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G.R. No. L-31303-04 May 31, 1978


REPUBLIC
petitioner,

OF

THE

PHILIPPINES,

vs.
THE HONORABLE COURT OF APPEALS,
ALFREDO V. DE OCAMPO, and OSCAR
ANGLO, respondents.
SANTOS, J.:
An appeal by certiorari filed on December 5,
1969 by petitioner, Republic of the Philippines
(Republic, for short), from the resolution of the
Court of Appeals dated August 21, 1969 1
dismissing petitioner's appeal in CA-G. R.
Nos. 40683-84-R, as well as from the
resolution of the said Court dated November
14, 1969 2 denying petitioner's motion for
reconsideration thereof
The relevant and essential factual and
procedural antecedents follow. Both
Republic and respondents Alfredo V. de
Ocampo and Oscar Anglo claim ownership
over the same lots, i.e,, Nos. 817 and 2509 of
the Sagay-Escalante Cadastre, Negros
Occidental, subject matter of this litigation.
The basis of Republic's claim is that said lots
were bequeathed to the Bureau of Education
(now Bureau of Public Schools) on
September 21, 1926 by the late Esteban
Jalandoni through his will. 3 Republic further
alleged that the said parcels of land were
already registered under the Torrens System
"before 1919 in a cadastral case in the name
of Meerkamp and Company" in whose favor
Original Certificate of Title (OCT, for short)
No. 370 was issued, that said company sold

the lots to Esteban Jalandoni who was issued


Transfer Certificate of Title (TCT, for short)
No. 1251: that TCT No. 6014 was issued to
the Bureau of Education when the subject
property was bequeathed to it; and that as a
matter of fact, a sugar quota (Plantation Audit
No. 24-10) was issued for the lots under the
name of the Bureau of Education. 4 The lots
have a total area of 289.47 hectares. 5
Respondent de Ocampo, upon the other
hand, predicates his claim on an application
for registration of the same Lots Nos. 817 and
2509 in Land Registration Case No. N-4, LRC
Rec. No. N-19196, wherein a decree of
registration No. 105538 was issued over the
lots, followed by the issuance in his name of
OCT No. 576, on October 1, 1965. 6 He
averred that the lots were unregistered lands
belonging to and possessed by him, by virtue
of a donation dated November 10, 1911 from
one Luis Mosquera. 7
Respondent Anglo intervened in the case on
February 21, 1966, having allegedly bought
the same lots from respondent de Ocampo on
January 6, 1966. TCT No. 42217 was issued
to him (Anglo) on January 12, 1966. 8

Procedurally, the records show that the


Bureau of Public Schools, then represented
by the Provincial Fiscal of Negros Occidental
initiated on December 24, 1958, a forcible
entry and detainer case against de Ocampo
over Lots Nos. 817 and 2509. On appeal, the
Court of First Instance of Negros Occidental
dismissed the complaint (Civil Case No.
5353). 9

Then on June 29, 1960, de Ocampo filed an


application for registration of the same two
parcels of land in Land Registration Case No.
N-4 LRC Rec. No. N-19196, entitled "Alfredo
V. de Ocampo, Applicant, v. Republic of the
Philippines, Oppositor Republic filed its
opposition; in due time. 10
On May 2, 1961, Republic, represented by
the Solicitor General, filed a complaint against
de Ocampo with the Court of First Instance of
Negros Occidental (Branch VII) for the
recovery of possession of the subject lots,
with prayer for the issuance of a writ of
preliminary mandatory injunction, docketed
therein as Civil Case No, 264 (6154), entitled
"Republic of the Philippines v. Alfredo v. de
Ocampo, Defendant, " 11 De Ocampo
averred in his answer that the properties
alleged to have been donated by Esteban
Jalandoni to the then Bureau of Education
were different from the properties involved in
this case, the former being titled lands (TCT
No. 1251) containing two million nine hundred
and twelve thousand four hundred and
seventy four square meters (2,912,474), while
Lots Nos. 817 and 2509 applied for by de
Ocampo and which Republic sought to
recover were unregistered lands, and that
granting, without admitting, that they are the
same lands, the court no longer had
jurisdiction over the subject matter of the
action since the issue of possession over said
lots was already decided by the Court of First
Instance of Negros Occidental. 12
On May 26, 1961, a preliminary hearing was
held before Branch IV of the Court of First
Instance of Negros Occidental where the land
registration case was pending, but inasmuch

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as the issues involved in both Civil Case No.
264 (6154) for recovery of possession and the
land registration case were Identical, the
parties agreed to a joint trial, this time before
Branch VI I, Judge Jose D. Divinagracia,
presiding, where the civil case was pending.
13
After a joint trial of the above-mentioned two
(2) cases, the Court of First Instance
rendered judgment on August 3, 1965,
dismissing the complaint in Civil Case No.
264 (6154) and adjudging the registration of
the subject two lots in the name of the then
applicant de Ocampo. On October 1, 1966,
OCT No. 576 was issued in his name. 14
It is admitted by Republic that it received a
copy of the decision on August 13, 1965 15
but no appeal was taken therefrom. However,
Republic later filed with the trial court on
December 28, 1965, a "Petition for Relief
from Judgment with Preliminary Injunction
Pending Proceeding 16 (petition, for short)
praying, among other things, that de Ocampo
be restrained from enforcing the decision
dated 3 August 1965, and that after the
hearing, an order be issued declaring the
decision to be not yet final add executory, and
granting Republic the right to file a motion for
reconsideration and/or appeal within the
period granted, to commence upon receipt of
the order.
The petition alleged inter alia that the
Republic's failure to appeal was due to
accident,
mistake
and/or
excusable
negligence, specifically, stating that its docket
clerk, Cesar Salud, merely committed
excusable negligence when he inadvertently
attached the copy of the decision to the file of

another case; that it was only on November 5,


1965, that Cesar Salud found the copy of the
same; and that petitioner has a substantial
cause of action in Civil Case No. 264 (6154)
and a good and substantial defense in Land
Registration Case No. N-4 Rec. No.N-19196.
An opposition to the petition was filed by
respondent de Ocampo on February 5, 1966
17 on the ground that the same was filed
beyond the reglementary period. The petition
was, however, given due course on January
11, 1966. 18 On February 21, 1966,
respondent Oscar Anglo filed a motion for
intervention alleging that he bought the
subject two (2) Lots Nos. 817 and 1509 from
respondent de Ocampo on January 6, 1966
and that TCT No. 42217 of the Register of
Deeds for Negros Occidental was issued to
him (Anglo) on January 12, 1966. 19 He also
filed an answer in opposition to Republic's
petition for relief from judgment 20 on the
grounds, among others, that the decree of
registration and certificate of title had already
been issued and that a writ of preliminary
injunction will not lie to restrain enforcement
of the decision of the trial court.
On June 6, 1966, after respondents filed their
respective memoranda, the trial court
dismissed the Republic's petition for lack of
competent proof, pursuant to Section 6, Rule
38, of the Rules of Court which the court said
required a hearing. 21
On July 25, 1966, petitioner Republic filed a
motion for reconsideration of the aforesaid
order dismissing its petition; 22 and on August
4, 1966, it filed a manifestation averring
additional grounds in support of the motion for

reconsideration. 23 Respondent Anglo and de


Ocampo opposed the same. 24
On September 28, 1966, Republic filed an
"Amended Petition for Relief from Judgment
and/or Review of Decree with Preliminary
Injunction 25 (Amended Petition, for short). In
specific regard to the petition for review of the
decree, Republic contended, inter alia, that
actual fraud had been perpetrated by
respondent de Ocampo in securing the lower
court's decision ordering the registration of
the lots in his name, as well as the issuance
of the decree of registration and the
corresponding certificate of title, on the
grounds which, briefly restated. advert to
respondent
de
Ocampo's
alleged
misrepresentations that the two parcels of
land applied for by him in the land registration
case were "different from the two parcels of
land of the same lot numbers, technical
descriptions and areas belonging to the
Government, knowing such allegations to be
false, the truth of the matter being that said
parcels of land are the same property owned
by the Government"; 26 that there was
previous registration of the same parcels of
land, Lots Nos. 817 and 2509, under the
Torrens System in favor of Meerkamp and
Company which later sold the same to
Jalandoni who, in turn, gave the lots to the
Bureau of Education as a legacy and that the
Court of First Instance no longer had
jurisdiction to decree again the registration of
Lots Nos. 817 and 2509, in favor of
respondent de Ocampo, in view of the earlier
registration of the same lands infavor of
Meerkamp and Company.

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Additionally, Republic claimed that its counsel
was not given notice of de Ocampo's motion
and
the
corresponding
order
dated
September 16, 1965, for the issuance of the
decree of registration and the issuance of the
decree itself by the Land Registration
Commission, in violation of its constitutional
rights to due process", 27 that it has also
been "in continuous peaceful, adverse, open
and public owner and possessor, in good faith
and with just title" of the lots "deriving the
fruits and products of said properties and
appropriating them to the purpose and
purposes they were intended for"; 28 that
they were in fact declared for tax purposes;
29 that on April 11, 1927, the lands were
leased for ten (10) years but the lease was
amended several times to extend the same;
30 that on September 17, 1964, Republic's
counsel filed a "Petition for an Order to
Produce the Original Documentary Exhibits
and Submit Same to the NBI for Examination,
31 Which petition was communicated to de
Ocampo's lawyers, Atty. Gemarino and
Garingalao, earlier on September 7, 1964;
that they did not object or state that the
originals were burned or lost; that it was only
on September 28, 1964 that de Ocampo's
lawyers revealed for the first time in their
"Manifestation and Reply" that the purported
originals were burned in the house of Atty.
Gemarino on May 16, 1963; 32 and that the
"supposed originals were fake and their
alleged burning was false and these
pretenses were intentionally resorted to only
to evade the examination of the spurious
documents by the NBI and as camouflage to
hide their fraudulent character. 33

On October 4, 1966, the trial court set, aside


its order of June 6, 1966, dismissing the
petition for relief, 34 having found Republic's
motion for reconsideration well-founded, and
scheduled December 1 and 2, 1966, for
Republic's witnesses to testify, and likewise
gave respondents, a chance to oppose the
amended petition. Respondents and Republic
filed their opposition 35 and reply; 36
respectively. Republic alleged in the said
reply that "(T)he lands in question and their
incomes are used exclusively for a public
purpose: public education. 37
In a subsequent hearing on June 6, 1967, the
trial court ordered Republic to present its
evidence in the absence of respondents, who
objected thereto for lack of jurisdiction, the
parcels of land having been already
registered in the name of respondent de
Ocampo and in fact transferred to an alleged
buyer in good faith, the other private
respondent, Anglo.
On August 30, 1967, the trial court rendered
its decision on the Amended Petition 38
against Republic, upon resolution of what it
considered the "decisive" issue, i.e., that the
allegations in the said petition did not
constitute actual and extrinsic fraud which is
the only ground available to review or reopen
a decree in cadastral cases pursuant to
Section 38 of Act 496. 39
On the other issues, the trial court found that
it was through mistake, accident and
excusable negligence that the decision of
August 3, 1965 was not brought to the
attention of Solicitor EmeritoSalva "as it was
inadvertently clipped to the record of another
case". 40 However, while the petition for relief

itself another case was filed within the


reglementary period prescribed in Section 3,
Rule 38, of the Rules of Court 41 the remedy
of relief from judgment was no longer
available since the decree, and later the title,
were already issued in the name of
respondent de Ocampo. 42 It also held that
the amended petition was still legally
available as it was filed within one (1) year
after the issuance of the decree, pursuant to
Section 38 of Act No. 496, "in case of actual
fraud" and that it had jurisdiction to entertain
the amended petition and to receive evidence
in support thereof, 43 but it had to deny the
relief prayed for on grounds already adverted
to. In regard to respondent Anglo's claim that
the petition for review was no longer tenable
as against him because he was a purchaser
in good faith, the trial court ruled that
competent evidence to that effect should be
submitted considering, among other things,
that the case was pending when he acquired
his interest. 44 Finally, it held that the fact that
the Republic was not notified of the motion
and the corresponding issuance of the decree
and title was immaterial since petitions for
issuance of decrees in cadastral cases are
analogous to petitions for execution in
ordinary cases and parties are not entitled to
notice thereof as a matter of right. 45 Thus
In the light of the decision of this Court dated
August 3. 1965, Section 39 of Act No. 496
and the authorities cited ... this court is
persuaded to conclude as it hereby holds,
that the evidence adduced by the petitioner in
this incident does not establish actual and
constructive fraud which is the only kind of
fraud that is considered a legal ground to
review, reopen or set aside the decree which

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has already been issued in the name of
Alfredo V. de Ocampo.

PREMISES CONSIDERED, the petition for


Relief from Judgment and/or Review of
Decree is hereby dismissed without
pronouncement as to costs. 46
From the said decision, Republic appealed to
the Court of Appeals, docketed therein as CAG.R. Nos. 4083-84-R. Private respondents de
Ocampo and Anglo moved to dismiss the
appeal which was opposed by petitioner,
Republic. 47 A supplemental motion to the
same effect was later filed by respondent de
Ocampo for failure of the record on appeal to
show on its face that it was filed on time, 48
followed by an ex parte motion to consider the
Solicitor General to have waived his right to
oppose the said supplemental motion to
dismiss and that the case be submitted for
resolution.
49
A
new
party,
SalvacionMaraon, sought to intervene in the
case and also filed a motion to dismiss the
appeal before respondent appellate court.
In its minute resolution of August 21, 1969, 50
the Court of Appeals resolved
(1) To DISMISS ... the appeal ... for failure of
the record on appeal to show on its face that
the record on appeal was filed within the
period fixed by the Rules (Secs. 3 & 6, Rule
41, Sec. 1[a] & [b), Rule 50, Rules of Court), it
appearing that appellant's motion for
extension of 20 days from October 14, 1967
to file the record on appeal was never granted
by the lower court (there being no showing to
that effect in the record on appeal); and even

if there was such an order granting it, the


extension asked for would have expired on
November 3, 1967 and, therefore, the record
on appeal filed on November 9,1967 was filed
six days late ...; and
(2) to DENY the motion to intervene of
intervenorSalvacion Maranon following the
doctrine enunciated in Hant, et al. vs. O'Leary,
et al., page 993. At any rate, the purpose of
intervening; which is to join the appellees in
their motion to dismiss the appeal of the
appellant, has already been served by the
dismissal of the instant appeal.
On September 11, 1969, Republic filed a
motion for reconsideration 51 but on
November 14, 1969, the Court of Appeals
RESOLVED TO DENY the said motion for
reconsideration. Killings in the pertinent cases
are equally applicable to the Republic of the
Philippines where the latter is the appellant
that recourse to 'the original records is
immaterial because it is what appears in the
record on appeal that is essential. 52
Hence, this appeal by certiorari on the
following assignment of errors, i.e., that the
Court of Appeals erred in not holding that
(1) prescription, the statute of limitations and
laches do not lie against the Republic, as a
sovereign state, and that, it is not bound or
prejudiced by the faults or mistakes of its
officers and employees, (2) the dismissal of
Republic's appeal is not in accordance with
the liberal construction of the Rules of Court
and the promotion of its object to assist the
parties in obtaining just, speedy and
inexpensive determination of actions and
proceedings; (3) the trial court has no

jurisdiction to entertain the application for land


registration of Alfredo V. de Ocampo on the
ground that Lots Nos. 817 and 2509 were
already registered under the Torrens System
before 1919; (4) the dismissal of Republic's
appeal placed technicality over, substance;
and (5) the dismissal of Republic's appeal will
abet and promote land grabbing. 53
Private respondents in turn stress in their
respective briefs, inter alia, (1) that Republic
shed its immunity and sovereignty and
assumed the garb of an ordinary private
litigant when it initiated an action for forcible
entry and detainer case over Lots Nos. 817
and 2509 against respondent de Ocampo.
filed I s opposition in the land registration
case, and instituted Civil Case No. 264
(6154); 54 (2) that Republic should comply
with the mandatory and jurisdictional
requirements of the rules on perfection of
appeals, citing cases; 55 that there cannot be
one set of Rules for ordinary private litigants,
and another set for the State otherwise the
set-up will result in the denial of due process
and equal protection of law to private litigants
as well as chaos in the administration of
justice; 56 and (4) that public policy and
sound practice demand that, at the risk of
occasional errors, judgments of courts should
become final at some definite date fixed by
the, law. 57
The threshold and, in the ultimate analysis,
the decisive issue raised by this petition is
whether the dismissal by respondent. Court of
Appeals of Republic's appeal from the
decision of the trial court denying its Amended
Petition, is not proper and should be set aside
as contended by Republic, or correct and

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should be maintained, as argued by
respondents. The issue framed in the
context of the suit's true significance to the
parties involved in this protracted proceeding
and in the light of the value the protagonists
attach to the outcome of the litigation may
be stated thus-Should the government,
represented by petitioner Republic not be
permitted by respondent Court of Appeals to
show that it stands Lo lose thru fraudulent
machinations close to three hundred (300)
hectares of prime sugar land to the private
respondents who have allegedly secured their
titles to these holdings long after the same
parcels of land were already titled in the name
of the original owner, Meerkamp and
Company and, therefore, the trial court's
action in directing the issuance of the title in
the name of respondent de Ocampo is null
and void ab initio and of no legal effect,
simply because petitioner Republic failed to
show in its record on appeal that it was
perfected on time and that it actually filed its
record on appeal six (6) days late?
Respondent Court of Appeals, in a very
simplistic approach, which disregards the
substantive merits of the appeal dismissed,
the same on the grounds that the record on
appeal did not show on its face that it was
perfected on time, and, additionally, that even
if it were to be assumed that the motion for
extension of 20 days to file the record on
appeal was indeed granted, the appeal was
still not perfected on time because the record
on appeal was filed November 9, six (6) days
after November 3, 1967, when petitioner's
requested extension expired.

If respondents' line of reasoning were to be


upheld, the dismissal of the appeal may be
sustained. For, as stated, in its notice of
appeal filed on October 12, 1967, petitioner
Republic received a copy of the decision of
the trial court on September 14, 1967. 58
Therefore, it had until October 14, 1967 within
which to file its record on appeal. The record
on appeal does not show that the extension
prayed for was granted, but the lower court in
its order of December 4, 1967 approved the
same, as there was no opposition to its
approval. There is also no mention in the
order approving the record on appeal as to
whether or not it was filed on time. The record
on appeal is, however, dated November
9,1967. Assuming then that this was also the
actual filing date, and on the further
assumption that the 20day extension was
impliedly granted with its approval, it was still
filed six (6) days late, after the requested
extension expired on November 3, 1967. 59
And, as to the legal ground for the dismissal
on the foregoing bases, this Court has
repeatedly construed Section 6, Rule 41, of
the Rules of Court 60 as mandatory and
jurisdictional in nature, non-compliance with
which justifies the dismissal of the appeal. 61
However, a consideration in depth of the
unique and peculiar facts attendant to this
case and the procedural and substantive
implications of the dismissal of the appeal
now sought to be reviewed and reconsidered;
and a due and proper regard to the merits of
the case rather than a fascile reliance on
procedural rules, compel this Court to reverse
and set aside the dismissal of Republic's
appeal by respondent Court of Appeals for the
following reasons, viz: (1) Should Republic

prove that the subject Lots Nos. 817 and


2509 were registered in favor of Meerkamp
and Company before 1919, the trial court's
decision decreeing again the same lots in the
name of respondent de Ocampo in 1965 is
null and void ab initio for lack of jurisdiction
and a fatal infirmity necessarily attaches to
the said decision; (2) There are strong and
substantial
allegations
of
fraudulent
misrepresentations
and
machinations
employed by respondent de Ocampo in
securing his title Relevant to this is The
express finding of the trial court that The
Petition for Relief was filed within the
reglementary period prescribed in Section 3,
Rule 38 of the Rules of Court, and the
Amended Petition was filed within one year
from issuance of the decree. If the appeal is
dismissed without considering its merits, the
above periods will resumed to run and will
lapse, and the reliefs sought herein will be
forever foreclosed to Republic; (3) Assuming
that respondents can invoke, the material
data rule, and/or the fact that Republic's
appeal was filed out of time because the
record On appeal was submitted to the Court
six (6) days beyond the requested extension
of 20 days, it always in the power of this Court
to suspend its rules or to except certain cases
therefrom
whenever
courtervailing
considerations so warrant; and (4) This Court,
is not powerless to prevent gross miscarriage
of Justice, which would follow if Republic's
appeal is dismissed since it stands to lose
close to 300 hectares of prime sugar land
already titled in its name and devoted to
educational purposes if it is true that the
land registration court was without jurisdiction
to issue a Second decree of registration in
favor of respondent de Ocampo and, if it is

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also true that fraudulent misrepresentations
and machinations attended respondent de
Ocampo's application for registration and
likewise prevented Republic from exposing
the fake exhibits, on the basis of which he
secured his title. 62

a total area of 289.47 hectares, 67 or only


about two (2) hectares less. These factors,
brought to light by respondent de Ocampo
himself, cannot simply be ignored in reaching
the conclusion that the disputed resolutions of
respondent Court of Appeals be reversed.

1. Specifically both Republic and respondents


claim ownership over the same Lots Nos. 811
and 2509, hence, this controversy. If
Republic's contentions are true that the said
lots had been registered twice, with OCT No.
370 issued in favor of Meerkamp and
Company before 1919 and another, OCT No.
576, issued in the name of respondent de
Ocampo in 1965 or some forty-six (46)
years later then the decision of the trial
court, sitting as land registration court, is null
and void ab initio and suffers from a fatal
infirmity, which is also a ground for the review
of a decree of registration. provided no
innocent purchaser for value will be
prejudiced. 63

It is also important to advert to the


documentary exhibits adduced by Republic in
the hearing of the Amended Petition below,
one of which was a certification dated
November 8, 1952 signed by the Register of
Deeds of Negros Occidental, stating that on
May 13, 1919, there was registered a sale
executed by Meerkamp and Company in
favor of Esteban Jalandoni and as a result
OCT No, 370 in the name of the Company
was cancelled and TCT No. 1251 was issued
to Jalandoni; that TCT No. 1251 was later
cancelled by virtue of the will of Jalandoni
leaving the parcel of land to the then Bureau
of Education; that TCT No. 6014 was
correspondingly issued to the Bureau of
Education; and that lease contracts were
annotated in TCT No. 6014 in favor of
Francisco Copper, executed by the Division
Superintendent of Schools. 68 However, the
above certification does not mention the lot
numbers, and no certificates of title were
exhibited in court, the incumbent Register of
Deeds having declared that the titles could
not be found in his office. 69

It is very significant in this connection that


respondent de Ocampo admitted the donation
of Jalandoni in favor of the Bureau of
Education, but averred that the lots so
donated were titled (TCT No. 1251), 64 while
Lots Nos. 817 and 2509 applied for by him in
the land registration case were "unregistered.
65 Yet, both parties claim to be the owners of
the same Lots Nos. 817 and 2509.
Respondent de Ocampo also gave the area
of the lots covered by TCT No. 1251, in the
name of Jalandoni, as two million nine
hundred and twelve thousand four hundred
and seventy four (2,912,474) square meters,
or 291 hectares plus. 66 Coincidentally, Lots
Nos. 817 and 2509 claimed by Republic have

The trial court also made the express finding


that the alleged deed of donation by Luis
Mosquera in favor of respondent de Ocampo,
dated November 10, 1911, acknowledged
before one Notary Public John Boardman
does not appear in his notarial book which is
on file in the Bureau of Record Management,

Manila, from October 16, 191 1 to May, 1913.


70
The Provincial Assessor of Negros Occidental
likewise issued a certification, dated
November 29, 1966, stating that Lots Nos.
817 and 2509 were never declared in the
name of Mosquera. 71 His later certification
states that the said lots were assessed in the
name of the Bureau of Education, and that
the technical descriptions in the Bureau of
Lands records show that the same lots were
in the name of Meerkamp and Company. 72
Authorities are in agreement that a land
registration court is without jurisdiction to
decree again the registration of land already
registered in an earlier registration case, and
that the second decree entered for the same
land is null and void. 73 If there is no valid
and final judgment by the land registration
court to speak of, then the filing of an
admittedly late appeal from the decision
denying the Amended Petition would be
immaterial and of no moment, in so far as
these proceedings are concerned in view of
the congenitally fatal infirmity that attaches to
the main decision. decreeing for the second
time the registration of the same Lots Nos.
817 and 2509 in favor of respondent de
Ocampo, despite an earlier registration in the
name
of
Meerkamp
and
Company.
Jurisprudence holds that the appellant's
failure to perfect an appeal on time, "although
ordinarily decisive, carries no persuasive
force" and may be completely disregarded if
the trial court acted without jurisdiction. 74 As
held in United States v. Jayme, 75 lack of
jurisdiction. la jurisdiction over the subject
matter is fatal and may be raised at any stage

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of the proceedings. Jurisdiction is conferred
by the sovereign authority which organizes
the court; it is given only by law, and in the
manner prescribed by law and an objection
on the lack of such jurisdiction cannot be
waived by the parties. The infirmity cannot be
cured by silence, acquiescence, or even by
express consent, 76 or by win of the parties.
77
In the interest of justice, which is the
paramount consideration in all litigations, and
especially considering the cloud surrounding
the decision of the land registration court, as
aforesaid, the more judicious course to follow
is for respondent Court of Appeals to entertain
Republic's appeal, not to dismiss it, so that if
it finds the same to be meritorious, and the
decision appealed from is reversed, the
correct Identity of the lots that were donated
to the then Bureau of Education (admitted by
respondent de Ocampo), as well as those
parcels of land applied for by said respondent
in the land registration case, may already be
ascertained once and for all, in the trial court
below, and in this same proceeding, without
Republic having to resort to relitigation to
prove its claim. Further proceedings will not
prejudice respondents. On the contrary, the
cloud over their titles, OCT No. 576 and TCT
No. 42217. issued in favor of respondents de
Ocampo and Anglo, respectively, will be
removed if Republic's claim is not true.
2. There is a serious charge, which is also
crucial to the issue between the parties, that
respondent de Ocampo used fraudulent
misrepresentations and machinations in
securing his title, Firstly, there was the
averment in his Answer in Civil case No, 264

(6154) for recovery of possession of the


subject lots by Republic, which case was
jointly tried with the land registration case,,
that the properties alleged to have been
donated by Jalandoni to the then Bureau of
Education were "different" from Lots Nos. 817
and 2509, applied for by him, the Jalandoni
holdings being "titled" lands, while Lots Nos.
817 and 2509 were "unregistered" lands. The
then applicant de Ocampo even cited TCT
No. 1251 of the Register of Deeds of Negros
Occidental as the title covering the lots in the
name of Jalandoni, further stating that the
lands donated by him to the Bureau of
Education had an area of 2,912,474 square
meters, 78 or 291 hectares plus. Lots Nos.
817 and 2509 have a total area of 289.47
hectares 79 or a difference of only 2 hectares,
more or less. The coincidence in area is
highly significant since both claim to be the
owners of the same lots. Secondly, certain
documents which were presented as exhibits
by respondent de Ocampo, on the basis of
which he secured OCT 576 in his name, were
withdrawn from the files of the trial court, and,
thereafter were allegedly lost by fire. As a
result, Republic's pending motion to have the
said exhibits produced for examination of their
genuineness by the NBI could not be made.
Unless successfully traversed, the inference
is strong that respondents did not want a full
disclosure of the true nature of the same by
the NBI and that the truth had been
suppressed. The inference is also buttressed
by the Republic's claim that despite their
counsel's knowledge of Republic's intention to
file the said motion which was orally
communicated to them earlier, the alleged
loss was not revealed to Republic's counsel.
80

If the charge is true, there is the element of


wilfull intent to deprive Republic of just rights
which constitutes the essential characteristics
of actual as distinguished from legal
fraud. 81 As Justice Fernando stressed,
"Nicolas v. Director of Lands 82 should erase
any doubt as to the extreme judicial
displeasure at this species of fraud of an
applicant seeking to include as a part of the
property to which title is sought land actually
in possession of another. 83 This is very
relevant in view of the denial of the Amended
Petition which was premised on the
conclusion that allegations in the said petition
did not constitute actual and extrinsic fraud
and which, according to the trial court, is "the
only ground" available to review or reopen the
decree. Of related significance is the express
finding of the trial court that the original
Petition for Relief was filed within the
reglementary period pursuant to Section 3,
Rule 38 of the Rules of Court, and the
Amended Petition was filed within one year
from issuance of the decree. For, if the appeal
is dismissed notwithstanding allegations of
fraud which appear to be supported by the
evidence adduced during the hearing of the
Amended Petition below the appealed
decision will become final and executory, and
the aforesaid periods will lapse, foreclosing
forever to Republic the reliefs prayed for in
the Amended Petition. Although Republic may
seek to recover the lots in a different action
that may still be legally available to it after the
appeal is dismissed, that recourse will involve
not only a re- litigation and, therefore.
multiplicity of suits, but will also entail the risk
that subject lots may be disposed of to
innocent purchasers for value to put them
beyond recovery. As it is, the other

Page 8 of 38
respondent, Anglo, has already intervened.
alleging that he bought the same lots from
respondent de Ocampo on January 6, 1966,
and that TCT No. 42217 was in fact issued to
him. 84 A new party, SalvacionMaraon, also
sought to intervene in the case and filed in
respondent Court of Appeals a motion to
dismiss Republic's appeal before the said
Court. 85
Finally, We held in Reyes, et al. v. Borbon, et
al. 86 "(W)hen the attention of the Court of
Land Registration is called to the fact that the
same land has been registered in the name of
two different persons, it is the duty of said
court to order an investigation of that fact and
that should be done even without requiring
the parties to show that a fraud has been
committed in during the double registration.
When it is established that the same has
been registered in the name of two different
person the titile should remain in the name of
the person securing the first registration." This
Court further held that " (T)he very purpose of
the Torrens System would be destroyed if the
same land may be subsequently brought
under a second action for registration. 87
3. The foregoing overriding considerations
then the alleged lack of jurisdiction and the
alleged fraudulent misrepresentations and
machinations, which, buttressed by strong
evidence, can nullity the second registration
and/or set aside OCT No. 576 issued to
respondent de Ocampo taken in relation
with the procedural and substantive
implications which could and would arise if
the appeal were dismissed, namely, the risk
that the holdings may be transacted to third
parties and the fact that Republic's action to

recover tile holdings would give rise to


multiplicity of suits compel Us to conclude
that the only recourse in the interest of just
and expeditious proceedings. considering that
these have been pending for close to twenty
(20) years now is to suspend Our rules
and/or to except this case from their
operation. For when the operation of the
Rules of will lead to an injustice We have, in
justifiable instances, resorted to this
extraordinary remedy to prevent it. 88 The
Rules have been drafted with the primary
objective of enhancing fair trials and
expediting justice. 89 As a corollary, if their
application and operation tend to subvert and
defeat instead of promote and enhance it,
their suspension is justified. In the words of
Justice Antonio P. Barredo in his concurring
opinion in Estrada v. Sto. Domingo, "(T)his
Court, through the revered and eminent Mr.
Justice Abad Santos, found occasion in the
case of C Viuda de Ordoveza v. Raymundo,
to lay down for recognition in this jurisdiction
the sound rule in the administration of justice
holding that 'it is always in the power of the
court (Supreme Court) to suspend its own
rules or to except a particular case from its
operation, whenever the purposes of justice
required it ... 90
Exceptions to the operation of the mandatory
and jurisdictional character of the rules on
perfection of appeals are to be noted in
Sarmiento v. Salud, et al., 91 penned by
Justice J.B. Reyes, Dequito v. Lopez 92 and
Carillo v. Allied Workers Association of the
Philippines 93 both written for the Court by
Justice E. M. Fernando, decided years after
the Revised Rules of Court took effect in
January, 1964. In the Sarmiento case, the late

appeal was allowed on the ground of laches


on the part of the appellees, the filing of the
motion to dismiss having taken place six (6)
years after the brief for appellees was filed,
and after the case was submitted for decision.
This, according to the Court, "constitutes a
unique instance of laches without comparable
precedent in the records of the Court. 94 The
Dequito and Carillo cases, upon the other
hand, took into account the fact that labor
cases were involved. Justice Fernando
expressly noted in the Dequito case that "in
the light of the constitutional as well as codal
and statutory mandates, there being an
explicit command of protection to labor as
well as the promotion of social justice," 95 the
motion to dismiss the late appeal which was
"filed much too late" hardly deserved
sympathy or consideration. 96 In the Carillo
case, no question whatsoever as to the late
appeal was raised, hence, "it would seem that
whatever right to contest the jurisdiction could
have been availed of is by now no longer in
existence. 97 Continuing, Justice Fernando
stated that "Social justice would be a
meaningless term if in a situation like the
present, an element of rigidity would be
affixed to procedural precepts and made to
recover the matter. Flexibility should not be
ruled out. Precisely, what is sought to be
accomplished by such a fundamental
principle expressly so declared by the
Constitution is the effectiveness of the
community's effort to assist the economically
underprivileged." The responsibility to protect
labor is incumbent "not only on the legislative
and executive branches but also on the
judiciary, to translate this pledge into a living
reality. 98

Page 9 of 38

While the above exceptions are predicated on


different grounds, they nevertheless support
the view that the rigid adherence to the rules
on perfection of appeals may and should be
relaxed where compelling reasons so warrant.
The grounds invoked in this case not only
lack of jurisdiction but gross injustice itself
more than justify the exception considering
further that the delay in the perfection of the
appeal involved six (6) days only.

PREMISES CONSIDERED, the resolution of


the Court of Appeals, dated August 21, 1969,
dismissing the appeal, as well as its
resolution of November 14, 1969, denying
petitioner
Republic's
motion
for
reconsideration in CA G.R. Nos. 40683-84 are
hereby SET ASIDE. The case is remanded to
the said Court to give due course to and
consider on its merits Republic's appeal. No
costs.

4. Finally, enshrined in our legal and judicial


annals is the maximum Chat no person
should enrich himself at the expense or
prejudice of others. 99 Courts should not be
used as instruments Lo disregard this
elemental and basic norm which is the
essence of justice and fair play. The whole
trust of our laws on civil relations enjoins all
those who come before the courts of justice to
observe true faith and candor in their dealings
with one another the government included.
100 The commendable and determined
efforts on the part of the citizenry to fashion a
New Society rid of graft, corruption and the
persistent malaise of land grabbing, will be
set back, if the subject lots consisting of
close to 300 hectares which are devoted to
educational purposes have indeed been
wrongfully titled to respondent de Ocampo,
Happily, We can at this stage still prevent this,
if true, by setting aside the dismissal of
Republic's appeal and according the parties
the opportunity in this proceeding, and without
further need to re-litigate, to terminate this
litigation, which has been pending for close to
twenty (20) long years in fairness to both
parties.

Castro, C.J., Fernando, Muoz Palma,


Concepcion, Jr., Fernandez and Guerrero,
JJ., concur.
Barredo, Makasiarand Antonio, JJ., took no
part.
Separate Opinions
TEEHANKEE, J., concurring:
This case illustrated graphically once more
'the correctness of the Court's turning away
from and setting aside of the rigid material
data rule in the perfection of appeals and its
adoption, in the interest of substantial justice
as against mere technicality, of the liberal rule
since the leading case of Berkenkotter vs.
Court of Appeals 1 that "the mere absence of
a formal order granting the motion for
extension of time to file the record on appeal
should not be fatal to the petitioner if the
record on appeal filed within the requested
extension period was approved by the court a
quo.
Here, even conceding that the record on
appeal was filed six (6) days later beyond the

requested
extension
period,
special
considerations have been shown in the case
at bar for the application of the principle of
substantial justice as set out in the main
opinion of Mr. Justice Santos. Among others,
it should be stressed that the State's record
On appeal was approved as per the trial
court's Order of December 4, 1967 with the
express statement that there was no
opposition from respondents-appellees to its
approval; and that the State's claims, that its
e e preponderantly shows that the trial court
had no jurisdiction to entertain the land
registration application of respondent de
Ocampo filed belatedly after forty-six years
and
with
alleged
fraudulent
misrepresentations and machinations since
the lots in question (some 289 hectares of
prime sugar land) were long ago before 1919
already duly registered in the name of the
predecessor-vendor of Esteban Jalandoni
who subsequently bequeathed the same to
the Bureau of Education exclusively for
educational purposes, which were rejected by
the trial court on erroneous grounds, raise a
jurisdictional issue that should properly be
reviewed and determined by the appellate
court.
It should be further stressed that to uphold the
appellate court's peremptory dismissal of the
State's appeal would bar the State from
"seeking again to recover the lots in a
different action that may still be legally
available to it after the appeal is dismissed"
notwithstanding
the
main
opinion's
declaration to the effect 2 since the petitioner
State would be foreclosed by the principle of
res adjudicata from filing still another suit for
the recovery of the lots in question. And the

Page 10 of 38
State itself in its comment of February 13,
1970 on respondents' motion to dismiss (filed
through then Solicitor General, now a
member of this Court, Associate Justice Felix
Q. Antonio) expressly so admitted "that if the
petition is dismissed, thereby sustaining the
resolution of the Court of Appeals dismissing
the appeal by the Government, then the latter
would have no further remedy. Certainly, to
lose a remedy resulting in unjust deprivation
of one's property cannot be categorized
except as substantial. 3
The precedent if Paulino vs. Court of Appeals
4 what re the Court ordered the giving of due
course to an appeal notwithstanding that the
same was admittedly filed two days beyond
the reglementary period and had been
therefore rejected by the appellate court is
fully applicable to the case at bar. We cited
therein inter alia the demands of substantial
justice and the presence of special
circumstances in this case) for giving due
course to the appeal and reiterated that
"(T)he
underlying
principle
in
the
administration of justice and application of the
rules is substantial justice and fair play. As
restated by the Court in Obut vs. Court of
Appeals, 5 (W)e cannot look with favor on a
course of action which would place the
administration of justice in a straight-jacket for
then the result would be a poor kind of justice
if there would be justice at all. Verily, judicial
orders, such as the one subject of this
petition, are issued to be obeyed, nonetheless
a non-compliance is to be dealt with as the
circumstances attending the case may
warrant. What should guide judicial action is
the principle that a party-litigant is to be given
the fullest opportunity to establish the merits

of his complaint or defense rather than for him


to lose life, liberty, honor or property on
technicalities.
As in the case of Carco Motor Sales, Inc. vs.
of Appeals, 6 wherein we also set aside the
appellate courts dismissal of an appeal for
failure to file appellant's brief due to the fault
and negligence of counsel's office secretary,
we are herein persuaded that the higher
interests of justice and fairness justify the
setting
aside
of
respondent
court's
peremptory dismissal of petitioner's appeal
and that the exercise of the Court's "inherent
right" to reinstate an appeal that was
dismissed as the result of fraud, mistake or
unavoidable casualty is fully justified under
the circumstances of the case at bar.
Referring briefly to the view expressed that
the State's record on appeal be remanded so
that its appeal would cover not only the denial
of its petition for relief but the lower court's
adverse judgment on the merits, 7 it should
be noted that as stated hereinafter the trial
court in effect granted the petition for relief
and reopened the case, setting aside its first
adverse decision of August 3, 1965, (from
which no appeal was taken), although it again
rendered an adverse judgment against the
State as per its decision of August 30, 1967,
which is the subject of the State's appeal. The
judgment of the Court has therefore properly
ordered the reinstatement of the State's
appeal and remanded the same to
respondent
Court
of
Appeals
for
determination on its merits without need of
amending the record on appeal, since the
State's notice of appeal (as well as its
pleadings and brier duly appealed from the

trial court's decision of August 30, 1967 "on


the ground that said decision is not in
accordance with law and the evidence
adduced in these cases. 8
One final word. The record shows a sorry lack
of care and dedication to duty on the part of
the staff of the State's counsel that almost
cost the State by default the forfeiture and
loss of the valuable lots involved, were it not
for the special circumstances and the
interests of substantial justice which have led
the Court to set aside respondent court's
summary dismissal of the appeal. The State's
suit against respondents for recovery of the
land was first dismissed by the trial court in its
judgment of August 3, 1965 and although the
State was duly served with copy thereof on
August 13, 1965, it took no appeal therefrom
since the docket clerk misfiled the same in
another case and the period for appeal
lapsed. 9 Fortunately, the State's petition for
relief from judgment was eventually granted
by the trial court which reopened the case
and received additional evidence from the
State, although ultimately it rendered its
questioned judgment of August 30, 1967
again dismissing the State's suit. Here again,
the appeal taken by the State appears to
have been perfected late by six (6) days,
which normally would have meant forfeiture of
the right of appeal. The attention of the
Solicitor General should be called to these
acts of carelessness and neglect so that the
proper remedial and administrative measures
may be taken to avoid the recurrence thereof.
AQUINO, J., concurring:
I concur in the well-written opinion of Justice
Santos. I will even go farther. I vote for the

Page 11 of 38
remand of the case to the trial court so that
the State can amend its record on appeal and
appeal from the lower court's decision of
August 3, 1965, dismissing its complaint for
recovery of the possession of the disputed
land and ordering the registration thereof in
the name of Alfredo V. de Ocampo. The
appeal from a judgment denying relief under
Rule 38 includes the review of the judgment
on the merits (Sec. 2, Rule 41, Rules of
Court).
The ultimate issue is whether the land already
registered as patrimonial property of the State
(for the use of the Bureau of Public Schools),
as allegedly shown in TCT No. 6014, can still
be registered in the name of another person.
My answer is that it cannot be done because
section 46 of Act 496 provides that no title to
registered land in derogation to that of the
registered owner shall be acquired by
prescription or adverse possession. The
action to recover possession of registered
land does not prescribe.
Separate Opinions
TEEHANKEE, J., concurring:
This case illustrated graphically once more
'the correctness of the Court's turning away
from and setting aside of the rigid material
data rule in the perfection of appeals and its
adoption, in the interest of substantial justice
as against mere technicality, of the liberal rule
since the leading case of Berkenkotter vs.
Court of Appeals 1 that "the mere absence of
a formal order granting the motion for
extension of time to file the record on appeal
should not be fatal to the petitioner if the
record on appeal filed within the requested

extension period was approved by the court a


quo.
Here, even conceding that the record on
appeal was filed six (6) days later beyond the
requested
extension
period,
special
considerations have been shown in the case
at bar for the application of the principle of
substantial justice as set out in the main
opinion of Mr. Justice Santos. Among others,
it should be stressed that the State's record
On appeal was approved as per the trial
court's Order of December 4, 1967 with the
express statement that there was no
opposition from respondents-appellees to its
approval; and that the State's claims, that its
e e preponderantly shows that the trial court
had no jurisdiction to entertain the land
registration application of respondent de
Ocampo filed belatedly after forty-six years
and
with
alleged
fraudulent
misrepresentations and machinations since
the lots in question (some 289 hectares of
prime sugar land) were long ago before 1919
already duly registered in the name of the
predecessor-vendor of Esteban Jalandoni
who subsequently bequeathed the same to
the Bureau of Education exclusively for
educational purposes, which were rejected by
the trial court on erroneous grounds, raise a
jurisdictional issue that should properly be
reviewed and determined by the appellate
court.
It should be further stressed that to uphold the
appellate court's peremptory dismissal of the
State's appeal would bar the State from
"seeking again to recover the lots in a
different action that may still be legally
available to it after the appeal is dismissed"

notwithstanding
the
main
opinion's
declaration to the effect 2 since the petitioner
State would be foreclosed by the principle of
res adjudicata from filing still another suit for
the recovery of the lots in question. And the
State itself in its comment of February 13,
1970 on respondents' motion to dismiss (filed
through then Solicitor General, now a
member of this Court, Associate Justice Felix
Q. Antonio) expressly so admitted "that if the
petition is dismissed, thereby sustaining the
resolution of the Court of Appeals dismissing
the appeal by the Government, then the latter
would have no further remedy. Certainly, to
lose a remedy resulting in unjust deprivation
of one's property cannot be categorized
except as substantial. 3
The precedent if Paulino vs. Court of Appeals
4 what re the Court ordered the giving of due
course to an appeal notwithstanding that the
same was admittedly filed two days beyond
the reglementary period and had been
therefore rejected by the appellate court is
fully applicable to the case at bar. We cited
therein inter alia the demands of substantial
justice and the presence of special
circumstances in this case) for giving due
course to the appeal and reiterated that
"(T)he
underlying
principle
in
the
administration of justice and application of the
rules is substantial justice and fair play. As
restated by the Court in Obut vs. Court of
Appeals, 5 (W)e cannot look with favor on a
course of action which would place the
administration of justice in a straight-jacket for
then the result would be a poor kind of justice
if there would be justice at all. Verily, judicial
orders, such as the one subject of this
petition, are issued to be obeyed, nonetheless

Page 12 of 38
a non-compliance is to be dealt with as the
circumstances attending the case may
warrant. What should guide judicial action is
the principle that a party-litigant is to be given
the fullest opportunity to establish the merits
of his complaint or defense rather than for him
to lose life, liberty, honor or property on
technicalities.
As in the case of Carco Motor Sales, Inc. vs.
of Appeals, 6 wherein we also set aside the
appellate courts dismissal of an appeal for
failure to file.
G.R. No. 75919 May 7, 1987
MANCHESTER
DEVELOPMENT
CORPORATION, ET AL., petitioners,
vs.
COURT OF APPEALS, CITY LAND
DEVELOPMENT
CORPORATION,
STEPHEN ROXAS, ANDREW LUISON,
GRACE LUISON and JOSE DE MAISIP,
respondents.
GANCAYCO, J.:
Acting on the motion for reconsideration of
the resolution of the Second Division of
January 28,1987 and another motion to refer
the case to and to be heard in oral argument
by the Court En Banc filed by petitioners, the
motion to refer the case to the Court en banc
is granted but the motion to set the case for
oral argument is denied.
Petitioners in support of their contention
that the filing fee must be assessed on the
basis of the amended complaint cite the case

of Magaspi vs. Ramolete. 1 They contend that


the Court of Appeals erred in that the filing fee
should be levied by considering the amount of
damages sought in the original complaint.
The environmental facts of said case differ
from the present in that
1. The Magaspi case was an action for
recovery of ownership and possession of a
parcel of land with damages. 2 While the
present case is an action for torts and
damages and specific performance with
prayer for temporary restraining order, etc. 3
2. In the Magaspi case, the prayer in the
complaint seeks not only the annulment of
title of the defendant to the property, the
declaration of ownership and delivery of
possession thereof to plaintiffs but also asks
for the payment of actual moral, exemplary
damages and attorney's fees arising
therefrom in the amounts specified therein. 4
However, in the present case, the prayer is for
the issuance of a writ of preliminary
prohibitory injunction during the pendency of
the action against the defendants' announced
forfeiture of the sum of P3 Million paid by the
plaintiffs for the property in question, to attach
such property of defendants that maybe
sufficient to satisfy any judgment that maybe
rendered, and after hearing, to order
defendants to execute a contract of purchase
and sale of the subject property and annul
defendants' illegal forfeiture of the money of
plaintiff, ordering defendants jointly and
severally to pay plaintiff actual, compensatory
and exemplary damages as well as 25% of
said amounts as maybe proved during the
trial as attorney's fees and declaring the
tender of payment of the purchase price of

plaintiff valid and producing the effect of


payment and to make the injunction
permanent. The amount of damages sought
is not specified in the prayer although the
body of the complaint alleges the total amount
of over P78 Million as damages suffered by
plaintiff. 5
3. Upon the filing of the complaint there
was an honest difference of opinion as to the
nature of the action in the Magaspi case. The
complaint was considered as primarily an
action for recovery of ownership and
possession of a parcel of land. The damages
stated were treated as merely to the main
cause of action. Thus, the docket fee of only
P60.00 and P10.00 for the sheriff's fee were
paid. 6
In the present case there can be no such
honest difference of opinion. As maybe
gleaned from the allegations of the complaint
as well as the designation thereof, it is both
an action for damages and specific
performance. The docket fee paid upon filing
of complaint in the amount only of P410.00 by
considering the action to be merely one for
specific performance where the amount
involved is not capable of pecuniary
estimation is obviously erroneous. Although
the total amount of damages sought is not
stated in the prayer of the complaint yet it is
spelled out in the body of the complaint
totalling in the amount of P78,750,000.00
which should be the basis of assessment of
the filing fee.
4. When this under-re assessment of the
filing fee in this case was brought to the
attention of this Court together with similar
other cases an investigation was immediately

Page 13 of 38
ordered by the Court. Meanwhile plaintiff
through another counsel with leave of court
filed an amended complaint on September
12, 1985 for the inclusion of Philips Wire and
Cable Corporation as co-plaintiff and by
emanating any mention of the amount of
damages in the body of the complaint. The
prayer in the original complaint was
maintained. After this Court issued an order
on October 15, 1985 ordering the reassessment of the docket fee in the present
case and other cases that were investigated,
on November 12, 1985 the trial court directed
plaintiffs to rectify the amended complaint by
stating the amounts which they are asking for.
It was only then that plaintiffs specified the
amount of damages in the body of the
complaint in the reduced amount of
P10,000,000.00. 7 Still no amount of
damages were specified in the prayer. Said
amended complaint was admitted.
On the other hand, in the Magaspi case,
the trial court ordered the plaintiffs to pay the
amount of P3,104.00 as filing fee covering the
damages alleged in the original complaint as
it did not consider the damages to be merely
an or incidental to the action for recovery of
ownership and possession of real property. 8
An amended complaint was filed by plaintiff
with leave of court to include the government
of the Republic as defendant and reducing
the amount of damages, and attorney's fees
prayed for to P100,000.00. Said amended
complaint was also admitted. 9
In the Magaspi case, the action was
considered not only one for recovery of
ownership but also for damages, so that the
filing fee for the damages should be the basis

of assessment. Although the payment of the


docketing fee of P60.00 was found to be
insufficient, nevertheless, it was held that
since the payment was the result of an
"honest difference of opinion as to the correct
amount to be paid as docket fee" the court
"had acquired jurisdiction over the case and
the proceedings thereafter had were proper
and regular." 10 Hence, as the amended
complaint superseded the original complaint,
the allegations of damages in the amended
complaint should be the basis of the
computation of the filing fee. 11
In the present case no such honest
difference of opinion was possible as the
allegations of the complaint, the designation
and the prayer show clearly that it is an action
for damages and specific performance. The
docketing fee should be assessed by
considering the amount of damages as
alleged in the original complaint.
As reiterated in the Magaspi case the rule
is well-settled "that a case is deemed filed
only upon payment of the docket fee
regardless of the actual date of filing in court .
12 Thus, in the present case the trial court did
not acquire jurisdiction over the case by the
payment of only P410.00 as docket fee.
Neither can the amendment of the complaint
thereby vest jurisdiction upon the Court. 13
For an legal purposes there is no such
original complaint that was duly filed which
could be amended. Consequently, the order
admitting the amended complaint and all
subsequent proceedings and actions taken by
the trial court are null and void.
The Court of Appeals therefore, aptly ruled
in the present case that the basis of

assessment of the docket fee should be the


amount of damages sought in the original
complaint and not in the amended complaint.
The Court cannot close this case without
making the observation that it frowns at the
practice of counsel who filed the original
complaint in this case of omitting any
specification of the amount of damages in the
prayer although the amount of over P78
million is alleged in the body of the complaint.
This is clearly intended for no other purpose
than to evade the payment of the correct filing
fees if not to mislead the docket clerk in the
assessment of the filing fee. This fraudulent
practice was compounded when, even as this
Court had taken cognizance of the anomaly
and ordered an investigation, petitioner
through another counsel filed an amended
complaint, deleting all mention of the amount
of damages being asked for in the body of the
complaint. It was only when in obedience to
the order of this Court of October 18, 1985,
the trial court directed that the amount of
damages be specified in the amended
complaint, that petitioners' counsel wrote the
damages sought in the much reduced amount
of P10,000,000.00 in the body of the
complaint but not in the prayer thereof. The
design to avoid payment of the required
docket fee is obvious.
The Court serves warning that it will take
drastic action upon a repetition of this
unethical practice.
To put a stop to this irregularity, henceforth
all complaints, petitions, answers and other
similar pleadings should specify the amount
of damages being prayed for not only in the
body of the pleading but also in the prayer,

Page 14 of 38
and said damages shall be considered in the
assessment of the filing fees in any case. Any
pleading that fails to comply with this
requirement shall not bib accepted nor
admitted, or shall otherwise be expunged
from the record.
The Court acquires jurisdiction over any
case only upon the payment of the prescribed
docket fee. An amendment of the complaint or
similar pleading will not thereby vest
jurisdiction in the Court, much less the
payment of the docket fee based on the
amounts sought in the amended pleading.
The ruling in the Magaspi case 14 in so far as
it is inconsistent with this pronouncement is
overturned and reversed.
WHEREFORE, the motion for
reconsideration is denied for lack of merit.
SO ORDERED.

G.R. No. 85879 September 29, 1989


NG SOON, petitioner,
vs.
HON. ALOYSIUS ALDAY, REGIONAL TRIAL
COURT, QUEZON CITY, BILLIE GAN AND
CHINA
BANKING
CORPORATION,
respondents.
MELENCIO-HERRERA, J.:
Applying literally the ruling on docket fees
enunciated in Manchester Development
Corporation vs. Court of Appeals (L-75919,
May 7, 1987, 149 SCRA 562), respondent

Judge, on 11 August 1988, ordered (1) that


petitioner's Complaint below (in Civil Case
No. Q-52489), for reconstitution of a savings
account, and payment of damages and
attorney's fees, be expunged; and (2) that the
case be dismissed. He also denied, on 21
October 1988, the reconsideration sought by
petitioner of that Order.

8. She discovered finally that defendant


Billie T. Gan connived and colluded with the
officers and officials of CBC to withdraw all of
the aforesaid savings account of Mr.Gan Bun
Yaw by forging his signature. This has to be
done because Mr.Gan Bun Yaw slipped into a
comatose condition in the hospital and could
not sign any withdrawal slip.

The aforementioned savings account was


allegedly maintained with the China Banking
Corporation (CBC) by Gan Bun Yaw, both of
whom are respondents herein. Petitioner, Ng
Soon, claims to be the latter's widow.

xxxxxxxxx

The pertinent portions of the Complaint and


Prayer read as follows:
2. During his lifetime, Mr.Gan Bun Yaw
opened Savings Account No. 17591-2 with
CBC wherein he deposited P900,000.00 more
or less.
3. Before his death on January 3, 1987 he
lapsed into a coma until he finally took his last
breath. But his passbook still showed a
deposit of P900,000.00 more or less.
xxxxxxxxx
5. For almost three (3) long years, she
looked for the deposit passbook with the help
of her children to no avail.
xxxxxxxxx
7. She discovered further that aforesaid
savings account was closed by defendant
CBC on December 8, 1988. x xx.

11. Due to the wanton and unfounded


refusal and failure of defendants to heed her
just and valid demands, she suffered actual
damages in the form of missing money in
aforesaid savings account and expenses of
litigation.
12. Due also to the unfounded and
malicious refusal of defendants to heed her
just and valid demands, she suffered moral
damages, the amount whereof she leaves to
the discretion of the Court.
13. Due likewise to the unfounded and
wanton refusal and failure of defendants to
heed her just and valid demands, she
suffered exemplary damages, the amount
whereof she leaves to the discretion of the
Court.
14. Due finally to the unfounded and
wanton refusal and failure of defendants to
heed her just and valid demands, she was
constrained to hire the services of counsel,
binding herself to pay the amount equivalent
to twenty percent payable to her, thereby
suffering to the tune thereof.
PRAYER

Page 15 of 38
WHEREFORE, plaintiff respectfully prays
that this Honorable Court render judgment:
1. Ordering defendants China Banking
Corporation to reconstitute Savings Account
No. 47591-2 in the name of Mr.Gan Bun Yaw
in the amount of P900,000.00 with interest
from December 8,1977 or ordering them both
to pay her the principal and interest from
December 9, 1977, jointly and severally.
2. Ordering both defendants to pay moral
and exemplary damages of not less than
P50,000.00.
3. Ordering both defendants to pay her
attorney's fees equivalent to twenty percent of
all amounts reconstituted or payable to her,
but not less than P50,000.00.
She prays for such other and further relief
to which she may be entitled in law and equity
under the premises. [Emphasis supplied] (pp.
11-13, Rollo)
For the filing of the above Complaint,
petitioner paid the sum of P3,600.00 as
docket fees.
Respondent Billie Gan and the Bank,
respectively, moved for the dismissal of the
Complaint. Subsequently, respondent Gan,
joined by the Bank, moved to expunge the
said Complaint from the record for alleged
non-payment of the required docket fees.
On 11 August 1988, respondent Judge
issued the questioned Order granting the
"Motion to Expunge Complaint." He
explained:

It can thus be seen that while it can be


considered at best as impliedly specifying the
amount (namely, P900,000.00, more or less)
of what is referred to in its par. 11 as 'missing
money 'which apparently is the main part of
the alleged actual damages), the body of the
complaint does not specify the following, to
wit: the amount of the rest of the alleged
actual damages; the amount of the alleged
moral damages; the amount of the alleged
exemplary damages; and, the amount of the
alleged attorney's fees. As regards the
alleged attorney's fees, in particular, the
clause 'the amount equivalent to twenty
percent payable to her' is vague and
indefinite. It leaves to guesswork the
determination of the exact amount relative to
which the 'twenty percent' shall be reckoned.
Is it the amount of P900,000.00, more or
less? Or is it the total amount of all the actual
damages? Or is it the grand total amount of
all
the
damages-actual,
moral,
and
exemplary-'payable to her'?

found in the complaint's body referred to


earlier. What exactly is the amount relative to
which the 'twenty percent' shall be
determined? Is it the amount of P900,000.00,
more or less? Or is it the total amount of all
the actual damages? Or is it the grand total
amount of all the damages-actual, moral, and
exemplary-'payable to her'? Certainly, the
great difference between any of these
amounts, on the one hand, and the amount of
P50,000.00 in the phrase 'not less than
P50,000.00' in No. 3 of the prayer, on the
other hand, is quite too obvious to need
underscoring.

As regards the prayer of the complaint,


while it may be regarded as specific enough
as to the principal sum of P900,000.00 as
actual damages, it cannot be so regarded
with respect to the amount of moral and
exemplary damages (No. 2 of the prayer) and
attorney's fees (No. 3 of the prayer); for,
evidently, the phrase 'not less than
P50,000.00' in each of Nos. 2 and 3 of the
prayer merely fixes the minimum amount, but
it does not mean that plaintiff is not praying
for an unspecified sum much higher than said
minimum. And, again, the clause 'equivalent
to twenty percent of all amounts reconstituted
or payable to her' in No. 3 of the prayer is as
vague and indefinite as the similar clause

xxxxxxxxx

Needless to state, implicit in the obligation


to specify is the duty to be clear and definite.
A purported specification which is vague and
indefinite obviously is no specification at all;
indeed, it will serve no purpose other than to
evade the payment of the correct filing fees
by misleading the docket clerk in the
assessment of the filing fees.

WHEREFORE, the Court hereby grants


defendants'
aforesaid
'MOTION
TO
EXPUNGE COMPLAINT and hereby denies
plaintiffs aforesaid 'URGENT OMNIBUS
MOTION (ETC.)' and 'OPPOSITION (ETC.)'
inclusive of all the prayers contained therein
and, accordingly, plaintiff's complaint herein is
hereby deemed EXPUNGED from the record.
Further, being rendered moot and academic
as a result hereof, defendant Billie T. Gan's
'MOTION TO DISMISS' dated April 25,1988
and defendant China Banking Corporations'
'MOTION TO DISMISS' dated May 25,1988
are hereby dismissed. (pp. 16-18, Rollo)

Page 16 of 38
Petitioner's Motion for the reconsideration
of the said Order having been denied, she
asks for its review, more properly for a Writ of
Certiorari.
The Petition is anchored on two grounds,
namely:
1. The doctrine laid down in the
Manchester case was incorrectly applied by
respondent Judge; and
2. Respondent Judge acted with grave
abuse of discretion when he ordered the
Complaint expunged from the record although
petitioner had paid the necessary filing fees.
During the pendency of this case,
respondent Gan filed a Manifestation alleging,
among others, that petitioner is an impostor
and not the real Ng Soon, wife of Gan Bun
Yaw, since the real Mrs.Gan Bun Yaw (Ng
Soon) died on 29 July 1933, as shown by a
Certificate issued on 27 April 1989 by, and
bearing the seal of, the An Hai Municipal
Government.
This allegation was, however, denied by
petitioner
in
her
"Sur-rejoinder
to
Manifestation" filed on 12 August 1989, to
which respondent Gan has countered with a
Reply on 9 September 1989.
We resolved to give due course to the
Petition and dispensed with the submittal of
Memoranda, the issues having been
thoroughly threshed out by the parties.
Upon the facts, the pleadings, and the law,
we grant the Petition.

It is true that Manchester laid down the rule


that all Complaints should specify the amount
of damages prayed for not only in the body of
the complaint but also in the prayer; that said
damages shall be considered in the
assessment of the filing fees in any case; and
that any pleading that fails to comply with
such requirement shall not be accepted nor
admitted, or shall, otherwise, be expunged
from the record.
While it may be that the body of petitioner's
Complaint below was silent as to the exact
amount of moral and exemplary damages,
and attorney's fees, the prayer did specify the
amount of not less than P50,000.00 as moral
and exemplary damages, and not less than
P50,000.00 as attorney's fees. These
amounts were definite enough and enabled
the Clerk of Court of the lower Court to
compute the docket fees payable.
Similarly, the principal amount sought to be
recovered as "missing money" was fixed at
P900,000.00. The failure to state the rate of
interest demanded was not fatal not only
because it is the Courts which ultimately fix
the same, but also because Rule 141, Section
5(a) of the Rules of Court, itemizing the filing
fees, speaks of "the sum claimed, exclusive
of interest." This clearly implies that the
specification of the interest rate is not that
indispensable.
Factually, therefore, not everything was left
to "guesswork" as respondent Judge has
opined.
The
sums
claimed
were
ascertainable, sufficient enough to allow a
computation pursuant to Rule 141, section
5(a).

Furthermore, contrary to the position taken


by respondent Judge, the amounts claimed
need not be initially stated with mathematical
precision. The same Rule 141, section 5(a)
(3rd paragraph), allows an appraisal "more or
less." Thus:
In case the value of the property or estate
or the sum claimed is less or more in
accordance with the appraisal of the court,
the difference of fee shall be refunded or paid
as the case may be.
In other words, a final determination is still
to be made by the Court, and the fees
ultimately found to be payable will either be
additionally paid by the party concerned or
refunded to him, as the case may be. The
above provision clearly allows an initial
payment of the filing fees corresponding to
the estimated amount of the claim subject to
adjustment as to what later may be proved.
.... there is merit in petitioner's claim that
the third paragraph of Rule 141, Section 5(a)
clearly contemplates a situation where an
amount is alleged or claimed in the complaint
but is less or more than what is later proved.
If what is proved is less than what was
claimed, then a refund will be made; if more,
additional fees will be exacted. Otherwise
stated, what is subject to adjustment is the
difference in the fee and not the whole
amount (Pilipinas Shell Petroleum Corp., et
als., vs. Court of Appeals, et als., G.R. No.
76119, April 10, 1989).
Significantly, too, the pattern in Manchester
to defraud the Government of the docket fee
due, the intent not to pay the same having
been obvious not only in the filing of the

Page 17 of 38
original complaint but also in the filing of the
second amended complaint, is patently
absent in this case. Petitioner demonstrated
her willingness to abide by the Rules by
paying the assessed docket fee of P
3,600.00. She had also asked the lower Court
to inform her of the deficiency, if any, but said
Court did not heed her plea.

SO ORDERED.

Additionally, in the case of Sun Insurance


Office Ltd., et al., vs. Hon. Maximiano
Asuncion et al. (G.R. Nos. 79937-38,
February 13, 1989), this Court had already
relaxed the Manchester rule when it held,
inter alia,:

HONORIA RAYMUNDO, respondent.

1. It is not simply the filing of the complaint


or appropriate initiatory pleading, but the
payment of the prescribed docket fee, that
vests a trial court with jurisdiction over the
subject matter or nature of the action. Where
the filing of the initiatory pleading is not
accompanied by payment of the docket fee,
the court may allow payment of the fee within
a reasonable time but in no case beyond the
applicable prescriptive or reglementary period
(Italics ours).
In respect of the questioned Identity of
petitioner, this is properly a matter falling
within the competence of the Court a quo, this
Court not being a trier of facts.
WHEREFORE, the assailed Orders of
respondent Judge, dated 11 August 1988 and
21 October 1988, are SET ASIDE, and he is
hereby directed to reinstate Civil Case No. Q52489 for determination and proper
disposition of the respective claims and rights
of the parties, including the controversy as to
the real identity of petitioner. No costs.

G.R. No. 45155


CARMEN C.
petitioner,

VIUDA

DE

ORDOVEZA,

vs.

ABAD SANTOS, J.:


Petitioner is the appellee and respondent the
appellant in a case now pending on appeal in
the Court of Appeals, entitled Domingo
Ordoveza
vs.
HonoriaRaymundo,
and
numbered 44763 in the records of the court.
The period for the filing of the appellant's brief
in that case expired on March 20, 1936. On
March 31, 1936 the Court of Appeals
dismissed the appeal for failure of the
appellant to file her brief within the time
prescribed by the rules of the court, and
ordered that after fifteen days the record of
the case be remanded to the court below. On
April 6, 1936 the appellant filed a petition for
reconsideration of the order dismissing the
appeal, which petition was denied on April 8,
1936. A second petition for reconsideration
was filed by the appellant, and in view thereof
the Court of Appeals on April 14, 1936,
passed the following resolution:
Upon consideration of the second petition of
the attorneys for the appellant in case G. R.
44763,
Domingo
Ordoveza
vs.
HonoriaRaymundo, etc. praying that the
resolution of this court of March 31, 1936,
dismissing the appeal for failure to file their
brief be reconsidered; in view of the reasons

given in said petition and the special


circumstances of the case, said resolution is
hereby set aside and the appeal reinstated;
provided, however, that the attorneys for the
appellant shall file their printed brief within five
days from notice hereof.
On April 17,1936 the appellee filed a motion
praying that the resolution above quoted be
reconsidered and set aside, which motion
was denied.
Upon the foregoing state of facts, the
appellee filed this petition for a writ of
certiorari with a view to having declared null
and void the order of the Court of Appeals
restating the appeal.
Petitioner now contends (1) that the Court of
Appeals had no power to reinstate the appeal
because it lost jurisdiction of the case on April
5, 1936, in that fifteen days had already
elapsed from March 20, 1936, the date when
the period fixed for the filing of the appellant's
brief expired; and (2) that granting that the
Court of Appeals retained jurisdiction of the
case, it had no authority to grant the appellant
an additional period of five days within which
to file her brief.
By
section
145-P
of
the
Revised
Administrative Code as amended by
Commonwealth Act No. 3, and in virtue of the
resolution adopted by the Court of Appeals on
February 8, 1936, the rules of the Supreme
Court governing the filing of briefs and the
dismissal of appeals are applicable to cases
cognizable by the Court of Appeals.

Page 18 of 38
Rules 23 and 24 of the Supreme Court are
pertinent to the consideration of the present
petition. The rules read as follows:
23. Motions for extension of time for the filing
of briefs must be presented before the
expiration of the time mentioned in Rules 21
and 22, or within a time fixed by special order
of the court. No more than one extension of
time for the filing of briefs shall be allowed,
and then only for good and sufficient cause
shown, to be demonstrated by affidavit.
24. If the appellant, in any civil case, fails to
serve his brief within the time prescribed by
these rules the court may, on motion of the
appellee and notice to the appellant, or on its
own motion, dismiss the bill of exceptions or
the appeal.
1. The first contention of the petitioner rests
on the theory developed in his argument that
upon the failure of the appellant to file her
brief within the time prescribed by the rules of
the court, her appeal became, ipso facto,
dismissed. Consequently, he argues that at
the expiration of the period of fifteen days
from March 20, 1936, the Court of Appeals
lost jurisdiction of the case, and had,
therefore, no power to reinstate the appeal.
This view finds no support in the rules of this
court. Rule 24 above transcribed clearly
indicates the contrary view when it says that
upon failure of the appellant to file his brief
within the period prescribed by the rules, the
court "may", on motion of the appellee and
notice to the appellant, or its own motion,
dismiss the bill of exceptions or the appeal.
The use of the word "may" implies that the
matter of dismissing the appeal or not rests
within the sound discretion of the court, and

that failure of the appellant to file his brief


within the time prescribed by the rules does
not have the effect of dismissing the appeal
automatically. Viewed in this light, the period
of fifteen days must be counted in the case
under consideration not from March 20, 1936,
but from March 31, 1936. Having been
entered on April 14, 1936, the order
reinstating the appeal came within such
fifteen-day period.
2. Granted that the Court of Appeals still had
jurisdiction of the case when it reinstated the
appeal, it seem reasonable to conclude that it
also had authority to grant the appellant an
additional period of five days within which to
file her brief. Rule 23 provides in specific
terms that the court may by special order fix a
time within which motions for extension of
time for the filing of briefs must be presented.
It would seem to be within the spirit of this
rule to hold that the court may grant either the
appellant or appellee an additional time for
the filing of his brief even without any
previous application therefor. Moreover, as
the Supreme Court of the United States has
aptly observed, "it is always in the power of
the court to suspend its own rules, or to
except a particular case from its operation,
whenever the purposes of justice require it."
(U. S. vs. Breitling, 20 How., 252; 15 Law. ed.,
900, 902.)
We conclude that the Court of Appeals had
authority to reinstate the appeal in the
aforesaid case numbered 44763 in its
records, and to grant the appellant an
additional period of file days within which to
file her brief.

The petition for a writ of certiorari must be


denied. So ordered.
[G.R. No. 141117. March 25, 2004]
UNITED PULP AND PAPER CO., INC.,
petitioner, vs. UNITED PULP AND PAPER
CHAPTER-FEDERATION
OF
FREE
WORKERS, respondent.
SANDOVAL-GUTIERREZ, J.:
For our resolution is the instant petition for
review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure, as amended,
assailing the Resolutions dated October 12,
1999[1] and December 10, 1999[2] of the
Court of Appeals in CA-G.R. SP No. 55245,
entitled United Pulp and Paper Co., Inc. vs.
United Pulp and Paper Chapter-Federation of
Free Workers.
The antecedent facts giving rise to the
controversy at bar are as follows:
Sometime in July 1991, United Pulp and
Paper Co., Inc., petitioner, implemented a
Promotions Policy[3] that recognizes the
excellent and meritorious work performance
of deserving employees during the last twelve
(12) months. The Promotions Policy sets forth
the following guidelines:
VI. ADMINISTRATIVE GUIDELINES
1. Except in abnormal situations (subject to
approval
by the
General
Manager),
promotions shall be made only if a vacancy in
the next higher position occurs and
Management has decided to fill-up such

Page 19 of 38
vacancy through approval of the Personnel
Requisition form.

previously promoted, enjoy the 5% salary


increase for their pay class movements.

x xx

The controversy was submitted to the


grievance machinery, but the parties failed to
reach an acceptable settlement.

9. In case of union employees, the


promotional
increase
shall
be
5%
compounded for every pay class jump.
However, the resulting effect of 5%
promotional increase shall not cause the
promoted employees salary to exceed that of
the lowest paid incumbent within first, the
section, second, department, and third,
division. If this constraint will result to a
promotional increase of lower than 3% over
his previous salary, the employee will receive
an increase of 3%.
x x x.[4]
On April 1, 1998, TeodoricoSimbulan was
promoted from Welder I to Welder II with the
corresponding pay class (PC) movement from
PC V to PC VIII.
For and in behalf of Simbulan, United Pulp
and Paper Chapter-Federation of Free
Workers,
respondent,
questioned
the
regularity or correctness of the salary
increase granted by petitioner. Invoking
Section 1, Article XVII of the collective
bargaining agreement (CBA),[5] respondent
maintains that Simbulan is entitled to a 5%
salary increase (for every pay class
movement) because such salary increase
does not exceed the salary rates of other
incumbents. Respondent also contends that
petitioner is guilty of discrimination against
Simbulan since other employees, like Enrique
Cruz and Joselito de Castro who were

Thus, the matter was elevated to a panel of


Voluntary Arbitrators of the National
Conciliation and Mediation Board (NCMB),
Regional Branch No. III at San Fernando,
Pampanga, docketed as NCMB-AC-583-RB310-024-98.
On July 1, 1999, the Voluntary Arbitrators
rendered a Decision[6] partly reproduced as
follows:
In light of all the foregoing, this Panel holds
that the promotional increase in the case of
union employees is 5% compounded for
every pay class jump unless the effect of such
increase will be such as to cause the
promoted employees salary to exceed that of
the lowest paid incumbent in the same
position as that to which the employee is
being promoted, in which case the
promotional increase shall be limited to not
less than 3%.
Consequently, in the case of the subject
employee, TeodoricoSimbulan, since there is
no showing that, for the second and third
jumps in his promotion on 1 April 1998, his
salary would have exceeded that of the
lowest paid incumbent in the pertinent
position if granted a 5% promotional increase,
he is entitled to a salary increase of 5%+5%
+5%, compounded for each pay class,
effective as of the said date.

WHEREFORE, respondent United Pulp and


Paper Co., Inc. is hereby ordered to pay
TeodoricoSimbulan the difference between
the promotional increase of 5%+5%+5%,
compounded for each pay class, and the
salary increase be actually received as a
result of his promotion, effective as of 1 April
1998.
The respondent is also directed to continue
implementing the promotions policy, in
appropriate cases, in the manner stated in
this Decision.
SO ORDERED.
Petitioner filed a motion for reconsideration
but was denied by the Voluntary Arbitrators in
a Resolution[7] dated September 3, 1999.
On October 6, 1999, petitioner filed with the
Court of Appeals a petition for review under
Rule 43 of the 1997 Rules of Civil Procedure,
as amended, assailing the Decision and
Resolution of the Voluntary Arbitrators.
In a Resolution dated October 12, 1999, the
Appellate Court dismissed the petition outright
for being insufficient in form, thus:
"1. The verification and certification of nonforum shopping was signed only by counsel
for the petitioner corporation, rather than by a
duly-authorized officer thereof;
2. The affidavit of service is inadequate, as
the registry receipts evidencing mailing of
copies of the petition to the respondent were
not attached;

Page 20 of 38
3. Absence of the mandatory written
explanation required under Sec. 11, Rule 13,
1997 Rules of Civil Procedure to explain why
personal service upon the respondents of
copies of the petition was not resorted to.
The foregoing defects warrant an outright
dismissal of the instant petition.
IN VIEW THEREOF, the Petition is hereby
DENIED DUE COURSE and DISMISSED.
SO ORDERED.
On October 29, 1999, petitioner filed a motion
for reconsideration but was denied by the
Appellate Court in a Resolution dated
December 10, 1999.
Hence, this petition for review on certiorari
alleging that the Court of Appeals seriously
erred in dismissing its petition for review on
mere technicalities.
We agree with the Court of Appeals. Section
5, Rule 7 of the same Rules[8] provides that it
is the plaintiff or principal party who shall
certify under oath in the complaint or other
initiatory pleading that he has not commenced
any action involving the same issues in any
court, tribunal or quasi-judicial agency.
Here, only petitioners counsel signed the
certification against forum-shopping. There is
no showing that he was authorized by the
petitioner company to represent the latter and
to sign the certification.
In Sy Chin vs. Court of Appeals,[9] we held
that the petition is flawed as the certificate of
non-forum shopping was signed only by

counsel and not by the party. The rule


requires that it should be the plaintiff or
principal party who should sign the
certification, otherwise, this requirement
would easily be circumvented by the
signature of every counsel representing
corporate parties.[10]

Public order and our system of justice are well


served by a conscientious observance of the
rules of procedure, particularly by government
officials and agencies.

Moreover, petitioners failure to attach with the


petition a written explanation why the service
or filing was not done personally violates
Section 11, Rule 13 of the same Rules.[11]
We have ruled that where no explanation is
offered to justify the service of pleadings by
other modes, the discretionary power of the
court to expunge the pleading becomes
mandatory. [12] Thus, the Court of Appeals
correctly considered the petition as not having
been filed, in view of petitioners failure to
present a written explanation why it failed to
effect personal service of its petition for
review.

SO ORDERED.

In Kowloon House/Willy Ng vs. Hon. Court of


Appeals,[13] we held that (r)ules of procedure
exist for a purpose, and to disregard such
rules in the guise of liberal construction would
be to defeat such purpose. Procedural rules
are not to be disdained as mere technicalities.
They may not be ignored to suit the
convenience of a party. Adjective law ensures
the effective enforcement of substantive rights
through the orderly and speedy administration
of justice. Rules are not intended to hamper
litigants or complicate litigation. But they help
provide for a vital system of justice where
suitors may be heard in the correct form and
manner, at the prescribed time in a peaceful
though adversarial confrontation before a
judge whose authority litigants acknowledge.

WHEREFORE, the petition is DENIED. Costs


against the petitioner.

G.R. No. L-53564 February 27, 1987


JUAN BAYANG, petitioner,
vs.
HON. COURT OF APPEALS and BENIGNO
BIONG, respondents.
CRUZ, J.:
Sometime in November 1969, Juan
Bayang filed a complaint for quieting of title
with damages against BenignoBiong in the
Court of First Instance of Surigao del Norte,
Branch 1, docketed as Civil Case No. 1892. 1
In 1970, while the case was pending, Biong
succeeded in dispossessing the plaintiff of the
land in question and remained there until
January 25, 1978. 2 On February 21, 1972,
the case was decided in favor of Biong, but
the Court of Appeals on December 8, 1977,
reversed the trial court, declaring in the
dispositive portion of its decision:
WHEREFORE, the judgment appealed
from is reversed and appellants are hereby
declared owner of the property in litigation,
and defendant-appellee are (sic) hereby
ordered to pay appellant the sum of P56.40
as the latter's share in the proceeds from the

Page 21 of 38
sale of the copra derived from the third
harvest of coconuts from the same land, and
P1,000.00 as attorney's fees, and costs of
Litigation. 3
This decision became final on February 2,
1978.
On February 6, 1978, Bayang filed a
second case, docketed as Civil Case No.
2589, with the CFI of Surigao del Norte,
Branch II, seeking to recover from Biong the
incomes earned from the same land from
1970 up to the quarterly incomes from 1978
until the said land was delivered to the
plaintiff. 4 At the pre-trial conference held on
July 10, 1978, the counsel for Bayang
admitted that as of January 25, 1978, Biong
had already surrendered possession of the
land in question to Bayang. 5 On August 16,
1978, Biong filed a motion for summary
judgment, reiterating the affirmative defense
of res judicata raised in his answer dated April
12, 1978, insofar as it related to the incidents
concerning the case prior to January 25,
1978. 6 An opposition to this motion was duly
filed by Bayang. 7
The trial court, after considering the
arguments of the parties, granted the motion
and rendered a summary judgment on
October 30, 1978. 8 The said decision was
sustained by the Court of Appeals, and
Bayang is now before us in this petition for
review by certiorari under Rule 45 of the
Rules of Court.
His assignment of errors raises two basic
submissions, to wit:

1. Civil Case No. 2589 should not have


been decided by summary judgment.
2. The judgment in CA-G.R. No. 54720-R
(appeal from judgment in Civil Case No.
1892) did not constitute res judicata as to bar
Civil Case No. 2589.
Both contentions are incorrect. We rule for
the respondents.
In its decision, the Court of Appeals quoted
the following excerpt from Singleton v.
Philippine Trust Co. 9 on the nature and
functions of the summary judgment:
Summary judgment is one of the methods
sanctioned in the present Rules of Court for a
prompt disposition of civil actions wherein
there exists no serious controversy. The
procedure may be availed of not only by
claimants, but also by defending parties who
may be the object of unfounded claims. A
motion for summary judgment assumes that
scrutinizing of the facts will disclose that the
issues presented by the pleadings need not
be tried because they are so patently
unsubstantial as not to be genuine issues, or
that there is no genuine issue as to any
material facts or where the facts appear
undisputed and certain from the pleadings,
depositions, admissions and affidavits.
We hold that there was no genuine or
triable issue of fact raised by the parties, in
view particularly of the affirmative defense of
res judicata invoked by the private
respondent. That defense is sustained.
A long line of decisions has consistently
held that for res judicata to apply: a) the

former judgment must be final; b) it must have


been rendered by a court having jurisdiction
over the subject matter and the parties; c) it
must be a judgment on the merits; and d)
there must be between the first case and the
second case identity of parties, identity of
subject matter and Identity of cause of action.
10
The decision in Civil Case No. 1892
became final and executory on February 2,
1978. There is no dispute that the trial court
which rendered that decision had jurisdiction
over the subject-matter and the parties to the
proceeding. The case was tried on the merits.
The parties to Civil Case No. 1892 and the
subsequent Civil Case No. 2589 are the same
petitioner and private respondent now before
us.
The petitioner would draw a distinction
between the land in dispute in Civil Case No.
1892 and the income from that land being
claimed in Civil Case No. 2589. But that is in
our view splitting hairs to split a cause of
action. The subject-matter is essentially the
same in both cases as the income is only a
consequence or accessory of the disputed
property. We cannot agree that there are
involved here two causes of action calling for
two separate cases. The claim for the income
from the land was incidental to, and should
have been raised by Bayang in his earlier
claim for, ownership of the land.
We note that while the first case was
pending, the private respondent, by the
petitioner's own account, "succeeded in
dispossessing" him of the disputed land 11
and that at the pretrial conference on Civil
Case No. 2589, Bayang's counsel admitted

Page 22 of 38
that Biong had vacated the said property as of
January 25, 1978. 12 This means that from
1970 to the date the respondent surrendered
the property in 1978, Biong was presumably
collecting and enjoying the income therefrom
to the exclusion of the petitioner.
Civil Case No. 1892 was commenced in
November 1969 and was finally decided only
on February 2, 1978. The private respondent
entered the disputed property in 1970 and left
it only in 1978. For about seven years,
therefore, the petitioner made no move at all
to amend his complaint to include a claim for
the income supposedly received by the
private respondent during that period.
Under Rule 10, Section 6, of the Rules of
Court.
Sec. 6. Matters subject of supplemental
pleadings. Upon motion of a party the court
may, upon reasonable notice and upon such
terms as are just, permit him to serve a
supplemental
pleading
setting
forth
transactions, occurrence or events which
have happened since the date of the pleading
sought to be supplemented. If the court
deems it advisable that the adverse party
should plead thereto, it shall so order,
specifying the time therefor.
In the case of Jalandoni v. Martin-Guanzon,
13 this Court declared through Justice J.B.L.
Reyes:
As to the value of the plaintiff's share in the
products of the land during the time that the
former action was pending (which are the
damages claimed under the second cause of
action), their recovery is now barred by the

previous judgment. These damages are but


the result of the original cause of action, viz.,
the continuing refusal by defendants in 1941
to recognize the plaintiff's right to an interest
in the property. In the same way that plaintiffs
claimed for their share of the produce from
1941 to 1947, these later damages could
have been claimed in the first action, either in
the original camplaint (for their existence
could be anticipated when the first complaint
was filed) or else by supplemental pleading.
To allow them to be recovered by subsequent
suit would be a violation of the rule against
multiplicity of suits, and specifically of
sections 3 and 4 of Rules 2 of the Rules of
Court, against the splitting of causes of
action, since these damages spring from the
same cause of action that was pleading (sic)
in the former case No. 573 between the same
parties (Blossom & Co., Inc. v. Manila Gas
Corporation, 55 Phil. 226; Santos v. Moir, 36
Phil. 350; Pascua v. Sideco 24 Phil. 26;
Bachrach Motor Co. v. Icarangal 68 Phil.
287).
And in another case, 14 the same jurist
declared:
Urtula, as defendant in the expropriation
case, could have raised the matter of interest
before the trial court even if there had been
no actual taking yet by the Republic and the
said court could have included the payment of
interest in its judgment but conditioned upon
the actual taking, because the rate of interest
upon the amount of just compensation (6%) is
a known factor, and it can reasonably be
expected that at some future time, the
expropriator would take possession of the
property, though the date be not fixed. In this

way, multiple suits would be avoided.


Moreover, nothing prevented appellee from
calling the attention of the appellate courts
(even by motion to reconsider before
judgment became final) to the subsequent
taking of possession by the condemnor, and
asking for allowance of interest on the
indemnity since that followed the taking as a
matter of course, and raised no issue
requiring remand of the records to the Court
of origin.
As the issue of interest could have been
raised in the former case but was not raised,
res judicata blocks the recovery of interest in
the present case. (Tejedor vs. Palet, 61 Phil.
494; Phil. Engineering Corp., et al. vs.
Ceniza, etc., et al., L-17834, 29 Sept. 1962).
It is settled that a former judgment constitutes
a bar, as between the parties, not only as to
matters expressly adjudged, but all matters
that could have been adjudged at the time
(Rule 39, sec. 49; Corda vs. Maglinti L-17476,
November 30, 1961; Rodriguez vs. Tan, 48
Off. Gaz. 3330).
Clearly, then, Civil Case No. 2589 is barred
by the previous judgment in Civil Case No.
1892. This being so, it should follow that the
trial judge committed no grave abuse of
discretion in deciding the latter case by
summary judgment.
We are not unmindful of the argument that
affirmance of the challenged decision of the
respondent court will result in the unjust
enrichment of Biong at the expense of
Bayang. This assumes, of course, that the
petitioner could have proved his right to the
income he now claims belatedly. The point is
that he did not make the proper claim at the

Page 23 of 38
proper time and in the proper proceedings,
and he cannot do it now. Whatever right he
might have had is now deemed waived
because of his neglect.
Nemodebetbisvexare pro unaeteademcausa.
This has to be so if litigants are to be spared
the annoyance, anxiety and expense that
could otherwise be inflicted upon them
endlessly by capricious, malicious or
vindictive suitors.
WHEREFORE, the petition is dismiss and
the appealed decision is affirmed. Costs
against the petitioner.
SO ORDERED.
G.R. No. L-32958

November 8, 1930

BLOSSOM AND COMPANY, INC.,


plaintiff-appellant,
vs.
MANILA GAS CORPORATION, defendantappellee.
STATEMENT
In its complaint filed March 3, 1927, the
plaintiff alleges that on September 10, 1918, it
entered into a contract with the defendant in
which the plaintiff promised and undertook to
purchase and receive from the defendant and
the defendant agreed to sell and deliver to the
plaintiff, for a period of four years, three tons
of water gas tar per month from September to
January 1, 1919 and twenty tons per month
after January 1, 1919, for the remaining
period of the contract; one-half ton of coal gas

tar a month from September to January 1,


1919, and six tons per month after January 1,
1919, for the remainder of the contract,
delivery to be made at the plant of the
defendant in the City of Manila, without
containers and at the price of P65 per ton for
each kind of gas tar, it being agreed that this
price should prevail only so long as the raw
materials coal and crude oil used by the
defendant in the manufacture of gas should
cost the defendant the same price as that
prevailing at the time of the contract, and that
in the event of an increase or decrease in the
cost of raw material there would be a
corresponding increase or decrease in the
price of the tar. That on January 31, 1919, this
contract was amended so that it should
continue to remain in force for a period of ten
years from January 1, 1919, and it was
agreed that the plaintiff should not be obliged
to take the qualities of the tars required during
the year 1919, but that it might purchase tars
in such quantities as it could use to
advantage at the stipulated price. That after
the year 1919 the plaintiff would take at least
the quantities specified in the contract of
September 10, 1918, to be taken from and
after January 1, 1919, and that at its option it
would have the right to take any quantity of
water gas tar in excess of the minimum
quantity specified in that contract and up to
the total amount of output of that tar of
defendant's plant and also to take any
quantity of coal gas tar in excess of the
minimum quantity specified in that contract
and up to 50 per cent of defendant's entire
output of coal gas tar, and that by giving the
defendant ninety days' notice, it would have
the right at its option to take the entire output
of defendant's coal gas tar, except such as it

might need for its own use in and about its


plant. That in consideration of this
modification of the contract of September 10,
1918, plaintiff agreed to purchase from the
defendant of certain piece of land lying
adjacent to its plant at the price of P5 per
square meter, the proof of which is evidenced
by Exhibit C. That pursuant to Exhibit C,
defendant sold and conveyed the land to the
plaintiff which in turn executed a mortgage
thereon to the defendant for P17,140.20, to
secure the payment of the balance of the
purchase price.
It is then alleged:
VIII. That about the last part of July, 1920
the defendant herein, the Manila Gas
Corporation
willfully,
and
deliberately
breached its said contract, Exhibit C, with the
plaintiff by ceasing to deliver any coal and
water gas tar to it thereunder solely because
of the increased price of its tar products and
its desire to secure better prices therefor than
plaintiff was obliged to pay to it,
notwithstanding the frequent and urgent
demands made by the plaintiff upon it to
comply with its aforesaid contract by
continuing to deliver the coal and water gas
tar to the plaintiff thereunder, but the said
defendant flatly refused to make any
deliveries under said contract, and finally on
November 23, 1923, the plaintiff was forced to
commence action against the defendant
herein in the Court of First Instance of Manila,
being case No. 25352, of that court entitled
'Blossom & Co., plaintiff, vs. Manila Gas
Corporation, defendant,' to recover the
damages which it had up to that time suffered
by reason of such flagrant violation of said

Page 24 of 38
contract on the part of the defendant herein,
and to obtain the specific performance of the
said contract and after due trial of that action,
judgment was entered therein in favor of the
plaintiff herein and against the said
defendant, the Manila Gas Corporation, for
the sum of P26,119.08, as the damages
suffered by this plaintiff by the defendant's
breach of said contract from July, 1920, up to
and including September, 1923, with legal
interest thereon from November 23, 1923,
and for the costs but the court refused to
order the said defendant to resume the
delivery of the coal and water gas tar to the
plaintiff under said contract, but left the
plaintiff with its remedy for damages against
said defendant for the subsequent breaches
of said contract, which said decision, as
shown by the copy attached hereto as Exhibit
G, and made a part hereof, was affirmed by
our Supreme Court on March 3, 1926;
IX. That after the defendant had willfully
and deliberately violated its said contract as
herein-before alleged, and the plaintiff
suffered great damage by reason thereof, the
plaintiff claimed the right to off- set its
damages against the balance due from it to
said defendant on account of the purchase of
said land from the defendant, and
immediately thereupon and notwithstanding
said defendant was justly indebted to the
plaintiff at that time as shown by the judgment
of the Court Exhibit G, in more that four times
the amount due to it from the plaintiff, the said
defendant caused to be presented against the
plaintiff a foreclosure action, known as the
Manila Gas Corporation versus Blossom &
Company, No. 24267, of the Court of First
Instance of Manila, and obtained judgment

therein ordering that Blossom & Company


pay the last installment and interest due on
said land or else the land and improvements
placed thereon by the plaintiff would be sold
as provided by law in such cases to satisfy
the same, and the said defendant proceeded
with the sale of said property under said
judgment and did everything in its power to
sell the same for the sole purpose of crushing
and destroying the plaintiff's business and
thus rendering it impossible for the plaintiff
herein to continue with its said contract in the
event that said defendant might in the future
consider it more profitable to resume
performance of the same, but fortunately the
plaintiff was able to redeem its property as
well as to comply with its contract and
continued demanding that the defendant
performed its said contract and deliver to it
the coal and water gas tar required thereby.
That the defendant made no deliveries
under its contract, Exhibit C, from July, 1920
to March 26, 1926, or until after the Supreme
Court affirmed the judgment of the lower court
for damages in the sum of P26, 119.08. 1
It is then alleged that:
. . . On March 26, 1926 the said defendant
offered to resume delivery to the plaintiff from
that date of the minimum monthly quantities
of tars stated in its contract ,and the plaintiff
believing that the said defendant was at least
going to try to act in good faith in the further
performance of its said contract, commenced
to accept deliveries of said tars from it, and at
once ascertained that the said defendant was
deliberately charging it prices much higher
than the contract price, and while the plaintiff
accepted deliveries of the minimum quantities

of tars stated in said contract up to and


including January, 1927, (although it had
demanded deliveries of larger quantities
thereunder, as hereinafter alleged) and paid
the increased prices demanded by the
defendant, in the belief that it was its duty to
minimize the damages as much as possible
which the defendant would be required to pay
to it by reason of its violation of said contract,
it has in all cases done so under protest and
with the express reservation of the right to
demand from the said defendant an
adjustment of the prices charged in violation
of its contract, and the right to the payment of
the losses which it had and would suffer by
reason of its refusal to make additional
deliveries under said contract, and it also has
continuously demanded that the said
defendant furnish to it statements supported
by its invoices showing the cost prices if its
raw materials coal and crude oil upon
which the contract price of the tars in question
is fixed, which is the only way the plaintiff has
to calculate the true price of said tars, but said
defendant has and still refuses to furnish such
information, and will continue to refuse to do
so, unless ordered to furnish such information
to the plaintiff by the court, and the plaintiff
believes from the information which it now
has and so alleges that the said defendant
has overcharged it on the deliveries of said
tars mentioned in the sum of at least P10,000,
all in violation of the rights of the plaintiff
under its said contract with the defendant.
That on January 31, 1926 and pursuant to
Exhibit C. plaintiff notified the defendant in
writing that commencing with the month of
August, 1926 it desired to take delivery of 50
per cent of defendant's coal tar production for

Page 25 of 38
that month and that on November 1, 1926, it
desired to take the entire output of
defendant's coal gas tar, but that the
defendant refused and still refuses to make
such deliveries unless plaintiff would take all
of its water gas tar production with the desired
quantity of coal gas tar which refusal was a
plain violation of the contract. That on
January 29, 1927, and in accord with Exhibit
C, plaintiff notified the defendant in writing
that within ninety days after the initial delivery
to it of its total coal gas tar production or in
February, 1927, it would require 50 per cent
of its total water gas tar production and that in
April 1927, it would require the total output of
the defendant of both coal and water gas tars,
and that it refused to make either of such
deliveries.
It is then alleged:
XIV. That as shown by the foregoing
allegations of this complaint, it is apparent
that notwithstanding the plaintiff in this case
has at all times faithfully performed all the
terms and conditions of said contract, Exhibit
C, on its part of be performed, and has at all
times and is now ready, able and willing to
accept and pay for the deliveries of said coal
and water gas tars required by said contract
and the notices given pursuant thereto, the
said defendant, the Manila Gas Corporation,
does not intend to comply with its said
contract, Exhibit C, and deliver to the plaintiff
at the times and under the terms and
conditions stated therein the quantities of coal
and water gas tars required by said contract,
and the several notices given pursuant
thereto, and that it is useless for the plaintiff to
insist further upon its performance of the said

contract, and for that reason he only feasible


course for the plaintiff to pursue is to ask the
court for the rescission of said contract and
for the full damages which the plaintiff has
suffered from September, 1923, and will
suffer for the remainder of said contract by
reason of the defendant's failure and refusal
to perform the same, and the plaintiff has so
notified the said defendant.
That since September, 1923, by reason of
the bad faith of the defendant, the plaintiff has
been damaged in the sum of P300,000, for
which it prays a corresponding judgment, and
that the contract, Exhibit C, be rescinded and
declared void and without force and effect.
After the filing and overruling of its
demurrer, the defendant filed an answer in the
nature of a general and specific denial and on
April 10, 1928, and upon stipulation of the
parties, the court appointed W. W. Larkin
referee, "to take the evidence and, upon
completion of the trial, to report his findings of
law and fact to the court."
July 18, 1928, the defendant filed an
amended answer in which it alleged as an
affirmative defense, first, that the complaint
does not state facts sufficient to constitute
cause of action the reason that a prior
adjudication has been had of all the issues
involved in this action, and, second, "that on
or about the 16th day of June, 1925, in an
action brought in the Court of First Instance of
the City on Manila, Philippine Islands, before
the Honorable Geo. R. Harvey, Judge, by
Blossom & Company, plaintiff, vs. Manila Gas
Corporation, defendant, being civil case No.
25353, of said court, for the same cause of
action as that set fourth in the complaint

herein, said plaintiff recovered judgment upon


the merits thereof, against said defendant
decreeing a breach of the contract sued upon
herein, and awarding damages therefor in the
sum of P26,119.08 with legal interest from
November 23, 1923, and costs of suit, which
judgment was upon appeal affirmed by the
Supreme Court of the Philippine Islands, in
case G. R. No. 24777 of said court, on the 3d
day of March, 1926 and reported in volume
48 Philippines Reports at page 848," and it
prays that plaintiff's complaint be dismissed
with costs.
After the evidence was taken the referee
made an exhaustive report of sixty-pages in
which he found that the plaintiff was entitled
to P56,901.53 damages, with legal interest
from the date of the filing on the complaint, to
which both parties filed numerous exceptions
In its decision the court says:
Incidental references have been made to
the referee's report. It was admirably
prepared. Leaving aside the question of
damages and the facts upon which the
referee assessed them, the facts are not in
dispute at least not in serious dispute.
They appear in the documentary evidence
and this decision is based upon documents
introduced into evidence by plaintiff. If I could
have agreed with the referee in respect to the
question of law, I should have approved his
report in toto. If defendant is liable for the
damages accruing from November 23, 1923,
the date the first complaint was filed, to April
1st, 1926, the date of resumption of relations;
and if defendant, after such resumption of
relations, again violated the contract, the
damages assessed by the referee, are, to my

Page 26 of 38
way of thinking, as fair as could be estimated.
He went to tremendous pains in figuring out
the details upon which he based his decision.
Unfortunately, I cannot agree with his legal
conclusions and the report is set aside except
wherein specifically approved.

VII. The trial court erred in refusing to


sustain plaintiff's third exception to the legal
interpretation placed on the contract in this
case by the referee with reference to quantity
of tars and his conclusion with respect to the
terms thereof that:

the contract, and that defendant had no


liability in refusing to comply therewith, and in
allowing plaintiff damages only for the failure
of the defendant to deliver quantities shown in
Exhibits Ref. 21 and 22. (See pages 51, 52,
Referee's report.)

It is unnecessary to resolve specifically the


many exceptions made by both partied to the
referee's report. It would take much time to do
so. Much time has already been spent in
preparing this decision. Since both parties
have informed me that in case of adverse
judgment ,and appeal would be taken, I
desire to conclude the case so that delay will
be avoided.

"1. Plaintiff must take and defendant must


deliver either the minimum or maximum
quantity of water gas tar and not any quantity
from the minimum to the maximum and/or

IX. The trial court erred in finding and


holding that the demands of plaintiff for
additional tars under its contract with the
defendant were extravagant and not made in
good faith, and that when it wrote to
defendant that it desired maximum quantities
of coal gas tars and only minimum of water
gas tars, but with the reservation of going
back to minimum quantities of both at any
time it chose, it announced its intention f
breaching the contract, and defendant was
under no obligation to deliver maximum
quantities of either tars, and since this was
the efficient cause of the failure of defendant
to deliver or plaintiff to accept tars, the blame
is attribute to plaintiff, and it cannot recover
for a rescission.

Let judgment be entered awarding


damages to plaintiff in the sum of P2,219.60,
with costs.
From which plaintiff only appealed and
assigns twenty-four different errors, of which
the following are material to this opinion:
I. The trial court erred in holding that this
suit in so far as the damages from November,
1923, to March 31, 1926, areconcerned , is
res adjudicata.
II. The trial court erred in holding that the
defendant repudiated the contract in question
as a whole, and that the plaintiff when it
brought its first suit to collect damages had
already elected and consented to the
dissolution of the contract, and its choice
once made, being final, it was estopped to
claim that the contract was alive when that
suit was brought.
x xxxxxxxx

"2. Plaintiff must take either the minimum


and any quantity up to fifty per cent of entire
output of coal gas tar.
"3. With ninety days' notice by plaintiff to
defendant the former must take and the latter
must deliver total output of both tars, except
such as might be needed by defendant for
use in and about its plants and not any
quantity from the minimum up to total output
of both tars." (See page 47, Referee's report.)
And in holding that the option contained in
said contract, taking into consideration the
purposes of both parties in entering into the
contract, was a claimed by defendant: all the
water gas tar and 50 per cent of the coal gas
tar upon immediate notice and all tars upon
ninety day's notice.
VIII. The trial court erred in refusing to
sustain plaintiff's fourth exception to the
finding and conclusion of the referee that from
the correspondence between the parties it
was apparent that plaintiff did not make a
right use of its option, and that the letter of
June 25, 1926, and the subsequent demands,
with exception of the letter of July 31, 1926,
were not made in pursuance to the terms of

x xxxxxxxx
XXIII. The trial court erred in refusing to
sustain plaintiff's seventeenth exception to the
finding and conclusion of the referee that the
plaintiff is entitled to recover from the
defendant only the following sums:
Water gas tar (Exhibit Ref. 21)
P38,134.60
Coal gas tar (Exhibit Ref. 22) 16,547.33
Overcharges on deliveries (Exhibit Ref. 23)
2,219.60

Page 27 of 38
or a total of

56,901.53

with interest, and in not awarding to the


plaintiff as damages in this case the sum of
P319,253.40, with legal interest thereon from
the date of filing the complaint in this case, in
the manner and form computed but it, and in
awarding damages to the plaintiff for the sum
of only P2,219.60. with costs.
x xxxxxxxx
JOHNS, J.:
In this action plaintiff seeks to recover
damages from the defendant which it claims
to have sustained after September, 1923,
arising from, and growing out of, its original
contract of September 10, 1918, as modified
on January 1, 1919, to continue for a period
of ten years from that date.
In paragraph VIII of its complaint, plaintiff
alleges that about the last part of July, 1920,
the defendant "willfully and deliberately
breached its said contract," and that it "flatly
refused to make any deliveries under said
contract, and finally on November 23, 1923,"
it was forced to commence action in the Court
of First Instance against the defendant known
as case No. 25352, to recover the damages
which it had then sustained by reason of such
flagrant violation of said contract on the part
of the defendant, in which judgment was
rendered in favor of the plaintiff and against
the defendant for P26,1119.08, as damages
suffered by this plaintiff by the defendant's
breach of said contract from July 1920, up to
and including September, 1923, with legal
interest thereon from November 23, 1923,
and for the costs," in which the court refused

to order the defendant to resume the delivery


of the coal and water gas tar to the plaintiff, in
accord with said contract, but left it with its
remedy for damages against the defendant
for any subsequent breaches of the contract.
A copy of that judgment, which was later
affirmed by this court, is attached to, marked
Exhibit G, and made a part of, the complaint
in this action.
In their respective briefs, opposing counsel
have much to say about the purpose and
intent of the judgment, and it is vigorously
asserted that it was never intended that it
should be or become a bar to another action
by the plaintiff to recover any damages it may
have sustained after September, 1923, during
the remainder of the ten-year period of that
contract. Be that as it may, it must be
conceded that the question as to what would
be the legal force and effect of that judgment
in that case was never presented to, or
decided by, the lower court or this court. In
the very nature of things, neither court in that
case would have the power to pass upon or
decided the legal force and effect of its own
judgment, for the simple reason that it would
be premature and outside of the issues of any
pleading, and could not be raised or
presented until after the judgment became
final and then only by an appropriate plea, as
in this case.
Plaintiff specifically alleges that the
defendant willfully and deliverately breached
the contract and "flatly refused to make any
deliveries under said contract," by reason of.
which it was forced to and commenced its
former action in which it was awarded
P26,119.08 damages against the defendant

by reason of its breach of the contract from


July, 1920, to September, 1923.
In the final analysis, plaintiff in this action
seeks to recover damages growing out of,
and arising from, other and different breaches
of that same contract after November, 1923,
for the remainder of the ten-year period, and
the question is thus squarely presented as to
whether the rendition of the former judgment
is a bar to the right of the plaintiff to recover
damages from and after September, 1923,
arising from, and growing out of, breaches of
the original contract of September 10, 1918,
as modified on January 1, 1919. That is to
say, whether the plaintiff, in a former action,
having recovered judgment for the damages
which it sustained by reason of a breach of its
contract by the defendant up to September,
1923, can now in this action recover damages
it may have sustained after September, 1923,
arising from, and growing out of, a breach of
the same contract, upon and for which it
recovered its judgment in the former action.
In the former action in which the judgment
was rendered, it is alleged in the compliant:
"7. That about the last part of July or the
first part of August, 1920, the Manila Gas
Corporation, the defendant herein, without
any cause ceased delivering coal and water
gas tar to the plaintiff herein; and that from
that time up to the present date, the plaintiff
corporation, Blossom & Company, has
frequently and urgently demanded of the
defendant, the Manila Gas Corporation, that it
comply with its aforesaid contract Exhibit A by
continuing to deliver coal and water gas tar to
this plaintiff but that the said defendant has
refused and still refuses, to deliver to the

Page 28 of 38
plaintiff any coal and water gas tar
whatsoever under the said contract Exhibit A,
since the said month of July 1920.
"9. That owing to the bad faith of the said
Manila Gas Corporation, defendant herein, in
not living up to its said contract Exhibit A,
made with this plaintiff, and refusing now to
carry out the terms of the same, be delivering
to this plaintiff the coal and water gas tar
mentioned in the said Exhibit A, has caused
to this plaintiff great and irreparable damages
amounting to the sum total of one hundred
twenty- four thousand eight hundred forty
eight
pesos
and
seventy
centavos
(P124,848,70);and that the said defendant
corporation has refused, and still refuses, to
pay to this plaintiff the whole or any part of the
aforesaid sum.
"10. That the said contract Exhibit A, was to
be in force until January 1, 1929, that is to say
ten (10) years counted from January 1, 1929;
and that unless the defendant again
commence to furnish and supply this plaintiff
with coal and water gas tar, as provided for in
the said contract Exhibit A, the damages
already suffered by this plaintiff will
continually increase and become larger and
larger in the course of years preceding the
termination of the said contract on January 1,
1929."
In that action plaintiff prays for judgment
against the defendant:
"(a) That upon trial of this this cause
judgment be rendered in favor of the plaintiff
and against the defendant for the sum of
P124,8484.70), with legal interest thereon
from November 23, 1923;

"(b) That the court specifically order the


defendant to resume the delivery of the coal
and water gas tar to the plaintiff under the
terms of the said contract Exhibit A of this
complaint."
In the final analysis, plaintiff must stand or
fall on its own pleadings, and tested by that
rule it must be admitted that the plaintiff's
original cause of action, in which it recovered
judgment for damages, was founded on the
ten-year contract, and that the damages
which it then recovered were recovered for a
breach of that contract.
Both actions are founded on one and the
same contract. By the terms of the original
contract of September 10, 1018, the
defendant was to sell and the plaintiff was to
purchase three tons of water gas tar per
month form September to January 1, 1919,
and twenty tons of water gas tar per month
after January 1, 1919, one-half ton of coal gas
tar per month from September to January 1,
1919, and six tons of coal gas tar per month
after January 1, 1919. That from and after
January 1, 1919, plaintiff would take at least
the quantities specified in the contract of
September 10, 1918, and that at its option, it
would have the right to take the total output of
water gas tar of defendant's plant and 50 per
cent of the gross output of its coal gas tar,
and upon giving ninety days' notice, it would
have the right to the entire output of coal gas
tar, except such as the defendant might need
for its own use. That is to say, the contract
provided for the delivery to the plaintiff from
month to month of the specified amounts of
the different tars as ordered and requested by
the plaintiff. In other words, under plaintiff's

own theory, the defendant was to make


deliveries from month to month of the tars
during the period of ten years, and it is
alleged in both complaints that the defendant
broke its contract, and in bad faith refused to
make any more deliveries.
In 34 Corpus Juris, p. 839, it is said:
As a general rule a contract to do several
things at several times in its nature, so as to
authorize successive actions; and a judgment
recovered for a single breach of a continuing
contract or covenant is no bar to a suit for a
subsequent breach thereof. But where the
covenant or contract is entire, and the breach
total, there can be only one action, and
plaintiff must therein recover all his damages.
In the case of Rhoelmvs, Horst, 178 U. U., 1;
44 Law. ed., 953, that court said:
An unqualified and positive refusal to
perform a contract, though the performance
thereof is not yet due, may, if the renunciation
goes to the whole contract, be treated as a
complete breach which will entitle the injured
party to bring his action at once.
15 Ruling Case Law, 966, 967, sec. 441
says:
Similarly if there is a breach by the vendor
of a contract for the sale of goods to be
delivered and paid for in installments, and the
vendee maintains an action therefor and
recovers damages, he cannot maintain a
subsequent action to recover for the failure to
deliver later installments.

Page 29 of 38
In Pakas vs. Hollingshead, 184 N. Y., 211;
77 N. E., 40; 3 L. R. A. (N. S.), 1024, the
syllabus says:
Upon refusal, by the seller, after partial
performance, longer to comply with his
contract to sell and deliver a quantity of
articles in installments the buyer cannot keep
the contract in force and maintain actions for
breaches as they occur but must recover all
his damages in one suit.
And on page 1044 of its opinion, the court
say:
The learned counsel for the plaintiff
contends that the former judgment did not
constitute a bar to the present action but that
the plaintiff had the right to elect to waive or
disregard the breach, keep the contract in
force, and maintain successive actions for
time to time as the installments of goods were
to be delivered, however numerous these
actions might be. It is said that this contention
is supported in reason and justice, and has
the sanction of authority at least in other
jurisdictions. We do not think that the
contention can be maintained. There is not as
it seems to us any judicial authority in this
state that gives it any substantial support. On
the contrary, we think that the cases, so far as
we have been able to examine them, are all
the other way, and are to the effect that,
inasmuch as there was a total breach of the
contract by the defendant's refusal to deliver,
the plaintiff cannot split up his demand and
maintain successive actions, but must either
recover all his damages in the first suit or wait
until the contract matured or the time for the
delivery of all the goods had arrived. In other
words, there can be but one action for

damages for a total breach of an entire


contract to deliver goods, and the fact that
they were to be delivered in installment from
time to time does not change the general rule.
The case of L. Bucki& Son Lumber Co. vs.
Atlantic Lumber Co. (109 Federal, 411), of the
United States Circuit Court of Appeals for the
Fifth Circuit, is very similar.
The syllabus says:
1. CONTRACTS CONSTRUCTION
ENTIRE CONTRACT. A contract was made
for the sale of a large quantity of logs to be
delivered in monthly installments during a
period of eight years, payments to be made
also in installments at times having relation tot
he deliveries. It contained stipulations as to
such payments, and guaranties as to the
average size of the logs to be delivered in
each installment. Held, that it was an entire
contract, and not a number of separate and
independent agreements for the sale of the
quantity to be delivered and paid for each
month, although there might be breaches of
the minor stipulations and warranties with
reference thereto which would warrant suits
without a termination of the contract.
2. JUDGMENTS MATTERS
CONCLUDED ACTION FOR BREACH OF
INDIVISIBLE CONTRACT. The seller
declared the contract terminated for alleged
breaches by the purchaser, and brought suit
for general and special damages the latter
covering payments due for installments of
logs delivered. By way of set-off and
recoupment against this demand, the
purchaser pleaded breaches of the warranty
as to the size of the logs delivered during the

months for which payment had not been


made. Held, that the judgment in such action
was conclusive as to all claims or demands or
either party against the other growing out of
the entire contract, and was a bar to a
subsequent suit brought by the purchaser to
recover for other breaches of the same
warranty in relation to deliveries made in
previous months.
On page 415 of the opinion, the court says:
When the contract was ended, the claims
of each party for alleged breaches and
damages therefor constituted an indivisible
demand; and when the same, or any part of
the same, was pleaded, litigation had, and
final judgment rendered, such suit and
judgment constitute a bar to subsequent
demands which were or might have been
litigated (Baird vs. U. S., 96 U. S., 430; 24 L.
ed., 703.)
In Watts vs. Weston (238 Federal, 149),
Circuit Court of Appeals, Second Circuit, the
syllabus says:
1. JUDGMENTS 593 JUDGMENT AS
BAR MATTERS CONCLUDED. Where
a continuing contract was terminated by the
absolute refusal of the party whose action
was necessary to further perform, a claim for
damages on account of the breach
constituted as indivisible demand, and when
the same or any part of the same was
pleaded, litigated, and final judgment
rendered, such suit and judgment constitute a
bar to subsequent demands which were or
might have been litigated therein.

Page 30 of 38
And on page 150 of the opinion, the court
says:
It is enough to show the lack of merit in the
present contention to point out as an
inexorable rule of law that, when Kneval's
contract was discharged by his total
repudiation thereof, Watt's claims for
breaches and damages therefor constituted
an indivisible demand, and when the same, or
any part of the same, was pleaded, litigation
had and final judgment rendered, such suit
and judgment constitute a bar to subsequent
demands which were or might have been
litigated." (Bucki, etc., Co. vs. Atlantic, etc.,
Co., 109 Fed. at page 415; 48 C. C. A., 459;
Cf. Landon vs. Bulkley, 95 Fed., 344; 337 C.
C. A., 96.)
The rule is usually applied in cases of
alleged or supposed successive breaches,
and consequently severable demands for
damages; but if the contract has been
discharged by breach, if suit for damages is
all that is left, the rule is applicable, and every
demand arising form that contract and
possessed by any given plaintiff must be
presented (at least as against any given
defendant) in one action; what the plaintiff
does not advance he foregoes by conclusive
presumption.
Inn Abbott vs. 76 Land and Water Co. (118
Pac., 425; 161 Cal., 42), at page 428, the
court said:
In Fish vs. Folley, 6 Hill (N. Y.), 54, it was
held, in accord with the rule we have
discussed, that, where the defendant had
covenanted that plaintiff should have a
continual supply of water for his mill from a

dam, and subsequently totally failed to


perform for nine years, and plaintiff brought
an action for the breach and recovered
damages sustained by him to that time, the
judgment was a bar to a second action arising
from subsequent failure to perform, on the
theory that, although he covenant was a
continuing one in one sense, it was an entire
contract, and a total breach put an end to it,
and gave plaintiff the right to sue for an
equivalent in damages.
In such a case it is no warrant for a second
action that the party may not be able to
actually prove in the first action all the items
of the demand, or that all the damage may
not then have been actually suffered. He is
bound to prove in the first action not only such
damages as has been actually suffered, but
also such prospective damage by reason of
the breach as he may be legally entitled to,
for the judgment he recovers in such action
will be a conclusive adjudication as to the
total damage on account of the breach.
It will thus be seen that, where there is a
complete and total breach of a continuous
contract for a term of years, the recovery of a
judgment for damages by reason of the
breach is a bar to another action on the same
contract for and on account of the continuous
breach.
In the final analysis is, there is no real
dispute about any material fact, and the
important and decisive question is the legal
construction of the pleadings in the former
case and in this case, and of the contract
between the plaintiff and the defendant of
January 1, 1920.

The complaint on the former case


specifically alleges that the defendant "has
refused and still refuses, to deliver to the
plaintiff any coal and water gas tar
whatsoever under the said contract Exhibit A,
since the said month of July, 1920." " That
owing to the bad faith of the said Manila Gas
Corporation, defendant herein, in not living up
to its said contract Exhibit A, made with this
plaintiff, and refusing now to carry out the
terms of the same." That is a specific
allegation not only a breach of the contract
since the month of July, 1920, but of the faith
of the defendant in its continuous refusal to
make deliveries of any coal and water gas tar.
That amended complaint was filed on July 11,
1924, or four years after the alleged bad faith
in breaking the contract.
Having recovered damages against it,
covering a period of four years, upon the
theory that the defendant broke the contract,
and in bad faith refused to make deliveries of
either of the tars, how can the plaintiff now
claim and assert that the contract is still in
fierce and effect? In the instant case the
plaintiff alleges and relies upon the ten year
contract on January 11, 1920, which in bad
faith was broken by the defendant. If the
contract was then broken, how can it be
enforced in this action?
It is admitted that the defendant never
made any deliveries of any tar from July,
1920, to April, 1936. Also that it made nine
deliveries to plaintiff of the minimum
quantities of coal and water gas tar from April
7, 1926, to January 5, 1927.

Page 31 of 38
Plaintiff contends that such deliveries were
made under and in continuation of the old
contract.

Thereafter we shall be ready to furnish


equal amounts on the first of each month.
Kindly make your arrangements accordingly.

March 26, 1926, after the decision of this


court affirming the judgment in the original
action, plaintiff wrote the defendant:

On January 29, 1927, the plaintiff wrote the


defendant that:

. . . It is our desire to take deliveries of at


least the minimum quantities set forth therein
and shall appreciate to have you advise us
how soon you will be in a position to make
deliveries; . . .
. . . In view of the fact that you have only
effected settlement up to November 23, 1923,
please inform us what adjustment you are
willing to make for the period of time that has
since elapsed without your complying with the
contract.
In response to which on March 31, 1926,
the defendant wrote this letter to the plaintiff:
In reply to your letter of March 26th, 1926,
in regard to tar, we beg to advise you that we
are prepared to furnish the minimum
quantities of coal and water gas tars as per
your letter, viz: twenty tons of water gas tar
and six tons of coal gas tar. The price figured
on present costs of raw materials is P39.01 )
Thirty-nine and 01/100 Pesos) per ton of
water gas and P33.59 (Thirty-three and
59/100 Pesos) per ton of coal tar.
We shall expect you to take delivery and
pay for the above amount of tars at our
factory on or before April 7th prox.

On July 31st last, we made demand upon


you, under the terms of our tar contract for 50
per cent of your total coal tar production for
that month and also served notice on you that
beginning 90 days from August 1st we would
require you total output of coal tar monthly;
this in addition to the 20 tons of water gas tar
provided for in the contract to be taken
monthly.
x xxxxxxxx
We are here again on your for your total
output of coal tar immediately and the regular
minimum monthly quantity of water gas tar. In
this connection we desire to advise you that
within 90 days of your initial delivery to us of
your total coal tar output we will require 50
per cent of your total water gas tar output,
and, further, that two months thereafter we
will require your total output of both tars.
February 2, 1927, the defendant wrote the
plaintiff:
Replying to your letter of Jan. 29, we would
sat that we have already returned to you the
check enclosed there with. As we have
repeatedly informed you we disagree with you
as to the construction of your contract and
insist that you take the whole output of both
tars if you wish to secure the whole of the
coal tar.

With regard to your threat of further suits


we presume that you will act as advised. If
you make it necessary we shall do the
same.lawphil.net
From an analysis of these letters it clearly
appears that the plaintiff then sought to reply
upon and enforce the contract of January 1,
1920, and that defendant denied plaintiff's
construction of the contract, and insisted "that
you take the whole output of both tars if you
wish to secure the whole of the coal tar."
February 28, 1927, the plaintiff wrote the
defendant:
In view of your numerous violations of and
repeated refusal and failure to comply with
the terms and provisions of our contract dated
January 30-31, 1919, for the delivery to us of
water and coal gas tars, etc., we will
commence action," which it did.
The record tends to show that tars which
the defendant delivered after April 7, 1926,
were not delivered under the old contract of
January 1, 1920, and that at all times since
July 1920, the defendant has consistently
refused to make any deliveries of any tars
under that contract.
The referee found as a fact that plaintiff
was entitled to P2,219.60 for and on account
of overcharges which the defendant made for
the deliveries of fifty-four tons of coal gas tar,
and one hundred eighty tons of water gas tar
after April, 1926, and upon that point the
lower says:
The fourth charge that plaintiff makes is
meritorious. The price was to be fixed on the

Page 32 of 38
basis of raw materials. The charge for
deliveries during 1926 were too high. In this I
agree with entirely with the referee and adopt
his findings of fact and calculations. (See
Referee's report, p. 83) The referee awarded
for overcharge during the period aforesaid,
the sum of P2,219.60. The defendant was
trying to discharge plaintiff from buying tars
and made the price of raw material appear as
high as possible.
That finding is sustained upon the theory
that the defendant broke its contract which it
made with the plaintiff for the sale and
delivery of the tars on and after April, 1926.
After careful study of the many important
questions presented on this appeal in the
exhaustive brief of the appellant, we are
clearly of the opinion that, as found by the
lower court, the plea of res judicata must be
sustained. The judgment of the lower court is
affirmed.
It is so ordered, with costs against the
appellant.
G.R. No. L-16797

February 27, 1963

RODRIGO ENRIQUEZ, ET AL., plaintiffsappellees,


vs.
SOCORRO A. RAMOS, ET AL.,
defendants-appellants.
REYES, J.B.L., J.:

Direct appeal on points of law from a decision


of the Court of First Instance of Rizal in its
Civil Case No.Q-4232.
The record is to the effect that on 24
November 1958, Rodrigo Enriquez and the
spouses UrbanoDizon and Aurea Soriano de
Dizon sold to Socorro A. Ramos, by a notarial
deed of even date, eleven (11) parcels of land
situated in BagoBantay, Quezon City, and
covered by their corresponding certificates of
title, for the stipulated price of P101,000.00.
The vendee paid P5,000.00 down, P2,500.00
in cash, and P2,500.00 by a check drawn
against the Philippine National Bank, and
agreed to satisfy the balance of P96,000.00
within ninety (90) days. To secure the said
balance, the vendee Socorro A. Ramos, in the
same deed of sale, mortgaged the eleven
parcels in favor of the vendors. By way of
additional security, Socorro A. Ramos, as
attorney-in-fact of her children, Enrique,
Antonio, Milagros, and Lourdes, and as
judicial guardian of her minor child Angelita
Ramos, executed another mortgage on Lot
No. 409 of the Malinta Estate.
Because of the vendee-mortgagor's failure
to comply with some conditions of the
mortgage, this action for foreclosure of the
mortgage was filed by the vendorsmortgagees in the court below, on 29 April
1959. Defendant Socorro Ramos moved to
dismiss, alleging that the plaintiffs previously
had filed action against her in the Court of
First Instance of Manila on 24 February 1959
for the recovery of P2,500.00 paid by check
as part of the down payment on the price of
the mortgaged lands; that at the time this first
suit was filed, the mortgage debt was already

accrued and demandable; that plaintiffs were,


therefore, guilty of splitting a single cause of
action, and under section 4 of Rule 2 of the
Rules of Court, the filing of the first action for
P2,500.00 was a defense that could be
pleaded in abatement of the second suit.
Upon opposition by the plaintiffs, the Court of
First Instance of Quezon City denied the
motion to dismiss; but defendant Ramos
repleaded the averments as a special
defense in her answer. After trial, on 16
December 1959, the Court of First Instance of
Quezon City rendered judgment against
defendant Ramos; ordered her to pay
P96,000.00, with 12% interest from 24
February 1959 until payment, 10% of the
amount due as attorney's fees, and the costs
of the suit; and further decreed the
foreclosure sale of the mortgaged properties
in case of non-payment within ninety (90)
days.
Socorro Ramos appealed directly to this
Court, and here insists that the action should
be dismissed on account of the alleged
splitting of appellee's cause of action, and
that the obligation not having fixed a period,
although one was intended, the court below
should have set first a date of maturity before
ordering payment or foreclosure.
We find no merit in the appeal.
Wherefore, the parties respectfully pray
that the foregoing stipulation of facts be
admitted and approved by this Honorable
Court, without prejudice to the parties
adducing other evidence to prove their case
not covered by this stipulation of facts.

Page 33 of 38
An examination of the first complaint filed
against appellant in the Court of First Instance
of Manila shows that it was based on
appellants'
having
unlawfully
stopped
payment of the check for P2,500.00 she had
issued in favor of appellees; while the
complaint in the present action was for nonpayment of the balance of P96,000.00
guaranteed by the mortgage. The claim for
P2,500.00 was, therefore, a distinct debt not
covered by the security; and since the
mortgage was constituted on lands situated in
Quezon City, the appellees could not ask for
its foreclosure in the Manila courts. The two
causes of action being different, section 4 of
Rule 2 does not apply.
On the second assignment of error: the
stipulation in the mortgage contract that the
obligation for P96,000.00 was to be
without interest, payable within ninety (90)
days from this date, provided that in case of
default it shall bear interest at the rate of 12%
per annum,
clearly fixes a date of maturity, the stipulated
twelve per cent in case of default being
nothing more than a penalty, designed to
induce the debtor to pay on or before the
expiration of the ninety (90) days. Hence,
there was no call upon the court to set
another due date.
Finding no error in the judgment appealed
from, the same is affirmed, with costs against
appellants.

G.R. No. L-64013 November 28, 1983


UNION GLASS & CONTAINER
CORPORATION and CARLOS PALANCA,
JR., in his capacity as President of Union
Glass
&
Container
Corporation,
petitioners,
vs.
THE
SECURITIES
AND
EXCHANGE
COMMISSION and CAROLINA HOFILEA,
respondents.
ESCOLIN, J.:
This petition for certiorari and prohibition
seeks to annul and set aside the Order of the
Securities and Exchange Commission, dated
September 25, 1981, upholding its jurisdiction
in SEC Case No. 2035, entitled "Carolina
Hofilea, Complainant, versus Development
Bank of the Philippines, et al., Respondents."
Private respondent Carolina Hofilea,
complainant in SEC Case No. 2035, is a
stockholder of Pioneer Glass Manufacturing
Corporation, Pioneer Glass for short, a
domestic corporation engaged in the
operation of silica mines and the manufacture
of glass and glassware. Since 1967, Pioneer
Glass
had
obtained
various
loan
accommodations from the Development Bank
of the Philippines [DBP], and also from other
local and foreign sources which DBP
guaranteed.
As security for said loan accommodations,
Pioneer Glass mortgaged and/or assigned its
assets, real and personal, to the DBP, in
addition to the mortgages executed by some

of its corporate officers over their personal


assets. The proceeds of said financial
exposure of the DBP were used in the
construction of a glass plant in Rosario,
Cavite, and the operation of seven silica
mining claims owned by the corporation.
It appears that through the conversion into
equity of the accumulated unpaid interests on
the various loans amounting to P5.4 million as
of January 1975, and subsequently increased
by another P2.2 million in 1976, the DBP was
able to gain control of the outstanding shares
of common stocks of Pioneer Glass, and to
get two, later three, regular seats in the
corporation's board of directors.
Sometime in March, 1978, when Pioneer
Glass suffered serious liquidity problems such
that it could no longer meet its financial
obligations with DBP, it entered into a dacion
en pago agreement with the latter, whereby
all its assets mortgaged to DBP were ceded
to the latter in full satisfaction of the
corporation's obligations in the total amount of
P59,000,000.00.
Part
of
the
assets
transferred to the DBP was the glass plant in
Rosario, Cavite, which DBP leased and
subsequently sold to herein petitioner Union
Glass and Container Corporation, hereinafter
referred to as Union Glass.
On April 1, 1981, Carolina Hofilea filed a
complaint before the respondent Securities
and Exchange Commission against the DBP,
Union Glass and Pioneer Glass, docketed as
SEC Case No. 2035. Of the five causes of
action pleaded therein, only the first cause of
action concerned petitioner Union Glass as
transferee and possessor of the glass plant.
Said first cause of action was based on the

Page 34 of 38
alleged illegality of the aforesaid dacion en
pago resulting from: [1] the supposed
unilateral and unsupported undervaluation of
the assets of Pioneer Glass covered by the
agreement; [2] the self-dealing indulged in by
DBP,
having
acted
both
as
stockholder/director and secured creditor of
Pioneer Glass; and [3] the wrongful inclusion
by DBP in its statement of account of P26M
as due from Pioneer Glass when the same
had already been converted into equity.
Thus, with respect to said first cause of
action, respondent Hofilea prayed that the
SEC issue an order:
1. Holding that the so called dacion en
pago conveying all the assets of Pioneer
Glass and the Hofilea personal properties to
Union Glass be declared null and void on the
ground that the said conveyance was tainted
with.
A. Self-dealing on the part of DBP which
was
acting
both
as
a
controlling
stockholder/director and as secured creditor
of the Pioneer Glass, all to its advantage and
to that of Union Glass, and to the gross
prejudice of the Pioneer Glass,
B. That the dacion en pago is void because
there was gross undervaluation of the assets
included in the so-called dacion en pago by
more than 100% to the prejudice of Pioneer
Glass and to the undue advantage of DBP
and Union Glass;
C. That the DBP unduly favored Union
Glass over another buyer, San Miguel
Corporation, notwithstanding the clearly
advantageous terms offered by the latter to

the prejudice of Pioneer Glass, its other


creditors and so-called 'Minority stockholders.'
2. Holding that the assets of the Pioneer
Glass taken over by DBP and part of which
was delivered to Union Glass particularly the
glass plant to be returned accordingly.
3. That the DBP be ordered to accept and
recognize the appraisal conducted by the
Asian Appraisal Inc. in 1975 and again in t978
of the asset of Pioneer Glass. 1
In her common prayer, Hofilea asked that
DBP be sentenced to pay Pioneer Glass
actual, consequential, moral and exemplary
damages, for its alleged illegal acts and gross
bad faith; and for DBP and Union Glass to
pay her a reasonable amount as attorney's
fees. 2
On April 21, 1981, Pioneer Glass filed its
answer. On May 8, 1981, petitioners moved
for dismissal of the case on the ground that
the SEC had no jurisdiction over the subject
matter or nature of the suit. Respondent
Hofilea filed her opposition to said motion, to
which herein petitioners filed a rejoinder.
On July 23, 1981, SEC Hearing Officer
Eugenio E. Reyes, to whom the case was
assigned, granted the motion to dismiss for
lack of jurisdiction. However, on September
25, 1981, upon motion for reconsideration
filed by respondent Hofilea, Hearing Officer
Reyes reversed his original order by
upholding the SEC's jurisdiction over the
subject matter and over the persons of
petitioners.
Unable
to
secure
a
reconsideration of the Order as well as to
have the same reviewed by the Commission

En Banc, petitioners filed the instant petition


for certiorari and prohibition to set aside the
order of September 25, 1981, and to prevent
respondent SEC from taking cognizance of
SEC Case No. 2035.
The issue raised in the petition may be
propounded thus: Is it the regular court or the
SEC that has jurisdiction over the case?
In upholding the SEC's jurisdiction over the
case Hearing Officer Reyes rationalized his
conclusion thus:
As correctly pointed out by the
complainant, the present action is in the form
of a derivative suit instituted by a stockholder
for the benefit of the corporation, respondent
Pioneer
Glass
and
Manufacturing
Corporation, principally against another
stockholder, respondent Development Bank
of the Philippines, for alleged illegal acts and
gross bad faith which resulted in the dacion
en pago arrangement now being questioned
by complainant. These alleged illegal acts
and gross bad faith came about precisely by
virtue of respondent Development Bank of the
Philippine's status as a stockholder of corespondent Pioneer Glass Manufacturing
Corporation although its status as such
stockholder, was gained as a result of its
being a creditor of the latter. The derivative
nature of this instant action can also be
gleaned from the common prayer of the
complainant which seeks for an order
directing respondent Development Bank of
the Philippines to pay co-respondent Pioneer
Glass Manufacturing Corporation damages
for the alleged illegal acts and gross bad faith
as above-mentioned.

Page 35 of 38
As far as respondent Union Glass and
Container Corporation is concerned, its
inclusion as a party-respondent by virtue of its
being an indispensable party to the present
action, it being in possession of the assets
subject of the dacion en pago and, therefore,
situated in such a way that it will be affected
by any judgment thereon, 3

a] Devices and schemes employed by or


any acts, of the board of directors, business
associates, its officers or partners, amounting
to fraud and misrepresentation which may be
detrimental to the interest of the public and/or
the stockholders, partners, members of
associations or organizations registered with
the Commission

It is in aid of this office that the adjudicative


power of the SEC must be exercised. Thus
the law explicitly specified and delimited its
jurisdiction to matters intrinsically connected
with
the
regulation
of
corporations,
partnerships and associations and those
dealing with the internal affairs of such
corporations, partnerships or associations.

In the ordinary course of things, petitioner


Union Glass, as transferee and possessor of
the glass plant covered by the dacion en pago
agreement, should be joined as partydefendant under the general rule which
requires the joinder of every party who has an
interest in or lien on the property subject
matter of the dispute. 4 Such joinder of
parties avoids multiplicity of suits as well as
ensures the convenient, speedy and orderly
administration of justice.

b] Controversies arising out of intracorporate or partnership relations, between


and among stockholders, members or
associates; between any or all of them and
the corporation, partnership, or association of
which they are stockholders, members or
associates, respectively; and between such
corporation, partnership or association and
the state insofar as it concerns their individual
franchise or right to exist as such entity;

Otherwise stated, in order that the SEC can


take cognizance of a case, the controversy
must pertain to any of the following
relationships: [a] between the corporation,
partnership or association and the public; [b]
between the corporation, partnership or
association and its stockholders, partners,
members, or officers; [c] between the
corporation, partnership or association and
the state in so far as its franchise, permit or
license to operate is concerned; and [d]
among the stockholders, partners or
associates themselves.

But since petitioner Union Glass has no


intra-corporate relation with either the
complainant or the DBP, its joinder as partydefendant in SEC Case No. 2035 brings the
cause of action asserted against it outside the
jurisdiction of the respondent SEC.
The jurisdiction of the SEC is delineated by
Section 5 of PD No. 902-A as follows:
Sec. 5. In addition to the regulatory and
adjudicative function of the Securities and
Exchange Commission over corporations,
partnerships and other forms of associations
registered with it as expressly granted under
existing laws and devices, it shall have
original and exclusive jurisdiction to hear and
decide cases involving:

c] Controversies in the election or


appointments of directors, trustees, officers or
managers of such corporations, partnerships
or associations.
This grant of jurisdiction must be viewed in
the light of the nature and function of the SEC
under the law. Section 3 of PD No. 902-A
confers upon the latter "absolute jurisdiction,
supervision, and control over all corporations,
partnerships or associations, who are
grantees of primary franchise and/or license
or permit issued by the government to
operate in the Philippines ... " The principal
function of the SEC is the supervision and
control over corporations, partnerships and
associations with the end in view that
investment in these entities may be
encouraged and protected, and their activities
pursued for the promotion of economic
development. 5

The fact that the controversy at bar


involves the rights of petitioner Union Glass
who has no intra-corporate relation either with
complainant or the DBP, places the suit
beyond the jurisdiction of the respondent
SEC. The case should be tried and decided
by the court of general jurisdiction, the
Regional Trial Court. This view is in accord
with
the
rudimentary
principle
that
administrative agencies, like the SEC, are
tribunals of limited jurisdiction 6 and, as such,
could wield only such powers as are
specifically granted to them by their enabling
statutes. 7 As We held in Sunset View
Condominium Corp. vs. Campos, Jr.: 8t.
hqw

Page 36 of 38
Inasmuch as the private respondents are
not
shareholders
of
the
petitioner
condominium corporation, the instant cases
for collection cannot be a 'controversy arising
out of intra-corporate or partnership relations
between and among stockholders, members
or associates; between any or all of them and
the corporation, partnership or association of
which they are stockholders, members or
associates, respectively,' which controversies
are under the original and exclusive
jurisdiction of the Securities & Exchange
Commission, pursuant to Section 5 [b] of P.D.
No. 902-A. ...

final judgment is rendered in SEC Case No.


2035, annulling the dacion en pago executed
in favor of the DBP.

cause of action against Union Glass for


cancellation of DBP's sale of the plant to
Union Glass.

WHEREFORE, the instant petition is


hereby granted, and the questioned Orders of
respondent SEC, dated September 25, 1981,
March 25, 1982 and May 28, 1982, are
hereby set aside. Respondent Commission is
ordered to drop petitioner Union Glass from
SEC Case No. 2035, without prejudice to the
filing of a separate suit before the regular
court of justice. No pronouncement as to
costs.

As heretofore pointed out, petitioner Union


Glass is involved only in the first cause of
action of Hofileas complaint in SEC Case
No, 2035. While the Rules of Court, which
applies suppletorily to proceedings before the
SEC, allows the joinder of causes of action in
one complaint, such procedure however is
subject to the rules regarding jurisdiction,
venue and joinder of parties. 9 Since
petitioner has no intra-corporate relationship
with the complainant, it cannot be joined as
party-defendant in said case as to do so
would violate the rule or jurisdiction. Hofileas
complaint against petitioner for cancellation of
the sale of the glass plant should therefore be
brought separately before the regular court
But such action, if instituted, shall be
suspended to await the final outcome of SEC
Case No. 2035, for the issue of the validity of
the dacion en pago posed in the last
mentioned case is a prejudicial question, the
resolution of which is a logical antecedent of
the issue involved in the action against
petitioner Union Glass. Thus, Hofileas
complaint against the latter can only prosper if

SO ORDERED.

The purpose of this brief concurrence is


with reference to the statement in the Court's
opinion that "Thus, Hofileas complaint
against the latter can only prosper if final
judgment is rendered in SEC Case No. 2035,
annulling the dacion en pago executed in
favor of the DBP," to erase any impression
that a favorable judgment secured by Hofilea
in SEC Case No. 2035 against the DBP and
Pioneer Glass would necessarily mean that
its action against Union Glass in the regular
courts of justice for recovery and cancellation
of the DBP sale of the glass plant to Union
Glass would necessarily prosper. It must be
borne in mind that as already indicated, the
SEC has no jurisdiction over Union Glass as
an outsider. The suit in the regular courts of
justice that Hofilea might bring against Union
Glass is of course subject to all defenses as
to the validity of the sale of the glass plant in
its favor as a buyer in good faith and should it
successfully substantiate such defenses, then
Hofileas action against it for cancellation of
the sale might fail as a consequence.

Separate Opinions
TEEHANKEE, J., concurring:
I concur in the Court's judgment penned by
Mr. Justice Escolin setting aside the
questioned orders of respondent SEC and
ordering that petitioner Union Glass be
dropped from SEC Case No. 2035 for lack of
SEC jurisdiction over it as a third party
purchaser of the glass plant acquired by the
DBP by dacion en pago from Pioneer Glass,
without prejudice to Hofilea filing a separate
suit in the regular courts of justice against
Union Glass for recovery and cancellation of
the said sale of the glass plant in favor of
Union Glass.
I concur also with the statement in the
Court's opinion that the final outcome of SEC
Case No. 2035 with regard to the validity of
the dacion en pago is a prejudicial case. If
Hofilea's complaint against said dacion en
pago fails in the SEC, then it clearly has no

AQUINO, J., dissenting:


I dissent with due deference to Justice
Escolin's opinion. What are belatedly assailed
in this certiorari and prohibition case filed on
May 17, 1983 are the order of September 25,
1981 of Eugenio E. Reyes, a SEC hearing
officer, and the orders of March 25 and May
28, 1982 of Antonio R. Manabat, another SEC
hearing officer.

Page 37 of 38
Although a jurisdictional issue is raised and
jurisdiction over the subject matter may be
raised at any stage of the case, nevertheless,
the petitioners are guilty of laches and
nonexhaustion of the remedy of appeal with
the Securities and Exchange Commission en
banc.
The petitioners resorted to the special civil
actions of certiorari and prohibition because
they assail the orders of mere SEC hearing
officers. This is not a review of the order,
decision or ruling of the SEC sitting en banc
which, according to section 6 of Presidential
Decree No. 902-A (1976), may be made by
this Court "in accordance with the pertinent
provisions of the Rules of Court."
Rule 43 of the Rules of Court used to allow
review by this Court of the SEC order, ruling
or decision. Republic Act 5434 (1968)
substituted the Court of Appeals for this Court
in line with the policy of lightening our heavy
jurisdictional burden. But this Court seems to
have been restored as the reviewing authority
by Presidential Decree No. 902-A.
However, section 9 of the Judiciary
Reorganization Law returned to the
Intermediate Appellate Court the exclusive
jurisdiction to review the ruling, order or
decision of the SEC as a quasi-judicial
agency. The same section 9 granted to the
Appellate Court jurisdiction in certiorari and
prohibition cases over the SEC although not
exclusive.
In this case, the SEC seems to have
adopted the orders of the two hearing officers
as its own orders as shown by the stand
taken by the Solicitor General in defending

the SEC. If that were so, that is, if the orders


of the hearing officers should be treated as
the orders of the SEC itself en banc, this
Court would have no jurisdiction over this
case. It should be the Appellate Court that
should exercise the power of review.
Carolina Hofilea has been a stockholder
since
1958
of
the
Pioneer
Glass
Manufacturing Corporation. Her personal
assets valued at P6,804,810 were apparently
or supposedly mortgaged to the DBP to
secure the obligations of Pioneer Glass (p.
32, Rollo).
Pioneer Glass became indebted to the
Development Bank of the Philippines in the
total sum of P59,000,000. Part of the loan
was used by Pioneer Glass to establish its
glass plant in Rosario, Cavite. The unpaid
interest on the loan amounting to around
seven million pesos became the DBP's equity
in Pioneer Glass. The DBP became a
substantial stockholder of Pioneer Glass.
Three members of the Pioneer Glass' board
of directors were from the DBP.
The glass plant commenced operations in
1977. At that time, Pioneer Glass was heavily
indebted to the DBP. Instead of foreclosing its
mortgage, DBP maneuvered to have the
mortgaged assets of Pioneer Glass, including
the glass plant, transferred to the DBP by way
of dacion en pago. This transaction was
alleged to be an "auto contract" or a case of
the DBP contracting with itself since the DBP
had a dominant position in Pioneer Glass.
Hofilea alleged that although the debt to the
DBP of Pioneer Glass amounted to
P59,000,000, the glass plant in 1977 had a

"sound value" of P77,329,000 and a


"reproduction cost" of P90,403,000. She
further alleged that San Miguel Corporation
was willing to buy the glass plant for
P40,000,000 cash, whereas it was actually
sold to Union Glass & Container Corporation
for the same amount under a 25-year term of
payment (pp. 32-34, Rollo).
On March 31, 1981; Carmen Hofilea filed
with the SEC a complaint against the DBP,
Union Glass, Pioneer Glass and Rafael Sison
as chairman of the DBP and Pioneer Glass
boards of directors. Union Glass filed a
motion to dismiss on the ground that
jurisdiction over the case is lodged in the
Court of First Instance. Hofilea opposed the
motion. Hearing Officer Reyes in his order of
July 23, 1981 dismissed the complaint on the
ground that the case is beyond the jurisdiction
of the SEC.
Hofilea filed a motion for reconsideration
which was opposed by Union Glass. Hearing
Officer Reyes in his order of September 25,
1981 reconsidered his dismissal order and
ruled that Union Glass is an indispensable
party because it is the transferee of the
controverted assets given by way of dacion
en pago to the DBP. He ruled that the SEC
has jurisdiction over the case.
Union Glass filed a motion for
reconsideration. Hearing Officer Antonio R.
Manabat denied the motion on the ground
"that the present action is an intra-corporate
dispute involving stockholders of the same
corporation (p. 26, Rollo).
Union Glass filed a second motion for
reconsideration with the prayer that the SEC

Page 38 of 38
should decide the motion en banc. The
hearing officer ruled that the remedy of Union
Glass was to file a timely appeal. Hence, its
second motion for reconsideration was denied
by the hearing officer. (This ruling is a
technicality which hinders substantial justice.)
It is clear that Union Glass has no cause of
action for certiorari and prohibition. Its
recourse was to appeal to the SEC en banc
the denial of its first motion for
reconsideration.
There is no question that the SEC has
jurisdiction over the intra-corporate dispute
between Hofilea and the DBP, both
stockholders of Pioneer Glass, over the
dacion en pago.
Now, does the SEC lose jurisdiction
because of the joinder of Union Glass which
has privity with the DBP since it was the
transferee of the assets involved in the dacion
en pago?
Certainly, the joinder of Union Glass does
not divest the SEC of jurisdiction over the
case. The joinder of Union Glass is necessary
because the DBP, its transfer or, is being
sued regarding the dacion en pago. The
defenses of Union Glass are tied up with the
defenses of the DBP in the intra-corporate
dispute. Hofileas cause of action should not
be split.
It would not be judicious and expedient to
require Hofilea to sue the DBP and Union
Glass in the Regional Trial Court. The SEC is
more competent than the said court to decide
the intra-corporate dispute.

The SEC, as the agency enforcing


Presidential Decree No. 902-A, is in the best
position to know the extent of its jurisdiction.
Its determination that it has jurisdiction in this
case has persuasive weight.