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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.,
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 Decision1of 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 Order2 of the Regional Trial Court of Ormoc City, Branch 35. Also assailed is the April 19,
2006 Resolution3 denying the Motion for Reconsideration thereto.

In lieu of Associate Justice Lucas P. Bersamin per Raffle dated August 8, 2011.
1
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).
2
Records, pp. 440-442; penned by Judge Fortunito L. Madrona.
3
CA rollo, p. 121.

1
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.4

The oppositors filed their appeal to the CA docketed as CA-G.R. No. 66541. In a Decision5 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, 19856 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. 24967 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,8 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.9

In an Order10 dated September 13, 1989, the RTC approved the Commissioners Report11 on the
relocation survey and ordered the original oppositors, petitioners Eugenio Sr., Teofilo and Rufino, as well

4
See first page of CA Decision dated July 24, 1985 in CA-G.R. No. 66541, records, p. 8.
5
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.
6
See Entry of Judgment, id. at 14.
7
Id. at 15.
8
See the (Sheriffs) Progress Report, id. at 16-17.
9
See RTC Order dated June 16, 1989, id. at 18.
10
Id. at 21-22.
11
Id. at 19-20.

2
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.

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.12

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 x13 (Emphasis supplied.)

This September 13, 1989 Order was, however, not implemented within the five-year period from
the time it became final.14 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
Judgment15 before the RTC of Ormoc City, Branch 12,16 docketed as Civil Case No. 3312-0. Impleaded
as defendants were Eugenio Sr., Teofilo, Rufino, Gervacio, Ismael, Eugenio, Simfronio, Feliciano, Rosita,

12
Id. at 22.
13
Id. at 21.
14
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.
15
Records, pp. 1-7.
16
The case was later transferred to Branch 35 of RTC, Ormoc City per Order dated September 22, 1997, id. at 80.

3
and Eugenio Jr. Petitioner-spouses Pablito Basarte and Marcelina Basbas-Sabarte17 (spouses Basarte), who,
although not identified in the September 13, 1989 Order as principal oppositors in 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 Dismiss18 on the ground that the Complaint states no cause of action. This was, however,
denied19 so the same set of petitioners, except for Feliciano, filed an Answer with Counterclaim.20

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)

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.

17
Later amended to read as Basarte per Order dated July 3, 1998, id. at 120.
18
Id. at 30-32.
19
See the RTCs Order dated May 9, 1997, id. at 49-50.
20
Id. at 73-77.

4
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
(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

5
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.21

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 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,

21
Id. at 2-5.

6
Eugenio Aras, Simfronio Aras, Feliciano Aras, Rosita Aras and Eugenio Basbas, Jr. were
oppositors to the application;22

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 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.23

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.

22
Id. at 1-2
23
Id. at 5-6.

7
Pre-trial conference was thereafter set24 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.25 Upon
receipt of summons, Simfronio adopted the Answer with Counterclaim of Gervacio, Rufino, Ismael,
Eugenio, Feliciano, Rosita and Eugenio Jr.26 while the spouses Basarte filed a Motion to Dismiss27 on the
ground of lack of cause of action. As said motion was also denied,28 the spouses Basarte later filed a
Manifestation29 that they were also adopting the Answer with Counterclaim filed by Gervacio and the
others.

During the pre-trial conference on July 14, 1999, the RTC issued an Order30 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

24
See Notice of Pre-Trial, id. at 85.
25
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.
26
See Simfronios Manifestation and Second Manifestation, id. at 116-119.
27
Id. at 149-151.
28
See RTC Order dated February 9, 1999, id. at 186.
29
Id. at 253.
30
Id. at 215-216.

8
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 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. 31 (Emphasis supplied.)

In their Manifestation with Prayer,32 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,33 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,34 the RTC issued the following Order35 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.

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.

31
Id.
32
Id. at 231-233.
33
One of the Spouses Basarte.
34
Records, pp. 237-239.
35
Id. at 250.

9
x x x x36

After summons were served, Vicente, Rosendo, Ligaya and Daina were, however, declared in
default for not filing any responsive pleading.37 On February 2, 2001, the RTC issued a Pre-Trial Order38
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

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.39

36
Id.
37
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.
38
Id. at 348-350.
39
Id. at 349.

10
Respondents subsequently filed an Omnibus Motion for Judgment on the Pleadings and/or
Summary Judgment.40 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.41 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

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 Order42 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.43

40
Id. at 377-382.
41
Id. at 435-439.
42
Id. at 440-442
43
Id. at 442.

11
Petitioners thus filed a Notice of Appeal44 which was approved in an Order dated June 06, 2001.45

Ruling of the Court of Appeals

Finding no merit in the appeal, the CA denied the same in a Decision46 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
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.47

Their Motion for Reconsideration48 having been denied in a Resolution49 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:

44
Id. at 445.
45
Id. at 450.
46
Supra note 1.
47
CA rollo, p. 93.
48
Id. at 95-101.
49
Supra note 3.

12
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;

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).50

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,51 they contend that said document cannot be admitted in

50
Rollo, p. 19.
51
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

13
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.

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

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.

14
In Tan v. De la Vega,52 citing Narra Integrated Corporation v. Court of Appeals,53 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.54 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.55

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 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.

52
G.R. No. 168809, March 10, 2006, 484 SCRA 538, 550-551.
53
398 Phil. 733,740 (2000).
54
Tan v. De la Vega, supra note 52 at 545.
55
Wood Technology Corporation v. Equitable Banking Corporation, 492 Phil.106, 116 (2005).

15
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 records56
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

56
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.

16
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, 199757 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.58

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

57
Id. at 49-50.
58
Id. at 49.

17
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.59

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. 5,60 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

59
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.
60
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.

18
Chairperson

TERESITA J. LEONARDO-DE CASTRO ARTURO D. BRION


Associate Justice Associate Justice

MARTIN S. VILLARAMA, JR.


Associate Justice

CERTIFICATION

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

19
SECOND DIVISION

PHILIPPINE BANK OF G.R. No. 175514


COMMUNICATIONS,
Petitioner, Present:

CARPIO, J., Chairperson,


NACHURA,
- versus - PERALTA,
ABAD, and
MENDOZA, JJ.

SPOUSES JOSE C. GO Promulgated:


and ELVY T. GO,
Respondents. February 14, 2011

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

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 filed by petitioner Philippine Bank
of Communications (PBCom) seeking to set aside the July 28, 2006 Decision,61 and the November
27, 2006 Resolution62 of the Court of Appeals (CA) in CA G.R. CV No. 77714. The CA decision
reversed and set aside the January 25, 2002 Decision of the Regional Trial Court, Branch 42,
Manila (RTC), which granted the motion for summary judgment and rendered judgment on the
basis of the pleadings and attached documents.

THE FACTS

61
Rollo, pp. 33-42.
62
Id. at 44-45.

20
On September 30, 1999, respondent Jose C. Go (Go) obtained two loans from PBCom,
evidenced by two promissory notes, embodying his commitment to pay P17,982,222.22 for the
first loan, and P80 million for the second loan, within a ten-year period from September 30, 1999
to September 30, 2009.63

To secure the two loans, Go executed two (2) pledge agreements, both dated September
29, 1999, covering shares of stock in Ever Gotesco Resources and Holdings, Inc. The first pledge,
valued at P27,827,122.22, was to secure payment of the first loan, while the second pledge, valued
at P70,155,100.00, was to secure the second loan.64

Two years later, however, the market value of the said shares of stock plunged to less than
P0.04 per share. Thus, PBCom, as pledgee, notified Go in writing on June 15, 2001, that it was
renouncing the pledge agreements.65

Later, PBCom filed before the RTC a complaint66 for sum of money with prayer for a writ
of preliminary attachment against Go and his wife, Elvy T. Go (Spouses Go), docketed as Civil
Case No. 01-101190. PBCom alleged that Spouses Go defaulted on the two (2) promissory notes,
having paid only three (3) installments on interest paymentscovering the months of September,
November and December 1999. Consequently, the entire balance of the obligations of Go became
immediately due and demandable. PBCom made repeated demands upon Spouses Go for the
payment of said obligations, but the couple imposed conditions on the payment, such as the lifting
of garnishment effected by the Bangko Sentral ng Pilipinas (BSP) on Gos accounts.67

Spouses Go filed their Answer with Counterclaim68 denying the material allegations in the
complaint and stating, among other matters, that:

63
Id. at 34.
64
Id.
65
Id.
66
Id. at 46-56.
67
Id. at 35.
68
Id. at 35-36.

21
8. The promissory note referred to in the complaint expressly state that
the loan obligation is payable within the period of ten (10) years. Thus, from the
execution date of September 30, 1999, its due date falls on September 30, 2009
(and not 2001 as erroneously stated in the complaint). Thus, prior to September 30,
2009, the loan obligations cannot be deemed due and demandable.

In conditional obligations, the acquisition of rights, as well as the


extinguishment or loss of those already acquired, shall depend upon the happening
of the event which constitutes the condition. (Article 1181, New Civil Code)

9. Contrary to the plaintiffs proferrence, defendant Jose C. Go had


made substantial payments in terms of his monthly payments. There is, therefore,
a need to do some accounting works (sic) to reconcile the records of both parties.

10. While demand is a necessary requirement to consider the defendant


to be in delay/default, such has not been complied with by the plaintiff since the
former is not aware of any demand made to him by the latter for the settlement of
the whole obligation.

11. Undeniably, at the time the pledge of the shares of stock were
executed, their total value is more than the amount of the loan or at the very least,
equal to it. Thus, plaintiff was fully secured insofar as its exposure is concerned.

12. And even assuming without conceding, that the present value of said
shares x x x went down, it cannot be considered as something permanent since the
prices of stocks in the market either increases (sic) or decreases (sic) depending on
the market forces. Thus, it is highly speculative for the plaintiff to consider said
shares to have suffered tremendous decrease in its value. More so, it is unfair for
the plaintiff to renounce or abandon the pledge agreements.

On September 28, 2001, PBCom filed a verified motion for summary judgment69 anchored
on the following grounds:

I. MATERIAL AVERMENTS OF THE COMPLAINT


ADMITTED BY DEFENDANT-SPOUSES IN THEIR ANSWER TO OBVIATE
THE NECESSITY OF TRIAL

II. NO REAL DEFENSES AND NO GENUINE ISSUES AS TO


ANY MATERIAL FACT WERE TENDERED BY THE DEFENDANT-
SPOUSES IN THEIR ANSWER

69
Id. at 64.

22
III. PLANTIFFS CAUSES OF ACTIONS ARE SUPPORTED BY
VOLUNTARY ADMISSIONS AND AUTHENTIC DOCUMENTS WHICH
MAY NOT BE CONTRADICTED.70

PBCom contended that the Answer interposed no specific denials on the material
averments in paragraphs 8 to 11 of the complaint such as the fact of default, the entire amount
being already due and demandable by reason of default, and the fact that the bank had made
repeated demands for the payment of the obligations.71

Spouses Go opposed the motion for summary judgment arguing that they had tendered
genuine factual issues calling for the presentation of evidence.72

The RTC granted PBComs motion in its Judgment73 dated January 25, 2002, the dispositive
portion of which states:

WHEREFORE, in view of all the foregoing, judgment is rendered for the


plaintiff and against the defendants ordering them to pay plaintiff jointly and
severally the following:

1. The total amount of P117,567,779.75, plus interests and


penalties as stipulated in the two promissory notes;

2. A sum equivalent to 10% of the amount involved in this case,


by way of attorneys fees; and

3. The costs of suit.

SO ORDERED.74

Spouses Go moved for a reconsideration but the motion was denied in an order75 dated
March 20, 2002.

70
Id.
71
Id. at 36.
72
Id.
73
Id. at 80-86.
74
Id. at 86.
75
Id. at 37.

23
RULING OF THE COURT OF APPEALS

In its Decision dated July 28, 2006, the CA reversed and set aside the assailed judgment
of the RTC, denied PBComs motion for summary judgment, and ordered the remand of the records
to the court of origin for trial on the merits. The dispositive portion of the decision states:

WHEREFORE, premises considered, the assailed judgment of the


Regional Trial Court, Branch 42 of Manila in Civil Case No. 01-101190 is hereby
REVERSED and SET ASIDE, and a new one entered denying plaintiff-appellees
motion for summary judgment. Accordingly, the records of the case are hereby
remanded to the court of origin for trial on the merits.

SO ORDERED.76

The CA could not agree with the conclusion of the RTC that Spouses Go admitted
paragraphs 3, 4 and 7 of the complaint. It found the supposed admission to be insufficient to justify
a rendition of summary judgment in the case for sum of money, since there were other allegations
and defenses put up by Spouses Go in their Answer which raised genuine issues on the material
facts in the action.77

The CA agreed with Spouses Go that paragraphs 3 and 4 of the complaint merely dwelt on
the fact that a contract of loan was entered into by the parties, while paragraph 7 simply emphasized
the terms of the promissory notes executed by Go in favor of PBCom. The fact of default, the
amount of the outstanding obligation, and the existence of a prior demand, which were all material
to PBComs claim, were hardly admitted78 by Spouses Go in their Answer and were, in fact,
effectively questioned in the other allegations in the Answer.79

76
Id. at 41.
77
Id. at 39.
78
Id.
79
Id. at 39-40.

24
PBComs motion for reconsideration was denied in a resolution80 dated November 27, 2006.

Thus, this petition for review.

THE ISSUES

I
WHETHER THE COURT OF APPEALS ERRED OR ACTED IN GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK, OR EXCESS OF
JURISDICTION IN RULING THAT THERE EXISTS A GENUINE ISSUE
AS TO MATERIAL FACTS IN THE ACTION IN SPITE OF THE
UNEQUIVOCAL ADMISSIONS MADE IN THE PLEADINGS BY
RESPONDENTS; AND

II

WHETHER THE COURT OF APPEALS ERRED OR ACTED IN GRAVE


ABUSE OF JURISDICTION [DISCRETION] IN HOLDING THAT ISSUES
WERE RAISED ABOUT THE FACT OF DEFAULT, THE AMOUNT OF
THE OBLIGATION, AND THE EXISTENCE OF PRIOR DEMAND, EVEN
WHEN THE PLEADING CLEARLY POINTS TO THE CONTRARY.

Petitioner PBComs Position: Summary


judgment was proper, as there were no
genuine issues raised as to any material fact.

PBCom argues that the material averments in the complaint categorically admitted by
Spouses Go obviated the necessity of trial. In their Answer, Spouses Go admitted the allegations
in paragraphs 3 and 4 of the Complaint pertaining to the security for the loans and the due execution
of the promissory notes,81 and those in paragraph 7 which set forth the acceleration clauses in the
promissory note. Their denial of paragraph 5 of the Complaint pertaining to the Schedules of

80
Id. at 44-45. Penned by Associate Justice Rodrigo V. Cosico, with Associate Justices Edgardo F. Sundiam and
Apolinario D. Bruselas, Jr. (in lieu of Associate Justice Japar B. Dimaampao who was on leave per Office Order No.
300-06-RTR dated November 14, 2006), concurring.
81
Id. at 236.

25
Payment for the liquidation of the two promissory notes did not constitute a specific denial required
by the Rules.82

Even in the Comment83 of Spouses Go, the clear, categorical and unequivocal admission
of paragraphs 3, 4, and 7 of the Complaint had been conceded.84

PBCom faults the CA for having formulated non-existent issues pertaining to the fact of
default, the amount of outstanding obligation and the existence of prior demand, none of which is
borne by the pleadings or the records.85

The Spouses Go, PBCom argues, cannot negate or override the legal effect of the
acceleration clauses embodied in each of the two promissory notes executed by Go. Moreover, the
non-payment of arrearages constituting default was admitted by Go in his letters to PBCom dated
March 3 and April 7, 2000, respectively.86 Therefore, by such default, they have lost the benefit of
the period in their favor, pursuant to Article 119887 of the Civil Code.

Further, PBCom claims that its causes of action are supported by authentic documents and
voluntary admissions which cannot be contradicted. It cites the March 3 and April 7, 2000 letters
of Go requesting deferment of interest payments on his past due loan obligations to PBCom, as his
assets had been placed under attachment in a case filed by the BSP.88 PBCom emphasizes that the

82
Id. at 237
83
Id. at 174.
84
Id. at 240.
85
Id. at 241.
86
Id. at 242.
87
Article 1198 of the Civil Code provides: The debtor shall lose every right to make use of the period:
(1) When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the
debt;
(2) When he does not furnish to the creditor the guaranties or securities which he has promised;
(3) When by his own acts he has impaired said guaranties or securities after their esta blishment, and when through a
fortuitous event they disappear, unless he immediately gives new ones equally satisfactory;
(4) When the debtor violates any undertaking, in consideration of which the creditor agreed to the period;
(5) When the debtor attempts to abscond.
88
Rollo, pp. 242-243.

26
said letters, in addition to its letters of demand duly acknowledged and received by Go, negated
their claim that they were not aware of any demand having been made.89

Respondent spouses position: Summary


judgment was not proper.

The core contention of Spouses Go is that summary judgment was not proper under the
attendant circumstances, as there exist genuine issues with respect to the fact of default, the amount
of the outstanding obligation, and the existence of prior demand, which were duly questioned in
the special and affirmative defenses set forth in the Answer. Spouses Go agree with the CA that
the admissions in the pleadings pertained to the highlight of the terms of the contract. Such
admissions merely recognized the existence of the contract of loan and emphasized its terms and
conditions.90 Moreover, although they admitted paragraphs 3, 4, and 7, the special and affirmative
defenses contained in the Answer tendered genuine issues which could only be resolved in a full-
blown trial.91

On the matter of specific denial, Spouses Go posit that the Court decisions cited by
92
PBCom do not apply on all fours in this case. Moreover, the substance of the repayment schedule
was not set forth in the complaint. It, therefore, follows that the act of attaching copies to the
complaint is insufficient to secure an implied admission. Assuming arguendo that it was impliedly
admitted, the existence of said schedule and the promissory notes would not immediately make
private respondents liable for the amount claimed by PBCom.93 Before respondents may be held
liable, it must be established, first, that they indeed defaulted; and second, that the obligations has
remained outstanding.94

89
Id. at 244.
90
Id. at 210.
91
Id. at 211.
92
Philippine Bank of Communications v. Court of Appeals, G.R. No. 92067, March 22, 1991, 195 SCRA 567 and
Morales v. Court of Appeals, 274 Phil.674 (1991).
93
Rollo, p. 215.
94
Id.

27
Spouses Go also state that although they admitted paragraphs 3, 4 and 7 of the Complaint,
the fact of default, the amount of outstanding obligation and the existence of prior demand were
fully questioned in the special and affirmative defenses.95

RULING OF THE COURT

The Court agrees with the CA that [t]he supposed admission of defendants-appellants on
the x x x allegations in the complaint is clearly not sufficient to justify the rendition of summary
judgment in the case for sum of money, considering that there are other allegations embodied and
defenses raised by the defendants-appellants in their answer which raise a genuine issue as to the
material facts in the action.96

The CA correctly ruled that there exist genuine issues as to three material facts, which have
to be addressed during trial: first, the fact of default; second, the amount of the outstanding
obligation, and third, the existence of prior demand.

Under the Rules, following the filing of pleadings, if, on motion of a party and after hearing,
the pleadings, supporting affidavits, depositions and admissions on file show that, except as to the
amount of damages, there is no genuine issue as to any material fact, and that the moving party is
entitled to a judgment as a matter of law,97 summary judgment may be rendered. This rule was
expounded in Asian Construction and Development Corporation v. Philippine Commercial
International Bank,98 where it was written:

Under Rule 35 of the 1997 Rules of Procedure, as amended, except as to


the amount of damages, when there is no genuine issue as to any material fact and
the moving party is entitled to a judgment as a matter of law, summary judgment
may be allowed.99 Summary or accelerated judgment is a procedural technique

95
Id. at 213.
96
Id. at 39.
97
Rule 35, Rules of Civil Procedure.
98
G.R. No. 153827, April 25, 2006, 488 SCRA 192.
99
Citing Northwest Airlines v. CA, 348 Phil. 438, 449 (1998).

28
aimed at weeding out sham claims or defenses at an early stage of litigation thereby
avoiding the expense and loss of time involved in a trial.100

Under the Rules, summary judgment is appropriate when there are no


genuine issues of fact which call for the presentation of evidence in a full-blown
trial. Even if on their face the pleadings appear to raise issues, when the affidavits,
depositions and admissions show that such issues are not genuine, then summary
judgment as prescribed by the Rules must ensue as a matter of law. The
determinative factor, therefore, in a motion for summary judgment, is the presence
or absence of a genuine issue as to any material fact.

A genuine issue is an issue of fact which requires the presentation of


evidence as distinguished from a sham, fictitious, contrived or false claim. When
the facts as pleaded appear uncontested or undisputed, then there is no real or
genuine issue or question as to the facts, and summary judgment is called for. The
party who moves for summary judgment has the burden of demonstrating clearly
the absence of any genuine issue of fact, or that the issue posed in the complaint is
patently unsubstantial so as not to constitute a genuine issue for trial. Trial courts
have limited authority to render summary judgments and may do so only when
there is clearly no genuine issue as to any material fact. When the facts as pleaded
by the parties are disputed or contested, proceedings for summary judgment cannot
take the place of trial.101 (Underscoring supplied.)

Juxtaposing the Complaint and the Answer discloses that the material facts here are not
undisputed so as to call for the rendition of a summary judgment. While the denials of Spouses Go
could have been phrased more strongly or more emphatically, and the Answer more coherently and
logically structured in order to overthrow any shadow of doubt that such denials were indeed made,
the pleadings show that they did in fact raise material issues that have to be addressed and threshed
out in a full-blown trial.

PBCom anchors its arguments on the alleged implied admission by Spouses Go resulting
from their failure to specifically deny the material allegations in the Complaint, citing as precedent
Philippine Bank of Communications v. Court of Appeals,102 and Morales v. Court of Appeals.
Spouses Go, on the other hand, argue that although admissions were made in the Answer, the
special and affirmative defenses contained therein tendered genuine issues.

100
Citing Excelsa Industries, Inc, v. CA, 317 Phil. 664, 671 (1995).
101
Supra note 38 at 202-203, citing Evadel Realty and Development Corporation v. Soriano, 409 Phil. 450, 461 (2001).
102
G.R. No. 92067, March 22, 1991, 195 SCRA 567.

29
Under the Rules, every pleading must contain, in a methodical and logical form, a plain,
concise and direct statement of the ultimate facts on which the party pleading relies for his claim
or defense, as the case may be, omitting the statement of mere evidentiary facts.103

To specifically deny a material allegation, a defendant must specify each material


allegation of fact the truth of which he does not admit, and whenever practicable, shall set forth the
substance of the matters upon which he relies to support his denial. Where a defendant desires to
deny only a part of an averment, he shall specify so much of it as is true and material and shall
deny only the remainder. Where a defendant is without knowledge or information sufficient to form
a belief as to the truth of a material averment made in the complaint, he shall so state, and this shall
have the effect of a denial.104

Rule 8, Section 10 of the Rules of Civil Procedure contemplates three (3) modes of specific
denial, namely: 1) by specifying each material allegation of the fact in the complaint, the truth of
which the defendant does not admit, and whenever practicable, setting forth the substance of the
matters which he will rely upon to support his denial; (2) by specifying so much of an averment in
the complaint as is true and material and denying only the remainder; (3) by stating that the
defendant is without knowledge or information sufficient to form a belief as to the truth of a
material averment in the complaint, which has the effect of a denial.105

The purpose of requiring the defendant to make a specific denial is to make him disclose
the matters alleged in the complaint which he succinctly intends to disprove at the trial, together
with the matter which he relied upon to support the denial. The parties are compelled to lay their
cards on the table.106

Again, in drafting pleadings, members of the bar are enjoined to be clear and concise in
their language, and to be organized and logical in their composition and structure in order to set

103
Section 1, Rule 8, Rules of Civil Procedure.
104
Section 10, Rule 8, Rules of Civil Procedure.
105
Spouses Gaza. v. Ramon J. Lim and Agnes J. Lim, 443 Phil. 337, 345 (2003).
106
Aquintey v. Tibong, G.R. No. 166704, December 20, 2006, 511 SCRA 414, 432.

30
forth their statements of fact and arguments of law in the most readily comprehensible manner
possible. Failing such standard, allegations made in pleadings are not to be taken as stand-alone
catchphrases in the interest of accuracy. They must be contextualized and interpreted in relation to
the rest of the statements in the pleading.

In Spouses Gaza v. Lim, the Court ruled that the CA erred in declaring that the petitioners
therein impliedly admitted respondents' allegation that they had prior and continuous possession of
the property, as petitioners did in fact enumerate their special and affirmative defenses in their
Answer. They also specified therein each allegation in the complaint being denied by them. The
Court therein stated:

The Court of Appeals held that spouses Gaza, petitioners, failed to deny
specifically, in their answer, paragraphs 2, 3 and 5 of the complaint for forcible
entry quoted as follows:
xxx xxx xxx
2. That plaintiffs are the actual and joint occupants and in
prior continuous physical possession since 1975 up to Nov. 28,
1993 of a certain commercial compound described as follows:
A certain parcel of land situated in Bo. Sta. Maria, Calauag,
Quezon. Bounded on the N., & E., by Julian de Claro; on the W.,
by Luis Urrutia. Containing an area of 5,270 square meters, more or
less. Declared under Ramon J. Lim's Tax Dec. No. 4576 with an
Ass. Value of P26,100.00
3. That plaintiffs have been using the premises mentioned
for combined lumber and copra business. Copies of plaintiffs'
Lumber Certificate of Registration No. 2490 and PCA Copra
Business Registration No. 6265/76 are hereto attached as Annexes
"A" and "B" respectively; the Mayor's unnumbered copra dealer's
permit dated Dec. 31, 1976 hereto attached as Annex "C";
xxx xxx xxx
5. That defendants' invasion of plaintiffs' premises was
accomplished illegally by detaining plaintiffs' caretaker Emilio
Herrera and his daughter inside the compound, then proceeded to
saw the chain that held plaintiffs' padlock on the main gate of the
compound and then busted or destroyed the padlock that closes the
backyard gate or exit. Later, they forcibly opened the lock in the
upstairs room of plaintiff Agnes J. Lim's quarters and defendants
immediately filled it with other occupants now. Copy of the
caretaker's (Emilio Herrera) statement describing in detail is hereto
attached as Annex "D";

31
xxx xxx xxx.7
The Court of Appeals then concluded that since petitioners did not deny
specifically in their answer the above-quoted allegations in the complaint, they
judicially admitted that Ramon and Agnes Lim, respondents, "were in prior
physical possession of the subject property, and the action for forcible entry which
they filed against private respondents (spouses Gaza) must be decided in their
favor. The defense of private respondents that they are the registered owners of the
subject property is unavailing."
We observe that the Court of Appeals failed to consider paragraph 2 of
petitioners' answer quoted as follows:
2. That defendants specifically deny the allegations in
paragraph 2 and 3 of the complaint for want of knowledge or
information sufficient to form a belief as to the truth thereof, the
truth of the matter being those alleged in the special and affirmative
defenses of the defendants;"8
Clearly, petitioners specifically denied the allegations contained in
paragraphs 2 and 3 of the complaint that respondents have prior and continuous
possession of the disputed property which they used for their lumber and copra
business. Petitioners did not merely allege they have no knowledge or information
sufficient to form a belief as to truth of those allegations in the complaint, but added
the following:
SPECIAL AND AFFIRMATIVE DEFENSES
That defendants hereby reiterate, incorporate and restate the
foregoing and further allege:
5. That the complaint states no cause of action;
"From the allegations of plaintiffs, it appears that their
possession of the subject property was not supported by any concrete
title or right, nowhere in the complaint that they alleged either as an
owner or lessee, hence, the alleged possession of plaintiffs is
questionable from all aspects. Defendants Sps. Napoleon Gaza and
Evelyn Gaza being the registered owner of the subject property has
all the right to enjoy the same, to use it, as an owner and in support
thereof, a copy of the transfer certificate of title No. T-47263 is
hereto attached and marked as Annex "A-Gaza" and a copy of the
Declaration of Real Property is likewise attached and marked as
Annex "B-Gaza" to form an integral part hereof;
6. That considering that the above-entitled case is an
ejectment case, and considering further that the complaint did not
state or there is no showing that the matter was referred to a Lupon
for conciliation under the provisions of P.D. No. 1508, the Revised
Rule on Summary Procedure of 1991, particularly Section 18 thereof
provides that such a failure is jurisdictional, hence subject to
dismissal;

32
7. That the Honorable Court has no jurisdiction over the
subject of the action or suit;
The complaint is for forcible entry and the plaintiffs were
praying for indemnification in the sum of P350,000.00 for those
copra, lumber, tools, and machinery listed in par. 4 of the complaint
and P100,000.00 for unrealized income in the use of the
establishment, considering the foregoing amounts not to be rentals,
Section 1 A (1) and (2) of the Revised Rule on Summary Procedure
prohibits recovery of the same, hence, the Honorable Court can not
acquire jurisdiction over the same. Besides, the defendants Napoleon
Gaza and Evelyn Gaza being the owners of those properties cited in
par. 4 of the complaint except for those copra and two (2) live
carabaos outside of the subject premises, plaintiffs have no rights
whatsoever in claiming damages that it may suffer, as and by way of
proof of ownership of said properties cited in paragraph 4 of the
complaint attached herewith are bunche[s] of documents to form an
integral part hereof;
8. That plaintiffs' allegation that Emilio Herrera was illegally
detained together with his daughter was not true and in support
thereof, attached herewith is a copy of said Herrera's statement and
marked as Annex "C-Gaza."
xxx xxx xxx.9
The above-quoted paragraph 2 and Special and Affirmative Defenses
contained in petitioners' answer glaringly show that petitioners did not admit
impliedly that respondents have been in prior and actual physical possession of the
property. Actually, petitioners are repudiating vehemently respondents' possession,
stressing that they (petitioners) are the registered owners and lawful occupants
thereof.
Respondents' reliance on Warner Barnes and Co., Ltd. v. Reyes10 in
maintaining that petitioners made an implied admission in their answer is misplaced.
In the cited case, the defendants' answer merely alleged that they were "without
knowledge or information sufficient to form a belief as to the truth of the material
averments of the remainder of the complaint" and "that they hereby reserve the right
to present an amended answer with special defenses and counterclaim."11 In the
instant case, petitioners enumerated their special and affirmative defenses in their
answer. They also specified therein each allegation in the complaint being denied
by them. They particularly alleged they are the registered owners and lawful
possessors of the land and denied having wrested possession of the premises from
the respondents through force, intimidation, threat, strategy and stealth. They
asserted that respondents' purported possession is "questionable from all aspects."
They also averred that they own all the personal properties enumerated in
respondents' complaint, except the two carabaos. Indeed, nowhere in the answer can
we discern an implied admission of the allegations of the complaint, specifically the
allegation that petitioners have priority of possession.

33
Thus, the Court of Appeals erred in declaring that herein petitioners
impliedly admitted respondents' allegation that they have prior and continuous
possession of the property.107 (Underscoring supplied.)

In this case, as in Gaza, the admissions made by Spouses Go are to be read and taken
together with the rest of the allegations made in the Answer, including the special and affirmative
defenses.

For instance, on the fact of default, PBCom alleges in paragraph 8 of the Complaint that
Go defaulted in the payment for both promissory notes, having paid only three interest installments
covering the months of September, November, and December 1999.

In paragraph 6 of the Answer, Spouses Go denied the said allegation, and further alleged
in paragraphs 8 to 13 that Go made substantial payments on his monthly loan amortizations.

The portions of the pleadings referred to are juxtaposed below:

Complaint Answer
8. The defendant defaulted in the payment of 6. Defendants deny the allegations in
the obligations on the two (2) promissory notes paragraphs 8, 9, 10 and 11 of the Complaint;
(Annexes A and B hereof) as he has paid only
three (3) installments on interests (sic) xxx
payments covering the months of September, 8. The promissory notes referred to in the
November and December, 1999, on both complaint expressly state that the loan
promissory notes, respectively. As a obligation is payable within the period of ten
consequence of the default, the entire balance (10) years. Thus, from the execution date of
due on the obligations of the defendant to September 30, 1999, its due date falls on
plaintiff on both promissory notes immediately September 3o, 2009 (and not 2001 as
became due and demandable pursuant to the erroneously stated in the complaint). Thus,
terms and conditions embodied in the two (2) prior to September 30, 2009, the loan
promissory notes;108 obligations cannot be deemed due and
demandable.
In conditional obligations, the acquisition of
rights, as well as the extinguishment or loss of
those already acquired, shall depend upon the

107
Supra note 45.
108
Rollo, p. 50.

34
happening of the event which constitutes the
condition. (Article 1181, New Civil Code)
9. Contrary to the plaintiffs preference,
defendant Jose C. Go has made substantial
payments in terms of his monthly payments.
There is therefore, a need to do some
accounting works (sic) just to reconcile the
records of both parties.
10. While demand is a necessary requirement
to consider the defendant to be in
delay/default, such has not been complied with
by the plaintiff since the former is not aware of
any demand made to him by the latter for the
settlement of the whole obligation.
11. Undeniably, at the time the pledge of the
shares of stocks were executed, their total
value is more than the amount of the loan, or at
the very least, equal to it. Thus, plaintiff was
fully secured insofar as its exposure is
concerned.109
12. And even assuming without conceding,
that the present value of said shares has went
(sic) down, it cannot be considered as
something permanent since, the prices of
stocks in the market either increases (sic) or
(sic) decreases depending on the market
forces. Thus, it is highly speculative for the
plaintiff to consider said shares to have
suffered tremendous decrease in its value.
Moreso (sic), it is unfair for the plaintiff to
renounce or abandon the pledge agreements.

13. As aptly stated, it is not aware of any


termination of the pledge agreement initiated
by the plaintiff.

Moreover, in paragraph 10 of the Answer, Spouses Go also denied the existence of prior
demand alleged by PBCom in paragraph 10 of the Complaint. They stated therein that they were

109
Id. at 59.

35
not aware of any demand made by PBCom for the settlement of the whole obligation. Both sections
are quoted below:

Complaint Answer
10. Plaintiff made repeated demands from (sic) 10. While demand is a necessary requirement
defendant for the payment of the obligations to consider the defendant to be in
which the latter acknowledged to have delay/default, such has not been complied with
incurred however, defendant imposed by the plaintiff since the former is not aware of
conditions such as [that] his [effecting] any demand made to him by the latter for the
payments shall depend upon the lifting of settlement of the whole obligation.
garnishment effected by the Bangko Sentral on
his accounts. Photocopies of defendants
communication dated March 3, 2000 and April
7, 2000, with plaintiff are hereto attached as
Annexes F and G hereof, as well as its demand
to pay dated April 18, 2000. Demand by
plaintiff is hereto attached as Annex H
hereof.110 [Emphases supplied]

Finally, as to the amount of the outstanding obligation, PBCom alleged in paragraph 9 of


the Complaint that the outstanding balance on the couples obligations as of May 31, 2001 was
P21,576,668.64 for the first loan and P95,991,111.11, for the second loan or a total of
P117,567,779.75.

In paragraph 9 of the Answer, however, Spouses Go, without stating any specific amount,
averred that substantial monthly payments had been made, and there was a need to reconcile the
accounting records of the parties.
Formatted: Space After: 0 pt, Line spacing: single
Complaint Answer
9. Defendants outstanding obligations under 9. Contrary to the plaintiffs preference,
the two (2) promissory notes as of May 31, defendant Jose C. Go has made substantial
2001 are: P21,576,668.64 (Annex A) and payments in terms of his monthly payments.
P95,991,111.11 (Annex B), or a total of There is therefore, a need to do some
P117,567,779.75. Copy of the Statement of accounting works just to reconcile the records
of both parties.112

110
Id. at 50.
112
Id. at 59.

36
Account is hereto attached as Annex E
hereof.111

Clearly then, when taken within the context of the entirety of the pleading, it becomes
apparent that there was no implied admission and that there were indeed genuine issues to be
addressed.

As to the attached March 3, 2000 letter, the Court is in accord with the CA when it wrote:

The letter dated March 3, 2000 is insufficient to support the material


averments in PBComs complaint for being equivocal and capable of different
interpretations. The contents of the letter do not address all the issues material to
the banks claim and thus do not conclusively establish the cause of action of
PBCom against the spouses Go. As regards the letter dated April 7, 2000, the trial
court itself ruled that such letter addressed to PBCom could not be considered
against the defendants-appellants simply because it was not signed by defendant-
appellant Jose Go.

Notably, the trial court even agreed with the defendant-appellants on the
following points:

The alleged default and outstanding obligations are based on


the Statement of Account. This Court agrees with the defendants that
since the substance of the document was not set forth in the
complaint although a copy thereof was attached thereto, or the said
document was not set forth verbatim in the pleading, the rule on
implied admission does not apply.113
It must also be pointed out that the cases cited by PBCom do not apply to this case. Those
two cases involve denial of lack of knowledge of facts so plainly and necessarily within [the
knowledge of the party making such denial] that such averment of ignorance must be palpably
untrue.114 Also, in both cases, the documents denied were the same documents or deeds sued upon
or made the basis of, and attached to, the complaint.

In Philippine Bank of Communications v. Court of Appeals,115 the Court ruled that the
defendants contention that it had no truth or information sufficient to form a belief as to the truth

111
Id.
113
Id. at 40.
114
Warner Barnes & Co., Ltd. v. Reyes, 103 Phil. 662, 665 (1958), citing Icle Plant Equipment Co. v. Marcello, D.C.
Pa. 1941, 43 F. Supp. 281.
115
Philippine Bank of Communications v. Court of Appeals, supra note 32.

37
of the deed of exchange was an invalid or ineffectual denial pursuant to the Rules of Court,116 as it
could have easily asserted whether or not it had executed the deed of exchange attached to the
petition. Citing Capitol Motors Corporations v. Yabut,117 the Court stated that:

x x x The rule authorizing an answer to the effect that the defendant has no
knowledge or information sufficient to form a belief as to the truth of an averment
and giving such answer the effect of a denial, does not apply where the fact as to
which want of knowledge is asserted, is so plainly and necessarily within the
defendants knowledge that his averment of ignorance must be palpably untrue.118

The Warner Barnes case cited above sprung from a suit for foreclosure of mortgage, where
the document that defendant denied was the deed of mortgage sued upon and attached to the
complaint. The Court then ruled that it would have been easy for the defendants to specifically
allege in their answer whether or not they had executed the alleged mortgage.

Similarly, in Capitol Motors, the document denied was the promissory note sued upon and
attached to the complaint. In said case, the Court ruled that although a statement of lack of
knowledge or information sufficient to form a belief as to the truth of a material averment in the
complaint was one of the modes of specific denial contemplated under the Rules, paragraph 2 of
the Answer in the said case was insufficient to constitute a specific denial.119 Following the ruling
in the Warner Barnes case, the Court held that it would have been easy for defendant to specifically
allege in the Answer whether or not it had executed the promissory note attached to the
Complaint.120

In Morales v. Court of Appeals,121 the matter denied was intervenors knowledge of the
plaintiffs having claimed ownership of the vehicle in contention. The Court therein stated:

Yet, despite the specific allegation as against him, petitioner, in his Answer
in Intervention with Counterclaim and Crossclaim, answered the aforesaid
paragraph 11, and other paragraphs, merely by saying that he has no knowledge or
information sufficient to form a belief as to its truth. While it may be true that under

116
Id. at 574.
117
Id.
118
Id., citing Warner Barnes & Co., Ltd. v. Reyes, 103 Phil. 662 (1958).
119
Id.
120
Id.
121
274 Phil. 674, 686 (1991).

38
the Rules one could avail of this statement as a means of a specific denial,
nevertheless, if an allegation directly and specifically charges a party to have done,
performed or committed a particular act, but the latter had not in fact done,
performed or committed it, a categorical and express denial must be made. In such
a case, the occurrence or non-occurrence of the facts alleged may be said to be
within the partys knowledge. In short, the petitioner herein could have simply
expressly and in no uncertain terms denied the allegation if it were untrue. It has
been held that when the matters of which a defendant alleges of having no
knowledge or information sufficient to form a belief, are plainly and necessarily
within his knowledge, his alleged ignorance or lack of information will not be
considered as specific denial. His denial lacks the element of sincerity and good
faith, hence, insufficient.122

Borrowing the phraseology of the Court in the Capitol Motors case, clearly, the fact of the
parties having executed the very documents sued upon, that is, the deed of exchange, deed or
mortgage or promissory note, is so plainly and necessarily within the knowledge of the denying
parties that any averment of ignorance as to such fact must be palpably untrue.

In this case, however, Spouses Go are not disclaiming knowledge of the transaction or the
execution of the promissory notes or the pledge agreements sued upon. The matters in contention
are, as the CA stated, whether or not respondents were in default, whether there was prior demand,
and the amount of the outstanding loan. These are the matters that the parties disagree on and by
which reason they set forth vastly different allegations in their pleadings which each will have to
prove by presenting relevant and admissible evidence during trial.

Furthermore, in stark contrast to the cited cases where one of the parties disclaimed
knowledge of something so patently within his knowledge, in this case, respondents Spouses Go
categorically stated in the Answer that there was no prior demand, that they were not in default,
and that the amount of the outstanding loan would have to be ascertained based on official records.

WHEREFORE, the petition is DENIED.

122
Id. at 674, citing Gutierrez v. Court of Appeals, 165 Phil. 752 (1976) and Warner Barnes & Co. v. Reyes, 103 Phil.
662 (1958).

39
SO ORDERED.

JOSE CATRAL MENDOZA


Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

ANTONIO EDUARDO B. NACHURA DIOSDADO M. PERALTA


Associate Justice Associate Justice

ROBERTO A. ABAD
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.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

40
CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons
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.

RENATO C. CORONA
Chief Justice

41
Republic of the Philippines
Supreme Court
Manila

THIRD DIVISION

ELAND PHILIPPINES, INC., G.R. No. 173289


Petitioner,

Present:

-versus-
CARPIO,* J.,
CORONA, J., Chairperson,
NACHURA,
AZUCENA GARCIA, ELINO PERALTA, and
FAJARDO, and HEIR OF
MENDOZA, JJ.
TIBURCIO MALABANAN named
TERESA MALABANAN,
Respondents.
Promulgated:

February 17, 2010


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

DECISION

*
Designated to sit as an additional Member, in lieu of Justice Presbitero J. Velasco, Jr., per Raffle dated
February 10, 2010.

42
PERALTA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to
reverse and set aside the decision123 dated February 28, 2006 of the Court of Appeals (CA) in CA-
G.R. CV No. 67417, which dismissed the appeal of petitioner Eland Philippines, Inc. and affirmed
the Resolutions dated November 3, 1999 and June 28, 2006 of Branch 18, Regional Trial Court
(RTC) of Tagaytay City.

The facts of the case, as shown in the records, are the following:

Respondents Azucena Garcia, Elino Fajardo, and Teresa Malabanan, the heir of Tiburcio
Malabanan, filed a Complaint124 dated March 2, 1998 for Quieting of Title with Writ of
Preliminary Injunction with the RTC, Branch XVIII, Tagaytay City against petitioner Eland
Philippines, Inc. Respondents claimed that they are the owners, in fee simple title, of a parcel of
land identified as Lot 9250 Cad-355, Tagaytay Cadastre, Plan Ap-04-008367, situated in Barangay
Iruhin, Tagaytay City, containing an area of Two Hundred Forty-Four Thousand One Hundred
Twelve (244,112) square meters, by occupation and possession under the provisions of Sec. 48
(b)125 of the Public Land Law or Commonwealth Act No. 141, as amended.

123
Penned by Associate Justice Hakim S. Abdulwahid, with Associate Justices Remedios A. Salazar-Fernando
and Estela M. Perlas-Bernabe, concurring; rollo, pp. 77-92.

124
Records, p. 1.
125
Sec. 48. The following described-citizens of the Philippines, occupying lands of the public domain or
claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may
apply to the Court of First Instance of the province where the land is located for confirmation of their claims and the
issuance of a certificate of title thereafter, under the Land Registration Act, to wit:
xxxx
(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim
of acquisition or ownership, for at least thirty years immediately preceding the filing of the application for
confirmation of title, except when prevented by war or force majeure. Those shall be conclusively presumed to have
performed all the conditions essential to a government grant and shall be entitled to a certificate of title under the
provisions of this Chapter.

43
For having been in continuous, public, and adverse possession as owners of the said lot for
at least thirty years, respondents stated that they were not aware of any person or entity who had a
legal or equitable interest or claim on the same lot until the time they were requesting that the lot
be declared for tax purposes. They found out that the lot was the subject of a land registration
proceeding that had already been decided by the same court126 where their complaint was filed.
They also found out that Decree No. N-217313, LRC Record No. N-62686, was already issued on
August 20, 1997 to the petitioner pursuant to the Decision dated June 7, 1994 of the same court.
They averred that they were not notified of the said land registration case; thus, they claimed the
presence of misrepresentation amounting to actual or extrinsic fraud. Thus, they argued that they
were also entitled to a writ of preliminary injunction in order to restrain or enjoin petitioner, its
privies, agents, representatives, and all other persons acting on its behalf, to refrain from
committing acts of dispossession on the subject lot.

Summons, together with a copy of the complaint, were served on the petitioner on April 7,
1998. On April 29, 1998, petitioner filed an Entry of Appearance with Motion for Extension of
Time,127 which the trial court granted128 for a period of ten (10) days within which to file a
responsive pleading. Petitioner filed a Second Motion for Extension of Time to File Answer129
dated April 29, 1998, which the trial court likewise granted.130

Thereafter, petitioner filed a Motion to Dismiss131 dated May 9, 1998, stating that the
pleading asserting the claim of respondents stated no cause of action, and that the latter were not
entitled to the issuance of a writ of preliminary injunction, setting the same for hearing on May 21,
1998. On the date of the hearing, the trial court issued an Order,132 which granted the respondents
ten (10) days from that day to file a comment, and set the date of the hearing on July 23, 1998.

126
Land Registration Case No. TG-423.
127
Supra note 2 at 51.
128
Id. at 57.
129
Id. at 68.
130
Id. at 71.
131
Id. at 58.
132
Id. at 67.

44
Respondents filed a Motion to Admit Comment/Opposition to Defendant Eland,133 together with
the corresponding Comment/Opposition134 dated June 8, 1998.

On the scheduled hearing of September 23, 1998, the trial court issued an Order,135
considering the Motion to Dismiss submitted for resolution due to the non-appearance of the
parties and their respective counsels. The said motion was eventually denied by the trial court in
an Order136 dated September 25, 1998, ruling that the allegations in the complaint established a
cause of action and enjoined petitioner Eland to file its answer to the complaint within ten (10)
days from receipt of the same. Petitioner then filed two Motions for Extension to File an Answer.137

Petitioner, on November 9, 1998, filed a Motion for Reconsideration138 of the trial court's
Order dated September 25, 1998, denying the former's Motion to Dismiss. Again, petitioner filed
a Motion for Final Extension of Time to File Answer 139 dated November 6, 1998. Respondents
filed their Comment/Opposition to Motion for Reconsideration dated November 24, 1998.
Subsequently, the trial court denied petitioner's motion for reconsideration in an Order140 dated
January 11, 1999.

Meanwhile, respondents filed a Motion to Declare Defendant Eland in Default141 dated


November 17, 1998. On December 4, 1998 Petitioner Eland filed its Comment (on Plaintiff's
Motion to Declare Defendant Eland in Default)142 dated December 2, 1998, while respondents
filed a Reply to Comment (on Plaintiff's Motion to Declare Defendant Eland in Default) 143 dated

133
Id. at 97.
134
Id. at 99.
135
Id. at 146.
136
Id. at 147.
137
Motion for Extension to File Answer dated October 16, 1998 and Second Motion for Extension to File
Answer dated October 28, 1998.
138
Supra note 2 at 165.
139
Id. at 168.
140
Id. at 214.
141
Id. at 173.
142
Id. at 209.
143
Id. at 204.

45
December 29, 1998. Thereafter, the trial court issued an Order144 dated January 11, 1999 declaring
the petitioner in default and allowed the respondents to present evidence ex parte. Petitioner filed
a Motion for Reconsideration (of the Order dated 11 January 1999) 145 dated February 5, 1999 on
the trial court's denial of its motion to dismiss and in declaring it in default. The trial court in an
Order146 dated March 18, 1999, denied the former and granted the latter. In the same Order, the
trial court admitted petitioner's Answer Ad Cautelam.

Earlier, petitioner filed its Answer Ad Cautelam (With Compulsory Counterclaim)147 dated
November 12, 1998. Respondents countered by filing a Motion to Expunge Eland's Answer from
the Records148 dated December 2, 1998. Petitioner filed its Opposition (to Plaintiff's Motion to
Expunge Eland's Answer from the Records)149 dated December 21, 1998, as well as a Comment
(on Plaintiff's Motion to Expunge Eland's Answer from the Records)150 dated January 26, 1999.

Consequently, respondents filed a Motion to Set Presentation of Evidence Ex Parte151 dated


January 18, 1999, which was granted in an Order152 dated January 22, 1999.

On January 28, 1999, respondents presented their evidence before the Clerk of Court of the
trial court which ended on February 3, 1999; and, on February 10, 1999, respondents filed their
Formal Offer of Evidence.153 However, petitioner filed an Urgent Motion to Suspend Plaintiff's Ex
Parte Presentation of Evidence154 dated February 8, 1999. In that regard, the trial court issued an
Order155 dated February 11, 1999 directing the Clerk of Court to suspend the proceedings.

144
Id. at 214.
145
Id. at 224.
146
Id. at 305.
147
Id. at 177.
148
Id. at 197.
149
Id. at 200.
150
Id. at 221.
151
Id. at 218.
152
Id. at 220.
153
Id. at 239.
154
Id. at 235.
155
Id. at 248.

46
On May 14, 1999, respondents filed a Motion for Clarification 156 as to whether or not the
evidence presented ex parte was nullified by the admission of petitioner's Answer Ad Cautelam.
Petitioner filed its Comment157 dated May 13, 1999 on the said motion for clarification.

A pre-trial conference was scheduled on May 27, 1999, wherein the parties submitted their
pre-trial briefs.158 However, petitioner filed a Motion to Suspend Proceedings159 dated May 24,
1999 on the ground that the same petitioner had filed a petition for certiorari with the CA, asking
for the nullification of the Order dated March 18, 1999 of the trial court and for the affirmation of
its earlier Order denying petitioner's Motion to Dismiss. The petition for certiorari was
subsequently denied; and a copy of the Resolution160 dated June 14, 1999 was received by the trial
court. Hence, in an Order161 dated July 7, 1999, the trial court ruled that the reception of evidence
already presented by the respondents before the Clerk of Court remained as part of the records of
the case, and that the petitioner had the right to cross-examine the witness and to comment on the
documentary exhibits already presented. Consequently, petitioner filed a Motion for
Reconsideration162 dated July 19, 1999, but it was denied by the trial court in an Omnibus Order163
dated September 14, 1999.

Eventually, respondents filed a Motion for Summary Judgment164 dated August 5, 1999,
while petitioner filed its Opposition165 to the Motion dated August 31, 1999. In its Resolution166

156
Id. at 376.
157
Id. at 379.
158
Id. at 370 for the respondents, p. 394 for petitioner.
159
Id. at 398.
160
Id. at 486.
161
Id. at 491.
162
Id. at 492.
163
Id. at 520.
164
Id. at 506.
165
Id. at 513.
166
Id. at 522.

47
dated November 3, 1999, the trial court found favor on the respondents. The dispositive portion of
the Resolution reads:

WHEREFORE, premises considered, the motion for summary judgment is


hereby GRANTED and it is hereby adjudged that:

1. Plaintiffs are the absolute owners and rightful possessors of Lot 9250,
CAD-355, Tagaytay Cadastre, subject to the rights of occupancy of the farm
workers on the one-third area thereof;

2. The Judgment dated June 7, 1994 in Land Registration Case No. TG-423
is set aside and the Decree No. N-217313, LRC Record No. N-62686 dated August
20, 1997 is null and void;

3. The Original Transfer Certificate of Title is ordered to be canceled, as


well as tax declaration covering Lot 9250, Cad-355.

SO ORDERED.

Petitioner appealed the Resolution of the trial court with the CA, which dismissed it in a
Decision dated February 28, 2006, which reads:

WHEREFORE, for lack of merit, the appeal is DISMISSED. The assailed


Resolution dated November 3, 1999, of the RTC, Branch 18, Tagaytay City, in
Civil Case No. TG-1784, is AFFIRMED. No pronouncement as to cost.

SO ORDERED.

48
Hence, the present petition.

The grounds relied upon by the petitioner are the following:

5.1 THE COURT OF APPEALS ACTED IN A MANNER NOT IN


ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT WHEN IT RULED THAT RESPONDENTS' MOTION
FOR SUMMARY JUDGMENT DATED AUGUST 05, 1999 DID NOT VIOLATE
THE TEN (10)-DAY NOTICE RULE UNDER SECTION 3, RULE 35 OF THE
1997 RULES OF CIVIL PROCEDURE.

5.2 THE COURT OF APPEALS ACTED IN A MANNER NOT IN


ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT WHEN IT RULED THAT A MOTION FOR SUMMARY
JUDGMENT IS PROPER IN AN ACTION FOR QUIETING OF TITLE.

5.3 THE COURT OF APPEALS ACTED IN A MANNER NOT IN


ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT WHEN IT RULED THAT THERE ARE NO GENUINE
FACTUAL AND TRIABLE ISSUES IN CIVIL CASE NO. TG-1784.

5.4 THE COURT OF APPEALS ACTED IN A MANNER NOT IN


ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT WHEN IT UPHELD THE RESOLUTION DATED
NOVEMBER 03, 1999 OF THE COURT A QUO, BASED ON TESTIMONIES
OF RESPONDENTS' WITNESSES TAKEN WITHOUT GRANTING HEREIN
PETITIONER THE RIGHT TO CROSS-EXAMINE AND UPON
DOCUMENTARY EXHIBITS PRESENTED BUT NOT ADMITTED AS
EVIDENCE.

5.5 THE COURT OF APPEALS ACTED IN A MANNER NOT IN


ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT WHEN IT UPHELD THE RESOLUTION DATED

49
NOVEMBER 03, 1999 OF THE COURT A QUO BASED ON FALSIFIED
EVIDENCE.

5.6 THE COURT OF APPEALS ACTED IN A MANNER NOT IN


ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT WHEN IT FAILED TO RULE THAT THE COURT A
QUO PATENTLY DEPRIVED PETITIONER OF ITS RIGHT TO DUE
PROCESS IN RENDERING ITS SUMMARY JUDGMENT.

5.7 THE COURT OF APPEALS ACTED IN A MANNER NOT IN


ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT WHEN IT HELD THAT THE COURT A QUO HAS
JURISDICTION TO CANCEL PETITIONER'S ORIGINAL CERTIFICATE OF
TITLE (OCT) NO. 0-660 IN AN ACTION TO QUIET TITLE.

According to the petitioner, a motion for summary judgment must be served at least ten
(10) days before the date set for hearing thereof, and that a hearing must be held to hear the parties
on the propriety of a summary judgment, per Sec. 3 of Rule 35 of the Revised Rules of Court,
which was not observed because the petitioner received a copy of the respondents' motion for
summary judgment only on August 20, 1999, or the very same day that the motion was set for
hearing. Petitioner further claims that the trial court never conducted any hearing on the motion
for summary judgment.

Petitioner also argued that a summary judgment is only available to a claimant seeking to
recover upon a claim, counterclaim or cross-claim or to obtain a declaratory relief, and does not
include cases for quieting of title. Furthermore, petitioner also averred that a summary judgment
has no place in a case where genuine factual and triable issues exist, like in the present case. It
added that the genuine and triable issues were all raised in its Answer Ad Cautelam.

50
Another ground relied upon by petitioner is its failure to cross-examine the witnesses for
the respondents without fault on its part. It also stated that the trial court did not issue any order
admitting in evidence the documentary exhibits presented by the respondents. Hence, according
to the petitioner, the trial court gravely erred in relying upon the testimonies of the witnesses for
the respondents, without having the latter cross-examined; and upon the documentary exhibits
presented but not admitted as evidence.

Petitioner further claimed that the trial court based its Resolution dated November 3, 1999
on falsified evidence.

Lastly, petitioner raised the issue that by rendering summary judgment, the trial court
deprived the former of its right to due process.

Respondents, in their Comment167 dated October 16, 2006, countered the first issue raised
by the petitioner, stating that their filing of the motion for summary judgment fourteen (14) days
before the requested hearing of the same motion was in compliance with Sec. 3, Rule 35 of the
Rules of Court.

As to the second and third issues, respondents argued that petitioner had a constricted
perception of the coverage of the Rules of Summary Judgment, and that the latter's citation of
cases decided by this Court showed the diverse causes of action that could be the subject matters
of summary judgment. Respondents also posited that petitioner's statements in its Answer Ad
Cautelam, although denominated as Specific Denial, were really general denials that did not
comply with the provisions of Section 10, Rule 8 of the Rules of Court.

167
Rollo, p. 469.

51
Anent the fourth and fifth issues, respondents claimed that despite the opportunity, or the
right allowed in the Order dated July 17, 1999 of the trial court, for the petitioner to cross-examine
respondents' witnesses and to comment on the documentary evidence presented ex parte after the
default order against the same petitioner, the latter evasively moved to set aside respondents'
evidence in order to suspend further proceedings that were intended to abort the pre-trial
conference. They added that petitioner neglected to avail itself of, or to comply with, the
prescription of the rules found in Rule 35 of the Rules of Court by opting not to avail itself of the
hearing of its opposition to the summary judgment after receiving the Order dated August 20,
1999; by failing to serve opposing affidavit, deposition or admission in the records; and by not
objecting to the decretal portion of the said Order dated August 20, 1999, which stated that the
motion for summary judgment has been submitted for resolution without further argument. With
regard to the contention of the petitioner that the trial court wrongly appreciated falsified evidence,
respondents asserted that petitioner's counsel failed to study carefully the records of the
proceedings for the presentation of the evidence ex parte to be able to know that it was not only a
single-day proceeding, and that more than one witness had been presented. They further averred
that the trial court did not only rely on the photographs of the houses of the occupants of the
property in question.

Finally, as to the sixth and seventh issues, respondents asseverated that their complaint
alleged joint causes of action for quieting of title under Art. 476 of the New Civil Code and for
the review of the decree of registration pursuant to Sec. 32 of the Property Registration Decree or
P.D. No. 1529, because they are complimentary with each other.

The petition is impressed with merit.

The basic contention that must be resolved by this Court is the propriety of the summary
judgment in this particular case of quieting of title.

52
Rule 35 of the 1997 Rules of Civil Procedure provides:

SEC. 1. Summary judgment for claimant. - A party seeking to recover upon


a claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any
time after the pleading in answer thereto has been served, move with supporting
affidavits for a summary judgment in his favor upon all or any part thereof

SEC. 3. Motion and proceedings thereon. - The motion shall be served at


least ten (10) days before the time specified for the hearing. The adverse party prior
to the day of hearing may serve opposing affidavits. After the hearing, the judgment
sought shall be rendered forthwith if the pleading, depositions, and admissions on
file together with the affidavits, show that, except as to the amount of damages,
there is no genuine issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.168

In the present case, it was the respondents who moved for a summary judgment.

Petitioner contended that the ten-day notice rule was violated, because the copy of the
motion for summary judgment was served only on August 20, 1999 or on the same day it was set
for hearing. It also added that even if the petitioner received a copy of the motion only on August
20, 1999, there was no hearing conducted on that date because the trial court issued an order giving
petitioner 10 days within which to file its comment or opposition.

The above specific contention, however, is misguided. The CA was correct in its
observation that there was substantial compliance with due process. The CA ruled, as the records
show, that the ten-day notice rule was substantially complied with because when the respondents
filed the motion for summary judgment on August 9, 1999, they furnished petitioner with a copy

168
Now Secs.1 and 3, Rule 35, 1997 Rules of Civil Procedure.

53
thereof on the same day as shown in the registry receipt and that the motion was set for hearing on
August 20, 1999, or 10 days from the date of the filing thereof.

Due process, a constitutional precept, does not, therefore, always and in all situations a
trial-type proceeding. The essence of due process is found in the reasonable opportunity to be
heard and submit one's evidence in support of his defense. What the law prohibits is not merely
the absence of previous notice, but the absence thereof and the lack of opportunity to be heard.169

Petitioner further argues that summary judgment is not proper in an action for quieting of
title. This particular argument, however, is misplaced. This Court has already ruled that any action
can be the subject of a summary judgment with the sole exception of actions for annulment of
marriage or declaration of its nullity or for legal separation.170

Proceeding to the main issue, this Court finds that the grant of summary judgment was not
proper. A summary judgment is permitted only if there is no genuine issue as to any material fact
and a moving party is entitled to a judgment as a matter of law. A summary judgment is proper if,
while the pleadings on their face appear to raise issues, the affidavits, depositions, and admissions
presented by the moving party show that such issues are not genuine.171

It must be remembered that the non-existence of a genuine issue is the determining factor
in granting a motion for summary judgment, and the movant has the burden of proving such

169
Mutuc v. Court of Appeals, G.R. No. 48108, September 26, 1990, 190 SCRA 43.
170
See Carlos v. Sandoval, et al, G. R. No. 179922, December 16, 2008, SCRA 574 116, citing Republic v.
Sandiganbayan, G.R. No. 152154, November 18, 2003, 416 SCRA 133, citing Family Code, Arts. 48 & 60, and Roque
v. Encarnacion, 96 Phil. 643 (1954).
171
Mariano Nocom v. Oscar Camerino, et al., G. R. No. 182984, February 10, 2009, 578 SCRA 390, citing
Ong v. Roban Lending Corporation, G.R. No. 172592, July 9, 2008, 557 SCRA 516.

54
nonexistence. The trial court found no genuine issue as to any material fact that would necessitate
conducting a full-blown trial. However, a careful study of the case shows otherwise.

In their motion for summary judgment, the respondents failed to clearly demonstrate the
absence of any genuine issue of fact. They merely reiterated their averments in the complaint for
quieting of title and opposed some issues raised by the petitioner in its Answer Ad Cautelam, to
wit:

Nonetheless, going by the records of the admitted and uncontroverted facts


and facts established there is no more litigious or genuine issue of basic fact to be
the subject of further trial on the merits.

The first defense as to the identity of the subject property, the issue has
already become nil because of not only the lack of seriousness in the allegations
but also because the identity of the subject parcel of land Lot 9250 was proven by
the approved plan Ap-04-008367 that was already presented and offered in
evidence as Exhibit B for the plaintiffs.

The second defense that plaintiffs' claim of the property is barred by prior
judgment rule is unavailing considering that the vital documentary evidence they
presented in Land Registration Case No. TG-423 before this Honorable Court the
markings and descriptions of such documents are stated in the Judgment quoted as
follows:

(1) Tax Declaration No. 015224-A (Exhibit Q; x x x.


(2) Tax Declaration No. 05019-B (Exhibit R; x x x.
(3) Tax Declaration No. 01926-B (Exhibit S; x x x.
(4) Tax Declaration No. GR-007-0007 (Exhibit T x x x.

are the very documentary evidence adopted and relied upon by the plaintiffs in
seeking the review and nullity of the Decree No. 217313 issued on August 20, 1997
under LRC Record No. N-62686 pursuant to the Judgment dated June 7, 1994

55
rendered by this Honorable Court penned by the acting presiding Judge Eleuterio
F. Guerrero in said Land Registration Case No. TG-423.

On the other hand, as to the gravamen of the claims in the complaint, the
plaintiffs have presented clear and convincing evidence as the well-nigh or almost
incontrovertible evidence of a registerable title to the subject land in the
proceedings conducted on the reception of evidence ex-parte for the plaintiffs
establishing in detail the specifications of continuous, open, exclusive possession
as aspects of acquisitive prescription as confirmed in the affidavit herein attached
as Annex A;

In ruling that there was indeed no genuine issue involved, the trial court merely stated that:

This Court, going by the records, observed keenly that plaintiffs cause of
action for quieting of title on the disputed parcel of land is based on the alleged
fraud in the substitution of their landholdings of Lot 9250, Cad 355, Tagaytay
Cadastre containing only an area of 244,112 square meters with Lot 9121, Cad 335,
Tagaytay Cadastre, containing only an area of 19,356 square meters. While
defendant Eland in its answer practically and mainly interposed the defenses of: (a)
the parcel of land being claimed by the plaintiffs is not the parcel of land subject
matter of Land Registration Case No. TG-423; (b) the claim of the plaintiffs is
barred by prior judgment of this Court in said Land Registration Case; and (c)
plaintiffs' complaint is barred by the Statute of Limitation since Original Certificate
of Title No. 0-660 has become incontrovertible.

Cross-reference of the above-cited Land Registration Case No. TG-423 that


was decided previously by this Court with the case at bench was imperatively made
by this Court. Being minded that the Court has and can take judicial notice of the
said land registration case, this Court observed that there is no genuine issue of fact
to be tried on the merits. Firstly, because the supposed identity crisis of the
controverted parcel of land covered by the Land Registration Case No. TG-423 with
the subject parcel of land is established by Plan Ap-04-006275 (Exhibit N) LRC
Case No. 423 and by Plan A04 008367 (Exhibit B of the plaintiffs) and the
Technical Description of Lot 9250, Cad 355 (Exhibit B-1 of the plaintiffs).
Secondly, the prior judgment rule cannot be availed of by defendant Eland since
not only intrinsic fraud but extrinsic fraud were alleged in and established by the
records. (Heirs of Manuel Roxas v. Court of Appeals, G. R. No. 1184436, pro.

56
March 21, 1997). Thirdly, it is incontrovertible that the complaint in this case
seeking to review the judgment and annul the decree was filed on March 5, 1998 or
within one (1) year from August 20, 1997 or the date of issuance of Decree No.
217313, LRC Record No. N-62686, hence, the Original Certificate of Title No. 0-
660 issued to defendant Eland has not attained incontrovertibility. (Heirs of Manuel
Roxas v. Court of Appeals, G.R. No. 118436, prom. March 21, 1997).

Notwithstanding, the issue of possession is a question of fact by the


interaction of the basic pleadings, the observation of this Court is that the
plaintiffs were able to prove by the well-nigh incontrovertible evidence, the aspects
of possession in accordance with Section 48 (b) of Commonwealth Act 141, as
amended, as hereinafter illustrated.

The CA, in affirming the above Resolution of the trial court, propounded thus:

The contention of defendant-appellant is untenable. Summary judgment is


not only limited to solving actions involving money claims. Under Rule 35 of the
1997 Rules of Court, except as to the amount of damages, when there is no genuine
issue as to any material fact and the moving party is entitled to a judgment as a
matter of law, summary judgment may be allowed. The term genuine issue has been
defined as an issue of fact which calls for the presentation of evidence as
distinguished from an issue which is sham, fictitious, contrived, set up in bad faith
and patently unsubstantial so as not to constitute a genuine issue for trial.

Thus, under the aforecited rule, summary judgment is appropriate when


there are no genuine issues of fact, which call for the presentation of evidence in a
full-blown trial. Thus, even if on their face the pleadings appear to raise issues, but
when the affidavits, depositions and admissions show that such issues are not
genuine, then summary judgment as prescribed by the rules must ensue as a matter
of law.

It should be stressed that the court a quo which rendered the assailed
resolution in Civil Case No. TG-1784 was the very court that decided the LRC Case
No. TG-423. Such being the case, the court a quo was privy to all relevant facts and
rulings pertaining to LRC Case No. TG-423 which it considered and applied to this

57
case. Thus, where all the facts are within the judicial knowledge of the court,
summary judgment may be granted as a matter of right.

On the contrary, in petitioner's Answer Ad Cautelam, genuine, factual and triable issues
were raised, aside from specifically denying all the allegations in the complaint, thus:

2. SPECIFIC DENIALS

2.1 Answering defendant specifically denies the allegations contained in


paragraphs 1 and 3 of the Complaint insofar as it alleges the personal circumstances
of the plaintiff and one A. F. Development Corporation for lack of knowledge or
information sufficient to form a belief as to the truth thereof.

2.2 Answering defendant specifically denies the allegations contained in


paragraphs 4, 5, 6 and 7 of the Complaint for lack of knowledge or information
sufficient to form a belief as to the truth of said allegations. And if the property
referred to in said paragraphs is that parcel of land which was the subject matter of
Land Registration Case No. TG-423 which was previously decided by this
Honorable Court with finality, said allegations are likewise specifically denied for
the obvious reason that the said property had already been adjudged with finality
by no less than this Honorable Court as absolutely owned by herein answering
defendant as will be further discussed hereunder.

2.3 Answering defendant specifically denies the allegations contained in


paragraph 8 of the Complaint insofar as it alleged that (u)pon exercise of further
circumspection, counsel for the plaintiffs once followed-up in writing the 1994
request of the plaintiffs to have the subject parcel of land be declared for taxation
purposes and insofar as it is made to appear that parcel of land being claimed by
the plaintiffs is the same parcel of land subject matter of Land Registration Case
No. TG-423 for lack of knowledge or information sufficient to form a belief as to
the truth thereof and for the reason that the names of the herein plaintiffs were never
mentioned during the entire proceedings in said land registration case and by reason
of the Affirmative Allegations contained hereunder.

58
2.4 Answering defendant specifically denies the allegations contained in
paragraphs 9, 10, 10 (a), 10 (b), 10 (c), 10 (d), 10 (e), 10 (f), 10 (g), 10 (h), and 11
for the reason that there is no showing that the parcel of land being claimed by the
plaintiff is the same parcel of land which was the subject matter of Land
Registration Case No. TG- 423, and in the remote possibility that the parcel of land
being claimed by the plaintiffs is the same as that parcel of land subject of Land
Registration Case No. TG-423, the allegations contained in said paragraphs are still
specifically denied for the reason that no less than the Honorable Court had decided
with finality that the parcel of land is absolutely owned by herein defendant to the
exclusion of all other persons as attested to by the subsequent issuance of an
Original Certificate of Title in favor of answering defendant and for reasons stated
in the Affirmative Allegations.

2.5 Answering defendant specifically denies the allegations contained in


paragraph 12 of the Complaint for the obvious reason that it was the plaintiffs who
appear to have been sleeping on their rights considering that up to the present they
still do not have any certificate of title covering the parcel of land they are claiming
in the instant case, while on the part of herein defendant, no less than the Honorable
Court had adjudged with finality that the parcel of land subject matter of Land
Registration Case No. TG-423 is absolutely owned by herein defendant.

2.6 Answering defendant specifically denies the allegations contained in


paragraph 13 of the complaint for the reason that defendant has never ladgrabbed
any parcel of land belonging to others, much less from the plaintiffs, and further,
answering defendant specifically denies the allegations therein that plaintiffs
engaged the services of a lawyer for a fee for lack of knowledge r information
sufficient to form a belief as to the truth thereof.

2.7 Answering defendant specifically denies the allegations contained in


paragraphs 14, 15, 16, 17 and 18 of the Complaint for lack of knowledge or
information sufficient to form a belief as the truth thereof.

2.8 Answering defendant specifically denies the allegations contained in


paragraphs IV (a) to IV (c) for the reason that, as above-stated, if the parcel of land
being claimed by the plaintiffs is the same as that parcel of land subject matter of
Land Registration Case No. TG-423, this Honorable Court had already decided
with finality that said parcel of land is absolutely owned by herein answering
defendant and additionally, for those reasons stated in defendant's Motion to
Dismiss.

59
2.9 Answering defendant specifically denies the allegations contained in
paragraph IV (d) of the Complaint for lack of knowledge or information sufficient
to form a belief as to the truth thereof.

Special and affirmative defenses were also raised in the same Answer Ad Cautelam, to wit:

xxxx

4.1 The pleading asserting the claim of the plaintiff states no cause of action
as asserted in the Motion To Dismiss filed by herein answering defendant and for
the reason that there is no evidence whatsoever showing or attesting to the fact that
the parcel of land being claimed by the plaintiffs in the Complaint is the same parcel
of land which was the subject matter of Land Registration Case No. TG-423.

4.2 The complaint was barred by the prior judgment rendered by this
Honorable in Land Registration Case No. TG-423.

4.3 The complaint is barred by the Statute of Limitation in that OCT No. 0-
660 had become incontrovertible by virtue of the Torrens System of Registration;
and to allow plaintiffs to question the validity of answering defendant's title through
the instant complaint would be a collateral of OCT No. 0-660 which is not
permissible under the law.

4.4 Plaintiffs are barred by their own acts and/or omission from filing the
present complaint under the principles of estoppel and laches.

4.5 Plaintiffs does not to the Court with clean hands as they appear to be
well aware of the proceedings in said Land Registration Case No. TG- 423 and
inspite of such knowledge, plaintiffs never bothered to present their alleged claims
in the proceedings.

4.6 Answering defendant has always acted with justice, given everyone his
due, and observed honesty and good faith in his dealings.
60
Clearly, the facts pleaded by the respondents in their motion for summary judgment have
been duly disputed and contested by petitioner, raising genuine issues that must be resolved only
after a full-blown trial. When the facts as pleaded by the parties are disputed or contested,
proceedings for summary judgment cannot take the place of trial.172 In the present case, the
petitioner was able to point out the genuine issues. A genuine issue is an issue of fact that requires
the presentation of evidence as distinguished from a sham, fictitious, contrived or false claim.173

It is of utmost importance to remember that petitioner is already the registered owner


(Original Certificate of Title [OCT] No. 0-660 issued by the Register of Deeds) of the parcel of
land in question, pursuant to a decree of registration (Decree No. N-217313, LRC Record No.
62686) based on the ruling of the same court that granted the summary judgment for the quieting
of title.

Incidentally, the findings of the trial court contained in the disputed summary judgment
were obtained through judicial notice of the facts and rulings pertaining to that earlier case (LRC
Case No. TG-423) wherein the same trial court ruled in favor of the petitioner. It is, therefore,
disorienting that the same trial court reversed its earlier ruling, which categorically stated that:

x x x There is overwhelming evidence or proof on record that the vendors


listed in Exhibit HH, with submarkings, are the previous owners of the parcel of
land mentioned in the same deed of sale and aside form the tax declarations
covering the same property (Exhibits Q to T, inclusive), the uncontroverted
testimony of Atty. Ruben Roxas establishes beyond any shadow of doubt that
applicant's (referring to herein defendant-appellant) sellers/predecessors-in-interest
are the grandchildren, great grandchildren and great great grandchildren of the
spouses Lucio Petate and Maria Pobleta Petate, the former owners of the same

172
National Power Corporation v. Loro, et al., G. R. No. 175176, October 17, 2008,
569 SCRA 648, citing Rivera v. Solidbank Corporation, G.R. No. 163269, April 19, 2006, 487 SCRA 512, 535.
173
Id.

61
property, whose ownership is further bolstered by tax receipts showing payments
of realty taxes (Exhibits U to GG, inclusive, with submarkings).

xxx

On the basis of the foregoing facts and circumstances, and considering that
applicant is a domestic corporation not otherwise disqualified from owning real
properties in the Philippines, this Court finds that applicant has satisfied all the
conditions/requirements essential to the grant of its application pursuant to the
provisions of the Land Registration Law, as amended, inspite of the opposition filed
by the Heirs of the late Doroteo Miranda. Hence, the grant of applicant's petition
appears to be inevitable.

WHEREFORE, this Court hereby approves the instant petition for land
registration and, thus, places under the operation of Act 141, Act 496 and/or P.D.
1529, otherwise known as the Property Registration Law, the land described in Plan
Ap-04-006275 and containing an area of Two Hundred Forty-Two Thousand Seven
Hundred Ninety-Four (242,794) square meters, as supported by its technical
description now forming part of the record of this case, in addition to other proofs
adduced in the name of the applicant, ELAND PHILIPPINES, INC., with principal
office at No. 43 E. Rodriguez Ave. (Espaa Extension), Quezon City, Metro Manila.

Once this decision becomes final and executory, the corresponding decree
of registration shall forthwith issue.

SO ORDERED.

By granting the summary judgment, the trial court has in effect annulled its former ruling
based on a claim of possession and ownership of the same land for more than thirty years without
the benefit of a full-blown trial. The fact that the respondents seek to nullify the original certificate
of title issued to the petitioner on the claim that the former were in possession of the same land for
a number of years, is already a clear indicium that a genuine issue of a material fact exists. This,
together with the failure of the respondents to show that there were no genuine issues involved,
should have been enough for the trial court to give the motion for summary judgment, filed by
62
respondents, scant consideration. Trial courts have limited authority to render summary judgments
and may do so only when there is clearly no genuine issue as to any material fact.174

Based on the foregoing, this Court deems it necessary to delve briefly on the nature of the
action of quieting of title as applied in this case. This Court's ruling in Calacala, et al. v. Republic,
et al.175 is instructive on this matter, thus:

To begin with, it bears emphasis that an action for quieting of title is


essentially a common law remedy grounded on equity. As we held in Baricuatro,
Jr. vs. CA:176

Regarding the nature of the action filed before the trial court,
quieting of title is a common law remedy for the removal of any
cloud upon or doubt or uncertainty with respect to title to real
property. Originating in equity jurisprudence, its purpose is to
secure x x x an adjudication that a claim of title to or an interest in
property, adverse to that of the complainant, is invalid, so that the
complainant and those claiming under him may be forever
afterward free from any danger of hostile claim. In an action for
quieting of title, the competent court is tasked to determine the
respective rights of the complainant and other claimants, x x x not
only to place things in their proper place, to make the one who has
no rights to said immovable respect and not disturb the other, but
also for the benefit of both, so that he who has the right would see
every cloud of doubt over the property dissipated, and he could
afterwards without fear introduce the improvements he may desire,
to use, and even to abuse the property as he deems best xxx.

Under Article 476 of the New Civil Code, the remedy may be availed of
only when, by reason of any instrument, record, claim, encumbrance or proceeding,

174
Concrete Aggregates Corp. v. CA, et al, G. R. No. 117574, January 2, 1997, 266 SCRA 88, citing
Archipelago Builders v. Intermediate Appellate Court, G.R. No. 75282, February 19, 1991, 194 SCRA 207, 212, citing
Auman v. Estenzo., No. L- 40500, 27 February 1976, 69 SCRA 524; Loreno v. Estenzo, No. L-43306, 29 October
1976, 73 SCRA 630; Viajar v. Estenzo, No. L- 45321, 30 April 1979, 89 SCRA 684.
175
G. R. No. 154415, July 28, 2005, 464 SCRA 438.
176
382 Phil. 15, 25 (2000).

63
which appears valid but is, in fact, invalid, ineffective, voidable, or unenforceable,
a cloud is thereby cast on the complainants title to real property or any interest
therein. The codal provision reads:

Article 476. Whenever there is a cloud on title to real


property or any interest therein, by reason of any instrument, record,
claim, encumbrance or proceeding which is apparently valid or
effective but is in truth and in fact invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may be
brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title
to real property or any interest therein.

In turn, Article 477 of the same Code identifies the party who may bring an
action to quiet title, thus:

Article 477. The plaintiff must have legal or equitable title


to, or interest in the real property which is the subject-matter of the
action. He need not be in possession of said property.

It can thus be seen that for an action for quieting of title to prosper, the
plaintiff must first have a legal, or, at least, an equitable title on the real property
subject of the action and that the alleged cloud on his title must be shown to be in
fact invalid. So it is that in Robles, et al. vs. CA,177 we ruled:

It is essential for the plaintiff or complainant to have a legal


title or an equitable title to or interest in the real property which is
the subject matter of the action. Also, the deed, claim, encumbrance
or proceeding that is being alleged as a cloud on plaintiffs title must
be shown to be in fact invalid or inoperative despite its prima facie
appearance of validity or legal efficacy.

177
384 Phil. 635, 647 (2000).

64
Verily, for an action to quiet title to prosper, two (2) indispensable requisites
must concur, namely: (1) the plaintiff or complainant has a legal or an equitable
title to or interest in the real property subject of the action; and (2) the deed,
claim, encumbrance, or proceeding claimed to be casting cloud on his title
must be shown to be in fact invalid or inoperative despite its prima facie
appearance of validity or legal efficacy.

Respondents, in their Complaint, claim that they have become the owners in fee-simple
title of the subject land by occupation and possession under the provisions of Sec. 48 (b) of the
Public Land Law or Commonwealth Act No. 141, as amended. Thus, it appears that the first
requisite has been satisfied. Anent the second requisite, respondents enumerated several facts that
would tend to prove the invalidity of the claim of the petitioner. All of these claims, which would
correspond to the two requisites for the quieting of title, are factual; and, as discussed earlier, the
petitioner interposed its objections and duly disputed the said claims, thus, presenting genuine
issues that can only be resolved through a full-blown trial.

Anent the propriety of the filing of an action for the quieting of title, the indefeasibility and
incontrovertibility of the decree of registration come into question. Under Sec. 32 of P.D. No.
1529 or the Property Registration Decree:

Section 32. Review of decree of registration; Innocent purchaser for value.


The decree of registration shall not be reopened or revised by reason of absence,
minority, or other disability of any person adversely affected thereby, nor by any
proceeding in any court for reversing judgments, subject, however, to the right of
any person, including the government and the branches thereof, deprived of land or
of any estate or interest therein by such adjudication or confirmation of title
obtained by actual fraud, to file in the proper Court of First Instance a petition for
reopening and review of the decree of registration not later than one year from and
after the date of the entry of such decree of registration, but in no case shall such
petition be entertained by the court where an innocent purchaser for value has
acquired the land or an interest therein, whose rights may be prejudiced. Whenever
the phrase "innocent purchaser for value" or an equivalent phrase occurs in this

65
Decree, it shall be deemed to include an innocent lessee, mortgagee, or other
encumbrancer for value.

Upon the expiration of said period of one year, the decree of


registration and the certificate of title issued shall become incontrovertible.
Any person aggrieved by such decree of registration in any case may pursue his
remedy by action for damages against the applicant or any other persons
responsible for the fraud.

As borne out by the records and undisputed by the parties, OCT No. 0-660 of petitioner
was issued on August 29, 1997 pursuant to a Decree issued on August 20, 1997, while the
complaint for the quieting of title in Civil Case No. TG-1784 was filed and docketed on March 5,
1998; hence, applying the above provisions, it would seem that the period of one (1) year from the
issuance of the decree of registration has not elapsed for the review thereof. However, a closer
examination of the above provisions would clearly indicate that the action filed, which was for
quieting of title, was not the proper remedy.

Courts may reopen proceedings already closed by final decision or decree when an
application for review is filed by the party aggrieved within one year from the issuance of the
decree of registration.178 However, the basis of the aggrieved party must be anchored solely on
actual fraud. Shedding light on the matter is a discussion presented in one of the recognized
textbooks on property registration,179 citing decisions of this Court, thus:

The right of a person deprived of land or of any estate or interest therein by


adjudication or confirmation of title obtained by actual fraud is recognized by law
as a valid and legal basis for reopening and revising a decree of registration.180 One
of the remedies available to him is a petition for review. To avail of a petition
for review, the following requisites must be satisfied:

178
Lopez v. Padilla, G. R. No. L-27559, May 18, 1972, 45 SCRA 44.
179
Justice Agcaoili (ed.), Property Registration Decree and Related Laws (Land Titles and Deeds), 297-298
(2006).
180
Serna v. CA, G. R. No. 124605, June 18, 1999, 308 SCRA 527.

66
(a) The petitioner must have an estate or interest in the land;

(b) He must show actual fraud in the procurement of the decree of


registration;

(c) The petition must be filed within one year from the issuance of the
decree by the Land Registration Authority; and

(d) The property has not yet passed to an innocent purchaser for value.181

A mere claim of ownership is not sufficient to avoid a certificate of title


obtained under the Torrens system. An important feature of a certificate of title
is its finality. The proceedings whereby such a title is obtained are directed against
all persons, known or unknown, whether actually served with notice or not, and
includes all who have an interest in the land. If they do not appear and oppose the
registration of their own estate or interest in the property in the name of another,
judgment is rendered against them by default, and, in the absence of fraud, such
judgment is conclusive. If an interest in the land will not by itself operate to vacate
a decree of registration, a fortiori, fraud is not alone sufficient to do so.182
As further pointed out in the same book,183 the petition for review must be filed within one
year from entry of the decree of registration. As written:

As long as a final decree has not been entered by the Land Registration
Authority and period of one year has not elapsed from the date of entry of such
decree, the title is not finally adjudicated and the decision in the registration case
continues to be under the control and sound discretion of the registration court.184
After the lapse of said period, the decree becomes incontrovertible and no longer
subject to reopening or review.

181
Walstrom v. Mapa, G. R. No. 38387, January 29, 1990, 181 SCRA 431; Cruz v. Navarro, G. R. No. L-27644,
November 29, 1973, 54 SCRA 109; Libudan v. Palma Gil, G. R. No. L-21164, May 17, 1972, 45 SCRA 17.
182
26 Phil. 581 (1914).
183
Supra note 57 at 302-304.
184
Gomez v. CA, G. R. No. 77770, December 15, 1988, 168 SCRA 491.

67
Section 32 provides that a petition for review of the decree of
registration may be filed not later than one year from and after the date of
entry of such decree of registration. Giving this provision a literal interpretation,
it may at first blush seem that the petition for review cannot be presented until the
final decree has been entered. However, it has been ruled that the petition may be
filed at any time after the rendition of the court's decision and before the
expiration of one year from the entry of the final decree of registration for, as
noted in Rivera v. Moran,185 there can be no possible reason requiring the
complaining party to wait until the final decree is entered before urging his claim
for fraud.

The one-year period stated in Sec. 32 within which a petition to re-open and
review the decree of registration refers to the decree of registration described in
Section 31, which decree is prepared and issued by the Land Registration
Administrator.186

The provision of Section 31 that every decree of registration shall bind the
land, quiet title thereto, and be conclusive upon and against all persons, including
the national government, and Sec. 32 that the decree shall not be reopened or revised
by reason of absence, minority or other disability or by any proceeding in court,
save only in cases of actual fraud and then only for one year from the entry of the
decree, must be understood as referring to final and unappealable decrees of
registration. A decision or, as it is sometimes called after entry, a decree of a
registration court, does not become final and unappealable until fifteen days after
the interested parties have been notified of its entry, and during that period may be
set aside by the trial judge on motion for new trial, upon any of the grounds stated
in the Rules of Court.187 An appeal from the decision of the trial court prevents the
judgment from becoming final until that decree is affirmed by the judgment of the
appellate court.188

A petition for review under Section 32 is a remedy separate and distinct


from a motion for new trial and the right to the remedy is not affected by the
denial of such a motion irrespective of the grounds upon which it may have
been presented. Thus, where petitioners acquired their interest in the land before
any final decree had been entered, the litigation was therefore in effect still pending

185
48 Phil. 836 (1926).
186
Ramos v. Rodriguez, G.R. No. 94033, May 29, 1995, 244 SCRA 418.
187
Roman Catholic Archbishop of Manila v. Sunico, 36 Phil. 279 (1917).
188
Supra note at 60.

68
and, in these circumstances, they can hardly be considered innocent purchasers in
good faith.189

Where the petition for review of a decree of registration is filed within the
one-year period from entry of the decree, it is error for the court to deny the petition
without hearing the evidence in support of the allegation of actual and extrinsic
fraud upon which the petition is predicated. The petitioner should be afforded an
opportunity to prove such allegation.190

In the present case, the one-year period before the Torrens title becomes indefeasible and
incontrovertible has not yet expired; thus, a review of the decree of registration would have been
the appropriate remedy.

Based on the above disquisitions, the other issues raised by the petitioner are necessarily
rendered inconsequential.

WHEREFORE, the petition for review on certiorari of petitioner Eland Philippines, Inc.
is hereby GRANTED, and the decision dated February 28, 2006 of the Court of Appeals (CA) in
CA-G.R. CV No. 67417, which dismissed the appeal of petitioner Eland Philippines, Inc. and
affirmed the resolutions dated November 3, 1999 and June 28, 2006 of Branch 18, RTC of
Tagaytay City, is hereby REVERSED and SET ASIDE. Consequently, the resolutions dated
November 3, 1999 and June 28, 2006 of Branch 18, RTC of Tagaytay City in Civil Case No. TG-
1784 are hereby declared NULL and VOID.

SO ORDERED.

189
Rivera v. Moran, 48 Phil. 863 (1926).
190
Republic v. Sioson, G. R. No. L-13687, November 29, 1963, 9 SCRA 533.

69
DIOSDADO M. PERALTA
Associate Justice

WE CONCUR:

RENATO C. CORONA
Associate Justice
Chairperson

ANTONIO T. CARPIO ANTONIO EDUARDO B. NACHURA


Associate Justice Associate Justice

JOSE CATRAL MENDOZA


Associate Justice

ATTESTATION

70
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
Third Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons
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

71
SYLLABI/SYNOPSIS
SECOND DIVISION

[G.R. No. 124049. June 30, 1999]

RODOLFO P. VELASQUEZ, petitioner, vs. COURT OF APPEALS, and PHILIPPINE


COMMERCIAL INTERNATIONAL BANK, INC., respondents.

DECISION
BELLOSILLO, J.:

This petition for review on certiorari prays for reversal of the Decision of the Court of Appeals
promulgated 28 September 1995 which affirmed the summary judgment of 20 June 1990 of the
Regional Trial Court of Makati City, a default judgment against petitioner, and its 19 February
1996 Resolution denying petitioners motion for reconsideration.
The case arose from a complaint for a sum of money with preliminary attachment filed with
the Regional Trial Court of Makati City by private respondent Philippine Commercial
International Bank (PCIB) against petitioner Rodolfo P. Velasquez together with Mariano N.
Canilao Jr., Inigo A. Nebrida, Cesar R. Dean and Artemio L. Raymundo.191
Sometime in December 1994 the Pick-up Fresh Farms, Inc. (PUFFI), of which petitioner
Velasquez was an officer and stockholder, filed an application for a loan of P7,500,000.00 with
PCIB under the government's Guarantee Fund for Small and Medium Enterprises (GFSME).192
On 16 April 1985 the parties executed the corresponding loan agreement. As security for the loan,
promissory notes numbered TL 121231 and TL 121258 for the amounts of P4,000,000.00 and
P3,500,000.00, respectively, were signed by Inigo A. Nebrida and Mariano N. Canilao, Jr. as
officers of and for both PUFFI and Aircon and Refrigeration Industries, Inc. (ARII).193 A chattel
mortgage was also executed by ARII over its equipment and machineries in favor of PCIB.
Petitioner along with Nebrida and Canilao, Jr. also executed deeds of suretyship in favor of PCIB.
Separate deeds of suretyship were further executed by Cesar R. Dean and Artemio L.
Raymundo.194
When PUFFI defaulted in the payment of its obligations PCIB foreclosed the chattel
mortgage. The proceeds of the sale amounted to P678,000.00.195 Thus, PCIB filed an action to

191
Raffled to RTC-Br. 51, Makati City.
192
RTC Records, pp. 13-14.
193
Id., pp. 27-30.
194
Id., pp. 31-36.
195
Id., p. 135.

72
recover the remaining balance of the entire obligation including interests, penalties and other
charges. Exemplary damages and attorneys fees of 25% of the total amount due were also sought.
On 9 October 1989 a writ of preliminary attachment was granted by the trial court.196
Petitioner and Canilao filed their joint answer with counterclaim denying personal liability
and interposing the defense of novation. At the pre-trial on 11 April 1989 petitioner and counsel
failed to appear despite due notice. On 11 April 1989, upon motion of PCIB, petitioner was
declared as in default and the trial court granted the motion for summary judgment as against
Canilao.197 Both PCIB and Canilao submitted their respective position papers. Petitioner, who was
still in default as he did not move to lift the order of default, adopted Canilaos position paper
through an ex parte manifestation.198 On 8 November 1989 an ex parte hearing was conducted as
against petitioner.199
On 20 June 1990 the trial court rendered a summary judgment in favor of PCIB holding
petitioner and Canilao solidarily liable to pay P7,227,624.48 plus annual interest of 17%, and
P700,000.00 as attorneys fees and the costs of suit. The case was dismissed without prejudice with
regard to the other defendants as they were not properly served with summons.200
On 31 July 1990 petitioner filed a motion for reconsideration praying that the order of default
be lifted and that the summary judgment be set aside.201 On 13 September 1991 the trial court
denied the motion for lack of merit.202 On appeal, the Court of Appeals on 28 September 1995
affirmed in toto the RTC judgment.203 Petitioners motion for reconsideration was thereafter denied.
Hence this petition which maintains that the appellate court committed reversible error in
sustaining or affirming the summary judgment despite the existence of genuine triable issues of
facts and in refusing to set aside the default order against petitioner.
We are not persuaded. Petitioner, in raising the first error, invokes our ruling in Viajar v.
Estenzo204 that a party who moves for a summary proceeding has the burden of demonstrating
clearly the absence of any genuine issue of fact, or that the issue posed in the complaint is so
patently unsubstantial as not to constitute a genuine issue for trial, and any doubt as to the existence
of such an issue is resolved against the movant.
While this rule is true in the summary proceedings under Rule 34 of the Revised Rules of
Court, it does not apply to summary proceedings under Rule 35. A different rationale operates in
the latter for it arises out of facts already established or admitted during the pre-trial held

196
Id., pp. 182-183.
197
Id., p. 357.
198
Id. p. 577.
199
TSN, 8 November 1989, pp. 1-34.
200
Decision penned by Judge Fernando V. Gorospe, Jr.; RTC Records, pp. 602-605.
201
Id., pp. 614-625.
202
Id., pp. 774-775.
203
CA (17th Division) Decision penned by Justice Salome Montoya and concurred in by Justices Godardo Jacinto and
Portia Hormachuelos; Rollo, pp. 28-41.
204
No. L-43882, 30 April 1979, 89 SCRA 684, 697.

73
beforehand, unlike in the former where the judge merely relies on the merits of the movant's
allegations.205 Rule 34 pertains to a judgment on the pleadings while Rule 35 relates to a summary
judgment which was the holding in this case.
Petitioner further insists that there are triable issues of fact raised in his answer, namely: (a)
the denial of personal liability on his part in the deed of suretyship since he signed thereon as an
officer of ARII; (b) PCIB's acceptance of royalties coming from the Franchise Agreement between
PUFFI and Arturo Rosales who novated the loan agreement between PUFFI and PCIB; and, (c)
the propriety of payment of the entire debt. According to petitioner, the fact that the addresses
stated under the names of petitioner and fellow surety signors were those of ARII implies that they
signed as officers of the corporation, otherwise, their personal addresses would have been used.
Petitioner further avers that any ambiguity in the contract should be decided against PCIB under
the contract of adhesion doctrine.
A mere perusal of the deed of suretyship readily shows petitioners personal liability under the
loan contract, hence, proper for summary judgment. Moreover, the more appropriate doctrine in
this case is that of the complementary contracts construed together doctrine which we enunciated
in National Power Corporation v. CA206-
The surety bond must be read in its entirety and together with the contract between the NPC
and the contractors. The provisions must be construed together to arrive at their true meaning.
Certain stipulations cannot be segregated and then made to control.
That the complementary contracts construed together doctrine applies in this case finds
support in the principle that the surety contract is merely an accessory contract and must be
interpreted with its principal contract, which in this case was the loan agreement. This doctrine
closely adheres to the spirit of Art. 1374 of the Civil Code which states that -
Art. 1374. The various stipulations of a contract shall be interpreted together, attributing to
the doubtful ones that sense which may result from all of them taken jointly.
Applying the complementary contracts construed together doctrine leaves no doubt that it was
the intention of the parties that petitioner would be personally liable in the deed of suretyship
because the loan agreement, among others, provided207-
Article 3. LOAN SECURITY. - x x x x 3.4 Suretyship. - To further secure the obligations of
the BORROWER to the LENDER, Messrs. Nebrida, Raymundo, Canilao, Dean and Velasquez
and Aircon and Refrigeration Ind. Inc. shall each execute a suretyship agreement in favor of the
LENDER in form and substance acceptable to the LENDER.
It would have been a different matter had petitioner properly contested the deed of suretyship
under Sec. 8, Rule 8, of the Rules of Court. But he did not. The omission, as properly noted by the
trial court, was fatal for it resulted in petitioners admission of the due execution and genuineness
of the contract. The admission effectively eliminated any defense relating to the authenticity and
due execution of the document, e.g., that the document was spurious, counterfeit, or of different

205
Libudan v. Gil, No. L-21163, 17 May 1972, 45 SCRA 17.
206
No. L-43706, 14 November 1986, 145 SCRA 533.
207
RTC Records, p. 20.

74
import on its face as the one executed by the parties; or that the signatures appearing thereon were
forgeries; or that the signatures were unauthorized.208
Petitioner also claims that PCIB's acceptance of royalty fees which were the fruits of the
Franchising Agreement between PUFFI and Arturo Rosales209 constituted a novation of the loan
agreement and deeds of suretyship, therefore, a genuine issue of fact.
This contention is untenable. Extinctive novation has these requisites: (a) the existence of a
previous valid obligation; (b) the agreement of all the parties to the new contract; (c) the
extinguishment of the old obligation or contract; and, (d) the validity of the new one. Thus,
novation is effected only when a new contract has extinguished an earlier contract between the
same parties.210 Necessarily, there is no novation when the new contract is not between the same
parties as in the old contract.
The franchise agreement was only between PUFFI and Rosales. PCIB was never mentioned
therein; neither was there any reference to the subject loan agreement. What PCIB simply did was
to accept royalty payments out of the franchise - an act which was already beyond the scope of the
franchise agreement but which was not in conflict with the payment arrangement in the loan
agreement. Our ruling in Magdalena Estates Inc. v. Rodriguez is instructive, to wit211-
An obligation to pay a sum of money is not novated, in a new instrument wherein the old is
ratified, by changing only the terms of payment and adding other obligations not incompatible
with the old one, or wherein the old contract is merely supplemented by the new one. The mere
fact that the creditor receives a guaranty or accepts payments from a third person who has agreed
to assume the obligation, when there is no agreement that the first debtor shall be released from
responsibility, does not constitute a novation, and the creditor can still enforce the obligation
against the original debtor.
As regards the defense of overpayment, since it is being raised for the first time we need not
discuss it for it is deemed waived pursuant to Sec. 2, Rule 9, of the Rules of Court.
At this point, it must be stressed that insofar as petitioner is concerned, the RTC decision was
not a summary judgment but a judgment by default as hearing was held ex parte against him. Even
so, the RTC decision is still without grave abuse of discretion. Thus, the CA could not be in error
in upholding it despite claims by petitioner that the default order should have been set aside
because he could not be bound by the negligence of his counsel.
Petitioner attempts to avoid any personal blame by claiming that a special power of attorney
in favor of his lawyer was drawn up because he could not attend the pre-trial due to previous
commitments abroad. The lawyer, however, failed to attend thereby prejudicing his interests.
However, the findings of the Court of Appeals, as fully substantiated by the records, showed that

208
Kalilid Wood Industries Corporation v. Intermediate Appellate Court, G.R. No. 75502, 12 November 1987, 155
SCRA 594.
209
See Note 16, pp. 517-521.
210
Uraca v. Court of Appeals, G.R. No. 115158, 5 September 1997, 278 SCRA 702.
211
No. L-18411, 17 December 1966, 18 SCRA 967.

75
the lawyer was not the only one negligent, thus212-
Velasquez appears to have appointed his counsel, Atty. Rodolfo Vega, as his attorney-in-fact
to represent him at the pre-trial but the said lawyer failed to appear, hence Velasquez was declared
as in default. The records show that the Order of April 11,1984 declaring him as in default was
sent to his counsel and was received by the latter as early as May 10, 1989. No steps were taken
to have the said Order lifted or reconsidered. This is binding on Velasquez who is himself guilty
of negligence when, after executing the special power of attorney in favor of his lawyer, he left for
abroad and apparently paid no further attention to his case until he received the decision. There is
therefore no fraud, accident, mistake or excusable negligence which will warrant a lifting of the
Order of Default.
As a general rule, a client is bound by the mistakes of his counsel;213 more so by the result of
his own negligence.
WHEREFORE, the petition is DENIED. The Decision of 28 September 1995 of the Court
of Appeals affirming the 20 June 1990 judgment of the RTC- Br. 61, Makati City, ordering
petitioner Rodolfo P. Velasquez and Mariano N. Canilao, Jr. to solidarily pay respondent
Philippine Commercial and Industrial Bank (PCIB) the amount of P7,227,624.48 with annual
interest of 17% and attorneys fees of P700,000.00 plus costs of suit as well as its Resolution of 19
February 1995 denying reconsideration, is AFFIRMED.
SO ORDERED.
Puno, Mendoza, Quisumbing, and Buena, JJ., concur.

212
Rollo, p. 41.
213
Villa Rhecar Bus v. De la Cruz, G.R. No. 78936, 7 January 1988, 157 SCRA 13.

76
77
Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

PILIPINO TELEPHONE
CORPORATION, G.R. No. 152092

Petitioner,

Present:

CORONA, C.J.,
Chairperson,

- versus - LEONARDO-DE CASTRO,


BERSAMIN,*
DEL CASTILLO, and
PEREZ, JJ.

RADIOMARINE NETWORK, INC., Promulgated:

Respondent.
August 4, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

LEONARDO-DE CASTRO, J.:

*
Per Special Order No. 876 dated August 2, 2010.

78
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
seeking to annul, reverse and set aside the Resolution214 issued on May 2, 2001 by the
former Sixth Division of the Court of Appeals in CA-G.R. SP No. 64155, entitled PILIPINO
TELEPHONE CORPORATION v. HON. JUDGE REINATO G. QUILALA, in his capacity as
Presiding Judge of the Regional Trial Court of Makati, Branch 57, and RADIOMARINE
NETWORK (SMARTNET), Inc. The assailed Court of Appeals Resolution dismissed
Pilipino Telephone Corporations (PILTEL) petition for certiorari under Rule 65 with
application for temporary restraining order (TRO) and/or writ of preliminary injunction
which sought to set aside the Resolution215 made by the Regional Trial Court (RTC) of
Makati City, Branch 57, dated November 13, 2000, rendering partial summary judgment
in Civil Case No. 99-2041, as well as the Order216 of the same trial court dated January 30,
2001 denying the motion for reconsideration thereof. The instant petition also seeks to
annul, reverse and set aside the Court of Appeals Resolution217 issued on February 7, 2002
denying petitioners motion for reconsideration of the May 2, 2001 Court of Appeals
Resolution.

The genesis of this prolonged controversy can be traced back to the execution of a
Contract to Sell218 on December 12, 1996 between petitioner PILTEL and respondent
Radiomarine Network, Inc. (RADIOMARINE), wherein the latter agreed to purchase a
3,500-square meter lot located in Makati City covered by Transfer Certificate of Title
(TCT) No. T-195516 issued by the Registry of Deeds for Makati City. The terms of
payment that were agreed upon by the parties were embodied in Article II of the said
contract, to wit:

The total consideration of FIVE HUNDRED SIXTY MILLION


PESOS [P560,000,000.00] shall be paid by the VENDEE, without the need of
any demand, to the VENDOR in the following manner:

[a] a downpayment in the amount of ONE HUNDRED EIGHTY


MILLION [P180,000,000.00] PESOS, to be paid on or before December 28,
1996;

214
Penned by Associate Justice Marina L. Buzon with Associate Justices Eubulo G. Verzola and Bienvenido L.
Reyes, concurring; rollo, pp. 77-82.
215
Rollo, pp. 220-224.
216
Id. at 271-272.
217
Id. at 83-85.
218
Id. at 111-114.

79
[b] Any and all outstanding payables which the VENDOR owes to the
VENDEE in consideration of the cellular phone units and accessories
ordered by the VENDOR and delivered by the VENDEE between the initial
downpayment date i.e. December 28, 1996 and April 30, 1997, shall be
credited to the VENDEE as additional payment of the purchase price.

[c] The remaining balance, after deducting [a] and [b] above, shall be
paid on or about April 30, 1997. It is expressly understood however, that the
VENDOR shall submit to the VENDEE, on or about April 20, 1997, a
Statement of Account updating the deliveries of cellular phones and its
outstanding amount in order that the VENDEE can prepare the final
payment. In this way, the amount of final payment shall be made to the
VENDOR on or before April 30, 1997. Should the VENDOR be delayed in
the submission of the said Statement on the stipulated date, the date of
payment of the remaining balance shall be automatically adjusted for a
period equivalent to the number of days by which the VENDOR is delayed in
the submission thereof.219

Thus, under the terms agreed upon, respondent was to give the amount of
P180,000,000.00 as down payment. Any outstanding unpaid obligation, which petitioner
owed respondent, would be deducted from the obligations of the latter. The balance, if any,
should be paid on or before April 30, 1997.

Contemporaneous with the execution of the Contract to Sell, petitioner wrote a


Letter220 to respondent dated December 11, 1996 in which it expressed its willingness, on a
purely best effort basis, to purchase from respondent 300,000 units of various models of
Motorola, Mitsubishi and Ericsson brand cellular phones and accessories for the entire
year of 1997.

Respondent failed to pay the balance of P380,000,000.00 on the stipulated period of


April 30, 1997 alleging, among other things, that petitioner reneged on its commitment to
purchase 300,000 units of cellular phones and accessories from respondent and instead
purchased the units from other persons/entities.

On December 19, 1997, petitioner returned to respondent the amount of


P50,000,000.00, which is part of the P180,000,000.00 down payment made by the latter

219
Id. at 114.
220
Id. at 115.

80
pursuant to the Contract to Sell as evidenced by a Statement of Account221 issued by the
former.

Respondent then filed a Complaint222 on December 1, 1999 against petitioner


PILTEL seeking either the rescission of the Contract to Sell or the partial specific
performance of the same with the RTC of Makati City. It prayed that judgment be
rendered (a) ordering PILTEL to convey to it at least thirty-two percent (32%) interest in
the Valgoson property, representing the value of its down payment of P180,000,000.00, or
in the alternative, ordering PILTEL to return to it the down payment plus interest; (b)
ordering PILTEL to pay to it the amount of P81,800,764.96 representing the value of the
300,000 units of various cellular phones which it bought pursuant to the commitment of
PILTEL to purchase but which commitment PILTEL disregarded, plus interest, as actual
and compensatory damages; and (c) ordering PILTEL to pay to it the attorneys fees in the
amount of P500,000.00.

Respondent then filed a Motion for Partial Summary Judgment223 on October 6,


2000 which was opposed by petitioner in its Comment/Opposition224 filed on October 26,
2000. The motion was eventually granted by the trial court in its assailed Resolution dated
November 13, 2000, the dispositive portion of which reads:

WHEREFORE, the motion for summary judgment is granted and


defendant Piltel is hereby ordered to return or to pay to plaintiff Smartnet
the down payment of P180 Million less the forfeited amount of P18 Million
and the cash advance of P50 Million, or a net of P112 Million with interest at
6% per annum from the extrajudicial demand of October 20, 1998 until
finality of the judgment and after this judgment becomes final and executory,
additional legal interest at 12% per annum on the total obligation until the
judgment is satisfied.225

On December 5, 2000, petitioner filed a Motion for Reconsideration226 which was


denied for lack of merit by the RTC in the assailed Order dated January 30, 2001. Prior to

221
Id. at 170.
222
Id. at 117-132.
223
Id. at 397-412.
224
Id. at 202-219.
225
Id. at 224.
226
Id. at 225-245.

81
the issuance of the said Order, respondent filed its Opposition227 on December 14, 2000 to
which petitioner countered with a Reply228 filed on January 10, 2001.

Respondent then filed a Manifestation and Motion for Execution229 on March 15,
2001 manifesting its withdrawal of the two remaining causes of action and moving for the
issuance of a Writ of Execution. This was followed by an Alternative Motion for Execution
Pending Appeal230 that was filed by respondent on March 20, 2001, praying for execution
pending appeal in the event that then defendant PILTEL would be held to have the right to
appeal.

On April 4, 2001, petitioner filed a Petition for Certiorari under Rule 65231 of the
Rules of Court before the Court of Appeals, with an application for a temporary
restraining order and a writ of preliminary injunction, alleging grave abuse of discretion
on the part of Judge Reinato Quilala in issuing the November 13, 2000 Resolution and the
January 30, 2001 Order. This petition was docketed as CA-G.R. SP No. 64155. A week
later, respondent filed before the Court of Appeals its Opposition to the Application for the
Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction232 on
April 11, 2001 wherein it called the appellate courts attention to what it perceived as then
defendant PILTELs pursuance of simultaneous reliefs before the trial court and the Court
of Appeals that all seek to nullify the November 13, 2000 Resolution of the trial court
granting the summary judgment.

Meanwhile, in compliance with the trial courts Order233 dated April 6, 2001,
petitioner filed before it on April 16, 2001, by registered mail, a Consolidated Opposition234
against respondents Manifestation and Motion for Execution dated March 15, 2001 and the
Alternative Motion for Execution Pending Appeal dated March 20, 2001. On April 17,
2001, respondent filed with the trial court its Ex Parte Manifestation and Motion235 stating
therein that, upon verification with the records of the court that day, then defendant
PILTEL had failed to file its Comment/Opposition to respondents aforementioned pending
motions and, thus, respondent moved to submit both motions for the resolution of the trial
court without opposition from then defendant PILTEL. Hence, the trial court issued an

227
Id. at 451-481.
228
Id. at 246-270.
229
Id. at 507-511.
230
Id. at 512-519.
231
Id. at 273-320.
232
Id. at 1350-1370.
233
Id. at 563.
234
Id. at 520-534.
235
Id. at 1407-1432.

82
Order236 on April 23, 2001 granting the withdrawal of respondents remaining causes of
action and the execution pending appeal, the dispositive portion of which reads:

WHEREFORE, the motion for execution pending appeal of the


Partial Summary Judgment rendered on November 13, 2000 is GRANTED.

Let the corresponding Writ of Execution be issued and implemented


accordingly.

As a result, the corresponding Writ of Execution Pending Appeal237 was issued on


April 24, 2001.

Back at the Court of Appeals, petitioner filed an Urgent Manifestation and Urgent
Reiteratory Motion for the Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction238 on April 25, 2001.

On that same date and while its Petition for Certiorari under Rule 65 was still
pending before the Court of Appeals, petitioner filed with the trial court its Notice of
Appeal239 informing the said court that it will raise before the Court of Appeals the trial
courts November 13, 2000 Resolution and April 23, 2001 Order. This appeal was
subsequently docketed as CA-G.R. CV No. 71805.

The following day, on April 26, 2001, petitioner filed with the trial court an Urgent
Manifestation to Post Supersedeas Bond and Urgent Motion to Defer Execution Pending
Appeal.240

On April 30, 2001, respondent filed with the Court of Appeals its Supplement (To:
Opposition to the Application for the Issuance of a Temporary Restraining Order and/or
Writ of Preliminary Injunction)241 while, on the other hand, petitioner filed with the trial
court another Urgent Motion to Admit Supersedeas Bond242 on May 2, 2001. On the same

236
Id. at 535-537.
237
Id. at 579-580.
238
Id. at 542-578.
239
Id. at 538-541.
240
Id. at 1435-1437.
241
Id. at 1377-1390.
242
Id. at 586-589.

83
day, by virtue of the Writ of Execution Pending Appeal issued by the trial court and there
being no TRO issued against it by the Court of Appeals in CA-G.R. SP No. 64155, Sheriff
George C. Ragutana issued a Notice of Sale on Execution Pending Appeal of Real
Property243 giving notice to the public that the sale by public auction of the real property
described in TCT No. 195516 or the Valgoson property shall be on May 31, 2001. Likewise
on the same date, the Court of Appeals denied petitioners petition for certiorari along with
the request for the issuance of a TRO in CA-G.R. SP No. 64155, stating:

We resolve to dismiss the petition.

As pointed out by private respondent, an appeal from a partial


summary judgment may be allowed by the trial court under Section 1(g),
Rule 41 of the 1997 Rules of Civil Procedure, which reads:

SECTION 1. Subject of appeal. x x x

No appeal may be taken from:

xxxx

(g) A judgment or final order for or against 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;

xxxx

Thus, petitioner should have filed, with leave of court, a notice of appeal
from the partial summary judgment dated November 13, 2000 before
resorting to this special civil action of certiorari. Moreover with the
withdrawal and dismissal of private respondents remaining two causes of
action, the summary judgment dated November 13, 2000 ceased to be partial
as it may be considered to have completely disposed of the entire case and,
therefore, appealable.

243
CA rollo, pp. 414-415.

84
Anent the alleged impropriety of a summary judgment, suffice it to
say that certiorari will not be issued to cure errors in proceedings or correct
erroneous conclusions of law or fact. As long as a court acts within its
jurisdiction, any alleged errors committed in the exercise of its jurisdiction
will amount to nothing more than errors of judgment which are reviewable
by timely appeal and not by certiorari.

Petitioner likewise assails the Order of execution dated April 23, 2001.
However, the copy of said Order attached to the urgent manifestation and
urgent reiteratory motion for the issuance of a temporary restraining order
and/or writ of preliminary injunction is a mere unsigned xerox copy thereof,
contrary to the requirement in Section 1, Rule 65 of the 1997 Rules of Civil
Procedure that the petition be accompanied by a clearly legible duplicate
original or certified true copy of the order subject thereof. Thus, Section 3,
Rule 46 of the 1997 Rules of Civil Procedure provides that the failure of the
petitioner to comply with the requirement, inter alia, that the petition be
accompanied by a clearly legible duplicate original or certified true copy of
the order subject thereof, shall be sufficient ground for the dismissal thereof.
As held in Manila Midtown Hotels and Land Corporation vs. NLRC, certiorari,
being an extraordinary remedy, the party who seeks to avail of the same
must observe the rules laid down by law.244

Thus, the dispositive portion of which reads as follows:

WHEREFORE, the instant petition is DISMISSED for insufficiency


in form and substance.245

In response to petitioners May 2, 2001 motion filed in the trial court, respondent
filed an Opposition to the Urgent Motion to Admit Supersedeas Bond246 on May 4, 2001
alleging that the offer to post supersedeas bond does not entitle then defendant PILTEL to
a deferment of execution pending appeal since at that time, compelling reasons warrant
immediate execution and that PILTEL has resorted to forum shopping in order to have the
execution postponed. On May 8, 2001, petitioner filed its Reply (to the Opposition to

244
Rollo, pp. 80-81.
245
Id. at 81.
246
Id. at 1438-1449.

85
Motion to Admit Supersedeas Bond)247 to which respondent filed its Rejoinder248 on May 9,
2001.

Notwithstanding the dismissal of petitioners Petition for Certiorari (CA-G.R. SP No.


64155), petitioner still filed on May 9, 2001 a Supplemental Petition for Certiorari249
challenging the April 23, 2001 Order of the trial court as having been issued with grave
abuse of discretion. Petitioner likewise filed a (Second) Urgent Manifestation and
Reiteratory Motion for a Temporary Restraining Order and/or Writ of Preliminary
Injunction250 on May 17, 2001. Both pleadings were merely noted without action by the
Court of Appeals in a Resolution251 dated May 18, 2001, to wit:

In view of the resolution of this Court dated May 2, 2001 which


dismissed the petition, the Supplemental Petition dated May 9, 2001 and
(Second) Urgent Manifestation and Reiteratory Motion for a Temporary
Restraining Order and/or Writ of Preliminary Injunction dated May 15,
2001 filed by petitioner are hereby NOTED without action.

On May 22, 2001, petitioner filed its Motion for Reconsideration252 to the May 2,
2001 Court of Appeals Resolution. It followed this up with the filing of a pleading entitled
(A) Third Urgent Manifestation and Reiteratory Motion for a Temporary Restraining
Order and/or Writ of Preliminary Injunction; and (B) Motion to Set Case for Oral
Arguments253 on June 1, 2001.

Respondent filed its Comment254 and Supplemental Comment255 on June 15, 2001
and June 25, 2001, respectively, to petitioners May 22, 2001 Motion for Reconsideration. In
return, petitioner filed by registered mail its Consolidated Reply (to Smartnets [1]
Comment and [2] Supplemental Comment) on August 23, 2001. Subsequently, respondent
filed its Rejoinder256 on September 17, 2001.

247
Id. at 1464-1471.
248
Id. at 1489A-1492.
249
Id. at 608-618.
250
Id. at 1500-1503.
251
Id. at 1507.
252
Id. at 86-110.
253
Id. at 1533-1536.
254
Id. at 1540-1588.
255
Id. at 1589-1592.
256
Id. at 1654-1677.

86
Back at the trial court, it issued an Order257 on May 11, 2001 denying petitioners
Urgent Manifestation to Post Supersedeas Bond and Urgent Motion to Defer Execution
Pending Appeal on the ground that the reasons for the allowance of execution pending
appeal still prevail and the posting of a supersedeas bond does not entitle the judgment
debtor to a suspension of execution as a matter of right. The dispositive portion of which
states:

WHEREFORE, defendants Urgent Manifestation to Post Supersedeas


Bond, Urgent Motion to Defer Execution Pending Appeal and the Urgent
Motion to Admit Supersedeas Bond are hereby denied for lack of merit.258

Petitioner then filed on May 30, 2001 a Motion for Reconsideration259 of the said
Order of the trial court. This was subsequently denied by the trial court in an Order260
issued on August 14, 2001, which likewise granted the withdrawal of all the remaining
incidents of the case. This Order later became the subject of petitioners Supplemental
Notice of Appeal261 which it filed on September 4, 2001.

On January 4, 2002, respondent filed a Manifestation262 in CA-G.R. SP No. 64155


informing the Court of Appeals of the status of the appeal taken by petitioner in CA-G.R.
CV No. 71805 and reiterating the gross violations of the rule against forum shopping
allegedly committed by the same. A month later, or on February 7, 2002, the Court of
Appeals denied petitioners May 22, 2001 Motion for Reconsideration in CA-G.R. SP No.
64155. In denying petitioners motion, the appellate court declared that even assuming that
the Petition for Certiorari has a practical legal effect because it would lead to the reversal of
the Resolution dismissing the Complaint, it would still be denied on the ground of forum
shopping. The Court of Appeals concluded that petitioner committed forum shopping
because the subject matter of its petition for certiorari and the notice of appeal that it
subsequently filed are one and the same, to wit:

It should be noted that after the filing of the instant petition,


petitioner appealed to this Court the partial summary judgment dated
November 13, 2000 and the Order dated April 23, 2001, declaring the partial
summary judgment to have finally disposed of the entire case and granting

257
Id. at 1537-1539.
258
Id. at 1539.
259
Id. at 1736-1740.
260
Id. at 668-669.
261
Id. at 670-673.
262
Id. at 1719-1725.

87
the motion for execution pending appeal, docketed as CA-G.R. CV No.
71805, which are the same subject matter of the instant petition.263

Hence, this petition where petitioner raises the following grounds:

I.

A SPECIAL CIVIL ACTION FOR CERTIORARI UNDER RULE 65 OF THE


RULES OF COURT IS THE PROPER REMEDY FROM A PARTIAL
SUMMARY JUDGMENT.

A. SECTION 1(G), RULE 41 OF THE RULES OF COURT DOES NOT


APPLY TO PARTIAL SUMMARY JUDGMENTS.

B. A PARTIAL SUMMARY JUDGMENT IS AN INTERLOCUTORY


ORDER THAT CANNOT BE THE SUBJECT OF AN APPEAL.

C. THE RULES AND EXISTING JURISPRUDENCE DICTATE THAT


APPEAL FROM A PARTIAL SUMMARY JUDGMENT MUST BE TAKEN
TOGETHER WITH THE JUDGMENT THAT MAY BE RENDERED IN THE
ENTIRE CASE AFTER TRIAL.

D. THE REMEDY OF AN AGGRIEVED PARTY FROM A PARTIAL


SUMMARY JUDGMENT IS A SPECIAL CIVIL ACTION FOR CERTIORARI
UNDER RULE 65 OF THE RULES OF COURT.

E. EVEN ASSUMING, ONLY FOR THE SAKE OF ARGUMENT, THAT


SECTION 1, RULE 41 IS APPLICABLE, THE GENERAL RULE EVEN AS
STATED IN THE SAME SECTION ITSELF, IS THAT NO APPEAL MAY BE
TAKEN FROM A JUDGMENT OR FINAL ORDER FOR OR AGAINST ONE
OR MORE OF SEVERAL PARTIES OR IN SEPARATE CLAIMS,
COUNTERCLAIMS, CROSS-CLAIMS AND THIRD-PARTY COMPLAINTS,
WHILE THE MAIN CASE IS PENDING. MOREOVER, THE EXCEPTION
PROVIDED THEREIN IS NOT EVEN MANDATORY.

263
Id. at 83-84.

88
F. AT THE TIME OF THE FILING OF THE PETITION IN THIS CASE,
THE PARTIAL SUMMARY JUDGMENT WAS TRULY PARTIAL, AND NOT
FINAL IN THE SENSE THAT IT DISPOSES OF THE ENTIRE CASE.

II.

EVEN ASSUMING, ONLY FOR THE SAKE OF ARGUMENT, THAT APPEAL


IS THE PROPER REMEDY FROM A PARTIAL SUMMARY JUDGMENT, A
SPECIAL CIVIL ACTION FOR CERTIORARI UNDER RULE 65 OF THE
RULES OF COURT IS NOT BARRED.

III.

JUDGE QUILALA COMMITTED PATENT AND GRAVE ABUSE OF


DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION, IN
RENDERING THE ASSAILED PARTIAL SUMMARY JUDGMENT.

IV.

THE ISSUES RAISED IN PILTELS PETITION FOR CERTIORARI WITH THE


COURT OF APPEALS ARE DIFFERENT FROM THE ISSUES RAISED IN
PILTELS APPEAL.

V.

PILTEL DID NOT COMMIT FORUM SHOPPING.

VI.

THE COURT OF APPEALS FAILED TO APPRECIATE THAT THE URGENT


MANIFESTATION AND URGENT REITERATORY MOTION FOR THE
ISSUANCE OF A TEMPORARY RESTRAINING ORDER DID NOT ASSAIL

89
THE 23 APRIL 2001 [ORDER]; THE SAID ORDER WAS ASSAILED IN THE
ORIGINAL SUPPLEMENTAL PETITION.264

A careful perusal of the voluminous pleadings filed by the parties leads us to conclude that
this case revolves around the following core issues:

I.

WHETHER OR NOT PETITIONER IS GUILTY OF FORUM SHOPPING

II.

WHETHER OR NOT GRAVE ABUSE OF DISCRETION ATTENDED THE


TRIAL COURTS ISSUANCE OF A SUMMARY JUDGMENT

III.

WHETHER OR NOT THE PETITION FOR CERTIORARI WAS PROPERLY


DISMISSED

We find the instant petition to be without merit.

Anent the first issue, petitioner asserts that the filing of its Notice of Appeal in CA-G.R.
CV No. 71805 subsequent to the filing of its Petition for Certiorari before the Court of Appeals in
CA-G.R. SP No. 64155 does not amount to forum shopping because the issues raised in the petition
for certiorari are different from the issues raised in the appeal since the former seeks to have an

264
Id. at 38-40.

90
order declared null and void for having been rendered with grave abuse of discretion amounting
to lack or excess of jurisdiction while the latter deals with the correctness and legal soundness of
the questioned decision. Furthermore, petitioner argues that a subsequent appeal was not adequate
to address the grave abuse of discretion committed by the trial court judge and could not have
provided adequate relief. Lastly, petitioner maintains that the element of res judicata is not present
in this case so as to amount to forum shopping on the part of petitioner.265

We cannot countenance petitioners nuanced position on this issue. The


captions/subheadings of the petitioners petition for certiorari and the argument
captions/subheadings of petitioners appellants brief may, at first blush, appear to be dissimilar.
However, the discussion that expounded on each of them plainly betray a similarity of issues
presented, grounds argued, and reliefs sought.

An example is petitioners first argument in its Petition for Certiorari before the Court of
Appeals in CA-G.R. SP No. 64155 where it alleged grave abuse of discretion on the part of Judge
Quilala in granting summary judgment despite the existence of materially disputed facts and the
absence of supporting affidavits, to wit:

RESPONDENT JUDGE COMMITTED PATENT AND GRAVE ABUSE OF


DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION, IN
RENDERING SUMMARY JUDGMENT NOTWITHSTANDING THE FACT
THAT:

A. THE PLEADINGS READILY AND IMMEDIATELY SHOW THAT THERE


ARE MATERIAL DISPUTED FACTS DETERMINATIVE OF THE PARTIES

265
Id. at 2309-2326.

91
CLAIMS AND DEFENSES WHICH CANNOT BE SETTLED WITHOUT
PRESENTATION OF EVIDENCE.266

In support of this allegation, petitioner states the following:

51. From the foregoing statement of the positions of the parties, the
following questions of material fact determinative of the parties claim and defenses
are glaring:

51.1 Does the Letter constitute a valid, binding, and enforceable agreement
between the parties?

51.2 Did the parties intend the Letter to form an integral part of the
Contract?

51.3 Was the Letter a material consideration for SMARTNETs entering into
the Contract?

51.4 Did PILTEL violate or fail to comply with any of its obligations under
the Contract?

51.5 Assuming, arguendo, that the Letter constitutes a valid binding, and
enforceable agreement, did PILTEL violate any of its provisions?

51.6 Is PILTEL guilty of fraud or bad faith in the negotiation, performance


or execution of the Contract and/or the Letter?

52. BECAUSE OF THE INDISPUTABLE EXISTENCE OF THE


FOREGOING MATERIAL QUESTIONS OF FACT WHICH GO INTO THE

266
Id. at 290.

92
HEART OF THE PARTIES RESPECTIVE CLAIMS AND DEFENSES,
ESPECIALLY SMARTNETS CLAIM FOR PARTIAL SPECIFIC
PERFORMANCE OR (IN THE ALTERNATIVE) FOR RESCISSION,
SUMMARY JUDGMENT IS EVIDENTLY NOT PROPER.267

On the other hand, petitioner assigned as its first error in its Appellants Brief in CA-G.R.
No. 71805 the following contention:

I.

JUDGE QUILALA GRIEVOUSLY ERRED IN HOLDING THAT THE


CONTRACT HAD BEEN RENDERED VOID AND INEFFECTIVE AND
WITHOUT FORCE AND EFFECT.268

In discussing this point, petitioner argued that the trial court was required to consider the
materially disputed facts before it can properly grant summary judgment instead of directly
disputing the finding that the contract had been rendered void, to wit:

Clearly, then, in order for Judge Quilala to determine whether or not SMARTNET
is entitled to any of the relief it prayed for, it had to resolve, among others, the
following issues of fact: Does the Letter constitute a valid, binding, and
enforceable agreement between the parties? Did the parties intend the Letter
to form an integral part of the Contract? Did PILTEL violate or fail to comply
with any of its obligations under the Contract to Sell? Is PILTEL guilty of
fraud or bad faith in the negotiation, performance or execution of the Contract
to Sell?269

267
Id. at 298-299.
268
Id. at 680.
269
Id. at 719.

93
In the present Petition for Review, we likewise find the same arguments, to wit:

6.31. In this case, Judge Quilala rendered partial summary judgment


notwithstanding the fact that THE PLEADINGS READILY AND
IMMEDIATELY SHOW THAT THERE ARE MATERIAL DISPUTED
FACTS DETERMINATIVE OF THE PARTIES CLAIMS AND DEFENSES
WHICH CANNOT BE SETTLED WITHOUT PRESENTATION OF
EVIDENCE.

xxxx

The rendition of the foregoing summary judgment is improper because,


from the pleadings of the parties and the issues presented at the pre-trial conference,
including the issues presented by PILTEL in its pre-trial brief, the following
questions of material fact determinative of the parties claim and defenses are
glaring:

1. Does the Letter constitute a valid, binding, and enforceable


agreement between the parties?

2. Did the parties intend the Letter to form an integral part of the
Contract?

3. Was the Letter a material consideration for SMARTNETs entering


into the Contract?

4. Did PILTEL violate or fail to comply with any of its obligations


under the Contract?

5. Assuming, arguendo, that the Letter constitutes a valid, binding, and


enforceable agreement, did PILTEL violate any of its provisions?

94
6. Is PILTEL guilty of fraud or bad faith in the negotiation,
performance or execution of the Contract and/or the Letter?270

From the foregoing, it can be clearly deduced that petitioner repeated the same argument
in its appeal and its petition for certiorari filed in the Court of Appeals as well as in the instant
petition that the trial courts resolution of the case by summary judgment was invalid allegedly
because of materially disputed facts which would render the whole proceeding beyond the purview
of the established rules on summary judgment.

Another illustration of petitioners proclivity to repeat its arguments in different fora can be
found in the second argument of its petition for certiorari in CA-G.R. SP No. 64155 which reads:

II

EVEN ASSUMING, ARGUENDO, THAT SUMMARY JUDGMENT IS


PROPER, RESPONDENT JUDGE COMMITTED PATENT AND GRAVE
ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS OF
JURISDICTION, WHEN HE DISREGARDED THE LAW AND WELL-
ESTABLISHED JURISPRUDENCE IN RENDERING JUDGMENT IN FAVOR
OF SMARTNET.

A. SMARTNET [RADIOMARINE] WENT TO COURT WITH


UNCLEAN HANDS. HENCE, IT IS NOT ENTITLED TO RELIEF FROM THE
COURTS.

B. SMARTNET CANNOT RENDER THE CONTRACT VOID AND


UNENFORCEABLE THROUGH ITS OWN DEFAULT, BREACH, OR
FAILURE.

C. SMARTNET IS NOT ENTITLED TO INTEREST.

270
Id. at 51-53.

95
D. SMARTNETS OBLIGATION TO PAY THE BALANCE OF THE
PURCHASE PRICE IS VALID, BINDING, ENFORCEABLE AND
SUBSISTING.271

In support of which, petitioner discussed the following points:

83. SMARTNET cannot avoid the Contract by the simple expedient of not
paying. Here, the bare truth of the matter is that SMARTNET is invoking its own
refusal or failure to comply with its obligation under the Contract to annul or render
the Contract ineffective or void.

xxxx

85. SMARTNET is in effect saying that, since it has not paid, and it failed
and refused, and continues to fail and refuse, to pay the balance of the purchase
price for the Valgoson Property, the Contract is automatically annulled or
rescinded.

86. Article 1182 of the Civil Code provides that: When the fulfillment of
the obligation depends upon the sole will of the debtor, the conditional
obligation shall be void. Thus, in Osmena vs. Rama, it was held that the condition
to pay (the balance of the purchase price of shares of stock) as soon as the debtor
sells her house is void.

87. Article 1186 of the Civil Code provides that: The condition shall be
deemed fulfilled when the obligor voluntarily prevents its fulfillment. The
reason for the rule is that ONE MUST NOT PROFIT BY HIS OWN FAULT.

88. In Mana vs. Luzon Consolidated Mines & Co., a company engaged the
services of a contractor to construct a road. Halfway, the company directed the
contractor to stop work. The contractor sued for the entire contract price. The

271
Id. at 291.

96
company refused, asserting that only half of the project was finished. The Court of
Appeals sustained the contractor and directed the company to pay the entire
contract price, saying that the project is deemed fulfilled because it was the
company that voluntarily prevented its completion.

89. The case of Valencia vs. Rehabilitation Finance Corporation and


Court of Appeals is even more applicable. There, the Rehabilitation Finance
Corporation (RFC) advertised to the general public an invitation to bid for the
construction of a building in Davao City. Valencia submitted a bid for the electrical
and plumbing works for the building. RFC awarded the plumbing to Valencia.
Valencia was asked to put up the performance bond as required under the contract.
Valencia did not put up the bond and also did not begin the work. When RFC sued
him, among the defenses put up by Valencia was that, since he did not put up a
bond, there was no contract since the condition was not complied with. The
Supreme Court, affirming the Court of Appeals, held Valencia liable for damages
to RFC, saying that:

xxxx

90. Article 1308 of the Civil Code states that: The contract must bind both
contracting parties; its validity or compliance cannot be left to the will of one
of them. Thus, in Fernandez vs. Manila Electric Company, the Supreme Court
held that the validity and fulfillment of contracts can not be left to the will of one
of the contracting parties, and the mere fact that one has made a poor bargain is no
ground for setting aside an agreement.272 (citations omitted.)

These same arguments were raised by petitioner in its Appellants Brief in CA-G.R. CV
No. 71805, to wit:

77. SMARTNET is in effect saying that, since it has not paid, and it failed
and refused, and continues to fail and refuse, to pay the balance of the purchase
price for the Valgoson Property, the Contract to Sell is automatically annulled or
rescinded.

272
Id. at 308-311.

97
78. SMARTNET cannot avoid the Contract by the simple expedient of not
paying. The validity of, compliance with, or fulfillment of a contract cannot be left
to the will of one of the parties.

79. Article 1182 of the Civil Code provides that: When the fulfillment of
the obligation depends upon the sole will of the debtor, the conditional
obligation shall be void. Thus, in Osmena vs. Rama, it was held that the condition
to pay (the balance of the purchase price of shares of stock) as soon as the debtor
sells her house is void.

80. Article 1186 of the Civil Code provides that: The condition shall be
deemed fulfilled when the obligor voluntarily prevents its fulfillment. The
reason for the rule is that ONE MUST NOT PROFIT BY HIS OWN FAULT.

81. In Mana vs. Luzon Consolidated Mines & Co., a company engaged the
services of a contractor to construct a road. Halfway, the company directed the
contractor to stop work. The contractor sued for the entire contract price. The
company refused, asserting that only half of the project was finished. The Court of
Appeals sustained the contractor and directed the company to pay the entire
contract price, saying that the project is deemed fulfilled because it was the
company that voluntarily prevented its completion.

82. The case of Valencia vs. Rehabilitation Finance Corporation and


Court of Appeals is even more applicable. There, the Rehabilitation Finance
Corporation (RFC) advertised to the general public an invitation to bid for the
construction of a building in Davao City. Valencia submitted a bid for the electrical
and plumbing works for the building. RFC awarded the plumbing to Valencia.
Valencia was asked to put up the performance bond as required under the contract.
Valencia did not put up the bond and also did not begin the work. When RFC sued
him, among the defenses put up by Valencia was that, since he did not put up a
bond, there was no contract since the condition was not complied with. The
Supreme Court, affirming the Court of Appeals, held Valencia liable for damages
to RFC, saying that:

xxxx

98
83. Article 1308 of the Civil Code states that: The contract must bind both
contracting parties; its validity or compliance cannot be left to the will of one
of them. Thus, in Fernandez vs. Manila Electric Company, the Supreme Court
held that the validity and fulfillment of contracts can not be left to the will of one
of the contracting parties, and the mere fact that one has made a poor bargain is no
ground for setting aside an agreement.273

It is apparent from the above that petitioner puts forward in both its petition for certiorari
and its appeal before the Court of Appeals as well as in the present petition the assertion that the
contract at issue was rendered void and unenforceable due to mistakes attributable solely to the
respondent in this case.

And finally, the most glaring demonstration of petitioners penchant for forum shopping
can be found in the prayer of its Court of Appeals petition for certiorari and appeal including the
instant petition before this Court.

In the present petition for review, petitioner sought in its prayer the following relief:

WHEREFORE, PILTEL respectfully prays that judgment be


rendered:

1. Annulling, reversing and setting aside the First and Second


Assailed Resolutions;

2. Annulling, reversing and setting aside the Resolution of the trial


court dated 13 November 2000 and the Order of the trial court dated 30
January 2001.

273
Id. at 729-732.

99
PILTEL likewise prays for such further or other relief as may be
deemed just and equitable under the circumstances.274 (Emphasis supplied.)

In its petition for certiorari in CA-G.R. SP No. 64155, petitioner prayed for the following:

2.1. Annul, reverse and set aside the Assailed Resolution dated 13
November 2000 and the assailed Order dated 30 January 2001, AND DENY
SMARTNETS MOTION FOR PARTIAL SUMMARY JUDGMENT;

2.2 (a) Order the lower court to proceed with the trial on the merits of the
case; or, in the alternative,

(b) dismiss the Complaint, and order SMARTNET to pay PILTEL:

(i) PhP380,000,000.00, representing the balance of the


purchase price for the Valgoson Property, plus interest until the same is fully
paid;

(ii) PhP5,000,000.00, as moral damages;

(iii) PhP1,000,000.00, as exemplary damages; and

(iv) PhP1,000,000.00, as attorneys fees and costs of litigation.275


(Emphasis supplied.)

While in its Supplemental Petition for Certiorari in the same appellate case, petitioner
prayed:

274
Id. at 69-70.
275
Id. at 316.

100
2. After due proceedings, judgment be rendered annulling, reversing and setting
aside the Order of 23 April 2001 in so far as it grants execution pending appeal.276
(Emphasis supplied.)

Petitioners Appellants Brief in CA-G.R. CV No. 71805, on the other hand, sought the
following relief:

WHEREFORE, PILTEL respectfully prays that judgment be rendered as


follows:

a. Annulling, reversing and setting aside (1) the Assailed Resolution dated
13 November 2000, (2) the First Assailed Order dated 23 April 2001, and (3) the
Second Assailed Order dated 14 August 2001;

b. Remanding the case to the Trial Court and allow the parties to present
evidence on their respective claims and defenses; and

c. Ordering SMARTNET to return the amount of Php131,795,836.38 to


PILTEL, plus interest.

PILTEL likewise prays for such further or other relief just and equitable
under the circumstances.277 (Emphasis supplied.)

It is plainly apparent from the foregoing that both the then pending suits before the Court
of Appeals and the instant petition before this Court raised the same issues and sought the same
reliefs, i.e., the annulment of the November 13, 2000 Resolution of the trial court granting partial

276
Id. at 616.
277
Id. at 736-737.

101
summary judgment, as well as the withdrawal of the other causes of action thereby disposing of
the entire case, and the execution of the summary judgment as directed by the trial court in its
April 23, 2001 Order.

Forum shopping exists when the elements of litis pendentia are present or when a final
judgment in one case will amount to res judicata in the other.278 There is res judicata when (1)
there is a final judgment or order; (2) the court rendering it has jurisdiction over the subject matter
and the parties; (3) the judgment or order is on the merits; and (4) there is between the two cases
identity of parties, subject matter and causes of action. For litis pendentia to exist, there must be
(1) identity of the parties or at least such as representing the same interests in both actions; (2)
identity of the rights asserted and relief prayed for, the relief founded on the same facts; and (3)
identity of the two cases such that judgment in one, regardless of which party is successful, would
amount to res judicata in the other.279

In the case at bar, the elements of litis pendentia and, consequently, of forum shopping are
present in petitioners petition for certiorari along with its supplemental petition for certiorari in
CA-G.R. SP No. 64155 and in its appeal in CA-G.R. CV No. 71850. Obviously, there is identity
of parties. Likewise, there is identity of causes of action as both cases assign the same errors on
the part of the trial court. Finally, there is identity of reliefs as both seek the annulment and
reversal of the same orders. It is not difficult to conclude that a decision in either case will
necessarily have a practical legal effect in the other.

278
Santos v. Heirs of Dominga Lustre, G.R. No. 151016, August 6, 2008, 561 SCRA 120, 128; Briones v.
Henson-Cruz, G.R. No. 159130, August 22, 2008, 563 SCRA 69, 84-85; Land Bank of the Philippines v.
AMS Farming Corporation, G.R. No. 174971, October 15, 2008, 569 SCRA 154, 179-180; Presidential
Commission on Good Government v. Sandiganbayan, G.R. No. 157592, October 15, 2008, 569 SCRA 360,
375; Rural Bank of the Seven Lakes (S.P.C.), Inc. v. Dan, G.R. No. 174109, December 24, 2008, 575 SCRA
476, 485-486.
279
Coca-Cola Bottlers (Phils.), Inc. v. Social Security Commission, G.R. No. 159323, July 31, 2008, 560 SCRA
719, 734-736.

102
Petitioner further argues that the petition for certiorari alleged grave abuse of discretion
on the part of the trial court judge in issuing the November 13, 2000 Resolution and April 23, 2001
Order, while the appeal alleged grave error on the part of the trial court judge in its November 13,
2000 Resolution, April 23, 2001 Order, and August 14, 2001 Order which are entirely different
issues.280 However, it is our view that, though petitioner attempts to make distinctions between
them, the two cases at issue are undoubtedly directed against the November 13, 2000 Resolution
and the April 23, 2001 Order of the trial court, as well as all rulings of the trial court arising from
these two. Clearly, both actions alleged the same right supposedly violated by the same acts of the
trial court which caused the same damage to petitioner, thus, in violation of the rule against forum
shopping. The present petition likewise violates the said rule.

Forum shopping is the act of a litigant who 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 raising substantially the same
issues either pending in, or already resolved adversely by some other court, or to increase his
chances of obtaining a favorable decision if not in one court, then in another. The rationale against
forum shopping is that a party should not be allowed to pursue simultaneous remedies in two
different courts as it constitutes abuse of court processes, which tends to degrade the administration
of justice, wreaks havoc upon orderly judicial procedure, and adds to the congestion of the heavily
burdened dockets of the courts.281

Petitioner stresses that when it filed its petition for certiorari directed against the November
13, 2000 Resolution granting partial summary judgment, the remedy of appeal was not yet an
available option to it as the case in the trial court had yet to be concluded. However, upon the
issuance of the April 23, 2001 Order which rendered the previously partial summary judgment as
the complete and final judgment disposing of the trial court case and was the subject of petitioners
supplemental petition for certiorari, appeal was now open to petitioner which it readily pursued.

280
Rollo, pp. 2310-2316.
281
Tokio Marine Malayan Insurance Company, Incorporated v. Valdez, G.R. No. 150107, January 28, 2008,
542 SCRA 455, 465.

103
Since the issues raised and the reliefs sought in its petition for certiorari and its appeal are identical
which would make a decision in either one as res judicata on the other and given that it is axiomatic
that the availability of appeal precludes resort to certiorari, it was imperative on the part of
petitioner to withdraw its petition for certiorari which it did not do. This is where the petitioner
crossed the line into the forbidden recesses of forum shopping. The assailed February 7, 2002
Court of Appeals Resolution correctly pointed this out citing the case of Ley Construction and
Development Corporation v. Hyatt Industrial Manufacturing Corporation,282 to wit:

Second, the Petition for Certiorari was superseded by the filing, before the
Court of Appeals, of a subsequent appeal docketed as CA-G.R. CV No. 57119,
questioning the Resolution and the two Orders. In this light, there was no more
reason for the CA to resolve the Petition for Certiorari.

Section 1, Rule 65 of the Rules of Court, clearly provides that a petition for
certiorari is available only when there is no appeal, or any plain, speedy and
adequate remedy in the ordinary course of law. A petition for certiorari cannot
coexist with an appeal or any other adequate remedy. The existence and the
availability of the right to appeal are antithetical to the availment of the special civil
action for certiorari. As the Court has held, these two remedies are mutually
exclusive.

In this case, the subsequent appeal constitutes an adequate remedy. In fact


it is the appropriate remedy, because it assails not only the Resolution but also the
two Orders.

It has been held that what is determinative of the propriety of certiorari is


the danger of failure of justice without the writ, not the mere absence of all other
legal remedies. The Court is satisfied that the denial of the Petition for Certiorari
by the Court of Appeals will not result in a failure of justice, for petitioners rights
are adequately and, in fact, more appropriately addressed in the appeal.

Third, petitioners submission that the Petition for Certiorari has a practical
legal effect is in fact an admission that the two actions are one and the same. Thus,

282
393 Phil. 633, 640-642 (2000).

104
in arguing that the reversal of the two interlocutory Orders would likely result in
the setting aside of the dismissal of petitioners amended complaint, petitioner
effectively contends that its Petition for Certiorari, like the appeal, seeks to set
aside the Resolution and the two Orders.

Such argument unwittingly discloses a recourse to forum shopping, which


has been held as the institution of two or more actions or proceedings grounded on
the same cause on the supposition that one or the other court would make a
favorable disposition. Clearly, by its own submission, petitioner seeks to
accomplish the same thing in its Petition for Certiorari and in its appeal: both assail
the two interlocutory Orders and both seek to set aside the RTC Resolution.

Hence, even assuming that the Petition for Certiorari has a practical legal
effect because it would lead to the reversal of the Resolution dismissing the
Complaint, it would still be denied on the ground of forum shopping.

With respect to the second issue of whether or not grave abuse of discretion attended the
granting of summary judgment by the trial court, we rule that a petition for an extraordinary writ
of certiorari is not a proper remedy to assail the propriety of the said act. The pertinent provision
of law in this particular case is Section 1, Rule 65 of the 1997 Rules of Civil Procedure, to wit:

SECTION 1. Petition for certiorari. When any tribunal, board or officer


exercising judicial or quasi-judicial functions has acted without or in excess of its
or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or 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 of such tribunal, board or officer,
and granting such incidental reliefs as law and justice may require.

105
In other words, a writ of certiorari may be issued only for the correction of errors of
jurisdiction or grave abuse of discretion amounting to lack or excess of jurisidiction.283

In Rizal Security & Protective Services, Inc v. Maraan,284 we elaborated on the


aforementioned grounds:

The respondent acts without jurisdiction if he does not have the legal power to
determine the case. There is excess of jurisdiction where the respondent, being
clothed with the power to determine the case, oversteps his authority as determined
by law. And there is grave abuse of discretion where the respondent acts in a
capricious, whimsical, arbitrary or despotic manner in the exercise of his judgment
as to be said to be equivalent to lack of jurisdiction. x x x.

After a careful review of the records, we find that petitioner failed to sufficiently show that
the trial court, in rendering a partial summary judgment, so gravely abused its discretion amounting
to lack or excess of jurisdiction. Verily, the circumstances of this case do not show that the trial
courts discretion was exercised arbitrarily, capriciously, or despotically because the November 13,
2000 Resolution laid down the factual and legal bases relied upon by the trial court in granting the
Motion for Partial Summary Judgment. Even assuming arguendo, that the trial court committed
errors in its appreciation of the facts and pleadings on record, as petitioner contends in its petition
for certiorari, we agree with the Court of Appeals that these involve errors of judgment which are
not reviewable by certiorari. As this Court held:

As a legal recourse, the special civil action of certiorari is a limited form of review.
The jurisdiction of this Court is narrow in scope; it is restricted to resolving errors
of jurisdiction, not errors of judgment. Indeed, as long as the courts below act within
their jurisdiction, alleged errors committed in the exercise of their discretion will

283
Delos Santos v. Court of Appeals, G.R. No. 169498, December 11, 2008, 573 SCRA 690, 700.
284
G.R. No. 124915, February 18, 2008, 546 SCRA 23, 32, citing Condo Suite Club Travel, Inc. v. National
Labor Relations Commission, 380 Phil. 660, 667 (2000).

106
amount to mere errors of judgment correctable by an appeal or a petition for
review.285

Lastly, we resolve the issue of whether or not the petition for certiorari filed by petitioner
was properly dismissed by the Court of Appeals. In dismissing the said petition, the Court of
Appeals ruled in its May 2, 2001 Resolution that appeal and not certiorari is the proper remedy
available to petitioner - a holding that was restated by the appellate court in its February 7, 2002
Resolution citing the case of Ley Construction and Development Corporation v. Hyatt Industrial
Manufacturing Corporation.286

Petitioner defends its resort to dual remedies by arguing that, under the peculiar
circumstances of the case, it could properly avail of a petition for certiorari and an appeal and that
the former is not barred even with the filing of the latter.287 However, we deem such a position
untenable as established jurisprudence declares otherwise.

The well-settled rule is that certiorari is not available where the aggrieved partys remedy
of appeal is plain, speedy and adequate in the ordinary course, the reason being that certiorari
cannot co-exist with an appeal or any other adequate remedy. The existence and availability of the
right of appeal are antithetical to the availment of the special civil action for certiorari. These two
remedies are mutually exclusive.288

Moreover, in Monterey Foods Corporation v. Eserjose,289 the Court distinguished when a


partial summary judgment is appealable and when it is not, to wit:

285
Apostol v. Court of Appeals, G.R. No. 141854, October 15, 2008, 569 SCRA 80, 92.
286
Supra note 69.
287
Rollo, pp. 2288-2290.
288
Estinozo v. Court of Appeals, G.R. No. 150276, February 12, 2008, 544 SCRA 422, 431; Macawiag v.
Balindong, G.R. No. 159210, September 20, 2006, 502 SCRA 454, 465; Caballes v. Court of Appeals, 492
Phil. 410, 420 (2005); People v. Court of Appeals, G.R. No. 144332, June 10, 2004, 431 SCRA 610, 617.
289
457 Phil. 771, 782 (2003).

107
Petitioners maintain that the order granting partial summary judgment was
merely interlocutory in nature and did not dispose of the action in its entirety. They
cite the doctrines laid down in Province of Pangasinan v. Court of Appeals and
Guevarra v. Court of Appeals, where the Court categorically stated that a partial
summary judgment is not a final or appealable judgment.

Petitioners position is untenable.

The rulings in Province of Pangasinan and Guevarra is not applicable in


the case at bar. The said cases specifically delved on the appeal of a partial summary
judgment, which did not dispose of all the reliefs sought in the complaint. In the
case at bar, other than the admitted liability of petitioners to respondents under the
contract growing agreement, all other reliefs sought under the complaint had
already been expressly waived by respondent before the trial court.
Accordingly, the assailed November 25, 1999 Order of the trial court which
granted partial summary judgment in favor of respondent was in the nature of
a final order which leaves nothing more for the court to adjudicate in respect
to the complaint. x x x. (Emphases supplied.)

Petitioner strongly asserts that the aforementioned Court of Appeals Resolutions are invalid
while conveniently failing to take into account the fact that the petition for certiorari it filed before
the Court of Appeals had become moot and academic because of the following circumstances:
First, when the May 2, 2001 Resolution was issued by the Court of Appeals, respondent had
already filed its Manifestation and Motion for Execution dated March 15, 2001 withdrawing its
remaining causes of action and the RTC had already granted this in an Order dated April 23, 2001.
In effect, this Order terminated the case before the RTC and the proper mode to challenge it is
through an appeal which petitioner did through a Notice of Appeal on April 25, 2001. Not unlike
the factual circumstances found in the Ley Construction and Development Corporation case, the
petition for certiorari was correctly dismissed since superseding events had already rendered it not
only improper because appeal already became an available remedy but also superfluous as the
appeal that was eventually filed dealt essentially with the same issues. Second, when the February

108
7, 2002 Resolution was issued, there was already a Sheriffs Return290 issued on September 21,
2001 informing the trial court that the writ of execution pending appeal was fully satisfied
rendering the case bereft of any pending incidents at the trial court level and, thus, concluded
already which would make an appeal as the proper mode to question it and not a petition for
certiorari.

To reiterate, it is axiomatic that a writ of certiorari is available when any tribunal, board
or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there
is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law. 291 As we
have previously discussed, we find that the trial court acted within its jurisdiction when it granted
summary judgment and the purported errors attributed to the trial court appear to be errors of
judgment not reviewable by certiorari but by appeal. Likewise, we find that the particular
circumstances of this case made the remedy of appeal the proper vehicle to thresh out the issues
raised by petitioner and rendered the petition for certiorari improper and moot, notwithstanding
the fact that it was filed earlier than the appeal subsequently filed by petitioner. Premises
considered, the petition for certiorari was properly dismissed by the Court of Appeals.

WHEREFORE, the petition is hereby DENIED, and the assailed Resolutions of the Court
of Appeals are AFFIRMED in toto. With costs against petitioner.

SO ORDERED.

290
Rollo, pp. 1733-1734.
291
RULES OF COURT, Rule 65, Sec. 1.

109
TERESITA J. LEONARDO-DE CASTRO
Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

LUCAS P. BERSAMIN MARIANO C. DEL CASTILLO


Associate Justice Associate Justice

JOSE PORTUGAL PEREZ


Associate Justice

110
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.

RENATO C. CORONA
Chief Justice

111
THIRD DIVISION

PILIPINO TELEPHONE G.R. No. 160322


CORPORATION,
Petitioner, Present:

VELASCO, JR., J., Chairperson,


- versus - LEONARDO-DE CASTRO,*
PERALTA,
ABAD, and
MENDOZA, JJ.
RADIOMARINE NETWORK
(SMARTNET) PHILIPPINES, INC., Promulgated:
Respondent.
August 24, 2011
x --------------------------------------------------------------------------------------- x

DECISION

ABAD, J.:

This case is about a partys right to summary judgment when the pleadings show that there
are no genuine issues of fact to be tried.

The Facts and the Case

*
Designated as additional member in lieu of Associate Justice Maria Lourdes P. A. Sereno, per Special Order 1069
dated August 23, 2011.

112
On December 11, 1996 petitioner Pilipino Telephone Corporation (Piltel) expressed its
willingness, on purely best effort, to buy in 1997 from respondent Radiomarine Network, Inc.
(Smartnet) 300,000 units of various brands of cellular phones and accessories (Motorola,
Mitsubishi, and Ericsson).292

On the following day, December 12, 1996, Piltel agreed to sell to Smartnet a 3,500-square
meter lot,293 known as the Valgoson Property, in Makati City for P560 million. Smartnet agreed
to pay Piltel P180 million as down payment with the balance of P380 million to be partly set off
against the obligations that Piltel was to incur from its projected purchase of cellular phones and
accessories from Smartnet. Smartnet agreed to settle any unpaid portion of the purchase price of
the land after the set off on or about April 30, 1997.

The contract to sell between the parties provides:

The total consideration of FIVE HUNDRED SIXTY MILLION PESOS


(P560,000,000.00) shall be paid by the VENDEE [Smartnet], without the need of
any demand, to the VENDOR [Piltel] in the following manner:

(a) a downpayment in the amount of ONE HUNDRED EIGHTY


MILLION (P180,000,000.00) PESOS, to be paid on or before December 28, 1996;

(b) Any and all outstanding payables which the VENDOR [Piltel] owes
to the VENDEE [Smartnet] in consideration of the cellular phone units and
accessories ordered by the VENDOR [Piltel] and delivered by the VENDEE
[Smartnet] between the initial downpayment date i.e. December 28, 1996 and April
30, 1997, shall be credited to the VENDEE [Smartnet] as additional payment of the
purchase price.

292
Records, p. 46.
293
Transfer Certificate of Title (TCT) T-195516.

113
(c) The remaining balance, after deducting (a) and (b) above, shall be
paid on or about April 30, 1997. It is expressly understood however, that the
VENDOR [Piltel] shall submit to the VENDEE [Smartnet], on or about April 20,
1997, a Statement of Account updating the deliveries of cellular phones and its
outstanding amount in order that the VENDEE [Smartnet] can prepare the final
payment. In this way, the amount of final payment shall be made to the VENDOR
[Piltel] on or before April 30, 1997. Should the VENDOR [Piltel] be delayed in the
submission of the said Statement on the stipulated date, the date of payment of the
remaining balance shall be automatically adjusted for a period equivalent to the
number of days by which the VENDOR [Piltel] is delayed in the submission
thereof.294

The parties also agreed on a rescission and forfeiture clause295 which provided that, if
Smartnet fails to pay the full price of the land within the stipulated period and within five days
after receipt of a notice of delinquency, it would automatically forfeit to Piltel 10% of the P180
million down payment or P18 million and the contract shall be without force and effect.

Smartnet failed to pay the P380 million balance of the purchase price on or about the date
it fell due. On December 19, 1997 Piltel returned P50 million to Smartnet, a portion of the P180
million down payment that it received. Smartnet later requested Piltel for the return of the
remaining P130 million but the latter failed to do so.296

On December 1, 1999 Smartnet filed a complaint297 against Piltel for rescission of their
contract to sell involving the Valgoson Property or its partial specific performance before the
Regional Trial Court (RTC)298 of Makati City in Civil Case 99-2041. Smartnet alleged, among
other things, that it withheld payment of the balance of the purchase price of the subject property

294
Rollo, p. 84.
295
Id. at 85.
296
Records, pp. 48-51.
297
Id. at 1-10.
298
Branch 57.

114
because Piltel reneged on its commitment to purchase from Smartnet 300,000 units of cellular
phones and accessories.

Smartnet asked the court to (a) order Piltel to convey to Smartnet at least 32% interest in
the Valgoson Property, representing the value of its down payment of P180 million or, in the
alternative, order Piltel to return to Smartnet its P180 million down payment plus interest; (b) order
Piltel to pay Smartnet P81,300,764.96, representing the value of the 300,000 units of various
cellular phones which it acquired pursuant to Piltels commitment to buy them but which
commitment Piltel disregarded, plus interest, as actual and compensatory damages; and (c) order
Piltel to pay Smartnet P500,000.00 in attorneys fees.

In its answer with counterclaims,299 Piltel claimed that the agreement to purchase cellular
phones and accessories was not part of its contract with Smartnet for the sale of the Valgoson
Property and that Piltel committed to buy equipment from Smartnet only on a best effort basis. For
this reason, Piltel pointed out, Smartnet did not have the power to rescind the contract to sell the
Valgoson Property and, hence, cannot invoke that contracts rescission and forfeiture clause. Piltel
sought full payment by Smartnet of the purchase price for the Valgoson Property, moral damages,
exemplary damages, and litigation expenses.

On October 3, 2000 Smartnet filed a motion for partial summary judgment300 for the return
of the down payment it paid Piltel. The RTC granted the motion on November 13, 2000301 and
ordered Piltel to return the P180 million down payment that it received less the forfeited amount
of P18 million and the cash advance of P50 million or a net of P112 million, with interest at 6%
per annum from the time of the extrajudicial demand on it on October 20, 1998 until finality of the
judgment and an additional 12% legal interest after the judgment becomes final and executory

299
Records, pp. 169-195.
300
Rollo, pp. 162-177.
301
Id. at 196-200. Penned by Presiding Judge Reinato G. Quilala.

115
until the same is satisfied. Piltel filed a motion for reconsideration which the RTC denied for lack
of merit on January 30, 2001.

On March 15, 2001 Smartnet filed a manifestation and motion, withdrawing its two
remaining causes of action and praying for the issuance of a writ of execution. On March 20, 2001
it filed an alternative motion for execution pending appeal of the RTCs partial decision.

On April 4, 2001 Piltel filed with the Court of Appeals (CA)302 a special civil action for
certiorari with application for a temporary restraining order and a writ of preliminary injunction.
Piltel alleged that the RTC presiding judge, Reinato G. Quilala, gravely abused his discretion when
he issued a partial summary judgment in the case and denied Piltels motion for reconsideration.
But the CA dismissed the petition, prompting Piltel to challenge such dismissal before this Court
in G.R. 152092.

Meantime, on April 23, 2001 the RTC granted (a) Smartnets motion to withdraw its
remaining causes of action and (b) its motion for execution pending appeal.303 Consequently, a
writ of execution was issued on April 24, 2001.

On April 25, 2001 Piltel filed a notice of appeal to the CA from the judgment of November
13, 2000 and from the April 23, 2001 Order that allowed execution pending appeal. The appeal to
the CA was docketed as CA-G.R. CV 71805.

On April 26, 2001 Piltel filed with the RTC a motion to defer execution pending appeal
upon the posting of a supersedeas bond. The RTC denied the motion. Piltel filed a motion for
reconsideration but the court denied it on August 14, 2001304 and directed Piltel to pay 12% interest

302
In CA-G.R. SP 64155.
303
Rollo, pp. 496-498.
304
Records, pp. 1086-1087.

116
on the judgment amount from April 23, 2001, when it allowed the execution pending appeal. Piltel
filed a supplemental notice of appeal to the CA from this last order.

On June 11, 2003 the CA dismissed Piltels appeal in CA-G.R. CV 71805.305 The appellate
court held that the RTC did not err when it granted summary judgment since there were no genuine
issues involved in the case. The CA said that Smartnets failure to pay the balance of the purchase
price ipso facto avoids the contract to sell. With the denial of its motion for reconsideration,306
Piltel filed this petition under Rule 45 of the Rules of Court.

Meantime, the Court in G.R. 152092307 denied Piltels petition on August 4, 2010. The
Court affirmed the CAs ruling in CA-G.R. SP 64155 that appeal, and not certiorari, is the proper
remedy. Moreover, it held that Piltel committed forum shopping when it filed a petition for
certiorari and a notice of appeal to assail the same resolutions and orders of the RTC.

With the denial of G.R. 152092, the Court is now left with this petition assailing the CAs
dismissal of Piltels appeal in CA-G.R. CV 71805.

The Issue Presented

The core issue for resolution is whether or not there are genuine issues of fact to be tried
in this case.

305
Rollo, pp. 62-75. Penned by Associate Justice Sergio L. Pestao and concurred in by Associate Justices Bernardo P.
Abesamis and Noel G. Tijam.
306
Id. at 77-82. Then Court of Appeals Associate Justice Arturo D. Brion, now Associate Justice of the Supreme
Court, participated in the resolution of the motion for reconsideration.
307
Pilipino Telephone Corporation v. Radiomarine Network, Inc., 626 SCRA 702. Penned by Associate Justice
Teresita J. Leonardo-De Castro and concurred in by Chief Justice Renato C. Corona, and Associate Justices Lucas P.
Bersamin, Mariano C. Del Castillo and Jose P. Perez.

117
The Courts Ruling

A genuine issue of fact is that which requires the presentation of evidence, as distinguished
from a sham, fictitious, contrived or false issue. When the facts as pleaded appear uncontested or
undisputed, then there is no real or genuine issue. Summary judgment is proper in such a case.308

Here, Piltel contends that summary judgment is out of place because the parties raise
factual issues of fraud and breach of contract. Although their contract has a built-in rescission and
forfeiture clause, this becomes operative only upon the occurrence of the following conditions: 1)
Piltel sends a Statement of Account to Smartnet; 2) Smartnet fails to pay within 10 days from
receipt of the statement; 3) Piltel sends a Notice of Delinquency to Smartnet; and 4) Smartnet fails
to pay within five days from receipt of the notice.

The rescission and forfeiture clause thus reads:

In case the VENDEE fails to fully pay, within the stipulated period, the
balance of the total consideration under Article 2(c) of this Contract to Sell, the
VENDOR shall send a notice of delinquency to the VENDEE. Failure on the part
of the VENDEE to pay within five (5) days from receipt of said notice, ten (10%)
percent of the downpayment or EIGHTEEN MILLION PESOS (P18,000,000.00)
PESOS, Philippine Currency shall automatically be forfeited in favor of the
VENDOR and the Contract to Sell shall be without force and effect.309

Notably, however, both Piltel and Smartnet admit that they entered into a contract to sell
covering the Valgoson Property; that Smartnet agreed to pay Piltel P560 million for it, with a down

308
D.M. Consunji, Inc. v. Duvaz Corporation, G.R. No. 155174, August 4, 2009, 595 SCRA 111, 120, citing Asian
Construction and Development Corporation v. Philippine Commercial Industrial Bank, G.R. No. 153827, April 25,
2006, 488 SCRA 192, 203.
309
Rollo, p. 85.

118
payment of P180 million; and that Smartnet failed to pay the balance of the purchase price on or
about April 30, 1997.

With these common admissions, it is clear that there are no genuine issues of fact as to the
existence and nature of the contract to sell as well as Smartnets failure to pay the balance of the
purchase price within the agreed period. Thus, the RTC was correct in skipping trial and deciding
the case through a summary judgment based on the undisputed facts.

Smartnets allegations respecting fraud and breach of contract referred to what appears to
be Piltels non-binding promise to buy cellular phones and accessories from Smartnet. These are
matters independent of the parties agreement concerning Piltels sale of the Valgoson Property to
Smartnet. The contract to sell of such property was not legally linked or made dependent on the
aborted cellular phone deal between the parties. Indeed, Smartnet dropped with leave of court its
causes of action relating to such deal.

All that matters is that since Smartnet failed to pay the balance of the purchase price,
automatic rescission set in and this placed Piltel under an obligation to return the down payment it
received, less the portion that it forfeited due to Smartnets default. Consequently, it is but proper
for Piltel to fully abide by such obligation. Piltel cannot avoid rescission since it in fact partially
abided by rescissions consequences when it returned to Smartnet on December 19, 1997 a P50
million portion of the down payment it received.

By returning part of the down payment, it is clear that Piltel recognized that the contract to
sell the Valgoson Property had reached the point of automatic rescission. Piltel is, therefore, in
estoppel to deny rescission based on a claim that it had not yet sent a statement of account or a
notice of delinquency to Smartnet regarding the latters default. Such statement of account and
notice of delinquency had become academic.

119
Piltel argues that Smartnet cannot, as a defaulting buyer, rescind the contract to sell
between them by the simple act of refusing to pay. But, Smartnets nonpayment of the full price of
the property was not an act of rescission. It was but an event that rendered the contract to sell
without force and effect. In a contract to sell, the prospective seller binds himself to part with his
property only upon fulfillment of the condition agreed, in this case, the payment in full of the
purchase price. If this condition is not fulfilled, the seller is then released from his obligation to
sell.

As the Court said in Heirs of Cayetano Pangan and Consuelo Pangan v. Perreras,310 the
payment of the purchase price in a contract to sell is a positive suspensive condition, the failure of
which is not a breach but a situation that results in the cancellation of the contract. Strictly
speaking, therefore, there can be no rescission or resolution of an obligation that is still non-
existent due to the non-happening of the suspensive condition.311

Likewise, a cause of action for specific performance does not arise where the contract to
sell has been cancelled due to nonpayment of the purchase price.312 Smartnet obviously cannot
demand title to the Valgoson Property because it did not pay the purchase price in full. For its part,
Piltel also cannot insist on full payment since Smartnets failure to pay resulted in the cancellation
of the contract to sell. Indeed, in the case of Ayala Life Assurance, Inc. v. Ray Burton Devt.
Corp.,313 the Court rejected the sellers demand for full payment and instead ordered it to refund to
the buyer all sums previously paid. The order to refund is correct based on the principle that no
one should unjustly enrich himself at the expense of another.314

310
G.R. No. 157374, August 27, 2009, 597 SCRA 253, 264.
311
Garcia v. Court of Appeals, G.R. No. 172036, April 23, 2010, 619 SCRA 280, 287.
312
Ayala Life Assurance, Inc. v. Ray Burton Devt. Corp., 515 Phil. 431, 439 (2006).
313
Id.
314
Padilla v. Spouses Paredes, 385 Phil. 128, 142 (2000).

120
Lastly, the Court sustains the CAs imposition of 12% interest pursuant to our ruling in
Eastern Shipping Lines, Inc. v. Court of Appeals.315

WHEREFORE, premises considered, the Court DENIES the petition and AFFIRMS the
June 11, 2003 Decision and the October 6, 2003 Resolution of the Court of Appeals in CA-G.R.
CV 71805.

SO ORDERED.

ROBERTO A. ABAD
Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.


Associate Justice
Chairperson

315
G.R. No. 97412, July 12, 1994, 234 SCRA 78.

121
TERESITA J. LEONARDO-DE CASTRO DIOSDADO M. PERALTA
Associate Justice Associate Justice

JOSE CATRAL MENDOZA


Associate Justice

ATTESTATION

122
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.

PRESBITERO J. VELASCO, JR.


Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons
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.

RENATO C. CORONA
Chief Justice

123
FIRST DIVISION

[G.R. No. 153126. September 11, 2003]

MONTEREY FOODS CORP. and RAMON F. LLANOS, petitioners, vs. VICTORINO E.


ESERJOSE, and the Branch Sheriff assigned to the Regional Trial Court of Quezon
City, Branch 224, National Capital Judicial Region, respondents.

DECISION
YNARES-SANTIAGO, J.:

This is a petition for review seeking to reverse and set aside the decision316 of the Court of
Appeals dated November 21, 2001, which upheld the Orders of the Regional Trial Court of Quezon
City, Branch 224 in Civil Case No. Q-98-36421.317
It is alleged in the petition that for a period of twelve years, respondent bought from petitioner
Monterey Foods Corporation live cattle and hogs which he in turn sold and distributed to his
customers. The transactions were covered by invoices and delivery receipts and were payable
within ten days from invoice date. Due to respondents inability to pay for his purchases, his
overdue account amounted to P87,434,689.37, and as a consequence, petitioner corporation ceased
its transactions with respondent.
Sometime in 1998, during the existence of the contractual relations between the parties, they
entered into a contract growing agreement whereby petitioner corporation supplied livestock for
respondent to grow, care for and nurture in his farm located in San Jose, Batangas. After five
months of operation, petitioner corporation withdrew from the contract without paying respondent
for his services, alleging that respondent failed to post the requisite bond under the contract and
poorly performed his farm management functions to the detriment of the animals.
Respondent repeatedly demanded that petitioner corporation pay him for his services under
the contract, amounting to P1,280,000.00. His demands went unheeded; thus, he filed with the
Regional Trial Court of Quezon City, Branch 224, an action for sum of money and damages against
petitioner corporation and its President, petitioner Ramon F. Llanes, which was docketed as Civil
Case No. Q-98-36421.318 After petitioners filed their Joint Answer, the case was scheduled for pre-
trial conference on May 14, 1999.
At the pre-trial conference, petitioners and their counsel failed to appear, and an Order was

316
Penned by Associate Justice Eubulo G. Verzola, concurred in by Associate Justices Rodrigo V. Cosico and Eliezer
R. De Los Santos.
317
Rollo, pp. 96-99; penned by Judge Emilio L. Leachon, Jr.
318
Rollo, pp. 100-103.

124
issued declaring them as in default and allowing respondent to present evidence ex parte.319 On
May 24, 1999, the trial court rendered judgment, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
plaintiff and against the defendants ordering the latter to pay the former the following:
1. P1,280,000.00 representing the principal obligation;
2. P100,000.00, jointly and severally, as damages; and
3. P50,000.00 as attorneys fees.
IT IS SO ORDERED.320
Petitioners filed a motion for new trial,321 which the trial court granted.322 Hence, the case was
again set for pre-trial conference and both parties submitted their respective pre-trial briefs.323
After the pre-trial, respondent submitted a manifestation and motion alleging that petitioners
have admitted their liability under the contract growing agreement at least to the extent of
P482,766.88 when they alleged in their Joint Answer: In accordance with the standard contract
growing fee provision plaintiff [respondent herein] was entitled to a compensation of net
P482,766.88.324 Respondent thus prayed that reverse trial be conducted.325
Petitioners opposed the manifestation and motion, stating that the reverse trial order has no
basis since the amount allegedly admitted was dramatically less than the total of P1,280,000.00
claimed by respondent.326
At the initial hearing of the case, petitioners confirmed in open court that they indeed entered
into a contract growing agreement with respondent and that the latter was entitled to a net
compensation of P482,766.88 under the said contract.327 The trial court, acting on petitioners
judicial admission, rendered partial summary judgment insofar as the amount of P482,766.88 was
concerned, and set the case for trial for the presentation of evidence on petitioners claim for
damages.328 Respondent moved for the execution of the partial summary judgment, which the trial
court granted.
Petitioners filed a motion for reconsideration, which was denied for lack of merit.329

319
Rollo, p. 133.
320
Id., p. 131.
321
Id., pp. 134-152.
322
Id., pp. 157-160.
323
RTC Record, Vol. I, p. 214.
324
Joint Answer, p. 9, par. (c); Rollo, p. 113.
325
Rollo, p. 161.
326
Id., p. 167.
327
TSN, 25 November 1999, p. 66.
328
Supra, note 2; TSN, 25 November 1999, pp. 73-74.
329
Supra, note 3.

125
Accordingly, on December 15, 1999, the trial court issued a writ of execution directing the sheriff
to cause the execution of the partial summary decision.330
On December 17, 1999, petitioners filed a petition for certiorari before the Court of Appeals,
docketed as CA-G.R. SP No. 56305.331 On November 21, 2001, the Court of Appeals dismissed
the petition.332 Petitioners motion for reconsideration was likewise denied for lack of merit.333
Petitioners are now before us assigning the following errors:
A.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A CLEAR AND
REVERSIBLE ERROR WHEN IT SANCTIONED THE WRIT OF EXECUTION
ISSUED BY THE TRIAL COURT OF A PARTIAL SUMMARY JUDGMENT WHICH
WAS NOT YET FINAL IN CHARACTER.
B.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A CLEAR AND
REVERSIBLE ERROR WHEN IT UPHELD THE WRIT OF EXECUTION OF THE
PARTIAL SUMMARY JUDGMENT ISSUED ON AN EX-PARTE MOTION THAT
DENIED PETITIONER AN OPPORTUNITY TO BE HEARD.
C.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A CLEAR AND
REVERSIBLE ERROR WHEN IT UPHELD THE WRIT OF EXECUTION OF THE
PARTIAL SUMMARY JUDGMENT ISSUED ON THE BASIS THAT A BOND IS
SUFFICIENT REASON FOR DISCRETIONARY EXECUTION TO ISSUE.
D.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A CLEAR AND
REVERSIBLE ERROR WHEN IT UPHELD THE WRIT OF EXECUTION ON THE
BASIS OF A PARTIAL SUMMARY JUDGMENT THAT IS PATENTLY INVALID
E.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A CLEAR AND
REVERSIBLE ERROR WHEN IT UPHELD THE PARTIAL SUMMARY
JUDGMENT THAT WAS RENDERED IN DISPARAGEMENT OF DUE PROCESS.
F.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A CLEAR AND
REVERSIBLE ERROR WHEN IT UPHELD THE TRIAL COURTS PARTIAL
SUMMARY JUDGMENT ISSUED ON THE BASIS THAT THERE ARE NO

330
Supra, note 4.
331
Rollo, pp. 65-95.
332
Id., pp. 57-64.
333
Id., p. 256.

126
GENUINE TRIABLE ISSUES OF FACT
G.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A CLEAR AND
REVERSIBLE ERROR WHEN IT SANCTIONED THE DEPARTURE OF THE
TRIAL COURT FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS.334
Simply put, the primordial question to be resolved hinges on whether summary judgment is
proper in the case at bar.
A summary judgment or accelerated judgment is a procedural technique to promptly dispose
of cases where the facts appear undisputed and certain from the pleadings, depositions, admissions
and affidavits on record, or for weeding out sham claims or defenses at an early stage of the
litigation to avoid the expense and loss of time involved in a trial. Its object is to separate what is
formal or pretended in denial or averment from what is genuine and substantial so that only the
latter may subject a party in interest to the burden of trial.335 Moreover, said summary judgment
must be premised on the absence of any other triable genuine issues of fact.336 Otherwise, the
movant cannot be allowed to obtain immediate relief. A genuine issue is such issue of fact which
requires presentation of evidence as distinguished from a sham, fictitious, contrived or false
claim.337
Rule 35, Section 3 of the Rules of Court provides two (2) requisites for summary judgment to
be proper: (1) there must be no genuine issue as to any material fact, except for the amount of
damages; and (2) the party presenting the motion for summary judgment must be entitled to a
judgment as a matter of law.338
Applying these principles to the case at bar, we find that the Court of Appeals did not commit
any reversible error in affirming the assailed orders of the trial court. Hence, the instant petition
must be denied.
The record shows that at the hearing on November 25, 1999, petitioners admitted liability
under the contract growing agreement in the amount of P482,766.88.339 As a result, respondent
agreed to waive all his other claims in the complaint, including his claim for consequential
damages.340 Correspondingly, insofar as the complaint was concerned, there was no other genuine
issue left for which the complaint for sum of money and damages may be prosecuted. Also by
reason of such admission, petitioners, in effect, likewise waived whatever defenses they may have
to deter recovery by respondent under the said contract. Thus, respondent became entitled, as a
334
Petition, pp. 11-12; Rollo, pp. 18-19.
335
Spouses Agbada v. Inter-Urban Developers, Inc., et al., G.R. No. 144029, 19 September 2002, citing Excelsa
Industries, Inc. v. CA, 317 Phil. 664 (1995).
336
Solidbank Corporation v. Court of Appeals, G.R. No. 120010, 3 October 2002.
337
Manufacturers Hanover Trust Co. and/or Chemical Bank v. Guerrero, G.R. No. 136804, 19 February 2003.
338
Solidbank Corporation v. Court of Appeals, supra.
339
TSN, 25 November 1999, p. 66.
340
TSN, 25 November 1999, pp. 27-29.

127
matter of law, to the execution of the partial summary judgment. When there are no genuine issues
of fact to be tried, the Rules of Court allows a party to obtain immediate relief by way of summary
judgment. In short, since the facts are not in dispute, the court is allowed to decide the case
summarily by applying the law to the material facts.341
Clearly, the judgment finally disposed of all the reliefs sought in the complaint. The order
granting summary judgment was akin to a judgment on the merits made after a full-blown trial. Its
consequent execution, therefore, may issue as a matter of right in favor of respondent unless appeal
was seasonably made therein, which petitioners failed to do. Instead of filing a notice of appeal
with the trial court, petitioners elevated the matter to the Court of Appeals via petition for certiorari
under Rule 65 of the Rules of Court, which is not a substitute for the lost remedy of appeal.
Petitioners maintain that the order granting partial summary judgment was merely
interlocutory in nature and did not dispose of the action in its entirety. They cite the doctrines laid
down in Province of Pangasinan v. Court of Appeals342 and Guevarra v. Court of Appeals,343
where the Court categorically stated that a partial summary judgment is not a final or appealable
judgment.
Petitioners position is untenable.
The rulings in Province of Pangasinan and Guevarra is not applicable in the case at bar. The
said cases specifically delved on the appeal of a partial summary judgment, which did not dispose
of all the reliefs sought in the complaint. In the case at bar, other than the admitted liability of
petitioners to respondents under the contract growing agreement, all other reliefs sought under the
complaint had already been expressly waived by respondent before the trial court. Accordingly,
the assailed November 25, 1999 Order of the trial court which granted partial summary judgment
in favor of respondent was in the nature of a final order which leaves nothing more for the court
to adjudicate in respect to the complaint. In Santo Tomas University Hospital v. Surla,344 the Court
distinguished a final judgment or order from an interlocutory issuance in this wise:
The concept of a final judgment or order, distinguished form an interlocutory
issuance, is that the former decisively puts to a close, or disposes of a case or a disputed
issue leaving nothing else to be done by the court in respect thereto. Once that
judgment or order is rendered, the adjudicative task of the court is likewise ended on
the particular matter involved. An order is interlocutory, upon the other hand, if its
effects would only be provisional in character and would still leave substantial
proceedings to be further had by the issuing court in order to put the controversy to rest.
We are not unmindful of petitioners counterclaim. However, our cursory evaluation of the
same fails to convince us that the issues raised therein are closely related to or intertwined with
the growing contract agreement. The issues raised therein clearly involved transactions distinct
and separate from the growing contract agreement; they refer to the alleged obligations of
respondent under their separate contract for the sale and distribution of cattle and hogs. As such,

341
Supra, note 26.
342
G.R. No. 104266, 31 March 1993, 220 SCRA 726.
343
G.R. Nos. L-49017 and L-49024, 30 August 1983, 124 SCRA 297.
344
355 Phil. 804, 811 (1998).

128
these are in the nature of permissive counterclaims which can be litigated independently of the
main complaint.
Petitioners also argue that they were denied an opportunity to be heard on the motion to
execute the summary judgment; and that the summary judgment was rendered in disregard of due
process.
The argument is not well-taken.
A party cannot successfully invoke deprivation of due process if he was accorded the
opportunity of a hearing, through either oral arguments or pleadings.345 Contrary to petitioners
claims, the record shows that petitioners were duly represented by counsel when the motion for
summary judgment as well as the execution of the same were heard by the trial court. Petitioners
counsel did not register any opposition to respondents oral motion for summary judgment, saying
that under the Rules of Court it should be furnished a written motion for summary judgment at
least 10 days before it is heard. We find, however, that the absence of the written notice did not
divest the trial court of authority to pass on the merits of the motion made in open court. The order
of the court granting the motion for summary judgment and its execution thereof despite absence
of a notice of hearing, or proof of service thereof, is merely an irregularity in the proceedings. It
cannot deprive the court of its authority to pass on the merits of the motion. The remedy of the
aggrieved party in such cases is either to have the order set aside or the irregularity otherwise cured
by the court, or to appeal from the final judgment, and not thru certiorari.346
In fact, the counsel for petitioners actively participated in disposing of the reliefs prayed for
in the complaint when he sought the reduction in respondents claim to P482,766.88. Besides, we
find from the records that petitioners expressly agreed to the summary judgment347 and to the
execution of the same after respondent posts a bond in an amount fixed by the court.348 In short,
petitioners were never deprived of their day in court. Thus, they cannot now be allowed to claim
that they were denied due process. The Rules of Court should be liberally construed in order to
promote their objective of securing a just, speedy and inexpensive disposition of every action and
proceeding.349
Thus, in Ley Construction and Development Corporation v. Union Bank of the Philippines,350
it was held:
Admittedly, there is nothing in the records which indicates that Judge Arcangel
conducted a hearing before he resolved respondents motion for summary judgment.
Nevertheless, as explained in Carcon Development Corporation v. Court of Appeals, in
proceedings for summary judgment, the court is merely expected to act chiefly on the
345
Alauya, Jr. v. COMELEC, G.R. Nos. 152151-52, 22 January 2003; See Rule 15, Section 2 of the Rules of Court
provides: All motions shall be in writing except those made in open court or in the course of a hearing or trial.
346
See Galvez v. CA, G.R. No. 114046, 24 October 1994, 237 SCRA 685, 698, citing People, et al. v. Vergara, etc.,
et al., G.R. Nos. 101557-58, 28 April 1993, 221 SCRA 560, 570-571.
347
TSN, 25 November 1999, pp. 42-50.
348
TSN, 25 November 1999, pp. 68-69.
349
Section 6, Rule 1 of the Rules of Court.
350
389 Phil. 788, 799 (2000).

129
basis of what is in the records of the case and that the hearing contemplated in the Rules
is not de riguer as its purpose is merely to determine whether the issues are genuine or
not, and not to receive evidence on the issues set up in the pleadings.
xxx. In view of the fact that they admitted having incurred the obligation which is
the basis of the complaint, a hearing would have served no pertinent purpose. The records
already provide sufficient basis for the court to resolve respondents motion. Thus, we find
that even if the trial court did not conduct a hearing, this fact would not affect the validity
of the summary judgment rendered by Judge Arcangel.
Neither does the fact that respondents motion to resolve its motion for summary
judgment was filed ex parte affect the validity of Judge Arcangels resolution. The
requirement in Rule 35, 3 that the opposing party be furnished a copy of the motion 10
days before the time specified for the hearing applies to the motion for summary judgment
itself and not to the motion to resolve such motion. xxx. Thus, it could not be said that
they were deprived of the opportunity to question the motion.
WHEREFORE, in view of all the foregoing, the instant petition for review is DENIED for
lack of merit. The assailed decision of the Court of Appeals dated November 21, 2001 in CA-G.R.
SP No. 56305, which affirmed the Orders of the Regional Trial Court of Quezon City, Branch 224,
directing the execution of partial summary judgment in Civil Case No. Q-98-36421, is
AFFIRMED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug, and Carpio, JJ., concur.
Azcuna, J., on official leave.

130
FIRST DIVISION

[G.R. No. 129382. January 23, 2002]

VICTOR SIASAT and JESUS ONG, petitioners, vs. COURT OF APPEALS, HON.
FELICIDAD Y. NAVARRO-QUIAMBAO, in her capacity as Presiding Judge, MTC,
Br. 65, Makati City, JOEL FERAREN, in his capacity as Deputy Sheriff of the
aforesaid Court, and GENIE DEVELOPMENT CORPORATION, respondents.

DECISION
PARDO, J.:

The Case

Appeal via certiorari from the decision of the Court of Appeals351 affirming in toto the
summary judgment352 of the Regional Trial Court, Makati, that denied the petition for relief from
judgment filed by petitioners who were ordered ejected from the premises in question in a decision
of the Metropolitan Trial Court, Makati.353

The Facts

The facts, as found by the Court of Appeals, are as follows:


On 29 November 1991, private respondent Genie Development Corporation (GDC,
for brevity) instituted in the Metropolitan Trial Court (MTC) of Makati a case for
ejectment against petitioners Victor Siasat and Jesus Ong. This case was docketed as Civil
Case No. 42351 and assigned to Branch 65.
Summons were duly issued and served together with the complaint and annexes upon
petitioners Victor Siasat and Jesus Ong on 18 December 1991.
On 2 January 1992, the reglementary period expired without the petitioners filing an
answer. Thus, they were declared in default.
On 30 January 1992, 28 days after the expiration of the period to answer, Atty.
Jeremias Vitan, counsel for petitioners, filed a Motion to Lift Order of Default. The

351
In CA-G. R. CV No. 50390, promulgated on January 09, 1997.
352
In Civil Case No. 92-1198, Summary Judgment dated August 10, 1994, Rollo, pp. 132-135.
353
In Civil Case No. 42351, Decision dated March 23, 1992. Rollo, pp. 128-131.

131
motion was denied. On 23 March 1992, a decision was rendered by the MTC against
petitioners.
Atty. Jeremias Vitan received the said decision on 31 March 1992. No appeal was
filed within the reglementary period resulting in the issuance of a writ of execution.
Thereafter, Deputy Sheriff Joel Feraren served the writ of execution on the
petitioners and the ejectment aspect of the decision was satisfied as evidenced by a
Certificate of Turn Over dated 28 April 1992.
Relative to the monetary aspect of the decision, Sheriff Feraren levied upon several
sewing machines and other personal properties and scheduled the auction sale thereof on
5 May 1992.
The scheduled sale did not materialize due to an order of Executive Judge Job
Madayag dated 4 May 1992 in connection with the Petition for Relief from Judgment (of
the MTC decision) with preliminary injunction and restraining order filed by petitioners
with the Makati Regional Trial Court (RTC for brevity) docketed as Civil Case No. 92-
1198.
In the petition for relief from judgment, petitioners Victor Siasat and Jesus Ong
blamed Atty. Jeremias Vitan, their former counsel, for the alleged negligence and bad
faith in causing them to be in default and in failing to appeal.
During the hearing on the petition for injunction, petitioners merely marked in
evidence the writ of execution and Notice of Levy and Sale. Private respondent GDC
filed its Answer with Opposition to Application for Injunction. It subpoenaed Atty.
Jeremias Vitan who testified that the default judgment and the lapse of the period to
appeal was due to the own making of the petitioners and not due to his negligence.
On 19 May 1992, petitioners filed a Motion for the Release of Levied Properties,
which was opposed by GDC.
On 25 May 1992, the RTC issued the writ of preliminary injunction, enjoining Sheriff
Feraren from proceeding with the auction sale of the personal properties of Victor Siasat.
However, on the same day, the RTC issued an order requiring Sheriff Feraren to
immediately release to petitioners the levied properties. By virtue of the said order, the
sheriff and petitioners forced open the premises of the private respondent and carried into
effect the release of the levied properties to petitioners.
Private respondent GDC filed a petition for certiorari before this Court, docketed as
CA-G. R. NSP No. 27999, seeking to annul the orders rendered by the RTC Judge, to wit:
(a) granting the issuance of preliminary prohibitory injunction in favor of the petitioners;
and, (2) granting petitioners motion to release the levied properties.
On 22 December 1992, the 6th Division of this Court, through Justice Quirino Abad
Santos, Jr., rendered a decision declaring that the action of the respondent judge in issuing
the two (2) assailed orders were in grave abuse of discretion amounting to lack of
jurisdiction and the orders were set aside (CA Decision, pp. 221-231, Record).
A motion for reconsideration was denied in a resolution dated 6 July 1992 (p. 250,

132
Record).
On 14 June 1994, the private respondent GDC filed a motion for summary judgment
alleging therein that with the decision of this Court, there is no longer any genuine issue
as to any material fact, or if there is such issue, the same can be resolved on the basis of
the pleadings, documents and affidavits.
Petitioners Victor Siasat and Jesus Ong filed an opposition on 29 June 1994.
On 10 August 1994, RTC, Branch 134, rendered the assailed summary judgment.354
In time, petitioners appealed the above-cited decision to the Court of Appeals.355
On January 09, 1997, the Court of Appeals promulgated a decision, the dispositive portion of
which reads:
WHEREFORE, the assailed Summary Judgment should be, as it is hereby,
AFFIRMED EN TOTO. Costs against defendants-appellants.
SO ORDERED.356
On February 11, 1997, petitioners filed a motion for reconsideration of the decision.357
However, on May 14, 1997, the Court of Appeals denied the motion for lack of merit.358
Hence, this appeal.359

The Issue

The issue raised is whether there exist genuine issues of material facts constitutive of
petitioners substantial and meritorious claim.360

The Courts Ruling

The issue raised is factual. In an appeal via certiorari, we may not review the factual findings
of the Court of Appeals.361 When supported by substantial evidence, the findings of fact of the
354
Petition, Annex A, Rollo, pp. 49-59, at pp. 49-51.
355
Docketed as CA-G.R. CV No. 50390.
356
Supra, Note 4, at p. 59. A. M. Martinez, J., ponente, Montenegro and Lipana-Reyes+, JJ. , concurring.
357
Petition, Annex C, Rollo, pp. 61-66.
358
Petition, Annex B, Rollo, p. 60.
Petition filed on July 21, 1997, Rollo, pp. 27-48. On January 31, 2000, the Court gave due course to the petition
359

(Rollo, pp. 138-139).


360
Petitioners Memorandum, Rollo, pp. 165-195, at p. 171.
361
Sarmiento v. Court of Appeals, 353 Phil. 834,845-846 [1998]; Concepcion v. Court of Appeals, 324 SCRA 85
[2000], citing Congregation of the Virgin Mary v. Court of Appeals, 353 Phil. 591, 597 [1998], Arriola v. Mahilum,

133
Court of Appeals are conclusive and binding on the parties and are not reviewable by this Court,362
unless the case falls under any of the recognized exceptions to the rule.363
There are instances when the findings of fact of the trial court or Court of Appeals may be
reviewed by the Supreme Court, such as (1) when the conclusion is a finding grounded entirely on
speculation, surmises and conjectures; (2) when the inference made is manifestly mistaken, absurd
or impossible; (3) where there is a grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of
Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the
admissions of both appellant and appellee; (7) when the findings are contrary to those of the trial
court; (8) when the findings of fact are conclusions without citation of specific evidence on which
they are based; (9) when the facts set forth in the petition as well as in the petitioners main and
reply briefs are not disputed by the respondents; and (10) when the findings of fact of the Court of
Appeals are premised on the supposed absence of evidence and contradicted by the evidence on
record.364
The case at bar arose from a simple ejectment of petitioners from the leased premises initiated
in the Metropolitan Trial Court, Makati. The Revised Rule on Summary Procedure covers all
ejectment cases, regardless of whether they involve questions of ownership.365 Under that Rule, a
petition for relief from judgment is a prohibited pleading.366 Hence, a party to an ejectment suit in
the municipal trial court may not file such pleading in the regional trial court.

The Judgment

WHEREFORE, the Court denies the petition, and affirms the decision of the Court of
Appeals367 in toto.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ., concur.

337 SCRA 464, 469 [2000]; Bolanos v. Court of Appeals, 345 SCRA 125, 130-131 [2000].
362
Atillo v. Court of Appeals, 334 Phil. 546, 555 [1997].
363
Cebu Shipyard and Engineering Works, Inc. v. William Lines, Inc., 366 Phil. 439, 452 [1999].
364
Misa v. Court of Appeals, 212 SCRA 217, 221-222 [1992]; Reyes v. Court of Appeals, 328 Phil. 171, 179-180
[1996].
365
Heirs of Miranda v. Court of Appeals, 325 Phil. 674, 687 [1996].
366
Section 19, Revised Rule on Summary Procedure.
367
In CA-G. R. CV No. 50390.

134
FIRST DIVISION

EDWARD T. MARCELO, MARCELO


FIBERGLASS CORPORATION, PHIL- G.R. No. 156605
ASIA AGRO INDUSTRIES CORP.,
PHILIPPINE SPECIAL SERVICES
CORP., PROVIDENT INTERNATIONAL Present:
RESOURCES CORP., MARCELO
CHEMICAL & PIGMENT CORP.,
FARMERS FERTILIZER CORP., PUNO, C.J., Chairperson,
INSULAR RUBBER CO., INC.,
HYDRONICS CORPORATION OF THE SANDOVAL-GUTIERREZ,
PHILIPPINES, MARCELO RUBBER & CORONA,
LATEX PRODUCTS, INC., POLARIS
MARKETING CORP., H. MARCELO & AZCUNA, and
CO., INC., MARCELO STEEL CORP.,
GARCIA, JJ.
PHILIPPINE CASINO OPERATORS
CORP., and MARIA CRISTINA
FERTILIZER CORP.,

Petitioners,
Promulgated:

- versus -
August 28, 2007

SANDIGANBAYAN and THE


PRESIDENTIAL COMMISSION ON
GOOD GOVERNMENT,

Respondents.
x------------------------------------------------------------------------------------x

DECISION

GARCIA, J.:

135
This joint petition for certiorari under Rule 65 of the Rules of Court seeks the reversal and
setting aside of the Resolution368 dated August 27, 2001 of the Sandiganbayan in its Civil Case
No. 21, a suit for recovery of ill-gotten wealth, with damages, initiated by the Republic of the
Philippines (Republic or RP, for short), denying herein petitioners respective motions for summary
judgment and its Resolution369 of November 19, 2002 which likewise denied their separate
motions for reconsideration.

At the core of the case is the contract entered into on June 10, 1982 by and between the
Republic, though the Philippine Navy (PN), and Marcelo Fiberglass Corporation (MFC),
represented by its President, herein petitioner Edward T. Marcelo (Marcelo, hereinafter), for the
construction of 55 units of 16.46 fiberglass high-speed boats, at the unit price of P7,200,000.00,
subject to adjustment upon the occurrence of certain stated contingencies.370 The same contract
underwent amendments, the first effected sometime in January 1984,371 and the second, in October
1984.372

The facts:

On February 16, 1987, the Presidential Commission on Good Government (PCGG), pursuant
to Executive Order (EO) No. 1, series of 1986, issued a writ of sequestration against MFC.
The next day, PCGG agents proceeded to occupy MFC premises where four of the herein
petitioner corporations were holding office.

368
Penned by Associate Justice Teresita Leonardo-de Castro, with Associate Justices Anacleto D. Badoy, Jr.
and Ricardo M. Ilarde (both retired), concurring; rollo, pp. 104-120.
369
Penned by Associate Justice Godofredo L. Legaspi, with Associate Justices Raoul V. Victorino and
Rodolfo G. Palattao, Sr., concurring; rollo, pp. 123-125.
370
Id. at 236 et seq.
371
Id. at 263- 266.
372
Id. at 267 et seq.

136
On July 27, 1987, the PCGG, on behalf of the Republic, filed a Complaint373 with the
Sandiganbayan against Marcelo, Fabian Ver (Ver), now deceased, and Ferdinand and Imelda
Marcos for recovery of ill-gotten or unexplained wealth which they allegedly acquired in
unlawful concert with one another. The complaint, which would later undergo amendments374
and was docketed in the Sandiganbayan as Civil Case No. 21, alleged, in gist, that Marcelo
and Ver, taking advantage of their relationship with the Marcoses, (a) obtained from the
Republic, thru the PN, a favored contract for the construction of high-speed fiberglass boats at
the cost of millions of pesos; (b) collected from the Republic advances representing 79% of
the contract price; and (c) secured a loan from foreign banks which, upon the behest of then
Pres. Marcos, was covered by what amounts to a sovereign guarantee.

On November 20, 1987, the Republic filed its Second Amended Complaint to rectify its
error in making reference to the Philippine Amusement and Gaming Corporation, when it should
properly be Philippine Casino Operators Corporation.

On May 17, 1989, Marcelo filed his Answer375 to the Second Amended Complaint attaching
thereto a copy of the PN-MFC boat-building contract, the alleged favored contract adverted to.
The Republic filed its Reply376 on June 30, 1989, followed later by Marcelos Rejoinder.377

Subsequently, the Republic served a Request for Admission378 dated June 5, 1991 on
Marcelo. In his August 15, 1991 Response to PCGGs Request for Admission,379 Marcelo included
his own counter-request for admission on matters stated in his response.

In the meantime, the Republic sought and was later granted leave to file a Third Amended

373
Id. at p. 127.
374
The complaint was actually thrice amended, the first filed before a responding pleading could be filed.
375
Answer to the Second Amended Complaint; rollo, p. 194.
376
Id. at 278.
377
Id. at 321.
378
It was not formally annexed to the petition.
379
Rollo, pp. 326 et seq.

137
Complaint380 dated October 30, 1991, therein impleading the herein petitioner corporations and
two others381 as additional defendants. As alleged, the newly impleaded sixteen (16) corporations
are beneficially owned and are dummies of the individual defendants.

To the third amended complaint, the other petitioner corporations filed their respective
Answers,382 which contained these common allegations: they are not owned, controlled or were
acquired by Marcelo who is merely an officer/stockholder; and that their assets were acquired
legally.

Following the filing by the Republic of its Pre-Trial Brief,383 Marcelo submitted his own
Pre-Trial Brief With Written Interrogatories, First Set and Request for Admission384 (to admit the
truth of the matters of fact stated in his August 15, 1991 reply to the Republics June 5, 1991 request
for admission). On October 15, 1996, MFC filed its Pre-Trial Brief With Written Interrogatories,
First Set and Request for Admission;385 the other petitioner corporations, as defendants a quo, filed
their Pre-Trial Briefs with Written Interrogatories First Set386 on the same day.

Of the written interrogatories and request for admission thus submitted, the Republic filed
an answer387 to that of Marcelos.

On August 15, 1997, the petitioners filed three separate Motion for Summary Judgment.388

380
Id. at 342 et seq.
381
Philippine Smelters Corp. and Marcelo Tire and Rubber Co., Inc.
382
Rollo, pp. 362 et seq.; pp. 365 et seq.
383
Id. at 369.
384
Id. at 375.
385
Id. at 381.
386
Id. at 433.
387
Id. at 439.
388
Id. at 446 (for petitioner Marcelo); p. 459 (for Marcelo Fiberglass Corporation [MFC]); and p. 509 (for the
other petitioner corporations). The copy of MFCs Motion For Summary Judgment (Annex V of the Petition)
does not contain a prayer. We take it to be an error in the photocopying.

138
Marcelos motion was based on two major arguments:

There is no genuine issue of fact/cause of action against him; and,

In his Pre-Trial Brief, he (Marcelo) requested the [Republic] to admit the truth
of the matter of fact related in his 15 August 1991 Response (to PCGG Request
for Admission) and Request on Plaintiff Republic of the Philippines for
Admission but the Republic did not reply to the request. Thus, pursuant to Sec.
2, Rule 26 of the Rules of Court, each of the matters of which an admission is
requested shall be deemed admitted.

For its part, MFC predicated its motion for summary judgment on two major points:

Lack of a genuine issue/cause of action against it; and,

The Republics failure and continued refusal to answer the written


interrogatories and reply to the request for admission of certain facts set forth
in its pre-trial brief.

Finally, the other petitioner corporations389 submit their entitlement to a summary


judgment on practically the same grounds invoked by Marcelo and MFC vis--vis facts embodied
in their own pre-trial brief. Thus, they argue that the matters set forth in their written interrogatories
are deemed established, more particularly the following: that they: a) are not parties or signatories
to, and were not involved in obtaining the PN-MFC contract in question; b) were not involved in
and did not do any act in securing the approval of direct payment for the subject boats, in violation
of the stipulation in the contract that payment should be made by Confirmed Irrevocable and
Divisible Letter of Credit (L/C); c) did not receive/collect anything from the Republic and there is

389
Per the Sandiganbayan, four defendant corporations did not join in the motion for summary
judgment.

139
no document showing they ever received anything; and d) were not involved in the procurement
of the alleged aforementioned foreign loan.

The Republic filed separate Opposition390 only to Marcelos and MFCs respective motions
for summary judgment, alleging in refutation to the formers motion the following:

MFCs defense of having a personality separate from that of Marcelo and the
other corporations was not raised in Marcelos answer.

The amended complaint alleges that Marcelo and Ver, taking undue advantage
of their influence and relationship, by themselves and/or in unlawful concert
with the Marcos spouses, for unjust enrichment, engaged in schemes and
strategies, including using the other corporations for the above purposes.

That MFC has a personality distinct from Marcelo is a legal issue, thus trial
should not be dispensed with.

The other corporations are merely the fruits of the ill-gotten wealth of the
individual defendants;

The case is based on the theory of conspiracy.

Against MFCs motion for summary judgment, the Republic advanced the following
arguments:

390
Rollo, pp. 518 et seq., and 531 et seq.

140
The complaint makes out an allegation that the other corporations were utilized
as fronts for the perpetration of the illegal schemes, devices and stratagems;

There is no allegation in the motion for summary judgment that defendant


corporations were not used as a front by Marcelo. As a matter of fact, Marcelo
claims that it was MFC, not himself, which entered into the contract with the
[PN] for the construction of high-speed fiberglass boats labeled as favored in
the Third Amended Complaint.

Marcelo and MFC in turn filed their respective Replies391 to the opposition entered by the
Republic.

Eventually, on August 27, 2001, the Sandiganbayan rendered the herein assailed
Resolution392 denying the separate motions of Marcelo and MFC, as defendants a quo, for
summary judgment and the collective motion for such judgment interposed by the other defending
corporations. In a subsequent Resolution393 of November 19, 2002, the Sandiganbayan denied the
petitioners respective motions for reconsideration. Hence, this recourse.

391
Id. at 522 and 534.
392
Supra note 1.
393
Supra note 2.

141
Before discussing the merits of the petition, the Court deems it appropos to delve into
Criminal Case No. 20224 which involved the subject PN-MFC boat supply contract.

In a Commission on Audit (COA) Report dated March 12, 1992 (COA Report), the COA
alleged that the PN disbursed for the boat supply contract P337,700,000.00. The disbursement, so
the report claims, was contrary to pertinent laws and COA rules governing the disbursement of
public funds, such as:

(a) There was no certificate of availability of funds;

(b) No performance bond was posted, as required;

(c) No demand for delivery was made despite failure to deliver after payment of
80% of the contract price;

(d) Default provision was not invoked or enforced against MFC; and,

(e) Payments were not made in accordance with the terms of the contract.

On the basis of the COA Report, an Information, docketed as Criminal Case No. 20224,
was filed against Marcelo, then Rear Admiral Simeon Alejandro and three other PN officials for
violation of Sec. 3(e) of the Anti-Graft Law (R.A. No. 3019, as amended) penalizing as corrupt
practice the act of a public officer and/or the conspiring private individual , inter alia, of causing
injury to the government by giving unwarranted benefits to a private party through evident bad
faith, manifest partiality or gross inexcusable negligence. As alleged, the giving of unwarranted
benefits stems from the disbursement of P337,437,000 to MFC in partial payment of undelivered

142
55 units of high speed boats.

Following a review, however, on motion of Alejandro et al., the Ombudsman approved an


Order394 of April 14, 1999, for the withdrawal of the Information, on the strength of, inter alia,
the ensuing findings of the Special Investigator embodied in the same Order:

Further, the failure to deliver the boats was for reasons not attributable to
MFC. First, in breach of contractual stipulations, the PN incurred delay in making
the down payments until the foreign exchange crisis supervened. Second, due to
the dollar crisis, the Central Bank (CB) refused to authorize the opening of (LCs)
to finance the importation of the boat components. The CB finally authorized the
opening of the LCs only two years after the first request was made, and it was for
restricted LCs. Third, when the shipment of the 55 MTU diesel engines arrived in
the Philippines between June and December 1986, they were taken to the MFC
manufacturing plant in Malabon so that boat manufacture could be commenced.
However, before the manufacture could start, the PCGG, on February 16, 1987,
sequestered not only the imported boat components but also all the properties of
MFC and padlocked its manufacturing plant. xxx..

The undisputed facts also show that the down payments made by the PN
were used for the importation of boat engines, gearboxes and other components
needed for the construction of the boats, and that the PN could not lawfully demand
the delivery of the boats from MFC since the latters obligation to deliver the boats
had not yet arisen.

xxx xxx xxx

Moreover, a corporation is a distinct juridical entity . In this case, the party


that entered into the Contract with PN for the construction of speed boats was MFC,
which exclusively assumed the obligation to put up a performance bond; it was to

394
Rollo, pp. 664 et seq.

143
MFC that down payments were made by PN; and it was MFC which, was solely
obligated to build the boats and deliver them to PN. Under the circumstances, if
MFC committed any culpable act, it alone bears the responsibility therefor.

xxx xxx xxx

As discussed earlier, there is no injury or prejudice to the government. The


down payments made by the PN to MFC were used to import MTU engines and
other boat parts, which were seized by the PCGG . Also, the facts show that no
party received any unwarranted benefits, advantage or preference under the
contract. It must be emphasized that none of the down payments or money subject
of this case inured to the benefit of MFC or Marcelo .

As no injury or prejudice was caused to the Government and no party


received any unwarranted benefit under the Contract, it is baseless to say that undue
injury was caused or unwarranted benefits given through manifest partiality,
evident bad faith or gross inexcusable negligence. xxx the elements of the crime
charged are not present in this case. 395 (Underscoring and words in brackets added)

The main issue tendered in this joint petition turns on whether or not respondent
Sandiganbayan committed grave abuse of discretion amounting to lack or excess of jurisdiction in
denying the motion for summary judgment of Marcelo, MFC and the other petitioner corporations.
According to the petitioners, the pleadings of the parties, and the admissions and documentary
evidence of the [Republic] show that there is no genuine issue as to any material fact and that
[they] are entitled to a [summary] judgment as a matter of law. 396 They thus urgently urge the
reversal of the assailed Resolutions and the consequent dismissal of Civil Case No. 21.

The petition is impressed with merit.

395
Id. at 673-677.
396
Id. at 41.

144
It needs to stress at the outset that Civil Case No. 21 is one of several suits involving ill-
gotten or unexplained wealth that the Republic, through the PCGG, has initiated. The Court has
resolved several similar cases, establishing in the process doctrinal teachings. As it were, several
sub-issues in the present petition may have already been addressed, if not rendered moot and
academic, in those cases. Accordingly, this petition shall be resolved taking into stock and in the
light of the relevant holdings and doctrines in those cases, foremost of which is Baseco v. PCGG.397
There, the Court made it abundantly clear that the right and duty of the Government to recover ill-
gotten wealth are undisputed. The Court added the caveat, however, that plain and valid that right
may be, a balance must still be sought to the end that proper respect be accorded and adequate
protection assured, the fundamental rights of private property and free enterprise. Among the
things we stressed in BASECO is the need, in ill-gotten wealth cases, to give due regard to the
basic rights of the parties, with particular emphasis on the right to property and the requirement of
evidentiary substantiation.

It is the petitioners main posture, positing the propriety of summary judgment in Civil Case
No. 21, that there is no more genuine factual issues to be tried by the Sandiganbayan, the
Republic, for failing to answer the petitioners requests for admission, having already admitted
certain vital facts in this case. Excepting, the Republic counters that the said requests for
admission were sufficiently denied by its allegations in the complaint.

In denying the motions for summary judgment, the Sandiganbayan wrote:

The answers of [the Republic] to the written interrogatories propounded by


Marcelo indubitably show the existence of genuine factual issues between the
parties, such as, whether or not Marcelo President of [MFC] was the real
beneficiary of the amounts collected from the [Republic] by [MFC] through the
alleged favored contract mentioned in the complaint; and whether or not [MFC]
was used as conduit by Marcelo allegedly to amass ill-gotten wealth.

It must be stressed that the crucial factual question that serves as underpinning of
the alleged causes of action invoked by the [Republic] in this case is whether or
not the subject contract, including the amendments, was a favored contract,

397
G.R. No. L-75885, May 27, 1987, 150 SCRA 181.

145
unlawfully obtained by the defendants in conspiracy with one another. Corollary
thereto, whether or not the other [petitioner] corporations allegedly owned or
controlled beneficially by the individual defendants were the fruits of the alleged
ill-gotten wealth obtained through the said contract or whether individual
defendants Marcelo and Ver acted as dummies or agents of former President
Marcos in the defendant corporations.
xxx xxx xxx

Incidentally, the instant motions for summary judgment were filed before the
[anti-graft] Court could issue an order under Section 1, Rule 9398 of the Rules of
Court relative to the written interrogatories. Moreover, the factual details alleged
and conclusions of fact and law adduced in the said pleadings largely rely on the
terms and conditions of the [favored] contract and its amendments which are
precisely being questioned to be a favored contract. From the allegations of the
defendants, it is apparent that the [Republic] extended enormous sums of money .
Even assuming that the factual background alleged in the Answer of Marcelo
which was reiterated in the Answer of [MFC], to be true or to have been
established or admitted, still, a genuine factual issue remains to be tried and that is
whether or not the subject contract was a favored contract as it appears from the
record that the implementation of its terms, as narrated by the defendants, had
resulted in the expenditure of hundreds of millions of pesos on the part of the
[Republic] without a single delivery having been made or required to be made .
The factual issue of whether or not the subject contract is a favored one, which we
take to mean as disadvantageous to the government, is not settled by the
allegation that the contract was implemented in the midst of a foreign exchange
crisis and that the government failed to comply with the staggered payments
which the government was required to tender before any delivery could be made
by the [MFC] under the terms of the contract. For the defendant to invoke the
terms of the contract to excuse the non-delivery of the subject matter thereof
simply begs the questions because the very stipulations of the contract are in issue
in this case.399 (Words in brackets added)

We examine the records and found that summary judgment is in order. Under Section 3, Rule
35 of the Rules of Court, summary judgment may be allowed where, save for the amount of
damages, there is no genuine issue as to any material fact and the moving party is entitled to a
judgment as a matter of law. Summary or accelerated judgment is a procedural technique
aimed at weeding out sham claims or defenses at an early stage of the litigation, thereby
avoiding the expense of time involved in a trial. Even if the pleadings appear, on their face, to
raise issues, summary judgment may still ensue as a matter of law if the affidavits, depositions

398
SECTION 1. Defenses and objections not pleaded.- Defenses and objections not pleaded either in a motion
to dismiss or in the answer are deemed waived. xxx
399
Resolution dated August 17, 2001, at 13-15, rollo, pp. 116-118.

146
and admissions show that such issues are not genuine.400 The presence or absence of a
genuine issue as to any material fact determines, at bottom, the propriety of summary
judgment. A genuine issue, as opposed to fictitious or contrived one, is an issue of fact that
requires the presentation of evidence. To the moving party rests the onus of demonstrating the
absence of any genuine issue of fact, or that the issue posed in the complaint is patently
unsubstantial so as not to constitute a genuine issue for trial.401 In Estrada v. Consolacion,402
the Court stated that when the moving party is a defending party, his pleadings, depositions or
affidavits must show that his defenses or denials are sufficient to defeat the claimants claim.
The affidavits or depositions shall show that there is no defense to the cause of action or the
cause of action has no merits, as the case may be. In fine, in proceedings for summary
judgment, the burden of proof is upon the plaintiff to prove the cause of action and to show
that the defense is interposed solely for the purpose of delay. After the plaintiff discharges its
burden, the defendants has the burden to show facts sufficient to entitle him to defend.

With the view we take of the case, there is really no more genuine issues to be tried in this
case, the Republic having failed or refused to answer the requests for admission and the
written interrogatories of the petitioners. As it were, the Republic only answered petitioner
Marcelos request for admission or interrogatories. But then the Republics answer serves only
to highlight and confirm the fact that petitioner Marcelos participation in all the transactions
subject of this case is as President of MFC, 403 thus:

1.0 Regarding the Specific Averments of Illegal Acts in paragraph 11, sub-
paragraph (d), of the Third Amended Complaint which reads:
(d) illegally securing a loan with a foreign
bank with the Guarantee of the Government, upon
the personal behest of defendant Ferdinand E.
Marcos, which loan remains unpaid to date

1.1. Was the alleged loan for defendant Marcelo personally?

ANSWER: The loan was for the [MFC] of which Marcelo is the
President, who stands to benefit from the proceeds of the loan.

1.2. In the affirmative, what documents indicate that the loan was for defendant .
400
Carcon Development Corporation v. CA, G.R. No. 88218, December 19, 1989, 180 SCRA 348.
401
Evadel Realty and Development Corporation v. Soriano, G.R. No. 144291, April 20, 2001, 357 SCRA 395.
402
G.R. No. L-40948, June 29, 1976, 71 SCRA 523, 528-29.
403
Pre-Trial Brief with Written Interrogatories First Set and Request for Admission of Marcelo, Annex n
of Petition, rollo, pp. 375 et seq.; See also pp. 7-8 Sandiganbayan Resolution of August 27, 2001, rollo, pp. 110-111.

147
Marcelo personally?

ANSWER: The loan was negotiated by Marcelo in his capacity as


President of [MFC] with the Swiss Bank Corporation. The Monetary Board
[in] August 12, 1983 approved the loan.

2.0 Regarding the Specific Averments of Illegal Acts in paragraph 11, sub-
paragraph (c), of the Third Amended Complaint which reads:
(c) unlawfully received and collected from
plaintiff hundreds of millions of pesos by way of
advances representing 79% of the contract price for
the construction of the aforementioned high-speed
fiberglass boats, without, to date, delivering a single
boat to the prejudice and damage of Plaintiff and the
Filipino people

2.1 Was the amount allegedly received and collected from plaintiff
for the personal account of defendant Edward T. Marcelo?

ANSWER: The amounts collected from plaintiff were for the account
of [MFC] but only as conduit. The real beneficiary of the amount is Marcelo.
The Contract to Buildand its Amended Contractprovide that payments should
be by CONFIRMED IRREVOCABLE, DIVISIBLE LETTER OF CREDIT
established in favor of the BUILDER. However, payments were made directly
to [MFC] as shown in Land Bank application for Cashiers Check;

2.2 In the affirmative, what documents indicate that the amount


allegedly received and collected went to the personal account of
defendant Edward T. Marcelo?

ANSWER: The defendant, as President of [MFC] stands to benefit


from the proceeds of the amount collected. The Amended Article of
Incorporationshows that Marcelo is the President of the Corporation, a wholly
owned family corporation.

3.0 Regarding the Specific Averments of Illegal Acts in paragraph 11, sub-
paragraph (b), of the Third Amended Complaint which reads:

148
(b) securing the approval of direct payments
on the above-mentioned contracts, in violation of the
stipulation that payment should be by confirmed,
irrevocable and divisible letter of credit

3.1 Was the direct payment allegedly secured for Marcelo


personally?

ANSWER: The direct payment was secured by defendant as President


of [MFC] as shown in his letter dated November 4, 1982 requesting for release
of the first downpayment of P127,710.00.

3.2 In the affirmative, what documents indicate that the direct


payments allegedly secured went to the personal account of
defendant Edward T. Marcelo?

ANSWER: The defendant, as President of [MFC] stands to benefit


from the proceeds of the direct payments made by plaintiff.

4.0 Regarding the Specific Averments of Illegal Acts in paragraph 11, sub-
paragraph (a), of the Third Amended Complaint which reads:
(a) unlawfully obtaining a favored contract
with the [PN] for the construction of high-speed
fiberglass boats at the cost of hundreds of millions of
pesos

4.1 Is Marcelo personally a party to the contract referred to


by plaintiff?

ANSWER: Yes, defendant is signatory to the contract as President of


[MFC]. Defendant Marcelos letter-requestdated November 4, 1982, to then
President Marcos who approved it in his marginal notedated November 10,

149
1982. 404 (Words in bracket added.)

It is basic that a corporation is clothed with a personality distinct from that of its officers,405
its stockholders and from other corporations it may be connected.406 Under the doctrine of
piercing the veil of corporate existence, however, the corporations separate personality may
be disregarded when the separate identity is used to protect a dishonest or fraudulent act,
justify a wrong, or defend a crime. In such instance, the wrongdoing must clearly and
convincingly be established;407 it cannot be presumed.408 Absent malice or bad faith, the
officer or shareholder cannot be made personally liable for corporate obligations and cannot
be held liable to third persons who have claims against the corporation.

A reading of the Republics answers to Marcelos interrogatories leads us to view, like the
Ombudsman,409 that there was nothing irregular with the boat supply contract. Neither were the
circumstances leading to the contract award tainted with irregularity. For, the answers yield
nothing more than a reiteration of mere conclusions of fact stated in the underlying complaint. The
complaint does not even state how the conclusion was arrived at that Marcelo was the real
beneficiary of the amounts collected under the contract, absent factual averments that would
support the same. The Republics argument that since MFC did not allege in its motion for summary
judgment that it is not used as a front by Marcelo, then the two should be treated as one and the
same,410 is simply specious. There is no such principle as presumption of piercing the veil of
corporate fiction. Nor could it be simply assumed that by the mere bare allegation or conclusion
of law, in an answer to written interrogatories, that Marcelo is a conduit of the Marcoses, a genuine
issue has been created. On this score, the Sandiganbayan was certainly in error.

As the Court distinctly notes, the complaint in Civil Case No. 21 imputes an unlawful or at
least a highly improper act against petitioner Marcelo in that he obtained a favored contract with

404
Rollo, p. 375.
405
Lafarge Cement Phil., Inc.v.Continental Cement Corp., G.R. No. 155173, November 23, 2004, 443 SCRA
522.
406
Concept Builders, Inc. v. NLRC, G.R. No. 108734, May 29, 1996, 257 SCRA 149.
407
Secosa v. Heirs of Francisco, G.R. No. 160039, June 29, 2004, 433 SCRA 273.
408
Matuguina Integrated Wood Products v. Court of Appeals, G.R. No. 98310, October 24, 1996, 263 SCRA
490.
409
Supra note 27.
410
Rollo, p. 532.

150
the PN, collected hundreds of million of pesos by way of advances and illegally secured a foreign
loan with sovereign guarantee courtesy of then Pres. Marcos. The complaint, however fails to
disclose why the contract characterization favored was, a conclusion of law, as it were. The Court
will go further. The complaint violates fundamental rules of pleading. For one, it yields a
substantial lack of specific averments constituting the Republics cause or causes of action against
the petitioners, particularly Marcelo. In fine, the complaint does not state with definiteness how or
in what specific manner the petitioners committed the alleged illegal and fraudulent acts so broadly
enumerated therein. For another, it is replete with sweeping generalizations, conclusions of fact
and law, and contains inferences derived from facts that are not found in the complaint. In short,
the complaint is an embodiment, a concrete example, of how one should not prepare a legal
complaint. The Courts disposition in Remitere v. Montinola Vda. De Yulo411 should be
enlightening:

It is not stated anywhere in the complaint why the sale was absolutely void,
nor were there stated any particular facts or circumstances upon which the alleged
nullity of the sale or transaction is predicated. The averment that "the public sale
was and still is absolutely a void sale . is a conclusion of law or an inference from
facts not stated in the pleading. A pleading should state the ultimate facts
essential to the rights of action or defense asserted, as distinguished from a mere
conclusion of fact, or conclusion of law. An allegation that a contract is valid or
void, as in the instant case, is a mere conclusion of law.

xxx xxx xxx

Not being statements of ultimate facts which constitute the basis of a right
of the plaintiffs-appellants, nor are they statements of ultimate facts which
constitute the wrongful acts or omissions of the defendants-appellees that violated
the right of the plaintiffs-appellants the allegations of the complaint in the present
case have not fulfilled the requirements of Section 3, Rule 6 of the Rules of
Court xxx that the complaint should contain a "concise statement of the
ultimate facts constituting the plaintiff's cause or causes of action. (Emphasis
added.)

411
G.R. No. L-19751, February 28, 1966, 16 SCRA 251.

151
It cannot be over-emphasized that the Republic cannot any more prove malice or wrongdoing
on the part of either Marcelo or MFC, or that the separate corporate identity of MFC was used
for unlawful means. For, the Republic has veritably acknowledged the regularity of the boat-
construction contract by its failure to answer written interrogatories and the request for
admission propounded by petitioner MFC. To be precise, the Republic did not answer the
following written interrogatories412 of MFC:

1.0 Regarding the Specific Averments of Illegal Acts in paragraph 11, sub-paragraph
(d), of the Third Amended Complaint which reads:

(d) illegally securing a loan with a foreign bank with


the Guarantee of the Government, upon the personal behest
of defendant Ferdinand E. Marcos, which loan remains
unpaid to date

1.1. Was there any loan with a foreign bank ever availed of for Republic to say that the
loan remains unpaid to date?

1.2. Who availed of such loan with a foreign bank?

1.2. When was such loan with a foreign bank availed of?

1.3. How much of such loan with a foreign bank was availed of?

1.4. What is the name of the foreign bank from which such loan was secured and availed
of?

1.5. Why was the loan with foreign bank secured?

412
Pre-Trial Brief for MFC, Annex O of the Petition, rollo, pp. 381 et seq.

152
1.6. In 1982, what were the loan options proposed by the Republic[s] Philippine
National Bank for plaintiff Republic[s] [PN] to pay for the domestic/deferred letter
of credit which the latter was supposed to open in favor of defendant [MFC]?

1.7. In 1983, without a long term foreign loan to pay for the letter of credit which [the]
[PN] was to open with [the] Land Bank of the Philippines, was plaintiff Republic[s]
Central Bank of the Philippines willing to approve the importations by defendant
[MFC] under the boat-building contract?

1.8. What specific provision of law in 1982 was violated for plaintiff Republic to
conclude that securing a loan with a foreign bank with the guarantee of the
government is illegal?

1.9. Who required and why was the Guarantee of Government secured for the loan with
a foreign bank?

1.10. In 1982, without the guarantee of the Republic[s] National Government, was
plaintiff Republics own [PNB] Bank willing to lend plaintiff Republic[s] own [PN]
the amounts to pay for the latters opening of a domestic/deferred letter of credit in
favor of defendant [MFC]?

1.11. In 1982, who in [the] National Government has power to approve the
issuance of [the] National Governments guarantee of a loan?

1.12. In 1982, in what a particular form, document or writing should the


approval of the issuance of plaintiff Republic[s] National Governments
guarantee of a loan appear?

2.0 Regarding the Specific Averments of Illegal Acts in paragraph 11, sub-
paragraph (c), of the Third Amended Complaint which reads:

(c) unlawfully received and collected from Plaintiff hundreds of millions of


pesos by way of advances representing 79% of the contract price for

153
the construction of the aforementioned high-speed fiberglass boats,
without, to date, delivering a single boat to the prejudice and

2.1. How much exactly was received and collected from plaintiff Republic

2.2 Who among the defendants received and collected such amount?

2.3. What does plaintiff Republic mean by the word advances?

2.3.1.Were the amounts received and collected borrowed from plaintiff Republic?

2.3.2. If they were borrowed, what are the loan documents evidencing the loan?

2.3.3. If they were not borrowed, why were they received and collected from
plaintiff Republic?

2.4. In its 5 June 1991 Request for Admission, plaintiff Republic asserts and
acknowledges that there is an upward adjustment of the contract price from P425.7
Million to P926.524 Million. This was the agreement in November 1985. What is
the contract price plaintiff Republic is referring to in the aforequoted allegations
in the Third Amended Complaint?

2.4.1. Under the June 1983 amendment to the contract, the parties agreed that the foreign
exchange risk shall be for the account of the Philippines. With the contract price
of P425.7 Million in June 1982 at the exchange rate of P8.00 to US$1.00, what is
the additional amount assumed by the plaintiff Republic [PN] by November 1985
when the exchange rate had changed to P18.00 to US$1.00?

2.5. What are the pre-conditions for the delivery by defendant [MFC] of any boat under
the contract?

154
2.6. Which of these preconditions have been satisfied for plaintiff Republic to
rightfully complain of the non-delivery of the boats to date?

2.7. Article VIII, part B, of the contract stipulates that delivery of the boats shall be
effected provided that [PN] shall have fulfilled all its obligations as stipulated in
this contract. Has plaintiff Republic fulfilled all its obligations as stipulated in the
contract?

2.8. Article XIII, part A of the contract signed and executed on 18 June 1982, stipulates
and obligates plaintiff Republic to make the following payments:

1. THIRTY (30) PERCENT of the total contract price as


downpayment upon the signing of the Contract on 18
December 1982.

2. TWENTY (20) PERCENT of the total contract price


xxx for the engines, gear boxes, fiberglass materials, radar and
communication equipment xxx after SIX (6) MONTHS from
date of the execution of this contract xxx or by 18 December 1982.

2.8.1. How many payments were received by defendant [MFC] from plaintiff
Republic?

2.8.2. On what dates were each of such payments received?

2.8.3. What were the amounts received on each of such dates?

2.8.4. How many years, months and/or days had elapsed from 18 June 1992 before
each of such payment was received?

2.8.5. How many years, months and/or days had elapsed before or after 18 November
1995 when each payment was received?

155
2.8.6. What percentage of the adjusted contract price of P926.524 Million was
received in each of the payment was received?

2.9. Article XIII, part A, of the contract further stipulates and obligates plaintiff
Republic to open a CONFIRMED, IRREVOCABLE, DIVISIBLE LETTER OF
CREDIT in favor of defendant Marcelo Fiberglass Corporation.

2.9.1. When did plaintiff Republic open such a [L/C] for either the full value of the
contract price or any part thereof?

2.9.2. What efforts did plaintiff Republic exert on its own to comply with this
obligation?

2.10. Article X, part A, of the contract further provides:

If, at any time, either the construction of the boat, or any performance required
hereunder as a prerequisite to the delivery of the boat, is delayed due to acts of state,
xxx by destruction of the shipyard xxx by fire and/or other causes beyond the
control of either contracting party, the time of delivery of the boat under this
Contract shall be extended for a period of time corresponding to the duration and
cause of such events.

2.10.1. Was not the construction of the boats and a prerequisite to the delivery of
the boats delayed by an act of state or by cause beyond the control of defendant
[MFC] when the state, plaintiff Republic, paid the 20% of the original contract
price, intended for the engines, gear boxes, fiberglass materials, radar and
communication equipment of the boats, only in November 1985 or almost three
years past due and when the contract price to be paid had increased because of the
change foreign exchange rate?

2.10.2. Was not the construction of the boats and a prerequisite to the delivery of
the boats delayed by an act of state and by cause beyond the control of defendant
[MFC] when the state, plaintiff Republic never delivered the full 20% of the
increased contract price intended for the very engines, gear boxes, fiberglass
materials, radar and communication equipment of the boats?

156
2.10.3. Was not the construction of the boats delayed by an act of state or by cause
beyond the control of defendant [MFC] when the Central Bank . from 1982 to 1986,
because of the dollar crisis which was aggravated by the murder of Senator Benigno
S. Aquino on 21 August 1983, refused or could not provide the foreign exchange
necessary for [MFC] to import the engines, gear boxes, fiberglass materials and
radio and communications equipment for the boats?

2.10.4. Was not a prerequisite to the delivery of the boats delayed by an act of state
or by cause beyond the control of defendant [MFC] when the State, plaintiff
Republic never opened or could not open the required [L/C]?

2.10.5. Was not the construction of the boats further delayed by an act of state or
by cause beyond the control of defendant [MFC] when the state, plaintiff Republic,
sequestered on 17 February 1987 all assets of [MFC], padlocked its offices and
shipyard/plant, and barred entry by anyone thereto up to this day?

2.10.6. Was not the construction of the boats further delayed by an act of state or
by cause beyond the control of defendant [MFC] when the State, plaintiff Republic,
negligently caused in 1994 the destruction by fire of the shipyard/plant of defendant
[MFC] while under its full and exclusive sequestration, control and custody?

2.10.7. Considering that the foregoing causes of the delay in the construction of the
boats and delay in the prerequisite to the delivery of the boats, most of which are
still existing up to this day, is not the extension of time granted in the contract for
the delivery of the boats still continuing?

xxx xxx xxx

3.2. Is such direct payment in violation of the stipulation in the amended contract of
June 1983 which allows the payment of the 30% downpayment either by bank draft
or [L/C]?

xxx xxx xxx

157
3.3. Is plaintiff Republic aware of its own documentary evidence consisting of
the 22 December 1983 letter of its own Defense Ministry, through then Minister
Juan Ponce Enrile, who explained therein that:

The Office of Budget and Management (OBM) released the


amount of P127.71 M. representing the 30% downpayment
required in the contract. The amount was subsequently paid to MFC
to save for the government front-end fee and other bank charges
amounting to P1,915,650.00

3.4. Does plaintiff Republic know that, for the reason stated by its own Defense
Ministry, it was itself who requested defendant [MFC] to accept payment and that
the latter merely acceded to the request?

3.4. Who secured the approval of, and who approved the direct payments?

3.4.1. What is the basis of plaintiff Republic in identifying such person (s) as the
one who secured the approval?

xxx

4.1. What does plaintiff Republic mean by the phrase favored contract?

4.1.2. What circumstances made the contract being referred to a favored one?

4.2. What specific provision of law was violated for plaintiff Republic to
conclude that the contract or the act of obtaining it is unlawful?

4.2.1. Is obtaining the contract unlawful because it is a favored one?

4.2.2. Or, is the contract favored because obtaining it is unlawful?

158
4.2.3. What is the reason for the answers to the two preceding questions?

4.3. Without using unlawful favored or words of similarly sweeping


conclusionary import, what is wrong with obtaining that contract with the [PN] for
the construction of high speed fiberglass boats at the costs of hundreds of millions
of pesos?

4.4. What did plaintiff Republic, its then Ministry of National Defense, its [AFP]
and its [PN] do to the offer made in 1979 by defendant [MFC] to construct the
boats required by the [PN] until the contract was signed on 18 June 1982?

4.5. What did plaintiff Republic, its then Ministry of National Defense, its
[AFP], and its [PN] do to comply with the contract entered into on 18 June 1983
up to the time defendant [MFC] was sequestered in February 1987?

4.6. With its sovereignty and all resources and powers , what efforts did plaintiff
Republic exert to know what itself, its then Ministry of National Defense, its
[AFP] and its [PN] did within the periods of almost four (4) years each referred
to in the two preceding questions? (Words in brackets added.)

The Republic did not also answer the written interrogatories of the other defendant
corporations. In effect, the Republic admitted the non-participation of the other defendant
corporations in the contracts in question. This is evident from the following written
interrogatories which were deemed admitted by the Republic:

1.1. What is the specific involvement of, or the specific acts done by, each of the other
Defendant Corporations in securing the alleged loan?

xxx xxx xxx

159
2.1. How much exactly was received and collected by each of the Other Defendant
Corporations from plaintiff?

2.2. When did each of the Other Defendant Corporations receive the amounts allegedly
received from plaintiff, if any?

2.3. What documents indicate that each of the Other Defendant Corporations received
such amount allegedly received from plaintiff?

xxx xxx xxx

4.1. Which of the other defendant corporations is a party or signatory to the contract
referred to by plaintiff?

4.2. What is the specific involvement of, or the specific acts done by, each of the other
defendant corporations in obtaining the contract referred to by plaintiff?

The Republic cannot plausibly evade the consequences of its failure to answer written
interrogatories and requests for admission. If the plaintiff fails or refuses to answer the
interrogatories, it may be a good basis for the dismissal of his complaint for non-suit unless he can
justify such failure or refusal.413

To be sure, the Rules of Court prescribes the procedures and defines all the consequence/s
for refusing to comply with the different modes of discovery. The case of Republic v.
Sandiganbayan,414 a case for recovery of ill-gotten wealth where the defendants served upon the

413
Santiago Land Development Company v. Court of Appeals, G.R. No. 103922, July 9, 1996, 258 SCRA 535.
414
G.R. No. 90478, November 21, 1991, 204 SCRA 213.

160
PCGG written

interrogatories but the latter refused to make a discovery, is relevant. Some excerpts of what the
Court said thereat:

The message is plain. It is the duty of each contending party to lay before
the court the facts in issue--fully and fairly; xxx

Initially, that undertaking of laying the facts before the court is


accomplished by the pleadings filed by the parties; "ultimate facts" are set forth in
the pleadings; xxx. The law says that every pleading "shall contain in a concise and
direct statement of the ultimate facts on which the party pleading relies for his claim
or defense, as the case may be, omitting the statement of mere evidentiary facts."

Parenthetically, if this requirement is not observed, i.e., the ultimate facts


are alleged too generally or "not averred with sufficient definiteness or particularity
to enable x x (an adverse party) properly to prepare his responsive pleading or to
prepare for trial," a bill of particulars seeking a "more definite statement" may be
ordered . xxx.

The truth is that "evidentiary matters' may be inquired into and


learned by the parties before the trial. Indeed, it is the purpose and policy of
the law that the parties - before the trial if not indeed even before the pre-trial
- should discover or inform themselves of all the facts relevant to the action,
not only those known to them individually, but also those known to their
adversaries; in other words, the desideratum is that civil trials should not be
carried on in the dark; and the Rules of Court make this ideal possible through
the deposition-discovery mechanism set forth in Rules 24 to 29. xxx

xxx xxx xxx.

In line with this principle of according liberal treatment to the deposition-


discovery mechanism, such modes of discovery as (a) depositions under Rule 24,(b)
interrogatories to parties under Rule 25, and (c) requests for admissions under Rule
26, may be availed of without leave of court, and generally, without court

161
intervention. The Rules of Court explicitly provide that leave of court is not
necessary to avail of said modes of discovery after an answer to the complaint
has been served. xxx.

On the other hand, leave of court is required as regards discovery in


accordance with Rule 27, or under Rule 28, which may be granted upon due
application and a showing of due cause.

To ensure that availment of the modes of discovery is otherwise


untrammeled and efficacious, the 'law imposes serious sanctions on the party
who refuses to make discovery, such as dismissing the action or proceeding or
part thereof, ; taking the matters inquired into as established in accordance
with the claim of the party seeking discovery; refusal to allow the disobedient
party support or oppose designated claims or defenses; xxx

xxx xxx xxx


.

One last word. xxx all that is entailed to activate or put in motion the process
of discovery by interrogatories to parties under Rule 25 of the Rules of Court, is
simply the delivery directly to a party of a letter setting forth a list of questions with
the request that they be answered individually. That is all. The service of such a
communication on the party has the effect of imposing on him the obligation of
answering the questions "separately and fully in writing under oath," and serving
"a copy of the answers on the party submitting the interrogatories " The sanctions
for refusing to make discovery have already been mentioned. So, too, discovery
under Rule 26 is begun by nothing more complex than the service on a party of a
letter or other written communication containing a request that specific facts therein
set forth be admitted in writing. That is all. Again, the receipt of such a
communication by the party has the effect of imposing on him the obligation of
serving the party requesting admission with "a sworn statement either denying
specifically the matters of which an admission is requested or setting forth in detail
the reasons why he cannot truthfully either admit or deny those matters," failing in
which "(e)ach of the matters of which admission is requested shall be deemed
admitted." xxx. (emphasis supplied)

While earlier touched upon, other considerations obtain which should have impelled the
Sandiganbayan to grant the motion for summary judgment. We refer to the defect in the Republics
complaint itself. We start with the very PN-MFC contract itself which served as the main prop of
the Republics case. There is no dispute that the Republic did not attach to its complaint a copy of
162
what it claims to be a favored contract, let alone set out therein the relevant terms and conditions
of the contract, or pertinent averments as would show, in general, why the same is unlawful or
grossly disadvantageous to the State as would merit the tag favored. The rule obtains that when a
claim is based on a written instrument or document, the substance of such instrument or document
shall be set forth in the pleading, and the original or a copy thereof shall be attached to the pleading
as an exhibit which shall be deemed to be a part of the pleading, or said copy may with like effect
be set forth therein:415

"SECTION 7. Action or defense based on document.


Whenever an action or defense is based upon a written instrument
or document, the substance of such instrument or document shall be
set forth in the pleading, and the original or a copy thereof shall be
attached to the pleading as an exhibit, which shall be deemed to be
a part of the pleading, or said copy may with like effect be set forth
in the pleading."

The record reveals that it was petitioner Marcelo no less who brought out the contract first,
as an attachment to his Answer.

On the alleged illegal advances, the particulars on the matter are not alleged; the
circumstances that would justify its conclusion that either petitioner Marcelo or MFC received the
79% monetary equivalent of the contract without delivering a single boat could not be found.
Again, the specific information was volunteered by Marcelo himself in his answer.

As to the allegation that the petitioners secured a loan with a foreign bank with the

415
Rule 8, Sec. 7, 1964 Revised Rules of Court.

163
guarantee of the government, upon the personal behest of defendant Ferdinand Marcos, which
loan remains unpaid to date, a copy of the alleged loan document is not appended to the complaint.
Neither is there a reference to the pertinent provisions of the loan agreement made in the complaint,
nor were the circumstances surrounding the alleged incurring of the obligation enumerated. This
is material in the sense that the petitioners deny that there was any loan at all obtained.

On the allegation that petitioners secured the approval of direct payments on the alleged
favored boat supply contract in violation of the stipulation that payment should be by confirmed,
irrevocable and divisible letter of credit, the existence of a cause of action based on the allegation
could not be determined since a copy of the contract was not attached to the complaint, nor was
there made a reference to the particular stipulation claimed to have been violated.

With respect to the allegation that the petitioners acted as dummies, nominees or agents of
Ferdinand E. Marcos in corporations such as the Philippine Casino Operators Corporation,
beneficially owned and/or controlled by the latter, it is noted that allegation partakes of a
conclusion of fact unsupported by a particular averment of circumstances that will show why such
inference or conclusion was arrived at. In this regard, we are reminded of the Courts ruling in
Republic v. Sandiganbayan:416

Under paragraph 6-A of the Amended Complaint, the Companies alleged to


be beneficially owned or controlled by defendants Lucio Tan, Ferdinand and
Imelda Marcos and/or the other individual defendants were identified and
enumerated, including herein corporate respondents. But except for this bare
allegation, the complaint provided no further information with respect to the
manner by which herein corporate respondents are beneficially owned or
controlled by the individual defendants. Clearly, the allegation is a conclusion
of law that is bereft of any factual basis. (emphasis supplied)

416
G.R. No. 115748, August 7, 1996, 260 SCRA 411.

164
To stress, the Rules of Court require every pleading to contain in a methodical and logical
form, a plain, concise and direct statement of the ultimate facts on which the party pleading relies
for his claim or defense.417 A transgression of this rule is fatal. 418

In view of the absence of specific averments in the Republics complaint, the same is
defective for it presents no basis upon which the court should act, or for the defendant to meet it
with an intelligent answer.419 The complaint, to stress, did not present the very documents claimed
to be the source of the Marcelo-Marcos vinculum: it did not attach the alleged boat supply contract
which is the main cause of action against the petitioners; the unpaid loan document from which
another claimed cause of action arose; and other relevant documents and information. The
Republic tags, at every turn, the PN-MFC contract to be a favored contract, without, however, so
much as stating with sufficient particularity the circumstances that led it to arrive at such
conclusion.

The foregoing is nonetheless true with respect to the case against the other petitioner
corporations (except MFC). There is no cause of action against them. Not only because the
complaint does not, as to them, spell out specific illegal acts and omissions committed by them,
but also on account of our ruling in Republic v. Sandiganbayan,420 or what subsequent opinions
would later refer to as The Final Dispositions case, which proscribes their being impleaded in the
case. Thus:

As regards actions in which the complaints seek recovery of defendants'


shares of stock in existing corporations (e.g., San Miguel Corporation, etc.) because
(they were) allegedly purchased with misappropriated public funds, the impleading
of said firms would clearly appear to be unnecessary. If warranted by the evidence,

417
Rule 8, Sec. 1.
418
Republic v. Sandiganbayan, G.R. No. 92594, March 4, 1994, 230 SCRA 710.
419
Republic v. Sandiganbayan, supra.
420
G.R. No. 96073, January 23, 1995, 240 SCRA 376; also, see Republic v. Sandiganbayan , G.R. No. 152154,
July 15, 2003, 406 SCRA 190.

165
judgments may be handed down against the corresponding defendants divesting
them of ownership of their stock, the acquisition thereof being illegal and
consequently burdened with a constructive trust, and imposing on them the
obligation of surrendering them to the Government.

Quite the same thing may be said of illegally obtained funds deposited in
banks. The impleading of the banks would also appear unnecessary. xxx.

xxx xxx xxx

And as to corporations organized with ill-gotten wealth, but are not guilty
of misappropriation, fraud or other illicit conduct in other words, the companies
themselves are the object or thing involved in the action, the res thereof there is no
need to implead them either. Indeed, their impleading is not proper on the strength
alone of having been formed with ill-gotten funds, absent any other particular
wrongdoing on their part. The judgment may simply be directed against the shares
of stock shown to have been issued in consideration of ill-gotten wealth.

Such showing of having been formed with, or having received ill-gotten


funds, however strong or convincing, does not, without more, warrant identifying
the corporations in question with the persons who formed or made use of them to
give the color or appearance of lawful, innocent acquisition to illegally amassed
wealth at the least, not so as (to) place on the Government the onus of impleading
the former together with the latter in actions to recover such wealth. xxx. In this
light, they are simply the res in the actions for the recovery of illegally acquired
wealth, and there is, in principle, no cause of action against them and no ground to
implead them as defendants in said actions.

The Government is, thus, not to be faulted for not making such corporations
defendants in the actions referred to. It is even conceivable that had this been
attempted, motions to dismiss would have lain to frustrate such attempts.
(Underscoring supplied)

It does not escape our notice that, in line with our ruling in Republic immediately adverted
to, petitioner corporations were perhaps not originally impleaded because it was unnecessary, they

166
being perceived to have been formed with ill-gotten wealth. As against them, there is no cause of
action other than that they constitute the res of the action. However, the fact that they were
subsequently impleaded in Civil Case No. 21 could only mean that a cause of action exists against
them, one that must be specifically alleged in the amended complaint. It appears, however, that
their inclusion was made without the corresponding insertion of general or specific averments of
illegal acts they are alleged to have committed as should constitute the cause of action against
them. It may not be said that those general and specific averments already existing in the complaint
before the amendment apply to them, because they refer only to the boat building contract, a
transaction for which only Marcelo and MFC have been specifically made answerable.

The Republics argument in their Opposition to the Motions for Summary Judgment that
the Final Dispositions case suggested that the other petitioner corporations should be impleaded
does not commend itself for concurrence. On the contrary, we categorically ruled therein that their
impleading is not at all proper.

In all then, we hold that the Sandiganbayan committed grave abuse of discretion in denying
the petitioners separate motions for a summary judgment. To us, the petitioners were entitled to a
summary judgment owing to the interplay of the following premises:

1. The Republics complaint, as couched and presented to the


Sandiganbayan does not contain concise and direct statement of the ultimate facts
on which it relies for its claim against petitioners Marcelo and MFC. Worse still,
it does not specify the act or omission by which the other petitioners wronged the
Republic. In net effect, the complaint no less does not present genuine ill-gotten
wealth issue; and

2. In view of the Republics failure to respond to MFCs interrogatories, the


Republic veritably conceded the regularity of the PN-MFC contract, that no
wrongdoing was committed vis--vis the conclusion of that contract and that the
separate personality of MFC was not used for unlawful means to activate the
piercing of corporate veil principle. The questions in the interrogatories were
167
simple and direct and the answers thereto would have constituted the fact/s sought
to be established. We do not see any reason why the Republic could not have
answered them. They refer to relevant matters that could clarify the important facts
left out by, to borrow from Republic v. Sandiganbayan,421 the roaming generalities
in the complaint.

Assume the element of regularity and the bona fides of the transaction and no genuine issue
as to any material fact would come into fore.

421
Supra note 51.

168
With the foregoing disquisitions, each of the petitioners counterclaim for damages need not

detain us long. Suffice it to state that resolution thereof entails factual determination which is not

proper in a certiorari proceeding.

WHEREFORE, the instant petition is GRANTED and the Resolutions of the


Sandiganbayan dated August 27, 2001 and November 19, 2002 are REVERSED and SET
ASIDE. Accordingly, the complaint against the petitioners in Civil Case No. 21 is DISMISSED.

No pronouncement as to costs.

SO ORDERED.

CANCIO C. GARCIA
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice
Chairperson

169
ANGELINA SANDOVAL-GUTIERREZ RENATO C. CORONA
Associate Justice Associate Justice

ADOLFO S. AZCUNA
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

170
Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

THE BOARD OF REGENTS OF THE G.R. No. 172448


MINDANAO STATE UNIVERSITY
represented by its Chairman,
Present:
Petitioner,

CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
- versus - BERSAMIN,
VILLARAMA, JR., and
PERLAS-BERNABE,* JJ.

ABEDIN LIMPAO OSOP, Promulgated:


Respondent.

February 22, 2012


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

DECISION

LEONARDO-DE CASTRO, J.:

*
Per Special Order No. 1203 dated February 17, 2012.

171
This Petition for Review under Rule 45 of the Rules of Court assails the Decision422 dated
March 14, 2006 of the Court of Appeals in CA-G.R. SP No. 82052. The Court of Appeals
dismissed the Petition for Certiorari filed by therein petitioner Dr. Macapado A. Muslim (Muslim)
and declared the Motion for Intervention of the Board of Regents of the Mindanao State University
(MSU) as a stray pleading proscribed by Rule 19, Section 2 of the Rules of Court.

The instant controversy arose from the following factual background:

Herein respondent Abedin Limpao Osop (Osop) is the former Chancellor of the Mindanao
State University-General Santos City (MSU-GSC) campus. Osop retired in 1987 under the Early
Retirement Law, but several years after his retirement, he was appointed by Moner M. Bajunaid,
then MSU-GSC Chancellor, as a substitute for another professor of the Electrical Engineering
Department, College of Engineering, of MSU-GSC, who was on study leave. Osops appointment
took effect on July 1, 1994.423

In 1997, Muslim, the succeeding Chancellor of MSU-GSC, renewed Osops appointment


as Assistant Professor IV, effective January 1, 1997 until December 31, 1997. His appointment
was duly noted by the MSU Board of Regents during its 166th Meeting held at DECS Conference
Room, U.L. Complex, Meralco Avenue, Pasig City, on February 19, 1997.424

Muslim allowed Osop to continue teaching at MSU-GSC even after December 31, 1997.
On April 17, 1998, Muslim issued Special Order No. 144-98C designating Osop as Chairperson
of the Electrical Engineering Department, College of Engineering, of MSU-GSC, with a term of

422
Rollo, pp. 54-65; penned by Associate Justice Rodrigo F. Lim, Jr. with Associate Justices Teresita Dy-Liacco
Flores and Ramon R. Garcia, concurring.
423
Records, Vol. 1, p. 49.
424
Id. at 21-56.

172
office from April 18, 1998 to April 17, 1999, unless revoked or amended by competent
authority.425

However, on July 15, 1998, Muslim caused to be served upon the College of Engineering
and other offices of MSU-GSC a letter426 dated July 14, 1998 addressed to Osop that reads in full:

Dear Prof. Osop:

In view of the return to the campus of Prof. Danilo Dadula for whom you
have been serving as substitute since July 1, 1994, and considering the expiration
of your temporary appointment last December 31, 1997, I regret to inform you that
your services with the university will have to end. And since I am not renewing
your appointment, you are hereby advised to cease from reporting to duty effective
immediately. Moreover, you should clear yourself from monetary and other official
accountabilities with the university.

On behalf of MSU-GSC, we thank you for your services.

Very truly yours,

(signed)
MACAPADO A. MUSLIM, Ph. D.
Chancellor

Muslim also issued Memorandum Order No. 010-98C427 dated July 14, 1998, addressed to
Virgilio Ramos (Ramos), Dean of the College of Engineering of MSU-GSC, concerning the

425
Id. at 56.
426
Id. at 61.
427
Id. at 62.

173
expiration and non-renewal of Osops appointment and directing Ramos to already distribute Osops
teaching load to the remaining faculty members of the College. In the same Memorandum Order,
Muslim asked Ramos to explain the latters failure to include Osop in the list of substitute faculty
members which he submitted to the Office of the Chancellor before the start of the 1st semester of
1998.

In compliance with Memorandum Order No. 010-98C, Ramos explained in his letter dated
July 16, 1998 that there was no request for the appointment of a substitute for Prof. Danilo Dadula
(Dadula) when the latter went on a study leave. He explained:

Basing on our records, there was no request for substitute of Engr. Danilo
P. Dadula when he went on study leave in June 1994.

On 17 June 1994, Engr. Noel S. Gunay, then the Chairman of the Electrical
Engineering Department, recommended the hiring of Prof. Abedin Limpao Osop
in view of the study leave of Julito G. Fuerzas, PEE. Chancellor Moner M.
Bajunaid, in his letter dated 30 June 1994, informed Dean Carlos B. Cuanan of the
approval of the higher management to hire Prof. Abedin Limpao Osop as substitute
of Engr. Julito G. Fuerzas effective 1 July 1994. After more than a semester, Engr.
Fuerzas stopped schooling but did not return to this campus. Since then, Prof.
Abedin Limpao Osop went on teaching with the College of Engineering and his
appointment was renewable yearly as those on probationary status.

Per DBM Plantilla of Personnel, page 336 of 444 pages, Prof. Abedin
Limpao Osop has an item. For this, I presumed Prof. A.L. Osop was not a
contractual or substitute faculty of the college.

xxxx

Regarding the distribution of Prof. A. L. Osops teaching load to appropriate


faculty members at this time poses some problems. He is handling major courses
in electrical engineering and the electrical engineers have excessive overload.

174
xxxx

It has been noted and experienced that real excessive overload is more on the
number of preparations than on overload teaching units. For the interest of our
students and with much concern on the efficient delivery of instruction, the faculty
of the Electrical Engineering Department could not absorb the load of Prof. A. L.
Osop. Since his load are major EE courses, the same could not be handled by any
of the faculty in the other departments.

In view thereof, may we request for the reconsideration of your decision to


terminate the services of Prof. Abedin Limpao Osop.428

Muslim responded by issuing handwritten Memorandum Order No. 012-98C429 dated July
17, 1998, in which he reiterated his earlier order to Ramos to already distribute Osops teaching
load.

On July 21, 1998, Osop filed before the Regional Trial Court (RTC) of General Santos
City, Branch 22, a Complaint for Injunction with Prayer for Writ of Preliminary
Injunction/Temporary Restraining Order (TRO), Damages and Attorneys Fees against Muslim and
Ramos. The Complaint was docketed as Civil Case No. 6381.430

Osop filed two days later, on July 23, 1998, an Urgent Motion for Writ of Preliminary
Mandatory Injunction and/or Temporary Restraining Order. At the hearing held the very next day,
on July 24, 1998, the RTC issued an Order in which it noted the absence of Muslim, and to give
chance for the possibility of an amicable settlement, it reset the hearing for the issuance of a TRO
to July 27, 1998. Nevertheless, in the same Order, the RTC already directed Osop to submit a bond

428
Id. at 64-65.
429
Id. at 63.
430
Id. at 5-14.

175
of P20,000.00 to answer for damages that Muslim and Ramos might suffer if it turns out that Osop
was not entitled to an injunction/TRO. Osop filed his injunction/TRO bond on July 27, 1998.

At the hearing of Osops application for the issuance of a TRO on July 27, 1998, the RTC
issued an Order,431 whereby, in consideration of the principle of exhaustion of administrative
remedies, it suggested that Osop first write Muslim to seek reconsideration of Muslims letter and
Memorandum Order No. 010-98C both dated July 14, 1998. Osop accordingly wrote Muslim such
a letter dated July 27, 1998.432

Muslim endorsed Osops letter dated July 27, 1998 to Emily Marohombsar (Marohombsar),
then MSU President. In a letter433 dated August 7, 1998, Marohombsar wrote:

Based on the meticulous study made, the management is not legally nor
morally under obligation to retain Prof. Osop in the service or liable for the non-
renewal of his appointment the nature of which was temporary and contingent on
the return of Prof. Danilo Dadula. With the return of Prof. Dadula, the renewal of
the appointment of Prof. Osop would have been an unjustifiable superfluity.

This Office, concurring with the opinion of Director Imam, upholds your
position on the case of Prof. Osop.

Marohombsars aforequoted decision was based on the Brief from the MSU Human
Resources Development Office dated August 6, 1998, signed by Director Lomala O. Imam, stating
that [t]he issue is not one of termination or dismissal but an expiration of an appointment which is

431
Id. at 110.
432
Id. at 119.
433
Rollo, p. 81.

176
not permanent in nature and that [t]he renewal or non-renewal of a temporary or probationary
appointment is a management prerogative.434

On August 6, 1998, Muslim and Ramos filed before the RTC a Motion to Dismiss Civil
Case No. 6381 citing the following grounds: (1) lack of cause of action due to non-exhaustion of
administrative remedies and non-inclusion of indispensable parties; (2) appointment in a
temporary character; (3) presumption of regularity; and (4) forum shopping.435

The RTC issued an Omnibus Order on September 10, 1998, dismissing Civil Case No.
6381, for the following reasons:

The complaint is essentially one for illegal dismissal filed by [herein


respondent] Abedin Limpao Osop, a faculty member of the Mindanao State
University (MSU), against defendant Macapagal A. Muslim, Chancellor of the
MSU, and Virgilio Ramos, Dean of the College of Engineering of the same
university. A party aggrieved by a decision, ruling, order or action of an agency of
the government involving termination of services may appeal to the Civil Service
Commission. Regional Trial Courts have no jurisdiction to entertain cases
involving dismissal of officers and employees covered by the Civil Service Law.
(Mateo v. C.A., 247 SCRA 284). The Civil Service Commission is the sole arbiter
of all controversies pertaining to the Civil Service. (Dario v. Mison, 176 SCRA
84).436

Thus, the RTC decreed:

WHEREFORE, in view of the foregoing, the instant complaint is hereby


DISMISSED for lack of jurisdiction. Accordingly, [Osops] application for

434
Id. at 82.
435
Records, Vol. I, p. 201.
436
Id. at 264.

177
preliminary injunction, being merely ancillary to the principal action is also hereby
dismissed without prejudice. The injunction bond is cancelled ipso facto.437

The RTC denied Osops Motion for Reconsideration in an Order438 dated September 25,
1998, prompting him to file with the Court of Appeals a Petition for Certiorari and Mandamus, 439
under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No. 49966, in which he argued,
inter alia, that:

2) The issue of removal from office of [Osop], who is faculty member


of a state university, is beyond the jurisdiction of the Civil Service Commission;

xxxx

4) In Civil Case No. 6381 [Osop] is suing [Muslim and Ramos] also
for damages, a subject matter that is beyond the jurisdiction of the Civil Service
Commission.440

In the meantime, concerned students of MSU-GSC filed before the Civil Service
Commission (CSC) Regional Office No. 11 a Complaint for the illegal termination of Osop by
Muslim. CSC Regional Office No. 11 issued an Order dated November 27, 1998 finding that
Osops termination was in order given that his appointment as a substitute was good only until the
return of the person being substituted.441

437
Id. at 265.
438
Id. at 343-344.
439
Id. at 347-370.
440
Id. at 356-357.
441
Id. at 418-420.

178
Eventually, on June 7, 1999, the Court of Appeals rendered a Decision442 in CA-G.R. SP
No. 49966, granting Osops Petition for Certiorari, based on the following ratiocination:

Anent the order of the Civil Service Commission Regional Office dated
November 27, 1998 holding the termination of [Osop] as legal, we agree with
[Osop] that this finding should not be legally binding upon him because he is not a
party to the complaint apparently initiated by alleged concerned students of MSU-
GSC.

Secondly, [Osops] side of the issue was never heard because only Muslim
was allowed to adduce evidence hence a denial of due process on the part of [Osop].

Coming now to the issue of whether or not [Osops] complaint was correctly
dismissed by the trial court for having failed to exhaust administrative remedies
and that consequently this case falls with the Civil Service Commission, we answer
in the negative.

[Osop] cites Sections 4, 5 and 6(e)(h) of the MSU charter R.A. 1387 as
amended by R.A. Nos. 1893, 3791, 3868, to wit:

Sec. 4. The government of said University is vested in a


board of regents to be known as the Board of Regents of the
Mindanao State University. (R.A. 1893)

Sec. 5. The Mindanao State University shall have the general


powers set out in Section thirteen of Act Numbered Fourteen
hundred and fifty-nine and the administration of said university and
the exercise of its corporate powers are hereby vested exclusively in
the Board of Regents and in the President of the University, insofar
as authorized by said Board.

442
Id. at 426-434.

179
Sec. 6. The Board of Regents shall have the following
powers of administration and the exercise of the powers of the
corporation.

xxxx

(e) To appoint, on the recommendation of the President of


the University, professors, instructors, lecturers, and other
employees of the University; to fix their compensation, hours of
service, and such other duties and conditions as it may deem proper;
to grant to them in its discretion leave of absence under such
regulations as it may promulgate, any provisions of law to the
contrary notwithstanding, and to remove them for cause after an
investigation and hearing shall have been had; and to extend with
their consent the tenure of faculty members of the University beyond
the age of sixty-five, any other provision of law to the contrary
notwithstanding, on recommendation of the President of the
University, whenever in his opinion their services are specially
needed; Provided, however, that no extension of service shall be
made beyond the age of seventy.

xxxx

(h) To prescribe rules for its own government, and to enact


for the government of the University such general ordinances and
regulations, not contrary to law, as are consistent with the purposes
of the University as defined in Section 2 of this Act.

Moreover, Article 152 of the Code of MSU provides:

Art. 152. Terms and Conditions of Appointment. The precise


terms and conditions of every appointment shall be stated in writing.
In case of a non-renewal of a probationary appointment the person
so concerned shall be so informed in writing at least sixty days
before the termination date.

180
Proceeding from all the foregoing, it appears clearly that the authority to
remove is vested in the Board of Regents and only after an investigation and
hearing.

Due process was clearly not observed in the removal of [Osop]. First of all,
only the Board of Regents have the power of removal which must be for cause and
after an investigation and hearing shall have been had. Secondly, even a mere
probationary appointment requires that in case of non-renewal the person so
concerned shall be informed in writing at least sixty (60) days before termination
date. These basic requisites were not at all observed in the termination of [Osop].

Therefore, we agree with [Osop] that his non-referral of the matter of his
removal to the Board of Regents before he resorted to court action is accepted as
an exception to the doctrine of exhaustion of administrative remedies.

The doctrine of exhaustion of administrative remedies admits of several


exception[s], to wit:

1. When there is a violation of due process.

xxxx

On another point, the two grounds relied upon by Muslim for terminating
[Osop] to wit: (1) that Prof. Danilo Dadula for whom [Osop] has been serving as
substitute since July 1, 1997 had already returned to MSU, and: (2) [Osops]
temporary appointment expired on December 31, 1997, clearly appears to be
without basis.

[Osop] contends and respondent Muslim does not deny that the notation
vice Danilo Dadula on study grant contained in [Osops] appointment is erroneous
because [Osop] was recruited as a substitute for Engineer Julito Fuerzas.

Assuming that [Osop] merely substituted for Dadula, [Muslim] does not
deny that Danilo Dadula returned to MSU General Santos from his study grant in
June 1996 and has taught in the Department of Mechanical Engineering of the

181
College of Engineering since then up to April 1998. During the said period, [Osop]
was also teaching in the said University and before the letter of July 15, 1998
advising [Osop] of his termination, he was teaching at the same time as Dadula for
which he was never asked to leave contrary to Muslims claim that [Osop] merely
acted as a substitute of Dadula. Meanwhile Dadula has filed a leave of absence and
has not reported for duty for the first semester of SY 1998-1999. To repeat, from
June 1996 up to April 1998, Dadula and [Osop] taught together in the College of
Engineering of MSU. Hence, if [Osop] was merely a substitute for Dadula, he
should have been required to leave as early as June 1996, upon Dadulas return.

Further, contradicting Muslims claim that [Osop] is a mere substitute of


Dadula on April 17, 1998, Muslim issued Special Order 144-98C designating
[Osop] as Chairperson of the Electrical Engineering Department of the College of
Engineering with a term of office from April 18, 1998 up to April 17, 1999. Clearly,
therefore, when [Osop] continued teaching up to July 15, 1998 and even his
appointment as Chairperson of the Electrical Engineering Department until April
17, 1999 by Muslim himself, his appointment has ceased to be probationary in
character.443

In the end, the Court of Appeals decreed:

WHEREFORE, premises considered, the petition for certiorari is


GRANTED. The Omnibus Order of the RTC of General Santos City, Branch 22
dated September 10, 1998 is hereby SET ASIDE. The RTC is directed to hear and
try Civil Case No. 6381 with utmost dispatch.444

The Motion for Reconsideration of Muslim and Ramos was denied by the Court of Appeal
in its Resolution dated November 11, 1999.445

443
Id. at 429-434.
444
Id. at 434.
445
Id. at 478.

182
Muslim then appealed the foregoing judgment of the Court of Appeals in CA-G.R. SP No.
49966 by way of a Petition for Review before this Court, docketed as G.R. No. 141276. However,
in a Resolution dated July 3, 2000, the Court denied Muslims Petition for Review; and in a
Resolution dated April 4, 2001, the Court likewise denied Muslims Motion for Reconsideration.446

On June 26, 2001, Osop filed an Amended Complaint447 before the RTC impleading MSU
as a defendant in Civil Case No. 6381. Despite the opposition of Muslim and Ramos, the RTC
admitted the Amended Complaint in its Order448 dated July 11, 2001, which reads:

Considering that no responsive pleading has yet been filed by [Muslim and
Ramos], the amended complaint is hereby ADMITTED.

WHEREFORE, the defendants Macapado Muslim and Virgilio Ramos are


ordered to file their answers within ten (10) days from today, and as prayed for by
the counsel of [Osop], issue the corresponding summons to newly impleaded
defendant Mindanao State University (MSU) at its main office in Marawi City. The
summons to defendant MSU, Marawi City shall be sent via registered mail to the
Clerk of Court of Marawi City who is requested to serve the same and thereafter to
make a return to this court.

The Solicitor General is hereby ordered to enter his appearance as counsel


for defendant Macapado A. Muslim and Virgilio Ramos, who were both sued in
their official and personal capacities and defendant MSU.

Muslim and Ramos, through counsel, Atty. Emmanuel C. Fontanilla, filed their Answer to
Amended Complaint on July 20, 2001.449

446
Id. at 507.
447
Id. at 508-517.
448
Id. at 589.
449
Id. at 632-642.

183
On July 27, 2001, RTC Clerk of Court Asuncion de Leon Omila served summons upon
MSU at its main campus in Marawi City which required the university to enter its appearance in
Civil Case No. 6381 and to answer Osops Amended Complaint within 15 days after service of said
summons.450

The Office of the Solicitor General (OSG) entered its appearance before the RTC in Civil
Case No. 6381 on September 14, 2001 as counsel for Muslim, Ramos, and MSU (Muslim, et al.).
The OSG requested that it be furnished with a copy of the Amended Complaint and that the period
to file the answer be suspended until receipt of said Amended Complaint.451 In its Order452 dated
September 26, 2001, the RTC granted the OSG a period of 15 days from receipt of a copy of the
Amended Complaint from Osop within which to file a responsive pleading.

For failure of MSU to file an answer to the Amended Complaint within the given period,
Osop filed a Motion to Declare Defendant MSU in Default.453 Osops Motion was denied by the
RTC in its Order454 dated February 1, 2002 since there was no proof as to when the OSG received
a copy of the Amended Complaint from Osop.

The OSG filed a Manifestation on February 14, 2002 which stated that upon verification
with its Record Section, it discovered that Atty. Fontanilla, counsel for Muslim and Ramos, was
actually deputized by the OSG to handle Civil Case No. 6381; and that MSU is adopting the
Answer to the Amended Complaint already filed by Ramos and Muslim, as all the defendants in
said case were in the same position.455

450
Id. at 660.
451
Id. at 664-668.
452
Id. at 670.
453
Id. at 751.
454
Records, Vol. II, p. 23.
455
Id. at 46-48.

184
Osop filed a Motion for Reconsideration of the RTC Order dated February 1, 2002 denying
his Motion to Declare Defendant MSU in Default. In another Order456 dated June 21, 2002, the
RTC denied Osops Motion for Reconsideration for being moot and academic in light of the
Manifestation of the OSG that MSU was adopting the Answer to the Amended Complaint of
Muslim and Ramos.

Meanwhile, Osop filed on January 11, 2002 a Motion for Summary Judgment457 in Civil
Case No. 6381, to which Muslim and Ramos filed on January 16, 2002 an Opposition.458

In an Order459 dated October 21, 2002, Judge Antonio Lubao of RTC-Branch 22 voluntarily
inhibited himself from further hearing Civil Case No. 6381 to avoid conflict of interest considering
that he was a faculty member at the MSU College of Law. Thus, the case was re-raffled to RTC-
Branch 37, presided over by Judge Eddie R. Rojas.

After an exchange of pleadings among the parties, the RTC issued an Order460 dated March
20, 2003, which granted Osops Motion for Summary Judgment in Civil Case No. 6381 pursuant
to Rule 35, Section 1 of the Rules of Court. The RTC explicated that:

The law itself determines when a summary judgment is proper. Under the
rules, summary judgment is appropriate when there are no genuine issues of fact
which call for the presentation of evidence in a full-blown trial. Even if on their
face the pleading appear to raise issues, when the affidavits, depositions and
admissions show that such issues are not genuine, then summary judgment as
prescribed by the rules must ensure as a matter of law. What is crucial for
determination, therefore, is the presence of a genuine issue as to any material fact.

456
Id. at 101.
457
Records, Vol. I, pp. 759-782.
458
Records, Vol. II, pp. 1-7.
459
Id. at 111-112.
460
Id. at 121-123.

185
A genuine issue is an issue of fact which require (sic) the presentation of
evidence as distinguished from a sham, fictitious, contrived or false claim. When
the facts as pleaded appear uncontested or undisputed, then there is no real or
genuine issue or question as to the facts, and summary judgment is called for. The
party who moves for summary judgment has the burden of demonstrating clearly
the absence of any genuine issue of fact, or that the issue posed in the complaint is
patently unsubstantial so as not to constitute a genuine issue of trial.

Applying these (sic) principle to the present case, it can be said that [Osop]
has clearly demonstrate (sic) the absence of any genuine issue of fact, as well as the
issue posed by [Muslim, et al.] that [Osop] is a contractual employee is patently
unsubstantial so as not to constitute a genuine issue for a full-blown trial.

From the decision rendered by the Seventeenth Division Court of Appeals


concerning the petition for Certiorari and Mandamus filed by [Osop], in this case
it ruled that the appointment of [Osop] by [Muslim] ceases to be probationary in
character when the former was allowed to continue teaching up to July 15, 1998
(sic) and even appointed as Chairperson of the Electrical Engineering Department.
The issue raised by [Muslim, et al.] in their answer that [Osop] is a contractual
employee is indeed patently unsubstantial as to constitute a genuine issue in this
case for trial. Once and for all, such an issue has already been settled by the
honorable Court of Appeals whose decision has become final and executory. Thus,
there was no more genuine issue that was left to be tried except the amount of
damages and attorneys fees.

xxxx

After having been taken into account the foregoing premises and pleadings
of the parties in support of their respective stand on the matter under consideration
as well as from the implied admissions arising from the failure of [Muslim, et al.]
to set forth reasons why [they] could not truthfully either admit or deny those
matters alleged in the amended complaint, and having concluded from the attendant
circumstances that [Osop] is entitled to judgment as a matter of law for such amount
as may be found to be due him in damages.

Consequently, the RTC disposed:

186
WHEREFORE, a summary judgment is hereby rendered in favor of [Osop]
by ordering [Muslim and Ramos] or their successors, and defendant Mindanao
State University to give teaching loads to [Osop] and to pay such amount as may
be found to be due him in damages.

For the meantime, let this case be called for trial to resolve the sole issue of
damages that may be awarded in favor of [Osop] on May 30, 2003, at 2:00 oclock
in the afternoon.461

Muslim, et al. filed a Motion for Reconsideration of the aforementioned Order on April 1,
2003, which Osop opposed.

Osop, for his part, filed a Motion for Execution Pending Appeal, and Muslim, et al. filed a
Comment thereon.

In an Order462 dated August 21, 2003, the RTC denied the Motion for Reconsideration of
the Order dated March 20, 2003 filed by Muslim, et al., thus:

In resolving [Muslim, et al.s] Motion for Reconsideration, the Court casts


doubt on the veracity of [Muslim, et al.s] claim that the findings of the Court of
Appeals as to the appointment of [Osop] was a mere opinion and that there could
be no final determination on the matters not principally raised before it. It was
emphasized in the ruling of the Honorable Supreme Court in the case of Padua vs.
Robles, G.R. No. 127930, December 15, 2000, which lays down the rules in
construing judgments. It was held that the sufficiency and efficacy of a judgment
must be tested by its substance rather than its form. In construing a judgment, its
legal effects including such effects that necessarily follows because of legal
implications, rather than the language used, govern. Also, its meaning, operations,
and consequences must be ascertained like any other written instrument. If the

461
Id. at 123.
462
Id. at 241-243.

187
record shows that the judgment could not have been rendered without deciding the
particular matter, it will be considered as having settled that matter as to all future
actions between the parties, and if a judgment necessarily presupposes certain
premises, they are as conclusive as the judgment itself. Reasons for the rule are that
a judgment is an adjudication on all the matters which are essential to support it,
and that every proposition assumed or decided by the court leading up to the final
conclusions and upon which such conclusion is based is as effectually passed upon
as the ultimate question which is solved. Thus a judgment rest on the intent of the
court as gathered from every part thereof, including the situation to which it applies
and attendant circumstances.

[Muslim, et al.] lost sight of the fact that the court gave due course to
[Osops] Motion for Summary Judgment only after finding that the issue raised by
them in their answer was patently unsubstantial as to constitute a genuine issue.
Inasmuch as [Muslim, et al.] failed to show a plausible ground of defense
something fairly arguable and of substantial character, they cannot therefore further
insist that they have a genuine issue to warrant this Court to hear and try the above-
entitled case.

Hence, in the present recourse, [Muslim, et al.s] Motion for Reconsideration


is hereby denied due course for bereft of any merit.

In the same Order, the RTC granted Osops Motion for Execution Pending Appeal, to wit:

Anent [Osops] Motion for Execution Pending Appeal, it alleged that [Osop]
has been unemployed for almost five (5) years and if [Muslim, et al.s] appeal on
the resolution of this Court, it will be just for the purpose of delaying the
termination of the case and to cause further misery to [Osop].

Section 2, Rule 39 of the 1997 Rules of Civil Procedure, lays down the rule
for execution pending appeal, categorized as discretionary execution. It is evident
from the said provision that a primary consideration for allowing execution pending
appeal would be the existence of good reasons. In turn, good reasons has been held
to consist of compelling circumstances justifying the immediate execution lest
judgment becomes illusory. Such reason must constitute superior circumstances

188
demanding urgency which will outweigh the injury or damages should the losing
party secure a reversal of the resolution issued by this Court.

After weighing the reasons presented, the Court deemed it wise to give due
course to [Osops] Motion for Execution Pending Appeal. The effective and
efficient administration of justice requires that the prevailing party should not be
deprived of the fruits of the verdict rendered in his favor. The system of judicial
review should not be misused and abused to evade the decision/order from attaining
finality.

With the foregoing reasons, [Osops] Motion for Execution Pending Appeal
is hereby given due course, but insofar as to the giving of teaching loads to [Osop]
only inasmuch as no amount of damages could be ascertained at this moment.

Let therefore a Writ of Execution Pending Appeal be issued in this case


directing [Muslim and Ramos] or their successors and defendant Mindanao State
University to give teaching loads to [Osop] with a bond fix at Five Thousand
(P5,000.00) Pesos.463

Muslim, et al., filed a Motion for Reconsideration464 of the Order dated August 21, 2003,
which Osop again opposed.465

On October 1, 2003, Osop filed a Motion for Partial Execution (Based on a Final Executory
Judgment) praying that a writ of execution be issued ordering Muslim, et al. to give him teaching
loads.466

463
Id. at 242-243.
464
Id. at 263-266.
465
Id. at 280-281.
466
Id. at 290-291.

189
Two days after, on October 3, 2003, Muslim, et al. filed a Second Motion for
Reconsideration and Supplement to the Opposition (also Reply to Motion for Partial Execution).467

In an Order468 dated October 9, 2003 the RTC denied Muslim, et al.s Second Motion for
Reconsideration and Supplement to the Opposition (also Reply to Motion for Partial Execution)
for being a pro forma motion.

Subsequently, the RTC issued an Order469 dated November 10, 2003 granting Osops
Motion for Partial Execution and ordering the issuance of a writ for the partial execution of the
Order dated March 20, 2003, particularly, for its directive that Muslim, et al. give Osop teaching
load.

RTC Clerk of Court Fulgar issued the Writ of Execution470 the next day, November 11,
2003. As shown in the Sheriffs Return471 dated November 17, 2003, original copies of RTC Order
dated November 10, 2003 and Writ of Execution dated November 11, 2003 were duly served upon
Muslim, et al. on November 12, 2003.

Aggrieved, Muslim, in his personal capacity,472 filed on January 12, 2004, with the Court
of Appeals, a Petition for Certiorari and Prohibition with Prayer for a Writ of Preliminary and
Instant Issuance of Temporary Restraining Order, which was docketed as CA-G.R. SP No.
82052.473 Muslim averred that in issuing the Order dated November 10, 2003, the RTC committed
grave abuse of discretion amounting to lack or excess of jurisdiction as it:

467
Id. at 309-314.
468
Id. at 328.
469
Id. at 366-372.
470
Id. at 382-383.
471
Id. at 384.
472
In the Amended Complaint, Muslim was sued not only in his official capacity but also in his personal
capacity.
473
Records, Vol. II, pp. 418-438.

190
1. Consider[ed] the Decision of the Court of Appeals in a Certiorari as a judgment
on the merit.

2. Plac[ed] the action in the lower court within the purview of summary procedure.

3. Grant[ed] partial execution.

4. Consider[ed] the order of finding no genuine issue as a final order.474

After the parties filed their respective Memorandum, the Court of Appeals issued a
Resolution dated October 6, 2004 considering the case submitted for decision.475

On January 14, 2005, MSU, through the OSG, filed before the Court of Appeals a Motion
to Intervene (with Motion to Admit Memorandum) in CA-G.R. SP No. 82052.476 Osop opposed
the intervention of MSU.477

The Court of Appeals rendered its Decision in CA-G.R. SP No. 82052 on March 14, 2006,
dismissing Muslims Petition for Certiorari and Prohibition.478 It held that:

In the instant case, it is indubitably shown that the main issue that needs to
be resolved is whether or not [Osop] was a probationary employee. In CA-G.R. SP
No. 49966, the appellate court, despite the fact that the issue brought therein was
whether or not public respondent gravely abused his discretion in dismissing the
case for lack of jurisdiction, nevertheless ruled that the appointment of [Osop]

474
Id. at 430.
475
Id. at 669.
476
Id. at 681-718.
477
Id. at 944-946.
478
Muslims Motion for Reconsideration is still pending in court.

191
ceased to be probationary in character. Respondent judge merely took judicial
notice of the appellate courts findings that [Osop] had indeed ceased to be a
probationary employee. To Our assessment, what respondent judge may have had
on his mind was that even if he decided otherwise, the case would still be appealed
to the Court of Appeals which, as adverted to, already made a finding that [Osop]
was a permanent employee. Moreover, the appellate courts decision was also
binding between the parties; it was deemed to be the law of the case, hence, it was
only proper for public respondent to conform to this Courts decision.

xxxx

A trial court which has jurisdiction over the person and subject matter of
the case, can grant a motion for summary judgment, and such is within its power or
authority in law to perform. Its propriety rests on its sound exercise of discretion
and judgment. In the event that it errs in finding that there is no genuine issue to
thus call for the rendition of a summary judgment, the resulting decision may not
be set aside either directly or indirectly by petition for certiorari, but may only be
corrected on appeal or other direct review. The court a quo categorically stated that
its March 20, 2003 [Order] had become final and executory as quoted hereunder:

A review of the records of the case will show that the


[Muslim, et al.] received the Order dated [20] March 2003, granting
the summary judgment, on March 25, 2003. On that date, the fifteen
(15) days prescriptive period within which to file an appeal began to
run. Instead of preparing an appeal, [Muslim, et al.] filed their
Motion for Reconsideration on April 1, 2003. The filing of the said
Motion interrupted the reglementary period to appeal. By that time,
however, eight (8) days had already lapsed; thus, from their receipt
of the Order dated August 21, 2003, denying their Motion for
Reconsideration, on September 2, 2003, they had only seven (7)
days left or until September 9, 2003 within which to file a notice of
appeal. However, on said date, [Muslim, et al.] filed another Motion
for Reconsideration praying that the order for execution pending
appeal be recalled. On October 9, 2003, an Order had been issued
denying [Muslim, et al.s] Motion for Reconsideration, copy of
which was received by [Muslim, et al.] on that same day.

Again, carefully going over the records, the Court finds that
the Orders issued were already final and executory. [Muslim, et al.]

192
received the Order granting the summary judgment of [Osop] dated
March 20, 2003. Hence, they had until September 9, 2003 within
which to file its appeal. [Muslim, et al.] filed a Motion for
Reconsideration and the Court on its Order dated August 21, 2003
denied the same. [Muslim, et al.] received a copy of the denial of its
Motion for Reconsideration, which was considered pro-forma, was
likewise denied on October 9, 2003, [Muslim, et al.] received copy
of the order of denial on that very same day. Such second motion for
reconsideration filed by [Muslim, et al.], being a pro-forma, does
(sic) not toll the running of the period to perfect an appeal or any
remedy provided by law. Thus, it can be concluded that the subject
orders issued by this Court are now final and executory. Now, once
a judgment attains finality it becomes the ministerial duty of the trial
court to order its execution.

Indeed, it bears stressing that the right to appeal is not a natural right or a
part of due process. It is a procedural remedy of statutory origin and, as such, may
be exercised only in the manner and within the time frame provided by the
provisions of law authorizing its exercise. Failure of a party to perfect an appeal
within the period fixed by law renders the decision sought to be appealed final and
executory. After a decision is declared final and executory, vested rights are
acquired by the winning party who has the right to enjoy the finality of the case.

To determine whether a judgment or order is final or interlocutory, the test


is: Does it leave something to be done in the trial court with respect to the merits
of the case? If it does, it is interlocutory, if it does not, it is final. A final judgment
is one that disposes of a case in a manner that leaves nothing more to be done by
the court in respect thereto. A summary judgment is one which is final as it already
adjudicated the issues and determined the rights of the parties. It is only
interlocutory when the court denies a motion for summary judgment or renders a
partial summary judgment as there would still be issues left to be determined by the
court. In the instant case, the March 20, 2003 Order was unequivocal, other than
setting a hearing to determine the amount of damages, but had, on the other hand,
already disposed of the case. As such, the issuance of the November 10, 2003 Order
granting the motion for partial execution was proper as the summary judgment
already became final and executory as adverted to.

In a petition for certiorari, even if, in the greater interest of substantial


justice, certiorari may be availed of, it must be shown that the trial court acted with
grave abuse of discretion amounting to lack or excess of jurisdiction, that is, that

193
the trial court exercised its powers in an arbitrary or despotic manner by reason of
passion or personal hostilities, so patent and gross as to amount to an evasion or
virtual refusal to perform the duty enjoined or to act in contemplation of law. We
find that such abuse is not extant in the instant case.479

Muslim filed a Motion for Reconsideration of the foregoing judgment on May 9, 2006 480
and a Supplemental Motion for Reconsideration on June 23, 2006.481

On July 11, 2006, the Court of Appeals issued a Resolution stating that it received on June
8, 2006 a copy of the instant Petition (G.R. No. 172448) filed by MSU; and since said Petition
assails its Decision dated March 14, 2006 in CA-G.R. SP No. 82052, it was constrained to await
the ruling of the Supreme Court in G.R. No. 172448. Hence, the Court of Appeals opted to hold in
abeyance the resolution of Muslims Motion for Reconsideration and Supplemental Motion for
Reconsideration of the Decision dated March 14, 2006 in CA-G.R. SP No. 82052.

The issue relevant to the Petition at bar insofar as MSU is concerned arises from the
pronouncement of the Court of Appeals in the same Decision dated March 14, 2006 in CA-G.R.
SP No. 82052 quoted hereunder:

At the outset this case was deemed submitted for decision on October 6,
2004. On January 10, 2005, this Court received a Motion to Intervene (with Motion
to Admit Memorandum) filed by Mindanao State University (MSU) through the
Office of the Solicitor General (OSG). However, Section 2, Rule 19 of the Rules of
Court, allows intervention only at any time before rendition of judgment by the trial
court, and We hold the motion to intervene is a stray pleading and is deemed not
filed.482

479
Rollo, pp. 60-65.
480
CA rollo, pp. 575-586.
481
Id. at 886-904.
482
Records, Vol. II, pp. 951-952.

194
The instant Petition of MSU presented the following assignment of errors:

THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT


PETITIONERS MOTION FOR INTERVENTION WAS IMPROVIDENTLY
FILED.

II

THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT


RESPONDENTS MOTION FOR SUMMARY JUDGMENT WAS PROPER
ALTHOUGH PETITIONER PRESENTED DEFENSES IN THEIR ANSWER TO
AMENDED COMPLAINT TENDERING FACTUAL ISSUES WHICH
REQUIRE TRIAL ON THE MERITS.

III

THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT


RESPONDENT ACQUIRED PERMANENT STATUS.

IV

195
THE COURT OF APPEALS GRAVELY ERRED UPHOLDING THE TRIAL
COURTS ORDER GRANTING RESPONDENT MOTION FOR ISSUANCE OF
PARTIAL WRIT OF EXECUTION.483

MSU anchors its right to intervene on Rule 19, Section 1 of the Rules of Court. MSU
stresses that it has a legal interest in the controversy considering that, ultimately, it will be the one
liable for the relief Osop prays for, particularly, Osops reinstatement at MSU-GSC.

Rule 19, Section 1 of the Rules of Court provides:

Section 1. Who may intervene. A person who has a legal interest in the
matter in litigation, or in the success of either of the parties, or an interest against
both, or is so situated as to be adversely affected by a distribution or other
disposition of property in the custody of the court or of an officer thereof may, with
leave of court, be allowed to intervene in the action. The court shall consider
whether or not the intervention will unduly delay or prejudice the adjudication of
the rights of the original parties, and whether or not the intervenors rights may be
fully protected in a separate proceeding.

In Alfelor v. Halasan,484 the Court held that:

Under this Rule, intervention shall be allowed when a person has (1) a legal
interest in the matter in litigation; (2) or in the success of any of the parties; (3) or
an interest against the parties; (4) or when he is so situated as to be adversely
affected by a distribution or disposition of property in the custody of the court or
an officer thereof.485

483
Rollo, pp. 24-25.
484
G.R. No. 165987, March 31, 2006, 486 SCRA 451.
485
Id. at 460.

196
Jurisprudence describes intervention as a remedy by which a third party, not originally
impleaded in the proceedings, becomes a litigant therein to enable him, her or it to protect or
preserve a right or interest which may be affected by such proceedings.486 The right to intervene
is not an absolute right; it may only be permitted by the court when the movant establishes facts
which satisfy the requirements of the law authorizing it.487

While undoubtedly, MSU has a legal interest in the outcome of the case, it may not avail
itself of the remedy of intervention in CA-G.R. SP No. 82052 simply because MSU is not a third
party in the proceedings herein.

In Osops Amended Complaint before the RTC, MSU was already impleaded as one of the
defendants in Civil Case No. 6381. MSU came under the jurisdiction of the RTC when it was
served with summons. It participated in Civil Case No. 6381, where it was represented by Atty.
Fontanilla, counsel for Muslim and Ramos, who was deputized by the OSG as counsel for MSU.
MSU adopted the Answer to the Amended Complaint of its co-defendants, Muslim and Ramos,
and also joined Muslim and Ramos in subsequent pleadings filed before the RTC in Civil Case
No. 6381. Evidently, the rights and interests of MSU were duly presented before the RTC in Civil
Case No. 6381. Unfortunately, the RTC issued the Orders dated March 20, 2003 and August 21,
2003 in Civil Case No. 6381 adverse to MSU and its co-defendants, Muslim and Ramos.

The Orders dated March 20, 2003 and August 21, 2003 of the RTC in Civil Case No. 6381
granted summary judgment in Osops favor. Muslim filed his Petition for Certiorari and
Prohibition in CA-G.R. SP No. 82052 which is still pending before the Court of Appeals (which
has yet to resolve Muslims Motion for Reconsideration and Supplemental Motion for

486
Asias Emerging Dragon Corporation v. Department of Transportation and Communications, G.R. No.
169914, March 24, 2008, 549 SCRA 44, 48.
487
Id. at 51.

197
Reconsideration). Consequently, we are careful not to make any declarations herein that will
prematurely judge the merits of CA-G.R. SP No. 82052.

MSU, on its part, neither filed an appeal nor a Petition for Certiorari before the Court of
Appeals to challenge the adverse RTC Orders. MSU sat on its rights. Despite receiving on
September 2, 2003488 a copy of the RTC Order dated August 21, 2003 (denying the Motion for
Reconsideration of the RTC Order dated March 20, 2003 filed by MSU, together with Muslim and
Ramos) in Civil Case No. 6381, MSU did not act until it filed its Motion for Intervention on
January 14, 2005489 in CA-G.R. SP No. 82052, after an interval of 16 months. Evidently, it was
already way beyond the reglementary period for MSU to file an appeal (15 days) 490 or a Petition
for Certiorari (60 days).491 The RTC Orders dated March 20, 2003 and August 21, 2003 had
already become final and executory as to MSU. It cannot now circumvent the finality of the RTC
Orders by seeking to intervene in CA-G.R. SP No. 82052 and thereby, to unduly benefit from the
timely action taken by Muslim, who alone, filed the Petition in CA-G.R. SP No. 82052.

In view of the foregoing, the Court finds no further need to address the other assignment
of errors of MSU. Given that the Court of Appeals did not allow MSU to intervene in CA-G.R. SP
No. 82052, it has no personality to question the judgment of the appellate court in this case.

WHEREFORE, the instant Petition for Review is hereby DENIED.

SO ORDERED.

488
Records, Vol. II, p. 368.
489
Id. at 681-718.
490
Rules of Court, Rule 41, Sec. 3.
491
Id., Rule 65, Sec. 4.

198
TERESITA J. LEONARDO-DE CASTRO
Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

199
LUCAS P. BERSAMIN MARTIN S. VILLARAMA, JR.
Associate Justice
Associate Justice

ESTELA M. PERLAS-BERNABE
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.

RENATO C. CORONA
Chief Justice

200
Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

THE BOARD OF REGENTS OF THE G.R. No. 172448


MINDANAO STATE UNIVERSITY
represented by its Chairman,
Present:
Petitioner,

CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
- versus - BERSAMIN,
VILLARAMA, JR., and
PERLAS-BERNABE,* JJ.

ABEDIN LIMPAO OSOP, Promulgated:


Respondent.

February 22, 2012


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

DECISION

LEONARDO-DE CASTRO, J.:

*
Per Special Order No. 1203 dated February 17, 2012.

201
This Petition for Review under Rule 45 of the Rules of Court assails the Decision492 dated
March 14, 2006 of the Court of Appeals in CA-G.R. SP No. 82052. The Court of Appeals
dismissed the Petition for Certiorari filed by therein petitioner Dr. Macapado A. Muslim (Muslim)
and declared the Motion for Intervention of the Board of Regents of the Mindanao State University
(MSU) as a stray pleading proscribed by Rule 19, Section 2 of the Rules of Court.

The instant controversy arose from the following factual background:

Herein respondent Abedin Limpao Osop (Osop) is the former Chancellor of the Mindanao
State University-General Santos City (MSU-GSC) campus. Osop retired in 1987 under the Early
Retirement Law, but several years after his retirement, he was appointed by Moner M. Bajunaid,
then MSU-GSC Chancellor, as a substitute for another professor of the Electrical Engineering
Department, College of Engineering, of MSU-GSC, who was on study leave. Osops appointment
took effect on July 1, 1994.493

In 1997, Muslim, the succeeding Chancellor of MSU-GSC, renewed Osops appointment


as Assistant Professor IV, effective January 1, 1997 until December 31, 1997. His appointment
was duly noted by the MSU Board of Regents during its 166th Meeting held at DECS Conference
Room, U.L. Complex, Meralco Avenue, Pasig City, on February 19, 1997.494

Muslim allowed Osop to continue teaching at MSU-GSC even after December 31, 1997.
On April 17, 1998, Muslim issued Special Order No. 144-98C designating Osop as Chairperson
of the Electrical Engineering Department, College of Engineering, of MSU-GSC, with a term of

492
Rollo, pp. 54-65; penned by Associate Justice Rodrigo F. Lim, Jr. with Associate Justices Teresita Dy-Liacco
Flores and Ramon R. Garcia, concurring.
493
Records, Vol. 1, p. 49.
494
Id. at 21-56.

202
office from April 18, 1998 to April 17, 1999, unless revoked or amended by competent
authority.495

However, on July 15, 1998, Muslim caused to be served upon the College of Engineering
and other offices of MSU-GSC a letter496 dated July 14, 1998 addressed to Osop that reads in full:

Dear Prof. Osop:

In view of the return to the campus of Prof. Danilo Dadula for whom you
have been serving as substitute since July 1, 1994, and considering the expiration
of your temporary appointment last December 31, 1997, I regret to inform you that
your services with the university will have to end. And since I am not renewing
your appointment, you are hereby advised to cease from reporting to duty effective
immediately. Moreover, you should clear yourself from monetary and other official
accountabilities with the university.

On behalf of MSU-GSC, we thank you for your services.

Very truly yours,

(signed)
MACAPADO A. MUSLIM, Ph. D.
Chancellor

Muslim also issued Memorandum Order No. 010-98C497 dated July 14, 1998, addressed to
Virgilio Ramos (Ramos), Dean of the College of Engineering of MSU-GSC, concerning the

495
Id. at 56.
496
Id. at 61.
497
Id. at 62.

203
expiration and non-renewal of Osops appointment and directing Ramos to already distribute Osops
teaching load to the remaining faculty members of the College. In the same Memorandum Order,
Muslim asked Ramos to explain the latters failure to include Osop in the list of substitute faculty
members which he submitted to the Office of the Chancellor before the start of the 1st semester of
1998.

In compliance with Memorandum Order No. 010-98C, Ramos explained in his letter dated
July 16, 1998 that there was no request for the appointment of a substitute for Prof. Danilo Dadula
(Dadula) when the latter went on a study leave. He explained:

Basing on our records, there was no request for substitute of Engr. Danilo
P. Dadula when he went on study leave in June 1994.

On 17 June 1994, Engr. Noel S. Gunay, then the Chairman of the Electrical
Engineering Department, recommended the hiring of Prof. Abedin Limpao Osop
in view of the study leave of Julito G. Fuerzas, PEE. Chancellor Moner M.
Bajunaid, in his letter dated 30 June 1994, informed Dean Carlos B. Cuanan of the
approval of the higher management to hire Prof. Abedin Limpao Osop as substitute
of Engr. Julito G. Fuerzas effective 1 July 1994. After more than a semester, Engr.
Fuerzas stopped schooling but did not return to this campus. Since then, Prof.
Abedin Limpao Osop went on teaching with the College of Engineering and his
appointment was renewable yearly as those on probationary status.

Per DBM Plantilla of Personnel, page 336 of 444 pages, Prof. Abedin
Limpao Osop has an item. For this, I presumed Prof. A.L. Osop was not a
contractual or substitute faculty of the college.

xxxx

Regarding the distribution of Prof. A. L. Osops teaching load to appropriate


faculty members at this time poses some problems. He is handling major courses
in electrical engineering and the electrical engineers have excessive overload.

204
xxxx

It has been noted and experienced that real excessive overload is more on the
number of preparations than on overload teaching units. For the interest of our
students and with much concern on the efficient delivery of instruction, the faculty
of the Electrical Engineering Department could not absorb the load of Prof. A. L.
Osop. Since his load are major EE courses, the same could not be handled by any
of the faculty in the other departments.

In view thereof, may we request for the reconsideration of your decision to


terminate the services of Prof. Abedin Limpao Osop.498

Muslim responded by issuing handwritten Memorandum Order No. 012-98C499 dated July
17, 1998, in which he reiterated his earlier order to Ramos to already distribute Osops teaching
load.

On July 21, 1998, Osop filed before the Regional Trial Court (RTC) of General Santos
City, Branch 22, a Complaint for Injunction with Prayer for Writ of Preliminary
Injunction/Temporary Restraining Order (TRO), Damages and Attorneys Fees against Muslim and
Ramos. The Complaint was docketed as Civil Case No. 6381.500

Osop filed two days later, on July 23, 1998, an Urgent Motion for Writ of Preliminary
Mandatory Injunction and/or Temporary Restraining Order. At the hearing held the very next day,
on July 24, 1998, the RTC issued an Order in which it noted the absence of Muslim, and to give
chance for the possibility of an amicable settlement, it reset the hearing for the issuance of a TRO
to July 27, 1998. Nevertheless, in the same Order, the RTC already directed Osop to submit a bond

498
Id. at 64-65.
499
Id. at 63.
500
Id. at 5-14.

205
of P20,000.00 to answer for damages that Muslim and Ramos might suffer if it turns out that Osop
was not entitled to an injunction/TRO. Osop filed his injunction/TRO bond on July 27, 1998.

At the hearing of Osops application for the issuance of a TRO on July 27, 1998, the RTC
issued an Order,501 whereby, in consideration of the principle of exhaustion of administrative
remedies, it suggested that Osop first write Muslim to seek reconsideration of Muslims letter and
Memorandum Order No. 010-98C both dated July 14, 1998. Osop accordingly wrote Muslim such
a letter dated July 27, 1998.502

Muslim endorsed Osops letter dated July 27, 1998 to Emily Marohombsar (Marohombsar),
then MSU President. In a letter503 dated August 7, 1998, Marohombsar wrote:

Based on the meticulous study made, the management is not legally nor
morally under obligation to retain Prof. Osop in the service or liable for the non-
renewal of his appointment the nature of which was temporary and contingent on
the return of Prof. Danilo Dadula. With the return of Prof. Dadula, the renewal of
the appointment of Prof. Osop would have been an unjustifiable superfluity.

This Office, concurring with the opinion of Director Imam, upholds your
position on the case of Prof. Osop.

Marohombsars aforequoted decision was based on the Brief from the MSU Human
Resources Development Office dated August 6, 1998, signed by Director Lomala O. Imam, stating
that [t]he issue is not one of termination or dismissal but an expiration of an appointment which is

501
Id. at 110.
502
Id. at 119.
503
Rollo, p. 81.

206
not permanent in nature and that [t]he renewal or non-renewal of a temporary or probationary
appointment is a management prerogative.504

On August 6, 1998, Muslim and Ramos filed before the RTC a Motion to Dismiss Civil
Case No. 6381 citing the following grounds: (1) lack of cause of action due to non-exhaustion of
administrative remedies and non-inclusion of indispensable parties; (2) appointment in a
temporary character; (3) presumption of regularity; and (4) forum shopping.505

The RTC issued an Omnibus Order on September 10, 1998, dismissing Civil Case No.
6381, for the following reasons:

The complaint is essentially one for illegal dismissal filed by [herein


respondent] Abedin Limpao Osop, a faculty member of the Mindanao State
University (MSU), against defendant Macapagal A. Muslim, Chancellor of the
MSU, and Virgilio Ramos, Dean of the College of Engineering of the same
university. A party aggrieved by a decision, ruling, order or action of an agency of
the government involving termination of services may appeal to the Civil Service
Commission. Regional Trial Courts have no jurisdiction to entertain cases
involving dismissal of officers and employees covered by the Civil Service Law.
(Mateo v. C.A., 247 SCRA 284). The Civil Service Commission is the sole arbiter
of all controversies pertaining to the Civil Service. (Dario v. Mison, 176 SCRA
84).506

Thus, the RTC decreed:

WHEREFORE, in view of the foregoing, the instant complaint is hereby


DISMISSED for lack of jurisdiction. Accordingly, [Osops] application for

504
Id. at 82.
505
Records, Vol. I, p. 201.
506
Id. at 264.

207
preliminary injunction, being merely ancillary to the principal action is also hereby
dismissed without prejudice. The injunction bond is cancelled ipso facto.507

The RTC denied Osops Motion for Reconsideration in an Order508 dated September 25,
1998, prompting him to file with the Court of Appeals a Petition for Certiorari and Mandamus, 509
under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No. 49966, in which he argued,
inter alia, that:

2) The issue of removal from office of [Osop], who is faculty member


of a state university, is beyond the jurisdiction of the Civil Service Commission;

xxxx

4) In Civil Case No. 6381 [Osop] is suing [Muslim and Ramos] also
for damages, a subject matter that is beyond the jurisdiction of the Civil Service
Commission.510

In the meantime, concerned students of MSU-GSC filed before the Civil Service
Commission (CSC) Regional Office No. 11 a Complaint for the illegal termination of Osop by
Muslim. CSC Regional Office No. 11 issued an Order dated November 27, 1998 finding that
Osops termination was in order given that his appointment as a substitute was good only until the
return of the person being substituted.511

507
Id. at 265.
508
Id. at 343-344.
509
Id. at 347-370.
510
Id. at 356-357.
511
Id. at 418-420.

208
Eventually, on June 7, 1999, the Court of Appeals rendered a Decision512 in CA-G.R. SP
No. 49966, granting Osops Petition for Certiorari, based on the following ratiocination:

Anent the order of the Civil Service Commission Regional Office dated
November 27, 1998 holding the termination of [Osop] as legal, we agree with
[Osop] that this finding should not be legally binding upon him because he is not a
party to the complaint apparently initiated by alleged concerned students of MSU-
GSC.

Secondly, [Osops] side of the issue was never heard because only Muslim
was allowed to adduce evidence hence a denial of due process on the part of [Osop].

Coming now to the issue of whether or not [Osops] complaint was correctly
dismissed by the trial court for having failed to exhaust administrative remedies
and that consequently this case falls with the Civil Service Commission, we answer
in the negative.

[Osop] cites Sections 4, 5 and 6(e)(h) of the MSU charter R.A. 1387 as
amended by R.A. Nos. 1893, 3791, 3868, to wit:

Sec. 4. The government of said University is vested in a


board of regents to be known as the Board of Regents of the
Mindanao State University. (R.A. 1893)

Sec. 5. The Mindanao State University shall have the general


powers set out in Section thirteen of Act Numbered Fourteen
hundred and fifty-nine and the administration of said university and
the exercise of its corporate powers are hereby vested exclusively in
the Board of Regents and in the President of the University, insofar
as authorized by said Board.

512
Id. at 426-434.

209
Sec. 6. The Board of Regents shall have the following
powers of administration and the exercise of the powers of the
corporation.

xxxx

(e) To appoint, on the recommendation of the President of


the University, professors, instructors, lecturers, and other
employees of the University; to fix their compensation, hours of
service, and such other duties and conditions as it may deem proper;
to grant to them in its discretion leave of absence under such
regulations as it may promulgate, any provisions of law to the
contrary notwithstanding, and to remove them for cause after an
investigation and hearing shall have been had; and to extend with
their consent the tenure of faculty members of the University beyond
the age of sixty-five, any other provision of law to the contrary
notwithstanding, on recommendation of the President of the
University, whenever in his opinion their services are specially
needed; Provided, however, that no extension of service shall be
made beyond the age of seventy.

xxxx

(h) To prescribe rules for its own government, and to enact


for the government of the University such general ordinances and
regulations, not contrary to law, as are consistent with the purposes
of the University as defined in Section 2 of this Act.

Moreover, Article 152 of the Code of MSU provides:

Art. 152. Terms and Conditions of Appointment. The precise


terms and conditions of every appointment shall be stated in writing.
In case of a non-renewal of a probationary appointment the person
so concerned shall be so informed in writing at least sixty days
before the termination date.

210
Proceeding from all the foregoing, it appears clearly that the authority to
remove is vested in the Board of Regents and only after an investigation and
hearing.

Due process was clearly not observed in the removal of [Osop]. First of all,
only the Board of Regents have the power of removal which must be for cause and
after an investigation and hearing shall have been had. Secondly, even a mere
probationary appointment requires that in case of non-renewal the person so
concerned shall be informed in writing at least sixty (60) days before termination
date. These basic requisites were not at all observed in the termination of [Osop].

Therefore, we agree with [Osop] that his non-referral of the matter of his
removal to the Board of Regents before he resorted to court action is accepted as
an exception to the doctrine of exhaustion of administrative remedies.

The doctrine of exhaustion of administrative remedies admits of several


exception[s], to wit:

2. When there is a violation of due process.

xxxx

On another point, the two grounds relied upon by Muslim for terminating
[Osop] to wit: (1) that Prof. Danilo Dadula for whom [Osop] has been serving as
substitute since July 1, 1997 had already returned to MSU, and: (2) [Osops]
temporary appointment expired on December 31, 1997, clearly appears to be
without basis.

[Osop] contends and respondent Muslim does not deny that the notation
vice Danilo Dadula on study grant contained in [Osops] appointment is erroneous
because [Osop] was recruited as a substitute for Engineer Julito Fuerzas.

Assuming that [Osop] merely substituted for Dadula, [Muslim] does not
deny that Danilo Dadula returned to MSU General Santos from his study grant in
June 1996 and has taught in the Department of Mechanical Engineering of the

211
College of Engineering since then up to April 1998. During the said period, [Osop]
was also teaching in the said University and before the letter of July 15, 1998
advising [Osop] of his termination, he was teaching at the same time as Dadula for
which he was never asked to leave contrary to Muslims claim that [Osop] merely
acted as a substitute of Dadula. Meanwhile Dadula has filed a leave of absence and
has not reported for duty for the first semester of SY 1998-1999. To repeat, from
June 1996 up to April 1998, Dadula and [Osop] taught together in the College of
Engineering of MSU. Hence, if [Osop] was merely a substitute for Dadula, he
should have been required to leave as early as June 1996, upon Dadulas return.

Further, contradicting Muslims claim that [Osop] is a mere substitute of


Dadula on April 17, 1998, Muslim issued Special Order 144-98C designating
[Osop] as Chairperson of the Electrical Engineering Department of the College of
Engineering with a term of office from April 18, 1998 up to April 17, 1999. Clearly,
therefore, when [Osop] continued teaching up to July 15, 1998 and even his
appointment as Chairperson of the Electrical Engineering Department until April
17, 1999 by Muslim himself, his appointment has ceased to be probationary in
character.513

In the end, the Court of Appeals decreed:

WHEREFORE, premises considered, the petition for certiorari is


GRANTED. The Omnibus Order of the RTC of General Santos City, Branch 22
dated September 10, 1998 is hereby SET ASIDE. The RTC is directed to hear and
try Civil Case No. 6381 with utmost dispatch.514

The Motion for Reconsideration of Muslim and Ramos was denied by the Court of Appeal
in its Resolution dated November 11, 1999.515

513
Id. at 429-434.
514
Id. at 434.
515
Id. at 478.

212
Muslim then appealed the foregoing judgment of the Court of Appeals in CA-G.R. SP No.
49966 by way of a Petition for Review before this Court, docketed as G.R. No. 141276. However,
in a Resolution dated July 3, 2000, the Court denied Muslims Petition for Review; and in a
Resolution dated April 4, 2001, the Court likewise denied Muslims Motion for Reconsideration.516

On June 26, 2001, Osop filed an Amended Complaint517 before the RTC impleading MSU
as a defendant in Civil Case No. 6381. Despite the opposition of Muslim and Ramos, the RTC
admitted the Amended Complaint in its Order518 dated July 11, 2001, which reads:

Considering that no responsive pleading has yet been filed by [Muslim and
Ramos], the amended complaint is hereby ADMITTED.

WHEREFORE, the defendants Macapado Muslim and Virgilio Ramos are


ordered to file their answers within ten (10) days from today, and as prayed for by
the counsel of [Osop], issue the corresponding summons to newly impleaded
defendant Mindanao State University (MSU) at its main office in Marawi City. The
summons to defendant MSU, Marawi City shall be sent via registered mail to the
Clerk of Court of Marawi City who is requested to serve the same and thereafter to
make a return to this court.

The Solicitor General is hereby ordered to enter his appearance as counsel


for defendant Macapado A. Muslim and Virgilio Ramos, who were both sued in
their official and personal capacities and defendant MSU.

Muslim and Ramos, through counsel, Atty. Emmanuel C. Fontanilla, filed their Answer to
Amended Complaint on July 20, 2001.519

516
Id. at 507.
517
Id. at 508-517.
518
Id. at 589.
519
Id. at 632-642.

213
On July 27, 2001, RTC Clerk of Court Asuncion de Leon Omila served summons upon
MSU at its main campus in Marawi City which required the university to enter its appearance in
Civil Case No. 6381 and to answer Osops Amended Complaint within 15 days after service of said
summons.520

The Office of the Solicitor General (OSG) entered its appearance before the RTC in Civil
Case No. 6381 on September 14, 2001 as counsel for Muslim, Ramos, and MSU (Muslim, et al.).
The OSG requested that it be furnished with a copy of the Amended Complaint and that the period
to file the answer be suspended until receipt of said Amended Complaint.521 In its Order522 dated
September 26, 2001, the RTC granted the OSG a period of 15 days from receipt of a copy of the
Amended Complaint from Osop within which to file a responsive pleading.

For failure of MSU to file an answer to the Amended Complaint within the given period,
Osop filed a Motion to Declare Defendant MSU in Default.523 Osops Motion was denied by the
RTC in its Order524 dated February 1, 2002 since there was no proof as to when the OSG received
a copy of the Amended Complaint from Osop.

The OSG filed a Manifestation on February 14, 2002 which stated that upon verification
with its Record Section, it discovered that Atty. Fontanilla, counsel for Muslim and Ramos, was
actually deputized by the OSG to handle Civil Case No. 6381; and that MSU is adopting the
Answer to the Amended Complaint already filed by Ramos and Muslim, as all the defendants in
said case were in the same position.525

520
Id. at 660.
521
Id. at 664-668.
522
Id. at 670.
523
Id. at 751.
524
Records, Vol. II, p. 23.
525
Id. at 46-48.

214
Osop filed a Motion for Reconsideration of the RTC Order dated February 1, 2002 denying
his Motion to Declare Defendant MSU in Default. In another Order526 dated June 21, 2002, the
RTC denied Osops Motion for Reconsideration for being moot and academic in light of the
Manifestation of the OSG that MSU was adopting the Answer to the Amended Complaint of
Muslim and Ramos.

Meanwhile, Osop filed on January 11, 2002 a Motion for Summary Judgment527 in Civil
Case No. 6381, to which Muslim and Ramos filed on January 16, 2002 an Opposition.528

In an Order529 dated October 21, 2002, Judge Antonio Lubao of RTC-Branch 22 voluntarily
inhibited himself from further hearing Civil Case No. 6381 to avoid conflict of interest considering
that he was a faculty member at the MSU College of Law. Thus, the case was re-raffled to RTC-
Branch 37, presided over by Judge Eddie R. Rojas.

After an exchange of pleadings among the parties, the RTC issued an Order530 dated March
20, 2003, which granted Osops Motion for Summary Judgment in Civil Case No. 6381 pursuant
to Rule 35, Section 1 of the Rules of Court. The RTC explicated that:

The law itself determines when a summary judgment is proper. Under the
rules, summary judgment is appropriate when there are no genuine issues of fact
which call for the presentation of evidence in a full-blown trial. Even if on their
face the pleading appear to raise issues, when the affidavits, depositions and
admissions show that such issues are not genuine, then summary judgment as
prescribed by the rules must ensure as a matter of law. What is crucial for
determination, therefore, is the presence of a genuine issue as to any material fact.

526
Id. at 101.
527
Records, Vol. I, pp. 759-782.
528
Records, Vol. II, pp. 1-7.
529
Id. at 111-112.
530
Id. at 121-123.

215
A genuine issue is an issue of fact which require (sic) the presentation of
evidence as distinguished from a sham, fictitious, contrived or false claim. When
the facts as pleaded appear uncontested or undisputed, then there is no real or
genuine issue or question as to the facts, and summary judgment is called for. The
party who moves for summary judgment has the burden of demonstrating clearly
the absence of any genuine issue of fact, or that the issue posed in the complaint is
patently unsubstantial so as not to constitute a genuine issue of trial.

Applying these (sic) principle to the present case, it can be said that [Osop]
has clearly demonstrate (sic) the absence of any genuine issue of fact, as well as the
issue posed by [Muslim, et al.] that [Osop] is a contractual employee is patently
unsubstantial so as not to constitute a genuine issue for a full-blown trial.

From the decision rendered by the Seventeenth Division Court of Appeals


concerning the petition for Certiorari and Mandamus filed by [Osop], in this case
it ruled that the appointment of [Osop] by [Muslim] ceases to be probationary in
character when the former was allowed to continue teaching up to July 15, 1998
(sic) and even appointed as Chairperson of the Electrical Engineering Department.
The issue raised by [Muslim, et al.] in their answer that [Osop] is a contractual
employee is indeed patently unsubstantial as to constitute a genuine issue in this
case for trial. Once and for all, such an issue has already been settled by the
honorable Court of Appeals whose decision has become final and executory. Thus,
there was no more genuine issue that was left to be tried except the amount of
damages and attorneys fees.

xxxx

After having been taken into account the foregoing premises and pleadings
of the parties in support of their respective stand on the matter under consideration
as well as from the implied admissions arising from the failure of [Muslim, et al.]
to set forth reasons why [they] could not truthfully either admit or deny those
matters alleged in the amended complaint, and having concluded from the attendant
circumstances that [Osop] is entitled to judgment as a matter of law for such amount
as may be found to be due him in damages.

Consequently, the RTC disposed:

216
WHEREFORE, a summary judgment is hereby rendered in favor of [Osop]
by ordering [Muslim and Ramos] or their successors, and defendant Mindanao
State University to give teaching loads to [Osop] and to pay such amount as may
be found to be due him in damages.

For the meantime, let this case be called for trial to resolve the sole issue of
damages that may be awarded in favor of [Osop] on May 30, 2003, at 2:00 oclock
in the afternoon.531

Muslim, et al. filed a Motion for Reconsideration of the aforementioned Order on April 1,
2003, which Osop opposed.

Osop, for his part, filed a Motion for Execution Pending Appeal, and Muslim, et al. filed a
Comment thereon.

In an Order532 dated August 21, 2003, the RTC denied the Motion for Reconsideration of
the Order dated March 20, 2003 filed by Muslim, et al., thus:

In resolving [Muslim, et al.s] Motion for Reconsideration, the Court casts


doubt on the veracity of [Muslim, et al.s] claim that the findings of the Court of
Appeals as to the appointment of [Osop] was a mere opinion and that there could
be no final determination on the matters not principally raised before it. It was
emphasized in the ruling of the Honorable Supreme Court in the case of Padua vs.
Robles, G.R. No. 127930, December 15, 2000, which lays down the rules in
construing judgments. It was held that the sufficiency and efficacy of a judgment
must be tested by its substance rather than its form. In construing a judgment, its
legal effects including such effects that necessarily follows because of legal
implications, rather than the language used, govern. Also, its meaning, operations,
and consequences must be ascertained like any other written instrument. If the

531
Id. at 123.
532
Id. at 241-243.

217
record shows that the judgment could not have been rendered without deciding the
particular matter, it will be considered as having settled that matter as to all future
actions between the parties, and if a judgment necessarily presupposes certain
premises, they are as conclusive as the judgment itself. Reasons for the rule are that
a judgment is an adjudication on all the matters which are essential to support it,
and that every proposition assumed or decided by the court leading up to the final
conclusions and upon which such conclusion is based is as effectually passed upon
as the ultimate question which is solved. Thus a judgment rest on the intent of the
court as gathered from every part thereof, including the situation to which it applies
and attendant circumstances.

[Muslim, et al.] lost sight of the fact that the court gave due course to
[Osops] Motion for Summary Judgment only after finding that the issue raised by
them in their answer was patently unsubstantial as to constitute a genuine issue.
Inasmuch as [Muslim, et al.] failed to show a plausible ground of defense
something fairly arguable and of substantial character, they cannot therefore further
insist that they have a genuine issue to warrant this Court to hear and try the above-
entitled case.

Hence, in the present recourse, [Muslim, et al.s] Motion for Reconsideration


is hereby denied due course for bereft of any merit.

In the same Order, the RTC granted Osops Motion for Execution Pending Appeal, to wit:

Anent [Osops] Motion for Execution Pending Appeal, it alleged that [Osop]
has been unemployed for almost five (5) years and if [Muslim, et al.s] appeal on
the resolution of this Court, it will be just for the purpose of delaying the
termination of the case and to cause further misery to [Osop].

Section 2, Rule 39 of the 1997 Rules of Civil Procedure, lays down the rule
for execution pending appeal, categorized as discretionary execution. It is evident
from the said provision that a primary consideration for allowing execution pending
appeal would be the existence of good reasons. In turn, good reasons has been held
to consist of compelling circumstances justifying the immediate execution lest
judgment becomes illusory. Such reason must constitute superior circumstances

218
demanding urgency which will outweigh the injury or damages should the losing
party secure a reversal of the resolution issued by this Court.

After weighing the reasons presented, the Court deemed it wise to give due
course to [Osops] Motion for Execution Pending Appeal. The effective and
efficient administration of justice requires that the prevailing party should not be
deprived of the fruits of the verdict rendered in his favor. The system of judicial
review should not be misused and abused to evade the decision/order from attaining
finality.

With the foregoing reasons, [Osops] Motion for Execution Pending Appeal
is hereby given due course, but insofar as to the giving of teaching loads to [Osop]
only inasmuch as no amount of damages could be ascertained at this moment.

Let therefore a Writ of Execution Pending Appeal be issued in this case


directing [Muslim and Ramos] or their successors and defendant Mindanao State
University to give teaching loads to [Osop] with a bond fix at Five Thousand
(P5,000.00) Pesos.533

Muslim, et al., filed a Motion for Reconsideration534 of the Order dated August 21, 2003,
which Osop again opposed.535

On October 1, 2003, Osop filed a Motion for Partial Execution (Based on a Final Executory
Judgment) praying that a writ of execution be issued ordering Muslim, et al. to give him teaching
loads.536

533
Id. at 242-243.
534
Id. at 263-266.
535
Id. at 280-281.
536
Id. at 290-291.

219
Two days after, on October 3, 2003, Muslim, et al. filed a Second Motion for
Reconsideration and Supplement to the Opposition (also Reply to Motion for Partial Execution).537

In an Order538 dated October 9, 2003 the RTC denied Muslim, et al.s Second Motion for
Reconsideration and Supplement to the Opposition (also Reply to Motion for Partial Execution)
for being a pro forma motion.

Subsequently, the RTC issued an Order539 dated November 10, 2003 granting Osops
Motion for Partial Execution and ordering the issuance of a writ for the partial execution of the
Order dated March 20, 2003, particularly, for its directive that Muslim, et al. give Osop teaching
load.

RTC Clerk of Court Fulgar issued the Writ of Execution540 the next day, November 11,
2003. As shown in the Sheriffs Return541 dated November 17, 2003, original copies of RTC Order
dated November 10, 2003 and Writ of Execution dated November 11, 2003 were duly served upon
Muslim, et al. on November 12, 2003.

Aggrieved, Muslim, in his personal capacity,542 filed on January 12, 2004, with the Court
of Appeals, a Petition for Certiorari and Prohibition with Prayer for a Writ of Preliminary and
Instant Issuance of Temporary Restraining Order, which was docketed as CA-G.R. SP No.
82052.543 Muslim averred that in issuing the Order dated November 10, 2003, the RTC committed
grave abuse of discretion amounting to lack or excess of jurisdiction as it:

537
Id. at 309-314.
538
Id. at 328.
539
Id. at 366-372.
540
Id. at 382-383.
541
Id. at 384.
542
In the Amended Complaint, Muslim was sued not only in his official capacity but also in his personal
capacity.
543
Records, Vol. II, pp. 418-438.

220
5. Consider[ed] the Decision of the Court of Appeals in a Certiorari as a judgment
on the merit.

6. Plac[ed] the action in the lower court within the purview of summary procedure.

7. Grant[ed] partial execution.

8. Consider[ed] the order of finding no genuine issue as a final order.544

After the parties filed their respective Memorandum, the Court of Appeals issued a
Resolution dated October 6, 2004 considering the case submitted for decision.545

On January 14, 2005, MSU, through the OSG, filed before the Court of Appeals a Motion
to Intervene (with Motion to Admit Memorandum) in CA-G.R. SP No. 82052.546 Osop opposed
the intervention of MSU.547

The Court of Appeals rendered its Decision in CA-G.R. SP No. 82052 on March 14, 2006,
dismissing Muslims Petition for Certiorari and Prohibition.548 It held that:

In the instant case, it is indubitably shown that the main issue that needs to
be resolved is whether or not [Osop] was a probationary employee. In CA-G.R. SP
No. 49966, the appellate court, despite the fact that the issue brought therein was
whether or not public respondent gravely abused his discretion in dismissing the
case for lack of jurisdiction, nevertheless ruled that the appointment of [Osop]

544
Id. at 430.
545
Id. at 669.
546
Id. at 681-718.
547
Id. at 944-946.
548
Muslims Motion for Reconsideration is still pending in court.

221
ceased to be probationary in character. Respondent judge merely took judicial
notice of the appellate courts findings that [Osop] had indeed ceased to be a
probationary employee. To Our assessment, what respondent judge may have had
on his mind was that even if he decided otherwise, the case would still be appealed
to the Court of Appeals which, as adverted to, already made a finding that [Osop]
was a permanent employee. Moreover, the appellate courts decision was also
binding between the parties; it was deemed to be the law of the case, hence, it was
only proper for public respondent to conform to this Courts decision.

xxxx

A trial court which has jurisdiction over the person and subject matter of
the case, can grant a motion for summary judgment, and such is within its power or
authority in law to perform. Its propriety rests on its sound exercise of discretion
and judgment. In the event that it errs in finding that there is no genuine issue to
thus call for the rendition of a summary judgment, the resulting decision may not
be set aside either directly or indirectly by petition for certiorari, but may only be
corrected on appeal or other direct review. The court a quo categorically stated that
its March 20, 2003 [Order] had become final and executory as quoted hereunder:

A review of the records of the case will show that the


[Muslim, et al.] received the Order dated [20] March 2003, granting
the summary judgment, on March 25, 2003. On that date, the fifteen
(15) days prescriptive period within which to file an appeal began to
run. Instead of preparing an appeal, [Muslim, et al.] filed their
Motion for Reconsideration on April 1, 2003. The filing of the said
Motion interrupted the reglementary period to appeal. By that time,
however, eight (8) days had already lapsed; thus, from their receipt
of the Order dated August 21, 2003, denying their Motion for
Reconsideration, on September 2, 2003, they had only seven (7)
days left or until September 9, 2003 within which to file a notice of
appeal. However, on said date, [Muslim, et al.] filed another Motion
for Reconsideration praying that the order for execution pending
appeal be recalled. On October 9, 2003, an Order had been issued
denying [Muslim, et al.s] Motion for Reconsideration, copy of
which was received by [Muslim, et al.] on that same day.

Again, carefully going over the records, the Court finds that
the Orders issued were already final and executory. [Muslim, et al.]

222
received the Order granting the summary judgment of [Osop] dated
March 20, 2003. Hence, they had until September 9, 2003 within
which to file its appeal. [Muslim, et al.] filed a Motion for
Reconsideration and the Court on its Order dated August 21, 2003
denied the same. [Muslim, et al.] received a copy of the denial of its
Motion for Reconsideration, which was considered pro-forma, was
likewise denied on October 9, 2003, [Muslim, et al.] received copy
of the order of denial on that very same day. Such second motion for
reconsideration filed by [Muslim, et al.], being a pro-forma, does
(sic) not toll the running of the period to perfect an appeal or any
remedy provided by law. Thus, it can be concluded that the subject
orders issued by this Court are now final and executory. Now, once
a judgment attains finality it becomes the ministerial duty of the trial
court to order its execution.

Indeed, it bears stressing that the right to appeal is not a natural right or a
part of due process. It is a procedural remedy of statutory origin and, as such, may
be exercised only in the manner and within the time frame provided by the
provisions of law authorizing its exercise. Failure of a party to perfect an appeal
within the period fixed by law renders the decision sought to be appealed final and
executory. After a decision is declared final and executory, vested rights are
acquired by the winning party who has the right to enjoy the finality of the case.

To determine whether a judgment or order is final or interlocutory, the test


is: Does it leave something to be done in the trial court with respect to the merits
of the case? If it does, it is interlocutory, if it does not, it is final. A final judgment
is one that disposes of a case in a manner that leaves nothing more to be done by
the court in respect thereto. A summary judgment is one which is final as it already
adjudicated the issues and determined the rights of the parties. It is only
interlocutory when the court denies a motion for summary judgment or renders a
partial summary judgment as there would still be issues left to be determined by the
court. In the instant case, the March 20, 2003 Order was unequivocal, other than
setting a hearing to determine the amount of damages, but had, on the other hand,
already disposed of the case. As such, the issuance of the November 10, 2003 Order
granting the motion for partial execution was proper as the summary judgment
already became final and executory as adverted to.

In a petition for certiorari, even if, in the greater interest of substantial


justice, certiorari may be availed of, it must be shown that the trial court acted with
grave abuse of discretion amounting to lack or excess of jurisdiction, that is, that

223
the trial court exercised its powers in an arbitrary or despotic manner by reason of
passion or personal hostilities, so patent and gross as to amount to an evasion or
virtual refusal to perform the duty enjoined or to act in contemplation of law. We
find that such abuse is not extant in the instant case.549

Muslim filed a Motion for Reconsideration of the foregoing judgment on May 9, 2006550
and a Supplemental Motion for Reconsideration on June 23, 2006.551

On July 11, 2006, the Court of Appeals issued a Resolution stating that it received on June
8, 2006 a copy of the instant Petition (G.R. No. 172448) filed by MSU; and since said Petition
assails its Decision dated March 14, 2006 in CA-G.R. SP No. 82052, it was constrained to await
the ruling of the Supreme Court in G.R. No. 172448. Hence, the Court of Appeals opted to hold in
abeyance the resolution of Muslims Motion for Reconsideration and Supplemental Motion for
Reconsideration of the Decision dated March 14, 2006 in CA-G.R. SP No. 82052.

The issue relevant to the Petition at bar insofar as MSU is concerned arises from the
pronouncement of the Court of Appeals in the same Decision dated March 14, 2006 in CA-G.R.
SP No. 82052 quoted hereunder:

At the outset this case was deemed submitted for decision on October 6,
2004. On January 10, 2005, this Court received a Motion to Intervene (with Motion
to Admit Memorandum) filed by Mindanao State University (MSU) through the
Office of the Solicitor General (OSG). However, Section 2, Rule 19 of the Rules of
Court, allows intervention only at any time before rendition of judgment by the trial
court, and We hold the motion to intervene is a stray pleading and is deemed not
filed.552

549
Rollo, pp. 60-65.
550
CA rollo, pp. 575-586.
551
Id. at 886-904.
552
Records, Vol. II, pp. 951-952.

224
The instant Petition of MSU presented the following assignment of errors:

THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT


PETITIONERS MOTION FOR INTERVENTION WAS IMPROVIDENTLY
FILED.

II

THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT


RESPONDENTS MOTION FOR SUMMARY JUDGMENT WAS PROPER
ALTHOUGH PETITIONER PRESENTED DEFENSES IN THEIR ANSWER TO
AMENDED COMPLAINT TENDERING FACTUAL ISSUES WHICH
REQUIRE TRIAL ON THE MERITS.

III

THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT


RESPONDENT ACQUIRED PERMANENT STATUS.

IV

225
THE COURT OF APPEALS GRAVELY ERRED UPHOLDING THE TRIAL
COURTS ORDER GRANTING RESPONDENT MOTION FOR ISSUANCE OF
PARTIAL WRIT OF EXECUTION.553

MSU anchors its right to intervene on Rule 19, Section 1 of the Rules of Court. MSU
stresses that it has a legal interest in the controversy considering that, ultimately, it will be the one
liable for the relief Osop prays for, particularly, Osops reinstatement at MSU-GSC.

Rule 19, Section 1 of the Rules of Court provides:

Section 1. Who may intervene. A person who has a legal interest in the
matter in litigation, or in the success of either of the parties, or an interest against
both, or is so situated as to be adversely affected by a distribution or other
disposition of property in the custody of the court or of an officer thereof may, with
leave of court, be allowed to intervene in the action. The court shall consider
whether or not the intervention will unduly delay or prejudice the adjudication of
the rights of the original parties, and whether or not the intervenors rights may be
fully protected in a separate proceeding.

In Alfelor v. Halasan,554 the Court held that:

Under this Rule, intervention shall be allowed when a person has (1) a legal
interest in the matter in litigation; (2) or in the success of any of the parties; (3) or
an interest against the parties; (4) or when he is so situated as to be adversely
affected by a distribution or disposition of property in the custody of the court or
an officer thereof.555

553
Rollo, pp. 24-25.
554
G.R. No. 165987, March 31, 2006, 486 SCRA 451.
555
Id. at 460.

226
Jurisprudence describes intervention as a remedy by which a third party, not originally
impleaded in the proceedings, becomes a litigant therein to enable him, her or it to protect or
preserve a right or interest which may be affected by such proceedings.556 The right to intervene
is not an absolute right; it may only be permitted by the court when the movant establishes facts
which satisfy the requirements of the law authorizing it.557

While undoubtedly, MSU has a legal interest in the outcome of the case, it may not avail
itself of the remedy of intervention in CA-G.R. SP No. 82052 simply because MSU is not a third
party in the proceedings herein.

In Osops Amended Complaint before the RTC, MSU was already impleaded as one of the
defendants in Civil Case No. 6381. MSU came under the jurisdiction of the RTC when it was
served with summons. It participated in Civil Case No. 6381, where it was represented by Atty.
Fontanilla, counsel for Muslim and Ramos, who was deputized by the OSG as counsel for MSU.
MSU adopted the Answer to the Amended Complaint of its co-defendants, Muslim and Ramos,
and also joined Muslim and Ramos in subsequent pleadings filed before the RTC in Civil Case
No. 6381. Evidently, the rights and interests of MSU were duly presented before the RTC in Civil
Case No. 6381. Unfortunately, the RTC issued the Orders dated March 20, 2003 and August 21,
2003 in Civil Case No. 6381 adverse to MSU and its co-defendants, Muslim and Ramos.

The Orders dated March 20, 2003 and August 21, 2003 of the RTC in Civil Case No. 6381
granted summary judgment in Osops favor. Muslim filed his Petition for Certiorari and
Prohibition in CA-G.R. SP No. 82052 which is still pending before the Court of Appeals (which
has yet to resolve Muslims Motion for Reconsideration and Supplemental Motion for

556
Asias Emerging Dragon Corporation v. Department of Transportation and Communications, G.R. No.
169914, March 24, 2008, 549 SCRA 44, 48.
557
Id. at 51.

227
Reconsideration). Consequently, we are careful not to make any declarations herein that will
prematurely judge the merits of CA-G.R. SP No. 82052.

MSU, on its part, neither filed an appeal nor a Petition for Certiorari before the Court of
Appeals to challenge the adverse RTC Orders. MSU sat on its rights. Despite receiving on
September 2, 2003558 a copy of the RTC Order dated August 21, 2003 (denying the Motion for
Reconsideration of the RTC Order dated March 20, 2003 filed by MSU, together with Muslim and
Ramos) in Civil Case No. 6381, MSU did not act until it filed its Motion for Intervention on
January 14, 2005559 in CA-G.R. SP No. 82052, after an interval of 16 months. Evidently, it was
already way beyond the reglementary period for MSU to file an appeal (15 days) 560 or a Petition
for Certiorari (60 days).561 The RTC Orders dated March 20, 2003 and August 21, 2003 had
already become final and executory as to MSU. It cannot now circumvent the finality of the RTC
Orders by seeking to intervene in CA-G.R. SP No. 82052 and thereby, to unduly benefit from the
timely action taken by Muslim, who alone, filed the Petition in CA-G.R. SP No. 82052.

In view of the foregoing, the Court finds no further need to address the other assignment
of errors of MSU. Given that the Court of Appeals did not allow MSU to intervene in CA-G.R. SP
No. 82052, it has no personality to question the judgment of the appellate court in this case.

WHEREFORE, the instant Petition for Review is hereby DENIED.

SO ORDERED.

558
Records, Vol. II, p. 368.
559
Id. at 681-718.
560
Rules of Court, Rule 41, Sec. 3.
561
Id., Rule 65, Sec. 4.

228
TERESITA J. LEONARDO-DE CASTRO
Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

229
LUCAS P. BERSAMIN MARTIN S. VILLARAMA, JR.
Associate Justice
Associate Justice

ESTELA M. PERLAS-BERNABE
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.

RENATO C. CORONA
Chief Justice

230
SECOND DIVISION

SPOUSES WILFREDO N. ONG and G.R. No. 172592


EDNA SHEILA PAGUIO-ONG,
Petitioners, Present:

QUISUMBING, J., Chairperson,


- versus - CARPIO MORALES,
TINGA,
BRION, and
AUSTRIA-MARTINEZ,* JJ.
ROBAN LENDING CORPORATION,
Respondent.
Promulgated:

July 9, 2008

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

DECISION

CARPIO MORALES, J.:

On different dates from July 14, 1999 to March 20, 2000, petitioner-spouses Wilfredo N.
Ong and Edna Sheila Paguio-Ong obtained several loans from Roban Lending Corporation
(respondent) in the total amount of P4,000,000.00. These loans were secured by a real estate
mortgage on petitioners parcels of land located in Binauganan, Tarlac City and covered by TCT
No. 297840.562

*
Additional member per Raffle dated July 2, 2008 pursuant to Administrative Circular No. 84-2007 in lieu
of Justice Arturo D. Brion who inhibited.
562
Records, pp. 11-16.

231
On February 12, 2001, petitioners and respondent executed an Amendment to Amended
Real Estate Mortgage563 consolidating their loans inclusive of charges thereon which totaled
P5,916,117.50. On even date, the parties executed a Dacion in Payment Agreement564 wherein
petitioners assigned the properties covered by TCT No. 297840 to respondent in settlement of their
total obligation, and a Memorandum of Agreement565 reading:

That the FIRST PARTY [Roban Lending Corporation] and the


SECOND PARTY [the petitioners] agreed to consolidate and restructure all
aforementioned loans, which have been all past due and delinquent since April
19, 2000, and outstanding obligations totaling P5,916,117.50. The SECOND
PARTY hereby sign [sic] another promissory note in the amount of
P5,916,117.50 (a copy of which is hereto attached and forms xxx an integral part
of this document), with a promise to pay the FIRST PARTY in full within one
year from the date of the consolidation and restructuring, otherwise the
SECOND PARTY agree to have their DACION IN PAYMENT agreement,
which they have executed and signed today in favor of the FIRST PARTY be
enforced[.]566

In April 2002 (the day is illegible), petitioners filed a Complaint,567 docketed as Civil Case
No. 9322, before the Regional Trial Court (RTC) of Tarlac City, for declaration of mortgage
contract as abandoned, annulment of deeds, illegal exaction, unjust enrichment, accounting, and
damages, alleging that the Memorandum of Agreement and the Dacion in Payment executed are
void for being pactum commissorium.568

Petitioners alleged that the loans extended to them from July 14, 1999 to March 20, 2000
were founded on several uniform promissory notes, which provided for 3.5% monthly interest
rates, 5% penalty per month on the total amount due and demandable, and a further sum of 25%
attorneys fees thereon,569 and in addition, respondent exacted certain sums denominated as

563
Id. at 37.
564
Id. at 40.
565
Id. at 38-39.
566
Id. at 38-39.
567
Id. at 1-5.
568
Id. at 2.
569
Id. at 2-3. Vide id. at 20.

232
EVAT/AR.570 Petitioners decried these additional charges as illegal, iniquitous, unconscionable,
and revolting to the conscience as they hardly allow any borrower any chance of survival in case
of default.571

Petitioners further alleged that they had previously made payments on their loan accounts,
but because of the illegal exactions thereon, the total balance appears not to have moved at all,
hence, accounting was in order.572

Petitioners thus prayed for judgment:

a) Declaring the Real Estate Mortgage Contract and its


amendments x x x as null and void and without legal force and effect for having
been renounced, abandoned, and given up;

b) Declaring the Memorandum of Agreement xxx and Dacion


in Payment x x x as null and void for being pactum commissorium;

c) Declaring the interests, penalties, Evat [sic] and attorneys


fees assessed and loaded into the loan accounts of the plaintiffs with defendant
as unjust, iniquitous, unconscionable and illegal and therefore, stricken out or
set aside;

d) Ordering an accounting on plaintiffs loan accounts to


determine the true and correct balances on their obligation against legal charges
only; and

e) Ordering defendant to [pay] to the plaintiffs: --

e.1 Moral damages in an amount not less than P100,000.00 and


exemplary damages of P50,000.00;

e.2 Attorneys fees in the amount of P50,000.00 plus P1,000.00


appearance fee per hearing; and

e.3 The cost of suit.573

570
Id. at 21.
571
Id. at 3.
572
Id. at 3.
573
Id. at 4.

233
as well as other just and equitable reliefs.
In its Answer with Counterclaim,574 respondent maintained the legality of its transactions
with petitioners, alleging that:

xxxx

If the voluntary execution of the Memorandum of Agreement and


Dacion in Payment Agreement novated the Real Estate Mortgage then the
allegation of Pactum Commissorium has no more legal leg to stand on;

The Dacion in Payment Agreement is lawful and valid as it is recognized


x x x under Art. 1245 of the Civil Code as a special form of payment whereby
the debtor-Plaintiffs alienates their property to the creditor-Defendant in
satisfaction of their monetary obligation;

The accumulated interest and other charges which were computed for
more than two (2) years would stand reasonable and valid taking into
consideration [that] the principal loan is P4,000,000 and if indeed it became
beyond the Plaintiffs capacity to pay then the fault is attributed to them and not
the Defendant[.]575

After pre-trial, the initial hearing of the case, originally set on December 11, 2002, was
reset several times due to, among other things, the parties efforts to settle the case amicably.576

During the scheduled initial hearing of May 7, 2003, the RTC issued the following order:

Considering that the plaintiff Wilfredo Ong is not around on the ground
that he is in Manila and he is attending to a very sick relative, without objection
on the part of the defendants counsel, the initial hearing of this case is reset to
June 18, 2003 at 10:00 oclock in the morning.

Just in case [plaintiffs counsel] Atty. Concepcion cannot present his


witness in the person of Mr. Wilfredo Ong in the next scheduled hearing, the

574
Id. at 51-54.
575
Id. at 52-53.
576
Id. at 127-128, 138-143, 147-153.

234
counsel manifested that he will submit the case for summary judgment.577
(Underscoring supplied)

It appears that the June 18, 2003 setting was eventually rescheduled to February 11, 2004
at which both counsels were present578 and the RTC issued the following order:

The counsel[s] agreed to reset this case on April 14, 2004, at 10:00
oclock in the morning. However, the counsels are directed to be ready with their
memorand[a] together with all the exhibits or evidence needed to support their
respective positions which should be the basis for the judgment on the pleadings
if the parties fail to settle the case in the next scheduled setting.

x x x x579 (Underscoring supplied)

At the scheduled April 14, 2004 hearing, both counsels appeared but only the counsel of
respondent filed a memorandum.580

By Decision of April 21, 2004, Branch 64 of the Tarlac City RTC, finding on the basis of
the pleadings that there was no pactum commissorium, dismissed the complaint.581

On appeal,582 the Court of Appeals583 noted that

x x x [W]hile the trial court in its decision stated that it was rendering
judgment on the pleadings, x x x what it actually rendered was a summary
judgment. A judgment on the pleadings is proper when the answer fails to tender
an issue, or otherwise admits the material allegations of the adverse partys
pleading. However, a judgment on the pleadings would not have been proper in
this case as the answer tendered an issue, i.e. the validity of the MOA and DPA.
On the other hand, a summary judgment may be rendered by the court if the
pleadings, supporting affidavits, and other documents show that, except as to the
amount of damages, there is no genuine issue as to any material fact.584

577
Id. at 141.
578
Id. at 154.
579
Id. at 155.
580
Id. at 156-164, 204.
581
Id. at 205-206.
582
Id. at 207.
583
Decision of November 30, 2005, penned by Court of Appeals Associate Justice Portia Alio-Hormachuelos,
with the concurrences of Associate Justices Mariano C. Del Castillo and Magdangal M. de Leon. CA rollo,
pp. 35-45.
584
CA rollo, pp. 40-41.

235
Nevertheless, finding the error in nomenclature to be mere semantics with no bearing on
the merits of the case,585 the Court of Appeals upheld the RTC decision that there was no pactum
commissorium.586

Their Motion for Reconsideration587 having been denied,588 petitioners filed the instant
Petition for Review on Certiorari,589 faulting the Court of Appeals for having committed a clear
and reversible error

I. . . . WHEN IT FAILED AND REFUSED TO APPLY PROCEDURAL


REQUISITES WHICH WOULD WARRANT THE SETTING ASIDE
OF THE SUMMARY JUDGMENT IN VIOLATION OF
APPELLANTS RIGHT TO DUE PROCESS;

II. . . . WHEN IT FAILED TO CONSIDER THAT TRIAL IN THIS CASE


IS NECESSARY BECAUSE THE FACTS ARE VERY MUCH IN
DISPUTE;

III. . . . WHEN IT FAILED AND REFUSED TO HOLD THAT THE


MEMORANDUM OF AGREEMENT (MOA) AND THE DACION EN
PAGO AGREEMENT (DPA) WERE DESIGNED TO CIRCUMVENT
THE LAW AGAINST PACTUM COMMISSORIUM; and

IV. . . . WHEN IT FAILED TO CONSIDER THAT THE MEMORANDUM


OF AGREEMENT (MOA) AND THE DACION EN PAGO (DPA)
ARE NULL AND VOID FOR BEING CONTRARY TO LAW AND
PUBLIC POLICY.590

The petition is meritorious.

Both parties admit the execution and contents of the Memorandum of Agreement and
Dacion in Payment. They differ, however, on whether both contracts constitute pactum
commissorium or dacion en pago.

585
Id. at 41.
586
Id. at 41-43.
587
Id. at 48-53.
588
Id. at 65-66.
589
Id. at 8-25.
590
Rollo, p. 15.

236
This Court finds that the Memorandum of Agreement and Dacion in Payment constitute
pactum commissorium, which is prohibited under Article 2088 of the Civil Code which provides:

The creditor cannot appropriate the things given by way of pledge or


mortgage, or dispose of them. Any stipulation to the contrary is null and void.

The elements of pactum commissorium, which enables the mortgagee to acquire ownership
of the mortgaged property without the need of any foreclosure proceedings,591 are: (1) there should
be a property mortgaged by way of security for the payment of the principal obligation, and (2)
there should be a stipulation for automatic appropriation by the creditor of the thing mortgaged in
case of non-payment of the principal obligation within the stipulated period.592

In the case at bar, the Memorandum of Agreement and the Dacion in Payment contain no
provisions for foreclosure proceedings nor redemption. Under the Memorandum of Agreement,
the failure by the petitioners to pay their debt within the one-year period gives respondent the right
to enforce the Dacion in Payment transferring to it ownership of the properties covered by TCT
No. 297840. Respondent, in effect, automatically acquires ownership of the properties upon
petitioners failure to pay their debt within the stipulated period.

Respondent argues that the law recognizes dacion en pago as a special form of payment
whereby the debtor alienates property to the creditor in satisfaction of a monetary obligation. 593
This does not persuade. In a true dacion en pago, the assignment of the property extinguishes the
monetary debt.594 In the case at bar, the alienation of the properties was by way of security, and
not by way of satisfying the debt.595 The Dacion in Payment did not extinguish petitioners
obligation to respondent. On the contrary, under the Memorandum of Agreement executed on the

591
Vide Lumayag v. Heirs of Jacinto Nemeo, G.R. No. 162112, July 3, 2007, 526 SCRA 315, 328.
592
Development Bank of the Philippines v. Court of Appeals, 348 Phil. 15, 31 (1998).
593
Records, p. 53. Vide CIVIL CODE, Article 1245.
594
Vide CIVIL CODE, Article 1245; Development Bank of the Philippines v. Court of Appeals, 348 Phil. 15, 30
(1998).
595
Vide Development Bank of the Philippines v. Court of Appeals, ibid.

237
same day as the Dacion in Payment, petitioners had to execute a promissory note for P5,916,117.50
which they were to pay within one year.596

Respondent cites Solid Homes, Inc. v. Court of Appeals597 where this Court upheld a
Memorandum of Agreement/Dacion en Pago.598 That case did not involve the issue of pactum
commissorium.599

That the questioned contracts were freely and voluntarily executed by petitioners and
respondent is of no moment, pactum commissorium being void for being prohibited by law.600

Respecting the charges on the loans, courts may reduce interest rates, penalty charges, and
attorneys fees if they are iniquitous or unconscionable.601

This Court, based on existing jurisprudence,602 finds the monthly interest rate of 3.5%, or
42% per annum unconscionable and thus reduces it to 12% per annum. This Court finds too the
penalty fee at the monthly rate of 5% (60% per annum) of the total amount due and demandable
principal plus interest, with interest not paid when due added to and becoming part of the principal
and likewise bearing interest at the same rate, compounded monthly603 unconscionable and reduces
it to a yearly rate of 12% of the amount due, to be computed from the time of demand.604 This
Court finds the attorneys fees of 25% of the principal, interests and interests thereon, and the
penalty fees unconscionable, and thus reduces the attorneys fees to 25% of the principal amount
only.605

596
Records, p. 38.
597
341 Phil. 261 (1997).
598
Records, p. 160.
599
Solid Homes, Inc. v. Court of Appeals, supra note 37 at 274-280.
600
Vide CIVIL CODE, Articles 1409 and 2088.
601
Vide CIVIL CODE, Articles 1229 and 2227; United Coconut Planters Bank v. Beluso, G.R. No. 159912,
August 17, 2007; 530 SCRA 567, 590; Poltan v. BPI Family Savings Bank, Inc., G.R. No. 164307, March 5,
2007, 517 SCRA 430, 444-446; Radiowealth Finance Co., Inc. v. International Corporate Bank, G.R. Nos.
77042-43, February 28, 1990, 182 SCRA 862, 868-869.
602
Vide Poltan v. BPI Family Savings Bank, Inc., G.R. No. 164307, March 5, 2007, 517 SCRA 430, 444-446.
603
Records, p. 41.
604
Vide United Coconut Planters Bank v. Beluso, G.R. No. 159912, August 17, 2007, 530 SCRA 567, 590, 604-
605.
605
Vide Titan Construction Corporation v. Uni-Field Enterprises, Inc., G.R. No. 153874, March 1, 2007, 517
SCRA 180, 190.

238
The prayer for accounting in petitioners complaint requires presentation of evidence, they
claiming to have made partial payments on their loans, vis a vis respondents denial thereof.606 A
remand of the case is thus in order.

Prescinding from the above disquisition, the trial court and the Court of Appeals erred in
holding that a summary judgment is proper. A summary judgment is permitted only if there is no
genuine issue as to any material fact and a moving party is entitled to a judgment as a matter of
law.607 A summary judgment is proper if, while the pleadings on their face appear to raise issues,
the affidavits, depositions, and admissions presented by the moving party show that such issues
are not genuine.608 A genuine issue, as opposed to a fictitious or contrived one, is an issue of fact
that requires the presentation of evidence.609 As mentioned above, petitioners prayer for
accounting requires the presentation of evidence on the issue of partial payment.

But neither is a judgment on the pleadings proper. A judgment on the pleadings may be
rendered only when an answer fails to tender an issue or otherwise admits the material allegations
of the adverse partys pleadings.610 In the case at bar, respondents Answer with Counterclaim
disputed petitioners claims that the Memorandum of Agreement and Dation in Payment are illegal
and that the extra charges on the loans are unconscionable.611 Respondent disputed too petitioners
allegation of bad faith.612

WHEREFORE, the challenged Court of Appeals Decision is REVERSED and SET


ASIDE. The Memorandum of Agreement and the Dacion in Payment executed by petitioner-
spouses Wilfredo N. Ong and Edna Sheila Paguio-Ong and respondent Roban Lending
Corporation on February 12, 2001 are declared NULL AND VOID for being pactum
commissorium.

606
Vide records, pp. 3, 51-52.
607
RULES OF COURT, Rule 35, Section 3; Pineda v. Heirs of Eliseo Guevarra, G.R. No. 143188, February
14, 2007, 515 SCRA 627, 638.
608
Vide Marcelo v. Sandiganbayan, G.R. No. 156605, August 28, 2007, 531 SCRA 385, 398.
609
Ibid.
610
RULES OF COURT, Rule 34, Section 1.
611
Records, pp. 53.
612
Id. at 51.

239
In line with the foregoing findings, the following terms of the loan contracts between the
parties are MODIFIED as follows:

1. The monthly interest rate of 3.5%, or 42% per annum, is reduced to 12% per
annum;

2. The monthly penalty fee of 5% of the total amount due and demandable is reduced
to 12% per annum, to be computed from the time of demand; and

3. The attorneys fees are reduced to 25% of the principal amount only.

Civil Case No. 9322 is REMANDED to the court of origin only for the purpose of
receiving evidence on petitioners prayer for accounting.

SO ORDERED.

CONCHITA CARPIO MORALES


Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING DANTE O. TINGA


Associate Justice Associate Justice
Chairperson

PRESBITERO J. VELASCO, JR. ARTURO D. BRION


Associate Justice Associate Justice

240
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.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons
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

241
SECOND DIVISION

[G.R. No. 138292. April 10, 2002]

KOREA EXCHANGE BANK, petitioner, vs. FILKOR BUSINESS INTEGRATED, INC.,


KIM EUNG JOE, and LEE HAN SANG, respondents.

DECISION
QUISUMBING, J.:

This petition assails the order613 dated April 16, 1999 of the Regional Trial Court of Cavite
City, Branch 88, in Civil Case No. N-6689. Said order denied petitioners partial motion for
reconsideration of the trial courts order614 dated March 12, 1999 whereby respondents were
ordered to pay petitioner various sums of U.S. dollars as payment of the formers various loans
with interest but omitted to state that the property mortgaged as security for said loans be
foreclosed and sold at public auction in case respondents fail to pay their obligations to petitioner
ninety days from entry of judgment.
The facts are summarized from the findings of the trial court.
On January 9, 1997, respondent Filkor Business Integrated, Inc. (Filkor), borrowed
US$140,000 from petitioner Korea Exchange Bank, payable on July 9, 1997. Of this amount, only
US$40,000 was paid by Filkor.615
In addition, Filkor executed nine trust receipts in favor of petitioner, from June 26, 1997 to
September 11, 1997. However, Filkor failed to turn over to petitioner the proceeds from the sale
of the goods, or the goods themselves as required by the trust receipts in case Filkor could not sell
them.616
In the period from June 9, 1997 to October 1, 1997, Filkor also negotiated to petitioner the
proceeds of seventeen letters of credit issued by the Republic Bank of New York and the Banque
Leumi France, S.A. to pay for goods which Filkor sold to Segerman International, Inc. and Davyco,
S.A. When petitioner tried to collect the proceeds of the letters of credit by presenting the bills of
exchange drawn to collect the proceeds, they were dishonored because of discrepancies.617
Prior to all the foregoing, in order to secure payment of all its obligations, Filkor executed a
Real Estate Mortgage on February 9, 1996. It mortgaged to petitioner the improvements belonging

613
Rollo, p. 155.
614
Id. at 141-151.
615
Id. at 141.
616
Id. at 141-142.
617
Id. at 142-145.

242
to it constructed on the lot it was leasing at the Cavite Export Processing Zone Authority.618
Respondents Kim Eung Joe and Lee Han Sang also executed Continuing Suretyships binding
themselves jointly and severally with respondent Filkor to pay for the latters obligations to
petitioner.619
As respondents failed to make good on their obligations, petitioner filed Civil Case No. N-
6689 in the Regional Trial Court of Cavite City, docketed as Korea Exchange Bank vs. Filkor
Business Integrated, Inc. In its complaint, petitioner prayed that (a) it be paid by respondents under
its twenty-seven causes of action; (b) the property mortgaged be foreclosed and sold at public
auction in case respondents failed to pay petitioner within ninety days from entry of judgment; and
(c) other reliefs just and equitable be granted.620
Petitioner moved for summary judgment pursuant to Section 1, Rule 35 of the 1997 Rules of
Civil Procedure. On March 12, 1999, the trial court rendered its order granting petitioners motion,
reasoning as follows:
xxx
It appears that the only reason defendants deny all the material allegations in the
complaint is because the documents attached thereto are mere photocopies and not the
originals thereof. Section 7, Rule 8 of the Rules of Court allows copies of documents to
be attached to the pleading as an exhibit. Defendants are, therefore, deemed to have
admitted the genuineness and due execution of all actionable documents attached to the
complaint inasmuch as they were not specifically denied, pursuant to Section 8 of the
Rule 8 of the Rules of Court.
In the case at bar, there is clearly no substantial triable issue, hence, the motion for
summary judgment filed by plaintiff is proper.
A summary of judgment is one granted by the court upon motion by a party for an
expeditious settlement of the case, there appearing from the pleadings, depositions,
admissions and affidavits that there are no important questions or issues of fact involved
(except as to the amount of damages) and that, therefore, the moving party is entitled to
a judgment as a matter of law (Sections 1, 2, 3, Rule 35, 1997 Rules of Civil Procedure).
The court having taken into account the pleadings of the parties as well as the
affidavits attached to the motion for summary judgment and having found that there is
indeed no genuine issue as to any material fact and that plaintiff is entitled to a summary
of judgment as a matter of law, hereby renders judgment for the plaintiff and against the
defendants, ordering said defendants jointly and severally to pay plaintiff, as follows621
The trial court then rendered judgment in favor of petitioner, granting its prayers under all its
twenty-seven causes of action. It, however, failed to order that the property mortgaged by
respondent Filkor be foreclosed and sold at public auction in the event that Filkor fails to pay its

618
Id. at 146.
619
Ibid.
620
Id. at 56-61.
621
Id. at 147-148.

243
obligations to petitioner.
Petitioner filed a motion for partial reconsideration of the trial courts order, praying that the
aforesaid relief of foreclosure and sale at public auction be granted. In an order dated April 16,
1999, the trial court denied petitioners motion, ruling as follows:
Plaintiff, in opting to file a civil action for the collection of defendants obligations,
has abandoned its mortgage lien on the property subject of the real estate mortgage.
The issue has already been resolved in Danao vs. Court of Appeals, 154 SCRA 446,
citing Manila Trading and Supply Co. vs. Co Kim, et al., 71 Phil. 448, where the Supreme
Court ruled that:
The rule is now settled that a mortgage creditor may elect to waive his
security and bring, instead, an ordinary action to recover the indebtedness with
the right to execute a judgment thereon on all the properties of the debtor
including the subject matter of the mortgage, subject to the qualification that if
he fails in the remedy by him elected, he cannot pursue further the remedy he
has waived.
WHEREFORE, the Partial Motion for Reconsideration filed by the plaintiff of the
Courts Order dated March 12, 1999 is hereby denied for lack of merit.
SO ORDERED.622
Hence, the present petition, where petitioner ascribes the following error to the trial court.
THE REGIONAL TRIAL COURT OF CAVITE CITY ERRED IN RULING THAT
PETITIONER HAD ABANDONED THE REAL ESTATE MORTGAGE IN ITS
FAVOR, BECAUSE IT FILED A SIMPLE COLLECTION CASE.623
The resultant issue is whether or not petitioners complaint before the trial court was an action
for foreclosure of a real estate mortgage, or an action for collection of a sum of money. In addition,
we must also determine if the present appeal was correctly lodged before us rather than with the
Court of Appeals.
In petitioners complaint before the trial court, Paragraph 183 thereof alleges:
183. To secure payment of the obligations of defendant Corporation under the First
to the Twenty-Seventh Cause of Action, on February 9, 1996, defendant Corporation
executed a Real Estate Mortgage by virtue of which it mortgaged to plaintiff the
improvements standing on Block 13, Lot 1, Cavite Export Processing Zone, Rosario,
Cavite, belonging to defendant Corporation covered by Tax Declaration No. 5906-1 and
consisting of a one-story building called warehouse and spooling area, the guardhouse,
the cutting/sewing area building and the packing area building. (A copy of the Real Estate
Mortgage is attached hereto as Annex SS and made an integral part hereof.)624

622
Id. at 155.
623
Id. at 4.
624
Id. at 54.

244
This allegation satisfies in part the requirements of Section 1, Rule 68 of the 1997 Rules of
Civil Procedure on foreclosure of real estate mortgage, which provides:
SECTION 1. Complaint in action for foreclosure. In an action for the foreclosure of
a mortgage or other encumbrance upon real estate, the complaint shall set forth the date
and due execution of the mortgage; its assignments, if any; the names and residences of
the mortgagor and the mortgagee; a description of the mortgaged property; a statement
of the date of the note or other documentary evidence of the obligation secured by the
mortgage, the amount claimed to be unpaid thereon; and the names and residences of all
persons having or claiming an interest in the property subordinate in right to that of the
holder of the mortgage, all of whom shall be made defendants in the action.
In Paragraph 183 above, the date and due execution of the real estate mortgage are alleged.
The properties mortgaged are stated and described therein as well. In addition, the names and
residences of respondent Filkor, as mortgagor, and of petitioner, as mortgagee, are alleged in
paragraphs 1 and 2 of the complaint.625 The dates of the obligations secured by the mortgage and
the amounts unpaid thereon are alleged in petitioners first to twenty-seventh causes of action.626
Moreover, the very prayer of the complaint before the trial court reads as follows:
WHEREFORE, it is respectfully prayed that judgment be rendered:
xxx
2. Ordering that the property mortgaged be foreclosed and sold at public auction in
case defendants fail to pay plaintiff within ninety (90) days from entry of judgment.
x x x627
Petitioners allegations in its complaint, and its prayer that the mortgaged property be
foreclosed and sold at public auction, indicate that petitioners action was one for foreclosure of
real estate mortgage. We have consistently ruled that what determines the nature of an action, as
well as which court or body has jurisdiction over it, are the allegations of the complaint and the
character of the relief sought.628 In addition, we find no indication whatsoever that petitioner had
waived its rights under the real estate mortgage executed in its favor. Thus, the trial court erred in
concluding that petitioner had abandoned its mortgage lien on Filkors property, and that what it
had filed was an action for collection of a sum of money.
Petitioners action being one for foreclosure of real estate mortgage, it was incumbent upon
the trial court to order that the mortgaged property be foreclosed and sold at public auction in the
event that respondent Filkor fails to pay its outstanding obligations. This is pursuant to Section 2

625
Id. at 12.
626
Id. at 13-54.
627
Id. at 56-61.
628
Union Bank of the Philippines vs. Court of Appeals, G.R. No. 131729, 290 SCRA 198, 218 (1998); Javelosa vs.
Court of Appeals, G.R. No. 124292, 265 SCRA 493 (1996); Amigo vs. Court of Appeals, et al., G.R. No. 102833, 253
SCRA 382 (1996); Caiza vs. Court of Appeals, G.R. No. 110427, 268 SCRA 640 (1997); Bernarte vs. Court of
Appeals, et al., G.R. No. 107741, 263 SCRA 323 (1996); Bernardo Sr., et al. vs. Court of Appeals, et al., G.R. No.
120730, 263 SCRA 660 (1996).

245
of Rule 68 of the 1997 Rules of Civil Procedure, which provides:
SEC. 2. Judgment on foreclosure for payment or sale.- If upon the trial in such action
the court shall find the facts set forth in the complaint to be true, it shall ascertain the
amount due to the plaintiff upon the mortgage debt or obligation, including interest and
other charges as approved by the court, and costs, and shall render judgment for the sum
so found due and order that the same be paid to the court or to the judgment obligee
within a period of not less than ninety (90) days nor more than one hundred twenty (120)
days from entry of judgment, and that in default of such payment the property shall be
sold at public auction to satisfy the judgment. (Italics supplied.)
Accordingly, the dispositive portion of the decision of the trial court dated March 12, 1999,
must be modified to comply with the provisions of Section 2 of Rule 68 of the 1997 Rules of Civil
Procedure. This modification is subject to any appeal filed by respondents of said decision.
On the propriety of the present appeal, we note that what petitioner impugns is the
determination by the trial court of the nature of action filed by petitioner, based on the allegations
in the complaint. Such a determination as to the correctness of the conclusions drawn from the
pleadings undoubtedly involves a question of law.629 As the present appeal involves a question of
law, petitioner appropriately filed it with this Court, pursuant to Section 1 of Rule 45 of the 1997
Rules of Civil Procedure, which provides:
SECTION 1. Filing of petition with Supreme Court. A party desiring to appeal by
certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on certiorari. The petition
shall raise only questions of law which must be distinctly set forth. (Italics supplied).
There is no dispute with respect to the fact that when an appeal raises only pure questions of
law, this Court has jurisdiction to entertain the same.630
WHEREFORE, the petition is GRANTED. The Order dated March 12, 1999, of the Regional
Trial Court of Cavite City, Branch 88, in Civil Case No. N-6689 is hereby MODIFIED, to state
that the mortgaged property of respondent Filkor be ordered foreclosed and sold at public auction
in the event said respondent fails to pay its obligations to petitioner within ninety (90) days from
entry of judgment.
No pronouncement as to costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, and De Leon, Jr., JJ., concur.

629
Martin, Rules of Court of the Philippines, Vol. 1, 945 (1989 ed.).
630
Far East Marble (Phils.), Inc. vs. Court of Appeals, G.R. No. 94093, 225 SCRA 249, 255 (1993).

246
FIRST DIVISION

MARITIMEINDUSTRY AUTHORITY G.R. No. 173128


(MARINA) and/or ATTY. OSCAR M. SEVILLA,
Petitioners, Present:

CORONA, C.J.,
Chairperson,
- versus - LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

MARC PROPERTIES CORPORATION, Promulgated:


Respondent.
February 15, 2012
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari under Rule 45 which seeks to reverse the
Decision631 dated June 2, 2006 of the Court of Appeals (CA) in CA-G.R. CV No. 80967. The CA
dismissed petitioners appeal questioning the summary judgment rendered by the trial court which
ordered petitioner to reimburse the expenses incurred by the respondent for repair/renovation
works on its building.

The factual antecedents:

On October 23, 2001, petitioner Maritime Industry Authority (MARINA), a government


agency represented by then Administrator and concurrently Vice-Chairman of the Board of
Directors Oscar M. Sevilla, entered into a Contract of Lease632 with respondent Marc Properties
Corporation represented by its Executive Vice-President Ericson M. Marquez. It was agreed that
the MARINA offices will be transferred from PPL Building, Taft Avenue, Manila to an eight-

631
Rollo, pp. 36-44. Penned by Associate Justice Andres B. Reyes, Jr. (now Presiding Justice) with Associate Justices
Regalado E. Maambong and Monina Arevalo-Zenarosa concurring.
632
Records, pp. 122-129.

247
storey commercial building (MARC Building) and Condominium Unit 5 of MARC 2000 Tower
which are both owned by respondent. The parties fixed the monthly rental at P1,263,607.74 (plus
VAT) from January 1, 2002 up to December 31, 2002 and renewable for the same one-year period.
The Contract of Lease also contained the following provisions:

Article II

xxxx

Section 2.01 - The LESSEE, at its own expense, shall have the right and
authority to alter, renovate and introduce in the leased premises such improvement
as it may deem appropriate to render the place suitable for the purpose intended by
the LESSEE, provided, that such alteration, renovation and construction of
additional improvement will not cause any damage to the buildings and such
improvements shall be in accordance with the LESSORs House Rules &
Regulations. The renovation of existing electrical, sanitary/plumbing works,
sprinkler systems, mechanical works, exhaust and ventilation systems, doors, will
be referred to the Administration Office of the LESSOR and will be done only by
the original contractors of the system and cost will be for the account of the
LESSEE. Alternatively, the LESSEE may be allowed to use its own contractor but
subject to close supervision and approval of all works done by the original
contractors of the system and/or the Building Administration. This is to safeguard
the original design intent of the Buildings.

Article IX

Section 9.00 - The LESSEE may pre-terminate the term of this Contract of
Lease by notifying the LESSOR in writing at least ninety (90) days prior to
LESSEES vacating the premises, provided further that the LESSEE shall pay to the
LESSOR a penalty equivalent to two (2) months rental.

Article XI

xxxx

Section 11.13 - This Contract of Lease is subject to the approval of the


Board of Directors of the Maritime Industry Authority and the Office of the
President and shall become binding on both parties only after its approval by the
above-mentioned government offices. The LESSEE shall provide the LESSOR the
written approval of both offices.633

633
Id. at 123, 126 & 128.

248
On December 14, 2001, respondent received a letter from Administrator Sevilla requesting
for rescission of their Contract of Lease for the reason that the MARINA Board of Directors during
its 158th Regular Meeting resolved to deny the proposed transfer of the MARINA office from its
present address to respondents building.634 In its letter-reply dated December 17, 2001, respondent
expressed disappointment and enumerated those facts and circumstances for which respondent
believes that the Boards decision was unreasonable. Respondent asserted that if the Board will not
reconsider its decision, MARINA must take responsibility for the cost already incurred by
respondent as damages and lost rental opportunity. Thus, respondent said it can only accept the
request for rescission upon reimbursement of P1,055,000.00 representing the amount advanced by
respondent and paid to its Contractors and payment of penalty equivalent to 2 months rental or
P2,527,215.48 in accordance with Art. IX, Sec. 9.00 of the Contract of Lease. With no immediate
response from petitioners, respondent again wrote Administrator Sevilla reiterating its position on
the matter.635

In their letter-reply dated January 23, 2002, petitioners asserted that MARINA is not liable
to pay the penalty considering that the Contract of Lease clearly provides that it is subject to the
approval of the Board and the Office of the President (OP) to become binding on the parties. As
to the actual amount expended for carpentry and electrical works done on the building, petitioners
requested to be furnished with copies of the official receipts so that it may be properly guided in
the disposition thereof. In compliance, respondent furnished petitioners with copies of the letter
and accomplishment reports/official receipts submitted by its contractors. Respondents counsel
faulted Administrator Sevilla for not submitting the Contract of Lease to the Board of Directors
notwithstanding the fact that respondent had filed a motion for reconsideration of the Boards
decision, a clear breach of petitioners contractual obligation which entitles respondent to the
penalty and damages sought. Petitioners asserted that MARINA is not liable for penalty and
damages since the Contract of Lease was not perfected; however, Administrator Sevilla reiterated
MARINAs commitment to pay actual expenses incurred for the works done on the premises based
on [MARINAs] request. Petitioners likewise furnished respondent with copies of the Agenda of
the 160th Regular Meeting of the MARINA Board of Directors held on June 28, 2002 and

634
Id. at 130.
635
Id. at 195-197.

249
Secretarys Certificate dated July 1, 2002 stating the resolution of the MARINA Board not to
approve/ratify the Contract of Lease.636

On July 10, 2002, respondent instituted Civil Case No. 02-104015 in the Regional Trial
Court of Manila (Branch 42) against petitioners MARINA and/or Atty. Oscar M. Sevilla. The
Complaint alleged the following:

xxxx

2. In or about the first week of August 2001 the herein [defendant] Atty.
Oscar M. Sevilla, as MARINA Administrator, represented to Mr. Ericson M.
Marquez, Executive Vice-President of herein [plaintiff] MARC, that the MARINA
has decided to terminate its lease on the 4th, 5th and 6th floors of the PPL Building
and to transfer said principal office to a new location; to this end, he negotiated for
the lease to MARINA of the entire 8-storey Marc Building, located at 1971 Taft
Avenue, Malate, Manila, and Unit #5 of the adjacent Marc 2000 Tower, both of
which belong to herein plaintiff MARC.

3. After about three (3) months of negotiations and after the terms and
conditions of the lease of said properties of herein plaintiff were ironed out with the
understanding that these were with the prior knowledge and consent of the
MARINA, a Contract of Lease on said 8-storey MARC Building and Unit #5 of the
Marc 2000 Tower was executed and signed x x x.

3.a. As a corollary to said contract, herein defendant Atty. Oscar M.


Sevilla wrote a letter, dated October 30, 2001, addressed to Mr. Emilio C.
Yap, informing the latter that Pursuant to Section 4 of the Contract of Lease
for the Fourth, Fifth and Sixth floors of the PPL Bldg., which floors we are
presently occupying, we regret to inform you that MARINA is not renewing
said Lease Contract beginning January 2002.

4. To prepare for the occupancy on January 1, 2002 of the leased properties,


herein defendants requested that alterations/renovations be made on plaintiffs
MARC Building for the account and at the expense of the MARINA, in accordance
with plans prepared and provided by Mr. Roberto C. Arceo, Administrative and
Finance Director of MARINA; and, pursuant to said request alterations/renovations
started on December 5, 2001 and was done by the lowest bidders, JTV Construction
Group, Inc., for civil works/renovations, and NCC Communication Networks, for
wiring and cable installation, for which MARC advanced/paid the sum of
P1,555,170.40.

5. The said Contract of Lease of the MARINA with MARC stipulated in


Sec. 11.13 of Article XI thereof that said contract is subject to the approval of the
636
Id. at 198-207, 212-222.

250
Board of Directors of the MARINA and the Office of the President of the
Philippines and shall become binding on both parties after its approval by the afore-
mentioned government offices, which stipulation, therefore, carries with it the
obligation on the part of the MARINA Administrator, Atty. Oscar M. Sevilla, to
submit the said contract to the said Board for approval or disapproval; however,
in breach of said stipulation, he did not do so.

5.a. On the contrary, in a letter addressed to Mr. Ericson Marquez,


dated December 14, 2001, the MARINA Administrator, Atty. Oscar M.
Sevilla, requested the rescission of the said Contract of Lease and, as
justification, he falsely asserted, that during yesterdays 158th Regular
Meeting of the MARINA Board held at the MARINA Conference Room,
the Board resolved to DENY the proposed transfer of the MARINA from
its present address to your owned building, when in truth and in fact, neither
the said transfer nor the said Contract of Lease was included in the agenda
or taken up during the said 158th Regular Meeting held on December 13,
2001.

5.b. Neither was said Contract of Lease taken up in said Boards next
regular meeting held on February 21, 2002 notwithstanding the fact that
MARC filed a Motion for Reconsideration, dated February 14, 2002, which
provided the MARINA Administrator with another opportunity to submit
the said contract to the MARINA Board for its consideration; yet, he again
did not do so.

6. The breach on the part of the defendants of the stipulation clearly


provided in the said Contract of Lease, alleged in paragraph 5 hereof, resulted in
damages to the plaintiff which may be compensated with the sum of P2,527,215.48
equivalent to two (2) months rental, - the measure of damages provided for in said
contract.

x x x x637 (Italics supplied.)

Petitioners through the Solicitor General filed their Answer638 specifically denying the
foregoing allegations. Petitioners argued that respondents demand for P2,527,215.48 is based
solely on Art. V, Sec. 5.0 of the Contract of Lease, which provision presupposes the approval of
the contract which is subject to the suspensive condition provided in Art. XI, Sec. 11.13. Petitioners
contended that by claiming that there was no reason to reject the Contract of Lease considering the
clear advantages of approving the same, respondent is effectively imposing its judgment on the
Board of Directors and the OP; this simply cannot be done. Petitioners pointed out that the approval

637
Id. at 2-4.
638
Id. at 40-52.

251
or rejection of the contract is a prerogative lodged solely on the said authorities and respondent is
devoid of any authority to question the wisdom of the Boards rejection of the contract as obviously
there were other considerations -- to which respondent is not privy -- factored in by the Board in
its decision. Lastly, petitioners asserted that this being a suit against the State, it must be dismissed
outright as there was no allegation in the complaint that the State had given its consent to be sued
in this case.

Respondent filed a motion for summary judgment in its favor contending that there is no
genuine issue in this case as to any material fact even as to the amount of damages. Petitioners
filed their opposition alleging the existence of genuine factual issues which can only be resolved
in a full-blown trial on the merits.

On March 5, 2003, the trial court issued an Order639 granting in part the motion for
summary judgment. Citing petitioners admission in the Answer that Administrator Sevilla, as an
act of good faith, offered in behalf of MARINA to shoulder the actual expenses incurred for the
works done on the premises based on their request, as well as the other proofs/official receipts
submitted by respondent and the January 23, 2002, May 13, 2002 and July 1, 2002 letters of
Administrator Sevilla who promised or at least gave the impression that respondent will be
reimbursed by MARINA of the amount of P1,555,170.40, the trial court ruled that summary
judgment for the said claim is proper. Accordingly, the trial court ordered:

WHEREFORE, in view of all the foregoing, the motion for summary


judgment is partly granted. The defendants are directed to jointly and severally pay
the plaintiff the sum of P1,555,170.40 as reimbursement of the expenses it incurred
in the repairs/renovations of the MARC Building with legal interest from the filing
(July 10, 2002) of the complaint. In so far as the other claims of plaintiff, the motion
for summary judgment is denied.

SO ORDERED.640

Respondent then moved to set the case for pre-trial, which was granted. Meanwhile,
petitioners filed a motion for reconsideration641 of the March 5, 2003 Order arguing that while

639
Id. at 250-252. Penned by Judge Guillermo G. Purganan.
640
Id. at 252.
641
Id. at 260-268.

252
admittedly they had offered to pay the respondent reimbursement for the alterations/renovations
made on its building as shown by the afore-mentioned letters of Administrator Sevilla, petitioners
did not admit that such alterations/renovations which respondent claims to have been prosecuted
on the MARC Building were actually made thereon and that such changes were in fact in
accordance with the plans prepared and provided for by MARINA. Petitioners stressed that these
factual matters are still to be determined which can only be done through a full-blown trial; the
reimbursable amount being also subject to verification since petitioners have not yet been given
the opportunity to independently confirm such amount. Further, it was contended that respondents
submission of accomplishment reports on the alterations/renovation works it claims to have been
done and the amount it allegedly expended do not automatically establish petitioners liability for
the same. Petitioners subsequently requested that the scheduled pre-trial be cancelled pending
resolution of their motion for reconsideration of the March 5, 2003 Order.642

In its Order643 dated June 30, 2003, the trial court denied petitioners motion for
reconsideration, as follows:

As correctly observed by the plaintiff the answer raises issues which are
sham or not genuine. In their answer[,] defendants did not specifically allege what
were not done in plaintiffs MARC Building or what were done therein which were
not in accordance with the plan. Neither did defendants specifically alleged in their
answer what amount covered by the receipts of the contractors is not reimbursable.

xxxx

The defendants opted not to file opposing or counter affidavits. Thus, there
is no proof what works were done in the MARC Building which was not in
accordance with the plan submitted by MARINA. Neither is there proof that the
amounts covered by the receipts of the contracts include amounts which were not
for works done in said MARC Building.

Anent the alleged lack of opportunity for defendants to confirm the amount
demanded by the plaintiff. From May 31, 2002 when defendants received copies of
the receipts issued by the contractors up to the time they filed their Answer dated
October 14, 2002, four and a half (4 ) months elapsed, during which defendants
have had full opportunity to verify the correctness of said receipts. Thereafter,
another four (4) months elapsed up to the time plaintiffs motion for summary
judgment was set for hearing on January 10, 2003. There were, therefore, a total of

642
Id. at 301-303.
643
Id. at 312-313.

253
8 months during which defendants could have verified the correctness of the
amounts covered by said receipts.

WHEREFORE, in view of all the foregoing, the motion for reconsideration


is denied.

SO ORDERED.644

The Office of the Solicitor General received a copy of the above order on July 14, 2003.
On July 18, 2003, the Solicitor General filed a notice of appeal. Said notice of appeal was later
withdrawn upon manifestation by the Solicitor General that since the March 5, 2003 Order is a
partial summary judgment, the same is interlocutory and not appealable, without prejudice to
petitioners availment of the appropriate remedy from the said ruling.645

On the scheduled pre-trial hearing on July 3, 2003, counsel for petitioners appeared but
without a special power of attorney as directed in the Notice of Pre-Trial. On motion of the
respondent, the trial court declared petitioners as in default and allowed the respondent to present
its evidence ex-parte.646 Petitioners filed a motion for reconsideration claiming that the scheduled
pre-trial was premature considering the pendency of their motion for reconsideration of the March
5, 2003 Order, and invoking the liberal policy on setting aside default orders. The trial court,
however denied said motion for reconsideration.647

Petitioners sought relief from the CA by filing a petition for certiorari with prayer for
issuance of TRO and/or writ of preliminary injunction (CA-G.R. SP No. 79343). Petitioners asked
the appellate court to hold in abeyance the proceedings in Civil Case No. 02-104015. Apparently,
however, petitioners urgent motion for the issuance of TRO was not acted upon by the CA. After
admission of the documentary exhibits identified by Ericson Marquez and formally offered in
evidence, and there being no restraining order issued by the appellate court, the case was deemed
submitted for decision.648

644
Id. at 313.
645
Id. at 317, 336-340, 346.
646
Id. at 314.
647
Id. at 323-329, 335.
648
Id. at 353-357, 363-368.

254
On December 1, 2003, the trial court rendered its Decision649 upholding the March 5, 2003
order granting the prayer for reimbursement but denying the rest of respondents claims. The
dispositive portion thereof reads:

WHEREFORE, premises considered, except for the amount of


Php1,555,170.40 representing reimbursement of the renovations advanced by the
plaintiff which this Court had already awarded in the Order dated March 5, 2003,
the rest of the plaintiffs claims vis--vis unpaid rentals of Php 2,527,215.48 together
with interest thereon at the legal rate as well as attorneys fees are hereby dismissed
for lack of factual and legal basis.

No pronouncement as to costs.

SO ORDERED.650

Both parties appealed the trial courts decision (CA-G.R. CV No. 80967).651However,
respondents appeal was dismissed for non-payment of appellate docket and other legal fees.
Respondent challenged the said dismissal before this Court in a petition for certiorari and
mandamus (G.R. No. 165110). G.R. No. 165110 was likewise dismissed under Resolution dated
October 6, 2004 of this Courts Third Division.652

By Decision dated June 2, 2006, the CA dismissed petitioners appeal holding that the trial
courts rendition of partial summary judgment was inaccord with Section 1, Rule 35 of the 1997
Rules of Civil Procedure, as amended, as it was based on petitioners admission in their Answer.
In rejecting petitioners argument that they raised a genuine factual issue as to the reimbursable
amount for the renovation works, the CA stated:

As to the contention that defendant-appellant is entitled to verify first the


authenticity, genuineness and due execution of the documents (e.g., receipts)
relative to the renovation, suffice it to note that plaintiff-appellee had offered its
evidence on 13 December 2002 or three (3) months prior to the issuance of the
contested order. Yet, defendant-appellant has never lift its finger to challenge the
authenticity, genuineness, and due execution of the said documents. For this failure,
it is established beyond cavil that there is no genuine issue as to any material fact
warranting thereby the issuance of a summary judgment.653

649
Id. at 376-382. Penned by Judge Guillermo G. Purganan.
650
Id. at 382.
651
Id. at 384-394.
652
CA rollo, pp. 26, 52,194-196.
653
Rollo, pp. 43-44.

255
Hence, this petition raising the sole issue of whether the CA was correct in sustaining the
trial courts order granting the motion for partial summary judgment thereby dispensing with a full
trial on respondents claim for reimbursement of P1,555,170.40, the amount allegedly advanced by
respondent for the repair/renovation works on its building. With the previous dismissal by the CA
of respondents appeal and its petition for certiorari in this Court, the present petition is thus
confined to the propriety of the trial courts partial summary judgment insofar as the aforesaid claim
for reimbursement.

We find the petition meritorious.

Sections 1 and 3, Rule 35 of the 1997 Rules of Civil Procedure, as amended, provide:

SECTION 1. Summary judgment for claimant. A party seeking to recover


upon a claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at
any time after the pleading in answer thereto has been served, move with supporting
affidavits, depositions or admissions for a summary judgment in his favor upon all
or any part thereof.

SECTION 3. Motion and proceedings thereon. The motion shall be served


at least ten (10) days before the time specified for the hearing. The adverse party
may serve opposing affidavits, depositions or admissions at least three (3) days
before the hearing. After the hearing, the judgment sought shall be rendered
forthwith if the pleadings, supporting affidavits, depositions, and admissions on
file, show that, except as to the amount of damages, there is no genuine issue
as to anymaterial fact and that the moving party is entitled to a judgment as a
matter of law. (Emphasis supplied.)

Summary judgment is a procedural device resorted to in order to avoid long drawn out
litigations and useless delays where the pleadings on file show that there are no genuine issues of
fact to be tried.654A genuine issue is such issue of fact which require the presentation of evidence
as distinguished from a sham, fictitious, contrived or false claim.655There can be no summary
judgment where questions of fact are in issue or where material allegations of the pleadings are in
dispute.656 A party who moves for summary judgment has the burden of demonstrating clearly the

654
Solidbank Corporation v. Court of Appeals, G.R. No. 120010, October 3, 2002, 390 SCRA 241, 249.
655
Id., citing Evadel Realty and Development Corporation v. Soriano, G.R. No. 144291, April 20, 2001, 357 SCRA
395, 401.
656
Manufacturers Hanover Trust Co. v. Guerrero, G.R. No. 136804, February 19, 2003, 397 SCRA 709, 715.

256
absence of any genuine issue of fact, or that the issue posed in the complaint is so patently
unsubstantial as not to constitute a genuine issue for trial, and any doubt as to the existence of such
an issue is resolved against the movant.657

Contrary to the findings of the trial court and CA, the Answer filed by petitioners contained
a specific denial of absolute liability for the amount being claimed as actual expenses for
repairs/renovations works done on repondents building after the execution of the Contract of
Lease.

5. SPECIFICALLY DENY the allegation in paragraph 4 of the complaint


that MARINA requested for alterations/renovations in accordance with the plans
prepared by MARINA on the MARC building for the account of and at the expense
of MARINA, the truth being those stated in the Special and Affirmative Defenses
hereof. They likewise SPECIFICALLY DENY the rest of the allegations therein
that said request alterations/renovations started on December 5, 2001 and was done
by the lowest bidders, JTV Construction Group, Inc., for civil works/renovations
and NCC Communication Networks, for wiring and cable installation, for whcih
plaintiff allegedly advanced/paid the sum of P1,555,170.40 for lack of knowledge
or information sufficient to form a belief as to the truth thereof.

xxxx

13. As an act of good faith, Atty. Sevilla, in behalf of MARINA, has offered
to shoulder and pay the actual expenses incurred for the works done on the premises
based on MARINAs request. Moreover, defendants cannot allow plaintiff to collect
from them the additional sum of P2,527,215.48 which is equivalent to two (2)
months rental as penalty simply because there is no justification therefor.

x x x x658

Furthermore, petitioners averred in their Opposition to Plaintiffs Motion for Summary


Judgment in Favor of Plaintiff:

With regard to the claim for reimbursement, plaintiff has yet to conclusively
prove that the alterations/renovations it claims to have been made in its building
were actually made and that the same were actually in accordance with the alleged
request made by MARINA.

657
Go v. Court of Appeals, G.R. No. 120040, January 29, 1996, 252 SCRA 564, 569.
658
Records, pp. 41-42, 49.

257
The reply-letter dated January 23, 2002 of defendant Sevilla in response to
the letters of Ericson Marquez dated December 17, 2001 and January 18, 2002,
demanding reimbursements of the alterations/renovation allegedly made upon its
building, shows that it merely required Marquez to show proof or receipt of the
expenses plaintiff alleges it had incurred.

Likewise, the letter of defendant Sevilla dated July 1, 2002, this time in
response to a similar demand letter made by plaintiffs counsel, Atty. Antonio
Atienza, simply stated that defendants have committed themselves to pay the actual
expenses incurred by plaintiff as based on MARINAs request. The same offer
was reiterated by defendants in paragraph 13 of their answer to plaintiffs complaint.
It must be noted, however, that said offer specifically pertains only to
alterations/renovations which were actually made on plaintiffs properties in
accordance with MARINAs request.

Verily, defendants have yet to actually acquiesce to the veracity of the


accomplishment reports, receipt, etc. submitted by plaintiff since the same are still
subject to verification which can only be achieved through a full-blown trial.659
(Emphasis and underscoring in the original.)

As can be gleaned, the fact that Administrator Sevilla sent respondent letters wherein
MARINA offered to shoulder actual expenses for works done on the premises based on MARINAs
request does not necessarily mean that petitioners had waived their right to question the
amountbeing claimed by the respondent.660Since the factual basis of the claim for reimbursement
was not admitted by the petitioners, it is clear that the resolution of the question of actual works
done based on MARINAs request, as well as the correctness of the amount actually spent by
respondent for the purpose, required a trial for the presentation of testimonial and documentary
evidence to support such claim. The trial court therefore erred in granting summary judgment for
the respondent. The averments in the answer and opposition clearly pose factual issues and hence
rendition of summary judgment would be improper.

It must be stressed that trial courts have limited authority to render summary judgments
and may do so only when there is clearly no genuine issue as to any material fact. When the facts
as pleaded by the parties are disputed or contested, proceedings for summary judgment cannot take
the place of trial.661As already stated, the burden of demonstrating clearly the absence of genuine

659
Id. at 237-238.
660
See D.M. Consunji, Inc. v. Duvaz Corporation, G.R. No. 155174, August 4, 2009, 595 SCRA 111, 123.
661
Asian Construction and Development Corporation v. Philippine Commercial International Bank, G.R. No.
153827, April 25, 2006, 488 SCRA 192, 203.

258
issues of fact rests upon the movant, in this case the respondent, and not upon petitioners who
opposed the motion for summary judgment. Any doubt as to the propriety of the rendition of a
summary judgment must thus be resolved against the respondent. But here, the partial summary
judgment was premised merely on the trial courts hasty conclusion that respondent is entitled to
the reimbursement sought simply because petitioners failed to point out what particular works
were not done or implemented not in accordance with MARINAs specifications after demands
were made by respondent and the filing of the complaint in court. Precisely, a trial is conducted
after the issues have been joined to enable herein respondent to prove, first, that repair/renovation
works were actually done and such were in accordance with MARINAs request, and second, that
it actually advanced the cost thereof by paying the contractors; and more importantly, to provide
opportunity for the petitioners to scrutinize respondents evidence, cross-examine its witnesses and
present rebuttal evidence. Moreover, the trial court should have been more circumspect in ruling
on the motion for summary judgment, taking into account petitioners concern for judicious
expenditure of public funds in settling its liabilities to respondent.

The partial summary judgment rendered under the trial courts Order dated March 5, 2003
being a nullity, the case should be remanded to saidcourt for the conduct of trial on the issue of the
reimbursement of expenses for repair/renovation works being claimed by the respondent. For this
purpose, petitioners shall be afforded fair opportunity to scrutinize the respondents evidence,
cross-examine its witnesses and present controverting evidence. It is to be noted that the partial
summary judgment was rendered before petitioners were declared non-suited. Petitioners had
promptly challenged the validity of the default order and even sought an injunction against the ex-
parte presentation of evidence by the respondent; however, the CA did not act on the matter until
the rendition of the trial courts December 1, 2003 Decision. Substantial justice in this instance can
best be served if a full opportunity is given to both parties to litigate their dispute and submit the
merits of their respective positions.662

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated
June 2, 2006 of the Court of Appeals in CA-G.R. CV No. 80967 is REVERSED and SET ASIDE.
The Decision dated December 1, 2003 insofar only as it upheld the Order dated March 5, 2003 of

662
Bahia Shipping Services, Inc. v. Mosquera, G.R. No. 153432, February 18, 2004, 423 SCRA 305, 308.

259
the Regional Trial Court of Manila, Branch 42, is SET ASIDE. The case is hereby REMANDED
to the said court for further proceedings.

No costs.

SO ORDERED.

MARTIN S. VILLARAMA, JR.


Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO LUCAS P. BERSAMIN


Associate Justice Associate Justice

MARIANO C. DEL CASTILLO


Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the 1987 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.
260
RENATO C. CORONA
Chief Justice

261
THIRD DIVISION

[G.R. No. 150922. September 21, 2004]

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner, vs. PHILIPPINE


VILLAGE HOTEL, INC., respondent.

DECISION
PANGANIBAN, J.:

Basic is the rule that a partial summary judgment is an interlocutory order, because it does not
completely and finally dispose of a litigation. That the case below has been needlessly delayed is
due to the error of petitioner itself in its choice of remedy. It cannot blame the Court of Appeals
for the delay, because the latter was merely following proper procedures, for which it cannot be
faulted.

The Case

Before us is a Petition for Review663 under Rule 45 of the Rules of Court, challenging the July
24, 2001 Decision664 and the November 22, 2001 Resolution665 of the Court of Appeals (CA) in
CA-GR CV No. 61355. The assailed Decision disposed as follows:
WHEREFORE, premises considered, this Court DISMISSES the appeal without
prejudice.666
The assailed Resolution denied petitioners Motion for Reconsideration.

The Facts

The antecedent facts are summarized by the appellate court as follows:


x x x. [Respondent] Philippine Village Hotel, Inc. (PVHI) has several outstanding
accounts totalling P152 million in favor of [petitioner] Government Service Insurance

663
Rollo, pp. 11-39.
Id., pp. 41-47. Second Division. Penned by Justice Hilarion L. Aquino with the concurrence of Justices Ma. Alicia
664

Austria-Martinez (Division chairman of the CA and now a member of this Court) and Jose L. Sabio Jr. (member).
665
Id., pp. 49-50.
666
Assailed CA Decision, p. 6; rollo, p. 46.

262
System (GSIS). Due to PVHIs default in its monthly amortization, [petitioner] on April
23, 1987 filed separate applications for extrajudicial foreclosure of the mortgages
securing said obligations with the City Sheriff of Pasay City. After several legal and
judicial skirmishes pertaining to the propriety of the applications for extrajudicial
foreclosure of said mortgages, the legal impediments to said proceedings were finally
eliminated. So, on October 13 and 14, 1988, the foreclosure proceedings were held and
the GSIS emerged as the buyer at auction of the mortgaged properties. On May 11, 1989,
GSIS filed an Ex-Parte Petition for the Issuance of a Writ of Possession before the
Regional Trial Court, Branch III, Pasay City docketed therein as LRC Case No. 3079. On
August 16, 1989, said court issued the writ of possession applied for.
Meanwhile, the PVHI and GSIS amicably settled their dispute. On December 13,
1989, they entered into a Memorandum of Agreement by virtue of which the accounts of
PVHI in favor of the GSIS were completely settled. Under the MOA, the total obligation
of PVHI to GSIS was fixed at P300 million to be paid in the manner therein specified. It
was further stipulated that the MOA was subject to the approval of the Office of the
President and Commission on Audit.
Of the P300 million obligation, PVHI was able to pay on time P30 million. x x x.
On March 5, 1990, PVHI filed a Complaint for Specific Performance with Damages
with the court a quo seeking for a judicial declaration of the validity and effectivity of
the MOA and to compel GSIS to accept payment of the outstanding obligation of P270
million. This Complaint was docketed as Civil Case No. 90-52272 before the Regional
Trial Court, Branch 2 in Manila. On March 6, 1990, the said court issued a Temporary
Restraining Order restraining GSIS and the Sheriff of Pasay City from implementing the
writ of possession issued by the Regional Trial Court, Branch III of Pasay City in LRC
No. 3079 and from consolidating title to the properties covered by the foreclosed
mortgages. This was followed with the issuance by the court a quo of a writ of preliminary
injunction.
The proceeding in the action for specific performance went its normal course until
the PVHI has presented its evidence and rested its case. At this stage of the proceeding,
PVHI filed a Motion for Partial Summary Judgment. The GSIS opposed said motion. On
June 16, 1993, the court a quo rendered a Partial Summary Judgment confirming the
validity of the MOA and directing PVHI to pay P 270 million to GSIS and the latter to
accept the same and then to comply with all its obligations under the MOA.667
Consequently, petitioner interposed an appeal to the CA and claimed that the trial court had
erred in (a) issuing the writ of preliminary injunction, (b) granting the Motion for Partial Summary
Judgment, and (c) declaring the MOA effective and valid.668

Ruling of the Court of Appeals

667
Id., pp. 1-3 & 41-43. Citations omitted.
668
Id., pp. 3 & 43.

263
The Court of Appeals ruled that the appeal was an improper remedy, and that the proper mode
of review was certiorari under Rule 65 of the Rules of Court.669 It dismissed the recourse by virtue
of Item No. 4 of Supreme Court Circular No. 2-90, according to which, inappropriate modes of
appeal brought to this Court and the CA shall be dismissed.670
In denying petitioners Motion for Reconsideration, the appellate court held that the cases
relied upon were not applicable because of differences in factual milieu.671
Hence, this Petition.672

The Issues

In its Memorandum, petitioner raises the following issues for our consideration:
I.
Whether the Court of Appeals committed reversible error when it dismissed the appeal
on procedural technicality instead of deciding the case on the merits.
A. Whether the trial courts Partial Summary Judgment is a decision on the
merits, which necessitates the adjudication of petitioners appeal below on the
merits and not on a mere technicality.
B. Whether the Honorable Court of Appeals has the power and jurisdiction
to pass upon the merits and/or validity of the Partial Summary Judgment.
C. Whether circumstances present require the Court of Appeals, or even the
Supreme Court, to pass upon the merits of the appealed case rather than dismiss
the same on a mere technicality.
II.
Whether the separate and corresponding approvals of the Office of the President and the
Commission on Audit on the subject Memorandum of Agreement is a sine qua non for
the effectivity of the said Contract.673
In more direct language, the issue is simply whether the CA -- on appeal -- may validly pass
upon the Partial Summary Judgment issued by the RTC, considering that the latter has not
adjudged the amount of recoverable damages. Should this issue be decided affirmatively, a

669
Id., pp. 5 & 45.
670
Id., pp. 6 & 46.
671
CA Resolution p. 2; rollo, p. 50.
672
The case was deemed submitted for decision on June 10, 2003, upon this Courts receipt of petitioners Memorandum,
signed by Attys. Nelson L. Guerrero, Librada C. Mendiola and Cesar L. Aganon. Respondents Memorandum -- signed
by Attys. Armando M. Marcelo, Elsie S. Ramos and Elvin Michael L. Cruz -- was received by this Court on May 5,
2003.
673
Petitioners Memorandum, p. 9-10; rollo, p. 279-280. Original in upper case.

264
corollary one is whether the MOA is valid.

This Courts Ruling

The Petition has no merit.

Main Issue:
Proper Remedy

Petitioner argues that the CA should have taken cognizance of the appeal brought before it,
because the principal issue in the case -- the validity of the MOA -- had allegedly been fully
decided on the merits through the Partial Summary Judgment. Supposedly, the only issue that
remains to be resolved by the trial court is the amount of liquidated damages, which may be the
subject of a separate appeal.674
Petitioner adds that the appeal should not have been dismissed on a mere technicality. It
stresses that the most equitable, judicious, expeditious, practical, and inexpensive manner of
resolving this case is for it to be decided on its merits by this Court, considering in particular the
amount of time already lost and the fact that the entire records of the case have been submitted and
made available to the CA.675 Petitioner further contends that an interlocutory order may
nevertheless be appealed by virtue of the exception provided under Section 1(g) of Rule 41.676
These contentions are unmeritorious. A partial summary judgment does not finally dispose of
an action. Our pronouncements in Guevarra v. Court of Appeals677 and Province of Pangasinan v.
Court of Appeals678 were categorical: a partial summary judgment is merely an interlocutory order,
not a final judgment. What the rules contemplate is that the appeal from the partial summary
judgment shall be taken together with the judgment that may be rendered in the entire case after a
trial is conducted on the material facts on which a substantial controversy exists.679
The dispositive portion of the assailed Partial Summary Judgment is quoted below:
WHEREFORE, premises considered, this Court hereby grants the Motion for Partial
Summary Judgment, confirms the validity and effectivity of the subject Memorandum of
Agreement dated December 13, 1989, allows x x x PVHI to pay the P270 Million balance
of the settlement price within ninety days from the finality of this O[r]der, and, lastly,
orders x x x GSIS, upon such full payment of the settlement price, to comply with all its

674
Id., pp. 12 & 282.
675
Id., pp. 15-19 & 285-289.
676
Id., pp. 16 & 286.
677
124 SCRA 297, August 30, 1983.
678
220 SCRA 726, March 31, 1993.
679
Guevarra v. CA, supra, p. 316, per Vasquez, J.

265
obligations under the Memorandum of Agreement by delivering to [respondent] the Deed
of Conveyance on the main hotel building and the chattels subject matter of the said
agreement, together with the deed of absolute sale over the hotel annex referred to therein,
in favor of x x x PVHI, and by canceling the debenture bonds mentioned in said
agreement. Trial on the issu[e] of damages shall resume on July 5/7, 1993 at 8:30 in the
morning at which time x x x GSIS shall present the evidence-in-chief on said issue.
(Emphasis supplied)
It is clear from the above that only the issue of the validity of the subject MOA has been
settled. Just as clearly, trial on the issue of damages is yet to take place; thus, the case has not come
to a close. The Partial Summary Judgment is therefore not reviewable by ordinary appeal to the
CA.
Neither was the exception provided in Rule 41 available to petitioner. The Rule states:
Section 1. Subject of appeal. x x x
No appeal may be taken from:
xxx xxx xxx
(g) A judgment or final order for or against 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;
Granting arguendo that the exception was applicable, petitioner should have filed a Record on
Appeal -- not a Notice on Appeal -- with the trial court, which would necessarily keep the records
in order to be able to resolve the recoverable damages, if any.680
The question of damages is inseparable from that of the validity of the MOA. Indeed, the
amount recoverable, if any, is dependent on the subsequent finding of the CA on the validity of
the MOA. Should the appellate court reverse the RTC and hold that the MOA is invalid, the trial
courts finding on the amount of recoverable damages would necessarily be reversed as well.
Contrary to petitioners contention, a strict application of the rule on interlocutory orders will
not frustrate substantial justice. What has delayed this case is not the application of the proper rules
of procedure, but petitioners wrong mode of redress. The RTC was gravely mistaken in allowing
the elevation to the CA of the entire records of the case, on which the trial court had not yet
rendered a complete and final judgment.
It is therefore not surprising that more than eight years have elapsed, but the issue of damages
still has to be resolved. Petitioner has only itself to blame for the delay and for the needless
vexation of the judicial system. Had it not chosen the wrong remedy, the main case would have
perhaps been finally resolved by the trial court long ago.
WHEREFORE, the Petition is DENIED, and the challenged Decision and Resolution

680 SEC. 2. Modes of Appeal.


(a) Ordinary Appeal - No record on appeal shall be required except in special proceedings and other cases of multiple
or separate appeals where the law or the rules so require. In such cases, the record on appeal shall be filed and served
in like manner.

266
AFFIRMED. Costs against petitioner.
SO ORDERED.
Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.

267
SECOND DIVISION

SALVADOR P. ESCAO G. R. No. 151953


and MARIO M. SILOS,
Petitioners,
Present:

QUISUMBING,
- versus - Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
RAFAEL ORTIGAS, JR., VELASCO, JR., JJ.
Respondent.
Promulgated:

June 29, 2007

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

DECISION

TINGA, J.:

The main contention raised in this petition is that petitioners are not under obligation to
reimburse respondent, a claim that can be easily debunked. The more perplexing question is
whether this obligation to repay is solidary, as contended by respondent and the lower courts, or
merely joint as argued by petitioners.

On 28 April 1980, Private Development Corporation of the Philippines (PDCP)681 entered


into a loan agreement with Falcon Minerals, Inc. (Falcon) whereby PDCP agreed to make available

268
and lend to Falcon the amount of US$320,000.00, for specific purposes and subject to certain terms
and conditions.682 On the same day, three stockholders-officers of Falcon, namely: respondent
Rafael Ortigas, Jr. (Ortigas), George A. Scholey and George T. Scholey executed an Assumption
of Solidary Liability whereby they agreed to assume in [their] individual capacity, solidary liability
with [Falcon] for the due and punctual payment of the loan contracted by Falcon with PDCP.683 In
the meantime, two separate guaranties were executed to guarantee the payment of the same loan
by other stockholders and officers of Falcon, acting in their personal and individual capacities.
One Guaranty684 was executed by petitioner Salvador Escao (Escao), while the other685 by
petitioner Mario M. Silos (Silos), Ricardo C. Silverio (Silverio), Carlos L. Inductivo (Inductivo)
and Joaquin J. Rodriguez (Rodriguez).

Two years later, an agreement developed to cede control of Falcon to Escao, Silos and
Joseph M. Matti (Matti). Thus, contracts were executed whereby Ortigas, George A. Scholey,
Inductivo and the heirs of then already deceased George T. Scholey assigned their shares of stock
in Falcon to Escao, Silos and Matti.686 Part of the consideration that induced the sale of stock was
a desire by Ortigas, et al., to relieve themselves of all liability arising from their previous joint and
several undertakings with Falcon, including those related to the loan with PDCP. Thus, an
Undertaking dated 11 June 1982 was executed by the concerned parties,687 namely: with Escao,
Silos and Matti identified in the document as SURETIES, on one hand, and Ortigas, Inductivo and
the Scholeys as OBLIGORS, on the other. The Undertaking reads in part:

3. That whether or not SURETIES are able to immediately cause PDCP and PAIC
to release OBLIGORS from their said guarantees [sic], SURETIES hereby
irrevocably agree and undertake to assume all of OBLIGORs said

681
Now PDCP Development Bank.
682
See rollo, p. 29.
683
Id. at 38.
684
Id. at 39.
685
Id. at 41.
686
See id. at 52-55.
687
See id. at 54.

269
guarantees [sic] to PDCP and PAIC under the following terms and
conditions:

a. Upon receipt by any of [the] OBLIGORS of any demand


from PDCP and/or PAIC for the payment of FALCONs obligations
with it, any of [the] OBLIGORS shall immediately inform
SURETIES thereof so that the latter can timely take appropriate
measures;

b. Should suit be impleaded by PDCP and/or PAIC against any


and/or all of OBLIGORS for collection of said loans and/or credit
facilities, SURETIES agree to defend OBLIGORS at their own
expense, without prejudice to any and/or all of OBLIGORS
impleading SURETIES therein for contribution, indemnity,
subrogation or other relief in respect to any of the claims of PDCP
and/or PAIC; and

c. In the event that any of [the] OBLIGORS is for any reason


made to pay any amount to PDCP and/or PAIC, SURETIES shall
reimburse OBLIGORS for said amount/s within seven (7) calendar
days from such payment;

4. OBLIGORS hereby waive in favor of SURETIES any and all fees which
may be due from FALCON arising out of, or in connection with, their said
guarantees[sic].688

Falcon eventually availed of the sum of US$178,655.59 from the credit line extended by
PDCP. It would also execute a Deed of Chattel Mortgage over its personal properties to further
secure the loan. However, Falcon subsequently defaulted in its payments. After PDCP foreclosed
on the chattel mortgage, there remained a subsisting deficiency of P5,031,004.07, which Falcon
did not satisfy despite demand.689

688
Id. at 53-54. Emphasis supplied.
689
See id. at 29-30.

270
On 28 April 1989, in order to recover the indebtedness, PDCP filed a complaint for sum of
money with the Regional Trial Court of Makati (RTC) against Falcon, Ortigas, Escao, Silos,
Silverio and Inductivo. The case was docketed as Civil Case No. 89-5128. For his part, Ortigas
filed together with his answer a cross-claim against his co-defendants Falcon, Escao and Silos, and
also manifested his intent to file a third-party complaint against the Scholeys and Matti.690 The
cross-claim lodged against Escao and Silos was predicated on the 1982 Undertaking, wherein they
agreed to assume the liabilities of Ortigas with respect to the PDCP loan.

Escao, Ortigas and Silos each sought to seek a settlement with PDCP. The first to come to
terms with PDCP was Escao, who in December of 1993, entered into a compromise agreement
whereby he agreed to pay the bank P1,000,000.00. In exchange, PDCP waived or assigned in favor
of Escao one-third (1/3) of its entire claim in the complaint against all of the other defendants in
the case.691 The compromise agreement was approved by the RTC in a Judgment692 dated 6 January
1994.

Then on 24 February 1994, Ortigas entered into his own compromise agreement693 with
PDCP, allegedly without the knowledge of Escao, Matti and Silos. Thereby, Ortigas agreed to pay
PDCP P1,300,000.00 as full satisfaction of the PDCPs claim against Ortigas,694 in exchange for
PDCPs release of Ortigas from any liability or claim arising from the Falcon loan agreement, and
a renunciation of its claims against Ortigas.

In 1995, Silos and PDCP entered into a Partial Compromise Agreement whereby he agreed
to pay P500,000.00 in exchange for PDCPs waiver of its claims against him.695

690
See id. at 48-49.
691
See id. at 56.
692
Id. at 56-57.
693
Id. at 58-60.
694
Id. at 59.
695
See id. at 62-63.

271
In the meantime, after having settled with PDCP, Ortigas pursued his claims against Escao,
Silos and Matti, on the basis of the 1982 Undertaking. He initiated a third-party complaint against
Matti and Silos,696 while he maintained his cross-claim against Escao. In 1995, Ortigas filed a
motion for Summary Judgment in his favor against Escao, Silos and Matti. On 5 October 1995,
the RTC issued the Summary Judgment, ordering Escao, Silos and Matti to pay Ortigas, jointly
and severally, the amount of P1,300,000.00, as well as P20,000.00 in attorneys fees.697 The trial
court ratiocinated that none of the third-party defendants disputed the 1982 Undertaking, and that
the mere denials of defendants with respect to non-compliance of Ortigas of the terms and
conditions of the Undertaking, unaccompanied by any substantial fact which would be admissible
in evidence at a hearing, are not sufficient to raise genuine issues of fact necessary to defeat a
motion for summary judgment, even if such facts were raised in the pleadings.698 In an Order dated
7 March 1996, the trial court denied the motion for reconsideration of the Summary Judgment and
awarded Ortigas legal interest of 12% per annum to be computed from 28 February 1994.699

From the Summary Judgment, recourse was had by way of appeal to the Court of Appeals.
Escao and Silos appealed jointly while Matti appealed by his lonesome. In a Decision700 dated 23
January 2002, the Court of Appeals dismissed the appeals and affirmed the Summary Judgment.
The appellate court found that the RTC did not err in rendering the summary judgment since the
three appellants did not effectively deny their execution of the 1982 Undertaking. The special

696
While apparently dropping his cross-claim against Silos.
697
Rollo, pp. 33-34.
698
Id. at 34.
699
Id. at 35-36.
700
Id. at 26-32. Penned by Associate Justice R. A. Barrios, concurred in by then Presiding Justice of the Court
of Appeals (now Supreme Court Associate Justice) M. A. Austria-Martinez and Associate Justice B. L. Reyes.

272
defenses that were raised, payment and excussion, were characterized by the Court of Appeals as
appear[ing] to be merely sham in the light of the pleadings and supporting documents and
affidavits.701 Thus, it was concluded that there was no genuine issue that would still require the
rigors of trial, and that the appealed judgment was decided on the bases of the undisputed and
established facts of the case.

Hence, the present petition for review filed by Escao and Silos.702 Two main issues are
raised. First, petitioners dispute that they are liable to Ortigas on the basis of the 1982 Undertaking,
a document which they do not disavow and have in fact annexed to their petition. Second, on the
assumption that they are liable to Ortigas under the 1982 Undertaking, petitioners argue that they
are jointly liable only, and not solidarily. Further assuming that they are liable, petitioners also
submit that they are not liable for interest and if at all, the proper interest rate is 6% and not 12%.

Interestingly, petitioners do not challenge, whether in their petition or their memorandum


before the Court, the appropriateness of the summary judgment as a relief favorable to Ortigas.
Under Section 3, Rule 35 of the 1997 Rules of Civil Procedure, summary judgment may avail if
the pleadings, supporting affidavits, depositions and admissions on file show that, except as to the
amount of damages, there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law. Petitioner have not attempted to demonstrate before us
that there existed a genuine issue as to any material fact that would preclude summary judgment.
Thus, we affirm with ease the common rulings of the lower courts that summary judgment is an
appropriate recourse in this case.

The vital issue actually raised before us is whether petitioners were correctly held liable to
Ortigas on the basis of the 1982 Undertaking in this Summary Judgment. An examination of the
document reveals several clauses that make it clear that the agreement was brought forth by the
desire of Ortigas, Inductivo and the Scholeys to be released from their liability under the loan
agreement which release was, in turn, part of the consideration for the assignment of their shares

701
Id. at 31.
702
Matti did not appeal. See id. at 169.

273
in Falcon to petitioners and Matti. The whereas clauses manifest that Ortigas had bound himself
with Falcon for the payment of the loan with PDCP, and that amongst the consideration for
OBLIGORS and/or their principals aforesaid selling is SURETIES relieving OBLIGORS of any
and all liability arising from their said joint and several undertakings with FALCON.703 Most
crucial is the clause in Paragraph 3 of the Undertaking wherein petitioners irrevocably agree and
undertake to assume all of OBLIGORs said guarantees [sic] to PDCP x x x under the following
terms and conditions.704

At the same time, it is clear that the assumption by petitioners of Ortigass guarantees [sic]
to PDCP is governed by stipulated terms and conditions as set forth in sub-paragraphs (a) to (c) of
Paragraph 3. First, upon receipt by any of OBLIGORS of any demand from PDCP for the payment
of Falcons obligations with it, any of OBLIGORS was to immediately inform SURETIES thereof
so that the latter can timely take appropriate measures. Second, should any and/or all of
OBLIGORS be impleaded by PDCP in a suit for collection of its loan, SURETIES agree[d] to
defend OBLIGORS at their own expense, without prejudice to any and/or all of OBLIGORS
impleading SURETIES therein for contribution, indemnity, subrogation or other relief705 in respect
to any of the claims of PDCP. Third, if any of the OBLIGORS is for any reason made to pay any
amount to [PDCP], SURETIES [were to] reimburse OBLIGORS for said amount/s within seven
(7) calendar days from such payment.706

Petitioners claim that, contrary to paragraph 3(c) of the Undertaking, Ortigas was not made
to pay PDCP the amount now sought to be reimbursed, as Ortigas voluntarily paid PDCP the
amount of P1.3 Million as an amicable settlement of the claims posed by the bank against him.

703
See id. at 52.
704
Id. at 53.
705
Id.
706
Id. at 54.

274
However, the subject clause in paragraph 3(c) actually reads [i]n the event that any of OBLIGORS
is for any reason made to pay any amount to PDCP x x x707 As pointed out by Ortigas, the
phrase for any reason reasonably includes any extra-judicial settlement of obligation such as what
Ortigas had undertaken to pay to PDCP, as it is indeed obvious that the phrase was incorporated
in the clause to render the eventual payment adverted to therein unlimited and unqualified.

The interpretation posed by petitioners would have held water had the Undertaking made
clear that the right of Ortigas to seek reimbursement accrued only after he had delivered payment
to PDCP as a consequence of a final and executory judgment. On the contrary, the clear intent of
the Undertaking was for petitioners and Matti to relieve the burden on Ortigas and his fellow
OBLIGORS as soon as possible, and not only after Ortigas had been subjected to a final and
executory adverse judgment.

Paragraph 1 of the Undertaking enjoins petitioners to exert all efforts to cause PDCP x x x
to within a reasonable time release all the OBLIGORS x x x from their guarantees [sic] to PDCP
x x x708 In the event that Ortigas and his fellow OBLIGORS could not be released from their
guaranties, paragraph 2 commits petitioners and Matti to cause the Board of Directors of Falcon
to make a call on its stockholders for the payment of their unpaid subscriptions and to pledge or
assign such payments to Ortigas, et al., as security for whatever amounts the latter may be held
liable under their guaranties. In addition, paragraph 1 also makes clear that nothing in the
Undertaking shall prevent OBLIGORS, or any one of them, from themselves negotiating with
PDCP x x x for the release of their said guarantees [sic].709

707
Id. at 53.
708
Id.
709
Id.

275
There is no argument to support petitioners position on the import of the phrase made to
pay in the Undertaking, other than an unduly literalist reading that is clearly inconsistent with the
thrust of the document. Under the Civil Code, the various stipulations of a contract shall be
interpreted together, attributing to the doubtful ones that sense which may result from all of them
taken jointly.710 Likewise applicable is the provision that if some stipulation of any contract should
admit of several meanings, it shall be understood as bearing

710
CIVIL CODE, Art. 1374.

276
that import which is most adequate to render it effectual.711 As a means to effect the general intent
of the document to relieve Ortigas from liability to PDCP, it is his interpretation, not that of
petitioners, that holds sway with this Court.

Neither do petitioners impress us of the non-fulfillment of any of the other conditions set
in paragraph 3, as they claim. Following the general assertion in the petition that Ortigas violated
the terms of the Undertaking, petitioners add that Ortigas paid PDCP BANK the amount of P1.3
million without petitioners ESCANO and SILOSs knowledge and consent.712 Paragraph 3(a) of
the Undertaking does impose a requirement that any of the OBLIGORS shall immediately inform
SURETIES if they received any demand for payment of FALCONs obligations to PDCP, but that
requirement is reasoned so that the [SURETIES] can timely take appropriate measures713
presumably to settle the obligation without having to burden the OBLIGORS. This notice
requirement in paragraph 3(a) is markedly way off from the suggestion of petitioners that Ortigas,
after already having been impleaded as a defendant in the collection suit, was obliged under the
1982 Undertaking to notify them before settling with PDCP.

The other arguments petitioners have offered to escape liability to Ortigas are similarly
weak.

Petitioners impugn Ortigas for having settled with PDCP in the first place. They note that
Ortigas had, in his answer, denied any liability to PDCP and had alleged that he signed the
Assumption of Solidary Liability not in his personal capacity, but as an officer of Falcon. However,
such position, according to petitioners, could not be justified since Ortigas later voluntarily paid

711
CIVIL CODE, Art. 1373.
712
Rollo, p. 18.
713
Id. at 53.

277
PDCP the amount of P1.3 Million. Such circumstances, according to petitioners, amounted to
estoppel on the part of Ortigas.

Even as we entertain this argument at depth, its premises are still erroneous. The Partial
Compromise Agreement between PDCP and Ortigas expressly stipulated that Ortigass offer to pay
PDCP was conditioned without [Ortigass] admitting liability to plaintiff PDCP Banks complaint,
and to terminate and dismiss the said case as against Ortigas solely.714 Petitioners profess it is
unthinkable for Ortigas to have voluntarily paid PDCP without admitting his liability, 715 yet such
contention based on assumption cannot supersede the literal terms of the Partial Compromise
Agreement.

Petitioners further observe that Ortigas made the payment to PDCP after he had already
assigned his obligation to petitioners through the 1982 Undertaking. Yet the fact is PDCP did
pursue a judicial claim against Ortigas notwithstanding the Undertaking he executed with
petitioners. Not being a party to such Undertaking, PDCP was not precluded by a contract from
pursuing its claim against Ortigas based on the original Assumption of Solidary Liability.

At the same time, the Undertaking did not preclude Ortigas from relieving his distress
through a settlement with the creditor bank. Indeed, paragraph 1 of the Undertaking expressly
states that nothing herein shall prevent OBLIGORS, or any one of them, from themselves
negotiating with PDCP x x x for the release of their said guarantees [sic].716 Simply put, the
Undertaking did not bar Ortigas from pursuing his own settlement with PDCP. Neither did the
Undertaking bar Ortigas from recovering from petitioners whatever amount he may have paid

714
Id. at 59.
715
Id.
716
Id. at 53.

278
PDCP through his own settlement. The stipulation that if Ortigas was for any reason made to pay
any amount to PDCP[,] x x x SURETIES shall reimburse OBLIGORS for said amount/s within
seven (7) calendar days from such payment717 makes it clear that petitioners remain liable to
reimburse Ortigas for the sums he paid PDCP.

We now turn to the set of arguments posed by petitioners, in the alternative, that is, on the
assumption that they are indeed liable.

Petitioners submit that they could only be held jointly, not solidarily, liable to Ortigas,
claiming that the Undertaking did not provide for express solidarity. They cite Article 1207 of the
New Civil Code, which states in part that [t]here is a solidary liability only when the obligation
expressly so states, or when the law or the nature of the obligation requires solidarity.

Ortigas in turn argues that petitioners, as well as Matti, are jointly and severally liable for
the Undertaking, as the language used in the agreement clearly shows that it is a surety
agreement718 between the obligors (Ortigas group) and the sureties (Escao group). Ortigas points
out that the Undertaking uses the word SURETIES although the document, in describing the
parties. It is further contended that the principal objective of the parties in executing the
Undertaking cannot be attained unless petitioners are solidarily liable because the total loan
obligation can not be paid or settled to free or release the OBLIGORS if one or any of the
SURETIES default from their obligation in the Undertaking.719

717
Supra note 26.
718
Rollo, p. 177.
719
Rollo, p. 178.

279
In case, there is a concurrence of two or more creditors or of two or more debtors in one
and the same obligation, Article 1207 of the Civil Code states that among them, [t]here is a solidary
liability only when the obligation expressly so states, or when the law or the nature of the obligation
requires solidarity. Article 1210 supplies further caution against the broad interpretation of
solidarity by providing: The indivisibility of an obligation does not necessarily give rise to
solidarity. Nor does solidarity of itself imply indivisibility.

These Civil Code provisions establish that in case of concurrence of two or more creditors
or of two or more debtors in one and the same obligation, and in the absence of express and
indubitable terms characterizing the obligation as solidary, the presumption is that the obligation
is only joint. It thus becomes incumbent upon the party alleging that the obligation is indeed
solidary in character to prove such fact with a preponderance of evidence.

The Undertaking does not contain any express stipulation that the petitioners agreed to bind
themselves jointly and severally in their obligations to the Ortigas group, or any such terms to that
effect. Hence, such obligation established in the Undertaking is presumed only to be joint. Ortigas,
as the party alleging that the obligation is in fact solidary, bears the burden to overcome the
presumption of jointness of obligations. We rule and so hold that he failed to discharge such
burden.

Ortigas places primary reliance on the fact that the petitioners and Matti identified
themselves in the Undertaking as SURETIES, a term repeated no less than thirteen (13) times in
the document. Ortigas claims that such manner of identification sufficiently establishes that the
obligation of petitioners to him was joint and solidary in nature.

The term surety has a specific meaning under our Civil Code. Article 2047 provides the
statutory definition of a surety agreement, thus:

280
Art. 2047. By guaranty a person, called the guarantor, binds himself to the
creditor to fulfill the obligation of the principal debtor in case the latter should fail
to do so.

If a person binds himself solidarily with the principal debtor, the provisions
of Section 4, Chapter 3, Title I of this Book shall be observed. In such case the
contract is called a suretyship. [Emphasis supplied]720

As provided in Article 2047 in a surety agreement the surety undertakes to be bound


solidarily with the principal debtor. Thus, a surety agreement is an ancillary contract as it
presupposes the existence of a principal contract. It appears that Ortigass argument rests solely on
the solidary nature of the obligation of the surety under Article 2047. In tandem with the
nomenclature SURETIES accorded to petitioners and Matti in the Undertaking, however, this
argument can only be viable if the obligations established in the

720
CIVIL CODE, Art. 2047.

281
Undertaking do partake of the nature of a suretyship as defined under Article 2047 in the first
place. That clearly is not the case here, notwithstanding the use of the nomenclature SURETIES
in the Undertaking.

Again, as indicated by Article 2047, a suretyship requires a principal debtor to whom the
surety is solidarily bound by way of an ancillary obligation of segregate identity from the
obligation between the principal debtor and the creditor. The suretyship does bind the surety to the
creditor, inasmuch as the latter is vested with the right to proceed against the former to collect the
credit in lieu of proceeding against the principal debtor for the same obligation.721 At the same
time, there is also a legal tie created between the surety and the principal debtor to which the
creditor is not privy or party to. The moment the surety fully answers to the creditor for the
obligation created by the principal debtor, such obligation is extinguished.722 At the same time, the
surety may seek reimbursement from the principal debtor for the amount paid, for the surety does
in fact become subrogated to all the rights and remedies of the creditor.723

Note that Article 2047 itself specifically calls for the application of the provisions on joint
and solidary obligations to suretyship contracts.724 Article 1217 of the Civil Code thus comes into
play, recognizing the right of reimbursement from a co-debtor (the principal debtor, in case of
suretyship) in favor of the one who paid (i.e., the surety).725 However, a significant distinction still

721
Since, generally, it is not necessary for a creditor to proceed against a principal in order to hold the surety
liable, where, by the terms of the contract, the obligation of the surety is the same as that of the principal, then as soon
as the principal is in default, the surety is likewise in default, and may be sued immediately and before any proceedings
are had against the principal. Palmares v. Court of Appeals, 351 Phil. 664, 685 (1998) citing Standard Accident
Insurance Co. v. Standard Oil Co., 133 So. 2d 539; School District No. 65 of Lincoln County v. Universal Surety Co.,
135 N. W. 2d 232; Depot Realty Syndicate v. Enterprise Brewing Co., 171 P. 223.
722
Payment made by one of the solidary debtors extinguishes the obligation. See CIVIL CODE, Art. 1217.
723
See Palmares v. Court of Appeals, supra note 41 at 686; citing 74 AM JUR 2d, PRINCIPAL AND
SURETY, 68, 53.
724
See note 49.

282
lies between a joint and several debtor, on one hand, and a surety on the other. Solidarity signifies
that the creditor can compel any one of the joint and several debtors or the surety alone to answer
for the entirety of the principal debt. The difference lies in the respective faculties of the joint and
several debtor and the surety to seek reimbursement for the sums they paid out to the creditor.

Dr. Tolentino explains the differences between a solidary co-debtor and a surety:

A guarantor who binds himself in solidum with the principal debtor under the
provisions of the second paragraph does not become a solidary co-debtor to all
intents and purposes. There is a difference between a solidary co-debtor and a
fiador in solidum (surety). The latter, outside of the liability he assumes to pay
the debt before the property of the principal debtor has been exhausted,
retains all the other rights, actions and benefits which pertain to him by reason
of the fiansa; while a solidary co-debtor has no other rights than those
bestowed upon him in Section 4, Chapter 3, Title I, Book IV of the Civil Code.

The second paragraph of [Article 2047] is practically equivalent to the


contract of suretyship. The civil law suretyship is, accordingly, nearly synonymous
with the common law guaranty; and the civil law relationship existing between the
co-debtors liable in solidum is similar to the common law suretyship.726

In the case of joint and several debtors, Article 1217 makes plain that the solidary debtor
who effected the payment to the creditor may claim from his co-debtors only the share which
corresponds to each, with the interest for the payment already made. Such solidary debtor will
not be able to recover from the co-debtors the full amount already paid to the creditor, because the
right to recovery extends only to the proportional share of the other co-debtors, and not as to the
particular proportional share of the solidary debtor who already paid. In contrast, even as the surety
is solidarily bound with the principal debtor to the creditor, the surety who does pay the creditor
has the right to recover the full amount paid, and not just any proportional share, from the principal

725
See Lapanday Agricultural v. Court of Appeals, 381 Phil. 41, 52 (2000). Art. 1217 reads in part: "Payment
made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the
creditor may choose which offer to accept x x x

He who made payment may claim from his co-debtors only the share which corresponds to each, with interest
for the payment already made. If the payment is made before the debt is due, no interest for the intervening period
may be demanded x x x"
726
A. TOLENTINO, V CIVIL CODE OF THE PHILIPPINES (1992 ed.), at 502. See also Inciong v. Court
of Appeals, 327 Phil. 364, 373 (1996).

283
debtor or debtors. Such right to full reimbursement falls within the other rights, actions and benefits
which pertain to the surety by reason of the subsidiary obligation assumed by the surety.

What is the source of this right to full reimbursement by the surety? We find the right under
Article 2066 of the Civil Code, which assures that [t]he guarantor who pays for a debtor must be
indemnified by the latter, such indemnity comprising of, among others, the total amount of the
debt.727 Further, Article 2067 of the Civil Code likewise establishes that [t]he guarantor who pays
is subrogated by virtue thereof to all the rights which the creditor had against the debtor.728

Articles 2066 and 2067 explicitly pertain to guarantors, and one might argue that the
provisions should not extend to sureties, especially in light of the qualifier in Article 2047 that the
provisions on joint and several obligations should apply to sureties. We reject that argument, and
instead adopt Dr. Tolentinos observation that [t]he reference in the second paragraph of [Article
2047] to the provisions of Section 4, Chapter 3, Title I, Book IV, on solidary or several obligations,
however, does not mean that suretyship is withdrawn from the applicable provisions governing
guaranty.729 For if that were not the implication, there would be no material difference between
the surety as defined under Article 2047 and the joint and several debtors, for both classes of
obligors would be governed by exactly the same rules and limitations.

Accordingly, the rights to indemnification and subrogation as established and granted to


the guarantor by Articles 2066 and 2067 extend as well to sureties as defined under Article 2047.
These rights granted to the surety who pays materially differ from those granted under Article
1217 to the solidary debtor who pays, since the indemnification that pertains to the latter extends
only [to] the share which corresponds to each [co-debtor]. It is for this reason that the Court cannot
accord the conclusion that because petitioners are identified in the Undertaking as SURETIES,
they are consequently joint and severally liable to Ortigas.

727
CIVIL CODE, Art. 2066.
728
CIVIL CODE, Art. 2067.
729
A. TOLENTINO, supra note 46 citing Manila Surety & Fidelity Co. v. Barter Construction & Co., et al.,
53 Off. Gaz. 8836 & Arranz v. Manila Fidelity & Surety Co., 53 Off. Gaz. 7247.

284
In order for the conclusion espoused by Ortigas to hold, in light of the general presumption
favoring joint liability, the Court would have to be satisfied that among the petitioners and Matti,
there is one or some of them who stand as the principal debtor to Ortigas and another as surety
who has the right to full reimbursement from the principal debtor or debtors. No suggestion is
made by the parties that such is the case, and certainly the Undertaking is not revelatory of such
intention. If the Court were to give full fruition to the use of the term SURETIES as conclusive
indication of the existence of a surety agreement that in turn gives rise to a solidary obligation to
pay Ortigas, the necessary implication would be to lay down a corresponding set of rights and
obligations as between the SURETIES which petitioners and Matti did not clearly intend.

It is not impossible that as between Escao, Silos and Matti, there was an agreement whereby
in the event that Ortigas were to seek reimbursement from them per the terms of the Undertaking,
one of them was to act as surety and to pay Ortigas in full, subject to his right to full reimbursement
from the other two obligors. In such case, there would have been, in fact, a surety agreement which
evinces a solidary obligation in favor of Ortigas. Yet if there was indeed such an agreement, it
does not appear on the record. More consequentially, no such intention is reflected in the
Undertaking itself, the very document that creates the conditional obligation that petitioners and
Matti reimburse Ortigas should he be made to pay PDCP. The mere utilization of the term
SURETIES could not work to such effect, especially as it does not appear who exactly is the
principal debtor whose obligation is assured or guaranteed by the surety.

Ortigas further argues that the nature of the Undertaking requires solidary obligation of the
Sureties, since the Undertaking expressly seeks to reliev[e] obligors of any and all liability arising
from their said joint and several undertaking with [F]alcon, and for the sureties to irrevocably agree
and undertake to assume all of obligors said guarantees to PDCP.730 We do not doubt that a finding
of solidary liability among the petitioners works to the benefit of Ortigas in the facilitation of these
goals, yet the Undertaking itself contains no stipulation or clause that establishes petitioners
obligation to Ortigas as solidary. Moreover, the aims adverted to by Ortigas do not by themselves

730
Rollo, p. 89-90.

285
establish that the nature of the obligation requires solidarity. Even if the liability of petitioners and
Matti were adjudged as merely joint, the full relief and reimbursement of Ortigas arising from his
payment to PDCP would still be accomplished through the complete execution of such a judgment.

Petitioners further claim that they are not liable for attorneys fees since the Undertaking
contained no such stipulation for attorneys fees, and that the situation did not fall under the
instances under Article 2208 of the Civil Code where attorneys fees are recoverable in the absence
of stipulation.

We disagree. As Ortigas points out, the acts or omissions of the petitioners led to his being
impleaded in the suit filed by PDCP. The Undertaking was precisely executed as a means to obtain
the release of Ortigas and the Scholeys from their previous obligations as sureties of Falcon,
especially considering that they were already divesting their shares in the corporation. Specific
provisions in the Undertaking obligate petitioners to work for the release of Ortigas from his surety
agreements with Falcon. Specific provisions likewise mandate the immediate repayment of Ortigas
should he still be made to pay PDCP by reason of the guaranty agreements from which he was
ostensibly to be released through the efforts of petitioners. None of these provisions were complied
with by petitioners, and Article 2208(2) precisely allows for the recovery of attorneys fees [w]hen
the defendants act or omission has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest.

Finally, petitioners claim that they should not be liable for interest since the Undertaking
does not contain any stipulation for interest, and assuming that they are liable, that the rate of
interest should not be 12% per annum, as adjudged by the RTC.

The seminal ruling in Eastern Shipping Lines, Inc. v. Court of Appeals731 set forth the rules
with respect to the manner of computing legal interest:

731
G.R. No. 97412, 12 July 1994, 234 SCRA 78.

286
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-
contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for
damages. The provisions under Title XVIII on Damages of the Civil Code govern
in determining the measure of recoverable damages.

II. With regard particularly to an award of interest in the concept of actual


and compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:

1. When the obligation is breached, and it consists in the payment


of a sum of money, i.e., a loan or forbearance of money, the
interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In the absence
of stipulation, the rate of interest shall be 12% per annum to be
computed from default, i.e., from judicial or extrajudicial
demand under and subject to the provisions of Article 1169 of
the Civil Code.

2. When an obligation, not constituting a loan or forbearance of


money, is breached, an interest on the amount of damages
awarded may be imposed at the discretion of the court at the rate
of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or until the demand
can be established with reasonable certainty. Accordingly,
where the demand is established with reasonable certainty, the
interest shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code) but when
such certainty cannot be so reasonably established at the time
the demand is made, the interest shall begin to run only from the
date the judgment of the court is made (at which time
quantification of damages may be deemed to have been
reasonably ascertained). The actual base for the computation of
legal interest shall, in any case, be on the amount finally
adjudged.

287
3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, whether
the case falls under paragraph 1 or paragraph 2, above, shall be
12% per annum from such finality until its satisfaction, this
interim period being deemed to be by then an equivalent to a
forbearance of credit.732

Since what was the constituted in the Undertaking consisted of a payment in a sum of
money, the rate of interest thereon shall be 12% per annum to be computed from default, i.e., from
judicial or extrajudicial demand. The interest rate imposed by the RTC is thus proper. However,
the computation should be reckoned from judicial or extrajudicial demand. Per records, there is no
indication that Ortigas made any extrajudicial demand to petitioners and Matti after he paid PDCP,
but on 14 March 1994, Ortigas made a judicial demand when he filed a Third-Party Complaint
praying that petitioners and Matti be made to reimburse him for the payments made to PDCP. It is
the filing of this Third Party Complaint on 14 March 1994 that should be considered as the date of
judicial demand from which the computation of interest should be reckoned.733 Since the RTC held
that interest should be computed from 28 February 1994, the appropriate redefinition should be
made.

WHEREFORE, the Petition is GRANTED in PART. The Order of the Regional Trial Court
dated 5 October 1995 is MODIFIED by declaring that petitioners and Joseph M. Matti are only
jointly liable, not jointly and severally, to respondent Rafael Ortigas, Jr. in the amount of
P1,300,000.00. The Order of the Regional Trial Court dated 7 March 1996 is MODIFIED in that
the legal interest of 12% per annum on the amount of P1,300,000.00 is to be computed from 14
March 1994, the date of judicial demand, and not from 28 February 1994 as directed in the Order
of the lower court. The assailed rulings are affirmed in all other respects. Costs against petitioners.

732
Id. at 95-97.
733
See Records, pp. 429-436.

288
SO ORDERED.

DANTE O. TINGA
Associate Justice

WE CONCUR:

(On Official Leave)


LEONARDO A. QUISUMBING
Associate Justice
Chairperson

ANTONIO T. CARPIO CONCHITA CARPIO MORALES


Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.


Associate Justice

ATTESTATION

289
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.

ANTONIO T. CARPIO
Associate Justice
Acting Chairperson, Second 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 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

290
THIRD DIVISION

BENJAMIN BITANGA, G.R. No. 173526


Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
- versus -
NACHURA, and
REYES, JJ.

Promulgated:
PYRAMID CONSTRUCTION
ENGINEERING CORPORATION,
Respondent. August 28, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

291
Assailed in this Petition for Review under Rule 45734 of the Revised Rules of Court are:
(1) the Decision735 dated 11 April 2006 of the Court of Appeals in CA-G.R. CV No. 78007 which
affirmed with modification the partial Decision736 dated 29 November 2002 of the Regional Trial
Court (RTC), Branch 96, of Quezon City, in Civil Case No. Q-01-45041, granting the motion for
summary judgment filed by respondent Pyramid Construction and Engineering Corporation and
declaring petitioner Benjamin Bitanga and his wife, Marilyn Bitanga (Marilyn), solidarily liable
to pay P6,000,000.000 to respondent; and (2) the Resolution737 dated 5 July 2006 of the appellate
court in the same case denying petitioners Motion for Reconsideration.

The generative facts are:

On 6 September 2001, respondent filed with the RTC a Complaint for specific performance
and damages with application for the issuance of a writ of preliminary attachment against the
petitioner and Marilyn. The Complaint was docketed as Civil Case No. Q-01-45041.

Respondent alleged in its Complaint that on 26 March 1997, it entered into an agreement
with Macrogen Realty, of which petitioner is the President, to construct for the latter the Shoppers
Gold Building, located at Dr. A. Santos Avenue corner Palayag Road, Sucat, Paraaque City.
Respondent commenced civil, structural, and architectural works on the construction project by
May 1997. However, Macrogen Realty failed to settle respondents progress billings. Petitioner,
through his representatives and agents, assured respondent that the outstanding account of
Macrogen Realty would be paid, and requested respondent to continue working on the construction
project. Relying on the assurances made by petitioner, who was no less than the President of
Macrogen Realty, respondent continued the construction project.

734
Appeal by Certiorari to the Supreme Court.
735
Penned by Associate Justice Renato C. Dacudao with Associate Justices Mario L. Guaria III and Fernanda
Lampas-Peralta, concurring. Rollo, pp. 37-52.
736
Penned by Judge Lucas P. Bersamin (now a Justice of the Court of Appeals).
737
Rollo, pp. 61-64.

292
In August 1998, respondent suspended work on the construction project since the
conditions that it imposed for the continuation thereof, including payment of unsettled accounts,
had not been complied with by Macrogen Realty. On 1 September 1999, respondent instituted with
the Construction Industry Arbitration Commission (CIAC) a case for arbitration against Macrogen
Realty seeking payment by the latter of its unpaid billings and project costs. Petitioner, through
counsel, then conveyed to respondent his purported willingness to amicably settle the arbitration
case. On 17 April 2000, before the arbitration case could be set for trial, respondent and Macrogen
Realty entered into a Compromise Agreement,738 with petitioner acting as signatory for and in
behalf of Macrogen Realty. Under the Compromise Agreement, Macrogen Realty agreed to pay
respondent the total amount of P6,000,000.00 in six equal monthly installments, with each
installment to be delivered on the 15th day of the month, beginning 15 June 2000. Macrogen Realty
also agreed that if it would default in the payment of two successive monthly installments,
immediate execution could issue against it for the unpaid balance, without need of judgment or
decree from any court or tribunal. Petitioner guaranteed the obligations of Macrogen Realty under
the Compromise Agreement by executing a Contract of Guaranty739 in favor of respondent, by

738
Id. at 93.
739
GUARANTY

This Guaranty made and executed this 17th day of April 2000 at Makati City, Philippines,
by and between:

Benajamin M. Bitanga, of legal age, Filipino, married, with office address located at 314
Sen. Gil Puyat Avenue, Makati City (hereafter referred to as the Guarantor)

- in favor of

PYRAMID CONSTRUCTION ENGINEERING CORPORATION, a corporation organized and


existing under the laws of the Republic of the Philippines, with office address located at Pyramid
Building, 124 Kaingin Road, Balintawak, Quezon City, represented herein by its duly authorized
representative, Mr. Engracio Ang, Jr. (hereafter referred to as PYRAMID).

W I T N E S S E T H: That

WHEREAS, on 17 April 2000, Pyramid and Macrogen Realty Corporation (hereafter


referred to as the Debtor) executed a Compromise Agreement (hereafter referred to as
Agreement), acknowledged before Jose Vicente B. Salazar Notary Public for Makati City, as Doc.
No. 118, Page 25, Book No. 2, Series of 2000;

293
virtue of which he irrevocably and unconditionally guaranteed the full and complete payment of
the principal amount of liability of Macrogen Realty in the sum of P6,000,000.00. Upon joint
motion of respondent and Macrogen Realty, the CIAC approved the Compromise Agreement on
25 April 2000.740

However, contrary to petitioners assurances, Macrogen Realty failed and refused to pay all the

monthly installments agreed upon in the Compromise Agreement. Hence, on 7 September

2000, respondent moved for the issuance of a writ of execution741 against Macrogen Realty,

which CIAC granted.

WHEREAS, in said Agreement, Macrogen, in order to put an end to CIAC Case No. 36-99,
agreed to pay and Pyramid has agreed to accept the total amount of SIX MILLION PESOS
(P6,000,000.00), payable in six monthly installments, on the 15th day of each month, beginning in
June 15, 2000;

WHEREAS, the Guarantor agrees to execute and deliver to Pyramid an irrevocable and
unconditional guaranty for the due and punctual payment of the principal amount of Six Million
Pesos (P6,000,000.00) due and payable by the Debtor to Pyramid under the Agreement.

NOW, THEREFORE, for and in consideration of the foregoing and for other good and
valuable consideration, receipt of which is hereby acknowledged by the Guarantor, the latter
agrees as follows:

SECTION 1. SCOPE OF GUARANTY

1.1. The Guarantor hereby absolutely, unconditionally and irrevocably guarantees to Pyramid the
full and complete payment by Debtor of the principal amount of Six Million pesos (P6,000,000.00).

1.2. The Guarantor irrevocably and unconditionally agrees that this Guaranty shall be a continuing
guaranty and as such shall remain in full force and effect and be binding on the Guarantor until all
sums payable by the Debtor under and pursuant to the Agreement shall have been fully paid by
the Debtor. (Rollo, pp. 136-137.)
740
Rollo, p. 101.
741
Id. at 104.

294
On 29 November 2000, the sheriff742 filed a return stating that he was unable to locate any
property of Macrogen Realty, except its bank deposit of P20,242.33, with the Planters Bank,
Buendia Branch.

Respondent then made, on 3 January 2001, a written demand743 on petitioner, as guarantor


of Macrogen Realty, to pay the P6,000,000.00, or to point out available properties of the Macrogen
Realty within the Philippines sufficient to cover the obligation guaranteed. It also made verbal
demands on petitioner. Yet, respondents demands were left unheeded.

Thus, according to respondent, petitioners obligation as guarantor was already due and
demandable. As to Marilyns liability, respondent contended that Macrogen Realty was owned and
controlled by petitioner and Marilyn and/or by corporations owned and controlled by them.
Macrogen Realty is 99% owned by the Asian Appraisal Holdings, Inc. (AAHI), which in turn is
99% owned by Marilyn. Since the completion of the construction project would have redounded
to the benefit of both petitioner and Marilyn and/or their corporations; and considering, moreover,
Marilyns enormous interest in AAHI, the corporation which controls Macrogen Realty, Marilyn
cannot be unaware of the obligations incurred by Macrogen Realty and/or petitioner in the course
of the business operations of the said corporation.

Respondent prayed in its Complaint that the RTC, after hearing, render a judgment ordering
petitioner and Marilyn to comply with their obligation under the Contract of Guaranty by paying
respondent the amount of P6,000,000.000 (less the bank deposit of Macrogen Realty with Planters
Bank in the amount of P20,242.23) and P400,000.000 for attorneys fees and expenses of litigation.
Respondent also sought the issuance of a writ of preliminary attachment as security for the
satisfaction of any judgment that may be recovered in the case in its favor.

742
Id. at 106.
743
Id. at 202.

295
Marilyn filed a Motion to Dismiss,744 asserting that respondent had no cause of action
against her, since she did not co-sign the Contract of Guaranty with her husband; nor was she a
party to the Compromise Agreement between respondent and Macrogen Realty. She had no part
at all in the execution of the said contracts. Mere ownership by a single stockholder or by another
corporation of all or nearly all of the capital stock of another corporation is not by itself a sufficient
ground for disregarding the separate personality of the latter corporation. Respondent misread
Section 4, Rule 3 of the Revised Rules of Court.

The RTC denied Marilyns Motion to Dismiss for lack of merit, and in its Order dated 24
January 2002 decreed that:

The Motion To Dismiss Complaint Against Defendant Marilyn Andal


Bitanga filed on November 12, 2001 is denied for lack of merit considering that
Sec. 4, Rule 3, of the Rules of Court (1997) specifically provides, as follows:

SEC. 4. Spouses as parties. Husband and wife shall sue or be


sued jointly, except as provided by law.

and that this case does not come within the exception.745

Petitioner filed with the RTC on 12 November 2001, his Answer746 to respondents
Complaint averring therein that he never made representations to respondent that Macrogen Realty
would faithfully comply with its obligations under the Compromise Agreement. He did not offer
to guarantee the obligations of Macrogen Realty to entice respondent to enter into the Compromise
Agreement but that, on the contrary, it was respondent that required Macrogen Realty to offer
some form of security for its obligations before agreeing to the compromise. Petitioner further

744
Id. at 120.
745
Rollo, p. 124.
746
Id. at 113.

296
alleged that his wife Marilyn was not aware of the obligations that he assumed under both the
Compromise Agreement and the Contract of Guaranty as he did not inform her about said
contracts, nor did he secure her consent thereto at the time of their execution.

As a special and affirmative defense, petitioner argued that the benefit of excussion was
still available to him as a guarantor since he had set it up prior to any judgment against him.
According to petitioner, respondent failed to exhaust all legal remedies to collect from Macrogen
Realty the amount due under the Compromise Agreement, considering that Macrogen Realty still
had uncollected credits which were more than enough to pay for the same. Given these premise,
petitioner could not be held liable as guarantor. Consequently, petitioner presented his
counterclaim for damages.

At the pre-trial held on 5 September 2002, the parties submitted the following issues for
the resolution of the RTC:

(1) whether the defendants were liable under the contract of guarantee dated
April 17, 2000 entered into between Benjamin Bitanga and the plaintiff;

(2) whether defendant wife Marilyn Bitanga is liable in this action;

(3) whether the defendants are entitled to the benefit of excussion, the plaintiff
on the one hand claiming that it gave due notice to the guarantor, Benjamin
Bitanga, and the defendants contending that no proper notice was received
by Benjamin Bitanga;

(4) if damages are due, which party is liable; and

297
(5) whether the benefit of excussion can still be invoked by the defendant
guarantor even after the notice has been allegedly sent by the plaintiff
although proper receipt is denied.747

On 20 September 2002, prior to the trial proper, respondent filed a Motion for Summary
Judgment.748 Respondent alleged therein that it was entitled to a summary judgment on account of
petitioners admission during the pre-trial of the genuineness and due execution of the Contract of
Guaranty. The contention of petitioner and Marilyn that they were entitled to the benefit of
excussion was not a genuine issue. Respondent had already exhausted all legal remedies to collect
from Macrogen Realty, but its efforts proved unsuccessful. Given that the inability of Macrogen
Realty as debtor to pay the amount of its debt was already proven by the return of the writ of
execution to CIAC unsatisfied, the liability of petitioner as guarantor already arose.749 In any event,
petitioner and Marilyn were deemed to have forfeited their right to avail themselves of the benefit
of excussion because they failed to comply with Article 2060750 of the Civil Code when petitioner
ignored respondents demand letter dated 3 January 2001 for payment of the amount he
guaranteed.751 The duty to collect the supposed receivables of Macrogen Realty from its creditors
could not be imposed on respondent, since petitioner and Marilyn never informed respondent about
such uncollected credits even after receipt of the demand letter for payment. The allegation of
petitioner and Marilyn that they could not respond to respondents demand letter since they did not
receive the same was unsubstantiated and insufficient to raise a genuine issue of fact which could
defeat respondents Motion for Summary Judgment. The claim that Marilyn never participated in
the transactions that culminated in petitioners execution of the Contract of Guaranty was nothing
more than a sham.

747
Id. at 125-126.
748
Id. at 127.
749
Machetti v. Hospicio de San Jose, 43 Phil. 297, 301 (1922).
750
Article 2060. In order that the guarantor may make use of the benefit of excussion, he must set it up against
the creditor upon the latters demand for payment from him, and point out to the creditor available property
of the debtor within Philippine territory, sufficient to cover the amount of the debt.
751
Luzon Steel Corporation v. Sia, 138 Phil. 62, 68 (1969).

298
In opposing respondents foregoing Motion for Summary Judgment, petitioner and Marilyn
countered that there were genuinely disputed facts that would require trial on the merits. They
appended thereto an affidavit executed by petitioner, in which he declared that his spouse Marilyn
could not be held personally liable under the Contract of Guaranty or the Compromise Agreement,
nor should her share in the conjugal partnership be made answerable for the guaranty petitioner
assumed, because his undertaking of the guaranty did not in any way redound to the benefit of
their family. As guarantor, petitioner was entitled to the benefit of excussion, and he did not waive
his right thereto. He never received the respondents demand letter dated 3 January 2001, as Ms.
Dette Ramos, the person who received it, was not an employee of Macrogen Realty nor was she
authorized to receive the letter on his behalf. As a guarantor, petitioner could resort to the benefit
of excussion at any time before judgment was rendered against him. 752 Petitioner reiterated that
Macrogen Realty had uncollected credits which were more than sufficient to satisfy the claim of
respondent.

On 29 November 2002, the RTC rendered a partial Decision, the dispositive portion of
which provides:

WHEREFORE, summary judgment is rendered ordering defendants


SPOUSES BENJAMIN BITANGA and MARILYN ANDAL BITANGA to pay
the [herein respondent], jointly and severally, the amount of P6,000,000.00, less
P20,242.23 (representing the amount garnished bank deposit of MACROGEN in
the Planters Bank, Buendia Branch); and the costs of suit.

Within 10 days from receipt of this partial decision, the [respondent] shall
inform the Court whether it shall still pursue the rest of the claims against the
defendants. Otherwise, such claims shall be considered waived.753

752
Article 2062 of the Civil Code.
753
The RTC was referring to the respondents prayer for attorneys fees and expenses of litigation in its
Complaint. The records, however, do not show that respondent acted pursuant to this directive of the RTC.
Rollo, p. 374.

299
Petitioner and Marilyn filed a Motion for Reconsideration of the afore-quoted Decision,
which the RTC denied in an Order dated 26 January 2003.754

In time, petitioner and Marilyn filed an appeal with the Court of Appeals, docketed as CA-
G.R. CV 78007. In its Decision dated 11 April 2006, the appellate court held:

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


appealed from must be, as it hereby is, MODIFIED to the effect that defendant-
appellant Marilyn Bitanga is adjudged not liable, whether solidarily or otherwise,
with her husband the defendant-appellant Benjamin Bitanga, under the compromise
agreement or the contract of guaranty. No costs in this instance.755

In holding that Marilyn Bitanga was not liable, the Court of Appeals cited Ramos v. Court
of Appeals,756 in which it was declared that a contract cannot be enforced against one who is not a
party to it. The Court of Appeals stated further that the substantial ownership of shares in Macrogen
Realty by Marilyn Bitanga was not enough basis to hold her liable.

The Court of Appeals, in its Resolution dated 5 July 2006, denied petitioners Motion for
Reconsideration757 of its earlier Decision.

Petitioner is now before us via the present Petition with the following assignment of errors:

754
Rollo, p. 376.
755
Id. at 51-52.
756
G.R. No. 132196, 9 December 2005, 477 SCRA 85.
757
Rollo, pp. 63-64.

300
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE
VALIDITY OF THE PARTIAL SUMMARY JUDGMENT BY THE REGIONAL
TRIAL COURT OF QUEZON CITY, BRANCH 96, DESPITE THE CLEAR
EXISTENCE OF DISPUTED GENUINE AND MATERIAL FACTS OF THE
CASE THAT SHOULD HAVE REQUIRED A TRIAL ON THE MERITS.

II

THE COURT OF APPEALS GRAVELY ERRED IN NOT UPHOLDING THE


RIGHT OF PETITIONER BENJAMIN M. BITANGA AS A MERE
GUARANTOR TO THE BENEFIT OF EXCUSSION UNDER ARTICLES 2058,
2059, 2060, 2061, AND 2062 OF THE CIVIL CODE OF THE PHILIPPINES.758

As in the two courts below, it is petitioners position that summary judgment is improper in
Civil Case No. Q-01-45041 because there are genuine issues of fact which have to be threshed out
during trial, to wit:

(A) Whether or not there was proper service of notice to petitioner


considering the said letter of demand was allegedly received by one Dette Ramos
at Macrogen office and not by him at his residence.

(B) Whether or not petitioner is entitled to the benefit of excussion?759

We are not persuaded by petitioners arguments.

Rule 35 of the Revised Rules of Civil Procedure provides:

758
Id. at 443.
759
Id. at 445-446.

301
Section 1. Summary judgment for claimant. A party seeking to recover upon a
claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any time
after the pleading in answer thereto has been served, move with supporting
affidavits, depositions or admissions for a summary judgment in his favor upon all
or any part thereof.

For a summary judgment to be proper, the movant must establish two requisites: (a) there

must be no genuine issue as to any material fact, except for the amount of damages; and (b)

the party presenting the motion for summary judgment must be entitled to a judgment as a

matter of law. Where, on the basis of the pleadings of a moving party, including documents

appended thereto, no genuine issue as to a material fact exists, the burden to produce a

genuine issue shifts to the opposing party. If the opposing party fails, the moving party is

entitled to a summary judgment.760

In a summary judgment, the crucial question is: are the issues raised by the opposing party
not genuine so as to justify a summary judgment?761

First off, we rule that the issue regarding the propriety of the service of a copy of the
demand letter on the petitioner in his office is a sham issue. It is not a bar to the issuance of a
summary judgment in respondents favor.

A genuine issue is an issue of fact which requires the presentation of evidence as


distinguished from an issue which is a sham, fictitious, contrived or false claim. To forestall
summary judgment, it is essential for the non-moving party to confirm the existence of genuine

760
Equitable PCI Bank v. Ong, G.R. No. 156207, 15 September 2006, 502 SCRA 127, 129.
761
Wood Technology Corporation v. Equitable Banking Corporation, G.R. No. 155394, 17 February 2005, 451
SCRA 725, 733.

302
issues, as to which he has substantial, plausible and fairly arguable defense, i.e.,762 issues of fact
calling for the presentation of evidence upon which reasonable findings of fact could return a
verdict for the non-moving party, although a mere scintilla of evidence in support of the party
opposing summary judgment will be insufficient to preclude entry thereof.

Significantly, petitioner does not deny the receipt of the demand letter from the respondent.
He merely raises a howl on the impropriety of service thereof, stating that the address to which the
said letter was sent was not his residence but the office of Macrogen Realty, thus it cannot be
considered as the correct manner of conveying a letter of demand upon him in his personal
capacity.763

Section 6, Rule 13 of the Rules of Court states:

SEC. 6. Personal service. Service of the papers may be made by delivering


personally a copy to the party or his counsel, or by leaving it in his office with his
clerk or with a person having charge thereof. If no person is found in his office,
or his office is not known, or he has no office, then by leaving the copy, between
the hours of eight in the morning and six in the evening, at the partys or counsels
residence, if known, with a person of sufficient age and discretion then residing
therein.

The affidavit of Mr. Robert O. Pagdilao, messenger of respondents counsel states in part:

2. On 4 January 2001, Atty. Jose Vicente B. Salazar, then one of the Associates
of the ACCRA Law Offices, instructed me to deliver to the office of Mr.
Benjamin Bitanga a letter dated 3 January 2001, pertaining to Construction
Industry Arbitration Commission (hereafter, CIAC) Case No. 99-56,

762
Agbada v. Inter-Urban Developers, Inc., 438 Phil. 168, 190-191 (2002).
763
Records, p. 402.

303
entitled Pyramid Construction Engineering Corporation vs. Macrogen
Realty Corporation.

3. As instructed, I immediately proceeded to the office of Mr. Bitanga located


at the 12th Floor, Planters Development Bank Building, 314 Senator Gil
Puyat Avenue, Makati City. I delivered the said letter to Ms. Dette Ramos,
a person of sufficient age and discretion, who introduced herself as one of
the employees of Mr. Bitanga and/or of the latters companies.764 (Emphasis
supplied.)

We emphasize that when petitioner signed the Contract of Guaranty and assumed
obligation as guarantor, his address in the said contract was the same address where the demand
letter was served.765 He does not deny that the said place of service, which is the office of
Macrogen, was also the address that he used when he signed as guarantor in the Contract of
Guaranty. Nor does he deny that this is his office address; instead, he merely insists that the person
who received the letter and signed the receiving copy is not an employee of his company. Petitioner
could have easily substantiated his allegation by a submission of an affidavit of the personnel
manager of his office that no such person is indeed employed by petitioner in his office, but that
evidence was not submitted.766 All things are presumed to have been done correctly and with due
formality until the contrary is proved. This juris tantum presumption stands even against the most
well-reasoned allegation pointing to some possible irregularity or anomaly.767 It is petitioners
burden to overcome the presumption by sufficient evidence, and so far we have not seen anything
in the record to support petitioners charges of anomaly beyond his bare allegation. Petitioner
cannot now be heard to complain that there was an irregular service of the demand letter, as it does
not escape our attention that petitioner himself indicated 314 Sen. Gil Puyat Avenue, Makati
City as his office address in the Contract of Guaranty.

764
Rollo, p. 201.
765
Id. at 98.
766
Omnia praesemuntur rite et solemniter esse acta donee probetur in contrarium.
767
Gold Line Transit, Inc. v. Ramos, 415 Phil. 492, 502-503 (2001).

304
Moreover, under Section 6, Rule 13 of the Rules of Court, there is sufficiency of service
when the papers, or in this case, when the demand letter is personally delivered to the party or his
counsel, or by leaving it in his office with his clerk or with a person having charge thereof,
such as what was done in this case.

We have consistently expostulated that in summary judgments, the trial court can determine a
genuine issue on the basis of the pleadings, admissions, documents, affidavits or counter affidavits
submitted by the parties. When the facts as pleaded appear uncontested or undisputed, then there
is no real or genuine issue or question as to any fact, and summary judgment is called for.768

The Court of Appeals was correct in holding that:

Here, the issue of non-receipt of the letter of demand is a sham or


pretended issue, not a genuine and substantial issue. Indeed, against the positive
assertion of Mr. Roberto O. Pagdilao (the private courier) in his affidavit that he
delivered the subject letter to a certain Ms. Dette Ramos who introduced herself
as one of the employees of [herein petitioner] Mr. Benjamin Bitanga and/or of the
latters companies, said [petitioner] merely offered a bare denial. But bare denials,
unsubstantiated by facts, which would be admissible in evidence at a hearing, are
not sufficient to raise a genuine issue of fact sufficient to defeat a motion for
summary judgment.769

We further affirm the findings of both the RTC and the Court of Appeals that, given the
settled facts of this case, petitioner cannot avail himself of the benefit of excussion.

Under a contract of guarantee, the guarantor binds himself to the creditor to fulfill the
obligation of the principal debtor in case the latter should fail to do so. The guarantor who pays
for a debtor, in turn, must be indemnified by the latter. However, the guarantor cannot be

768
Rivera v. Solidbank, G.R. No. 163269, 19 April 2006, 487 SCRA 512, 535.
769
Rollo, pp. 47-48.

305
compelled to pay the creditor unless the latter has exhausted all the property of the debtor and
resorted to all the legal remedies against the debtor. This is what is otherwise known as the
benefit of excussion.770

Article 2060 of the Civil Code reads:

Art. 2060. In order that the guarantor may make use of the benefit of
excussion, he must set it up against the creditor upon the latters demand for payment
from him, and point out to the creditor available property of the debtor within
Philippine territory, sufficient to cover the amount of the debt.771

The afore-quoted provision imposes a condition for the invocation of the defense of
excussion. Article 2060 of the Civil Code clearly requires that in order for the guarantor to make
use of the benefit of excussion, he must set it up against the creditor upon the latters demand for
payment and point out to the creditor available property of the debtor within the Philippines
sufficient to cover the amount of the debt.772

It must be stressed that despite having been served a demand letter at his office, petitioner still
failed to point out to the respondent properties of Macrogen Realty sufficient to cover its debt as

770
JN Development Corporation v. Philippine Export and Foreign Loan Guarantee Corporation, G.R. No.
151060, 31 August 2005, 468 SCRA 554, 564.
771
Other relevant provisions of the Civil Code reads:

Art. 2058. The guarantor cannot be compelled to pay the creditor unless the latter has exhausted
all the property of the debtor, and has resorted to all the legal remedies against the debtor.

Art. 2061. The guarantor having fulfilled all the conditions required in the preceding article, the
creditor who is negligent in exhausting the property pointed out shall suffer the loss, to the extent of said
property, for the insolvency of the debtor resulting from such negligence.

Art. 2062. In every action by the creditor, which must be against the principal debtor alone, except
in the cases mentioned in article 2059, the former shall ask the court to notify the guarantor of the action. The
guarantor may appear so that he may, if he so desire, set up such defenses as are granted him by law. The
benefit of excussion mentioned in article 2058 shall always be unimpaired, even if judgment should be
rendered against the principal debtor and the guarantor in case of appearance by the latter.
772
JN Development Corporation v. Philippine Export and Foreign Loan Guarantee Corporation, supra note 37.

306
required under Article 2060 of the Civil Code. Such failure on petitioners part forecloses his
right to set up the defense of excussion.

Worthy of note as well is the Sheriffs return stating that the only property of Macrogen
Realty which he found was its deposit of P20,242.23 with the Planters Bank.

Article 2059(5) of the Civil Code thus finds application and precludes petitioner from
interposing the defense of excussion. We quote:

Art. 2059. This excussion shall not take place:

xxxx

(5) If it may be presumed that an execution on the property of the principal


debtor would not result in the satisfaction of the obligation.

As the Court of Appeals correctly ruled:

We find untenable the claim that the [herein petitioner] Benjamin Bitanga
cannot be compelled to pay Pyramid because the Macrogen Realty has allegedly
sufficient assets. Reason: The said [petitioner] had not genuinely controverted the
return made by Sheriff Joseph F. Bisnar, who affirmed that, after exerting diligent
efforts, he was not able to locate any property belonging to the Macrogen Realty,
except for a bank deposit with the Planters Bank at Buendia, in the amount of
P20,242.23. It is axiomatic that the liability of the guarantor arises when the
insolvency or inability of the debtor to pay the amount of debt is proven by the
return of the writ of execution that had not been unsatisfied.773

IN ALL, we fail to point out any impropriety in the rendition of a summary judgment in
favor of the respondent.

773
Rollo, p. 48.

307
WHEREFORE, premises considered, the instant petition is DENIED for lack of merit.
The Decision of the Court of Appeals dated 11 April 2006 and its Resolution dated 5 July 2006
are AFFIRMED. Costs against petitioner.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

308
MA. ALICIA AUSTRIA-MARTINEZ ANTONIO EDUARDO B. NACHURA
Associate Justice Associate Justice

RUBEN T. REYES
Associate Justice

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.

309
REYNATO S. PUNO
Chief Justice

310
FIRST DIVISION

[G.R. No. 141238. February 15, 2002]

SATURNINO SALERA, JR., SARAH SALERA, SAMUEL SALERA, and SUSAN


SALERA, petitioners, vs. A-1 INVESTORS, INC., respondent.

DECISION
PUNO, J.:

Petitioners owe the courts candor and must call a spade a spade. They seek to permanently
enjoin the satisfaction of a final judgment through a mere complaint for injunction which, in
hindsight, they claim is an action for annulment of judgment. We cannot allow their wily ways to
make a mockery of the justice system and render a final judgment empty. They should avail of
remedies for their grievances in accordance with law.
The petitioners filed this petition for review on certiorari to annul the Court of Appeals
Decision dated December 15, 1998 prohibiting the Regional Trial Court of Cebu City, Branch 16,
from proceeding further with Civil Case No. CEB-20550 and Resolution dated December 21, 1999
denying their motion for reconsideration of the December 15, 1998 decision.
The following facts spurred the present controversy:
It is undisputed that on August 27, 1992, Teodora Salera, mother of the petitioners, contracted
a P50,000.00 loan and issued a promissory note to respondent A-1 Investors, Inc. payable one
month after or on September 27, 1992, with interest of six percent (6%) per month. The promissory
note also stated that she would pay liquidated damages of two percent (2%) per month of any
unpaid amount due and that in case legal services are necessary for collection of payment, she
would be liable for attorney's fees equivalent to 25% of the amount due, but in no case less than
P500.00.774
As the loan remained unpaid long after it had fallen due, respondent A-1 Investors, Inc. filed
a complaint for collection of a sum of money on August 15, 1996, docketed as Civil Case No.
15996 in the Metropolitan Trial Court of Quezon City, Branch 36, against Teodora Salera and
impleaded her husband, Saturnino Salera, Sr., pursuant to Section 4, Rule 3 of the then Rules of
Court.775 The summons for said case was received from the sheriff by the couple's son, petitioner

774
Original Records, p. 163; Plaintiff's Pre-trial Brief in Civil Case No. CEB-20550 in the RTC of Cebu City, Branch
16, p. 1; Rollo, pp. 38-39, Complaint in Civil Case No. 15996 in the Metropolitan Trial Court of Quezon City, Branch
36.
775
Sec. 4, Rule 3 of the Rules of Court provides, viz:
Sec. 4. Married woman. - A married woman may not sue or be sued alone without joining her husband, except in the
following instances:

311
Samuel Salera, at their family's residential address at 35-J Amon Court, Lahug, Cebu City in
September 1996, but Samuel refused to sign receipt of a copy thereof.776
Saturnino, Sr. claims that from 1993 to 1997, he lived in Clarin, Bohol as he ran for and was
elected mayor of that town in the 1995 local elections. He and his wife, Teodora, did not receive
the summons that was sent to the Salera residence in Cebu, and were not able to file an Answer to
the Complaint in Civil Case No. 15996. Consequently, they were held in default and a decision
was rendered on November 27, 1996, viz:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against
defendants Spouses Saturnino Salera and Teodora Salera, as follows:
1. Ordering said defendants to pay the sum of FIFTY (P50,000.00) PESOS with
interest at the rate of 6% per month from September 27, 1992 until fully paid;
2. Ordering said defendants to pay liquidated damages in amount equivalent to 2%
per month from September 27, 1992 until fully paid;
3. Ordering the defendants to pay an amount equivalent to 25% of the total amount
due, as and for, attorney's fees; and,
4. Ordering the defendants to pay the costs of suit.777
A copy of the decision was sent again to the family's residential address in Cebu and was
received by a certain Joel Ario on December 23, 1996, but Saturnino, Sr. was then still residing in
Bohol. The Salera spouses did not appeal and the decision became final and executory upon
expiration of the appeal period. On April 23, 1997, Saturnino, Sr.s daughter, Sarah Salera, received

(a) When they are judicially separated;


(b) If they have in fact been separated for at least one year;
(c) When there is a separation of property agreed upon in the marriage settlements;
(d) If the administration of all the property in the marriage has been transferred to her, in accordance with Articles 196
and 197 of the Civil Code;
(e) When the litigation is between the husband and the wife;
(f) If the suit concerns her paraphernal property;
(g) When the action is upon the civil liability arising from a criminal offense;
(h) If the litigation is incidental to the profession, occupation or business in which she is engaged;
(i) In any civil action referred to in Articles 25 to 35 of the Civil Code; and
(j) In an action upon a quasi-delict.
In the cases mentioned in paragraphs (g) to (j), the husband must be joined as a party defendant if the third paragraph
of Article 163 of the Civil Code is applicable.
776
Original Records, p. 47.
777
Id., p. 50; Decision, p. 2.

312
a Writ of Execution778 and a Notice of Levy Upon Realty Pursuant to Writ of Execution779 in
connection with Civil Case No. 15996. Although Sarah was already 28 years old and a college
graduate, she simply received these documents from the sheriff without reading them, placed them
in her drawer without informing her parents about them, and forgot about them. It was only a week
after that she showed the documents to her parents.780
Saturnino, Sr. claims to have been practically unaware of the proceedings in Civil Case No.
15996 and was aghast when on July 10, 1997, his son informed him that he (the son) received a
Notice to Parties of Public Auction dated June 23, 1997. The notice stated that Sheriff Jessie
Belarmino would sell the Salera spouses property on July 17, 1997 pursuant to a Writ of Execution
issued in Civil Case No. 15996. The property consisted of a parcel of land in Cebu covered by
TCT No. 66400 with an area of 405 square meters.781
As Saturnino, Sr. felt aggrieved and denied of due process in Civil Case No. 15996, he filed
on July 14, 1997, a complaint for "Injunction with Damages" against respondent A-1 Investors,
Inc. docketed as Civil Case No. CEB-20550 before the Regional Trial Court (RTC) of Cebu City,
and prayed that the court award damages in his favor and issue a temporary restraining order,
followed by a preliminary injunction, and that the injunction be made permanent after trial.782 The
RTC of Cebu issued a TRO, and subsequently a preliminary injunction enjoining the sale of the
levied property. It gave due consideration to Saturnino Sr.s allegation that he was unaware of the
proceedings in Civil Case No. 15996 and he had no relation with respondent A-1 Investors, Inc.
as it was his wife, and not him, who signed the loan agreement; that the levied property is his
exclusive property and not answerable to the debt of his wife; and that assuming he was liable to
pay respondent, the levied property was exempt from execution as it was their family home. 783
Respondent A-1 Investors, Inc. filed a Motion for Summary Judgment and a Supplemental Motion
for Summary Judgment with Urgent Motion to Quash Writ of Preliminary Injunction. In an Order
dated October 1, 1997, the court denied the motions and ordered the respondent to answer.
Respondent filed a motion for reconsideration of the October 1 Order and an Answer. On October
28, 1997, Saturnino, Sr. died and all his children, the petitioners herein, replaced him as plaintiffs
in the injunction case. His wife, Teodora Salera, executed an affidavit stating that the levied
property was the exclusive property of her husband and that she was waiving in favor of her
children her one-fifth share of the levied property which she was to inherit.784 Respondent's motion
for reconsideration was denied. The case was then set for pre-trial conference and both petitioners
and respondent filed their pre-trial briefs. On January 12, 1998, respondent filed a Petition for
Certiorari and Prohibition with the Court of Appeals.785 The appellate court granted the petition

778
Id., p. 8.
779
Id., p. 7.
780
TSN, Sarah Salera, July 28, 1997, pp. 16-21.
781
Original Records, p. 1; Complaint, p. 1.
782
Original Records, p. 3.
783
Id., pp. 63-64.
784
Id., pp. 152-153.
785
Rollo, pp. 3-7; Petition, pp. 1-5.

313
in the assailed Decision dated December 15, 1998, viz:
Though not specifically raised, the petition for prohibition is an indirect attack on the
jurisdiction of the court to take cognizance of the complaint for injunction, while invoking
at the same time the jurisdiction of the same court to render a summary judgment in his
favor. Be that as it may, (i)t is hornbook doctrine that in order (t)o ascertain whether a
court has jurisdiction or not, the provisions of the law should be inquired into. (Ignacio
vs. Court of Appeals, G.R. No. 113947, 11 December 95, First Division, Minute
Resolution) Furthermore, the jurisdiction of the court must appear clearly from the statute
law or it will not be held to exist. (Azarcon vs. Sandiganbayan, 268 SCRA 747, 757).
Clearly, from the provision of law abovecited, the RTC must be prohibited from further
proceeding with the case. In the same case, it was held that (j)urisdiction cannot be
conferred by xxx erroneous belief of the court that it had jurisdiction. (Azarcon vs.
Sandiganbayan, supra, p. 763) Clearly, Civil Case CEB-20550 is but a mere brazen
attempt by Salera to substitute for a lost appeal of the MeTC-QC decision which had
already attained finality. Even if the case had been brought before the RTC-QC, the same
would have been dismissed anyway, execution having been issued as a matter of right in
favor of petitioner for failure of Salera to appeal.
WHEREFORE, above premises considered, RTC-Cebu City is prohibited from
further proceeding with Civil Case CEB-20550.786
Petitioners filed a motion for reconsideration which was denied in the assailed Resolution
dated December 21, 1999.
Hence this appeal with the following assignment of errors:
I. WHETHER OR NOT REGIONAL TRIAL COURTS HAVE JURISDICTION
OVER INJUNCTION CASES;
II. WHETHER OR NOT RESPONDENT IS ESTOPPED FROM RAISING THE
ISSUE OF LACK OF JURISDICTION;
III. WHETHER OR NOT THE COMPLAINT IN CIVIL CASE NO. CEB-20550
SHOULD HAVE BEEN TREATED AS A PETITION TO ANNUL THE DECISION IN
CIVIL CASE NO. 15996 OF THE METROPOLITAN TRIAL COURT OF QUEZON
CITY.
The petition must fail.
Petitioners anchor their position that the RTC of Cebu has jurisdiction over their injunction
case on Section 19 (1) of Batas Pambansa Blg. 129, as amended by R.A. No. 7691, which states
that Regional Trial Courts have jurisdiction over civil actions in which the subject of the litigation
is incapable of pecuniary estimation. They assert that the complaint for injunction filed by
Saturnino, Sr. falls within this category of civil actions as the subject of the action was the restraint
of the public auction of property levied pursuant to a writ of execution issued in Civil Case No.
15996.
While petitioners are correct that a complaint for injunction is a recognized remedy to enjoin

786
Rollo, p. 31; Decision, p. 7.

314
the performance of an act,787 which action falls within the province of Regional Trial Courts,788 it
must be taken into account that Saturnino, Sr. sought to permanently enjoin the public auction of
property levied pursuant to a writ of execution issued in Civil Case No. 15996 on the ground that
he was not served with summons and was denied due process. In doing so, Saturnino, Sr. was
actually seeking the annulment of the decision in Civil Case No. 15996 which was the basis of the
writ of execution pursuant to which the public auction was to be held. The proper remedy for
petitioners' predicament is therefore not an action for injunction, but for annulment of judgment.
It is thus understandable why petitioners are staunch in claiming, in hindsight, that although
the complaint filed in the RTC of Cebu was captioned Injunction with Damages, the allegations
therein suffice to constitute an action for annulment of the decision in Civil Case No. 15996 for
lack of due process amounting to lack of jurisdiction and/or extrinsic fraud. The issue of whether
or not the Metropolitan Trial Court of Quezon City did not acquire jurisdiction over the person of
Saturnino, Sr. in Civil Case No. 15996 and his exclusion from the proceedings in said case
amounted to extrinsic fraud which denied him of due process should be properly resolved in an
action for annulment of judgment as mandated by Sections 1 and 2789 in relation to Section 10 of
Rule 47 of the 1997 Rules of Civil Procedure, viz:
Sec. 1. Coverage.- This Rule shall govern the annulment by the Court of Appeals of
judgments or final orders and resolutions in civil actions of Regional Trial Courts for
which the ordinary remedies of new trial, appeal, petition for relief or other appropriate
remedies are no longer available through no fault of the petitioner.
Sec. 2. Grounds for annulment.- The annulment may be based only on the grounds
of extrinsic fraud and lack of jurisdiction.
xxx x x
x xxx
Sec. 10. Annulment of judgments or final orders of Municipal Trial Courts. - An
action to annul a judgment or final order of a Municipal Trial Court shall be filed in the
Regional Trial Court having jurisdiction over the former. It shall be treated as an ordinary
civil action and sections 2, 3, 4, 7, 8 and 9 of this Rule shall be applicable thereto.
Unfortunately for the petitioners, the complaint filed by Saturnino, Sr. in the RTC of Cebu
was, without a shadow of doubt, not for annulment of the decision rendered in Civil Case No.
15996. Not only was the complaint captioned Injunction with Damages, but it likewise did not
pray for annulment of judgment, viz:
WHEREFORE, in view of the foregoing, it is respectfully prayed that:
1. Upon the filing of this Complaint, a temporary restraining order be issued and to
be followed by a preliminary injunction after a preliminary hearing upon putting by the
plaintiff a bond in such amount that this Honorable Court may determine, directing
defendants to immediately stop from proceeding with the auction sale on July 17, 1997

787
Manila Banking Corp., et al. v. Court of Appeals, et al., 187 SCRA 138 (1990).
788
Notre Dame de Lourdes Hospital v. Mallare-Phillips, 197 SCRA 187 (1991).
789
See also Gacutana-Fraile v. Domingo, et al., G.R. No. 138518, December 15, 2000.

315
and after trial, to make said injunction permanent and perpetual;
2. And on plaintiff's claim for damages, defendants be ordered jointly and solidarily
to pay plaintiff the following sums of money:
a. P500,000.00 or such amount as this Honorable Court may deem just, legal, and
equitable under the premises by way of moral damages;
b. P100,000.00 or such amount as this Honorable Court may deem just, legal and
equitable under the premises by way of exemplary damages;
c. P100,000.00 as attorneys fees;
d. P50,000.00 as litigation expenses, and
e. Triple costs of this suit.
Further, plaintiff prays for such other relief and remedies this Honorable Court may
find just and equitable under the circumstances.790
Section 4 in relation to the above-quoted Section 10, Rule 47 of the 1997 Rules of Civil
Procedure on annulment of judgments or final orders provides, viz:
Sec. 4. Filing and contents of petition.- The action shall be commenced by filing a
verified petition alleging therein with particularity the facts and the law relied upon for
annulment, as well as those supporting the petitioner's good and substantial cause of
action or defense, as the case may be.
. . . A certified true copy of the judgment or final order or resolution shall be attached
to the original copy of the petition intended for the court and indicated as such by the
petitioner.
The petitioner shall also submit together with the petition affidavits of witnesses or
documents supporting the cause of action or defense and a sworn certification that he has
not theretofore commenced any other action involving the same issues in the Supreme
Court, the Court of Appeals or different divisions thereof, or any other tribunal or agency;
if there is such other action or proceeding, he must state the status of the same, and if he
should thereafter learn that a similar action or proceeding has been filed or is pending
before the Supreme Court, the Court of Appeals, or different divisions thereof, or any
other tribunal or agency thereof within five (5) days therefrom.
It is clear from the contents of the complaint filed by the petitioners that the action is not for
annulment of the decision in Civil Case No. 15996. It does not allege with particularity the facts
and the law relied upon for annulment, as well as those supporting the petitioner's good and
substantial cause of action which petitioners now claim are extrinsic fraud and lack of jurisdiction.
Neither is a certified true copy of the decision in Civil Case No. 15996 attached to the original
copy of the petition intended for the court and indicated as such by the petitioner. Nor were
affidavits of witnesses or documents supporting the cause of action, i.e., annulment of judgment
on the ground of lack of jurisdiction and extrinsic fraud, submitted together with the complaint.
Petitioners cannot now mislead the court into treating the complaint for injunction as an action for

790
Original Records, p. 3; Complaint, p. 3.

316
annulment of judgment with the ancillary remedy of injunction.
More importantly, even assuming arguendo that the action was for annulment of judgment,
the RTC of Cebu did not have jurisdiction over the subject matter of the complaint as Section 10,
Rule 47 of the 1997 Rules of Civil Procedure provides:
Sec. 10. Annulment of judgments or final orders of Municipal Trial Courts.- An
action to annul a judgment or final order of a Municipal Trial Court shall be filed in the
Regional Trial Court having jurisdiction over the former. . .
It is therefore the RTC of Quezon City which has jurisdiction over a case seeking annulment of
the final decision of the Metropolitan Trial Court of Quezon City, Branch 36, which is similar in
rank as the above-mentioned Municipal Trial Court.
Petitioners claim that respondent A-1 Investors, Inc. is now estopped from assailing the
jurisdiction of the RTC of Cebu over the subject matter of the action for two reasons. First,
respondent did not raise this issue of jurisdiction in their Petition for Certiorari and Prohibition in
the Court of Appeals. Thus, petitioners argue that it was error for the appellate court to have
granted the petition on the ground of lack of jurisdiction over the subject matter. Second, according
to petitioners, while it is established doctrine that lack of jurisdiction over the subject matter can
be raised at any time during the proceedings even for the first time on appeal, this rule admits of
an exception as when the defendant actively participated in the proceedings and invoked the
jurisdiction of the court in seeking affirmative remedies such as respondents Motion for Summary
Judgment, Supplemental Motion for Summary Judgment with Urgent Motion to Quash Writ of
Execution, and Answer. In such cases, the defendant is estopped from assailing the jurisdiction of
the court pursuant to the policy that it is not right for a party who has affirmed and invoked the
jurisdiction of a court in a particular matter to secure an affirmative relief, to afterwards deny that
same jurisdiction to escape a penalty.791
A careful perusal of the records would, however, show that respondent A-1 Investors, Inc.
questioned the jurisdiction of the RTC of Cebu over the subject matter of the action, i.e., to issue
a preliminary injunction to enjoin the public auction of property levied pursuant to a writ of
execution issued in Civil Case No. 15996 of the Metropolitan Trial Court of Quezon City. In its
motion for reconsideration of the October 1, 1997 Order of the RTC of Cebu that denied
respondent's motion for summary judgment, respondent stated, viz:
4. Even assuming arguendo that the lot subject of the execution is an exclusive
property of the plaintiff, this Court still has no authority to issue an injunction based
on said ground because in doing so, this Court will in effect be varying the mandate
of the Writ of Execution issued by the Quezon City Metropolitan Trial Court,
Branch 36, in Civil Case No. 15996 (See Annex D, Complaint) which enjoins the
properties of herein plaintiffs and his spouse to satisfy the money judgment in the said
case.
5. With due respect, it is well to remind this Honorable Court that it is beyond its
authority to deviate from the mandate of a lawful, valid, and enforceable Writ of

791
Rollo, p. 8; Petition, p. 7, citing Tijam v. Sibonghanoy, 23 SCRA 29 (1968).

317
Execution issued by a court outside of its jurisdiction.792 (emphasis supplied)
In its Answer, respondent A-1 Investors, Inc. similarly stated in its affirmative defenses, viz:
5. Assuming arguendo that the subject house and lot are exclusive properties of the
plaintif (sic), still this Honorable Court has no authority to issue an injunction based
on said ground for the reason that it has no authority to deviate from the mandate
of the Writ of Execution issued by the Quezon City Metropolitan Trial Court in Civil
Case No. 15996 (See Annex D, Complaint) which enjoins the properties of plaintiff
herein and his spouse to satisfy the money judgment in said case.793 (emphasis supplied)
While the respondent invoked the jurisdiction of the court and sought affirmative remedies
such as the Motion for Summary Judgment and the Supplemental Motion for Summary Judgment
with Urgent Motion to Quash Writ of Execution, it also questioned the jurisdiction of the court
over the subject matter in its Motion for Reconsideration and Answer. Respondent A-1 Investors,
Inc. is not estopped from assailing the jurisdiction of the RTC of Cebu over the subject matter
because it properly raised this lack of jurisdiction as one of its defenses in its Answer. It was thus
proper for the Court of Appeals to grant the petition filed by respondent A-1 Investors, Inc. on the
ground that the RTC of Cebu did not have jurisdiction over the subject matter of the complaint
even though respondent did not raise the issue of jurisdiction on appeal. Section 1, Rule 9 of the
1997 Rules of Civil Procedure provides, viz:
Section 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. (emphasis supplied)
Well-settled is the rule that the issue of jurisdiction over the subject matter may, at any time, be
raised by the parties or motu proprio considered by the Court.794
WHEREFORE, the petition is DENIED and the impugned decision and resolution of the
Court of Appeals are AFFIRMED. The preliminary injunction issued by the RTC of Cebu, Branch
16 in Civil Case No. CEB-20550 is lifted and said court is prohibited from further proceeding with
Civil Case No. CEB-20550. No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Kapunan and Ynares-Santiago, JJ., concur.

792
Original Records, p. 137; Motion for Reconsideration, p. 3.
793
Original Records, p. 144; Answer, p. 2.
794
Namuhe v. Ombudsman, 298 SCRA 298 (1998), citing Section 1, Rule 9, 1997 Rules of Civil Procedure (formerly
Section 2, Rule 9); Fabian v. Desierto, 295 SCRA 470 (1998).

318
FIRST DIVISION

EDWARD ROCO TAN G.R. No. 168809


and EDWIN ROCO TAN,
Petitioners, Present:

Panganiban, C.J. (Chairperson),


- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
BENIGNO DE LA VEGA, ANGELA
TUASON STALEY and ANTONIO Promulgated:
PEREZ Y TUASON,
Respondents. March 10, 2006

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

DECISION

YNARES-SANTIAGO, J.:

319
Assailed in this petition for review is the February 3, 2005 Decision795of the Court of
Appeals in CA-G.R. CV No. 79957, which affirmed the March 21, 2003 Order796of the Regional
Trial Court of Pasig City, Branch 264, granting the motion for judgment on the pleadings filed by
respondents in Civil Case No. 62269. Likewise questioned is the appellate courts July 6, 2005
Resolution797which denied petitioners motion for reconsideration.

The undisputed facts show that on August 3, 1992, respondents filed a complaint for
quieting of title and for declaration of nullity of Free Patent No. 495269, Original Certificate of
Title (OCT) No. 711 and Transfer Certificate of Title (TCT) No. 186516, against the heirs of
Macario Mencias (defendant heirs), namely, Aquilina Mencias, Aurora M. Gabat, Merlyn M.
Cadete, Myrna M. Quirante; and the Secretary of the Department of Environment and Natural
Resources, the Director of the Land Management Bureau and the Register of Deeds of Marikina.
The complaint was later amended to implead herein petitioner purchasers of the disputed lot and
to nullify TCT No. 272191 issued in their name.

The Amended Complaint averred that respondents are the co-owners of a 159,576 square
meter parcel of land located in Marikina, Rizal, Metro Manila and covered by TCT No. 257152,
issued on June 20, 1969. Said title was a transfer from TCT No. 22395 in the name of J. Antonio
Araneta as trustee of the children of Angela I. Tuason. Among the lots covered by TCT No. 257152
is the controverted Lot 89 containing an area of 54,197 square meters.798

Sometime in April 1992, respondents learned that the defendant heirs are causing the
ejectment of the occupants of a 29,945 square meter portion of Lot 89; and that Macario Mencias
was able to obtain Free Patent No. 495269 on July 31, 1971, and OCT No. 711 on August 11,
1971, over said portion. Upon Macario's death, OCT No. 711 was canceled and TCT No. 186516

795
Rollo, pp. 33-57; penned by Associate Justice Martin S. Villarama, Jr. and concurred in by Associate Justices
Regalado E. Maambong and Lucenito N. Tagle.
796
Records, pp. 768-774; penned by Judge Leoncio M. Janolo, Jr.
797
Rollo, p. 60.
798
Id. at 63.

320
was issued to the defendant heirs on July 5, 1990.799 By virtue of a Deed of Sale inscribed on
November 14, 1994, TCT No. 186516 was further cancelled and TCT No. 271604 was issued on
the same date in favor of New Atlantis Real Estate & Development, Inc., (Corporation) represented
by its President, Victor C. Salvador, Jr. The questioned lot was thereafter sold by the Corporation
to petitioners. TCT No. 271604 was thus cancelled and in lieu thereof, TCT No. 272191 was issued
to petitioners on November 17, 1994.800

Respondents contended that Macarios OCT No. 711 and its derivative titles-TCT No.
186516, in the name of defendant heirs and petitioners TCT NO. 272191, are void because the
area they cover is entirely within their (respondents) land, specifically, Lot 89, as shown by the
notation in the said titles, i.e., This survey is covered by F.P.A. No. (III-1) 4496; and This survey
is entirely inside No. 89, II-4755.801 Respondents further averred that since the controverted lot is
already a private land, the Director of Lands and the Secretary of Agriculture and Natural
Resources, had no jurisdiction to approve Macarios application and to issue Free Patent No.
495269. The pendency of this action was allegedly inscribed in the defendant heirs title (TCT No.
186516) on August 4, 1992 and carried over to the petitioners' TCT No. 272191.802

In their Answer,803the defendant heirs contended that Lot 89 was never part of respondents
TCT No. 257152 which originated from OCT No. 730. Respondents own exhibits, i.e., the
documents purportedly issued by the Bureau of Lands (Exhibits E and F), show that Lot 89 was
covered by OCT No. 734 and not OCT No. 730. Defendant heirs further stated that respondents
TCT No. 257152 was issued in lieu of TCT No. 22395 which is a mere reconstitution of TCT No.
45046. Upon verification with the Register of Deeds of Rizal, TCT No. 45046, covers a different
parcel of land situated in San Juan, Rizal, and measuring about 356 square meters only. The
defendant heirs also raised the defenses of laches and prescription.

799
Id. at 64.
800
Id. at 67.
801
Id. at 66.
802
Id. at 66-68.
803
Id. at 85-88.

321
On the other hand, petitioners asserted, inter alia, that they are purchasers in good faith
and for value and that they have no knowledge of any defect in the title of the Corporation from
whom they purchased the controverted lot. The notice of lis pendens alleged to have been inscribed
in TCT No. 186516 on August 4, 1992 does not appear in the Corporations title, TCT No. 271604
nor in their title, TCT No. 272191. Absent said notice, petitioners claim that they cannot be charged
with knowledge of any defect in the Corporation's title. Neither does the note This survey is
covered by F.P.A. No. (III-1) 4496; and This survey is entirely inside No. 89, II-4755, serve as
sufficient warning to third persons because said notes do not indicate that the property is covered
by another title.804

For failure to file their Answer, defendant Aurora M. Gabat,805 public defendants Secretary
of the Department of Environment and Natural Resources, Director of Land Management Bureau
and the Register of Deeds of Marikina,806were declared in default.

On March 4, 2003, respondents filed a motion for judgment on the pleadings which was
granted by the trial court. It was held that the disputed lot is within Lot 89 covered by respondents
TCT No. 257152, issued on June 20, 1969. Said lot therefore became a private land long before
the Free Patent was issued to Macario on July 31, 1971. Hence, the titles derived or issued on the
basis of said Free Patent are void because Public Land Act applies only to public lands and not
private lands. On the theory that the spring cannot rise higher than its source, the trial court
concluded that petitioners cannot be purchasers in good faith considering that their title was
derived from Macario who acquired the property by virtue of a void title. It further ruled that
petitioners defense of good faith must fail because they were forewarned of the notice indicating
that the questioned lot is inside Lot 89. The dispositive portion of the March 21, 2003 order, reads:

804
Id. at 69-84.
805
Order dated July 15, 1995, records, p. 147.
806
Order dated July 20, 1993, records, p. 87.

322
WHEREFORE, premises considered, Plaintiffs [respondents herein]
Motion is hereby Granted and judgment rendered as follows:

1. Plaintiffs Transfer Certificate of Title (TCT) No. 257152 is declared


valid and superior to defendants [petitioners] TCT No. 272191;

2. Free Patent No. 495269 issued by then Secretary of Environment


and Natural Resources to Macario Mencias on July 21, 1971 is declared null and
void;

3. Original Certificate of Title (OCT) No. 711, Transfer Certificate of


Title (TCT) No. 271604/T-1358 and Transfer Certificate of Title (TCT) No.
272191, TCT No. 186516 and TCT No. 272191, all derivatives [sic] title of Free
Patent 495269 issued by Registry of Deeds of Marikina, are also declared null and
void;

4. The Bureau of Lands and Land Registration Administration are


directed to enter into their technical files the findings in this order;

5. The Registry of Deeds of Marikina is directed to cancel Transfer


Certificate of Title (TCT) NO. 272191 in the names of Edward and Edwin Roco
Tan.

SO ORDERED.807

Petitioners appealed to the Court of Appeals which affirmed the assailed order of the trial
court. They filed a motion for reconsideration but was denied in a resolution dated July 6, 2005.

Hence, this petition.

807
Records, pp. 773-774.

323
The sole issue for resolution is whether a judgment on the pleadings is proper in the instant
case.

Section 1, Rule 34 of the Rules of Court, states:

SECTION 1. Judgment on the pleadings. Where an answer fails to tender


an issue, or otherwise admits the material allegations of the adverse partys pleading,
the court may, on motion of that party, direct judgment on such pleading. x x x.

Where a motion for judgment on the pleadings is filed, the essential question is whether
there are issues generated by 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.808The answer would fail to tender an issue, of course, if it does not deny the material
allegations in the complaint or admits said material allegations of the adverse partys pleadings by
confessing the truthfulness thereof and/or omitting to deal with them at all. Now, if an answer does
in fact specifically deny the material averments of the complaint and/or asserts affirmative
defenses (allegations of new matter which, while admitting the material allegations of the
complaint expressly or impliedly, would nevertheless prevent or bar recovery by the plaintiff), a
judgment on the pleadings would naturally be improper.809

In this case, we find that the trial court erred in rendering judgment on the pleadings
because the pleadings filed by the parties generated ostensible issues that necessitate the
presentation of evidence. Respondents action for declaration of nullity of Free Patent No. 495269
and the titles derived therefrom is based on their claim that the lot titled in the name of petitioners,
is a portion of a bigger tract of land previously titled in the name of their (respondents)
predecessors-in-interest. The documents presented in support thereof were the photocopy of

808
Wood Technology Corporation v. Equitable Banking Corporation, G.R. No. 153867, February 17, 2005, 451 SCRA
724, 731.
809
Mongao v. Pryce Properties Corporation, G.R. No. 156474, August 16, 2005, 467 SCRA 201, 209-210.

324
respondents TCT No. 257152 which shows that the land it covers, including lot 89, originated
from OCT No. 730; and photocopies of the documents alleged to have been issued by the Bureau
of Lands and confirming that the disputed lot is a portion of respondents Lot 89. Pertinent portions
of the Amended Complaint, state:

5. Sometime in early April, 1992, plaintiff de la Vega was informed by


one of the occupants of the above-described lot No. 89 that the heirs of Macario
Mencias, the defendants herein, were causing the ejectment of said occupants and
claiming to be the owners of an area of 29,945 sq. ms. (sic) which is within, or part
of, Lot No. 89 covered by plaintiffs T.C.T. No. 257152. It was only then that the
plaintiffs heard of Macario Mencias and of his encroaching into plaintiffs Lot 89.

6. The plaintiffs later learned that, unknown to them, Macario Mencias


had applied with the then Bureau of Lands for, and obtained on 31 July 1971, Free
Patent No. 495269 which was granted under the signature of the then Secretary of
Agriculture and Natural Resources and covering an area of 29,945 sq. ms. (sic) as
described in Plan F (III-1) 4496-D. On 11 August 1971, Original Certificate of Title
No. 711 (Rizal) was issued to him based on the said Free Patent, and upon his death,
said OCT No. 711 was cancelled and transferred to his heirs, the defendants herein,
to whom T.C.T. No. 186516 (Marikina) was issued on 5 July 1990. The plaintiffs
were never notified of said application of Mencias for free patent nor of the issuance
of Free Patent No. 495269 and OCT No. 711 to him and T.C.T. No. 186515 to his
heirs, the defendants herein. Photocopies of OCT No. 711, which incorporated Free
Patent No. 495269, and T.C.T. No. 186516 are hereto appended as Annexes B and
C, respectively.

xxxx

8. A letter dated 29 October 1971 of Mr. Amando A. Salvador as Chief


of the Survey Division of the then Bureau of Lands and addressed to Macario
Mencias, 1st Indorsement, dated 15 February 1974, signed by Mr. Daniel C. Florida
as Acting Chief of the Legal Division of the Bureau of Lands, a report dated 17
December 1976 by Mr. Jose B. Isidro as Hearing Officer addressed to the Director
of Lands, and the 1st Indorsement, dated 3 January 1977, also addressed to the
Director of Lands by Mr. Claudio C. Batiles as the District Land Officer,
photocopies of which are appended hereto as Annexes D, E, F and G, respectively,
unequivocally confirmed that the area of 29,945 sq. ms. (sic) covered by the Free
Patent based on Plan F (III-1) 4496-D and issued to Macario Mencias was entirely
inside Lot 89 of Plan II-4755, which was covered by T.C.T. No. 22395 in the name
of J Antonio Araneta, Trustee of the children Angela I. Tauson, and since 20 June
1969, by T.C.T. No. 257152 in the plaintiffs names.

9. There can be no doubt that the area of 29,945 sq. ms. (sic) covered
by Free Patent No. 495269, which was incorporated in OCT No. 711 issued to

325
Macario Mencias, was within Lot 89 of Plan II-4755 covered by T.C.T. No. 22395
and, since 20 June 1969, by T.C.T. No. 2597152 (sic) in the plaintiffs names,
because the technical description of said area embodied in the said Free Patent itself
and in OCT No. 711 disclosed the following information:

NOTE: This survey is covered by F.P.A. No. (III-1) 4496.


This survey is entirely inside No. 89, II-4755 (See Annex B hereof).
(See Annex B hereof).

10. In fact the very same notes were carried over in T.C.T. No. 186516
issued to the heirs of Mencias, the defendants herein, thus forewarning all those
who dealt or may have dealt with the private defendants regarding the area therein
described that there was something anomalous in said title (See Annex C hereof).

xxxx

14. The records of the Registry of Deeds of Marikina, Metro Manila,


disclosed that TCT No. 186516, Annex C, was cancelled and T.C.T. No. 271604,
covering the same parcel of land covered by T.C.T. No. 186516, was issued on
November 14, 1994 by the Register of Deeds of Marikina, Mr. Artemio B. Caa, to
the New Atlantis Real Eastate & Dev., Inc. represented by its President, Victor C.
Salvador, Jr., based on a sale in its favor inscribed on the same date; and that T.C.T.
No. 271604 was thereupon cancelled and in lieu thereof T.C.T. No. 272191 was
issued by the said Register of Deeds to private defendants Edward and Edwin Roco
Tan on November 17, 1994 based on a sale in their favor inscribed on the same
date. A photocopy of T.C.T. No. 272191 is hereto attached as Annex H.

xxxx

16. Neither New Atlantis Real Estate & Dev. Inc., nor Edward Roco
Tan and Edwin Roco Tan could claim to be purchasers in good faith not only
because their titles are void and inexistent and could not possibly have any legal
effect whatsoever but also because the NOTE cited in paragraphs 9 and 10 above,
which likewise appears on T.C.T. No. 272191 itself, discloses the very basis for its
nullity.

17. The notice of the pendency of this action (Notice of Lis Pendens)
was duly inscribed on T.C.T. No. 186516 on August 4, 1992 under Entry No.
274711, which notice has been carried over to T.C.T. No. 272191, a photocopy of
which is hereto appended as Annex H.

x x x x.810

810
Rollo, pp. 64-68.

326
The foregoing averments were specifically denied by defendant heirs who raised, among
others, the affirmative defense that respondents TCT No. 22395 is void and that lot 89 is not found
inside respondents land. Thus

11. Lot 89 was never a part of the Mariquina Estate as shown in


subdivision plan PSD 29965 as surveyed in December, 1950 up to June, 1951. This
fact is also certified by the Office of the Register of Deeds of Rizal as early as 1967,
a photo copy of said certification is hereto attached as Annex 1;

12. Plaintiffs own exhibits (Annexes E, F, in relation to Annex A) show


that lot 89 was never part of Original Certificate of Title (O.C.T.) No. 730 from
which plaintiffs alleged title was derived (T.C.T. No. 257152, Annex A). In
Annexes E and F, Lot No. 89 of II-4755 is covered by O.C.T. No. 734 and not 730;

13. T.C. T. No. 257152 is spurious, falsified, hence, null and void. This
certificate of title was issued in lieu of T.C.T. No. 22395/T 389 as per Annex A of
the Complaint. T.C.T. No. 22395/T 389 was in turn issued in lieu of T.C.T. No.
45046 as shown in a document (T.C.T. No. 22395) hereto attached as Annex 2;

14. It also appears that T.C.T. No. 22395 is a mere reconstitution of a


lost/destroyed T.C.T. No. 45046 as shown on page 3 of T.C.T. No. 257152;

15. Upon verification with the Office of the Register of Deeds of Rizal,
T.C.T. No. 45046 covered a different parcel of land situated in San Juan, Rizal and
measuring about 356 square meters only, photo copy of which is hereto attached as
Annex 3 hereof;

x x x x.811

Petitioners asserted, inter alia, the affirmative defense of good faith and denied the material
allegations of the complaint relating to the origin of the title of respondents; and the latters claim
that Lot 89 is covered by TCT No. 257152. Pertinent portions of the Answer state:

In further support of the Specific Denials and Affirmative Allegations


herein set forth, and by way of Affirmative Defenses, defendants allege:

xxxx

4.2 Defendants are innocent purchasers for value of the subject


property. They had no knowledge, actual or constructive, of the alleged defect in

811
Id. at 86.

327
their title, Transfer Certificate of Title No. 272191, or of the title of their
predecessor-in-interest, the Corporation.

4.2.1 Plaintiff's (sic) notice of lis pendens alleged to have been duly
inscribed on TCT No. 186516 on August 4, 1992 under Entry No, 274711 did not
appear or was not annotated on the corporations title, TCT No. 271604, which was
issued on November 14, 1994 or long after the alleged inscription was made on the
said title. Attached and made integral part hereof as Annex A is a copy of
Corporation's title, TCT No. 271604.

4.2.2 Neither did said inscription appear or annotated on defendants title,


TCT No. 272191, which was issued on 17 November 1994. Attached and made
integral part hereof as Annex B is a copy of TCT No. 272191.

4.2.3 It bears stressing that if the said inscription was duly made on 4
August 1992 as plaintiffs alleged, the same would have been annotated on TCT
Nos. 271604 and 272191 which were issued long after the said entry was allegedly
made. Obviously, if said entry does appear today on TCT No. 272191, it was made
only recently or at the earliest, after the latter title was issued on 17 November 1994.
But certainly said entry could not have been possibly made on 4 August 1992.

4.2.4 With the absence of the notice of lis pendens, defendants could not
be charged with notice of any defect in their title No. 272191 nor their status as
innocent purchasers for value be adversely affected by the same.

4.2.5 Neither does the note, this survey is covered by F.P.A. No. (III-1)
4496; This survey is entirely inside No. 89 II-4755. serve as sufficient notice to
defendants of any defect in their title. Said note does not indicate or disclose that
the subject property is covered by another title.

4.2.6 Moreover, the fact that the subject property was covered by TCT
No. 271604 duly issued by the Registry of Deeds in the name of the corporation
without any encumbrance, liens or adverse claims annotated thereon negates any
possibility that the subject property belongs to any person other than the
corporation.812

It is clear from the foregoing that the pleadings filed in the instant case generated the
following issues: (1) whether respondents TCT No. 257152 is valid; (2) whether Lot 89 is covered
by TCT No. 257152; and (3) whether petitioners are purchasers in good faith. This is clearly not a
proper case for judgment on the pleadings considering that the Answers tendered factual issues.

812
Id. at 76-79.

328
The trial court rendered a summary judgment on March 21, 2003 and not a judgment on the
pleadings.

In Narra Integrated Corporation v. Court of Appeals,813the Court explained the distinction


between a proper case of summary judgment and judgment on the pleadings, in this wise:

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
answerbut the issues thus arising from the pleadings are sham, fictitious or not
genuine, as shown by affidavits, depositions, or admissions. x x x.

In any case, a summary judgment is likewise not warranted in this case as there are genuine
issues which call for a full blown trial. A genuine issue is an issue of fact which requires the
presentation of evidence as distinguished from a sham, fictitious, contrived or false claim. When
the facts as pleaded appear uncontested or undisputed, then there is no real or genuine issue or
question as to the facts, and summary judgment is called for. The party who moves for summary
judgment has the burden of demonstrating clearly the absence of any genuine issue of fact, or that
the issue posed in the complaint is patently unsubstantial so as not to constitute a genuine issue for
trial. Trial courts have limited authority to render summary judgments and may do so only when
there is clearly no genuine issue as to any material fact. When the facts as pleaded by the parties
are disputed or contested, proceedings for summary judgment cannot take the place of trial.814

In the instant case, presentation of evidence is necessary to determine the validity of TCT
No. 22395 from which respondents title (TCT No. 257152) was derived. As alleged by defendant
heirs, TCT No. 22395 was a mere reconstitution of TCT No. 45046, which per verification from
the Register of Deeds of Rizal pertain to a different piece of land measuring only about 356 square

813
398 Phil. 733, 740 (2000).
814
Evadel Realty and Development Corporation v. Soriano, G.R. No. 144291, April 20, 2001, 357 SCRA 395, 401.

329
meters and located in San Juan, Rizal. These allegations were never refuted by respondents, hence,
they cannot be simply brushed aside by the trial court.

Moreover, even assuming that the title of respondents predecessors-in-interest (TCT No.
22395) is valid, the evidence at this stage is still insufficient to sustain the conclusion of the trial
court that Lot 89 is inside respondents land now covered by TCT No. 257152. The title appended
by respondents in their complaint is a mere photocopy. Likewise, the document allegedly issued
by the Bureau of Lands and presented by respondents to prove that Lot 89 is inside their land are
also mere photocopies and not authenticated by said office. Furthermore, the title referred in the
said documents as the origin of TCT No. 257152, is a different title, that is OCT No. 734 and not
OCT No. 730. There is thus a need to present evidence to settle the issues in a full blown trial.

If the evidence show that the Free Patent and the OCT issued to petitioners predecessors-
in-interest is valid and or Lot 89 is not inside TCT No. 257152, then judgment should be rendered
in favor of petitioners; and whether the latter acted in good or bad faith will no longer be a decisive
issue in this case. On the other hand, if the title of petitioners predecessors-in-interest is declared
void, the defense of good faith may still be available to petitioners who claim to be purchasers in
good faith and for value. The rule is that a void title may be the source of a valid title in the hands
of an innocent purchaser for value.815 An innocent purchaser for value is one who buys the property
of another, without notice that some other person has a right to, or interest in, such property and
pays a full and fair price for the same at the time of such purchase, or before he has notice of the
claims or interest of some other person in the property.816

Since good faith is always presumed,817it was premature for the trial court to conclude that
petitioners are not purchasers in good faith. Note that the complaint did not state that the notice of
the pendency of this action was inscribed in the title of the Corporation from whom petitioners
purchased the property. Petitioners even denied the presence of said inscription in their own title
and in the title of the Corporation.818 Neither the presence of the notation This survey is covered

815
Republic v. Agunoy, Sr., G.R. No. 155394, February 17, 2005, 451 SCRA 735, 752; Republic v. Court of Appeals,
365 Phil. 522, 530 (1999).
816
Republic v. Court of Appeals, supra at 529.
817
Rosencor Development Corporation v. Inquing, G.R. No. 140479, March 8, 2001, 354 SCRA 119, 137.
818
Records, pp. 220-221.

330
by F.P.A. No. (III-1) 4496; and This survey is entirely inside No. 89, II-4755, in the title of the
Corporation automatically make petitioners purchasers in bad faith. In the absence of other
evidence to explain said notation, bad faith, which is never presumed, cannot be charged against
petitioners. The notation that the disputed lot is covered by Free Patent Application No. (III-1)
4496, will not place the title in dubious light because the same is the number of the application for
Free Patent of Macario Mencias,819petitioners predecessor-in-interest. The same is true with
respect to the notation in the title that the questioned lot is inside Lot 89. Considering that the title
presented is a mere photocopy and that the notes appearing thereon do not indicate that the subject
property is covered by any title, the trial court should have directed the parties to substantiate their
respective allegations instead of rendering judgment. Indeed, in determining the propriety of
rendering a motion for summary judgment, the lower court should take that view of the evidence
most favorable to the party against whom it is directed, giving such party the benefit of all
favorable inferences.820

In sum, we find that respondents failed to prove that presentation of evidence may be
dispensed with in the present controversy. The instant case is neither a proper case for rendition of
judgment on the pleadings nor of summary judgment. A full blown trial should therefore be
conducted to resolve the issues raised by the parties.

WHEREFORE, in view of all the foregoing, the petition is GRANTED and the February
3, 2005 Decision and the July 6, 2005 Resolution of the Court of Appeals in CA-G.R. CV No.
79957 are REVERSED and SET ASIDE. Let the records of this case be remanded to the Regional
Trial Court of Pasig City, Branch 264 for further proceedings.

SO ORDERED.

CONSUELO YNARES-SANTIAGO
Associate Justice

819
Id. at 61.
820
SolidBank Corp. v. Court of Appeals, 439 Phil. 23, 35-36 (2002).

331
WE CONCUR:

ARTEMIO V. PANGANIBAN
Chief Justice

MA. ALICIA AUSTRIA-MARTINEZ ROMEO J. CALLEJO, SR.


Associate Justice Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice

CERTIFICATION

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.

332
ARTEMIO V. PANGANIBAN
Chief Justice

333
EN BANC

ALFONSO T. YUCHENGCO and Y G.R. No. 149802


REALTY CORPORATION,
Petitioners,

- versus -

THE HON. SANDIGANBAYAN, Fourth


Division, REPUBLIC OF THE
PHILIPPINES, PRESIDENTIAL
COMMISSION ON GOOD
GOVERNMENT, ESTATE OF
FERDINAND E. MARCOS, IMELDA R.
MARCOS, PRIME HOLDINGS, INC.,
ESTATE OF RAMON U. COJUANGCO,
represented by IMELDA O. COJUANGCO,
and IMELDA O. COJUANGCO,
Respondents.
x------------------------x

ALFONSO T. YUCHENGCO and Y


REALTY CORPORATION,Petitioners,
G.R. No. 150320
- versus -

THE HON. SANDIGANBAYAN, Fourth


Division, REPUBLIC OF THE
PHILIPPINES, PRESIDENTIAL
COMMISSION ON GOOD
GOVERNMENT, ESTATE OF
FERDINAND E. MARCOS, IMELDA R.
MARCOS, PRIME HOLDINGS, INC.,
ESTATE OF RAMON U. COJUANGCO,
represented by IMELDA O. COJUANGCO,
and IMELDA O. COJUANGCO,
Respondents.

334
x------------------------x

REPUBLIC OF THE PHILIPPINES,


Petitioner,

- versus -
G.R. No. 150367

THE HON. SANDIGANBAYAN (Fourth


Division), ESTATE OF FERDINAND E.
MARCOS (rep. by its Administrator, the
Bureau of Internal Revenue), IMELDA R.
MARCOS, PRIME HOLDINGS, INC.,
ESTATE OF RAMON U. COJUANGCO,
(represented by its Administratrix, IMELDA
O. COJUANGCO), ALFONSO T.
YUCHENGCO and Y REALTY
CORPORATION,
Respondents.
x - - - - - - -- - - - - - - - - - - - - - - - - -x

ALFONSO T. YUCHENGCO and Y


REALTY CORPORATION,
Petitioners,

- versus -

REPUBLIC OF THE PHILIPPINES, G.R. No. 153207


PRESIDENTIAL COMMISSION ON
GOOD GOVERNMENT, ESTATE OF
FERDINAND E. MARCOS, IMELDA R.
MARCOS, PRIME HOLDINGS, INC.,
ESTATE OF RAMON U. COJUANGCO,
represented by IMELDA O. COJUANGCO
and IMELDA O. COJUANGCO,
Respondents.
x - - -- - - - - - - - - - - - - - - - - - - - - -x

REPUBLIC OF THE PHILIPPINES,


Petitioner,

335
- versus -

ESTATE OF FERDINAND E. MARCOS,


(represented by its Administrator, the
Commissioner of Internal Revenue), G.R. No. 153459
IMELDA R. MARCOS, PRIME
HOLDINGS, INC., ESTATE OF RAMON U.
COJUANGCO
(represented by the Administratrix, IMELDA
O. COJUANGCO), IMELDA O.
COJUANGCO, ALFONSO T.
YUCHENGCO and Y REALTY
CORPORATION,
Respondents.

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

DISSENTING OPINION

GARCIA, J.:

336
Before the Court are these five (5) separate petitions to nullify and set aside certain
issuances of the Sandiganbayan, Fourth Division, in Civil Case No. 0002, a complaint for
reconveyance, reversion, accounting, restitution and damages thereat instituted by the Republic
of the Philippines (Republic), through the Presidential Commission on Good Government
(PCGG).

Per its en banc Resolution of March 4, 2003,[1] the Court ordered the consolidation of
these five (5) petitions, emanating, as they all do, from the same case.

I. THE UNDERLYING CASE:


CIVIL CASE NO. 0002

Civil Case No. 0002, one of several suits involving ill-gotten or unexplained wealth that
the Republic, through the PCGG, initiated with the Sandiganbayan pursuant to Executive
Order (EO) Nos. 1 and 2 in relation to EO No. 14, all series of 1986,[2] seeks the recovery of
ill-gotten wealth from former President Ferdinand E. Marcos (Pres. Marcos, hereafter), later
substituted by his Estate, his wife, their three (3) children (Marcos family, or Marcoses,
collectively) and their alleged cronies. Among the properties identified as partaking the nature
of ill-gotten wealth, as the term is contextually understood, are shares of stock in Philippine
Telecommunications Investment Corporation (PTIC, for short) which, in turn, covered over
two (2) million shares in Philippine Long Distance Telephone Company, Inc. (PLDT).
The Republic seeks to recover the covered PLDT shares from Imelda O. Cojuangco,
the Estate of Ramon U. Cojuangco, represented by its administratrix Imelda O. Cojuangco
(collectively, Cojuangcos), and Prime Holdings, Inc. (PHI), as part of the alleged ill-gotten
wealth of the Marcos family.

Subsequently, petitioner Alfonso T. Yuchengco (Yuchengco), joined later by his


ally, Y Realty Corporation (Y Realty), intervened, claiming they are the rightful owners of
PHIs 46% shareholding in PTIC. They would assert that their claim for recovery of the property
allegedly unjustly taken from them is superior to the forfeiture claim of the Republic.

Acting on a February 1996 motion of the Cojuangcos, the Sandiganbayan would later
resolve to sever the PLDT-share-ownership issue from the other claims involved in Civil Case
No. 0002, and allowed a separate trial with respect only to the issue related to the PLDT shares.
In the course of the separate trial, the Sandiganbayan (Fourth Division) issued certain orders

337
and resolutions, infra, that are now subject to challenge in either one of the herein five (5)
consolidated petitions.

Three (3) of these petitions, i.e., G.R. No. 150367, G.R. No. 149802 and G. R.
No. 150320, are for certiorari under Rule 65 of the Rules of Court, the first filed
by Republic and the remaining two, by Yuchengco/Y Realty (collectively,
the Yuchengcos). These recourses similarly assail as having been issued in grave abuse of
discretion or in excess or lack of jurisdiction, ergo null and void, certain resolutions and orders
issued by the graft court in Civil Case 0002. As each petitioner in these three (3) petitions
alleged, the resolutions and orders adverted to effectively deny them due process of law.
Accordingly, they pray that writs of certiorari issue with the end in view of enjoining respondent
Sandiganbayan to allow them additional trial dates for purposes of presenting their respective
evidence in the separate trial below.

On the other hand, G.R. No. 153459 and G.R. No. 153207, filed by Republic and
the Yuchengcos, respectively, under Rule 45 of the Rules of Court, each seeks a review and the
setting aside, allegedly for not being in accord with the evidence adduced below, and for being
contrary to law and settled jurisprudence, the Sandiganbayans Partial Decision[3] on the PLDT
issue dated April 25, 2002, but promulgated on May 6, 2002 (simply Partial Decision,
hereafter). The Partial Decision, which was rendered after the three (3) aforementioned petitions
for certiorari had been filed, disposes, as follows:

WHEREFORE, premises considered, the complaint of the plaintiff


Republic of the Philippines on the PLDT shares subject of separate trial is hereby
DISMISSED for lack of merit.

The Motion for Summary Judgment is hereby GRANTED, and the


Complaint-in-Intervention DISMISSED.

SO ORDERED.

The arguments and counter-arguments of the herein four (4) main sets of litigants
(the Republic, the Marcoses, the Cojuangcos and the Yuchengcos)on a menu of issues
presently pressed in pleadings after pleadings are as numerous as they are extensive. What is
more, the parties, along the way, squeezed the rules of procedure to the hilt, thus adding
incidental matters to an already complex proceedings. So as not to be sidetracked, or, worse
still, waylaid thereby and thus neglect, if not altogether miss, the proverbial tree for the forest,

338
the Court shall limit itself and shall accord particular focus only to what it perceives to be
material determinative facts and matters which led to the filing of the instant petitions. Towards
the same end, the Court shall condense the several issues raised into two (2) core questions for
resolution, to wit:

1. whether or not petitioners in G.R. Nos. 149802,


150320 and 150367 were denied due process when the respondent court in effect
directed them to terminate the presentation of their respective evidence; and

2. whether or not the challenged Partial Decision, subject of the petitions


for review in G.R. Nos. 153459 and 153207, conforms to the evidence presented,
the law and/or settled jurisprudence.

II. THE PARTIES & THEIR PRINCIPAL


CLAIM in CIVIL CASE No. 0002

A. Petitioner Republic

The original complaint in Civil Case No. 0002, filed on July 16, 1987 by the Republic,
thru the PCGG, named, as defendants, Pres. Marcos and Imelda R. Marcos (Mrs. Marcos,
hereafter), their three (3) children, and seven (7) other individuals. As the case progressed,
the Republic successively amended its original complaint to include other alleged illegally
acquired assets and/or implead other parties.

Among the properties sought to be recovered as part of the alleged ill-gotten wealth of the
Marcos family are, as indicated earlier, shares of stock in PTIC and PLDT.
The Republics Third Amended Complaint (Amended Complaint), dated April 20,
1990,[4] impleaded, as additional party-defendants, the herein respondents Cojuangcos/PHI,
and, as to them, the Amended Complaint pertinently avers:

1. This is a civil action against Defendants Ferdinand E. Marcos, Imelda R.


Marcos, . . . Imelda Cojuangco, the Estate of Ramon Cojuangco, and Prime
Holdings, Inc. to recover from them ill-gotten wealth consisting of funds and other
property which they . . . had acquired and accumulated in flagrant breach of trust

339
and of their fiduciary obligations as public officers, . . . thus resulting in their unjust
enrichment during Defendant Ferdinand E. Marcos 20 years of rule . . . .

2. The wrongs committed by Defendants, acting singly or collectively and


in unlawful concert with one another. . . include the misappropriation and theft of
public funds, plunder of the nations wealth, extortion, blackmail, bribery,
embezzlement and other acts of corruption, betrayal and public trust . . . .

xxx xxx xxx

17. Among the assets acquired by Defendants in the manner above-


described . . . are funds and other property listed in Annex A hereof and made an
integral part of this Complaint, [including, but not limited to the following]:

xxx xxx xxx

c. Stocks

Shares of stocks in numerous corporations . . ., including about 2.4


million shares of . . . [PLDT] valued, at current market prices,
approximately P1.6 Billion pesos and covered by shares of stock in . . .
(PTIC) registered in the names of Prime Holdings Inc. (PHI), Ramon
Cojuangco and the latters associates.

During his lifetime, Ramon U. Cojuangco held 76,779 shares of


stock in PTIC, while Imelda O. Cojuangco held 21,525 shares of stock in
her own name, the beneficial and actual ownership of which is that of
defendants Ferdinand Marcos and his family.

Defendant Prime Holdings, Inc. (PHI) held 111,415 shares which in


truth and in fact belong to defendants Ferdinand E. Marcos and his family.
This stockholding of defendants Marcos and his family in PTIC, through
Ramon U. Cojuangco and PHI, constitutes the majority stockholding in
PTIC. PTIC, in turn, is the biggest stockholder of PLDT shares. In the
manner above stated, defendants Marcos and his family effectively
controlled PLDT. (Underscoring in the Original; Words in bracket, added)

As may thus be gathered from the above averments, petitioner Republic, as plaintiff a
quo, seeks to recover from respondents Cojuangcos/PHI, the following PTIC shares of
stock, viz: (1) the 111,415 shares in PHIs name; (2) the 76,779 and the 21,525 shares in the
name of Ramon U. Cojuangco and Imelda O. Cojuangco, respectively. The desired recovery is

340
predicated on the postulate that the three, as defendants a quo, are mere
dummies/nominees/conduits of the Marcos family in the control of PLDT.

B. Respondents Cojuangcos and PHI

In its Answer dated June 5, 1990,[5] to the Republics Amended Complaint, PHI belied
allegations that the Marcos family is the beneficial owner of its 111,415 PTIC shares, stating in
this regards, as follows:

11. Answering defendant PHI specifically denies the allegations contained


in paragraphs 20 (a) and 20 (b) of plaintiffs Complaint. Insofar as the facts alleged
in paragraph 20 (c) thereof, defendant PHI respectfully alleges that: (a) Defendant
PHI is the registered stockholder of 111,415 shares in . . . (PTIC); that during his
lifetime Ramon U. Cojuangco held 76,779 shares of stock in PTIC; that Imelda O.
Cojuangco held 21,525 shares of stock in her name, but answering defendant
specifically denies that these shares registered in said names are owned, actually
and/or beneficially, by Ferdinand E. Marcos and his family.

xxx xxx xxx

The truth of the matter is that the members of the family of the late Ramon
U. Cojuangco own all the outstanding shares in PHI in full legal and beneficial
ownership . . . .
Respondent Cojuangcos Answer dated June 9, 1990,[6] to the same Amended
Complaint contains virtually the same material averments as those in PHIs answer. And like
PHI, the Cojuangcos also pray for the dismissal, as to them, of the Amended Complaint.

C. Respondent Imelda R. Marcos

As its most essential, Mrs. Marcos Answer with Counterclaim dated November 22,
1993,[7] confirmed the Republics allegation about the Marcoses ownership over the PLDT
shares in controversy, but with the qualification that these shares were legitimate acquisitions.
Very much later, however, Mrs. Marcos, by motion dated January 22, 1999, sought leave to
amend answer for the purpose of pursuing a cross-claim against Cojuangcos/PHI. The
respondent court, however, denied her motion, holding that the proferred Amended Answer
with Cross-Claim thus attached to her motion varied her theory of defense, in that, while she
asserted in her original answer that the late Pres. Marcos had lawfully acquired and thus owned
the PLDT shares in question, she, in the intended amended answer with cross-claim, traversed

341
the allegations of the Republics Amended Complaint by pleading lack of knowledge of facts
sufficient to form a belief as to the truth thereof. Nonetheless, the respondent court allowed
Mrs. Marcos to file a pleading to contain her cross-claim against Cojuangcos/PHI.

Accordingly, Mrs. Marcos filed a Cross-Claim dated April 21, 1999[8] against
Cojuangcos/PHI, alleging, inter alia, the following:
2. The . . . (PLDT), . . . is one of the assets listed in Annex A of the Third
Amended Complaint [of the Republic] . . . .

3. The Philippine Telecommunications Investment Corp. (PTIC) was


organized . . . with the primary purpose to . . . otherwise deal in all securities, shares
of stocks and bonds of the [PLDT]. x x x . PTIC is the single biggest corporate
stockholder of PLDT.

3.1. PTICs capital stock were originally subscribed by . . ., among


others: defendants Ramon Cojuangco and Imelda Cojuangco both of whom
held shares of stock in their respective names as trustees . . .for and in behalf
of the late President Ferdinand E. Marcos, . . . and family . . . . All shares of
stock in PTIC acquired and registered in their respective names subsequent
to the incorporation were likewise acquired and held for and behalf of said
principals.

3.2. On 7 December 1967, defendant Ramon Cojuangco and Mr.


Luis T. Rivilla,. . . executed an agreement whereby . . . (67,392) shares of
PTIC, which were held in their names were transferred, . . . unto defendant
Imelda R. Marcos in consideration of the extinguishment of [their] loan of
. . .(P3,400,000.00) . . . .

xxx xxx xxx

3.4. Mrs. Marcos subsequently authorized Messrs. Cojuangco and


Rivilla, their assigns, . . . to hold said 67,392 PTIC shares for and in her
behalf on the understanding, agreement and recognition of her true, lawful
and beneficial ownership thereof.

4. Sometime in 1977, defendants Ramon Cojuangco and Imelda Cojuangco


likewise acquired for and in behalf of Mr. and Mrs. Marcos and their family
approximately . . . (54,349) fully paid shares of stock in PTIC from General
Telephone and Electronics, Inc. (GTE), an American company. Again, this share
acquisition was on the understanding, agreement and recognition that defendant
Cojuangcos were mere trustees/nominees of Mr. and Mrs. Marcos and their family.

342
xxx xxx xxx

5. All the shares of stock of PTIC registered in the name of defendants


Ramon Cojuangco, Imelda Cojuangco, their assigns, nominees and representatives,
. . ., were never acquired and held in their own right, . . . since they have always
been held by them as trustees/nominees for and in behalf of Mr. and Mrs. Marcos
and family the true, lawful and beneficial owners thereof.

xxx xxx xxx

6. On 05 October 1977, . . .. (PHI) was organized . . . as an investment and


holding company. PHIs principal asset at present is the . . . (111,415) PTIC shares
of stock registered and held in PTIC.

6.1 PHI was incorporated to serve as the holding company of all the
PTIC shares owned by Mr. and Mrs. Marcos and family, in addition to those
being held by trustees/nominees . . . . For this purpose, PHI was organized
with the following as incorporators [Jose D. Campos, Rolando C. Gapud,
Renato E. Lirio, Gervaso T. Gaviola and Ernesto S. Abalos, with 400 shares
each], all of whom are the trustees/nominees of the Marcoses:

xxx xxx xxx

6.3 In 1978, . . . (111,415) shares of stock in PTIC were transferred


and registered in the name of PHI. These PTIC shares came from various
sources, including from registered stockholders of PTIC.

xxx xxx xxx (Words in bracket added.)

On the basis of the foregoing averments, Mrs. Marcos, for her own behalf and that of
her family, prayed that judgment be rendered ordering the Cojuangcos/PHI, their assignees and
agents, to transfer in her favor (i) the aforesaid shares of stock in PTIC being held by them as
trustees/nominees of the Marcos family, and (ii) all the two thousand (2,000) shares of stock in
PHI being held by them as such trustees/nominees, together with all the fruits accruing from
the time that they were constituted or acted as such trustees/nominees.

In fine, Mrs. Marcos maintained that all PTIC shares registered in the names of
Cojuangcos/PHI as well as the PHI shares which are registered in the name of its incorporators
have always been held by them as trustees and/or nominees of the Marcos spouses and their
family who are the lawful and beneficial owners thereof. She assumed the same posture in her
343
Pre-trial Brief dated April 24, 1999[9] as well in her Answer to petitioner Republics Request for
Admission.[10]

Via a Resolution promulgated on February 22, 2000,[11] the respondent court dismissed
Mrs. Marcos Cross-claim for being barred and for failure to state a cause of action. Her motion
for reconsideration was denied in another Resolution of May 23, 2000.[12]

D. Petitioner Yuchengcos

Petitioner Yuchengco filed his Complaint-in-Intervention and his Amended Complaint-


in-Intervention in August 1988 and May 1993, respectively, both of which the Sandiganbayan
(Third Division) admitted. He asserted ownership over a certain number of PTIC shares and
necessarily a portion of the disputed PLDT shares. Y Realty later joined Yuchengco in his
Second Amended Complaint-in-Intervention and, to the extent of their combined claim over
the disputed PLDT shares, pitted the same against that of either the Republic,
the Marcos family, or the Cojuangcos/PHI.

The Yuchengcoss joint Second Amended Complaint-in-Intervention dated September


20, 1993[13] - admitted on June 11, 1995 - contained the ensuing material averments:

FIRST CAUSE OF ACTION


6. In the early to mid-1960s, the largest block of stock of . . . [PLDT]
was held by General Telephone & Electronics Corporation (GTE), which
held 28% of its outstanding stock.

In 1967, GTE decided to divest its shareholdings in PLDT. . . . GTE


agreed to sell its PLDT shares to the Ramon U. Cojuangco group, which
included . . . Ferdinand E. Marcos and/or . . . Imelda R. Marcos, Estate of
Ramon U. Cojuangco and Imelda O. Cojuangco, and their nominees.

The Ramon U. Cojuangco group caused. . . (PTIC) to be formed for


the purpose of purchasing GTEs 28% stockholdings in PLDT. xxx.

7. In 1967, PTIC was owned by the following: GTE received 25%


of PTIC as part of the consideration for selling its shareholding in PLDT to
PTIC. Approximately 57% of the PTIC stock was divided among the
Ramon U. Cojuangco group.

Gregorio Romulo and Leonides Virata each received 3% of PTIC


for their services rendered . . . .
344
The remaining 12% of PTIC was divided among various persons.
Plaintiff-in-intervention Yuchengco - . . . who already controlled 10% of
PLDT purchased 7.75% of the stock in PTIC (18,720 shares) . . . . He placed
the 7.75% shares in the name of . . . Y Realty Corporation.

8. Some time after PTICs acquisition of 28% of PLDT, Gregorio


Romulo and Leonides Virata . . . approached . . . Yuchengco and offered to
sell their respective 3% shareholdings in PTIC to him for P300,000.00 each.
Plaintiff-in-intervention Yuchengco agreed to buy.

9. But, the Ramon U. Cojuangco group learned of the agreed sale


and sent Atty. Alberto Meer to . . . Yuchengco to inform him that . . .
President Marcos objected to his acquiring additional shares in PTIC.
xxxx Yuchengco was instructed to pay the purchase price of P600,000.00
and to transfer the 6% stockholdings to the Ramon U. Cojuangco group.
Otherwise, . . . Yuchengco was told, his business interests would suffer.

Gregorio Romulo, upon finding out, also strenuously objected to


selling to the Ramon U. Cojuangco group.

But, . . . Yuchengco and Gregorio Romulo complied as they could


not do otherwise. xxx Yuchengco paid the P600,000.00 price. The 6%
stockholdings of Gregorio Romulo and Leonides Virata were transferred to
the Ramon U. Cojuangco group and eventually to. . .[PHI].

10. xxx Yuchengco was the victim of illegal coercion and duress
of the Marcos regime. He was coerced into giving up Gregorio Romulos
and Leonides Viratas 6%shareholdings in PTIC . . . .

xxx Yuchengco was prevented by the same illegal coercion and


duress and by force majeure (Martial Law) from seeking judicial relief until
after the ouster of the former regime.

11. Consequently, . . . [PHI] holds the 6% stockholdings in PTIC,


and all dividends and distributions attributable thereto, in constructive trust
for . . .

xxx xxx xxx

SECOND CAUSE OF ACTION

345
xxx xxx xxx

14. On 22 November 1967 at about the time GTE sold out its PLDT
shares to PTIC and received 25% of PTIC GTE through its . . ., John J.
Douglas, entered into a put and call agreement with . . . Yuchengco for
GTEs 25% stockholdings in PTIC. xxx

15. But, as with the Leonides Virata and Gregorio Romulo


shares, Yuchengco was prevented from acquiring GTEs 25% shares in
PTIC by exercise of his put and call agreement with GTE.

16. In February 1976, GTE was compelled by the Ramon U.


Cojuangco group to waive its 25% stockholdings in PTIC for free. At a
meeting in Tokyo with Ted Brophy, . . . and Ramon U. Cojuangco, [and 3
others], Brophy waived the 25% stockholdings, notwithstanding plaintiffs
put and call agreement with GTE. Said 25% stockholdings in PTIC were re-
issued to the Ramon U. Cojuangco group for a nominal amount and
eventually transferred to . . . [PHI].

xxx xxx xxx

17. Again, . . . Yuchengco . . . was coerced into not exercising his


put and call agreement with GTE for the latters 25% stockholdings in
PTIC, when he was otherwise ready, willing and able to do so. xxx.

Plaintiff-in-intervention Yuchengco was prevented by the same


illegal coercion and duress and by force majeure (Martial Law) from
seeking judicial relief until after the ouster of the former regime.

18. Consequently, . . .[PHI] and the owners of . . . [PHI] whether


they be (a) the Estate of Ramon U. Cojuangco and Imelda O. Cojuangco (b)
plaintiff Republic and the PCGG, or (c) the Estate of Ferdinand E. Marcos
and Imelda R. Marcos hold the 25% stockholdings in PTIC, and all
dividends and distributions attributable thereto, in constructive trust for
plaintiff-in-intervention Yuchengco, and should be compelled to turn over
the same to him.

ALTERNATIVE THIRD CAUSE OF ACTION

xxx xxx xxx

346
20. In the event the Honorable Court should adjudge that . .
. Yuchengco is not entitled to recover, under the Second Cause of Action,
the 25% shareholdings in PTIC formerly belonging to GTE, then plaintiffs-
in-intervention are at least entitled to recover 4.6% of said 25%
shareholdings, as demonstrated below.

20.1. xxx Y Realty Corporation owns 7.7% of the stock in


PTIC, and . . . Yuchengco is entitled to recover the 6%
shareholdings formerly belonging to Gregorio Romulo and
Leonides Virata . . . for a total of 13.75%.

20.2. When GTE was coerced by the Ramon U. Cojuangco


group to waive its 25% stockholdings in PTIC in February 1976, the
remaining stockholders of PTIC were entitled to a pro-
rata distribution of said 25% stockholdings which were instead
wholly re-issued to the Ramon U. Cojuangco group for a nominal
amount and eventually transferred to . . . [PHI].

20.3. Thus, plaintiffs-in-intervention, with 13.75% of the


remaining 75% stock, were entitled to 4.6% of the 25%
stockholdings formerly belonging to GTE.

[It is thus prayed]

On the first cause of action,

(a) xxx Ordering . . . [PHI] to turn over the 6% PTIC shareholdings


including stock, cash and other dividends and stock splits thereon, to . .
. Yuchengco; and

(b) Adjudging plaintiff-in-intervention Yuchengco to be the true


owner of said 6% PTIC [formerly Viratas and Romulos], shareholdings;

On the second cause of action

(a) Ordering . . . [PHI] to turn over the 25% PTIC shareholdings


(formerly of GTE), including all . . . dividends and stock splits thereon, to .
. . Yuchengco [as true owner thereof]; and xxx

On the alternative third cause of action,

(a) Ordering defendant-in-intervention [PHI] to turn over 4.6% of


its PTIC shareholdings (plaintiffs-in-interventions pro-rata share of GTEs

347
former 25% shares), including all stock, cash and other dividends and stock
splits thereon, to plaintiffs-in-intervention; and

(b) Adjudging plaintiffs-in-intervention to be the true owners of said


4.6% PTIC shareholdings. (Underscoring as found in the original; Emphasis
and words in bracket added).

In their answer to the Amended Complaint-in-Intervention, which they later manifested


as serving as their answer to the Second Amended Complaint-in-Intervention,
respondents Cojuangcos/PHI set up, inter alia, by way of affirmative defense, the following
grounds: (1) lack of cause of action, since the PTIC and PHI shares of stock in the name of the
late Ramon U. Cojuangco and members of his family were lawfully acquired by them; (2)
neither of the Marcos spouses was a member of the Ramon U. Cojuangco group, so that they
(the Marcos spouses) have no interest whatsoever over any share in the said corporations; and
(3) no jurisdiction has been acquired by the Sandiganbayan over the Amended Complaint-in-
Intervention for non-payment of the proper docket fees.

III. THE PETITIONS

A. G.R. Nos. 150367 and 153459 (Republics)

On February 16, 2001, petitioner Republic secured a subpoena ad


testificandum[14]
for Mrs. Marcos to testify as its witness respecting her claim over the disputed
PLDT shareholdings. Mrs. Marcos, however, wasted no time in moving for the quashal of the
subpoena, invoking in this regard her right against self-incrimination. In its opposition to
motion, petitioner Republic argued that Mrs. Marcos has waived such right when, in her
Answer and subsequent pleadings, she made judicial admissions and declaration of the
beneficial ownership of the Marcoses over the disputed PLDT shares. The respondent court,
per its Order ofMay 4, 2001, denied her motion to quash subpoena.[15] Another resolution
of July 9, 2001 would eventually follow denying reconsideration of the denial of her motion to
quash subpoena, along the following tenor:

Be that as it may, the prosecutions Opposition to Motion to Quash, dated 3


April 2001, specifically mentions only defendant Imelda Marcos admission that
Ferdinand Marcos acquired the properties mentioned in paragraph 19 of the
complaint; hence, other than this fact, said prosecution may not propound any

348
question that may violate her right against self-incrimination, upon proper and
timely objection.

xxx xxx xxx

WHEREFORE, defendant Imelda Marcos Motion for Reconsideration


dated 19 June 2001, is hereby denied, and the subpoena earlier issued stand.
However, in lieu of the testimony of said defendant in court, the plaintiff may,
instead, make use of the provisions in Rule 26 of the Revised Rules on Civil
Procedure. [16]

In the meantime, petitioner Republic continued presenting other witnesses, relying - as


it would later claim on the oral assurance given by the graft court during the hearing on March
26, 2001 that it would allow the Republic to present Mrs. Marcos as its adverse or hostile
witness.

At the May 28, 2001 hearing, the respondent court directed petitioner Republic to wrap up
by May 30, 2001 the presentation of its evidence. This prompted petitioner Republic to
posthaste file its Respectful Motion For Additional Time To Complete Presentation Of
Evidence[17] therein praying for two (2) additional settings to complete the presentation of its
evidence. But, in an open court Order dated May 30, 2001,[18] the respondent court denied the
said respectful motion; the desired reconsideration was also denied per
[19]
a Resolution dated August 27, 2001.

Meanwhile, in the September 5, 2001 hearing, PCGG Special Counsel Tomas


Evangelista, apparently unaware of the August 27, 2001 Order adverted to, reiterated the
Republics intention to present Mrs. Marcos as its witness, only to be apprised by the respondent
court of its August 27, 2001 Order, supra. In the end, Atty. Evangelista requested that he be
allowed thirty (30) days within which to file the Republics formal offer of documentary
evidence, which respondent court in fact directed him to do via an Order dated September 5,
2001[20].

Hence, petitioner Republic filed on October 6, 2001 its Formal Offer of Evidence dated
October 4, 2001, followed later by a Supplemental Offer of Evidence dated November 13,
2001[21] therein reserving the right to present the testimony of Mrs. Marcos, as a hostile witness
regarding her cross-claim, should this Court grant its petition for certiorari that it (Republic)

349
intended to file. The intended petition was eventually filed and is presently docketed as G.R.
No. 150367.

Via its petition in G.R. No. 150367, petitioner Republic seeks to nullify the following
issuances of the respondent court, as described hereunder for better perspective:

1) Order dated May 30, 2001,[22] denying the Republics respectful motion
for additional time to complete the presentation of evidence and Resolution of
August 27, 2001,[23]denying the motion to reconsider the May 30, 2001 order; and

2) Order dated September 5, 2001,[24] directing the Republic to submit its


offer of evidence within 30 days from that date.

It is the Republics submission that the respondent court gravely abused its discretion
when it issued the aforementioned assailed orders and resolution considering that:

I. THE ASSAILED ORDERS . . . AMOUNT TO A DEPRIVATION OF


THE REPUBLICS SUBSTANTIVE AND CONSTITUTIONALLY ENSHRINED
RIGHT TO THE FULL RECOVERY OF THE MARCOSES ILL-GOTTEN
WEALTH.

II. THE ASSAILED ORDERS BLATANTLY VIOLATED THE


REPUBLICS RIGHT TO PROCEDURAL DUE PROCESS OF LAW WHEN
THE RESPONDENT COURT, AFTER ISSUING AND SUSTAINING THE
VALIDITY OF THE SUBPOENA TO IMELDA MARCOS, DENIED
PETITIONERS PLEA TO PRESENT HER AS ADVERSE/HOSTILE WITNESS
AND TO COMPLETE THE PRESENTATION OF THE REPUBLICS
EVIDENCE.

A. BY ISSUING THE ASSAILED ORDERS, THE


RESPONDENT COURT VIOLATED THE REPUBLICS RIGHT
TO DUE PROCESS OF LAW INASMUCH AS IT BARRED THE
REPUBLIC FROM PRESENTING IMELDA MARCOS AS
ADVERSE/HOSTILE WITNESS, NOTWITHSTANDING THAT
THE REPUBLIC CONSISTENTLY AND CATEGORICALLY
ASSERTED ITS RIGHT TO PRESENT HER AS SUCH
WITNESS.

350
B. BY ISSUING THE ASSAILED ORDERS, THE
RESPONDENT COURT RENDERED NUGATORY ITS OWN
SUBPOENA DIRECTED TO IMELDA MARCOS, WHOSE
VALIDITY THE RESPONDENT COURT HAD ALREADY
SUSTAINED WITH FINALITY.

C. BY ISSUING THE ASSAILED ORDERS, THE


RESPONDENT COURT CAPRICIOUSLY SUBORDINATED
THE PROCESS OF LAW TO EXPEDIENCY AND DISPATCH.

D. BY ISSUING THE ASSAILED ORDERS, THE


RESPONDENT COURT DEPRIVED THE REPUBLIC OF DUE
PROCESS OF LAW WHEN IT EFFECTIVELY BARRED THE
REPUBLIC FROM PRESENTING, AMONG OTHER
EVIDENCE, IMELDA MARCOS, A VITAL AND MATERIAL
WITNESS WHOSE TESTIMONY WITH RESPECT TO HER
CROSS-CLAIM AGAINST THE RESPONDENTS
COJUANGCOS WILL BUTTRESS THE REPUBLICS CAUSE
OF ACTION IN CIVIL CASE NO. 0002 NOT ONLY AGAINST
HER, BUT ALSO AGAINST THE RESPONDENTS
COJUANGCOS.

E. THE ASSAILED ORDERS BETRAY THE


RESPONDENT COURTS GLARING, ALL-TOO-
TRANSPARENT TURNABOUT INASMUCH AS THEY
IRONICALLY SUPPRESSED THE ENFORCEABILITY OF THE
RESPONDENT COURTS OWN SUBPOENA TO IMELDA
MARCOS, EVEN AS THE RESPONDENT COURT HAD
ALREADY SUSTAINED THE VALIDITY OF THAT
SUBPOENA.

On the basis of the foregoing arguments, petitioner Republic prays, by way of relief,
that this Court, upon the annulment of the assailed Orders and Resolution subject of its petition
in G.R. No. 150367, direct the respondent court to allow the Republic to complete its
presentation of evidence, and compel respondent Mrs. Marcos to take the witness stand.

In their comment to the petition in G.R. No. 150367, respondents Cojuangcos/PHI maintained
the correctness of the assailed orders and resolution. Setting particular focus on Republics claim
of having been denied its day in court, said respondents contend that an agreed calendar of
hearings was in place, but petitioner Republic moved to cancel a number of trial dates for lack

351
of preparedness or for want of ready witnesses, which thus impelled the respondent court to
come out with the assailed issuances.

In the light of conflicting allegations thus made, the Court deems it appropriate to recite
additional determinative antecedents as may be gathered from the records. Thus
It would appear that at the preliminary conference held on September 28, 1998, the
parties agreed to continue the preliminary conference and the pre-trial on January 14, 1999.
Following a series of postponements, the pre-trial for the Republics Amended Complaint was
finally conducted on May 25, 2000 and terminated on the same day. The Pre-trial Order issued
on that date sets the trial of the case, upon mutual agreement, to July 10, 14, 31, August 11 and
18, 2000 at 8:30 in the morning.

Thereafter, the respondent court issued a Supplemental Pre-Trial Order dated July 10,
2000,[25] therein defining the principal issue, as follows:

Whether the properties, assets, and funds sought to be recovered by


the plaintiff are ill-gotten or lawfully acquired;

Subsequent events show that the scheduled July 10, 2000 hearing was cancelled at the
instance of petitioner Republics counsel. The July 14, 2000 hearing was also cancelled and
reset to July 31, 2000. The July 31, 2000 hearing was likewise cancelled but the parties agreed,
however, for the continuation of trial on August 11 and 18, 2000 in the morning and on
September 13, 18, 20 and 25, 2000, morning and afternoon sessions.

Presented in the August 11, 2000 hearing as petitioner Republics witness was Atty.
Francisco G. de Guzman. The August 18, 2000 hearing - when petitioner Republic intended to
present the PCGG records custodian, Ma. Lourdes Magno - was cancelled. Owing to the
voluminous records she had to identify and testify on, the respondent court ordered that Magnos
testimony be taken before the Executive Clerk of Court on three trial dates to end on September
5, 2000.

On September 5, 2000, the respondent court scheduled four (4) hearings for the
remaining days of the month of September 2000.

However, the first three (3) settings, i.e., September 13, 18 and 20, 2000, were,
upon petitioner Republics written motion dated September 11, 2000, and for reasons ranging

352
from its inability to locate a misplaced deposition to affording the new assigned Solicitor time
to go over the case records, cancelled.

Despite the developments immediately adverted to above, the parties and their counsels
nonetheless appeared for the September 18, 2000 hearing. There, Atty. Taningco of the PCGG
manifested that the Government panel is in the process of compiling the records to support the
Republics motion for admission, which, in turn, would serve as his basis for recommending the
filing of a motion for summary judgment. Accordingly, the respondent court, in a bid to
expedite an early case disposition, then blocked off the following dates for the presentation of
evidence: For petitioner Republic, December 5, 2000, January 29, 30 and 31, February 1 and
2, 2001; and for respondents Cojuangcos/PHI, March 12, 13, 14, 15, 26, 27 and 28, 2001.

What transpired next were the following events:

1. The scheduled hearing on December 5, 2000 was cancelled because the Republics
witness was not available.

2. Petitioner Republic filed a motion to reset the January 29, 30 and 31, 2001 hearings,
its Special Counsel having just received his assignment order for Civil Case No. 0002.

3. On January 29, 2001, petitioner Republic manifested its intention to call Mrs. Marcos
on the witness stand, but requested for additional hearing dates, pleading that it will not be ready
to present Mrs. Marcos within its allotted time. Respondents Cojuangcos/ PHI offered to
stipulate on the testimony of the Republics intended witness, one Atty. Manuel G. Montecillo.

4. Respondent court cancelled the January 29, 2001 hearing and required the parties to
make an appearance at the next scheduled hearing, January 30, 2001, as previously set.

5. The January 30, 2001 schedule was cancelled, as requested by petitioner Republic,
owing to lack of witness. In addition, the same petitioner also asked for the cancellation of the
three (3) succeeding scheduled hearings, i.e., January 31, February 1 and 2, 2001, and instead
requested for a February 9, 2001 setting, undertaking to present Mrs. Marcos on that date, then
rest its case, with or without her testimony.
6. The February 9, 2001 setting was reset, owing to the unavailability on that day of
the Republics intended witness, Mrs. Marcos, who, Atty. Evangelista of PCGG explained, was
physically indisposed. Acting on the Republics request for a month to present Mrs. Marcos, the

353
respondent court granted the desired resetting to March 12, 13, 14 and 15, 2001, on the
condition that the Republic will have to rest its case with or without her testimony.
7. On March 12, 2001, the Republic requested to reset the scheduled hearing.
Respondent court gave the Republic another opportunity to present its evidence and accordingly
reset the hearings to March 26, 27, and 28, 2001, as previously scheduled.

8. On March 26, 2001, the Republic presented Lourdes Magno, the PCGG record
custodian. Her direct, cross and redirect examinations were done that day. Ms. Magno was
followed on March 27, 2001, by Rosalie Sarthou of the BIR. Respondents Cojuangcos/PHI
manifested that the Republic had until the next trial date to finish its presentation of evidence.

9. After the parties, in the March 28, 2001 hearing, were through with Ms. Sarthou, the
Republic requested and was granted five additional trial dates, i.e.,May 7, 9, 16, 28, and 30,
2001, for the presentation of further evidence.

10. The hearing on May 7, 2001 was cancelled and reset to May 9, 2001. On May 9, 2001,
Republic presented Mr. Danilo Daniel, a PCGG Director, after which the presentation of further
evidence was continued to May 28, and 30, 2001.

It is upon the foregoing factual backdrop that the respondent court issued, in the May
28, 2001 hearing, its Order of even date directing petitioner Republicto terminate the
presentation of its evidence on the hearing of May 30, 2001. The May 28, 2000 Order is, as
earlier stated, what moved petitioner Republic to file its Respectful Motion for Additional Time
To Complete Presentation Of Evidence.[26]

In the meantime, pending resolution of G.R. No. 150367, the separate trial continued.
After respondents Cojuangcos/PHI have rested their case, the respondent court rendered
its Partial Decision, which, to reiterate, is the subject of petitioner Republics petition for
review, now docketed as G.R. No. 153459, on the following supporting grounds:

THE SANDIGANBAYAN COMMITTED (SIC) GRAVELY ERRED IN


ITS PARTIAL DECISION DATED MAY 6, 2002 WHEN IT DECIDED
QUESTIONS OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW OR
WITH THE APPLICABLE DECISIONS OF THE HONORABLE COURT

354
AND/OR HAS DEPARTED FROM THE ACCEPTED AND USUAL COURSE
OF JUDICIAL PROCEEDINGS CONSIDERING THAT:

I. THE SANDIGANBAYAN PARTIAL DECISION DATED MAY 6,


2002 DOES NOT COMPLY WITH THE BASIC REQUIREMENT UNDER
SECTION 14, ARTICLE VIII OF THE 1987 CONSTITION THAT NO
DECISION SHALL BE RENDERED BY ANY COURT WITHOUT CLEARLY
AND DISTINCTLY EXPRESSING THEREIN THE FACTS AND THE LAW ON
WHICH IT IS BASED, HENCE, PETITIONER WAS DEPRIVED OF ITS RIGHT
TO DUE PROCESS OF LAW.

II. THE SANDIGANBAYAN RULED IN ITS PARTIAL DECISION


DATED MAY 6, 2002 AGAINST THE ADMISSIBILITY OF THE
DOCUMENTARY EVIDENCE AFTER ADMITTING THE SAME IN
EVIDENCE, THEREBY DEPRIVING PETITIONER OF ITS RIGHT TO DUE
PROCESS OF LAW.

III. THE PARTIAL DECISION DATED MAY 6, 2002 IS FATALLY


FLAWED AS IT FAILED OR OMITTED TO MENTION VITAL FACTS AND
REFUSED TO CONSIDER MATERIAL EVIDENCE PRESENTED BY
PETITIONER TO SUPPORT ITS COMPLAINT AND REFUSED TO
CONSIDER EVIDENCE WHICH THE SANDIGANBAYAN ITSELF HAD IN
FACT ALREADY ADMITTED.

IV. PETITIONER WAS DEPRIVED OF THE OPPORTUNITY TO


PRESENT RESPONDENT IMELDA R. MARCOS AS ITS
ADVERSE/HOSTILE WITNESS, ALSO IN A MANNER VIOLATIVE OF
PETITIONERS FUNDAMENTAL RIGHT TO PROCEDURAL AND
SUBSTANTIVE DUE PROCESS OF LAW.

V. THE SANDIGANBAYAN DISREGARDED THE DECLARATIONS


UNDER OATH/JUDICIAL ADMISSIONS OF RESPONDENT IMELDA
MARCOS POSITIVELY IDENTIFYING AND CLAIMING OWNERSHIP
OVER THE SUBJECT SHARES IN PLDT, WHICH DECLARATION
LIKEWISE CONCLUSIVELY ESTABLISHES AND CONFIRMS THE
ACTUAL AND BENEFICIAL OWNERSHIP BY RESPONDENTS MARCOS
OF SAID SHARES OR, THEIR PRINCIPAL-NOMINEE RELATIONSHIP.

VI. THE SANDIGANBAYAN COMMITTED UNDUE HASTE IN


DECIDING THE CASE, IN UTTER DISREGARD OF ITS MANDATED DUTY
TO ASCERTAIN THE TRUTH IN ALL MATTERS IN CONTROVERSY.

355
Petitioner Republic thus pray for a judgment: (1) reversing and setting aside the Partial
Decision dated April 25, 2002; and (2) ordering respondents Cojuangcos/PHI, their assignees,
nominees, and agents to RETURN and RECONVEY to the Republic (a) the 111,415 PTIC
shares in the name of Prime Holdings, Incorporated (PHI) ceded and conveyed by Ramon U.
Cojuangco and Luis T. Rivilla to PHI; (b) the 76,779 PTIC shares in the name of Ramon U.
Cojuangco; and (c) the 21,525 PTIC shares in the name of Imelda O. Cojuangco, for being
ILL-GOTTEN WEALTH of Ferdinand E. Marcos and his family.[27]

This brings us to the Yuchengcos petitions.

B. G.R. Nos. 149802, 150320 and 153207 [Yuchengcos]

As already elsewhere herein mentioned, petitioner Yuchengcos intervened in Civil Case No.
0002 to recover ownership of a portion of the disputed PLDT shares the forfeiture of
which petitioner Republic itself is pursuing owing to their being ill-gotten wealth. Mr.
Yuchengcos original Complaint-in-Intervention was filed on August 11, 1988; the Amended
Complaint-in-Intervention, on May 31 1993, and the Second Amended Complaint-in-
Intervention, on September 22, 1993, this time joined by Y Realty.

In a Resolution dated October 9, 1996, the respondent court dismissed the Amended Complaint-
in-Intervention for non-payment of docket fees, among other grounds, and denied the
Yuchengcos Motion to Admit Second Amended Complaint, posthaste sending the Yuchengcos
to this Court on earlier separate petitions for review on certiorari.

However, Mr. Yuchengcos intervention was effectively reinstated and his and Y
Realtys Second Amended Complaint-in-Intervention admitted by the respondent court pursuant
to the Decision rendered by this Court in G.R. No. 131127, (Yuchengco vs. Republic, et al.), on
June 8, 2000,[28] in relation to a companion Decision dated March 13, 2001,[29] in G.R. No.
131530, (Y Realty Corporation vs. Hon. Sandiganbayan).

In its Decision in G.R. No. 131127, this Court ordered petitioner Yuchengco to submit to public
respondent Sandiganbayan the value of the properties he seeks to recover and to pay the proper
docket fees therefor within thirty (30) days upon determination thereof either by the
Sandiganbayan or its clerk of court, which in turn is directed to act with dispatch on the matter.
Following another round of legal skirmish on our judgments in G.R. No. 131127 and G.R. No.
131530, the respondent court assessed the Yuchengcos the docket fees due on the Second

356
Amended Complaint-in-Intervention in the amount of P8,729,185.00, which the latter paid
on April 4, 2001.

Barely a month after, the Yuchengcos filed with the respondent court an Urgent Motion To
Suspend Trial Pending Discovery Proceedings dated April 30, 2001,[30] followed by
a Supplement thereto dated May 7, 2001[31]. Thereat, they prayed for the cancellation of the
separate trial settings already made and agreed upon until they shall have fully undertaken pre-
trial discovery proceedings under the provisions of Rule 23 of the Rules of Court, a right they
allegedly are entitled to, but were unable to exercise due to the erroneous dismissal by the
respondent court of their Amended Complaint-in-Intervention.

The Yuchengcos commenced with the discovery process by filing and serving notices
for the deposition-taking of Atty. Francisco De Guzman, former PHI Corporate Secretary, and
Atty. Teresa Mercado- Ferrer, then Corporate Secretary of PTIC on May 15, 2001 and May 17,
2001, respectively, with a request for the issuance of subpoena for them. On May 15, 2001,
however, they filed amended notices re-scheduling the deposition taking of Attys. De Guzman
and Mercado-Ferrer for May 31, 2001 and June 1, 2001, respectively. The Yuchengcos would
later request another rescheduling and issuance of the corresponding subpoenas for the June 11
and 12, 2001 deposition taking of both individuals. The deposition taking of Atty. De Guzman
proceeded as scheduled and was completed - on June 12, 2001. The scheduled deposition taking
of Atty. Mercado-Ferrer on June 11, 2001, however, was deferred upon her request for a 2-
week time to prepare therefor. Her deposition was finally taken on July 6 and completed on July
13, 2001.
In the meantime, the respondent court, via a Resolution dated May 24, 2001,[32] as
reiterated in an Order given in open court on July 12, 2001, denied the Yuchengcos Urgent
Motion To Suspend Trial Pending Discovery and its Supplement, for the reason that: (a) Rule
23 of the Rules of Court does not authorize the suspension of trial owing alone to the fact that
a party wishes, in the interim, to avail itself of a mode of discovery; (b) petitioners were not
being deprived of their right of discovery, as they have in fact taken the deposition of Mr.
Gregorio Romulo in 1987; and (c) the ground relied upon was not among the instances calling
for the suspension of trial under Section 8, Rule 30 of the Rules of Court.[33] The Yuchengcos
would receive a copy of the denying resolution on June 7, 2001. Respondent court would, in
a Resolution of September 5, 2001,[34] deny the Yuchengcos motion for reconsideration [filed
on August 17] of the aforesaid May 24, 2001 order.

357
At the hearing of May 30, 2001 for the continuation of the reception of the Republics
evidence, respondent court issued an order to reflect that the parties agreed on the following
settings, viz: (1) July 12, 2001 for the pre-trial conference vis--vis the Yuchengcos complaint-
in-intervention, and July 30 and August 7, 2001 for the reception of their evidence; and (2)
August 29 and September 12, 2001, for the reception of the evidence for respondents
Cojuangcos and PHI.[35]
In the pre-trial conference for the complaint-in-intervention conducted on July 12, 2001,
the Yuchengcos orally moved for the resetting of the scheduled pre-trial as well as the trial dates
previously agreed upon. They likewise moved to change the order of trial vis--vis respondents
Cojuangcos/PHI, such that they (Yuchengcos) shall be presenting their evidence as plaintiffs-
in-intervention only after Cojuangcos/PHI shall have presented their defense evidence in
relation to the Republics Amended Complaint. Both motions were denied in open court. The
parties thereupon agreed on their trial dates. The dispositive portion of the July 12, 2001 Pre-
Trial Order reads:

WHEREFORE, with this Pretrial Order, the pretrial stage of this case with
respect to plaintiff-in-intervention Y Realty Corporation is hereby terminated.

As agreed upon by all the parties, let the trial on the merits be set on July
26 and 30, 2001 for the reception of evidence for said plaintiff-intervenor, and on
August 7, 29, 2001 and September 5 and 12, 2001 for the turn of the defendants-
intervenors to present their evidence. [36]

At the initial scheduled hearing on July 26, 2001 for the presentation of their evidence
as plaintiffs-in-intervention, the Yuchengcos were unable to present any witness to testify on
their behalf. Likewise, on July 30, 2001, the Yuchengcos manifested that the subpoenaed Atty.
de Guzman and Atty. Mercado-Ferrer were not in court. This development prompted
respondents Cojuangcos/PHI to counter-manifest that De Guzmans and Mercado-Ferrers
testimonies need not be taken anymore, both having already been deposed and subjected to
cross-examination, for which reason they (Cojuangcos/ PHI) have waived their right to cross-
examine.

At the next hearing session August 7, 2001 - the Yuchengcos again moved for the
cancellation and resetting of the hearing on the ground that the witness they intended to present
on that day one Nene Trajano - was unavailable. The respondent court denied the motion to

358
cancel, and, in an open court order, deemed the Yuchengcos as having waived their right to
present evidence, rationalizing as follows:

When this case was called for hearing today, Atty. Laurence Arroyo
appeared for the plaintiffs-in-intervention, . . ., and moved for the cancellation of
todays hearing as his . . . witnesses are not present in Court.

The Court reminded the plaintiffs-in-intervention that precisely the parties


agreed on the trial dates for them to present and terminate the presentation of their
respective evidence, i.e.,the hearings for plaintiffs-in-intervention were set on July
26, 30, and August 7, 2001 and for defendants-in-intervention on August 29,
September 5 and 12. It appears that the plaintiffs-in-intervention failed to present
their evidence on July 26, 30, and in todays hearing.

In view thereof, the plaintiffs-in-intervention are hereby deemed to have


waived their right to present further evidence and let the reception of evidence by
the defendants-in-intervention be set on August 29, September 5, and 12, 2001 at
8:30 in the morning, as previously scheduled and agreed upon by the parties. [37]

On August 15, 2001, the Yuchengcos moved for a reconsideration of the respondent
courts Resolution of May 24, 2001, as reiterated in the open-court Order decreed on July 12,
2001. The desired reconsideration was, however, denied per the respondent
courts Resolution dated September 5, 2001.[38]

The Yuchengcos received a copy of the formal Order of August 7, 2001, on August 15,
2001 and took due notice of the denying September 5 Resolution on September 18, 2001.

Unable to accept these denials, the Yuchengcos came to us via their present petition
in G.R. No. 149802, on the singular ground that -

RESPONDENT SANDIGANBAYAN COMMITTED GRAVE ABUSE


OF DISCRETION, OR ACTED WITHOUT OR IN EXCESS OF ITS
JURISDICTION, IN ISSUING THE QUESTIONED RESOLUTIONS AND
ORDER, ALL OF WHICH CONSTITUTE AN ARBITRARY DENIAL OF
PETITIONERS RIGHT TO PRE-TRIAL DISCOVERY.

359
In the meantime, on August 21, 2001, the Yuchengcos moved for a reconsideration of
the Order of August 7, 2001,[39] but their motion for reconsideration was likewise denied by the
respondent court per its Resolution dated September 28, 2001,[40] saying:

xxx it appearing that the court, in various instances, had accorded plaintiffs-
in-intervention the opportunities to present their evidence but failed altogether to
do so, thus effectively delaying the early disposition of the instant case which has
been pending for the last fourteen (14) years.

The Yuchengcos received their copy of the Resolution of September 28,


2001 on October 8, 2001.

On October 12, 2001, the respondent court rejected the Yuchengcos further requests for
the issuance of subpoenae to Imelda O. Cojuangco, her son, Antonio, and three (3) other
individuals. For, as explained by the respondent court, such request is an attempt on the part of
the Yuchengcos to set to naught its earlier Order considering them as having waived their right
to present further evidence.

Hence, the Yuchengcos second petition for certiorari, now docketed as G.R. No.
150320, in which they ascribe to the respondent court the commission of grave abuse of
discretion or of an act in excess of its jurisdiction in issuing the Order and Resolution
dated August 7, 2001 and September 28, 2001, respectively. Pressing on, the Yuchengcos argue
that they -

I. xxx WERE DEPRIVED OF THEIR RIGHT TO PRESENT EVIDENCE AND


THEIR DAY IN COURT IN VIOLATION OF DUE PROCESS.

II. xxx SHOULD NOT HAVE BEEN COMPLELLED TO PRESENT EVIDENCE


WHEN RESPONDENTS REPUBLIC/PCGG HAD NOT YET
FORMALLY OFFERED THEIR EVIDENCE AND RESTED THEIR
CASE.

III. xxx SHOULD NOT HAVE BEEN COMPELLED TO PRESENT EVIDENCE


BEFORE RESPONDENTS (DEFENDANTS) PHI/COJUANGCOS.

360
IV. xxx WERE UNREASONABLY BOUND TO THE SCHEDULE OF TRIAL
IN THE 30 MAY 2001 ORDER, CONSISTING OF MERELY 3 TRIAL
DATES SPANNING 13 DAYS.

V. RESPONDENT SANDIGANBAYAN ERRONEOUSLY FOUND THAT


PETITIONERS FAILED TO PRESENT EVIDENCE ON 26 AND 30
JULY AND 7 AUGUST 2001. (Petition, G.R. No. 150320, p. 26)

To summarize, assailed and sought to be nullified by the Yuchengcos in their certiorari


petitions in G.R. No. 149802 and G.R. No. 150320, are the following related issuances of the
respondent court:

(1) Resolution dated May 24, 2001, denying their Urgent Motion To
Suspend Trial Pending Discovery and its Supplement;

(2) Order dated July 12, 2001, denying their verbal motions for the re-
setting of the agreed pre-trial and trial dates insofar as their complaint-in-
intervention is concerned or, in the alternative, for a change in the order of trial so
that Cojuangcos/ PHI be made to present their evidence in relation to the complaint
of petitioner Republic ahead of them (Yuchengcos), and the Resolution dated
September 5, 2001, denying reconsideration of the Resolution dated May 24,
2001 and of the Order of July 12, 2001; and

(3) Resolution dated August 7, 2001, declaring them as being deemed to


have waived their right to present evidence, and the Resolution dated September
28, 2001, denying reconsideration of the Resolution of August 7, 2001.

Apropos the Yuchengcos Second Amended Complaint-in-Intervention, respondent


Cojuangcos/PHI filed on September 20, 2001 a Motion For Summary Judgment.[41] They
contended that the pleadings and affidavits on record failed to tender any genuine issue on the
alleged coercion and duress allegedly exerted by the late Pres. Marcos and/or the Cojuangco
group. According to them, the desired recovery of PLDT shares sought under the Second
Amended Complaint-in-Intervention is anchored on such coercion and duress employed.

To this motion for summary judgment, the Yuchengcos interposed an opposition,


followed by a supplement to opposition.

On the basis of the foregoing antecedents, and acting on the motion for summary
judgment, the respondent court rendered its assailed Partial Decision.[42] Feeling aggrieved,

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just like the Republic, over the dismissal of their PLDT shares claims, the Yuchengcos have
challenged in their petition in G.R. No. 153207 the aforesaid Partial Decision, raising the
following issues for resolution:

I. The Sandiganbayan gravely erred when it insisted on rendering the questioned


Partial Decision despite the pendency of G.R. Nos. 149802 and 150320.

II. The Sandiganbayan gravely erred in confining the presentation of petitioners


evidence to three (3) hearing dates spanning less than two (2) weeks.

III. The Sandiganbayan gravely erred in granting respondents PHI/Cojuangcos


Motion for Summary Judgment.

IV. The Sandiganbayan gravely erred in finding that the subject PTIC shares do not
partake of the character of ill-gotten wealth. (Petition, G.R. No. 153207, pp.
33-34)

IV. THE COURTS RULING

As a matter of sound and long appellate practice, the Court, before considering the merits of a
petition before it, looks into the matter of timeliness and accordingly would dismiss or otherwise
deny further due course to petitions for non-compliance with the jurisdictional caveat on
timeliness of filing. The threshold question, therefore, is whether or not all the five (5) petitions
at bar were timely filed.

Lateness and Mootness of the Petition in G.R. NO. 149802

A review of the records clearly indicates that the Yuchengcos petition for certiorari in G.R. No.
149802 was filed out of time. As it were, there can hardly be any quibbling that the Resolution
of May 24, 2001 assailed thereby is interlocutory in character. For, respondent courts refusal to
suspend trial until the Yuchengcos shall have completed their discovery did not terminate the
case. Further proceedings were still required, such as the further reception of evidence for all
parties, inclusive of the Yuchengcos. In his ponencia in Investments, Inc. vs. Court of
Appeals,[43] then Justice and later Chief Justice Andres Narvasa explained the nature of an
interlocutory order and how it differs with one that is final:

362
The concept of final judgment, as distinguished from one which has become
final (or executory as of right [final and executory]), is definite and settled. A final
judgment or order is one that finally disposes of a case, leaving nothing more to be
done by the Court in respect thereto, e.g., an adjudication on the merits which, on
the basis of the evidence presented at the trial, declares categorically what the rights
and obligations of the parties are and which party is in the right; or a judgment or
order that dismisses an action on the ground, for instance, of res judicataor
prescription. Once rendered, the task of the Court is ended, as far as deciding the
controversy or determining the rights and liabilities of the litigants is concerned.
Nothing more remains to be done by the Court except to await the parties next move
. . . and ultimately, of course, to cause the execution of the judgment once it
becomes final or, to use the established and more distinctive term, final and
executory.

xxx xxx xxx

Conversely, an order that does not finally dispose of the case, and does not
end the Courts task of adjudicating the parties contentions and determining their
rights and liabilities as regards each other, but obviously indicates that other things
remain to be done by the Court, is interlocutory, e.g., an order denying a motion to
dismiss under Rule 16 of the Rules, . . . . Unlike a final judgment or order, which
is appealable, as above pointed out, an interlocutory order may not be questioned
on appeal except only as part of an appeal that may eventually be taken from the
final judgment rendered in the case. (at pp. 339-340)

Following Investments, Inc., the remedy of an appeal from the interlocutory May 24,
2001 Order was unavailing to the Yuchengcos, thus the propriety of their coming to this Court,
with respect to that order, in G.R. No. 149802 via a special action for certiorari under Rule 65
of the Rules of the Court.

It may be recalled, however, that prior to the filing of their petition in G.R. No. 149802,
the Yuchengcos first urged the respondent court for a reconsideration of its May 24, 2001
Resolution, a copy of which they received, by their own admission, on June 7, 2001. The
corresponding motion filed on August 15, 2001 also sought the reconsideration of the open-
court Order dated July 12, 2001. Given these defining dates, there is a need to look into the
timeliness of the said motion as a preliminary step to determine the timeliness of the
Yuchengcos petition in G.R. No. 149802 itself.

363
The rule on the filing of petitions for certiorari is embodied in Section 4, Rule 65 of the
Rules of Court, partly reading -

SEC. 4. When and where petition filed. The petition may be filed not later
than sixty (60) days from notice of the judgment, order or resolution. In case a
motion for reconsideration or new trial is timely filed, whether such motion is
required or not, the sixty (60) day period shall be counted from notice of the denial
of said motion. [44]

As the rule now thus stands, the 60-day reglementary period within which to file a
petition for certiorari shall be reckoned from notice of the resolution or order sought to be
nullified, save when a motion for reconsideration is timely filed in which case the 60-day period
shall start from receipt of the denial of such motion.

A corollary rule, subsumed in the same Section 4 of Rule 65, applies in the event it is
determined that a motion for reconsideration is not timely. In such a situation, a party seeking
to avail himself of the remedy of certiorari under the same Rule 65, does not have a new 60-
day period from receipt of the denial of the motion for reconsideration, within which to file the
petition. As such, the timeliness of the petition must be reckoned from the date of notice or
receipt of the order or resolution assailed, as if no motion for reconsideration was filed.

Given the following sequence of events: a copy of the May 24, 2001 resolution was
received on June 7; the motion for reconsideration thereof was filed on August 15, with a copy
of the resolving issuance dated September 5 received on September 18, the question that now
comes to fore is: Vis-a-vis the May 24, 2001 resolution, was the motion for its reconsideration
filed on August 15, 2001 timely, so that the Yuchengcos can validly reckon, as they in fact did,
the 60-day period from their receipt on September 18, 2001 of the September 5, 2001 Resolution
denying reconsideration of the Resolution of May 24, 2001 jointly with the Order of July 12,
2001?

To answer the poser, a determination must first be made as to when should a motion for
reconsideration of an interlocutory order be filed. In Denso (Phils.), Inc. vs. The Intermediate
Appellate Court, et al.,[45] this Court ruled that a motion for reconsideration of an interlocutory
order is not subject to the usual limiting fifteen-day period of appeal prescribed for final
judgments or orders. The Denso ruling, however, stopped short of directly addressing the issue
of precisely when should a party file a motion for reconsideration of an interlocutory order. For,

364
apart from saying that such motion is not subject to the 15-day-appeal-period rule, it merely
held that moving for reconsideration after the lapse of a 38-day period after receipt of the
assailed order is not unreasonable.

While the Rules of Court has no specific provision dealing directly with the question,
Section 4 of Rule 65 provides a logical answer.

Taken in its proper perspective, the clause not subject to the limiting 15-day period for
appeal prescribed for final judgments or orders cannot plausibly be stretched to mean that the
period to ask for reconsideration of an interlocutory order can exceed the 60-day threshold
prescribed under the Section 4 of Rule 65 for filing a petition for certiorari. Else, a legal
aberration would ensue where a party who has merely 60 days from notice of an adverse
interlocutory order to interpose a special action for certiorari would be allowed a longer period
to move for reconsideration of such order.

Withal, the filing of the Yuchengcos motion for reconsideration of the Resolution
of May 24, 2001 on August 15, 2001, which is the 69th day from notice of the said Resolution
on June 7, 2001, is beyond the 60-day period prescribed under the present Section 4 of Rule 65,
and is, therefore, late. Perforce, and as discussed earlier, their petition in G.R. No. 149802 itself
was belatedly filed. In fine, for lack of a timely motion for reconsideration of the May 24,
2001Resolution, the same has, in a manner of speaking, thereby become final and executory.
Certiorari, insofar as the said resolution is concerned, is no longer available.

Apropos the Order of July 12, 2001, this Court is of the view that the same petition in
G.R. No. 149802 has, with respect to such order, become moot and academic. As we look back
at the incidents subject of the stated order, the Yuchengcos had moved that the trial be
suspended to await the completion of their discovery procedure or, in the alternative, for
respondents Cojuangcos/PHI to present their evidence, vis--vis the claim of petitioner Republic,
ahead of them (Yuchengcos). By this desired variation of the order of trial, the Yuchengcos
were, as we see it, actually hoping to be given additional trial dates for presentation of evidence
on top of those dates allotted them but did not utilize. Owing, however, to the promulgation of
the Partial Decision dated April 25, 2002, we can assume that during the pendency of the
petition in G.R. No. 149802, petitioner Republic and respondent Cojuangcos/PHI had, in the
separate trial on the PLDT shares, already finished with the presentation of their evidence and
have rested their case, the latter in relation to both the Republics Amended Complaint and the
Yuchengcos Complaint-in-Intervention. In net effect, the change in the order of presentation of

365
evidence veritably sought in G.R. No. 149802 can no longer be granted, or, if granted, can no
longer be implemented. It is, therefore, futile to belabor, let alone rule, on the merits of this
particular petition insofar as it relates to the Order of July 12, 2001. Time and again, we have
said that courts exist to decide actual controversies, and do not render opinions on moot cases.

The Due Process Issue in


G.R. NOS. 150320 and 150367

The Court shall first pass upon the issue of due process, or lack of it, to be precise,
uniformly invoked in G.R. Nos. 150320 and 150367. If non-observance of the requirements of
due process indeed tainted the separate trial below, then the resolution on the issue of the
substantive correctness of the Partial Decision raised in petitions for review in G.R. No.
153459 and G.R. No. 153207 should be clear, simple and unavoidable. For, a judgment arrived
at after a trial marred by lack of due process deserves to be immediately struck down as a nullity.

It may be well to revisit the various issuances sought to be annulled under Rule 65 of
the Rules of Court on due procedural ground. Specifically, petitionerRepublic assails, in G.R.
No.150367, the respondent courts Order dated May 30, 2001 denying its motion for
additional time to present its evidence, as well as the Order dated September 5,
2001 requiring the same petitioner to file and terminate its formal offer of evidence within 30
days. On the other hand, in G.R. No. 150320, the Yuchengcos urge the annulment of
the August 7, 2001 and September 28, 2001 Resolutions in which they were deemed by the
respondent court to have waived their right to present further evidence. At bottom, respondent
court issued these assailed orders and/or resolutions owing to both petitioners failure to
complete the presentation of their respective evidence within the agreed trial dates, a failure
which, if allowed to continue, would, in the eyes of that court, further derail the early disposition
of Civil Case No. 0002. It could have been that the respondent court was, in the end, actuated
by the desire to resolve a case that has been pending for the last fourteen (14) years. And this,
in hindsight, is not an idle speculation on our part as respondent court would later write in
its Partial Decision, citing Republic vs. Sandiganbayan,[46] the following:

We stress that the resolution of the complaint-in-intervention, along with


the principal case, is long overdue. What the Supreme Court has said in this regard
four years ago has acquired even greater urgency today

366
xxx Eleven years have passed since the government started its
search for and reversion of such alleged ill-gotten wealth. The
definitive resolution of such cases on the merits is thus long overdue.
If there is adequate proof of illegal acquisition, accumulation,
misappropriation, fraud or illicit conduct, let it be brought now . . .

It cannot be gainsaid that the respondent court merely exercised its discretion to order
and to be guided by such order - the termination of the respective presentation of evidence by
both petitioners Yuchengcos and Republic or to set a limiting timetable for such presentation.
We are loathe to disturb such exercise of judicial discretion which has spawned the petitions
for certiorari in G.R. No. 150320 and G.R. No. 150367. For, jurisprudence teaches that
certiorari lies only when the tribunal acts without or oversteps its jurisdiction, or gravely abuses
its discretion, [47] as when the power is exercised in an arbitrary or despotic manner by reason
of passion, prejudice or personal hostility.[48] The abuse must, in fine, be of such degree as to
amount to an evasion of positive duty, or a virtual refusal to perform a duty enjoined, or to act
at all, in contemplation of law, as to be equivalent to having acted without jurisdiction.[49]

What we said in Lee, et al. vs. People[50] is also apropos, viz.:

xxx Certiorari may not be availed of where it is not shown that the
respondent court lacked or exceeded its jurisdiction over the case even if its findings
are not correct.

In other words, certiorari will issue only to correct errors or jurisdiction and
not to correct errors of procedure or mistakes in the courts findings and conclusions.
An interlocutory order may be assailed by certiorari only when it is shown that the
court acted without or in excess of jurisdiction or with grave abuse of discretion.
However, this Court generally frowns upon this remedial measure as regards
interlocutory orders. To tolerate the practice of allowing interlocutory orders to be
the subject of review by certiorari will not only delay the administration of justice
but will also unduly burden the courts. (At pp. 402-03)

Complementing Lee is Ampeloquio, Sr. vs. Court of Appeals[51] where we wrote:

xxx If every error committed by the trial court were to be a proper object of
review by certiorari, the trial would never come to an end and the appellate courts
dockets would be clogged ad infinitum with the aggrieved parties-litigants filing

367
petitions against every interlocutory order of the trial court. Such a situation could
only undermine the proper conduct of litigation before the courts and ought not to
be tolerated if we are to enhance the prompt administration of justice at every level
of the judicial hierarchy.

In the light of the foregoing doctrinal holdings, we can say without fear of contradiction
that not every erroneous interlocutory order, if that be the case, is correctible by certiorari. We
grant certiorari only upon clear showing that the trial court issued its challenged interlocutory
order without or in excess of jurisdiction or in grave abuse of discretion amounting to lack of
jurisdiction. Conversely, absent the vitiating element of want or excess of jurisdiction, certiorari
is unavailing as a remedy.

We thus sustain as defensible, nay correct, under the obtaining factual milieu and
certainly within the jurisdiction of the respondent court, the issuance of the assailed orders and
resolutions respecting the presentation of evidence. As it were, petitioners Republics and
Yuchengcos respective certiorari petitions basically rest on the postulate that the respondent
court violated their right to due process of law when it refused to grant them what basically
were requests for further postponements to further receive their respective evidence.

Lest it be overlooked, the matter of granting or denying a plea for continuance or


postponement is, as a rule, addressed to the sound discretion of the trial court.[52] In 1916, or
some eighty nine (89) years ago, the landmark case of Lino- Luna vs. Arcenas,[53] expounded
on the juridical concept of discretion in the following wise:

In its very nature, the discretionary control conferred upon the trial judge
over the proceedings had before him implies the absence of any hard-and-fast rule
by which it is to be exercised, and in accordance with which it may be reviewed.
But the discretion conferred upon the courts is not a willful, arbitrary, capricious
and uncontrolled discretion. It is a sound, judicial discretion which should always
be exercised with due regard to the rights of the parties and the demands of equity
and justice. As was said in the case of The Styria vs. Morgan (186 U.S., 1, 9): The
establishment of a clearly defined rule of action would be the end of discretion, and
yet discretion should not be a word for arbitrary will or inconsiderate action. So in
the case of Goodwin vs. Prime (92 Me., 355), it was said that discretion implies
that in the absence of positive law or fixed rule the judge is to decide by his view
of expediency or by the demands of equity and justice.

There being no positive law or fixed rule to guide the judge in the court
below in such cases, there is no positive law or fixed rule to guide a court of appeal

368
in reviewing his action in the premises, and such courts will not therefore attempt
to control the exercise of discretion by the court below unless it plainly appears that
there was inconsiderate action or the exercise of mere arbitrary will, or in other
words that his action in the premises amounted to an abuse of discretion. But the
right of an appellate court to review judicial acts which lie in the discretion of
inferior courts may properly be invoked upon a showing of a strong and clear case
of abuse of power to the prejudice of the appellant, or that the ruling objected to
rested on an erroneous principle of law not vested in discretion.

The doctrine, supported by numerous citations of authority, is thus stated in


the Encyclopedia of Pleading and Practice (vol. 2, pp. 416, 418):

Abuse of discretion. - Accordingly, where the power is so


exercised as to deprive a party of a legal right, or unduly benefit one
party at the expense of the other, or where, generally, the injustice
or inexpediency of the act is so clear as to show beyond a reasonable
doubt the violation of equitable considerations, the act of decision is
always reviewable in some form on appeal, as an abuse of power.

Presumption. - The presumption on appeal that the exercise


of discretionary powers was sound is very strong. The appellant
must rebut it by showing a strong and clear case of abuse of power
to his prejudice, or that the decision below rested on an erroneous
principle of law not vested in discretion. A mere mistake of
judgment, or a difference in opinion between the appellate and the
trial court, is not sufficient.

It cannot be stressed enough that postponements have a way of causing delays of the
vexatious kind. With this in mind and with respect to the specific issue before us, we are now
confronted with the task of harmonizing two (2) basic, but not necessarily irreconcilable, rights
etched no less in the Bill of Rights. We refer to the right to due process, on one hand, and the
right to speedy trial, on the other. This undertaking becomes all the more made difficult by the
stark reality that these petitions involve ill-gotten wealth reputedly amassed by the Marcos
family, their friends and former business associates where, as in several like cases, the Court
itself dictated a resolution in utmost dispatch, albeit acknowledging in the same breath that over
and above the exigencies of recovering ill-gotten wealth, we must carry out the more pressing
constitutional task of seeing to it that all parties are afforded due processes and substantial
justice, stressingthat this burden extends [E]ven to those suspected . . . of having acquired
and/or accumulated ill-gotten wealth [54]

369
It is, therefore, well-nigh apropos to hark on judicial precedents on the two constitutional
rights adverted to above.

In the abstract due process has been described as nothing more and nothing less than the
embodiment of the sporting idea of fair play.[55] Its irreducible minimum requirements are
notice and hearing,[56] the right to be heard being its most basic tenet.[57] In PCIB vs. Court of
Appeals,[58] we held that the essence of due process is that a party is afforded a reasonable
opportunity to be heard in support of his case; what the law abhors and prohibits is the absolute
absence of the opportunity to be heard. Hence, a party cannot feign denial of due process when,
having been afforded the opportunity to present his side, chooses, for whatever reason, not to
be heard.[59]

On the other hand, the right to speedy trial, as an adjunct to the right of all persons to a
speedy disposition of their cases before judicial, quasi-judicial, or administrative bodies,
requires that court proceedings should be conducted according to fixed rules and must be free
from vexatious, capricious and oppressive delays.[60] In the determination of whether or not the
right to speedy trial has been violated, the factors that may be considered and balanced are
length of delay, reason for the delay, assertion of the right or failure to assert it, and prejudice
to counsel by the delay.[61]

Given the foregoing perspective, it was in keeping with the imperatives of speedy trial
for the respondent court, in the exercise of its discretion, to issue the orders/resolutions assailed
in G.R. No. 150320 and G.R. No. 150367 as a necessary consequence to its denial of
petitioners innumerable motions for postponement.

An old but still good decisional law holds that the postponement of the hearing of a case,
which had been previously set with due notice to the parties and their attorneys, is not an
absolute right of the litigants nor of their counsel.[62] Owing, however, to the practice that
persists to this day, we acknowledged the stubborn reality that continuances and postponements
form part of the procedural system of dispensing justice.[63] But even so, the Court has already
taken measures to cleanse the system of this practice which, when abused, as it has often been
abused, leads to the wheels of justice grinding to a halt. One reformative step is the mandatory
continuous trial scheme prescribed under Supreme Court (SC) Administrative Order No.4,
series of 1988, in relation to SC Circular No. 1-89. Under this scheme, trials are to be held on
the scheduled dates without needless postponements, the factual issues for trial well defined at
pre-trial and the whole proceedings terminated and ready for judgment within ninety (90) days

370
from the date of the initial hearing, unless, for meritorious reasons, an extension is permitted.
Following a trial period involving the participation of designated pilot courts, the Court issued
Administrative Circular (AC) No. 3-90, series of 1990, decreeing the adoption of the mandatory
continuous trial system starting February 15, 1990, in all trial courts.

Not to be overlooked as another measure towards a speedy disposition of cases is the


issuance of SC Administrative Circular No. 3-99 prescribing guidelines on effective
management of cases to ensure their speedy disposition. Some highlights:

B. Trial

(5) The judge shall conduct trial with utmost dispatch, with judicious
exercise of the courts power to control trial proceedings to avoid delay.

xxx xxx xxx

(7) The trial shall be terminated within ninety (90) days from initial hearing.
Appropriate disciplinary sanctions may be imposed on the judge and the lawyers
for failure to comply with this requirement due to causes attributable to them.

(8) Each party is bound to complete the presentation of his evidence within
the trial dates assigned to him. After the lapse of said dates, the party is deemed to
have completed the presentation of evidence. However, upon verified motion based
on compelling reasons, the judge may allow a party additional trial dates in the
afternoon; provided that said extension will not go beyond the three-month limit
computed from the first trial date except when authorized in writing by the Court
Administrator, Supreme Court.

It is thus abundantly clear that the mandatory continuous trial scheme, the guidelines on
trial, and, to a significant level, the ideal articulated in Republic (PCGG) vs.
Sandiganbayan[64] to resolve ill-gotten wealth cases with utmost dispatch, circumscribed, in a
way, the respondent courts otherwise wide latitude in the conduct of its proceedings. At bottom,
then, respondent court acted with some degree of circumspection and, doubtless, well within its
authority when, in its assailed issuances in G.R. No. 150367, it refused to
accommodate petitioner Republic with additional trial dates and ordered it to file its formal
offer of exhibits and rest its case. The same conclusion applies to petitioner Yuchengcos in G.R.
No. 150320. Grave abuse of discretion cannot be ascribed on the respondent court in (i)

371
proceeding to hear the evidence of the Yuchengcos on the agreed trial dates of July 26 and 30
and August 7, 2001, (ii) refusing to reset the hearings to later dates, and (iii) declaring them to
have effectively waived their right to present further evidence when they were still without
evidence or witness on the last trial date. There is hardly any dispute that these were trial dates
previously agreed upon and to which the Yuchengcos committed to abide. And under the cited
Guidelines on Trial, petitioner Yuchengcos were bound to complete the presentation of their
evidence within the trial dates assigned to them. Likewise, at the end of the trial dates, they
were deemed to have completed with the presentation of their evidence. It would be an
aberration for the Court to fault and reverse the graft court for following what it has enjoined
the latter to observe in the first place.

As to petitioner Republic, it was given, per our own count, no less than twenty (20) trial
dates. There were, in fact, more trial settings than those agreed upon and directed in the pre-
trial of May 25, 2000. The accommodating attitude of the graft court
towards petitioner Republic did not escape petitioner Yuchengcos notice. While perhaps a bit
exaggerated, petitioner Yuchengcos statement in page 88 of their Consolidated Memorandum
that not once did [the Sandiganbayan] deny their (Republics) requests to cancel scheduled
hearings belies the Republics lament that the respondent court did not accord it fair, adequate
and reasonable opportunity to present all evidence they consider vital.

The problem lies not in the alleged unreasonable refusal of the respondent court to grant
the Republic more trial dates, but, as the respondent court aptly suggested, in the
Republics innumerable requests for cancellation and resetting of hearings, on one pretext after
another, which, at the end of the day, reflected on the unpreparedness of its set of counsels and
the seeming unavailability of admissible material evidence. With the view we take of the
case, petitionerRepublic sought, but in vain, to present respondent Mrs. Marcos, it being its
posture that her testimony - after she had announced to the four winds that the Marcos family
owns the disputed PLDT shares in the name of respondent Cojuangcos/PHI - would have been
vital to its case. Ironical as it may sound, petitionerRepublic seems to imply by its consuming
bid to have Mrs. Marcos on the witness stand that it cannot adequately prove its case without
her testimony. For, how else explain the fact that it footnoted its Formal Offer of Evidence with
the reservation to have her testify, if so allowed by this Court?

To be sure, we have taken note of petitioner Republics assertion that respondent court
gave its word during the March 26, 2001 hearing that it can present Mrs. Marcos after all of its
intended witnesses shall have testified. This assurance, if indeed given, cannot be taken to mean,

372
however, that the court has to forever await her testimony. The refusal to
grant petitioner Republic additional trial dates just to have the unwilling Mrs. Marcos testify is
understandable, when taken in the perspective of vexatious delays juxtaposed with the
Republics counsels commitment given in one of the hearings to finish with the presentation of
evidence with or without her testimony. As we refer to the records, we see that the first
time petitioner Republic manifested its intention to present Mrs. Marcos as its hostile witness
was during the hearing of January 29, 2001. But the succeeding scheduled hearing dates, i.e,
January 30 and 31, 2001, February 1, 2, and 9, March 12, 13, 14, 15, 26, 27, and 28, May 7, 9,
16 and 28, 2001 came and went without Mrs. Marcos testifying as a witness
of petitioner Republic. It is in fact not amiss to say that all these scheduled hearings were, at the
instance of petitioner Republic, cancelled or reset to other dates, either because of the
unavailability of the intended witness or the government handling counsel was ill prepared for
trial.

The Yuchengcos were no better. They agreed to present their evidence on certain trial
dates, but were unable to do so in any of those trial dates, inclusive of the last scheduled hearing.
In any event, the depositions of Attys. de Guzman and Mercado-Ferrer, together with that of
Gregorio Romulo, were received in evidence for said petitioners over the objections of the
adverse parties. Moreover, petitioner Yuchengcos wasted their trial dates by their unyielding
insistence on presenting witnesses who have already been deposed, and even after respondents
Cojuangcos/PHI anticipatorily manifested their intention to waive their right to further cross-
examine the deponents. While perhaps a bit anti-climactic to state at this juncture, there was no
attempt to present petitioner Yuchengco himself, when it would seem that he was in the best of
position to testify on his and/or Y Realty Corporations claim over the PTIC and PLDT shares
or on the alleged duress exerted on him by the Marcoses or the Cojuangco group.

Neither do we find persuasive cogency in the Yuchengcos posture that the separate trial
should have been suspended to await the completion of their discovery efforts. For, such
arrangement, if allowed and put in motion, would have veritably provided said petitioners with
tools to cause the indefinite suspension of the separate trial by the convenient plea of inadequate
availment of discovery. Besides, we are at loss to understand the Yuchengcos contention about
their inability to undertake discovery procedure until this Court reinstated their Amended
Complaint-in-Intervention heretofore dismissed by the respondent court. There is no rule, and
the Yuchengcos have cited none precluding them from undertaking such discovery procedure
prior to the reinstatement action of this Court. Neither is there any rule requiring the suspension
of trial just to allow a party-litigant to complete discovery procedure.

373
And, when we take into stock of respondent courts constant reminders to the contending
parties to observe the trial schedule in view of the length of time that Civil Case No. 0002 has
been pending, petitioners Republic and Yuchengcos have, in the final reckoning, only
themselves to point at for their present plight. The recorded facts indicate that they were not
denied the opportunity to be heard.

Finally, we cannot write finis to the due process issue without resolving the question of
whether the respondent court, through the use of its coercive powers, could have had compelled
Mrs. Marcos to be petitioner Republics hostile witness and testify on the circumstances
surrounding their (the Marcos family) claimed acquisition and ownership of the disputed PLDT
and PTIC shares.

The Court only has to recall that when Mrs. Marcos refused to make a court appearance
for petitioner Republic, she invoked her right against self-incrimination under Article III,
Section 17 of the Constitution.[65] She was correct. She cannot be compelled to testify without
violating her constitutional right against self-incrimination. As she aptly observed, Civil Case
No. 0002, while basically a civil suit, is penal in nature, since it is, for all intents and purposes,
a forfeiture proceeding, taken under and pursuant to EO Nos. 1 and 2, series of 1986.[66] These
twin issuances indeed seek, as ultimate objective, the recovery of all ill-gotten wealth
accumulated by former President Ferdinand E. Marcos, his immediate family, relatives,
subordinates and close associates, and the properties being contemplated to be recovered being
those funds, moneys, assets and properties illegally acquired or misappropriated by said
persons thus, stamping upon the civil suit the characteristics of a forfeiture proceedings.

The suggestion that the right against compulsory self-incrimination may be invoked
only in criminal proceedings is valid to a certain extent, but not enough justification to compel
Mrs. Marcos to testify against her volition, given the penal characteristics of Civil Case No.
0002. This is because Rule 115, Section 1(e) of the Rules of Court accords the accused at a trial
the right to be exempt from being compelled to be witness against himself . The kernel of this
privilege is testimonial compulsion, or simply a prohibition against legal process to extract from
a persons own lips an admission of guilt against his will.[67] As this Court has further explained
in People vs. Ayson[68] -

The right of a defendant in a criminal case (to be exempt from being a


witness against himself) signifies that he cannot be compelled to testify or produce
evidence in the criminal cases in which he is the accused, or one of the accused. He

374
cannot be compelled to do so even by subpoena or other process or order of the
Court. He cannot be required to be a witness either for the prosecution, or for a co-
accused, or even for himself. In other words unlike an ordinary witness (or a party
in a civil action) who may be compelled to testify by subpoena, having only the
right to refuse to answer a particular incriminatory question at the time it is put to
him the defendant in a criminal action can refuse to testify altogether. He can
refuse to take the witness stand, be sworn, answer any question. And, as the law
categorically states, his neglect or refusal to be a witness shall not in any manner
prejudice or be used against him. (Emphasis supplied)

Lest we be misunderstood, this Courts concurrence with Mrs. Marcos is really nothing
more than being faithful with what was taught in the oft-cited case of Cabal vs. Kapunan,[69] to
wit:

In a strict signification, a forfeiture is a divestiture of property without


compensation, in consequence of a default or an offense, and the term is used in
such a sense in this article. A forfeiture, as thus defined, is imposed by way
of punishment not by the mere convention of the parties, but by the lawmaking
power, to insure a prescribed course of conduct. It is a method deemed necessary
by the legislature to restrain the commission of an offense and to aid in the
prevention of such an offense. The effect of such a forfeiture is to transfer the title
to the specific thing from the owner to the sovereign power. (23 Am. Jur. 599, italics
in the original)

In Blacks Law Dictionary a forfeiture is defined to be the incurring of a


liability to pay a definite sum of money as the consequence of violating the
provisions of some statute or refusal to comply with some requirement of law. It
may be said to be a penalty imposed for misconduct or breach of duty. (Com. vs.
French, 114 S.W. 255)

As a consequence, proceedings for forfeiture of property are deemed


criminal or penal, and, hence, the exemption of defendants in criminal cases from
the obligation to be witnesses against themselves is applicable thereto.

xxx xxx xxx

The rule protecting a person from being compelled to furnish evidence


which would incriminate him exists not only when he is liable criminally to
prosecution and punishment, but also when his answer would tend to expose him
to a xxx forfeiture xxx. (Am. Jur. Sec. 43, p. 48) (Italics in the original)

375
Assayed against the cited jurisprudence, respondent Mrs. Marcos can, as was her bent,
refuse to testify altogether, notwithstanding the express allegations she made in the pleadings
adverted to by petitioner Republic.

The Propriety of SUMMARY JUDGMENT as


Against the Yuchengcos Second Amended Complaint-in-Intervention

Under Section 3, Rule 35, of the 1997 Rules of Civil Procedure, summary judgment
may be allowed where, save for the amount of damages, there is no genuine issue as to any
material fact and the moving party is entitled to a judgment as a matter of law. Summary or
accelerated judgment is a procedural technique aimed at weeding out sham claims or defenses
at an early stage of the litigation, thereby avoiding the expense and loss of time involved in a
trial. Even if the pleadings appear, on their face, to raise issues, summary judgment may still
ensue as a matter of law if the affidavits, depositions and admissions show that such issues are
not genuine.[70] The presence or absence of a genuine issue as to any material fact determines,
at bottom, the propriety of summary judgment. A genuine issue, as differentiated from a
fictitious or contrived one, is an issue of fact that requires the presentation of evidence. To the
party who moves for summary judgment rests the onus of demonstrating clearly the absence of
any genuine issue of fact, or that the issue posed in the complaint is patently unsubstantial so
as not to constitute a genuine issue for trial.[71]

Guided by the principles above indicated, we hold that, under the circumstances
obtaining, summary judgment is proper and the respondent court did not commit a reversible
error in granting the corresponding motion for summary judgment filed by respondents
Cojuangcos/PHI on the Second Amended Complaint-in-Intervention.

As may be observed, petitioner Yuchengco anchored his claim over the disputed PLDT
shares on the proposition that the Marcos regime coerced him into giving up 6% of PTIC shares
formerly owned by Gregorio Romulo and Leonides Virata which he paid for. Apart from this
6% PTIC-share transaction, he alleged having entered into a put and call agreement with GTE
for the purchase of the latters 25% equity in PTIC, but that he was again coerced into not
exercising his option to purchase, only to be apprised later that PHI acquired the same 25%
stockholdings.

376
It cannot be overemphasized, vis--vis the Yuchengcos claim that, when respondents
Cojuangcos/PHI moved for summary judgment, the Yuchengcos, consequent to their having
been deemed to have waived their right to present their evidence, were effectively precluded
from pursuing discovery procedure. In net effect, the only facts before the respondent court at
the time of the filing of the motion for summary judgment were those to be gathered from the
pleadings and the depositions of Mr. Romulo and Attys. de Guzman and Mercado-Ferrer.

No substantial proof of coercion or duress, however, appears from the depositions on


file. On the other hand, the only relevant facts deducible from the deposition of Atty. Mercado-
Ferrer on the put and call option, are: (1) the put option of petitioner Alfonso T. Yuchengco
expired in 1972; and (2) petitioner Y Realty Corporation executed a waiver of its pre-emptive
right on the transfer of the PTIC shares held by GTE to Mr. Ramon U. Cojuangco in 1978.
Thus, if, by its own terms, the put and call option expired in 1972, Yuchengcos right had long
lapsed when the assignment of the PTIC shares were made in favor of the late Ramon U.
Cojuangco. Moreover, the waiver Y Realty Corporation executed may be seen to confirm
petitioner Yuchengcos assent to the aforesaid assignment of PTIC shares in favor of Ramon
Cojuangco.

As to Mr. Gregorio D. Romulo, his deposition taken on August 3, 1987 yields the
following:

ATTY. QUISUMBING:

Q: And who were the major stockholders in that corporation i.e. [PTIC]?
A: The stockholders involved is the Gentel who turned over their equity to PLDT
into the corporation and it was assumed that this company formed in the
Bahamas would be the body agent of PLDT which in turn would buy all
those equipments from Gentel through the Bahamas corporation paying
Gentel its share with a large commission, I do not know.

Q: When you said Gentel, are you referring to General Telephone & Electronics
Corporation you have mentioned?
A: Yes, sir.

Q: And who held the interest in PTIC eventually?


A: What resulted, from my point of view, was while in Manila, I received word that
I was the owner of 3% shares in PTIC, I immediately wired my office in
New York and wanted to know if I could hold the shares in my name or if

377
they wanted to transfer to them but I had the offer and I wanted to know
definitely what was the position of the Headquarters with regards to this.

Q: And what was their position?


A: Our position was the acquired 3% do not mean anything to us of a company that
is from PLDT, at least one regular share of the PLDT had no or rather IT&T
had no interest in PLDT except to acquire if it could be acquired and we
have quite to iron in the fire at that time so I dont know now.

Q: Who else held stockholding interest?


A: I was informed that Leo Virata had 3%, Tony Meer had 3%, Oscar Africa had
1% or 2% and the rest were distributed among the relatives and in-laws of
Cojuangco, oh yes, Mr. Alfonso Yuchengco. I dont know if awarded or
allowed to possess the 7% of the original shares.

ATTY. FRANCISCO:
I would like to request for the striking of the testimony of the witness from
the record, that is hearsay because he claimed that he was merely informed
of the other interests.

ATTY. LEANO:
I adopt the manifestation of counsel.

xxx xxx xxx

COMMISSIONER:
ALL objections are recorded.

ATTY. QUISUMBING:
Q: Did you subsequently make any confirmation of the information that you
received?
A: Yes, but I never saw a piece of paper, I was told by Ramon Cojuangco and
Antonio Meer about this information after their return from their trip abroad
and that we successfully negotiated the purchase of PLDT.

Q: And what was the role of then President Marcos in this acquisition?

ATTY. LEANO:
No basis.

ATTY. FRANCISCO:
Leading.

378
xxx xxx xxx

COMMISSIONER:
But the witness may answer the question if he so desire.

A: I believe that I can answer the question by simply telling the Court how we were
informed that PLDT was available apparently because I am only told this.
The person that found that this PLDT was going to be sold to Ninoy Aquino
was his cousin Danding Cojuangco, his cousin told the President and the
President asked Ambassador Roberto S. Benedicto to go to the offices of
PLDT and stop all ways then he signed for Monching Cojuangco because
he felt that a transaction of this nature, of this large was beyond the abilities
of Danding . . . I do not know but that was then transmitted to us by
Monching Cojuangco, I do not know and I cannot testify to the veracity of
this story but what we were told that in order to meet us

ATTY. FRANCISCO:
I move to strike out the answer of the witness for being hearsay.

ATTY. PALMA:
Counsel for Prime Holding adopts the same objection.

ATTY. LEANO:
For Mrs. Cojuangco, the same objection for being hearsay.

COMMISSIONER:
All objections recorded.

xxx xxx xxx

ATTY. QUISUMBING:
Q: So General Telephone and Electronics Corporation was paid the monthly fee
and who made those payment on the fees?

ATTY. LEANO:
The best evidence would be the payment.

A: I believe it was already PLDT that is being privy to the financial method, PLDT
is not answering definitely who came, who held but much later on, every
interest then was bought up by at that time Chairman of the Board of the
DBP and that our friend Alfonso Yuchengco may eventually had PTIC but
since we were, at least was completely out of the picture, I did not know
whether it was true or not but since Leo Virata was still at that time very

379
much involved with PLDT because of the guarantee issued by DBP during
the time of Licaros, I believe he has reason to at least suspect that the
company of General Telephone had negotiated with Mr. Yuchengco, I do
not know if this is true, I have not spoken to Mr. Yuchengco about this
matter, he has not asked me to speak about this. I decided this because
naturally it is always a matter of motive, my motive is that long before
Senator Salonga made sequestration, I was sequestered and so with Leo
Virata and I felt my repose had been dead a long time that whoever enjoyed
the benefits of that sequestration should at least be taken to proper
authorities or in turn make amends of the years that they have illegally
enjoyed the recourse which is substantial and which at todays prices must
be worth an awful of money.

Q: Now, you mentioned Licaros of the DBP

ATTY. LEANO:
I object, may I move for the striking out of the answer for being hearsay.

ATTY. PALMA:
Same objection for being hearsay.

ATTY. FRANCISCO:
It is not responsive to the question.

ATTY. LEANO:
All his statements are hearsay, all his statements are mere expression of
opinion and under the law, the best evidence should be the document.

xxx xxx xxx

COMMISSIONER:
All objections are recorded.

ATTY. QUISUMBING:
Q: You mentioned the DBP and Licaros, were they connected then at that time and
how?
A: In the purchase of eventually of PLDT, it required the guaranty of the DBP that
any future commitments made by this group will be guaranteed by the
Philippine government.

Q: What specifically was guaranteed by the DBP?


A: Of my knowledge, it was required that the agreed purchase price be guaranteed
by DBP to Gentel.

380
Q: Do you remember the figure? And the guarantee of the DBP was given in favor
of whom?
A: It was released by order of Mr. Licaros in favor, I believe of PTIC.

Q: Which is the PTIC, what did you mean by PTIC, what firm?
A: That PTIC is the Philippine Telecommunications Investment Company.

Q: So the DBP issued a guaranty, guaranteeing PTIC an obligation to whom?


A: To Gentel.

Q: Was there an intermediary bank involved in the U.S.?


A: In the later operation, I only remember the Irving Trust lending $1million to
Ramon Cojuangco in order to pay the options of this group to purchase
PLDT from Gentel.

xxx xxx xxx

Q: You spoke of this sequestration or rather the sequestration of yours and of Leo
Virata, what did you mean by that, will you give us specifics?
A: I will give you the specifics as I know it happened to me personally. Leo Virata
and I decided to bail out because we did not like what was going on, we
offered our shares to Alfonso Yuchengco, he offered to pay them but being
honorable, we have to tell Ramon Cojuangco and Tony Meer that in turn
have a meeting in the new PLDT building where across from the office of
Tony and Ramon was a lunch and we were told that our shares had to be
given to Pasig, now what that mean, I do not know, there is approximately
no way to verify that. Those words were enough for Ramon, to tell
Monching, go ahead and take these two and you will be taken cared of later
on, he was never paid, I found out this.

Q: While you say you do not know exactly what Pasig means, who used the word
Pasig?
A: Monching, Ramon Cojuangco.

Q: What do you understand of Pasig?

ATTY. LEANO:
May I make another objection insofar as the estate is concerned because of
the testimony of the witness, we would like to manifest our continuing
objection to any and all questions and matters that would affect the estate
of Ramon Cojuangco, we are making this objection in behalf of the widow
whom we are representing in behalf of the estate.

381
COMMISSIONER:
The objection is recorded.

A: Now, this is the way we were told, and Mr. Cojuangco, there was a pre-long
negotiation in that lunch between Mr. Virata, myself and later, Mr.
Yuchengco. I do not know how the thing terminated because I was asked
by Mr. Virata to go home because I get very violent, I did not like being
treated that way by anybody and that is it, I went home and much later on
because I refused to discuss this with anybody, I found out that Mr.
Yuchengco was never paid but that he paid me, I know he did because I
used in my name to pay a corporate obligation to the RCBC bank which is
I believe was his bank.

Q: Now, you said that you got violently angry, so what did you understand by the
word Pasig?
A: I cannot specify because in my mind, at that time there was a turmoil, too much
I understand we have been drinking since lunch time and this was about
4:00 in the afternoon, so what was conveyed to me by the words Pasig, I
cannot definitely say now but I do know what it conveyed in those days the
long regime of powers that were in control at that time.

Q: You said that you have never been treated that way before, you refer to your
selling, to your offer to sell to Yuchengco but being forced to sell to
another?

ATTY. LEANO:
He never said that, may we just make our objection.

Q: What were forced to do that made you angry?


A: What made me angry was, I know that the company had a tremendous future,
when Mr. Yuchengco gave me a visit in the hospital seven years ago on my
stroke, not now, he mentioned the fact that he had never been reimbursed
of the money that he advanced to me and that I thought that was terrible.

Q: Now let us go back to your reasons as well as of the reasons Leo Virata in getting
rid of this 3% share each in PTIC, what were those reasons exactly that
made you decide to sell out?
A: Normally, inspection of the corporation means to look to the corporation papers,
I never did, or they are signed by the incorporators in terms of the original
documents at the buyers list, I never saw them, we understood that PTIC
was in operation, pay regular dividends, I never saw them, so naturally I
asked the man who got me in to all this things in the first place, what

382
happened, he said, I do not know, I have not received anything either, so let
us get rid of this and we have thought most likely the buyer is Mr. Alfonso
Yuchengco.

Q: What happened to your offer to Yuchengco?


A: He accepted it, I and Leo Virata arrived and we decided to tell Monching and
Tony that we had sold our shares to Mr. Yuchengco. Apparently Leo told
Ramon this only and by the time we arrived in the PLDT building, he had
already apparently consulted and we were told that the Pasig did not like
and said go ahead and you will be taken cared of which much later on told
me never happened. Doon ako nagalit, masiyado nanag pag-oonse. Well,
anyway now, there is nothing more demanding of persons at their state that
being locked in a hospital room for years and in the usual reading, I decided
whoever enjoyed those shares, better make good and since I have read in
the newspapers about investigation of PTIC which seem to get out the cloud,
I decided to do this, maybe to give some clue to the investigation of PTIC,
I dont know.

Q: And what was the figure agreed upon with Mr. Yuchengco?
A: Apparently . . .

ATTY. LEANO
I just want to make the same objection for being hearsay.

ATTY. QUISUMBING:
These objections are to be used during the presentation of evidence not at
the taking of the deposition. Just remember that.

ATTY.LEANO: But we want to make our objection.

xxx xxx xxx

COMMISSIONER:
All objections are recorded.

A: I do not know anymore that anybody else, after this maybe stray bit of
information will be remembered later on but none right now and I was
reviewing over my mind time and again, my participation in the whole
affair, I was eventually and I was used in that way as a means to get IT&T
into their negotiation and let Gentel to the bargaining if only to show that
they could afford to buy Gentel, in effect, they were closing the deal, leaving
IT&T to force Gentel to sit down and negotiate with them. That was the

383
idea because unfortunately, IT&T did not work for them but for this group
apparently that I do not know anymore.

Q: My last question only is, how much is the figure for the sale of this 3%
A: I understand, well, I used part of it to pay an obligation worth P636,000.00, it
was an obligation with the defunct T.J. Wolfe that was bought by me which
appears in its book that amount or a little bit more with RCBC, now the
balance maybe used by Mr. Virata for something else, I do not know. x x x

CROSS EXAMINATION:
BY ATTY. LEANO

xxx xxx xxx

Q: Was Tony Meer present in that meeting?


A: He was always in the meeting . . . . (TSN of the Deposition of Gregorio L.
Romulo, August 3, 1987 pp. 12 37). [72]

As we see it, Mr. Romulos deposition is virtually a hearsay account and should,
therefore, be disregarded, being itself inadmissible in evidence. Supporting and opposing
affidavits shall be based on personal knowledge of the declarant, shall set forth such facts as
would be admissible in evidence, and shall show affirmatively that the affiant is competent to
testify to the matters stated therein. Therefore, in determining whether summary judgment is
proper, statements contained in affidavits, which would be inadmissible in evidence (such as
statements of opinion, belief and hearsay) must be disregarded. So it must be with the Romulo
deposition.

One minor point. Petitioner Yuchengcos drew attention to the pendency of their
petitions in G.R. Nos. 149802 and 150320 when the Partial Decisionwas rendered, suggesting
doubtless that it was error on the part of the respondent court to proceed with the separate trial
below without awaiting the outcome of said petitions.

We are not persuaded. The pendency of the petitions in G.R. Nos. 149802 and 150320
did not, without more, dilute the validity of the assailed Partial Decision or diminish the
authority of the respondent court to render the same. Section 7, Rule 65 of the Rules of Court
says as much:

384
SEC. 7. Expediting proceedings; injunctive relief. - The court in which the
petition [for certiorari, prohibition or mandamus] is filed may issue orders
expediting the proceedings, and it may also grant a temporary restraining order or
a writ of preliminary injunction for the preservation of the rights of the parties
pending such proceedings. The petition shall not interrupt the course of the
principal case unless a temporary restraining order or a writ of preliminary
injunction has been issued against the public respondent from further proceedings
in the case.

The governing rule, in fine, is that to arrest the course of the principal action during the
pendency of certiorari proceedings, there must be an interrupting restraining order or a writ of
preliminary injunction from the appellate court directed to the lower court. [73] There was none
in the instant case. Accordingly, it was in order for the respondent court to proceed with the
separate trial in Civil Case No. 0002 and necessarily in rendering a judgment, in this instance,
the Partial Decision, which, in its estimation, is called for by the facts and law of the case.

DISMISSAL OF THE AMENDED COMPLAINT


AGAINST COJUANGCOS/PHI

We now come what, to us, is the center of the controversy. We refer to the question of
whether or not the disputed PLDT shares, which are covered by the equally disputed PTIC
shares of respondents Cojuangcos/PHI, are indeed part of the ill-gotten wealth of the Marcos
family - ergo to be forfeited in favor of the State - using the evidentiary standards and
determinative indicia set out in Bataan Shipyard & Engineering Co., Inc. (Baseco) vs.
PCGG,[74] and applied analogously in subsequent cases,[75] whence the conclusion that the
wealth is ill-gotten may be reasonably deduced. Respondent court cited the benchmark outlined
in Baseco in support of its Partial Decision,[76] to wit:

One, evidence indicating manifest partiality and favorable treatment by the


former President towards the alleged trustees, as demonstrated by active interplay
between him and such trustees and/or presidential interventions which have
resulted in inexplicable benefits to the trustees or to the corporations held by him
through such trustees; and

Two, the existence of documents and records in the possession of the former
President which, through indorsements and/or assignment made thereon in blank
by his trustees, provide the legal instrumentation for him to assert, now or in the
future, ownership or control over the properties held by his trustees and/or to
recover such properties from them. (At p. 23)

385
The respondent court dismissed the Republics Amended Complaint as against the
Cojuangcos/ PHI on the finding that the former has not adequately discharged its burden of
proving, by the threshold preponderance of evidence required in ill-gotten wealth cases, that
the subject PLDT shares are ill-gotten. Wrote the respondent court:

xxx the Republic has failed to provide such proof of authenticity or


reliability of the documents offered by it in evidence. Thus almost all the documents
offered by the Republic are photocopies, and no effort was undertaken . . . to submit
the originals of said documents, or to have them properly identified, or to otherwise
justify the admission of mere photocopies. Not surprisingly, defendants . . . objected
to the admission of the Republics documentary exhibits, citing violation of the Best
Evidence Rule (Section 3, Rule 130 of the Revised Rules of Civil Procedure
[Rules], the Rules on Presentation of Documentary Evidence (Section 20, Rule 132
of the Rules), the Hearsay Evidence Rule, and the rule as to Purpose/s of
Documentary Evidence (Section 34, Rule 132 of the Rules). (at p. 31)

Excepting, petitioner Republic tags the respondent courts determinative finding as


a sweeping conclusion or bare generalization. Pressing the point, petitioner Republic argues
that the Partial Decision did not identify with particular specificity which evidence failed to
hurdle the bar of admissibility for being mere photocopies or are otherwise unidentified,
unauthenticated, and constitutive of hearsay.[77]

Petitioner Republics lament is, to a point, well taken. Indeed, not all documents the
Republic offered in evidence in the separate trial on the PLDT shares suffer from the infirmity
imputed on them by the graft court. For, as argued with some measure of merit, most of these
documentary evidence have been identified and authenticated during the deposition taking of
the deponents whose depositions were entered into evidence after the usual procedure of
comparing the originals with the faithful reproductions thereof which were those marked in
evidence. And certainly not lost on this Court is the fact that some documents are common
exhibits, thus, there exists no tenable reason for any of the parties offering them as common
exhibits to object to their admissibility.

Were want of proof of authenticity and reliability of the offered documentary evidence
was, with respect to the Republics Amended Complaint, the rationale behind the
adverse Partial Decision, as it strikes this Court to be, we can only say that such disposition is
not in accordance with Section 3 of EO No. 14[78]which enjoins courts, in resolving suits filed

386
in the recovery efforts, not to strictly apply technical rules of evidence. Be that as it may, we
instead take the course of delving into the substance of the evidence on record
which petitioner Republic asserts to be vital facts and material evidence,[79] and thereby
determine whether or not the respondent court indeed justifiably ignored them in arriving at the
disputed holding dismissing the Amended Complaint as against the Cojuangcos/PHI. Towards
this end, the Court shall first ascertain what could be those asserted vital facts and material
evidence be by looking at the allegations of the Republic in its Petition. Thus, according to the
Republics petition in G.R. No. 153459, to cite pertinently:

1. PHI was registered by Jose Y. Campos on November 8, 1977 with a paid-


up capital of a measly Fifty Thousand Pesos (P50,000.00) and utilizing as place of
business the address of UNILAB, a corporation owned and controlled by Jose Y.
Campos, and with UNILABs officers and directors, namely Rolando Gapud,
Renato Lirio, [etc.] . . . and Gervacio Gaviola managing PHI xxx albeit, said
managing officers and directors had no financial interest whatsoever in PHI.

2. On May 2, 1978, Ramon U. Cojuangco, ceded and conveyed in favor of


PHI by way of Deed of Assignment dated May 2, 1978, some 44,023 shares of
stock of PTIC . . . . On that same date, also by way of Deed of Assignment . . .
Ramon U. Cojuangco ceded and conveyed in favor of PHI another 33,696 shares
of stock of PTIC . . . . Also on the same date, Luis Tirso Rivilla ceded and conveyed
in favor of PHI another 33,696 shares . . . . Ramon U. Cojuangco and Luis Tirso
Rivilla were compensated by PHI for said PTIC shares of stock which all in all sum
up to 111,415 shareholdings in the name of PHI. xxx

3. From the foregoing evidence, there is no doubt that respondent PHI is a


corporation which was formed and organized and maintained by the former
dictator, President Ferdinand E. Marcos through confessed dummies, Jose Yao
Campos and Rolando C. Gapud, who, in conspiracy with Ramon U. Cojuangco and
Luis Tirso Rivilla, sought to acquire for the Marcoses the single biggest majority
shareholdings in PLDT.

4. The foregoing is confirmed by the declarations of confessed


nominees/cronies of former President Ferdinand E. Marcos: Jose Y. Campos,
Roland C. Gapud and Atty. Francisco de Guzman.

xxx xxx xxx

On the basis of the foregoing evidence, respondents Cojuangcos cannot


lawfully acquire ownership of title over the PHI shares of stocks, because the same

387
constitute the Marcos ill-gotten wealth, formed and/or acquired in violation of the
1973 Constitution. xx (Petition, G.R. No. 153459, pp. 69-90)

Indubitably, petitioner Republic calls attention to the sworn declarations of Messrs. Jose
Yao Campos, Roland C. Gapud and Atty. Francisco de Guzman (Campos, Gapud and de
Guzman, respectively, hereafter) as alleged proof of its theory of the case, i.e., that the disputed
PLDT shares are in fact owned by the Marcos family and that respondents Cojuangcos/PHI are
but dummies/nominees/conduit for the Marcos family to control PLDT. It is, hence, our task to
scrutinize the sworn declarations of Campos et al., to ascertain if they indeed prove the facts
adverted to by petitioner Republic, failing which would naturally impel this Court to affirm
the Partial Decision insofar as it dismissed the Republics Amended Complaint against the
respondents Cojuangcos/PHI.

Following are excerpts of the Sworn Statement of Mr. Campos, dated March 21,
1986[80]:

xxx a discussion between me and Mr. Ramon Diaz, a member of the Commission
[PCGG} who inquired about certain assets and properties that I might be holding
in favour (sic) of certain beneficiaries and which . . . are now about to be claimed
by the Philippine Government.

1. My relationship with the then President Ferdinand E. Marcos dates back


to the time when he was first elected as Congressman . . . [and] continued when he
was then elected President . . . . Thereafter I assisted in the organization and
acquisition of some business ventures for the former President. Following his
directive I instructed my lawyers and requested the assistance of my other business
associates and officers of the company to organize, establish and manage these
business ventures for and on behalf of the President;

2. The companies that we have organized for and on behalf of former President
Marcos are listed in Annex A attached herewith;

3. In the organization, administration and management of the abovenamed


corporations, it was my policy that whenever such a corporation is organized for
and on behalf of the intended beneficiaries, I execute and I require all my said
business associates to execute a Deed of Trust or Deed of Assignment duly signed
in favour (sic) of an unnamed beneficiary and to deliver the original copy thereof
to the former President. It is in fact my policy and procedure that we disclaim

388
completely any interest in any of such businesses and make it clear to the former
President that we hold such interests on his behalf;

4. In the latter part of 1979 I suffered a severe heart attack . . . . Because of this . .
., I requested former President Marcos to relieve me of my responsibilities
regarding the businesses that have been entrusted to me and following such request,
I signed and delivered to him a Certification dated January 1980, attached herewith
as Annex B to the effect that my family including my wife and children expressly
disclaimed any interest in the businesses that I have been holding in his behalf and
they acknowledged the truthfulness, authenticity and validity of various Deeds of
Trust and Deeds of Assignment which I and my business associates signed and
executed as aforementioned covering properties, interest and shares of stock of the
corporations listed therein.

5. Occasioned by the withdrawal of my active participation in the management of


the above named corporations, Mr. Rolando C. Gapud who was my financial
consultant took over the direct responsibility of directing, managing and
administering all the activities of the said corporation. However, since Mr. Gapud
did not have the administrative staff to efficiently manage the businesses, he
requested me that all the employees and officers involved in the organization should
continue to remain in the companies even only in a nominal capacity considering
that they had previously disclaimed any interest therein. It is for this reason that
Roland C. Gapud and my business associates, namely, . . . Francisco G. de Guzman,
. . . Ernesto Abalos, Gervasio T. Gaviola, . . ., Renato E. Lirio, Rafael de Guzman,
[etc.] . . . continued to be named stockholders in these corporations although they
did not have any financial interest therein;

xxx xxx xxx

Among the Philippine corporations listed in item #4.16 of Annex A of


Mr. Campos aforesaid Sworn Statement and held in trust by him and his associates was Prime
Holdings Corporation.
Moreover, on the occasion of his deposition-taking on December 18, 1995 at the Philippine
Consulate General, Vancouver, British Columbia, Canada Mr. Campos, responding to written
interrogatories, made the following declarations in answer:[81]

2.2 The records show that [PHI] owns approximately 46% of the stock of . . . (PTIC)
which in turn owns approximately 28% of Philippine Long Distance Telephone
Company (PLDT). The records of this Civil Case No. 0002 show that PCGG has
sequestered 111,415 shares of stock in PTIC registered in the name of [PHI]. Was
anything with respect to PTIC delivered to the PCGG by Atty. De Guzman or

389
anyone else in your behalf? Please describe with specificity the things that were
delivered.

ANSWER: As I said, I dont know that Prime Holdings has any holdings of
PTIC.

3. In your Sworn Statement, page 2, you stated that with respect to the
corporations you held in trust for President Marcos, it was your policy that
whenever such a corporation was organized, you executed, and you required all
your business associates to execute, a Deed of Trust or Deed of Assignment in favor
of an unnamed beneficiary, and delivered the originals thereof to President Marcos.
x x x. Was this policy followed in the case of [PHI]? xxx

ANSWER: All the corporations that I organized that was the standard policy
that we surrendered direct to President Marcos.

3.1. Was it also your policy to deliver to President Marcos the stock
certificates that you and your business associates held in trust for him?

ANSWER: Yes, Mam.

3.2. If stock certificates that you and your business associates held in trust
for President Marcos were delivered to him was it also your policy to have the stock
certificates indorsed in blank? Were the stock certificates in [PHI] Inc. indorsed in
blank?

ANSWER: If there are certificates issued in Prime Holdings, it is the same


way it was delivered to him. If there is such certificate issued, it is indorsed in blank
and follow the same pattern for all the corporations. Whatever we have decided, we
deliver, sign in blank and deliver to him.

3.3 Did you and your business associates deliver to President Marcos the
stock certificates issued by [PHI]? If not, what did you and your business associates
do with the stock certificates?

ANSWER: If Prime Holdings certificates have been issued, as I said Mam,


it is delivered to the President.

4. In your Sworn Statement, page 2, you also stated that it is in fact my


policy and procedure that we disclaim completely any interest in the businesses
organized for President Marcos and make it clear to the former President that we
held such interests in his behalf. xxx. Was this policy and procedure followed in
the case of [PHI]? xxx

390
ANSWER: The policy is followed by every corporation that we organized
for the President.

4.1 Did you and your business associates also disclaim completely any
interest in . . . (PTIC) and make it clear to the former President that we hold such
interests on his behalf?

ANSWER: Mam, as I said, I dont know that Prime Holdings has such
holdings of the PTIC shares that you referred to.

5. The records of . . . (PTIC) show that Luis T. Rivilla owned approximately


P4,565,750 worth of shares of stock in PTIC and that some time in 1978-1980, he
transferred approximately P2,903,762 worth of such shares to [PHI]. Who was the
true or beneficial owner of the shares of stock in PTIC transferred by Luis T. Rivilla
to [PHI] in 1978-1980?

ANSWER: Any matters that pertain to PTIC, I dont have any knowledge
of, Maam.

xxx

ANSWER: Consul Morales, just to make everything short, after my heart


attack in 1979, Mr. Gapud took over the management of the corporations that
belonged to the President . . . I did not participate anymore in anything of the
Presidents corporations managed by Mr. Gapud after my heart attack and after he
took over the management of those corporations. It is because of health reasons that
I was compelled not only to relinquish that to the President, but also my own
companies and

xxx xxx xxx

10. Did you ever have any discussions or correspondence with anyone other
than President Marcos, Ramon U. Cojuangco or Rolando C. Gapud regarding the
beneficial ownership by President Marcos or any member of his family, directly or
indirectly, of shares of stock in PLDT, PTIC, or Prime Holdings, Inc.?

ANSWER: No, Maam.

xxx xxx xxx

11. In your Sworn Statement, pages 2-3, you stated that because of a heart
attack in the latter part of 1979, you requested President Marcos to relieve you or

391
your responsibilities regarding the businesses entrusted to you, and that Rolando C.
Gapud took over the direct responsibility of directing, managing and administering
all the activities of the said corporations. xxx

ANSWER: Yes, Mam.

11.1 Please describe in detail the circumstances surrounding the transfer, if


any, of the direct responsibility of directing, managing and administering all the
activities of PHI] to Mr. Gapud?

ANSWER: As I stated Maam, Prime Holdings has been a holding company.


The only assets are the stock certificates and there is nothing. I think at that time I
transferred there is nothing Mr. Gapud has to manage to do because its a shared
corporation. (Words in bracket added)

Contextually, the only conclusion the Court can plausibly attach to the above response
of Mr. Campos is that he had no knowledge about PHIs shareholdings in PTIC. His answers,
such as Mam, as I said I dont know that Prime Holdings has such holdings of the PTIC shares
that you referred to, and Any matters that pertain to PTIC I dont have any knowledge say as
much. It is also a fact deducible from Mr. Campos sworn declarations that he adhered to a set
of pattern or practice when he organized corporations for then Pres. Marcos. Thus, he declared
that he, his family and his associates executed deeds of trust or assignment in favor of an
unnamed beneficiary, and there disclaim any interest in the corporations that he (Mr. Campos)
organized for Pres. Marcos. Or, they indorsed the stock certificates in blank. And, all of such
deeds or certificates were delivered to the late President. Yet, Mr. Campos was unable to declare
with certitude if these patterns and practices were followed vis--vis PHI. Accordingly, the
question begging an answer is whether there truly exists, in respect to PHI shares, certificates
indorsed in blank or deeds of trust or assignment in favor of an unnamed beneficiary delivered
to the late President. If there is one person who can provide a satisfactory answer to this
question, it is Mr. Campos. But he is not saying anything. Under this scenario, we cannot see
our way clear on how the sworn declarations of Mr. Campos could have, as asserted by
petitioner Republic, proved that respondent PHI was merely incorporated to hold the PTIC
shares, that in turn would have proved that PHI together with respondents Cojuangcos were
mere dummies of the Marcos family to hold the controlling share of PLDT.

On the other hand, Mr. Gapuds deposition - taken on October 19, October 20
and December 11, 1995 at the Hong Kong Philippine Consulate Office - materially reads:

392
CONSUL AGUILUCHO:
On paragraph 4 of Exhibit E, Mr. Gaviola stated:

That I have no personal knowledge of the operation of Prime


Holdings, Inc. as Mr. Rolando C. Gapud handled all the directing,
managing and administering of all the activities of the said
corporation.

Question: Based on your personal knowledge, do you affirm or deny the contents
of the said paragraph 4 of Exhibit E?

MR. GAPUD: I affirm. xxx

Madam Consul, I would like to make a clarification here. Because Mr. Gaviola says
I handled all the directing and managing and administering of all the activities. Prior
to the heart attack of Mr. Campos I recall that he was also involved in the
administration of this company. So, with that clarification I affirm paragraph 4.

CONSUL AGUILUCHO: For how long did you manage [PHI]?

MR. GAPUD: I would estimate maybe two or three years after Mr. Campos heart
attack.

CONSUL AGUILUCHO: Do you know anything about the . . . (PTIC), 46% of the
capital stock of which is owned by [PHI]?

MR. GAPUD: Well, very little except for that which I have read from the
newspapers.

CONSUL AGUILUCHO: Do you know the PTIC owns 25% of the common voting
stock of the . . . PLDT?

MR. GAPUD: Yes.

CONSUL AGUILUCHO : Do you know the beneficial owner or owners of [PHI]?

MR. GAPUD : What I know . . . is the shares of stock and/or the assignments
endorsed in blank were delivered to President Marcos by Mr. Campos.

CONSUL AGUILUCHO: The heirs of Ramon U. Cojuangco, namely: Imelda O.


Cojuangco and her children . . .claim that they own . . .(80%) percent of the
outstanding capital stock of [PHI], while the Estate of Ramon U. Cojuangco
allegedly owns the remaining twenty (20%) percent.

393
Question: Based on your personal knowledge, do you affirm or deny the said
allegation?

MR. GAPUD: I do not know. I can neither affirm or deny.

CONCUL AGUILUCHO: The said heirs also alleged that [PHI] was incorporated
on 5 October 1977 with the following stockholders, namely: Rolando C. Gapud,
Renato E. Lirio, Jose D. Campos, Jr., Gervasio T. Gaviola and Ernesto S. Abalos,
with 400 shares each, . . . .

Question: Based on your personal knowledge, do you affirm or deny the said
allegation?

MR. GAPUD: I affirm.

CONCUL AGUILUCHO: Did you really own the 400 shares of the Prime
Holdings?

MR. GAPUD: No.


CONSUL AGUILUCHO: For whom did you hold those 400 shares?

MR. GAPUD: Well, as I said earlier the shares and/or assignment indorsed in blank
were delivered by Mr. Campos to President Marcos.

CONSUL AGUILUCHO: The same heirs likewise alleged:

In separate Deeds of Assignment dated 18 February 1981, two (2)


of the incorporators of Prime Holdings, namely: Rolando C. Gapud
and Jose D. Campos, Jr., assigned and conveyed to Messrs. Ramon
U. Cojuangco and Oscar Africa, respectively, all their shareholdings
in Prime, consisting of four hundred (400) shares of stock each, or
twenty (20%) percent each of the shares of stock of Prime (Annexes
C and -1).

Question: Based on your personal knowledge, do you affirm or deny the said
allegation?

xxx

MR. GAPUD: Madam Consul, I think I can only affirm that which pertains to me,
namely: the Deed of Assignment that I signed. I will leave it to Mr. Campos to
affirm his Deed of Assignment.

394
ATTY. MANALAYSAY: Madam Consul General, in view of the identification by
the witness of the Deed of Assignment, may we request that the same be marked as
our Exhibit 1 (Cojuangco)

xxx xxx xxx

ASST. SOLICITOR GENERAL DEL ROSARIO: Do you identify this as your


signature?

MR. GAPUD: Yes.

xxx xxx xxx

CONSUL AGUILUCHO: May we continue?


Showing you the said Annex C now marked as Exhibit F for purposes of this
proceeding, do you affirm or deny the authenticity of this document?

MR. GAPUD: Yes, I affirm.

CONSUL AGUILUCHO: Is it really true that you assigned your 400 shares to
Ramon U. Cojuangco?

MR. GAPUD: Yes.

CONSUL AGUILUCHO: How much did you receive as consideration for


assigning your shares to him?

MR. GAPUD: The consideration for the assignment was that upon my assignment,
first, my fiduciary responsibilities as nominee were extinguished, and secondly, I
had transferred and extinguished any and all liabilities under the subscription
payable.

CONSUL AGUILUCHO: Do you know if Ramon U. Cojuangco received the said


shares for himself or for anybody else?

MR. GAPUD: I dont know.

xxx xxx xxx. [82] (Underscoring added)

Continuing his deposition-taking on December 11, 1995, Mr. Gapud also said:

395
VICE CONSUL HERNANDEZ: No. 5, regarding [PHI] which was one of the
companies organized for former President Ferdinand E, Marcos, as stated by
deponent Jose Y. Campos in his Sworn Statement (EXHIBIT D) and affirmed by
you also, and the various Deeds of Assignment of shares in Prime Holdings, Inc.
by the listed Stockholders-Nominees in favor of the late Ramon U. Cojuangco and
his children, respectively, namely:

Deed of Assignment dated February 18, 1981 signed by you and marked EXHIBIT
F;

Deed of Assignment dated February 18, 1981 signed by JOSE D. CAMPOS, JR.,
copy marked EXHIBIT F-1;

Deed of Assignment dated June 1983 signed by RENATO E. LIRIO, copy marked
as EXHIBIT F-2;

Deed of Assignment dated June 1983 signed by GERVACIO T. GAVIOLA, copy


marked as EXHIBIT F-3;

Deed of Assignment dated June 1983 signed by ERNESTO S. ABALOS, copy


marked EXHIBIT F-4;

Deed of Assignment dated July 1983 signed by OSCAR T. AFRICA, copy marked
EXHIBIT F-5;

The aforesaid Deeds of Assignments obviously will be with the knowledge and
upon authorization and order of former President Ferdinand E. Marcos, is this
correct?

ATTY. MANALAYSAY: Your Honor, before the witness answers the question,
we would like to reiterate our objection insofar as the question referring to Mr.
Oscar T. Africa is concerned. We are objecting to the question on the ground that
Mr. Gapud would be incompetent to testify with respect to Mr. Africa, considering
that Mr. Africa is not among the stockholders-nominees mentioned by Mr. Campos
or Mr. Gapud as far as Prime Holdings is concerned and Mr. Africa is not among
the incorporators of Prime Holdings, Inc.

xxx xxx xxx

VICE CONSUL HERNANDEZ: Can we note your objection and let Mr. Gapud
answer?

396
So the aforesaid Deeds of Assignments obviously will be with the knowledge and
upon authorization and order of former President Ferdinand E. Marcos, is this
correct?

MR. GAPUD: Considering that [PHI] was incorporated upon the instructions of
former President Marcos, obviously all the nominees would act only upon his
authorization. Thats my answer. [83]

Like Mr. Campos before him, Mr. Gapud also seems to be without personal knowledge
of whether or not PHI owned shares in PTIC. He admits that whatever he knows about PHIs
holding in PTIC, if there be any, is based only on what he has read from the newspapers. True
it is that he acknowledged not actually owning the 400 PHI shares in his name. But when asked
for whom he held such shares, he hedged on his answer, saying: Well, as I said earlier the
shares and/or assignment indorsed in blank were delivered by Mr. Campos to President
Marcos. Mr. Gapud, however, would later contradict himself with respect to the disposition of
the said 400 PHI shares with his statement that he assigned what on paper was his PHI shares
to the late Ramon U. Cojuangco. Clearly, it would have been implausible for him to make the
assignment to Mr. Cojuangco if the covering certificates had previously been delivered to Pres.
Marcos. He also affirmed that his assignment of PHI shares to Mr. Cojuangco was for a
consideration, albeit this consisted of being freed from his fiduciary responsibilities as nominee
and of the extinguishment of his liabilities on his subscription.

Taken as a package, Mr. Gapuds sworn statements do not sufficiently


prove petitioner Republics theory of the case.

The sworn statement of Atty. Francisco de Guzman, former PHI corporate secretary,
taken during his deposition on June 12, 2001, is hereunder pertinently reproduced, viz.:

ATTY. QUISUMBING: But as of 1978 . . . Prime Holdings, Inc. [PHI] was


incorporated on instruction of Mr. Jose Yao Campos in 1977, so as of 1978 [PHI]
was still a holding company of Mr. Campos?

xxx xxx xxx

Witness: Please repeat the question.

Atty. Quisumbing :The records in the Securities and Exchange Commission


indicate that [PHI] was incorporated in October of 1977 and you already testified
that [PHI] was incorporated on instructions of Mr. Campos?
397
Witness: Yes sir:

Q: And you also testified that Prime Holdings is a holding company?


A: Yes, sir.

Q: Of Mr. Campos?
A: I said holding company, you asked me what is the nature of the company and I
think you clarified the question, a holding company is one that hold assets
and I said yes, sir, thats how I understand a holding company.

Q: And you testified that all of these five (5) original stockholders of [PHI] worked
for Mr. Campos?
A: Yes, sir.

Q: So, the following year of 1978 you were still Corporate Secretary of [PHI]?
A: Yes, sir.

Q: And were you still taking instructions from Mr. Campos the following year 1978
with regard to [PHI]?
A: Yes, sir.

Q: And how long after that did you continue to take instructions from Mr. Campos
with regard to [PHI]?
A: xxx Im not too sure about this, but he distanced himself in many operations even
of United Laboratories when he had a heart attack in 1979, sir.

Q: So you are saying that you took instructions from Mr. Campos with regard to
[PHI] until 1979 when Mr. Campos had a heart attack?
A: Yes, that is the possibility of having instructions from him because after that he
really was very inactive in all these corporations and it was then that Mr.
Gapud who took over, sir.

Q: In 1979?
A: Yes, sir.

Q: By the way, in 1979 after Mr. Campos suffered this heart attack and I believe
that was late 1979, did Mr. Campos also retire from active involvement in
UNILAB?
A: Yes, sir.

xxx xxx xxx

398
Q: After 1979 when Mr. Gapud took over, are you aware if there are any transfers
of shares of stocks in [PHI] to other people?
A: Yes, sir.

Q: Will you tell us about that?


A: My recollection is, Mr. Gapud himself made a Deed of Assignment but I dont
remember to whom the Deed of Assignment, in whose favor.

Q: What year was that?


A: I cannot recall the year, sir.

Q: But this was in 1979?


A: I suppose so, sir.

Q: Now, di