on relying solely on the self-serving
affidavit of a member of the petitioner's own staff who could not at least profess having the
personal knowledge about the change in the system by MCPO. 33
The courts have inherent power to impose a penalty for contempt that is
reasonably commensurate with the gravity of the offense. The degree of punishment lies
within the sound discretion of the courts. 34 Ever mindful that the inherent power of
contempt should be exercised on the preservative, not on the vindictive, principle, 35 and
that the penalty should be meted according to the corrective, not the retaliatory, idea of
punishment, 36 the Court must justly sanction the contempt of court committed by the
petitioner and its counsel. Under Section 7, Rule 71 of the Rules of Court, the penalty of
fine not exceeding P30,000.00, or imprisonment not exceeding six months, or both fine and
imprisonment, may be meted as punishment for contemptuous conduct committed against
a Regional Trial Court or a court of equivalent or higher rank. Upon considering all the
circumstances, the Court imposes a fine of P15,000.00 on the petitioner and Atty.
Fortaleza.
IISecond Motion for Reconsideration,being a prohibited motion, is denied
Section 2, Rule 52 of the Rules of Court prohibits a second motion for
reconsideration by the same party. Section 3, Rule 15 of the Internal Rules of the Supreme
Court echoes the prohibition, providing thusly:
Section 3. Second motion for reconsideration. — The Court
shall not entertain a second motion for reconsideration, and any
exception to this rule can only be granted in the higher interest of justice
by the Court en banc upon a vote of at least two-thirds of its actual
membership. There is reconsideration "in the higher interest of justice"
when the assailed decision is not only legally erroneous, but is likewise
patently unjust and potentially capable of causing unwarranted and
irremediable injury or damage to the parties. A second motion for
reconsideration can only be entertained before the ruling sought to be
reconsidered becomes final by operation of law or by the Court's
declaration.
In the Division, a vote of three Members shall be required to
elevate a second motion for reconsideration to the Court En Banc.
A second motion for reconsideration, albeit prohibited, may be entertained in the
higher interest of justice, such as when the assailed decision is not only legally erroneous
but also patently unjust and potentially capable of causing unwarranted and irremediable
injury or damage to the moving party.
The showing of exceptional merit to justify the acceptance of the
petitioner's Second Motion for Reconsideration was not made herein. Hence, we deny
theSecond Motion for Reconsideration.
For sure, the petitioner's non-compliance with the rule on proof of service and the
petitioner's unjustified reliance on the Fresh Period Rule as the basis to extend the period
for filing of the special civil actions for certiorari under Rule 64 of the Rules of Court were
already enough ground to dismiss the petition forcertiorari. We need not remind that
 the Fresh Period Rule applies only to appeals in civil and criminal cases, and in special
proceedings filed under Rule 40, Rule 41, Rule 42, Rule 43, Rule 45, 37 and Rule 122. 38
Hence, liberality could not be extended to the petitioner. According to Ginete v.
Court of Appeals, 39 only matters of life, liberty, honor or property may warrant the
suspension of the rules of the most mandatory character. That is not the situation of the
petitioner herein. It is also true that other justifications may be considered, like: (1) the
existence of special or compelling circumstances; (2) the merits of the case; (3) a cause
not entirely attributable to the fault or negligence of the party favored by the suspension of
the rules; (4) a lack of any showing that the review sought is merely frivolous and dilatory;
and (5) the other party will not be unjustly prejudiced thereby. 40 But, again, the petitioner
has not shown the attendance of any of such justifications for excepting its petition
for certiorari from the stricture of timeliness of filing.
As earlier pointed out, the petition for certiorari was dismissed upon reasonable
but still formidable grounds, namely: (a) noncompliance with the rule on proof of service; (b)
noncompliance with the Efficient Use of Paper Rule; and (c) failure to establish the grave
abuse of discretion committed by the COA. The plea for liberality was really unworthy of
favorable consideration.
ACCORDINGLY, the Court:
(1) FINDS and PRONOUNCES the petitioner and its counsel, Atty. Eduardo S.
Fortaleza, GUILTY of INDIRECT CONTEMPT OF COURT, and,
accordingly,SENTENCES them to pay, JOINTLY AND SEVERALLY, a fine
of P15,000.00; and
(2) DENIES the Motion for Leave to File Second Motion for Reconsideration and
the Second Motion for Reconsideration.
SO ORDERED.
||| (Fortune Life Insurance Co., Inc. v. Commission on Audit, G.R. No. 213525, [November 21,
2017])
 SECOND DIVISION
[G.R. No. 206653. February 25, 2015.]
YUK LING ONG, petitioner, vs. BENJAMIN T. CO, respondent.
DECISION
MENDOZA, J p:
In court proceedings, there is no right more cherished than the right of every litigant to
be given an opportunity to be heard. This right begins at the very moment that summons is
served on the defendant. The Rules of Court places utmost importance in ensuring that the
defendant personally grasp the weight of responsibility that will befall him. Thus, it is only in
exceptional circumstances that constructive notification, or substituted service of summons, is
allowed. If the server falls short of the rigorous requirements for substituted service of summons,
then the Court has no other option but to strike down a void judgment, regardless of the
consequences.
This is a petition for review on certiorari seeking to reverse and set aside the June 27,
2012 Decision 1 and the March 26, 2013 Resolution 2 of the Court of Appeals(CA) in CA-G.R.
SP No. 106271, which denied the petition for annulment of judgment.
The Facts
Petitioner Yuk Ling Ong (petitioner), a British-Hong Kong national, and respondent
Benjamin Co (respondent), a Filipino citizen, were married on October 3, 1982 at
Ellinwood-Malate Church. 3
Sometime in November 2008, petitioner received a subpoena from the Bureau of
Immigration and Deportation (BID) directing her to appear before the said agency because her
permanent residence visa was being subjected to cancellation proceedings. Reportedly, her
marriage with respondent was nullified by the court.
When petitioner appeared before the BID, she was furnished with the copies of the
following documents: (1) petition for declaration of nullity of marriage filed as Civil Case No.
CV-01-0177; (2) petition for declaration of nullity of marriage docketed as Civil Case No.
02-0306; (3) Decision, 4 dated December 11, 2002, in Civil Case No. 02-0306 of the Regional
Trial Court, Branch 260 (RTC), Parañaque City, declaring the marriage between petitioner and
respondent as void ab initio; and (4) their marriage contract 5 with the subject decision
annotated thereon. Petitioner was perplexed that her marriage with respondent had been
declared void ab initio.
The above documents showed that on April 26, 2001, respondent filed a petition for
declaration of nullity 6 on the ground of psychological incapacity before the RTC, which was
docketed as Civil Case No. CV-01-0177. Respondent stated that petitioner's address was 600
Elcano St., Binondo, Manila. There was no showing of its status, whether pending, withdrawn or
terminated.
On July 19, 2002, respondent filed another petition for declaration of nullity 7 on the
ground of psychological incapacity before the RTC, docketed as Civil Case No. 02-0306.
Respondent indicated that petitioner's address was 23 Sta. Rosa Street, Unit B-2 Manresa
Garden Homes, Quezon City. On July 29, 2002, the RTC issued summons. 8 In his Server's
Return, 9 process server Rodolfo Torres, Jr. stated that, on August 1, 2002, substituted service
of summons with the copy of the petition was effected after several futile attempts to serve the
same personally on petitioner. The said documents were received by Mr. Roly Espinosa, a
security officer.
On December 11, 2002, the RTC rendered a decision 10 in Civil Case No. 02-0306
finding respondent's marriage with petitioner as void ab initio on the ground of psychological
incapacity under Article 36 of the Family Code. It stated that summons was served on
petitioner on August 1, 2002, but she failed to file her responsive pleading within the
reglementary period. The public prosecutor also stated that there were no indicative facts to
manifest collusion. Thus, the RTC concluded that petitioner was psychologically incapacitated
to perform her essential marital obligations.
Consequently, petitioner filed a petition for annulment of judgment 11 under Rule 47 of
the Rules of Court before the CA on November 24, 2008, claiming that she was never notified
of the cases filed against her. She prayed that the RTC decision, dated December 11, 2002, in
Civil Case No. 02-0306, be nullified on the grounds of extrinsic fraud and lack of jurisdiction.
Petitioner alleged that first, respondent committed extrinsic fraud because, as seen in
Civil Case No. CV-01-0177, he deliberately indicated a wrong address to prevent her from
participating in the trial; second, jurisdiction over her person was not acquired in Civil Case No.
02-0306 because of an invalid substituted service of summons as no sufficient explanation,
showing impossibility of personal service, was stated before resorting to substituted service of
summons; third, the alleged substituted service was made on a security guard of their
townhouse and not on a member of her household; and fourth, she was not psychologically
incapacitated to perform her marital obligations. 12 acITSD
Ruling of the Court of Appeals
On June 27, 2012, the CA rendered the assailed decision finding the petition for
annulment of judgment to be devoid of merit. It held that there was no sufficient proof to
establish that respondent employed fraud to insure petitioner's non-participation in the trial of
Civil Case No. CV-01-0177.
Relying on Robinson v. Miralles, 13 the CA further ruled that the substituted service
of summons in Civil Case No. 02-0306 was valid. It found that there was a customary practice in
petitioner's townhouse that the security guard would first entertain any visitors and receive any
communication in behalf of the homeowners. With this set-up, it was obviously impossible for
the process server to personally serve the summons upon petitioner. It also declared that the
process server's return carries with it the presumption of regularity in the discharge of a public
officer's duties and functions.
Petitioner moved for reconsideration, but her motion was denied by the CA in its
Resolution, 14 dated March 26, 2013.
Hence, this petition, anchored on the following
ISSUES
1. Whether or not the Trial Court in Civil Case No. 02-0306 validly
acquired jurisdiction over the person of the petitioner.
2. Whether or not the facts proven by the petitioner constitute
extrinsic fraud within the purview of Rule 47 of the Rules of
Court. 15
Petitioner argues that there was an invalid substituted service of summons. The
process server's return only contained a general statement that substituted service was
resorted to "after several futile attempts to serve the same personally," 16 without stating the
dates and reasons of the failed attempts. Petitioner also reiterates her argument that extrinsic
fraud was employed.
In his Comment, 17 filed on July 9, 2014, respondent contended that the server's
return satisfactorily stated the reason for the resort to a substituted service of summons on
August 1, 2002; and it was improbable that petitioner failed to receive the summons because it
was sent to the same address which she declared in this present petition.
Petitioner filed her Reply 18 on October 8, 2014 reiterating her previous arguments.
The Court's Ruling
The Court finds merit in the petition.
Annulment of judgment is a recourse equitable in character, allowed only in
exceptional cases as where there is no available or other adequate remedy. Rule 47 of
the 1997 Rules of Civil Procedure, as amended, governs actions for annulment of judgments or
final orders and resolutions, and Section 2 thereof explicitly provides only two grounds for
annulment of judgment, that is, extrinsic fraud and lack of jurisdiction. 19 Annulment of
judgment is an equitable principle not because it allows a party-litigant another opportunity to
reopen a judgment that has long lapsed into finality but because it enables him to be discharged
from the burden of being bound to a judgment that is an absolute nullity to begin with. 20
Petitioner raises two grounds to support her claim for annulment of judgment: (1)
extrinsic fraud and (2) lack of jurisdiction. Her contention on the existence of extrinsic fraud,
however, is too unsubstantial to warrant consideration. The discussion shall then focus on the
ground of lack of jurisdiction.
Lack of jurisdiction on the part of the trial court in rendering the judgment or final order
is either lack of jurisdiction over the subject matter or nature of the action, or lack of jurisdiction
over the person of the petitioner. The former is a matter of substantive law because statutory
law defines the jurisdiction of the courts over the subject matter or nature of the action. The
latter is a matter of procedural law, for it involves the service of summons or other processes on
the petitioner. 21
In the present case, petitioner contends that there was lack of jurisdiction over her
person because there was an invalid substituted service of summons. Jurisdiction over the
defendant is acquired either upon a valid service of summons or the defendant's voluntary
appearance in court. 22 If the defendant does not voluntarily appear in court, jurisdiction can be
acquired by personal or substituted service of summons as laid out under Sections 6 and 7 of
Rule 14 of the Rules of Court, which state:
Sec. 6. Service in person on defendant. — Whenever practicable,
the summons shall be served by handing a copy thereof to the defendant
in person, or, if he refuses to receive and sign for it, by tendering it to
him. TDCaSE
Sec. 7. Substituted Service. — If, for justifiable causes, the
defendant cannot be served within a reasonable time as provided in the
preceding section, service may be effected (a) by leaving copies of the
summons at the defendant's residence with some person of suitable age
and discretion then residing therein, or (b) by leaving the copies at
defendant's office or regular place of business with some competent
person in charge thereof.
The landmark case of Manotoc v. CA (Manotoc) 23 thoroughly discussed the
rigorous requirements of a substituted service of summons, to wit: . . .
(1) Impossibility of Prompt Personal Service
xxx xxx xxx
For substituted service of summons to be available, there must
be several attempts by the sheriff to personally serve the summons within
a reasonable period of one month which eventually resulted in failure to
prove impossibility of prompt service. "Several attempts" means at least
three (3) tries, preferably on at least two different dates. In addition,
the sheriff must cite why such efforts were unsuccessful. It is only
then that impossibility of service can be confirmed or accepted.
(2) Specific Details in the Return
The sheriff must describe in the Return of Summons the facts and
circumstances surrounding the attempted personal service. The efforts
made to find the defendant and the reasons behind the failure must be
clearly narrated in detail in the Return. The date and time of the attempts
on personal service, the inquiries made to locate the defendant, the
name/s of the occupants of the alleged residence or house of
defendant and all other acts done, though futile, to serve the
 summons on defendant must be specified in the Return to justify
substituted service.
(3) A Person of Suitable Age and Discretion
xxx xxx xxx
The sheriff must therefore determine if the person found in the
alleged dwelling or residence of defendant is of legal age, what the
recipient's relationship with the defendant is, and whether said person
comprehends the significance of the receipt of the summons and his duty
to immediately deliver it to the defendant or at least notify the defendant of
said receipt of summons. These matters must be clearly and
specifically described in the Return of Summons. (Emphases and
underscoring supplied)
The pronouncements of the Court in Manotoc have been applied to several
succeeding cases. In Pascual v. Pascual, 24 the return of summons did not show or indicate
the actual exertion or positive steps taken by the officer or process server in serving the
summons personally to the defendant. Similarly, in Spouses Afdal v. Carlos, 25 the process
server's indorsements therein failed to state that the personal service on the defendants was
rendered impossible and that efforts were made to find them personally. In both those cases,
the Court ruled that the meticulous requirements for substituted service of summons were not
met.
There are cases, however, in which Manotoc was applied, but, nevertheless, it was
ruled that there was no lack of jurisdiction over the person of the defendant. InSagana v.
Francisco, 26 the diligent efforts exerted by the sheriff to locate the respondent were
determined, not only based on the sheriff's return, but also on the process server's notation and
case records. In the case of Wong v. Factor-Koyama, 27 on the other hand, even if the sheriff
performed an invalid substituted service of summons, jurisdiction over the person of defendant
was obtained because the latter had actively participated in trial, amounting to a voluntary
appearance under Section 20 of Rule 14. 28
In the case at bench, the summons in Civil Case No. 02-0306 29 was issued on July
29, 2002. In his server's return, 30 the process server resorted to substituted service of
summons on August 1, 2002. Surprisingly, the process server immediately opted for substituted
service of summons after only two (2) days from the issuance of the summons. The server's
return stated the following:
SERVER'S RETURN
THIS IS TO CERTIFY THAT on August 1, 2002, substituted
service of summons with copy of petition, were effected to respondent, Yuk
Ling H. Ong, at the Unit B-2, No. 23 Sta. Rosa St., Manresa Garden
Homes, Manresa Garden City, Quezon City, after several futile attempts
to serve the same personally. The said documents were received by Mr.
Roly Espinosa of sufficient age and discretion, the Security Officer thereat.
Therefore, respectfully returning to Court, original copy of
summons, Duly Served, this 2nd day of August, 2002.
RODOLFO P. TORRES, JR.
Process Server
(Emphasis supplied)
The server's return utterly lacks sufficient detail of the attempts undertaken by the
process server to personally serve the summons on petitioner. The server simply made a
general statement that summons was effected after several futile attempts to serve the same
personally. The server did not state the specific number of attempts made to perform the
personal service of summons; the dates and the corresponding time the attempts were made;
and the underlying reason for each unsuccessful service. He did not explain either if there were
inquiries made to locate the petitioner, who was the defendant in the case. These important
acts to serve the summons on petitioner, though futile, must be specified in the return to justify
substituted service. AacCIT
The server's return did not describe in detail the person who received the summons,
on behalf of petitioner. It simply stated that the summons was received "by Mr. Roly Espinosa of
sufficient age and discretion, the Security Officer thereat." It did not expound on the
competence of the security officer to receive the summons.
Also, aside from the server's return, respondent failed to indicate any portion of the
records which would describe the specific attempts to personally serve the summons.
Respondent did not even claim that petitioner made any voluntary appearance and actively
participated in Civil Case No. 02-0306.
The case of Robinson v. Miralles, cited by the CA, is not applicable. In that case, the
return described in thorough detail how the security guard refused the sheriff's entry despite
several attempts. The defendant in the said case specifically instructed the guard to prevent
anybody to proceed to her residence. In the present case, the attempts made by the process
server were stated in a broad and ambiguous statement.
The CA likewise erred in ruling that the presumption of regularity in the performance of
official duty could be applied in the case at bench. This presumption of regularity, however, was
never intended to be applied even in cases where there are no showing of substantial
compliance with the requirements of the rules of procedure. Such presumption does not apply
where it is patent that the sheriff's or server's return is defective. 31 As earlier explained, the
server's return did not comply with the stringent requirements of substituted service of
summons.
Given that the meticulous requirements in Manotoc were not met, the Court is not
inclined to uphold the CA's denial of the petition for annulment of judgment for lack of
jurisdiction over the person of petitioner because there was an invalid substituted service of
summons. Accordingly, the decision in Civil Case No. 02-0306 must be declared null and void.
The stricter rule in substituted service of summons was meant to address "[t]he
numerous claims of irregularities in substituted service which have spawned the filing of a great
number of unnecessary special civil actions of certiorari and appeals to higher courts, resulting
in prolonged litigation and wasteful legal expenses." 32 IDCScA

Although the decision in Civil Case No. 02-0306 was promulgated as early as
December 11, 2002, the Court must strike it down for lack of jurisdiction over the person of
petitioner. The favorable judgment enjoyed by respondent cannot be categorized as a genuine
victory because it was fought against an adversary, who was ignorant of the existing dispute.
Whatever prize bestowed upon the victor in such a void decision must also be undone.
Respondent, if he wishes to pursue, must start from scratch and institute his action for
declaration of nullity again; this time with petitioner fully aware and ready for litigation.

WHEREFORE, the petition is GRANTED. The June 27, 2012 Decision and the March
26, 2013 Resolution of the Court of Appeals in CA-G.R. SP No. 106271 are
hereby REVERSED and SET ASIDE. The December 11, 2002 Decision of the Regional Trial
Court, Branch 260, Parañaque City is hereby declared VOID.

SO ORDERED.

||| (Yuk Ling Ong v. Co, G.R. No. 206653, [February 25, 2015])
 THIRD DIVISION
[G.R. No. 183370. August 17, 2015.]
NATION PETROLEUM GAS, INCORPORATED, NENA ANG, MARIO
ANG, ALISON A. SY, GUILLERMO G. SY, NELSON ANG, LUISA ANG,
RENATO C. ANG, PAULINE T. ANG, RICKY C. ANG, 1 and MELINDA
ANG, petitioners, vs. RIZAL COMMERCIAL BANKING CORPORATION,
substituted by PHILIPPINE ASSET GROWTH ONE, INC., respondent.
DECISION
PERALTA, J p:
This petition for review on certiorari under Rule 45 of the 1997 Revised Rules of
Civil Procedure (Rules) seeks to reverse and set aside the December 12, 2007
Decision 2 and June 17, 2008 Resolution 3 of the Court of Appeals (CA) in CA-G.R. SP No.
98787, which affirmed the March 29, 2007 Order 4 of the Regional Trial Court (RTC),
Branch 66, Makati City, in Civil Case No. 06-882, denying petitioners' Special Appearance
with Motion to Dismiss for alleged improper service of summons.
On October 16, 2006, respondent Rizal Commercial Banking Corporation filed
against petitioner corporation and its directors/officers a Complaint 5 for civil damages
arising from estafa in relation to violations of the Trust Receipts Law. On October 26, 2006,
after an ex parte hearing was conducted, respondent's prayer for a writ of preliminary
attachment was granted and the corresponding writ was issued. 6 Thereafter, Sheriff
Leodel N. Roxas served upon petitioners a copy of the summons, complaint, application for
attachment, respondent's affidavit and bond, and the order and writ of attachment. The
Sheriff's Report dated November 13, 2006 narrated:
The undersigned sheriff respectfully submits the following
report to wit:
On 26 October 2006, [a] copy of Writ of Attachment dated 26
October 2006, issued by the Court in the above-entitled case was
received by the undersigned for service and implementation.
On even date, the undersigned served the Summons, copy of
[the] Complaint, application for attachment, the plaintiffs affidavit and
bond, and the Order and Writ of Attachment, on the
defendants Nation Petroleum Gas et al., at BPI Building, Rizal Street,
Candelaria, Quezon. Said summons and all pertinent papers, upon
telephone instruction of defendant Melinda Ang, were received by
Claudia Abante, [defendants'] [Liaison] Officer, as evidenced by her
signature at the original copy of Summons and Writ. I also served copies
to other defendants at their given addresses, but they refused to
acknowledge receipt thereof. EATCcI
On the same day, at the instance of the plaintiff's counsel and
representative, the undersigned levied the real properties of the
defendants at the Register of Deeds of Lucena City, Makati City, Pasig
City, Quezon City and the Register of Deeds of Manila. I also levied a
property (plant equipment) in NPGI plant in Sariaya, Quezon. Copies of
the notices of levy on attachment are hereto attached.
WHEREFORE, the original copies of the Summonses, Order,
Writ of Attachment and all pertinent papers are hereby returned to the
Court of origin for record and information. 7
Petitioners filed through counsel a Special Appearance with Motion to
Dismiss 8 on November 15, 2006. They asserted that the trial court did not acquire
jurisdiction over the corporation since the summons was improperly served upon Claudia
Abante (Abante), who is a mere liaison officer and not one of the corporate officers
specifically enumerated in Section 11, Rule 14 of the Rules. Likewise, the individual
petitioners argued that the sheriff and/or process server did not personally approach them
at their respective address as stated in the Complaint. Neither did he resort to substituted
service of summons, and that, even if he did, there was no strict compliance with Section 7,
Rule 14 of the Rules. The Court's pronouncements in Spouses Mason v. Court of
Appeals, 9 E. B. Villarosa & Partner Co., Ltd. v. Judge Benito, 10 Laus v. Court of
Appeals, 11 and Samartino v. Raon 12 were invoked in praying for the dismissal of the
complaint and the discharge of the writ of attachment.
Respondent countered in its Opposition with Motion to Declare Defendants in
Default 13 that there was valid service of summons upon petitioners. With respect to the
corporation, Abante received the summons upon the express authority and instruction of
the corporate secretary, petitioner Melinda Ang (Ang). As regards the individual petitioners,
the Sheriff's Report reflects that they were served "at their given addresses, but they
refused to acknowledge receipt thereof."Respondent stressed that said Report is prima
facie evidence of the facts stated therein and that the sheriff enjoys the presumption of
regularity in the performance of his official functions. In any case, it averred that, according
to Oaminal v. Castillo, 14 petitioners already voluntarily submitted to the court's
jurisdiction when they prayed for the discharge of the writ of attachment, which is an
affirmative relief apart from the dismissal of the case.
A Reply with Comment/Opposition (to the motion to declare defendants in
default) 15 was then filed by petitioners. In support of their contention that the court lacks
jurisdiction over their persons, they submitted their Joint Affidavit 16 and the Affidavit 17 of
Abante, claiming, among others, that they neither personally met the sheriff and/or the
process server nor were handed a copy of the court documents; that Ang did not give
Abante telephone instructions to receive the same; and that Abante did not receive any
instruction from Ang. Petitioners further held that Oaminal finds no application in the
instant case since they only filed one motion and that the additional relief prayed for, which
is the discharge of the writ, is complementary to and a necessary consequence of a finding
that the court has no jurisdiction over their persons. Instead, Our ruling in Avon Insurance
PLC v. Court of Appeals 18 was relied upon.
In its Rejoinder with Motion to Strike, 19 respondent stood firm in defending the
court's jurisdiction. The denials of Ang and Abante were viewed as self-serving and could
not prevail over the presumption of regularity which the sheriff enjoys as an officer of the
court. Even assuming that the Sheriff's Return does not state in detail the fact that the
summons was served upon the individual petitioners through substituted service,
respondent asserted that this does not conclusively prove that such service is invalid
because it may still be shown through extraneous evidence similar to the case of BPI v.
Spouses Evangelista. 20
On March 29, 2007, the RTC denied petitioners' motion to dismiss and
respondent's motion to declare them in default. In upholding the jurisdiction of the court
over the persons of petitioners and requiring them to file an Answer, the Order ratiocinated:
The very essence of service of summons is for the defendants
to be aware of an existing suit against them and for them to file an
answer or responsive pleading thereto. When corporate and individual
defendants were served with summons through the [liaison] officer who
received the same for and in their behalf as per instruction of defendant
Melinda Ang, and when defendants filed a responsive pleading in the
form of a Motion to Dismiss, the essence of service of summons was
met and defendants are deemed to have ultimately received the
summons despite their protestations. There is no reason for the Court to
doubt the regularity of the Sheriff's service of summons as in fact its
regularity is presumed. It bears stressing that defendants did not per
se deny having received summonses. Perforce, they are challenging the
manner of service of the same. Having ultimately received the
summonses upon them and considering the rules on service of the same
was substantially complied with, the Court finds no reason to deny the
instant Motion to Dismiss. 21
Petitioners elevated the jurisdictional issue to the CA via petition for certiorari and
prohibition. 22 As afore-stated, the appellate court later dismissed the petition and denied
the motion for reconsideration; hence, this petition raising the following issues for
resolution: DHITCc
I.
WHETHER OR NOT THE TRIAL COURT ACQUIRED JURISDICTION
OVER THE PERSON OF THE DEFENDANT CORPORATION BY
SERVICE OF SUMMONS UPON ITS MERE EMPLOYEE.
II.
WHETHER OR NOT THE TRIAL COURT ACQUIRED JURISDICTION
OVER THE PERSONS OF THE INDIVIDUAL DEFENDANTS BY
RESORTING TO SUBSTITUTED SERVICE OF SUMMONS DESPITE
ABSENCE OF EARNEST EFFORTS ON THE PART OF THE
SERVING OFFICER TO SERVE SUMMONS PERSONALLY. 23
We deny.
Summons is a writ by which the defendant is notified of the action brought against
him or her. 24 Its purpose is two-fold: to acquire jurisdiction over the person of the
defendant and to notify the defendant that an action has been commenced so that he may
be given an opportunity to be heard on the claim against him. 25 "[C]ompliance with the
rules regarding the service of summons is as much an issue of due process as of
jurisdiction. The essence of due process is to be found in the reasonable opportunity to be
heard and submit any evidence one may have in support of his defense. It is elementary
that before a person can be deprived of his property, he should first be informed of the
claim against him and the theory on which such claim is premised." 26
Service of summons on domestic corporation, partnership or other juridical entity
is governed by Section 11, Rule 14 of the Rules, which states:
SECTION 11. Service upon domestic private juridical entity. —
When the defendant is a corporation, partnership or association
organized under the laws of the Philippines with a juridical personality,
service may be made on the president, managing partner, general
manager, corporate secretary, treasurer, or in-house counsel.
When the defendant is a domestic corporation like herein petitioner, service of
summons may be made only upon the persons enumerated in Section 11, Rule 14 of
the Rules. 27 The enumeration of persons to whom summons may be served is restricted,
limited and exclusive following the rule on statutory constructionexpressio unios est
exclusio alterius. 28 Substantial compliance cannot be invoked. 29 Service of summons
upon persons other than those officers specifically mentioned in Section 11, Rule 14 is void,
defective and not binding to said corporation. 30
Basic is the rule that a strict compliance with the mode of
service is necessary to confer jurisdiction of the court over a corporation.
The officer upon whom service is made must be one who is named in the
statute; otherwise, the service is insufficient. The purpose is to render it
reasonably certain that the corporation will receive prompt and proper
notice in an action against it or to insure that the summons be served on
a representative so integrated with the corporation that such person will
know what to do with the legal papers served on him. 31
As correctly argued by petitioners, Sps. Mason already resolved that substantial
compliance on service of summons upon a domestic corporation is no longer an excuse.
Thus:
The question of whether the substantial compliance rule is still
applicable under Section 11, Rule 14 of the 1997 Rules of Civil
Procedure has been settled inVillarosa which applies squarely to the
instant case. In the said case, petitioner E.B. Villarosa & Partner Co.
Ltd. (hereafter Villarosa) with principal office address at 102 Juan Luna
 St., Davao City and with branches at 2492 Bay View Drive, Tambo,
Parañaque, Metro Manila and Kolambog, Lapasan, Cagayan de Oro
City, entered into a sale with development agreement with private
respondent Imperial Development Corporation. As Villarosa failed to
comply with its contractual obligation, private respondent initiated a suit
for breach of contract and damages at the Regional Trial Court of Makati.
Summons, together with the complaint, was served upon Villarosa
through its branch manager at Kolambog, Lapasan, Cagayan de Oro
City. Villarosa filed a Special Appearance with Motion to Dismiss on the
ground of improper service of summons and lack of jurisdiction. The trial
court denied the motion and ruled that there was substantial compliance
with the rule, thus, it acquired jurisdiction over Villarosa. The latter
questioned the denial before us in its petition for certiorari. We decided
in Villarosa's favor and declared the trial court without jurisdiction to take
cognizance of the case. We held that there was no valid service of
summons on Villarosa as service was made through a person not
included in the enumeration in Section 11, Rule 14 of the 1997 Rules of
Civil Procedure, which revised the Section 13, Rule 14 of the 1964 Rules
of Court. We discarded the trial court's basis for denying the motion to
dismiss, namely, private respondent's substantial compliance with the
rule on service of summons, and fully agreed with petitioner's assertions
that the enumeration under the new rule is restricted, limited and
exclusive, following the rule in statutory construction that expressio
unios est exclusio alterius. Had the Rules of Court Revision Committee
intended to liberalize the rule on service of summons, we said, it could
have easily done so by clear and concise language. Absent a manifest
intent to liberalize the rule, we stressed strict compliance with Section 11,
Rule 14 of the 1997 Rules of Civil Procedure.
Neither can herein petitioners invoke our ruling in Millennium to
support their position for said case is not on all fours with the instant
case. We must stress that Millennium was decided when the
1964 Rules of Court were still in force and effect, unlike the instant case
which falls under the new rule. Hence, the cases cited by petitioners
where we upheld the doctrine of substantial compliance must be
deemed overturned by Villarosa, which is the later case. cEaSHC
At this juncture, it is worth emphasizing that notice to enable
the other party to be heard and to present evidence is not a mere
technicality or a trivial matter in any administrative or judicial
proceedings. The service of summons is a vital and indispensable
ingredient of due process. . . . 32
The foregoing notwithstanding, We agree with the CA that there was a valid and
effective service of summons upon petitioner corporation through its liaison officer who
acted as the agent of the corporate secretary. It ruled:
Petitioner corporation asserts that based on the said rule
[Section 11, Rule 14 of the Rules], the service of summons made by the
sheriff upon its liaison officer, Claudia Abante, was defective for the
reason that a liaison officer is not one of the corporate officers
enumerated therein upon whom service of summons is authorized to be
made. It contends that there having been no valid service, the trial court
consequently did not acquire jurisdiction to hear the complaint a quo.
The contention deserves full credence only if it is to be
assumed that Claudia Abante received the summons in her official
capacity as petitioner corporation's liaison officer. However, this is not
true in the instant case, since according to the sheriff, Abante proceeded
to receive the summons and accompanying documents only after
receiving instructions to do so from Melinda Ang, an individual petitioner
herein and the petitioner corporation's corporate secretary. It is clear,
therefore, that Abante, in so receiving the summons, did so in
representation of Ang who, as corporate secretary, is one of the officers
competent under the Rules of Court to receive summons on behalf of a
private juridical person. Thus, while it may be true that there was no
direct, physical handing of the summons to Ang, the latter could at least
be charged with having constructively received the same, which in Our
view, amounts to a valid service of summons.
Having herself instructed Abante to receive the summons, Ang,
and for that matter, petitioner corporation, is thus now precluded from
impugning the jurisdiction of the trial court on the ground of invalid
service of summons. In point in this regard is the principle of estoppel
which, under our remedial laws, is an effective bar against any claim of
lack of jurisdiction. Under said doctrine, an admission or representation
is rendered conclusive upon the person making it and cannot be denied
or disproved as against the person relying thereon.
Thus, despite the assertions of Ang and Abante that, as
between them, no such instruction had been relayed and received, the
sheriff's statement belying the allegations should be accorded weight.
The sheriff's report is further bolstered by the presumption of
regularity in the performance of public duty as the same is provided for in
Rule 131 of the Rules of Court. The presumption applies so long as it is
shown that the officer, in performing his duties, is not inspired by any
improper motive, a fact that is true with the sheriff in the case at bar. And,
if the presumption may be made to apply to public officers in general,
with more reason should its benefit be accorded to the sheriff, who is an
officer of the court.
True, the presumption is disputable, but to overcome the same,
more concrete evidence than the affidavit of Abante is required. As
correctly pointed out by the respondent, in line with the ruling of the
Supreme Court in R. Transport Corporation vs. Court of
 Appeals and Talsan Enterprises, Inc. vs. Baliwag, Abante's affidavit is
self-serving in nature, and being so, is not sufficient to overturn the said
presumption.
On this aspect, petitioners score the respondent, asserting that
the two above-cited cases are not applicable to the case at hand
inasmuch as these were decided before the advent of the 1997 Revised
Rules of Civil Procedure, adding likewise that the cited cases and the
instant case differ in their respective factual milieus. We are not
persuaded. Under either the former or the present rules, it is clear that
Abante's denial that she received instructions from Ang is evidence that
would pale in comparison to the declaration of an officer of the court
indisputably performing his duty objectively and free from any malicious
and ill motives. 33
Petitioner corporation cannot conveniently rely on the sworn statements of the
individual petitioners and Abante. Upon examination, Ang's denial of having spoken with
any process server to give instruction to serve the summons and other pertinent papers to
Abante 34 is not incompatible with the Sheriff's Report stating that "[s]aid summons and all
pertinent papers, upon telephone instruction of defendant Melinda Ang, were received by
Claudia Abante, [defendants'] [Liaison] Officer, as evidenced by her signature at the
original copy of Summons and Writ." While it may be true that Ang had not talked to the
sheriff or process server, it still does not rule out the possibility that she in fact spoke to
Abante and instructed the latter to receive the documents in her behalf. As to the Affidavit
of Abante, her disavowal of having spoken to Ang or receiving telephone instructions from
her is truly self-serving. Evidence as simple as a telephone billing statement or an affidavit
of a disinterested third person, among others, could have been presented to refute the
sheriff's claim, but there was none. Likewise, no substantial proofs were credibly shown to
support Abante's allegation that the sheriff insisted on having the court processes received
and that she was "intimidated by the presence of a court personnel who was quite earnest
in accomplishing his task." 35
It is well to note that the certificate of service of the process server is prima
facie evidence of the facts as set out therein. This is fortified by the presumption of the
regularity of performance of official duty. To overcome the presumption of regularity of
official functions in favor of such sheriff's return, the evidence against it must be clear and
convincing. Sans the requisite quantum of proof to the contrary, the presumption stands
deserving of faith and credit. 36 CTIEac
The same conclusion, however, could not be said with respect to the service of
summons upon the individual petitioners.
Section 7, in relation to Section 6, Rule 14 of the Rules, provides for substituted
service of summons:
Section 6. Service in person on defendant. — Whenever
practicable, the summons shall be served by handling a copy thereof to
the defendant in person, or, if he refuses to receive and sign for it, by
tendering it to him.
Section 7. Substituted service. — If, for justifiable causes, the
defendant cannot be served within a reasonable time as provided in the
preceding section, service may be effected (a) by leaving copies of the
summons at the defendant's residence with some person of suitable age
and discretion then residing therein, or (b) by leaving the copies at
defendant's office or regular place of business with some competent
person in charge thereof.
Sections 6 and 7 of the Rules cannot be construed to apply simultaneously and
do not provide for alternative modes of service of summons which can either be resorted to
on the mere basis of convenience to the parties for, under our procedural rules, service of
summons in the persons of the defendants is generally preferred over substituted
service. 37 Resort to the latter is permitted when the summons cannot be promptly served
on the defendant in person and after stringent formal and substantive requirements have
been complied with. 38 The failure to comply faithfully, strictly and fully with all the
requirements of substituted service renders the service of summons ineffective. 39
Manotoc v. Court of Appeals 40 painstakingly elucidated the requirements of
the Rules as follows:
We can break down this section into the following requirements
to effect a valid substituted service:
(1) Impossibility of Prompt Personal Service
The party relying on substituted service or the sheriff must
show that defendant cannot be served promptly or there is impossibility
of prompt service. Section 8, Rule 14 provides that the plaintiff or the
sheriff is given a "reasonable time" to serve the summons to the
defendant in person, but no specific time frame is mentioned.
"Reasonable time" is defined as "so much time as is necessary under
the circumstances for a reasonably prudent and diligent man to do,
conveniently, what the contract or duty requires that should be done,
having a regard for the rights and possibility of loss, if any[,] to the other
party." Under the Rules, the service of summons has no set period.
However, when the court, clerk of court, or the plaintiff asks the sheriff to
make the return of the summons and the latter submits the return of
summons, then the validity of the summons lapses. The plaintiff may
then ask for an alias summons if the service of summons has failed.
What then is a reasonable time for the sheriff to effect a personal service
in order to demonstrate impossibility of prompt service? To the plaintiff,
"reasonable time" means no more than seven (7) days since an
expeditious processing of a complaint is what a plaintiff wants. To the
sheriff, "reasonable time" means 15 to 30 days because at the end of the
month, it is a practice for the branch clerk of court to require the sheriff to
submit a return of the summons assigned to the sheriff for service. The
Sheriff's Return provides data to the Clerk of Court, which the clerk uses
in the Monthly Report of Cases to be submitted to the Office of the Court
Administrator within the first ten (10) days of the succeeding month.
Thus, one month from the issuance of summons can be considered
"reasonable time" with regard to personal service on the defendant.
Sheriffs are asked to discharge their duties on the service of
summons with due care, utmost diligence, and reasonable promptness
and speed so as not to prejudice the expeditious dispensation of justice.
Thus, they are enjoined to try their best efforts to accomplish personal
service on defendant. On the other hand, since the defendant is
expected to try to avoid and evade service of summons, the sheriff must
be resourceful, persevering, canny, and diligent in serving the process
on the defendant. For substituted service of summons to be available,
there must be several attempts by the sheriff to personally serve the
summons within a reasonable period [of one month] which eventually
resulted in failure to prove impossibility of prompt service. "Several
attempts" means at least three (3) tries, preferably on at least two
different dates. In addition, the sheriff must cite why such efforts were
unsuccessful. It is only then that impossibility of service can be
confirmed or accepted.
(2) Specific Details in the Return
The sheriff must describe in the Return of Summons the facts
and circumstances surrounding the attempted personal service. The
efforts made to find the defendant and the reasons behind the failure
must be clearly narrated in detail in the Return. The date and time of the
attempts on personal service, the inquiries made to locate the defendant,
the name/s of the occupants of the alleged residence or house of
defendant and all other acts done, though futile, to serve the summons
on defendant must be specified in the Return to justify substituted
service. The form on Sheriff's Return of Summons on Substituted
Service prescribed in the Handbook for Sheriffs published by the
Philippine Judicial Academy requires a narration of the efforts made to
find the defendant personally and the fact of failure. Supreme Court
Administrative Circular No. 5 dated November 9, 1989 requires that
"impossibility of prompt service should be shown by stating the efforts
made to find the defendant personally and the failure of such efforts,"
which should be made in the proof of service. SaCIDT
(3) A Person of Suitable Age and Discretion
If the substituted service will be effected at defendant's house
or residence, it should be left with a person of "suitable age and
discretion then residing therein." A person of suitable age and discretion
is one who has attained the age of full legal capacity (18 years old) and
is considered to have enough discernment to understand the importance
of a summons. "Discretion" is defined as "the ability to make decisions
which represent a responsible choice and for which an understanding of
what is lawful, right or wise may be presupposed". Thus, to be of
sufficient discretion, such person must know how to read and
understand English to comprehend the import of the summons, and fully
realize the need to deliver the summons and complaint to the defendant
at the earliest possible time for the person to take appropriate action.
Thus, the person must have the "relation of confidence" to the defendant,
ensuring that the latter would receive or at least be notified of the receipt
of the summons. The sheriff must therefore determine if the person
found in the alleged dwelling or residence of defendant is of legal age,
what the recipient's relationship with the defendant is, and whether said
person comprehends the significance of the receipt of the summons and
his duty to immediately deliver it to the defendant or at least notify the
defendant of said receipt of summons. These matters must be clearly
and specifically described in the Return of Summons.
(4) A Competent Person in Charge
If the substituted service will be done at defendant's office or
regular place of business, then it should be served on a competent
person in charge of the place. Thus, the person on whom the substituted
service will be made must be the one managing the office or business of
defendant, such as the president or manager; and such individual must
have sufficient knowledge to understand the obligation of the defendant
in the summons, its importance, and the prejudicial effects arising from
inaction on the summons. Again, these details must be contained in the
Return. 41
In resorting to the substituted service, the sheriff in this case pithily declared in his
Report that he "also served copies to other defendants at their given addresses, but they
refused to acknowledge receipt thereof." Obviously, the Sheriff's Report dated November
13, 2006 does not particularize why substituted service was resorted to and the precise
manner by which the summons was served upon the individual petitioners. The disputable
presumption that an official duty has been regularly performed will not apply where it is
patent from the sheriff's or server's return that it is defective. 42
To avail themselves of substituted service of summons, courts must rely on a
detailed enumeration of the sheriff's actions and a showing that the defendant cannot be
served despite diligent and reasonable efforts. 43 The Court requires that the Sheriff's
Return clearly and convincingly show the impracticability or hopelessness of personal
service. 44 The impossibility of personal service justifying availment of substituted service
should be explained in the proof of service; why efforts exerted towards personal service
failed. The pertinent facts and circumstances attendant to the service of summons must be
stated in the proof of service or Officer's Return; otherwise, the substituted service cannot
be upheld. 45
Under exceptional terms, the circumstances warranting substituted service of
summons may be proved by evidence aliunde. 46 Substituted service will still be
considered as regular if other evidence of the efforts to serve summons was
presented. 47 BPI v. Spouses Evangelista 48 teaches Us that a defect in the service of
summons, which is apparent on the face of the return, does not necessarily constitute
conclusive proof that the actual service has in fact been improperly made. In the interest of
speedy justice, the trial court has to immediately ascertain whether the patent defect is real
and, if so, to fully determine whether prior attempts at personal service have in fact been
done and resort to the substituted service was justified. Should the returns not show
compliance with the Rules on substituted service, actual and correct service may still be
proven by evidence extraneous to it. If substituted service is indeed improper, the trial court
must issue new summons and serve it in accordance with the Rules.
In the present case, while no actual hearing was conducted to verify the validity of
the grounds for substituted service of summons, the parties exchanged pleadings in
support of their respective positions. To justify, respondent contends:
34. In the instant case, representatives of the undersigned
counsel and plaintiff RCBC personally observed the service of
summons on the defendants. Based on their account, the following facts
and circumstances transpired:
a. On [October 26, 2006], the Sheriff served
summons on defendant NPGI at the G/F BPI Building,
Rizal Street, Candelaria, Quezon, the reported office
address of defendant NPGI in the latter's General
Information Sheet submitted with the Securities and
Exchange Commission.
a.1. In the said address, the Sheriff
met a person who introduced herself as Ms.
Claudia Abante, the Liaison [Officer] of
defendant NPGI.
a.2. Upon inquiry, the Sheriff was
informed that defendants NPGI Officers
were all not around to receive the summons
for defendant NPGI considering that,
according to Ms. Abante, the defendant
NPGI Directors do not hold office at said
address.
a.3. However, Ms. Abante
volunteered to call defendant Melinda Ang
on the phone to inform her that summons
was beings served upon defendant
NPGI. cHECAS
a.4. Subsequently, Ms. Abante
informed the Sheriff that defendant Melinda
Ang authorized her to receive the summons
for defendant NPGI.
a.5. Considering that she claimed
to be authorized by defendant Melinda Ang,
who is the Corporate Secretary of defendant
NPGI, to receive the summons on behalf of
defendant NPGI, the Sheriff entrusted the
same to her, as well as the Complaint and
the Writ of Attachment, among others, and
Ms. Abante voluntarily signed the receiving
copy thereof.
a.6. The Sheriff did not intimidate
Ms. Abante into receiving the summons. In
fact, she volunteered to receive the same.
b. Copies of the Complaint, summons
and Writ of Attachment, among others, were likewise
served to defendant NPGI at its office located at 39th
Floor, Yuchengco Tower, RCBC Plaza, 6819 Ayala
Avenue, corner Sen. Gil Puyat Avenue, Makati City,
Metro Manila ('RCBC Plaza Office').
b.1. The personnel from said office
also stated that all the defendant NPGI
Directors were not around and were
probably at home. As such, a copy of
the Complaint, summons and Writ of
Attachment, among others, were left with
said office.
c. Thereafter, summons on the individual
defendants were served at the following addresses:
c.1. Renato Ang, Nena Ang,
Melinda Ang, Pauline Ang — 1348 Palm
Avenue, Dasmariñas Village, Makati City;
c.2. Guillermo Sy and Alison Sy —
1320 Glorioso Streets, Dasmariñas Village,
Makati City;
c.3. Nelson Ang, Luisa Ang — 19
Swallow Drive, Greenmeadows, Quezon
City;
c.4. Mario Ang — Diamond
Furniture, Cabunyag Street, Candelaria,
Quezon; and
c.5. Ricky Ang — Rizal Street,
Candelaria, Quezon.
d. Upon service of the summons upon them,
it became apparent that the individual defendants
were evading service of summons considering that
the sheriff was being given a runaround.
 d.1. In their respective residences,
their house helpers stated that the individual
defendants were not at home but in
the RCBC Plaza Office.
d.2. However, considering that the
Sheriff had already been to the RCBC Plaza
Office and the personnel at said office
previously stated that all the defendants
were not at said office, it became apparent
that all the defendants were trying to evade
service of summons.
d.3. Given the obvious attempt of
defendants to evade service of summons, it
was futile for the Sheriff to go back to
the RCBC Plaza Office.
d.4. Hence, summons were served
to the individual defendants through
substituted service by entrusting the same to
their house helpers residing at the respective
addresses, all of whom are of suitable age
and discretion.
xxx xxx xxx
36. Indeed, in the instant case, contrary to the allegations
contained in the Motion to Dismiss, the summons were properly served
to the individual defendants through substituted service considering that
there were justifiable causes existing which prevented personal service
upon all the individual defendants within a reasonable time.
36.1. It should be noted that aside from
defendant NPGI, there are ten (10) other individual
defendants in the instant case who are residing in
addresses which are far apart (i.e., Makati City, Pasig
City, City of Manila and Quezon Province).
36.2. Summons were attempted to be
served to all defendant NPGI Directors, Luisa Ang,
Guillermo Sy and Pauline Ang on the following
addresses:
1. Renato Ang, Nena Ang, Melinda Ang, Pauline Ang — 1348
Palm Avenue, Dasmariñas Village, Makati City;
2. Guillermo Sy and Alison Sy — 1320 Glorioso Streets,
Dasmariñas Village, Makati City;
3. Nelson Ang, Luisa Ang — 19 Swallow Drive, Greenmeadows,
Quezon City;
4. Mario Ang — Diamond Furniture, Cabunyag Street, Candelaria,
Quezon; and AHDacC
5. Ricky Ang — Rizal Street, Candelaria, Quezon.
36.3. To require the sheriff to return several
times at the residences of the ten (10) defendants as
suggested by the defendants, despite the apparent
intention of the defendants to evade service of
summons, and the considerable distances between
all their residences (i.e., Makati City, Pasig City, City
of Manila and Quezon Province), would clearly be
unreasonable. 49
According to respondent's version, copies of the complaint, summons and writ of
attachment, among others, were served to petitioner corporation at its offices in Candelaria,
Quezon and RCBC Plaza. In the Quezon office, the sheriff was informed that the individual
petitioners were all not around to receive the summons for the corporation considering that
they do not hold office at said address. Likewise, a staff from the RCBC Plaza office stated
that all them were not around and were probably at home. Thereafter, summons was
served on the individual petitioners at their respective addresses in Makati City, Quezon
City, and Candelaria, Quezon. Their house helpers told that they were not at home but
were in the RCBC Plaza office. Considering that the sheriff already went there and its
personnel said that they were not at said office, it became apparent on the sheriff that the
individual petitioners were trying to evade service of summons. Thus, given this
predicament, it was futile for him to go back to the RCBC Plaza office.
It is argued that the summons was properly served to the individual petitioners
through substituted service because there were justifiable causes existing which prevented
personal service within a reasonable period of time. Respondent asserts that requiring the
sheriff to return several times at the residences of the ten (10) individual petitioners despite
their intention to evade service of summons and the considerable distances of their
residences would clearly be unreasonable.
Respondent's explanations do not suffice.
In the instant case, it appears that the sheriff hastily and capriciously resorted to
substituted service of summons without actually exerting any genuine effort to locate the
individual petitioners. The "reasonable time" within which to personally serve the summons
— 7 days for the plaintiff or 15-30 days for the sheriff as stated in Manotoc — has not yet
elapsed at the time the substituted service was opted to. Remarkably, based on the
Sheriff's Report and the narration of petitioners, the personal service of summons upon the
corporation and the individual petitioners as well as the levy of their personal and real
properties were all done in just one day. Manotoc stresses that for substituted service of
summons to be available, there must be several attempts by the sheriff to personally serve
the summons within a reasonable period which eventually resulted in failure in order to
prove impossibility of prompt service. To reiterate, "several attempts" means at least three
(3) tries, preferably on at least two different dates.
 Further, except for the Quezon Province, there is, in fact, no considerable ||| (Nation Petroleum Gas, Inc. v. Rizal Commercial Banking Corp., G.R. No. 183370 , [August
distance between the residences of the individual petitioners since the cities of Makati and 17, 2015])
Quezon are part of the National Capital Region; hence, accessible either by private or
public modes of transportation. Assuming that there is, the distance would not have been
insurmountable had respondent took its time and not unnecessarily rushed to accomplish
personal service in just a single day.
Finally, respondent alleges that the summons was served to the individual
petitioners through substituted service by entrusting the same to their house helpers, all of
whom are of suitable age and discretion. It did not, however, elaborate that these persons
know how to read and understand English to comprehend the import of the summons, and
fully realize the need to deliver the summons and complaint to the individual petitioners at
the earliest possible time for them to take appropriate action. There is no way for Us to
conclusively ascertain that the sheriff ensured, among others, that the persons found in the
alleged dwelling or residence comprehend the significance of the receipt of the summons
and the duty to immediately deliver it to the individual petitioners or at least notify them of
said receipt of summons.
The foregoing considered, it can be deduced that since there were no actual
efforts exerted and no positive steps undertaken to earnestly locate the individual
petitioners, there is no basis to convincingly say that they evaded the personal service of
summons and merely gave the sheriff a run-around, thus, justifying substituted service
upon them.
Despite improper service of summons upon their persons, the individual
petitioners are deemed to have submitted to the jurisdiction of the court through their
voluntary appearance. The second sentence of Section 20, 50 Rule 14 of
the Rules that "[t]he inclusion in a motion to dismiss of other grounds aside from lack of
jurisdiction over the person of the defendant shall not be deemed a voluntary
appearance" clearly refers to affirmative defenses, not affirmative reliefs. 51
In the present case, the individual petitioners prayed, among others, for the
following: (1) discharge of the writ of attachment on their properties; (2) denial of the motion
to declare them in default; (3) admission of the Comment/Opposition (to the motion to
declare them in default) filed on December 19, 2006; and (4) denial of respondent's motion
to strike off from the records (their opposition to the motion to declare them in default). By
seeking affirmative reliefs from the trial court, the individual petitioners are deemed to have
voluntarily submitted to the jurisdiction of said court. A party cannot invoke the jurisdiction
of a court to secure affirmative relief against his opponent and after obtaining or failing to
obtain such relief, repudiate or question that same jurisdiction. 52 Therefore, the CA
cannot be considered to have erred in affirming the trial court's denial of the Special
Appearance with Motion to Dismiss for alleged improper service of summons. IDSEAH
WHEREFORE, premises considered, the petition is DENIED. The December 12,
2007 Decision and June 17, 2008 Resolution of the Court of Appeals in CA-G.R. SP No.
98787, which sustained the March 29, 2007 Order of the Regional Trial Court, Branch 66,
Makati City, in Civil Case No. 06-882, are hereby AFFIRMED.
SO ORDERED.
 THIRD DIVISION
[G.R. No. 181517. July 6, 2015.]
GREEN STAR EXPRESS, INC. and FRUTO SAYSON,
JR., petitioners, vs. NISSIN-UNIVERSAL ROBINA
CORPORATION, respondent.
DECISION
PERALTA, ** J p:
For resolution is a Petition for Review under Rule 45 of the Rules of Court which
petitioners Green Star Express, Inc. and Fruto Sayson, Jr. brought before the Court,
assailing the Decision 1 of the Court of Appeals (CA) dated September 17, 2007 and its
Resolution 2 dated January 22, 2008 in CA-G.R. SP No. 86824. The CA nullified the
Resolution dated May 5, 2004 of the Regional Trial Court (RTC) of San Pedro, Laguna,
Branch 31, in Civil Case No. SPL-0969, and dismissed the complaint for lack of jurisdiction.
The following are the antecedents of the case:
On February 25, 2003, a Mitsubishi L-300 van which Universal Robina
Corporation (URC) owned figured in a vehicular accident with petitioner Green Star
Express, Inc.'s (Green Star) passenger bus, resulting in the death of the van's driver. Thus,
the bus driver, petitioner Fruto Sayson, Jr., was charged with the crime of reckless
imprudence resulting in homicide.
Thereafter, Green Star sent a demand letter to respondent Nissin-Universal
Robina Corporation (NURC) for the repair of its passenger bus amounting to P567,070.68.
NURC denied any liability therefor and argued that the criminal case shall determine the
ultimate liabilities of the parties. Thereafter, the criminal case was dismissed without
prejudice, due to insufficiency of evidence.
Sayson and Green Star then filed a complaint for damages against NURC before
the RTC of San Pedro, Laguna. Francis Tinio, one of NURC's employees, was the one who
received the summons. On February 6, 2004, NURC filed a Motion to Dismiss claiming
lack of jurisdiction due to improper service.
On May 5, 2004, the RTC issued a Resolution denying NURC's motion to dismiss.
It ruled that there was substantial compliance because there was actual receipt of the
summons by NURC. The dispositive portion of said Resolution thus reads: TCAScE
WHEREFORE, in view of the foregoing, defendant's "Motion to
Dismiss" is hereby DENIED. 3
Since its Motion for Reconsideration was denied, NURC elevated the case to the
CA via a Petition for Certiorari. On September 17, 2007, the CA reversed the RTC ruling,
hence:
WHEREFORE, the instant Petition for Certiorari is GRANTED.
The assailed Resolutions, dated May 5, 2004 and dated July 26, 2004,
of the Regional Trial Court of San Pedro, Laguna, Branch 31, in Civil
Case No. SPL-0969, are hereby NULLIFIED and a new one rendered
granting Petitioner's Motion to Dismiss, dated February 3, 2004. Private
Respondents' Amended Complaint for Damages filed against Petitioner
Nissin-Universal Robina Corporation is accordingly dismissed for lack
of jurisdiction.
SO ORDERED. 4
Aggrieved, Green Star and Sayson moved for reconsideration, but the same was
denied. Hence, this petition.
The lone issue is whether or not the summons was properly served on NURC,
vesting the trial court with jurisdiction.
The petition is bereft of merit.
It is a well-established rule that the rules on service of summons upon a domestic
private juridical entity must be strictly complied with. Otherwise, the court cannot be said to
have acquired jurisdiction over the person of the defendant. 5
NURC maintains that the RTC did not acquire jurisdiction over it as the summons
was received by its cost accountant, Francis Tinio. It argues that under Section 11, Rule 14
of the 1997 Rules of Court, which provides the rule on service of summons upon a juridical
entity, in cases where the defendant is a domestic corporation like NURC, summons may
be served only through its officers. 6 Thus:
Section 11. Service upon domestic private juridical entity. —
When the defendant is a corporation, partnership or association
organized under the laws of the Philippines with a juridical personality,
service may be made on the president, managing partner, general
manager, corporate secretary, treasurer, or in-house counsel. 7
This provision replaced the former Section 13, Rule 14 of the 1964 Rules of
Court which read:
Section 13. Service upon private domestic corporation or
partnership. — If the defendant is a corporation organized under the
laws of the Philippines or a partnership duly registered, service may be
made on the president, manager, secretary, cashier, agent, or any
of its directors. 8
In the past, the Court upheld service of summons upon a construction project
manager, a corporation's assistant manager, ordinary clerk of a corporation, private
secretary of corporate executives, retained counsel, and officials who had control over the
operations of the corporation like the assistant general manager or the corporation's Chief
 Finance and Administrative Officer. The Court then considered said persons as "agent"
within the contemplation of the old rule. Notably, under the new Rules, service of summons
upon an agent of the corporation is no longer authorized. 9 The rule now likewise states
"general manager" instead of "manager"; "corporate secretary" instead of merely
"secretary"; and "treasurer" instead of "cashier." 10 It has now become restricted, limited,
and exclusive only to the persons enumerated in the aforementioned provision, following
the rule in statutory construction that the express mention of one person excludes all others,
orexpressio unios est exclusio alterius. Service must, therefore, be made only on the
persons expressly listed in the rules. 11 If the revision committee intended to liberalize the
rule on service of summons, it could have easily done so by clear and concise
language. 12 cTDaEH
Here, Tinio, a member of NURC's accounting staff, received the summons on
January 22, 2004. Green Star claims that it was received upon instruction of Junadette
Avedillo, the general manager of the corporation. Such fact, however, does not appear in
the Sheriff's Return. 13 The Return did not even state whether Avedillo was present at the
time the summons was received by Tinio, the supposed assistant manager. Green Star
further avers that the sheriff tendered the summons, but Avedillo simply refused to sign and
receive the same. She then allegedly instructed Tinio to just receive it in her behalf.
However, Green Star never presented said sheriff as witness during the hearing of NURC's
motion to dismiss to attest to said claim. And while the sheriff executed an affidavit which
appears to support such allegation, the same was likewise not presented as evidence. It
was only when the case was already before the CA that said affidavit first surfaced. Since
the service of summons was made on a cost accountant, which is not one of the
designated persons under Section 11 of Rule 14, the trial court did not validly acquire
jurisdiction over NURC, 14 although the corporation may have actually received the
summons. 15 To rule otherwise will be an outright circumvention of the rules, aggravating
further the delay in the administration of justice. 16
At this juncture, it is worth emphasizing that notice to enable the other party to be
heard and to present evidence is not a mere technicality or a trivial matter in any
administrative or judicial proceedings. The service of summons is a vital and indispensable
ingredient of due process. Corporations would be easily deprived of their right to present
their defense in a multi-million peso suit, if the Court would disregard the mandate of the
Rules on the service of summons. 17
WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated
September 17, 2007 and Resolution dated January 22, 2008 in CA-G.R. SP No. 86824 are
hereby AFFIRMED.
SO ORDERED.
||| (Green Star Express, Inc. v. Nissin-Universal Robina Corp., G.R. No. 181517, [July 6, 2015])
 SECOND DIVISION WHEREFORE, judgment is hereby rendered in favor of the
plaintiff, ordering the defendants to jointly and severally pay plaintiff the
following:
[G.R. No. 206147. January 13, 2016.]
1. Purchase price plus 6% per annum from

MICHAEL C. GUY, petitioner, vs. ATTY. GLENN March 3, 1997 up to and until fully paid P18,000.00
C. GACOTT, respondent.
2. Actual Damages 40,936.44

3. Moral Damages 75,000.00

DECISION 4. Corrective Damages 100,000.00

5. Attorney's Fees 60,000.00

MENDOZA, J p: 6. Costs.

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of
Court filed by petitioner Michael C. Guy (Guy), assailing the June 25, 2012 Decision 1 and
the March 5, 2013 Resolution 2 of the Court of Appeals (CA) in CA-G.R. CV No. 94816,
which affirmed the June 28, 2009 3 and February 19, 2010 4Orders of the Regional Trial
Court, Branch 52, Puerto Princesa City, Palawan (RTC), in Civil Case No. 3108, a case for
damages. The assailed RTC orders denied Guy's Motion to Lift Attachment Upon
Personalty 5 on the ground that he was not a judgment debtor.
The Facts
It appears from the records that on March 3, 1997, Atty.
Glenn Gacott (Gacott) from Palawan purchased two (2) brand new transreceivers from
Quantech Systems Corporation (QSC) in Manila through its employee Rey
Medestomas (Medestomas), amounting to a total of P18,000.00. On May 10, 1997, due to
major defects, Gacott personally returned the transreceivers to QSC and requested that
they be replaced. Medestomas received the returned transreceivers and promised to send
him the replacement units within two (2) weeks from May 10, 1997.
Time passed and Gacott did not receive the replacement units as promised. QSC
informed him that there were no available units and that it could not refund the purchased
price. Despite several demands, both oral and written, Gacott was never given a
replacement or a refund. The demands caused Gacott to incur expenses in the total
amount of P40,936.44. Thus, Gacott filed a complaint for damages. Summons was served
upon QSC and Medestomas, afterwhich they filed their Answer, verified by Medestomas
himself and a certain Elton Ong (Ong). QSC and Medestomas did not present any
evidence during the trial. 6
In a Decision, 7 dated March 16, 2007, the RTC found that the two (2)
transreceivers were defective and that QSC and Medestomas failed to replace the same or
return Gacott's money. The dispositive portion of the decision reads:
SO ORDERED.
The decision became final as QSC and Medestomas did not interpose an
appeal. Gacott then secured a Writ of Execution, 8 dated September 26, 2007.
During the execution stage, Gacott learned that QSC was not a corporation, but
was in fact a general partnership registered with the Securities and Exchange
Commission (SEC). In the articles of partnership, 9 Guy was appointed as General
Manager of QSC.
To execute the judgment, Branch Sheriff Ronnie L. Felizarte (Sheriff
Felizarte) went to the main office of the Department of Transportation and
Communications, Land Transportation Office (DOTC-LTO), Quezon City, and verified
whether Medestomas, QSC and Guy had personal properties registered therein.10 Upon
learning that Guy had vehicles registered in his name, Gacott instructed the sheriff to
proceed with the attachment of one of the motor vehicles of Guybased on the certification
issued by the DOTC-LTO. 11 CAIHTE
On March 3, 2009, Sheriff Felizarte attached Guy's vehicle by virtue of the Notice
of Attachment/Levy upon Personalty 12 served upon the record custodian of the
DOTC-LTO of Mandaluyong City. A similar notice was served to Guy through his
housemaid at his residence.
Thereafter, Guy filed his Motion to Lift Attachment Upon Personalty, arguing that
he was not a judgment debtor and, therefore, his vehicle could not be
attached. 13 Gacott filed an opposition to the motion.
The RTC Order
On June 28, 2009, the RTC issued an order denying Guy's motion. It explained
that considering QSC was not a corporation, but a registered partnership, Guyshould be
treated as a general partner pursuant to Section 21 of the Corporation Code, and he may
be held jointly and severally liable with QSC and Medestomas. The trial court wrote:
All persons who assume to act as a corporation knowing it to be
without authority to do so shall be liable as general partners for all debts,
liabilities and damages incurred or arising as a result thereof . . . . Where,
by any wrongful act or omission of any partner acting in the ordinary
course of the business of the partnership . . ., loss or injury is caused to
any person, not being a partner in the partnership, or any penalty is
incurred, the partnership is liable therefore to the same extent as the
partner so acting or omitting to act. All partners are liable solidarily with
the partnership for everything chargeable to the partnership under
Article 1822 and 1823. 14
Accordingly, it disposed:
WHEREFORE, with the ample discussion of the matter, this
Court finds and so holds that the property of movant Michael Guy may
be validly attached in satisfaction of the liabilities adjudged by this Court
against Quantech Co., the latter being an ostensible Corporation and the
movant being considered by this Court as a general partner therein in
accordance with the order of this court impressed in its decision to this
case imposing joint and several liability to the defendants. The Motion to
Lift Attachment Upon Personalty submitted by the movant is therefore
DENIED for lack of merit.
SO ORDERED. 15
Not satisfied, Guy moved for reconsideration of the denial of his motion. He
argued that he was neither impleaded as a defendant nor validly served with summons and,
thus, the trial court did not acquire jurisdiction over his person; that under Article 1824 of
the Civil Code,the partners were only solidarily liable for the partnership liability under
exceptional circumstances; and that in order for a partner to be liable for the debts of the
partnership, it must be shown that all partnership assets had first been exhausted. 16
On February 19, 2010, the RTC issued an order 17 denying his motion.
The denial prompted Guy to seek relief before the CA.
The CA Ruling
On June 25, 2012, the CA rendered the assailed decision dismissing Guy's
appeal for the same reasons given by the trial court. In addition thereto, the appellate court
stated:
We hold that Michael Guy, being listed as a general partner of
QSC during that time, cannot feign ignorance of the existence of the
court summons. The verified Answer filed by one of the partners, Elton
Ong, binds him as a partner because the Rules of Court does not
require that summons be served on all the partners. It is sufficient that
service be made on the "president, managing partner, general manager,
corporate secretary, treasurer or in-house counsel." To Our mind, it is
immaterial whether the summons to QSC was served on the theory that
it was a corporation. What is important is that the summons was served
on QSC's authorized officer . . . . 18
The CA stressed that Guy, being a partner in QSC, was bound by the summons
served upon QSC based on Article 1821 of the Civil Code.The CA further opined that the
law did not require a partner to be actually involved in a suit in order for him to be made
liable. He remained "solidarily liable whether he participated or not, whether he ratified it or
not, or whether he had knowledge of the act or omission." 19
Aggrieved, Guy filed a motion for reconsideration but it was denied by the CA in
its assailed resolution, dated March 5, 2013.
Hence, the present petition raising the following:
ISSUE
THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR IN HOLDING THAT PETITIONER GUY IS
SOLIDARILY LIABLE WITH THE PARTNERSHIP FOR DAMAGES
ARISING FROM THE BREACH OF THE CONTRACT OF SALE WITH
RESPONDENT GACOTT. 20
Guy argues that he is not solidarily liable with the partnership because the
solidary liability of the partners under Articles 1822, 1823 and 1824 of the Civil Codeonly
applies when it stemmed from the act of a partner. In this case, the alleged lapses were not
attributable to any of the partners. Guy further invokes Article 1816 of the Civil Code which
states that the liability of the partners to the partnership is merely joint and subsidiary in
nature. DETACa
In his Comment, 21 Gacott countered, among others, that because Guy was a
general and managing partner of QSC, he could not feign ignorance of the transactions
undertaken by QSC. Gacott insisted that notice to one partner must be considered as
notice to the whole partnership, which included the pendency of the civil suit against it.
In his Reply, 22 Guy contended that jurisdiction over the person of the
partnership was not acquired because the summons was never served upon it or through
any of its authorized office. He also reiterated that a partner's liability was joint and
subsidiary, and not solidary.
The Court's Ruling
The petition is meritorious.
The service of summons was
flawed; voluntary appearance
cured the defect
Jurisdiction over the person, or jurisdiction in personam — the power of the court
to render a personal judgment or to subject the parties in a particular action to the judgment
and other rulings rendered in the action — is an element of due process that is essential in
all actions, civil as well as criminal, except in actions in rem or quasi in rem. 23 Jurisdiction
over the person of the plaintiff is acquired by the mere filing of the complaint in court. As the
initiating party, the plaintiff in a civil action voluntarily submits himself to the jurisdiction of
the court. As to the defendant, the court acquires jurisdiction over his person either by the
proper service of the summons, or by his voluntary appearance in the action. 24
Under Section 11, Rule 14 of the 1997 Revised Rules of Civil Procedure, when
the defendant is a corporation, partnership or association organized under the laws of the
Philippines with a juridical personality, the service of summons may be made on the
president, managing partner, general manager, corporate secretary, treasurer, or in-house
counsel. Jurisprudence is replete with pronouncements that such provision provides
an exclusive enumeration of the persons authorized to receive summons for juridical
entities. 25
The records of this case reveal that QSC was never shown to have been served
with the summons through any of the enumerated authorized persons to receive such,
namely: president, managing partner, general manager, corporate secretary, treasurer or
in-house counsel. Service of summons upon persons other than those officers
enumerated in Section 11 is invalid. Even substantial compliance is not sufficient
service of summons. 26 The CA was obviously mistaken when it opined that it was
immaterial whether the summons to QSC was served on the theory that it was a
corporation. 27
Nevertheless, while proper service of summons is necessary to vest the court
jurisdiction over the defendant, the same is merely procedural in nature and the lack of or
defect in the service of summons may be cured by the defendant's subsequent voluntary
submission to the court's jurisdiction through his filing a responsive pleading such as an
answer. In this case, it is not disputed that QSC filed its Answer despite the defective
summons. Thus, jurisdiction over its person was acquired through voluntary appearance.
A partner must be separately
and distinctly impleaded before
he can be bound by a judgment
The next question posed is whether the trial court's jurisdiction over QSC
extended to the person of Guy insofar as holding him solidarily liable with the partnership.
After a thorough study of the relevant laws and jurisprudence, the Court answers in the
negative.
Although a partnership is based on delectus personae or mutual agency,
whereby any partner can generally represent the partnership in its business affairs, it
is non sequitur that a suit against the partnership is necessarily a suit impleading each and
every partner. It must be remembered that a partnership is a juridical entity that has a
distinct and separate personality from the persons composing it. 28
In relation to the rules of civil procedure, it is elementary that a judgment of a court
is conclusive and binding only upon the parties and their successors-in-interest after the
commencement of the action in court. 29 A decision rendered on a complaint in a civil
action or proceeding does not bind or prejudice a person not impleaded therein, for no
person shall be adversely affected by the outcome of a civil action or proceeding in which
he is not a party. 30 The principle that a person cannot be prejudiced by a ruling rendered
in an action or proceeding in which he has not been made a party conforms to the
constitutional guarantee of due process of law. 31
In Muñoz v. Yabut, Jr., 32 the Court declared that a person not impleaded and
given the opportunity to take part in the proceedings was not bound by the decision
declaring as null and void the title from which his title to the property had been derived. The
effect of a judgment could not be extended to non-parties by simply issuing an alias writ of
execution against them, for no man should be prejudiced by any proceeding to which he
was a stranger. aDSIHc
In Aguila v. Court of Appeals, 33 the complainant had a cause of action against
the partnership. Nevertheless, it was the partners themselves that were impleaded in the
complaint. The Court dismissed the complaint and held that it was the partnership, not its
partners, officers or agents, which should be impleaded for a cause of action against the
partnership itself. The Court added that the partners could not be held liable for the
obligations of the partnership unless it was shown that the legal fiction of a different juridical
personality was being used for fraudulent, unfair, or illegal purposes. 34
Here, Guy was never made a party to the case. He did not have any participation
in the entire proceeding until his vehicle was levied upon and he suddenly became QSC's
"co-defendant debtor" during the judgment execution stage. It is a basic principle of law
that money judgments are enforceable only against the property incontrovertibly belonging
to the judgment debtor. 35 Indeed, the power of the court in executing judgments extends
only to properties unquestionably belonging to the judgment debtor alone. An execution
can be issued only against a party and not against one who did not have his day in court.
The duty of the sheriff is to levy the property of the judgment debtor not that of a third
person. For, as the saying goes, one man's goods shall not be sold for another man's
debts. 36
In the spirit of fair play, it is a better rule that a partner must first be impleaded
before he could be prejudiced by the judgment against the partnership. As will be
discussed later, a partner may raise several defenses during the trial to avoid or mitigate
his obligation to the partnership liability. Necessarily, before he could present evidence
during the trial, he must first be impleaded and informed of the case against him. It would
be the height of injustice to rob an innocent partner of his hard-earned personal belongings
without giving him an opportunity to be heard. Without any showing that Guy himself acted
maliciously on behalf of the company, causing damage or injury to the complainant, then
he and his personal properties cannot be made directly and solely accountable for the
liability of QSC, the judgment debtor, because he was not a party to the case.
Further, Article 1821 of the Civil Code does not state that there is no need to
implead a partner in order to be bound by the partnership liability. It provides that:
Notice to any partner of any matter relating to partnership
affairs, and the knowledge of the partner acting in the particular
matter, acquired while a partner or then present to his mind, and the
knowledge of any other partner who reasonably could and should have
communicated it to the acting partner, operate as notice to or
 knowledge of the partnership, except in the case of fraud on the
partnership, committed by or with the consent of that partner.
[Emphases and Underscoring Supplied]
A careful reading of the provision shows that notice to any partner, under certain
circumstances, operates as notice to or knowledge to the partnership only. Evidently, it
does not provide for the reverse situation, or that notice to the partnership is notice to the
partners. Unless there is an unequivocal law which states that a partner is automatically
charged in a complaint against the partnership, the constitutional right to due process takes
precedence and a partner must first be impleaded before he can be considered as a
judgment debtor. To rule otherwise would be a dangerous precedent, harping in favor of
the deprivation of property without ample notice and hearing, which the Court certainly
cannot countenance.
Partners' liability is subsidiary
and generally joint; immediate
levy upon the property of a
partner cannot be made
Granting that Guy was properly impleaded in the complaint, the execution of
judgment would be improper. Article 1816 of the Civil Code governs the liability of the
partners to third persons, which states that:
Article 1816. All partners, including industrial ones, shall be
liable pro rata with all their property and after all the partnership
assets have been exhausted, for the contracts which may be entered
into in the name and for the account of the partnership, under its
signature and by a person authorized to act for the partnership. However,
any partner may enter into a separate obligation to perform a partnership
contract.
[Emphasis Supplied]
This provision clearly states that, first, the partners' obligation with respect to the
partnership liabilities is subsidiary in nature. It provides that the partners shall only be liable
with their property after all the partnership assets have been exhausted. To say that one's
liability is subsidiary means that it merely becomes secondary and only arises if the one
primarily liable fails to sufficiently satisfy the obligation. Resort to the properties of a partner
may be made only after efforts in exhausting partnership assets have failed or that such
partnership assets are insufficient to cover the entire obligation. The subsidiary nature of
the partners' liability with the partnership is one of the valid defenses against a premature
execution of judgment directed to a partner. ETHIDa
In this case, had he been properly impleaded, Guy's liability would only arise after
the properties of QSC would have been exhausted. The records, however, miserably failed
to show that the partnership's properties were exhausted. The report 37 of the sheriff
showed that the latter went to the main office of the DOTC-LTO in Quezon City and verified
whether Medestomas, QSC and Guy had personal properties registered
therein. Gacott then instructed the sheriff to proceed with the attachment of one of the
motor vehicles of Guy. 38 The sheriff then served the Notice of Attachment/Levy upon
Personalty to the record custodian of the DOTC-LTO of Mandaluyong City. A similar notice
was served to Guy through his housemaid at his residence.
Clearly, no genuine efforts were made to locate the properties of QSC that could
have been attached to satisfy the judgment — contrary to the clear mandate of Article 1816.
Being subsidiarily liable, Guy could only be held personally liable if properly impleaded and
after all partnership assets had been exhausted.
Second, Article 1816 provides that the partners' obligation to third persons with
respect to the partnership liability is pro rata or joint. Liability is joint when a debtor is liable
only for the payment of only a proportionate part of the debt. In contrast, a solidary liability
makes a debtor liable for the payment of the entire debt. In the same vein, Article 1207
does not presume solidary liability unless: 1) the obligation expressly so states; or 2)
the law or nature requires solidarity. With regard to partnerships, ordinarily, the liability of
the partners is not solidary. 39 The joint liability of the partners is a defense that can be
raised by a partner impleaded in a complaint against the partnership.
In other words, only in exceptional circumstances shall the partners' liability be
solidary in nature. Articles 1822, 1823 and 1824 of the Civil Code provide for these
exceptional conditions, to wit:
Article 1822. Where, by any wrongful act or omission of any
partner acting in the ordinary course of the business of the partnership or
with the authority of his co-partners, loss or injury is caused to any
person, not being a partner in the partnership, or any penalty is incurred,
the partnership is liable therefor to the same extent as the partner so
acting or omitting to act.
Article 1823. The partnership is bound to make good the loss:
(1) Where one partner acting within the scope of his apparent
authority receives money or property of a third person and misapplies it;
and
(2) Where the partnership in the course of its business receives
money or property of a third person and the money or property so
received is misapplied by any partner while it is in the custody of the
partnership.
Article 1824. All partners are liable solidarily with the
partnership for everything chargeable to the partnership under Articles
1822 and 1823.
[Emphases Supplied]
In essence, these provisions articulate that it is the act of a partner which caused
loss or injury to a third person that makes all other partners solidarily liable with the
partnership because of the words "any wrongful act or omission of any partner acting in
the ordinary course of the business," "one partner acting within the scope of his apparent
authority" and "misapplied by any partner while it is in the custody of the partnership." The
 obligation is solidary because the law protects the third person, who in good faith relied
upon the authority of a partner, whether such authority is real or apparent. 40
In the case at bench, it was not shown that Guy or the other partners did a
wrongful act or misapplied the money or property he or the partnership received
from Gacott. A third person who transacted with said partnership can hold the partners
solidarily liable for the whole obligation if the case of the third person falls under
Articles 1822 or 1823. 41 Gacott's claim stemmed from the alleged defective
transreceivers he bought from QSC, through the latter's employee, Medestomas. It was for
a breach of warranty in a contractual obligation entered into in the name and for the
account of QSC, not due to the acts of any of the partners. For said reason, it is the general
rule under Article 1816 that governs the joint liability of such breach, and not the exceptions
under Articles 1822 to 1824. Thus, it was improper to hold Guy solidarily liable for the
obligation of the partnership.
Finally, Section 21 of the Corporation Code, 42 as invoked by the RTC, cannot be
applied to sustain Guy's liability. The said provision states that a general partner shall be
liable for all debts, liabilities and damages incurred by an ostensible corporation. It must be
read, however, in conjunction with Article 1816 of theCivil Code,which governs the
liabilities of partners against third persons. Accordingly, whether QSC was an alleged
ostensible corporation or a duly registered partnership, the liability of Guy, if any, would
remain to be joint and subsidiary because, as previously stated, all partners shall be
liable pro rata with all their property and after all the partnership assets have been
exhausted for the contracts which may be entered into in the name and for the account of
the partnership.
WHEREFORE, the petition is GRANTED. The June 25, 2012 Decision and the
March 5, 2013 Resolution of the Court of Appeals in CA-G.R. CV No. 94816 are
hereby REVERSED and SET ASIDE. Accordingly, the Regional Trial Court, Branch 52,
Puerto Princesa City, is ORDERED TO RELEASE Michael C. Guy's Suzuki Grand Vitara
subject of the Notice of Levy/Attachment upon Personalty.
SO ORDERED.
||| (Guy v. Gacott, G.R. No. 206147, [January 13, 2016])
 FIRST DIVISION
[G.R. No. 201378. October 18, 2017.]
G.V. FLORIDA TRANSPORT,
INC., petitioner, vs. TIARA COMMERCIAL
CORPORATION, respondent.
DECISION
JARDELEZA, J p:
This is a petition for review on certiorari 1 under Rule 45 of the Rules of
Court filed by petitioner G.V. Florida Transport, Inc. (GV Florida) to challenge the Decision
of the Court of Appeals (CA) in CA-G.R. SP No. 110760 dated October 13, 2011
(Decision) 2 and its Resolution dated March 26, 2012 (Resolution) 3 which denied
GV Florida's subsequent motion for reconsideration. The CA granted
respondent Tiara Commercial Corporation's (TCC) petition for certiorari and prohibition
under Rule 65 of the Rules of Court. It found that Branch 129 of the Regional Trial Court
(RTC), Caloocan City, acted with grave abuse of discretion when it refused to grant TCC's
motion to dismiss GV Florida's third-party complaint in an action for damages pending
before the RTC.
The bus company Victory Liner, Inc. (VLI) filed an action for damages 4 against
GV Florida and its bus driver Arnold Vizquera (Vizquera) before the RTC. This action arose
out of a vehicle collision between the buses of VLI and GV Florida along Capirpiwan,
Cordon, Isabela on May 1, 2007. In its complaint, VLI claimed that Vizquera's negligence
was the proximate cause of the collision and GV Florida failed to exercise due diligence in
supervising its employee. 5
In its Answer, 6 GV Florida alleged that the Michelin tires of its bus had factory
and mechanical defects which caused a tire blow-out. This, it claimed, was the proximate
cause of the vehicle collision. 7
On April 8, 2008, GV Florida instituted a third-party complaint 8 against TCC.
According to GV Florida, on March 23, 2007, it purchased from TCC fifty (50) brand new
Michelin tires, four (4) of which were installed into the bus that figured in the collision. It
claimed that though Vizquera exerted all efforts humanly possible to avoid the accident, the
bus nevertheless swerved to the oncoming south-bound lane and into the VLI bus.
GV Florida maintains that the "proximate cause of the accident is the tire blow out which
was brought about by factory and mechanical defects in the Michelin tires which third-party
plaintiff GV Florida absolutely and totally had no control over." 9
The RTC ordered the service of summons on TCC. In the return of summons, it
appears that the sheriff served the summons to a certain Cherry Gino-gino (Gino-gino) who
represented herself as an accounting manager authorized by TCC to receive summons on
its behalf. 10
TCC filed a Special Entry of Appearance with an Ex-parte Motion for Extension of
Time to File Responsive Pleading and/or Motion to Dismiss. 11 Therein, it stated that the
summons was received by Gino-gino, its financial supervisor. The RTC granted TCC's
prayer for extension of time to file a responsive pleading or a motion to dismiss.
TCC eventually filed a motion to dismiss 12 GV Florida's third-party complaint.
First, it argued that the RTC never acquired jurisdiction over it due to improper service of
summons. Under Section 11 of Rule 14, there is an exclusive list of the persons upon
whom service of summons on domestic juridical entities may be made. As the summons in
this case was not served on any of the persons listed in Section 11 of Rule 14, there was no
proper service of summons on TCC that would vest the RTC with jurisdiction over it.
Second, TCC stated that the purported cause of action in the third-party complaint is a
claim for an implied warranty which has already prescribed, having been made beyond the
six-month period allowed in the Civil Code. Third, the third-party complaint failed to state a
cause of action against TCC. TCC harped on the fact that GV Florida did not mention in the
third-party complaint that the tires that blew out were purchased from it. Moreover, a tire
blow-out does not relieve a common carrier of its liability. Fourth, TCC argues that there is
a condition precedent which the law requires before a claim for implied warranty may be
made. The party claiming must submit a warranty claim and demand. GV Florida failed to
do so in this case. Fifth, GV Florida has the burden of first establishing that the cause of the
accident was not its own negligence before it can be allowed to file a third-party complaint
against TCC. Sixth, venue was improperly laid since TCC's principal place of business is in
Makati. And finally, TCC states that the third-party complaint should be dismissed due to
GV Florida's failure to implead Michelin as an indispensable party. 13
The RTC denied TCC's motion to dismiss in an Order 14 dated March 2, 2009. It
also denied TCC's subsequent motion for reconsideration in an Order 15 dated July 16,
2009.
On October 5, 2009, TCC filed before the CA a petition for certiorari and
prohibition under Rule 65 of the Rules of Court challenging the RTC's denial of its motion
to dismiss and motion for reconsideration.
In the meantime, TCC filed its Answer Ad Cautelam 16 which repeated its
arguments pertaining to jurisdiction, the prescription of the implied warranty claim, the
impropriety of the third-party complaint and the venue of the action, and the failure to
implead Michelin. Upon order of the RTC, the case was set for pre-trial 17and the parties
submitted their respective pre-trial briefs. Notably, TCC filed its pre-trial brief without any
reservations as to the issue of jurisdiction. Moreover, not only did it fail to include in its
identification of issues the question of the RTC's jurisdiction, TCC even reserved the option
to present additional evidence. 18
On October 13, 2011, the CA rendered its Decision granting TCC's petition and
reversing the Orders of the RTC. Emphasizing that the enumeration in Section 11 of Rule
14 of the Rules of Court is exclusive, the CA found that the RTC never acquired
jurisdiction over TCC because of the improper service of summons upon a person not
named in the enumeration. 19 It then proceeded to rule that GV Florida's third-party
complaint against TCC is a claim for implied warranty which, under Article 1571 of the Civil
Code, must be filed within six months from delivery. While the CA noted that the delivery
receipt for the tires is not in the records of the case, it may be assumed that the tires were
delivered a few days after the purchase date of March 23, 2007. Since GV Florida only filed
the third-party complaint on April 8, 2008, the action has prescribed. 20
GV Florida thus filed this petition for review on certiorari under Rule 45 of the
Rules of Court seeking the reversal of the CA's Decision.
GV Florida argues that the RTC acquired jurisdiction over TCC. While it agrees
that the enumeration in Section 11 of Rule 14 of the Rules of Court is exclusive,
GV Florida argues that service of summons is not the only means through which a court
acquires jurisdiction over a party. Under Section 20 of Rule 14, voluntary appearance of a
defendant is equivalent to service of summons, which then gives a court jurisdiction over
such defendant. In this case, GV Florida claims that TCC voluntarily appeared and
submitted to the jurisdiction of the RTC when it filed motions and pleadings seeking
affirmative relief from said court. It adds that Section 11 of Rule 14 is only a general rule
which allows for substantial compliance when there is clear proof that the domestic juridical
entity in fact received the summons. Moreover, GV Florida argues that improper service of
summons is not a ground for dismissal of the third-party complaint since the RTC has the
authority to issuealias summons. 21
GV Florida also challenges the CA's ruling that its third-party complaint against
TCC should be dismissed on the ground of prescription. It claims that prescription cannot
be the basis of a dismissal when the issue involves evidentiary matters that can only be
threshed out during trial. In this case, GV Florida asserts that the issue of whether its action
has prescribed requires a determination of when the Michelin tires were delivered. Thus,
there is a need to examine the delivery receipts which, as GV Florida highlights, are not in
the records of the CA as stated in the Decision itself. 22
In its Comment, TCC raises the procedural defense that GV Florida's petition was
filed out of time. It insists that GV Florida's motion for extension of time to file its petition is
no longer allowed by virtue of AM No. 07-7-12-SC n which prohibits the filing of motions for
extension of time in petitions filed under Rule 45 and Rule 65 of the Rules of
Court. 23 Further, TCC repeats its position that the RTC did not acquire jurisdiction over it
due to improper service of summons. It also disputes GVFlorida's argument that it
voluntarily appeared. TCC insists that it initially filed a Special Entry of Appearance to
apprise the RTC that "[TCC] is represented without necessarily waiving any right/s of the
latter." 24 TCC adds that in its motion to dismiss and Answer Ad Cautelam, it consistently
raised the question of the propriety of the service of summons and the RTC's lack of
jurisdiction over it. 25
Moreover, TCC insists that GV Florida's implied warranty claim has prescribed
and that the latter has, in any case, failed to comply with a condition precedent — the filing
of a warranty claim or demand. TCC also insists that GV Florida has never complained
about the other Michelin tires it purchased. This, in TCC's view, belies GV Florida's claim
that the tires are defective. 26
TCC also contends that GV Florida's filing of the third-party complaint is improper.
It explains that the test for ascertaining whether a third-party complaint may be filed is
whether the third-party defendant may assert any defense which the third-party plaintiff
may have against the original plaintiff in the original case. However, GV Florida's defense
against VLI, which is lack of negligence, is personal to GV Florida and cannot be raised by
TCC for its own benefit. TCC also asserts that in any case, the venue of the third-party
complaint is improperly laid since TCC's principal place of business is in Makati. 27
Finally, TCC claims that the third-party complaint should be dismissed for failure
to implead an indispensable party — Michelin, the manufacturer of the tires which
GV Florida claims are defective. 28
We GRANT the petition.
I
We emphasize that GV Florida's appeal came from an original special civil action
for certiorari and prohibition under Rule 65 filed before the CA. In cases such as this, the
question of law presented before us is whether the CA was correct in its ruling that the
lower court acted with grave abuse of discretion amounting to lack or excess of
jurisdiction. 29
In particular, the main issue we must resolve is whether the CA correctly found
that the RTC's Order dismissing GV Florida's third-party complaint is tainted with grave
abuse of discretion which, in turn, merits its reversal and the reinstitution of the third-party
complaint.
A
However, we shall first resolve the procedural issue raised by TCC pertaining to
the timeliness of this petition.
Section 2 of Rule 45 of the Rules of Court governing the procedure for filing an
appeal through a petition for review on certiorari expressly allows the filing of a motion for
extension of time. Under the Rules, the period to file a petition for review on certiorari is
fifteen (15) days from receipt of the judgment, resolution, or final order appealed from.
Nevertheless, on motion of the party filed before the reglementary period, this Court may
grant extension for a period not exceeding thirty (30) days. In a Resolution 30 dated July
16, 2012, we granted Florida's motion for extension of time. We thus find GV Florida's
petition to be timely filed.
 B of Court is clearly grave abuse of discretion. 40 In Belongilot v. Cua, 41 we also ruled that
The central issue in this case arose from the RTC's Order dated March 2, 2009
denying TCC's motion to dismiss GV Florida's third-party complaint. In remedial law, an
order denying a motion to dismiss is classified as an interlocutory order. 31 This
classification is vital because the kind of court order determines the particular remedy that
a losing party may pursue. In the case of a final order — one that finally disposes of a case
— the proper remedy is an appeal. On the other hand, when an order is merely
interlocutory — one which refers to something between the commencement and end of the
suit which decides some point or matter but is not the final decision of the whole
controversy, 32 — Section 1 of Rule 41 provides that an appeal cannot be had. In this
instance, a party's recourse is to file an answer, with the option to include grounds stated in
the motion to dismiss, and proceed to trial. In the event that an adverse judgment is
rendered, the party can file an appeal and raise the interlocutory order as an error. 33
This general rule is subject to a narrow exception. A party may question an
interlocutory order without awaiting judgment after trial if its issuance is tainted with grave
abuse of discretion amounting to lack or excess of jurisdiction. 34 In this case, the party
can file a special civil action for certiorari under Rule 65.
A special civil action for certiorari is an original civil action and not an appeal. An
appeal aims to correct errors in judgment and rectify errors in the appreciation of facts and
law which a lower court may have committed in the proper exercise of its jurisdiction. 35 A
special civil action for certiorari, on the other hand, is used to correct errors in jurisdiction.
We have defined an error in jurisdiction as "one where the officer or tribunal acted without
or in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or excess
of jurisdiction." 36
This distinction finds concrete significance when a party pleads before a higher
court seeking the correction of a particular order. When a party seeks an appeal of a final
order, his or her petition must identify the errors in the lower court's findings of fact and law.
Meanwhile, when a party files a special civil action forcertiorari, he or she must allege the
acts constituting grave abuse of discretion.
Grave abuse of discretion has a precise meaning in remedial law. It is not mere
abuse of discretion but must be grave "as when the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, and must be so patent and so
gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty
enjoined or to act at all in contemplation of law." 37 In more concrete terms, not every error
committed by a tribunal amounts to grave abuse of discretion. A misappreciation of the
facts or a misapplication of the law does not, by itself, warrant the filing of a special civil
action for certiorari. There must be a clear abuse of the authority vested in a tribunal. This
abuse must be so serious and so grave that it warrants the interference of the court to
nullify or modify the challenged action and to undo the damage done. 38
In Pahila-Garrido v. Tortogo, 39 we found grave abuse of discretion when a trial
court judge issued a temporary restraining order to prevent the implementation of a writ of
execution for an indefinite period. There, we declared that the blatant violation of the Rules
the Ombudsman's dismissal of a complaint for a violation of Republic Act No. 3019 was
attended with grave abuse of discretion because it used irrelevant considerations and
refused to properly examine pertinent facts in arriving at its decision on the issue of
probable cause. 42 We held that "an examination of the records reveal a collective pattern
of action — done capriciously, whimsically and without regard to existing rules and
attendant facts." 43
There are instances when litigants file a petition seeking the reversal of an
interlocutory order yet their pleadings fail to allege any grave abuse of discretion on the
part of the lower tribunal. Instead, these petitions merely identify errors of fact and law and
seek their reversal. In such a case, the higher court must dismiss the petition because it
fails to allege the core requirement of a Rule 65 petition — the allegation of the presence of
grave abuse of discretion. Without this requirement, litigants can easily circumvent the rule
that an interlocutory order cannot be appealed. They will simply file a pleading
denominated as a special civil action forcertiorari, but which instead raises errors in
judgment and is, in truth, an appeal. An appeal and a special civil action for certiorari are,
however, not interchangeable remedies. 44
In the present case, TCC's petition for certiorari did not identify the RTC's specific
acts constituting grave abuse of discretion. Rather, it imputed errors in the RTC's proper
interpretation of the law. Further, the CA's Decision makes no finding of any grave abuse of
discretion on the part of the RTC. The penultimate paragraph of the Decision, which
summarizes the basis for its ruling, states:
In fine, the RTC failed to acquire jurisdiction over the person of
[TCC] since the service of summons to its Account Manager is not
binding on the corporation. Furthermore, the action brought by
[GV Florida] against [TCC] is already barred by prescription having filed
beyond the six-month prescriptive period. Having settled the pivotal
issues in this case, We find that it is no longer necessary to address
other arguments raised by the petitioner since those questions, if
considered, would not alter the outcome of this case. 45
The CA, in choosing to reverse the RTC in a special civil action for certiorari,
based its decision on its disagreement with the RTC as to the correct application of the law.
This is not an error in jurisdiction but merely an error in judgment. Instead of granting the
petition and reversing the RTC, what the CA should have done was to dismiss the petition
for certiorari for failing to allege grave abuse of discretion. We further note that the RTC
Order challenged before the CA through the petition for certiorari is an interlocutory order.
As there was no showing of grave abuse of discretion, TCC's recourse is to proceed to trial
and raise this error in its appeal in the event of an adverse judgment.
II
Nevertheless, we have examined the errors raised by GV Florida in the appeal
filed before us and hold that the CA erred in its conclusions of law as well.
 We agree that there was improper service of summons on TCC. We, however,
apply jurisprudence and rule that in cases of improper service of summons, courts should
not automatically dismiss the complaint by reason of lack of jurisdiction over the person of
the defendant. The remedy is to issue alias summons and ensure that it is properly
served. 46
Service of summons is the main mode through which a court acquires jurisdiction
over the person of the defendant in a civil case. Through it, the defendant is informed of the
action against him or her and he or she is able to adequately prepare his or her course of
action. Rules governing the proper service of summons are not mere matters of procedure.
They go into a defendant's right to due process. 47 Thus, strict compliance with the rules
on service of summons is mandatory.
Section 11, Rule 14 of the Rules of Court provides the procedure for the
issuance of summons to a domestic private juridical entity. It states:
Sec. 11. Service upon domestic private juridical entity. — When the
defendant is a corporation, partnership or association organized under
the laws of the Philippines with a juridical personality, service may be
made on the president, managing partner, general manager, corporate
secretary, treasurer, or in-house counsel.
This enumeration is exclusive. Section 11 of Rule 14 changed the old rules
pertaining to the service of summons on corporations. While the former rule allowed
service on an agent of a corporation, the current rule has provided for a list of specific
persons to whom service of summons must be made.
In Nation Petroleum Gas, Incorporated v. Rizal Commercial Banking
Corporation, 48 we explained that the purpose of this rule is "to insure that the summons
be served on a representative so integrated with the corporation that such person will know
what to do with the legal papers served on him." 49 This rule requires strict compliance; the
old doctrine that substantial compliance is sufficient no longer applies. 50 In E.B. Villarosa
Partner Co., Ltd. v. Benito, 51 we ruled that the liberal construction of the rules cannot be
invoked as a substitute for the plain requirements stated in Section 11 of Rule
14. 52 In Mason v. Court of Appeals, 53 we definitively ruled that Villarosa settled the
question of the application of the rule on substantial compliance. It does not apply in the
case of Section 11 of Rule 14. We said:
The question of whether the substantial compliance rule is still
applicable under Section 11, Rule 14 of the 1997 Rules of Civil
Procedure has been settled inVillarosa which applies squarely to the
instant case. In the said case, petitioner E.B. Villarosa & Partner Co.
Ltd. (hereafter Villarosa) with principal office address at 102 Juan Luna
St., Davao City and with branches at 2492 Bay View Drive, Tambo,
Parañaque, Metro Manila and Kolambog, Lapasan, Cagayan de Oro
City, entered into a sale with development agreement with private
respondent Imperial Development Corporation. As Villarosa failed to
comply with its contractual obligation, private respondent initiated a suit
for breach of contract and damages at the Regional Trial Court of Makati.
Summons, together with the complaint, was served upon Villarosa
through its branch manager at Kolambog, Lapasan, Cagayan de Oro
City. Villarosa filed a Special Appearance with Motion to Dismiss on the
ground of improper service of summons and lack of jurisdiction. The trial
court denied the motion and ruled that there was substantial compliance
with the rule, thus, it acquired jurisdiction over Villarosa. The latter
questioned the denial before us in its petition for certiorari. We decided
in Villarosa's favor and declared the trial court without jurisdiction to take
cognizance of the case. We held that there was no valid service of
summons on Villarosa as service was made through a person not
included in the enumeration in Section 11, Rule 14 of the 1997 Rules of
Civil Procedure, which revised [ ] Section 13, Rule 14 of the 1964 Rules
of Court. We discarded the trial court's basis for denying the motion to
dismiss, namely, private respondent's substantial compliance with the
rule on service of summons, and fully agreed with petitioner's assertions
that the enumeration under the new rule is restricted, limited and
exclusive, following the rule in statutory construction that expressio
union est exclusio alterius. Had the Rules of Court Revision Committee
intended to liberalize the rule on service of summons, we said, it could
have easily done so by clear and concise language. Absent a manifest
intent to liberalize the rule, we stressed strict compliance with Section 11,
Rule 14 of the 1997 Rules of Civil Procedure.54 (Italics in the original.)
Service of summons, however, is not the only mode through which a court
acquires jurisdiction over the person of the defendant. Section 20 of Rule 14 of theRules of
Court states:
Sec. 20. Voluntary appearance. — The defendant's voluntary
appearance in the action shall be equivalent to service of summons. The
inclusion in a motion to dismiss of other grounds aside from lack of
jurisdiction over the person of the defendant shall not be deemed a
voluntary appearance.
There is voluntary appearance when a party, without directly assailing the court's
lack of jurisdiction, seeks affirmative relief from the court. 55 When a party appears before
the court without qualification, he or she is deemed to have waived his or her objection
regarding lack of jurisdiction due to improper service of summons. 56 When a defendant,
however, appears before the court for the specific purpose of questioning the court's
jurisdiction over him or her, this is a special appearance and does not vest the court with
jurisdiction over the person of the defendant. 57 Section 20 of Rule 14 of the Rules of
Court provides that so long as a defendant raises the issue of lack of jurisdiction, he or she
is allowed to include other grounds of objection. In such case, there is no voluntary
appearance.
Still, improper service of summons and lack of voluntary appearance do not
automatically warrant the dismissal of the complaint. In Lingner & Fisher GMBH v.
Intermediate Appellate Court, 58 we held:
 A case should not be dismissed simply because an original
summons was wrongfully served. It should be difficult to conceive, for
example, that when a defendant personally appears before a Court
complaining that he had not been validly summoned, that the case filed
against him should be dismissed. An alias summons can be actually
served on said defendant. 59 (Italics in the original)
We repeated this doctrine in later cases such as Tung Ho Steel Enterprises
Corporation v. Ting Guan Trading Corporation, 60 Spouses Anunciacion v.
Bocanegra,61 and Teh v. Court of Appeals. 62
In Philippine American Life & General Insurance Company v. Breva, 63 we even
said that there is no grave abuse of discretion when a trial court refuses to dismiss a
complaint solely on the ground of lack of jurisdiction over the person of the defendant
because of improper service of summons. 64
Thus, when there is improper service of summons and the defendant makes a
special appearance to question this, the proper and speedy remedy is for the court to
issue alias summons.
In the present case, the summons was served to Gino-gino, a financial supervisor
of TCC. While she is not one of the officers enumerated in Section 11 of Rule 14, we find
that TCC has voluntarily appeared before (and submitted itself to) the RTC when it filed its
pre-trial brief without any reservation as to the court's jurisdiction over it. At no point in its
pre-trial brief did TCC raise the issue of the RTC's jurisdiction over it. In fact, it even asked
the RTC that it be allowed to reserve the presentation of additional evidence through
documents and witnesses. While it is true that TCC initially filed an Answer Ad Cautelam,
we rule that TCC waived any objection raised therein as to the jurisdiction of the court when
it subsequently filed its pre-trial brief without any reservation and even prayed to be
allowed to present additional evidence. This, to this Court's mind, is an unequivocal
submission to the jurisdiction of the RTC to conduct the trial.
Moreover, we apply the doctrine in Lingner & Fisher GMBH and hold that the
mere fact of improper service of summons does not lead to the outright dismissal of the
third-party complaint. While the RTC should issue an alias summons to remedy the error,
its refusal to dismiss GV Florida's third-party complaint on the ground of lack of jurisdiction
(over TCC due to improper service of summons) does not constitute grave abuse of
discretion.
III
We also disagree with the CA that GV Florida's third-party complaint should be
dismissed on the ground of prescription.
Prescription is a ground for the dismissal of a complaint without going to trial on
the merits. Under Rule 16 of the Rules of Court, it is raised in a motion to dismiss which is
filed before the answer. It may also be raised as an affirmative defense in the answer. At
the discretion of the court, a preliminary hearing on the affirmative defense may be
conducted as if a motion to dismiss was filed. 65 Nevertheless, this is only a general rule.
When the issue of prescription requires the determination of evidentiary matters, it cannot
be the basis of an outright dismissal without hearing.
In Sanchez v. Sanchez (Sanchez), 66 we held that the trial court erred when it
dismissed an action on the ground of prescription on the basis of the pleadings filed and
without requiring any trial. The issue of prescription in Sanchez required the prior
determination of whether the sale subject of the case was valid, void or voidable. This is a
matter that requires the presentation of evidence since the fact of prescription is not
apparent in the pleadings. We said:
The Court has consistently held that the affirmative defense of
prescription does not automatically warrant the dismissal of a complaint
under Rule 16 of theRules of Civil Procedure. An allegation of
prescription can effectively be used in a motion to dismiss only when the
complaint on its face shows that indeed the action has already
prescribed. If the issue of prescription is one involving evidentiary
matters requiring a full-blown trial on the merits, it cannot be determined
in a motion to dismiss x x x. 67 (Citations omitted.)
Here, TCC alleges that GV Florida's third-party complaint (which it argues is
essentially an action for implied warranty) has already prescribed. The Civil Codestates
that this claim must be made within six months from the time of the delivery of the thing sold.
Without preempting the RTC's findings on the validity of the argument that this is a
warranty claim, a finding that the action has prescribed requires the ascertainment of the
delivery date of the tires in question. This, in turn, requires the presentation of the delivery
receipts as well as their identification and authentication. Under the Rules of Court, a party
presenting a document as evidence must first establish its due execution and authenticity
as a preliminary requirement for its admissibility. 68
We find that the reckoning date from which the prescriptive period may be
ascertained is not apparent from the pleadings themselves. We agree with GVFlorida's
observation that the CA itself admitted in its Decision that the delivery receipts do not
appear in the records. A finding of fact as to the date of delivery can only be made after
hearing and reception of evidence. Thus, the CA erred in ruling that GV Florida's third-party
complaint should be dismissed on the ground of prescription.
We further note that the CA based its finding on the delivery date on mere
presumptions. The assailed Decision states that since Florida purchased the Michelin tires
on March 23, 2007, it may be presumed that the delivery was made in the ensuing days.
Since the third-party complaint was filed only on April 8, 2008, or more than one year from
the date of purchase, it concluded that the claim on the implied warranty has
prescribed. 69 Findings of fact, however, cannot be based on mere assumptions.
The Rules of Court provide the process through which factual findings are arrived at. This
procedure must be followed as it is the means chosen by law to ascertain judicial truth.
Relying on probabilities, when the rules provide for a specific procedure to ascertain facts,
cannot be countenanced.
 Since we cannot proceed to rule beyond the question of whether the CA correctly
ruled that the RTC committed grave abuse of discretion, this being the only question of law
presented before us in this petition for review on certiorari, we shall withhold ruling on the
other issues raised by TCC in its Comment which have not been discussed by the CA in
its Decision. In any case, we find that the other matters raised by TCC in its Comment are
questions that should first be threshed out before the RTC.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals
dated October 13, 2011 and its Resolution dated March 26, 2012 are REVERSED. The
Order dated March 2, 2009 of Branch 129 of the Regional Trial Court of Caloocan City
is REINSTATED.
SO ORDERED.
||| (G.V. Florida Transport, Inc. v. Tiara Commercial Corp., G.R. No. 201378, [October 18,
2017])