G.R. No.

165423

January 19, 2011

NILO PADRE, Petitioner, vs. FRUCTOSA BADILLO, FEDILA BADILLO, PRESENTACION CABALLES, EDWINA VICARIO (d) represented by MARY JOY VICARIO-ORBETA and NELSON BADILLO, Respondents. DECISION DEL CASTILLO, J.: "A void judgment is no judgment at all. It cannot be the source of any right nor the creator of any obligation. All acts performed pursuant to it and all claims emanating from it have no legal effect."1 This petition for review on certiorari assails the Orders dated July 21 and September 20, 20042 issued by the Regional Trial Court (RTC) of Allen, Northern Samar, Branch 23 in Special Civil Action No. A-927, which affirmed the ruling of the Municipal Trial Court (MTC) of San Isidro, Northern Samar that it has jurisdiction to try Civil Case No. 104. Factual Antecedents On October 13, 1986, the RTC of Allen, Northern Samar, Branch 23, rendered judgment3 in Civil Case No. A-514 for Ownership and Recovery of Possession with Damages in favor of therein plaintiffs Fructosa Badillo, Fedila Badillo, Edwina Badillo, Presentacion Badillo and Nelson Badillo and against therein defendants, including Consesa Padre. The dispositive portion of the said Decision reads: WHEREFORE, on preponderance of evidence, the Court hereby renders judgment in favor of the plaintiffs and against the defendants, declaring and ordering as follows: 1. That the herein plaintiffs are the lawful owners of the five-sixth (5/6) portion of Lot No. 4080, Pls-54, registered in Original Certificate of Title No. 736, more particularly, the said five-sixth portion is described, delineated and/or indicated in the Sketch Plan which is now marked as Exhibit "B-1"; 2. That the said five-sixth (5/6) portion which [is] herein adjudged as being owned by the herein plaintiffs, include the portions of land presently being occupied by defendants x x x, Concesa Padre, x x x; 3. Ordering the defendants mentioned in No. 2 hereof to vacate x x x the lots respectively occupied by them and restore to [the herein plaintiffs] the material possessions thereof; 4. Condemning and ordering each of the same defendants herein above-named to pay plaintiffs the amount of P100.00 per month, as monthly rental, starting from January 19, 1980, until the lots in question shall have been finally restored to the plaintiffs; and 5. Condemning and ordering the herein defendants named above to jointly and severally pay the plaintiffs the amount of P5,000.00 representing attorney’s fees and P2,000.00 as litigation expenses, and to pay the costs of suit. SO ORDERED.4 This Decision became final and executory on November 5, 1986.5 On December 29, 1997, the Badillo family filed another complaint against those who occupy their property which included some of the defendants in Civil Case No. A-514.6 The case was filed with the MTC of San Isidro, Northern Samar and was docketed as Civil Case No. 104.7 As Consesa Padre had already died in 1989, her heir, Nilo Padre (Nilo), was impleaded as one of the defendants. While some of the defendants filed their respective answers, Nilo was one of those who were declared in default for failure to file their answer to the complaint.8 Although denominated as one for "Ownership and Possession," the Badillo family alleged in their complaint in Civil Case No. 104 viz: 4. That plaintiffs are the joint owners of Lot No. 4080. Pls-54, with a total area of 10,167 square meters, covered by OCT No. 736 in the name of Eutequio Badillo, deceased husband of plaintiff Fructosa Badillo

and father of the rest of the other plaintiffs, covered by Tax Declaration No. 9160 and assessed atP26,940.00; 5. That plaintiffs in Civil Case No. A-514, entitled Fructosa Badillo versus Celso Castillo, et. al., were the prevailing parties in the aforesaid case as evidenced by the hereto attached copy of the decision rendered by the Regional Trial Court in the above-entitled case and marked as Annex "A" and made integral part of this complaint; 6. That after the judgment in the above-mentioned case became final, the same was executed as evidenced by a copy of the writ of execution hereto attached as Annex "B" and made integral part hereof; 7. That despite the service of the writ of execution and vacating the properties x x x illegally occupied by the afore-mentioned defendants, [said defendants] re-entered the property in 1990 after the execution and refused to vacate the same [thereby] reasserting their claims of ownership x x x despite repeated demands; 8. That all attempts towards a peaceful settlement of the matter outside of Court to avoid a civil suit, such as referring the matter of the Brgy. Captain and the Brgy. Lupon of Brgy. Alegria, San Isidro, N. Samar were of no avail as the defendants refused to heed lawful demands of plaintiffs to x x x vacate the premises[. I]nstead, defendants claimed ownership of the property in question [and] refused to vacate the same despite repeated demands [such] that having lost all peaceful remedies, plaintiffs were constrained to file this suit. Certificate to file Action is hereby attached and marked as Annex "C" and made integral part hereof;9 (Emphasis supplied.) Ruling of the Municipal Trial Court The MTC rendered judgment10 on July 17, 2003. Interpreting the suit of the Badillo family as an action to revive the dormant judgment in Civil Case No. A-514, the court recognized the right of the plaintiffs to finally have such judgment enforced. The MTC disposed of the case as follows: WHEREFORE, judgment is ordered reviving the previous judgment of the Regional Trial Court there being, and still, preponderance of evidence in favor of plaintiffs, as follows: 1. That the herein plaintiffs are the lawful owners of the five-sixth (5/6) portion of Lot No. 4080, Pls-54, registered in Original Certificate of Title No. 730, more particularly x x x described, delineated and/or indicated in the Sketch Plan which is now marked as Exhibit "B-1"; 2. That the said five-sixth portion which is herein adjudged as being owne[d] by herein plaintiffs, includes the portions of land presently being occupied by defendants Victor Eulin, Consesa Padre, Celso Castillo, Leo Atiga, Santos Corollo, Iñego Armogela, Salustiano Millano, Milagros Gile, Pusay Enting, Galeleo Pilapil, more particularly indicated in Exhibit "B-1" and marked as Exhibits "B-3", "B-4", "B-5," "B-6," "B7," "B-8," "B-9," "B-10," "B-11," "B-12," and "B-13", respectively; 3. Ordering the defendants mentioned in No. 2, hereof and THOSE PRESENTLY NAMED AS PARTYDEFENDANTS IN THIS REVIVAL OF JUDGMENT AND THOSE ACTING IN PRIVITY to vacate from the lots respectively occupied by them and restore [to] the herein plaintiff x x x the material possession thereof; 4. Condemning and ordering each of the same defendants named in the previous civil case and those NAMED ANEW to jointly and severally pay the plaintiffs the amount of P5,000.00, representing attorney’s fees, and P2,000.00 as litigation expenses; 5. CONDEMNING ALL DEFENDANTS HEREIN TO PAY EXEMPLARY DAMAGES FOR OBSTINATELY VIOLATING THE DECISION OF THE COURT JOINTLY AND SEVERALLY X X X THE AMOUNT OF P5,000.00, and to pay the costs of the suit. SO ORDERED.11 Nilo thereafter appeared and moved to reconsider12 the MTC judgment. He argued that the MTC is without jurisdiction over the case, opining that the action for revival of judgment is a real action and should be filed with the same court, i.e., the RTC, which rendered the decision sought to be revived. Or, assuming arguendo that the MTC has jurisdiction over real actions, it must be noted that the subject property is assessed at P26,940.00, an amount beyond the P20,000.00 limit for the MTC to have jurisdiction over real actions, in accordance with Republic Act (RA) No. 7691.13 Nilo also contended that the action is dismissible for a) lack of certificate of non-forum shopping

in the complaint and b) prescription, the complaint for revival of judgment having been filed beyond the 10-year reglementary period14 from the time the judgment sought to be revived became final and executory in November 1986. The MTC denied the motion for reconsideration.15 It held that the case is an action for revival of judgment and not an action for ownership and possession, which had already long been settled. To the MTC, the former is a personal action under Section 2, Rule 4 of the Rules of Court which may be filed, at the election of plaintiffs, either at the court of the place where they reside or where the defendants reside. The court found excusable the absence of the certification against forum shopping, justifying that the action filed before it is merely a continuation of the previous suit for ownership. Moreover, the counsel for the Badillo family, a nonagenarian, may not yet have been familiar with the rule when Civil Case No. 104 was filed. To it, this mistake should not prejudice the Badillo family who deserve to possess and enjoy their properties. Ruling of the Regional Trial Court By way of a special civil action for certiorari, Nilo elevated the case to the RTC to question the MTC’s jurisdiction,16 reiterating the same grounds he had raised before the MTC. The case was docketed as Special Civil Action No. A-927. On July 21, 2004, however, the RTC dismissed said petition17 on the ground that it was filed late. Moreover, the RTC upheld the MTC’s jurisdiction over the case, affirming the MTC’s ratiocination that an action for enforcement of a dormant judgment is a personal action, and hence may be filed either at the court of the place where plaintiffs reside or where the defendants reside. In his Motion for Reconsideration,18 Nilo contended that his petition with the RTC was timely filed as shown by the registry receipt dated March 1, 2004,19 stamped on the mailing envelope he used in filing said petition. He argued that this date of mailing is also the date of filing. He also contended that the RTC’s Decision was bereft of any explanation as to why it ruled that the case is a personal action. He further alleged that the RTC failed to discuss the issues of prescription and non-compliance with the rule against forum shopping. In its Order dated September 20, 2004, the RTC denied the motion for reconsideration. It said: Assuming that the date of posting was March 1, 2004, as shown in the registry receipts, still the 60-day reglementary period had already lapsed with December 30, 2003 as the reckoning period when petitioner received the December 9, 2003 Order of Hon. Judge Jose A. Benesisto. With the month of February, 2004 having 29 days, it is now clear that the petition was filed sixty one (61) days after; hence, there is no timeliness of the petition to speak of. Civil Case No. 104 is an ordinary action to enforce a dormant judgment filed by plaintiffs against defendants. Being an action for the enforcement of dormant judgment for damages is a personal one and should be brought in any province where the plaintiff or defendant resides, at the option of the plaintiff. As regards prescription, the present rule now is, the prescriptive period commences to run anew from the finality of the revived judgment. A revived judgment is enforceable again by motion within five years and thereafter by another action within ten years from the finality of the revived judgment. There is, therefore, no prescription or beyond the statute of limitations to speak [sic] in the instant case. Petitioner’s contention must therefore fail. It is but proper and legal that the plaintiffs in Civil Case No. 514 of which they are the prevailing parties to institute for the enforcement of a dormant judgment [which right] they have failed to exercise x x x for more than a decade. Being an ordinary action to enforce a dormant judgment, not even testimonial evidence is necessary to enforce such judgment because the decision had long obtained its finality. x x x x20 Hence, this petition. Petitioner’s Arguments Nilo finds the RTC’s adverse ruling as wanting in sufficient explanation as to the factual and legal bases for upholding the MTC. He also highlights the failure of the Badillo family to attach to their complaint a certificate of non-forum shopping. Petitioner also argues that the date of mailing of his petition with the RTC is the date of his filing. He stressed that the filing of his petition on March 1, 2004 was well within the prescriptive period. As the

60th day from December 30, 2003 fell on a Saturday, he maintains that the Rules of Court allows him to file his petition on the next working day, which is March 1, 2004, a Monday. As have already been raised in the courts below, Nilo mentions the following grounds for the dismissal of the action against him before the MTC: a) The MTC lacks jurisdiction. Nilo reiterates that the prime objective of the Badillo family in Civil Case No. 104 is to recover real property, which makes it a real action. Citing the case of Aldeguer v. Gemelo,21 he contends that this suit must be brought before the RTC of Allen, Northern Samar. Besides, the assessed value of the land in controversy, i.e., P26,940.00, divests the MTC of jurisdiction. b) Prescription. Nilo claims that the Badillo family’s suit had already lapsed as they allowed 11 years to pass without resorting to any legal remedy before filing the action for revival of judgment. Although the Badillo family moved for the issuance of a writ of execution in Civil Case No. A-514, the same did not interrupt the running of the period to have the judgment enforced by motion or by action. Respondents’ Arguments While impliedly acknowledging that Nilo seasonably filed his petition for certiorari with the RTC, the Badillo family note that he should have filed an appeal before the RTC. They claim that they properly filed their case, a personal action, with the MTC of San Isidro, Northern Samar as they are allowed under Section 2, Rule 4 of the Rules of Court to elect the venue as to where to file their case. Granting that their action is considered a revival of judgment, the Badillos claim that they filed their suit within the 10-year period. They contend that in filing Civil Case No. 104 in December 1997, the prescriptive period should not be counted from the finality of judgment in Civil Case No. A-514, but should be reckoned from August 22, 1989, when the RTC issued an Order that considered as abandoned the motion to declare the defendants in default in the contempt proceedings. Issue The question that should be settled is whether the RTC correctly affirmed the MTC ruling that it has jurisdiction over Civil Case No. 104. Our Ruling Indeed, "[t]he existence and availability of the right of appeal proscribes a resort to certiorari."22 The court a quo could have instead dismissed Nilo’s petition on the ground that this question should have been raised by way of an appeal.23 This rule is subject to exceptions, such as "when the writs issued are null and void or when the questioned order amounts to an oppressive exercise of judicial authority."24 As will be later on discussed, the RTC, although it ultimately erred in its judgment, was nevertheless correct in entertaining the special civil action for certiorari. The exceptions we mentioned apply in the case at bar, as it turns out that petitioner’s jurisdictional objection has compelling basis. Timeliness of the petition for certiorari The petition for certiorari before the RTC was timely filed. If the pleading filed was not done personally, the date of mailing, as stamped on the envelope or the registry receipt, is considered as the date of filing.25 By way of registered mail, Nilo filed his petition for certiorari with the RTC on March 1, 2004, as indicated in the date stamped on its envelope. From the time Nilo received on December 30, 2003 the MTC’s denial of his motion for reconsideration, the last day for him to file his petition with the RTC fell on February 28, 2004, a Saturday. Under the Rules, should the last day of the period to file a pleading fall on a Saturday, a Sunday, or a legal holiday, a litigant is allowed to file his or her pleading on the next working day,26 which in the case at bar, fell on a Monday, i.e., March 1, 2004. Jurisdiction over Civil Case No. 104 We shall now look into the core argument of Nilo anent the MTC’s lack of jurisdiction over the case and the alleged prescription of the action. "[W]hat determines the nature of the action and which court has jurisdiction over it are the allegations in the complaint and the character of the relief sought."27 In their complaint in Civil Case No. 104, some of the allegations of the Badillo family, which petitioner never opposed and are thus deemed admitted by him, states:

4. That plaintiffs are the joint owners of Lot No. 4080. Pls-54, with a total area of 10,167 square meters, covered by OCT No. 736 in the name of Eutequio Badillo, deceased husband of plaintiff Fructosa Badillo and father of the rest of the other plaintiffs, covered by Tax Declaration No. 9160 and assessed atP26,940.00; 5. That plaintiffs in Civil Case No. A-514, entitled Fructosa Badillo versus Celso Castillo, et. al., were the prevailing parties in the aforesaid case as evidenced by the hereto attached copy of the decision rendered by the Regional Trial Court in the above-entitled case and marked as Annex "A" and made integral part of this complaint; 6. That after the judgment in the above-mentioned case became final, the same was executed as evidenced by a copy of the writ of execution hereto attached as Annex "B" and made integral part hereof; 7. That despite the service of the writ of execution and vacating the properties x x x illegally occupied by the afore-mentioned defendants, the latter re-entered the property in 1990 after the execution and refused to vacate the same [thereby] reasserting their claims of ownership over [the disputed properties] and refused to vacate the same despite repeated demands; 8. That all attempts towards a peaceful settlement of the matter outside of Court to avoid a civil suit, such as referring the matter of the Brgy. Captain and the Brgy. Lupon of Brgy. Alegria, San Isidro, N. Samar were of no avail as the defendants refused to heed lawful demands of plaintiffs to x x x vacate the premises[. I]nstead, defendants claimed ownership of the property in question refused to vacate the same despite repeated demands [such] that having lost all peaceful remedies, plaintiffs were constrained to file this suit. Certificate to file Action is hereby attached and marked as Annex "C" and made integral part hereof;28(Emphasis supplied.) Under paragraph 6 of their complaint, the Badillos alleged that judgment in Civil Case No. A-514 had become final and had been executed. Further, in paragraph 7, they alleged that in 1990, the defendants re-entered the property and despite repeated demands they refused to vacate the same. Thus, the Badillos were not at all seeking a revival of the judgment. In reality, they were asking the MTC to legally oust the occupants from their lots. The Badillo family would have been correct in seeking judicial recourse from the MTC had the case been an action for ejectment, i.e., one of forcible entry under Rule 70 of the Rules of Court wherein essential facts constituting forcible entry29 have been averred and the suit filed within one year from the time of unlawful deprivation or withholding of possession, as the MTC has exclusive original jurisdiction over such suit.30 However, as the alleged dispossession occurred in 1990, the one-year period to bring a case for forcible entry had expired since the Badillos filed their suit only in December 1997. We thus construe that the remedy they availed of is the plenary action of accion publiciana, which may be instituted within 10 years.31 "It is an ordinary civil proceeding to determine the better right of possession of realty independently of title. It also refers to an ejectment suit filed after the expiration of one year from the accrual of the cause of action or from the unlawful withholding of possession of the realty." 32 Whether the case filed by the Badillo family is a real or a personal action is irrelevant. Determining whether an action is real or personal is for the purpose only of determining venue. In the case at bar, the question raised concerns jurisdiction, not venue. Although the Badillo family correctly filed a case for accion publiciana, they pleaded their case before the wrong court. In civil cases involving realty or interest therein not within Metro Manila, the MTC has exclusive original jurisdiction only if the assessed value of the subject property or interest therein does not exceed P20,000.00.33 As the assessed value of the property subject matter of this case is P26,940.00, and since more than one year had expired after the dispossession, jurisdiction properly belongs to the RTC.34 Hence, the MTC has no judicial authority at all to try the case in the first place. "A decision of the court without jurisdiction is null and void; hence, it could never logically become final and executory. Such a judgment may be attacked directly or collaterally."35 Based on the foregoing discussion, it is not anymore necessary to discuss the issue raised concerning the failure to include a certification of non-forum shopping. Although we are compelled to dismiss respondents’ action before the MTC, they are nonetheless not precluded from filing the necessary judicial remedy with the proper court.lawphi1 WHEREFORE, the petition is GRANTED. The Orders dated July 21 and September 20, 2004 of the Regional Trial Court of Allen, Northern Samar, Branch 23 in Special Civil Action No. A-927 are hereby SET ASIDE. The Municipal Trial Court of San Isidro, Northern Samar is DIRECTED to dismiss Civil Case No. 104 for lack of jurisdiction. SO ORDERED.

G.R. No. 174104

February 14, 2011

INSURANCE OF THE PHILIPPINE ISLANDS CORPORATION, Petitioner, vs. SPOUSES VIDAL S. GREGORIO and JULITA GREGORIO, Respondents. DECISION PERALTA, J.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal and nullification of the Decision1 of the Court of Appeals (CA), dated June 14, 2006 and its Resolution2 dated August 10, 2006 in CA-G.R. CV No. 82303. The assailed CA Decision reversed the Decision3 of the Regional Trial Court (RTC) of Morong, Rizal, Branch 79, in Civil Case No. 748-M in favor of herein petitioner, while the questioned CA Resolution denied petitioner's motion for reconsideration. The pertinent antecedent facts of the case, as summarized by the CA, are as follows: On January 10, 1968, the spouses Vidal Gregorio and Julita Gregorio [herein respondents] obtained a loan from the Insurance of the Philippine Islands Corporation [herein petitioner] (formerly known as Pyramid Insurance Co., Inc.) in the sum of P2,200.00, payable on or before January 10, 1969, with interest thereon at the rate of 12% per annum. By way of security for the said loan, [respondents] executed a Real Estate Mortgage in favor of [petitioner] over a parcel of land known as Lot 6186 of the Morong Cadastre, then covered by Tax Declaration No. 7899 issued by the Municipal Assessor's Office of Morong, Rizal. On February 14, 1968, [respondents] again obtained another loan from [petitioner] in the sum of P2,000.00, payable on or before February 14, 1969, with 12% interest per annum. Another Real Estate Mortgage, covering a parcel of land known as Lot No. 6190 of the Morong Cadastre under Tax Declaration No. 10518, was executed by [respondents] in favor of [petitioner]. On April 10, 1968, [respondents] obtained, for the third time, another loan from [petitioner] in the amount ofP4,500.00 payable on or before April 10, 1969 with 12% interest per annum. As a security for the loan, [respondents] again executed a Real Estate Mortgage, this time covering two parcels of land: Lot 3499 under Tax Declaration No. 10631-Rizal and a lot situated in Brgy. Kay Kuliat under Tax Declaration No. 3918. [Respondents] failed to pay their loans, as a result of which the [mortgaged] properties were extrajudicially foreclosed. The extrajudicial foreclosure sale was conducted on December 11, 1969 where [petitioner] was the highest bidder. Since [respondents] failed to redeem the property, [petitioner] consolidated its ownership over the properties. The corresponding Tax Declarations were thereafter issued in the name of [petitioner].4 On February 20, 1996, petitioner filed a Complaint5 for damages against respondents alleging that in 1995, when it was in the process of gathering documents for the purpose of filing an application for the registration and confirmation of its title over the foreclosed properties, it discovered that the said lots were already registered in the names of third persons and transfer certificates of title (TCT) were issued to them. Claiming that respondents acted in a fraudulent and malevolent manner in enticing it to grant their loan applications by misrepresenting ownership of the subject properties, petitioner prayed for the grant of actual and exemplary damages as well as attorney's fees and litigation expenses. In their Amended Answer,6 respondents contended that their obligations in favor of petitioner were all settled by the foreclosure of the properties given as security therefor. In the alternative, respondents argue that petitioner's cause of action and right of action are already barred by prescription and laches.1avvphi1 In its Decision dated February 23, 2004, the RTC of Morong, Rizal, ruled in favor of petitioner, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and as against the defendants, directing the latter to pay the plaintiff, jointly and severally, as follows: a. Actual damages in the amount of P1,000,000.00, representing the fair market value of the real properties subject matter of this suit; b. For defendants' deceit and bad faith, exemplary damage in the sum of P300,000.00; c. Attorney's fees and litigation expenses in the amount of P200,000.00; and

d. Costs of suit. SO ORDERED.7 Aggrieved, respondents appealed the judgment of the trial court to the CA. On June 14, 2006, the CA rendered a Decision reversing and setting aside the decision of the RTC and dismissing the complaint of petitioner. It ruled that petitioner's action for damages is barred by prescription and laches. Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution of August 10, 2006. Hence, the instant petition. Petitioner's main contention is that the CA erred in ruling that petitioner's right to any relief under the law has already prescribed or is barred by laches. Petitioner argues that the prescriptive period of its action for damages should be counted from 1995, which it alleges to be the time that it discovered the fraud committed by respondents against it. On the other hand, the CA ruled that petitioner's right of action prescribed four years after the subject properties were registered with the Register of Deeds of Morong, Rizal and TCTs were subsequently issued in the names of third persons in the years 1970, 1973 and 1989. The Court finds the petition meritorious. Petitioner filed an action for damages on the ground of fraud committed against it by respondents. Under the provisions of Article 1146 of the Civil Code, actions upon an injury to the rights of the plaintiff or upon a quasidelict must be instituted within four years from the time the cause of action accrued.8 The Court finds no error in the ruling of the CA that petitioner's cause of action accrued at the time it discovered the alleged fraud committed by respondents. It is at this point that the four-year prescriptive period should be counted. However, the Court does not agree with the CA in its ruling that the discovery of the fraud should be reckoned from the time of registration of the titles covering the subject properties. The Court notes that what has been given by respondents to petitioner as evidence of their ownership of the subject properties at the time that they mortgaged the same are not certificates of title but tax declarations, in the guise that the said properties are unregistered. On the basis of the tax declarations alone and by reason of respondent's misrepresentations, petitioner could not have been reasonably expected to acquire knowledge of the fact that the said properties were already titled. As a consequence, petitioner may not be charged with any knowledge of any subsequent entry of an encumbrance which may have been annotated on the said titles, much less any change of ownership of the properties covered thereby. As such, the Court agrees with petitioner that the reckoning period for prescription of petitioner's action should be from the time of actual discovery of the fraud in 1995. Hence, petitioner's suit for damages, filed on February 20, 1996, is well within the four-year prescriptive period. Neither may the principle of laches apply in the present case. The essence of laches or "stale demands" is the failure or neglect for an unreasonable and unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier, thus, giving rise to a presumption that the party entitled to assert it either has abandoned or declined to assert it.9 It is not concerned with mere lapse of time; the fact of delay, standing alone, being insufficient to constitute laches.10 In addition, it is a rule of equity and applied not to penalize neglect or sleeping on one's rights, but rather to avoid recognizing a right when to do so would result in a clearly unfair situation.11 There is no absolute rule as to what constitutes laches or staleness of demand; each case is to be determined according to its particular circumstances.12 Ultimately, the question of laches is addressed to the sound discretion of the court and, being an equitable doctrine, its application is controlled by equitable considerations.13 It cannot be used to defeat justice or perpetrate fraud and injustice.14 It is the better rule that courts, under the principle of equity, will not be guided or bound strictly by the statute of limitations or the doctrine of laches when to be so, a manifest wrong or injustice would result.15 It is significant to point out at this juncture that the overriding consideration in the instant case is that petitioner was deprived of the subject properties which it should have rightly owned were it not for the fraud committed by respondents. Hence, it would be the height of injustice if respondents would be allowed to go scot-free simply

because petitioner relied in good faith on the former's false representations. Besides, as earlier discussed, even in the exercise of due diligence, petitioner could not have been expected to immediately discover respondents' fraudulent scheme. WHEREFORE, the instant petition is GRANTED. The Decision and Resolution, dated June 14, 2006 and August 10, 2006, respectively, of the Court of Appeals in CA-G.R. CV No. 82303, are REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Morong, Rizal, Branch 79, dated February 23, 2004 in Civil Case No. 748-M, is REINSTATED. SO ORDERED.

G.R. No. 190823

April 4, 2011

DOMINGO CARABEO, Petitioner, vs. SPOUSES NORBERTO and SUSAN DINGCO, Respondents. DECISION CARPIO MORALES, J.: On July 10, 1990, Domingo Carabeo (petitioner) entered into a contract denominated as "Kasunduan sa Bilihan ng Karapatan sa Lupa"1 (kasunduan) with Spouses Norberto and Susan Dingco (respondents) whereby petitioner agreed to sell his rights over a 648 square meter parcel of unregistered land situated in Purok III, Tugatog, Orani, Bataan to respondents for P38,000. Respondents tendered their initial payment of P10,000 upon signing of the contract, the remaining balance to be paid on September 1990. Respondents were later to claim that when they were about to hand in the balance of the purchase price, petitioner requested them to keep it first as he was yet to settle an on-going "squabble" over the land. Nevertheless, respondents gave petitioner small sums of money from time to time which totaled P9,100, on petitioner’s request according to them; due to respondents’ inability to pay the amount of the remaining balance in full, according to petitioner. By respondents’ claim, despite the alleged problem over the land, they insisted on petitioner’s acceptance of the remaining balance of P18,900 but petitioner remained firm in his refusal, proffering as reason therefor that he would register the land first. Sometime in 1994, respondents learned that the alleged problem over the land had been settled and that petitioner had caused its registration in his name on December 21, 1993 under Transfer Certificate of Title No. 161806. They thereupon offered to pay the balance but petitioner declined, drawing them to file a complaint before the Katarungan Pambarangay. No settlement was reached, however, hence, respondent filed a complaint for specific performance before the Regional Trial Court (RTC) of Balanga, Bataan. Petitioner countered in his Answer to the Complaint that the sale was void for lack of object certain, the kasunduan not having specified the metes and bounds of the land. In any event, petitioner alleged that if the validity of the kasunduan is upheld, respondents’ failure to comply with their reciprocal obligation to pay the balance of the purchase price would render the action premature. For, contrary to respondents’ claim, petitioner maintained that they failed to pay the balance of P28,000 on September 1990 to thus constrain him to accept installment payments totaling P9,100. After the case was submitted for decision or on January 31, 2001,2 petitioner passed away. The records do not show that petitioner’s counsel informed Branch 1 of the Bataan RTC, where the complaint was lodged, of his death and that proper substitution was effected in accordance with Section 16, Rule 3, Rules of Court.3 By Decision of February 25, 2001,4 the trial court ruled in favor of respondents, disposing as follows: WHEREFORE, premises considered, judgment is hereby rendered ordering: 1. The defendant to sell his right over 648 square meters of land pursuant to the contract dated July 10, 1990 by executing a Deed of Sale thereof after the payment of P18,900 by the plaintiffs; 2. The defendant to pay the costs of the suit. SO ORDERED.5 Petitioner’s counsel filed a Notice of Appeal on March 20, 2001. By the herein challenged Decision dated July 20, 2009,6 the Court of Appeals affirmed that of the trial court. Petitioner’s motion for reconsideration having been denied by Resolution of January 8, 2010, the present petition for review was filed by Antonio Carabeo, petitioner’s son,7 faulting the appellate court:

(A) … in holding that the element of a contract, i.e., an object certain is present in this case. (B) … in considering it unfair to expect respondents who are not lawyers to make judicial consignation after herein petitioner allegedly refused to accept payment of the balance of the purchase price. (C) … in upholding the validity of the contract, "Kasunduan sa Bilihan ng Karapatan sa Lupa," despite the lack of spousal consent, (underscoring supplied) and proffering that (D) [t]he death of herein petitioner causes the dismissal of the action filed by respondents; respondents’ cause of action being an action in personam. (underscoring supplied) The petition fails. The pertinent portion of the kasunduan reads:8 xxxx Na ako ay may isang partial na lupa na matatagpuan sa Purok 111, Tugatog, Orani Bataan, na may sukat na 27 x 24 metro kuwadrado, ang nasabing lupa ay may sakop na dalawang punong santol at isang punong mangga, kaya’t ako ay nakipagkasundo sa mag-asawang Norby Dingco at Susan Dingco na ipagbili sa kanila ang karapatan ng nasabing lupa sa halagang P38,000.00. x x x x (underscoring supplied) That the kasunduan did not specify the technical boundaries of the property did not render the sale a nullity. The requirement that a sale must have for its object a determinate thing is satisfied as long as, at the time the contract is entered into, the object of the sale is capable of being made determinate without the necessity of a new or further agreement between the parties.9 As the above-quoted portion of the kasunduan shows, there is no doubt that the object of the sale is determinate. Clutching at straws, petitioner proffers lack of spousal consent. This was raised only on appeal, hence, will not be considered, in the present case, in the interest of fair play, justice and due process.10 Respecting the argument that petitioner’s death rendered respondents’ complaint against him dismissible, Bonilla v. Barcena11 enlightens: The question as to whether an action survives or not depends on the nature of the action and the damage sued for. In the causes of action which survive, the wrong complained [of] affects primarily and principally property and property rights, the injuries to the person being merely incidental, while in the causes of action which do not survive, the injury complained of is to the person, the property and rights of property affected being incidental. (emphasis and underscoring supplied) In the present case, respondents are pursuing a property right arising from the kasunduan, whereas petitioner is invoking nullity of the kasunduan to protect his proprietary interest. Assuming arguendo, however, that the kasunduan is deemed void, there is a corollary obligation of petitioner to return the money paid by respondents, and since the action involves property rights,12 it survives.1avvphi1 It bears noting that trial on the merits was already concluded before petitioner died. Since the trial court was not informed of petitioner’s death, it may not be faulted for proceeding to render judgment without ordering his substitution. Its judgment is thus valid and binding upon petitioner’s legal representatives or successors-in-interest, insofar as his interest in the property subject of the action is concerned.13 In another vein, the death of a client immediately divests the counsel of authority.14 Thus, in filing a Notice of Appeal, petitioner’s counsel of record had no personality to act on behalf of the already deceased client who, it bears reiteration, had not been substituted as a party after his death. The trial court’s decision had thereby become final and executory, no appeal having been perfected. WHEREFORE, the petition is DENIED. SO ORDERED.

G.R. No. 142676

June 6, 2011

EMERITA MUÑOZ, Petitioner, vs. ATTY. VICTORIANO R. YABUT, JR. and SAMUEL GO CHAN, Respondents. G.R. No. 146718 EMERITA MUÑOZ, Petitioner, vs. SPOUSES SAMUEL GO CHAN and AIDA C. CHAN, and THE BANK OF THE PHILIPPINE ISLANDS,Respondents. DECISION LEONARDO-DE CASTRO, J.: Before Us are the following consolidated petitions for review on certiorari under Rule 45 of the Rules of Court. In G.R. No. 142676, Emerita Muñoz (Muñoz) is seeking the reversal, annulment, and setting aside of the Decision1dated July 21, 1995 and Resolution2 dated March 9, 2000 of the Court of Appeals in CA-G.R. SP No. 35322, which affirmed the Orders3 dated June 10, 1994 and August 5, 1994 of the Regional Trial Court, Branch 88 (RTC-Branch 88) of Quezon City in Civil Case No. Q-94-20632. The RTC dismissed Civil Case No. 8286, the forcible entry case instituted by Muñoz against Atty. Victoriano R. Yabut, Jr. (Atty. Yabut) and Samuel Go Chan before the Metropolitan Trial Court (MeTC), Branch 33 of Quezon City; and nullified the MeTC Order4 dated May 16, 1994, granting Muñoz’s prayer for the issuance of a writ of preliminary mandatory injunction which restored possession of the subject property to Muñoz. In G.R. No. 146718, Muñoz is praying for the reversal, setting aside, and nullification of the Decision5 dated September 29, 2000 and Resolution6 dated January 5, 2001 of the Court of Appeals in CA-G.R. SP No. 40019, which affirmed the Orders7 dated August 21, 1995 and October 3, 1995 of the Quezon City RTC, Branch 95 (RTCBranch 95) in Civil Case No. Q-28580 denying Muñoz’s Motion for an Alias Writ of Execution and Application for Surrender of the Owner’s Duplicate Copy of TCT No. 532978 against respondents Bank of the Philippine Islands (BPI) and the spouses Samuel Go Chan and Aida C. Chan (spouses Chan). I FACTS The subject property is a house and lot at No. 48 Scout Madriñan St., Diliman, Quezon City, formerly owned by Yee L. Ching. Yee L. Ching is married to Emilia M. Ching (spouses Ching), Muñoz’s sister. Muñoz lived at the subject property with the spouses Ching. As consideration for the valuable services rendered by Muñoz to the spouses Ching’s family, Yee L. Ching agreed to have the subject property transferred to Muñoz. By virtue of a Deed of Absolute Sale, seemingly executed by Yee L. Ching in favor of Muñoz,9 the latter acquired a Transfer Certificate of Title (TCT) No. 186306 covering the subject property in her name on December 22, 1972.10However, in a Deed of Absolute Sale dated December 28, 1972, Muñoz purportedly sold the subject property to her sister, Emilia M. Ching. As a result, TCT No. 186306 was cancelled and TCT No. 186366 was issued in Emilia M. Ching’s name. Emilia M. Ching, in a Deed of Absolute Sale dated July 16, 1979, sold the subject property to spouses Go Song and Tan Sio Kien (spouses Go), hence, TCT No. 186366 was cancelled and replaced by TCT No. 258977 in the spouses Go’s names. On October 15, 1979, Muñoz registered her adverse claim to the subject property on TCT No. 258977 of the spouses Go. The next day, on October 16, 1979, Muñoz filed a complaint for the annulment of the deeds of absolute sale dated December 28, 1972 and July 16, 1979, the cancellation of TCT No. 258977 in the spouses Go’s names, and the restoration and revival of TCT No. 186306 in Muñoz’s name. The complaint was docketed as Civil Case No. Q-28580 and raffled to RTC-Branch 95. On October 17, 1979, Muñoz caused the annotation of a notice of lis pendens on TCT No. 258977 of the spouses Go. In an Order dated December 17, 1979, the RTC-Branch 95 granted the spouses Go’s motion for the issuance of a writ of preliminary mandatory injunction and ordered the sheriff to put the spouses Go in possession of the subject property. The writ was implemented by the sheriff on March 26, 1980, driving Muñoz and her housemates away from the subject property. Muñoz filed a petition for certiorari and prohibition before the Court of Appeals, assailing the issuance of the writ of preliminary mandatory injunction, which was docketed as CA-G.R. SP No. 10148. The appellate court dismissed Muñoz’s petition on January 4, 1980. Yee L. Ching and his son Frederick M. Ching filed an urgent motion for leave to intervene in CA-G.R. SP No. 10148 and for the issuance of a temporary restraining order (TRO). The Court of Appeals issued a TRO. However, in a Resolution dated March 18, 1980, the appellate court denied the motion to intervene of Yee L. Ching and Frederick M. Ching, and cancelled the TRO previously issued. Yee L. Ching and

Frederick M. Ching challenged before this Court, in G.R. No. 53463, the Resolution dated March 18, 1980 of the Court of Appeals. Eventually, in a Resolution dated June 3, 1981, the Court dismissed the petition in G.R. No. 53463, for lack of merit and failure of Yee L. Ching and Frederick M. Ching to substantially show that the RTCBranch 95 and the Court of Appeals gravely abused their discretion. In a subsequent Resolution dated June 21, 1982, the Court clarified that its Resolution of June 3, 1981 was without prejudice to the continuation of the litigation in Civil Case No. Q-28580 still pending before the trial court, "in order that proper and final adjudication may be made of whether or not the deed of sale by Emerita L. Muñoz in favor of Emilia M. Ching is a real, genuine and authentic transaction, thereby to settle once and for all the issue of ownership of the property herein in question."11 Trial in Civil Case No. Q-28580 proceeded before RTC-Branch 95. In the meantime, Muñoz’s adverse claim and notice of lis pendens on TCT No. 258977 was cancelled on October 28, 1982 on the basis of an alleged final judgment in favor of the spouses Go.12 The spouses Go obtained a loan of P500,000.00 from BPI Family Savings Bank (BPI Family) and to secure the same, they constituted a mortgage on the subject property on November 23, 1982.13 When the spouses Go defaulted on the payment of their loan, BPI Family foreclosed the mortgage. BPI Family was the highest bidder at the auction sale of the subject property. The spouses Go failed to exercise their right of redemption within the prescribed period, thus, BPI Family was finally able to register the subject property in its name on October 23, 1987 under TCT No. 370364.14 Apparently, the original copy of TCT No. 370364 was among those razed in the fire at the Quezon City Register of Deeds on June 11, 1988. As a result of the administrative reconstitution of the lost title, TCT No. RT-54376 (370364) was issued to BPI Family. On December 3, 1990, BPI Family executed in favor of the spouses Samuel Go Chan and Aida C. Chan (spouses Chan) a Deed of Absolute Sale15 covering the subject property for and in consideration ofP3,350,000.00. Consequently, TCT No. RT-54376 (370364) in the name of BPI Family was cancelled and TCT No. 53297 was issued in the spouses Chan’s names on January 28, 1991.16 The spouses Chan obtained a loan from BPI Family on October 2, 1992 for the construction of a building on the subject property, and to secure the same, constituted a mortgage on the subject property in favor of BPI Family.17 On July 19, 1991, RTC-Branch 95 rendered its Decision18 in Civil Case No. Q-28580, against Emilia M. Ching, Yee L. Ching, and the spouses Go (Emilia M. Ching, et al.). It found that Muñoz’s signature on the Deed of Absolute Sale dated December 28, 1972 was forged; that Muñoz never sold the subject property to her sister, Emilia M. Ching; and that the spouses Go were not innocent purchasers for value of the subject property. The fallo of the said decision reads: WHEREFORE, judgment is hereby rendered dismissing for lack of merit [Emilia M. Ching, et al.’s] respective counterclaims, cross-claims, and counter-cross-claim, declaring as null and void ab initio the following documents, to wit: (a) Deed of Absolute Sale dated December 28, 1972, copy of which is marked in evidence as Exh. M; (b) TCT No. 186366 of the Registry of Deeds for Quezon City, copy of which is marked in evidence as Exh. N; (c) Deed of Absolute Sale dated July 16, 1979, copy of which is marked in evidence as Exh. 3; and, (d) TCT No. 258977 of the Registry of Deeds for Metro Manila District III, copy of which is marked in evidence as Exh. 4, and directing defendant Register of Deeds of Quezon City to cancel from the records of the subject property the registrations of all the said documents and to restore and revive, free from all liens and encumbrances, TCT No. 186306 of the Registry of Deeds for Quezon City, copy of which is marked in evidence as Exh. L, as well as ordering defendants Emilia M. Ching, Go Song and Tan Sio Kien jointly and severally to pay [Muñoz] the sum ofP50,000.00 as and for attorney’s fees and to pay the costs of suit. The court also hereby dismisses the rest of the claims in [Muñoz’s] complaint, there being no satisfactory warrant therefor.19 Emilia M. Ching, et al.’s, appeal of the foregoing judgment of the RTC-Branch 95 was docketed as CA-G.R. CV No. 33811 before the Court of Appeals. In its Decision20 dated March 4, 1993, the appellate court not only affirmed the appealed judgment, but also ordered the spouses Go and their successors-in-interest and assigns and those acting on their behalf to vacate the subject property, to wit: WHEREFORE, premises considered, the decision appealed from is AFFIRMED, with costs against [Emilia M. Ching, et al.]. The writ of preliminary mandatory injunction issued on December 17, 1979 is hereby set aside and declared dissolved. Defendants-appellants Go and Tan, their successors-in-interest and assigns and those acting on their behalf, are ordered to vacate the disputed premises and to deliver the same to [Muñoz] immediately upon receipt of this decision.21 Emilia L. Ching, et al., filed before this Court a motion for extension of time to file their petition for review, which was assigned the docket number G.R. No. 109260. However, they failed to file their intended petition within the extended period which expired on April 23, 1993. In a Resolution22 dated July 12, 1993, the Court declared G.R. No. 109260 terminated. The Resolution dated July 12, 1993 of the Court in G.R. No. 109260 became final and executory on July 15, 1993 and was entered in the Book of Entries of Judgments on even date.23

More than two months later, on September 20, 1993, the RTC-Branch 95 issued a writ of execution to implement the judgment in Civil Case No. Q-28580. The spouses Chan, who bought the subject property from BPI Family, then came forward and filed before the RTC-Branch 95 on October 22, 1993 an Urgent Motion to Stop Execution as Against Spouses Samuel Go Chan and Aida Chan,24 opposing the writ of execution issued in Civil Case No. Q-28580. The spouses Chan asserted ownership and possession of the subject property on the basis of a clean title registered in their names under TCT No. 53297. The spouses Chan further contended that the final judgment in Civil Case No. Q-28580 could not be executed against them since they were not parties to the said case; they were not successors-in-interest, assigns, or acting on behalf of the spouses Go; and they purchased the subject property from BPI Family without any notice of defect in the latter’s title. It was only at this point that Muñoz, upon her own inquiry, discovered the cancellation on October 28, 1982 of her adverse claim and notice of lis pendens annotated on the spouses Go’s TCT No. 258977, and the subsequent events that led to the transfer and registration of the title to the subject property from the spouses Go, to BPI Family, and finally, to the spouses Chan. In its Order25 dated December 28, 1993, the RTC-Branch 95 denied the spouses Chan’s urgent motion to stop the execution. According to the RTC-Branch 95, the photocopy of TCT No. 370364 in the name of BPI Family, submitted by the spouses Chan with their motion, could hardly be regarded as satisfactory proof that Muñoz’s adverse claim and notice of lis pendens annotated therein were also missing from the original copy of said certificate of title. Muñoz’s adverse claim and notice of lis pendens were annotated on TCT No. 258977 in the spouses Go’s names as P.E.-8078 and P.E.-8178, respectively. So when TCT No. 258977 of the spouses Go was cancelled and TCT No. 370364 was issued to BPI Family, it could be presumed that the Register of Deeds regularly performed his official duty by carrying over Muñoz’s adverse claim and notice of lis pendens to TCT No. 370364. In addition, the RTC-Branch 95 pointed out that in this jurisdiction, the entry of the notice of lis pendens in the day book of the Register of Deeds was already sufficient notice to the whole world of the dispute over the subject property, and there was no more need to annotate the same on the owner’s duplicate of the certificate of title. Finally, the RTCBranch 95 held that TCT No. RT-54376 (370364) of BPI Family and TCT No. 53297 of the spouses Chan shall be subject to the reservation under Section 7 of Republic Act No. 2626 "[t]hat certificates of title reconstituted extrajudicially, in the manner stated in sections five and six hereof, shall be without prejudice to any party whose right or interest in the property was duly noted in the original, at the time it was lost or destroyed, but entry or notation of which has not been made on the reconstituted certificate of title." Thus, the spouses Chan were deemed to have taken the disputed property subject to the final outcome of Civil Case No. Q-28580. On January 3, 1994, the RTC-Branch 95 issued an Alias Writ of Execution.27 On January 10, 1994, the writ was enforced, and possession of the subject property was taken from the spouses Chan and returned to Muñoz.28 In its Orders dated April 8, 1994 and June 17, 1994, the RTC-Branch 95 denied the spouses Chan’s motion for reconsideration and notice of appeal, respectively.29 G.R. No. 142676 Pending resolution by the RTC-Branch 95 of the spouses Chan’s motion for reconsideration and notice of appeal in Civil Case No. Q-28580, Muñoz instituted before the MeTC on February 4, 1994 a Complaint for Forcible Entry with Prayer for Preliminary Mandatory Injunction30 against Samuel Go Chan and Atty. Yabut, docketed as Civil Case No. 8286. Muñoz alleged in her complaint that she had been in actual and physical possession of the subject property since January 10, 1994. She hired a caretaker and two security guards for the said property. On February 2, 1994, Samuel Go Chan and Atty. Yabut, along with 20 other men, some of whom were armed, ousted Muñoz of possession of the subject property by stealth, threat, force, and intimidation. Muñoz prayed for the issuance of a writ of preliminary mandatory injunction directing Samuel Go Chan and Atty. Yabut and all persons claiming right under them to vacate the subject property. Muñoz additionally prayed for judgment making the mandatory injunction permanent and directing Samuel Go Chan and Atty. Yabut to pay Muñoz: (1) compensation for the unlawful occupation of the subject property in the amount of P50,000.00 per month, beginning February 2, 1994 until the said property is fully and completely turned over to Muñoz; (2) attorney’s fees in the amount ofP50,000.00, plus P1,500.00 per court appearance of Muñoz’s counsel; and (3) costs of suit. Samuel Go Chan and Atty. Yabut denied Muñoz’s allegations, insisting that Samuel Go Chan is the valid, lawful, and true legal owner and possessor of the subject property. Samuel Go Chan and Atty. Yabut averred that the TurnOver of Possession and Receipt of Possession dated January 10, 1994 – attached to Muñoz’s complaint as proof that the subject property had been placed in her possession – is a falsified document. The Writ of Execution issued on September 20, 1993 in Civil Case No. Q-28580 had already expired and the Sheriff’s Return on the Writ – another document purporting to show that possession of the subject property was turned-over to Muñoz on January 10, 1994 – was then being challenged in a complaint before the Office of Deputy Court Administrator

Reynaldo L. Suarez of the Supreme Court. Samuel Go Chan’s possession of the subject property has never been interrupted. His sister, Cely Chan, resided at the subject property and was never removed therefrom. On February 2, 1994, Atty. Yabut was at the subject property only to protect the rights and interest of his client, Samuel Go Chan, and since the latter’s possession of the subject property had never been interrupted, Atty. Yabut entered the same peacefully, without intimidation, force, or stealth. The other people at the subject property on February 2, 1994 were there to attend the services at the Buddhist Temple which occupied the fourth floor of the building erected by the spouses Chan on the subject property. Samuel Go Chan and Atty. Yabut, thus, asked the MeTC to dismiss Muñoz’s complaint for lack of merit and legal basis.31 The MeTC received evidence from the parties on whether a writ of preliminary injunction should be issued, as prayed for by Muñoz. In its Order dated May 16, 1994, the MeTC adjudged that the final judgment in Civil Case No. Q-28580 was already executed against the spouses Chan and there was, indeed, a turn-over of possession of the subject property to Muñoz. Accordingly, the MeTC granted Muñoz’s prayer for the issuance of a writ of preliminary mandatory injunction, restoring possession of the subject property to Muñoz. Samuel Go Chan and Atty. Yabut questioned the foregoing MeTC order through a Petition for Certiorari with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction32 before the RTC-Branch 88, which was docketed as Civil Case No. Q-94-20632. They asserted that they were not bound by the execution of the final judgment of RTC-Branch 95 in Civil Case No. Q-28580 as they were not parties to the said case. Muñoz, on the other hand, argued that the MeTC Order of May 16, 1994 was an interlocutory order, and under Section 19 of the Rules of Summary Procedure, a petition for certiorari against an interlocutory order issued by the court is one of the prohibited pleadings and motions in summary proceedings. In its Order dated June 10, 1994, the RTC-Branch 88 issued a writ of preliminary injunction to enjoin the implementation of the MeTC Order dated May 16, 1994. On August 5, 1994, the RTC-Branch 88 issued another Order resolving Muñoz’s motion to dismiss the petition for certiorari in Civil Case No. Q-94-20632, motion for reconsideration of the Order dated June 10, 1994 of RTCBranch 88 granting the issuance of a writ of preliminary injunction, and motion to resolve with additional grounds for dismissal. According to the RTC-Branch 88, the MeTC failed to distinguish the issue of finality of the judgment of the RTC-Branch 95 in Civil Case No. Q-28580 from the assertions of Samuel Go Chan and Atty. Yabut that the spouses Chan are not covered by said final judgment because they are not successors-in-interest, assigns, or privies of the spouses Go and they are purchasers of the subject property in good faith. The issue of whether the final judgment in Civil Case No. Q-28580 extended to the spouses Chan was then still being litigated in the same case before RTC-Branch 95, where the spouses Chan’s motion for reconsideration of the denial of their notice of appeal was pending. The RTC-Branch 88 further found that the MeTC committed grave abuse of discretion in not dismissing Muñoz’s complaint for forcible entry on the ground of "lis pendens," as the issue as to who between Muñoz and the spouses Chan had the better right to possession of the subject property was the subject of the pending proceeding in Civil Case No. Q-28580 before the RTC-Branch 95. In the end, the RTC-Branch 88 decreed: WHEREFORE, premises considered, the Court renders judgment – (a) Denying the motion to dismiss of respondent Muñoz for lack of merit; (b) Denying the motion for reconsideration of respondent Muñoz for the recall and/or setting aside of the writ of preliminary injunction granted to petitioners; (c) Declaring the Order dated May 16, 1994 of Public respondent Hon. Elsa de Guzman in Civil Case No. 8286 illegal and therefore null and void; and (d) Dismissing the ejectment suit in Civil Case No. 8286 on ground of lis pendens. Without pronouncement as to costs.33 Muñoz appealed the Orders dated June 10, 1994 and August 5, 1994 of RTC-Branch 88 before the Court of Appeals. Her appeal was docketed as CA-G.R. SP No. 35322. Aside from the nullification of the two orders, Muñoz additionally prayed for the dismissal from the service of the RTC-Branch 88 presiding judge and the disbarment of Atty. Yabut. The Court of Appeals, in its Decision dated July 21, 1995, sustained the appealed orders of RTC-Branch 88. The Court of Appeals held that the MeTC should have dismissed the forcible entry case on the ground of "lis pendens"; that the spouses Chan were not parties in Civil Case No. Q-28580, and impleading them only in the execution stage of said case vitiated their right to due process; that the order of the RTC-Branch 95 involving the spouses Chan in Civil Case No. Q-28580 was null and void, considering that they are strangers to the case, and they are innocent purchasers for value of the subject property; that the notice of lis pendens was already cancelled from the spouses Go’s certificate of title at the time they mortgaged the subject property to BPI Family; and that the title to the

subject property was already free of any and all liens and encumbrances when the spouses Chan purchased the said property from BPI Family. The Court of Appeals, in its Resolution dated March 9, 2000, denied Muñoz’s motion for reconsideration. G.R. No. 146718 Meanwhile, Muñoz filed before the RTC-Branch 95 in Civil Case No. Q-28580 a Motion to Cite the Register of Deeds in Contempt of Court for the failure of the Register of Deeds to restore Muñoz’s TCT No. 186306 despite having been served with a copy of the writ of execution on October 11, 1993. In its Judgment (on the Contempt Proceedings against the Register of Deeds of Quezon City Samuel C. Cleofe)34 dated March 18, 1994, the RTCBranch 95 denied Muñoz’s motion, convinced that the Register of Deeds had a valid excuse for his inability to implement the served writ. The Register of Deeds could not cancel the spouses Chan’s TCT No. 53297, the subsisting certificate of title over the subject property, absent any authority or directive for him to do so. The directive in the final judgment in Civil Case No. Q-28580 and the writ of execution for the same only pertained to the cancellation of the spouses Go’s TCT No. 258977. Thereafter, Muñoz filed a Motion for Contempt against the spouses Chan and a Second Motion for Contempt against Samuel Go Chan and Atty. Yabut. Muñoz also filed a Motion for an Alias Writ of Execution and Application for Surrender of the Owner’s Duplicate Copy of TCT No. 53297,35 in which she prayed for the issuance of an alias writ of execution directing the Register of Deeds not only to cancel TCT No. 258977 and all documents declared null and void ab initio in the dispositive portion of the Decision36 dated July 19, 1991 of RTCBranch 95 in Civil Case No. Q-28580, and to restore and revive, free from all liens and encumbrances Muñoz’s TCT No. 186306, but likewise to cancel the present certificate of title covering the subject property, TCT No. 53297. In its Order dated August 21, 1995, the RTC-Branch 95 denied all of Muñoz’s aforementioned motions. The RTCBranch 95 was of the view that Samuel Go Chan’s title should be litigated in another forum, not in Civil Case No. Q-28580 where the judgment had already become final and executory. The RTC-Branch 95 also stressed that since the judgment in Civil Case No. Q-28580 had long become final and executory, it could no longer be changed or amended except for clerical error or mistake. Accordingly, the RTC-Branch 95 resolved as follows: 1. Ordering, as it hereby orders, the denial of [Muñoz’s] first and second motions for contempt and hereby absolves respondents Samuel Go Chan, Celia Chan, Atty. Victoriano R. Yabut, Jr., and several John Does of the Contempt Charges against them. 2. Ordering, as it hereby orders, the issuance of an alias writ of execution directing the Court’s Deputy Sheriff: (a) Defendants Go Song and Tan Sio Kien, their successors-in-interest and assigns and those acting on their behalf to vacate the disputed premises and deliver the same to [Muñoz]; (b) Defendant Register of Deeds of Quezon City to cancel from the records of the subject property the registration of all the following documents, to wit: (1) "Deed of Absolute Sale" dated December 28, 1972; (2) Transfer Certificate of Title (TCT) No. 186366 of the Register of Deeds of Quezon City; (3) "Deed of Absolute Sale" dated July 16, 1979; and (4) TCT No. 258977 of the Registry of Deeds for Metro Manila II, and to restore and revive, free from all liens and encumbrances TCT No. 186306 of the Registry of Deeds for Quezon City; and (c) Defendants Emilia M. Ching, Go Song and Tan Sio Kien jointly and severally to pay [Muñoz] the sum of P50,000.00 as and for attorney’s fees and to pay the cost of suit.37 Unrelenting, Muñoz filed a Motion for Clarificatory Order, pointing out that the spouses Chan are the present occupants of the subject property. The Order dated August 21, 1995 of the RTC-Branch 95 directed the deputy sheriff to deliver the subject property to Muñoz, and this could not be done unless the spouses Chan are evicted therefrom. Resultantly, Muñoz prayed that "a clarificatory order be made categorically stating that the spouses Samuel Go Chan and Aida C. Chan, and all persons claiming right under them, are likewise evicted from the subject premises pursuant to the Order of 21 August 1995."38 Once more, the RTC-Branch 95 denied Muñoz’s motion in its Order dated October 3, 1995. The RTC-Branch 95 reiterated the rule that after the judgment had become final, only clerical errors, as distinguished from substantial errors, can be amended by the court. Furthermore, when the decision or judgment sought to be amended is promulgated by an appellate court, it is beyond the power of the trial court to change, amplify, enlarge, alter, or modify. Ultimately, the RTC-Branch 95 pronounced that it was "restrained x x x to consider as mere clerical error

the exclusion of spouses Samuel Go Chan and Aida C. Chan in the Decision of the Court dated July 19, 1991, a final judgment, which judgment cannot now be made to speak a different language."39 Attributing grave abuse of discretion on the part of the RTC-Branch 95 in issuing its Orders dated August 21, 1995 and October 3, 1995, Muñoz filed before this Court a Petition for Certiorari and Mandamus, which was remanded to the Court of Appeals in observance of the hierarchy of courts, where it was docketed as CA-G.R. SP No. 40019. The Court of Appeals promulgated its Decision on September 29, 2000 dismissing Muñoz’s petition. The Court of Appeals agreed with the RTC-Branch 95 that the spouses Chan could not be covered by the alias writ of execution considering that they were not impleaded in Civil Case No. Q-28580. The cancellation of TCT No. 53297 in the spouses Chan’s names could not be done apart from a separate action exclusively for that matter. The spouses Chan are deemed buyers in good faith and for value as the certificate of title delivered to them by BPI Family was free from any liens or encumbrances or any mark that would have raised the spouses Chan’s suspicions. Every person dealing with registered lands may safely rely on the correctness of the certificate of title of the vendor/transferor, and he is not required to go beyond the certificate and inquire into the circumstances culminating in the vendor’s acquisition of the property. The Court of Appeals denied Muñoz’s motion for reconsideration in a Resolution dated January 5, 2001. Muñoz comes before this Court via the present consolidated petitions. Muñoz posits that the final judgment and writ of execution of RTC-Branch 95 in Civil Case No. Q-28580 bind not only Emilia M. Ching and the spouses Go, but also their successors-in-interest, assigns, or persons acting on their behalf, namely, BPI Family and spouses Chan. The spouses Chan cannot be deemed innocent purchasers for value of the property since the cancellation of the adverse claim and notice of lis pendens on the spouses Go’s TCT No. 258977 is completely null and void. Muñoz further argues that the MeTC Order dated May 16, 1994 in Civil Case No. 8286 correctly ordered the issuance of a writ of preliminary mandatory injunction restoring possession of the subject property to her, as she had already acquired prior possession of the said property upon the execution of the final judgment in Civil Case No. Q-28580. Also, the spouses Chan’s petition for certiorari before the RTC-Branch 88, docketed as Civil Case No. Q-94-20632, challenging the Order dated May 16, 1994 of the MeTC in Civil Case No. 8286, is a prohibited pleading under the Rules of Summary Procedure; and the RTC-Branch 88 and the Court of Appeals should be faulted for giving due course to the said petition even in the absence of jurisdiction. On the other hand, in their comments to the two petitions at bar, the spouses Chan, Atty. Yabut, and BPI Family assert that given the peculiar factual circumstances of the case, RTC-Branch 88 was justified in taking cognizance of Samuel Go Chan and Atty. Yabut’s petition for certiorari in Civil Case No. Q-94-20632; that Muñoz is estopped from questioning the jurisdiction of RTC-Branch 88 after participating in the proceedings in Civil Case No. Q-9420632; that the spouses Chan’s title to the subject property is not affected by the final judgment of RTC-Branch 95 in Civil Case No. Q-28580, and the said judgment cannot be executed against the spouses Chan since they are neither parties to the case, nor are they the successors-in-interest, assigns, or persons acting on behalf of Emilia M. Ching or the spouses Go; that BPI Family and consequently, the spouses Chan, obtained title to the subject property as innocent purchasers for value, there being no notice of any infirmity in said title; and that Muñoz is guilty of forum shopping for filing her petition in G.R. No. 146718 even while her petition in G.R. No. 142676 is still pending. II RULING For the sake of expediency, we will be discussing first the merits of the petition in G.R. No. 146718. G.R. No. 146718 Civil Case No. Q-28580 involved Muñoz’s complaint for the annulment of the deeds of absolute sale dated December 28, 197240 and July 16, 1979,41 the cancellation of the spouses Go’s TCT No. 258977, and the restoration and revival of Muñoz’s TCT No. 186306. The final judgment of RTC-Branch 95 in Civil Case No. Q-28580 was in favor of Muñoz and against Emilia M. Ching and the spouses Go. The problem arose when during the pendency of the said case, title and possession of the subject property were transferred from the spouses Go, to BPI Family, and finally, to the spouses Chan. BPI Family and the spouses Chan were never impleaded as parties and were not referred to in the dispositive portion of the final judgment in Civil Case No. Q-28580. Muñoz questions in G.R. No. 146718: (1) the Order dated August 21, 1995 denying her Motion for Contempt against the spouses Chan, Second Motion for Contempt against Samuel Go Chan and Atty. Yabut, and Motion for an Alias Writ of Execution and Application for Surrender of the Owner’s Duplicate Copy of TCT No. 53297; and

(2) the Order dated October 3, 1995 denying her Motion for Clarificatory Order, both issued by the RTC-Branch 95 in Civil Case No. Q-28580, and upheld by the Court of Appeals in CA-G.R. SP No. 40019. In sum, Muñoz was seeking in her aforementioned motions: (1) a categorical order from the RTC-Branch 95 that the final judgment in Civil Case No. Q-28580 be executed against the spouses Chan; and (2) the surrender and cancellation of the spouses Chan’s TCT No. 53297 and restoration of Muñoz’s TCT No. 186306. There is no merit in Muñoz’s petition in G.R. No. 146718. Civil Case No. Q-28580 is an action for reconveyance of real property. In Heirs of Eugenio Lopez, Sr. v. Enriquez,42 we described an action for reconveyance as follows: An action for reconveyance is an action in personam available to a person whose property has been wrongfully registered under the Torrens system in another’s name. Although the decree is recognized as incontrovertible and no longer open to review, the registered owner is not necessarily held free from liens. As a remedy, an action for reconveyance is filed as an ordinary action in the ordinary courts of justice and not with the land registration court. Reconveyance is always available as long as the property has not passed to an innocent third person for value. A notice of lis pendens may thus be annotated on the certificate of title immediately upon the institution of the action in court. The notice of lis pendens will avoid transfer to an innocent third person for value and preserve the claim of the real owner.43 (Emphases ours.) The rule is that: (1) a judgment in rem is binding upon the whole world, such as a judgment in a land registration case or probate of a will; and (2) a judgment in personam is binding upon the parties and their successors-in-interest but not upon strangers. A judgment directing a party to deliver possession of a property to another is in personam; it is binding only against the parties and their successors-in-interest by title subsequent to the commencement of the action. An action for declaration of nullity of title and recovery of ownership of real property, or re-conveyance, is a real action but it is an action in personam, for it binds a particular individual only although it concerns the right to a tangible thing. Any judgment therein is binding only upon the parties properly impleaded.44 Since they were not impleaded as parties and given the opportunity to participate in Civil Case No. Q-28580, the final judgment in said case cannot bind BPI Family and the spouses Chan. The effect of the said judgment cannot be extended to BPI Family and the spouses Chan by simply issuing an alias writ of execution against them. No man shall be affected by any proceeding to which he is a stranger, and strangers to a case are not bound by any judgment rendered by the court. In the same manner, a writ of execution can be issued only against a party and not against one who did not have his day in court. Only real parties in interest in an action are bound by the judgment therein and by writs of execution issued pursuant thereto.45 A similar situation existed in Dino v. Court of Appeals,46 where we resolved that: As the registered owner of the subject property, petitioners are not bound by decision in Civil Case No. R-18073 for they were never summoned in said case and the notice of lis pendens annotated on TCT No. 73069 was already cancelled at the time petitioners purchased the subject property. While it is true that petitioners are indispensable parties in Civil Case No. R-18073, without whom no complete relief could be accorded to the private respondents, the fact still remains that petitioners were never actually joined as defendants in said case. Impleading petitioners as additional defendants only in the execution stage of said case violated petitioners’ right to due process as no notice of lis pendens was annotated on the existing certificate of title of said property nor were petitioners given notice of the pending case, therefore petitioners remain strangers in said case and the Order of the trial court involving them is null and void, considering that petitioners are innocent purchasers of the subject property for value.47 We further stress that Section 48 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, clearly provides that "[a] certificate of title shall not be subject to collateral attack. It cannot be altered, modified or cancelled except in a direct proceeding in accordance with law." Herein, several Torrens titles were already issued after the cancellation of Muñoz’s. Certificates of title had been successively issued to Emilia M. Ching, spouses Go, BPI Family, and spouses Chan. Civil Case No. Q-28580, in which a final judgment had already been rendered, specifically challenged the validity of the certificates of title of Emilia M. Ching and the spouses Go only. To have the present certificate of title of the spouses Chan cancelled, Muñoz must institute another case directly attacking the validity of the same. The fact that the titles to the subject property of Emilia M. Ching and the spouses Go were already declared null and void ab initio by final judgment in Civil Case No. Q-28580 is not enough, for it does not automatically make the subsequent titles of BPI Family and the spouses Chan correspondingly null and void ab initio. It has long been ingrained in our jurisprudence that a void title may become the root of a valid title if the derivative title was obtained in good faith and for value. Following the principle of indefeasibility of a Torrens title, every

person dealing with registered lands may safely rely on the correctness of the certificate of title of the vendor/transferor, and he is not required to go beyond the certificate and inquire into the circumstances culminating in the vendor’s acquisition of the property. The rights of innocent third persons who relied on the correctness of the certificate of title and acquired rights over the property covered thereby cannot be disregarded and the courts cannot order the cancellation of such certificate for that would impair or erode public confidence in the Torrens system of land registration.48 Hence, we pronounced in Republic v. Agunoy, Sr.49: Here, it bears stressing that, by petitioner's own judicial admission, the lots in dispute are no longer part of the public domain, and there are numerous third, fourth, fifth and more parties holding Torrens titles in their favor and enjoying the presumption of good faith. This brings to mind what we have reechoed in Pino v. Court of Appeals and the cases therein cited: [E]ven on the supposition that the sale was void, the general rule that the direct result of a previous illegal contract cannot be valid (on the theory that the spring cannot rise higher than its source) cannot apply here for We are confronted with the functionings of the Torrens System of Registration. The doctrine to follow is simple enough: a fraudulent or forged document of sale may become the ROOT of a valid title if the certificate of title has already been transferred from the name of the true owner to the name of the forger or the name indicated by the forger.50(Emphases ours.) Although the RTC-Branch 95 had declared with finality in Civil Case No. Q-28580 that the titles of Emilia M. Ching and the spouses Go were null and void, there is yet no similar determination on the titles of BPI Family and the spouses Chan. The question of whether or not the titles to the subject property of BPI Family and the spouses Chan are null and void, since they are merely the successors-in-interest, assigns, or privies of Emilia M. Ching and the spouses Go, ultimately depends on the issue of whether or not BPI Family and the spouses Chan obtained their titles to the subject property in bad faith, i.e., with notice of Muñoz’s adverse claim and knowledge of the pendency of Civil Case No. Q-28580. The latter is a factual issue on which we cannot rule in the present petition, not only because we are not a trier of facts, but more importantly, because it was not among the issues raised and tried in Civil Case No. Q-28580. In support of her prayer for an alias writ of execution against BPI Family and the spouses Go, Muñoz cites our ruling in Calalang v. Register of Deeds of Quezon City,51 in relation to De la Cruz v. De la Cruz.52 De la Cruz is an action for reconveyance of Lot 671 founded on breach of trust filed by Augustina de la Cruz, et al., against Lucia dela Cruz (Lucia) and Iglesia Ni Kristo (INK). We upheld the validity of the sale of Lot 671 by Lucia to INK, and thereby validated the title of INK to the said property. Calalang actually involved two petitions: (1) a special civil action for certiorari and prohibition originally filed by Virginia Calalang (Calalang) before this Court, and (2) a petition for injunction with damages originally filed by Augusto M. de Leon (De Leon), et al., before the RTC and docketed as Civil Case No. Q-45767. Calalang and De Leon, et al., assert titles that were adverse to that of INK. De Leon, et al., in particular, claim that their titles to Lot 671 were derived from Amando Clemente. Calalang and De Leon, et al., sought from the court orders enjoining INK from building a fence to enclose Lot 671; requiring the Administrator of the National Land Titles and Deeds Registration Administration (NLTDRA) to conduct an investigation of the anomaly regarding Lucia’s reconstituted title to Lot 671; and dismissing the proceedings instituted by the Register of Deeds for the cancellation of their titles. We dismissed the petitions of Calalang and De Leon, et al., on the ground of res judicata, the legality or validity of the title of INK over Lot 671 had been settled with finality in De la Cruz. De la Cruz was applied to Calalang and De Leon, et al., since the facts on which such decision was predicated continued to be the facts on which the petitions of Calalang and De Leon, et al., were based. Muñoz’s reliance on Calalang is misplaced. There are substantial differences in the facts and issues involved in Calalang and the present case. In Calalang, there is duplication or overlapping of certificates of title issued to different persons over the same property. We already upheld in De la Cruz the validity of the certificate of title of INK over Lot 671, which effectively prevents us from recognizing the validity of any other certificate of title over the same property. In addition, Lucia, the predecessor-in-interest of INK, had her certificate of title judicially reconstituted. The judicial reconstitution of title is a proceeding in rem, constituting constructive notice to the whole world. Hence, we rejected the petitions of Calalang and De Leon, et al., to enjoin INK from building a fence enclosing Lot 671, and the concerned public authorities from instituting appropriate proceedings to have all other certificates of title over Lot 671 annulled and cancelled.

In the instant case, there has been no duplication or overlapping of certificates of title. The subject property has always been covered by only one certificate of title at a time, and at present, such certificate is in the spouses Chan’s names. As we have previously discussed herein, Muñoz cannot have the spouses Chan’s TCT No. 53297 cancelled by a mere motion for the issuance of an alias writ of execution in Civil Case No. Q-28580, when the spouses Chan were not parties to the case. Civil Case No. Q-28580 was a proceeding in personam, and the final judgment rendered therein – declaring null and void the titles to the subject property of Emilia M. Ching and the spouses Go – should bind only the parties thereto. Furthermore, despite the void titles of Emilia M. Ching and the spouses Go, the derivative titles of BPI Family and the spouses Chan may still be valid provided that they had acquired the same in good faith and for value. More in point with the instant petition is Pineda v. Santiago.53 Pineda still involved Lot 671. INK sought from the RTC a second alias writ of execution to implement the judgment in Calalang against Conrado Pineda (Pineda), et. al. In opposing the issuance of such writ, Pineda, et al., asserted that they held titles to Lot 671 adverse to those of Lucia and INK and that they were not parties in De la Cruz or in Calalang. In its assailed order, the RTC granted the second alias writ of execution on the basis that the issue of ownership of Lot 671 was already determined with finality in favor of Lucia and INK. The writ ordered the deputy sheriff to eject Pineda, et al., from Lot 671. When the matter was brought before us, we annulled the assailed order as the writ of execution issued was against Pineda, et al., who were not parties to Civil Case No. Q-45767, the ejectment suit instituted by De Leon, et al. We elaborated in Pineda that: Being a suit for injunction, Civil Case No. Q-45767 partakes of an action in personam. In Domagas v. Jensen, we have explained the nature of an action in personam and enumerated some actions and proceedings which are in personam, viz: "The settled rule is that the aim and object of an action determine its character. Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the court. The purpose of a proceeding in personam is to impose, through the judgment of a court, some responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a defendant to specifically perform some act or actions to fasten a pecuniary liability on him. An action in personam is said to be one which has for its object a judgment against the person, as distinguished from a judgment against the propriety to determine its state. It has been held that an action in personam is a proceeding to enforce personal rights or obligations; such action is brought against the person. As far as suits for injunctive relief are concerned, it is well-settled that it is an injunctive act in personam. In Combs v. Combs, the appellate court held that proceedings to enforce personal rights and obligations and in which personal judgments are rendered adjusting the rights and obligations between the affected parties is in personam. Actions for recovery of real property are in personam." The respondent judge's jurisdiction is, therefore, limited to the parties in the injunction suit. To stress, the petition for injunction, docketed as Civil Case No. Q-45767, was filed only by therein petitioners Augusto M. de Leon, Jose de Castro, Jose A. Panlilio, Felicidad Vergara Vda. De Pineda, Fernando L. Vitug I, Fernando M. Vitug II, Fernando M. Vitug III, and Faustino Tobia, and later amended to include Elena Ostrea and Feliza C. CristobalGeneroso as additional petitioners therein, against Bishop Eraño Manalo, in his capacity as titular and spiritual head of I.N.K. Herein petitioners Conrado Pineda, et al. never became parties thereto. Any and all orders and writs of execution, which the respondent judge may issue in that case can, therefore, be enforced only against those parties and not against the herein petitioners Conrado Pineda, et al. In issuing the assailed Order dated 22 April 1998, which directed the issuance of the 2nd Alias Writ of Execution to eject non-parties (herein petitioners), the respondent judge clearly went out of bounds and committed grave abuse of discretion. The nature of the injunction suit — Civil Case No. Q-45767 — as an action in personam in the RTC remains to be the same whether it is elevated to the CA or to this Court for review. An action in personam does not become an action in rem just because a pronouncement confirming I.N.K.'s title to Lot 671 was made by this Court in the Calalang decision. Final rulings may be made by this Court, as the Highest Court of the Land, in actions in personam but such rulings are binding only as against the parties therein and not against the whole world. Here lies another grave abuse of discretion on the part of the respondent judge when he relied on the Calalang decision in his assailed Order dated 07 May 1998 as if it were binding against the whole world, saying: "After evaluating the arguments of both parties, decisive on the incident is the decision of the Supreme Court in favor of the respondent I.N.K., represented by its titular and spiritual head Bishop Eraño G. Manalo, sustaining its ownership over the subject Lot 671. This Court could do no less but to follow and give substantial meaning to its ownership which shall include all dominical rights by way of a Writ of Execution. To delay the issuance of such writ is a denial of justice due the I.N.K."

As a final word, this decision shall not be misinterpreted as disturbing or modifying our ruling in Calalang. The final ruling on I.N.K.'s ownership and title is not at all affected. Private respondent I.N.K., as the true and lawful owner of Lot 671 as ruled by the Court in Calalang, simply has to file the proper action against the herein petitioners to enforce its property rights within the bounds of the law and our rules. I.N.K.'s recourse of asking for the issuance of an alias writ of execution against the petitioners in Civil Case No. Q-45767 and the respondent judge's orders in said case, granting I.N.K.'s prayer and enforcing the alias writ of execution against the present petitioners, constitutes blatant disregard of very fundamental rules and must therefore be stricken down.54 (Emphases ours.) Consistent with Pineda, and as appositely recommended by the RTC-Branch 95 and the Court of Appeals in the present case, Muñoz’s legal remedy is to directly assail in a separate action the validity of the certificates of title of BPI Family and the spouses Chan. G.R. No. 142676 G.R. No. 142676 is Muñoz’s appeal of the dismissal of Civil Case No. 8286, the forcible entry case she instituted against Samuel Go Chan and Atty. Yabut before the MeTC. There is forcible entry or desahucio when one is deprived of physical possession of land or building by means of force, intimidation, threat, strategy or stealth. In such cases, the possession is illegal from the beginning and the basic inquiry centers on who has the prior possession de facto. In filing forcible entry cases, the law tells us that two allegations are mandatory for the municipal court to acquire jurisdiction: first, the plaintiff must allege prior physical possession of the property, and second, he must also allege that he was deprived of his possession by any of the means provided for in Section 1, Rule 70 of the Rules of Court, i.e., by force, intimidation, threat, strategy, or stealth. It is also settled that in the resolution thereof, what is important is determining who is entitled to the physical possession of the property. Indeed, any of the parties who can prove prior possession de facto may recover such possession even from the owner himself since such cases proceed independently of any claim of ownership and the plaintiff needs merely to prove prior possession de facto and undue deprivation thereof.55 Title is never in issue in a forcible entry case, the court should base its decision on who had prior physical possession. The main thing to be proven in an action for forcible entry is prior possession and that same was lost through force, intimidation, threat, strategy, and stealth, so that it behooves the court to restore possession regardless of title or ownership.56 We more extensively discussed in Pajuyo v. Court of Appeals57 that: Ownership or the right to possess arising from ownership is not at issue in an action for recovery of possession. The parties cannot present evidence to prove ownership or right to legal possession except to prove the nature of the possession when necessary to resolve the issue of physical possession. The same is true when the defendant asserts the absence of title over the property. The absence of title over the contested lot is not a ground for the courts to withhold relief from the parties in an ejectment case. The only question that the courts must resolve in ejectment proceedings is - who is entitled to the physical possession of the premises, that is, to the possession de facto and not to the possession de jure. It does not even matter if a party’s title to the property is questionable, or when both parties intruded into public land and their applications to own the land have yet to be approved by the proper government agency. Regardless of the actual condition of the title to the property, the party in peaceable quiet possession shall not be thrown out by a strong hand, violence or terror. Neither is the unlawful withholding of property allowed. Courts will always uphold respect for prior possession. Thus, a party who can prove prior possession can recover such possession even against the owner himself. Whatever may be the character of his possession, if he has in his favor prior possession in time, he has the security that entitles him to remain on the property until a person with a better right lawfully ejects him. To repeat, the only issue that the court has to settle in an ejectment suit is the right to physical possession.58 (Emphases ours.) Based on the foregoing, we find that the RTC-Branch 88 erred in ordering the dismissal of Civil Case No. 8286 even before completion of the proceedings before the MeTC. At the time said case was ordered dismissed by RTCBranch 88, the MeTC had only gone so far as holding a hearing on and eventually granting Muñoz’s prayer for the issuance of a writ of preliminary mandatory injunction. Muñoz alleges in her complaint in Civil Case No. 8286 that she had been in prior possession of the subject property since it was turned-over to her by the sheriff on January 10, 1994, pursuant to the Alias Writ of Execution issued by the RTC-Branch 95 to implement the final judgment in Civil Case No. Q-28580. The factual issue of who was in prior possession of the subject property should be litigated between the parties regardless of whether or not the

final judgment in Civil Case No. Q-28580 extended to the spouses Chan. Hence, the pendency of the latter issue in Civil Case No. Q-28580 before the RTC-Branch 95 did not warrant the dismissal of Civil Case No. 8286 before the MeTC on the ground of litis pendentia. The two cases could proceed independently of one another. Samuel Go Chan and Atty. Yabut aver that the spouses Chan have never lost possession of the subject property since acquiring the same from BPI Family in 1990. This is a worthy defense to Muñoz’s complaint for forcible entry, which Samuel Go Chan and Atty. Yabut should substantiate with evidence in the continuation of the proceedings in Civil Case No. 8286 before the MeTC. In addition, Civil Case No. 8286, a forcible entry case, is governed by the Revised Rule on Summary Procedure, Section 19 whereof provides: SEC. 19. Prohibited pleadings and motions. – The following pleadings, motions, or petitions shall not be allowed in the cases covered by this Rule: xxxx (g) Petition for certiorari, mandamus, or prohibition against any interlocutory order issued by the court. The purpose of the Rule on Summary Procedure is to achieve an expeditious and inexpensive determination of cases without regard to technical rules. Pursuant to this objective, the Rule prohibits petitions for certiorari, like a number of other pleadings, in order to prevent unnecessary delays and to expedite the disposition of cases.59 Interlocutory orders are those that determine incidental matters that do not touch on the merits of the case or put an end to the proceedings.60 An order granting a preliminary injunction, whether mandatory or prohibitory, is interlocutory and unappealable.611avvphil The writ of preliminary mandatory injunction issued by the MeTC in its Order dated May 16, 1994, directing that Muñoz be placed in possession of the subject property during the course of Civil Case No. 8286, is an interlocutory order. Samuel Go Chan and Atty. Yabut assailed the said order before the RTC-Branch 88 via a petition for certiorari, docketed as Civil Case No. Q-94-20632. The RTC-Branch 88 gave due course to said petition, and not only declared the MeTC Order dated May 16, 1994 null and void, but went further by dismissing Civil Case No. 8286. The prohibition in Section 19(g) of the Revised Rule on Summary Procedure is plain enough. Its further exposition is unnecessary verbiage.62 The petition for certiorari of Samuel Go Chan and Atty. Yabut in Civil Case No. Q-9420632 is clearly covered by the said prohibition, thus, it should have been dismissed outright by the RTC-Branch 88. While the circumstances involved in Muñoz’s forcible entry case against Samuel Go Chan and Atty. Yabut are admittedly very peculiar, these are insufficient to except the petition for certiorari of Samuel Go Chan and Atty. Yabut in Civil Case No. Q-94-20632 from the prohibition. The liberality in the interpretation and application of the rules applies only in proper cases and under justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure to insure an orderly and speedy administration of justice.63 Nonetheless, even though the peculiar circumstances extant herein do not justify the dismissal of Civil Case No. 8286, they do require limiting pro hac vice the reliefs the MeTC may accord to Muñoz in the event that she is able to successfully prove forcible entry by Samuel Go Chan and Atty. Yabut into the subject property (i.e., that the sheriff actually turned-over to Muñoz the possession of the subject property on January 10, 1994, and that she was deprived of such possession by Samuel Go Chan and Atty. Yabut on February 2, 1994 by means of force, intimidation, threat, strategy, and stealth). Taking into account our ruling in G.R. No. 146718 – that the final judgment in Civil Case No. Q-28580 does not extend to the spouses Chan, who were not impleaded as parties to the said case – the MeTC is precluded from granting to Muñoz relief, whether preliminary or final, that will give her possession of the subject property. Otherwise, we will be perpetuating the wrongful execution of the final judgment in Civil Case No. Q-28580. Based on the same reason, Muñoz can no longer insist on the reinstatement of the MeTC Order dated May 16, 1994 granting a preliminary mandatory injunction that puts her in possession of the subject property during the course of the trial. Muñoz though may recover damages if she is able to prove wrongful deprivation of possession of the subject property from February 2, 1994 until the finality of this decision in G.R. No. 146718. WHEREFORE, in view of the foregoing, we: (1) GRANT Emerita Muñoz’s petition in G.R. No. 142676. We REVERSE and SET ASIDE the Decision dated July 21, 1995 and Resolution dated March 9, 2000 of the Court of Appeals in CA-G.R. SP No. 35322,

which affirmed the Orders dated June 10, 1994 and August 5, 1994 of the Regional Trial Court, Branch 88 of Quezon City in Civil Case No. Q-94-20632. We DIRECT the Metropolitan Trial Court, Branch 33 of Quezon City to reinstate Emerita Muñoz’s complaint for forcible entry in Civil Case No. 8286 and to resume the proceedings only to determine whether or not Emerita Muñoz was forcibly deprived of possession of the subject property from February 2, 1994 until finality of this judgment, and if so, whether or not she is entitled to an award for damages for deprivation of possession during the aforementioned period of time; and (2) DENY Emerita Munoz’s petition in G.R. No. 146718 for lack of merit, and AFFIRM the Decision dated September 29, 2000 and Resolution dated January 5, 2001 of the Court of Appeals in CA-G.R. SP No. 40019, which in turn, affirmed the Orders dated August 21, 1995 and October 3, 1995 of the Regional Trial Court, Branch 95 of Quezon City in Civil Case No. Q-28580. No pronouncement as to costs. SO ORDERED.

G.R. No. 167246

July 20, 2011

GEORGE LEONARD S. UMALE, Petitioner, vs. CANOGA PARK DEVELOPMENT CORPORATION, Respondent. DECISION BRION, J.: Before us is a petition for review on certiorari1 filed by George Leonard S. Umale (petitioner), challenging the August 20, 2004 Decision2 of the Court of Appeals (CA) in CA-G.R. SP. No. 78836 and its subsequent February 23, 2005 Resolution3 that denied his motion for reconsideration. The CA reversed the Decision4 of the Regional Trial Court (RTC)-Branch 68, Pasig City, that dismissed Canoga Park Development Corporation’s complaint for unlawful detainer on the ground of litis pendentia. ANTECEDENTS On January 4, 2000, the parties entered into a Contract of Lease5 whereby the petitioner agreed to lease, for a period of two (2) years starting from January 16, 2000, an eight hundred sixty (860)-square-meter prime lot located in Ortigas Center, Pasig City owned by the respondent. The respondent acquired the subject lot from Ortigas & Co. Ltd. Partnership through a Deed of Absolute Sale, subject to the following conditions: (1) that no shopping arcades or retail stores, restaurants, etc. shall be allowed to be established on the property, except with the prior written consent from Ortigas & Co. Ltd. Partnership and (2) that the respondent and/or its successors-in-interest shall become member/s of the Ortigas Center Association, Inc. (Association), and shall abide by its rules and regulations.6 On October 10, 2000, before the lease contract expired, the respondent filed an unlawful detainer case against the petitioner before the Metropolitan Trial Court (MTC)-Branch 68, Pasig City, docketed as Civil Case No. 8084.7The respondent used as a ground for ejectment the petitioner’s violation of stipulations in the lease contract regarding the use of the property. Under this contract, the petitioner shall use the leased lot as a parking space for light vehicles and as a site for a small drivers’ canteen,8 and may not utilize the subject premises for other purposes without the respondent’s prior written consent.9 The petitioner, however, constructed restaurant buildings and other commercial establishments on the lot, without first securing the required written consent from the respondent, and the necessary permits from the Association and the Ortigas & Co. Ltd. Partnership. The petitioner also subleased the property to various merchants-tenants in violation of the lease contract. The MTC-Branch 68 decided the ejectment case in favor of the respondent. On appeal, the RTC-Branch 155, Pasig City affirmed in toto the MTC-Branch 68 decision.10 The case, however, was re-raffled to the RTC-Branch 267, Pasig City because the Presiding Judge of the RTC-Branch 155, upon motion, inhibited himself from resolving the petitioner’s motion for reconsideration.11 The RTC-Branch 267 granted the petitioner’s motion, thereby reversing and setting aside the MTC-Branch 68 decision. Accordingly, Civil Case No. 8084 was dismissed for being prematurely filed.12 Thus, the respondent filed a petition for review with the CA on April 10, 2002.13 During the pendency of the petition for review, the respondent filed on May 3, 2002 another case for unlawful detainer against the petitioner before the MTC-Branch 71, Pasig City. The case was docketed as Civil Case No. 9210.14 This time, the respondent used as a ground for ejectment the expiration of the parties’ lease contract. On December 4, 2002, the MTC-Branch 71 rendered a decision15 in favor of the respondent, the dispositive portion of which read, as follows: WHEREFORE, judgment is hereby rendered in favor of the plaintiff [referring to the respondent] and against the defendant and all persons claiming rights under him, as follows: 1. Defendant and all persons claiming rights under him are ordered to peacefully vacate the premises located at Lot 9, Block 5, San Miguel Avenue, Ortigas Center, Pasig City, covered by Transfer Certificate of Title No. 488797 of the Registry of Deeds of Pasig City and to surrender the possession thereof to the plaintiff; 2. Defendant is ordered to pay unto plaintiff the following: a. Damages for the use of the property after the expiration of the lease contract therefor in the amount of One Hundred Fifty Thousand Pesos (P150,000.00) a month, beginning 16 January 2002 until he and all those claiming rights under him have vacated and peacefully turned over the subject premises to the plaintiff; and

b. One Hundred Thousand Pesos (P100,000.00) as and for attorney’s fees together with costs of suit. 3. With respect to the commercial units built by [the] defendant on the subject land, he is hereby ordered to remove the same from the subject land and to restore the subject land in the same condition as it was received unto the plaintiff, at his exclusive account, failing which the same shall be removed by the plaintiff, with expenses therefor chargeable to the defendant. On appeal, the RTC-Branch 68 reversed and set aside the decision of the MTC-Branch 71, and dismissed Civil Case No. 9210 on the ground of litis pendentia.16 The petitioner, however, was still ordered to pay rent in the amount of seventy-one thousand five hundred pesos (P71,500.00) per month beginning January 16, 2002, which amount is the monthly rent stipulated in the lease contract. Aggrieved by the reversal, the respondent filed a Petition for Review under Rule 42 of the Rules of Court with the CA. The respondent argued that there exists no litis pendentia between Civil Case Nos. 8084 and 9210 because the two cases involved different grounds for ejectment, i.e., the first case was filed because of violations of the lease contract, while the second case was filed due to the expiration of the lease contract. The respondent emphasized that the second case was filed based on an event or a cause not yet in existence at the time of the filing of the first case.17 The lease contract expired on January 15, 2002,18 while the first case was filed on October 10, 2000. On August 20, 2004, the CA nullified and set aside the assailed decision of the RTC-Branch 68, and ruled that there was no litis pendentia because the two civil cases have different causes of action. The decision of the MTC- Branch 71 was ordered reinstated. Subsequently, the petitioner’s motion for reconsideration was denied; hence, the filing of the present petition for review on certiorari. In presenting his case before this Court, the petitioner insists that litis pendentia exists between the two ejectment cases filed against him because of their identity with one another and that any judgment on the first case will amount to res judicata on the other. The petitioner argues that the respondent reiterated the ground of violations of the lease contract, with the additional ground of the expiration of the lease contract in the second ejectment case. Also, the petitioner alleges that all of the elements of litis pendentia are present in this case, thus, he prays for the reversal and setting aside of the assailed CA decision and resolution, and for the dismissal of the complaint in Civil Case No. 9210 on the ground of litis pendentia and/or forum shopping. THE COURT’S RULING We disagree with the petitioner and find that there is no litis pendentia. As a ground for the dismissal of a civil action, litis pendentia refers to a situation where two actions are pending between the same parties for the same cause of action, so that one of them becomes unnecessary and vexatious.19 Litis pendentia exists when the following requisites are present: identity of the parties in the two actions; substantial identity in the causes of action and in the reliefs sought by the parties; and the identity between the two actions should be such that any judgment that may be rendered in one case, regardless of which party is successful, would amount to res judicata in the other.20 In the present case, the parties’ bone of contention is whether Civil Case Nos. 8084 and 9210 involve the same cause of action. The petitioner argues that the causes of action are similar, while the respondent argues otherwise. If an identity, or substantial identity, of the causes of action in both cases exist, then the second complaint for unlawful detainer may be dismissed on the ground of litis pendentia. We rule that Civil Case Nos. 8084 and 9210 involve different causes of action. Generally, a suit may only be instituted for a single cause of action.21 If two or more suits are instituted on the basis of the same cause of action, the filing of one or a judgment on the merits in any one is ground for the dismissal of the others.22 Several tests exist to ascertain whether two suits relate to a single or common cause of action, such as whether the same evidence would support and sustain both the first and second causes of action23 (also known as the "same evidence" test),24 or whether the defenses in one case may be used to substantiate the complaint in the other.25 Also fundamental is the test of determining whether the cause of action in the second case existed at the time of the filing of the first complaint.26

Of the three tests cited, the third one is especially applicable to the present case, i.e., whether the cause of action in the second case existed at the time of the filing of the first complaint – and to which we answer in the negative. The facts clearly show that the filing of the first ejectment case was grounded on the petitioner’s violation of stipulations in the lease contract, while the filing of the second case was based on the expiration of the lease contract. At the time the respondent filed the first ejectment complaint on October 10, 2000, the lease contract between the parties was still in effect. The lease was fixed for a period of two (2) years, from January 16, 2000, and in the absence of a renewal agreed upon by the parties, the lease remained effective until January 15, 2002. It was only at the expiration of the lease contract that the cause of action in the second ejectment complaint accrued and made available to the respondent as a ground for ejecting the petitioner. Thus, the cause of action in the second case was not yet in existence at the time of filing of the first ejectment case. In response to the petitioner’s contention that the similarity of Civil Case Nos. 8084 and 9210 rests on the reiteration in the second case of the cause of action in the first case, we rule that the restatement does not result in substantial identity between the two cases. Even if the respondent alleged violations of the lease contract as a ground for ejectment in the second complaint, the main basis for ejecting the petitioner in the second case was the expiration of the lease contract. If not for this subsequent development, the respondent could no longer file a second complaint for unlawful detainer because an ejectment complaint may only be filed within one year after the accrual of the cause of action,27 which, in the second case, was the expiration of the lease contract.1awphi1 Also, contrary to petitioner’s assertion, there can be no conflict between the decisions rendered in Civil Case Nos. 8084 and 9210 because the MTC-Branch 71 decided the latter case on the sole issue of whether the lease contract between the parties had expired. Although alleged by the respondent in its complaint, the MTC-Branch 71 did not rule on the alleged violations of the lease contract committed by the petitioner. We note that the damages awarded by the MTC-Branch 71 in Civil Case No. 9210 were for those incurred after the expiration of the lease contract,28 not for those incurred prior thereto. Similarly, we do not find the respondent guilty of forum shopping in filing Civil Case No. 9210, the second civil case. To determine whether a party violated the rule against forum shopping, the test applied is whether the elements of litis pendentia are present or whether a final judgment in one case will amount to res judicata in another.29 Considering our pronouncement that not all the requisites of litis pendentia are present in this case,the CA did not err in declaring that the respondent committed no forum shopping. Also, a close reading of the Verification and Certification of Non-Forum Shopping30 (attached to the second ejectment complaint) shows that the respondent did disclose that it had filed a former complaint for unlawful detainer against the petitioner. Thus, the respondent cannot be said to have committed a willful and deliberate forum shopping. WHEREFORE, the instant petition is DENIED. The assailed Decision dated August 20, 2004 and Resolution dated February 23, 2005 of the Court of Appeals in CA-G.R. SP. No. 78836 are AFFIRMED. SO ORDERED.

G.R. No. 156185

September 12, 2011

CATALINA B. CHU, THEANLYN B. CHU, THEAN CHING LEE B. CHU, THEAN LEEWN B. CHU, and MARTIN LAWRENCE B. CHU, Petitioners, vs. SPOUSES FERNANDO C. CUNANAN and TRINIDAD N. CUNANAN, BENELDA ESTATE DEVELOPMENT CORPORATION, and SPOUSES AMADO E. CARLOS and GLORIA A. CARLOS, Respondents. DECISION BERSAMIN, J.: If two or more suits are instituted on the basis of the same cause of action, the filing of one or a judgment upon the merits in any one is available as a ground for the dismissal of the others.1 We review the decision promulgated on November 19, 2002,2 whereby the Court of Appeals (CA) dismissed the petitioners’ amended complaint in Civil Case No. 12251 of the Regional Trial Court, Branch 41, in San Fernando City, Pampanga (RTC) for being barred by res judicata. Antecedents On September 30, 1986, Spouses Manuel and Catalina Chu (Chus) executed a deed of sale with assumption of mortgage3 involving their five parcels of land situated in Saguin, San Fernando City, Pampanga, registered under Transfer Certificate of Title (TCT) No. 198470-R, TCT No. 198471-R, TCT No. 198472-R, TCT No. 198473-R, and TCT No. 199556-R, all of the Office of the Registry of Deeds of the Province of Pampanga, in favor of Trinidad N. Cunanan (Cunanan) for the consideration ofP5,161,090.00. They also executed a so-called side agreement, whereby they clarified that Cunanan had paid only P1,000,000.00 to the Chus despite the Chus, as vendors, having acknowledged receiving P5,161,090.00; that the amount of P1,600,000.00 was to be paid directly to Benito Co and to Security Bank and Trust Company (SBTC) in whose favor the five lots had been mortgaged; and that Cunanan would pay the balance of P2,561.90.00 within three months, with a grace period of one month subject to 3%/month interest on any remaining unpaid amount. The parties further stipulated that the ownership of the lots would remain with the Chus as the vendors and would be transferred to Cunanan only upon complete payment of the total consideration and compliance with the terms of the deed of sale with assumption of mortgage.4 Thereafter, the Chus executed a special power of attorney authorizing Cunanan to borrow P5,161,090.00 from any banking institution and to mortgage the five lots as security, and then to deliver the proceeds to the Chus net of the balance of the mortgage obligation and the downpayment.5 Cunanan was able to transfer the title of the five lots to her name without the knowledge of the Chus, and to borrow money with the lots as security without paying the balance of the purchase price to the Chus. She later transferred two of the lots to Spouses Amado and Gloria Carlos (Carloses) on July 29, 1987. As a result, on March 18, 1988, the Chus caused the annotation of an unpaid vendor’s lien on three of the lots. Nonetheless, Cunanan still assigned the remaining three lots to Cool Town Realty on May 25, 1989 despite the annotation.6 In February 1988, the Chus commenced Civil Case No. G-1936 in the RTC to recover the unpaid balance from Spouses Fernando and Trinidad Cunanan (Cunanans). Five years later, on April 19, 1993, the Chus amended the complaint to seek the annulment of the deed of sale with assumption of mortgage and of the TCTs issued pursuant to the deed, and to recover damages. They impleaded Cool Town Realty and Development Corporation (Cool Town Realty), and the Office of the Registry of Deeds of Pampanga as defendants in addition to the Cunanans.7 Considering that the Carloses had meanwhile sold the two lots to Benelda Estate Development Corporation (Benelda Estate) in 1995, the Chus further amended the complaint in Civil Case No. G-1936 to implead Benelda Estate as additional defendant. In due course, Benelda Estate filed its answer with a motion to dismiss, claiming, among others, that the amended complaint stated no cause of action because it had acted in good faith in buying the affected lots, exerting all efforts to verify the authenticity of the titles, and had found no defect in them. After the RTC denied its motion to dismiss, Benelda Estate assailed the denial on certiorari in the CA, which annulled the RTC’s denial for being tainted with grave abuse of discretion and dismissed Civil Case No. G-1936 as against Benelda Estate. On March 1, 2001, the Court upheld the dismissal of Civil Case No. G-1936 in G.R. No. 142313 entitled Chu, Sr. v. Benelda Estate Development Corporation.8 On December 2, 1999, the Chus, the Cunanans, and Cool Town Realty entered into a compromise agreement,9whereby the Cunanans transferred to the Chus their 50% share in "all the parcels of land situated in

Saguin, San Fernando, Pampanga" registered in the name of Cool Town Realty "for and in consideration of the full settlement of their case." The RTC approved the compromise agreement in a partial decision dated January 25, 2000.10 Thereafter, on April 30, 2001, the petitioners herein (i.e., Catalina Chu and her children) brought another suit, Civil Case No. 12251, against the Carloses and Benelda Estate,11 seeking the cancellation of the TCTs of the two lots in the name of Benelda Estate, and the issuance of new TCTs in their favor, plus damages. The petitioners amended their complaint in Civil Case No. 12251 on February 4, 2002 to implead the Cunanans as additional defendants.12 The Cunanans moved to dismiss the amended complaint based on two grounds, namely: (a) bar by prior judgment, and (b) the claim or demand had been paid, waived, and abandoned. Benelda Estate likewise moved to dismiss the amended complaint, citing as grounds: (a) forum shopping; (b) bar by prior judgment, and (c) failure to state a cause of action. On their part, the Carloses raised affirmative defenses in their answer, namely: (a) the failure to state a cause of action; (b) res judicata or bar by prior judgment; and (c) bar by statute of limitations. On April 25, 2002, the RTC denied both motions to dismiss,13 holding that the amended complaint stated a cause of action against all the defendants; that the action was not barred by res judicata because there was no identity of parties and subject matter between Civil Case No.12251 and Civil Case No. G-1936; and that the Cunanans did not establish that the petitioners had waived and abandoned their claim or that their claim had been paid by virtue of the compromise agreement, pointing out that the compromise agreement involved only the three parcels of land registered in the name of Cool Town Realty.14 The Cunanans sought reconsideration, but their motion was denied on May 31, 2002.15 On September 2, 2002, the Cunanans filed a petition for certiorari in the CA (SP-72558), assailing the RTC’s denial of their motion to dismiss and motion for reconsideration.16 On November 19, 2002, the CA promulgated its decision,17 granting the petition for certiorari and nullifying the challenged orders of the RTC. The CA ruled that the compromise agreement had ended the legal controversy between the parties with respect to the cause of action arising from the deed of sale with assumption of mortgage covering all the five parcels of land; that Civil Case No. G-1936 and Civil Case No.12251 involved the violation by the Cunanans of the same legal right under the deed of sale with assumption of mortgage; and that the filing of Civil Case No.12251 contravened the rule against splitting of a cause of action, and rendered Civil Case No.12251 subject of a motion to dismiss based on bar by res judicata. The CA disposed thusly: WHEREFORE, premises considered, the present petition for certiorari is hereby GIVEN DUE COURSE and the writ prayed for, accordingly GRANTED. Consequently, the challenged Orders of the respondent court denying the motions to dismiss are hereby ANNULLED and SET ASIDE and a new one is hereby rendered DISMISSING the Amended Complaint in Civil Case No. 12251. No costs. SO ORDERED.18 Hence, this appeal. Issue Was Civil Case No. 12251 barred by res judicata although the compromise agreement did not expressly include Benelda Estate as a party and although the compromise agreement made no reference to the lots now registered in Benelda Estate’s name? Ruling We deny the petition for review. I The petitioners contend that the compromise agreement did not apply or extend to the Carloses and Benelda Estate; hence, their Civil Case No. 12251 was not barred by res judicata.

We disagree. A compromise agreement is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced.19 It encompasses the objects specifically stated therein, although it may include other objects by necessary implication,20 and is binding on the contracting parties, being expressly acknowledged as a juridical agreement between them.21 It has the effect and authority of res judicata upon the parties.22 In the construction or interpretation of a compromise agreement, the intention of the parties is to be ascertained from the agreement itself, and effect should be given to that intention.23 Thus, the compromise agreement must be read as a whole. The following pertinent portions of the compromise agreement indicate that the parties intended to thereby settleall their claims against each other, to wit: 1. That the defendants SPOUSES TRINIDAD N.CUNANAN and FERNANDO C.CUNANAN for and in consideration of the full settlement of their case in the above-entitled case, hereby TRANSFER, DELIVER, and CONVEY unto the plaintiffs all their rights, interest, benefits, participation, possession and ownership which consists of FIFTY (50%) percent share on all the parcels of land situated in Saguin, San Fernando Pampanga now registered in the name of defendant, COOL TOWN REALTY & DEVELOPMENT CORPORATION, as particularly evidenced by the corresponding Transfer Certificates of Titles xxx xxxx 6. That the plaintiffs and the defendant herein are waiving, abandoning, surrendering, quitclaiming, releasing, relinquishing any and all their respective claims against each other as alleged in the pleadings they respectively filed in connection with this case.24 (bold emphasis supplied) The intent of the parties to settle all their claims against each other is expressed in the phrase any and all their respective claims against each other as alleged in the pleadings they respectively filed in connection with this case, which was broad enough to cover whatever claims the petitioners might assert based on the deed of sale with assumption of mortgage. There is no question that the deed of sale with assumption of mortgage covered all the five lots, to wit: WHEREAS, the VENDORS are willing to sell the above-described properties and the VENDEE is willing to buy the same at FIFTY FIVE (P55.00) PESOS, Philippine Currency, per square meter, or a total consideration of FIVE MILLION ONE HUNDRED SIXTY ONE THOUSAND and NINETY (P5,161,090.00) PESOS, Philippine Currency.25 To limit the compromise agreement only to the three lots mentioned therein would contravene the avowed objective of Civil Case No. G-1936 to enforce or to rescind the entire deed of sale with assumption of mortgage. Such interpretation is akin to saying that the Cunanans separately sold the five lots, which is not the truth. For one, Civil Case No. G-1936 did not demand separate amounts for each of the purchased lots. Also, the compromise agreement did not state that the value being thereby transferred to the petitioners by the Cunanans corresponded only to that of the three lots. Apparently, the petitioners were guilty of splitting their single cause of action to enforce or rescind the deed of sale with assumption of mortgage. Splitting a single cause of action is the act of dividing a single or indivisible cause of action into several parts or claims and instituting two or more actions upon them.26 A single cause of action or entire claim or demand cannot be split up or divided in order to be made the subject of two or more different actions.27 Thus, Section 4, Rule 2 of the Rules of Court expressly prohibits splitting of a single cause of action, viz: Section 4. Splitting a single cause of action; effect of. — If two or more suits are instituted on the basis of the same cause of action, the filing of one or a judgment upon the merits in any one is available as a ground for the dismissal of the others. (4a)1avvphi1 The petitioners were not at liberty to split their demand to enforce or rescind the deed of sale with assumption of mortgage and to prosecute piecemeal or present only a portion of the grounds upon which a special relief was sought under the deed of sale with assumption of mortgage, and then to leave the rest to be presented in another suit; otherwise, there would be no end to litigation.28 Their splitting violated the policy against multiplicity of suits, whose primary objective was to avoid unduly burdening the dockets of the courts. Their contravention of the policy merited the dismissal of Civil Case No. 12251 on the ground of bar by res judicata.

Res judicata means a matter adjudged, a thing judicially acted upon or decided; a thing or matter settled by judgment.29 The doctrine of res judicata is an old axiom of law, dictated by wisdom and sanctified by age, and founded on the broad principle that it is to the interest of the public that there should be an end to litigation by the same parties over a subject once fully and fairly adjudicated. It has been appropriately said that the doctrine is a rule pervading every well-regulated system of jurisprudence, and is put upon two grounds embodied in various maxims of the common law: the one, public policy and necessity, which makes it to the interest of the State that there should be an end to litigation –interest reipublicae ut sit finis litium; the other, the hardship on the individual that he should be vexed twice for one and the same cause – nemo debet bis vexari pro una et eadem causa. A contrary doctrine would subject the public peace and quiet to the will and neglect of individuals and prefer the gratification of the litigious disposition on the part of suitors to the preservation of the public tranquillity and happiness.30 Under the doctrine of res judicata, a final judgment or decree on the merits rendered by a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits and on all points and matters determined in the previous suit.31 The foundation principle upon which the doctrine rests is that the parties ought not to be permitted to litigate the same issue more than once; that when a right or fact has been judicially tried and determined by a court of competent jurisdiction, so long as it remains unreversed, should be conclusive upon the parties and those in privity with them in law or estate.32 Yet, in order that res judicata may bar the institution of a subsequent action, the following requisites must concur:– (a) the former judgment must be final; (b) it must have been rendered by a court having jurisdiction of the subject matter and the parties; (c) it must be a judgment on the merits; and (d) there must be between the first and second actions (i) identity of parties, (ii) identity of the subject matter, and (iii) identity of cause of action.33 The first requisite was attendant. Civil Case No. G-1936 was already terminated under the compromise agreement, for the judgment, being upon a compromise, was immediately final and unappealable. As to the second requisite, the RTC had jurisdiction over the cause of action in Civil Case No. G-1936 for the enforcement or rescission of the deed of sale with assumption of mortgage, which was an action whose subject matter was not capable of pecuniary estimation. That the compromise agreement explicitly settled the entirety of Civil Case No. G-1936 by resolving all the claims of the parties against each other indicated that the third requisite was also satisfied.34 But was there an identity of parties, of subject matter, and of causes of action between Civil Case No.G-1936 and Civil Case No. 12251? There is identity of parties when the parties in both actions are the same, or there is privity between them, or they are successors-in-interest by title subsequent to the commencement of the action litigating for the same thing and under the same title and in the same capacity.35 The requirement of the identity of parties was fully met, because the Chus, on the one hand, and the Cunanans, on the other hand, were the parties in both cases along with their respective privies. The fact that the Carloses and Benelda Estate, defendants in Civil Case No. 12251, were not parties in the compromise agreement was inconsequential, for they were also the privies of the Cunanans as transferees and successors-in-interest. It is settled that the absolute identity of parties was not a condition sine qua non for res judicata to apply, because a shared identity of interest sufficed.36 Mere substantial identity of parties, or even community of interests between parties in the prior and subsequent cases, even if the latter were not impleaded in the first case, was sufficient.37 As to identity of the subject matter, both actions dealt with the properties involved in the deed of sale with assumption of mortgage. Identity of the causes of action was also met, because Case No. G-1936 and Civil Case No. 12251 were rooted in one and the same cause of action – the failure of Cunanan to pay in full the purchase price of the five lots subject of the deed of sale with assumption of mortgage. In other words, Civil Case No. 12251 reprised Civil Case No. G-1936, the only difference between them being that the petitioners alleged in the former that Benelda Estate was "not also a purchaser for value and in good faith."38 In fine, the rights and obligations of the parties vis-à-vis the five lots were all defined and governed by the deed of sale with assumption of mortgage, the only contract between them. That contract was single and indivisible, as far as they were concerned. Consequently, the Chus could not properly proceed against the respondents in Civil Case No. 12251, despite the silence of the compromise agreement as to the Carloses and Benelda Estate, because there can only be one action where the contract is entire, and the breach total, and the petitioners must therein recover all their claims and damages.39 The Chus could not be permitted to split up a single cause of action and make that single cause of action the basis of several suits.40 WHEREFORE, we deny the petition for review on certiorari, and affirm the decision promulgated in CA-G.R. SP No. 72558. The petitioners shall pay the costs of suit. SO ORDERED.

G.R. No. 182902

October 5, 2011

VIRRA MALL TENANTS ASSOCIATION, INC., Petitioner, vs. VIRRA MALL GREENHILLS ASSOCIATION, INC., LOLITA C. REGALADO, ANNIE L. TRIAS, WILSON GO, PABLO OCHOA, JR., BILL OBAG and GEORGE V. WINTERNITZ, Respondents. DECISION SERENO, J.: Before us is a Petition for Review of the 21 May 2007 Decision1 and 14 May 2008 Resolution2 of the Court of Appeals (CA) dismissing the Complaint-in-Intervention and denying the Motion for Reconsideration both filed by petitioner. Ortigas & Company, Limited Partnership (Ortigas) is the owner of the Greenhills Shopping Center (GSC). On 5 November 1975, Ortigas and Virra Realty Development Corporation (Virra Realty) entered into a Contract of Lease (First Contract of Lease) over a portion of the GSC. The 25-year lease was to expire on 15 November 2000. Pursuant thereto, Virra Realty constructed a commercial building, the Virra Mall Shopping Center (Virra Mall), which was divided into either units for lease or units whose leasehold rights were sold.3 Thereafter, Virra Realty organized respondent Virra Mall Greenhills Association (VMGA), an association of all the tenants and leasehold right holders, who managed and operated Virra Mall. In the First Contract of Lease, VMGA assumed and was subrogated to all the rights, obligations and liabilities of Virra Realty.4 On 22 November 2000, VMGA, through its president, William Uy (Uy), requested from Ortigas the renewal of the First Contract of Lease.5 VGMA secured two insurance policies to protect Virra Mall against damage by fire and other causes. However, these insurance coverages expired simultaneously with the First Contract of Lease on 15 November 2000.6Subsequently, on 13 March 2001, VGMA acquired new sets of insurance policies effective 10 January 2001 to 31 December 2001.7 On 5 May 2001, Virra Mall was gutted by fire, requiring substantial repair and restoration. VMGA thus filed an insurance claim through the insurance broker, respondent Winternitz Associates Insurance Company, Inc. (Winternitz). Thereafter, the proceeds of the insurance were released to VMGA.8 On 3 September 2001, Ortigas entered into a Contract of Lease (Second Contract of Lease) with Uy effective 2 November 2001 to 31 December 2004. On 11 September 2001, the latter assigned and transferred to petitioner Virra Mall Tenants Association (VMTA) all his rights and interests over the property.9 On 7 February 2003, Ortigas filed a Complaint for Specific Performance with Damages and Prayer for Issuance of a Writ of Preliminary Attachment against several defendants, including herein respondents. It accused them of fraud, misappropriation and conversion of substantial portions of the insurance proceeds for their own personal use unrelated to the repair and restoration of Virra Mall. To secure the subject insurance proceeds, Ortigas also sought the issuance of a writ of preliminary attachment against herein respondents. The case was docketed as Civil Case No. 69312, and raffled to the Regional Trial Court, National Capital Judicial Region, Pasig City, Branch 67 (RTC Br. 67), which issued a Writ of Preliminary Attachment on 12 February 2003.10 On 17 February 2003, VMTA filed a Complaint-in-Intervention.11 It claimed that as the assignee or transferee of the rights and obligations of Uy in the Second Contract of Lease, and upon the order of Ortigas, it had engaged the services of various contractors. These contractors undertook the restoration of the damaged area of Virra Mall amounting to P18,902,497.75. Thus, VMTA sought the reimbursement of the expenses it had incurred in relation thereto.12 RTC Br. 67 admitted the Complaint-in-Intervention in its Order dated 8 January 2004.13 On 5 March 2004, herein respondents moved for the dismissal of the Complaint-in-Intervention on the ground that it stated no cause of action.14 In its Omnibus Order dated 2 August 2005, RTC Br. 67 denied this Motion to Dismiss.15 The trial court based its Decision on the grounds that (a) by filing the said motion, herein respondents hypothetically admitted the truth of the facts alleged in the Complaint-in-Intervention, and (b) the test of sufficiency of the facts alleged was whether or not the court could render a valid judgment as prayed for, accepting as true the exclusive facts set forth in the Complaint.16 Thus, RTC Br. 67 held that if there are doubts as to the truth of the facts averred, then the court must not dismiss the Complaint, but instead require an answer and proceed to trial on the merits.17

On a Rule 65 Petition for Certiorari alleging grave abuse of discretion, the CA reversed the ruling of RTC Br. 67 and dismissed the Complaint-in-Intervention on the following grounds: (a) VMTA failed to state a cause of action; (b) VMTA has no legal interest in the matter in litigation; and (c) the Complaint-in-Intervention would cause a delay in the trial of the action, make the issues more complicated, prejudice the adjudication of the rights of the parties, stretch the issues, and increase the breadth of the remedies and relief.18 The relevant portions of the Decision read: Section 2, Rule 2 of the Rules of Court defines a cause of action as the act or omission by which a party violates the right of another. Its essential elements are as follows: 1. A right in favor of the plaintiff by whatever means and under whatever law it arises or is created; 2. An obligation on the part of the named defendant to respect or not to violate such right; and 3. Act or omission on the part of such defendant in violation of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of damages or other appropriate relief. It is, thus, only upon the occurrence of the last element that a cause of action arises, giving the plaintiff the right to maintain an action in court for recovery of damages or other appropriate relief. (Swagman Hotels and Travel, Inc. v. Court of Appeals, G.R. No. 161135, April 8, 2005, 455 SCRA 175, 183). If these elements are absent, the complaint is dismissible on the ground of failure to state a cause of action. What VMTA actually seeks in filing a complaint-in-intervention is the reimbursement of the cost of the restoration and rehabilitation of the burned area of the Virra Mall building. And VMTA believes that such reimbursement must be made from the fire insurance proceeds released to VMGA. Such position cannot be sustained. ……… Firstly, We find that the complaint-in-intervention fails to state a cause of action against the petitioners. The material averments of the complaint-in-intervention belie any correlative obligation on the part of herein petitioners vis-à-vis the legal right of VMTA for reimbursement. The petitioners are not the proper parties against whom the subject action for reimbursement must be directed to. On the contrary, since "x x x plaintiff Ortigas, as owner of the building, has ordered intervenor VMTA to undertake with dispatch the restoration and rehabilitation of the burned area or section of the Virra Mall buiding x x x" (par. 7 of Complaint-in-Intervention), VMTA’s recourse would be to file and direct its claim against ORTIGAS who has the obligation to pay for the same. The complaintin-intervention is not the proper action for VMTA to enforce its right of reimbursement. At any rate, VMTA’s rights, if any, can be ventilated and protected in a separate action. The complaint-in-intervention is therefore dismissible for failure to state a cause of action against the petitioners. Secondly, VMTA has no legal interest in the matter in litigation. It is not privy to the Contract of Lease between ORTIGAS and VMGA. It came into the picture only after the expiration of the said contract. Finally, Section 1, Rule 19 of the 1997 Rules of Civil Procedure provides: Section 1. 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 the property in the custody of the court or of an offices 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 intervenor’s rights may be fully protected in a separate proceeding. As a general guide in determining whether a party may intervene, 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 intervenor’s rights may be fully protected in a separate proceeding (Sec. 2(b), Rule 12; Balane, et al. vs. De Guzman, et al., 20 SCRA 177 [1967]). The complaint below is primarily on the issue of specific performance. The relief being sought by the VMTA in its complaint-in-intervention is the reimbursement of expenses incurred by it for the repair/restoration of the Virra Mall Building. VMTA’s cause of action has a standpoint which is unique to itself. New, unrelated, and conflicting issues would be raised which do not concern the petitioners herein, or VMTA as intervenor. Inevitably, the allowance of the intervention will not only cause delay in the trial of the action, make the issues even more complicated, and stretch the issues in the action as well as amplify the breadth of the remedies and relief.

Thereafter, VMTA filed a Motion for Reconsideration, which the CA denied in the assailed Resolution dated 14 May 2008.19 Hence, the instant Petition raising the following issues: I. With due respect, the Honorable Court of Appeals committed grave error in declaring that the complaint in intervention failed to state a cause of action against private respondents when it declared that the complaint in intervention belies any correlative obligation on the part of private respondents vis-à-vis the legal right of petitioner for reimbursement. II. With due respect, the Honorable Court of Appeals committed grave error in holding that private respondents are not the proper parties against whom the subject action for reimbursement must be directed to but recourse would be for petitioner VMTA to file and direct its claim against OCLP who has the obligation to pay petitioner VMTA since it was OCLP who has (sic) ordered to undertake the restoration and rehabilitation of the burned area or section of the Virra Mall Building. III. With due respect, the Honorable Court of Appeals similarly committed grave error when it ruled that the complaint-in-intervention is not the proper action to enforce its right in the controversy between OCLP and private respondents since the proper remedy is for petitioner VMTA to ventilate and protect its right in a separate action.20 The determination of whether the CA committed reversible error in dismissing the Complaint-in-Intervention filed by VMTA boils down to the sole issue of the propriety of this remedy in enforcing the latter’s rights. According to VMTA, it has a legal interest in Civil Case No. 69312, which is rooted in the alleged failure of VMGA to turn over the insurance proceeds for the restoration and rehabilitation of Virra Mall, in breach of the latter’s contractual obligation to Ortigas. However, the CA ruled against this position taken by VMTA not only because, in the CA’s view, VMTA’s Complaint-in-Intervention failed to state a cause of action, but also because it has no legal interest in the matter in litigation. We rule in favor of VMTA. Section 1, Rule 19 of the Rules of Court provides: 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 intervenor’s rights may be fully protected in a separate proceeding. In Executive Secretary v. Northeast Freight,21 this Court explained intervention in this wise: Intervention is not a matter of absolute right but may be permitted by the court when the applicant shows facts which satisfy the requirements of the statute authorizing intervention. Under our Rules of Court, what qualifies a person to intervene is his possession of a legal interest in the matter in litigation or in the success of either of the parties, or an interest against both; or when he is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or an officer thereof. As regards the legal interest as qualifying factor, this Court has ruled that such interest must be of a direct and immediate character so that the intervenor will either gain or lose by the direct legal operation of the judgment. The interest must be actual and material, a concern which is more than mere curiosity, or academic or sentimental desire; it must not be indirect and contingent, indirect and remote, conjectural, consequential or collateral. However, notwithstanding the presence of a legal interest, permission to intervene is subject to the sound discretion of the court, the exercise of which is limited by considering "whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties and whether or not the intervenor’s rights may be fully protected in a separate proceeding."22 (Emphasis supplied.) Applying the foregoing points to the case at bar, VMTA may be allowed to intervene, and the ruling of RTC Br. 67 allowing intervention was wrongly reversed by the CA because such a ruling does not constitute grave abuse of discretion.

VMTA has a cause of action A cause of action is defined as "the act or omission by which a party violates a right of another."23 In Shell Philippines v. Jalos,24 this Court expounded on what constitutes a cause of action, to wit: A cause of action is the wrongful act or omission committed by the defendant in violation of the primary rights of the plaintiff. Its elements consist of: (1) a right existing in favor of the plaintiff, (2) a duty on the part of the defendant to respect the plaintiff’s right, and (3) an act or omission of the defendant in violation of such right. To sustain a motion to dismiss for lack of cause of action, however, the complaint must show that the claim for relief does not exist and not only that the claim was defectively stated or is ambiguous, indefinite or uncertain.25 In the case at bar, VMTA, in its Complaint-in-Intervention, explicitly laid down its cause of action as follows:26 Pursuant to and by virtue of such claim, defendant VMGA and defendant VMGA Board Members, impleaded as party defendants herein, received, at various times, from their insurance broker, and it is in their custody, the insurance proceeds arising out of such claim which, as of January 8, 2003, aggregated P48.6-Million. Having failed to deliver the said proceeds to the real beneficiary inspite of due notice and demand, plaintiff Ortigas herein instituted the present action against all the defendants to compel delivery of the said insurance proceeds which are being unlawfully and illegally withheld by all the defendant VMGA and defendant VMGA Board Members inspite of written demands made therefor. Worse, a portion of said insurance proceeds, aggregating P8.6-Million had already been disbursed and misappropriated in breach of trust and fiduciary duty. (Emphasis supplied.) It is clear from the foregoing allegations that VMTA’s purported right is rooted in its claim that it is the real beneficiary of the insurance proceeds, on the grounds that it had (a) facilitated the repair and restoration of the insured infrastructure upon the orders of Ortigas, and (b) advanced the costs thereof. Corollarily, respondents have a duty to reimburse it for its expenses since the insurance proceeds had already been issued in favor of respondent VMGA, even if the latter was not rightfully entitled thereto. Finally, the imputed act or omission on the part of respondents that supposedly violated the right of VMTA was respondent VMGA’s refusal, despite demand, to release the insurance proceeds it received to reimburse the former for the expenses it had incurred in relation to the restoration and repair of Virra Mall. Clearly, then, VMTA was able to establish its cause of action. VMTA has a legal interest in the matter in litigation VMTA was also able to show its legal interest in the matter in litigation — VMGA’s insurance proceeds — considering that it had already advanced the substantial amount of P18,902,497.75 for the repair and restoration of Virra Mall. That VMTA seeks reimbursement from Ortigas is precisely the reason why intervention is proper. The main issue in Civil Case No. 69312 is whether Ortigas has a contractual right to the insurance proceeds received by VMGA. Thus, the recoupment by VMTA of the expenses it incurred in the repair of Virra Mall depends on the success of either party in the main case. VMTA therefore has an undeniable stake in Civil Case No. 69312 that would warrant its intervention therein. Further, the issuance to Ortigas of a Writ of Preliminary Attachment against VMGA puts VMTA in a situation in which it will be adversely affected by a distribution or other disposition of the property in the custody of the court, pursuant to the said writ.lawphil The prospect of any distribution or disposition of the attached property will likewise affect VMTA’s claim for reimbursement. VMTA’s intervention in Civil Case No. 69312 will avoid a multiplicity of suits Lastly, allowing VMTA to intervene in Civil Case No. 69312 finds support in Heirs of Medrano v. De Vera,27 to wit: The purpose of intervention is to enable a stranger to an action to become a party in order for him to protect his interest and for the court to settle all conflicting claims. Intervention is allowed to avoid multiplicity of suits more than on due process considerations.28 Thus, although the CA was correct in stating that VMTA could always file a separate case against Ortigas, allowing VMTA to intervene will facilitate the orderly administration of justice and avoid a multiplicity of suits. We do not see how delay will be inordinately occasioned by the intervention of VMTA, contrary to the fear of the CA. WHEREFORE, the instant petition is GRANTED. The Decision dated 21 May 2007 and Resolution dated 14 May 2008 of the CA are hereby REVERSED and SET ASIDE insofar as the dismissal of the Complaint-inIntervention filed by VMTA is concerned. The Complaint-in-Intervention of VMTA in Civil Case No. 69312 is allowed to proceed before RTC Br. 67. SO ORDERED.

G.R. No. 175799

November 28, 2011

NM ROTHSCHILD & SONS (AUSTRALIA) LIMITED, Petitioner, vs. LEPANTO CONSOLIDATED MINING COMPANY, Respondent. DECISION LEONARDO-DE CASTRO, J.: This is a Petition for Review on Certiorari assailing the Decision1 of the Court of Appeals dated September 8, 2006 in CA-G.R. SP No. 94382 and its Resolution2 dated December 12, 2006, denying the Motion for Reconsideration. On August 30, 2005, respondent Lepanto Consolidated Mining Company filed with the Regional Trial Court (RTC) of Makati City a Complaint3 against petitioner NM Rothschild & Sons (Australia) Limited praying for a judgment declaring the loan and hedging contracts between the parties void for being contrary to Article 20184 of the Civil Code of the Philippines and for damages. The Complaint was docketed as Civil Case No. 05-782, and was raffled to Branch 150. Upon respondent’s (plaintiff’s) motion, the trial court authorized respondent’s counsel to personally bring the summons and Complaint to the Philippine Consulate General in Sydney, Australia for the latter office to effect service of summons on petitioner (defendant). On October 20, 2005, petitioner filed a Special Appearance With Motion to Dismiss5 praying for the dismissal of the Complaint on the following grounds: (a) the court has not acquired jurisdiction over the person of petitioner due to the defective and improper service of summons; (b) the Complaint failed to state a cause of action and respondent does not have any against petitioner; (c) the action is barred by estoppel; and (d) respondent did not come to court with clean hands. On November 29, 2005, petitioner filed two Motions: (1) a Motion for Leave to take the deposition of Mr. Paul Murray (Director, Risk Management of petitioner) before the Philippine Consul General; and (2) a Motion for Leave to Serve Interrogatories on respondent. On December 9, 2005, the trial court issued an Order6 denying the Motion to Dismiss. According to the trial court, there was a proper service of summons through the Department of Foreign Affairs (DFA) on account of the fact that the defendant has neither applied for a license to do business in the Philippines, nor filed with the Securities and Exchange Commission (SEC) a Written Power of Attorney designating some person on whom summons and other legal processes maybe served. The trial court also held that the Complaint sufficiently stated a cause of action. The other allegations in the Motion to Dismiss were brushed aside as matters of defense which can best be ventilated during the trial. On December 27, 2005, petitioner filed a Motion for Reconsideration.7 On March 6, 2006, the trial court issued an Order denying the December 27, 2005 Motion for Reconsideration and disallowed the twin Motions for Leave to take deposition and serve written interrogatories.8 On April 3, 2006, petitioner sought redress via a Petition for Certiorari9 with the Court of Appeals, alleging that the trial court committed grave abuse of discretion in denying its Motion to Dismiss. The Petition was docketed as CAG.R. SP No. 94382. On September 8, 2006, the Court of Appeals rendered the assailed Decision dismissing the Petition for Certiorari. The Court of Appeals ruled that since the denial of a Motion to Dismiss is an interlocutory order, it cannot be the subject of a Petition for Certiorari, and may only be reviewed in the ordinary course of law by an appeal from the judgment after trial. On December 12, 2006, the Court of Appeals rendered the assailed Resolution denying the petitioner’s Motion for Reconsideration. Meanwhile, on December 28, 2006, the trial court issued an Order directing respondent to answer some of the questions in petitioner’s Interrogatories to Plaintiff dated September 7, 2006. Notwithstanding the foregoing, petitioner filed the present petition assailing the September 8, 2006 Decision and the December 12, 2006 Resolution of the Court of Appeals. Arguing against the ruling of the appellate court, petitioner insists that (a) an order denying a motion to dismiss may be the proper subject of a petition for certiorari; and (b) the trial court committed grave abuse of discretion in not finding that it had not validly acquired jurisdiction over petitioner and that the plaintiff had no cause of action.

Respondent, on the other hand, posits that: (a) the present Petition should be dismissed for not being filed by a real party in interest and for lack of a proper verification and certificate of non-forum shopping; (b) the Court of Appeals correctly ruled that certiorari was not the proper remedy; and (c) the trial court correctly denied petitioner’s motion to dismiss. Our discussion of the issues raised by the parties follows: Whether petitioner is a real party in interest Respondent argues that the present Petition should be dismissed on the ground that petitioner no longer existed as a corporation at the time said Petition was filed on February 1, 2007. Respondent points out that as of the date of the filing of the Petition, there is no such corporation that goes by the name NM Rothschild and Sons (Australia) Limited. Thus, according to respondent, the present Petition was not filed by a real party in interest, citing our ruling in Philips Export B.V. v. Court of Appeals,10 wherein we held: A name is peculiarly important as necessary to the very existence of a corporation (American Steel Foundries vs. Robertson, 269 US 372, 70 L ed 317, 46 S Ct 160; Lauman vs. Lebanon Valley R. Co., 30 Pa 42; First National Bank vs. Huntington Distilling Co., 40 W Va 530, 23 SE 792). Its name is one of its attributes, an element of its existence, and essential to its identity (6 Fletcher [Perm Ed], pp. 3-4). The general rule as to corporations is that each corporation must have a name by which it is to sue and be sued and do all legal acts. The name of a corporation in this respect designates the corporation in the same manner as the name of an individual designates the person (Cincinnati Cooperage Co. vs. Bate, 96 Ky 356, 26 SW 538; Newport Mechanics Mfg. Co. vs. Starbird, 10 NH 123); and the right to use its corporate name is as much a part of the corporate franchise as any other privilege granted (Federal Secur. Co. vs. Federal Secur. Corp., 129 Or 375, 276 P 1100, 66 ALR 934; Paulino vs. Portuguese Beneficial Association, 18 RI 165, 26 A 36).11 In its Memorandum12 before this Court, petitioner started to refer to itself as Investec Australia Limited (formerly "NM Rothschild & Sons [Australia] Limited") and captioned said Memorandum accordingly. Petitioner claims that NM Rothschild and Sons (Australia) Limited still exists as a corporation under the laws of Australia under said new name. It presented before us documents evidencing the process in the Australian Securities & Investment Commission on the change of petitioner’s company name from NM Rothschild and Sons (Australia) Limited to Investec Australia Limited.13 We find the submissions of petitioner on the change of its corporate name satisfactory and resolve not to dismiss the present Petition for Review on the ground of not being prosecuted under the name of the real party in interest. While we stand by our pronouncement in Philips Export on the importance of the corporate name to the very existence of corporations and the significance thereof in the corporation’s right to sue, we shall not go so far as to dismiss a case filed by the proper party using its former name when adequate identification is presented. A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit.14 There is no doubt in our minds that the party who filed the present Petition, having presented sufficient evidence of its identity and being represented by the same counsel as that of the defendant in the case sought to be dismissed, is the entity that will be benefited if this Court grants the dismissal prayed for. Since the main objection of respondent to the verification and certification against forum shopping likewise depends on the supposed inexistence of the corporation named therein, we give no credit to said objection in light of the foregoing discussion. Propriety of the Resort to a Petition for Certiorari with the Court of Appeals We have held time and again that an order denying a Motion to Dismiss is an interlocutory order which neither terminates nor finally disposes of a case as it leaves something to be done by the court before the case is finally decided on the merits. The general rule, therefore, is that the denial of a Motion to Dismiss cannot be questioned in a special civil action for Certiorari which is a remedy designed to correct errors of jurisdiction and not errors of judgment.15 However, we have likewise held that when the denial of the Motion to Dismiss is tainted with grave abuse of discretion, the grant of the extraordinary remedy of Certiorari may be justified. By "grave abuse of discretion" is meant: [S]uch capricious and whimsical exercise of judgment that 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 all in contemplation of law.16

The resolution of the present Petition therefore entails an inquiry into whether the Court of Appeals correctly ruled that the trial court did not commit grave abuse of discretion in its denial of petitioner’s Motion to Dismiss. A mere error in judgment on the part of the trial court would undeniably be inadequate for us to reverse the disposition by the Court of Appeals. Issues more properly ventilated during the trial of the case As previously stated, petitioner seeks the dismissal of Civil Case No. 05-782 on the following grounds: (a) lack of jurisdiction over the person of petitioner due to the defective and improper service of summons; (b) failure of the Complaint to state a cause of action and absence of a cause of action; (c) the action is barred by estoppel; and (d) respondent did not come to court with clean hands. As correctly ruled by both the trial court and the Court of Appeals, the alleged absence of a cause of action (as opposed to the failure to state a cause of action), the alleged estoppel on the part of petitioner, and the argument that respondent is in pari delicto in the execution of the challenged contracts, are not grounds in a Motion to Dismiss as enumerated in Section 1, Rule 1617 of the Rules of Court. Rather, such defenses raise evidentiary issues closely related to the validity and/or existence of respondent’s alleged cause of action and should therefore be threshed out during the trial. As regards the allegation of failure to state a cause of action, while the same is usually available as a ground in a Motion to Dismiss, said ground cannot be ruled upon in the present Petition without going into the very merits of the main case. It is basic that "[a] cause of action is the act or omission by which a party violates a right of another." 18 Its elements are the following: (1) a right existing in favor of the plaintiff, (2) a duty on the part of the defendant to respect the plaintiff's right, and (3) an act or omission of the defendant in violation of such right.19 We have held that to sustain a Motion to Dismiss for lack of cause of action, the complaint must show that the claim for relief does not exist and not only that the claim was defectively stated or is ambiguous, indefinite or uncertain.20 The trial court held that the Complaint in the case at bar contains all the three elements of a cause of action, i.e., it alleges that: (1) plaintiff has the right to ask for the declaration of nullity of the Hedging Contracts for being null and void and contrary to Article 2018 of the Civil Code of the Philippines; (2) defendant has the corresponding obligation not to enforce the Hedging Contracts because they are in the nature of wagering or gambling agreements and therefore the transactions implementing those contracts are null and void under Philippine laws; and (3) defendant ignored the advice and intends to enforce the Hedging Contracts by demanding financial payments due therefrom.21 The rule is that in a Motion to Dismiss, a defendant hypothetically admits the truth of the material allegations of the ultimate facts contained in the plaintiff's complaint.22 However, this principle of hypothetical admission admits of exceptions. Thus, in Tan v. Court of Appeals, 23 we held: The flaw in this conclusion is that, while conveniently echoing the general rule that averments in the complaint are deemed hypothetically admitted upon the filing of a motion to dismiss grounded on the failure to state a cause of action, it did not take into account the equally established limitations to such rule, i.e., that a motion to dismiss does not admit the truth of mere epithets of fraud; nor allegations of legal conclusions; nor an erroneous statement of law; nor mere inferences or conclusions from facts not stated; nor mere conclusions of law; nor allegations of fact the falsity of which is subject to judicial notice; nor matters of evidence; nor surplusage and irrelevant matter; nor scandalous matter inserted merely to insult the opposing party; nor to legally impossible facts; nor to facts which appear unfounded by a record incorporated in the pleading, or by a document referred to; and, nor to general averments contradicted by more specific averments. A more judicious resolution of a motion to dismiss, therefore, necessitates that the court be not restricted to the consideration of the facts alleged in the complaint and inferences fairly deducible therefrom. Courts may consider other facts within the range of judicial notice as well as relevant laws and jurisprudence which the courts are bound to take into account, and they are also fairly entitled to examine records/documents duly incorporated into the complaint by the pleader himself in ruling on the demurrer to the complaint.24 (Emphases supplied.) In the case at bar, respondent asserts in the Complaint that the Hedging Contracts are void for being contrary to Article 201825 of the Civil Code. Respondent claims that under the Hedging Contracts, despite the express stipulation for deliveries of gold, the intention of the parties was allegedly merely to compel each other to pay the difference between the value of the gold at the forward price stated in the contract and its market price at the supposed time of delivery.

Whether such an agreement is void is a mere allegation of a conclusion of law, which therefore cannot be hypothetically admitted. Quite properly, the relevant portions of the contracts sought to be nullified, as well as a copy of the contract itself, are incorporated in the Complaint. The determination of whether or not the Complaint stated a cause of action would therefore involve an inquiry into whether or not the assailed contracts are void under Philippine laws. This is, precisely, the very issue to be determined in Civil Case No. 05-782. Indeed, petitioner’s defense against the charge of nullity of the Hedging Contracts is the purported intent of the parties that actual deliveries of gold be made pursuant thereto. Such a defense requires the presentation of evidence on the merits of the case. An issue that "requires the contravention of the allegations of the complaint, as well as the full ventilation, in effect, of the main merits of the case, should not be within the province of a mere Motion to Dismiss."26 The trial court, therefore, correctly denied the Motion to Dismiss on this ground. It is also settled in jurisprudence that allegations of estoppel and bad faith require proof. Thus, in Parañaque Kings Enterprises, Inc. v. Court of Appeals,27 we ruled: Having come to the conclusion that the complaint states a valid cause of action for breach of the right of first refusal and that the trial court should thus not have dismissed the complaint, we find no more need to pass upon the question of whether the complaint states a cause of action for damages or whether the complaint is barred by estoppel or laches. As these matters require presentation and/or determination of facts, they can be best resolved after trial on the merits.28 (Emphases supplied.) On the proposition in the Motion to Dismiss that respondent has come to court with unclean hands, suffice it to state that the determination of whether one acted in bad faith and whether damages may be awarded is evidentiary in nature. Thus, we have previously held that "[a]s a matter of defense, it can be best passed upon after a full-blown trial on the merits."29 Jurisdiction over the person of petitioner Petitioner alleges that the RTC has not acquired jurisdiction over its person on account of the improper service of summons. Summons was served on petitioner through the DFA, with respondent’s counsel personally bringing the summons and Complaint to the Philippine Consulate General in Sydney, Australia. In the pleadings filed by the parties before this Court, the parties entered into a lengthy debate as to whether or not petitioner is doing business in the Philippines. However, such discussion is completely irrelevant in the case at bar, for two reasons. Firstly, since the Complaint was filed on August 30, 2005, the provisions of the 1997 Rules of Civil Procedure govern the service of summons. Section 12, Rule 14 of said rules provides: Sec. 12. Service upon foreign private juridical entity. – When the defendant is a foreign private juridical entitywhich has transacted business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose, or, if there be no such agent, on the government official designated by law to that effect, or on any of its officers or agents within the Philippines. (Emphasis supplied.) This is a significant amendment of the former Section 14 of said rule which previously provided: Sec. 14. Service upon private foreign corporations. — If the defendant is a foreign corporation, or a nonresident joint stock company or association, doing business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose, or if there be no such agent, on the government official designated by law to that effect, or on any of its officers or agents within the Philippines. (Emphasis supplied.) The coverage of the present rule is thus broader.30 Secondly, the service of summons to petitioner through the DFA by the conveyance of the summons to the Philippine Consulate General in Sydney, Australia was clearly made not through the above-quoted Section 12, but pursuant to Section 15 of the same rule which provides: Sec. 15. Extraterritorial service. – When the defendant does not reside and is not found in the Philippines, and the action affects the personal status of the plaintiff or relates to, or the subject of which is property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by leave of court, be effected out of the Philippines by personal service as under section 6; or by publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within which the defendant must answer.

Respondent argues31 that extraterritorial service of summons upon foreign private juridical entities is not proscribed under the Rules of Court, and is in fact within the authority of the trial court to adopt, in accordance with Section 6, Rule 135: Sec. 6. Means to carry jurisdiction into effect. – When by law jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it into effect may be employed by such court or officer; and if the procedure to be followed in the exercise of such jurisdiction is not specifically pointed out by law or by these rules, any suitable process or mode of proceeding may be adopted which appears comformable to the spirit of said law or rules. Section 15, Rule 14, however, is the specific provision dealing precisely with the service of summons on a defendant which does not reside and is not found in the Philippines, while Rule 135 (which is in Part V of the Rules of Court entitled Legal Ethics) concerns the general powers and duties of courts and judicial officers. Breaking down Section 15, Rule 14, it is apparent that there are only four instances wherein a defendant who is a non-resident and is not found in the country may be served with summons by extraterritorial service, to wit: (1) when the action affects the personal status of the plaintiffs; (2) when the action relates to, or the subject of which is property, within the Philippines, in which the defendant claims a lien or an interest, actual or contingent; (3) when the relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4) when the defendant non-resident's property has been attached within the Philippines. In these instances, service of summons may be effected by (a) personal service out of the country, with leave of court; (b) publication, also with leave of court; or (c) any other manner the court may deem sufficient.32 Proceeding from this enumeration, we held in Perkin Elmer Singapore Pte Ltd. v. Dakila Trading Corporation33that: Undoubtedly, extraterritorial service of summons applies only where the action is in rem or quasi in rem, but not if an action is in personam. When the case instituted is an action in rem or quasi in rem, Philippine courts already have jurisdiction to hear and decide the case because, in actions in rem and quasi in rem, jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the court, provided that the court acquires jurisdiction over the res. Thus, in such instance, extraterritorial service of summons can be made upon the defendant. The said extraterritorial service of summons is not for the purpose of vesting the court with jurisdiction, but for complying with the requirements of fair play or due process, so that the defendant will be informed of the pendency of the action against him and the possibility that property in the Philippines belonging to him or in which he has an interest may be subjected to a judgment in favor of the plaintiff, and he can thereby take steps to protect his interest if he is so minded. On the other hand, when the defendant or respondent does not reside and is not found in the Philippines, and the action involved is in personam, Philippine courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court.34 (Emphases supplied.) In Domagas v. Jensen,35 we held that: [T]he aim and object of an action determine its character. Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the court. The purpose of a proceeding in personam is to impose, through the judgment of a court, some responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a defendant to specifically perform some act or actions to fasten a pecuniary liability on him.36 It is likewise settled that "[a]n action in personam is lodged against a person based on personal liability; an action in rem is directed against the thing itself instead of the person; while an action quasi in rem names a person as defendant, but its object is to subject that person’s interest in a property to a corresponding lien or obligation."37 The Complaint in the case at bar is an action to declare the loan and Hedging Contracts between the parties void with a prayer for damages. It is a suit in which the plaintiff seeks to be freed from its obligations to the defendant under a contract and to hold said defendant pecuniarily liable to the plaintiff for entering into such contract. It is therefore an action in personam, unless and until the plaintiff attaches a property within the Philippines belonging to the defendant, in which case the action will be converted to one quasi in rem.

Since the action involved in the case at bar is in personam and since the defendant, petitioner Rothschild/Investec, does not reside and is not found in the Philippines, the Philippine courts cannot try any case against it because of the impossibility of acquiring jurisdiction over its person unless it voluntarily appears in court.38 In this regard, respondent vigorously argues that petitioner should be held to have voluntarily appeared before the trial court when it prayed for, and was actually afforded, specific reliefs from the trial court.39 Respondent points out that while petitioner’s Motion to Dismiss was still pending, petitioner prayed for and was able to avail of modes of discovery against respondent, such as written interrogatories, requests for admission, deposition, and motions for production of documents.40 Petitioner counters that under this Court’s ruling in the leading case of La Naval Drug Corporation v. Court of Appeals,41 a party may file a Motion to Dismiss on the ground of lack of jurisdiction over its person, and at the same time raise affirmative defenses and pray for affirmative relief, without waiving its objection to the acquisition of jurisdiction over its person.42 It appears, however, that petitioner misunderstood our ruling in La Naval. A close reading of La Naval reveals that the Court intended a distinction between the raising of affirmative defenses in an Answer (which would not amount to acceptance of the jurisdiction of the court) and the prayer for affirmative reliefs (which would be considered acquiescence to the jurisdiction of the court): In the same manner that a plaintiff may assert two or more causes of action in a court suit, a defendant is likewise expressly allowed, under Section 2, Rule 8, of the Rules of Court, to put up his own defenses alternatively or even hypothetically. Indeed, under Section 2, Rule 9, of the Rules of Court, defenses and objections not pleaded either in a motion to dismiss or in an answer, except for the failure to state a cause of action, are deemed waived. We take this to mean that a defendant may, in fact, feel enjoined to set up, along with his objection to the court's jurisdiction over his person, all other possible defenses. It thus appears that it is not the invocation of any of such defenses, but the failure to so raise them, that can result in waiver or estoppel. By defenses, of course, we refer to the grounds provided for in Rule 16 of the Rules of Court that must be asserted in a motion to dismiss or by way of affirmative defenses in an answer. Mindful of the foregoing, in Signetics Corporation vs. Court of Appeals and Freuhauf Electronics Phils., Inc. (225 SCRA 737, 738), we lately ruled: "This is not to say, however, that the petitioner's right to question the jurisdiction of the court over its person is now to be deemed a foreclosed matter. If it is true, as Signetics claims, that its only involvement in the Philippines was through a passive investment in Sigfil, which it even later disposed of, and that TEAM Pacific is not its agent, then it cannot really be said to be doing business in the Philippines. It is a defense, however, that requires the contravention of the allegations of the complaint, as well as a full ventilation, in effect, of the main merits of the case, which should not thus be within the province of a mere motion to dismiss. So, also, the issue posed by the petitioner as to whether a foreign corporation which has done business in the country, but which has ceased to do business at the time of the filing of a complaint, can still be made to answer for a cause of action which accrued while it was doing business, is another matter that would yet have to await the reception and admission of evidence. Since these points have seasonably been raised by the petitioner, there should be no real cause for what may understandably be its apprehension, i.e., that by its participation during the trial on the merits, it may, absent an invocation of separate or independent reliefs of its own, be considered to have voluntarily submitted itself to the court's jurisdiction."43 (Emphases supplied.) In order to conform to the ruling in La Naval, which was decided by this Court in 1994, the former Section 23, Rule 1444 concerning voluntary appearance was amended to include a second sentence in its equivalent provision in the 1997 Rules of Civil Procedure: SEC. 20. Voluntary appearance. – The defendant's voluntary appearance in the action shall be equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance. (Emphasis supplied.) The new second sentence, it can be observed, merely mentions other grounds in a Motion to Dismiss aside from lack of jurisdiction over the person of the defendant. This clearly refers to affirmative defenses, rather than affirmative reliefs. Thus, while mindful of our ruling in La Naval and the new Section 20, Rule 20, this Court, in several cases, ruled that seeking affirmative relief in a court is tantamount to voluntary appearance therein.45 Thus, in Philippine Commercial International Bank v. Dy Hong Pi,46 wherein defendants filed a "Motion for Inhibition without

submitting themselves to the jurisdiction of this Honorable Court" subsequent to their filing of a "Motion to Dismiss (for Lack of Jurisdiction)," we held: Besides, any lingering doubts on the issue of voluntary appearance dissipate when the respondents' motion for inhibition is considered. This motion seeks a sole relief: inhibition of Judge Napoleon Inoturan from further hearing the case. Evidently, by seeking affirmative relief other than dismissal of the case, respondents manifested their voluntary submission to the court's jurisdiction. It is well-settled that the active participation of a party in the proceedings is tantamount to an invocation of the court's jurisdiction and a willingness to abide by the resolution of the case, and will bar said party from later on impugning the court's jurisdiction.47 (Emphasis supplied.)1âwphi1 In view of the above, we therefore rule that petitioner, by seeking affirmative reliefs from the trial court, is deemed to have voluntarily submitted to the jurisdiction of said court. A party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction.48 Consequently, the trial court cannot be considered to have committed grave abuse of discretion amounting to lack or excess of jurisdiction in the denial of the Motion to Dismiss on account of failure to acquire jurisdiction over the person of the defendant. WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision of the Court of Appeals dated September 8, 2006 and its Resolution dated December 12, 2006 in CA-G.R. SP No. 94382 are hereby AFFIRMED. No pronouncement as to costs. SO ORDERED.

G.R. No. 192828

November 28, 2011

RAMON S. CHING AND PO WING PROPERTIES, INC., Petitioners, vs. HON. JANSEN R. RODRIGUEZ, in his capacity as Presiding Judge of the Regional Trial Court of Manila, Branch 6, JOSEPH CHENG, JAIME CHENG, MERCEDES IGNE AND LUCINA SANTOS, substituted by her son, EDUARDO S. BALAJADIA, Respondents. RESOLUTION REYES, J.: The Case Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assailing the December 14, 2009 Decision2 and July 8, 2010 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 99856. The dispositive portion of the assailed Decision reads: WHEREFORE, in view of all the foregoing premises, judgment is hereby rendered by us DENYING the petition filed in this case and AFFIRMING the assailed Orders dated March 15, 2007 and May 16, 2007 issued by the respondent Judge of the Regional Trial Court (RTC), Branch 6, in Manila in Civil Case No. 02-105251.4 The assailed Resolution denied the petitioners' Motion for Reconsideration. The Factual Antecedents Sometime between November 25, 2002 and December 3, 2002,5 the respondents filed a Complaint6 against the petitioners and Stronghold Insurance Company, Global Business Bank, Inc. (formerly PhilBank), Elena Tiu Del Pilar, Asia Atlantic Resources Ventures, Inc., Registers of Deeds of Manila and Malabon, and all persons claiming rights or titles from Ramon Ching (Ramon) and his successors-in-interest. The Complaint, captioned as one for "Disinheritance, Declaration of Nullity of Agreement and Waiver, Affidavit of ExtraJudicial Settlement, Deed of Absolute Sale, Transfer Certificates of Title with Prayer for [the] Issuance of [a] Temporary Restraining Order and [a] Writ of Preliminary Injunction," was docketed as Civil Case No. 02-105251 and raffled to Branch 8 of the Regional Trial Court of Manila (RTC). In the Complaint, the respondents alleged the following as causes of action: First Cause of Action. They are the heirs of Lim San, also known as Antonio Ching / Tiong Cheng / Ching Cheng Suy (Antonio). Respondents Joseph Cheng (Joseph) and Jaime Cheng (Jaime) are allegedly the children of Antonio with his common-law wife, respondent Mercedes Igne (Mercedes). Respondent Lucina Santos (Lucina) claimed that she was also a common-law wife of Antonio. The respondents averred that Ramon misrepresented himself as Antonio's and Lucina's son when in truth and in fact, he was adopted and his birth certificate was merely simulated. On July 18, 1996, Antonio died of a stab wound. Police investigators identified Ramon as the prime suspect and he now stands as the lone accused in a criminal case for murder filed against him. Warrants of arrest issued against him have remained unserved as he is at large. From the foregoing circumstances and upon the authority of Article 9197 of the New Civil Code (NCC), the respondents concluded that Ramon can be legally disinherited, hence, prohibited from receiving any share from the estate of Antonio. Second Cause of Action. On August 26, 1996, prior to the conclusion of the police investigations tagging Ramon as the prime suspect in the murder of Antonio, the former made an inventory of the latter's estate. Ramon misrepresented that there were only six real estate properties left by Antonio. The respondents alleged that Ramon had illegally transferred to his name the titles to the said properties. Further, there are two other parcels of land, cash and jewelries, plus properties in Hongkong, which were in Ramon's possession. Third Cause of Action. Mercedes, being of low educational attainment, was sweet-talked by Ramon into surrendering to him a Global Business Bank, Inc. (Global Bank) Certificate of Time Deposit ofP4,000,000.00 in the name of Antonio, and the certificates of title covering two condominium units in Binondo which were purchased by Antonio using his own money but which were registered in Ramon's name. Ramon also fraudulently misrepresented to Joseph, Jaime and Mercedes that they will promptly receive their complete shares, exclusive of the stocks in Po Wing Properties, Inc. (Po Wing), from the estate

of Antonio. Exerting undue influence, Ramon had convinced them to execute an Agreement8 and a Waiver9on August 20, 1996. The terms and conditions stipulated in the Agreement and Waiver, specifically, on the payment by Ramon to Joseph, Jaime and Mercedes of the amount of P22,000,000.00, were not complied with. Further, Lucina was not informed of the execution of the said instruments and had not received any amount from Ramon. Hence, the instruments are null and void. Fourth Cause of Action. Antonio's 40,000 shares in Po Wing, which constitute 60% of the latter's total capital stock, were illegally transferred by Ramon to his own name through a forged document of sale executed after Antonio died. Po Wing owns a ten-storey building in Binondo. Ramon's claim that he bought the stocks from Antonio before the latter died is baseless. Further, Lucina's shares in Po Wing had also banished into thin air through Ramon's machinations. Fifth Cause of Action. On October 29, 1996, Ramon executed an Affidavit of Extra-Judicial Settlement of Estate10 adjudicating solely to himself Antonio's entire estate to the prejudice of the respondents. By virtue of the said instrument, new Transfer Certificates of Title (TCTs) covering eight real properties owned by Antonio were issued in Ramon's name. Relative to the Po Wing shares, the Register of Deeds of Manila had required Ramon to post a Surety Bond conditioned to answer for whatever claims which may eventually surface in connection with the said stocks. Co-defendant Stronghold Insurance Company issued the bond in Ramon's behalf. Sixth Cause of Action. Ramon sold Antonio's two parcels of land in Navotas to co-defendant Asia Atlantic Business Ventures, Inc. Another parcel of land, which was part of Antonio's estate, was sold by Ramon to co-defendant Elena Tiu Del Pilar at an unreasonably low price. By reason of Ramon's lack of authority to dispose of any part of Antonio's estate, the conveyances are null and void ab initio. Since Ramon is at large, his wife, Belen Dy Tan Ching, now manages Antonio's estate. She has no intent to convey to the respondents their shares in the estate of Antonio. The respondents thus prayed for the following in their Complaint: 1. x x x a temporary restraining order be issued restraining the defendant RAMON CHING and/or his attorney-infact Belen Dy Tan Ching from disposing, selling or alienating any property that belongs to the estate of the deceased ANTONIO CHING; xxx 4. x x x a.) Declaring that the defendant RAMON CHING who murdered his father ANTONIO CHING disqualified as heir and from inheriting to (sic) the estate of his father; b.) Declaring the nullity of the defendant RAMON CHING transfer (sic) of the six [6] parcels of land from the name of his father ANTONIO CHING to his name covered by TCT No. x x x; c.) Declaring the nullity of the AGREEMENT and WAIVER executed by plaintiffs x x x in favor of x x x RAMON CHING for being patently immoral, invalid, illegal, simulated and (sic) sham; d.) Declaring the nullity of the transfer of the shares of stocks at (sic) PO WING from the names of ANTONIO CHING and LUCINA SANTOS to the defendant ANTONIO CHING's name for having been illegally procured through the falsification of their signatures in the document purporting the transfer thereof; e.) Declaring the nullity and to have no force and effect the AFFIDAVIT OF SETTLEMENT OF ESTATE executed by x x x RAMON CHING for being contrary to law and existing jurisprudence; f.) Declaring the nullity of the DEED OF SALES (sic) executed by x x x RAMON CHING (i) over two (2) parcels of land x x x to defendant ASIA ATLANTIC BUSINESS VENTURES, Inc.; and (ii) one (1) parcel of land x x x sold to x x x ELENA TIU DEL PILAR for having illegally procured the ownership and titles of the above properties; x x x.11

The petitioners filed with the RTC a Motion to Dismiss12 alleging forum shopping, litis pendentia, res judicata and the respondents as not being the real parties in interest. On July 30, 2004, the RTC issued an Omnibus Order13 denying the petitioners' Motion to Dismiss. The respondents filed an Amended Complaint14 dated April 7, 2005 impleading Metrobank as the successor-ininterest of co-defendant Global Bank. The Amended Complaint also added a seventh cause of action relative to the existence of a Certificate of Premium Plus Acquisition (CPPA) in the amount of P4,000,000.00 originally issued by PhilBank to Antonio. The respondents prayed that they be declared as the rightful owners of the CPPA and that it be immediately released to them. Alternatively, the respondents prayed for the issuance of a hold order relative to the CPPA to preserve it during the pendency of the case. On April 22, 2005, the petitioners filed their Consolidated Answer with Counterclaim.15 On October 28, 2005, the RTC issued an Order16 admitting the respondents' Amended Complaint. The RTC stressed that Metrobank had already filed Manifestations admitting that as successor-in-interest of Global Bank, it now possesses custody of Antonio's deposits. Metrobank expressed willingness to abide by any court order as regards the disposition of Antonio's deposits. The petitioners' Motion for Reconsideration filed to assail the aforecited Order was denied by the RTC on May 3, 2006. On May 29, 2006, the petitioners filed their Consolidated Answer with Counterclaim to the respondents' Amended Complaint. On August 11, 2006, the RTC issued a pre-trial order.17 On January 18, 2007, the petitioners filed a Motion to Dismiss18 the respondents' Amended Complaint on the alleged ground of the RTC's lack of jurisdiction over the subject matter of the Complaint. The petitioners argued that since the Amended Complaint sought the release of the CPPA to the respondents, the latter's declaration as heirs of Antonio, and the propriety of Ramon's disinheritance, the suit partakes of the nature of a special proceeding and not an ordinary action for declaration of nullity. Hence, jurisdiction pertains to a probate or intestate court and not to the RTC acting as an ordinary court. On March 15, 2007, the RTC issued an Order19 denying the petitioners' Motion to Dismiss on grounds: In the case at bar, an examination of the Complaint would disclose that the action delves mainly on the question of ownership of the properties described in the Complaint which can be properly settled in an ordinary civil action. And as pointed out by the defendants, the action seeks to declare the nullity of the Agreement, Waiver, Affidavit of Extra-Judicial Settlement, Deed of Absolute Sale, Transfer Certificates of Title, which were all allegedly executed by defendant Ramon Ching to defraud the plaintiffs. The relief of establishing the status of the plaintiffs which could have translated this action into a special proceeding was nowhere stated in the Amended Complaint. With regard [to] the prayer to declare the plaintiffs as the rightful owner[s] of the CPPA and that the same be immediately released to them, in itself poses an issue of ownership which must be proved by plaintiffs by substantial evidence. And as emphasized by the plaintiffs, the Amended Complaint was intended to implead Metrobank as a co-defendant. As regards the issue of disinheritance, the court notes that during the Pre-trial of this case, one of the issues raised by the defendants Ramon Ching and Po Wing Properties is: Whether or not there can be disinheritance in intestate succession? Whether or not defendant Ramon Ching can be legally disinherited from the estate of his father? To the mind of the Court, the issue of disinheritance, which is one of the causes of action in the Complaint, can be fully settled after a trial on the merits. And at this stage, it has not been sufficiently established whether or not there is a will.20 (Emphasis supplied.) The above Order, and a subsequent Order dated May 16, 2007 denying the petitioners' Motion for Reconsideration, became the subjects of a petition for certiorari filed with the CA. The petition, docketed as CA-G.R. SP No. 99856, raised the issue of whether or not the RTC gravely abused its discretion when it denied the petitioners' Motion to Dismiss despite the fact that the Amended Complaint sought to establish the status or rights of the respondents which subjects are within the ambit of a special proceeding. On December 14, 2009, the CA rendered the now assailed Decision21 denying the petition for certiorari on grounds: Our in-depth assessment of the condensed allegations supporting the causes of action of the amended complaint induced us to infer that nothing in the said complaint shows that the action of the private respondents should be threshed out in a special proceeding, it appearing that their allegations were substantially for

the enforcement of their rights against the alleged fraudulent acts committed by the petitioner Ramon Ching. The private respondents also instituted the said amended complaint in order to protect them from the consequence of the fraudulent acts of Ramon Ching by seeking to disqualify Ramon Ching from inheriting from Antonio Ching as well as to enjoin him from disposing or alienating the subject properties, including the P4 Million deposit with Metrobank. The intestate or probate court has no jurisdiction to adjudicate such issues, which must be submitted to the court in the exercise of its general jurisdiction as a regional trial court. Furthermore, we agree with the trial court that the probate court could not take cognizance of the prayer to disinherit Ramon Ching, given the undisputed fact that there was no will to be contested in a probate court. The petition at bench apparently cavils the subject amended complaint and complicates the issue of jurisdiction by reiterating the grounds or defenses set up in the petitioners' earlier pleadings. Notwithstanding, the jurisdiction of the court over the subject matter is determined by the allegations of the complaint without regard to whether or not the private respondents (plaintiffs) are entitled to recover upon all or some of the causes of action asserted therein. In this regard, the jurisdiction of the court does not depend upon the defenses pleaded in the answer or in the motion to dismiss, lest the question of jurisdiction would almost entirely depend upon the petitioners (defendants).22 Hence, we focus our resolution on the issue of jurisdiction on the allegations in the amended complaint and not on the defenses pleaded in the motion to dismiss or in the subsequent pleadings of the petitioners. In fine, under the circumstances of the present case, there being no compelling reason to still subject the action of the petitioners in a special proceeding since the nullification of the subject documents could be achieved in the civil case, the lower court should proceed to evaluate the evidence of the parties and render a decision thereon upon the issues that it defined during the pre-trial in Civil Case No. 02-105251.23(emphasis supplied) The petitioners' Motion for Reconsideration was denied by the CA through a Resolution24 issued on July 8, 2010. The Issue The instant Petition for Review on Certiorari25 is anchored on the issue of: Whether or not the RTC should have granted the Motion to Dismiss filed by the PETITIONERS on the alleged ground of the RTC's lack of jurisdiction over the subject matter of the Amended Complaint, to wit, (a) filiations with Antonio of Ramon, Jaime and Joseph; (b) rights of common-law wives, Lucina and Mercedes, to be considered as heirs of Antonio; (c) determination of the extent of Antonio's estate; and (d) other matters which can only be resolved in a special proceeding and not in an ordinary civil action. The petitioners argue that only a probate court has the authority to determine (a) who are the heirs of a decedent; (b) the validity of a waiver of hereditary rights; (c) the status of each heir; and (d) whether the property in the inventory is conjugal or the exclusive property of the deceased spouse.26 Further, the extent of Antonio's estate, the status of the contending parties and the respondents' alleged entitlement as heirs to receive the proceeds of Antonio's CPPA now in Metrobank's custody are matters which are more appropriately the subjects of a special proceeding and not of an ordinary civil action. The respondents opposed27 the instant petition claiming that the petitioners are engaged in forum shopping. Specifically, G.R. Nos. 17550728 and 183840,29 both involving the contending parties in the instant petition were filed by the petitioners and are currently pending before this Court. Further, in Mendoza v. Hon. Teh,30 the SC declared that whether a particular matter should be resolved by the RTC in the exercise of its general jurisdiction or its limited probate jurisdiction, is not a jurisdictional issue but a mere question of procedure. Besides, the petitioners, having validly submitted themselves to the jurisdiction of the RTC and having actively participated in the trial of the case, are already estopped from challenging the RTC's jurisdiction over the respondents' Complaint and Amended Complaint.31 The Court's Ruling We resolve to deny the instant petition. The petitioners failed to comply with a lawful order of this Court directing them to file their reply to the respondents' Comment/Opposition to the instant Petition. While the prescribed period to comply expired on March 15, 2011, the petitioners filed their Manifestation that they will no longer file a reply only on October 10, 2011 or after the lapse of almost seven months.

Further, no reversible errors were committed by the RTC and the CA when they both ruled that the denial of the petitioners' second motion to dismiss Civil Case No. 02-105251 was proper. Even without delving into the procedural allegations of the respondents that the petitioners engaged in forum shopping and are already estopped from questioning the RTC's jurisdiction after having validly submitted to it when the latter participated in the proceedings, the denial of the instant Petition is still in order. Although the respondents' Complaint and Amended Complaint sought, among others, the disinheritance of Ramon and the release in favor of the respondents of the CPPA now under Metrobank's custody, Civil Case No. 02-105251 remains to be an ordinary civil action, and not a special proceeding pertaining to a settlement court. An action for reconveyance and annulment of title with damages is a civil action, whereas matters relating to settlement of the estate of a deceased person such as advancement of property made by the decedent, partake of the nature of a special proceeding, which concomitantly requires the application of specific rules as provided for in the Rules of Court.32 A special proceeding is a remedy by which a party seeks to establish a status, a right, or a particular fact.33 It is distinguished from an ordinary civil action where a party sues another for the enforcement or protection of a right, or the prevention or redress of a wrong.34 To initiate a special proceeding, a petition and not a complaint should be filed. Under Article 916 of the NCC, disinheritance can be effected only through a will wherein the legal cause therefor shall be specified. This Court agrees with the RTC and the CA that while the respondents in their Complaint and Amended Complaint sought the disinheritance of Ramon, no will or any instrument supposedly effecting the disposition of Antonio's estate was ever mentioned. Hence, despite the prayer for Ramon's disinheritance, Civil Case No. 02-105251 does not partake of the nature of a special proceeding and does not call for the probate court's exercise of its limited jurisdiction. The petitioners also argue that the prayers in the Amended Complaint, seeking the release in favor of the respondents of the CPPA under Metrobank's custody and the nullification of the instruments subject of the complaint, necessarily require the determination of the respondents' status as Antonio's heirs. It bears stressing that what the respondents prayed for was that they be declared as the rightful owners of the CPPA which was in Mercedes' possession prior to the execution of the Agreement and Waiver. The respondents also prayed for the alternative relief of securing the issuance by the RTC of a hold order relative to the CPPA to preserve Antonio's deposits with Metrobank during the pendency of the case. It can thus be said that the respondents' prayer relative to the CPPA was premised on Mercedes' prior possession of and their alleged collective ownership of the same, and not on the declaration of their status as Antonio's heirs. Further, it also has to be emphasized that the respondents were parties to the execution of the Agreement35 and Waiver36 prayed to be nullified. Hence, even without the necessity of being declared as heirs of Antonio, the respondents have the standing to seek for the nullification of the instruments in the light of their claims that there was no consideration for their execution, and that Ramon exercised undue influence and committed fraud against them. Consequently, the respondents then claimed that the Affidavit of Extra-Judicial Settlement of Antonio’s estate executed by Ramon, and the TCTs issued upon the authority of the said affidavit, are null and void as well. Ramon's averment that a resolution of the issues raised shall first require a declaration of the respondents' status as heirs is a mere defense which is not determinative of which court shall properly exercise jurisdiction. In Marjorie Cadimas v. Marites Carrion and Gemma Hugo,37 the Court declared: It is an elementary rule of procedural law that jurisdiction of the court over the subject matter is determined by the allegations of the complaint irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. As a necessary consequence, the jurisdiction of the court cannot be made to depend upon the defenses set up in the answer or upon the motion to dismiss, for otherwise, the question of jurisdiction would almost entirely depend upon the defendant. What determines the jurisdiction of the court is the nature of the action pleaded as appearing from the allegations in the complaint. The averments in the complaint and the character of the relief sought are the matters to be consulted.1âwphi1 In sum, this Court agrees with the CA that the nullification of the documents subject of Civil Case No. 02-105251 could be achieved in an ordinary civil action, which in this specific case was instituted to protect the respondents from the supposedly fraudulent acts of Ramon. In the event that the RTC will find grounds to grant the reliefs prayed for by the respondents, the only consequence will be the reversion of the properties subject of the dispute to the estate of Antonio. Civil Case No. 02105251 was not instituted to conclusively resolve the issues relating to the administration, liquidation and distribution of Antonio's estate, hence, not the proper subject of a special proceeding for the settlement of the estate of a deceased person under Rules 73-91 of the Rules of Court.

The respondents' resort to an ordinary civil action before the RTC may not be strategically sound, because a settlement proceeding should thereafter still follow, if their intent is to recover from Ramon the properties alleged to have been illegally transferred in his name. Be that as it may, the RTC, in the exercise of its general jurisdiction, cannot be restrained from taking cognizance of respondents' Complaint and Amended Complaint as the issues raised and the prayers indicated therein are matters which need not be threshed out in a special proceeding. WHEREFORE, the instant petition is DENIED. The petitioners' (a) Opposition to the respondents' Motion to Admit Substitution of Party;38 and (b) Manifestation39 through counsel that they will no longer file a reply to the respondents' Comment/Opposition to the instant petition are NOTED. SO ORDERED.

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