G.R. No.

161849 July 9, 2010

WALLEM PHILIPPINES SHIPPING, INC., Petitioner,

vs.
S.R. FARMS, INC., Respondent.

DECISION

PERALTA, J.:

Assailed in the present petition for review on certiorari are the Decision 1 and Resolution2 of the Court of Appeals (CA) dated June 2,
2003 and January 15, 2004, respectively, in CA-G.R. CV No. 65857. The CA Decision reversed and set aside the Decision 3 dated
October 8, 1999 of the Regional Trial Court (RTC) of Manila, Branch 11, in Civil Case No. 93-65021, while the CA Resolution
denied petitioners Motion for Reconsideration.

The facts of the case, as found by the RTC and affirmed by the CA, are as follows:

x x x On March 25, 1992, Continental Enterprises, Ltd. loaded on board the vessel M/V "Hui Yang," at Bedi Bunder, India, a
shipment of Indian Soya Bean Meal, for transportation and delivery to Manila, with plaintiff [herein respondent] as consignee/notify
party. The said shipment is said to weigh 1,100 metric tons and covered by Bill of Lading No. BEDI 4 dated March 25, 1992 (Exhibit
A; also Exhibit I). The vessel is owned and operated by defendant Conti-Feed, with defendant [herein petitioner] Wallem as its ship
agent.

The subject cargo is part of the entire shipment of Indian Soya Bean Meal/India Rapeseed Meal loaded in bulk on board the said
vessel for delivery to several consignees. Among the consignees were San Miguel Corporation and Vitarich Corporation, including the
herein plaintiff (Exhibit A; Exhibits 1 to 6; TSN, p. 13, June 28, 1996).

On April 11, 1992, the said vessel, M/V "Hui Yang" arrived at the port of Manila, Pier 7 South Harbor. Thereafter, the shipment was
discharged and transferred into the custody of the receiving barges, the NorthFront-333 and NorthFront-444. The offloading of the
shipment went on until April 15, 1992 and was handled by [Ocean Terminal Services, Inc.] OTSI using its own manpower and
equipment and without the participation of the crew members of the vessel. All throughout the entire period of unloading operation,
good and fair weather condition prevailed.

At the instance of the plaintiff, a cargo check of the subject shipment was made by one Lorenzo Bituin of Erne Maritime and Allied
Services, Co. Inc., who noted a shortage in the shipment which was placed at 80.467 metric tons based on draft survey made on the
NorthFront-33 and NorthFront-444 showing that the quantity of cargo unloaded from the vessel was only 1019.53 metric tons. Thus,
per the bill of lading, there was an estimated shortage of 80.467.

Upon discovery thereof, the vessel chief officer was immediately notified of the said short shipment by the cargo surveyor, who
accordingly issued the corresponding Certificate of Discharge dated April 15, 1992 (Exhibit D). The survey conducted and the
resultant findings thereon are embodied in the Report of Superintendence dated April 21, 1992 (Exhibits C to C-2) and in the Barge
Survey Report both submitted by Lorenzo Bituin (Exhibits C-3 and C-4). As testified to by Lorenzo Bituin, this alleged shortage of
80.467 metric tons was arrived at using the draft survey method which calls for the measurement of the light and loaded condition of
the barge in relation to the weight of the water supposedly displaced. 4

Petitioner then filed a Complaint for damages against Conti-Feed & Maritime Pvt. Ltd., a foreign corporation doing business in the
Philippines and the owner of M/V "Hui Yang"; RCS Shipping Agencies, Inc., the ship agent of Conti-Feed; Ocean Terminal Services,
Inc. (OTSI), the arrastre operator at Anchorage No. 7, South Harbor, Manila; and Cargo Trade, the customs broker. 5

On June 7, 1993, respondent filed an Amended Complaint impleading herein petitioner as defendant alleging that the latter, and not
RCS, was the one which, in fact, acted as Conti-Feeds ship agent.6

On June 22, 1993, the complaint against Cargo Trade was dismissed at the instance of respondent on the ground that it has no cause of
action against the former.7

Subsequently, upon motion of RCS, the case against it was likewise dismissed for lack of cause of action. 8

Meanwhile, defendant OTSI filed its Answer with Counterclaim and Crossclaim 9 denying the material allegations of the Complaint
and alleging that it exercised due care and diligence in the handling of the shipment from the carrying vessel unto the lighters; no
damage or loss whatsoever was sustained by the cargo in question while being discharged by OTSI; petitioners claim had been
waived, abandoned or barred by laches or estoppels; liability, if any, is attributable to its co-defendants.

For its part, petitioner denied the allegations of respondent claiming, among others, that it is not accountable nor responsible for any
alleged shortage sustained by the shipment while in the possession of its co-defendants; the alleged shortage was due to negligent or
faulty loading or unloading of the cargo by the stevedores/shipper/consignee; the shortage, if any, was due to pre-shipment damage,
inherent nature, vice or defect of the cargo for which herein petitioner is not liable; respondents claim is already barred by laches
and/or prescription.10

Conti-Feed did not file an Answer.

Pre-Trial Conference was conducted, after which trial ensued.

On October 8, 1999, the RTC rendered its Decision 11 dismissing respondents complaint, as well as the opposing parties
counterclaims and crossclaims.

Aggrieved by the RTC Decision, respondent filed an appeal with the CA.

On June 2, 2003, the CA rendered its presently assailed Decision disposing as follows:

WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE and another one entered ordering defendants-
appellees Conti-Feed and Maritime Pvt. Ltd. and Wallem Philippines Shipping, Inc., to pay the sum representing the value of the
80.467 metric tons of Indian Soya Beans shortdelivered, with legal interest from the time the judgment becomes final until full
payment, plus attorneys fees and expenses of litigation of 10,000.00, as well as the cost of suit.

SO ORDERED.12

Petitioner filed a Motion for Reconsideration.

On July 8, 2003, respondent filed a Motion for a More Definite Dispositive Portion 13 praying that the value of the 80.467 metric tons
of Indian Soya Beans, which petitioner and Conti-Feed were ordered to pay, be specified in the dispositive portion of the CA
Decision.

Petitioner filed its Comment/Opposition14 to private respondents Motion.

On January 15, 2004, the CA issued a Resolution denying petitioners Motion for Reconsideration and modifying the dispositive
portion of its Decision, thus:

WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE and another one entered ordering defendants-
appellees Conti-Feed and Maritime Pvt. Ltd. and Wallem Shipping, Inc., to pay the sum of $19,070.06 representing the value of the
80.467 metric tons of Indian Soya Beans shortdelivered, with legal interest from the time the judgment becomes final until full
payment, plus attorneys fees and expenses of litigation of 10,000.00, as well as the costs of suit.

SO ORDERED.15

Hence, the instant petition based on the following Assignment of Errors:

THE COURT OF APPEALS ERRED IN APPLYING THE PRESUMPTION OF NEGLIGENCE UNDER ARTICLE 1735 OF THE
CIVIL CODE. THIS PROVISION DOES NOT APPLY IN THIS CASE BECAUSE THERE WAS NO LOSS OR SHORTAGE OR
SHORTDELIVERY.

II

THE COURT OF APPEALS ERRED IN GIVING DUE COURSE TO THE CASE CONSIDERING THAT:

A. THE CLAIM WAS ALREADY TIME-BARRED WHEN THE CASE WAS FILED AGAINST HEREIN PETITIONER
ON 8 MAY 1993, AS PROVIDED IN SECTION 3 (6) OF THE COGSA. THE ONE-YEAR PRESCRIPTIVE PERIOD
COMMENCED ON 15 APRIL 1992 WHEN THE SUBJECT SHIPMENT WAS DELIVERED TO PRIVATE
RESPONDENT AND LAPSED ON 15 APRIL 1993; AND

B. [RESPONDENT] WAIVED ITS RIGHT OF ACTION WHEN IT DID NOT GIVE A WRITTEN NOTICE OF LOSS TO
THE PETITIONER WITHIN THREE (3) DAYS FROM DISCHARGE OF THE SUBJECT SHIPMENT AS PROVIDED IN
SECTION 3 (6) OF THE COGSA.

III

IN THE REMOTE POSSIBILITY OF LOSS OR SHORTAGE OR SHORTDELIVERY, THE COURT OF APPEALS ERRED IN
IMPUTING NEGLIGENCE AGAINST THE PETITIONER WHICH WAS NOT RESPONSIBLE IN LOADING AND/OR
DISCHARGING THE SUBJECT SHIPMENT.

IV

THE COURT OF APPEALS ERRED IN GRANTING [RESPONDENTS] MOTION FOR A MORE DEFINITE DISPOSITIVE
PORTION WITHOUT STATING IN THE DECISION, THE LEGAL BASES FOR DOING SO.

V
THE COURT OF APPEALS ERRED IN GRANTING THE MOTION FOR A MORE DEFINITE DISPOSITIVE PORTION
BECAUSE [RESPONDENT] FILED SAID MOTION MORE THAN FIFTEEN (15) DAYS AFTER [RESPONDENT] RECEIVED
THE DECISION OF THE COURT OF APPEALS. THE COURT OF APPEALS FURTHER ERRED IN INSERTING A DEFINITE
MONETARY VALUE OF THE ALLEGED SHORTAGE BECAUSE THERE WAS NO FACTUAL FINDING, BOTH IN THE
TRIAL COURT AND IN THE COURT OF APPEALS, AS TO THE SPECIFIC AMOUNT OF THE ALLEGED
SHORTDELIVERED CARGO.16

The Court finds it proper to resolve first the question of whether the claim against petitioner was timely filed.

With respect to the prescriptive period involving claims arising from shortage, loss of or damage to cargoes sustained during transit,
the law that governs the instant case is the Carriage of Goods by Sea Act17 (COGSA), Section 3 (6) of which provides:

Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port
of discharge or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of
carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. If the
loss or damage is not apparent, the notice must be given within three days of delivery.

Said notice of loss or damage may be endorsed upon the receipt for the goods given by the person taking delivery thereof.

The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or
inspection.

In any event, the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one
year after delivery of the goods or the date when the goods should have been delivered; Provided, That, if a notice of loss or damage,
either apparent or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to
bring suit within one year after the delivery of the goods or the date when the goods should have been delivered.

In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable facilities to each other for
inspecting and tallying the goods.

Petitioner claims that pursuant to the above-cited provision, respondent should have filed its Notice of Loss within three days from
delivery. It asserts that the cargo was fully discharged from the vessel on April 15, 1992, but that respondent failed to file any written
notice of claim. Petitioner also avers that, pursuant to the same provision of the COGSA, respondents claim had already prescribed
because the complaint for damages was filed more than one year after the shipment was discharged.

The Court agrees.

Under Section 3 (6) of the COGSA, notice of loss or damages must be filed within three days of delivery. Admittedly, respondent did
not comply with this provision.

Under the same provision, however, a failure to file a notice of claim within three days will not bar recovery if a suit is nonetheless
filed within one year from delivery of the goods or from the date when the goods should have been delivered.18

In Loadstar Shipping Co., Inc. v. Court of Appeals, 19 the Court ruled that a claim is not barred by prescription as long as the one-year
period has not lapsed. Thus, in the words of the ponente, Chief Justice Hilario G. Davide Jr.:

Inasmuch as neither the Civil Code nor the Code of Commerce states a specific prescriptive period on the matter, the Carriage of
Goods by Sea Act (COGSA) -- which provides for a one-year period of limitation on claims for loss of, or damage to, cargoes
sustained during transit -- may be applied suppletorily to the case at bar.20

In the instant case, the Court is not persuaded by respondents claim that the complaint against petitioner was timely filed. Respondent
argues that the suit for damages was filed on March 11, 1993, which is within one year from the time the vessel carrying the subject
cargo arrived at the Port of Manila on April 11, 1993, or from the time the shipment was completely discharged from the vessel on
April 15, 1992.

There is no dispute that the vessel carrying the shipment arrived at the Port of Manila on April 11, 1992 and that the cargo was
completely discharged therefrom on April 15, 1992. However, respondent erred in arguing that the complaint for damages, insofar as
the petitioner is concerned, was filed on March 11, 1993.1awph!l

As the records would show, petitioner was not impleaded as a defendant in the original complaint filed on March 11, 1993. 21 It was
only on June 7, 1993 that the Amended Complaint, impleading petitioner as defendant, was filed.

Respondent cannot argue that the filing of the Amended Complaint against petitioner should retroact to the date of the filing of the
original complaint.

The settled rule is that the filing of an amended pleading does not retroact to the date of the filing of the original; hence, the statute of
limitation runs until the submission of the amendment.22 It is true that, as an exception, this Court has held that an amendment which
merely supplements and amplifies facts originally alleged in the complaint relates back to the date of the commencement of the action
and is not barred by the statute of limitations which expired after the service of the original complaint. 23 The exception, however,
would not apply to the party impleaded for the first time in the amended complaint. 24
The rule on the non-applicability of the curative and retroactive effect of an amended complaint, insofar as newly impleaded
defendants are concerned, has been established as early as in the case of Aetna Insurance Co. v. Luzon Stevedoring Corporation.25 In
the said case, the defendant Barber Lines Far East Service was impleaded for the first time in the amended complaint which was filed
after the one-year period of prescription. The order of the lower court dismissing the amended complaint against the said defendant on
ground of prescription was affirmed by this Court.

In the instant case, petitioner was only impleaded in the amended Complaint of June 7, 1993, or one (1) year, one (1) month and
twenty-three (23) days from April 15, 1992, the date when the subject cargo was fully unloaded from the vessel. Hence, reckoned
from April 15, 1992, the one-year prescriptive period had already lapsed.

Having ruled that the action against petitioner had already prescribed, the Court no longer finds it necessary to address the other issues
raised in the present petition.

WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of Appeals dated June 2, 2003 and its Resolution
dated January 15, 2004 in CA-G.R. CV No. 65857 are MODIFIED by dismissing the complaint against petitioner. In all other
respects, the challenged Decision and Resolution of the CA are AFFIRMED.

SO ORDERED.

G.R. No. 123672 December 14, 2005

FERNANDO CARRASCOSO, JR., Petitioner,

vs.
THE HONORABLE COURT OF APPEALS, LAURO LEVISTE, as Director and Minority Stockholder and On Behalf of
Other Stockholders of El Dorado Plantation, Inc. and EL DORADO PLANTATION, INC., represented by one of its minority
stockholders, Lauro P. Leviste, Respondents

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

G.R. No. 164489

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, Petitioner,

vs.
LAURO LEVISTE, as Director and Minority Stockholder and On Behalf of Other Stockholders of El Dorado Plantation, Inc.,
EL DORADO PLANTATION, INC., represented by Minority Stockholder, Lauro P. Leviste, and FERNANDO
CARRASCOSO, JR., Respondents.

DECISION

CARPIO MORALES, J.:

El Dorado Plantation, Inc. (El Dorado) was the registered owner of a parcel of land (the property) with an area of approximately 1,825
hectares covered by Transfer Certificate of Title (TCT) No. T-931 situated in Sablayan, Occidental Mindoro.

On February 15, 1972, at a special meeting of El Dorados Board of Directors, a Resolution2 was passed authorizing Feliciano Leviste,
then President of El Dorado, to negotiate the sale of the property and sign all documents and contracts bearing thereon.

On March 23, 1972, by a Deed of Sale of Real Property, 3 El Dorado, through Feliciano Leviste, sold the property to Fernando O.
Carrascoso, Jr. (Carrascoso).

The pertinent provisions of the Deed of Sale read:

NOW, THEREFORE, for and in consideration of the sum of ONE MILLION EIGHT HUNDRED THOUSAND (1,800,000.00)
PESOS, Philippine Currency, the Vendor hereby sells, cedes, and transfer (sic) unto the herein VENDEE, his heirs, successors and
assigns, the above-described property subject to the following terms and consitions (sic):

1. Of the said sum of P1,800,000.00 which constitutes the full consideration of this sale, P290,000.00 shall be paid, as it is hereby
paid, to the Philippines (sic) National Bank, thereby effecting the release and cancellation fo (sic) the present mortgage over the
above-described property.

2. That the sum of P210,000.00 shall be paid, as it is hereby paid by the VENDEE to the VENDOR, receipt of which amount is hereby
acknowledged by the VENDOR.

3. The remaining balance of P1,300,000.00 plus interest thereon at the rate of 10% per annum shall be paid by the VENDEE to the
VENDOR within a period of three (3) years, as follows:

(a) One (1) year from the date of the signing of this agreement, the VENDEE shall pay to the VENDOR the sum of FIVE HUNDRED
NINETEEN THOUSAND EIGHT HUNDRED THIRTY THREE & 33/100 (P519,833.33) PESOS.

(b) Two (2) years from the date of signing of this agreement, the VENDEE shall pay to the VENDOR the sum of FIVE HUNDRED
NINETTEN (sic) THOUSAND EIGHT HUNDRED AND THIRTY-THREE & 33/100 (P519,833.33) PESOS.

(c) Three (3) years from the date of signing of this agreement, the VENDEE shall pay to the VENDOR the sum of FIVE Hundred
NINETEEN THOUSAND EIGHT HUNDRED AND THIRTY-THREE & 33/100 (P519,833.33) PESOS.
4. The title of the property, subject of this agreement, shall pass and be transferred to the VENDEE who shall have full authority to
register the same and obtain the corresponding transfer certificate of title in his name.

xxx

6. THE VENDOR certifies and warrants that the property above-described is not being cultivated by any tenant and is therefore not
covered by the provisions of the Land Reform Code. If, therefore, the VENDEE becomes liable under the said law, the VENDOR
shall reimburse the VENDEE for all expenses and damages he may incur thereon. 4 (Underscoring supplied)

From the above-quoted provisions of the Deed of Sale, Carrascoso was to pay the full amount of the purchase price on March 23,
1975.

On even date, the Board of Directors of El Dorado passed a Resolution reading:

"RESOLVED that by reason of the sale of that parcel of land covered by TCT No. T-93 to Dr. FERNANDO O. CARRASCOSO,
JR., the corporation interposes no objection to the property being mortgage (sic) by Dr. FERNANDO O. CARRASCOSO, JR.
to any bank of his choice as long as the balance on the Deed of Sale shall be recognized by Dr. FERNANDO O.
CARRASCOSO, JR.;

"RESOLVED, FURTHER, that the corporation authorizes the prefered (sic) claim on the property to be subordinated to any mortgage
that may be constituted by Dr. FERNANDO O. CARRASCOSO, JR.;

"RESOLVED, FINALLY, that in case of any mortgage on the property, the corporation waives the preference of any vendors lien on
the property."5 (Emphasis and underscoring supplied)

Feliciano Leviste also executed the following affidavit on the same day:

1. That by reason of the sale of that parcel of land covered by Transfer Certificate of Title T-93 as evidenced by the Deed of Sale
attached hereto as Annex "A" and made an integral part hereof, the El Dorado Plantation, Inc. has no objection to the
aforementioned property being mortgaged by Dr. Fernando O. Carrascoso, Jr. to any bank of his choice, as long as the
payment of the balance due the El Dorado Plantation, Inc. under the Deed of Sale, Annex "A" hereof, shall be recognized by
the vendee therein, Dr. Fernando O. Carrascoso, Jr. though subordinated to the preferred claim of the mortgagee bank.

2. That in case of any mortgage on the property, the vendor hereby waives the preference of any vendors lien on the property, subject
matter of the deed of sale.

3. That this affidavit is being executed to avoid any question on the authority of Dr. Fernando O. Carrascoso, Jr. to mortgage the
property subject of the Deed of Sale, Annex "A" hereof, where the purchase price provided therein has not been fully paid.

4. That this affidavit has been executed pursuant to a board resolution of El Dorado Plantation, Inc. 6 (Emphasis and underscoring
supplied)

On the following day, March 24, 1972, Carrascoso and his wife Marlene executed a Real Estate Mortgage 7 over the property in favor
of Home Savings Bank (HSB) to secure a loan in the amount of 1,000,000.00. Of this amount, 290,000.00 was paid to Philippine
National Bank to release the mortgage priorly constituted on the property and 210,000.00 was paid to El Dorado pursuant to above-
quoted paragraph Nos. 1 and 2 of the terms and conditions of the Deed of Sale. 8

The March 23, 1972 Deed of Sale of Real Property was registered and annotated on El Dorados TCT No. T-93 as Entry No.
152409 on April 5, 1972. On even date, TCT No. T-93 covering the property was cancelled and TCT No. T-605510 was in its stead
issued by the Registry of Deeds of Occidental Mindoro in the name of Carrascoso on which the real estate mortgage in favor of HSB
was annotated as Entry No. 15242.11

On May 18, 1972, the real estate mortgage in favor of HSB was amended to include an additional three year loan of 70,000.00 as
requested by the spouses Carrascoso.12 The Amendment of Real Estate Mortgage was also annotated on TCT No. T-6055 as Entry No.
15486 on May 24, 1972.13

The 3-year period for Carrascoso to fully pay for the property on March 23, 1975 passed without him having complied therewith.

In the meantime, on July 11, 1975, Carrascoso and the Philippine Long Distance Telephone Company (PLDT), through its President
Ramon Cojuangco, executed an Agreement to Buy and Sell14 whereby the former agreed to sell 1,000 hectares of the property to the
latter at a consideration of 3,000.00 per hectare or a total of 3,000,000.00.

The July 11, 1975 Agreement to Buy and Sell was not registered and annotated on Carrascosos TCT No. T-6055.

Lauro Leviste (Lauro), a stockholder and member of the Board of Directors of El Dorado, through his counsel, Atty. Benjamin
Aquino, by letter15 dated December 27, 1976, called the attention of the Board to Carrascosos failure to pay the balance of the
purchase price of the property amounting to 1,300,000.00. And Lauros lawyer manifested that:

Because of the default for a long time of Mr. Carrascoso to pay the balance of the consideration of the sale, Don Lauro Leviste, in his
behalf and in behalf of the other shareholders similarly situated like him, want a rescission of the sale made by the El Dorado
Plantation, Inc. to Mr. Carrascoso. He desires that the Board of Directors take the corresponding action for rescission. 16

Lauros desire to rescind the sale was reiterated in two other letters 17 addressed to the Board dated January 20, 1977 and March 3,
1977.
Jose P. Leviste, as President of El Dorado, later sent a letter of February 21, 1977 18 to Carrascoso informing him that in view of his
failure to pay the balance of the purchase price of the property, El Dorado was seeking the rescission of the March 23, 1972 Deed of
Sale of Real Property.

The pertinent portions of the letter read:

xxx

I regret to inform you that the balance of P1,300,000.00 and the interest thereon have long been due and payable, although yo u have
mortgaged said property with the Home Savings Bank for P1,000,000.00 on March 24, 1972, which was subsequently increased to
P1,070,000.00 on May 18, 1972.

You very well know that the El Dorado Plantation, Inc., is a close family corporation, owned exclusively by the members of the
Leviste family and I am one of the co-owners of the land. As nothing appears to have been done on your part after our numerous
requests for payment of the said amount of P1,300,000.00 and the interest of 10% per annum due thereon, please be advised that we
would like to rescind the contract of sale of the land.19 (Underscoring supplied)

Jose Leviste, by letter20 dated March 10, 1977, informed Lauros counsel Atty. Aquino of his (Joses) February 21, 1977 letter to
Carrascoso, he lamenting that "Carrascoso has not deemed it fit to give [his] letter the courtesy of a reply" and advis[ing] that some of
the Directors of [El Dorado] could not see their way clear in complying with the demands of your client [Lauro] and have failed to
reach a consensus to bring the corresponding action for rescission of the contract against . . . Carrascoso." 21

Lauro and El Dorado finally filed on March 15, 1977 a complaint 22 for rescission of the March 23, 1972 Deed of Sale of Real Property
between El Dorado and Carrascoso with damages before the Court of First Instance (CFI) of Occidental Mindoro, docketed as Civil
Case No. R-226.

Lauro and El Dorado also sought the cancellation of TCT No. T-6055 in the name of Carrascoso and the revival of TCT No. T-93 in
the name of El Dorado, free from any liens and encumbrances. Furthermore, the two prayed for the issuance of an order for
Carrascoso to: (1) reconvey the property to El Dorado upon return to him of 500,000.00, (2) secure a discharge of the real e state
mortgage constituted on the property from HSB, (3) submit an accounting of the fruits of the property from March 23, 1972 up to the
return of possession of the land to El Dorado, (4) turn over said fruits or the equivalent value thereof to El Dorado and (5) pay the
amount of 100,000.00 for attorneys fees and other damages. 23

Also on March 15, 1977, Lauro and El Dorado caused to be annotated on TCT No. T-6055 a Notice of Lis Pendens,inscribed as Entry
No. 39737.24

In the meantime, Carrascoso, as vendor and PLDT, as vendee forged on April 6, 1977 a Deed of Absolute Sale25over the 1,000 hectare
portion of the property subject of their July 11, 1975 Agreement to Buy and Sell. The pertinent portions of the Deed are as follows:

WHEREAS, the VENDOR and the VENDEE entered into an agreement To Buy and Sell on July 11, 1975, which is made a part
hereof by reference;

WHEREAS, the VENDOR and the VENDEE are now decided to execute the Deed of Absolute Sale referred to in the aforementioned
agreement to Buy and Sell;

WHEREFORE, for and in consideration of the foregoing premises and the terms hereunder stated, the VENDOR and the VENDEE
have agreed as follows:

1. For and in consideration of the sum of THREE MILLION PESOS (P3,000,000.00), Philippine currency, of which ONE
HUNDRED TWENTY THOUSAND PESOS P120,000.00 have (sic) already been received by the VENDOR, the VENDOR hereby
sells, transfers and conveys unto the VENDEE one thousand hectares (1,000 has.) of his parcel of land covered by T.C.T. No. T-6055
of the Registry of Deeds of Mindoro, delineated as Lot No. 3-B-1 in the subdivision survey plan xxx

2. The VENDEE shall pay to the VENDOR upon the signing of this agreement, the sum of TWO MILLION FIVE HUNDRED
THOUSAND PESOS (P2,500,000.00) in the following manner:

a) The sum of TWO MILLION THREE HUNDRED THOUSAND PESOS (P2,300,000.00) to Home Savings Bank in full payment of
the VENDORs mortgaged obligation therewith;

b) The sum of TWO HUNDRED THOUSAND PESOS (P200,000.00) to VENDOR;

The remaining balance of the purchase price in the sum of THREE HUNDRED EIGHTY THOUSAND PESOS (P380,000.00), less
such expenses which may be advanced by the VENDEE but which are for the account of the VENDOR under Paragraph 6 of the
Agreement to Buy and Sell, shall be paid by the VENDEE to the VENDOR upon issuance of title to the VENDEE.26 (Underscoring
supplied)

In turn, PLDT, by Deed of Absolute Sale27 dated May 30, 1977, conveyed the aforesaid 1,000 hectare portion of the property to its
subsidiary, PLDT Agricultural Corporation (PLDTAC), for a consideration of 3,000,000.00, the amount of 2,620,000.00 of which
was payable to PLDT upon signing of said Deed, and 380,000.00 to Carrascoso upon issuance of title to PLDTAC.

In the meantime, on October 19, 1977, the El Dorado Board of Directors, by a special meeting,28 adopted and approved a Resolution
ratifying and conferring "the prosecution of Civil Case No. R-226 of the Court of First Instance of Occidental Mindoro, entitled
Lauro P. Leviste vs. Fernando Carascoso (sic), etc. initiated by stockholder Mr. Lauro P. Leviste." 29

In his Answer with Compulsory Counterclaim,30 Carrascoso alleged that: (1) he had not paid his remaining 1,300,000.00 obligation
under the March 23, 1972 Deed of Sale of Real Property in view of the extensions of time to comply therewith granted him by El
Dorado; (2) the complaint suffered from fatal defects, there being no showing of compliance with the condition precedent of
exhaustion of intra-corporate remedies and the requirement that a derivative suit instituted by a complaining stockholder be verified
under oath; (3) El Dorado committed a gross misrepresentation when it warranted that the property was not being cultivated by any
tenant to take it out of the coverage of the Land Reform Code; and (4) he suffered damages due to the premature filing of the
complaint for which Lauro and El Dorado must be held liable.

On February 21, 1978, the April 6, 1977 and May 30, 1977 Deeds of Absolute Sale and the respective Articles of Incorporation of
PLDT and PLDTAC were annotated on TCT No. T-6055 as Entry Nos. 24770,31 42774,32 4276933and 24772,34 respectively. On even
date, Carrascosos TCT No. T-6055 was cancelled and TCT No. T-1248035covering the 1,000 hectare portion of the property was
issued in the name of PLDTAC. The March 15, 1977 Notice of Lis Pendens was carried over to TCT No. T-12480.

On July 31, 1978, PLDT and PLDTAC filed an Urgent Motion for Intervention 36 which was granted by the trial court by Order37 of
September 7, 1978.

PLDT and PLDTAC thereupon filed their Answer In Intervention with Compulsory Counterclaim and Crossclaim 38against Carrascoso
on November 13, 1978, alleging that: (1) when Carrascoso executed the April 6, 1977 Deed of Absolute Sale in favor of PLDT, PLDT
was not aware of any litigation involving the 1,000 hectare portion of the property or of any flaw in his title, (2) PLDT is a purchaser
in good faith and for value; (3) when PLDT executed the May 30, 1977 Deed of Absolute Sale in favor of PLDTAC, they had no
knowledge of any pending litigation over the property and neither were they aware that a notice of lis pendens had been annotated on
Carrascosos title; and (4) Lauro and El Dorado knew of the sale by Carrascoso to PLDT and PLDTs actual possession of the 1,000
hectare portion of the property since June 30, 1975 and of its exercise of exclusive rights of ownership thereon through agricultural
development.39

By Decision40 of January 28, 1991, Branch 45 of the San Jose Occidental Mindoro Regional Trial Court to which the CFI has been
renamed, dismissed the complaint on the ground of prematurity, disposing as follows, quoted verbatim:

WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered:

1. Dismissing the plaintiffs complaint against the defendant on the ground of prematurity;

2. Ordering the plaintiffs to pay to the defendant the sum of P2,980,000.00 as actual and compensatory damages, as well as the sum of
P100,000.00 as and for attorneys fees; provided, however, that the aforesaid amounts must first be set off from the latters unpaid
balance to the former;

3. Dismissing the defendants-intervenors counterclaim and cross-claim; and

4. Ordering the plaintiffs to pay to (sic) the costs of suit.

SO ORDERED.41 (Underscoring supplied)

Carrascoso, PLDT and PLDTAC filed their respective appeals to the Court of Appeals.

By Decision42 of January 31, 1996, the appellate court reversed the decision of the trial court, disposing as follows, quoted verbatim:

WHEREFORE, not being meritorious, PLDTs/PLDTACs appeal is hereby DISMISSED and finding El Dorados appeal to be
impressed with merit, We REVERSE the appealed Decision and render the following judgment:

1. The Deed of Sale of Real Property (Exhibit C) is hereby rescinded and TCT No. T-12480 (Exhibit Q) is cancelled while TCT No.
T-93 (Exhibit A), is reactivated.

2. Fernando Carrascoso, Jr. is commanded to:

2.1. return the possession of the 825 [hectare-] remaining portion of the land to El Dorado Plantation, Inc. without prejudice to the
landholdings of legitimate tenants thereon;

2.2. return the net fruits of the land to El Dorado Plantation, Inc. from March 23, 1972 to July 11, 1975, and of the 825-hectare-
remaining portion minus the tenants landholdings, from July 11, 1975 up to its delivery to El Dorado Plantation, Inc. including
whatever he may have received from the tenants if any by way of compensation under the Operation Land Transfer or under any other
pertinent agrarian law;

2.3 Pay El Dorado Plantation, Inc. an attorneys fee of P20,000.00 and litigation expenses of P30,000.00;

2.4 Return to Philippine Long Distance Telephone Company/PLDT Agricultural Corporation P3,000,000.00 plus legal interest from
April 6, 1977 until fully paid;

3. PLDT Agricultural Corporation is ordered to surrender the possession of the 1000-hectare Farm to El Dorado Plantation, Inc.;

4. El Dorado Plantation, Inc. is directed to return the P500,000.00 to Fernando Carrascoso, Jr. plus legal interest from March 23, 1972
until fully paid. The performance of this obligation will however await the full compliance by Fernando Carrascoso, Jr. of his
obligation to account for and deliver the net fruits of the land mentioned above to El Dorado Plantation, Inc.

5. To comply with paragraph 2.2 herein, Carrascoso is directed to submit in (sic) the court a quo a full accounting of the fruits of the
land during the period mentioned above for the latters approval, after which the net fruits shall be delivered to El Dorado, Plantation,
Inc.

6. El Dorado Plantation, Inc. should inform Philippine Long Distance Telephone Co. and PLDT Agricultural Corporation in writing
within ten (10) days after finality of this decision regarding the exercise of its option under Art. 448 of the Civil Code.
SO ORDERED.43 (Underscoring supplied)

PLDT and PLDTAC filed on February 22, 1996, a Motion for Reconsideration44 of the January 31, 1996 CA Decision, while
Carrascoso went up this Court by filing on March 25, 1996 a petition for review, 45 docketed as G.R. No. 123672, assailing the January
31, 1996 CA Decision and seeking the reinstatement of the January 28, 1991 Decision of the trial court except with respect to its
finding that the acquisition of PLDT and PLDTAC of the 1,000 hectare portion of the property was subject to the notice
of lis pendens.

Lauro, in the meantime, died, hence, on April 16, 1996, a Motion for Substitution of Party 46 was filed praying that his heirs,
represented by Conrad C. Leviste, be substituted as respondents. The Motion was granted by Resolution 47 of July 10, 1996.

PLDT and PLDTAC filed their Comment48 to Carrascosos petition and prayed that judgment be rendered finding them to be
purchasers in good faith to thus entitle them to possession and ownership of the 1,000 hectare portion of the property, together with all
the improvements they built thereon. Reiterating that they were not purchasers pendente lite, they averred that El Dorado and Lauro
had actual knowledge of their interests in the said portion of the property prior to the annotation of the notice of lis pendens to thereby
render said notice ineffective.

El Dorado and the heirs of Lauro, both represented by Conrad C. Leviste, also filed their Comment 49 to Carrascosos petition, praying
that it be dismissed for lack of merit and that paragraph 6 of the dispositive portion of the January 31, 1996 CA Decision be modified
to read as follows:

6. El Dorado Plantation, Inc. should inform Philippine Long Distance Telephone Co. and PLDT Agricultural Corporation in writing
within ten (10) days after finality of this decision regarding the exercise of its option under Arts. 449 and 450 of the Civil Code,
without right to indemnity on the part of the latter should the former decide to keep the improvements under Article
449.50 (Underscoring supplied)

Carrascoso filed on November 13, 1996 his Reply51 to the Comment of El Dorado and the heirs of Lauro.

In the meantime, as the February 22, 1996 Motion for Reconsideration filed by PLDT and PLDTAC of the CA decision had remained
unresolved, this Court, by Resolution52 of June 30, 2003, directed the appellate court to resolve the same.

By Resolution53 of July 8, 2004, the CA denied PLDT and PLDTACs Motion for Reconsideration for lack of merit.

PLDT54 thereupon filed on September 2, 2004 a petition for review55 before this Court, docketed as G.R. No. 164489, seeking to
reverse and set aside the January 31, 1996 Decision and the July 8, 2004 Resolution of the appellate court. It prayed that judgment be
rendered upholding its right, interest and title to the 1,000 hectare portion of the property and that it and its successors-in-interest be
declared owners and legal possessors thereof, together with all improvements built, sown and planted thereon.

By Resolution56 of August 25, 2004, G.R. No. 164489 was consolidated with G.R. No. 123672.

In his petition, Carrascoso faults the CA as follows:

THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION AND COMMITTED A MISTAKE OF LAW IN
NOT DECLARING THAT THE ACTION FOR RESCISSION WAS PREMATURELY FILED.

II

THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION AND COMMITTED A MISTAKE OF LAW IN
DISREGARDING THE CRUCIAL SIGNIFICANCE OF THE WARRANTY OF NON-TENANCY EXPRESSLY STIPULATED IN
THE CONTRACT OF SALE.

III

THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION IN REVERSING THE DECISION OF THE
TRIAL COURT.57 (Underscoring supplied)

PLDT, on the other hand, faults the CA as follows:

THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN HOLDING THAT PETITIONER AND PLTAC (sic)
TOOK THEIR RIGHT, INTEREST AND TITLE TO THE FARM SUBJECT TO THE NOTICE OF LIS PENDENS, THE SAME IN
DISREGARD OF THE PROTECTION ACCORDED THEM UNDER ARTICLES 1181 AND 1187 OF THE NEW CIVIL CODE.

II

THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN HOLDING THAT PETITIONER AND PLDTAC TOOK
THEIR RIGHT, INTEREST AND TITLE TO THE FARM SUBJECT TO THE NOTICE OF LIS PENDENS, THE SAME IN
DISREGARD OF THE LEGAL PRINCIPLE THAT RESPONDENTS EL DORADO ET AL.s PRIOR, ACTUAL KNOWLEDGE
OF PETITIONER PLDTS AGREEMENT TO BUY AND SELL WITH RESPONDENT CARRASCOSO RESULTING IN THE
DELIVERY TO, AND POSSESSION, OCCUPATION AND DEVELOPMENT BY, SAID PETITIONER OF THE FARM, IS
EQUIVALENT TO REGISTRATION OF SUCH RIGHT, INTEREST AND TITLE AND, THEREFORE, A PRIOR
REGISTRATION NOT AFFECTED BY THE LATER NOTICE OF LIS PENDENS.58 (Underscoring supplied)
Carrascoso posits that in the El Dorado Board Resolution and the Affidavit of Feliciano Leviste, both dated March 23, 1972, no
objection was interposed to his mortgaging of the property to any bank provided that the balance of the purchase price of the property
under the March 23, 1972 Deed of Sale of Real Property is recognized, hence, El Dorado could collect the unpaid balance of
1,300,000.00 only after the mortgage in favor of HSB is paid in full; and the filing of the complaint for rescission with damages on
March 15, 1977 was premature as he fully paid his obligation to HSB only on April 5, 1977 as evidenced by the Cancellation of
Mortgage59 signed by HSB President Gregorio B. Licaros.

Carrascoso further posits that extensions of the period to pay El Dorado were verbally accorded him by El Dorados directors and
officers, particularly Jose and Angel Leviste.

Article 1191 of the Civil Code provides:

Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is
incumbent upon him.

The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case.
He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.

The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.

This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385
and 1388 and the Mortgage Law.

Reciprocal obligations are those which arise from the same cause, and in which each party is a debtor and a creditor of the other, such
that the obligation of one is dependent upon the obligation of the other.60 They are to be performed simultaneously such that the
performance of one is conditioned upon the simultaneous fulfillment of the other. 61

The right of rescission of a party to an obligation under Article 1191 is predicated on a breach of faith by the other party who violates
the reciprocity between them.62

A contract of sale is a reciprocal obligation. The seller obligates itself to transfer the ownership of and deliver a determinate thing, and
the buyer obligates itself to pay therefor a price certain in money or its equivalent. 63 The non-payment of the price by the buyer is a
resolutory condition which extinguishes the transaction that for a time existed, and discharges the obligations created
thereunder.64 Such failure to pay the price in the manner prescribed by the contract of sale entitles the unpaid seller to sue for
collection or to rescind the contract.65

In the case at bar, El Dorado already performed its obligation through the execution of the March 23, 1972 Deed of Sale of Real
Property which effectively transferred ownership of the property to Carrascoso. The latter, on the other hand, failed to perform his
correlative obligation of paying in full the contract price in the manner and within the period agreed upon.

The terms of the Deed are clear and unequivocal: Carrascoso was to pay the balance of the purchase price of the property amounting
to 1,300,000.00 plus interest thereon at the rate of 10% per annum within a period of three (3) years from the signing of the contract
on March 23, 1972. When Jose Leviste informed him that El Dorado was seeking rescission of the contract by letter of February 21,
1977, the period given to him within which to fully satisfy his obligation had long lapsed.

The El Dorado Board Resolution and the Affidavit of Jose Leviste interposing no objection to Carrascosos mortgaging of the
property to any bank did not have the effect of suspending the period to fully pay the purchase price, as expressly stipulated in the
Deed, pending full payment of any mortgage obligation of Carrascoso.

As the CA correctly found:

The adverted resolution (Exhibit 2) does not say that the obligation of Carrascoso to pay the balance was extended. Neither can We
see in it anything that can logically infer said accommodation.

A partially unpaid seller can agree to the buyers mortgaging the subject of the sale without changing the time fixed for the payment of
the balance of the price. The two agreements are not incompatible with each other such that when one is to be implemented, the other
has to be suspended. In the case at bench, there was no impediment for Carrascoso to pay the balance of the price after mortgaging the
land.

Also, El Dorados subordinating its "preferred claim" or waiving its superior "vendors lien" over the land in favor of the mortgagee of
said property only means that in a situation where the unpaid price of the Land and loan secured by the mortgage over the Land both
become due and demandable, the mortgagee shall have precedence in going after the Land for the satisfaction of the loan. Such
accommodations do not necessarily imply the modification of the period fixed in the contract of sale for the payment by Carrascoso of
the balance.

The palpable purpose of El Dorado in not raising any objection to Carrascosos mortgaging the land was to eliminate any legal
impediment to such a contract. That was so succinctly expressed in the Affidavit (Exhibit 2-A) of President Feleciano (sic) Leviste. El
Dorados yielding its "superior lien" over the land in favor of the mortgagee was plainly intended to overcome the natural reluctance
of lending institutions to accept a land whose price has not yet been fully paid as collateral of a loan. 66 (Underscoring supplied)

Respecting Carrascosos insistence that he was granted verbal extensions within which to pay the balance of the purchase price of the
property by El Dorados directors and officers Jose and Angel Leviste, this Court finds the same unsubstantiated by the evidence on
record.

It bears recalling that Jose Leviste wrote Carrascoso, by letter of February 21, 1977, calling his attention to his failure to comply,
despite "numerous" requests, with his obligation to pay the amount of 1,300,000.00 and 10% annual interest thereon, and advising
him that "we would like to rescind the contract of sale." This letter reiterated the term of payment agreed upon in the March 23, 1972
Deed of Sale of Real Property and Carrascososs non-compliance therewith.

Carrascoso, harping on Jose Levistes March 10, 1977 letter to Lauros counsel wherein he (Jose Leviste) stated that "some of the
Directors of the corporation could not see their way clear in complying with the demands of [Lauro] and have failed to reach a
consensus to bring the corresponding action for rescission of the contract against Dr. Fernando Carrascoso," argues that the extensions
priorly given to him "no doubt lead to the logical conclusion on some of the directors inability to file suit against him." 67

The argument is specious. As the CA found, even if some officers of El Dorado were initially reluctant to file suit against him, the
same should not be interpreted to mean that this was brought about by a prior extension of the period to pay the balance of the
purchase price of the property as such reluctance could have been due to a myriad of reasons totally unrelated to the period of payment
of the balance.

The bottomline however is, if El Dorado really intended to extend the period of payment of the balance there was absolutely no reason
why it did not do it in writing in clear and unmistakable terms. That there is no such writing negates all the speculations of the court a
quo and pretensions of Carrascoso.

xxx

The unalterable fact here remains that on March 23, 1973, with or without demand, the obligation of Carrascoso to pay P519,933.33
became due. The same was true on March 23, 1974 and on March 23, 1975 for equal amounts. Since he did not perform his obligation
under the contract of sale, he, therefore, breached it. Having breached the contract, El Dorados cause of action for rescission of that
contract arose.68 (Underscoring supplied)

Carrascoso goes on to argue that the appellate court erred in ignoring the import of the warranty of non-tenancy expressly stipulated in
the March 23, 1972 Deed of Sale of Real Property. He alleges that on March 8, 1972 or two weeks prior to the execution of the Deed
of Sale, he discovered, while inspecting the property on board a helicopter, that there were people and cattle in the area; when he
confronted El Dorado about it, he was told that the occupants were caretakers of cattle who would soon leave; 69 four months after the
execution of the Deed of Sale, upon inquiry with the Bureau of Lands and the Bureau of Soils, he was informed that there were people
claiming to be tenants in certain portions of the property; 70 and he thus brought the matter again to El Dorado which informed him that
the occupants were not tenants but squatters.71

Carrascoso now alleges that as a result of what he concludes to be a breach of the warranty of non-tenancy committed by El Dorado,
he incurred expenses in the amount of 2,890,000.00 for which he should be reimbursed, his unpaid obligation to El Dorado
amounting to 1,300,000.00 to be deducted therefrom. 72

The breach of an express warranty makes the seller liable for damages. 73 The following requisites must be established in order that
there be an express warranty in a contract of sale: (1) the express warranty must be an affirmation of fact or any promise by the seller
relating to the subject matter of the sale; (2) the natural tendency of such affirmation or promise is to induce the buyer to purchase the
thing; and (3) the buyer purchases the thing relying on such affirmation or promise thereon.74

Under the March 23, 1972 Deed of Sale of Real Property, El Dorado warranted that the property was not being cultivated by any
tenant and was, and therefore, not covered by the provisions of the Land Reform Code. If Carrascoso would become liable under the
said law, he would be reimbursed for all expenses and damages incurred thereon.

Carrascoso claims to have incurred expenses in relocating persons found on the property four months after the execution of the Deed
of Sale. Apart from such bare claim, the records are bereft of any proof that those persons were indeed tenants. 75 The fact of
tenancy76 not having been priorly established,77 El Dorado may not be held liable for actual damages.

Carrascoso further argues that both the trial and appellate courts erred in holding that the sale of the 1,000 hectare portion of the
property to PLDT, as well as its subsequent sale to PLDTAC, is subject to the March 15, 1977 Notice of Lis Pendens.

PLDT additionally argues that the CA incorrectly ignored the Agreement to Buy and Sell which it entered into with Carrascoso on
July 11, 1975, positing that the efficacy of its purchase from Carrascoso, upon his fulfillment of the condition it imposed resulting in
its decision to formalize their transaction and execute the April 6, 1977 Deed of Sale, retroacted to July 11, 1975 or before the
annotation of the Notice of Lis Pendens.78

The pertinent portions of the July 11, 1975 Agreement to Buy and Sell between PLDT and Carrascoso read:

2. That the VENDOR hereby agrees to sell to the VENDEE and the latter hereby agrees to purchase from the former, 1,000 hectares of
the above-described parcel of land as shown in the map hereto attached as Annex "A" and made an integral part hereof and as
hereafter to be more particularly determined by the survey to be conducted by Certeza & Co., at the purchase price of P3,000.00 per
hectare or for a total consideration of Three Million Pesos (P3,000,000.00) payable in cash.

3. That this contract shall be considered rescinded and cancelled and of no further force and effect, upon failure of the VENDOR to
clear the aforementioned 1,000 hectares of land of all the occupants therein located, within a period of one (1) year from the date of
execution of this Agreement. However, the VENDEE shall have the option to extend the life of this Agreement by another six months,
during which period the VENDEE shall definitely inform the VENDOR of its decision on whether or not to finalize the deed of
absolute sale for the aforementioned 1,000 hectares of land.

The VENDOR agrees that the amount of P500.00 per family within the aforementioned 1,000 hectares of land shall be spent by him
for relocation purposes, which amount however shall be advanced by the VENDEE and which shall not exceed the total amount of
P120,000.00, the same to be thereafter deducted by the VENDEE from the aforementioned purchase price of P3,000,000.00.

The aforementioned advance of P120,000.00 shall be remitted by the VENDEE to the VENDOR upon the signing of this Agreement.
xxx

It is likewise further agreed that the VENDEE shall have the right to enter into any part of the aforementioned 1,000 hectares at any
time within the period of this Agreement for purposes of commencing the development of the same.

xxx

5. Title to the aforementioned land shall also be cleared of all liens or encumbrances and if there are any unpaid taxes, existing
mortgages, liens and encumbrances on the land, the payments to be made by the VENDEE to the VENDOR of the purchase price shall
first be applied to liquidate said mortgages, liens and/or encumbrances, such that said payments shall be made directly to the
corresponding creditors. Thus, the balance of the purchase price will be paid to the VENDOR after the title to the land is cleared of all
such liens and encumbrances.

xxx

7. The VENDOR agrees that, during the existence of this Agreement and without the previous written permission from the VENDEE,
he shall not sell, cede, assign and/or transfer the parcel of land subject of this Agreement. 79

A notice of lis pendens is an announcement to the whole world that a particular real property is in litigation, and serves as a warning
that one who acquires an interest over said property does so at his own risk, or that he gambles on the result of the litigation over said
property.80

Once a notice of lis pendens has been duly registered, any cancellation or issuance of title over the land involved as well as any
subsequent transaction affecting the same would have to be subject to the outcome of the suit. In other words, a purchaser who buys
registered land with full notice of the fact that it is in litigation between the vendor and a third party stands in the shoes of his vendor
and his title is subject to the incidents and result of the pending litigation. 81

x x x Notice of lis pendens has been conceived and, more often than not, availed of, to protect the real rights of the registrant while the
case involving such rights is pending resolution or decision. With the notice of lis pendens duly recorded, and while it remains
uncancelled, the registrant could rest secure that he would not lose the property or any part of it during the litigation.

The filing of a notice of lis pendens in effect (1) keeps the subject matter of litigation within the power of the courtuntil the entry of
the final judgment so as to prevent the defeat of the latter by successive alienations; and (2) binds a purchaser of the land subject of the
litigation to the judgment or decree that will be promulgated thereon whether such a purchaser is a bona fide purchaser or not; but (3)
does not create a non-existent right or lien.

The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of which is to keep the subject matter
of the litigation within the power of the court until the judgment or decree shall have been entered; otherwise by successive alienations
pending the litigation, its judgment or decree shall be rendered abortive and impossible of execution. The doctrine of lis pendens is
based on considerations of public policy and convenience, which forbid a litigant to give rights to others, pending the litigation, so as
to affect the proceedings of the court then progressing to enforce those rights, the rule being necessary to the administration of justice
in order that decisions in pending suits may be binding and may be given full effect, by keeping the subject matter in controversy
within the power of the court until final adjudication, that there may be an end to litigation, and to preserve the property that the
purpose of the pending suit may not be defeated by successive alienations and transfers of title. 82 (Italics in the original)

In ruling against PLDT and PLDTAC, the appellate court held:

PLDT and PLDTAC argue that in reality the Farm was bought by the former on July 11, 1975 when Carrascoso and it entered into the
Agreement to Buy and Sell (Exhibit 15). How can an agreement to buy and sell which is a preparatory contract be the same as a
contract of sale which is a principal contract? If PLDTs contention is correct that it bought the Farm on July 11, 1975, why did it buy
the same property again on April 6, 1977? There is simply no way PLDT and PLDTAC can extricate themselves from the effects of
said Notice of Lis Pendens. It is admitted that PLDT took possession of the Farm on July 11, 1975 after the execution of the
Agreement to Buy and Sell but it did so not as owner but as prospective buyer of the property. As prospective buyer which had actual
on (sic) constructive notice of the lis pendens, why did it pursue and go through with the sale if it had not been willing to gamble with
the result of this case?83 (Underscoring supplied)

Further, in its July 8, 2004 Resolution, the CA held:

PLDT cannot shield itself from the notice of lis pendens because all that it had at the time of its inscription was an Agreement to Buy
and Sell with CARRASCOSO, which in effect is a mere contract to sell that did not pass to it the ownership of the property.

xxx

Ownership was retained by CARRASCOSO which EL DORADO may very well recover through its action for rescission.

xxx

PLDTs possession at the time the notice of lis pendens was registered not being a legal possession based on ownership but a mere
possession in fact and the Agreement to Buy and Sell under which it supposedly took possession not being registered, it is not
protected from an adverse judgment that may be rendered in the case subject of the notice of lis pendens.84 (Underscoring supplied)

In a contract of sale, the title passes to the vendee upon the delivery of the thing sold; whereas in a contract to sell, ownership is not
transferred upon delivery of the property but upon full payment of the purchase price. 85 In the former, the vendor has lost and cannot
recover ownership until and unless the contract is resolved or rescinded; whereas in the latter, title is retained by the vendor until
the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach but an event that
prevents the obligation of the vendor to convey title from becoming effective. 86
PLDT argues that the July 11, 1975 Agreement to Buy and Sell is a conditional contract of sale, thus calling for the application of
Articles 118187 and 118788 of the Civil Code as held in Coronel v. Court of Appeals.89

The Court is not persuaded.

For in a conditional contract of sale, if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such that if there
had already been previous delivery of the property subject of the sale to the buyer, ownership thereto automatically transfers to the
buyer by operation of law without any further act having to be performed by the seller. 90 Whereas in a contract to sell, upon fulfillment
of the suspensive condition, ownership will not automaticallytransfer to the buyer although the property may have been previously
delivered to him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale. 91

A perusal of the contract92 adverted to in Coronel reveals marked differences from the Agreement to Buy and Sell in the case at bar. In
the Coronel contract, there was a clear intent on the part of the therein petitioners-sellers to transfer title to the therein respondent-
buyer. In the July 11, 1975 Agreement to Buy and Sell, PLDT still had to "definitely inform Carrascoso of its decision on whether or
not to finalize the deed of absolute sale for the 1,000 hectare portion of the property," such that in the April 6, 1977 Deed of Absolute
Sale subsequently executed, the parties declared that they "are now decided to execute" such deed, indicating that the Agreement to
Buy and Sell was, as the appellate court held, merely a preparatory contract in the nature of a contract to sell. In fact, the parties even
had to stipulate in the said Agreement to Buy and Sell that Carrascoso, "during the existence of the Agreement, shall not sell, cede,
assign and/or transfer the parcel of land," which provision this Court has held to be a typical characteristic of a contract to sell.93

Being a contract to sell, what was vested by the July 11, 1975 Agreement to Buy and Sell to PLDT was merely the beneficial title to
the 1,000 hectare portion of the property.

The right of Daniel Jovellanos to the property under the contract [to sell] with Philamlife was merely an inchoate and expectant right
which would ripen into a vested right only upon his acquisition of ownership which, as aforestated, was contingent upon his full
payment of the rentals and compliance with all his contractual obligations thereunder. A vested right is an immediate fixed right of
present and future enjoyment. It is to be distinguished from a right that is expectant or contingent. It is a right which is fixed,
unalterable, absolute, complete and unconditional to the exercise of which no obstacle exists, and which is perfect in itself and not
dependent upon a contingency. Thus, for a property right to be vested, there must be a transition from the potential or contingent to the
actual, and the proprietary interest must have attached to a thing; it must have become fixed or established and is no longer open to
doubt or controversy.94 (Underscoring supplied)

In the case at bar, the July 11, 1975 Agreement to Buy and Sell was not registered, which act of registration is the operative act to
convey and affect the land.

An agreement to sell is a voluntary instrument as it is a willful act of the registered owner. As such voluntary instrument, Section 50 of
Act No. 496 [now Section 51 of PD 1529] expressly provides that the act of registration shall be the operative act to convey and affect
the land. And Section 55 of the same Act [now Section 53 of PD 1529] requires the presentation of the owners duplicate certificate of
title for the registration of any deed or voluntary instrument. As the agreement to sell involves an interest less than an estate in fee
simple, the same should have been registered by filing it with the Register of Deeds who, in turn, makes a brief memorandum thereof
upon the original and owners duplicate certificate of title. The reason for requiring the production of the owners duplicate certificate
in the registration of a voluntary instrument is that, being a willful act of the registered owner, it is to be presumed that he is interested
in registering the instrument and would willingly surrender, present or produce his duplicate certificate of title to the Register of Deeds
in order to accomplish such registration. However, where the owner refuses to surrender the duplicate certificate for the annotation of
the voluntary instrument, the grantee may file with the Register of Deeds a statement setting forth his adverse claim, as provided for in
Section 110 of Act No. 496. xxx95 (Underscoring supplied)

In Valley Golf Club, Inc. v. Salas,96 where a Deed of Absolute Sale covering a parcel of land was executed prior to the annotation of a
notice of lis pendens by the original owner thereof but which Deed was registered after such annotation, this Court held:

The advance payment of P15,000.00 by the CLUB on October 18, 1960 to ROMERO, and the additional payment by the CLUB of
P54,887.50 as full payment of the purchase price on October 26, 1960, also to ROMERO, cannot be held to be the dates of sale such
as to precede the annotation of the adverse claim by the SISTERS on October 25, 1960 and the lis pendens on October 27, 1960. It is
basic that it is the act of registration of the sale that is the operative act to convey and affect the land. That registration was not effected
by the CLUB until December 4, 1963, or three (3) years after it had made full payment to ROMERO. xxx

xxx

As matters stand, therefore, in view of the prior annotations of the adverse claim and lis pendens, the CLUB must be legally held to
have been aware of the flaws in the title. By virtue of the lis pendens, its acquisition of the property was subject to whatever judgment
was to be rendered in Civil Case No. 6365. xxx The CLUBs cause of action lies, not against the SISTERS, to whom the property had
been adjudged by final judgment in Civil Case No. 6365, but against ROMERO who was found to have had no right to dispose of the
land.97 (Underscoring supplied)

PLDT further argues that El Dorados prior, actual knowledge of the July 11, 1975 Agreement to Buy and Sell is equivalent to prior
registration not affected by the Notice of Lis Pendens. As such, it concludes that it was not a purchaser pendente lite nor a purchaser in
bad faith.

PLDT anchors its argument on the testimony of Lauro and El Dorados counsel Atty. Aquino from which it infers that Atty. Aquino
filed the complaint for rescission and caused the notice of lis pendens to be annotated on Carrascosos title only after reading
newspaper reports on the sale to PLDT of the 1,000 hectare portion of the property.

The pertinent portions of Atty. Aquinos testimony are reproduced hereunder:

Q: Do you know, Atty. Aquino, what you did after the filing of the complaint in the instant case of Dr. Carrascoso?
A: Yes, I asked my associates to go to Mamburao and had the notice of Lis Pendens covering the property as a result of the filing of
the instant complaint.

Q: Do you know the notice of Lis Pendens?

A: Yes, it is evidenced by a [Transfer] Certificate Copy of Title of Dr. Carrascoso entitled "Notice of Lis Pendens".

Q: As a consequence of the filing of the complaint which was annotated, you have known that?

A: Yes.

xxx

Q: After the annotation of the notice of Lis Pendens, do you know, if any further transaction was held on the property?

A: As we have read in the newspaper, that Dr. Carrascoso had sold the property in favor of the PLDT, Co.

Q: And what did you do?

A: We verified the portion of the property having recorded under entry No. 24770 xxx and we also discovered that the articles
incorporated (sic) and other corporate matters had been organized and established of the PLDT, Co., and had been annotated.

xxx

Q: Do you know what happened to the property?

A: It was sold by the PLDT to its sub-PLDT Agitating (sic) Co. when at that time there was already notice of Lis Pendens.

xxx

Q: In your testimony, you mentioned that you had come cross- (sic) reading the sale of the subject litigation (sic) between Dr.
Fernando Carrascoso, the defendant herein and the PLDT, one of defendants-intervenor, may I say when?

A: I cannot remember now, but it was in the newspaper where it was informed or mentioned of the sold property to PLDT.

xxx

Q: Will you tell to the Honorable Court what newspaper was that?

A: Well, I cannot remember what is that newspaper. That is only a means of [confirming] the transaction. What was [confirmed] to us
is whether there was really transaction (sic) and we found out that there was in the Register of Deeds and that was the reason why we
obtained the case.

Q: Well, may I say, is there any reason, the answer is immaterial. The question is as regard the matter of time when counsel is being
able (sic) to read the newspaper allegedly (interrupted)

xxx

Q: The idea of the question, your Honor, is to establish and ask further the notice of [lis pendens] with regards (sic) to the transfer of
property to PLDT, would have been accorded prior to the pendency of the case.

xxx

A: I cannot remember.98

PLDT also relies on the following testimony of Carrascoso:

Q: You mentioned Doctor a while ago that you mentioned to the late Governor Feliciano Leviste regarding your transaction with the
PLDT in relation to the subject property you allegedly mention (sic) your intention to sell with the PLDT?

A: It was Dr. Jose Leviste and Dr. Angel Leviste that was constantly in touched (sic) with me with respect to my transaction with the
PLDT, sir.

Q: Any other officer of the corporation who knows with instruction aside from Dr. Angel Leviste and Dr. Jose Leviste?

A: Yes, sir. It was Trinidad Andaya Leviste and Assemblyman Expedito Leviste.

xxx

Q: What is the position of Mrs. Trinidad Andaya Leviste with the plaintiff-corporation?

A: One of the stockholders and director of the plaintiff-corporation, sir.

Q: Will you please tell us the other officers?

A: Expedito Leviste, sir.

A: Will you tell the position of Expedito Leviste?

A: He was the corporate secretary, sir.

Q: If you know, was Dr. Jose Leviste also a director at that time?
A: Yes, sir.99

On the other hand, El Dorado asserts that it had no knowledge of the July 11, 1975 Agreement to Buy and Sell prior to the filing of the
complaint for rescission against Carrascoso and the annotation of the notice of lis pendens on his title. It further asserts that it always
acted in good faith:

xxx The contract to sell between the Petitioner [Carrascoso] and PLDT was executed in July 11, 1975. There is no evidence that El
Dorado was notified of this contract. The property is located in Mindoro, El Dorado is based in Manila. The land was planted to rice.
This was not an unusual activity on the land, thus it could have been the Petitioner who was using the land. Not having been notified
of this sale, El Dorado could not have stopped PLDT from developing the land.

The absolute sale of the land to PLDT took place on April 6, 1977, or AFTER the filing of this case on March 15, 1977 and the
annotation of a notice of lis pendens on March 16, 1977. Inspite of the notice of lis pendens, PLDT then PLDTAC persisted not only
in buying the land but also in putting up improvements on the property such as buildings, roads, irrigation systems and drainage. This
was done during the pendency of this case, where PLDT and PLDTAC actively participated as intervenors. They were not innocent
bystanders. xxx100

This Court finds the above-quoted testimony of Atty. Aquino to be susceptible of conflicting interpretations. As such, it cannot be the
basis for inferring that El Dorado knew of the July 11, 1975 Agreement to Buy and Sell prior to the annotation of the notice of lis
pendens on Carrascosos title.

Respecting Carrascosos allegation that some of the directors and officers of El Dorado had knowledge of his dealings with PLDT, it
is true that knowledge of facts acquired or possessed by an officer or agent of a corporation in the course of his employment, and in
relation to matters within the scope of his authority, is notice to the corporation, whether he communicates such knowledge or
not.101 In the case at bar, however, apart from Carrascosos claim that he in fact notified several of the directors about his intention to
sell the 1,000 hectare portion of the property to PLDT, no evidence was presented to substantiate his claim. Such self-serving,
uncorroborated assertion is indubitably inadequate to prove that El Dorado had notice of the July 11, 1975 Agreement to Buy and Sell
before the annotation of the notice of lis pendens on his title.

PLDT is, of course, not without recourse. As held by the CA:

Between Carrascoso and PLDT/PLDTAC, the former acted in bad faith while the latter acted in good faith. This is so because it was
Carrascosos refusal to pay his just debt to El Dorado that caused PLDT/PLDTAC to suffer pecuniary losses. Therefore, Carrascoso
should return to PLDT/PLDTAC the P3,000,000.00 price of the farm plus legal interest from receipt thereof until
paid.102 (Underscoring supplied)

The appellate courts decision ordering the rescission of the March 23, 1972 Deed of Sale of Real Property between El Dorado and
Carrascoso being in order, mutual restitution follows to put back the parties to their original situation prior to the consummation of the
contract.

The exercise of the power to rescind extinguishes the obligatory relation as if it had never been created, the extinction having a
retroactive effect. The rescission is equivalent to invalidating and unmaking the juridical tie, leaving things in their status before the
celebration of the contract.

Where a contract is rescinded, it is the duty of the court to require both parties to surrender that which they have respectively received
and to place each other as far as practicable in his original situation, the rescission has the effect of abrogating the contract in all
parts.103 (Underscoring supplied)

The April 6, 1977 and May 30, 1977 Deeds of Absolute Sale being subject to the notice of lis pendens, and as the Court affirms the
declaration by the appellate court of the rescission of the Deed of Sale executed by El Dorado in favor of Carrascoso, possession of the
1,000 hectare portion of the property should be turned over by PLDT to El Dorado.

As regards the improvements introduced by PLDT on the 1,000 hectare portion of the property, a distinction should be made between
those which it built prior to the annotation of the notice of lis pendens and those which it introduced subsequent thereto.

When a person builds in good faith on the land of another, Article 448 of the Civil Code governs:

Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as
his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who
built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged
to buy the land if its value is considerably more than that of the building or trees. In such a case, he shall pay reasonable rent, if the
owner of the land does not choose to appropriate the building or trees after the proper indemnity. The parties shall agree upon the
terms of the lease and in case of disagreement, the court shall fix the terms thereof.

The above provision covers cases in which the builders, sowers or planters believe themselves to be owners of the land or, at least, to
have a claim of title thereto.104 Good faith is thus identified by the belief that the land is owned; or that by some title one has the right
to build, plant, or sow thereon. 105

The owner of the land on which anything has been built, sown or planted in good faith shall have the right to appropriate as his own
the building, planting or sowing, after payment to the builder, planter or sower of the necessary and useful expenses, 106 and in the
proper case, expenses for pure luxury or mere pleasure. 107

The owner of the land may also oblige the builder, planter or sower to purchase and pay the price of the land.
If the owner chooses to sell his land, the builder, planter or sower must purchase the land, otherwise the owner may remove the
improvements thereon. The builder, planter or sower, however, is not obliged to purchase the land if its value is considerably more
than the building, planting or sowing. In such case, the builder, planter or sower must pay rent to the owner of the land.

If the parties cannot come to terms over the conditions of the lease, the court must fix the terms thereof.

The right to choose between appropriating the improvement or selling the land on which the improvement of the builder, planter or
sower stands, is given to the owner of the land.108

On the other hand, when a person builds in bad faith on the land of another, Articles 449 and 450 govern:

Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to
indemnity.

Art. 450. The owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the
work, or that the planting or sowing be removed, in order to replace things in their former condition at the expense of the person who
built, planted or sowed; or he may compel the builder or planter to pay the price of the land, and the sower the proper rent.

In the case at bar, it is undisputed that PLDT commenced construction of improvements on the 1,000 hectare portion of the property
immediately after the execution of the July 11, 1975 Agreement to Buy and Sell with the full consent of Carrascoso. 109 Thus, until
March 15, 1977 when the Notice of Lis Pendens was annotated on Carrascosos TCT No. T-6055, PLDT is deemed to have been in
good faith in introducing improvements on the 1,000 hectare portion of the property.

After March 15, 1977, however, PLDT could no longer invoke the rights of a builder in good faith.

Should El Dorado then opt to appropriate the improvements made by PLDT on the 1,000 hectare portion of the property, it should
only be made to pay for those improvements at the time good faith existed on the part of PLDT or until March 15, 1977,110 to be
pegged at its current fair market value.111

The commencement of PLDTs payment of reasonable rent should start on March 15, 1977 as well, to be paid until such time that the
possession of the 1,000 hectare portion is delivered to El Dorado, subject to the reimbursement of expenses as aforestated, that is, if El
Dorado opts to appropriate the improvements. 112

If El Dorado opts for compulsory sale, however, the payment of rent should continue up to the actual transfer of ownership.113

WHEREFORE, the petitions are DENIED. The Decision dated January 13, 1996 and Resolution dated July 8, 2004 of the Court of
Appeals are AFFIRMED with MODIFICATION in that

1) the Regional Trial Court of San Jose, Occidental Mindoro, Branch 45 is further directed to:

a. determine the present fair price of the 1,000 hectare portion of the property and the amount of the expenses actually spent by PLDT
for the improvements thereon as of March 15, 1977;

b. include for determination the increase in value ("plus value") which the 1,000 hectare portion may have acquired by reason of the
existence of the improvements built by PLDT before March 15, 1977 and the current fair market value of said improvements;

2. El Dorado is ordered to exercise its option under the law, whether to appropriate the improvements, or to oblige PLDT to pay the
price of the land, and

3) PLDT shall pay El Dorado the amount of Two Thousand Pesos (2,000.00) per month as reasonable compensation for its
occupancy of the 1,000 hectare portion of the property from the time that its good faith ceased to exist until such time that possession
of the same is delivered to El Dorado, subject to the reimbursement of the aforesaid expenses in favor of PLDT or until such time that
the payment of the purchase price of the 1,000 hectare portion is made by PLDT in favor of El Dorado in case the latter opts for its
compulsory sale.

Costs against petitioners.

SO ORDERED.

G.R. No. 142406 May 16, 2005

SPOUSES CONRADO and MA. CORONA ROMERO, petitioners,

vs.
COURT OF APPEALS and SATURNINO S. ORDEN, respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for certiorari filed under Rule 65 of the Rules of Court, seeking the nullification of the Decision 1 promulgated
by the Court of Appeals (CA) on September 30, 1999 in CA-G.R. Sp. No. 49608 and the Resolution2 promulgated on January 26,
2000, denying the motion for reconsideration.

The facts are as follows:

On April 23, 1996, petitioner Ma. Corona Romero and her siblings executed a letter-contract to sell with private respondent Saturnino
Orden. In said contract, private respondent proposed to purchase from Romero and her siblings a property located at Denver cor. New
York Sts., Cubao, Quezon City, covered by Transfer Certificate of Title (TCT) No. 145269, for the total amount of P17M. The
contract stipulated that private respondent shall pay petitioner the amount of P7M upon the execution of the deed of absolute sale, the
balance of P10M not later than December 19, 1996 and that private respondent shall shoulder the expenses to evict the squatters on the
property.3

When private respondent failed to pay the down payment, petitioner Corona told him that she was rescinding the contract to
sell.4 Private respondent then filed a complaint for specific performance and damages against petitioners before the Regional Trial
Court (RTC) of Quezon City, docketed as Civil Case No. Q-97-31114 alleging that he has complied with his obligation to evict the
squatters on the property and is entitled to demand from petitioners the performance of their obligation under the contract. 5

Simultaneous with the filing of the complaint, private respondent caused the annotation of a notice of lis pendens on TCT No.
145269.6

On August 11, 1997, Manuel Y. Limsico, Jr. and Aloysius R. Santos, subsequent buyers of the subject property sold by petitioner
Corona and her siblings, filed a motion for leave to intervene with the RTC and were admitted as defendants-intervenors. They filed a
motion for the cancellation of lis pendens which the RTC granted in its Resolution dated November 26, 1997. The RTC reasoned that:

In the instant case, the evidence so far presented by the plaintiff do[es] not bear out the main allegations in the complaint. While the
filing of the notice may not have been for the purpose of molesting the defendants and the defendants-in-intervenors, still the
inscription is not necessary to protect the alleged right of the plaintiff over the subject property. The plaintiff is not entitled to the
inscription of the notice on TCT No. 145269 in the name of the defendants and others because he does not have any actionable right
over the subject property there being no deed of sale executed between him and the defendants over the subject real properties as
offered in the alleged agreement dated April 23, 1996. The alleged agreement dated April 23, 1996 although with the conformity of
Maria Corona S. Romero cannot serve as sufficient basis for the inscription of the notice on TCT No. 145269. Therefore said notice
should be cancelled.7

The motion for reconsideration filed by private respondent was denied by the RTC in its Resolution dated August 28, 1998. 8

On November 16, 1998, private respondent filed a petition for certiorari before the CA seeking the nullification of the resolutions of
the RTC and asked for the re-annotation of the notice of lis pendens on the TCT.9 The CA granted the petition in its Decision dated
September 30, 1999, portions of which read:

First, the general rule is that a notice of lis pendens cannot be cancelled while the action is pending and undetermined except in cases
expressly provided by statute.

Section 77, P.D. 1529 (Property Registration Decree) provides:

SEC. 77. Cancellation of lis pendens. Before final judgment, a notice of lis pendens may be cancelled upon order of the court, after
proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the
party who caused it to be registered. It may also be cancelled by the Register of Deeds upon verified petition of the party who caused
the registration thereof.

At any time after final judgment in favor of the defendant, or other disposition of the action such as to terminate finally all rights of the
plaintiff in and to the land and/or buildings involved, in any case in which a memorandum or notice of lis pendens has been registered
as provided in the preceding section, the notice of lis pendens shall be deemed cancelled upon the registration of certificate of the clerk
of court in which the action or proceeding was pending stating the manner of disposal thereof.

In the instant case, there was not even a hearing upon which could be predicated a "proper showing" that any of the grounds provided
by law exists. The cited case of Victoriano presupposes that there must be a hearing where the evidence of the party who sought the
annotation of the notice of lis pendens must be considered.

Second, as shown in the above cited provisions, there are only two grounds for the court to order the cancellation of a notice
of lis pendens during the pendency of an action, and they are: (1) if the annotation was for the purpose of molesting the title of the
adverse party, or (2) when the annotation is not necessary to protect the title of the party who caused it to be recorded. While the
parties are locked up in legal battle and until it becomes convincingly shown that either of the two grounds exists, the court should not
allow the cancellation.

Third, the Doctrine of Lis Pendens is founded upon reasons of public policy and necessity, the purpose of which is to keep the
properties in litigation within the power of the court until the litigation is terminated, and to prevent the defeat of the judgment or
decree by subsequent alienation. This purpose would be rendered meaningless if the private respondents are allowed to file a bond
regardless of the amount, in substitution of said notice. Moreover, the law does not authorize a judge to cancel a notice
of lis pendens pending litigation, upon the mere filing of a sufficient bond by the party on whose title said notice is annotated.

In the case at bench, the judgment is even defective, in that the same does not specify who among the private respondents whether
the defendants-vendors or intervenors-vendeesshould file a bond.

Fourth, if there was indeed an agreement to sell between the petitioner and the private respondents-owners (which question of fact is
not for this court to determine in this petition), then the said parties are bound by the provisions of Article 1475 of the Civil Code, to
wit:

ART. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the
contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of
contract.

As a matter of fact, there would have been no need for a notarial rescission if there was no actionable contract at all.
Without ruling on the merits of the case below, we are constrained to remind the public respondent that when a case is commenced
involving any right to land registered under the Land Registration Law, any decision therein will bind the parties only, unless a notice
of the pendency of such action is registered on the title of said land, in order to bind the whole world as well. Therefore, in order that a
notice of lis pendens may affect the right of a subsequent purchaser, such notice should be annotated on the back of the certificate of
title.

In any case, a notation of lis pendens does not create a non-existent right or lien. It serves merely as a warning to a person who
purchases or contracts on the subject property that he does so at his peril and subject to the result of the pending litigation. It is not
even required that the applying party must prove his right or interest over the property sought to be annotated.

Thus, it was legally erroneous for the respondent court to order the cancellation of the notice.

Finally, when a judge improperly orders the cancellation of a notice of lis pendens, he is said to have acted with grave abuse of
discretion, as held in the case of Sarmiento vs. Ortiz.

WHEREFORE, the petition is GRANTED. The challenged resolutions of the public respondent dated 26 November 1997 and 28
August 1998 are SET ASIDE for being NULL AND VOID. The public respondent is directed to issue an order for the Register of
Deeds to restore the annotation of the notice of lis pendens upon the affected title.10 (Citations omitted)

The motion for reconsideration filed by petitioners was denied on January 26, 2000. 11 Hence the present petition alleging that:

THE COURT OF APPEALS GRAVELY ERRED IN ORDERING THE REANNOTATION OF THE NOTICE
OF LIS PENDENS ON THE SUBJECT TITLE DESPITE THE FACT THAT THE COMPLAINT FILED BY THE PRIVATE
RESPONENT AFFECTED NEITHER THE TITLE TO NOR THE POSSESSION OF THE SUBJECT PROPERTY. 12

Petitioners contend that: the notice of lis pendens is not necessary in this case since the complaint does not pray for an express award
of ownership or possession; what is involved in this case is a contract to sell and not a contract of sale, thus, no title has passed to
private respondent yet which needs to be protected by a notice of lis pendens; by ordering the re-annotation of the notice of lis
pendens, when private respondent did not even assert a claim of possession or title over the subject property, the CA went against the
doctrine in Villanueva vs. Court of Appeals,13where this Court held that the applicant must, in the complaint or answer filed in the
subject litigation, assert a claim of possession or title over the subject property in order to give due course to his application; the CA,
in concluding that there was no hearing before the annotation was cancelled, overlooked the fact that the motion for cancellation was
set for hearing on November 12, 1997, that private respondent was duly notified but failed to appear, and that he was able to file his
opposition to the motion to cancel lis pendens which the RTC considered before promulgating its Resolution dated November 26,
1997.14

Private respondent, on the other hand, contends that: the court a quo cancelled the notice of lis pendens even before it has been
apprised of all the relevant facts of the case; the CA was correct in ruling that while the parties are locked in legal battle and until it
becomes manifest that the grounds set forth in Sec. 77, P.D. No. 1529 exist, the trial court should not allow the cancellation of the lis
pendens; the RTC ruling in this case is proscribed by the case of Tan vs. Lantin15 which held that the law does not authorize a judge to
cancel lis pendens pending litigation, upon the mere filing of a bond; the danger sought to be prevented by the Tan ruling, i.e., the
defeat of the judgment or decree by subsequent alienation, already happened in this case because the subject property was sold on July
28, 1999 by petitioners to Mueller Trading Corporation; 16 said sale was made with evident bad faith by petitioners because they had
full knowledge of the pendency of private respondents petition for certiorari before the CA; and the sale of the property in favor of
private respondent verily affects the title to or possession of the real properties making it the subject of the law of lis pendens.17

In their Reply, petitioners reiterate their arguments and cited AFP Mutual Benefit Association, Inc. vs. Court of Appeals 18 where it was
held that a notice of lis pendens may be annotated only where there is an action or proceeding in court which affects title to or
possession of real property. They further maintain that the requirement of prior hearing was sufficiently complied with in this case and
petitioners did not act in bad faith when she sold the subject property pending the outcome of this case since there was no outstanding
injunction or restraining order which would have prevented her from doing so. 19

Clearly, the only issue that needs to be addressed in the present petition is whether or not the CA committed grave abuse of discretion
in ordering the re-annotation of the lis pendens.

We rule in the negative.

Lis pendens, which literally means pending suit, refers to the jurisdiction, power or control which a court acquires over property
involved in a suit, pending the continuance of the action, and until final judgment. 20 Founded upon public policy and necessity, lis
pendens is intended to keep the properties in litigation within the power of the court until the litigation is terminated, and to prevent
the defeat of the judgment or decree by subsequent alienation. 21 Its notice is an announcement to the whole world that a particular
property is in litigation and serves as a warning that one who acquires an interest over said property does so at his own risk or that he
gambles on the result of the litigation over said property. 22

The filing of a notice of lis pendens has a two-fold effect: (1) to keep the subject matter of the litigation within the power of the court
until the entry of the final judgment to prevent the defeat of the final judgment by successive alienations; and (2) to bind a
purchaser, bona fide or not, of the land subject of the litigation to the judgment or decree that the court will promulgate subsequently. 23

While the trial court has inherent power to cancel a notice of lis pendens, such power, meanwhile, is exercised under express
provisions of law.24 As provided for by Sec. 14, Rule 13 of the 1997 Rules of Civil Procedure, a notice of lis pendens may be
cancelled on two grounds: (1) if the annotation was for the purpose of molesting the title of the adverse party, or (2) when the
annotation is not necessary to protect the title of the party who caused it to be recorded. 25

In Magdalena Homeowners Association, Inc. vs. Court of Appeals,26 we held that a notice of lis pendens is appropriate in the
following:
(a) an action to recover possession of real estate;

(b) an action to quiet title thereto;

(c) an action to remove clouds thereon;

(d) an action for partition; and

(e) any other proceedings of any kind in Court directly affecting the title to the land or the use or occupation thereof or the
buildings thereon.27 (Emphasis supplied)

In Atlantic Erectors, Inc. vs. Herbal Cove Realty Corp.,28 we further held that resorting to lis pendens is not necessarily confined to
cases that involve title to or possession of real property but also applies to suits seeking to establish a right to, or an equitable estate or
interest in, a specific real property; or to enforce a lien, a charge or an encumbrance against it. We clarified however that the doctrine
of lis pendens has no application to a proceeding in which the only object sought is the recovery of a money judgment, though the title
or right of possession to property be incidentally affected. It is essential that the property be directly affected such as when the relief
sought in the action or suit includes the recovery of possession, or the enforcement of a lien, or an adjudication between conflicting
claims of title, possession, or the right of possession to specific property, or requiring its transfer or sale. Even if a party initially avails
of a notice of lis pendens upon the filing of a case in court, such notice is rendered nugatory if the case turns out to be a purely
personal action. In such event, the notice of lis pendens becomes functus officio.29

To put the property under the coverage of the rule on lis pendens, all a party has to do is to assert a claim of possession or title over the
subject property. It is not necessary that ownership or interest over the property is proved. 30

We disagree with petitioners claim that lis pendens is not proper since private respondent has no title over the property neither did he
pray specifically in his complaint for the ownership or possession thereof.

The complaint for specific performance and damages filed by private respondent specifically prayed that petitioners, as defendants
thereat, be bound by the terms and conditions of their letter-contract. By praying thus, private respondent in effect asks the court to
order petitioners to fulfill their promise to sell the property covered by TCT No. 145269 for the amount of P17M.31 While private
respondent did not explicitly state that he was running after the ownership of the property, a simple reading of the complaint would
show that such was his intent. This is sufficient for purposes of annotating lis pendens.

Whether or not the claim of private respondent has merit is of no moment and should not affect the annotation of lis pendens on the
title of the subject property. There is nothing in the rules which requires a party seeking annotation of lis pendens to show that the land
belongs to him. There is no requirement that the party applying for the annotation must prove his right or interest over the property
sought to be annotated. Thus, we have held that even on the basis of an unregistered deed of sale, a notice of lis pendens may be
annotated on the title. Said annotation cannot be considered as a collateral attack against the certificate of title based on the principle
that the registration of a notice of lis pendens does not produce a legal effect similar to a lien.32 The rules merely require that an
affirmative relief be claimed since a notation of lis pendens neither affects the merits of a case nor creates a right or a lien. It only
protects the applicants rights which will be determined during trial. 33

In fine, petitioners failed to show that the CA committed grave abuse of discretion in ordering the re-annotation of the notice of lis
pendens.

WHEREFORE, the petition for certiorari is DISMISSED for lack of merit.

Costs against petitioners.

SO ORDERED.

G.R. No. 165273 March 10, 2010

LEAH PALMA, Petitioner,

vs.
HON. DANILO P. GALVEZ, in his capacity as PRESIDING JUDGE of the REGIONAL TRIAL COURT OF ILOILO CITY,
BRANCH 24; and PSYCHE ELENA AGUDO, Respondents.

DECISION

PERALTA, J.:

Assailed in this petition for certiorari under Rule 65 of the Rules of Court are the Orders dated May 7, 2004 1 and July 21, 20042 of the
Regional Trial Court (RTC) of Iloilo City, Branch 24, granting the motion to dismiss filed by private respondent Psyche Elena Agudo
and denying reconsideration thereof, respectively.

On July 28, 2003, petitioner Leah Palma filed with the RTC an action for damages against the Philippine Heart Center (PHC), Dr.
Danilo Giron and Dr. Bernadette O. Cruz, alleging that the defendants committed professional fault, negligence and omission for
having removed her right ovary against her will, and losing the same and the tissues extracted from her during the surgery; and that
although the specimens were subsequently found, petitioner was doubtful and uncertain that the same was hers as the label therein
pertained that of somebody else. Defendants filed their respective Answers. Petitioner subsequently filed a Motion for Leave to Admit
Amended Complaint, praying for the inclusion of additional defendants who were all nurses at the PHC, namely, Karla Reyes, Myra
Mangaser and herein private respondent Agudo. Thus, summons were subsequently issued to them.
On February 17, 2004, the RTC's process server submitted his return of summons stating that the alias summons, together with a copy
of the amended complaint and its annexes, were served upon private respondent thru her husband Alfredo Agudo, who received and
signed the same as private respondent was out of the country.3

On March 1, 2004, counsel of private respondent filed a Notice of Appearance and a Motion for Extension of Time to File
Answer4 stating that he was just engaged by private respondent's husband as she was out of the country and the Answer was already
due.

On March 15, 2004, private respondent's counsel filed a Motion for Another Extension of Time to File Answer, 5 and stating that while
the draft answer was already finished, the same would be sent to private respondent for her clarification/verification before the
Philippine Consulate in Ireland; thus, the counsel prayed for another 20 days to file the Answer.

On March 30, 2004, private respondent filed a Motion to Dismiss 6 on the ground that the RTC had not acquired jurisdiction over her
as she was not properly served with summons, since she was temporarily out of the country; that service of summons on her should
conform to Section 16, Rule 14 of the Rules of Court. Petitioner filed her Opposition 7 to the motion to dismiss, arguing that a
substituted service of summons on private respondent's husband was valid and binding on her; that service of summons under Section
16, Rule 14 was not exclusive and may be effected by other modes of service, i.e., by personal or substituted service. Private
respondent filed a Comment8 on petitioner's Opposition, and petitioner filed a Reply9 thereto.

On May 7, 2004, the RTC issued its assailed Order granting private respondent's motion to dismiss. It found that while the summons
was served at private respondent's house and received by respondent's husband, such service did not qualify as a valid service of
summons on her as she was out of the country at the time the summons was served, thus, she was not personally served a summons;
and even granting that she knew that a complaint was filed against her, nevertheless, the court did not acquire jurisdiction over her
person as she was not validly served with summons; that substituted service could not be resorted to since it was established that
private respondent was out of the country, thus, Section 16, Rule 14 provides for the service of summons on her by publication.

Petitioner filed a motion for reconsideration, which the RTC denied in its Order dated July 21, 2004.

Petitioner is now before us alleging that the public respondent committed a grave abuse of discretion amounting to lack or excess of
jurisdiction when he ruled that:

I. Substituted service of summons upon private respondent, a defendant residing in the Philippines but temporarily outside the country
is invalid;

II. Section 16, Rule 14, of the 1997 Rules of Civil Procedure limits the mode of service of summons upon a defendant residing in the
Philippines, but temporarily outside the country, exclusively to extraterritorial service of summons under section 15 of the same rule;

III. In not ruling that by filing two (2) motions for extension of time to file Answer, private respondent had voluntarily submitted
herself to the jurisdiction of respondent court, pursuant to Section 20, Rule 14 of the 1997 Rules of Civil Procedure, hence, equivalent
to having been served with summons;

IV. The cases cited in his challenged Order of May 7, 2004 constitute stare decisis despite his own admission that the factual
landscape in those decided cases are entirely different from those in this case. 10

Petitioner claims that the RTC committed a grave abuse of discretion in ruling that Section 16, Rule 14, limits the service of summons
upon the defendant-resident who is temporarily out of the country exclusively by means of extraterritorial service, i.e., by personal
service or by publication, pursuant to Section 15 of the same Rule. Petitioner further argues that in filing two motions for extension of
time to file answer, private respondent voluntarily submitted to the jurisdiction of the court.

In her Comment, private respondent claims that petitioner's certiorari under Rule 65 is not the proper remedy but a petition for review
under Rule 45, since the RTC ruling cannot be considered as having been issued with grave abuse of discretion; that the petition was
not properly verified because while the verification was dated September 15, 2004, the petition was dated September 30, 2004. She
insists that since she was out of the country at the time the service of summons was made, such service should be governed by Section
16, in relation to Section 15, Rule 14 of the Rules of Court; that there was no voluntary appearance on her part when her counsel filed
two motions for extension of time to file answer, since she filed her motion to dismiss on the ground of lack of jurisdiction within the
period provided under Section 1, Rule 16 of the Rules of Court.

In her Reply, petitioner claims that the draft of the petition and the verification and certification against forum shopping were sent to
her for her signature earlier than the date of the finalized petition, since the petition could not be filed without her signed verification.
Petitioner avers that when private respondent filed her two motions for extension of time to file answer, no special appearance was
made to challenge the validity of the service of summons on her.

The parties subsequently filed their respective memoranda as required.

We shall first resolve the procedural issues raised by private respondent.

Private respondent's claim that the petition for certiorari under Rule 65 is a wrong remedy thus the petition should be dismissed, is not
persuasive. A petition for certiorari is proper when any tribunal, board or officer exercising judicial or quasi-judicial functions has
acted without or in excess of 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 at law. 11 There is "grave abuse of discretion" when public respondent acts in a
capricious or whimsical manner in the exercise of its judgment as to be equivalent to lack of jurisdiction.

Section 1, Rule 41 of the 1997 Rules of Civil Procedure states that an appeal may be taken only from a final order that completely
disposes of the case; that no appeal may be taken from (a) an order denying a motion for new trial or reconsideration; (b) an order
denying a petition for relief or any similar motion seeking relief from judgment; (c) an interlocutory order; (d) an order disallowing or
dismissing an appeal; (e) an order denying a motion to set aside a judgment by consent, confession or compromise on the ground of
fraud, mistake or duress, or any other ground vitiating consent; (f) an order of execution; (g) a judgment or final order for or against
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; or (h) an order dismissing an action without prejudice. In all the above instances
where the judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action for certiorari under
Rule 65.

In this case, the RTC Order granting the motion to dismiss filed by private respondent is a final order because it terminates the
proceedings against her, but it falls within exception (g) of the Rule since the case involves several defendants, and the complaint for
damages against these defendants is still pending.12 Since there is no appeal, or any plain, speedy, and adequate remedy in law, the
remedy of a special civil action for certiorari is proper as there is a need to promptly relieve the aggrieved party from the injurious
effects of the acts of an inferior court or tribunal. 13

Anent private respondent's allegation that the petition was not properly verified, we find the same to be devoid of merit. The purpose
of requiring a verification is to secure an assurance that the allegations of the petition have been made in good faith, or are true and
correct, not merely speculative.14 In this instance, petitioner attached a verification to her petition although dated earlier than the filing
of her petition. Petitioner explains that since a draft of the petition and the verification were earlier sent to her in New York for her
signature, the verification was earlier dated than the petition for certiorari filed with us. We accept such explanation. While Section 1,
Rule 65 requires that the petition for certiorari be verified, this is not an absolute necessity where the material facts alleged are a
matter of record and the questions raised are mainly of law. 15 In this case, the issue raised is purely of law.

Now on the merits, the issue for resolution is whether there was a valid service of summons on private respondent.

In civil cases, the trial court acquires jurisdiction over the person of the defendant either by the service of summons or by the latters
voluntary appearance and submission to the authority of the former. 16 Private respondent was a Filipino resident who was temporarily
out of the Philippines at the time of the service of summons; thus, service of summons on her is governed by Section 16, Rule 14 of
the Rules of Court, which provides:

Sec. 16. Residents temporarily out of the Philippines. When an action is commenced against a defendant who ordinarily resides
within the Philippines, but who is temporarily out of it, service may, by leave of court, be alsoeffected out of the Philippines, as under
the preceding section. (Emphasis supplied)

The preceding section referred to in the above provision is Section 15, which speaks of extraterritorial service, thus:

SEC. 15. Extraterritorial service. When the defendant does not reside and is not found in the Philippines, and the action affects the
personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which the defendant has or
claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant
from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by leave of court, be
effected out of the Philippines by personal service as under section 6; or by publication in a newspaper of general circulation in such
places and for such time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered
mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any order granting such leave
shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within which the defendant must answer.

The RTC found that since private respondent was abroad at the time of the service of summons, she was a resident who was
temporarily out of the country; thus, service of summons may be made only by publication.

We do not agree.

In Montefalcon v. Vasquez,17 we said that because Section 16 of Rule 14 uses the words "may" and "also," it is not mandatory. Other
methods of service of summons allowed under the Rules may also be availed of by the serving officer on a defendant-resident who is
temporarily out of the Philippines. Thus, if a resident defendant is temporarily out of the country, any of the following modes of
service may be resorted to: (1) substituted service set forth in section 7 ( formerly Section 8), Rule 14; (2) personal service outside the
country, with leave of court; (3) service by publication, also with leave of court; or (4) in any other manner the court may deem
sufficient.18

In Montalban v. Maximo,19 we held that substituted service of summons under the present Section 7, Rule 14 of the Rules of Court in
a suit in personam against residents of the Philippines temporarily absent therefrom is the normal method of service of summons that
will confer jurisdiction on the court over such defendant. In the same case, we expounded on the rationale in providing for substituted
service as the normal mode of service for residents temporarily out of the Philippines.

x x x A man temporarily absent from this country leaves a definite place of residence, a dwelling where he lives, a local base, so to
speak, to which any inquiry about him may be directed and where he is bound to return. Where one temporarily absents himself, he
leaves his affairs in the hands of one who may be reasonably expected to act in his place and stead; to do all that is necessary to protect
his interests; and to communicate with him from time to time any incident of importance that may affect him or his business or his
affairs. It is usual for such a man to leave at his home or with his business associates information as to where he may be contacted in
the event a question that affects him crops up. If he does not do what is expected of him, and a case comes up in court against him, he
cannot just raise his voice and say that he is not subject to the processes of our courts. He cannot stop a suit from being filed against
him upon a claim that he cannot be summoned at his dwelling house or residence or his office or regular place of business.

Not that he cannot be reached within a reasonable time to enable him to contest a suit against him. There are now advanced facilities
of communication. Long distance telephone calls and cablegrams make it easy for one he left behind to communicate with him. 20

Considering that private respondent was temporarily out of the country, the summons and complaint may be validly served on her
through substituted service under Section 7, Rule 14 of the Rules of Court which reads:
SEC. 7. Substituted service. If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the
preceding section, service may be effected (a) by leaving copies of the summons at the defendants residence with some person of
suitable age and discretion then residing therein, or (b) by leaving the copies at defendants office or regular place of business with
some competent person in charge thereof.

We have held that a dwelling, house or residence refers to the place where the person named in the summons is living at the time when
the service is made, even though he may be temporarily out of the country at the time.21 It is, thus, the service of the summons
intended for the defendant that must be left with the person of suitable age and discretion residing in the house of the defendant.
Compliance with the rules regarding the service of summons is as important as the issue of due process as that of
jurisdiction.221avvphi1

Section 7 also designates the persons with whom copies of the process may be left. The rule presupposes that such a relation of
confidence exists between the person with whom the copy is left and the defendant and, therefore, assumes that such person will
deliver the process to defendant or in some way give him notice thereof. 23

In this case, the Sheriff's Return stated that private respondent was out of the country; thus, the service of summons was made at her
residence with her husband, Alfredo P. Agudo, acknowledging receipt thereof. Alfredo was presumably of suitable age and discretion,
who was residing in that place and, therefore, was competent to receive the summons on private respondent's behalf.

Notably, private respondent makes no issue as to the fact that the place where the summons was served was her residence, though she
was temporarily out of the country at that time, and that Alfredo is her husband. In fact, in the notice of appearance and motion for
extension of time to file answer submitted by private respondent's counsel, he confirmed the Sheriff's Return by stating that private
respondent was out of the country and that his service was engaged by respondent's husband. In his motion for another extension of
time to file answer, private respondent's counsel stated that a draft of the answer had already been prepared, which would be submitted
to private respondent, who was in Ireland for her clarification and/or verification before the Philippine Consulate there. These
statements establish the fact that private respondent had knowledge of the case filed against her, and that her husband had told her
about the case as Alfredo even engaged the services of her counsel.

In addition, we agree with petitioner that the RTC had indeed acquired jurisdiction over the person of private respondent when the
latter's counsel entered his appearance on private respondent's behalf, without qualification and without questioning the propriety of
the service of summons, and even filed two Motions for Extension of Time to File Answer. In effect, private respondent, through
counsel, had already invoked the RTCs jurisdiction over her person by praying that the motions for extension of time to file answer
be granted. We have held that the filing of motions seeking affirmative relief, such as, to admit answer, for additional time to file
answer, for reconsideration of a default judgment, and to lift order of default with motion for reconsideration, are considered voluntary
submission to the jurisdiction of the court.24 When private respondent earlier invoked the jurisdiction of the RTC to secure affirmative
relief in her motions for additional time to file answer, she voluntarily submitted to the jurisdiction of the RTC and is thereby estopped
from asserting otherwise.25

Considering the foregoing, we find that the RTC committed a grave abuse of discretion amounting to excess of jurisdiction in issuing
its assailed Orders.

WHEREFORE, the petition is GRANTED. The Orders dated May 7, 2004 and July 21, 2004 of the Regional Trial Court of Iloilo
City, Branch 24, are hereby SET ASIDE. Private respondent is DIRECTED to file her Answer within the reglementary period from
receipt of this decision.

SO ORDERED.

G.R. No. 159699. March 16, 2005

ROSALINO P. ACANCE, in his capacity as Attorney-in-Fact, Administrator of property and as counsel of SPOUSES
JESULITO P. ACANCE and VILMA ACANCE, SPOUSES MANUEL P. ACANCE and GUIA ACANCE, and SPOUSES
NESTOR P. ACANCE and LYNNE ACANCE, Petitioners,
vs.
COURT OF APPEALS, SPOUSES YOLANDA QUIJANO TRIA and AMBROCIO TRIA, SPOUSES EPIFANIA QUIJANO
and RAPHAEL VILLANUEVA, and SPOUSES NAPOLEON PAGLICAWAN QUIJANO and PILAR Z. QUIJANO,
represented by their attorney-in-fact, ENGR. JULIUS VILLANUEVA, Respondents.

DECISION

CALLEJO, SR., J.:

Before the Court is a petition for review on certiorari seeking to reverse and set aside the Resolution1 dated November 29, 2002 of the
Court of Appeals (CA) in CA-G.R. SP No. 71658. In the said resolution, the appellate court dismissed the petition for certiorari filed
therewith for failure to file a motion for reconsideration with the court a quo. Likewise sought to be reversed is the appellate courts
Resolution dated August 27, 2003 denying the reconsideration of its earlier resolution.

The case stemmed from the following facts:

On May 23, 2001, Spouses Yolanda Quijano and Ambrocio Tria, Spouses Epifania Quijano and Raphael Villanueva, Spouses
Napoleon and Pilar Quijano (respondents herein), represented by their attorney-in-fact Engr. Julius F. Villanueva, filed with the
Regional Trial Court (RTC) of Muntinlupa an amended complaint against Spouses Jesulito and Vilma Acance, Spouses Nestor and
Lynne Acance, and Spouses Manuel and Guia Acance (petitioners herein). The case was docketed as Civil Case No. 01-122 and
raffled to Branch 276 of the RTC of Muntinlupa City.
The amended complaint sought to annul the Extra-Judicial Settlement of the Estate of Deceased Jesus P. Acance and Waiver of Rights
dated February 10, 1997, executed by Jesulito, Manuel and Nestor, all surnamed Acance, and their mother Angela. The estate covered
by the said extra-judicial settlement included two parcels of land with a total area of 1,044 square meters under Transfer Certificates of
Titles (TCT) Nos. 239998 and 242993 and the improvements thereon consisting of a 9-door apartment units, situated in Muntinlupa
City. Following the execution of the extra-judicial settlement, TCT Nos. 239998 and 242993, which were in the names of Jesus and
Angela Acance, were cancelled and, in their stead, TCT Nos. 4365 and 4366 were issued in the names of the Acance siblings.

The amended complaint alleged that the siblings Yolanda, Epifania and Napoleon were the legitimate children of Angela Paglicawan
and Vernier Quijano. The couple, however, became estranged after the birth of their youngest child. Upon their separation, Vernier
continued to reside in Looc, Occidental Mindoro while Angela went to Manila to work as a nurse at the National Mental Hospital in
Muntinlupa City. While working thereat, Angela met Jesus Acance. They lived together as common law husband and wife and bore
the siblings Jesulito, Manuel and Nestor.

Some time in 1966, Angela went to the United States to work as a nurse. With the savings she earned therefrom, she acquired the
subject parcels of land in Muntinlupa and had the subject 9-door apartment units constructed thereon. Jesus Acance lived with Angela
in the United States. After Vernier passed away in 1989, Jesus and Angela got married in 1990. Jesus died in 1996 in the United
States.

In seeking to nullify the extra-judicial settlement of estate executed by the Acance siblings and their TCT Nos. 4365 and 4366, the
Quijano siblings alleged that the subject real properties are conjugal properties of Angela and Vernier because these were acquired by
Angela during the subsistence of her first marriage with Vernier. As such, they (the Quijano siblings) have a valid right to succeed
over the said properties as the lawful and compulsory heirs of Angela and Vernier.

The Quijano siblings impugned the validity of the extra-judicial settlement claiming that the signature of Angela thereon was a forgery
or that she affixed the same without her free volition because at the time of its execution, she was already senile. In any case, Angelas
purported waiver of her rights over the subject properties in favor of her children with Jesus (Acance siblings) and excluding her
children with Vernier (Quijano siblings) is against the law. Consequently, TCT Nos. 4365 and 4366 of the Acance siblings are
allegedly also void as they emanated from the forged deed of extra-judicial settlement.

On April 26, 2002, upon motion of the respondents (the Quijano siblings and their spouses), as plaintiffs therein, the court a
quo issued an order declaring the petitioners (the Acance siblings and their spouses), as defendants therein, in default for their failure
to file an answer to the amended complaint.

On May 13, 2002, petitioner Rosalino Acance, as attorney-in-fact and administrator of the subject properties, filed with the court a
quo a Motion to Lift/Set Aside Order of Default. In his affidavit of merit attached to the said motion, petitioner Rosalino alleged that
the Acance siblings had appointed him as their private prosecutor in a criminal case involving the subject real properties. On January
25, 2002, upon learning about Civil Case No. 01-122, he filed therein a Motion to Represent Defendants and set the same for hearing
on February 5, 2002. On the said date, however, petitioner Rosalino found out that his motion was not included in the court calendar
for that day. Since there was no action on his motion, he had the impression that the court a quo needed time to determine other
jurisdictional requirements considering that the petitioners are American citizens and non-residents of the Philippines.

Petitioner Rosalino further alleged that he had not received a copy of the complaint filed in Civil Case No. 01-122. The only pleading
he received pertaining to the case was that of the motion to declare the petitioners in default and setting the hearing thereon on April
26, 2002. At the said hearing, the respondents motion was granted and the petitioners were declared in default.

The affidavit of merit likewise alleged that the petitioners have a valid and meritorious defense including that the subject real
properties were acquired by their parents, Jesus and Angela, with both their earnings during the period that they lived together. They
denied that these were paraphernal properties of Angela or conjugal properties of Angela and Vernier. The petitioners further claimed
that the extra-judicial settlement was duly executed by them and Angelas waiver of her rights over the subject properties in their favor
was validly made. To prove that Angela really intended to transfer the properties to them, the petitioners presented her Last Will and
Testament executed in the United States on December 6, 1996 in which she bequeathed to them all her properties, real and personal,
wherever situated.

In its Order dated June 27, 2002, the court a quo denied the motion to lift the order of default. It explained that the petitioners are all
residing abroad but the real properties subject of the complaint are situated in Muntinlupa City. Accordingly, upon motion, they were
deemed served with the summons and the amended complaint through publication thereof in a newspaper of general circulation in
Muntinlupa City, where the properties are located, and nationwide on October 20, 2001. The petitioners had sixty (60) days from the
last publication or until December 2, 2001 within which to file their answer. However, they failed to do so.

More than a month later, or on January 25, 2002, petitioner Rosalino filed the motion to represent the petitioners and asked for sixty
(60) days to file an answer. According to the court a quo, since the motion was not an adversarial pleading it was no longer included
in the court calendar. It stressed that at the time said counsel entered his appearance, the period to file an answer had long expired.
Further, the 60 days extension prayed for was not denied. However, the petitioners still failed to file their answer within the extension
period prayed for.

The court a quo faulted petitioner Rosalino, as counsel, for erroneously assuming that since it failed to rule on his entry of appearance,
the period to file an answer was suspended. It pointed out that the fact that the counsel may be allowed to represent a party-litigant or
not does not toll the running of the period to file the responsive pleading to the complaint.

Forthwith, the petitioners filed with the Court of Appeals a petition for certiorari alleging grave abuse of discretion on the part of the
court a quo in denying their motion to lift the default order. Preliminarily, they averred that they dispensed with the filing of a motion
for reconsideration with the court a quo because of the urgency of the matter as well as the fact that they raised jurisdictional issues in
their motion to lift the default order.
They contended that, in denying their motion to lift the order of default, the court a quo adopted a rigid, strict and technical stance.
Further, petitioner Rosalino, as their counsel, was of the honest belief that when the court a quodid not act on his motion to represent
the petitioners, it was still determining whether all the requirements for a valid extraterritorial service was made on them. They,
likewise, harped on the fact that the court a quos order denying their motion to lift order of default had been promulgated before they
even filed their reply to the respondents opposition. They maintained that the court a quo did not acquire jurisdiction over the
petitioners because no valid extraterritorial service of summons was made on them.

On November 29, 2002, the appellate court rendered the assailed Resolution dismissing outright the petition for certiorari for failure
of the petitioners to file a motion for reconsideration with the court a quo. In so doing, it applied the general rule that the filing of a
motion for reconsideration of the disputed order is a condition sine qua non in order that certiorari will lie. The petitioners moved for
the reconsideration of the said resolution but it was denied in the assailed Resolution dated August 27, 2003. Hence, the recourse to
this Court by the petitioners.

It is contended by the petitioners that the appellate court committed reversible error in dismissing their petition for certiorari for
failure to file a motion for reconsideration with the court a quo. They posit that such omission is not fatal. They maintain that they
have a meritorious defense in Civil Case No. 01-122 and that grave injuries and injustice would be inflicted on them unless they are
afforded the full opportunity to protect their interests. On the other hand, no undue prejudice would be caused the respondents in the
event that the order of default is lifted and the action in the court a quo is heard on the merits.

According to the petitioners, the non-filing of a motion for reconsideration was justified because the need for relief was extremely
urgent and a motion for reconsideration was not a plain and adequate remedy under the circumstances of the case. Moreover, the
questions raised before the appellate court were the same as those which have been raised in the motion to lift order of default and
already passed upon by the court a quo. Finally, the failure to file a responsive pleading to the respondents amended complaint was
due to the excusable negligence of the petitioners counsel.

For their part, the respondents urge the Court to deny the petition for review. They are of the view that the appellate court correctly
applied the general rule that the filing of a motion for reconsideration is a condition sine qua non in order that certiorari will lie.

The threshold issue that needs to be resolved is whether the CA committed reversible error in dismissing the petition for certiorari for
failure of the petitioners to file a motion for reconsideration with the court a quo.

The Court rules in the affirmative.

The rule is well settled that the filing of a motion for reconsideration is an indispensable condition to the filing of a special civil action
for certiorari.2 However, this rule admits of exceptions including:

(a) where the order is a patent nullity, as where the court a quo has no jurisdiction;

(b) where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or are the same
as those raised and passed upon in the lower court;

(c) where there is an urgent necessity for the resolution of the question and any further delay would prejudice the interests of the
Government or of the petitioner or the subject matter of the action is perishable;

(d) where, under the circumstances, a motion for reconsideration would be useless;

(e) where petitioner was deprived of due process and there is extreme urgency for relief;

(f) where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is improbable;

(g) where the proceedings in the lower court are a nullity for lack of due process;

(h) where the proceedings was ex parte or in which the petitioner had no opportunity to object; and

(i) where the issue raised is one purely of law or public interest is involved. 3

A perusal of the petition for certiorari filed with the CA shows that the petitioners expressly stated therein that they dispensed with the
filing of a motion for reconsideration with the court a quo because they raised questions of jurisdiction in the motion to set aside the
default order filed therewith. It was further averred that there was an urgent necessity for relief as the court a quo seemed to act with
precipitate haste. It was, likewise, pointed out that the court a quo allowed the respondents to present their evidence ex parte on April
30, 2002 (a Tuesday), just two office days after the default order was issued on April 26, 2002 (a Friday).

It appears that the CA committed reversible error in dismissing outright the petition for certiorari for failure of the petitioners to move
for a reconsideration of the default order when it had been sufficiently shown that the need for relief was extremely urgent. The
procedural requirement that a motion for reconsideration must first be filed before resorting to the special civil action
of certiorari may be glossed over to prevent a miscarriage of justice and, among other recognized instances, when the need for relief is
extremely urgent and certiorari is the only adequate and speedy remedy available.4 Among other remedies, a petition for certiorari to
declare the nullity of a judgment by default is available if the trial court improperly declared a party in default, or even if the trial court
properly declared a party in default, if grave abuse of discretion attended such declaration. 5

In this case, the court a quo acted with grave abuse of discretion in declaring the petitioners in default without showing that there was
full compliance with the requirements for extraterritorial service of summons under Section 15, Rule 14 of the Rules of Court. The
said provision reads:

Sec. 15. Extraterritorial service. When the defendant does not reside and is not found in the Philippines, and the action affects the
personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which the defendant has or
claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant
from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by leave of court, be
effected out of the Philippines by personal service as under Section 6; or by publication in a newspaper of general circulation in such
places and for such time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered
mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any order granting such leave
shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within which the defendant must answer.

The petitioners are citizens of the United States and residents thereof. Further, the suit against them involves real property wherein the
petitioners, as defendants therein, have an interest. These facts clearly warranted extraterritorial service of summons in accordance
with Section 15, Rule 14 of the Rules of Court. The rationale for service of summons on a nonresident defendant is explained, thus:

We repeat, service of summons on a nonresident defendant who is not found in the country is required, not for purposes of physically
acquiring jurisdiction over his person but simply in pursuance of the requirements of fair play, so that he may be informed of the
pendency of the action against him and the possibility that the property in the Philippines belonging to him or in which he has an
interest may be subjected to a judgment in favor of a resident, and that he may thereby be accorded an opportunity to defend in the
action, if he be so minded. The only relief that may be granted in such an action against such a nonresident defendant, who does not
choose to submit himself to the jurisdiction of the Philippine court, is limited to the res.6

In its Order dated April 26, 2002, the court a quo declared the petitioners in default in this wise:

Since the last publication of this case more than 60 days ago, no answer has been filed by any of the Defendants, the MOTION TO
DECLARE THE DEFENDANTS IN DEFAULT is, therefore, granted; hence Defendants, SPS. JESULITO P. ACANCE & VILMA
ACANCE, SPS. MANUEL P. ACANCE & GUIA ACANCE, and SPS. NESTOR P. ACANCE & LYNNE ACANCE are defaulted.

Evidence for Plaintiffs may be received ex-parte before the Clerk of Court.7

However, as will be shown shortly, the service of summons in this case is defective. There was no showing that copies of the
summons and the amended complaint were duly served at the petitioners last known correct address by registered mail, as a
complement to the publication pursuant to Section 15, Rule 14 of the Rules of Court 8 and in compliance with the court a quos Order
dated July 1, 2001 granting the respondents motion for leave to serve summons by publication.

The respondents alleged that they had "caused copies of the Amended Complaint and Summons and the 1 July 2001 Order to be sent
on November 13, 2001 by registered mail to the Acances known addresses in the United States." In their Compliance dated January
31, 2002 filed with the court a quo, the respondents averred that "a copy of the summons and order of the court together with a copy of
the amended complaint had been sent to each of the three (3) defendants in their respective addresses by registered mail, as evidenced
by Registry Receipt No. 26832 for Nestor P. Acance dated November 13, 2001; Registry receipt No. 26833 for Jesulito P. Acance
dated November 13, 2001 and Registry Receipt No. 26834 for Manuel P. Acance dated November 13, 2001, all sent from the Makati
City Branch Post Office."9 However, except for this bare allegation, the corresponding registry receipts or copies thereof were not
presented to show compliance with the rules.

Further, there was likewise non-compliance with Section 19, Rule 15 of the Rules of Court relating to the proof of service by
publication. The said provision reads:

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

While the respondents claimed that they had complied with the service of summons by publication in a newspaper of general
circulation,10 it does not appear that they had presented to the court a quo the "affidavit of the printer, his foreman, or principal clerk,
or of the editor, business or advertising manager" of the "Remate," where the publication was allegedly made, to prove such service by
publication. Neither did they present an affidavit showing the deposit of a copy of the summons and order of publication in the post
office, postage prepaid, directed to the petitioners by registered mail to their last known addresses.

The failure to strictly comply correctly with the requirements of the rules regarding the mailing of copies of the summons and the
order for its publication is a fatal defect in the service of summons.11 As held by this Court:

It is the duty of the court to require the fullest compliance with all the requirements of the statute permitting service by publication.
Where service is obtained by publication, the entire proceeding should be closely scrutinized by the courts and a strict compliance
with every condition of law should be exacted. Otherwise great abuses may occur, and the rights of persons and property may be made
to depend upon the elastic conscience of interested parties rather than the enlightened judgment of the court or judge. 12

Even granting arguendo that the respondents had fully complied with the requirements for extraterritorial service of summons and the
court a quo correctly declared them in default; still, it should not have been too rash in dismissing the petitioners motion to lift the
default order. Well-settled is the rule that courts should be liberal in setting aside orders of default for default judgments are frowned
upon, unless in cases where it clearly appears that the reopening of the case is intended for delay. The issuance of the orders of default
should be the exception rather than the rule, to be allowed only in clear cases of obstinate refusal by the defendant to comply with the
orders of the trial court.13 In this case, there is no showing that the petitioners failure to file an answer was due to an apparent scheme
to delay the proceedings or to flagrantly transgress the rules.

Under the circumstances, the setting aside of the order of default is in order. The petitioners should be afforded the opportunity to
present evidence on their behalf in order that substantial justice is achieved. After all, court litigations are primarily for the search of
truth, and a liberal interpretation of the rules by which both parties are given the fullest opportunity to adduce proofs is the best way to
ferret out such truth.14 By conducting a full-blown trial, both parties will be able to present their evidence, thus, affording them the
opportunity to enforce and protect their respective rights.

WHEREFORE, the petition is GRANTED. The assailed Resolutions dated November 29, 2002 and August 27, 2003 of the Court of
Appeals in CA-G.R. SP No. 71658 are REVERSED AND SET ASIDE. The case is REMANDED to the court a quo, which is
DIRECTED to allow the petitioners to file their answer to the amended complaint, and thereafter to conduct the proper proceedings in
Civil Case No. 01-122.

SO ORDERED.

G.R. No. L-58340 July 16, 1991

KAWASAKI PORT SERVICE CORPORATION, NAIKAI SHIPPING CO. LTD., NAIKAI TUG BOAT SERVICE CO.,
THE PORT SERVICE CORPORATION, LICENSED LAND SEA PILOTS ASSOCIATION, HAYAKOMA UNYU K.K.,
TOKYO KISEN COMPANY, LTD., OMORI KAISOTEN, LTD., TOHOKU UNYU CO., LTD. AND SEITETSU UNYU CO.,
LTD., petitioners,
vs.
THE HON. AUGUSTO M. AMORES, Judge of Br. XXIV, Court of First Instance of Manila, and C.F. SHARP & CO.,
INC., respondents.

Quasha, Asperilla, Ancheta, Pea & Nolasco for petitioners.

Chuidian Law Office for private respondent.

BIDIN, J.:

This is a petition for certiorari seeking to set aside the orders of the then Court of First Instance of Manila, * Branch XXIV in Civil
Case No. 132077: (a) dated July 13, 1981 denying the special appearances of petitioners as defendants in said case to question the
court's jurisdiction over the persons of the defendants and (b) dated September 22, 1981, denying the motion for reconsideration of
said order.

The antecedents of this case are as follows:

On May 7, 1980, the private respondent C.F. Sharp & Co., Inc. filed a complaint for injunction and/or declaratory relief in the then
Court of First Instance of Manila against seventy-nine (79) Japanese corporations as defendants, among which are the petitioners
herein. Said complaint was docketed as Civil Case No. 132077. The complaint alleges, among others, that the plaintiff is a corporation
organized and existing under the laws of the Philippines; that there is another corporation organized under the law of Japan with the
corporate name C.F. Sharp Kabushiki Kaisha; that the plaintiff and C.F. Sharp Kabushiki Kaisha are in all respects separate and
distinct from each other; that C.F. Sharp Kabushiki Kaisha appears to have incurred obligations to several creditors amongst which are
defendants, also foreign corporations organized and existing under the laws of Japan; that due to financial difficulties, C.F. Sharp
Kabushiki Kaisha failed and/or refused to pay its creditors; and that in view of the failure and/or refusal of said C.F. Sharp Kabushiki
Kaisha to pay its alleged obligations to defendants, the latter have been demanding or have been attempting to demand from C.F.
Sharp & Co., Inc., the payment of the alleged obligations to them of C.F. Sharp Kabushiki Kaisha, notwithstanding that C.F. Sharp &
Co., Inc. is a corporation separate and distinct from that of C.F. Sharp Kabushiki Kaisha and that the former had no participation
whatsoever or liability in connection with the transactions between the latter and the defendants.

As alleged in the complaint, the private respondent prayed for injunctive relief against the petitioners' demand from the private
respondent for the payment of C.F. Sharp Kabushiki Kaisha's liabilities to the petitioners.

As an alternative to injunction, the private respondent prayed that a judicial declaration be made that, as a separate and independent
corporation, it is not liable for the obligations and liabilities of C.F. Sharp Kabushiki Kaisha.

Since the defendants are non-residents, without business addresses in the Philippines but in Japan, the private respondent prayed for
leave of court to effect extraterritorial service of summons.

On June 11, 1980, the respondent judge issued an order authorizing the private respondent to effect extraterritorial service of summons
on defendants therein.

Subsequently, private respondent filed an urgent ex-parte motion dated June 23, 1980 for Extraterritorial Service of Summons Upon
Defendants by registered mail with return cards pursuant to Section 17 of Rule 14 of the Rules of Court.

Acting on said motion, the respondent judge issued an order dated June 30, 1980 granting the motion and authorizing extraterritorial
service of summons upon defendants to be effected by registered mail with return cards.

On March 11, 1981, five of the petitioners, Kawasaki Port Service Corporation, Naikai Shipping Co., Ltd., Naikai Tug Boat Service
Co., Ltd., The Port Service Corporation and Licensed Land Sea Pilots Association filed their "Special Appearance to Question
Jurisdiction of This Honorable Court Over Persons of Defendants" contending that the lower court does not and cannot acquire
jurisdiction over the persons of defendants on the grounds that private respondent's action does not refer to its personal status; that the
action does not have for subject matter property contemplated in Section 17 of Rule 14 of the Rules of Court, that the action does not
pray that defendants be excluded from any interest or property in the Philippines; that no property of the defendants has been attached;
that the action is in personam; and that the action does not fall within any of the four cases mentioned in Section 17, Rule 14 of the
Rules of Court.
On March 17, 1981, another three of herein petitioners, Hayakoma Unyu K.K., Tokyo Kisen Company, Ltd. and Omori Kaisoten, Ltd.
also filed their special appearance adopting the same arguments as that of the first five.

On April 28, 1981, the two other petitioners, Tohoku Unyu Co., Ltd. and Seitetsu Unyu Co., Ltd., filed their "Special Appearance to
Question the Jurisdiction of the Honorable Court" over their persons adopting in toto as theirs the "Special Appearance" dated March
11, 1981 of Kawasaki Port Service.

On July 13, 1981, the respondent Court issued its order denying said special appearances. The motion for reconsideration of said order
filed by the petitioners was also denied on September 22, 1981.

Hence, the present petition.

After the required pleadings were filed, the First Division of this Court, in the resolution of April 14, 1982, gave due course to the
petition and required both parties to submit simultaneous memoranda within thirty (30) days from notice. Both parties complied by
submitting the required memoranda.

The main issue in this case is whether or not private respondent's complaint for injunction and/or declaratory relief is within the
purview of the provisions of Section 17, Rule 14 of the Rules of Court.

The petitioners contend that the respondent judge acted contrary to the provisions of Section 17 of Rule 14 for the following reasons:
(1) private respondent's prayer for injunction, as a consequence of its alleged non-liability to the petitioners for debts of C.F. Sharp
Kabushiki Kaisha of Japan, conclusively establishes that private respondent's cause of action does not affect its status; (2) the
respondent court cannot take jurisdiction of actions against the petitioners as they are non-residents and own no property within the
state; (3) the petitioners have not as yet claimed a lien or interest in the property within the Philippines at the time the action was filed
which is a requirement under Section 17 of Rule 14; (4) extra-territorial service on a non-resident defendant is authorized, among
others, when the subject of the action is property within the Philippines in which the relief demanded consists in excluding defendant
from any interest therein; and (5) inasmuch as the reliefs prayed for by the private respondent in the complaint are in personam,
service by registered mail cannot be availed of because Section 17 of Rule 14 authorized this mode of service only in actions in
rem or quasi in rem.

For its part, the private respondent countered that (1) the action refers to its status because the basic issue presented to the lower court
for determination is its status as a corporation which has a personality that is separate, distinct and independent from the personality of
another corporation, i.e., C.F. Sharp Kabushiki Kaisha of Japan; (2) under Section 17 of Rule 14, the subject matter or property
involved in the action does not have to belong to the defendants. The provisions of said section contemplate of a situation where the
property belongs to the plaintiff but the defendant has a claim over said property, whether that claim be actual or contingent; (3) the
prayer of the plaintiff that the defendants be excluded from any interest in the properties of the plaintiff within the Philippines has the
effect of excluding the defendants from the properties of the plaintiff in the Philippines for the purpose of answering for the debts of
C.F. Sharp Kabushiki Kaisha of Japan to the defendants in accordance with Section 17 of Rule 14; and (4) the action before the lower
court is an action quasi in rem as the remedies raised in the complaint affect the personal status of the plaintiff as a separate, distinct
and independent corporation and relates to the properties of the plaintiff in the Philippines over which the petitioners have or claim an
interest, actual or contingent.

The petition is impressed with merit.

Section 17, Rule 14 of the Rules of Court provides:

Section 17. Extraterritorial service. When the defendant does not reside and is not found in the Philippines and the action affects
the personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which the defendant has
or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant
from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by leave of court, be
effected out of the Philippines by personal service as under section 7; or by publication in a newspaper of general circulation in such
places and for such times as the court may order, in which case a copy of the summons and order of the court shall be sent by
registered mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any order granting
such leave shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within which the defendant must
answer.

This Court had ruled that extraterritorial service of summons is proper only in four (4) instances, namely: "(1) when the action affects
the personal status of the plaintiffs: (2) when the action relates to, or the subject of which is, property within the Philippines, in which
the defendant has or claims a lien or interest, actual or contingent; (3) when the relief demanded in such action consists, wholly or in
part, in excluding the defendant from any interest in property located in the Philippines; and (4) when the defendant non-resident's
property has been attached within the Philippines." (De Midgely v. Ferandos, 64 SCRA 23 [1975]; The Dial Corporation v. Soriano,
161 SCRA 737 [1988]).

In the case at bar, private respondent has two (2) alternative principal causes of action, to wit: either for declaratory relief or for
injunction. Allegedly, in both cases, the status of the plaintiff is not only affected but is the main issue at hand.

As defined, "Status means a legal personal relationship, not temporary in nature nor terminable at the mere will of the parties, with
which third persons and the state are concerned" (Holzer v. Deutsche Reichsbahn Gesellschaft, 290 NYS 181; cited in 40 Words and
Phrases, 129, Permanent Edition).

It is easy to see in the instant case, that what is sought is a declaration not only that private respondent is a corporation for there is no
dispute on that matter but also that it is separate and distinct from C.F. Sharp Kabushiki Kaisha and therefore, not liable for the latter's
indebtedness. It is evident that monetary obligations does not, in any way, refer to status, lights and obligations. Obligations are more
or less temporary, but status is relatively permanent. But more importantly, as cited in the case of (Dy Poco v. Commissioner of
Immigration, et al., 16 SCRA 618 [1966]), the prevailing rule is that "where a declaratory judgment as to a disputed fact would be
determinative of issues rather than a construction of definite stated rights, status and other relations, commonly expressed in written
instrument, the case is not one for declaratory judgment." Thus, considering the nature of a proceeding for declaratory judgment,
wherein relief may be sought only to declare rights and not to determine or try issues, there is more valid reason to adhere to the
principle that a declaratory relief proceeding is unavailable where judgment would have to be made, only after a judicial investigation
of disputed issues (ibid). In fact, private respondent itself perceives that petitioners may even seek to pierce the veil of corporate
identity (Rollo, p. 63).

Private respondent alleges that most if not all, of the petitioners have merely demanded or have attempted to demand from the former
the payment of the obligations of C.F. Sharp K.K., (Rollo, p. 63). Otherwise stated, there is no action relating to or the subject of
which are the properties of the defendants in the Philippines for it is beyond dispute that they have none in this jurisdiction nor can it
be said that they have claimed any lien or interest, actual or contingent over any property herein, for as above stated, they merely
demanded or attempted to demand from private respondent payment of the monetary obligations of C.F. Sharp K.K., No action in
court has as yet ensued. Verily, the fact that C.F. Sharp Philippines is an entity separate and distinct from C.F. Sharp K.K., is a matter
of defense that can be raised by the former at the proper time.

Finally, the alternative relief sought is injunction, that is to enjoin petitioners from demanding from private respondent the payment of
the obligations of C.F. Sharp K.K., It was not prayed that petitioners be excluded from any property located in the Philippines, nor was
it alleged, much less shown, that the properties of the defendants, if any, have been attached.

Hence, as ruled by this Court, where the complaint does not involve the personal status of plaintiff, nor any property in the Philippines
in which defendants have or claim an interest, or which the plaintiff has attached, but purely an action for injunction, it is a personal
action as well as an action in personam, not an action in rem or quasi in rem. As a personal action, personal or substituted service of
summons on the defendants, not extraterritorial service, is necessary to confer jurisdiction on the court. In an action for injunction,
extra-territorial service of summons and complaint upon the non-resident defendants cannot subject them to the processes of the
regional trial courts which are powerless to reach them outside the region over which they exercise their authority. Extra-territorial
service of summons will not confer on the court jurisdiction or Power to compel them to obey its orders (Dial Corporation v. Soriano,
161 SCRA 738 [1988] citing Section 3-a Interim Rules of Court, Section 21, subpar. 1, BP Blg. 129).

Considering that extra-territorial service of summons on the petitioners was improper, the same was null and void.1wphi1

WHEREFORE, the petition is Granted and the questioned orders dated July 13, 1981 and September 22, 1981 of the respondent
Judge, are Reversed and Set Aside.

SO ORDERED.

G.R. No. L-22997 March 15, 1968

PABLO C. MONTALBAN, ET AL., plaintiffs-appellees,

vs.
GERARDO MAXIMO, defendant-appellant.

Jose W. Diokno for plaintiffs-appellees.

Norberto J. Quisumbing for defendant-appellant.

SANCHEZ, J.:

Chronologically, following are the events that spawned the present case:

August 15, 1958. Plaintiffs commenced suit1 against Fr. Gerardo Maximo who, according to the complaint, was residing at the
parish church at Concepcion, Malabon, Rizal. Plaintiffs' cause of action for damages sprang from a motor vehicle accident which
occurred at Padre Faura St., Manila, on December 16, 1957. Paul Hershell Montalban, son of plaintiffs, suffered injuries.

August 15, 1958. On this same day that the complaint was filed, summons was served on defendant Fr. Gerardo Maximo at the
parish church of Concepcion, Malabon, Rizal, through Fr. Arsenio Bautista a priest in the same parish church.

August 23, 1958. Fr. Arsenio Bautista sent a letter (dated August 21) to Macario M. Ofilada, Clerk of Court of the Court of First
Instance of Manila, informing him that defendant Fr. Gerardo Maximo left for Europe on August 7, and "will be back on the first week
of November." Actually, Fr. Maximo returned from abroad "about the second week of October, 1958" 2

September 20, 1958. The lower court declared defendant in default, on plaintiffs' motion of September 13, 1958.

June 8, 1959. Upon plaintiffs' evidence, the court rendered judgment sentencing defendant to:

1. Pay plaintiff Paul Hershell Montalban the amount of P10,000.00 as actual damages for loss of his spleen;

2. Pay plaintiff Paul Hershell Montalban the amount of P10,000.00 for loss or impairment of earning capacity, talents and physical
strength;

3. Pay plaintiff Paul Hershell Montalban the amount of P5,000.00 as moral damages;

4. Pay plaintiffs Pablo C. Montalban and Regina Barretto the amount of P5,000.00 as moral damages;

5. Pay plaintiffs the amount of P1,000.00 as exemplary damages; and

6. Pay plaintiffs attorney's fees [in] the amount of P3,000.00 and the cost of litigation.
 December 16, 1959. Plaintiffs themselves wrote defendant Fr. Gerardo Maximo, at the Malabon Catholic Church, informing the
latter of the lower court's decision, giving the data: "Re Civil Case No. 37202 (in which the foregoing judgment was rendered)
Montalban vs. Maximo," quoting therein the dispositive part of the decision just transcribed, requesting prompt compliance therewith
and suggesting that he communicate with or personally see their lawyer, Jose W. Diokno, at the latter's address, 332 Regina Building,
Escolta, Manila.

December 20, 1959. Defendant, through his legal counsel, Dr. Nicanor T. Santos, answered the foregoing letter expressing
regret that he could not comply with plaintiffs' request, because he (defendant) was not aware of the said civil case, and that, in the
criminal action arising out of the same incident, said defendant was acquitted by the Municipal Court of Manila. 3

January 14, 1960. Deputy Sheriff Liberato C. Manalo of Rizal notified defendant of the issuance of the writ of execution dated
January 7, 1960, and demanded payment of the amount set forth therein. The Sheriff's return to the writ shows that in response to such
demand, defendant alleged that he was then "financially hard up" 4 and that the Sheriff found no property that could be subject to
execution.

January 30, 1962. An alias writ of execution was issued. Copy thereof was received by defendant on February 9, 1962.

February 1, 1962. The Deputy Sheriff attached and levied on a residential house located in Caloocan City and purportedly
belonging to defendant.

February 20, 1962. Two years and two months after defendant admittedly learned of the lower court's decision from counsel for
plaintiffs herein, said defendant, by counsel, filed a verified motion in the same case praying for the annulment of the entire
proceedings. His ground is this: Summons was not duly served upon him "as provided under Sec. 7, Rule 7 of the Rules of
Court;"5 accordingly, the lower court "did not acquire jurisdiction over his person"; and "the trial and decision by default" are "null
and void."6

March 3, 1962. The court denied this motion.

March 24, 1962. Defendant's move to reconsider was rejected by the court.

Hence, this appeal from the orders of March 3 and March 24, 1962, duly certified to this Court by the Court of
Appeals.1wph1.t

September 2, 1965. After the case was submitted for decision, defendant's lawyer informed this Court of the death of defendant
on August 1, 1965.

October 18, 1967. Following extensive efforts to have the deceased defendant substituted by any of his heirs or the executor or
administrator of his estate, which were to no avail, this Court appointed the Clerk of Court of the Court of First Instance of Manila,
representative of the deceased defendant.

1. A question of transcendental importance which necessarily involves an inquiry into procedural due process is whether
summons in a suit in personam against a resident of the Philippines temporarily absent therefrom may be validly effected by
substituted service under Section 8, Rule 14, (formerly Section 8, Rule 7) of the Rules of Court. A head-on collision of views becomes
inevitable considering the diametrically opposing positions taken by plaintiffs, on the one hand, and defendant, on the other. For,
plaintiffs make the point that even with defendant temporarily abroad, substituted service is valid under Section 8 by leaving a copy of
the summons "at the defendant's dwelling house or residence with some person of suitable age and discretion then residing therein."

Plaintiffs argue that if the ordinary method prescribed by the rules that is, personal service under Section 7, Rule 14, is not
feasible, then the substituted service in Section 8 aforesaid comes into play. Section 8 says:

Sec. 8. Substituted service. If the defendant cannot be served within a reasonable time as provided in the preceding section,
service may be effected (a) by leaving copies of the summons at the defendant's dwelling house or residence with some person of
suitable age and discretion then residing therein, or (b) by leaving the copies at defendant's office or regular place of business with
some competent person in charge thereof.

Upon the other hand, defendant advances the theory that in a situation like the present, where defendant was temporarily abroad,
the sole and exclusive method of service of summons in a case in personam is that set forth in Section 18, Rule 14 of the Rules
(formerly Section 18, Rule 7), which reads:

Sec. 18. Residents temporarily out of the Philippines. When an action is commenced against a defendant who ordinarily
resides within the Philippines, but who is temporarily out of it, service may, by leave of court, be effected out of the Philippines, as
under the preceding section.7

Section 17 referred to in Section 18 (Section 17, Rule 7 in the old Rules) in turn states:

Sec. 17. Extraterritorial service. When the defendant does not reside and is not found in the Philippines and the action
affects the personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding
the defendant from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by
leave of court, be effected out of the Philippines by personal service as under section 7; or by publication in a newspaper of general
circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court shall
be sent by registered mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any order
granting such leave shall specify a reasonable time which shall not be less than sixty (60) days after notice, within which the defendant
must answer.
 Historically, in its common-law origin, the jurisdiction of courts to render judgments in personam was grounded on their de
facto power over defendant's person. Jurisdiction was based on the power to seize and imprison defendant. 8 If a defendant was absent
from the territory, the fact that he was a citizen would not enable the court's officers to seize him and service could not represent this
power.9 Hence, his presence within the territorial jurisdiction was a prerequisite to the rendition of a judgment personally binding
against him. Anglo-American law then emphasized the power concept of jurisdiction. 10

Continental law, however, was somewhat different. It had two fundamental principles of Roman origin: 1) in suits in
personam and those relating to movables, courts of the domicile of the defendant have general jurisdiction actor rei forum sequitur,
and (2) in actions concerning immovables, the courts of the situs have exclusive jurisdiction.11

In the development of the law, the variance between Anglo-American law and continental law became "less and less clear-cut"
because "American law has had to yield to the increasing necessity of enlarging more and more the catalogue of forums available to
the plaintiff."12

Thus it is, that American cases forged the doctrine, now long recognized, that domiciliaries of a state, though temporarily out of
its territorial jurisdiction, are always amenable to suits in personam therein.13 And this precept is the foundation for the American rule
that declares substituted service binding on absent residents. The leading case Milliken vs. Meyer,14 furnishes the rationale:

. . . the authority of a state over one of its citizens is not terminated by the mere fact of his absence from the state. The state
which accords him privileges and affords protection to him and his property by virtue of his domicile may also exact reciprocal duties.
"Enjoyment of the privileges of residence within the state, and the attendant right to invoke the protection of its laws, are inseparable"
from the various incidences of state citizenship. . . . The responsibilities of that citizenship arise out of the relationship to the state
which domicile creates. That relationship is not dissolved by mere absence from the state. The attendant duties, like the rights and
privileges incident to domicile, are not dependent on continuous presence in the state. One such incident of domicile is amenability to
suit within the state even during sojourns without the state, where the state has provided and employed a reasonable method for
apprising such an absent party of the proceedings against him.

There should be no doubt, therefore, that in suits in personam, courts have jurisdiction over residents temporarily out of the
country.

This brings us to the question of procedural due process. Substituted service such as one contemplated in Section 8 upon a
temporarily absent resident, it has been held, is wholly adequate to meet the requirements of due process. 15 The constitutional
requirement of due process exacts that the service be such as may be reasonably expected to give the notice desired. Once the service
provided by the rules reasonably accomplishes that end, the requirement of justice is answered; the traditional notions of fair play are
satisfied; due process is served.

In American jurisprudence, whether a defendant be in another state under the federal system or is abroad in
Europe,16 substituted service is still considered to be valid.17 The language in Milliken vs. Meyer, supra, is expressive: "Its adequacy so
far as due process is concerned is dependent on whether or not the form of substituted service provided for such cases and employed
is reasonably calculated to give him actual notice of the proceedings and an opportunity to be heard. If it is, then traditional notions of
fair play and substantial justice (McDonald vs. Mabee, supra) implicit in due process are satisfied." 18

When the framers of our Rules adapted Section 8, it is to be implied that they intended to give the provision the same meaning
shaped out by the jurisprudence of the jurisdiction from whence it was patterned. Section 8 is to be viewed in the same context it is
understood in the American legal system. The word "defendant" in that provision is to be construed as including any resident of this
country. By comparative construction, Section 8 is to be applied to all resident defendants without distinction as to whether he is
physically present in this country or not.

Chief Justice Moran shares this view. Commenting on Section 18, Rule 14, he states: "Since the defendant is residing in the
Philippines, jurisdiction over his person may be acquired by Philippine courts by substituted service of summons under section 8. But
extra-territorial service is allowed also by leave of court according to the above provision [Section 18]." 19 Justice Martin regards the
word "residence" in Section 8 as "the place where the person named in the summons is living at the time when the service is made,
even though he may be temporarily out of the state at the time." 20

This construction is but fair. It is in accord with substantial justice. The burden on a plaintiff is not to be enlarged with a
restrictive construction as desired by defendant here. Under the rules, a plaintiff, in the initial stage of suit, is merely required to know
the defendant's "dwelling house or residence" or his "office or regular place of business" and no more. He is not asked to
investigate where a resident defendant actually is at the precise moment of filing suit. Once defendant's dwelling house or residence or
office or regular place of business is known, he can expect valid service of summons to be made on "some person of suitable age and
discretion then residing" in defendant's dwelling house or residence, or on "some competent person in charge" of his office or regular
place of business. By the terms of the law, plaintiff is not even duty-bound to see to it that the person upon whom service was actually
made delivers the summons to defendant or inform him about it. The law presumes that for him.

It is immaterial then that defendant does not in fact receive actual notice. This will not affect the validity of the
service.21 Accordingly, the defendant may be charged by a judgment in personam as a result of legal proceedings upon a method of
service which is not personal, "which in fact may not become actual notice to him," and which may be accomplished in his lawful
absence from the country.22 For, the rules do not require that papers be served on defendant personally or a showing that the papers
were delivered to defendant by the person with whom they were left.23

Reasons for the views just expressed are not wanting. A man temporarily absent from this country leaves a definite place of
residence, a dwelling where he lives, a local base, so to speak, to which any inquiry about him may be directed and where he is bound
to return. Where one temporarily absents himself, he leaves his affairs in the hands of one who may be reasonably expected to act in
his place and stead; to do all that is necessary to protect his interests; and to communicate with him from time to time any incident of
importance that may affect him or his business or his affairs. It is usual for such a man to leave at his home or with his business
associates information as to where he may be contacted in the event a question that affects him crops up. If he does not do what is
expected of him, and a case comes up in court against him, he cannot in justice raise his voice and say that he is not subject to the
processes of our courts. He cannot stop a suit from being filed against him upon a claim that he cannot be summoned at his dwelling
house or residence or his office or regular place of business.

Not that he cannot be reached within a reasonable time to enable him to contest a suit against him. There are now advanced
facilities of communication. Long distance telephone calls and cablegrams make it easy for one he left behind to communicate with
him.

In the light of the foregoing, we find ourselves unwilling to concede that substituted service provided in Section 8 may be down-
graded as an ineffective means to bring temporarily absent residents within the reach of our courts.

As we go back to the case at hand, there is the temporarily absent defendant who was a parish priest. Summons upon him was
served upon Fr. Bautista who lived in the same convent where defendant resided. Fr. Bautista, we must assume, is a responsible
person. Service upon him is effective.

2. The view we take of this case sweeps away defendant's argument that Section 18 is the sole provision that governs summons
upon a defendant temporarily absent in an action in personam, as here. Indeed, defendant's posture strikes at the very language
employed by this reglementary provision cited by him. The word "may" in the statement in Section 8 that "service may, by leave of
court, be effected out of the Philippines," as under Section 17 will not support the deduction, without more, that Section 18 is the
only provision controlling in this case. On the contrary, the phraseology of the rule is a recognition of the fact that substituted service
out of the Philippines under Section 17 is but one of the modes of effective service to bring a defendant in court. And upon the
basic concepts under which our rules governing processes operate, the normal method of service of summons on one temporarily
absent is by substituted service set forth in Section 8. And this, because personal service outside the country and service by publication
are not ordinary means of summoning defendants.

In practical terms, we perceive that in suits in personam the more circuitous procedure delineated in Sections 17 and 18 is
resorted to by a plaintiff if defendant's dwelling house or residence or place of business in this country is not known; or, if known,
service upon him cannot be had thereat upon the terms of Section 8. Here, since personal service is impossible, resort to substituted
service becomes a necessity. A comparison between the service in Section 8 and that in Sections 17 and 18 is beside the point. They
both provide for substituted service. Anyway, as Goodrich observed: "[I]f a substitute is to be made where an actual personal service
is impossible, 'the best is none too good'." 24

3. The judgment has long since become final. It enjoys the presumption of regularity. It is, unless stricken down, entitled to
respect. Non quieta movere. Because "[p]ublic policy and sound practice demand that, at the risk of occasional errors, judgments of
courts should become final at some definite date fixed by law." 25

The norm of conduct observed by defendant would not, we believe, tilt the scales of justice in his favor. We go to the
background facts. Logic and common sense tell us that Fr. Bautista who received the summons and who took interest in the case must
have informed defendant one way or another of the suit, at the latest upon his return in October, 1958. By then there was still time for
him to move to set aside the default order of September 20, 1958. Defendant did not move. It is well to remember also that judgment
by default was not rendered against defendant until June 8, 1959, or almost nine (9) months after the default order was issued. Again,
defendant did nothing. According to defendant, he learned of that judgment on December 20, 1959. The full impact of the judgment
totalling P34,000.00 must have by then left an indelible mark in his mind. A judgment of a court of justice is no piddling matter. It
should not be trifled with. Especially so when the amount is big, as it is here. That same day December 20 his attorney took a
hand on the matter, wrote back plaintiffs refusing payment of the claim. The first writ of execution was served on defendant on
January 14, 1960. That time he did not pay, because according to the Sheriff's return, defendant then stated that he was "financially
hard up."

Defendant did not bestir himself until February 20, 1962, i.e., not less than to years and two months after he learned by his
own admission of the judgment. And, that was shortly after levy was made on his house in Caloocan. It is in this actual
environment that then CFI Judge Magno Gatmaitan, in his order of March 24, 1962, correctly observed that "the Court once again
believes that this solution (denial of the motion to reconsider the appealed order) is just because of the apparent intentional inaction of
defendant since 20 December, 1959."

Indeed, it was not right that defendant should have supinely sat on the decision, and deliberately disregarded the import thereof.
Neither was it correct for him to have waited so long, slept on his rights, and only put plaintiffs to task when his own property was
threatened because of the levy and execution thereon.

The decision below may not thus be annulled. Plaintiffs may not be compelled to file a fresh suit. Because, prejudice to
plaintiffs, which could have been avoided by defendant, will become a reality. The additional expense, trouble and anxiety need not be
essayed. The accident took place on December 16, 1957. The lower court's decision made mention of two eye witnesses and two
doctors of medicine who testified as to injuries. To bring back those witnesses to court becomes a serious problem. Plaintiffs will have
to search for them and if found, they may not be able to present to the court a narrative as accurately as they had done before. Time
has an unfortunate tendency of obliterating occurrences from a witness' memory. Recollections are apt to be blurred. Human memory
can even be treacherous. Lapse of time may also carry with it dissipation of other evidence. Surely, there is great validity to the
statement that the march of time is truth in flight.26 These, in broad outlines, give life to the salutary policy on which laches is
founded.

WHEREFORE, the orders appealed from dated March 3, 1962 and March 24, 1962 are hereby affirmed.1wph1.t

Costs against defendant-appellant. So ordered.

G.R. No. 154064 February 28, 2005

SPS. ERNESTO GUTIERREZ and FELICISIMA B. GUTIERREZ, petitioners,

vs.
PASCUAL B. CABRERA (deceased), substituted by his Heirs namely: Reymundo F. Cabrera, Enelia F. Cabrera, Nery
Cabrera-Bacani, and Darlo F. Cabrera, respondents.

DECISION

QUISUMBING, J.:

This is a petition for review of the Decision,1 dated September 28, 2000, of the Court of Appeals in CA-G.R. SP No. 46266 nullifying
(a) the Decision,2 dated August 11, 1997, of the Municipal Trial Court, of Calumpit, Bulacan in Special Civil Action No. 53, (b) the
Decision,3 dated November 17, 1997, of the Regional Trial Court of Bulacan, Branch 20 in Civil Case No. 686-M-97, and (c) the Writ
of Execution4 issued on March 16, 1998. Included in this review is the Resolution,5 dated June 14, 2002, of the Court of Appeals,
denying petitioners Motion for Reconsideration.

The facts of the case, as culled from the records, are as follows:

On September 29, 1970, petitioner Felicisima B. Gutierrez purchased from her mother, Primitiva Lorenzo Vda. de Buenaventura, a
parcel of land covered by Transfer Certificate of Title No. T-47965. After due registration with the Register of Deeds, petitioner
Felicisima was issued TCT No. T-252339.

On March 25, 1976, Primitiva entered into an agricultural lease agreement6 over the same parcel of land with respondent Pascual B.
Cabrera. By virtue of this agreement, Cabrera took possession and cultivated the land. After sometime, the land was converted into a
fishpond.

When petitioners sent their son, Apolinario, to check on the status of the property, respondent confronted Apolinario and hacked him
with a bolo. Respondent, for his part, filed a criminal case for trespassing against Apolinario before the MTC. The complaint was,
however, dismissed.

Subsequently, petitioners asked respondent to vacate the land but respondent refused. On May 14, 1997, petitioners then filed before
the MTC7 an ejectment case against respondent. On May 28, 1997, respondent, assisted by the Department of Agrarian Reform Legal
Assistance Division, moved for the dismissal of the case on the ground of lack of jurisdiction. Respondent alleged that he was a
registered agricultural tenant.8

The MTC denied respondents motion to dismiss for two reasons, namely (1) that the jurisdiction over the subject matter was
determined by the allegations in the complaint and not on the allegations in the answer or motion to dismiss; and (2) that the motion
was defective for not being addressed to the adverse party and set for hearing. 9

Petitioners filed two motions to render judgment on the pleading for respondents failure to file an answer. Accordingly, a
decision10 on the case was rendered on August 11, 1997, as follows:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant ordering the latter and all persons
claiming rights over them:

a) to vacate the subject parcel of land and to surrender the peaceful possession thereof to the plaintiff;

b) to pay plaintiff the amount of P5,000.00 per month as reasonable monthly rentals to commence on March 1976 until the possession
of the subject parcel of land is turned over to the plaintiffs;

c) to restore the subject parcel of land to its former condition before the same was converted into a fishpond;

d) to pay the plaintiff the amount of P30,000.00 as reasonable attorneys fees.

SO ORDERED.11

Respondent appealed the decision to the RTC raising as error the MTCs lack of jurisdiction since what was involved was an agrarian
dispute.12 The RTC, however, affirmed in toto the MTC Decision.13 Consequently, petitioners moved for the execution of the
judgment. This was granted and so, on March 16, 1998, 14 and July 14, 1998,15 writs of execution and of demolition were respectively
issued.

Based on the sheriffs partial report,16 dated August 11, 1998, respondents house on the subject land was demolished. On February 2,
1999,17 the sheriff levied two parcels of agricultural land owned by respondent and sold them, on July 5, 1999, 18 in an auction. The
petitioners were the highest bidders. These fully satisfied the MTC judgment.

In the meantime, respondent appealed to the Court of Appeals. 19 Petitioners opposed the petition on ground that it impleaded the lower
court judge contrary to Section 2, Rule 42 of the Rules of Court. It prayed that the petition be dismissed.

On September 28, 2000, the Court of Appeals annulled the decisions of the MTC and of the RTC as well as the writ of execution
dated March 16, 1998. Petitioners then filed a motion for reconsideration,20 but it was denied.

Hence, the instant petition for review raising the following issues:

I. WHETHER OR NOT A JUDGE WHO RENDERED A DECISION MAY BE IMPLEADED AS A PARTY IN A PETITION FOR
REVIEW WITH THE COURT OF APPEALS UNDER RULE 42 OF THE 1997 RULES OF CIVIL PROCEDURE;
II. WHETHER OR NOT P.D. NO. 316 AND P.D. 1038 WERE EXPRESSLY REPEALED BY R.A. 6657, SO AS TO RENDER
THE ASSAILED DECISION AND RESOLUTION OF THE COURT OF APPEALS WITHOUT LEGAL BASIS;

III. WHETHER OR NOT A MOTION TO DISMISS BEING A LITIGATED MOTION MUST BE SET FOR HEARING BY THE
APPLICANT/MOVANT BY INDICATING THE TIME AND DATE OF THE HEARING, DULY SERVED UPON THE
ADVERSE PARTY AT LEAST 3 DAYS BEFORE THE SCHEDULED HEARING OF THE MOTION. 21

Simply put, we are asked to resolve the following questions: (1) Should the appellate court dismiss the petition because it impleaded
the lower court judge as a party? (2) Should the trial court refer the case to the Department of Agrarian Reform (DAR) for preliminary
determination of agricultural tenancy relationship? and (3) Was the denial of the motion to dismiss by the MTC proper?

First, petitioners assert that in accordance with Section 3 22 in relation to Section 223 of Rule 42 of the Rules of Court, the Court of
Appeals should have dismissed the petition. Second, petitioners insist that proceedings in the trial court were proper and regular since
Republic Act No. 665724 repealed Presidential Decree No. 31625 and Presidential Decree No. 1038,26 thus the condition precedent of
referring the case to the DAR for preliminary determination of agricultural tenancy relationship was no longer necessary. Third,
petitioners also claim that the MTC did not err when it denied the motion to dismiss because the motion lacked the requirement set
forth in Sections 427 and 5,28Rule 15 of the Rules of Court.

Anent the first issue, the correct procedure, as mandated by the Rules of Court, is not to implead the lower court or agency which
rendered the assailed decision.29 However, impleading a lower court judge as respondent in the petition for review does not
automatically mean the dismissal of the appeal but merely authorizes the dismissal of the petition. 30

Formal defects in petitions are not uncommon. The Court has encountered previous petitions for review that erroneously impleaded
the Court of Appeals. In those cases, the Court merely called the petitioners attention to the defects and proceeded to resolve the case
on their merits.31 The Court finds no reason why it should not afford the same liberal treatment in this case. While the Court has
unquestionably the discretion to dismiss the appeal for being defective, sound policy dictates that it is far better to dispose of cases on
the merits, rather than on technicality as the latter approach may result in injustice. 32 This is in accordance with Rule 1, Section
633 which encourages a reading of the procedural requirements in a manner that will help secure and not defeat justice. 34

On the second issue, referral to the DAR is no longer necessary. P.D. No. 316 and P.D. No. 1038 which required the referral of a land
dispute case to the DAR for the preliminary determination of the existence of an agricultural tenancy relationship has indeed been
repealed by Section 7635 of Rep. Act No. 6657 in 1988.36 Thus, the court may proceed to hear the case. However, it still has to
ascertain that the case does not involve an agrarian dispute before taking cognizance thereof. 37

For a case to involve an agrarian dispute, the following essential requisites of an agricultural tenancy relationship must be present: (1)
the parties are the landowner and the tenant; (2) the subject is agricultural land; (3) there is consent; (4) the purpose is agricultural
production; (5) there is personal cultivation; and (6) there is sharing of harvest or payment of rental. 38

Our examination of the records show that there is no landowner-tenant relationship between the parties. Primitiva no longer owned the
land on March 23, 1976, at the time she entered into the lease agreement with Pascual Cabrera. On September 29, 1970, she already
sold the land to her daughter, petitioner Felicisima. Since the sale, Primitiva no longer had an owners right to alienate or encumber it,
much less, to lease it. Without a valid leasehold agreement, there was no tenancy involved in this case, and the jurisdiction on the
matter belonged to the regular courts.

Apropos the last issue, concerning the motion to dismiss filed by respondent before the MTC, we have time and again warned that a
notice of hearing which does not comply with the requirements of Sections 4 and 5, Rule 15 of the Rules of Court, is a worthless piece
of paper and would not merit any consideration from the courts. 39 The clerk of court does not have the duty to accept it, much less, to
bring it to the attention of the presiding judge. 40 The defect cannot be cured by any subsequent action of the court and it is grave abuse
of discretion of the court to overlook the mandatory rule on notice and act on the motion. 41

WHEREFORE, the petition is GRANTED. The Decision, dated September 28, 2000, and the Resolution, dated June 14, 2002, of the
Court of Appeals in CA-G.R. SP No. 46266 are hereby REVERSED and SET ASIDE, and the Decisions dated August 11, 1997 and
November 17, 1997 of the Municipal Trial Court in Special Civil Action No. 53 and of the Regional Trial Court in Civil Case No.
686-M-97, respectively, are reinstated. The Writ of Execution dated March 16, 1998, by the RTC is also declared valid. No
pronouncement as to costs.

SO ORDERED.
 G.R. No. 165273 March 10, 2010
LEAH PALMA, Petitioner vs. HON. DANILO P. GALVEZ, in his capacity as PRESIDING JUDGE of
the REGIONAL TRIAL COURT OF ILOILO CITY, BRANCH 24; and PSYCHE ELENA AGUDO,
Respondents

FACTS
Petitioner Leah Palma filed with the RTC an action for damages against the Philippine Heart Center
(PHC), Dr. Danilo Giron and Dr. Bernadette O. Cruz, alleging that the defendants committed professional fault,
negligence and omission for having removed her right ovary against her will, and losing the same and the
tissues extracted from her during the surgery; and that although the specimens were subsequently found,
petitioner was doubtful and uncertain that the same was hers as the label therein pertained that of somebody
else. Defendants filed their respective Answers. Petitioner subsequently filed a Motion for Leave to Admit
Amended Complaint, praying for the inclusion of additional defendants who were all nurses at the PHC,
namely, Karla Reyes, Myra Mangaser and herein private respondent Agudo. Thus, summons were subsequently
issued to them.
On February 17, 2004, the RTC's process server submitted his return of summons stating that the alias
summons, together with a copy of the amended complaint and its annexes, were served upon private respondent
thru her husband Alfredo Agudo, who received and signed the same as private respondent was out of the
country.
On March 1, 2004, counsel of private respondent filed a Notice of Appearance and a Motion for
Extension of Time to File Answer stating that he was just engaged by private respondent's husband as she was
out of the country and the Answer was already due.
On March 15, 2004, private respondent's counsel filed a Motion for Another Extension of Time to File
Answer, and stating that while the draft answer was already finished, the same would be sent to private
respondent for her clarification/verification before the Philippine Consulate in Ireland; thus, the counsel prayed
for another 20 days to file the Answer.
On March 30, 2004, private respondent filed a Motion to Dismiss on the ground that the RTC had not
acquired jurisdiction over her as she was not properly served with summons, since she was temporarily out of
the country; that service of summons on her should conform to Section 16, Rule 14 of the Rules of
Court. Petitioner filed her Opposition to the motion to dismiss, arguing that a substituted service of summons on
private respondent's husband was valid and binding on her; that service of summons under Section 16, Rule 14
was not exclusive and may be effected by other modes of service, i.e., by personal or substituted service.
On May 7, 2004, the RTC issued its assailed Order granting private respondent's motion to dismiss. It
found that while the summons was served at private respondent's house and received by respondent's husband,
such service did not qualify as a valid service of summons on her as she was out of the country at the time the
summons was served, thus, she was not personally served a summons; and even granting that she knew that a
complaint was filed against her, nevertheless, the court did not acquire jurisdiction over her person as she was
not validly served with summons; that substituted service could not be resorted to since it was established that
private respondent was out of the country, thus, Section 16, Rule 14 provides for the service of summons on her
by publication
ISSUE
Whether there was a valid service of summons on private respondent

HELD
Yes. In civil cases, the trial court acquires jurisdiction over the person of the defendant either by the
service of summons or by the latters voluntary appearance and submission to the authority of the former. Private
respondent was a Filipino resident who was temporarily out of the Philippines at the time of the service of
summons; thus, service of summons on her is governed by Section 16, Rule 14 of the Rules of Court.
We have held that a dwelling, house or residence refers to the place where the person named in the
summons is living at the time when the service is made, even though he may be temporarily out of the country
at the time. It is, thus, the service of the summons intended for the defendant that must be left with the person of
suitable age and discretion residing in the house of the defendant. Compliance with the rules regarding the
service of summons is as important as the issue of due process as that of jurisdiction.
In this case, the Sheriff's Return stated that private respondent was out of the country; thus, the service
of summons was made at her residence with her husband, Alfredo P. Agudo, acknowledging receipt thereof.
Alfredo was presumably of suitable age and discretion, who was residing in that place and, therefore, was
competent to receive the summons on private respondent's behalf.
Notably, private respondent makes no issue as to the fact that the place where the summons was served
was her residence, though she was temporarily out of the country at that time, and that Alfredo is her husband.
In fact, in the notice of appearance and motion for extension of time to file answer submitted by private
respondent's counsel, he confirmed the Sheriff's Return by stating that private respondent was out of the country
and that his service was engaged by respondent's husband. In his motion for another extension of time to file
answer, private respondent's counsel stated that a draft of the answer had already been prepared, which would
be submitted to private respondent, who was in Ireland for her clarification and/or verification before the
Philippine Consulate there. These statements establish the fact that private respondent had knowledge of the
case filed against her, and that her husband had told her about the case as Alfredo even engaged the services of
her counsel.

G.R. No. L-58340 July 16, 1991

KAWASAKI PORT SERVICE CORPORATION, NAIKAI SHIPPING CO. LTD., NAIKAI TUG BOAT SERVICE CO., THE PORT
SERVICE CORPORATION, LICENSED LAND SEA PILOTS ASSOCIATION, HAYAKOMA UNYU K.K., TOKYO KISEN COMPANY,
LTD., OMORI KAISOTEN, LTD., TOHOKU UNYU CO., LTD. AND SEITETSU UNYU CO., LTD., petitioners,
vs.
THE HON. AUGUSTO M. AMORES, Judge of Br. XXIV, Court of First Instance of Manila, and C.F. SHARP & CO., INC.,
respondents.

respondent filed a complaint for injunction and/or declaratory relief in the Court of First Instance of Manila against
Japanese corporations as defendants. The complaint alleges that the plaintiff is a corporation organized and existing
under the laws of the Philippines; that there is another corporation organized under the law of Japan with the corporate
name C.F. Sharp Kabushiki Kaisha; that the plaintiff and C.F. Sharp Kabushiki Kaisha are separate and distinct from each
other; that C.F. Sharp Kabushiki Kaisha appears to have incurred obligations to several creditors, that due to financial
difficulties, C.F. Sharp Kabushiki Kaisha failed and/or refused to pay its creditors; and that in view of the failure to pay its
alleged obligations to defendants, the latter have been demanding from C.F. Sharp & Co., Inc., the payment of the
alleged obligations to them of C.F. Sharp Kabushiki Kaisha,
Since the defendants are non-residents, without business addresses in the Philippines but in Japan, the private
respondent prayed for leave of court to effect extraterritorial service of summons.

whether or not private respondent's complaint for injunction and/or declaratory relief is within the purview of the
provisions of Section 17, Rule 14 of the Rules of Court.

It is evident that monetary obligations do not refer to status, lights and obligations. Obligations are more or less
temporary, but status is relatively permanent. But more importantly, the prevailing rule is that "where a declaratory
judgment as to a disputed fact would be determinative of issues rather than a construction of definite stated rights,
status and other relations, commonly expressed in written instrument, the case is not one for declaratory judgment."
Thus, considering the nature of a proceeding for declaratory judgment, wherein relief may be sought only to declare
rights and not to determine or try issues, there is more valid reason to adhere to the principle that a declaratory relief
proceeding is unavailable where judgment would have to be made, only after a judicial investigation of disputed issues.

Hence, as ruled by this Court, where the complaint does not involve the personal status of plaintiff, nor any property in
the Philippines in which defendants have or claim an interest, or which the plaintiff has attached, but purely an action
for injunction, it is a personal action as well as an action in personam, not an action in rem or quasi in rem. As a personal
action, personal or substituted service of summons on the defendants, not extraterritorial service, is necessary to confer
jurisdiction on the court. In an action for injunction, extra-territorial service of summons and complaint upon the non-
resident defendants cannot subject them to the processes of the regional trial courts which are powerless to reach them
outside the region over which they exercise their authority. Extra-territorial service of summons will not confer on the
court jurisdiction or Power to compel them to obey its orders