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EN BANC

Atty. Camacho whether he paid the amount of P1,288,260.00


as additional dockets fees, and the latter replied that he
simply gave it to the clerk of court as the payment period
had lapsed.

[A.C. No. 10910. January 12, 2016.]


[Formerly CBD Case No. 12-3594]
ANTERO M. SISON, JR., complainant, vs. ATTY. MANUEL N.
CAMACHO, respondent.
DECISION
PER CURIAM p:
In his verified affidavit-complaint,
dated
September 17, 2012, filed before the Integrated Bar of the
Philippines Commission on Bar Discipline (IBP-CBD),
complainant Atty. Antero M. Sison, Jr. (Atty. Sison), president
of Marsman-Drysdale Agribusiness Holdings, Inc. (MDAHI),
charged respondent Atty. Manuel Camacho (Atty. Camacho)
with violation of the Code of Professional Responsibility
(CPR). He accused Atty. Camacho of violating Rule 1.01, for
dishonestly entering into a compromise agreement without
authorization, and Rule 16.01, for failure to render an
accounting of funds which were supposed to be paid as
additional docket fees.
1

Complainant's Position
Atty. Sison alleged that Atty. Camacho was the
counsel of MDAHI in an insurance claim action against
Paramount Life & General Insurance Corp. (Paramount
Insurance), docketed as Civil Case No. 05-655, before the
Regional Trial Court, Makati City, Branch 139 (RTC). The initial
insurance claim of MDAHI against Paramount Insurance was
P14,863,777.00. AcICHD

Disappointed with the actions of Atty. Camacho,


Atty. Sison sent a letter, dated August 24, 2011, stating that
he was alarmed that the former would accept a
disadvantageous compromise; that it was against company
policy to bribe any government official with respect to the
P1,288,260.00 given to the clerk of court; and that MDAHI
would only pay P200,000.00 to Atty. Camacho as attorney's
fees.
9

Respondent's Position
In his verified answer, dated October 30, 2012,
Atty. Camacho denied all the allegations against him. He
stressed that he had the authority to enter into the
compromise agreement. Moreover, the alleged docket fees
given to him by MDAHI formed part of his attorney's fees.
10

He further stated in his position paper that the


judgment debt was paid and accepted by MDAHI without any
objection, as duly evidenced by an acknowledgment receipt.
Thus, there was no irregularity in the compromise
agreement.
11

12

With respect to the amount handed to him, Atty.


Camacho averred that he filed a Motion to Compel Plaintiff
to Pay Attorney's Fee on September 13, 2011 before the RTC.
The Court granted the said motion in its April 12, 2012 Order
stating that the amount of P1,288,260.00 was considered as
part of his attorney's fees.
13

On March 4, 2011, Atty. Camacho met with Atty.


Enrique Dimaano (Atty. Dimaano), corporate secretary of
MDAHI, and proposed to increase their claim to
P64,412,534.18 by taking into account the interests imposed.
Atty. Camacho, however, clarified that the increase in the
claim would require additional docket fees in the amount of
P1,288,260.00, as shown in his hand-written computation.
MDAHI agreed and granted the said amount to Atty.
Dimaano which was evidenced by a Payment Request/Order
Form. On May 27, 2011, Atty. Dimaano gave the money
for docket fees to Atty. Camacho who promised to issue a
receipt for the said amount, but never did.

Atty. Sison later discovered that on May 26,


2011, the RTC had already rendered a decision in favor of
MDAHI granting its insurance claim plus interests in the
amount of approximately P65,000,000.00.

On July 6, 2012, the RTC issued an Order


resolving the motion for reconsideration filed by both parties
in favor of Atty. Camacho. In the said order, the RTC opined
that only P300,000.00 was previously paid to Atty. Camacho
as attorney's fees. Based on the foregoing, Atty. Camacho
asserted that the amount of P1,288,260.00 which he
received, truly formed part of his unpaid attorney's fees. He
stressed that the said RTC order had attained finality and
constituted res judicata on the present administrative case.
He added that MDAHI disregarded the RTC order as it filed
an estafa case against him concerning the amount of
P1,288,260.00.

14

15

On August 11, 2011, Atty. Camacho sent a letter


to MDAHI recommending a settlement with Paramount
Insurance in Civil Case No. 05-655 in the amount of
P15,000,000.00 allegedly to prevent a protracted appeal with
the appellate court. MDAHI refused the offer of compromise
and did not indicate its conforme on the letter of Atty.
Camacho. Surprisingly, even without the written conformity
of MDAHI, Atty. Camacho filed the Satisfaction of Judgment,
dated August 15, 2011, before the RTC stating that the
parties had entered into a compromise agreement.
6

On August 18, 2011, Atty. Sison met with Atty.


Camacho to clarify the events that transpired. He asked
8

Report and Recommendation


After the mandatory conference on January 24,
2013 and upon a thorough evaluation of the evidence
presented by the parties in their respective position papers,
the IBP-CBD submitted its Report and Recommendation,
dated April 1, 2013 finding Atty. Camacho to have violated
the provisions of Rule 1.01 and Rule 16.01 of the CPR and
recommending the imposition of the penalty of one (1) year
suspension from the practice of law against him. In its
Resolution No. XX-2013-474, dated April 16, 2013, the Board
of Governors of the Integrated Bar of the Philippines (Board)
adopted the said report and recommendation of
Investigating Commissioner Eldrid C. Antiquiera.
16

17

Aggrieved, Atty. Camacho filed a motion for


reconsideration
before the Board reiterating that the
compromise agreement was valid because MDAHI did not
18

reject the same and that the amount of P1,288,260.00


formed part of his attorney's fees.

litigation, or receive anything in


discharge of a client's claim but
the full amount in cash.

In his Comment/Opposition,
Atty. Sison
countered that Atty. Camacho never denied that he filed the
satisfaction of judgment without the written authority of
MDAHI and that there was a pending estafa case against him
before the Regional Trial Court, Makati City, Branch 146,
docketed as Criminal Case No. 13-1688, regarding the
P1,288,260.00 handed to him.
19

In its Resolution No. XXI-2014-532,


dated
August 10, 2014, the Board adopted the report and
recommendation of National Director Dominic C.M. Solis.
The Board partially granted the motion for reconsideration
and dismissed, without prejudice, the charge regarding the
failure to account for the money, because it was premature
to act on such issue due to the pending criminal case against
the Atty. Camacho. Accordingly, the penalty of one (1) year
suspension imposed was lowered to six (6) months
suspension from the practice of law.

[Emphasis and
Underscoring Supplied]

20

21

Hence, the case was elevated to the Court. TAIaHE


The Court's Ruling
The Court finds that Atty. Camacho violated
Rules 1.01 and 16.01 of the CPR.

In the case at bench, the RTC decision, dated


May
26,
2011,
awarded
MDAHI
approximately
P65,000,000.00. When Paramount Insurance offered a
compromise settlement in the amount of P15,000,000.00, it
was clear as daylight that MDAHI never consented to the said
offer. As can be gleaned from Atty. Camacho's letter, MDAHI
did not sign the conforme regarding the compromise
agreement.
23

Glaringly, despite the lack of a written special


authority, Atty. Camacho agreed to a lower judgment award
on behalf of his client and filed a satisfaction of judgment
before the RTC. The said pleading also failed to bear the
conformity of his client.
Although MDAHI subsequently
received the payment of P15M from Paramount Insurance, it
does not erase Atty. Camacho's transgression in reaching the
compromise agreement without the prior consent of his
client.
24

Entering into a compromise


agreement without written
authority of the client
Those in the legal profession must always
conduct themselves with honesty and integrity in all their
dealings. Members of the Bar took their oath to conduct
themselves according to the best of their knowledge and
discretion with all good fidelity as well to the courts as to
their clients and to delay no man for money or malice. These
mandates apply especially to dealings of lawyers with their
clients considering the highly fiduciary nature of their
relationship.
22

In the practice of law, lawyers constantly


formulate compromise agreements for the benefit of their
clients. Article 1878 of the Civil Code provides that "[s]pecial
powers of attorney are necessary in the following cases: . . .
(3) To compromise, to submit questions to arbitration, to
renounce the right to appeal from a judgment, to waive
objections to the venue of an action or to abandon a
prescription already acquired . . . ."
In line with the fiduciary duty of the Members of
the Bar, Section 23, Rule 138 of the Rules of Court specifies a
stringent requirement with respect to compromise
agreements, to wit:
Sec. 23. Authority of
attorneys to bind clients. Attorneys
have authority to bind their clients in
any case by any agreement in relation
thereto made in writing, and in taking
appeals, and in all matters of ordinary
judicial procedure. But they cannot,
without
special
authority,
compromise
their
client's

For entering into a compromise agreement


without the written authority of his client, Atty. Camacho
violated Rule 1.01 of the CPR, which states that "[a] lawyer
shall not engage in unlawful, dishonest, immoral or deceitful
conduct." Members of the Bar must always conduct
themselves in a way that promotes public confidence in the
integrity of the legal profession.
25

Failing to account for


the money of the client
Atty. Camacho was also charged with violation
of Rule 16.01 of the CPR, which provides for a lawyer's duty
to "account for all money or property collected or received
for or from the client."
Here, Atty. Sison alleged that MDAHI gave Atty.
Camacho the amount of P1,288,260.00 as payment of
additional docket fees but the latter failed to apply the same
for its intended purpose. In contrast, Atty. Camacho invoked
the July 6, 2012 Order of the RTC which declared the MDAHI
allegation as unsubstantiated, and claimed that the said
amount formed part of his attorney's fees. The Board, on the
other hand, opined that it was still premature to decide such
issue because there was a pending estafa case, docketed as
Criminal Case No. 13-1688, filed by MDAHI against Atty.
Camacho involving the same amount of P1,288,260.00.
The Court is of the view that it is not premature
to rule on the charge against Atty. Camacho for his failure to
account for the money of his client. The pending case against

him is criminal in nature. The issue therein is whether he is


guilty beyond reasonable doubt of misappropriating the
amount of P1,288,260.00 entrusted to him by his client. The
present case, however, is administrative in character,
requiring only substantial evidence. It only entails a
determination of whether Atty. Camacho violated his solemn
oath by failing to account for the money of his client.
Evidently, the adjudication of such issue in this
administrative case shall not, in any way, affect the separate
criminal proceeding.
In disciplinary proceedings against lawyers, the
only issue is whether the officer of the court is still fit to be
allowed to continue as a member of the Bar. The only
concern of the Court is the determination of the
respondent's administrative liability. The findings in this case
will have no material bearing on other judicial action which
the parties may choose to file against each other. While a
lawyer's wrongful actuations may give rise at the same time
to criminal, civil, and administrative liabilities, each must be
determined in the appropriate case; and every case must be
resolved in accordance with the facts and the law applicable
and the quantum of proof required in each.
26

Delving into the substance of the allegation, the


Court rules that Atty. Camacho indeed violated Rule 16.01 of
the CPR. When Atty. Camacho personally requested MDAHI
for additional docket fees, the latter obediently granted the
amount of P1,288,260.00 to the former. Certainly, it was
understood that such amount was necessary for the
payment of supposed additional docket fees in Civil Case No.
05-655. Yet, when Atty. Sison confronted Atty. Camacho
regarding the said amount, the latter replied that he simply
gave it to the clerk of court as the payment period had
lapsed. Whether the said amount was pocketed by him or
improperly given to the clerk of court as a form of bribery, it
was unmistakably clear that Atty. Camacho did not apply the
amount given to him by his client for its intended legal
purpose. cDHAES
Atty. Camacho did not even deny making that
request to MDAHI for additional docket fees and receiving
such amount from his client. Rather, he set up a defense that
the said amount formed part of his attorney's fees. Such
defense, however, is grossly contradictory to the
established purpose of the P1,288,260.00. In its Payment
Request/Order Form,
it is plainly indicated therein that
MDAHI released the said amount only to be applied as
payment for additional docket fees, and not for any other
purposes. Consequently, the lame excuse of Atty. Camacho
is bereft of merit because it constitutes a mere afterthought
and a manifest disrespect to the legal profession. Atty.
Camacho is treading on a perilous path where the payment
of his attorney's fees is more important than his fiduciary
and faithful duty of accounting the money of his client. Wellsettled is the rule that lawyers are not entitled to unilaterally
appropriate their clients' money for themselves by the mere
fact that the clients owe them attorney's fees.
27

keep copies of the receipts for his own records. Pursuant to


Rule 16.01 of the CPR, a lawyer must be aware that he is
accountable for the money entrusted to him by the clients,
and that his only means of ensuring accountability is by
issuing and keeping receipts.
Worse, on May 26, 2011, the RTC already
rendered its decision in Civil Case No. 05-655, adjudging
MDAHI entitled to an insurance claim in the amount of
approximately P65,000,000.00. From that date on, there was
no more need for additional docket fees. Apparently, still
unaware of the judgment, MDAHI subsequently released the
money for additional docket fees to Atty. Dimaano, who
handed it to Atty. Camacho on May 27, 2011. Despite a
decision having been rendered, Atty. Camacho did not reject
the said amount or return it to his client upon receipt.
Instead, he unilaterally withheld the said amount by
capriciously invoking the payment of his attorney's fees.
The fiduciary nature of the relationship between
the counsel and his client imposes on the lawyer the duty to
account for the money or property collected or received for
or from his client. Money entrusted to a lawyer for a specific
purpose but not used for the purpose should be immediately
returned. A lawyer's failure, to return upon demand, the
funds held by him on behalf of his client gives rise to the
presumption that he has appropriated the same for his own
use in violation of the trust reposed in him by his client. Such
act is a gross violation of general morality as well as of
professional ethics. It impairs public confidence in the legal
profession and deserves punishment.
30

Administrative penalty
A member of the Bar may be penalized, even
disbarred or suspended from his office as an attorney, for
violation of the lawyer's oath and/or for breach of the ethics
of the legal profession as embodied in the CPR. The practice
of law is a profession, a form of public trust, the performance
of which is entrusted to those who are qualified and who
possess good moral character. The appropriate penalty for
an errant lawyer depends on the exercise of sound judicial
discretion based on the surrounding facts.
31

In Luna v. Galarrita, the Court suspended


the respondent lawyer for two (2) years because he
accepted a compromise agreement without valid authority
and he failed to turn over the payment to his client. In the
case of Melendrez v. Decena,
the lawyer therein was
disbarred because he entered into a compromise
agreement without the special authority of his client and he
drafted deceptive and dishonest contracts. Similarly, in
Navarro v. Meneses III,
another lawyer, who
misappropriated the money entrusted to him by his client
which he failed and/or refused to account for despite
repeated demands, was disbarred because his lack of
personal honesty and good moral character rendered him
unworthy of public confidence.
32

33

34

28

Moreover, Atty. Camacho failed to issue a


receipt to MDAHI from the moment he received the said
amount. In Tarog v. Ricafort, the Court held that ethical and
practical considerations made it both natural and imperative
for a lawyer to issue receipts, even if not demanded, and to
29

In this case, Atty. Camacho entered into a


compromise agreement without the conformity of his client
which is evidently against the provisions of the CPR and the
law. Moreover, he deliberately failed to account for the
money he received from his client, which was supposed to
be paid as additional docket fees. He even had the gall to

impute that the money was illicitly given to an officer of the


court. The palpable indiscretions of Atty. Camacho shall not
be countenanced by the Court for these constitute as a
blatant and deliberate desecration of the fiduciary duty that
a lawyer owes to his client.
The Court finds that Atty. Camacho's acts are so
reprehensible, and his violations of the CPR are so flagrant,
exhibiting his moral unfitness and inability to discharge his
duties as a member of the Bar. His actions erode rather than
enhance the public perception of the legal profession.
Therefore, in view of the totality of his violations, as well as
the damage and prejudice they caused to his client, Atty.
Camacho deserves the ultimate penalty of disbarment. ASEcHI
Further, he must be ordered to return the
amount of P1,288,260.00 to MDAHI, which he received in his
professional capacity for payment of the purported
additional docket fees. Disciplinary proceedings revolve
around the determination of the respondent-lawyer's
administrative liability, which must include those intrinsically
linked to his professional engagement.
35

WHEREFORE, Atty. Manuel N. Camacho is found guilty of


violating Rule 1.01 and Rule 16.01 of the Code of Professional
Responsibility. For reasons above-stated, he is DISBARRED from
the practice of law and his name stricken off the Roll of Attorneys,
effective immediately.
Furthermore, Atty. Manuel N. Camacho is
ORDERED to return to Marsman-Drysdale, Agribusiness
Holdings Inc. the money intended to pay for additional
docket fees which he received from the latter in the amount
of P1,288,260.00 within ninety (90) days from the finality of
this decision.
Let a copy of this decision be furnished the
Office of the Bar Confidant to be entered into the records of
respondent Atty. Manuel N. Camacho. Copies shall likewise
be furnished the Integrated Bar of the Philippines and the
Office of the Court Administrator for circulation to all courts
concerned.
SO ORDERED.
||| (Sison, Jr. v. Camacho, A.C. No. 10910 [Formerly CBD Case No. 123594], [January 12, 2016])

SECOND DIVISION
[G.R. No. 193420. October 14, 2015.]
7107 ISLANDS PUBLISHING, INC., petitioner, vs. THE
HOUSE PRINTERS CORPORATION, respondent.
DECISION
BRION, J p:
This petition for review on certiorari seeks to
reverse the 10 November 2009 and 17 August 2010
resolutions of the Court of Appeals (CA) in CA-G.R. UDKSP No. 6325. The CA dismissed the petitioner's petition for
certiorari challenging the 30 January 2009 and 29 June 2009
orders of the Regional Trial Court of Quezon City (RTC),
Branch 221, in Civil Case No. Q-06-58473. This RTC
ruling, in turn, denied its motion to dismiss.
*

not included in the enumeration under Rule 14, Section 11,


Chief Accountant Milan was able to turn over the summons
and the complaint to the defendants; therefore, the purpose
of Rule 14 was attained. The petitioner received a copy of the
order on 4 August 2009.
On 2 October 2009, 7107 Publishing filed a
petition for certiorari before the CA against the 30 January
2009 and 29 June 2009 orders of the RTC. The petition was
filed by registered mail.
On 7 October 2009, 7107 Publishing manifested
before the CA that it had filed a petition for certiorari on 2
October 2009.

ANTECEDENTS
On 25 July 2006, respondent The House Printers
Corporation (House Printers) filed a complaint for a sum of
money and damages against the 7107 Islands Publishing, Inc.
(7107 Publishing) before the RTC. House Printers alleged that
7107 Publishing refused to pay for PHP1,178,700.00 worth of
magazines it purchased in 2005. The complaint was docketed
as Civil Case No. Q-06-58473.
On 1 August 2006, Manuel S. Paguyo, Sheriff IV,
served the summons and a copy of the complaint on 7107
Publishing through its Chief Accountant Laarni Milan. Sheriff
Paguyo explained on his return that the President and the inhouse counsel were not at the office when he arrived so he
served the summons on the highest ranking officer.
On 16 August 2006, 7107 Publishing filed a
motion to dismiss on the ground that the RTC failed to
acquire jurisdiction over its person. 7107 Publishing argued
that if the defendant was a corporation, service of summons
could only be made on the president, managing partner,
general manager, corporate secretary, treasurer, or in-house
counsel pursuant to Rule 14, Section 11 of the Rules of Court.
Petitioner further argued that this was an exclusive list, citing
E.B. Villarosa & Partner Co., Ltd. v. Benito and Delta Motor
Sales Corporation v. Mangosing.
4

On 4 September 2006, House Printers filed its


opposition to petitioner's motion to dismiss. House Printers
argued that there was substantial compliance with the
requirement of service, citing G&G Trading Corporation v.
Court of Appeals
and Millenium Industrial Commercial
Corporation v. Tan.
6

On 30 January 2009, the RTC denied the motion


to dismiss for lack of merit. The RTC held that there was
substantial compliance with the rule on service of summons
and directed the petitioner to file its answer within five days
from receipt of the denial. caITAC
On 16 March 2009, 7107 Publishing moved for
the reconsideration of the denial. It reiterated that Rule 14,
Section 11 is an exclusive list that requires strict compliance.
On 29 June 2009, the RTC denied the motion for
reconsideration. It held that although a Chief Accountant was

On 10 November 2009, the CA dismissed the


petition outright because the petitioner failed to pay the
docket and the other legal fees.
On 18 December 2009, 7107 Publishing moved
for the reconsideration of the dismissal. It explained that: (1)
it was constrained to file the petition by registered mail on 2
October 2009, prior to the last day of the reglementary
period; (2) on 7 October 2009, petitioner's counsel went to
the RTC to give an advance copy of the petition and pay the
docket and other lawful fees; (3) however, the court
personnel at the receiving section refused to accept
payment; (4) instead, the court personnel instructed the
petitioner to file a manifestation that the petition was filed by
registered mail then wait until the CA receives and dockets
the petition, to avoid double docketing and double payment;
(5) the petitioner complied and was instructed by the Civil
Cases Section to wait for a notice from the CA to pay the
docket fees; (6) petitioner relied in good faith on the court
personnel's advice, but the notice to pay never arrived; (7)
instead, the petitioner received the 10 November 2009 order
of dismissal on 14 December 2009. The petitioner prayed for
the CA to allow him to pay the required fees and to give due
course to the petition.
On 17 August 2010, the CA denied
reconsideration. It held that even if the court personnel
refused to accept the petitioner's tender of payment, it could
have simply paid the required fees by postal money order.
On 8 October 2010, 7107 Publishing filed the
present petition for review on certiorari.
THE PETITION
The petitioner argues: (1) that the RTC
committed grave abuse of discretion when it denied its
motion to dismiss because the RTC did not acquire
jurisdiction over its person; and (2) that the CA was not
justified in dismissing its petition for certiorari for
nonpayment of the required fees because of the court
personnel's refusal to accept its tender of payment on four
separate occasions. The petitioner begs this Court to brush
aside any procedural barriers and give due course to its
petition.
In its Comment dated 16 May 2011, the
respondent maintains: (1) that the petitioner did not suffer
any undue prejudice from the service of summons on its
accountant; and (2) that the petitioner failed to substantiate

its allegations that court personnel refused his tender of


payment four times.
OUR RULING

We deny the petition for lack of merit.


Rule 14 of the Rules of Court provides:

SEC. 11. Service upon domestic private juridical entity.


When the defendant is a corporation,
partnership or association organized
under the laws of the Philippines with a
juridical personality, service may be
made on the president, managing
partner,
general
manager,
corporate secretary, treasurer, or
in-house
counsel.
(emphasis
supplied)

We have long established that this enumeration


is an exclusive list under the principle of expresso unius est
exclusio alterius. Under the present Rules of Court, the rule
of substantial compliance invoked by the respondent is no
longer applicable. To quote our decision in Sps. Mason v.
Court of Appeals: ICHDca
8

The question of whether the substantial compliance rule is


still applicable under Section 11, Rule 14
of the 1997 Rules of Civil Procedure has
been settled in Villarosa which applies
squarely to the instant case. In the said
case, petitioner E.B. Villarosa & Partner
Co. Ltd. (hereafter Villarosa) with
principal office address at 102 Juan Luna
St., Davao City, and with branches at
2492
Bay
View
Drive,
Tambo,
Paraaque,
Metro
Manila,
and
Kolambog, Lapasan, Cagayan de Oro
City, entered into a sale with
development agreement with private
respondent
Imperial
Development
Corporation. As Villarosa failed to
comply with its contractual obligation,
private respondent initiated a suit for
breach of contract and damages at the
Regional Trial Court of Makati.
Summons, together with the complaint,
was served upon Villarosa through its
branch manager at Kolambog, Lapasan,
Cagayan de Oro City. Villarosa filed a
Special Appearance with Motion to
Dismiss on the ground of improper
service of summons and lack of
jurisdiction. The trial court denied the
motion and ruled that there was
substantial compliance with the rule,
thus, it acquired jurisdiction over
Villarosa. The latter questioned the
denial before us in its petition for
certiorari. We decided in Villarosa's
favor and declared the trial court
without jurisdiction to take cognizance
of the case. We held that there was no
valid service of summons on Villarosa as
service was made through a person not
included in the enumeration in Section

11, Rule 14 of the 1997 Rules of Civil


Procedure, which revised the Section 13,
Rule 14 of the 1964 Rules of Court. We
discarded the trial court's basis for
denying the motion to dismiss, namely,
private
respondents'
substantial
compliance with the rule on service of
summons, and fully agreed with
petitioners'
assertions
that
the
enumeration under the new rule is
restricted,
limited
and
exclusive,
following
the
rule
in
statutory
construction that expressio unios est
exclusio alterius. Had the Rules of Court
Revision
Committee
intended
to
liberalize the rule on service of
summons, we said, it could have easily
done so by clear and concise language.
Absent a manifest intent to liberalize the
rule, we stressed strict compliance with
Section 11, Rule 14 of the 1997 Rules of
Civil Procedure.

Neither can herein petitioners invoke our ruling in


Millenium to support their position for
said case is not on all fours with the
instant case. We must stress that
Millenium was decided when the
1964 Rules of Court were still in
force and effect, unlike the
instant case which falls under
the new rule. Hence, the cases
cited by petitioners where we
upheld
the
doctrine
of
substantial compliance must be
deemed overturned by Villarosa,
which is the later case. 9 (emphasis
supplied)

Therefore, the petitioner's argument is


meritorious; service of summons on an officer other than
those enumerated in Section 11 is invalid.
10

However, although the petition before the CA


was meritorious, the petitioner failed to pay the required
docket fees and other legal fees. The payment of docket fees
within the prescribed period is mandatory for the filing of a
petition for certiorari. The court acquires jurisdiction over
the case only upon the payment of the prescribed docket
fees. The payment of the full amount of the docket fee is a
condition sine qua non for jurisdiction to rest.
11

We agree with the respondent that the


petitioner failed to substantiate his allegations that the Court
of Appeals personnel refused his offer of payment four
times. Moreover, these are factual allegations that we cannot
entertain because we are not a trier of facts. Nevertheless,
the petitioner pleads that technicalities be set aside in order
to dispense substantial justice.

The payment of docket fees, like the rule of


strict compliance in the service of summons, is not a mere
technicality of procedure but is an essential requirement of
due process. Procedural rules are not to be set aside simply
because their strict application would prejudice a party's
substantive rights. Like all rules, they must be observed. They
can only be relaxed for the most persuasive of reasons
where a litigant's degree of noncompliance with the rules is
severely disproportionate to the injustice he is bound to
suffer as a consequence. TCAScE
12

In the present case, the petitioner appeals to


our sense of equity and justice to relax the procedural rules
in his favor because his petition for certiorari is meritorious.
However, we cannot overlook the inequity of relaxing the
procedural rules for the petitioner in CA-G.R. UDK-SP No.
6325 in order to dismiss the respondent's complaint in
Civil Case No. Q-06-58473 for the Sheriff's
noncompliance with the rule on the service of summons. If
we will be equitable to the petitioner, then fairness demands
that we must also be equitable to the respondent.
In rendering justice, courts have always been, as
they ought to be, conscientiously guided by the norm that on
the balance, technicalities take a backseat against
substantive rights, and not the other way around. As the
petitioner itself said, the ends of justice would be best served
if we do away with the technicalities as we dispense
substantial justice. We thus believe that the best course of
action under the circumstances is to allow the RTC to decide
the case on the merits.
13

WHEREFORE, premises considered, we hereby DENY the


petition for lack of merit. The Regional Trial Court of Quezon City,
Branch 221 is DIRECTED to proceed with Civil Case No. Q-0658473 and the petitioner is ORDERED to file its answer within
five (5) days from receipt of this decision. No costs.
SO ORDERED. ASEcHI
||| (7107 Islands Publishing, Inc. v. The House Printers Corp., G.R.
No. 193420, [October 14, 2015])

SECOND DIVISION
[G.R. No. 193420. October 14, 2015.]
7107 ISLANDS PUBLISHING, INC., petitioner, vs. THE
HOUSE PRINTERS CORPORATION, respondent.
DECISION
BRION, J p:
This petition for review on certiorari seeks to
reverse the 10 November 2009 and 17 August 2010
resolutions of the Court of Appeals (CA) in CA-G.R. UDKSP No. 6325. The CA dismissed the petitioner's petition for
certiorari challenging the 30 January 2009 and 29 June 2009
orders of the Regional Trial Court of Quezon City (RTC),
Branch 221, in Civil Case No. Q-06-58473. This RTC
ruling, in turn, denied its motion to dismiss.
*

not included in the enumeration under Rule 14, Section 11,


Chief Accountant Milan was able to turn over the summons
and the complaint to the defendants; therefore, the purpose
of Rule 14 was attained. The petitioner received a copy of the
order on 4 August 2009.
On 2 October 2009, 7107 Publishing filed a
petition for certiorari before the CA against the 30 January
2009 and 29 June 2009 orders of the RTC. The petition was
filed by registered mail.
On 7 October 2009, 7107 Publishing manifested
before the CA that it had filed a petition for certiorari on 2
October 2009.

ANTECEDENTS
On 25 July 2006, respondent The House Printers
Corporation (House Printers) filed a complaint for a sum of
money and damages against the 7107 Islands Publishing, Inc.
(7107 Publishing) before the RTC. House Printers alleged that
7107 Publishing refused to pay for PHP1,178,700.00 worth of
magazines it purchased in 2005. The complaint was docketed
as Civil Case No. Q-06-58473.
On 1 August 2006, Manuel S. Paguyo, Sheriff IV,
served the summons and a copy of the complaint on 7107
Publishing through its Chief Accountant Laarni Milan. Sheriff
Paguyo explained on his return that the President and the inhouse counsel were not at the office when he arrived so he
served the summons on the highest ranking officer.
On 16 August 2006, 7107 Publishing filed a
motion to dismiss on the ground that the RTC failed to
acquire jurisdiction over its person. 7107 Publishing argued
that if the defendant was a corporation, service of summons
could only be made on the president, managing partner,
general manager, corporate secretary, treasurer, or in-house
counsel pursuant to Rule 14, Section 11 of the Rules of Court.
Petitioner further argued that this was an exclusive list, citing
E.B. Villarosa & Partner Co., Ltd. v. Benito and Delta Motor
Sales Corporation v. Mangosing.
4

On 4 September 2006, House Printers filed its


opposition to petitioner's motion to dismiss. House Printers
argued that there was substantial compliance with the
requirement of service, citing G&G Trading Corporation v.
Court of Appeals
and Millenium Industrial Commercial
Corporation v. Tan.
6

On 30 January 2009, the RTC denied the motion


to dismiss for lack of merit. The RTC held that there was
substantial compliance with the rule on service of summons
and directed the petitioner to file its answer within five days
from receipt of the denial. caITAC
On 16 March 2009, 7107 Publishing moved for
the reconsideration of the denial. It reiterated that Rule 14,
Section 11 is an exclusive list that requires strict compliance.
On 29 June 2009, the RTC denied the motion for
reconsideration. It held that although a Chief Accountant was

On 10 November 2009, the CA dismissed the


petition outright because the petitioner failed to pay the
docket and the other legal fees.
On 18 December 2009, 7107 Publishing moved
for the reconsideration of the dismissal. It explained that: (1)
it was constrained to file the petition by registered mail on 2
October 2009, prior to the last day of the reglementary
period; (2) on 7 October 2009, petitioner's counsel went to
the RTC to give an advance copy of the petition and pay the
docket and other lawful fees; (3) however, the court
personnel at the receiving section refused to accept
payment; (4) instead, the court personnel instructed the
petitioner to file a manifestation that the petition was filed by
registered mail then wait until the CA receives and dockets
the petition, to avoid double docketing and double payment;
(5) the petitioner complied and was instructed by the Civil
Cases Section to wait for a notice from the CA to pay the
docket fees; (6) petitioner relied in good faith on the court
personnel's advice, but the notice to pay never arrived; (7)
instead, the petitioner received the 10 November 2009 order
of dismissal on 14 December 2009. The petitioner prayed for
the CA to allow him to pay the required fees and to give due
course to the petition.
On 17 August 2010, the CA denied
reconsideration. It held that even if the court personnel
refused to accept the petitioner's tender of payment, it could
have simply paid the required fees by postal money order.
On 8 October 2010, 7107 Publishing filed the
present petition for review on certiorari.
THE PETITION
The petitioner argues: (1) that the RTC
committed grave abuse of discretion when it denied its
motion to dismiss because the RTC did not acquire
jurisdiction over its person; and (2) that the CA was not
justified in dismissing its petition for certiorari for
nonpayment of the required fees because of the court
personnel's refusal to accept its tender of payment on four
separate occasions. The petitioner begs this Court to brush
aside any procedural barriers and give due course to its
petition.
In its Comment dated 16 May 2011, the
respondent maintains: (1) that the petitioner did not suffer
any undue prejudice from the service of summons on its
accountant; and (2) that the petitioner failed to substantiate

its allegations that court personnel refused his tender of


payment four times.
OUR RULING

We deny the petition for lack of merit.


Rule 14 of the Rules of Court provides:

SEC. 11. Service upon domestic private juridical entity.


When the defendant is a corporation,
partnership or association organized
under the laws of the Philippines with a
juridical personality, service may be
made on the president, managing
partner,
general
manager,
corporate secretary, treasurer, or
in-house
counsel.
(emphasis
supplied)

We have long established that this enumeration


is an exclusive list under the principle of expresso unius est
exclusio alterius. Under the present Rules of Court, the rule
of substantial compliance invoked by the respondent is no
longer applicable. To quote our decision in Sps. Mason v.
Court of Appeals: ICHDca
8

The question of whether the substantial compliance rule is


still applicable under Section 11, Rule 14
of the 1997 Rules of Civil Procedure has
been settled in Villarosa which applies
squarely to the instant case. In the said
case, petitioner E.B. Villarosa & Partner
Co. Ltd. (hereafter Villarosa) with
principal office address at 102 Juan Luna
St., Davao City, and with branches at
2492
Bay
View
Drive,
Tambo,
Paraaque,
Metro
Manila,
and
Kolambog, Lapasan, Cagayan de Oro
City, entered into a sale with
development agreement with private
respondent
Imperial
Development
Corporation. As Villarosa failed to
comply with its contractual obligation,
private respondent initiated a suit for
breach of contract and damages at the
Regional Trial Court of Makati.
Summons, together with the complaint,
was served upon Villarosa through its
branch manager at Kolambog, Lapasan,
Cagayan de Oro City. Villarosa filed a
Special Appearance with Motion to
Dismiss on the ground of improper
service of summons and lack of
jurisdiction. The trial court denied the
motion and ruled that there was
substantial compliance with the rule,
thus, it acquired jurisdiction over
Villarosa. The latter questioned the
denial before us in its petition for
certiorari. We decided in Villarosa's
favor and declared the trial court
without jurisdiction to take cognizance
of the case. We held that there was no
valid service of summons on Villarosa as
service was made through a person not
included in the enumeration in Section

11, Rule 14 of the 1997 Rules of Civil


Procedure, which revised the Section 13,
Rule 14 of the 1964 Rules of Court. We
discarded the trial court's basis for
denying the motion to dismiss, namely,
private
respondents'
substantial
compliance with the rule on service of
summons, and fully agreed with
petitioners'
assertions
that
the
enumeration under the new rule is
restricted,
limited
and
exclusive,
following
the
rule
in
statutory
construction that expressio unios est
exclusio alterius. Had the Rules of Court
Revision
Committee
intended
to
liberalize the rule on service of
summons, we said, it could have easily
done so by clear and concise language.
Absent a manifest intent to liberalize the
rule, we stressed strict compliance with
Section 11, Rule 14 of the 1997 Rules of
Civil Procedure.

Neither can herein petitioners invoke our ruling in


Millenium to support their position for
said case is not on all fours with the
instant case. We must stress that
Millenium was decided when the
1964 Rules of Court were still in
force and effect, unlike the
instant case which falls under
the new rule. Hence, the cases
cited by petitioners where we
upheld
the
doctrine
of
substantial compliance must be
deemed overturned by Villarosa,
which is the later case. 9 (emphasis
supplied)

Therefore, the petitioner's argument is


meritorious; service of summons on an officer other than
those enumerated in Section 11 is invalid.
10

However, although the petition before the CA


was meritorious, the petitioner failed to pay the required
docket fees and other legal fees. The payment of docket fees
within the prescribed period is mandatory for the filing of a
petition for certiorari. The court acquires jurisdiction over
the case only upon the payment of the prescribed docket
fees. The payment of the full amount of the docket fee is a
condition sine qua non for jurisdiction to rest.
11

We agree with the respondent that the


petitioner failed to substantiate his allegations that the Court
of Appeals personnel refused his offer of payment four
times. Moreover, these are factual allegations that we cannot
entertain because we are not a trier of facts. Nevertheless,
the petitioner pleads that technicalities be set aside in order
to dispense substantial justice.

The payment of docket fees, like the rule of


strict compliance in the service of summons, is not a mere
technicality of procedure but is an essential requirement of
due process. Procedural rules are not to be set aside simply
because their strict application would prejudice a party's
substantive rights. Like all rules, they must be observed. They
can only be relaxed for the most persuasive of reasons
where a litigant's degree of noncompliance with the rules is
severely disproportionate to the injustice he is bound to
suffer as a consequence. TCAScE
12

In the present case, the petitioner appeals to


our sense of equity and justice to relax the procedural rules
in his favor because his petition for certiorari is meritorious.
However, we cannot overlook the inequity of relaxing the
procedural rules for the petitioner in CA-G.R. UDK-SP No.
6325 in order to dismiss the respondent's complaint in
Civil Case No. Q-06-58473 for the Sheriff's
noncompliance with the rule on the service of summons. If
we will be equitable to the petitioner, then fairness demands
that we must also be equitable to the respondent.
In rendering justice, courts have always been, as
they ought to be, conscientiously guided by the norm that on
the balance, technicalities take a backseat against
substantive rights, and not the other way around. As the
petitioner itself said, the ends of justice would be best served
if we do away with the technicalities as we dispense
substantial justice. We thus believe that the best course of
action under the circumstances is to allow the RTC to decide
the case on the merits.
13

WHEREFORE, premises considered, we hereby DENY the


petition for lack of merit. The Regional Trial Court of Quezon City,
Branch 221 is DIRECTED to proceed with Civil Case No. Q-0658473 and the petitioner is ORDERED to file its answer within
five (5) days from receipt of this decision. No costs.
SO ORDERED. ASEcHI
||| (7107 Islands Publishing, Inc. v. The House Printers Corp., G.R.
No. 193420, [October 14, 2015])

10

THIRD DIVISION

personal purposes.

[G.R. No. 186204. September 2, 2015.]


SPOUSES ROMEO T. JAVIER and ADORINA F. JAVIER,
petitioners, vs. SPOUSES EVANGELINE PINEDA DE
GUZMAN and VIRGILIO DE GUZMAN, ARNEL PINEDA,
EDGAR PINEDA, HENRY PINEDA and REGINO RAMOS,
respondents.
DECISION
PERALTA, J p:
This deals with the Petition for Review on
Certiorari under Rule 45 of the Rules of Court praying that
the Decision of the Court of Appeals (CA), dated September
24, 2008, and the Resolution dated January 7, 2009, denying
petitioner's motion for reconsideration thereof, be reversed
and set aside.
1

The antecedent facts are as follows:


On April 8, 2005, petitioners filed with the
Municipal Trial Court in Cities of Cabanatuan City (MTCC), a
Complaint against respondents for Ejectment, pertinent
portions of which contain the following allegations:

6. While the concrete


hollow blocks (chb) fence was being
erected, plaintiff Romeo T. Javier made a
request to the Office of the City
Engineer, Cabanatuan City to conduct a
relocation survey so as to prove to
defendants the metes and bounds of
plaintiffs' property and in the said
survey it appears that defendants have
encroached an area of 121.5434 square
meters on plaintiffs' land and 26.43
square meters on the road right of way
(Copy of Memorandum of Honorio G.
Garcia, Engineer IV, Geodetic Services
Division for the City Engineer of
Cabanatuan
City
containing
this
information, among others, is appended
hereto as Annex "C";

xxx xxx xxx


2. Plaintiffs
are
the
absolute owners of a parcel of land at
Bakod Bayan, Cabanatuan City with an
area of 740 square meters and covered
by Transfer Certificate of Title No. T113559, a copy of which is hereto
attached as Annex "A" to "A-1";

7. The above findings,


however, and several demands made by
plaintiffs and their father, Gregorio
Javier, to defendants for them to desist
from occupying subject land were just
ignored by defendants and they
persisted in completing their illegal acts;

3. Plaintiffs were in prior


physical possession of the entire
property;

8. Referral of the matter


by complainants to the Barangay
officials of Bakod Bayan, Cabanatuan
City similarly failed as evidenced by a
Certification to that effect herewith
attached as Annex "D";

4. On December 13, 2004,


the above-named defendants unlawfully
entered a portion of said land and
arrogated unto themselves ownership
thereof by enclosing the same with
concrete hollow blocks (chb) fence as
shown by a copy of picture herewith
attached as Annex "B";

5. In
the
process,
defendants, by using a chainsaw, even
cut the old and big Java plum (duhat)
tree of plaintiff on the subject land, had
it sawn, and took it for their own

9. Plaintiffs suffered and


have been continuously suffering
damages because of the acts of
defendants as narrated above;

10. Further,
the
construction by defendants of the
concrete hollow blocks (chb) fence is
violative of the National Building Code
(PD 1096) and for which defendant Eva
Pineda was charged by George G. Garcia

11

of the Cabanatuan City Engineers' Office


as shown by an Affidavit-Complaint,
Information for violation of PD 1096 and
Warrant of Arrest attached respectively
as Annexes "E", "F" to "F-1" and "G";

11. In cutting the abovementioned old and big Java plum


(duhat)
tree, defendants likewise
violated Section 68 of Presidential
Decree No. 705, (The Revised forestry
code of the Philippines) as amended by
E.O. No. 277 viz.,

S
ection
68. Cutting
, gathering
and
or
collecting
timber or
other
forest
products
without
license.
Any
person
who shall
cut,
gather,
collect,
remove
timber or
other
forest
products
from any
forest
land,
or
timber
from
alienable
or
disposable
public
land,
or
from
private
land,
without
any
authority,
or possess
timber or
other
forest
products
without
the legal
document
s
as
required

under
existing
forest laws
and
regulation
s, shall be
punished
with
the
penalties
imposed
under
Articles
309
and
310 of the
Revised
Penal
Code. . . . .
(underscor
ing
supplied)

(Copies of Certification
issued by the Community Environment
and Natural Resources Office (CENRO)
to the effect that defendants did not
secure the necessary cutting permit
from said government agency are
attached as Annexes "H" and "I")

12. Defendants have no


title over the adjacent lot where they are
staying at the time they illegally
occupied and fenced the subject portion
of plaintiff's land and even up to the
filing of this suit;

13. Due to the illegal acts


committed by defendants, plaintiffs
were deprived of the use and
occupation of the land and for which
they should be paid by defendants
damages in the amount of no less than
P10,000.00 and for taking the Java plum
(duhat) free against the will of the
plaintiffs, they should likewise be
ordered to pay a minimum amount of
P15,000.00;

12

14. In order to protect


their rights, plaintiffs were forced to
litigate and for that purpose constrained
to secure the services of counsel to
whom they paid an amount of
P20,000.00 for his acceptance fee and
will pay P2,000.00 for every appearance
in court. In filing this suit, they incurred
an amount of P4,220.00 for filing fee
and are likely to spend an amount of at
least P15,000.00 as litigation expenses;

15. The assessed value of


the 740-square-meter land of plaintiffs
is P2,480.00 as proven by a copy of Tax
Declaration herewith attached as Annex
"J"; 3

Respondents, on the other hand, alleged in their


Answer that the area they fenced in had always been in their
possession as it was within the boundary of the lot they had
been occupying. They maintained that the disputed area had
originally been enclosed by a barbed wire fence and
respondents were merely replacing the barbed wires with
concrete hollow blocks, without changing or moving the
boundaries. While this case was pending before the trial
court, the lot occupied by respondents was titled in the name
of their sister, Adoracion Pineda Ilustre. Respondents
questioned the survey conducted by the Office of the City
Engineer, pointing out that it was done unilaterally, without
taking into consideration the boundaries of their lot as
described in the Transfer Certificate of Title registered in the
name of their sister. After due proceedings, the MTCC issued
its Decision dated March 15, 2007, dismissing the complaint
on the ground that the case involved a boundary dispute,
thus, a plenary action within the competence of the Regional
Trial Court is the proper remedy.
Petitioners then appealed to the Regional Trial
Court (RTC), and in a Decision dated October 19, 2007, said
court disposed as follows:
WHEREFORE, the decision
appealed from is hereby reversed and
set aside. Judgment is hereby rendered
in favor of the plaintiffs-appellants
[herein petitioners], and against the
defendants-appellees,
ordering
the
latter as follows:

1
. Defendan
ts and all
persons

claiming
right
under
them
to
vacate the
premises
in
question
by
removing
the
concrete
fence they
have
constructe
d
within
the
plaintiffs'
lot
and
restore
possession
of
the
same
peacefully
to
the
plaintiffs;

2
. Defendan
ts
to
reimburse
to
plaintiffs
the
amount of
P4,220.00
that
plaintiffs
paid
as
filing fees
in
the
lower
court plus
the
amount of
P1,515.00
that
plaintiffs
paid
as
appeal
docket fee
as
evidenced
by
the
correspon
ding
official
receipts
issued by
the Clerk
of Court of
the MTCC
of

13

Cabanatua
n City;

3
. To refund
to
plaintiffs
the
amount of
P20,000.00
for
attorney's
fees; and

4
.
The
amount of
P5,000.00
representi
ng
the
actual
damages
that
plaintiffs
incurred
due to the
unlawful
cutting
down
of
the duhat
tree
belonging
to
the
plaintiffs.

SO ORDERED. 4

Aggrieved by the foregoing judgment, herein


respondents elevated the case to the CA. In a Decision dated
September 24, 2008, the CA, in turn, reversed and set aside
the RTC Decision and reinstated the MTCC Decision. Herein
petitioners' motion for reconsideration of the CA Decision
was denied in the Resolution dated January 7, 2009.
Thus, petitioners filed the instant petition,
wherein the following issues are raised: (1) whether the
action filed by petitioners qualify as one for forcible entry
based on the allegations in the complaint; (2) whether the
remedy of petitioners should be an action for recovery of
possession and not one for ejectment; and (3) which court
has jurisdiction in a boundary dispute.
The petition lacks merit.
At the outset, it should be made clear that there
is absolutely no issue regarding the MTCC's jurisdiction to
take cognizance of petitioner's complaint for ejectment. It is
true that petitioners alleged in their complaint that they had
prior possession of the contested area and, thus, the MTCC
properly acted on the case, conducting the necessary
summary proceedings. However, after their respective
pleadings and evidence were presented by the contending
parties before the MTCC as a trial court, it found that the
case actually involved a boundary dispute, and thus, the
MTCC dismissed the case. It should be emphasized that the
dismissal was not due to lack of jurisdiction of the court over
the complaint, but rather, due to petitioners' failure to prove
that they had a proper case for ejectment. The case was
dismissed on the ground of lack of merit, not lack of
jurisdiction.
Likewise, the MTCC and the CA are correct that
the meat of the controversy between herein parties is the
actual boundaries or the metes and bounds of their
respective lots. On this matter, Manalang v. Bacani is quite
instructive:
5

. . . a boundary dispute must be resolved in the


context of accion reivindicatoria,
not an ejectment case. The
boundary dispute is not about
possession, but encroachment, that is,
whether the property claimed by the
defendant formed part of the plaintiff's
property. A boundary dispute
cannot be settled summarily
under Rule 70 of the Rules of
Court, the proceedings under which
are limited to unlawful detainer and
forcible entry. In unlawful detainer, the
defendant unlawfully withholds the
possession of the premises upon the
expiration or termination of his right to
hold such possession under any
contract, express or implied. The
defendant's possession was lawful at
the beginning, becoming unlawful only
because of the expiration or termination
of his right of possession. In forcible
entry, the possession of the defendant
is illegal from the very beginning, and
the issue centers on which
between the plaintiff and the
defendant
had
the
prior
possession de facto. 6

14

Opposing possessory rights over certain areas of adjacent lots,


arising from claims of ownership thereof, cannot be resolved
in a summary action such as an ejectment suit. The issues
involved in such a controversy should be fully threshed out
in an action like accion reivindicatoria, especially when
plaintiff fails to establish actual prior possession. In a much
earlier ruling of this Court, it was already held therein that
"[i]f [a party] is indeed the owner of the premises subject of
this suit and she was unlawfully deprived of the real right of
possession or the ownership thereof, she should present her
claim before the regional trial court in an accion publiciana
or an accion reivindicatoria, and not before the municipal
trial court in a summary proceeding of unlawful detainer or
forcible entry."
7

WHEREFORE, the petition is DENIED. The Decision of the Court


of Appeals, dated September 24, 2008, and its Resolution dated
January 7, 2009, are hereby AFFIRMED.
SO ORDERED.
||| (Spouses Javier v. Spouses De Guzman, G.R. No. 186204,
[September 2, 2015])

15

SECOND DIVISION

of the service, and gross neglect of duty. It subsequently


employed Atty. Ernesto D. Cahucom (Atty. Cahucom) as its
new counsel.
9

[G.R. No. 171582. August 19, 2015.]


ALBERTO T. LASALA, previously doing business under
the style PSF SECURITY AGENCY, petitioner, vs. THE
NATIONAL FOOD AUTHORITY, respondent.
DECISION
BRION, J p:
We resolve in this petition for review on
certiorari the challenge to the June 14, 2005 Decision and
the February 15, 2006 Resolution (CA rulings) of the Court of
Appeals (CA) in CA-G.R. SP No. 73235. These assailed CA
rulings annulled the September 2, 2002 decision of the
Regional Trial Court of Quezon City (RTC QC), Branch 220,
which granted petitioner Alberto T. Lasala's (Lasala)
counterclaim against respondent National Food Authority
(NFA).
1

Although the NFA's complaint was dismissed,


Lasala's counterclaim remained, and he presented evidence
to support it. Interestingly, Atty. Cahucom, the NFA's
new counsel, did not submit any evidence to
controvert Lasala's counterclaim evidence. When
asked during trial, Atty. Cahucom simply waived his
right to cross-examine Lasala and did not exert
any effort to counter his testimony.

Factual Antecedents
Lasala, through his company PSF Security
Agency, used to provide security guard services to the NFA.
Sometime in 1994, Lasala's employees who were deployed to
the NFA filed with the National Labor Relations Commission
(NLRC) a complaint for underpayment of wages and
nonpayment of other monetary benefits. The NLRC ruled for
the employees and held Lasala and the NFA solidarily liable
for the employees' adjudged monetary award.
Consequently, the sheriff garnished the NFA's P383,572.90
worth of bank deposits with the Development Bank of the
Philippines.

Thus, in its September 2, 2002 decision, the trial


court granted Lasala's counterclaim in the total amount
of P52,788,970.50 broken down as follows:
10

Nature of Award
Actual and compensatory damages
Loss of business credit
Moral damages
Exemplary damages
Litigation expenses
Lasala's claim for wage adjustment

Total

Believing that it had no liability to Lasala's


employees, the NFA filed with the RTC, Branch 220, Quezon
City, a complaint for sum of money with damages and an
application for the issuance of a writ of preliminary
attachment against Lasala.
6

In response, Lasala filed an answer with


counterclaim and opposition to the prayer for preliminary
attachment. In his counterclaim, Lasala prayed for the
payment of moral damages of P1,000,000.00;
exemplary damages of P500,000.00; attorney's
fees of P300,000.00, compensatory damages of
P250,000.00; and unpaid wage differential of
P1,500,000.00,
for
a
total
amount
of
P3,550,000.00.
7

Notably, this amount is substantially higher than the


amount of P3,550,000.00, Lasala originally prayed for.
Despite the huge award to Lasala, the NFA
failed to appeal its case to the CA. Atty. Cahucom
did not inform the NFA's management about the
trial court's adverse ruling. When asked to explain, he
reasoned out that he only discovered the decision after the
lapse of the period for appeal.
11

Having lost its chance to appeal, the NFA filed


with the trial court a petition for relief from judgment
(petition for relief) grounded on excusable negligence. In its
petition, the NFA through Atty. Cahucom, attributed its
failure to appeal to one of the NFA's employees. Allegedly,
this employee received the copy of the trial court's
September 2, 2002 decision but did not inform Atty.
Cahucom about it. It was only after the lapse of the period
for the filing of a motion for reconsideration and an appeal
that the NFA learned about the adverse ruling.
12

Initially, the trial court granted the NFA's prayer


for the issuance of a writ of preliminary attachment.
However, this writ was eventually nullified when Lasala
questioned it with the CA in CA-G.R. SP No. 41124. ITAaHc

The trial court did not accept the NFA's


reasoning; thus, it denied the petition for relief for
insufficiency in substance.

Meanwhile, on May 2, 1997, the trial court


dismissed the NFA's complaint for failure of the
lawyer deputized by the Office of the Government
Corporate Counsel (OGCC), Atty. Rogelio B. Mendoza (Atty.
Mendoza), to present the NFA's evidence-in-chief,
due to his repeated hearing absences.

In the meantime, then NFA Administrator Arthur


C. Yap had assumed his position. One of his first instructions
was the legal audit of all NFA cases. In doing this, the NFA
management found out that the two lawyers (Attys. Mendoza
and Cahucom) assigned to the case against Lasala, grossly
mishandled it; hence, causing a huge and unjust liability to
the NFA in the amount of P52,788,970.50.

The NFA replaced Atty. Mendoza and


administratively charged him with dishonesty, grave
misconduct, conduct grossly prejudicial to the best interests

Thus, on the grounds of lack of jurisdiction and


extrinsic fraud, the NFA, now through the OGCC, filed with
the CA a petition and an amended petition for annulment

13

14

16

of judgment (petition for annulment) of the trial court's


September 2, 2002 decision which had granted a
substantially higher award than what Lasala originally prayed
for in his counterclaim.

Extrinsic fraud was employed against the NFA


when its handling lawyers allowed its complaint against
Lasala to be dismissed, and when they failed to question the
trial court's adverse ruling through a motion for
reconsideration or an appeal without any valid justification.
20

The CA's Ruling


The CA granted the petition and annulled the
trial court's September 2, 2002 decision.

The trial court also lacked jurisdiction over


Lasala's counterclaim because he failed to file the required
docket fees.

It ruled that though Lasala's counterclaim is


compulsory in nature (thus, it did not require the payment of
docket fees), the trial court's decision must still be annulled
for having been rendered without any jurisdiction.

Lastly, the NFA asserts that the CA did not err in


annulling the trial court's September 2, 2002 decision, which
granted Lasala's counterclaim, since the trial court ruling had
no basis except Lasala's self-serving testimony.

The trial court lacked jurisdiction because no


concrete and convincing evidence supported its decision to
grant Lasala's counterclaim. The CA noted that the trial court
awarded Lasala an exorbitant amount of P52,788,970.50,
despite the absence of any supporting evidence other than
his self-serving testimony. Notably, Lasala did not present
any corroborating documentary evidence to support his
counterclaim.
The Petition
Lasala submits that the NFA's use of a petition
for relief at the trial court level should have barred the NFA
from filing a subsequent petition for annulment with the CA.
At this point, res judicata had already set in, thus prohibiting
the CA from recognizing the NFA's petition for annulment
and its subsequent amended petition.
15

Lasala also asserts that the NFA could no longer


invoke extrinsic fraud as its basis for annulment, since the
NFA failed to raise this ground in its petition for relief. The
NFA's omission amounted to a waiver of the NFA's right to
subsequently raise this ground in its petition for annulment.
And even if extrinsic fraud had been properly cognizable as
a ground, the NFA still failed to prove it.
16

17

Lasala further argues that the NFA may not


invoke the trial court's lack of jurisdiction over his
counterclaim for nonpayment of docket fees. His
counterclaim is compulsory and is not permissive; no docket
fee is required to be paid. CHTAIc
18

Lastly, Lasala posits that grave abuse of


discretion is not a proper basis for granting a petition for
annulment of judgment. The only grounds allowed in the
Rules of Court are extrinsic fraud and lack of jurisdiction.
Since these two grounds were not available to the NFA, then
the CA's annulment of the trial court's September 2, 2002
decision had no basis.
The Case for the NFA
The NFA argues that there was no res judicata
between its petition for relief and petition for annulment of
judgment as these two reliefs were based on two different
grounds. The petition for relief was grounded on excusable
negligence while the petition for annulment was based on
extrinsic fraud and lack of jurisdiction.
19

21

22

The Court's Ruling


We resolve to DENY the petition.
The nature of a petition forannulment of judgment
As a general rule, final judgments may no longer
be modified as, after finality, all the issues between the
parties are deemed resolved and laid to rest. This rule
embodies the principle that at some point, litigation must
end for an effective and efficient administration of justice.
Hence, once a judgment becomes final, the winning party
should not, through subterfuge, be deprived of the fruits of
the verdict.
23

In Antonino v. Register of Deeds of Makati, the


Court explained the nature of a petition for annulment of
judgment and reiterated that it is only available under
certain exceptional circumstances, since it runs
counter to the general rule of immutability of final
judgments, viz.:
24

Annulment of judgment is a recourse equitable in


character,
allowed
only
in
exceptional cases as where there is
no available or other adequate remedy.
Rule 47 of the 1997 Rules of Civil
Procedure, as amended, governs
actions for annulment of judgments or
final orders and resolutions, and Section
2 thereof explicitly provides only two
grounds
for
annulment
of
judgment, i.e., extrinsic fraud
and lack of jurisdiction. The
underlying reason is traceable to the
notion that annulling final judgments
goes against the grain of finality of
judgment. Litigation must end and
terminate sometime and somewhere,
and it is essential to an effective
administration of justice that once a
judgment has become final, the issue or
cause involved therein should be laid to
rest. The basic rule of finality of
judgment is grounded on the
fundamental principle of public
policy and sound practice that at
the risk of occasional error, the
judgment of courts and the
award of quasi-judicial agencies
must become final at some
definite date fixed by law. 25
(emphasis supplied)

17

Since a petition for annulment of judgment is an


equitable and exceptional relief, the Rules of Court under
Rule 47 put in place stringent requirements that must be
complied with before this remedy may prosper.

judgment or order must be final; (2) the judgment or order


must be on the merits; (3) it must have been rendered by a
court having jurisdiction over the subject matter and the
parties; and (4) there must be, between the first and the
second action, identity of parties, of subject matter,
and cause of action.
There is res judicata when all
these requisites concur.
31

First, it is only available when the ordinary


remedies of new trial, appeal, petition for relief, or other
appropriate remedies are no longer available through no
fault of the petitioner.
26

Second, an annulment may only be based on


the grounds of extrinsic fraud and lack of jurisdiction.
Moreover, extrinsic fraud shall not be a valid ground if it was
availed of, or could have been availed of, in a motion for new
trial or petition for relief.
27

Lastly, if grounded on extrinsic fraud, the


petition must be filed within four years from its
discovery; and if based on lack of jurisdiction, before
it is barred by laches or estoppel.
28

Guided by these requisites, we now discuss


each related issue that the parties raised.
The prior filing of a petition for reliefdoes not per se
bar the filing of apetition for annulment of
judgment.
Annulment of judgment may only be resorted to
if the ordinary remedies of new trial, appeal, petition for
relief or other appropriate remedies, are no longer available
without the petitioner's fault.
Thus, the petitioner must be able to provide a
plausible explanation for not resorting first to the more
common remedies enumerated under the Rules. As
annulment is an equitable remedy, it cannot be used to
compensate litigants who lost their case because of their
negligence or because they slept on their rights. This
safeguard has been put in place to address the concern that
defeated litigants would use and abuse Rule 47 to avoid or
delay an already final and executory judgment.
29

In the present case, the NFA actually availed of


the remedy of petition for relief at the trial court level.
Through Atty. Cahucom, the NFA, invoking the ground of
excusable negligence, prayed that the execution of the trial
court's September 2, 2002 decision be restrained, and that
its right to appeal be recognized. However, the trial court
also dismissed this petition for being insufficient in
substance. EATCcI

Clearly, the fourth requisite is absent


and cannot apply to the present case. There is
identity of parties in the petitions for relief and annulment of
judgment, but no identity of subject matter and cause of
action.
To determine the existence of identity of cause
of action between the two cases, the Court has often applied
the identity of evidence test i.e., whether the evidence to
support and establish the present and former causes of
action are the same.
The petition for relief prayed that the execution
of the trial court's adverse ruling be restrained, and for the
recognition of the NFA's right to appeal on the ground of
excusable negligence. On the other hand, the petition for
annulment and its amendment sought the setting aside of
the trial court's decision because of extrinsic fraud and lack
of jurisdiction.
32

33

Clearly, the pieces of evidence that NFA


presented in its petition for relief are different from the
evidence it presented in the current case the former,
grounded on excusable negligence, sought relief from
judgment because one of its employees failed to give a copy
of the trial court decision to Atty. Cahucom on time to file an
appeal.
The present case, on the other hand, seeks to
annul the trial court's judgment based on the fraudulent acts
of its former counsels (including Atty. Cahucom's), and
because the lower court lacked jurisdiction over Lasala's
counterclaim.
The distinctions between the grounds invoked and
reliefs prayed for between the two petitions highlight
the need for different pieces of evidence to prove
them. Thus, their causes of action are not identical,
and res judicata does not bar the filing of the present
petition for annulment.
Only two grounds may be recognizedin a petition for
annulment: extrinsicfraud and lack of jurisdiction.

30

Lasala now argues that res judicata should have


prevented the CA from recognizing the NFA's petition for
annulment, as the dismissal of the NFA's petition for relief
serves as a prior judgment that bars the filing of a
subsequent petition for annulment of judgment.
Res judicata refers to the rule that a final judgment or decree on
the merits by a court of competent jurisdiction is conclusive of the
rights of the parties or their privies in all later suits on all points and
matters determined in the former suit.
Its elements are the following: (1) the former

Because it is an exceptional relief, the Rules


provide that only two grounds may be availed of in a petition
for annulment. These are extrinsic fraud and lack of
jurisdiction.
In the present case, the CA annulled the trial
court's decision granting Lasala's counterclaim as the RTC
ruling was not supported by any concrete and convincing
evidence. According to the CA, the RTC effectively acted
without jurisdiction. CA Associate Justice Rosmari Carandang
fully communicated the sense of the majority's ruling in her
concurring opinion,
when she held that the trial court
committed an error of judgment and acted beyond its lawful
jurisdiction when it relied solely on Lasala's self-serving
34

18

testimony. Otherwise stated, the trial court committed grave


abuse of discretion amounting to lack of jurisdiction when it
rendered a decision that was not supported by factual and
evidentiary basis.
35

We rule that the CA committed an error; it


violated the restrictive application of a petition for
annulment; only extrinsic fraud and/or lack of jurisdiction
may annul a final judgment.
By seeking to include acts committed with grave
abuse of discretion, the CA's ruling enlarged the concept of
lack of jurisdiction as a ground for annulment. Moreover,
grave abuse of discretion is properly addressed
not through a Rule 47 relief but through a Rule 65
petition for certiorari. Since the NFA availed of a petition
for annulment of judgment, then the CA's disposition must
also be confined to findings on the existence of either
extrinsic fraud or the trial court's lack of jurisdiction over the
parties or the subject matter as explained below.
36

In a petition for annulment based on lack of


jurisdiction, the petitioner cannot rely on jurisdictional defect
due to grave abuse of discretion, but on absolute lack of
jurisdiction. As we have already held, the concept of
lack of jurisdiction as a ground to annul a
judgment does not embrace grave abuse of
discretion amounting to lack or excess of
jurisdiction. In Republic v. G Holdings, we explained:
37

to "any fraudulent act of the prevailing party in litigation


committed outside of the trial of the case, where the
defeated party is prevented from fully exhibiting his side 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 an attorney
fraudulently or without authority connives at his
defeat."
40

Because extrinsic fraud must emanate from the


opposing party, extrinsic fraud concerning a party's lawyer
often involves the latter's collusion with the prevailing party,
such that his lawyer connives at his defeat or
corruptly sells out his client's interest.
41

In this light, we have ruled in several cases that


a lawyer's mistake or gross negligence does not amount to
the extrinsic fraud that would grant a petition for annulment
of judgment.
42

We so ruled not only because extrinsic fraud


has to involve the opposing party, but also because the
negligence of counsel, as a rule, binds his client.
43

We have recognized, however, that there had


been instances where the lawyer's negligence had been so
gross that it amounted to a collusion with the other party,
and thus, qualified as extrinsic fraud.

38

Jurisdiction is not the same as the exercise of jurisdiction.


As distinguished from the exercise of
jurisdiction, jurisdiction is the authority
to decide a cause, and not the decision
rendered therein. Where there is
jurisdiction over the person and
the subject matter, the decision
on all other questions arising in
the case is but an exercise of the
jurisdiction.
And
the
errors
which the court may commit in
the exercise of jurisdiction are
merely errors of judgment which
are the proper subject of an
appeal. 39 (emphasis supplied) DHITCc

In other words, the lack of jurisdiction


envisioned under Rule 47 is the total absence of
jurisdiction over the person of a party or over the
subject matter. When the court has validly acquired its
jurisdiction, annulment through lack of jurisdiction is not
available when the court's subsequent grave abuse of
discretion operated to oust it of its jurisdiction.
Despite this erroneous ruling of the CA, we hold
that annulment of the trial court's September 2, 2002
decision is still proper as the NFA validly raised and
substantiated the allowed grounds of extrinsic fraud and lack
of jurisdiction.
a. Extrinsic fraud
Extrinsic fraud in a petition for annulment refers

In Bayog v. Natino, for instance, we held that


the unconscionable failure of a lawyer to inform his
client of his receipt of the trial court's order and the motion
for execution, and to take the appropriate action against
either or both to protect his client's rights amounted to
connivance with the prevailing party, which
constituted extrinsic fraud.
44

45

Two considerations differentiate the lawyer's


negligence in Bayog from the general rule enunciated in Tan.
While both cases involved the lawyer's negligence to inform
the client of a court order, the negligence in Bayog was
unconscionable because the (1) the client's pauper litigant
status indicated that he relied solely on his counsel for the
protection and defense of his rights; and (2) the lawyer's
repeated acts of negligence in handling the case showed that
his inaction was deliberate.

In contrast, the Court ruled in Tan that the


petitioner's failure to file a notice of appeal was partly his
fault and not just his lawyer's. Too, the failure to file the
notice of appeal was the only act of negligence presented as
extrinsic fraud.
We find the exceptional circumstances in Bayog
to be present in the case now before us.
The party in the present case, the NFA, is a
government agency that could rightly rely solely on its legal
officers to vigilantly protect its interests. The NFA's lawyers
were not only its counsel, they were its employees tasked to
advance the agency's legal interests.
Further, the NFA's' lawyers acted negligently

19

several times in handling the case that it appears deliberate


on their part.
First, Atty. Mendoza caused the dismissal of the
NFA's complaint against Lasala by negligently and repeatedly
failing to attend the hearing for the presentation of the NFA's
evidence-in-chief. Consequently, the NFA lost its chance to
recover from Lasala the employee benefits that it allegedly
shouldered as indirect employer.
Atty. Mendoza never bothered to provide any
valid excuse for this crucial omission on his part.
Parenthetically, this was not the first time Atty. Mendoza
prejudiced the NFA; he did the same when he failed to file a
motion for reconsideration and an appeal in a prior 1993
case where Lasala secured a judgment of P34,500,229.67
against the NFA.
46

For these failures, Atty. Mendoza merely


explained that the NFA's copy of the adverse decision was
lost and was only found after the lapse of the period for
appeal. Under these circumstances, the NFA was forced to
file an administrative complaint against Atty. Mendoza for his
string of negligent acts.
47

Atty. Cahucom, Atty. Mendoza's successor in


handling the case, notably did not cross-examine Lasala's
witnesses, and did not present controverting evidence to
disprove and counter Lasala's counterclaim. Atty. Cahucom
further prejudiced the NFA when he likewise failed to file a
motion for reconsideration or an appeal from the trial court's
September 2, 2002 decision, where Lasala was awarded the
huge amount of P52,788,970.50, without any convincing
evidence to support it.
When asked to justify his failure, Atty. Cahucom,
like Atty. Mendoza, merely mentioned that the NFA's copy of
the decision was lost and that he only discovered it when the
period for appeal had already lapsed.
48

The trial court's adverse decision, of course,


could have been avoided or the award minimized, if Atty.
Cahucom did not waive the NFA's right to present its
controverting evidence against Lasala's counterclaim
evidence. Strangely, when asked during hearing, Atty.
Cahucom refused to refute Lasala's testimony and instead
simply moved for the filing of a memorandum. cEaSHC
49

The actions of these lawyers, that at the very least


could be equated with unreasonable disregard for the
case they were handling and with obvious indifference
towards the NFA's plight, lead us to the conclusion that
Attys. Mendoza's and Cahucom's actions amounted to a
concerted action with Lasala when the latter secured
the trial court's huge and baseless counterclaim award.
By this fraudulent scheme, the NFA was prevented from making a
fair submission in the controversy.
To further invalidate the NFA's petition for
annulment, Lasala argues that extrinsic fraud as a ground is
no longer available since the NFA failed to raise it in its
petition for relief when it could have done so. Under Section
2, Rule 47 of the Rules of Court, extrinsic fraud as a ground
will not be allowed if it had already been availed of or
could have been availed of in a motion for new
trial or petition for relief. Attys. Mendoza and

Cahucom's actions which amounted to extrinsic fraud should


have been earlier raised at the trial court's level since their
actions had been consummated when the petition for relief
was filed. The NFA's failure to do so amounted to a waiver of
this ground in its petition for annulment.
We find Lasala's reasoning to be grossly
erroneous.
The NFA did not waive its right to raise extrinsic
fraud precisely because the circumstances prevented its
inclusion in the petition for relief. Notably, Atty.
Cahucom was the one who drafted and filed the
petition for relief, which he based not on his own
negligence, but on that of another NFA employee.
Since part of the extrinsic fraud against the NFA
was attributable to Atty. Cahucom, it could not be expected
that he would raise his own act as a ground and incriminate
himself in the petition for relief. In our analysis, the NFA
could not have availed of this ground because Atty. Cahucom
himself prevented it.
Moreover, it was only in 2002, when then NFA
Administrator Arthur Yap ordered a legal audit of all existing
NFA cases, that the NFA's management discovered the
mishandling of the case against Lasala.
In these lights, we rule that the prohibition
under Section 2, Rule 47 should not apply to the NFA.
Although available during the filing of the petition for relief,
the NFA could not have raised this ground because it was
fraudulently precluded from doing so.
Thus, the actions of Attys. Mendoza and
Cahucom, under the unique circumstances of this
case, amount to extrinsic fraud that warrants the grant of
NFA's petition for relief from judgment.
b. Lack of jurisdiction over the subject matter
Moreover, the trial court's September 2, 2002
decision should also be annulled on the ground of lack of
jurisdiction.
Notably, Lasala's counterclaim was not only
based on the damages that he incurred because of the trial
court's invalid issuance of a writ of preliminary attachment
against his properties. A big chunk of the award which
amounted to P1,623,600.00 pertained to Lasala's other
claims against the NFA, specifically the wage adjustment
against the NFA for the security guard services his agency
rendered from April 16, 1988 to April 15, 1989.
This amount further ballooned when the trial
court granted Lasala's prayer for interest at 3%
per month or 36% per year. Compounded until the year
1999, the interest due on such wage adjustment amounted
to P35,165,370.50, which is almost 67% of the trial court's
total counterclaim award. Lasala paid no docket fees on this
counterclaim, reasoning that it is in the nature of a
compulsory counterclaim.
We do not agree with Lasala's position.

20

A compulsory counterclaim is any claim for


money or other relief that a defending party may have
against an opposing party, which at the time of suit arises
out of, or is necessarily connected with, the same
transaction or occurrence that is the subject
matter of the plaintiff's complaint. It is compulsory in
the sense that it is within the jurisdiction of the court, does
not require for its adjudication the presence of third parties
over whom the court cannot acquire jurisdiction, and will be
barred if not set up in the answer to the complaint in the
same case.
50

To determine if a counterclaim is compulsory,


the following tests apply: (a) Are the issues of fact and law
raised by the claim and by the counterclaim largely the
same?; (b) Would res judicata bar a subsequent suit on
defendant's claims, absent the compulsory counterclaim
rule?; (c) Will substantially the same evidence support or
refute plaintiff's claim as well as the defendant's
counterclaim?; and (d) Is there any logical relation between
the claim and the counterclaim? A positive answer to all four
questions would indicate that the counterclaim is
compulsory. Otherwise, it is permissive.
51

In these lights, we rule that Lasala's


counterclaim for wage adjustment against the NFA is not a
compulsory but a permissive counterclaim. The cause of
action for this counterclaim already existed even
before the filing of the NFA's complaint against
Lasala. Thus, it did not arise out of, nor is it
necessarily connected with, the NFA's complaint
for sum of money and prayer for preliminary
attachment. Because it is not an incident of the NFA's
claim, it can be filed as a separate case against the NFA,
unless already extinguished.
Under this situation, Lasala's nonpayment of
docket fee for his permissive counterclaim prevented the
trial court from acquiring jurisdiction over it. The court may
allow payment of such fee but only within a reasonable time
and in no case beyond the prescriptive period for the filing of
the permissive counterclaim. CTIEac
52

As it was based on the parties' security service


contract, the prescriptive period for Lasala's counterclaim is
10 years. Lasala's cause of action accrued in 1989, when the
contract with the NFA was executed. Since no docket fee was
paid even after the lapse of 10 years, then the trial court
never acquired jurisdiction over Lasala's wage adjustment
counterclaim. Thus, with regard to this counterclaim,
annulment of the trial court's judgment is proper.
53

Lasala's permissive counterclaimhas already


prescribed and mayno longer be refiled.
While Section 7, Rule 47 of the Rules of Court
provides that an annulment of judgment renders the
assailed judgment, resolution, or final order null and void,
the original action may still be refiled in the proper court.
This rule applies in instances where the judgment is annulled
because of lack of jurisdiction. In such cases, the defeated
party may still refile the original action in the court that has
jurisdiction, provided it has not yet prescribed.
54

In cases of extrinsic fraud, the party who is

defrauded and prevented from fully exhibiting his side may


file a motion in court to present his evidence as if a timely
motion for new trial had been granted.
In the present case, we annulled the trial court's
decision granting Lasala's permissive counterclaim on both
grounds of lack of jurisdiction and extrinsic fraud.
Although the prescriptive period for the refiling
of the annulled action shall be deemed suspended from its
original filing until the finality of the judgment of annulment,
we rule that Lasala may no longer refile his permissive
counterclaim as it has already prescribed.

Under Section 8, Rule 47, the prescriptive period


to file the annulled original action shall not be suspended
when the extrinsic fraud is attributable to the plaintiff in the
action.
In the present case, the original action
contemplated is Lasala's counterclaim against the NFA.
55

On this basis, we hold that the existence of


extrinsic fraud in the present case did not toll the
prescriptive period for the filing of Lasala's counterclaim.
To reiterate, the unique facts of this case
show that Attys. Mendoza and Cahucom patently, blatantly,
and unjustifiably mishandled the case to the utter prejudice
of the NFA. The degree to which they disregarded
their duty to protect the NFA's interests
amounted to actions in concert with Lasala which
constituted the extrinsic fraud against the NFA.
56

In sum, not only do we set aside the trial court's


judgment award of P52,788,970.50 to Lasala for being null
and void; we also categorically hold that Lasala's cause of
action has prescribed, and thus, may no longer be refiled.
On a final note, we observe that the NFA's
petition for annulment of judgment, whether grounded on
extrinsic fraud or lack of jurisdiction, was filed within the
allowed periods provided for in the Rules. As the NFA
substantiated the required grounds for annulment, we affirm
the CA's decision annulling the September 2, 2002 decision
of the trial court.
Potential liabilities of Attys.Mendoza and Cahucom
The records of the case show that the NFA had
conducted initial investigations against Attys. Mendoza and
Cahucom for potential administrative and criminal liabilities.
We are forwarding a copy of the records of this
case to the Ombudsman to assist it in determining the
administrative and criminal liabilities of these public officers.
We likewise furnish the Board of Governors of
the Integrated Bar of the Philippines a copy of this Decision
and the records of this case so that they may conduct the
appropriate investigation regarding Atty. Mendoza's and
Atty. Cahucom's fitness to remain as members of the Bar.
Lest it be misunderstood, the Court's ruling in
this case involves solely the finding of extrinsic fraud for

21

purposes of granting the NFA relief from judgment; the


Ombudsman and the Board of Governors are tasked to
conduct their own investigations regarding the incidents
surrounding this case, with this Decision and its records to
be considered as part of evidence, to determine the potential
liabilities of Attys. Mendoza and Cahucom.
WHEREFORE, premises considered, we hereby DENY the
petition for lack of merit, and AFFIRM with modification the June
14, 2005 Decision and February 15, 2006 Resolution of the Court of

Appeals in CA-G.R. SP No. 73235 (which annulled and set aside the
September 2, 2002 decision of the Regional Trial Court of Quezon
City, Branch 220).
Let a copy of this Decision and the records of
this case be furnished the Office of the Ombudsman for
whatever action it may deem appropriate against Attys.
Rogelio B. Mendoza and Ernesto D. Cahucom under the
circumstances defined in this Decision.

Let a copy of this Decision and the records of


this case also be sent to the Board of Governors of the
Integrated Bar of the Philippines for its administrative
investigation of Attys. Rogelio B. Mendoza and Ernesto D.
SO ORDERED.

Cahucom, based on the given facts of this Decision, in the


interest of determining whether these members of the Bar
still have the requisite competence and integrity to maintain
their membership in the roll of lawyers of this country.
(Lasala v. National Food Authority, G.R. No. 171582, [August 19,
2015])
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22