UPDATE ON REMEDIAL LAW (Discussion on 2003 Decisions of the Supreme Court on Remedial Law

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I. CIVIL PROCEDURE A. Jurisdiction 1. Departure From Tijam v. Sibonhanoy Atuel v. Valdez, 403 SCRA 517, June 10, 2003 Even if the parties never questioned the jurisdiction of the DARAB as in fact they actively participated in the proceedings thereof, the SC nonetheless ruled upon the issue of jurisdiction and pronounced the DARAB to have no jurisdiction because there was no tenancy relationship between the parties. The High Court ruled, contrary to Tijam v. Sibonhanoy, that estoppel cannot confer upon a court or a tribunal a jurisdiction that it does not have under the law. Note: Just about 6 months before Atuel v. Valdez, the SC in Gonzaga v. CA, G.R. No. 144025, Dec. 27, 2002 ruled that petitioner having invoked the jurisdiction of the trial court, cannot after receiving an adverse verdict, claim that that court had no jurisdiction for the subject matter of the suit properly belongs to the HLURB. The High Court reiterated the Sibonhanoy doctrine. Similarly, a year earlier, in the case of Alcantara v. Commission on Settlement of Land Problems (COSLAP), G.R. No. 145838, July 20, 2001, the SC ruled that petitioner is in estoppel from questioning the jurisdiction of the COSLAP after participating actively n the proceedings before said commission by filing an answer and a motion for reconsideration of the decision of the latter without raising the issue of jurisdiction. 2. Jurisdiction over an Action for Expropriation (Rule 67, RCP) Bardellon v. Barangay Masili of Calamba, G.R. No. 146886, April 30, 2003 An action for expropriation is one whose subject is incapable of pecuniary estimation and it is, therefore, within the exclusive jurisdiction of the RTC. 3. Jurisdiction over Matters Pertaining to the Settlement of Estate of a Deceased Person (Rules 7391, RRC) Arbolario v. CA, G.R. No. 129163, (April 22, 2003) An ordinary court hearing an action for recovery of possession of a realty has no jurisdiction to make determinations re the heirs of a decedent, proof of filiation, the estate of the decedent and claims against it. Only a probate court in a special proceeding for the settlement of the estate of a deceased person can resolve those questions. Note: The same ruling was made in Natcher v. CA, G.R. No. 133000, Oct. 2, 2001 where a regular court was resolving the question of the alleged advancement of property made by the decedent to one of his heirs. The SC ruled that the regular court had no jurisdiction over the issue. It belongs to the probate court. 4. Custom's Seizure and Detention of Imported Merchandise Zuño v. Judge Cabredo, A.M. RTJ-1779, April 30, 2003

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A regular court does not have jurisdiction over seizure and forfeiture proceedings undertaken by the Deputy Collector of Customs. The action of this official is reviewable by the Collector of Customs whose action is reviewable by the Court of Tax Appeals. B. Docket Fees (S.C. Res. en banc, April 4, 19987, AM 085-3-001) RCBC v. Magwin Marketing Corp., G.R. No. 152878, Aug. 5, 2003 When an order of dismissal of complaint is reconsidered and the case is reinstated, the plaintiff is not required to pay another docket fee.

C. Actions (Rule 2, RCP) Romualdez-Licaros v. Licaros, G.R. No. 150656, April 20, 2003 The three kinds of actions: 1. Action in personam — it is an action which is lodged against a person based on personal liability and seeks a personal judgment. The decision rendered therein is called judgment in personam which is binding only between the parties. 2. Action in rem — it is an action directed against a res or the thing itself instead of a person and seeks a judgment enforceable against the whole world. The decision is called judgment in rem. 3. Action quasi-in-rem — it is an action which names a person as defendant but its object is to subject that person's interest in a property to a corresponding lien or obligation or an action pertaining to the status of a person. The decision which is called judgment quasi-in-rem is binding only between the parties. Notes: a) An action for declaration of the nullity of marriage is an action quasi-in-rem. b) Two kinds of quasi-in-rem actions: (Rule 14, Sec. 15) 1) Defendant does not reside and is not found in the Philippines and the action affects the personal status of the plaintiff; 2) Defendant does not reside and not found in the Philippines and the subject of the suit is a property in the Philippines in which the defendant has a claim or lien or interest, actual or contingent or in which the relief demanded consists wholly or in part, in excluding the defendant from any interest thereat or the property is attached within the Philippines. C. Death of a Party (Rule 3, Sec. 16, RCP) Brioso v. Reli-Mariano, G.R. No. 132765, Jan. 37, 2003 During the pendency of the case, defendant died. His lawyer filed a Notice of Death. Plaintiff's counsel filed a Motion for Substitution of Deceased Defendant. The court admitted the motion. Decision was rendered ordering the defendants and heirs of deceased defendant to pay plaintiff damages and to surrender the lot in question to him. Was there proper substitution of parties?

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Held: There was no proper substitution of deceased defendant and, therefore, the heirs of the deceased defendants are not bound by the decision. The court did not comply with Rule 3, Sec. 16, RCP which requires that upon receipt of the Notice of Death of a party, it should issue an order directing the deceased legal representative or heirs to appear for the deceased. The order of the court admitting the motion for substitution of party does not comply with the rule. Notes: a. If heirs of original party are also original parties over whom the court had already acquired jurisdiction over their person, a formal order of substitution is not necessary. b. Even if there is no formal substitution of deceased party of the heirs actively participated on the hearing as witnesses who gave evidence in support of the deceased's cause, the defect is cured. D. Compulsory Counterclaim (Rule 6, Sec. 7, RCP) Requisites of a compulsory counterclaim: 1. it arises out of, or is necessarily connected with the transaction or occurrence that is the subject matter of the opposing party's claim; 2. it does not require the presence of third parties of whom the court cannot acquire jurisdiction; 3. the trial court has jurisdiction to entertain the claim. Test to determine whether a counterclaim is compulsory: 1. Are the issues of fact or law raised by the claim and counterclaim largely the same? 2. Would res judicata bar a subsequent suit on defendant's claims absent the compulsory counterclaim rule? 3. Will substantially the same evidence support or refute plaintiff's claim as well as defendant's counterclaim? 4. Is there any logical relations between the claim and the counterclaim? E. Forum Shopping (S.C. Cir. No. 28-91 and S.C. Cir. No. 04-94) 1. UP v. Susi, G.R. No. 130912, Feb. 14, 2003 Susi claimed part of the titled Diliman campus of UP on the strength of a certificate of title in her name. She tried several times to fence and occupy said portion of the UP campus but was repulsed. So she filed an action for damages and injunction with prayer for a TRO and WPI against UP and some of its officials. UP filed an action for cancellation of the title of Susi over said property. Issue: Is there forum shopping? Held: None. UP could not have raised as counterclaim the cancellation of title on the damage suit because the court would not have jurisdiction thereof. Cancellation of title can only

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be pursued on a separate and direct action for said purpose. Certificate of title under the torrens systems cannot be collaterally attached. F. Certificate on Non-Forum Shopping (Rule 7, Sec. 5, RCP) 1. Fiel v. Kris Security System, Inc., G.R. No. 155875, April 3, 2003 The laborers in a company lost their case before the NLRC. They filed a petition for certiorari before the Court of Appeals. Only 3 laborers signed the certificate on non-forum shopping. The CA dismissed the petition for non-compliance with the Rule on Certificate on Non-Forum Shopping. Held: The CA should have allowed the petition to continue as to the three who signed the certificate. 2. Leonidas v. Supnit, A.M. No. MTJ-02-1433, Feb. 21, 2003, Sec. 5, Rule 7, RCP Only a duly authorized members of the Board of Directors or a senior ranking officials can sign the certificate of non-forum shopping. A mere collection officer is not qualified to sign for the corporation. 3. Batay v. RTC, Branch 50, Suay, G.R.No. 1267833, Feb. 17, 2003. – Sec. 5, Rule 7, RCP The failure to file a certificate of non-forum shopping in an election protest justifies the outright dismissal of the petition. The petitioner subsequently filed a certificate of non-forum shopping beyond the 10-day reglementary period to file the protest. The subsequent filing of the certificate does not justify a reconsideration of the order of dismissal because it was filed beyond the reglementary period. G. Requirements in Motion (Rule 15, RCP) National Commercial Bank of Saudi Arabia v. CA, G.R. No. 124267, Jan. 31, 2003 This case reiterates the doctrine that the 3-day notice rule on motion is mandatory and that a motion without notice of hearing is a mere scrap of paper and does not toll the running of the period to appeal. A motion for reconsideration which merely reiterates the arguments already disposed of in the decision or resolution sought to be resolved is pro forma. The absence of a notice of hearing cannot be cured by a motion to set the motion for hearing. H. Double Jeopardy (Rule 16, Sec. 1, RCP) 1. Dela Rama v. Mendiola, 401 SCRA 710, April 29, 2003 Requisites of Res Judicata a) there must be final judgment or order b) the court rendering it must have jurisdiction over the subject matter and the parties c) there must be between the two cases identity of parties, subject matter and causes of action

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Identity of parties, subject matter and causes of action requires only substantial not complete identity. Thus, even if in the second case not only the parties in the first case are mode parties for as long as those impleaded in the subsequent case represent the interest which was the subject mater of the previous case, the requirement is satisfied. That the two cases are different (like one is for declaratory relief while the other is for specific performance) does not negate res judicata if the issues on both cases are substantially the same. 2. Rivera v. CA, G.R. No. 141863, June 30, 2003 Double Jeopardy — Rule 16, Sec. 1, RCP A judgment in an accion publiciana does not bar an accion reivindicatoria over the said land. Determinations of ownership in the accion publiciana should be treated as provisional in nature. I. Pre-Trial (Rule 18, RCP) 1. Saguid v. CA, 403 SCRA 6787, June 10, 2003 The failure of defendant to file a pre-trial brief is the same as failure to appear in the pretrial, that is, the plaintiff may present his evidence ex-parte and the court shall render judgment on the basis thereof. The fact that defendant was not assisted by counsel is of no moment for he took the risk when he did not engage the services of a lawyer. His remedy is to file a motion for reconsideration showing that his failure to file a pretrial brief was due to fraud, accident, mistake or excusable neglect. 2. RCBC v. Neogwin Marketing Corp., G.R. No. 152878, May 5, 2003 RCBC sued A, B & C for recovery of a sum of money with prayer for a writ of preliminary attachment. Despite the joinder of issues. RCBC failed to move for the setting of the case for pre-trial. The reason was that, the parties were in the process of restructuring the loans of the defendants. Meantime, 6 months already lapsed and so the court motu proprio dismissed the case for lack of interest of RCBC to prosecute. RCBC moved for a reconsideration expressing its earnest desire to pursue its case but the same was stalled because of the on-going amicable settlement between the parties. The court granted the motion and reinstated the case but it gave the parties 15 days to submit the amicable settlement otherwise the plaintiff would be required to pay the fees for re-filing of the case. RCBC filed a motion to set the case for pre-trial but the court refused to set it for pre-trial because of the failure of the parties to submit the amicable settlement. The amicable settlement could not be submitted because one of the defendants refused to sign. RCBC challenged the order of the trial court and the same finally reached the SC. Held: The court committed grave abuse of discretion when it refused to set the case for pre-trial for failure of the parties to submit the amicable settlement. Amicable settlement is encouraged but it cannot be enforced. The proper step for the court to have taken was to set the case for pre-trial and continue with the proceedings. J. Motion for Reconsideration (Rule 37, RCP) Custodio v. Judge Antonio, A.M. No. RTJ-03-1761, April 30, 2003

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There is no rule governing the period within which a motion challenging an interlocutory order (like MR) should be resolved. The court ruled for the guidance of the bench that the motion should be resolved within the 90-day period provided in Sec. 15, Art. VIII of the Constitution unless the law requires a shorter period. K. Discretionary Execution (Rule 39, Sec. 2, RCP) 1. Santos v. COMELEC, G.R. No. 155618, March 26, 2003 Can an RTC which heard and decided an election protest finding for protestant, grant, on motion of the protestant, an execution pending appeal of its decision? As a general rule, yes. In fact that should be the case because of the very short term of office of municipal elective officials. 2. Philippine Nails and Wires Corp. v. Malayan Insurance Co., G.R. No. 143933, Feb. 14, 2003 1. Execution pending appeal 1.1. The trial court has no power to order execution pending appeal on the ground that appeal is purely dilatory. The High Court cannot pass upon the question of whether appeal is frivolous or dilatory. That prerogative belongs to the appellate tribunal. 1.2. Execution pending appeal can be granted only upon a showing of good reasons stated in a special order after due hearing. Example of good reasons: a) impending insolvency of the adverse party b) appeal is patently dilatory which however cannot be appreciated only by the appellate court. 1.3. Posting of bond is not sufficient justification to grant execution pending appeal. L. Appeal 1. Failure to Pay Appellate Docket Fee (Rule 41, Sec. 4, RCP) Jose v. CA, G.R. No. 128646, Mar. 14, 2003, Rule 41, Sec. 4, RCP Payment of appeal docket fee within the prescribed period is mandatory and jurisdictional and failure of appellant to comply with said rule prevents the perfection of the appeal and the eventual attainment of finality of the decision sought to be appealed. The failure to pay the appellate docket fee within the prescribed period does not result in the automatic dismissal of the appeal. It merely grants the court the discretion to dismiss. 2. Failure of Petitioner to Attach Affidavit of Service (Rule 42 or 43, RCP) El Reyno Homes, Inc. v. Ong, G.R. No. 142440, Feb. 2, 2003. Failure of petitioner to attach affidavit of service to its motion for extension of time to file its petition for review warrants outright dismissal of the motion.

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In this case even the explanation regarding the mode of service was not signed. 3. Failure to Submit Memorandum on Appeal (Rule 40, Sec. 7, RCA) Enrique v. CA, G.R. No. 140473, Jan. 28, 2003 Rule 40, Sec. 7(b), RCP provides that it shall be the duty of appellant to submit a memorandum on appeal in an appeal from the first level court to the RTC. Failure to do so shall be a ground for dismissal of the appeal. The rule is mandatory and if the appellant fails to submit his memorandum, the RTC is compelled to dismiss the appeal. The court has no discretion but to dismiss the appeal unless the failure to file it is justified or excusable. 4. Review of Decision of the DAR Secretary (Rule 43, RCP) Valencia v. CA, 401 SCRA 666, April 29, 2003 Appeal from the decision of the DAR Secretary to the Office of the President is required by the doctrine of exhaustion of administrative remedies. The doctrine of qualified political agency does not apply because DAR Circular No. 3, s. 1990 prescribes said administrative appellate remedy. The Secretary of DAR has authority to promulgate said rule pursuant to the doctrine of necessary implication. 5. Extent of SC's Power to Review (Rules 45 and 56, RCP) Nordec Asia, Ltd. v. CA, 403 SCRA 390, June 10, 2003 The SC is clothed with authority to review matters even if not assigned as errors on appeal if it finds this consideration necessary in arriving at a just decision of the case. M. Third Party Claim (Terceria) over Attached Properties (Rule 57, RCP) Spouses Ching v. CA, G.R. No. 118830, Feb. 24, 2003, Rule 57, RCP The RTC of Manila in a case before it issued a writ of preliminary attachment of property of the defendant. The sheriff levied upon the property of defendant. Defendant and his wife filed an action to annul the writ of preliminary attachment on the ground that it was conjugal partnership property. The Manila court annulled the writ of attachment. Hence, a petition for certiorari. Held: If a party questions a writ of attachment issued by a court, it has to be filed with the court which issued the writ. If a stranger claiming ownership over the property desires to challenge the writ, he can file an affidavit stating his claim of ownership or file an ordinary action in court to establish his title or ownership over said property. In this case, the wife of defendant claims that she is a stranger and, therefore, she could institute the separate action. The SC ruled that she is a

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not stranger insofar as the conjugal property which was attached is concerned. In legal contemplation, she is a party and therefore, she has to file the action to amend the writ of preliminary attachment in the court which issued the writ. N. Certiorari (Rule 65, RCP) NYK International Knitwear Corporation Phils. v. NLRC, G.R. No. 14620, Feb. 17, 2003 1. A xerox copy of a certified true copy of a document is not a certified copy. A xerox copy of a certified copy of a decision which is attached to a petition for certiorari does not satisfy the requirement of Sec. 1, Rule 65 of the RCP. Failure to comply with the requirement justifies the immediate dismissal of the petition. 2. Subsequent compliance with the requirement shall not warrant any reconsideration unless the court is fully satisfied that non-compliance was not in anyway attributable to the party, despite due diligence on his part, and that there are highly justifiable and compelling reasons for the court to make disposition. O. Mandamus (Rule 65, Sec. 3) BPI Family Savings Bank, Inc. v. Bayabores & Manikan, G.R. No. 148789, Jan. 16, 2003 The bank issued 2 manager's check to the City Treasurer of Iloilo City in payment of taxes. The bank manager instructed an employee to deliver the check to the City Treasurer. They were delivered but the checks were credited in favor of another taxpayer. The bank demanded a receipt for the 2 checks but the treasurer refused. Bank filed an action for mandamus against the treasurer to compel him to issue a receipt for the 2 checks. Ruling: By allowing the delivery of the checks to a person who was not directly charged with the collection of its tax liabilities, it must be deemed to have assumed the risk of a possible misuse. The bank can of course pursue its action against the culprit. But then mandamus is not the correct remedy because the bank did not have a clear legal right to be credited with said payment. Mandamus will not issue to enforce a right or to compel compliance with a duty which is questionable or over which a substantial doubt exists. P. Accion Interdictal (Rule 70, RCP) 1. Priority Status of Unlawful Detainer Panganiban v. Shell Petroleum Corp., G.R. No. 131471, Jan. 22, 2003 A leased the gasoline station of B as evidenced by a contract of lease. B demanded of A to vacate the leased premises because the term of their contract has already expired. A refused to vacate and instead filed an action for declaratory relief against B praying the court to declare the contract as still in full force and effect. B countered by filing an action for unlawful detainer against A. B also filed a motion to dismiss the case for declaratory relief on the ground of litis pendentia. A responded by filing a motion to suspend the proceedings in the action for declaratory relief also on the ground of litis pendentia. Issue: Which of the two cases should give way?

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Held: The action for declaratory relief should give way to the action for unlawful detainer. The reason is, in both cases the main issue is whether the lessee should continue occupying the leased premises. The question of possession should properly be threshed out in an unlawful detainer case. That the unlawful detainer case was filed later than the action for declaratory relief is of no moment because what is important is which of the two actions is the more appropriate one to resolve the controversy between plaintiff and defendant. Notes: a) Rosales v. CFI of Lanao del Norte, 154 SCRA 153 The MTC can resolve in an unlawful detainer case the issue of the right of a lessee to a renewal of the contract of lease. This is to prevent the multiplicity of suits. b) University Physicians Services, inc. v. CA, 233 SCRA 869 In resolving which of 2 cases, one for damages and another for ejectment filed in 2 different courts involving the same parties and subject matter, the SC ruled that the action for damages should be dismissed. The issues on damages may be resolved in the ejectment case. The filing of the action for damages with an application for preliminary injunction was merely a pre-emptive action to forestall the filing of the ejectment case. c) Alvir v. Vera, 230 SCRA 357 In an ejectment case the MTC can make a determination on the following incidents: a. whether or not the relationship between the parties is one of landlord and tenant. b. whether or not there is a lease contract and whether or not the lease contract had already expired. c. The just and reasonable amount of the rent and the date when it will take effect. d. The right of the tenant to keep the premises against the will of the landlord. e. If the defendant has built on the land a substantial and valuable building and there is no dispute between the parties as to the ownership of the land and the building, their rights shall be governed according to the Civil Code. f. The power of the court to fix the period of lease (Divina-gracia v. CA, 102 SCRA 189; Ramirez v. Chit, 221 SCRA 1364) 2. Parties Against Whom a Decision in a ejectment case may be Enforced (Rule 39, RCP) Sunflower Neighborhood Assn. v. CA, G.R. No. 136274, Sept. 4, 2003 A decision ejecting a homeowner's association may be enforced to eject the members of the association even if they were not impleaded in the case. A judgment in an ejectment case is binding even to non-parties if he or she is: a) b) c) d) e) a trespasser, squatter or agent of the defendant fraudulently occupying the property to frustrate the judgment. guest or occupant of the premises with the permission of the defendant transferee pendente lite a sublessee a co-lessee.

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f)

a member of the family, relative or privy of the defendant.

In this case, it was the Sunflower Neighborhood Assn. which was sued. The final decision was sought to be enforced against the unimpleaded members. The SC ruled that the decision can be enforced against the members because they are mere squatters or trespassers without any right to occupy plaintiff's property. Q. Contempt (Rule 71, RCP) 1. Imprisonment of Respondent Until He Complies with the Order of the Court (Sec. 8, Rule 71, RCP) Vergara v. Judge Gedorio, G.R. No. 154037, April 30, 2003. In a probate proceeding, the court ordered Vergara to pay the administratrix rentals for the property he was occupying. Vergara refused to pay because according to him he already paid an advance rental to one who claimed to be one of the heirs of the decedent. The administratrix filed a petition for contempt against Vergara. After hearing the court rendered a decision ordering Vergara to pay a fine of P30,000.00 and his directing his imprisonment until he pays the rentals. Issue: Had the judge exercised his contempt power properly? Held: The invocation of the judge of Sec. 8, Rule 71 of the RCP was wrong. The enforcement of the order to pay rental should be based upon Sec. 9, Rule 39, RCP which is to levy upon properties of the respondent to satisfy the rentals in arrears. Payment of rentals is covered by the constitutional guarantee against imprisonment and so the imprisonment of Vergara was unlawful. 2. Torcende v. Judge Sardido, A.M.No. MTJ-99-1238, Jan. 24, 2003 For the second time, the accused appeared without counsel. His counsel filed on the day of the hearing a motion to postpone without notice of hearing. The judge denied the motion and slapped a fine of P1,000.00 against counsel for failure to appear and for violating the rules on motions. Ruling: The judge acted with gross ignorance of the law. The act of counsel at most constituted only indirect contempt and not direct contempt and so summary of conviction was improper. In indirect contempt, a written charge is necessary pursuant to Sec. 7, Rule 71 of the Rules of Court. The written charge may partake of the nature of: (1) an order requiring the respondent (not accused) to show cause why he should not be punished for contempt of court for having committed the contemptuous acts imputed against him; and (2) a petition for contempt by way of special civil action under Rule 71 of the Rules of court. This written charge applies if the contemptuous act was committed against a court or judicial officer without authority to punish the contemptuous act. Respondent judge has already been administratively sanctioned twice – and this being the third time, he was dismissed. R. Miscellaneous Subjects 1. Notice of Lis Pendens Atlantic Erectors, Inc. v. Herbal Cave Realty

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Corporation, G.R. No. 148568, March 20, 2003 Claiming that X failed to pay the materials it obtained from A to build houses, A filed an action for sum of money and damages against X. On the same day, A caused to be annotated a notice of lis pendens on the titles of the land in which the houses were erected. X filed a cancellation of the notice of lis pendens because the action is just a money claim and there was no allegation about recovery of possession of a realty or enforcement of a lien. The court ordered the cancellation of the notice of lis pendens. A filed an MR but it was denied. Hence, the petition for certiorari. Held: The lien of a supplier of material is the one mentioned in Art. 2242 of the Civil Code. In this article, it merely grants the supplies of materials a preferred lien over the structure built with said materials. The complaint however did not raise that lien and so an action was merely a personal action for collection of money. But even if that lien had been raised, still the annotation of the notice of lis pendens was improper. Art. 2242 applies only when there are other claims against the realty by other creditors and the value of the property is not sufficient to pay all the claims. No such situation obtained in this case. Notice of lis pendens may be availed of only on the following cases: a) action to recover possession of real estate b) action for partition c) any other court proceedings that directly affect title to a realty or the use or occupation thereof d) any action seeking to establish a right to, or an equitable estate or interest in a specific real property to enforce a lien. 2. Extrajudicial Foreclosure of Mortgage Quano v. CA, G.R. No. 129279, March 4, 2003 When a scheduled extrajudicial foreclosure of real estate mortgage is cancelled and reset to another date, the requirements of posting of notices and publication of notice should be repeated. Failure to do so renders the proceedings null and void — because these requirements are jurisdictional. The parties cannot agree to waive re-publication because as earlier held in PNB v. Nepomuceno Production, Inc., G.R. No. 135479, Dec. 27, 2002, the publication of notice does not only benefit the mortgagor but the general public because other people who come to know of it may want to bid. There are three (3) kinds of sales under the law: 1. ordinary execution sale which is governed by Rule 39, RC. 2. judicial foreclosure sale which is governed by Rule 68, RCP. 3. extrajudicial foreclosure sale which is governed by Art. 3135 as amended by Art. 4118. 3. Authority of a Judge to Act on Cases in the Court which He Temporarily Vacated Executive Judge Abad Santos v. Judge de Guzman, AM No. 96-1-05-RTC, Jan. 28, 2003

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Judge de Guzman was the regular presiding judge of a Makati RTC. He was assigned to a Pasay court. Judge Fernandez was detailed as a replacement of Judge de Guzman in the Makati court. Subsequently, Judge de Guzman was transferred to the Manila court. While acting as judge of the Manila court, he decided a case of the Makati court which was already submitted for decision before he left that court. On motion of the prevailing party, Judge de Guzman also granted a motion for execution pending appeal. Issue: Did Judge de Guzman have the authority to render the decision and grant execution pending appeal of his decision. Held: a) Judge de Guzman had authority to decide the Makati court case because the case was submitted for decision while he was still the presiding judge of that court. (Sec. 9, Rule 135, RRC) b) It was however improper for Judge de Guzman to act upon the motion for execution pending appeal of his decision. This should be resolved by the judge who replaced him, Judge Fernandez. c) While a judge who has been assigned to another court may resolve motions for reconsideration and new trial which were already filed before he left the court, the new judge who replaced him is the only one who can conduct the new trial.

II. CRIMINAL PROCEDURE A. Institution of Criminal and Civil Actions (Rule III, Sec. 1, RCrP) Hambon v. CA, G.R. No. 122150, March 17, 2003 For having been bumped by the truck driver by B, A initiated the filing of a criminal case against him for reckless imprudence resulting in serious physical injuries. The MTC however dismissed the case for lack of interest to prosecute. Subsequently, A filed a civil action for damages against B for the same incident. The RTC rendered a decision granting A the damages he prayed for. On the appeal, the CA reversed the appealed decision on the ground of res judicata. SC held: The CA is correct. Sec. 1, Rule III of the Rules in Criminal Procedure provides that when a criminal action is instituted, the civil action for recovery of indemnity is impliedly instituted with the criminal action unless the: (a) offended party waive the civil action; (b) reserves his right to institute it separately; or (c) institutes the civil action prior to the criminal action. The civil action includes: (a) recovery of liability under the RPC; (b) damages under Arts. 32, 33, 34 and 2176 of the Civil Code. In the case at bar, the offended party did not waive the civil action nor reserved his right to institute a separate civil action nor institute the civil action prior to the institution of the criminal action, hence, the civil action was deemed included in the criminal action. Resultantly, the dismissal by the court of the criminal action carried with it the dismissal of the civil action for recovery of civil liability.

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B. Preliminary Investigation (Rule 112, RCrP) Miaque v. Judge Pamonag, AM MTJ-02-1412, March 28, 2003. (Art. 360 RPC; RA 4363) Jurisdiction to conduct preliminary investigation in libel cases is indeed lodged with the provincial or city prosecutor of the province or the city or with the MTC of the city or capital of the province where the case is filed. (Art. 360, RPC as amended by RA 4363) In this case, the preliminary investigation was conducted by a MCTC in a town in Iloilo which has no power to do so. The judge was found guilty of gross ignorance of the law. C. Bail (Rule 114, RCrP) 1. Serapio v. Sandiganbayan, G.R. No. 148468, Jun. 28, 2003 ( Rule 114, RCrP) 1.Is it proper for a court to suspend the bail hearing until the accused shall have been arraigned? Answer: No, it is grave abuse of discretion. To require arraignment before bail hearing puts to naught the rule that a person may apply for bail from the moment that he is deprived of his liability by virtue of his arrest or voluntary surrender. 2.Are a motion to quash the information incompatible with an application for a bail? Answer: No. The two reliefs are not necessarily antithetical to each other. It is however conceded that if the motion to quash is granted, the application for bail becomes moot and academic. 3.Can two petitions for bail filed by different accused be heard jointly? Answer: That matter is addressed to the sound discretion of the court. Barring grave abuse of discretion, that discretion will not be disturbed. 4.Can a petition for bail filed by an accused be heard jointly with the trial on the merits of his coaccused? Answer: No, because a bail hearing is summary in nature while trial on the merits is a fullblown trial. 5.When an accused is not entitled to bail as a matter of right and he is under detention by virtue of his arrest or voluntary surrender, habeas corpus is not a proper remedy. A petition for bail is the proper remedy. 2. People v. Tuppal, G.R. Nos. 137982-85, Jan. 13, 2003 Secs. 7 & 8, Rule 114, RCrP Accused was charged with Robbery with Homicide. In the bail hearing, he was granted bail on the ground that the evidence of guilt is not strong. Trial on the merits continued and the accused was found guilty and sentenced to reclusion perpetua. Issue: Whether the trial court committed an error in convicting accused after it granted bail to him because the evidence of guilt is not strong. Held: The findings of the trial court in the bail hearing is not an immutable evaluation of the prosecution's evidence. The court's assessment of the evidence on the bail hearing in capital offense is preliminary and intended only for the purpose of granting or denying application for the provisional release of the accused. D. Motion to Quash (Rule 117, RCrP)

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1. Double Jeopardy People v. Degamo, GR No. 121211, April 30, 2003 The accused was charged with rape. After his arraignment, the prosecutor moved to amend the information to allege that as a result of the rape, the victim became insane. Over the opposition of the accused, the court granted the motion. Held: There is no double jeopardy because the insanity of the victim became manifest only after the arraignment. 2. Provisional Dismissal People v. Lacson, G.R. No. 149453, April 1, 2003 Rule 117, Sec. 8, RCrP. Time-bar for reinstating or re-filing a provisionally dismissed case. Lacson and several others were charged with multiple murder for the killing of alleged members of the Kuratong Baleleng gang. In the trial court, Lacson filed a motion for the judicial determination of probable cause and for examination of witnesses. Since in the meantime all the main prosecution witnesses had either left the country or executed affidavits of recantation so that no witness of the prosecution whose testimony was vital appeared during the scheduled examination of witnesses, and determining that there was no probable cause, Judge W. Agnir provisionally dismissed the case on March 29, 1999. Meanwhile, the new Rules of Criminal Procedure took effect on December 1, 2000 containing a new provision, Sec. 8, Rule 117 which states: Sec. 8. Provisional dismissal. A case shall not be provisionally dismissed except with the express consent of the accused and with notice to the offended party. The provisional dismissal of offenses punishable by imprisonment not exceeding six (6) years or a fine of any amount, or both, shall became permanent one (1) after the issuance of the order without the case having been revived. With respect to offenses punishable by imprisonment of more than six (6) years, this provisional dismissal shall become permanent two (2) years after issuance of the order without the case having been revived. Note: The Revised Penal Code provides: Art. 90, RPC. Prescription of Crimes. Crimes punishable by death, reclusion perpetua or reclusion temporal shall prescribe in twenty years. Crimes punishable by other effective penalties shall prescribed in fifteen years. Etcetera. After the effectivity of the new rule in the RCrP, but after 2 years from the provisional dismissal of the case, the prosecution claiming that there are new witnesses, filed an Information against Lacson and his co-accused. Some persons were also added as accused. plus new accused. Lacson challenged the refiling of the case. Ruling of the SC: 1. The prescriptive period in Art. 90 of the RPC is a substantive law and the period therein fixed is jurisdictional. The time-bar under the RCP is akin to a special procedural limitation qualifying the State's right to persecute so that the lapse of the time-bar operates to extinguish the right of the State to prosecute the accused. The time-bar in the RCP does not reduce the periods under Art. 90, RPC. It is just a limitation of the right of the State to revive a criminal case against an accused after the Information had

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been filed, but subsequently provisionally dismissed with the express consent of the accused. 2. The requisites for the application of Sec. 8, Rule 117, RCP are the following: a) the prosecution with the express conformity of the accused or the accused moves for provisional dismissal of the case; b) the offended party is notified by the motion for the provisional dismissal of the case; c) the court issues an order granting the motion and dismissing the case provisionally;

d) the public prosecutor is served with a copy of the order of provisional dismissal of the case. Note: The express consent of the accused is necessary to bar him from subsequently invoking double jeopardy should the prosecutor refile the case. 3. Explanation of Requisites a) The period mentioned in Sec. 8, Rule 117 should be counted from service of the order of dismissal on the public prosecutor. b) Express consent of the accused may either be viva voce or in writing but it must be unequivocal positive, direct and clear. 4. The provisionally dismissed case may be revived within the time-bar either by: (a) refiling the Information or filing a new one for the same offense or for an offense necessarily included therein. 5. When the information is refiled or a new one is filed, there is no need for a new preliminary investigation. Exceptions when a new preliminary investigation is necessary: a) if the original witnesses are no longer available and new ones appear. b) new accused are added to the original accused for the same offense or one necessarily included therein.

c) in the new information the original charge has been upgraded. d) in the new information the criminal liability of the accused is upgraded. In this case, the accused failed to establish requisites numbers 1 and 2; no proof that the prosecution gave its express conformity to the provisional dismissal and no proof that the offended parties were notified of the provisional dismissal of the case. 6. The time-bar cannot be applied retroactively. The rule has been promulgated for the benefit of the accused and the State. The retroactive application of the rule would prejudice the State because it would no longer have the 2-year period to refile the case because the same is shortened. The prosecution received the order of dismissal on March 31, 1999. But then the new rule became effective only on Dec. 1, 2000. If one applies the rule retroactively, then one begins counting from March 31, 1999 so that the State would have only 1 year and 3 months to refile the case which — is short of 2 years. If applied prospectively, then one begins counting on December 1, 2000 when the rule took effect and the State would have the benefit of a full 2-year term within which to refile the case.

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E. Pre-Trial (Rule 118, RCrP) Non-appearance of complaining witnesses. People v. Tac-an, G.R. No. 148000, Feb. 27, 2003 For failure of the complaining witnesses to appear during the pre-trial, the court dismissed the criminal case. Held: The court gravely abused its discretion when it dismissed the case. Although pretrial is mandatory in criminal cases, the presence of complainant or complaining witness is not required. Even the presence of the accused is not required unless specifically required by the court. F. Appeal (Rule 122, RCrP) 1. Effect of Appeal Naya v. Abraham Guillermo; Abung v. People, G.R. No. 146770, Feb. 27, 2003 A was convicted of Estafa and so he appealed to the CA but the decision was affirmed. Hence, appeal by certiorari to the SC. The SC reversed the conviction of A but required him to pay the complainant B a sum of money as actual damage and another sum as moral damages because he acted in bad faith. What was the basis of the SC in awarding actual and moral damages when the offended party did not appeal? Once a decision in a criminal case is appealed, the whole case — criminal and civil aspects are thrown open for review . The review can even deal with unassigned errors 2. Personality to Appeal (Rule 122, RCrP) People & Salmingo v. Velez, et. al., G.R. No.138093, Feb. 19, 2003 A, a private citizen filed an affidavit-criminal complaint with the Ombudsman charging X, Y and Z with technical malversation. After preliminary investigation, the Ombudsman found probable cause and so an Information was filed. In the Information, the private complainant is the City of Silay. On a motion for reinvestigation, the Ombudsman found no probable cause against Y and Z. He however found probable cause against X but for another crime. The Ombudsman filed a motion to withdraw Information with SB but A opposed the motion. SB denied the MR because A has no personality to file the MR considering that the aggrieved party is the City of Silay. Hence, petition for review on certiorari with SC. Held: A has no personality to file the MR. Neither has he the personality to institute the appeal pursuant to Sec. 1, Rule 45 of the RCP. 3. Withdrawal of Appeal People v. Paradeza , G.R. No. 144590, Feb. 7, 2003 Rule 124, Sec. 18 – Appeal Rule 50, Sec. 3 of the RCrP states that withdrawal of an appeal is a matter of right before the filing of appellee's brief. After that, withdrawal is a matter of discretion. This rule is applicable to criminal appeals pursuant to Rule 124, Sec. 18 of the 2000 Rules of Criminal Procedure.

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III. EVIDENCE (Rule 130, RRE) A. Dead Man's Statute Sanson v. CA, GR No. 127745, April 22, 2003 Deadman's statute means that parties to a case, their assignors or persons in whose behalf a case is prosecuted are prohibited from testifying as to a conversation or transaction between the deceased and a third person, if they took no active part therein. What is prohibited in a testimonial evidence upon a claim which arose before the death of the deceased. The incompetency is confined to the giving of testimony. B. Judicial Notice (Rule 129, RRE) G. Santos v. People, G.R. No. 147615, Jan. 20, 2003 Sec. 6, Rule 112, RCrP Is a trial court bound to take judicial notice of records of the preliminary investigation which are found in the records of the case? In this case, the accused complained that the court did not take into consideration the dismissal of the complaint against him by the municipal trial court which preliminarily investigated the case as well as the provincial prosecutor. Answer: Unless the said records were offered in evidence, the trial court is not duty bound to take judicial notice of them. In legal contemplation such records are not parts of the records of the case before the court. RES JUDICATA Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 110203 May 9, 2001

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS, MANILA MANOR HOTEL, INC., and Spouses GREGORIO and LUZ DIZON, respondents. PANGANIBAN, J.: The doctrine of res judicata bars the relitigation of the same cause of action over the same subject matter by substantially the same litigators. This principle frees the parties from undergoing all over again the rigors of unnecessary suits and repetitious trials. At the same time, it prevents the clogging of court dockets. Equally important, it stabilizes rights and promotes the rule of law. The Case

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Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking the reversal of the December 28, 1992 Decision1 of the Court of Appeals in CA-GR CV No. 05542. The dispositive portion of the assailed Decision reads as follows: "WHEREFORE, the order appealed from is hereby REVERSED and SET ASIDE and Civil Case No. 84-24513 for annulment and damages is hereby reinstated. Let the records thereof be remanded to the court a quo for further proceedings. No costs."2 Also challenged is the May 11, 1993 CA Resolution denying the Motion for Reconsideration. The instant case originated from the Order3 dated March 14, 1985, issued by the Regional Trial Court (RTC) of Manila (Branch 17). On the ground of res judicata, the trial court dismissed Civil Case No. 8424513 entitled, "The Manila Manor Hotel, Inc. v. The Development Bank of the Philippines." Ruled the RTC: "Wherefore, the Order dated December 19, 1984 is hereby reconsidered and set aside, and this case is DISMISSED. No special pronouncement as to cost of suit."4 The Facts On May 21, 1984, Manila Manor Hotel, Inc. filed before the RTC of Manila a Complaint for Annulment and Damages (Civil Case No. 84-24513) against the Development Bank of the Philippines (DBP).5 On August 10, 1984, DBP filed a Motion to Dismiss on the ground of res judicata.6 It argued that in Special Proceeding No. 83-17979 entitled "Gregorio Dizon, et al., v. DBP, et al.," the December 8, 1983 Order7 of the RTC of Manila (Branch 33) had dismissed the legally identical action for failure to prosecute on the part of therein plaintiffs (the spouses Dizon).8 This earlier civil case, a Petition for Declaratory Relief, had been filed on June 6, 1983.9 On September 12, 1984, the RTC (Branch 17) granted the Motion to Dismiss Civil Case No. 84-24513.10 On October 19, 1984, Manila Manor Hotel, Inc. filed a Motion for Reconsideration, which the trial court11 granted on December 19, 1984, in these words: "After due consideration of the plaintiff's motion for reconsideration dated August 4, 1984 which shows that for one reason the dismissal order dated December 8, 1983 in Civil Case No. 8317979 could not be taken to have the effect of an adjudication upon the merit, and therefore, res judic[a]ta will not lie, the order dated September 12, 1984 dismissing the complaint in the instant case is hereby reconsidered and set aside."12 Subsequently, Petitioner DBP (defendant therein) filed its own Motion for Reconsideration13 of the December 19, 1984 Order. After hearing the parties, the trial court, on March 14, 1985, set aside its December 19, 1984 Order and, once again, dismissed Civil Case No. 84-24513.14 Ruling of the Court of Appeals The Court of Appeals ruled that res judicata cannot bar the Manila Manor Complaint. First, it opined that there was no identity of parties between Special Proceedings No. 83-17979 for declaratory relief and Civil Case No. 84-24513 for annulment and damages. Second, it also held that there was no identity of subject matter and cause of action between the two cases. It declared: "No amount of reconciliation and/or interpretation of the allegations and prayers of the two (2) cases could justify a conclusion that the Special Proceedings (No. 83-17979) for declaratory relief under Rule 64 of the Rules of Court, which merely seeks a declaration of the rights and duties of the Dizon spouses and the DBP under the mortgage contract and Presidential Decree No. 385, apparently x x x non-adversarial proceedings and the Civil Case for annulment and damages, a highly contentious [case] are one and identical to the other." It added that the evidence that would sustain the civil case was "not necessarily the same evidence that would have been presented in the Special Proceedings for declaratory relief had [the latter] not been dismissed on a technicality." Hence, this Petition.15

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The Issues Petitioner submits the following grounds for reversing the assailed CA Decision: "I Whether or not the Respondent Court abused its discretion when it whimsically and capriciously disregarded its earlier finding that there [was] here a commingling of personalities of the spouses (Gregorio & Luz Dizon) and the Manila Manor Hotel, Inc. x x x[, a] finding [that] made possible the allowance of an otherwise filed-out-of-time Appellant's Brief. "II Whether or not the Respondent Court erred when it said that there [was] no identity of parties in the instant case. "III Whether or not the Respondent Court erred when it said that there [was] no identity of cause of action in the instant case. "IV Whether or not the Respondent Court erred in its appreciation and application of the cases it cited in its questioned decision."16 In the main, petitioner asks the Court to determine whether res judicata is a bar to the complaint filed by Manila Manor Hotel in Civil Case No. 84-24513. The Court's Ruling The Petition is meritorious. Main Issue: Res Judicata Res judicata or bar by prior judgment is a doctrine which holds that a matter that has been adjudicated by a court of competent jurisdiction must be deemed to have been finally and conclusively settled if it arises in any subsequent litigation between the same parties and for the same cause.17 Thus, "[a] final judgment on the merits rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and their privies and constitutes an absolute bar to subsequent actions involving the same claim, demand, or cause of action."18 Res judicata is based on the ground that "the party to be affected, or some other with whom he is in privity, has litigated the same matter in a former action in a court of competent jurisdiction, and should not be permitted to litigate it again."19 It frees the parties from undergoing all over again the rigors of unnecessary suits and repetitive trials. At the same time, it prevents the clogging of court dockets. Equally important, it stabilizes rights and promotes the rule of law. For the doctrine to apply, four requisites must be met: (1) the former judgment or order must be final; (2) it must be a judgment or an order 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 the second actions, identity of parties, of subject matter and of cause of action.20 We believe that all four requisites have been satisfied in the present case. First Requisite: Finality of the RTC Order

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The December 8, 1983 Order issued by the RTC of Manila (Branch 33) dismissing Special Proceedings No. 83-17979 was a final order. As explained in De Ocampo v. Republic: "An order is deemed final when it finally disposes of the pending action so that nothing more can be done with it in the lower court (Mejia v. Alimorong, 4 Phil. 572; Insular Government v. Roman Catholic Bishop of Nueva Segovia, 17 Phil. 487; People v. Macaraig, 54 Phil. 904). In other words, a final order is that which gives an end to the litigation (Olsen & Co. v. Olsen, 48 Phil. 238). The test to ascertain whether an order is interlocutory or final is: does it leave something to be done in the trial court with respect to the merits of the case? If it does, it is interlocutory; if it does not, it is final. (Moran, Comments on the Rules of Court, Vol. 1, 3rd ed. pp. 806-807). A final order is that which disposes of the whole subject-matter or terminates the particular proceedings or action, leaving nothing to be done but to enforce by execution what has been determined (2 Am Jur., section 22, pp. 861-862). Reyes v. De Leon, G.R. No. L-3720, June 24, 1952)."21 An order of dismissal of a complaint is a final disposition because, after its issuance, nothing else need be done by the trial court in respect to the merits of the case. Second Requisite: Judgment on the Merits Petitioner contends that the December 8, 1983 Order had the effect of an adjudication upon the merits. We agree. Section 3, Rule 17 of the Rules of Court22 in effect at the time, provided: "SEC. 3. Failure to prosecute. -- If plaintiff fails to appear at the time of the trial, or to prosecute his action for an unreasonable length of time, or to comply with these rules or any order of the court, the action may be dismissed upon motion of the defendant or upon the court's own motion. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise provided by court." (emphasis supplied) Because the trial judge did not state that the dismissal was without prejudice, it is therefore clear, following the above-mentioned provision, that the Order was an adjudication upon the merits. Third Requisite: Court of Competent Jurisdiction The RTC of Manila (Branch 33), which issued the December 8, 1983 Order of dismissal, had jurisdiction to hear and decide the Petition for Declaratory Relief23 filed by the spouses Dizon. Ergo, it also has the power to order the dismissal of the action when warranted by the circumstances. Fourth Requisite: Identity of Parties, Subject Matter and Cause of Action In Special Proceedings No. 83-17979, the petitioners were Spouses Gregorio V. Dizon and Luz MojaresDizon, while the respondents were the Development Bank of the Philippines and the City Sheriff of Manila. The subject matter was the mortgage contract executed by the Dizon spouses and the DBP for the construction of the Manila Manor Hotel. The cause of action was the declaration of the rights and duties of petitioners and respondents under Presidential Decree No. 385 and the said mortgage contracts. In Civil Case No. 84-24513, the litigants were the Manila Manor Hotel, Inc. as the plaintiff and the DBP as the defendant. The subject matter was the validity of the extrajudicial foreclosure of the properties mortgaged as security for the loan to build the Manila Manor Hotel. The cause of action was the annulment of the sale at public auction of the mortgaged properties and the consequent nullity of the certificate of sale issued by the sheriff in favor of the defendant. We believe that there is an identity of parties, subject matter, and cause of action between the Special Proceedings (first case) and the Civil Action (second case). Although the parties to the two civil cases are not exactly the same, we believe that there is substantial identity to warrant the application of res judicata. In Republic v. Court of Appeals, the Court stressed that substantial identity of parties was enough, as follows:

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"For purposes of res judicata, only substantial identity is required and not absolute identity. Parties in both cases need not be physically identical provided that there is privity between the parties or their successors-in-interest subsequent to the commencement of the previous cause of action, litigating for the same thing, title or capacity. The Court of Appeals correctly found in our view, that since all the aforecited cases were ultimately in the interest of these 'small fishermen,' there is privity of interest in all the cases."24 (citations omitted) The Dizon spouses filed the first case (1) to seek a declaration of their rights under the mortgage contract in view of their inability to meet the amortization and (2) to enjoin the foreclosure of the mortgaged properties of the Manila Manor Hotel, Inc. In its September 27, 1990 Resolution,25 the CA already made a categorical factual finding that "the Manila Manor Hotel Inc. is owned and controlled by the Spouses Gregorio and Luz Dizon, it being a family corporation, with Gregorio as President."26 Hence, while the second case was filed directly by the Manila Manor Hotel, Inc. in order to annul the foreclosure sale of its mortgaged properties, it is clear that the interests sought to be protected in both actions pertained to the same parties, regardless of their appellation. No amount of verbal legerdemain can conceal that fact.1âwphi1.nêt It is also clear that in both cases, the same subject matter is involved -- the sale at public auction of the Manila Manor Hotel in connection with the mortgage contract. We also hold that there is identity of the cause of action. To determine the presence of identity of cause of action, the ultimate test is to consider whether the same evidence would sustain the cause of action in both the first and the second cases.27 A careful review of the pleadings and other records shows that the same evidence in the declaratory relief will have to be reexamined to support the cause of action in the annulment case. In the Petition for Declaratory Relief, herein respondents alleged that they could not meet the loan amortizations; that DBP had not acted on their application for restructuring; and that petitioner had been served notice of sale on extrajudicial foreclosure, without prior notification from DBP. The same allegations were repeated, albeit differently worded, in the Complaint for Annulment. The objectives of the two actions, however, were the same – to assail the foreclosure sale. Hence, in the special proceedings for declaratory relief, herein respondents prayed that the trial court enjoin the foreclosure proceedings and declare their rights and duties under the mortgage contract. In the civil action, they prayed for the annulment of the foreclosure sale. The two cases are different only in the form of action. But as the Court has held, "the employment of two different forms of action does not enable one to escape the operation of the principle that one and the same cause of action shall not be twice litigated."28 In sum, we hold that all the requisites of res judicata are present in this case. Indeed, respondents contend that petitioner did not comply with the procedural legal requirements when it foreclosed extrajudicially the properties mortgaged in its favor. We are not persuaded. As can be gleaned from the pleadings and other records of the instant case, petitioner complied with the requirements set by RA No. 3135 ("An Act to Regulate the Sale of Property Under Special Powers Inserted in or Annexed to Real-Estate Mortgages") when it sold the mortgaged properties at public auction. The City Sheriff of Manila served on the Dizon spouses Notice for the extrajudicial foreclosure of the mortgaged properties. In fact, two Notices were served on them: the first was sometime in April, 1983; and the second, on May 4, 1983. The auction sale scheduled on June 15, 1983 at 10:00 a.m. did not take place, because the spouses were able to get a Temporary Restraining Order (TRO). The sale, however, eventually pushed through after the lapse of the TRO. Instead of complying with the procedure provided in paragraph 2, Section 1 of PD No. 385, the Dizon spouses29 allowed the TRO to lapse or be dissolved upon their failure to liquidate the remaining balance of their loan; at the time, they only paid for the outstanding arrearages, interests and other charges thereon.

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Worse, the Dizon spouses allowed the case to be dismissed on December 8, 1983, when they did not appear during the scheduled trial on that said date. The Order of dismissal became final and executory when they failed to appeal. The inevitable consequence of such inadvertence, which private respondents find hard to accept, was that the Order became final and executory. As such, it constituted a bar to the filing of the subsequent civil action. WHEREFORE, the Petition is GRANTED and the assailed Decision of the Court of Appeals is REVERSED; the RTC Order of March 14, 1985 is REINSTATED. SO ORDERED. Melo, Vitug, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.

Footnotes:
1

Penned by Justice Arturo B. Buena (Division chairman and now a member of this Court) and concurred in by Justices Asaali S. Isnani and Eduardo G. Montenegro, members.
2

Assailed CA Decision, p. 8; rollo, p. 14. Penned by Judge Alfredo Marigomen. Assailed RTC Order dated March 14, 1985, p. 3; rollo, p. 97; records, p. 83. Complaint, pp. 1-5; records, pp. 1-5. Motion to Dismiss, pp. 1-5; records, pp. 20-24.

3

4

5

6

7

Order dated December 8, 1983; records, p. 34. In its Motion to Dismiss the Complaint filed on August 10, 1984, petitioner mistakenly wrote the date December 8, 1984 instead of the correct date, which was December 8, 1983. This error was repeated all the way to the appellate court.
8

In the aforesaid Order, the dismissal is worded as follows: "For failure of the parties to appear showing their lack of interest to prosecute and to defend their case, the above-entitled case is hereby ordered dismissed without pronouncement as to costs."
9

Petition, pp. 1-4; records, pp. 25-28. Records, p. 42. Presided by Hon. Alfredo Marigomen. Records, p. 63. Records, pp. 65-70. Order dated March 14, 1985, p. 3; records, p. 83.

10

11

12

13

14

15

To eliminate its backlog, the Court on February 27, 2001 resolved to redistribute long-pending cases to justices who had none, and who were thus tasked to prioritize these old cases. Consequently, this case was raffled to the ponente for study and report.
16

Petition for Review, pp. 11-12; rollo, pp. 29-30. Upper case used in the original.

17

Gosnell v. Webb, 66 CA2d 518, 521, 152 P2d 463 (1944); Poochigian v. Layne, 120 CA2d 757, 261 P2d 738 (1953).

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18

Republic v. Court of Appeals, 324 SCRA 560, 565, February 3, 2000, per Quisumbing, J. Watkins v. Watkins, 117 CA2d 610, 256 P2d 339 (1953).

19

20

Esperas v. Court of Appeals, GR No. 121182, October 2, 2000; Republic v. Court of Appeals, supra; Ayala Land, Inc. v. Valisno, 324 SCRA 522, 531-532, February 2, 2000; Van Ngiah v. Rodriguez, 324 SCRA 217, 220-221, January 31, 2000; Pagsisihan v. Court of Appeals, 95 SCRA 540, 545, January28, 1980; Vda. de Nator v. Court of Industrial Relations, 4 SCRA 727, 733, March 30, 1962.
21

9 SCRA 440, 443, October 31, 1963, per Bautista Angelo, J.; quoted in Diesel Construction Company, Inc., v. Jollibee Foods Corp., 323 SCRA 844, 854, January 28, 2000.
22

At the time the December 8, 1983 Order was issued, the governing rules were the 1964 Rules of Court. These rules on civil procedure were amended by the 1997 Revised Rules of Civil Procedure. Section 3, Rule 17 of the 1997 Revised Rules of Civil Procedure amended the abovequoted provision as follows: "SEC. 3. Dismissal due to fault of plaintiff. -- If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the defendant or upon the court's own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court."
23

Paragraph 1, Section 1, Rule 63 of the 1997 Rules of Civil Procedure provides who and where to file a petition for declaratory relief, to wit: "SEC. 1. Who may file petition. -- Any person interested under a deed, will, contract or other written instrument, whose rights are affected by a statute, executive order or regulation, ordinance, or any other governmental regulation may, before breach or violation thereof, bring an action in the appropriate Regional Trial Court to determine any question of construction or validity arising, and for a declaration of his rights or duties, thereunder." Prior to the 1997 Rules, the filing of a petition for declaratory relief was governed by paragraph 1, Section 1, Rule 64 of the Rules of Court, to wit: "SEC. 1. Who may file petition. -- Any person interested under a deed, will, contract or other written instrument, whose rights are affected by a statute, executive order or regulation, may, before breach or violation thereof, bring an action to determine any question of construction or validity arising under the instrument or statute and for a declaration of his rights or duties, thereunder."
24

Supra, 567.

25

Written by Justice Venancio D. Aldecoa Jr., with the concurrence of Justices Gloria C. Paras (Division chairman) and Regina G. Ordoñez-Benitez.
26

CA Resolution dated September 27, 1990, p. 2; rollo, p. 166. See also CA Records, p. 270.

27

Esperas v. Court of Appeals, supra, citing Bachrach Corporation v. Court of Appeals, 296 SCRA 487, 494, September 25, 1998.
28

Yusingco v. Ong Hing Lian, 42 SCRA 589, December 24, 1971, per Makasiar, J. See also Villanueva v. CA, 285 SCRA 180, January 28, 1998; Rasay-Lahoz v. Leonor, 38 SCRA 47, March 23, 1971.
29

Section 2 of PD No. 385, which took effect in 1974, provides: "No restraining order, temporary or permanent injunction shall be issued by the court against any government financial institution in any action taken by such institution in compliance with the mandatory foreclosure provided in

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Section 1 hereof, whether such restraining order, temporary or permanent injunction is sought by the borrower(s) or any third party or parties, except after due hearing in which it is established by the borrower and admitted by the government financial institution concerned that twenty percent (20%) of the outstanding arrearages has been paid after the filing of foreclosure proceedings. In case a restraining order or injunction is issued the borrower shall nevertheless be legally obligated to liquidate the remaining balance of the arrearages, paying ten percent (10%) of the arrearages outstanding as of the time of foreclosure, plus interest and other charges, on every succeeding thirtieth (30th) day after the issuance of such restraining order or injunction until the entire arrearages have been liquidated. These shall be in addition to the payment of amortizations currently maturing. The restraining order or injunction shall automatically be dissolved should the borrower fail to make any of the above-mentioned payments on due dates, and no restraining order or injunction shall be issued thereafter. This shall be without prejudice to the exercise by the government financial institutions of such rights and/or remedies available to them under their respective charters and their respective contracts with their debtors, nor should this provision be construed as restricting the government financial institutions concerned from approving, solely at its own discretion, any restructuring, recapitalization, or any other arrangement that would place the entire account on a current basis, provided, however, that at least twenty (20%) of the arrearages outstanding at the time of the foreclosure is paid. All restraining orders and injunctions existing as of the date of this Decree on foreclosure proceedings filed by said government financial institutions shall be considered lifted unless finally resolved by the court within (60) days from date hereof." (emphasis supplied)

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