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CASES - RULE 1 (GENERAL PROVISIONS)

FIRST DIVISION
[G.R. No. 131686. March 18, 2002]
ROUEL AD. REYES, petitioner, vs. SPOUSES PEPITO and MARTA TORRES,
HON. ELIEZER R. DELOS SANTOS, Executive Judge, RTC, Angeles
City, respondents.

Respondents filed a motion for reconsideration,[6] averring that they had paid
the proper docket fees as early as August 27, 1997, annexing thereto the receipts.
They manifested that it was the Clerk of Court of the MCTC of Mabalacat and
Magalang who neglected to attach the said receipts to the records of the case. The
motion for reconsideration was set for hearing at 2:00 in the afternoon of October 3,
1997.
The day before the hearing, respondents filed a petition for certiorari and
prohibition[7] with Branch 62 of the Regional Trial Court of Angeles City, docketed as
Civil Case No. 8794. Respondents assailed the writ of execution issued by the MCTC
on September 30, 1997 despite their filing of the supersedeas bond to stay execution
of judgment pending appeal. Nevertheless, the sheriff executed the writ and
demolished respondents house and other structure on the subject property.

DECISION
YNARES-SANTIAGO, J.:
This petition for certiorari originates from a case for ejectment with damages
concerning a parcel of land[1] located in Mabalacat, Pampanga. Sometime in 1993,
petitioner Rouel AD. Reyes purchased the subject property. At that time, the property
was already occupied by several tenants who had constructed their homes and
commercial establishments thereon. These residents were informed that petitioner had
acquired the property and were asked to vacate the same.
Respondent spouses Pepito and Marta Torres and Arcelli T. Manalo refused to
vacate and remove their structure. Moreover, they erected one more structure and
leased the same to Lolita Ticse for a monthly rental of One Thousand Pesos
(P1,000.00). Several written demands [2] to vacate addressed to the Torres couple and
Manalo went unheeded, which prompted petitioner Reyes to file a complaint before the
Barangay Lupon for conciliation proceedings. When no settlement was reached, a
certificate to file action was issued to petitioner, who filed a case for
ejectment[3] against respondents and Manalo before the Municipal Circuit Trial Court of
Mabalacat and Magalang, Pampanga.
On May 29, 1997, the MCTC rendered a decision, disposing of the case as
follows:

Respondents failed to appear at the hearing of their motion for reconsideration


before Branch 59 of the RTC. The motion for reconsideration was denied and its
earlier order dismissing the appeal was sustained.
The following day, respondents filed another motion for reconsideration [8] of the
order denying their first motion for reconsideration. They alleged that their counsel
arrived late at the hearing on October 3, 1997; that their counsel was at Branch 62 of
the RTC Angeles City awaiting the issuance of a temporary restraining order in Civil
Case No. 8794, which was issued only a few minutes before 2:00 oclock; that he
thereafter rushed to Branch 59 to attend the hearing but was delayed by heavy traffic
due to a vehicular accident.
On November 17, 1997, the Regional Trial Court issued an Order,[9] ruling as
follows:
Without necessarily touching on the issue as to whether the appeal was filed on time
and it appearing that indeed there was payment of the appellate docket fees as
evidenced by Official Receipt Nos. 5864393 and 6674615, the Branch Clerk of Court
of the Municipal Circuit Trial Court, Mabalacat-Magalang, Pampanga, is hereby
ORDERED to immediately transmit the entire records of this case to this Court for
inclusion in the raffle.
SO ORDERED.

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against herein
defendants by ordering the latter:
1. To vacate the premises and to surrender the same peacefully to the plaintiff or to
any of his authorized representative/s;
2. To remove the structure/s standing on the premises;
3. To pay the plaintiff a rental of P1,000.00 a month commencing from the date of filing
of the complaint on July 22, 1996, up to the time defendants finally vacate the
premises;
4. To pay the plaintiff the amount of P20,000.00 as attorneys fees and to pay the cost
of this suit.
Plaintiffs claims for moral damages and defendants counterclaim are hereby denied
for lack of proof.
SO ORDERED.[4]
The Torres couple and co-defendant Manalo appealed to the Regional Trial
Court of Angeles City and filed the required supersedeas bond. The case was
docketed as Civil Case No. 8746. On September 18, 1997, the RTC dismissed the
appeal for failure to pay docket and other legal fees.[5]

Petitioner filed a motion for reconsideration.[10] While his motion for


reconsideration remained unresolved, the case was raffled to Branch 57 of the
Regional Trial Court of Angeles City. [11] On December 5, 1997, said court issued an
Order[12] directing the parties to submit their respective memoranda, after which the
case would be considered submitted for decision.
Hence, the instant petition for certiorari. Petitioner argues that respondent court
had lost jurisdiction when it dismissed the appeal and returned the records of the case
to the Municipal Circuit Trial Court; that respondent court erred in reinstating the
appeal without first resolving the motion for reconsideration; that respondent court
erred in not citing private respondents in contempt for forum-shopping; and that
respondents motion for reconsideration of the dismissal order was bereft of merit.
We find no grave abuse of discretion on the part of respondent court.
This Court is fully aware that procedural rules are not to be belittled or simply
disregarded for these prescribed procedures insure an orderly and speedy
administration of justice. However, it is equally true that litigation is not merely a game
of technicalities. Time and again, courts have been guided by the principle that the
rules of procedure are not to be applied in a very rigid and technical manner, as rules
of procedure are used only to help secure and not to override substantial justice.
[13]
The law and jurisprudence grant to courts the prerogative to relax compliance with
procedural rules of even the most mandatory character,[14] mindful of the duty to
reconcile both the need to put an end to litigation speedily and the parties right to an
opportunity to be heard.[15]

A more lenient interpretation is appropriate in this case especially because the


dismissal of respondents appeal for failure to pay docket fees was manifestly
erroneous. Through no fault of respondents, the clerk of court of the Municipal Circuit
Trial Court failed to include and transmit to respondent Regional Trial Court the
receipts of payment. The records show that respondents paid to the Clerk of Court of
the Municipal Circuit Trial Court the corresponding amounts well within the five
(5) days granted by the respondent court in its order requiring such payment. [16]

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SECOND DIVISION
[G.R. No. 187409 : November 16, 2011]
PEOPLE OF THE PHILIPPINES, FELIX FLORECE, JOSE FLORECE, AND
JUSTINO FLORECE, PETITIONERS, VS. HON. COURT OF APPEALS, AND
SOCORRO FLORECE, RESPONDENTS.

Contrary to petitioners contention, there was nothing respondents could have


done about the situation since they had every right to rely on the presumption that the
clerk of court would do her bounden duty. Rule 40, Section 5 of the Rules of Court, as
amended, provides:
Within the period for taking an appeal, the appellant shall pay to the clerk of the court
which rendered the judgment or final order appealed from the full amount of the
appellate court docket and other lawful fees. Proof of payment thereof shall be
transmitted to the appellate court together with the original record or the record on
appeal, as the case may be. (Underscoring ours)

RESOLUTION
REYES, A., J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by
Justino Florece (Justino), for himself and on behalf of his deceased brothers Felix
Florece (Felix) and Jose Florece (Jose), assailing the Court of Appeals (CA)
Decision[1] dated August 20, 2008 in CA-G.R. CR No. 31034.
The instant case stemmed from a criminal complaint filed by the petitioners against
Hilario Florece (Hilario) and his wife Socorro Florece (Socorro) for falsification of public
document punishable under Article 172 of the Penal Code.

Clearly then, it was the responsibility of the clerk of court to attach respondents
proof of payment to the original record. Respondent courts error in dismissing the
appeal after having been inadvertently misled to believe that respondents had failed to
pay the docket fees was rectifiable. Respondents endeavored to set this right through
their first motion for reconsideration.

In the said complaint, the petitioners alleged that they are the children-heirs of the late
spouses Gavino and Clara Florece, who were the registered owners of a 1,290 square
meter parcel of land in La Purisima, Nabua, Camarines Sur. After the death of their
parents, the petitioners, together with their other siblings, orally partitioned said parcel
of land amongst themselves.

It cannot be said that respondents second motion is strictly prohibited by the


rules for the matters raised in the first and second motions are not identical, since they
challenged two different orders of the respondent court.

Sometime in 2003, Felix decided to erect a nipa hut in said parcel of land. However,
Hilario protested the same, claiming that said parcel of land was already registered
under his name and that he acquired the same by virtue of a deed of transfer from his
parents. Hilario's parents, in turn, acquired the property from the petitioners as
evidenced by a Deed of Absolute Sale dated August 21, 1973 signed by the latter.

To our mind, a strict application of the rule prohibiting a second motion for
reconsideration in this instance would be unreasonable. Both orders dismissing the
appeal were based on technicalities and not on the merits of the case. Recognizing
that litigations should, as much as possible, be resolved on the merits and not on
technicality, the strict interpretation of this exclusionary rule in this case would amount
to a deprivation of the petitioners statutory right to appeal. The Court has in
innumerable instances held that the right of appeal is an essential part of the judicial
system; hence, courts should proceed with caution so as not to unduly and hastily
divest a party of the right to appeal.[17]

Claiming that they never executed said Deed of Absolute Sale, the petitioners filed a
complaint before the Provincial Prosecutors Office, which after finding probable
cause to indict Hilario and Socorro for falsification of public document under Article 172
of the Penal Code, filed the corresponding Information with the Municipal Circuit Trial
Court (MCTC) of Nabua-Bato, Camarines Sur.

In the first place, were it not for the omission or negligence of the Clerk of the
Municipal Court, the appeal would not have been dismissed, and the same would have
been resolved on the merits. The final resolution of this case has been delayed
because of procedural or technical lapses. However, such procedural lapses on the
part of respondents was neither intended to delay nor did it result in prejudice to
petitioner; hence, denying respondents appeal under the circumstances would be
putting a premium on technicalities at the expense of a just resolution of the case.[18]

On appeal, the Regional Trial Court (RTC), Branch 37, Iriga City, affirmed the
conviction of Hilario and Socorro for falsification of public document[3]. The motion for
reconsideration filed by Hilario and Socorro was denied by the RTC of Iriga City in its
Order dated July 18, 2007. Meanwhile, accused Hilario passed away on July 25, 2007.

Whenever non-compliance with the rules is not intended to delay the final
disposition of the case, nor to cause prejudice to the adverse party, we have
repeatedly held that the dismissal of an appeal on mere technicalities may be stayed
in the exercise of the courts equity jurisdiction. [19] Thus, when respondent court set
aside its earlier dismissal of respondents appeal, it did not do so with grave abuse of
discretion amounting to excess or lack of jurisdiction. Litigations should, as much as
possible, be decided on the merits and not on technicality. [20] It is the courts policy to
encourage hearings of appeals on the merits [21] so that every party-litigant is afforded
the amplest opportunity for the proper and just disposition of his cause, unhampered
by the constraints of technicalities.[22]
WHEREFORE, in view of all the foregoing, the petition is DISMISSED. The
case is REMANDED to the Regional Trial Court of Angeles City, Pampanga, which is
directed to resume proceedings in Civil Case No. 8746.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, and Kapunan, JJ., concur.

On November 26, 2006, the MCTC of Nabua-Bato rendered a Judgment[2] convicting


Hilario and Socorro of the crime charged. The MCTC of Nabua-Bato opined that
accused Hilario and Socorro, being in possession of and having made use of the
alleged falsified deed of sale, are presumed to be the material authors of the
falsification.

Thereafter, Socorro filed a Petition for Review[4] with the CA asserting that the RTC of
Iriga City erred in affirming her conviction of the crime charged. Socorro asserted that
the prosecution failed to prove that she indeed falsified the questioned deed and that
her conviction for the offense charged was merely based on presumption.
On August 20, 2008, the CA rendered the herein assailed Decision,[5] acquitting
Socorro of the crime charged. The CA concurred with the lower courts insofar as their
finding that the prosecution was able to prove that the questioned deed was indeed
forged. Nevertheless, the CA pointed out that Hilario and Socorro were not parties and
were never shown to have participated in the execution of the Deed of Absolute Sale,
and thus, could not be presumed to be the forgers thereof.
Undaunted, the petitioners instituted the instant petition for review on certiorari before
this Court.
The petition is denied.
The core issue here is whether or not the CA had committed reversible error and/or
grave abuse of discretion in reversing the Decision of the RTC which convicted the
respondent Socorro. The petitioners insist that the Decision rendered by the CA
should be reversed on the ground of extrinsic fraud.
According to the herein petitioners, in the CA proceedings, they were deprived of due
process as they had not been given the opportunity to participate in the said
proceedings.

Extrinsic fraud refers to any fraudulent act of the prevailing party in litigation committed
outside of the trial of the case, whereby the defeated party is prevented from fully
exhibiting his side of the case by fraud or deception practiced on him by his opponent,
such as by keeping him away from court, by giving him a false promise of a
compromise, or where the defendant never had the knowledge of the suit, being kept
in ignorance by the acts of the plaintiff, or where an attorney fraudulently or without
authority connives at his defeat.[6]
In the instant case, none of the foregoing circumstances exist that would justify a
finding that extrinsic fraud was extant in the proceedings before the CA. The records
would show that in the CA, the respondent-complainant was the People of the
Philippines represented by the Office of the Solicitor General (OSG). The OSG had in
fact participated in the proceedings before the CA. Thus, the People of the Philippines
was not prevented from fully exhibiting its case before the CA.
The fact that the herein petitioners were not able to participate in the proceedings
before the CA is immaterial. Insofar as the petitioners are concerned, they were not
parties to the criminal case. The petitioners, as private complainants in the case below,
were merely witnesses for the prosecution. The cases cited by the petitioners herein in
support of the instant petition aptly pertain to civil cases.
In Palu-ay v. Court of Appeals, [7] we held that:
It is well-settled that in criminal cases where the offended party is the State, the
interest of the private complainant or the private offended party is limited to the civil
liability. Thus, in the prosecution of the offense, the complainants role is limited to
that of a witness for the prosecution. If a criminal case is dismissed by the trial
court or if there is an acquittal, an appeal therefrom on the criminal aspect may
be undertaken only by the State through the Solicitor General. Only the Solicitor
General may represent the People of the Philippines on appeal. The private
offended party or complainant may not take such appeal. However, the said offended
party or complainant may appeal the civil aspect despite the acquittal of the accused.
(Emphasis supplied)
While there may be instances where a private complainant or offended party in a
criminal case may be allowed to file a petition directly with this Court, as when there is
a denial of due process, the foregoing circumstance is not extant here.
Moreover, the instant petition for review on certiorari was not filed on time. A petition
for review on certiorari must be filed within fifteen (15) days from notice of the
judgment or final order or resolution appealed from, or of the denial of a motion for
new trial or reconsideration filed in due time after notice of the judgment.[8]
Here, the petitioners alleged that they received a copy of the August 20, 2008 Decision
of the CA only on February 10, 2009. Thus, the petitioners only had until February 25,
2009 to assail the August 20, 2008 Decision of the CA via a petition for review
on certiorari. However, the petitioners were only able to file the instant petition on April
27, 2009. Clearly, the instant petition was filed out of time.
Nevertheless, the petitioners invoke the principle of substantial justice and beg this
Court to suspend the rules in their favor. We are
however loath to heed the petitioners invocation of substantial justice. It bears
stressing that the petitioners utterly failed to advance any cogent or intelligible
explanation for their failure to file the petition on time.
The petitioners ought to be reminded that the bare invocation of "the interest of
substantial justice" is not a magic wand that will automatically compel this Court to
suspend procedural rules. Procedural rules are not to be belittled or dismissed simply
because their non-observance may have resulted in prejudice to a party's substantive
rights. Like all rules, they are required to be followed except only for the most
persuasive of reasons when they may be relaxed to relieve a litigant of an injustice not
commensurate with the degree of his thoughtlessness in not complying with the
procedure prescribed.[9]
Lastly, a review of the findings of the CA acquitting Socorro of the charge against her is
not warranted under the circumstances as it runs afoul of the avowed constitutional
right of an accused against double jeopardy. A verdict of acquittal is immediately final,
and a re-examination of the merits of such acquittal, even in the appellate courts, will
put the accused in jeopardy for the same offense.[10]

RULE 2 CAUSE OF ACTION


FIRST DIVISION
G.R. No. 161135. April 8, 2005
SWAGMAN HOTELS AND TRAVEL, INC., Petitioner, vs. HON. COURT OF
APPEALS, and NEAL B. CHRISTIAN,Respondents.
DECISION
DAVIDE, JR., C.J.:
May a complaint that lacks a cause of action at the time it was filed be cured by
the accrual of a cause of action during the pendency of the case? This is the
basic issue raised in this petition for the Court's consideration.
Sometime in 1996 and 1997, petitioner Swagman Hotels and Travel, Inc., through
Atty. Leonor L. Infante and Rodney David Hegerty, its president and vicepresident, respectively, obtained from private respondent Neal B. Christian
loans evidenced by three promissory notes dated 7 August 1996, 14 March 1997,
and 14 July 1997. Each of the promissory notes is in the amount of US$50,000
payable after three years from its date with an interest of 15% per annum
payable every three months.[1] In a letter dated 16 December 1998, Christian
informed the petitioner corporation that he was terminating the loans and
demanded from the latter payment in the total amount of US$150,000 plus
unpaid interests in the total amount of US$13,500.[2]
On 2 February 1999, private respondent Christian filed with the Regional Trial
Court of Baguio City, Branch 59, a complaint for a sum of money and damages
against the petitioner corporation, Hegerty, and Atty. Infante. The complaint
alleged as follows: On 7 August 1996, 14 March 1997, and 14 July 1997, the
petitioner, as well as its president and vice-president obtained loans from him in
the total amount of US$150,000 payable after three years, with an interest of 15%
per annum payable quarterly or every three months. For a while, they paid an
interest of 15% per annum every three months in accordance with the three
promissory notes. However, starting January 1998 until December 1998, they
paid him only an interest of 6% per annum, instead of 15% per annum, in
violation of the terms of the three promissory notes. Thus, Christian prayed that
the trial court order them to pay him jointly and solidarily the amount of
US$150,000 representing the total amount of the loans; US$13,500 representing
unpaid interests from January 1998 until December 1998; P100,000 for moral
damages; P50,000 for attorney's fees; and the cost of the suit.[3]
The petitioner corporation, together with its president and vice-president, filed
an Answer raising as defenses lack of cause of action and novation of the
principal obligations. According to them, Christian had no cause of action
because the three promissory notes were not yet due and demandable. In
December 1997, since the petitioner corporation was experiencing huge losses
due to the Asian financial crisis, Christian agreed (a) to waive the interest of 15%
per annum, and (b) accept payments of the principal loans in installment basis,
the amount and period of which would depend on the state of business of the
petitioner corporation. Thus, the petitioner paid Christian capital repayment in
the amount of US$750 per month from January 1998 until the time the complaint
was filed in February 1999. The petitioner and its co-defendants then prayed that
the complaint be dismissed and that Christian be ordered to pay P1 million as
moral damages; P500,000 as exemplary damages; and P100,000 as attorney's
fees.[4]

WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED.


SO ORDERED.
Carpio, (Chairperson), Brion, Perez, Aranal-Sereno, and Reye
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In due course and after hearing, the trial court rendered a decision[5] on 5 May
2000 declaring the first two promissory notes dated 7 August 1996 and 14 March
1997 as already due and demandable and that the interest on the loans had been
reduced by the parties from 15% to 6% per annum. It then ordered the petitioner

corporation to pay Christian the amount of $100,000 representing the principal


obligation covered by the promissory notes dated 7 August 1996 and 14 March
1997, 'plus interest of 6% per month thereon until fully paid, with all interest
payments already paid by the defendant to the plaintiff to be deducted
therefrom.
The trial court ratiocinated in this wise:
(1) There was no novation of defendant's obligation to the plaintiff. Under Article
1292 of the Civil Code, there is an implied novation only if the old and the new
obligation be on every point incompatible with one another.
The test of incompatibility between the two obligations or contracts, according
to an imminent author, is whether they can stand together, each one having an
independent existence. If they cannot, they are incompatible, and the
subsequent obligation novates the first (Tolentino, Civil Code of the Philippines,
Vol. IV, 1991 ed., p. 384). Otherwise, the old obligation will continue to subsist
subject to the modifications agreed upon by the parties. Thus, it has been
written that accidental modifications in an existing obligation do not extinguish
it by novation. Mere modifications of the debt agreed upon between the parties
do not constitute novation. When the changes refer to secondary agreement and
not to the object or principal conditions of the contract, there is no novation;
such changes will produce modifications of incidental facts, but will not
extinguish the original obligation. Thus, the acceptance of partial payments or a
partial remission does not involve novation (id., p. 387). Neither does the
reduction of the amount of an obligation amount to a novation because it only
means a partial remission or condonation of the same debt.
In the instant case, the Court is of the view that the parties merely intended to
change the rate of interest from 15% per annum to 6% per annum when the
defendant started paying $750 per month which payments were all accepted by
the plaintiff from January 1998 onward. The payment of the principal obligation,
however, remains unaffected which means that the defendant should still pay
the plaintiff $50,000 on August 9, 1999, March 14, 2000 and July 14, 2000.
(2) When the instant case was filed on February 2, 1999, none of the promissory
notes was due and demandable. As of this date however, the first and the
second promissory notes have already matured. Hence, payment is already due.
Under Section 5 of Rule 10 of the 1997 Rules of Civil Procedure, a complaint
which states no cause of action may be cured by evidence presented without
objection. Thus, even if the plaintiff had no cause of action at the time he filed
the instant complaint, as defendants' obligation are not yet due and demandable
then, he may nevertheless recover on the first two promissory notes in view of
the introduction of evidence showing that the obligations covered by the two
promissory notes are now due and demandable.
(3) Individual defendants Rodney Hegerty and Atty. Leonor L. Infante can not be
held personally liable for the obligations contracted by the defendant
corporation it being clear that they merely acted in representation of the
defendant corporation in their capacity as General Manager and President,
respectively, when they signed the promissory notes as evidenced by Board
Resolution No. 1(94) passed by the Board of Directors of the defendant
corporation (Exhibit '4').[6]
In its decision[7] of 5 September 2003, the Court of Appeals denied petitioner's
appeal and affirmed in toto the decision of the trial court, holding as follows:
In the case at bench, there is no incompatibility because the changes referred to
by appellant Swagman consist only in the manner of payment. . . .
Appellant Swagman's interpretation that the three (3) promissory notes have
been novated by reason of appellee Christian's acceptance of the monthly
payments of US$750.00 as capital repayments continuously even after the filing
of the instant case is a little bit strained considering the stiff requirements of the

law on novation that the intention to novate must appear by express agreement
of the parties, or by their acts that are too clear and unequivocal to be mistaken.
Under the circumstances, the more reasonable interpretation of the act of the
appellee Christian in receiving the monthly payments of US$750.00 is that
appellee Christian merely allowed appellant Swagman to pay whatever amount
the latter is capable of. This interpretation is supported by the letter of demand
dated December 16, 1998 wherein appellee Christian demanded from appellant
Swagman to return the principal loan in the amount of US$150,000 plus unpaid
interest in the amount of US$13,500.00
...
Appellant Swagman, likewise, contends that, at the time of the filing of the
complaint, appellee Christian ha[d] no cause of action because none of the
promissory notes was due and demandable.
Again, We are not persuaded.
...
In the case at bench, while it is true that appellant Swagman raised in its Answer
the issue of prematurity in the filing of the complaint, appellant Swagman
nonetheless failed to object to appellee Christian's presentation of evidence to
the effect that the promissory notes have become due and demandable.
The afore-quoted rule allows a complaint which states no cause of action to be
cured either by evidence presented without objection or, in the event of an
objection sustained by the court, by an amendment of the complaint with leave
of court (Herrera, Remedial Law, Vol. VII, 1997 ed., p. 108).[8]
Its motion for reconsideration having been denied by the Court of Appeals in its
Resolution of 4 December 2003,[9] the petitioner came to this Court raising the
following issues:
I. WHERE THE DECISION OF THE TRIAL COURT DROPPING TWO DEFENDANTS
HAS BECOME FINAL AND EXECUTORY, MAY THE RESPONDENT COURT OF
APPEALS STILL STUBBORNLY CONSIDER THEM AS APPELLANTS WHEN THEY
DID NOT APPEAL?
ii. Where there is no cause of action, is the decision of the lower court valid?
III. MAY THE RESPONDENT COURT OF APPEALS VALIDLY AFFIRM A DECISION
OF THE LOWER COURT WHICH IS INVALID DUE TO LACK OF CAUSE OF
ACTION?
IV. Where there is a valid novation, may the original terms of contract which has
been novated still prevail?[10]
The petitioner harps on the absence of a cause of action at the time the private
respondent's complaint was filed with the trial court. In connection with this, the
petitioner raises the issue of novation by arguing that its obligations under the
three promissory notes were novated by the renegotiation that happened in
December 1997 wherein the private respondent agreed to waive the interest in
each of the three promissory notes and to accept US$750 per month as
installment payment for the principal loans in the total amount of US$150,000.
Lastly, the petitioner questions the act of the Court of Appeals in considering
Hegerty and Infante as appellants when they no longer appealed because the
trial court had already absolved them of the liability of the petitioner corporation.
On the other hand, the private respondent asserts that this petition is 'a mere
ploy to continue delaying the payment of a just obligation. Anent the fact that
Hegerty and Atty. Infante were considered by the Court of Appeals as appellants,
the private respondent finds it immaterial because they are not affected by the
assailed decision anyway.

Cause of action, as defined in Section 2, Rule 2 of the 1997 Rules of Civil


Procedure, is the act or omission by which a party violates the right of another.
Its essential elements are as follows:
1. A right in favor of the plaintiff by whatever means and under whatever law it
arises or is created;
2. An obligation on the part of the named defendant to respect or not to violate
such right; and
3. Act or omission on the part of such defendant in violation of the right of the
plaintiff or constituting a breach of the obligation of the defendant to the plaintiff
for which the latter may maintain an action for recovery of damages or other
appropriate relief.[11]
It is, thus, only upon the occurrence of the last element that a cause of action
arises, giving the plaintiff the right to maintain an action in court for recovery of
damages or other appropriate relief.
It is undisputed that the three promissory notes were for the amount of P50,000
each and uniformly provided for (1) a term of three years; (2) an interest of 15 %
per annum, payable quarterly; and (3) the repayment of the principal loans after
three years from their respective dates. However, both the Court of Appeals and
the trial court found that a renegotiation of the three promissory notes indeed
happened in December 1997 between the private respondent and the petitioner
resulting in the reduction ' not waiver ' of the interest from 15% to 6% per
annum, which from then on was payable monthly, instead of quarterly. The term
of the principal loans remained unchanged in that they were still due three years
from the respective dates of the promissory notes. Thus, at the time the
complaint was filed with the trial court on 2 February 1999, none of the three
promissory notes was due yet; although, two of the promissory notes with the
due dates of 7 August 1999 and 14 March 2000 matured during the pendency of
the case with the trial court. Both courts also found that the petitioner had been
religiously paying the private respondent US$750 per month from January 1998
and even during the pendency of the case before the trial court and that the
private respondent had accepted all these monthly payments.
With these findings of facts, it has become glaringly obvious that when the
complaint for a sum of money and damages was filed with the trial court on 2
February 1999, no cause of action has as yet existed because the petitioner had
not committed any act in violation of the terms of the three promissory notes as
modified by the renegotiation in December 1997. Without a cause of action, the
private respondent had no right to maintain an action in court, and the trial court
should have therefore dismissed his complaint.
Despite its finding that the petitioner corporation did not violate the modified
terms of the three promissory notes and that the payment of the principal loans
were not yet due when the complaint was filed, the trial court did not dismiss the
complaint, citing Section 5, Rule 10 of the 1997 Rules of Civil Procedure, which
reads:
Section 5. Amendment to conform to or authorize presentation of evidence. '
When issues not raised by the pleadings are tried with the express or implied
consent of the parties, they shall be treated in all respects as if they had been
raised in the pleadings. Such amendment of the pleadings as may be necessary
to cause them to conform to the evidence and to raise these issues may be
made upon motion of any party at any time, even after judgment; but failure to
amend does not affect the result of the trial of these issues. If evidence is
objected to at the trial on the ground that it is not within the issues made by the
pleadings, the court may allow the pleadings to be amended and shall do so
with liberality if the presentation of the merits of the action and the ends of
substantial justice will be subserved thereby. The court may grant a continuance
to enable the amendment to be made.

According to the trial court, and sustained by the Court of Appeals, this Section
allows a complaint that does not state a cause of action to be cured by evidence
presented without objection during the trial. Thus, it ruled that even if the private
respondent had no cause of action when he filed the complaint for a sum of
money and damages because none of the three promissory notes was due yet,
he could nevertheless recover on the first two promissory notes dated 7 August
1996 and 14 March 1997, which became due during the pendency of the case in
view of the introduction of evidence of their maturity during the trial.
Such interpretation of Section 5, Rule 10 of the 1997 Rules of Civil Procedure is
erroneous.
Amendments of pleadings are allowed under Rule 10 of the 1997 Rules of Civil
Procedure in order that the actual merits of a case may be determined in the
most expeditious and inexpensive manner without regard to technicalities, and
that all other matters included in the case may be determined in a single
proceeding, thereby avoiding multiplicity of suits.[12] Section 5 thereof applies
to situations wherein evidence not within the issues raised in the pleadings is
presented by the parties during the trial, and to conform to such evidence the
pleadings are subsequently amended on motion of a party. Thus, a complaint
which fails to state a cause of action may be cured by evidence presented
during the trial.
However, the curing effect under Section 5 is applicable only if a cause of action
in fact exists at the time the complaint is filed, but the complaint is defective for
failure to allege the essential facts. For example, if a complaint failed to allege
the fulfillment of a condition precedent upon which the cause of action depends,
evidence showing that such condition had already been fulfilled when the
complaint was filed may be presented during the trial, and the complaint may
accordingly be amended thereafter.[13] Thus, in Roces v. Jalandoni,[14] this
Court upheld the trial court in taking cognizance of an otherwise defective
complaint which was later cured by the testimony of the plaintiff during the trial.
In that case, there was in fact a cause of action and the only problem was the
insufficiency of the allegations in the complaint. This ruling was reiterated
inPascua v. Court of Appeals.[15]
It thus follows that a complaint whose cause of action has not yet accrued
cannot be cured or remedied by an amended or supplemental pleading alleging
the existence or accrual of a cause of action while the case is pending.[16] Such
an action is prematurely brought and is, therefore, a groundless suit, which
should be dismissed by the court upon proper motion seasonably filed by the
defendant. The underlying reason for this rule is that a person should not be
summoned before the public tribunals to answer for complaints which are
immature. As this Court eloquently said in Surigao Mine Exploration Co., Inc. v.
Harris:[17]
It is a rule of law to which there is, perhaps, no exception, either at law or in
equity, that to recover at all there must be some cause of action at the
commencement of the suit. As observed by counsel for appellees, there are
reasons of public policy why there should be no needless haste in bringing up
litigation, and why people who are in no default and against whom there is yet
no cause of action should not be summoned before the public tribunals to
answer complaints which are groundless. We say groundless because if the
action is immature, it should not be entertained, and an action prematurely
brought is a groundless suit.
It is true that an amended complaint and the answer thereto take the place of the
originals which are thereby regarded as abandoned (Reynes vs. Compaa
General de Tabacos [1912], 21 Phil. 416; Ruyman and Farris vs. Director of
Lands [1916], 34 Phil., 428) and that 'the complaint and answer having been
superseded by the amended complaint and answer thereto, and the answer to
the original complaint not having been presented in evidence as an exhibit, the
trial court was not authorized to take it into account. (Bastida vs. Menzi & Co.
[1933], 58 Phil., 188.) But in none of these cases or in any other case have we
held that if a right of action did not exist when the original complaint was filed,
one could be created by filing an amended complaint. In some jurisdictions in

the United States what was termed an 'imperfect cause of action could be
perfected by suitable amendment (Brown vs. Galena Mining & Smelting Co., 32
Kan., 528; Hooper vs. City of Atlanta, 26 Ga. App., 221) and this is virtually
permitted in Banzon and Rosauro vs. Sellner ([1933], 58 Phil., 453); Asiatic
Potroleum [sic] Co. vs. Veloso ([1935], 62 Phil., 683); and recently in Ramos vs.
Gibbon (38 Off. Gaz., 241).That, however, which is no cause of action
whatsoever cannot by amendment or supplemental pleading be converted into a
cause of action: Nihil de re accrescit ei qui nihil in re quando jus accresceret
habet.
We are therefore of the opinion, and so hold, that unless the plaintiff has a valid
and subsisting cause of action at the time his action is commenced, the defect
cannot be cured or remedied by the acquisition or accrual of one while the
action is pending, and a supplemental complaint or an amendment setting up
such after-accrued cause of action is not permissible. (Emphasis ours).
Hence, contrary to the holding of the trial court and the Court of Appeals, the
defect of lack of cause of action at the commencement of this suit cannot be
cured by the accrual of a cause of action during the pendency of this case
arising from the alleged maturity of two of the promissory notes on 7 August
1999 and 14 March 2000.
Anent the issue of novation, this Court observes that the petitioner corporation
argues the existence of novation based on its own version of what transpired
during the renegotiation of the three promissory notes in December 1997. By
using its own version of facts, the petitioner is, in a way, questioning the
findings of facts of the trial court and the Court of Appeals.
As a rule, the findings of fact of the trial court and the Court of Appeals are final
and conclusive and cannot be reviewed on appeal to the Supreme Court[18] as
long as they are borne out by the record or are based on substantial evidence.
[19] The Supreme Court is not a trier of facts, its jurisdiction being limited to
reviewing only errors of law that may have been committed by the lower courts.
Among the exceptions is when the finding of fact of the trial court or the Court
of Appeals is not supported by the evidence on record or is based on a
misapprehension of facts. Such exception obtains in the present case.[20]
This Court finds to be contrary to the evidence on record the finding of both the
trial court and the Court of Appeals that the renegotiation in December 1997
resulted in the reduction of the interest from 15% to 6% per annum and that the
monthly payments of US$750 made by the petitioner were for the reduced
interests.
It is worthy to note that the cash voucher dated January 1998[21] states that the
payment of US$750 represents 'INVESTMENT PAYMENT. All the succeeding cash
vouchers describe the payments from February 1998 to September 1999 as
'CAPITAL REPAYMENT.[22] All these cash vouchers served as receipts
evidencing private respondent's acknowledgment of the payments made by the
petitioner: two of which were signed by the private respondent himself and all
the others were signed by his representatives. The private respondent even
identified and confirmed the existence of these receipts during the
hearing. [23] Significantly, cognizant of these receipts, the private respondent
applied these payments to the three consolidated principal loans in the
summary of payments he submitted to the court.[24]
Under Article 1253 of the Civil Code, if the debt produces interest, payment of
the principal shall not be deemed to have been made until the interest has been
covered. In this case, the private respondent would not have signed the receipts
describing the payments made by the petitioner as 'capital repayment if the
obligation to pay the interest was still subsisting. The receipts, as well as private
respondent's summary of payments, lend credence to petitioner's claim that the
payments were for the principal loans and that the interests on the three
consolidated loans were waived by the private respondent during the
undisputed renegotiation of the loans on account of the business reverses
suffered by the petitioner at the time.

There was therefore a novation of the terms of the three promissory notes in
that the interest was waived and the principal was payable in monthly
installments of US$750. Alterations of the terms and conditions of the obligation
would generally result only in modificatory novation unless such terms and
conditions are considered to be the essence of the obligation itself.[25] The
resulting novation in this case was, therefore, of the modificatory type, not the
extinctive type, since the obligation to pay a sum of money remains in force.
Thus, since the petitioner did not renege on its obligation to pay the monthly
installments conformably with their new agreement and even continued paying
during the pendency of the case, the private respondent had no cause of action
to file the complaint. It is only upon petitioner's default in the payment of the
monthly amortizations that a cause of action would arise and give the private
respondent a right to maintain an action against the petitioner.
Lastly, the petitioner contends that the Court of Appeals obstinately included its
President Infante and Vice-President Hegerty as appellants even if they did not
appeal the trial court's decision since they were found to be not personally liable
for the obligation of the petitioner. Indeed, the Court of Appeals erred in
referring to them as defendants-appellants; nevertheless, that error is no cause
for alarm because its ruling was clear that the petitioner corporation was the one
solely liable for its obligation. In fact, the Court of Appeals affirmed intoto the
decision of the trial court, which means that it also upheld the latter's ruling that
Hegerty and Infante were not personally liable for the pecuniary obligations of
the petitioner to the private respondent.
In sum, based on our disquisition on the lack of cause of action when the
complaint for sum of money and damages was filed by the private respondent,
the petition in the case at bar is impressed with merit.
WHEREFORE, the petition is hereby GRANTED. The Decision of 5 September
2003 of the Court of Appeals in CA-G.R. CV No. 68109, which affirmed the
Decision of 5 May 2000 of the Regional Trial Court of Baguio, Branch 59,
granting in part private respondent's complaint for sum of money and damages,
and its Resolution of 4 December 2003, which denied petitioner's motion for
reconsideration are hereby REVERSED and SET ASIDE. The complaint docketed
as Civil Case No. 4282-R is hereby DISMISSED for lack of cause of action.
No costs.
SO ORDERED.
Quisumbing, Ynares-Santiago, Carpio, and Azcuna, JJ., concur.
@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@
RULE 3 PARTIES TO CIVIL ACTION
ECOND DIVISION
[G.R. No. 162575 : December 15, 2010]
BEATRIZ SIOK PING TANG, PETITIONER, VS. SUBIC BAY DISTRIBUTION, INC.,
RESPONDENT.
DECISION
PERALTA, J.:
Before us is a petition for review on certiorari filed by petitioner Beatriz Siok Ping Tang
seeking to annul and set aside the Decision[1] dated October 17, 2003 and the
Resolution[2] dated March 5, 2004 of the Court of Appeals (CA) in CA-G.R. SP No.
74629.
The antecedent facts are as follows:
Petitioner is doing business under the name and style of Able Transport. Respondent

Subic Bay Distribution, Inc. (SBDI) entered in two Distributorship Agreements with
petitioner and Able Transport in April 2002. Under the Agreements, respondent, as
seller, will sell, deliver or procure to be delivered petroleum products, and petitioner, as
distributor, will purchase, receive and pay for its purchases from respondent. The two
Agreements had a period of one year, commencing on October 2001 to October 2002,
which shall continue on an annual basis unless terminated by either party upon thirty
days written notice to the other prior to the expiration of the original term or any
extension thereof.

undertakings were nullified, respondent's rights under the same should be maintained.

Section 6.3 of the Distributorship Agreement provides that respondent may require
petitioner to put up securities, real or personal, or to furnish respondent a performance
bond issued by a bonding company chosen by the latter to secure and answer for
petitioner's outstanding account, and or faithful performance of her obligations as
contained or arising out of the Agreement. Thus, petitioner applied for and was granted
a credit line by the United Coconut Planters Bank (UCPB), International Exchange
Bank (IEBank), and Security Bank Corporation (SBC). Petitioner also applied with the
Asia United Bank (AUB) an irrevocable domestic standby letter of credit in favor of
respondent. All these banks separately executed several undertakings setting the
terms and conditions governing the drawing of money by respondent from these
banks.

WHEREFORE, the petition is hereby GRANTED. The Order dated December 17, 2002
is hereby ANNULLED AND SET ASIDE. The writ of preliminary injunction issued by
the lower court is hereby LIFTED.[9]

Petitioner allegedly failed to pay her obligations to respondent despite demand, thus,
respondent tried to withdraw from these bank undertakings.
Petitioner then filed with the Regional Trial Court (RTC) of Quezon City separate
petitions[3] against the banks for declaration of nullity of the several bank undertakings
and domestic letter of credit which they issued with the application for the issuance of
a temporary restraining order (TRO) and writ of preliminary injunction. The cases were
later consolidated and were assigned to Branch 101. Petitioner asked for the
annulment of the bank undertakings/letter of credit which she signed on the ground
that the prevailing market rate at the time of respondent's intended drawings with
which petitioner will be charged of as interests and penalties is oppressive, exorbitant,
unreasonable and unconscionable rendering it against public morals and policy; and
that to make her automatically liable for millions of pesos on the bank undertakings,
these banks merely required the submission of a mere certification from the company
(respondent) that the customer (petitioner) has not paid its account (and its statement
of account of the client) without first verifying the truthfulness of the alleged petitioner's
total liability to the drawer thereon. Therefore, such contracts are oppressive,
unreasonable and unconscionable as they would result in her obtaining several
millions of liability.
On November 28, 2002, a hearing was conducted for the issuance of the TRO and the
writ of preliminary injunction wherein the petitioner and the bank representatives were
present. On query of the respondent Judge Normandie Pizarro (Judge Pizarro) to the
bank representatives with regard to the eventual issuance of the TRO, the latter all
replied that they will abide by the sound judgment of the court. The court then issued
an Order[4] granting the TRO and requiring petitioner to implead respondent as an
indispensable party and for the latter to submit its position paper on the matter of the
issuance of the injunction. Petitioner and respondent submitted their respective
position papers.
On December 17, 2002, the RTC rendered an Order,[5] the dispositive portion of which
reads:
ACCORDINGLY, let a Writ of Preliminary Injunction be issued restraining and enjoining
herein Respondent UCPB, IEB, SB and AUB from releasing any funds to SBDI,
pursuant to the Bank Undertakings and/or Domestic Standby Letter of Credit until
further orders from this Court. Consequently, Petitioner is hereby DIRECTED to post a
bond in the amount of TEN MILLION PESOS (P10,000,000.00), to answer for
whatever damages respondent banks and SBDI may suffer should this Court finally
decide that petitioner was not entitled thereto. [6]
The RTC found that both respondent and petitioner have reasons for the enforcement
or non-enforcement of the bank undertakings, however, as to whether said reasons
were justifiable or not, in view of the attending circumstances, the RTC said that these
can only be determined after a full blown trial. It ruled that the outright denial of
petitioner's prayer for the issuance of injunction, even if the evidence warranted the
reasonable probability that real injury will occur if the relief for shall not be granted in
favor of petitioner, will not serve the ends of justice.
Respondent filed with the CA a petition for certiorari with prayer for the issuance of a
TRO and writ of preliminary injunction against respondent Judge Pizarro and
petitioner. Subsequently, petitioner filed her Comment and respondent filed its Reply.
On July 4, 2003, the CA issued a Resolution[7] granting the TRO prayed for by
respondent after finding that it was apparent that respondent has a legal right under
the bank undertakings issued by UCPB, SBC, and IEBank; and that until those

On July 11, 2003, the CA issued a Supplemental Resolution[8] wherein the Domestic
Standby Letter of Credit issued by AUB was ordered included among the bank
undertakings, to which respondent has a legal right.
On October 17, 2003, the CA rendered its assailed Decision, the decretal portion of
which reads:

In so ruling, the CA said that the grant or denial of an injunction rests on the sound
discretion of the RTC which should not be intervened, except in clear cases of abuse.
Nonetheless, the CA continued that the RTC should avoid issuing a writ of preliminary
injunction which would, in effect, dispose of the main case without trial. It found that
petitioner was questioning the validity of the bank undertakings and letter of credit for
being oppressive, unreasonable and unconscionable. However, as provided under the
law, private transactions are presumed to be fair and regular and that a person takes
ordinary care of his concerns. The CA ruled that the RTC's issuance of the injunction,
which was premised on the abovementioned justification, would be a virtual
acceptance of petitioner's claim, thus, already a prejudgment of the main case. It also
said that contracts are presumed valid until they are voided by a court of justice, thus,
until such time that petitioner has presented sufficient evidence to rebut such
presumption, her legal right to the writ is doubtful.
As to petitioner's claim of respondent's non-filing of a motion for reconsideration before
resorting to a petition for certiorari, the CA said that it is not a rigid rule, as
jurisprudence had said, that when a definite question has been properly raised, argued
and submitted in the RTC and the latter had decided the question, a motion for
reconsideration is no longer necessary before filing a petition forcertiorari. The court
found that both parties had fully presented their sides on the issuance of the writ of
preliminary injunction and that the RTC had squarely resolved the issues presented by
both parties. Thus, respondent could not be faulted for not filing a motion for
reconsideration.
In a Resolution dated March 5, 2004, petitioner's motion for reconsideration was
denied.
Hence, this petition, wherein petitioner raises the following assignment of errors:
I. THE HONORABLE COURT OF APPEALS A QUO COMMITTED A SERIOUS AND
REVERSIBLE ERROR IN GIVING DUE COURSE AND GRANTING THE PETITION
FORCERTIORARI FILED BY PRIVATE RESPONDENT SBDI, DESPITE THE FACT
THAT THE ORIGINAL PARTIES IN THE TRIAL COURT, WHO ARE EQUALLY
MANDATED BY THE QUESTIONED ORDER OF THE TRIAL COURT, NAMELY;
UCPB, IEBANK, SBC AND AUB, AS DEFENDANTS IN THE MAIN CASE, WERE NOT
IMPLEADED AS INDISPENSABLE PARTIES IN THE PETITION.
II. THE HONORABLE COURT OF APPEALS A QUO COMMITTED A SERIOUS AND
REVERSIBLE ERROR IN GIVING DUE COURSE AND GRANTING PRIVATE
RESPONDENT SBDI'S PETITION WHEN THE LATTER ADMITTEDLY FAILED TO
FILE A PRIOR MOTION FOR RECONSIDERATION BEFORE THE TRIAL COURT,
MORESO WHEN INDISPENSABLE PARTIES WERE NOT IMPLEADED WHICH
SHOULD HAVE RENDERED THE COURT OF APPEALS IN WANT OF
JURISDICTION TO ACT.[10]
Petitioner claims that the CA decision is void for want of authority of the CA to act on
the petition as the banks should have been impleaded for being indispensable parties,
since they are the original party respondents in the RTC; that the filing with the CA of
respondent's petition for certiorariemanated from the RTC Order wherein the banks
were the ones against whom the questioned Order was issued; that the banks are the
ones who stand to release hundred millions of pesos which respondent sought to draw
from the questioned bank undertakings and domestic standby letter of credit through
the certiorari proceedings, thus, they should be given an opportunity to be heard.
Petitioner claims that even the CA recognized the banks' substantial interest over the
subject matter of the case when, despite not being impleaded as parties in the petition
filed by respondent, the CA also notified the banks of its decision.
Petitioner argues that a petition for certiorari filed without a prior motion for
reconsideration is a premature action and such omission constitutes a fatal infirmity;
that respondent explained its omission only when petitioner already brought the same
to the attention of the CA, thus, a mere afterthought and an attempt to cure the fatal
defects of its petition.
In its Comment, respondent contends that the banks which issued the bank

undertakings and letter of credit are not indispensable parties in the petition
for certiorari filed in the CA. Respondent argues that while the RTC preliminarily
resolved the issue of whether or not petitioner was entitled to an injunctive relief, and
the enforcement of any decision granting such would necessarily involve the banks,
the resolution of the issue regarding the injunction does not require the banks'
participation. This is so because on one hand the entitlement or non-entitlement to an
injunction is a matter squarely between petitioner and respondent, the latter being the
party that is ultimately enjoined from benefiting from the banks' undertakings. On the
other hand, respondent contends that the issue resolved by the CA was whether or not
the RTC gravely abused its discretion in granting the injunctive relief to respondent;
that while the enforcement of any decision enjoining the implementation of the
injunction issued by the RTC would affect the banks, the resolution of whether there is
grave abuse of discretion committed by the RTC does not require the banks'
participation.
Respondent claims that while as a rule, a motion for reconsideration is required before
filing a petition for certiorari, the rule admits of exceptions, which are, among others:
(1) when the issues raised in the certiorari proceedings have been duly raised and
passed upon by the RTC or are the same as those raised and passed upon in the
RTC; (2) there is an urgent necessity and time is of the essence for the resolution of
the issues raised and any further delay would prejudice the interests of the petitioner;
and (3) the issue raised is one purely of law, which are present in respondent's case.
In her Reply, petitioner claims that the decree that will compel and order the banks to
release any funds to respondent pending the resolution of her petition in the RTC will
have an injurious effect upon her rights and interest. She reiterates her arguments in
her petition.
Respondent filed a Rejoinder saying that it is misleading for petitioner to allege that the
decree sought by respondent before the CA is directed against the banks; that even
the dispositive portion of the CA decision did not include any express directive to the
banks; that there was nothing in the CA decision which compelled and ordered the
banks to release funds in favor of respondent as the CA decision merely annulled the
RTC Order and lifted the writ of preliminary injunction. Respondent contends that the
banks are not persons interested in sustaining the RTC decision as this was obvious
from the separate answers they filed in the RTC wherein they uniformly maintained
that the bank undertakings/letter of credit are not oppressive, unreasonable and
unconscionable. Respondent avers that petitioner is the only person interested in
upholding the injunction issued by the RTC, since it will enable her to prevent the
banks from releasing funds to respondent. Respondent insists that petitioner's petition
before the RTC and the instant petition have caused and continues to cause
respondent grave and irreparable damage.
Both parties were then required to file their respective memoranda, in which they
complied.
Petitioner's insistence that the banks are indispensable parties, thus, should have
been impleaded in the petition for certiorari filed by respondent in the CA, is not
persuasive.
In Arcelona v. Court of Appeals,[11] we stated the nature of indispensable party, thus:
An indispensable party is a party who has such an interest in the controversy or
subject matter that a final adjudication cannot be made, in his absence, without
injuring or affecting that interest, a party who has not only an interest in the subject
matter of the controversy, but also has an interest of such nature that a final decree
cannot be made without affecting his interest or leaving the controversy in such a
condition that its final determination may be wholly inconsistent with equity and good
conscience. It has also been considered that an indispensable party is a person in
whose absence there cannot be a determination between the parties already before
the court which is effective, complete, or equitable. Further, an indispensable party is
one who must be included in an action before it may properly go forward.
A person is not an indispensable party, however, if his interest in the controversy or
subject matter is separable from the interest of the other parties, so that it will not
necessarily be directly or injuriously affected by a decree which does complete justice
between them. Also, a person is not an indispensable party if his presence would
merely permit complete relief between him and those already parties to the action, or if
he has no interest in the subject matter of the action. It is not a sufficient reason to
declare a person to be an indispensable party that his presence will avoid multiple
litigation.[12]
Applying the foregoing, we find that the banks are not indispensable parties in the
petition for certiorari which respondent filed in the CA assailing the RTC Order dated
December 17, 2002. In fact, several circumstances would show that the banks are not
parties interested in the matter of the issuance of the writ of preliminary injunction,
whether in the RTC or in the CA.

First. During the hearing of petitioner's prayer for the issuance of a TRO, the RTC, in
open court, elicited from the lawyer-representatives of the four banks their position in
the event of the issuance of the TRO, and all these representatives invariably replied
that they will abide and/or submit to the sound judgment of the court.[13]
Second. When the RTC issued its Order dated December 17, 2002 granting the
issuance of the writ of preliminary injunction, the banks could have challenged the
same if they believe that they were aggrieved by such issuance. However, they did
not, and such actuations were in consonance with their earlier position that they would
submit to the sound judgment of the RTC.
Third. When respondent filed with the CA the petition for certiorari with prayer for the
issuance of a TRO and writ of preliminary injunction, and a TRO was subsequently
issued, copies of the resolution were also sent[14] to the banks, although not impleaded,
yet the latter took no action to question their non-inclusion in the petition. Notably, the
SBC filed an Urgent Motion for Clarification[15] on whether or not the issuance of the
TRO has the effect of restraining the bank from complying with the writ of preliminary
injunction issued by the RTC or nullifying /rendering ineffectual the said writ. In fact,
SBC even stated that the motion was filed for no other purpose, except to seek proper
guidance on the issue at hand so that whatever action or position it may take with
respect to the CA resolution will be consistent with its term and purposes.
Fourth. When the CA rendered its assailed Decision nullifying the injunction issued by
the RTC, and copies of the decision were furnished these banks, not one of these
banks ever filed any pleading to assail their non-inclusion in the certiorari proceedings.
Indeed, the banks have no interest in the issuance of the injunction, but only the
petitioner. The banks' interests as defendants in the petition for declaration of nullity of
their bank undertakings filed against them by petitioner in the RTC are separable from
the interests of petitioner for the issuance of the injunctive relief.
Moreover, certiorari, as a special civil action, is an original action invoking the original
jurisdiction of a court to annul or modify the proceedings of a tribunal, board or officer
exercising judicial or quasi-judicial functions.[16] It is an original and independent action
that is not part of the trial or the proceedings on the complaint filed before the trial
court.[17] Section 5, Rule 65 of the Rules of Court provides:
Section 5. Respondents and costs in certain cases. - When the petition filed relates to
the acts or omissions of a judge, court, quasi-judicial agency, tribunal, corporation,
board, officer or person, the petitioner shall join, as private respondent or respondents
with such public respondent or respondents. the person or persons interested in
sustaining the proceedings in the court; and it shall be the duty of such private
respondents to appear and defend, both in his or their own behalf and in behalf of the
public respondent or respondents affected by the proceedings, and the costs awarded
in such proceedings in favor of the petitioner shall be against the private respondents
only, and not against the judge, court, quasi-judicial agency, tribunal, corporation,
board, officer or person impleaded as public respondent or respondents.
xxxx
Clearly, in filing the petition for certiorari, respondent should join as party defendant
with the court or judge, the person interested in sustaining the proceedings in the
court, and it shall be the duty of such person to appear and defend, both in his own
behalf and in behalf of the court or judge affected by the proceedings. In this case,
there is no doubt that it is only the petitioner who is the person interested in sustaining
the proceedings in court since she was the one who sought for the issuance of the writ
of preliminary injunction to enjoin the banks from releasing funds to respondent. As
earlier discussed, the banks are not parties interested in the subject matter of the
petition. Thus, it is only petitioner who should be joined as party defendant with the
judge and who should defend the judge's issuance of injunction.
Notably, the dispositive portion of the assailed CA Decision declared the annulment of
the Order dated December 17, 2002 and lifted the writ of preliminary injunction issued
by the RTC. The decision was directed against the order of the judge. There was no
order for the banks to release the funds subject of their undertakings/letter of credit
although such order to lift the injunction would ultimately result to the release of funds
to respondent.
Petitioner contends that respondent filed its petition for certiorari in the CA without a
prior motion for reconsideration, thus, constitutes a fatal infirmity.
We do not agree.
Concededly, the settled rule is that a motion for reconsideration is a condition sine qua
non for the filing of a petition for certiorari.[18] Its purpose is to grant an opportunity for
the court to correct any actual or perceived error attributed to it by the re-examination

of the legal and factual circumstances of the case.[19] The rule is, however,
circumscribed by well-defined exceptions, such as (a) where the order is a patent
nullity, as where the court a quo had no jurisdiction; (b) where the questions raised in
the certiorari proceeding have been duly raised and passed upon by the lower court,
or are the same as those raised and passed upon in the lower court; (c) where there
is an urgent necessity for the resolution of the question and any further delay would
prejudice the interests of the Government or of the petitioner or the subject matter of
the action is perishable; (d) where, under the circumstances, a motion for
reconsideration would be useless; (e) where petitioner was deprived of due process
and there is extreme urgency for relief; (f) where, in a criminal case, relief from an
order of arrest is urgent and the granting of such relief by the trial court is improbable;
(g) where the proceedings in the lower court are a nullity for lack of due process; (h)
where the proceedings were ex parte, or in which the petitioner had no opportunity to
object; and (i) where the issue raised is one purely of law or where public interest is
involved.[20]
Respondent explained their omission of filing a motion for reconsideration before
resorting to a petition for certiorari based on exceptions (b), (c) and (i). The CA
brushed aside the filing of the motion for reconsideration based on the ground that the
questions raised in the certiorari proceedings have been duly raised and passed upon
by the lower court, or are the same as those raised and passed upon in the lower
court. We agree.
Respondent had filed its position paper in the RTC stating the reasons why the
injunction prayed for by petitioner should not be granted. However, the RTC granted
the injunction. Respondent filed a petition for certiorari with the CA and presented the
same arguments which were already passed upon by the RTC. The RTC already had
the opportunity to consider and rule on the question of the propriety or impropriety of
the issuance of the injunction. We found no reversible error committed by the CA for
relaxing the rule since respondent's case falls within the exceptions.
Petitioner's reliance on Philippine National Construction Corporation v. National Labor
Relations Commission,[21] where we required the filing of a motion for reconsideration
before the filing of a petition for certiorari notwithstanding petitioner's invocation of the
recognized exception, i.e., the same questions raised before the public respondent
were to be raised before us, is not applicable. In said case, we ruled that petitioner
failed to convince us that his case falls under the recognized exceptions as the basis
was only petitioner's bare allegation. In this case before us, the CA found, and to
which we agree, that both parties have fully presented their respective arguments in
the RTC on petitioner's prayer for the issuance of the writ of preliminary injunction, and
that respondent's argument that petitioner is not entitled to the injunctive relief had
been squarely resolved by the RTC.
WHEREFORE, the petition is DENIED. The Decision dated October 17, 2003 and the
Resolution dated March 5, 2004 of the Court of Appeals, in CA-G.R. SP No. 74629,
are hereby AFFIRMED.
SO ORDERED.

the former sold the property to the latter for the price of P940,250.00 payable in six (6)
installments viapostdated checks. The vendees forthwith took possession of the
property.
It appears in the MOA that the petitioners obliged themselves to transfer the
property to the respondents upon the execution of the MOA with the condition that if
two of the postdated checks would be dishonored by the drawee bank, the latter would
be obliged to reconvey the property to the petitioners.
On May 17, 1999, the petitioners, then residents of Malolos, Bulacan, filed a
Complaint[3] against the respondents with the Regional Trial Court (RTC) of Malolos,
Bulacan, for the annulment of the sale/MOA, recovery of possession and damages.
The petitioners alleged therein that, they did not transfer the property to and in the
names of the respondents as vendees because the first two checks drawn and issued
by them in payment for the purchase price of the property were dishonored by the
drawee bank, and were not replaced with cash despite demands therefor.
The petitioners prayed that, after due proceedings, judgment be rendered in
their favor, thus:
a.
The sale/Memorandum of Agreement (Annex A, supra) be declared null and
void, rescinded and with no further force and effect;
b.
Defendants, and all persons claiming right under them, be ordered to
immediately vacate the subject property and turnover its possession to the plaintiffs;
c.

Defendants, jointly and severally, be ordered to pay the plaintiffs:

i. P10,000.00 monthly, starting 01 October 1997 until complete turnover of the


subject property to the plaintiffs, as reasonable compensation for its continued
unlawful use and occupation by the defendants;
ii. P200,000.00 moral damages;
iii. P200,000.00 exemplary damages;
iv. P250,000.00 attorneys fees and litigation related expenses; and
v. the costs of suit.

Carpio, J., (Chairperson), Nachura, Abad, and Mendoza, JJ., concur.


@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@

Other reliefs just and equitable are, likewise, prayed for.[4]

RULE 4 VENUE OF ACTIONS


SECOND DIVISION
[G.R. No. 155736. March 31, 2005]
SPOUSES DANILO and CRISTINA DECENA, petitioners, vs. SPOUSES PEDRO
and VALERIA PIQUERO,respondents.
RESOLUTION
CALLEJO, SR., J.:
The petitioners, Spouses Danilo and Cristina Decena were the owners of a
parcel of land, with a house constructed thereon, located in Paraaque, Metro Manila
(now Paraaque City) covered by Transfer Certificate of Title (TCT) No. 134391 issued
on February 24, 1998.[1]
On September 7, 1997, the petitioners and the respondents, the Spouses
Pedro and Valeria Piquero, executed a Memorandum of Agreement (MOA) [2] in which

The petitioners declared in their complaint that the property subject of the
complaint was valued at P6,900,000.00. They appended copies of the MOA and TCT
No. 134391 to their complaint. The case was eventually raffled to Branch 13 of the
RTC of Malolos, Bulacan.
The respondents filed a motion to dismiss the complaint on the ground, inter
alia, of improper venue and lack of jurisdiction over the property subject matter of the
action.
On the first ground, the respondents averred that the principal action of the
petitioners for the rescission of the MOA, and the recovery of the possession of the
property is a real action and not a personal one; hence, it should have been brought in
the RTC of Paraaque City, where the property subject matter of the action was
located, and not in the RTC of Malolos, Bulacan, where the petitioners resided. The
respondents posited that the said court had no jurisdiction over the property subject
matter of the action because it was located in Paraaque City.[5]
In opposition, the petitioners insisted that their action for damages and
attorneys fees is a personal action and not a real action; hence, it may be filed in the
RTC of Bulacan where they reside. They averred that while their second cause of
action for the recovery of the possession of the property is a real action, the same

may, nevertheless, be joined with the rest of their causes of action for damages,
conformably with Section 5(c), Rule 2 of the Rules of Court.[6]
By way of reply, the respondents averred that Section 5(c), Rule 2 of the Rules
of Court applies only when one or more of multiple causes of action falls within the
exclusive jurisdiction of the first level courts, and the other or others are within the
exclusive jurisdiction of the RTC, and the venue lies therein.
On February 9, 2000, the trial court issued an Order [7] denying the motion for
lack of merit. It found merit in the petitioners contention that Section 5(c), Rule 2 was
applicable.
Meanwhile, the case was re-raffled to Branch 10 of the RTC of Malolos,
Bulacan. In a Motion[8] dated December 20, 2000, the respondents prayed for the
reconsideration of the trial courts February 9, 2000 Order. On October 16, 2001, the
court issued an Order[9]granting the motion and ordered the dismissal of the
complaint. It ruled that the principal action of the petitioners was a real action and
should have been filed in the RTC of Paraaque City where the property subject
matter of the complaint was located. However, since the case was filed in the RTC of
Bulacan where the petitioners reside, which court had no jurisdiction over the subject
matter of the action, it must be dismissed.
Hence, the present recourse.
The petition has no merit.
The sole issue is whether or not venue was properly laid by the petitioners in
the RTC of Malolos, Bulacan. The resolution of this issue is, in turn, anchored on
whether Section 5, Rule 2 of the Rules of Court invoked by the petitioners is applicable
in this case.
Under the said Rule, a party may, in one pleading, assert, in the alternative or
otherwise, as many causes of action as he may have against an opposing party
subject to the conditions therein enumerated, one of which is Section 5(c) which reads:
Sec. 5. Joinder of causes of action. --
(c) Where the causes of action are between the same parties but pertain to different
venues or jurisdiction, the joinder may be allowed in the Regional Trial Court provided
one of the causes of action falls within the jurisdiction of said court and the venue lies
therein;
Explaining the aforequoted condition, Justice Jose Y. Feria declared:
(c) Under the third condition, if one cause of action falls within the jurisdiction of the
Regional Trial Court and the other falls within the jurisdiction of a Municipal Trial Court,
the action should be filed in the Regional Trial Court. If the causes of action have
different venues, they may be joined in any of the courts of proper venue. Hence, a
real action and a personal action may be joined either in the Regional Trial Court of the
place where the real property is located or where the parties reside.[10]
A cause of action is an act or omission of one party in violation of the legal right
of the other which causes the latter injury. The essential elements of a cause of action
are the following: (1) the existence of a legal right of the plaintiff; (2) a correlative legal
duty of the defendant to respect ones right; and (3) an act or omission of the
defendant in violation of the plaintiffs right. [11] A cause of action should not be confused
with the remedies or reliefs prayed for. A cause of action is to be found in the facts
alleged in the complaint and not in the prayer for relief. It is the substance and not the
form that is controlling.[12] A party may have two or more causes of action against
another party.

alleged.[13] In declaring whether more than one cause of action is alleged, the main
thrust is whether more than one primary right or subject of controversy is present.
Other tests are whether recovery on one ground would bar recovery on the other,
whether the same evidence would support the other different counts and whether
separate actions could be maintained for separate relief; [14] or whether more than one
distinct primary right or subject of controversy is alleged for enforcement or
adjudication.[15]
A cause of action may be single although the plaintiff seeks a variety of
remedies. The mere fact that the plaintiff prays for multiple reliefs does not indicate
that he has stated more than one cause of action. The prayer may be an aid in
interpreting the petition and in determining whether or not more than one cause of
action is pleaded.[16] If the allegations of the complaint show one primary right and one
wrong, only one cause of action is alleged even though other matters are incidentally
involved, and although different acts, methods, elements of injury, items of claims or
theories of recovery are set forth.[17] Where two or more primary rights and wrongs
appear, there is a joinder of causes of action.
After due consideration of the foregoing, we find and so rule that Section 5(c),
Rule 2 of the Rules of Court does not apply. This is so because the petitioners, as
plaintiffs in the court a quo, had only one cause of action against the respondents,
namely, the breach of the MOA upon the latters refusal to pay the first two installments
in payment of the property as agreed upon, and turn over to the petitioners the
possession of the real property, as well as the house constructed thereon occupied by
the respondents. The claim for damages for reasonable compensation for the
respondents use and occupation of the property, in the interim, as well as moral and
exemplary damages suffered by the petitioners on account of the aforestated breach
of contract of the respondents are merely incidental to the main cause of action, and
are not independent or separate causes of action.[18]
The action of the petitioners for the rescission of the MOA on account of the
respondents breach thereof and the latters failure to return the premises subject of
the complaint to the petitioners, and the respondents eviction therefrom is a real
action.[19] As such, the action should have been filed in the proper court where the
property is located, namely, in Paraaque City, conformably with Section 1, Rule 4 of
the Rules of Court which reads:
SECTION 1. Venue of real actions. Actions affecting title to or possession of real
property, or interest therein, shall be commenced and tried in the proper court which
has jurisdiction over the area wherein the real property involved, or a portion thereof, is
situated.
Since the petitioners, who were residents of Malolos, Bulacan, filed their
complaint in the said RTC, venue was improperly laid; hence, the trial court acted
conformably with Section 1(c), Rule 16 of the Rules of Court when it ordered the
dismissal of the complaint.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit.
Costs against the petitioners.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur

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RULE 5 (UNIFOR PROCEDURE IN TIRAL COURTS)


A joinder of causes of action is the uniting of two or more demands or right of
action in a complaint. The question of the joinder of causes of action involves in
particular cases a preliminary inquiry as to whether two or more causes of action are

THIRD DIVISION
[G.R. No. 152807. August 12, 2003]
HEIRS OF LOURDES SAEZ SABANPAN: BERNARDO S. SABANPAN, RENE S.
SABANPAN, DANILO S. SABANPAN and THELMA S. CHU; HEIRS OF
ADOLFO SAEZ: MA. LUISA SAEZ TAPIZ, MA. VICTORIA SAEZ
LAPITAN, MA. BELEN SAEZ and EMMANUEL SAEZ; and HEIRS OF
CRISTINA SAEZ GUTIERREZ: ROY SAEZ GUTIERREZ and LUIS
SAEZ JR., petitioners, vs. ALBERTO C. COMORPOSA, HERDIN C.
COMORPOSA, OFELIA C. ARIEGO,[1] REMEDIOS COMORPOSA,
VIRGILIO A. LARIEGO,1-a BELINDA M. COMORPOSA and ISABELITA
H. COMORPOSA, respondents.
DECISION
PANGANIBAN, J.:
The admissibility of evidence should be distinguished from its probative
value. Just because a piece of evidence is admitted does notipso facto mean that it
conclusively proves the fact in dispute.
The Case
Before us is a Petition for Review [2] under Rule 45 of the Rules of Court,
seeking to set aside the August 7, 2001 Decision and the February 27, 2002
Resolution of the Court of Appeals[3](CA) in CA-GR SP No. 60645. The dispositive
portion of the assailed Decision reads as follows:
WHEREFORE, in view of all the foregoing, the Court hereby AFFIRMS the Decision
dated 22 June 2000 rendered by Branch 18 of the Regional Trial Court of Digos,
Davao del Sur, REVERSING and SETTING ASIDE the Decision of the Municipal Trial
Court of Sta. Cruz, Davao del Su[r].[4]
The assailed Resolution[5] denied petitioners Motion for Reconsideration.
The Facts
The CA summarized the factual antecedents of the case as follows:
A [C]omplaint for unlawful detainer with damages was filed by [petitioners] against
[respondents] before the Santa Cruz, Davao del Sur Municipal Trial Court.
The [C]omplaint alleged that Marcos Saez was the lawful and actual possessor of Lot
No. 845, Land 275 located at Darong, Sta. Cruz, Davao del Sur with an area of 1.2
hectares. In 1960, he died leaving all his heirs, his children and grandchildren.
In 1965, Francisco Comorposa who was working in the land of Oboza was terminated
from his job. The termination of his employment caused a problem in relocating his
house. Being a close family friend of [Marcos] Saez, Francisco Comorposa
approached the late Marcos Saezs son, [Adolfo] Saez, the husband of Gloria Leano
Saez, about his problem. Out of pity and for humanitarian consideration, Adolfo
allowed Francisco Comorposa to occupy the land of Marcos Saez. Hence, his nipa hut
was carried by his neighbors and transferred to a portion of the land subject matter of
this case. Such transfer was witnessed by several people, among them, Gloria Leano
and Noel Oboza. Francisco Comorposa occupied a portion of Marcos Saez property
without paying any rental.
Francisco Comorposa left for Hawaii, U.S.A. He was succeeded in his possession by
the respondents who likewise did not pay any rental and are occupying the premises
through petitioners tolerance.

On 7 May 1998, a formal demand was made upon the respondents to vacate the
premises but the latter refused to vacate the same and claimed that they [were] the
legitimate claimants and the actual and lawful possessor[s] of the premises. A
[C]omplaint was filed with the barangay office of Sta. Cruz[,] Davao del Sur, but the
parties failed to arrive at an amicable settlement. Thus, the corresponding Certificate
to File Action was issued by the said barangay and an action for unlawful detainer was
filed by petitioners against respondents.
Respondents, in their Answer, denied the material allegations of the [C]omplaint and
alleged that they entered and occupied the premises in their own right as true, valid
and lawful claimants, possessors and owners of the said lot way back in 1960 and up
to the present time; that they have acquired just and valid ownership and possession
of the premises by ordinary or extraordinary prescription, and that the Regional
Director of the DENR, Region XI has already upheld their possession over the land in
question when it ruled that they [were] the rightful claimants and possessors and
[were], therefore, entitled to the issuance of a title.
The Municipal Trial Court of Sta. Cruz, Davao del Sur rendered judgment in favor of
petitioners but the Regional Trial Court of Digos, Davao del Sur, on appeal, reversed
and set aside the said decision. x x x[6]
Ruling of the Court of Appeals
Affirming the Regional Trial Court (RTC), the CA upheld the right of
respondents as claimants and possessors. The appellate court held that -- although
not yet final -- the Order issued by the regional executive director of the Department of
Environment and Natural Resources (DENR) remained in full force and effect, unless
declared null and void. The CA added that the Certification issued by the DENRs
community environment and natural resources (CENR) officer was proof that when the
cadastral survey was conducted, the land was still alienable and was not yet allocated
to any person.
According to the CA, respondents had the better right to possess alienable and
disposable land of the public domain, because they have suffiently proven their actual,
physical, open, notorious, exclusive, continuous and uninterrupted possession thereof
since 1960. The appellate court deemed as self-serving, and therefore incredible, the
Affidavits executed by Gloria Leano Saez, Noel Oboza and Paulina Paran.
Hence, this Petition.[7]
The Issue
In their Memorandum, petitioners raise the following issues for the Courts
consideration:
I
Did the Court of Appeals gravely abuse its discretion and [err] in sustaining the ruling
of the Regional Trial Court giving credence to the Order dated 2 April 1998 issued by
the regional executive director?
II
Did the Court of Appeals gravely abuse its discretion and err in sustaining the Regional
Trial Courts ruling giving weight to the CENR Officers Certification, which only bears
the facsimile of the alleged signature of a certain Jose F. Tagorda and, [worse], it is a
new matter raised for the first time on appeal?
III
Did the Court of Appeals gravely abuse its discretion and err in holding that the land
subject matter of this case has been acquired by means of adverse possession and
prescription?

IV
Did the Court of Appeals gravely abuse its discretion, and err in declaring that, neither
is there error on the part of the Regional Trial Court, when it did not give importance to
the affidavits by Gloria Leano Saez, Noel [Oboza], and Paulina Paran for allegedly
being self serving?[8]
To facilitate the discussion, the fourth and the third issues shall be discussed in
reverse sequence.
The Courts Ruling
The Petition has no merit.
First Issue:

Pleadings filed via fax machines are not considered originals and are at best
exact copies. As such, they are not admissible in evidence, as there is no way of
determining whether they are genuine or authentic.[19]
The Certification, on the other hand, is being contested for bearing a facsimile
of the signature of CENR Officer Jose F. Tagorda. The facsimile referred to is not the
same as that which is alluded to in Garvida. The one mentioned here refers to a
facsimile signature, which is defined as a signature produced by mechanical means
but recognized as valid in banking, financial, and business transactions.[20]
Note that the CENR officer has not disclaimed the Certification. In fact, the
DENR regional director has acknowledged and used it as reference in his Order dated
April 2, 1998:
x x x. CENR Officer Jose F. Tagorda, in a CERTIFICATION dated 22 July 1997, certified among
others, that: x x x per records available in his Office, x x x the controverted lot x x
x was not allocated to any person x x x.[21]

The DENR Order of April 2, 1998


Petitioners claim that the reliance of the CA upon the April 2, 1998 Order
issued by the regional director of the DENR was erroneous. The reason was that the
Order, which had upheld the claim of respondents, was supposedly not yet final and
executory. Another Order dated August 23, 1999,[9] issued later by the DENR regional
director, allegedly held in abeyance the effectivity of the earlier one.

If the Certification were a sham as petitioner claims, then the regional director
would not have used it as reference in his Order. Instead, he would have either verified
it or directed the CENR officer to take the appropriate action, as the latter was under
the formers direct control and supervision.

Under the Public Land Act,[10] the management and the disposition of public
land is under the primary control of the director of lands [11](now the director of the
Lands Management Bureau or LMB),[12] subject to review by the DENR secretary.
[13]
As a rule, then, courts have no jurisdiction to intrude upon matters properly falling
within the powers of the LMB.

Petitioners claim that the Certification was raised for the first time on appeal is
incorrect. As early as the pretrial conference at the Municipal Trial Court (MTC), the
CENR Certification had already been marked as evidence for respondents as stated in
the Pre-trial Order.[22] The Certification was not formally offered, however, because
respondents had not been able to file their position paper.

The powers given to the LMB and the DENR to alienate and dispose of public
land does not, however, divest regular courts of jurisdiction over possessory actions
instituted by occupants or applicants to protect their respective possessions and
occupations.[14] The power to determine who has actual physical possession or
occupation of public land and who has the better right of possession over it remains
with the courts.[15] But once the DENR has decided, particularly through the grant of a
homestead patent and the issuance of a certificate of title, its decision on these points
will normally prevail.[16]

Neither the rules of procedure [23] nor jurisprudence[24] would sanction the
admission of evidence that has not been formally offered during the trial. But this
evidentiary rule is applicable only to ordinary trials, not to cases covered by the rule on
summary procedure -- cases in which no full-blown trial is held.[25]
Third Issue:
Affidavit of Petitioners Witnesses

Therefore, while the issue as to who among the parties are entitled to a piece
of public land remains pending with the DENR, the question of recovery of possession
of the disputed property is a matter that may be addressed to the courts.
Second Issue:
CENR Officers Certification
Petitioners contend that the CENR Certification dated July 22, 1997 is a sham
document, because the signature of the CENR officer is a mere facsimile. In support
of their argument, they cite Garvida v. Sales Jr. [17] and argue that the Certification is a
new matter being raised by respondents for the first time on appeal.
We are not persuaded.
In Garvida, the Court held:

Petitioners assert that the CA erred in disregarding the Affidavits of their


witnesses, insisting that the Rule on Summary Procedure authorizes the use of
affidavits. They also claim that the failure of respondents to file their position paper
and counter-affidavits before the MTC amounts to an admission by silence.
The admissibility of evidence should not be confused with its probative
value. Admissibility refers to the question of whether certain pieces of evidence are to
be considered at all, while probative value refers to the question of whether the
admitted evidence proves an issue.[26] Thus, a particular item of evidence may be
admissible, but its evidentiary weight depends on judicial evaluation within the
guidelines provided by the rules of evidence.[27]
While in summary proceedings affidavits are admissible as the witnesses
respective testimonies, the failure of the adverse party to reply does not ipso
facto render the facts, set forth therein, duly proven. Petitioners still bear the burden of
proving their cause of action, because they are the ones asserting an affirmative relief.
[28]

A facsimile or fax transmission is a process involving the transmission and


reproduction of printed and graphic matter by scanning an original copy, one elemental
area at a time, and representing the shade or tone of each area by a specified amount
of electric current. x x x[18]

Fourth Issue:
Defense of Prescription

Petitioners claim that the court a quo erred in upholding the defense of
prescription proffered by respondents. It is the formers contention that since the
latters possession of the land was merely being tolerated, there was no basis for the
claim of prescription. We disagree.

2.
Ordering defendant to pay the plaintiff legal interest of 12% per annum on the
principal obligations in the total amount of FIVE MILLION SEVENTY-ONE
THOUSAND THREE HUNDRED THIRTY-FIVE [PESOS] & 86/100 (P5,071,335.86)
computed from the date the obligations became due until fully paid;

For the Court to uphold the contention of petitioners, they have first to prove
that the possession of respondents was by mere tolerance. The only pieces of
evidence submitted by the former to support their claim were a technical description
and a vicinity map drawn in accordance with the survey dated May 22, 1936. [29] Both of
these were discredited by the CENR Certification, which indicated that the contested
lot had not yet been allocated to any person when the survey was conducted. [30] The
testimony of petitioners witnesses alone cannot prevail over respondents continued
and uninterrupted possession of the subject lot for a considerable length of time.

3.
Ordering defendant to pay attorneys fees in the amount equivalent to 15% of
the amount of claim;

Furthermore, this is an issue of fact that cannot, as a rule, be raised in a


petition for review under Rule 45.[31]
WHEREFORE,
the
Petition
is DENIED and
Decision AFFIRMED. Costs against petitioners.

the

assailed

SO ORDERED.
Puno,
JJ., concur.

(Chairman),

Sandoval-Gutierrez,

Corona, and Carpio-Morales,

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4.

Ordering defendant to pay all costs of litigation.

Plaintiff prays for such other reliefs as may be just and equitable under the premises.[2]
ACDC filed a motion to file and admit answer with third-party complaint against
Becthel Overseas Corporation (Becthel). In its answer, ACDC admitted its
indebtedness to MEC in the amount of P5,071,335.86 but alleged the following special
and affirmative defenses:
5. Defendant has incurred an obligation with plaintiff, in the amount
of P5,071,335.86. But third-party defendant fails and refuses to
pay its overdue obligation in connection with the leased equipment
used by defendant to comply with its contracted services;
6. The equipment covered by the lease were all used in the
construction project of Becthel in Mauban, Quezon, and Expo in
Pampanga and defendant was not yet paid of its services that
resulted to the non-payment of rentals on the leased equipment.[3]
And by way of third-party complaint against Becthel as third-party defendant,
ACDC alleged that:

RULE 6 KINDS OF PLEADINGS


7.

SECOND DIVISION
[G.R. No. 160242. May 17, 2005]
ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION, petitioner,
vs. COURT
OF
APPEALS
and
MONARK
EQUIPMENT
CORPORATION, respondents.

Third-party plaintiff repleads the foregoing allegations in the


preceding paragraphs as may be material and pertinent hereto;

8. Third-party BECTHEL OVERSEAS CORPORATION (herein called


Becthel) is a corporation duly organized and existing under the
laws of the United States of America but may be served with
summons at Barangay Cagsiay I, Mauban, Quezon 4330,
Philippines;
9. Third-party defendant Becthel contracted the services of third-party
plaintiff to do construction work at its Mauban, Quezon project
using the leased equipment of plaintiff Monark;

DECISION
CALLEJO, SR., J.:
On March 13, 2001, Monark Equipment Corporation (MEC) filed a
Complaint[1] for a sum of money with damages against the Asian Construction and
Development Corporation (ACDC) with the Regional Trial Court (RTC) of Quezon City.
The complaint alleged the following: ACDC leased Caterpillar generator sets and
Amida mobile floodlighting systems from MEC during the period of March 13 to July
15, 1998 but failed, despite demands, to pay the rentals therefor in the total amount
of P4,313,935.00; from July 14 to August 25, 1998, various equipments from MEC
were, likewise, leased by ACDC for the latters power plant in Mauban, Quezon, and
that there was still a balance ofP456,666.67; and ACDC also purchased and took
custody of various equipment parts from MEC for the agreed price of P237,336.20
which, despite demands, ACDC failed to pay.
MEC prayed that judgment be rendered in its favor, thus:
1.
Ordering defendant to pay the plaintiff the total amount of FIVE MILLION
SEVENTY-ONE THOUSAND THREE HUNDRED THIRTY-FIVE [PESOS] & 86/100
(P5,071,335.86);

10. With the contracted work, third-party plaintiff rented the equipment
of the plaintiff Monark;
11. Third-party plaintiff rendered and complied with its contracted works
with third-party defendant using plaintiffs (Monark) rented
equipment. But, third-party defendant BECTHEL did not pay for
the services of third-party plaintiff ASIAKONSTRUKT that
resulted to the non-payment of plaintiff Monarks claim;
12. Despite repeated demands, third-party defendant failed and
refused to pay its overdue obligation to third-party plaintiff
ASIAKONSTRUKT, and third-party defendant needs to be
impleaded in this case for contribution, indemnity, subrogation or
other reliefs to off-set or to pay the amount of money claim of
plaintiff Monark on the leased equipment used in the Mauban,
Quezon project in the total amount of P456,666.67;
13. By reason thereof, third-party plaintiff was compelled to prosecute
its claim against third-party defendant and hired the services of
undersigned counsel for an attorneys fees of P500,000.00.[4]

ACDC prayed that judgment be rendered in its favor dismissing the complaint
and ordering the third-party defendant (Becthel) to payP456,666.67 plus interest
thereon and attorneys fees.[5]
MEC opposed the motion of ACDC to file a third-party complaint against
Becthel on the ground that the defendant had already admitted its principal obligation
to MEC in the amount of P5,071,335.86; the transaction between it and ACDC, on the
one hand, and between ACDC and Becthel, on the other, were independent
transactions. Furthermore, the allowance of the third-party complaint would result in
undue delays in the disposition of the case.[6]
MEC then filed a motion for summary judgment, alleging therein that there was
no genuine issue as to the obligation of ACDC to MEC in the total amount
of P5,071,335.86, the only issue for the trial courts resolution being the amount of
attorneys fees and costs of litigation.[7]
ACDC opposed the motion for summary judgment, alleging that there was a
genuine issue with respect to the amount of P5,071,335.86 being claimed by MEC,
and that it had a third-party complaint against Becthel in connection with the reliefs
sought against it which had to be litigated.[8]
In its reply, MEC alleged that the demand of ACDC in its special and affirmative
defenses partook of the nature of a negative pregnant, and that there was a need for a
hearing on its claim for damages.
On August 2, 2001, the trial court issued a Resolution denying the motion of
ACDC for leave to file a third-party complaint and granting the motion of MEC, which
the trial court considered as a motion for a judgment on the pleadings. The fallo of the
resolution reads:
ACCORDINGLY, this Court finds defendant Asian Construction and Development
Corporation liable to pay plaintiff Monark Equipment Corporation and is hereby
ordered to pay plaintiff the amount of FIVE MILLION SEVENTY-ONE THOUSAND
AND THREE HUNDRED THIRTY-FIVE & 86/100 PESOS (P5,071,335.86) plus 12%
interest from the filing of the complaint until fully paid.
SO ORDERED.[9]
ACDC appealed the resolution to the Court of Appeals (CA), alleging that
I. THE LOWER COURT ERRED IN DENYING THE MOTION TO FILE
AND ADMIT ANSWER WITH THIRD-PARTY COMPLAINT;
II. THE LOWER COURT ERRED IN GRANTING THE MOTION FOR
SUMMARY JUDGMENT;
III. THE LOWER COURT ERRED WHEN IT DENIED THE THIRDPARTY COMPLAINT AND ORDERED DEFENDANT TO PAY THE
AMOUNT OF P5,071,335.86 PLUS INTEREST OF 12% PER
ANNUM.[10]
On July 18, 2001, the CA rendered judgment dismissing the appeal and
affirming the assailed decision. The appellate court ruled that since MEC had prayed
for judgment on the pleadings, it thereby waived its claim for damages other than the
amount of P5,071,335.86; hence, there was no longer a genuine issue to be resolved
by the court which necessitated trial. The appellate court sustained the disallowance
of the third-party complaint of ACDC against Becthel on the ground that the transaction
between the said parties did not arise out of the same transaction on which MECs
claim was based.
Its motion for reconsideration of the decision having been denied, ACDC, now
the petitioner, filed the present petition for review oncertiorari, and raises the following
issues:

I. WHETHER OR NOT A THIRD-PARTY COMPLAINT IS PROPER;


AND
II. WHETHER OR NOT JUDGMENT ON THE PLEADINGS IS
PROPER.[11]
Citing the rulings of this Court in Allied Banking Corporation v. Court of
Appeals[12] and British Airways v. Court of Appeals,[13] the petitioner avers that the CA
erred in ruling that in denying its motion for leave to file a third-party complaint, the
RTC acted in accordance with the Rules of Court and case law. The petitioner
maintains that it raised genuine issues in its answer; hence, it was improper for the
trial court to render judgment on the pleadings:
With due respect, the judgment on the pleadings affirmed by the Court of Appeals is
not, likewise, proper considering that the Answer with Third-Party Complaint, although
it admitted the obligation to respondent, tendered an issue of whether the respondents
claim is connected with the third-party claim.
As alleged in the Answer with Third-Party Complaint, it is admitted then by respondent,
for purposes of judgment on the pleadings, that failure to pay respondent was in
connection of Becthel Overseas Corporations failure to pay its obligation to petitioner
and that the equipment leased was used in connection with the Becthel Overseas
Corporation project.
This tendered issue could not just be disregarded in the light of the third-party
complaint filed by herein petitioner and third-party plaintiff which, as argued in the first
discussion/argument, is proper and should have been given due course.[14]
The petition is denied for lack of merit.
Section 11, Rule 6 of the Rules of Court provides:
Sec. 11. Third (fourth, etc.)-party complaint. A third (fourth, etc.) party complaint is
a claim that a defending party may, with leave of court, file against a person not a party
to the action, called the third (fourth, etc.) party defendant, for contribution,
indemnity, subrogation or any other relief, in respect of his opponents claim.
Furthermore, Section 1, Rule 34 of the Rules of Court provides that the Court
may render judgment on the pleadings, as follows:
Section 1. Judgment on the pleadings. Where an answer fails to tender an issue, or,
otherwise, admits the material allegations of the adverse partys pleading, the court
may, on motion of that party, direct judgment on such pleading. However, in actions
for declaration of nullity or annulment of marriage or for legal separation, the material
facts alleged in the complaint shall always be proved.
The purpose of Section 11, Rule 6 of the Rules of Court is to permit a
defendant to assert an independent claim against a third-party which he, otherwise,
would assert in another action, thus preventing multiplicity of suits. All the rights of the
parties concerned would then be adjudicated in one proceeding. This is a rule of
procedure and does not create a substantial right. Neither does it abridge, enlarge, or
nullify the substantial rights of any litigant.[15] This right to file a third-party complaint
against a third-party rests in the discretion of the trial court. The third-party complaint
is actually independent of, separate and distinct from the plaintiffs complaint, such that
were it not for the rule, it would have to be filed separately from the original complaint.
[16]

A prerequisite to the exercise of such right is that some substantive basis for a
third-party claim be found to exist, whether the basis be one of indemnity, subrogation,
contribution or other substantive right. [17] The bringing of a third-party defendant is
proper if he would be liable to the plaintiff or to the defendant or both for all or part of
the plaintiffs claim against the original defendant, although the third-party defendants
liability arises out of another transaction.[18] The defendant may implead another as
third-party defendant (a) on an allegation of liability of the latter to the defendant for

contribution, indemnity, subrogation or any other relief; (b) on the ground of direct
liability of the third-party defendant to the plaintiff; or (c) the liability of the third-party
defendant to both the plaintiff and the defendant.[19] There must be a causal connection
between the claim of the plaintiff in his complaint and a claim for contribution,
indemnity or other relief of the defendant against the third-party defendant.
In Capayas v. Court of First Instance,[20] the Court made out the following tests: (1)
whether it arises out of the same transaction on which the plaintiffs claim is based; or
whether the third-party claim, although arising out of another or different contract or
transaction, is connected with the plaintiffs claim; (2) whether the third-party defendant
would be liable to the plaintiff or to the defendant for all or part of the plaintiffs claim
against the original defendant, although the third-party defendants liability arises out
of another transaction; and (3) whether the third-party defendant may assert any
defenses which the third-party plaintiff has or may have to the plaintiffs claim.
The third-party complaint does not have to show with certainty that there will be
recovery against the third-party defendant, and it is sufficient that pleadings show
possibility of recovery.[21] In determining the sufficiency of the third-party complaint, the
allegations in the original complaint and the third-party complaint must be examined.
[22]
A third-party complaint must allege facts which prima facie show that the defendant
is entitled to contribution, indemnity, subrogation or other relief from the third-party
defendant.[23]
It bears stressing that common liability is the very essence for contribution.
Contribution is a payment made by each, or by any of several having a common
liability of his share in the damage suffered or in the money necessarily paid by one of
the parties in behalf of the other or others. [24] The rule on common liability is
fundamental in the action for contribution. [25] The test to determine whether the claim
for indemnity in a third-party complaint is, whether it arises out of the same transaction
on which the plaintiffs claim is based, or the third-party plaintiffs claim, although
arising out of another or different contract or transaction, is connected with the
plaintiffs claim.[26]
In this case, the claims of the respondent, as plaintiff in the RTC, against the
petitioner as defendant therein, arose out of the contracts of lease and sale; such
transactions are different and separate from those between Becthel and the petitioner
as third-party plaintiff for the construction of the latters project in Mauban, Quezon,
where the equipment leased from the respondent was used by the petitioner. The
controversy between the respondent and the petitioner, on one hand, and that
between the petitioner and Becthel, on the other, are thus entirely distinct from each
other. There is no showing in the proposed third-party complaint that the respondent
knew or approved the use of the leased equipment by the petitioner for the said project
in Quezon. Becthel cannot invoke any defense the petitioner had or may have against
the claims of the respondent in its complaint, because the petitioner admitted its
liabilities to the respondent for the amount ofP5,075,335.86. The barefaced fact that
the petitioner used the equipment it leased from the respondent in connection with its
project with Becthel does not provide a substantive basis for the filing of a third-party
complaint against the latter. There is no causal connection between the claim of the
respondent for the rental and the balance of the purchase price of the equipment and
parts sold and leased to the petitioner, and the failure of Becthel to pay the balance of
its account to the petitioner after the completion of the project in Quezon.[27]
We note that in its third-party complaint, the petitioner alleged that Becthel
should be ordered to pay the balance of its account ofP456,666.67, so that the
petitioner could pay the same to the respondent. However, contrary to its earlier plea
for the admission of its third-party complaint against Becthel, the petitioner also sought
the dismissal of the respondents complaint. The amount of P456,666.67 it sought to
collect from Becthel would not be remitted to the respondent after all.
The rulings of this Court in Allied Banking Corporation and British Airways are
not applicable in this case since the factual backdrops in the said cases are different.
In Allied Banking Corporation, Joselito Yujuico obtained a loan from General
Bank and Trust Company. The Central Bank of the Philippines ordered the liquidation
of the Bank. In a Memorandum Agreement between the liquidation of the Bank and
Allied Banking Corporation, the latter acquired the receivables from Yujuico. Allied
Banking Corporation then sued Yujuico for the collection of his loan, and the latter filed

a third-party complaint against the Central Bank, alleging that by reason of its tortious
interference with the affairs of the General Bank and Trust Company, he was
prevented from performing his obligation under the loan. This Court allowed the thirdparty complaint based on the claim of the defendant therein, thus:
In the words of private respondent, he [s]eeks to transfer liability for the default
imputed against him by the petitioner to the proposed third-party defendants because
of their tortious acts which prevented him from performing his obligations. Thus, if at
the outset the issue appeared to be a simple makers liability on a promissory note, it
became complex by the rendition of the aforestated decision.[28]
In British Airways, the Court allowed the third-party complaint of British Airways
against its agent, the Philippine Airlines, on the plaintiffs complaint regarding his
luggage, considering that a contract of carriage was involved. The Court ruled, thus:
Undeniably, for the loss of his luggage, Mahtani is entitled to damages from BA, in
view of their contract of carriage. Yet, BA adamantly disclaimed its liability and instead
imputed it to PAL which the latter naturally denies. In other words, BA and PAL are
blaming each other for the incident.
In resolving this issue, it is worth observing that the contract of air transportation was
exclusively between Mahtani and BA, the latter merely endorsing the Manila to
Hongkong leg of the formers journey to PAL, as its subcontractor or agent. In fact, the
fourth paragraph of the Conditions of Contracts of the ticket issued by BA to Mahtani
confirms that the contract was one of continuous air transportation from Manila to
Bombay.
4.
xxx carriage to be performed hereunder by several successive carriers is
regarded as a single operation.
Prescinding from the above discussion, it is undisputed that PAL, in transporting
Mahtani from Manila to Hongkong acted as the agent of BA.
Parenthetically, the Court of Appeals should have been cognizant of the well-settled
rule that an agent is also responsible for any negligence in the performance of its
function and is liable for damages which the principal may suffer by reason of its
negligent act. Hence, the Court of Appeals erred when it opined that BA, being the
principal, had no cause of action against PAL, its agent or sub-contractor.
Also, it is worth mentioning that both BA and PAL are members of the International Air
Transport Association (IATA), wherein member airlines are regarded as agents of each
other in the issuance of the tickets and other matters pertaining to their relationship.
Therefore, in the instant case, the contractual relationship between BA and PAL is one
of agency, the former being the principal, since it was the one which issued the
confirmed ticket, and the latter the agent.[29]
It goes without saying that the denial of the petitioners motion with leave to file
a third-party complaint against Becthel is without prejudice to its right to file a separate
complaint against the latter.
Considering that the petitioner admitted its liability for the principal claim of the
respondent in its Answer with Third-Party Complaint, the trial court did not err in
rendering judgment on the pleadings against it.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit.
Costs against the petitioner.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.