CIVIL PROCEDURE CASES

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

1. Monarch Insurance Co. Inc. vs. CA 2. Emergency Loan Pawnshop Inc vs. CA 3. Simon vs. Canlas 4. Parayno vs. Jovellanos 5. Camitan vs. CA 6. de los Santos vs. Vda. De Mangubat 7. Pangasinan Five Star Bus Co., Inc. vs. Barredo 8. Perez vs. CA 9. Cano vs. Jumawan G.R. No. 94867 June 8, 2000 G.R. No. 92735 June 8, 2000

MONARCH INSURANCE CO., INC., TABACALERA INSURANCE CO., INC and Hon. Judge AMANTE PURISIMA,petitioners, vs. COURT OF APPEALS and ABOITIZ SHIPPING CORPORATION, respondents.

ALLIED GUARANTEE INSURANCE COMPANY, petitioner, vs. COURT OF APPEALS, Presiding Judge, RTC Manila, Br. 24 and ABOITIZ SHIPPING CORPORATION,respondents.

G.R. No. 95578 June 8, 2000 EQUITABLE INSURANCE CORPORATION, petitioner, vs. COURT OF APPEALS, Former First Division Composed of Hon. Justices RODOLFO NOCON, PEDRO RAMIREZ, and JESUS ELBINIAS and ABOITIZ SHIPPING CORPORATION, respondents.

DE LEON, JR., J.: Before us are three consolidated petitions. G.R. No. 92735 is a petition for review filed under Rule 45 of the Rules of Court assailing the decision of the Court of Appeals dated March 29, 1990 in CA-G.R. SP. Case No. 17427 which set aside the writ of execution issued by the lower court for the full indemnification of the claims of the petitioners, Monarch Insurance Company (hereafter "Monarch") and Tabacalera Insurance Company, Incorporated (hereafter "Tabacalera") against private respondent, Aboitiz Shipping Corporation (hereafter "Aboitiz") on the ground that the latter is entitled to the benefit of the limited liability rule in maritime law; G.R. No. 94867 is a petition for certiorari under Rule 65 of the Rules of Court to annul and set aside the decision of the Court of Appeals dated August 15, 1990 in CA-G.R. SP No. 20844 which ordered the lower court to stay the execution of the judgment in favor of the petitioner, Allied Guarantee Insurance Company (hereafter "Allied") against Aboitiz insofar as it impairs the rights of the other claimants to their pro-rata share in the insurance proceeds from the sinking of the M/V P. Aboitiz, in accordance with the rule on limited liability; and G.R. No. 95578 is a petition for review under Rule 45 of the Rules of Court seeking a reversal of the decision of the Court of Appeals dated August 24, 1990 and its resolution dated October 4, 1990 in C.A. G.R. Civil Case No. 15071 which modified the judgment of the lower court's award of actual damages to petitioner Equitable Insurance Corporation (hereafter "Equitable") to its pro-rata share in the insurance proceeds from the sinking of the M/V P. Aboitiz. All cases arose from the loss of cargoes of various shippers when the M/V P. Aboitiz, a common carrier owned and operated by Aboitiz, sank on her voyage from Hong Kong to Manila on October 31, 1980. Seeking indemnification for the loss of their cargoes, the shippers, their successors-in-interest, and the cargo insurers such as the instant petitioners filed separate suits against Aboitiz before the Regional Trial Courts. The claims numbered one hundred and ten (110) for the total amount of P41,230,115.00 which is almost thrice the

amount of the insurance proceeds of P14,500,000.00 plus earned freight of 500,000.00 according to Aboitiz. To this day, some of these claims, including those of herein petitioners, have not yet been settled. G.R. No. 92735. Monarch and Tabacalera are insurance carriers of lost cargoes. They indemnified the shippers and were consequently subrogated to their rights, interests and actions against Aboitiz, the cargo carrier. 1 Because Aboitiz refused to compensate Monarch, it filed two complaints against Aboitiz, docketed as Civil Cases Nos. 82-2767 and 82-2770. For its part, Tabacalera also filed two complaints against the same defendant, docketed as Civil Cases Nos. 82-2768 and 82-2769. As these four (4) cases had common causes of action, they were consolidated and jointly tried. 2 In Civil Case No. 82-2767 where Monarch also named Malaysian International Shipping Corporation and Litonja Merchant Shipping Agency as Aboitiz's co-defendants, Monarch sough recovery of P29,719.88 representing the value of three (3) pallets of glass tubing that sank with the M/V P. Aboitiz, plus attorney's fees of not less than P5,000.00, litigation expenses, interest at the legal rate on all these amounts, and the cost of suit. 3 Civil Case. No. 82-2770 was a complaint filed by Monarch against Aboitiz and codefendants Compagnie Maritime des Chargeurs Reunis and F.E. Zuellig (M), Inc. for the recovery of P39,597.00 representing the value of the one case motor vehicle parts which was lost when the M/V P. Aboitiz sank on her way to Manila, plus Attorney's fees of not less than P10,000.00 and cost of suit. 4 Tabacalera sought against Franco Belgian Services, F.E. Zuellig and Aboitiz in Civil Case No. 82-2768 the recovery of P284,218.00 corresponding to the value of nine (9) cases of Renault spare parts, P213,207.00 for the value of twenty-five (25) cases of door closers and P42,254.00 representing the value of eighteen (18) cases of plastic spangle, plus attorney's fees of not less than P50,000.00 and cost of suit. 5 In Civil Case No. 82-2769, Tabacalera claimed from Hong Kong Island Shipping Co., Ltd., Citadel Lines and Aboitiz indemnification in the amount of P75,058.00 for the value of four (4) cartons of motor vehicle parts foundered with the M/V P. Aboitiz, plus attorney's fees of not less than P20,000.00 and cost of suit. 6 In its answer with counterclaim, Aboitiz rejected responsibility for the claims on the ground that the sinking of its cargo vessel was due to force majeure or an act of God. 7 Aboitiz was subsequently declared as in default for its failure to appear during the pre-trial. Its counsel fried a motion to set aside the order of default with notice of his withdrawal as such counsel. Before the motion could be acted upon, Judge Bienvenido Ejercjto, the presiding judge of the trial court, was promoted to the then intermediate Appellate Court. The cases were thus re-raffled to Branch VII of the RTC of Manila presided by Judge Amante P. Purisima, the co-petitioner in G.R. No. 92735. Without resolving the pending motion to set aside the order of default, the trial court set the cases for hearing. However, since Aboitiz had repeatedly failed to appear in court, the trial court denied the said motion and allowed Monarch and Tabacalera to present evidence ex-parte. 8 Monarch and Tabacalera proffered in evidence the survey of Perfect Lambert, a surveyor commissioned to investigate the possible cause of the sinking of the cargo vessel. The survey established that on her voyage to Manila from Hong Kong, the vessel did not encounter weather so inclement that Aboitiz would be exculpated from liability for losses. In his note of protest, the master of M/V P. Aboitiz described the wind force encountered by the vessel as from ten (10) to fifteen (15) knots, a weather condition classified as typical and moderate in the South China Sea at that particular time of the year. The survey added that the seaworthiness of the vessel was in question especially because the breaches of the hull and the serious flooding of two (2) cargo holds occurred simultaneously in "seasonal weather." 9 In due course, the trial court rendered judgment against Aboitiz but the complaint against all the other defendants was dismissed. Aboitiz was held liable for the following: (a) in Civil Case No. 82-2767, P29,719.88 with legal interest from the filing of the complaint until fully paid plus attorney's fees of P30,000.00 and cost of suit; (b) in Civil Case No. 82-2768, P539,679.00 with legal interest of 12% per annum from date of filing of the complaint until fully paid, plus attorney's fees of P30,000.00, litigation expenses and cost of suit; (c) in Civil Case No. 82-2769, P75,058.00 with legal interest of 12% per annum from date of filing of the complaint untilfully paid, plus P5,000.00 attorney's fees, litigation expenses and cost of suit, and (d) in Civil Case No. 822770, P39,579.66 with legal interest of 12% per annum from date of filing of the complaint until fully paid, plus attorney's fees of P5,000.00, litigation expenses and cost of suit.

Aboitiz filed a motion for reconsideration of the decision and/or for new trial to lift the order of default. The court denied the motion on August 27, 1986. 10 Aboitiz appealed to the Court of Appeals but the appeal was dismissed for its failure to file appellant's brief. It subsequently filed an urgent motion for reconsideration of the dismissal with prayer for the admission of its attached appellant's brief. The appellate court denied that motion for lack of merit in a Resolution dated July 8, 1988. 11 Aboitiz thus filed a petition for review before this Court. Docketed as G.R. No. 84158, the petition was denied in the Resolution of October 10, 1988 for being filed out of time. Aboitiz's motion for the reconsideration of said Resolution was similarly denied. 12 Entry of judgment was made in the case. 13 Consequently, Monarch and Tabacalera moved for execution of judgment. The trial court granted the motion on April 4, 1989 14 and issued separate writs of execution. However, on April 12, 1989, Aboitiz, invoking the real and hypothecary nature of liability in maritime law, filed an urgent motion to quash the writs of execution. 15 According to Aboitiz, since its liability is limited to the value of the vessel which was insufficient to satisfy the aggregate claims of all 110 claimants, to indemnify Monarch and Tabacalera ahead of the other claimants would be prejudicial to the latter. Monarch and Tabacalera opposed the motion to quash. 16 On April 17, 1989, before the motion to quash could be heard, the sheriff levied upon five (5) heavy equipment owned by Aboitiz for the public auction sale. At said sale, Monarch was the highest bidder for one (1) unit FL151 Fork Lift (big) and one (1) unit FL-25 Fork Lift (small). Tabacalera was also the highest bidder for one (1) unit TCH TL-251 Hyster Container Lifter, one (1) unit Hyster Top Lifter (out of order), and one (1) unit ER-353 Crane. The corresponding certificates of sale 17 were issued to Monarch and Tabacalera. On April 18, 1989, the day before the hearing of the motion to quash, Aboitiz filed a supplement to its motion, to add the fact that an auction sale had taken place. On April 19, 1989, Judge Purisima issued an order denying the motion to quash but freezing execution proceedings for ten (10) days to give Aboitiz time to secure a restraining order from a higher court. 18 Execution was scheduled to resume to fully satisfy the judgment when the grace period shall have lapsed without such restraining order having been obtained by Aboitiz. Aboitiz filed with the Court of Appeals a petition for certiorari and prohibition with prayer for preliminary injunction and/or temporary restraining order under CA-G.R. No. SP-17427. 19 On March 29, 1990, the appellate court rendered a Decision the dispositive portion of which reads: WHEREFORE, the writ of certiorari is hereby granted, annulling the subject writs of execution, auction sale, certificates of sale, and the assailed orders of respondent Judge dated April 4 and April 19, 1989 insofar as the money value of those properties of Aboitiz, levied on execution and sold at public auction, has exceeded the pro-rata shares of Monarch and Tabacalera in the insurance proceeds of Aboitiz in relation to the pro-rata shares of the 106 other claimants. The writ of prohibition is also granted to enjoin respondent Judge, Monarch and Tabacalera from proceeding further with execution of the judgments in question insofar as the execution would satisfy the claims of Monarch and Tabacalera in excess of their prorata shares and in effect reduce the balance of the proceeds for distribution to the other claimants to their prejudice. The question of whether or how much of the claims of Monarch and Tabacalera against the insurance proceeds has already been settled through the writ of execution and auction sale in question, being factual issues, shall be threshed out before respondent judge. The writ of preliminary injunction issued in favor of Aboitiz, having served its purpose, is hereby lifted. No pronouncement as to costs.1wphi1.nt SO ORDERED.
20

Hence, the instant petition for review on certiorari where petitioners Monarch, Tabacalera and Judge Purisima raise the following assignment of errors:

1. The appellate court grievously erred in re-opening the Purisima decisions, already final and executory, on the alleged ground that the issue of real and hypothecary liability had not been previously resolved by Purisima, the appellate court, and this Hon. Supreme Court; 2. The appellate court erred when it resolved that Aboitiz is entitled to the limited real and hypothecary liability of a ship owner, considering the facts on record and the law on the matter. 3. The appellate court erred when it concluded that Aboitiz does not have to present evidence to prove its entitlement to the limited real and hypothecary liability. 4. The appellate court erred in ignoring the case of "Aboitiz Shipping Corporation v. CA and Allied Guaranty Insurance Co., Inc. (G.R. No. 88159), decided by this Honorable Supreme Court as early as November 13, 1989, considering that said case, now factual and executory, is in pari materia with the instant case. 5. The appellate court erred in not concluding that irrespective of whether Aboitiz is entitled to limited hypothecary liability or not, there are enough funds to satisfy all the claimants. 6. The appellate court erred when it concluded that Aboitiz had made an "abandonment" as envisioned by Art. 587 of the Code of Commerce. 7. The appellate court erred when it concluded that other claimants would suffer if Tabacalera and Monarch would be fully paid. 8. The appellate court erred in concluding that certiorari was the proper remedy for Aboitiz. 21 G.R. NOS. 94867 & 95578 Allied as insurer-subrogee of consignee Peak Plastic and Metal Products Limited, filed a complaint against Aboitiz for the recovery of P278,536.50 representing the value of 676 bags of PVC compound and 10 bags of ABS plastic lost on board the M/V P. Aboitiz, with legal interest from the date of filing of the complaint, plus attorney's fees, exemplary damages and costs. 22 Docketed as Civil Case No. 138643, the case was heard before the Regional Trial Court of Manila, Branch XXIV, presided by Judge Sergio D. Mabunay. On the other hand, Equitable, as insurer-subrogee of consignee-assured Axel Manufacturing Corporation, filed an amended complaint against Franco Belgian Services, F.E. Zuellig, Inc. and Aboitiz for the recovery of P194,794.85 representing the value of 76 drums of synthetic organic tanning substances and 1,000 kilograms of optical bleaching agents which were also lost on board the M/V P. Aboitiz, with legal interest from the date of filing of the complaint, plus 25% attorney's fees, exemplary damages, litigation expenses and costs of suit. 23 Docketed as Civil Case No. 138396, the complaint was assigned to the Regional Trial Court of Manila, Branch VIII. In its answer with counterclaim in the two cases, Aboitiz disclaimed responsibility for the amounts being recovered, alleging that the loss was due to a fortuitous event or an act of God. It prayed for the dismissal of the cases and the payment of attorney's fees, litigation expenses plus costs of suit. It similarly relied on the defenses of force mejeure, seaworthiness of the vessel and exercise of due diligence in the carriage of goods as regards the cross-claim of its co-defendants. 24 In support of its position, Aboitiz presented the testimonies of Capt. Gerry N. Racines, master mariner of the M/V P. Aboitiz, and Justo C. Iglesias, a meteorologist of the Philippine Atmospheric Geophysical and Astronomical Services Administration (PAGASA). The gist of the testimony of Capt. Racines in the two cases follows:

The M/V P. Aboitiz left Hong Kong for Manila at about 7:30 in the evening of October 29, 1980 after securing a departure clearance from the Hong Kong Port Authority. The departure was delayed for two hours because he (Capt. Racines) was observing the direction of the storm that crossed the Bicol Region. He proceeded with the voyage only after being informed that the storm had abated. At about 8:00 o'clock in the morning of October 30, 1980, after more than twelve (12) hours of navigation, the vessel suddenly encountered rough seas with waves about fifteen to twenty-five feet high. He ordered his chief engineer to check the cargo holds. The latter found that sea water had entered cargo hold Nos. 1 and 2. He immediately directed that water be pumped out by means of the vessel's bilge pump, a device capable of ejecting 180 gallons of water per minute. They were initially successful in pumping out the water. At 6:00 a.m. of October 31, 1980, however, Capt. Racines received a report from his chief engineer that the water level in the cargo holds was rapidly rising. He altered the vessel's course and veered towards the northern tip of Luzon to prevent the vessel from being continuously pummeled by the waves. Despite diligent efforts of the officers and crew, however, the vessel, which was approximately 250 miles away from the eye of the storm, began to list on starboard side at 27 degrees. Capt. Racines and his crew were not able to make as much headway as they wanted because by 12:00 noon of the same day, the cargo holds were already flooded with sea water that rose from three to twelve feet, disabling the bilge pump from containing the water. The M/V P. Aboitiz sank at about 7:00 p.m. of October 31, 1980 at latitude 18 degrees North, longitude 170 degrees East in the South China Sea in between Hong Kong, the Philippines and Taiwan with the nearest land being the northern tip of Luzon, around 270 miles from Cape Bojeador, Bangui, Ilocos Norte. Responding to the captain's distress call, the M/V Kapuas (Capuas) manned by Capt. Virgilio Gonzales rescued the officers and crew of the ill-fated M/V P. Aboitiz and brought them to Waileen, Taiwan where Capt. Racines lodged his marine protest dated November 3, 1980. Justo Iglesias, meteorologist of PAGASA and another witness of Aboitiz, testified in both cases that during the inclusive dates of October 28-31, 1980, a stormy weather condition prevailed within the Philippine area of responsibility, particularly along the sea route from Hong Kong to Manila, because of tropical depression "Yoning."25 PAGASA issued weather bulletins from October 28-30, 1980 while the storm was still within Philippine territory. No domestic bulletins were issued the following day when the storm which hit Eastern Samar, Southern Quezon and Southern Tagalog provinces, had made its exit to the South China Sea through Bataan. Allied and Equitable refuted the allegation that the M/V P. Aboitiz and its cargo were lost due to force majeure, relying mainly on the marine protest filed by Capt. Racines as well as on the Beaufort Scale of Wind. In his marine protest under oath, Capt. Racines affirmed that the wind force an October 29-30, 1980 was only ten (10) to fifteen (15) knots. Under the Beaufort Scale of Wind, said wind velocity falls under scale No. 4 that describes the sea condition as "moderate breeze," and "small waves becoming longer, fairly frequent white horses." 26 To fortify its position, Equitable presented Rogelio T. Barboza who testified that as claims supervisor and processor of Equitable, he recommended payment to Axel Manufacturing Corporation as evidenced by the cash voucher, return check and subrogation receipt. Barboza also presented a letter of demand to Aboitiz which, however, the latter ignored. 27 On April 24, 1984, the trial court rendered a decision that disposed of Civil Case No. 138643 as follows: WHEREFORE, judgment is hereby rendered ordering defendant Aboitiz Shipping Company to pay plaintiff Allied Guarantee Insurance Company, Inc. the sum of P278,536.50, with legal interest thereon from March 10, 1981, then date of the filing of the complaint, until fully paid, plus P30,000.00 as attorney's fees, with costs of suit. SO ORDERED.
28

A similar decision was arrived at in Civil Case No. 138396, the dispositive portion of which reads: WHEREFORE, in view of the foregoing, this Court hereby renders judgment in favor of plaintiff and against defendant Aboitiz Shipping Corporation, to pay the sum of

P194,794.85 with legal rate of interest thereon from February 27, 1981 until fully paid; attorney's fees of twenty-five (25%) percent of the total claim, plus litigation expenses and costs of litigation. SO ORDERED.
29

From the decision of the trial court in Civil Case No. 138396 that favored Equitable, Aboitiz likewise appealed to the Court of Appeals through CA-G.R. CV No. 15071. On August 24, 1990, the Court of Appeals rendered the Decision quoting extensively its Decision in CA-G.R. No. SP-17427 (now G.R. No. 92735) and disposing of the appeal as follows: WHEREFORE, we hereby affirm the trial court's awards of actual damages, attorney's fees and litigation expenses, with the exception of legal interest, in favor of plaintiff-appellee Equitable Insurance Corporation as subrogee of the consignee for the loss of its shipment aboard the M/V "P. Aboitiz" and against defendant-appellant Aboitiz Shipping Corporation. However, the amount and payment of those awards shall be subject to a determination of the pro-rata share of said appellee in relation to the pro-rata shares of the 109 other claimants, which determination shall be made by the trial court. This case is therefore hereby ordered remanded to the trial court which shall reopen the case and receive evidence to determine appellee's pro-rata share as aforesaid. No pronouncement as to costs. SO ORDERED.
33

In Civil Case No. 138643, Aboitiz appealed to the Court of Appeals under CA-G.R. CV No. 04121. On March 23, 1987, the Court of Appeals affirmed the decision of the lower court. A motion for reconsideration of the said decision was likewise denied by the Court of Appeals on May 3, 1989. Aggrieved, Aboitiz then filed a petition for review with this Court docketed as G.R. No. 88159 which was denied for lack merit. Entry of judgment was made and the lower court's decision in Civil Case No. 138643 became final and executory. Allied prayed for the issuance of a writ of execution in the lower court which was granted by the latter on April 4, 1990. To stay the execution of the judgment of the lower court, Aboitiz filed a petition for certiorari and prohibition with preliminary injunction with the Court of Appeals docketed as CA-G.R. SP No. 20844. 30 On August 15, 1990, the Court of Appeals rendered the assailed decision, the dispositive portion of which reads as follows. WHEREFORE, the challenged order of the respondent Judge dated April 4, 1990 granting the execution is hereby set aside. The respondent Judge is further ordered to stay the execution of the judgment insofar as it impairs the rights of the 100 other claimants to the insurance proceeds including the rights of the petitioner to pay more than the value of the vessel or the insurance proceeds and to desist from executing the judgment insofar as it prejudices the pro-rata share of all claimants to the insurance proceeds. No pronouncement as to costs. SO ORDERED.
31

On September 12, 1990, Equitable moved to reconsider the Court of Appeals' Decision. The Court of Appeals denied the motion for reconsideration on October 4, 1990. 34 Consequently, Equitable filed with this Court a petition for review alleging the following assignment of errors: 1. Respondent Court of Appeals, with grave abuse of discretion amounting to lack or excess of jurisdiction, erroneously brushed aside the doctrine in G.R. No. 88159 which is now the law of the case as held in G.R. No. 89757 involving the same and identical set of facts and cause of action relative to the sinking of the M/V "P. Aboitiz" and observance of the time honored principles of stare decisis, and estoppel by judgment. 2. Real and hypothecary rule under Articles 587, 590 and 837 of the Code of Commerce which is the basis of the assailed decision and resolution is without application in the face of the facts found by the trial court which conforms to the conclusion and finding of facts arrived at in a similar and identical case involving the same incident and parties similarly situated in G.R. No. 88159 already declared as the "law of the case" in a subsequent decision of this Honorable Court in G.R. No. 89757 promulgated on August 6, 1990. 3. Respondent Court of Appeals gravely erred in concluding that limited liability rule applies in case of loss of cargoes when the law itself does not distinguish; fault of the shipowner or privity thereto constitutes one of the exceptions to the application of limited liability under Article 587, 590 and 837 of the Code of Commerce, Civil Code provisions on common carriers for breach of contract of carriage prevails. 35 These three petitions in G.R. Nos. 92735, 94867 and 95578 were consolidated in the Resolution of August 5, 1991 on the ground that the petitioners "have identical causes of action against the same respondent and similar reliefs are prayed for." 36 The threshold issue in these consolidated petitions is the applicability of the limited liability rule in maritime law in favor of Aboitiz in order to stay the execution of the judgments for full indemnification of the losses suffered by the petitioners as a result of the sinking of the M/V P. Aboitiz. Before we can address this issue, however, there are procedural matters that need to be threshed out. First. At the outset, the Court takes note of the fact that in G.R. No. 92735, Judge Amante Purisima, whose decision in the Regional Trial Court is sought to be upheld, is named as a co-petitioner. In Calderon v. Solicitor General, 37 where the petitioner in the special civil action of certiorari and mandamus was also the

Hence, Allied filed the instant petition for certiorari, mandamus and injunction with preliminary injunction and/or restraining order before this Court alleging the following assignment of errors: 1. Respondent Court of Appeals gravely erred in staying the immediate execution of the judgment of the lower court as it has no authority nor jurisdiction to directly or indirectly alter, modify, amend, reverse or invalidate a final judgment as affirmed by the Honorable Supreme Court in G.R. No. 88159. 2. Respondent Court of Appeals with grave abuse of discretion amounting to lack or excess of jurisdiction, brushed aside the doctrine in G.R. No. 88159 which is now the law of the case and observance of time honored principles of stare decisis, res adjudicataand estoppel by judgment. 3. Real and hypothecary rule under Articles 587, 590 and 837 of the Code of Commerce which is the basis of the questioned decision (Annex "C" hereof) is without application in the face of the facts found by the lower court, sustained by the Court of Appeals in CA-G.R. No. 04121 and affirmed in toto by the Supreme Court in G.R. No. 88159. 4. Certiorari as a special remedy is unavailing for private respondent as there was no grave abuse of discretion nor lack or excess of jurisdiction for Judge Mabunay to issue the order of April 4, 1990 which was in accord with law and jurisprudence, nor were there intervening facts and/or supervening events that will justify respondent court to issue a writ of certiorari or a restraining order on a final and executory judgment of the Honorable Supreme Court. 32

judge whose order was being assailed, the Court held that said judge had no standing to file the petition because he was merely a nominal or formal party-respondent under Section 5 of Rule 65 of the Rules of Court. He should not appear as a party seeking the reversal of a decision that is unfavorable to the action taken by him. The Court there said: Judge Calderon should be-reminded of the well-known doctrine that a judge should detach himself from cases where his decision is appealed to a higher court for review. The raison d'etre for such doctrine is the fact that a judge is not an active combatant in such proceeding and must leave the opposing parties to contend their individual positions and for the appellate court to decide the issues without his active participation. By filing this case, petitioner in a way ceased to be judicial and has become adversarial instead. 38 While the petition in G.R. No. 92735 does not expressly show whether or not Judge Purisima himself is personally interested in the disposition of this petition or he was just inadvertently named as petitioner by the real parties in interest, the fact that Judge Purisima is named as petitioner has not escaped this Court's notice. Judges and litigants should be reminded of the basic rule that courts or individual judges are not supposed to be interested "combatants" in any litigation they resolve. Second. The petitioners contend that the inapplicability of the limited liability rule to Aboitiz has already been decided on by no less than this Court in G.R. No. 88159 as early as November 13, 1989 which was subsequently declared as "law of the case" in G.R. No. 89757 on August 6, 1990. Herein petitioners cite the aforementioned cases in support of their theory that the limited liability rule based on the real and hypothecary nature of maritime law has no application in the cases at bar. The existence of what petitioners insist is already the "law of the case" on the matter of limited liability is at best illusory. Petitioners are either deliberately misleading this Court or profoundly confused. As elucidated in the case of Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance Corporation, 39 An examination of the November 13, 1989 Resolution in G.R. No. 88159 (pp. 280282, Rollo) shows that the same settles two principal matters, first of which is that the doctrine of primary administrative jurisdiction is not applicable therein; and second is that a limitation of liability in said case would render inefficacious the extraordinary diligence required by law of common carriers. It should be pointed out, however, that the limited liability discussed in said case is not the same one now in issue at bar, but an altogether different aspect. The limited liability settled in G.R. No. 88159 is that which attaches to cargo by virtue of stipulations in the Bill of Lading, popularly known as package limitation clauses, which in that case was contained in Section 8 of the Bill of Lading and which limited the carrier's liability to US$500.00 for the cargo whose value was therein sought to be recovered. Said resolution did not tackle the matter of the Limited Liability Rule arising out of the real and hypothecary nature of maritime law, which was not raised therein, and which is the principal bone of contention in this case. While the matters threshed out in G.R. No. 88159, particularly those dealing with the issues on primary administrative jurisdiction and the package liability limitation provided in the Bill of Lading are now settled and should no longer be touched, the instant case raises a completely different issue. 40 Third. Petitioners asseverate that the judgments of the lower courts, already final and executory, cannot be directly or indirectly altered, modified, amended, reversed or invalidated. The rule that once a decision becomes final and executory, it is the ministerial duty of the court to order its execution, is not an absolute one: We have allowed the suspension of execution in cases of special and exceptional nature when it becomes imperative in the higher interest of justice. 41 The unjust and inequitable effects upon various other claimants against Aboitiz should we allow the execution of judgments for the full indemnification of petitioners' claims impel us to uphold the stay of execution as ordered by the respondent Court of Appeals. We reiterate our pronouncement in Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance Corporation on this very same issue.

This brings us to the primary question herein which is whether or not respondent court erred in granting execution of the full judgment award in Civil Case No. 14425 (G.R. No. 89757), thus effectively denying the application of the limited liability enunciated under the appropriate articles of the Code of Commerce. . . . . Collaterally, determination of the question of whether execution of judgments which have become final and executory may be stayed is also an issue. We shall tackle the latter issue first. This Court has always been consistent in its stand that the very purpose for its existence is to see the accomplishment of the ends of justice. Consistent with this view, a number of decisions have originated herefrom, the tenor of which is that no procedural consideration is sancrosanct if such shall result in the subverting of justice. The right to execution after finality of a decision is certainly no exception to this. Thus, in Cabrias v. Adil (135 SCRA 355 [1885]), this Court ruled that: xxx xxx xxx . . . every court having jurisdiction to render a particular judgment has inherent power to enforce it, and to exercise equitable control over such enforcement. The court has authority to inquire whether its judgment has been executed, and will remove obstructions to the enforcement thereof. Such authority extends not only to such orders and such writs as may be necessary to prevent an improper enforcement of the judgment. If a judgment is sought to be perverted and made a medium of consummating a wrong the court on proper application can prevent it. 42 Fourth. Petitioners in G.R. No. 92735 ever that it was error for the respondent Court of Appeals to allow Aboitiz the benefit of the limited liability rule despite its failure to present evidence to prove its entitlement thereto in the court below. Petitioners Monarch and Tabacalera remind this Court that from the inception of G.R. No. 92735 in the lower court and all the way to the Supreme Court, Aboitiz had not presented an iota of evidence to exculpate itself from the charge of negligence for the simple reason that it was declared as in default. 43 It is true that for having been declared in default, Aboitiz was precluded from presenting evidence to prove its defenses in the court a quo. We cannot, however, agree with petitioners that this circumstance prevents the respondent Court of Appeals from taking cognizance of Aboitiz' defenses on appeal. It should be noted that Aboitiz was declared as in default not for its failure to file an answer but for its absence during pre-trial and the trial proper. In Aboitiz' answer with counterclaim, it claimed that the sinking of the M/V P. Aboitiz was due to an act of God or unforeseen event and that the said ship had been seaworthy and fit for the voyage. Aboitiz also alleged that it exercised the due diligence required by law, and that considering the real and hypothecary nature of maritime trade, the sinking justified the extinguishment of its liability for the lost shipment. 44 A judgment of default does not imply a waiver of rights except that of being heard and presenting evidence in defendant's favor. It does not imply admission by the defendant of the facts and causes of action of the plaintiff, because the codal section 45 requires the latter to adduce evidence in support of his allegations as an indispensable condition before final judgment could be given in his favor. Nor could it be interpreted as an admission by the defendant that the plaintiff's causes of action find support in the law or that the latter is entitled to the relief prayed for. 46 This is especially true with respect to a defendant who had filed his answer but had been subsequently declared in default for failing to appear at the trial since he has had an opportunity to traverse, viahis answer, the material averments contained in the complaint. Such defendant has a better standing than a defendant who has neither answered nor appeared at trial. 47 The former should be allowed to reiterate all affirmative defenses pleaded in his answer before the Court of Appeals. Likewise, the Court of Appeals may review the correctness of the evaluation of the plaintiffs evidence by the lower court. It should also be pointed out that Aboitiz is not raising the issue of its entitlement to the limited liability rule for the first time on appeal thus, the respondent Court of Appeals may properly rule on the same.

However, whether or not the respondent Court of Appeals erred in finding, upon review, that Aboitiz is entitled to the benefit of the limited liability rule is an altogether different matter which shall be discussed below. Rule on Limited Liability. The petitioners assert in common that the vessel M/V P. Aboitiz did not sink by reason offorce majeure but because of its unseaworthiness and the concurrent fault and/or negligence of Aboitiz, the captain and its crew, thereby barring Aboitiz from availing of the benefit of the limited liability rule. The principle of limited liability is enunciated in the following provisions of the Code of Commerce: Art. 587. The shipagent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of goods which he loaded on the vessel; but he may exempt himself therefrom by abandoning the vessel with all the equipments and the freight it may have earned during the voyage. Art. 590. The co-owners of a vessel shall be civilly liable in the proportion of their interests in the common fund for the results of the acts of the captain referred to in Art. 587. Each co-owner may exempt himself from his liability by the abandonment, before a notary, of the part of the vessel belonging to him. Art. 837. The civil liability incurred by shipowners in the case prescribed in this section, shall be understood as limited to the value of the vessel with all its appurtenances and the freightage served during the voyage. Art. 837 appeals the principle of limited liability in cases of collision hence, Arts. 587 and 590 embody the universal principle of limited liability in all cases. In Yangco v. Laserna, 48 this Court elucidated on the import of Art. 587 as follows: The provision accords a shipowner or agent the right of abandonment; and by necessary implication, his liability is confined to that which he is entitled as of right to abandon-"the vessel with all her equipments and the freight it may have earned during the voyage." It is true that the article appears to deal only with the limited liability of the shipowners or agents for damages arising from the misconduct of the captain in the care of the goods which the vessel carries, but this is a mere deficiency of language and in no way indicates the true extent of such liability. The consensus of authorities is to the effect that notwithstanding the language of the aforequoted provision, the benefit of limited liability therein provided for, applies in all cases wherein the shipowner or agent may properly be held liable for the negligent or illicit acts of the captain. 49 "No vessel, no liability," expresses in a nutshell the limited liability rule. The shipowner's or agent's liability is merely co-extensive with his interest in the vessel such that a total loss thereof results in its extinction. The total destruction of the vessel extinguishes maritime liens because there is no longer any res to which it can attach. 50This doctrine is based on the real and hypothecary nature of maritime law which has its origin in the prevailing conditions of the maritime trade and sea voyages during the medieval ages, attended by innumerable hazards and perils. To offset against these adverse conditions and to encourage shipbuilding and maritime commerce, it was deemed necessary to confine the liability of the owner or agent arising from the operation of a ship to the vessel, equipment, and freight, or insurance, if any. 51 Contrary to the petitioners' theory that the limited liability rule has been rendered obsolete by the advances in modern technology which considerably lessen the risks involved in maritime trade, this Court continues to apply the said rule in appropriate cases. This is not to say, however, that the limited liability rule is without exceptions, namely: (1) where the injury or death to a passenger is due either to the fault of the shipowner, or to the concurring negligence of the shipowner and the captain; 52 (2) where the vessel is insured; and (3) in workmen's compensation claims. 53 We have categorically stated that Article 587 speaks only of situations where the fault or negligence is committed solely by the captain. In cases where the ship owner is likewise to be blamed, Article 587 does not apply. Such a situation will be covered by the provisions of the Civil Code on common carriers. 54

A finding that a fortuitous event was the sole cause of the loss of the M/V P. Aboitiz would absolve Aboitiz from any and all liability pursuant to Article 1734(1) of the Civil Code which provides in part that common carriers are responsible for the loss, destruction, or deterioration of the goods they carry, unless the same is due to flood, storm, earthquake, lightning, or other natural disaster or calamity. On the other hand, a finding that the M/V P. Aboitiz sank by reason of fault and/or negligence of Aboitiz, the ship captain and crew of the M/V P. Aboitiz would render inapplicable the rule on limited liability. These issues are therefore ultimately questions of fact which have been subject of conflicting determinations by the trial courts, the Court of Appeals and even this Court. In Civil Cases Nos. 82-2767-82-2770 (now G.R. No. 92735), after receiving Monarch's and Tabacalera's evidence, the trial court found that the complete loss of the shipment on board the M/V P. Aboitiz when it sank was neither due to a fortuitous event nor a storm or natural cause. For Aboitiz' failure to present controverting evidence, the trial court also upheld petitioners' allegation that the M/V P. Aboitiz was unseaworthy. 55 However, on appeal, respondent Court of Appeals exculpated Aboitiz from fault or negligence and ruled that: . . ., even if she (M/V P. Aboitiz) was found to be unseaworthy, this fault (distinguished from civil liability) cannot be laid on the shipowner's door. Such fault was directly attributable to the captain. This is so, because under Art. 612 of the Code of Commerce, among the inherent duties of a captain, are to examine the vessel before sailing and to comply with the laws on navigation. 56 and that: . . . although the shipowner may be held civilly liable for the captain's fault . . . having abandoned the vessel in question, even if the vessel was unseaworthy due to the captain's fault, Aboitiz is still entitled to the benefit under the rule of limited liability accorded to shipowners by the Code of Commerce. 57 Civil Case No. 138396 (now G.R. No. 95578) was similarly resolved by the trial court, which found that the sinking of the M/V P. Aboitiz was not due to an act of God or force majeure. It added that the evidence presented by the petitioner Equitable demonstrated the negligence of Aboitiz Shipping Corporation in the management and operation of its, vessel M/V P. Aboitiz. 58 However, Aboitiz' appeal was favorably acted upon by the respondent Court of Appeals which reiterated its ruling in G.R. No. 92735 that the unseaworthiness of the M/V P. Aboitiz was not a fault directly attributable to Aboitiz but to the captain, and that Aboitiz is entitled to the benefit of the limited liability rule for having abandoned its ship. 59 Finally, in Civil Case No. 138643 (now G.R. No. 94867), the trial court held that the M/V P. Aboitiz was not lost due to a fortuitous event or force majeure, and that Aboitiz had failed to satisfactorily establish that it had observed extraordinary diligence in the vigilance over the goods transported by it. 60 In CA-G.R. CV No. 04121, the Court of Appeals initially ruled against Aboitiz and found that the sinking of the vessel was due to its unseaworthiness and the failure of its crew and master to exercise extraordinary diligence. 61Subsequently, however, Aboitiz' petition before the Court of Appeals, docketed as CA-G.R. SP No. 20844 (now G.R. No. 94867) to annul and set aside the order of execution issued by the lower court was resolved in favor of Aboitiz. The Court of Appeals brushed aside the issue of Aboitiz' negligence and/or fault and proceeded to allow the application of the limited liability rule "to accomplish the aims of justice." 62 It elaborated thus: "To execute the judgment in this case would prejudice the substantial right of other claimants who have filed suits to claim their cargoes that was lost in the vessel that sank and also against the petitioner to be ordered to pay more than what the law requires." 63 It should be pointed out that the issue of whether or not the M/V P. Aboitiz sank by reason of force majeure is not a novel one for that question has already been the subject of conflicting pronouncements by the Supreme Court. InAboitiz Shipping Corporation v. Court of Appeals, 64 this Court approved the findings of the trial court and the appellate court that the sinking of the M/V P. Aboitiz was not due to the waves caused by tropical storm "Yoning" but due to the fault and negligence of Aboitiz, its master and crew. 65 On the other hand, in the

later case ofCountry Bankers Insurance Corporation v. Court of Appeals, 66 this Court issued a Resolution on August 28, 1991 denying the petition for review on the ground that the Court of Appeals committed no reversible error, thereby affirming and adopting as its own, the findings of the Court of Appeals that force majeure had caused the M/V P. Aboitiz to founder. In view of these conflicting pronouncements, we find that now is the opportune time to settle once and for all the issue or whether or not force mejeure had indeed caused the M/V P. Aboitiz to sink. After reviewing the records of the instant cases, we categorically state that by the facts on record, the M/V P. Aboitiz did not go under water because of the storm "Yoning." It is true that as testified by Justo Iglesias, meteorologist of Pag-Asa, during the inclusive dates of October 2831, 1980, a stormy weather condition prevailed within the Philippine area of responsibility, particularly along the sea route from Hong Kong to Manila, because of tropical depression "Yoning". 67 But even Aboitiz' own evidence in the form of the marine protest filed by Captain Racines affirmed that the wind force when the M/V P. Aboitiz foundered on October 31, 1980 was only ten (10) to fifteen (15) knots which, under the Beaufort Scale or Wind, falls within scale No. 4 that describes the wind velocity as "moderate breeze," and characterizes the waves as "small . . . becoming longer, fairly frequent white horses." 68 Captain Racines also testified in open court that the ill-fated M/V P. Aboitiz was two hundred (200) miles away from storm "Yoning" when it sank. 69 The issue of negligence on the part of Aboitiz, and the captain and crew of the M/V P. Aboitiz has also been subject of conflicting rulings by this Court. In G.R. No. 100373, Country Bankers Insurance Corporation v. Court of Appeals, this Court found no error in the findings of the Court of Appeals that the M/V P. Aboitiz sank by reason offorce majeure, and that there was no negligence on the part of its officers and crew. In direct contradiction is this Court's categorical declaration in Aboitiz Shipping Corporation v. Court of Appeals," 70 to wit: The trial court and the appellate court found that the sinking of the M/V P. Aboitiz was not due to the waves caused by tropical storm "Yoning" but due to the fault and negligence of petitioner, its master and crew. The court reproduces with approval said findings . . . . 71 However, in the subsequent case of Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Ltd., 72 this Court exculpated Aboitiz from fault and/or negligence while holding that the unseaworthiness of the M/V P. Aboitiz was only attributable to the negligence of its captain and crew. Thus, On this point, it should be stressed that unseaworthiness is not a fault that can be laid squarely on petitioner's lap, absent a factual basis for such conclusion. The unseaworthiness found in some cases where the same has been ruled to exist is directly attributable to the vessel's crew and captain, more so on the part of the latter since Article 612 of the Code of Commerce provides that among the inherent duties of a captain is to examine a vessel before sailing and to comply with the laws of navigation. Such a construction would also put matters to rest relative to the decision of the Board of Marine Inquiry. While the conclusion therein exonerating the captain and crew of the vessel was not sustained for lack of basis, the finding therein contained to the effect that the vessel was seaworthy deserves merit. Despite appearances, it is not totally incompatible with the findings of the trial court and the Court of Appeals, whose finding of "unseaworthiness" clearly did not pertain to the structural condition of the vessel which is the basis of the BMI's findings, but to the condition it was in at the time of the sinking, which condition was a result of the acts of the captain and the crew. 73 It therefore becomes incumbent upon this Court to answer with finality the nagging question of whether or not it was the concurrent fault and/or negligence of Aboitiz and the captain and crew of the ill-fated vessel that had caused it to go under water. Guided by our previous pronouncements and illuminated by the evidence now on record, we reiterate our findings in Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Ltd. 74, that the unseaworthiness of the M/V P. Aboitiz had caused it to founder. We, however, take exception to the

pronouncement therein that said unseaworthiness could not be attributed to the ship owner but only to the negligent acts of the captain and crew of the M/V P. Aboitiz. On the matter of Aboitiz' negligence, we adhere to our ruling in Aboitiz Shipping Corporation v. Court of Appeals, 75 that found Aboitiz, and the captain and crew of the M/V P. Aboitiz to have been concurrently negligent. During the trial of Civil Case Nos. 82-2767-82-2770 (now G.R. No. 92735), petitioners Monarch and Tabacalera presented a survey from Perfect Lambert, a surveyor based in Hong Kong that conducted an investigation on the possible cause of the sinking of the vessel. The said survey established that the cause of the sinking of the vessel was the leakage of water into the M/V P. Aboitiz which probably started in the forward part of the No. 1 hull, although no explanation was proffered as to why the No. 2 hull was likewise flooded. Perfect Lambert surmised that the flooding was due to a leakage in the shell plating or a defect in the water tight bulk head between the Nos. 1 and 2 holds which allowed the water entering hull No. 1 to pass through hull No. 2. The surveyor concluded that whatever the cause of the leakage of water into these hulls, the seaworthiness of the vessel was definitely in question because the breaches of the hulls and serious flooding of the two cargo holds occurred simultaneously in seasonal weather. 76 We agree with the uniform finding of the lower courts that Aboitiz had failed to prove that it observed the extraordinary diligence required of it as a common carrier. We therefore reiterate our pronouncement in Aboitiz Corporation v. Court of Appeals 77 on the issue of Aboitiz' liability in the sinking of its vessel, to wit: In accordance with Article 1732 of the Civil Code, the defendant common carrier from the nature of its business and for reasons of public policy, is bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by it according to all circumstances of the case. While the goods are in the possession of the carrier, it is but fair that it exercise extraordinary diligence in protecting them from loss or damage, and if loss occurs, the law presumes that it was due to the carrier's fault or negligence; that is necessary to protect the interest of the shipper which is at the mercy of the carrier . . . In the case at bar, the defendant failed to prove hat the loss of the subject cargo was not due to its fault or negligence. 78 The failure of Aboitiz to present sufficient evidence to exculpate itself from fault and/or negligence in the sinking of its vessel in the face of the foregoing expert testimony constrains us to hold that Aboitiz was concurrently at fault and/or negligent with the ship captain and crew of the M/V P. Aboitiz. This is in accordance with the rule that in cases involving the limited liability of shipowners, the initial burden of proof of negligence or unseaworthiness rests on the claimants. However, once the vessel owner or any party asserts the right to limit its liability, the burden of proof as to lack of privity or knowledge on its part with respect to the matter of negligence or unseaworthiness is shifted to it. 79 This burden, Aboitiz had unfortunately failed to discharge. That Aboitiz failed to discharge the burden of proving that the unseaworthiness of its vessel was not due to its fault and/or negligence should not however mean that the limited liability rule will not be applied to the present cases. The peculiar circumstances here demand that there should be no strict adherence to procedural rules on evidence lest the just claims of shippers/insurers be frustrated. The rule on limited liability should be applied in accordance with the latest ruling in Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Ltd., 80 promulgated on January 21, 1993, that claimants be treated as "creditors in an insolvent corporation whose assets are not enough to satisfy the totality of claims against it." 81 To do so, the Court set out in that case the procedural guidelines: In the instant case, there is, therefore, a need to collate all claims preparatory to their satisfaction from the insurance proceeds on the vessel M/V P. Aboitiz and its pending freightage at the time of its loss. No claimant can be given precedence over the others by the simple expedience of having completed its action earlier than the rest. Thus, execution of judgment in earlier completed cases, even these already final and executory must be stayed pending completion of all cases occasioned by the subject sinking. Then and only then can all such claims be simultaneously settled, either completely or pro-rata should the insurance proceeds and freightage be not enough to satisfy all claims. xxx xxx xxx

In fairness to the claimants and as a matter of equity, the total proceeds of the insurance and pending freightage should now be deposited in trust. Moreover, petitioner should institute the necessary limitation and distribution action before the proper admiralty court within 15 days from finality of this decision, and thereafter deposit with it the proceeds from the insurance company and pending freightage in order to safeguard the same pending final resolution of all incidents, for final pro-rating and settlement thereof. 82 (Emphasis supplied.) There is no record that Aboitiz. has instituted such action or that it has deposited in trust the insurance proceeds and freightage earned. The pendency of the instant cases before the Court is not a reason for Aboitiz to disregard the aforementioned order of the Court. In fact, had Aboitiz complied therewith, even these cases could have been terminated earlier. We are inclined to believe that instead of filing the suit as directed by this Court, Aboitiz tolerated the situation of several claimants waiting to gel hold of its insurance proceeds, which, if correctly handled must have multiplied in amount by now. By its failure to abide by the order of this Court, it had caused more damage to the claimants over and above that which they have endured as a direct consequence of the sinking of the M/V P. Aboitiz. It was obvious that from among the many cases filed against it over the years, Aboitiz was waiting for a judgment that might prove favorable to it, in blatant violation of the basic provisions of the Civil Code on abuse of rights. Well aware of the 110 claimants against it, Aboitiz preferred to litigate the claims singly rather than exert effort towards the consolidation of all claims. Consequently, courts have arrived at conflicting decisions while claimants waited over the years for a resolution of any of the cases that would lead to the eventual resolution of the rest. Aboitiz failed to give the claimants their due and to observe honesty and good faith in the exercise of its rights. 83 Aboitiz' blatant disregard of the order of this Court in Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Ltd. 84 cannot be anything but, willful on its part. An act is considered willful if it is done with knowledge of its injurious effect; it is not required that the act be done purposely to produce the injury.85 Aboitiz is well aware that by not instituting the said suit, it caused the delay in the resolution of all claims against it. Having willfully caused loss or injury to the petitioners in a manner that is contrary to morals, good customs or public policy, Aboitiz is liable for damages to the latter. 86 Thus, for its contumacious act of defying the order of this Court to file the appropriate action to consolidate all claims for settlement, Aboitiz must be held liable for moral damages which may be awarded in appropriate cases under the Chapter on human relations of the Civil Code (Articles 19 to 36). 87 On account of Aboitiz' refusal to satisfy petitioners' claims in accordance with the directive of the Court in Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Ltd., it acted in gross and evident bad faith. Accordingly, pursuant to Article 2208 of the Civil Code, 88 petitioners should be granted attorney's fees. WHEREFORE, the petitions in G.R. Nos. 92735, 94867, and 95578 are DENIED. The decisions of the Court of Appeals in CA-G.R. No. SP-17427 dated March 29, 1990, CA-G.R. SP No. 20844 dated August 15, 1990, and CA-G.R. CV No. 15071 dated August 24, 1990 are AFFIRMED with the MODIFICATION that respondent Aboitiz Shipping Corporation is ordered to pay each of the respective petitioners the amounts of P100,000.00 as moral damages and P50,000.00 as attorney's fees, and treble the cost of suit. Respondent Aboitiz Shipping Corporation is further directed to comply with the Order promulgated by this Court on January 21, 1993 in Aboitiz Shipping Corporation v. General Accident Fire and Life Assurance Corporation, Ltd., G.R. No. 100446, January 21, 1993, to (a) institute the necessary limitation and distribution action before the proper Regional Trial Court, acting as admiralty court, within fifteen (15) days from the finality of this decision, and (b) thereafter to deposit with the said court the insurance proceeds from the loss of the vessel, M/V P. Aboitiz, and the freightage earned in order to safeguard the same pending final resolution of all incidents relative to the final pro-rating thereof and to the settlement of all claims.1wphi1.nt SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 129184 February 28, 2001

EMERGENCY LOAN PAWNSHOP INCORPORATED and DANILO R. NAPALA, petitioners, vs. THE COURT OF APPEALS (Tenth Division) and TRADERS ROYAL BANK, respondents. PARDO, J.: May an appeal be taken from a decision of the Regional Trial Court denying a motion to dismiss the complaint on the ground of improper venue? If not, will certiorari lie? The case before the Court is a petition for review on certiorari assailing the decision of the Court of Appeals,1granting respondent's petition for certiorari and dismissing the complaint below on the ground of improper venue. On January 18, 1996, Traders Royal Bank (TRB for brevity) sold in favor of petitioner Emergency Loan Pawnshop Incorporated (ELPI for brevity) a parcel of land located at Km. 3 Asin, Baguio City for Five Hundred Thousand Pesos (P500,000.00). 2 At the time of the sale, TRB misrepresented to ELPI that the subject property was a vacant residential lot valued at P600.00 to P800.00 per square meter, with a usable land area of 1,143.75 square meters (approximately 75% of the land area of 1,525 sq.m.) without any illegal occupants or squatters, when it truth the subject property was dominantly a public road with only 140 square meters usable area.1wphi1.nt ELPI, after having spent to fully ascertain the actual condition of the property, demanded from TRB the rescission and cancellation of the sale of the property. TRB refused, hence, on April 16, 1996, ELPI filed with the Regional Trial Court, Davao, Branch 17, a complaint for annulment of sale and damages against TRB.3 On August 27, 1996, TRB filed a Motion to Dismiss4 the complaint on the ground of improper venue. On September 18, 1996 the trial court denied the motion to dismiss.5 On October 21, 1996, TRB filed a motion for reconsideration.6 On November 14, 1996, the trial court denied the motion.7 On January 15, 1997, TRB elevated the case to the Court of Appeals by petition for certiorari and prohibition with preliminary injunction or temporary restraining order, contending that the trial court committed a grave abuse of discretion in denying its motion to dismiss the complaint on the ground of improper venue.8 After due proceedings, on March 11, 1997, the Court of Appeals promulgated its decision, the dispositive portion of which reads: "WHEREFORE, finding merit in the petition, the Orders dated September 18, 1996 and November 14, 1996 are hereby ANNULED AND SET ASIDE and Civil Case No. 24,317-96 is hereby DISMISSED on ground of improper venue." 9 Hence, this petition.10 Petitioners seek to set aside the decision of the Court of Appeals alleging that: 1. The Court of Appeals erred in entertaining the petition for certiorari and prohibition, for lack of jurisdiction; 2. The Court of Appeals erred in ruling that the Regional Trial Court erred in not dismissing the complaint for improper venue.11 According to petitioners, the determination of whether the venue of an action was improperly laid was a question of law, thus, the Court of Appeals had no jurisdiction to entertain the petition for certiorari and prohibition, which involved pure questions of law.

Petitioners further alleged that an order denying a motion to dismiss is interlocutory in nature that can not be the subject of an appeal and can not be even reviewed by a special civil action for certiorari. We find the petition not meritorious. The general rule is that the denial of a motion to dismiss a complaint is an interlocutory order and, hence, cannot be appealed or questioned via a special civil action of certiorari until a final judgment on the merits of the case is rendered. 12 The remedy of the aggrieved party is to file an answer to the complaint and to interpose as defenses the objections raised in his motion to dismiss, proceed to trial, and in case of an adverse decision, to elevate the entire case by appeal in due course. However, the rule is not ironclad. Under certain situations, recourse to certiorari or mandamus is considered appropriate, that is, (a) when the trial court issued the order without or in excess of jurisdiction; (b) where there is patent grave abuse of discretion by the trial court; or, (c) appeal would not prove to be a speedy and adequate remedy as when an appeal would not promptly relieve a defendant from the injurious effects of the patently mistaken order maintaining the plaintiff's baseless action and compelling the defendant needlessly to go through a protracted trial and clogging the court dockets by another futile case."13 In the case at bar, we agree with the Court of Appeals that the trial court erred grievously amounting to ousting itself of jurisdiction. The motion of respondent TRB was well founded because venue was clearly improperly laid. The action in the Regional Trial Court was for annulment of sale involving a parcel of land located at Km. 3 Asin Road, Baguio City. The venue of such action is unquestionably within the territorial jurisdiction of the proper court where the real property or part thereof lies.14 An action affecting title to real property, or for recovery of, or foreclosure of mortgage on real property, shall be commenced and tried in the proper court having jurisdiction over the area where the real property or any part thereof lies.15 Hence, the case at bar clearly falls within the exceptions to the rule. The Regional Trial Court has committed a palpable and grievous error amounting to lack or excess of jurisdiction in denying the motion to dismiss the complaint on the ground of improper venue. WHEREFORE, the Court denies the petition and affirms the decision of the Court of Appeals in CA-G.R. SP No. 43095, in toto. No costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Baguio City FIRST DIVISION G.R. NO. 148273 April 19, 2006

MILAGROS SIMON and LIBORIO BALATICO, Petitioners, vs. GUIA W. CANLAS, Respondent. DECISION AUSTRIA-MARTINEZ, J.: Before the Court is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) dated May 23, 2001 in CA-G.R. CV No. 62789 which affirmed the Decision of the Regional Trial Court (RTC), Branch 65, Tarlac City dated July 31, 1998 in Civil Case No. 7384. The factual background of the case is as follows: On February 11, 1991, Edgar H. Canlas (Edgar) filed a complaint for judicial foreclosure of real estate mortgage against Milagros Simon (Milagros) and her husband, Liborio Balatico (petitioners). In the complaint, Edgar alleges that: on September 10, 1987, Milagros obtained a loan from him in the amount of P220,000.00 secured by a real estate mortgage2 over her paraphernal property, a 748-square meter parcel of land located at San Nicolas, Victoria, Tarlac, covered by Transfer Certificate of Title (TCT) No. 139884; the loan was payable within a period of three years or until September 18, 1990; Milagros defaulted in the payment of the loan and repeated demands for payment went unheeded, prompting the filing of a case in court.3 On March 25, 1991, petitioners filed their Answer with Counterclaim, alleging that Milagros never transacted any business with Edgar and she did not receive the consideration of the alleged mortgage.4 On March 26, 1991, Edgar filed his Reply and Answer to Counterclaim, reiterating validity and due execution of the real estate mortgage. 5 On November 12, 1991, with leave of court,6 petitioners filed a Third-Party Complaint against Virginia Canlas (Virginia) and Aurelia Delos Reyes (Aurelia), claiming that they duped Milagros to part with her title and sign the mortgage documents without giving her the consideration and refusing to return her title when demanded. 7 On November 18, 1991, Virginia and Aurelia filed their Answer with Counterclaim to Third-Party Complaint, alleging that the complaint states no cause of action against them since they are not privies to the real estate mortgage and Aurelia is only a witness to the mortgage document.8 On November 28, 1991, petitioners filed their Reply and Answer to Counterclaim, reiterating their claims in the third-party complaint. 9 Edgar died during the pendency of the case. On December 4, 1991, upon proper motion,10 the RTC ordered that Edgar be substituted by his wife, Guia W. Canlas (respondent), as plaintiff.11 On August 12, 1996, the RTC issued a pre-trial order stating that the parties failed to arrive at a settlement. However, they agreed to stipulate on the following: "[t]hat the defendant executed a deed of real estate mortgage in favor of the plaintiff involving a parcel of land covered by TCT No. 139884 located at San Nicolas, Victoria, Tarlac." 12 Thereafter, trial on the merits ensued with respondent presenting her witnesses, namely: Nelson Nulud, the records custodian of the Registry of Deeds of Tarlac; Aurelia, the third-party defendant and one of the instrumental witnesses to the real estate mortgage; and respondent herself. When petitioners turn came, they presented Crisostomo Astrero, the other instrumental witness to the real estate mortgage. 1avvphil.net

On April 15, 1998, petitioners counsel, Atty. Norberto De Jesus, filed an Ex-Parte Urgent Motion for Postponement since he is busy campaigning as a candidate in the coming elections.13 There being no objection from respondent, the RTC reset the hearing to May 28, 1998. 14 On May 28, 1998, Atty. De Jesus and petitioners failed to appear in court. The RTC reset the hearing on June 17, 1998 with a warning that if the petitioners will still fail to appear on said date, they will be considered to have waived their right to present further evidence. 15 On June 17, 1998, Atty. De Jesus failed to appear in court but petitioners were present. Milagros informed the RTC that Atty. De Jesus withdrew his appearance as their counsel. In view thereof, the RTC directed petitioners to secure the services of another counsel and the hearing was reset to June 24, 1998 with a warning that should petitioners still fail to present evidence at said hearing, they will be considered to have waived their right to present further evidence. 16 On June 23, 1998, Atty. De Jesus filed his Withdrawal of Appearance as Counsel for the Defendants with the conformity of Milagros.17 On June 24, 1998, Milagros informed the RTC that they have retained Atty. Alejo Y. Sedico18 as new counsel. The hearing was again reset to July 2, 1998 with the final warning that should petitioners witnesses fail to appear at the said hearing, they would be considered to have waived their right to present further evidence.19 On July 1, 1998, Atty. Sedico formally filed his Entry of Appearance with Urgent Ex-Parte Motion to Reset, praying that the hearing scheduled on July 2, 1998 be reset to August 12, 1998 due to conflict of schedule and his trial calendar for July is fully occupied, as well as to give him more time to study the case since he had just been retained. 20 On July 2, 1998, the RTC allowed, in the interest of justice, the resetting of the hearing for presentation of petitioners evidence for the last time on July 15, 1998. The RTC directed petitioners to secure the services of a counsel of their choice to represent them in the said hearing considering that it postponed motu propio the hearing in the interest of justice over the vigorous objection of the respondent due to failure of petitioners counsel to appear for three successive times. It warned petitioners that in case they would be unable to present evidence in the next scheduled hearing, they would be deemed to have waived their right to present further evidence.21 On July 9, 1998, Atty. Sedico filed an Urgent Motion to Reset the scheduled hearing on July 15, 1998 due to a previously scheduled hearing on the same date of Criminal Case Nos. 6463 to 6510 for Estafa entitled "People of the Philippines v. Eddie Sentero" before the Regional Trial Court, Branch 172, Valenzuela. He reiterated that his trial calendar for the whole month of July is fully occupied and requested the hearing be reset to August 10 or 19, 1998.22 At the scheduled hearing on July 15, 1998, the RTC was apprised of the Urgent Motion to Reset filed by petitioners counsel. In view of the vigorous objection of respondents counsel on the ground that the case has been postponed several times at petitioners instance, the RTC denied the motion to reset and petitioners were deemed to have waived their right to present evidence. The case was then considered submitted for decision.23 Sixteen days later, on July 31, 1998, the RTC rendered its decision, the dispositive portion of which reads: WHEREFORE, the plaintiff having substantiated her claim by a preponderance of evidence, this Court hereby renders judgment in her favor, ordering the defendants to pay the plaintiff within a period of ninety (90) days from the entry of judgment hereof, the following sums of: (1) P220,000.00, representing the principal obligation plus interest thereof of 12% per annum from the filing of the complaint until fully paid; (2) P30,000.00 as attorneys fees; and (3) The costs of suit. It is further adjudged that in the event defendants default in the payment of the above determined amounts, Lot No. 2763, with an area of 748 square meters situated in San Nicolas, Victoria, Tarlac and covered by

Transfer Certificate of Title No. 13984 Tarlac Registry, particularly identified and described in the Real Estate Mortgage contract (Exhibit "A"), shall be sold at public auction to satisfy this judgment. SO ORDERED. 24 The RTC held that Milagros executed a deed of real estate mortgage in favor of Edgar and she received the consideration for the mortgage in the amount of P220,000.00; that petitioners inaction for three years before the filing of the complaint against them to protest the alleged non-receipt of the consideration for the mortgage casts serious doubts on their claim; and that the deed of real estate mortgage was duly notarized and assumed the character of a public instrument. On September 2, 1998, petitioners filed a Motion for Reconsideration, claiming that they were denied due process when the RTC decided the case without petitioners evidence. 25 On October 16, 1998, the RTC denied the motion for reconsideration, holding that petitioners were given ample opportunity to hire a counsel, prepare for trial and adduce evidence, which they took for granted and they should bear the fault.26 Dissatisfied, petitioners filed an appeal with the CA. On May 23, 2001, the CA affirmed the decision of the RTC.27 The CA ruled that petitioners were not denied due process since they were duly accorded all the opportunities to be heard and present evidence to substantiate their defense but they forfeited their right for not appearing in court together with their counsel at the scheduled hearings; that since Milagros admitted the existence, due execution, authenticity and validity of the Deed of Real Estate Mortgage during the Pre-Trial Conference on June 7, 1995, absence of consideration is no longer an issue; that, in any case, the amount of P220,000.00 was actually received by Milagros per the testimony of Aurelia; that petitioners slept on their rights, if they had any, since they never lifted a finger to protect and preserve their alleged rights and interests; and that the mortgaged property is not conjugal property but the exclusive property of Milagros which she could validly dispose of or encumber without her husbands consent. The CA merely noted that the RTC failed to dispose of petitioners third-party complaint and without any further discussion, dismissed the third-party complaint in the dispositive portion of its decision, to wit: WHEREFORE, the Decision appealed from is hereby AFFIRMED in toto as to the main case. The third-party complaint is hereby DISMISSED. SO ORDERED. 28 Hence, the present petition for review on certiorari anchored on the following Assignment of Errors: 1. THE RESPONDENT COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS OF JURISDICTION WHEN IT UPHELD THE VALIDITY OF THE QUESTIONED REAL ESTATE MORTAGE EVEN AS THERE WAS LACK OF CONSIDERATION AND THAT THE SAME WAS EXECUTED THROUGH FRAUDULENTLY [sic] SCHEME; 2. THE RESPONDENT COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS OF JURISDICTION WHEN IT RULED THAT THE DUE EXECUTION OF THE REAL ESTATE MORTGAGE WAS ADMITTED WHILE WHAT WAS ADMITTED ONLY IS ITS EXECUTION; 3. THE RESPONDENT COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS OF JURISDICTION WHEN IT RULED THAT THE SUBJECT REAL PROPERTY IS PARAPHERNAL EVEN AS EXISTING LAW AND JURISPRUDENCE HAD CONSIDERED IT CONJUGAL OR ABSOLUTE COMMUNITY OF PROPERTY; 4. THE RESPONDENT COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS OF JURISDICTION WHEN IT RULED THAT DESPITE OF [sic] HAVING DENIED PETITIONER TO BE REPRESENT [sic] BY A COUNSEL OF CHOICE DUE PROCESS IS SATISFIED. 29

Petitioners contend that the real estate mortgage was fraudulently executed and there was lack of consideration but material facts relating thereto were not fully ventilated because the RTC denied petitioners motion to reset the hearing. They maintain that they never admitted the due execution of the real estate mortgage, but only its execution or existence. They further insist that the mortgaged property is conjugal, not paraphernal, and therefore, Milagros could not dispose of or encumber without her husbands consent; and the CA disregarded Article 9930 of the Family Code which provides that all the property owned by the spouses at the time of the celebration of the marriage or acquired thereafter forms part of the community property. Lastly, they submit that while they were given the opportunity to secure the services of a new counsel to defend them, the RTCs apathy to the plight of petitioners counsel on the latters conflict of schedule amounted to stripping such right to counsel and denial of due process. For her part, respondent contends that the petition should be dismissed outright for impleading the CA as respondent, despite the clear directive of the 1997 Rules of Civil Procedure against it. She further points out that the petition lacks verification, a certification against forum shopping, a copy of the assailed CA decision, and it fails to raise any specific question of law but only presents and discusses an "assignment of errors." In any event, even if these procedural defects are disregarded, respondent argues that petitioners were not denied due process when the RTC denied their motion for postponement since they were duly accorded all the opportunities to be heard and to present their evidence to substantiate their defense but they forfeited this right for not appearing in court together with their counsel at the scheduled hearings. They also aver that the real estate mortgage is valid and duly executed and the mortgaged property is the paraphernal property of Milagros such that she can validly dispose of or encumber it without her husbands consent. Anent the procedural defects raised by respondent, the Court agrees that the correct procedure, as mandated by Section 4, Rule 45 of the 1997 Rules of Civil Procedure, is not to implead the lower court which rendered the assailed decision.31 However, impleading the lower court as respondent in the petition for review on certiorari does not automatically mean the dismissal of the appeal but merely authorizes the dismissal of the petition.32 Besides, formal defects in petitions are not uncommon. The Court has encountered previous petitions for review on certiorari that erroneously impleaded the CA. In those cases, the Court merely called the petitioners attention to the defects and proceeded to resolve the case on their merits.33 The Court finds no reason why it should not afford the same liberal treatment in this case. While unquestionably, the Court has the discretion to dismiss the appeal for being defective, sound policy dictates that it is far better to dispose of cases on the merits, rather than on technicality as the latter approach may result in injustice.34 This is in accordance with Section 6, Rule 1 of the 1997 Rules of Civil Procedure35 which encourages a reading of the procedural requirements in a manner that will help secure and not defeat justice.36 As to respondents claim that the petition lacks verification, a certification against forum shopping and a copy of the assailed CA decision, the Court has carefully examined the rollo of the case and found them to be attached to the petition.37 Anent respondents submission that the petition failed to raise a question of law, the Court disagrees. For a question to be one of law, it must not involve an examination of the probative value of the evidence presented by the litigants or any of them.38 Petitioners contention that they were denied substantive due process is a pure question of law.39 As a rule, the grant or denial of a motion for postponement is addressed to the sound discretion of the court, which should always be predicated on the consideration that more than the mere convenience of the courts or of the parties in the case, the ends of justice and fairness should be served thereby. After all, postponements and continuances are part and parcel of our procedural system of dispensing justice." 40 When no substantial rights are affected and the intention to delay is not manifest with the corresponding motion to transfer the hearing having been filed accordingly, it is sound judicial discretion to allow the same to the end that the merits of the case may be fully ventilated.41 Thus, in considering motions for postponements, two things must be borne in mind: (1) the reason for the postponement, and (2) the merits of the case of the movant.42 Unless grave abuse of discretion is shown, such discretion will not be interfered with either by mandamus or appeal.43

In the present case, there are circumstances that justify postponement of the July 15, 1998 hearing. Atty. Sedico had only been formally retained as petitioners new counsel as of July 1, 1998, or merely two weeks before July 15, 1998. Atty. Sedico also had a previously intransferable hearing in a criminal case before the Regional Trial Court, Branch 172, Valenzuela scheduled on the same date of July 15, 1998. The distance factor, from Valenzuela to Tarlac, is enough consideration to call for postponement. Moreover, Atty. Sedico twice informed the RTC that his entire calendar for July is already full such that he requested specific dates in August for the hearing.44 The motion to reset the hearing has not been shown to be manifestly dilatory. Besides, except for the May 28, 1998 scheduled hearing,45 petitioners have always been present in court. They cannot be said to have lost interest in fighting the civil case to the end; only that Atty. De Jesus withdrew his appearance as their counsel and petitioners had to look for new counsel to take their case on short notice. Absolutely wanting from the records is any evidence that the change of counsel was intended to delay the proceedings. In fact, only 48 days have lapsed from the time Atty. De Jesus failed to appear on May 28, 199846 to the time when Atty. Sedicos motion to reset was denied on July 15, 1998.47 Such intervening time cannot be said to have greatly impaired the substantial rights of respondent. Thus, absent unreasonable delay and manifest intent to employ dilatory tactic prejudicial to the respondent and trifling court processes, Atty. Sedicos request for resetting should have been granted. It cannot be disputed that the case has been pending since February 11 1991,48 or more than seven years until petitioners were able to start their presentation of their evidence on March 11, 1998. 49 The Court is as aware as anyone of the need for the speedy disposition of cases. However, it must be emphasized that speed alone is not the chief objective of a trial. It is the careful and deliberate consideration for the administration of justice, a genuine respect for the rights of all parties and the requirements of procedural due process, and an adherence to this Courts standing admonition that the disposition of cases should always be predicated on the consideration that more than the mere convenience of the courts and of the parties in the case, the ends of justice and fairness would be served thereby. These are more important than a race to end the trial.50 Indeed, court litigations are primarily for the search for truth, and a liberal interpretation of the rules by which both parties are given the fullest opportunity to adduce proofs is the best way to ferret out such truth. 51 Ironically, the precipitate action of the RTC prolonged the litigation and unnecessarily delayed the case, in the process, causing the very evil it apparently sought to avoid. Instead of unclogging dockets, it has actually increased the workload of the justice system as a whole. Such action does not inspire public confidence in the administration of justice. Moreover, it is noted that petitioners filed a third-party complaint which the RTC simply disregarded. On the other hand, the CA, while stating in its Decision that "[a]ll thus told, we find no reversible error in the judgment of the trial court, except that it failed to dispose of the third-party complaint," 52 it simply proceeded to dismiss the third-party complaint in the dispositive portion of herein assailed decision, without giving any reason or justification therefor. As to the effect of petitioners admission of the due execution of the real estate mortgage during the pre-trial conference, it must be noted that in Benguet Exploration, Inc. v. Court of Appeals, 53 this Court ruled that the admission of the genuineness and due execution of a document simply means that the party whose signature it bears admits that he voluntarily signed the document or it was signed by another for him and 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 formalities required by law, such as a seal, an acknowledgment, or revenue stamp, which it lacks, are waived by him. However, it does not preclude a party from arguing against it by evidence of fraud, mistake, compromise, payment, statute of limitations, estoppel and want of consideration. Petitioners therefore are not barred from presenting evidence regarding their claim of want of consideration. It bears stressing that the matter of absence of consideration and alleged fraudulent scheme perpetuated by third-party defendants, being evidentiary, should be threshed out in a proper trial. To deny petitioners their right to present evidence constitutes a denial of due process, since there are issues that cannot be decided without a trial of the case on the merits.

Ordinarily, when there is sufficient evidence before the Court to enable it to resolve the fundamental issues, the Court will dispense with the regular procedure of remanding the case to the lower court, in order to avoid further delays in the resolution of the case. 54 However, a remand in this case, while time-consuming, is necessary, because the proceedings had in the RTC are grossly inadequate to settle factual issues. Petitioners were unduly deprived of the full opportunity to present evidence on the merits of their defense and third-party complaint. Considering the foregoing, the Court need not delve on the other issues raised by petitioners. Suffice it to say that such matters are best decided by the RTC only after full reception of petitioners evidence. WHEREFORE, the present petition is GRANTED. The assailed Decision dated May 23, 2001 of the Court of Appeals and the Decision dated July 31, 1998 of the Regional Trial Court, Branch 65, Tarlac City in Civil Case No. 7384, are REVERSED and SET ASIDE. The case is REMANDED to the said Regional Trial Court for reception of petitioners evidence and further proceedings. No pronouncement as to costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 148408 July 14, 2006

CONCEPCION PARAYNO, petitioner, vs. JOSE JOVELLANOS and the MUNICIPALITY OF CALASIAO, PANGASINAN, * respondents. DECISION CORONA, J.: This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Court questioning the resolution of the Court of Appeals (CA) which dismissed the petition for certiorari, mandamus and prohibition, with prayer for issuance of a preliminary and mandatory injunction, filed by petitioner Concepcion Parayno against respondents Jose Jovellanos and the Municipality of Calasiao, Pangasinan. Petitioner was the owner of a gasoline filling station in Calasiao, Pangasinan. In 1989, some residents of Calasiao petitioned the Sangguniang Bayan (SB) of said municipality for the closure or transfer of the station to another location. The matter was referred to the Municipal Engineer, Chief of Police, Municipal Health Officer and the Bureau of Fire Protection for investigation. Upon their advise, the Sangguniang Bayan recommended to the Mayor the closure or transfer of location of petitioner's gasoline station. In Resolution No. 50, it declared: a) xxx the existing gasoline station is a blatant violation and disregard of existing law to wit: The Official Zoning Code of Calasiao, Art. 6, Section 44,1 the nearest school building which is San Miguel Elementary School and church, the distances are less than 100 meters. No neighbors were called as witnesses when actual measurements were done by HLURB Staff, Baguio City dated 22 June 1989. b) The gasoline station remains in thickly populated area with commercial/residential buildings, houses closed (sic) to each other which still endangers the lives and safety of the people in case of fire. Moreover, additional selling and storing of several LPG tanks in the station (sic). c) The residents of our barangay always complain of the irritating smell of gasoline most of the time especially during gas filling which tend to expose residents especially children to frequent colds, asthma, cough and the like nowadays. d) xxx the gasoline station violated Building and Fire Safety Codes because the station has 2nd floor storey building used for business rental offices, with iron grilled windows, no firewalls. It also endangers the lives of people upstairs. e) It hampers the flow of traffic, the gasoline station is too small and narrow, the entrance and exit are closed to the street property lines. It couldn't cope situation (sic) on traffic because the place is a congested area. 2 Petitioner moved for the reconsideration of the SB resolution but it was denied. Hence, she filed a special civil action for prohibition and mandamus with the Regional Trial Court (RTC) of Dagupan City, Branch 44 against respondents. The case, docketed as SP Civil Case No. 99-03010-D, was raffled to the sala of Judge Crispin Laron. Petitioner claimed that her gasoline station was not covered by Section 44 of the Official Zoning Code since it was not a "gasoline service station" but a "gasoline filling station" governed by Section 21 thereof. She added that the decision of the Housing and Land Use Regulatory Board (HLURB), 3 in a previous case filed by the same respondent Jovellanos against her predecessor (Dennis Parayno), barred the grounds invoked by

respondent municipality in Resolution No. 50. In the HLURB case, respondent Jovellanos opposed the establishment of the gas station on the grounds that: (1) it was within the 100-meter prohibited radius under Section 44 and (2) it posed a pernicious effect on the health and safety of the people in Calasiao. After the hearing on the propriety of issuing a writ of preliminary prohibitory and mandatory injunction, the trial court ruled: There is no basis for the court to issue a writ of preliminary prohibitory and mandatory injunction. Albeit, Section 44 of the Official Zoning Code of respondent municipality does not mention a gasoline filling station, [but] following the principle of ejusdem generis, a gasoline filling station falls within the ambit of Section 44. The gasoline filling station of the petitioner is located under the establishment belonging to the petitioner and is very near several buildings occupied by several persons. Justice dictates that the same should not be allowed to continue operating its business on that particular place. Further, the gasoline filling station endangers the lives and safety of people because once there is fire, the establishment and houses nearby will be razed to the ground. 4(emphasis supplied) Petitioner moved for reconsideration of the decision but it was denied by the trial court. Petitioner elevated the case to the CA via a petition for certiorari, prohibition and mandamus,5 with a prayer for injunctive relief. She ascribed grave abuse of discretion, amounting to lack or excess of jurisdiction, on the part of Judge Laron who dismissed her case. After the CA dismissed the petition, petitioner filed a motion for reconsideration but the same was denied. Hence, this appeal. Before us, petitioner insists that (1) the legal maxim of ejusdem generis did not apply to her case; (2) the closure/transfer of her gasoline filling station by respondent municipality was an invalid exercise of the latter's police powers and (3) it was the principle of res judicata that applied in this case.6 We find merit in the petition. The Principle of Ejusdem Generis We hold that the zoning ordinance of respondent municipality made a clear distinction between "gasoline service station" and "gasoline filling station." The pertinent provisions read: xxx xxx xxx

f. Grease and lubricating; g. Emergency wiring repairs; h. Minor servicing of carburators; i. Adjusting and repairing brakes; j. Minor motor adjustments not involving removal of the head or crankcase, or raising the motor.8 xxx xxx xxx

It is evident from the foregoing that the ordinance intended these two terms to be separate and distinct from each other. Even respondent municipality's counsel admitted this dissimilarity during the hearing on the application for the issuance of a writ of preliminary prohibitory and mandatory injunction. Counsel in fact admitted: 1. That there exist[ed] an official zoning code of Calasiao, Pangasinan which [was] not yet amended; 2. That under Article III of said official zoning code there [were] certain distinctions made by said municipality about the designation of the gasoline filling station and that of the gasoline service station as appearing in Article III, Nos. 21 and 42, [respectively]; 3. That the business of the petitioner [was] one of a gasoline filling station as defined in Article III, Section 21 of the zoning code and not as a service station as differently defined under Article 42 of the said official zoning code; 4. That under Section 44 of the official zoning code of Calasiao, the term filling station as clearly defined under Article III, Section 21, [did] not appear in the wordings thereof;9(emphasis supplied) The foregoing were judicial admissions which were conclusive on the municipality, the party making them.10 Respondent municipality thus could not find solace in the legal maxim of ejusdem generis11which means "of the same kind, class or nature." Under this maxim, where general words follow the enumeration of particular classes of persons or things, the general words will apply only to persons or things of the same general nature or class as those enumerated.12 Instead, what applied in this case was the legal maxim expressio unius est exclusio alterius which means that the express mention of one thing implies the exclusion of others.13 Hence, because of the distinct and definite meanings alluded to the two terms by the zoning ordinance, respondents could not insist that "gasoline service station" under Section 44 necessarily included "gasoline filling station" under Section 21. Indeed, the activities undertaken in a "gas service station" did not automatically embrace those in a "gas filling station." The Exercise of Police Powers Respondent municipality invalidly used its police powers in ordering the closure/transfer of petitioner's gasoline station. While it had, under RA 7160,14 the power to take actions and enact measures to promote the health and general welfare of its constituents, it should have given due deference to the law and the rights of petitioner. A local government is considered to have properly exercised its police powers only when the following requisites are met: (1) the interests of the public generally, as distinguished from those of a particular class, require the interference of the State and (2) the means employed are reasonably necessary for the attainment of the object sought to be accomplished and not unduly oppressive.15The first requirement refers to the equal protection clause and the second, to the due process clause of the Constitution.16 Respondent municipality failed to comply with the due process clause when it passed Resolution No. 50. While it maintained that the gasoline filling station of petitioner was less than 100 meters from the nearest public school and church, the records do not show that it even attempted to measure the distance, notwithstanding that such distance was crucial in determining whether there was an actual violation of Section

Section 21. Filling Station. A retail station servicing automobiles and other motor vehicles with gasoline and oil only.7 xxx xxx xxx

Section 42. Service Station. A building and its premises where gasoline oil, grease, batteries, tires and car accessories may be supplied and dispensed at retail and where, in addition, the following services may be rendered and sales and no other. a. Sale and servicing of spark plugs, batteries, and distributor parts; b. Tire servicing and repair, but not recapping or regrooving; c. Replacement of mufflers and tail pipes, water hose, fan belts, brake fluids, light bulbs, fuses, floor mats, seat covers, windshield wipers and wiper blades, grease retainers, wheel, bearing, mirrors and the like; d. Radiator cleaning and flushing; e. Washing and polishing, and sale of automobile washing and polishing materials;

44. The different local offices that respondent municipality tapped to conduct an investigation never conducted such measurement either. Moreover, petitioner's business could not be considered a nuisance which respondent municipality could summarily abate in the guise of exercising its police powers. The abatement of a nuisance without judicial proceedings is possible only if it is a nuisance per se. A gas station is not a nuisance per se or one affecting the immediate safety of persons and property,17 hence, it cannot be closed down or transferred summarily to another location. As a rule, this Court does not pass upon evidence submitted by the parties in the lower courts.18 We deem it necessary, however, to recall the findings of the HLURB which petitioner submitted as evidence during the proceedings before the trial court, if only to underscore petitioner's compliance with the requirements of law before she put up her gasoline station. Another factor that should not be left unnoticed is the diligence exercised by [petitioner] in complying with the requirements of the several laws prior to the actual implementation of the project as can be attested by the fact that [petitioner] has secured the necessary building permit and approval of [her] application for authority to relocate as per the letter of the Energy Regulatory Board xxx.19 On the alleged hazardous effects of the gasoline station to the lives and properties of the people of Calasiao, we again note: Relative to the allegations that the project (gasoline station) is hazardous to life and property, the Board takes cognizance of the respondent's contention that the project "is not a fire hazard since petroleum products shall be safely stored in underground tanks and that the installation and construction of the underground tanks shall be in accordance with the Caltex Engineering Procedures which is true to all gasoline stations in the country. xxx Hence, the Board is inclined to believe that the project being hazardous to life and property is more perceived than factual. For, after all, even the Fire Station Commander, after studying the plans and specifications of the subject proposed construction, recommended on 20 January 1989, "to build such buildings after conform (sic) all the requirements of PP 1185." It is further alleged by the complainants that the proposed location is "in the heart of the thickly populated residential area of Calasiao." Again, findings of the [HLURB] staff negate the allegations as the same is within a designated Business/Commercial Zone per the Zoning Ordinance. xxx20 (emphasis supplied) The findings of fact of the HLURB are binding as they are already final and conclusive vis--vis the evidence submitted by respondents. The Principle of Res Judicata Petitioner points out that the HLURB decision in the previous case filed against her predecessor (Dennis Parayno) by respondent Jovellanos had effectively barred the issues in Resolution No. 50 based on the principle of res judicata. We agree. Res judicata refers to the rule that a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on all points and matters determined in the former suit.21 For res judicata to apply, the following elements must be present: (1) the judgment or order must be final; (2) the judgment must be on the merits; (3) it must have been rendered by a court having jurisdiction over the subject matter and the parties and (4) there must be, between the first and second actions, identity of parties, of subject matter and of cause of action. 22 Respondent municipality does not contest the first, second and third requisites. However, it claims that it was not a party to the HLURB case but only its co-respondent Jovellanos, hence, the fourth requisite was not met. The argument is untenable. The absolute identity of parties is not required for the principle of res judicata to apply.23 A shared identity of interests is sufficient to invoke the application of this principle.24 The proscription may not be evaded by the

mere expedient of including an additional party.25 Res judicata may lie as long as there is a community of interests between a party in the first case and a party in the second case although the latter may not have been impleaded in the first.26 In the assailed resolution of respondent municipality, it raised the same grounds invoked by its co-respondent in the HLURB: (1) that the resolution aimed to close down or transfer the gasoline station to another location due to the alleged violation of Section 44 of the zoning ordinance and (2) that the hazards of said gasoline station threatened the health and safety of the public. The HLURB had already settled these concerns and its adjudication had long attained finality. It is to the interest of the public that there should be an end to litigation by the parties over a subject matter already fully and fairly adjudged. Furthermore, an individual should not be vexed twice for the same cause. 27 WHEREFORE, the petition is hereby GRANTED. The assailed resolution of the Court of the Appeals is REVERSED and SET ASIDE. Respondent Municipality of Calasiao is hereby directed to cease and desist from enforcing Resolution No. 50 against petitioner insofar as it seeks to close down or transfer her gasoline station to another location. No costs. SO ORDERED.

spouses Camitan, when in fact, as early as 1967, the same had already been given to respondent. Finally, citing Demetriou v. Court of Appeals9 the Court of Appeals concluded that the trial court could not have acquired jurisdiction over the petition because the Owners Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 128099 December 20, 2006 Copy was never lost in the first place.10 Petitioners sought reconsideration of the Resolution, but the motion was denied for lack of merit.11 Petitioners now claim that they have no knowledge of the purported sale and that they were not aware of any claim whatsoever over the property in question for over twenty-seven-(27) years, stressing that property is still registered, declared for taxation, and realty taxes paid thereon in the name of the spouses Camitan.12 They argue that the Court of Appeals erred in finding that the Owners Copy was not lost but was in fact in the possession of respondent since there was no documentary proof to support such conclusion. According to petitioners, respondent was not able to present even a photocopy of the Owners Copy to prove its possession thereof since 1967 and thus the Court of Appeals did not acquire jurisdiction over the petition for annulment. 13 Petitioners add that respondent is guilty of estoppel and laches in asserting its alleged rights over the property. The unexplained concealment for a long time of its possession of the purported deed of absolute sale and Owners Copy, and its non-registration of the deed in its name run counter to the natural course of things and are devoid of credence. 14 Lastly, petitioners allege that the property in question could be a portion of the land surrendered to the Presidential Commission on Good Government (PCGG) as part of the ill-gotten wealth of former President Ferdinand Marcos, and that the sole purpose of respondents concealment of the deed of absolute sale is to prevent sequestration thereof.15 On the other hand, respondent argues that its non-registration of title does not affect its ownership of the property because by the execution of the deed of absolute sale, the spouses Camitan had effectively divested themselves of all the rights, title and interest over the property. Moreover, save for their bare allegations, petitioners have not been able to rebut the presumptive authenticity of the deed of absolute sale. Lastly, respondent posits that there is no basis for the allegation that the property in question is part of the former Presidents ill-gotten wealth.16 Anent the claim that it failed to attach even a photocopy of the Owners Copy, respondent claims that there is no rule which requires that the such document should be included in a petition for annulment of judgment. Besides, petitioners never disputed respondents possession of the title, but in fact merely categorized such possession as one in bad faith. More importantly, the argument that respondents should have attached the Owners Copy of the title was raised for the first time in petitioners motion for reconsideration of this Courts resolution dated 18 June 1997 dismissing the instant petition.17 Finally, respondent maintains that petitioners are estopped from questioning the jurisdiction of the Court of Appeals since they actively participated in the proceedings therein.18 In a nutshell, the petition presents a very simple question: Whether the Court of Appeals erred when it ordered the annulment of the 08 March 1995 Order of the trial court which directed the Register of Deeds to issue a second Owners Copy of the title. The Court of Appeals did not. The petition must be denied. Annulment of judgment is a recourse equitable in character, allowed only in exceptional cases as where there is no available or other adequate remedy.19 An action for annulment of judgment is grounded only on two justifications: (1) extrinsic fraud; and (2) lack of jurisdiction or denial of due process. The purpose of such action is to have the final and executory judgment set aside so that there will be a renewal of litigation.20 The annulment of the Order dated 08 March 1995 was premised on the lack of jurisdiction of the trial court, apparently brought about by the fact that, as found by the Court of Appeals, the duplicate certificate of the title was not lost nor destroyed, but has remained in the possession of respondent which purchased the real property from the spouses Camitan in 1967. The Court finds no reason to disturb the finding of the appellate court.

FELIX CAMITAN, FRANCISCO CAMITAN, SEVERO CAMITAN and VICTORIA CAMITAN, petitioners, vs. THE HONORABLE COURT OF APPEALS and THE FIDELITY INVESTMENT CORPORATION, respondents

DECISION

TINGA, J.: On 13 December 1967, the spouses Mateo Camitan and Lorenza Alcazar (spouses Camitan) sold to Fidelity Investment Corporation (respondent) a parcel of land covered by Transfer Certificate of Title (TCT) No. T(11982)T-3188 located in Barangay Maunong, Calamba, Laguna. Upon the execution of the Deed of Absolute Sale, the spouses Camitan delivered to respondent corporation (respondent) the owners duplicate certificate of title (Owners Copy). From then on, respondent has been paying the real estate taxes due on the property and has remained in actual physical possession thereof.1 On 29 December 1993, after the death of the spouses Camitan, without the knowledge of respondent, the heirs of the spouses-petitioners herein - filed a petition for the issuance of a new Owners Copy,2 However, it appears that respondent was not given notice of such proceedings. The trial court issued an order of general default.3 After an ex parte presentation of evidence by the petitioners, the trial court granted the petition and directed the Register of Deeds of Laguna to issue a new Owners Copy, while at the same time declaring void the first Owners Copy, per its Order dated 08 March 1995.4 When respondent learned of the petition and order for the first time in March 1995, it caused the annotation of a notice of sale on the title of the property. Thereafter, on 26 April 1995, it filed a Notice of Adverse Claim with the Register of Deeds of Calamba, Laguna.5 In a Petition6 for annulment of judgment and cancellation of title before the Court of Appeals, respondent argued that the Order dated 08 March 1995 is null and void, having been issued by the trial court without jurisdiction since the Owners Copy of TCT No. T-(11982)T-3188 exists and has been in its possession, and not lost as petitioners alleged. Moreover, it claimed that petitioners have no standing to file the petition, not being the registered owners of the property, nor persons in interest, since all the rights and interest of the spouses Camitan had already been transferred to respondent upon the sale of the property. Respondent further accused petitioners of perjury; intentionally suppressing from the trial court the fact that they were not in possession of the property; and not serving notice on respondent despite knowledge that it was in actual possession of the property.7 The Court of Appeals granted the petition and ordered the annulment of the impugned Order.8 It found that the Owners Copy is in the possession of respondent since 1967. Thus, petitioners do not own the property, nor do they have any interest thereon that could have been the subject of succession. Moreover, the Court of Appeals found that petitioners committed perjury in executing their Joint Affidavit of Loss in support of their petition before the trial court as they made it appear that the Owners Copy was still in the possession of the

The petition for issuance of the new Owners Copy before the trial court was filed pursuant to Presidential Decree No. 1529, otherwise known as the "Property Registration Decree," Section No. 109 of which provides: SEC. 109. Notice and replacement of lost duplicate certificate.In case of loss or theft of an owners duplicate certificate of title, due notice under oath shall be sent by the owner or by someone in his behalf to the Register of Deeds of the province or city where the land lies as soon as the loss or theft is discovered. If a duplicate certificate is lost or destroyed, or cannot be produced by a person applying for the entry of a new certificate to him or for the registration of any instrument, a sworn statement of the fact of such loss or destruction may be filed by the registered owner or other person in interest and registered. Upon the petition of the registered owner or other person in interest, the court may, after notice and due hearing, direct the issuance of a new duplicate certificate, which shall contain a memorandum of the fact that it is issued in place of the lost duplicate certificate, but shall in all respects be entitled to like faith and credit as the original duplicate, and shall thereafter be regarded as such for all purposes of this decree. Thus, before a duplicate certificate of title can be replaced, the petitioner under the foregoing provision must establish that the duplicate certificate was lost or destroyed. This Court has consistently held that a trial court does not acquire jurisdiction over a petition for the issuance of a new owners duplicate certificate of title, if the original is in fact not lost but is in the possession of an alleged buyer.21 In other words, the fact of loss of the duplicate certificate is jurisdictional. Petitioners question the Court of Appeals Resolution, claiming that respondent failed to attach to its petition for annulment of judgment of the Owners Copy itself, or even a photocopy thereof. Thus, they argue there was no proof that respondent has been in possession of the duplicate certificate. That being the situation, the trial court validly acquired jurisdiction over their petition for issuance of a new Owners Copy, petitioners conclude. Respondent, so it appears, did not attach to its petition for annulment of judgment the Owners Copy of the title. This lapse, however, does not suffice as basis to set aside the questioned resolutions of the Court of Appeals. A review of the records of the case shows that petitioners never questioned respondents possession of the Owners Copy, its actual and physical possession and occupation of the property, as well as its payment of real estate taxes due on the property. In its petition for annulment before the Court of Appeals, respondent alleged that: 4. On December 13, 1967, the spouses Camitan sold the Property to petitioner, as documented by a "Deed of Absolute Sale" dated 13 December 1967, a copy of which is attached hereto as annex "C". Pursuant to the said Deed of Absolute Sale, petitioner paid the purchase price in full. 5. Upon the execution of the Deed of Absolute Sale, the vendors delivered to petitioner the owners duplicate copy of the Title, which Title has since been in the possession of petitioner. Also, since 1967 and to this day, petitioner has been in actual physical possession and continuous occupation of the above-described Property. Moreover, petitioner has been the one paying the real estate taxes due on the Property.22 While for its part, respondent treated the allegations perfunctorily in this wise in its Comment: SPECIFIC DENIALS xxxx 2. Private respondents deny specifically paragraphs 4 and 5 of the said petition for lack of knowledge and information sufficient to form a belief as to the truth of falsity of the allegations contained therein and as heretofore substantiated. 23 The relevant provisions of the Rules of Court are Sections 10 and 11, Rule 8, which read:

SEC. 10. Specific denial. 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 only 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. (Emphasis supplied) SEC.11. Allegation not specifically denied deemed admitted. Material averment in the complaint, other than those as to the amount of unliquidated damages, shall be deemed admitted when not specifically denied. Allegations of usury in a complaint to recover usurious interest are deemed admitted if not denied under oath. (Emphasis supplied) Although petitioners put their unmistakably sparse denial of respondents allegations relative to the execution of the deed of sale in its favor and its possession of the Owners Copy under the heading "SPECIFIC DENIALS" and anteceding it with the adverb "specifically, the same cannot function as an operative denial within the purview of the Rules. A denial is not specific simply because it is so qualified by the defendant. A general denial does not become specific by the use of the word "specifically." When the matters of whether the defendant alleges having no knowledge or information sufficient to form a belief, are plainly and necessarily within the defendants knowledge, his alleged ignorance or lack of information will not be considered as a specific denial. 24 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 were plainly within its knowledge and the defendant could not logically pretend ignorance as to the same, said defendant fails to properly tender an issue.25 Petitioners "specific denial" in this case is ineffective and amounts to an admission pursuant to Rule 8, Sec. 11 of the Rules of Court. Petitioners make an issue of the lack of material evidence to support the Court of Appeals conclusion that the Owners Copy was not lost, because respondent failed to attach the said Owners Copy or even a photocopy thereof. The argument is unavailing. Firstly, there is no need of proof because of petitioners implied admission thereof. Secondly, the matter should have been raised in the proceedings before the Court of Appeals and not before this Court. Despite various opportunities, petitioners failed to do so before the Court of Appeals. In fact, it was only in petitioners Motion for Reconsideration of our Resolution dated 18 June 1997 dismissing their petition26 that they claimed that the Court of Appeals committed "grave error tantamount to lack of jurisdiction thereof when it declared annulled the contested Order x x x x for lack of material evidence to support that the said title was lost."27 We have consistently held that matters, theories or arguments not brought out in the original proceedings cannot be considered on review or appeal where they are raised for the first time.28 Finally, having actively participated in the proceedings before the Court of Appeals, petitioners can no longer question its authority.29 Everything considered, the Court of Appeals was satisfied that the Owners Copy of the TCT No. (T-11982) T3188 is not lost, but rather, as admitted by petitioners, it has been in the possession of another person. We find no reason to disturb the said finding. Petitioners other claims, to wit: (i) respondent is guilty of estoppel and laches in asserting its rights over the property; (ii) respondent is guilty of fraud and bad faith when it concealed the possession of the deed of absolute sale of the property and the Owners Copy, and when it failed to register and have the title of the property transferred to its name; and (iii) the property in question could be a part of ill-gotten wealth surrendered to the PCGG, are immaterial and irrelevant to the case. Thus, there is no need to dwell on them. The instant petition merely questions the propriety of the annulment order on the ground of the trial courts lack of jurisdiction. Any other issues, such as the ownership of the property, or the motives for the non-

registration of the sale or the non-transfer of the title are beyond the ambit of the petition. Besides, the determination of said issues necessitates a factual inquiry which this Court does not perform in a petition for review.30 WHEREFORE, the petition is DENIED and the challenged resolution of the Court of Appeals is AFFIRMED, with costs against petitioners.SO ORDERED. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION SPOUSES RICARDO and G.R. NO. 149508 LEONILADE LOS SANTOS, Petitioners,Present: versus MA. SOCORRO V. VDA. DE MANGUBAT, SPS. PURIFICACION V. LINAO and DOMINGO LINAO, BIENVENIDO G. VILLARENTE, SPS. CESAR G. VILLARENTE and MARIA DE LUZ HALILI, and SPS. LILIA V. MONTENEGRO and RUDY MONTENEGRO in their individual capacities and as Heirs of JOSEFA R. CABAGAT, represented by BIENVENIDO G. VILLARENTE,cralawcralawPromulgated: Respondents. October 10, 2007 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x DECISION AUSTRIA-MARTINEZ, J.: In the present Petition for Certiorari under Rule 65 of the Rules of Court, Spouses Ricardo and Leonila de los Santos (petitioners) assail the Resolution[1] dated October 27, 2000 of the Court of Appeals (CA) in CA-G.R. SP No. 61394 which dismissed the petition for certiorari filed by the petitioners before it; and the CA Resolution[2] dated July 3, 2001 denying petitioners motion for reconsideration of the October 27, 2000 Resolution. The procedural antecedents and factual background of the case are as follows: Private respondents are the registered owners of Lot No. 1033 located in Sta. Cruz, Sta. Maria, Bulacan with an area of 793 square meters and covered by Transfer Certificate of Title No. 61.279. [3]Located in the east of Lot No. 1033 is Lot No. 1034 where the house of petitioners is erected, with an area of 530 square meters and covered by Tax Declaration No. 18929 in the name of a certain Elena San Jose.[4]In front of Lot No. 1034 is the provincial road.[5] On June 5, 1998, private respondents filed with the Regional Trial Court, Malolos, Bulacan (RTC) a Complaint for Damages with Prayer for a Writ of Preliminary Injunction[6] against the petitioners docketed as Civil Case No. 442-M-98.In their Complaint, private respondents alleged that: they cannot reach the public road without using and passing upon a portion of Lot No. 1034, as it is the nearest and shortest passage way; the alleged owners of Lot No. 1034 executed a duly notarized Deed of Assignment of Right of Way dated July 24, 1991 conveying a strip of Lot No. 1034 in favor of the private respondents to be used as a permanent right

of way; sometime in June 1998, the petitioners, without any authority over the strip of land, deliberately placed sand and gravel along the passageway which violated the right of way of the private respondents and caused irreparable damage and injury to the rights of the private respondents. In their Answer dated 22 June 1998, petitioners denied liability on the grounds that the persons who allegedly executed the Deed of Assignment of Right of Way are neither the owners nor possessors of Lot No. 1034 and thus, the Deed of Assignment of Right of Way is null and void; that the Deed of Assignment was executed because of the anticipation that Lot No. 1034 will be allotted to the assignors as their share in the estate of their ascendant, Pedro San Jose; that instead, Lot No. 1034 was inherited by petitioner Leonila de los Santos; and that the private respondents cannot demand the right of way there being no proof that they have indemnified the petitioners. Trial ensued and on May 3, 2000, the RTC rendered its Decision which granted a permanent right of way in favor of the private respondents measuring 2.7 meters wide and 21 meters long, upon payment of the proper indemnification in the amount of P28,350.00; but which denied the private respondents prayer for damages.[7] A copy of the RTCs Decision was received by petitioners on May 12, 2000.[8] On May 29, 2000, the petitioners filed a Motion for Reconsideration via registered mail[9] which was denied by the RTC in its Order[10] dated July 19, 2000. The petitioners received a copy of the July 19, 2000 Order on August 3, 2000. Dissatisfied, the petitioners filed a Notice of Appeal on August 15, 2000.[11] However, the RTC denied due course to theappeal in its Order[12] dated August 17, 2000.The RTC held that from the records, the Motion for Reconsideration of the petitioners was filed out of time, more so was their Notice of Appeal. Petitioners then filed a petition for certiorari with the CA, docketed as CA-G.R. SP No. 61394.[13] On October 27, 2000, the CA issued a Resolution[14] dismissing the petition on two grounds: first, the verification and the non-forum shopping certification is signed by petitioners counsel which is proscribed by law; and second, the petitioners failed to file a Motion for Reconsideration before resorting to the petition for certiorari. Petitioners filed a Motion for Reconsideration but to no avail.[15] Hence, the present petition based on the following grounds: I. WHETHER OR NOT THE PUBLIC RESPONDENT APPELLATE COURT GRAVELY ABUSED ITS DISCRETION, AMOUNTING TO LACK OF JURISDICTION, WHEN IT ISSUED THE QUESTIONED RESOLUTIONS DATED OCTOBER 27, 2000 BASED SOLELY ON TECHNICAL CONSIDERATIONS x x x AS WELL AS EFFECTIVELY AFFIRMING PUBLIC RESPONDENT TRIAL COURTS MANIFESTLY NULL AND VOID ORDER OF AUGUST 17, 2000 DENYING DUE COURSE TO PETITIONERS NOTICE OF APPEAL EVEN AS THE SAME WAS FILED WITHIN THE REGLEMENTARY PERIOD. II.

WHETHER OR NOT THE PUBLIC RESPONDENT APPELLATE COURT GRAVELY ABUSED ITS DISCRETION, AMOUNTING TO LACK OF JURISDICTION, WHEN IT ISSUED THE ASSAILED ORDER OF JULY 3, 2001 DENYING PETITIONERS MOTION FOR RECONSIDERATION NOTWITHSTANDING THE FACT THAT IT HAD MERITORIOUS GROUNDS AND WAS TIMELY FILED. On October 1, 2001, the Court issued a temporary restraining order directing private respondents to refrain from executing the RTC decision until further orders from the Court.[16] In 2005, pending resolution of herein petition, the Court amended the Rules of Court on the appeal period in Neypes v. Court of Appeals,[17] to wit:

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. xxxx To recapitulate, a party litigant may either file his notice of appeal within 15 days from receipt of the Regional Trial Courts decision or file it within 15 days from receipt of the order (the final order) denying his motion for new trial or motion for reconsideration. Obviously, the new 15-day period may be availed of only if either motion is filed; otherwise, the decision becomes final and executory after the lapse of the original appeal period provided in Rule 41, Section 3. This fresh period rule served as the beacon of light that guided the Court in the resolution of the present petition. However, there are existing procedural rules that would have blocked the outright application of Neypes to the present case. First, the dismissal by the CA of the petition for certiorari filed before it by the petitioners was based on the grounds that the verification and non-forum shopping certification were signed by petitioners counsel; and that petitioners failed to file a motion for reconsideration of the order denying due course to the appeal before resorting to a petition for certiorari. Supreme Court Circular No. 28-91,[18] as amended by SC Administrative Circular No. 04-94,[19] specifically provided that the verification and certification of non-forum shopping must be signed by the plaintiff, petitioner, applicant or principal party seeking relief and failure to do so shall be a cause for the dismissal of the petition. [20]This rule is now embodied in Section 1, Rule 65 of the Rules of Court.[21] In the present case, it was Atty. Eduardo G. Araullo, the counsel for the petitioners, who signed both the verification and certification against forum shopping instead of the petitioners.[22] In Pajuyo v. Court of Appeals,[23] the Court held that the requirement on verification of a pleading is a formal and not a jurisdictional requisite. It is intended simply to secure an assurance that what are alleged in the pleading are true and correct and not the product of the imagination or a matter of speculation. A partys representative, lawyer or any person who personally knows the truth of the facts alleged in the pleading may sign the verification. The rule that the certification on non-forum shopping should be signed by the petitioner has been relaxed by the Court in several instances where procedural lapses are overlooked in the interest of substantial justice and for compelling reasons.[24] In the present case, the issue whether the RTC committed an error in awarding a right of way in favor of private respondents, together with the other issues mentioned in the petition for certiorari filed with the CA, are proper subjects of appeal. The fact that litigants have been given a fresh period of appeal, constrains the Court to give due course to the petition. Second, the general rule is that before certiorari under Rule 65 can be availed of, a motion for reconsideration must first be filed.[25] However, this rule admits of exceptions. In a plethora of cases, the Court held that when the Rules of Procedure are rigid and strict in application, resulting in technicalities that tend to frustrate rather than promote justice, the Court is empowered to suspend them.[27] The Court finds that the present case is one of the instances where the rigid application of the rule on filing a motion for reconsideration before filing a petition for certiorari may be suspended to give way to the application of the new rule enunciated in Neypes. Third, the present Petition for Certiorari filed with this Court is an improper remedy in bringing the instant case before this Court.The proper remedy to obtain reversal of the CAs October 27, 2000 and July 3, 2001, Resolutions is a petition for review on certiorari under Rule 45 of the Rules of Court.

While the Court may treat a petition for certiorari under Rule 65 as having been filed under Rule 45 to serve the higher interest of justice, such liberal application of the rules finds no application if the petition is filed well beyond the reglementary period for filing a petition for review without any reason therefor.[28] Herein petition for certiorari was filed on the 60th day from date of receipt of the denial of the motion for reconsideration,[29] well beyond the 15-day period within which to file the petition for review under Rule 45. However, considering that rules of procedure are mere tools designed to facilitate the attainment of justice, it is well-recognized that the Supreme Court is empowered to suspend its operation, when the rigid application thereof tends to frustrate rather than to promote the ends of justice.[30] Taking into account the fact that private respondent is entitled to the fresh period rule, in the interest of substantial justice, procedural rules of the most mandatory character in terms of compliance may be relaxed. [31] Thus, setting aside technicalities, the Court will proceed to determine the merits of herein petition. For a better perspective in the resolution of the present case, it is necessary that the Court examine the petition for certiorari[32] filed by petitioners before the CA. cralawPetitioners raised the following issues, viz: I. WHETHER or not the public respondent gravely abused his discretion amounting to lack of jurisdiction, when it issued the questioned Decision dated May 3, 2000 granting a right of way to private respondents which was clearly more prejudicial and burdensome to the servient estate there being an existing concrete residential building getting in the way of the subject right of way owned not by petitioners but by third parties who were never impleaded in this case. II. WHETHER or not the public respondent gravely abused his discretion, amounting to lack of jurisdiction, when it issued the assailed order of July 19, 2000 denying petitioners Motion for Reconsideration notwithstanding the fact that it had meritorious grounds and was timely filed; III. WHETHER or not the public respondent gravely abused his discretion, amounting to lack of jurisdiction, when it issued the assailed order dated August 17, 2000 denying due course to petitioners Notice of Appeal even as the same was filed within the reglementary period.[33](Emphasis supplied) cralawThe Court will limit itself only to the sub-issue mentioned in the second issue regarding the timeliness of the motion for reconsideration of the RTC Decision and to the third issue involving the filing of the Notice of Appeal.The first two issues involve matters which go into the merits of the case which should be properly threshed out in an appeal before the CA. The petitioners argue that the notice of appeal filed before the RTC on August 15, 2000 was within the reglementary period of perfecting an appeal. Before Neypes, Section 3, Rule 41 of the Rules of Court provides that the appeal shall be taken within fifteen (15) days from the notice of the judgment or final order appealed from; and the period of appeal shall be interrupted by a timely motion for new trial or reconsideration. The RTC acknowledges that on May 12, 2000,[34] the petitioners received a copy of the RTC Decision dated May 3, 2000. Computing the 15-day period limitation within which a party may file a motion for reconsideration or appeal, the petitioners last day for filing their motion for reconsideration should be on May

27, 2000, which fell on a Saturday. Thus, the following Monday or on May 29, 2000, the petitioners filed their Motion for Reconsideration via registered mail.[35] The RTC denied the motion in its Order dated July 19, 2000 which petitioners received on August 3, 2000.[36] Petitioners filed a Notice of Appeal on August 15, 2000, or twelve (12) days later.Under the aforementioned Rules, petitioners should have filed the Notice of Appeal on August 4, 2000. In Neypes, the trial court issued an order dated February 12, 1998 which dismissed the complaint of petitioners Neypes on the ground of prescription. Upon receipt of the order on March 3, 1998, the petitioners filed a motion for reconsideration onMarch 18, 1998.On July 1, 1998, the trial court issued another order which dismissed the motion for reconsideration which petitioners received on July 22, 1998.Five days later, or on July 27, 1998, petitioners filed a notice of appeal which was denied by the trial court on August 4, 1998, holding that it was filed eight days late.Petitioners filed a motion for reconsideration but this too was denied in an Order dated September 3, 1998.[37]chanroblesvirtuallawlibrary The Court elucidated in Neypes that in order to standardize the appeal periods provided in the Rules of Court and to afford litigants a fair opportunity to appeal their cases, it is 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. Thus, the Court held that petitioners Neypes seasonably filed their notice of appeal within the fresh period of 15 days counted from the date of receipt of notice denying their motion for reconsideration.[38] Procedural law refers to the adjective law which prescribes rules and forms of procedure in order that courts may be able to administer justice.[39] 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.[40] 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. 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. Petitioners filed their Notice of Appeal on August 15, 2000 or 12 days from receipt of the Order denying their motion for reconsideration on August 3, 2000.Hence, following the fresh period rule, the notice of appeal filed by petitioners may now be considered as having been filed well within the fresh period of 15 days. WHEREFORE, the instant petition is GRANTED.In the higher interest of substantial justice, the assailed Court of Appeals Resolutions dated October 27, 2000 and July 31, 2001 are SET ASIDE and the RTC of Malolos, Bulacan, Branch 9, is directed to GIVE DUE COURSE to the Notice of Appeal filed by the petitioners on August 14, 2000. The temporary restraining order issued by the Court during the pendency of herein petition is LIFTED. No pronouncement as to costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION PANGASINAN FIVE STAR BUS G.R. No. 152714 CO., INC., Petitioner, - versus SPOUSES LEON & LUISA BARREDO, Respondents. August 10, 2006 DECISION CALLEJO, SR., J.: Before the Court is a Petition for Review on Certiorari of the Decision[1] of the Court of Appeals (CA) in CAG.R. CV No. 60791 affirming, on appeal, the Decision of the Regional Trial Court (RTC) of Valenzuela City in Civil Case No. 4509-2-94. At around 10:30 a.m. on April 14, 1994, a Pangasinan Five Star Bus Co., Inc. passenger bus with plate no. NKP 484 driven by Emilio Credo bumped the rear portion of an owner-type jeep. The driver of the smaller vehicle, Leon Barredo, Jr., sustained serious injuries and was confined at the The Family Clinic Hospital for acute lumbosacral strain secondary to vehicular accident. He did not fully recover and eventually lost his job as a forklift operator with the Barber Dubai Shipping Agencies (PVT) Ltd. where he had been earning $518.00 a month.[2] On November 14, 1994, the spouses Leon and Luisa Barredo filed a complaint for damages before the RTC of Valenzuela City against the bus company and Emilio Credo. The complaint was later amended. After the defendants filed their Answer to the complaint, pre-trial was set on February 6, 13, 15, 22, 27 and 29, 1996, all at 8:30 a.m.[3]Several pre-trial conferences were held to give the parties the chance to settle the case amicably, to no avail. On May 2, 1996, or after more than a year, the court terminated pre-trial and set June 27 and July 11, 1996 as trial dates. However, this setting and subsequent ones were cancelled, as defendants manifested their willingness to settle the case amicably.[4] Upon agreement of the parties, the RTC set the trial on April 22, 29 and May 8, 1997.[5] However, the trial set on April 22, 1997 did not proceed because the defendants and their counsel failed to appear. On plaintiffs' motion, the court issued an Order declaring the defendants 'as in default and allowed the plaintiffs to adduce evidence ex parte before the Acting Branch Clerk of Court.[6] Plaintiffs presented their evidence ex parte on April 23, 1997, and among the documentary evidence adduced were the following: the Employment Contract of Leon M. Barredo, Jr.;[7] receipts for costs of the repair of the vehicle of plaintiffs, hospitalization and medical expenses; and the medical certificate issued to the plaintiffs from Barredo, Jr. Thereafter, plaintiffs manifested that they were resting their case. Barely a week thereafter, or on April 30, 1997, the RTC rendered judgment in favor of the plaintiffs. The dispositive portion reads:

WHEREFORE, judgment is hereby rendered as follows: 1. Ordering the defendants, jointly and solidarily, to pay plaintiffs the sum of P70,000.00 as actual damages for the repair of the owner-type jeep and medical expenses; 2. Ordering the defendants, jointly and solidarily, to pay plaintiff Leon Barredo, Jr. the sum of $36,080.00 in the concept of loss earnings for at least the next five (5) years of his gainful life; 3. Ordering the defendants to pay the plaintiffs the sum of P100,000.00 as moral damages; 4. Ordering the defendants to pay the plaintiffs the sum of P100,000.00 as exemplary damages; 5. Ordering the defendants to pay the plaintiffs the amount of P1,000.00 as litigation expenses; 6. Ordering the defendants to pay the plaintiffs the amount of P10,000.00 as attorney's fees, plus the costs. SO ORDERED.[8]chanroblesvirtuallawlibrary The trial court declared that defendants and their counsel were considered 'as in default for their failure to appear at the trial on April 22, 1997.[9] On May 14, 1997, defendants filed a Motion to Lift the Order of Default alleging therein that, since the pre-trial had been terminated as early as May 2, 1996, they could no longer be declared as in default due to their absence on the April 22, 1997 trial, and that, consequently, the order of the court declaring them as in default was void. They insisted that they were not notified of the setting on April 22, 1997; besides, their counsel's absence was excusable because he was suffering from a recurring fever aggravated by dry cough.[10] The defendants further alleged that they had meritorious defenses: it was Leon Barredo, Jr. who was reckless and negligent, thus causing the accident. In any event, the defendant bus company was not directly liable to the plaintiffs because it had always exercised due diligence in the selection and supervision of its employees. Meantime, defendants received a copy of the decision of the court on May 19, 1997. They filed an unverified motion for reconsideration thereof, maintaining that the absence of their counsel during the April 22, 1997 trial was beyond their control. They prayed that the decision of the trial court be set aside and, in the interest of justice, that they be allowed to cross-examine the witnesses of the plaintiff and adduce evidence in their behalf.[11]However, defendants failed to append to their motion any affidavit of merit. On June 3, 1997, the RTC issued an Order[12] denying defendants' motions. It declared that, although defendants were erroneously declared as in default in its April 22, 1997 Order for failure to appear at the scheduled hearing on said date, the clear import of said Order was to consider defendants as having waived their right to be present and to allow the plaintiffs to present evidence ex parte. The RTC clarified that the April 22, 1997 Order merely allowed the plaintiffs to present their evidence in the absence of defendants. It also pointed out that in its Decision dated April 30, 1997 it stated that 'the plaintiffs were just allowed to present their evidence ex parte in view of the non-appearance of the defendants and their counsel on said date of hearing.[13] The bus company and Credo appealed the decision, as well as the June 3, 1997 Order of the RTC, to the CA. They alleged that the lower court gravely erred when it declared them as in default at the initial trial of the case; it acted with apparent bias and partiality, thereby depriving them of due process of law; and that it gravely erred in deciding the case based solely on the evidence presented by the Barredo spouses which,

however, were not even formally offered. They insisted that the trial court acted with undue and suspicious haste when it rendered judgment barely a week after they were declared as in default.[14] On July 6, 2001, the CA rendered judgment dismissing the appeal, holding that the trial court had already clarified its April 22, 1997 Order in its June 3, 1997 Order.The minutes of the proceedings before the Branch Clerk of Court on April 23, 1997 show that the Barredo spouses formally offered their evidence and rested their case thereafter.[15] The aggrieved parties filed a motion for reconsideration, which the appellate court denied on February 19, 2002. Pangasinan Five Star Bus Co., Inc., now petitioner, forthwith filed the instant petition, seeking the reversal of the appellate court's ruling. The following issues are raised: COULD THE TRIAL COURT DECLARE DEFENDANTS AS IN DEFAULT WHEN THE PROCEEDING WHICH DEFENDANTS FAILED TO ATTEND WAS JUST THE INITIAL HEARING OF THE CASE AND NOT A PRE-TRIAL CONFERENCE. WITH THE ERRONEOUS DECLARATION OF DEFENDANTS AS IN DEFAULT BY THE TRIAL COURT, COUPLED WITH ITS PRECIPITATE AND HASTY ISSUANCE OF DECISION, DID DEFENDANTS-PETITIONER LOSE THEIR STANDING IN COURT, SUCH THAT THEY COULD NO LONGER TAKE PART IN FURTHER PROCEEDINGS IN THE COURT A QUO MUCH LESS ADDUCE EVIDENCE IN SUPPORT OF THEIR DEFENSES; [III] WHETHER OR NOT THE JUDGMENT BY DEFAULT ISSUED BY THE TRIAL COURT SHOULD BE ANNULLED FOR BEING NULL AND VOID THE SAME HAVING BEEN ISSUE (SIC) THROUGH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION, AND THE CASE REMANDED TO THE TRIAL COURT FOR FURTHER PROCEEDINGS, FOR RECEPTION OF DEFENDANTS' EVIDENCE.[16] Petitioner reiterates its argument in the CA that the RTC erred in declaring it as in default because the April 22, 1997 setting was for the initial presentation of respondents' evidence, as plaintiffs therein. It claims that while the trial court had the discretion to consider it as having forfeited its right to cross-examine respondents or their witnesses, it retained the right to present evidence in support of its defense. Petitioner points out that the trial court rendered judgment on April 30, 1997, or barely a week after it was declared as in default and after respondents presented their evidence before the Branch Clerk of Court. Petitioner asserts that the trial court's April 22, 1997 Order declaring it as in default is void and did not divest it of its standing in court.Petitioner thus prays that the April 22, 1997 Order of the trial court and its Decision dated April 30, 1997 be declared void, and that the case be remanded to the trial court for it to adduce evidence. In their Comment on the petition, respondents aver that petitioner raised factual issues which are improper in a petition for review on certiorari in this Court; worse, it merely reiterated its arguments in the CA to support the instant petition. They assert that the decision of the CA is in accord with law and the evidence on record, and that the decision of the trial court had become final and executory due to petitioner's failure to append an affidavit of merit in its May 14, 1997 Motion to Lift the Order of Default. They pointed out that respondent Leon Barredo, Jr. had not been able to recover from the injuries he sustained from the accident and remains bedridden. We hold that the trial court's April 22, 1997 Order is partially void in that it erroneously declared petitioner as in default for its representative's failure to appear at the scheduled trial. Under Section 2, Rule 20 of the Rules of Court,[17] a party who fails to appear at a pre-trial conference may be non-suited or considered as in default.If the defendant is declared as in default, the court may allow the

plaintiff to present his evidence ex parte before the Branch Clerk of Court, and, thereafter, render judgment on the basis of the evidence of the plaintiffs. On the other hand, if the defendant is absent during the initial trial without any justifiable reason therefor, the defendant cannot be declared as in default for such absence. However, the court may allow the plaintiff to present his evidence before the Branch Clerk of Court ex parte.By the absence of the defendant, he waives, not only his right to cross-examine the plaintiff and his witnesses, but also to adduce evidence in his behalf.[18]However, the court, in the exercise of its judicial discretion, may allow the plaintiff to present his evidence ex parte before the Branch Clerk of Court without prejudice to the right of the defendant to present his own evidence after the plaintiff shall have rested his case. In this case, the pre-trial of the case had already been terminated on May 2, 1996.The court had set the trial of the case, by agreement of the parties, on April 22, 1997.Only the respondents, as plaintiffs, appeared at the scheduled trial of the case. The RTC thus erred in declaring the petitioner (defendant below), as in default for the failure of its representative and counsel to appear at the trial. This error in the April 22, 1997 Order was even admitted by the trial court in its June 3, 1997Order. However, we find that the portion of the April 22, 1997 Order allowing respondents (as plaintiffs) to present their evidence ex parte before the Branch Clerk of Court is correct. Contrary to the contention of petitioner, the trial set on April 22, 1997 was for the presentation of the evidence of the parties.The Order of the court on February 18, 1997 postponed the setting to April 22, 29 and May 8, 1997.There is no showing in the records that the setting on April 22, 1997 was only for the reception of the evidence of respondents, and that the setting on April 29, 1997 was for petitioner and its co-defendant to present their evidence. The trial court did not specifically declare in its April 22, 1997 Order that petitioner had thereby waived its right to adduce its evidence for failure to appear during the April 22, 1997 trial date.Indeed, there was no need for the trial court to do so, for one is deemed to have waived the right to adduce evidence by an unexplained absence. Petitioner's unexplained absence raises no other logical conclusion, that is, it was no longer interested to adduce evidence in its behalf.Petitioner's claim that its counsel was absent due to 'fever aggravated by dry cough, even if true, is not excusable.It bears stressing that it was represented by a law firm, and that a member of such firm could have appeared before the RTC to ask for postponement on that ground. At the very least, the lawyer handling the case could have informed the Branch Clerk of Court and requested for the postponement of the hearing of the case. And even assuming that its counsel was indisposed, petitioner should have seen to it that its representative attended the trial and requested for such postponement. The absence of petitioner's representative and counsel at the trial on April 22, 1997 was thus inexcusable. We note that petitioner even failed to append to its two motions, motion to lift order of default and motion for reconsideration of the trial court's decision, the required affidavits to support its claim that the absence of its representative and its counsel on April 22, 1997 was excusable and that it has meritorious defenses. While petitioner was not required to append to its motion to set aside the order of default on the ground that it was improper for the trial court to do so, it was nevertheless required to append the required affidavits to the motion for reconsideration on the ground of excusable negligence. The failure of the petitioner to append the requisite affidavits rendered the motion pro forma and the decision final and executory. As we held in Philippine Commercial and Industrial Bank v. Judge Rodolfo Ortiz:[19] Two more points need be dealt with before this opinion is ended. It is true that when fraud, accident, mistake or excusable negligence is invoked as ground of a motion for new trial, it should be proved in the manner provided for proof of motions, i.e., by 'affidavits or depositions' unless the court should direct that 'the matter be heard wholly or partly on oral testimony or depositions.It is also required that 'affidavits of merits' be attached to the motion.A motion for new trial grounded on fraud, accident, mistake or excusable negligence should thus ordinarily be accompanied by two (2) affidavits: one, setting forth the facts and circumstances alleged to constitute such fraud, accident, mistake, or excusable negligence; and the other, an affidavit of merits, setting forth the particular facts claimed to constitute the movant's meritorious cause of action or

defense.The reason for the first is quite obvious: it is to enable the court to determine if the movant's claim of fraud, etc., is not a mere conclusion but is indeed borne out of the relevant facts. The reason for the second is equally evident: it would be useless, a waste of time, to set aside the judgment and reopen the case to allow the movant to adduce evidence when he has no valid cause of action or meritorious defense. Where, therefore, a motion for new trial on the ground of fraud, etc., is unaccompanied by either or both affidavits, the motion is pro forma a scrap of paper, as it were, and will not interrupt the running of the period of appeal. x x x[20] Petitioner even failed to append to its petition a copy of its Answer to the Complaint and Amended Complaint of the respondents. Considering the foregoing, the Court finds it unnecessary to still resolve the other issues raised by petitioner. WHEREFORE, the petition is DENIED. Costs against the petitioner. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 162580 January 27, 2006

Tristan filed a petition for certiorari and prohibition with the Court of Appeals seeking to annul the order dated September 30, 2002 of the trial court. The Court of Appeals granted the petition and declared as null and void the September 30, 2002 Order of the trial court granting the motion for leave to file intervention and admitting the complaint-in-intervention. Petitioners motion for reconsideration was denied, hence this petition for certiorari and prohibition filed under Rule 65 of the Rules of Court. Petitioner contends that the Court of Appeals gravely abused its discretion in disregarding her legal interest in the annulment case between Tristan and Lily. The petition lacks merit. Ordinarily, the proper recourse of an aggrieved party from a decision of the Court of Appeals is a petition for review on certiorari under Rule 45 of the Rules of Court. However, if the error subject of the recourse is one of jurisdiction, or the act complained of was granted by a court with grave abuse of discretion amounting to lack or excess of jurisdiction, as alleged in this case, the proper remedy is a petition for certiorari under Rule 65 of the said Rules.11 This is based on the premise that in issuing the assailed decision and resolution, the Court of Appeals acted with grave abuse of discretion, amounting to excess of lack of jurisdiction and there is no plain, speedy and adequate remedy in the ordinary course of law. A remedy is considered plain, speedy, and adequate if it will promptly relieve the petitioner from the injurious effect of the judgment and the acts of the lower court.12 It is therefore incumbent upon the petitioner to establish that the Court of Appeals acted with grave abuse of discretion amounting to excess or lack of jurisdiction when it promulgated the assailed decision and resolution. We have previously ruled that grave abuse of discretion may arise when a lower court or tribunal violates or contravenes the Constitution, the law or existing jurisprudence. By grave abuse of discretion is meant, such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be grave as where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act at all in contemplation of law.13 The word "capricious," usually used in tandem with the term "arbitrary," conveys the notion of willful and unreasoning action. Thus, when seeking the corrective hand of certiorari, a clear showing of caprice and arbitrariness in the exercise of discretion is imperative.14 The Rules of Court laid down the parameters before a person, not a party to a case can intervene, thus: Who may intervene. A person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenors rights may be fully protected in a separate proceeding. 15 The requirements for intervention are: [a] legal interest in the matter in litigation; and [b] consideration must be given as to whether the adjudication of the original parties may be delayed or prejudiced, or whether the intervenors rights may be protected in a separate proceeding or not.16 Legal interest, which entitles a person to intervene, must be in the matter in litigation and of such direct and immediate character that the intervenor will either gain or lose by direct legal operation and effect of the judgment.17 Such interest must be actual, direct and material, and not simply contingent and expectant. 18 Petitioner claims that her status as the wife and companion of Tristan for 17 years vests her with the requisite legal interest required of a would-be intervenor under the Rules of Court. Petitioners claim lacks merit. Under the law, petitioner was never the legal wife of Tristan, hence her claim of legal interest has no basis.

ELMAR O. PEREZ, Petitioner, vs. COURT OF APPEALS, Fifth Division, TRISTAN A. CATINDIG and LILY GOMEZCATINDIG, Respondents. DECISION YNARES-SANTIAGO, J.: This petition for certiorari and prohibition under Rule 65 of the Rules of Court assails the July 25, 2003 Decision1 of the Court of Appeals in CA-G.R. SP No. 74456 which set aside and declared as null and void the September 30, 2002 Order2 of the Regional Trial Court of Quezon City, Branch 84, granting petitioners motion for leave to file intervention and admitting the Complaint-in-Intervention3 in Civil Case No. Q-01-44847; and its January 23, 2004 Resolution4 denying the motion for reconsideration. Private respondent Tristan A. Catindig married Lily Gomez Catindig5 twice on May 16, 1968. The first marriage ceremony was celebrated at the Central Methodist Church at T.M. Kalaw Street, Ermita, Manila while the second took place at the Lourdes Catholic Church in La Loma, Quezon City. The marriage produced four children. Several years later, the couple encountered marital problems that they decided to separate from each other. Upon advice of a mutual friend, they decided to obtain a divorce from the Dominican Republic. Thus, on April 27, 1984, Tristan and Lily executed a Special Power of Attorney addressed to the Judge of the First Civil Court of San Cristobal, Dominican Republic, appointing an attorney-in-fact to institute a divorce action under its laws.6 Thereafter, on April 30, 1984, the private respondents filed a joint petition for dissolution of conjugal partnership with the Regional Trial Court of Makati. On June 12, 1984, the civil court in the Dominican Republic ratified the divorce by mutual consent of Tristan and Lily. Subsequently, on June 23, 1984, the Regional Trial Court of Makati City, Branch 133, ordered the complete separation of properties between Tristan and Lily. On July 14, 1984, Tristan married petitioner Elmar O. Perez in the State of Virginia in the United States7 and both lived as husband and wife until October 2001. Their union produced one offspring.8 During their cohabitation, petitioner learned that the divorce decree issued by the court in the Dominican Republic which "dissolved" the marriage between Tristan and Lily was not recognized in the Philippines and that her marriage to Tristan was deemed void under Philippine law. When she confronted Tristan about this, the latter assured her that he would legalize their union after he obtains an annulment of his marriage with Lily. Tristan further promised the petitioner that he would adopt their son so that he would be entitled to an equal share in his estate as that of each of his children with Lily.9 On August 13, 2001, Tristan filed a petition for the declaration of nullity of his marriage to Lily with the Regional Trial Court of Quezon City, docketed as Case No. Q-01-44847. Subsequently, petitioner filed a Motion for Leave to File Intervention claiming that she has a legal interest in the matter in litigation because she knows certain information which might aid the trial court at a truthful, fair and just adjudication of the annulment case, which the trial court granted on September 30, 2002. Petitioners complaint-in-intervention was also ordered admitted.
10

When petitioner and Tristan married on July 14, 1984, Tristan was still lawfully married to Lily. The divorce decree that Tristan and Lily obtained from the Dominican Republic never dissolved the marriage bond between them. It is basic that laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad. 19 Regardless of where a citizen of the Philippines might be, he or she will be governed by Philippine laws with respect to his or her family rights and duties, or to his or her status, condition and legal capacity. Hence, if a Filipino regardless of whether he or she was married here or abroad, initiates a petition abroad to obtain an absolute divorce from spouse and eventually becomes successful in getting an absolute divorce decree, the Philippines will not recognize such absolute divorce.20 When Tristan and Lily married on May 18, 1968, their marriage was governed by the provisions of the Civil Code21 which took effect on August 30, 1950. In the case of Tenchavez v. Escano22 we held: (1) That a foreign divorce between Filipino citizens, sought and decreed after the effectivity of the present Civil Code (Rep. Act No. 386), is not entitled to recognition as valid in this jurisdiction; and neither is the marriage contracted with another party by the divorced consort, subsequently to the foreign decree of divorce, entitled to validity in the country. (Emphasis added) Thus, petitioners claim that she is the wife of Tristan even if their marriage was celebrated abroad lacks merit. Thus, petitioner never acquired the legal interest as a wife upon which her motion for intervention is based. Since petitioners motion for leave to file intervention was bereft of the indispensable requirement of legal interest, the issuance by the trial court of the order granting the same and admitting the complaint-inintervention was attended with grave abuse of discretion. Consequently, the Court of Appeals correctly set aside and declared as null and void the said order. WHEREFORE, the petition is DISMISSED. The assailed Decision dated July 25, 2003 and Resolution dated January 23, 2004 of the Court of Appeals in CA-G.R. SP No. 74456 are AFFIRMED. No pronouncement as to costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 153860 February 6, 2006

VALERIANO B. CANO, Petitioner, vs. SPOUSES VICENTE and SUSAN JUMAWAN, Respondents. DECISION GARCIA, J.: By this petition for review on certiorari under Rule 65 of the Rules of Court, petitioner Valeriano B. Cano seeks the reversal and setting aside of the following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 64308, to wit: 1. Decision1 dated January 23, 2002, reversing that of the Regional Trial Court of Davao City, Branch 10, which, in turn, set aside, for want of jurisdiction, an earlier "Judgment" of the Municipal Trial Court in Cities (MTCC), Davao City, in an unlawful detainer case thereat commenced by the herein respondents against petitioner; and 2. Resolution2 dated June 6, 2002, denying petitioners motion for reconsideration. Stripped of unessentials, the facts are: Herein respondents, the spouses Vicente Jumawan and Susan Jumawan, are the owners of a parcel of agricultural land with an area of about 24,025 square meters at Barangay Malagos, Baguio District, Davao City and registered in their names under Transfer Certificate of Title No. 185776 of the Davao City Registry of Deeds. On February 24, 1999, petitioner and respondents entered into a notarized document entitled "Agreement," 3 whereunder, for "humanitarian consideration," the spouses, designated in said document as "OWNERS," allowed petitioner, therein referred to as "BUILDER," to construct a house of light materials in an area of about twenty (20) square meters at the eastern portion of their property. Good for a term of two (2) years starting March 1, 1997 and terminating on March 1, 1999, the "Agreement" specifically provides: 1. No rental shall be paid by petitioner for his occupancy of said portion of respondents landholding; and 2. Upon the expiration of the agreed period of two (2) years, petitioner "shall voluntarily remove" his small house/shanty thereon, unless an extension is granted him by the respondents. Following the expiration of the aforementioned "Agreement," respondents demanded the petitioner to vacate the area occupied by him and to pay a rent of not less than P300.00 a month until he shall have vacated the same. Petitioner refused. Hence, after conciliation proceedings before the local barangay lupon proved futile, respondents filed against petitioner a complaint4 for unlawful detainer before the Municipal Circuit Trial Court (MCTC) of Davao City on September 20, 1999. In his answer,5 petitioner, while qualifiedly admitting the existence and execution of his 2-year agreement with the respondents, alleged that " he has long been an agricultural tenant" of the latter, adding that the ejectment suit was merely resorted to by respondents as leverage after he had filed an agrarian case against them before the Barangay Agrarian Reform Council (BARC) which elevated said case to the Provincial Agrarian Reform Office (PARO) for adjudication by the Department of Agrarian Reform Adjudication Board (DARAB). He thus interposed in his answer the specific and affirmative defense of lack of jurisdiction on the part of the MCTC, contending that the suit before it was an "agrarian dispute" properly cognizable by the DARAB.

After the parties had filed their respective position papers, the MCTC came out with a "Judgment"6 on July 26, 2000, finding for the respondents, to wit: "WHEREFORE, judgment is hereby rendered IN FAVOR of the [respondents] and against the [petitioner], as follows: a) Ordering [petitioner] and any person in his behalf, to vacate subject premises and yield possession thereof to [respondents]; b) Directing [petitioner] to pay the sum of P300.00 per month from March 1, 1999 until he vacates the subject premises; c) Sentencing [petitioner] to pay P10,000.00 as attorneys fees and to pay the cost. SO ORDERED. (Words in brackets ours) Therefrom, petitioner went to the Regional Trial Court (RTC) of Davao City where the appeal was raffled to Branch 10 thereof. In a decision7 dated December 29, 2000, said court reversed the appealed "Judgment" of the MCTC for lack of jurisdiction, saying that the latter court "should have dismissed the case and allowed the Department of Agrarian Reform to resolve the agrarian case." We quote the dispositive portion of the decision: WHEREFORE, the JUDGMENT rendered by the Court a quo is reversed and this case is dismissed for want of jurisdiction. Consequently, the MOTION FOR EXECUTION PENDING APPEAL is denied. SO ORDERED. With their motion for reconsideration having been denied by the RTC in its Order of March 2, 2001,8 respondents went to the CA on a petition for review, thereat docketed as CA-G.R. SP No. 64308. As stated at the outset hereof, the CA, in a decision dated January 23, 2002, reversed and set aside that of the RTC and reinstated the earlier "Judgment" of the MCTC, thus: WHEREFORE, the petition is GRANTED. Accordingly, the questioned decision dated December 29, 2000 and the Order dated March 2, 2001 of the Regional Trial Court, Branch 10, of Davao City are hereby REVERSED and SET ASIDE. Consequently, the Decision ["Judgment"] dated July 26, 2000 of the MTCC Branch 1 is hereby affirmed in toto. SO ORDERED. (Word in bracket ours) With the CAs denial of his motion for reconsideration in its Resolution of June 6, 2002, petitioner is now with this Court via the present recourse on the lone issue of his own formulation, to wit: WHETHER OR NOT THE INSTANT CASE WHICH CLEARLY INVOLVES AGRARIAN REFORM MATTERS FALLS WITHIN THE JURISDICTION OF THE MUNICIPAL TRIAL COURT. Actually, the issue thus formulated raises two distinct questions, namely: (1) whether the instant case involves, in the first place, agrarian reform matters; and (2) whether agrarian reform matters fall within the jurisdiction of municipal trial courts. We DISMISS. To begin with, we note from the records that respondents complaint for unlawful detainer was filed with the MCTC on September 20, 1999, as borne by the stamped "RECEIVED" appearing on the face thereof. It was filed after respondents were issued by the local barangay lupon a Certificate to File Action following the parties failure to arrive at an amicable settlement before the lupon. On the other hand, as borne by the annexes to petitioners Position Paper in the MCTC, particularly Annex "E"9 thereof, he lodged a complaint for Harassment With Design to Eject with the BARC only on September 21, 1999, which the BARC denominated as "agrarian dispute," and referred it to the Acting Municipal Agrarian Reform Officer, who conducted an Investigation Report10 thereon. In turn, the Municipal Agrarian Reform Officer endorsed the case to the Department of Agrarian Reform (DAR) Provincial Reform Officer, Davao City

on September 28, 1999 with the recommendation, among others, that petitioner be declared as tenant pursuant to the provisions of Republic Act No. 3844.1avvphil.net It can thus be seen that contrary to petitioners pretense, his complaint for Harassment With Design to Eject initiated before the BARC on September 21, 1999 and which evidently is the so-called "agrarian reform matters" referred to by him, came only after respondents complaint for unlawful detainer before the MCTC on September 20, 1999. This lends credence to respondents claim that petitioner resorted to the DAR in order to pre-empt the civil action for ejectment earlier filed against him. In any event, and more importantly, the basic rule is that the material averments in the complaint determine the jurisdiction of a court. And jurisprudence dictates that a court does not lose its jurisdiction over an ejectment suit by the simple expedient of a party raising as a defense therein the alleged existence of a tenancy relationship between the parties.11 The court continues to have the authority to hear and evaluate the evidence, precisely to determine whether or not it has jurisdiction, and, if, after hearing, tenancy is shown to exist, it shall dismiss the case for lack of jurisdiction.12 Here, the allegations in respondents complaint before the MCTC clearly make out a case for unlawful detainer. Petitioner was allowed to construct his house/shanty on a portion of respondents property without paying rental therefor but merely for "humanitarian consideration," pursuant to a notarized agreement which explicitly imposes on the petitioner the obligation to remove his construction thereon and vacate the premises upon the expiration of said agreement. The agreement had undoubtedly expired but despite respondents demand to vacate, petitioner refused. To the MCTC, "[T]he, Agreement which [petitioner] admitted having signed clearly negates the claim of [petitioner] of a tenancy relationship between him and the [respondents]." For sure, the very pieces of evidence submitted by the parties before the MCTC, consisting of annexes to their respective position papers, indubitably belie petitioners claim of being a tenant of respondents. For one, there is no less the sworn affidavit13 in the local dialect of his very own mother, Albina Cano, saying that her son is not a tenant of respondents but of one Rodolfo Evangelista, a declaration under oath which finds support in the equally sworn affidavits of Rodolfo Evangelista himself;14 Nicasio Layan15 and Maximo Roloos.16 If ever, the only piece of evidence adduced by petitioner to buttress his self-serving claim of tenancy relationship is the sworn affidavit of Felisa Tan,17 proprietor of Golden Grains Harvest Trading, relevantly reading, as follows: That I know and is (sic) known to VALERIANO CANO, who have (sic) been selling to us since 1992 to `995 a total of ONE HUNDRED TWENTY (120) CAVANS of palay, allegedly the share of SUSAN A. JUMAWAN, the lessor of the agricultural land from which the palay sold to us was harvested from. That consequently after every sale of VALERIANO S. CANO, we issued to him receipts of his palay sale. That I am executing this affidavit to attest to the truth of the foregoing facts to declare that VALERIANO V. CANO have sold to us the above cited cavans of rice for whatever legal purposes this may serve from hereof (sic). (Emphasis supplied) Clear it is from the above, however, affiant Tan has no personal knowledge that the 120 cavans of palay sold to her by petitioner, allegedly the share of SUSAN A. JUMAWAN, were in fact harvested from respondents land. Besides, it must be noted that the palay transaction referred to by Tan in her affidavit was from 1992 to 1995, or long before petitioner constructed his house on the eastern portion of respondents land sometime in 1997 pursuant to the notarized "Agreement" earlier mentioned. No evidence was presented by petitioner that he was still selling palay harvested from respondents land after 1995. If indeed petitioner is respondents tenant and his tenancy required the construction of a house on the latters land, then it should have been as early as 1992, or, at the very least, between 1992 and 1995 when he was selling palay to Tan that he should have erected his house on a portion of respondents landholding. Given the reality that it was only after the execution of the "Agreement" in question that petitioner put up his house on respondents property, the only clear and logical conclusion is that he was not a tenant of the latter

and that it was merely out of "humanitarian consideration" that he was allowed to stay thereat, but with the obligation on his part to vacate the place and yield possession thereof to respondents after the agreement shall have expired. Case law teaches that the essential requisites of an agricultural tenancy relationship are: (1) the parties are the landowner and the tenant; (2) the subject is agricultural land; (3) there is consent; (4) the purpose is agricultural production; (5) there is personal cultivation; and (6) there is sharing of harvests. 18 All these requisites must concur for a tenancy relationship to exist. The absence of one does not make an occupant of a parcel of land, or a cultivator thereof, or a planter thereon, a de jure tenant. Unless a person establishes his status as de jure tenant, he is not entitled to security of tenure nor covered by the land reform program of the government under existing tenancy laws.19 Simply put, the pieces of evidence on record fail to yield the existence of the foregoing requisites between the herein parties. Quite the contrary, the pleadings filed and their annexes heavily preponderate on the absence of such relationship. WHEREFORE, the instant petition is DISMISSED and the assailed decision and resolution of the Court of Appeals in CA-G.R. SP No. 64308 are AFFIRMED in toto. Costs against petitioner. SO ORDERED.