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G.R. No. 172825 October 11, 2012 petitioners failed to collect the amounts they claimed from respondent.

SPOUSES MINIANO B. DELA CRUZ and LETA L. DELA CRUZ, Petitioners, vs. Hence, the Complaint for Sum of Money With Damages 10 filed with the
ANA MARIE CONCEPCION, Respondent. Regional Trial Court (RTC)11 of Antipolo, Rizal. The case was docketed as
DECISION Civil Case No. 98-4716.
PERALTA, J.: In her Answer with Compulsory Counterclaim,12 respondent claimed that
Assailed in this petition for review on certiorari under Rule 45 of the her unpaid obligation to petitioners is only P200,000.00 as earlier
Rules of Court filed by petitioners spouses Miniano B. Dela Cruz and Leta confirmed by petitioners and not P487,384.15 as later alleged in the
L. Dela Cruz against respondent Ana Marie Concepcion are the Court of complaint. Respondent thus prayed for the dismissal of the complaint.
Appeals (CA) Decision1 dated March 31, 2005 and Resolution2 dated May By way of counterclaim, respondent prayed for the payment of moral
24, 2006 in CA-G.R. CV No. 83030. damages and attorney’s fees. During the presentation of the parties’
The facts of the case are as follows: evidence, in addition to documents showing the statement of her paid
On March 25, 1996, petitioners (as vendors) entered into a Contract to obligations, respondent presented a receipt purportedly indicating
Sell3 with respondent (as vendee) involving a house and lot in Cypress payment of the remaining balance of P200,000.00 to Adoracion Losloso
St., Phase I, Town and Country Executive Village, Antipolo City for a (Losloso) who allegedly received the same on behalf of petitioners. 13
consideration of P2,000,000.00 subject to the following terms and On March 8, 2004, the RTC rendered a Decision14 in favor of respondent,
conditions: the dispositive portion of which reads:
a) That an earnest money of P100,000.00 shall be paid immediately; WHEREFORE, premises considered, this case is hereby DISMISSED. The
b) That a full down payment of Four Hundred Thousand Pesos plaintiff is hereby ordered to pay the defendant’s counterclaim,
(P400,000.00) shall be paid on February 29, 1996; amounting to wit:
c) That Five Hundred Thousand Pesos (P500,000.00) shall be paid on or a) P300,000 as moral damages; and
before May 5, 1996; and b) P100,000 plus P2,000 per court appearance as attorney’s fees.
d) That the balance of One Million Pesos (P1,000,000.00) shall be paid on SO ORDERED.15
installment with interest of Eighteen Percent (18%) per annum or One The RTC noted that the evidence formally offered by petitioners have not
and a half percent (1-1/2 %) interest per month, based on the actually been marked as none of the markings were recorded. Thus, it
diminishing balance, compounded monthly, effective May 6, 1996. The found no basis to grant their claims, especially since the amount
interest shall continue to run until the whole obligation shall have been claimed in the complaint is different from that testified to. The court, on
fully paid. The whole One Million Pesos shall be paid within three years the other hand, granted respondent’s counterclaim. 16
from May 6, 1996; On appeal, the CA affirmed the decision with modification by deleting the
e) That the agreed monthly amortization of Fifty Thousand Pesos award of moral damages and attorney’s fees in favor of respondent. 17 It
(P50,000.00), principal and interest included, must be paid to the agreed with the RTC that the evidence presented by petitioners cannot
Vendors, without need of prior demand, on or before May 6, 1996, and be given credence in determining the correct liability of
every month thereafter. Failure to pay the monthly amortization on time, respondent.18 Considering that the purchase price had been fully paid by
a penalty equal to Five Percent (5%) of the amount due shall be respondent ahead of the scheduled date agreed upon by the parties,
imposed, until the account is updated. In addition, a penalty of One petitioners were not awarded the excessive penalties and
Hundred Pesos per day shall be imposed until the account is updated; interests.19 The CA thus maintained that respondent’s liability is limited
f) That after receipt of the full payment, the Vendors shall execute the to P200,000.00 as claimed by respondent and originally admitted by
necessary Absolute Deed of Sale covering the house and lot mentioned petitioners.20 This amount, however, had already been paid by
above x x x4 respondent and received by petitioners’ representative.21 Finally, the CA
Respondent made the following payments, to wit: (1) P500,000.00 by pointed out that the RTC did not explain in its decision why moral
way of downpayment; (2) P500,000.00 on May 30, 1996; (3) damages and attorney’s fees were awarded. Considering also that bad
P500,000.00 paid on January 22, 1997; and (4) P500,000.00 bounced faith cannot be attributed to petitioners when they instituted the
check dated June 30, 1997 which was subsequently replaced by another collection suit, the CA deleted the grant of their counterclaims.22
check of the same amount, dated July 7, 1997. Respondent was, Aggrieved, petitioners come before the Court in this petition for review
therefore, able to pay a total of P2,000,000.00.5 on certiorari under Rule 45 of the Rules of Court raising the following
Before respondent issued the P500,000.00 replacement check, she told errors:
petitioners that based on the computation of her accountant as of July I.
6, 1997, her unpaid obligation which includes interests and penalties was "THE TRIAL COURT ERRED IN DISMISSING THE COMPLAINT ON THE GROUND
only P200,000.00.6 Petitioners agreed with respondent and said "if THAT PLAINTIFF FAILED TO FORMALLY OFFER THEIR EVIDENCE AS
P200,000.00 is the correct balance, it is okay with us."7 DEFENDANT JUDICIALLY ADMITTED IN HER ANSWER WITH COMPULS[O]RY
Meanwhile, the title to the property was transferred to respondent. COUNTERCLAIM HER OUTSTANDING OBLIGATION STILL DUE TO PLAINTIFFS
Petitioners later reminded respondent to pay P209,000.00 within three AND NEED NO PROOF.
months.8 They claimed that the said amount remained unpaid, despite II.
the transfer of the title to the property to respondent. Several months THE TRIAL COURT ERRED IN DISMISSING THE COMPLAINT FOR ALLEGED
later, petitioners made further demands stating the supposed correct FAILURE OF PLAINTIFFS TO PRESENT COMPUTATION OF THE AMOUNT BEING
computation of respondent’s liabilities.9 Despite repeated demands, CLAIMED AS DEFENDANT JUDICIALLY ADMITTED HAVING RECEIVED THE
DEMAND LETTER DATED OCTOBER 22, 1997 WITH COMPUTATION OF THE respondent in her Answer with Compulsory Counterclaim, especially as
BALANCE DUE. to their agreed stipulations on interests and penalties as well as the
III. existence of outstanding obligations.
THE TRIAL COURT ERRED IN DISMISSING THE COMPLAINT ON THE GROUND It is, thus, necessary to discuss the effect of failure of respondent to
THAT THE DEFENDANT FULLY PAID THE CLAIMS OF PLAINTIFFS BASED ON plead payment of its obligations.
THE ALLEGED RECEIPT OF PAYMENT BY ADORACION LOSLOSO FROM ANA Section 1, Rule 9 of the Rules of Court states that "defenses and
MARIE CONCEPCION MAGLASANG WHICH HAS NOTHING TO DO WITH THE objections not pleaded either in a motion to dismiss or in the answer are
JUDICIALLY ADMITTED OBLIGATION OF APPELLEE."23 deemed waived." Hence, respondent should have been barred from
Invoking the rule on judicial admission, petitioners insist that respondent raising the defense of payment of the unpaid P200,000.00. However,
admitted in her Answer with Compulsory Counterclaim that she had paid Section 5, Rule 10 of the Rules of Court allows the amendment to
only a total amount of P2 million and that her unpaid obligation amounts conform to or authorize presentation of evidence, to wit:
to P200,000.00.24 They thus maintain that the RTC and the CA erred in Section 5. Amendment to conform to or authorize presentation of
concluding that said amount had already been paid by respondent. evidence. – When issues not raised by the pleadings are tried with the
Petitioners add that respondent’s total liability as shown in the latter’s express or implied consent of the parties, they shall be treated in all
statement of account was erroneously computed for failure to respects as if they had been raised in the pleadings. Such amendment of
compound the monthly interest agreed upon.25 Petitioners also claim the pleadings as may be necessary to cause them to conform to the
that the RTC and the CA erred in giving credence to the receipt evidence and to raise these issues may be made upon motion of any
presented by respondent to show that her unpaid obligation had already party at any time, even after judgment; but failure to amend does not
been paid having been allegedly given to a person who was not armed affect the result of the trial of these issues. If evidence is objected to at
with authority to receive payment.26 the trial on the ground that it is not within the issues made by the
The petition is without merit. pleadings, the court may allow the pleadings to be amended and shall do
It is undisputed that the parties entered into a contract to sell a house so with liberality if the presentation of the merits of the action and the
and lot for a total consideration of P2 million. Considering that the ends of substantial justice will be subserved thereby. The court may
property was payable in installment, they likewise agreed on the grant a continuance to enable the amendment to be made.
payment of interest as well as penalty in case of default. It is likewise The foregoing provision envisions two scenarios, namely, when evidence
settled that respondent was able to pay the total purchase price of P2 is introduced in an issue not alleged in the pleadings and no objection
million ahead of the agreed term. Afterwhich, they agreed on the was interjected; and when evidence is offered on an issue not alleged in
remaining balance by way of interest and penalties which is the pleadings but this time an objection was raised.29 When the issue is
P200,000.00. Considering that the term of payment was not strictly tried without the objection of the parties, it should be treated in all
followed and the purchase price had already been fully paid by respects as if it had been raised in the pleadings. 30 On the other hand,
respondent, the latter presented to petitioners her computation of her when there is an objection, the evidence may be admitted where its
liabilities for interests and penalties which was agreed to by petitioners. admission will not prejudice him.31
Petitioners also manifested their conformity to the statement of Thus, while respondent judicially admitted in her Answer that she only
account prepared by respondent. paid P2 million and that she still owed petitioners P200,000.00,
In paragraph (9) of petitioners’ Complaint, they stated that: respondent claimed later and, in fact, submitted an evidence to show
9) That the Plaintiffs answered the Defendant as follows: "if P200,000 is that she already paid the whole amount of her unpaid obligation. It is
the correct balance, it is okay with us." x x x.27 noteworthy that when respondent presented the evidence of payment,
But in paragraph (17) thereof, petitioners claimed that defendant’s petitioners did not object thereto. When the receipt was formally offered
outstanding liability as of November 6, 1997 was P487,384.15.28 Different as evidence, petitioners did not manifest their objection to the
amounts, however, were claimed in their demand letter and in their admissibility of said document on the ground that payment was not an
testimony in court. issue. Apparently, petitioners only denied receipt of said payment and
With the foregoing factual antecedents, petitioners cannot be permitted assailed the authority of Losloso to receive payment. Since there was an
to assert a different computation of the correct amount of respondent’s implied consent on the part of petitioners to try the issue of payment,
liability. even if no motion was filed and no amendment of the pleading has been
It is noteworthy that in answer to petitioners’ claim of her purported ordered,32 the RTC cannot be faulted for admitting respondent’s
unpaid obligation, respondent admitted in her Answer with Compulsory testimonial and documentary evidence to prove payment. 33
Counterclaim that she paid a total amount of P2 million representing the As stressed by the Court in Royal Cargo Corporation v. DFS Sports
purchase price of the subject house and lot. She then manifested to Unlimited, Inc.,34
petitioners and conformed to by respondent that her only balance was The failure of a party to amend a pleading to conform to the evidence
P200,000.00. Nowhere in her Answer did she allege the defense of adduced during trial does not preclude adjudication by the court on the
payment. However, during the presentation of her evidence, respondent basis of such evidence which may embody new issues not raised in the
submitted a receipt to prove that she had already paid the remaining pleadings. x x x Although, the pleading may not have been amended to
balance. Both the RTC and the CA concluded that respondent had already conform to the evidence submitted during trial, judgment may
paid the remaining balance of P200,000.00. Petitioners now assail this, nonetheless be rendered, not simply on the basis of the issues alleged
insisting that the court should have maintained the judicial admissions of but also on the issues discussed and the assertions of fact proved in the
course of the trial. The court may treat the pleading as if it had been Moreover, as correctly held by the CA:
amended to conform to the evidence, although it had not been actually Furthermore, that Adoracion Losloso was indeed an agent of the
amended. x x x Clearly, a court may rule and render judgment on the appellant spouses is borne out by the following admissions of plaintiff-
basis of the evidence before it even though the relevant pleading had not appellant Atty. Miniano dela Cruz, to wit:
been previously amended, so long as no surprise or prejudice is thereby Q: You would agree with me that you have authorized this Doiry Losloso
caused to the adverse party. Put a little differently, so long as the basic to receive payment of whatever balance is due you coming from Ana
requirements of fair play had been met, as where the litigants were Marie Concepcion, that is correct?
given full opportunity to support their respective contentions and to A: In one or two times but not total authority, sir.
object to or refute each other's evidence, the court may validly treat the Q: Yes, but you have authorized her to receive payment?
pleadings as if they had been amended to conform to the evidence and A: One or two times, yes x x x. (TSN, June 28, 1999, pp. 16-17)40
proceed to adjudicate on the basis of all the evidence before it. Thus, as shown in the receipt signed by petitioners’ agent and pursuant
(Emphasis supplied)35 to the authority granted by petitioners to Losloso, payment made to the
To be sure, petitioners were given ample opportunity to refute the fact latter is deemed payment to petitioners. We find no reason to depart
of and present evidence to prove payment. from the RTC and the CA conclusion that payment had already been
With the evidence presented by the contending parties, the more made and that it extinguished respondent's obligations.
important question to resolve is whether or not respondent’s obligation WHEREFORE, premises considered, the petition is DENIED for lack of
had already been extinguished by payment. merit. The Court of Appeals Decision dated March 31, 2005 and
We rule in the affirmative as aptly held by the RTC and the CA. Resolution dated May 24, 2006 in CA-G.R. CV No. 83030, are AFFIRMED.
Respondent’s obligation consists of payment of a sum of money. In order SO ORDERED.
to extinguish said obligation, payment should be made to the proper
person as set forth in Article 1240 of the Civil Code, to wit: G.R. No. 173987 February 25, 2012
Article 1240. Payment shall be made to the person in whose favor the PADILLA MERCADO, ZULUETA MERCADO, BONIFACIA MERCADO, DAMIAN
obligation has been constituted, or his successor in interest, or any MERCADO and EMMANUEL MERCADO BASCUG, Petitioners,
person authorized to receive it. (Emphasis supplied) vs.
The Court explained in Cambroon v. City of Butuan,36 cited in Republic v. SPOUSES AGUEDO ESPINA and LOURDES ESPINA, Respondents.
De Guzman,37 to whom payment should be made in order to extinguish an DECISION
obligation: PERALTA, J.:
Payment made by the debtor to the person of the creditor or to one Assailed before the Court via a petiti_on for review on certiorari under
authorized by him or by the law to receive it extinguishes the obligation. Rule 45 of the Rules of Court are the Decision1 and Resolution,2 dated
When payment is made to the wrong party, however, the obligation is not April 27, 2005 and July 12, 2006, respectively, of the Court of Appeals
extinguished as to the creditor who is without fault or negligence even if (CA) in CA-G.R. SP No. 84537.
the debtor acted in utmost good faith and by mistake as to the person of Subject of the instant controversy is a 338 square meter parcel of land
the creditor or through error induced by fraud of a third person. located at the Poblacion of the then Municipality of Maasin (now a city),
In general, a payment in order to be effective to discharge an obligation, in the Province of Southern Leyte.
must be made to the proper person. Thus, payment must be made to the On May 8, 2000, herein petitioners filed with the Regional Trial Court
obligee himself or to an agent having authority, express or implied, to (RTC) of Maasin, Southern Leyte, a Complaint for Recovery of Property
receive the particular payment. Payment made to one having apparent and Declaration of Nullity of Deed of Sale, Certificate of Title and
authority to receive the money will, as a rule, be treated as though Damages. The case was docketed as Civil Case No. R-3147.
actual authority had been given for its receipt. Likewise, if payment is Petitioners alleged in their Complaint that they are the heirs of the late
made to one who by law is authorized to act for the creditor, it will work spouses Santiago and Sofronia Mercado, who were the owners of the
a discharge. The receipt of money due on a judgment by an officer subject parcel of land; after the death of Santiago and Sofronia,
authorized by law to accept it will, therefore, satisfy the debt. 38 petitioners inherited the disputed lot, possessing the same as owners;
Admittedly, payment of the remaining balance of P200,000.00 was not sometime in 1996, herein respondents claimed ownership over the
made to the creditors themselves. Rather, it was allegedly made to a subject parcel of land, alleging that they bought the same from one
certain Losloso. Respondent claims that Losloso was the authorized Josefa Mercado Espina (Josefa) who, in turn, previously bought the
agent of petitioners, but the latter dispute it. same in 1939 from a certain Genivera Mercado Kavanaugh; that
Losloso’s authority to receive payment was embodied in petitioners’ Genivera supposedly purchased the same property from one Escolastico
Letter39 addressed to respondent, dated August 7, 1997, where they Mercado in 1937 who, in turn, allegedly bought it from Santiago Mercado.
informed respondent of the amounts they advanced for the payment of Petitioners further alleged that in 1962, Josefa, through fraudulent
the 1997 real estate taxes. In said letter, petitioners reminded machinations, was able to obtain a title (Original Certificate of Title No.
respondent of her remaining balance, together with the amount of taxes 35) over the subject property in her name. Asserting that the above-
paid. Taking into consideration the busy schedule of respondent, mentioned contracts of sale never happened, petitioners prayed for the
petitioners advised the latter to leave the payment to a certain "Dori" declaration of nullity of the deeds of sale between Santiago and
who admittedly is Losloso, or to her trusted helper. This is an express Escolastico, Escolastico and Genivera, and between Genivera and Josefa.
authority given to Losloso to receive payment. They prayed that the Transfer Certificate of Title (TCT) in the name of
herein respondents be nullified and that petitioners be declared as the On the first issue, petitioners contend that respondents' Motion to
owners of the disputed lot. They asked that the court award them actual, Dismiss Amended Complaint was filed beyond the period allowed by the
moral and exemplary damages, and attorney's fees. Rules of Court. Petitioners also aver that the above Motion to Dismiss
On June 29, 2000, respondents filed a Motion to Dismiss on grounds Amended Complaint is a circumvention of the Rules of Court, because
that the RTC has no jurisdiction over the case due to the failure of the the matters raised therein are mere reiterations of their first motion to
complainant to state the assessed value of the property, that dismiss, which was dismissed by the RTC and, on petition for certiorari,
petitioners' cause of action is barred by prescription, laches and was denied due course by the CA.
indefeasibility of title, and that the complaint does not state sufficient Anent the second issue, petitioners argue that respondents' ground of
cause of action against respondents who are buyers in good faith. 3 indefeasibility of title in their Motion to Dismiss Amended Complaint is
The RTC denied respondents' Motion to Dismiss. Respondents then filed a not an authorized ground under Rule 16 of the Rules of Court. Petitioners
motion for reconsideration, but the same was denied by the RTC. also assert that the other grounds, i.e., good faith, lack of cause of
Respondents then filed a special civil action for certiorari with the CA action and prescription, raised by respondents in their motion are not
assailing the above orders of the RTC. supported by evidence.
In its Resolution4 dated March 13, 2001, the CA denied due course and The petition lacks merit.
dismissed respondents' petition for certiorari. Respondents filed a As to the first issue, there is no dispute that the issue of timeliness of
motion for reconsideration, but the same was denied by the CA in its respondents' Motion to Dismiss petitioners' Amended Complaint was not
Resolution dated October 21, 2003. raised by petitioners before the RTC. Neither was this issue raised in
Meanwhile, on August 17, 2000, petitioners, by leave of court, filed an their Comment to respondents' petition for certiorari filed with the CA. It
Amended Complaint to include the assessed value of the subject was only in their Motion for Reconsideration of the CA Decision that this
property.5 matter was raised. It is well established that issues raised for the first
On November 21, 2003, respondents filed a Motion to Dismiss Amended time on appeal and not raised in the proceedings in the lower court are
Complaint on grounds of prescription, laches, indefeasibility of title and barred by estoppel.12 Points of law, theories, issues, and arguments not
lack of cause of action.6 brought to the attention of the trial court ought not to be considered by
On February 18, 2004, the RTC issued an Order7 denying respondents' a reviewing court, as these cannot be raised for the first time on
Motion to Dismiss Amended Complaint. Respondents filed a motion for appeal.13 Basic considerations of due process impel the adoption of this
reconsideration, but the RTC denied it in its Order dated April 19, 2004. 8 rule.14
Respondents filed a special civil action for certiorari with the CA praying Moreover, respondent's filing of their Motion to Dismiss Amended
that the February 18, 2004 and April 19, 2004 Orders of the RTC be set Complaint may not be considered as a circumvention of the rules of
aside and petitioners' complaint dismissed. procedure. Under Section 8, Rule 10 of the Rules of Court, an amended
On April 27, 2005, the CA promulgated its assailed Decision, the complaint supersedes an original one. As a consequence, the original
dispositive portion of which reads as follows: complaint is deemed withdrawn and no longer considered part of the
WHEREFORE, the petition is granted. The assailed orders of the Regional record.15 In the present case, the Amended Complaint is, thus, treated as
Trial Court dated February 18, 2004 and April 19, 2004 must be as they an entirely new complaint. As such, respondents had every right to move
are hereby, SET ASIDE. The COMPLAINT in Civil Case No. R-3147 is for the dismissal of the said Amended Complaint. Were it not for the
DISMISSED. The Regional Trial Court of Maasin City, Branch 25 is filing of the said Motion, respondents would not have been able to file a
hereby enjoined from proceeding with the case. No pronouncement as to petition for certiorari before the CA which, in turn, rendered the
costs. presently assailed judgment in their favor.
SO ORDERED.9 With respect to the second issue, the CA correctly ruled that petitioners'
The CA ruled that respondents' title has become indefeasible and Amended Complaint failed to state a cause of action. The Court quotes
incontrovertible by lapse of time and that petitioners' action is already with approval the following disquisition of the appellate court, to wit:
barred by prescription. The CA also held that since petitioners did not xxxx
allege that respondents were not buyers in good faith, the latter are With particular reference to the petitioners [herein respondents], We
presumed to be purchasers in good faith and for value. observed that there is no allegation at all in respondents' [herein
Petitioners filed a motion for reconsideration, but the CA denied it in its petitioners'] complaint that they [respondents] are buyers or
Resolution10 dated July 12, 2006. transferees in bad faith or with notice of the alleged defect in the title of
Hence, the instant petition for review on certiorari raising the following their vendor/s with the result that the allegations of said pleading are
issues: not sufficient to constitute a cause of action.
1) Procedurally, whether or not the Court of Appeals erred in giving due While private respondents [petitioners] accused Escolastico Mercado of
course to respondents’ second motion to dismiss filed on November 21, fraudulent conduct, due to the alleged dubious character of the
2003 on the amended complaint filed on August 16, 2000; document of sale which passed the ownership of Santiago's property to
2) Substantively, whether or not the Court of Appeals erred in ordering him and that the signature of Santiago was not authentic, there is no
the Regional Trial Court to dismiss the case and enjoining it from allegation whatsoever as to the fraudulent nature of the succeeding
proceeding with the case on the ground of indefeasibility of title, transfers or of the succeeding transferee's knowledge about the
prescription and/or laches.11 irregularity and defect of the first sale. Most importantly, the complaint
contains no averment that herein petitioners [respondents] had any
knowledge, much less any participation, voluntarily or otherwise, in the correct in dismissing the complaint on the ground of failure to state a
alleged irregularity or anomaly of the original sale transaction between cause of action.
Santiago and Escolastico Mercado or in the acquisition/issuance of the Apropos to the foregoing, it bears to note at this stage that the Court
OCT No. 35. Neither was there any allegation in the complaint attributing likewise agrees with the ruling of the CA that respondents are presumed
petitioners [respondents] with negligence. Petitioners [Respondents] purchasers in good faith.1âwphi1 In holding thus, the CA relied on the
cannot also be presumed to be negligent. On the contrary, the revised settled principle that one who deals with property registered under the
rules of court provides a disputable presumption in Petitioners’ Torrens System need not go beyond the same, but only has to rely on
[respondents'] favor to the effect "that a person takes ordinary care of the title.20 In the instant case, there is no dispute that the subject
his concerns["] and that ["]private transactions have been fair and property was already covered by a Torrens title when respondents
regular.["] The allegations of the complaint would even lend a conclusion bought the same. There was no allegation in the Amended Complaint that
that there is nothing questionable as to the way respondents were not buyers in good faith. More particularly, there was
petitioners[respondents] obtained their title over the property. This is nothing in the said complaint to indicate that respondents were aware of
where We denounce the court a quo's act of entertaining or were participants in the alleged fraud supposedly committed against
evidence aliunde and supplying the missing facts which should have been petitioners' predecessor-in-interest, or that they have notice of any
alleged to constitute a cause of action. defect in the title of the seller. As the CA correctly noted, from the time
We have carefully perused the complaint and We find that it is devoid of that petitioners' predecessor-in-interest was supposedly deprived of
the following allegations: 1) that Josefa is the mother of petitioners ownership of the subject Jot through an alleged fraudulent sale, the
[respondents]; 2) that Genivera Mercado Kavanaugh is an American same had already been sold thrice. Moreover, since the subject property
citizen, and 3) that, petitioners [respondents] are not buyers in good was already covered by a Torrens title at the time that respondents
faith. Hence, the court a quo clearly committed grave abuse of bought the same, the law does not require them to go beyond what
discretion, when, in denying the motion to dismiss, he made some appears on the face of the title. The lot has, thus, passed to
findings "that petitioners [respondents] are not buyers in good faith respondents, who are presumed innocent purchasers for value, in the
because all along they know or they ought to know that the land does not absence of any allegation to the contrary.
belong to their mother Josefa Espina, and that their mother could not Paragraph 3, Section 53 ofPresidential Decree No. 1529 provides:
have legally acquired the same from her sister Genivera Kavanaugh, an In all cases of registration procured by fraud, the owner may pursue all
American citizen who cannot acquire land except by way of hereditary his legal and equitable remedies against the parties to such fraud
succession." It has been held time and again that "to determine the without prejudice, however, to the rights of any i1moccnt holder for
sufficiency of the cause of action, the respondent court can only value of a certificate of title. x x x
consider facts alleged in the complaint – which are deemed Petitioners' cause of action should, therefore, be directed not against
hypothetically admitted by defendants – and no other allegations should respondents, who are innocent holders for value, but against those
be considered." whom petitioners alleged to have defrauded them.
Where the complaint for recovery of ownership and possession of a Based on the above discussions, the Court no longer finds any need to
parcel of land (such as the one at bar) alleges that some of the resolve the other issues raised in the instant petition.
defendants bought said land from their co-defendants who had a WHEREFORE, the petition for review on certiorari is DENIED. The April 27,
defective title thereto – but does not allege that the purchasers were 2005 Decision and July 12, 2006 Resolution of the Court of Appeals in
purchasers in bad faith or with notice of the defect in the title of their CA-G.R. SP No. 84537 are AFFIRMED.
vendors, it is held that the lower court correctly dismissed the SO ORDERED.
complaint against the purchasers for failure to state a cause of action
against them. MA. MERCEDES L. BARBA, Petitioner, - versus - LICEO DE CAGA Y AN
x x x x16 (Emphasis supplied) UNIVERSITY, Respondent. x- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Failure to state a cause of action refers to the insufficiency of the DECISION VILLARAMA, JR., J.: G .R. No. 193857 Present: SERENO, C.J.,
pleading, and is a ground for dismissal under Rule 16 of the Rules of Chairperson, LEONARDO-DE CASTRO, BERSAMIN, VILLARAMA, JR., and
Court.17 PEREZ,* JJ Promulgated: Before the Court is a petition for review on
A complaint states a cause of action if it avers the existence of the certiorari assailing the March 29, 2010 Amended Decision1 and
three essential elements of a cause of action, namely: September 14, 2010 Resolution2 of the Court of Appeals (CA) in CA-G.R.
(a) The legal right of the plaintiff; SP No. 02508-MIN. The CA had reconsidered its earlier Decision3 dated
(b) The correlative obligation of the defendant; and October 22, 2009 and set aside the September 25, 2007 and June 30,
(c) The act or omission of the defendant in violation of said legal right. 18 2008 Resolutions4 of the National Labor Relations Commission (NLRC)
If the allegations in the complaint do not aver the concurrence of these as well as the September 29, 2006 Decision5 of the Labor Arbiter. The
elements, the complaint becomes vulnerable to a motion to dismiss on CA held that the Labor Arbiter and NLRC had no jurisdiction over the
the ground of failure to state a cause of action.19 A perusal of the illegal dismissal case filed by petitioner against 2 Designated additional
Amended Complaint in the present case would show that there is, member per Special Order No. 1356 dated November 13, 2012. Rollo, pp.
indeed, no allegation of any act or omission on the part of respondents 77-94. Penned by Associate Justice Leoncia R. Dimagiba with Associate
which supposedly violated the legal rights of petitioners. Thus, the CA is Justices Rodrigo F. Lim, Jr. and Danton Q. Bueser concurring. Id. at 166-
172. Penned by Associate Justice Leoncia R. Dimagiba with Associate
Justices Rodrigo F. Lim, Jr. and Ramon Paul L. Hernando concurring. Id. in that department for the school year 2005-2006. In reply, petitioner
at 54-76. Penned by Associate Justice Ruben C. Ayson with Associate informed Dr. Lerin that she had not committed to teach in the College of
Justices Rodrigo F. Lim, Jr. and Leoncia Rea1-Dimagiba concurring. I d. Nursing and that as far as she can recall, her 8 Records, Vol. I, p. 39. 9
at 42-48, 50-52. ld. at 34-41. Decision 2 G.R. No. 193857 respondent Annex “B,” id. at 23. 10 Annex “E,” id. at 61. Decision 4 G.R. No. 193857
because petitioner’s position as Dean of the College of Physical Therapy employment is not dependent on any teaching load. She then requested
of respondent is a corporate office. The facts follow. Petitioner Dr. Ma. for the processing of her separation benefits in view of the closure of
Mercedes L. Barba was the Dean of the College of Physical Therapy of the College of Physical Therapy.11 She did not report to Palomares on
respondent Liceo de Cagayan University, Inc., a private educational June 1, 2005. On June 8, 2005, petitioner followed up her request for
institution with school campus located at Carmen, Cagayan de Oro City. separation pay and other benefits but Dr. Lerin insisted that she report
Petitioner started working for respondent on July 8, 1993 as medical to Palomares; otherwise, sanctions will be imposed on her. Thus,
officer/school physician for a period of one school year or until March petitioner through counsel wrote Dr. Golez directly, asking for her
31, 1994. In July 1994, she was chosen by respondent to be the recipient separation pay and other benefits. On June 21, 2005, Dr. Magdale wrote
of a scholarship grant to pursue a three-year residency training in petitioner a letter12 directing her to report for work and to teach her
Rehabilitation Medicine at the Veterans Memorial Medical Center assigned subjects on or before June 23, 2005. Otherwise, she will be
(VMMC). The Scholarship Contract6 provides: 5. That the SCHOLAR after dismissed from employment on the ground of abandonment. Petitioner,
the duration of her study and training shall serve the SCHOOL in through counsel, replied that teaching in the College of Nursing is in no
whatever position the SCHOOL desires related to the SCHOLAR’s studies way related to her scholarship and training in the field of rehabilitation
for a period of not less than ten (10) years; After completing her medicine. Petitioner added that coercing her to become a faculty
residency training with VMMC in June 1997, petitioner returned to member from her position as College Dean is a great demotion which
continue working for respondent. She was appointed as Acting Dean of amounts to constructive dismissal.13 Dr. Magdale sent another letter14
the College of Physical Therapy and at the same time designated as to petitioner on June 24, 2005 ordering her to report for work as she
Doctor-In-Charge of the Rehabilitation Clinic of the Rodolfo N. Pelaez was still bound by the Scholarship Contract to serve respondent for two
Hall, City Memorial Hospital. On June 19, 2002, petitioner’s appointment more years. But petitioner did not do so. Hence, on June 28, 2005, Dr.
as Doctor-In-Charge of the Rehabilitation Clinic was renewed and she Magdale sent petitioner a notice terminating her services on the ground
was appointed as Dean of the College of Physical Therapy by of abandonment. Meanwhile, on June 22, 2005, prior to the termination
respondent’s President, Dr. Jose Ma. R. Golez. The appointment letter7 of her services, petitioner filed a complaint before the Labor Arbiter for
reads: x x x x Dear Dr. Barba: 6 Annex “A,” records, Vol. I, pp. 20-21. 7 illegal dismissal, payment of separation pay and retirement benefits
Annex “E”, CA rollo, p. 31. Decision 3 G.R. No. 193857 You are hereby re- against respondent, Dr. Magdale and Dr. Golez. She alleged that her
appointed Dean of the College of Physical Therapy and Doctor-In-Charge transfer to the College of 11 Id. at 25. 12 Annex “I,” id. at 65. 13 Id. at 66.
of the Rehabilitation Clinic at Rodolfo N. Pelaez Hall, City Memorial 14 Annex “L,” id. at 68. Decision 5 G.R. No. 193857 Nursing as a faculty
Hospital and other rehabilitation clinics under the management of Liceo member is a demotion amounting to constructive dismissal. Respondent
de Cagayan University for a period of three years effective July 1, 2002 claimed that petitioner was not terminated and that it was only
unless sooner revoked for valid cause or causes. Your position is one of petitioner’s appointment as College Dean in the College of Physical
trust and confidence and the appointment is subject to the pertinent Therapy that expired as a necessary consequence of the eventual
provisions of the University Administrative Personnel and Faculty closure of the said college. Respondent further averred that petitioner’s
Manuals, and Labor Code. x x x x Petitioner accepted her appointment transfer as fulltime professor in the College of Nursing does not amount
and assumed the position of Dean of the College of Physical Therapy. In to constructive dismissal since the transfer was without loss of
the school year 2003 to 2004, the College of Physical Therapy suffered seniority rights and without diminution of pay. Also, respondent added
a dramatic decline in the number of enrollees from a total of 1,121 that pursuant to the Scholarship Contract, petitioner was still duty
students in the school year 1995 to 1996 to only 29 students in the first bound to serve respondent until 2007 in whatever position related to
semester of school year 2003 to 2004. This worsened in the next year her studies the school desires. Labor Arbiter’s Ruling In a Decision15
or in school year 2004 to 2005 where a total of only 20 students dated September 29, 2006, the Labor Arbiter found that respondent did
enrolled.8 Due to the low number of enrollees, respondent decided to not constructively dismiss petitioner; therefore, she was not entitled to
freeze the operation of the College of Physical Therapy indefinitely. separation pay. The Labor Arbiter held that petitioner’s assignment as
Respondent’s President Dr. Rafaelita Pelaez-Golez wrote petitioner a full-time professor in the College of Nursing was not a demotion
letter9 dated March 16, 2005 informing her that her services as dean of tantamount to constructive dismissal. The dispositive portion of the
the said college will end at the close of the school year. Thereafter, the Labor Arbiter’s decision reads: WHEREFORE, in view of the foregoing,
College of Physical Therapy ceased operations on March 31, 2005, and judgment is hereby rendered dismissing the complaint for illegal
petitioner went on leave without pay starting on April 9, 2005. dismissal for utter lack of merit, but ordering the respondent Liceo de
Subsequently, respondent’s Executive Vice President, Dr. Mariano M. Cagayan University to reinstate complainant to an equivalent position
Lerin, through Dr. Glory S. Magdale, respondent’s Vice President for without loss of seniority rights, but without back wages. However, if
Academic Affairs, sent petitioner a letter10 dated April 27, 2005 reinstatement is no longer feasible or if there is no equivalent position
instructing petitioner to return to work on June 1, 2005 and report to to which complainant may be reinstated, respondent may opt to pay
Ma. Chona Palomares, the Acting Dean of the College of Nursing, to complainant her separation pay equivalent to one-half (1/2) month pay
receive her teaching load and assignment as a full-time faculty member for every year of service or in the sum of P195,000.00, subject to
deduction for advances or accountabilities which complainant may have authority given to it by its By-Laws because only one College Director is
had. Other claims are ordered dismissed for lack of merit. SO authorized to be appointed. It must amend its By-Laws. Prior to such an
ORDERED.16 15 Supra note 5. 16 Id. at 41. Decision 6 G.R. No. 193857 amendment, the office of College Dean is not a corporate office. Another
NLRC’s Ruling Petitioner appealed the above decision to the NLRC. On telling sign that a College Director is not the same as a Dean is the
September 25, 2007, the NLRC issued a Resolution17 reversing the Labor manner of appointment. A College Director is directly appointed by the
Arbiter’s decision and holding that petitioner was constructively Board of Directors. However, a College Dean is appointed by the
dismissed. The NLRC held that petitioner was demoted when she was President upon the recommendation of the Vice President for Academic
assigned as a professor in the College of Nursing because there are Affairs and the Executive Vice President and approval of the Board of
functions and obligations and certain allowances and benefits given to a Directors. There is a clear distinction on the manner of appointment
College Dean but not to an ordinary professor. The NLRC ruled: indicating that the offices are not one and the same. x x x x 21 Supra
WHEREFORE, in view of the foregoing, the assailed decision is hereby note 3. Decision 8 G.R. No. 193857 This shows that it was not the
MODIFIED in that complainant is hereby considered as constructively intention of LDCU to make Dr. Barba a corporate officer as it was stated
dismissed and thus entitled to backwages and separation pay of one (1) in her letter of appointment that the same shall be subject to the
month salary for every year of service, plus attorney’s fees, which shall provisions of the Labor Code. Otherwise, the appointment letter should
be computed at the execution stage before the Arbitration Branch of have stated that her appointment is governed by the Corporation Code.
origin. SO ORDERED.18 The NLRC denied respondent’s motion for Thus, We find the arguments in the Supplemental Petition on the matter
reconsideration in a Resolution19 dated June 30, 2008. Ruling of the of lack of jurisdiction of the Labor Arbiter and the NLRC to be without
Court of Appeals Respondent went to the CA on a petition for certiorari merit. Dr. Barba, being a College Dean, was not a corporate officer.22
alleging that the NLRC committed grave abuse of discretion when it (Emphasis not ours) The CA further found that no constructive dismissal
declared that petitioner’s transfer to the College of Nursing as full-time occurred nor has petitioner abandoned her work. According to the CA, a
professor but without diminution of salaries and without loss of transfer amounts to constructive dismissal when the transfer is
seniority rights amounted to constructive dismissal because there was unreasonable, unlikely, inconvenient, impossible, or prejudicial to the
a demotion involved in the transfer and because petitioner was employee or it involves a demotion in rank or a diminution of salary and
compelled to accept her new assignment. Respondent also filed a other benefits. In the case of petitioner, the CA held that she was never
Supplemental Petition20 raising for the first time the issue of lack of demoted and her transfer, being a consequence of the closure of the
jurisdiction of the Labor Arbiter and the NLRC over the case. Respondent College of Physical Therapy, was valid. The CA also noted that
claimed that a College Dean is a corporate officer under its by-laws and petitioner’s appointment as Dean of the College of Physical Therapy was
petitioner was a corporate officer of respondent since 17 Supra note 4 for a term of three years. Hence, when her appointment as College Dean
at 42-48. 18 Id. at 47. 19 Id. at 50-52. 20 Id. at 179-209. Decision 7 G.R. was no longer renewed on June 1, 2005 or after her three-year term
No. 193857 her appointment was approved by the board of directors. had expired, it cannot be said that there was a demotion or that she was
Respondent posited that petitioner was a corporate officer since her dismissed. Her term as Dean had expired and she can no longer claim to
office was created by the by-laws and her appointment, compensation, be entitled to the benefits emanating from such office. On the issue of
duties and functions were approved by the board of directors. Thus, alleged lack of jurisdiction, the CA observed that respondent never
respondent maintained that the jurisdiction over the case is with the raised the issue of jurisdiction before the Labor Arbiter and the NLRC
regular courts and not with the labor tribunals. In its original Decision21 and respondent even actively participated in the proceedings below.
dated October 22, 2009, the CA reversed and set aside the NLRC Hence, respondent is estopped from questioning the jurisdiction of the
resolutions and reinstated the decision of the Labor Arbiter. The CA did labor tribunals. Unsatisfied, both petitioner and respondent sought
not find merit in respondent’s assertion in its Supplemental Petition that reconsideration of the CA decision. Petitioner prayed for the reversal of
the position of petitioner as College Dean was a corporate office. the ruling that there was no constructive dismissal. Respondent
Instead, the appellate court held that petitioner was respondent’s meanwhile maintained that the labor tribunals have no jurisdiction over
employee, explaining thus: Corporate officers in the context of PD 902-A the case, petitioner being a corporate officer. 22 Id. at 64-66. Decision
are those officers of a corporation who are given that character either 9 G.R. No. 193857 On March 29, 2010, the CA issued the assailed
by the Corporation Code or by the corporation’s By-Laws. Under Section Amended Decision23 setting aside its earlier ruling. This time the CA
25 of the Corporation Code, the “corporate officers” are the president, held that the position of a College Dean is a corporate office and
secretary, treasurer and such other officers as may be provided for in therefore the labor tribunals had no jurisdiction over the complaint for
the By-Laws. True, the By-Laws of LDCU provides that there shall be a constructive dismissal. The CA noted that petitioner’s appointment as
College Director. This means a College Director is a corporate officer. Dean of the College of Physical Therapy was approved by the
However, contrary to the allegation of petitioner, the position of Dean respondent’s board of directors thereby concluding that the position of
does not appear to be the same as that of a College Director. Aside from a College Dean is a corporate office. Also, the CA held that the College
the obvious disparity in name, the By-Laws of LDCU provides for only Director mentioned in respondent’s by-laws is the same as a College
one College Director. But as shown by LDCU itself, numerous persons Dean and no one has ever been appointed as College Director. The CA
have been appointed as Deans. They could not be the College Director added that in the Administrative Manual the words “college” and
contemplated by the By-Laws inasmuch as the By-Laws authorize only “department” were used in the same context in the section on the Duties
the appointment of one not many. If it is indeed the intention of LDCU to and Responsibilities of the College Dean, and that there could not have
give its many Deans the rank of College Director, then it exceeded the been any other “head of department” being alluded to in the by-laws but
the college dean. The dispositive portion of the Amended Decision reads: Here, the motion for reconsideration of petitioner was filed after the
WHEREFORE, in view of the foregoing, We reconsider Our Decision on appellate court rendered an Amended Decision totally reversing and
October [22], 2009, and declare that the position of College Dean is a setting aside its previous ruling. Hence, petitioner is not precluded from
corporate office of Petitioner [Liceo de Cagayan University], thereby filing another motion for reconsideration from the Amended Decision
divesting the Labor Arbiter and the National Labor Relations Commission which held that the labor tribunals lacked jurisdiction over petitioner’s
of jurisdiction over the instant case. Hence, the Resolutions of the Public complaint for constructive dismissal. The period to file an appeal should
Respondent dated September 25, 2007 and June 30, 2008 as well as be reckoned not from the denial of her motion for reconsideration of the
that of the Regional Labor Arbiter dated 29 September 2006 are original decision, but from the date of petitioner’s receipt of the notice
VACATED and SET ASIDE as they were rendered by tribunals that had no of denial of her motion for reconsideration from the Amended Decision.
jurisdiction over the case. SO ORDERED. 24 Petitioner filed a motion for And as petitioner received notice of the denial of her motion for
reconsideration from the above decision, but her motion was denied by reconsideration from the Amended Decision on September 23, 2010 and
the CA in its Resolution25 dated September 14, 2010. Hence, petitioner filed her petition on November 8, 2010, or within the extension period
filed the present petition. Petitioner argues that the CA erred in ruling granted by the Court to file the petition, her petition was filed on time.
that she was a corporate officer and asserts that the CA’s previous Now on the main issue. As a general rule, only questions of law may be
finding that she was respondent’s employee is more in accord with law allowed in a petition for review on certiorari. 26 Considering, however,
and jurisprudence. Petitioner adds that the appellate court erred when that the CA reversed its earlier decision and made a complete
it ruled that the labor tribunals had no jurisdiction over her complaint turnaround from its previous ruling, and consequently set aside both the
for illegal dismissal against respondent. She 23 Supra note 1. 24 Id. at findings of the Labor Arbiter and the NLRC for allegedly having been
93. 25 Supra note 2. Decision 10 G.R. No. 193857 faults the CA for issued without jurisdiction, it is necessary for the Court to reexamine
allowing respondent to raise the issue of jurisdiction in a Supplemental the records and resolve the conflicting rulings. 26 Uy v. Centro
Petition after respondent has actively participated in the proceedings Ceramica Corporation, G.R. No. 174631, October 19, 2011, 659 SCRA 604,
before the labor tribunals. Petitioner also asserts that the CA erred in 614. Decision 12 G.R. No. 193857 After a careful review and examination
denying her motion for reconsideration from its Amended Decision on of the records, we find that the CA’s previous ruling that petitioner was
the ground that it is a second motion for reconsideration which is a respondent’s employee and not a corporate officer is supported by the
prohibited pleading. Lastly, petitioner claims that respondent violated totality of the evidence and more in accord with law and prevailing
the rule against forum shopping when it failed to inform the CA of the jurisprudence. Corporate officers are elected or appointed by the
pendency of the complaint for breach of contract which it filed against directors or stockholders, and are those who are given that character
petitioner before the Regional Trial Court of Misamis Oriental, Branch either by the Corporation Code or by the corporation’s by-laws.27
23. Respondent, for its part, counters that the petition was filed out of Section 2528 of the Corporation Code enumerates corporate officers as
time and petitioner’s motion for reconsideration from the Amended the president, the secretary, the treasurer and such other officers as
Decision was a prohibited pleading since petitioner has already filed a may be provided for in the by-laws. In Matling Industrial and Commercial
motion for reconsideration from the original decision of the CA. It is Corporation v. Coros, 29 the phrase “such other officers as may be
respondent’s posture that an Amended Decision is not really a new provided for in the by-laws” has been clarified, thus: Conformably with
decision but the appellate court’s own modification of its prior decision. Section 25, a position must be expressly mentioned in the By-Laws in
More importantly, respondent points out that the arguments raised by order to be considered as a corporate office. Thus, the creation of an
petitioner do not justify a reversal of the Amended Decision of the office pursuant to or under a By-Law enabling provision is not enough to
appellate court. Respondent insists on the correctness of the Amended make a position a corporate office. Guerrea v. Lezama, the first ruling
Decision and quotes the assailed decision in its entirety. Issue The on the matter, held that the only officers of a corporation were those
decisive issue in the present petition is whether petitioner was an given that character either by the Corporation Code or by the By-Laws;
employee or a corporate officer of respondent university. Resolution of the rest of the corporate officers could be considered only as
this issue resolves the question of whether the appellate court was employees of subordinate officials. Thus, it was held in Easycall
correct in ruling that the Labor Arbiter and the NLRC had no jurisdiction Communications Phils., Inc. v. King: An “office” is created by the charter
over petitioner’s complaint for constructive dismissal against of the corporation and the officer is elected by the directors or
respondent. Our Ruling We grant the petition. Prefatorily, we first stockholders. On the other hand, an employee occupies no office and
discuss the procedural matter raised by respondent that the present generally is employed not by the action of the directors or stockholders
petition is filed out of time. Respondent claims that Decision 11 G.R. No. but by the managing officer of the corporation who also determines the
193857 petitioner’s motion for reconsideration from the Amended compensation to be paid to such employee. (Emphasis supplied) 27
Decision is a second motion for reconsideration which is a prohibited Gomez v. PNOC Development and Management Corporation (PDMC), G.R.
pleading. Respondent’s assertion, however, is misplaced for it should be No. 174044, November 27, 2009, 606 SCRA 187, 194. 28 SEC. 25.
noted that the CA’s Amended Decision totally reversed and set aside its Corporate officers, quorum. – Immediately after their election, the
previous ruling. Section 2, Rule 52 of the 1997 Rules of Civil Procedure, directors of a corporation must formally organize by the election of a
as amended, provides that no second motion for reconsideration of a president, who shall be a director, a treasurer who may or may not be a
judgment or final resolution by the same party shall be entertained. This director, a secretary who shall be a resident and citizen of the
contemplates a situation where a second motion for reconsideration is Philippines, and such other officers as may be provided for in the by[-
filed by the same party assailing the same judgment or final resolution. ]laws. Any two (2) or more positions may be held concurrently by the
same person, except that no one shall act as president and secretary or College Honorarium Ma. Mercedes Vivares 2,450.00 Physical Therapy x x
as president and treasurer at the same time. The directors or trustees x x 32 In respondent’s by-laws, there are four officers specifically
and officers to be elected shall perform the duties enjoined on them by mentioned, namely, a president, a vice president, a secretary and a
law and the by[-]laws of the corporation. Unless the articles of treasurer. In addition, it is provided that there shall be other appointive
incorporation or the by[-]laws provide for a greater majority, a majority officials, a College Director and heads of departments whose
of the number of directors or trustees as fixed in the articles of appointments, compensations, powers and duties shall be determined by
incorporation shall constitute a quorum for the transaction of corporate the board of directors. It is worthy to note that a College Dean is not
business, and every decision of at least a majority of the directors or among the corporate officers mentioned in respondent’s by-laws.
trustees present at a meeting at which there is a quorum shall be valid Petitioner, being an academic dean, also held an administrative post in
as a corporate act, except for the election of officers which shall the university but not a corporate office as contemplated by law.
require the vote of a majority of all the members of the board. Directors Petitioner was not directly elected nor appointed by the board of
or trustees cannot attend or vote by proxy at board meetings. 29 G.R. directors to any corporate office but her appointment was merely
No. 157802, October 13, 2010, 633 SCRA 12, 26. Decision 13 G.R. No. approved by the board together with the other academic deans of
193857 In declaring petitioner a corporate officer, the CA considered respondent university in accordance with the procedure prescribed in
respondent’s by-laws and gave weight to the certifications of respondent’s Administrative Manual.33 The act of the board of 32 CA
respondent’s secretary attesting to the resolutions of the board of rollo, pp. 191-193. 33 4.2. Academic Deans x x x x Decision 15 G.R. No.
directors appointing the various academic deans for the School Years 193857 directors in approving the appointment of petitioner as Dean of
1991-2002 and 2002-2005, including petitioner. However, an assiduous the College of Therapy did not make her a corporate officer of the
perusal of these documents does not convince us that petitioner corporation. Moreover, the CA, in its amended decision erroneously
occupies a corporate office position in respondent university. The equated the position of a College Director to that of a College Dean
relevant portions of respondent’s by-laws30 are hereby quoted as thereby concluding that petitioner is an officer of respondent. It bears
follows: Article III The Board of Directors Sec. 3. The Board of Directors stressing that the appointive officials mentioned in Article V of
shall appoint a College Director, define his powers and duties, and respondent’s by-laws are not corporate officers under the
determine his compensation; approve or disapprove recommendations contemplation of the law. Though the board of directors may create
for appointment or dismissal of teachers and employees submitted to it appointive positions other than the positions of corporate officers, the
by the College Director; and exercise other powers and perform such persons occupying such positions cannot be deemed as corporate
duties as may be required of it hereafter for the proper functioning of officers as contemplated by Section 25 of the Corporation Code. On this
the school. x x x x Article IV Officers Sec. 1. The officers of the point, the SEC Opinion dated November 25, 1993 quoted in the case of
corporation shall consist of a President, a Vice President, and a Matling Industrial and Commercial Corporation v. Coros,34 is
Secretary-Treasurer, who shall be chosen from the directors and by the instructive: Thus, pursuant to the above provision (Section 25 of the
directors themselves. They shall be elected annually at the first meeting Corporation Code), whoever are the corporate officers enumerated in
of the directors immediately after their election, and shall hold office for the by-laws are the exclusive Officers of the corporation and the Board
one (1) year and until their successors are elected and qualified. x x x x has no power to create other Offices without amending first the
Article V Other Appointive Officials Sec. 1. The Liceo de Cagayan shall corporate Bylaws. However, the Board may create appointive positions
have a College Director and such heads of departments as may exist in other than the positions of corporate Officers, but the persons
the said college whose appointments, compensations, powers and duties occupying such positions are not considered as corporate officers
shall be determined by the Board of Directors.31 (Emphasis supplied) On within the meaning of Section 25 of the Corporation Code and are not
the other hand, the pertinent portions of the two board resolutions empowered to exercise the functions of the corporate Officers, except
appointing the various academic deans in the university including those functions lawfully delegated to them. Their functions and duties
petitioner, read as follows: 30 Rollo, pp. 211-218. 31 Id. at 212-215. are to be determined by the Board of Directors/Trustees. But even
Decision 14 G.R. No. 193857 x x x x RESOLVE, as it is hereby resolved, that assuming that a College Director may be considered a corporate officer
pursuant to Section 3[,] Article III and Section 1[,] Article V of the of respondent, a review of the records as well as the other documents
Corporation’s By-laws, the various academic deans for the school years submitted by the parties fails to persuade that petitioner was the
1999-2002 of the University, as recommended by the President of the “College Director” mentioned in the by-laws of respondent. Nowhere in
Corporation, are hereby appointed, whose names are enumerated petitioner’s appointment letter was it stated that petitioner was
hereunder and their respective colleges and their honoraria are designated as the College Director or that petitioner was to assume the
indicated opposite their names, all of them having a three (3) year term, functions and duties of a College Director. Neither can it be inferred in
to wit: Name and College Honorarium Ma. Mercedes Vivares 2,660.00 respondent’s bylaws that a dean of a college is the same as a College
Physical Therapy x x x x RESOLVE, as it is hereby resolved, that pursuant Director of respondent. 4.2.2.1. Appointed by: The President upon the
to Section 3[,] Article III and Section 1[,] Article V of the Corporation’s recommendation of the VPAA and EVP and upon approval of the Board of
By-laws, the various academic deans for the school years 2002-2005 of Directors for a definite term not to exceed three (3) years and subject
the University, as recommended by the President of the Corporation, to reappointment. (Rollo, p. 83). 34 Supra note 29 at 27. Decision 16 G.R.
are hereby appointed, whose names are enumerated hereunder and No. 193857 Respondent’s lone surviving incorporating director Yolanda
their respective colleges and their honoraria are indicated opposite Rollo even admitted that no College Director has ever been appointed by
their names, all of them having a three (3) year term, to wit: Name and respondent. In her affidavit, Yolanda also explained the reason for the
creation of the position of a College Director, to wit: 4. At the time we labor practice cases; 2. Termination disputes; 3. If accompanied with a
signed the By-Laws of the Corporation, we, as directors, did envision to claim for reinstatement, those cases that workers may file involving
form only a college of law as that was the main thrust of our president, wage, rates of pay, hours of work and other terms and conditions of
the late Atty. Rodolfo N. Pelaez. The original plan then was to have a employment; 4. Claims for actual, moral, exemplary and other forms of
“College Director” as the head of the college of law and below him within damages arising from the employer-employee relations; 5. Cases
the college were heads of departments. The appointments, arising from any violation of Article 264 of this Code, including questions
remuneration, duties and functions of the “College Director” and the involving the legality of strikes and lockouts; and 6. Except claims for
heads of departments were to be approved by the Board of Directors. x Employees Compensation, Social Security, Medicare and maternity
x x35 Notably, the CA has sufficiently explained why petitioner could not benefits, all other claims arising from employeremployee relations,
be considered a College Director in its previous decision. The appellate including those of persons in domestic or household service, involving
court explained: True, the By-Laws of [Liceo de Cagayan University] an amount exceeding five thousand pesos (P5,000.00) regardless of
provides that there shall be a College Director. This means a College whether accompanied with a claim for reinstatement. (b) The
Director is a corporate officer. However, contrary to the allegation of Commission shall have exclusive appellate jurisdiction over all cases
petitioner, the position of Dean does not appear to be the same as that decided by Labor Arbiters. x x x x Decision 18 G.R. No. 193857 Moreover,
of a College Director. Aside from the obvious disparity in name, the By- we agree with the CA’s earlier pronouncement that since respondent
Laws of [Liceo de Cagayan University] provides for only one College actively participated in the proceedings before the Labor Arbiter and the
Director. But as shown by [Liceo de Cagayan University] itself, NLRC, it is already estopped from belatedly raising the issue of lack of
numerous persons have been appointed as Deans. They could not be the jurisdiction. In this case, respondent filed position papers and other
College Director contemplated by the By-Laws inasmuch as the By-Laws supporting documents to bolster its defense before the labor tribunals
authorize only the appointment of one not many. If it is indeed the but in all these pleadings, the issue of lack of jurisdiction was never
intention of [Liceo de Cagayan University] to give its many Deans the raised. It was only in its Supplemental Petition filed before the CA that
rank of College Director, then it exceeded the authority given to it by its respondent first brought the issue of lack of jurisdiction. We have
By-Laws because only one College Director is authorized to be consistently held that while jurisdiction may be assailed at any stage, a
appointed. It must amend its By-Laws. Prior to such amendment, the party’s active participation in the proceedings will estop such party
office of [the] College Dean is not a corporate office. Another telling sign from assailing its jurisdiction. It is an undesirable practice of a party
that a College Director is not the same as a Dean is the manner of participating in the proceedings and submitting his case for decision and
appointment. A College Director is directly appointed by the Board of then accepting the judgment, only if favorable, and attacking it for lack
Directors. However, a College Dean is appointed by the President upon of jurisdiction, when adverse.37 Under Section 6, Rule 10 of the 1997
the recommendation of the Vice President for Academic Affairs and the Rules of Civil Procedure, as amended, governing supplemental pleadings,
Executive Vice President and approval of the Board of Directors. There the court “may” admit supplemental pleadings, such as the supplemental
is a clear distinction on the manner of appointment indicating that the petition filed by respondent before the appellate court, but the
offices are not one and the same.36 (Additional emphasis supplied) admission of these pleadings remains in the sound discretion of the
Undoubtedly, petitioner is not a College Director and she is not a court. Nevertheless, we have already found no credence in respondent’s
corporate officer but an employee of respondent. Applying the four-fold claim that petitioner is a corporate officer, consequently, the alleged
test 35 CA rollo, p. 195. 36 Rollo, p. 65. Decision 17 G.R. No. 193857 lack of jurisdiction asserted by respondent in the supplemental petition
concerning (1) the selection and engagement of the employee; (2) the is bereft of merit. On the issue of constructive dismissal, we agree with
payment of wages; (3) the power of dismissal; (4) the employer’s power the Labor Arbiter and the appellate court’s earlier ruling that petitioner
to control the employee with respect to the means and methods by was not constructively dismissed. Petitioner’s letter of appointment
which the work is to be accomplished, it is clear that there exists an specifically appointed her as Dean of the College of Physical Therapy and
employer-employee relationship between petitioner and respondent. Doctor-inCharge of the Rehabilitation Clinic “for a period of three years
Records show that petitioner was appointed to her position as Dean by effective July 1, 2002 unless sooner revoked for valid cause or causes.”
Dr. Golez, the university president and was paid a salary of P32,500 plus Evidently, petitioner’s appointment as College Dean was for a fixed term,
transportation allowance. It was evident that respondent had the power subject to reappointment and revocation or termination for a valid
of control over petitioner as one of its deans. It was also the university cause. When respondent decided to close its College of Physical Therapy
president who informed petitioner that her services as Dean of the due to drastic 37 Philippine Veterans Bank v. National Labor Relations
College of Physical Therapy was terminated effective March 31, 2005 Commission (Fourth Division), G.R. No. 188882, March 30, 2010, 617 SCRA
and she was subsequently directed to report to the Acting Dean of the 204, 211. Decision 19 G.R. No. 193857 decrease in enrollees, petitioner’s
College of Nursing for assignment of teaching load. Thus, petitioner, appointment as its College Dean was validly revoked and her subsequent
being an employee of respondent, her complaint for illegal/constructive assignment to teach in the College of Nursing was justified as it is still
dismissal against respondent was properly within the jurisdiction of the related to her scholarship studies in Physical Therapy. As we observed
Labor Arbiter and the NLRC. Article 217 of the Labor Code provides: ART. in Brent School, Inc. v. Zamora, 38 also cited by the CA, it is common
217. Jurisdiction of Labor Arbiters and the Commission. – (a) Except as practice in educational institutions to have fixed-term contracts in
otherwise provided under this Code, the Arbiters shall have original and administrative positions, thus: Some familiar examples may be cited of
exclusive jurisdiction to hear and decide xxx the following cases employment contracts which may be neither for seasonal work nor for
involving all workers, whether agricultural or nonagricultural: 1. Unfair specific projects, but to which a fixed term is an essential and natural
appurtenance: overseas employment contracts, for one, to which, petition for review on certiorari is GRANTED. The Amended Decision
whatever the nature of the engagement, the concept of regular dated March 29, 2010 and Resolution dated September 14, 2010 of the
employment with all that it implies does not appear ever to have been Court of Appeals in CA-G.R. SP No. 02508-MIN are hereby SET ASIDE. The
applied, Article 280 of the Labor Code notwithstanding; also earlier Decision dated October 22, 2009 of the Court of Appeals in said
appointments to the positions of dean, assistant dean, college secretary, case is REINSTATED and UPHELD.
principal, and other administrative offices in educational institutions, G.R. No. 154096 August 22, 2008
which are by practice or tradition rotated among the faculty members, IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, and
and where fixed terms are a necessity without which no reasonable JOSE G. RESLIN,petitioners,
rotation would be possible. x x x (Emphasis supplied) In constructive vs.
dismissal cases, the employer has the burden of proving that its COURT OF APPEALS, JULITA C. BENEDICTO, and FRANCISCA
conduct and action or the transfer of an employee are for valid and BENEDICTO-PAULINO,respondents.
legitimate grounds such as genuine business necessity.39 Particularly, DECISION
for a transfer not to be considered a constructive dismissal, the VELASCO, JR., J.:
employer must be able to show that such transfer is not unreasonable, The Case
inconvenient, or prejudicial to the employee. In this case, petitioner’s This Petition for Review on Certiorari under Rule 45 assails and seeks to
transfer was not unreasonable, inconvenient or prejudicial to her. On nullify the Decision1 dated October 17, 2001 of the Court of Appeals (CA)
the contrary, the assignment of a teaching load in the College of Nursing in CA-G.R. SP No. 64246 and its Resolution2 of June 20, 2002 denying
was undertaken by respondent to accommodate petitioner following the petitioners' motion for reconsideration. The assailed CA decision
closure of the College of Physical Therapy. Respondent further annulled and set aside the Orders dated October 9, 2000, December 18,
considered the fact that petitioner still has two years to serve the 2000, and March 15, 2001 of the Regional Trial Court (RTC), Branch 17 in
university under the Scholarship Contract. Petitioner’s subsequent Batac, Ilocos Norte which admitted petitioners' amended complaint in
transfer to another department or college is not tantamount to Civil Case Nos. 3341-17 and 3342-17.
demotion as it was a valid transfer. There is therefore no 38 G.R. No. The Facts
48494, February 5, 1990, 181 SCRA 702, 714. 39 See Julie’s Bakeshop v. Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now
Arnaiz, G.R. No. 173882, February 15, 2012, 666 SCRA 101, 115. Decision 20 deceased, and his business associates (Benedicto Group) organized Far
G.R. No. 193857 constructive dismissal to speak of. That petitioner East Managers and Investors, Inc. (FEMII) and Universal Equity
ceased to enjoy the compensation, privileges and benefits as College Corporation (UEC), respectively. As petitioner Irene Marcos-Araneta
Dean was but a logical consequence of the valid revocation or would later allege, both corporations were organized pursuant to a
termination of such fixed-term position. Indeed, it would be absurd and contract or arrangement whereby Benedicto, as trustor, placed in his
unjust for respondent to maintain a deanship position in a college or name and in the name of his associates, as trustees, the shares of
department that has ceased to exist. Under the circumstances, giving stocks of FEMII and UEC with the obligation to hold those shares and
petitioner a teaching load in another College/Department that is related their fruits in trust and for the benefit of Irene to the extent of 65% of
to Physical Therapy -- thus enabling her to serve and complete her such shares. Several years after, Irene, through her trustee-husband,
remaining two years under the Scholarship Contract -- is a valid Gregorio Ma. Araneta III, demanded the reconveyance of said 65%
exercise of management prerogative on the part of respondent. Lastly, stockholdings, but the Benedicto Group refused to oblige.
as to whether respondent was guilty of forum shopping when it failed to In March 2000, Irene thereupon instituted before the RTC two similar
inform the appellate court of the pendency of Civil Case No. 2009- 320, complaints for conveyance of shares of stock, accounting and
a complaint for breach of contract filed by respondent against receivership against the Benedicto Group with prayer for the issuance
petitioner, we rule in the negative. Forum shopping exists when the of a temporary restraining order (TRO). The first, docketed as Civil Case
elements of litis pendentia are present or where a final judgment in one No. 3341-17, covered the UEC shares and named Benedicto, his daughter,
case will amount to res judicata in another. Litis pendentia requires the and at least 20 other individuals as defendants. The second, docketed as
concurrence of the following requisites: (1) identity of parties, or at least Civil Case No. 3342-17, sought the recovery to the extent of 65% of
such parties as those representing the same interests in both actions; FEMII shares held by Benedicto and the other defendants named therein.
(2) identity of rights asserted and reliefs prayed for, the reliefs being Respondent Francisca Benedicto-Paulino,3 Benedicto's daughter, filed a
founded on the same facts; and (3) identity with respect to the two Motion to Dismiss Civil Case No. 3341-17, followed later by an Amended
preceding particulars in the two cases, such that any judgment that may Motion to Dismiss. Benedicto, on the other hand, moved to dismiss 4 Civil
be rendered in the pending case, regardless of which party is Case No. 3342-17, adopting in toto the five (5) grounds raised by
successful, would amount to res judicata in the other case.40 While Francisca in her amended motion to dismiss. Among these were: (1) the
there is identity of parties in the two cases, the causes of action and the cases involved an intra-corporate dispute over which the Securities and
reliefs sought are different. The issue raised in the present case is Exchange Commission, not the RTC, has jurisdiction; (2) venue was
whether there was constructive dismissal committed by respondent. On improperly laid; and (3) the complaint failed to state a cause of action,
the other hand, the issue in the civil case pending before the RTC is as there was no allegation therein that plaintiff, as beneficiary of the
whether petitioner was guilty of breach of contract. Hence, respondent purported trust, has accepted the trust created in her favor.
is not guilty of forum shopping. 40 Yu v. Lim, G.R. No. 182291, September To the motions to dismiss, Irene filed a Consolidated Opposition, which
22, 2010, 631 SCRA 172, 184. Decision 21 G.R. No. 193857 WHEREFORE, the Benedicto and Francisca countered with a Joint Reply to Opposition.
Upon Benedicto's motion, both cases were consolidated. In said order, the RTC stood pat on its holding on the rule on
During the preliminary proceedings on their motions to dismiss, amendments of pleadings. And scoffing at the argument about there
Benedicto and Francisca, by way of bolstering their contentions on being no complaint to amend in the first place as of October 9, 2000
improper venue, presented the Joint Affidavit5 of Gilmia B. Valdez, (when the RTC granted the motion to amend) as the original complaints
Catalino A. Bactat, and Conchita R. Rasco who all attested being were dismissed with finality earlier, i.e., on August 25, 2000 when the
employed as household staff at the Marcos' Mansion in Brgy. Lacub, court denied Irene's motion for reconsideration of the June 29, 2000
Batac, Ilocos Norte and that Irene did not maintain residence in said order dismissing the original complaints, the court stated thusly: there
place as she in fact only visited the mansion twice in 1999; that she did was actually no need to act on Irene's motion to admit, it being her right
not vote in Batac in the 1998 national elections; and that she was staying as plaintiff to amend her complaints absent any responsive pleading
at her husband's house in Makati City. thereto. Pushing its point, the RTC added the observation that the filing
Against the aforesaid unrebutted joint affidavit, Irene presented her PhP of the amended complaint on July 17, 2000 ipso facto superseded the
5 community tax certificate6(CTC) issued on "11/07/99" in Curimao, original complaints, the dismissal of which, per the June 29, 2000
Ilocos Norte to support her claimed residency in Batac, Ilocos Norte. Order, had not yet become final at the time of the filing of the amended
In the meantime, on May 15, 2000, Benedicto died and was substituted by complaint.
his wife, Julita C. Benedicto, and Francisca. Following the denial on March 15, 2001 of their motion for the RTC to
On June 29, 2000, the RTC dismissed both complaints, stating that these reconsider its December 18, 2000 order aforestated, Julita and
partly constituted "real action," and that Irene did not actually reside in Francisca, in a bid to evade being declared in default, filed on April 10,
Ilocos Norte, and, therefore, venue was improperly laid. In its dismissal 2001 their Answer to the amended complaint. 15 But on the same day, they
order,7 the court also declared "all the other issues raised in the went to the CA via a petition for certiorari, docketed as CA-G.R. SP No.
different Motions to Dismiss x x x moot and academic." 64246, seeking to nullify the following RTC orders: the first, admitting
From the above order, Irene interposed a Motion for the amended complaint; the second, denying their motion to dismiss the
Reconsideration8 which Julita and Francisca duly opposed. amended complaint; and the third, denying their motion for
Pending resolution of her motion for reconsideration, Irene filed on July reconsideration of the second issuance.
17, 2000 a Motion (to Admit Amended Complaint),9 attaching therewith a Inasmuch as the verification portion of the joint petition and the
copy of the Amended Complaint10 dated July 14, 2000 in which the names certification on non-forum shopping bore only Francisca's signature, the
of Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin appeared as CA required the joint petitioners "to submit x x x either the written
additional plaintiffs. As stated in the amended complaint, the added authority of Julita C. Benedicto to Francisca B. Paulino authorizing the
plaintiffs, all from Ilocos Norte, were Irene's new trustees. latter to represent her in these proceedings, or a supplemental
Parenthetically, the amended complaint stated practically the same verification and certification duly signed by x x x Julita C.
cause of action but, as couched, sought the reconveyance of the FEMII Benedicto."16 Records show the submission of the corresponding
shares only. authorizing Affidavit17 executed by Julita in favor of Francisca.
During the August 25, 2000 hearing, the RTC dictated in open court an Later developments saw the CA issuing a TRO18 and then a writ of
order denying Irene's motion for reconsideration aforementioned, but preliminary injunction19 enjoining the RTC from conducting further
deferred action on her motion to admit amended complaint and the proceedings on the subject civil cases.
opposition thereto.11 On October 17, 2001, the CA rendered a Decision, setting aside the
On October 9, 2000, the RTC issued an Order12 entertaining the amended assailed RTC orders and dismissing the amended complaints in Civil
complaint, dispositively stating: Case Nos. 3341-17 and 3342-17. The fallo of the CA decision reads:
WHEREFORE, the admission of the Amended Complaint being tenable and WHEREFORE, based on the foregoing premises, the petition is hereby
legal, the same is GRANTED. GRANTED. The assailed Orders admitting the amended complaints are
Let copies of the Amended Complaint be served to the defendants who SET ASIDE for being null and void, and the amended complaints a
are ordered to answer within the reglementary period provided by the quo are, accordingly, DISMISSED.20
rules. Irene and her new trustees' motion for reconsideration of the assailed
The RTC predicated its order on the following premises: decision was denied through the equally assailed June 20, 2002 CA
(1) Pursuant to Section 2, Rule 10 of the Rules of Court,13 Irene may opt Resolution. Hence, this petition for review is before us.
to file, as a matter of right, an amended complaint. The Issues
(2) The inclusion of additional plaintiffs, one of whom was a Batac, an Petitioners urge the setting aside and annulment of the assailed CA
Ilocos Norte resident, in the amended complaint setting out the same decision and resolution on the following submissions that the appellate
cause of action cured the defect of improper venue. court erred in: (1) allowing the submission of an affidavit by Julita as
(3) Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4 allow the filing sufficient compliance with the requirement on verification and
of the amended complaint in question in the place of residence of any of certification of non-forum shopping; (2) ruling on the merits of the trust
Irene's co-plaintiffs. issue which involves factual and evidentiary determination, processes
In time, Julita and Francisca moved to dismiss the amended complaint, not proper in a petition for certiorari under Rule 65 of the Rules of
but the RTC, by Order14dated December 18, 2000, denied the motion and Court; (3) ruling that the amended complaints in the lower court should
reiterated its directive for the two to answer the amended complaint. be dismissed because, at the time it was filed, there was no more
original complaint to amend; (4) ruling that the respondents did not
waive improper venue; and (5) ruling that petitioner Irene was not a common single defense to protect their rights over the shares of stocks
resident of Batac, Ilocos Norte and that none of the principal parties are in question.
residents of Ilocos Norte.21 Second Issue: Merits of the Case cannot be Resolved
The Court's Ruling on Certiorari under Rule 65
We affirm, but not for all the reasons set out in, the CA's decision. Petitioners' posture on the second issue is correct. As they aptly
First Issue: Substantial Compliance with the Rule pointed out, the CA, in the exercise of its certiorari jurisdiction under
on Verification and Certification of Non-Forum Shopping Rule 65, is limited to reviewing and correcting errors of jurisdiction
Petitioners tag private respondents' petition in CA-G.R. SP No. 64246 as only. It cannot validly delve into the issue of trust which, under the
defective for non-compliance with the requirements of Secs. 422 and premises, cannot be judiciously resolved without first establishing
523 of Rule 7 of the Rules of Court at least with regard to Julita, who certain facts based on evidence.
failed to sign the verification and certification of non-forum shopping. Whether a determinative question is one of law or of fact depends on the
Petitioners thus fault the appellate court for directing Julita's counsel to nature of the dispute. A question of law exists when the doubt or
submit a written authority for Francisca to represent Julita in the controversy concerns the correct application of law or jurisprudence to
certiorari proceedings. a certain given set of facts; or when the issue does not call for an
We are not persuaded. examination of the probative value of the evidence presented, the truth
Verification not Jurisdictional; May be Corrected or falsehood of facts being admitted. A question of fact obtains when the
Verification is, under the Rules, not a jurisdictional but merely a formal doubt or difference arises as to the truth or falsehood of facts or when
requirement which the court may motu proprio direct a party to comply the query invites the calibration of the whole evidence considering
with or correct, as the case may be. As the Court articulated in Kimberly mainly the credibility of the witnesses, the existence and relevancy of
Independent Labor Union for Solidarity, Activism and Nationalism specific surrounding circumstances, as well as their relation to each
(KILUSAN)-Organized Labor Associations in Line Industries and other and to the whole, and the probability of the situation. 30
Agriculture (OLALIA) v. Court of Appeals: Clearly then, the CA overstepped its boundaries when, in disposing of
V]erification is a formal, not a jurisdictional requisite, as it is mainly intended to secure an assurance that the
private respondents' petition for certiorari, it did not confine itself to
allegations therein made are done in good faith or are true and correct and not mere speculation. The Court may
determining whether or not lack of jurisdiction or grave abuse of
order the correction of the pleading, if not verified, or act on the unverified pleading if the attending
discretion tainted the issuance of the assailed RTC orders, but
circumstances are such that a strict compliance with the rule may be dispensed with in order that the ends of
proceeded to pass on the factual issue of the existence and
justice may be served.24
enforceability of the asserted trust. In the process, the CA virtually
Given this consideration, the CA acted within its sound discretion in resolved petitioner Irene's case for reconveyance on its substantive
ordering the submission of proof of Francisca's authority to sign on merits even before evidence on the matter could be adduced. Civil Case
Julita's behalf and represent her in the proceedings before the appellate Nos. 3341-17 and 3342-17 in fact have not even reached the pre-trial
court. stage. To stress, the nature of the trust allegedly constituted in Irene's
Signature by Any of the Principal Petitioners is Substantial favor and its enforceability, being evidentiary in nature, are best
Compliance determined by the trial court. The original complaints and the amended
Regarding the certificate of non-forum shopping, the general rule is that complaint certainly do not even clearly indicate whether the asserted
all the petitioners or plaintiffs in a case should sign it.25 However, the trust is implied or express. To be sure, an express trust differs from the
Court has time and again stressed that the rules on forum shopping, implied variety in terms of the manner of proving its existence. 31 Surely,
which were designed to promote the orderly administration of justice, the onus of factually determining whether the trust allegedly established
do not interdict substantial compliance with its provisions under in favor of Irene, if one was indeed established, was implied or express
justifiable circumstances.26 As has been ruled by the Court, the properly pertains, at the first instance, to the trial court and not to the
signature of any of the principal petitioners27 or principal parties,28 as appellate court in a special civil action for certiorari, as here. In the
Francisca is in this case, would constitute a substantial compliance with absence of evidence to prove or disprove the constitution and
the rule on verification and certification of non-forum shopping. It necessarily the existence of the trust agreement between Irene, on one
cannot be overemphasized that Francisca herself was a principal party hand, and the Benedicto Group, on the other, the appellate court cannot
in Civil Case No. 3341-17 before the RTC and in the certiorari intelligently pass upon the issue of trust. A pronouncement on said issue
proceedings before the CA. Besides being an heir of Benedicto, of trust rooted on speculation and conjecture, if properly challenged,
Francisca, with her mother, Julita, was substituted for Benedicto in the must be struck down. So it must be here.
instant case after his demise. Third Issue: Admission of Amended Complaint Proper
And should there exist a commonality of interest among the parties, or As may be recalled, the CA veritably declared as reversibly erroneous
where the parties filed the case as a "collective," raising only one the admission of the amended complaint. The flaw in the RTC's act of
common cause of action or presenting a common defense, then the admitting the amended complaint lies, so the CA held, in the fact that the
signature of one of the petitioners or complainants, acting as filing of the amended complaint on July 17, 2000 came after the RTC had
representative, is sufficient compliance. We said so in Cavile v. Heirs of ordered with finality the dismissal of the original complaints. According
Clarita Cavile.29 Like Thomas Cavile, Sr. and the other petitioners in to petitioners, scoring the CA for its declaration adverted to and
Cavile, Francisca and Julita, as petitioners before the CA, had filed their debunking its posture on the finality of the said RTC order, the CA failed
petition as a collective, sharing a common interest and having a
to take stock of their motion for reconsideration of the said dismissal improper venue.36 In the case at bench, Benedicto and Francisca raised
order. at the earliest time possible, meaning "within the time for but before
We agree with petitioners and turn to the governing Sec. 2 of Rule 10 of filing the answer to the complaint,"37 the matter of improper venue. They
the Rules of Court which provides: would thereafter reiterate and pursue their objection on venue, first, in
SEC. 2. Amendments as a matter of right. -- A party may amend his their answer to the amended complaints and then in their petition for
pleading once as a matter of right at any time before a responsive certiorari before the CA. Any suggestion, therefore, that Francisca and
pleading is served or in the case of a reply, at any time within ten (10) Benedicto or his substitutes abandoned along the way improper venue
days after it is served. as ground to defeat Irene's claim before the RTC has to be rejected.
As the aforequoted provision makes it abundantly clear that the plaintiff Fifth Issue: The RTC Has No Jurisdiction
may amend his complaint once as a matter of right, i.e., without leave of on the Ground of Improper Venue
court, before any responsive pleading is filed or served. Responsive Subject Civil Cases are Personal Actions
pleadings are those which seek affirmative relief and/or set up It is the posture of Julita and Francisca that the venue was in this case
defenses,32 like an answer. A motion to dismiss is not a responsive improperly laid since the suit in question partakes of a real action
pleading for purposes of Sec. 2 of Rule 10. 33Assayed against the involving real properties located outside the territorial jurisdiction of
foregoing perspective, the RTC did not err in admitting petitioners' the RTC in Batac.
amended complaint, Julita and Francisca not having yet answered the This contention is not well-taken. In a personal action, the plaintiff seeks
original complaints when the amended complaint was filed. At that the recovery of personal property, the enforcement of a contract, or
precise moment, Irene, by force of said Sec. 2 of Rule 10, had, as a the recovery of damages.38 Real actions, on the other hand, are those
matter of right, the option of amending her underlying reconveyance affecting title to or possession of real property, or interest therein. In
complaints. As aptly observed by the RTC, Irene's motion to admit accordance with the wordings of Sec. 1 of Rule 4, the venue of real
amended complaint was not even necessary. The Court notes though actions shall be the proper court which has territorial jurisdiction over
that the RTC has not offered an explanation why it saw fit to grant the the area wherein the real property involved, or a portion thereof, is
motion to admit in the first place. situated. The venue of personal actions is the court where the plaintiff
In Alpine Lending Investors v. Corpuz, the Court, expounding on the or any of the principal plaintiffs resides, or where the defendant or any
propriety of admitting an amended complaint before a responsive of the principal defendants resides, or in the case of a non-resident
pleading is filed, wrote: defendant where he may be found, at the election of the plaintiff. 39
W]hat petitioner Alpine filed in Civil Case No. C-20124 was a motion to dismiss, not an answer. Settled is the rule
In the instant case, petitioners are basically asking Benedicto and his
that a motion to dismiss is not a responsive pleading for purposes of Section 2, Rule 10. As no responsive pleading
Group, as defendants a quo, to acknowledge holding in trust Irene's
had been filed, respondent could amend her complaint in Civil Case No. C-20124 as a matter of right. Following
purported 65% stockownership of UEC and FEMII, inclusive of the fruits
this Court's ruling in Breslin v. Luzon Stevedoring Co. considering that respondent has the right to amend her
of the trust, and to execute in Irene's favor the necessary conveying
complaint, it is the correlative duty of the trial court to accept the amended complaint; otherwise, mandamus
deed over the said 65% shareholdings. In other words, Irene seeks to
would lie against it. In other words, the trial court's duty to admit the amended complaint was purely ministerial.
compel recognition of the trust arrangement she has with the Benedicto
In fact, respondent should not have filed a motion to admit her amended complaint.34
Group. The fact that FEMII's assets include real properties does not
It may be argued that the original complaints had been dismissed materially change the nature of the action, for the ownership interest of
through the June 29, 2000 RTC order. It should be pointed out, however, a stockholder over corporate assets is only inchoate as the corporation,
that the finality of such dismissal order had not set in when Irene filed as a juridical person, solely owns such assets. It is only upon the
the amended complaint on July 17, 2000, she having meanwhile liquidation of the corporation that the stockholders, depending on the
seasonably sought reconsideration thereof. Irene's motion for type and nature of their stockownership, may have a real inchoate right
reconsideration was only resolved on August 25, 2000. Thus, when Irene over the corporate assets, but then only to the extent of their
filed the amended complaint on July 17, 2000, the order of dismissal was stockownership.
not yet final, implying that there was strictly no legal impediment to her The amended complaint is an action in personam, it being a suit against
amending her original complaints.35 Francisca and the late Benedicto (now represented by Julita and
Fourth Issue: Private Respondents did not Waive Improper Venue Francisca), on the basis of their alleged personal liability to Irene upon
Petitioners maintain that Julita and Francisca were effectively an alleged trust constituted in 1968 and/or 1972. They are not actions in
precluded from raising the matter of improper venue by their rem where the actions are against the real properties instead of against
subsequent acts of filing numerous pleadings. To petitioners, these persons.40 We particularly note that possession or title to the real
pleadings, taken together, signify a waiver of private respondents' initial properties of FEMII and UEC is not being disputed, albeit part of the
objection to improper venue. assets of the corporation happens to be real properties.
This contention is without basis and, at best, tenuous. Venue essentially Given the foregoing perspective, we now tackle the determinative
concerns a rule of procedure which, in personal actions, is fixed for the question of venue in the light of the inclusion of additional plaintiffs in
greatest convenience possible of the plaintiff and his witnesses. The the amended complaint.
ground of improperly laid venue must be raised seasonably, else it is Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4
deemed waived. Where the defendant failed to either file a motion to We point out at the outset that Irene, as categorically and peremptorily
dismiss on the ground of improper venue or include the same as an found by the RTC after a hearing, is not a resident of Batac, Ilocos Norte,
affirmative defense, he is deemed to have waived his right to object to as she claimed. The Court perceives no compelling reason to disturb, in
the confines of this case, the factual determination of the trial court and Sec. 2 of Rule 4 indicates quite clearly that when there is more than one
the premises holding it together. Accordingly, Irene cannot, in a plaintiff in a personal action case, the residences of
personal action, contextually opt for Batac as venue of her the principal parties should be the basis for determining proper venue.
reconveyance complaint. As to her, Batac, Ilocos Norte is not what Sec. According to the late Justice Jose Y. Feria, "the word 'principal' has
2, Rule 4 of the Rules of Court adverts to as the place "where the been added [in the uniform procedure rule] in order to prevent the
plaintiff or any of the principal plaintiffs resides" at the time she filed plaintiff from choosing the residence of a minor plaintiff or defendant as
her amended complaint. That Irene holds CTC No. 1701945141 issued the venue."42 Eliminate the qualifying term "principal" and the purpose of
sometime in June 2000 in Batac, Ilocos Norte and in which she indicated the Rule would, to borrow from Justice Regalado, "be defeated where a
her address as Brgy. Lacub, Batac, Ilocos is really of no moment. Let nominal or formal party is impleaded in the action since the latter would
alone the fact that one can easily secure a basic residence certificate not have the degree of interest in the subject of the action which would
practically anytime in any Bureau of Internal Revenue or treasurer's warrant and entail the desirably active participation expected of
office and dictate whatever relevant data one desires entered, Irene litigants in a case."43
procured CTC No. 17019451 and appended the same to her motion for Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene
reconsideration following the RTC's pronouncement against her being a stands undisputedly as the principal plaintiff, the real party-in-interest.
resident of Batac. Following Sec. 2 of Rule 4, the subject civil cases ought to be
Petitioners, in an attempt to establish that the RTC in Batac, Ilocos Norte commenced and prosecuted at the place where Irene resides.
is the proper court venue, asseverate that Batac, Ilocos Norte is where Principal Plaintiff not a Resident in Venue of Action
the principal parties reside. As earlier stated, no less than the RTC in Batac declared Irene as not a
Pivotal to the resolution of the venue issue is a determination of the resident of Batac, Ilocos Norte. Withal, that court was an improper
status of Irene's co-plaintiffs in the context of Secs. 2 and 3 of Rule 3 in venue for her conveyance action.
relation to Sec. 2 of Rule 4, which pertinently provide as follows: The Court can concede that Irene's three co-plaintiffs are all residents
Rule 3 of Batac, Ilocos Norte. But it ought to be stressed in this regard that not
PARTIES TO CIVIL ACTIONS one of the three can be considered as principal party-plaintiffs in Civil
SEC. 2. Parties in interest. -- A real party in interest is the party who Case Nos. 3341-17 and 3342-17, included as they were in the amended
stands to be benefited or injured by the judgment in the suit, or the complaint as trustees of the principal plaintiff. As trustees, they may be
party entitled to the avails of the suit. Unless otherwise authorized by accorded, by virtue of Sec. 3 of Rule 3, the right to prosecute a suit, but
law or these Rules, every action must be prosecuted or defended in the only on behalf of the beneficiary who must be included in the title of the
name of the real party in interest. case and shall be deemed to be the real party-in-interest. In the final
SEC. 3. Representatives as parties. -- Where the action is allowed to be analysis, the residences of Irene's co-plaintiffs cannot be made the
prosecuted or defended by a representative or someone acting in a basis in determining the venue of the subject suit. This conclusion
fiduciary capacity, the beneficiary shall be included in the title of the becomes all the more forceful considering that Irene herself initiated
case and shall be deemed to be the real party in interest. A and was actively prosecuting her claim against Benedicto, his heirs,
representative may be a trustee of an express trust, a guardian, an assigns, or associates, virtually rendering the impleading of the
executor or administrator, or a party authorized by law or these Rules. trustees unnecessary.
An agent acting in his own name and for the benefit of an undisclosed And this brings us to the final point. Irene was a resident during the
principal may sue or be sued without joining the principal except when period material of Forbes Park, Makati City. She was not a resident of
the contract involves things belonging to the principal. Brgy. Lacub, Batac, Ilocos Norte, although jurisprudence44 has it that one
Rule 4 can have several residences, if such were the established fact. The
VENUE OF ACTIONS Court will not speculate on the reason why petitioner Irene, for all the
SEC. 2. Venue of personal actions. -- All other actions may be inconvenience and expenses she and her adversaries would have to
commenced and tried where the plaintiff or any of the principal plaintiffs endure by a Batac trial, preferred that her case be heard and decided
resides, or where the defendant or any of the principal defendants by the RTC in Batac. On the heels of the dismissal of the original
resides, or in the case of a non-resident defendant where he may be complaints on the ground of improper venue, three new personalities
found, at the election of the plaintiff. were added to the complaint doubtless to insure, but in vain as it turned
Venue is Improperly Laid out, that the case stays with the RTC in Batac.
There can be no serious dispute that the real party-in-interest plaintiff Litigants ought to bank on the righteousness of their causes, the
is Irene. As self-styled beneficiary of the disputed trust, she stands to superiority of their cases, and the persuasiveness of arguments to
be benefited or entitled to the avails of the present suit. It is undisputed secure a favorable verdict. It is high time that courts, judges, and those
too that petitioners Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin, who come to court for redress keep this ideal in mind.
all from Ilocos Norte, were included as co-plaintiffs in the amended WHEREFORE, the instant petition is hereby DISMISSED. The Decision
complaint as Irene's new designated trustees. As trustees, they can only and Resolution dated October 17, 2001 and June 20, 2002, respectively,
serve as mere representatives of Irene. of the CA in CA-G.R. SP No. 64246, insofar as they nullified the assailed
Upon the foregoing consideration, the resolution of the crucial issue of orders of the RTC, Branch 17 in Batac, Ilocos Norte in Civil Case Nos.
whether or not venue had properly been laid should not be difficult. 3341-17 and 3342-17 on the ground of lack of jurisdiction due to
improper venue, are hereby AFFIRMED. The Orders dated October 9,
2000, December 18, 2000, and March 15, 2001 of the RTC in Civil Case defendants then prayed that the complaint be dismissed and that
Nos. 3341-17 and 3342-17 are accordingly ANNULLED and SET Christian be ordered to pay ₱1 million as moral damages; ₱500,000 as
ASIDE and said civil cases are DISMISSED. exemplary damages; and ₱100,000 as attorney’s fees.4
Costs against petitioners. In due course and after hearing, the trial court rendered a decision5 on
5 May 2000 declaring the first two promissory notes dated 7 August
G.R. No. 161135. April 8, 2005 1996 and 14 March 1997 as already due and demandable and that the
SWAGMAN HOTELS AND TRAVEL, INC., Petitioners, interest on the loans had been reduced by the parties from 15% to 6%
vs. per annum. It then ordered the petitioner corporation to pay Christian
HON. COURT OF APPEALS, and NEAL B. CHRISTIAN, Respondents. the amount of $100,000 representing the principal obligation covered by
DECISION the promissory notes dated 7 August 1996 and 14 March 1997, "plus
DAVIDE, JR., C.J.: interest of 6% per month thereon until fully paid, with all interest
May a complaint that lacks a cause of action at the time it was filed be payments already paid by the defendant to the plaintiff to be deducted
cured by the accrual of a cause of action during the pendency of the therefrom."
case? This is the basic issue raised in this petition for the Court’s The trial court ratiocinated in this wise:
consideration. (1) There was no novation of defendant’s obligation to the plaintiff. Under
Sometime in 1996 and 1997, petitioner Swagman Hotels and Travel, Inc., Article 1292 of the Civil Code, there is an implied novation only if the old
through Atty. Leonor L. Infante and Rodney David Hegerty, its president and the new obligation be on every point incompatible with one another.
and vice-president, respectively, obtained from private respondent Neal The test of incompatibility between the two obligations or contracts,
B. Christian loans evidenced by three promissory notes dated 7 August according to an imminent author, is whether they can stand together,
1996, 14 March 1997, and 14 July 1997. Each of the promissory notes is in each one having an independent existence. If they cannot, they are
the amount of US$50,000 payable after three years from its date with incompatible, and the subsequent obligation novates the first (Tolentino,
an interest of 15% per annum payable every three months. 1 In a letter Civil Code of the Philippines, Vol. IV, 1991 ed., p. 384). Otherwise, the old
dated 16 December 1998, Christian informed the petitioner corporation obligation will continue to subsist subject to the modifications agreed
that he was terminating the loans and demanded from the latter upon by the parties. Thus, it has been written that accidental
payment in the total amount of US$150,000 plus unpaid interests in the modifications in an existing obligation do not extinguish it by novation.
total amount of US$13,500.2 Mere modifications of the debt agreed upon between the parties do not
On 2 February 1999, private respondent Christian filed with the Regional constitute novation. When the changes refer to secondary agreement
Trial Court of Baguio City, Branch 59, a complaint for a sum of money and not to the object or principal conditions of the contract, there is no
and damages against the petitioner corporation, Hegerty, and Atty. novation; such changes will produce modifications of incidental facts,
Infante. The complaint alleged as follows: On 7 August 1996, 14 March but will not extinguish the original obligation. Thus, the acceptance of
1997, and 14 July 1997, the petitioner, as well as its president and vice- partial payments or a partial remission does not involve novation ( id., p.
president obtained loans from him in the total amount of US$150,000 387). Neither does the reduction of the amount of an obligation amount
payable after three years, with an interest of 15% per annum payable to a novation because it only means a partial remission or condonation
quarterly or every three months. For a while, they paid an interest of of the same debt.
15% per annum every three months in accordance with the three In the instant case, the Court is of the view that the parties merely
promissory notes. However, starting January 1998 until December 1998, intended to change the rate of interest from 15% per annum to 6% per
they paid him only an interest of 6% per annum, instead of 15% per annum when the defendant started paying $750 per month which
annum, in violation of the terms of the three promissory notes. Thus, payments were all accepted by the plaintiff from January 1998 onward.
Christian prayed that the trial court order them to pay him jointly and The payment of the principal obligation, however, remains unaffected
solidarily the amount of US$150,000 representing the total amount of which means that the defendant should still pay the plaintiff $50,000 on
the loans; US$13,500 representing unpaid interests from January 1998 August 9, 1999, March 14, 2000 and July 14, 2000.
until December 1998; ₱100,000 for moral damages; ₱50,000 for (2) When the instant case was filed on February 2, 1999, none of the
attorney’s fees; and the cost of the suit.3 promissory notes was due and demandable. As of this date however, the
The petitioner corporation, together with its president and vice- first and the second promissory notes have already matured. Hence,
president, filed an Answer raising as defenses lack of cause of action payment is already due.
and novation of the principal obligations. According to them, Christian Under Section 5 of Rule 10 of the 1997 Rules of Civil Procedure, a
had no cause of action because the three promissory notes were not yet complaint which states no cause of action may be cured by evidence
due and demandable. In December 1997, since the petitioner corporation presented without objection. Thus, even if the plaintiff had no cause of
was experiencing huge losses due to the Asian financial crisis, Christian action at the time he filed the instant complaint, as defendants’
agreed (a) to waive the interest of 15% per annum, and (b) accept obligation are not yet due and demandable then, he may nevertheless
payments of the principal loans in installment basis, the amount and recover on the first two promissory notes in view of the introduction of
period of which would depend on the state of business of the petitioner evidence showing that the obligations covered by the two promissory
corporation. Thus, the petitioner paid Christian capital repayment in the notes are now due and demandable.
amount of US$750 per month from January 1998 until the time the (3) Individual defendants Rodney Hegerty and Atty. Leonor L. Infante can
complaint was filed in February 1999. The petitioner and its co- not be held personally liable for the obligations contracted by the
defendant corporation it being clear that they merely acted in The petitioner harps on the absence of a cause of action at the time the
representation of the defendant corporation in their capacity as General private respondent’s complaint was filed with the trial court. In
Manager and President, respectively, when they signed the promissory connection with this, the petitioner raises the issue of novation by
notes as evidenced by Board Resolution No. 1(94) passed by the Board of arguing that its obligations under the three promissory notes were
Directors of the defendant corporation (Exhibit "4").6 novated by the renegotiation that happened in December 1997 wherein
In its decision7 of 5 September 2003, the Court of Appeals denied the private respondent agreed to waive the interest in each of the three
petitioner’s appeal and affirmed in toto the decision of the trial court, promissory notes and to accept US$750 per month as installment
holding as follows: payment for the principal loans in the total amount of US$150,000.
In the case at bench, there is no incompatibility because the changes Lastly, the petitioner questions the act of the Court of Appeals in
referred to by appellant Swagman consist only in the manner of considering Hegerty and Infante as appellants when they no longer
payment. . . . appealed because the trial court had already absolved them of the
Appellant Swagman’s interpretation that the three (3) promissory notes liability of the petitioner corporation.
have been novated by reason of appellee Christian’s acceptance of the On the other hand, the private respondent asserts that this petition is "a
monthly payments of US$750.00 as capital repayments continuously mere ploy to continue delaying the payment of a just obligation." Anent
even after the filing of the instant case is a little bit strained considering the fact that Hegerty and Atty. Infante were considered by the Court of
the stiff requirements of the law on novation that the intention to novate Appeals as appellants, the private respondent finds it immaterial
must appear by express agreement of the parties, or by their acts that because they are not affected by the assailed decision anyway.
are too clear and unequivocal to be mistaken. Under the circumstances, Cause of action, as defined in Section 2, Rule 2 of the 1997 Rules of Civil
the more reasonable interpretation of the act of the appellee Christian Procedure, is the act or omission by which a party violates the right of
in receiving the monthly payments of US$750.00 is that appellee another. Its essential elements are as follows:
Christian merely allowed appellant Swagman to pay whatever amount 1. A right in favor of the plaintiff by whatever means and under whatever
the latter is capable of. This interpretation is supported by the letter of law it arises or is created;
demand dated December 16, 1998 wherein appellee Christian demanded 2. An obligation on the part of the named defendant to respect or not to
from appellant Swagman to return the principal loan in the amount of violate such right; and
US$150,000 plus unpaid interest in the amount of US$13,500.00 3. Act or omission on the part of such defendant in violation of the right
... of the plaintiff or constituting a breach of the obligation of the defendant
Appellant Swagman, likewise, contends that, at the time of the filing of to the plaintiff for which the latter may maintain an action for recovery
the complaint, appellee Christian ha[d] no cause of action because none of damages or other appropriate relief. 11
of the promissory notes was due and demandable. It is, thus, only upon the occurrence of the last element that a cause of
Again, We are not persuaded. action arises, giving the plaintiff the right to maintain an action in court
... for recovery of damages or other appropriate relief.
In the case at bench, while it is true that appellant Swagman raised in its It is undisputed that the three promissory notes were for the amount of
Answer the issue of prematurity in the filing of the complaint, appellant P50,000 each and uniformly provided for (1) a term of three years; (2)
Swagman nonetheless failed to object to appellee Christian’s an interest of 15 % per annum, payable quarterly; and (3) the repayment
presentation of evidence to the effect that the promissory notes have of the principal loans after three years from their respective dates.
become due and demandable. However, both the Court of Appeals and the trial court found that a
The afore-quoted rule allows a complaint which states no cause of renegotiation of the three promissory notes indeed happened in
action to be cured either by evidence presented without objection or, in December 1997 between the private respondent and the petitioner
the event of an objection sustained by the court, by an amendment of resulting in the reduction – not waiver – of the interest from 15% to 6%
the complaint with leave of court (Herrera, Remedial Law, Vol. VII, 1997 per annum, which from then on was payable monthly, instead of
ed., p. 108).8 quarterly. The term of the principal loans remained unchanged in that
Its motion for reconsideration having been denied by the Court of they were still due three years from the respective dates of the
Appeals in its Resolution of 4 December 2003,9the petitioner came to promissory notes. Thus, at the time the complaint was filed with the trial
this Court raising the following issues: court on 2 February 1999, none of the three promissory notes was due
I. WHERE THE DECISION OF THE TRIAL COURT DROPPING TWO DEFENDANTS yet; although, two of the promissory notes with the due dates of 7
HAS BECOME FINAL AND EXECUTORY, MAY THE RESPONDENT COURT OF August 1999 and 14 March 2000 matured during the pendency of the
APPEALS STILL STUBBORNLY CONSIDER THEM AS APPELLANTS WHEN THEY case with the trial court. Both courts also found that the petitioner had
DID NOT APPEAL? been religiously paying the private respondent US$750 per month from
ii. Where there is no cause of action, is the decision of the lower court January 1998 and even during the pendency of the case before the trial
valid? court and that the private respondent had accepted all these monthly
III. MAY THE RESPONDENT COURT OF APPEALS VALIDLY AFFIRM A DECISION payments.
OF THE LOWER COURT WHICH IS INVALID DUE TO LACK OF CAUSE OF With these findings of facts, it has become glaringly obvious that when
ACTION? the complaint for a sum of money and damages was filed with the trial
IV. Where there is a valid novation, may the original terms of contract court on 2 February 1999, no cause of action has as yet existed because
which has been novated still prevail?10 the petitioner had not committed any act in violation of the terms of the
three promissory notes as modified by the renegotiation in December and the only problem was the insufficiency of the allegations in the
1997. Without a cause of action, the private respondent had no right to complaint. This ruling was reiterated in Pascua v. Court of Appeals.15
maintain an action in court, and the trial court should have therefore It thus follows that a complaint whose cause of action has not yet
dismissed his complaint. accrued cannot be cured or remedied by an amended or supplemental
Despite its finding that the petitioner corporation did not violate the pleading alleging the existence or accrual of a cause of action while the
modified terms of the three promissory notes and that the payment of case is pending.16 Such an action is prematurely brought and is,
the principal loans were not yet due when the complaint was filed, the therefore, a groundless suit, which should be dismissed by the court
trial court did not dismiss the complaint, citing Section 5, Rule 10 of the upon proper motion seasonably filed by the defendant. The underlying
1997 Rules of Civil Procedure, which reads: reason for this rule is that a person should not be summoned before the
Section 5. Amendment to conform to or authorize presentation of public tribunals to answer for complaints which are immature. As this
evidence. — When issues not raised by the pleadings are tried with the Court eloquently said in Surigao Mine Exploration Co., Inc. v. Harris :17
express or implied consent of the parties, they shall be treated in all It is a rule of law to which there is, perhaps, no exception, either at law
respects as if they had been raised in the pleadings. Such amendment of or in equity, that to recover at all there must be some cause of action
the pleadings as may be necessary to cause them to conform to the at the commencement of the suit. As observed by counsel for
evidence and to raise these issues may be made upon motion of any appellees, there are reasons of public policy why there should be no
party at any time, even after judgment; but failure to amend does not needless haste in bringing up litigation, and why people who are in no
affect the result of the trial of these issues. If evidence is objected to at default and against whom there is yet no cause of action should not be
the trial on the ground that it is not within the issues made by the summoned before the public tribunals to answer complaints which are
pleadings, the court may allow the pleadings to be amended and shall do groundless. We say groundless because if the action is immature, it
so with liberality if the presentation of the merits of the action and the should not be entertained, and an action prematurely brought is a
ends of substantial justice will be subserved thereby. The court may groundless suit.
grant a continuance to enable the amendment to be made. It is true that an amended complaint and the answer thereto take the
According to the trial court, and sustained by the Court of Appeals, this place of the originals which are thereby regarded as abandoned (Reynes
Section allows a complaint that does not state a cause of action to be vs. Compañía General de Tabacos [1912], 21 Phil. 416; Ruyman and Farris
cured by evidence presented without objection during the trial. Thus, it vs. Director of Lands [1916], 34 Phil., 428) and that "the complaint and
ruled that even if the private respondent had no cause of action when he answer having been superseded by the amended complaint and answer
filed the complaint for a sum of money and damages because none of thereto, and the answer to the original complaint not having been
the three promissory notes was due yet, he could nevertheless recover presented in evidence as an exhibit, the trial court was not authorized to
on the first two promissory notes dated 7 August 1996 and 14 March take it into account." (Bastida vs. Menzi & Co. [1933], 58 Phil., 188.) But
1997, which became due during the pendency of the case in view of the in none of these cases or in any other case have we held that if a right
introduction of evidence of their maturity during the trial. of action did not exist when the original complaint was filed, one could
Such interpretation of Section 5, Rule 10 of the 1997 Rules of Civil be created by filing an amended complaint. In some jurisdictions in the
Procedure is erroneous. United States what was termed an "imperfect cause of action" could be
Amendments of pleadings are allowed under Rule 10 of the 1997 Rules of perfected by suitable amendment (Brown vs. Galena Mining & Smelting
Civil Procedure in order that the actual merits of a case may be Co., 32 Kan., 528; Hooper vs. City of Atlanta, 26 Ga. App., 221) and this is
determined in the most expeditious and inexpensive manner without virtually permitted in Banzon and Rosauro vs. Sellner ([1933], 58 Phil.,
regard to technicalities, and that all other matters included in the case 453); Asiatic Potroleum [sic] Co. vs. Veloso ([1935], 62 Phil., 683); and
may be determined in a single proceeding, thereby avoiding multiplicity recently in Ramos vs. Gibbon (38 Off. Gaz., 241). That, however, which
of suits.12 Section 5 thereof applies to situations wherein evidence not is no cause of action whatsoever cannot by amendment or
within the issues raised in the pleadings is presented by the parties supplemental pleading be converted into a cause of action: Nihil de re
during the trial, and to conform to such evidence the pleadings are accrescit ei qui nihil in re quando jus accresceret habet.
subsequently amended on motion of a party. Thus, a complaint which We are therefore of the opinion, and so hold, that unless the plaintiff
fails to state a cause of action may be cured by evidence presented has a valid and subsisting cause of action at the time his action is
during the trial. commenced, the defect cannot be cured or remedied by the
However, the curing effect under Section 5 is applicable only if a cause acquisition or accrual of one while the action is pending, and a
of action in fact exists at the time the complaint is filed, but the supplemental complaint or an amendment setting up such after-
complaint is defective for failure to allege the essential facts . For accrued cause of action is not permissible. (Emphasis ours).
example, if a complaint failed to allege the fulfillment of a condition Hence, contrary to the holding of the trial court and the Court of
precedent upon which the cause of action depends, evidence showing Appeals, the defect of lack of cause of action at the commencement of
that such condition had already been fulfilled when the complaint was this suit cannot be cured by the accrual of a cause of action during the
filed may be presented during the trial, and the complaint may pendency of this case arising from the alleged maturity of two of the
accordingly be amended thereafter. 13 Thus, in Roces v. Jalandoni,14 this promissory notes on 7 August 1999 and 14 March 2000.
Court upheld the trial court in taking cognizance of an otherwise Anent the issue of novation, this Court observes that the petitioner
defective complaint which was later cured by the testimony of the corporation argues the existence of novation based on its own version
plaintiff during the trial. In that case, there was in fact a cause of action of what transpired during the renegotiation of the three promissory
notes in December 1997. By using its own version of facts, the petitioner Lastly, the petitioner contends that the Court of Appeals obstinately
is, in a way, questioning the findings of facts of the trial court and the included its President Infante and Vice-President Hegerty as appellants
Court of Appeals. even if they did not appeal the trial court’s decision since they were
As a rule, the findings of fact of the trial court and the Court of Appeals found to be not personally liable for the obligation of the petitioner.
are final and conclusive and cannot be reviewed on appeal to the Indeed, the Court of Appeals erred in referring to them as defendants-
Supreme Court18 as long as they are borne out by the record or are appellants; nevertheless, that error is no cause for alarm because its
based on substantial evidence.19 The Supreme Court is not a trier of ruling was clear that the petitioner corporation was the one solely liable
facts, its jurisdiction being limited to reviewing only errors of law that for its obligation. In fact, the Court of Appeals affirmed in toto the
may have been committed by the lower courts. Among the exceptions is decision of the trial court, which means that it also upheld the latter’s
when the finding of fact of the trial court or the Court of Appeals is not ruling that Hegerty and Infante were not personally liable for the
supported by the evidence on record or is based on a misapprehension pecuniary obligations of the petitioner to the private respondent.
of facts. Such exception obtains in the present case.20 In sum, based on our disquisition on the lack of cause of action when the
This Court finds to be contrary to the evidence on record the finding of complaint for sum of money and damages was filed by the private
both the trial court and the Court of Appeals that the renegotiation in respondent, the petition in the case at bar is impressed with merit.
December 1997 resulted in the reduction of the interest from 15% to 6% WHEREFORE, the petition is hereby GRANTED. The Decision of 5
per annum and that the monthly payments of US$750 made by the September 2003 of the Court of Appeals in CA-G.R. CV No. 68109, which
petitioner were for the reduced interests. affirmed the Decision of 5 May 2000 of the Regional Trial Court of
It is worthy to note that the cash voucher dated January 199821 states Baguio, Branch 59, granting in part private respondent’s complaint for
that the payment of US$750 represents "INVESTMENT PAYMENT." All the sum of money and damages, and its Resolution of 4 December 2003,
succeeding cash vouchers describe the payments from February 1998 which denied petitioner’s motion for reconsideration are hereby
to September 1999 as "CAPITAL REPAYMENT."22 All these cash vouchers REVERSED and SET ASIDE. The complaint docketed as Civil Case No.
served as receipts evidencing private respondent’s acknowledgment of 4282-R is hereby DISMISSED for lack of cause of action.
the payments made by the petitioner: two of which were signed by the
private respondent himself and all the others were signed by his G.R. No. 110844 April 27, 2000
representatives. The private respondent even identified and confirmed ALFREDO CHING, petitioner,
the existence of these receipts during the hearing. 23 Significantly, vs.
cognizant of these receipts, the private respondent applied these HON. COURT OF APPEALS, HON. ZOSIMO Z. ANGELES, RTC- BR. 58,
payments to the three consolidated principal loans in the summary of MAKATI, METRO MANILA, PEOPLE OF THE PHILIPPINES AND ALLIED
payments he submitted to the court.24 BANKING CORPORATION, respondents.
Under Article 1253 of the Civil Code, if the debt produces interest,
payment of the principal shall not be deemed to have been made until
the interest has been covered. In this case, the private respondent BUENA, J.:
would not have signed the receipts describing the payments made by the Confronting the Court in this instant petition for review
petitioner as "capital repayment" if the obligation to pay the interest on certiorari under Rule 45 is the task of resolving the issue of whether
was still subsisting. The receipts, as well as private respondent’s the pendency of a civil action for damages and declaration of nullity of
summary of payments, lend credence to petitioner’s claim that the documents, specifically trust receipts, warrants the suspension of
payments were for the principal loans and that the interests on the criminal proceedings instituted for violation of Article 315 1(b) of the
three consolidated loans were waived by the private respondent during Revised Penal Code, in relation to P.D. 115, otherwise known as the "Trust
the undisputed renegotiation of the loans on account of the business Receipts Law".
reverses suffered by the petitioner at the time. Petitioner Alfredo Ching challenges before us the decision1 of the Court
There was therefore a novation of the terms of the three promissory of Appeals promulgated on 27 January 1993 in CA G.R. SP No. 28912,
notes in that the interest was waived and the principal was payable in dismissing his "Petition for Certiorari and Prohibition with Prayer for
monthly installments of US$750. Alterations of the terms and conditions Issuance of Temporary Restraining Order/ Preliminary Injunction", on
of the obligation would generally result only in modificatory novation the ground of lack of merit.
unless such terms and conditions are considered to be the essence of Assailed similarly is the resolution2 of the Court of Appeals dated 28
the obligation itself.25 The resulting novation in this case was, therefore, June 1993 denying petitioner's motion for reconsideration.
of the modificatory type, not the extinctive type, since the obligation to As borne by the records, the controversy arose from the following
pay a sum of money remains in force. facts:
Thus, since the petitioner did not renege on its obligation to pay the On 04 February 1992,3 petitioner was charged before the Regional Trial
monthly installments conformably with their new agreement and even Court of Makati (RTC-Makati), Branch 58, with four counts of estafa
continued paying during the pendency of the case, the private punishable under Article 315 par. 1(b) of the Revised Penal Code, in
respondent had no cause of action to file the complaint. It is only upon relation to Presidential Decree 115, otherwise known as the "Trust
petitioner’s default in the payment of the monthly amortizations that a Receipts Law".
cause of action would arise and give the private respondent a right to
maintain an action against the petitioner.
The four separate informations4 which were couched in similar language aforementioned orders and to prohibit the RTC-Makati from conducting
except for the date, subject goods and amount thereof, charged herein further proceedings in the criminal cases.
petitioner in this wise: In denying the petition,13 the Court of Appeals, in CA G.R. SP No. 28912,
That on or about the (18th day of May 1981; 3rd day of June 1981; 24th ruled:
day of June 1981 and 24th day of June 1981), in the Municipality of Makati, . . . Civil Case No. 90-60600 pending before the Manila Regional Trial
Metro Manila, Philippines and within the jurisdiction of this Honorable Court seeking (sic) the declaration of nullity of the trust receipts in
Court, the above-named accused having executed a trust receipt question is not a prejudicial question to Criminal Case Nos. 92-0934 to
agreement in favor of Allied Banking Corporation in consideration of the 37 pending before the respondent court charging the petitioner with
receipt by the said accused of goods described as "12 Containers (200 four counts of violation of Article 315, par. 1(b), RPC, in relation to PD 115
M/T) Magtar Brand Dolomites"; "18 Containers (Zoom M/T) Magtar as to warrant the suspension of the proceedings in the latter . . . .
Brand Dolomites"; "High Fired Refractory Sliding Nozzle Bricks"; and Consequently, petitioner filed a motion for reconsideration of the
"High Fired Refractory Sliding Nozzle Bricks" for which there is now due decision which the appellate court denied for lack of merit, via a
the sum of (P278, 917.80; P419,719.20; P387, 551. 95; and P389,085.14 resolution 14 dated 28 June 1993.
respectively) under the terms of which the accused agreed to sell the Notwithstanding the decision rendered by the Court of Appeals, the RTC-
same for cash with the express obligation to remit to the complainant Manila, Branch 53 in an order dated 19 November 1993 in Civil Case No.
bank the proceeds of the sale and/or to turn over the goods, if not sold, 92-60600, admitted petitioner's amended complaint15 which, inter alia,
on demand, but the accused, once in possession of said goods, far from prayed the court for a judgment:
complying with his obligation and with grave abuse of confidence, did xxx xxx xxx
then and there, willfully, unlawfully and feloniously misappropriate, 1. Declaring the 'Trust Receipts," annexes D, F, H and J hereof, null and
misapply and convert to his own personal use and benefit the said goods void, or otherwise annulling the same, for failure to express the true
and/or the proceeds of the sale thereof, and despite repeated demands, intent and agreement of the parties;
failed and refused and still fails and refuses, to account for and/or 2. Declaring the transaction subject hereof as one of pure and simple
remit the proceeds of sale thereof to the Allied Banking Corporation to loan without any trust receipt agreement and/or not one involving a
the damage and prejudice of the said complainant bank in the trust receipt, and accordingly declaring all the documents annexed
aforementioned amount of (P278,917.80; P419,719.20; P387,551.95; and hereto as mere loan documents . . . (emphasis ours).
P389,085.14). In its amended answer,16 herein private respondent Allied Banking
On 10 February 1992, an "Omnibus Motion 5 to Strike Out Information, or Corporation submitted in riposte that the transaction applied for was a
in the Alternative to Require Public Prosecutor to Conduct Preliminary "letter of credit/trust receipt accommodation" and not a "pure and
Investigation, and to Suspend in the Meantime Further Proceedings in simple loan with the trust receipts as mere additional or side
these Cases," was filed by the petitioner. documents", as asserted by herein petitioner in its amended complaint. 17
In an order dated 13 February 1992, the Regional Trial Court of Makati, Through the expediency of Rule 45, petitioner seeks the intervention of
Branch 58, acting on the omnibus motion, required the prosecutor's this Court and prays:
office to conduct a preliminary investigation and suspended further After due consideration, to render judgment reversing the decision and
proceedings in the criminal cases. resolution, Annexes A and B hereof, respectively, and ordering the
On 05 March 1992, petitioner Ching, together with Philippine Blooming suspension of Criminal Cases (sic) Nos. 92-0934 to 92-0937, inclusive,
Mills Co. Inc., filed a case6 before the Regional Trial Court of Manila (RTC- entitled "People of the Philippines vs. Alfredo Ching" pending before
Manila), Branch 53, for declaration of nullity of documents and for Branch 58 of the Regional Trial Court of Makati, Metro Manila, until final
damages docketed as Civil Case No. 92-60600, entitled "Philippine determination of Civil Case No. 92-600 entitled Philippine Blooming Mills
Blooming Mills, Inc. et. al. vs. Allied Banking Corporation. Co. Inc. and Alfredo Ching vs. Allied Banking Corporation" pending before
On 07 August 1992, Ching filed a petition7 before the RTC-Makati, Branch Branch 53 of the Regional Trial Court of Manila.
58, for the suspension of the criminal proceedings on the ground of The instant petition is bereft of merit.
prejudicial question in a civil action. We agree with the findings of the trial court, as affirmed by the Court of
The prosecution then filed an opposition to the petition for suspension, Appeals, that no prejudicial question exists in the present case.
against which opposition, herein petitioner filed a reply. 8 As defined, a prejudicial question is one that arises in a case the
On 26 August 1992, the RTC-Makati issued an order9 which denied the resolution of which is a logical antecedent of the issue involved therein,
petition for suspension and scheduled the arraignment and pre-trial of and the cognizance of which pertains to another tribunal. The prejudicial
the criminal cases. As a result, petitioner moved to reconsider 10 the question must be determinative of the case before the court but the
order to which the prosecution filed an opposition. jurisdiction to try and resolve the question must be lodged in another
In an order11 dated 04 September 1992, the RTC-Makati, before which the court or tribunal.18
criminal cases are pending, denied petitioner's motion for It is a question based on a fact distinct and separate from the crime but
reconsideration and set the criminal cases for arraignment and pre- so intimately connected with it that it determines the guilt or innocence
trial. of the accused, and for it to suspend the criminal action, it must appear
Aggrieved by these orders12 of the lower court in the criminal cases, not only that said case involves facts intimately related to those upon
petitioner brought before the Court of Appeals a petition which the criminal prosecution would be based but also that in the
for certiorari and prohibition which sought to declare the nullity of the resolution of the issue or issues raised in the civil case, the guilt or
innocence of the accused would necessarily be determined. 19 It comes thousand eight hundred and fifteen, as amended, otherwise known as the
into play generally in a situation where a civil action and a criminal Revised Penal Code.
action are both pending and there exists in the former an issue which We must stress though, that an act violative of a trust receipt
must be preemptively resolved before the criminal action may proceed, agreement is only one mode of committing estafa under the
because howsoever the issue raised in the civil action is resolved would abovementioned provision of the Revised Penal Code. Stated differently,
be determinative juris et de jure of the guilt or innocence of the accused a violation of a trust receipt arrangement is not the sole basis for
in the criminal case.20 incurring liability under Article 315 1 (b) of the Code.
More simply, for the court to appreciate the pendency of a prejudicial In Jimenez vs. Averia,22 where the accused was likewise charged with
question, the law,21 in no uncertain terms, requires the concurrence of estafa, this Court had occasion to rule that a civil case contesting the
two essential requisites, to wit: validity of a certain receipt is not a prejudicial question that would
a) The civil action involves an issue similar or intimately related to the warrant the suspension of criminal proceedings for estafa. 1âwphi1.nêt
issue raised in the criminal action; and In the abovementioned case, a criminal charge for estafa was filed in
b) The resolution of such issue determines whether or not the criminal the Court of First Instance of Cavite against the two accused. The
action may proceed. information alleged that the accused, having received the amount of
Verily, under the prevailing circumstances, the alleged prejudicial P20,000.00 from Manuel Jimenez for the purchase of a fishing boat,
question in the civil case for declaration of nullity of documents and for with the obligation on the part of the former to return the money in case
damages, does not juris et de jure determine the guilt or innocence of the boat was not purchased, misappropriated the said amount to the
the accused in the criminal action for estafa. Assuming arguendo that damage and prejudice of Jimenez.23
the court hearing the civil aspect of the case adjudicates that the Before arraignment, the accused filed a civil case contesting the validity
transaction entered into between the parties was not a trust receipt of a certain receipt signed by them. In the receipt, the accused
agreement, nonetheless the guilt of the accused could still be acknowledged having received the aforesaid sum, in addition to the
established and his culpability under penal laws determined by other amount of P240.00 as agent's commission. The complaint, however,
evidence. To put it differently, even on the assumption that the alleged that the accused never received any amount from Jimenez and
documents are declared of null, it does not ipso facto follow that such that the signatures on the questioned receipt were secured by means of
declaration of nullity shall exonerate the accused from criminal fraud, deceit and intimidation.
prosecution and liability. In ruling out the existence of prejudicial question, we declared:
Accordingly, the prosecution may adduce evidence to prove the criminal . . . It will be readily seen that the alleged prejudicial question is not
liability of the accused for estafa, specifically under Article 315 1(b) of determinative of the guilt or innocence of the parties charged with
the Revised Penal Code which explicitly provides that said crime is estafa, because even on the assumption that the execution of the receipt
committed: whose annulment they sought in the civil case was vitiated by fraud,
. . . (b) By misappropriating or converting, to the prejudice of another, duress or intimidation, their guilt could still be established by other
money; goods, or any other personal property received by the offender evidence showing, to the degree required by law, that they had actually
in trust or on commission, or for administration, or any other obligation received from the complainant the sum of P20,000,00 with which to buy
involving the duty to make delivery of or to return the same, even for him a fishing boat, and that, instead of doing so, they
though such obligation be totally or partially guaranteed by a bond; or by misappropriated the money and refused or otherwise failed to return it
denying having received such money, goods, or other property. to him upon demand. . . .
Applying the foregoing principles, the criminal liability of the accused for Furthermore, petitioner submits that the truth or falsity of the parties'
violation of Article 315 1(b) of the Revised Penal Code, may still be shown respective claims as regards the true nature of the transactions and of
through the presentation of evidence to the effect that: (a) the accused the documents, shall have to be first determined by the Regional Trial
received the subject goods in trust or under the obligation to sell the Court of Manila, which is the court hearing the civil case.
same and to remit the proceeds thereof to Allied Banking Corporation, While this may be true, it is no less true that the Supreme Court may, on
or to return the goods, if not sold; (b) that accused Ching certain exceptional instances, resolve the merits of a case on the basis
misappropriated or converted the goods and/or the proceeds of the of the records and other evidence before it, most especially when the
sale; (c) that accused Ching performed such acts with abuse of resolution of these issues would best serve the ends of justice and
confidence to the damage and prejudice of Allied Banking Corporation; promote the speedy disposition of cases.
and (d) that demand was made by the bank to herein petitioner. Thus, considering the peculiar circumstances attendant in the instant
Presidential Decree 115, otherwise known as the "Trust Receipts Law", case, this Court sees the cogency to exercise its plenary power:
specifically Section 13 thereof, provides: It is a rule of procedure for the Supreme Court to strive to settle the
The failure of an entrustee to turn over the proceeds of the sale of the entire controversy in a single proceeding leaving no root or branch to
goods, documents or instruments covered by a trust receipt to the bear the seeds of future litigation. No useful purpose will be served if a
extent of the amount owing to the entruster or as appears in the trust case or the determination of an issue in a case is remanded to the trial
receipt or to return said goods, documents or instruments if they were court only to have its decision raised again to the Court of Appeals and
not sold or disposed of in accordance with the terms of the trust receipt from there to the Supreme Court (citing Board of Commissioners vs.
shall constitute the crime of estafa, punishable under the provisions of Judge Joselito de la Rosa and Judge Capulong, G.R. Nos. 95122-23).
Article Three hundred fifteen, paragraph one (b) of Act Numbered Three
We have laid down the rule that the remand of the case or of an issue to Clearly, a trust receipt partakes the nature of a security transaction. It
the lower court for further reception of evidence is not necessary could never be a mere additional or side document as alleged by
where the Court is in position to resolve the dispute based on the petitioner. Otherwise, a party to a trust receipt agreement could easily
records before it and particularly where the ends of justice would not renege on its obligations thereunder, thus undermining the importance
be subserved by the remand thereof (Escudero vs. Dulay, 158 SCRA 69). and defeating with impunity the purpose of such an indispensable tool in
Moreover, the Supreme Court is clothed with ample authority to review commercial transactions.
matters, even those not raised on appeal if it finds that their Of equal importance is the fact that in his complaint in Civil Case No. 92-
consideration is necessary in arriving at a just disposition of the case. 24 60600, dated 05 March 1992, petitioner alleged that the trust receipts
On many occasions, the Court, in the public interest and for the were executed and intended as collateral or security. Pursuant to the
expeditious administration of justice, has resolved actions on the merits rules, such particular allegation in the complaint is tantamount to a
instead of remanding them to the trial court for further proceedings, judicial admission on the part of petitioner Ching to which he must be
such as where the ends of justice would not be subserved by the bound.
remand of the case.25 Thus, the Court of Appeals in its resolution dated 28 June 1993,
Inexorably, the records would show that petitioner signed and executed correctly observed:
an application and agreement for a commercial letter of credit to It was petitioner himself who acknowledged the trust receipts as mere
finance the purchase of imported goods. Likewise, it is undisputed that collateral and security for the payment of the loan but kept on insisting
petitioner signed and executed trust receipt documents in favor of that the real and true transaction was one of pure loan. . . .
private respondent Allied Banking Corporation. In his present motion, the petitioner alleges that the trust receipts are
In its amended complaint, however, which notably was filed only after evidence of a pure loan or that the same were additional or side
the Court of Appeals rendered its assailed decision, petitioner urges documents that actually stood as promissory notes and not a collateral
that the transaction entered into between the parties was one of "pure or security agreement. He cannot assume a position inconsistent with
loan without any trust receipt agreement". According to petitioner, the his previous allegations in his civil complaint that the trust receipts
trust receipt documents were intended merely as "additional or side were intended as mere collateral or security . . . .
documents covering the said loan" contrary to petitioner's allegation in Perhaps, realizing such flaw, petitioner, in a complete turn around, filed
his original complaint that the trust receipts were executed as a motion to admit amended complaint before the RTC-Manila. Among
collateral or security. others, the amended complaint alleged that the trust receipts stood as
We do not agree. As Mr. Justice Story succinctly puts it: "Naked additional or side documents, the real transaction between the parties
statements must be entitled to little weight when the parties hold better being that of a pure loan without any trust receipt agreement.
evidence behind the scenes. 26 In an order dated 19 November 1993, the RTC-Manila, Branch 53,
Hence, with affirmance, we quote the findings of the Court of Appeals: admitted the amended complaint. Accordingly, with the lower court's
The concept in which petitioner signed the trust receipts, that is admission of the amended complaint, the judicial admission made in the
whether he signed the trust receipts as such trust receipts or as a original complaint was, in effect, superseded.
mere evidence of a pure and simple loan transaction is not decisive Under the Rules, pleadings superseded or amended disappear from the
because precisely, a trust receipt is a security agreement of an record, lose their status as pleadings and cease to be judicial
indebtedness. admissions. While they may nonetheless be utilized against the pleader
Contrary to petitioner's assertions and in view of jurisprudence as extrajudicial admissions, they must, in order to have such effect, be
established in this jurisdiction, a trust receipt is not merely an additional formally offered in evidence. If not offered in evidence, the admission
or side document to a principal contract, which in the instant case is contained therein will not be considered.30
alleged by petitioner to be a pure and simple loan. Consequently, the original complaint, having been amended, lost its
As elucidated in Samo vs. People,27 a trust receipt is considered a character as a judicial admission, which would have required no proof,
security transaction intended to aid in financing importers and retail and became merely an extrajudicial admission, the admissibility of
dealers who do not have sufficient funds or resources to finance the which, as evidence, required its formal offer. 31
importation or purchase of merchandise, and who may not be able to In virtue thereof, the amended complaint takes the place of the original.
acquire credit except through utilization, as collateral, of the The latter is regarded as abandoned and ceases to perform any further
merchandise imported or purchased. function as a pleading. The original complaint no longer forms part of
Further, a trust receipt is a document in which is expressed a security the record.32
transaction whereunder the lender, having no prior title in the goods on Thus, in the instant case, the original complaint is deemed superseded
which the lien is to be given and not having possession which remains in by the amended complaint. Corollarily, the judicial admissions in the
the borrower, lends his money to the borrower on security of the goods original complaint are considered abandoned. Nonetheless, we must
which the borrower is privileged to sell clear of the lien with an stress that the actuations of petitioner, as sanctioned by the RTC-
agreement to pay all or part of the proceeds of the sale to the Manila, Branch 53 through its order admitting the amended complaint,
lender.28 It is a security agreement pursuant to which a bank acquires a demands stern rebuke from this Court.
"security interest" in the goods. It secures an indebtedness and there Certainly, this Court is not unwary of the tactics employed by the
can be no such thing as security interest that secures no obligation.29 petitioner specifically in filing the amended complaint only after the
promulgation of the assailed decision of the Court of Appeals. It bears
noting that a lapse of almost eighteen months (from March 1992 to We are perplexed by the statements in the assailed DOJ resolution that
September 1993), from the filing of the original complaint to the filing of the goods subject of the instant case are outside the ambit of the
the amended complaint, is too lengthy a time sufficient to enkindle provisions of PD 115 albeit covered by trust receipt agreements (17
suspicion and enflame doubts as to the true intentions of petitioner February 1988 resolution) and that not all transactions covered by trust
regarding the early disposition of the pending cases. receipts may be considered as trust receipt transactions defined and
Although the granting of leave to file amended pleadings is a matter penalized under P.D. 115 (11 January 1988 resolution). A construction
peculiarly within the sound discretion of the trial court and such should be avoided when it affords an opportunity to defeat compliance
discretion would not normally be disturbed on appeal, it is also well to with the terms of a statute.
mention that this rule is relaxed when evident abuse thereof is xxx xxx xxx
apparent. 33 The penal provision of P.D. 115 encompasses any act violative of an
Hence, in certain instances we ruled that amendments are not proper obligation covered by the trust receipt; it is not limited to transactions
and should be denied when delay would arise,34 or when the amendments in goods which are to be sold (retailed), reshipped, stored or processed
would result in a change of cause of action or defense or change the as a component of a product ultimately sold.
theory of the case, 35 or would be inconsistent with the allegations in the An examination of P.D. 115 shows the growing importance of trust
original complaint.36 receipts in Philippine business, the need to provide for the rights and
Applying the foregoing rules, petitioner, by filing the amended complaint, obligations of parties to a trust receipt transaction, the study of the
in effect, altered the theory of his case. Likewise, the allegations problems involved and the action by monetary authorities, and the
embodied in the amended complaint are inconsistent with that of the necessity of regulating the enforcement of rights arising from default or
original complaint inasmuch as in the latter, petitioner alleged that the violations of trust receipt agreements. The legislative intent to meet a
trust receipts were intended as mere collateral or security, the pressing need is clearly expressed. 38
principal transaction being one of pure loan. In fine, we reiterate that the civil action for declaration of nullity of
Yet, in the amended complaint, petitioner argued that the said trust documents and for damages does not constitute a prejudicial question
receipts were executed as additional or side documents, the transaction to the criminal cases for estafa filed against petitioner Ching.
being strictly one of pure loan without any trust receipt arrangement. WHEREFORE, premises considered, the assailed decision and resolution
Obviously these allegations are in discord in relation to each other and of the Court of Appeals are hereby AFFIRMED and the instant petition is
therefore cannot stand in harmony. DISMISSED for lack of merit. Accordingly, the Regional Trial Court of
These circumstances, taken as a whole, lead this Court to doubt the Makati, Branch 58, is hereby directed to proceed with the hearing and
genuine purpose of petitioner in filing the amended trial on the merits of Criminal Case Nos. 92-0934 to 92-0937, inclusive,
complaint.1âwphi1 Again, we view petitioner's actuations with abhorrence and to expedite proceedings therein, without prejudice to the right of the
and displeasure. accused to due process.1âwphi1.nêt
Moreover, petitioner contends that the transaction between Philippine
Blooming Mills (PBM) and private respondent Allied Banking Corporation G.R. No. 168973 August 24, 2011
does not fall under the category of a trust receipt arrangement claiming CITY OF DUMAGUETE, herein Represented by City Mayor, Agustin R.
that the goods were not to be sold but were to be used, consumed and Perdices, Petitioner,
destroyed by the importer PBM. vs.
To our mind, petitioner's contention is a stealthy attempt to circumvent PHILIPPINE PORTS AUTHORITY,Respondent.
the principle enunciated in the case of Alied Banking Corporation vs. DECISION
Ordonez, 37 thus: LEONARDO-DE CASTRO, J.:
. . . In an attempt to escape criminal liability, private respondent claims Before Us is a Petition for Review under Rule 45 of the Rules of Court
P.D. 115 covers goods which are ultimately destined for sale and not assailing the Decision1 dated March 4, 2005 and Resolution2 dated June
goods for use in manufacture. But the wording of Section 13 covers 6, 2005 of the Court Appeals in CA-G.R. SP No. 64379, which granted the
failure to turn over the proceeds of the sale of the entrusted goods, or Petition for Certiorari and Prohibition of respondent Philippine Ports
to return said goods if unsold or disposed of in accordance with the Authority and set aside the Orders dated December 7, 2000 and
terms of the trust receipts. Private respondent claims that at the time February 20, 2001 of the Regional Trial Court (RTC), Branch 44 of the
of PBM's application for the issuance of the LC's, it was not represented City of Dumaguete in LRC Case No. N-201.
to the petitioner that the items were intended for sale, hence, there was The antecedent facts are as follows:
no deceit resulting in a violation of the trust receipts which would On October 14, 1998, petitioner City of Dumaguete, through Mayor Felipe
constitute a criminal liability. Again we cannot uphold this contention. Antonio B. Remollo (Remollo), filed before the RTC an Application for
The non-payment of the amount covered by a trust receipt is an act Original Registration of Title over a parcel of land with improvements,
violative of the entrustee's obligation to pay. There is no reason why the located at Barangay Looc, City of Dumaguete (subject property), under
law should not apply to all transactions covered by trust receipts, the Property Registration Decree. The application was docketed as LRC
except those expressly excluded (68 Am. Jur. 125). Case No. N-201.
The Court takes judicial notice of customary banking and business Petitioner alleged in support of its application:
practices where trust receipts are used for importation of heavy 1. That the applicant, City of Dumaguete through its Honorable Mayor
equipment, machineries and supplies used in manufacturing operations. Felipe Antonio B. Remollo, is the owner of the land subject of this
application with all improvements and buildings comprising the Commission (LRC) in Manila for comment. Only thereafter would the RTC
Engineer’s Compound where it is now situated and has been in set the application for hearing.
continuous occupation and possession of the same for more than 30 Petitioner filed its Compliance5 with the above-mentioned Order,
years or from the year 1960 (Affidavit of Ownership executed by Felipe submitting additional copies of the required documents and clarifying
Antonio G. Remollo, the City Mayor, dated August 21, 1998 herein thus:
attached as ANNEX A). The said land consist of 5,410 square meters and 1. The approved plan does not state the number of lot sought to be
is situated and bounded and described as shown on the plan (true and registered because it is a public land, thus, only PSU-07-006805
photostatic copies of the original plan marked Psu-07-006805 approved appears on the plan which is being applied for registration;
by the Regional Technical Director of the [Department of Environment 2. Only one (1) parcel of land is applied for by petitioners which consist
and Natural Resources] DENR, Regional Office, Cebu City herein attached of five thousand four hundred ten (5,410) square meters, more or less;
as ANNEX B) and technical descriptions attached hereto (technical 3. The City Engineer’s Building within the City Engineer’s compound are
description attached as ANNEX C) and made a part hereof; the only improvement found thereon; and
2. That said land at the last assessment for taxation was assessed at 4. Petitioners do not claim any portion of the road which serves as a
₱676,250, Philippine currency, with market value of ₱1,352,500.00, boundary line.
Philippine currency. (Declaration of Real Property with the assessed and The RTC accordingly set the initial hearing of LRC Case No. N-201 on April
market values attached as ANNEX D); 12, 1999, and sent notices to the parties.
3. That to the best of my knowledge and belief, there is no mortgage or The Republic of the Philippines, represented by the Director of Lands,
encumbrance of any kind whatsoever affecting said land, nor another and respondent, represented by the Office of the Government Corporate
person having any estate or interest therein, legal or equitable, in Counsel, filed separate Oppositions 6 to the application for registration
possession, remainder, reversion or expectancy; of petitioner. Both the Republic and respondent averred that petitioner
4. That the land was acquired by possessory title in open, continuous, may not register the subject property in its name since petitioner had
adverse occupation and possession in the concept of owner for more never been in open, continuous, exclusive, and notorious possession of
than thirty years since 1960 (please refer to ANNEX A); the said property for at least 30 years immediately preceding the filing
5. That the land is adjoined by the following: of the application; and the subject property remains to be a portion of
NorthWest the public domain which belongs to the Republic.
NorthEast After several postponements of the scheduled hearings, petitioner
SouthEast presented the testimony of its first witness, Engineer Rilthe P. Dorado
All along line 1-2-3-4-5-6-7-8-9-10 by Flores Avenue, City Road and the (Engr. Dorado), on January 14, 2000. Engr. Dorado’s examination on the
Dumaguete Port Road witness stand was terminated on April 7, 2000. The presentation of the
SouthWest – along line 10-1 by Plan Msi-V-20453 other witnesses of petitioner was then scheduled to continue on June 2,
xxxx 2000. 7
8. That the land included is bounded on the West by Flores Avenue and on However, before the next hearing, respondent filed a Motion to
the North by the City Road, all public highways and on the East by the Dismiss,8 seeking the dismissal of LRC Case No. N-201 on the ground that
Dumaguete Port Road, a private road made part of the Port Zone.3 the RTC lacked jurisdiction to hear and decide the case. Respondent
In an Order4 dated October 23, 1998, the RTC noted that: argued that Section 14(1) of Presidential Decree No. 1529, otherwise
A perusal of the records of the case shows that the annexes lack the known as the Property Registration Decree, refers only to alienable and
following copies: disposable lands of the public domain under a bona fide claim of
a) two blue print copies of the approved plan; ownership. The subject property in LRC Case No. N-201 is not alienable
b) two copies of the technical description of the lot sought to be and disposable, since it is a foreshore land, as explicitly testified to by
registered; petitioner’s own witness, Engr. Dorado. A foreshore land is not
c) two copies of the Surveyor’s certificate; registerable. This was precisely the reason why, respondent points out,
d) a certificate in quadruplicate of the City Assessor of the assessed that the subject property was included in Presidential Proclamation No.
value of the land; 1232 (delineating the territorial boundaries of the Dumaguete Port
e) all original muniments of title in the possession of the applicant which Zone), so that the same would be administered and managed by the
prove ownership of the land; State, through respondent, for the benefit of the people.
f) two copies of the petition/application. In its Terse Opposition to Oppositor’s Motion to Dismiss, petitioner
Further, the application did not state the number of the lot sought to be claimed that the subject property was a swamp reclaimed about 40
registered, the number of parcels applied for, the improvements found years ago, which it occupied openly, continuously, exclusively, and
thereon, and indicate whether it claims a portion of the road which notoriously under a bona fide claim of ownership. The technical
serves as a boundary line. description and approved plan of the subject property showed that the
All these must be alleged in the petition so that the Court will know the said property was not bounded by any part of the sea. Petitioner invoked
nature of the property. Republic Act No. 1899,9 which authorizes chartered cities and
The RTC explained that the extra copies submitted by petitioner shall be municipalities to undertake and carry out, at their own expense, the
forwarded by the RTC Clerk of Court to the Land Registration reclamation of foreshore lands bordering them; and grants said
chartered cities and municipalities ownership over the reclaimed lands.
Presidential Proclamation No. 1232 is immaterial to the present By its own evidence, [petitioner] has utilized the subject property
application for registration because it merely authorizes respondent to allegedly reclaimed by it as Office of the City Engineer and not as
administer and manage the Dumaguete Port Zone and does not confer docking and harboring facilities. [Petitioner] has failed to show that
upon respondent ownership of the subject property. 10 such reclamation was undertaken by it in consultation with the
Respondent filed a Reply/Rejoinder (To Applicant’s Opposition to Secretary of Finance and the Secretary of Public Works and
Oppositor’s Motion to Dismiss), 11 asserting that there are no factual or Communications.13
legal basis for the claim of petitioner that the subject property is The RTC decreed in the end that "the instant application for original
reclaimed land. Petitioner sought the original registration of its title registration is dismissed for lack of merit."14
over the subject property acquired through alleged continuous In its Motion for Reconsideration15 and Supplemental Motion for
possession for 30 years under Section 14(1) of the Property Registration Reconsideration,16 petitioner contended that the dismissal of its
Decree, and not through the reclamation of the said property at its own application was premature and tantamount to a denial of its right to due
expense under Republic Act No. 1899. The present claim of petitioner process. It has yet to present evidence to prove factual matters in
that the subject property is reclaimed land should not be allowed for it support of its application, such as the subject property already being
would improperly change the earlier theory in support of the application alienable and disposable at the time it was occupied and possessed by
for registration. Respondent reiterated that the subject property is petitioner.
foreshore land which cannot be registered; and that Presidential Petitioner also pointed out that its witness, Engr. Dorado, "testified only
Proclamation No. 1232 is very material to LRC Case No. N-201 because it as to the physical status of the land in question at the time when the
confirms that areas within the Dumaguete Port Zone, including the cadastral survey of Dumaguete was made sometime in 1916."17 In fact,
subject property, are not alienable and disposable lands of the public Engr. Dorado expressly testified that the subject property was "part of
domain. 1avvphi1 the shore or foreshore a long time ago[;]"18 and he did not testify at all
On September 7, 2000, the RTC issued an Order12 granting the Motion to that the subject property was a foreshore lot at the time petitioner
Dismiss of respondent based on the following ratiocination: occupied and possessed the same. The physical state of the subject
The Court agrees with [herein respondent] Philippine Ports Authority property had already changed since 1916. It is now within the "alienable
that the basis of the [herein petitioner’s] application for original and disposable area as per the Land Classification Map No. 674, Project
registration of the subject lot is Section 14 of the Presidential Decree No. 1-D, BL C-6, certified on July 3, 1927, of the Bureau of Lands, now
No. 1529, otherwise known as the Property Registration Decree. A Land Management Sector of the Department of Environment and Natural
circumspect scrutiny of said Section readily shows that it refers to Resources[,]"19as verified and certified by the Chief of the Map
alienable and disposable lands of the public domain as proper subjects Projection Section, Land Management Sector, DENR Regional Office in
of registration, provided the applicant has met the other requirements Cebu City, who has yet to take the witness stand before the RTC.
such as open, continuous, exclusive and notorious possession for at Petitioner insisted that the RTC should continue with the hearing of LRC
least thirty (30) years under a bona fide claim of ownership. Case No. N-201 and allow petitioner to present evidence that the subject
It having been shown by [petitioner’s] own evidence that the lot subject property is reclaimed land. Petitioner sufficiently alleged in its
of the application for original registration is a foreshore land, and application for registration that it has been in "open, continuous,
therefore not registerable (Dizon, et al. vs. Bayona, et al., 98 SCRA 942, exclusive, and notorious possession of the [subject property] for more
944), the application must be denied. than thirty (30) years under a bona fide claim of ownership."20 In
Again as correctly argued by [respondent], [petitioner’s] reliance on support of such allegation, petitioner must necessarily prove that the
Republic Act 1899 which authorizes all municipalities and chartered subject property was previously a swampy area, which had to be filled
cities to undertake and carry out the reclamation by dredging, filling or or reclaimed before the construction of the City Engineer’s Office
other means of any foreshore lands bordering them and which confers building thereon.
ownership on them of the lands so reclaimed, is misplaced, as such has Respondent based its Opposition (To Applicant’s Motion for
never been alleged in the application. It is fundamental that a party Reconsideration dated September 28, 2000)21 and Opposition (To
cannot prove what it has not alleged in his complaint or application, as Applicant’s Supplemental Motion for Reconsideration)22 on technical and
in this case. substantive grounds.
The admission by Engr. Dorado that there is no formal declaration from According to respondent, the Motion for Reconsideration of petitioner
the executive branch of government or law passed by Congress that the violated Sections 4 (Hearing of motion), 5 (Notice of hearing), and 6
land in question is no longer needed for public use or special industries (Proof of service necessary), Rule 15 of the Rules of Court. Petitioner did
x x x further militates against the application. not set its Motion for Reconsideration for hearing even when the said
Moreover, the authority granted to municipalities and chartered cities to Motion could not be considered as non-litigable. The RTC could not hear
undertake and carry out at their own expense the reclamation by the motion for reconsideration ex parte as they are prejudicial to the
dredging, filling, or other means, of any foreshore lands bordering them rights of respondent. Petitioner also failed to comply with Section 11,
is for the purpose of establishing, providing, constructing, maintaining, Rule 13 of the Rules of Court when it did not attach to the Motion for
and repairing proper and adequate docking and harbor facilities as such Reconsideration a written explanation why it did not resort to personal
municipalities and chartered cities may determine in consultation with service of the said Motion. Thus, respondent averred that the Motion for
the Secretary of Finance and the Secretary of Public Works and Reconsideration of petitioner should be treated as a mere scrap of
Communications. paper with no legal effect. It did not interrupt the reglementary period
to appeal and the RTC Order dated September 7, 2000, dismissing LRC rendered the same as a mere scrap of paper, which did not toll the
Case No. N-201, had already attained finality. Respondent also pointed running of the prescriptive period to appeal the RTC Order dated
out that the Supplemental Motion for Reconsideration of petitioner September 7, 2000.
suffered from the same fatal defects as the original Motion for The Court of Appeals, in its Decision dated March 4, 2005, found merit in
Reconsideration. the Petition of respondent and set aside the RTC Orders dated
Respondent again posited that the subject property was foreshore land December 7, 2000 and February 20, 2001. The appellate court, in its
belonging to the State and not subject to private appropriation, unless Resolution dated June 6, 2005, denied the Motion for Reconsideration of
the same had already been declared by the executive or legislative petitioner.
department of the national government as no longer needed for coast Hence, petitioner comes before us via the instant Petition for Review
guard service, public use, or special industries, and classified as with the following assignment of error:
alienable and disposable. Full- blown trial in LRC Case No. N-201 was no GROUND FOR THE APPEAL
longer necessary as the evidence so far presented by petitioner had Error of law: The March 4, 2005 decision of the Court of Appeals and its
already established that the RTC lacked jurisdiction over the subject June 6, 2005 Resolution, erred on question of law in setting aside the
matter of the case. Orders of the Regional Trial Court, Branch 44, dated December 7, 2000
In its Order23 dated November 16, 2000, the RTC initially agreed with and February 20, 2001. The said Orders of the trial court were made in
respondent that the Motion for Reconsideration of petitioner violated order to determine factual issues and to correct its error in its findings
Sections 4, 5, and 6, Rule 15 and Section 11, Rule 13 of the Rules of Court. on the September 7, 2000 Order. Thus, the Court of Appeals decision is
Resultantly, the Motion for Reconsideration of petitioner was considered contrary to law, justice, equity and existing jurisprudence.27
as not filed and did not toll the running of the period to file an appeal, Respondent insists on the strict application of Sections 4, 5, and 6, Rule
rendering final and executory the order of dismissal of LRC Case No. N- 15 and Section 11, Rule 13 of the Rules of Court. Violations of the said
201. rules were fatal to the Motion for Reconsideration and Supplemental
However, after taking into consideration the Supplemental Motion for Motion for Reconsideration of the petitioner, and as a result, the RTC
Reconsideration of petitioner, the RTC issued another Order24 dated Order dated September 7, 2000, dismissing LRC Case No. N-201, had
December 7, 2000, setting aside its Order dated September 7, 2000 in already become final and executory and, thus, beyond the jurisdiction of
the interest of justice and resolving to have a full-blown proceeding to the RTC to set aside. Respondent urges us to reject the plea of
determine factual issues in LRC Case No. N-201. petitioner for a liberal application of the rules in the absence of a
It was then the turn of respondent to file with the RTC a Motion for compelling reason to do so.
Reconsideration25 of the Order dated December 7, 2000. In an We grant the Petition.
Order26 dated February 20, 2001, the RTC denied the motion of The grant of a petition for certiorari under Rule 65 of the Rules of Court
respondent and admitted the following: requires grave abuse of discretion amounting to lack or excess of
A thorough review and perusal of the disputed order dated September 7, jurisdiction. Grave abuse of discretion exists where an act is performed
2000 and December 7, 2000, whereby this Court dismissed with a capricious or whimsical exercise of judgment equivalent to lack of
[petitioner’s] petition for registration of Lot No. 1, Dumaguete Cadastre, jurisdiction. The abuse of discretion must be patent and gross as to
and later set aside the Order of September 7, 2000, shows that there amount to an evasion of positive duty or to a virtual refusal to perform a
was honest mistake in declaring said lot 1, as a shoreline. Indeed, the duty enjoined by law, or to act at all in contemplation of law, as where
adjoining lots are already titled and bounded by a City Road. It is not the power is exercised in an arbitrary and despotic manner by reason of
bounded by a sea. The Court wants to correct this error in its findings passion or personal hostility.28
on the September 7, 2000 Order, that Lot No. 1 is situated on the The Court of Appeals erred in granting the writ of certiorari in favor of
shoreline of Dumaguete City. The Court simply committed an oversight respondent. The RTC did not commit grave abuse of discretion when, in
on the petitioner’s evidence that the lot in question is a foreshore land x its Orders dated December 7, 2000 and February 20, 2001, it set aside
x x when in fact it is not. And it is for this reason that the court the order of dismissal of LRC Case No. N-201 and resolved to have a full-
reconsidered and set aside said September 7, 2000 Order, to correct blown proceeding to determine factual issues in said case.
the same while it is true that said September 7, 2000 Order had Procedural rules were conceived to aid the attainment of justice. If a
attained its finality, yet this Court cannot in conscience allow injustice to stringent application of the rules would hinder rather than serve the
perpetuate in this case and that hearing on the merits must proceed to demands of substantial justice, the former must yield to the latter.29 In
determine the legality and truthfulness of its application for registration Basco v. Court of Appeals,30 we allowed a liberal application of technical
of title. rules of procedure, pertaining to the requisites of a proper notice of
Respondent sought recourse from the Court of Appeals by filing a hearing, upon consideration of the importance of the subject matter of
Petition for Certiorari and Prohibition under Rule 65 of the Rules of the controversy, as illustrated in well-settled cases, to wit:
Court, docketed as CA-G.R. SP No. 64379. Respondent challenged the The liberal construction of the rules on notice of hearing is exemplified
RTC Orders dated December 7, 2000 and February 20, 2001 for having in Goldloop Properties, Inc. v. CA:
been issued by the RTC in grave abuse of discretion amounting to lack or Admittedly, the filing of respondent-spouses' motion for reconsideration
excess of jurisdiction. Respondent reiterated that the RTC Order dated did not stop the running of the period of appeal because of the absence
September 7, 2000, dismissing LRC Case No. N-201 had already attained of a notice of hearing required in Secs. 3, 4 and 5, Rule 15, of the Rules
finality. The defects of the Motion for Reconsideration of petitioner of Court. As we have repeatedly held, a motion that does not contain a
notice of hearing is a mere scrap of paper; it presents no question by the allegations in the complaint, jurisdiction also remains vested
which merits the attention of the court. Being a mere scrap of paper, irrespective of whether or not the plaintiff is entitled to recover upon all
the trial court had no alternative but to disregard it. Such being the or some of the claims asserted therein.32
case, it was as if no motion for reconsideration was filed and, therefore, As a necessary consequence, the jurisdiction of the court cannot be
the reglementary period within which respondent-spouses should have made to depend upon the defenses set up in the answer or upon the
filed an appeal expired on 23 November 1989. motion to dismiss; for otherwise, the question of jurisdiction would
But, where a rigid application of that rule will result in a manifest failure almost entirely depend upon the defendant. What determines the
or miscarriage of justice, then the rule may be relaxed, especially if a jurisdiction of the court is the nature of the action pleaded as appearing
party successfully shows that the alleged defect in the questioned final from the allegations in the complaint. The averments therein and the
and executory judgment is not apparent on its face or from the recitals character of the relief sought are the ones to be consulted. 33
contained therein. Technicalities may thus be disregarded in order to Under Act No. 496, otherwise known as the Land Registration Act, as
resolve the case. After all, no party can even claim a vested right in amended by Act No. 2347, jurisdiction over all applications for
technicalities. Litigations should, as much as possible, be decided on the registration of title to land was conferred upon the Courts of First
merits and not on technicalities. Instance (CFI) of the respective provinces in which the land sought to be
Hence, this Court should not easily allow a party to lose title and registered was situated. Jurisdiction over land registration cases, as in
ownership over a party worth ₱4,000,000.00 for a measly ordinary actions, is acquired upon the filing in court of the application
P650,000.00 without affording him ample opportunity to prove his claim for registration, and is retained up to the end of the litigation. 34
that the transaction entered into was not in fact an absolute sale but The land registration laws were updated and codified by the Property
one of mortgage. Such grave injustice must not be permitted to prevail Registration Decree, and under Section 17 thereof, jurisdiction over an
on the anvil of technicalities. application for land registration was still vested on the CFI of the
Likewise, in Samoso v. CA, the Court ruled: province or city where the land was situated, viz:
But time and again, the Court has stressed that the rules of procedure SEC. 17. What and where to file. – The application for land registration
are not to be applied in a very strict and technical sense. The rules of shall be filed with the Court of First Instance of the province or city
procedure are used only to help secure not override substantial justice where the land is situated. The applicant shall file together with the
(National Waterworks & Sewerage System vs. Municipality of Libmanan, application all original muniments of titles or copies thereof and a
97 SCRA 138 [1980]; Gregorio v. Court of Appeals, 72 SCRA 120 [1976]). survey plan of the land approved by the Bureau of Lands.
The right to appeal should not be lightly disregarded by a stringent The Clerk of Court shall not accept any application unless it is shown
application of rules of procedure especially where the appeal is on its that the applicant has furnished the Director of Lands with a copy of the
face meritorious and the interests of substantial justice would be application and all annexes.
served by permitting the appeal (Siguenza v. Court of Appeals, 137 SCRA Batas Pambansa Blg. 129, otherwise known as The Judiciary
570 [1985]; Pacific Asia Overseas Shipping Corporation v. National Labor Reorganization Act of 1980, created the RTC35 in place of the CFI.
Relations Commission, et al., G.R. No. 76595, May 6, 1998). . . . Presently, jurisdiction over an application for land registration remains
In the instant case, it is petitioner's life and liberty that is at stake. The with the RTC where the land is situated, except when such jurisdiction is
trial court has sentenced him to suffer the penalty of reclusion perpetua delegated by the Supreme Court to the Metropolitan Trial Court,
and his conviction attained finality on the basis of mere technicality. It is Municipal Trial Courts, and Municipal Circuit Trial Courts under certain
but just, therefore, that petitioner be given the opportunity to defend circumstances.36
himself and pursue his appeal. To do otherwise would be tantamount to It is not disputed that the Application for Original Registration of Title
grave injustice. A relaxation of the procedural rules, considering the filed by petitioner before the RTC of the City of Dumaguete conformed to
particular circumstances herein, is justified.31 (Emphasis ours.) Section 15 of the Property Registration Decree, which prescribes the
In the case at bar, the Motion for Reconsideration and Supplemental form and contents of such applications. In its Application, petitioner
Motion for Reconsideration of petitioner, which sought the reversal of prayed that its title to the subject property, which it repeatedly alleged
RTC Order dated September 7, 2000 dismissing LRC Case No. N-201, cite to have acquired through continuous and adverse possession and
meritorious grounds that justify a liberal application of procedural occupation of the said property for more than 30 years or since 1960,
rules. be placed under the land registration laws. The allegations and prayer in
The dismissal by the RTC of LRC Case No. N-201 for lack of jurisdiction is the Application of petitioner were sufficient to vest jurisdiction on the
patently erroneous. RTC over the said Application upon the filing thereof.
Basic as a hornbook principle is that jurisdiction over the subject matter Respondent sought the dismissal of LRC Case No. N-201 on the ground of
of a case is conferred by law and determined by the allegations in the lack of jurisdiction, not because of the insufficiency of the allegations
complaint which comprise a concise statement of the ultimate facts and prayer therein, but because the evidence presented by petitioner
constituting the plaintiff's cause of action. The nature of an action, as itself during the trial supposedly showed that the subject property is a
well as which court or body has jurisdiction over it, is determined based foreshore land, which is not alienable and disposable. The RTC granted
on the allegations contained in the complaint of the plaintiff, irrespective the Motion to Dismiss of respondent in its Order dated September 7,
of whether or not the plaintiff is entitled to recover upon all or some of 2000. The RTC went beyond the allegations and prayer for relief in the
the claims asserted therein. The averments in the complaint and the Application for Original Registration of petitioner, and already
character of the relief sought are the ones to be consulted. Once vested
scrutinized and weighed the testimony of Engr. Dorado, the only witness certain rules of procedure. Ordinarily, such non-compliance would have
petitioner was able to present. rendered said motions as mere scraps of paper, considered as not
As to whether or not the subject property is indeed foreshore land is a having been filed at all, and unable to toll the reglementary period for an
factual issue which the RTC should resolve in the exercise of its appeal. However, we find that the exceptional circumstances extant in
jurisdiction, after giving both parties the opportunity to present their the present case warrant the liberal application of the rules.
respective evidence at a full-blown trial. As we have explained in the Also, the Motion for Reconsideration and Supplemental Motion for
Estate of the Late Jesus S. Yujuico v. Republic37 : Reconsideration of the Order dated September 7, 2000 filed by
The plain import of Municipality of Antipolo is that a land registration petitioner did not comply with Section 11, Rule 13 of the Rules of Court,
court, the RTC at present, has no jurisdiction over the subject matter of for these did not include a written explanation why service or filing
the application which respondent Republic claims is public land. This thereof was not done personally. Nonetheless, in Maceda v. Encarnacion
ruling needs elucidation. de Guzman Vda. de Magpantay,39 citing Solar Team Entertainment, Inc. v.
Firmly entrenched is the principle that jurisdiction over the subject Ricafort,40 and Musa v. Amor,41 we explained the rationale behind said
matter is conferred by law. Consequently, the proper CFI (now the RTC) rule and the mandatory nature of the same, vis-à-vis the exercise of
under Section 14 of PD 1529 (Property Registration Decree) has discretion by the court in case of non-compliance therewith:
jurisdiction over applications for registration of title to land. In Solar Team Entertainment, Inc. v. Ricafort, this Court, passing upon
xxxx Section 11 of Rule 13 of the Rules of Court, held that a court has the
Conformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction over the discretion to consider a pleading or paper as not filed if said rule is not
subject matter of the land registration case filed by Fermina Castro, complied with.
petitioners’ predecessor-in-interest, since jurisdiction over the subject Personal service and filing are preferred for obvious reasons. Plainly,
matter is determined by the allegations of the initiatory pleading – the such should expedite action or resolution on a pleading, motion or other
application. Settled is the rule that "the authority to decide a case and paper; and conversely, minimize, if not eliminate, delays likely to be
not the decision rendered therein is what makes up jurisdiction. When incurred if service or filing is done by mail, considering the inefficiency
there is jurisdiction, the decision of all questions arising in the case is of the postal service. Likewise, personal service will do away with the
but an exercise of jurisdiction. practice of some lawyers who, wanting to appear clever, resort to the
In our view, it was imprecise to state in Municipality of Antipolo that the following less than ethical practices: (1) serving or filing pleadings by
"Land Registration Court [has] no jurisdiction to entertain the mail to catch opposing counsel off-guard, thus leaving the latter with
application for registration of public property x x x" for such court little or no time to prepare, for instance, responsive pleadings or an
precisely has the jurisdiction to entertain land registration applications opposition; or (2) upon receiving notice from the post office that the
since that is conferred by PD 1529. The applicant in a land registration registered containing the pleading of or other paper from the adverse
case usually claims the land subject matter of the application as his/her party may be claimed, unduly procrastinating before claiming the parcel,
private property, as in the case of the application of Castro. Thus, the or, worse, not claiming it at all, thereby causing undue delay in the
conclusion of the CA that the Pasig-Rizal CFI has no jurisdiction over the disposition of such pleading or other papers.
subject matter of the application of Castro has no mooring. The land If only to underscore the mandatory nature of this innovation to our set
registration court initially has jurisdiction over the land applied for at of adjective rules requiring personal service whenever practicable,
the time of the filing of the application. After trial, the court, in the Section 11 of Rule 13 then gives the court the discretion to consider a
exercise of its jurisdiction, can determine whether the title to the land pleading or paper as not filed if the other modes of service or filing
applied for is registerable and can be confirmed. In the event that the were not resorted to and no written explanation was made as to why
subject matter of the application turns out to be inalienable public land, personal service was not done in the first place. The exercise of
then it has no jurisdiction to order the registration of the land and discretion must, necessarily consider the practicability of personal
perforce must dismiss the application. 38 (Emphasis ours.) service, for Section 11 itself begins with the clause "whenever
It is true that petitioner, as the applicant, has the burden of proving that practicable."
the subject property is alienable and disposable and its title to the same We thus take this opportunity to clarify that under Section 11, Rule 13 of
is capable of registration. However, we stress that the RTC, when it the 1997 Rules of Civil Procedure, personal service and filing is the
issued its Order dated September 7, 2000, had so far heard only the general rule, and resort to other modes of service and filing, the
testimony of Engr. Dorado, the first witness for the petitioner. Petitioner exception. Henceforth, whenever personal service or filing is
was no longer afforded the opportunity to present other witnesses and practicable, in the light of the circumstances of time, place and person,
pieces of evidence in support of its Application. The RTC Order dated personal service or filing is mandatory. Only when personal service or
September 7, 2000 – already declaring the subject property as filing is not practicable may resort to other modes be had, which must
inalienable public land, over which the RTC has no jurisdiction to order then be accompanied by a written explanation as to why personal
registration – was evidently premature. service or filing was not practicable to begin with. In adjudging the
The RTC Order dated September 7, 2000 has not yet become final and plausibility of an explanation, a court shall likewise consider the
executory as petitioner was able to duly file a Motion for importance of the subject matter of the case or the issues involved
Reconsideration and Supplemental Motion for Reconsideration of the therein, and the prima facie merit of the pleading sought to be expunged
same, which the RTC eventually granted in its Order dated December 7, for violation of Section 11.
2000. Admittedly, said motions filed by petitioner did not comply with
In Musa v. Amor, this Court, on noting the impracticality of personal Consequently, the Court finds that the petitioner substantially complied
service, exercised its discretion and liberally applied Section 11 of Rule with the pertinent provisions of the Rules of Court and existing
13: jurisprudence on the requirements of motions and
As [Section 11, Rule 13 of the Rules of Court] requires, service and filing pleadings.46 (Emphasis supplied.)
of pleadings must be done personally whenever practicable. The court It was not refuted that petitioner furnished respondent and respondent
notes that in the present case, personal service would not be actually received copies of the Motion for Reconsideration, as well as
practicable. Considering the distance between the Court of Appeals and the Supplemental Motion for Reconsideration of the RTC Order dated
Donsol, Sorsogon where the petition was posted, clearly, service by September 7, 2000 filed by petitioner. As a result, respondent was able
registered mail [sic] would have entailed considerable time, effort and to file its Oppositions to the said Motions. The RTC, in issuing its Order
expense. A written explanation why service was not done personally dated December 7, 2000, was able to consider the arguments presented
might have been superfluous. In any case, as the rule is so worded with by both sides. Hence, there was substantial compliance by petitioner
the use of "may," signifying permissiveness, a violation thereof gives the with the rules on notice of hearing for its Motion for Reconsideration
court discretion whether or not to consider the paper as not filed. While and Supplemental Motion for Reconsideration of the RTC Order dated
it is true that procedural rules are necessary to secure an orderly and September 7, 2000. Respondent cannot claim that it was deprived of the
speedy administration of justice, rigid application of Section 11, Rule 13 opportunity to be heard on its opposition to said Motions.
may be relaxed in this case in the interest of substantial justice. In view of the foregoing circumstances, the RTC judiciously, rather than
In the case at bar, the address of respondent’s counsel is Lopez, abusively or arbitrarily, exercised its discretion when it subsequently
Quezon, while petitioner Sonia’s counsel’s is Lucena City. Lopez, Quezon issued the Order dated December 7, 2000, setting aside its Order dated
is 83 kilometers away from Lucena City. Such distance makes personal September 7, 2000 and proceeding with the trial in LRC Case No. N-201.
service impracticable. As in Musa v. Amor, a written explanation why WHEREFORE, the instant Petition for Review of petitioner City of
service was not done personally "might have been Dumaguete is hereby GRANTED. The Decision dated March 4, 2005 and
superfluous."42 (Emphases supplied and citations omitted.) Resolution dated June 6, 2005 of the Court Appeals in CA-G.R. SP No.
Our ruling in the above-cited cases is relevant to the instant case. 64379 are SET ASIDE, and the Orders dated December 7, 2000 and
Counsel for petitioner holds office in Dumaguete City, Negros Oriental, in February 20, 2001 of Branch 44 of the Regional Trial Court of the City of
the Visayas; while counsel for respondent holds office in Quezon City, Dumaguete in LRC Case No. N-201 are REINSTATED. The said trial court is
Metro Manila, in Luzon. Given the considerable distance between the DIRECTED to proceed with the hearing of LRC Case No. N-201 with
offices of these two counsels, personal service of pleadings and motions dispatch.
by one upon the other was clearly not practicable and a written
explanation as to why personal service was not done would only be G.R. No. 178789 November 14, 2012
superfluous.43 In addition, we refer once more to the merits of the NATIVIDAD LIM, Petitioner,
Motion for Reconsideration and Supplemental Motion for vs.
Reconsideration of the RTC Order dated September 7, 2000 filed by NATIONAL POWER CORPORATION, SPOUSES ROBERTO LL. ARCINUE
petitioner, which justify the liberal interpretation of Section 11, Rule 13 of and ARABELA ARCINUE,Respondents.
the Rules of Court in this case.1avvphi1 DECISION
Jurisprudence confirms that the requirements laid down in Sections 4, ABAD, J.:
5, and 6, Rule 15 of the Rules of Court that the notice of hearing shall be This case is about the consequence of a party's failure to explain in his
directed to the parties concerned, and shall state the time and place for motion why he served a copy of it on the adverse party by registered
the hearing of the motion, are mandatory. If not religiously complied mail rather than by personal service.
with, they render the motion pro forma. As such, the motion is a useless The Facts and the Case
piece of paper that will not toll the running of the prescriptive period. 44 On February 8, 1995 respondent National Power Corporation (NPC) filed
Yet, again, there were previous cases with peculiar circumstances that an expropriation suit1 against petitioner Natividad B. Lim (Lim) before the
had compelled us to liberally apply the rules on notice of hearing and Regional Trial Court (RTC) of Lingayen, Pangasinan, Branch 37 in Civil
recognize substantial compliance with the same. Once such case is Case 17352 covering Lots 2373 and 2374 that the NPC needed for its
Philippine National Bank v. Paneda,45 where we adjudged: Sual Coal-Fired Thermal Power Project. Since Lim was residing in the
Thus, even if the Motion may be defective for failure to address the United States, the court caused the service of summons on her on
notice of hearing of said motion to the parties concerned, the defect February 20, 1995 through her tenant, a certain Wilfredo
was cured by the court's taking cognizance thereof and the fact that the Tabongbong.2 On March 1, 1995, upon notice to Lim and the deposit of the
adverse party was otherwise notified of the existence of said pleading. provisional value of the property, the RTC ordered the issued writ of
There is substantial compliance with the foregoing rules if a copy of the possession in NPC’s favor that would enable it to cause the removal of
said motion for reconsideration was furnished to the counsel of herein Lim from the land.3
private respondents. On April 24, 1995, however, Lim, represented by her husband Delfin, filed
In the present case, records reveal that the notices in the Motion were an omnibus motion to dismiss the action and to suspend the writ of
addressed to the respective counsels of the private respondents and possession,4 questioning the RTC’s jurisdiction over Lim’s person and the
they were duly furnished with copies of the same as shown by the nature of the action. She also assailed the failure of the complaint to
receipts signed by their staff or agents. state a cause of action. The RTC denied the motions.5
On December 6, 1996 respondent spouses Roberto and Arabela Arcinue There is no question that the Arcinues’ motion failed to comply with the
(the Arcinues) filed a motion for leave to admit complaint in requirement of Section 11, Rule 13 of the 1997 Rules of Civil Procedure
intervention,6 alleging that they owned and were in possession of Lot which provides:
2374, one of the two lots subject of the expropriation. On January 7, SECTION 11. Priorities in modes of service and filing. — Whenever
1997 the RTC granted the Arcinues’ motion and required both the NPC practicable, the service and filing of pleadings and other papers shall be
and Lim to answer the complaint-in-intervention within 10 days from done personally. Except with respect to papers emanating from the
receipt of its order. 7 court, a resort to other modes must be accompanied by a written
When Lim and the NPC still did not file their answers to the complaint-in- explanation, why the service or filing was not done personally. A
intervention after 10 months, on December 7, 1998 the Arcinues filed a violation of this Rule may be cause to consider the paper as not filed.
motion for judgment by default. 8 Lim sought to expunge the motion on But the above does not provide for automatic sanction should a party
the ground that it lacked the requisite explanation why the Arcinues fail to submit the required explanation. It merely provides for that
resorted to service by registered mail rather than to personal service. possibility considering its use of the term "may." The question is
At the scheduled hearing of the motion, Lim’s counsel did not appear. whether or not the RTC gravely abused its discretion in not going for the
The NPC for its part manifested that it did not file an answer since its sanction of striking out the erring motion. 1âwphi1
interest lay in determining who was entitled to just compensation. The Court finds no such grave abuse of discretion here. As the RTC
On March 1, 1999 the RTC issued an order of default9 against both Lim pointed out, notwithstanding that the Arcinues' failed to explain their
and the NPC. The RTC pointed out that the Arcinues’ failure to explain resort to service by registered mail rather than by personal service,
their resort to service by registered mail had already been cured by the the fact is that Lim's counsel expressly admitted having received a copy
manifestation of Lim’s counsel that he received a copy of the Arcinues’ of the Arcinues' motion for judgment by default on December 7, 1998 or I
motion on December 7, 1998 or 10 days before its scheduled hearing. 0 days before its scheduled hearing. This means that the Arcinues were
Lim filed a motion for reconsideration10 to lift the default order but the diligent enough to file their motion by registered mail long before the
Court denied the motion,11 prompting Lim to file a petition for scheduled hearing.
certiorari12 before the Court of Appeals (CA) in CA-G.R. SP 52842. Personal service is required precisely because it often happens that
On March 23, 2007 the CA rendered a decision 13 that affirmed the RTC’s hearings do not push through because, while a copy of the motion may
order of default. Lim filed a motion for reconsideration14 but the CA have been served by registered mail before the date of the hearing,
denied it,15 prompting her to file the present petition for review. 16 On such is received by the adverse party already after the hearing. Thus,
September 24, 2007 the Court initially denied Lim’s petition 17 but on the rules prefer personal service. But it does not altogether prohibit
motion for reconsideration, the Court reinstated the same. 18 service by registered mail when such service, when adopted, ensures as
Issue Presented in this case receipt by the adverse party.
The only issue presented in this case is whether or not the CA gravely WHEREFORE, the Court DENIES the petition and AFFIRMS the Court of
abused its discretion in affirming the order of default that the RTC Appeals Decision in CA-G.R. SP 52842 dated March 23, 2007 and
entered against Lim. Resolution dated July 5, 2007 that upheld the orders of the Regional
Ruling of the Court Trial Court in Civil Case 17352. The Court DIRECTS the RTC to proceed
Lim points out that an answer-in-intervention cannot give rise to default with its hearing and adjudication of the case.
since the filing of such an answer is only permissive. But Section 4, Rule
1919 of the 1997 Rules of Civil Procedure requires the original parties to MARTIN PEÑOSO and ELIZABETH PEÑOSO, Petitioners, v.MACROSMAN
file an answer to the complaint-in-intervention within 15 days from DONA, Respondent.
notice of the order admitting the same, unless a different period is fixed DECISION
by the court. This changes the procedure under the former rule where AUSTRIA-MARTINEZ, J.:
such an answer was regarded as optional.20 Thus, Lim’s failure to file the Before the Court is a Petition for Review on Certiorari under Rule 45 of
required answer can give rise to default. the Rules of Court assailing the Resolution1 dated March 22, 2002
The trial court had been liberal with Lim. It considered her motion for promulgated by the Court of Appeals (CA) in CA-G.R. SP No. 69472, which
reconsideration as a motion to lift the order of default and gave her an dismissed the appeal before it because Martin Peñoso and his mother
opportunity to explain her side. The court set her motion for hearing but Elizabeth Peñoso (petitioners) failed to submit a written explanation why
Lim’s counsel did not show up in court. She remained unable to show service of pleading was not done personally as required under Section 11
that her failure to file the required answer was due to fraud, accident, of Rule 13 of the Rules of Court and to pay the requisite docket fees; and,
mistake, or excusable negligence. And, although she claimed that she the CA Resolution2 dated June 3, 2002 which denied petitioners' Motion
had a meritorious defense, she was unable to specify what constituted for Reconsideration.
such defense.21 This case originated from a Complaint for Abatement of Nuisance filed
Lim points out that the RTC should have ordered the Arcinues’ motion with the Municipal Trial Court (MTC), Branch No. 001, San Jose,
for judgment by default expunged from the records since it lacked the Occidental Mindoro, by Macrosman Dona (respondent) against the
requisite explanation as to why they resorted to service by registered petitioners, which was tried and decided under the Rule on Summary
mail in place of personal service. Procedure. Respondent alleged that he is the owner of a house and lot
located at San Jose, Occidental Mindoro; that in front of the house and
lot is a barangay road where the petitioners constructed their house
against the objections of the respondent; and that the house of the Failure of the petitioners to include in their petition the required
petitioners constituted a public nuisance. explanation on why personal service upon the respondent was not
The petitioners, in their defense, contended that their house was resorted to pursuant to Section 11, rule 13, of the 1997 Rules of Civil
constructed by the late Praxido Peñoso, Martin's father and Elizabeth's Procedure;
husband, way ahead before the respondent arrived; that their house B.
constitutes no public nuisance; that the respondent cannot demand a Payment of the required docketing and other legal fees is short by
right of way; that the continued existence of their house brings no harm P520.00. 7
to the respondent; and that the respondent is not authorized to file the The petition has merit.
instant Complaint. Section 11, Rule 13 of the Rules of Court provides:
On October 1, 1997, the MTC rendered its Decision, in favor of the Sec. 11. Priorities in modes of service and filing. - Whenever practicable,
petitioners and against the respondent on the ground that respondent the service and filing of pleadings and other papers shall be done
has no cause of action against the petitioners. It ordered the dismissal personally. Except with respect to papers emanating from the court, a
of the complaint on the ground that the house in question was resort to other modes must be accompanied by a written explanation
constructed on a public property which "may be abated only by the why the service or filing was not done personally. A violation of this Rule
Municipal Mayor, unless it is specially injurious to a private person;" and may be cause to consider the paper as not filed.
the respondent to pay petitioners P10,000.00 by way of attorney's fee.3 Jurisprudence holds that the rule that a pleading must be accompanied
Respondent appealed the Decision of the MTC to the RTC, docketed as by a written explanation why the service or filing was not done
Civil Case No. R-1061. personally is mandatory.8
On January 2, 2002, the RTC rendered its Decision reversing the MTC. However, in Ello v. Court of Appeals,9 the Court defined the
The RTC declared the house erected by the petitioners on a portion of circumstances when the court may exercise its discretionary power
the road fronting the house of the respondent as a nuisance; ordered under Section 11 of Rule 13, viz:
the petitioners to immediately remove the said house at their own However, such discretionary power of the court must be exercised
expense; ordered the petitioners to jointly and severally pay plaintiff- properly and reasonably, taking into account the following factors: (1)
appellant the amount of P20,000.00, as and for reasonable attorney's "the practicability of personal service;" (2) "the importance of the
fees; and, ordered the petitioners to pay respondent P5,000.00 as subject matter of the case or the issues involved therein;" and (3)
litigation expenses and to pay the costs of this suit. 4 "the prima facie merit of the pleading sought to be expunged for
On January 21, 2002, the RTC denied the petitioners' Motion for violation of Section 11. x x x"10
Reconsideration. Considering the prima facie merit of the pleading involving the issues
Petitioners filed a Petition for Review with the CA. On March 22, 2002, whether the petitioners' house is a public nuisance; whether the subject
the CA issued a Resolution dismissing the Petition, to wit: house is constructed on an abandoned road; and whether the alleged
For failure of the petitioners to include in their petition the required nuisance is specially injurious to respondent; and, considering further
explanation on why personal service upon the respondent was not the fact that the MTC and the RTC decisions are conflicting, the CA had
resorted to pursuant to Sec. 11, Rule 13 of the 1997 Rules of Civil valid grounds to refrain from dismissing the appeal solely on technical
Procedure, as amended, the herein petition is hereby DISMISSED grounds.11
OUTRIGHT. Strict compliance with this rule is mandated. (Solar Team As the Court has expounded in Aguam v. Court of Appeals:12
Entertainment, Inc. v. Hon. Helen Bautista-Ricafort, et al., 293 SCRA 661). The court has the discretion to dismiss or not to dismiss an appellant's
Moreover, payment of the required docketing and other legal fees is appeal. It is a power conferred on the court, not a duty. The "discretion
short by P530.00. must be a sound one, to be exercised in accordance with the tenets of
SO ORDERED.5 (emphasis in the original) justice and fair play, having in mind the circumstances obtaining in each
On May 16, 2002, a Motion for Reconsideration was filed by the case." Technicalities, however, must be
petitioners attaching a Certification dated April 15, 2002 from the avoided.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
Postmaster that the pleading in question had been actually received by The law abhors technicalities that impede the cause of justice. The
the respondent as well as a Letter dated February 12, 2002 to the CA court's primary duty is to render or dispense justice. "A litigation is not
Clerk of Court stating that if the docket fee is insufficient, counsel for a game of technicalities." "Lawsuits unlike duels are not to be won by a
the petitioners shall remit the balance immediately, if any. But on June rapier's thrust. Technicality, when it deserts its proper office as an aid
3, 2002, the CA issued another Resolution which states: to justice and becomes its great hindrance and chief enemy, deserves
Petitioners' motion for reconsideration is hereby DENIED, for lack of scant consideration from courts." Litigations must be decided on their
merit. Petitioners' subsequent compliance with the RULES does not merits and not on technicality. Every party litigant must be afforded the
cleanse the petition of its infirmity. amplest opportunity for the proper and just determination of his cause,
Atty. Ma. Conchita Lucero-De Mesa is hereby ordered to RETURN the free from the unacceptable plea of technicalities. Thus, dismissal of
two (2) Postal Money Orders for P530.00 to the petitioners. appeals purely on technical grounds is frowned upon where the
SO ORDERED.6 (emphasis in the original) policy of the court is to encourage hearings of appeals on their
Hence, the instant Petition averring that the CA erred in dismissing the merits and the rules of procedure ought not to be applied in a very
petition on the following grounds: rigid, technical sense; rules of procedure are used only to help
A. secure, not override substantial justice. It is a far better and more
prudent course of action for the court to excuse a technical lapse that they and their counsel are living in a remote town and are not
and afford the parties a review of the case on appeal to attain the aware of the exact amount of the lawful fees for petitions for review.
ends of justice rather than dispose of the case on technicality and Hence, it is understandable why they place sheer reliance on the Rules
cause a grave injustice to the parties, giving a false impression of of Court, notably, Section 1 of Rule 42, which only specifies the amount
speedy disposal of cases while actually resulting in more delay, if of P500.00 for the appeal cost in question. Petitioners sent P500.00
not a miscarriage of justice.13 (Emphasis supplied)cralawlibrary with a request from the Clerk of Court for notification of any
In Ginete v. Court of Appeals,14 the Court further held: insufficiency which will be sent immediately if there is any. The
Let it be emphasized that the rules of procedure should be viewed as deficiency in payment was not at all intentional. There was a willingness
mere tools designed to facilitate the attainment of justice. Their strict to comply should any deficiency occur, as stated in their Letter to the
and rigid application, which would result in technicalities that tend to CA Clerk of Court: "Please acknowledge receipt of the amount and if the
frustrate rather than promote substantial justice, must always be amount is insufficient pursuant to Sec. 1, Rule 42 of the Revised Rules of
eschewed. Even the Rules of Court reflect this principle. The power to Court, kindly notify the undersigned and the balance if any will be
suspend or even disregard rules can be so pervasive and compelling as immediately sent. Thank you very much." This clearly shows that the
to alter even that which this Court itself has already declared to be final, petitioners acted in good faith and substantially complied with the Rules.
as we are now constrained to do in the instant case. In Heirs of Bertuldo Hinog v. Melicor,19 the Court held:
x x x Time and again, the Court has held that the Manchester rule has been
The emerging trend in the rulings of this Court is to afford every party modified in Sun Insurance Office, Ltd. (SIOL) v. Asuncion which defined
litigant the amplest opportunity for the proper and just determination of the following guidelines involving the payment of docket fees:
his cause, free from the constraints of technicalities. Time and again, x x x
this Court has consistently held that rules must not be applied rigidly so Plainly, while the payment of the prescribed docket fee is a jurisdictional
as not to override substantial justice.15 (Emphasis supplied)cralawlibrary requirement, even its non-payment at the time of filing does not
Rules of procedure being designed to facilitate the attainment of justice, automatically cause the dismissal of the case, as long as the fee is paid
their rigid application resulting in technicalities that tend to delay or within the applicable prescriptive or reglementary period, more so when
frustrate rather than promote substantial justice, must always be the party involved demonstrates a willingness to abide by the rules
avoided.16 prescribing such payment. Thus, when insufficient filing fees were
In Philippine Amusement and Gaming Corporation v. Angara,17 this Court initially paid by the plaintiffs and there was no intention to defraud
held: the government, the Manchester rule does not apply.20
While it is true that rules of procedure are intended to promote rather In fine, the CA erred in dismissing the Petition for Review outright.
than frustrate the ends of justice, and the swift unclogging of court In light of Philippine Amusement and Gaming Corporation v.
dockets is a laudable objective, it nevertheless must not be met at the Angara,21since the records of the case are not before this Court, a
expense of substantial justice. Time and again, this Court has reiterated remand of the case to the CA for proper disposition on the merits is
the doctrine that the rules of procedure are mere tools intended to necessary, bearing in mind the judicial policy to resolve the present
facilitate the attainment of justice, rather than frustrate it. A strict and controversy with all dispatch in order to avoid further delay.
rigid application of the rules must always be eschewed when it would WHEREFORE, the instant petition is GRANTED and the assailed
subvert the primary objective of the rules, that is, to enhance fair trials Resolutions of the Court of Appeals are REVERSED and SET ASIDE. The
and expedite justice. Technicalities should never be used to defeat the Court of Appeals is directed to REINSTATE the Petition for Review,
substantive rights of the other party. Every party-litigant must be docketed as CA-G.R. SP No. 69472, for further proceedings.
afforded the amplest opportunity for the proper and just determination
of his cause, free from the constraints of technicalities. Thus, the CA G.R. No. 156759 June 5, 2013
should have refrained from hastily dismissing the petition on procedural ALLEN A. MACASAET, NICOLAS V. QUIJANO, JR., ISAIAS ALBANO, LILY
flaws. REYES, JANET BAY, JESUS R. GALANG, AND RANDY
In similar cases, the Court ordinarily remands the case to the CA for HAGOS, Petitioners,
proper disposition on the merits. However, in the present case, vs.
considering the issues raised and the fact that the records of the case FRANCISCO R. CO, JR., Respondent.
are before us, the Court deems it more appropriate and practical to DECISION
resolve the present controversy in order to avoid further delay. 18 BERSAMIN, J.:
Thus, in view of the foregoing jurisprudential trend to afford every party To warrant the substituted service of the summons and copy of the
litigant the amplest opportunity for a just determination of his case, free complaint, the serving officer must first attempt to effect the same
from the severities of technicalities; the prima facie merit of the upon the defendant in person. Only after the attempt at personal service
pleading; and, especially considering the conflicting rulings of the has become futile or impossible within a reasonable time may the
MTC and the RTC, the CA erred in dismissing the appeal on mere officer resort to substituted service.
technical grounds.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ The Case
Furthermore, considering the peculiar circumstances of the case, the Petitioners – defendants in a suit for libel brought by respondent –
shortage of the payment of the docketing fee cannot be used as a appeal the decision promulgated on March 8, 2002 1 and the resolution
ground for dismissing petitioners' appeal before the CA. It is undisputed promulgated on January 13, 2003,2 whereby the Court of Appeals (CA)
respectively dismissed their petition for certiorari, prohibition and per information of (sic) Mr. Esleta said defendants is (sic) always roving
mandamus and denied their motion for reconsideration. Thereby, the CA outside and gathering news, thus, substituted service was applied.
upheld the order the Regional Trial Court (RTC), Branch 51, in Manila had Original copy of summons is therefore, respectfully returned duly
issued on March 12, 2001 denying their motion to dismiss because the served.
substituted service of the summons and copies of the complaint on each Manila, September 22, 2000.
of them had been valid and effective. 3 On October 3, 2000, petitioners moved for the dismissal of the
Antecedents complaint through counsel’s special appearance in their behalf, alleging
On July 3, 2000, respondent, a retired police officer assigned at the lack of jurisdiction over their persons because of the invalid and
Western Police District in Manila, sued Abante Tonite, a daily tabloid of ineffectual substituted service of summons. They contended that the
general circulation; its Publisher Allen A. Macasaet; its Managing sheriff had made no prior attempt to serve the summons personally on
Director Nicolas V. Quijano; its Circulation Manager Isaias Albano; its each of them in accordance with Section 6 and Section 7, Rule 14 of the
Editors Janet Bay, Jesus R. Galang and Randy Hagos; and its Rules of Court. They further moved to drop Abante Tonite as a defendant
Columnist/Reporter Lily Reyes (petitioners), claiming damages because by virtue of its being neither a natural nor a juridical person that could
of an allegedly libelous article petitioners published in the June 6, 2000 be impleaded as a party in a civil action.
issue of Abante Tonite. The suit, docketed as Civil Case No. 00-97907, At the hearing of petitioners’ motion to dismiss, Medina testified that he
was raffled to Branch 51 of the RTC, which in due course issued had gone to the office address of petitioners in the morning of
summons to be served on each defendant, including Abante Tonite, at September 18, 2000 to personally serve the summons on each
their business address at Monica Publishing Corporation, 301-305 3rd defendant; that petitioners were out of the office at the time; that he had
Floor, BF Condominium Building, Solana Street corner A. Soriano Street, returned in the afternoon of the same day to again attempt to serve on
Intramuros, Manila. 4 each defendant personally but his attempt had still proved futile
In the morning of September 18, 2000, RTC Sheriff Raul Medina because all of petitioners were still out of the office; that some
proceeded to the stated address to effect the personal service of the competent persons working in petitioners’ office had informed him that
summons on the defendants. But his efforts to personally serve each Macasaet and Quijano were always out and unavailable, and that Albano,
defendant in the address were futile because the defendants were then Bay, Galang, Hagos and Reyes were always out roving to gather news;
out of the office and unavailable. He returned in the afternoon of that and that he had then resorted to substituted service upon realizing the
day to make a second attempt at serving the summons, but he was impossibility of his finding petitioners in person within a reasonable
informed that petitioners were still out of the office. He decided to time.
resort to substituted service of the summons, and explained why in his On March 12, 2001, the RTC denied the motion to dismiss, and directed
sheriff’s return dated September 22, 2005,5 to wit: petitioners to file their answers to the complaint within the remaining
SHERIFF’S RETURN period allowed by the Rules of Court,6 relevantly stating:
This is to certify that on September 18, 2000, I caused the service of Records show that the summonses were served upon Allen A. Macasaet,
summons together with copies of complaint and its annexes attached President/Publisher of defendant AbanteTonite, through LuAnn Quijano;
thereto, upon the following: upon defendants Isaias Albano, Janet Bay, Jesus R. Galang, Randy Hagos
1. Defendant Allen A. Macasaet, President/Publisher of defendant and Lily Reyes, through Rene Esleta, Editorial Assistant of defendant
AbanteTonite, at Monica Publishing Corporation, Rooms 301-305 3rd Abante Tonite (p. 12, records). It is apparent in the Sheriff’s Return that
Floor, BF Condominium Building, Solana corner A. Soriano Streets, on several occasions, efforts to served (sic) the summons personally
Intramuros, Manila, thru his secretary Lu-Ann Quijano, a person of upon all the defendants were ineffectual as they were always out and
sufficient age and discretion working therein, who signed to unavailable, so the Sheriff served the summons by substituted service.
acknowledge receipt thereof. That effort (sic) to serve the said Considering that summonses cannot be served within a reasonable time
summons personally upon said defendant were made, but the same to the persons of all the defendants, hence substituted service of
were ineffectual and unavailing on the ground that per information of summonses was validly applied. Secretary of the President who is duly
Ms. Quijano said defendant is always out and not available, thus, authorized to receive such document, the wife of the defendant and the
substituted service was applied; Editorial Assistant of the defendant, were considered competent
2. Defendant Nicolas V. Quijano, at the same address, thru his wife Lu- persons with sufficient discretion to realize the importance of the legal
Ann Quijano, who signed to acknowledge receipt thereof. That effort (sic) papers served upon them and to relay the same to the defendants
to serve the said summons personally upon said defendant were made, named therein (Sec. 7, Rule 14, 1997 Rules of Civil Procedure).
but the same were ineffectual and unavailing on the ground that per WHEREFORE, in view of the foregoing, the Motion to Dismiss is hereby
information of (sic) his wife said defendant is always out and not DENIED for lack of merit..
available, thus, substituted service was applied; Accordingly, defendants are directed to file their Answers to the
3. Defendants Isaias Albano, Janet Bay, Jesus R. Galang, Randy Hagos complaint within the period still open to them, pursuant to the rules.
and Lily Reyes, at the same address, thru Rene Esleta, Editorial Assistant SO ORDERED.
of defendant AbanteTonite, a person of sufficient age and discretion Petitioners filed a motion for reconsideration, asserting that the sheriff
working therein who signed to acknowledge receipt thereof. That effort had immediately resorted to substituted service of the summons upon
(sic) to serve the said summons personally upon said defendants were being informed that they were not around to personally receive the
made, but the same were ineffectual and unavailing on the ground that
summons, and that Abante Tonite, being neither a natural nor a juridical Furthermore, the CA ruled:
person, could not be made a party in the action. Anent the issue raised by petitioners that "Abante Tonite is neither a
On June 29, 2001, the RTC denied petitioners’ motion for natural or juridical person who may be a party in a civil case," and
reconsideration. 7 It stated in respect of the service of summons, as therefore the case against it must be dismissed and/or dropped, is
follows: untenable.
The allegations of the defendants that the Sheriff immediately resorted The respondent Judge, in denying petitioners’ motion for
to substituted service of summons upon them when he was informed reconsideration, held that:
that they were not around to personally receive the same is untenable. xxxx
During the hearing of the herein motion, Sheriff Raul Medina of this Abante Tonite’s newspapers are circulated nationwide, showing
Branch of the Court testified that on September 18, 2000 in the morning, ostensibly its being a corporate entity, thus the doctrine of corporation
he went to the office address of the defendants to personally serve by estoppel may appropriately apply.
summons upon them but they were out. So he went back to serve said An unincorporated association, which represents itself to be a
summons upon the defendants in the afternoon of the same day, but corporation, will be estopped from denying its corporate capacity in a
then again he was informed that the defendants were out and suit against it by a third person who relies in good faith on such
unavailable, and that they were always out because they were roving representation.
around to gather news. Because of that information and because of the There being no grave abuse of discretion committed by the respondent
nature of the work of the defendants that they are always on field, so Judge in the exercise of his jurisdiction, the relief of prohibition is also
the sheriff resorted to substituted service of summons. There was unavailable.
substantial compliance with the rules, considering the difficulty to serve WHEREFORE, the instant petition is DENIED. The assailed Orders of
the summons personally to them because of the nature of their job respondent Judge are AFFIRMED.
which compels them to be always out and unavailable. Additional SO ORDERED.9
matters regarding the service of summons upon defendants were On January 13, 2003, the CA denied petitioners’ motion for
sufficiently discussed in the Order of this Court dated March 12, 2001. reconsideration.10
Regarding the impleading of Abante Tonite as defendant, the RTC held, Issues
viz: Petitioners hereby submit that:
"Abante Tonite" is a daily tabloid of general circulation. People all over 1. THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN HOLDING THAT
the country could buy a copy of "Abante Tonite" and read it, hence, it is THE TRIAL COURT ACQUIRED JURISDICTION OVER HEREIN PETITIONERS.
for public consumption. The persons who organized said publication 2. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR BY
obviously derived profit from it. The information written on the said SUSTAINING THE INCLUSION OF ABANTE TONITE AS PARTY IN THE INSTANT
newspaper will affect the person, natural as well as juridical, who was CASE.11
stated or implicated in the news. All of these facts imply that "Abante Ruling
Tonite" falls within the provision of Art. 44 (2 or 3), New Civil Code. The petition for review lacks merit.
Assuming arguendo that "Abante Tonite" is not registered with the Jurisdiction over the person, or jurisdiction in personam –the power of
Securities and Exchange Commission, it is deemed a corporation by the court to render a personal judgment or to subject the parties in a
estoppels considering that it possesses attributes of a juridical person, particular action to the judgment and other rulings rendered in the
otherwise it cannot be held liable for damages and injuries it may inflict action – is an element of due process that is essential in all actions, civil
to other persons. as well as criminal, except in actions in rem or quasi in rem. Jurisdiction
Undaunted, petitioners brought a petition for certiorari, prohibition, over the defendantin an action in rem or quasi in rem is not required,
mandamusin the CA to nullify the orders of the RTC dated March 12, 2001 and the court acquires jurisdiction over an actionas long as it acquires
and June 29, 2001. jurisdiction over the resthat is thesubject matter of the action. The
Ruling of the CA purpose of summons in such action is not the acquisition of jurisdiction
On March 8, 2002, the CA promulgated its questioned over the defendant but mainly to satisfy the constitutional requirement
decision,8 dismissing the petition for certiorari, prohibition, mandamus, of due process.12
to wit: The distinctions that need to be perceived between an action in
We find petitioners’ argument without merit. The rule is that certiorari personam, on the one hand, and an action inrem or quasi in rem, on the
will prosper only if there is a showing of grave abuse of discretion or an other hand, are aptly delineated in Domagas v. Jensen,13 thusly:
act without or in excess of jurisdiction committed by the respondent The settled rule is that the aim and object of an action determine its
Judge. A judicious reading of the questioned orders of respondent Judge character. Whether a proceeding is in rem, or in personam, or quasi in
would show that the same were not issued in a capricious or whimsical rem for that matter, is determined by its nature and purpose, and by
exercise of judgment. There are factual bases and legal justification for these only. A proceeding in personam is a proceeding to enforce
the assailed orders. From the Return, the sheriff certified that "effort to personal rights and obligations brought against the person and is based
serve the summons personally xxx were made, but the same were on the jurisdiction of the person, although it may involve his right to, or
ineffectual and unavailing xxx. the exercise of ownership of, specific property, or seek to compel him to
and upholding the trial court’s finding that there was a substantial control or dispose of it in accordance with the mandate of the court. The
compliance with the rules that allowed the substituted service. purpose of a proceeding in personam is to impose, through the judgment
of a court, some responsibility or liability directly upon the person of the answers within the time fixed by the Rules of Court; and a notice that
defendant. Of this character are suits to compel a defendant to unless the defendant so answers, the plaintiff will take judgment by
specifically perform some act or actions to fasten a pecuniary liability default and may be granted the relief applied for. 17 To be attached to the
on him. An action in personam is said to be one which has for its object original copy of the summons and all copies thereof is a copy of the
a judgment against the person, as distinguished from a judgment against complaint (and its attachments, if any) and the order, if any, for the
the property to determine its state. It has been held that an action in appointment of a guardian ad litem.18
personam is a proceeding to enforce personal rights or obligations; The significance of the proper service of the summons on the defendant
such action is brought against the person. As far as suits for injunctive in an action in personam cannot be overemphasized. The service of the
relief are concerned, it is well-settled that it is an injunctive act in summons fulfills two fundamental objectives, namely: (a) to vest in the
personam. In Combs v. Combs, the appellate court held that proceedings court jurisdiction over the person of the defendant; and (b) to afford to
to enforce personal rights and obligations and in which personal the defendant the opportunity to be heard on the claim brought against
judgments are rendered adjusting the rights and obligations between him.19 As to the former, when jurisdiction in personam is not acquired in
the affected parties is in personam. Actions for recovery of real a civil action through the proper service of the summons or upon a valid
property are in personam. waiver of such proper service, the ensuing trial and judgment are
On the other hand, a proceeding quasi in rem is one brought against void.20 If the defendant knowingly does an act inconsistent with the right
persons seeking to subject the property of such persons to the to object to the lack of personal jurisdiction as to him, like voluntarily
discharge of the claims assailed. In an action quasi in rem, an individual appearing in the action, he is deemed to have submitted himself to the
is named as defendant and the purpose of the proceeding is to subject jurisdiction of the court.21 As to the latter, the essence of due process
his interests therein to the obligation or loan burdening the property. lies in the reasonable opportunity to be heard and to submit any
Actions quasi in rem deal with the status, ownership or liability of a evidence the defendant may have in support of his defense. With the
particular property but which are intended to operate on these proper service of the summons being intended to afford to him the
questions only as between the particular parties to the proceedings and opportunity to be heard on the claim against him, he may also waive the
not to ascertain or cut off the rights or interests of all possible process.21 In other words, compliance with the rules regarding the
claimants. The judgments therein are binding only upon the parties who service of the summons is as much an issue of due process as it is of
joined in the action. jurisdiction.23
As a rule, Philippine courts cannot try any case against a defendant who Under the Rules of Court, the service of the summons should firstly be
does not reside and is not found in the Philippines because of the effected on the defendant himself whenever practicable. Such personal
impossibility of acquiring jurisdiction over his person unless he service consists either in handing a copy of the summons to the
voluntarily appears in court; but when the case is an action in rem or defendant in person, or, if the defendant refuses to receive and sign for
quasi in rem enumerated in Section 15, Rule 14 of the Rules of Court, it, in tendering it to him.24 The rule on personal service is to be rigidly
Philippine courts have jurisdiction to hear and decide the case because enforced in order to ensure the realization of the two fundamental
they have jurisdiction over the res, and jurisdiction over the person of objectives earlier mentioned. If, for justifiable reasons, the defendant
the non-resident defendant is not essential. In the latter instance, cannot be served in person within a reasonable time, the service of the
extraterritorial service of summons can be made upon the defendant, summons may then be effected either (a) by leaving a copy of the
and such extraterritorial service of summons is not for the purpose of summons at his residence with some person of suitable age and
vesting the court with jurisdiction, but for the purpose of complying with discretion then residing therein, or (b) by leaving the copy at his office
the requirements of fair play or due process, so that the defendant will or regular place of business with some competent person in charge
be informed of the pendency of the action against him and the possibility thereof.25 The latter mode of service is known as substituted service
that property in the Philippines belonging to him or in which he has an because the service of the summons on the defendant is made through
interest may be subjected to a judgment in favor of the plaintiff, and he his substitute.
can thereby take steps to protect his interest if he is so minded. On the It is no longer debatable that the statutory requirements of substituted
other hand, when the defendant in an action in personam does not service must be followed strictly, faithfully and fully, and any substituted
reside and is not found in the Philippines, our courts cannot try the case service other than that authorized by statute is considered
against him because of the impossibility of acquiring jurisdiction over ineffective.26 This is because substituted service, being in derogation of
his person unless he voluntarily appears in court. 14 the usual method of service, is extraordinary in character and may be
As the initiating party, the plaintiff in a civil action voluntarily submits used only as prescribed and in the circumstances authorized by
himself to the jurisdiction of the court by the act of filing the initiatory statute.27 Only when the defendant cannot be served personally within a
pleading. As to the defendant, the court acquires jurisdiction over his reasonable time may substituted service be resorted to. Hence, the
person either by the proper service of the summons, or by a voluntary impossibility of prompt personal service should be shown by stating the
appearance in the action.15 efforts made to find the defendant himself and the fact that such efforts
Upon the filing of the complaint and the payment of the requisite legal failed, which statement should be found in the proof of service or
fees, the clerk of court forthwith issues the corresponding summons to sheriff’s return.28 Nonetheless, the requisite showing of the impossibility
the defendant.16 The summons is directed to the defendant and signed by of prompt personal service as basis for resorting to substituted service
the clerk of court under seal. It contains the name of the court and the may be waived by the defendant either expressly or impliedly. 29
names of the parties to the action; a direction that the defendant
There is no question that Sheriff Medina twice attempted to serve the the Regional Trial Court (RTC), Makati City, Branch 66, and held
summons upon each of petitioners in person at their office address, the petitioner CCC Insurance Corporation (CCCIC) liable under its Surety
first in the morning of September 18, 2000 and the second in the and Performance Bonds to respondent Kawasaki Steel Corporation
afternoon of the same date. Each attempt failed because Macasaet and (Kawasaki); and (2) the Resolution3 dated November 14, 2002 of the
Quijano were "always out and not available" and the other petitioners appellate court in the same case which denied the Motion for
were "always roving outside and gathering news." After Medina learned Reconsideration of CCCIC.
from those present in the office address on his second attempt that The antecedents of this case are as follows:
there was no likelihood of any of petitioners going to the office during On August 16, 1988, Kawasaki, represented by its Manager, Yoshimitsu
the business hours of that or any other day, he concluded that further Hosoya, and F .F. Mañacop Construction Company, Inc. (FFMCCI),
attempts to serve them in person within a reasonable time would be represented by its President, Florante F. Mañacop (Mañacop ), executed
futile. The circumstances fully warranted his conclusion. He was not a Consortium Agreement for Pangasinan Fishing Port Network Project
expected or required as the serving officer to effect personal service by (Consortium Agreement).4 Kawasaki and FFMCCI formed a consortium
all means and at all times, considering that he was expressly authorized (Kawasaki-FFMCCI Consortium) for the purpose of contracting with the
to resort to substituted service should he be unable to effect the Philippine Government for the construction of a fishing port network in
personal service within a reasonable time. In that regard, what was a Pangasinan (Project). According to their Consortium Agreement,
reasonable time was dependent on the circumstances obtaining. While Kawasaki and FFMCIA undertook to perform and accomplish their
we are strict in insisting on personal service on the defendant, we do respective and specific portions of work in the intended contract with
not cling to such strictness should the circumstances already justify the Philippine Government.5
substituted service instead. It is the spirit of the procedural rules, not The Project was awarded to the Kawasaki-FFMCCI Consortium for the
their letter, that governs.30 contract price of ₱62,000,441.00, 33 .3 7% of which or
In reality, petitioners’ insistence on personal service by the serving ₱20,692,026.00 was the price of work of FFMCCI. On October 4, 1988,
officer was demonstrably superfluous. They had actually received the the Republic of the Philippines (Republic), through the Department of
summonses served through their substitutes, as borne out by their filing Public Works and Highways (DPWH), represented by former Secretary
of several pleadings in the RTC, including an answer with compulsory Romulo M. del Rosario, as owner, and the Kawasaki-FFMCCI Consortium,
counterclaim ad cautelam and a pre-trial brief ad cautelam. They had represented by Shigeru Kohda, as contractor, entered into a Contract
also availed themselves of the modes of discovery available under the Agreement entitled Stage I-A Construction of Pangasinan Fishing Port
Rules of Court. Such acts evinced their voluntary appearance in the Network (Construction Contract).6
action. In accordance with Article 10 of the Consortium
Nor can we sustain petitioners’ contention that Abante Tonite could not Agreement,7 "Consortium Leader" Kawasaki, on behalf of the
be sued as a defendant due to its not being either a natural or a juridical Consortium, secured from the Philippine Commercial International Bank
person. In rejecting their contention, the CA categorized Abante Tonite (PCIB) Letter of Credit No. 38-001-1836178in the amount of
as a corporation by estoppel as the result of its having represented ₱6,200,044.10 in favor of DPWH, available from September 9, 1988 to
itself to the reading public as a corporation despite its not being November 19, 1990. Said Letter of Credit guaranteed the faithful
incorporated. Thereby, the CA concluded that the RTC did not gravely performance by Kawasaki-FFMCCI Consortium of its obligation under the
abuse its discretion in holding that the non-incorporation of Abante Construction Contract.
Tonite with the Securities and Exchange Commission was of no The Republic made an advance payment for the Project to the Kawasaki-
consequence, for, otherwise, whoever of the public who would suffer any FFMCCI Consortium in the amount of ₱9,300,066.15, representing 15%
damage from the publication of articles in the pages of its tabloids of the contract price of: ₱62,000,441.00.
would be left without recourse. We cannot disagree with the CA, For the release of its share in the advance payment made by the
considering that the editorial box of the daily tabloid disclosed that Republic, and also pursuant to Article 10 of the Consortium Agreement,
basis, nothing in the box indicated that Monica Publishing Corporation FFMCCI secured from CCCIC the following bonds in favor of Kawasaki: (a)
had owned Abante Tonite. Surety Bond No. B-88/111919 in the amount of ₱3,103,803.90 (equivalent
WHEREFORE, the Court AFFIRMS the decision promulgated on March 8, to 15% of the price of work of FFMCCI), effective from October 26, 1988
2002; and ORDERS petitioners to pay the costs of suit. to October 26, 1989, to counter guarantee the amount of advance
payment FFMCCI would receive from Kawasaki; and (b) Performance
.R. No. 156162 June 22, 2015 Bond B-88/1119310 in the amount of ₱2,069,202.60 (equivalent to 10% of
CCC INSURANCE CORPORATION, Petitioner, the price of work of FFMCCI), effective from October 27, 1988 to October
vs. 27, 1989, to guarantee completion by FFMCCI of its scope of work in the
KAWASAKI STEEL CORPORATION, F.F. MAÑACOP CONSTRUCTION CO., Project. In turn, FFMCCI and Mañacop executed two Indemnity
INC., and FLORANTE F. MAÑACOP, Respondents. Agreements11promising to compensate CCCIC for any damages the
DECISION insurance company might incur from issuing the Surety and
LEONARDO-DE CASTRO, J.: Performance Bonds.
Assailed in this Petition for Review on Certiorari are: (1) the In two letters dated October 27, 1998,12 FFMCCI submitted the Surety and
Decision1 dated May 30, 2002 of the Court of Appeals in CA-G.R. CV No. Performance Bonds to Kawasaki and requested Kawasaki to release the
54066, which reversed and set aside the Decision2 dated May 2, 1996 of advance payment in the amount of ₱3,103,803.90. FFMCCI eventually
received the amount of advance payment it requested on a staggered Kawasaki to cause prejudice to CCCIC, so it did not grant the
basis.13 counterclaims for moral and exemplary damages and attorney's fees of
The Project commenced in November 1988. 14 Sometime in April 1989, CCCIC against Kawasaki.
FFMCCI ceased performing its work in the Project after suffering Kawasaki appealed before the Court of Appeals assigning the following
financial problems and/or business reverses. After discussions, errors on the part of the RTC:
Kawasaki and FFMCCI then executed a new Agreement 15 on August 24, I. THE COURT A QUO GROSSLY ERRED IN HOLDING THAT [CCCIC] CAN BE
1989 wherein Kawasaki recognized the "Completed Portion of Work" of HELD LIABLE TO [Kawasaki] UNDER THE SUBJECT BONDS ONLY "IF THE
FFMCCI as of April 25, 1989, and agreed to take over the unfinished GOVERNMENT EXERCISES ITS RIGHTS AGAINST THE GUARANTEE-BONDS
portion of work of FFMCCI, referred to as "Transferred Portion of Work." ISSUED TO IT BY [Kawasaki]" ON THE THEORY ADVANCED BY [CCCIC],
Kawasaki and FFMCCI further agreed that "[a]ny profit or benefit arising WHICH THE COURT A QUO FULLY EMBRACED AND ADOPTED, THAT THE
from the performance by [Kawasaki] of the Transferred Portion of Work BONDS ARE MERE "COUNTER-GUARANTEES."
shall accrue to [Kawasaki]." II. THE COURT A QUO GROSSLY ERRED IN HOLDING THAT THE EXTENSION
In a letter dated September 14, 1989,16 Kawasaki informed CCCIC about GRANTED BY THE GOVERNMENT TO THE CONSORTIUM FOR THE
the cessation of operations of FFMCCI, and the failure of FFMCCI to CONSTRUCTION OF THE PANGASINAN FISHING PORT NETWORK PROJECT
perform its obligations in the Project and repay the advance payment EXTINGUISHED THE LIABILITY OF [CCCIC].
made by Kawasaki. Consequently, Kawasaki formally demanded that III. THE COURT A QUO GROSSLY ERRED IN HOLDING THAT ARTICLE 2079 OF
CCCIC, as surety, pay Kawasaki the amounts covered by the Surety and THE CIVIL CODE OF THE PHILIPPINES APPLIES TO THE CASE AT BAR. IN A
Performance Bonds. Because CCCIC did not act upon its demand, LONG LINE OF DECISIONS, THE SUPREME COURT HAS HELD THAT THE RULE
Kawasaki filed on November 6, 1989 before the RTC a Complaint 17 against OF "STRICTISSIMI JURIS" DOES NOT APPLY TO SURETY COMPANIES SUCH
CCCIC to collect on Surety Bond No. B-88/11191 and Performance Bond AS [CCCIC] HEREIN.
No. B-88/11193. IV. THE SUBJECT BONDS ARE FIXED UNTIL OCTOBER 26 AND 27, 1989
In its Answer with Counterclaims,18 CCCIC denied any liability on its RESPECTIVELY WHILE THE ORIGINAL PERIOD OF THE CONTRACT WITH THE
Surety and Performance Bonds on the following grounds: (a) the rights GOVERNMENT, THE PERFORMANCE OF WHICH BY [CCCIC] ARE PRECISELY
of Kawasaki under the Surety and Performance Bonds had not yet GUARANTEED BY THESE BONDS, IS UNTIL DECEMBER 30, 1989. ON THE
accrued since the said Bonds were mere counter-guarantees, for which OTHER HAND, THE DEF AULT BY [FFMCCI] WHICH THE BONDS GUARANTEED
CCCIC could only be held liable upon the filing of a claim by the Republic AGAINST OCCURRED ON [OR] ABOUT AUGUST 24, 1989. THEREFORE,
against the Kawasaki-FFMCCI Consortium; (b) Kawasaki and FFMCCI, IRRESPECTIVE OF WHETHER THERE WAS AN EXTENSION OR NOT AT THE END
without the consent of CCCIC, executed a new Agreement dated August OF THE ORIGINAL CONTRACT PERIOD AND IRRESPECTIVE OF WHETHER THIS
24, 1989 novating the terms of the Consortium Agreement, which EXTENSION IS KNOWN OR UNKNOWN TO [CCCIC], THE LIABILITY THAT IT
prevented CCCIC from being subrogated to the right of Kawasaki against BOUND ITSELF UNTO UNDER THE BONDS IS VERY CLEARLY AND
FFMCCI; (c) Kawasaki, in completing the Transferred Portion of Work was UNEQUIVOCALLY FIXED UNTIL OCTOBER 26 AND 27, 1989 RESPECTIVELY.
correspondingly compensated, which negated any allegation of loss on THEREFORE, ARTICLE 2079 WILL NOT APPLY. HENCE, THE COURT A QUO
the part of Kawasaki; and (d) the obligation of CCCIC was extinguished GROSSLY ERRED IN HOLDING OTHERWISE.21
when the Republic granted the Kawasaki-FFMCCI Consortium an The Court of Appeals, in its Decision dated May 30, 2002, reversed the
extension of time to complete the Project, without the consent of CCCIC. appealed RTC Decision, reasoning as follows:21
CCCIC subsequently filed on August 19, 1991 before the RTC a Third-Party From the language of the aforesaid bonds, it is clear that, in the case of
Complaint19 against FFMCCI and its President Mañacop based on the two the surety bond, the same was posted, jointly and severally, by [FFMCCI]
Indemnity Agreements which FFMCCI and Mañacop executed in favor of and CCCIC "to fully and faithfully guarantee the repayment of the
CCCIC. The RTC issued summonses but FFMCCI and Mañacop failed to file downpayment made by the principal ([FFMCCI]) to the obligee
any responsive pleading to the Third-Party Complaint of CCCIC. Upon (KAWASAKI) in connection with the construction of the Pangasinan
motion of CCCIC, the RTC issued an Order20 dated December 2, 1991 Fishing Port Network Project at Pangasin.an" subject only to the
declaring FFMCCI and Mañacop in default. condition that "the liability of the [herein] surety shall in no case exceed
After trial, the RTC rendered a Decision on May 2, 1996 dismissing the the amount of Pesos: THREE MILLION ONE HUNDRED THREE THOUSAND
Complaint of Kawasaki and the counterclaim of CCCIC. The RTC agreed EIGHT HUNDRED THREE & 90/100 (₱3,103,803.90) Philippine currency;
with CCCIC that the Surety and Performance Bonds issued by the and in the case of the performance bond, the same was posted, jointly
insurance company were mere counter-guarantees and the cause of and severally by [FFMCCI] and CCCIC "to guarantee the full and faithful
action of Kawasaki based on said Bonds had not yet accrued. Since the performance of the principal ([FFMCCI]) of its obligation in connection
Republic did not exercise its right to claim against the PCIB Letter of with the project for the construction of the Pangasinan Fishing Port
Credit No. 38-001-183617, nor compelled Kawasaki to perform the Network located at Pangasinan in accordance with the plans and
unfinished work of FFMCCI, Kawasaki could not claim indemnification specifications of the contract" subject only to the condition that "the
from CCCIC. Moreover, the RTC, citing Article 2079 of the Civil Code, liability of the [herein] surety shall in no case exceed the amount of
ruled that the obligations of CCCIC under the Surety and Performance Pesos: TWO MILLION SIXTY-NINE THOUSAND TWO HUNDRED TWO & 60/100
Bonds were extinguished when the Republic granted the Kawasaki- (₱2,069,202.60) Philippine currency."
FFMCCI Consortium a 43-day extension to finish the Project, absent the The right of KAW AS AKI as the obligee/creditor of the said bonds was
consent of CCCIC. The RTC found no deliberate intent on the part of not made subject to any other condition expressly so provided in the
Consortium Agreement, which was the reason for the bonds posted by the appellate court partially granted the Third-Party Complaint of CCCIC
[FFMCCI] and CCCIC, or in the subject bonds themselves. by holding Mañacop liable under the Indemnity Agreements he executed
Hence, this Court finds that the court a quo did err in ruling that in favor of the insurance company, while declaring the RTC was without
"[u]nder the Consortium Agreement, the bonds are counter-guarantees jurisdiction over FFMCCI due to invalid service of summons. The Court of
which only guarantee the plaintiff KAWASAKI for reimbursement to the Appeals ultimately resolved:
extent of the value of the bonds in case the employer (government) WHEREFORE, judgment is hereby rendered in favor of third-party plaintiff
successfully exercised its rights under the bonds issued to it by plaintiff CCC Insurance Corporation and against third-party defendant Florante
KAW AS AKI;" and that "[ c]onsidering that the government did not F. Mañacop, ordering the latter to indemnify the former the total amount
exercise its rights against the bond issued to it by the Consortium paid by the former to Kawasaki Steel Corporation representing CCC
Leader, it follows that the Consortium Leader cannot collect from the Insurance Corporation's liabilities under Surety Bond No. B-88/11191 and
counter-guarantees furnished by [FFMCCI]." Performance Bond No. B88/11193 and to pay CCC Insurance Corporation
Time and again, the Supreme Court has stressed the rule that a 25% of the total amount due, as and for attorney's fees.24
contract is the law between the parties, and courts have no choice but In the instant Petition for Review on Certiorari, CCCIC assails the
to enforce such contract so long as they are not contrary to law, aforementioned Decision and Resolution of the Court of Appeals on six
morals, good customs or public policy. grounds, viz.:
With respect to the second, third and fourth issues raised, suffice it to A.
say that this Court finds Article 2079 of the Civil Code of the Philippines THE COURT OF APPEALS, CONTRARY TO LAW, FAILED TO CONSIDER THE
not applicable. [Kawasaki] claims that since the issue in this case is the TRUE NATURE OF THE TRANSACTION BETWEEN THE PARTIES AND THE TRUE
liability of CCCIC to KAWASAKI, the extension of forty-three (43) days NATURE OF A COUNTER-GUARANTEE.
within which to complete the Pangasinan Fishing Port Network Project B.
granted by the Philippine government, who is not a party to the two (2) THE COURT OF APPEALS, CONTRARY TO LAW, FAILED TO APPRECIATE THE
bonds posted by [FFMCCI] and CCCIC, to the consortium, does not APPLICABILITY OF ARTICLE 2079 OF THE CIVIL CODE, WHICH PROVIDES
absolve CCCI C's liabilities to KAWASAKI under the subject bonds. THAT AN EXTENSION GRANTED TO THE DEBTOR BY THE CREDITOR WITHOUT
We agree. THE CONSENT OF THE GUARANTOR EXTINGUISHES THE GUARANTY.
As stated earlier, the parties insofar as the surety bond and C.
performance bond are concerned are: KAWASAKI, as obligee, [FFMCCI], THE COURT OF APPEALS, CONTRARY TO LAW, ERRONEOUSLY FAILED TO
as principal; and CCCIC, as surety. Considering therefore that the CONSIDER THE FACT THAT KAWASAKI AND FFMCCI HAVE NOVATED THEIR
extension of time within which to complete the construction of the ORIGINAL AGREEMENT
Pangasinan Fishing Port Network Project was granted by the Philippine WITHOUT THE KNOWLEDGE AND CONSENT OF CCCIC, THEREBY RELEASING
government, who is not the creditor of the bonds, this Court finds that THE LATTER FROM ANY OBLIGATION UNDER THE BONDS IT ISSUED.
Article 2079 of the Civil Code of the Philippines does not apply and the D.
extension of time granted by the Philippine government, contrary to the THE COURT OF APPEALS, CONTRARY TO LAW, ERRONEOUSLY RENDERED
ruling of the trial court, does not absolve the surety of its liabilities to CCCIC LIABLE TO PAY THE FULL AMOUNT OF THE SURETY AND
KAWASAKI under the subject bonds. PERFORMANCE BONDS DESPITE THE FACT THAT FFMCCI WAS ABLE TO
The principle of relativity of contracts provides that contracts can only PARTIALLY EXECUTE ITS PORTION OF THE WORK AND THAT KAWASAKI HAD
bind the parties who entered into it. BEEN FULLY COMPENSATED FOR TAKING OVER THE UNFINISHED PORTION.
Finally, this Court finds the award of attorney's fees in favor of the E.
appellant warranted under the circumstance, pursuant to paragraph (2) THE COURT OF APPEALS, CONTRARY TO LAW, ERRONEOUSLY AWARDED
of Article 2208 of the Civil Code of the Philippines.22 ATTORNEY'S FEES TO KAWASAKI UNDER PARAGRAPH 2 OF ARTICLE 2208
In the end, the Court of Appeals decreed: OF THE CIVIL CODE.
WHEREFORE, the instant appeal is hereby GRANTED. Accordingly, the F.
assailed decision of the Regional Trial Court of Makati City, Branch 66, is THE COURT OF APPEALS, CONTRARY TO LAW, ERRONEOUSLY RULED THAT
hereby REVERSED and SET ASIDE. CCC Insurance Corporation is hereby THER WAS NO VALID SERVICE OF SUMMONS UPON FFMCCI.25
ordered to pay KAWASAKI the following: CCCIC avers that its liabilities under the Surety and Performance Bonds
1. The amount of ₱3,103,803.90 representing its liability to Kawasaki are directly linked with the obligation of the Kawasaki-FFMCCI
Steel Corporation under Surety Bond No. B-88/11191, plus legal interest Consortium to finish the Project for the Republic, so that its liability as
at the rate of 12% per annum computed from 15 September 1989, until surety of FFMCCI will only arise if the Republic made a claim on the PCIB
fully paid; Letter of Credit furnished by Kawasaki, on behalf of the Consortium.
2. The amount of ₱2,069,202.80 representing its liability to Kawasaki Since the Republic has not exercised its right against said Letter of
Steel Corporation under Performance Bond No. B-88/11193, plus legal Credit, Kawasaki does not have a cause of action against CCCIC.
interest at the rate of 12% per annum computed from 15 September CCCIC also maintains that its obligations under the Surety and
1989, until fully paid; and Performance Bonds had been extinguished when (a) the Republic
3. 15% of the total amount due as and for attorney's fees. 23 In its extended the completion period for the Project upon the request of
Resolution dated November 14, 2002, the Court of Appeals denied the Kawasaki but without the knowledge or consent of CCCIC, based on
Motion for Reconsideration of CCCIC. However, in the same Resolution, Article 2079 of the Civil Code; and (b) when Kawasaki and FFMCCI
executed the Agreement dated August 24, 1989, without the consent of Kawasaki-FFMCCI Consortium. The Surety and Performance Bonds from
CCCIC, there being a novation of the Consortium Agreement. CCCIC guaranteed the performance by FFMCCI of its obligations under
CCCIC further argues that when Kawasaki, under the Agreement dated the Consortium Agreement; whereas the Letter of Credit from PCIB
August 24, 1989, voluntarily took over the Transferred Portion of Work warranted the completion of the Project by the Kawasaki FFMCCI
from FFMCCI, it resulted in the reduction of revenue of FFMCCI on which Consortium. At the crux of the instant controversy are the Surety and
CCCIC relied upon as a source of indemnification. CCCIC additionally Performance Bonds issued by CCCIC in relation to the Consortium
posits that Kawasaki already received compensation for doing the Agreement.
Transferred Portion of Work, so the Court of Appeals had no basis for FFMCCI secured the Surety and Performance Bonds from CCCIC in
still ordering Kawasaki to pay the full value of the Surety and compliance with Article 10 of the Consortium Agreement which provided:
Performance Bonds, plus interest. ARTICLE 10 - BONDS
Moreover, CCCIC contends that the Court of Appeals erred in awarding 10.1 The CONSORTIUM LEADER [Kawasaki] shall arrange, at [its] own cost,
attorney's fees in favor of Kawasaki based on paragraph 2 of Article all necessary bonds or guarantees as required under the CONTRACT on
2208 of the Civil Code as it is not a sound policy to place a penalty on behalf of the CONSORTIUM. [FFMCCI] shall, at its own cost, furnish the
the right to litigate. CONSORTIUM LEADER [Kawasaki] with a suitable counter guarantees of
Lastly, CCCIC insists that there was proper service of summons upon its advance payment under the CONTRACT and the performance of its
FFMCCI, through one of its directors, as authorized by the Rules of PORTION OF WORK in the amount of fifteen (15%) percent (in the case of
Court. the repayment guarantee for the advance) and ten (10%) percent (in the
The Petition is partly meritorious. case of the performance guarantee) of the price of its PORTION OF THE
The liability of CCCIC under the WORK.
Surety and Performance Bonds is 10.2 If the EMPLOYER [Republic] exercises its right on the bonds or
dependent on the fulfillment and/or guarantees furnished by the CONSORTIUM LEADER, the PARTIES shall
non-fulfillment of the obligation of decide the respective responsibilities according to the provisions of this
FFMCCI to KAWASAKI under the AGREEMENT and the necessary reimbursement or compensation shall be
Consortium Agreement. made also according to the provisions of this AGREEMENT. Pertinent
The statutory definition of suretyship is found in Article 204 7 of the Civil portions of Surety Bond No. B-88/11191 read:
Code, thus: SURETY BOND
Art. 2047. By guaranty a person, called the guarantor, binds himself to KNOW ALL MEN BY THESE PRESENTS:
the creditor to fulfill the obligation of the principal debtor in case the That we, F.F. MANACOP CONSTRUCTION CO., INC., x xx, as principal, and
latter should fail to do so. CCC Insurance Corporation, x x x, as SURETY, are held and firmly bound
If a person binds himself solidarily with the principal debtor, the unto KAWASAKI STEEL CORPORATION, hereinafter referred to as the
provisions of Section 4, Chapter 3, Title I of this Book shall be observed. OBLIGEE: in the sum of PESOS: THREE MILLION ONE HUNDRED THREE
In such case the contract is called a suretyship. (Emphasis supplied.) THOUSAND EIGHT HUNDRED THREE & 90/100 ONLY (₱3,103,803.90),
Jurisprudence also defines a contract of suretyship as "an agreement Philippine currency, for the payment of which, well and truly to be made,
where a party called the surety guarantees the performance by another we bind ourselves, our heirs, executors, administrators, successors and
party called the principal or obligor of an obligation or undertaking in assigns, jointly and severally, firmly bound from notice of acceptance, by
favor of a third person called the obligee. Specifically, suretyship is a these presents.
contractual relation resulting from an agreement whereby one person, THE CONDITIONS OF THIS OBLIGATION ARE AS FOLLOWS:
the surety, engages to be answerable for the debt, default or TO FULLY AND FAITHFULLY GUARANTEE THE REPAYMENT OF THE
miscarriage of another, known as the principal." 26 The Court expounds DOWNPAYMENT MADE BY THE PRINCIPAL TO THE OBLIGEE IN CONNECTION
that "a surety's liability is joint and several, limited to the amount of the WITH THE CONSTRUCTION OF THE PANGASINAN FISHING PORT NETWORK
bond, and determined strictly by the terms of contract of suretyship in PROJECT AT PANGASINAN; AND PROVIDED HOWEVER, THAT THE LIABILITY
relation to the principal contract between the obligor and the obligee. It OF THE HEREIN SURETY SHALL IN NO CASE EXCEED THE AMOUNT OF
bears stressing, however, that although the contract of suretyship is PESOS: THREE MILLION ONE HUNDRED THREE THOUSAND EIGHT HUNDRED
secondary to the principal contract, the surety's liability to the obligee THREE & 90/100 ONLY (₱3,103,803.90) PHILIPPINE CURRENCY.
is nevertheless direct, primary, and absolute."27 xxxx
At the outset, the Court ascertains that there are two principal WHEREAS, the said OBLIGEE requires said Principal to give a good and
contracts in this case: (1) the Consortium Agreement wherein Kawasaki sufficient bond in the above-stated sum to secure the full and faithful
and FFMCCI agreed to jointly enter into a contract with the Republic for performance on his part of said UNDERTAKING. NOW, THEREFORE, if the
the Project, each assuming the performance of specific scopes of work above bounden principal shall in all respects duly and fully observe and
in said Project; and (2) the Construction Contract whereby the Republic perform all and singular the aforesaid covenants, conditions and
awards the Project to the Kawasaki-FFMCCI Consortium. While there is a agreements to the true intent and meaning thereof, then this obligation
connection between these two contracts, they are each distinguishable shall be null and void, otherwise to remain in full force and effect.
from and enforceable independently of one another: the first governs The liability of the Surety under this bond shall expire on October 26,
the rights and obligations between Kawasaki and FFMCCI, while the 1989 and the Surety does not assume responsibility for any liability
second covers contractual relations between the Republic and the incurred or created after said date. Any claims against this bond must
be presented to the Surety in writing not later than ten (10) days after Bonds are enforceable by and against the parties FFMCCI (the obligor)
said expiry date; otherwise, failure to do so shall forthwith release the and CCCIC (the surety), as well as the third person Kawasaki (the
Surety from all liabilities under this bond and shall be a bar to any court obligee) in whose favor said bonds had been explicitly constituted; while
action against it and which right to sue is hereby waived by the Obligee the related Consortium Agreement binds the parties Kawasaki and
after the lapse of said period often (10) days above cited.29 FFMCCI. Since the Republic is neither a party to the Surety and
(Emphases supplied.) Performance Bonds nor the Consortium Agreement, any action or
Performance Bond No. B-88111193 contains the following terms and omission on its part has no effect on the liability of CCCIC under said
conditions: bonds.
PERFORMANCE BOND The Surety and Performance Bonds state that their purpose was "to
KNOW ALL MEN BY THESE PRESENTS: secure the full and faithful performance on [FFMCCI' s] part of said
That we, F.F. MANACOP CONSTRUCTION CO., INC., xx x, as principal, and undertaking," particularly, the repayment by FFMCCI of the
CCC Insurance Corporation, x x x, as SURETY, are held and firmly bound downpayment advanced to it by Kawasaki (in the case of the Surety
unto KAWASAKI STEEL CORPORATION, hereinafter referred to as the Bond) and the full and faithful performance by FFMCCI of its portion of
OBLIGEE: in the sum of PESOS: TWO MILLION SIXTY-NINE THOUSAND TWO work in the Project (in the case of the Performance Bond).These are the
HUNDRED TWO & 60/100 ONLY (₱2,069,202.60), Philippine currency, for only undertakings expressly guaranteed by the bonds, the fulfillment of
the payment of which, well and truly to be made, we bind ourselves, our which by FFMCCI would release CCCIC from its obligations as surety; or
heirs, executors, administrators, successors and assigns, jointly and conversely, the non-performance of which would give rise to the
severally, firmly bound from notice of acceptance, by these presents. liabilities of CCCIC as a surety.
THE CONDITIONS OF THIS OBLIGATION ARE AS FOLLOWS: The Surety and Performance Bonds do not contain any condition that
TO GUARANTEE THE FULL AND FAITHFUL PERFORMANCE OF THE PRINCIPAL CCCIC would be liable only if, in addition to the default on its
OF ITS OBLIGATION IN CONNECTION WITH THE PROJECT FOR THE undertakings by FFMCCI, the Republic also made a claim against the PCIB
CONSTRUCTION OF PANGASINAN FISHING PORT NETWORK LOCATED AT Letter of Credit furnished by Kawasaki, on behalf of the Kawasaki-
PANGASINAN IN ACCORDANCE WITH THE PLANS AND SPECIFICATION OF FFMCCI Consortium. The Court agrees with the observation of the Court
THE CONTRACT, AND; PROVIDED HOWEVER, THAT THE LIABILITY OF THE of Appeals that "it is not provided, neither in the Consortium Agreement
HEREIN SURETY SHALL IN NO CASE EXCEED THE AMOUNT OF PESOS: TWO nor in the subject bonds themselves that before KAWASAKI may proceed
MILLION SIXTY-NINE THOUSAND TWO HUNDRED TWO & 60/100 ONLY against the bonds posted by [FFMCCI] and CCCIC, the Philippine
(₱2,069,202.60) PHILIPPINE CURRENCY. government as employer must first exercise its rights against the bond
xxxx issued in its favor by the consortium."32
WHEREAS, the said OBLIGEE requires said Principal to give a good and The Court cannot give any additional meaning to the plain language of
sufficient bond in the above-stated sum to secure the full and faithful the undertakings in the Surety and Performance Bonds. The extent of a
performance on his part of said UNDERTAKING. surety's liability is determined by the language of the suretyship
NOW, THEREFORE, if the above bounden principal shall in all respects duly contract or bond itself. Article 1370 of the Civil Code provides that "[i]f
and fully observe and perform all and singular the aforesaid covenants, the terms of a contract are clear and leave no doubt upon the intention
conditions and agreements to the true intent and meaning thereof, then of the contracting parties, the literal meaning of its stipulations shall
this obligation shall be null and void, otherwise to remain in full force control. "33
and effect. There is no basis for the interpretation by CCCIC of the word "counter-
The liability of the Surety under this bond shall expire on October 27, guarantee" in Article 10 of the Consortium Agreement. The first
1989 and the Surety does not assume responsibility for any liability paragraph of Article 10 of the Consortium Agreement provides that
incurred or created after said date. Any claims against this bond must Kawasaki, as the Consortium Leader, shall arrange, at its own cost but
be presented to the Surety in writing not later than ten (10) days after on behalf of the Kawasaki-FFMCCI Consortium, for all necessary bonds
said expiry date; otherwise, failure to do so shall forthwith release the and guarantees under the Construction Contract with the Republic. The
Surety from all liabilities under this bond and shall be a bar to any court same paragraph requires, in turn, that FFMCCI, at its own cost, to
action against it and which right to sue is hereby waived by the Obligee furnish Kawasaki with suitable counter-guarantees for the repayment by
after the lapse of said period of ten ( 10) days above cited. 30 FFMCCI for the advance payment from Kawasaki and performance by
(Emphasis supplied.) FFMCCI of its portion of work in the Project. Clearly, the "guarantees"
The Court reiterates that a surety's liability is determined strictly by the and "counter-guarantees" were securities for the fulfillment of the
terms of contract of suretyship, in relation to the principal contract obligations of the Kawasaki-FFMCCI Consortium to the Republic under
between the obligor and the obligee. Hence, the Court looks at the the Construction Contract and of FFMCCI to the Consortium Leader
Surety and Performance Bonds, in relation to the Consortium Kawasaki under the Consortium Agreement, respectively. The CCCIC
Agreement. Surety and Performance Bonds were not counter-guarantees to the
According to the principle of relativity of contracts in Article 1311 of the PCIB Letter of Credit. In fact, in the event that the Republic did make a
Civil Code,31 a contract takes effect only between the parties, their claim on the PCIB Letter of Credit, the second paragraph of Article 10 of
assigns, and heirs; except when the contract contains a stipulation in the Consortium Agreement stipulates
favor of a third person, which gives said person the right to demand that Kawasaki and FFMCCI would still have to determine their respective
fulfillment of said stipulation. In this case, the Surety and Performance
responsibilities, reimbursements, and/or compensations according to reneged on its undertaking with the petitioner and further failed to
the provisions of the Consortium Agreement, instead of simply allowing return the ₱575,000.00 downpayment that was already advanced to it,
Kawasaki to recover on the "counter-guarantees" of FFMCCI. respondent, as surety, became solidarily bound with Lucky Star for the
It is not disputed that FFMCCI, due to financial difficulties, was unable to repayment of the said amount to petitioner. The clause, "this bond is
repay the advance payment it received from Kawasaki and to finish its callable on demand," strongly speaks of respondent's primary and direct
scope of work in the Project, thus, FFMCCI defaulted on its obligations to responsibility to the petitioner.
Kawasaki. Given the default of FFMCCI, CCCIC as surety Accordingly, after liability has attached to the principal, the obligee or, in
became directly, primarily, and absolutely liable to Kawasaki as the this case, the petitioner, can exercise the right to proceed against Lucky
obligee under the Surety and Performance Bonds. The following Star or respondent or both. x x x. (Emphases supplied, citations
pronouncements of the Court in Asset Builders Corporation v. omitted.)
Stronghold Insurance Company, Inc.34 are relevant herein: Article 2079 of the New Civil Code is not applicable to the instant case.
Respondent, along with its principal, Lucky Star, bound itself to the To free itself from its liabilities under the Surety and Performance
petitioner when it executed in its favor surety and performance bonds. Bonds, CCCIC cites Article 2079 of the Civil Code, which reads: Art.
The contents of the said contracts clearly establish that the parties 2079. An extension granted to the debtor by the creditor without the
entered into a surety agreement as defined under Article 2047 of the consent of the guarantor extinguishes the guaranty. The mere failure on
New Civil Code. x x x. the part of the creditor to demand payment after the debt has become
xxxx due does not of itself constitute any extension of time referred to
As provided in Article 204 7, the surety undertakes to be bound herein.
solidarily with the principal obligor. That undertaking makes a surety The aforequoted provision clearly speaks of an extension for the
agreement an ancillary contract as it presupposes the existence of a payment of a debt granted by the creditor to a debtor without the
principal contract. Although the contract of a surety is in essence consent of the surety. The theory behind Article 2079 was further
secondary only to a valid principal obligation, the surety becomes liable explained by the Court in Trade and Investment Development
for the debt or duty of another although it possesses no direct or Corporation of the Philippines (Formerly Philippine Export and Foreign
personal interest over the obligations nor does it receive any benefit Loan Guarantee Corporation) v. Asia Paces Corporation,35 thus:
therefrom. Let it be stressed that notwithstanding the fact that the Comparing a surety's obligations with that of a guarantor, the Court, in
surety contract is secondary to the principal obligation, the surety the case of Palmares v. CA, illumined that a surety is responsible for the
assumes liability as a regular party to the undertaking. debt's payment at once if the principal debtor makes default, whereas a
Stronghold Insurance Company, Inc. v. Republic-Asahi Glass guarantor pays only if the principal debtor is unable to pay, viz.:
Corporation, reiterating the ruling in Garcia v. Court of Appeals, A surety is an insurer of the debt, whereas a guarantor is an insurer of
expounds on the nature of the surety's liability: the solvency of the debtor. A suretyship is an undertaking that the debt
x x x. The surety's obligation is not an original and direct one for the shall be paid; a guaranty, an undertaking that the debtor shall pay.
performance of his own act, but merely accessory or collateral to the Stated differently, a surety promises to pay the principal's debt if the
obligation contracted by the principal. Nevertheless, although the principal will not pay, while a guarantor agrees that the creditor, after
contract of a surety is in essence secondary only to a valid principal proceeding against the principal, may proceed against the guarantor if
obligation, the principal is unable to pay. A surety binds himself to perform if the
his liability to the creditor or promisee of the principal is said to be principal does not, without regard to his ability to do so. A guarantor, on
direct, primary and absolute; in other words, he is directly and equally the other hand, does not contract that the principal will pay, but simply
bound with the principal. that he is able to do so. In other words, a surety undertakes directly for
Suretyship, in essence, contains two types of relationship - the principal the payment and is so responsible at once if the principal debtor makes
relationship between the obligee (petitioner) and the obligor (Lucky default, while a guarantor contracts to pay if, by the use of due
Star), and the accessory surety relationship between the principal diligence, the debt cannot be made out of the principal debtor.
(Lucky Star) and the surety (respondent). In this arrangement, the xxx.
obligee accepts the surety's solidary undertaking to pay if the obligor Despite these distinctions, the Court in Cochingyan, Jr. v. R&B Surety &
does not pay. Such acceptance, however, does not change in any Insurance Co., Inc., and later in the case of Security Bank, held that
material way the obligee's relationship with the principal obligor. Neither Article 2079 of the Civil Code, which pertinently provides that "[a]n
does it make the surety an active party to the principal obligee-obligor extension granted to the debtor by the creditor without the consent of
relationship. Thus, the acceptance does not give the surety the right to the guarantor extinguishes the guaranty," equally applies to both
intervene in the principal contract. The surety's role arises only upon contracts of guaranty and suretyship. The rationale therefore was
the obligor's default, at which time, it can be directly held liable by the explained by the Court as follows:
obligee for payment as a solidary obligor. The theory behind Article 2079 is that an extension of time given to the
In the case at bench, when Lucky Star failed to finish the drilling work principal debtor by the creditor without the surety's consent would
within the agreed time frame despite petitioner's demand for deprive the surety of his right to pay the creditor and to be immediately
completion, it was already in delay. Due to this default, Lucky Star's subrogated to the creditor's remedies against the principal debtor upon
liability attached and, as a necessary consequence, respondent's liability the maturity date. The surety is said to be entitled to protect himself
under the surety agreement arose. Undeniably, when Lucky Star
against the contingency of the principal debtor or the indemnitors creditor-debtor relationship between the Republic and FFMCCI and
becoming insolvent during the extended period. Article 2079 of the Civil Code did not apply. The extension granted by the
Applying these principles, the Court finds that the payment extensions Republic to Kawasaki modified the deadline for the completion of the
granted by Banque Indosuez and PCI Capital to TIDCORP under the Project under the Construction Contract, but had no effect on the
Restructuring Agreement did riot have the effect of extinguishing the obligations of FFMCCI to Kawasaki under the Consortium Agreement,
bonding companies' obligations to TIDCORP under the Surety Bonds, much less, on the liabilities of CCCIC under the
notwithstanding the fact that said extensions were made without their Surety and Performance Bonds.
consent. This is because Article 2079 of the Civil Code refers to a CCCIC failed to discharge the
payment extension granted by the creditor to the principal burden of proving the novation of
debtor without the consent of the guarantor or surety. In this case, the the Consortium Agreement which
Surety Bonds are suretyship contracts which secure the debt of ASP AC, would have extinguished its
the principal debtor, under the Deeds of Undertaking to pay TIDCORP, obligations under the Surety and
the creditor, the damages and liabilities it may incur under the Letters Performance Bonds.
of Guarantee, within the bounds of the bonds' respective coverage CCCIC argues that it was released from its obligations as surety under
periods and amounts. No payment extension was, however, granted by the Surety and Performance Bonds because of the novation of the
TIDCORP in favor of ASP AC in this regard; hence, Article 2079 of the Consortium Agreement by the subsequent Agreement dated August 24,
Civil Code should not be applied with respect to the bonding companies' 1989 executed between Kawasaki and FFMCCI, without the consent of
liabilities to TIDCORP under the Surety Bonds. CCCIC.
The payment extensions granted by Banque Indosuez and PCI Capital The Court first notes that the default of FFMCCI preceded the execution
pertain to TIDCORP's own debt under the Letters of Guarantee wherein it of the Agreement on August 24, 1989 which purportedly novated the
(TIDCORP) irrevocably and unconditionally guaranteed full payment of Consortium Agreement and, in effect, extinguished the Surety and
ASPAC's loan obligations to the banks in the event of its (ASP AC) Performance Bonds. As early as his letter dated July 20, 1989, Mañacop,
default. In other words, the Letters of Guarantee secured ASPAC's loan FFMCCI President, already admitted the inability of FFMCCI to continue
agreements to the banks. Under this arrangement, TIDCORP therefore with its portion of work in the Project and authorized Kawasaki to
acted as a guarantor, with ASP AC as the principal debtor, and the banks continue the same. It was precisely because FFMCCI defaulted on its
as creditors. obligations under the Consortium Agreement that necessitated the
Proceeding from the foregoing discussion, it is quite clear that there execution of the Agreement dated August 24, 1989 between Kawasaki
are two sets of transactions that should be treated separately and and FFMCCI, and this is evident from one of the "whereas" clauses in the
distinctly from one another following the civil law principle of relativity said Agreement which says that "due to some financial reverses[,
of contracts "which provides that contracts can only bind the parties FFMCCI] can no longer do its portion of the work under the Contract."
who entered into it, and it cannot favor or prejudice a third person, even The liabilities of CCCIC as surety to Kawasaki under the Surety and
if he is aware of such contract and has acted with knowledge thereof." Performance Bonds had already attached upon the default of FFMCCI
Verily, as the Surety Bonds concern ASPAC's debt to TIDCORP and not while the said bonds were still in effect and prior to the alleged novation
TIDCORP's debt to the banks, the payments extensions (which conversely of the Consortium Agreement by the Agreement dated August 24, 1989
concern TIDCORP's debt to the banks and not ASP A C's debt to TIDCORP) which resulted in the extinguishment of the bonds.
would not deprive the bonding companies of their right to pay their The Court expounded on the concept of novation in Reyes v. BPI Family
creditor (TIDCORP) and to be immediately subrogated to the latter's Savings Bank, Inc.36
remedies against the principal debtor (ASP AC) upon the maturity date. Novation is defined as the extinguishment of an obligation by the
It must be stressed that these payment extensions did not modify the substitution or change of the obligation by a subsequent one which
terms of the Letters of Guarantee but only provided for a new payment terminates the first, either by changing the object or principal
scheme covering TIDCORP's liability to the banks. In fine, considering the conditions, or by substituting the person of the debtor, or subrogating a
inoperability of Article 2079 of the Civil Code in this case, the bonding third person in the rights of the creditor.
companies' liabilities to TIDCORP under the Surety Bonds - except those Article 1292 of the Civil Code on novation further provides:
issued by Paramount and covered by its Compromise Agreement with Article 1292. In order that an obligation may be extinguished by another
TIDCORP - have not been extinguished. Since these obligations arose and which substitute the same, it is imperative that it be so declared in
have been duly demanded within the coverage periods of all the Surety unequivocal terms, or that the old and the new obligations be on every
Bonds, TIDCORP's claim is hereby granted. point incompatible with each other.
Similarly, there are two sets of transactions in the present case The cancellation of the old obligation by the new one is a necessary
covered by two different contracts: the Consortium Agreement between element of novation which may be effected either expressly or impliedly.
Kawasaki and FFMCCI and the Construction Contract between the While there is really no hard and fast rule to determine what might
Republic and the Kawasaki-FFMCCI Consortium. The Surety and constitute sufficient change resulting in novation, the touchstone,
Performance Bonds guaranteed the performance of the obligations of however, is irreconcilable incompatibility between the old and the new
FFMCCI to Kawasaki under the Consortium Agreement. The Republic was obligations.
not a party in either the Surety and Performance Bonds or the In Garcia, Jr. v. Court of Appeals, we held that:
Consortium Agreement. Under these circumstances, there was no
In every novation there are four essential requisites: (1) a previous valid impede the progress thereof, on any ground, and shall allow such
obligation; (2) the agreement of all the parties to the new contract; (3) performing PARTY or the said contractor to use the materials and
the extinguishment of the old contract; and (4) validity of the new one. equipment of such defaulting PARTY, for the purpose of remedial action.
There must be consent of all the parties to the substitution, resulting in FFMCCI was unable to finish its portion of work in the Project because of
the extinction of the old obligation and the creation of a valid new one .xx business reverses, and by the Agreement dated August 24, 1989,
x. (Citations omitted.) Kawasaki assumed the Transferred Portion of Work from FFMCCI and
It is well-settled that novation is never presumed - novatio non was accorded the right to receive the profits and benefits
praesumitur. As the party alleging novation, the onus of showing clearly corresponding to said portion. Although the Agreement dated August 24,
and unequivocally that novation had indeed taken place rests on 1989 resulted in the reallocation of the respective portions of work of
CCCIC.The Court laid down guidelines in establishing novation, viz.: Kawasaki and FFMCCI, as well as their corresponding shares in the
Novation is never presumed, and the animus novandi, whether totally or profits and benefits under the Consortium Agreement, such changes
partially, must appear by express agreement of the parties, or by their were not incompatible with the object, cause, and principal conditions of
acts that are too clear and unequivocal to be mistaken. the Consortium Agreement. Consequently, the changes under the
The extinguishment of the old obligation by the new one is a necessary Agreement dated August 24, 1989 were only modificatory and did not
element of novation which may be effected either expressly or impliedly. extinguish the original obligations under the Consortium Agreement.
The term "expressly" means that the contracting parties Even granting that there is novation, the Court in Stronghold Insurance
incontrovertibly disclose that their object in executing the new contract Company, Incorporated v. Tokyu Construction Company, Ltd.,39 held that
is to extinguish the old one. Upon the other hand, no specific form is to release the surety, the material change in the principal contract must
required for an implied novation, and all that is prescribed by law would make the obligation of the surety more onerous. The Court ratiocinated
be an incompatibility between the two contracts. While there is really no in Stronghold as follows:
hard and fast rule to determine what might constitute to be a sufficient Petitioner's liability was not affected by the revision of the contract
change that can bring about novation, the touchstone for contrariety, price, scope of work, and contract schedule. Neither was it extinguished
however, would be an irreconcilable incompatibility between the old and because of the issuance of new bonds procured from Tico.
the new obligations. As early as February 10, 1997, respondent already sent a letter to
There are two ways which could indicate, in fine, the presence of Gabriel informing the latter of the delay incurred in the performance of
novation and thereby produce the effect of extinguishing an obligation by the work, and of the former's intention to terminate the subcontract
another which substitutes the same. The first is when novation has been agreement to prevent further losses. Apparently, Gabriel had already
explicitly stated and declared in unequivocal terms. The second is when been in default even prior to the aforesaid letter; and demands had been
the old and the new obligations are incompatible on every point. The test previously made but to no avail. By reason of said default, Gabriel's
of incompatibility is whether or not the two obligations can stand liability had arisen; as a consequence, so also did the liability of
together, each one having its independent existence. If they cannot, they petitioner as a surety arise.
are incompatible and the latter obligation novates the first. Corollarily, xxxx
changes that breed incompatibility must be essential in nature and not By the language of the bonds issued by petitioner, it guaranteed the full
merely accidental. The incompatibility must take place in any of the and faithful compliance by Gabriel of its obligations in the construction
essential elements of the obligation, such as its object, cause or of the SDS and STP specifically set forth in the subcontract agreement,
principal conditions thereof; otherwise, the change would be merely and the repayment of the 15% advance payment given by respondent.
modificatory in nature and insufficient to extinguish the original These guarantees made by petitioner gave respondent the right to
obligation.38(Citations omitted.) proceed against the former following Gabriel's non-compliance with her
CCCIC failed to discharge the burden of proving novation of the obligation.
Consortium Agreement by the Agreement dated August 24, 1989. The Confusion, however, transpired when Gabriel and respondent agreed, on
Court failed to see the presence of the essential requisites for a February 26, 1997, to reduce the scope of work and, consequently, the
novation of contract, specifically, the irreconcilable incompatibility contract price. Petitioner viewed such revision as novation of the
between the old and new contracts. Indeed, Kawasaki and FFMCCI original subcontract agreement; and since no notice was given to it as a
executed the Agreement dated August 24, 1989 pursuant to Article 8.3 surety, it resulted in the extinguishment of its obligation.
of the Consortium Agreement: We wish to stress herein the nature of suretyship, which actually
8.3 If, for any reason, any PARTY should fail in the performance of its involves two types of relationship --the underlying principal relationship
PORTION OF WORK or contractual obligations and if such defaulting PAR between the creditor (respondent) and the debtor (Gabriel), and the
TY refuses to cure or makes no remedial action, without presenting any accessory surety relationship between the principal (Gabriel) and the
valid cause, within fifteen (15) days following demand of rectification by surety (petitioner). The creditor accepts the surety's solidary
registered letter sent by the other PARTY, the defaulting PARTY's undertaking to pay if the debtor does not pay. Such acceptance,
PORTION OF WORK may be performed at the account and responsibility however, does not change in any material way the creditor's
of the defaulting PARTY, by the non-defaulting PARTY or by any other relationship with the principal debtor nor does it make the surety an
contractor selected by the non-defaulting PARTY and approved by the active party to the principal creditor-debtor relationship. In other
EMPLOYER. In such event, the defaulting PARTY or its representative words, the acceptance does not give the surety the right to intervene in
shall, in no way, interfere with the performance of the CONTRACT or the principal contract. The surety's role arises only upon the debtor's
default, at which time, it can be directly held liable by the creditor for Kawasaki and FFMCCI colluded or connived to deprive CCCIC of its
payment as a solidary obliger. source of indemnification. Other than its allegation, CCCIC failed to
The surety is considered in law as possessed of the identity of the present any evidence of collusion or connivance between Kawasaki and
debtor in relation to whatever is adjudged touching upon the obligation FFMCCI to intentionally prejudice CCCIC. The Court reiterates that the
of the latter. Their liabilities are so interwoven as to be inseparable. execution of the Agreement dated August 24, 1989 was actually
Although the contract of a surety is, in essence, secondary only to a authorized under Article 8.3 of the Consortium Agreement. Kawasaki
valid principal was given the right to the profits and benefits corresponding to the
obligation, the surety's liability to the creditor is direct, primary, and Transferred Portion of Work because it would be the one to perform the
absolute; he becomes liable for the debt and duty of another although he same. It would be the height of inequity to allow FFMCCI to continue
possesses no direct or personal interest over the obligations nor does collecting payments for work it was not able to do. Besides, there is
he receive any benefit therefrom. utter lack of basis for the claim of CCCIC that without the compensation
Indeed, a surety is released from its obligation when there is a material for the Transferred Portion of Work, FFMCCI would have no means to
alteration of the principal contract in connection with which the bond is indemnify CCCIC for any payments the latter would have to make to
given, such as a change which imposes a new obligation on the Kawasaki under the Surety and Performance Bonds. As the succeeding
promising party, or which takes away some obligation already imposed, discussion will show, it is premature for CCCIC to question the capacity
or one which changes the legal effect of the original contract and not of FFMCCI to indemnify it.
merely its form. However, a surety is not released by a change in the CCCIC must first pay its liabilities to
contract, which does not have the effect of making its obligation more Kawasaki under the Surety and
onerous. Performance Bonds before it could
In the instant case, the revision of the subcontract agreement did not in be indemnified and subrogated to the
any way make the obligations of both the principal and the surety more rights of Kawasaki against FFMCCI.
onerous. To be sure, petitioner never assumed added obligations, nor The rights of a guarantor who pays for the debt of the debtor are
were there any additional obligations imposed, due to the modification of governed by the following provisions of the Civil Code:
the terms of the contract. Failure to receive any notice of such change Art. 2066. The guarantor who pays for a debtor must be indemnified by
did the latter.
not, therefore, exonerate petitioner from its liabilities as surety. The indemnity comprises:
(Emphasis supplied, citations omitted.) (1) The total amount of the debt;
There is no showing herein that the obligations of CCCIC as surety had (2) The legal interests thereon from the time the payment was made
become more onerous with the execution of the Agreement dated known to the debtor, even though it did not earn interest for the
August 24, 1989 between Kawasaki and FFMCCI. The Agreement dated creditor;
August 24, 1989 did not alter in any way the original coverage and the (3) The expenses incurred by the guarantor after having notified the
terms and conditions of the Surety and Performance Bonds of CCCIC. If debtor that payment had been demanded of him;
truth be told, the Agreement dated August 24, 1989 made it more (4) Damages, if they are due. Art. 2067. The guarantor who pays is
onerous for Kawasaki which had to take over the Transferred Portion of subrogated by virtue thereof to all the rights which the creditor had
Work from FFMCCI. against the debtor.
That Kawasaki was to receive the profits and benefits corresponding to If the guarantor has compromised with the creditor, he cannot demand
the Transferred Portion of Work would not extinguish the liabilities of of the debtor more than what he has really paid.
CCCIC under the Surety and Performance Bonds. The right of Kawasaki Although the foregoing provisions only speak of a guarantor, they also
to the profits and benefits corresponding to the Transferred Portion of apply to a surety, as the Court held in Escano v. Ortigas, Jr. 40
Work was granted under the Agreement dated August 24, 1989 because What is the source of this right to full reimbursement by the surety? We
Kawasaki was the one that would actually perform the remaining portion find the right under Article 2066 of the Civil Code, which assures that
of work and complete the Project and should be duly compensated for "[t]he guarantor who pays for a debtor must be indemnified by the
the same. It is separate and distinct from the right of Kawasaki to latter," such indemnity comprising of, among others, "the total amount
demand payment of the amounts guaranteed by CCCIC as surety upon of the debt." Further, Article 2067 of the Civil Code likewise establishes
the default of FFMCCI on its undertakings under the Surety and that "[t]he guarantor who pays is subrogated by virtue thereof to all the
Performance Bonds. CCCIC cannot standby passively and be benefitted rights which the creditor had against the debtor."
by payments made by the Republic, as owner of the Project, to Kawasaki, Articles 2066 and 2067 explicitly pertain to guarantors, and one might
as contractor, for the Transferred Portion of Work. The only way CCCIC argue that the provisions should not extend to sureties, especially in
can extinguish its liabilities as surety, which light of the qualifier in Article 2047 that the provisions on joint and
already attached upon the default of FFMCCI, is to make its own several obligations should apply to sureties. We reject that argument,
payments to Kawasaki of the amounts guaranteed under the Surety and and instead adopt Dr. Tolentino's observation that "[t]he reference in
Performance Bonds. the second paragraph of [Article 2047] to the provisions of Section 4,
Equally without merit is the averment of CCCIC that by executing the Chapter 3, Title I, Book IV, on solidary or several obligations, however,
Agreement dated August 24, 1989, which gave Kawasaki the right to the does not mean that suretyship is withdrawn from the applicable
profits and benefits corresponding to the Transferred Portion of Work, provisions governing guaranty." For if that were not the implication,
there would be no material difference between the surety as defined corporation. Section 13, does not, however, impose such requirement,
under Article 204 7 and the joint and several debtors, for both classes and so personal service upon the corporation may be effected through
of obligors would be service upon, for instance, the president of the corporation at his office
governed by exactly the same rules and limitations. or residential address." xx x.
Accordingly, the rights to indemnification and subrogation as In fine, the service of summons upon respondent Baliwag Transit is
established and granted to the guarantor by Articles 2066 and 2067 proper. Consequently, the trial court validly acquired jurisdiction over
extend as well to sureties as defined under Article 2047. x x x. (Citations respondent Baliwag. (Citation omitted.)
omitted.) Hence, the personal service of the Alias Summons on an FFMCCI director
Pursuant to Articles 2066 and 2067, the rights of CCCIC as surety to was sufficient for the RTC to acquire jurisdiction over FFMCCI itself.
indemnification and subrogation will arise only after it has paid its Nevertheless, the Third-Party Complaint filed by CCCIC against FFMCCI
obligations to Kawasaki as the debtor-obligee. In Autocorp Group v. Intra and Mañacop must be dismissed on the ground of lack of cause of
Strata Assurance Corporation,41 the Court ruled that: action.
The benefit of subrogation, an extinctive subjective novation by a change A cause of action is defined as the act or omission by which a party
of creditor, which "transfers to the person subrogated, the credit and violates a right of another. The essential elements of a cause of action
all the rights thereto appertaining, either against the debtor or against are: (a) the existence of a legal right in favor of the plaintiff; (b) a
third persons," is granted by the Article 2067 of the Civil Code only to correlative legal duty of the defendant to respect such right; and ( c) an
the "guarantor (or surety) who pays." (Emphases supplied, citations act or omission by such defendant in violation of the right of the plaintiff
omitted.) with a resulting injury or damage to the plaintiff for which the latter may
In the present case, CCCIC has yet to pay Kawasaki. maintain an action for the recovery of relief from the defendant. 46
While summons was validly served As discussed earlier, the rights to indemnification and subrogation of a
upon FFMCCI, the Third-Party surety only arise upon its payment of the obligation to the obligee. In the
Complaint of CCCJC against case at bar, since CCCIC up to this point refuses to acknowledge and pay
FFMCCI is dismissed on the ground its obligation to Kawasaki under the Surety and Performance Bonds, it
of lack of cause of action. has not yet acquired the rights to seek indemnification from FFMCCI and
The Court disagrees with the ruling of the Court of Appeals that there subrogation to Kawasaki as against FFMCCI. In the same vein, the
was no proper service of summons upon FFMCCI. The appellate court corresponding obligation of FFMCCI to indemnify CCCIC under the
overlooked the fact that the service of summons on FFMCCI at its Indemnity Agreements has yet to accrue. Thus far, there is no act or
principal address at #86 West A venue, Quezon City failed because omission on the part of FFMCCI which violated the right of CCCIC and for
FFMCCI had already vacated said premises without notifying anyone as which CCCIC may seek relief from the courts. In the absence of these
to where it transferred. For this reason, the RTC, upon the motion of elements, CCCIC has no cause of action against FFMCCI and/or FFMCCI
CCCIC, issued an Order42 dated September 4, 1991, directing the President Mañacop. Resultantly, the Third-Party Complaint of CCCIC
issuance and service of Alias Summons to the individual directors of should be dismissed.
FFMCCI. Eventually, the Alias Summons was personally served upon There is no basis for awarding
FFMCCI director Vicente Concepcion on September 25, 1991. 43 attorney's fees in favor of Kawasaki.
Rule 14, Section 13 of the 1964 Rules of Court, which was then in force, In addition, the rate of legal interest
allowed the service of summons upon a director of a private domestic imposed shall conform with latest
corporation: jurisprudence.
Sec. 13. Service upon private domestic corporation or partnership. - If Article 2208(2) of the Civil Code allows the award of attorney's fees
the defendant is a corporation organized under the laws of the "[w]hen the defendant's act or omission has compelled the plaintiff to
Philippines or a partnership duly registered, service may be made on litigate with third persons or to incur expenses to protect his
the president, manager, secretary, cashier, agent, or any of its interest[.]" In Servicewide Specialists, Incorporated v. Court of
directors. Appeals,47 the Court declared that:
The aforementioned rule does not require that service on the private Article 2208 of the Civil Code allows attorney's fees to be awarded by a
domestic corporation be served at its principal office in order for the court when its claimant is compelled to litigate with third persons or to
court to acquire jurisdiction over the same. The Court, in Talsan incur expenses to protect his interest by reason of an unjustified act or
Enterprises, Inc. vs. Baliwag Transit, lnc.,44 citing Baltazar v. Court of omission on the part of the party from whom it is sought. To be sure,
Appeals,45 affirmed that: private respondents were forced to litigate to protect their rights but as
[S]ervice on respondent's bus terminal at the address stated in the we have previously held: "where no sufficient showing of bad faith would
summons and not in its main office in Baliwag do not render the service be reflected in a party's persistence in a case other than an erroneous
of summons invalid. 1âwphi1 In Artemio Baltazar v. Court of Appeals, we conviction of the righteousness of his cause, attorney's fee shall not be
held: recovered as cost." (Citation omitted.)
"The regular mode, in other words, of serving summons upon a private Bad faith has been defined as "a breach of a known duty through some
Philippine Corporation is by personal service upon one of the officers of motive of interest or ill will. It must, however, be substantiated by
such corporation identified in Section 13. Ordinarily, such personal evidence. Bad faith under the law cannot be presumed, it must be
service may be expected to be made at the principal office of the established by clear and convincing evidence."48 There is no evidence in
this case to show bad faith on the part of CCCIC. CCCIC, in refusing the on October 3, 1982 at Ellinwood-Malate Church.3cralawlawlibrary
claim of Kawasaki, was merely acting based on its belief in the
righteousness of its defense. Hence, even though Kawasaki was Sometime in November 2008, petitioner received a subpoena from the
compelled to litigate to enforce its claim against CCCIC, the award of Bureau of Immigration and Deportation (BID) directing her to appear
attorney's fees is not proper. before the said agency because her permanent residence visa was
Finally, the Court, in Nacar v. Gallery Frames,49 modified the guidelines in being subjected to cancellation proceedings. Reportedly, her marriage
imposing interests, taking into account Bangko Sentral ng Pilipinas- with respondent was nullified by the court.
Monetary Board Resolution No. 796 dated May 16, 2013 and Circular No.
799, series of 2013, which fixed the legal rate at 6% per annum effective When petitioner appeared before the BID, she was furnished with the
July 1, 2013. In the absence of stipulated interest in the present case, the copies of the following documents: (1) petition for declaration of nullity
Court imposes upon the amounts covered by the Surety and of marriage filed as Civil Case No. CV-01-0177; (2) petition for
Performance Bonds the legal rate of 12% per annum from September 15, declaration of nullity of marriage docketed as Civil Case No. 02-0306;
1989, the date of demand, until June 30, 2013; and then the legal rate (3) Decision,4 dated December 11, 2002, in Civil Case No. 02-0306 of the
of6% per annum from July 1, 2013 until full payment of the same. Regional Trial Court, Branch 260 (RTC), Parañaque City, declaring the
WHEREFORE, premises considered, the instant Petition for Review on marriage between petitioner and respondent as void ab initio; and (4)
Certiorari is PARTLY GRANTED. The Decision dated May 30, 2002 and their marriage contract5 with the subject decision annotated thereon.
Resolution dated November 14, 2002 of the Court of Appeals are Petitioner was perplexed that her marriage with respondent had been
AFFIRMED with the following MODIFICATIONS: declared void ab initio.
1) The Third-Party Complaint filed by CCC Insurance Corporation against
F.F. Mañacop Construction Company, Inc. and Mr. Florante F. Mañacop is The above documents showed that on April 26, 2001, respondent filed a
DISMISSED on the ground of lack of cause of action; petition for declaration of nullity6 on the ground of psychological
2) The award of attorney's fees in favor of Kawasaki Steel Corporation is incapacity before the RTC, which was docketed as Civil Case No. CV-01-
DELETED; and 0177. Respondent stated that petitioner’s address was 600 Elcano St.,
3) In addition to the amounts CCC Insurance Corporation is ordered to Binondo, Manila. There was no showing of its status, whether pending,
pay Kawasaki Steel Corporation under Surety Bond No. B-88/11191 and withdrawn or terminated.
Performance Bond No. B-88/11193, CCC Insurance Corporation is further
ORDERED to pay Kawasaki Steel Corporation legal interest on said On July 19, 2002, respondent filed another petition for declaration of
amounts at the rates of 12% per annum from September 15, 1989 to nullity7 on the ground of psychological incapacity before the RTC,
June 30, 2013 and 6% per annum from July 1, 2013 until full payment docketed as Civil Case No. 02-0306. Respondent indicated that
thereof. petitioner’s address was 23 Sta. Rosa Street, Unit B-2 Manresa Garden
SO ORDERED. Homes, Quezon City. On July 29, 2002, the RTC issued summons.8 In his
Server’s Return,9 process server Rodolfo Torres, Jr. stated that, on
R. No. 206653, February 25, 2015 August 1, 2002, substituted service of summons with the copy of the
YUK LING ONG, Petitioner, v. BENJAMIN T. CO, Respondent. petition was effected after several futile attempts to serve the same
DECISION personally on petitioner. The said documents were received by Mr. Roly
MENDOZA, J.: Espinosa, a security officer.
In court proceedings, there is no right more cherished than the right of
every litigant to be given an opportunity to be heard. This right begins at On December 11, 2002, the RTC rendered a decision10 in Civil Case No.
the very moment that summons is served on the defendant. The Rules of 02-0306 finding respondent’s marriage with petitioner as void ab
Court places utmost importance in ensuring that the defendant initio on the ground of psychological incapacity under Article 36 of the
personally grasp the weight of responsibility that will befall him. Thus, it Family Code. It stated that summons was served on petitioner on August
is only in exceptional circumstances that constructive notification, or 1, 2002, but she failed to file her responsive pleading within the
substituted service of summons, is allowed. If the server falls short of reglementary period. The public prosecutor also stated that there were
the rigorous requirements for substituted service of summons, then the no indicative facts to manifest collusion. Thus, the RTC concluded that
Court has no other option but to strike down a void judgment, petitioner was psychologically incapacitated to perform her essential
regardless of the consequences. marital obligations.

This is a petition for review on certiorari seeking to reverse and set Consequently, petitioner filed a petition for annulment of
aside the June 27, 2012 Decision1and the March 26, 2013 Resolution2 of judgment11 under Rule 47 of the Rules of Court before the CA on
the Court of Appeals (CA) in CA-G.R. SP No. 106271, which denied the November 24, 2008, claiming that she was never notified of the cases
petition for annulment of judgment. filed against her. She prayed that the RTC decision, dated December 11,
The Facts 2002, in Civil Case No. 02-0306, be nullified on the grounds of extrinsic
fraud and lack of jurisdiction.
Petitioner Yuk Ling Ong (petitioner), a British-Hong Kong national, and
respondent Benjamin Co (respondent), a Filipino citizen, were married Petitioner alleged that first, respondent committed extrinsic fraud
because, as seen in Civil Case No. CV-01-0177, he deliberately indicated a
wrong address to prevent her from participating in the trial; second, The Court finds merit in the petition.
jurisdiction over her person was not acquired in Civil Case No. 02-0306
because of an invalid substituted service of summons as no sufficient Annulment of judgment is a recourse equitable in character, allowed
explanation, showing impossibility of personal service, was stated only in exceptional cases as where there is no available or other
before resorting to substituted service of summons; third, the alleged adequate remedy. Rule 47 of the 1997 Rules of Civil Procedure, as
substituted service was made on a security guard of their townhouse amended, governs actions for annulment of judgments or final orders
and not on a member of her household; and fourth, she was not and resolutions, and Section 2 thereof explicitly provides only two
psychologically incapacitated to perform her marital grounds for annulment of judgment, that is, extrinsic fraud and lack of
obligations.12cralawlawlibrary jurisdiction.19 Annulment of judgment is an equitable principle not
Ruling of the Court of Appeals because it allows a party-litigant another opportunity to reopen a
judgment that has long lapsed into finality but because it enables him to
On June 27, 2012, the CA rendered the assailed decision finding the be discharged from the burden of being bound to a judgment that is an
petition for annulment of judgment to be devoid of merit. It held that absolute nullity to begin with.20cralawlawlibrary
there was no sufficient proof to establish that respondent employed
fraud to insure petitioner’s non-participation in the trial of Civil Case No. Petitioner raises two grounds to support her claim for annulment of
CV-01-0177. judgment: (1) extrinsic fraud and (2) lack of jurisdiction. Her contention
on the existence of extrinsic fraud, however, is too unsubstantial to
Relying on Robinson v. Miralles,13the CA further ruled that the warrant consideration. The discussion shall then focus on the ground of
substituted service of summons in Civil Case No. 02-0306 was valid. It lack of jurisdiction.
found that there was a customary practice in petitioner’s townhouse
that the security guard would first entertain any visitors and receive Lack of jurisdiction on the part of the trial court in rendering the
any communication in behalf of the homeowners. With this set-up, it was judgment or final order is either lack of jurisdiction over the subject
obviously impossible for the process server to personally serve the matter or nature of the action, or lack of jurisdiction over the person of
summons upon petitioner. It also declared that the process server’s the petitioner. The former is a matter of substantive law because
return carries with it the presumption of regularity in the discharge of a statutory law defines the jurisdiction of the courts over the subject
public officer’s duties and functions. matter or nature of the action. The latter is a matter of procedural law,
for it involves the service of summons or other processes on the
Petitioner moved for reconsideration, but her motion was denied by the petitioner.21cralawlawlibrary
CA in its Resolution,14 dated March 26, 2013.
In the present case, petitioner contends that there was lack of
Hence, this petition, anchored on the following jurisdiction over her person because there was an invalid substituted
ISSUES service of summons. Jurisdiction over the defendant is acquired either
upon a valid service of summons or the defendant's voluntary
Whether or not the Trial Court in Civil Case No. 02-0306 validly acquired appearance in court.22 If the defendant does not voluntarily appear in
jurisdiction over the person of the petitioner. court, jurisdiction can be acquired by personal or substituted service of
Whether or not the facts proven by the petitioner constitute extrinsic summons as laid out under Sections 6 and 7 of Rule 14 of the Rules of
fraud within the purview of Rule 47 of the Rules of Court.15 Court, which state:chanRoblesvirtualLawlibrary
Sec. 6. Service in person on defendant. - Whenever practicable, the
Petitioner argues that there was an invalid substituted service of summons shall be served by handing a copy thereof to the defendant in
summons. The process server’s return only contained a general person, or, if he refuses to receive and sign for it, by tendering it to him.
statement that substituted service was resorted to “after several futile
attempts to serve the same personally,”16 without stating the dates and Sec. 7. Substituted Service. - If, for justifiable causes, the defendant
reasons of the failed attempts. Petitioner also reiterates her argument cannot be served within a reasonable time as provided in the preceding
that extrinsic fraud was employed. section, service may be effected (a) by leaving copies of the summons
at the defendant's residence with some person of suitable age and
In his Comment,17 filed on July 9, 2014, respondent contended that the discretion then residing therein, or (b) by leaving the copies at
server’s return satisfactorily stated the reason for the resort to a defendant's office or regular place of business with some competent
substituted service of summons on August 1, 2002; and it was person in charge thereof.
improbable that petitioner failed to receive the summons because it was
sent to the same address which she declared in this present petition. The landmark case of Manotoc v. CA (Manotoc)23 thoroughly discussed
the rigorous requirements of a substituted service of summons, to wit:
Petitioner filed her Reply18 on October 8, 2014 reiterating her previous xxx
arguments. (1) Impossibility of Prompt Personal Service
The Court’s Ruling xxx
14.28cralawlawlibrary
For substituted service of summons to be available, there must be
several attempts by the sheriff to personally serve the summons within In the case at bench, the summons in Civil Case No. 02-030629 was
a reasonable period of one month which eventually resulted in failure to issued on July 29, 2002. In his server’s return,30 the process server
prove impossibility of prompt service. "Several attempts" means at resorted to substituted service of summons on August 1, 2002.
least three (3) tries, preferably on at least two different dates. In Surprisingly, the process server immediately opted for substituted
addition, the sheriff must cite why such efforts were service of summons after only two (2) days from the issuance of the
unsuccessful. It is only then that impossibility of service can be summons. The server’s return stated the
confirmed or accepted. following:chanRoblesvirtualLawlibrary
SERVER’S RETURN
(2) Specific Details in the Return
THIS IS TO CERTIFY THAT on August 1, 2002, substituted service of
The sheriff must describe in the Return of Summons the facts and summons with copy of petition, were effected to respondent, Yuk Ling H.
circumstances surrounding the attempted personal service. The efforts Ong, at the Unit B-2, No. 23 Sta. Rosa St., Manresa Garden Homes,
made to find the defendant and the reasons behind the failure must be Manresa Garden City, Quezon City, after several futile attempts to
clearly narrated in detail in the Return. The date and time of the serve the same personally. The said documents were received by Mr.
attempts on personal service, the inquiries made to locate the Roly Espinosa of sufficient age and discretion, the Security Officer
defendant, the name/s of the occupants of the alleged residence or thereat.
house of defendant and all other acts done, though futile, to serve
the summons on defendant must be specified in the Return to Therefore, respectfully returning to Court, original copy of summons,
justify substituted service. Duly Served, this 2nd day of August, 2002.
RODOLFO P. TORRES, JR.
(3) A Person of Suitable Age and Discretion Process Server
xxx
(Emphasis supplied)
The sheriff must therefore determine if the person found in the alleged The server’s return utterly lacks sufficient detail of the attempts
dwelling or residence of defendant is of legal age, what the recipient's undertaken by the process server to personally serve the summons on
relationship with the defendant is, and whether said person petitioner. The server simply made a general statement that summons
comprehends the significance of the receipt of the summons and his was effected after several futile attempts to serve the same personally.
duty to immediately deliver it to the defendant or at least notify the The server did not state the specific number of attempts made to
defendant of said receipt of summons. These matters must be clearly perform the personal service of summons; the dates and the
and specifically described in the Return of Summons. (Emphases corresponding time the attempts were made; and the underlying reason
and underscoring supplied) for each unsuccessful service. He did not explain either if there were
inquiries made to locate the petitioner, who was the defendant in the
The pronouncements of the Court in Manotoc have been applied to case. These important acts to serve the summons on petitioner, though
several succeeding cases. In Pascual v. Pascual,24 the return of futile, must be specified in the return to justify substituted service.
summons did not show or indicate the actual exertion or positive steps
taken by the officer or process server in serving the summons The server’s return did not describe in detail the person who received
personally to the defendant. Similarly, in Spouses Afdal v. Carlos,25 the the summons, on behalf of petitioner. It simply stated that the summons
process server’s indorsements therein failed to state that the personal was received “by Mr. Roly Espinosa of sufficient age and discretion, the
service on the defendants was rendered impossible and that efforts Security Officer thereat.” It did not expound on the competence of the
were made to find them personally. In both those cases, the Court ruled security officer to receive the summons.
that the meticulous requirements for substituted service of summons
were not met. Also, aside from the server’s return, respondent failed to indicate any
portion of the records which would describe the specific attempts to
There are cases, however, in which Manotoc was applied, but, personally serve the summons. Respondent did not even claim that
nevertheless, it was ruled that there was no lack of jurisdiction over the petitioner made any voluntary appearance and actively participated in
person of the defendant. In Sagana v. Francisco,26 the diligent efforts Civil Case No. 02-0306.
exerted by the sheriff to locate the respondent were determined, not
only based on the sheriff's return, but also on the process server's The case of Robinson v. Miralles, cited by the CA, is not applicable. In
notation and case records. In the case of Wong v. Factor-Koyama,27 on that case, the return described in thorough detail how the security
the other hand, even if the sheriff performed an invalid substituted guard refused the sheriff’s entry despite several attempts. The
service of summons, jurisdiction over the person of defendant was defendant in the said case specifically instructed the guard to prevent
obtained because the latter had actively participated in trial, amounting anybody to proceed to her residence. In the present case, the attempts
to a voluntary appearance under Section 20 of Rule made by the process server were stated in a broad and ambiguous
statement. annul the 27 June 2001 Decision5 and 10 November 2004 Order6 of
the Regional Trial Court (RTC), Judicial Region 3, Malolos, Bulacan,
The CA likewise erred in ruling that the presumption of regularity in the Branch 22, in Civil Case No. 473-M-2000.
performance of official duty could be applied in the case at bench. This The Facts
presumption of regularity, however, was never intended to be applied In March 1997, the Spouses Galura purchased broiler starters and
even in cases where there are no showing of substantial compliance finishers worth ₱426,000 from Math-Agro Corporation (MAC). The
with the requirements of the rules of procedure. Such presumption does Spouses Galura paid MAC ₱72,500. Despite several demands, they
not apply where it is patent that the sheriff’s or server’s return is failed to pay the ₱353,500 unpaid balance.
defective.31 As earlier explained, the server’s return did not comply with MAC engaged the services of a certain Atty. Ronolfo S. Pasamba
the stringent requirements of substituted service of summons. (Atty. Pasamba) for the purpose of collecting the ₱353,500 unpaid
balance from the Spouses Galura. In his letter7 dated 13 November
Given that the meticulous requirements in Manotoc were not met, the 1998 and addressed to the Spouses Galura, Atty. Pasamba stated:
Court is not inclined to uphold the CA’s denial of the petition for Ang kinatawan ng aming kliyente na Math Agro Corporation na may
annulment of judgment for lack of jurisdiction over the person of tanggapan sa Balagtas , Bulacan, ay lumapit sa aming tanggapan at
petitioner because there was an invalid substituted service of summons. kinuha ang aming paglilingkod bilang manananggol kaugnay sa
Accordingly, the decision in Civil Case No. 02-0306 must be declared inyong natitirang pagkakautang sa kanila na halagang
null and void. ₱353,500.00, na hanggang sa ngayon ay hindi pa ninyo
nababayaran.
The stricter rule in substituted service of summons was meant to Dahilan dito , kayo ay binibigyan namin ng limang (5) araw mula sa
address “[t]he numerous claims of irregularities in substituted service pagkatanggap ng sulat na ito upang bayaran ang aming nabanggit
which have spawned the filing of a great number of unnecessary special na kliyente, pati na ang kaukulang tubo nito. Ikinalulungkot naming
civil actions of certiorari and appeals to higher courts, resulting in sabihin sa inyo na kung hindi ninyo bibigyang pansin ang mga bagay
prolonged litigation and wasteful legal expenses.”32cralawlawlibrary na ito, mapipilitan na kaming magsampa ng kaukulang dimanda sa
hukuman laban sa inyo upang mapangalagaan namin ang karapatan
Although the decision in Civil Case No. 02-0306 was promulgated as at interes ng aming nabanggit na kliyente.
early as December 11, 2002, the Court must strike it down for lack of Inaasahan namin na bibigyang pansin ninyo ang mga bagay na ito .
jurisdiction over the person of petitioner. The favorable judgment In its complaint8 dated 21 June 2000 and filed with the RTC, MAC
enjoyed by respondent cannot be categorized as a genuine victory prayed that the RTC order the Spouses Galura to pay the
because it was fought against an adversary, who was ignorant of the ₱353,500 unpaid balance and ₱60,000 attorney’s fees and
existing dispute. Whatever prize bestowed upon the victor in such a void litigation expenses. In the complaint, MAC stated that "defendants
decision must also be undone. Respondent, if he wishes to pursue, must are both of legal age, spouses, and residents of G.L. Calayan Agro
start from scratch and institute his action for declaration of nullity System Inc., Bo. Kalayaan, Gerona, Tarlac, and/or 230 Apo St., Sta.
again; this time with petitioner fully aware and ready for litigation. Mesa Heights, Quezon City, where they may be served with
summonses and other processes of this Honorable Court."
WHEREFORE, the petition is GRANTED. The June 27, 2012 Decision and
Clerk of Court Emmanuel L. Ortega issued the corresponding
the March 26, 2013 Resolution of the Court of Appeals in CA-G.R. SP No. summons9 dated 15 August 2000 requiring the Spouses Galura to file
106271 are hereby REVERSED and SET ASIDE. The December 11, 2002 their answer within 15 days, otherwise judgment by default would be
Decision of the Regional Trial Court, Branch 260, Parañaque City is taken against them.
hereby declared VOID. On 17 September 2000, Court Process Server Faustino B. Sildo (Sildo)
went to 230 Apo Street, Sta. Mesa Heights, Quezon City, to serve the
G.R. No. 167230 August 14, 2009 summons. There, Dante Galura’s father, Dominador Galura, told Sildo
SPOUSES DANTE and MA. TERESA L. GALURA, Petitioners, that the Spouses Galura were presently residing at Tierra Pura
vs. Subdivision, Tandang Sora, Quezon City. On 22 September 2000, Sildo
MATH-AGRO CORPORATION, Respondent. went to G.L. Calayan Agro System, Inc. in Barrio Kalayaan, Gerona, Tarlac
DECISION to serve the summons. Sildo learned that the property had been
CARPIO, J.: foreclosed and that the Spouses Galura no longer resided there. On 26
The Case September 2000, Sildo went to Tierra Pura Subdivision, Tandang Sora,
This is a petition1 for review on certiorari under Rule 45 of the Quezon City, to serve the summons. Sildo served the summons on
Rules of Court, with prayer for the issuance of a writ of Teresa L. Galura’s sister, Victoria Lapuz (Lapuz). In his return of
preliminary injunction or temporary restraining order. The petition service10 dated 4 October 2000, Sildo stated:
challenges the 25 January and 28 February 2005 Resolutions2 of THIS IS TO CERTIFY that on September 22, 2000 the undersigned went to
the Court of Appeals in CA-G.R. SP No. 88088 dismissing the the given address of the defendant at G. Bo. Kalayaan, Gerona, Tarlac for
petition3 for annulment of judgment and final order and denying the the purpose of serving the summons, issued in the above-entitled case
motion4 for reconsideration, respectively, filed by Dante and Ma.
Teresa L. Galura (Spouses Galura). The Spouses Galura sought to
That the defendants is [sic] no longer residing at the given address and For reasons heretofore made apparent, the Court resolves to grant the
their property was foreclose [sic] by the Bank, motion for execution.12 1avvphi1
That on September 17, the undersigned went to the given address of the On 13 December 2004, the Spouses Galura received "from their
defendants at 230 Apo St., Sta Mesa Heights, Quezon City; parents-in-law" a copy of the 10 November 2004 Order. On 6 January
That the defendants is [sic] not residing at the given address as per 2005, the Spouses Galura filed with the Court of Appeals a petition 13 for
information given by Mr. Dominador Galura father of the defendants. annulment of judgment and final order under Rule 47 of the Rules of
That Mr. Dominador Galura give [sic] the address of the defendant Court, with prayer for the issuance of a writ of preliminary injunction or
where they are presently residing at Tierra Fura [sic] Subd. at Tandang temporary restraining order. The Spouses Galura claimed that the RTC’s
Sora, Quezon City. 27 June 2001 Decision and 10 November 2004 Order were void for two
That on September 26, 2000 the undersigned went to Tandang Sora reasons: (1) the RTC failed to acquire jurisdiction over their persons
where the defendants presently residing [sic] Tierra Fura [sic] Subd. because the substituted service of summons was invalid, and (2) there
for the purpose of serving the summons, complaint together with the was extrinsic fraud because MAC made them believe that it would not
annexes, file a case against them. The Spouses Galura stated:
That Ms. Victoria Lapuz sister-in-Law of Dante Galura received the copy The assailed decision dated June 27, 2001 and the order of execution
of said summons, as evidence [sic] by her signature appearing on the dated November 10, 2004, issued by respondent Judge in Civil Case No.
face of original summons. 473-M-2000, should be annulled pursuant to Rule 47 of the 1997 Rules of
The Spouses Galura failed to file their answer. In its Order dated 23 Court.
January 2001, the RTC declared the Spouses Galura in default and 1. The assailed decision and order of execution are null and void having
allowed MAC to present its evidence ex parte. been rendered and issued despite failure of the court a quo to first
In its 27 June 2001 Decision, the RTC ruled in favor of MAC and ordered acquire jurisdiction over the persons of the petitioners, on account of
the Spouses Galura to pay the ₱353,500 unpaid balance, ₱30,000 the improper service of summons upon them.
attorney’s fees, and expenses of litigation. The RTC stated: 2. The assailed decision and order of execution were rendered with
Based on the facts and findings established above, the Court is of the extrinsic fraud in attendance. The owner of Math-Agro and herein
considered view that a judgment in favor of the plaintiff is in order. petitioners had an existing agreement for the settlement of their
Likewise, this Court strongly believes that the failure of the defendants obligation, and herein petitioners were complying with the agreement.
or their refusal to file any answer to the complaint is a clear admission Math-Agro, despite the commitment of its owner not to file the
on their part of their obligation to the plaintiff. It may even be safely complaint, did so. Such an act on the part of Math-Agro and its owner
presumed that by their inaction, defendants have no valid defense constitutes extrinsic fraud, as it prevented petitioners from defending
against the claim of the plaintiff such that under the circumstances, this themselves in the action lodged with the court a quo. 14
Court has no other alternative but to pass judgment on the issued [sic] The Court of Appeals’ Ruling
based on the evidence on record. In its 25 January 2005 Resolution, the Court of Appeals dismissed the
The award of attorney’s fees in the amount of ₱30,000.00 is justified petition for lack of merit. The Court of Appeals held that there was a
under the premises in view of the court’s finding that the defendants valid substituted service of summons, that the allegation of extrinsic
acted in gross and evident bad faith in refusing to satisfy plaintiff’s fraud was unbelievable, and that the Spouses Galura should have first
plainly valid, just and demandable claim. availed of the ordinary remedies of new trial, appeal, or petition for
WHEREFORE, judgment is hereby rendered ordering the defendants to relief. The Court of Appeals stated:
pay the plaintiff the following: 1. Petitioners make no denial that insofar as known by the respondent
1. The sum of ₱353,500.00 representing the unpaid purchase price of Math-Agro Corporation, their address at the time of the filing of the
the poultry products plus interest of 6% per annum accruing from the complaint on July 25, 2000 was at G.L. Calayaan Agro System Inc., Bo.
date of defendants’ receipt of the first demand letter on October 18, Kalayaan, Gerona, Tarlac and/or 230 Apo St., Sta. Mesa Heights, Quezon
1998 until full payment is made; City. They likewise do not deny the proceedings taken by Court Process
2. The sum of ₱30,000.00 as and for attorney’s fees; and Server Paulino Sildo as narrated in his Return of Service dated October
3. The costs of suit. 4, 2000 x x x.
SO ORDERED.11 Under the circumstances, we believe, and so hold, that there was a valid
In its Order dated 10 November 2004, the RTC issued a writ of execution substituted service of summons on the petitioners as defendants in the
to implement the 27 June 2001 Decision. The RTC stated: case. To begin with, the petitioners never took the bother of informing
In support of the motion, it is alleged among others that on June 27, the creditor Math-Agro Corporation that they were leaving their address
2001, the Decision was rendered in the above-entitled case, has become known to the latter and were moving on to another place of residence,
final and executory on August 1, 2001 and was duly recorded in the Book so the process server took it upon himself to diligently trace the
of Entry of Judgment. whereabouts of the petitioners until he was able to effect service of the
On the other hand, the fifteen (15) days period given to the defendants, summons on Victoria Lapuz, a sister-in-law of petitioner Dante Galura at
from receipt of the order of the Court dated November 11, 2003 had Tierra Fura Subdivision in Tandang Sora, Quezon City, where the
already lapsed without complying therewith, hence his right to file defendants were then residing. What they claim is that substituted
comment on the Motion for Execution filed by the plaintiff was waived. service was immediately resorted to without the process server first
exhausting all opportunities for personal service which is improper. x x The process server, in his return of service above, did not state that his
x attempts to serve the summons by personal service upon the
Far from being improper, the actuations taken and the efforts exerted petitioners at the Tierra Pura Subdivision address failed, and that the
by the process server are highly commendable for he started looking same could not be made within a reasonable time. He likewise failed to
for the petitioners in the addresses given by them to their creditor and state facts and circumstances showing why personal service of the
alleged by the latter in the complaint. Finding them not to be there, he summons upon the petitioners at the said address was impossible.
methodically traced their whereabouts until he came upon their latest Finally, he also failed to state that Ms. Victoria Lapuz, the person with
address at Tierra Fura Subdivision, Tandang Sora, Quezon City, as given whom he left the summons, was a person of sufficient age and
by Dominador Galura, father of petitioner-husband, Dante Galura. Quite discretion, and residing in the said Tierra Pura address. 17
conspicuously, the petitioner do not deny that they were residing at that The Court agrees. Section 6, Rule 14 of the Rules of Court states that,
place when service of the summons was made on petitioner-husband’s "Whenever practicable, the summons shall be served by handing a copy
sister-in-law, Victoria Lapuz. thereof to the defendant in person, or, if he refuses to receive and sign
xxxx for it, by tendering it to him." Section 7 states:
2. Petitioners’ posturing that they are at the receiving end of extrinsic SEC. 7. Substituted service. — If, for justifiable causes, the defendant
fraud because they had an existing payment arrangement with their cannot be served within a reasonable time as provided in the preceding
creditor, Math-Agro Corporation, that the latter would not resort to section, service may be effected (a) by leaving copies of the summons
judicial action for as long as payments are being made by them and that at the defendant’s residence with some person of suitable age and
they had been paying their obligation until July, 2004 is hard to be discretion then residing therein, or (b) by leaving the copies at
believed in. This is but a bare and vagrant allegation without any visible defendant’s office or regular place of business with some competent
means of support for nowhere in their petition, as well as in their joint person in charge thereof.
affidavit of merit, did they attach copies of the corresponding receipts In Sandoval II v. HRET,18 the Court enumerated the requisites of a valid
of their payments. x x x substituted service: (1) service of summons within a reasonable time is
3. Prescinding from the foregoing records also show that contrary to impossible; (2) the person serving the summons exerted efforts to
Section 1, Rule 47 of the 1997 Rules of Civil Procedure, petitioners have locate the defendant; (3) the person to whom the summons is served is
not availed themselves first of the ordinary remedies of a motion to lift of sufficient age and discretion; (4) the person to whom the summons is
order of default, new trial, appeal, petition for relief before resorting to served resides at the defendant’s place of residence; and (5) pertinent
this extra-ordinary action for annulment of judgment. 15 facts showing the enumerated circumstances are stated in the return of
The Spouses Galura filed a motion for reconsideration dated 14 February service. In Sandoval, the Court held that "statutory restrictions for
2005. In its Resolution dated 28 February 2005, the Court of Appeals substituted service must be strictly, faithfully and fully observed."
denied the motion for lack of merit. In the present case, there is no showing that personal service of
Hence, the present petition. summons within a reasonable time was impossible. On 17 September
The Issues 2000, Sildo went to 230 Apo Street, Sta. Mesa Heights, Quezon City, to
In their petition dated 8 April 2005, the Spouses Galura raised as issues serve the summons. There, Dominador Galura told him that the Spouses
that the Court of Appeals erred when it ruled that (1) there was a valid Galura were presently residing at Tierra Pura Subdivision, Tandang
substituted service of summons; (2) the allegation of extrinsic fraud was Sora, Quezon City. Despite being told of the Spouses Galura’s correct
unbelievable; and (3) they should have availed first of the ordinary address, Sildo still went to G.L. Calayan Agro System, Inc. in Barrio
remedies of new trial, appeal, or petition for relief. Kalayaan, Gerona, Tarlac to serve the summons, only to find out that the
In its Resolution16 dated 27 April 2005, the Court issued a temporary property had already been foreclosed and that the Spouses Galura no
restraining order enjoining the Court of Appeals from implementing its longer resided there. On 26 September 2000, Sildo went to Tierra Pura
25 January and 28 February 2005 Resolutions. Subdivision, Tandang Sora, Quezon City, and, without any explanation,
The Court’s Ruling served the summons on Lapuz. In his 4 October 2000 return of service,
The petition is meritorious. Sildo stated:
The Spouses Galura claim that the RTC failed to acquire jurisdiction over That on September 26, 2000 the undersigned went to Tandang Sora
their persons because the substituted service of summons was invalid. where the defendants presently residing [sic] Tierra Fura [sic] Subd.
They stated: for the purpose of serving the summons, complaint together with the
The resort of the process server to what purports to be a substituted annexes,
service, when he left the summons with Ms. Victoria Lapuz is clearly That Ms. Victoria Lapuz sister-in-Law of Dante Galura received the copy
unjustified, as it was premature. He could still serve the summons of said summons, as evidence [sic] by her signature appearing on the
personally upon herein petitioners had he exerted efforts to do so. face of original summons.
Unfortunately, he did not, and he immediately resorted to a substituted Whenever practicable, the summons must be served on the defendant in
service of the summons. Clearly, the acts of the trial court’s process person. Substituted service may be resorted to only when service of
server contravenes the rulings espoused by the Honorable Supreme summons within a reasonable time is impossible. Impossibility of prompt
Court that summons must be served personally on the defendant as service should appear in the return of service — the efforts exerted to
much as possible. find the defendant and the fact that such efforts failed must be stated in
xxxx the return of service. In Keister v. Judge Navarro,19 the Court held:
Service of summons upon the defendant is the means by which the court rule, however, that it states a sufficient cause of action for the
may acquire jurisdiction over his person. In the absence of a valid nullification of the assailed order on the ground of lack of jursdiction of
waiver, trial and judgment without such service are null and void. This the RTC over the person of the petitioner, notwithstanding the absence
process is solely for the benefit of the defendant. Its purpose is not only of any allegation therein that the ordinary remedy of new trial or
to give the court jurisdiction of the person of the defendant, but also to reconsideration, or appeal are no longer available through no fault of
afford the latter an opportunity to be heard on the claim made against the petitioner.
him. In a case where a petition for annulment of a judgment or final order of
The summons must be served to the defendant in person. It is only when the RTC filed under Rule 47 of the Rules of Court is grounded on lack of
the defendant cannot be served personally within a reasonable time that jurisdiction over the person of the defendant/respondent or over the
a substituted service may be made. Impossibility of prompt service nature or subject of the action, the petitioner need not allege in the
should be shown by stating the efforts made to find the defendant petition that the ordinary remedy of new trial or reconsideration of the
personally and the fact that such efforts failed. This statement should be final order or judgment or appeal therefrom are no longer available
made in the proof of service. This is necessary because substituted through no fault of her own. This is so because a judgment rendered or
service is in derogation of the usual method of service. It has been held final order issued by the RTC without jurisdiction is null and void and
that this method of service is "in derogation of the common law; it is a may be assailed any time either collaterally or in a direct action or by
method extraordinary in character, and hence may be used only as resisting such judgment or final order an any action or proceeding
prescribed and in the circumstances authorized by statute." Thus, under whenever it is invoked, unless barred by laches. (Emphasis supplied)
the controlling decisions, the statutory requirements of substituted WHEREFORE, the Court (1) GRANTS the petition, (2) SETS ASIDE the 25
service must be followed strictly, faithfully and fully, and any substituted January and 28 February 2005 Resolutions of the Court of Appeals in
service other than that authorized by the statute is considered CA-G.R. SP No. 88088, (3) MAKES PERMANENT the temporary restraining
ineffective. order issued on 27 April 2005, and (4) SETS ASIDE the 27 2001 Decision
Indeed, the constitutional requirement of due process requires that the and 10 November 2004 Order of the Regional Trial Court, Judicial Region
service be such as may be reasonably expected to give the desired 3, Malolos, Bulacan, Branch 22, in Civil Case No. 473-M-2000.
notice to the party of the claim against him.
In the present case, there was no showing in the return of service (1) of G.R. No. 171916 December 4, 2009
the impossibility of personal service within a reasonable time; (2) that CONSTANTINO A. PASCUAL, substituted by his heirs, represented
Lapuz, the person on whom summons was served, was of suitable age by Zenaida Pascual, Petitioner,
and discretion; and (3) that Lapuz resided in the residence of the vs.
Spouses Galura. Consequently, the RTC did not acquire jurisdiction over LOURDES S. PASCUAL, Respondent.
the persons of the Spouses Galura, and thus the Spouses Galura are not DECISION
bound by the RTC’s 27 June 2001 Decision and 10 November 2004 PERALTA, J.:
Order.20 Due process dictates that jurisdiction over the person of a defendant
The Spouses Galura claim that the Court of Appeals erred when it ruled can only be acquired by the courts after a strict compliance with the
that they should have first availed of the ordinary remedies of new trial, rules on the proper service of summons.
appeal, or petition for relief. The Spouses Galura stated: Before this Court is a Petition for Review on Certiorari under Rule 45 of
In the case at bar, the assailed decision was rendered in June 27, 2001. the Rules of Court, with Prayer for Temporary Restraining Order and
More than three years have passed since the said decision, clearly the Writ of Preliminary Injunction, seeking to annul the Decision1 dated June
remedies for a motion to lift order of default, new trial, appeal, petition 29, 2005 and the Resolution2 dated March 14, 2006 of the Court of
for relief, have already prescribed. Herein petitioners, therefore, are Appeals (CA) nullifying and vacating the Decision3 dated December 3,
left only with the remedy of a petition for the annulment of judgment.21 2002 and Order4 dated April 4, 2003 of the Regional Trial Court (RTC),
The Court agrees. When a petition for annulment of judgment or final Branch 12, Malolos, Bulacan.
order under Rule 47 is grounded on lack of jurisdiction over the person The facts, as found in the records, are the following:
of the defendant, the petitioner does not need to allege that the ordinary Petitioner filed a Complaint for Specific Performance with Prayer for
remedies of new trial, appeal, or petition for relief are no longer Issuance of Preliminary Mandatory Injunction with Damages before the
available through no fault of his or her own. In Ancheta v. Ancheta,22 the RTC of Malolos, Bulacan against respondent. The process server, in his
Court held: Return of Service5 dated May 21, 2002, reported, among others that:
[T]he Court of Appeals erred in dismissing the original petition and The undersigned Process Server of this Honorable Court went at
denying admission of the amended petition. This is so because defendant's given address at No. 4 Manikling St., Talayan Village, Quezon
apparently, the Court of Appeals failed to take note from the material City on May 20, 2002 to serve the summons and copy of the Complaint
allegations of the petition, that the petition was based not only on together with the annexes thereto in connection with the above-entitled
extrinsic fraud but also on lack of jurisdiction over the person of the case.
petitioner, on her claim that the summons and the copy of the complaint At the time of the service of the said summons, the defendant was not at
in Sp. Proc. No. NC-662 were not served on her. While the original her home and only her maid was there who refused to receive the said
petition and amended petition did not state a cause of action for the summons [in spite] of the insistence of the undersigned.
nullification of the assailed order on the ground of extrinsic fraud, we
The undersigned, upon his request with the Brgy. Clerk at the said place, Consequently, on December 3, 2002, the RTC, in its Decision,13 found in
was given a certification that he really exerted effort to effect the favor of the petitioner. The dispositive portion of the said Decision
service of the said summons but failed due to the above reason. (Annex reads:
"A"). WHEREFORE, in light of all the foregoing, judgment is hereby rendered in
The following day, May 21, 2002, the undersigned went back at favor of the plaintiff, Constantino A. Pascual, and against Lourdes S.
defendant's residence to have her receive the subject summons but Pascual, ordering the latter as follows:
again the above defendant was not at her house. a. to CEASE AND DESIST from further intervening with the corporate and
WHEREFORE, the original summons and copy of the complaint is hereby internal affairs of Rosemoor Mining Corporation, consisting of acts and
returned to the Honorable Court NOT SERVED. omissions prejudicial and detrimental to the interest of the said
Malolos, Bulacan, May 21, 2002. corporation resulting to irreparable injury to herein plaintiff;
Thereafter, an alias summons was issued by the RTC and, on May 29, b. to pay plaintiff the sum of One Hundred Thousand
2002, the following report was submitted: Pesos (P100,000.00), for and by way of moral damages;
The undersigned, on May 29, 2002, made a 3rd attempt to serve the c. to pay the sum of Thirty Thousand Pesos (₱30,000.00) for and by
alias summons issued by the Hon. Court relative with the above-entitled way of Attorney's fees; and
case at the given address of the defendant. d. to pay the costs of this suit.
The undersigned, accompanied by the barangay officials of the said SO ORDERED.
place, proceeded at defendant's residence but the undersigned was not Respondent then filed a Motion to Set Aside Order of Default14 dated
permitted to go inside her house and was given information by her maid December 13, 2002, with the argument of non-service of summons upon
that the defendant was not there. her. This was denied by the RTC in its Order15 dated April 4, 2003; and on
The defendant's car was parked inside her house and the same day, a Certificate of Finality and Entry of Judgment was issued.
inquiries/verification made on her neighbors revealed that the Eventually, respondent, on April 28, 2003, filed a Motion for
defendant was inside her house at the time of service of said summons Reconsideration16 of the Order dated April 4, 2003, which was denied by
and probably did not want to show-up when her maid informed her of the RTC in its Order17 dated June 23, 2003. Finally, on June 26, 2003, a
undersigned's presence. Writ of Execution was issued to enforce the Decision dated December 3,
WHEREFORE, the undersigned court process server respectfully 2002 of the RTC.
returned the alias summons dated May 29, 2002 issued by the Hon. Aggrieved, respondent filed with the CA a Petition for Certiorari and
Court "UNSERVED" for its information and guidance. Prohibition under Rule 65 of the Rules of Court which was granted by
Malolos, Bulacan, May 30, 2002.6 the same Court in its Decision18 dated June 29, 2005, the dispositive
Subsequently, on August 14, 2002, the process server returned with the portion of which reads:
following report,7 stating that a substituted service was effected: WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. The said
This is to certify that on the 14th day of August, 2002, I personally went Decision, as well as the Orders and the processes on which this is
at Dr. Lourdes Pascual's residence at #4 Manikling Street, Talayan premised, are NULLIFIED and VACATED.
Village, Quezon City, to serve the copy of the Summons dated August 12, SO ORDERED.
2002, together with a copy of the Complaint and its annexes Petitioner comes now to this Court through a Petition for Review
thereto. 1avvphi1 on Certiorari under Rule 45 of the Rules of Court, with Prayer for
Defendant Dr. Lourdes Pascual was out during the time of service of the Temporary Restraining Order and Writ of Preliminary Injunction, on the
said summons and only her housemaid was present. The undersigned following grounds:
left a copy of the same to the latter who is at the age of reason but I
refused to sign the same. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS
WHEREFORE, the undersigned respectfully return the service of AN INVALID SERVICE OF SUMMONS UPON THE RESPONDENT AND, HENCE,
summons duly served for information and guidance of the Honorable THE COURT (REGIONAL TRIAL COURT) DID NOT ACQUIRE JURISDICTION
Court. OVER THE RESPONDENT.
Malolos, Bulacan, August 14, 2002. II
For failure of the respondent to file a responsive pleading, petitioner, on THE HONORABLE COURT OF APPEALS ERRED IN GIVING DUE COURSE TO
September 17, 2002, filed a Motion to Declare Defendant in Default8 to THE PETITION WHEN FROM THE UNDISPUTED FACTS, THE RESPONDENT'S
which the petitioner filed an Opposition/Comment to Plaintiff's Motion to FAILURE TO INTERPOSE AN APPEAL OR TO FILE A MOTION FOR
Declare Defendant in Default9 dated October 1, 2002, claiming that she RECONSIDERATION OR A PETITION FOR RELIEF FROM JUDGMENT CLEARLY
was not able to receive any summons and copy of the complaint. The BARS THE INSTITUTION OF THE SPECIAL CIVIL ACTION FOR CERTIORARI
RTC, in its Order10 dated October 30, 2002, declared respondent in UNDER RULE 65, 1997 RULES OF CIVIL PROCEDURE.
default and allowed petitioner to file his evidence ex-parte. Petitioner insists that there was a valid substituted service of summons
Respondent filed a Motion for Reconsideration11 dated November 18, and that there should be a presumption of regularity in the performance
2002 seeking to set aside the above-mentioned Order dated October 30, of official functions. He also avers that certiorari, which was filed by the
2002. However, the said motion was denied by the RTC in its respondent with the CA, does not lie when the remedy of appeal has
Order12 dated November 27, 2002. been lost.
In her Comment with Motion to Cite for Contempt 19 dated August 29, Clearly, the main, if not the only issue that needs to be resolved is
2006, respondent raises the following issues: whether or not there was a proper and valid substituted service of
1. SHOULD THE PETITION BE DISMISSED FOR HAVING BEEN FILED IN summons, the resolution of which, will determine whether jurisdiction
VIOLATION REPUBLIC ACT NO. 6713 IN RELATION TO ART. 5 OF THE CIVIL was indeed acquired by the trial court over the person of the petitioner.
CODE? In a case where the action is in personam and the defendant is in the
2. ARE THE PETITIONER AND HIS COUNSEL PUNISHABLE FOR CONTEMPT OF Philippines, the service of summons may be done by personal or
COURT FOR KNOWINGLY MISLEADING THIS HONORABLE COURT? substituted service as laid out in Sections 6 and 7 of Rule 14 of the
3. WAS THE ALLEGED SERVICE OF SUMMONS ON THE ILLITERATE MAID Revised Rules of Court. The provisions state:
EFFECTIVE TO CONFER JURISDICTION OVER THE DEFENDANT BEFORE THE Section 6. Service in person on defendant. - Whenever practicable, the
RTC OF MALOLOS, BULACAN? summons shall be served by handing a copy thereof to the defendant in
4. ASSUMING FOR THE SAKE OF ARGUMENT THAT THE SERVICE OF person, or, if he refuses to receive and sign for it, by tendering it to him.
SUMMONS WAS VALID, WAS THE ORDER DECLARING THE DEFENDANT IN Section 7. Substituted service. - If, for justifiable causes, the defendant
DEFAULT RENDERED WITH GRAVE ABUSE OF DISCRETION? cannot be served within a reasonable time as provided in the preceding
5. WAS THE ORDER DENYING THE MOTION TO LIFT AND SET ASIDE THE section, service may be effected (a) by leaving copies of the summons
ORDER OF DEFAULT RENDERED WITH GRAVE ABUSE OF DISCRETION? at the defendant's residence with some person of suitable age and
6. IS THE PETITIONER GUILTY OF FORUM SHOPPING? discretion then residing therein, or (b) by leaving the copies at
7. WILL THIS HONORABLE COURT ALLOW THE NULL AND VOID DECEMBER 3, defendant’s office or regular place of business with some competent
2002 DECISION OF THE RTC TO BECOME FINAL AND EXECUTORY AND person in charge thereof.
OBLITERATE THE CRIMINAL ACT OF FALSIFICATION, THEREBY REWARDING A plain and simple reading of the above provisions indicates that
THE AUTHOR OF THE CRIMINAL OFFENSE? personal service of summons should and always be the first option, and
In addressing the above issues, the respondent argues that the CA it is only when the said summons cannot be served within a reasonable
decision became final by operation of law because the present petition time can the process server resort to substituted service.
is null and void for being a violation of the provisions of Republic Act No. This Court gave an in-depth discussion as to the nature and requisites of
6712, in relation to Article 5 of the Civil Code, the counsel for petitioner substituted service in Manotoc v. Court of Appeals, et al.:22
having filed a Motion for Extension of Time to File Petition for Review We can break down this section into the following requirements to effect
and, thereafter, the Petition for Review itself. She also claims that there a valid substituted service:
was no proper service of summons as the maid who was purportedly (1) Impossibility of Prompt Personal Service
served a copy thereof was illiterate and has denied being served in a The party relying on substituted service or the sheriff must show
sworn statement executed before a notary public and, thus, the RTC that defendant cannot be served promptly or there is impossibility
never acquired jurisdiction over her person. According to her, assuming of prompt service.23 Section 8, Rule 14 provides that the plaintiff or the
that the summons were indeed served, the RTC was guilty of grave sheriff is given a "reasonable time" to serve the summons to the
abuse of discretion for declaring her in default and for refusing to lift defendant in person, but no specific time frame is mentioned.
the order of default because it deprived her of her right to present "Reasonable time" is defined as "so much time as is necessary under
evidence in support of her defense. She further disputes the argument the circumstances for a reasonably prudent and diligent man to do,
of the petitioner that the Decision dated December 3, 2002 became final conveniently, what the contract or duty requires that should be done,
because it did not become the subject of appeal by stating that the said having a regard for the rights and possibility of loss, if any, to the other
principle can only be applied to valid judgments that were rendered in party."24 Under the Rules, the service of summons has no set period.
accordance with law and not to void judgments rendered without However, when the court, clerk of court, or the plaintiff asks the sheriff
jurisdiction or in excess thereof. In addition, she avers that petitioner to make the return of the summons and the latter submits the return of
made a deliberate and malicious concealment of the fact that at the time summons, then the validity of the summons lapses. The plaintiff may
he filed the case for specific performance, as well as during the time it then ask for an alias summons if the service of summons has
was being heard, he was already being investigated in administrative failed.25What then is a reasonable time for the sheriff to effect a
proceedings before the National Bureau of Investigation, the Department personal service in order to demonstrate impossibility of prompt
of Justice and the Municipal Trial Court of Malolos, Bulacan, Branch 2, service? To the plaintiff, "reasonable time" means no more than seven
involving the same subject matter, issues and parties; hence, he violated (7) days since an expeditious processing of a complaint is what a
the law against forum shopping. Lastly, respondent points out that the plaintiff wants. To the sheriff, "reasonable time" means 15 to 30 days
CA Decision dated June 29, 2005 is a permanent injunction against the because at the end of the month, it is a practice for the branch clerk of
implementation of the contested Orders and Decisions of the RTC; court to require the sheriff to submit a return of the summons assigned
therefore, there is an urgent necessity to enforce the said judgment. to the sheriff for service. The Sheriff’s Return provides data to the Clerk
On June 30, 2008, this Court granted20 the substitution of the of Court, which the clerk uses in the Monthly Report of Cases to be
respondent by his heirs as represented by his wife Zenaida Pascual, submitted to the Office of the Court Administrator within the first ten
after the Manifestation21 dated June 12, 2008 was filed informing this (10) days of the succeeding month. Thus, one month from the issuance of
Court of the demise of the same respondent. summons can be considered "reasonable time" with regard to personal
After a careful study of the records of this case, this Court finds the service on the defendant.
petition bereft of any merit.
Sheriffs are asked to discharge their duties on the service of summons If the substituted service will be done at defendant’s office or regular
with due care, utmost diligence, and reasonable promptness and speed place of business, then it should be served on a competent person in
so as not to prejudice the expeditious dispensation of justice. Thus, they charge of the place. Thus, the person on whom the substituted service
are enjoined to try their best efforts to accomplish personal service on will be made must be the one managing the office or business of
defendant. On the other hand, since the defendant is expected to try to defendant, such as the president or manager; and such individual must
avoid and evade service of summons, the sheriff must be resourceful, have sufficient knowledge to understand the obligation of the defendant
persevering, canny, and diligent in serving the process on the defendant. in the summons, its importance, and the prejudicial effects arising from
For substituted service of summons to be available, there must be inaction on the summons. Again, these details must be contained in the
several attempts by the sheriff to personally serve the summons within Return.
a reasonable period [of one month] which eventually resulted in failure Petitioner contends that there was a valid substituted service of
to prove impossibility of prompt service. "Several attempts" means at summons as shown in not one, but three Officer's Return. He points out
least three (3) tries, preferably on at least two different dates. In that the absence in the officer's return of a statement about the
addition, the sheriff must cite why such efforts were unsuccessful. It is impossibility of personal service does not conclusively prove that the
only then that impossibility of service can be confirmed or accepted. service was invalid. He adds that proof of prior attempts to serve
(2) Specific Details in the Return personally can be deduced from the other returns when there are
The sheriff must describe in the Return of Summons the facts and several in a series of officer's returns all tending to establish the
circumstances surrounding the attempted personal service.26 The impossibility of personal service upon the respondent. However, the said
efforts made to find the defendant and the reasons behind the argument of the petitioner is merely a plain deduction that veers away
failure must be clearly narrated in detail in the Return. The date and from the well-established requisite that the officer must show that the
time of the attempts on personal service, the inquiries made to locate defendant cannot be served promptly, or that there was an impossibility
the defendant, the name/s of the occupants of the alleged residence or of prompt service. A cursory reading of the three Officer's Returns does
house of defendant and all other acts done, though futile, to serve the not show any compliance with the said requisite. The Return of Service
summons on defendant must be specified in the Return to justify dated May 21, 2002 inadequately states that:
substituted service. The form on Sheriff’s Return of Summons on xxxx
Substituted Service prescribed in the Handbook for Sheriffs published At the time of service of the said summons, the defendant was not at
by the Philippine Judicial Academy requires a narration of the efforts her home and only her maid was there who refused to receive the said
made to find the defendant personally and the fact of failure. 27 Supreme summons [in spite] of the insistence of the undersigned.
Court Administrative Circular No. 5 dated November 9, 1989 requires The undersigned, upon his request with the Brgy. Clerk at the said place,
that "impossibility of prompt service should be shown by stating the was given a certification that he really exerted effort to effect the
efforts made to find the defendant personally and the failure of such service of the said summons but failed due to the above reason. (Annex
efforts," which should be made in the proof of service. "A").
(3) A Person of Suitable Age and Discretion The following day, May 21, 2002, the undersigned went back at
If the substituted service will be effected at defendant’s house or defendant's residence to have her receive the subject summons but
residence, it should be left with a person of "suitable age and again the above defendant was not at her house.
discretion then residing therein."28 A person of suitable age and xxxx
discretion is one who has attained the age of full legal capacity (18 years Similarly, in the Return of Service dated May 30, 2002, pertinent details
old) and is considered to have enough discernment to understand the were wanting, as it reads:
importance of a summons. "Discretion" is defined as "the ability to make xxxx
decisions which represent a responsible choice and for which an The undersigned accompanied by the barangay officials of the said place
understanding of what is lawful, right or wise may be proceeded at defendant's residence but the undersigned was not
presupposed".29 Thus, to be of sufficient discretion, such person must permitted to go inside her house and was given information by her maid
know how to read and understand English to comprehend the import of that the defendant was not there.
the summons, and fully realize the need to deliver the summons and The defendant's car was parked inside her house and
complaint to the defendant at the earliest possible time for the person inquiries/verification made on her neighbors revealed that the
to take appropriate action. Thus, the person must have the "relation of defendant was inside her house at the time of service of said summons
confidence" to the defendant, ensuring that the latter would receive or and probably did not want to show-up when her maid informed her of
at least be notified of the receipt of the summons. The sheriff must undersigned's presence.
therefore determine if the person found in the alleged dwelling or xxxx
residence of defendant is of legal age, what the recipient’s relationship Lastly, the Return of Service dated August 14, 2002 was no different. It
with the defendant is, and whether said person comprehends the reads:
significance of the receipt of the summons and his duty to immediately xxxx
deliver it to the defendant or at least notify the defendant of said receipt Defendant Dr. Lourdes Pascual was out during the time of service of the
of summons. These matters must be clearly and specifically described said summons and only her housemaid was present. The undersigned
in the Return of Summons. left a copy of the same to the latter who is at the age of reason but
(4) A Competent Person in Charge refused to sign the same.
xxxx the RTC having attained its finality. The question, however, is whether
The above Return of Summons does not show or indicate the actual the said Decision has indeed attained finality. The importance of the
exertion or any positive steps taken by the officer or process server in doctrine of the finality of judgment has always been emphasized by this
serving the summons personally to the defendant. As in Jose v. Court. In Pasiona, Jr. v. Court of Appeals ,35 this Court has expounded on
Boyon,30 this Court ruled that: the said doctrine, thus:
The Return of Summons shows no effort was actually exerted and no The Court re-emphasizes the doctrine of finality of judgment.
positive step taken by either the process server or petitioners to locate In Alcantara v. Ponce,36 the Court, citing its much earlier ruling
and serve the summons personally on respondents. At best, the Return in Arnedo v. Llorente,37 stressed the importance of said doctrine, to wit:
merely states the alleged whereabouts of respondents without It is true that it is the purpose and intention of the law that courts
indicating that such information was verified from a person who had should decide all questions submitted to them "as truth and justice
knowledge thereof. Certainly, without specifying the details of the require," and that it is greatly to be desired that all judgments should be
attendant circumstances or of the efforts exerted to serve the so decided; but controlling and irresistible reasons of public policy and
summons, a general statement that such efforts were made will not of sound practice in the courts demand that at the risk of occasional
suffice for purposes of complying with the rules of substituted service error, judgments of courts determining controversies submitted to
of summons. them should become final at some definite time fixed by law, or by a rule
The necessity of stating in the process server's Return or Proof of of practice recognized by law, so as to be thereafter beyond the control
Service the material facts and circumstances sustaining the validity of even of the court which rendered them for the purpose of correcting
substituted service was explained by this Court in Hamilton v. errors of fact or of law, into which, in the opinion of the court it may
Levy,31 from which we quote: have fallen. The very purpose for which the courts are organized is to
x x x The pertinent facts and circumstances attendant to the service of put an end to controversy, to decide the questions submitted to the
summons must be stated in the proof of service or Officer's Return; litigants, and to determine the respective rights of the parties. With the
otherwise, any substituted service made in lieu of personal service full knowledge that courts are not infallible, the litigants submit their
cannot be upheld. This is necessary because substituted service is in respective claims for judgment, and they have a right at some time or
derogation of the usual method of service. It is a method extraordinary other to have final judgment on which they can rely as a final disposition
in character and, hence, may be used only as prescribed and in the of the issue submitted, and to know that there is an end to the
circumstances authorized by statute. Here, no such explanation was litigation.38
made. Failure to faithfully, strictly, and fully comply with the Then, in Juani v. Alarcon,39 it was held, thus:
requirements of substituted service renders said service ineffective. 32 This doctrine of finality of judgment is grounded on fundamental
Petitioner further states that the presumption of regularity in the considerations of public policy and sound practice. In fact, nothing is
performance of official functions must be applied to the present case. more settled in law than that once a judgment attains finality it thereby
He expounds on the fact that as between the process server's return of becomes immutable and unalterable. It may no longer be modified in any
substituted service, which carries with it the presumption of regularity respect, even if the modification is meant to correct what is perceived
and the respondent's self-serving assertion that she only came to know to be an erroneous conclusion of fact or law, and regardless of whether
of the case against her when she received a copy of the petitioner's the modification is attempted to be made by the court rendering it or by
motion to declare her in default, the process server's return is the highest court of the land.40
undoubtedly more deserving of credit. The said argument, however, is Again, in Dinglasan v. Court of Appeals,41 the Court declared that:
only meritorious, provided that there was a strict compliance with the After the judgment or final resolution is entered in the entries of
procedure for serving a summons. In the absence of even the barest judgment, the case shall be laid to rest. x x x
compliance with the procedure for a substituted service of summons xxxx
outlined in the Rules of Court, the presumption of regularity in the The finality of decision is a jurisdictional event which cannot be made to
performance of public functions does not apply. 33 depend on the convenience of the party. To rule otherwise would
Applying the above disquisitions, the jurisdiction over the person of the completely negate the purpose of the rule on completeness of service,
respondent was never vested with the RTC, because the manner of which is to place the date of receipt of pleadings, judgment and
substituted service by the process server was apparently invalid and processes beyond the power of the party being served to determine at
ineffective. As such, there was a violation of due process. Jurisdiction his pleasure.42
over the defendant is acquired either upon a valid service of summons The said doctrine, however, is applicable only when the judgment or
or the defendant’s voluntary appearance in court. When the defendant decision is valid. In the present case, as earlier pronounced, and as
does not voluntarily submit to the court’s jurisdiction or when there is ruled by the CA, the judgment in question is void, the RTC not having
no valid service of summons, "any judgment of the court which has no acquired jurisdiction over the person of the respondent. It is a well-
jurisdiction over the person of the defendant is null and void."34 entrenched principle that a void judgment can never become final. As
Petitioner also raises the issue of the impropriety of the remedy ruled by this Court in Metropolitan Bank & Trust Company v. Alejo:43
resorted to by the respondent which is the filing of a Petition In Leonor v. Court of Appeals44 and Arcelona v. Court of Appeals,45 we
for Certiorari under Rule 65 of the Rules of Court, claiming that the said held thus:
remedy is inappropriate because there are still other plain, speedy and A void judgment for want of jurisdiction is no judgment at all. It
adequate remedies available, such as an ordinary appeal, the Decision of cannot be the source of any right nor the creator of any obligation. All
acts performed pursuant to it and all claims emanating from it have no On December 9, 1999, Sheriff Doroteo P. Cortes proceeded at
legal effect. Hence, it can never become final and any writ of execution petitioner's given address for the purpose of serving the summons,
based on it is void: "x x x it may be said to be a lawless thing which can together with the complaint, writ of replevin and bond. However, the
be treated as an outlaw and slain at sight, or ignored wherever and Sheriff failed to serve the summons personally upon the petitioner,
whenever it exhibits its head." since the latter was not there. The Sheriff then resorted to substituted
Thus, from the above discussion, the Decision of the RTC, not having service by having the summons and the complaint received by a certain
attained its finality due to its being void, the Petition for Certiorari under Rolando Bonayon, a security guard of the
Rule 65, filed by the respondent with the CA, was proper. petitioner. 7chanroblesvirtualawlibrary
WHEREFORE, the Petition dated May 3, 2006 is hereby DENIED and the Petitioner failed to file any responsive pleading, which prompted
Decision dated June 29, 2005 of the Court of Appeals in CA-G.R. SP No. respondent to move for the declaration of defendant in default. On
77789 is hereby AFFIRMED in toto. January 12, 2000, the RTC issued an Order declaring defendant in
SO ORDERED. default and, thereafter, allowed respondent to present its evidence ex
parte.
G.R. NO. 184333 : April 1, 2013 On December 15, 2000, after respondent presented its evidence, the RTC
SIXTO N. CHU, Petitioner, v. MACH ASIA TRADING rendered a Decision against the petitioner,
CORPORATION, Respondent. thus:chanroblesvirtualawlibrary
DECISION 1. By adjudicating and adjudging plaintiff's right of ownership and
PERALTA, J.: possession over the subject units mentioned and described in the
This is a petition for review on certiorari assailing the Decision1 dated complaint, and which were already seized and turned over to the
July 25, 2007 of the Court of Appeals (CA) in CA-G.R. CV No. 70666, and plaintiff by virtue of the writ of replevin.
the Resolution2 dated August 28, 2008 denying petitioner's Motion for 2. Ordering defendants to pay to plaintiff the sum of (sic) equivalent to
Reconsideration. 25% of the total amount recovered or value of the heavy equipments
The factual and procedural antecedents are as possessed as attorney's fees, and to reimburse no less than P15,000.00
follows:chanroblesvirtualawlibrary as expenses for litigation, plus the cost of the premium of replevin bond
Respondent Mach Asia Trading Corporation is a corporation engaged in in the amount of P11,333.50.8chanroblesvirtualawlibrary
importing dump trucks and heavy equipments. On December 8, 1998, Aggrieved, petitioner sought recourse before the CA, docketed as CA-
petitioner Sixto N. Chu purchased on installment one (1) Hitachi G.R. CV No. 70666. Petitioner argued that the RTC erred in concluding
Excavator worth P900,000.00 from the respondent. Petitioner initially that the substituted service of summons was valid, and that,
paid P180,000.00 with the balance of P720,000.00 to be paid in 12 consequently, there was error on the part of the RTC when it declared
monthly installments through Prime Bank postdated checks. On March him in default, in proceeding with the trial of the case, and rendering an
29, 1999, petitioner again purchased two (2) heavy equipments from the unfavorable judgment against him.
respondent on installment basis in the sum of P1,000,000.00, namely: On July 25, 2007, the CA rendered a Decision9 affirming the Decision of
one (1) motorgrader and one (1) payloader. Petitioner made a down the RTC, the decretal portion of which reads:chanroblesvirtualawlibrary
payment of P200,000.00 with the balance of P800,000.00 payable in 12 WHEREFORE, IN LIGHT OF THE FOREGOING, the Decision of the Regional
monthly installments through Land Bank postdated Trial Court of Cebu, Branch 17, in Civil Case No. CEB-24551, rendered on
checks.3chanroblesvirtualawlibrary December 15, 2000, is hereby AFFIRMED with the sole modification as to
However, upon presentment of the checks for encashment, they were award of attorney's fees, which is hereby reduced to 10% of the value of
dishonored by the bank either by reason of "closed account," "drawn the heavy equipments recovered.
against insufficient funds," or "payment stopped." Respondent informed SO ORDERED.10chanroblesvirtualawlibrary
petitioner that the checks were dishonored and invited him to its office Ruling in favor of the respondent, the CA opined, among others, that the
to replace the checks. On September 16, 1999, respondent sent requirement of due process was complied with, considering that
petitioner a formal demand letter urging the latter to settle his accounts petitioner actually received the summons through his security guard. It
within five days from receipt of the letter. In response, petitioner sent held that where the summons was in fact received by the defendant, his
respondent a letter explaining that his business was badly hit by the argument that the Sheriff should have first tried to serve summons on
Asian economic crisis and that he shall endeavor to pay his obligation by him personally before resorting to substituted service of summons
giving partial payments. He said that he shall also voluntarily surrender deserves scant consideration. Thus, in the interest of fairness, the CA
the subject units should he fail to do so.4chanroblesvirtualawlibrary said that the process server's neglect or inadvertence in the service of
On November 11, 1999, respondent filed a complaint before the Regional summons should not unduly prejudice the respondent's right to speedy
Trial Court (RTC) of Cebu City for sum of money, replevin, attorney's justice.
fees and damages against the petitioner. Respondent prayed for the The CA also noted that petitioner failed to set up a meritorious defense
payment of the unpaid balance of P1,661,947.27 at 21% per annum until aside from his contention that summons was not properly served. It
full payment, 25% of the total amount to be recovered as attorney's went further and decided the case on the merits and ruled that
fees, litigation expenses and costs.5chanroblesvirtualawlibrary petitioner has an unpaid obligation due to respondent for the heavy
On November 29, 1999, the RTC issued an Order6 allowing the issuance machineries he purchased from the latter. It, however, reduced the
of a writ of replevin on the subject heavy equipments.
amount of attorney's fees awarded to 10% of the value of the heavy in the circumstances authorized by statute. The statutory requirements
equipments recovered. of substituted service must be followed strictly, faithfully and fully, and
Petitioner filed a Motion for Reconsideration, but it was denied in the any substituted service other than that authorized by statute is
Resolution11 dated August 28, 2008. considered ineffective.17chanroblesvirtualawlibrary
Hence, the petition assigning the following In the case at bar, the Sheriff's Return
errors:chanroblesvirtualawlibrary provides:chanroblesvirtualawlibrary
I Respectfully returned to the Honorable Regional Trial Court, Branch 17,
THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN Cebu City, the Summons and writ issued in the above-entitled case with
DEFIANCE OF LAW AND JURISPRUDENCE IN FINDING THAT THE TRIAL the following information, to wit:chanroblesvirtualawlibrary
COURT ACQUIRED JURISDICTION OVER THE PERSON OF THE DEFENDANT 1. That the Summons, together with the complaint, writ of replevin and
EVEN WHEN THE SUBSTITUTED SERVICE OF SUMMONS WAS bond was received on December 7, 1999, by Rolando Bonayon, a security
IMPROPER.12chanroblesvirtualawlibrary guard on defendant Sixto Chu at his given address who received and
II signed receipt thereof.
THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN 2. That the writ of replevin was duly executed on the same date,
DEFIANCE OF LAW AND JURISPRUDENCE IN HOLDING THAT HEREIN December 7, 1999, Tacloban City and San Jorge, Samar of the following
PETITIONER SHOULD HAVE SET UP A MERITORIOUS DEFENSE EVEN WHEN properties subject of the writ.
THE SUMMONS WAS IMPROPERLY SERVED.13chanroblesvirtualawlibrary a) Excavator Hitachi with Serial No. WHO44-116-0743
Petitioner argues that there was no valid substituted service of b) Motorgrader with Serial No. N525PS-1014
summons in the present case. He maintains that jurisdiction over the c) Payloader with Serial No. KLD70-54224
person of the defendant is acquired only through a valid service of After the issuance of the Sheriff's inventory receipt, the units were
summons or the voluntary appearance of the defendant in court. Hence, turned over to Al Caballero and companion, representatives of plaintiff,
when there is no valid service of summons and no voluntary appearance who shipped the same to Cebu to be deposited with MACH ASIA TRADING
by the defendant, any judgment of a court, which acquired no jurisdiction CORPORATION, Block 26 MacArthur Highway, Reclamation Area, Cebu
over the defendant, is null and void. City, for safekeeping, subject to the provision of Sec. 6, Rule 60 of the
On its part, respondent posits that the RTC acquired jurisdiction over Rules of Court.18chanroblesvirtualawlibrary
the person of the petitioner and the judgment by default of the RTC was Clearly, it was not shown that the security guard who received the
based on facts, law, and jurisprudence and, therefore, should be summons in behalf of the petitioner was authorized and possessed a
enforced against the petitioner. relation of confidence that petitioner would definitely receive the
The petition is meritorious. summons. This is not the kind of service contemplated by law. Thus,
Courts acquire jurisdiction over the plaintiffs upon the filing of the service on the security guard could not be considered as substantial
complaint. On the other hand, jurisdiction over the defendants in a civil compliance with the requirements of substituted service.
case is acquired either through the service of summons upon them or Moreover, the reasoning advanced by the CA in ruling against the
through their voluntary appearance in court and their submission to its petitioner was based merely on conjectures and surmises. The CA even
authority. 14chanroblesvirtualawlibrary went as far as to conclude that the process server's neglect should not
As a rule, summons should be personally served on the defendant. It is have unduly prejudiced the respondent, thus:chanroblesvirtualawlibrary
only when summons cannot be served personally within a reasonable Hence, if Chu had actually received the summons through his security
period of time that substituted service may be resorted to. 15Section 7, guard, the requirement of due process would have nevertheless been
Rule 14 of the Rules of Court provides:chanroblesvirtualawlibrary complied with. x x x. Based on the presumption that a person takes
SEC. 7. Substituted service. If, for justifiable causes, the defendant ordinary care of his concerns, the security guard would not have
cannot be served within a reasonable time as provided in the preceding allowed the sheriff to take possession of the equipments without the
section, service may be effected (a) by leaving copies of the summons prior permission of Chu; otherwise he would be accountable to Chu for
at the defendant's residence with some person of suitable age and the said units. Chu, for his part, would not have given his permission
discretion then residing therein, or (b) by leaving the copies at without being informed of the fact of the summons and the writ of
defendant's office or regular place of business with some competent replevin issued by the lower court, which permission includes the
person in charge thereof. authority to receive the summons and the writ of replevin.
It is to be noted that in case of substituted service, there should be a Thus, where summons was in fact received by defendant, his argument
report indicating that the person who received the summons in the that the sheriff should have tried first to serve summons on him
defendant's behalf was one with whom the defendant had a relation of personally before resorting to substituted service of summons is not
confidence, ensuring that the latter would actually receive the meritorious.
summons.16chanroblesvirtualawlibrary x x x.
Also, impossibility of prompt personal service must be shown by stating Evidently, plaintiff-appellee cannot be penalized, through no fault of its
that efforts have been made to find the defendant personally and that own, for an irregular or defective return on service of summons. x x x.
such efforts have failed. This is necessary because substituted service x x x.
is in derogation of the usual method of service. It is a method
extraordinary in character, hence, may be used only as prescribed and
In the interest of fairness, the process server's neglect or inadvertence The trial court, despite the written certification from NBI-TRC, granted
in the service of summons should not, thus, unduly prejudice plaintiff- respondents’ motion to declare petitioner in default and ordered them
appellee's right to speedy justice. x x x 19chanroblesvirtualawlibrary to present evidence ex-parte. On March 21, 1996, the trial court
The service of summons is a vital and indispensable ingredient of due rendered judgment in favor of respondents as follows:
process. As a rule, if defendants have not been validly summoned, the FROM THE FOREGOING CONSIDERATIONS, judgment is hereby rendered in
court acquires no jurisdiction over their person, and a judgment favor of the plaintiffs and against the defendant ordering the latter and
rendered against them is null and void.20 Since the RTC never acquired other person/s claiming rights under him:
jurisdiction over the person of the petitioner, the judgment rendered by 1. To vacate immediately the land in question after the finality of the
the court could not be considered binding upon him for being null and decision.
void. 2. For the defendant to pay the plaintiffs the sum of P5,000.00 monthly
WHEREFORE, premises considered, the petition is GRANTED. The Decision from January, 1992 up to the time he surrenders the premises
of the Court of Appeals, dated July 25, 2007, as well as its Resolution considered as damages for the use of the subject land.
dated August 28, 2008, in CA-G.R. CV No. 70666 is hereby REVERSED and 3. For the defendant to pay the plaintiffs P 10,000.00 as and for
SET ASIDE. The Decision of the Regional Trial Court dated December 15, attorney’s fees with an additional P800.00 as appearance fees.
2000 is declared NULL and VOID. The Regional Trial Court is hereby 4. To pay the plaintiffs P 100.00 as filing fee.
ORDERED to validly serve summons upon Sixto N. Chu and, thereafter, SO ORDERED. 4
proceed with the trial of the main action with dispatch. After learning of the adverse decision against him, petitioner’s counsel
SO ORDERED. filed with the Regional Trial Court of Cavite City, Branch 16, a motion to
set aside judgment. The motion was treated as an appeal and docketed
FIRST DIVISION as Civil Case No. N-6281. On July 18, 1996, the RTC affirmed the decision
G.R. No. 131482 July 3, 2002 of the MTC.5
REGALADO P. SAMARTINO, petitioner, The aforesaid decision became final. Accordingly, the court of origin
vs. issued on September 17, 1996 a writ of execution.6 Petitioner was given a
LEONOR B. RAON, AGUSTIN G. CRISOSTOMO, THE MUNICIPAL TRIAL grace period of one month within which to vacate the premises. His real
COURT OF NOVELETA, CAVITE, HON. MANUEL A. MAYO, REGIONAL property situated in Noveleta, Cavite, covered by Transfer Certificate of
TRIAL COURT, BRANCH 16, CAVITE CITY, HON. ROLANDO D. DIAZ, Title No. T-283572, was levied and sold at public auction to respondents
REGIONAL TRIAL COURT, BRANCH 17, CAVITE CITY, SHERIFF DANILO in full satisfaction of the monetary award. 7
G. LAPUZ, CAVITE CITY and THE HON. COURT OF On November 25, 1996, petitioner filed with the Regional Trial Court of
APPEALS, respondents. Cavite City, a petition for relief from judgment, docketed as Civil Case
YNARES-SANTIAGO, J.: No. N-6393.8 In support thereof, petitioner submitted an affidavit of
Respondents Leonor Bernardo-Raon and Agustin G. Crisostomo are the merit,9alleging in fine that the parcel of land from which he was being
surviving sister and spouse, respectively, of the late Filomena Bernardo- evicted had been sold to him by Filomena Bernardo-Crisostomo, as
Crisostomo, who passed away on May 17, 1994. Among the properties left evidenced by the Deed of Absolute Sale dated December 13, 1988. 10
by the deceased was her one-half share in a parcel of land in Noveleta, The following day, November 26, 1996, the RTC issued an Order
Cavite, registered under Transfer Certificate of Title No. T- 131898 in the dismissing the petition for relief from judgment. 11Petitioner’s Motion for
name of co-owners Lido Beach Corporation and Filomena Bernardo. Reconsideration was denied on December 12, 1996. A second Motion for
On January 25, 1996, respondents instituted against petitioner Regalado Reconsideration was likewise denied on January 14, 1997. 12 On the same
P. Samartino a complaint for ejectment, docketed as Civil Case No. 744 day, a writ of demolition was issued commanding the sheriff to remove
of the Municipal Trial Court of Noveleta, Cavite. 1 They alleged that during the building and improvements made by petitioner on the subject
the lifetime of Filomena Bernardo, she leased her share in the property premises and to deliver the possession thereof to respondents. 13
to petitioner for a period of five years counted from 1986; that the said Petitioner thus filed a petition for certiorari with the Court of Appeals,
lease expired and was not extended thereafter; and that petitioner docketed as CA-G.R. SP No. 432O2. 14 On August 29, 1997, the Court of
refused to vacate the property despite demands therefor. Appeals dismissed the petition. 15 Petitioner’s Motion for Reconsideration
Summons was served on Roberto Samartino, brother of petitioner.2 At was denied on November 14, 1997. 16 Hence this petition for review.
the time of service of summons at petitioner’s house, he was not at The petition is impressed with merit.
home as he was then confined at the National Bureau of Investigation In actions in personam, summons on the defendant must be served by
Treatment and Rehabilitation Center (NBI-TRC), Tagaytay City since handing a copy thereof to the defendant in person, or, if he refuses to
January 19, 1996, where he was undergoing treatment and rehabilitation receive it, by tendering it to him. If efforts to serve the summons
for drug dependency. Thus, on February 2, 1996, a liaison officer of the personally to defendant is impossible, service may be effected by
NBI-TRC appeared before the trial court with a certification that leaving copies of the summons at the defendant’s dwelling house or
petitioner will be unable to comply with the directive to answer the residence with some person of suitable age and discretion residing
complaint within the reglementary period, inasmuch as it will take six therein, or by leaving the copies at the defendant’s office or regular
months for him to complete the rehabilitation program and before he place of business with some competent person in charge thereof.
can be recommended for discharge by the Rehabilitation Committee. 3 Otherwise stated, service of summons upon the defendant shall be by
personal service first and only when the defendant cannot be promptly acknowledge receipt of said court processes by affixing his signature at
served in person will substituted service be availed of. 17 the lower left portion of the original summons hereto attached.
Rule 14 of the 1997 Rules of Civil Procedure clearly provides: WHEREFORE, the attached original summons is hereby respectfully
Sec. 6. Service in person on defendant. - Whenever practicable, the returned to the court of origin duly served for information and record
summons shall be served by handing a copy thereof to the defendant in purposes.
person, or, if he refuses to receive and sign for it, by tendering it to him. Noveleta, Cavite, February 9, 1996.19
Sec. 7. Substituted service. - If, for justifiable causes, the defendant Clearly, the above return failed to show the reason why personal
cannot be served within a reasonable time as provided in the preceding service could not be made. It failed to state that prompt and personal
section, service may be effected (a) by leaving copies of the summons service on the defendant was rendered impossible. It was not shown
at the defendant’s residence with some person of suitable age and that efforts were made to find the defendant personally and that said
discretion then residing therein, or (b) by leaving the copies at efforts failed; hence the resort to substituted service. As stated above,
defendant’s office or regular place of business with some competent these requirements are indispensable because substituted service is in
person in charge thereof. derogation of the usual method of service. It is an extraordinary method
We have long held that the impossibility of personal service justifying since it seeks to bind the defendant to the consequences of a suit even
availment of substituted service should be explained in the proof of though notice of such action is served not upon him but upon another
service; why efforts exerted towards personal service failed. The whom law could only presume would notify him of the pending
pertinent facts and circumstances attendant to the service of summons proceedings. For this reason, failure to faithfully, strictly, and fully
must be stated in the proof of service or Officer’s Return; otherwise, the comply with the requirements of substituted service renders said
substituted service cannot be upheld. It is only under exceptional terms service ineffective.20
that the circumstances warranting substituted service of summons may Furthermore, nowhere in the return of summons or in the records of
be proved by evidence aliunde. It bears stressing that since service of this case is it shown that petitioner’s brother, on whom substituted
summons, especially for actions in personam, is essential for the service of summons was effected, was a person of suitable age and
acquisition of jurisdiction over the person of the defendant, the resort discretion residing at petitioner’s residence.
to a substituted service must be duly justified. Failure to do so would There being no valid substituted service of summons, the trial court did
invalidate all subsequent proceedings on jurisdictional grounds. 18 not acquire jurisdiction over the person of petitioner. It should be
In this connection, Supreme Court Administrative Circular No. 59 was emphasized that the service of summons is not only required to give the
issued on November 19, 1989 to stress the importance of strict court jurisdiction over the person of the defendant, but also to afford
compliance with the requisites for a valid substituted service, to wit: the latter an opportunity to be heard on the claim made against him.
Delays in court proceedings have been caused by faulty and erroneous Thus, compliance with the rules regarding the service of summons is as
implementation of Section 8, Rule 14, Rules of Court on Substituted much an issue of due process as of jurisdiction. The essence of due
Service of Summons. process is to be found in the reasonable opportunity to be heard and
The Trial Judges of all lower courts, as well as the Clerks of Court in submit any evidence one may have in support of his defense. It is
their capacity as Ex-Officio Sheriffs together with the Deputy Sheriffs elementary that before a person can be deprived of his property, he
are reminded of the provision of Section 8, Rule 14, Rules of Court on should first be informed of the claim against him and the theory on
substituted service as follows: which such claim is premised.21
xxx xxx xxx By reason of the ineffective service of summons, petitioner was not duly
The manner of effecting substituted service as prescribed in Venturanza apprised of the action against him. Consequently, he was prevented
vs. Court of Appeals, 156 SCRA 305, must be strictly complied with, thus: from answering the claims against him. He was not given a chance to be
"The substituted service should be availed only when the defendant heard on his defenses. What made matters worse was that the trial
cannot be served promptly in person. Impossibility of prompt service court had actual knowledge that petitioner was then indisposed and
should be shown by stating the efforts made to find the defendant unable to file his answer to the complaint, as he was then confined at
personally and the failure of such efforts. The statement should be made the NBI-TRC. The trial court’s failure to give petitioner a reasonable
in the proof of service. This is necessary because substituted service is opportunity to file his answer violated his right to due process.
in derogation of the usual method of service. Perforce, the judgment rendered against petitioner is nugatory and
Substituted service is a method extraordinary in character, and hence without effect.
may be used only as prescribed in the circumstances authorized by The trial court should not have been too rash in declaring petitioner in
statute. Thus, the statutory requirements of substituted service must be default, considering it had actual notice of valid reasons that prevented
followed strictly, faithfully and any substituted service other than him from answering. Well-settled is the rule that courts should be
authorized by the statute is considered ineffective." liberal in setting aside orders of default for default judgments are
For immediate compliance. frowned upon, unless in cases where it clearly appears that the
In the case at bar, the sheriff’s Return of Summons simply states: reopening of the case is intended for delay. The issuance of orders of
This is to certify that on this date: 26th day of January I have caused the default should be the exception rather than the rule, to be allowed only
service of summons, together with the attached complaint and its in clear cases of obstinate refusal by the defendant to comply with the
annexes issued in the above entitled case upon defendant REGALADO orders of the trial court.22
SAMARTINO thru ROBERTO SAMARTINO, Brother of the defendant
Suits should as much as possible be decided on the merits and not on owner who cannot exercise the seven "juses" or attributes of ownership
technicalities. In this regard, we have often admonished courts to be - the right to possess, to use and enjoy, to abuse or consume, to
liberal in setting aside orders of default as default judgments are accessories, to dispose or alienate, to recover or vindicate and to the
frowned upon and not looked upon with favor for they may amount to a fruits - is a crippled owner.26
positive and considerable injustice to the defendant and the possibility of All told, the Municipal Trial Court of Noveleta and the Regional Trial Court
such serious consequences necessitates a careful examination of the of Cavite City did not have jurisdiction over the person of petitioner.
grounds upon which the defendant asks that it be set aside. Since rules Hence, all proceedings had as regards petitioner were null and void.
of procedure are mere tools designed to facilitate the attainment of Necessarily, the enforcement of the writ of execution as well as the sale
justice, it is well recognized that this Court is empowered to suspend its at public auction of petitioner’s real property to satisfy the void
operation, or except a particular case from its operation, when the rigid judgment must also be declared of no legal effect.
application thereof tends to frustrate rather than promote the ends of There is a real need to resolve the issue of ownership over the premises
justice. We are not unmindful of the fact that during the pendency of the in order to determine who, as between petitioner and respondents, has
instant petition, the trial court has rendered judgment against a better right to possess the property in dispute. This can only be done
petitioners. However, being the court of last resort, we deem it in the in the proper proceeding before the trial court wherein petitioner will be
best interest that liberality and relaxation of the Rules be extended to afforded every right to present evidence in his behalf.
petitioners by setting aside the order of default issued by the trial court WHEREFORE, in view of the foregoing, the petition is GRANTED. The
and the consequent default judgment; otherwise, great injustice would decision of the Court of Appeals in CA-G.R. SP No. 43202
result if petitioners are not afforded an opportunity to prove their is REVERSED and SET ASIDE. This case is REMANDED to the Municipal
claims.23 Trial Court of Noveleta, Cavite, which is directed to continue
In addition, the Regional Trial Court committed reversible error in proceedings in Civil Case No. 744 by affording petitioner Regalado P.
dismissing the petition for relief from judgment for having been filed out Samartino a chance to file his answer and present evidence in his
of time. According to the Regional Trial Court, the petition for relief, filed defense, and thereafter to hear and decide the case. The Writ of
on November 25, 1996, was late because petitioner had actual Execution dated September 17, 1996, the Writ of Demolition dated
knowledge of the judgment in the ejectment case since March 1996. The January 14, 1997, and the certificate of sale over Transfer Certificate of
period within which to file a petition for relief should have been Title No. T-283572, as well as all acts and deeds incidental to the
reckoned from the date petitioner learned of the judgment of the judgment in Civil Case No. 744, are declared NULL AND VOID.
Regional Trial Court. It should not have been counted from the date of
the Municipal Trial Court’s decision because, precisely, petitioner
appealed the same. It was the Regional Trial Court’s decision that G.R. No. 165016 June 17, 2008
became final and, hence, was the proper subject of the petition for relief DOLORES MONTEFALCON & LAURENCE MONTEFALCON, petitioners,
from judgment. It is axiomatic that a petition for relief is only available vs.
against a final and executory judgment.24 RONNIE S. VASQUEZ, respondent.
Section 3, Rule 38, of the 1997 Rules of Civil Procedure provides that a DECISION
verified petition for relief must be filed within sixty (60) days after the QUISUMBING, J.:
petitioner learns of the judgment, final order, or other proceeding to be This petition for review assails the September 29, 2003 Decision 1 and
set aside and not more than six (6) months after such judgment or final the July 19, 2004 Resolution2 of the Court of Appeals in CA-G.R. CV No.
order has been entered or such proceeding has been taken. It must be 71944, which had reversed the May 28, 2001 Decision3 of the Regional
accompanied with affidavits showing the fraud, accident, mistake, or Trial Court (RTC), Branch 19, of Naga City in Civil Case No. RTC '99-4460.
excusable negligence relied upon, and the facts constituting petitioner’s The facts culled from the records are as follows.
good and substantial cause of action or defense.25 In 1999, petitioner Dolores P. Montefalcon filed a Complaint 4 for
It is not clear from the records of the case at bar when petitioner acknowledgment and support against respondent Ronnie S. Vasquez
learned of the decision of the Regional Trial Court affirming the before the RTC of Naga City. Alleging that her son Laurence is the
judgment of the Municipal Trial Court. What appears is that the said illegitimate child of Vasquez, she prayed that Vasquez be obliged to give
decision became final only on August 15 , 1996, and must have been support to co-petitioner Laurence Montefalcon, whose certificate of live
entered sometime thereafter. Hence, the petition for relief filed on birth he signed as father.5 According to petitioners, Vasquez only gave a
November 25, 1996 was well within the six-month period prescribed by total of P19,000 as support for Laurence since Laurence was born in
the Rules. 1993. Vasquez allegedly also refused to give him regular school
Finally, the records show that petitioner raised a meritorious defense in allowance despite repeated demands. Petitioner Dolores added that she
his affidavit of merit. He alleged therein that the property from which he and Vasquez are not legally married, and that Vasquez has his own
was being ejected had been sold to him by its registered owner. family.
Ownership is a valid defense in unlawful detainer cases. While A sheriff tried to serve the summons and complaint on Vasquez in Aro-
possession is the main issue in ejectment, it is also one of the essential aldao, Nabua, Camarines Sur. Vasquez's grandfather received them as
attributes of ownership. It follows that an owner of real property is Vasquez was in Manila. Vasquez's mother returned the documents to the
entitled to possession of the same. Petitioner can, therefore, properly clerk of court, who informed the court of the non-service of summons.6
plead his right of possession to defeat that of respondents. Indeed, an
Petitioners then filed a motion to declare Vasquez in default. The court respectively, and litigation expenses of ONE THOUSAND (P1,000.00)
denied it for lack of proper service of summons. 7 PESOS.
In 2000, the court issued an alias summons on Vasquez at "10 Int. SO ORDERED.12
President Garcia St., Zone 6, Signal Village, Taguig, Metro Manila" upon In the same year, Vasquez surfaced. He filed a notice of appeal to which
petitioners' motion. Albeit a Taguig deputy sheriff served it by petitioners opposed. Appeal was granted by the court. 13 Before the
substituted service on Vasquez's caretaker Raquel Bejer, the sheriff's appellate court, he argued that the trial court erred in trying and
return incorrectly stated "Lazaro" as Vasquez's surname. 8 deciding the case as it "never" acquired jurisdiction over his person, as
Another alias summons9 was issued, also received by Bejer. The second well as in awarding P5,000-per-month support, which was allegedly
sheriff's return states: "excessive and exorbitant." The appellate court noted that the service of
THIS IS TO CERTIFY THAT on the 19 th day of July 2000 the undersigned summons on Vasquez was "defective" as there was no explanation of
sheriff caused the service of summons issued by the court in the above- impossibility of personal service and an attempt to effect personal
entitled case together with the copy of the complaint and annexes service, and decreed as follows:
attached thereon upon defendant RONNIE S. VASQUEZ, by substituted WHEREFORE, based on the foregoing premises, the instant appeal
service, thru his caretaker, RAQUEL BEJER, a person of sufficient is GRANTED. The appealed May 28, 2001 Decision of the Regional Trial
discretion, who acknowledged the receipt thereof at No. 10 Int. President Court of Naga City in Civil Case No. RTC '99-4460 is
Garcia St. Zone 6, Signal Village, Taguig, Metro Manila, as evidenced by hereby NULLIFIEDand SET ASIDE. Accordingly, let this case
her signature appearing at the lower portion of the original copy of be REMANDED to the court a quo for further proceedings.
summons. SO ORDERED.14
WHEREFORE, said summons is hereby returned to the court of origin Petitioners argued in their motion for reconsideration15 that any attempt
DULY SERVED for its records and information. at personal service of summons was needless as Vasquez already left
Taguig for Naga City, July 19, 2000 for abroad. The appellate court, however, denied the motion. Hence, this
(SGD.) petition.
ERNESTO G. RAYMUNDO, JR., Petitioners assign two appellate court errors:
Deputy Sheriff I.
MTC BR 74 THE COURT OF APPEALS ERRED IN HOLDING THAT THE RESPONDENT IN
Taguig, Metro Manila10 THIS CASE WAS NOT VALIDLY SERVED WITH THE SUMMONS AND
COMPLAINT IN CIVIL CASE NO. RTC '99-4460; AND THAT
On petitioners' motion, the trial court declared Vasquez in default for II.
failure to file an answer despite the substituted service of summons. THE COURT OF APPEALS ERRED IN ANNUL[L]ING AND SETTING ASIDE THE
Vasquez was furnished with court orders and notices of the proceedings TRIAL COURT'S DECISION (ANNEX "B") FOR LACK OF JURISDICTION. 16
at his last known address, but these were returned as he had allegedly Petitioners justify the validity of substituted service as Vasquez had left
moved to another place and left no new address. 11 as overseas seafarer when the sheriff served the summons on July 19,
In 2001, the court granted petitioners' prayers, explaining that they had 2000 in Taguig. Noting that Vasquez's seaman's book indicated that he
no ill-motive and that Dolores gave a truthful testimony. The court added left the country on January 24, 2000 and came back on October 12,
that Vasquez admitted the truth of the allegations by his silence. It 2000, they criticize the appellate court for anchoring its rulings on
further explained that Laurence's certificate of live birth, being a public mere technicality.
document, is irrefutably a prima facie evidence of illegitimate filiation. Vasquez counters that because he was abroad, service of summons
The trial court decreed: should have been personal or by publication as substituted service is
WHEREFORE, by preponderant evidence, judgment is hereby rendered in proper only if a defendant is in the country. Vasquez also added that the
favor of the plaintiffs Dolores Montefalcon and her minor child Laurence sheriff's return did not state that he exerted efforts to personally serve
Montefalcon and against defendant Ronnie S. Vasquez who is hereby the summons.17
ordered to: In their reply, petitioners insist that a substituted service is the normal
1. Acknowledge plaintiff Laurence Montefalcon as his illegitimate child method if one is temporarily away from the country as personal service
with Dolores Montefalcon; abroad or by publication are not ordinary means of service. 18
2. Give support to the said minor in the amount of FIVE THOUSAND Simply put, the issues now for resolution are: (1) whether there is a valid
(P5,000.00) PESOS monthly commencing on June 1, 1993, the past substituted service of summons on Vasquez to clothe the trial court with
support for eight (8) years in the amount of FOUR HUNDRED EIGHTY jurisdiction over his person; and (2) whether he is obliged to give
THOUSAND (P480,000.00) PESOS less the amount of NINETEEN support to co-petitioner Laurence.
THOUSAND (P19,000.00) PESOS previously given, shall be paid promptly To acquire jurisdiction over the person of a defendant, service of
and the monthly support of FIVE THOUSAND (P5,000.00) PESOS shall be summons must be personal,19 or if this is not feasible within a
paid not later than the end of each month beginning on July 31, 2001 and reasonable time, then by substituted service.20 It is of judicial notice that
every end of the month thereafter as prayed for in the complaint; and overseas Filipino seafarers are contractual employees. They go back to
3. Pay the sum of TEN THOUSAND (P10,000.00) PESOS and THREE the country once their contracts expire, and wait for the signing of
THOUSAND (P3,000.00) PESOS as attorney's and appearance fees, another contract with the same or new manning agency and principal if
they wish. It is therefore common knowledge that a Filipino seaman
often has a temporary residence in the urban areas like Metro Manila, shows that there was indeed no precipitate haste in serving the
where majority of the manning agencies hold offices, aside from his summons.
home address in the province where he originates. In this case, In this case, we agree that the substituted service in Taguig was valid
respondent Vasquez hails from Camarines Sur but he has lived in Taguig and justified because previous attempts were made by the sheriffs to
City when the complaint was filed. Notice may then be taken that he has serve the summons, but to no avail. Diligent efforts were evidently
established a residence in either place. Residence is a place where the exerted in the conduct of the concerned sheriffs in the performance of
person named in the summons is living at the time when the service was their official duty. Also, the person who received the alias summons was
made, even though he was temporarily abroad at the time. As an of suitable age and discretion, then residing at Vasquez's dwelling. There
overseas seafarer, Vasquez was a Filipino resident temporarily out of is no quarrel that it was really Vasquez's residence, as evidenced by his
the country. Hence, service of summons on him is governed by Rule 14, employment contract, executed under the supervision and authority of
Section 16 of the Rules of Court: the Philippine Overseas Employment Administration (POEA). Vasquez
SEC. 16. Residents temporarily out of the Philippines. ─ When any action cannot deny that in his contract of employment and seafarer's
is commenced against a defendant who ordinarily resides within the information sheet, both bearing POEA's letterhead, his address in Metro
Philippines, but who is temporarily out of it, service may, by leave of Manila was what was correctly mentioned in the alias summons that
court, be also effected out of the Philippines, as under the preceding Bejer received. She must have informed Vasquez one way or another of
section. (Emphasis supplied.) the suit upon his return in October 2000 after finishing his nine-month
The preceding section referred to states: contract with Fathom Ship Management.
SEC. 15. Extraterritorial service.─ When the defendant does not reside Thus, it is reasonable to conclude that he had enough time to have the
and is not found in the Philippines, and the action affects the personal default order set aside. The default judgment was rendered on May 28,
status of the plaintiff or relates to, or the subject of which is, property 2001. He also had enough time to file a motion for reconsideration. But
within the Philippines, in which the defendant has or claims a lien or he did nothing. The interregnum between the first but failed attempt at
interest, actual or contingent, or in which the relief demanded consists, personal service by the RTC of Naga City in Vasquez's place in
wholly or in part, in excluding the defendant from any interest therein, Camarines Sur to the final substituted service in Metro Manila by a
or the property of the defendant has been attached within the Taguig RTC sheriff was almost eight months, a reasonable time long
Philippines, service may, by leave of court, be effected out of the enough to conclude that personal service had failed and was futile.
Philippines by personal service as under section 6; or by publication in a Montalban v. Maximo21 offers a rational and logical solution of the issue.
newspaper of general circulation in such places and for such time as We held in said case that the normal method of service of summons on
the court may order, in which case a copy of the summons and order of one temporarily absent is by substituted service because personal
the court shall be sent by registered mail to the last known address of service abroad and service by publication are not ordinary means of
the defendant, or in any other manner the court may deem sufficient. summoning defendants. Summons in a suit in personamagainst a
Any order granting such leave shall specify a reasonable time, which temporarily absent resident may be by substituted service as
shall not be less than sixty (60) days after notice, within which the domiciliaries of a State are always amenable to suits in
defendant must answer. personam therein.22
Because Section 16 of Rule 14 uses the words "may" and "also," it is not "Residence" is the place where the person named in the summons is
mandatory. Other methods of service of summons allowed under the living at the time when the service is made, even though he may be
Rules may also be availed of by the serving officer on a defendant- temporarily out of the country at the time. A plaintiff is merely required
seaman. to know the defendant's residence, office or regular business place. He
Ideally, Vasquez must be personally served summons. But was personal need not know where a resident defendant actually is at the very
service of summons practicable? Conversely, was substituted service of moment of filing suit. He is not even duty-bound to ensure that the
summons justified? person upon whom service was actually made delivers the summons to
Obviously, personal service of summons was not practicable since the the defendant or informs him about it. The law presumes that for him. It
defendant was temporarily out of the country. To proceed with personal is immaterial that defendant does not receive actual notice.
service of summons on a defendant-seaman who went on overseas As well said in Montalban:
contract work ─ would not only be impractical and futile ─ it would . . . A man temporarily absent from this country leaves a definite place
also be absurd. of residence, a dwelling where he lives, a local base, so to speak, to
The impossibility of prompt personal service was shown by the fact that which any inquiry about him may be directed and where he is bound to
the Naga City-based sheriff purposely went to a barrio in Camarines Sur return. Where one temporarily absents himself, he leaves his affairs in
to serve the summons personally on Vasquez. When service of summons the hands of one who may be reasonably expected to act in his place and
failed, said sheriff ascertained the whereabouts of Vasquez. Upon being stead; to do all that is necessary to protect his interests; and to
informed that Vasquez was in Manila, the Naga court commissioned a communicate with him from time to time any incident of importance that
Taguig City-based sheriff to serve the summons. Both the Naga and may affect him or his business or his affairs. It is usual for such a man
Taguig sheriffs inquired about Vasquez's whereabouts, signifying that to leave at his home or with his business associates information as to
they did not immediately resort to substituted service. There was no where he may be contacted in the event a question that affects him
undue haste in effecting substituted service. The fact that the Naga crops up. If he does not do what is expected of him, and a case comes up
court allowed a reasonable time to locate Vasquez to as far as Taguig 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 As filiation is beyond question, support follows as matter of obligation.
being filed against him upon a claim that he cannot be summoned at his Petitioners were able to prove that Laurence needs Vasquez's support
dwelling house or residence or his office or regular place of business. and that Vasquez is capable of giving such support. Dolores testified
Not that he cannot be reached within a reasonable time to enable him to that she spent around P200,000 for Laurence; she spends P8,000 a
contest a suit against him. There are now advanced facilities of month for his schooling and their subsistence. She told the lower court
communication. Long distance telephone calls and cablegrams make it Vasquez was earning US$535 monthly based on his January 10, 2000
easy for one he left behind to communicate with him.23 contract of employment29 with Fathom Ship Management and his
Aside from, at present, various forms of texting and short message seafarer information sheet.30 That income, if converted at the prevailing
services by the ubiquitous cellular phones. rate, would be more than sufficient to cover the monthly support for
More importantly, the letter of the law must yield to its spirit. The Laurence.
absence in the final sheriff's return of a statement about the Under Article 195 (4)31 of the Family Code, a parent is obliged to support
impossibility of personal service does not conclusively prove that the his illegitimate child. The amount is variable. There is no final judgment
service is invalid. Such failure should not unduly prejudice petitioners if thereof as it shall be in proportion to the resources or means of the
what was undisclosed was in fact done. Proof of prior attempts at giver and the necessities of the recipient. 32 It may be reduced or
personal service may have been submitted by the plaintiff during the increased proportionately according to the reduction or increase of the
hearing of any incident assailing the validity of the substituted necessities of the recipient and the resources or means of the person
service24 had Vasquez surfaced when the case was heard. In fact, he obliged to support.33 Support comprises everything indispensable for
was declared in default. It was only when a judgment against him was sustenance, dwelling, clothing, medical attendance, education and
rendered by the trial court that he questioned the validity of service of transportation, in keeping with the financial capacity of the
summons before the appellate court. Such failure to appear, and then family.34 Under the premises, the award of P5,000 monthly support to
later to question the court's jurisdiction over his person, should not be Laurence is reasonable, and not excessive nor exorbitant.
taken against herein petitioners. In sum, we rule that the Court of Appeals erred in invalidating the
Between Vasquez's self-serving assertion that he only came to know of substituted service of summons and remanding the case. As there was
the case when his mother told him about the trial court's decision and valid substituted service of summons under the circumstances of this
the sheriff's return on the substituted service which carries a case, the lower court acquired jurisdiction over his person and
presumption of regularity, the latter is undoubtedly deserving of more correctly ordered him to pay past and present monthly support to his
faith and credit. The sheriff's certificate of service of summons is prima illegitimate child as well as attorney's fees and litigation expenses to
facieevidence of the facts set out in it. Only clear and convincing petitioners.
evidence may overcome its presumption of regularity. Given the WHEREFORE, the petition is GRANTED. The Decision dated September
circumstances in the present case, we agree that the presumption of 29, 2003 and Resolution dated July 19, 2004 of the Court of Appeals in
regularity in the performance of duty on the part of the sheriff stands.25 CA-G.R. CV No. 71944 are REVERSED and SET ASIDE. The Decision dated
On the second issue, the trial court's order must also be sustained. Co- May 28, 2001 of the Regional Trial Court, Branch 19, Naga City in Civil
petitioner Laurence is legally entitled to support from the respondent, Case No. RTC '99-4460 is hereby REINSTATED.
and the amount of P5,000 monthly set by the trial court is neither Costs against respondent.
excessive nor unreasonable.
Article 17526 of the Family Code of the Philippines mandates that G.R. No. 165273 March 10, 2010
illegitimate filiation may be established in the same way and on the same LEAH PALMA, Petitioner,
evidence as legitimate children. Under Article 172,27 the filiation of vs.
legitimate children is established by any of the following: (1) through HON. DANILO P. GALVEZ, in his capacity as PRESIDING JUDGE of the
record of birth appearing in the civil register or a final order; or (2) by REGIONAL TRIAL COURT OF ILOILO CITY, BRANCH 24; and PSYCHE
admission of filiation in a public document or private handwritten ELENA AGUDO, Respondents.
instrument and signed by the parent concerned; or in default of these DECISION
two, by open and continuous possession of the status of a legitimate PERALTA, J.:
child or by any other means allowed by the Rules of Court and special Assailed in this petition for certiorari under Rule 65 of the Rules of
laws. Court are the Orders dated May 7, 20041 and July 21, 20042 of the
Laurence's record of birth is an authentic, relevant and admissible piece Regional Trial Court (RTC) of Iloilo City, Branch 24, granting the motion
of evidence to prove paternity and filiation. Vasquez did not deny that to dismiss filed by private respondent Psyche Elena Agudo and denying
Laurence is his child with Dolores. He signed as father in Laurence's reconsideration thereof, respectively.
certificate of live birth, a public document. He supplied the data entered On July 28, 2003, petitioner Leah Palma filed with the RTC an action for
in it. Thus, it is a competent evidence of filiation as he had a hand in its damages against the Philippine Heart Center (PHC), Dr. Danilo Giron and
preparation. In fact, if the child had been recognized by any of the Dr. Bernadette O. Cruz, alleging that the defendants committed
modes in the first paragraph of Article 172, there is no further need to professional fault, negligence and omission for having removed her right
file any action for acknowledgment because any of said modes is by ovary against her will, and losing the same and the tissues extracted
itself a consummated act.28 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. III. In not ruling that by filing two (2) motions for extension of time to file
Defendants filed their respective Answers. Petitioner subsequently filed Answer, private respondent had voluntarily submitted herself to the
a Motion for Leave to Admit Amended Complaint, praying for the jurisdiction of respondent court, pursuant to Section 20, Rule 14 of the
inclusion of additional defendants who were all nurses at the PHC, 1997 Rules of Civil Procedure, hence, equivalent to having been served
namely, Karla Reyes, Myra Mangaser and herein private respondent with summons;
Agudo. Thus, summons were subsequently issued to them. IV. The cases cited in his challenged Order of May 7, 2004 constitute
On February 17, 2004, the RTC's process server submitted his return of stare decisis despite his own admission that the factual landscape in
summons stating that the alias summons, together with a copy of the those decided cases are entirely different from those in this case. 10
amended complaint and its annexes, were served upon private Petitioner claims that the RTC committed a grave abuse of discretion in
respondent thru her husband Alfredo Agudo, who received and signed ruling that Section 16, Rule 14, limits the service of summons upon the
the same as private respondent was out of the country. 3 defendant-resident who is temporarily out of the country exclusively by
On March 1, 2004, counsel of private respondent filed a Notice of means of extraterritorial service, i.e., by personal service or by
Appearance and a Motion for Extension of Time to File Answer4 stating publication, pursuant to Section 15 of the same Rule. Petitioner further
that he was just engaged by private respondent's husband as she was argues that in filing two motions for extension of time to file answer,
out of the country and the Answer was already due. private respondent voluntarily submitted to the jurisdiction of the court.
On March 15, 2004, private respondent's counsel filed a Motion for In her Comment, private respondent claims that
Another Extension of Time to File Answer,5 and stating that while the petitioner's certiorari under Rule 65 is not the proper remedy but a
draft answer was already finished, the same would be sent to private petition for review under Rule 45, since the RTC ruling cannot be
respondent for her clarification/verification before the Philippine considered as having been issued with grave abuse of discretion; that
Consulate in Ireland; thus, the counsel prayed for another 20 days to file the petition was not properly verified because while the verification was
the Answer. dated September 15, 2004, the petition was dated September 30, 2004.
On March 30, 2004, private respondent filed a Motion to Dismiss 6 on the She insists that since she was out of the country at the time the service
ground that the RTC had not acquired jurisdiction over her as she was of summons was made, such service should be governed by Section 16,
not properly served with summons, since she was temporarily out of the in relation to Section 15, Rule 14 of the Rules of Court; that there was no
country; that service of summons on her should conform to Section 16, voluntary appearance on her part when her counsel filed two motions
Rule 14 of the Rules of Court. Petitioner filed her Opposition 7 to the for extension of time to file answer, since she filed her motion to
motion to dismiss, arguing that a substituted service of summons on dismiss on the ground of lack of jurisdiction within the period provided
private respondent's husband was valid and binding on her; that service under Section 1, Rule 16 of the Rules of Court.
of summons under Section 16, Rule 14 was not exclusive and may be In her Reply, petitioner claims that the draft of the petition and the
effected by other modes of service, i.e., by personal or substituted verification and certification against forum shopping were sent to her
service. Private respondent filed a Comment8 on petitioner's Opposition, for her signature earlier than the date of the finalized petition, since the
and petitioner filed a Reply9 thereto. petition could not be filed without her signed verification. Petitioner
On May 7, 2004, the RTC issued its assailed Order granting private avers that when private respondent filed her two motions for extension
respondent's motion to dismiss. It found that while the summons was of time to file answer, no special appearance was made to challenge the
served at private respondent's house and received by respondent's validity of the service of summons on her.
husband, such service did not qualify as a valid service of summons on The parties subsequently filed their respective memoranda as required.
her as she was out of the country at the time the summons was served, We shall first resolve the procedural issues raised by private
thus, she was not personally served a summons; and even granting that respondent.
she knew that a complaint was filed against her, nevertheless, the court Private respondent's claim that the petition for certiorari under Rule 65
did not acquire jurisdiction over her person as she was not validly is a wrong remedy thus the petition should be dismissed, is not
served with summons; that substituted service could not be resorted to persuasive. A petition for certiorari is proper when any tribunal, board
since it was established that private respondent was out of the country, or officer exercising judicial or quasi-judicial functions has acted
thus, Section 16, Rule 14 provides for the service of summons on her by without or in excess of jurisdiction, or with grave abuse of discretion
publication. amounting to lack or excess of jurisdiction and there is no appeal, or any
Petitioner filed a motion for reconsideration, which the RTC denied in its plain, speedy, and adequate remedy at law. 11 There is "grave abuse of
Order dated July 21, 2004. discretion" when public respondent acts in a capricious or whimsical
Petitioner is now before us alleging that the public respondent manner in the exercise of its judgment as to be equivalent to lack of
committed a grave abuse of discretion amounting to lack or excess of jurisdiction.
jurisdiction when he ruled that: Section 1, Rule 41 of the 1997 Rules of Civil Procedure states that an
I. Substituted service of summons upon private respondent, a defendant appeal may be taken only from a final order that completely disposes of
residing in the Philippines but temporarily outside the country is invalid; the case; that no appeal may be taken from (a) an order denying a
II. Section 16, Rule 14, of the 1997 Rules of Civil Procedure limits the motion for new trial or reconsideration; (b) an order denying a petition
mode of service of summons upon a defendant residing in the for relief or any similar motion seeking relief from judgment; (c) an
Philippines, but temporarily outside the country, exclusively to interlocutory order; (d) an order disallowing or dismissing an appeal; (e)
extraterritorial service of summons under section 15 of the same rule; an order denying a motion to set aside a judgment by consent,
confession or compromise on the ground of fraud, mistake or duress, or Philippines by personal service as under section 6; or by publication in a
any other ground vitiating consent; (f) an order of execution; (g) a newspaper of general circulation in such places and for such time as
judgment or final order for or against one or more of several parties or the court may order, in which case a copy of the summons and order of
in separate claims, counterclaims, cross-claims and third-party the court shall be sent by registered mail to the last known address of
complaints, while the main case is pending, unless the court allows an the defendant, or in any other manner the court may deem sufficient.
appeal therefrom; or (h) an order dismissing an action without Any order granting such leave shall specify a reasonable time, which
prejudice. In all the above instances where the judgment or final order is shall not be less than sixty (60) days after notice, within which the
not appealable, the aggrieved party may file an appropriate special civil defendant must answer.
action for certiorari under Rule 65. The RTC found that since private respondent was abroad at the time of
In this case, the RTC Order granting the motion to dismiss filed by the service of summons, she was a resident who was temporarily out of
private respondent is a final order because it terminates the the country; thus, service of summons may be made only by publication.
proceedings against her, but it falls within exception (g) of the Rule We do not agree.
since the case involves several defendants, and the complaint for In Montefalcon v. Vasquez,17 we said that because Section 16 of Rule 14
damages against these defendants is still pending. 12 Since there is no uses the words "may" and "also," it is not mandatory. Other methods of
appeal, or any plain, speedy, and adequate remedy in law, the remedy of service of summons allowed under the Rules may also be availed of by
a special civil action for certiorari is proper as there is a need to the serving officer on a defendant-resident who is temporarily out of
promptly relieve the aggrieved party from the injurious effects of the the Philippines. Thus, if a resident defendant is temporarily out of the
acts of an inferior court or tribunal.13 country, any of the following modes of service may be resorted to: (1)
Anent private respondent's allegation that the petition was not properly substituted service set forth in section 7 ( formerly Section 8), Rule 14;
verified, we find the same to be devoid of merit. The purpose of (2) personal service outside the country, with leave of court; (3) service
requiring a verification is to secure an assurance that the allegations of by publication, also with leave of court; or (4) in any other manner the
the petition have been made in good faith, or are true and correct, not court may deem sufficient.18
merely speculative.14 In this instance, petitioner attached a verification In Montalban v. Maximo,19 we held that substituted service of summons
to her petition although dated earlier than the filing of her petition. under the present Section 7, Rule 14 of the Rules of Court in a suit in
Petitioner explains that since a draft of the petition and the verification personam against residents of the Philippines temporarily absent
were earlier sent to her in New York for her signature, the verification therefrom is the normal method of service of summons that will confer
was earlier dated than the petition for certiorari filed with us. We accept jurisdiction on the court over such defendant. In the same case, we
such explanation. While Section 1, Rule 65 requires that the petition expounded on the rationale in providing for substituted service as the
for certiorari be verified, this is not an absolute necessity where the normal mode of service for residents temporarily out of the Philippines.
material facts alleged are a matter of record and the questions raised x x x A man temporarily absent from this country leaves a definite place
are mainly of law.15 In this case, the issue raised is purely of law. of residence, a dwelling where he lives, a local base, so to speak, to
Now on the merits, the issue for resolution is whether there was a valid which any inquiry about him may be directed and where he is bound to
service of summons on private respondent. return. Where one temporarily absents himself, he leaves his affairs in
In civil cases, the trial court acquires jurisdiction over the person of the the hands of one who may be reasonably expected to act in his place and
defendant either by the service of summons or by the latter’s voluntary stead; to do all that is necessary to protect his interests; and to
appearance and submission to the authority of the former. 16 Private communicate with him from time to time any incident of importance that
respondent was a Filipino resident who was temporarily out of the may affect him or his business or his affairs. It is usual for such a man
Philippines at the time of the service of summons; thus, service of to leave at his home or with his business associates information as to
summons on her is governed by Section 16, Rule 14 of the Rules of Court, where he may be contacted in the event a question that affects him
which provides: crops up. If he does not do what is expected of him, and a case comes up
Sec. 16. Residents temporarily out of the Philippines. – When an action is in court against him, he cannot just raise his voice and say that he is not
commenced against a defendant who ordinarily resides within the subject to the processes of our courts. He cannot stop a suit from being
Philippines, but who is temporarily out of it, service may, by leave of filed against him upon a claim that he cannot be summoned at his
court, be alsoeffected out of the Philippines, as under the preceding dwelling house or residence or his office or regular place of business.
section. (Emphasis supplied) Not that he cannot be reached within a reasonable time to enable him to
The preceding section referred to in the above provision is Section 15, contest a suit against him. There are now advanced facilities of
which speaks of extraterritorial service, thus: communication. Long distance telephone calls and cablegrams make it
SEC. 15. Extraterritorial service. ─ When the defendant does not reside easy for one he left behind to communicate with him.20
and is not found in the Philippines, and the action affects the personal Considering that private respondent was temporarily out of the country,
status of the plaintiff or relates to, or the subject of which is, property the summons and complaint may be validly served on her through
within the Philippines, in which the defendant has or claims a lien or substituted service under Section 7, Rule 14 of the Rules of Court which
interest, actual or contingent, or in which the relief demanded consists, reads:
wholly or in part, in excluding the defendant from any interest therein, SEC. 7. Substituted service. — If, for justifiable causes, the defendant
or the property of the defendant has been attached within the cannot be served within a reasonable time as provided in the preceding
Philippines, service may, by leave of court, be effected out of the section, service may be effected (a) by leaving copies of the summons
at the defendant’s residence with some person of suitable age and Considering the foregoing, we find that the RTC committed a grave
discretion then residing therein, or (b) by leaving the copies at abuse of discretion amounting to excess of jurisdiction in issuing its
defendant’s office or regular place of business with some competent assailed Orders.
person in charge thereof. WHEREFORE, the petition is GRANTED. The Orders dated May 7, 2004 and
We have held that a dwelling, house or residence refers to the place July 21, 2004 of the Regional Trial Court of Iloilo City, Branch 24, are
where the person named in the summons is living at the time when the hereby SET ASIDE. Private respondent is DIRECTED to file her Answer
service is made, even though he may be temporarily out of the country within the reglementary period from receipt of this decision.
at the time.21 It is, thus, the service of the summons intended for the SO ORDERED
defendant that must be left with the person of suitable age and
discretion residing in the house of the defendant. Compliance with the G.R. No. 171137 June 5, 2009
rules regarding the service of summons is as important as the issue of PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner,
due process as that of jurisdiction.221avvphi1 vs.
Section 7 also designates the persons with whom copies of the process SPOUSES WILSON DY HONG PI and LOLITA DY and SPOUSES PRIMO
may be left. The rule presupposes that such a relation of confidence CHUYACO, JR. and LILIA CHUYACO,Respondents.
exists between the person with whom the copy is left and the defendant DECISION
and, therefore, assumes that such person will deliver the process to PUNO, C.J.:
defendant or in some way give him notice thereof.23 Before the Court is a petition for review on certiorari assailing the
In this case, the Sheriff's Return stated that private respondent was out Decision1 dated July 18, 2005 of the Court of Appeals in CA–G.R. SP. No.
of the country; thus, the service of summons was made at her residence 85282, and its Resolution2 dated January 10, 2006, denying petitioner’s
with her husband, Alfredo P. Agudo, acknowledging receipt thereof. motion for reconsideration.
Alfredo was presumably of suitable age and discretion, who was residing Spouses Damian and Tessie Amadeo are indebted to petitioner Philippine
in that place and, therefore, was competent to receive the summons on Commercial International Bank, a domestic uni-banking corporation, as
private respondent's behalf. sureties for Streamline Cotton Development Corporation. The
Notably, private respondent makes no issue as to the fact that the place promissory notes became due and demandable, but the Amadeo spouses
where the summons was served was her residence, though she was failed to pay their outstanding obligations despite repeated demands. As
temporarily out of the country at that time, and that Alfredo is her of February 15, 1994, these obligations stood at Ten Million, Six Hundred
husband. In fact, in the notice of appearance and motion for extension of Seventy-One Thousand, Seven Hundred Twenty-Six Pesos and Sixty-One
time to file answer submitted by private respondent's counsel, he Centavos (P10,671,726.61).
confirmed the Sheriff's Return by stating that private respondent was Petitioner subsequently discovered that roughly a month before the due
out of the country and that his service was engaged by respondent's date of the promissory notes, the Amadeo spouses (i) sold three (3) or
husband. In his motion for another extension of time to file answer, nearly all of their real properties to respondents, Spouses Wilson and
private respondent's counsel stated that a draft of the answer had Lolita Dy and Spouses Primo and Lilia Chuyaco, and (ii) immediately
already been prepared, which would be submitted to private respondent, caused the transfer of the titles covering the parcels of land in favor of
who was in Ireland for her clarification and/or verification before the the latter. The consideration for these sales was further alleged to have
Philippine Consulate there. These statements establish the fact that been grossly insufficient or inadequate.
private respondent had knowledge of the case filed against her, and that Believing that the transfers were done in fraud of creditors, petitioner
her husband had told her about the case as Alfredo even engaged the instituted an action for rescission and damages on April 22, 1994. In its
services of her counsel. Complaint3 in Civil Case No. 94-1585 against Spouses Amadeo, Dy and
In addition, we agree with petitioner that the RTC had indeed acquired Chuyaco, petitioner asked the Regional Trial Court of Makati City for the
jurisdiction over the person of private respondent when the latter's following reliefs:
counsel entered his appearance on private respondent's behalf, without 1. Annulling the Deeds of Absolute Sale both dated September 16, 1993
qualification and without questioning the propriety of the service of and thereafter, direct the Registries of Deeds of Sultan Kudarat and
summons, and even filed two Motions for Extension of Time to File Davao City to cancel the Transfer Certificates of Title Nos. (sic) T-27628,
Answer. In effect, private respondent, through counsel, had already T-202868, and T-202869 issued in the name of Wilson Dy Hong Pi and
invoked the RTC’s jurisdiction over her person by praying that the Lolita G. Dy AND Primo Chuyaco, Jr. and Lilia O. Chuyaco, respectively,
motions for extension of time to file answer be granted. We have held and in lieu thereof, issue new ones under the name of Damian and Tessie
that the filing of motions seeking affirmative relief, such as, to admit Amadeo.
answer, for additional time to file answer, for reconsideration of a 2. Ordering the defendants to pay the plaintiff moral damages in the sum
default judgment, and to lift order of default with motion for of P200,000.00; exemplary damages in the sum of P200,000.00; and
reconsideration, are considered voluntary submission to the jurisdiction P100,000.00 as[,] and for[,] attorney’s fees.4
of the court.24 When private respondent earlier invoked the jurisdiction The case was then raffled to Branch 133, presided over by Judge
of the RTC to secure affirmative relief in her motions for additional time Napoleon E. Inoturan.
to file answer, she voluntarily submitted to the jurisdiction of the RTC Upon service of summons on the Amadeo spouses, the latter filed a
and is thereby estopped from asserting otherwise.25 Motion to Dismiss5 on the ground that the Complaint violated the explicit
terms of Supreme Court Circular No. 04-94, as the Verification was
executed by petitioner’s legal counsel. 6 Petitioner filed its Opposition to August 2, 2001 Order24 since its notice of hearing was addressed only to
the Motion to Dismiss,7where it argued that (i) the rule cited by the the Clerk of Court, viz.:
Amadeo spouses should not be applied literally, and (ii) at any rate, It appears from the Motion that its Notice of Hearing is not addressed to
petitioner’s legal counsel was authorized by petitioner to institute the any of the parties concerned as otherwise required by Rule 15[,] Section
Complaint.8 On February 4, 1995, the trial court issued an 5 of the 1997 Rules of Civil Procedure. Such being the case, the Motion is
Order9 denying the Motion to Dismiss. deemed a mere scrap of paper as held in Provident International
The Amadeo spouses subsequently filed an Answer10 where they alleged Resources Corporation vs. Court of Appeals, 259 SCRA 510.
that petitioner failed to release the loans to Streamline Cotton In any event, the record shows that defendants Sps. Amadeo have been
Development Corporation on the agreed date, thereby constraining them duly served with summons as early as November 11, 1994 per Sheriff’s
to incur loans from third parties at high interest rates to keep the Return of Service dated November 14, 1994, and they are therefore
company afloat. These loans were covered by postdated checks which within the jurisdiction of the Court. However, defendants Spouses Dy and
had to be funded once the obligations fell due, lest the Amadeo spouses Chuyaco have not been served with summons as evidenced by Officer’s
face criminal prosecution. In order to pay the said loans, they thus had Return dated May 24, 1994 and Return of Service dated June 10, 1994,
to sell the properties subject of this case. The Amadeo spouses further respectively, and so the Court has not yet acquired jurisdiction over
claimed that the purchase price for the three (3) parcels of land was them. Since aforesaid Motion is deemed a scrap of paper, it cannot be
the fair market value, and that they had other personal and real construed to manifest a (sic) voluntary appearance on their part.
properties which may be availed of to answer for their obligations. In Wherefore, the Omnibus Motion is noted without action. Let alias
their Counterclaim, they prayed for moral damages of P200,000.00, summons be issued to defendants-spouses Dy and Chuyaco. For
attorney’s fees and expenses of litigation. plaintiff’s guidance, it may avail itself of Rule 14[,] Section 14 on
Petitioner filed its Reply and Answer to Counterclaim11 on March 8, 1995. summons by publication if it so desires, upon proper motion.
On September 13, 1995, petitioner filed an Ex Parte Motion for Leave to SO ORDERED. (underscoring in the original)
Serve Summons by Publication12 on Spouses Dy and Chuyaco. However, Spouses Dy and Chuyaco subsequently filed a "Motion to Dismiss (for
this was denied in an Order13 dated September 14, 1995 on the ground Lack of Jurisdiction)"25 on February 18, 2002, in which motion they
that summons by publication cannot be availed of in an action in essentially accused petitioner of not causing summons to be served
personam. upon them and losing interest in the case. Petitioner filed its
Accordingly, on March 4, 1996, petitioner filed an Amended Complaint 14 to Opposition26 thereto, and in an April 23, 2002 Order,27 the trial court
include allegations in support of, and a prayer for, a writ of preliminary denied the Motion to Dismiss on account of (i) petitioner’s Compliance
attachment. Petitioner then presented evidence in relation thereto, and and Manifestation28 that it had not lost interest in pursuing the case, and
on February 25, 1997, the trial court issued an Order 15 for the issuance (ii) the Motion for Leave of Court to Serve Summons by Publication that
of the writ. Upon petitioner’s ex-parte motion, the trial court likewise petitioner filed simultaneously with its Opposition. On April 24, 2002, the
directed the Clerk of Court of the Regional Trial Court of Davao City to Motion for Leave of Court to Serve Summons by Publication was
designate a Special Sheriff to implement the writ of preliminary submitted for resolution.29
attachment.16 Respondent Spouses Dy and Chuyaco next filed a "Motion to Dismiss for
In Orders17 dated January 12, 1998 and February 20, 1998, respectively, Failure to Prosecute"30 on June 17, 2003. The significant portions of the
petitioner was directed to inform the court whether it still intended to motion state:
pursue the case. This appears to have been motivated by the fact that 2. That based on the order of this Honorable Court dated April 23, 2003
no property of the defendants had been attached as of yet. Petitioner did (sic), the Motion for Leave of Court to Serve Summons by Publication
not comply with the said Orders; consequently, the case was dismissed was submitted for resolution, but the movants-defendants would like to
without prejudice on June 26, 1998 for failure to prosecute. 18 By this remind the Honorable Court that a Motion of the same nature was
time, petitioner had already caused the annotation of a notice of lis already filed on September 13, 1995 and was DENIED on September 14,
pendens at the back of the titles of the properties subject of this case 1995. xxx;
(i.e., TCT Nos. T-27628, T-202868, and T-202869). 3. That therefore, the order dated August 21, 2001 of this Honorable
On August 3, 1998, petitioner filed a Motion for Reconsideration of the Court which advised the complainant to avail of Rule 14 Section 14 of the
June 26, 1998 Order, alleging that its failure to notify the trial court of Rules is contrary to its order dated September 14, 1995;
its intention to pursue the case was prompted solely by the difficulty of 4. That up to this date, the complainant has not lifted a finger to pursue
locating properties against which the writ of attachment could be this case against movants-defendants, hence, this Motion to Dismiss.
enforced. In the interest of justice, the trial court granted the motion.19 WHEREFORE, premises considered, it is most respectfully prayed that
Defendant Spouses Amadeo, Dy and Chuyaco then filed an "Omnibus this case be dismissed against the movants-defendants and to order the
Motion to Dismiss and to Annul All the Proceedings Taken Against the deletion of the Notice of Lis Pendens at the back of the subject title (sic).
Defendants"20 on December 11, 1998, in which motion they questioned the This was opposed by petitioner, arguing that it had already filed a motion
jurisdiction of the trial court over their persons. Petitioner filed its for the service of summons by publication, but the trial court had yet to
Opposition21 thereto on February 15, 1999. Defendants filed their act on it.31 On July 25, 2003, this Motion was submitted for resolution.32
Reply22 on March 10, 1999, while petitioner filed its Rejoinder23 on June 9, On November 4, 2003, Spouses Dy and Chuyaco personally, and not
1999. Said motion, however, was merely noted without action in an through their counsel, filed a "Motion for Inhibition without submitting
themselves to the jurisdiction of this Honorable Court,"33 the relevant Unsatisfied with the Order, respondent Spouses Dy and Chuyaco filed a
portions of which state: Petition for Certiorari under Rule 6538before the CA, alleging that "the
1. That since 1998, the defendants-movants have been moving for the public respondent committed grave abuse of discretion when he
dismissal of this case as far as the movants are concerned and to nullify considered the Motion to Inhibit (without submitting to the jurisdiction of
the proceedings taken against them since the Honorable Court has not the Honorable Court) which they had filed to question his impartiality
yet acquired jurisdiction over their persons when the plaintiff presented and competence due to the delay in resolving the Motion to Dismiss
its evidence against defendants (sic) Sps. Damian and Tessie Amadeo based on lack of jurisdiction, as voluntary appearance, and wherein he
and even thereafter; required the respondents to file their Answer within the required
2. That, however only on (sic) August 2, 2001 or after more than three period." The CA granted the petition in this wise:
(3) years, that this Honorable Court denied the said Motion to Dismiss The old provision under Section 23, Rule 14 of the Revised Rules of Court
due to technicality (sic) and merely require (sic) the plaintiff to serve provided that:
the summons either personally or thru publication; Section 23. What is equivalent to service. The defendant’s voluntary
3. That, however in the order of this Honorable Court dated September appearance in the action shall be equivalent to service.
14, 1995, it already denied the Ex-Parte Motion for Leave to Serve Under Section 20, Rule 14 of the 1997 Rules of Civil Procedure, the
Summons by Publication "considering that the action herein is in provision now reads as follows:
personam", hence, this order is contrary to its latest order dated Sec. 20. Voluntary Appearance. — The defendant's voluntary appearance
August 2, 2001; in the action shall be equivalent to service of summons. The inclusion in
4. That another Motion to Dismiss was filed last June 11, 2003 34 on the a motion to dismiss of other grounds aside from lack of jurisdiction over
ground of lack of interest to pursue the case but up to this date, the the person of the defendant shall not be deemed a voluntary
Honorable Court has done nothing that delays (sic) the proceedings to appearance.
the prejudice of the defendants-movants; What remains the same, carry (sic) over from the old doctrine, is that
5. That this continuous delay in the proceedings shows that the the issue of jurisdiction must be raised seasonably.
Honorable Court may not be competent enough to further hear this But everything else changed.
case. What changed is that: if a motion is filed, whatever kind it is, it need no
WHEREFORE, premises considered, it is most respectfully prayed for the longer be for the sole and separate purpose of objecting to the
inhibition of this Honorable Court (sic) from further hearing this case. jurisdiction of the court because the motion may raise myriad issues in
This was submitted for resolution on November 13, 2003. that one motion of special appearance as long as the objection to the
The motion for inhibition was adopted by their counsel on record, jurisdiction of the court is included. xxx
Clarissa Castro, through a "Motion to Adopt Motion for Inhibition and What necessarily changed also is that the medium of "special
Manifestation," which was filed on February 11, 200435 and noted by the appearance" is no longer restricted to a motion to dismiss because one
trial court in a February 20, 2004 Order. 36 On June 23, 2004, however, could now file any type of motion provided you included the issue of lack
the trial court (i) denied the motion for inhibition for lack of merit, (ii) of jurisdiction due to defective service of summons.
ruled that Spouses Dy and Chuyaco have voluntarily submitted Thus, in this case at bar, the "two motions to dismiss" and the "motion
themselves to the jurisdiction of the trial court, and (iii) gave them to inhibit" may be treated as "special appearance" since they all
fifteen (15) days from receipt of the Order within which to file their included the issue of lack of jurisdiction due to non-service of summons.
respective answers, as follows: They did not constitute as submitting the movant to the jurisdiction of
Acting on the Motion for Inhibition, the Court hereby denies the same for the court.
lack of legal basis. xxx xxx xxx
In any event, the fact that defendants Wilson Dy and Primo Chuyaco, Jr. There being no proper service of summons on petitioners and there
signed said Motion themselves and in behalf of their respective spouses being no voluntary appearance by petitioners, the trial court did not
undoubtedly indicates their voluntary appearance in this case and their acquire jurisdiction over the persons of the defendants, the herein
submission to the jurisdiction of this Court. The phrase "without petitioners. Any proceeding undertaken by the trial court against them
submitting themselves to the jurisdiction of this Honorable Court" in the would consequently be null and void.
heading of said Motion can not qualify the clear import of Rule 14 section WHEREFORE, premises considered, the assailed June 23, 2004 Order of
20 which states: the Regional Trial Court of Makati City, Branch 133, is hereby DECLARED
Voluntary appearance. — The defendant's voluntary appearance in the NULL AND VOID as against herein petitioners. The April 22, 1994
action shall be equivalent to service of summons. The inclusion in a complaint filed by Philippine Commercial International Bank is hereby
motion to dismiss of other grounds aside from lack of jurisdiction over DISMISSED as against herein petitioners DY and CHUYACO only, no
the person of the defendant shall not be deemed a voluntary jurisdiction over their persons having been acquired.
appearance. (23a) SO ORDERED.39
It may be noted that subject Motion for Inhibition is not a Motion to Petitioner’s motion for reconsideration was denied by the appellate
Dismiss. court.40
Wherefore, defendants-spouses Dy and Chuyaco are given fifteen (15) Hence this appeal, where petitioner argues that:
days from receipt hereof within which to file their respective answers. I.
All pending incidents are deemed resolved. 37
THE COURT OF APPEALS ERRED IN DECLARING THE JUNE 23, 2004 ORDER c. where there is an urgent necessity for the resolution of the question
OF THE TRIAL COURT NULL AND VOID AND IN DISMISSING THE COMPLAINT and any further delay would prejudice the interests of the government
AS AGAINST RESPONDENTS DY AND CHUYACO AND RENDERING THE or the petitioner, or the subject matter of the action is perishable;
QUESTIONED DECISION AND RESOLUTION IN A WAY THAT IS NOT IN d. where, under the circumstances, a motion for reconsideration would
ACCORD WITH THE FACTS AND APPLICABLE LAWS AND JURISPRUDENCE, be useless;
WHICH HOLD THAT BY THEIR SUCCESSIVE FILING OF MOTIONS WITH THE e. where petitioner was deprived of due process and there is extreme
CONVENIENT CAVEAT THAT THEY ARE NOT SUBMITTING TO THE urgency for relief;
JURISDICTION OF THE COURT A QUO, THEY HAVE VOLUNTARILY SUBMITTED f. where, in a criminal case, relief from an order of arrest is urgent and
TO THE TRIAL COURT’S JURISDICTION. the granting of such relief by the trial court is improbable;
A. THE HONORABLE COURT OF APPEALS ERRED WHEN IT DISMISSED THE g. where the proceedings in the lower court are a nullity for lack of due
CASE AS AGAINST DY AND CHUYACO. process;
B. THE SPOUSES DY AND CHUYACO HAVE LOST THEIR RIGHT TO QUESTION h. where the proceedings were ex parte or in which the petitioner had
THE TRIAL COURT’S JURISDICTION OVER THEM WHEN THEY DID NOT RAISE no opportunity to object; and
THE DENIAL OF THEIR APRIL 22, 2002 MOTION TO DISMISS TO THE COURT i. where the issue raised is one purely of law or where public interest is
OF APPEALS. involved. 45
C. THE SPOUSES DY AND CHUYACO HAVE MISERABLY FAILED TO SHOW Otherwise stated, a motion for reconsideration may be dispensed with
BASIS IN SEEKING THE TRIAL COURT’S JURISDICTION. only if there are concrete, compelling, and valid reasons for doing so. 46
D. THE SPOUSES DY AND CHUYACO HAVE VOLUNTARILY SUBMITTED We find that respondents’ non-filing of a motion for reconsideration is
THEMSELVES TO THE TRIAL COURT’S JURISDICTION. justifiable under the circumstances of this case. It is not disputed that
II. the trial court, rightly or wrongly, considered them to have voluntarily
THE COURT OF APPEALS ERRED IN A WAY THAT IS NOT IN ACCORD WITH submitted to its jurisdiction by virtue of their motion for inhibition. Thus,
APPLICABLE LAWS AND JURISPRUDENCE IN NOT DISMISSING THE PETITION respondents’ apprehension that the motion for reconsideration might be
FOR CERTIORARI NOTWITHSTANDING THAT THE DY AND CHUYACO construed as further manifesting their voluntary appearance is
SPOUSES FAILED TO SHOW THAT THERE IS NO APPEAL, OR ANY PLAIN, certainly well-grounded. They may not, therefore, be faulted for having
SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW resorted immediately to a special civil action for certiorari. 1avvphil
AVAILABLE TO THEM. 41 Second Issue: Voluntary Appearance
Simply stated, the issues are: (1) Was the petition for certiorari Preliminarily, jurisdiction over the defendant in a civil case is acquired
prematurely filed? (2) Has there been voluntary appearance on the part either by the coercive power of legal processes exerted over his
of respondent Spouses Dy and Chuyaco as to confer the trial court with person, or his voluntary appearance in court. 47 As a general proposition,
jurisdiction over their persons? and (3) Did the trial court correctly one who seeks an affirmative relief is deemed to have submitted to the
deny the motion for inhibition? jurisdiction of the court. 48 It is by reason of this rule that we have had
We shall discuss these issues in seriatim. occasion to declare that the filing of motions to admit answer, for
First Issue: Propriety of Certiorari additional time to file answer, for reconsideration of a default judgment,
Petitioner contends that respondents subverted the settled rule that a and to lift order of default with motion for reconsideration, is
Petition for Certiorari under Rule 65 is available only when there is no considered voluntary submission to the court’s jurisdiction. 49 This,
appeal, or any plain, speedy, and adequate remedy in the ordinary however, is tempered by the concept of conditional appearance, such
course of law.42 It asserts that respondents’ failure to move for that a party who makes a special appearance to challenge, among
reconsideration of the June 23, 2004 Order of the trial court, denying others, the court’s jurisdiction over his person cannot be considered to
the latter’s motion for inhibition, provides sufficient cause for the have submitted to its authority.50
outright dismissal of the instant petition. Prescinding from the foregoing, it is thus clear that:
We disagree. (1) Special appearance operates as an exception to the general rule on
Petitioner is correct that a motion for reconsideration, as a general voluntary appearance;
rule, must have first been filed before the tribunal, board, or officer (2) Accordingly, objections to the jurisdiction of the court over the
against whom the writ of certiorari is sought. 43 This is intended to afford person of the defendant must be explicitly made, i.e., set forth in an
the latter an opportunity to correct any actual or fancied error unequivocal manner; and
attributed to it. 44 However, there are several exceptions where the (3) Failure to do so constitutes voluntary submission to the jurisdiction
special civil action for certiorari will lie even without the filing of a of the court, especially in instances where a pleading or motion seeking
motion for reconsideration, namely: affirmative relief is filed and submitted to the court for resolution.
a. where the order is a patent nullity, as where the court a quo has no Measured against these standards, it is readily apparent that
jurisdiction; respondents have acquiesced to the jurisdiction of the trial court as
b. where the questions raised in the certiorari proceeding have been early as June 17, 2003, when they filed their Motion to Dismiss for
duly raised and passed upon by the lower court, or are the same as Failure to Prosecute. Significantly, the motion did not categorically and
those raised and passed upon in the lower court; expressly raise the jurisdiction of the court over their persons as an
issue. It merely (i) "reminded" the court of its purportedly conflicting
Orders in respect of summons by publication, (ii) alleged that because
petitioner "has not lifted a finger to pursue this case against movants- (b) he is related to either party within the sixth degree of consanguinity
defendants," the case may be dismissed for failure to prosecute, and or affinity, or to counsel within the fourth degree, computed according
(iii) prayed additionally for the deletion of the Notice of Lis Pendens to the rules of civil law; or
indicated at the back of the transfer certificates of title covering the (c) he has been executor, administrator, guardian, trustee or counsel;
subject properties. We note, furthermore, that the motion failed to or
qualify the capacity in which respondents were appearing and seeking (d) he has presided in any inferior court when his ruling or decision is
recourse.51 It is in this light that the Court’s pronouncement in Busuego the subject of review, without the written consent of all parties in
v. Court of Appeals52 finds cogent application: interest, signed by them and entered upon the record.56
A voluntary appearance is a waiver of the necessity of a formal notice. Paragraph two of the same provision meanwhile provides for the rule on
An appearance in whatever form, without explicitly objecting to the voluntary inhibition and states: "[a] judge may, in the exercise of his
jurisdiction of the court over the person, is a submission to the sound discretion, disqualify himself from sitting in a case, for just or
jurisdiction of the court over the person. While the formal method of valid reasons other than those mentioned above." That discretion is a
entering an appearance in a cause pending in the courts is to deliver to matter of conscience and is addressed primarily to the judge’s sense of
the clerk a written direction ordering him to enter the appearance of fairness and justice.57 We have elucidated on this point in Pimentel v.
the person who subscribes it, an appearance may be made by simply Salanga,58 as follows:
filing a formal motion, or plea or answer. This formal method of A judge may not be legally prohibited from sitting in a litigation. But
appearance is not necessary. He may appear without such formal when suggestion is made of record that he might be induced to act in
appearance and thus submit himself to the jurisdiction of the court. He favor of one party or with bias or prejudice against a litigant arising out
may appear by presenting a motion, for example, and unless by such of circumstances reasonably capable of inciting such a state of mind, he
appearance he specifically objects to the jurisdiction of the court, he should conduct a careful self-examination. He should exercise his
thereby gives his assent to the jurisdiction of the court over his discretion in a way that the people's faith in the courts of justice is not
person.53 (emphasis supplied) impaired. A salutary norm is that he reflect on the probability that a
Besides, any lingering doubts on the issue of voluntary appearance losing party might nurture at the back of his mind the thought that the
dissipate when the respondents’ motion for inhibition is considered. This judge had unmeritoriously tilted the scales of justice against him. That
motion seeks a sole relief: inhibition of Judge Napoleon Inoturan from passion on the part of a judge may be generated because of serious
further hearing the case. Evidently, by seeking affirmative relief other charges of misconduct against him by a suitor or his counsel, is not
than dismissal of the case, respondents manifested their voluntary altogether remote. He is a man, subject to the frailties of other men. He
submission to the court’s jurisdiction. It is well-settled that the active should, therefore, exercise great care and caution before making up his
participation of a party in the proceedings is tantamount to an mind to act in or withdraw from a suit where that party or counsel is
invocation of the court’s jurisdiction and a willingness to abide by the involved. He could in good grace inhibit himself where that case could be
resolution of the case, and will bar said party from later on impugning heard by another judge and where no appreciable prejudice would be
the court’s jurisdiction.54 occasioned to others involved therein. On the result of his decision to sit
To be sure, the convenient caveat in the title of the motion for inhibition or not to sit may depend to a great extent the all-important confidence
(i.e., "without submitting themselves to the jurisdiction of this Honorable in the impartiality of the judiciary. If after reflection he should resolve to
Court") does not detract from this conclusion. It would suffice to say voluntarily desist from sitting in a case where his motives or fairness
that the allegations in a pleading or motion are determinative of its might be seriously impugned, his action is to be interpreted as giving
nature; the designation or caption thereof is not meaning and substances to the second paragraph of Section 1, Rule 137.
controlling.55Furthermore, no amount of caveat can change the fact that He serves the cause of the law who forestalls miscarriage of justice.
respondents tellingly signed the motion to inhibit in their own behalf and The present case not being covered by the rule on mandatory inhibition,
not through counsel, let alone through a counsel making a special the issue thus turns on whether Judge Napoleon Inoturan should have
appearance. voluntarily inhibited himself.
Third Issue: Inhibition At the outset, we underscore that while a party has the right to seek the
Respondents argue that the trial court’s so-called "continuous delay in inhibition or disqualification of a judge who does not appear to be wholly
the proceedings" is indicative of the fact that it is incompetent to free, disinterested, impartial and independent in handling the case, this
continue hearing the case. Respondents therefore assert that the trial right must be weighed with the duty of a judge to decide cases without
court acted with grave abuse of discretion amounting to lack or excess fear of repression.59 Respondents consequently have no vested right to
of jurisdiction when it denied their motion to inhibit and required them the issuance of an Order granting the motion to inhibit, given its
to file their Answer. discretionary nature.60
We are not convinced. However, the second paragraph of Rule 137, Section 1 does not give
Under the first paragraph of Section 1, Rule 137 of the Rules of Court, a judges unfettered discretion to decide whether to desist from hearing a
judge or judicial officer shall be mandatorily disqualified to sit in any case.61 The inhibition must be for just and valid causes, and in this
case in which: regard, we have noted that the mere imputation of bias or partiality is
(a) he, or his wife or child, is pecuniarily interested as heir, legatee, not enough ground for inhibition, especially when the charge is without
creditor or otherwise; or basis.62 This Court has to be shown acts or conduct clearly indicative of
arbitrariness or prejudice before it can brand them with the stigma of
bias or partiality. 63 Moreover, extrinsic evidence is required to establish In this petition for review under Rule 45 of the Rules of Court, Planters
bias, bad faith, malice or corrupt purpose, in addition to palpable error Development Bank (PDB) questions the Decision1 dated July 27, 2010 of
which may be inferred from the decision or order itself. 64 The only the Court of Appeals (CA), as well as its Resolution2 dated February 16,
exception to the rule is when the error is so gross and patent as to 2011, denying the petitioner's motion for reconsideration in CA-G.R. CV
produce an ineluctable inference of bad faith or malice.65 No. 82861. The assailed decision nullified the Decision3 dated May 31,
We do not find any abuse of discretion by the trial court in denying 2004 of the Regional Trial Court (RTC), Las Piñas City, Branch 255 in
respondents’ motion to inhibit. Our pronouncement in Webb, et al. v. Civil Case No. LP-99-0137.
People of the Philippines, et al. 66 is apropos: Antecedent Facts
A perusal of the records will reveal that petitioners failed to adduce any The instant case stemmed from a contract to sell a parcel of land,
extrinsic evidence to prove that respondent judge was motivated by together with improvements, between BF Homes, Inc. (BF Homes) and
malice or bad faith in issuing the assailed rulings. Petitioners simply herein respondent Julie Chandumal (Chandumal). The property subject
lean on the alleged series of adverse rulings of the respondent judge of the contract is located in Talon Dos, Las Piñas City and covered by
which they characterized as palpable errors. This is not enough. We note Transfer Certificate of Title No. T-10779. On February 12, 1993, BF Homes
that respondent judge's rulings resolving the various motions filed by sold to PDB all its rights, participations and interests over the contract.
petitioners were all made after considering the arguments raised by all Chandumal paid her monthly amortizations from December 1990 until
the parties. xxx May 1994 when she began to default in her payments. In a Notice of
xxx xxx xxx Delinquency and Rescission of Contract with Demand to Vacate 4 dated
We hasten to stress that a party aggrieved by erroneous interlocutory July 14, 1998, PDB gave Chandumal a period of thirty (30) days from
rulings in the course of a trial is not without remedy. The range of receipt within which to settle her installment arrearages together with
remedy is provided in our Rules of Court and we need not make an all its increments; otherwise, all her rights under the contract shall be
elongated discourse on the subject. But certainly, the remedy for deemed extinguished and terminated and the contract declared as
erroneous rulings, absent any extrinsic evidence of malice or bad faith, rescinded. Despite demand, Chandumal still failed to settle her
is not the outright disqualification of the judge. For there is yet to come obligation.
a judge with the omniscience to issue rulings that are always infallible. On June 18, 1999, an action for judicial confirmation of notarial
The courts will close shop if we disqualify judges who err for we all err. rescission and delivery of possession was filed by PDB against
(emphasis supplied) Chandumal, docketed as Civil Case No. LP-99-0137. PDB alleged that
Truth be told, respondents are not entirely blameless for any perceived despite demand, Chandumal failed and/or refused to pay the
delay in the resolution of the various incidents of the case. For instance, amortizations as they fell due; hence, it caused the rescission of the
they make much of the fact that close to three years passed before contract by means of notarial act, as provided in Republic Act (R.A.) No.
their "Omnibus Motion to Dismiss and to Annul All the Proceedings Taken 6552.5 According to PDB, it tried to deliver the cash surrender value of
Against the Defendants," filed on December 11, 1998, was noted by the the subject property, as required under R.A. No. 6552, in the amount of
trial court. But the fact remains that the said "motion," not having a ₱ 10,000.00; however, the defendant was unavailable for such purpose. 6
notice of hearing addressed to the adverse party, is legally a mere Consequently, summons was issued and served by deputy sheriff
scrap of paper.67 It presents no question which merits the attention and Roberto T. Galing (Sheriff Galing). According to his return, Sheriff Galing
consideration of the court, and is not entitled to judicial cognizance. 68 attempted to personally serve the summons upon Chandumal on July 15,
Considering the foregoing, we rule that respondents’ accusations of 19 and 22, 1999 but it was unavailing as she was always out of the house
delay, incompetence, and bias on the part of the trial court are on said dates. Hence, the sheriff caused substituted service of summons
unfounded. Hence, they are not entitled to the inhibition of Judge on August 5, 1999 by serving the same through Chandumal’s mother who
Inoturan as a relief. acknowledged receipt thereof. 7
IN VIEW WHEREOF, the Petition is hereby GRANTED. The Decision dated For her failure to file an answer within the prescribed period, PDB filed
July 18, 2005 of the Court of Appeals and its Resolution dated January on April 24, 2000 an ex parte motion to declare Chandumal in default. On
10, 2006 are hereby REVERSED and SET ASIDE, and another in their stead January 12, 2001, the RTC issued an Order granting the motion of PDB. 8
is hereby rendered ORDERING respondent Spouses Dy and Chuyaco to On February 23, 2001, Chandumal filed an Urgent Motion to Set Aside
answer the Complaint in Civil Case No. 94-1585 within fifteen (15) days Order of Default and to Admit Attached Answer. She maintained that she
from receipt of this Decision. did not receive the summons and/or was not notified of the same. She
The trial court is directed to proceed hearing the case, and to resolve further alleged that her failure to file an answer within the reglementary
the same with dispatch. period was due to fraud, mistake or excusable negligence. In her
answer, Chandumal alleged the following defenses: (a) contrary to the
G.R. No. 195619 September 5, 2012 position of PDB, the latter did not make any demand for her to pay the
PLANTERS DEVELOPMENT BANK, Petitioner, unpaid monthly amortization; and (b) PDB did not tender or offer to give
vs. the cash surrender value of the property in an amount equivalent to fifty
JULIE CHANDUMAL, Respondent. percent (50%) of the actual total payment made, as provided for under
DECISION Section 3(b) of R.A. No. 6552. Moreover, Chandumal claimed that since
REYES, J.: the total payment she made amounts to ₱ 782,000.00, the
corresponding cash surrender value due her should be ₱ 391,000.00.9
Per Order10 dated August 2, 2001, the RTC denied Chandumal’s motion to filed an Urgent Motion to Set Aside Order of Default and to Admit
set aside the order of default. Her motion for reconsideration was also Attached Answer.
denied for lack of merit.11 Conformably, the RTC allowed PDB to present For her part, Chandumal asserts that she never received a copy of the
its evidence ex parte.12 On May 31, 2004, the RTC rendered a summons or was ever notified of it and she only came to know of the
Decision13 in favor of PDB, the dispositive portion of which reads: case sometime in July or August 2000, but she was already in the
WHEREFORE, the foregoing considered, judgment is hereby rendered in United States of America by that time, and that the CA correctly ruled
favor of the plaintiff Planters Development Bank and against defendant that there was no valid service of summons; hence, the RTC never
Julie Chandumal as follows, to wit: acquired jurisdiction over her person.
1. Declaring the notarial rescission of the Contract to Sell dated 03 Issues
January 1990 made by the plaintiff per the Notice of Delinquency and 1. Whether there was a valid substituted service of summons;
Rescission of Contract with Demand to Vacate dated 14 July 1998 as 2. Whether Chandumal voluntarily submitted to the jurisdiction of the
judicially confirmed and ratified; trial court; and
2. Requiring the plaintiff to deposit in the name of the defendant the 3. Whether there was proper rescission by notarial act of the contract
amount of ₱ 10,000.00 representing the cash surrender value for the to sell.
subject property with the Land Bank of the Philippines, Las Pi[ñ]as City Our Ruling
Branch in satisfaction of the provisions of R.A. No. 6552; and, The fundamental rule is that jurisdiction over a defendant in a civil case
3. Ordering the defendant to pay the plaintiff the amount of ₱ is acquired either through service of summons or through voluntary
50,000.00 as and by way of attorney’s fees, including the costs of suit. appearance in court and submission to its authority. If a defendant has
SO ORDERED.14 not been properly summoned, the court acquires no jurisdiction over its
From the foregoing judgment, Chandumal appealed to the CA. person, and a judgment rendered against it is null and void. 17
On July 27, 2010, the CA, without ruling on the propriety of the judicial Where the action is in personam18 and the defendant is in the Philippines,
confirmation of the notarial rescission, rendered the assailed decision service of summons may be made through personal service, that is,
nullifying the RTC decision due to invalid and ineffective substituted summons shall be served by handing to the defendant in person a copy
service of summons. The dispositive portion of the CA decision provides: thereof, or if he refuses to receive and sign for it, by tendering it to
WHEREFORE, premises considered, the decision of Branch 255 of the him.19 If the defendant cannot be personally served with summons within
Regional Trial Court of Las Piñas City, dated May 31, 2004, in Civil Case a reasonable time, it is then that substituted service may be
No. LP-99-0137 is hereby NULLIFIED and VACATED. made.20 Personal service of summons should and always be the first
SO ORDERED.15 option, and it is only when the said summons cannot be served within a
PDB filed a motion for reconsideration but it was denied by the CA in its reasonable time can the process server resort to substituted service.21
Resolution dated February 16, 2011. No valid substituted service of
Hence, this petition based on the following assignment of errors: summons
I In this case, the sheriff resorted to substituted service of summons due
The Honorable Court of Appeals erred in reversing the decision of the to his failure to serve it personally. In Manotoc v. Court of Appeals,22 the
trial court on the ground of improper service of summons; Court detailed the requisites for a valid substituted service of summons,
II summed up as follows: (1) impossibility of prompt personal service – the
The decision of the trial court is valid as it duly acquired jurisdiction party relying on substituted service or the sheriff must show that the
over the person of respondent Chandumal through voluntary defendant cannot be served promptly or there is impossibility of prompt
appearance; and service; (2) specific details in the return – the sheriff must describe in
III the Return of Summons the facts and circumstances surrounding the
The trial court did not err in confirming and ratifying the notarial attempted personal service; (3) a person of suitable age and discretion
rescission of the subject contract to sell. 16 – the sheriff must determine if the person found in the alleged dwelling
PDB contends that the RTC properly acquired jurisdiction over the or residence of defendant is of legal age, what the recipient’s
person of Chandumal.1âwphi1 According to PDB, there was proper relationship with the defendant is, and whether said person
service of summons since the sheriff complied with the proper comprehends the significance of the receipt of the summons and his
procedure governing substituted service of summons as laid down in duty to immediately deliver it to the defendant or at least notify the
Section 7, Rule 14 of the Rules of Court. PDB alleges that it is clear from defendant of said receipt of summons, which matters must be clearly
the sheriff’s return that there were several attempts on at least three and specifically described in the Return of Summons; and (4) a
(3) different dates to effect personal service within a reasonable period competent person in charge, who must have sufficient knowledge to
of nearly a month, before he caused substituted service of summons. understand the obligation of the defendant in the summons, its
The sheriff likewise stated the reason for his failure to effect personal importance, and the prejudicial effects arising from inaction on the
service and that on his fourth attempt, he effected the service of summons.23 These were reiterated and applied in Pascual v.
summons through Chandumal’s mother who is unarguably, a person of Pascual,24 where the substituted service of summon made was
legal age and with sufficient discretion. PDB also argues that Chandumal invalidated due to the sheriff’s failure to specify in the return the
voluntarily submitted herself to the jurisdiction of the court when she necessary details of the failed attempts to effect personal service which
would justify resort to substituted service of summons.
In applying the foregoing requisites in the instant case, the CA correctly There is no valid rescission of the
ruled that the sheriff’s return failed to justify a resort to substituted contract to sell by notarial act
service of summons. According to the CA, the Return of Summons does pursuant to Section 3(b), R.A. No. 6552
not specifically show or indicate in detail the actual exertion of efforts That the RTC had jurisdiction to render the decision does not necessarily
or any positive step taken by the officer or process server in attempting mean, however, that its ruling on the validity of the notarial rescission is
to serve the summons personally to the defendant. The return merely in accord with the established facts of the case, the relevant law and
states the alleged whereabouts of the defendant without indicating that jurisprudence.1âwphi1
such information was verified from a person who had knowledge PDB claims that it has validly rescinded the contract by notarial act as
thereof.25Indeed, the sheriff’s return shows a mere perfunctory attempt provided under R.A. No. 6552. Basically, PDB instituted Civil Case No. LP-
to cause personal service of the summons on Chandumal. There was no 99-0137 in order to secure judicial confirmation of the rescission and to
indication if he even asked Chandumal’s mother as to her specific recover possession of the property subject of the contract.
whereabouts except that she was "out of the house", where she can be In Leaño v. Court of Appeals,30 it was held that:
reached or whether he even tried to await her return. The "efforts" R. A. No. 6552 recognizes in conditional sales of all kinds of real estate
exerted by the sheriff clearly do not suffice to justify substituted service (industrial, commercial, residential) the right of the seller to cancel the
and his failure to comply with the requisites renders such service contract upon non-payment of an installment by the buyer, which is
ineffective.26 simply an event that prevents the obligation of the vendor to convey title
Respondent voluntarily submitted from acquiring binding force. The law also provides for the rights of the
to the jurisdiction of the trial court buyer in case of cancellation. Thus, Sec. 3 (b) of the law provides that:
Despite that there was no valid substituted service of summons, the "If the contract is cancelled, the seller shall refund to the buyer the
Court, nevertheless, finds that Chandumal voluntarily submitted to the cash surrender value of the payments on the property equivalent to fifty
jurisdiction of the trial court. percent of the total payments made and, after five years of installments,
Section 20, Rule 14 of the Rules of Court states: an additional five percent every year but not to exceed ninety percent of
Sec. 20. Voluntary appearance. – The defendant’s voluntary appearance the total payments made: Provided, That the actual cancellation of the
in the action shall be equivalent to service of summons. The inclusion in contract shall take place after thirty days from receipt by the buyer of
a motion to dismiss of other grounds aside from lack of jurisdiction over the notice of cancellation or the demand for rescission of the contract
the person of the defendant shall not be deemed a voluntary by a notarial act and upon full payment of the cash surrender value to
appearance. the buyer."31 (Citation omitted and emphasis ours)
When Chandumal filed an Urgent Motion to Set Aside Order of Default R.A. No. 6552 recognizes the right of the seller to cancel the contract
and to Admit Attached Answer, she effectively submitted her person to but any such cancellation must be done in conformity with the
the jurisdiction of the trial court as the filing of a pleading where one requirements therein prescribed. In addition to the notarial act of
seeks an affirmative relief is equivalent to service of summons and rescission, the seller is required to refund to the buyer the cash
vests the trial court with jurisdiction over the defendant’s person. Thus, surrender value of the payments on the property. The actual
it was ruled that the filing of motions to admit answer, for additional cancellation of the contract can only be deemed to take place upon the
time to file answer, for reconsideration of a default judgment, and to lift expiry of a thirty (30)-day period following the receipt by the buyer of
order of default with motion for reconsideration is considered voluntary the notice of cancellation or demand for rescission by a notarial act and
submission to the trial court’s jurisdiction.27 The Court notes that aside the full payment of the cash surrender value.32
from the allegation that she did not receive any summons, Chandumal’s In this case, it is an admitted fact that PDB failed to give Chandumal the
motion to set aside order of default and to admit attached answer failed full payment of the cash surrender value. In its complaint,33 PDB
to positively assert the trial court’s lack of jurisdiction. In fact, what was admitted that it tried to deliver the cash surrender value of the subject
set forth therein was the substantial claim that PDB failed to comply property as required under R.A. No. 6552 but Chandumal was
with the requirements of R.A. No. 6552 on payment of cash surrender "unavailable" for such purpose. Thus, it prayed in its complaint that it be
value,28 which already delves into the merits of PDB’s cause of action. In ordered to "deposit with a banking institution in the Philippines, for the
addition, Chandumal even appealed the RTC decision to the CA, an act account of Defendants (sic), the amount of Ten Thousand Pesos (₱
which demonstrates her recognition of the trial court’s jurisdiction to 10,000.00), Philippine Currency, representing the cash surrender value
render said judgment. of the subject property; x x x."34 The allegation that Chandumal made
Given Chandumal’s voluntary submission to the jurisdiction of the trial herself unavailable for payment is not an excuse as the twin
court, the RTC, Las Piñas City, Branch 255, had all authority to render its requirements for a valid and effective cancellation under the law, i.e.,
Decision dated May 31, 2004. The CA, therefore, erred in nullifying said notice of cancellation or demand for rescission by a notarial act and the
RTC decision and dispensing with the resolution of the substantial issue full payment of the cash surrender value, is mandatory. 35 Consequently,
raised herein, i.e., validity of the notarial rescission. Instead, however, of there was no valid rescission of the contract to sell by notarial act
remanding this case to the CA, the Court will resolve the same undertaken by PDB and the RTC should not have given judicial
considering that the records of the case are already before us and in confirmation over the same.
order to avoid any further delay.29 WHEREFORE, the petition is DENIED. The Decision dated July 27, 2010 of
the Court of Appeals, as well as its Resolution dated February 16, 2011,
denying the Motion for Reconsideration in CA-G.R. CV No. 82861
are AFFIRMED in so far as there was no valid service of summons. 2. Ordering defendants to pay plaintiff the amount of TEN THOUSAND
Further, the Court DECLARES that there was no valid rescission of PESOS (₱10,000.00) as rental arrears from August 25, 2003 up to the
contract pursuant to R.A. No. 6552. Accordingly, the Decision dated May date of decision;
31, 2004 of the Regional Trial Court, Las Piñas City, Branch 255 in Civil 3. Ordering defendants to pay plaintiff the amount of TEN THOUSAND
Case No. LP-99-0 137 is REVERSED and SET ASIDE, and is PESOS (₱10,000.00) a month thereafter, as reasonable compensation
therefore, DISMISSED for lack of merit. for the use of the subject premises until they finally vacate the same;
4. Ordering defendants to pay plaintiff the amount of FIFTY THOUSAND
G.R. No. 173379 December 1, 2010 PESOS (₱50,000.00) as and for attorney’s fees plus ONE THOUSAND
ABUBAKAR A. AFDAL and FATIMA A. AFDAL, Petitioners, FIVE HUNDRED PESOS (₱1,500.00) appearance fee;
vs. 5. Ordering defendants to pay the costs of suit.
ROMEO CARLOS, Respondent. SO ORDERED.10
DECISION On 1 October 2004, the MTC issued a writ of execution. 11
CARPIO, J.: On 30 October 2004, petitioners filed a petition for relief from judgment
The Case with the MTC. 12 Respondent filed a motion to dismiss or strike out the
This is a petition for review1 of the 3 January 20052 and 16 June petition for relief.13 Subsequently, petitioners manifested their intention
20063 Orders of the Regional Trial Court, Branch 25, Biñan, Laguna to withdraw the petition for relief after realizing that it was a prohibited
(RTC) in Civil Case No. B-6721. In its 3 January 2005 Order, the RTC pleading under the Revised Rule on Summary Procedure. On 10
ordered the dismissal of petitioners Abubakar A. Afdal and Fatima A. November 2004, the MTC granted petitioners’ request to withdraw the
Afdal’s (petitioners) petition for relief from judgment. In its 16 June petition for relief.14
2006 Order, the RTC denied petitioners’ motion for reconsideration. On 6 December 2004, petitioners filed the petition for relief before the
The Facts RTC.15 Petitioners alleged that they are the lawful owners of the property
On 18 December 2003, respondent Romeo Carlos (respondent) filed a which they purchased from spouses Martha D.G. Ubaldo and Francisco D.
complaint for unlawful detainer and damages against petitioners, Ubaldo. Petitioners denied that they sold the property to respondent.
Zenaida Guijabar (Guijabar), John Doe, Peter Doe, Juana Doe, and all Petitioners added that on 15 December 2003, petitioner Abubakar filed
persons claiming rights under them docketed as Civil Case No. 3719 with the Commission on Elections his certificate of candidacy as mayor
before the Municipal Trial Court, Biñan, Laguna (MTC). Respondent in the municipality of Labangan, Zamboanga del Sur, for the 10 May 2004
alleged that petitioners, Guijabar, and all other persons claiming rights elections. Petitioners said they only learned of the MTC’s 23 August
under them were occupying, by mere tolerance, a parcel of land in 2004 Decision on 27 October 2004. Petitioners also pointed out that
respondent’s name covered by Transfer Certificate of Title No. T- they never received respondent’s demand letter nor were they informed
5301394 in the Registry of Deeds Calamba, Laguna. Respondent claimed of, much less participated in, the proceedings before the Lupon.
that petitioner Abubakar Afdal (petitioner Abubakar) sold the property to Moreover, petitioners said they were not served a copy of the summons
him but that he allowed petitioners to stay in the property. On 25 August and the complaint.
2003, respondent demanded that petitioners, Guijabar, and all persons On 3 January 2005, the RTC issued the assailed Order dismissing the
claiming rights under them turn over the property to him because he petition for relief. The RTC said it had no jurisdiction over the petition
needed the property for his personal use.5 Respondent further alleged because the petition should have been filed before the MTC in
that petitioners refused to heed his demand and he was constrained to accordance with Section 1 of Rule 38 of the Rules of Court which
file a complaint before the Lupon ng Tagapamayapa (Lupon). According provides that a petition for relief should be filed "in such court and in
to respondent, petitioners ignored the notices and the Lupon issued a the same case praying that the judgment, order or proceeding be set
"certificate to file action."6 Then, respondent filed the complaint before aside."
the MTC. Petitioners filed a motion for reconsideration. In its 16 June 2006 Order,
According to the records, there were three attempts to serve the the RTC denied petitioners’ motion.
summons and complaint on petitioners – 14 January, 3 and 18 February Hence, this petition.
2004. 7 However, petitioners failed to file an answer. The Issue
On 2 June 2004, respondent filed an ex-parte motion and compliance Petitioners raise the sole issue of whether the RTC erred in dismissing
with position paper submitting the case for decision based on the their petition for relief from judgment.
pleadings on record.8 The Ruling of the Court
In its 23 August 2004 Decision,9 the MTC ruled in favor of respondent. Petitioners maintain that the RTC erred in dismissing their petition for
The dispositive portion of the 23 August 2004 Decision reads: relief. Petitioners argue that they have no other recourse but to file the
WHEREFORE, judgment is hereby rendered in favor of plaintiff and petition for relief with the RTC. Petitioners allege the need to reconcile
against defendants as follows: the apparent inconsistencies with respect to the filing of a petition for
1. Ordering defendants Abubakar Afdal, Zenaida Guijabar and all persons relief from judgment under Rule 38 of the Rules of Court and the
claiming rights under them to vacate the subject property and prohibition under the Revised Rule on Summary Procedure. Petitioners
peacefully turn-over possession of the same to plaintiff; suggest that petitions for relief from judgment in forcible entry and
unlawful detainer cases can be filed with the RTC provided that
petitioners have complied with all the legal requirements to entitle him section, service may be effected (a) by leaving copies of the summons
to avail of such legal remedy. at the defendant’s residence with some person of suitable age and
Section 13(4) of Rule 70 of the Rules of Court provides: discretion then residing therein, or (b) by leaving the copies at
SEC. 13. Prohibited pleadings and motions. - The following petitions, defendant’s office or regular place of business with some competent
motions, or pleadings shall not be allowed: x x x person in charge thereof.
4. Petition for relief from judgment; x x x Any judgment of the court which has no jurisdiction over the person of
Section 19(d) of the Revised Rule on Summary Procedure also provides: the defendant is null and void.22
SEC. 19. Prohibited pleadings and motions. - The following pleadings, The 23 August 2004 Decision of the MTC states:
motions, or petitions shall not be allowed in the cases covered by this Record shows that there were three attempts to serve the summons to
Rule: x x x the defendants. The first was on January 14, 2004 where the same was
(d) Petition for relief from judgment; x x x unserved. The second was on February 3, 2004 where the same was
Clearly, a petition for relief from judgment in forcible entry and unlawful served to one Gary Akob and the last was on February 18, 2004 where
detainer cases, as in the present case, is a prohibited pleading. The the return was duly served but refused to sign.23
reason for this is to achieve an expeditious and inexpensive A closer look at the records of the case also reveals that the first
determination of the cases subject of summary procedure.16 indorsement dated 14 January 2004 carried the annotation that it was
Moreover, Section 1, Rule 38 of the Rules of Court provides: "unsatisfied/given address cannot be located."24 The second
SEC. 1. Petition for relief from judgment, order or other proceedings. - indorsement dated 3 February 2004 stated that the summons was "duly
When a judgment or final order is entered, or any other proceeding is served as evidenced by his signature of one Gary
thereafter taken against a party in any court through fraud, accident, Acob25 (relative)."26While the last indorsement dated 18 February 2004
mistake or excusable negligence, he may file a petition in such court carried the annotation that it was "duly served but refused to sign"
and in the same case praying that the judgment, order or without specifying to whom it was served.27
proceeding be set aside. (Emphasis supplied) Service of summons upon the defendant shall be by personal service
A petition for relief from judgment, if allowed by the Rules and not a first and only when the defendant cannot be promptly served in person
prohibited pleading, should be filed with and resolved by the court in the will substituted service be availed of.28 In Samartino v. Raon,29 we said:
same case from which the petition arose.171avvphi1 We have long held that the impossibility of personal service justifying
In the present case, petitioners cannot file the petition for relief with the availment of substituted service should be explained in the proof of
MTC because it is a prohibited pleading in an unlawful detainer case. service; why efforts exerted towards personal service failed. The
Petitioners cannot also file the petition for relief with the RTC because pertinent facts and circumstances attendant to the service of summons
the RTC has no jurisdiction to entertain petitions for relief from must be stated in the proof of service or Officer’s Return; otherwise, the
judgments of the MTC. Therefore, the RTC did not err in dismissing the substituted service cannot be upheld.30
petition for relief from judgment of the MTC. In this case, the indorsements failed to state that prompt and personal
The remedy of petitioners in such a situation is to file a petition for service on petitioners was rendered impossible. It failed to show the
certiorari with the RTC under Rule 65 18 of the Rules of Court on the reason why personal service could not be made. It was also not shown
ground of lack of jurisdiction of the MTC over the person of petitioners that efforts were made to find petitioners personally and that said
in view of the absence of summons to petitioners. Here, we shall treat efforts failed. These requirements are indispensable because
petitioners’ petition for relief from judgment as a petition for certiorari substituted service is in derogation of the usual method of service. It is
before the RTC. an extraordinary method since it seeks to bind the defendant to the
An action for unlawful detainer or forcible entry is a real action and in consequences of a suit even though notice of such action is served not
personam because the plaintiff seeks to enforce a personal obligation upon him but upon another whom the law could only presume would
on the defendant for the latter to vacate the property subject of the notify him of the pending proceedings. Failure to faithfully, strictly, and
action, restore physical possession thereof to the plaintiff, and pay fully comply with the statutory requirements of substituted service
actual damages by way of reasonable compensation for his use or renders such service ineffective.31
occupation of the property. 19 In an action in personam, jurisdiction over Likewise, nowhere in the return of summons or in the records of the
the person of the defendant is necessary for the court to validly try and case was it shown that Gary Acob, the person on whom substituted
decide the case.20 Jurisdiction over the defendant is acquired either service of summons was effected, was a person of suitable age and
upon a valid service of summons or the defendant’s voluntary discretion residing in petitioners’ residence. In Manotoc v. Court of
appearance in court.21 If the defendant does not voluntarily appear in Appeals,32 we said:
court, jurisdiction can be acquired by personal or substituted service of If the substituted service will be effected at defendant’s house or
summons as laid out under Sections 6 and 7 of Rule 14 of the Rules of residence, it should be left with a person of "suitable age and discretion
Court, which state: then residing therein." A person of suitable age and discretion is one
Sec. 6. Service in person on defendant. - Whenever practicable, the who has attained the age of full legal capacity (18 years old) and is
summons shall be served by handing a copy thereof to the defendant in considered to have enough discernment to understand the importance
person, or, if he refuses to receive and sign for it, by tendering it to him. of a summons. "Discretion" is defined as "the ability to make decisions
Sec. 7. Substituted Service. - If, for justifiable causes, the defendant which represent a responsible choice and for which an understanding of
cannot be served within a reasonable time as provided in the preceding what is lawful, right or wise may be presupposed." Thus, to be of
sufficient discretion, such person must know how to read and the lease period to two years and five months, commencing on 1 October
understand English to comprehend the import of the summons, and fully 2003 and ending on 28 February 2006. 7?r?l1
realize the need to deliver the summons and complaint to the defendant Renovations in the Optima Building commenced in January and ended in
at the earliest possible time for the person to take appropriate action. November 2005.8 As a result, Hertz alleged that it experienced a 50%
Thus, the person must have the "relation of confidence" to the drop in monthly sales and a significant decrease in its personnels
defendant, ensuring that the latter would receive or at least be notified productivity. It then requested a 50% discount on its rent for the
of the receipt of the summons. The sheriff must therefore determine months of May, June, July and August 2005.9?r?l1
if the person found in the alleged dwelling or residence of On 8 December 2005, Optima granted the request of Hertz. 10 However,
defendant is of legal age, what the recipient’s relationship with the the latter still failed to pay its rentals for the months of August to
defendant is, and whether said person comprehends the December of 2005 and January to February 2006,11 or a total of seven
significance of the receipt of the summons and his duty to months. In addition, Hertz likewise failed to pay its utility bills for the
immediately deliver it to the defendant or at least notify the months of November and December of 2005 and January and February
defendant of said receipt of summons. These matters must be of 2006,12 or a total of four months.
clearly and specifically described in the Return of On 8 December 2005, Optima wrote another letter to Hertz,13 reminding
Summons.33 (Emphasis supplied) the latter that the Contract of Lease could be renewed only by a new
In this case, the process server failed to specify Gary Acob’s age, his negotiation between the parties and upon written notice by the lessee to
relationship to petitioners and to ascertain whether he comprehends the lessor at least 90 days prior to the termination of the lease
the significance of the receipt of the summons and his duty to deliver it period.14 As no letter was received from Hertz regarding its intention to
to petitioners or at least notify them of said receipt of summons. seek negotiation and extension of the lease contract within the 90-day
In sum, petitioners were not validly served with summons and the period, Optima informed it that the lease would expire on 28 February
complaint in Civil Case No. 3719 by substituted service. Hence, the MTC 2006 and would not be renewed.15?r?l1
failed to acquire jurisdiction over the person of the petitioners and, On 21 December 2005, Hertz wrote a letter belatedly advising Optima of
thus, the MTC’s 23 August 2004 Decision is void. 34 Since the MTC’s 23 the formers desire to negotiate and extend the lease. 16 However, as the
August 2004 Decision is void, it also never became final. 35 Contract of Lease provided that the notice to negotiate its renewal must
WHEREFORE, we GRANT the petition. We SET ASIDE the 3 January 2005 be given by the lessee at least 90 days prior to the expiration of the
and 16 June 2006 Orders of the Regional Trial Court, Branch 25, Biñan, contract, petitioner no longer entertained respondents notice.
Laguna. The 23 August 2004 Decision and the 1 October 2004 Writ of On 30 January 2006, Hertz filed a Complaint for Specific Performance,
Execution, as well as all acts and deeds incidental to the judgment in Injunction and Damages and/or Sum of Money with prayer for the
Civil Case No. 3719, are declared VOID. We REMAND the case to the issuance of a Temporary Restraining Order (TRO) and Writ of
Municipal Trial Court, Biñan, Laguna, for consolidation with the unlawful Preliminary Injunction (Complaint for Specific Performance) against
detainer case in Civil Case No. 3719 and for the said Municipal Trial Court Optima. In that Complaint, Hertz prayed for the issuance of a TRO to
to continue proceedings thereon by affording petitioners Abubakar A. enjoin petitioner from committing acts that would tend to disrupt
Afdal and Fatima A. Afdal a chance to file their answer and present respondents peaceful use and possession of the leased premises; for a
evidence in their defense, and thereafter to hear and decide the case. Writ of Preliminary Injunction ordering petitioner to reconnect its
utilities; for petitioner to be ordered to renegotiate a renewal of the
G.R. No. 183035 : January 9, 2013 Contract of Lease; and for actual, moral and exemplary damages, as well
OPTIMA REALTY CORPORATION, Petitioner, v. HERTZ PHIL. EXCLUSIVE as attorneys fees and costs.
CARS, INC., Respondent. On 1 March 2006, Optima, through counsel, wrote Hertz a letter
DECISION requiring the latter to surrender and vacate the leased premises in view
SERENO, C.J.: of the expiration of the Contract of Lease on 28 February 2006.17 It
Before us is a Rule 45 Petition assailing the Decision 1 and Resolution2 of likewise demanded payment of the sum of ?420,967.28 in rental
the Court of Appeals (CA) in CA-GR SP No. 99890, which reversed the arrearages, unpaid utility bills and other charges. 18 Hertz, however,
Decision3 and Resolution4 of the Regional Trial Court (RTC), Branch 13 7, refused to vacate the leased premises. 19 As a result, Optima was
Makati City in Civil Case No. 06-672. The RTC had affirmed in toto the 22 constrained to file before the MeTC a Complaint for Unlawful Detainer
May 2006 Decision5 of the Metropolitan Trial Court (MeTC), Branch 64, and Damages with Prayer for the Issuance of a TRO and/or Preliminary
Makati City in Civil Case No. 90842 evicting respondent Hertz Phil. Mandatory Injunction (Unlawful Detainer Complaint) against Hertz.20?r?l1
Exclusive Cars, Inc. (Hertz) and ordering it to pay back rentals and other On 14 March 2006, Summons for the Unlawful Detainer Complaint was
arrearages to petitioner Optima Realty Corporation (Optima). served on Henry Bobiles, quality control supervisor of Hertz, who
Optima is engaged in the business of leasing and renting out commercial complied with the telephone instruction of manager Rudy Tirador to
spaces and buildings to its tenants. On 12 December 2002, it entered receive the Summons.21?r?l1
into a Contract of Lease with respondent over a 131-square-meter office On 28 March 2006, or 14 days after service of the Summons, Hertz filed
unit and a parking slot in the Optima Building for a period of three years a Motion for Leave of Court to file Answer with Counterclaim and to
commencing on 1 March 2003 and ending on 28 February 2006. 6 On 9 Admit Answer with Counterclaim (Motion for Leave to File Answer).22 In
March 2004, the parties amended their lease agreement by shortening that Motion, Hertz stated that, "in spite of the defective service of
summons, it opted to file the instant Answer with Counterclaim with
Leave of Court."23 In the same Motion, it likewise prayed that, in the Aggrieved by the ruling of the appellate court, petitioner then filed the
interest of substantial justice, the Answer with Counterclaim attached to instant Rule 45 Petition for Review on Certiorari with this Court. 34?r?l1
the Motion for Leave to File Answer should be admitted regardless of its THE ISSUES
belated filing, since the service of summons was defective.24?r?l1 As culled from the records, the following issues are submitted for
On 22 May 2006, the MeTC rendered a Decision,25 ruling that petitioner resolution by this Court:cralawlibrary
Optima had established its right to evict Hertz from the subject 1. Whether the MeTC properly acquired jurisdiction over the person of
premises due to nonpayment of rentals and the expiration of the period respondent Hertz;
of lease.26 The dispositive portion of the Decision reads:cralawlibrary 2. Whether the unlawful detainer case is barred by litis pendentia; and
WHEREFORE, premises considered, the Court hereby renders judgment 3. Whether the ejectment of Hertz and the award of damages, attorneys
for the plaintiff and against the defendant, ordering:cralawlibrary fees and costs are proper. ???ñr?bl?š ??r†??l l?? l?br?rÿ
1. the defendant corporation and all persons claiming rights from it to THE COURTS RULING
immediately vacate the leased premises and to surrender possession We grant the Petition and reverse the assailed Decision and Resolution
thereof to the plaintiff; of the appellate court.
2. the defendant corporation to pay the plaintiff the amount of Four I
Hundred Twenty Thousand Nine Hundred Sixty Seven Pesos and 28/100 The MeTC acquired jurisdiction over the person of respondent Hertz.
(P420,967.28) representing its rentals arrearages and utility charges In civil cases, jurisdiction over the person of the defendant may be
for the period of August 2005 to February 2006, deducting therefrom acquired either by service of summons or by the defendants voluntary
defendants security deposit; appearance in court and submission to its authority.35?r?l1
3. the defendant corporation to pay the amount of Fifty Four Thousand In this case, the MeTC acquired jurisdiction over the person of
Two Hundred Pesos (P54,200.00) as a reasonable monthly respondent Hertz by reason of the latters voluntary appearance in
compensation for the use and occupancy of the premises starting from court.
March 2006 until possession thereof is restored to the plaintiff; and In Philippine Commercial International Bank v. Spouses Dy,36 we had
4. the defendant corporation to pay the amount of Thirty Thousand occasion to state:cralawlibrary
Pesos (P30,000.00) as and for attorneys fees; and Preliminarily, jurisdiction over the defendant in a civil case is acquired
5. the cost of suit. ???ñr?bl?š ??r†??l l?? l?br?rÿ either by the coercive power of legal processes exerted over his
SO ORDERED.27?r?l1 person, or his voluntary appearance in court. As a general proposition,
Hertz appealed the MeTCs Decision to the RTC. 28?r?l1 one who seeks an affirmative relief is deemed to have submitted to the
Finding no compelling reason to warrant the reversal of the MeTCs jurisdiction of the court. It is by reason of this rule that we have had
Decision, the RTC affirmed it by dismissing the appeal in a occasion to declare that the filing of motions to admit answer, for
Decision29 dated 16 March 2007. additional time to file answer, for reconsideration of a default judgment,
On 18 June 2007, the RTC denied respondents Motion for and to lift order of default with motion for reconsideration, is
Reconsideration of its assailed Decision.30?r?l1 considered voluntary submission to the court's jurisdiction. This,
Hertz thereafter filed a verified Rule 42 Petition for Review on Certiorari however, is tempered by the concept of conditional appearance, such
with the CA.31?r?l1 that a party who makes a special appearance to challenge, among
On appeal, the CA ruled that, due to the improper service of summons, others, the court's jurisdiction over his person cannot be considered to
the MeTC failed to acquire jurisdiction over the person of respondent have submitted to its authority.
Hertz. The appellate court thereafter reversed the RTC and remanded Prescinding from the foregoing, it is thus clear that:cralawlibrary
the case to the MeTC to ensure the proper service of summons. (1) Special appearance operates as an exception to the general rule on
Accordingly, the CA issued its 17 March 2008 Decision, the fallo of which voluntary appearance;
reads:cralawlibrary (2) Accordingly, objections to the jurisdiction of the court over the
WHEREFORE, premises considered, the May 22, 2006 Decision of the person of the defendant must be explicitly made, i.e., set forth in an
Metropolitan Trial Court of Makati City, Branch 64, in Civil Case No. unequivocal manner; and
90842, and both the March 16, 2007 Decision, as well as the June 18, (3) Failure to do so constitutes voluntary submission to the jurisdiction
2007 Resolution, of the Regional Trial Court of Makati City, Branch 137, in of the court, especially in instances where a pleading or motion seeking
Civil Case No. 06-672, are hereby REVERSED, ANNULLED and SET ASIDE affirmative relief is filed and submitted to the court for resolution.
due to lack of jurisdiction over the person of the defendant corporation (Emphases supplied) ???ñr?bl?š ??r†??l l?? l?br?rÿ
HERTZ. This case is hereby REMANDED to the Metropolitan Trial Court of In this case, the records show that the following statement appeared in
Makati City, Branch 64, in Civil Case No. 90842, which is DIRECTED to respondents Motion for Leave to File Answer:cralawlibrary
ensure that its Sheriff properly serve summons to only those persons In spite of the defective service of summons, the defendant opted to file
listed in Sec. 11, Rule 14 of the Rules of Civil Procedure in order that the the instant Answer with Counterclaim with Leave of Court, upon
MTC could acquire jurisdiction over the person of the defendant inquiring from the office of the clerk of court of this Honorable Court
corporation HERTZ. and due to its notice of hearing on March 29, 2005 application for
SO ORDERED.32 ?r?l1 TRO/Preliminary Mandatory Injunction was received on March 26, 2006.
Petitioners Motion for Reconsideration of the CAs Decision was denied in (Emphasis supplied)37?r?l1
a Resolution dated 20 May 2008.33?r?l1
Furthermore, the Answer with Counterclaim filed by Hertz never raised On the second ground, the records likewise show that the lease had
the defense of improper service of summons. The defenses that it already expired on 28 February 2006 because of Hertzs failure to
pleaded were limited to litis pendentia, pari delicto, performance of its request a renegotiation at least 90 days prior to the termination of the
obligations and lack of cause of action.38 Finally, it even asserted its own lease period.
counterclaim against Optima. 39?r?l1 The pertinent provision of the Contract of Lease reads:cralawlibrary
Measured against the standards in Philippine Commercial International x x x. The lease can be renewed only by a new negotiation between the
Bank, these actions lead to no other conclusion than that Hertz parties upon written notice by the LESSEE to be given to the LESSOR at
voluntarily appeared before the court a quo. We therefore rule that, by least 90 days prior to termination of the above lease period. 44?r?l1
virtue of the voluntary appearance of respondent Hertz before the As the lease was set to expire on 28 February 2006, Hertz had until 30
MeTC, the trial court acquired jurisdiction over respondents. November 2005 within which to express its interest in negotiating an
II extension of the lease with Optima. However, Hertz failed to
The instant ejectment case is not barred by litis pendentia. Hertz communicate its intention to negotiate for an extension of the lease
contends that the instant case is barred by litis pendentia because of within the time agreed upon by the parties. Thus, by its own provisions,
the pendency of its Complaint for Specific Performance against Optima the Contract of Lease expired on 28 February 2006.
before the RTC. Under the Civil Code, the expiry of the period agreed upon by the parties
We disagree. is likewise a ground for judicial ejectment. 45?r?l1
Litis pendentia requires the concurrence of the following As to the award of monthly compensation, we find that Hertz should pay
elements:cralawlibrary adequate compensation to Optima, since the former continued to occupy
(1) Identity of parties, or at least their representation of the same the leased premises even after the expiration of the lease contract. As
interests in both actions; the lease price during the effectivity of the lease contract was P54,200
(2) Identity of rights asserted and reliefs prayed for, the relief being per month, we find it to be a reasonable award.
founded on the same facts; and Finally, we uphold the award of attorney's fees in the amount of P30,000
(3) Identity with respect to the two preceding particulars in the two and judicial costs in the light of Hertz's unjustifiable and unlawful
cases, such that any judgment that may be rendered in the pending retention of the leased premises, thus forcing Optima to file the instant
case, regardless of which party is successful, would amount to res case in order to protect its rights and interest.
judicata in the other case.40?r?l1 ???ñr?bl?š ??r†??l l?? l?br?rÿ From the foregoing, we find that the MeTC committed no reversible
Here, while there is identity of parties in both cases, we find that the error in its 22 May 2006 Decision, and that the RTC committed no
rights asserted and the reliefs prayed for under the Complaint for reversible error either in affirming the MeTC's Decision.
Specific Performance and those under the present Unlawful Detainer WHEREFORE, in view of the foregoing, the instant Rule 45 Petition for
Complaint are different. As aptly found by the trial court:cralawlibrary Review is GRANTED. The assailed Decision and Resolution of the Court of
The Complaint for Specific Performance] seeks to compel plaintiff- Appeals in CA-G.R. SP No. 99890 are hereby REVERSED and SET ASIDE.
appellee Optima to: (1) renegotiate the contract of lease; (2) reconnect The Decision of the Regional Trial Court, Branch 13 7, Makati City in Civil
the utilities at the leased premises; and (3) pay damages. On the other Case No. 06-672 affirming in toto the Decision of the Metropolitan Trial
hand, the unlawful detainer case sought the ejectment of defendant- Court, Branch 64, Makati City in Civil Case No. 90842 is hereby
appellant Hertz from the leased premises and to collect arrears in REINSTATED and AFFIRMED.
rentals and utility bills. 41?r?l1 SO ORDERED.
As the rights asserted and the reliefs sought in the two cases are
different, we find that the pendency of the Complaint for Specific DECISION BRION, J.: Before us is the petition for review on certiorari, 1
Performance is not a bar to the institution of the present case for filed by Pablo Pua under Rule 45 of the Rules of Court, assailing the
ejectment. decision2 dated February 23, 2006 and the resolution3 dated June 23,
III 2006 of the Court of Appeals (CA) in CA-G.R. CV No. 84331. TheCA
The eviction of respondent and the award of damages, affirmed the order4 dated January Designated as Additional Member in
attorneys fees and costs were proper. lieu of Associate Justice Estela M. Perlas-Bernabe per Special Order No.
We find that the RTCs ruling upholding the ejectment of Hertz from the 13 77 dated November 22, 2012. •• Designated as Additional Member in
building premises was proper. First, respondent failed to pay rental lieu of Associate Justice Mariano C. del Castillo per Raft1e dated
arrearages and utility bills to Optima; and, second, the Contract of Lease November 26,2012. 1 Rollo, pp. 9-28. Id. at 30-43. Id. at 45-46. Records,
expired without any request from Hertz for a renegotiation thereof at pp. 189-191. Decision G.R. No. 173336 2 3, 2005 of the Regional Trial
least 90 days prior to its expiration. Court (RTC), Branch 19, Manila, in Civil Case No. 00-99353 which
On the first ground, the records show that Hertz failed to pay rental dismissed the case for failure to prosecute. The Antecedent Facts Pua is
arrearages and utility bills to Optima. Failure to pay timely rentals and engaged in the business of wholesale rice trading. Among his clients was
utility charges is an event of default under the Contract of respondent Jennelita Ang, allegedly operating under the business and
Lease,42entitling the lessor to terminate the lease. trade name of JD Grains Center. In October 2000, Pua delivered to Ang
Moreover, the failure of Hertz to pay timely rentals and utility charges truckloads of rice worth P766,800.00. Ang paid Pua through two (2)
entitles the lessor to judicially eject it under the provisions of the Civil postdated checks dated November 4, 2000 and November 6, 2000.
Code.43?r?l1 When the checks fell due, Pua tried to encash them, but they were
dishonored because they were drawn from a closed account. Pua case was the untimely death of his counsel – Atty. Kamid Abdul. He
immediately went to Ang’s residence to complain. Unfortunately, he was added that he had shown interest in the case by securing the properties
only able to talk to Ang’s mother and co-respondent, Lourdes Deyto, who of Deyto; paying the annual premium of the attachment bond 11 Id. at 101.
told him that Ang had been missing. Unable to locate Ang, Pua demanded 12 Id. at 113. 13 Id. at 116-118. 14 Id. at 120. 15 Letter addressed to Hon.
payment from Deyto, but she refused to pay. On November 24, 2000, Zenaida R. Daguna, Regional Trial Court, Branch 19, Manila; rollo, p. 151. 16
Pua filed a complaint5 with the RTC for collection of sum of money with Records, p. 129. 17 Id. at 133. Decision G.R. No. 173336 5 for the years
preliminary attachment against Ang and Deyto, as co-owners of JD 2002, 2003, and 2004; and causing the publication of summons on Ang.
Grains Center. The complaint alleged that the respondents were guilty of On February 23, 2006, the CA denied Pua’s appeal. While the CA
fraud in contracting the obligation, as they persuaded Pua to conduct recognized some of Pua’s actions in prosecuting the case, it still found
business with them and presented documents regarding their financial that the totality of the surrounding circumstances of the case pointed to
capacity to fund the postdated checks. On November 28, 2000, the RTC gross and immoderate delay in the prosecution of the complaint.18 Pua
issued an order for the issuance of a writ of preliminary attachment moved for reconsideration, which the CA denied in its resolution dated
upon an attachment bond of P766,800.00. Since Ang could not be found June 23, 2006. The Petition Pua now questions the CA rulings before us.
and had no available properties to satisfy the lien, the properties of He insists that it was the untimely demise of his counsel that created
Deyto were levied upon. Decision G.R. No. 173336 3 Summons was duly the hiatus in the prosecution of the case. He adds that he has
served on Deyto, but not on Ang who had absconded. On April 16, 2001, consistently paid the annual premiums of the attachment bond and has
Deyto submitted her answer with special and affirmative defenses.6 On also served summons by publication on Ang. He also questions the delay
May 8, 2001, Deyto filed a “Motion to Set Hearing of Defendant’s Special in the filing of Deyto’s answer. Pua pleads that the case be decided on
and Affirmative Defenses,” which was in the nature of a motion to the merits and not on mere technicalities. He contends that he has
dismiss.7 In an order dated July 12, 2001, the RTC denied Deyto’s motion adequately shown his interest in pursuing his meritorious claim against
to dismiss, stating that: The allegations raised by defendant Lourdes the respondents before the RTC; and the RTC and the CA committed
Deyto as special and affirmative defenses are largely evidentiary in patent error in dismissing his case for his alleged lack of interest. For
nature and therefore can be threshed out in a trial on the merit. her part, Deyto reiterates that the numerous delays involved in this
Consequently, the prayer to dismiss the complaint upon these grounds, case warrant its dismissal for failure to prosecute. First, the motion to
is hereby Denied.8 After Pua and Deyto filed their respective pre-trial serve summons by publication on Ang was filed about four hundred
briefs, the case was set for pre-trial conference on November 13, 2001. (400) days after the filing of the complaint; second, the delay of
On the scheduled date, the RTC ordered the resetting of the pre-trial seventy-seven (77) days before the case was set for pre-trial; and third,
conference to January 22, 2002, upon the parties’ agreement.9 The RTC, the delay of almost four (4) years in the prosecution of the case.
upon motion by Pua, also ordered the sheriff to submit the return of Decision G.R. No. 173336 6 The Issue The issue centers on whether the
summons for Ang. The summons by publication to Ang Since service of plaintiff incurred unreasonable delay in prosecuting the present case.
summons could not be effected on Ang, Pua moved for leave of court to The Court’s Ruling We deny the petition for lack of merit. We agree with
serve summons by publication on Ang on January 8, 2002.10 The RTC the finding that Pua committed delay in prosecuting his case against the
granted the motion in an order dated January 11, 2002.11 By March 2002, respondents. We clarify, however, that Pua’s delay is limited to his
Pua’s counsel manifested that the summons for Ang remained failure to move the case forward after the summons for Ang had been
unpublished; the RTC accordingly cancelled the pre-trial scheduled on published in the Manila Standard; he could not be faulted for the delay in
March 5, 2002.12 5 Rollo, pp. 258-267. 6 Id. at 238. 7 Ibid. 8 Ibid. 9 the service of summons for Ang. A 13-month delay occurred between the
Records, p. 94. 10 Id. at 97-98. Decision G.R. No. 173336 4 On May 17, filing of the complaint and the filing of the motion to serve summons by
2002, Pua again filed a manifestation that as early as April 17, 2002, he publication on Ang. This delay, however, is attributable to the failure of
had already paid P9,500.00 to Manila Standard for the publication of the the sheriff to immediately file a return of service of summons. The
summons on Ang, but it failed to do so.13 This prompted the RTC to issue complaint was filed on November 24, 2000, but the return of service of
an order directing Manila Standard to explain why the summons was not summons was filed only on January 3, 2002, after the RTC ordered its
published despite payment of the corresponding fees.14 On May 30, submission and upon Pua’s motion.19 Under Section 14, Rule 14 of the
2002, Manila Standard explained15 to the trial court that when Pua paid Rules of Court, service of summons may be effected on a defendant by
the publication fee, he issued a specific order to hold the publication publication, with leave of court, when his whereabouts are unknown and
until he ordered otherwise. Eventually, the summons for Ang was cannot be ascertained by diligent inquiry. The Rules of Court provides: 18
published in the May 31, 2002 edition of the Manila Standard. On January Rollo, pp. 36-37. 19 Records, p. 94. Decision G.R. No. 173336 7 SEC. 14.
24, 2003, more than (6) months after the publication of summons for Service upon defendant whose identity or whereabouts are unknown. –
Ang, the case was archived for inactivity. 16 Since neither party filed any In any action where the defendant is designated as an unknown owner,
further motions, the RTC dismissed the case for the plaintiff’s lack of or the like, or whenever his whereabouts are unknown and cannot be
interest to prosecute on October 1, 2004. 17 On November 3, 2004, Pua ascertained by diligent inquiry, service may, by leave of court, be
submitted a motion for reconsideration and a motion to declare Ang in effected upon him by publication in a newspaper of general circulation
default. The RTC, however, denied the motion in an order dated January and in such places and for such time as the court may order. [emphases
3, 2005; it added that the dismissal of the main case amounts to the ours] In Santos, Jr. v. PNOC Exploration Corporation, 20 the Court
dismissal of the motion to declare Ang in default. Pua appealed the case authorized resort to service of summons by publication even in actions
to the CA. He argued that the reason for the delay in prosecuting the in personam, considering that the provision itself allow this mode in any
action, i.e., whether the action is in personam, in rem, or quasi in rem. have the effect of an adjudication upon the merits, unless otherwise
The ruling, notwithstanding, there must be prior resort to service in declared by the court. [emphases ours; italics supplied] Once a case is
person on the defendant21 and substituted service,22 and proof that dismissed for failure to prosecute, the dismissal has the effect of an
service by these modes were ineffective before service by publication23 adjudication on the merits and is understood to be with prejudice to the
may be allowed for defendants whose whereabouts are unknown, filing of another action unless otherwise provided in the order of
considering that Section 14, Rule 14 of the Rules of Court requires a dismissal.32 In this case, Pua failed to take any action on the case after
diligent inquiry of the defendant’s whereabouts.24 Until the summons summons was served by publication on Ang. It took him more than two
has been served on Ang, the case cannot proceed since Ang is an years to file a motion to declare Ang in default and only after the RTC
indispensable party to the case; Pua alleged in his complaint that the has already dismissed his case for failure to prosecute. That Pua
respondents are co-owners of JD Grains Center.25 An indispensable renewed the attachment bond is not an indication of his intention to
party is one who must be included in an action before it may properly go prosecute. The payment of an attachment bond is not the appropriate
forward. A court must acquire jurisdiction over the person of procedure to settle a legal dispute in court; it could not be considered
indispensable parties before it can validly pronounce judgments as a substitute for the submission of necessary pleadings or motions
personal to the parties. The absence of an indispensable party renders that would lead to prompt action on the case. WHEREFORE, the foregoing
all subsequent actions of the court null and void for want of authority to premise considered, this present petition is DENIED. Accordingly, the
act, not only as to the absent parties but even as to those present.26 20 decision and the resolution of the Court of Appeals in CA-G.R. CV No.
G.R. No. 170943, September 23, 2008, 566 SCRA 272. 21 RULES OF 84331 are hereby AFFIRMED. 32 Insular Veneer, Inc. v. Judge Plan, 165
COURT, Rule 14, Section 6. 22 Id., Section 7. 23 Id., Section 14. 24 Mangila Phil. 1, 11-12 (1976); Malvar v. Pallingayan, No. L- 24736, September 27,
v. Court of Appeals, 435 Phil. 870, 882 (2002). 25 Rollo, p. 259. Decision 1966, 18 SCRA 121, 124; Rivera v. Luciano, No. L-20844, August 14, 1965, 14
G.R. No. 173336 8 After the summons for Ang was published on May 31, SCRA 947, 948; and Guanzon, et al. v. Mapa, 117 Phil. 471, 472-473 (1963).
2002 and the Affidavit of Service was issued by Manila Standard’s Decision 10 G.R. No. 173336 attachment bond is not an indication of his
Advertising Manager on June 3, 2002, no further action was taken on intention to prosecute. The payment of an attachment bond is not the
the case by Pua. Even after the RTC issued its order dated January 24, appropriate procedure to settle a legal dispute in court; it could not be
2003 to archive the case, Pua made no move to have the case reopened. considered as a substitute for the submission of necessary pleadings or
More than a year after the case was sent to the archives (October 1, motions that would lead to prompt action on the case. WHEREFORE, the
2004), the RTC decided to dismiss the case for Pua’s lack of interest to foregoing premtse considered, this present petition is DENIED.
prosecute the case. It was only after Pua received the order of Accordingly, the decision and the resolution of the Court of Appeals in
dismissal that he filed his motion for reconsideration and motion to CA-G.R. CV No. 84331 are hereby AFFIRMED.
declare Ang in default.27 We give scant consideration to Pua’s claim that
the untimely demise of his counsel caused the delay in prosecuting the
case. Pua had employed the services of a law firm;28 hence, the death
of one partner does not excuse such delay; the law firm had other
lawyers who would take up the slack created by the death of a partner.
The more relevant rule is that a client is bound by the action of his
counsel in the conduct of his case; he cannot complain that the result of
the litigation could have been different had the counsel proceeded
differently.29 Moreover, Pua had also secured the services of another
law firm even before the death of Atty. Kamid Abdul.30 In fact, this
second law firm signed the formal appearance in court on October 15,
2001.31 To our mind, with two (2) law firms collaborating on the case, no
reason exists for delay if only Pua had been more vigilant. 26 Regner v.
Logarta, G.R. No. 168747, October 19, 2007, 537 SCRA 277, 289. 27 Dated
November 3, 2004; records, pp. 137-141. 28 Abdul & Maningas Law
Offices; rollo, p. 201. 29 United States v. Umali, 15 Phil. 33, 35 (1910). 30
Cruz Durian Alday & Cruz Matters; records, p. 74. 31 Ibid. Decision G.R.
No. 173336 9 Section 3, Rule 17 of the Revised Rules of Court authorizes
the dismissal of a case when the plaintiff fails to prosecute his action
for an unreasonable length of time: SEC. 3. Dismissal due to fault of
plaintiff. — If, for no justifiable cause, the plaintiff fails to appear on the
date of the presentation of his evidence in chief on the complaint, or to
prosecute his action for an unreasonable length of time, or to comply
with these Rules or any order of the court, the complaint may be
dismissed upon motion of the defendant or upon the court’s own motion,
without prejudice to the right of the defendant to prosecute his
counterclaim in the same or in a separate action. This dismissal shall