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What should plaintiff do so that judgment be made against defendant?

1. Plaintiff files a motion to declare defendant Samaco in default.


2. Court hears motion and issues an order of default on Samaco.

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http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/144568.htm

FIRST DIVISION

GUILLERMA S. SABLAS, G.R. No. 144568


joined by her husband,
PASCUAL LUMANAS,
Petitioners, Present:

PUNO, C.J., Chairperson,


SANDOVAL-GUTIERREZ,*
-versus- CORONA,
AZCUNA and
GARCIA, JJ.

ESTERLITA S. SABLAS and


RODULFO S. SABLAS,
Respondents. Promulgated:

July 3, 2007

x-------------------------------------------x

DECISION
CORONA, J.:

This case traces its roots to a complaint for judicial partition, inventory and
accounting filed by respondents Esterlita S. Sablas and Rodulfo S. Sablas against
petitioner spouses Pascual Lumanas and Guillerma S. Sablas in the Regional Trial
Court of Baybay, Leyte, Branch 14* on October 1, 1999.*

Petitioner spouses were served with summons and a copy of the complaint
on October 6, 1999. On October 21, 1999, they filed a motion for extension of time
requesting an additional period of 15 days, or until November 5, 1999, to file their
answer. However, they were able to file it only on November 8, 1999. While the

**
On Leave.

Presided by Judge Cristina T. Pontejos.

The case was docketed as Civil Case No. B-1999-10-24.

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trial court observed that the answer was filed out of time, it admitted the pleading
because no motion to declare petitioner spouses in default was filed.*

The following day, November 9, 1999, respondents filed a motion to declare


petitioner spouses in default.* It was denied by the trial court in an order dated
December 6, 1999.* Respondents moved for reconsideration but it was also
denied.* Thereafter, they challenged the December 6, 1999 order in the Court of
Appeals in a petition for certiorari* alleging that the admission of the answer by the
trial court was contrary to the rules of procedure and constituted grave abuse of
discretion amounting to lack of jurisdiction.

In a decision dated July 17, 2000,* the appellate court ruled that the trial
court committed grave abuse of discretion because, pursuant to Section 3, Rule 9
of the Rules of Court, the trial court had no recourse but to declare petitioner
spouses in default when they failed to file their answer on or before November 5,
1999. Thus, the Court of Appeals granted the petition, vacated the December 6,
1999 order and remanded the case to the trial court for reception of plaintiffs
evidence.

Aggrieved, petitioner spouses (defendants in the trial court) now assail the
July 17, 2000 decision of the Court of Appeals in this petition for review on
certiorari.*

Petitioner spouses contend that the Court of Appeals decision was not in
accord with the rules of procedure as it misconstrued Section 3, Rule 9 of the Rules
of Court and was in contravention of jurisprudence.

We agree.

Order dated November 9, 1999. Rollo, p. 52.

The answer was served on respondents counsel by registered mail and respondents alleged that they were
unaware that petitioner spouses already answered the complaint.

Rollo, p. 24.

Resolution dated January 11, 2000. Id., pp. 25-26.

Under Rule 65 of the Rules of Court. The case was docketed as CA-G.R. SP No. 57397.

Penned by Associate Justice Andres B. Reyes, Jr. and concurred in by Associate Justices Quirino D. Abad-
Santos, Jr. (retired) and Romeo A. Brawner (retired) of the Third Division of the Court of Appeals. Rollo,
pp. 63-67.

Under Rule 45 of the Rules of Court.

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WHERE THERE IS NO MOTION, THERE
CAN BE NO DECLARATION OF DEFAULT

The elements of a valid declaration of default are:


1. the court has validly acquired jurisdiction over the person of the
defending party either by service of summons or voluntary
appearance;*
2. the defending party failed to file the answer within the time allowed
therefor and
3. a motion to declare the defending party in default has been filed by
the claiming party with notice to the defending party.

An order of default can be made only upon motion of the claiming party. * It
can be properly issued against the defending party who failed to file the answer
within the prescribed period only if the claiming party files a motion to that effect
with notice to the defending party.

In this connection, Section 3, Rule 9 of the Rules of Court provides:


SEC. 3. Default: Declaration of. If the defending party fails to
answer within the time allowed therefor, the court shall, upon
motion of the claiming party with notice to the defending party, and
proof of such failure, declare the defending party in default. x x x.
(emphasis supplied)

Three requirements must be complied with before the court can declare the
defending party in default: (1) the claiming party must file a motion asking the
court to declare the defending party in default; (2) the defending party must be
notified of the motion to declare him in default and (3) the claiming party must
prove that the defending party has failed to answer within the period provided by
the Rules of Court.*

The rule on default requires the filing of a motion and notice of such motion
to the defending party. It is not enough that the defendant fails to answer the
complaint within the reglementary period.* The trial court cannot motu proprio

Laus v. Court of Appeals, G.R. No. 101256, 08 March 1993, 219 SCRA 688.

Mediserv, Inc. v. China Banking Corporation, G.R. No. 140755, 17 April 2001, 356 SCRA 616.

De los Santos v. Carpio, G.R. No. 153696, 11 September 2006, 501 SCRA 390 .

Id.

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declare a defendant in default* as the rules leave it up to the claiming party to
protect his or its interests. The trial court should not under any circumstances act as
counsel of the claiming party.

WHERE THERE IS NO
DECLARATION OF DEFAULT,
ANSWER MAY BE ADMITTED EVEN
IF FILED OUT OF TIME

It is within the sound discretion of the trial court to permit the defendant to
file his answer and to be heard on the merits even after the reglementary period for
filing the answer expires.* The Rules of Court provides for discretion on the part of
the trial court not only to extend the time for filing an answer but also to allow an
answer to be filed after the reglementary period.*

Thus, the appellate court erred when it ruled that the trial court had no
recourse but to declare petitioner spouses in default when they failed to file their
answer on or before November 5, 1999.

The rule is that the defendants answer should be admitted where it is filed
before a declaration of default and no prejudice is caused to the plaintiff. * Where
the answer is filed beyond the reglementary period but before the defendant is
declared in default and there is no showing that defendant intends to delay the case,
the answer should be admitted.*

Viacrusis v. Estenzo, 115 Phil. 556 (1962); Trajano v. Cruz, G.R. No. L-47070, 29 December 1977, 80
SCRA 712.

De Dios v. Court of Appeals, G.R. No. 80491, 12 August 1992, 212 SCRA 519.

Regalado, Florenz, REMEDIAL LAW COMPENDIUM, vol. I, 6th Revised edition; Section 11, Rule 11,
Rules of Court provides:
Sec. 11. Extension of time to plead. Upon motion and on such terms as may be just, the
court may extend the time to plead provided in these Rules.

The court may also, upon like terms, allow an answer or other pleading to be filed after the time
fixed by these Rules.

Trajano v. Cruz, supra.

Cathay Pacific Airways, Ltd. v. Hon. Romillo, Jr., 225 Phil. 397 (1986).

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Therefore, the trial court correctly admitted the answer of petitioner spouses
even if it was filed out of time because, at the time of its filing, they were not yet
declared in default nor was a motion to declare them in default ever filed. Neither
was there a showing that petitioner spouses intended to delay the case.

WHERE ANSWER HAS BEEN FILED,


THERE CAN BE NO DECLARATION
OF DEFAULT ANYMORE

Since the trial court already admitted the answer, it was correct in denying
the subsequent motion of respondents to declare petitioner spouses in default.

In Cathay Pacific Airways, Ltd. v. Hon. Romillo, Jr.,* the Court ruled that it
was error to declare the defending party in default after the answer was filed. The
Court was in fact even more emphatic in Indiana Aerospace University v.
Commission on Higher Education:* it was grave abuse of discretion to declare a
defending party in default despite the latters filing of an answer.

The policy of the law is to have every litigants case tried on the merits as
much as possible. Hence, judgments by default are frowned upon. * A case is best
decided when all contending parties are able to ventilate their respective claims,
present their arguments and adduce evidence in support thereof. The parties are
thus given the chance to be heard fully and the demands of due process are
subserved. Moreover, it is only amidst such an atmosphere that accurate factual
findings and correct legal conclusions can be reached by the courts.

Accordingly, the petition is hereby GRANTED. The July 17, 2000 decision
of the Court of Appeals in CA-G.R. SP No. 57397 is REVERSED and SET
ASIDE and the December 6, 1999 order of the Regional Trial Court of Baybay,
Leyte, Branch 14 is REINSTATED. The case is REMANDED to the trial court
for further proceedings.

SO ORDERED.

RENATO C. CORONA

Id.

G.R. No. 139371, 04 April 2001, 356 SCRA 367.

Cathay Pacific Airways, Ltd. v. Romillo, Jr., supra.

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Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice
Chairperson

(On Leave)

ANGELINA SANDOVAL-GUTIERREZ ADOLFO S. AZCUNA


Associate Justice Associate Justice

CANCIO C. GARCIA
Associate Justice

CE RT IFICAT IO N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

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http://sc.judiciary.gov.ph/jurisprudence/2008/september2008/170943.htm

FIRST DIVISION

PEDRO T. SANTOS, JR., G.R. No. 170943


Petitioner,
Present:

PUNO, C.J., Chairperson,


CARPIO,
-versus- CORONA,
AZCUNA and
LEONARDO-DE CASTRO, JJ.

PNOC EXPLORATION
CORPORATION,
Respondent. Promulgated:

September 23, 2008

x---------------------------------------------------x

DECISION
CORONA, J.:

8
This is a petition for review* of the September 22, 2005 decision* and
December 29, 2005 resolution* of the Court of Appeals in CA-G.R. SP No. 82482.

On December 23, 2002, respondent PNOC Exploration Corporation filed a


complaint for a sum of money against petitioner Pedro T. Santos, Jr. in the
Regional Trial Court of Pasig City, Branch 167. The complaint, docketed as Civil
Case No. 69262, sought to collect the amount of P698,502.10 representing
petitioners unpaid balance of the car loan* advanced to him by respondent when he
was still a member of its board of directors.

Personal service of summons to petitioner failed because he could not be


located in his last known address despite earnest efforts to do so. Subsequently, on
respondents motion, the trial court allowed service of summons by publication.

Respondent caused the publication of the summons in Remate, a newspaper


of general circulation in the Philippines, on May 20, 2003. Thereafter, respondent
submitted the affidavit of publication of the advertising manager of Remate* and an
affidavit of service of respondents employee* to the effect that he sent a copy of the
summons by registered mail to petitioners last known address.

When petitioner failed to file his answer within the prescribed period,
respondent moved that the case be set for the reception of its evidence ex parte.
The trial court granted the motion in an order dated September 11, 2003.

Under Rule 45 of the Rules of Court.

Penned by Associate Justice Santiago Javier Ranada (retired) and concurred by Associate Justices Roberto
A. Barrios (deceased) and Mario L. Guaria III of the Eighth Division of the Court of Appeals. Rollo, pp.
20-25.

Id., p. 27.

The car loan was originally for P966,000 which was used to procure a Honda CRV for petitioner. The said
loan was evidenced by a promissory note and further secured by a chattel mortgage on the vehicle. One of
the conditions of the promissory note was that, in case of separation from the service, any unpaid balance
shall immediately be paid in full. (See May 19, 2004 Regional Trial Court decision, rollo, pp. 82-83.)

Allan Paul A. Plaza.

Vincent Panganiban.

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Respondent proceeded with the ex parte presentation and formal offer of its
evidence. Thereafter, the case was deemed submitted for decision on October 15,
2003.

On October 28, 2003, petitioner filed an Omnibus Motion for


Reconsideration and to Admit Attached Answer. He sought reconsideration of the
September 11, 2003 order, alleging that the affidavit of service submitted by
respondent failed to comply with Section 19, Rule 14 of the Rules of Court as it
was not executed by the clerk of court. He also claimed that he was denied due
process as he was not notified of the September 11, 2003 order. He prayed that
respondents evidence ex parte be stricken off the records and that his answer be
admitted.

Respondent naturally opposed the motion. It insisted that it complied with


the rules on service by publication. Moreover, pursuant to the September 11, 2003
order, petitioner was already deemed in default for failure to file an answer within
the prescribed period.

In an order dated February 6, 2004, the trial court denied petitioners motion
for reconsideration of the September 11, 2003 order. It held that the rules did not
require the affidavit of complementary service by registered mail to be executed by
the clerk of court. It also ruled that due process was observed as a copy of the
September 11, 2003 order was actually mailed to petitioner at his last known
address. It also denied the motion to admit petitioners answer because the same
was filed way beyond the reglementary period.

Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004
orders of the trial court in the Court of Appeals via a petition for certiorari. He
contended that the orders were issued with grave abuse of discretion. He imputed
the following errors to the trial court: taking cognizance of the case despite lack of
jurisdiction due to improper service of summons; failing to furnish him with copies
of its orders and processes, particularly the September 11, 2003 order, and
upholding technicality over equity and justice.

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During the pendency of the petition in the Court of Appeals, the trial court
rendered its decision in Civil Case No. 69262. It ordered petitioner to pay
P698,502.10 plus legal interest and costs of suit.*

Meanwhile, on September 22, 2005, the Court of Appeals rendered its


decision* sustaining the September 11, 2003 and February 6, 2004 orders of the
trial court and dismissing the petition. It denied reconsideration. * Thus, this
petition.

Petitioner essentially reiterates the grounds he raised in the Court of


Appeals, namely, lack of jurisdiction over his person due to improper service of
summons, failure of the trial court to furnish him with copies of its orders and
processes including the September 11, 2003 order and preference for technicality
rather than justice and equity. In particular, he claims that the rule on service by
publication under Section 14, Rule 14 of the Rules of Court applies only to actions
in rem, not actions in personam like a complaint for a sum of money. He also
contends that the affidavit of service of a copy of the summons should have been
prepared by the clerk of court, not respondents messenger.

The petition lacks merit.

PROPRIETYOF
SERVICE BY PUBLICATION

Section 14, Rule 14 (on Summons) of the Rules of Court provides:

See May 19, 2004 Regional Trial Court decision, rollo, pp. 82-83. Petitioners motion for reconsideration
of the said decision remains pending.

Supra note 2.

Supra note 3.

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SEC. 14. Service upon defendant whose identity or
whereabouts are unknown. In any action where the defendant is
designated as an unknown owner, or the like, or whenever his
whereabouts are unknown and cannot be ascertained by diligent
inquiry, service may, by leave of court, be effected upon him by
publication in a newspaper of general circulation and in such
places and for such times as the court may order. (emphasis supplied)

Since petitioner could not be personally served with summons despite


diligent efforts to locate his whereabouts, respondent sought and was granted leave
of court to effect service of summons upon him by publication in a newspaper of
general circulation. Thus, petitioner was properly served with summons by
publication.

Petitioner invokes the distinction between an action in rem and an action in


personam and claims that substituted service may be availed of only in an action in
rem. Petitioner is wrong. The in rem/in personam distinction was significant under
the old rule because it was silent as to the kind of action to which the rule was
applicable.* Because of this silence, the Court limited the application of the old rule
to in rem actions only.*

This has been changed. The present rule expressly states that it applies [i]n
any action where the defendant is designated as an unknown owner, or the like, or
whenever his whereabouts are unknown and cannot be ascertained by diligent
inquiry. Thus, it now applies to any action, whether in personam, in rem or quasi
in rem.*

The predecessor of this provision was Section 16, Rule 14 of the 1964 Rules of Procedure which provided:
SEC. 16. Service upon an unknown defendant. Whenever the defendant is designated as
an unknown owner, or the like, or whenever the address of a defendant is unknown and cannot be
ascertained by diligent inquiry, service may, by leave of court, be effected upon him by
publication in a newspaper of general circulation and in such places and for such time as the
court may order.

Consolidated Plywood Industries, Inc. v. Breva, G.R. No. L-82811, 18 October 1988, 166 SCRA 519;
Asiavest Limited v. Court of Appeals, 357 Phil. 536 (1998); Valmonte v. Court of Appeals, 322 Phil. 96
(1996).

See Herrera, Oscar M., REMEDIAL LAW, vol. I, pp. 699 and 702.

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Regarding the matter of the affidavit of service, the relevant portion of
Section 19,* Rule 14 of the Rules of Court simply speaks of the following:
an affidavit showing the deposit of a copy of the summons and order
for publication in the post office, postage prepaid, directed to the
defendant by registered mail to his last known address.

Service of summons by publication is proved by the affidavit of the printer,


his foreman or principal clerk, or of the editor, business or advertising manager of
the newspaper which published the summons. The service of summons by
publication is complemented by service of summons by registered mail to the
defendants last known address. This complementary service is evidenced by an
affidavit showing the deposit of a copy of the summons and order for publication
in the post office, postage prepaid, directed to the defendant by registered mail to
his last known address.

The rules, however, do not require that the affidavit of complementary


service be executed by the clerk of court. While the trial court ordinarily does the
mailing of copies of its orders and processes, the duty to make the complementary
service by registered mail is imposed on the party who resorts to service by
publication.

Moreover, even assuming that the service of summons was defective, the
trial court acquired jurisdiction over the person of petitioner by his own
voluntary appearance in the action against him. In this connection, Section 20,
Rule 14 of the Rules of Court states:

SEC. 20. Voluntary appearance. The defendants voluntary


appearance in the action shall be equivalent to service of

The provision states:


SEC. 19. Proof of service by publication. If the service has been made by publication,
service may be proved by the affidavit of the printer, his foreman or principal clerk, or of the
editor, business or advertising manager, to which affidavit a copy of the publication shall be
attached, and by an affidavit showing the deposit of a copy of the summons and order for
publication in the post office, postage prepaid, directed to the defendant by registered mail to his
last known address.

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summons. The inclusion in a motion to dismiss of other grounds aside
from lack of jurisdiction over the person of the defendant shall not be
deemed a voluntary appearance. (emphasis supplied)

Petitioner voluntarily appeared in the action when he filed the Omnibus


Motion for Reconsideration and to Admit Attached Answer. * This was equivalent
to service of summons and vested the trial court with jurisdiction over the person
of petitioner.

E NTITLE M ENTTO
NOTICE OF PROCEEDINGS

The trial court allowed respondent to present its evidence ex parte on


account of petitioners failure to file his answer within the prescribed period.
Petitioner assails this action on the part of the trial court as well as the said courts
failure to furnish him with copies of orders and processes issued in the course of
the proceedings.

The effects of a defendants failure to file an answer within the time allowed
therefor are governed by Sections 3 and 4, Rule 9 (on Effect of Failure to Plead) of
the Rules of Court:

SEC. 3. Default; declaration of. If the defending party fails to


answer within the time allowed therefor, the court shall, upon
motion of the claiming party with notice to the defending party,
and proof of such failure, declare the defending party in default.
Thereupon, the court shall proceed to render judgment granting the
claimant such relief as his pleading may warrant, unless the court in
its discretion requires the claimant to submit evidence. Such reception
of evidence may be delegated to the clerk of court.

Herrera, supra note 12 citing Europa v. Intermediate Appellate Court, G.R. No. 72827, 18 July 1989, 175
SCRA 394.

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SEC. 4. Effect of order of default. A party in default shall be
entitled to notice of subsequent proceedings but not to take part in
the trial. (emphasis supplied)

If the defendant fails to file his answer on time, he may be declared in


default upon motion of the plaintiff with notice to the said defendant. In case he is
declared in default, the court shall proceed to render judgment granting the plaintiff
such relief as his pleading may warrant, unless the court in its discretion requires
the plaintiff to submit evidence. The defaulting defendant may not take part in the
trial but shall be entitled to notice of subsequent proceedings.

In this case, even petitioner himself does not dispute that he failed to file his
answer on time. That was in fact why he had to file an Omnibus Motion for
Reconsideration and to Admit Attached Answer. But respondent moved only for
the ex parte presentation of evidence, not for the declaration of petitioner in
default. In its February 6, 2004 order, the trial court stated:

The disputed Order of September 11, 2003 allowing the


presentation of evidence ex-parte precisely ordered that despite and
notwithstanding service of summons by publication, no answer has
been filed with the Court within the required period and/or
forthcoming.[] Effectively[,] that was a finding that the defendant
[that is, herein petitioner] was in default for failure to file an
answer or any responsive pleading within the period fixed in the
publication as precisely the defendant [could not] be found and for
which reason, service of summons by publication was ordered. It is
simply illogical to notify the defendant of the Order of September 11,
2003 simply on account of the reality that he was no longer residing
and/or found on his last known address and his whereabouts unknown
thus the publication of the summons. In other words, it was reasonable
to expect that the defendant will not receive any notice or order in his
last known address. Hence, [it was] impractical to send any notice or
order to him. Nonetheless, the record[s] will bear out that a copy of

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the order of September 11, 2003 was mailed to the defendant at
his last known address but it was not claimed. (emphasis supplied)

As is readily apparent, the September 11, 2003 order did not limit itself to
permitting respondent to present its evidence ex parte but in effect issued an order
of default. But the trial court could not validly do that as an order of default can be
made only upon motion of the claiming party. * Since no motion to declare
petitioner in default was filed, no default order should have been issued.

To pursue the matter to its logical conclusion, if a party declared in default is


entitled to notice of subsequent proceedings, all the more should a party who has
not been declared in default be entitled to such notice. But what happens if the
residence or whereabouts of the defending party is not known or he cannot be
located? In such a case, there is obviously no way notice can be sent to him and the
notice requirement cannot apply to him. The law does not require that the
impossible be done.* Nemo tenetur ad impossibile. The law obliges no one to
perform an impossibility.* Laws and rules must be interpreted in a way that they
are in accordance with logic, common sense, reason and practicality.*

Hence, even if petitioner was not validly declared in default, he could not
reasonably demand that copies of orders and processes be furnished him. Be that as
it may, a copy of the September 11, 2003 order was nonetheless still mailed to
petitioner at his last known address but it was unclaimed.

CORRECTNESSOF
NON-ADMISSION OF ANSWER

Mediserv, Inc. v. China Banking Corporation, 408 Phil. 745 (2001).

Akbayan-Youth v. Commission on Elections, 407 Phil. 618 (2001).

Id.

Id.

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Petitioner failed to file his answer within the required period. Indeed, he
would not have moved for the admission of his answer had he filed it on time.
Considering that the answer was belatedly filed, the trial court did not abuse its
discretion in denying its admission.

Petitioners plea for equity must fail in the face of the clear and express
language of the rules of procedure and of the September 11, 2003 order regarding
the period for filing the answer. Equity is available only in the absence of law, not
as its replacement.* Equity may be applied only in the absence of rules of
procedure, never in contravention thereof.

WHEREFORE, the petition is hereby DENIED.


Costs against petitioner.

SO ORDERED.

RENATO C. CORONA
Associate Justice

W E C O N C U R:

REYNATO S. PUNO
Chief Justice

Heirs of Spouses de la Cruz v. Heirs of Quintos, Sr., 434 Phil. 708 (2002) citing Tupas v. Court of Appeals,
G.R. No. 89571, 06 February 1991, 193 SCRA 597.

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Chairperson

ANTONIO T. CARPIO ADOLFO S. AZCUNA


Associate Justice Associate Justice

TERESITA J. LEONARDO-DE CASTRO


Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

18
Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

EUGENIO BASBAS, TEOFILO G.R. No. 172660


ARAS, RUFINO ARAS,
GERVACIO BASBAS, ISMAEL
ARAS, EUGENIO ARAS,
SIMFRONIO ARAS, Present:
FELICIANO ARAS, ROSITA
ARAS, EUGENIO BASBAS, JR. CORONA, C. J., Chairperson,
and SPOUSES PABLITO LEONARDO-DE CASTRO,
BASARTE and MARCELINA BRION,
BASBAS BASARTE, DEL CASTILLO, and
Petitioners, VILLARAMA, JR., JJ.

- versus -

BEATA SAYSON and Promulgated:


ROBERTO SAYSON, JR.,

In lieu of Associate Justice Lucas P. Bersamin per Raffle dated August 8, 2011.

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Respondents. August 24, 2011
x--------------------------------------------------------------
-----x

DECISION

DEL CASTILLO, J.:

Petitioners seek to prevent the revival of a judgment rendered in favor of the


respondents more than two decades back.

This Petition for Review on Certiorari assails the February 17, 2004 Decision*of
the Court of Appeals (CA) in CA-G.R. CV No. 72385 which denied the appeal filed
before it and affirmed in toto the May 21, 2001 Order* of the Regional Trial Court of
Ormoc City, Branch 35. Also assailed is the April 19, 2006 Resolution * denying the
Motion for Reconsideration thereto.

Factual Antecedents

On September 2, 1976, respondent Beata Sayson (Beata) and her husband Roberto
Sayson, Sr. (Roberto Sr.) filed a Petition for Registration of an agricultural land located in
Cagbatang, Balagtas, Matag-ob, Leyte docketed as Land Registration Case No. 0-177.
The said application was opposed by the Republic of the Philippines and herein
petitioners Eugenio Basbas (Eugenio Sr.), Teofilo Aras (Teofilo) and Rufino Aras
(Rufino). On March 22, 1979, the Court of First Instance (CFI) of Leyte, Branch V
(Ormoc City) rendered a Decision adjudicating to the spouses Sayson said agricultural
land and approving its registration under their names.*

CA rollo, pp. 102-109; penned by Associate Justice Elvi John S. Asuncion and concurred in by Associate Justices
Godardo A. Jacinto and Lucas P. Bersamin (now a Member of this Court).

Records, pp. 440-442; penned by Judge Fortunito L. Madrona.

CA rollo, p. 121.

See first page of CA Decision dated July 24, 1985 in CA-G.R. No. 66541, records, p. 8.

20
The oppositors filed their appeal to the CA docketed as CA-G.R. No. 66541. In a
Decision* dated July 24, 1985, the appellate court affirmed in toto the Decision of the
CFI. This CA Decision became final and executory on August 21, 1985 * and,
accordingly, a Writ of Possession was issued on November 21, 1985, which was never
implemented.

The following year or on September 17, 1986, Original Certificate of Title (OCT)
No. 2496* was issued to the spouses Sayson pursuant to the March 22, 1979 CFI
Decision. An Alias Writ of Possession was issued on April 6, 1989 but this could also not
be implemented in view of the refusal of Eugenio Sr. and his son Eugenio Basbas, Jr.
(Eugenio Jr.). Claiming that the land they occupied is not the same land subject of the
CFI Decision,* they demanded that a relocation survey be conducted. Hence, a relocation
survey was conducted by order of the Regional Trial Court (RTC), Branch 12, Ormoc
City.*

In an Order* dated September 13, 1989, the RTC approved the Commissioners
Report* on the relocation survey and ordered the original oppositors, petitioners Eugenio
Sr., Teofilo and Rufino, as well as their co-petitioners herein Gervacio Basbas (Gervacio),
Ismael Aras (Ismael), Eugenio Aras (Eugenio), Simfronio Aras (Simfronio), Feliciano
Aras (Feliciano), Rosita Aras (Rosita) and Eugenio Jr. to vacate the subject property, viz:

[R]espondents are directed to vacate the portion of Lot No. 1, Psu-08-


000235 covered by OCT No. 2496 and subject of the final decree of
registration which, [up to the] present, said respondents are still possessing
pursuant to the final and executory judgment of the Court of Appeals and as
particularly defined in the Commissioners report submitted on August 3,
1989 x x x.

Id. at 8-13; penned by Associate Justice Leonor Ines Luciano and concurred in by Presiding Justice Ramon G. Gaviola,
Jr., and Associate Justices Edgardo P. Caguioa and Ma. Rosario Quetulio-Losa.

See Entry of Judgment, id. at 14.

Id. at 15.

See the (Sheriffs) Progress Report, id. at 16-17.

See RTC Order dated June 16, 1989, id. at 18.

Id. at 21-22.

Id. at 19-20.

21
Respondents are reminded that under Rule 71 of the New Rules of
Court, failure on their part to so obey this order may make them liable for
contempt of this Court.

SO ORDERED.*

Gervacio, Ismael, Eugenio, Simfronio, Feliciano, Rosita and Eugenio Jr., although
not oppositors in CA-G.R. No. 66541, were likewise ordered to vacate the property in
view of the following pronouncement in the RTCs September 13, 1989 Order:

It appearing from the records that respondents Eugenio Basbas,


Teofilo Aras, Gervacio Basbas, Rufino Aras, Ismael Aras, Eugenio Aras,
Simfronio Aras, Feliciano Aras, Rosita Aras and Eugenio Basbas[,] Jr.
are parties to the present case, they having been the principal
oppositors to the petition filed by the applicants as shown in the
records, pages 34, 35 and 36, Vol. 1 x x x* (Emphasis supplied.)

This September 13, 1989 Order was, however, not implemented within the five-
year period from the time it became final.* Hence, respondent Beata and her son Roberto
Sayson, Jr. (Roberto Jr.), as successor-in-interest of the late Roberto Sr., filed on August
18, 1995 a Complaint for Revival of Judgment* before the RTC of Ormoc City, Branch
12,* docketed as Civil Case No. 3312-0. Impleaded as defendants were Eugenio Sr.,
Teofilo, Rufino, Gervacio, Ismael, Eugenio, Simfronio, Feliciano, Rosita, and Eugenio Jr.
Petitioner-spouses Pablito Basarte and Marcelina Basbas-Sabarte* (spouses Basarte),
who, although not identified in the September 13, 1989 Order as principal oppositors in

Id. at 22.

Id. at 21.

RULES OF COURT, Rule 39, Sec. 6 provides:


Sec. 6. Execution by motion or by independent action. A final and executory judgment or order may be
executed on motion within five (5) years from the date of its entry. After the lapse of such time, and before it is
barred by the statute of limitations, a judgment may be enforced by action. x x x.

Records, pp. 1-7.

The case was later transferred to Branch 35 of RTC, Ormoc City per Order dated September 22, 1997, id. at 80.

Later amended to read as Basarte per Order dated July 3, 1998, id. at 120.

22
the land registration case, were likewise impleaded as defendants since they also
allegedly harvested, processed, and sold the coconuts found in the subject property.

Upon receipt of summons, Gervacio, Rufino, Ismael, Eugenio, Feliciano, Rosita


and Eugenio Jr. filed a Motion to Dismiss * on the ground that the Complaint states no
cause of action. This was, however, denied * so the same set of petitioners, except for
Feliciano, filed an Answer with Counterclaim.*

In their Answer with counterclaim, said petitioners admitted the allegations in


paragraphs 4, 5, 6, 7, 8, 9, 10, 11 and 12 of respondents Complaint which state that:

xxxx

4. On March 22, 1979, the Honorable Judge Numeriano Estenzo


rendered a decision in the above-mentioned Land Registration [c]ase in
favor of the petitioners x x x and against the oppositors, the dispositive
portion of said decision reads:

WHEREFORE, decision is hereby rendered x x x


[and] the land described under Plan PSU-08-000235 dated
September 10, 1973 of Geodetic Engineer Nestorio Encenzo
already APPROVED by the Acting Regional Director on
June 27, 1974 is hereby adjudicated and registered in the
names of the Spouses ROBERTO SAYSON and BEATA O.
SAYSON, of legal ages, Filipinos, spouses and residents of
Campokpok, Tabango, Leyte, Philippines and as soon as this
decision becomes final, let a decree of registration be issued
by the Land Registration Commission.
SO ORDERED. (x x x)

Id. at 30-32.

See the RTCs Order dated May 9, 1997, id. at 49-50.

Id. at 73-77.

23
5. From the above decision the oppositors (defendants herein)
appealed;

6. On July 24, 1985, the Honorable Court of Appeals rendered its


decision, the dispositive portion [of which] reads:

WHEREFORE, PREMISES CONSIDERED, finding


no merit in this appeal the decision appealed from is hereby
AFFIRMED in toto.

SO ORDERED.

and the said decision has become final and executory on August 21, 1985
per Entry of Judgment issued by the Court of Appeals x x x.

7. That consequently, on September 17, 1986 an Original


Certificate of Title No. N-2496 was issued in the names of Roberto Sayson
and Beata O. Sayson, pursuant to Decree No. N-191615, by the Register of
Deeds for the Province of Leyte;

8. That on motion, the Honorable Court, on November 21, 1985,


issued a Writ of Possession which for some reason or [another] was not
satisfied, so that the Honorable Court, on April 7, 1989 acting on an ex-
parte motion dated April 6, 1989 directed the issuance of an Alias Writ of
Possession;

9. That the Deputy Sheriff of this Court, Mr. Placid[o] Cayco


tendered the Alias Writ of Possession to the oppositors, particularly to Mr.
Eugenio Basbas, Sr. and Eugenio Basbas, Jr. who, as the Deputy Sheriff
stated in his Progress Report dated May 18, 1989 did not believe and obey
the CFI Decision and the decision of the Court of Appeals and x x x [t]hey
demanded a relocation survey to determine the exact location of applicants

24
(complainant[s] herein) property described in the alias writ of possession. x
x x;

10.That on June 16, 1989, the Honorable Court, acting on the


Progress Report of Deputy Sheriff Placido Cayco, issued an Order on even
date appointing Geodetic Engineer Jose A. Tahil as Court Commissioner
specifically to relocate Lot No. 1, Plan Psu-08-000235, LRC No. 0-177,
Land Reg. Record No. N51830 x x x This Order was dictated in open court
in the presence of Mr. Eugenio Basbas, Sr. and Eugenio Basbas, Jr. who
had both objected to the Writ of Possession, and their counsel Atty.
Evargisto Escalon, and Attorney Demetrio D. Sarit, counsel for the
applicants. x x x

11. That pursuant to the [O]rder dated June 16, 1989 x x x the Court
assigned Commissioner, Engr. Jose A. Tahil, submitted his report stating
that the job assigned to the commissioner was already fully and peacefully
accomplished; that his findings [show] that all points are existing and intact
on the field except x x x corner 3 of said lot x x x which at present [is]
already defined and indicated on the ground. The commissioner also
attached a Sketch Plan of the land to his report. x x x

12.That, finally, the Honorable Court, on September 13, 1989 issued


an Order approving the Commissioners Report and further stated:

[R]espondents (defendants herein) are directed to vacate the


portion of Lot No. 1, Psu-08-000235 covered by OCT No.
2496 and subject of final decree of registration which, until
[the] present, said respondents are still possessing, pursuant to
the final and executory judgment of the Court of Appeals and
as particularly [defined] in the Commissioners Report
submitted on August 3, 1989 x x x

25
Respondents are reminded that under Rule 71 of the
New Rules of Court, failure on their part to so obey this Order
may make them liable for contempt of this Court.*

However, petitioners admitted but denied in part:

1) paragraphs 2 and 3, insofar as they alleged that they were all oppositors to the
land registration case when only Eugenio Sr., Teofilo and Rufino were the oppositors
therein; and

2) paragraph 14, with respect to the allegation on the retirement of the Deputy
Sheriff and the heart condition of the Clerk of Court, for lack of sufficient knowledge and
information sufficient to form a belief thereon.

On the other hand, they specifically denied:

1) paragraph 13, on the ground that they have the right of ownership and/or
possession over the subject property; and

2) paragraph 15, on the ground that the property they are cultivating is owned by
them, hence, respondents cannot suffer losses and damages.

Paragraphs 2, 3, 13, 14 and 15 alluded to in the foregoing are as follows:

2. All the defendants named above are x x x of legal age and are
residents of Balagtas, Matag-ob, Leyte where they may be served summons
and other court processes; while defendant-spouses Pablito Basarte and
Marcelina Basbas Basarte were not named as among the oppositors in the
land registration case whose decision is herein sought to be revived, said

Id. at 2-5.

26
spouses are nonetheless participating in the harvest, processing and sale of
the coconuts with the other defendants named above;

3. Plaintiffs Beata Sayson and her late husband, Roberto Sayson are
petitioners in Land Registration Case No. 0-177 for the registration of a
parcel of agricultural land situated in Barrio Balagtas, Matag-ob, Leyte,
filed on September 2, 1976 with the then Court of First Instance of Leyte,
Branch V, Ormoc City. The above-named defendants, namely: Eugenio
Basbas, Teofilo Aras, Gervacio Basbas, Rufino Aras, Ismael Aras, Eugenio
Aras, Simfronio Aras, Feliciano Aras, Rosita Aras and Eugenio Basbas, Jr.
were oppositors to the application;*

xxxx

13.That despite this admonition in the [September 13, 1989] [O]rder


that they could be cited for contempt of Court, the respondents, defendants
herein, had continuously defied the same and this notwithstanding the fact
that it was upon their own demands and insistence that a relocation survey
be made on the premises subject of this case before they would obey the
alias writ of possession x x x and that the finding[s] of the
Court[-]appointed Commissioner Engr. Jose A. Tahil show that the
oppositors-respondents did [encroach] on the land of plaintiffs herein;

14.That this [September 13, 1989] Order however was not


implemented thru a Writ of Execution within the five-year period from the
time the Order became final because of the retirement of Deputy Sheriff
Placido Cayco and by reason also of the fact that the then Clerk of Court,
Atty. Constantino A. Trias, Jr. who was also the ex-officio Provincial
Sheriff was not physically fit to hike thru the mountains and hills of Brgy.
Balagtas where the property and the defendants therein reside due to his
heart condition;

15.That despite their knowledge of the Court[s] [September 13,


1989] Order, the same [having been] dictated in open court, the respondents

Id. at 1-2

27
had continued to occupy the land of the plaintiffs and for more than five (5)
years since this Order for them to vacate the land in question was issued,
they had harvested the coconuts growing thereon and such other produce of
the land herein involved. And until the decision of the Court of Appeals is
executed, plaintiff will continue to suffer losses and damages by reason of
defendants unlawful occupation and possession and their continued
harvesting of the produce of this land of the herein plaintiffs.*

By way of special and affirmative defenses, said petitioners contended that the
Order sought to be revived is not the judgment contemplated under Section 6, Rule 39 of
the Rules of Court, hence the action for revival of judgment is improper. Also, except for
Rufino, petitioners averred that they cannot be made parties to the complaint for revival
of judgment as they were not parties to the land registration case. They thus believed that
the September 13, 1989 Order sought to be revived is not binding upon them and hence,
the complaint states no cause of action with respect to them. As to the counterclaim,
petitioners prayed that respondents pay them moral and exemplary damages, attorneys
fees and litigation expenses.

Pre-trial conference was thereafter set* but since not all petitioners were served
with summons, this was reset and alias summons was issued and served upon Simfronio
and the spouses Basarte.* Upon receipt of summons, Simfronio adopted the Answer with
Counterclaim of Gervacio, Rufino, Ismael, Eugenio, Feliciano, Rosita and Eugenio Jr. *
while the spouses Basarte filed a Motion to Dismiss * on the ground of lack of cause of
action. As said motion was also denied,* the spouses Basarte later filed a Manifestation*
that they were also adopting the Answer with Counterclaim filed by Gervacio and the
others.

Id. at 5-6.

See Notice of Pre-Trial, id. at 85.

See Orders dated March 9, 1998 & May 20, 1998, id. at 102 & 112 respectively; Alias Summons dated June 1, 1998, id.
at 113; and Officers Return, id. at 115. See also the Summons served to the spouses Basarte, id. at 148, and the Officers
Return thereof, id. at 147, after the spouses surname was amended to read as spouses Basarte instead as Sabarte.

See Simfronios Manifestation and Second Manifestation, id. at 116-119.

Id. at 149-151.

See RTC Order dated February 9, 1999, id. at 186.

Id. at 253.

28
During the pre-trial conference on July 14, 1999, the RTC issued an Order * which
provides in part, viz:

In todays pre-trial conference, manifestations and counter-


manifestations were exchanged. All the parties and their counsels are
present. x x x [P]laintiffs counsel presented a Special Power of Attorney
by Beata Sayson but the Court observed that same was not duly
acknowledged before the Philippine Consulate or Embassy in Canada.
However, this matter is not so important[.] [W]hen the Court tried to dig
and discuss with the parties on their real positions, it turned out that the
plaintiffs are seeking revival of the previous final judgment, the
original parties of which were Eugenio Basbas, Teofilo Aras and
Rufino Aras. Eugenio and Teofilo are all dead, leaving Rufino Aras
alive. It is quite complicated considering that in this action, the
plaintiffs relied on the Order of this Court penned by the previous
judge dated September 13, 1989 which was made after or consequent
to the final judgment aforementioned, wherein the names of the other
defendants were mentioned in the body thereof. After considering the
merits of the various contentions, the Court is of the view that the
complaint had to limit itself to the names of the original parties
appearing in the original judgment now being sought for revival. The
interest of the plaintiffs in seeking implementation or execution of the
judgment sought to be revived which would involve the other defendants
can be taken when the judgment shall have been revived.

In this connection therefore and as part of the matters to be made


part in the pre-trial conference, in the exercise of the authority granted to it
by law, this Court directs the plaintiffs to make the necessary
amendment and/or to submit a manifestation first to this Court on the
point above raised regarding amendment of the designation of the
parties having in mind the objection of the defendants who manifested that
should there be an amendment, this counter-claim shall be disregarded
since they were brought in unnecessarily in this kind of action.

Plaintiffs therefore are given a period of ten (10) days from today
within which to submit the requisite manifestation furnishing copy thereof

Id. at 215-216.

29
to the defendant who upon receipt shall also be given a period of ten (10)
days within which this Court will make the necessary resolution before
allowing any amendment.

Hold the pre-trial conference in abeyance.

SO ORDERED. * (Emphasis supplied.)

In their Manifestation with Prayer,* respondents informed the RTC about the death
of Eugenio Sr. and Teofilo who were oppositors in the land registration case and the
substitution by their heirs, namely, Gervacio, Marcelina Basbas Basarte,* and Eugenio Jr.
for Eugenio Sr. and Ismael, Vicente, Ligaya Aras (Ligaya), Rosendo Aras (Rosendo) and
Daina Aras (Daina) for Teofilo. Respondents prayed that their manifestation be
considered for the purpose of determining the proper parties to the case. Despite
petitioners Counter-Manifestation,* the RTC issued the following Order* on May 15,
1999:

The Manifestation of plaintiffs and the Counter-Manifestation of


defendants having already been submitted and duly noted, the Court hereby
directs that henceforth in the denomination of this case, the names of the
original parties, Eugenio Basbas and Teofilo Aras (in Land Registration
Case No. 0-177) shall still remain to be so stated as defendants for purposes
of the present case but with additional names of their respective heirs to be
included and stated immediately after each name as heirs in substitution,
namely: for Eugenio Basbas 1) Gervacio Basbas, 2) Marcelina Basbas
Basarte, and 3) Eugenio Basbas, Jr.; and for Teofilo Aras 1) Ismael Aras, 2)
Vicente Aras, 3) Ligaya Aras, 4) Rosendo Aras, and 5) Daina Aras.

Id.

Id. at 231-233.

One of the Spouses Basarte.

Records, pp. 237-239.

Id. at 250.

30
Since from the records, only Gervacio Basbas, Eugenio Basbas, Jr.
and Ismael Aras were duly served with summons, the Branch Clerk of
Court is hereby directed to serve summons on the other heirs, namely:
Marcelina Basbas Basarte, Vicente Aras, Ligaya Aras, Rosendo Aras, and
Daina Aras.

x x x x*

After summons were served, Vicente, Rosendo, Ligaya and Daina were, however,
declared in default for not filing any responsive pleading. * On February 2, 2001, the RTC
issued a Pre-Trial Order* where the controverted stipulations and issues to be tried,
among others, were enumerated as follows:

Controverted Stipulations:

1. That defendants are not enjoying the produce of the land because there
are period[s] wherein the fruits were subject of theft and the same is
now pending at the Municipal Trial Court of Matag-ob;

2. That [even] before the start of the original case, the original defendants
referring to the late Eugenio Basbas, Sr. and Teofilo Aras, [and] Rufino
Aras were occupying the property and they were succeeded by the
respective heirs of the deceased Eugenio Basbas, Sr. and Teofilo Aras
[sic];

3. That plaintiff Teofilo Aras, Sr. has a daughter named Fedeliza Aras;

Issues

Id.

See 1st page of Pre-Trial Order, id. at 348. The Rufino Aras declared in default in said Pre-Trial Order is actually
Rosendo Aras. Rufino filed his Answer together with Gervacio and the others.

Id. at 348-350.

31
1. Whether x x x the plaintiffs are entitled to revival of judgment in the
earlier [land registration] case;

2. Whether x x x the defendants except for defendant Rufino Aras are the
proper parties in the present action;

3. Whether x x x the complaint states a cause of action;

4. Whether x x x defendants are entitled to their counterclaim, and;

5. Whether judgment on the pleadings is allowed or is tenable.*

Respondents subsequently filed an Omnibus Motion for Judgment on the


Pleadings and/or Summary Judgment.* They contended that since petitioners Answer
failed to tender an issue, they having expressly admitted the material allegations in the
complaint, particularly paragraphs 4 to 12, a judgment on the pleadings or summary
judgment is proper.

Petitioners filed an Opposition Re: Omnibus Motion for Judgment on the


Pleadings and/or Summary Judgment and Memorandum Re: Failure of Plaintiff Beata
Sayson to Appear in the Pre-trial Conference. * They argued that the case cannot be
decided based on the pleadings nor through summary judgment considering that the
controverted stipulations and issues defined in the Pre-Trial Order must be proven by
evidence. In addition, they questioned the Special Power of Attorney (SPA) executed by
Beata in Canada empowering her son Roberto Jr. to appear on her behalf in the pre-trial
conference. They argued that since said SPA has not been authenticated by a Philippine
Consulate official, it is not sufficient authorization and hence, Beata cannot be considered
to have attended the pre-trial conference. The case must, therefore, be dismissed insofar
as she is concerned.

Ruling of the Regional Trial Court

Id. at 349.

Id. at 377-382.

Id. at 435-439.

32
In resolving respondents Omnibus Motion for Judgment on the Pleadings and/or
Summary Judgment, the RTC found that petitioners Answer does not essentially tender
an issue since the material allegations of the Complaint were admitted. Hence, said court
issued an Order* dated May 21, 2001, the dispositive portion of which reads:

Wherefore, finding merit in the motion, judgment is hereby rendered


for and in favor of the plaintiffs and against the defendants ordering the
revival of the decision of the Court of Appeals promulgated on July 24,
1985 affirming the decree of registration of this Court in the decision of the
Land Registration Case No. 0-177 dated March 22, 1979, and of the final
Order of this Court dated September 13, 1989 and upon finality of this
Order, ordering the issuance of Writ of Possession for the lot made subject
of the decision. Without pronouncement as to costs.

SO ORDERED.*

Petitioners thus filed a Notice of Appeal * which was approved in an Order dated
June 06, 2001.*

Ruling of the Court of Appeals

Finding no merit in the appeal, the CA denied the same in a Decision * dated
February 17, 2004. It noted that petitioners Answer admitted almost all of the allegations
in respondents complaint. Hence, the RTC committed no reversible error when it granted
respondents Motion for Judgment on the Pleadings and/or Summary Judgment. The
appellate court likewise found untenable the issue as regards the failure of the complaint
to state a cause of action. To the appellate court, petitioners refusal to vacate the subject

Id. at 440-442

Id. at 442.

Id. at 445.

Id. at 450.

Supra note 1.

33
property despite the final and executory Decision of the CA in the land registration case
and the September 13, 1989 Order of the RTC for them to vacate the same, clearly
support respondents cause of action against them. Also contrary to petitioners posture, the
September 13, 1989 Order is a final order as it finally disposed of the controversy
between the parties in the land registration case. The CA likewise found the SPA
executed by Beata in favor of Roberto Jr. as valid, hence, she was duly represented
during the pre-trial conference. The dispositive portion of said CA Decision reads:

WHEREFORE, premises considered, the present appeal is


DENIED. The May 21, 2001 Decision of the Regional Trial Court of
Ormoc City, Branch 35 is AFFIRMED.
SO ORDERED.*

Their Motion for Reconsideration* having been denied in a Resolution* dated


April 19, 2006, petitioners are now before this Court through the present Petition for
Review on Certiorari.

Issues

Petitioners impute upon the CA the following errors:

1. The Honorable Court of Appeals clearly committed serious errors of law


in its decision and Resolution dated February 17, 2004 and April 19, 2006
when it affirmed the Order of the Regional Trial Court dated May 21, 2001
and declared that no reversible error was committed by the Regional Trial
Court of Ormoc City in granting respondents motion for judgment on the
pleadings and/or summary judgment;

CA rollo, p. 93.

Id. at 95-101.

Supra note 3.

34
2. The Honorable Court of Appeals clearly committed serious errors of law
in its Decision and Resolution dated February 17, 2004 and April 19, 2006
when it affirmed the Order of the Regional Trial Court of Ormoc City dated
May 21, 2001 and declared that petitioners argument that respondents
complaint failed to state a cause of action has no merit.

3. The Honorable Court of Appeals clearly committed serious errors of law


when it affirmed the Order of the Regional Trial Court of Ormoc City
which ordered the revival of the Judgment of this Court of Appeals in CA-
G.R. No. 66541 entitled Beata Sayson and Roberto Sayson vs. Eugenio
Basbas, et al., despite the fact that this was not the judgment sought to be
revived in Civil Case No. 3312-0;

4. The Honorable Court of Appeals clearly committed serious errors of law


in ruling that the duly notarized Special Power of Attorney in favor of
Roberto Sayson[,] Jr. is valid and the latter is authorized to represent his
mother, Beata Sayson[,] which is contrary to the ruling in the case of
ANGELITA LOPEZ, represented by PRISCILLA L. TY vs. COURT OF
APPEALS, REGIONAL TRIAL COURT OF QUEZON CITY x x x (G.R.
No. 77008, December 29, 1987).*

The Parties Arguments

Petitioners insist that a judgment on the pleadings or a summary judgment


is not proper in this case since the controverted stipulations and the first three issues
enumerated in the pre-trial order involve facts which must be threshed out during trial.
They also claim that the Complaint for Revival of Judgment states no cause of action
because the September 13, 1989 Order which it sought to revive is not the judgment
contemplated under Section 6, Rule 39 of the Rules of Court and, therefore, cannot be the
subject of such an action. Moreover, they argue that the CA Decision in the land
registration case should not have been revived as same was not prayed for in the
Complaint for Revival of Judgment. Lastly, petitioners assail the SPA which authorized
Roberto Jr. to represent his mother, Beata, during the pre-trial conference, it not having
been authenticated by a Philippine consulate officer in Canada where it was executed.
Citing Lopez v. Court of Appeals,* they contend that said document cannot be admitted in

Rollo, p. 19.

35
evidence and hence, Beata was not duly represented during said pre-trial conference. The
case, therefore, should have been dismissed insofar as she is concerned.

For their part, respondents point out that the RTCs basis in granting the Motion for
Judgment on the Pleadings and/or Summary Judgment was petitioners admission of
practically all the material allegations in the complaint. They aver that Section 1, Rule 34
of the Rules of Court clearly provides that 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 the pleadings. Also, the test for a motion for
summary judgment is whether the pleadings, affidavits or exhibits in support of the
motion are sufficient to overcome the opposing papers and to justify a finding as a matter
of law that there is no defense to the action or the claim is clearly meritorious. And since,
as found by the CA, petitioners Answer did not tender an issue and that there is no
defense to the action, the grant of the Motion for Judgment on the Pleadings and/or
Summary Judgment was appropriate. Respondents likewise contend that if their prayer in
the Complaint is taken in its proper context, it can be deduced that what they were really
seeking is the implementation of the CA Decision dated July 24, 1985 and the orders
ancillary thereto. With respect to the SPA, they submit that the law does not require that a
power of attorney be notarized. Moreover, Section 4, Rule 18 of the Rules of Court
simply requires that a representative appear fully authorized in writing. It does not specify
a particular form of authority.

Our Ruling

There is no merit in the petition.

I. The instant case is proper for the rendition of a summary judgment.

240 Phil. 811 (1987); In this case, an SPA was executed abroad by the real party in interest

in favor of a representative here in the Philippines to initiate an action for ejectment.

Finding said SPA to be without the authentication of an officer in the foreign service of the

Philippines stationed in that foreign country pursuant to Sec. 25, Rule 132 of the old Rules

of Court (now Sec. 24, Rule 132 of the Revised Rules of Court, see footnote 63), this Court

declared the same as not admissible in evidence. Hence, the litigation was considered not

commenced by the real party-in-interest or by one duly authorized to do so, making the

entire proceedings before the lower courts null and void.

36
Petitioners principally assail the CAs affirmance of the RTCs Order granting
respondents Motion for Judgment on the Pleadings and/or Summary Judgment.

In Tan v. De la Vega,* citing Narra Integrated Corporation v. Court of Appeals,*


the court distinguished summary judgment from judgment on the pleadings, viz:

The existence or appearance of ostensible issues in the pleadings, on


the one hand, and their sham or fictitious character, on the other, are what
distinguish a proper case for summary judgment from one for a judgment
on the pleadings. In a proper case for judgment on the pleadings, there is no
ostensible issue at all because of the failure of the defending partys answer
to raise an issue. On the other hand, in the case of a summary judgment,
issues apparently exist i.e. facts are asserted in the complaint regarding
which there is as yet no admission, disavowal or qualification; or specific
denials or affirmative defenses are in truth set out in the answer but the
issues thus arising from the pleadings are sham, fictitious or not genuine, as
shown by affidavits, depositions, or admissions. x x x.
Simply stated, what distinguishes a judgment on the pleadings from a summary
judgment is the presence of issues in the Answer to the Complaint. When the Answer
fails to tender any issue, that is, if it does not deny the material allegations in the
complaint or admits said material allegations of the adverse partys pleadings by admitting
the truthfulness thereof and/or omitting to deal with them at all, a judgment on the
pleadings is appropriate.* On the other hand, when the Answer specifically denies the
material averments of the complaint or asserts affirmative defenses, or in other words
raises an issue, a summary judgment is proper provided that the issue raised is not
genuine. A genuine issue means an issue of fact which calls for the presentation of
evidence, as distinguished from an issue which is fictitious or contrived or which does
not constitute a genuine issue for trial.*

a) Judgment on the pleadings is not proper


because petitioners Answer tendered issues.

In this case, we note that while petitioners Answer to respondents Complaint


practically admitted all the material allegations therein, it nevertheless asserts the
affirmative defenses that the action for revival of judgment is not the proper action and

G.R. No. 168809, March 10, 2006, 484 SCRA 538, 550-551.

398 Phil. 733,740 (2000).

Tan v. De la Vega, supra note 52 at 545.

Wood Technology Corporation v. Equitable Banking Corporation, 492 Phil.106, 116 (2005).

37
that petitioners are not the proper parties. As issues obviously arise from these affirmative
defenses, a judgment on the pleadings is clearly improper in this case.

However, before we consider this case appropriate for the rendition of summary
judgment, an examination of the issues raised, that is, whether they are genuine issues or
not, should first be made.

b) The issues raised are not genuine issues,


hence rendition of summary judgment is
proper.
To resolve the issues of whether a revival of judgment is the proper action and
whether respondents are the proper parties thereto, the RTC merely needed to examine
the following: 1) the RTC Order dated September 13, 1989, to determine whether same is
a judgment or final order contemplated under Section 6, Rule 39 of the Rules of Court;
and, 2) the pleadings of the parties and pertinent portions of the records * showing, among
others, who among the respondents were oppositors to the land registration case, the heirs
of such oppositors and the present occupants of the property. Plainly, these issues could
be readily resolved based on the facts established by the pleadings. A full-blown trial on
these issues will only entail waste of time and resources as they are clearly not genuine
issues requiring presentation of evidence.

Petitioners aver that the RTC should not have granted respondents Motion for
Judgment on the Pleadings and/or Summary Judgment because of the controverted
stipulations and the first three issues enumerated in the Pre-trial Order, which, according
to them, require the presentation of evidence. These stipulations and issues, however,
when examined, basically boil down to questions relating to the propriety of the action
resorted to by respondents, which is revival of judgment, and to the proper parties thereto
the same questions which we have earlier declared as not constituting genuine issues.

In sum, this Court holds that the instant case is proper for the rendition of a
summary judgment, hence, the CA committed no error in affirming the May 21, 2001
Order of the RTC granting respondents Motion for Judgment on the Pleadings and/or
Summary Judgment.

II. The Complaint states a cause of action.

Petitioners contend that the complaint states no cause of action since the

Particularly the (1) Complaint, records, pp. 1-7; (2) Answer, id. at 73-77; (3) respondents Manifestation with Prayer, id.
at 231-233; and (4) petitioners Counter-Manifestation, id. at 237-239.

38
September 13, 1989 Order sought to be revived is not the judgment contemplated under
Section 6, Rule 39 of the Rules of Court. They also aver that the RTC erred when it
ordered the revival not only of the September 13, 1989 Order but also of the July 24,
1985 CA Decision, when what was prayed for in the complaint was only the revival of
the former.

This Court, however, agrees with respondents that these matters have already been
sufficiently addressed by the RTC in its Order of May 9, 1997 * and we quote with
approval, viz:

The body of the Complaint as well as the prayer mentioned about the
executory decision of the Court of Appeals promulgated on July 24, 1985
that had to be finally implemented. So it appears to this Court that the
Complaint does not alone invoke or use as subject thereof the Order of this
Court which would implement the decision or judgment regarding the land
in question. The Rules of Court referring to the execution of judgment,
particularly Rule 39, Sec. 6, provides a mechanism by which the judgment
that had not been enforced within five (5) years from the date of its entry or
from the date the said judgment has become final and executory could be
enforced. In fact, the rule states: judgment may be enforced by action.

So in this Complaint, what is sought is the enforcement of a


judgment and the Order of this Court dated September 13, 1989 is part of
the process to enforce that judgment. To the mind of the Court, therefore,
the Complaint sufficiently states a cause of action.*

III. Any perceived defect in the SPA would not serve to bar the case from
proceeding.

Anent the SPA, we find that given the particular circumstances in the case at bar,
an SPA is not even necessary such that its efficacy or the lack of it would not in any way
preclude the case from proceeding. This is because upon Roberto Sr.s death, Roberto Jr.,
in succession of his father, became a co-owner of the subject property together with his
mother, Beata. As a co-owner, he may, by himself alone, bring an action for the recovery
of the co-owned property pursuant to the well-settled principle that in a co-ownership, co-
owners may bring actions for the recovery of co-owned property without the necessity of

Id. at 49-50.

Id. at 49.

39
joining all the other co-owners as co-plaintiffs because the suit is presumed to have been
filed for the benefit of his co-owners.*

While we note that the present action for revival of judgment is not an action for
recovery, the September 13, 1989 Order sought to be revived herein ordered the
petitioners, among others, to vacate the subject property pursuant to the final and
executory judgment of the CA affirming the CFIs adjudication of the same in favor of
respondents. This Order was issued after the failure to enforce the writ of execution and
alias writ of execution due to petitioners refusal to vacate the property. To this Courts
mind, respondents purpose in instituting the present action is not only to have the CA
Decision in the land registration case finally implemented but ultimately, to recover
possession thereof from petitioners. This action is therefore one which Roberto Jr., as co-
owner, can bring and prosecute alone, on his own behalf and on behalf of his co-owner,
Beata. Hence, a dismissal of the case with respect to Beata pursuant to Sec. 5,* Rule 18 of
the Rules of Court will be futile as the case could nevertheless be continued by Roberto
Jr. in behalf of the two of them.

WHEREFORE, the Petition for Review on Certiorari is DENIED and the


assailed Decision of the Court of Appeals dated February 17, 2004 and Resolution dated
April 19, 2006 in CA-G.R. CV No. 72385 are AFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLO


Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

Carandang v. Heirs of De Guzman, G.R. No. 160347, November 29, 2006, 508 SCRA 469, 487 citing Baloloy
v. Hular, 481 Phil. 398, (2004) and Adlawan v. Adlawan, G.R. No. 161916, January 20, 2006, 479 SCRA 275,
283.

Sec. 5. Effect of failure to appear. The failure of the plaintiff to appear when so required pursuant to the next
preceding section shall be caused for dismissal of the action. The dismissal shall be with prejudice, unless
otherwise ordered by the court. x x x.

40
TERESITA J. LEONARDO-DE CASTRO ARTURO D. BRION
Associate Justice Associate Justice

MARTIN S. VILLARAMA, JR.


Associate Justice

C E R T I F I CAT I O N

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that
the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

41
Partial default in a case with multiple defendants
Posted on March 18, 2016April 15, 2017 by Lawyers in the Philippines

What if, in a case filed against multiple defendants, one defendant does not file his
Answer but his co-defendants file theirs?

Can a defendant who failed to file his own Answer be declared in default even if
Answers were filed by his co-defendants?

Yes. The applicable rule is Section 3 of Rule 9 of the Rules of Court.

At the outset, it must be seen that the rules on Default in Section 3 of Rule 9
provide for two distinct and discrete stages of action.

The first stage of action pertains to the finding that a defendant is in default and the
consequent declaration by the Court. With regard to this stage, the first paragraph
of Section 3, Rule 9, provides thus:

Sec. 3. Default; declaration of. If the defending party fails to answer within the
time allowed therefore, the court shall, upon motion of the claiming party with
notice to the defending party, and proof of such failure, declare the defending party
in default.

The first stage thus concludes with the declaration that a defending party is in
default.

The second stage of action pertains to the conduct of the case after the declaration
in default. The ordinary consequence upon a defendant after he is found in default
is provided in paragraph (a) of Section 3, Rule 9, thus:

(a) Effect of order of default. A party in default is entitled to notice of


subsequent proceedings, but not to take part in the trial.

There is a critical distinction between the first stage of action, a defendants being
declared in default, and the second stage of action, the consequences thereof, i.e.
the conduct of the case after such a declaration. While both pertain to default, they
are not identical.

It is clear that paragraph (c) of Section 3, Rule 9 also refers to the second stage.

42
(c) Effect of partial default. When a pleading asserting a claim states a
common cause of action against several defending parties, some of whom answer
and the others fail to do so, the court shall try the case against all upon the answers
thus filed and render judgment upon the evidence presented.

Paragraph (c) only provides for the manner in which the trial will be conducted in
a case where a defendant filed no Answer although his co-defendants did. The
paragraph provides only that the case will be tried upon the Answers filed by the
responsive defendants. Nowhere does it state that the Rule on default does not
apply. It is not an exception to a defendant being declared in default.

The defendant who does not file an Answer is to be declared in default. This is the
Rule and paragraph (c) of Section 3, Rule 9 is no exception to it. Said provision, in
fact, recognizes a situation where one defendant among several is in default. This
is clear from paragraph (c)s own heading, Effect of partial default. That very
heading recognizes that default exists within the set. This recognition can only be
upon the Courts declaration of default pursuant to the first paragraph of Section 3
of Rule 9.

Paragraph (c) of Section 3, Rule 9 thus provides for the manner of the trials
conduct in a situation where one party among several, but not all, were declared in
default pursuant to the first paragraph of Section 3, Rule 9. It contemplates the
existence of default in one of the defendants. It is, therefore, not an exception to
the rule on default, but a consequence.

A contrary interpretation would allow a defendant in willful default to nevertheless


present evidence contrary to the Rules explicit provision. This would render in
vain the provisions for the Rule on Default and defeat the Rules of Courts
objective of securing a just, speedy and inexpensive disposition of every action and
proceeding.[1]

Jurisprudence is in full support of this view. The Supreme Court has ruled upon
Section 3 (c) of Rule 9 in the case of PINLAC, ET AL. vs. COURT OF
APPEALS, ET AL., G.R. No. 91486, 19 January 2001. There the Supreme Court
affirmed that when a party does not file an Answer, although his co-defendants do
so, default is availing against the former. The Supreme Court ruled:

(c) Effect of partial default. When a pleading asserting a claim states a


common cause of action against several defending parties, some of whom answer
and the others fail to do so, the court shall try the case against all upon the answers
thus filed and render judgment upon the evidence presented.
43
In fact, the court a quo enumerated in the Partial Decision those who filed
responsive pleadings. Considering that petitioners in their complaint stated a
common cause of action against all the named respondents, the court a quo should
have heard the case as against all respondents, the defaulted respondents included.
However, the trial court, unmindful of the above-quoted rule, proceeded to receive
evidence ex parte only against the defaulted respondents. The trial courts
disposition is not only violative of the rules but also a clear negation of the
defaulted respondents limited rights.

Whatever defense and evidence the non-defaulted respondents may present which
would be applicable to the situation of the defaulted respondents should inure to
the benefit of the latter. The nullification of OCT 614 adversely affected the
answering respondents for they all share the same mother title. In effect, the court
a quo pre-judged the case even against the answering respondents, for how could
OCT 614, the mother title, be valid for one set of respondents and null and void for
the other respondents? In fine, the Partial Decision was procedurally flawed.
[Boldfacing supplied]

Pinlac vs. Court of Appeals affirms that a declaration of partial default is in order
in these cicumstances. For, under Pinlac, that a Complaint states a common cause
of action against all the named defendants means only that the Honorable Court
should hear the case and receive evidence against all defendants, the defaulted
defendant included.

But, as Pinlac vs. Court of Appeals makes clear, Section 3 (c) of Rule 9 does not
mean that a delinquent defendant whose co-defendants did file their
Answers cannot be declared in default. He still should be declared in default for
having failed to file an Answer within the time given by the Rules. He does remain
entitled to the limited rights of a defendant in default, but to no more than those.

Although such defenses and evidence as the non-defaulted co-defendant may


present which would be applicable to the situation of the defaulted defendant could
inure to his benefit, being in default, the latter should be so declared. And so the
defaulted defendant shall remain entitled to notice of subsequent proceedings, but
he cannot take part in the trial.[2]

The Supreme Court again explained in depth the governing rules in a situation of
partial default under Section 3 (c) of Rule 9 in the case of REMIGIA GRAGEDA
ET AL., vs. HON. NIMFA C. GOMEZ, ET AL., G.R. No. 169536, 21 September
2007:

44
Stated differently, in all instances where a common cause of action is alleged
against several defendants, some of whom answer and the others do not, the latter
or those in default acquire a vested right not only to own the defense interposed in
the answer of their co-defendant or co-defendants not in default but also to expect
a result of the litigation totally common with them in kind and in amount whether
favorable or unfavorable. The substantive unity of the plaintiffs cause against all
the defendants is carried through to its adjective phase as ineluctably demanded by
the homogeneity and indivisibility of justice itself. Indeed, since the singleness of
the cause of action also inevitably implies that all the defendants are indispensable
parties, the courts power to act is integral and cannot be split such that it cannot
relieve any of them and at the same time render judgment against the rest.
Considering the tenor of the section in question, it is to be assumed that when any
defendant allows himself to be declared in default knowing that his co-defendant
has already answered, he does so trusting in the assurance implicit in the rule that
his default is in essence a mere formality that deprives him of no more than the
right to take part in the trial and that the court would deem anything done by or for
the answering defendant as done by or for him. The presumption is that otherwise
he would not have seen to it that he would not be in default. Of course, he has to
suffer the consequences of whatever the answering defendant may do or fail to do,
regardless of possible adverse consequences, but if the complaint has to be
dismissed in so far as the answering defendant is concerned, it becomes his
inalienable right that the same be dismissed also as to him. It does not matter that
the dismissal is upon the evidence presented by the plaintiff or upon the latters
mere desistance, for in both contingencies, the lack of sufficient legal basis must be
the cause. x x x.

The primary question which a Motion To Declare Defendant In Default hinges on


is whether or not the defendant failed to Answer within the time given him.

The question of whether or not his co-defendant had filed an Answer is relevant
only as to the second stage, the manner of how trial will subsequently be
conducted. It has no bearing on the first stage, the declaration of the delinquent
partys default.

The application of the Rules in such a case are therefore clear. The Rules on partial
default are as they were laid out in the same case of Grageda vs. Hon. Gomez:

The effects, therefore, of a failure to file a separate Answer when other co-
defendants (against whom a common cause of action was alleged) had already
filed theirs, are limited to the following:

45
1. While the non-answering defendants may be declared in default, the court
would still try the case against them on the assumption that they are deemed
to have adopted the Answer of the answering defendants; and

2. If declared in default, the defaulting party is deprived of no more than the


right to take part in the trial. Consequently, the result of the litigation,
whether favorable or unfavorable, shall affect and bind the defaulting party
and the answering defendant with equal force and effect.

[1] Section 6, Rule 1 of the Rules of Court.

[2] Section 3 (a), Rule 9 of the Rules of Court.

46
(Motion to Declare Defendant in Default)

(CAPTION)

MOTION

(TO DECLARE DEFENDANT IN DEFAULT)

Plaintiff, by counsel and unto this Honorable Court, respectfully states

1.The records of the Honorable Court show that Defendant was served with copy
of the summons and of the complaint, together with annexes thereto on
_____________;

2.Upon verification however, the records show that Defendant _____________ has
failed to file his Answer within the reglementary period specified by the Rules of
Court despite the service of the summons and the complaint;

3.As such, it is respectfully prayed that Defendant _____________ be declared in


default pursuant to the Rules of Court and that the Honorable Court proceed to
render judgment as the complaint may warrant.

PRAY E R

WHEREFORE, it is respectfully prayed that Defendant _____________ be


declared in default pursuant to the Rules of Court and that the Honorable Court
proceed to render judgment as the complaint may warrant.

Other relief just and equitable are likewise prayed for.

_____________, Philippines, __Date__.

(COUNSEL)

(NOTICE OF HEARING)

(EXPLANATION)

COPY FURNISHED:

47
OPPOSING COUNSEL

48
FIRST DIVISION

ERLINDA GAJUDO, FERNANDO G.R. No. 151098


GAJUDO, JR., ESTELITA GAJUDO,
BALTAZAR GAJUDO and DANILO Present:
ARAHAN CHUA,
Petitioners, Panganiban, CJ,
Chairman,
Ynares-Santiago,
- versus - Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ
Promulgated:
TRADERS ROYAL BANK,[1]
Respondent. March 21, 2006
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - -- x

DECISION

PANGANIBAN, CJ:

T he mere fact that a defendant is declared in default does not automatically result
in the grant of the prayers of the plaintiff. To win, the latter must still present the
same quantum of evidence that would be required if the defendant were still

49
present. A party that defaults is not deprived of its rights, except the right to be
heard and to present evidence to the trial court. If the evidence presented does not
support a judgment for the plaintiff, the complaint should be dismissed, even if the
defendant may not have been heard or allowed to present any countervailing
evidence.

The Case

Before us is a Petition for Review[2] under Rule 45 of the Rules of Court,


assailing the June 29, 2001 Decision[3] and December 6, 2001 Resolution[4] of the
Court of Appeals (CA) in CA-GR CV No. 43889. The CA disposed as follows:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the


partial judgment appealed from, must be, as it hereby is, VACATED
and SET ASIDE, and another one entered DISMISSING the
complaint at bench. Without costs.[5]

The assailed Resolution denied petitioners Motion for Reconsideration [6] for
lack of merit.

The Facts

The CA narrated the facts as follows:

[Petitioners] filed a complaint before the Regional Trial Court


of Quezon City, Branch 90, against [respondent] Traders Royal Bank,
the City Sheriff of Quezon City and the Register of Deeds of Quezon
City. Docketed thereat as Civil Case No. Q-41203, the complaint
sought the annulment of the extra-judicial foreclosure and auction
sale made by [the] city sheriff of Quezon City of a parcel of land
covered by TCT No. 16711 of the Register of Deeds of Quezon City,

50
the conventional redemption thereof, and prayed for damages and the
issuance of a writ of preliminary injunction.

The complaint alleged that in mid 1977[, Petitioner] Danilo


Chua obtained a loan from [respondent] bank in the amount
of P75,000.00 secured by a real estate mortgage over a parcel of land
covered by TCT No. 16711, and owned in common by the
[petitioners]; that when the loan was not paid, [respondent] bank
commenced extra-judicial foreclosure proceedings on the property;
that the auction sale of the property was set on 10 June 1981, but was
reset to 31 August 1981, on [Petitioner Chuas] request, which,
however, was made without the knowledge and conformity of the
other [petitioners]; that on the re-scheduled auction sale, [the] Sheriff
of Quezon City sold the property to the [respondent] bank, the highest
bidder therein, for the sum of P24,911.30; that the auction sale was
tainted with irregularity because, amongst others, the bid price was
shockingly or unconscionably, low; that the other [petitioners] failed
to redeem the property due to their lack of knowledge of their right of
redemption, and want of sufficient education; that, although the
period of redemption had long expired, [Petitioner] Chua offered to
buy back, and [respondent] bank also agreed to sell back, the
foreclosed property, on the understanding that Chua would pay
[respondent] bank the amount of P40,135.53, representing the sum
that the bank paid at the auction sale, plus interest; that [Petitioner]
Chua made an initial payment thereon in the amount of P4,000.00,
covered by Interbank Check No. 09173938, dated 16 February 1984,
duly receipted by [respondent] bank; that, in a sudden change of
position, [respondent] bank wrote Chua, on 20 February 1984, asking
that he could repurchase the property, but based on the current market
value thereof; and that sometime later, or on 22 March 1984,
[respondent] bank wrote Chua anew, requiring him to tender a new
offer to counter the offer made thereon by another buyer.

Traversing [petitioners] complaint, [respondent] bank, upon 05


July 1984, filed its answer with counterclaim, thereunder asserting
that the foreclosure sale of the mortgaged property was done in
accordance with law; and that the bid price was neither
unconscionable, nor shockingly low; that [petitioners] slept on their
51
rights when they failed to redeem the property within the one year
statutory period; and that [respondent] bank, in offering to sell the
property to [Petitioner] Chua on the basis of its current market price,
was acting conformably with law, and with legitimate banking
practice and regulations.

Pre-trial having been concluded, the parties entered upon trial,


which dragged/lengthened to several months due to
postponements. Upon 11 June 1988, however, a big conflagration hit
the City Hall of Quezon City, which destroyed, amongst other things,
the records of the case. After the records were reconstituted,
[petitioners] discovered that the foreclosed property was sold by
[respondent] bank to the Ceroferr Realty Corporation, and that the
notice of lis pendens annotated on the certificate of title of the
foreclosed property, had already been cancelled. Accordingly,
[petitioners], with leave of court, amended their complaint, but the
Trial Court dismissed the case without prejudice due to [petitioners]
failure to pay additional filing fees.

So, upon 11 June 1990, [petitioners] re-filed the complaint with


the same Court, whereat it was docketed as Civil Case No. 90-5749,
and assigned to Branch 98: the amended complaint substantially
reproduced the allegations of the original complaint. But [petitioners]
this time impleaded as additional defendants the Ceroferr Realty
Corporation and/or Cesar Roque, and Lorna Roque, and included an
additional cause of action, to wit: that said new defendants conspired
with [respondent] bank in [canceling] the notice of lis pendens by
falsifying a letter sent to and filed with the office of the Register of
Deeds of Quezon City, purportedly for the cancellation of said notice.

Summons was served on [respondent] bank on 26 September


1990, per Sheriffs Return dated 08 October 1990. Supposing that all
the defendants had filed their answer, [petitioners] filed, on 23
October 1991, a motion to set case for pre-trial, which motion was,
however, denied by the Trial Court in its Order of25 October 1991, on
the ground that [respondent] bank has not yet filed its answer. On 13
November 1991[, petitioners] filed a motion for reconsideration,
52
thereunder alleging that they received by registered mail, on 19
October 1990, a copy of [respondent] banks answer with
counterclaim, dated 04 October 1990, which copy was attached to the
motion. In its Order of 14 November 1991, the trial Court denied for
lack of merit, the motion for reconsideration, therein holding that the
answer with counterclaim filed by [respondent] bank referred to
another civil case pending before Branch 90 of the same Court.

For this reason, [petitioners] filed on 02 December 1991 a


motion to declare [respondent] bank in default, thereunder alleging
that no answer has been filed despite the service of summons on it on
26 September 1990.

On 13 December 1991, the Trial Court declared the motion


submitted for resolution upon submission by [petitioners] of proof of
service of the motion on [respondent] bank.

Thus, on 16 January 1992, upon proof that [petitioners] had


indeed served [respondent] bank with a copy of said motion, the Trial
Court issued an Order of default against [respondent] bank.

Upon 01 December 1992, on [petitioners] motion, they were by


the Court allowed to present evidence ex parte on 07 January 1993,
insofar as [respondent] bank was concerned.

Thereafter, or on 08 February 1993, the Trial Court rendered


the new questioned partial decision.[7]
Aggrieved, [respondent] bank filed a motion to set aside [the]
partial decision by default against Traders Royal Bank and admit
[respondent] Traders Royal Banks x x x Answer with counterclaim:
thereunder it averred, amongst others, that the erroneous filing of said
answer was due to an honest mistake of the typist and inadvertence of
its counsel.

53
The [trial court] thumbed down the motion in its Order of 26
July 1993.[8]

Respondent bank appealed the Partial Decision[9] to the CA. During the
pendency of that appeal, Ceroferr Realty Corporation and/or Cesar and/or Lorna
Roque filed a Manifestation with Motion[10] asking the CA to discharge them as
parties, because the case against them had already been dismissed on the basis of
their Compromise Agreement[11] with petitioners. On May 14, 1996, the CA issued
a Resolution[12] granting Ceroferr et al.s Manifestation with Motion to discharge
movants as parties to the appeal. The Court, though, deferred resolution of the
matters raised in the Comment[13] of respondent bank. The latter contended that the
Partial Decision had been novated by the Compromise Agreement, whose effect
of res judicata had rendered that Decision functus officio.
Ruling of the Court of Appeals

The CA ruled in favor of respondent bank. Deemed, however, to have rested


on shaky ground was the latters Motion to Set Aside Partial Decision by Default
Against Traders Royal Bank and Admit Defendant Traders Royal Banks Answer.
[14]
The reasons offered by the bank for failing to file an answer were considered by
the appellate court to be at once specious, shallow and sophistical and can hardly
be dignified as a mistake or excusable negligence, which ordinary prudence could
not have guarded against.[15]

In particular, the CA ruled that the erroneous docket number placed on the
Answer filed before the trial court was not an excusable negligence by the banks
counsel. The latter had a bounden duty to be scrupulously careful in reviewing
pleadings. Also, there were several opportunities to discover and rectify the
mistake, but these were not taken. Moreover, the banks Motion to Set Aside the
Partial Decision and to Admit [the] Answer was not accompanied by an affidavit of
merit. These mistakes and the inexcusable negligence committed by respondents
lawyer were binding on the bank.

On the issue of whether petitioners had convincingly established their right


to relief, the appellate court held that there was no ground to invalidate the

54
foreclosure sale of the mortgaged property. First, under Section 3 of Act No. 3135,
an extrajudicial foreclosure sale did not require personal notice to the
mortgagor. Second, there was no allegation or proof of noncompliance with the
publication requirement and the public posting of the notice of sale, provided under
Act No. 3135, as amended. Third, there was no showing of inadequacy of price as
no competent evidence was presented to show the real market value of the land
sold or the readiness of another buyer to offer a price higher than that at which the
property had been sold.

Moreover, petitioners failed to prove that the bank had agreed to sell the
property back to them. After pointing out that the redemption period had long
expired, respondents written communications to Petitioner Chua only showed, at
most, that the former had made a proposal for the latter to buy back the property at
the current market price; and that Petitioner Chua was requested to make an offer
to repurchase the property, because another buyer had already made an offer to buy
it. On the other hand, respondent noted that the Interbank check for P4,000 was for
deposit only. Thus, there was no showing that the check had been issued to cover
part of the repurchase price.

The appellate court also held that the Compromise Agreement had not
resulted in the novation of the Partial Decision, because the two were not
incompatible. In fact, the bank was not even a party to the Agreement. Petitioners
recognition of Ceroferrs title to the mortgaged property was intended to preclude
future litigation against it.

Hence this Petition.[16]

Issues

In their Memorandum, petitioners raise the following issues:

1. Whether or not the Respondent Court of Appeals erred in


failing to apply the provisions of Section 3, Rule 9 of the 1997 Rules
of Civil Procedure [and in applying instead] the rule on

55
preponderance of evidence under Section 1, Rule 133 of the Rules of
Court.

2. Whether or not the respondent appellate court failed to apply


the conventional redemption rule provided for under Article 1601 of
the New Civil Code.

3. Whether or not this Honorable Court can exercise its judicial


prerogative to evaluate the findings of facts.[17]

The first issue is one of law and may be taken up by the Court without hindrance,
pursuant to Section 1 of Rule 45 of the Rules of Court. [18] The second and the third
issues, however, would entail an evaluation of the factual findings of the appellate
court, a function ordinarily not assumed by this Court, unless in some excepted
cases. The Court will thus rule on the first issue before addressing the second and
the third issues jointly.

The Courts Ruling

The Petition has no merit.

First Issue:
Quantum of Proof

Petitioners challenge the CA Decision for applying Section 3 of Rule 9 of the


Rules of Court, rather than Section 1 of Rule 133 of the same Rules. In essence,
petitioners argue that the quantum of evidence for judgments flowing from a default
order under Section 3 of Rule 9 is not the same as that provided for in Section 1 of
Rule 133.

56
For ease of discussion, these two rules will be reproduced below, starting
with Section 3 of Rule 9 of the Rules of Court:

Sec. 3. Default; declaration of. If the defending party fails to


answer within the time allowed therefor, the court shall, upon motion of
the claiming party with notice to the defending party, and proof of such
failure, declare the defending party in default. Thereupon, the court
shall proceed to render judgment granting the claimant such relief as his
pleading may warrant, unless the court in its discretion requires the
claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.

(a) Effect of order of default. A party in default shall be entitled


to notice of subsequent proceedings but not to take part in the trial.

(b) Relief from order of default. A party declared in default may


at any time after notice thereof and before judgment file a motion under
oath to set aside the order of default upon proper showing that his
failure to answer was due to fraud, accident, mistake or excusable
negligence and that he has a meritorious defense.In such case, the order
of default may be set aside on such terms and conditions as the judge
may impose in the interest of justice.

(c) Effect of partial default. When a pleading asserting a claim


states a common cause of action against several defending parties, some
of whom answer and the others fail to do so, the court shall try the case
against all upon the answers thus filed and render judgment upon the
evidence presented.

57
(d) Extent of relief to be awarded. A judgment rendered against a
party in default shall not exceed the amount or be different in kind from
that prayed for nor award unliquidated damages.

(e) Where no defaults allowed. If the defending party in an


action for annulment or declaration of nullity of marriage or for legal
separation fails to answer, the court shall order the prosecuting attorney
to investigate whether or nor a collusion between the parties exists, and
if there is no collusion, to intervene for the State in order to see to it that
the evidence submitted is not fabricated.

We now quote Section 1 of Rule 133:

SECTION 1. Preponderance of evidence, how determined. In


civil cases, the party having the burden of proof must establish his case
by a preponderance of evidence. In determining where the
preponderance or superior weight of evidence on the issues involved
lies, the court may consider all the facts and circumstances of the case,
the witnesses manner of testifying, their intelligence, their means and
opportunity of knowing the facts to which they are testifying, the
nature of the facts to which they testify, the probability or
improbability of their testimony, their interest or want of interest, and
also their personal credibility so far as the same may legitimately
appear upon the trial. The court may also consider the number of
witnesses, though the preponderance is not necessarily with the greater
number.

58
Between the two rules, there is no incompatibility that would preclude the
application of either one of them. To begin with, Section 3 of Rule 9 governs the
procedure which the trial court is directed to take when a defendant fails to file an
answer. According to this provision, the court shall proceed to render judgment
granting the claimant such relief as his pleading may warrant, subject to the courts
discretion on whether to require the presentation of evidence ex parte. The same
provision also sets down guidelines on the nature and extent of the relief that may
be granted. In particular, the courts judgment shall not exceed the amount or be
different in kind from that prayed for nor award unliquidated damages.

As in other civil cases, basic is the rule that the party making allegations has
the burden of proving them by a preponderance of evidence. [19] Moreover, parties
must rely on the strength of their own evidence, not upon the weakness of the
defense offered by their opponent.[20] This principle holds true, especially when the
latter has had no opportunity to present evidence because of a default
order. Needless to say, the extent of the relief that may be granted can only be as
much as has been alleged and proved[21] with preponderant evidence required
under Section 1 of Rule 133.

Regarding judgments by default, it was explained in Pascua v.


Florendo[22] that complainants are not automatically entitled to the relief prayed
for, once the defendants are declared in default. Favorable relief can be granted
only after the court has ascertained that the relief is warranted by the evidence
offered and the facts proven by the presenting party. In Pascua, this Court ruled
that x x x it would be meaningless to require presentation of evidence if every time
the other party is declared in default, a decision would automatically be rendered
in favor of the non-defaulting party and exactly according to the tenor of his
prayer. This is not contemplated by the Rules nor is it sanctioned by the due
process clause.[23]

The import of a judgment by default was further clarified in Lim Tanhu v.


Ramolete.[24] The following disquisition is most instructive:

59
Unequivocal, in the literal sense, as these provisions [referring
to the subject of default then under Rule 18 of the old Rules of Civil
Procedure] are, they do not readily convey the full import of what they
contemplate. To begin with, contrary to the immediate notion that can
be drawn from their language, these provisions are not to be understood
as meaning that default or the failure of the defendant to answer should
be interpreted as an admission by the said defendant that the plaintiffs
cause of action find support in the law or that plaintiff is entitled to the
relief prayed for. x x x.

xxxxxxxxx

Being declared in default does not constitute a waiver of rights


except that of being heard and of presenting evidence in the trial
court. x x x.

In other words, a defaulted defendant is not actually thrown out


of court. While in a sense it may be said that by defaulting he leaves
himself at the mercy of the court, the rules see to it that any judgment
against him must be in accordance with law. The evidence to support
the plaintiffs cause is, of course, presented in his absence, but the court
is not supposed to admit that which is basically incompetent. Although
the defendant would not be in a position to object, elementary justice
requires that only legal evidence should be considered against him. If
the evidence presented should not be sufficient to justify a judgment for
the plaintiff, the complaint must be dismissed. And if an unfavorable
judgment should be justifiable, it cannot exceed in amount or be
different in kind from what is prayed for in the complaint.[25]

In sum, while petitioners were allowed to present evidence ex parte under


Section 3 of Rule 9, they were not excused from establishing their claims for
damages by the required quantum of proof under Section 1 of Rule 133. Stated
differently, any advantage they may have gained from the ex parte presentation of
60
evidence does not lower the degree of proof required. Clearly then, there is no
incompatibility between the two rules.

Second and Third Issues:


Review of the Evidence

Petitioners urge this Court to depart from the general rule that the lower courts
findings of fact are not reviewable in a petition for review. [26] In support of their
plea, they cite the conflicting findings of the trial and the appellate courts, as well
as the alleged conjectures and surmises made by the CA in arriving at its Decision.

Indeed, the differences between the findings of the two courts a quo, leading to
entirely disparate dispositions, is reason enough for this Court to review the
evidence in this case.[27] Whether the CA indulged in surmises and conjectures
when it issued the assailed Decision will thus be determined.

At the outset, it behooves this Court to clarify the CAs impression that no evidence
was presented in the case which might have contributed to petitioners challenge to
its Decision. The appellate courts observation was based on the notation by the
lower courts clerk of court that there were no separate folders for exhibits and
transcripts, because there was no actual hearing conducted in this case.[28]

True, there was no hearing conducted between petitioners and


respondent, precisely because the latter had been declared in default, and
petitioners had therefore been ordered to present their evidence ex parte. But the
absence of a hearing did not mean that no evidence was presented. The Partial
Decision dated February 8, 1993, in fact clearly enumerated the pieces of evidence
adduced by petitioners during the ex parte presentation on January 7, 1993. The
documentary evidence they presented consisted of the following:
1. A copy of respondent banks Petition for the extrajudicial foreclosure and
auction sale of the mortgaged parcel of land[29]

61
2. The Certificate of Sale that was a consequence of the foreclosure sale[30]

3. A Statement of Account dated February 15, 1984, showing Petitioner


Chuas outstanding debt in the amount of P40,135.53[31]

4. A copy of the Interbank check dated February 16, 1984, in the amount
of P4,000[32]

5. The Official Receipt issued by the bank acknowledging the check[33]

6. The banks letter dated February 20, 1984, advising Petitioner Chua of the
sale of the property at an extrajudicial public auction; the lapse of the period of
redemption; and an invitation to purchase the property at its current market price[34]

7. Another letter from the bank dated March 22, 1984, inviting Petitioner
Chua to submit, within five days, an offer to buy the same property, which another
buyer had offered to buy[35]

8. A copy of the Notice of Lis Pendens, the filing of which was done after
that of the Amended Complaint[36]

9. A copy of the title showing the inscription of the Notice of Lis Pendens[37]

10. A copy of the Absolute Deed of Sale to Cerrofer[38]

11. A copy of a letter dated August 29, 1986, made and signed by
petitioners counsel, requesting the cancellation of the Notice of Lis Pendens[39]

12. A copy of a page of the Memorandum of Encumbrance from TCT No.


(314341) 7778/T-39[40]

62
Having clarified this matter, we proceed to review the facts.

Petitioners do not deny that the one-year period for legal redemption had already
lapsed when respondent bank supposedly offered to sell the property in
question. The records clearly show that the Certificate of Sale following the
extrajudicial public auction of the property was registered on June 21, 1982, the
date from which the legal redemption period was to be reckoned. [41] Petitioners
insist, though, that they had the right to repurchase the property through
conventional redemption, as provided under Article 1601 of the Civil Code,
worded as follows:

ART. 1601. Conventional redemption shall take place when the


vendor reserves the right to repurchase the thing sold, with the
obligation to comply with the provisions of Article 1616 and other
stipulations which may have been agreed upon.
It is true that the one-year period of redemption provided in Act No. 3135, as
amended -- the law under which the property here was sold in a foreclosure sale --
is only directory and, as such can be extended by agreement of the parties.
[42]
However, it has also been held that for legal redemption to be converted into
conventional redemption, two requisites must be established: 1) voluntary
agreement of the parties to extend the redemption period; and 2) the debtors
commitment to pay the redemption price on a fixed date.[43] Thus, assuming that an
offer was made to Petitioner Chua to buy back the property after the lapse of the
period of legal redemption, petitioners needed to show that the parties had agreed
to extend the period, and that Petitioner Chua had committed to pay the redemption
price on a fixed date.

The letters sent by the bank to Petitioner Chua on February 20 and March 22,
1984, do not convincingly show that the parties arrived at a firm agreement for the
repurchase of the property. What can be gleaned from the February 20 letter is that
Petitioner Chua proposed to pay the redemption price for the property, but that the
bank refused to accede to his request, because the one-year redemption period had
already lapsed.[44] The bank, though, had offered to sell back the property to him at
the current market value. Indeed, an examination of his earlier letter of February
17, 1984, readily reveals that he expressed willingness to settle his account with
63
the bank, but that his present financial situation precludes [him] from effecting an
immediate settlement x x x.[45]

On the other hand, the letter dated March 22, 1984, clearly states that x x x
the Bank rejected [his] request to redeem said property due to [the] lapse of [the]
one (1) year legal redemption period.[46] Nonetheless, he was [invited] to submit an
offer to buy the same property in five (5) days from receipt [of the letter].
[47]
Petitioner Chua was also informed that the bank had received an offer to
purchase the foreclosed property. As to the P4,000 check enclosed in his proposal
dated February 17, 1984, as a token of his good faith, he was advised that the
amount was still outstanding in the books of the bank and could be claimed by him
if he thought the invitation was not feasible.

More important, there was no showing that petitioners had committed to pay the
redemption price on a fixed date. True, Petitioner Chua had attempted to establish
a previous agreement to repurchase the property for less than its fair market
value. He had submitted in evidence a Statement of Account[48] dated February 15,
1984, showing a balance of P40,135.53; the Interbank check dated February 16,
1984 , for P4,000, which was deposited to the account of respondent bank;[49] and
the Official Receipt for the check.[50]

Granting that these documents evinced an agreement, petitioners were still


unable to establish a firm commitment on their part to pay the redemption price on
a fixed date. On the contrary, the February 17 letter of Petitioner Chua to the bank
clearly manifested that he was not capable of paying the account immediately. For
this reason, he proposed to pay in three or four installments without a specification
of dates for the payments, but with a plea for a reduction of the interest
charges. That proposal was rejected.

Indeed, other than the Interbank check marked for deposit by respondent
bank, no other evidence was presented to establish that petitioners had offered to
pay the alleged redemption price of P40,135.53 on a fixed date. For that matter,
petitioners have not shown that they tendered payment of the balance and/or
consigned the payment to the court, in order to fulfill their part of the purported
agreement. These remedies are available to an aggrieved debtor under Article 1256

64
of the Civil Code,[51] when the creditor unjustly refuses to accept the payment of an
obligation.

The next question that presents itself for resolution is the propriety of the CAs
ruling vacating the Partial Decision of the regional trial court (RTC) and
dismissing the case. To recall, the RTC had resolved to withhold a ruling on
petitioners right to redeem conventionally and/or order the reconveyance of the
property in question, pending a determination of the validity of the sale to Cerrofer
Realty Corporation and Spouses Cesar and Lorna Roque. The trial court, however,
granted the prayer for damages against respondent bank. The RTC ruled as
follows:

The evidence presented by [petitioners] in so far as the cause of


action against [respondent] Traders Royal Bank is concerned are
preponderant to support the claims of the [petitioners]. However, in
view of the fact that the property subject matter of this case has
already been conveyed to defendant Cerrofer Realty Corporation thus
the issue as to whether or not the said conveyance or sale is valid is
sill pending between the [petitioners] and [respondents] Cerrofer
Realty Corporation and Cesar Roque and Lorna Roque. Hence, this
Court resolves to grant the prayer for damages against Traders Royal
Bank.

The claims of the [petitioners] as against [respondent] Traders


Royal Bank having been established and proved by evidence,
judgment is hereby rendered ordering [respondent] Traders Royal
Bank to pay [petitioners] actual damage or the market value of the
land in question in the sum of P500,000.00; the sum of P70,000.00 as
compensatory damages; the sum of P200,000.00 to the heirs of
[petitioner] Danilo Chua; and attorneys fees in the sum of P30,000.00.
[52]

In the light of the pending issue as to the validity of the sale of the property
to the third parties (Cerrofer Realty Corporation and Spouses Roque), the trial

65
court properly withheld judgment on the matter and thus left the prayer for
damages as the sole issue for resolution.

To adjudge damages, paragraph (d) of Section 3 of Rule 9 of the Rules of


Court provides that a judgment against a party in default shall not exceed the
amount or be different in kind from that prayed for nor award unliquidated
damages. The proscription against the award of unliquidated damages is
significant, because it means that the damages to be awarded must be proved
convincingly, in accordance with the quantum of evidence required in civil cases.

Unfortunately for petitioners, the grant of damages was not sufficiently


supported by the evidence for the following reasons.

First, petitioners were not deprived of their property without cause. As


correctly pointed out by the CA, Act No. 3135, as amended, does not require
personal notice to the mortgagor.[53] In the present case, there has been no
allegation -- much less, proof -- of noncompliance with the requirement of
publication and public posting of the notice of sale, as required by ct No.
3135. Neither has there been competent evidence to show that the price paid at the
foreclosure sale was inadequate.[54] To be sure, there was no ground to invalidate
the sale.

Second, as previously stated, petitioners have not convincingly established


their right to damages on the basis of the purported agreement to
repurchase.Without reiterating our prior discussion on this point, we stress that
entitlement to actual and compensatory damages must be proved even under
Section 3 of Rule 9 of the Rules of Court. The same is true with regard to awards
for moral damages and attorneys fees, which were also granted by the trial court.

In sum, petitioners have failed to convince this Court of the cogency of their
position, notwithstanding the advantage they enjoyed in presenting their
evidence ex parte. Not in every case of default by the defendant is the complainant
entitled to win automatically.

66
WHEREFORE, this Petition is hereby DENIED and the assailed Decision
and Resolution AFFIRMED. Costs against petitioners.

SO ORDERED.

ARTEMIO V. PANGANIBAN
Chief Justice
Chairman, First Division

WECONCUR:

CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ


Associate Justice Associate Justice

ROMEO J. CALLEJO, SR. MINITA V. CHICO-NAZARIO


Associate Justice Associate Justice

CERTIFICATION

67
Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Chief Justice

[1]
The Court of Appeals was included in the Petition as a respondent. However, the
CA was omitted by this Court from the title of the case, because it need not
be impleaded in petitions for review, under Section 4 of Rule 45 of the
Rules of Court.
[2]
Rollo, pp. 9-27.
[3]
Penned by Justice Renato C. Dacudao and concurred in by Justices Romeo J.
Callejo Sr. (then chairperson of the Special Thirteenth Division and now a
member of this Court) and Alicia L. Santos (acting member). Id., pp. 29-39.
[4]
Id., p. 41.
[5]
CA Decision, p. 11; id., p. 39.
[6]
CA rollo, pp. 145-152.
[7]
The dispositive portion of the Partial Decision reads as follows:
The claims of the [petitioners] as against [Respondent]
Traders Royal Bank having been established and proved by
evidence, judgment is hereby rendered ordering [Respondent]
Traders Royal Bank to pay [petitioners] actual damage or the
market value of the land in question in the sum of P500,000.00; the
sum of P70,000.00 as compensatory damages; the sum
of P200,000.00 to the heirs of [Petitioner] Danilo Chua; and
attorneys fees in the sum of P30,000.00. (Partial Decision
dated February 8, 1993, p. 2; records, p. 173).
68
[8]
CA Decision, pp. 2-5; rollo, pp. 30-33.
[9]
Records, pp. 172-173.
[10]
CA rollo, pp. 37-41.
[11]
Contained in the RTC Decision dated October 28, 1993; records, pp. 263-264.
[12]
CA Rollo, pp. 84-87.
[13]
Records, pp. 75-82.
[14]
Id., pp. 176-183.
[15]
CA Decision, p. 7; rollo, p. 35.
[16]
The Petition was deemed submitted for decision on March 29, 2005, upon the
Courts receipt of respondents 4-page Memorandum, signed by Atty.
Diosdado B. Jimenez of Gonzales Sinense Jimenez &
Associates. Petitioners Memorandum, signed by Atty. Sergio F. Angeles of
Angeles & Associates, was received by the Court on May 15, 2003.
[17]
Petitioners Memorandum, pp. 10-17; rollo, pp. 98-105.
[18]
Section 1 of Rule 45 of the Rules of Court provides that x x x. The petition shall
raise only questions of law which must be distinctly set forth.
[19]
Saguid v. Court of Appeals, 451 Phil. 825, June 10, 2003; Ocampo v.
Ocampo, 427 SCRA 545, April 14, 2004; Catapusan v. Court of Appeals,
332 Phil. 586, November 21, 1996. Section 1 of Rule 131 of the Rules of
Court provides:
SECTION 1. Burden of proof. Burden of proof is the duty
of a party to present evidence on the facts in issue necessary to
establish his claim or defense by the amount of evidence
required by law.
[20]
Saguid v. CA, ibid. (citing Heirs of Anastacio Fabela v. CA, 362 SCRA
531, August 9, 2001).
[21]
Regalado, Remedial Law Compendium, Vol. 1, 7th rev. ed. (1999), p. 169. See
also P. T. Cerna Corporation v. CA, 221 SCRA 19, 25, April 6, 1993.
[22]
220 Phil. 588, April 30, 1985 cited in Luxuria Homes, Inc. v. CA, 361
Phil. 989, January 28, 1999.
[23]
Pascua v. Florendo, supra, pp. 595-596, per Gutierrez, Jr., J.
[24]
66 SCRA 425, August 29, 1975. See also Heirs of Anastacio Fabela v. CA,
supra at note 20.
[25]
Id., pp. 452-453, per Barredo, J.
[26]
Vibram Manufacturing Corporation v. Manila Electric Company, 466 SCRA
178, August 9, 2005; Rubiato v. Heirs of Jovito Rubiato, 464 SCRA 296,
July 28, 2005; Republic v. CA, 328 Phil. 238, July 12, 1996;Baricuatro Jr. v.
Court of Appeals, 382 Phil. 15, 24, February 9, 2000.

69
[27]
Manila Banking Corp. v. Silverio, 466 SCRA 438, August 11, 2005; Yason v.
Arciaga, 449 SCRA 458, January 28, 2005; Menchavez v. Torres Jr. 449
SCRA 380, January 26, 2005.
[28]
CA Decision, p. 9; rollo, p. 37.
[29]
Records, pp. 9-12.
[30]
Id., pp. 13-14.
[31]
Id., p. 15.
[32]
Id., p. 16.
[33]
Id., p. 17.
[34]
Id., p. 18.
[35]
Id., p. 19.
[36]
Id., pp. 20-21.
[37]
Id., pp. 22-23.
[38]
Id., pp. 24-26.
[39]
Id., p. 27.
[40]
Id., p. 28.
[41]
Union Bank of the Philippines v. CA, 412 Phil. 64, June 25, 2001; Castro v.
Bague, 359 SCRA 28, June 20, 2001; Ysmael v. CA, 376 Phil. 323,
November 16, 1999. Section 28 of Rule 39 of the Rules of Court provides
that legal redemption should be made at any time within one (1) year from
the date of the registration of the certificate of sale x x x.
[42]
Ibaan Rural Bank, Inc. v. Court of Appeals, 378 Phil. 707, 713, December 17,
1999; Lazo v. Republic Surety & Insurance Co., Inc., 31 SCRA 329, January
30, 1970.
[43]
Landrito v. Court of Appeals, 466 SCRA 107, August 9, 2005 (citing Lazo v.
Republic Surety & Insurance Co., Inc., supra); Ibaan Rural Bank, Inc. v.
Court of Appeals, supra.
[44]
Records, p. 18.
[45]
Id., p. 195.
[46]
Id., p. 19.
[47]
Ibid.
[48]
Id., p. 15.
[49]
Id., p. 16.
[50]
Id., p. 17.
[51]
ART. 1256. If the creditor to whom tender of payment has been made refuses
without just cause to accept it, the debtor shall be released from
responsibility by the consignation of the thing or sum due. x x x.
[52]
Partial Decision, p. 2; records, p. 173.
[53]
Section 3 of Act No. 3135, as amended, provides as follows:

70
Notice shall be given by posting notices of the sale for not
less than twenty days in at least three public places of the
municipality or city where the property is situated, and if such
property is worth more than four hundred pesos, such notice
shall also be published once a week for at least three
consecutive weeks in a newspaper of general circulation in the
municipality or city. (See also Ardiente v. Provincial Sheriff, 436
SCRA 655, August 17, 2004)
[54]
This fact would have been shown by presenting evidence that another bidder
had offered to pay a higher price for the property during the bidding.

71
Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

HEIRS OF FRANCISCA MEDRANO, G.R. No. 165770


namely YOLANDA R. MEDRANO,
ALFONSO R. MEDRANO, JR., EDITA
M. ALFARO, MARITES M.
PALENTINOS, and GIOVANNI Present:
MEDRANO, represented by their legal
representative, Marites Medrano- CORONA, C. J., Chairperson,
Palentinos, LEONARDO-DE CASTRO,
BERSAMIN,*
Petitioners, DEL CASTILLO, and
PEREZ, JJ.
- versus -

ESTANISLAO DE VERA, Promulgated:


Respondent. August 9, 2010
x--------------------------------------------------------x

DECISION

DEL CASTILLO, J.

In cases where the subject property is transferred by the defendant during the pendency
of the litigation, the interest of the transferee pendente lite cannot be considered
independent of the interest of his transferors. If the transferee files an answer while the
transferor is declared in default, the case should be tried on the basis of the transferees
answer and with the participation of the transferee.

This Petition for Review on Certiorari[1] assails the June 25, 2004 Decision[2] of the
Court of Appeals (CA) in CA-G.R. SP No. 80053, which contained the following
dispositive portion:

72
WHEREFORE, premises considered, the petition is hereby GRANTED
and this Court orders that the case be remanded to the court a quo for
further trial.

SO ORDERED.[3]

Likewise assailed is the appellate courts October 6, 2004 Resolution [4] denying
petitioners Motion for Reconsideration.

Factual Antecedents

This case concerns a 463-square meter parcel of land[5] covered by Transfer Certificate of
Title (TCT) No. 41860 in the name of Flaviana De Gracia (Flaviana). In 1980, Flaviana
died[6]intestate, leaving her half-sisters Hilaria Martin-Paguyo (Hilaria) and Elena Martin-
Alvarado (Elena) as her compulsory heirs.

In September 1982, Hilaria and Elena, by virtue of a private document


denominated Tapno Maamoan ti Sangalobongan,[7] waived all their hereditary rights to
Flavianas land in favor of Francisca Medrano (Medrano). It stated that the waiver was
done in favor of Medrano in consideration of the expenses that she incurred for Flavianas
medication, hospitalization, wake and burial. In the same year, Medrano built her
concrete bungalow on the land in question without any objection from Hilaria and Elena
or from their children.

When Hilaria and Elena died, some of their children affirmed the contents of the private
document executed by their deceased mothers. To that end, they executed separate Deeds
of Confirmation of Private Document and Renunciation of Rights in favor of Medrano.
[8]
They likewise affirmed in said documents that Medrano had been occupying and
possessing the subject property as owner since September 1982.

Due to the refusal of the other children[9] to sign a similar renunciation, Medrano filed a
Complaint[10] on April 27, 2001 for quieting of title, reconveyance, reformation of
instrument, and/or partition with damages against Pelagia M. Paguyo-Diaz (Pelagia),
Faustina Paguyo-Asumio (Faustina), Jesus Paguyo (Jesus), Veneranda Paguyo-Abrenica,
Emilio a.k.a. Antonio Alvarado, Francisca Alvarado-Diaz (Francisca) and Estrellita
Alvarado-Cordero (Estrellita). The case was docketed as Civil Case No. U-7316 and
raffled to Branch 48 of the Regional Trial Court (RTC) of Urdaneta,

73
Pangasinan. Medrano then caused the annotation of a notice of lis pendens on TCT No.
41860[11] on May 3, 2001.

Summons upon the original complaint was duly served upon Pelagia and Estrellita .[12]

On August 29, 2001, Medrano filed an Amended Complaint [13] impleading the widow
and children of Antonio Alvarado, in view of the latters death. [14] Summons upon the
amended complaint was served upon the other defendants, [15] but no longer served upon
Pelagia and Estrellita.

On April 2, 2002, respondent Estanislao D. De Vera (De Vera) filed an Answer with
Counterclaim.[16] De Vera presented himself as the real party-in-interest on the ground
that some of the named defendants (Faustina, Pelagia, Francisca, Elena Kongco-
Alvarado, Jesus, and Estrellita) had executed a Deed of Renunciation of Rights [17] in his
favor on March 23, 2002. He maintained that the Tapno Maamoan ti
Sangalobongan that was executed by the defendants predecessors in favor of Medrano
was null and void for want of consideration. Thus, while some children affirmed the
renunciation of their deceased mothers rights in the lot in favor of Medrano, the other
children renounced their hereditary rights in favor of De Vera.

Medrano filed a Motion to Expunge Answer with Counterclaim of Estanislao D. De Vera


and to Declare Defendants in Default.[18] She argued that respondent De Vera had no
personality to answer the complaint since he was not authorized by the named defendants
to answer in their behalf.

In an Order,[19] dated July 30, 2002, the trial court disagreed with Medranos argument and
admitted De Veras Answer with Counterclaim. The trial court opined that De Vera did
not need a special power of attorney from the defendants because he did not answer the
complaint in their behalf. De Vera made a voluntary appearance in the case as the
transferee of the defendants rights to the subject property. The trial court further
explained that when the presence of other parties is required for granting complete relief,
the court shall order them to be brought in as defendants. While it was unsure whether
De Vera was an indispensable party to the case, the trial court opined that at the very least
he was a necessary party for granting complete relief. It thus held that the admission of
De Veras Answer with Counterclaim is proper in order to avoid multiplicity of suits. [20] In
the same Order, the court declared the named defendants in default for not answering the
complaint despite valid service of summons. Thus, it appears that the court a quo treated
the named defendants and De Vera as distinct and separate parties.

74
Medranos response to the aforesaid order was two-fold. With regard to the order
declaring the named defendants in default, Medrano filed on February 13, 2003 a Motion
to Set Reception of Evidence Before the Branch Clerk of Court. [21] She argued that she
could present evidence ex parte against the defaulting defendants on the ground that she
presented alternative causes of action against them in her complaint. Her cause of action
on the basis of acquisitive prescription can be raised solely against the defaulting original
defendants.[22] She thus prayed to be allowed to present evidence ex parte with respect to
her claim of acquisitive prescription against the defaulting defendants. As for the order
admitting De Veras Answer with Counterclaim, Medrano filed on February 21, 2003 a
Motion for Reconsideration of Order dated July 30, 2002.[23] She asked the court to order
De Vera to file a pleading-in-intervention so that he could be properly named as a
defendant in the case.

In an Order[24] dated March 6, 2003, the trial court resolved to grant Medranos Motion to
Set Reception of Evidence. It ordered the conduct of ex parte presentation of evidence
on the same day and the continuation thereof to proceed on March 10, 2003. Thus,
Medrano presented her evidence ex parte on the set dates. On March 10, 2003, the case
was submitted for resolution.[25]

Given the courts standing order which admitted De Veras Answer with Counterclaim, De
Vera filed a Motion to Set the Case for Preliminary Conference on March 27, 2003.[26]

The trial court resolved petitioners and De Veras respective pending motions in its March
31, 2003 Order.[27] The trial court granted Medranos motion and set aside its Order which
admitted De Veras Answer with Counterclaim. Citing Rule 19 of the Rules of Court, the
court ordered De Vera to file a pleading-in-intervention so that he could be recognized as
a party-defendant. As a necessary consequence to this ruling, the trial court denied De
Veras motion to set the case for preliminary conference for prematurity.

De Vera did not comply with the courts order despite service upon his lawyer, Atty.
Simplicio M. Sevilleja, on April 2, 2003.

Ruling of the Regional Trial Court

The RTC rendered its Decision[28] on April 21, 2003. It ruled that ownership over the
titled property has vested in petitioners by virtue of good faith possession for more than
10 years; thus, it was no longer necessary to compel the defendants - heirs of Hilaria and
Elena - to execute an instrument to confirm Medranos rightful ownership over the land.

75
The trial court likewise held that the private document denominated as Tapno Maamoan
Ti Sangalobongan sufficiently conveyed to Medrano the subject property. The court held
that the conveyance was done in consideration of the various expenses that Medrano
incurred for Flavianas benefit. While the court conceded that the parcel of land was not
adequately described in the Tapno Maamoan ti Sangalobongan, its location, metes and
bounds were nonetheless confirmed by the defendants siblings in their respective deeds
of confirmation.

The dispositive portion of the Decision reads, in toto:

WHEREFORE, judgment is hereby rendered:

(1) Declaring [Medrano], substituted by her heirs, as the rightful and


lawful owner of the land covered by T.C.T. No. 41860;[29]

(2) Ordering the Register of Deeds of Tayug, Pangasinan to cancel


T.C.T. No. 41860 and to issue another Transfer Certificate of Title in the
name of [Medrano];

All other claims are hereby denied for lack of merit.

SO ORDERED.[30]

De Vera filed a Motion for Reconsideration[31] arguing that he was an indispensable party
who was not given an opportunity to present his evidence in the case. He also maintained
that Medrano was not the owner of the property, but a mere administratrix of the land as
evidenced by the records in SP Proc. No. 137577.[32]

De Veras motion was denied[33] for lack of merit on July 22, 2003. The court noted that
De Vera had no legal personality to file a motion for reconsideration because he did not
file a pleading-in-intervention. The trial court explained it would have allowed De Vera
to present his evidence in the case had he complied with the courts order to file a
pleading-in-intervention.

On September 10, 2003, De Vera filed a Manifestation[34] informing the trial court of his
intention to file a petition for certiorari and mandamus before the CA, pursuant to Rule
41, Section 1, second paragraph and Rule 65 of the Rules of Court.

On October 7, 2003, petitioners filed a Motion for Entry of Judgment and


Execution[35] before the trial court. They also filed a Counter-Manifestation[36] to De
76
Veras Manifestation.Petitioners insisted that De Vera, as a transferee pendente lite, was
bound by the final judgment or decree rendered against his transferors. Even assuming
that De Vera had a right to appeal, the period therefor had already lapsed on August 12,
2003.
In its Order[37] dated December 10, 2003, the court a quo maintained that De Vera was
not a party to the suit, hence his appeal would not stay the finality and execution of
judgment. Thus the trial court ordered the entry of judgment in Civil Case No. U-
7316. The writ of execution was issued on December 12, 2003.

De Vera sought reconsideration[38] of the above order but the same was denied [39] on the
basis that De Vera had no personality to assail any order, resolution, or decision of the
trial court in Civil Case No. U-7316.

The Register of Deeds of Tayug, Pangasinan complied with the writ by canceling TCT
No. 41860 in the name of Flaviana De Gracia and issuing TCT No. 65635 in the names
of petitioners[40] on April 19, 2004.

Proceedings before the Court of Appeals

De Vera argued in his Petition for Certiorari and Mandamus[41] before the CA that the
trial court erred in declaring the defendants in default and sought a writ compelling the
trial court to try the case anew. He insisted that he stepped into the shoes of the
defendants with regard to the subject property by virtue of the quitclaim that the
defendants executed in his favor. Thus, the trial court should have considered the
defendants as properly substituted by De Vera when he filed his Answer.

The standing order of the trial court with regard to De Vera at the time that it allowed
Medrano to present her evidence was to admit De Veras Answer with
Counterclaim. Thus, De Vera argued that it was improper for the trial court to have
allowed Medrano to present her evidence ex parte because it had yet to rule on whether
De Vera had personality to participate in the proceedings.

Ruling of the Court of Appeals

The appellate court agreed with De Vera. The CA noted that the ex parte presentation of
evidence took place on March 6 and 10, 2003; while the Motion to Expunge Answer and
Require Filing of Pleading-in-Intervention was granted much later on March 31,
2003. The CA held that the trial court gravely abused its discretion by allowing Medrano
to present her evidence ex parte while De Veras personality to participate in the case still

77
remained unresolved. The premature ex parte presentation of evidence rendered a
pleading-in-intervention moot and academic.

The CA pointed out that the trial court should have exercised its authority to order the
substitution of the original defendants instead of requiring De Vera to file a pleading-in-
intervention. This is allowed under Rule 3, Section 19 of the Rules of Court. Since a
transferee pendente lite is a proper party[42] to the case, the court can order his outright
substitution for the original defendants.

The CA further held that De Veras failure to file the necessary pleading-in-intervention
was a technical defect that could have been easily cured. The trial court could have
settled the controversy completely on its merits had it admitted De Veras Answer with
Counterclaim. Not affording De Vera his right to adduce evidence is not only a manifest
grave abuse of discretion amounting to lack or excess of jurisdiction but also runs counter
to the avowed policy of avoiding multiplicity of suits.

The appellate court then ordered the case remanded to the trial court to afford De Vera an
opportunity to present his evidence.

Petitioners filed a Motion for Reconsideration,[43] which motion was denied[44] for lack of
merit on October 6, 2004.

Issues

I
Whether De Vera could participate in Civil Case No. U-7316
without filing a motion to intervene

II
Whether De Vera is bound by the judgment against his transferors

III
Whether it was proper for the CA to take cognizance of
respondents Petition for Certiorari and Mandamus

Our Ruling

We sustain the CAs ruling that the trial court gravely abused its discretion in refusing to
allow De Vera to participate in the case and requiring him to file a motion to intervene.
78
The trial court misjudged De Veras interest in Civil Case No. U-7316. It held that De
Veras right to participate in the case was independent of the named defendants. Because
of its ruling that De Vera had an independent interest, the trial court considered his
interest as separate from Medranos claims against the named defendants, and allowed the
latter to be tried separately. Thus, it admitted De Veras Answer with Counterclaim but
declared the named defendants in default and allowed the ex parte presentation of
evidence by Medrano against the named defendants.

The trial courts approach is seriously flawed because De Veras interest is not independent
of or severable from the interest of the named defendants. De Vera is
a transferee pendente lite of the named defendants (by virtue of the Deed of
Renunciation of Rights that was executed in his favor during the pendency of Civil Case
No. U-7316). His rights were derived from the named defendants and, as
transferee pendente lite, he would be bound by any judgment against his transferors
under the rules of res judicata.[45] Thus, De Veras interest cannot be considered and tried
separately from the interest of the named defendants.

It was therefore wrong for the trial court to have tried Medranos case against the
named defendants (by allowing Medrano to present evidence ex parte against them) after
it had already admitted De Veras answer. What the trial court should have done is to treat
De Vera (as transferee pendente lite) as having been joined as a party-defendant, and to
try the case on the basis of the answer De Vera had filed and with De Veras
participation. As transferee pendente lite, De Vera may be allowed to join the original
defendants under Rule 3, Section 19:

SEC. 19. Transfer of interest. In case of any transfer of interest, the action
may be continued by or against the original party, unless the court upon
motion directs the person to whom the interest is transferred to be
substituted in the action or joined with the original party. (Emphasis
supplied)

The above provision gives the trial court discretion to allow or disallow the
substitution or joinder by the transferee. Discretion is permitted because, in general, the
transferees interest is deemed by law as adequately represented and protected by the
participation of his transferors in the case. There may be no need for the
transferee pendente lite to be substituted or joined in the case because, in legal
contemplation, he is not really denied protection as his interest is one and the same as his
transferors, who are already parties to the case.[46]
79
While the rule allows for discretion, the paramount consideration for the exercise thereof
should be the protection of the parties interests and their rights to due process. In the
instant case, the circumstances demanded that the trial court exercise its discretion in
favor of allowing De Vera to join in the action and participate in the trial. It will be
remembered that the trial court had already admitted De Veras answer when it declared
the original defendants in default. As there was a transferee pendente lite whose answer
had already been admitted, the trial court should have tried the case on the basis of that
answer, based on Rule 9, Section 3(c):

Effect of partial default. When a pleading asserting a claim states a


common cause of action against several defending parties, some of whom
answer and the others fail to do so, the court shall try the case against all
upon the answers thus filed and render judgment upon the evidence
presented.

Thus, the default of the original defendants should not result in the ex parte presentation
of evidence because De Vera (a transferee pendente lite who may thus be joined as
defendant under Rule 3, Section 19) filed an answer. The trial court should have tried the
case based on De Veras answer, which answer is deemed to have been adopted by the
non-answering defendants.[47]

To proceed with the ex parte presentation of evidence against the named


defendants after De Veras answer had been admitted would not only be a violation of
Rule 9, Section 3(c), but would also be a gross disregard of De Veras right to due
process. This is because the ex parte presentation of evidence would result in a default
judgment which would bind not just the defaulting defendants, but also De Vera,
precisely because he is a transferee pendente lite.[48] This would result in an anomaly
wherein De Vera would be bound by a default judgment even if he had filed an answer
and expressed a desire to participate in the case.

We note that under Rule 3, Section 19, the substitution or joinder of the transferee is upon
motion, and De Vera did not file any motion for substitution or joinder. However, this
technical flaw may be disregarded for the fact remains that the court had already admitted
his answer and such answer was on record when the ex parte presentation of evidence
was allowed by the court. Because De Veras answer had already been admitted, the court
should not have allowed the ex parte presentation of evidence.

80
We are not persuaded by petitioners insistence that De Vera could not have
participated in the case because he did not file a motion to intervene. The purpose of
intervention is to enable a stranger to an action to become a party in order for him to
protect his interest and for the court to settle all conflicting claims. Intervention is allowed
to avoid multiplicity of suits more than on due process considerations. The intervenor can
choose not to participate in the case and he will not be bound by the judgment.

In this case, De Vera is not a stranger to the action but a transferee pendente
lite. As mentioned, a transferee pendente lite is deemed joined in the pending action
from the moment when the transfer of interest is perfected.[49] His participation in the case
should have been allowed by due process considerations.[50]

We likewise adopt with approval the appellate courts observation that De Veras failure to
file a pleading-in-intervention will not change the long foregone violation of his right to
due process. The ex parte presentation of evidence had already been terminated when the
trial court required De Vera to file his pleading-in-intervention. Even if he complied with
the order to file a pleading-in-intervention, the damage had already been done. The
precipitate course of action taken by the trial court rendered compliance with its order
moot.
Given the Courts finding that the ex parte presentation of evidence constituted a violation
of due process rights, the trial courts judgment by default cannot bind De Vera. A void
judgment cannot attain finality and its execution has no basis in law. The case should be
remanded to the trial court for trial based on De Veras answer and with his participation.

Certiorari petition before the CA proper

Petitioners point out that De Vera admitted receiving the trial courts Order denying his
motion for reconsideration on July 28, 2003. Thus he only had until August 12, 2003 to
file an appeal of the decision. Having lost his right to appeal by allowing the period
therefor to lapse, respondent has also lost his right to file a petition for certiorari before
the CA. A special civil action for certiorari is not a substitute for the lost remedy of
appeal.

Respondent argues that a Rule 65 certiorari petition before the CA is proper because an
ordinary appeal would not have been speedy and adequate remedy to properly relieve
him from the injurious effects of the trial courts orders.

We agree with respondent that ordinary appeal was not an adequate remedy under the
circumstances of the case. An appeal seeks to correct errors of judgment committed by a
court, which has jurisdiction over the person and the subject matter of the dispute. In the
81
instant case, the trial court maintained that it had no jurisdiction over De Vera because it
did not consider him a party to the case. Its stance is that De Vera, as a non-party to the
case, could not participate therein, much less assail any of the orders, resolutions, or
judgments of the trial court. An appeal would have been an illusory remedy in this
situation because his notice of appeal would have certainly been denied on the ground
that he is not a party to the case.

On the other hand, certiorari is an extraordinary remedy for the correction of errors of
jurisdiction. It is proper if the court acted without or in grave abuse of discretion
amounting to lack or excess of jurisdiction and there is no appeal or any plain, speedy,
and adequate remedy in law. Given the circumstance that the final decision in Civil Case
No. U-7316 prejudices De Veras rights despite the fact that he was not recognized as a
party thereto and was not allowed to assail any portion thereof, De Veras remedy was to
annul the trial court proceedings on the ground that it was conducted with grave abuse of
discretion amounting to lack of jurisdiction. With such annulment, the trial court should
hear the case anew with De Vera fully participating therein.

WHEREFORE, the petition is DENIED. The June 25, 2004 Decision of the Court of
Appeals in CA-G.R. SP No. 80053 and its October 6, 2004 Resolution are AFFIRMED.

Costs against petitioners.

SO ORDERED.

MARIANO C. DEL CASTILLO


Associate Justice
WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO LUCAS P. BERSAMIN


Associate Justice Associate Justice

82
JOSE PORTUGAL PEREZ
Associate Justice

C E R T I F I CAT I O N

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the
conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

*
In lieu of Associate Justice Presbitero J. Velasco, Jr., per Special Order No. 876
dated August 2, 2010.
[1]
Rollo, pp. 14-56.
[2]
CA rollo, pp. 152-160; penned by Associate Justice Eugenio S. Labitoria and
concurred in by Associate Justices Jose L. Sabio, Jr. and Jose C. Mendoza (now
a Member of this Court).
[3]
Id. at 160.
[4]
Id. at 205-206.
[5]
Located at Roxas St., cor. Cerezo St, Barangay Guiset Norte, San Manuel,
Pangasinan.

83
[6]
Flaviana De Gracia died on February 14, 1980 per Certificate of Death, records,
p. 10.
[7]
Exhibit C, Folder of Exhibits.
[8]
Two of Hilarias children, Victorio and Miguel Paguyo, executed the Deed of
Confirmation on September 23, 1998, Exhibit D, Folder of Exhibits; while four
of Elenas children, Elet, Francisco, Dolores, and Felipe, executed their own
Deed of Confirmation on January 26, 2000, Exhibit E, Folder of Exhibits.
[9]
Pelagia Diaz, Faustina Asumio, Jesus Paguyo, Veneranda Abrenica, Emilio a.ka.
Antonio Alvarado, Francisca Diaz, and Estrellita Cordero.
[10]
Records, pp. 2-8 with Annexes.
[11]
Entry No. 196296, rollo, p. 103.
[12]
Records, p. 32.
[13]
Id. at 136-146.
[14]
Ex-Parte Notice of Death and Motion to Amend Complaint, id. at 134-135.
[15]
Id. at 170 and 197.
[16]
Id. at188-194.
[17]
Id. at 192-193.
[18]
Id. at 206-208. Dated July 1, 2002 and filed on July 9, 2002.
[19]
Id. at 225-226; penned by Judge Alicia B. Gonzales-Decano.
[20]
Id. at 226.
[21]
Id. at 230-231.
[22]
Id. at 231.
[23]
Id. at 233-234.
[24]
Id. at 237.
[25]
Id. at 239. Meanwhile, Francisca Medrano died and her daughter Edith M.
Alfaro was entered as her legal representative (Id. at 248).
[26]
Id. at 247.
[27]
Id. at 249-250.
[28]
Id. at 254-262.
[29]
See Order dated December 11, 2003, id. at 390.
[30]
Id. at 262.
[31]
Id. at 269-271.
[32]
Id. at 275-276.
[33]
Id. at 285-286.
[34]
Id. at 289.
[35]
Id. at 297-299.
[36]
Id. at 306-307.
[37]
Id. at 386-387.
[38]
Id. at 397-399.
[39]
Order dated May 13, 2004; id. at 415.
84
[40]
Id. at 428-429.
[41]
Filed on October 23, 2003. Entitled Pelagia M. Paguyo-Diaz, Jesus M. Paguyo,
Faustina M. Paguyo-Asumio, Franscisca M. Alvarado-Diaz, Elena Kongco-
Alvarado, and Estrellita M. Alvarado-Cordero, substituted by Estanislao de Vera
v. Regional Trial Court, First Judicial Region, Branch 48, Urdaneta City,
Pangasinan, Heirs of Francisca R. Medrano, namely: Alfonso Medrano, Jr.,
Editha M. Alfaro, Marites M. Palentinos, and Giovani Medrano, represented by
their legal representative, Editha M. Alfaro. CA rollo, pp. 10-27.
[42]
Heirs of Francisco Guballa, Sr. v. Court of Appeals, G.R. Nos. L-78223 and L-
79403, December 19, 1988, 168 SCRA 518, 534.
[43]
CA rollo, pp. 165-184.
[44]
Id. at 205-206.
[45]
RULES OF COURT, Rule 39, Section 47(b).
[46]
Santiago Land Development Corporation v. Court of Appeals, 334 Phil. 741,
748 (1997), and its Resolution in 342 Phil. 643, 649 (1997).
[47]
See Heirs of Mamerto Manguiat v. Court of Appeals, G.R. Nos. 150768 and
160176, August 20, 2008, 562, SCRA 422, 432-433. See also Grageda v.
Gomez, G.R. No. 169536, September 21, 2007, 533 SCRA 677, 692-693.
[48]
RULES OF COURT, Rule 39, Section 47(b).
[49]
Santiago Land Development Corporation v. Court of Appeals, supra note 46
at 748.
[50]
See also Dela Cruz v. Joaquin, G.R. No. 162788, July 28, 2005, 464 SCRA 576,
584, which states: The rule on the substitution of parties was crafted to protect
every partys right to due process. x x x [N]o adjudication can be made against
the successor of the deceased if the fundamental right to a day in court is
denied. The Court has nullified not only trial proceedings conducted without the
appearance of the legal representatives of the deceased, but also the resulting
judgments.

85
THIRD DIVISION

JOSE R. MARTINEZ, G. R. No. 160895


Petitioner,
Present:
QUISUMBING,
- versus - Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
REPUBLIC OF THE PHILIPPINES, VELASCO, JR., JJ.
Respondents.
Promulgated:

October 30, 2006

x---------------------------------------------------------------------------------x

DECISION

TINGA, J.:

The central issue presented in this Petition for Review is whether an order of
general default issued by a trial court in a land registration case bars the Republic
of the Philippines, through the Office of the Solicitor General, from interposing an
appeal from the trial courts subsequent decision in favor of the applicant.

The antecedent facts follow.

On 24 February 1999, petitioner Jose R. Martinez (Martinez) filed a petition


for the registration in his name of three (3) parcels of land included in the Cortes,
Surigao del Sur Cadastre. The lots, individually identified as Lot No. 464-A, Lot
No. 464-B, and Lot No. 370, Cad No. 597, collectively comprised around 3,700
square meters. Martinezalleged that he had purchased lots in 1952 from his uncle,
86
whose predecessors-in-interest were traceable up to the 1870s. It was claimed
that Martinez had remained in continuous possession of the lots; that the lots had
remained unencumbered; and that they became private property through
prescription pursuant to Section 48(b) of Commonwealth Act No.
141. Martinez further claimed that he had been constrained to initiate the
proceedings because the Director of the Land Management Services had failed to
do so despite the completion of the cadastral survey of Cortes, Surigao del Sur.[1]

The case was docketed as Land Registration Case No. N-30 and raffled to
the Regional Trial Court (RTC) of Surigao del Sur, Branch 27. The Office of the
Solicitor General (OSG) was furnished a copy of the petition. The trial court set the
case for hearing and directed the publication of the corresponding Notice of
Hearing in the Official Gazette. On 30 September 1999, the OSG, in behalf of the
Republic of the Philippines, opposed the petition on the grounds that appellees
possession was not in accordance with Section 48(b) of Commonwealth Act No.
141; that his muniments of title were insufficient to prove bona-fide acquisition
and possession of the subject parcels; and that the properties formed part of the
public domain and thus not susceptible to private appropriation.[2]

Despite the opposition filed by the OSG, the RTC issued an order of general
default, even against the Republic of the Philippines, on 29 March 2000. This
ensued when during the hearing of even date, no party appeared before the Court to
oppose Martinezs petition.[3]

Afterwards, the trial court proceeded to receive Martinezs oral and


documentary evidence in support of his petition. On 1 August 2000, the RTC
rendered a Decision[4]concluding that Martinez and his predecessors-in-interest had
been for over 100 years in possession characterized as continuous, open, public,
and in the concept of an owner. The RTC thus decreed the registration of the three
(3) lots in the name of Martinez.

From this Decision, the OSG filed a Notice of Appeal dated 28 August 2000,
[5]
which was approved by the RTC. However, after the records had been
transmitted to the Court of Appeals, the RTC received a letter dated 21 February
2001[6] from the Land Registration Authority (LRA) stating that only Lot Nos. 464-
A and 464-B were referred to in the Notice of Hearing published in the Official
Gazette; and that Lot No. 370, Cad No. 597 had been deliberately omitted due to
the lack of an approved survey plan for that property. Accordingly, the LRA
manifested that this lot should not have been adjudicated to Martinez for lack of

87
jurisdiction. This letter was referred by the RTC to the Court of Appeals for
appropriate action.[7]

On 10 October 2003, the Court of Appeals promulgated the assailed


Decision,[8] reversing the RTC and instead ordering the dismissal of the petition for
registration. In light of the opposition filed by the OSG, the appellate court found
the evidence presented by Martinez as insufficient to support the registration of the
subject lots. The Court of Appeals concluded that the oral evidence presented
by Martinez merely consisted of general declarations of ownership, without
alluding to specific acts of ownership performed by him or his predecessors-in-
interest. It likewise debunked the documentary evidence presented by Martinez,
adjudging the same as either inadmissible or ineffective to establish proof of
ownership.

No motion for reconsideration appears to have been filed with the Court of
Appeals by Martinez, who instead directly assailed its Decision before this Court
through the present petition.

We cannot help but observe that the petition, eight (8) pages in all, was
apparently prepared with all deliberate effort to attain nothing more but the
perfunctory. The arguments raised center almost exclusively on the claim that the
OSG no longer had personality to oppose the petition, or appeal its allowance by
the RTC, following the order of general default. Starkly put, the [OSG] has no
personality to raise any issue at all under the circumstances pointed out
hereinabove.[9] Otherwise, it is content in alleging that [Martinez] presented
sufficient and persuasive proof to substantiate the fact that his title to Lot Nos. 464-
A and 464-B is worth the confirmation he seeks to be done in this registration case;
[10]
and that the RTC had since issued a new Order dated 1 September 2003,
confirming Martinezs title over Lot No. 370.

In its Comment dated 24 May 2004,[11] the OSG raises several substantial
points, including the fact that it had duly opposed Martinezs application for
registration before the RTC; that jurisprudence and the Rules of Court
acknowledge that a party in default is not precluded from appealing the
unfavorable judgment; that the RTC had no jurisdiction over Lot No. 370 since its
technical description was not published in the Official Gazette; and that as found
by the Court of Appeals the evidence presented by Martinez is insufficient for
registering the lots in his name.[12] Despite an order from the Court requiring him to
file a Reply to the Comment, counsel for Martinez declined to do so, explaining,
among others, that he felt he would only be taxing the collective patience of this
88
[Court] if he merely repeats x x x what petitioner had succinctly stated x x x on
pages four (4) to seven (7) of his said petition. Counsel for petitioner was
accordingly fined by the Court.[13]
The Courts patience is taxed less by redundant pleadings than by
insubstantial arguments. The inability of Martinez to offer an effective rebuttal to
the arguments of the OSG further debilitates what is an already weak petition.

The central question, as posed by Martinez, is whether the OSG could have
still appealed the RTC decision after it had been declared in default. The OSG
argues that a party in default is not precluded from filing an appeal,
citing Metropolitan Bank & Trust Co. v. Court of Appeals,[14] and asserts that [t]he
Rules of Court expressly provides that a party who has been declared in default
may appeal from the judgment rendered against him.[15]

There is error in that latter, unequivocal averment, though one which does
not deter from the ultimate correctness of the general postulate that a party
declared in default is allowed to pose an appeal. Elaboration is in order.

We note at the onset that the OSG does not impute before this Court that the
RTC acted improperly in declaring public respondent in default, even though an
opposition had been filed to Martinezs petition. Under Section 26 of Presidential
Decree No. 1529, as amended, the order of default may be issued [i]f no person
appears and answers within the time allowed. The RTC appears to have issued the
order of general default simply on the premise that no oppositor appeared before it
on the hearing of 29 March 2000. But it cannot be denied that the OSG had already
duly filed its Opposition to Martinezs petition long before the said hearing. As we
held in Director of Lands v. Santiago:[16]

[The] opposition or answer, which is based on substantial


grounds, having been formally filed, it was improper for the
respondent Judge taking cognizance of such registration case to
declare the oppositor in default simply because he failed to appear on
the day set for the initial healing. The pertinent provision of law which
states: "If no person appears and answers within the time allowed, the
court may at once upon motion of the applicant, no reason to the
contrary appearing, order a general default to be recorded . . . ,"
cannot be interpreted to mean that the court can just disregard the
answer before it, which has long been filed, for such an interpretation
would be nothing less than illogical, unwarranted, and unjust. Had the
law intended that failure of the oppositor to appear on the date of the
89
initial hearing would be a ground for default despite his having filed
an answer, it would have been so stated in unmistakable terms,
considering the serious consequences of an order of default.
Especially in this case where the greater public interest is involved as
the land sought to be registered is alleged to be public land, the
respondent Judge should have received the applicant's evidence and
set another date for the reception of the oppositor's evidence. The
oppositor in the Court below and petitioner herein should have been
accorded ample opportunity to establish the government's claim.[17]

Strangely, the OSG did not challenge the propriety of the default order,
whether in its appeal before the Court of Appeals or in its petition before this
Court. It would thus be improper for the Court to make a pronouncement on the
validity of the default order since the same has not been put into issue.
Nonetheless, we can, with comfort, proceed from same apparent premise of the
OSG that the default order was proper or regular.

The juridical utility of a declaration of default cannot be disputed. By


forgoing the need for adversarial proceedings, it affords the opportunity for the
speedy resolution of cases even as it penalizes parties who fail to give regard or
obedience to the judicial processes.

The extent to which a party in default loses standing in court has been the
subject of considerable jurisprudential debate. Way back in 1920, in Velez v.
Ramas,[18] we declared that the defaulting defendant loses his standing in court, he
not being entitled to the service of notices in the case, nor to appear in the suit in
any way. He cannot adduce evidence; nor can he be heard at the final hearing.
[19]
These restrictions were controversially expanded in Lim Toco v. Go Fay,
[20]
decided in 1948, where a divided Court pronounced that a defendant in default
had no right to appeal the judgment rendered by the trial court, except where a
motion to set aside the order of default had been filed. This, despite the point raised
by Justice Perfecto in dissent that there was no provision in the then Rules of Court
or any law depriving a defaulted defendant of the right to be heard on appeal.[21]

The enactment of the 1964 Rules of Court incontestably countermanded


the Lim Toco ruling. Section 2, Rule 41 therein expressly stated that [a] party who
has been declared in default may likewise appeal from the judgment rendered
against him as contrary to the evidence or to the law, even if no petition for relief to
set aside the order of default has been presented by him in accordance with Rule
38.[22] By clearly specifying that the right to appeal was available even if no
90
petition for relief to set aside the order of default had been filed, the then fresh
Rules clearly rendered the Lim Toco ruling as moot.

Another provision in the 1964 Rules concerning the effect of an order of


default acknowledged that a party declared in default shall not be entitled to notice
of subsequent proceedings, nor to take part in the trial. [23] Though it might be
argued that appellate proceedings fall part of the trial since there is no final
termination of the case as of then, the clear intent of the 1964 Rules was to
nonetheless allow the defaulted defendant to file an appeal from the trial court
decision. Indeed, jurisprudence applying the 1964 Rules was unhesitant to affirm a
defaulted defendants right to appeal, as guaranteed under Section 2 of Rule 41,
even as Lim Toco was not explicitly abandoned.

In the 1965 case of Antonio, et al. v. Jacinto,[24] the Court acknowledged that
the prior necessity of a ruling setting aside the order of default however, was
changed by the Revised Rules of Court. Under Rule 41, section 2, paragraph 3, a
party who has been declared in default may likewise appeal from the judgment
rendered against him as contrary to the evidence or to the law, even if no petition
for relief to set aside the order of default has been presented by him in accordance
with Rule 38.[25] It was further qualified in Matute v. Court of Appeals[26] that the
new availability of a defaulted defendants right to appeal did not preclude a
defendant who has been illegally declared in default from pursuing a more speedy
and efficacious remedy, like a petition for certiorari to have the judgment by
default set aside as a nullity.[27]

In Tanhu v. Ramolete,[28] the Court cited with approval the commentaries of


Chief Justice Moran, expressing the reformulated doctrine that following Lim Toco,
a defaulted defendant cannot adduce evidence; nor can he be heard at the final
hearing, although

[under Section 2, Rule 41,] he may appeal the judgment rendered against him on
the merits.[29]

Thus, for around thirty-odd years, there was no cause to doubt that a
defaulted defendant had the right to appeal the adverse decision of the trial court
even without seeking to set aside the order of default. Then, in 1997, the Rules of
Civil Procedure were amended, providing for a new Section 2, Rule 41. The new
provision reads:

91
SECTION 1. Subject of appeal.An appeal may be taken from a
judgment or final order that completely disposes of the case, or of a
particular matter therein when declared by these Rules to be
appealable.

No appeal may be taken from:

(a) An order denying a motion for new trial or reconsideration;

(b) An order denying a petition for relief or any similar motion


seeking relief from judgment;

(c) An interlocutory order;

(d) An order disallowing or dismissing an appeal;

(e) An order denying a motion to set aside a judgment by


consent, confession or compromise on the ground of fraud, mistake or
duress, or any other ground vitiating consent;

(f) An order of execution;

(g) A judgment or final order for or against or one or more of


several parties or in separate claims, counterclaims, cross-claims and
third-party complaints, while the main case is pending, unless the
court allows an appeal therefrom; and

(h) An order dismissing an action without prejudice.

In all the above instances where the judgment or final order is


not appealable, the aggrieved party may file an appropriate special
civil action under Rule 65.

Evidently, the prior warrant that a defaulted defendant had the right to appeal
was removed from Section 2, Rule 41. On the other hand, Section 3 of Rule 9 of

92
the 1997 Rules incorporated the particular effects on the parties of an order of
default:

Sec. 3. Default; declaration of.If the defending party fails to


answer within the time allowed therefor, the court shall, upon motion
of the claiming party with notice to the defending party, and proof of
such failure, declare the defending party in default. Thereupon, the
court shall proceed to render judgment granting the claimant such
relief as his pleading may warrant, unless the court in its discretion
requires the claimant to submit evidence. Such reception of evidence
may be delegated to the clerk of court.

(a) Effect of order of default.A party in default shall be entitled


to notice of subsequent proceedings but shall not take part in the trial.

(b) Relief from order of default.A party declared in default may


any time after notice thereof and before judgment file a motion under
oath to set aside the order of default upon proper showing that his
failure to answer was due to fraud, accident, mistake or excusable
negligence and that he has a meritorious defense. In such case, the
order of default may be set aside on such terms and conditions as the
judge may impose in the interest of justice.

(c) Effect of partial default.When a pleading asserting a claim


states a common cause of action against several defending parties,
some of whom answer and the others fail to do so, the court shall try
the case against all upon the answers thus filed and render judgment
upon the evidence presented.

(d) Extent of relief to be awarded.A judgment rendered against


a party in default shall not exceed the amount or be different in kind
from that prayed for nor award unliquidated damages.

xxx

93
It cannot be escaped that the old provision expressly guaranteeing the right
of a defendant declared in default to appeal the adverse decision was not replicated
in the 1997 Rules of Civil Procedure. Should this be taken as a sign that under the
1997 Rules a defaulted defendant no longer has the right to appeal the trial court
decision, or that the Lim Toco doctrine has been reinstated?

If post-1997 jurisprudence and the published commentaries to the 1997


Rules were taken as an indication, the answer should be in the negative. The right
of a defaulted defendant to appeal remains extant.

By 1997, the doctrinal rule concerning the remedies of a party declared in


default had evolved into a fairly comprehensive restatement as offered in Lina v.
Court of Appeals:[30]

a) The defendant in default may, at any time after discovery


thereof and before judgment, file a motion, under oath, to set aside the
order of default on the ground that his failure to answer was due to
fraud, accident, mistake or excusable neglect, and that he has
meritorious defenses; (Sec 3, Rule 18)

b) If the judgment has already been rendered when the


defendant discovered the default, but before the same has become
final and executory, he may file a motion for new trial under Section
1(a) of Rule 37;

c) If the defendant discovered the default after the judgment has


become final and executory, he may file a petition for relief under
Section 2 of Rule 38; and

d) He may also appeal from the judgment rendered against him


as contrary to the evidence or to the law, even if no petition to set
aside the order of default has been presented by him. (Sec. 2, Rule 41)
[31]

The fourth remedy, that of appeal, is anchored on Section 2, Rule 41 of the


1964 Rules. Yet even after that provisions deletion under the 1997 Rules, the Court
did not hesitate to expressly rely again on the Lina doctrine, including the
pronouncement that a defaulted defendant may appeal from the judgment rendered
against him. This can be seen in the cases of Indiana Aerospace University v.
94
Commission on Higher Education,[32] Tan v. Dumarpa,[33] and Crisologo v. Globe
Telecom, Inc.[34]

Annotated textbooks on the 1997 Rules of Civil Procedure similarly


acknowledge that even under the new rules, a defaulted defendant retains the right
to appeal as previously confirmed under the old Section 2, Rule 41. In his textbook
on Civil Procedure, Justice Francisco answers the question What are the remedies
available to a defending party in default? with a reiteration of the Lina doctrine,
including the remedy that a defaulted defendant may also appeal from the
judgment rendered against him as contrary to the evidence or to the law, even if no
petition to set aside the order of default has been presented by him. [35] Justice
Regalado also restates the Lina rule in his textbook on Civil Procedure, opining
that the remedies enumerated therein, even if under the former Rules of Procedure,
would hold true under the present amended Rules.[36] Former Court of Appeals
Justice Herrerra likewise reiterates the Lina doctrine, though with the caveat that
an appeal from an order denying a petition for relief from judgment was no longer
appealable under Section 1, Rule 41 of the 1997 Rules.[37] Herrera further adds:

Section 2, paragraph [2] of the former Rule 41, which allows an


appeal from a denial of a petition for relief, was deleted from the
present Rule, and confined appeals to cases from a final judgment or
final order that completely disposes of the case, or of a particular
matter therein, when declared by these rules to be appealable. A
judgment by default may be considered as one that completely
disposes of the case.[38]

We are hard-pressed to find a published view that the enactment of the 1997
Rules of Civil Procedure accordingly withdrew the right, previously granted under
the 1964 Rules, of a defaulted defendant to appeal the judgment by default against
him. Neither is there any provision under the 1997 Rules which expressly denies
the defaulted defendant such a right. If it is perplexing why the 1997 Rules deleted
the previous authorization under the old Section 2, Rule 41 (on subject of appeal),
it is perhaps worth noting that its counterpart provision in the 1997 Rules, now
Section 1, Rule 41, is different in orientation even as it also covers subject of
appeal. Unlike in the old provision, the bulk of the new provision is devoted to
enumerating the various rulings from which no appeal may be taken, and
nowhere therein is a judgment by default included. A declaration therein that a
defaulted defendant may still appeal the judgment by default would have seemed
out of place.

95
Yet even if it were to assume the doubtful proposition that this contested
right of appeal finds no anchor in the 1997 Rules, the doctrine still exists, applying
the principle of stare decisis. Jurisprudence applying the 1997 Rules has continued
to acknowledge the Lina doctrine which embodies this right to appeal as among the
remedies of a defendant, and no argument in this petition persuades the Court to
rule otherwise.

In Rural Bank of Sta. Catalina v. Land Bank of the Philippines,[39] the Court,
through Justice Callejo, Sr., again provided a comprehensive restatement of the
remedies of the defending party declared in default, which we adopt for purposes
of this decision:

It bears stressing that a defending party declared in default loses


his standing in court and his right to adduce evidence and to present
his defense. He, however, has the right to appeal from the judgment
by default and assail said judgment on the ground, inter alia, that the
amount of the judgment is excessive or is different in kind from that
prayed for, or that the plaintiff failed to prove the material allegations
of his complaint, or that the decision is contrary to law. Such party
declared in default is proscribed from seeking a modification or
reversal of the assailed decision on the basis of the evidence submitted
by him in the Court of Appeals, for if it were otherwise, he would
thereby be allowed to regain his right to adduce evidence, a right
which he lost in the trial court when he was declared in default, and
which he failed to have vacated. In this case, the petitioner sought the
modification of the decision of the trial court based on the evidence
submitted by it only in the Court of Appeals.[40]

If it cannot be made any clearer, we hold that a defendant party declared in


default retains the right to appeal from the judgment by default on the ground that
the plaintiff failed to prove the material allegations of the complaint, or that the
decision is contrary to law, even without need of the prior filing of a motion to set
aside the order of default. We reaffirm that the Lim Toco doctrine, denying such
right to appeal unless the order of default has been set aside, was no longer
controlling in this jurisdiction upon the effectivity of the 1964 Rules of Court, and
up to this day.

Turning to the other issues, we affirm the conclusion of the Court of Appeals
that Martinez failed to adduce the evidence needed to secure the registration of the
subject lots in his name.
96
It should be noted that the OSG, in appealing the case to the Court of
Appeals, did not introduce any new evidence, but simply pointed to the
insufficiency of the evidence presented by Martinez before the trial court. The
Court of Appeals was careful to point out that the case against Martinez was
established not by the OSGs evidence, but by petitioners own insufficient
evidence. We adopt with approval the following findings arrived at by the Court of
Appeals, thus:

The burden of proof in land registration cases is incumbent on


the applicant who must show that he is the real and absolute owner in
fee simple of the land applied for. Unless the applicant succeeds in
showing by clear and convincing evidence that the property involved
was acquired by him or his ancestors by any of the means provided
for the proper acquisition of public lands, the rule is settled that the
property must be held to be a part of the public domain. The applicant
must, therefore, present competent and persuasive proof to
substantiate his claim. He may not rely on general statements, or mere
conclusions of law other than factual evidence of possession and title.

Considered in the light of the opposition filed by the Office of


the Solicitor General, we find the evidence adduced by appellee, on
the whole, insufficient to support the registration of the subject parcels
in his name. To prove the provenance of the land, for one, all that
appellee proffered by way of oral evidence is the following cursory
testimony during his direct examination, viz:

xxxx

Q You mentioned that you are the owner of these three (3) parcels of
land. How did you begin the ownership of the same?
A I bought it from my uncles Julian Martinez and Juan Martinez.

xxxx

Q x x x x Who took possession of these parcels of land from then on?


A I took possession, sir

Q As owner?
A Yes, as owner.
97
Q Up to the present who is in possession as owner of these parcels of
land?
A I took possession.

Q Before Julian Martinez and Juan Martinez sold these parcels of land
before you took possession who were the owners and in
possession of these?
A Hilarion Martinez, the father of my predecessors-in-interest and
also my grandfather.

xxxx

Court:

Q Of your own knowledge[,] where [sic] did your grandfather


Hilarion Martinez acquire these lands?
A According to my grandfather he bought that land from a certain
Juan Casano in the year 1870s[,] I think.

xxxx

Q By the way[,] when did your grandfather Hilarion Martinez die?


A Either in 1920 or 1921.

Q Since you said your immediate predecessors-in-interest Julian


Martinez and Juan Martinez inherited the same from your
grandfather. Can you say it the same that your predecessors-in-
interest were the owners and possessors of the same since 1921
up to the time they sold the land to you in 1952?
A Yes, sir.

xxxx

In the dreary tradition of most land registration cases,


appellee has apparently taken the absence of representation for
appellant at the hearing of his petition as license to be perfunctory
in the presentation of his evidence. Actual possession of land,
98
however, consists in the manifestation of acts of dominion over it
of such a nature as a party would naturally exercise over his own
property. It is not enough for an applicant to declare himself or
his predecessors-in-interest the possessors and owners of the land
for which registration is sought. He must present specific acts of
ownership to substantiate the claim and cannot just offer general
statements which are mere conclusions of law requiring
evidentiary support and substantiation.

The record shows that appellee did not fare any better with the
documentary evidence he adduced before the trial court. The October
20, 1952 Deed of Sale by which appellee claims to have purchased
the subject parcels from his uncle, Julian Martinez, was not
translated from the vernacular in which it was executed and, by
said token, was inadmissible in evidence. Having submitted a
white print copy of the survey plan for Lot Nos. 464-A and 464-B,
appellee also submitted the tracing cloth plan for Lot No. 370
which does not, however, appear to be approved by the Director of
Lands. In much the same manner that the submission of the original
tracing cloth plan is a mandatory statutory requirement which cannot
be waived, the rule is settled that a survey plan not approved by the
Director of Lands is not admissible in evidence.[41]

These findings of the Court of Appeals, arrived at after a sufficiently


extensive evaluation of the evidence, stand in contrast to that contained in the RTC
decision, encapsulated in a one-paragraph prcis of the factual allegations of
Martinez concerning how he acquired possession of the subject properties. The
Court of Appeals, of course, is an appropriate trier of facts, and a comparison
between the findings of fact of the Court of Appeals and that of the RTC clearly
demonstrates that it was the appellate court which reached a more thorough and
considered evaluation of the evidence.

As correctly held by the Court of Appeals, the burden of proof expected of


the petitioner in a land registration case has not been matched in this case.

WHEREFORE, the petition is DISMISSED. Costs against petitioner.

SO ORDERED.

99
DANTE O. TINGA Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

ANTONIO T. CARPIO CONCHITA CARPIO MORALES


Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.


Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

100
LEONARDO A. QUISUMBING
Associate Justice
Chairperson, Third Division
CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairmans Attestation, it is hereby certified that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Chief Justice

[1]
Records, pp. 1-4.
[2]
Id. at 108-108a.
[3]
Id. at 161.
[4]
Id. at 229-230.
[5]
Id. at 239.
[6]
CA rollo, p. 17.
[7]
Id. at 19.
[8]
Rollo, pp. 12-20.
[9]
Id. at 9.
[10]
Id. at 9-10.
[11]
Id. at 30-45.

101
[12]
Id. at 37-42.
[13]
Id. at 49.
[14]
G.R. No. 110147, 17 April 2001, 356 SCRA 563.
[15]
Rollo, p. 38, citing Oriental Media Inc. v. Court of Appeals, 250 SCRA
647.
[16]
No. L-41278, 15 April 1988, 160 SCRA 186.
[17]
Id. at 191.
[18]
40 Phil. 787 (1920).
[19]
Id. at 792.
[20]
80 Phil. 166 (1948).
[21]
Id. at 176; J. Perfecto, dissenting.
[22]
See 1964 RULES OF COURT, Rule 41, Sec. 2. The entire provision
reads:

SEC. 2. Judgments or orders subject to appeal.Only final


judgments or orders shall be subject to appeal. No interlocutory or
incidental judgment or order shall stay the progress of an action, nor
shall it be the subject of appeal until final judgment or order is
rendered for one party or the other.

A judgment denying relief under Rule 38 is subject to appeal,


and in the course thereof, a party may also assail the judgment on the
merits, upon the ground that it is not supported by the evidence or it is
contrary to law.

A party who has been declared in default may likewise


appeal from the judgment rendered against him as contrary to the
evidence or to the law, even if no petition for relief to set aside the
order of default has been presented by him in accordance with
Rule 38. [Emphasis supplied.]
102
[23]
See 1964 RULES OF COURT, Rule 18, Sec. 2. Except when the party in
default files a motion to set aside the order of default, in which even he shall be
entitled to notice of all further proceedings regardless of whether the order of
default is set aside or not. See also 1964 RULES OF CIVIL PROCEDURE, Rule
13, Sec. 9.
[24]
121 Phil. 1128 (1965).
[25]
Id. at 1131.
[26]
136 Phil. 157 (1969).
[27]
Id. at 190.
[28]
160 Phil. 1101 (1976).
[29]
Id. at 1128.
[30]
No. L-63397, 9 April 1985, 135 SCRA 637.
[31]
Id. at 642. See also Tiburcio v. Castro, No. L-58997, 28 May 1988, 161
SCRA 583; Dulos v. Court of Appeals, G.R. No. 87917, 7 August 1990, 188 SCRA
413; Ramnani v. Court of Appeals, G.R. No. 101789, 28 April 1993, 221 SCRA
582;
[32]
G.R. No. 139371, 4 April 2001, 356 SCRA 367.
[33]
G.R. No. 138777, 22 September 2004, 438 SCRA 659.
[34]
G.R. No. 167631, 16 December 2005, 478 SCRA 433, 439.
[35]
R.J. FRANCISCO, CIVIL PROCEDURE: RULES 1-22 (2001 ed.), at
340.
[36]
F. REGALADO, REMEDIAL LAW COMPENDIUM, Vol. 1 (2001 ed.),
pp. 173-174.
[37]
O. HERRERA, REMEDIAL LAW (2000 ed.), pp. 570-571.

103
[38]
Id. at 572; emphasis supplied. The quoted text actually reads, Section 2,
paragraph 3 of the former Rule 41 which allows an appeal from a denial of a
petition for relief x x x. However, it is Section 2, paragraph 2, and not paragraph 3,
which stated that [a] judgment denying relief under Rule 38 is subject to appeal x x
x. We consider the error to be clerical in nature.
[39]
G.R. No. 148019, 26 July 2004, 435 SCRA 183.
[40]
Id. at 190-191.
[41]
Rollo, pp. 17-20.

104
FIRST DIVISION

[G.R. No. 91486. January 19, 2001]

ALBERTO G. PINLAC, ATTY. ERIBERTO H. DECENA, RODOLFO F.


REYES, FELIPE BRIONES, JUANITO METILLA, JR., FELIPE A.
FLORES, HERMINIO ELEVADO, NARCISO S.
SIMEROS, petitioners, vs. COURT OF APPEALS, ATTY. CORAZON
A. MERRERA, ATTY. JEAN MAKASIAR-PUNO, SERGIO ACABAN,
represented by Atty. Ramon Gerona, ATTY. ROGELIO VELASCO,
MARTINA S. NONA, OVIDEO MEJICA, ALFREDO ITALIA,
MARIANO GUEVARRA, JESUS YUJUICO, DOMINADOR RIVERA,
SATURNINA SALES, represented by Atty. Consolacion Sales-
Demontano, FRED CHUA, SONIA SY CHUA, LAWRENCE CHUA,
CAROLINA C. RUBIO, represented by Tessie Sebastian, GEORGE G.
GUERRERO, BEATRIZ TANTOCO, represented by Filomena
Cervantes, ATTY. MARCELA CELESTINO-GARCIA, FEDERICO
GARCIA, ILDEFONSO MORALES, LEONCIA VELASCO,
OCRAVIO F. LINA, ANA MARIA JARAMILLO, ESTRELLA BASA,
JOSE ESTEVA, JR., CIRILO GONZALES, VILLY TOBIAS, MIGUEL
DELA PAZ, RUBEN GUILLERMO, FAUSTO YADAO, represented by
Jeremias Panlilio, RICARDO YAP, ROSAURO/PATRICK MARQUEZ,
represented by Emmanuel Marquez, MODESTA FABRIG and
MAXIMINO SALCEDA, MELIA LATOMBO, TERESITA
PANGILINAN-RIVERO, ARCH. DANILO C. DE CASTRO, JOSE S.
LEDESMA, JAIME P. ANG, VEICENTE P. ANG, MAURO U.
GABRIEL, ATTY. VIRGINIA GOMEZ, GIL S. BONILLA, LOURDES
BLANCO, represented by Catalina Blanco, JOSEFA SANCHEZ and
ROSALINA VILLEGAS, represented by Heidi Bobis, SHIRLEY
BUCAG, QUIRINA O. TUVERA, represented by Wilfredo Orejuros,
GREGORIO AVENTINO, represented by Enrico Aventino,
LEONARDO L. NICOLAS, NICOMEDES PENARANDA,
FRANCISCA MEDRANO, OFELIA IGNACIO, ROSENDO ABUBO,
represented by Santos Chavez, SOLEDAD BAUTISTA DE COLUMNA,
represented by Zenaida Valle, MARQUITA/ SEBASTIAN LOPEZ,
represented by Emmanuel Marquez, DELIA DORION, GERARDO L.
SANTIAGO, FIDEL PANGANIBAN, represented by Manuel dela Roca,

105
MATEO and OFELIA INOVEJAS, REMEDIOS C. DOVAS,
represented by Josefa Capistrano, DOMINGO ALTAMIRANO and
SPOUSES ROLANDO ALTAMIRANO and MINERVA FETALVERO,
BEATRIZ RINGPIS, ROSARIO DE MATA, RUFINA CRUZ,
represented by JOSEFA MANABAT, SPOUSES ANITA SALONGA-
CAPAGCUAN and MAYNARD CAPAGCUAN, DISCORA YATCO,
represented by VICTORINA Y. FIRME, and CONSUELO YATCO,
GENEROSA MEDINA VDA. DE NOGUERA, represented by ATTY.
RAYMUNDO M. NOGUERA, BEATRIZ SALANDANAN and
LOURDES ALONTE-VASQUEZ, PEDRO COSIO and VICTORINA
CARINO, RUTH C. ZARATE, PRECIOSISIMA V. YAPCHULAY,
BASILISA B. YAPCHULAY, OFELIA B. YAPCHULAY, FELISA B.
YAPCHULAY, FE B. YAPCHULAY, WILMA B. YAPCHULAY, FELIX
B. YAPCHULAY, MARIANO B. YAPCHULAY, GEN. ALFREDO LIM,
and other registered OWNERS OF VILAR-MALOLES (VILMA)
SUBDIVISION, respondents.

DECISION
YNARES-SANTIAGO, J.:

The instant case springs from a contentious and protracted dispute over a
sizeable piece of real property situated in what is now known as Old Balara, Sitio
Veterans, Barrio Payatas and Silangan, all of Quezon City. There are numerous
claimants, titled and untitled alike, each either pressing to own a piece of it, or
striving to protect ones right as a titled owner.
Petitioners herein are World War II veterans, their dependents and successors-
in-interest. Together, they filed a class suit primarily for Quieting of Title before
the Regional Trial Court of Quezon City, Branch 83, where it was docketed as
Civil Case No. Q-35672. In particular, petitioners claimed that the real property,
which has an aggregate area of 502 hectares, were part of forest lands belonging to
the government; that they and their predecessors-in-interest have occupied said
property continuously, adversely, and exclusively for more than thirty (30) years;
and that they have accordingly filed applications for land titling in their respective
names with the appropriate government agency.
While petitioners claim that the land in dispute was part of the public domain,
they named as respondents several persons and corporations who are titled owners
of subdivided parcels of land within the subject property. One of those so
impleaded as a party-respondent was the Vil-Ma Maloles Subdivision (hereinafter,
Vil-Ma). The individual lot owners of the said subdivision, however, were not
106
specifically named. Since personal service of summons could not be effected on
Vil-Ma and some of the other named respondents, petitioners moved for leave of
court to serve summons by publication which was granted. Accordingly, the
summons was published in the Metropolitan Newsweek, a periodical edited and
published in the City of Caloocan and Malolos, Bulacan.[1]
Some of the named respondents filed their respective responsive pleadings,
while the others, including Vil-Ma, failed to answer, and were thus declared in
default. Consequently, petitioners were allowed to present evidence ex
parte against the defaulted respondents. The court a quo found the following facts
to be conclusive:

(T)hat the case involves three parcel of lands, to wit: Lot 1 & 2 situated at the Old
Balara, Diliman, Quezon City and Lot 3 situated at Sitio Veterans, Barrio Payatas
and Silangan, Quezon City containing an aggregate area of 502 hectares more or
less; that Lot 1 is covered by TCT No. 5690 in the name of defaulted respondent
Jose V. Bagtas, which title emanated from TCT No. 48546 in the name of Emiliana
Vda. De Vera Cruz which contains an actual area of only 294.6 sq. meters, but,
when said TCT No. 5690 was issued the same was illegally and fraudulently
expanded to cover 23.5767 hectares through fraudulent resurveys without proper
judicial proceedings; that on said illegally expanded area of TCT No. 5690 in the
name of respondent Jose V. Bagtas, more than 363 transfer certificates of title were
subsequently issued including those belonging to some of the defaulted
respondents thereof; that TCT No. 5690 contains no technical description on its
face; that Lot 2 is covered by TCT No. 3548 in the name of Eustacio Maloles
married to Soledad Villegas and Vicente B. Vilar doing business under the name
and style of defaulted respondent Vilma Maloles Subdivision Inc., which title was
derived from TCT No. 33531 in the name of Oscar L. Uy which in turn came from
TCT No. 26285 in the name of Maria Lim which was immediately derived from
OCT No. 614 which contains no technical description on its face, that TCT No.
3548 likewise contains no technical description on its face; that however, on the
face of TCT No. 33531 of Oscar L. Uy from which TCT No. 3548 of defaulted
respondent Vilma Maloles Subdivision Inc., was derived, it appears that said TCT
No. 33531 was cancelled by another title, TCT No. 1713 and not by TCT No.
3548, the supposed derivative thereof, which title, from the foregoing facts, seems
to have come from nowhere considering that no document could be produced by
the representative of the Register of Deeds of Pasig, relative to the origin of the
aforesaid title and which register of deeds has jurisdiction over the same; that from
this spurious and fraudulent TCT No. 3548 which contains no technical description
on its face, numerous TCTs were subsequently issued, some of which belong to the

107
defaulted respondents hereof, that despite the issuance has not been cancelled by
the Register of Deeds of Quezon City; that Lot 3 was originally covered by OCT
No. 333 from which 846 questionable TCTs emanated and issued by the Register
of Deeds of Quezon City perpetrated and made possible by the illegal expansion of
the actual area thereof from 4,574 Sq. Meters, more or less, to
407,3875 (sic) hectares without proper judicial proceedings; that as an example of
the fraud perpetrated by respondents, TCT No. 26205 covers a lot situated at Barrio
Ermitao, San Juan del Monte, TCT No. 26287 covers a lot located at Barrio
Talipapa, Novaliches, TCT No. 33531 covers a lot located at the District of
Cubao. TCT No. 47705 covers a lot situated at Barrio San Francisco, San Juan,
TCT No. 133770 covers a lot located at San Bartolome, Caloocan City, TCT No.
45741 covers a lot located at San Francisco del Monte, San Juan, TCT No. 45636
covers a lot located at the municipality of San Juan, TCT No. 19-6370 covers a lot
located at Kamuning District, TCT No. 188447 covers a lot located at San
Francisco del Monte with a different mother title, OCT No. 515, TCT No. (22092)
61850 covers a lot located at Tala Estate Caloocan City, TCT No. 14645 covers lot
located at Kamuning District and TCT No. 14692 covers a lot located at Bo. San
Isidro, Caloocan City, yet these TCTs were utilized by some people to claim an
area located inside the litigated premises despite the fact that their technical
descriptions, as aforementioned, are different from the lands being sought to be
covered therewith; that Lots 1, 2 & 3 have been under the possession of petitioners
for a continuous, public, open, & uninterrupted period of 30 years through World
War II Veterans Legionnaires of the Philippines, Inc., by the principle of tacking
possession; that the Bureau of Forest Development has certified that Lots 1, 2 & 3
are part of public forest belonging to the government not yet certified for
disposition and alienation; that the Bureau of Forest Development knew and
encouraged petitioners occupancy and possession of said lots as in fact ordinary
residential permits were issued by said agency to some of herein petitioners and
even helped in petitioners acquisition of electrical facilities from the MERALCO.[2]

Resolving the sole issue of whether or not petitioners were entitled to the land
they occupy and possess, even when said land was allegedly part of unclassified
public forest land and yet covered by transfer certificates of title in the names of
the defaulted respondents, the court a quo rendered a Partial Decision in favor of
petitioners, based on the following disquisition:

First, because as established from the foregoing facts, OCT No. 614, TCT No.
5690, TCT No. 3548 covering Lots 1 & 2 of the disputed land, not having technical
descriptions appearing on their respective face, clearly are null and void by reason
thereof. This is because a torrens title is the certificate of ownership issued under

108
the Register of Deeds naming and declaring the owner in fee simple of the real
property DESCRIBED therein, free from all liens and encumbrances except such
as maybe expressly noted thereon or otherwise reserved by law. (Philippine
National Bank vs. Tan Ong Zse, 51 Phil. 317).Without any technical description a
title is fictitious and the mere issuance thereof is fraudulent. Such being the case, it
follows that none of the title holders subsequently issued out of said void titles
could say that he or she is an innocent purchaser for value. For in the case at bar,
there are really no rights that could be transferred to them since even the titles of
those supposed owners thereof originally are themselves fictitious. x x x Second,
because although the Bureau of Forest Development maintains, as in fact, it
certified that Lots 1, 2 & 3 are part of the unclassified public forest land of the
government, and therefore, are not susceptible of private appropriation, still, due to
the established fact that the lots involved are under the present occupancy and
possession of petitioners with the knowledge and tolerance of the Bureau of Forest
Development, the true and real nature of said lands as being public forest has
become highly dubious and in the opinion of this Court could not overcome the
presumption that said lands are agricultural. For the mere fact that a tract of land
has trees upon it or has mineral wealth within it, is not of itself sufficient to declare
that one is forest land and the other mineral land. There must be some proof of the
extent as well as of the present or future value of the land as forest or mineral. It
must be shown that the land is more valuable for the forestry or the minerals which
it contains than it is for agricultural purposes. Land may be classified as forest or
mineral today and after the exhaustion of the timber or minerals contained therein
may be classified as agricultural land tomorrow. Hence, in case of doubt and
considering that it is a matter of public knowledge that a majority of the lands in
the Philippines are agricultural lands, it was rightly held that in the absence of
evidence to the contrary any land may be presumed to be agricultural. And that
being the case, it is clear that petitioners have acquired legally a title over Lots 1, 2
& 3 of this case through extra-ordinary prescription of thirty (30) years of
continuous, public, open and uninterrupted possession thereof, the lands being
agricultural and, thus, are susceptible of private ownership by petitioners.

WHEREFORE, premises considered, judgment is hereby rendered in favor of


petitioners and against the defaulted respondents:

1) Declaring petitioners through the principal petitioners hereof, to wit: Alberto G.


Pinlac, Atty. Eriberto H. Decena, Rodolfo T. Reyes, Felipe Briones and Juanito S.
Metilla as absolute owners in fee simple title of the aforesaid Lots 1, 2 & 3 hereof
by virtue of extra-ordinary prescription, with the exception of the lands covered by

109
the respective transfer certificate of title belonging to the non-defaulted
respondents;

2) Declaring Original Certificate of Title No. 614, TCT No. 5690 and TCT No.
3548 of the Register of Deeds of Quezon City, and the subsequent TCTs issued
therefrom, with the exception of those titles belonging to the non-defaulted
respondents, as null and void ab initio;

3) Ordering the Register of Deeds of Quezon City to cancel OCT No. 614, TCT
No. 5690 and TCT No. 3548 as well as the subsequent TCTs issued and emanating
therefrom, with the exception of those titles belonging to the non-defaulted
respondents, from its record;

4) Declaring the area of TCT No. 333 in excess of its true and actual area of 4,574
Sq. Meters, as well as the TCTs subsequently issued by the Register of Deeds of
Quezon City, covering the area in excess of said actual area, with the exception of
those belonging to non-defaulted respondents, as null and void ab initio;

5) Ordering the Register of Deeds of Quezon City to cancel all TCTs subsequently
issued based on OCT No. 333 in excess of the actual area of 4,574 Sq. Meters, with
the exception of those titles belonging to the non-defaulted respondents;

6) Declaring the writ of preliminary injunction dated August 7, 1985, in so far as


those areas covered by the cancelled OCTs and TCTs hereof are concerned, as
permanent;

7) Ordering the Register of Deeds of Quezon City to issue herein petitioners the
corresponding individual transfer certificate of titles upon proper application made
thereof.

SO ORDERED.[3]

On May 17, 1989, or exactly one (1) year and fifty-seven (57) days after the
above-quoted judgment by default was rendered, a Petition for Annulment of
Judgment with Certiorari, Prohibition and Mandamus [4] was brought before the
Court of Appeals by the titled owners of the subdivided lots within Vil-Ma. They
assailed the default judgment which nullified all their titles, arguing that the
court a quohad no jurisdiction over them and their respective titled
properties. They also alleged that they only came to know of the adverse judgment
when petitioners sought the execution of the judgment by attempting to dispossess

110
some of the titled owners of the lots and making formal demands for them to
vacate their respective properties.
They likewise claimed that the Partial Decision against the defaulted
respondents was null and void on the grounds of lack of jurisdiction and extrinsic
fraud, for the reasons that:
(1) Civil Case No. Q-35672, while it was a petition to quiet title, was a
collateral proceeding, not a direct action attacking their duly registered
titles. Besides, a petition for cancellation of title can only be filed by a
registered owner or a person having an interest in registered property,
and must be filed in the original land registration case in which the
decree of registration was entered.
(2) They were never made parties to Civil Case No. Q-35672, nor were
their lots described in the complaint, published summons, and Partial
Decision. Named defendant was VIL-MA, a totally separate and
independent entity which had already ceased to exist way back in
January of 1976. Moreover, the summons, as well as the Partial Decision
was not published in a newspaper or periodical of general
circulation.Thus, the defective service of summons to said defendant did
not place the individual lot owners under the trial courts jurisdiction, nor
are they bound by the adverse judgment.
(3) They were denied due process of law as they were not given their day
in court. They should have been included as indispensable parties-
respondents in Civil Case No. Q-35672 since the petitioners therein were
seeking to annul their respective transfer certificates of title.
(4) Their duly registered titles cannot be defeated by the alleged adverse,
continuous and notorious possession of the petitioners since their titles
are indefeasible and cannot be acquired by prescription or adverse
possession.
(5) If, indeed, the subject property is unclassified forest lands, it is not
capable of private appropriation. The court a quo is bereft of authority to
declare motu proprio that the subject property should be reclassified as
agricultural, not forest land.
(6) The trial court violated Section 3(c), Rule 10 of the Rules of Court
which provides that when some of several respondents fail to answer, the
court shall try the case against all upon the answers thus filed and render
judgment upon the evidence thus presented, whenever a complaint states
a common cause of action against several respondents. Accordingly, the
111
defense interposed by those who answer or appear to litigate the case
should inure to the benefit of even those who fail to appear or answer.
(7) The trial court cannot render null and void in the default judgment the
mother title (OCT No. 614), from which the petitioners transfer
certificates were derived, which the Supreme Court had already declared
valid and legal.
To impress upon the Court of Appeals that they have a meritorious defense and
that their petition was not intended to delay or frustrate the final disposition of the
case, the titled owners cited the case of De La Cruz v. De La Cruz,[5] where the
Supreme Court traced the origins of OCT 614. It was held in that case, that:

x x x. The Piedad Estate consists of a vast tract of land originally registered on


March 12, 1912 under Original Certificate of Title No. 614 of the Register of
Deeds of the Province of Rizal in the name of the Philippine Government.

The Piedad Estate was one of the so-called friar lands which were purchased by the
government of the Philippines pursuant to the provisions of the Friar Lands Act,
Public Act No. 1120 which was enacted on April 26, 1904. x x x.

As specifically stated above, the said lands are not public lands in the sense in
which those words are used in the Public Land Act Numbered Nine Hundred and
twenty-six and cannot be acquired or leased under the provisions thereof. In the
case of Jacinto vs. Director of Lands (1926) 49 Phil. 853, the Supreme Court held
that the so-called friar lands, to which the government of the Philippines holds title,
are not public lands but private or patrimonial property of the government.

xxxxxxxxx

As held in Lorenzo vs. Nicolas, No. L-4085, 30 July 1952, 91 Phil. 686, from the
provisions of sections 11, 12 and 16 of Act No. 1120, it is apparent that the
pervading legislative intent is to sell the friar lands acquired by the government to
actual settlers and occupants of the same.[6]

Claiming that their individual transfer certificates of title were derived from
subsequent subdivisions and transfers of the lots within the Piedad Estate, the
defaulted registered owners invoked the Comments and Recommendations of the
Ad Hoc Committee created by the then Ministry of Natural Resources, tasked to
investigate the historical background of the Piedad and Payatas Estates in Quezon
City, containing evidence which they would have substantiated had they been
given their day in court. The Ad Hoc Committee reported, to wit:
112
FINDINGS AND OBSERVATIONS

The Piedad Estate, situated in the Municipality of San Mateo and Caloocan during
the time of registration in 1910, covers an area of 3850.7226 hectares. The
Registration of Title under Case No. 5975 was published in the January 21, 1910
issue of the Official Gazette.

After the Piedad Estate was registered in Original Certificate of Title No. 614 in
the name of the Government in 1910 under the provisions of Act 496, the area was
subdivided originally into 874 lots. As a result of subsequent surveys executed in
the course of disposition, the number of lots increased to 1,305. Disposition of
these lots was made by the Bureau of Lands thru sales, under the Friar Lands Act,
as early as 1910 and records show that even before the Second World War, all lots
in the Piedad Estate have been disposed of. Owing perhaps to the scarcity of land
applicants at the time, it will be observed that a number of applicants have
acquired several lots totalling several hectares. Among the vendees with several
lots are the Philippine Trust Co., the Zuzuarreguis and the Metropolitan Water
District, to name a few. A list of lot holders in the Piedad Estate with the
corresponding lot numbers, lot areas and date of purchase from the Bureau of
Lands is hereto attached and marked as ANNEX B.

Thru a series of transfer of lots from one owner to another attended at times by
subdivision into smaller lots and at other times by consolidation of several lots into
one, most of the lots of the Piedad Estate have lost their identity both in original
ownership structure and lot descriptions. Piedad Estate now embraces and includes
a number of private residential subdivisions among which are the following:

1. Villar Maloles Subdivision (owned by Villar Maloles, Psd-21997)

2. U.P. Sites Nos. 1 and 2

3. Sunnyville Subdivision (Owned by the Delos Santos family)

4. Sterling Meadows Subdivision (LRC) Pcs-11110

5. Dona Patrona Subdivision

6. Far Eastern University (43 has.)

7. Luis Reyes (Psd-19419)

113
8. Jose Yulo (PLS-336-D)

By virtue of subsequent changes in political boundaries, Piedad Estate is now


within Quezon City. It is located on both sides of Luzon Avenue and is bounded on
the North by the Republic Avenue; on the East by private residential subdivisions
which includes the B.F. Homes (LRC) Psd-133236, the Villa Ligaya Subdivision
(Psd-65729), the Kapalaran Subdivision (Pcs-47850), the Kasiyahan Subdivision
(LRC) Pcs-12091, Zuzuarregui Property (Psd-34912) and the Doa Beartiz
Subdivision under Psd-39351; on the South by the Don Mariano Marcos Avenue;
and on the South-West and West by the U.P. Sites Nos. 1 and 2.

COMMENTS AND RECOMMENDATION

There is no doubt that Piedad Estate has long been segregated from the mass of the
public domain and have become private lands duly registered under the Torrens
System following the procedure for the confirmation of private lands prescribed in
Act 496. Thus the lands inside the Piedad Estate are no longer lands of the public
domain. Neither are these lands forest lands, in the classification of lands for forest
purposes, the main criterion prescribed in Section 15 of P.D. 705, the Forestry
Code, is its slope. Those beyond 18% are to be preserved for forest purposes while
those below are to be released as not needed for forest purposes, hence, as
alienable and disposable. By its physical nature, location and historical use, the
land in question can hardly be considered and classified as forest land. Physically,
it is first, level and at most slightly rolling land. Location wise, it used to be within
the periphery and now in the heart of a metropolis. While originally it was used for
agricultural purposes, it has later become urban due to population pressure and
rapid urbanization in the Metro Manila area. It is devoid of any timber land, more
so if we talk of forest of commercial value. In fact, the Composite Land
Classification Committee of the MNR composed of the Directors of BFD, BL,
BFAR and BMGS, has already signed a land classification map and recommended
for its release because it has absolutely no forest value.

On the basis of existing records of the Bureau of Lands and the area of the Piedad
Estate as contained in the Technical Descriptions of the said Estate published in the
January 21, 1910 issue of the Official Gazette, there is no expansion or
enlargement of the area, hence, it is recommended that existing titles within the
area should be respected and their validity upheld.

xxxxxxxxx

114
In view of all the foregoing, the committee recommends that all existing titles
validly issued within the area be respected and their validity upheld.
[7]
(Emphasis supplied)

Accordingly, the defaulted titled owners prayed that judgment be rendered:

1. Declaring the aforesaid Partial Decision on defaulted private respondents as null


and void;

2. Declaring all Residential Use Permits issued by the Director of Forest


Management Bureau as null and void;

3. Declaring all Transfer of Certificates of Titles of the petitioners (respondents


herein) emanating from OCT 614 and TCT 3548 (1713) as valid;

4. Ordering private respondents (petitioners herein), their agents or representatives


and all other persons claiming right under them to vacate the respective titled lands
of the petitioners squatted by the former;

5. Ordering the dismissal of Hon. Judge Reynaldo Roura from the Regional Trial
Court, Macabebe, Pampanga on the grounds of gross incompetence and gross
ignorance of the law (Adm. Circular No. 4 of the Supreme Court, dated January
27, 1988).

6. Making the preliminary injunction as permanent; and

7. Ordering the private respondents (petitioners herein) to pay jointly and solidarily
to the petitioners the sum of P200,000.00 as moral and exemplary damages, plus
the sum of P5,000.00 per lot of the petitioners as attorneys fee, aside from cost of
suit, and for any other relief just and proper.[8]

On June 23, 1989, the Court of Appeals granted respondents (petitioners


therein) application for writ of preliminary injunction, ruling that:

When this case was called for hearing on June 21, 1989 on the application for the
issuance of a writ of preliminary injunction, the parties and their respective counsel
appeared and orally argued their respective stand on the matter. It is admitted that
the herein petitioners, indispensable parties in the case, were not individually
served with summons.

115
We believe and so hold that there is merit in the instant application for preliminary
injunction, hence, the same is hereby GRANTED. Upon the posting by the
petitioners of a bond in the amount of One Hundred Thousand Pesos
(P100,000.00), subject to Our approval, let a writ of preliminary injunction issue
enjoining the respondents (petitioners herein), and all persons acting for and in
their behalf, to desist and refrain from enforcing or implementing, or from
attempting to enforce and implement, the questioned writ of execution of the
partial judgment, dated March 21, 1988, rendered in Civil Case No. Q-35672,
entitled: Teofilo M. Gariando, et al., petitioners versus Gregorio Dizon, et al.,
respondents, until further orders from this Court.

SO ORDERED.[9]

On November 15, 1989, the Court of Appeals rendered a Decision [10] granting
the petition and annulling the Partial Decision in Civil Case No. Q-35762 based on
its finding that the trial courts lack of jurisdiction over the persons of respondents
---

x x x becomes all the more apparent when petitioners claim or asseverate that the
assailed Partial Decision can not bind Vilar-Maloles (VILMA), the umbrella name,
for the simple reason that said PARTNERSHIP was dissolved on January 26, 1976,
for it can no longer be sued as it had no more juridical personality.

xxxxxxxxx

Furthermore, petitioners contend that the summons and the Partial Decision were
published in a local newspaper edited in Caloocan City and Malolos, Bulacan
known as METROPOLITAN NEWSWEEK implying that said summons and
Partial Decision were not published in a newspaper of general circulation in
Quezon City as required by PD 1079, Sec. 1 thereof. Petitioners not having been
duly notified of the hearing/proceedings, the Partial Decision being assailed is
without significance to them or as far as petitioners are concerned said Partial
Decision is null and void.[11]

Petitioners motion for reconsideration was denied in a Resolution dated


December 21, 1989.[12]
Hence, the instant petition for certiorari which raises the following issues:
I. WHETHER OR NOT RESPONDENT COURT OF APPEALS
QUESTIONED DECISION HAS VIOLATED PETITIONERS RIGHT
TO DUE PROCESS BY IGNORING AND LEAVING UNDECIDED
116
ALL THE ISSUES RAISED IN THE ANSWER OF PETITIONERS IN
CA-G.R. NO. SP-17596.
II. WHETHER OR NOT THE COURT A-QUO HAS ACQUIRED
JURISDICTION OVER RESPONDENT VILMA MALOLES
SUBDIVISION BY THE PUBLICATION OF THE SUMMONS AND
PETITION AS ORDERED BY THE COURT IN CIVIL CASE NO. Q-
35672 AND SO THE PARTIAL DECISION (ANNEX B) WAS LEGAL,
VALID AND PROPER.
III. WHETHER OR NOT PRIVATE RESPONDENTS PER THEIR
PETITION BEFORE RESPONDENT COURT OF APPEALS HAS A
VALID CAUSE OF ACTION CONSIDERING THEY ADOPTED
CONTRADICTORY POSITIONS OR THEORIES OF THE CASE,
AND THAT RESPONDENT COURT OF APPEALS DECISION
(ANNEX G) IS VOID.[13]
We find no merit in the instant petition.
The case before the Court of Appeals was one for annulment of judgment,
certiorari, prohibition and mandamus. In resolving the same, the Court of Appeals
need not retry the facts. An action for annulment of judgment is grounded only on
two justifications: (1) extrinsic fraud; and (2) lack of jurisdiction or denial of due
process.[14] All that herein private respondents had to prove was that the trial court
had no jurisdiction; that they were prevented from having a trial or presenting their
case to the trial court by some act or conduct of petitioners; [15] or that they had been
denied due process of law. Thus, the Court of Appeals need only to resolve the
issues of lack of jurisdiction, existence of extrinsic fraud, and denial of due process
of law.
The action for annulment of judgment cannot and was not a substitute for the
lost remedy of appeal. The very purpose of the action for annulment of judgment
was to have the final and executory judgment set aside so that there will be a
renewal of litigation.[16] Whether or not the assailed Partial Decision based solely
on facts and evidence presented by the petitioners is meritorious is irrelevant and
immaterial. Thus, the Court of Appeals did not err, nor did it violate the petitioners
right to due process of law, when it refused to consider all the factual issues raised
by petitioners.
We also agree with the Court of Appeals conclusion that the Partial Decision is
null and void insofar as private respondents are concerned since the latter were not
duly served summons or notified of the proceedings against them. The summons
and the Partial Decision were published in a local newspaper edited and published

117
in Caloocan City and Malolos, Bulacan. However, the Court of Appeals found the
publication in said newspaper, namely the Metropolitan Newsweek, to be invalid
because the said periodical is not considered a newspaper of general circulation in
Quezon City where the subject property is located, as required by Presidential
Decree No. 1079, Section 1.
Petitioners, however, contend that the service of summons by publication was
legal and in accordance with the requirements of Rule 14, Section 14 of the Rules
of Court. The service by publication was done pursuant to the orders of the trial
court dated May 5, 1993 and September 29, 1983.[17]
While the service of summons by publication may have been done with the
approval of the trial court, it does not cure the fatal defect that the Metropolitan
Newsweek is not a newspaper of general circulation in Quezon City. The Rules
strictly require that publication must be in a newspaper of general circulation and
in such places and for such time as the court may order. [18] The court orders relied
upon by petitioners did not specify the place and the length of time that the
summons was to be published. In the absence of such specification, publication in
just any periodical does not satisfy the strict requirements of the rules. The
incomplete directive of the court a quo coupled with the defective publication of
the summons rendered the service by publication ineffective. The modes of service
of summons should be strictly followed in order that the court may acquire
jurisdiction over the respondents,[19] and failure to strictly comply with the
requirements of the rules regarding the order of its publication is a fatal defect in
the service of summons.[20] It cannot be overemphasized that the statutory
requirements of service of summons, whether personally, by substituted service, or
by publication, must be followed strictly, faithfully and fully, and any mode of
service other than that prescribed by the statute is considered ineffective.[21]
Be that as it may, even granting that the publication strictly complied with the
rules, the service of summons would still be ineffective insofar as private
respondents are concerned. At the time the complaint for Quieting of Title was
filed on November 2, 1983, Vilma Maloles Subdivision no longer existed as a
juridical entity. Vilma Maloles Subdivision, a partnership, was dissolved more than
six (6) years earlier, as evidenced by a Certificate of Dissolution issued by the SEC
dated January 26, 1976.[22] Consequently, it could no longer be sued having lost its
juridical personality.
It was also established that all the lots within the subdivision had been disposed
of to private individuals, herein private respondents. As the titled owners, they
should have been impleaded as party-respondents before the court a quo. They
were not made respondents, neither were they informed of the adverse proceedings

118
that would result in the nullification of their duly registered titles. Clearly, there
was a blatant disregard for their rights as registered owners. Private respondents
titles and rights as owners have been unjustly violated. Hence, the Court of
Appeals did not err in granting private respondents petition by annulling and
setting aside the Partial Decision rendered by the court a quo for lack of
jurisdiction and for denial of due process of law.
Petitioners failed to show that they were the aggrieved parties. If ever there was
denial of due process, it was private respondents who suffered therefrom. Whether
by petitioners failure to effectively serve summons or by omitting to name private
respondents as respondents, the trial courts Partial Decision declaring private
respondents titles null and void was clearly violative of the due process
requirement of the Constitution. It is elementary that before a person can be
deprived of his right or property he should first be informed of the claim against
him and the theory on which such claim is premised. [23] The courts will not
countenance a denial of the fundamental right to due process, which is a
cornerstone of our legal system.[24]
The Partial Decision was a judgment by default, which is generally looked
upon with disfavor,[25] for it cannot pretend to be based on the merits of the
controversy.[26] As in this case, the judgment by default may amount to a positive
and considerable injustice to private respondents. Hence, justice and equity
demand that this case be litigated anew.[27] It is evident that the reopening of the
case would not amount to an exercise in futility nor is it intended to further delay
the final resolution of this controversy. The court a quo should give all the
necessary parties every chance to fight their case fairly and in the open, without
resort to technicalities.[28]
Finally, the conclusion that the Partial Decision of the court a quo is void finds
support in Rule 10, Section 5(c) of the then Rules of Court, which provides:

(c) Effect of partial default. - When a pleading asserting a claim states a common
cause of action against several defending parties, some of whom answer and the
others fail to do so, the court shall try the case against all upon the answers thus
filed and render judgment upon the evidence presented.

In fact, the court a quo enumerated in the Partial Decision those who filed
responsive pleadings. Considering that petitioners in their complaint stated a
common cause of action against all the named respondents, the court a quo should
have heard the case as against all respondents, the defaulted respondents
included. However, the trial court, unmindful of the above-quoted rule, proceeded
to receive evidence ex parte only against the defaulted respondents. The trial courts
119
disposition is not only violative of the rules but also a clear negation of the
defaulted respondents limited rights.
Whatever defense and evidence the non-defaulted respondents may present
which would be applicable to the situation of the defaulted respondents should
inure to the benefit of the latter. The nullification of OCT 614 adversely affected
the answering respondents for they all share the same mother title. In effect, the
court a quo pre-judged the case even against the answering respondents, for how
could OCT 614, the mother title, be valid for one set of respondents and null and
void for the other respondents? In fine, the Partial Decision was procedurally
flawed.
WHEREFORE, in view of all the foregoing, the decision of the Court of
Appeals in CA-G.R. SP No. 17596 is AFFIRMED and the instant petition is
DENIED for lack of merit.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Kapunan, and Pardo, JJ., concur.
Puno, J., no part.

[1]
Annex R, Records, p. 259.
[2]
Partial Decision on Defaulted Private Respondents, Civil Case No. Q-35672,
RTC, Quezon City, Branch 83, penned by Judge Reynaldo V. Roura; Rollo, pp. 50-
52; references to exhibits omitted.
[3]
Ibid., pp. 52-54 (citations omitted).
[4]
CA-G.R. SP No. 17596.
[5]
130 SCRA 666 (1984).
[6]
At 673-677.
[7]
Special Order No. 426, Series of 1986; Rollo, pp. 214-221.
[8]
Petition, Rollo, p. 111.
[9]
Record, p. 319.
[10]
Associate Justice Ricardo J. Francisco, ponente; Associate Justices Antonio M.
Martinez and Jesus M. Elbinias, concurring.
[11]
Rollo, pp. 127-129.

120
[12]
Rollo, p. 136.
[13]
Petition, Rollo, p. 35.
[14]
Strait Times, Inc. v. CA, 294 SCRA 714 (1998); Salonga v. CA, 269 SCRA 534
(1997).
[15]
Ybanez v. CA, 253 SCRA 540 (1997).
[16]
I Moran, Rules of Court, 1950 ed., p. 697, citing Anuran v. Aquino, 38 Phil. 29;
Banco-Espaol-Filipino v. Palanca, 37 Phil. 921; Santiago v. Ceniza, 5 SCRA 494
(1962).
[17]
Annex F-1 and F-2 cited in pp. 39-40, Rollo.
[18]
Rules of Court, Rule 14, Section 14.
[19]
Gan Hock v. CA, 197 SCRA 223 (1991).
[20]
Sahagun v. CA, 198 SCRA 44 (1991).
[21]
Paluwagan ng Bayan Savings Bank v. King, 172 SCRA 60 (1989).
[22]
Annex P, Record, p. 255.
[23]
Republic v. Sandiganbayan, 266 SCRA 515 (1997).
[24]
Fabella v. CA, 282 SCRA 256 (1997).
[25]
Trajano v. Cruz, 80 SCRA 712 (1977).
[26]
Lesaca v. Ca, 215 SCRA 17 (1992); Coombs v. Santos, 24 Phil. 446 (1913).
[27]
Sps. Rudy Ameloquio, Sr. and Laguimas Obnamia v. CA, G.R. No. 124243,
June 15, 2000.
[28]
Gerales v. CA, 218 SCRA 638 (1993); Goldloop Properties, Inc. v. CA, 212
SCRA 504 (1992).

121
FIRST DIVISION

HEIRS OF MAMERTO MANGUIAT, G.R. No. 150768


represented by GERARDO MANGUIAT;
HEIRS OF FELIPE MARUDO,
represented by JOSE MARUDO; HEIRS
OF JULIANA MAILON, represented by
GAVINA MAILON MENDOZA; HEIRS
OF LEONCIA MERCADO, represented by
ANIANA MANGUIAT; HEIRS OF
VICENTE PEREZ, represented by
SOTERO PEREZ; HEIRS OF VICENTE
GARCIA, represented by MACARIO
GARCIA LUCIDO; and HEIRS OF
TRANQUILINA MENDOZA, represented
by RUFINA MENDOZA,
Petitioners,

- versus -

THE HON. COURT OF APPEALS and J.A.


DEVELOPMENT CORPORATION,
Respondents.

x ----------------------------------------------------x

HEIRS OF MAMERTO
MANGUIAT,represented by GERARDO
MANGUIAT; HEIRS OF FELIPE
MARUDO, represented by JOSE
MARUDO; HEIRS OF JULIANA
MAILON, represented by GAVINA
MAILON MENDOZA; HEIRS OF
LEONCIA MERCADO, represented by

122
ANIANA MANGUIAT; HEIRS OF
VICENTE PEREZ, represented by
G.R. No. 160176
SOTERO PEREZ; HEIRS OF VICENTE
GARCIA, represented by MACARIO
GARCIA LUCIDO; and HEIRS OF
TRANQUILINA MENDOZA, represented
Present:
by RUFINA MENDOZA,
Petitioners, PUNO, C.J., Chairperson,
CARPIO,

- versus - CORONA,
AZCUNA, and

THE HON. COURT OF APPEALS LEONARDO- DE


AND REPUBLIC OF THE PHILIPPINES, CASTRO, JJ.
Respondents.

Promulgated:

August 20, 2008

x ----------------------------------------------------------------------------------------x

DECISION

PUNO, C.J.:

123
Before us are two petitions for review on certiorari assailing the Decisions
of the Court of Appeals in CA-G.R. SP No. 60770 and CA-G.R. SP No. 61703
dated August 29, 2001 and January 22, 2003, respectively, and their Resolutions
dated November 16, 2001 and September 29, 2003, respectively. In both cases, the
Court of Appeals set aside the partial decision of
the Regional Trial Court of Tagaytay City, dated February 18, 2000, in Civil Case
No. TG-1904.

The facts show that petitioners filed a complaint against respondent J.A.
Development Corporation (JDC), Bureau of Telecommunications (BUTEL), Juan
dela Cruz, and Pedro dela Cruz on May 14, 1999 with
the Regional Trial Court of Tagaytay City. The complaint, docketed as Civil Case
No. TG-1904, was for quieting of title and cancellation of certificates of title
over Lot 1993, commonly known as the Calamba Estate. Petitioners alleged that
they succeeded to the rights of their predecessors-in-interest to whom Lot1993
was awarded on November 13, 1914 by virtue of a Sales Certificate, in accordance
with the provisions of the Friar Land Act. Petitioners, thus, sought to annul
the Torrenstitle issued to respondent, BUTEL, Juan dela Cruz, and Pedro dela
Cruz.
On May 19, 1999, summons was served on respondent JDC through its
employee, Jacqueline de los Santos.[1] On the same date, summons was served on
BUTEL through a certain employee, Cholito Anitola. [2] The sheriffs return did not
describe the position of Mr. Anitola at BUTEL.[3]

Respondent JDC moved to dismiss the complaint on the following grounds:


(1) lack of jurisdiction of the court over the subject matter of the case; (2) lack of
cause of action; (3) prescription; and (4) improper venue. [4] With leave of court, it
supplemented its motion by raising the additional ground of res judicata citing the
judgment of the same court in Civil Case No. TG-1516. It contended that Civil
Case Nos. TG-1904 and TG-1516 have identical parties and causes of action, and
that the order of dismissal of the latter case has long become final due to
prescription, and laches has long set in.[5] The motion to dismiss was denied
on January 11, 2000.[6] JDC filed a motion for reconsideration which, to date, has
not been resolved.

On July 1, 1999, petitioners moved to have BUTEL declared in default for


its failure to file an answer despite service of summons and to allow them to
present their evidence ex parte.[7] The motion was granted on November 10, 1999.
[8]
A week later, the petitioners presented their evidence before the branch clerk of
court acting as commissioner.

124
On February 18, 2000, the trial court promulgated a partial decision against
BUTEL, the dispositive portion of which states:

PREMISES CONSIDERED, this Court found and hold (sic)


that the plaintiffs were able to prove satisfactorily and convincingly
their allegations in the complaint as against defendant Bureau of
Telecommunication[s].

WHEREFORE, partial decision is hereby rendered:

a. Declaring that (sic) the plaintiffs as the equitable owner


of Lot 1993-I and transfer certificate of title covering the same is
hereby ordered cancelled as null and void;

b. Ordering the transfer of possession of said Lot 1993-I to the


plaintiffs;

c. Enjoining the defendant Bureau of Telecommunication[s], its


representative, agents or privies to remove any improvements they
have on Lot 1993-I.[9]

On March 28, 2000, petitioners filed a motion to execute. On April 7, 2000,


respondent JDC moved to set aside the partial decision, arguing in the main that
the decision constitutes a prejudgment of the merits of the entire case.[10] On July
17, 2000, the trial court denied the motion.[11] On August 25, 2000, respondent filed
a motion for reconsideration of the order.[12] On August 8, 2000, the trial court
ordered the issuance of a writ of execution.

On September 15, 2000, respondent JDC filed a petition for certiorari and
prohibition with the Court of Appeals to annul: (1) the partial decision
dated February 18, 2000; (2) the order dated July 17, 2000; and (3) the writ of
execution dated August 8, 2000.[13] The petition was raffled to the Fifteenth
Division of the appellate court and docketed as CA-G.R. SP No. 60770.

On October 31, 2000, the Republic of the Philippines, through the Office of
the Solicitor General, filed a petition for Annulment of Judgment with the Court of
Appeals docketed as CA-G.R. SP No. 61703, and raffled to its Ninth Division.[14] It
sought the nullification of the partial decision dated February 18, 2000 on the
ground of lack of jurisdiction. It alleged that the service of summons made on
BUTEL was not valid as it was not made
upon the Solicitor General who is its statutory counsel and representative.

125
On August 29, 2001, the Fifteenth Division of the Court of Appeals
promulgated its decision granting the petition of respondent JDC. The dispositive
portion states:

WHEREFORE, it is hereby resolved that the (sic): (a) the


Partial Decision dated 18 February 2000; (b) the Order dated 17 July
2000; and (c) Writ of Execution dated 10 August 2000 in Civil Case
No. TG-1904 entitled Heirs of Mamerto Manguiat, [e]t [a]l.,
Plaintiffs, versus J.A. Development Corporation, Bureau of
Telecommunication[s], Juan Dela Cruz, and Pedro Dela Cruz,
Defendants[,] are hereby ordered SET ASIDE, for having been issued
with grave abuse of discretion.

The public respondent is hereby ordered to follow strictly Sec.


3(c), Rule 9 of the 1997 Rules of Civil Procedure.

SO ORDERED.[15]

Petitioners moved for reconsideration of the decision but the motion was
denied on November 16, 2001.[16] Hence, petitioners filed the instant petition for
review on certiorari with this Court, docketed as G.R. No. 150768.

On January 22, 2003, the Ninth Division of the Court of Appeals


promulgated its decision granting the petition of the Republic of
the Philippines and setting aside the judgment of the trial court in Civil Case No.
TG-1904 for lack of jurisdiction.[17] Petitioners filed a motion for reconsideration
but the motion was denied on September 29, 2003. They then filed a petition for
review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure with this
Court which was docketed as G.R. No. 160176.

On May 25, 2005, this Court resolved to consolidate G.R. Nos. 150768 and
160176.

In G.R. No. 150768, petitioners contend that the Court of Appeals erred in
setting aside the partial decision. They claim that the trial court was correct in
rendering the partial judgment as the causes of action against the respondent,
BUTEL, Juan dela Cruz, and Pedro dela Cruz were distinct and severable,
involving distinct lots or interests owned separately by each of the defendants but
joined in one complaint to avoid multiplicity of suits.[18]
126
On the other hand, respondent JDC contends that the partial decision was a
pre-judgment of the entire case because its interests were inseparable from the
respondent, BUTEL, Juan dela Cruz, and Pedro dela Cruz. JDC claims that its set
of titles find their origin in the same title whose validity is assailed by the
petitioners in their complaint. It argues that the Court of Appeals correctly relied on
Section 3(c), Rule 9 of the 1997 Rules of Civil Procedure when BUTEL was
declared in default,[19] viz.:

SECTION 3. Default, declaration of. If the defending party


fails to answer within the time allowed therefor, the court shall, upon
motion of the claiming party with notice to the defending party, and
proof of such failure, declare the defending party in default.
Thereupon, the court shall proceed to render judgment granting the
claimant such relief as the pleading may warrant, unless the court in
its discretion requires the claimant to submit evidence. Such reception
of evidence may be delegated to the clerk of court.

xxx

(c) Effect of partial default. When a pleading asserting a claim


states a common cause of action against several defending parties,
some of whom answer and the others fail to do so, the court shall try
the case against all upon the answers thus filed and render judgment
upon the evidence presented.

In G.R. No. 160176, petitioners assert that summons was validly served on
the Republic of the Philippines considering that the sheriffs return states that it was
duly served.They further aver that Section 13, Rule 14 of the 1997 Rules of Civil
Procedure does not limit service of summons to the Solicitor General but allows
service on other officers as the court may direct. They point out that the failure to
inform the Solicitor General of Civil Case No. TG-1904 can only be attributed to
the gross negligence of the BUTEL.[20]
For its part, respondent Republic of the Philippines contends that summons
must be served upon it through the Solicitor General and that service of summons
on an employee of the BUTEL is insufficient compliance with Section 13, Rule 14
of the Rules of Court.[21]

In both cases before us, the decisive issue is whether jurisdiction over the
BUTEL was validly acquired by the Regional Trial Court through service of

127
summons upon its employee whose authority to do so does not appear from the
sheriffs return.

We rule in favor of respondent, BUTEL, Juan dela Cruz, and Pedro dela
Cruz.

Summons must be served upon a party for valid judgment to be rendered


against him. This not only comports with basic procedural law but the
constitutional postulate of due process. The disputable presumption that an official
duty has been regularly performed will not apply where it is patent from the
sheriffs or servers return that it is defective.[22]
Rule 14, Section 13 of the 1997 Rules of Procedure provides:
SECTION 13. Service upon public corporations. When the
defendant is the Republic of the Philippines, service may be effected
on the Solicitor General; in case of a province, city or municipality, or
like public corporations, service may be effected on its executive
head, or on such other officer or officers as the law or the court may
direct.[23]

It is clear under the Rules that where the defendant is the Republic of
the Philippines, service of summons must be made on the Solicitor General. The
BUTEL is an agency attached to the Department of Transportation and
Communications created under E.O. No. 546 on July 23, 1979, and is in charge of
providing telecommunication facilities, including telephone systems to government
offices. It also provides its services to augment limited or inadequate existing
similar private communication facilities. It extends its services to areas where no
communication facilities exist yet; and assists the private sector engaged in
telecommunication services by providing and maintaining backbone
telecommunication network.[24] It is indisputably part of the Republic, and
summons should have been served on the Solicitor General.

We now turn to the question of whether summons was properly served


according to the Rules of Court. Petitioners rely solely on the sheriffs return to
prove that summons was properly served. We quote its contents, viz.:

THIS IS TO CERTIFY that on the 19th day of May 1999, the


undersigned caused the service of Summons and Complaint upon
defendant J.A. Development Corporation at the address indicated in
the summons, the same having been received by a certain Jacqueline
delos Santos, a person employed thereat, of sufficient age and
128
discretion to receive such process, who signed on the lower portion of
the Summons to acknowledge receipt thereof.

Likewise, copy of the Summons and Complaint was served


upon defendant Bureau of Telecommunications at the address
indicated in the Summons, a copy of the same was received by a
certain Cholito Anitola, a person employed thereat, who signed on
the lower portion of the Summons to acknowledge receipt thereof.
[25]
(Emphasis supplied)

It is incumbent upon the party alleging that summons was validly served to
prove that all requirements were met in the service thereof. We find that this
burden was not discharged by the petitioners. The records show that the sheriff
served summons on an ordinary employee and not on the Solicitor
General. Consequently, the trial court acquired no jurisdiction over BUTEL, and all
proceedings therein are null and void.
Further, we likewise affirm the decision of the Court of Appeals in CA-G.R.
SP No. 60770, setting aside the partial decision of the trial court for having been
issued with grave abuse of discretion. It ruled that when the trial court declared the
BUTEL in default, allowed petitioners to present their evidence ex parte and
rendered a partial decision holding that petitioners are the owners of the subject
property, such was tantamount to prejudging the case against respondent JDC. The
trial court ruled that petitioners validly acquired the subject parcel of land without
any consideration of the evidence that respondent JDC may present to substantiate
its claim of ownership over its aliquot part of the subject property. The trial court
should have followed the Rules of Court in this situation. Sec. 3(c) of Rule 9 states
that when a pleading asserting a claim states a common cause of action against
several defending parties, some of whom answer and the others fail to do so, the
court shall try the case against all upon the answers thus filed and render judgment
upon the evidence presented. Therefore, the answer filed by a defendant inure to
the benefit of all the defendants, defaulted or not, and all of them share a common
fate in the action. It is not within the authority of the trial court to divide the case
before it by first hearing it ex parte as against the defaulted defendant and
rendering a default judgment (in the instant case, partial decision) against it, then
proceeding to hear the case, as to the non-defaulted defendant. This deprives the
defaulted defendant of due process as it is denied the benefit of the answer and the
evidence which could have been presented by its non-defaulted co-defendant.[26]

129
IN VIEW WHEREOF, the petitions are DENIED for lack of merit. The
Decision and Resolution of the Fifteenth Division of the Court of Appeals in CA-
G.R. SP No. 60770, dated August 29, 2001 and November 16, 2001, respectively,
are AFFIRMED. Likewise, the Decision and Resolution of the Ninth Division of
the Court of Appeals in CA-G.R. SP No. 61703, dated January 22,
2003 and September 29, 2003, respectively, are AFFIRMED. The partial decision
of the Regional Trial Court dated February 18, 2000, its order dated July 17, 2000,
and the writ of execution dated August 8, 2000 are ANNULLED and SET ASIDE.

SO ORDERED.

REYNATO S. PUNO
Chief Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice

130
RENATO C. CORONA ADOLFO S. AZCUNA

Associate Justice Associate Justice

TERESITA J. LEONARDO-DE CASTRO


Associate Justice

C E R T I FI CAT I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO

131
Chief Justice

[1]
Rollo, G.R. No. 160176, p. 61.
[2]
Id. at 60-61.
[3]
Ibid.
[4]
RTC Records, Civil Case No. TG-1904, p. 19.
[5]
Id. at 92-98.
[6]
Rollo, G.R. No. 160176, p. 213.
[7]
Rollo, G.R. No. 150768, p. 62.
[8]
Id. at 64.
[9]
Id. at 59, 277.
[10]
Rollo, G.R. No. 160176, p. 231.
[11]
Id. at 240.
[12]
Id. at 242.
[13]
Rollo, G.R. No. 150768, p. 249.
[14]
Supra note 7.
[15]
Rollo, G.R. No. 150768, p. 39.
[16]
Id. at 47.
[17]
Rollo, G.R. No. 160176, p. 44.
[18]
Rollo, G.R. No. 150768, pp. 9-19.
[19]
Id. at 93-137.
[20]
Rollo, G.R. No. 160176, pp. 3-30.
[21]
Id. at 99-111.
[22]
Laus v. Court of Appeals, G.R. No. 101256, March 8, 1993, 219 SCRA 688,
705; citing Venturanza v. Court of Appeals, No. L-77760, December 11,
1987, 156 SCRA 305, 313 (1987).
[23]
1997 Rules of Civil Procedure, Rule 14, Section 13.
[24]
Sec. 13, E.O. No. 546.
[25]
Rollo, G.R. No. 160176, p. 61.
[26]
Regalado, Remedial Law Compendium, vol. 1, 7th revised ed., 1999, p. 177.

132
Republic of the Philippines
Supreme Court
Manila

THIRD DIVISION

HUTAMA-RSEA/SUPERMAX PHILS., G.R. No. 173181


J.V.,
Petitioner,
Present:

CORONA, J.,
Chairperson,
VELASCO, JR.,
- versus -
NACHURA,
DEL CASTILLO,* and
MENDOZA, JJ.

KCD BUILDERS CORPORATION,


Promulgated:
represented by its President CELSO C.
DIOKNO,
Respondent.
March 3, 2010

x------------------------------------------------------------------------------------x

133
DECISION
NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules
of Court, assailing the Decision[1] dated October 14, 2005 and the
Resolution[2] dated June 19, 2006 of the Court of Appeals (CA) in CA-G.R. CV
No. 78262.

The Facts

The facts of the case, as summarized by the CA, are as follows:

On 10 December 2001, appellee KCD Builders Corporation


filed a complaint for sum of money against appellants [Hutama-
RSEA/Super Max, Philippines and/or Charles H.C. Yang] before the
Regional Trial Court of Makati. Its cause of action arose from a
written contract which was the Notice to Proceed dated 10 November
2000 executed by the parties whereby appellant [Hutama] as principal
contractor of Package 2-Site Works in Philips Semiconductors Phils.
Inc. Integrated Circuits Plant Phase II Project located at the Light
Industry and Science Park of the Philippines-2 (LISPP-2) Calamba,
Laguna contracted with appellee [KCD] as sub-contractor for the said
project. The final billing dated 20 September 2001 was submitted to
appellant Charles H.C. Yang, and despite a joint evaluation by the
parties through their respective representatives who agreed on the
amount [of] P2,967,164.71 as HUTAMAs total obligation to appellee
[KCD], and a letter of demand, appellant corporation [Hutama] failed
and refused to pay.

Summons was served on appellants [Hutama and Yang] on 8 February


2002 which was received by their secretary, Ms. Evelyn Estrabela in

134
behalf of the two defendants [Hutama and Yang]. On 21 February
2002, their counsel filed an Entry of Appearance and Motion for
Extension of time to File Responsive Pleading. They were given a 20-
day extension period to file the responsive pleading, or until 16 March
2002.

On 11 April 2002, appellee [KCD] filed a Motion to Declare


Defendant/s [Hutama and Yang] in Default for failure to file the
responsive pleading within the extended period, and set the same for
hearing on 26 April 2002.

On 23 April 2002, appellant Charles H.C. Yang filed a Motion to


Dismiss for failure of the complaint to state a case of action against
him, as he merely signed the sub-contract between the parties not for
his personal benefit but only in behalf of appellant HUTAMA. On the
same date, appellant HUTAMA filed an Urgent Motion to Admit
Attached Answer with Compulsory Counterclaim, together with the
said answer.

During the hearing on appellees [KCDs] motion to declare


defendant/s [Hutama and Yang] in default, the trial court noted the
filing of appellants [Hutama and Yangs] respective motion to dismiss
and answer with counterclaim but noted that the filing thereof on 27
March 2002 was too late considering that they were only given an
extended period up [to] 16 March 2002 to do the same. Thus, the trial
court granted the motion to declare defendants [Hutama and Yang] in
default and directed, upon appellees [KCDs] motion, the presentation
of evidence ex-parte before the branch clerk of court who was
appointed as commissioner to received evidence.

Appellants [Hutama and Yang] filed an Urgent Motion to Set Aside


Order of Default. During the hearing, the trial court ordered appellee
[KCD] to file an opposition or comment. After the Manifestation filed
by appellee [KCD] on 24 June 2002, the trial court set anew the
hearing on the motion to set aside order of default on 22 August 2002,

135
but appellants [Hutama and Yang] failed to appear. The trial court then
denied the said motion in the Order dated 19 September 2002.

During the ex-parte presentation of evidence, appellees [KCDs]


witness Celso C. Dioko testified that there was a contract executed
between appellants [Hutama and Yang] and appellee [KCD] regarding
the construction of Package 2 Site Works in Philips Semiconductor
Phils. Inc., Calamba, Laguna where appellee [KCD] was the sub-
contractor as evidenced by a Notice to Proceed.After the completion
of the project, he [Dioko] billed them the total amount
of P3,009,954.05. After they [Hutama and Yang] received the bill,
they asked him [Dioko] to have a joint evaluation by their engineer
and his engineer on site. The authorized engineer to evaluate the
amount arrived at was Engr. Jose De Asis. Thus, their authorized
engineers came out with the total amount of P2,967,164.71 as cost of
the project. After the joint evaluation, he [Dioko] again sent the bill to
appellant Charles H.C. Yang and wrote a letter to HUTAMA to pay
the final billing. The appellants [Hutama and Yang], however, failed
to comply with the demand. Upon the filing of this case, appellee
[KCD] paid P30,000.00 acceptance fee and P3,000.00 per appearance
fee and a contingency of 15% of the total amount due as attorneys
fees.

Engr. Jose De Asis testified that he is an employee of appellee


corporation [KCD] and knows the appellants [Hutama and Yang] to be
the representatives of HUTAMA. He was the one who prepared the
final evaluation and the total outstanding obligation inside the office
of Philips Conductors [in] Calamba, Laguna. He and appellants
[Hutama and Yang] were present when the agreement was prepared
and the amount agreed upon was promised to be paid to Dioko.[3]

On February 20, 2003, the Regional Trial Court (RTC) rendered a decision [4] in
favor of KCD Builders Corporation (KCD), viz.:

136
WHEREFORE, in view of the foregoing premises, judgment is
rendered in favor of the plaintiff [KCD] as against the defendant[s
Hutama and Yang], ordering the defendants to:

1.) Pay the plaintiff [KCD] the amount


of P2,967,164.71 representing the defendants [Hutama and
Yangs] total indebtedness in favor of the plaintiff [KCD] with interest
of 12% per annum from October 11, 2001, until the same has been
fully paid;

2.) Pay the plaintiff [KCD] 5% of the total amount


awarded plus P30,000.00 acceptance fees and P3,000.00 appearance
fees as and by way of attorneys fees; and

3.) Costs of the suit.

SO ORDERED.[5]

Aggrieved, Hutama Semiconductor Phils., Inc. (Hutama) and Charles H.C.


Yang (Yang) filed an appeal before the CA. On October 14, 2005, the CA rendered
a Decision,[6] the dispositive portion of which reads:

WHEREFORE, the foregoing considered, the assailed


decision is hereby modified by dismissing the complaint against
appellant Charles H.C. Yang for lack of cause of action. The decision
is AFFIRMED in all other respects.

SO ORDERED.[7]

137
Unsatisfied, Hutama and Yang filed a motion for reconsideration; however,
the same was denied in a Resolution[8] dated June 19, 2006.

Hence, this petition.

The Issues

Petitioner assigned the following errors:

THE HONORABLE COURT OF APPEALS COMMITTED A


SERIOUS, REVERSIBLE ERROR, IF NOT GRAVE ABUSE OF
DISCRETION, IN REFUSING TO RESOLVE AS TO

(A) WHETHER OR NOT THE COURT A


QUO COMMITTED SERIOUS, REVERSIBLE
ERROR, WHEN IT FAILED TO CONSIDER THAT
RESPONDENT ABANDONED THE PROJECT AND
IT IS THE LATTER (sic) LIABLE TO PETITIONER;

(B) WHETHER OR NOT THE COURT A


QUO COMMITTED SERIOUS, REVERSIBLE
ERROR, WHEN IT DENIED PETITIONERS RIGHTS
TO PRESENT ITS EVIDENCE IN VIOLATION OF ITS
CONSTITUTIONAL RIGHTS TO DUE PROCESS;
AND

(C) WHETHER OR NOT THE COURT A


QUO COMMITTED SERIOUS, REVERSIBLE
ERROR, WHEN IT FAILED TO CONSIDER THAT
RESPONDENT FAILED TO COMPLY WITH

138
SECTION 5, RULE 7 OF THE 1997 RULES OF CIVIL
PROCEDURE ON VERIFICATION AND
CERTIFICATION OF NON-FORUM SHOPPING;

II

THE HONORABLE COURT OF APPEALS COMMITTED A


SERIOUS, REVERSIBLE ERROR, IF NOT GRAVE ABUSE OF
DISCRETION, IN DENYING PETITIONER[S] MOTION FOR
RECONSIDERATION WITHOUT STATING CLEARLY AND
DISTINCTLY THE FACTUAL AND LEGAL BASIS THEREOF.[9]

In sum, the sole issue for resolution is whether the CA erred in affirming the
decision of the RTC as to the liability of Hutama to KCD.

The Ruling of the Court

We resolve to deny the petition.

First, Hutama assails the decision of the CA based on its claim that it is KCD
which owes them a sum of money because the latter abandoned the project. In
other words, Hutama is asking this Court to review the factual findings of the RTC
and the CA. This position of petitioner is untenable.

A petition under Rule 45 of the Rules of Court shall raise only questions of law. As
a rule, findings of fact of a trial judge, when affirmed by the CA, are binding upon
the Supreme Court. This rule admits of only a few exceptions, such as when the
findings are grounded entirely on speculations, surmises or conjectures; when an
inference made by the appellate court from its factual findings is manifestly
mistaken, absurd or impossible; when there is grave abuse of discretion in the

139
appreciation of facts; when the findings of the appellate court go beyond the issues
of the case, run contrary to the admissions of the parties to the case, or fail to
notice certain relevant facts which, if properly considered, will justify a different
conclusion; when there is a misappreciation of facts; when the findings of fact are
conclusions without mention of the specific evidence on which they are based, are
premised on the absence of evidence, or are contradicted by the evidence on
record.[10] However, not one of the exceptions is present in this case.

Based on the findings of fact of the RTC, which were affirmed by the CA, it was
proven that Hutama contracted the services of KCD as a sub-contractor of Package
2 Site Works at Phillips Semiconductors Philippines, Inc. Integrated Circuits Plant
Phase II Project, located in Calamba, Laguna. After the completion of the project,
KCD billed Hutama Three Million Nine Hundred Nine Thousand Nine Hundred
Sixty-Four Pesos and 05/100 (P3,909,964.05). The amount was reduced to Two
Million Nine Hundred Sixty-Seven Thousand One Hundred Sixty-Four Pesos and
71/100 (P2,967,164.71) by agreement of the parties. Thus, on October 11, 2001,
KCD sent Hutama the final bill. However, Hutama refused to settle the obligation
and its refusal compelled KCD to file the collection suit before the RTC.

Second, Hutama avers that the CA committed a reversible error when it


upheld the decision of the RTC, which was based on the ex-parte evidence
presented by KCD. Allegedly, its constitutional right to due process was violated
when the RTC issued an order of default[11] which resulted in its failure to present
evidence.

However, we find that the RTC acted within the confines of its discretion
when it issued the order of default upon the motion of KCD when Hutama failed to
file an answer within the extended period. The RTC did not hastily issue the order
of default. It gave Hutama the opportunity to explain its side. On August 22, 2002,
the motion to set aside the order of default was set for hearing, but neither Hutamas
counsel, nor any other representative of petitioner corporation, appeared.
According to the counsel of Hutama, in his Memorandum, [12] he failed to file an
answer on time because he went to the province for the Lenten season. He assigned
the case to his associate, but the latter also went to the province. This flimsy excuse
deserves scant consideration.

140
Third, Hutama questions the verification and certification on non-forum
shopping of KCD, issued by its board of directors, because the same was signed by
the latters president without proof of authority to sign the same.

A pleading is verified by an affidavit that an affiant has read the pleading


and that the allegations therein are true and correct as to his personal knowledge or
based on authentic records. The party does not need to sign the verification. A
party's representative, lawyer, or any person who personally knows the truth of the
facts alleged in the pleading may sign the verification.[13]

On the other hand, a certification of non-forum shopping is a certification


under oath by the plaintiff or principal party in the complaint or other initiatory
pleading, asserting a claim for relief, or in a sworn certification annexed thereto
and simultaneously filed therewith, that (a) he has not theretofore commenced any
action or filed any claim involving the same issues in any court, tribunal or quasi-
judicial agency and, to the best of his knowledge, no such other action or claim is
pending therein; (b) if there is such other pending action or claim, a complete
statement of the present status thereof; and (c) if he should thereafter learn that the
same or similar action or claim has been filed or is pending, he shall report that fact
within five days therefrom to the court wherein his aforesaid complaint or
initiatory pleading has been filed.[14]

It is true that the power of a corporation to sue and be sued is lodged in the
board of directors that exercises its corporate powers.[15] However, it is settled and
we have so declared in numerous decisions that the president of a corporation may
sign the verification and the certification of non-forum shopping.
In Ateneo de Naga University v. Manalo,[16] we held that the lone signature
of the University President was sufficient to fulfill the verification requirement,
because such officer had sufficient knowledge to swear to the truth of the
allegations in the petition.

In Peoples Aircargo and Warehousing Co., Inc. v. CA,[17] we held that in the
absence of a charter or bylaw provision to the contrary, the president of a
corporation is presumed to have the authority to act within the domain of the
general objectives of its business and within the scope of his or her usual duties.

141
Moreover, even if a certain contract or undertaking is outside the usual powers of
the president, the corporations ratification of the contract or undertaking and the
acceptance of benefits therefrom make the corporate presidents actions binding on
the corporation.

Finally, Hutama questions the resolution of the CA on its motion for


reconsideration on the ground that it denied the same without stating clearly and
distinctly the factual and legal basis thereof.

In denying petitioners motion for reconsideration, the CA ruled that it found


no plausible reason to depart from its earlier decision wherein all the issues had
been exhaustively passed upon. That ruling contained a sufficient legal reason or
basis to deny the motion. There was no need for the CA to restate the rationale for
its decision that the petitioner wanted reconsidered.

WHEREFORE, in view of the foregoing, the instant petition is DENIED. The


Decision dated October 14, 2005 and the Resolution dated June 19, 2006 of the
Court of Appeals in CA-G.R. CV No. 78262 are hereby AFFIRMED. Costs
against petitioners.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA


Associate Justice

WE CONCUR:

RENATO C. CORONA

142
Associate Justice
Chairperson

PRESBITERO J. VELASCO, JR. MARIANO C. DEL CASTILLO


Associate Justice Associate Justice

JOSE CATRAL MENDOZA


Associate Justice

ATT E STAT I O N

I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA
Associate Justice
Chairperson, Third Division

143
C E R T I FI CAT I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

*
Additional member in lieu of Associate Justice Diosdado M. Peralta per Special
Order No. 824 dated February 12, 2010.
[1]
Penned by Associate Justice Josefina Guevara-Salonga, with Associate Justices
Delilah Vidallon-Magtolis and Fernanda Lampas-Peralta, concurring; rollo, pp. 28-
35.
[2]
Rollo, pp. 36-37.
[3]
Id. at 29-31.
[4]
Penned by Judge Romeo F. Barza, RTC, Makati City, Branch 61; id. at 86-88.
[5]
Id. at 88.
[6]
Supra note 1.
[7]
Rollo, p. 35.
[8]
Supra note 2.
[9]
Rollo, pp. 173-174.
[10]
Halili v. Court of Appeals, G.R. No. 113539, March 12, 1998, 287 SCRA 465.

144
[11]
Rules of Court, Rule 9, Sec. 3 reads:
Sec. 3. Default; declaration of. If the defending party fails to answer within
the time allowed therefore, the court shall, upon motion of the claiming party with
notice to the defending party, and proof of such failure, declare the defending party
in default. Thereupon, the court shall proceed to render judgment granting the
claimant such relief as his pleading may warrant, unless the court in its discretion
requires the claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.
(a) Effect of order of default. - A party in default shall be
entitled to notice of subsequent proceedings but not to take part in the
trial.
(b) Relief from order of default. - A party declared in default
may at any time after notice thereof and before judgment file a motion
under oath to set aside the order of default upon proper showing that
his failure to answer was due to fraud, accident, mistake or excusable
negligence and that he has a meritorious defense. In such case, the
order of default may be set aside on such terms and conditions as the
judge may impose in the interest of justice.
(c) Effect of partial default. - When a pleading asserting a claim
states a common cause of action against several defending parties,
some of whom answer and the others fail to do so, the court shall try
the case against all upon the answers thus filed and render judgment
upon the evidence presented.
(d) Extent of relief to be awarded. - A judgment rendered
against a party in default shall not exceed the amount or be different in
kind from that prayed for nor award unliquidated damages.
(e) Where no defaults allowed. - If the defending party in an
action for annulment or declaration of nullity of marriage or for legal
separation fails to answer, the court shall order the prosecuting
attorney to investigate whether or not a collusion between the parties
exists, and if there is no collusion, to intervene for the State in order to
see to it that the evidence submitted is not fabricated.
[12]
Rollo, pp. 164-178.
[13]
Rules of Court, Rule 7, Sec. 4; LDP Marketing, Inc. v. Monter, G.R. No.
159653, January 25, 2006, 480 SCRA 137.
[14]
Rules of Court, Rule 7, Sec. 5 (par. 1).

145
[15]
LDP Marketing, Inc. v. Monter, supra note 13.
[16]
G.R. No. 160455, May 9, 2005, 458 SCRA 325.
[17]
G.R. No. 117847, October 7, 1998, 297 SCRA 170.

146
THIRD DIVISION

UNITED OVERSEAS BANK OF G.R. No. 172651


THE PHILIPPINES (formerly
WESTMONT BANK),
Present:
Petitioner,
YNARES-SANTIAGO,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
- versus - NACHURA, and
REYES, JJ.

ROSEMOOR MINING AND Promulgated:


DEVELOPMENT
CORPORATION and DRA.
LOURDES S. PASCUAL,
Respondents.
October 2, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

147
Before this Court is a Petition for Review on Certiorari under Rule 45, of the
Revised Rules of Court, filed by petitioner United Overseas Bank of the
Philippines (Overseas Bank), seeking the reversal and the setting aside of the
Decision,[1] dated 10 May 2005, and the Resolution,[2] dated 16 May 2006 of the
Court of Appeals in CA-G.R. CV No. 78583. The appellate court, in its assailed
Decision and Resolution, affirmed the Decision of the Regional Trial Court (RTC)
of Malolos, Bulacan, Branch 16, declaring, inter alia, as null and void the Real
Estate Mortgage executed by Rosemoor Mining and Development Corporation
(Rosemoor Mining) in favor of Overseas Bank, with the modification that the
award of moral and exemplary damages and attorneys fees were deleted.

Overseas Bank is a banking institution duly authorized to engage in banking


business under Philippine laws.[3]

Rosemoor Mining, on the other hand, is a domestic corporation, likewise


duly authorized by Philippine laws to engage in mining operation.[4]

In order to raise the necessary funds for the importation of machineries needed for
its operations, Rosemoor Mining, through its President, Lourdes Pascual (Pascual),
M.D., obtained a loan from Overseas Bank in the amount of P80,000,000.00. The
loan was secured by two Real Estate Mortgage Contracts over six parcels of land
situated at San Miguel, Bulacan, and registered under the name of Rosemoor
Mining, and another two parcels of land situated at Gapan, Nueva Ecija, registered
under Pascuals name.[5]

The arrangement agreed to by the parties was for Overseas Bank to handle,
on behalf of Rosemoor Mining, the amount of P50,000,000.00 to be used for the
importation of machineries, while the loan balance of P30,000,000.00 will be
released by Overseas Bank to Rosemoor Mining as a revolving credit line.[6]

Pursuant to such agreement, Rosemoor Mining executed four irrevocable Letters of


Credit in the total amount US$1,943,508.11 for the importation of machineries. To
answer for the 20% advance payment of the total amount of the Letters of Credit,

148
Rosemoor Mining proceeded to draw against its P50,000,000.00 credit facility with
the Overseas Bank specifically allocated for the acquisition of machineries and
executed promissory notes in favor of the bank in the amount
of P49,82,682.50. Rosemoor Mining also partially availed itself of the
remaining P30,000,000.00 credit line for which it executed two promissory notes
in Overseas Banks favor in the amounts of P10,000,000.00 and P3,500,000.00

Subsequently, Rosemoor Mining defaulted in the payment of its various drawings


of Letters of Credit and promissory notes which prompted Overseas Bank to cause
the extrajudicial foreclosure of the mortgaged Nueva Ecija properties on 22 May
1998, and the similarly mortgaged Bulacan properties on 10 August 1998, and the
sale thereof by public auction. The Overseas Bank was the highest bidder on both
occasions.[7]

In order to prevent the impending consolidation of ownership of the mortgaged


properties in the name of Overseas Bank, Rosemoor Mining instituted two separate
complaints against the bank, the procedural incidents of which were litigated all
the way up to this Court on four occasions, three of which were already decided
with finality, leaving the instant petition for our resolution.

One of the two cases was filed before the RTC of Manila and the other one before
the RTC of Bulacan.

Manila Case
Civil Case No. 98-90089
RTC of Manila, Branch 33

On 5 August 1998, Rosemoor Mining instituted an action for damages,


accounting, release of the balance of the loan and machinery and annulment of
foreclosure sales against Overseas Bank before the RTC of Manila, Branch 33.[8]

149
In its Complaint docketed as Civil Case No. 98-90089, Rosemoor Mining
alleged that it obtained a loan from Overseas Bank in the amount
of P80,000,000.00, secured by Real Estate Mortgages over parcels of land located
in Bulacan and Nueva Ecija, but the proceeds of the loan did not redound to its
benefit because it was allegedly mishandled by Overseas Bank causing serious
financial injury to Rosemoor Mining. To further aggravate its injury, Rosemoor
Mining claimed that Overseas Bank hastily foreclosed the mortgaged properties
without previous notice to Rosemoor Mining.[9]
On 10 August 1998, Overseas Bank filed an Urgent Motion to Dismiss the
above complaint on the ground of improper venue since one of the prayers therein
included the nullification of the foreclosure of real estate mortgages, a real action
which must be lodged before the RTC of the place where the property or one of the
properties is situated.Considering that none of the mortgaged properties was
located in Manila, the filing of the Complaint before the RTC of Manila was,
therefore, invalid. Consequently, Rosemoor Mining amended its Complaint
deleting the prayer for nullification of foreclosure sale. Hence, Oveseas Banks
Urgent Motion to Dismiss was denied by the RTC of Manila for lack of merit in an
Omnibus Resolution dated 24 January 2000.[10]

Subsequently, Overseas Bank filed its Answer with Counterclaim. After the
pre-trial was conducted, trial on the merits ensued.

Bulacan Case
Civil Case No. 215-M-202
RTC of Malolos,Bulacan, Branch 16

On 11 March 2002, Rosemoor Mining filed another action denominated as


Petition for Injunction with Damages[11] before the RTC of Malolos, Bulacan,
docketed as Civil Case No. 215-M-02. The Complaint prayed for the annulment of
Real Estate Mortgage foreclosures that Rosemoor Mining executed in favor of
Overseas Bank on the ground of fraud.

150
In order to prevent the threatened consolidation of titles over the mortgaged
properties in Overseas Banks name, Rosemoor Mining moved for the issuance of a
Writ of Preliminary Injunction. During the hearing for the issuance of the said writ,
the Bulacan RTC found merit in Rosemoor Minings Motion and thus ordered that
the scheduled consolidation of titles be temporarily enjoined pending the
determination of the merits of the pending case.[12]

On 26 March 2002, Overseas Bank, instead of filing an Answer, filed a


Motion to Dismiss Civil Case No. 215-M-02 on the ground of forum-shopping in
view of the pendency of the other case involving the same parties and the same
issues before the RTC of Manila.[13]

On 13 May 2002, the Bulacan RTC denied the Motion to Dismiss filed by
Overseas Bank on the ground that the arguments raised therein were not applicable
in the present case. The court a quo then directed Overseas Bank to file an Answer
within five days from the receipt of the Order denying its Motion to Dismiss.[14]

Again, instead of filing an Answer, Overseas Bank filed a Motion for


Reconsideration[15] of the Bulacan RTC Order denying its Motion to Dismiss Civil
Case No. 215-M-02. On the other hand, Rosemoor Mining filed a Motion to
Declare Overseas Bank in Default[16] for failure to timely file an Answer.

Acting on the Motions filed by the parties, the Bulacan RTC, in an Order
dated 10 September 2002, denied the Motion for Reconsideration of Overseas
Bank and granted the motion of Rosemoor Mining to declare the bank in default.[17]

Aggrieved by the Bulacan RTC Orders, dated 13 May 2002 and 10


September 2002, which respectively denied Overseas Banks Motion to Dismiss
Civil Case No. 215-M-02 and declared it in default, Overseas Bank assailed the
same before the Court of Appeals on the ground that they were issued with grave
abuse of discretion.[18]

In its Petition for Certiorari docketed as CA-G.R. SP No. 73358, Overseas


Bank, in addition to the issues of forum shopping and propriety of the default

151
order, likewise raised the issue of the venue for Civil Case No. 215-M-02 before
the RTC of Bulacan. Overseas Bank argued that the venue of the action for
nullification of the foreclosure sales of the mortgaged properties which were
located in Bulacan and Nueva Ecija, were improperly lodged before the Bulacan
RTC.[19]

For lack of merit, the Court of Appeals in its Decision dated 20 June 2004,
dismissed the Petition and declared that no forum-shopping existed in the filing of
Civil Case No. 98-90089 before the RTC of Manila and Civil Case No. 215-M-02
before the RTC of Bulacan; and upholding the validity of the default order against
Overseas Bank and the propriety of venue.

Dissatisfied, Overseas Bank elevated the matter before this Court via a
Petition for Review on Certiorari of the 20 June 2004 Decision of the Court of
Appeals. The Petition was docketed as G.R. No. 159669.[20]

In the meantime, just as the Overseas Bank moved for the dismissal of Civil
Case No. 215-M-02 before the RTC of Bulacan on the ground of forum-shopping,
Overseas Bank also filed a Motion to Dismiss Civil Case No. 98-90089 before the
RTC of Manila on the same ground.[21]

In an Order dated 23 October 2002, the Manila RTC denied the Motion to
Dismiss the case before it for lack or merit. The subsequent Motion for
Reconsideration filed by Overseas Bank was also denied by the lower court.[22]

On Certiorari, the Court of Appeals, in its Decision dated 26 February 2004,


affirmed the Order dated 23 October 2002 of the Manila RTC, for failure by the
Overseas Bank to establish that the court a quo gravely erred in ruling that no
forum shopping attended the actions filed by Rosemoor Mining. The Motion for
Reconsideration filed by Overseas Bank was also denied by the appellate court in a
Resolution dated 30 April 2004.[23]

152
Undaunted, Overseas Bank again raised the issue before this Court in G.R.
No. 163521, advancing that Rosemoor Mining was guilty of forum shopping in
instituting both the Bulacan and the Manila Cases.[24]

Both petitions, G.R. No. 163521 and G.R. No. 159669, were consolidated
and jointly resolved by the Second Division of this Court, since the issues raised
therein were interrelated.[25]

On 12 March 2007, this Court put to rest the issue of forum-shopping by


declaring that Rosemoor Mining is not guilty of forum shopping in filing Civil
Case No. 275-M-02 before the Bulacan RTC, after it had instituted Civil Case No.
98-90089 before the Manila RTC. This Court ratiocinated that there was no
identity of parties involved and the rights asserted in both actions were different
from each other.[26]

On the issue of improper venue, this Court ruled that the action to nullify the
foreclosure sales of the Nueva Ecija properties, along with the Bulacan properties
were properly instituted before the Bulacan RTC, thus:

[T]he venue of real actions affecting properties found in different


provinces is determined by the singularity or plurality of the
transactions involving said parcels of land. Where said parcels are the
object of one and the same transaction, the venue is in the court of any
of the provinces wherein a parcel of land is situated.[27]

This Court further upheld the validity of the Order dated 13 May 2002, of
the Bulacan RTC declaring Overseas Bank in default in Civil Case No. 215-M-02,
ruling in this wise:

The motion for reconsideration could not have tolled the


running of the period to answer for two reasons. One, it was filed late,
nine days after the due date of the answer. Two, it was a mere rehash

153
of the motion to dismiss; hence, pro forma in nature. Thus, the
Malolos RTC did not err in declaring the Bank in default.[28]

In sum, this Court in G.R. No. 163521 and G.R. No. 159669, denied the
Petitions for Review on Certiorari filed by Overseas Bank and affirmed the
assailed Decisions, dated 26 February 2004 and 20 June 2003 of the Court of
Appeals, in CA-G.R. No. 76934 and CA-G.R. No. 73358, respectively.

In the interregnum, the Bulacan RTC, after its declaration that Overseas
Bank was in default, proceeded with the ex-parte reception of evidence offered by
Rosemoor Mining in Civil Case No. 215-M-02.

On 24 October 2002, the RTC of Bulacan, rendered a Decision [29] in favor of


Rosemoor Mining granting its prayers, among which was its declaration that the
Real Estate Mortgage executed by Rosemoor Mining in favor of Overseas Bank is
null and void. The dispositive portion of the Bulacan RTC Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in


favor of petitioners and against respondents, to wit:

1. The Writ of Preliminary Injunction issued by this


Court on March 25, 2002, is hereby made
permanent.

2. Declaring as null and void the Real Estate Mortgages


executed by [Rosemoor Mining] in favor
of [Overseas Bank] (Exhibits D and E) and the
subsequent foreclosures of such mortgages;

3. Ordering the [Overseas Bank], to pay unto [Rosemoor


Mining] as follows:

154
P2,000,000.00 as moral and exemplary
damages unto [Pascual] (P1,000,000.00 as
exemplary damages),

P13,000,000.00 unto [Rosemoor Mining]


as moral and exemplary damages
(P3,000,000.00 as moral damages
and P10,000,000.00 as exemplary
damages), and

P100,000.00 unto petitioner as attorneys


fees, plus cost of litigation.[30]

On appeal, the Court of Appeals in a Decision dated 10 May 2005, in CA-


G.R. No. 78583 affirmed the Bulacan RTC Decision with the modification, that the
award of moral and exemplary damages, as well as the attorneys fees, was
deleted. The Motions for Reconsideration interposed by both Overseas Bank and
Rosemoor Mining were denied by the appellate court in its Resolution dated 16
May 2006.

Hence, this instant Petition for Review on Certiorari filed by Overseas Bank
raising the following issues:

I.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF


LAW WHEN IT AFFIRMED THE DECISION OF BRANCH
16 OF THE REGIONAL TRIAL COURT OF MALOLOS,

155
BULACAN DECLARING PETITIONER IN DEFAULT AND
DEPRIVING IT OF DUE PROCESS.

II.

THE COURT OF APPEALS COMMITTED SERIOUS


ERROR OF LAW WHEN IT AFFIRMED THE DECISION OF
THE SAID BRANCH OF THE REGIONAL TRIAL COURT
OF MALOLOS, BULACAN ASSUMING JURISDICTION
OVER REAL PROPERTIES IN NUEVA ECIJA AND
ANNULLING FORECLOSURE OF REAL ESTATE
MORTGAGES OVER THE SAME.

III.

THE COURT OF APPEALS COMMITTED SERIOUS


ERROR OF LAW WHEN IT AFFIRMED THE DECISION OF
THE SAID BRANCH OF THE REGIONAL TRIAL COURT
OF MALOLOS, BULACAN MAKING PERMANENT THE
INJUNCTION IT ISSUED DESPITE LACK OF EVIDENCE
SHOWING COMPLIANCE WITH REQUISITES.

IV.

THE COURT OF APPEALS COMMITTED SERIOUS


ERROR OF LAW WHEN IT AFFIRMED THE DECISION OF
THE SAID BRANCH OF THE REGIONAL TRIAL COURT
OF MALOLOS, BULACAN FINDING THAT THE REAL
ESTATE MORTGAGES EXECUTED BY RESPONDENTS
WERE FRAUDULENTLY SECURED AND WANTING IN
CONSIDERATION.

156
V.

THE COURT OF APPEALS COMMITTED SERIOUS


ERROR OF LAW WHEN IT AFFIRMED THE DECISION OF
THE SAID BRANCH OF THE REGIONAL TRIAL COURT
OF MALOLOS, BULACAN REFUSING TO DISMISS THE
PETITION OUTRIGHT ON THE GROUND OF FORUM
SHOPPING.

VI.

THE COURT OF APPEALS COMMITTED SERIOUS


ERROR OF LAW WHEN IT AFFIRMED THE DECISION OF
THE SAID BRANCH OF THE REGIONAL TRIAL COURT
OF MALOLOS, BULACAN WHICH, ALTHOUGH A
DEFAULT JUDGMENT, EXCEEDED JURISDICTION AS IT
GRANTED A RELIEF NOT INCLUDED IN THE
COMPLAINT.

VI.

THE COURT OF APPEALS COMMITTED SERIOUS


ERROR OF LAW WHEN IT DENIED THE MOTION FOR
RECONSIDERATION FILED BY PETITIONER.[31]

The first, second and fifth errors assigned by Overseas Bank, questioning the
propriety of the default order and the venue of the action for nullification and
assuming that Rosemoor Mining committed forum shopping, were already
resolved by the Second Division of this Court in G.R. Nos. 159669 and
163521, promulgated on 12 March 2007.[32] As evidenced by the Entry of
Judgment,[33] this consolidated Decision became final and executory on 14
September 2007.

157
Also, in the same cases, this Court already pronounced that Rosemoor Mining is
not guilty of forum shopping by filing both the Bulacan and the Manila cases. In
the same Decision, this Court affirmed the validity of the Bulacan RTC Order,
dated 10 September 2002, declaring Overseas Bank in default in Civil Case No.
215-M-02. Finally, this Court also ruled that the action for nullification of the
foreclosure sales of the mortgaged properties in Bulacan and Nueva Ecija were
properly lodged before the Bulacan RTC.[34]

Our jurisprudential pronouncements in G.R. Nos. 159669 and 163521, on


the aforementioned issues are conclusive upon this Court in the instant petition and
could no longer be overturned without transgressing the elementary principle of
the law of the case.

In Padillo v. Court of Appeals,[35] this Court had the occasion to explain this
principle thus:

Law of the case has been defined as the opinion delivered on a


former appeal. More specifically, it means that whatever is once
irrevocably established as the controlling legal rule or decision
between the same parties in the same case continues to be the law of
the case, whether correct on general principles or not, so long as the
facts on which such decision was predicated continue to be the facts
of the case before the court. As a general rule, a decision on a prior
appeal of the same case is held to be the law of the case whether that
question is right or wrong, the remedy of the party deeming himself
aggrieved being to seek a rehearing.

The concept of Law of the Case was further elucidated in the


1919 case of Zarate v. Director of Lands, thus:

A well-known legal principle is that when an appellate court


has once declared the law in a case, such declaration continues to be
the law of that case even on a subsequent appeal. The rule made by an

158
appellate court, while it may be reversed in other cases, cannot be
departed from in subsequent proceedings in the same case. The Law
of the Case, as applied to a former decision of an appellate court,
merely expresses the practice of the courts in refusing to reopen what
has been decided. Such a rule is necessary to enable an appellate court
to perform its duties satisfactorily and efficiently, which would be
impossible if a question, once considered and decided by it, were to be
litigated anew in the same case upon any and every subsequent
appeal. Again, the rule is necessary as a matter of policy to end
litigation. There would be no end to a suit if every obstinate litigant
could, by repeated appeals, compel a court to listen to criticisms on
their opinions, or speculate of chances from changes in its members.
[36]

Applying the above-stated rule in the case at bar, Overseas Bank, therefore,
is now barred from once again raising before this Court the issues on forum
shopping, the default order and venue of Civil Case No. 215-M-02, after the
intricacies involved therein were already adjudicated and resolved fully and with
finality in G.R. Nos. 159669 and 163521.
Verily, the Overseas Bank cannot feign that it was denied its day in court when it
was precluded from presenting its evidence during the hearing by the default order
of the Bulacan RTC in Civil Case No. 215-M-02. It bears to stress that Overseas
Bank, in several instances, was able to raise before this Court the issue of the
validity of the interlocutory orders issued by the courts a quo and, likewise, on
various occasions, moved for the dismissal of both the Bulacan and Manila cases,
instead of proving the merits of its cases before the lower courts. Overseas Bank,
therefore, cannot pound on due process and substantial justice, when it is evident in
the records that it had, countless times, used, if not abused, such procedural due
process for its end and thereby prolonged the disposition of the cases involved.

In the same breadth, Overseas Bank cannot contend that it was denied its day in
court when it was declared in default for such was the legal and logical
consequence of its obstinate refusal to file an Answer despite the Bulacan RTCs
directive.

159
Undeniably, when Overseas Bank deliberately opted to file a Motion for
Reconsideration of the Order dated 13 May 2002, of the Bulacan RTC denying its
Motion to Dismiss, instead of filing an Answer, it assumed the risk of losing its
standing in court and it cannot simply excuse itself from the adverse consequence
of its chosen procedural course.

Overseas Bank further argued that Rosemoor Mining is not entitled to


Injunction for the evidence it presented before the RTC of Bulacan is insufficient
to warrant the issuance of the same. Hence, the Decision of the Bulacan RTC in
Civil Case No. 215-M-02, permanently enjoining it from foreclosing the mortgage
properties, is without basis and therefore void.

Again, we do not agree. In controverting the basis relied upon by the


Bulacan RTC in issuing the Injunction, Overseas Bank, in effect, wants this Court
to calibrate the evidence presented before the lower court all over again, a task
which we cannot do in consonance with the well-settled rule that this Court is not a
trier of facts.[37]

In Cagayan de Oro Landless Residents Association, Inc. v. Court of Appeals,


[38]
this Court, in explaining the concept of injunction, underscored that the issuance
of the writ of injunction is vested in the discretion of the trial court, thus:

As an extraordinary remedy, injunction is calculated to prevent


or maintain the status quo of things and is generally availed of to
prevent actual or threatened acts, until the merits of the case can be
heard. As such, injunction is accepted as the strong arm of equity or
the transcendent remedy to be used cautiously, as it affects the
respective rights of the parties, and only upon the full conviction on
the part of the court of its extreme necessity. Its issuance rests
entirely within the discretion of the court taking cognizance of the
case and is generally not interfered with except in cases of
manifest abuse.

160
Even Justice Moran, in his renowned Commentaries,[39] was emphatic in
vesting in the court deciding the case the discretion to grant or deny the injunction,
opining that:

Except in cases wherein the statute gives an absolute right to an


injunction, this remedy, whether temporary or permanent, cannot, as a
general rule, be sought as a matter of right, but its granting or refusal
rest in the sound discretion of the court under the circumstances and
the facts of the particular case.

Upon perusal of the records, it was not shown that the granting of the prayer for
Injunction was attended with manifest abuse since the Bulacan RTC found
sufficient basis for its issuance based on its intelligible appreciation of the evidence
presented by Rosemoor Mining.

The mere reliance of the Bulacan RTC on the testimony of Rosemoor


Minings lone witness does not amount to grave abuse of discretion. It must be
recalled that Overseas Bank was given the opportunity to establish its right over
the mortgaged properties during the hearing for the issuance of the writ of
preliminary injunction, only that, the court a quo gave more evidentiary weight to
Rosemoor Minings claim. Giving credence to the evidence offered by one party
over that of the other is an exercise of the courts sound judgment and is not
equivalent to grave abuse of discretion.

For the same reason, this Court cannot find merit in the contention of Overseas
Bank that the Court of Appeals erred in affirming the Decision of the Bulacan RTC
in Civil Case No. 215-M-02 annulling the mortgage contracts as well as the
subsequent foreclosures pursuant thereto. Worth noting is that in voiding the
mortgage contracts and foreclosure sales, the court a quo stressed the want of
consideration for the Real Estate Mortgages and the fraud employed by Overseas
Bank in securing the said contracts, to wit:

161
Thus, on the basis of the foregoing uncontroverted evidence and
established facts, this Court finds that the mortgages (Exhibits D and
E) executed by the petitioners are null and void and declares them to
be so having been fraudulently secured and for want of consideration
and that the subsequent foreclosures thereof were also null and
void. Moreover, as established by petitioners, the respondent bank,
thru its officers, in apparent negligence and bad faith, bungled and
mishandled the loan account and letters of credits transactions
covering the machineries to be imported such that Rosemoor did not
receive any of such machineries. Such manipulations effectively
undermined the petitioner corporations credit standing before the
financial institution, crippled its operations and blemished its
reputation.[40]

The above pronouncement of the Bulacan RTC was affirmed by the Court of
Appeals, pursuant to the well-entrenched principle that the factual findings of the
trial courts should be accorded great weight and are generally not disturbed on
appeal. We are equally bound by this principle. Moreover, in cases where the
factual findings of the trial court are affirmed by the Court of Appeals, as in the
case at bar, this rule finds greater application.

In Professional Academic Plans, Inc. v. Crisostomo,[41] this Court declared:

Factual issues are beyond the province of the Supreme Court in a


petition for review, for it is not the Courts function to weigh the
evidence all over again. While the Court may, in exceptional cases,
resolve factual issues, the petitioners herein failed to establish any
such exceptional circumstances. Moreover, it is doctrinal that findings
of facts of the CA upholding those of the trial court are binding upon
the Supreme Court.

Thus, we find no compelling reason to deviate from the factual findings of the trial
court as sustained by the appellate court.
162
Finally, Overseas Bank averred that the Bulacan RTC exceeded its jurisdiction in
granting a relief not prayed for by Rosemoor Mining in its complaint. In its prayer,
Rosemoor Mining asked for the nullification of the foreclosure sales of the
mortgaged properties but the Bulacan RTC declared void, not only the foreclosure
sales but the Real Estate Mortgages over the said properties as well.

In order to resolve the final issue posed by Overseas Bank, attention must be called
on the pertinent provisions of Rule 9 of the Revised Rules of Court, on the
declaration of default which provide:

SEC. 3. Default; declaration of. If the defending party fails to answer


within the time allowed therefor, the court shall, upon motion of the
claiming party with notice to the defending party, and proof of such
failure, declare the defending party in default. Thereupon, the court
shall proceed to render judgment granting the claimant such relief as
his pleading may warrant, unless the court in its discretion requires the
claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.

(a) Effect of order of default. A party in default shall be


entitled to notice of subsequent proceedings but not to
take part in the trial.

(b) Relief from order of default. A party declared in


default may at any time after notice thereof and before
judgment file a motion under oath to set aside the order
of default upon proper showing that his failure to answer
was due to fraud, accident, mistake or excusable
negligence and that he has a meritorious defense. In such
case, the order of default may be set aside on such terms
and conditions as the judge may impose in the interest of
justice.

163
(c) Effect of partial default. When a pleading asserting a
claim states a common cause of action against several
defending parties, some of whom answer and the others
fail to do so, the court shall try the case against all upon
the answers thus filed and render judgment upon the
evidence presented.

(d) Extent of relief to be awarded. A judgment


rendered against a party in default shall not exceed
the amount or be different in kind from that prayed
for nor award unliquidated damages.

(e) Where no defaults allowed. If the defending party in


an action for annulment or declaration of nullity of
marriage or for legal separation fails to answer, the court
shall order the prosecuting attorney to investigate
whether or nor a collusion between the parties exists, and
if there is no collusion, to intervene for the State in order
to see to it that the evidence submitted is not
fabricated. (Emphasis supplied.)

In its Petition, Rosemoor Mining prayed for the following reliefs, to


quote:

WHEREFORE, premises considered, it must be respectfully


prayed that this Honorable Court

1. Issue ex-parte a temporary restraining order before the matter


could be heard on notice to restrain and enjoin respondent
[Overseas Bank] from proceeding with its threatened
consolidation of titles over the subject properties of petitioner
[Rosemoor Mining] in San Miguel, Bulacan covered by TCT Nos.
42132; 42133; 42134; 42135; 42136 and RT 34569 (T-222448) on

164
March 16, 2002 or at any time thereafter; that the respondent
Register of Deeds of the Province of Bulacan be enjoined and
restrained from registering any document(s) submitted and/or to
be submitted by respondent [Overseas Bank] consolidating its
titles over the above-named properties of [Rosemoor Mining] in
San Miguel, Bulacan; and likewise, that the Register of Deeds of
the Province of Bulacan be restrained and enjoined from
cancelling the titles of [Rosemoor Mining] over its properties,
namely, TCT Nos. TCT Nos. 42132; 42133; 42134; 42135; 42136
and RT 34569 (T-222448);

2. That after due notice, a writ of preliminary injunction be issued


upon the posting of a bond in such amount as may be fixed by this
Court;

3. That after due hearing and trial, judgment be rendered in favor


of petitioners and against [Overseas Bank]

a. Permanently enjoining respondent bank from


proceeding from the consolidation of its titles of the
subject properties of Rosemoor covered by TCT Nos.
42132; 42133; 42134; 42135; 42136 and RT 34569 (T-
222448) and permanently restraining respondent Register
of Deeds of Bulacan from from registering any
document(s) submitted and/or to be submitted by
[Overseas Bank] consolidating its titles over the above-
named properties of petitioner [Rosemoor Mining] in San
Miguel, Bulacan; and likewise, that the Register of Deeds
of the Province of Bulacan be restrained and enjoined
from cancelling the titles of [Rosemoor Mining] over its
properties, namely, TCT Nos. TCT Nos. 42132; 42133;
42134; 42135; 42136 and RT 34569 (T-222448);

b. Declaring the foreclosures of real estate mortgages


on the properties of petitioners Rosemoor and Dra.
Pascual to be null and void;

c. Recognizing the ownership of the petitioners in fee


simple over their properties above-mentioned;

165
d. Awarding to petitioners the damages prayed for,
including attorneys fees and costs and expenses of
litigation.

Petitioners pray for such other reliefs and remedies as may


be deemed just and equitable in the premises.[42] (Emphases
supplied.)

However, upon promulgation of the Decision, the Bulacan RTC, declared as null
and void the Real Estate Mortgages, not only the foreclosures of such
mortgages. The pertinent portion of the Bulacan RTC Decision thus reads:

Declaring as null and void the Real Estate Mortgages executed by


[Rosemoor Mining] in favor of [Overseas Bank] (Exhibits D and E)
and the subsequent foreclosures of such mortgages.[43]

Based on the foregoing, Overseas Bank now argues that the RTC of Bulacan
exceeded its jurisdiction in granting a relief not prayed for in the Complaint in
violation of the clear and categorical mandate of the Revised Rules of Court,
proscribing it from awarding reliefs in excess of or different from that prayed for in
the complaint.

We are not persuaded.

While it is true that Rosemoor Mining did not specifically ask for the
annulment of the Real Estate Mortgages, upon scrutiny of its Complaint however,
it is apparent that the allegations propounded by Rosemoor Mining go into the very
validity of the mortgage contracts. The allegation that Overseas Bank committed
fraudulent acts in the constitution of the Real Estate Mortgages was actually an
attack on the mortgage contracts, and not just on the foreclosures of these

166
mortgages. The nullity of the foreclosures, therefore, was merely a necessary
consequence of the invalidity of the mortgages.

Thus, to void the foreclosure sales and not the mortgage contracts would only
result in absurdity when it is palpable from the body of the Complaint in Civil Case
No. 215-M-02 that Rosemoor Minings challenge of the foreclosure sales was
rooted in the defective mortgage contracts. If at all, Rosemoor Minings failure to
particularly pray for the nullification of the Real Estate Mortgages was merely an
oversight on its part that is deemed cured when it asked from the court a quo for
such other reliefs and remedies as may be deemed just and equitable in the
premises.[44]

Moreover, the general prayer of Rosemoor Mining, couched in the phrase,


such other reliefs and remedies as may be deemed just and equitable in the
premises, should be interpreted to include the prayer for the nullification of the
mortgage contracts since this is already evident from the allegations contained in
the body of its Complaint though it was not specifically pleaded in the prayer.

In a cantena of cases,[45] this Court ruled that the general prayer is broad
enough to justify extension of a remedy different from or together with the specific
remedy sought. Even without the prayer for a specific remedy, proper relief may be
granted by the court if the facts alleged in the complaint and the evidence
introduced so warrant.[46]The prayer in the complaint for other reliefs equitable and
just in the premises justifies the grant of a relief not otherwise specifically prayed
for.

WHEREFORE, premises considered, the instant Petition is DENIED. The


Court of Appeals Decision dated 10 May 2005 and its Resolution dated 16 May
2006 in CA-G.R. CV No. 78583 are hereby AFFIRMED. Costs against the
petitioner.

SO ORDERED.

167
MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ ANTONIO EDUARDO B. NACHURA


Associate Justice Associate Justice

RUBEN T. REYES
Associate Justice

168
ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.

169
REYNATO S. PUNO
Chief Justice

[1]
Penned by Associate Justice Roberto A. Barrios with Associate Justices Amelita
G. Tolentino and Vicente S.E. Veloso, concurring. Rollo, pp. 64-75.
[2]
Id. at 78-80.
[3]
Id. at 12.
[4]
Id.
[5]
Id. at 97-105.
[6]
Id.
[7]
Id.
[8]
Id. at 81-96.
[9]
Id.
[10]
United Oversesas Bank v. Judge Ros, G.R. No. 171532, 7 August 2007.
[11]
Rollo, pp. 97-105.
[12]
Id. at 145-146.
[13]
Rollo of G.R. No. 159669, pp. 248-264.
[14]
Rollo, pp. 124-125.
[15]
Id. at 126-132.
[16]
Id. at 138-140.
[17]
Id. at 142-145.
[18]
Id. at 69.
[19]
Id.
[20]
Id. at 270.
[21]
Id. at 264.
[22]
Id. at 264-265.
[23]
Id.
[24]
Id. at 265.
[25]
Id. at 270.
170
[26]
Id.
[27]
Id. at 274.
[28]
Id. at 277.
[29]
Id. at 145-150.
[30]
Id. at 150.
[31]
Rollo, pp. 388-389
[32]
Id. at 259-282.
[33]
Rollo of G.R. Nos. 159669 and 163521.
[34]
Id.
[35]
Radio Communications of the Philippines, Inc. v. Court of Appeals, G.R. No.
139762, 26 April 2006, 488 SCRA 306.
[36]
Id. at 311-312.
[37]
New City Builders, Inc. v. National Labor Relations Commission, G.R. No.
149281, 15 June 2005, 460 SCRA 220, 225-229.
[38]
324 Phil. 466, 477 (1996).
[39]
Moran, Comments on the Rules of Court, Vol. III, 1980, pp. 66-67, as cited in
Annotation, Injunction by Alicia Gonzales-Decano, 446 SCRA 127.
[40]
Rollo, p. 150.
[41]
G.R. No. 148599, 14 March 2005, 453 SCRA 342, 353-354.
[42]
Rollo, pp. 103-104.
[43]
Id. at 150.
[44]
Arroyo, Jr. v. Taduran, 466 Phil. 173, 180 (2004).
[45]
BPI Family Bank v. Buenaventura, G.R. Nos. 148196 & 148259, 30 September
2005, 471 SCRA 431; Morales v. Court of Appeals, G.R. No. 112140, 23
June 2005, 461 SCRA 34.
[46]
Eugenio, Sr. v. Velez, G.R. No. 85140, 17 May 1990, 185 SCRA 425, 432-433.

171
https://lawyerphilippines.org/2016/03/18/partial-default-in-a-case-with-multiple-
defendants/

Partial default in a case with multiple defendants


Posted on March 18, 2016April 15, 2017 by Lawyers in the Philippines

What if, in a case filed against multiple defendants, one defendant does not file his
Answer but his co-defendants file theirs?

Can a defendant who failed to file his own Answer be declared in default even if
Answers were filed by his co-defendants?

Yes. The applicable rule is Section 3 of Rule 9 of the Rules of Court.

At the outset, it must be seen that the rules on Default in Section 3 of Rule 9
provide for two distinct and discrete stages of action.

The first stage of action pertains to the finding that a defendant is in default and the
consequent declaration by the Court. With regard to this stage, the first paragraph
of Section 3, Rule 9, provides thus:

Sec. 3. Default; declaration of. If the defending party fails to answer within the
time allowed therefore, the court shall, upon motion of the claiming party with
notice to the defending party, and proof of such failure, declare the defending party
in default.

The first stage thus concludes with the declaration that a defending party is in
default.

The second stage of action pertains to the conduct of the case after the declaration
in default. The ordinary consequence upon a defendant after he is found in default
is provided in paragraph (a) of Section 3, Rule 9, thus:

(a) Effect of order of default. A party in default is entitled to notice of


subsequent proceedings, but not to take part in the trial.

There is a critical distinction between the first stage of action, a defendants being
declared in default, and the second stage of action, the consequences thereof, i.e.
the conduct of the case after such a declaration. While both pertain to default, they
are not identical.

172
It is clear that paragraph (c) of Section 3, Rule 9 also refers to the second stage.

(c) Effect of partial default. When a pleading asserting a claim states a


common cause of action against several defending parties, some of whom answer
and the others fail to do so, the court shall try the case against all upon the answers
thus filed and render judgment upon the evidence presented.

Paragraph (c) only provides for the manner in which the trial will be conducted in
a case where a defendant filed no Answer although his co-defendants did. The
paragraph provides only that the case will be tried upon the Answers filed by the
responsive defendants. Nowhere does it state that the Rule on default does not
apply. It is not an exception to a defendant being declared in default.

The defendant who does not file an Answer is to be declared in default. This is the
Rule and paragraph (c) of Section 3, Rule 9 is no exception to it. Said provision, in
fact, recognizes a situation where one defendant among several is in default. This
is clear from paragraph (c)s own heading, Effect of partial default. That very
heading recognizes that default exists within the set. This recognition can only be
upon the Courts declaration of default pursuant to the first paragraph of Section 3
of Rule 9.

Paragraph (c) of Section 3, Rule 9 thus provides for the manner of the trials
conduct in a situation where one party among several, but not all, were declared in
default pursuant to the first paragraph of Section 3, Rule 9. It contemplates the
existence of default in one of the defendants. It is, therefore, not an exception to
the rule on default, but a consequence.

A contrary interpretation would allow a defendant in willful default to nevertheless


present evidence contrary to the Rules explicit provision. This would render in
vain the provisions for the Rule on Default and defeat the Rules of Courts
objective of securing a just, speedy and inexpensive disposition of every action and
proceeding.[1]

Jurisprudence is in full support of this view. The Supreme Court has ruled upon
Section 3 (c) of Rule 9 in the case of PINLAC, ET AL. vs. COURT OF
APPEALS, ET AL., G.R. No. 91486, 19 January 2001. There the Supreme Court
affirmed that when a party does not file an Answer, although his co-defendants do
so, default is availing against the former. The Supreme Court ruled:

(c) Effect of partial default. When a pleading asserting a claim states a


common cause of action against several defending parties, some of whom answer
173
and the others fail to do so, the court shall try the case against all upon the answers
thus filed and render judgment upon the evidence presented.

In fact, the court a quo enumerated in the Partial Decision those who filed
responsive pleadings. Considering that petitioners in their complaint stated a
common cause of action against all the named respondents, the court a quo should
have heard the case as against all respondents, the defaulted respondents included.
However, the trial court, unmindful of the above-quoted rule, proceeded to receive
evidence ex parte only against the defaulted respondents. The trial courts
disposition is not only violative of the rules but also a clear negation of the
defaulted respondents limited rights.

Whatever defense and evidence the non-defaulted respondents may present which
would be applicable to the situation of the defaulted respondents should inure to
the benefit of the latter. The nullification of OCT 614 adversely affected the
answering respondents for they all share the same mother title. In effect, the court
a quo pre-judged the case even against the answering respondents, for how could
OCT 614, the mother title, be valid for one set of respondents and null and void for
the other respondents? In fine, the Partial Decision was procedurally flawed.
[Boldfacing supplied]

Pinlac vs. Court of Appeals affirms that a declaration of partial default is in order
in these cicumstances. For, under Pinlac, that a Complaint states a common cause
of action against all the named defendants means only that the Honorable Court
should hear the case and receive evidence against all defendants, the defaulted
defendant included.

But, as Pinlac vs. Court of Appeals makes clear, Section 3 (c) of Rule 9 does not
mean that a delinquent defendant whose co-defendants did file their
Answers cannot be declared in default. He still should be declared in default for
having failed to file an Answer within the time given by the Rules. He does remain
entitled to the limited rights of a defendant in default, but to no more than those.

Although such defenses and evidence as the non-defaulted co-defendant may


present which would be applicable to the situation of the defaulted defendant could
inure to his benefit, being in default, the latter should be so declared. And so the
defaulted defendant shall remain entitled to notice of subsequent proceedings, but
he cannot take part in the trial.[2]

The Supreme Court again explained in depth the governing rules in a situation of
partial default under Section 3 (c) of Rule 9 in the case of REMIGIA GRAGEDA
174
ET AL., vs. HON. NIMFA C. GOMEZ, ET AL., G.R. No. 169536, 21 September
2007:

Stated differently, in all instances where a common cause of action is alleged


against several defendants, some of whom answer and the others do not, the latter
or those in default acquire a vested right not only to own the defense interposed in
the answer of their co-defendant or co-defendants not in default but also to expect
a result of the litigation totally common with them in kind and in amount whether
favorable or unfavorable. The substantive unity of the plaintiffs cause against all
the defendants is carried through to its adjective phase as ineluctably demanded by
the homogeneity and indivisibility of justice itself. Indeed, since the singleness of
the cause of action also inevitably implies that all the defendants are indispensable
parties, the courts power to act is integral and cannot be split such that it cannot
relieve any of them and at the same time render judgment against the rest.
Considering the tenor of the section in question, it is to be assumed that when any
defendant allows himself to be declared in default knowing that his co-defendant
has already answered, he does so trusting in the assurance implicit in the rule that
his default is in essence a mere formality that deprives him of no more than the
right to take part in the trial and that the court would deem anything done by or for
the answering defendant as done by or for him. The presumption is that otherwise
he would not have seen to it that he would not be in default. Of course, he has to
suffer the consequences of whatever the answering defendant may do or fail to do,
regardless of possible adverse consequences, but if the complaint has to be
dismissed in so far as the answering defendant is concerned, it becomes his
inalienable right that the same be dismissed also as to him. It does not matter that
the dismissal is upon the evidence presented by the plaintiff or upon the latters
mere desistance, for in both contingencies, the lack of sufficient legal basis must be
the cause. x x x.

The primary question which a Motion To Declare Defendant In Default hinges on


is whether or not the defendant failed to Answer within the time given him.

The question of whether or not his co-defendant had filed an Answer is relevant
only as to the second stage, the manner of how trial will subsequently be
conducted. It has no bearing on the first stage, the declaration of the delinquent
partys default.

The application of the Rules in such a case are therefore clear. The Rules on partial
default are as they were laid out in the same case of Grageda vs. Hon. Gomez:

175
The effects, therefore, of a failure to file a separate Answer when other co-
defendants (against whom a common cause of action was alleged) had already
filed theirs, are limited to the following:

1. While the non-answering defendants may be declared in default, the court


would still try the case against them on the assumption that they are deemed
to have adopted the Answer of the answering defendants; and

2. If declared in default, the defaulting party is deprived of no more than the


right to take part in the trial. Consequently, the result of the litigation,
whether favorable or unfavorable, shall affect and bind the defaulting party
and the answering defendant with equal force and effect.

[1] Section 6, Rule 1 of the Rules of Court.

[2] Section 3 (a), Rule 9 of the Rules of Court.

176
FIRST DIVISION

ERLINDA GAJUDO, FERNANDO G.R. No. 151098


GAJUDO, JR., ESTELITA GAJUDO,
BALTAZAR GAJUDO and DANILO Present:
ARAHAN CHUA,
Petitioners, Panganiban, CJ,
Chairman,
Ynares-Santiago,
- versus - Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ

Promulgated:

TRADERS ROYAL BANK,*


Respondent. March 21, 2006
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - -- x

DECISION

The Court of Appeals was included in the Petition as a respondent. However, the CA was omitted by this
Court from the title of the case, because it need not be impleaded in petitions for review, under Section 4
of Rule 45 of the Rules of Court.

177
PANGANIBAN, CJ:

T he mere fact that a defendant is declared in default does not automatically


result in the grant of the prayers of the plaintiff. To win, the latter must still
present the same quantum of evidence that would be required if the
defendant were still present. A party that defaults is not deprived of its rights,
except the right to be heard and to present evidence to the trial court. If the
evidence presented does not support a judgment for the plaintiff, the complaint
should be dismissed, even if the defendant may not have been heard or allowed to
present any countervailing evidence.

The Case

Before us is a Petition for Review* under Rule 45 of the Rules of Court, assailing
the June 29, 2001 Decision* and December 6, 2001 Resolution* of the Court of
Appeals (CA) in CA-GR CV No. 43889. The CA disposed as follows:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the


partial judgment appealed from, must be, as it hereby is, VACATED
and SET ASIDE, and another one entered DISMISSING the
complaint at bench. Without costs.*

Rollo, pp. 9-27.

Penned by Justice Renato C. Dacudao and concurred in by Justices Romeo J. Callejo Sr. (then chairperson
of the Special Thirteenth Division and now a member of this Court) and Alicia L. Santos (acting member).
Id., pp. 29-39.

Id., p. 41.

CA Decision, p. 11; id., p. 39.

178
The assailed Resolution denied petitioners Motion for Reconsideration* for lack of
merit.

The Facts

The CA narrated the facts as follows:

[Petitioners] filed a complaint before the Regional Trial Court


of Quezon City, Branch 90, against [respondent] Traders Royal Bank,
the City Sheriff of Quezon City and the Register of Deeds of Quezon
City. Docketed thereat as Civil Case No. Q-41203, the complaint
sought the annulment of the extra-judicial foreclosure and auction
sale made by [the] city sheriff of Quezon City of a parcel of land
covered by TCT No. 16711 of the Register of Deeds of Quezon City,
the conventional redemption thereof, and prayed for damages and the
issuance of a writ of preliminary injunction.

The complaint alleged that in mid 1977[, Petitioner] Danilo


Chua obtained a loan from [respondent] bank in the amount of
P75,000.00 secured by a real estate mortgage over a parcel of land
covered by TCT No. 16711, and owned in common by the
[petitioners]; that when the loan was not paid, [respondent] bank
commenced extra-judicial foreclosure proceedings on the property;
that the auction sale of the property was set on 10 June 1981, but was
reset to 31 August 1981, on [Petitioner Chuas] request, which,
however, was made without the knowledge and conformity of the
other [petitioners]; that on the re-scheduled auction sale, [the] Sheriff
of Quezon City sold the property to the [respondent] bank, the highest
bidder therein, for the sum of P24,911.30; that the auction sale was
tainted with irregularity because, amongst others, the bid price was
shockingly or unconscionably, low; that the other [petitioners] failed
to redeem the property due to their lack of knowledge of their right of
redemption, and want of sufficient education; that, although the
period of redemption had long expired, [Petitioner] Chua offered to
buy back, and [respondent] bank also agreed to sell back, the

CA rollo, pp. 145-152.

179
foreclosed property, on the understanding that Chua would pay
[respondent] bank the amount of P40,135.53, representing the sum
that the bank paid at the auction sale, plus interest; that [Petitioner]
Chua made an initial payment thereon in the amount of P4,000.00,
covered by Interbank Check No. 09173938, dated 16 February 1984,
duly receipted by [respondent] bank; that, in a sudden change of
position, [respondent] bank wrote Chua, on 20 February 1984, asking
that he could repurchase the property, but based on the current market
value thereof; and that sometime later, or on 22 March 1984,
[respondent] bank wrote Chua anew, requiring him to tender a new
offer to counter the offer made thereon by another buyer.

Traversing [petitioners] complaint, [respondent] bank, upon 05 July


1984, filed its answer with counterclaim, thereunder asserting that the
foreclosure sale of the mortgaged property was done in accordance
with law; and that the bid price was neither unconscionable, nor
shockingly low; that [petitioners] slept on their rights when they
failed to redeem the property within the one year statutory period;
and that [respondent] bank, in offering to sell the property to
[Petitioner] Chua on the basis of its current market price, was acting
conformably with law, and with legitimate banking practice and
regulations.

Pre-trial having been concluded, the parties entered upon trial, which
dragged/lengthened to several months due to postponements. Upon
11 June 1988, however, a big conflagration hit the City Hall of
Quezon City, which destroyed, amongst other things, the records of
the case. After the records were reconstituted, [petitioners] discovered
that the foreclosed property was sold by [respondent] bank to the
Ceroferr Realty Corporation, and that the notice of lis pendens
annotated on the certificate of title of the foreclosed property, had
already been cancelled. Accordingly, [petitioners], with leave of
court, amended their complaint, but the Trial Court dismissed the case
without prejudice due to [petitioners] failure to pay additional filing
fees.

180
So, upon 11 June 1990, [petitioners] re-filed the complaint with the
same Court, whereat it was docketed as Civil Case No. 90-5749, and
assigned to Branch 98: the amended complaint substantially
reproduced the allegations of the original complaint. But [petitioners]
this time impleaded as additional defendants the Ceroferr Realty
Corporation and/or Cesar Roque, and Lorna Roque, and included an
additional cause of action, to wit: that said new defendants conspired
with [respondent] bank in [canceling] the notice of lis pendens by
falsifying a letter sent to and filed with the office of the Register of
Deeds of Quezon City, purportedly for the cancellation of said notice.

Summons was served on [respondent] bank on 26 September 1990,


per Sheriffs Return dated 08 October 1990. Supposing that all the
defendants had filed their answer, [petitioners] filed, on 23 October
1991, a motion to set case for pre-trial, which motion was, however,
denied by the Trial Court in its Order of 25 October 1991, on the
ground that [respondent] bank has not yet filed its answer. On 13
November 1991[, petitioners] filed a motion for reconsideration,
thereunder alleging that they received by registered mail, on 19
October 1990, a copy of [respondent] banks answer with
counterclaim, dated 04 October 1990, which copy was attached to the
motion. In its Order of 14 November 1991, the trial Court denied for
lack of merit, the motion for reconsideration, therein holding that the
answer with counterclaim filed by [respondent] bank referred to
another civil case pending before Branch 90 of the same Court.

For this reason, [petitioners] filed on 02 December 1991 a motion to


declare [respondent] bank in default, thereunder alleging that no
answer has been filed despite the service of summons on it on 26
September 1990.

On 13 December 1991, the Trial Court declared the motion submitted


for resolution upon submission by [petitioners] of proof of service of
the motion on [respondent] bank.

181
Thus, on 16 January 1992, upon proof that [petitioners] had indeed
served [respondent] bank with a copy of said motion, the Trial Court
issued an Order of default against [respondent] bank.

Upon 01 December 1992, on [petitioners] motion, they were by the


Court allowed to present evidence ex parte on 07 January 1993,
insofar as [respondent] bank was concerned.

Thereafter, or on 08 February 1993, the Trial Court rendered


the new questioned partial decision.*
Aggrieved, [respondent] bank filed a motion to set aside [the] partial
decision by default against Traders Royal Bank and admit
[respondent] Traders Royal Banks x x x Answer with counterclaim:
thereunder it averred, amongst others, that the erroneous filing of said
answer was due to an honest mistake of the typist and inadvertence of
its counsel.

The [trial court] thumbed down the motion in its Order of 26 July
1993.*

Respondent bank appealed the Partial Decision* to the CA. During the pendency of
that appeal, Ceroferr Realty Corporation and/or Cesar and/or Lorna Roque filed a
Manifestation with Motion* asking the CA to discharge them as parties, because the
case against them had already been dismissed on the basis of their Compromise

The dispositive portion of the Partial Decision reads as follows:


The claims of the [petitioners] as against [Respondent] Traders Royal Bank
having been established and proved by evidence, judgment is hereby rendered ordering
[Respondent] Traders Royal Bank to pay [petitioners] actual damage or the market
value of the land in question in the sum of P500,000.00; the sum of P70,000.00 as
compensatory damages; the sum of P200,000.00 to the heirs of [Petitioner] Danilo
Chua; and attorneys fees in the sum of P30,000.00. (Partial Decision dated February 8,
1993, p. 2; records, p. 173).

CA Decision, pp. 2-5; rollo, pp. 30-33.

Records, pp. 172-173.

CA rollo, pp. 37-41.

182
Agreement* with petitioners. On May 14, 1996, the CA issued a Resolution*
granting Ceroferr et al.s Manifestation with Motion to discharge movants as parties
to the appeal. The Court, though, deferred resolution of the matters raised in the
Comment* of respondent bank. The latter contended that the Partial Decision had
been novated by the Compromise Agreement, whose effect of res judicata had
rendered that Decision functus officio.

Ruling of the Court of Appeals

The CA ruled in favor of respondent bank. Deemed, however, to have rested on


shaky ground was the latters Motion to Set Aside Partial Decision by Default
Against Traders Royal Bank and Admit Defendant Traders Royal Banks Answer.*
The reasons offered by the bank for failing to file an answer were considered by
the appellate court to be at once specious, shallow and sophistical and can hardly
be dignified as a mistake or excusable negligence, which ordinary prudence could
not have guarded against.*

In particular, the CA ruled that the erroneous docket number placed on the Answer
filed before the trial court was not an excusable negligence by the banks counsel.
The latter had a bounden duty to be scrupulously careful in reviewing pleadings.
Also, there were several opportunities to discover and rectify the mistake, but these
were not taken. Moreover, the banks Motion to Set Aside the Partial Decision and
to Admit [the] Answer was not accompanied by an affidavit of merit. These
mistakes and the inexcusable negligence committed by respondents lawyer were
binding on the bank.

On the issue of whether petitioners had convincingly established their right to


relief, the appellate court held that there was no ground to invalidate the
foreclosure sale of the mortgaged property. First, under Section 3 of Act No. 3135,
an extrajudicial foreclosure sale did not require personal notice to the mortgagor.
Second, there was no allegation or proof of noncompliance with the publication
requirement and the public posting of the notice of sale, provided under Act No.

Contained in the RTC Decision dated October 28, 1993; records, pp. 263-264.

CA Rollo, pp. 84-87.

Records, pp. 75-82.

Id., pp. 176-183.

CA Decision, p. 7; rollo, p. 35.

183
3135, as amended. Third, there was no showing of inadequacy of price as no
competent evidence was presented to show the real market value of the land sold
or the readiness of another buyer to offer a price higher than that at which the
property had been sold.

Moreover, petitioners failed to prove that the bank had agreed to sell the property
back to them. After pointing out that the redemption period had long expired,
respondents written communications to Petitioner Chua only showed, at most, that
the former had made a proposal for the latter to buy back the property at the
current market price; and that Petitioner Chua was requested to make an offer to
repurchase the property, because another buyer had already made an offer to buy it.
On the other hand, respondent noted that the Interbank check for P4,000 was for
deposit only. Thus, there was no showing that the check had been issued to cover
part of the repurchase price.

The appellate court also held that the Compromise Agreement had not resulted in
the novation of the Partial Decision, because the two were not incompatible. In
fact, the bank was not even a party to the Agreement. Petitioners recognition of
Ceroferrs title to the mortgaged property was intended to preclude future litigation
against it.

Hence this Petition.*

Issues

In their Memorandum, petitioners raise the following issues:

1. Whether or not the Respondent Court of Appeals erred in


failing to apply the provisions of Section 3, Rule 9 of the 1997 Rules
of Civil Procedure [and in applying instead] the rule on

The Petition was deemed submitted for decision on March 29, 2005, upon the Courts receipt of
respondents 4-page Memorandum, signed by Atty. Diosdado B. Jimenez of Gonzales Sinense Jimenez&
Associates. Petitioners Memorandum, signed by Atty. Sergio F. Angeles of Angeles & Associates, was
received by the Court on May 15, 2003.

184
preponderance of evidence under Section 1, Rule 133 of the Rules of
Court.

2. Whether or not the respondent appellate court failed to apply


the conventional redemption rule provided for under Article 1601 of
the New Civil Code.

3. Whether or not this Honorable Court can exercise its judicial


prerogative to evaluate the findings of facts.*

The first issue is one of law and may be taken up by the Court without
hindrance, pursuant to Section 1 of Rule 45 of the Rules of Court. * The second and
the third issues, however, would entail an evaluation of the factual findings of the
appellate court, a function ordinarily not assumed by this Court, unless in some
excepted cases. The Court will thus rule on the first issue before addressing the
second and the third issues jointly.

The Courts Ruling

The Petition has no merit.

First Issue:
Quantum of Proof

Petitioners challenge the CA Decision for applying Section 3 of Rule 9 of the Rules of
Court, rather than Section 1 of Rule 133 of the same Rules. In essence, petitioners argue

Petitioners Memorandum, pp. 10-17; rollo, pp. 98-105.

Section 1 of Rule 45 of the Rules of Court provides that x x x. The petition shall raise only questions of
law which must be distinctly set forth.

185
that the quantum of evidence for judgments flowing from a default order under Section
3 of Rule 9 is not the same as that provided for in Section 1 of Rule 133.

For ease of discussion, these two rules will be reproduced below, starting with
Section 3 of Rule 9 of the Rules of Court:

Sec. 3. Default; declaration of. If the defending party fails to


answer within the time allowed therefor, the court shall, upon motion of
the claiming party with notice to the defending party, and proof of such
failure, declare the defending party in default. Thereupon, the court
shall proceed to render judgment granting the claimant such relief as his
pleading may warrant, unless the court in its discretion requires the
claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.

(a) Effect of order of default. A party in default shall be entitled


to notice of subsequent proceedings but not to take part in the trial.

(b) Relief from order of default. A party declared in default may


at any time after notice thereof and before judgment file a motion under
oath to set aside the order of default upon proper showing that his
failure to answer was due to fraud, accident, mistake or excusable
negligence and that he has a meritorious defense. In such case, the
order of default may be set aside on such terms and conditions as the
judge may impose in the interest of justice.

186
(c) Effect of partial default. When a pleading asserting a claim
states a common cause of action against several defending parties, some
of whom answer and the others fail to do so, the court shall try the case
against all upon the answers thus filed and render judgment upon the
evidence presented.

(d) Extent of relief to be awarded. A judgment rendered against a


party in default shall not exceed the amount or be different in kind from
that prayed for nor award unliquidated damages.

(e) Where no defaults allowed. If the defending party in an


action for annulment or declaration of nullity of marriage or for legal
separation fails to answer, the court shall order the prosecuting attorney
to investigate whether or nor a collusion between the parties exists, and
if there is no collusion, to intervene for the State in order to see to it that
the evidence submitted is not fabricated.

We now quote Section 1 of Rule 133:

SECTION 1. Preponderance of evidence, how determined. In


civil cases, the party having the burden of proof must establish his case
by a preponderance of evidence. In determining where the
preponderance or superior weight of evidence on the issues involved
lies, the court may consider all the facts and circumstances of the case,
the witnesses manner of testifying, their intelligence, their means and
opportunity of knowing the facts to which they are testifying, the
nature of the facts to which they testify, the probability or
improbability of their testimony, their interest or want of interest, and
also their personal credibility so far as the same may legitimately
appear upon the trial. The court may also consider the number of

187
witnesses, though the preponderance is not necessarily with the greater
number.

Between the two rules, there is no incompatibility that would preclude the
application of either one of them. To begin with, Section 3 of Rule 9 governs the
procedure which the trial court is directed to take when a defendant fails to file an
answer. According to this provision, the court shall proceed to render judgment
granting the claimant such relief as his pleading may warrant, subject to the courts
discretion on whether to require the presentation of evidence ex parte. The same
provision also sets down guidelines on the nature and extent of the relief that may
be granted. In particular, the courts judgment shall not exceed the amount or be
different in kind from that prayed for nor award unliquidated damages.

As in other civil cases, basic is the rule that the party making allegations has
the burden of proving them by a preponderance of evidence.* Moreover, parties
must rely on the strength of their own evidence, not upon the weakness of the
defense offered by their opponent.* This principle holds true, especially when the
latter has had no opportunity to present evidence because of a default order.
Needless to say, the extent of the relief that may be granted can only be as much as
has been alleged and proved* with preponderant evidence required under Section 1
of Rule 133.

Regarding judgments by default, it was explained in Pascua v. Florendo* that


complainants are not automatically entitled to the relief prayed for, once the
defendants are declared in default. Favorable relief can be granted only after the
court has ascertained that the relief is warranted by the evidence offered and the

Saguid v. Court of Appeals, 451 Phil. 825, June 10, 2003; Ocampo v. Ocampo, 427 SCRA 545, April 14, 2004;
Catapusan v. Court of Appeals, 332 Phil. 586, November 21, 1996. Section 1 of Rule 131 of the Rules of Court
provides:
SECTION 1. Burden of proof. Burden of proof is the duty of a party
to present evidence on the facts in issue necessary to establish his claim
or defense by the amount of evidence required by law.

Saguid v. CA, ibid. (citing Heirs of Anastacio Fabela v. CA, 362 SCRA 531, August 9, 2001).

Regalado, Remedial Law Compendium, Vol. 1, 7th rev. ed. (1999), p. 169. See also P. T. Cerna Corporation v. CA,
221 SCRA 19, 25, April 6, 1993.

220 Phil. 588, April 30, 1985 cited in Luxuria Homes, Inc. v. CA, 361 Phil. 989, January 28, 1999.

188
facts proven by the presenting party. In Pascua, this Court ruled that x x x it would
be meaningless to require presentation of evidence if every time the other party is
declared in default, a decision would automatically be rendered in favor of the
non-defaulting party and exactly according to the tenor of his prayer. This is not
contemplated by the Rules nor is it sanctioned by the due process clause.*

Pascua v. Florendo, supra, pp. 595-596, per Gutierrez, Jr., J.

189
The import of a judgment by default was further clarified in Lim Tanhu v.
Ramolete.* The following disquisition is most instructive:

Unequivocal, in the literal sense, as these provisions [referring


to the subject of default then under Rule 18 of the old Rules of Civil
Procedure] are, they do not readily convey the full import of what they
contemplate. To begin with, contrary to the immediate notion that can
be drawn from their language, these provisions are not to be understood
as meaning that default or the failure of the defendant to answer should
be interpreted as an admission by the said defendant that the plaintiffs
cause of action find support in the law or that plaintiff is entitled to the
relief prayed for. x x x.

xxx xxx xxx

Being declared in default does not constitute a waiver of rights


except that of being heard and of presenting evidence in the trial court.
x x x.

In other words, a defaulted defendant is not actually thrown out


of court. While in a sense it may be said that by defaulting he leaves
himself at the mercy of the court, the rules see to it that any judgment
against him must be in accordance with law. The evidence to support
the plaintiffs cause is, of course, presented in his absence, but the court
is not supposed to admit that which is basically incompetent. Although
the defendant would not be in a position to object, elementary justice
requires that only legal evidence should be considered against him. If
the evidence presented should not be sufficient to justify a judgment for
the plaintiff, the complaint must be dismissed. And if an unfavorable
judgment should be justifiable, it cannot exceed in amount or be
different in kind from what is prayed for in the complaint.*

66 SCRA 425, August 29, 1975. See also Heirs of Anastacio Fabela v. CA, supra at note 20.

Id., pp. 452-453, per Barredo, J.

190
In sum, while petitioners were allowed to present evidence ex parte under Section
3 of Rule 9, they were not excused from establishing their claims for damages by
the required quantum of proof under Section 1 of Rule 133. Stated differently, any
advantage they may have gained from the ex parte presentation of evidence does
not lower the degree of proof required. Clearly then, there is no incompatibility
between the two rules.

Second and Third Issues:


Review of the Evidence

Petitioners urge this Court to depart from the general rule that the lower
courts findings of fact are not reviewable in a petition for review.* In support of
their plea, they cite the conflicting findings of the trial and the appellate courts, as
well as the alleged conjectures and surmises made by the CA in arriving at its
Decision.

Indeed, the differences between the findings of the two courts a quo, leading
to entirely disparate dispositions, is reason enough for this Court to review the
evidence in this case.* Whether the CA indulged in surmises and conjectures when
it issued the assailed Decision will thus be determined.

At the outset, it behooves this Court to clarify the CAs impression that no
evidence was presented in the case which might have contributed to petitioners
challenge to its Decision. The appellate courts observation was based on the
notation by the lower courts clerk of court that there were no separate folders for
exhibits and transcripts, because there was no actual hearing conducted in this
case.*

Vibram Manufacturing Corporation v. Manila Electric Company, 466 SCRA 178,


August 9, 2005; Rubiato v. Heirs of Jovito Rubiato, 464 SCRA 296, July 28, 2005;
Republic v. CA, 328 Phil. 238, July 12, 1996; Baricuatro Jr. v. Court of Appeals, 382
Phil. 15, 24, February 9, 2000.

Manila Banking Corp. v. Silverio, 466 SCRA 438, August 11, 2005; Yason v. Arciaga, 449 SCRA 458,
January 28, 2005; Menchavez v. Torres Jr. 449 SCRA 380, January 26, 2005.

CA Decision, p. 9; rollo, p. 37.

191
True, there was no hearing conducted between petitioners and respondent,
precisely because the latter had been declared in default, and petitioners had
therefore been ordered to present their evidence ex parte. But the absence of a
hearing did not mean that no evidence was presented. The Partial Decision dated
February 8, 1993, in fact clearly enumerated the pieces of evidence adduced by
petitioners during the ex parte presentation on January 7, 1993. The documentary
evidence they presented consisted of the following:
1. A copy of respondent banks Petition for the extrajudicial foreclosure and
auction sale of the mortgaged parcel of land*

2. The Certificate of Sale that was a consequence of the foreclosure sale*

3. A Statement of Account dated February 15, 1984, showing Petitioner


Chuas outstanding debt in the amount of P40,135.53*

4. A copy of the Interbank check dated February 16, 1984, in the amount of
*
P4,000

5. The Official Receipt issued by the bank acknowledging the check*

6. The banks letter dated February 20, 1984, advising Petitioner Chua of the
sale of the property at an extrajudicial public auction; the lapse of the period of
redemption; and an invitation to purchase the property at its current market price*

Records, pp. 9-12.

Id., pp. 13-14.

Id., p. 15.

Id., p. 16.

Id., p. 17.

Id., p. 18.

192
7. Another letter from the bank dated March 22, 1984, inviting Petitioner
Chua to submit, within five days, an offer to buy the same property, which another
buyer had offered to buy*

8. A copy of the Notice of Lis Pendens, the filing of which was done after
that of the Amended Complaint*

9. A copy of the title showing the inscription of the Notice of Lis Pendens*

10. A copy of the Absolute Deed of Sale to Cerrofer*

11. A copy of a letter dated August 29, 1986, made and signed by petitioners
counsel, requesting the cancellation of the Notice of Lis Pendens*

12. A copy of a page of the Memorandum of Encumbrance from TCT No.


(314341) 7778/T-39*

Having clarified this matter, we proceed to review the facts.

Petitioners do not deny that the one-year period for legal redemption had
already lapsed when respondent bank supposedly offered to sell the property in
question. The records clearly show that the Certificate of Sale following the
extrajudicial public auction of the property was registered on June 21, 1982, the
date from which the legal redemption period was to be reckoned.* Petitioners
insist, though, that they had the right to repurchase the property through

Id., p. 19.

Id., pp. 20-21.

Id., pp. 22-23.

Id., pp. 24-26.

Id., p. 27.

Id., p. 28.

Union Bank of the Philippines v. CA, 412 Phil. 64, June 25, 2001; Castro v. Bague, 359 SCRA 28, June 20, 2001;
Ysmael v. CA, 376 Phil. 323, November 16, 1999. Section 28 of Rule 39 of the Rules of Court provides that legal
redemption should be made at any time within one (1) year from the date of the registration of the certificate of sale
x x x.

193
conventional redemption, as provided under Article 1601 of the Civil Code,
worded as follows:

ART. 1601. Conventional redemption shall take place when the


vendor reserves the right to repurchase the thing sold, with the
obligation to comply with the provisions of Article 1616 and other
stipulations which may have been agreed upon.
It is true that the one-year period of redemption provided in Act No. 3135, as
amended -- the law under which the property here was sold in a foreclosure sale --
is only directory and, as such can be extended by agreement of the parties.*
However, it has also been held that for legal redemption to be converted into
conventional redemption, two requisites must be established: 1) voluntary
agreement of the parties to extend the redemption period; and 2) the debtors
commitment to pay the redemption price on a fixed date.* Thus, assuming that an
offer was made to Petitioner Chua to buy back the property after the lapse of the
period of legal redemption, petitioners needed to show that the parties had agreed
to extend the period, and that Petitioner Chua had committed to pay the redemption
price on a fixed date.

The letters sent by the bank to Petitioner Chua on February 20 and March
22, 1984, do not convincingly show that the parties arrived at a firm agreement for
the repurchase of the property. What can be gleaned from the February 20 letter is
that Petitioner Chua proposed to pay the redemption price for the property, but that
the bank refused to accede to his request, because the one-year redemption period
had already lapsed.* The bank, though, had offered to sell back the property to him
at the current market value. Indeed, an examination of his earlier letter of February
17, 1984, readily reveals that he expressed willingness to settle his account with
the bank, but that his present financial situation precludes [him] from effecting an
immediate settlement x x x.*

Ibaan Rural Bank, Inc. v. Court of Appeals, 378 Phil. 707, 713, December 17, 1999; Lazo v. Republic Surety &
Insurance Co., Inc., 31 SCRA 329, January 30, 1970.

Landrito v. Court of Appeals, 466 SCRA 107, August 9, 2005 (citing


Lazo v. Republic Surety & Insurance Co., Inc., supra); Ibaan Rural
Bank, Inc. v. Court of Appeals, supra.

Records, p. 18.

Id., p. 195.

194
On the other hand, the letter dated March 22, 1984, clearly states that x x x
the Bank rejected [his] request to redeem said property due to [the] lapse of [the]
one (1) year legal redemption period.* Nonetheless, he was [invited] to submit an
offer to buy the same property in five (5) days from receipt [of the letter]. *
Petitioner Chua was also informed that the bank had received an offer to purchase
the foreclosed property. As to the P4,000 check enclosed in his proposal dated
February 17, 1984, as a token of his good faith, he was advised that the amount
was still outstanding in the books of the bank and could be claimed by him if he
thought the invitation was not feasible.

More important, there was no showing that petitioners had committed to pay
the redemption price on a fixed date. True, Petitioner Chua had attempted to
establish a previous agreement to repurchase the property for less than its fair
market value. He had submitted in evidence a Statement of Account * dated
February 15, 1984, showing a balance of P40,135.53; the Interbank check dated
February 16, 1984 , for P4,000, which was deposited to the account of respondent
bank;* and the Official Receipt for the check.*

Granting that these documents evinced an agreement, petitioners were still


unable to establish a firm commitment on their part to pay the redemption price on
a fixed date. On the contrary, the February 17 letter of Petitioner Chua to the bank
clearly manifested that he was not capable of paying the account immediately. For
this reason, he proposed to pay in three or four installments without a specification
of dates for the payments, but with a plea for a reduction of the interest charges.
That proposal was rejected.

Indeed, other than the Interbank check marked for deposit by respondent
bank, no other evidence was presented to establish that petitioners had offered to
pay the alleged redemption price of P40,135.53 on a fixed date. For that matter,
petitioners have not shown that they tendered payment of the balance and/or
consigned the payment to the court, in order to fulfill their part of the purported
agreement. These remedies are available to an aggrieved debtor under Article 1256

Id., p. 19.

Ibid.

Id., p. 15.

Id., p. 16.

Id., p. 17.

195
of the Civil Code,* when the creditor unjustly refuses to accept the payment of an
obligation.

The next question that presents itself for resolution is the propriety of the
CAs ruling vacating the Partial Decision of the regional trial court (RTC) and
dismissing the case. To recall, the RTC had resolved to withhold a ruling on
petitioners right to redeem conventionally and/or order the reconveyance of the
property in question, pending a determination of the validity of the sale to Cerrofer
Realty Corporation and Spouses Cesar and Lorna Roque. The trial court, however,
granted the prayer for damages against respondent bank. The RTC ruled as
follows:

The evidence presented by [petitioners] in so far as the cause of


action against [respondent] Traders Royal Bank is concerned are
preponderant to support the claims of the [petitioners]. However, in
view of the fact that the property subject matter of this case has
already been conveyed to defendant Cerrofer Realty Corporation thus
the issue as to whether or not the said conveyance or sale is valid is
sill pending between the [petitioners] and [respondents] Cerrofer
Realty Corporation and Cesar Roque and Lorna Roque. Hence, this
Court resolves to grant the prayer for damages against Traders Royal
Bank.

The claims of the [petitioners] as against [respondent] Traders


Royal Bank having been established and proved by evidence,
judgment is hereby rendered ordering [respondent] Traders Royal
Bank to pay [petitioners] actual damage or the market value of the
land in question in the sum of P500,000.00; the sum of P70,000.00 as
compensatory damages; the sum of P200,000.00 to the heirs of
[petitioner] Danilo Chua; and attorneys fees in the sum of
P30,000.00.*

ART. 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept
it, the debtor shall be released from responsibility by the consignation of the thing or sum due. x x x.

Partial Decision, p. 2; records, p. 173.

196
In the light of the pending issue as to the validity of the sale of the property
to the third parties (Cerrofer Realty Corporation and Spouses Roque), the trial
court properly withheld judgment on the matter and thus left the prayer for
damages as the sole issue for resolution.

To adjudge damages, paragraph (d) of Section 3 of Rule 9 of the Rules of


Court provides that a judgment against a party in default shall not exceed the
amount or be different in kind from that prayed for nor award unliquidated
damages. The proscription against the award of unliquidated damages is
significant, because it means that the damages to be awarded must be proved
convincingly, in accordance with the quantum of evidence required in civil cases.

Unfortunately for petitioners, the grant of damages was not sufficiently


supported by the evidence for the following reasons.

First, petitioners were not deprived of their property without cause. As


correctly pointed out by the CA, Act No. 3135, as amended, does not require
personal notice to the mortgagor.* In the present case, there has been no allegation
-- much less, proof -- of noncompliance with the requirement of publication and
public posting of the notice of sale, as required by ct No. 3135. Neither has there
been competent evidence to show that the price paid at the foreclosure sale was
inadequate.* To be sure, there was no ground to invalidate the sale.

Second, as previously stated, petitioners have not convincingly established


their right to damages on the basis of the purported agreement to repurchase.
Without reiterating our prior discussion on this point, we stress that entitlement to
actual and compensatory damages must be proved even under Section 3 of Rule 9

Section 3 of Act No. 3135, as amended, provides as follows:


Notice shall be given by posting notices of the sale for not less than
twenty days in at least three public places of the municipality or city where
the property is situated, and if such property is worth more than four
hundred pesos, such notice shall also be published once a week for at
least three consecutive weeks in a newspaper of general circulation in the
municipality or city. (See also Ardiente v. Provincial Sheriff, 436 SCRA 655, August
17, 2004)

This fact would have been shown by presenting evidence that another bidder had offered to pay a higher price for
the property during the bidding.

197
of the Rules of Court. The same is true with regard to awards for moral damages
and attorneys fees, which were also granted by the trial court.

In sum, petitioners have failed to convince this Court of the cogency of their
position, notwithstanding the advantage they enjoyed in presenting their evidence
ex parte. Not in every case of default by the defendant is the complainant entitled
to win automatically.

198
WHEREFORE, this Petition is hereby DENIED and the assailed Decision and
Resolution AFFIRMED. Costs against petitioners.

SO ORDERED.

ARTEMIO V. PANGANIBAN
Chief Justice
Chairman, First Division

WECONCUR:

CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ


Associate Justice Associate Justice

ROMEO J. CALLEJO, SR. MINITA V. CHICO-NAZARIO


Associate Justice Associate Justice

CERTIFICATION

199
Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Chief Justice

200
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 200134 August 15, 2012

ROBERTO OTERO, Petitioner,


vs.
ROGER TAN, Respondent.

VILLARAMA, JR.,*

R E S O LUTIO N

REYES, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision1 dated April 29, 2011 rendered by the Court of Appeals (CA) in CA-G.R.
SP No. 02244, which affirmed the Judgment2 dated December 28, 2007 issued by the Regional Trial Court
(RTC), Cagayan de Oro City, Branch 23 in Civil Case No. 2007-90.

The Antecedent Facts

A Complaint3 for collection of sum of money and damages was filed by Roger Tan (Tan) with the
Municipal Trial Court in Cities (MTCC), Cagayan de Oro City on July 28, 2005 against Roberto Otero
(Otero). Tan alleged that on several occasions from February 2000 to May 2001, Otero purchased on credit
petroleum products from his Petron outlet in Valencia City, Bukidnon in the aggregate amount of P
270,818.01. Tan further claimed that despite several verbal demands, Otero failed to settle his obligation.

Despite receipt of the summons and a copy of the said complaint, which per the records of the case below
were served through his wife Grace R. Otero on August 31, 2005, Otero failed to file his answer with the
MTCC.

On November 18, 2005, Tan filed a motion with the MTCC to declare Otero in default for his failure to
file his answer. Otero opposed Tans motion, claiming that he did not receive a copy of the summons and a
copy of Tans complaint. Hearing on the said motion was set on January 25, 2006, but was later reset to
March 8, 2006, Otero manifesting that he only received the notice therefor on January 23, 2006. The
hearing on March 8, 2006 was further reset to April 26, 2006 since the presiding judge was attending a

201
convention. Otero failed to appear at the next scheduled hearing, and the MTCC issued an order declaring
him in default. A copy of the said order was sent to Otero on May 9, 2006. Tan was then allowed to present
his evidence ex parte.

Tan adduced in evidence the testimonies of Rosemarie Doblado and Zita Sara, his employees in his Petron
outlet who attended Otero when the latter made purchases of petroleum products now the subject of the
action below. He likewise presented various statements of account4 showing the petroleum products which
Otero purchased from his establishment. The said statements of account were prepared and checked by a
certain Lito Betache (Betache), apparently likewise an employee of Tan.

The MTCC Decision

On February 14, 2007, the MTCC rendered a Decision5 directing Otero to pay Tan his outstanding
obligation in the amount of P 270,818.01, as well as attorneys fees and litigation expenses and costs in the
amounts of P 15,000.00 and P 3,350.00, respectively. The MTCC opined that Oteros failure to file an
answer despite notice is a tacit admission of Tans claim.

Undeterred, Otero appealed the MTCC Decision dated February 14, 2007 to the RTC, asserting that the
MTCCs disposition is factually baseless and that he was deprived of due process.

The RTC Decision

On December 28, 2007, the RTC rendered a Judgment6 affirming the MTCC Decision dated February 14,
2007. The RTC held that the statements of account that were presented by Tan before the MTCC were
overwhelming enough to prove that Otero is indeed indebted to Tan in the amount of P 270,818.01.
Further, brushing aside Oteros claim of denial of due process, the RTC pointed out that:

As to the second assignment of error, suffice to say that as borne out by the record of the case, defendant-
appellant was given his day in Court contrary to his claim. His wife, Grace R. Otero received a copy of the
summons together with a copy of the Complaint and its corresponding annexes on August 31, 2005, per
Return of Service made by Angelita N. Bandoy, Process Server of OCC-MTCC of Davao City. He was
furnished with a copy of the Motion to Declare Defendant in Default on November 18, 2005, per Registry
Receipt No. 2248 which was received by the defendant. Instead of filing his answer or any pleading to set
aside the Order of default, he filed his Comment to the Motion to Declare Defendant in Default of which
plaintiff filed his Rejoinder to Defendants Comment.

The case was set for hearing on January 23, 2006, but defendant through counsel sent a telegram that he
only received the notice on the day of the hearing thereby he was unable to appear due to his previous
scheduled hearings. Still, for reasons only known to him, defendant failed to lift the Order of Default.

202
The hearing on January 23, 2006 was reset on March 8, 2006 and again reset on April 26, 2006 by
agreement of counsels x x x.

It is not therefore correct when defendant said that he was deprived of due process.7

Otero sought reconsideration of the Judgment dated December 28, 2007 but it was denied by the RTC in
its Order8 dated February 20, 2008.

Otero then filed a petition for review9 with the CA asserting that both the RTC and the MTCC erred in
giving credence to the pieces of evidence presented by Tan in support of his complaint. Otero explained
that the statements of account, which Tan adduced during the ex parte presentation of his evidence, were
prepared by a certain Betache who was not presented as a witness by Tan. Otero avers that the genuineness
and due execution of the said statements of account, being private documents, must first be established lest
the said documents be rendered inadmissible in evidence. Thus, Otero asserts, the MTCC and the RTC
should not have admitted in evidence the said statements of account as Tan failed to establish the
genuineness and due execution of the same.

The CA Decision

On April 29, 2011, the CA rendered the assailed Decision10 which denied the petition for review filed by
Otero. In rejecting Oteros allegation with regard to the genuineness and due execution of the statements of
account presented by Tan, the CA held that any defense which Otero may have against Tans claim is
already deemed waived due to Oteros failure to file his answer. Thus:

Otero never denied that his wife received the summons and a copy of the complaint. He did not question
the validity of the substituted service. Consequently, he is charged with the knowledge of Tans monetary
claim. Section 1, Rule 9 of the Rules of Court explicitly provides that defenses and objections not pleaded
are deemed waived. Moreover, when the defendant is declared in default, the court shall proceed to render
judgment granting the claimant such relief as his pleading may warrant.

Due to Oteros failure to file his Answer despite being duly served with summons coupled with his
voluntary appearance in court, he is deemed to have waived whatever defenses he has against Tans claim.
Apparently, Otero is employing dilatory moves to defer the payment of his obligation which he never
denied.11 (Citation omitted)

Oteros Motion for Reconsideration12 was denied by the CA in its Resolution13 dated December 13, 2011.

Hence, the instant petition.

203
Issues

Essentially, the fundamental issues to be resolved by this Court are the following: first, whether Otero,
having been declared in default by the MTCC, may, in the appellate proceedings, still raise the failure of
Tan to authenticate the statements of account which he adduced in evidence; and second, whether Tan was
able to prove the material allegations of his complaint.

The Courts Ruling

The petition is denied.

First Issue: Authentication of the Statements of Account

The CA, in denying the petition for review filed by Otero, held that since he was declared in default by the
MTCC, he is already deemed to have waived whatever defenses he has against Tans claim. He is, thus,
already barred from raising the alleged infirmity in the presentation of the statements of account.

We do not agree.

A defendant who fails to file an


answer loses his standing in court.

The effect of a defendants failure to file an answer within the time allowed therefor is primarily governed
by Section 3, Rule 9 of the Rules of Court, viz:

Sec. 3. Default; declaration of. If the defending party fails to answer within the time allowed therefor, the
court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure,
declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the
claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to
submit evidence. Such reception of evidence may be delegated to the clerk of court. x x x (Emphasis ours)

A defendant who fails to file an answer may, upon motion, be declared by the court in default. Loss of
standing in court, the forfeiture of ones right as a party litigant, contestant or legal adversary, is the
consequence of an order of default. A party in default loses his right to present his defense, control the
proceedings, and examine or cross-examine witnesses. He has no right to expect that his pleadings would
be acted upon by the court nor may be object to or refute evidence or motions filed against him.14

A defendant who was declared in


default may nevertheless appeal
from the judgment by default,

204
albeit on limited grounds.

Nonetheless, the fact that a defendant has lost his standing in court for having been declared in default
does not mean that he is left sans any recourse whatsoever. In Lina v. CA, et al.,15 this Court enumerated
the remedies available to party who has been declared in default, to wit:

a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion,
under oath, to set aside the order of default on the ground that his failure to answer was due to fraud,
accident, mistake or excusable neglect, and that he has meritorious defenses; (Sec 3, Rule 18)

b) If the judgment has already been rendered when the defendant discovered the default, but before the
same has become final and executory, he may file a motion for new trial under Section 1(a) of Rule 37;

c) If the defendant discovered the default after the judgment has become final and executory, he may file a
petition for relief under Section 2 of Rule 38; and

d) He may also appeal from the judgment rendered against him as contrary to the evidence or to the law,
even if no petition to set aside the order of default has been presented by him. (Sec. 2, Rule 41)16
(Emphasis ours)

Indeed, a defending party declared in default retains the right to appeal from the judgment by default.
However, the grounds that may be raised in such an appeal are restricted to any of the following: first, the
failure of the plaintiff to prove the material allegations of the complaint; second, the decision is contrary to
law; and third, the amount of judgment is excessive or different in kind from that prayed for.17 In these
cases, the appellate tribunal should only consider the pieces of evidence that were presented by the
plaintiff during the ex parte presentation of his evidence.

A defendant who has been declared in default is precluded from raising any other ground in his appeal
from the judgment by default since, otherwise, he would then be allowed to adduce evidence in his
defense, which right he had lost after he was declared in default.18 Indeed, he is proscribed in the appellate
tribunal from adducing any evidence to bolster his defense against the plaintiffs claim. Thus, in Rural
Bank of Sta. Catalina, Inc. v. Land Bank of the Philippines,19 this Court explained that:

It bears stressing that a defending party declared in default loses his standing in court and his right to
adduce evidence and to present his defense. He, however, has the right to appeal from the judgment by
default and assail said judgment on the ground, inter alia, that the amount of the judgment is excessive or
is different in kind from that prayed for, or that the plaintiff failed to prove the material allegations of his
complaint, or that the decision is contrary to law. Such party declared in default is proscribed from seeking
a modification or reversal of the assailed decision on the basis of the evidence submitted by him in the
Court of Appeals, for if it were otherwise, he would thereby be allowed to regain his right to adduce

205
evidence, a right which he lost in the trial court when he was declared in default, and which he failed to
have vacated. In this case, the petitioner sought the modification of the decision of the trial court based on
the evidence submitted by it only in the Court of Appeals.20 (Citations omitted and emphasis ours)

Here, Otero, in his appeal from the judgment by default, asserted that Tan failed to prove the material
allegations of his complaint. He contends that the lower courts should not have given credence to the
statements of account that were presented by Tan as the same were not authenticated. He points out that
Betache, the person who appears to have prepared the said statements of account, was not presented by
Tan as a witness during the ex parte presentation of his evidence with the MTCC to identify and
authenticate the same. Accordingly, the said statements of account are mere hearsay and should not have
been admitted by the lower tribunals as evidence.

Thus, essentially, Otero asserts that Tan failed to prove the material allegations of his complaint since the
statements of account which he presented are inadmissible in evidence. While the RTC and the CA, in
resolving Oteros appeal from the default judgment of the MTCC, were only required to examine the
pieces of evidence that were presented by Tan, the CA erred in brushing aside Oteros arguments with
respect to the admissibility of the said statements of account on the ground that the latter had already
waived any defense or objection which he may have against Tans claim.

Contrary to the CAs disquisition, it is not accurate to state that having been declared in default by the
MTCC, Otero is already deemed to have waived any and all defenses which he may have against Tans
claim.

While it may be said that by defaulting, the defendant leaves himself at the mercy of the court, the rules
nevertheless see to it that any judgment against him must be in accordance with the evidence required by
law. The evidence of the plaintiff, presented in the defendants absence, cannot be admitted if it is basically
incompetent. Although the defendant would not be in a position to object, elementary justice requires that
only legal evidence should be considered against him. If the same should prove insufficient to justify a
judgment for the plaintiff, the complaint must be dismissed. And if a favorable judgment is justifiable, it
cannot exceed in amount or be different in kind from what is prayed for in the complaint.21

Thus, in SSS v. Hon. Chaves,22 this Court emphasized that:

We must stress, however, that a judgment of default against the petitioner who failed to appear during pre-
trial or, for that matter, any defendant who failed to file an answer, does not imply a waiver of all of their
rights, except their right to be heard and to present evidence to support their allegations. Otherwise, it
would be meaningless to request presentation of evidence every time the other party is declared in default.
If it were so, a decision would then automatically be rendered in favor of the non-defaulting party and
exactly to the tenor of his prayer. The law also gives the defaulting parties some measure of protection
because plaintiffs, despite the default of defendants, are still required to substantiate their allegations in the
206
complaint.23 (Citations omitted and emphasis ours)

The statements of account


presented by Tan were merely
hearsay as the genuineness and due
execution of the same were not
established.

Anent the admissibility of the statements of account presented by Tan, this Court rules that the same
should not have been admitted in evidence by the lower tribunals.

Section 20, Rule 132 of the Rules of Court provides that the authenticity and due execution of a private
document, before it is received in evidence by the court, must be established. Thus:

Sec. 20. Proof of private document. Before any private document offered as authentic is received in
evidence, its due execution and authenticity must be proved either:

a) By anyone who saw the document executed or written; or

b) By evidence of the genuineness of the signature or handwriting of the maker.

Any other private document need only be identified as that which it is claimed to be.

A private document is any other writing, deed, or instrument executed by a private person without the
intervention of a notary or other person legally authorized by which some disposition or agreement is
proved or set forth. Lacking the official or sovereign character of a public document, or the solemnities
prescribed by law, a private document requires authentication in the manner allowed by law or the Rules
of Court before its acceptance as evidence in court. The requirement of authentication of a private
document is excused only in four instances, specifically: (a) when the document is an ancient one within
the context of Section 21, Rule 132 of the Rules of Court; (b) when the genuineness and authenticity of an
actionable document have not been specifically denied under oath by the adverse party; (c) when the
genuineness and authenticity of the document have been admitted; or (d) when the document is not being
offered as genuine.24

The statements of account which Tan adduced in evidence before the MTCC indubitably are private
documents. Considering that these documents do not fall among the aforementioned exceptions, the
MTCC could not admit the same as evidence against Otero without the required authentication thereof
pursuant to Section 20, Rule 132 of the Rules of Court. During authentication in court, a witness positively
testifies that a document presented as evidence is genuine and has been duly executed, or that the

207
document is neither spurious nor counterfeit nor executed by mistake or under duress.25

Here, Tan, during the ex parte presentation of his evidence, did not present anyone who testified that the
said statements of account were genuine and were duly executed or that the same were neither spurious or
counterfeit or executed by mistake or under duress. Betache, the one who prepared the said statements of
account, was not presented by Tan as a witness during the ex parte presentation of his evidence with the
MTCC.

Considering that Tan failed to authenticate the aforesaid statements of account, the said documents should
not have been admitted in evidence against Otero. It was thus error for the lower tribunals to have
considered the same in assessing the merits of Tans Complaint.

Second Issue: The Material Allegations of the Complaint

In view of the inadmissibility of the statements of account presented by Tan, the remaining question that
should be settled is whether the pieces of evidence adduced by Tan during the ex parte presentation of his
evidence, excluding the said statements of account, sufficiently prove the material allegations of his
complaint against Otero.

We rule in the affirmative.

In civil cases, it is a basic rule that the party making allegations has the burden of proving them by a
preponderance of evidence. The parties must rely on the strength of their own evidence and not upon the
weakness of the defense offered by their opponent.26 This rule holds true especially when the latter has had
no opportunity to present evidence because of a default order. Needless to say, the extent of the relief that
may be granted can only be so much as has been alleged and proved with preponderant evidence required
under Section 1 of Rule 133.27

Notwithstanding the inadmissibility of the said statements of account, this Court finds that Tan was still
able to prove by a preponderance of evidence the material allegations of his complaint against Otero.

First, the statements of account adduced by Tan during the ex parte presentation of his evidence are just
summaries of Otero's unpaid obligations, the absence of which do not necessarily disprove the latter's
liability.

Second, aside from the statements of account, Tan likewise adduced in evidence the testimonies of his
employees in his Petron outlet who testified that Otero, on various occasions, indeed purchased on credit
petroleum products from the former and that he failed to pay for the same. It bears stressing that the
MTCC, the R TC and the CA all gave credence to the said testimonial evidence presented by Tan and,
accordingly, unanimously found that Otero still has unpaid outstanding obligation in favor of Tan in the

208
amount of P 270,818.01.

Well-established is the principle that factual findings of the trial court, when adopted and confirmed by the
CA, are binding and conclusive on this Court and will generally not be reviewed on appeal.28 The Court
sees no compelling reason to depart from the foregoing finding of fact of the lower courts.

WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED. The Decision
dated April 29, 2011 rendered by the Court of Appeals in CA-G.R. SP No. 02244 is AFFIRMED.

SO ORDERED.

BIENVENIDO L. REYES
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Senior Associate Justice
Chairperson, Second Division

ARTURO D. BRION MARTIN S. VILLARAMA, JR.


Associate Justice Associate Justice

JOSE PORTUGAL PEREZ


Associate Justice

C E R T I F I CAT I O N

I certify that the conclusions in the above Resolution had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.

ANTONIO T. CARPIO
Senior Associate Justice
(Per Section 12, R.A. 296
The Judiciary Act of 1948, as amended)

Footnotes

209
*
Additional member per Special Order No. 1274 dated July 30. 2012 vice Associate Justice Maria
Lourdes P.A. Sereno.
1
Penned by Associate Justice Edgardo T. Lloren, with Associate Justices Romulo V. Borja and
Rodrigo F. Lim. Jr., concurring; rollo, pp. 30-33.
2
Under the sala of Presiding Judge Ma. Anita M. Esguerra-Lucagho; id. at 49-50.
3
Id. at 44-46.
4
Id. at 73-81.
5
Under the sala of Judge Eleuteria Badoles-Algodon; id. at 47-48.
6
Id. at 49-50.
7
Id.
8
Id. at 51.
9
Id. at 52-63.
10
Id. at 30-33.
11
Id. at 32-33.
12
Id. at 34-40.
13
Id. at 42-43.
14
See S.C. Johnson & Son, Inc. v. Court of Appeals, 188 Phil. 579 (1990); Cavili v. Judge Florendo,
238 Phil. 597, 603 (1987).
15
220 Phil. 311 (1985).
16
Id. at 316-317.
17
See Martinez v. Republic of the Philippines, 536 Phil. 868 (2006).
18
See Arquero v. Court of Appeals, G.R. No. 168053, September 21, 2011.

210
19
479 Phil. 43 (2004).
20
Id. at 52.
21
See Tanhu v. Judge Ramolete, 160 Phil. 1101, 1126 (1975).
22
483 Phil. 292 (2004).
23
Id. at 301-302.
24
Patula v. People of the Philippines, G.R. No. 164457, April 11, 2012.
25
Salas v. Sta. Mesa Market Corporation, G.R. No. 157766, July 12, 2007, 527 SCRA 465, 472.
26
See New Sun Valley Homeowners Association, Inc. v. Sangguniang Barangay, Barangay Sun
Valley, Paraaque City, G.R. No. 156686, July 27, 2011, 654 SCRA 438, 464.
27
See Gajudo v. Traders Royal Bank, 519 Phil. 791, 803 (2006).
28
Insular Investment and 71-ust Corporation v. Capital One Equities Corp., G.R. No. 183308, April
25,2012.

211
Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

SPOUSES HUMBERTO DELOS G.R. No. 153696


SANTOS and CARMENCITA
DELOS SANTOS, Present:
Petitioners,
PANGANIBAN, CJ., Chairperson,
- versus - YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
HON. EMMANUEL C. CALLEJO, SR. and
CARPIO, Presiding Judge of CHICO-NAZARIO, JJ.
RTC, Branch 16, Davao City
and METROPOLITAN BANK Promulgated:
and TRUST COMPANY,
Respondents. September 11, 2006

x------------------------------------------------x

212
DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of


Court filed by spouses Humberto delos Santos and Carmencita delos Santos
(petitioners) assailing the Decision* dated April 30, 2002 of the Court of Appeals
(CA) in CA-G.R. SP No. 64961.*

The antecedent facts of the case as summarized by the CA are as follows:

On January 3, 2001, Metropolitan Bank and Trust Company (or


Metrobank) filed a complaint* for sum of money against spouses
Humberto and Carmencita delos Santos (or petitioners) before the
Regional Trial Court of Davao City (Branch 16).

On January 22, 2001, petitioners were served with the


summons, together with a copy of the complaint. As petitioners failed
to file an answer within the reglementary period, Metrobank, on
February 8, 2001,* filed a motion to declare them in default. The
motion was set for hearing on February 16, 2001.

Penned by Justice Edgardo P. Cruz, concurred in by Justices Mariano C. del Castillo and Regalado E.
Maambong; CA rollo, pp. 115-121.

Entitled Sps. Humberto delos Santos and Carmencita delos Santos v. Hon. Emmanuel C. Carpio,
Presiding Judge of the Regional Trial Court, 11 th Judicial Region, Branch 16, Davao City, and
Metropolitan Bank and Trust Company.

Docketed as Civil Case No. 28,362-2001.


4
Should be February 9, 2001, records, p. 15.

213
Acting on the motion, the lower court, presided over by Hon.
Emmanuel C. Carpio (or respondent judge), issued an order dated
February 12, 2001 declaring petitioners in default and setting the ex-
parte presentation of Metrobanks evidence on March 7, 2001.

On February 15, 2001, petitioners filed an opposition to


Metrobanks motion to declare them in default, claiming that upon
receipt of the summons, they immediately sought the services of Atty.
Philip Pantojan (or Atty. Pantojan) of the Into Pantojan Gonzales and
Marasigan Law Offices but it was only on February 12, 2001 that they
were able to meet with Atty. Pantojan. Petitioners alleged that not
being learned in law, they were unaware of the consequences of delay
in the filing of their answer.

On the same date, February 15, 2001, petitioners filed a motion


to admit answer, as well as the answer. In an order dated February 16,
2001, respondent judge disregarded petitioners opposition to
Metrobanks motion for default and stood pat on his previous default
order.

On February 19, 2001, Metrobank filed an opposition to


petitioners motion to admit answer, arguing that said motion was
rendered moot and academic by the February 12, 2001 order.
Metrobank also chided petitioners for violating the three-day notice
rule under Sec. 4, Rule 15 of the 1997 Rules of Civil Procedure. In an
order dated February 20, 2001, the motion to admit answer was
denied.

On February 27, 2001, petitioners filed a motion to lift the order


of default; Metrobank opposed the motion. In their motion, petitioners
reiterated that, being laymen, they were unaware of the fifteen-day
period within which to file the answer and that their failure to do so
was due to the unavailability of Atty. Pantojan who was then always
out of town. They attached to their motion an Affidavit of Merits
which restated the contents of the motion. Petitioners further claimed

214
that if given our day in Court, we have a meritorious defense to set up
against the allegations of the plaintiffs complaint.

On March 2, 2001, respondent judge issued an order holding in


abeyance the ex-parte reception of evidence pending resolution of
petitioners motion to lift the order of default.

On March 5, 2001, respondent judge issued an order denying


petitioners motion to lift the order of default and setting the reception
of Metrobanks evidence on March 7, 2001, as previously scheduled.
On that date (March 7, 2001), Metrobank presented its evidence and
the case was submitted for decision. Petitioners moved for
reconsideration of the March 5, 2001 order but their motion was
denied on March 21, 2001.*

Aggrieved, petitioners filed a Petition for Certiorari with the CA ascribing


grave abuse of discretion committed by the trial court amounting to lack of
jurisdiction in issuing the Orders dated February 12 and 16, 2001, declaring them
in default and denying their Opposition to Metropolitan Bank and Trust Companys
(Metrobank) Motion to Declare them in Default, respectively; and the Orders dated
March 5 and 21, 2001 denying their Motion to Lift the Order of Default and their
Motion for Reconsideration, respectively.

In a Decision dated April 30, 2002, the CA denied the petition for lack of
merit and accordingly dismissed the same. The CA did not find the excuse
proffered by petitioners, i.e., the ignorance of procedural rules and their lawyers
unavailability, as constitutive of excusable negligence. It also ruled that for an
order of default to be set aside, petitioners must have a meritorious defense or that
something could be gained by having the order of default set aside; that petitioners
affidavit of merit did not show a meritorious defense since it merely stated that
they have a meritorious defense to set up against the allegation of petitioners
complaint but there was no discussion of such defense and the facts which they
intend to prove in support thereof.

CA rollo, pp. 115-117.

215
The CA further found unmeritorious the contention of petitioners that they
were declared in default without giving them ample time to file an opposition to
Metrobanks Motion to Declare them in Default; that under Section 3, Rule 9 of the
Rules of Court, it is provided that the court shall, upon motion of the claiming
party with notice to the defending party in default, and proof of such failure,
declare the defending party in default; and that since it is clear from the records
that the reglementary period for filing an answer had expired with no responsive
pleading filed by petitioners, the trial court had properly declared them in default.
The CA further declared that even assuming that the trial court committed a
procedural lapse in declaring petitioners in default before the scheduled hearing of
Metrobanks motion, such error is not so serious as to constitute grave abuse of
discretion.

Hence, the instant petition filed by petitioners raising the following issues, to
wit:

1. Whether or not the procedural lapse committed by


Honorable Public Respondent in issuing an Order declaring
petitioners [sic] in default on 12 February 2001 or four (4) days before
the scheduled hearing of Metrobanks Motion to declare petitioners
[sic] in default on 16 February 2001 is so serious as to constitute
grave abuse of discretion.
2. Whether or not LITIS PENDENTIA raised by petitioners
[sic] as an affirmative defense is a meritorious defense.

3. Whether or not it is beyond the authority of the Honorable


Trial Court to rule on the issue of LITIS PENDENTIA simply and
chiefly because the defendants failed to seasonably raise it.

4. What constitutes Affidavit of Merit? *

Rollo, pp. 16-17.

216
Petitioners claim that the trial court committed grave abuse of discretion in
declaring them in default in its Order dated February 12, 2001, which was four
days before the hearing set on Metrobanks Motion to Declare them in Default; that
their failure to file their Answer within the reglementary period was due to the fact
that the services of their counsel of choice could not be secured within the period;
that they had filed their Motion to Admit Answer and their Answer as well as their
Opposition to respondents motion to declare them in default on February 15, 2001,
a day prior to the scheduled date of hearing.

Petitioners aver that under Section 1, Rule 9 of the Rules of Court, defenses
like the court has no jurisdiction, litis pendentia, res judicata and prescription can
be taken cognizance of by the court despite the fact that they are not in a motion to
dismiss or Answer; that the trial court should have looked into their affirmative
defense of litis pendentia raised in their Answer since it is a meritorious defense as
it is a ground for a dismissal of a complaint. They further contend that although the
affirmative defense of litis pendentia had reached the trial courts attention, it still
refused to pass judgment on said legal concern; that the defense of litis pendentia
raised in their Answer is sufficient to show that the affidavit of merit showed a
meritorious defense; that the procedural lapse committed by the trial court would
cause the unlawful deprivation of their property rights through undue haste.

In its Comment, Metrobank contends that petitioners failed to file a motion


for reconsideration before filing the instant petition which would vest authority for
this Court to assume jurisdiction; that the rule on declaration of default did not
expressly mandate the trial court to conduct a hearing of the motion as it merely
requires that the notice of the motion was made to the defending party; that the trial
court declared petitioners in default since they failed to file their Answer within the
reglementary period; that assuming arguendo that the trial court committed
procedural lapse in declaring petitioners in default before the scheduled hearing,
there is still no grave abuse of discretion committed by the trial court since even if
the hearing was held, it would not make any difference as petitioners failed to file
their Answer within the reglementary period.

Metrobank further argues that petitioners negligence is not excusable


because if they have consulted the associates of Atty. Pantojan, they would
definitely be advised to ask for an extension of time to file their answer; that
petitioners failed to present a meritorious defense since aside from merely stating
217
in general terms their claim of litis pendentia as a defense, the same is misplaced
because Civil Case No. 28,362-2001 pending in RTC of Davao City, Branch 16,
and Civil Case No. 27,875-2000 filed by petitioners in RTC of Davao City, Branch
10, have separate and distinct causes of action; that the trial court is correct in not
ruling on the issue of litis pendentia as petitioners Answer was not admitted as part
of the records of the case.

Petitioners filed their Reply contending that appeal by certiorari under Rule
45 does not require prior filing of a motion for reconsideration; that the procedural
lapse committed by the trial court in declaring petitioners in default before the
scheduled hearing should not be tolerated since petitioners land and building are at
stake; and that they should not be faulted for not consulting the associates of Atty.
Pantojan as they reposed their trust and confidence in him.

Petitioners and Metrobank filed their respective memoranda. Metrobanks


Memorandum no longer questioned petitioners non-filing of a motion for
reconsideration of the CA decision.

Prefatorily, we agree with petitioners that in appeal by certiorari, the prior


filing of a motion for reconsideration is not required.*

The principal issue before us is whether or not the CA erred in upholding the
Orders of the trial court declaring petitioners in default and denying their Motion to
Lift Order of Default.

We rule in the affirmative.

Section 3, Rule 9 of the Rules of Court provides:

Sec. 3. Default; declaration of If the defending party fails


to answer within the time allowed therefor, the court shall, upon
motion of the claiming party with notice to the defending party, and

Atty. Paa v. Court of Appeals, 347 Phil. 122, 136 (1997).

218
proof of such failure, declare the defending party in default.
Thereupon, the court shall proceed to render judgment granting the
claimant such relief as his pleading may warrant, unless the court in
its discretion requires the claimant to submit evidence. Such reception
of evidence may be delegated to the clerk of court.

Clearly, there are three requirements which must be complied with by the
claiming party before the court may declare the defending party in default, to wit:
(1) the claiming party must file a motion asking the court to declare the defending
party in default; (2) the defending party must be notified of the motion to declare
him in default; (3) the claiming party must prove that the defending party has
failed to answer within the period provided by the Rule.

In filing motions, Section 4, Rule 15 of the Rules of Court, specifically


provides:

Sec. 4. Hearing of motion. Except for motions which the court


may act upon without prejudicing the rights of the adverse party,
every written motion shall be set for hearing by the applicant.
(Emphasis supplied)

xxxx

Prior to the present rule on default introduced by the 1997 Rules of Civil
Procedure, as amended, Section 1 of the former Rule 18 on default is silent on
whether or not there is need for a notice of a motion to declare defendant in
default.* The Court then ruled that there is no need.* However, the present rule
expressly requires that the motion of the claiming party should be with notice to
the defending party.* The purpose of a notice of a motion is to avoid surprises on
the opposite party and to give him time to study and meet the arguments.* The
notice of a motion is required when the party has the right to resist the relief sought

Oscar M. Herrera, Comments on the 1997 Rules of Civil Procedure as amended, Volume VII, p. 101, 1997
edition.

Id. citing The Philippine British Company, Inc. v. De los Angeles, 159 Phil. 660, 673 (1975); Dulos v.
Court of Appeals, G.R. No. 87917, August 7, 1990, 188 SCRA 413, 420.

RULES OF COURT, Rule 9, Section 3.

Herrera, Remedial Law, Volume I, p. 733, 2000 edition.

219
by the motion and principles of natural justice demand that his right be not affected
without an opportunity to be heard.*

Therefore, as the present rule on default requires the filing of a motion and
notice of such motion to the defending party, it is not enough that the defendant
failed to answer the complaint within the reglementary period to be a sufficient
ground for declaration in default. The motion must also be heard.

In this case, it is not disputed that petitioners were served summons on


January 22, 2001.* Under Section 1, Rule 11 of the Rules of Court, the defendant
shall file his answer to the complaint within 15 days after service of summons,
unless a different period is fixed by the court. Petitioners answer was due on
February 6, 2001, but no answer was filed by petitioners. Thus, Metrobank filed a
Motion* to declare petitioners in default on February 9, 2001, setting the hearing
thereof on February 16, 2001. However, four days before the scheduled hearing,
the trial court issued the Order dated February 12, 2001, declaring petitioners in
default.

We could not see any justifiable reason why the trial court chose not to hear
the petitioners on the date and time fixed in Metrobanks motion, and instead,
hastily granted the motion before it could be heard on the ground that it had found
the motion to be impressed with merit. Indeed, in totally disregarding the purpose
for which the filing of a motion and notice to defending party are required by the
Rules, the trial court had acted in a despotic manner that is correctly assailed
through a petition for certiorari which petitioners have seasonably filed with the
CA.

Again, respondent Judge acted capriciously when he totally ignored


petitioners Opposition to Metrobanks Motion to Declare them in Default and
denied their Motion to Admit Answer, both filed on February 15, 2001, a day
before the scheduled hearing, which showed their desire to be heard before the
motion to declare them in default is resolved by the trial court.

A mere perusal of the Answer attached to the Motion to Admit Answer


would readily reveal that petitioners raised a special and affirmative defense the
other action pending between the same parties for the same cause. Petitioners

Yap v. Court of Appeals, 200 Phil. 509, 514 (1982).

Records, pp. 13-14.

Id. at 15.

220
alleged that they entered into several loan agreements with Metrobank involving an
aggregate amount of P12,500,000.00 which was the basis of petitioners causes of
action in a civil case they earlier filed against Metrobank with the RTC of Davao
City, Branch 10, docketed as Civil Case No. 27,875-2000, for damages, fixing of
interest rates, application of excess interest payments; that the principal obligation
of P12,500,000.00 includes all other loans which petitioners have with Metrobank;
that the P500,000.00 obligation covered by the promissory note subject of the
instant Civil Case No. 28,362-2001 is part of the P12,500,000.00 loan of
petitioners, subject of Civil Case No. 27,875-2000 that was earlier filed; and that a
written copy of the P500,000.00 loan was not attached to the complaint.

Thus, the trial court is deemed to have been apprised of the affirmative
defense of litis pendentia. Instead of unceremoniously discarding petitioners
Opposition and Motion to Admit Answer* which were filed before the scheduled
date of hearing of the motion to declare petitioners in default, it behooved upon the
trial court to delve into the merits of the Opposition and the Answer.

The trial court then should have been guided by Section 11, Rule 11 of the
Rules of Court, to wit:

Sec. 11. Extension of time to plead. - Upon motion and on such


terms as may be just, the court may extend the time to plead provided
in these Rules.

The court may also, upon like terms, allow an answer or other
pleading to be filed after the time fixed by these Rules.

and Section 1, Rule 9 of the 1997 Rules of Procedure which provides:

Sec. 1. Defenses and objections not pleaded. - Defenses and


objections not pleaded either in a motion to dismiss or in the answer
are deemed waived. However, when it appears from the pleadings or
the evidence on record that the court has no jurisdiction over the
subject matter, that there is another action pending between the same
parties for the same cause, or that the action is barred by a prior
judgment or by statute of limitations, the court shall dismiss the claim.

Set for hearing on the same day that the hearing on the motion to declare petitioners in default was set.

221
Under Rule 11, it is within the discretion of the trial court to permit the filing
of defendants answer even beyond the reglementary period, provided there is
justification for the belated action, and there was no showing that the defendant
intended to delay the case. Petitioners may be considered to have committed
excusable negligence when they waited for the counsel of their choice who was out
of town which caused the delay in filing their Answer; and the Motion to Admit
Answer was filed before the scheduled date of hearing on the Motion to Declare
Petitioners in Default, showing that petitioners had no intention to delay the case.

Under Rule 9, the trial court may motu proprio dismiss the claim when it
appears from the pleadings or evidence on the record that there is another cause of
action pending between the same parties for the same cause. With the alleged
affirmative defense of litis pendentia, the trial court had justifiable compelling
reason to recall its premature Order declaring petitioners in default.

In a case,* we found the trial court to have gravely abused its discretion
when it declared defendants in default; that the answer should be admitted because
it had been filed before it was declared in default and no prejudice was caused to
plaintiff; and that the hornbook rule is that default judgments are generally
disfavored.*

In this case, since the Order dated February 12, 2001 declaring petitioners in
default is null and void, the filing of the Answer may be considered as having been
filed before petitioners were declared in default and therefore no prejudice was
caused to Metrobank and there was no undue delay on the part of petitioners.

Basic elementary sense of fairness, liberality and substantial justice so


dictate that the premature Order be considered as null and void. It is the avowed
policy of the law to accord both parties every opportunity to pursue and defend
their cases in the open and relegate technicality to the background in the interest of
substantial justice.*

Since the Order dated February 12, 2001 was null and void, the trial court
likewise committed grave abuse of discretion in issuing the Orders dated March 5,

Indiana Aerospace University v. Commission on Higher Education, G.R. No. 139371, April 4, 2001, 356
SCRA 367, 381.

Id.

Republic of the Philippines v. Sandiganbayan, G.R. Nos. 109430-43, December 28, 1994, 239 SCRA 529,
536.

222
2001 and March 21, 2001 denying petitioners Motion to Lift Order of Default and
Motion for Reconsideration, respectively.

We reiterate the ruling in Akut v. Court of Appeals,* where we found that the
trial court committed grave abuse of discretion in declaring therein petitioners in
default and in denying their motion to set aside the order of default, thus:

The controlling principle ignored by respondent court is that it


is within sound judicial discretion to set aside an order of default and
to permit a defendant to file his answer and to be heard on the merits
even after the reglementary period for the filing of the answer has
expired. This discretion should lean towards giving party-litigants
every opportunity to properly present their conflicting claims on the
merits of the controversy without resorting to technicalities. Courts
should be liberal in setting aside orders of default, for default
judgments are frowned upon, and unless it clearly appears that
reopening of the case is intended for delay, it is best that the trial
courts give both parties every chance to fight their case fairly and in
the open, without resort to technicality. x x x

x x x Moreover, petitioners' answer shows that they have a


prima facie meritorious defense. They should, therefore, be given
their day in court to avoid the danger of committing a grave injustice
if they were denied an opportunity to introduce evidence in their
behalf.

Our ruling in Mercader v. Bonto* and the copious precedents


therein cited that "considering that the late filing of defendants'
answer was due to excusable negligence and that they appear to
have a meritorious defense; that defendants filed an answer
before they were declared in default; and that the late filing of the
answer did not in any way prejudice or deprive the plaintiff of any
substantial right, nor was there intention to unduly delay the case,
WE hold that the respondent judge committed an abuse of
discretion in declaring the defendants in default and in refusing to
set aside the order of default" is fully applicable to the case at bar.

201 Phil. 680 (1982).

G.R. No. L-48564, August 20, 1979, 92 SCRA 665, 677.

223
Time and again the Court has enjoined trial judges to act with
circumspection and not to precipitately declare parties in default,
needlessly compelling the aggrieved party to undergo the additional
expense, anxiety and delay of seeking the intervention of the appellate
courts and depriving them of the much needed time and attention that
could instead have well been devoted to the study and disposition of
more complex and complicated cases and issues.* (Emphasis
supplied)

In sum, we find that the RTC Order declaring petitioners in default and its
subsequent Order denying petitioners Motion to Lift Order of Default are null and
void; and the CA erroneously upheld the assailed Orders of the trial court.

WHEREFORE, the petition for review is GRANTED. The Decision of the


Court of Appeals dated April 30, 2002 in CA-G.R. SP No. 64961 is REVERSED
and SET ASIDE. The Order of Default of the Regional Trial Court is SET ASIDE
and the Answer filed by petitioners is deemed ADMITTED. The trial court is
DIRECTED to continue with deliberate speed with the proceedings in the case
below.

Costs against private respondent.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ


Associate Justice

WE CONCUR:

Supra note 19, at 687-688.

224
ARTEMIO V. PANGANIBAN
Chief Justice

Chairperson

CONSUELO YNARES-SANTIAGO ROMEO J. CALLEJO, SR.


Associate Justice Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice
C E R T I F I CAT I O N

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified


that the conclusions in the above Decision were reached in consultation before
the case was assigned to the writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Chief Justice

225
G.R. No. 193494, March 07, 2014 - LUI ENTERPRISES, INC., Petitioner, v.
ZUELLIG PHARMA CORPORATION AND THE PHILIPPINE BANK OF
COMMUNICATIONS, Respondents.

THIRD DIVISION

G.R. No. 193494, March 07, 2014

LUI ENTERPRISES, INC., Petitioner, v. ZUELLIG PHARMA


CORPORATION AND THE PHILIPPINE BANK OF COMMUNICATIONS,
Respondents.

DECISION

LEONEN, J.:

There should be no inexplicable delay in the filing of a motion to set aside order of
default. Even when a motion is filed within the required period, excusable
negligence must be properly alleged and proven.

This is a petition for review on certiorari of the Court of Appeals decision1 dated
May 24, 2010 and resolution2 dated August 13, 2010 in CAG.R. CV No. 88023.
The Court of Appeals affirmed in toto the Regional Trial Court of Makatis
decision3 dated July 4, 2006.

The facts as established from the pleadings of the parties are as


follows:chanRoblesvirtualLawlibrary

On March 9, 1995, Lui Enterprises, Inc. and Zuellig Pharma Corporation entered
into a 10year contract of lease4 over a parcel of land located in Barrio Tigatto,
Buhangin, Davao City. The parcel of land was covered by Transfer Certificate of
Title No. T166476 and was registered under Eli L. Lui.5

On January 10, 2003, Zuellig Pharma received a letter6 from the Philippine Bank of
Communications. Claiming to be the new owner of the leased property, the bank
asked Zuellig Pharma to pay rent directly to it. Attached to the letter was a copy of

226
Transfer Certificate of Title No. 336962 under the name of the Philippine Bank of
Communications.7 Transfer Certificate of Title No. 336962 was derived from
Transfer Certificate of Title No. T166476.8

Zuellig Pharma promptly informed Lui Enterprises of the Philippine Bank of


Communications claim. On January 28, 2003, Lui Enterprises wrote to Zuellig
Pharma and insisted on its right to collect the leased propertys rent.9

Due to the conflicting claims of Lui Enterprises and the Philippine Bank of
Communications over the rental payments, Zuellig Pharma filed a complaint10 for
interpleader with the Regional Trial Court of Makati. In its complaint, Zuellig
Pharma alleged that it already consigned in court P604,024.35 as rental payments.
Zuellig Pharma prayed that it be allowed to consign in court its succeeding
monthly rental payments and that Lui Enterprises and the Philippine Bank of
Communications be ordered to litigate their conflicting claims.11

The Philippine Bank of Communications filed its answer12 to the complaint. On the
other hand, Lui Enterprises filed a motion to dismiss13 on the ground that Zuellig
Pharmas alleged representative did not have authority to file the complaint for
interpleader on behalf of the corporation. Under the secretarys certificate14 dated
May 6, 2003 attached to the complaint, Atty. Ana L.A. Peralta was only authorized
to initiate and represent [Zuellig Pharma] in the civil proceedings for consignation
of rental payments to be filed against Lui Enterprises, Inc. and/or [the Philippine
Bank of Communications].15

According to Lui Enterprises, an earlier filed nullification of deed of dation in


payment case pending with the Regional Trial Court of Davao barred the filing of
the interpleader case.16 Lui Enterprises filed this nullification case against the
Philippine Bank of Communications with respect to several properties it dationed
to the bank in payment of its obligations. The property leased by Zuellig Pharma
was among those allegedly dationed to the Philippine Bank of Communications.17

In the nullification of deed of dation in payment case, Lui Enterprises raised the
issue of which corporation had the better right over the rental payments.18 Lui
Enterprises argued that the same issue was involved in the interpleader case. To
avoid possible conflicting decisions of the Davao trial court and the Makati trial
court on the same issue, Lui Enterprises argued that the subsequently filed
interpleader case be dismissed.

To support its argument, Lui Enterprises cited a writ of preliminary injunction19


227
dated July 2, 2003 issued by the Regional Trial Court of Davao, ordering Lui
Enterprises and the Philippine Bank of Communications [to maintain] status
quo20 with respect to the rent. By virtue of the writ of preliminary injunction, Lui
Enterprises argued that it should continue collecting the rental payments from its
lessees until the nullification of deed of dation in payment case was resolved. The
writ of preliminary injunction dated July 2, 2003
reads:chanRoblesvirtualLawlibrary

WHEREAS, on June 30, 2003, the Court issued an Order, a portion of which is
quoted:
WHEREFORE, PREMISES CONSIDERED, let a Writ of Preliminary Injunction
issue, restraining and enjoining [the Philippine Bank of Communications], its
agents or [representative], the Office of the Clerk of CourtSheriff and all persons
acting on their behalf, from conducting auction sale on the properties of [Lui
Enterprises] in EJFREM Case No. 627203 scheduled on July 3, 2003 at 10:00
a.m. at the Hall of Justice, Ecoland, Davao City, until the final termination of the
case, upon plaintiff [sic] filing of a bond in the amount of P1,000,000.00 to answer
for damages that the enjoined parties may sustain by reason of the injunction if the
Court should finally decide that applicant is not entitled thereto.
WHEREAS, that plaintiff posted a bond of P1,000,000.00 duly approved by this
Court.

IT IS HEREBY ORDERED by the undersigned Judge that, until further orders,


[the Philippine Bank of Communications] and all [its] attorneys, representatives,
agents and any other persons assisting [the bank], are directed to restrain from
conducting auction sale on the Properties of [Lui Enterprises] in EJFREM Case
No. 627203 scheduled on July 3, 2003 at 10:00 a.m. at the Hall of Justice,
Ecoland, Davao City, until the final termination of the case.21

Zuellig Pharma filed its opposition22 to the motion to dismiss. It argued that the
motion to dismiss should be denied for having been filed late. Under Rule 16,
Section 1 of the 1997 Rules of Civil Procedure, a motion to dismiss should be filed
within the required time given to file an answer to the complaint, which is 15 days
from service of summons on the defendant.23 Summons was served on Lui
Enterprises on July 4, 2003. It had until July 19, 2003 to file a motion to dismiss,
but Lui Enterprises filed the motion only on July 23, 2003.24

As to Lui Enterprises claim that the interpleader case was filed without authority,
Zuellig Pharma argued that an action interpleader is a necessary consequence of

228
the action for consignation.25 Zuellig Pharma consigned its rental payments
because of the clearly conflicting claims of [Lui Enterprises] and [the Philippine
Bank of Communications].26 Since Atty. Ana L.A. Peralta was authorized to file a
consignation case, this authority necessarily included an authority to file the
interpleader case.

Nevertheless, Zuellig Pharma filed in court the secretarys certificate dated August
28, 2003,27 which expressly stated that Atty. Ana L.A. Peralta was authorized to file
a consignation and interpleader case on behalf of Zuellig Pharma.28

With respect to the nullification of deed of dation in payment case, Zuellig Pharma
argued that its pendency did not bar the filing of the interpleader case. It was not a
party to the nullification case.29

As to the writ of preliminary injunction issued by the Regional Trial Court of


Davao, Zuellig Pharma argued that the writ only pertained to properties owned by
Lui Enterprises. Under the writ of preliminary injunction, the Regional Trial Court
of Davao enjoined the July 3, 2003 auction sale of Lui Enterprises properties, the
proceeds of which were supposed to satisfy its obligations to the Philippine Bank
of Communications. As early as April 21, 2001, however, the Philippine Bank of
Communications already owned the leased property as evidenced by Transfer
Certificate of Title No. 336962. Thus, the writ of preliminary injunction did not
apply to the leased property.30

Considering that Lui Enterprises filed its motion to dismiss beyond the 15day
period to file an answer, Zuellig Pharma moved that Lui Enterprises be declared in
default.31

In its compliance32 dated September 15, 2003, the Philippine Bank of


Communications [joined Zuellig Pharma] in moving to declare [Lui Enterprises]
in default, and in [moving for] the denial of [Lui Enterprises] motion to
dismiss.33

The Regional Trial Court of Makati found that Lui Enterprises failed to file its
motion to dismiss within the reglementary period. Thus, in its order34 dated
October 6, 2003, the trial court denied Lui Enterprises motion to dismiss and
declared it in default.35

Lui Enterprises did not move for the reconsideration of the order dated October 6,
2003. Thus, the Makati trial court heard the interpleader case without Lui
229
Enterprises participation.

Despite having been declared in default, Lui Enterprises filed the manifestation
with prayer36 dated April 15, 2004. It manifested that the Regional Trial Court of
Davao allegedly issued the order37 dated April 1, 2004, ordering all of Lui
Enterprises lessees to observe status quo with regard to the rental payments38
and continue remitting their rental payments to Lui Enterprises while the
nullification of deed of dation in payment case was being resolved. The order dated
April 1, 2004 of the Regional Trial Court of Davao
reads:chanRoblesvirtualLawlibrary

ORDER

Posed for Resolution is the Motion for Amendment of Order filed by [Lui
Enterprises] on September 23, 2003 seeking for the preservation of status quo on
the payment/remittance of rentals to [it] and the disposal/construction of the
properties subject matter of this case.

xxxx

As elsewhere stated, [the Philippine Bank of Communications] did not oppose the
instant motion up to the present. In fact, during the hearing held on March 15,
2004, [the banks] counsel manifested in open court that except for the rentals due
from [Zuellig Pharma] which are the subject of a consignation suit before a Makati
Court, the other rental payments are continuously received by [Lui Enterprises].

There being no objection from [the Philippine Bank of Communications], and in


order to protect the right of [Lui Enterprises] respecting the subject of the action
during the pendency of this case, this Court, in the exercise of its discretion hereby
grants the motion.

Accordingly, consistent with the order of this Court dated June 30, 2003, the
parties are hereby directed to further observe status quo with regard to the rental
payments owing or due from the lessees of the properties subject of the first set of
deeds of dacion and that the defendants are enjoined from disposing of the
properties located at Green Heights Village, Davao City until the case is finally
resolved.

With the order dated April 1, 2004 issued by the Regional Trial Court of Davao as
basis, Lui Enterprises argued that Zuellig Pharma must remit its rental payments to
230
it and prayed that the interpleader case be dismissed.

The Regional Trial Court of Makati only noted the manifestation with prayer dated
April 15, 2004.39

It was only on October 21, 2004, or one year after the issuance of the order of
default, that Lui Enterprises filed a motion to set aside order of default40 in the
Makati trial court on the ground of excusable negligence. Lui Enterprises argued
that its failure to file a motion to dismiss on time was caused by the negligence of
[Lui Enterprises] former counsel.41 This negligence was allegedly excusable
because [Lui Enterprises] was prejudiced and prevented from fairly presenting
[its] case.42

For its allegedly meritorious defense, Lui Enterprises argued that the earlier filed
nullification of deed of dation in payment case barred the filing of the interpleader
case. The two actions allegedly involved the same parties and the same issue of
which corporation had the better right over the rental payments. To prevent the
possibility of two courts x x x rendering conflicting rulings [on the same issue],43
Lui Enterprises argued that the subsequently filed interpleader case be dismissed.

Zuellig Pharma filed its opposition44 to the motion to set aside order of default. It
argued that a counsels failure to file a timely answer was inexcusable negligence
which bound his client.

Further, Zuellig Pharma argued that the pending case for nullification of deed of
dation in payment [did] not preclude [Zuellig Pharma] from seeking the relief
prayed for in the [interpleader case].45

While the motion to set aside order of default was still pending for resolution, Lui
Enterprises filed the manifestation and motion to dismiss46 dated April 21, 2005 in
the Makati trial court. It manifested that the Davao trial court issued another order47
dated April 18, 2005 in the nullification of deed of dation in payment case. In this
order, the Davao trial court directed the Philippine Bank of Communications to
inform Zuellig Pharma to pay rent to Lui Enterprises while the Davao trial courts
order dated April 1, 2004 was subsisting. The order dated April 18, 2005 of the
Davao trial court reads:chanRoblesvirtualLawlibrary

ORDER

Plaintiffs move for execution or implementation of the Order dated September 14,

231
2004. In substance, [Lui Enterprises] seek[s] to compel the remittance in their
favor of the rentals from [Zuellig Pharma], one of the lessees alluded to in the
September 14, 2004 Order whose rental payments must be remitted to and
collected by [Lui Enterprises]. [The Philippine Bank of Communications] did not
submit any opposition.

It appears from the records that sometime in February 2003, after being threatened
with a lawsuit coming from [the Philippine Bank of Communications], [Zuellig
Pharma] stopped remitting its rentals to [Lui Enterprises] and instead, has
reportedly deposited the monthly rentals before a Makati court for consignation.

As aptly raised by the plaintiffs, a possible impasse may insist should the Makati
Courts ruling be contrary to or in conflict with the status quo order issued by this
Court. To preclude this spectacle, Zuellig Pharma should accordingly be advised
with the import of the Order dated September 14, 2004, the salient portion of
which is quoted:
x x x prior to the institution of the instant case and by agreement of the parties,
plaintiffs were given as they did exercise the right to collect, receive and enjoy
rental payments x x x.

Since the April 1, 2004 status quo order was a necessary implement of the writ of
preliminary injunction issued on June 30, 2003, it follows that plaintiffs right to
collect and receive rental payments which he enjoyed prior to the filing of this
case, must be respected and protected and maintained until the case is resolved. As
such, all rentals due from the aboveenumerated lessees must be remitted to and
collected by the Plaintiffs.

Status quo simply means the last actual peaceable uncontested status that preceded
the actual controversy. (Searth Commodities Corp. v. Court of Appeals, 207 SCRA
622).
As such, the [Philippine Bank of Communications] [is] hereby directed to
forthwith inform [Zuellig Pharma] of the April 1, 2004 status quo order and the
succeeding September 14, 2004 Order, and consequently, for the said lessee to
remit all rentals due from February 23, 2003 and onwards to [Lui Enterprises] in
the meanwhile that the status quo order is subsisting.

In its manifestation and motion to dismiss, Lui Enterprises reiterated its prayer for
the dismissal of the interpleader case to prevent the possibility of [the Regional
Trial Court, Branch 143, Makati City] and [the Regional Trial Court, Branch 16,

232
Davao City] rendering conflicting rulings [on the same issue of which corporation
has the better right to the rental payments].48

Without resolving the motion to set aside order of default, the Makati trial court
denied the manifestation with motion to dismiss dated April 21, 2005 on the
ground that Lui Enterprises already lost its standing in court.49

Lui Enterprises did not file any motion for reconsideration of the denial of the
manifestation and motion to dismiss dated April 21, 2005.

In its decision50 dated July 4, 2006, the Regional Trial Court of Makati ruled that
Lui Enterprises [was] barred from any claim in respect of the [rental payments]51
since it was declared in default. Thus, according to the trial court, there was no
issue as to which corporation had the better right over the rental payments.52 The
trial court awarded the total consigned amount of P6,681,327.30 to the Philippine
Bank of Communications and ordered Lui Enterprises to pay Zuellig Pharma
P50,000.00 in attorneys fees.53

Lui Enterprises appealed to the Court of Appeals.54

The Court of Appeals found Lui Enterprises appellants brief insufficient. Under
Rule 44, Section 13 of the 1997 Rules of Civil Procedure, an appellants brief must
contain a subject index, page references to the record, table of cases, textbooks and
statutes cited, and the statement of issues, among others. However, Lui Enterprises
appellants brief did not contain these requirements.55

As to the denial of Lui Enterprises motion to dismiss, the Court of Appeals


sustained the trial court. The Court of Appeals found that Lui Enterprises filed its
motion to dismiss four days late.56

With respect to Lui Enterprises motion to set aside order of default, the Court of
Appeals found that Lui Enterprises failed to show the excusable negligence that
prevented it from filing its motion to dismiss on time. On its allegedly meritorious
defense, the Court of Appeals ruled that the nullification of deed of dation in
payment case did not bar the filing of the interpleader case, with Zuellig Pharma
not being a party to the nullification case.57

On the award of attorneys fees, the Court of Appeals sustained the trial court since
Zuellig Pharma x x x was constrained to file the action for interpleader with
consignation in order to protect its interests x x x.58
233
Thus, in its decision59 promulgated on May 24, 2010, the Court of Appeals
dismissed Lui Enterprises appeal and affirmed in toto the Regional Trial Court of
Makatis decision.

Lui Enterprises filed a motion for reconsideration.60

The Court of Appeals denied Lui Enterprises motion for reconsideration in its
resolution promulgated on August 13, 2010.61 Hence, this petition.

In this petition for review on certiorari ,62 Lui Enterprises argued that the Court of
Appeals applied the rules of procedure strictly63 and dismissed its appeal on
technicalities. According to Lui Enterprises, the Court of Appeals should have
taken a liberal stance and allowed its appeal despite the lack of subject index, page
references to the record, table of cases, textbooks and statutes cited, and the
statement of issues in its appellants brief.64

Lui Enterprises also claimed that the trial court should have set aside the order of
default since its failure to file a motion to dismiss on time was due to excusable
negligence.65

For its allegedly meritorious defense, Lui Enterprises argued that the pending
nullification of deed of dation in payment case barred the filing of the interpleader
case. The nullification of deed of dation in payment case and the interpleader case
allegedly involved the same issue of which corporation had the better right to the
rent. To avoid conflicting rulings on the same issue, Lui Enterprises argued that the
subsequently filed interpleader case be dismissed.66

No attorneys fees should have been awarded to Zuellig Pharma as argued by Lui
Enterprises. Zuellig Pharma filed the interpleader case despite its knowledge of the
nullification of deed of dation in payment case filed in the Davao trial court where
the same issue of which corporation had the better right over the rental payments
was being litigated. Thus, Zuellig Pharma filed the interpleader case in bad faith
for which it was not entitled to attorneys fees.67

The Philippine Bank of Communications filed its comment68 on the petition for
review on certiorari . It argued that Lui Enterprises failed to raise any error of law
and prayed that we affirm in toto the Court of Appeals decision.

For Zuellig Pharma, it manifested that it was adopting the Philippine Bank of
234
Communications arguments in its comment.69

The issues for our resolution are:chanRoblesvirtualLawlibrary

I. Whether the Court of Appeals erred in dismissing Lui Enterprises appeal for
lack of subject index, page references to the record, table of cases, textbooks and
statutes cited, and the statement of issues in Lui Enterprises appellants brief;

II. Whether the Regional Trial Court of Makati erred in denying Lui Enterprises
motion to set aside order of default;

III. Whether the annulment of deed of dation in payment pending in the Regional
Trial Court of Davao barred the subsequent filing of the interpleader case in the
Regional Trial Court of Makati; and

IV. Whether Zuellig Pharma was entitled to attorneys fees.

Lui Enterprises petition for review on certiorari is without merit. However, we


delete the award of attorneys fees.

Lui Enterprises did not comply with the


rules on the contents of the appellants
brief

Under Rule 50, Section 1, paragraph (f) of the 1997 Rules of Civil Procedure, the
Court of Appeals may, on its own motion or that of the appellee, dismiss an appeal
should the appellants brief lack specific requirements under Rule 44, Section 13,
paragraphs (a), (c), (d), and (f):chanRoblesvirtualLawlibrary

Section 1. Grounds for dismissal of appeal. An appeal may be dismissed by the


Court of Appeals, on its own motion or on that of the appellee, on the following
grounds:chanRoblesvirtualLawlibrary

xxxx

(f) Absence of specific assignment of errors in the appellants brief, or of page

235
references to the record as required in Section 13, paragraphs (a), (c), (d), and (f) of
Rule 44.

These requirements are the subject index of the matter in brief, page references to
the record, and a table of cases alphabetically arranged and with textbooks and
statutes cited:chanRoblesvirtualLawlibrary

Section 13. Contents of the appellants brief. The appellants brief shall contain,
in the order herein indicated, the following:chanRoblesvirtualLawlibrary

(a) A subject index of the matter in brief with a digest of the arguments and page
references, and a table of cases alphabetically arranged, textbooks and statutes
cited with references to the pages where they are cited;

xxxx

(c) Under the heading Statement of the Case, a clear and concise statement of
the nature of the action, a summary of the proceedings, the appealed rulings and
orders of the court, the nature of the controversy, with page references to the
record;

(d) Under the heading Statement of Facts, a clear and concise statement in a
narrative form of the facts admitted by both parties and of those in controversy,
together with the substance of the proof relating thereto in sufficient detail to make
it clearly intelligible, with page references to the record;

xxxx

(f) Under the heading Argument, the appellants arguments on each assignment
of error with page references to the record. The authorities relied upon shall be
cited by the page of the report at which the case begins and the page of the report
on which the citation is found;

xxxx

Lui Enterprises appellants brief lacked a subject index, page references to the
record, and table of cases, textbooks and statutes cited. Under Rule 50, Section 1 of
the 1997 Rules of Civil Procedure, the Court of Appeals correctly dismissed Lui
Enterprises appeal.

236
Except for cases provided in the Constitution,70 appeal is a purely statutory
right.71 The right to appeal must be exercised in the manner prescribed by law72
and requires strict compliance with the Rules of Court on appeals.73 Otherwise, the
appeal shall be dismissed, and its dismissal shall not be a deprivation of due
process of law.

In Mendoza v. United Coconut Planters Bank, Inc.,74 this court sustained the Court
of Appeals dismissal of Mendozas appeal. Mendozas appellants brief lacked a
subject index, assignment of errors, and page references to the record. In De Liano
v. Court of Appeals,75 this court also sustained the dismissal of De Lianos appeal.
De Lianos appellants brief lacked a subject index, a table of cases and authorities,
and page references to the record.

There are exceptions to this rule. In Philippine Coconut Authority v. Corona


International, Inc.,76 the Philippine Coconut Authoritys appellants brief lacked a
clear and concise statement of the nature of the action, a summary of the
proceedings, the nature of the judgment, and page references to the record.
However, this court found that the Philippine Coconut Authority substantially
complied with the Rules. Its appellants brief apprise[d] [the Court of Appeals] of
the essential facts and nature of the case as well as the issues raised and the laws
necessary [to dispose of the case].77 This court [deviated] from a rigid
enforcement of the rules78 and ordered the Court of Appeals to resolve the
Philippine Coconut Authoritys appeal.

In Go v. Chaves,79 Gos 17page appellants brief lacked a subject index. However,


Go subsequently filed a subject index. This court excused Gos procedural lapse
since the appellants brief [consisted] only of 17 pages which [the Court of
Appeals] may easily peruse to apprise it of [the case] and of the relief sought.80
This court ordered the Court of Appeals to resolve Gos appeal in the interest of
justice.81

In Philippine Coconut Authority and Go, the appellants substantially complied with
the rules on the contents of the appellants brief. Thus, this court excused the
appellants procedural lapses.

In this case, Lui Enterprises did not substantially comply with the rules on the
contents of the appellants brief. It admitted that its appellants brief lacked the
required subject index, page references to the record, and table of cases, textbooks,
and statutes cited. However, it did not even correct its admitted technical
237
omissions82 by filing an amended appellants brief with the required contents.83
Thus, this case does not allow a relaxation of the rules. The Court of Appeals did
not err in dismissing Lui Enterprises appeal.

Rules on appeal are designed for the proper and prompt disposition of cases
before the Court of Appeals.84 With respect to the appellants brief, its required
contents are designed to minimize the [Court of Appeals] labor in [examining]
the record upon which the appeal is heard and determined.85

The subject index serves as the briefs table of contents.86 Instead of [thumbing]
through the [appellants brief]87 every time the Court of Appeals Justice
encounters an argument or citation, the Justice deciding the case only has to refer
to the subject index for the argument or citation he or she needs.88 This saves the
Court of Appeals time in reviewing the appealed case. Efficiency allows the
justices of the appellate court to substantially attend to this case as well as other
cases.

Page references to the record guarantee that the facts stated in the appellants brief
are supported by the record.89 A statement of fact without a page reference to the
record creates the presumption that it is unsupported by the record and, thus, may
be stricken or disregarded altogether.90

As for the table of cases, textbooks, and statutes cited, this is required so that the
Court of Appeals can easily verify the authorities cited for accuracy and
aptness.91

Lui Enterprises appellants brief lacked a subject index, page references to the
record, and a table of cases, textbooks, and statutes cited. These requirements
were designed to assist the appellate court in the accomplishment of its tasks, and,
overall, to enhance the orderly administration of justice.92 This court will not
disregard rules on appeal in the guise of liberal construction.93 For this court to
liberally construe the Rules, the party must substantially comply with the Rules
and correct its procedural lapses.94 Lui Enterprises failed to remedy these errors.

All told, the Court of Appeals did not err in dismissing Lui Enterprises appeal. It
failed to comply with Rule 44, Section 13, paragraphs (a), (c), (d), and (f) of the
1997 Rules of Civil Procedure on the required contents of the appellants brief.

II

238
Lui Enterprises failed to show that its
failure to answer the complaint within
the required period was due to excusable
negligence

When a defendant is served with summons and a copy of the complaint, he or she
is required to answer within 15 days from the day he or she was served with
summons.95 The defendant may also move to dismiss the complaint [w]ithin the
time for but before filing the answer.96

Fifteen days is sufficient time for a defendant to answer with good defenses against
the plaintiffs allegations in the complaint. Thus, a defendant who fails to answer
within 15 days from service of summons either presents no defenses against the
plaintiffs allegations in the complaint or was prevented from filing his or her
answer within the required period due to fraud, accident, mistake or excusable
negligence.97

In either case, the court may declare the defendant in default on plaintiffs motion
and notice to defendant.98 The court shall then try the case until judgment without
defendants participation99 and grant the plaintiff such relief as his or her complaint
may warrant.100

A defendant declared in default loses his or her standing in court.101 He or she is


deprived of the right to take part in the trial and forfeits his [or her] rights as a
party litigant,102 has no right to present evidence [supporting his or her]
allegations,103 and has no right to control the proceedings [or] crossexamine
witnesses.104 Moreover, he or she has no right to expect that [the court] would
[act] upon [his or her pleadings]105 or that he or she may [oppose] motions filed
against him [or her].106

However, the defendant declared in default does not [waive] all of [his or her]
rights.107 He or she still has the right to receive notice of subsequent
proceedings.108 Also, the plaintiff must still present evidence supporting his or her
allegations despite the default of [the defendant].109

Default, therefore, is not meant to punish the defendant but to enforce the prompt
filing of the answer to the complaint. For a defendant without good defenses,
default saves him or her the embarrassment of openly appearing to defend the
239
indefensible.110 As this court explained in Gochangco v. The Court of First
Instance of Negros Occidental, Branch IV:111

It does make sense for a defendant without defenses, and who accepts the
correctness of the specific relief prayed for in the complaint, to forego the filing of
the answer or any sort of intervention in the action at all. For even if he did
intervene, the result would be the same: since he would be unable to establish any
good defense, having none in fact, judgment would inevitably go against him. And
this would be an acceptable result, if not being in his power to alter or prevent it,
provided that the judgment did not go beyond or differ from the specific relief
stated in the complaint. x x x.112 (Emphasis in the original)

On the other hand, for a defendant with good defenses, it would be unnatural for
him [or her] not to set x x x up [his or her defenses] properly and timely.113 Thus,
it must be presumed that some insuperable cause prevented him [or her] from
[answering the complaint].114 In which case, his or her proper remedy depends on
when he or she discovered the default and whether the default judgment was
already rendered by the trial court.

After notice of the declaration of default but before the court renders the default
judgment, the defendant may file, under oath, a motion to set aside order of
default. The defendant must properly show that his or her failure to answer was
due to fraud, accident,115 mistake116 or excusable negligence.117 The defendant must
also have a meritorious defense. Rule 9, Section 3, paragraph (b) of the 1997 Rules
of Civil Procedure provides:chanRoblesvirtualLawlibrary

Section 3. Default; declaration of. x x x x

(b) Relief from order of default. A party declared in default may at any time after
notice thereof and before judgment file a motion under oath to set aside the order
of default upon proper showing that his failure to answer was due to fraud,
accident, mistake or excusable negligence and that he has a meritorious defense. In
such case, the order of default may be set aside on such terms and conditions as the
judge may impose in the interest of justice.

If the defendant discovers his or her default after judgment but prior to the
judgment becoming final and executory, he or she may file a motion for new trial
under Rule 37, Section 1, paragraph (a) of the 1997 Rules of Civil Procedure.118 If
he or she discovers his or her default after the judgment has become final and
executory, a petition for relief from judgment under Rule 38, Section 1 of the 1997
240
Rules of Civil Procedure may be filed.119

Appeal is also available to the defendant declared in default. He or she may appeal
the judgment for being contrary to the evidence or to the law under Rule 41,
Section 2 of the 1997 Rules of Civil Procedure.120 He or she may do so even if he
or she did not file a petition to set aside order of default.121

A petition for certiorari may also be filed if the trial court declared the defendant
in default with grave abuse of discretion.122

The remedies of the motion to set aside order of default, motion for new trial, and
petition for relief from judgment are mutually exclusive, not alternative or
cumulative. This is to compel defendants to remedy their default at the earliest
possible opportunity. Depending on when the default was discovered and whether
a default judgment was already rendered, a defendant declared in default may avail
of only one of the three remedies.

Thus, if a defendant discovers his or her default before the trial court renders
judgment, he or she shall file a motion to set aside order of default. If this motion
to set aside order of default is denied, the defendant declared in default cannot
await the rendition of judgment, and he or she cannot file a motion for new trial
before the judgment becomes final and executory, or a petition for relief from
judgment after the judgment becomes final and executory.

Also, the remedies against default become narrower and narrower as the trial nears
judgment. The defendant enjoys the most liberality from this court with a motion to
set aside order of default, as he or she has no default judgment to contend with, and
he or she has the whole period before judgment to remedy his or her default.

With a motion for new trial, the defendant must file the motion within the period
for taking an appeal123 or within 15 days from notice of the default judgment.
Although a default judgment has already been rendered, the filing of the motion for
new trial tolls the reglementary period of appeal, and the default judgment cannot
be executed against the defendant.

A petition for relief from judgment is filed after the default judgment has become
final and executory. Thus, the filing of the petition for relief from judgment does
not stay the execution of the default judgment unless a writ of preliminary
injunction is issued pending the petitions resolution.124

241
Upon the grant of a motion to set aside order of default, motion for new trial, or a
petition for relief from judgment, the defendant is given the chance to present his
or her evidence against that of plaintiffs. With an appeal, however, the defendant
has no right to present evidence on his or her behalf and can only appeal the
judgment for being contrary to plaintiffs evidence or the law.

Similar to an appeal, a petition for certiorari does not allow the defendant to
present evidence on his or her behalf. The defendant can only argue that the trial
court committed grave abuse of discretion in declaring him or her in default.

Thus, should a defendant prefer to present evidence on his or her behalf, he or she
must file either a motion to set aside order of default, motion for new trial, or a
petition for relief from judgment.

In this case, Lui Enterprises had discovered its default before the Regional Trial
Court of Makati rendered judgment. Thus, it timely filed a motion to set aside
order of default, raising the ground of excusable negligence.

Excusable negligence is one which ordinary diligence and prudence could not
have guarded against.125 The circumstances should be properly alleged and
proved. In this case, we find that Lui Enterprises failure to answer within the
required period is inexcusable.

Lui Enterprises counsel filed its motion to dismiss four days late. It did not
immediately take steps to remedy its default and took one year from discovery of
default to file a motion to set aside order of default. In its motion to set aside order
of default, Lui Enterprises only conveniently blamed its x x x counsel [for the late
filing of the answer]126 without offering any excuse for the late filing. This is not
excusable negligence under Rule 9, Section 3, paragraph (b)127 of the 1997 Rules of
Civil Procedure. Thus, the Regional Trial Court of Makati did not err in refusing to
set aside the order of default.

Lui Enterprises argued that the Regional Trial Court of Makati should have been
liberal in setting aside its order of default. After it had been declared in default, Lui
Enterprises filed several manifestations informing the Makati trial court of the
earlier filed nullification of deed of dation in payment case which barred the filing
of the interpleader case. Lui Enterprises president, Eli L. Lui, and counsel even
flew in from Davao to Makati to formally [manifest that] a [similar] action
between [Lui Enterprises] and [the Philippine Bank of Communications]128 was
already pending in the Regional Trial Court of Davao. However, the trial court did
242
not recognize Lui Enterprises standing in court.

The general rule is that courts should proceed with deciding cases on the merits
and set aside orders of default as default judgments are frowned upon.129 As
much as possible, cases should be decided with both parties given every chance to
fight their case fairly and in the open, without resort to technicality.130

However, the basic requirements of Rule 9, Section 3, paragraph (b) of the 1997
Rules of Civil Procedure must first be complied with.131 The defendants motion to
set aside order of default must satisfy three conditions. First is the time element.
The defendant must challenge the default order before judgment. Second, the
defendant must have been prevented from filing his answer due to fraud, accident,
mistake or excusable negligence. Third, he must have a meritorious defense. As
this court held in SSS v. Hon. Chaves:132

Procedural rules are not to be disregarded or dismissed simply because their non
observance may have resulted in prejudice to a partys substantive rights. Like all
rules[,] they are to be followed, except only when for the most persuasive of
reasons 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. x x x.133

As discussed, Lui Enterprises never explained why its counsel failed to file the
motion to dismiss on time. It just argued that courts should be liberal in setting
aside orders of default. Even assuming that it had a meritorious defense and that its
representative and counsel had to fly in from Davao to Makati to personally appear
and manifest in court its meritorious defense, Lui Enterprises must first show that
its failure to answer was due to fraud, accident, mistake or excusable negligence.
This Lui Enterprises did not do.

Lui Enterprises argued that Zuellig Pharma filed the interpleader case to compel
Lui Enterprises and the Philippine Bank of Communications to litigate their
claims. Thus, [d]eclaring the other claimant in default would ironically defeat the
very purpose of the suit.134 The Regional Trial Court of Makati should not have
declared Lui Enterprises in default.

Under Rule 62, Section 1 of the 1997 Rules of Civil Procedure, a person may file a
special civil action for interpleader if conflicting claims are made against him or
her over a subject matter in which he or she has no interest. The action is brought
against the claimants to compel them to litigate their conflicting claims among
243
themselves. Rule 62, Section 1 of the 1997 Rules of Civil Procedure
provides:chanRoblesvirtualLawlibrary

Section 1. When interpleader proper. Whenever conflicting claims upon the same
subject matter are or may be made against a person who claims no interest
whatever in the subject matter, or an interest which in whole or in part is not
disputed by the claimants, he may bring an action against the conflicting claimants
to compel them to interplead and litigate their several claims among themselves.

An interpleader complaint may be filed by a lessee against those who have


conflicting claims over the rent due for the property leased.135 This remedy is for
the lessee to protect him or her from double vexation in respect of one liability.136
He or she may file the interpleader case to extinguish his or her obligation to pay
rent, remove him or her from the adverse claimants dispute, and compel the
parties with conflicting claims to litigate among themselves.

In this case, Zuellig Pharma filed the interpleader case to extinguish its obligation
to pay rent. Its purpose in filing the interpleader case was not defeated137 when
the Makati trial court declared Lui Enterprises in default.

At any rate, an adverse claimant in an interpleader case may be declared in default.


Under Rule 62, Section 5 of the 1997 Rules of Civil Procedure, a claimant who
fails to answer within the required period may, on motion, be declared in default.
The consequence of the default is that the court may render judgment barring [the
defaulted claimant] from any claim in respect to the subject matter.138 The Rules
would not have allowed claimants in interpleader cases to be declared in default if
it would ironically defeat the very purpose of the suit.139

The Regional Trial Court of Makati declared Lui Enterprises in default when it
failed to answer the complaint within the required period. Lui Enterprises filed a
motion to set aside order of default without an acceptable excuse why its counsel
failed to answer the complaint. It failed to prove the excusable negligence. Thus,
the Makati trial court did not err in refusing to set aside the order of default.

III

The nullification of deed in dation in


payment case did not bar the filing of
the interpleader case. Litis pendentia

244
is not present in this case.

Lui Enterprises allegedly filed for nullification of deed of dation in payment with
the Regional Trial Court of Davao. It sought to nullify the deed of dation in
payment through which the Philippine Bank of Communications acquired title over
the leased property. Lui Enterprises argued that this pending nullification case
barred the Regional Trial Court of Makati from hearing the interpleader case. Since
the interpleader case was filed subsequently to the nullification case, the
interpleader case should be dismissed.

Under Rule 16, Section 1, paragraph (e) of the 1997 Rules of Civil Procedure, a
motion to dismiss may be filed on the ground of litis
pendentia:chanRoblesvirtualLawlibrary

Section 1. Grounds. Within the time for but before filing the answer to the
complaint or pleading asserting a claim, a motion to dismiss may be made on any
of the following grounds:chanRoblesvirtualLawlibrary

xxxx

(e) That there is another action pending between the same parties for the same
cause;

xxxx

Litis pendentia is Latin for a pending suit.140 It exists when another action is
pending between the same parties for the same cause of action x x x.141 The
subsequent action is unnecessary and vexatious142 and is instituted to harass the
respondent [in the subsequent action].143

The requisites of litis pendentia are:chanRoblesvirtualLawlibrary

(1) Identity of parties or at least such as represent the same interest in both
actions;
(2) Identity of rights asserted and reliefs prayed for, the reliefs being founded on
the same facts; and
(3) The identity in the two cases should be such that the judgment that may be
rendered in one would, regardless of which party is successful, amount to res
judicata in the other.144

245
All of the requisites must be present.145 Absent one requisite, there is no litis
pendentia.146

In this case, there is no litis pendentia since there is no identity of parties in the
nullification of deed of dation in payment case and the interpleader case. Zuellig
Pharma is not a party to the nullification case filed in the Davao trial court.

There is also no identity of rights asserted and reliefs prayed for. Lui Enterprises
filed the first case to nullify the deed of dation in payment it executed in favor of
the Philippine Bank of Communications. Zuellig Pharma subsequently filed the
interpleader case to consign in court the rental payments and extinguish its
obligation as lessee. The interpleader case was necessary and was not instituted to
harass either Lui Enterprises or the Philippine Bank of Communications.

Thus, the pending nullification case did not bar the filing of the interpleader case.

Lui Enterprises cited Progressive Development Corporation, Inc. v. Court of


Appeals147 as authority to set aside the subsequently filed interpleader case. In this
cited case, petitioner Progressive Development Corporation, Inc. entered into a
lease contract with Westin Seafood Market, Inc. The latter failed to pay rent. Thus,
Progressive Development Corporation, Inc. repossessed the leased premises,
inventoried the movable properties inside the leased premises, and scheduled the
public sale of the inventoried properties as they agreed upon in their lease contract.

Westin Seafood Market, Inc. filed for forcible entry with damages against
Progressive Development Corporation, Inc. It subsequently filed an action for
damages against Progressive Development Corporation for its forcible takeover of
the leased premises.148

This court ordered the subsequently filed action for damages dismissed as the
pending forcible entry with damages case barred the subsequently filed damages
case.

Progressive Development Corporation, Inc. does not apply in this case. The action
for forcible entry with damages and the subsequent action for damages were filed
by the same plaintiff against the same defendant. There is identity of parties in both
cases.

In this case, the nullification of deed of dation in payment case was filed by Lui
246
Enterprises against the Philippine Bank of Communications. The interpleader case
was filed by Zuellig Pharma against Lui Enterprises and the Philippine Bank of
Communications. A different plaintiff filed the interpleader case against Lui
Enterprises and the Philippine Bank of Communications. Thus, there is no identity
of parties, and the first requisite of litis pendentia is absent.

As discussed, Lui Enterprises filed the nullification of deed of dation in payment to


recover ownership of the leased premises. Zuellig Pharma filed the interpleader
case to extinguish its obligation to pay rent. There is no identity of reliefs prayed
for, and the second requisite of litis pendentia is absent.

Since two requisites of litis pendentia are absent, the nullification of deed of dation
in payment case did not bar the filing of the interpleader case.

Lui Enterprises alleged that the Regional Trial Court of Davao issued a writ of
preliminary injunction against the Regional Trial Court of Makati. The Regional
Trial Court of Davao allegedly enjoined the Regional Trial Court of Makati from
taking cognizance of the interpleader case. Lui Enterprises argued that the
Regional Trial Court of Makati should have respected the orders issued by the
Regional Trial Court of Davao.149 Lui Enterprises cited Compania General de
Tabacos de Filipinas v. Court of Appeals150 where this court allegedly
held:chanRoblesvirtualLawlibrary

x x x [T]he issuance of the said writ by the RTC of Agoo, La Union not only seeks
to enjoin Branch 9 of the RTC of Manila from proceedingwith the foreclosure case
but also has the effect of preempting the latters order. x x x.151

Compania General de Tabacos de Filipinas is not an authority for the claim that a
court can issue a writ of preliminary injunction against a coequal court. The cited
sentence was taken out of context. In Compania General de Tabacos de Filipinas,
this court held that the Regional Trial Court of Agoo had no power to issue a writ
of preliminary injunction against the Regional Trial Court of Manila.152 A court
cannot enjoin the proceedings of a coequal court.

Thus, when this court said that the Regional Trial Court of Agoos writ of
preliminary injunction not only seeks to enjoin x x x [the Regional Trial Court of
Manila] from proceeding with the foreclosure case but also has the effect of pre
empting the latters orders,153 this court followed with [t]his we cannot
countenance.154

247
At any rate, the Regional Trial Court of Davaos order dated April 18, 2005 was
not a writ of preliminary injunction. It was a mere order directing the Philippine
Bank of Communications to inform Zuellig Pharma to pay rent to Lui Enterprises
while the status quo order between Lui Enterprises and the Philippine Bank of
Communications was subsisting. The Regional Trial Court of Davao did not enjoin
the proceedings before the Regional Trial Court of Makati. The order dated April
18, 2005 provides:chanRoblesvirtualLawlibrary

As such, [the Philippine Bank of Communications] [is] hereby directed to


forthwith inform Zuellig Pharma Corp., of the April 1, 2004 status quo order and
the succeeding September 14, 2004 Order, and consequently, for the said lessee to
remit all rentals due from February 23, 2003 and onwards to plaintiff Lui
Enterprises, Inc., in the meanwhile that the status quo order is subsisting.155

Thus, the Regional Trial Court of Davao did not enjoin the Regional Trial Court of
Makati from hearing the interpleader case.

All told, the trial court did not err in proceeding with the interpleader case. The
nullification of deed of dation in payment case pending with the Regional Trial
Court of Davao did not bar the filing of the interpleader case with the Regional
Trial Court of Makati.

IV

The Court of Appeals erred in awarding attorneys fees

In its ordinary sense, attorneys fees represent the reasonable compensation [a


client pays his or her lawyer] [for legal service rendered].156 In its extraordinary
sense, attorneys fees [are] awarded x x x as indemnity for damages [the losing
party pays the prevailing party].157

The award of attorneys fees is the exception rather than the rule.158 It is not
awarded to the prevailing party as a matter of course.159 Under Article 2208 of
the Civil Code, attorneys fees cannot be recovered in the absence of stipulation,
except under specific circumstances:chanRoblesvirtualLawlibrary

(1) When exemplary damages are awarded;


(2) When the defendants act or omission has compelled the plaintiff to litigate
with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;

248
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy
the plaintiffs plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled
workers;
(8) In actions for indemnity under workmens compensation and employers
liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorneys
fees and expenses of litigation should be recovered.160

Even if a party is compelled to litigate with third persons or to incur expenses to


protect his [or her] rights,161 attorneys fees will not be awarded if no bad faith
could be reflected in a partys persistence in a case.162

To award attorneys fees, the court must have factual, legal, [and] equitable
justification.163 The court must state the awards basis in its decision.164 These
rules are based on the policy that no premium should be placed on the right to
litigate.165

In this case, the Court of Appeals awarded attorneys fees as [Zuellig Pharma]
was compelled to litigate with third persons or to incur expenses to protect [its]
interest[s].166 This is not a compelling reason to award attorneys fees. That
Zuellig Pharma had to file an interpleader case to consign its rental payments did
not mean that Lui Enterprises was in bad faith in insisting that rental payments be
paid to it. Thus, the Court of Appeals erred in awarding attorneys fees to Zuellig
Pharma.

All told, the Court of Appeals award of P50,000.00 as attorneys fees must be
deleted.

WHEREFORE, in view of the foregoing, the petition for review on certiorari is


DENIED. The Court of Appeals decision and resolution in CAG.R. CV No.
88023 are AFFIRMED with MODIFICATION. The award of P50,000.00
attorneys fees to Zuellig Pharma Corporation is DELETED.

SO ORDERED.

249
Velasco, Jr., (Chairperson), Peralta, Abad, and Mendoza, JJ., concur.

March 28, 2014

N O T I C E OF J U D G M E N T

Sirs/Mesdames:chanRoblesvirtualLawlibrary

Please take notice that on ___March 12, 2014___ a Decision, copy attached
herewith, was rendered by the Supreme Court in the aboveentitled case, the
original of which was received by this Office on March 28, 2014 at 2:00 p.m.

Very truly yours,


(SGD)
LUCITA ABJELINA SORIANO
Division Clerk of Court

Endnotes:

1
Rollo, pp. 2841. This decision was penned by Associate Justice Ramon M. Bato,
Jr., with Associate Justices Juan Q. Enriquez, Jr. and Florito S. Macalino,
concurring.
2
Id. at 4344.
3
Id. at 7479.
4
Id. at 5366.
5
Record, p. 44.
6
Rollo, p. 68.

250
7
Id. at 6970.
8
Id. at 77, decision dated July 4, 2006.
9
Id. at 71.
10
Id. at 4752, complaint dated May 7, 2003.
11
Id. at 30.
12
Record, pp. 3747.
13
Rollo, pp. 8082.
14
Id. at 52.
15
Id.
16
Record, p. 405.
17
Rollo, p. 81.
18
Record, pp. 7780.
19
Id. at 87.
20
Rollo, p. 81.
21
Record, p. 87.
22
Id. at 9398.
23
Rules of Court, Rule 11, sec. 1.
24
Rollo, pp. 3031.
25
Record, p. 94.
26
Id. at 95.
251
27
Id. at 98.
28
Id., secretarys certificate dated August 28, 2003,
states:chanRoblesvirtualLawlibrary

RESOLVED, that the Board of Directors of ZUELLIG PHARMA


CORPORATION (the Corporation) hereby authorize ATTY. ANA L.A.
PERALTA with address as that of the Corporation, to initiate, represent and act on
behalf of the Corporation, including the authority to execute verifications and
certificate of nonforum shopping, in the civil proceedings for consignation of
rental payments and interpleader and in all other legal suits or proceedings to be
filed against Lui Enterprises, Inc. and/or Philippine Bank of Communications, and
to be the Corporations true and lawful attorneyinfact, in its name, place and
stead.
29
Record, p. 95.
30
Id. at 9596.
31
Id. at 96.
32
Id. at 101103.
33
Id. at 101.
34
Id. at 111113.
35
Id. at 112.
36
Id. at 208209.
37
Id. at 210211.
38
Id. at 211.
39
Id. at 215, in an order dated April 29, 2004.
40
Id. at 402409.

252
41
Id. at 402.
42
Id.
43
Id. at 405.
44
Id. at 393395.
45
Id. at 394.
46
Rollo, pp. 8388.
47
Id. at 8990.
48
Id. at 87.
49
Record, p. 451, in an order dated May 3, 2005.
50
Rollo, pp. 7479.
51
Id. at 77.
52
Id.
53
Id. at 7879.
54
Court of Appeals rollo, pp. 1738.
55
Rollo, pp. 3335.
56
Id. at 3536.
57
Id. at 3637.
58
Id. at 40.
59
Id. at 2841.
60
Court of Appeals rollo, pp. 128137.

253
61
Rollo, pp. 4344.
62
Id. at 626.
63
Id. at 16.
64
Id. at 1416.
65
Id. at 1819.
66
Id. at 2021.
67
Id. at 2223.
68
Id. at 104121.
69
Id. at 129130.
70
CONSTI., Art. VIII, sec. 5, par. 2 provides:chanRoblesvirtualLawlibrary

Sec. 5. The Supreme Court shall have the following


powers:chanRoblesvirtualLawlibrary

xxxx

(2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or
the Rules of Court may provide, final judgments and orders of lower courts
in:chanRoblesvirtualLawlibrary

(a) All cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order, instruction,
ordinance, or regulation is in question.
(b) All cases involving the legality of any tax, impost, assessment, or toll, or any
penalty imposed in relation thereto.
(c) All cases in which the jurisdiction of any lower court is in issue.
(d) All criminal cases in which the penalty imposed is reclusion perpetua or higher.
(e) All cases in which only an error or question of law is involved.
71
Mendoza v. United Coconut Planters Bank, Inc., G.R. No. 165575, February 2,
2011, 641 SCRA 333, 345 [Per J. Peralta, Second Division].
254
72
De Liano v. Court of Appeals, 421 Phil. 1033, 1040 (2001) [Per J. De Leon, Jr.,
Second Division].
73
Mendoza v. United Coconut Planters Bank, Inc., G.R. No. 165575, February 2,
2011, 641 SCRA 333, 345 [Per J. Peralta, Second Division].
74
Id. at 333.
75
421 Phil. 1033 (2001) [Per J. De Leon, Jr., Second Division].
76
395 Phil. 742 (2000) [Per J. Kapunan, First Division].
77
Id. at 750.
78
Id.
79
G.R. No. 182341, April 23, 2010, 619 SCRA 333 [Per J. Del Castillo, Second
Division].
80
Id. at 344.
81
Id. at 342.
82
Rollo, p. 14.
83
Mendoza v. United Coconut Planters, Bank, Inc., G.R. No. 165575, February 2,
2011, 641 SCRA 333, 348 [Per J. Peralta, Second Division].
84
Id.
85
De Liano v. Court of Appeals, 421 Phil. 1033, 1041 (2001) [Per J. De Leon, Jr.,
Second Division], citing Estiva v. Cawil, 59 Phil. 67, 6869 (1933) [Per J.
Malcolm, En Banc].
86
Id. at 1042.
87
Id.
88
Id.
255
89
Id. at 1044.
90
Id.
91
Id. at 10451046.
92
Id. at 1040.
93
Mendoza v. United Coconut Planters Bank, Inc., G.R. No. 165575, February 2,
2011, 641 SCRA 333, 348 [Per J. Peralta, Second Division].
94
Id.
95
RULES OF COURT, Rule 11, sec.1.
96
RULES OF COURT, Rule 16, sec. 1.
97
Gochangco v. The Court of First Instance of Negros Occidental, Branch IV, 241
Phil. 48, 67 (1988) [Per C.J. Narvasa, En Banc].
98
RULES OF COURT, Rule 9, sec. 3.
99
RULES OF COURT, Rule 9, sec. 3 (a).
100
RULES OF COURT, Rule 9, sec. 3.
101
Otero v. Tan, G.R. No. 200134, August 15, 2012, 678 SCRA 583, 591 [Per J.
Reyes, Second Division].
102
Mediserv, Inc. v. China Banking Corporation, 408 Phil. 745, 755 (2001) [Per J.
GonzagaReyes, Third Division].
103
SSS v. Hon. Chaves, 483 Phil. 292, 301 (2004) [Per J. Quisumbing, First
Division].
104
Otero v. Tan, G.R. No. 200134, August 15, 2012, 678 SCRA 583, 591 [Per J.
Reyes, Second Division].
105
Id. at 591592.
256
106
Id. at 592.
107
SSS v. Hon. Chaves, 483 Phil. 292, 301 (2004) [Per J. Quisumbing, First
Division].
108
Mediserv, Inc. v. China Banking Corporation, 408 Phil. 745, 755 (2001) [Per J.
GonzagaReyes, Third Division].
109
SSS v. Hon. Chaves, 483 Phil. 292, 302 (2004) [Per J. Quisumbing, First
Division].
110
Gochangco v. The Court of First Instance of Negros Occidental, Branch IV, 241
Phil. 48, 67 (1988) [Per C.J. Narvasa, En Banc].
111
241 Phil. 48 (1988) [Per C.J. Narvasa, En Banc].
112
Id. at 67.
113
Id.
114
Id.
115
Ong Guan Can v. Century Insurance Co., 45 Phil. 667 (1924) [Per J. Johnson,
En Banc], cited in The Mechanics of Lifting an Order of Default, Annotation,
December 14, 1981, 110 SCRA 223, 226.
116
Tanchan v. Court of Appeals, 365 Phil. 34 (1999) [Per J. Purisima, Third
Division].
117
Santos v. Hon. Samson, 196 Phil. 398 (1981) [Per C.J. Concepcion, Jr., Second
Division].
118
David v. Judge GutierrezFruelda, 597 Phil. 354, 361 (2009) [Per Acting C.J.
Quisumbing, Second Division].
119
Id.
120
Id.

257
121
Id.
122
Sps. Delos Santos v. Judge Carpio, 533 Phil. 42, 5354 (2006) [Per J. Austria
Martinez, First Division]; Acance v. Court of Appeals, 493 Phil. 676, 685 (2005)
[Per J. Callejo, Sr., Second Division]; Indiana Aerospace University v. Commission
on Higher Education, 408 Phil. 483, 497 (2001) [Per C.J. Panganiban, Third
Division].
123
Rules of Court, Rule 37, sec. 1.
124
Rules of Court, Rule 38, sec. 5.
125
Magtoto v. Court of Appeals, G.R. No. 175792, November 21, 2012, 686 SCRA
88, 101 [Per J. Del Castillo, Second Division].
126
Rollo, p. 36.
127
RULES OF COURT, Rule 9, sec. 3, par. (b) Relief from order of default. A
party declared in default may at any time after notice thereof and before judgment
file a motion under oath to set aside the order of default upon proper showing that
his failure to answer was due to fraud, accident, mistake or excusable negligence
and that he has a meritorious defense. In such case, the order of default may be set
aside on such terms and conditions as the judge may impose in the interest of
justice.
128
Id. at 18.
129
Republic v. Sandiganbayan, 565 Phil. 172, 185 (2007) [Per J. Quisumbing,
Second Division]; Samartino v. Raon, 433 Phil. 173, 187 (2002) [Per J. Ynares
Santiago, First Division]; Tanchan v. Court of Appeals, 365 Phil. 34, 41 (1999) [Per
J. Purisima, Third Division].
130
Tanchan v. Court of Appeals, 365 Phil. 34, 41 (1999) [Per J. Purisima, Third
Division].
131
David v. Judge GutierrezFruelda, 597 Phil. 354, 362 (2009) [Per Acting C.J.
Quisumbing, Second Division].
132
483 Phil. 292 [Per J. Quisumbing, First Division].

258
133
Id. at 301.
134
Rollo, p. 19.
135
Pasricha v. Don Luis Dison Realty, Inc., 572 Phil. 52, 69 (2008) [Per J. Nachura,
Third Division]; Ocampo v. Tirona, 495 Phil. 55, 68 (2005) [Per J. Carpio, First
Division].
136
Pasricha v. Don Luis Dison Realty, Inc., 572 Phil. 52, 69 (2008) [Per J. Nachura,
Third Division]; Ocampo v. Tirona, 495 Phil. 55, 68 (2005) [Per J. Carpio, First
Division].
137
Rollo, p. 19.
138
RULES OF COURT, Rule 62, sec. 5.
139
Rollo, p. 19.
140
Feliciano v. Court of Appeals, 350 Phil. 499, 505 (1998) [Per J. Bellosillo, First
Division].
141
University Physicians Services, Inc. v. Court of Appeals, 381 Phil. 54, 67 (2000)
[Per J. GonzagaReyes, Third Division].
142
Id.
143
Id.
144
Feliciano v. Court of Appeals, 350 Phil. 499, 505506 (1998) [Per J. Bellosillo,
First Division].
145
University Physicians Services, Inc. v. Court of Appeals, 381 Phil. 54, 67 (2000)
[Per J. GonzagaReyes, Third Division].
146
Id.
147
361 Phil. 566 (1999) [Per J. Bellosillo, Second Division].
148
Id. at 581.

259
149
Rollo, p. 22.
150
422 Phil. 405 (2001) [Per J. De Leon, Jr., Second Division].
151
Id. at 422.
152
Id.
153
Id.
154
Id.
155
Rollo, p. 90.
156
Philippine National Construction Corporation v. APAC Marketing Corporation,
G.R. No. 190957, June 5, 2013, 697 SCRA 441, 449 [Per C.J. Sereno, First
Division], citing Benedicto v. Villaflores, G.R. No. 185020, October 6, 2010, 632
SCRA 446.
157
Id.
158
Id. at 450.
159
Id.
160
CIVIL CODE, Art. 2208.
161
Philippine National Construction Corporation v. APAC Marketing Corporation,
G.R. No. 190957, June 5, 2013, 697 SCRA 441, 449 [Per C.J. Sereno, First
Division], citing ABSCBN Broadcasting Corp. v. CA, 361 Phil. 499 (1999).
162
Id.
163
Id. at 450.
164
Id.
165
Id. at 449.
166
Rollo, p. 40
260
261
Republic of the Philippines
SUPREME COURT
Manila

G.R. No. 184197 : February 11, 2010

RAPID CITY REALTY AND DEVELOPMENT CORPORATION, Petitioner,


v. ORLANDO VILLA and LOURDES PAEZ-VILLA,1cralaw Respondents.

DECISION

CARPIO MORALES, J.:

Sometime in 2004, Rapid City Realty and Development Corporation


(petitioner) filed a complaint for declaration of nullity of subdivision plans . . .
mandamus and damages against several defendants including Spouses
Orlando and Lourdes Villa (respondents). The complaint, which was docketed
at the Regional Trial Court of Antipolo City as Civil Case No. 04-7350, was
lodged at Branch 71 thereof.

After one failed attempt at personal service of summons, Gregorio Zapanta


(Zapanta), court process server, resorted to substituted service by serving
summons upon respondents househelp who did not acknowledge receipt
thereof and refused to divulge their names. Thus Zapanta stated in the Return
of Summons:

THIS IS TO CERTIFY that on September 24, 2004, the undersigned caused


the service of summons together with a copy of the complaint with its annexes
to defendant Spouses Lourdes Estudillo Paez-Cline and Orlando Villa at their
given address at 905 Padre Faura Street, Ermita Manila, as per information
given by two lady househelps who are also residing at the said address, the
defendant spouses are not around at that time. On the 27th of September,
2004, I returned to the same placeto serve the summons. I served the
summons and the copy of the complaint with its annexes to the two ladies (The
same lady househelp I met on Sept. 24, 2004) but they refused to sign to
acknowledge receipt and they refused to tell their name as per instruction of
the defendants. With me who can attest to the said incident is Mr. Jun Llanes,
who was with me at that time.2cralaw x x x (emphasis and underscoring
supplied)

262
Despite substituted service, respondents failed to file their Answer, prompting
petitioner to file a "Motion to Declare Defendants[-herein respondents] in
Default" which the trial court granted by Order of May 3, 2005.

More than eight months thereafter or on January 30, 2006, respondents filed a
Motion to Lift Order of Default,3cralaw claiming that on January 27, 2006
they "officially receivedall pertinent papers such as Complaint and Annexes.
Motion to Dismiss of the Solicitor General and the ORDER dated May 3, 2005
granting the Motion to Declare [them] in Default." And they denied the
existence of two women helpers who allegedly refused to sign and
acknowledge receipt of the summons. In any event, they contended that
assuming that the allegation were true, the helpers had no authority to receive
the documents.4cralaw

By Order of July 17, 2006, the trial court set aside the Order of Default and
gave herein respondents five days to file their Answer. Respondents just the
same did not file an Answer, drawing petitioner to again file a Motion to
declare them in default, which the trial court again granted by Order of
February 21, 2007.

On April 18, 2007, respondents filed an Omnibus Motion for reconsideration


of the second order declaring them in default and to vacate proceedings, this
time claiming that the trial court did not acquire jurisdiction over their
persons due to invalid service of summons.

The trial court denied respondents Omnibus Motion by Order of May 22,
2007 and proceeded to receive ex-parte evidence for petitioner.

Respondents, via certiorari , challenged the trial court's February 21, 2007
and April 18, 2007 Orders before the Court of Appeals.

In the meantime, the trial court, by Decision of September 4, 2007, rendered


judgment in favor of petitioner.

By Decision of April 29, 2008,5cralaw the appellate court annulled the trial
court's Orders declaring respondents in default for the second time in this
wise:

In assailing the orders of the trial court through their Motion to Lift and later
their OmnibusMotion the petitioners [herein-respondents] never raised any
other defense in avoidance of the respondents [herein petitioners] claim, and

263
instead focused all their energies on questioning the said court's jurisdiction.
The latter motion clearly stated prefatorily their counsel's reservation or
"special appearance to question jurisdiction" over the persons of the
petitioners. "A party who makes a special appearance in court challenging the
jurisdiction of said court based on the ground of invalid service of summons is
not deemed to have submitted himself to the jurisdiction of the court."6cralaw
(citation omitted; italics, emphasis and underscoring supplied)

Petitioner's motion for reconsideration having been denied by the appellate


court by Resolution of August 12, 2008, it comes to the Court via petition for
review on certiorari , arguing in the main that respondents, in filing the first
Motion to Lift the Order of Default, voluntarily submitted themselves to the
jurisdiction of the court.

The petition is impressed with merit.

It is settled that if there is no valid service of summons, the court can still
acquire jurisdiction over the person of the defendant by virtue of the latter's
voluntary appearance. Thus Section 20 of Rule 14 of the Rules of Court
provides:

Sec. 20. Voluntary appearance . The defendant's voluntary appearance in the


action shall be equivalent to service of summons. The inclusion in a motion to
dismiss of other grounds aside from lack of jurisdiction over the person shall
not be deemed a voluntary appearance.

And Philippine Commercial International Bank v. Spouses Wilson Dy Hong Pi


and Lolita Dy, et al. enlightens:

Preliminarily, jurisdiction over the defendant in a civil case is acquired either


by the coercive power of legal processes exerted over his person, or his
voluntary appearance in court. As a general proposition, one who seeks an
affirmative relief is deemed to have submitted to the jurisdiction of the court.
It is by reason of this rule that we have had occasion to declare that the filing
of motions to admit answer, for additional time to file answer, for
reconsideration of a default judgment, and to lift order of default with motion
for reconsideration, is considered voluntary submission to the court's
jurisdiction. This, however, is tempered by the concept of conditional
appearance, such that a party who makes a special appearance to challenge,
among others, the court's jurisdiction over his person cannot be considered to
have submitted to its authority.
264
Prescinding from the foregoing, it is thus clear that:

(1) Special appearance operates as an exception to the general rule on


voluntary appearance;

(2) Accordingly, objections to the jurisdiction of the court over the person of
the defendantmust be explicitly made, i.e., set forth in an unequivocal
manner; and

(3) Failure to do so constitutesvoluntary submission to the jurisdiction of the


court, especially in instances where a pleading or motion seeking affirmative
relief is filed and submitted to the court for resolution.7cralaw (italics and
underscoring supplied)

In their first Motion to Lift the Order of Default8cralaw dated January 30,
2006, respondents alleged:

xxxx

4. In the case of respondents, there is no reason why they should not receive
the Orders of this Honorable Court since the subject of the case is their multi-
million real estate property and naturally they would not want to be declared
in default or lose the same outright without the benefit of a trial on the merits;

5. It would be the height of injustice if the respondents is [sic] denied the equal
protection of the laws[;]

6. Respondents must be afforded "Due process of Law" as enshrined in the


New Constitution, which is a basic right of every Filipino, since they were not
furnished copies of pleadings by the plaintiff and the Order dated May 3,
2005;

x x x x9cralaw

and accordingly prayed as follows:

WHEREFORE, . . . it is most respectfully prayed . . . that the Order dated


May 5, 2005 declaring [them] in default be LIFTED.10cralaw

265
Respondents didnot, in said motion, allege that their filing thereof was a
special appearance for the purpose only to question the jurisdiction over their
persons. Clearly, they had acquiesced to the jurisdiction of the court.

WHEREFORE, the petition is GRANTED. The assailed Court of Appeals


Decision of April 29, 2008 is REVERSED and SET ASIDE.

Let the original records of Civil Case No. 04-7350 be remanded to the court of
origin, Regional Trial Court of Antipolo City, Branch 71.

SO ORDERED.

CONCHITA CARPIO MORALES


Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice
Chairperson

ANTONIO EDUARDO B.
LUCAS P. BERSAMIN
NACHURA*
Associate Justice
Associate Justice

MARTIN S. VILLARAMA, JR.


Associate Justice

C E R T I FI CAT I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court's Division.

REYNATO S. PUNO
Chief Justice

Endnotes:
266
1
cralaw The Court of Appeals was originally impleaded as respondent.
Pursuant however to Rule 45, Sec. 4 of the Rules of Court, the courts or
judges rendering the assailed judgment shall not be impleaded as respondents
in a petition for review on certiorari .
*
Additional member per Special Order No. 821.
2
cralaw Records, p. 219.
3
cralaw Id. at 367-372.
4
cralaw Rollo, pp. 70-71.
5
cralaw Penned by Associate Justice Apolinario O. Bruselas, Jr. with the
concurrence of Associate Justices Rebecca de Guia-Salvador and Vicente S.E.
Veloso.
6
cralaw Supra note 4.
7
cralaw G.R. No. 171137, June 5, 2009.
8
cralaw Records, pp. 367-371.
9
cralaw Id. at 368-369.
10
cralaw Id. at 370.

267
THIRD DIVISION

REMIGIA* GRAGEDA, G.R. No. 169536


CLARITA GRAGEDA-
IMPERIAL, MOSAD-LINO
GRAGEDA, ANTONIO
GRAGEDA, MERLIN GRAGEDA Present:
and HEIRS OF JUAN MOROA
GRAGEDA, represented by his
widow, MARCELITA N.
GRAGEDA, YNARES-SANTIAGO, J.,

Petitioners, Chairperson,

AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
- versus - NACHURA, and
REYES, JJ.

HON. NIMFA C. GOMEZ, in her


capacity as Presiding Judge,
Municipal Circuit Trial Court of
Camalig-Jovellar, and HAUDINY
GRAGEDA,
Respondents.
Promulgated:

September 21, 2007

**
Sometimes spelled Remegia in the rollo.

268
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari assailing the Decision dated 31


August 2005, of the Court of Appeals in CA-G.R. SP No. 89563, dismissing the
appeal taken by petitioners from the 15 March 2005 Order of the Regional Trial
Court (RTC), Branch 3, of Legazpi City, in SCA Case No. 10440. In its 15 March
2005 Order, the RTC dismissed petitioners Petition for Certiorari under Rule 65 of
the Rules of Court, assailing; (a) the 22 September 2004 Order of the Municipal
Circuit Trial Court (MCTC) of Camalig-Jovellar, granting the Motion for Issuance
of Alias Writ of Execution filed by private respondent Haudiny Grageda, and (b)
the 13 January 2005 Order, issued by the same court denying petitioners Motion
for Reconsideration.

The factual and procedural antecedents of this case are as follows:

Juan Navia Grageda owned a 1,527 square meter parcel of land in


Quirangay, Camalig, Albay, denominated as Lot No. 6386, and the residential
house standing thereon. On 27 July 1982, Juan Navia Grageda died single and
without issue. He left the following as his heirs:

(1) his sister, petitioner Remigia Grageda;


(2) the two daughters of his deceased brother Lauro Grageda,
namely: Dorotea Grageda Naga and Lina Grageda-Solano;

269
(3) the six children of another late brother, Amado Grageda, to wit:
Antonio Grageda, Merlin Grageda, Haudiny Grageda, Juan Moroa
Grageda, Hipolito Grageda, and Aurea Grageda-Villa;
(4) the two children of a third late brother, Moises Grageda, namely:
Mosadlino Grageda, and Clarita Grageda-Imperial.

A fourth brother, Rufo Grageda, also died single and without issue.

In July 1998, Dorotea Grageda-Naga and Lina Grageda-Solano (referred to


in the title of the Complaint as Lina Solano-Naga), heirs of Lauro Grageda, filed
with the MCTC of Camalig-Jovellar, Albay a Complaint* for partition of Lot No.
6386 and its improvement/s, which was docketed as Civil Case No. C-655.
Impleaded as defendants therein were all the other surviving heirs of Juan Navia
Grageda.

Of the defendants, only Remigia Grageda (sister heir of Juan Grageda),


Mosadlino Grageda (one of the heirs of Moises Grageda) and Juan Moroa Grageda
(one of the heirs of Amado Grageda) tendered an Answer to the Complaint. In their
Answer, they averred that they do not know of any person by the name of Lina
Solano-Naga, although Lauro Grageda was known to have several children, among
whom was Estaquio Grageda who is not a party to the case. * They manifested that
they do not have any interest in the subject property because it now belongs to a
third person, who was never made a party to this case. * They also claimed that the
properties of Juan Navia Grageda had already been the subject of a Deed of
Extrajudicial Partition and Exchange executed by his siblings Amado Grageda,
Lauro Grageda, Rufo Grageda, and Remegia Grageda, and his nephew Mosadlino
Grageda and niece Clara Grageda Imperial, and duly notarized by RTC Judge
Gregorio Consulta, then MCTC Judge of Camalig-Jovellar, immediately after the
death of said Juan Grageda in the year 1983. * As regards the house constructed on
the subject lot, they averred that it was constructed at the expense of petitioner
Remegia Grageda, a public school teacher, and said house now belongs to a third
person who was not impleaded as a party defendant in this case.*

Rollo, p. 46.

Id. at 50.

Id. at 50-51.

Id. at 51.

Id.

270
On 31 March 2000, the MCTC issued its Decision in Civil Case No. C-655.
The MCTC pertinently ruled:

The defendants, however, contend that the estate of the late


Juan Navia Grageda was extrajudicially divided among his heirs. But,
they did not adduce any credible proof that Lot No. 6386 was
included on such division. Further, there is no evidence on record
showing that the plaintiffs predecessor-in-interest, the late Lauro
Grageda, has agreed to dispose or part away in favor of another
person his share in Lot No. 6386.

As to the claim by the defendants that a third person has


acquired ownership over Lot No. 6386, there is no iota of proof
adduced on record to lend credence to such claim. This Court finds
such claim baseless. Anyway, the admission by the defendants
Remigia Grageda and Juan Moroa Grageda that they are staying on
the house built over Lot No. 6386 negates such claim.

Now, Juan Navia Grageda died single, without a child, and


without a will. His intestate heirs, his brothers Rufo, Lauro, Amado
and Moises, his sister Remegia, hence inherit his estate in equal
shares. (Article 1004, Civil Code). As Lauro Grageda is now
deceased, his share on Juans estate goes to his own estate. As the
plaintiffs are the heirs of the late Lauro Grageda, (Article 979, Ibid.),
they can rightfully claim whatever property interest belonging to his
estate.

Clearly, the plaintiffs are co-heirs to the estate of the late Juan
Navia Grageda. As co-heirs, they are co-owners of such estate. As Lot
No. 6386 appears as the remaining part of such estate, as co-owners of
such land, they can rightfully demand for its partition. Article 494, the
Civil Code, is explicit of this, stating, in part, as follows, to wit: No
co-owner shall be obliged to remain in the co-ownership. Each co-
owner may demand at any time the partition of the thing owned in

271
common, insofar as his share is concerned xxx xxx. And such
partition should not be limited on Lot No. 6386, but should include
the house built on it, because such house is but an accessory to it.
(Article 445, Ibid.).*

The dispositive portion of the MCTC Decision provides:

WHEREFORE, Premises considered, judgment is hereby


rendered as follows, to wit:

1. Ordering the partition of Lot No. 6386, including the


house built on it, into four (4) equal shares, among
Remegia Grageda, Heirs of Amado Grageda, Heirs of
Moises Grageda and the Heirs of Lauro Grageda, the
latter represented by the plaintiffs Dorotea Grageda-
Naga and Lina Grageda-Solano. They shall contribute
equally for any such expenses necessary to effect such
partition;

2. Ordering the defendants to pay the plaintiffs the following


sums of money:

2.a. The amount of Twenty Thousand Pesos, Philippine


currency, as attorneys fees, to include counsel's appearance
fees;

2.b. The amount of Five Thousand Pesos, Philippine


currency, as and by way of litigation expenses.

The defendants shall pay the costs of suit.*

Id. at 54-55.

Id. at 55.

272
On 16 January 2001, the MCTC issued an Order commissioning Geodetic
Engineer Ramon Magdaong to conduct a survey of the subject lot, to carry out the
partition, and to submit his report thereon. The full contents of such Order are as
follows:

Geodetic engineer Ramon Magdaong is hereby commissioned


to conduct a survey on re: partition of Lot No. 6386 pursuant to and to
carry out that portion of the decision, dated March 31, 2000 re:
partition of Lot No. 6386 into four (4) equal shares, on the above-
entitled case. Engineer Magdaong shall consider the value of the
house standing on such lot as he partition it pursuant to his
commission.

Thus, engineer Magdaong is hereby directed to appear and thus


take his oath as commissioner before this Court on February 8, 2001,
at 9:30 oclock in the morning.

Within a period of ten (10) days after Engineer Magdaong has


taken his commissioners oath, he will convene the parties to a meeting
before he conduct his survey to partition Lot No. 6386.

Commissioner Magdaong shall notify the parties, their counsels


and this Court of the date and precise time he will conduct his survey
to partition Lot No. 6386. Such survey shall be transparent, and the
parties shall have the option to attend it, assisted by another geodetic
engineer of their choice, if they so wish, and they can raise objection/s
as commissioner Magdaong conduct his survey, and the latter is
hereby required to note any and all objections.

Within a period of fifteen (15) days after commissioner


Magdaong has completed his survey to partition Lot No. 6386, he

273
shall submit with this Court his written report embodying the result of
such survey, furnishing separate copies thereof to the parties thru their
counsels.

Commissioner Magdaongs compensation for his work shall be


taxed as costs against the parties here, pursuant to the above decision.

Send separate copies of this order upon Engineer Ramon


Magdaong, who resides in Daraga, Albay, the parties and their
counsels.*

On 22 October 2001, Dorotea Grageda-Naga and Lina Grageda-Solano filed


a Manifestation stating that the disputed property had already been partitioned in
accordance with MCTCs Order.* It appears, however, that only the one-fourth
share pertaining to the plaintiffs had been segregated.

On 9 May 2002, private respondent Haudiny Grageda and his brother


Hipolito Grageda filed before the MCTC of Camalig-Jovellar a Complaint against
their siblings Juan Moroa Grageda, Aurea Grageda-Villa, Antonio Grageda and
Merlin Grageda for the partition, amongst themselves, of the one-fourth share in
Lot No. 6487 pertaining to their late father, Amado Grageda. The case was
docketed as Civil Case No. C-691.*

On 4 June 2002, Juan Moroa Grageda, Aurea Grageda-Villa, Antonio


Grageda, and Merlin Grageda filed a Motion to Dismiss * Civil Case No. C-691,
alleging, inter alia, that since Haudiny Grageda and Hipolito Grageda had not filed
their separate Answer in Civil Case No. C-655, they are deemed to have adopted
the answer filed by Remigia Grageda, Mosadlino Grageda, and Juan Moroa
Grageda, wherein they manifested that the property now belongs to a third person.

Id. at 56-57.

Id. at 58.

Id. at 59-62.

Id. at 63-64.

274
On 9 September 2003, the MCTC dismissed the Complaint in Civil Case
No. C-691 without prejudice, on the ground that the same is premature inasmuch
as the share pertaining to the Heirs of Amado Grageda had not yet been segregated.
The MCTC held as follows:

This action for Partition commenced by the plaintiffs is


anchored on the Decision dated March 31, 2002, rendered by this
court in Civil Case No. C-655 (RTC No. 9834) entitled DOROTEA
GRAGEDA-NAGA and LINA SOLANO-NAGA vs. REMEGIA
GRAGEDA, JUAN MOROA-GRAGEDA, ANTONIO GRAGEDA,
MERLIN GRAGEDA, [J]UADINI GRAGEDA, HIPOLITO
GRAGEDA, AUREA GRAGEDA, CLARITA GRAGEDA-
IMPERIAL and MOSADLINO GRAGEDA, which provided among
others that Lot No. 6386, including the house built on it, be
partitioned into four equal shares among Remigia Grageda, the heirs
of Amado Grageda, the heirs of Moises Grageda and the heirs of
Lauro Grageda.

In this case (CC No. C-691), the plaintiffs and the defendants
are all children/heirs of the late AMADO GRAGEDA. The complaint
filed in this case prayed that the share adjudged as pertaining to the
heirs of AMADO GRAGEDA, now co-owned by his children be
partitioned.

Section 2, Rule 69 of the Rules of Court provides as follows:

Order for partition, and partition by agreement


thereunder. If after the trial the court finds that the
plaintiff has no right thereto, it shall order the partition of
the real estate among all the parties in interest.
Thereupon, the parties may, if they are able to agree,
make the partition among themselves by proper
instruments of conveyance, and the court shall confirm
the partition so agreed upon by all the parties, and such

275
partition, together with the order of the court confirming
the same, shall be recorded in the registry of deeds of the
place in which the property is situated.

Hence, under the aforequoted rule, there are two stages in every
action for partition.

The first phase is the determination of whether or not a co-


ownership in fact exists and a partition is proper. This phase existed
and ended by virtue of the Decision in Civil Case No. C-655 entitled,
Dorotea Gragera-Naga and Lina Grageda-Solano vs. Remegia
Grageda, et al.

The second phase commences when the parties are unable to


agree upon the partition agreed by the court. In that event, partition
shall be effected for the parties by the court with the assistance of not
more than three commissioners.

A perusal of the records in Civil Case No. C-655 (RTC No.


9834) showed that the approved partition segregated only the share
appertaining to the heirs of LAURO GRAGEDA, and the respective
individual shares appertaining to REMIGIA GRAGEDA, Heirs of
MOISES GRAGEDA, and Heirs of AMADO GRAGEDA (the father
of the parties in this case [C.C. No. C-691] remained unsegregated.
Hence, except for the segregated portion pertaining to the heirs of
LAURO GRAGEDA, the remaining portion of Lot 6386, including a
portion of the house remained undivided.

Nonetheless, as discussed above, the total shares pertaining to


Remigia Grageda, heirs of Moises Grageda, and heirs of Amado
Grageda are not yet segregated, hence, it will still be premature for the
herein plaintiffs to ask for partition of the share pertaining them as
heirs of Amado Grageda.

276
WHEREFORE, for lack of cause of action, and pre-maturity of
action, this case is DISMISSED, without prejudice.*

Haudiny and Hipolito Grageda filed a Motion for Reconsideration, but the
same was denied.

Haudiny Grageda, acting alone, filed on 15 December 2003, a Motion for


the Issuance of an Alias Writ of Execution in Civil Case No. C-655, seeking to
execute the partition of the remaining three-fourths portion of the subject property
among the remaining heirs.

On 22 September 2004, the MCTC directed the parties, within fifteen days
from receipt of its Order, to submit a project of partition of the lot involved in said
case.

Petitioners filed a Motion for Reconsideration of said Order. On 13 January


2005, the MCTC effectively denied the Motion, and directed Geodetic Engineer
Ramon Magdaong to partition the remaining three-fourths undivided part of Lot
No. 6386, holding that it could not add and/or declare that which is not in the
Decision, and that it is simply mandated to carry out its terms.

Petitioners filed a Petition for Certiorari with the RTC of Legazpi City,
docketed as SCA Case No. 10440. The RTC dismissed the Petition on the ground
that it is patently without merit and manifestly intended for delay, and that the
question raised therein is too insubstantial and deserves scant consideration.
Petitioners appealed to the Court of Appeals, which rendered the assailed Decision,
the dispositive portion of which states:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the


appeal at bench must be, as it hereby is, DENIED DUE COURSE,

Id. at 71-72.

277
and consequently DISMISSED. Without special pronouncement as to
costs.*

Thus, this Petition for Review on Certiorari, where petitioners raise the sole
issue:

IS THE COURT OF APPEALS CORRECT IN FINDING THAT


PRIVATE RESPONDENTS CLAIM IN HIS MOTION FOR
EXECUTION FILED IN CIVIL CASE NO. C-655 IS NOT A
COMPULSORY CROSS-CLAIM WHICH HE COULD ENFORCE
AT ANY TIME?*

Petitioners argue that private respondent Haudiny Gragedas claim in his


Motion for Execution in Civil Case No. C-655 filed with the MCTC is in the
nature of a compulsory cross-claim, which he should have ventilated in the said
case by filing an answer separate from that filed by petitioners Remigia Grageda
and Mosadlino Grageda and petitioner Marcelita N. Gragedas late husband, Juan
Moroa Grageda, who were the only defendants to file an Answer thereto. *
Petitioners submit that it was necessary for private respondent Haudiny Grageda to
file a separate Answer in Civil Case No. C-655, because the defendants who
actually filed their Answer disclaimed any interest in the lot involved in said case,
which they averred, already belonged to another person not impleaded as a
defendant therein.* According to petitioners, by private respondent Haudiny
Gragedas failure to file a separate answer in Civil Case No. C-655, he was deemed
to have adopted the answer filed by the answering defendants, and that the
admissions made by the answering defendants in their answer should be binding on
Haudiny Grageda.*

Id. at 33.

Id. at 114.

Id. at 114-115.

Id. at 115.

Id. at 115.

278
Petitioners further argue that since private respondent Haudiny Grageda did
not file a separate Answer or a cross-claim in Civil Case No. C-655, the issue in
said case was limited to whether the plaintiffs therein (Dorotea Grageda Naga and
Lina Grageda-Solano) had the right to a share in Lot No. 6386.* According to
petitioners, the issue of whether the defendants in Civil Case No. C-655 (which
include petitioners and private respondent in the case at bar), could likewise
demand a partition of Lot No. 6386 among themselves was not properly raised in
said case. Thus, there was no opportunity to introduce evidence against private
respondent Haudiny Grageda in Civil Case No. C-655, because he did not contest
the claim made by the answering defendants in their Answer therein that the lot
involved in said case already belongs to a third person.*

Presented with these arguments, the very same arguments raised by


petitioners with the MCTC and the RTC, the Court of Appeals held that the MCTC
was correct in ordering the execution of its 31 March 2000 Decision, with respect
to the remaining of the subject property. According to the Court of Appeals,
petitioners arguments were baseless, since there was no evidence with respect to its
claim that the subject property was now owned by a third person, and since the
MCTC Decision has already become final and executory. Thus:

It should be easy enough to see that this cross-claim hypothesis


which is the petitioners mainstay in this appeal is a subtle, cunning
ruse or attempt by the petitioners to deprive private respondent
Haudiny Grageda, son of the late Amado Grageda, - by way of
perceived procedural technicality, - of what is lawfully and rightfully
his share in the subject lot as a co-heir and co-owner under the Civil
Code of the Philippines. For, as the MCTC pointed out in its decision
in Civil Case No. C-655, the defendants therein (Remigia Grageda,
Juan Grageda and Mosadlino Grageda) did not adduce any credible
proof that Lot No. 6386 was included (in) such division. Further, there
is no evidence on record showing that the plaintiffs predecessor-in-
interest, the late Lauro Grageda, has agreed to dispose (of) or part
away [with] in favor of another person [with] his share (in) Lot No.
6386. The same court moreover noted that As to the claim by the
defendants that a third person (i.e. Rosadel N. Grageda) has acquired
ownership over Lot No. 6386, there is no iota of proof adduced on

Id.

Id. at 116.

279
record to lend credence to such claim. This Court finds such claim
baseless. Anyway, the admission by the defendants Remigia Grageda
and Juan Moroa Grageda that they were staying (in) the house built
over Lot No. 6386 negates such claim. We are bound by this finding
of the MCTC judgment, as this has already attained finality, and is,
therefore, irrevocable.

Quite apart from the foregoing, Haudiny Grageda (and his


brother Hipolito Gragedas) failure or inability to tender an answer in
Civil Case No. C-655 should not be held up against them. For these
two must have known, as they are presumed to know, that an action
for partition, is, as a general proposition, imprescriptible (last
paragraph of Art. 494 of the Civil Code). In point of fact, on March
21, 2002 these two filed a complaint for partition with damages (Civil
Case No. 691 of the MCTC of Camalig-Jovellar) against their siblings
Juan Moroa Grageda, Aurea Grageda-Villa, Antonio Grageda and
Marlin Grageda in line with the decision of the same court in Civil
Case No. C-655. And, even as this action (Civil Case No. C-691) was
dismissed on the ground that it was premature (See MCTC Order
dated Sept. 9, 2003 in civil Case No. C-691), for the reason that while
the first phase of a partition proceeding under Sec. 2, Rule 69 of the
Rules of Court had been ended and concluded by a decision in Civil
Case No. 655, the second phase had yet to be finalized and concluded,
the required three commissioners for the partition not having been
appointed by the court yet. To be noted, too, is the fact that said
dismissal was without prejudice.

Nevertheless, it cannot escape notice that upon a timely Motion


for Reconsideration and Appointment of Commissioners the MCTC,
in an order dated February 2, 2004, ruled that As to the prayer for
appointment of commissioner, this court is of the opinion that the
same may be proper in Civil Case No. C-655 and not in this case.
What is more, the decision in this case has obviously become final
and executory, as stressed in the January 13, 2005 order of MCTC
Judge Nimfa C. Gomez, who therein hastened to add that This court
cannot add and/or declare that which is not in the Decision, but is
simply mandated to carry out its terms. In order to do this, the Ex
Parte Manifestation of Atty. Hermel R. Marantal stated in No. 2 above
280
(viz. there is now a need to order the appointed commissioner, Engr.
Ramon Magdaong, to proceed with the partition of said remaining
shares so as to fully implement the final and executory judgment of
this Honorable Court dated March 31, 2000 and for said
commissioner to thereafter submit his report) is GIVEN DUE
COURSE.*

We agree with the Court of Appeals.

The cross-claim argument presented by petitioners is directed against the


correctness of the judgment and, thus, should have been the subject of an appeal
from the 31 March 2000 MCTC Decision. These arguments cannot be threshed out
in a Petition for Certiorari against a Motion for Execution of such Decision.

Petitioners argument that Civil Case No. C-655 was tried and decided on the
basic issue of whether the plaintiffs therein (Dorotea Grageda Naga and Lina
Grageda-Solano), had a right to a share in Lot No. 6386, is contradicted by the
dispositive portion of the Decision of the MCTC and the subsequent 16 January
2001 Order of the MCTC. The dispositive portion of the final and executory
Decision of the MCTC on Civil Case No. C-655, clearly ordered the partition of
Lot No. 6386 into four equal shares. One of those shares was ordered to be
awarded to the Heirs of Amado Grageda, of which private respondent Haudiny
Grageda is a part. The 16 January 2001 Order of the MCTC (commissioning
Geodetic Engineer Ramon Magdaong to conduct a survey of the subject lot, to
carry out the partition, and to submit his report thereon), on the other hand,
confirms that the MCTC intended in its Decision to order the partition of Lot No.
6386 into four equal shares, and not merely to segregate the one-fourth share of the
plaintiffs therein.

It is basic that when there is a conflict between the dispositive portion or


fallo of a Decision and the opinion of the court contained in the text or body of the
judgment, the former prevails over the latter. * An order of execution is based on the

Id. at 30-32.

PH Credit Corporation v. Court of Appeals, 421 Phil. 821, 833 (2001).

281
disposition, not on the body, of the Decision. * This rule rests on the theory that the
fallo is the final order while the opinion in the body is merely a statement ordering
nothing.*

Indeed, the foregoing rule is not without an exception. We have held that
where the inevitable conclusion from the body of the decision is so clear as to
show that there was a mistake in the dispositive portion, the body of the decision
will prevail.* The case at bar, however, does not fall under this exception. The
MCTC Decision, while primarily dealing with the right of the plaintiffs to their
one-fourth share in the subject property, likewise discussed, albeit sparingly, the
ownership of the entire Lot No. 6386, and not just the right of the plaintiffs thereto.
Specifically, the Decision discussed that the allegation of third-person ownership is
baseless due to the complete absence of evidence proving such claim, and the
admission by Remigia Grageda and Juan Moroa Grageda that they were staying in
the house built on Lot No. 6386.*

Finally, petitioners contention that Haudiny Gragedas failure to file a


separate Answer in Civil Case No. C-655 resulted in his adopting the Answer filed
by the answering defendants, including the admissions thereon, is unavailing. The
principle petitioners are evidently referring to is based on Rule 9, Section 3(c) of
the Rules of Court, which provides:

(c) Effect of partial default. When a pleading asserting a claim


states a common cause of action against several defending parties,
some of whom answer and the others fail to do so, the court shall try
the case against all upon the answers thus filed and render judgment
upon the evidence presented.

Thus, in Tanhu v. Judge Ramolete,* we held:

Id. at 833-834.

Rosales v. Court of Appeals, 405 Phil. 638, 655 (2001).

Id.

Rollo, p. 54.

160 Phil. 1101, 1131-1132 (1975).

282
Stated differently, in all instances where a common cause of
action is alleged against several defendants, some of whom answer
and the others do not, the latter or those in default acquire a vested
right not only to own the defense interposed in the answer of their
co-defendant or co-defendants not in default but also to expect a
result of the litigation totally common with them in kind and in
amount whether favorable or unfavorable. The substantive unity of
the plaintiffs cause against all the defendants is carried through to its
adjective phase as ineluctably demanded by the homogeneity and
indivisibility of justice itself. Indeed, since the singleness of the cause
of action also inevitably implies that all the defendants are
indispensable parties, the court's power to act is integral and cannot be
split such that it cannot relieve any of them and at the same time
render judgment against the rest. Considering the tenor of the section
in question, it is to be assumed that when any defendant allows
himself to be declared in default knowing that his co-defendant
has already answered, he does so trusting in the assurance implicit
in the rule that his default is in essence a mere formality that
deprives him of no more than the right to take part in the trial
and that the court would deem anything done by or for the
answering defendant as done by or for him. The presumption is that
otherwise he would not have seen to it that he would not be in default.
Of course, he has to suffer the consequences of whatever the
answering defendant may do or fail to do, regardless of possible
adverse consequences, but if the complaint has to be dismissed in so
far as the answering defendant is concerned, it becomes his
inalienable right that the same be dismissed also as to him. It does not
matter that the dismissal is upon the evidence presented by the
plaintiff or upon the latter's mere desistance, for in both contingencies,
the lack of sufficient legal basis must be the cause. x x x.

The effects, therefore, of a failure to file a separate Answer when other co-
defendants (against whom a common cause of action was alleged) had already
filed theirs, are limited to the following:

283
1. While the non-answering defendants may be declared in default, the
court would still try the case against them on the assumption that they
are deemed to have adopted the Answer of the answering defendants;
and

2. If declared in default, the defaulting party is deprived of no more


than the right to take part in the trial. Consequently, the result of
the litigation, whether favorable or unfavorable, shall affect and bind
the defaulting party and the answering defendant with equal force and
effect.

Thus, in this case, while it is implied that Haudiny Grageda has adopted the
Answer of the answering defendants in Civil Case No. C-655, such adoption
cannot result in a waiver of private respondent Haudiny Gragedas right to take part
in the favorable results of the litigation. Under the principle of renuntiatio non
prsumitur, a waiver of right may not be performed unless the will to waive is
indisputably shown by him who holds the right.* Private respondent Haudiny
Gragendas supposed waiver of his right to a share in the subject property must
therefore be express* and cannot be lightly presumed from his failure to tender a
separate Answer to the Complaint in Civil Case No. C-655. As the result of the
litigation as to the answering defendants, whether favorable or unfavorable, would
likewise be applicable to Haudiny Grageda, the disposition of the MCTC (that the
subject property be partitioned into four equal shares, one share of which to be
awarded to the Heirs of Amado Grageda) should be adjudged applicable to him.

WHEREFORE, the instant Petition is hereby DENIED. The Decision of


the Court of Appeals dated 31 August 2005 is AFFIRMED. No costs.

SO ORDERED.

Testate Estate of Mota. v. Serra, 47 Phil. 464, 469-470 (1925).

Id.

284
MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ ANTONIO EDUARDO B. NACHURA


Associate Justice Associate Justice

RUBEN T. REYES
Associate Justice

285
ATTESTATION

I attest that the conclusions in the above Decision were reached in


consultation before the case was assigned to the writer of the opinion of the Courts
Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the above

286
Decision were reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

287
FIRST DIVISION

[G.R. No. 127683. August 7, 1998]

LETICIA P. LIGON, petitioner, vs. COURT OF APPEALS and IGLESIA NI


CRISTO, respondents.

DECISION
DAVIDE, JR., J.:

This petition, as appeal under Rule 45 and at the same time as a special civil
action for certiorari under Rule 65 of the Rules of Court, seeks to reverse the
Decision* of the Court of Appeals of 11 September 1996 in CA-G.R. SP No. 40258
and its Resolution* of 3 January 1997 denying petitioners motion for
reconsideration of the Decision.
As far as could be gathered from the voluminous pleadings filed by the parties
in this case and in CA-G.R. SP No. 40258, the factual antecedents are as follows:
Petitioner Leticia P. Ligon (hereafter LIGON) is the mortgagee in three deeds
of mortgage covering two parcels of land located along Tandang Sora, Barangay
Culiat, Quezon City, covered by Transfer Certificates of Title (TCT) Nos. 170567
(now RT-26521) and 176616 (now RT-26520) belonging to the Islamic Directorate
of the Philippines (hereafter IDP). These deeds of mortgage were executed by
certain Abdulrahman R.T. Linzag and Rowaida Busran-Sampaco on 21 March
1988, 25 April 1988, and 29 July 1988 as security for the loans of P3 million, P2
million, and P4 million, respectively, which IDP allegedly obtained from LIGON.*
It must be pointed out that two groups had earlier vied for control of the IDP,
namely, (1) the Carpizo group headed by Engr. Farouk Carpizo and (2) the Abbas
group led by Zorayda Tamano and Atty. Firdaussi Abbas. In its decision of 3
October 1986 in SEC Case No. 2687, the Securities and Exchange Commission
(SEC) declared null and void the election of both groups to the IDP Board of

Per Luna, A., J., with Barcelona and Valdez, JJ., concurring. Annex A of Petition, Rollo, 65-91;

Annex C of Petition, Rollo, 115-126.

Partial Judgment in Civil Case No. Q-91-10494, 3-5; Original Record (OR), Vol. III, 1,169-1,171;
Complaint, 6; OR, Vol. I, 8. The Complaint stated that copies of said mortgages were attached thereto as
Annexes D, E, and F, but said annexes were not in the record.

288
Trustees. Nevertheless, on 20 April 1989, the Carpizo group caused the signing of
an alleged Board Resolution authorizing the sale of the two parcels of land
mentioned above to private respondent Iglesia ni Cristo (hereafter INC). The sale
was evidenced by a Deed of Absolute Sale i dated 20 April 1989, wherein IDP and
INC stipulated that the former would evict all squatters and illegal occupants in the
two lots within forty-five (45) days from execution of the sale.
IDP failed to clear the lots of squatters; hence, on 19 October 1990 INC filed
with the Regional Trial Court (RTC) of Quezon City a complaint for specific
performance with damages, which was docketed as Civil Case No. Q-90-6937.
On 30 May 1991, IDPs original Board of Trustees headed by Senator Mamintal
Tamano, or the Tamano group, filed a petition with SEC to annul the sale of the
two lots to INC. The case was docketed as SEC Case No. 4012. On 5 July 1993,
the SEC promulgated its decision in SEC Case No. 4012 annulling, inter alia, the
sale of the two parcels of land to INC. Aggrieved, INC filed a special civil action
for certiorari before the Court of Appeals, which was docketed as CA-G.R. SP No.
33295. In its decision of 28 October 1994, the Court of Appeals granted INCs
petition and set aside the portion of the SEC decision declaring the sale null and
void. Consequently, the Tamano group appealed to this Court in a petition for
review in G.R. No. 117897 entitled Islamic Directorate of the Philippines v. Court
of Appeals.
Meanwhile, on 12 September 1991, the RTC rendered a partial judgment in
Civil Case No. Q-90-6937; and on 7 October 1991, it rendered an amended partial
judgment granting the reliefs prayed for by INC except the prayer for damages,
which was to be resolved later.
On 31 October 1991, the INC filed with the RTC of Quezon City a complaint ii
for the annulment of the deeds of mortgage over the two lots, impleading as
defendants therein LIGON, Abdulrahman R.T. Linzag, Rowaida Busran-Sampaco,
and the IDP. The case was docketed as Civil Case No. Q-91-10494. In its answer, iii
IDP interposed a cross-claim against LIGON. On the other hand, LIGON filed an
answeriv with counterclaim; a cross-claim against IDP; and a third-party complaint
against Pablo de Leon, Guillermo Vina, and Aida Vina.
Later, LIGON filed a motionv in Civil Case No. Q-91-10494 to declare INC
and IDP in default for their failure to file an answer to her counterclaim and cross-
claim, respectively. She further prayed that she be allowed to present evidence ex-
parte. INC opposedvithe motion, saying that some of the grounds raised by LIGON
in her counterclaim were sufficiently dealt with in INCs complaint, while the other
grounds were in the nature of a compulsory counterclaim and did not therefore
require an answer. On 30 September 1992, the trial court granted LIGONs motion
289
and allowed LIGON to present evidence ex-parte to support her cross-claim
against IDP.vii
Then, on 2 August 1995, LIGON filed in Civil Case No. Q-91-10494, an
urgent motionviii for rendition of partial judgment against IDP in the cross-claim for
the foreclosure of the mortgages. On 27 October 1995, the trial court rendered a
partial judgmentix (1) ordering IDP to pay LIGON the amounts of P3 million, P2
million, and P4 million with interest at 36% per annum compounded annually from
the dates the loans became due and demandable; and (2) directing the foreclosure
sale of the mortgaged properties in case of non-payment of said amounts.
On 21 November 1995, INC filed a Motion for Reconsiderationx of the partial
judgment, which was, however, denied by the trial court in its Order xi of 20 March
1996 on the following grounds:
. . . [T]he INC has no personality to seek a reconsideration of the partial
judgment.
Firstly, the judgment involves a cross-claim in which INC is not a party; the
right to appeal from a judgment or to move for a reconsideration thereof is a right
inherent to the party in the cross-claim affected adversely by the judgment. Section
2, Rule 3 of the Rules of Court provides that a case shall be prosecuted and
defended in the name of the real party-in-interest. INC is not a party to the
mortgages hence it is not a real party-in-interest to the foreclosure thereof.
...
Not being a party to the cross-claim, as indeed it cannot be being the plaintiff
and cross-claim being a suit between co-parties, INC has no right to file the instant
motion.
Secondly, INC is the plaintiff in this case that sued IDP. Thus, the interests of
INC as plaintiff are adverse to or in conflict with those of IDP, a defendant. The
plaintiff cannot take up the cudgels for an adverse party, the defendant.
Thirdly, the right of the INC to file this motion rests on its being a subsequent
purchaser of the property or its being the new owner; thus, it claims it steps into the
shoes of IDP. The right of IDP as a party to a case should be distinguished from its
rights as owner-seller of the property, especially in this case where not only did
INC sue IDP but IDP also chose not to exercise its right to move for a
reconsideration of the partial judgment or to appeal therefrom.
More importantly, even assuming arguendo that INC is now the new owner of
the mortgaged property, the fact remains that the sale to it on April 20, 1989, is
admittedly after the execution of the real estate mortgages in 1988; the mortgages
290
were registered in 1991 while the sale was never inscribed in the TCTs of the IDP.
The INC is simply a subsequent buyer whose rights were explicitly defined in the
case of Limpin vs. IAC (supra).
Finally, this Court has already ruled that INC is not a party to the mortgages
and may have no right to question the validity thereof ....
Consequently, INC filed with the Court of Appeals a petition xii for certiorari
with prayer for the issuance of a temporary restraining order to annul the
aforementioned partial judgment and the order denying private respondents motion
for reconsideration. The case was docketed as CA-G.R. SP No. 40258.
In its decisionxiii of 11 September 1996 in CA-G.R. SP No. 40258, the Court of
Appeals ruled in favor of INC and justified its ruling in this wise:
Technically, while the IDP can be declared in default for failure to file its
answer to Ligons counterclaim, and that Ligons motion to present her evidence ex-
parte against the IDP is not irregular, the respondent court should not have
rendered a partial judgment based on the evidence presented by Ligon, without
giving the INC an opportunity to present its evidence contra as well as to
substantiate its allegations in the complaint that the mortgage contracts are null and
void and of no binding force and effect .
...
Had respondent court, upon motion by respondent Ligon allowed her to
introduce her evidence, and afterwards afforded the INC of the opportunity to be
heard in its complaint to prove that the loans and the mortgages are invalid, such
recourse could have prevented the most mischievous consequences in the
administration of justice to suitors, that of depriving one of his day in court -- the
affording of an opportunity to be heard on the other.
...
We find sufficient basis to hold that respondent court committed grave abuse of
discretion tantamount to lack or in excess of jurisdiction in rendering a partial
judgment at that stage of the proceedings, the dispositive portion of which would
even indicate that respondent Ligon was awarded more than what she prayed for.
We further find that respondent court exceeded its jurisdiction in rendering
partial judgment in favor of respondent Ligon without first giving petitioner its day
in court since the issues in the respective claims of the parties against each other
are interrelated and inseparably intertwined with one another -- one maintains that
the mortgages are null and void, while the other asks for foreclosure of the same
mortgage contracts -- respondent court could have deferred disposition of one
291
claim adverse to the claim of the other until the claim of both are heard and the
parties afforded the opportunity to present their evidence in support of their
opposing claim.
This decision prompted LIGONs Urgent Motions to Vacate Null and Void
Decision Dated September 11, 1996, Dismiss the Petition and/or for
Reconsiderationxiv and Motion to Recuse Associate Justices Artemon D. Luna,
Ramon A. Barcelona, and Salvador J. Valdez, Jr., xv which was accompanied by
Amended Urgent Motions to Vacate Null and Void Decision Dated September 11,
1996, Dismiss the Petition and/or for Reconsideration. xvi These were denied by the
Court of Appeals in its Resolutionxvii of 3 January 1997.
Undaunted by the foregoing adversities in CA-G.R. SP No. 40258, LIGON
filed the instant petition on 27 February 1997. LIGON claims that respondent
Court of Appeals (1) acted with grave abuse of discretion in refusing to order INC
to implead or include IDP as an indispensable party in the petition for certiorari;
(2) acted without jurisdiction in annulling the decision of the lower court; and (3)
erred in not dismissing INCs petition because INC was not aggrieved by the trial
courts decision and was guilty of forum-shopping.
LIGON asserts that IDP was an indispensable party in INCs action in CA-G.R.
SP No. 40258 because IDP is the mortgagor and defendant in the foreclosure suit
instituted by petitioner Ligon before the lower court; it has such interest in the
controversy that a final decree would necessarily affect its rights and interests; and,
an action to annul a contract cannot be maintained without joining both contracting
parties as defendants or respondents. Since IDP was not impleaded in said case, the
petition should have been dismissed pursuant to Section 7, Rule 3 of the Rules of
Court.xviii The Court of Appeals, therefore, acquired no jurisdiction over the case;
and its decision was a total nullity.
As to the second ground, LIGON claims that the Court of Appeals was
powerless to annul the trial courts judgment because IDP was not a party in CA-
G.R. SP No. 40258.
Regarding the third ground, LIGON asserts that INC was not aggrieved by the
trial courts decision because at no time was it a party to the action for foreclosure
of the mortgages; moreover, INC did not show that it would suffer substantial
injury or manifest injustice in case of foreclosure of the mortgages. She asserts that
IDP was the aggrieved party, then tirelessly reiterates her argument that IDP should
have been joined as petitioner or respondent in the certiorari proceeding.
As to forum-shopping, LIGON maintains that both litis pendentia and res
judicata [were] irrepressibly present and attendant in INCs action before the

292
appellate court. INC filed three actions, in all of which there was identity of (1)
parties or interests represented, (2) right or causes, and (3) reliefs sought. Civil
Case No. Q-90-6937 was for the enforcement of the stipulation in the Deed of
Absolute Sale between INC and IDP obliging IDP to clear the properties sold of
squatters. In Civil Case No. Q-91-10494, INC sought to stop the foreclosure of the
mortgages. The third case was CA-G.R. SP. No. 40258, wherein the same relief
was being sought by INC, that is, to enjoin the foreclosure of the mortgages.
LIGON claims that the issues in the three cases were so intertwined that the
resolution of any one would constitute res judicata in the others.
For its part, INC argues that IDP was not an indispensable party in CA-G.R. SP
No. 40258. LIGONs reliance on Section 7, Rule 3 of the Rules of Court on
compulsory joinder of indispensable parties is misplaced. INC contends that the
rules on ordinary civil actions, including said Section 7, apply only suppletorily to
special civil actions. Section 5, Rule 65 of the Rules of Court declares that the
defendants in a special civil action for certiorari shall be the person or persons
interested in sustaining the proceeding in court to be joined with the court or judge
whose act or omission is being contested. It is illogical and absurd to argue that
IDP is interested in defending the validity of an adverse partial judgment.
As regards LIGONs second ground, INC counters that the special civil action
for certiorari was an independent action and not a continuation of the proceedings
before the trial court. Thus, not all the parties in the case at the trial court could be
included in the independent action for certiorari.
Anent the third ground, INC maintains that it was aggrieved by the foreclosure
judgment because, being the new owner of the subject lots, it would suffer
substantial injury and manifest injustice from the foreclosure of the mortgages.
INC relies on Article 1609 of the Civil Code, which subrogates the vendee to the
rights and actions of the vendor.
INC claims it did not engage in forum-shopping, as the cases it filed involved
different issues. Civil Case No. Q-90-6937 involved the validity of the sale of the
IDP properties to INC; Civil Case No. Q-91-10494, the validity of the mortgages;
and CA-G.R. SP No. 40258, the validity of the partial judgment rendered by the
trial court. The judgment in one case was not determinative of the issues in the
other cases.
As to the trial courts declaration that IDP was in default, INC contends that the
same was illegal, since IDP did not have to file an answer to LIGONs cross-claim
pursuant to Section 4, Rule 18 of the Rules of Court.xix
INC further argues that LIGONS cross-claim for foreclosure of the mortgages

293
could not proceed ahead of the main action for annulment of said mortgages.
Meanwhile, on 14 May 1997, this Court promulgated its decision xx in G.R. No.
117897 (Islamic Directorate of the Philippines v. Court of Appeals). It set aside the
decision of the Court of Appeals of 28 October 1994 in CA-G.R. SP No. 33295 and
upheld the decision of the SEC holding null and void the sale of the two lots to
INC. This Court clarified and decided the issue therein as follows:
The main question though in this petition is: Did the Court of Appeals commit
reversible error in setting aside that portion of the SECs Decision in SEC Case No.
4012 which declared the sale of two (2) parcels of land in Quezon City between the
IDP-Carpizo Group and private respondent INC as null and void?
We rule in the affirmative.
There can be no question as to the authority of the SEC to pass upon the issue
as to who among the different contending groups is the legitimate Board of
Trustees of the IDP since this is a matter properly falling within the original and
exclusive jurisdiction of the SEC by virtue of Sections 3 and 5 (c) of Presidential
Decree No. 902-A:
...
. . . If the SEC can declare who is the legitimate IDP Board, then by parity of
reasoning, it can also declare who is not the legitimate IDP Board. This is precisely
what the SEC did in SEC Case No. 4012 when it adjudged the election of the
Carpizo Group to the IDP Board of Trustees to be null and void. By this ruling, the
SEC in effect made the unequivocal finding that the IDP-Carpizo Group is a bogus
Board of Trustees. Consequently, the Carpizo Group is bereft of any authority
whatsoever to bind IDP in any kind of transaction including the sale or disposition
of IDP property.
...
Nothing thus becomes more settled than that the IDP-Carpizo Group with
whom private respondent INC contracted is a fake Board.
Premises considered, all acts carried out by the Carpizo Board, particularly the
sale of the Tandang Sora property, allegedly in the name of the IDP, have to be
struck down for having been done without the consent of the IDP thru a legitimate
Board of Trustees.
...
The Carpizo Group-INC sale is further deemed null and void ab initio because
of the Carpizo Groups failure to comply with Section 40 of the Corporation Code

294
pertaining to the disposition of all or substantially all assets of the corporation:
...
The Tandang Sora property, it appears from the records, constitutes the only
property of the IDP. Hence, its sale to a third-party is a sale or disposition of all the
corporate property and assets of IDP falling squarely within the contemplation of
the foregoing section. For the sale to be valid, the majority vote of the legitimate
Board of Trustees, concurred in by the vote of at least 2/3 of the bona fide
members of the corporation should have been obtained. These twin requirements
were not met as the Carpizo Group which voted to sell the Tandang Sora property
was a fake Board of Trustees, and those whose names and signatures were affixed
by the Carpizo group together with the sham Board Resolution authorizing the
negotiation for the sale were, from all indications, not bona fide members of the
IDP as they were made to appear to be .
All told, the disputed Deed of Absolute Sale executed by the fake Carpizo
Board and private respondent INC was intrinsically void ab initio.
Before addressing the issues raised in the present petition, it must be recalled
that LIGON describes her petition as an appeal under Rule 45 and at the same time
as a special civil action of certiorari under Rule 65 of the Rules of Court. This
Court cannot tolerate such a chimera. The remedies of appeal and certiorari are
mutually exclusive and not alternative nor successive. xxi It is settled that the
averments in the complaint, and not the nomenclature given by the parties,
determine the nature of the action.xxii Considering that this petition primarily
consists of allegations charging the Court of Appeals with having acted with grave
abuse of discretion and without jurisdiction, this Court shall treat this petition as a
special civil action for certiorari under Rule 65 of the Rules of Court.
Returning to the instant petition, the first issue must be resolved against
LIGON.
At the time CA-G.R. SP No. 40258 was filed, the law on who should be parties
in a special civil action for certiorari were Sections 1 and 5 of Rule 65 of the Rules
of Court,xxiii which provided:
Section 1. Petition for certiorari. -- When any tribunal, board, or officer
exercising judicial functions, has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion and there is no appeal, nor any plain,
speedy, and adequate remedy in the ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper court alleging the facts with
certainty and praying that judgment be rendered annulling or modifying the
proceedings, as the law requires, of such tribunal, board or officer.
295
Sec. 5. Defendants and costs in certain cases. -- When the petition filed relates
to the acts or omissions of a court or judge, the petitioner shall join, as parties
defendant with such court or judge, the person or persons interested in sustaining
the proceedings in the court....
There can be no dispute on the fact that insofar as the partial decision in Civil Case
No. Q-91-10494, challenged in CA-G.R. SP No. 40258, is concerned, IDP can by
no yardstick be considered as a party interested in sustaining the challenged partial
decision pursuant to the aforequoted Section 5. In fact, IDP was also an aggrieved
party in said partial decision. It could have challenged the partial decision and the
previous order declaring it in default.
Neither is there merit in the second ground relied upon by LIGON. While
LIGON may be correct in her argument that a cross-claim must be answered, and
the party who fails to file an answer thereto may be declared in default, xxiv one
should not lose sight of the true nature of a cross-claim. Section 7xxv of Rule 6 of
the Rules of Court defines a cross-claim as any claim by one party against a co-
party arising out of the transaction or occurrence that is the subject matter either of
the original action or of a counterclaim. It may include a claim that the party
against whom it is asserted is or may be liable to the cross-claimant for all or part
of a claim asserted in the action against the cross-claimant. The answer then to the
cross-claim is meant to join the subsidiary issues between the co-parties in relation
to the opposing partys claim against the cross-claimant.xxvi Needless to state, until
the principal issue between the plaintiff and the defendant cross-claimant shall
have been heard and determined, it would be premature to decide the cross-claim.
It may also be pointed out that in her cross-claim against IDP, LIGON alleged
that IDP unjustly refused to pay the loans it contracted from her, which had
become due and demandable. She thus prayed that the trial court render judgment
1. Ordering IDP, INC, VINA and DE LEON to pay solidarily defendant,
third party plaintiff and cross claimant LIGON the sum of P9 Million
plus stipulated interest of 36% per annum from the due dates of the
obligations within ten (10) days from finality of the judgment and
attorneys fees of P900,000.00 plus appearance fee of P1,000.00 per
appearance in Court and conferences with adverse parties as attorneys
fees;
2. Should they fail to pay the said sums within the abovementioned period
of time, ordering the foreclosure of the real estate mortgages, the sale at
public auction of the property subject matter of said mortgages and the
application of the proceeds thereof to the satisfaction of the sums due
defendant and cross claimant LIGON, including the taxes paid, attorneys
296
fees and costs of foreclosure and litigation.
Earlier however, IDP charged in its Answer with Cross-claimxxvii that LIGON
should have known that the persons she transacted with had no authority to bind
IDP to the loans and mortgages she was trying to enforce. Further, IDP alleged that
it never benefited from the money loaned from LIGON. Thus, IDP argued that as
far as it was concerned, the subject loans and mortgages were null and void. IDP
prayed that judgment be rendered
1. Declaring that the mortgages executed by ATTY. ABDULRAHMAN
LINZAG and MRS. ROWAIDA BUSHRAN SAMPACO and annotated
in the Transfer Certificates of Title are null and void as far as defendant
IDP is concerned;
2. Ordering and directing the Register of Deeds of Quezon City to cancel
the registered or annotated mortgages on the aforementioned Transfer
Certificates of Title;
3. Ordering the cross-claim defendant Ligon to deliver the original of the
reconstituted Transfer Certificates of Title.
From the foregoing, it is inevitable that IDPs cross-claim effectively joined the
subsidiary issues between the co-parties. Requiring an answer to LIGONs cross-
claim would be superfluous. Consequently, declaring IDP in default on the cross-
claim was improper.
LIGONs contention that INC was not aggrieved by the trial courts order of
foreclosure of mortgages cannot be taken seriously. INCs principal cause of action
was the annulment of the mortgages. The partial decision resolved this issue
against INC through the backdoor and without INC having presented its evidence.
In short, the trial court disregarded the fact that LIGONs cross-claim was
connected with, or dependent on, the subject of INCs original complaint.
As regards the final issue, we hold that INC did not engage in forum-shopping.
There is forum-shopping when as a result of an adverse decision in one forum or, it
may be added, in anticipation thereof, a party seeks a favorable opinion in another
forum through means other than appeal or certiorari,xxviii raising identical causes of
action, subject matter, and issues.xxix Forum-shopping exists when two or more
actions involve the same transactions, essential facts, and circumstances; and raise
identical causes of action, subject matter, and issues.xxx Yet another indication is
when the elements of litis pendencia are present or where a final judgment in one
case will amount to res judicata in the other case. The test is whether in the two or
more pending cases there is an identity of (a) parties, (b) rights or causes of action,
and (c) reliefs sought.xxxi
297
INC instituted Civil Case No. Q-90-6937 to compel IDP to comply with its
undertaking to clear of squatters the lots the latter sold to the former. On the other
hand, in Civil Case No. Q-91-10494 INC sought to annul the mortgages and enjoin
LIGON from foreclosing them. The two cases involved different transactions and
sought different reliefs. Moreover, INC won in Civil Case No. Q-90-6937; hence,
it cannot be said that the later Civil Case No. Q-91-10494 was filed as a result of
an adverse decision in one forum. On the other hand, CA-G.R. SP No. 40258 was a
special civil action for certiorari, which was instituted, and correctly so, in reaction
to an adverse partial decision in Civil Case No. Q-91-10494.
Unfortunately, the dismissal of the instant petition cannot inure to the benefit of
INC, since its opposition to LIGONs cause has been rendered moot and academic
by the decision in G.R. No. 117897 declaring null and void the sale of the IDP
properties to INC. Upon the other hand, the validity of the deeds of mortgage in
favor of LIGON has yet to be settled in Civil Case No. Q-91-10494.
WHEREFORE, the instant petition is DISMISSED for lack of merit.
Costs against petitioner LETICIA P. LIGON.
SO ORDERED.
Vitug, Panganiban, and Quisumbing, JJ., concur.
Bellosillo, J. - took no part.

298
Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

HERMINIO T. DISINI, G.R. No. 175730


Petitioner,

- versus - Present:

THE HONORABLE CORONA, C. J., Chairperson,


SANDIGANBAYAN, THE CARPIO,*
REPUBLIC OF THE VELASCO, Jr.,
PHILIPPINES, as represented by DEL CASTILLO, and
the OFFICE OF THE PEREZ, JJ.
SOLICITOR GENERAL (OSG),
and the PRESIDENTIAL
COMMISSION ON GOOD
GOVERNMENT (PCGG), Promulgated:
Respondents. July 5, 2010
x-------------------------------------------------------------------x

DECISION

DEL CASTILLO, J.:

The simultaneous availment of judicial remedies from different fora for


exactly the same ultimate relief and involving the same issue constitutes forum-
shopping. It is a prohibited malpractice, condemned for trifling with the courts and

*
In lieu of Associate Justice Teresita J. Leonardo-De Castro, per raffle dated June 28, 2010.

299
their processes.

The Case

The instant Petition for Certiorari and Prohibition* under Rule 65 of the Rules of
Court seeks to:
1. Annul the December 18, 2006 Resolution of the Sandiganbayan (respondent
court), which denied petitioners Motion to Lift Default Order and to Admit
Answer, and consequently allowed respondent Republic to present evidence
ex-parte in Civil Case No. 0013 entitled Republic of the Philippines v.
Herminio T. Disini, et al.;

2. Annul the orders or declarations made by the Sandiganbayan in open court


during the hearing of December 8, 2006, which prevented petitioner from
commenting ad cautelam on the Republics Urgent Manifestation and Motion
(hereinafter the Urgent Manifestation and Motion) to Present Evidence Ex-
Parte;*

3. Prohibit the Sandiganbayan from continuing with the ex-parte proceedings


and rendering a judgment by default;

4. Secure injunctive relief to enjoin the Sandiganbayan from conducting further


proceedings in Civil Case No. 0013 and from rendering judgment on the basis
of the ex-parte proceedings; and

Rollo, pp. 3-75.

Sandiganbayan rollo, Vol. IV, pp. 470-475. The Urgent Manifestation and Motion prays for the resolution of
PCGGs earlier motion to drop Sison as party-defendant (filed on September 17, 2002; id. at 374-377;
considered submitted for resolution by virtue of Sandiganbayans Order dated September 20, 2002; id. at 411)
and the motion-to-intervene filed by strangers to the amended complaint (filed September 15, 2006; id. at 428-
432). In the event that these motions are resolved in PCGGs favor, they also pray that they be allowed to present
evidence ex-parte.

300
5. Declare null and void all the proceedings conducted as against petitioner
because of lack of jurisdiction over his person, violation of his Constitutional
rights to due process and fair play, and the arbitrary acts of respondent court
which effectively ousted it of jurisdiction to hear the case.*

In sum, petitioner assails the Sandiganbayans refusal to set aside its Order of
Default against petitioner, as well as its acts which allegedly reveal its inclination to
railroad the proceedings and render a precipitate judgment by default against petitioner.*

Factual Antecedents

On July 23, 1987, the Republic (through the Presidential Commission on Good
Government [PCGG]) filed with the Sandiganbayan a civil complaint for reconveyance,
reversion, accounting, restitution, and damages against petitioner Herminio T. Disini
(Disini), spouses Ferdinand and Imelda Marcos (Marcos spouses) and Rodolfo B. Jacob
(Jacob).* The same was docketed as Civil Case No. 0013 and assigned to the First
Division of the Sandiganbayan (respondent court). Summons for Disini was issued on
July 29, 1987.* Per Sheriffs Return dated September 4, 1987, * the summons* was
unserved on the ground that petitioner did not live at the given address, which was No. 92
Kennedy St., Greenhills, San Juan, Metro Manila. The occupants of said address were the
Roman family.

Rollo, pp. 852-853.

Id. at 853.

Sandiganbayan rollo, Vol. I, pp. 1-22.

Id. at 23.

Id. at 72.

Id. at 23.

301
On August 26, 1987,* the Complaint was amended* to include Rafael A. Sison
(Sison) as a party-defendant.*

The Amended Complaint alleged that Disini acted in unlawful concert with his co-
defendants in acquiring and accumulating ill-gotten wealth through the misappropriation
of public funds, plunder of the nations wealth, extortion, embezzlement, and other acts of
corruption.*

Sandiganbayan Resolution dated August 26, 1987, id. at 68.

Id. at 44-66.

Id. at 41-43.

The portions of the Amended Complaint that pertain to petitioner are as follows:

4. Defendant HERMINIO T. DISINI is a close associate of defendant Ferdinand E. Marcos and the husband
of the first cousin of Defendant Imelda R. Marcos. By reason of this relationship, defendant Herminio
Disini was awarded by defendant Ferdinand E. Marcos the tobacco filter monopoly. It was from the
said monopoly that the former first derived his fortune. In the same token, at the behest of defendant
Ferdinand E. Marcos, the corporations under Defendant Herminio Disini became the beneficiaries of
rescue funds infused by the government to the tune of several billion pesos. Later, said defendant
Herminio Disini obtained staggering commissions from the Westinghouse in exchange for securing the
nuclear plant contract from the Philippine government. Said defendant may be served with summons
and other court processes at his last known address at 92 Kennedy St., Greenhills, San Juan, Metro
Manila. Defendant Herminio T. Disini is temporarily outside, even as he remains a resident and citizen
of the Philippines.
xxxx

13. Defendants Herminio T. Disini and Rodolfo Jacob, by themselves and/or in unlawful concert, active
collaboration and willing participation of defendants Ferdinand E. Marcos and Imelda R. Marcos, and
taking undue advantage of their association and influence with the latter defendant spouses in order
to prevent disclosure and recovery of ill-gotten assets, engaged in devices, schemes, and stratagems
such as:

(a) acted as the above defendant spouses dummy, nominee and/or agent in acquiring and
exercising control of several corporations, such as: (1) Herdis Group of Companies, (2) Energy
Corporation, (3) Vulcan Industrial Mining, (4) United Oriental Bank, (5) Three-M;
(b) unlawfully obtained favored loans and rescue funds from government financing institutions,
under terms and conditions grossly and manifestly disadvantageous to plaintiff and the
Filipino people;
(c) unlawfully utilizing the Herdis Group of Companies and Asia Industries, Inc. as conduits
through which defendants received, kept, and/or invested improper payments such as
unconscionably large commissions from foreign corporations like the Westinghouse
Corporation;
(d) secured special concessions, privileges and/or benefits from defendants Ferdinand E. Marcos
and Imelda R. Marcos, such as a contract awarded to Westinghouse Corporation which built
an inoperable nuclear facility in the country for a scandalously exorbitant amount that
included defendants staggering commissions defendant Rodolfo Jacob executed for HGI the
contract for the aforesaid nuclear plant;

302
The Sandiganbayan issued summons on the Amended Complaint on September
3, 1987.* On September 15, 1987, the Sandiganbayan Deputy Sheriff proceeded to the
same address, No. 92 Kennedy Street, Greenhills, San Juan, Metro Manila. Again, the
summons was returned unserved for the reason that the Roman family occupied the said
residence.*

In the meantime, petitioners co-defendants, Sison* and Jacob,* filed their


respective answers, while the Marcos spouses were declared in default* for failure to file
their responsive pleadings despite valid service of summons.*

After the lapse of two years without any progress in the case, Jacob filed an
Omnibus Motion for the Sandiganbayan to either set the case for pre-trial or to dismiss
the same with respect to Jacob for failure to prosecute. * Jacob argued that there was no
excuse for the delay in prosecuting the case. He reasoned that, if summons could not be
served on his co-defendant Disini within a reasonable time, the prosecution should have
moved to exclude Disini from the complaint so that the case could be disposed of one
way or another instead of being left pending indefinitely.
(e) participated in numerous stratagems and devices to prevent disclosure and to avoid
discovery of their unabated plunder of the public treasury by, among others, acting as
conduits to siphon out of the country illegally acquired assets of defendants Ferdinand E.
Marcos and Imelda R. Marcos, through Fe Roa Gimenez, a defendant in a separate suit;
(f) obtained, with the active collaboration of defendant Rafael A. Sison, from the Development
Bank of the Philippines (DBP) huge amounts in peso and foreign currency denominated loans
and guarantees in favor of Cellophil Resources Corporation, a corporation beneficially held
and controlled by Defendant Herminio T. Disini, in violation of duly approved DBP policies on
allowable collateral ratios, maximum allowable exposure and standard conditions for loans
and guarantee accommodations. (Amended Complaint, pp. 11-13; Sandiganbayan rollo, Vol.
I, pp. 54-56)

Sandiganbayan rollo, Vol. I, p. 70.

Id. at 81.

Filed on November 18, 1987 (Id. at 100-106).

Filed on February 14, 1989 (Id. at 323-336).

Sandiganbayan Resolution dated June 23, 1989 (Id. at 490-505).

Marcos v. Garchitorena, G.R. Nos. 90110-43, February 22, 1990 (unsigned resolution).

Sandiganbayan rollo, Vol. I, pp. 570-571.

303
The Sandiganbayan denied Jacobs motion.* It held that the Republic had not
lacked in efforts to ascertain Disinis whereabouts; hence, there is no basis to rule that it
failed to prosecute the case. Nevertheless, it ordered the Republic to furnish the court
with the correct address of petitioner or to file a motion to show the reasonability of
expecting Disini to be summoned.

In response, the Republic filed a Manifestation that it is still in the process of


securing alias summonses for the unserved defendants and will take steps to serve
summons by publication.*

On October 11, 1990, the Republic moved to drop Jacob as party-defendant


considering that he will testify as a witness for the Republic in its ill-gotten wealth cases
both here and abroad.* It also sought several times to suspend the pre-trial on various
grounds such as the PCGGs vacillation regarding the grant of immunity in favor of
Jacob* and the Republics admission that it still could not ascertain Disinis whereabouts
for purposes of service of summons. The Republic explained that it was still trying to
exhaust all efforts to make a personal or substituted service of summons through the help
of the Philippine consulate office in Austria, where Disini is believed to be residing.*

On August 4, 1994, the Sandiganbayan resolved to grant the dismissal of the


complaint against Jacob with prejudice and ordered him dropped as party-defendant.*

Resolution dated October 26, 1989. Sandiganbayan rollo, Vol. II, p. 10.

Id. at 56-57.

Sandiganbayan rollo, Vol. III, pp. 12-13.

Id. at 80-83 and 120-121.

Id. at 20-22.

Id. at 292-308.

304
When it appeared that pre-trial could finally continue in 1995, the Republic again
moved for several resetting of pre-trial for reasons such as looking at the possibility of
granting immunity to petitioners other co-defendant, Sison, and the unavailability of the
solicitor assigned to the case.*

After displaying utmost liberality in the past as regards the postponement of the
pre-trial, the Sandiganbayan issued a strongly-worded Order on January 17, 1997, on
which date the Republic was still not ready to submit Sisons affidavit for the
consideration of the court. The Order reads:

Over the year, the matter of the affidavit [of Sison] remains unresolved. In the
end, this case is sought once more to be reset with no visible product for the effort.

Under the circumstances, should no action be taken thereon with finality on or


before March 14, 1997, the Court will assume that the government is not disposed to
prosecute this matter and will dismiss the case.*

Heeding the Sandiganbayans warning, the Office of the Solicitor General filed its
Manifestation and Urgent Motion to Drop Rafael Sison as Party-Defendant on March 14,
1997.*

A year later, on April 8, 1998, the Republic filed an Ex Parte Motion for Leave to
Serve Summons by Publication.* It stated that resort to service by publication was needed
because they could not ascertain Disinis whereabouts despite diligent efforts to do so.
While this motion was awaiting resolution five months later, the Republic filed an Urgent
Ex Parte Motion for Issuance of Alias Summons.* It allegedly received information that

Id. at 542, 561-562, 567; Sandiganbayan rollo, Vol. IV, pp. 24-25, 69-70, 78, 90-91.

Sandiganbayan rollo, Vol. IV, pp. 195-196.

Id. at 201-202.

Id. at 243-244.

Filed on September 11, 1998, id. at 251-252.

305
Disini had returned to the Philippines and could be served with summons at No. 92
Kennedy Street, Greenhills, San Juan, Metro Manila. Alias summons was issued but was
returned unserved on the ground that Disini did not occupy the said house, which
belonged to the Roman family.* Receiving information that Disini was often seen at No.
35 Buchanan Street, Greenhills, San Juan, Metro Manila, the sheriff proceeded to the
new address only to find that it belonged to petitioners cousin, Jesus Disini.*

Failing to serve summons personally on Disini, the Republic filed an Urgent


Motion to Resolve Motion for Leave to Serve Summons by Publication on October 3,
2001.* While awaiting the resolution of the Urgent Motion, the Republic again received
information that petitioner has been regularly seen at the Wack Wack Golf and Country
Club in Mandaluyong City and at No. 57 Flamingo Street, Greenmeadows Subdivision,
Quezon City. Thus, the Republic sought again the issuance of alias summons, without
prejudice to the resolution of its previous Motion for Leave for Issuance of Summons by
Publication.* The Sandiganbayan issued an alias summons for Disini, but it was returned
unserved.

On February 6, 2002, the Republic filed a Motion to Resolve (Ex Parte Motion
for Leave to Serve Summons by Publication).* The same was granted* and on April 23,
2002, the summons and the Amended Complaint were published in Peoples Tonight,
with a copy sent by registered mail to Disinis last known address, No. 92 Kennedy Street,
Greenhills, San Juan, Metro Manila.* By August 27, 2002, petitioner was declared in
default for failure to file his responsive pleading within 60 days from the publication of

Sheriffs Return, id. at 258-259.

Sheriffs Return, id. at 258-259.

Id. at 285-287.

Filed on November 8, 2001, id at 292-294.

Id. at 299-301.

Id. at 318-319.

Id. at 343-344.

306
the summons.*

Since three of the party-defendants (Ferdinand Marcos, Imelda Marcos, and


petitioner) had been declared in default, while one was dropped to become state witness
(Jacob), Sison remained as the sole defendant who could participate in Civil Case No.
0013. Given that there was a pending motion to drop Sison also as party-defendant, the
Republic asked the Sandiganbayan to resolve the said motion so that they could proceed
with the ex parte presentation of evidence.* The said motion was submitted for resolution
on September 20, 2002.*

On February 17, 2003, with the motion to drop Sison as party-defendant still
pending, the Republic asked the Sandiganbayan to hold in abeyance the pre-trial until the
said motion had been resolved.* On February 27, 2003, the Sandiganbayan clerk of court
sent notice of the cancellation of the pre-trial set for March 4, 2003.*

The records of the Sandiganbayan became silent from the year 2003 to 2006,
revealing an inaction that would only be broken by a foreign court that imposed a
deadline on the freeze orders of the Disini Swiss accounts. This development began when
petitioner Disinis wife and children filed a petition* in a Swiss Federal Court to remove a
previously issued freeze order on their Swiss accounts. On August 18, 2006, the Swiss
Federal Court rendered a partial decision* ordering the counsel for the Republic of the
Philippines to submit a forfeiture order from a Philippine court with regard to the assets

Id. at 365-366.

Id. at 374-377.

Id. at 411.

Id. at 418-421.

Id. at 423.

Entitled Pacienca Escolin-Disini, Liliana and Herminio Angel Disini, and Lea Disini vs. District Attorney I of
the Canton of Zurich, Section B, Superior Court of the Canton of Zurich, 3rd Criminal Chamber, and the
Republic of the Philippines. Id. at 476-492.

Id. at 476-492.

307
of Liliana and Herminio Disini not later than December 30, 2006; otherwise, the Swiss
Federal Court would revoke the freeze order on the Disini Swiss accounts.*
This deadline apparently spurred the Republic (through the PCGG) to file an
Urgent Manifestation and Motion* with the Sandiganbayan on November 30, 2006. The
Republic prayed for the resolution of its Urgent Motion to Resolve (its motion to drop

The relevant portion of the Swiss Federal Court decision, as translated into English, reads as follows:
Facts of the Case
A.
In April 1986, the Republic of the Philippines requested the Swiss authorities for judicial assistance in
the repatriation of assets which had been misappropriated by Ferdinand E. Marcos, his family members and
persons close to him in the exercise of their official functions. This group of persons includes Herminio T.
Disini. On April 7, 1986, the Solicitor General of the Philippines initiated a criminal investigation against
him.
On October 21, 1986, the Office of the Investigating Judge of Canton Fribourg ordered the accounts of
Herminio T. Disini blocked.
B.
With the requests for judicial assistance dated March 20, 1989 and July 11, 1991, the Republic of the
Philippines also requested the blocking of the accounts of family members of Herminio T. Disini and return
of the corresponding account records.
By an order dated October 14, 1991, the Investigating Judge of Canton Fribourg granted the request,
ordered the referenced accounts of Schweizerische Volksbank (now: Credit Suisse) under the names of
Pacienca Escolin-Disini (the wife of Herminio T. Disini), Herminio Angel Disini (the son of Herminio T.
Disini) and his wife Liliana, and Lea Disini (the daughter of Herminio T. Disini) to be blocked. The account
records were delivered to the Republic of the Philippines on November 8, 1999.
Subsequently, a number of requests by the account holders to release the blocked assets were rejected.
xxxx
D.
On December 21, 2004, the account holders filed another petition demanding the release of their
accounts stating that there were no criminal or civil proceedings pending in the Philippines for which
judicial assistance could be provided. The [Cantonal] Attorneys Office dismissed the petition by Herminio
Angel and Liliana Disini, Paciencia Escolin-Disini and Lea Disini on August 30, 2005 referring to a report
by the Philippines dated June 10, 2005 (Status Report) which stated that a number of criminal and
forfeiture proceedings were pending against Herminio T. Disini.
xxxx
The Supreme Court considers:
xxxx
5.3 The appellants account records were sent to the Philippines as early as 1991. As such, the
Philippines have already had all of the records necessary to confiscate the appellants assets
blocked in Switzerland.
The Philippine forfeiture proceeding (Civil Case No. 0013) was initiated in 1987, that is 19
years ago. According to the Philippine authorities, Herminio T. Disini was declared in default on
August 27, 2002 after he had allegedly prevented the service of court summonses for years and
thereby blocked the case. Nonetheless, the case is still pending in the pre-trial phase.
xxxx
5.4 However, after the account block has been maintained for so long without the Philippines ever
indicating a term for the conclusion of the forfeiture proceeding, it appears also in light of Art.
3 par. 3 of the Judicial Assistance Treaty appropriate to provide the Republic of the
Philippines with a final opportunity to reach a forfeiture decision concerning the appellants

308
Rafael Sison as party-defendant).* Should the resolution of this pending motion be
favorable to the Republic, it likewise prayed for the setting of the ex parte presentation of
evidence at an early date.

On December 7, 2006, petitioner Disini filed a Motion to Lift Order of Default


and for Leave to File and Admit Attached Answer,* together with an Answer to Amended
Complaint with Compulsory Counterclaims.* He maintained that he was unaware of the
civil case pending against him because he never received summons or other processes
from the court, nor any pleadings from the parties of the case. His only fault, he averred,
was that he was ignorant of the proceedings in the case because of the absence of a
proper notice. Petitioner asked the respondent court to look at his meritorious defenses.
He then invoked the liberality of the courts in lifting default orders to give both parties
every opportunity to defend their cases, and pointed out that the proceedings, being in
their pre-trial stage, would not be delayed by petitioners participation therein.

Petitioners Answer contained affirmative defenses such as the respondent courts


assets.
Therefore the counsel of the Philippines is granted until December 31, 2006 to submit to the
Supreme Court at least a lower court forfeiture decision concerning the appellants assets blocked
in Switzerland. Until then, the Supreme Court case will be stayed. After expiration of this period,
the Supreme Court will revoke the block on the accounts of Liliana and Herminio Angel Disini if
no forfeiture order has been handed down or if the submitted decision does not meet the minimum
requirements of Art. 74a IRSG.
xxxx
Thus the Federal Court decides
1.
To the legal representative of the Republic of the Philippines is given a time limit until
December 31, 2006 in order to file a erstinstanzlichen Einziehungsentscheid (first instance
decision) with regard to the assets of Liliana and Herminio Angel Disini which are blocked in
Switzerland.
xxxx

Sandiganbayan rollo, Vol. IV, pp. 470-475.

It also included a motion to resolve the Motion to Intervene filed by third parties, who claim equitable
ownership of a piece of real estate, which was included in the list of sequestered assets of Disini. This Motion to
Intervene was eventually dismissed on the ground that the property over which the movants claim an interest is
not among the properties in litigation in Civil Case No. 0013. Sandiganbayan rollo, Vol. V, pp. 120-123.

Id. at 5-21.

Id. at 22-64.

309
failure to acquire jurisdiction over his person through service by publication and the
failure of the Amended Complaint to state a cause of action against him.

With the two motions pending before it, the Sandiganbayan heard the Republic on
its Urgent Manifestation and Motion on December 8, 2006. Petitioner Disinis lawyers
were present during the hearing but were not allowed to participate therein because of the
prevailing default order against Disini. The Sandiganbayan issued the following Order at
the end of the said hearing:

This morning, the Court heard the arguments of the counsel for [respondent]
regarding the latters Urgent Manifestation and Motion dated November 29, 2006. The
Court also gave the [respondent] a non-extendible period of three days counted from
today within which to file its comment on the Motion to Lift Order of Default filed by
[petitioner] Disini, and the latter is given a non-extendible period of three days from
December 11, 2006 or until December 14, 2006, within which to file his reply to the
comment of the [respondent], after which the incident shall be considered submitted for
resolution without need of oral arguments. The Court will act on the [respondent]s
Urgent Manifestation and Motion dated November 29, 2006 after the Court has resolved
the Motion to Lift Order of Default.

x x x x*

On December 11, 2006, the Republic filed its Comment/Opposition* stating that it
exhausted all efforts to ascertain the whereabouts of petitioner Disini. Failing to do so, the
Republic resorted to service of summons by publication. This mode of service is allowed
under Sections 14 and 15 of Rule 14 considering that the forfeiture case is in rem and the
defendants address is unknown. The Republic explained that it filed its Ex Parte Motion
for Leave to Serve Summons by Publication because it received information that
petitioner had already gone to Austria. Clearly then, Disini was no longer a resident of the
Philippines. The Republic reiterated that the service of summons by publication is proper

Id. at 74-A. Signed by Presiding Justice Teresita J. Leonardo-De Castro, Diosdado M. Peralta, Efren N. Dela
Cruz.

Id. at 80-99.

310
considering that what is involved is a forfeiture case, an action in rem, under Republic
Act No. 1379, in relation to Executive Order (EO) Nos. 1, 2, 14, and 14-A all issued by
President Corazon C. Aquino.

As for petitioners allegation that the Republic was aware of Disinis address as
shown by the fact that summons were properly served at his correct address * in two
criminal cases pending before the same First Division of the Sandiganbayan, the
Republic pointed out that these criminal cases were filed on June 30, 2004, while
respondents Ex Parte Motion for Leave to Serve Summons by Publication was filed on
April 8, 1998. Hence, at the time the Republic asked for service by publication, it was not
yet aware of petitioners correct address. Since petitioner failed to file his answer to a
validly served Amended Complaint, the motion to lift the order of default is utterly
lacking merit.

Petitioner Disini filed his Reply on December 14, 2006* basically expounding on
the arguments he stated in his Motion to Lift.

On December 15, 2006, the Sandiganbayan granted PCGGs motion to drop Sison
as party-defendant in Civil Case No. 0013, * leaving only the defaulted defendants (i.e.,
the Marcos spouses and petitioner Disini) as parties to the case.

Ruling of the Sandiganbayan (Assailed Resolution)

On December 18, 2006, the Sandiganbayan resolved to deny* petitioners Motion

The correct address of Herminio T. Disini was No. 1 Lark Street, Greenmeadows, Quezon City.

Sandiganbayan rollo, Vol. V, pp. 100-129.

Id. at 124-127.

Id. at 131-138.

311
to Lift Default Order.

The Sandiganbayan held that the Republic exerted diligence in ascertaining


petitioners whereabouts as evidenced by the two motions it filed for the issuance of alias
summons. The Sandiganbayan looked favorably at the Republics efforts to personally
serve the summons on petitioner despite the pendency of its Ex Parte Motion for Leave
to Serve Summons by Publication. It held that the Republics determination to serve
summons at the places where the petitioner was last heard of to reside belies the
petitioners claim that the Republic had intended to mislead the court into service by
publication all along. The Sandiganbayan likewise held that the rules for a valid service
of summons by publication were observed.

The Sandiganbayan did not find any indication that the Republic knew petitioners
actual residence when it sought leave to serve summons by publication in 1998 and 2001.

As for the argument that publication is not proper because the action is in
personam, the Sandiganbayan ruled that Civil Case No. 0013 is an action in rem for
which service by publication is proper. The case is in rem because it involves the
forfeiture of ill-gotten wealth based on EO No. 2, * EO No. 14* and No. 14-A*
promulgated by former President Corazon Aquino by virtue of her legislative authority. It
cited the case of Republic v. Sandiganbayan and Marcos* where the Court ruled that
forfeiture proceedings are civil actions in rem.

Given the validity of the service of summons, the respondent court held that

Dated March 12, 1986.

Dated May 7, 1986.

Dated August 18, 1986.

416 SCRA 133, 141.

312
petitioners failure to file a responsive pleading within the allotted period resulted in his
default. The respondent court refused to lift the order of default on the ground that there
was no fraud, accident, mistake or excusable negligence that would justify such an
action.

Petitioner then filed an Extremely Urgent Motion for Reconsideration * and an


Extremely Urgent Manifestation and Motion* on December 19, 2006. Aside from asking
for reconsideration, petitioner also prayed that the republics ex parte presentation of
evidence be held in abeyance until the resolution of his motion for reconsideration.

Petitioners motions were set for hearing on December 20, 2006 but the said
hearing did not take place. Instead, the Sandiganbayan issued the following orders on
December 19 and 20, 2006 respectively:

Considering the difficulty in obtaining a quorum for the purpose of hearing the
Extremely Urgent Manifestation and Motion dated December 18, 2006 of [petitioner]
Herminio T. Disini, the Court resolves to cancel the hearing on the abovesaid motion on
December 20, 2006, and instead require the [respondent] to file its written comment on
the above-said motion on or before December 22, 2006, after which the motion shall be
deemed submitted for resolution.*

Considering the difficulty in obtaining a quorum for the purpose of hearing the
Extremely Urgent Motion for Reconsideration dated December 19, 2006 of [petitioner]
Herminio T. Disini which was filed at the close of office hours on December 19, 2006,
the Court resolves to cancel the hearing on the above-said motion on December 20, 2006,
and instead require the [respondent] to file its written comment on the above-said motion
within a non-extendible period of three (3) days from receipt thereof, after which the
motion shall be deemed submitted for resolution, unless the parties or the Court will set
the matter for hearing anew after the submission of the above comment.*

Sandiganbayan rollo, Vol. V, pp. 140-169.

Id. at 170-175.

Id. at 197. Issued on December 19, 2006.

Id. at 198. Issued on December 20, 2006.

313
The Republics ex parte presentation of evidence held before the Sandiganbayan
Executive Clerk of Court began on December 20, 2006 as evidenced by the transcript. *
While petitioner was not allowed to participate in the said proceedings, he was notified
thereof and his counsels were present to observe the same.

On December 22, 2006, petitioner filed this Petition for Certiorari. On January 2,
2007, he filed a Supplement to the Petition for Certiorari and Prohibition* protesting the
continuation of the ex parte proceedings before the Sandiganbayan as a grave abuse of
discretion amounting to lack of jurisdiction. He also filed a Second Supplemental Petition
on January 5, 2007.*

Proceedings before the Sandiganbayan during the pendency of the instant Petition for
Certiorari and Prohibition
On August 7, 2007, the Sandiganbayan issued its Resolution* denying petitioners
Extremely Urgent Motion for Reconsideration for lack of merit.

The Republic presented 10 witnesses.* It filed its Formal Offer of Evidence dated
October 17, 2008, which offer was admitted in the Resolution dated December 3, 2008.*
On February 11, 2009, the Republic filed its Memorandum.*

On July 7, 2009, despite the pendency of his Petition for Certiorari and
Prohibition with the Supreme Court, petitioner filed with the Sandiganbayan a Second

Id. at 200-206.

Id. at 312-328.

Rollo, pp. 533-590.

Sandiganbayan rollo, Vol. VII, pp. 420-434.

Stephen Tanchuling on December 22, 2006; Ma. Lourdes Magno y Oliveros on January 9, 2007; Danilo Daniel
on January 25, 2007; Angelito Vicente Manahan on February 14, 2007; Rafael Sison on March 26, 2007; Maria
Cristina Beronilla on August 1, 2007; Rodolfo Jacob on January 12, 2007; Jesus Jose Vergara on January 15,
2007; Ricardo Valera Paras on August 14, 2007; and Jesus Disini on August 8, 2008.

Sandiganbayan rollo, Vol. X, p. 2.

Id. at 25-83.

314
Motion to Lift the Order of Default* dated August 27, 2002 the very same Order which is
now at the heart of the present petition.

On September 8, 2009, petitioner filed with the Sandiganbayan a Motion to


Expunge or Cross-Examine Plaintiffs Witnesses.* On September 15, 2009, he also filed a
Motion to Expunge Evidence Presented Before the Clerk of Court.*

On September 23, 2009, petitioner filed with this Court a Motion for Leave to File
Supplemental Memorandum,* which was denied in a Resolution dated September 30,
2009.*

On October 15, 2009, petitioner filed with the Sandiganbayan a Motion to


Expunge Rolando Gapuds Deposition taken on October 18-20, 1995. * On October 19,
2009, he filed a Motion to Expunge or Cross-Examine Plaintiffs witnesses.*

On February 18, 2010, petitioner filed with the Sandiganbayan a Supplement to


the Second Motion to Lift the Order of Default dated August 27, 2002 with Motion to
Take Judicial Notice.* On March 4, 2010, he filed a Motion for Leave to Take
Deposition.*

Issues

Id. at 101-205.

Id. at 342-355.

Id. at 356-361.

Rollo, pp. 1229-1242.

Id. at 1245-1246.

Sandiganbayan rollo, Vol. XI, pp. 56-69.

Id. at 146-176.

Id. at 321-342.

Id. at 378-386.

315
Petitioner raised the following issues for our consideration:

1. Whether the Sandiganbayan court gravely abused its discretion in not lifting
its default order against petitioner Disini

2. Whether the Sandiganbayan court gravely abused its discretion when it


allowed the Republic to present its evidence ex-parte while petitioners
Motion for Reconsideration [of the stay of the default order] had not yet been
resolved.*

Our Ruling

Issue of Validity of Service of Summons Mooted


by Voluntary Appearance

In his Petition, petitioner originally sought the nullification of the proceedings


before the Sandiganbayan on the theory of lack of jurisdiction over his person, premised
on the alleged impropriety in the service of summons.

However, petitioner subsequently filed several motions with the Sandiganbayan


which sought various affirmative reliefs from that court, sans any qualification of the
nature of its appearance and without reserving or reiterating its previous objection on the
ground of lack of jurisdiction over the person. These motions are:

(a) Motion to Expunge Exhibits A, B, C, D, E, XX, YY, ZZ, EE, and their
Submarkings or Cross-Examine Plaintiffs Witness,* which sought to expunge

Rollo, p. 870.

Filed on September 8, 2009. Sandiganbayan, rollo, Vol. X, pp. 342-355.

316
various affidavits of the Republics witnesses;

(b) Motion to Expunge Evidence Presented Before the Clerk of Court, * which
prayed that all the evidence presented before the clerk of court be stricken off
the records for being taken in violation of the Rules;

(c) Motion to Expunge Gapuds Deposition taken on 18-20 October 1995, *


which sought to remove from the records the deposition offered by the
Republic;

(d) Motion to Expunge Exhibits FFF and GGG,* which sought to strike off the
mentioned exhibits of respondents and asked the Sandiganbayan to permit
petitioner to cross-examine witness Jesus Disini;

(e) Motion for Consolidation,* which prayed that Civil Case No. 0013 be
consolidated with Criminal Case Nos. 28001 and 28001; and

(f) Motion for Leave to Take Deposition based on Section 1 of Rule 23


(Depositions Pending Action or De Benne Esse).*

In regard to the last mentioned Motion for Leave to Take Deposition * (which is the
last pleading on record), it is important to note that there are two instances when the
defendant can take depositions under Section 1 of Rule 23: (1) after the court has
acquired jurisdiction over the defendant or the property subject of the action; and (2) after
an answer has been served. Both instances presuppose that the court has already acquired

Filed on September 15, 2009. Id. at 356-361.

Filed on October 15, 2009. Sandiganbayan rollo, Vol. XI, pp. 56-69.

Filed on October 19, 2009. Id. at 146-176.

Filed on February 8, 2010. Id. at 302-311.

Filed on March 4, 2010. Id. at 378-386.

Id.

317
jurisdiction over the defendant. By seeking the relief contained in this provision,
petitioner is deemed to have voluntarily submitted himself to the jurisdiction of the
Sandiganbayan. Thus, petitioner may be held to have waived his objections regarding the
lack of jurisdiction over his person by seeking affirmative relief through the said
provision.

While petitioner bewailed the mode of service of summons on him and questioned
the Sandiganbayans jurisdiction over his person, he has rendered his own arguments
moot by his voluntary appearance or submission to the jurisdiction of the
Sandiganbayan. Jurisprudence holds that an objection based on lack of jurisdiction over
the person is waived when the defendant files a motion or pleading which seeks
affirmative relief other than the dismissal of the case.*

Issue of Non-Lifting of Default Order


Dismissed for Forum-shopping

When petitioner filed this Petition on December 22, 2006 assailing the
Sandiganbayans December 18, 2006 Resolution, the latter was still the subject of a
pending Extremely Urgent Motion for Reconsideration filed by petitioner with the
Sandiganbayan. The filing of the instant petition before this Court while a motion for
reconsideration was still pending before the Sandiganbayan constitutes, strictly speaking,
forum-shopping,* which could have warranted the outright dismissal of the petition.
However, in light of the due process issues raised by petitioner and the very real
possibility that he had no other speedy remedy available to him, his Petition was given

Philippine Commercial International Bank v. Spouses Dy, G.R. No. 171137, June 5, 2009, 588 SCRA 612,
629..

Montes v. Court of Appeals, G.R. No. 143797, May, 4, 2006, 489 SCRA 432-443, 439-440; Go v. Looyuko, G.R.
Nos. 147923, 147962 & 154035, October 26, 2007, 537 SCRA 445, 477-478; Madara v. Hon. Perello, G.R. No.
172449, August 20, 2008, 562 SCRA 638-659, 654-655.

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due course.

Inexplicably, and in continuing disregard of the rules on forum-shopping and


judicial courtesy, petitioner raised again the same issue (validity of the default order and
the propriety of lifting said default order) in a Second Motion to Lift the Order of Default
dated August 27, 2002 which he filed with the Sandiganbayan after the latter denied his
Extremely Urgent Motion for Reconsideration.

This Second Motion to Lift the Order of Default was filed on July 27, 2009,
admittedly during the pendency of the instant Petition. Both remedies seek from different
fora exactly the same ultimate relief (lifting of the default order issued by the
Sandiganbayan) and raise the same issue (validity of the default order and the propriety
of lifting said default order). In availing himself of these two remedies, petitioner has
engaged in forum-shopping.

There is forum shopping when one party repetitively avails of several judicial
remedies in different courts, simultaneously or successively, all substantially founded on
the same transactions and the same essential facts and circumstances, and all raising
substantially the same issues either pending in, or already resolved adversely, by some
other court.* Forum shopping is a prohibited malpractice and condemned as trifling with
the courts and their processes. * It is proscribed because it unnecessarily burdens the
courts with heavy caseloads, and unduly taxes the manpower and financial resources of
the judiciary.* It is inimical to the orderly administration of justice as it creates the
possibility of conflicting decisions being rendered by two courts, * and opens the system

Feliciano v. Villasin, G.R. No. 174929, June 27, 2008, 556 SCRA 348-373, 370.

Chemphil Export & Import Corporation v. Court of Appeals, 321 Phil. 619, 655-656 (1995).

Abines v. Bank of the Philippine Islands, G.R. No. 167900, February 13, 2006, 482 SCRA 421, 428.

Tan v. Court of Appeals, G.R. No. 164966, June 8, 2007, 524 SCRA 306, 318, citing Top Rate Construction &
General Services, Inc. v. Paxton Development Corporation, 457 Phil. 740, 748 (2003).

319
to the possibility of manipulation.*
In filing a Second Motion to Lift the Order of Default with the Sandiganbayan
while the instant Petition is pending with this Court, petitioner has unfairly doubled his
chances of securing the lifting of the default order. This misdeed amounts to a wagering
on the result of [petitioners] twin devious strategies, and shows not only [his] lack of faith
in this Court in its evenhanded administration of law but also [his] expression of
disrespect if not ridicule for our judicial process and orderly procedure.*

The situation here is strikingly similar to that in People v. Sandiganbayan.* In that


case, the petitioner had filed with the Sandiganbayan a motion for consolidation of a
bribery case with a plunder case. The Sandiganbayan refused, leading the petitioner to
file a petition for certiorari with this Court. While the said petition was pending with this
Court, the petitioner filed another motion for consolidation with the Sandiganbayan,
praying anew for the consolidation of the bribery case with a plunder case. The motion
raised the same issues and prayed for the same remedy as the pending petition with this
Court, namely, the consolidation of the bribery case and the plunder case. The Court held
that such move clearly constitutes forum-shopping.

This is almost exactly what happened in the instant case. Petitioner had filed with
the Sandiganbayan a motion to lift default order. The Sandiganbayan refused, leading
petitioner to file a petition for certiorari with this Court. While the said petition was
pending with this Court, petitioner filed another motion to lift default order with the
Sandiganbayan, praying anew for the lifting of the default order. Thus, following the
ruling in People v. Sandiganbayan, we rule that petitioners actuations clearly constitute

Madara v. Hon. Perello, supra note 89.

Top Rate Construction & General Services, Inc. v. Paxton Development Corporation, supra note 93 at 760.

456 Phil. 707, 718 (2003).

320
forum-shopping.

Because of the forum-shopping committed by petitioner, the Court cannot grant


the relief he prayed for.
Certiorari is an improper remedy

Petitioner imputes grave abuse of discretion on the Sandiganbayan for allegedly


railroading the proceedings in violation of his right to due process and fair trial. More
specifically, petitioner points out that when the Sandiganbayan denied his Motion to Lift
Order of Default (December 18, 2006), he immediately filed an Extremely Urgent
Motion for Reconsideration (December 19, 2006). However, before the latter could be
resolved, the Sandiganbayan allowed the ex-parte presentation of evidence to proceed
(December 20, 2006). This prompted petitioner to file the instant Petition with this Court
two days later (December 22, 2006).

While it may have been more convenient if the Sandiganbayan resolved first the
Extremely Urgent Motion for Reconsideration before allowing the ex-parte presentation
of evidence, we cannot say that the course taken by the Sandiganbayan constitutes grave
abuse of discretion. We cannot infer from the Sandiganbayans deliberate speed that it
was done to prejudice petitioner. There was adequate justification for the
Sandiganbayans resolve to finish the twenty-year old forfeiture case with dispatch. Aside
from the length of time that Civil Case No. 0013 has stagnated in the dockets, the
Republics manifestation (that a resolution was necessary by December 30, 2006 in order
to maintain the Swiss Federal Courts freeze order on petitioners Swiss accounts) is reason
enough not to further delay the case as a matter of public interest. Besides, it should be
remembered that when the Sandiganbayan received evidence ex-parte on December 20,
2006, petitioner was still in default and his Motion to Lift Default Order has already been
321
denied. The ex-parte presentation of evidence on December 20, 2006 was simply
consistent with petitioners default status as of that time.

Grave abuse of discretion refers to such capricious or whimsical exercise of


judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be patent
and gross as to amount to an evasion of positive duty or a virtual refusal to perform a
duty enjoined by law, or to act at all in contemplation of law, as where the power is
exercised in an arbitrary and despotic manner by reason of passion and hostility. The
actions of the Sandiganbayan were not thus tainted under the circumstances we
described above. Thus, we cannot accept petitioners contention that the proceedings
taken below must be nullified because of the alleged railroading by the Sandiganbayan.

Moreover, Rule 65 petitions for certiorari are extraordinary remedies available


only when there is grave abuse of discretion amounting to lack of jurisdiction and the
petitioner has no other plain, speedy, and adequate remedy for correcting such abuse. *

By filing a Second Motion to Lift the Order of Default and the various motions
seeking the Sandiganbayans correction of the perceived errors during the Republics ex
parte presentation of evidence, petitioner has revealed his belief that he had adequate
remedies before the Sandiganbayan. A resort to a Rule 65 petition is, under the premises,
improper.

WHEREFORE, the Petition for Certiorari is DISMISSED. Costs against


petitioner.

SO ORDERED.

RULES OF COURT, Rule 65, Section 1.

322
MARIANO C. DEL CASTILLO
Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

ANTONIO T. CARPIO PRESBITERO J. VELASCO, JR.


Associate Justice Associate Justice

JOSE PORTUGAL PEREZ


Associate Justice

C E R T I FI CAT I O N

323
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that
the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

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i Exhibit A, Folder of Exhibits, Civil Case No. Q-91-10494.
ii OR, Vol. I, 3-14.
iii Id., 128-137.
iv Id., 264-278.
v OR, Vol. II, 515-516.
vi Id., 518-519, 538-543.
vii OR, Vol. II, 551-552.
viii OR, Vol. III, 1162-1166.
ix Id., 1167-1173. Per Judge Eudarlio B. Valencia.
x Id., 1174-1183.
xi Id., 1328-1335.
xii Rollo, CA-G.R. Sp. No. 40258 [CA Rollo 2-21].
xiii Supra note 1.
xiv Annex B of Petition, Rollo, 92-113.
xv CA Rollo, 569-572.
xvi Id., 573-594.
xvii Supra note 2.
xviii This is reproduced in Sec. 7, Rule 3 of the 1997 Rules of Civil Procedure.

xix Substantially reproduced in Section 3(c), Rule 9 of the 1997 Rules of Civil Procedure,
which reads:
SEC. 3. Default; declaration of.
...
(c) Effect of partial default. When a pleading asserting a claim states a common cause of action against several
defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon
the answers thus filed and render judgment upon the evidence presented.
xx 272 SCRA 454 [1997].
xxi Fajardo v. Bautista, 232 SCRA 291, 298[1994].
xxii Abad v. Court of First Instance of Pangasinan, Br. VIII, 206 SCRA 567, 579[1992]; Solid Homes, Inc. v. Court
of Appeals, 271 SCRA 157, 164 [1997].
xxiii These are retained, with modifications, in Sections 1 and 5, respectively, of Rule 65 of the 1997 Rules of
Civil Procedure.
xxiv Rule 6, Sec. 10. This is not reproduced in the 1997 Rules of Civil Procedure; however, the matter of default
is covered by Sec. 3 of Rule 9 thereof.
xxv Now Sec. 8, Rule 6, 1997 Rules of Civil Procedure.
xxvi I Vicente J. Francisco, The Revised Rules of Court In The Philippines (Civil Procedure) 492 (1973).
xxvii OR, Vol. I, 128-137.
xxviii Washington Distillers, Inc. v. Court of Appeals, 260 SCRA 821, 835 [1996].
xxix Laureano Investment & Development Corporation v. Court of Appeals, 272 SCRA 253, 266 [1997], citing
International Container Terminal Services, Inc. v. Court of Appeals, 249 SCRA 389 [1995].
xxx Valencia v. Court of Appeals, 263 SCRA 275, 286 [1996].
xxxi Employees Compensation Commission v. Court of Appeals, 257 SCRA 717, 722-723 [1996] citing Buan v.
Lopez, 145 SCRA 34 [1986].