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SECOND DIVISION

G.R. No. 174542, August 03, 2015

KAREN GO, Petitioner, v. LAMBERTO ECHAVEZ, Respondent.

DECISION

BRION, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the
March 30, 2006 Decision1 and August 15, 2006 Resolution2 of the Court of Appeals3 (CA) in CA-G.R. No. SP
No. 77310.

The assailed CA decision dismissed the Petition for Certiorari and Prohibition4 under Rule 65 of the Rules of
Court, and ruled that Branch 39 of the Regional Trial Court (RTC) of Misamis Oriental committed no grave
abuse of discretion in: (i) granting the respondent's Motion for Execution, and in issuing the Writ of
Execution on May 12, 2003; and (ii) denying the petitioner's Motion for Reconsideration5 on May 27, 2003.
The challenged CA resolution, on the other hand, denied the petitioner's Motion for Reconsideration.

The Antecedents

Petitioner Karen Go (Go) is engaged in buying and selling motor vehicles and heavy equipment under the
business name Kargo Enterprises (Kargo). Nick Carandang (Carandang) is Kargo's Manager at its General
Santos City Branch.6 redarclaw

On December 20, 1996, Kargo7 and Carandang entered into a Contract of Lease with Option to
Purchase8 (lease contract) over a Fuso Dropside Truck (truck). The lease contract stipulated that Kargo
would execute a Deed of Absolute Sale over the truck upon Carandang's full payment of five equal monthly
installments of P78,710.75.9 If he failed to pay any of the installments, Carandang should return the truck
and forfeit his payments as rentals. The lease contract also prohibited Carandang from assigning his rights,
as lessee-buyer, to third persons.10 redarclaw

Carandang failed to pay the installments11 prompting Go to demand the return of the truck.12Carandang,
instead of returning the truck, sold it to respondent Lamberto Echavez (Echavez) without Go's knowledge.
Later, Go learned about the sale but did not know to whom the truck was sold.13Hence, on April 30, 1997,
Go filed before the RTC a Complaint14 for Replevin, docketed as Civil Case No. 97-271, against Carandang
and John Doe.15

The RTC issued the Writ of Replevin; and on May 17, 1997, the sheriff seized the truck from Echavez. 16 redarclaw

On August 5, 1997, Echavez filed his Answer17 with Cross-Claim and Counterclaim. Echavez denied
knowledge of the lease contract, and claimed that he bought the truck in good faith and for value from
Kargo through Carandang.18 According to Echavez, Go could not deny Carandang's authority to sell Kargo's
trucks because she represented to the public that Carandang was Kargo's manager.

In his counterclaim,19 Echavez alleged that from the time the truck was seized, he had missed many of his
deliveries for his seeds and fertilizer business causing him actual damages in terms of unrealized
income amounting to P10,000.00 per week. For his cross-claim, Echavez prayed that Carandang should
be held liable if the RTC ruled in Go's favor.20 redarclaw

Carandang, however, failed to answer the Complaint and the Cross-claim despite receipt of summonses.
Hence, the RTC declared him in default.

After trial on the merits, the RTC held Go and Carandang solidarity liable to Echavez for damages. The RTC
found that: (i) Echavez purchased the truck from Kargo, through Carandang, in good faith and for value;
and (ii) Go is estopped from denying Carandang's authority to sell the truck. The dispositive portion of
the February 11, 2000 Judgment reads: LawlibraryofCRAlaw
WHEREFORE, in view of the foregoing and considering the preponderance of evidence in favor of the
defendant Lamberto Echavez, the complaint against him is hereby DISMISSED. Upon convincing proof of the
counterclaim, judgment is hereby rendered ordering the plaintiff and defendant Nick Carandang to jointly
and severally pay or indemnify herein defendant Lamberto Echavez of the following: Lawlib raryofCRAlaw

1. P10,000.00 per week as actual damages from the time the subject motor vehicle was
seized from defendant Echavez, that is, on May 17, 1997;

2. P300,000.00 by way of moral damages; chanRoblesvi rtua lLawl ibra ry

3. P50,000.00 as exemplary damages; chanRoblesvi rtua lLawl ibra ry

4. P50,000.00 as litigation expenses and P50,000.00 as attorney's fees, exclusive of the sum of
P3,000.00 as appearance fee for every hearing. The damages and attorney's fees awarded by the
Court is pursuant to the ruling by the Supreme Court in National Power Corporation vs. CA,
GR# 122195, July 23, 1998;and to restitute unto defendant Lamberto Echavez the motor
vehicle seized on replevin or to refund to the said defendant, the payment made for the said
vehicle and to pay the costs. [Emphasis supplied.]

On February 29, 2000, Go moved for reconsideration arguing that the RTC failed to consider the Lease
Contract, and that the actual damages awarded to Echavez were not supported by evidence.21 reda rclaw

On April 17, 2000, the RTC granted in part Go's Motion for Reconsideration holding Carandang liable to Go
for the truck's value22 plus damages. The RTC, however, maintained that Echavez is entitled to his
counterclaim.23 Thus, the April 17, 2000 Order preserved the dispositive portion of the February 11, 2000
Judgment but added a new paragraph ordering Carandang to pay Go damages, litigation expenses, and
attorney's fees.24 reda rclaw

On April 25, 2000, Go appealed the Judgment to the CA, docketed as C.A. G.R. No. CV-68814.

Meanwhile, on Echavez's motion, the RTC allowed partial execution of the Judgment pending appeal.Thus,
on May 5, 2000, Go delivered to Echavez another truck as substitute for the truck previously seized.25 redarclaw

On June 4, 2002, CA. G.R. No. CV-68814 was dismissed since Go had failed to serve and file the required
number of copies of her appellant's brief.26 Go moved for reconsideration, but the CA denied her
motion. Thus, on October 2, 2002, the CA entered in its book of entries the dismissal of CA. G.R. No. CV-
68814.27

On April 8, 2003, Echavez moved for execution of the RTC's Judgment. Before the RTC could act on the
Motion for Execution, Go filed a Motion for Clarification28 alleging that the P10,000.00 per week award: (i)
will roughly amount to P1,600,000.00, which is more than double the truck's value; (ii) erroneously
assumed that the truck was "continually (sic) hired and running without maintenance for a period of nearly
three years"; (iii) "is not an 'actual' damage;" and (iv) is inequitable, highly speculative, and will unjustly
enrich Echavez. Pending clarification, Go prayed that the RTC hold the issuance of the writ of execution.

Echavez opposed Go's motion for being dilatory.

In her Reply with Manifestation,29 Go argued that the February 11, 2000 Judgment, as modified by the
April 17, 2000 Order, is unenforceable because it contains materially conflicting rulings. Go argues that since
the RTC held Carandang liable on the lease contract, it also upheld the provision30prohibiting Carandang
from assigning his rights to third persons. In effect, the RTC invalidated Carandang's transfer of the truck to
Echavez and recognized Go's ownership. Thus, the counterclaim should be dismissed because Go, as owner,
had the right to recover the truck from Echavez.

On May 12, 2003, RTC Judge Downey C. Valdevilla denied Go's Motion for Clarification and Manifestation,
and issued the Writ of Execution. Go moved for reconsideration, but the RTC denied her motion.

On June 4, 2003, Go filed with the CA a Petition for Certiorari and Prohibition with Preliminary Injunction &
Temporary Restraining Order alleging that the RTC committed grave abuse of discretion amounting to lack
or excess of jurisdiction in executing a Judgment that: (i) contains materially conflicting rulings; and (ii) will
result in Echavez's unjust enrichment. Go prayed that the CA stop the RTC from implementing the Writ of
Execution.

The CA's Decision

In its Decision dated March 30, 2006, the CA denied Go's petition for certiorari.

The CA ruled that the RTC's Judgment does not contain materially conflicting rulings. Go merely failed to
grasp the correctness of the ruling.31 reda rc law

The CA reminded Go that in the main case, she sued two defendants: (i) Carandang, in his capacity as
buyer of the truck; and (ii) Echavez, as possessor and owner of the truck.32 According to the CA, the RTC
can give due course to the complaint against Carandang and dismiss it in so far as Echavez is
concerned.33 This is because, unlike Carandang, Echavez successfully proved his defense and
counterclaim.34 Considering that there is nothing to clarify, the RTC's execution of Judgment did not
constitute abuse, much less grave abuse of discretion.

The CA opined that the award of P10,000.00 per week as actual damages is exorbitant. However, it
admitted that its opinion no longer matters because the Judgment had already become final.

Go moved for reconsideration, but the CA denied her motion.

The Petition for Review on Certiorari

Go claims that the RTC decided the case contrary to law, jurisprudence, and regular procedure calling for
the exercise of this Court's power of supervision.35 She argues that: LawlibraryofCR Alaw

1. The February 11, 2000 Judgment, modified by the April 17, 2000 Order, did not finally resolve or
dispose of the action because the RTC made two conflicting rulings which, unless clarified, renders
the Judgment unenforceable.36 redarclaw

2. An execution of the award of actual damages, amounting to P10,000.00 per week from May 17,
1997, will amount to an unjust enrichment of the respondent.37

Thus, Go prays, among others, that this Court: (i) set aside the RTC's Judgment dated February 11,
2000, and its Order dated April 17, 2000; (ii) nullify all proceedings in respect to the execution in Civil
Case No. 97-271; (iii) declare Go not liable on Echavez's counterclaim.38 redarclaw

The Case for the Respondent

Echavez claims that the RTC's Judgment does not contain materially conflicting rulings, hence, there is
nothing to clarify.39 According to Echavez, the present petition should be dismissed because it seeks the
"recalibration" of the RTC's findings of fact and law.40 Echavez points out that this Court is not a trier of
facts, and that a petition for certiorari cannot substitute for a lost appeal.41 redarc law

The Issues Raised

The parties' arguments, properly joined, present to us the following issues: Lawl ibra ryofCRAlaw

1) Whether the February 11, 2000 judgment, as modified by the April 27, 2000 order, contains materially
conflicting rulings.

2) Whether the actual damages awarded to Echavez can still be modified.

The Court's Ruling

We deny the petition for lack of merit.

The Judgment does not


contain materially
conflicting rulings

We are not persuaded by Go's claim that the Judgment, as modified by the April 17, 2000 Order, contains
two materially conflicting rulings.

Go has read too many assumptions in the April 17, 2000 Order. The RTC never invalidated the sale between
Carandang and Echavez; it simply recognized Carandang's obligations to Go for breach of contract. The
lease contract bound only Go and Carandang because Echavez was found to be a buyer in good faith and for
value.

The flaw in Go's argument springs from her misconception that Echavez's counterclaim is a component part
of the main action. The Rules of Court define a counterclaim as any claim which a defending party may have
against an opposing party.42 Sec. 1, Rule 3 of the Rules of Court also states that the term "plaintiff may
refer to the counterclaimant or cross-claimant while the term "defendant" may refer to the defendant in the
counterclaim, or in the cross-claim. Thus, when Echavez filed his Counterclaim in Civil Case No. 97-271, he
became the plaintiff in the counterclaim, while Go became the defendant.

We also note that Go's complaint against Carandang is separate from the complaint against Echavez
because they were not sued as alternative defendants. As the CA correctly put it, Carandang was sued
based on the lease contract; while Echavez was impleaded as possessor of the truck.

In effect, there are four causes of action in Civil Case No. 97-271: first, Go's complaint against Carandang
based on the Lease Contract; second, Go's complaint against Echavez, as possessor of the
truck; third, Echavez's counterclaim against Go; and fourth, Echavez's cross-claim against Carandang.

Considering that the four causes of action are independent from each other, the RTC can grant Go's
complaint against Carandang but dismiss that against Echavez, and at the same time, grant Echavez's
counterclaim and cross-claim against Go and Carandang, respectively. These rulings are not incompatible
with one another.

What would be incompatible is a decision favoring Go's complaint against Echavez, and at the same time
awarding the latter's counterclaim. This is because Echavez's counterclaim is compulsory in character, or
one that arises as a consequence of the main action. Thus, had Go's case against Echavez been sustained, it
would mean that Go was entitled to the possession of the truck and that its seizure could not have injured
Echavez. That is not the case here.

The February 11, 2000 Judgment


had attained finality and had
become Immutable

To "clarify" is to free the mind of confusion, doubt or uncertainty, or to make something


understandable.43 Although Go prays for "clarification," We note that her objective is to petition this Court to
modify the judgment award and ultimately, to nullify or at least, reopen Civil Case No. 97-271.

We point at the outset that the February 11, 2000 Judgment, as modified by the April 27, 2000 Order,
became final and executory on June 19, 2015, or 15 days following the dismissal of C.A. G.R. No. CV-
68814.44 At that point, the Judgment had become immutable, and hence could no longer be changed,
revised, amended, or reversed.45 reda rc law

The rule, however, admits exceptions: first, the correction of clerical errors; second, the making ofnunc pro
tunc entries which causes no prejudice to any party; third, an attack against a void judgment;
and. fourth and last, supervening events that render execution unjust and inequitable.46 redarclaw

Clerical errors cover all errors, mistakes, or omissions47 that result in the record's failure to correctly
represent the court's decision.48 However, courts are not authorized to add terms it never adjudged, nor
enter orders it never made, although it should have made such additions or entered such orders.49 redarclaw

In other words, to be clerical, the error or mistake must be plainly due to inadvertence or
negligence.50 Examples of clerical errors include the interchange of the words "mortgagor" and
"mortgagee,"51 and the correction of the dispositive portion to read "heirs of Joaquin Avendafio" instead of
"heirs of Isabela Avendano."52 redarclaw
Nunc pro tunc is Latin for "now for then." Its purpose is to put on record an act which the court performed,
but omitted from the record through inadvertence or mistake.53 It is neither intended to render a new
judgment nor supply the court's inaction.54 In other words, a nunc pro tunc entry may be used to make the
record speak the truth, but not to make it speak what it did not speak but ought to have spoken. 55 redarclaw

A void judgment or order has no legal and binding effect. It does not divest rights and no rights can be
obtained under it; all proceedings founded upon a void judgment are equally worthless.56 redarclaw

Void judgments, because they are legally nonexistent,57 are susceptible to collateral attacks. A collateral
attack is an attack, made as an incident in another action, whose purpose is to obtain a different relief. In
other words, a party need not file an action to purposely attack a void judgment; he may attack the void
judgment as part of some other proceeding. A void judgment or order is a lawless thing, which can be
treated as an outlaw and slain at sight, or ignored wherever and whenever it exhibits its head.58 Thus, it can
never become final, and could be assailed at any time.

Nevertheless, this Court has laid down a stiff requirement to collaterally overthrow a judgment. In the case
of Reyes, et al. v. Datu,59 We ruled that it is not enough for the party seeking the nullity to show a mistaken
or erroneous decision; he must show to the court that the judgment complained of is utterly void.60 In short,
the judgment must be void upon its face.61
reda rclaw

Supervening events, on the other hand, are circumstances that transpire after the decision's finality
rendering the execution of the judgment unjust and inequitable.62 It includes matters that the parties were
not aware of prior to or during the trial because such matters were not yet in existence at the time. 63 In
such cases, courts are allowed to suspend execution, admit evidence proving the event or circumstance, and
grant relief as the new facts and circumstances warrant.64 redarc law

To successfully stay or stop the execution of a final judgment, the supervening event: (i) must have altered
or modified the parties' situation as to render execution inequitable, impossible, or unfair;65and (ii) must be
established by competent evidence; otherwise, it would become all too easy to frustrate the conclusive
effects of a fined and immutable judgment.66 redarclaw

The award can no longer be


modified because it is not covered
by any of the exceptions

The challenged award is not a clerical error because it is exactly what Echavez prayed for.

In his counterclaim, Echavez alleged that he suffered actual losses "in the amount of not less than
P10,000.00 weekly in terms of unrealized income reckoned from the time the truck was seized by the
sheriff."67 During trial, Echavez offered documentary exhibits68 to prove such losses; and the RTC, in turn,
admitted those pieces of evidence,69 ruling that "it cannot help but agree with defendant Echavez that he
has suffered actual loss of income." Obviously, there was no inadvertence, mistake, nor omission here.

A nunc pro tunc entry cannot be recognized in this case.

Go argues that, in granting the award, the RTC assumed that the vehicle was hired and was continually
running for three years, which is contrary to the normal usage and practice in the transport industry. We
note that "normal usage and practice in the transport industry" is a not matter adjudged in the original
decision. Thus, had Go's motion been granted, the RTC would have required the parties to prove what
consists "normal usage and practice in the transport industry." Such modification is not nunc pro
tunc because it supplies findings of facts and law not included in the original judgment.

Moreover, a nunc pro tunc entry should cause no prejudice to either party. Apparently, the diminution of the
award is prejudicial to Echavez because he would be deprived of a right already vested in him by the
Judgment.

Neither does the award render the judgment void.

Go failed to prove that the judgment is utterly void. On the contrary, the judgment has complied with all the
requisites of a valid decision70 and has fully satisfied the requirements of due process.71 reda rclaw
Go insists, however, that this Court should take a second look at the propriety of the award because it would
result in Echavez's unjust enrichment. This, we cannot do.

We agree with the CA that some might opine the award to be exorbitant. However, variance in opinion does
not render the award wrong, much less void. Considering that the judgment is already final, it may no
longer be modified in any respect, even if the modification is meant to correct what is perceived to be an
erroneous conclusion of fact or law, and regardless of whether the modification is attempted by the court
that rendered it or by the highest Court of [the] land.72 redarclaw

Lastly, Go did not allege in her petition, much less establish by competent evidence, that the parties'
situation changed after the judgment became final.

Nonetheless, we note that during the judgment's partial execution, Go delivered to Echavez another truck as
replacement for the one previously seized. To our mind, this event did not change the situation of the
parties because: (i) the restitution of the truck is a separate award from the actual damages; and (ii)
Echavez's receipt of the replacement truck did not recompense him for the unrealized income he suffered
since May 17, 1997.

We realize, however, that while the Judgment specifies the day Go must begin paying Echavez PI0,000.00
per week, it does not say until when she is obligated to pay.73 reda rc law

This Court puts on record that Go never alleged that the award is vague for this reason. Instead, her Motion
for Clarification argues that "a rough computation of the [award] will amount to more than One Million Six
Hundred Thousand Pesos" and that the amount "assumes that the vehicle is continually hired and running
without maintenance for a period of three years." These arguments show that even Go understood the
meaning of the award— that the PI0,000.00 per week covers only three years, or 156 weeks counted from
May 17, 1997, up to May 5, 2000.

In any case, what is clear to us is that Go never introduced any competent evidence to prove that the RTC
executed the judgment unreasonably or to the point of absurdity.

Considering that there is no issue affecting the Judgment, Echavez is entitled to a writ of execution as a
matter of right.74 Accordingly, the RTC did not commit abuse, much less grave abuse of discretion in issuing
the writ of execution, and in denying Go's Motion for Clarification and Manifestation.

Finally, we note that Go's petition for certiorari was filed on June 4, 2003. Had it been filed after A.M. No.
07-7-12-SC75 came into effect, the CA would have been constrained to rule on whether the petition for
certiorari was prosecuted manifestly for delay or was too unsubstantial to require consideration.76 In these
instances, the CA might have ordered Go and his counsel to pay treble costs. As a word of caution, lawyers
should study their grounds carefully, lest they waste the precious time of the courts.

WHEREFORE, in the light of these considerations, we hereby DENY the petition and AFFIRM in toto the
Decision of the Court of Appeals dated March 30, 2006, and the Resolution dated August 15, 2006, in CA-
G.R. No. SP No. 77310. Costs against petitioner Karen Go.

SO ORDERED.

SECOND DIVISION

G.R. No. 175507, October 08, 2014

RAMON CHING AND PO WING PROPERTIES, INC., Petitioners, v. JOSEPH


CHENG, JAIME CHENG, MERCEDES IGNE1 AND LUCINA
SANTOS, Respondents.

DECISION
LEONEN, J.:

Rule 17 of the Rules of Civil Procedure governs dismissals of actions at the


instance of the plaintiff. Hence, the "two-dismissal rule" under Rule 17, Section
1 of the Rules of Civil Procedure will not apply if the prior dismissal was done
at the instance of the defendant.

This is a petition for review on certiorari assailing the decision2 and


resolution3 of the Court of Appeals in CA-G.R. SP. No. 86818, which upheld the
(1) order4 dated November 22, 2002 dismissing Civil Case No. 02-103319
without prejudice, and (2) the omnibus order5 dated July 30, 2004, which
denied petitioners' motion for reconsideration. Both orders were issued by the
Regional Trial Court of Manila, Branch 6.6

The issues before this court are procedural. However, the factual antecedents
in this case, which stemmed from a complicated family feud, must be stated to
give context to its procedural development.

It is alleged that Antonio Ching owned several businesses and properties,


among which was Po Wing Properties, Incorporated (Po Wing Properties).7 His
total assets are alleged to have been worth more than P380 million.8 It is also
alleged that while he was unmarried, he had children from two women.9

Ramon Ching alleged that he was the only child of Antonio Ching with his
common-law wife, Lucina Santos.10 She, however, disputed this. She maintains
that even if Ramon Ching's birth certificate indicates that he was Antonio
Ching's illegitimate child, she and Antonio Ching merely adopted him and
treated him like their own.11

Joseph Cheng and Jaime Cheng, on the other hand, claim to be Antonio
Ching's illegitimate children with his housemaid, Mercedes Igne.12 While
Ramon Ching disputed this,13 both Mercedes and Lucina have not.14

Lucina Santos alleged that when Antonio Ching fell ill sometime in 1996, he
entrusted her with the distribution of his estate to his heirs if something were
to happen to him. She alleged that she handed all the property titles and
business documents to-Ramon Ching for safekeeping.15 Fortunately, Antonio
Ching recovered from illness and allegedly demanded that Ramon Ching return
all the titles to the properties and business documents.16

On July 18, .1996, Antonio Ching was murdered.17 Ramon Ching allegedly
induced Mercedes igne and her children, Joseph Cheng and Jaime Cheng, to
sign an agreement and waiver18 to Antonio Ching's estate in consideration of
P22.5 million. Mercedes Igne's children alleged that Ramon Ching never paid
them.19 On October 29, 1996, Ramon Ching allegedly executed an affidavit of
settlement of estate,20 naming himself as the sole heir and adjudicating upon
himself the entirety of Antonio Ching's estate.21

Ramon Ching denied these allegations and insisted that when Antonio Ching
died, the Ching family association, headed by Vicente Cheng, unduly
influenced him to give Mercedes Igne and her children financial aid considering
that they served Antonio Ching for years. It was for this reason that an
agreement and waiver in consideration of P22.5 million was made. He also
alleged that he was summoned by the family association to execute an affidavit
of settlement of estate declaring him to be Antonio Ching's sole heir.22

After a year of investigating Antonio Ching's death, the police found Ramon
Ching to be its primary suspect.23 Information24 was filed against him, and a
warrant of arrest25cralawred was issued.

On October 7, 1998, Joseph Cheng, Jaime Cheng, and Mercedes Igne (the
Chengs) filed a complaint for declaration of nullity of titles against Ramon
Ching before the Regional Trial Court of Manila. This case was docketed
as Civil Case No. 98-91046 (the first case).26

On March 22, 1999, the complaint was amended, with leave of court, to
implead additional defendants, including Po Wing Properties, of which Ramon
Ching was a primary stockholder. The amended complaint was for "Annulment
of Agreement, Waiver, Extra-Judicial Settlement of Estate and the Certificates
of Title Issued by Virtue of Said Documents with Prayer for Temporary
Restraining Order and Writ of Preliminary Injunction."27 Sometime after,
Lucina Santos filed a motion for intervention and was allowed to intervene.28

After the responsive pleadings had been filed, Po Wing Properties filed a motion
to dismiss on the ground of lack of jurisdiction of the subject matter.29

On November 13, 2001, the Regional Trial Court of Manila, Branch 6, granted
the motion to dismiss on the ground of lack of jurisdiction over the subject
matter.30 Upon motion of the Chengs' counsel, however, the Chengs and
Lucina Santos were given fifteen (15) days to file the appropriate pleading. They
did not do so.31

On April 19, 2002, the Chengs and Lucina Santos filed a complaint for
"Annulment of Agreement, Waiver, Extra-Judicial Settlement of Estate and the
Certificates of Title Issued by Virtue of Said Documents with Prayer for
Temporary Restraining Order and Writ of Preliminary Injunction" against
Ramon Ching and Po Wing Properties.32 This case was docketed as Civil Case
No. 02-103319 (the second case) and raffled to Branch 20 of the Regional Trial
Court of Manila.33

When Branch 20 was made aware of the first case, it issued an order
transferring the case to Branch 6, considering that the case before it involved
substantially the same parties and causes of action.34

On November 11, 2002, the Chengs and Lucina Santos filed a motion to
dismiss their complaint in the second case, praying that it be dismissed
without prejudice.35

On November 22, 2002, Branch 6 issued an order granting the motion to


dismiss on the basis that the summons had not yet been served on Ramon
Ching and Po Wing Properties, and they had not yet filed any responsive
pleading. The dismissal of the second case was made without prejudice.36

On December 9, 2002, Ramon Ching and Po Wing Properties filed a motion for
reconsideration of the order dated November 22, 2002. They argue that the
dismissal should have been with prejudice under the "two-dismissal rule" of
Rule 17, Section 1 of the 1997 Rules of Civil Procedure, in view of the previous
dismissal of the first case.37

During the pendency of the motion for reconsideration, the Chengs and Lucina
Santos filed a complaint for "Disinheritance and Declaration of Nullity of
Agreement and Waiver, Affidavit of Extrajudicial Agreement, Deed of Absolute
Sale, and Transfer Certificates of Title with Prayer for TRO and Writ of
Preliminary Injunction" against Ramon Ching and Po Wing Properties. This
case was docketed as Civil Case No. 02-105251 (the third case) and was
eventually raffled to Branch 6.38

On December 10, 2002, Ramon Ching and Po Wing Properties filed their
comment/opposition to the application for temporary restraining order in the
third case. They also filed a motion to dismiss on the ground of res jiidicata,
litis pendencia, forum-shopping, and failure of the complaint to state a cause of
action. A series of responsive pleadings were filed by both parties.39

On July 30, 2004, Branch 6 issued an omnibus order40 resolving both the
motion for reconsideration in the second case and the motion to dismiss in the
third case. The trial court denied the motion for reconsideration and the motion
to dismiss, holding that the dismissal of the second case was without prejudice
and, hence, would not bar the filing of the third case.41

On October 8, 2004, while their motion for reconsideration in the third case
was pending, Ramon Ching and Po Wing Properties filed a petition for certiorari
(the first certiorari case) with the Court of Appeals, assailing the order dated
November 22, 2002 and the portion of the omnibus order dated July 30,.2004,
which upheld the dismissal of the second case.42

On December 28, 2004, the trial court issued an order denying the motion for
reconsideration in the third case. The denial prompted Ramon Ching and Po
Wing Properties to file a petition for certiorari and prohibition with application
for a writ of preliminary injunction or the issuance of a temporary restraining
order (the second certiorari case) with the Court of Appeals.43

On March 23, 2006, the Court of Appeals rendered the decision44 in the first
certiorari case dismissing the petition. The appellate court ruled that Ramon
Ching and Po Wing Properties' reliance on the "two-dismissal rule" was
misplaced since the rule involves two motions for dismissals filed by the
plaintiff only. In this case, it found that the dismissal of the first case was upon
the motion of the defendants, while the dismissal of the second case was at the
instance of the plaintiffs.45

Upon the denial of their motion for reconsideration,46 Ramon Ching and Po
Wing Properties filed this present petition for review47 under Rule 45 of the
Rules of Civil Procedure.

Ramon Ching and Po Wing Properties argue that the dismissal of the second
case was with prejudice since the non-filing of an amended complaint in the
first case operated as a dismissal on the merits.48 They also argue that the
second case should be dismissed on the ground of res judicatasince there was
a previous final judgment of the first case involving the same parties, subject
matter, and cause of action.49

Lucina Santos was able to file a comment50 on the petition within the period
required.51 The Chengs, however, did not comply.52 Upon the issuance by this
court of a show cause order on September 24, 2007,53 they eventually filed a
comment with substantially the same allegations and arguments as that of
Lucina Santos'.54

In their comment, respondents allege that when the trial court granted the
motion to dismiss, Ramon Ching's counsel was notified in open court that the
dismissal was without prejudice. They argue that the trial court's order became
final and executory when he failed to file his motion for reconsideration within
the reglementary period.55

Respondents argue that the petition for review should be dismissed on the
ground of forum shopping and litis pendencia. since Ramon Ching and Po Wing
Properties are seeking relief simultaneously in two forums by filing the two
petitions for certiorari, which involved the same omnibus order by the trial
court.56 They also argue that the "two-dismissal rule" and res judicata did not
apply since (1) the failure to amend a complaint is not a dismissal, and (2) they
only moved for dismissal once in the second case.57

In their reply,58 petitioners argue that they did not commit forum shopping
since the actions they commenced against respondents stemmed from the
complaints filed against them in the trial courts.59 They reiterate that their
petition for review is only about the second case; it just so happened that the
assailed omnibus order resolved both the second and third cases.60

Upon the filing of the parties' respective memoranda,61 the case was submitted
for decision.62

For this court's resolution are the following issues:

I. Whether the trial court's dismissal of the second case operated as a bar
to the filing of a third case, as per the "two-dismissal rule"; and

II. Whether respondents committed forum shopping when they filed the
third case while the motion for reconsideration of the second case was
still pending.

The petition is denied.

The "two-dismissal rule" vis-a-vis


the Rules of Civil Procedure

Dismissals of actions are governed by Rule 17 of the 1997 Rules of Civil


Procedure. The pertinent provisions state:ChanRoblesVirtualawlibrary

RULE 17
DISMISSAL OF ACTIONS

SEC. 1. Dismissal upon notice by plaintiff. — A complaint may be dismissed


by the plaintiff by filing a notice of dismissal at any time before service of the
answer or of a motion for summary judgment. Upon such notice being filed, the
court shall issue an order confirming the dismissal. Unless otherwise stated in
the notice, the dismissal is without prejudice, except that a notice operates as an
adjudication upon the merits when filed by a plaintiff who has once dismissed in
a competent court an action based on or including the same claim.

SEC. 2. Dismissal upon motion of plaintiff. — Except as provided in the


preceding section, a complaint shall not be dismissed at the plaintiffs instance
save upon approval of the court and upon such terms and conditions as the
court deems proper. If a counterclaim has been pleaded by a defendant prior to
the service upon him of the plaintiffs motion for dismissal, the dismissal shall
be limited to the complaint. The dismissal shall be without prejudice to the
right of the defendant to prosecute his counterclaim in a separate action unless
within fifteen (15) days from notice of the motion he manifests his preference to
have his counterclaim resolved in the same action. Unless otherwise specified
in the order, a dismissal under this paragraph shall be without prejudice. A class
suit shall not be dismissed or compromised without the approval of the court.
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 have the effect of an
adjudication upon the merits, unless otherwise declared by the court. (Emphasis
supplied)chanroblesvirtuallawlibrary

The first section of the rule contemplates a situation where a plaintiff requests
the dismissal of the case before any responsive pleadings have been filed by the
defendant. It is done through notice by the plaintiff and confirmation by the
court. The dismissal is without prejudice unless otherwise declared by the
court.

The second section of the rule contemplates a situation where a counterclaim


has been pleaded by the defendant before the service on him or her of the
plaintiffs motion to dismiss. It requires leave of court, and the dismissal is
generally without prejudice unless otherwise declared by the court.

The third section contemplates dismissals due to the fault of the plaintiff such
as the failure to prosecute. The case is dismissed either upon motion of the
defendant or by the court motu propio. Generally, the dismissal
is with prejudice unless otherwise declared by the court.

In all instances, Rule 17 governs dismissals at the instance of the plaintiff, not
of the defendant. Dismissals upon the instance of the defendant are generally
governed by Rule 16, which covers motions to dismiss.63

In Insular Veneer, Inc. v. Hon. Plan,64 Consolidated Logging and Lumber Mills
filed a complaint against Insular Veneer to recover some logs the former had
delivered to the latter. It also filed ex parte a motion for issuance of a
restraining order. The complaint and motion were filed in a trial court in
Isabela.65

The trial court granted the motion and treated the restraining order as a writ of
preliminary injunction. When Consolidated Logging recovered the logs, it filed a
notice of dismissal under Rule 17, Section 1 of the 1964 Rules of Civil
Procedure.66

While the action on its notice for dismissal was pending, Consolidated Logging
filed the same complaint against Insular Veneer, this time in a trial court in
Manila. It did not mention any previous action pending in the Isabela court.67
The Manila court eventually dismissed the complaint due to the non-
appearance of Consolidated Logging's counsel during pre-trial. Consolidated
Logging subsequently returned to the Isabela court to revive the same
complaint. The Isabela court apparently treated the filing of the amended
complaint as a withdrawal of its notice of dismissal.68

Insular Veneer also filed in the Isabela court a motion to dismiss, arguing that
the dismissal by the Manila court constituted res judicata over the case. The
Isabela court, presided over by Judge Plan, denied the motion to dismiss. The
dismissal was the subject of the petition for certiorari and mandamus with this
court.69

This court stated that:ChanRoblesVirtualawlibrary

In resolving that issue, we are confronted with the unarguable fact that
Consolidated Logging on its volition dismissed its action for damages and
injunction in the Isabela court and refiled substantially the same action in the
Manila court. Then, when the Manila court dismissed its action for failure to
prosecute, it went hack [sic] to the Isabela court and revived its old action by
means of an amended complaint.

Consolidated Logging would like to forget the Manila case, consign it to oblivion
as if it were a bad dream, and prosecute its amended complaint in the Isabela
court as if nothing had transpired in the Manila court. We hold that it cannot
elude the effects of its conduct in junking the Isabela case and in giving that
case a reincarnation in the Manila court. Consolidated Logging' [sic] filed a
new case in Manila at its own risk. Its lawyer at his peril failed to appear at the
pre-trial.70chanRoblesvirtualLawlibrary

This court ruled that the filing of the amended complaint in the Isabela court
was barred by the prior dismissal of the Manila court, stating
that:ChanRoblesVirtualawlibrary

The provision in section 1(e), Rule 16 of the Rules of Court that an action may
be dismissed because "there is another action pending between the same
parties for the same cause" presupposes that two similar actions are
simultaneously pending in two different Courts of First Instance. Lis
pendens as a ground for a motion to dismiss has the same requisites as the
plea of res judicata.

On the other hand, when a pleading is amended, the original pleading is


deemed abandoned. The original ceases to perform any further function as a
pleading. The case stands for trial on the amended pleading only. So, when
Consolidated Logging filed its amended complaint dated March 16, 1970 in
Civil Case No. 2158, the prior dismissal order dated January 5, 1970 in the
Manila case could he [sic] interposed in the Isabela court to support the
defense of res judicata.71chanRoblesvirtualLawlibrary

As a general rule, dismissals under Section 1 of Rule 17 are without prejudice


except when it is the second time that the plaintiff caused its dismissal.
Accordingly, for a dismissal to operate as an adjudication upon the merits,
i.e, with prejudice to the re-filing of the same claim, the following requisites must
be present:ChanRoblesVirtualawlibrary

(1) There was a previous case that was dismissed by a competent court;
(2) Both cases were based on or include the same claim;
(3) Both notices for dismissal were filed by the plaintiff; and
(4) When the motion to dismiss filed by the plaintiff was consented to by the
defendant on the ground that the latter paid and satisfied all the claims of the
former.72chanRoblesvirtualLawlibrary

The purpose of the "two-dismissal rule" is "to avoid vexatious


litigation."73 When a complaint is dismissed a second time, the plaintiff is now
barred from seeking relief on the same claim.

The dismissal of the second case


was without prejudice in view of the
"two-dismissal rule"

Here, the first case was filed as an ordinary civil action. It was later amended to
include not only new defendants but new causes of action that should have
been adjudicated in a special proceeding. A motion to dismiss was inevitably
filed by the defendants on the ground of lack of jurisdiction.

The trial court granted that motion to dismiss, stating


that:ChanRoblesVirtualawlibrary

A careful perusal of the allegations of the Amended Complaint dated February


10, 1999, filed by Plaintiff Joseph Cheng, show that additional causes of action
were incorporated i.e. extra-judicial settlement of the intestate estate of Antonio
Ching and receivership, subject matters, which should be threshed out in a
special proceedings case. This is a clear departure from the main cause of
action in the original complaint which is for declaration of nullity of certificate
of titles with damages. And the rules of procedure which govern special
proceedings case are different and distinct from the rules of procedure
applicable in an ordinary civil action.

In view of the afore-going, the court finds the Motion to Dismiss filed by Atty.
Maria Lina Nieva S. Casals to be meritorious and the Court is left with no
alternative but to dismiss as it hereby dismisses the Amended Complaint.
However, on motion of Atty. Mirardo Arroyo Obias, counsel for the plaintiffs, he
is given a period of fifteen (15) days from today, within which to file an
appropriate pleading, copy furnished to all the parties concerned.

. . . .

SO ORDERED.74

Petitioners are of the view that when Atty. Mirardo Arroyo Obias failed to file
the appropriate pleading within fifteen (15) days, he violated the order of the
court. This, they argue, made the original dismissal an adjudication upon the
merits, in accordance with Rule 17, Section 3, i.e., a dismissal through the
default of the plaintiff. Hence, they argue that when respondents filed the
second case and then caused its dismissal, the dismissal should have been
with prejudice according to Rule 17, Section 1, i.e., two dismissals caused by
the plaintiff on the same claim.

Unfortunately, petitioners' theory is erroneous.

The trial court dismissed the first case by granting the motion to dismiss
filed by the defendants. When it allowed Atty. Mirardo Arroyo Obias a period of
fifteen (15) days to file an appropriate pleading, it was merely acquiescing to a
request made by the plaintiffs counsel that had no bearing on the dismissal of
the case.

Under Rule 17, Section 3, a defendant may move to dismiss the case if the
plaintiff defaults; it does not contemplate a situation where the dismissal was
due to lack of jurisdiction. Since there was already a dismissal prior to
plaintiffs default, the trial court's instruction to file the appropriate pleading
will not reverse the dismissal. If the plaintiff fails to file the appropriate
pleading, the trial court does not dismiss the case anew; the order dismissing
the case still stands.

The dismissal of the first case was done at the instance of the defendant under
Rule 16, Section 1(b) of the Rules of Civil Procedure, which
states:ChanRoblesVirtualawlibrary

SECTION 1. Grounds. — Within the time for but before filing the answer to the
complaint or pleading asserting a claim, a motion to dismiss may be made on
any of the following grounds:

. . . .

(b) That the court has no jurisdiction over the subject matter of the
claim;chanrobleslaw
....

Under Section 5 of the same rule,75 a party may re-file the same action or claim
subject to certain exceptions.

Thus, when respondents filed the second case, they were merely refiling the
same claim that had been previously dismissed on the basis of lack of
jurisdiction. When they moved to dismiss the second case, the motion to
dismiss can be considered as the first dismissal at the plaintiffs instance.

Petitioners do not deny that the second dismissal was requested by


respondents before the service of any responsive pleadings. Accordingly, the
dismissal at this instance is a matter of right that is not subject to the trial
court's discretion. In O.B. Jovenir Construction and Development Corporation v.
Macamir Realty and Development Corporation:76

[T]he trial court has no discretion or option to deny the motion, since dismissal
by the plaintiff under Section 1, Rule 17 is guaranteed as a matter of right to
the plaintiffs.Even if the motion cites the most ridiculous of grounds for
dismissal, the trial court has no choice but to consider the complaint as
dismissed, since the plaintiff may opt for such dismissal as a matter of right,
regardless of ground77 (Emphasis supplied)chanroblesvirtuallawlibrary

For this reason, the trial court issued its order dated November 22, 2002
dismissing the case, without prejudice. The order
states:ChanRoblesVirtualawlibrary

When this Motion was called for hearing, all the plaintiffs namely, Joseph
Cheng, Jaime Cheng, Mercedes Igne and Lucina Santos appeared without their
counsels. That they verbally affirmed the execution of the Motion to Dismiss, as
shown by their signatures over their respective names reflected thereat.
Similarly, none of the defendants appeared, except the counsel for defendant,
Ramon Chang [sic], who manifested that they have not yet filed their Answer as
there was a defect in the address of Ramon Cheng [sic] and the latter has not
yet been served with summons.

Under the circumstances, and further considering that the defendants herein
have not yet filed their Answers nor any pleading, the plaintiffs has [sic] the
right to out rightly [sic] cause the dismissal of the Complaint pursuant to
Section 2, Rule 17 of the 1997 Rules of Civil Procedure without prejudice.
Thereby, and as prayed for, this case is hereby ordered DISMISSED without
prejudice.

SO ORDERED.78 (Emphasis supplied)


When respondents filed the third case on substantially the same claim, there
was already one prior dismissal at the instance of the plaintiffs and one prior
dismissal at the instance of the defendants. While it is true that there were two
previous dismissals on the same claim, it does not necessarily follow that the
re-filing of the claim was barred by Rule 17, Section 1 of the Rules of Civil
Procedure. The circumstances surrounding each dismissal must first be
examined to determine before the rule may apply, as in this case.

Even assuming for the sake of argument that the failure of Atty. Mirardo
Arroyo Obias to file the appropriate pleading in the first case came under the
purview of Rule 17, Section 3 of the Rules of Civil Procedure, the dismissal in
the second case is still considered as one without prejudice. InGomez v.
Alcantara:79

The dismissal of a case for failure to prosecute has the effect of adjudication on
the merits, and is necessarily understood to be with prejudice to the filing of
another action, unless otherwise provided in the order of dismissal. Stated
differently, the general rule is that dismissal of a case for failure to prosecute is
to be regarded as an adjudication on the merits and with prejudice to the filing
of another action, and the only exception is when the order of dismissal
expressly contains a qualification that the dismissal is without
prejudice.80 (Emphasis supplied)

In granting the dismissal of the second case, the trial court specifically orders
the dismissal to be without prejudice. It is only when the trial court's order
either is silent on the matter, or states otherwise, that the dismissal will be
considered an adjudication on the merits.

However, while the dismissal of the second case was without prejudice,
respondents' act of filing the third case while petitioners' motion for
reconsideration was still pending constituted forum shopping.

The rule against forum shopping


and the "twin-dismissal rule"

In Yap v. Chua:81

Forum shopping is the institution of two or more actions or proceedings involving


the same parties for the same cause of action, either simultaneously or
successively, on the supposition that one or the other court would make a
favorable disposition. Forum shopping may be resorted to by any party against
whom an adverse judgment or order has been issued in one forum, in an
attempt to seek a favorable opinion in another, other than by appeal or a
special civil action for certiorari. Forum shopping trifles with the courts, abuses
their processes, degrades the administration of justice and congest court dockets.
What is critical is the vexation brought upon the courts and the litigants by a
party who asks different courts to rule on the same or related causes and grant
the same or substantially the same reliefs and in the process creates the
possibility of conflicting decisions being rendered by the different fora upon the
same issues. Willful and deliberate violation of the rule against forum shopping
is a ground for summary dismissal of the case; it may also constitute direct
contempt.

To determine whether a party violated the rule against forum shopping, the
most important factor to ask is whether the elements of litis pendentia are
present, or whether a final judgment in one case will amount to res judicata in
another; otherwise stated, the test for determining forum shopping is whether
in the two (or more) cases pending, there is identity of parties, rights or causes
of action, and reliefs sought.82(Emphasis supplied)

When respondents filed the third case, petitioners' motion for reconsideration
of the dismissal of the second case was still pending. Clearly, the order of
dismissal was not yet final since it could still be overturned upon
reconsideration, or even on appeal to a higher court.

Moreover, petitioners were not prohibited from filing the motion for
reconsideration. This court has already stated in Narciso v. Garcia83 that a
defendant has the right to file a motion for reconsideration of a trial court's
order denying the motion to dismiss since "[n]o rule prohibits the filing of such
a motion for reconsideration."84 The second case, therefore, was still pending
when the third case was filed.

The prudent thing that respondents could have done was to wait until the final
disposition of the second case before filing the third case. As it stands, the
dismissal of the second case was without prejudice to the re-filing of the same
claim, in accordance with the Rules of Civil Procedure. In their haste to file the
third case, however, they unfortunately transgressed certain procedural
safeguards, among which are the rules on litis pendentia and res judicata.

In Yap:ChanRoblesVirtualawlibrary

Litis pendentia as a ground for the dismissal of a civil action refers to that
situation wherein another action is pending between the same parties for the
same cause of action, such that the second action becomes unnecessary and
vexatious. The underlying principle of litis pendentia is the theory that a party is
not allowed to vex another more than once regarding the same subject matter
and for the same cause of action. This theory is founded on the public policy
that the same subject matter should not be the subject of controversy in courts
more than once, in order that possible conflicting judgments may be avoided
for the sake of the stability of the rights and status of persons.
The requisites of litis pendentia are: (a) the identity of parties, or at least such
as representing the same interests in both actions; (b) the identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and
(c) the identity of the two cases such that judgment in one, regardless of which
party is successful, would amount to res judicata in the other.85 (Emphasis
supplied)chanroblesvirtuallawlibrary

There is no question that there was an identity of parties, rights, and reliefs in
the second and third cases. While it may be true that the trial court already
dismissed the second case when the third case was filed, it failed to take into
account that a motion for reconsideration was filed in the second case and,
thus, was still pending. Considering that the dismissal of the second case was
the subject of the first certiorari case and this present petition for review, it can
be reasonably concluded that the second case, to this day, remains pending.

Hence, when respondents filed the third case, they engaged in forum shopping.
Any judgment by this court on the propriety of the dismissal of the second case
will inevitably affect the disposition of the third case.

This, in fact, is the reason why there were two different petitions for certiorari
before the appellate court. The omnibus order dated July 30, 2004 denied two
pending motions by petitioners: (1) the motion for reconsideration in the
second case and (2) the motion to dismiss in the third case. Since petitioners
are barred from filing a second motion for reconsideration of the second case,
the first certiorari case was filed before the appellate court and is now the
subject of this review.

The denial of petitioners' motion for reconsideration in the third case, however,
could still be the subject of a separate petition for certiorari. That petition
would be based now on the third case, and not on the second case.

This multiplicity of suits is the very evil sought to be avoided by the rule on
forum shopping. In Dy v. Mandy Commodities Co., Inc.,86 the rule is
that:ChanRoblesVirtualawlibrary

Once there is a finding of forum shopping, the penalty is summary dismissal


not only of the petition pending before this Court, but also of the other case
that is pending in a lower court. This is so because twin dismissal is a punitive
measure to those who trifle with the orderly administration of
justice.87 (Emphasis supplied)chanroblesvirtuallawlibrary

The rule originated from the 1986 case of Buan v. Lopez, Jr.88 In Buan,
petitioners filed a petition for prohibition with this court while another petition
for prohibition with preliminary injunction was pending before the Regional
Trial Court of Manila involving the same parties and based on the same set of
facts. This court, in dismissing both actions,
stated:ChanRoblesVirtualawlibrary

Indeed, the petitioners in both actions . . . have incurred not only the sanction
of dismissal of their case before this Court in accordance with Rule 16 of the
Rules of Court, but also the punitive measure of dismissal of both their actions,
that in this Court and that in the Regional Trial Court as well. Quite recently,
upon substantially identical factual premises, the Court en banc had occasion
to condemn and penalize the act of litigants of filing the same suit in different
courts, aptly described as "forum-shopping[.]"89chanRoblesvirtualLawlibrary

The rule essentially penalizes the forum shopper by dismissing all pending
actions on the same claim filed in any court. Accordingly, the grant of this
petition would inevitably result in the summary dismissal of the third case. Any
action, therefore, which originates from the third case pending with any court
would be barred by res judicata.

Because of the severity of the penalty of the rule, an examination must first.be
made on the purpose of the rule. Parties resort to forum shopping when they
file several actions of the same claim in different forums in the hope of
obtaining a favorable result. It is prohibited by the courts as it "trifle[s] with the
orderly administration of justice."90

In this case, however, the dismissal of the first case became final and executory
upon the failure of respondents' counsel to file the appropriate pleading. They
filed the correct pleading the second time around but eventually sought its
dismissal as they "[suspected] that their counsel is not amply protecting their
interests as the case is not moving for almost three (3) years."91 The filing of the
third case, therefore, was not precisely for the purpose of obtaining a favorable
result but only to get the case moving, in an attempt to protect their rights.

It appears that the resolution on the merits of the original controversy between
the parties has long been mired in numerous procedural entanglements. While
it might be more judicially expedient to apply the "twin-dismissal rule" and
disallow the proceedings in the third case to continue, it would not serve the
ends of substantial justice. Courts of justice must always endeavor to resolve
cases on their merits, rather than summarily dismiss these on
technicalities:ChanRoblesVirtualawlibrary

[C]ases should be determined on the merits, after all parties have been given
full opportunity to ventilate their causes and defenses, rather than on
technicalities or procedural imperfections. In that way, the ends of justice
would be served better. Rules of procedure are mere tools designed to expedite
the decision or resolution of cases and other matters pending in court. A strict
and rigid application of rules, resulting in technicalities that tend to frustrate
rather than promote substantial justice, must be avoided. In fact, Section 6 of
Rule 1 states that the Rules [on Civil Procedure] shall be liberally construed in
order to promote their objective of ensuring the just, speedy and inexpensive
disposition of every action and proceeding.92 (Emphasis
supplied)chanroblesvirtuallawlibrary

The rule on forum shopping will not strictly apply when it can be shown that
(1) the original case has been dismissed upon request of the plaintiff for valid
procedural reasons; (2) the only pending matter is a motion for reconsideration;
and (3) there are valid procedural reasons that serve the goal of substantial
justice for the fresh new case to proceed.

The motion for reconsideration filed in the second case has since been
dismissed and is now the subject of a petition for certiorari. The third case filed
apparently contains the better cause of action for the plaintiffs and is now
being prosecuted by a counsel they are more comfortable with. Substantial
justice will be better served if respondents do not fall victim to the labyrinth in
the procedures that their travails led them. It is for this reason that we deny
the petition.

WHEREFORE, the petition is DENIED. The Regional Trial Court of Manila,


Branch 6 is ordered to proceed with Civil Case No. 02-105251 with due and
deliberate dispatch.

SO ORDERED.cralawlawlibrary

SECOND DIVISION

G.R. No. 199990, February 04, 2015


SPOUSES ROLANDO AND HERMINIA SALVADOR, Petitioners, v. SPOUSES
ROGELIO AND ELIZABETH RABAJA AND ROSARIO
GONZALES, Respondents.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the
August 22, 2011 Decision1 and the January 5, 2012 Resolution2 of the Court
of Appeals (CA) in CA-G.R. CV No. 90296 which affirmed with modification the
March 29, 2007 Decision of the Regional Trial Court Branch 214 (RTC-Branch
214), Mandaluyong City in Civil Case No. MC-03-2175, for rescission of a
contract (rescission case).

The Facts

This case stemmed from a dispute involving the sellers, petitioner spouses
Rolando and Herminia Salvador (Spouses Salvador); the sellers’ agent, Rosario
Gonzales (Gonzales); and the buyers, respondent Spouses Rogelio and
Elizabeth Rabaja (Spouses Rabaja), over a parcel of land situated at No. 25,
Merryland Village, 375 Jose Rizal Street, Mandaluyong City (subject property),
covered by Transfer Certificate of Title (TCT) No. 13426 and registered in the
names of Spouses Salvador. From 1994 until 2002, Spouses Rabaja were
leasing an apartment in the subject lot.

Sometime in July 1998, Spouses Rabaja learned that Spouses Salvador were
looking for a buyer of the subject property. Petitioner Herminia Salvador
(Herminia) personally introduced Gonzales to them as the administrator of the
said property. Spouses Salvador even handed to Gonzales the owner’s
duplicate certificate of title over the subject property. On July, 3, 1998,
Spouses Rabaja made an initial payment of P48,000.00 to Gonzales in the
presence of Herminia. Gonzales then presented the Special Power of
Attorney3 (SPA), executed by Rolando Salvador (Rolando) and dated July 24,
1998. On the same day, the parties executed the Contract to Sell4 which
stipulated that for a consideration of P5,000,000.00, Spouses Salvador sold,
transferred and conveyed in favor of Spouses Rabaja the subject property.
Spouses Rabaja made several payments totalling P950,000.00, which were
received by Gonzales pursuant to the SPA provided earlier as evidenced by the
check vouchers signed by Gonzales and the improvised receipts signed by
Herminia.

Sometime in June 1999, however, Spouses Salvador complained to Spouses


Rabaja that they did not receive any payment from Gonzales. This prompted
Spouses Rabaja to suspend further payment of the purchase price; and as a
consequence, they received a notice to vacate the subject property from
Spouses Salvador for non-payment of rentals.

Thereafter, Spouses Salvador instituted an action for ejectment against


Spouses Rabaja. In turn, Spouses Rabaja filed an action for rescission of
contract against Spouses Salvador and Gonzales, the subject matter of the
present petition.

In the action for ejectment, the complaint was filed before the Metropolitan
Trial Court of Mandaluyong City, Branch 60 (MeTC), where it was docketed as
Civil Case No. 17344. In its August 14, 2002 Decision,5 the MeTC ruled in favor
of Spouses Salvador finding that valid grounds existed for the eviction of
Spouses Rabaja from the subject property and ordering them to pay back
rentals. Spouses Salvador were able to garnish the amount of
P593,400.006 from Spouses Rabaja’s time deposit account pursuant to a writ
of execution issued by the MeTC.7 Spouses Rabaja appealed to the Regional
Trial Court, Branch 212, Mandaluyong City (RTC-Br. 212) which reversed the
MeTC ruling in its March 1, 2005 decision.8 The RTC-Br. 212 found that no
lease agreement existed between the parties. Thereafter, Spouses Salvador filed
an appeal with the CA which was docketed as CA-G.R. SP No. 89259. On
March 31, 2006, the CA ruled in favor of Spouses Salvador and reinstated the
MeTC ruling ejecting Spouses Rabaja.9 Not having been appealed, the CA
decision in CA-G.R. SP No. 89259 became final and executory on May 12,
2006.10chanroblesvirtuallawlibrary

Meanwhile, the rescission case filed by Spouses Rabaja against Spouses


Salvador and Gonzales and docketed as Civil Case No. MC No. 03-2175 was
also raffled to RTC-Br. 212. In their complaint,11dated July 7, 2003, Spouses
Rabaja demanded the rescission of the contract to sell praying that the amount
of P950,000.00 they previously paid to Spouses Salvador be returned to them.
They likewise prayed that damages be awarded due to the contractual breach
committed by Spouses Salvador.

Spouses Salvador filed their answer with counterclaim and cross-


claim12 contending that there was no meeting of the minds between the parties
and that the SPA in favor of Gonzales was falsified. In fact, they filed a case for
falsification against Gonzales, but it was dismissed because the original of the
alleged falsified SPA could not be produced. They further averred that they did
not receive any payment from Spouses Rabaja through Gonzales. In her
defense, Gonzales filed her answer13 stating that the SPA was not falsified and
that the payments of Spouses Rabaja amounting to P950,000.00 were all
handed over to Spouses Salvador.

The pre-trial conference began but attempts to amicably settle the case were
unsuccessful. It was formally reset to February 4, 2005, but Spouses Salvador
and their counsel failed to attend. Consequently, the RTC issued the pre-trial
order14declaring Spouses Salvador in default and allowing Spouses Rabaja to
present their evidence ex parte against Spouses Salvador and Gonzales to
present evidence in her favor.

A motion for reconsideration,15 dated March 28, 2005, was filed by Spouses
Salvador on the said pre-trial order beseeching the liberality of the court. The
rescission case was then re-raffled to RTC-Br. 214 after the Presiding Judge of
RTC-Br. 212 inhibited herself. In the Order,16 dated October 24, 2005, the
RTC-Br. 214 denied the motion for reconsideration because Spouses Salvador
provided a flimsy excuse for their non-appearance in the pre-trial conference.

Thereafter, trial proceeded and Spouses Rabaja and Gonzales presented their
respective testimonial and documentary evidence.

RTC Ruling

On March 29, 2007, the RTC-Br. 214 rendered a decision17 in favor of Spouses
Rabaja. It held that the signature of Spouses Salvador affixed in the contract to
sell appeared to be authentic. It also held that the contract, although
denominated as “contract to sell,” was actually a contract of sale because
Spouses Salvador, as vendors, did not reserve their title to the property until
the vendees had fully paid the purchase price. Since the contract entered into
was a reciprocal contract, it could be validly rescinded by Spouses Rabaja, and
in the process, they could recover the amount of P950,000.00 jointly and
severally from Spouses Salvador and Gonzales. The RTC stated that Gonzales
was undoubtedly the attorney-in-fact of Spouses Salvador absent any taint of
irregularity. Spouses Rabaja could not be faulted in dealing with Gonzales who
was duly equipped with the SPA from Spouses Salvador.

The RTC-Br. 214 then ruled that the amount of P593,400.00 garnished from
the time deposit account of Spouses Rabaja, representing the award of rental
arrearages in the separate ejectment suit, should be returned by Spouses
Salvador.18 The court viewed that such amount was part of the purchase price
of the subject property which must be returned. It also awarded moral and
exemplary damages in favor of Spouses Rabaja and attorney’s fees in favor of
Gonzales. The dispositive portion of the said decision
reads:chanRoblesvirtualLawlibrary
WHEREFORE, this court renders judgment as
follows:chanRoblesvirtualLawlibrary

a. Ordering the “Contract to Sell” entered into by the plaintiff and defendant
spouses Rolando and Herminia Salvador on July 24, 1998 as
RESCINDED;chanrobleslaw

b. Ordering defendant spouses Rolando and Herminia Salvador and


defendant Rosario S. Gonzales jointly and severally liable to pay
plaintiffs:chanRoblesvirtualLawlibrary
1. the amount of NINE HUNDRED FIFTY THOUSAND PESOS
(P950,000.00), representing the payments made by the latter for
the purchase of subject property;chanrobleslaw

2. the amount of TWENTY THOUSAND PESOS (P20,000.00), as moral


damages;chanrobleslaw

3. the amount of TWENTY THOUSAND PESOS (P20,000.00), as


exemplary damages;chanrobleslaw

4. the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00),


as attorney’s fees;chanrobleslaw

5. the cost of suit.

c. Ordering defendant Spouses Rolando and Herminia Salvador to pay


plaintiffs the amount of FIVE HUNDRED NINETY THREE THOUSAND
PESOS (P593,000.00) (sic), representing the amount garnished from the
Metrobank deposit of plaintiffs as payment for their alleged back
rentals;chanrobleslaw

d. Ordering the defendant Spouses Rolando and Herminia Salvador to pay


defendant Rosario Gonzales on her cross-claim in the amount of ONE
HUNDRED THOUSAND PESOS (P100,000.00);chanrobleslaw

e. Dismissing the counterclaims of the defendants against the plaintiff.

SO ORDERED.19
Gonzales filed a motion for partial reconsideration, but it was denied by the
RTC-Br. 114 in its Order,20 dated September 12, 2007. Undaunted, Spouses
Salvador and Gonzales filed an appeal before the CA.

CA Ruling

On March 29, 2007, the CA affirmed the decision of the RTC-Br. 114 with
modifications. It ruled that the “contract to sell” was indeed a contract of sale
and that Gonzales was armed with an SPA and was, in fact, introduced to
Spouses Rabaja by Spouses Salvador as the administrator of the property.
Spouses Rabaja could not be blamed if they had transacted with Gonzales.

The CA then held that Spouses Salvador should return the amount of
P593,400.00 pursuant to a separate ejectment case, reasoning that Spouses
Salvador misled the court because an examination of CA-G.R. SP No.
89260 showed that Spouses Rabaja were not involved in that case. CA-G.R. SP
No. 59260 was an action between Spouses Salvador and Gonzales only and
involved a completely different residential apartment located at 302-C Jupiter
Street, Dreamland Subdivision, Mandaluyong City.

The CA, however, ruled that Gonzales was not solidarily liable with Spouses
Salvador. The agent must expressly bind himself or exceed the limit of his
authority in order to be solidarily liable. It was not shown that Gonzales as
agent of Spouses Salvador exceeded her authority or expressly bound herself to
be solidarily liable. The decretal portion of the CA decision
reads:chanRoblesvirtualLawlibrary
WHEREFORE, the appeal is PARTLY GRANTED. The assailed Decision dated
March 29, 2007 and the Order dated September 12, 2007, of the Regional Trial
Court, Branch 214, Mandaluyong City, in Civil Case No. MC-03-2175, are
AFFIRMED with MODIFICATION in that Rosario Gonzalez is not jointly and
severally liable to pay Spouses Rabaja the amounts enumerated in paragraph
(b) of the Decision dated March 29, 2007.

SO ORDERED.21
Spouses Salvador filed a motion for reconsideration but it was denied by the
CA in its January 5, 2012 Resolution.

Hence, this petition.


ASSIGNMENT OF ERRORS

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE LOWER


COURT GRAVELY ABUSED ITS DISCRETION IN DECLARING PETITIONERS
IN DEFAULT AND IN DEPRIVING THEM OF THE OPPORTUNITY TO CROSS-
EXAMINE RESPONDENTS SPS. RABAJA AS WELL AS TO PRESENT
EVIDENCE FOR AND IN THEIR BEHALF, GIVEN THE MERITORIOUS
DEFENSES RAISED IN THEIR ANSWER THAT CATEGORICALLY AND
DIRECTLY DISPUTE RESPONDENTS SPS. RABAJA’S CAUSE OF ACTION.

II

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE TRIAL


COURT GRAVELY ERRED IN GIVING CREDENCE TO THE TESTIMONY OF
RESPONDENT GONZALES THAT PAYMENTS WERE INDEED REMITTED TO
AND RECEIVED BY PETITIONER HERMINIA SALVADOR EVEN AS THE
IMPROVISED RECEIPTS WERE EVIDENTLY MADE UP AND FALSIFIED BY
RESPONDENT GONZALES.

III
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE TRIAL
COURT GRAVELY ERRED IN RESCINDING THE CONTRACT TO SELL
WHEN THERE IS NOTHING TO RESCIND AS NO VALID CONTRACT TO
SELL WAS ENTERED INTO, AND IN DIRECTING THE REFUND OF THE
AMOUNT OF P950,000.00 WHEN THE EVIDENCE CLEARLY SHOWS THAT
SAID AMOUNT WAS PAID TO AND RECEIVED BY RESPONDENT GONZALES
ALONE WHO MISAPPROPRIATED THE SAME.

IV

THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT’S


DECISION FOR PETITIONERS TO RETURN THE AMOUNT OF P543,400.00
REPRESENTING RENTALS IN ARREARS GARNISHED OR WITHDRAWN BY
VIRTUE OF A WRIT OF EXECUTION ISSUED IN AN EJECTMENT CASE
WHICH WAS TRIED AND DECIDED BY ANOTHER COURT.

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE LOWER


COURT GRAVELY ERRED IN AWARDING DAMAGES TO RESPONDENTS
SPS. RABAJA, THERE BEING NO FACTUAL AND LEGAL BASES FOR SUCH
AWARD.

VI

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE TRIAL


COURT GRAVELY ERRED IN AWARDING P100,000.00 TO RESPONDENT
GONZALES AS ATTORNEY’S FEES WHEN RESPONDENT GONZALES, IN
FACT, COMMITTED FORGERY AND FALSIFICATION IN DEALING WITH
THE PROPERTY OF PETITIONERS AND MISAPPROPRIATED THE MONIES
PAID TO HER BY RESPONDENTS SPS. RABAJA, THUS GIVING PREMIUM
TO HER FRAUDULENT ACTS.22
The foregoing can be synthesized into three main issues. First, Spouses
Salvador contend that the order of default must be lifted because reasonable
grounds exist to justify their failure to attend the pre-trial conference on
February 4, 2005. Second, Spouses Salvador raise in issue the veracity of the
receipts given by Gonzales, the SPA and the validity of the contract to sell. They
claim that the improvised receipts should not be given credence because these
were crude and suspicious, measuring only by 2 x 2 inches which showed that
Gonzales misappropriated the payments of Spouses Rabaja for herself and did
not remit the amount of P950,000.00 to them. As there was no consideration,
then no valid contract to sell existed. Third, Spouses Salvador argue that the
ejectment case, from which the amount of P593,400.00 was garnished, already
became final and executory and could not anymore be disturbed. Lastly, the
award of damages in favor of Spouses Rabaja and Gonzales was improper
absent any legal and factual bases.
On January 21, 2013, Spouses Salvador filed their supplemental
petition23 informing the Court that RTC-Br. 213 had rendered a decision in
Civil Case No. MC00-1082, an action for rescission of the SPA. The said
decision held that Spouses Salvador properly revoked the SPA in favor of
Gonzales due to loss of trust and confidence. On September 11, 2013,
Gonzales filed her comment to the supplemental petition,24 contending that the
RTC-Branch 213 decision had no bearing because it had not yet attained
finality. On even date, Spouses Rabaja filed their Comment,25 asserting that
the present petition is a mere rehash of the previous arguments of Spouses
Salvador before the CA. On November 15, 2013, Spouses Salvador replied that
they merely wanted to show that the findings by the RTC-Br. 213 should be
given weight as a full-blown trial was conducted
therein.26chanroblesvirtuallawlibrary

The Court’s Ruling

As a general rule, the Court’s jurisdiction in a Rule 45 petition is limited to the


review of pure questions of law. A question of law arises when the doubt or
difference exists as to what the law is on a certain state of facts. Negatively put,
Rule 45 does not allow the review of questions of fact. A question of fact exists
when the doubt or difference arises as to the truth or falsity of the
allegations.27chanroblesvirtuallawlibrary

The present petition presents questions of fact because it requires the Court to
examine the veracity of the evidence presented during the trial, such as the
improvised receipts, the SPA given to Gonzales and the contract to sell. Even
the petitioner spouses themselves concede and ask the Court to consider
questions of fact,28 but the Court finds no reason to disturb the findings of fact
of the lower courts absent any compelling reason to the contrary.

The failure of Spouses Salvador to attend pre-trial conference warrants the


presentation of evidence ex parte by Spouses Rabaja

On the procedural aspect, the Court reiterates the rule that the failure to
attend the pre-trial conference does not result in the default of an absent party.
Under the 1997 Rules of Civil Procedure, a defendant is only declared in
default if he fails to file his Answer within the reglementary period.29On the
other hand, if a defendant fails to attend the pre-trial conference, the plaintiff
can present his evidence ex parte. Sections 4 and 5, Rule 18 of the Rules of
Court provide:chanRoblesvirtualLawlibrary
Sec. 4. Appearance of parties.

It shall be the duty of the parties and their counsel to appear at the pre-trial.
The non-appearance of a party may be excused only if a valid cause is shown
therefor or if a representative shall appear in his behalf fully authorized in
writing to enter into an amicable settlement, to submit to alternative modes of
dispute resolution, and to enter into stipulations or admissions of facts and of
documents.

Sec. 5. Effect of failure to appear.

The failure of the plaintiff to appear when so required pursuant to the next
preceding section shall be cause for dismissal of the action. The dismissal shall
be with prejudice, unless otherwise ordered by the court. A similar failure on
the part of the defendant shall be cause to allow the plaintiff to present
his evidence ex parte and the court to render judgment on the basis
thereof.

[Emphasis supplied]
The case of Philippine American Life & General Insurance Company v. Joseph
Enario30 discussed the difference between the non-appearance of a defendant
in a pre-trial conference and the declaration of a defendant in default in the
present Rules of Civil Procedure. The decision
instructs:chanRoblesvirtualLawlibrary
Prior to the 1997 Revised Rules of Civil Procedure, the phrase "as in default"
was initially included in Rule 20 of the old rules, and which read as
follows:chanRoblesvirtualLawlibrary
Sec. 2. A party who fails to appear at a pre-trial conference may be non-suited
or considered as in default.cralawred
It was, however, amended in the 1997 Revised Rules of Civil Procedure. Justice
Regalado, in his book, REMEDIAL LAW COMPENDIUM, explained the rationale
for the deletion of the phrase "as in default" in the amended provision, to
wit:chanRoblesvirtualLawlibrary
1. This is a substantial reproduction of Section 2 of the former Rule 20 with the
change that, instead of defendant being declared "as in default" by reason of
his non-appearance, this section now spells out that the procedure will be to
allow the ex parte presentation of plaintiff’s evidence and the rendition of
judgment on the basis thereof. While actually the procedure remains the same,
the purpose is one of semantical propriety or terminological accuracy as there
were criticisms on the use of the word "default" in the former provision since
that term is identified with the failure to file a required answer, not appearance
in court.cralawred
Still, in the same book, Justice Regalado clarified that while the order of default
no longer obtained, its effects were retained, thus:chanRoblesvirtualLawlibrary
Failure to file a responsive pleading within the reglementary period, and not
failure to appear at the hearing, is the sole ground for an order of default,
except the failure to appear at a pre-trial conference wherein the effects of a
default on the part of the defendant are followed, that is, the plaintiff shall be
allowed to present evidence ex parte and a judgment based thereon may be
rendered against defendant.cralawred
From the foregoing, the failure of a party to appear at the pre-trial has indeed
adverse consequences. If the absent party is the plaintiff, then his case shall be
dismissed. If it is the defendant who fails to appear, then the plaintiff is allowed
to present his evidence ex parte and the court shall render judgment based on
the evidence presented. Thus, the plaintiff is given the privilege to present his
evidence without objection from the defendant, the likelihood being that the
court will decide in favor of the plaintiff, the defendant having forfeited the
opportunity to rebut or present its own evidence.31 The stringent application of
the rules on pre-trial is necessitated from the significant role of the pre-trial
stage in the litigation process. Pre-trial is an answer to the clarion call for the
speedy disposition of cases. Although it was discretionary under the 1940
Rules of Court, it was made mandatory under the 1964 Rules and the
subsequent amendments in 1997.32 “The importance of pre-trial in civil actions
cannot be overemphasized.”33chanroblesvirtuallawlibrary

There is no dispute that Spouses Salvador and their counsel failed to attend
the pre-trial conference set on February 4, 2005 despite proper notice. Spouses
Salvador aver that their non-attendance was due to the fault of their counsel as
he forgot to update his calendar.34 This excuse smacks of carelessness, and
indifference to the pre-trial stage. It simply cannot be considered as a
justifiable excuse by the Court. As a result of their inattentiveness, Spouses
Salvador could no longer present any evidence in their favor. Spouses Rabaja,
as plaintiffs, were properly allowed by the RTC to present evidence ex
parte against Spouses Salvador as defendants. Considering that Gonzales as
co-defendant was able to attend the pre-trial conference, she was allowed to
present her evidence. The RTC could only render judgment based on the
evidence presented during the trial.

Gonzales, as agent of Spouses Salvador, could validly receive the payments of


Spouses Rabaja

Even on the substantial aspect, the petition does not warrant consideration.
The Court agrees with the courts below in finding that the contract entered into
by the parties was essentially a contract of sale which could be validly
rescinded. Spouses Salvador insist that they did not receive the payments
made by Spouses Rabaja from Gonzales which totalled P950,000.00 and that
Gonzales was not their duly authorized agent. These contentions, however,
must fail in light of the applicable provisions of the New Civil Code which
state:chanRoblesvirtualLawlibrary
Art. 1900. So far as third persons are concerned, an act is deemed to have
been performed within the scope of the agent's authority, if such act is within
the terms of the power of attorney, as written, even if the agent has in fact
exceeded the limits of his authority according to an understanding between the
principal and the agent.

xxxx
Art. 1902. A third person with whom the agent wishes to contract on behalf of
the principal may require the presentation of the power of attorney, or the
instructions as regards the agency. Private or secret orders and instructions of
the principal do not prejudice third persons who have relied upon the power of
attorney or instructions shown them.

xxxx

Art. 1910. The principal must comply with all the obligations which the agent
may have contracted within the scope of his authority.cralawred
Persons dealing with an agent must ascertain not only the fact of agency, but
also the nature and extent of the agent’s authority. A third person with whom
the agent wishes to contract on behalf of the principal may require the
presentation of the power of attorney, or the instructions as regards the
agency. The basis for agency is representation and a person dealing with an
agent is put upon inquiry and must discover on his own peril the authority of
the agent.35chanroblesvirtuallawlibrary

According to Article 1990 of the New Civil Code, insofar as third persons are
concerned, an act is deemed to have been performed within the scope of the
agent's authority, if such act is within the terms of the power of attorney, as
written. In this case, Spouses Rabaja did not recklessly enter into a contract to
sell with Gonzales. They required her presentation of the power of attorney
before they transacted with her principal. And when Gonzales presented the
SPA to Spouses Rabaja, the latter had no reason not to rely on it.

The law mandates an agent to act within the scope of his authority which what
appears in the written terms of the power of attorney granted upon him.36 The
Court holds that, indeed, Gonzales acted within the scope of her authority. The
SPA precisely stated that she could administer the property, negotiate the sale
and collect any document and all payments related to the subject
property.37 As the agent acted within the scope of his authority, the principal
must comply with all the obligations.38As correctly held by the CA, considering
that it was not shown that Gonzales exceeded her authority or that she
expressly bound herself to be liable, then she could not be considered
personally and solidarily liable with the principal, Spouses
Salvador.39chanroblesvirtuallawlibrary

Perhaps the most significant point which defeats the petition would be the fact
that it was Herminia herself who personally introduced Gonzalez to Spouses
Rabaja as the administrator of the subject property. By their own ostensible
acts, Spouses Salvador made third persons believe that Gonzales was duly
authorized to administer, negotiate and sell the subject property. This fact was
even affirmed by Spouses Salvador themselves in their petition where they
stated that they had authorized Gonzales to look for a buyer of their
property.40 It is already too late in the day for Spouses Salvador to retract the
representation to unjustifiably escape their principal obligation.

As correctly held by the CA and the RTC, considering that there was a valid
SPA, then Spouses Rabaja properly made payments to Gonzales, as agent of
Spouses Salvador; and it was as if they paid to Spouses Salvador. It is of no
moment, insofar as Spouses Rabaja are concerned, whether or not the
payments were actually remitted to Spouses Salvador. Any internal matter,
arrangement, grievance or strife between the principal and the agent is theirs
alone and should not affect third persons. If Spouses Salvador did not receive
the payments or they wish to specifically revoke the SPA, then their recourse is
to institute a separate action against Gonzales. Such action, however, is not
any more covered by the present proceeding.

The amount of P593,400.00 should not be returned by Spouses Salvador

Nevertheless, the assailed decision of the CA must be modified with respect to


the amount of P593,400.00 garnished by Spouses Salvador and ordered
returned to Spouses Rabaja. The RTC ordered the return of the amount
garnished holding that it constituted a part of the purchase price. The CA ruled
that Spouses Salvador misled the Court when they improperly cited CA-G.R.
SP No. 89260 to prove their entitlement to the said amount. Both courts erred
in their ruling.

First, the garnishment of the amount of P593,400.00 against Spouses Rabaja


was pursuant to the CA decision in CA-G.R. SP No. 89259, an entirely different
case involving an action for ejectment, and it does not concern the rescission
case which is on appeal before this Court. Moreover, the decision on the
ejectment case is final and executory and an entry of judgment has already
been made.41 Nothing is more settled in law than that when a final judgment
is executory, it thereby becomes immutable and unalterable. The judgment
may no longer be modified in any respect, even if the modification is meant to
correct what is perceived to be an erroneous conclusion of fact or law, and
regardless of whether the modification is attempted to be made by the court
which rendered it or by the highest Court of the land. The doctrine is founded
on consideration of public policy and sound practice that, at the risk of
occasional errors, judgments must become final at some definite point in
time.42chanroblesvirtuallawlibrary

The March 31, 2006 CA decision43in CA-G.R. SP No. 89259 has long been
final and executory and cannot any more be disturbed by the Court. Public
policy dictates that once a judgment becomes final, executory and
unappealable, the prevailing party should not be denied the fruits of his victory
by some subterfuge devised by the losing party. Unjustified delay in the
enforcement of a judgment sets at naught the role and purpose of the courts to
resolve justiciable controversies with finality.44chanroblesvirtuallawlibrary
Meanwhile, in ruling that the garnishment was improper and thus ordering the
return of the garnished amount, the CA referred to its decision in CA-G.R. SP
No. 89260. Spouses Salvador, however, clarified in its motion for
reconsideration45 before the CA and in the present petition46 that the
garnishment was pursuant to CA-G.R. SP No. 89259, and not CA-G.R. SP No.
89260, another ejectment case involving another property. A perusal of the
records reveals that indeed the garnishment was pursuant to the ejectment
case in the MeTC, docketed as Civil Case No. 17344,47where Spouses Rabaja
were the defendants. The MeTC decision was then reinstated by the CA in CA-
G.R. SP No. 89259, not CA-G.R. SP No. 89260. There, a writ of execution48 and
notice of pay49 were issued against Spouses Rabaja in the amount of
P591,900.00.

Second, Spouses Rabaja’s appeal with the RTC never sought relief in returning
the garnished amount.50 Such issue simply emerged in the RTC decision. This
is highly improper because the court’s grant of relief is limited only to what has
been prayed for in the complaint or related thereto, supported by evidence, and
covered by the party’s cause of action.51chanroblesvirtuallawlibrary

If Spouses Rabaja would have any objection on the manner and propriety of the
execution, then they must institute their opposition to the execution
proceeding a separate case. Spouses Rabaja can invoke the Civil Code
provisions on legal compensation or set-off under Articles 1278, 1279 and
1270.52 The two obligations appear to have respectively offset each other,
compensation having taken effect by operation of law pursuant to the said
provisions of the Civil Code, since all the requisites provided in Art. 1279 of the
said Code for automatic compensation are duly present.

No award of actual, moral and exemplary damages

The award of damages to Spouses Rabaja cannot be sustained by this Court.


The filing alone of a civil action should not be a ground for an award of moral
damages in the same way that a clearly unfounded civil action is not among
the grounds for moral damages.53 Article 2220 of the New Civil Code provides
that to award moral damages in a breach of contract, the defendant must act
fraudulently or in bad faith. In this case, Spouses Rabaja failed to sufficiently
show that Spouses Salvador acted in a fraudulent manner or with bad faith
when it breached the contract of sale. Thus, the award of moral damages
cannot be warranted.

As to the award of exemplary damages, Article 2229 of the New Civil Code
provides that exemplary damages may be imposed by way of example or
correction for the public good, in addition to the moral, temperate, liquidated or
compensatory damages.54 The claimant must first establish his right to moral,
temperate, liquidated or compensatory damages. In this case, considering that
Spouses Rabaja failed to prove moral or compensatory damages, then there
could be no award of exemplary damages.

With regard to attorney’s fees, neither Spouses Rabaja nor Gonzales is entitled
to the award. The settled rule is that no premium should be placed on the right
to litigate and that not every winning party is entitled to an automatic grant of
attorney’s fees.55 The RTC reasoned that Gonzales was forced to litigate due to
the acts of Spouses Salvador. The Court does not agree. Gonzales, as agent of
Spouses Salvador, should have expected that she would be called to litigation
in connection with her fiduciary duties to the principal.

In view of all the foregoing, the CA decision should be affirmed with the
following modifications:chanRoblesvirtualLawlibrary

1. The order requiring defendant Spouses Rolando and Herminia Salvador


to pay plaintiffs the amount of Five Hundred Ninety Three Thousand
(P593,000.00) Pesos, representing the amount garnished from the
Metrobank deposit of plaintiffs as for their back rentals should be
deleted;chanrobleslaw

2. The award of moral damages in the amount of Twenty Thousand


(P20,000.00) Pesos; exemplary damages in the amount of Twenty
Thousand (P20,000.00) Pesos, and attorney’s fees in the amount of One
Hundred Thousand (P100,000.00) Pesos in favor of Spouses Rabaja
should be deleted; and

3. The award of attorney’s fees in amount of One Hundred Thousand


(P100,000.00) Pesos in favor of Gonzales should be deleted.

The other amounts awarded are subject to interest at the legal rate of 6% per
annum, to be reckoned from the date of finality of this judgment until fully
paid.

WHEREFORE, the petition is PARTLY GRANTED. The March 29, 2007


Decision of the Regional Trial Court, Branch 214, Mandaluyong City, in Civil
Case No. MC-03-2175, is MODIFIED to read as
follows:chanRoblesvirtualLawlibrary
“WHEREFORE, this Court renders judgment as
follows:chanRoblesvirtualLawlibrary

a. Ordering the “Contract to Sell” entered into by Spouses Rogelio and


Elizabeth Rabaja and Spouses Rolando and Herminia Salvador on July
24, 1998 as RESCINDED;chanrobleslaw

b. Ordering Spouses Rolando and Herminia Salvador to pay Spouses


Rogelio and Elizabeth Rabaja:chanRoblesvirtualLawlibrary
1. The amount of Nine Hundred Fifty Thousand (P950,000.00) Pesos,
representing the payments made by the latter for the purchase of
the subject property; and
2. The cost of suit;chanrobleslaw

c. Dismissing the counterclaims of Spouses Rolando and Herminia


Salvador and Rosario Gonzales against Spouses Rogelio and Elizabeth
Rabaja

The amounts awarded are subject to interest at the legal rate of 6% per annum
to be reckoned from the date of finality of this judgment until fully paid.”
As aforestated, this is without prejudice to the invocation by either party of the
Civil Code provisions on legal compensation or set-off under Articles 1278,
1279 and 1270.

SO ORDERED.
FIRST DIVISION

G.R. No. 157583, September 10, 2014

FRUMENCIO E. PULGAR, Petitioner, v. THE REGIONAL TRIAL COURT OF


MAUBAN, QUEZON, BRANCH 64, QUEZON POWER (PHILIPPINES) LIMITED,
CO., PROVINCE OF QUEZON,AND DEPARTMENT OF
FINANCE, Respondents.

RESOLUTION

PERLAS-BERNABE, J.:

This is a direct recourse to the Court via a petition for review


on certiorari1assailing the Orders dated December 2, 20022 and March 13,
20033 issued by the Regional Trial Court of Mauban, Quezon, Branch 64 (RTC)
which dismissed Civil Case No. 0587-M on jurisdictional grounds and,
concomitantly, petitioner Frumencio E. Pulgar’s (Pulgar) motion for
intervention therein.

The Facts4

Sometime in 1999, the Municipal Assessor of Mauban, Quezon issued 34 tax


declarations on the buildings and machinery comprising the Mauban Plant – a
coal-fired electric generation facility owned and operated by respondent Quezon
Power (Philippines) Limited, Co. (QPL) – and thereby assessed it with a total
market value of P29,626,578,291.00 and, hence, P500 Million, more or less, in
realty taxes per annum. The Municipal Assessor maintained that the Mauban
Plant was completed and already operational in October 1999. Subsequently,
or on May 18, 2000, QPL filed with the Municipal Assessor a sworn statement
declaring that the said properties had a value of only
P15,055,951,378.00. cralawred
5

On March 16 and 23, 2001, QPL tendered to the Municipal Assessor the
amount of P60,223,805.51 as first quarter installment of the realty taxes on
the plant, which the latter rejected.6 Hence, QPL filed a Complaint for
Consignation and Damages7 before the RTC against the Province of Quezon,
the Municipal Assessor and Municipal Treasurer of Mauban, Quezon, and the
Provincial Assessor and Provincial Treasurer of Quezon (defendants), docketed
as Civil Case No. 0587-M, depositing to the RTC the above-stated amount in
payment of the first quarter realty tax for 2001.8 Albeit classified as a
consignation and damages case, QPL essentially protested the Municipal
Assessor’s assessment for, among others, its lack of legal authority to make
such assessment and its supposed non-compliance with the prescribed
valuation process.9cralawred
For their part,10 defendants averred, among others, that QPL was estopped
from denying the authority of the Municipal Assessor since it previously paid
realty taxes for its properties for the year 2001 based on the assessment of the
latter.

On January 28, 2002, Pulgar filed a Motion for Leave to Admit Answer-in-
Intervention11 and Answer-in-Intervention12 (motion for intervention), alleging,
among others, that as a resident and taxpayer of Quezon Province, he has an
interest in the aggressive collection of realty taxes against QPL. By way of
counterclaim, he prayed for the award of moral damages and attorney’s fees,
anchoring the same on the “mindless disturbance of the forest and marine
environment whereon the power plant of [QPL] stands.”13Pulgar’s motion was
initially granted and his Answer-in-Intervention was admitted.14cralawred

Sometime in June 2002, QPL and the Province of Quezon agreed to submit
their dispute before the Secretary of Finance, which resulted in a
Resolution15 dated August 30, 2002 where the basic issues between the
principal parties were passed upon.

The RTC Ruling

In an Order16 dated December 2, 2002, the RTC dismissed Civil Case No. 0587-
M for lack of jurisdiction in the absence of a payment of the tax assessed under
protest, which requirement QPL attempted to skirt by alleging in its complaint
that it is the very authority of the Municipal Assessor to impose the assessment
and the treasurer to collect the tax that it was questioning. Declaring that
QPL’s complaint essentially challenged the amount of the taxes assessed, the
RTC ruled that it is the Local Board of Assessment Appeals that had
jurisdiction over the complaint. Consequently, it also dismissed Pulgar’s
motion for intervention since with the dismissal of the main case, the same had
no leg to stand on.17cralawred

Aggrieved, Pulgar filed a motion for reconsideration which was, however, denied
in an Order18 dated March 13, 2003, hence, this petition.

The Issue Before The Court

The issue advanced before the Court is whether or not the RTC erred in
dismissing Pulgar’s motion for intervention as a consequence of the dismissal
of the main case. While acknowledging the RTC’s lack of jurisdiction, Pulgar
nonetheless prays that the Court pass upon the correctness of the Municipal
Assessor’s assessment of QPL’s realty taxes, among others.

The Court’s Ruling


The petition lacks merit.

Jurisdiction over an intervention is governed by jurisdiction over the main


action.19 Accordingly, an intervention presupposes the pendency of a suit in a
court of competent jurisdiction.20cralawred

In this case, Pulgar does not contest the RTC’s dismissal of Civil Case No.
0587-M for lack of jurisdiction, but oddly maintains his intervention by asking
in this appeal a review of the correctness of the subject realty tax assessment.
This recourse, the Court, however, finds to be improper since the RTC’s lack of
jurisdiction over the main case necessarily resulted in the dismissal of his
intervention. In other words, the cessation of the principal litigation – on
jurisdictional grounds at that – means that Pulgar had, as a matter of course,
lost his right to intervene. Verily, it must be borne in mind
that:ChanRoblesVirtualawlibrary

[I]ntervention is never an independent action, but is ancillary and


supplemental to the existing litigation. Its purpose is not to obstruct nor x xx
unnecessarily delay the placid operation of the machinery of trial, but merely to
afford one not an original party, yet having a certain right or interest in the
pending case, the opportunity to appear and be joined so he could assert or
protect such right or interests.

Otherwise stated, the right of an intervenor should only be in aid of the right of
the original party. Where the right of the latter has ceased to exist, there is
nothing to aid or fight for; hence, the right of intervention ceases.21cralawred

WHEREFORE, the petition is DENIED.

SO ORDERED.
SECOND DIVISION

G.R. No. 201427, March 18, 2015

TEOFILO B. ADOLFO, Petitioner, v. FE. T. ADOLFO, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 seeks to set aside: 1) the October 6, 2009
Decision2 of the Court of Appeals (CA) in CA-G.R. CV No. 01783 reversing the
October 2, 2006 Order3 of the Regional Trial Court, 7th Judicial Region,
Mandaue City (RTC Mandaue), Branch 55 in Civil Case No. MAN-4821; as well
as 2) the CA’s March 2, 2012 Resolution4 denying petitioner’s Motion for
Reconsideration5 and Supplement6 thereto.

Civil Case No. MAN-4821

On April 14, 2004, petitioner Teofilo B. Adolfo filed with the RTC Mandaue a
Petition7 for judicial separation of property against his estranged wife,
respondent Fe Adolfo, nee Tudtud. Docketed as Civil Case No. MAN-4821 and
assigned to Branch 55, the petition alleged that the parties were married on
November 26, 1966; that the union bore one child; that during the marriage,
they acquired through conjugal funds Lot 1087-A-2-E, a 3,652-square meter
property in Brgy. Cabancalan, Mandaue City, Cebu (the subject property)
covered by Transfer Certificate of Title No. (TCT) 18368; that later on, the
parties separated due to irreconcilable differences; that since reunion was no
longer feasible, petitioner suggested a separation of the conjugal property, but
respondent adamantly refused; that respondent denied petitioner’s co-
ownership of the subject property, claiming the same as her paraphernal
property; that several earnest efforts to amicably settle the matter between
them proved unavailing; and that a judicial separation of property is proper
under the circumstances and pursuant to Article 135(6) of the Family
Code.8 Petitioner thus prayed that judgment be rendered decreeing a
separation of the conjugal property and the subdivision or sale thereof, to the
end of dividing the same or the proceeds thereof; and ordering respondent to
pay petitioner P50,000.00 as attorney’s fees, appearance fees (P2,000.00 per
hearing), and P20,000.00 litigation costs.

In her Answer9 with counterclaim, respondent contended that while she


remained married to petitioner, she is the sole owner of the subject property,
the same being her paraphernal property which she inherited from her mother;
that petitioner is a lazy bum, gambler, drunkard, wife abuser, and neglectful
father; that respondent found all means to support the family even as
petitioner neglected it; that respondent bought on installment a tricycle for the
petitioner’s use in business, but he kept the proceeds thereof to himself and
used the same in his gambling and drinking sprees; that respondent alone took
the initiative to support the family and found ways to take care of the daily
needs of her child; that she caused to be built on a portion of her mother’s land
a house even while petitioner was bumming around; that one day, petitioner
destroyed the roof of the house that was then being built; that petitioner
subsequently abandoned her and their child in 1968, and transferred to Davao
City where he took a mistress and begot four children by her; that in 1986,
petitioner returned to Cebu City seeking reconciliation with respondent; that
respondent took petitioner back, but in 1987 they once more separated; that
thereafter, respondent never again saw or heard from petitioner.

Respondent claimed in her Answer that the subject property was a portion of a
bigger lot (mother lot) owned by her mother Petronila Tudtud which was
covered by TCT T-15941. On October 11, 1967, her mother executed a
quitclaim deed transferring a portion of the mother lot – the subject property –
to respondent. The mother title TCT T-15941 was then cancelled and a new
one, TCT (17216)-5415, was issued in respondent’s name. Respondent then
sold the subject property to her brother on January 19, 1968, and a new TCT
(17833)-5515 was issued in her brother’s name. Her brother then mortgaged
the property to Development Bank of the Philippines (DBP), which foreclosed
on the same. TCT 18231 was issued in DBP’s name. DBP then sold the
property to the spouses Antonio and Lucy Garcia (the Garcias), and TCT 18266
was in turn issued in their name. Finally, on May 25, 1983, the Garcias sold
back the subject property to respondent, and a new title – TCT 1836810 – was
then issued in the name of respondent “FE M. TUDTUD, x x x married to
Teofilo Adolfo.”

Respondent argued that she is the sole owner of the subject property, the same
being her paraphernal property which she alone redeemed from the Garcias;
that the inclusion of petitioner’s name in TCT 18368 does not make him a co-
owner of the property, but was merely necessary to describe respondent’s civil
status; and that under Article 13511 of the Civil Code, all property brought by
the wife to the marriage as well as all property she acquires during the
marriage in accordance with Article 14812 of the same Code constitutes
paraphernal property.

Respondent thus prayed that the petition be dismissed. By way of


counterclaim, she sought the payment of moral, exemplary, and nominal
damages, attorney’s fees, and litigation expenses.

Civil Case No. MAN-2683

In 1996, respondent’s sister Florencia Tudtud and her husband Juanito


Gingoyon (the Gingoyons) filed a case for partition with damages against
respondent. The case was docketed as Civil Case No. MAN-2683 and raffled to
Branch 55 of the RTC Mandaue. The Complaint13 therein alleged that in 1988,
respondent executed a deed of sale in favor of the Gingoyons over a 300-square
meter portion of the subject property, but that respondent refused to
partition/subdivide the same even after the Gingoyons paid the taxes, fees and
expenses of the sale. For her defense, respondent claimed in her Answer14 that
when the sale to the Gingoyons was made, the subject property constituted
conjugal property of her marriage with petitioner; that as early as 1983, or
when the Garcias executed the deed of sale in her favor, the subject property
became a conjugal asset; since petitioner did not sign the deed of sale in favor
of the Gingoyons as he was in Davao at the time and knew nothing about the
sale, the sale was null and void.

On May 15, 2002, the trial court rendered its Decision15 in Civil Case No. MAN-
2683, declaring that the subject property constituted conjugal property of the
marriage. It thus nullified the 1988 deed of sale executed by respondent in
favor of the Gingoyons for lack of consent on the part of petitioner, citing
Article 124 of the Family Code.16 The trial court likewise awarded moral and
exemplary damages, attorney's fees and litigation expenses in favor of the
respondent in the total amount of P107,000.00.

The Gingoyons filed an appeal with the CA, which was docketed as CA-G.R. CV
No. 78971.

Motion for Judgment Based on the Pleadings in Civil Case No. MAN-4821

Meanwhile, during the pre-trial conference in Civil Case No. MAN-4821,


petitioner submitted as part of his evidence and for marking certified true
copies of the Gingoyons’ Complaint in Civil Case No. MAN-2683, respondent’s
Answer thereto, and the trial court’s May 15, 2002 Decision in said case.

On August 1, 2005, petitioner filed a Request for Admission17 of 1) the


genuineness of the duly marked certified true copies of the Complaint, Answer,
and Decision in Civil Case No. MAN-2683 (Exhibits “F,” “G” and “H,”
respectively); 2) respondent’s declaration in said Answer that the subject
property constituted conjugal property of the marriage; and 3) the trial court’s
pronouncement in said case that the subject property forms part of the
conjugal estate.

Respondent failed to file her answer or response to the request for admission.

On September 5, 2005, petitioner filed a Motion for Judgment Based on the


Pleadings,18 stating that since respondent failed to answer his request for
admission, the matters contained in the request are deemed admitted pursuant
to Rule 26, Section 2 of the 1997 Rules of Civil Procedure19 (1997 Rules); that
as a consequence of the application of the rule, respondent is in effect
considered to have admitted that the subject property is a conjugal asset of
their subsisting marriage which may thus be the subject of his petition for
judicial separation of property; and that on account of said admission, a
hearing on the merits becomes unnecessary and, instead, Rule 3420 of the
1997 Rules on judgments on the pleadings should apply. Petitioner thus
prayed that the trial court render judgment in his favor based on the pleadings.

Respondent filed an Opposition.21 In her Opposition to Plaintiff’s


Memorandum, respondent argued among others that the request for
22

admission was premature considering that the decision in Civil Case No. MAN-
2683 was the subject of an appeal, and thus not yet final.

In an October 11, 2005 Order,23 the trial court directed the transfer of Civil
Case No. MAN-4821 to Branch 55 of the RTC Mandaue, since it is said court
which decided the closely related Civil Case No. MAN-2683.

On October 2, 2006, Branch 55 issued an Order24 granting petitioner’s motion


for judgment on the pleadings. It held as follows:chanRoblesvirtualLawlibrary

This court has painstakingly exerted effort in going over the record and took
serious note of all the pleadings, documents and others on file. After serious
consideration, the court believes and so holds that there is basis in rendering
judgment. The Motion for Judgment Based on the Pleadings though
denominated as such but [sic] shall be treated as a move to seek summary
judgment. x x x

x x x x

The court in arriving at this resolution was guided by the following


pronouncements by the Supreme Court in the case of Diman vs. Alumbres,
G.R. No. 131466, November 27, 1998, 299 SCRA 459 x x x:
x x x x

In the same case, it was held –

“It is also the law which determines when a summary judgment is proper. It
declares that although the pleadings on their face appear to raise issues of fact
– e.g., there are denials of, or a conflict in, factual allegations – if it is shown by
admissions, depositions or affidavits, that those issues are sham, fictitious, or
not genuine, or, in the language of the Rules, that ‘except as to the amount of
damages, there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law, the Court shall render a
summary judgment for the plaintiff or the defendant, as the case may be.
(Italics and underscoring supplied)

On the other hand, in the case of a summary judgment[,] issues apparently


exist – i.e.. facts are asserted in the complaint regarding which there is as yet
no admission, disavowal or qualification; or specific denials or affirmative
defenses are in truth set out in the answer – but the issues thus arising from
the pleadings are sham, fictitious, not genuine, as shown by [affidavits],
depositions or admissions. In other words, as a noted authority remarks, a
judgment on the pleadings is a judgment on the facts as pleaded, while a
summary judgment is a judgment on the facts as summarily proven by
affidavits, depositions or admissions.” (Italics and underscoring supplied)

x x x xcralawlawlibrary

Defendant25 did not file any verified answer or a pleading denying under oath
the genuineness and authenticity of the documents attached to the Request for
Admission and of the other matters therein set forth. This failure has far
reaching implications in that the following are deemed admitted: a) the
genuineness of Exhibits F, G and H, all attached to the Request for Admission;
b) that she admitted in paragraph 10 in her Answer to Civil Case No. MAN-
2683 that Lot 1087-A-2-E was no longer paraphernal property but rather a
conjugal property of Spouses Teofilo and Fe Adolfo and; c) that RTC, Branch
55, Mandaue City, sustained and/or held the view of defendant (Fe Tudtud)
that Lot 1087-A-2-E is a conjugal property of Spouses Teofilo and Fe Adolfo,
thus, dismissed Civil Case No. MAN-2683 and awarded damages to the
defendant.

Judicial admissions may be made in (a) the pleadings filed by the parties, (b) in
the course of the trial either by verbal or written manifestations or stipulations,
or (c) in other stages of the judicial proceeding, as in the pre-trial of the
case. Admissions obtained through depositions, written interrogatories or
requests for admission are also considered judicial admissions.” Page 686,
Remedial Law Compendium, Vol. II, 9thRev. Ed., Regalado

With the admission that Lot 1087-A-2-E is a conjugal property, it follows as its
necessary and logical consequence, that plaintiff26 is entitled to the relief
demanded.chanrobleslaw

x x x x

A DECISION in Civil Case No. MAN-2683 had already been rendered by RTC,
Branch 55, on the 15th day of May 2002 with the court finding that Lot 1087-
A-2-E is a conjugal property x x x –

x x x x

For reason[s] of expediency and convenience, the court may even take judicial
notice of its earlier decision finding Lot 1087-A-2-E as a conjugal
property.27cralawred
x x x x

Under the circumstances, judicial separation of property is proper. Aware that


the separation has the effect of a dissolution of the conjugal partnership
property regime, the presumptive legitime of Nilo Adolfo (the only common child
of the spouses) has to be delivered in accordance with Article 51 in relation to
paragraph (8) Article 127 and Article 137 of the Family Code of the Philippines.

WHEREFORE, premises considered, judgment is hereby rendered directing the


partition of Lot 1087-A-2-E between the plaintiff and the defendant in equal
share of what remains after allocating to Nilo Adolfo a portion of Nine hundred
thirteen (913) square meters representing his presumptive legitime.

The plaintiff is directed to submit to this court the proposed subdivision plan
for its consideration before submitting the same for approval to the Bureau of
Lands.

In case of disagreement as to their respective location, the same shall be done


through raffle to be conducted by the sheriff who shall see to it that judgment
in this case shall be fully implemented.

SO ORDERED.28cralawlawlibrary

Respondent instituted an appeal with the CA, which was docketed as CA-G.R.
CV No. 01783.

Court of Appeals Decision in CA-G.R. CV No. 78971

Meanwhile, on May 30, 2007, the CA rendered its Decision29 in CA-G.R. CV No.
78971. It reversed the May 15, 2002 Decision of the trial court in Civil Case
No. MAN-2683. It declared, among others, that the subject property was
respondent’s paraphernal property. Thus, it held:chanRoblesvirtualLawlibrary

Proceeding from the foregoing consideration, the finding that Lot No. 1087-A-2-
E is a conjugal property does not have any basis, hence, does not have any
merit at all. On the contrary, plaintiffs-appellants30 sufficiently proved that the
aforesaid lot was defendant-appellee’s31 paraphernal property as the latter even
admitted that she inherited the same from her mother although she claimed it
as a conjugal property based on the TCT’s attached to her answer. Another
strong indication that Lot No. 1087-A-2-E is solely owned by defendant-
appellee is the fact that in another case (Civil Case No. MAN-2008) involving
the same property and the same parties but for a different issue (road right of
way), defendant-appellee alone signed the compromise agreement ceding a
portion of the subject lot as a right of way perpetually open and unobstructed
for the benefit of plaintiffs-appellants, defendant-appellee, their respective
heirs, assigns and transferees and guests. The same compromise agreement
which became the decision of the case attained finality without defendant-
appellee questioning the absence of her husband’s signature.chanrobleslaw

x x x x

WHEREFORE, prescinding from the foregoing premises, the appeal is hereby


GRANTED and the Decision of the Regional Trial Court of Mandaue City,
Branch 55, dated 15 May 2002, in Civil Case No. MAN-2683 is REVERSED and
SET ASIDE.

Let the partition of Lot No. 1087-A-2-E consisting of 300 square meters bought
by plaintiffs-appellants from defendant-appellee be done in accordance to [sic]
the sketch plan executed for that purpose.

SO ORDERED.32cralawred
cralawlawlibrary

On June 23, 2007, the above CA decision became final and


executory.33cralawred

Ruling of the Court of Appeals in CA-G.R. CV No. 01783

In CA-G.R. CV No. 01783, respondent filed her Appellant’s Brief,34 where she
argued that the trial court erred in issuing its October 2, 2006 Order directing
the partition or sale of the subject property; that it was error for the trial court
to take judicial notice of its own judgment in Civil Case No. MAN-2683 and
thus declare that the subject property is conjugal, since the issue of whether it
constitutes conjugal or paraphernal property was still pending in the appeal in
CA-G.R. CV No. 78971; that since the proceedings in Civil Case No. MAN-2683
have not been terminated and the issue regarding the character of the subject
property has not been resolved with finality, then petitioner’s resort to a
request for admission and motion for judgment on the pleadings was
premature; and that with the May 30, 2007 Decision in CA-G.R. CV No. 78971,
petitioner and the trial court should submit to the finding therein that the
subject property is her paraphernal property.

In his Appellee’s Brief,35 petitioner insisted that the trial court did not err in
treating his motion for judgment on the pleadings as one for summary
judgment; that respondent’s Answer in Civil Case No. MAN-2683 constituted a
judicial admission that the subject property was a conjugal asset, which
required no further proof; that respondent’s failure to reply to his written
request for admission also resulted in the acknowledgment that the subject
property is a conjugal asset; that the trial court correctly took judicial notice of
the proceedings in Civil Case No. MAN-2683, as they were relevant and
material to the resolution of Civil Case No. MAN-4821; that since it was not
respondent who appealed the May 15, 2002 decision in Civil Case No. MAN-
2683, then the finding therein that the subject property is conjugal should
bind her; and that the CA’s eventual finding in CA-G.R. CV No. 78971 that the
subject lot was respondent’s paraphernal property cannot bind him because he
was not a party to Civil Case No. MAN-2683.

On October 6, 2009, the CA issued the assailed Decision containing the


following decretal portion:chanRoblesvirtualLawlibrary

WHEREFORE, based from the foregoing premises, the Order of the Regional
Trial Court, Branch 55, Mandaue City, in Civil Case No. MAN-4821, is hereby
REVERSED and SET ASIDE and the records of this case are remanded to RTC
(Branch 55), Mandaue City, for further proceedings.

SO ORDERED.36cralawlawlibrary

In arriving at the above conclusion, the CA held that the trial court cannot
treat petitioner’s motion for judgment on the pleadings as one for summary
judgment. It stated that in a proper case for judgment on the pleadings, there
are no ostensible issues at all on account of the defending party’s failure to
raise an issue in his answer, while in a proper case for summary judgment,
such issues exist, although they are sham, fictitious, or not genuine as shown
by affidavits, depositions or admissions. In other words, a judgment on the
pleadings is a judgment on the facts as pleaded, while a summary judgment is
a judgment on the facts as summarily proved by affidavits, depositions, or
admissions.37 It added that respondent’s Answer appeared on its face to tender
an issue; it disputed petitioner’s claim that the subject property is their
conjugal property. The next thing to be determined is whether this issue is
fictitious or sham as to justify a summary judgment.

The CA added that although respondent was bound by the resulting admission
prompted by her failure to reply to petitioner’s request for admission, her
claims and documentary exhibits clearly contradict what petitioner sought to
be admitted in his request; that the trial court disregarded the fact that the
issue of whether the subject property is conjugal was still unresolved as CA-
G.R. CV No. 78971 was still pending; and that finally, the trial court should
have been guided by the principles that trial courts have but limited authority
to render summary judgments and that summary judgments should not be
rendered hastily.38cralawred

Petitioner moved to reconsider, but in a March 2, 2012 Resolution, he was


rebuffed. Hence, the present Petition was filed on April 30, 2012.

In a March 20, 2013 Resolution,39 the Court resolved to give due course to the
instant Petition.chanroblesvirtuallawlibrary
Issue

Petitioner now claims that the Court of Appeals erred in deciding the case on a
question of substance not in accord with law, Rule 26 of the 1997 Rules, and
applicable jurisprudence.40cralawred

Petitioner’s Arguments

In his Petition seeking to reverse and set aside the assailed CA dispositions and
thus reinstate the October 2, 2006 Order of the trial court, petitioner insists
that respondent’s failure to reply to his written request for admission resulted
in her admitting that the subject property is a conjugal asset, applying Rule 26,
Section 2 of the 1997 Rules; that the CA grossly erred in disregarding the rule;
that with the resulting admission, there remains no genuine issue to be
resolved in Civil Case No. MAN-4821, such that judgment based on the
pleadings is proper. Finally, petitioner adds that respondent’s trifling with the
law and rules of procedure – by conveniently claiming in one case that the
subject property is conjugal, and then in another that it is paraphernal –
should not be countenanced; she should be held to her original declaration
that the subject property is conjugal.

Respondent’s Arguments

In her Comment,41 respondent counters that, as correctly ruled by the CA,


petitioner elected the wrong remedy in filing a motion for judgment on the
pleadings when he should have moved for summary judgment; that in a motion
for judgment on the pleadings, the movant is deemed to admit the truth of all
of the opposing party’s material and relevant allegations, and rest his motion
on those allegations taken together with that of his own as are admitted in the
pleadings;42 that the effect of this is that petitioner is deemed to have admitted
that the subject property is paraphernal, as claimed in her Answer; that with
the final and executory May 30, 2007 Decision of the CA in CA-G.R. CV No.
78971, the subject property should now be considered as her paraphernal
property, and petitioner’s case for partition on the claim that the subject
property is conjugal should be dismissed for being moot and academic.

Our Ruling

The Court denies the Petition.

Judgment on the pleadings is proper “where an answer fails to tender an issue,


or otherwise admits the material allegations of the adverse party’s
pleading.”43 Summary judgment, on the other hand, will be granted “if the
pleadings, supporting affidavits, depositions, and admissions on file, show
that, except as to the amount of damages, there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of
law.”44cralawred

We have elaborated on the basic distinction between summary judgment and


judgment on the pleadings, thus:chanRoblesvirtualLawlibrary

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


hand, and their sham or fictitious character, on the other, are what distinguish
a proper case for summary judgment from one for a judgment on the
pleadings. In a proper case for judgment on the pleadings, there is no
ostensible issue at all because of the failure of the defending party’s answer to
raise an issue. On the other hand, in the case of a summary judgment, issues
apparently exist ? i.e. facts are asserted in the complaint regarding which there
is as yet no admission, disavowal or qualification; or specific denials or
affirmative defenses are in truth set out in the answer?but the issues thus
arising from the pleadings are sham, fictitious or not genuine, as shown by
affidavits, depositions, or admissions.45cralawlawlibrary

An answer would “fail to tender an issue” if it “does not deny the material
allegations in the complaint or admits said material allegations of the adverse
party’s pleadings by confessing the truthfulness thereof and/or omitting to deal
with them at all. Now, if an answer does in fact specifically deny the material
averments of the complaint and/or asserts affirmative defenses (allegations of
new matter which, while admitting the material allegations of the complaint
expressly or impliedly, would nevertheless prevent or bar recovery by the
plaintiff), a judgment on the pleadings would naturally be
improper.” cralawred
46

On the other hand, “whether x x x the issues raised by the Answer are genuine
is not the crux of inquiry in a motion for judgment on the pleadings. It is so
only in a motion for summary judgment. In a case for judgment on the
pleadings, the Answer is such that no issue is raised at all. The essential
question in such a case is whether there are issues generated by the
pleadings.”47 “A ‘genuine issue’ is an issue of fact which requires the
presentation of evidence as distinguished from a sham, fictitious, contrived or
false claim. When the facts as pleaded appear uncontested or undisputed,
then there is no real or genuine issue or question as to the facts, and summary
judgment is called for.”48cralawred

In rendering summary judgment, the trial court relied on respondent’s failure


to reply to petitioner’s request for admission, her admission in Civil Case No.
MAN-2683, as well as its May 15, 2002 Decision declaring that the subject
property is a conjugal asset. It took judicial notice of the proceedings in said
case. While there is nothing irregular with this – as courts may “take judicial
notice of a decision or the facts prevailing in another case sitting in the same
court if (1) the parties present them in evidence, absent any opposition from
the other party; or (2) the court, in its discretion, resolves to do so”49 – the trial
court however disregarded the fact that its decision was then the subject of a
pending appeal in CA-G.R. CV No. 78971. It should have known that until the
appeal is resolved by the appellate court, it would be premature to render
judgment on petitioner’s motion for judgment on the pleadings; that it would be
presumptuous to assume that its own decision would be affirmed on
appeal. One of the issues raised in the appeal is precisely whether the subject
property is conjugal, or a paraphernal asset of the respondent. Thus, instead
of resolving petitioner’s motion for judgment on the pleadings, the trial court
should have denied it or held it in abeyance. It should have guided petitioner
to this end, instead of aiding in the hasty resolution of his case. In the first
place, Civil Case No. MAN-4821 was transferred to it from Branch 56 precisely
for the reason that it was the court which tried the closely related Civil Case
No. MAN-2683.

Even if respondent is deemed to have admitted the matters contained in


petitioner’s request for admission by her failure to reply thereto, the trial court
should have considered the pending appeal in CA-G.R. CV No. 78971. It
cannot take judicial notice solely of the proceedings in Civil Case No. MAN-
2683, and ignore the appeal in CA-G.R. CV No. 78971. After all, CA-G.R. CV
No. 78971 is merely a continuation of Civil Case No. MAN-2683; an appeal is
deemed a continuation of the same case commenced in the lower
court.50cralawred

On the part of petitioner, it must be said that he could not have validly resorted
to a motion for judgment on the pleadings or summary judgment. While it may
appear that under Rules 34 and 35 of the 1997 Rules, he may file a motion for
judgment on the pleadings or summary judgment as a result of the consequent
admission by respondent that the subject property is conjugal, this is not
actually the case. Quite the contrary, by invoking the proceedings and decision
in Civil Case No. MAN-2683, petitioner is precluded from obtaining judgment
while the appeal in said case is pending, because the result thereof determines
whether the subject property is indeed conjugal or paraphernal. He may not
preempt the appeal in CA-G.R. CV No. 78971.

While it is true that a judgment cannot bind persons who are not parties to the
action,51 petitioner cannot, after invoking the proceedings in Civil Case No.
MAN-2683 to secure affirmative relief against respondent and thereafter failing
to obtain such relief, be allowed to repudiate or question the CA’s ruling in CA-
G.R. CV No. 78971. The principle of estoppel bars him from denying the
resultant pronouncement by the appellate court, which became final and
executory, that the subject property is respondent’s paraphernal property. “In
estoppel, a person, who by his deed or conduct has induced another to act in a
particular manner, is barred from adopting an inconsistent position, attitude or
course of conduct that thereby causes loss or injury to another. It further bars
him from denying the truth of a fact which has, in the contemplation of law,
become settled by the acts and proceeding of judicial or legislative officers or by
the act of the party himself, either by conventional writing or by
representations, express or implied or in pais.”52cralawred

Finally, the Court notes that the appellate court overlooked the May 30, 2007
Decision in CA-G.R. CV No. 78971, which became final and executory on June
23, 2007. The respondent included this development in her appellee’s brief,
but the CA did not take it into account. As an unfortunate consequence, the
case was not appreciated and resolved completely.

Thus, with the development in Civil Case No. MAN-2683 brought upon by the
final and executory decision in CA-G.R. CV No. 78971, petitioner’s case is left
with no leg to stand on. There being no conjugal property to be divided
between the parties, Civil Case No. MAN-4821 must be dismissed.

WHEREFORE, the Petition is DENIED. The October 6, 2009 Decision and


March 2, 2012 Resolution of the Court of Appeals in CA-G.R. CV No. 01783
are AFFIRMED WITH MODIFICATION in that Civil Case No. MAN-4821 is
ordered DISMISSED.

SO ORDERED.cralawlawlibrary
THIRD DIVISION

G.R. No. 202989, March 25, 2015

COMGLASCO CORPORATION/AGUILA GLASS, Petitioner, v. SANTOS CAR


CHECK CENTER CORPORATION, Respondent.

DECISION

REYES, J.:

On August 16, 2000, respondent Santos Car Check Center Corporation


(Santos), owner of a showroom located at 75 Delgado Street, in Iloilo City,
leased out the said space to petitioner Comglasco Corporation (Comglasco), an
entity engaged in the sale, replacement and repair of automobile windshields,
for a period of five years at a monthly rental of P60,000.00 for the first year,
P66,000.00 on the second year, and P72,600.00 on the third through fifth
years.1

On October 4, 2001, Comglasco advised Santos through a letter2 that it was


pre-terminating their lease contract effective December 1, 2001. Santos
refused to accede to the pre-termination, reminding Comglasco that their
contract was for five years. On January 15, 2002, Comglasco vacated the
leased premises and stopped paying any further rentals. Santos sent several
demand letters, which Comglasco completely ignored. On September 15, 2003,
Santos sent its final demand letter,3 which Comglasco again ignored. On
October 20, 2003, Santos filed suit for breach of contract.4

Summons and a copy of the complaint, along with the annexes, were served on
Comglasco on January 21, 2004, but it moved to dismiss the complaint for
improper service. The Regional Trial Court (RTC) of Iloilo City, Branch 37,
dismissed the motion and ordered the summons served anew. On June 28,
2004, Comglasco filed its Answer.5 Santos moved for a judgment on the
pleadings, which the RTC granted. On August 18, 2004, the trial court
rendered its judgment,6 the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of [Santos] and against


[Comglasco]:

1. Ordering [Comglasco] to faithfully comply with [its] obligation under the


Contract of Lease and pay its unpaid rentals starting January 16, 2002 to
August 15, 2003 in the total amount of Php1,333,200.00, plus 12% interest
per annum until fully paid;

2. To pay [Santos]:
a) Php200,000.00 as attorney’s fees;
b) [Php]50,000.00 as litigation expenses;
c) [Php]400,000.00 as exemplary damages.
3. Costs of the suit.

SO ORDERED.7

On February 14, 2005, Santos moved for execution pending Comglasco’s


appeal, which the trial court granted on May 12, 2005. In its appeal,
Comglasco interposed the following issues for resolution:

1. Whether or not judgment on the pleadings was properly invoked by the


trial court as basis for rendering its decision;
2. Whether or not material issues were raised in [Comglasco’s] Answer;
3. Whether or not damages may be granted by the trial court without proof
and legal basis.8

In its Decision9 dated August 10, 2011, the Court of Appeals (CA) affirmed the
judgment of the RTC but reduced the award of attorney’s fees to P100,000.00
and deleted the award of litigation expenses and exemplary damages.

Petition for Review to the Supreme Court

In this petition, Comglasco raises the following issues:

1. Whether or not judgment on the pleadings was properly invoked by the


trial court as basis for rendering its decision?
2. Whether or not material issues were raised in [Comglasco’s] answer?
3. Whether or not summary judgment or judgment on the pleadings is the
proper remedy for [Santos] under the circumstances of the present case?
4. Whether or not the amount deposited for advance rental and deposit
should be credited to [Comglasco’s] account?
5. Whether or not attorney’s fees may be granted by the trial court without
proof and legal basis?10

Paragraph 15 of the parties’ lease contract11 permits pre-termination with


cause in the first three years and without cause after the third year. Citing
business reverses which it ascribed to the 1997 Asian financial crisis,
Comglasco insists that under Article 1267 of the Civil Code it is exempted from
its obligation under the contract, because its business setback is the “cause”
contemplated in their lease which authorized it to pre-terminate the
same. Article 1267 provides:
Art. 1267. When the service has become so difficult as to be manifestly beyond
the contemplation of the parties, the obligor may also be released therefrom, in
whole or in part.

Comglasco argues that it cannot be said to have admitted in its Answer the
material allegations of the complaint precisely because it invoked therein a
valid cause for its decision to pre-terminate the lease before the lapse of three
years; that therefore, in view of its pleaded “cause” for reneging on its rentals
(the 1997 Asian financial crisis), the RTC should have ordered the reception of
evidence for this purpose, after which a summary judgment would then have
been proper, not a judgment on the pleadings. After all, Santos has claimed in
its Motion for Summary Judgment that Comglasco’s cited “cause” for pre-
termination was fictitious or a sham, whereas in truth the prevailing business
climate which ensued after the 1997 currency crisis resulted in great difficulty
on its part to comply with the terms of the lease “as to be manifestly beyond
the contemplation of the parties”; thus, Comglasco should be deemed released
from the lease.

Next, Comglasco insists that its advance rentals and deposit totaling
P309,000.00 should be deducted from any sum awarded to Santos while it also
insists that there is no factual and legal basis for the award of damages.

Ruling of the Court

The petition is denied.

The first three issues being related will be discussed together.

Comglasco maintains that the RTC was wrong to rule that its answer to Santos’
complaint tendered no issue, or admitted the material allegations therein; that
the court should have heard it out on the reason it invoked to justify its action
to pre-terminate the parties’ lease; that therefore a summary judgment would
have been the proper recourse, after a hearing.

In Philippine National Construction Corporation v. CA12 (PNCC), which also


involves the termination of a lease of property by the lessee “due to financial, as
well as technical, difficulties,”13 the Court ruled:

The obligation to pay rentals or deliver the thing in a contract of lease falls
within the prestation “to give”; hence, it is not covered within the scope of
Article 1266. At any rate, the unforeseen event and causes mentioned by
petitioner are not the legal or physical impossibilities contemplated in said
article. Besides, petitioner failed to state specifically the circumstances
brought about by “the abrupt change in the political climate in the country”
except the alleged prevailing uncertainties in government policies on
infrastructure projects.
The principle of rebus sic stantibus neither fits in with the facts of the
case. Under this theory, the parties stipulate in the light of certain prevailing
conditions, and once these conditions cease to exist, the contract also ceases to
exist. This theory is said to be the basis of Article 1267 of the Civil Code,
which provides:
Art. 1267. When the service has become so difficult as to be manifestly beyond
the contemplation of the parties, the obligor may also be released therefrom, in
whole or in part.
This article, which enunciates the doctrine of unforeseen events, is not,
however, an absolute application of the principle of rebus sic stantibus, which
would endanger the security of contractual relations. The parties to the
contract must be presumed to have assumed the risks of unfavorable
developments. It is therefore only in absolutely exceptional changes of
circumstances that equity demands assistance for the debtor.

In this case, petitioner wants this Court to believe that the abrupt change in
the political climate of the country after the EDSA Revolution and its poor
financial condition “rendered the performance of the lease contract impractical
and inimical to the corporate survival of the petitioner.”

This Court cannot subscribe to this argument. As pointed out by private


respondents:

x x x x

Anent petitioner’s alleged poor financial condition, the same will neither release
petitioner from the binding effect of the contract of lease. As held in Central
Bank v. Court of Appeals, cited by private respondents, mere pecuniary inability
to fulfill an engagement does not discharge a contractual obligation, nor does it
constitute a defense to an action for specific performance.14

Relying on Article 1267 of the Civil Code to justify its decision to pre-
terminate its lease with Santos, Comglasco invokes the 1997 Asian currency
crisis as causing it much difficulty in meeting its obligations. But
in PNCC,15 the Court held that the payment of lease rentals does not involve a
prestation “to do” envisaged in Articles 1266 and 1267 which has been
rendered legally or physically impossible without the fault of the obligor-
lessor. Article 1267 speaks of a prestation involving service which has been
rendered so difficult by unforeseen subsequent events as to be manifestly
beyond the contemplation of the parties. To be sure, the Asian currency crisis
befell the region from July 1997 and for sometime thereafter, but Comglasco
cannot be permitted to blame its difficulties on the said regional economic
phenomenon because it entered into the subject lease only on August 16,
2000, more than three years after it began, and by then Comglasco had known
what business risks it assumed when it opened a new shop in Iloilo City.

This situation is no different from the Court’s finding in PNCC wherein PNCC
cited the assassination of Senator Benigno Aquino Jr. (Senator Aquino) on
August 21, 1983 and the ensuing national political and economic crises as
putting it in such a difficult business climate that it should be deemed released
from its lease contract. The Court held that the political upheavals, turmoils,
almost daily mass demonstrations, unprecedented inflation, and peace and
order deterioration which followed Senator Aquino’s death were a matter of
judicial notice, yet despite this business climate, PNCC knowingly entered into
a lease with therein respondents on November 18, 1985, doing so with open
eyes of the deteriorating conditions of the country. The Court rules now, as in
PNCC, that there are no “absolutely exceptional changes of circumstances that
equity demands assistance for the debtor.”16

As found by the CA, Comglasco’s Answer admitted the material allegations in


the complaint, to wit: a) that Santos holds absolute title to a showroom space;
b) that Comglasco leased the said showroom from Santos; c) that after a little
over a year, Comglasco pre-terminated the lease; d) that, disregarding Santos’
rejection of the pre-termination of their lease, Comglasco vacated the leased
premises on January 15, 2002; e) that Comglasco never denied the existence
and validity of the parties’ lease contract. Specifically, the CA noted that
Paragraph 2 of the Answer admitted the allegations in Paragraphs 2, 3 and 4 of
the complaint that the lease was for five years, starting on August 16, 2000
and to expire on August 15, 2005, at a monthly rental of P60,000.00 on the
first year, P66,000.00 on the second year, and P72,600.00 on the third up to
the fifth year.

The RTC acted correctly in resorting to Section 1 of Rule 34, on Judgment on


the Pleadings, to cut short a needless trial. This Court agrees with the CA that
Comglasco cannot cite Article 1267 of the Civil Code, and that it must be
deemed to have admitted the material allegations in the complaint. Section 1,
Rule 34 reads:

Sec. 1. Judgment on the pleadings. - Where an answer fails to tender an issue,


or otherwise admits the material allegations of the adverse party’s pleading, the
court may, on motion of that party, direct judgment on such
pleading. However, in actions for declaration of nullity or annulment of
marriage or for legal separation, the material facts alleged in the complaint
shall always be proved.

A judgment on the pleadings is a judgment on the facts as pleaded,17 and is


based exclusively upon the allegations appearing in the pleadings of the parties
and the accompanying annexes.18 It is settled that the trial court has the
discretion to grant a motion for judgment on the pleadings filed by a party if
there is no controverted matter in the case after the answer is filed.19 A genuine
issue of fact is that which requires the presentation of evidence, as
distinguished from a sham, fictitious, contrived or false issue.20 Come to think
of it, under Rule 35, on Summary Judgments, Comglasco had recourse to move
for summary judgment, wherein it could have adduced supporting evidence to
justify its action on the parties’ lease, but it did not do so. Section 2 of Rule 35
provides:

Sec. 2. Summary judgment for defending party. - A party against whom a claim,
counterclaim, or cross-claim is asserted or a declaratory relief is sought
may, at any time, move with supporting affidavits, depositions or admissions
for a summary judgment in his favor as to all or any part thereof.

Concerning, now, whether Comglasco’s alleged rental deposit and advance


rentals of P309,000.00 should be credited to Comglasco’s account, let it suffice
to state that it never raised this matter in its answer to the complaint, nor in
its appeal to the CA. Certainly, it cannot do so now.

Finally, as to whether attorney’s fees may be recovered by Santos, Article


2208(2) of the Civil Code justifies the award thereof, in the absence of
stipulation, where the defendant’s act or omission has compelled the plaintiff to
incur expenses to protect his interest. The pre-termination of the lease by
Comglasco was not due to any fault of Santos, and Comglasco completely
ignored all four demands of Santos to pay the rentals due from January 16,
2002 to August 15, 2003, thereby compelling Santos to sue to obtain relief. It
is true that the policy of the Court is that no premium should be placed on the
right to litigate,21 but it is also true that attorney’s fees are in the nature of
actual damages, the reason being that litigation costs money.22 But the Court
agrees with the CA that the lesser amount of P100,000.00 it awarded to Santos
instead of P200,000.00 adjudged by the RTC, is more reasonable.

WHEREFORE, premises considered, the petition is DENIED for lack of merit.

SO ORDERED.
SECOND DIVISION

G.R. No. 200759, March 25, 2015

FAJ CONSTRUCTION & DEVELOPMENT


CORPORATION, Petitioner, v. SUSAN M. SAULOG,Respondent.

DECISION

DEL CASTILLO, J.:

This case illustrates the oft-quoted principle that the Supreme Court is not a
trier of facts and does not normally undertake the re-examination of the
evidence presented by the contending parties during trial.

This Petition for Review on Certiorari1 seeks to set aside the November 29, 2011
Decision2 and February 24, 2012 Resolution3 of the Court of Appeals (CA) in
CA-G.R. CV No. 88385 affirming with modification the January 30, 2006
Decision4 of the Regional Trial Court (RTC) of Quezon City, Branch 220 in Civil
Case No. Q-02-45865 and denying petitioner’s Partial Motion for
Reconsideration,5respectively.

Factual Antecedents

On June 15, 1999, petitioner FAJ Construction and Development Corporation


and respondent Susan M. Saulog entered into an Agreement6 (construction
agreement) for the construction of a residential building in San Lorenzo Village,
Makati City for a contract price of P12,500,000.00. Payment to petitioner
contractor shall be on a progress billing basis, after inspection of the work by
respondent.

Construction of the building commenced, and respondent made a


corresponding total payment to petitioner in the amount of
P10,592,194.80. However, for the October 31 and November 6, 2000 progress
billing statements sent by petitioner in the total amount of P851,601.58,
respondent refused to pay. After performing additional work, petitioner made
another request for payment, but respondent again refused to pay, prompting
petitioner to terminate the construction contract pursuant to Article 27(b) of
the Uniform General Conditions of Contract for Private Construction (or
Document 102) of the Construction Industry Authority of the Philippines,
Department of Trade and Industry.7

Petitioner then sent demand letters to respondent on November 24, 2000 and
September 28, 2001. In reply, respondent claimed that petitioner’s work was
defective, and that it should instead be made liable thereon.
Petitioner thus filed with the RTC of Quezon City a civil case for collection of a
sum of money with damages against respondent. Docketed as Civil Case No.
Q-02-45865 and assigned to Branch 220, the Complaint8 alleged that despite
faithful compliance with the construction agreement, respondent refused to
pay the outstanding balance of P851,601.58, which prompted it to stop
construction of the building. Petitioner thus prayed that respondent be
ordered to pay the amounts of P851,601.58 representing the unpaid billings;
P625,000.00 representing the retention amount; P50,000.00 for litigation
expenses; 20% attorney’s fees and appearance fees, or P170,000.00; and costs
of suit.

In her Answer with Compulsory Counterclaim,9 respondent claimed that while


she religiously paid petitioner pursuant to their construction agreement,
petitioner’s work was defective and delayed; that petitioner failed to remedy
said defects; that as a result, rainwater seeped through the building and
caused extensive damage to the unfinished building; and that she had to incur
additional substantial expenses for the repair of the building, to remedy the
defects caused by petitioner, and to finish construction of the building. By way
of counterclaim, respondent prayed for an award of actual damages in the
amount of P3,213,575.91; lost rentals amounting to P5,391,456.00; additional
consequential damages of P1,600,000.00 because she could not devote herself
to her work; additional costs of ongoing repair; P5,000,000.00 moral damages;
P5,000,000.00 exemplary damages; P1,387,500.00 as penalties for delay;
attorney’s fees and P4,000.00 appearance fees per hearing; interest; and costs
of suit.

After pre-trial, the case was set for trial on the merits.

Petitioner presented its first witness on March 11, 2003. However, the
presentation of the witness’s testimony was not concluded as petitioner’s
counsel did not have the required documentary evidence.10 Thus, petitioner
moved for a continuance.

After several opportunities for the presentation of its first witness, petitioner
failed to proceed with trial. Its counsel moved and asked for several
postponements of trial, which the trial court granted despite respondent’s
opposition. However, petitioner’s counsel and witness failed to appear during
the scheduled April 29, 2003 hearing, prompting the trial court, upon
respondent’s motion, to dismiss the case for failure to prosecute.11

Petitioner filed an unverified motion for reconsideration12 of the April 29, 2003
dismissal order, claiming that its counsel was unable to attend the scheduled
hearing because he suffered arthritis of the knee; however, the motion was not
accompanied by an affidavit or certification to the effect that the character of
petitioner’s counsel’s illness is such as to render his non-attendance
excusable. Respondent opposed the motion.13 In a June 23, 2003 Order,14 the
trial court granted petitioner’s motion for reconsideration, thus recalling its
April 29, 2003 dismissal order and setting the case for hearing on July 29,
2003 for the continuation of the presentation of petitioner’s evidence.

On July 29, 2003, both petitioner and its counsel again failed to appear. The
trial court reset the hearing to September 4, 2003, with a warning that further
postponement will not be tolerated.15

Petitioner once more moved for the postponement of the September 4, 2003
hearing, citing conflict of schedule.16 Respondent opposed the motion,
claiming that there was a pattern on petitioner’s part to delay the disposition of
the case despite the trial court’s admonition that no further postponement will
be allowed.

On September 4, 2003, petitioner and counsel again failed to appear for the
continuation of trial. The trial court, noting respondent’s manifestation, issued
another Order dismissing the case for failure to prosecute, ordering that the
direct testimony of petitioner’s witness be stricken off the record, and setting
the case for hearing on respondent’s counterclaim.17

Petitioner again filed a motion for reconsideration18 of the above September 4,


2003 dismissal order, which respondent opposed,19 and which the trial court
denied in a December 16, 2003 Order.20 Petitioner filed a second motion for
reconsideration,21 but the same was denied in a January 14, 2004 Order.22

Petitioner filed a petition for certiorari23 with the CA questioning the above
December 16, 2003 and January 14, 2004 Orders of the trial court, claiming
that they were issued with grave abuse of discretion; that the trial court erred
in denying a postponement of trial, in striking off the testimony of its witness,
and in declaring that petitioner had the propensity to delay the case. The
Petition was docketed as CA-G.R. SP No. 82239.

On September 30, 2004, the CA issued its Decision24 in CA-G.R. SP No. 82239
dismissing the petition for certiorari and affirming the trial court’s action,
declaring that petitioner adopted a pattern of delay and was guilty of employing
dilatory maneuvers, trifling with respondent’s right to a speedy dispensation of
justice, abusing the patience of the trial court and wasting its time,
squandering the people’s money, and impeding the administration of justice. It
held further that the trial court acted rightly in its resolution of the case,
treating petitioner with liberality despite its trifling with the expeditious
administration of justice; that petitioner’s complaint was correctly dismissed
for failure to prosecute after it was given all the opportunity to present its
evidence; that said dismissal operates as an adjudication on the merits; that
petitioner’s right to due process was not violated; and that petitioner’s second
motion for reconsideration is not allowed under Section 5, Rule 37 of the 1997
Rules of Civil Procedure.25 In addition, the appellate court admonished
petitioner’s counsel, reminding the latter not to delay his case, but rather to
observe the rules of procedure and not misuse them to defeat the ends of
justice.

Petitioner took the matter to this Court, via a petition for review
on certiorari docketed as G.R. No. 166336. However, in a March 7, 2005
Resolution,26 the Petition was denied for failure to submit a verified statement
of material date of filing the motion for reconsideration of the assailed CA
judgment, and for failure to show that the appellate court committed any
reversible error. In several other Resolutions27 of this Court, petitioner’s
motions for reconsideration and to refer the case to the Court en banc were
denied on the ground, among others, that it failed to sufficiently show that the
CA committed any reversible error.

On January 17, 2006, an Entry of Judgment28 was issued by the Court stating
that on August 16, 2005, its March 7, 2005 Resolution in G.R. No. 166336
became final and executory.

Ruling of the Regional Trial Court

In Civil Case No. Q-02-45865, respondent was allowed to present her evidence
on the counterclaim. As found by the CA, respondent’s evidence is as follows:

x x x. She presented the testimony of Rhodora Calinawan, the architect who


conducted a complete inspection of the project first in September 2000, and,
second, in November 2000, after typhoon Seniang. Rhodora Calinawan
narrated her findings and identified the photographs submitted as proofs of
appellant’s29 substandard work. Among the defects she pointed out were the
sloppily done flooring, the unaligned electrical outlet and switch, dried cement
and paint stained flooring, incorrect colored cement used to fill the gap
between the tiles, need to repair door jamb, sloppily done grouting of tiles,
incorrect luggage compartment doors, bubbles in the varnishing works,
unaligned sanding of parquet flooring, poor termination of shower and
enclosure and bull nose wood moulding, dirty window sill, lack of screws and
rubber on the window, damaged roof panels, need for plashing and installation
of drift edges, and improper installation of asphalt shingles on the roof. After
the typhoon, appellee30 also requested her to make a second inspection. She
prepared another report which listed the following additional defects: the
second floor parquet flooring was wet due to the typhoon because the windows
were not properly sealed, lacked sealant and rubber protector.

Susan Saulog took the stand on February 15, 2005. She testified on
appellant’s defective work and the damage caused by typhoon “Seniang” to the
unfinished work, notwithstanding the fact that she had already paid a total of
P10,592,194.80. She refused to pay appellant the amount of P851,601.58
because the latter already collected advance payment but had a lot of
unfinished work before it abandoned the project. She made a counter-demand
for P4,600,000.00 that excluded the lost revenue for unearned rentals,
exemplary and moral damages. She was supposed to earn P160,000.00 per
month from rentals starting July 2000. After appellant abandoned the project,
she still spent P3,820,796.21 to rectify and complete the same. The accounts
chargeable to appellant were listed in Exhibit 21, to wit:

ITEM NO. PARTICULARS AMOUNT


A Bestbuilt Steel Builders 785,299.12
B Sub-Contractor: Fizcon Enterprises 375,166.17
C Labor Contracts & Quotations 243,461.40
D Cash Advances for Materials by FAJ 186,236.62
E Professional Fees 631,666.46
F Rectification of Major Defective Works 422,563.77
G Other Charges 647,629.71
H Other Additional Construction Expenses for528,772.96
Rectification & Repair Works
GRAND TOTAL AMOUNT 3,820,796.21

The penalty for delay is P12,500.00 per day. From July 30, 2000 up to
November 17, 2000, the total penalty amounted to P1,387,500.00. She
suffered sleepless nights because she started to experience frozen shoulder and
trigger finger that necessitated the services of Dr. Alberto Lu, an
acupuncturist. Exhibits 30-34 comprised five receipts issued by Alberto M.
Lou, evidencing payment of P400 for services rendered. She claimed
reimbursement for the amounts she paid to her counsel: P20,000.00 as
acceptance fees; P4,000.00 per appearance and cost of suit which totaled
P100,000.00. She spent P60,000.00 and P7,000.00, respectively, for the
services of Architect Calinauan and an accountant to put the records in
order. She claimed moral damages of P5,000,000.00.31

On January 30, 2006, the trial court rendered its Decision on respondent’s
counterclaim, declaring as follows:

After carefully studying all the above evidence, this court resolves that
defendant32 has proven her following allegations and counterclaims, to wit:

(1) That, in fact, the construction work of plaintiff33 was not only delayed, but
defective; and that plaintiff abandoned the construction work, incomplete and
with many defects. The evidence on record is overwhelming and in addition to
the testimonies of Arch. Rhodora Calinawan and the defendant herself; the
same is proven by Exhs. 1 – 1-B-4; 2 – 2-A; 3; 4 – 4-H-2; 5 – 5-G-2; 6 – 6-G-2;
7 – 7-E-2; 8 – 8-C; 9 – 9-M; 9-N – 9-EE; 15 – 15-A2; 15-B – 15-B-5; 15-B2 – 15-
Z.
(2) That defendant paid plaintiff the total amount of P10,592,194.80 before
plaintiff abandoned the work (Exhs. 16 – 16-Q).

(3) That defendant had to finish the work abandoned by plaintiff, incurring
substantial additional expenses therefor. This is also supported not only by
her testimony, but by documentary evidence presented by her (Exhs. 21; 20 –
20-A; 21 – 21-F; 22 – 22-CCC; 23 – 23-M; 24 – 24-JJJ; 25 – 25-S; 26 – 26-QQ;
28 – 28-AAAA-130; 29 – 29-JJJ).

(4) As to the claim of defendant for moral damages, the Court finds that she is
entitled to moral damages, but not for the amount she is claiming. The
testimony given by defendant on how the problems created by plaintiff affected
her personally is believable; and furthermore, it is supported by official receipts
of an Acupuncture Consultant (Exhs. 30-34). This is one of the cases wherein
moral damages are allowed by Article 2220 of the New Civil Code. Breach of
Contract where the defendant acted fraudulently or in bad faith.

(5) With respect to exemplary damages, the Court perceives that same should
be granted, but moderates the same. Plaintiff being in the construction
business to the public, should be deterred from doing to others, what it did to
defendant. This is one of the situations envisioned by Article 2229 of the New
Civil Code, for exemplary damages.

(6) The Court is convinced that attorney’s fees should also be adjudicated,
considering the work that counsel for defendant undertook. Attorney’s fees
should be adjudicated, in accordance with Article 2208 of the New Civil Code.

(7) The Court is also persuaded to grant penalties for delay, as provided for in
the agreement between the parties (Exhs. 11-B-1 and 11-B-2).

(8) The Court, however, is not inclined to grant additional consequential


damages of P1,600,000.00, because this court finds that this claim has not
been properly supported.

(9) Finally, the Court is inclined to grant defendant’s claim, for lost rentals,
which is properly supported by the testimony of defendant and very plausible
under the circumstances, because one of the duplex apartments was
constructed for rental income purposes and its completion and rental was very
much delayed, because of the fault of plaintiff.

IN VIEW OF ALL THE FOREGOING, plaintiff FAJ Construction & Development


Corporation is hereby ordered to pay defendant Susan Saulog, the following
amounts:

(1) P3,213,575.91 as actual damages;


(2) Lost rentals of P5,391,456.00;
(3) Moral damages of P500,000.00;
(4) Exemplary damages of P500,000.00;
(5) Penalties for delay amounting to P1,387,500.00;
(6) Attorney’s fees of P20,000.00, plus appearance fee of P4,000.00 per
appearance, payable to Atty. Alberto B. Guevara, Jr.;
(7) This court also grants 6% interest, on all the above amounts, commencing
from the date of the filing of the complaint, January 2, 2002.

This Court, however, dismisses the claim of Susan Saulog for additional
consequential damages amounting to P1,600,000.00, which has not been
proven.

SO ORDERED.34

Ruling of the Court of Appeals

Petitioner filed an appeal with the CA. Docketed as CA-G.R. CV No. 88385, the
appeal essentially argued that the trial court erred in holding petitioner liable
to the respondent for the amounts stated in the decretal portion of the trial
court’s decision. In addition, petitioner contended that it was erroneous for the
trial court to have dismissed its complaint for failure to prosecute, as it should
not be penalized for the negligence of its counsel in the handling of Civil Case
No. Q-02-45865, which is the sole reason for the dismissal thereof.

On November 29, 2011, the CA rendered the assailed Decision affirming with
modification the January 30, 2006 Decision of the trial court, pronouncing
thus:

Appellant35 now questions anew the propriety of the dismissal of the complaint
on ground of failure to prosecute. Appellant argues that it should not be made
to suffer the consequences of the negligence or mistakes of its counsel.

This Court finds that any disquisition on this issue is improper for being
barred by res judicata. x x x

More, appellant’s case was dismissed for failure to prosecute because of the
numerous delays caused by its counsel. Appellant cannot be excused from the
actions of its counsel since it is likewise a settled rule that mistake[s] of
counsel binds the client. It is only in case of gross or palpable negligence of
counsel when courts must step in and accord relief to a client who suffered
thereby. x x x

The next issue is: did appellee36 adequately prove her right to actual damages
for rectification of appellant’s defective work? Article 1715 of the Civil Code
provides:
Article 1715. The contractor shall execute the work in such a manner that it
has the qualities agreed upon and has no defects which destroy or lessen its
value or fitness for its ordinary or stipulated use. Should the work be not of
such quality, the employer may require that the contractor remove the defect or
execute another work. If the contractor fails or refuses to comply with this
obligation, the employer may have the defect removed or another work
executed, at the contractor’s cost.

Evidently, Article 1715 gives the employer the options to require the removal of
the work, to rectify the flaws in their work, or to have the work done at the
expense of the contractor.

Here, the defective workmanship was amply proven by Architect Rhodora


Calinawan’s testimony and documentary evidence i.e., photographs, receipts,
and list of the expenses needed to rectify appellant’s poorly crafted
work. Hence, We sustain the award of actual damages based on these
testimonial and documentary evidence.

Regarding the penalty for delay in the amount of One Million Three Hundred
Eighty Seven Thousand Five Hundred Pesos (P1,387,500.00), the same should
also be sustained. A contract is the law between the parties, and they are
bound by its stipulations so long as they are not contrary to law, customs,
public policy and public morals. The penalty for delay is agreed upon by the
parties themselves. The fact that appellant was already delayed in the
completion of the duplex is undisputed. In fact, record shows that on January
24, 2000, appellee approved the extension requested by appellant. This
request for extension, by itself, is already proof of delay. Thus, at the time
appellant abandoned the project, it already incurred delay. Verily, it is only
proper that appellant be made to pay the penalty for delay after appellee no
longer agreed to any further extension.

We now go to the issue of damages.

Moral damages are recoverable for breach of contract where the breach was
wanton, reckless, malicious or in bad faith, oppressive or abusive. However,
moral damages are improperly awarded, absent a specific finding and
pronouncement from the trial court that a party acted in such manner. Here,
the only basis of the trial court in granting moral damages of P500,000.00 was
appellee’s gratuitous claim that she suffered sleepless nights for her frozen
shoulder and trigger finger, supposedly evidenced by 5 official receipts issued
by her acupuncturist whom she paid P400.00 per receipt. No evidence,
however, was adduced showing that her frozen shoulder and trigger finger were
the direct result of the delayed project. The basis for such award is too shallow
and evidently untenable, hence, the same must be deleted.

As a consequence, the award of exemplary damages should also be vacated. x x


x

Also, appellee does not dispute the fact that the total contract price was
P12,500,000.00. After paying more than P10,500,000.00, appellee made
several demands for the parts that did not meet the agreed specifications. On
the other hand, appellant was of the firm belief that it had the right to work
stoppage, as authorized under the contractor’s manual. Both parties honestly
believed that their respective actions were justified, hence, no bad faith can be
attributed to either party to merit the award of damages.

Too, this Court finds that the trial court erred in holding appellant liable for
lost rentals in the amount of Five Million Three Hundred Ninety One Thousand
Four Hundred Fifty Six Pesos (P5,391,456.00). Unrealized profits fall under
the category of actual or compensatory damages. If there exists a basis for
reasonable expectation of profits had there been no breach of contract,
indemnification for damages based on such expected profits is proper. Here,
appellee did not present any evidence to show that there was already a
potential lessee to one of the units of the duplex. Even assuming that appellee
may have presented evidence to show the existence of a future lessee, she
should have presented a contract of lease showing the contract price. She
should have also shown that the rental rate, at that time and in that area was,
similar or at least approximately close to the amount of P160,000.00 per
month. Without any of these evidence, damages based on lost rental is purely
speculative. In the same way that one could speculate that the unit will be
rented out, a person cannot be precluded from speculating that the other unit
may be occupied by a close relative for free. The court must rely on competent
evidence and must avoid any speculation or give premium to self-serving
allegations. As stated, the award of P5,391,456.00 is in the nature of actual
damages. To be recoverable, actual damages must not only be capable of
proof, but must actually be proved with a reasonable degree of
certainty. Courts cannot simply rely on speculation, conjecture, or guesswork
in determining the fact and amount of damages. To justify an award of actual
damages, there must be competent proof of the actual amount of
loss. Credence can be given only to claims which are duly supported by
receipts x x x. These are not present in the case at bar.

As for attorney’s fees, it is well settled that the law allows judicial discretion to
determine whether or not attorney’s fees are appropriate. The surrounding
circumstances of each case are to be considered. Here, We resolve to delete the
award of attorney’s fees since the trial court did not make any particular
finding that any of the instances enumerated in Art. 2208 of the Civil Code
exists. More, it is settled that the award of attorney’s fees is the exception
rather than the general rule. Counsel’s fees are not awarded every time a party
prevails in a suit because of the policy that no premium should be placed on
the right to litigate.
The trial court correctly imposed 6% interest on all awarded amounts
commencing from the date of the filing of the complaint. When an obligation,
not constituting a loan or forbearance of money, is breached, interest on the
amount of damages awarded may be imposed at the discretion of the court at
6% per annum.

ACCORDINGLY, the appealed decision is AFFIRMED WITH MODIFICATION,


deleting the award of lost rentals, moral damages, exemplary damages, and
attorney’s fees, including appearance fee.

SO ORDERED.37

Petitioner filed a Partial Motion for Reconsideration, but in a February 24, 2012
Resolution, the CA denied the same. Hence, the present Petition.

Issues

In a January 28, 2013 Resolution,38 this Court resolved to give due course to
the Petition, which raises the following assignment of errors:

I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT


CONCLUDED THAT RES JUDICATA APPLIES IN THE INSTANT CASE.

II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT


CONCLUDED THAT PETITIONER IS LIABLE FOR ACTUAL DAMAGES, AND IN
IMPOSING THE PENALTY FOR DELAY AND AWARDING INTEREST ON ALL
AMOUNTS DUE.39

Petitioner’s Arguments

In its Petition and Reply40 seeking to reverse and set aside the assailed CA
dispositions and praying that judgment be rendered absolving it from the
adjudged pecuniary liabilities or, in the alternative, that a new trial of its case
be held, petitioner argues that res judicata cannot be made as basis to deny it
the opportunity to question the dismissal of its case and to present its evidence
because the dismissal of its Petition in G.R. No. 166336 was not an
adjudication of the case on its merits; that the dismissal of Civil Case No. Q-
02-45865 was not due to its fault, but solely the gross negligence of its
counsel; that the case should not have been dismissed as it was not guilty of
lack of diligence in failing to continue with trial with reasonable
promptitude;41 that it should not be made liable for the adjudged liabilities as
they are bereft of factual and legal basis; that respondent’s witness, architect
Rhodora Calinawan (Calinawan), was not competent to testify, nor was she an
objective, reliable, or trustworthy witness; that the supposed actual damages
suffered by respondent have not been adequately proved; that when
respondent refused to pay the outstanding balance, petitioner was justified in
stopping work, and any damages suffered by respondent thereafter may not be
attributed to it but constitute damnum absque injuria; that the adjudged
penalty for its supposed delay is excessive; and that there is no basis to award
interest.

Respondent’s Arguments

In her Comment,42 respondent contends that the issue of whether the trial and
appellate courts correctly decided the amount of damages is a factual issue
which is beyond the jurisdiction of this Court; that with respect to the
dismissal of petitioner’s case in Civil Case No. Q-02-45865 for failure to
prosecute, res judicata applies; that petitioner’s claim that it should not be
bound by the negligence of its counsel cannot stand because it was itself
negligent in the prosecution of its case despite having been given by the trial
court all the opportunity to present evidence; that with respect to the issue of
damages, the factual findings of the trial and appellate courts may not be
disturbed; that petitioner failed to present evidence to controvert the trial and
appellate courts’ findings; that the pecuniary liabilities were justified as
petitioner was guilty of delay, abandonment, and defective workmanship; that
there is no ground to reduce the amount of penalties for petitioner’s delay; and
that the award of interest was proper.

Our Ruling

The Court denies the Petition.

Petitioner’s claim that res judicata cannot apply has no merit. This Court, in
G.R. No. 166336, found nothing wrong in the judgment of the CA in CA-G.R.
SP No. 82239 affirming the dismissal of petitioner’s Complaint in Civil Case No.
Q-02-45865 for failure to prosecute. In fact, the Court found that the appellate
court had not committed any reversible error. This finding of lack of any
reversible error is now final with the entry of judgment in G.R. No.
166336. Thus, petitioner could no longer prove its case, other than to present
controverting evidence on respondent’s counterclaim.

The Court has repeatedly said that minute resolutions dismissing the actions
filed before it constitute actual adjudications on the merits. They are the result
of thorough deliberation among the members of the Court. When the Court
does not find any reversible error in the decision of the CA and denies the
petition, there is no need for the Court to fully explain its denial, since it
already means that it agrees with and adopts the findings and conclusions of
the CA. The decision sought to be reviewed and set aside is correct. It would
be an exercise in redundancy for the Court to reproduce or restate in the
minute resolution denying the petition the conclusions that the CA reached.43

Next, petitioner’s argument that it should not be punished for the negligence of
its counsel deserves the same treatment. Suffice it to state that we have not
seen any reason to reverse the CA’s ruling on this matter; on the other hand,
the record will disclose that petitioner was itself neglectful of its duties relative
to its case, and it continued to retain the services of its counsel which it now
conveniently claims to be negligent, even after repeatedly suffering from the
latter’s claimed lack of care. It appears that despite witnessing firsthand the
caliber of its lawyer during the initial presentation of its evidence in 2003,
petitioner changed counsel only after the trial court’s January 30, 2006
Decision on respondent’s counterclaim.44 The general rule still applies that the
mistakes of counsel bind his client.

On the issue of liability, we find – relying on the identical findings of the trial
and appellate courts – that petitioner is guilty of violating the construction
agreement, for its defective and incomplete work, delay, and for unjustified
abandonment of the project. Indeed, we find no reason to disturb the identical
pronouncements of the trial court and the CA. The same holds true with
respect to the issue of damages raised by petitioner; it requires an inquiry into
the facts, which is no longer this Court’s realm. In a case previously decided
by this ponente concerning a construction contract and where similar
allegations of abandonment, delay and defective workmanship were advanced,
it was held that –

Petitioner endeavors to convince us to determine, yet again, the weight,


credence, and probative value of the evidence presented. This cannot be done
in this petition for review on certiorari under Rule 45 of the Rules of Court
where only questions of law may be raised by the parties and passed upon by
us. In Fong v. Velayo, we defined a question of law as distinguished from a
question of fact, viz:
A question of law arises when there is doubt as to what the law is on a certain
state of facts, while there is a question of fact when the doubt arises as to the
truth or falsity of the alleged facts. For a question to be one of law, the same
must not involve an examination of the probative value of the evidence
presented by the litigants or any of them. The resolution of the issue must rest
solely on what the law provides on the given set of circumstances. Once it is
clear that the issue invites a review of the evidence presented, the [question]
posed is one of fact. Thus, the test of whether a question is one of law or of
fact is not the appellation given to such question by the party raising the same;
rather, it is whether the appellate court can determine the issue raised without
reviewing or evaluating the evidence, in which case, it is a question of law;
otherwise, it is a question of fact.
It has already been held that the determination of the existence of a breach of
contract is a factual matter not usually reviewable in a petition filed under Rule
45. We will not review, much less reverse, the factual findings of the Court of
Appeals especially where, as in this case, such findings coincide with those of
the trial court, since we are not a trier of facts x x x.45

There is no ground either to doubt the testimony of Calinawan, who testified on


the defective quality of petitioner’s work and the state of construction after the
latter abandoned the project. Her testimony merely corroborates already
existing evidence – such as photographs – as well as the testimony of
respondent herself. All in all, these pieces of evidence collectively proved the
facts in issue. Besides, Calinawan need not be qualified as an expert witness
in order to testify on facts which are readily apparent to the eye, and even to
the layman: it does not require an expert to conclude that flooring is sloppily
done, or that the electrical outlet and switch are not aligned, or that the
flooring is stained with paint, or that incorrect colored cement was used to fill
the gap between tiles, or that a door jamb needs repair, or that grouting of tiles
is sloppily done, or that there are unwanted bubbles in the varnishing works,
or that the parquet flooring is unaligned or uneven, or that the window sills are
dirty, or that windows lacked the necessary screws and rubber, or that the roof
panels are damaged, or that the installation of asphalt shingles on the roof was
improper. Any ordinary individual building a home would readily notice such
defects.

Since respondent suffered damages as a result of petitioner’s defective and


delayed work and unjustified abandonment of the project, the principle
of damnum absque injuria cannot apply. The principle cannot apply when
there is an abuse of a person’s right.46

Coming now to the issue of delay, we find that the trial and appellate courts’
grant of P1,387,500.00 not excessive; it is, in fact, liberal. Construction period
was agreed upon at 240 days from receipt by petitioner of a notice to
proceed.47 Said notice was issued on June 18, 1999,48 thus giving petitioner
approximately eight months from said date, or – roughly computed – up to
February 18, 2000, to complete the project. Yet, petitioner was still working on
the project as late as on November 22, 2000, after which it stopped work and
abandoned the project; this fact is not denied by petitioner.49 Thus, petitioner
was already delayed for more than nine months – that is, beginning March
2000 and ending November of the same year – or approximately 270 days. At
P12,500.00 agreed penalty imposed for each day of delay, petitioner should be
correspondingly liable to respondent for P3,375,000.00 liquidated damages,
more or less, under the construction agreement.50 Yet, the courts below
awarded a mere P1,387,500.00; this award is certainly not excessive and
should remain, accepted as it is without question by the respondent.

Finally, the imposition of 6% interest per annum is proper. Indeed, as correctly


held by the CA, when an obligation, not constituting a loan or forbearance of
money, is breached, an interest on the amount of damages awarded may be
imposed at the discretion of the court at the rate of 6% per annum,51 from the
filing of the complaint until its full satisfaction.

WHEREFORE, the Petition is DENIED. The November 29, 2011 Decision and
February 24, 2012 Resolution of the Court of Appeals in CA-G.R. CV No. 88385
are AFFIRMED.

SO ORDERED.
THIRD DIVISION

G.R. No. 198223, February 18, 2015

HEIRS OF TIMBANG DAROMIMBANG DIMAAMPAO, NAMELY: CABIB D.


ALAWI, ACMAD D. ALAWI, KALIKO D. ALAWI, ABU ALI D. ALAWI,
MOKHAYMA D. ABAB, AND MARIAM ABAB, REPRESENTED BY CABIB D.
ALAWI, Petitioners, v. ATTY. ABDULLAH ALUG, HADJI BOGABONG BALT
AND HEIRS OF HADJI ALI PETE PANGARUNGAN, NAMELY: HADJA SITTIE
SALIMA PANGARUNGAN, AMINA P. ALANGADI, JAMELA P. SANI, ANSARY
S. PANGARUNGAN, RAMLA P. PANGCAT, JACKLYN P. BANTO, ACMAD T.
PANGARUNGAN, ACMELA P. MAMAROBA, AMERA P. LALANTO, ACLI T.
PANGARUNGAN, ASMIA P. BANOCAG, ABDARI T. PANGARUNGAN, ASLIA T.
PANGARUNGAN, HANIPA T. PANGARUNGAN, CALILI T. PANGARUNGAN,
AND ANSANTO T. PANGARUNGAN, REPRESENTED BY HADJA SITTIE
SALIMA PANGARUNGAN, Respondents.

DECISION

PERALTA, J.:

Assailed in this petition for review on certiorari are the Decision1 dated July 2,
2010 of the Court of Appeals in CA-G.R. SP No. 02376-MIN and the
Resolution2 dated July 27, 2011 denying reconsideration thereof.

On February 15, 2005, petitioners Heirs of Timbang Daromimbang Dimaampao


represented by Cabib D. Alawi, filed with the Regional Trial Court (RTC) of
Lanao del Sur, Marawi City, a Complaint3 for declaration of deed of sale as a
nullity, quieting of title and damages against respondents Abdullah Alug, Hadji
Bogabong Balt and Heirs of Hadji Ali Pete Pangarungan, represented by Hadja
Sittie Salima Pangarungan. Petitioners alleged that they are the owners pro
indiviso and lawful possessors of a parcel of land located at Madaya, Marawi
City with an area of 157,738 square meters covered by OCT No. RP-355
(subject lot), Homestead Patent No. 47201; that they acquired ownership and
possession of the subject land and the improvements thereon by way
of inheritance from their deceased grandmother, Timbang Daromimbang
Dimaampao (Timbang), who was the true and exclusive owner and lawful
possessor of the subject lot; that Cota Dimaampao (Cota) and Timbang got
married in accordance with the Muslim rites and the subject lot was among the
dowries given by the former to the latter; that during the existence of their
marriage, the spouses applied for registration and titling of the land and their
homestead application was approved and was issued OCT No. RP-355 in their
names; that sometime after the issuance of the said title, Cota and Timbang
were divorced from each other, hence, Timbang and their two daughters
continued possession and ownership of the subject land, while Cota contracted
another marriage; that when Timbang died, her daughters succeeded her on
the ownership and possession of the land until their deaths and were survived
by herein petitioners.

Petitioners claimed that sometime on April 10, 1978, without their knowledge
and that of their predecessors, Cota executed a deed of sale in favor
of respondents involving the subject land; that respondents were in bad faith
since at the time of purchase, petitioners by themselves were in actual
possession of the land in the concept of owners; that the deed of sale was
invalid because Cota had no right to sell any portion of the subject land as he
was not the owner thereof; that the deed of sale cast a cloud of doubt on
petitioners' title; that despite such deed of sale, respondents have never
occupied any portion of the subject land. Petitioners stated that the subject
land was allegedly sold by Cota to deceased Sheik Pangandaman Daromimbang
(Timbang's brother) who then donated the same to his daughter and son-in-law
which deeds of sale and donation, however, were annulled by the RTC Lanao
del Sur, Branch 9, in Civil Case No. 2410; that they were not impleaded as
parties in that case even if they were in possession of the land; that the RTC
decision was affirmed by the CA and became final which cast a cloud of doubt
on their title and ownership of the land. Petitioners prayed that the Deed of
Sale dated April 10, 1978 between Cota and respondents be declared null and
void, and for them to be declared as the rightful owners and lawful possessors
of the subject land.

Respondents filed their Answer4 denying petitioners' claim of ownership and


possession of the subject land as they owned and possessed the same since
1978; that the validity of the Deed of Sale dated April 10, 1978 involving the
subject land was already upheld by the RTC Lanao del Sur, Branch 9, in Civil
Case No. 2410, entitled “Cota Dimaampao, et al. v. Sheik Pangandaman
Daromimbang, et al.,” a case that had already attained finality. In their Special
and Affirmative Defenses, respondents claimed that petitioners have no cause
of action against them because the latter's claim of dowry or donation by
reason of marriage was belied by the issuance of OCT No. RP-335 in Cota's
name; that their claim of dowry or donation was not supported by any written
memorandum or agreement and now barred under the Statute of frauds; that
the action is barred by prescription or estoppel or laches; and, that the
complaint violates the rule on judicial stability or rule on non-interference.

On March 6, 2006, the RTC issued its Order5 with the following dispositive
portion, to wit:chanRoblesvirtualLawlibrary

The allegations contained in the Special and Affirmative Defenses are matters
of evidence that can be properly ventilated in the trial of the case. The same is
therefore denied for lack of merit. The parties are directed to submit their pre-
trial brief at least 3 days before the scheduled pre-trial conference on April 6,
2006.
WHEREFORE, set the Pre-trial conference to April 6, at 9:00 o'clock in the
morning.

SO ORDERED.6

On May 2, 2006, respondents filed a Manifestation7 stating that they just


received the RTC Order on April 17, 2006 and moved for time to file a motion
for reconsideration and to defer the submission of pre-trial brief and the
scheduled pre-trial conference. A motion for reconsideration8 was filed on May
17, 2006. The motion for reconsideration was denied by the RTC in its
Order9 dated February 29, 2008.

On June 6, 2008, respondents filed with the CA Cagayan de Oro City, a


petition for certiorari with prayer for issuance of a preliminary injunction.
Petitioners filed their Comment and respondents their Reply thereto.

On July 2, 2010, the CA rendered its decision, the dispositive portion of which
reads:chanRoblesvirtualLawlibrary

FOR THESE REASONS, the writ of certiorari is GRANTED. The challenged


Orders of the respondent court, dated March 6, 2006 and February 29, 2008,
respectively, areSET ASIDE, and another Resolution/Order will be entered in
Civil Case No. 2046-05 dismissing the Complaint.10
ChanRoblesVirtualawlibrary
In so ruling, the CA found that the RTC had unduly disregarded the decision in
Civil Case No. 2410 which had already attained finality; that it was already
determined that the subject land was the very same land in Civil Case No.
2410 which was declared to be owned and lawfully possessed by Cota and to
grant petitioners' demand would result to an unending litigation of the
case. The CA found thatres judicata applied in this case. The CA also found
that the action had already prescribed as it took petitioners more than 26 years
to institute the instant case.

Hence this petition wherein petitioners raise the following


issues:chanRoblesvirtualLawlibrary

1. WHETHER OR NOT THE ASSAILED DECISION AND RESOLUTION OF THE


COURT OF APPEALS, TWENTY SECOND DIVISION IS CONTRARY TO LAW
AND JURISPRUDENCE;

2. WHETHER OR NOT A MOTION FOR EXTENSION OF TIME TO FILE A


MOTION FOR RECONSIDERATION IS ALLOWED OR A PROHIBITED
PLEADING;

3. WHETHER OR NOT THE SPECIAL AND AFFIRMATIVE DEFENSES OF THE


RESPONDENTS EMBODIED IN THEIR ANSWER IN CIVIL CASE NO. 2046-05
ARE MATTERS OF EVIDENCE TO BE RESOLVED AFTER THE TRIAL OF THE
CASE ON THE MERITS.11
ChanRoblesVirtualawlibrary
Petitioners claim that respondents' counsel received the RTC Order dated
March 6, 2006 denying their special and affirmative defenses on April 17,
2006, thus, they had until May 2, 2006 to file a motion for reconsideration.
Respondents, however, filed a Manifestation with motion for extension of time
to file a motion for reconsideration which is not allowed under the Rules of
Court. Hence, the RTC Order dated March 6, 2006 had already become final
and executory and could no longer be the subject of a petition
for certiorari with the CA. Consequently, the CA erred in granting the petition
and reversing the RTC Orders.

We find no merit in the arguments.

Section 1, Rule 41 of the Rules of Court provides:chanRoblesvirtualLawlibrary

Section 1. Subject of appeal. - An appeal may be taken from a judgment or final


order that completely disposes of the case, or of a particular matter therein
when declared by these Rules to be appealable.

No appeal may be taken from:

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

(b) An order denying a petition for relief or any similar motion seeking relief
from judgment;

(c) An interlocutory order;

(d) An order disallowing or dismissing an appeal;

(e) An order denying a motion to set aside a judgment by consent, confession or


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

(f) An order of execution;

(g) A judgment or final order for or against one or more of several parties or in
separate claims, counterclaims, cross-claims and third-party complaints, while
the main case is pending, unless the court allows an appeal therefrom; and

(h) An order dismissing an action without prejudice.

In all the above instances where the judgment or final order is not appealable,
the aggrieved party may file an appropriate special civil action under Rule 65.
In Denso (Phils.), Inc. v. Intermediate Appellate Court,12 we expounded on the
differences between a “final judgment” and an “interlocutory order,” to
wit:chanRoblesvirtualLawlibrary

x x x A final judgment or order is one that finally disposes of a case, leaving


nothing more to be done by the Court in respect thereto, e.g., an adjudication
on the merits which, on the basis of the evidence presented at the trial,
declares categorically what the rights and obligations of the parties are and
which party is in the right; or a judgment or order that dismisses an action on
the ground, for instance, of res judicata or prescription. Once rendered, the
task of the Court is ended, as far as deciding the controversy or determining
the rights and liabilities of the litigants is concerned. Nothing more remains to
be done by the Court except to await the parties' next move x x x and
ultimately, of course, to cause the execution of the judgment once it becomes
“final” or, to use the established and more distinctive term, “final and
executory.”

x x x x

Conversely, an order that does not finally dispose of the case, and does not end
the Court's task of adjudicating the parties' contentions and determining their
rights and liabilities as regards each other, but obviously indicates that other
things remain to be done by the Court, is “interlocutory,” e.g., an order denying
a motion to dismiss under Rule 16 of the Rules x x x Unlike a “final”
judgment or order, which is appealable, as above pointed out, an
“interlocutory” order may not be questioned on appeal except only as part of an
appeal that may eventually be taken from the final judgment rendered in the
case.13
ChanRoblesVirtualawlibrary
Given the differences between a final judgment and an interlocutory order, the
RTC Order dated March 6, 2006 denying respondents' special and affirmative
defenses contained in their answer is no doubt interlocutory since it did not
finally dispose of the case but will proceed for the reception of the parties'
respective evidence to determine the rights and obligations of each other. As
such, the RTC Order dated March 6, 2006 may not be questioned on appeal
except only as part of an appeal that may eventually be taken from the final
judgment rendered in the case.14cralawlawlibrary

An interlocutory order is always under the control of the court and may be
modified or rescinded upon sufficient grounds shown at any time before final
judgment.15 This prescinds from a court’s inherent power to control its process
and orders so as to make them conformable to law and justice,16 and a motion
for reconsideration thereof was not subject to the limiting fifteen-day period of
appeal prescribed for final judgments or orders.17 We, therefore, find no merit
to petitioners’ claim that the Order dated March 6, 2006 had already become
final and could not be the subject of a petition for certiorari with the Court of
Appeals.

The petition for certiorari was timely filed with the CA. The RTC Order dated
February 29, 2008 denying respondents' motion for reconsideration was
received by the latter on April 9, 2008. They had 60 days from receipt thereof to
file the petition for certiorari with the CA. The last day to file the petition fell on
June 8, 2008, a Sunday, while June 9 was declared a holiday, hence, the
filing of the petition on the next working day which was June 10, 2008 was
still on time.

Going now on the merits, petitioners claim that they did not violate the rule on
judicial stability as the parties in the instant case and the earlier decided Civil
Case No. 2410 of the RTC Lanao del Sur, Branch 9, are entirely different and
petitioners were not parties in the latter case. There is no absolute identity of
causes of action and the issues involved are not similar. The main issue in
Civil Case No. 2410 was which of the two deeds of sale appeared to have been
executed by Cota Dimaampao, i.e., one in favor of Sheik Pangandaman
Daromimbang (Timbang’s brother) and the other one in favor of Alug, Balt and
Pangarungan, now herein respondents, was really signed and executed by him.
On the other hand, the main issue in the instant case is whether or not the
subject land was given by Cota as a dowry to his ex-wife Timbang, if so, the
land exclusively belongs to petitioners as compulsory heirs of Timbang and the
sale made by Cota to respondents was void. In the alternative, even assuming
that the subject land was not given as a dowry but acquired by the spouses
Cota and Timbang during their marriage, petitioners contend that the subject
land is a conjugal property to which Timbang is entitled to a ½ share thereof
which Cota had no right to sell. Petitioners insist that respondents are buyers
in bad faith as they were aware of the former's possession of the subject land at
the time it was sold to them by Cota. These issues, as petitioners claim, are
factual which can only be determined after a full blown trial.

We are not persuaded.

We find no error committed by the CA in ruling that the RTC committed a grave
abuse of discretion in not dismissing petitioners' complaint on the ground that
the issue of ownership and possession of the subject land had already been
previously decided in Civil Case No. 2410 which had attained finality. We
agree with the CA that res judicata is applicable in the instant case.

Under the rule of res judicata, a final judgment or order on the merits,
rendered by a court having jurisdiction of the subject matter and of the
parties, is conclusive in a subsequent case between the same parties and their
successors-in-interest by title subsequent to the commencement of the action
or special proceeding litigating for the same thing and under the same title and
in the same capacity.18 To state simply, a final judgment or decree on the
merits by a court of competent jurisdiction is conclusive of the rights of the
parties or their privies in all later suits on all points and matters determined in
the former suit.19cralawlawlibrary

The requisite essential of res judicata are: (1) the judgment sought to bar the
new action must be final; (2) the decision must have been rendered by a court
having jurisdiction over the subject matter and the parties; (3) the disposition
of the case must be a judgment on the merits; and (4) there must be as
between the first and second action, identity of parties, subject matter, and
causes of action. Should identity of parties, subject matter, and causes of
action be shown in the two cases, then res judicata in its aspect as a “bar by
prior judgment” would apply. If as between the two cases, only identity of
parties can be shown, but not identical causes of action, then res judicata as
“conclusiveness of judgment” applies.20cralawlawlibrary

It is not disputed that the RTC Lanao del Sur, Branch 9, had jurisdiction over
the subject matter and parties in Civil Case No. 2410 and its Decision dated
November 21, 2000 was a judgment on the merits, i.e., one rendered after the
presentation of the parties' evidence during the trial of the case; and that such
decision had already become final and executory and an entry of judgment had
been made.21cralawlawlibrary

Petitioners, however, claim that there is no identity of parties as they were not
parties in Civil Case No. 2410. Petitioners are grandchildren of both Cota and
Timbang Dimaampao, and as heirs, they are deemed in privity with their
grandparents as to the property they would acquire by inheritance. Notably,
Cota and Timbang's two daughters had never intervened during their lifetime
to claim that the subject land was given as a dowry to their mother Timbang
and that Cota had no right to sell the same and it was only now that
petitioners as grandchildren who are claiming such. Since the decision in Civil
Case No. 2410 had already ruled that Cota was the owner of the subject land
and could validly convey the same to herein respondents, petitioners' claim of
Timbang's ownership of the subject lot is already barred.

Petitioners further allege that there is no identity of causes of action between


Civil Case No. 2410 and the instant case. One test of identity of causes of
action is whether or not the judgment sought in a subsequent case will be
inconsistent with the prior judgment. If no inconsistency will result, the prior
judgment cannot be held to be a bar.22cralawlawlibrary

Petitioners, in the instant case, raise the issue of Cota's ownership and
possession of the subject land and the invalidity of respondents' deed of sale
dated April 10, 1978. Notably, these issues were already resolved by RTC
Lanao del Sur, Branch 9, in Civil Case No. 2410 where it declared that
plaintiffs, Cota and herein respondents, are the true and lawful owners of the
subject land. Such decision was affirmed by the CA on July 8, 200323 which
made the following disquisition, among others, to
wit:chanRoblesvirtualLawlibrary

Since (Cota) Dimaampao is still the owner of the subject land, he could validly
convey the same to his co-plaintiffs below (herein respondents). Dimaampao's
ownership of the land in question coupled with his right to alienate the same
necessarily renders moot and academic the issue of whether plaintiffs-
appellees Alug, Pangarungan and Balt (herein respondents) are buyers in bad
faith.

In any event, the purported bad faith of Alug, Pangarungan and Balt (herein
respondents) is negated by the diligence they exercised in ascertaining
Dimaampao's ownership of the disputed land at the time it was offered to them
for sale. As testified to by Alug, he verified OCT No. RP-355 with the Register of
Deeds and found out that the subject land is registered in the name of
Dimaampao but encumbered by way of mortgage in favor of Luna. No other
encumbrance or transfer is annotated on OCT No. RP-355. When Alug
inspected the subject parcel of land, it was being cultivated by Soliman Bilao,
the tenant of Dimaampao. Thus, he and Pangarungan and Balt concluded the
sale with Dimaampao. x x x

Finally contrary to the contention of defendants-appellants, plaintiffs-appellees


(herein respondents) are under no obligation to check the status of the subject
property with (Sheik) Daromimbang, it being sufficient that they verified the
title thereof with the Register of Deeds of Marawi City and conducted an ocular
inspection thereon. The investigation they had diligently pursued to confirm
the validity of Dimaampao's title effectively negates any bad faith in their
purchase of the property.24 (Emphasis supplied )

The CA decision became final with our denial of the petition for review
on certiorari in G.R. No. 161438 on February 23, 2004 and an Entry of
Judgment was made on April 22, 2004.25 Consequently, the issue of Cota's
ownership and possession of the subject land as well as the validity of the 1978
deed of sale between Cota and herein respondents are already settled issues
which could not be relitigated anew. When a right or fact has been judicially
tried and determined by a court of competent jurisdiction, so long as it remains
unreversed, it should be conclusive upon the parties and those in privity with
them in law or estate.26cralawlawlibrary

The validity of the 1978 deed of sale in respondents' favor had already been
declared with finality, and if affirmative relief is granted to petitioners in the
instant case, i.e., by the annulment of the deed of sale, then the decision will
necessarily be inconsistent with the prior judgment, substantial identity of
causes of action is present.
We also agree with the CA's finding that petitioners' action had already
prescribed. The subject land was bought by respondents from Cota as
evidenced by a Deed of Sale dated April 10, 1978. Cota executed an
Affidavit27 of adverse claim attaching thereto the deed of sale and such affidavit
was registered and annotated in OCT No. RP-335 on April 11, 1978. Article
1144 (1) of the Civil Code provides that an action upon a written contract must
be brought within ten years from the time the right of action
accrues. Here, the period of prescription should be counted from the time of
the registration of sale which was a notice to all the world. The affidavit of
adverse claim was annotated on OCT No. RP-335 on April 11, 1978,28 thus
petitioners' complaint filed only in 2005 is indeed beyond the prescriptive
period to do so.

WHEREFORE, the petition for review is DENIED. The Decision dated July 2,
2010 and the Resolution dated July 27, 2011 issued by the Court of Appeals in
CA -G.R. SP No. 02376-MIN are herebyAFFIRMED.

SO ORDERED.cha

nroblesvirtuallawlib
EN BANC

G.R. No. 187836, November 25, 2014

SOCIAL JUSTICE SOCIETY (SJS) OFFICERS, NAMELY, SAMSON S.


ALCANTARA, AND VLADIMIR ALARIQUE T.
CABIGAO, Petitioners, v. ALFREDO S. LIM, IN HIS CAPACITY AS MAYOR OF
THE CITY OF MANILA, Respondent.

G.R. NO. 187916

JOSE L. ATIENZA, JR., BIENVINIDO M. ABANTE, MA. LOURDES M. ISIP-


GARCIA, RAFAEL P. BORROMEO JOCELYN DAWIS-ASUNCION, MINORS
MARIAN REGINA B. TARAN, MACAILA RICCI B. TARAN, RICHARD
KENNETH B. TARAN, REPRESENTED AND JOINED BY THEIR PARENTS
RICHARD AND MARITES TARAN, MINORS CZARINA ALYSANDRA C.
RAMOS, CEZARAH ADRIANNA C. RAMOS, AND CRISTEN AIDAN C. RAMOS
REPRESENTED AND JOINED BY THEIR MOTHER DONNA C. RAMOS,
MINORS JAZMIN SYLLITA T. VILA AND ANTONIO T. CRUZ IV,
REPRESENTED AND JOINED BY THEIR MOTHER MAUREEN C.
TOLENTINO, Petitioners,v. MAYOR ALFREDO S. LIM, VICE MAYOR
FRANCISCO DOMAGOSO, COUNCILORS ARLENE W. KOA, MOISES T. LIM,
JESUS FAJARDO LOUISITO N. CHUA, VICTORIANO A. MELENDEZ, JOHN
MARVIN C. NIETO, ROLANDO M. VALERIANO, RAYMUNDO R. YUPANGCO,
EDWARD VP MACEDA, RODERICK D. VALBUENA, JOSEFINA M. SISCAR,
SALVADOR PHILLIP H. LACUNA, LUCIANO M. VELOSO, CARLO V. LOPEZ,
ERNESTO F. RIVERA,1 DANILO VICTOR H. LACUNA, JR., ERNESTO G.
ISIP, HONEY H. LACUNA-PANGAN, ERNESTO M. DIONISO, JR. AND ERICK
IAN O. NIEVA, Respondents.

CHEVRON PHILIPPINES INC., PETRON CORPORATION AND PILIPINAS


SHELL PETROLEUM CORPORATION, Intervenors.

DECISION

PEREZ, J.:

Challenged in these consolidated petitions2 is the validity of Ordinance No.


81873 entitled “AN ORDINANCE AMENDING ORDINANCE NO. 8119,
OTHERWISE KNOWN AS ‘THE MANILA COMPREHENSIVE LAND USE PLAN
AND ZONING ORDINANCE OF 2006,’ BY CREATING A MEDIUM INDUSTRIAL
ZONE (1-2) AND HEAVY INDUSTRIAL ZONE (1-3), AND PROVIDING FOR ITS
ENFORCEMENT” enacted by the Sangguniang Panlungsod of Manila
(Sangguniang Panlungsod) on 14 May 2009.

The creation of a medium industrial zone (1-2) and heavy industrial zone (1-3)
effectively lifted the prohibition against owners and operators of businesses,
including herein intervenors Chevron Philippines, Inc. (Chevron), Pilipinas
Shell Petroleum Corporation (Shell), and Petron Corporation (Petron),
collectively referred to as the oil companies, from operating in the designated
commercial zone – an industrial zone prior to the enactment of Ordinance No.
80274 entitled “AN ORDINANCE RECLASSIFYING THE LAND USE OF THAT
PORTION OF LAND BOUNDED BY THE PASIG RIVER IN THE NORTH, PNR
RAILROAD TRACK IN THE EAST, BEATA ST. IN THE SOUTH, PALUMPONG ST.
IN THE SOUTHWEST AND ESTERO DE PANDACAN IN THE WEST, PNR
RAILROAD IN THE NORTHWEST AREA, ESTERO DE PANDACAN IN THE
NORTHEAST, PASIG RIVER IN THE SOUTHEAST AND DR. M. L. CARREON IN
THE SOUTHWEST, THE AREA OF PUNTA, STA. ANA BOUNDED BY THE
PASIG RIVER, MARCELINO OBRERO ST., MAYO 28 ST. AND THE F. MANALO
STREET FROM INDUSTRIAL II TO COMMERCIAL I,” and Ordinance No.
81195 entitled “AN ORDINANCE ADOPTING THE MANILA COMPREHENSIVE
LAND USE PLAN AND ZONING REGULATIONS OF 2006 AND PROVIDING FOR
THE ADMINISTRATION, ENFORCEMENT AND AMENDMENT
THERETO.”ChanRoblesVirtualawlibrary

The Parties

Petitioners allege the parties’ respective capacity to sue and be sued, viz:
Suing capacity aside from being
Petitioners Residence in Manila residents of Manila/other personal
circumstances
G.R. No. 187836
Manila taxpayer;
SJS Officer Not mentioned in the One of the petitioners in SJS v.
Samson S. petition; holding Atienza(G.R. No. 156052);*
Alcantara office in Ermita, Pesident of ABAKADA GURO PARTY
(Alcantara) Manila LIST with members who are
residents of the City of Manila
SJS Officer
Vladimir Alarique One of the petitioners in SJS v.
Pandacan
T. Cabigao Atienza(G.R. No. 156052)
(Cabigao)
* The allegation is inaccurate. SJS Officer Alcantara is actually one of the
counsels for petitioner SJS in G.R. No. 156052. The petitioners in that case are
the SJS itself, Cabigao and Bonifacio S. Tumbokon (Tumbokon).

G.R. No. 187916


Former Mayor of Manila;

Former Mayor Jose L. Atienza, Jr. (Mayor San Secretary of Department of


Atienza) Andres Environment and Natural
Resources (DENR)
Citizen and
Sta. taxpayer;member of the
Bienvinido M. Abante Ana House of Representatives
San Incumbent City Councilor
Ma. Lourdes M. Isip-Garcia Miguel of the City of Manila
Incumbent City Councilor
Rafael P. Borromeo Paco of the City of Manila
Sta. Incumbent City Councilor
Jocelyn Dawis-Asuncion Mesa of the City of Manila
Minors Marian Regina B. Taran, Macalia
Ricci B. Taran, Richard Kenneth B. Taran,
represented and joined by their parents Citizens, real estate owners
Richard and Marites Taran Paco and taxpayers
Minors Czarina Alysandra C. Ramos,
Cezarah Adrianna C. Ramos, and Cristen
Aidan C. Ramos represented and joined by Citizens, real estate owners
their mother Donna c. Ramos Tondo and taxpayers
Minors Jasmin Syllita T. Vila and Antonio T.
Cruz IV, represented and joined by their Sta. Citizens, real estate owners
mother Maureen C. Tolentino Ana and taxpayers
Respondents Sued in their capacity as

G.R. Nos. 187836 and 187916

Former Mayor Alfredo S. Lim (Mayor Incumbent Mayor of Manila at the time
Lim) of the filing of the present petitions
Respondents Sued in their capacity as

G.R. No. 187916

Vice-Mayor Francisco Domagoso (Vice- Vice-Mayor and Presiding Officer of the


Mayor Domagoso) City Council of Manila
Principal author of City Ordinance No.
Arlene Woo Koa
8187
Moises T. Lim, Jesus Fajardo, Louisito
N. Chua, Victoriano A. Melendez, John
Marvin Nieto, Rolando M. Valeriano,
Personal and official capacities as
Raymondo R. Yupangco, Edward VP
councilors who voted and approved
Maceda, Roderick D. Valbuena,
City Ordinance No. 8187
Josefina M. Siscar, Phillip H. Lacuna,
Luciano M. Veloso, Carlo V. Lopez,
Ernesto F. Rivera,6 Danilo Victor H.
Lacuna, Jr., Ernesto G. Isip, Honey H.
Lacuna-Pangan, Ernesto M. Dionisio,
Jr., Erick Ian O. Nieva
The following intervenors, all of which are corporations organized under
Philippine laws, intervened:7
Intervenors Nature of Business

Chevron Philippines, importing, distributing and marketing of petroleum


Inc. (CHEVRON) products in the Philippines since 1922
Pilipinas Shell
manufacturing, refining, importing, distributing and
Petroleum Corporation
marketing of petroleum products in the Philippines
(SHELL)
Petron Corporation manufacturing, refining, importing, distributing and
(PETRON) marketing of petroleum products in the Philippines
They claim that their rights with respect to the oil depots in Pandacan would be
directly affected by the outcome of these cases.chanrobleslaw

The Antecedents

These petitions are a sequel to the case of Social Justice Society v. Mayor
Atienza, Jr.8 (hereinafter referred to as G.R. No. 156052), where the Court
found: (1) that the ordinance subject thereof – Ordinance No. 8027 – was
enacted “to safeguard the rights to life, security and safety of the inhabitants of
Manila;”9 (2) that it had passed the tests of a valid ordinance; and (3) that it is
not superseded by Ordinance No. 8119.10 Declaring that it is constitutional
and valid,11 the Court accordingly ordered its immediate enforcement with a
specific directive on the relocation and transfer of the Pandacan oil
terminals.12chanrobleslaw

Highlighting that the Court has so ruled that the Pandacan oil depots should
leave, herein petitioners now seek the nullification of Ordinance No. 8187,
which contains provisions contrary to those embodied in Ordinance No. 8027.
Allegations of violation of the right to health and the right to a healthful and
balanced environment are also included.

For a better perspective of the facts of these cases, we again trace the history of
the Pandacan oil terminals, as well as the intervening events prior to the
reclassification of the land use from Industrial II to Commercial I under
Ordinance No. 8027 until the creation of Medium Industrial Zone and Heavy
Industrial Zone pursuant to Ordinance No. 8187.

History of the Pandacan


Oil Terminals

We quote the following from the Resolution of the Court in G.R. No. 156052:
Pandacan (one of the districts of the City of Manila) is situated along the banks
of the Pasig [R]iver. At the turn of the twentieth century, Pandacan was
unofficially designated as the industrial center of Manila. The area, then largely
uninhabited, was ideal for various emerging industries as the nearby river
facilitated the transportation of goods and products. In the 1920s, it was
classified as an industrial zone. Among its early industrial settlers were the oil
companies. x x x

On December 8, 1941, the Second World War reached the shores of the
Philippine Islands. x x x [I]n their zealous attempt to fend off the Japanese
Imperial Army, the United States Army took control of the Pandacan Terminals
and hastily made plans to destroy the storage facilities to deprive the advancing
Japanese Army of a valuable logistics weapon. The U.S. Army burned unused
petroleum, causing a frightening conflagration. Historian Nick Joaquin
recounted the events as follows:
After the USAFFE evacuated the City late in December 1941, all army fuel
storage dumps were set on fire. The flames spread, enveloping the City in
smoke, setting even the rivers ablaze, endangering bridges and all riverside
buildings. … For one week longer, the “open city” blazed—a cloud of smoke by
day, a pillar of fire by night.
The fire consequently destroyed the Pandacan Terminals and rendered its
network of depots and service stations inoperative.

After the war, the oil depots were reconstructed. Pandacan changed as Manila
rebuilt itself. The three major oil companies resumed the operation of their
depots. But the district was no longer a sparsely populated industrial zone; it
had evolved into a bustling, hodgepodge community. Today, Pandacan has
become a densely populated area inhabited by about 84,000 people, majority of
whom are urban poor who call it home. Aside from numerous industrial
installations, there are also small businesses, churches, restaurants, schools,
daycare centers and residences situated there. Malacañang Palace, the official
residence of the President of the Philippines and the seat of governmental
power, is just two kilometers away. There is a private school near the Petron
depot. Along the walls of the Shell facility are shanties of informal settlers.
More than 15,000 students are enrolled in elementary and high schools
situated near these facilities. A university with a student population of about
25,000 is located directly across the depot on the banks of the Pasig [R]iver.

The 36-hectare Pandacan Terminals house the oil companies’ distribution


terminals and depot facilities. The refineries of Chevron and Shell in Tabangao
and Bauan, both in Batangas, respectively, are connected to the Pandacan
Terminals through a 114-kilometer underground pipeline system. Petron’s
refinery in Limay, Bataan, on the other hand, also services the depot. The
terminals store fuel and other petroleum products and supply 95% of the fuel
requirements of Metro Manila, 50% of Luzon’s consumption and 35%
nationwide. Fuel can also be transported through barges along the Pasig [R]iver
or tank trucks via the South Luzon Expressway.13 (Citations omitted)
Memorandum of Agreement (MOA)
dated 12 October 2001 between the oil companies
and the Department of Energy (DOE)

On 12 October 2001, the oil companies and the DOE entered into a MOA14 “in
light of recent international developments involving acts of terrorism on civilian
and government landmarks,”15“potential new security risks relating to the
Pandacan oil terminals and the impact on the surrounding community which
may be affected,”16 and “to address the perceived risks posed by the proximity
of communities, businesses and offices to the Pandacan oil terminals,
consistent with the principle of sustainable development.”17 The stakeholders
acknowledged that “there is a need for a comprehensive study to address the
economic, social, environmental and security concerns with the end in view of
formulating a Master Plan to address and minimize the potential risks and
hazards posed by the proximity of communities, businesses and offices to the
Pandacan oil terminals without adversely affecting the security and reliability
of supply and distribution of petroleum products to Metro Manila and the rest
of Luzon, and the interests of consumers and users of such petroleum
products in those areas.”18chanrobleslaw

The enactment of Ordinance No. 8027


against the continued stay of the oil depots

The MOA, however, was short-lived.

On 20 November 2001, during the incumbency of former Mayor Jose L.


Atienza, Jr. (Mayor Atienza) – now one of the petitioners in G.R. No. 187916 –
the Sangguniang Panlungsod enacted Ordinance No. 802719 reclassifying the
use of the land in Pandacan, Sta. Ana, and its adjoining areas from Industrial
II to Commercial I.

The owners and operators of the businesses thus affected by the


reclassification were given six months from the date of effectivity of the
Ordinance within which to stop the operation of their businesses.

Nevertheless, the oil companies were granted an extension of until 30 April


2003 within which to comply with the Ordinance pursuant to the
following:chanroblesvirtuallawlibrary

(1) Memorandum of Understanding (MOU)20 dated 26 June 2002 between the


City of Manila and the Department of Energy (DOE), on the one hand, and the
oil companies, on the other, where the parties agreed that “the scaling down of
the Pandacan Terminals [was] the most viable and practicable option”21 and
committed to adopt specific measures22 consistent with the said objective;

(2) Resolution No. 97 dated 25 July 200223 of the Sangguniang Panlungsod,


which ratified the 26 June 2002 MOU but limited the extension of the period
within which to comply to six months from 25 July 2002; and

(3) Resolution No. 13 dated 30 January 200324 of the Sanguniang Panlungsod,


which extended the validity of Resolution No. 97 to 30 April 2003, authorized
then Mayor Atienza to issue special business permits to the oil companies, and
called for a reassessment of the ordinance.

Social Justice Society v. Atienza (G.R. No. 156052):


The filing of an action for mandamus
before the Supreme Court
to enforce Ordinance No. 8027

In the interim, an original action for mandamus entitled Social Justice Society v.
Atienza, Jr. docketed as G.R. No. 15605225 was filed on 4 December 2002 by
Tumbokon and herein petitioners SJS and Cabigao against then Mayor
Atienza. The petitioners sought to compel former Mayor Atienza to enforce
Ordinance No. 8027 and cause the immediate removal of the terminals of the
oil companies.26chanrobleslaw

Issuance by the Regional Trial Court (RTC)


of writs of preliminary prohibitory injunction
and preliminary mandatory injunction,
and status quo order in favor of the oil companies

Unknown to the Court, during the pendency of G.R. No. 156052, and before
the expiration of the validity of Resolution No. 13, the oil companies filed the
following actions before the Regional Trial Court of Manila: (1) an action for the
annulment of Ordinance No. 8027 with application for writs of preliminary
prohibitory injunction and preliminary mandatory injunction – by Chevron; (2)
a petition for prohibition and mandamus also for the annulment of the
Ordinance with application for writs of preliminary prohibitory injunction and
preliminary mandatory injunction – by Shell; and (3) a petition assailing the
validity of the Ordinance with prayer for the issuance of a writ of preliminary
injunction and/or temporary restraining order (TRO) – by
Petron.27chanrobleslaw

Writs of preliminary prohibitory injunction and preliminary mandatory


injunction were issued in favor of Chevron and Shell on 19 May 2003. Petron,
on the other hand, obtained a status quo order on 4 August
2004.28chanrobleslaw
The Enactment of Ordinance No. 8119
defining the Manila land use plan
and zoning regulations

On 16 June 2006, then Mayor Atienza approved Ordinance No. 8119 entitled
“An Ordinance Adopting the Manila Comprehensive Land Use Plan and Zoning
Regulations of 2006 and Providing for the Administration, Enforcement and
Amendment thereto.”29chanrobleslaw

Pertinent provisions relative to these cases are the


following:chanroblesvirtuallawlibrary

(a) Article IV, Sec. 730 enumerating the existing zones or districts in the City of
Manila;

(b) Article V, Sec. 2331 designating the Pandacan oil depot area as a “Planned
Unit Development/Overlay Zone” (O-PUD); and

(c) the repealing clause, which reads:


SEC. 84. Repealing Clause. – All ordinances, rules, regulations in conflict with
the provisions of this Ordinance are hereby repealed; PROVIDED, That the
rights that are vested upon the effectivity of this Ordinance shall not be
impaired.32
7 March 2007 Decision in G.R. No. 156052;
The mayor has the mandatory legal duty
to enforce Ordinance No. 8027 and order
the removal of the Pandacan terminals

On 7 March 2007, the Court granted the petition for mandamus, and directed
then respondent Mayor Atienza to immediately enforce Ordinance No.
8027.33chanrobleslaw

Confined to the resolution of the following issues raised by the petitioners, to


wit:
1. whether respondent [Mayor Atienza] has the mandatory legal duty to enforce
Ordinance No. 8027 and order the removal of the Pandacan Terminals, and

2. whether the June 26, 2002 MOU and the resolutions ratifying it can amend
or repeal Ordinance No. 8027.34
the Court declared:
x x x [T]he Local Government Code imposes upon respondent the duty, as city
mayor, to “enforce all laws and ordinances relative to the governance of the
city.” One of these is Ordinance No. 8027. As the chief executive of the city, he
has the duty to enforce Ordinance No. 8027 as long as it has not been repealed
by the Sanggunian or annulled by the courts. He has no other choice. It is his
ministerial duty to do so. x x x
x x x x

The question now is whether the MOU entered into by respondent with the oil
companies and the subsequent resolutions passed by the Sanggunian have
made the respondent’s duty to enforce Ordinance No. 8027 doubtful, unclear
or uncertain. x x x

We need not resolve this issue. Assuming that the terms of the MOU were
inconsistent with Ordinance No. 8027, the resolutions which ratified it and
made it binding on the City of Manila expressly gave it full force and effect only
until April 30, 2003. Thus, at present, there is nothing that legally hinders
respondent from enforcing Ordinance No. 8027.

Ordinance No. 8027 was enacted right after the Philippines, along with the rest
of the world, witnessed the horror of the September 11, 2001 attack on the
Twin Towers of the World Trade Center in New York City. The objective of the
ordinance is to protect the residents of Manila from the catastrophic
devastation that will surely occur in case of a terrorist attack on the
Pandacan Terminals. No reason exists why such a protective measure
should be delayed.35 (Emphasis supplied; citations omitted)
13 February 2008 Resolution in G.R. No. 156052;
Ordinance No. 8027 is constitutional

The oil companies and the Republic of the Philippines, represented by the
DOE, filed their motions for leave to intervene and for reconsideration of the 7
March 2007 Decision. During the oral arguments, the parties submitted to the
power of the Court to rule on the constitutionality and validity of the assailed
Ordinance despite the pendency of the cases in the RTC.36chanrobleslaw

On 13 February 2008, the Court granted the motions for leave to intervene of
the oil companies and the Republic of the Philippines but denied their
respective motions for reconsideration. The dispositive portion of the Resolution
reads:
WHEREFORE, x x x

We reiterate our order to respondent Mayor of the City of Manila to enforce


Ordinance No. 8027. In coordination with the appropriate agencies and other
parties involved, respondent Mayor is hereby ordered to oversee the relocation
and transfer of the Pandacan Terminals out of its present site.37
13 February 2008 Resolution in G.R. No. 156052;
Ordinance No. 8027 was not impliedly repealed
by Ordinance No. 8119

The Court also ruled that Ordinance No. 8027 was not impliedly repealed by
Ordinance No. 8119. On this score, the Court ratiocinated:
For the first kind of implied repeal, there must be an irreconcilable conflict
between the two ordinances. There is no conflict between the two ordinances.
Ordinance No. 8027 reclassified the Pandacan area from Industrial II to
Commercial I. Ordinance No. 8119, Section 23, designated it as a “Planned
Unit Development/Overlay Zone (O-PUD).” In its Annex “C” which defined the
zone boundaries, the Pandacan area was shown to be within the “High Density
Residential/Mixed Use Zone (R-3/MXD).” x x x [B]oth ordinances actually have
a common objective, i.e., to shift the zoning classification from industrial to
commercial (Ordinance No. 8027) or mixed residential commercial (Ordinance
No. 8119)

x x x x

Ordinance No. 8027 is a special law since it deals specifically with a certain
area described therein (the Pandacan oil depot area) whereas Ordinance No.
8119 can be considered a general law as it covers the entire city of
Manila.cralawred

x x x x

x x x The repealing clause of Ordinance No. 8119 cannot be taken to indicate


the legislative intent to repeal all prior inconsistent laws on the subject matter,
including Ordinance No. 8027, a special enactment, since the aforequoted
minutes (an official record of the discussions in the Sanggunian) actually
indicated the clear intent to preserve the provisions of Ordinance No. 8027.38
Filing of a draft Resolution amending
Ordinance No. 8027 effectively allowing
the oil depots to stay in the Pandacan area;
Manifestation and Motion to forestall
the passing of the new Ordinance
filed in G.R. No. 156052

On 5 March 2009, respondent then Councilor Arlene W. Koa, filed with


the Sangguniang Panlungsod a draft resolution entitled “An Ordinance
Amending Ordinance No. 8119 Otherwise Known as ‘The Manila
Comprehensive Land Use Plan and Zoning Ordinance of 2006’ by Creating a
Medium Industrial Zone (1-2) and Heavy Industrial Zone (1-3) and Providing for
its Enforcement.”39 Initially numbered as Draft Ordinance No. 7177, this was
later renumbered as Ordinance No. 8187, the assailed Ordinance in these
instant petitions.

Considering that the provisions thereof run contrary to Ordinance No. 8027,
the petitioners in G.R. No. 156052 filed a “Manifestation and Motion to: a) Stop
the City Council of Manila from further hearing the amending ordinance to
Ordinance No. 8027; [and] b) Transfer the monitoring of the enforcement of the
Resolution of the Honorable Court on this case dated 13 February 2008 from
Branch 39, Manila Regional Trial Court to the Supreme Court.”40chanrobleslaw

28 April 2009 Resolution in G.R. No. 156052;


Second Motion for Reconsideration
denied with finality; succeeding motions
likewise denied or otherwise noted
without action

On 28 April 2009, pending the resolution of the Manifestation and Motion, the
Court denied with finality the second motion for reconsideration dated 27
February 2008 of the oil companies.41 It further ruled that no further pleadings
shall be entertained in the case.42chanrobleslaw

Succeeding motions were thus denied and/or noted without action. And, after
the “Very Urgent Motion to Stop the Mayor of the City of Manila from Signing
Draft Ordinance No. 7177 and to Cite Him for Contempt if He Would Do So”
filed on 19 May 2009 was denied on 2 June 2009 for being moot,43 all
pleadings pertaining to the earlier motion against the drafting of an ordinance
to amend Ordinance No. 8027 were noted without action.44chanrobleslaw

The Enactment of Ordinance No. 8187


allowing the continued stay of the oil depots

On 14 May 2009, during the incumbency of former Mayor Alfredo S. Lim


(Mayor Lim), who succeeded Mayor Atienza, the Sangguniang
Panlungsod enacted Ordinance No. 8187.45chanrobleslaw

The new Ordinance repealed, amended, rescinded or otherwise modified


Ordinance No. 8027, Section 23 of Ordinance No. 8119, and all other
Ordinances or provisions inconsistent therewith46 thereby allowing, once again,
the operation of “Pollutive/Non-Hazardous and Pollutive/Hazardous
manufacturing and processing establishments” and “Highly Pollutive/Non-
Hazardous[,] Pollutive/Hazardous[,] Highly Pollutive/Extremely Hazardous[,]
Non-Pollutive/Extremely Hazardous; and Pollutive/Extremely Hazardous; and
Pollutive/Extremely Hazardous manufacturing and processing establishments”
within the newly created Medium Industrial Zone (1-2) and Heavy Industrial
Zone (1-3) in the Pandacan area.

Thus, where the Industrial Zone under Ordinance No. 8119 was limited to Light
Industrial Zone (I-1), Ordinance No. 8187 appended to the list a Medium
Industrial Zone (I-2) and a Heavy Industrial Zone (I-3), where petroleum
refineries and oil depots are now among those expressly allowed.

Hence these petitions.chanrobleslaw

The Petitions
G.R. No. 187836

To support their petition for prohibition against the enforcement of Ordinance


No. 8187, the petitioner Social Justice Society (SJS) officers allege
that:chanroblesvirtuallawlibrary

1. The enactment of the assailed Ordinance is not a valid exercise of police


power because the measures provided therein do not promote the general
welfare of the people within the contemplation of the following provisions of
law:
a) Article III, Section 18 (kk)47 of Republic Act No. 409 otherwise known as the
“Revised Charter of the City of Manila,” which provides that the Municipal
Board shall have the legislative power to enact all ordinances it may deem
necessary and proper;
b) Section 1648 of Republic Act No. 7160 known as the Local Government
Code, which defines the scope of the general welfare clause;
2. The conditions at the time the Court declared Ordinance No. 8027
constitutional in G.R. No. 156052 exist to this date;

3. Despite the finality of the Decision in G.R. No. 156052, and notwithstanding
that the conditions and circumstances warranting the validity of the Ordinance
remain the same, the Manila City Council passed a contrary Ordinance,
thereby refusing to recognize that “judicial decisions applying or interpreting
the laws or the Constitution form part of the legal system of the
Philippines;”49 and

4. Ordinance No. 8187 is violative of Sections 15 and 16, Article II of the


Constitution of the Philippines on the duty of the State “to protect and promote
the right to health of the people”50 and “protect and advance the right of the
people to a balanced and healthful ecology.”51chanrobleslaw

Petitioners pray that Ordinance No. 8187 of the City of Manila be declared null
and void, and that respondent, and all persons acting under him, be prohibited
from enforcing the same.

G.R. No. 187916

The petition for Prohibition, Mandamus and Certiorari with Prayer for
Temporary Restraining Order and/or Injunction against the enforcement of
Ordinance No. 8187 of former Secretary of Department of Environment and
Natural Resources and then Mayor Atienza, together with other residents and
taxpayers of the City of Manila, also alleges violation of the right to health of
the people and the right to a healthful and balanced environment under
Sections 15 and 16 of the Constitution.
Petitioners likewise claim that the Ordinance is in violation of the following
health and environment-related municipal laws, and international conventions
and treaties to which the Philippines is a state
party:chanroblesvirtuallawlibrary

1. Municipal Laws –

(a) Sections 4,52 12,53 1954 and 3055 of Republic Act No. 8749 otherwise known
as the Philippine Clean Air Act;

(b) Environment Code (Presidential Decree No. 1152);

(c) Toxic and Hazardous Wastes Law (Republic Act No. 6969); and

(d) Civil Code provisions on nuisance and human relations;

2. International Conventions and Treaties to which the Philippines is a state


party –

a. Section 1 of the Universal Declaration of Human Rights, which states that


“[e]veryone has the right to life, liberty and security of person;”

b. Articles 6,56 2457 and 2758 of the Convention on the Rights of the Child,
summarized by the petitioners in the following manner:
1. the human right to safe and healthy environment[;]

2. human right to the highest attainable standard of health[;]

3. the human right to ecologically sustainable development[;]

4. the human right to an adequate standard of living, including access to safe


food and water[;]

5. the human right of the child to live in an environment appropriate for


physical and mental development[; and]

6. the human right to full and equal participation for all persons in
environmental decision-making and development planning, and in shaping
decisions and policies affecting one’s community, at the local, national and
international levels.59
Petitioners likewise posit that the title of Ordinance No. 8187 purports to
amend or repeal Ordinance No. 8119 when it actually intends to repeal
Ordinance No. 8027. According to them, Ordinance No. 8027 was never
mentioned in the title and the body of the new ordinance in violation of Section
26, Article VI of the 1987 Constitution, which provides that every bill passed by
Congress shall embrace only one subject which shall be expressed in the title
thereof.

Also pointed out by the petitioners is a specific procedure outlined in


Ordinance No. 8119 that should be observed when amending the zoning
ordinance. This is provided for under Section 81 thereof, which reads:
SEC. 81. Amendments to the Zoning Ordinance. The proposed amendments to
the Zoning Ordinance as reviewed and evaluated by the City Planning and
Development Office (CPDO) shall be submitted to the City Council for approval
of the majority of theSangguniang Panlungsod members. The amendments
shall be acceptable and eventually approved: PROVIDED, That there is
sufficient evidence and justification for such proposal; PROVIDED FURTHER,
That such proposal is consistent with the development goals, planning
objectives, and strategies of the Manila Comprehensive Land Use Plan. Said
amendments shall take effect immediately upon approval or after thirty (30)
days from application.
Petitioners thus pray that:
1. upon filing of [the] petition, [the] case be referred to the Court [E]n Banc, and
setting (sic) the case for oral argument;

2. upon the filing of [the] petition, a temporary restraining order be issued


enjoining the respondents from publishing and posting Manila City Ordinance
No. 8187 and/or posting of Manila City Ordinance No. 8187; and/or taking any
steps to implementing (sic) and/or enforce the same and after due hearing, the
temporary restraining order be converted to a permanent injunction;

3. x x x Manila City Ordinance 8187 [be declared] as null and void for being
repugnant to the Constitution and existing municipal laws and international
covenants;

4. x x x the respondents [be ordered] to refrain from enforcing and/or


implementing Manila City Ordinance No. 8187;

5. x x x respondent City Mayor Alfredo S. Lim [be enjoined] from issuing any
permits (business or otherwise) to all industries whose allowable uses are
anchored under the provisions of Manila Ordinance No. 8187; and

6. x x x respondent Mayor of Manila Alfredo S. Lim [be ordered] to comply with


the Order of the Honorable Court in G.R. 156052 dated February 13, 2008.60
The Respondents’ Position
on the Consolidated Petitions

Respondent former Mayor Lim

In his Memorandum,61 former Mayor Lim, through the City Legal Officer,
attacks the petitioners’ lack of legal standing to sue. He likewise points out that
the petitioners failed to observe the principle of hierarchy of courts.

Maintaining that Ordinance No. 8187 is valid and constitutional, he expounds


on the following arguments:chanroblesvirtuallawlibrary

On the procedural issues, he contends that: (1) it is the function of


the Sangguniang Panlungsod to enact zoning ordinances, for which reason, it
may proceed to amend or repeal Ordinance No. 8119 without prior referral to
the Manila Zoning Board of Adjustment and Appeals (MZBAA) as prescribed
under Section 80 (Procedure for Re-Zoning) and the City Planning and
Development Office (CPDO) pursuant to Section 81 (Amendments to the Zoning
Ordinance) of Ordinance No. 8119, especially when the action actually
originated from the Sangguniang Panlungsod itself; (2) the Sangguniang
Panlungsod may, in the later ordinance, expressly repeal all or part of the
zoning ordinance sought to be modified; and (3) the provision repealing Section
23 of Ordinance No. 8119 is not violative of Section 26, Article VI of the 1987
Constitution, which requires that every bill must embrace only one subject and
that such shall be expressed in the title.

On the substantive issues, he posits that the petitions are based on unfounded
fears; that the assailed ordinance is a valid exercise of police power; that it is
consistent with the general welfare clause and public policy, and is not
unreasonable; that it does not run contrary to the Constitution, municipal
laws, and international conventions; and that the petitioners failed to overcome
the presumption of validity of the assailed ordinance.

Respondents Vice-Mayor Domagoso


and the City Councilors who voted
in favor of the assailed ordinance

On 14 September 2012, after the Court gave the respondents several chances
to submit their Memorandum,62 they, through the Secretary of
the Sangguniang Panlungsod, prayed that the Court dispense with the filing
thereof.

In their Comment,63 however, respondents offered a position essentially similar


to those proffered by former Mayor Lim.chanrobleslaw

The Intervenors’ Position


on the Consolidated Petitions

On the other hand, the oil companies sought the outright dismissal of the
petitions based on alleged procedural infirmities, among others, incomplete
requisites of judicial review, violation of the principle of hierarchy of courts,
improper remedy, submission of a defective verification and certification
against forum shopping, and forum shopping.
As to the substantive issues, they maintain, among others, that the assailed
ordinance is constitutional and valid; that the Sangguniang Panlalawigan is in
the best position to determine the needs of its constituents; that it is a valid
exercise of legislative power; that it does not violate health and environment-
related provisions of the Constitution, laws, and international conventions and
treaties to which the Philippines is a party; that the oil depots are not likely
targets of terrorists; that the scaling down of the operations in Pandacan
pursuant to the MOU has been followed; and that the people are safe in view of
the safety measures installed in the Pandacan terminals.

Incidentally, in its Manifestation dated 30 November 2010,64 Petron informed


the Court that it will “cease [the] operation of its petroleum product storage
facilities”65 in the Pandacan oil terminal not later than January 2016 on
account of the following:
2.01 Environmental issues, many of which are unfounded, continually crop up
and tarnish the Company’s image.

2.02. The location of its Pandacan terminal is continually threatened, and


made uncertain preventing long-term planning, by the changing local
government composition. Indeed, the relevant zoning ordinances have been
amended three (3) times, and their validity subjected to litigation.66
Intervening Events

On 28 August 2012, while the Court was awaiting the submission of the
Memorandum of respondents Vice-Mayor Domagoso and the councilors who
voted in favor of the assailed Ordinance, theSangguniang Panlungsod, which
composition had already substantially changed, enacted Ordinance No.
828367 entitled “AN ORDINANCE AMENDING SECTION 2 OF ORDINANCE NO.
8187 BY RECLASSIFYING THE AREA WHERE PETROLEUM REFINERIES AND
OIL DEPOTS ARE LOCATED FROM HEAVY INDUSTRIAL (1-3) TO HIGH
INTENSITY COMMERCIAL/MIXED USE ZONE (C3/MXD).

The new ordinance essentially amended the assailed ordinance to exclude the
area where petroleum refineries and oil depots are located from the Industrial
Zone.

Ordinance No. 8283 thus permits the operation of the industries operating
within the Industrial Zone. However, the oil companies, whose oil depots are
located in the High Intensity Commercial/Mixed Use Zone (C3/MXD), are given
until the end of January 2016 within which to relocate their terminals.

Former Mayor Lim, who was then the incumbent mayor, did not support the
amendment. Maintaining that the removal of the oil depots was prejudicial to
public welfare, and, on account of the pending cases in the Supreme Court, he
vetoed Ordinance No. 8283 on 11 September 2012.68chanrobleslaw
On 28 November 2012, former Mayor Lim filed a Manifestation informing this
Court that theSangguniang Panlungsod voted to override the veto, and that he,
in turn, returned it again with his veto. He likewise directed the Sangguniang
Panlungsod to append his written reasons for his veto of the Ordinance, so that
the same will be forwarded to the President for his consideration in the event
that his veto is overridden again.69chanrobleslaw

On 11 December 2012, Shell also filed a similar Manifestation.70chanrobleslaw

Meanwhile, three days after former Mayor Lim vetoed the new ordinance, Atty.
Luch R. Gempis, Jr. (Atty. Gempis), Secretary of the Sangguniang Panlungsod,
writing on behalf of respondents Vice-Mayor Domagoso and the City Councilors
of Manila who voted in favor of the assailed Ordinance, finally complied with
this Court’s Resolution dated 17 July 2012 reiterating its earlier directives71 to
submit the said respondents’ Memorandum.

In his Compliance/Explanation with Urgent Manifestation72 dated 13


September 2012, Atty. Gempis explained that it was not his intention to show
disrespect to this Court or to delay or prejudice the disposition of the cases.

According to him, he signed the Comment prepared by respondents Vice-Mayor


and the City Councilors only to attest that the pleading was personally signed
by the respondents. He clarified that he was not designated as the legal
counsel of the respondents as, in fact, he was of the impression that, pursuant
to Section 481(b)(3) of the Local Government Code,73 it is the City Legal Officer
who is authorized to represent the local government unit or any official thereof
in a litigation. It was for the same reason that he thought that the filing of a
Memorandum may already be dispensed with when the City Legal Officer filed
its own on 8 February 2010. He further explained that the Ordinance subject of
these cases was passed during the 7th Council (2007-2010); that the
composition of the 8th Council (2010-2013) had already changed after the
2010 elections; and that steps were already taken to amend the ordinance
again. Hence, he was in a dilemma as to the position of theSangguniang
Panlungsod at the time he received the Court’s Resolution of 31 May 2011.

Atty. Gempis, thus, prayed that the Court dispense with the filing of the
required memorandum in view of the passing of Ordinance No.
8283.chanrobleslaw

Issue

The petitioners’ arguments are primarily anchored on the ruling of the Court in
G. R. No. 156052 declaring Ordinance No. 8027 constitutional and valid after
finding that the presence of the oil terminals in Pandacan is a threat to the life
and security of the people of Manila. From thence, the petitioners enumerated
constitutional provisions, municipal laws and international treaties and
conventions on health and environment protection allegedly violated by the
enactment of the assailed Ordinance to support their position.

The resolution of the present controversy is, thus, confined to the


determination of whether or not the enactment of the assailed Ordinance
allowing the continued stay of the oil companies in the depots is, indeed,
invalid and unconstitutional.chanrobleslaw

Our Ruling

We see no reason why Ordinance No. 8187 should not be stricken down insofar
as the presence of the oil depots in Pandacan is concerned.chanrobleslaw

We first rule on the procedural issues raised by the respondents and the oil
companies.

At the outset, let it be emphasized that the Court, in G.R. No. 156052, has
already pronounced that the matter of whether or not the oil depots should
remain in the Pandacan area is of transcendental importance to the residents
of Manila.74chanrobleslaw

We may, thus, brush aside procedural infirmities, if any, as we had in the past,
and take cognizance of the cases75 if only to determine if the acts complained of
are no longer within the bounds of the Constitution and the laws in
place.76chanrobleslaw

Put otherwise, there can be no valid objection to this Court’s discretion to


waive one or some procedural requirements if only to remove any impediment
to address and resolve the serious constitutional question77 raised in these
petitions of transcendental importance, the same having far-reaching
implications insofar as the safety and general welfare of the residents of
Manila, and even its neighboring communities, are concerned.

Proper Remedy

Respondents and intervenors argue that the petitions should be outrightly


dismissed for failure on the part of the petitioners to properly apply related
provisions of the Constitution, the Rules of Court, and/or the Rules of
Procedure for Environmental Cases relative to the appropriate remedy available
to them.

To begin with, questioned is the applicability of Rule 6578 of the Rules of Court
to assail the validity and constitutionality of the Ordinance.
… there is no appeal, or any plain,
speedy, and adequate remedy
in the ordinary course of law…

Rule 65 specifically requires that the remedy may be availed of only when
“there is no appeal, or any plain, speedy, and adequate remedy in the ordinary
course of law.”79chanrobleslaw

Shell argues that the petitioners should have sought recourse before the first
and second level courts under the Rules of Procedure for Environmental
Cases,80 which govern “the enforcement or violations of environmental and
other related laws, rules and regulations.”81 Petron additionally submits that
the most adequate remedy available to petitioners is to have the assailed
ordinance repealed by the Sangguniang Panlungsod. In the alternative, a local
referendum may be had. And, assuming that there were laws violated, the
petitioners may file an action for each alleged violation of law against the
particular individuals that transgressed the law.

It would appear, however, that the remedies identified by the intervenors prove
to be inadequate to resolve the present controversies in their entirety owing to
the intricacies of the circumstances herein prevailing.

The scope of the Rules of Procedure for Environmental Cases is embodied in


Sec. 2, Part I, Rule I thereof. It states that the Rules shall govern the procedure
in civil, criminal and special civil actions before the Metropolitan Trial Courts,
Municipal Trial Courts in Cities, Municipal Trial Courts and Municipal Circuit
Trial Courts, and the Regional Trial Courts involving enforcement or violations
of environmental and other related laws, rules and regulations such as but not
limited to the following:
(k) R.A. No. 6969, Toxic Substances and Hazardous Waste Act;

x x x x

(r) R.A. No. 8749, Clean Air Act;

x x x x

(y) Provisions in C.A. No. 141, x x x; and other existing laws that relate to
the conservation, development, preservation, protection and utilization of
the environment and natural resources.82 (Emphasis supplied)
Notably, the aforesaid Rules are limited in scope. While, indeed, there are
allegations of violations of environmental laws in the petitions, these only serve
as collateral attacks that would support the other position of the petitioners –
the protection of the right to life, security and safety.
Moreover, it bears emphasis that the promulgation of the said Rules was
specifically intended to meet the following objectives:
SEC. 3. Objectives.—The objectives of these Rules
are:chanroblesvirtuallawlibrary

(a) To protect and advance the constitutional right of the people to a balanced
and healthful ecology;
(b) To provide a simplified, speedy and inexpensive procedure for the
enforcement of environmental rights and duties recognized under the
Constitution, existing laws, rules and regulations, and international
agreements;
(c) To introduce and adopt innovations and best practices ensuring the
effective enforcement of remedies and redress for violation of environmental
laws; and
(d) To enable the courts to monitor and exact compliance with orders and
judgments in environmental cases.83
Surely, the instant petitions are not within the contemplation of these Rules.

Relative to the position of Petron, it failed to consider that these petitions are
already a sequel to G.R. No. 156052, and that there are some issues herein
raised that the remedies available at the level of the Sangguniang
Panlungsod could not address. Neither could the filing of an individual action
for each law violated be harmonized with the essence of a “plain, speedy, and
adequate” remedy.

From another perspective, Shell finds fault with the petitioners’ direct recourse
to this Court when, pursuant to Section 5, Article VIII of the Constitution, the
Supreme Court exercises only appellate jurisdiction over cases involving the
constitutionality or validity of an ordinance.84 Thus:
Section 5. The Supreme Court shall have the following
powers:chanroblesvirtuallawlibrary

xxxx
2. Review, revise, reverse, modify, or affirm on appeal or certiorari, as the
law or the Rules of Court may provide, final judgments and orders of lower
courts in:chanroblesvirtuallawlibrary

a. All cases in which the constitutionality or validity of any treaty,


international or executive agreement, law, presidential decree, proclamation,
order, instruction, ordinance, or regulation is in question. (Emphasis supplied)
To further support its position, it cites the case of Liga ng mga Barangay
National v. City Mayor of Manila,85 where the petitioners sought the nullification
of the mayor’s executive order and the council’s ordinance concerning certain
functions of the petitioners that are vested in them by law. There, the Court
held:
Second, although the instant petition is styled as a petition for certiorari, in
essence, it seeks the declaration by this Court of the unconstitutionality or
illegality of the questioned ordinance and executive order. It, thus, partakes of
the nature of a petition for declaratory relief over which this Court has only
appellate, not original, jurisdiction.86 Section 5, Article VIII of the Constitution
provides: x x x

As such, this petition must necessary fail, as this Court does not have original
jurisdiction over a petition for declaratory relief even if only questions of law are
involved.87
Assuming that a petition for declaratory relief is the proper remedy, and that
the petitions should have been filed with the Regional Trial Court, we have,
time and again, resolved to treat such a petition as one for prohibition,
provided that the case has far-reaching implications and transcendental issues
that need to be resolved,88 as in these present petitions.

On a related issue, we initially found convincing the argument that the


petitions should have been filed with the Regional Trial Court, it having
concurrent jurisdiction with this Court over a special civil action for
prohibition, and original jurisdiction over petitions for declaratory relief.

However, as we have repeatedly said, the petitions at bar are of transcendental


importance warranting a relaxation of the doctrine of hierarchy of courts.89 In
the case of Jaworski v. PAGCOR,90the Court ratiocinated:
Granting arguendo that the present action cannot be properly treated as a
petition for prohibition, the transcendental importance of the issues
involved in this case warrants that we set aside the technical defects and
take primary jurisdiction over the petition at bar. x x x This is in
accordance with the well-entrenched principle that rules of procedure are
not inflexible tools designed to hinder or delay, but to facilitate and
promote the administration of justice. Their strict and rigid application,
which would result in technicalities that tend to frustrate, rather than
promote substantial justice, must always be eschewed. (Emphasis supplied)
…persons aggrieved thereby…

As to who may file a petition for certiorari, prohibition or mandamus, Petron


posits that petitioners are not among the “persons aggrieved” contemplated
under Sections 1 to 3 of Rule 65 of the Rules of Court.

Chevron argues that petitioners, whether as “citizens,” taxpayers,” or


legislators,” lack the legal standing to assail the validity and constitutionality of
Ordinance No. 8187. It further claims that petitioners failed to show that they
have suffered any injury and/or threatened injury as a result of the act
complained of.91chanrobleslaw
Shell also points out that the petitions cannot be considered taxpayers’ suit, for
then, there should be a claim that public funds were illegally disbursed and
that petitioners have sufficient interest concerning the prevention of illegal
expenditure of public money.92 In G.R. No. 187916, Shell maintains that the
petitioners failed to show their personal interest in the case and/or to establish
that they may represent the general sentiments of the constituents of the City
of Manila so as to be treated as a class suit. Even the minors, it argues, are not
numerous and representative enough for the petition to be treated as a class
suit. As to the city councilors who joined the petitioners in assailing the validity
of Ordinance No. 8187, Shell posits that they cannot invoke the ruling in Prof.
David v. Pres. Macapagal-Arroyo,93 where the Court held that legislators may
question the constitutionality of a statute, if and when it infringes upon their
prerogatives as legislators, because of the absence of the allegation that the
assailed ordinance indeed infringes upon their prerogatives.

Former Mayor Lim submitted a similar position supported by a number of


cases on the concept oflocus standi,94 the direct injury test,95 an outline of the
stringent requirements of legal standing when suing as a citizen,96 as a
taxpayer,97 as a legislator and in cases where class suits are filed in behalf of
all citizens.98chanrobleslaw

Their arguments are misplaced.

In G.R. No. 156052, we ruled that the petitioners in that case have a legal right
to seek the enforcement of Ordinance No. 8027 because the subject of the
petition concerns a public right, and they, as residents of Manila, have a direct
interest in the implementation of the ordinances of the city. Thus:
To support the assertion that petitioners have a clear legal right to the
enforcement of the ordinance, petitioner SJS states that it is a political party
registered with the Commission on Elections and has its offices in Manila. It
claims to have many members who are residents of Manila. The other
petitioners, Cabigao and Tumbokon, are allegedly residents of Manila.

We need not belabor this point. We have ruled in previous cases that when
amandamus proceeding concerns a public right and its object is to compel a
public duty, the people who are interested in the execution of the laws are
regarded as the real parties in interest and they need not show any specific
interest. Besides, as residents of Manila, petitioners have a direct interest in
the enforcement of the city’s ordinances.99x x x (Citations omitted)

No different are herein petitioners who seek to prohibit the enforcement of the
assailed ordinance, and who deal with the same subject matter that concerns a
public right. Necessarily, the people who are interested in the nullification of
such an ordinance are themselves the real parties in interest, for which reason,
they are no longer required to show any specific interest therein. Moreover, it is
worth mentioning that SJS, now represented by SJS Officer Alcantara, has
been recognized by the Court in G.R. No. 156052 to have legal standing to sue
in connection with the same subject matter herein considered. The rest of the
petitioners are residents of Manila. Hence, all of them have a direct interest in
the prohibition proceedings against the enforcement of the assailed ordinance.

In the case of Initiatives for Dialogue and Empowerment through Alternative


Legal Services, Inc. (IDEALS, INC.) v. Power Sector Assets and Liabilities
Management Corporation (PSALM),100 involving a petition for certiorari and
prohibition to permanently enjoin PSALM from selling the Angat Hydro-Electric
Power Plant (AHEPP) to Korea Water Resources Corporation (K-Water), the
Court ruled:chanRoblesvirtualLawlibrary

“Legal standing” or locus standi has been defined as a personal and substantial
interest in the case such that the party has sustained or will sustain direct
injury as a result of the governmental act that is being challenged, alleging
more than a generalized grievance. x x x This Court, however, has adopted a
liberal attitude on the locus standi of a petitioner where the petitioner is able to
craft an issue of transcendental significance to the people, as when the issues
raised are of paramount importance to the public. Thus, when the proceeding
involves the assertion of a public right, the mere fact that the petitioner
is a citizen satisfies the requirement of personal interest.

There can be no doubt that the matter of ensuring adequate water supply for
domestic use is one of paramount importance to the public. That the continued
availability of potable water in Metro Manila might be compromised if PSALM
proceeds with the privatization of the hydroelectric power plant in the Angat
Dam Complex confers upon petitioners such personal stake in the resolution of
legal issues in a petition to stop its implementation.101 (Emphasis supplied;
citations omitted)

In like manner, the preservation of the life, security and safety of the people is
indisputably a right of utmost importance to the public. Certainly, the
petitioners, as residents of Manila, have the required personal interest to seek
relief from this Court to protect such right.

… in excess of its or his jurisdiction,


or with grave abuse of discretion
amounting to lack or excess of jurisdiction…

Petron takes issue with the alleged failure of the petitioners to establish the
facts with certainty that would show that the acts of the respondents fall within
the parameters of the grave abuse of discretion clause settled by jurisprudence,
to wit:chanRoblesvirtualLawlibrary
x x x “[G]rave abuse of discretion” means such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction. The abuse of
discretion must be grave as where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility and must be so
patent and gross as to amount to an evasion of positive duty or to a virtual
refusal to perform the duty enjoined by or to act all in contemplation of law.102

It is pointless to discuss the matter at length in these instant cases of


transcendental importance in view of the Court’s pronouncement, in Magallona
v. Ermita.103 There it held that the writs of certiorariand prohibition are proper
remedies to test the constitutionality of statutes, notwithstanding the following
defects:chanRoblesvirtualLawlibrary

In praying for the dismissal of the petition on preliminary grounds,


respondents seek a strict observance of the offices of the writs of certiorari and
prohibition, noting that the writs cannot issue absent any showing of grave
abuse of discretion in the exercise of judicial, quasi-judicial or ministerial
powers on the part of respondents and resulting prejudice on the part of
petitioners.

Respondents’ submission holds true in ordinary civil proceedings. When this


Court exercises its constitutional power of judicial review, however, we have, by
tradition, viewed the writs of certiorari and prohibition as proper remedial
vehicles to test the constitutionality of statutes, and indeed, of acts of other
branches of government. Issues of constitutional import x x x carry such
relevance in the life of this nation that the Court inevitably finds itself
constrained to take cognizance of the case and pass upon the issues
raised, non-compliance with the letter of procedural rules
notwithstanding. The statute sought to be reviewed here is one such
law.104 (Emphasis supplied; citations omitted)

Requisites of judicial review

For a valid exercise of the power of judicial review, the following requisites shall
concur: (1) the existence of a legal controversy; (2) legal standing to sue of the
party raising the constitutional question; (3) a plea that judicial review be
exercised at the earliest opportunity; and (4) the constitutional question is
the lis mota of the case.105chanrobleslaw

Only the first two requisites are put in issue in these cases.

On the matter of the existence of a legal controversy, we reject the contention


that the petitions consist of bare allegations based on speculations, surmises,
conjectures and hypothetical grounds.
The Court declared Ordinance No. 8027 valid and constitutional and ordered
its implementation. With the passing of the new ordinance containing the
contrary provisions, it cannot be any clearer that here lies an actual case or
controversy for judicial review. The allegation on this, alone, is sufficient for the
purpose.

The second requisite has already been exhaustively discussed.

Proof of identification required in the notarization


of the verification and certification against forum
shopping in G.R. No. 187916

At the bottom of the Verification and Certification against Forum Shopping of


the petition in G.R. No. 187916 is the statement of the notary public to the
effect that the affiant, in his presence and after presenting “an integrally
competent proof of identification with signature and photograph,”106 signed the
document under oath.

Citing Sec. 163 of the Local Government Code,107 which provides that an
individual acknowledging any document before a notary public shall present
his Community Tax Certificate (CTC), Chevron posits that the petitioner’s
failure to present his CTC rendered the petition fatally defective warranting the
outright dismissal of the petition.

We disagree.

The verification and certification against forum shopping are governed


specifically by Sections 4 and 5, Rule 7 of the Rules of Court.

Section 4 provides that a pleading, when required to be verified, shall be


treated as an unsigned pleading if it lacks a proper verification while Section 5
requires that the certification to be executed by the plaintiff or principal party
be under oath.

These sections, in turn, should be read together with Sections 6 and 12, Rule 2
of the 2004 Rules on Notarial Practice.

Section 6108 of the latter Rules, specifically, likewise provides that any
competent evidence of identity specified under Section 12 thereof may now be
presented before the notary public, to wit:chanRoblesvirtualLawlibrary

SEC. 12. Competent Evidence of Identity. - The phrase “competent evidence of


identity” refers to the identification of an individual based
on:chanroblesvirtuallawlibrary
(a) at least one current identification document issued by an official agency
bearing the photograph and signature of the individual, such as but not
limited to passport, driver’s license, Professional Regulations Commission
ID, National Bureau of Investigation clearance, police clearance, postal ID,
voter’s ID, Barangay certification, Government Service and Insurance
System (GSIS) e-card, Social Security System (SSS) card, Philhealth card,
senior citizen card, Overseas Workers Welfare Administration (OWWA) ID,
OFW ID, seaman’s book, alien certificate of registration/immigrant
certificate of registration, government office ID, certification from the
National Council for the Welfare of Disable Persons (NCWDP), Department
of Social Welfare and Development (DSWD) certification; or
(b) x x x.109

Forum shopping

Shell contends that the petitioners in G.R. No. 187836 violated the rule against
forum shopping allegedly because all the elements thereof are present in
relation to G.R. No. 156052, to wit:chanroblesvirtuallawlibrary

1. “identity of parties, or at least such parties who represent the same interests
in both actions” –

According to Shell, the interest of petitioner SJS in G.R. No. 156052 and the
officers of SJS in G.R. No. 187836 are clearly the same. Moreover, both actions
implead the incumbent mayor of the City of Manila as respondent. Both then
respondent Mayor Atienza in G.R. No. 156052 and respondent former Mayor
Lim in G.R. No. 187836 are sued in their capacity as Manila mayor.

2. “identity of rights asserted and relief prayed for, the relief being founded on
the same fact(s)” –

Shell contends that, in both actions, petitioners assert the same rights to
health and to a balanced and healthful ecology relative to the fate of the
Pandacan terminal, and seek essentially the same reliefs, that is, the removal
of the oil depots from the present site.
3. “the identity of the two preceding particulars is such that any judgment
rendered in the pending case, regardless of which party is successful, would
amount to res judicata in the other” –

Relative to the filing of the Manifestation and Motion to: a) Stop the City Council
of Manila from further hearing the amending ordinance to Ordinance No. 8027 x
x x (Manifestation and Motion) and Very Urgent Motion to Stop the Mayor of the
City of Manila from Signing Draft Ordinance No. 7177 [now Ordinance No.
8187] and to Cite Him for Contempt if He Would Do So (Urgent Motion) both in
G.R. No. 156052, Shell points out the possibility that the Court would have
rendered conflicting rulings “on cases involving the same facts, parties, issues
and reliefs prayed for.”110chanrobleslaw

We are not persuaded.

In Spouses Cruz v. Spouses Caraos,111 the Court expounded on the nature of


forum shopping. Thus:chanRoblesvirtualLawlibrary

Forum shopping is an act of a party, against whom an adverse judgment or


order has been rendered in one forum, of seeking and possibly getting a
favorable opinion in another forum, other than by appeal or special civil action
for certiorari. It may also be the institution of two or more actions or
proceedings grounded on the same cause on the supposition that one or the
other court would make a favorable disposition. The established rule is that for
forum shopping to exist, both actions must involve the same transactions,
same essential facts and circumstances and must raise identical causes of
actions, subject matter, and issues. x x x112 (Citations omitted)

It bears to stress that the present petitions were initially filed, not to secure a
judgment adverse to the first decision, but, precisely, to enforce the earlier
ruling to relocate the oil depots from the Pandacan area.

As to the matter of the denial of the petitioners’ Manifestation and Urgent


Motion in G.R. No. 156052, which were both incidental to the enforcement of
the decision favorable to them brought about by the intervening events after
the judgment had become final and executory, and which involve the same
Ordinance assailed in these petitions, we so hold that the filing of the instant
petitions is not barred byres judicata.

In the same case of Spouses Cruz v. Spouses Caraos involving the re-filing of a
complaint, which had been earlier dismissed without qualification that the
dismissal was with prejudice, and which had not been decided on the merits,
the Court declared that such re-filing did not amount to forum shopping. It
ratiocinated:chanRoblesvirtualLawlibrary
It is not controverted that the allegations of the respective complaints in both
Civil Case No. 95-1387 and Civil Case No. 96-0225 are similarly worded, and
are identical in all relevant details, including typographical errors, except for
the additional allegations in support of respondents’ prayer for the issuance of
preliminary injunction in Civil Case No. 95-1387. It is similarly not disputed
that both actions involve the same transactions; same essential facts and
circumstances; and raise identical causes of actions, subject matter, and
issues.cralawred

x x x x

x x x The dismissal of Civil Case No. 95-1387 was without prejudice. Indeed,
the Order dated 20 November 1995, dismissing Civil Case No. 95-1387 was an
unqualified dismissal. More significantly, its dismissal was not based on
grounds under paragraphs (f), (h), and (i) of Section 1 of Rule 16 of the Rules of
Court, which dismissal shall bar the refiling of the same action or claim as
crystallized in Section 5 of Rule 16 thereof, thus:chanRoblesvirtualLawlibrary

SEC. 5. Effect of dismissal. – Subject to the right of appeal, an order granting a


motion to dismiss based on paragraphs (f), (h), and (i) of section 1 hereof shall
bar the refiling of the same action or claim.

From the foregoing, it is clear that dismissals under paragraphs (f), (h), and (i)
of Section 1 of Rule 16 of the Rules of Court constitute res judicata, to
wit:chanRoblesvirtualLawlibrary

(f) That the cause of action is barred by a prior judgment or by the statute of
limitations;

x x x x

(h) That the claim or demand set forth in the plaintiff’s pleading has been paid,
waived, abandoned, or otherwise extinguished;

(i) That the claim on which the action is founded is unenforceable under the
provisions of the statute of frauds.

Res judicata or bar by prior judgment is a doctrine which holds that a matter
that has been adjudicated by a court of competent jurisdiction must be deemed
to have been finally and conclusively settled if it arises in any subsequent
litigation between the same parties and for the same cause. Res judicata exists
when the following elements are present: (a) the former judgment must be final;
(b) the court which rendered judgment had jurisdiction over the parties and the
subject matter; (3) it must be a judgment on the merits; and (d) and there
must be, between the first and second actions, identity of parties, subject
matter, and cause of action.113 (Emphasis supplied; citations omitted)

Here, it should be noted that this Court denied the


said Manifestation and Urgent Motion, and refused to act on the succeeding
pleadings, for being moot.114 Clearly, the merits of the motion were not
considered by the Court. The following disquisition of the Court in Spouses
Cruz v. Spouses Caraos is further enlightening:chanRoblesvirtualLawlibrary

The judgment of dismissal in Civil Case No. 95-1387 does not constitute res
judicata to sufficiently bar the refiling thereof in Civil Case No. 96-0225. As
earlier underscored, the dismissal was one without prejudice. Verily, it was not
a judgment on the merits. It bears reiterating that a judgment on the merits
is one rendered after a determination of which party is right, as
distinguished from a judgment rendered upon some preliminary or formal
or merely technical point. The dismissal of the case without prejudice
indicates the absence of a decision on the merits and leaves the parties free to
litigate the matter in a subsequent action as though the dismissed action had
not been commenced.115 (Emphasis supplied; citations omitted)

Considering that there is definitely no forum shopping in the instant cases, we


need not discuss in detail the elements of forum shopping.chanrobleslaw

II

The Local Government Code of 1991 expressly provides that the Sangguniang
Panlungsod is vested with the power to “reclassify land within the jurisdiction
of the city”116 subject to the pertinent provisions of the Code. It is also settled
that an ordinance may be modified or repealed by another ordinance.117 These
have been properly applied in G.R. No. 156052, where the Court upheld the
position of the Sangguniang Panlungsod to reclassify the land subject of the
Ordinance,118 and declared that the mayor has the duty to enforce Ordinance
No. 8027, provided that it has not been repealed by the Sangguniang
Panlungsod or otherwise annulled by the courts.119 In the same case, the Court
also used the principle that the Sanguniang Panlungsod is in the best position
to determine the needs of its constituents120 – that the removal of the oil depots
from the Pandacan area is necessary “to protect the residents of Manila from
catastrophic devastation in case of a terrorist attack on the Pandacan
Terminals.”121chanrobleslaw

Do all these principles equally apply to the cases at bar involving the same
subject matter to justify the contrary provisions of the assailed Ordinance?
We answer in the negative.

We summarize the position of the Sangguniang Panlungsod on the matter


subject of these petitions. In 2001, the Sanggunian found the relocation of the
Pandacan oil depots necessary. Hence, the enactment of Ordinance No. 8027.

In 2009, when the composition of the Sanggunian had already changed,


Ordinance No. 8187 was passed in favor of the retention of the oil depots. In
2012, again when some of the previous members were no longer re-elected, but
with the Vice-Mayor still holding the same seat, and pending the resolution of
these petitions, Ordinance No. 8283 was enacted to give the oil depots until the
end of January 2016 within which to transfer to another site. Former Mayor
Lim stood his ground and vetoed the last ordinance.

In its Comment, the 7th Council (2007-2010) alleged that the assailed
Ordinance was enacted to alleviate the economic condition of its
constituents.122chanrobleslaw

Expressing the same position, former Mayor Lim even went to the extent of
detailing the steps123 he took prior to the signing of the Ordinance, if only to
show his honest intention to make the right decision.

The fact remains, however, that notwithstanding that the conditions with
respect to the operations of the oil depots existing prior to the enactment of
Ordinance No. 8027 do not substantially differ to this day, as would later be
discussed, the position of the Sangguniang Panlungsod on the matter has
thrice changed, largely depending on the new composition of the council
and/or political affiliations. The foregoing, thus, shows that its determination
of the “general welfare” of the city does not after all gear towards the protection
of the people in its true sense and meaning, but is, one way or another,
dependent on the personal preference of the members who sit in the council as
to which particular sector among its constituents it wishes to favor.

Now that the City of Manila, through the mayor and the city councilors, has
changed its view on the matter, favoring the city’s economic-related benefits,
through the continued stay of the oil terminals, over the protection of the very
lives and safety of its constituents, it is imperative for this Court to make a
final determination on the basis of the facts on the table as to which specific
right of the inhabitants of Manila should prevail. For, in this present
controversy, history reveals that there is truly no such thing as “the will of
Manila” insofar as the general welfare of the people is concerned.

If in sacrilege, in free translation of Angara124 by Justice Laurel, we say when


the judiciary mediates we do not in reality nullify or invalidate an act of the
Manila Sangguniang Panlungsod, but only asserts the solemn and sacred
obligation assigned to the Court by the Constitution to determine conflicting
claims of authority under the Constitution and to establish for the parties in an
actual controversy the rights which that instrument secures and guarantees to
them.chanrobleslaw

III

The measures taken by the intervenors to lend support to their position that
Manila is now safe despite the presence of the oil terminals remain ineffective.
These have not completely removed the threat to the lives of the inhabitants of
Manila.

In G.R. No. 156052, the validity and constitutionality of Ordinance No. 8027
was declared as a guarantee for the protection of the constitutional right to life
of the residents of Manila. There, the Court said that the enactment of the said
ordinance was a valid exercise of police power with the concurrence of the two
requisites: a lawful subject – “to safeguard the rights to life, security and safety
of all the inhabitants of Manila;”125 and a lawful method – the enactment of
Ordinance No. 8027 reclassifying the land use from industrial to commercial,
which effectively ends the continued stay of the oil depots in
Pandacan.126chanrobleslaw

In the present petitions, the respondents and the oil companies plead that the
Pandacan Terminal has never been one of the targets of terrorist
attacks;127 that the petitions were based on unfounded fears and mere
conjectures;128 and that the possibility that it would be picked by the terrorists
is nil given the security measures installed thereat.129chanrobleslaw

The intervenors went on to identify the measures taken to ensure the safety of
the people even with the presence of the Pandacan Terminals.
Thus:chanroblesvirtuallawlibrary

1. Chevron claims that it, together with Shell and Petron, continues to enhance
the safety and security features of the terminals. They likewise adopt fire and
product spill prevention measures in accordance with the local standards set
by the Bureau of Fire Protection, among others, and with the international
standards of the American Petroleum Industry (“API”) and the National Fire
Prevention and Safety Association (“NFPSA”); that since 1914, the oil depots
had not experienced “any incident beyond the ordinary risks and
expectations”130 of the residents of Manila; and that it received a passing
grade on the safety measures they installed in the facilities from the
representatives of the City of Manila who conducted an ocular inspection on 22
May 2009; and

2. Referring to the old MOU entered into between the City of Manila and the
DOE, on the one hand, and the oil companies, on the other, where the parties
thereto conceded and acknowledged that the scale-down option for the
Pandacan Terminal operations is the best alternative to the relocation of the
terminals, Shell enumerates the steps taken to scale down its operations.

As to the number of main fuel tanks, the entire Pandacan Terminal has already
decommissioned twenty-eight out of sixty-four tanks. Speaking for Shell alone,
its LPG Spheres, which it claims is the only product that may cause explosion,
was part of those decommissioned, thereby allegedly removing the danger of
explosion. Safety buffer zones and linear/green parks were likewise created to
separate the terminal from the nearest residential area. Shell’s portion of the oil
depot is likewise allegedly equipped with the latest technology to ensure air-
quality control and water-quality control, and to prevent and cope with possible
oil spills with a crisis management plan in place in the event that an oil spill
occurs. Finally, Shell claims that the recommendations of EQE International in
its Quantitative Risk Assessment (QRA) study, which it says is one of the
leading independent risk assessment providers in the world and largest risk
management consultancy, were sufficiently complied with; and that, on its own
initiative, it adopted additional measures for the purpose, for which reason,
“the individual risk level resulting from any incident occurring from the
Pandacan Terminal, per the QRA study, is twenty (20) times lower compared
to the individual risk level of an average working or domestic
environment.”131chanrobleslaw

We are not persuaded.

The issue of whether or not the Pandacan Terminal is not a likely target of
terrorist attacks has already been passed upon in G. R. No. 156052. Based on
the assessment of the Committee on Housing, Resettlement and Urban
Development of the City of Manila and the then position of theSangguniang
Panlungsod,132 the Court was convinced that the threat of terrorism is
imminent. It remains so convinced.

Even assuming that the respondents and intervenors were correct, the very
nature of the depots where millions of liters of highly flammable and highly
volatile products, regardless of whether or not the composition may cause
explosions, has no place in a densely populated area. Surely, any untoward
incident in the oil depots, be it related to terrorism of whatever origin or
otherwise, would definitely cause not only destruction to properties within and
among the neighboring communities but certainly mass deaths and injuries.

With regard to the scaling down of the operations in the Pandacan Terminals,
which the oil companies continue to insist to have been validated and
recognized by the MOU, the Court, in G.R. No. 156052, has already put this
issue to rest. It specifically declared that even assuming that the terms of the
MOU and Ordinance No. 8027 were inconsistent, the resolutions ratifying the
MOU gave it full force and effect only until 30 April 2003.133chanrobleslaw

The steps taken by the oil companies, therefore, remain insufficient to convince
the Court that the dangers posed by the presence of the terminals in a thickly
populated area have already beencompletely removed.

For, given that the threat sought to be prevented may strike at one point or
another, no matter how remote it is as perceived by one or some, we cannot
allow the right to life to be dependent on the unlikelihood of an event. Statistics
and theories of probability have no place in situations where the very life of not
just an individual but of residents of big neighborhoods is at
stake.chanrobleslaw

IV

It is the removal of the danger to life not the mere subdual of risk of
catastrophe, that we saw in and made us favor Ordinance No. 8027. That
reason, unaffected by Ordinance No. 8187, compels the affirmance of our
Decision in G.R. No. 156052.

In striking down the contrary provisions of the assailed Ordinance relative to


the continued stay of the oil depots, we follow the same line of reasoning used
in G.R. No. 156052, to wit:chanRoblesvirtualLawlibrary

Ordinance No. 8027 was enacted “for the purpose of promoting sound urban
planning, ensuring health, public safety and general welfare” of the residents of
Manila. TheSanggunian was impelled to take measures to protect the residents
of Manila from catastrophic devastation in case of a terrorist attack on the
Pandacan Terminals. Towards this objective, the Sanggunian reclassified the
area defined in the ordinance from industrial to commercial.

The following facts were found by the Committee on Housing, Resettlement and
Urban Development of the City of Manila which recommended the approval of
the ordinance:
(1) the depot facilities contained 313.5 million liters of highly flammable and
highly volatile products which include petroleum gas, liquefied petroleum
gas, aviation fuel, diesel, gasoline, kerosene and fuel oil among others;
(2) the depot is open to attack through land, water or air;
(3) it is situated in a densely populated place and near Malacañang Palace;
and
(4) in case of an explosion or conflagration in the depot, the fire could spread
to the neighboring communities.

The ordinance was intended to safeguard the rights to life, security and safety
of all the inhabitants of Manila and not just of a particular class. The depot is
perceived, rightly or wrongly, as a representation of western interests which
means that it is a terrorist target. As long as it (sic) there is such a target in
their midst, the residents of Manila are not safe. It therefore became necessary
to remove these terminals to dissipate the threat. According to
respondent:chanRoblesvirtualLawlibrary

Such a public need became apparent after the 9/11 incident which showed
that what was perceived to be impossible to happen, to the most powerful
country in the world at that, is actually possible. The destruction of property
and the loss of thousands of lives on that fateful day became the impetus for a
public need. In the aftermath of the 9/11 tragedy, the threats of terrorism
continued [such] that it became imperative for governments to take measures
to combat their effects.

x x x x

Both law and jurisprudence support the constitutionality and validity of


Ordinance No. 8027. Without a doubt, there are no impediments to its
enforcement and implementation. Any delay is unfair to the inhabitants of the
City of Manila and its leaders who have categorically expressed their desire for
the relocation of the terminals. Their power to chart and control their own
destiny and preserve their lives and safety should not be curtailed by the
intervenors’ warnings of doomsday scenarios and threats of economic disorder
if the ordinance is enforced.134
The same best interest of the public guides the present decision. The Pandacan
oil depot remains a terrorist target even if the contents have been lessened. In
the absence of any convincing reason to persuade this Court that the life,
security and safety of the inhabitants of Manila are no longer put at risk by the
presence of the oil depots, we hold that Ordinance No. 8187 in relation to the
Pandacan Terminals is invalid and unconstitutional.

There is, therefore, no need to resolve the rest of the issues.

Neither is it necessary to discuss at length the test of police power against the
assailed ordinance. Suffice it to state that the objective adopted by
the Sangguniang Panlungsod to promote the constituents’ general welfare in
terms of economic benefits cannot override the very basic rights to life, security
and safety of the people.

In. G.R. No. 156052, the Court explained:chanRoblesvirtualLawlibrary

Essentially, the oil companies are fighting for their right to property. They
allege that they stand to lose billions of pesos if forced to relocate. However,
based on the hierarchy of constitutionally protected rights, the right to life
enjoys precedence over the right to property. The reason is obvious: life is
irreplaceable, property is not. When the state or LGU’s exercise of police power
clashes with a few individuals’ right to property, the former should prevail.135

We thus conclude with the very final words in G.R. No.


156052:chanRoblesvirtualLawlibrary

On Wednesday, January 23, 2008, a defective tanker containing 2,000 liters of


gasoline and 14,000 liters of diesel exploded in the middle of the street a short
distance from the exit gate of the Pandacan Terminals, causing death,
extensive damage and a frightening conflagration in the vicinity of the incident.
Need we say anthing about what will happen if it is the estimated 162 to 211
million liters [or whatever is left of the 26 tanks] of petroleum products in the
terminal complex will blow up?136

As in the prequel case, we note that as early as October 2001, the oil
companies signed a MOA with the DOE obliging themselves
to:chanRoblesvirtualLawlibrary

... undertake a comprehensive and comparative study ... [which] shall include
the preparation of a Master Plan, whose aim is to determine the scope and
timing of the feasible location of the Pandacan oil terminals and all associated
facilities and infrastructure including government support essential for the
relocation such as the necessary transportation infrastructure, land and right
of way acquisition, resettlement of displaced residents and environmental and
social acceptability which shall be based on mutual benefit of the Parties and
the public.

such that:chanRoblesvirtualLawlibrary

Now that they are being compelled to discontinue their operations in the
Pandacan Terminals, they cannot feign unreadiness considering that they had
years to prepare for this eventuality.137

On the matter of the details of the relocation, the Court gave the oil companies
the following time frames for compliance:chanRoblesvirtualLawlibrary

To ensure the orderly transfer, movement and relocation of assets and


personnel, the intervenors Chevron Philippines Inc., Petron Corporation and
Pilipinas Shell Petroleum Corporation shall, within a non-extendible period of
ninety (90) days, submit to the Regional Trial Court of Manila, Branch 39, the
comprehensive plan and relocation schedule which have allegedly been
prepared. The presiding judge of Manila RTC, Branch 39 will monitor the strict
enforcement of this resolution.138

The periods were given in the Decision in G.R. No. 156052 which became final
on 23 April 2009. Five years have passed, since then. The years of non-
compliance may be excused by the swing of local legislative leads. We now stay
the sway and begin a final count.

A comprehensive and well-coordinated plan within a specific time-frame shall,


therefore, be observed in the relocation of the Pandacan Terminals. The oil
companies shall be given a fresh non-extendible period of forty-five (45) days
from notice within which to submit to the Regional Trial Court, Branch 39,
Manila an updated comprehensive plan and relocation schedule. The
relocation, in turn, shall be completed not later than six months from the date
of their submission.

Finally, let it be underscored that after the last Manifestation filed by Shell
informing this Court that respondent former Mayor Lim vetoed Ordinance No.
8283 for the second time, and was anticipating its referral to the President for
the latter’s consideration, nothing was heard from any of the parties until the
present petitions as to the status of the approval or disapproval of the said
ordinance. As it is, the fate of the Pandacan Terminals remains dependent on
this final disposition of these cases.chanrobleslaw

VI

On the matter of the failure of Atty. Gempis to immediately comply with the
directives of this Court to file the Memorandum for the Vice-Mayor and the city
councilors who voted in favor of the assailed Ordinance, the records do not
bear proof that he received a copy of any of the resolutions pertaining to the
filing of the Memorandum.

A narration of the events from his end would show, however, that he was aware
of the directive issued in 2009 when he stated that “when the City Legal Officer
filed its Memorandum dated 8 February 2010, [he] thought the filing of a
Memorandum for the other respondent city officials could be dispensed
with.”139 There was also a categorical admission that he received the later
Resolution of 31 May 2011 but that he could not prepare a Memorandum
defending the position of respondents vice-mayor and the city councilors who
voted in favor of Ordinance No. 8187 in view of the on-going drafting of
Ordinance No. 8283, which would change the position of the Sanggunian, if
subsequently approved.

The reasons he submitted are not impressed with merit.

That he was not officially designated as the counsel for the vice-mayor and the
city councilors is beside the point. As an officer of the court, he cannot feign
ignorance of the fact that “a resolution of this Court is not a mere request but
an order which should be complied with promptly and completely.”140 As early
as 2009, he should have immediately responded and filed a Manifestation and
therein set forth his reasons why he cannot represent the vice-mayor and the
city councilors. And, even assuming that the 31 May 2011 Resolution was the
first directive he personally received, he had no valid excuse for disregarding
the same. Worse, the Court had to issue a show cause order before he finally
heeded.

Atty. Gempis should “strive harder to live up to his duties of observing and
maintaining the respect due to the courts, respect for law and for legal
processes and of upholding the integrity and dignity of the legal profession in
order to perform his responsibilities as a lawyer effectively.”141chanrobleslaw

In Sibulo v. Ilagan,142 which involves a lawyer’s repeated failure to comply with


the directives of the Court, the penalty recommended by the Integrated Bar of
the Philippines was reduced from suspension to reprimand and a warning. The
Court ratiocinated:chanRoblesvirtualLawlibrary
Considering, however, that respondent was absolved of the administrative
charge against him and is being taken to task for his intransigence and lack of
respect, the Court finds that the penalty of suspension would not be warranted
under the circumstances.cralawred

x x x x

To the Court’s mind, a reprimand and a warning are sufficient sanctions for
respondent’s disrespectful actuations directed against the Court and the IBP.
The imposition of these sanctions in the present case would be more consistent
with the avowed purpose of disciplinary case, which is “not so much to punish
the individual attorney as to protect the dispensation of justice by sheltering
the judiciary and the public from the misconduct or inefficiency of officers of
the court.”143

We consider the participation of Atty. Gempis in this case and opt to be lenient
even as we reiterate the objective of protecting the dispensation of justice. We
deem it sufficient to remind Atty. Gempis to be more mindful of his duty as a
lawyer towards the Court.

WHEREFORE, in light of all the foregoing, Ordinance No. 8187 is hereby


declaredUNCONSTITUTIONAL and INVALID with respect to the continued stay
of the Pandacan Oil Terminals.

The incumbent mayor of the City of Manila is hereby ordered


to CEASE and DESIST from enforcing Ordinance No. 8187. In coordination
with the appropriate government agencies and the parties herein involved, he is
further ordered to oversee the relocation and transfer of the oil terminals out of
the Pandacan area.

As likewise required in G.R. No. 156052, the intervenors Chevron Philippines,


Inc., Pilipinas Shell Petroleum Corporation, and Petron Corporation shall,
within a non-extendible period of forty-five (45) days, submit to the Regional
Trial Court, Branch 39, Manila an updated comprehensive plan and relocation
schedule, which relocation shall be completed not later than six (6) months
from the date the required documents are submitted. The presiding judge of
Branch 39 shall monitor the strict enforcement of this Decision.

For failure to observe the respect due to the Court, Atty. Luch R. Gempis, Jr.,
Secretary of theSangguniang Panlungsod, is REMINDED of his duties towards
the Court and WARNED that a repetition of an act similar to that here
committed shall be dealt with more severely.

SO ORDERED.cralawlawlibrary
SECOND DIVISION

G.R. No. 173168, September 29, 2014

PHILIPPINE AMANAH BANK (NOW AL-AMANAH ISLAMIC INVESTMENT


BANK OF THE PHILIPPINES, ALSO KNOWN AS ISLAMIC
BANK), Petitioner, v. EVANGELISTA CONTRERAS,Respondent.

DECISION

BRION, J.:

Before us is a petition for review on certiorari filed by petitioner Philippine


Amanah Bank (now Al-Amanah Islamic Investment Bank of the
Philippines)1 against respondent Evangelista Contreras assailing the
decision2 and resolution3 of the Court of Appeals (CA) dated May 4, 2004 and
May 26, 2006, respectively, in CA-G.R. CV No. 47053.

The Antecedents

On July 21, 1981, the respondent filed a complaint for annulment of real estate
mortgage, cancellation of original certificate of title, reconveyance, recovery of
possession and damages4 before the Regional Trial Court (RTC), Branch 19,
Cagayan de Oro City against spouses Calinico and Elnora Ilogon and the
petitioner bank, docketed as Civil Case No. 7950.

The respondent alleged that he was the owner of Cadastral Lot No. 19316-D, a
640 square meter parcel of land located in Cagayan de Oro City. On August 1,
1980, the respondent went to the house of his brother-in-law, Calinico Ilogon,
to seek assistance in obtaining a loan from the petitioner bank since he
(Calinico) is a friend of the bank’s Chief of the Loan Division. The respondent
brought with him the documents of the subject lot, and told Calinico that he
was willing to mortgage this property as security for the loan. Three days later,
Calinico told the respondent that the petitioner bank could grant a loan up to
P200,000.00 if the subject property would be titled.

On August 3, 1980, the respondent and Calinico, upon the suggestion of the
Chief of the petitioner bank’s Loan Division, entered into a Deed of Confirmation
of Sale5 under which they transferred the title of the land to Calinico6 who, in
turn, mortgaged it to the petitioner bank. On October 25, 1980, Calinico and
the respondent executed an Agreement7 stating, among others, that the deed of
sale they executed was for the purpose of securing a loan with the petitioner
bank.

On May 20, 1981, the respondent wrote a letter and went to the petitioner
bank directing the latter’s manager not to release the loan to Calinico. The
respondent handed a copy of the letter to the bank on the same day. On the
next day, the respondent again went to the petitioner bank, but was informed
that the loaned amount of P50,000.00 had already been given to Calinico
earlier that morning. The respondent thereafter learned that the petitioner
released another P50,000.00 as loan to Calinico.

That petitioner bank subsequently extrajudicially foreclosed the mortgage due


to the Ilogon spouses’ failure to pay the loan. On January 9, 1989, the
Provincial Sheriff sold the mortgaged property at public auction to the
petitioner bank as the highest bidder. On October 31, 1989, the Provincial
Sheriff issued a Certificate of Sale in favor of the petitioner bank.

For the mortgagor’s failure to redeem the mortgaged property within the period
prescribed by law, the title to the property was consolidated in the petitioner
bank's name. Consequently, Original Certificate of Title (OCT) No. P-20348 was
cancelled and Transfer Certificate of Title (TCT) No. T-633319 was issued in the
petitioner bank's name.

The RTC and the CA Rulings

In its decision dated September 13, 1993, the RTC dismissed the complaint for
lack of merit. It held that the petitioner bank was not aware of the agreement
between the respondent and the Ilogon spouses, and that the respondent failed
to present any evidence as basis to annul the mortgage contract. To quote the
RTC ruling:chanRoblesvirtualLawlibrary

xxxx

Plaintiff has not presented any evidence to be a basis for the annulment of the
real estate mortgage, the bank’s certificate of title, as well as justification for an
order from this court to return the possession of the lot to the plaintiff. The
agreement between plaintiff and defendant Ilogon spouses about the purpose(s)
of the loan and how they would dispose of it had until the filing of this case,
been unknown to the bank. The latter has been a lender in good faith, later a
buyer in good faith.

The court finds that plaintiff has failed to prove his allegations, and that the
preponderance of evidence has been in favor of the bank.10cralawlawlibrary

xxxx
The respondent moved to reconsider this decision,11 but the RTC denied his
motion for having been filed out of time. Accordingly, the RTC declared its
September 13, 1993 decision final and executory.

The respondent filed a petition for relief from judgment12 before the RTC,
claiming that he had been prevented from moving for the timely
reconsideration of the trial court’s decision or to appeal this decision on time
due to the excusable negligence arising from the death of his wife on
September 13, 1993.

He explained that his counsel, Atty. Bienvenido Valmorida, only informed him
of the trial court’s adverse decision thirty-seven (37) days from his counsel's
receipt of the decision. The respondent also claimed that the petitioner bank
was not a lender in good faith since it knew that the Ilogon spouses did not
own the mortgaged property.

In its order13 dated July 1, 1994, the RTC denied the respondent’s petition for
relief from judgment for lack of merit.

The respondent appealed to the CA and the appeal was docketed as CA-G.R.
CV No. 47053. In its decision of May 4, 2004, the CA set aside the RTC’s July
1, 1994 order, and declared the real estate mortgage null and void. It also
ordered the petitioner bank to reconvey the land covered by TCT No. T-63331
to the respondent within sixty (60) days from entry of judgment.

It further directed the petitioner bank to pay the equivalent monetary value of
the land based on the price of the property at the public auction, with 6%
interest per annum from the date of the sheriff’s auction sale or the amount of
the sale of the lot by the bank to third persons plus 6% interest per annum, in
the event that the property had already been conveyed by the petitioner bank
to third persons.

The CA held that while the respondent was late in filing his motion for
reconsideration, the rules of procedure should be relaxed since the matters he
raised in his petition were meritorious.

It disagreed with the RTC’s ruling that the respondent did not present any
evidence that the petitioner bank had knowledge of the defect in Calinico’s title
to the mortgaged land. According to the CA, the petitioner bank knew that
there were conflicting claims over the land, and that the OCT of this land
carried a prohibition of any encumbrance on the lot for five (5) years. It added
that the petitioner bank failed to exercise diligence in ascertaining the
ownership of the land, and ignored the respondent’s representations that
Calinico’s title was defective and was only for loan purposes.

The Ilogon spouses and the petitioner bank moved to reconsider this decision,
but the CA denied their motion in its resolution dated May 26, 2006.

The Petition for Review on Certiorari

In the present petition, the petitioner bank alleged that the respondent’s
petition for relief from judgment is unmeritorious as it was filed only after the
lapse of ninety-one (91) days from his (respondent’s) notice of the adverse
judgment. The bank also claimed that the failure of the respondent’s counsel to
file a timely motion for reconsideration from the RTC’s judgment did not
constitute excusable negligence so as to warrant the granting of the
respondent’s petition.

The petitioner bank further maintained that the real estate mortgage over the
land was valid because: (1) its validity was never raised as an issue before the
trial court; and (2) the petitioner bank is exempted from the 5-year prohibitory
period since it is a Government branch, unit or institution.

In his comment, the respondent,14 represented by his heirs, maintained that


his counsel’s negligence was excusable, and that the petitioner bank was a
mortgagee in bad faith.

Our Ruling

After due consideration, we resolve to grant the petition.

RTC judgment already final and executory

We note at the outset that the RTC’s September 13, 1993 decision which
dismissed the respondent’s complaint for annulment of real estate mortgage,
cancellation of original certificate of title, reconveyance, recovery of possession
and damages had already become final and executory due to the failure of his
counsel to file a timely motion for reconsideration. This fact was admitted by
the respondent himself in his various pleadings before the lower and appellate
courts, as well as in his comment before this Court.

Both the law and jurisprudence hold that the perfection of an appeal in the
manner and within the period prescribed by law is mandatory. Failure to
conform to the rules on appeal renders the judgment final, executory and
unappealable. Finality means that the decision can no longer be disturbed or
reopened no matter how erroneous the ruling might have been. The decision
fully binds, and should be complied with by the parties and their successors in
interest.

The Petition for Relief was filed out of time

We sustain the trial court’s denial of the respondent’s petition for relief from
judgment to challenge its final and executory decision.

Section 3, Rule 38 of the 1997 Rules of Civil Procedure lays down the
requirements for a petition for relief from judgment,
thus:chanRoblesvirtualLawlibrary
Section 3. Time for filing petition; contents and verification. - A petition
provided for in either of the preceding sections of this Rule must be verified,
filed within sixty (60) days after the petitioner learns of the judgment, final
order, or other proceeding to be set aside, and not more than six (6) months
after such judgment or final order was entered, or such proceeding was taken;
and must be accompanied with affidavits showing the fraud, accident, mistake,
or excusable negligence relied upon, and the facts constituting the petitioner's
good and substantial cause of action or defense, as the case may be.

A party filing a petition for relief from judgment must strictly comply with two
(2) reglementary periods: first, the petition must be filed within sixty (60) days
from knowledge of the judgment, order or other proceeding to be set aside;
and second, within a fixed period of six (6) months from entry of such
judgment, order or other proceeding.

Strict compliance with these periods is required because a petition for relief
from judgment is a final act of liberality on the part of the State, which remedy
cannot be allowed to erode any further the fundamental principle that a
judgment, order or proceeding must, at some definite time, attain finality in
order to put an end to litigation.15cralawlawlibrary

In the present case, the respondent’s counsel received a copy of the RTC’s
decision dated September 13, 1993 on September 15, 1993. Thus, the petition
for relief from judgment should have been filed on or before November 14,
1993. However, the records showed that the petition was filed only on
December 15, 1993, or ninety-one (91) days later.

Strict compliance with the periods stated under Rule 38 stems from the
equitable character and nature of the petition for relief. Indeed, relief is allowed
only in exceptional cases such as when there is no other available or adequate
remedy. As a petition for relief is actually the "last chance" given by law to
litigants to question a final judgment or order, the failure to avail of this final
chance within the grace period fixed by the Rules is fatal.16cralawlawlibrary

The respondent’s cited circumstances are not the proper subject of a petition for
relief from the judgment

Section 1, Rule 38 of the 1997 Rules of Civil Procedure provides that [w]hen a
judgment or final order is entered, or any other proceeding is thereafter taken
against a party in any court through fraud, accident, mistake, or excusable
negligence, he may file a petition in the same court and in the same case
praying that the judgment, order or proceeding be set aside.

Relief from judgment is a remedy provided by law to any person against whom
a decision or order is entered through fraud, accident, mistake, or excusable
negligence. It is a remedy, equitable in character, that is allowed only in
exceptional cases when there is no other available or adequate remedy. When a
party has another remedy available to him, which may either be a motion for
new trial or appeal from an adverse decision of the trial court, and he was not
prevented by fraud, accident, mistake, or excusable negligence from filing such
motion or taking such appeal, he cannot avail of the remedy of petition for
relief.17cralawlawlibrary

In the present case, the respondent alleged that he had been prevented from
moving for the timely reconsideration of the trial court’s decision or to appeal
this decision on time due to the death of his wife on September 13, 1993. He
explained that his counsel, Atty. Valmorida, was the brother of his deceased
wife, and could not bear to tell him that he had lost his case in the RTC given
the circumstances. Atty. Valmorida only informed him of the court’s adverse
decision thirty-seven (37) days after his (Atty. Valmoria's) receipt of the adverse
decision. This circumstance, according to the respondent, was a clear case of
excusable negligence on the part of his counsel, warranting relief from
judgment.

We do not find this explanation persuasive.

Negligence to be excusable must be one that ordinary diligence and prudence


could not have guarded against. Atty. Valmorida’s oversight in the present case
can hardly be characterized as excusable, much less unavoidable.

We point out that the one who died was the respondent’s wife, and not the
respondent; nothing prevented Atty. Valmorida from filing an appeal to
challenge the RTC ruling. That Atty. Valmorida took into account the emotions
vis-à-vis the medical condition of the respondent, was beside the point. As a
lawyer, he knew or ought to have known that failure to appeal the RTC decision
would render it final. To be sure, the respondent could have easily prevented
the RTC decision from becoming final and executory had he only exerted
ordinary diligence by filing a timely motion for reconsideration or filing a notice
of appeal.

It is settled that clients are bound by the mistakes, negligence and omission of
their counsel. While, exceptionally, the client may be excused from the failure
of counsel, the circumstances obtaining in the present case do not convince
this Court to recognize the exception.

We likewise emphasize that procedural rules are designed to facilitate the


adjudication of cases. Courts and litigants alike are enjoined to abide strictly
by the rules. While in certain instances, we allow a relaxation in the application
of the rules, we never intend to forge a weapon for erring litigants to violate the
rules with impunity. The liberal interpretation and application of the rules
apply only in proper cases of demonstrable merit and under justifiable causes
and circumstances. While it is true that litigation is not a game of
technicalities, it is equally true that every case must be prosecuted in
accordance with the prescribed procedure to ensure an orderly and speedy
administration of justice. Party litigants and their counsel are well advised to
abide by, rather than flaunt, procedural rules; these rules illumine the path of
the law and place the pursuit of justice in reasonable and orderly basis.

In his petition for relief, the respondent also claimed that the petitioner bank
was not a lender in good faith since it knew that the mortgaged land was not
owned by the Ilogon spouses. He added that the petitioner bank and the Ilogon
spouses connived with each other to release the loan to Calinico.

We stress that the mistake contemplated by Rule 38 of the Rules of Court


pertains generally to one of fact, not of law. It does not refer to a judicial errors
that the court might have committed. Such judicial errors may be corrected by
means of an appeal. To recall, the respondent already raised these grounds in
his complaint for annulment of real estate mortgage, cancellation of original
certificate of title, reconveyance, recovery of possession and damages before the
RTC. Indeed, relief will not be granted to a party who seeks avoidance from the
effects of the judgment when the loss of the remedy at law was due to his own
(or that of his counsel’s) negligence; otherwise, the petition for relief can be
used to revive the right to appeal which had been lost through inexcusable
negligence.18cralawlawlibrary

At any rate, the grounds raised by the respondent are unmeritorious.

We are aware of the rule that banks are expected to exercise more care and
prudence than private individuals in their dealings, even those involving
registered lands, since their business is impressed with public interest. The
rule that persons dealing with registered lands can rely solely on the certificate
of title does not apply to banks.19 Simply put, the ascertainment of the status
or condition of a property offered to it as security for a loan must be a standard
and indispensable part of a bank’s operations.20cralawlawlibrary

In the present case, however, nothing in the documents presented by Calinico


would arouse the suspicion of the petitioner bank to prompt a more extensive
inquiry. When the Ilogon spouses applied for a loan, they presented as
collateral a parcel of land evidenced by OCT No. P-2034 issued by the Office of
the Register of Deeds of Cagayan de Oro, and registered in the name of Calinico.
This document did not contain any inscription or annotation indicating that
the respondent was the owner or that he has any interest in the subject land.
In fact, the respondent admitted that there was no encumbrance annotated on
Calinico’s title at the time of the latter’s loan application. Any private
arrangement between Calinico and the respondent regarding the proceeds of
the loan was not the concern of the petitioner bank, as it was not a privy to this
agreement. If Calinico violated the terms of his agreement with the respondent
on the turn-over of the proceeds of the loan, then the latter's proper recourse
was to file the appropriate criminal action in court.

The respondent also failed to prove its allegation that the petitioner bank knew,
thru a letter sent by the former’s lawyer, Atty. Crisanto Mutya, Jr., that the
sale of the subject land between him and Calinico was made only for loan
purposes, and that failure of Calinico to turn over the proceeds of the loan will
invalidate the sale. In his November 6, 1991 testimony, the respondent
admitted that it was his son who gave the letter to the manager of the
petitioner bank, thus:chanRoblesvirtualLawlibrary

ATTY. REYNALDO LLEGO:


Q: Mr. Contreras, may I just show to you Exhibit C, the letter addressed
to Amanah Bank. You said that, this letter Exhibit C was received by
the Manager of the bank. May I know from you the name of the
Manager at that time?
EVANGELISTA CONTRERAS:
A: I did not know the name of the Manager at that time. Because it was
my son who brought this Exhibit C to the bank, and according to
him it was the personnel of the bank who received Exhibit C.
Q: And this was received on what date?
A: May 20, 1981.
Q: Directing your attention to Exhibit B which is the supposed counter
agreement. You will of course agree with me that the bank has no
knowledge of the execution of that agreement, is that correct?
A: When my lawyer wrote a letter to the bank at that time, he attached
one of the Xerox copy of this Exhibit B.
xxxx
Q: The title of the land was already in the name of the spouses Ilogon.
There was no encumbrance at the time it was offered for loan.
A: When Mr. Ilogon got the title, I did not see anymore because I trust him
already.21 (Emphasis ours)

Clearly, the respondent testified on matters not of his own personal knowledge,
hence hearsay. Corollarily, the respondent’s son was never presented in court.
Even assuming, for the sake of argument, that the petitioner bank received a
copy of Atty. Mutya’s letter,22 it was still well-within its discretion to grant or
deny the loan application after evaluating the documents submitted for loan
applicant. As earlier stated, OCT No. P-2034 issued in Calinico’s favor was free
from any encumbrances. The petitioner bank is not anymore privy to whatever
arrangements the owner entered into regarding the proceeds of the loan.

Finally, we point out that the petitioner bank is a government owned or


controlled corporation. While OCT No. P-2034 (issued in favor of Calinico by
virtue of the deed of confirmation of sale) contained a prohibition against the
alienation and encumbrance of the subject land within five (5) years from the
date of the patent, the CA failed to mention that by the express wordings of the
OCT itself, the prohibition does not cover the alienation and encumbrance “in
favor of the Government or any of its branches, units or
institutions.”23cralawlawlibrary

WHEREFORE, in light of all the foregoing, we GRANT the present petition,


and SET ASIDE the decision and resolution of the Court of Appeals dated May
4, 2004 and May 26, 2006, respectively, in CA-G.R. CV No. 47053. Accordingly,
the decision of the Regional Trial Court, Branch 19, Cagayan de Oro City dated
September 13, 1993 is REINSTATED.

SO ORDERED.cralawred
THIRD DIVISION

G.R. No. 191101, October 01, 2014

SPOUSES MARIO OCAMPO AND CARMELITA F.


OCAMPO, Petitioners, v. HEIRS OF BERNARDINO U. DIONISIO,
REPRESENTED BY ARTEMIO SJ. DIONISIO, Respondents.

DECISION

REYES, J.:

Before this Court is a petition for review on certiorari1 under Rule 45 of the
Rules of Court seeking to annul and set aside the Decision2 dated July 2, 2009
and Resolution3 dated January 27, 2010 issued by the Court of Appeals (CA) in
CA-G.R. SP No. 106064, which affirmed the Decision4 dated September 3, 2008
of the Regional Trial Court (RTC) of Binangonan, Rizal, Branch 69, in SCA Case
No. 08-014.

The Facts

On August 28, 1996, Bernardino U. Dionisio (Dionisio) filed a complaint5 for


forcible entry with the Municipal Trial Court (MTC) of Cardona, Rizal, docketed
as Civil Case No. 96-0031 (forcible entry case), against Mario Ocampo (Mario)
and Felix Ocampo (Felix). Dionisio sought to recover the possession of a portion
of his property, covered by Original Certificate of Title (OCT) No. M-4559,
situated in Dalig, Cardona, Rizal, alleging that Mario and Felix built a piggery
thereon without his consent. In his answer,6 Mario denied Dionisio's allegation,
claiming that the disputed parcel of land is owned by his wife, Carmelita
Ocampo (Carmelita), who inherited the same from her father. Mario further
claimed that they have been in possession of the said parcel of land since
1969.

On September 12, 1997, the MTC rendered a decision,7 which dismissed the
complaint for forcible entry filed by Dionisio. The MTC opined that Dionisio
failed to establish his prior possession of the disputed parcel of land. Dionisio's
notice of appeal was denied by the MTC in its Order8 dated January 26, 1998
for having been filed beyond the reglementary period.

Dionisio died on September 27, 1997. Consequently, on July 3, 1998, the heirs
of Dionisio (respondents), filed a complaint9 for recovery of possession with the
MTC, docketed as Civil Case No. 98-0006 (recovery of possession case), against
the spouses Mario and Carmelita (petitioners). The respondents sought to
recover the same portion of the parcel of land subject of Civil Case No. 96-
0031.
The respondents averred that the subject property was acquired by Dionisio on
February 10, 1945 when he purchased the same from Isabelo Capistrano. That
Dionisio thereafter took possession of the subject property and was able to
obtain a free patent covering the subject property. OCT No. M-4559 was
subsequently issued in the name of Dionisio on December 22, 1987. The
respondents further claimed that sometime in 1995, Mario constructed a
piggery on a portion of the subject property without their consent.10cralawred

In their answer,11 the petitioners maintained that the subject parcel of land is
owned by Carmelita, having acquired the same through inheritance and that
they have been in possession thereof since 1969. Additionally, the petitioners
claimed that the respondents' complaint for recovery of possession of the
subject property is barred by res judicata in the light of the finality of the
decision in the forcible entry case.

On February 18, 2008, the MTC rendered a decision12 dismissing the


complaint for recovery of possession filed by the respondents on the ground
of res judicata. Thus:chanRoblesvirtualLawlibrary

The Court has taken cognizance of the fact that the earlier case for forcible
entry docketed as Civil Case No. 96-0031 was filed by Bernardino U. Dionisio
against the same defendant Mario Ocampo before this Court on August 28,
1996, and a decision based on the merit was rendered on September 12, 1997
where this Court ruled to dismiss the complaint for failure on the part of the
plaintiff to establish their prior possession of the land and sufficient evidence
to establish cause of action by preponderance of evidence.

x x x x

Hence, the present complaint must be dismissed on ground of res judicata.

The material fact or question in issue in the forcible entry is for recovery of
possession which was conclusively settled in the decision dated September 12,
1997, such fact or question may not again be litigated in the present action for
accion publiciana, although covered by ordinary civil proceeding, but
technically has the same purpose, a suit for recovery of the right to possess.13

On appeal, the RTC rendered a Decision14 on September 3, 2008, the decretal


portion of which reads:chanRoblesvirtualLawlibrary

WHEREFORE, premises considered, the appealed decision of Municipal Trial


Court of Cardona, Rizal, dated February 8, 2008, is hereby REVERSED and
SET ASIDE and a new one rendered in favor of the plaintiffs-appellants as
follows:
1. Declaring plaintiffs-appellants as entitled to possession for being the
lawful owners of the lands described under paragraph II of the complaint
and covered by Original Certificate of Title No. M-4559.

2. Ordering the defendants-appellees and all persons claiming rights under


them to vacate the parcel of land located at Dalig, Cardona, Rizal with an
area of 225 square meters covered by Original certificate of Title No. M-
4559 in the name of Bernardino Dionisio and more particularly described
under paragraph 2 of the complaint, to remove the improvements
thereon and deliver its possession to the plaintiffs.

3. Ordering the defendants-appellees to pay plaintiffs-appellants PI0,000.00


as attorney's fees and litigation expenses of P5,000.

SO ORDERED.15

The RTC ruled that the MTC erred in dismissing the respondents' complaint for
recovery of possession of the subject property solely on the ground of res
judicata. The RTC opined that the forcible entry case, only involves the
question of who has a better right to the possession of the subject property
while the recovery of possession case not only involves the right to the
possession of the subject property, but the ownership thereof as well. The RTC
stressed that a judgment rendered in a forcible entry case will not bar an
action for recovery of possession based on title or ownership since there is no
identity of cause of action as between the two cases.

Further, the RTC held that the respondents were able to establish that the
subject property is indeed part of the parcel of land covered by OCT No. M-
4559 registered in the name of Dionisio. Considering that OCT No. M-4559 is
registered under the name of Dionisio, the RTC opined that the respondents, as
sucessors-in-interest of Dionisio, are entitled to the possession of the subject
property as an attribute of their ownership over the same. On the other hand,
the RTC averred that the petitioners failed to adduce sufficient evidence to
support their claim that they indeed own the subject property.

Unperturbed, the petitioners filed a petition for review with the CA, alleging
that the RTC erred in setting aside the MTC Decision dated February 18, 2008.
They maintained that the finality of the decision in the forcible entry case
constitutes res judicata, which would warrant the outright dismissal of the
respondents' complaint for recovery of possession; that the respondents were
not able to sufficiently prove their ownership of the subject property. The
petitioners further contended that OCT No. M-4559 registered in the name of
Dionisio was irregularly issued. They likewise claimed that respondents' cause
of action in the recovery of possession case is already barred by laches.

On July 2, 2009, the CA rendered the herein assailed decision,16 which


affirmed the RTC Decision dated September 3, 2008. The CA held that the
doctrine of res judicata cannot be applied in this case since there is no identity
of cause of action as between the forcible entry case and the recovery of
possession case. The CA likewise affirmed the RTC's finding that the
respondents, as successors-in-interest of Dionisio, have sufficiently established
their ownership of the subject property and, hence, are entitled to the
possession thereof. Further, the CA held that the respondents' cause of action
is not barred by laches.

The petitioners sought a reconsideration of the Decision dated July 2, 2009,


but it was denied by the CA in its Resolution17 dated January 27, 2010.

Hence, the instant petition.

Issues

Essentially, the issues set forth by the petitioners for this Court's resolution are
the following: (1) whether the finality of the decision in the forcible entry case
constitutes res judicata, which would warrant the dismissal of the respondents'
complaint for recovery of possession; (2) whether the respondents were able to
establish their ownership of the subject property; and (3) whether the
respondents' cause of action is already barred by laches.

The Ruling of the Court

The petition is denied.

First Issue: Res Judicata

The doctrine of res judicata is laid down under Section 47, Rule 39 of the Rules
of Court, which pertinently provides that:chanRoblesvirtualLawlibrary

Sec. 47. Effect of judgments or final orders. — The effect of a judgment or final
order rendered by a court of the Philippines, having jurisdiction to pronounce
the judgment or final order, may be as follows:chanroblesvirtuallawlibrary

x x x x

(b) In other cases, the judgment or final order is, with respect to the matter
directly adjudged or as to any other matter that could have been raised in
relation thereto, conclusive between the parties and their successors in interest
by title subsequent to the commencement of the action or special proceeding,
litigating for the same thing and under the same title and in the same capacity;
and

(c) In any other litigation between the same parties of their successors in
interest, that only is deemed to have been adjudged in a former judgment or
final order which appears upon its face to have been so adjudged, or which was
actually and necessarily included therein or necessary thereto.

This provision comprehends two distinct concepts of res judicata: (1) bar by
former judgment and (2) conclusiveness of judgment.18 In Judge Abelita III v.
P/Supt. Doria, et al.,19 the Court explained the two aspects of res judicata,
thus:chanRoblesvirtualLawlibrary

There is "bar by prior judgment" when, as between the first case where the
judgment was rendered and the second case that is sought to be barred, there
is identity of parties, subject matter, and causes of action. In this instance, the
judgment in the first case constitutes an absolute bar to the second action.
Otherwise put, the judgment or decree of the court of competent jurisdiction on
the merits concludes the litigation between the parties, as well as their privies,
and constitutes a bar to a new action or suit involving the same cause of action
before the same or other tribunal.

But where there is identity of parties in the first and second cases, but no
identity of causes of action, the first judgment is conclusive only as to those
matters actually and directly controverted and determined and not as to
matters merely involved therein. This is the concept of res judicata known as
"conclusiveness of judgment." Stated differently, any right, fact or matter in
issue directly adjudicated or necessarily involved in the determination of an
action before a competent court in which judgment is rendered on the merits is
conclusively settled by the judgment therein and cannot again be litigated
between the parties and their privies whether or not the claim, demand,
purpose, or subject matter of the two actions is the same.20

For res judicata under the first concept, bar by prior judgment, to apply, the
following requisites must concur, viz: (a) finality of the former judgment; (b) the
court which rendered it had jurisdiction over the subject matter and the
parties; (c) it must be a judgment on the merits; and (d) there must be, between
the first and second actions, identity of parties, subject matter and causes of
action.21cralawred

The first three requisites are present in this case. The Decision dated
September 12, 1997 in the forcible entry case rendered by the MTC, a court
which has jurisdiction over the subject property and the parties, had long
become final. The said MTC decision is an adjudication on the merits. However,
the fourth requisite is not present. Although there is identity of parties and
subject matter as between the forcible entry case and recovery of possession
case, there is no identity of causes of action.

As correctly found by the RTC and the CA, the forcible entry case only involves
the issue of possession over the subject property while the recovery of
possession case puts in issue the ownership of the subject property and the
concomitant right to possess the same as an attribute of ownership.

In an action for forcible entry and detainer, the only issue is possession in fact,
or physical possession of real property, independently of any claim of
ownership that either party may put forth in his pleading. If plaintiff can prove
prior physical possession in himself, he may recover such possession even from
the owner, but, on the other hand, if he cannot prove such prior physical
possession, he has no right of action for forcible entry and detainer even if he
should be the owner of the property.22cralawred

Thus, even the MTC, in its Decision dated September 12, 1997 in the forcible
entry case, stressed that its determination is only limited to the issue of who
has "actual prior possession" of the subject property regardless of the
ownership of the same.23cralawred

On the other hand, the recovery of possession case is actually an accion


reinvindicatoria or a suit to recover possession of a parcel of land as an element
of ownership. A perusal of the complaint filed by the respondents in the
recovery of possession case shows that the respondents, as successors-in-
interest of Dionisio, are asserting ownership of the subject property and are
seeking the recovery of possession thereof.

A judgment rendered in a forcible entry case will not bar an action between the
same parties respecting title or ownership because between a case for forcible
entry and an accion reinvindicatoria, there is no identity of causes of
action.24 Such determination does not bind the title or affect the ownership of
the land; neither is it conclusive of the facts therein found in a case between
the same parties upon a different cause of action involving possession.

The decision in the forcible entry case is conclusive only as to the MTC's
determination that the petitioners are not liable for forcible entry since the
respondents failed to prove their prior physical possession; it is not conclusive
as to the ownership of the subject property. Besides, Section 18, Rule 70 of the
Rules of Court expressly provides that a "judgment rendered in an action for
forcible entry or detainer shall be conclusive with respect to the possession
only and shall in no wise bind the title or affect the ownership of the land."

Second Issue: Ownership of the Subject Property

The respondents were able to prove that they have a superior right over the
subject property as against the petitioners. It is undisputed that the subject
property is indeed covered by OCT No. M-4559, which is registered in the name
of Dionisio, the respondents' predecessor-in-interest.

Between the petitioners' unsubstantiated and self-serving claim that the


subject property was inherited by Carmelita from her father and OCT No. M-
4559 registered in Dionisio's name, the latter must prevail. The respondents'
title over the subject property is evidence of their ownership thereof. That a
certificate of title serves as evidence of an indefeasible and incontrovertible title
to the property in favor of the person whose name appears therein and that a
person who has a Torrens title over a land is entitled to the possession thereof
are fundamental principles observed in this jurisdiction.25cralawred

Further, it is settled that a Torrens Certificate of Title is indefeasible and


binding upon the whole world unless and until it has been nullified by a court
of competent jurisdiction. Under existing statutory and decisional law, the
power to pass upon the validity of such certificate of title at the first instance
properly belongs to the Regional Trial Courts in a direct proceeding for
cancellation of title.26Accordingly, the petitioners may not assail the validity of
the issuance of OCT No. M-4559 in the name of Dionisio in their answer to the
complaint filed by the respondents for recovery of possession of the subject
property; it is a collateral attack to the validity of OCT No. M-4559, which the
RTC and the CA aptly disregarded.

Third Issue: Laches

Equally untenable is the petitioners' claim that the respondents' right to


recover the possession of the subject property is already barred by laches. As
owners of the subject property, the respondents have the right to recover the
possession thereof from any person illegally occupying their property. This
right is imprescriptible. Assuming arguendo that the petitioners indeed have
been occupying the subject property for a considerable length of time, the
respondents, as lawful owners, have the right to demand the return of their
property at any time as long as the possession was unauthorized or merely
tolerated, if at all.

Jurisprudence consistently holds that "prescription and laches can not apply
to registered land covered by the Torrens system" because "under the Property
Registration Decree, no title to registered land in derogation to that of the
registered owner shall be acquired by prescription or adverse
possession."27cralawred

WHEREFORE, in consideration of the foregoing disquisitions, the petition


is DENIED. The Decision dated July 2, 2009 and Resolution dated January 27,
2010 of the Court of Appeals in CA-G.R. SP No. 106064 are
hereby AFFIRMED.

SO ORDERED.
G.R. No. 189358, October 08, 2014

CENTENNIAL GUARANTEE ASSURANCE


CORPORATION, Petitioner, v. UNIVERSAL MOTORS CORPORATION,
RODRIGO T. JANEO, JR., GERARDO GELLE, NISSAN CAGAYAN DE ORO
DISTRIBUTORS, INC., JEFFERSON U. ROLIDA, AND PETER
YAP, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated
February 25, 2009 and the Resolution3 dated August 14, 2009 of the Court of
Appeals (CA) in CA-G.R. SP No. 02459-MIN which affirmed, in part, the
Order4 dated May 13, 2008 of the Regional Trial Court of Cagayan de Oro City,
Branch 39 (RTC) allowing the execution pending appeal of the Decision5 dated
October 31, 2007 (October 31, 2007 Decision) of the RTC in Civil Case No.
2002-058, but limiting the amount of petitioner Centennial Guarantee
Assurance Corporation’s (CGAC) liability to only P1,000,000.00.

The Facts

The instant petition originated from a Complaint for Breach of Contract with
Damages and Prayer for Preliminary Injunction and Temporary Restraning
Order filed by Nissan Specialist Sales Corporation (NSSC) and its President and
General Manager, Reynaldo A. Orimaco (Orimaco), against herein respondents
Universal Motors Corporation (UMC), Rodrigo T. Janeo, Jr. (Janeo, Jr.),
Gerardo Gelle (Gelle), Nissan Cagayan de Oro Distributors, Inc. (NCOD),
Jefferson U. Rolida (Rolida), and Peter Yap (Yap). The case was raffled to the
RTC and docketed as Civil Case No. 2002-058.6cralawlawlibrary

The temporary restraining order (TRO) prayed for was eventually issued
by the RTC upon the posting by NSSC and Orimaco of a P1,000,000.00
injunction bond7issued by their surety, CGAC. The TRO enjoined
respondents UMC, Rolida,Gelle, Janeo, Jr., NCOD, and Yap (respondents) from
selling, dealing, and marketing all models of motor vehicles and spare parts of
Nissan, and from terminating the dealer agreement between UMC and NSSC. It
likewise restrained UMC from supplying and doing trading transactions with
NCOD, which, in turn, was enjoined from entering and doing business on
Nissan Products within the dealership territory of NSSC as defined in the
Dealer Agreement. The TRO was converted to a writ of preliminary injunction
on April 2, 2002.8cralawlawlibrary

Respondents filed a petition for certiorari and prohibition before the CA,
docketed as CA-G.R. SP No. 70236, to assail the issuance of the aforesaid
injunctive writ. On July 24, 2002, the CA rendered a Decision holding that the
RTC committed grave abuse of discretion in issuing the writ absent a clear
legal right thereto on the part of NSSC and Orimaco. Consequently, the April
2, 2002 Writ of Preliminary Injunction issued by the RTC was
ordered dissolved.9cralawlawlibrary

On May 27, 2004, respondents filed an application for damages against the
injunction bond issued by CGAC in the amount of
P1,000,000.00.10cralawlawlibrary

The RTC Ruling

On October 31, 2007, the RTC rendered a Decision11 dismissing the complaint
for breach of contract with damages for lack of merit.12cralawlawlibrary

It further ruled that respondents were entitled to recover damages against the
injunction bond following the CA’s pronouncement in CA-G.R. SP No.
70236, i.e., that NSSC and Orimaco had no clear legal right to justify the
issuance of the April 2, 2002 Writ of Preliminary Injunction, warranting its
dissolution.13cralawlawlibrary

Accordingly, the RTC ordered NSSC, Orimaco, and CGAC to jointly and
severally pay respondents the following amounts: actual damages and lost
opportunities suffered by UMC in the amounts of P928,913.68 and
P14,271,266.00, respectively; P50,000.00 as attorney’s fees and P500,000.00
as lost income in favor of NCOD, Rolida, and Yap; and exemplary damages of
P300,000.00 for each of the respondents.14cralawlawlibrary

Upon respondents’ motion,15 the RTC granted Execution Pending Appeal of its
October 31, 2007 Decision through an Order16dated January 16, 2008. It
ruled that there exists good reasons to justify the immediate execution of
the Decision, namely: (a) that NSSC is in imminent danger of insolvency being
admittedly in a state of rehabilitation under the supervision of the Regional
Trial Court of Misamis Oriental, Branch 40 through Special Proceeding No.
2002-095; (b) that it has ceased its business operation as the authorized dealer
of Nissan Motor Philippines, Inc.; (c) that Orimaco, NSSC’s President and
General Manager, has migrated abroad with his family; and (d) that NSSC
failed to file the necessary supersedeas bond to forestall the immediate
execution of the Decision pending appeal.17 The RTC thereupon issued the
corresponding writ.18cralawlawlibrary

CGAC assailed the RTC’s January 16, 2008 Order before the CA through a
petition for certiorari,docketed as CA-G.R. SP No. 02459-MIN, questioning the
existence of good reasons to warrant the grant of execution pending appeal and
the propriety of enforcing it against one which is not the losing party in the
case but a mere bondsman whose liability is limited to the surety bond it
issued.

The CA Ruling

In a Decision19 dated February 25, 2009, the CA affirmed in part the assailed
order by allowing the execution pending appeal of the RTC’s October 31, 2007
Decision but limiting the amount of CGAC’s liability to only
P1,000,000.00.20cralawlawlibrary

It upheld the trial court’s findings that there are good reasons warranting the
execution of the latter’s Decision pending appeal, not only against NSSC and
Orimaco, but also against CGAC whose liability, however, was declared to be
limited only to the extent of the amount of the bond it issued in favor of its
principals, NSSC and Orimaco.21cralawlawlibrary

Aggrieved, CGAC filed a motion for reconsideration22 which was, however,


denied in a Resolution23dated August 14, 2009, hence, this petition.

The Issues Before the Court

The central issues in this case are: (a)whether or not good reasons exist to
justify execution pending appeal against CGAC which is a mere surety; and (b)
whether or not CGAC’s liability on the bond should be limited to P500,000.00.

The Court’s Ruling

The petition is unmeritorious.

The execution of a judgment pending appeal is an exception to the general rule


that only a final judgment may be executed; hence, under Section 2, Rule 39 of
the Rules of Court (Rules), the existence of “good reasons” for the immediate
execution of a judgment is an indispensable requirement as this is what
confers discretionary power on a court to issue a writ of execution pending
appeal.24 Good reasons consist of compelling circumstances justifying
immediate execution, lest judgment becomes illusory,25 that is, the prevailing
party’s chances for recovery on execution from the judgment debtor are
altogether nullified. The “good reason” yardstick imports a superior
circumstance demanding urgency that will outweigh injury or damage to the
adverse party26and one such “good reason” that has been held to justify
discretionary execution is the imminent danger of insolvency of the
defeated party.27cralawlawlibrary

The factual findings that NSSC is under a state of rehabilitation and had
ceased business operations, taken together with the information that NSSC
President and General Manager Orimaco had permanently left the country with
his family, constitute such superior circumstances that demand urgency in the
execution of the October 31, 2007 Decision because respondents now run the
risk of its non-satisfaction by the time the appeal is decided with finality.
Notably, as early as April 22, 2008, the rehabilitation receiver had manifested
before the rehabilitation court the futility of rehabilitating NSSC because of the
latter’s insincerity in the implementation of the rehabilitation
process. Clearly, respondents’ diminishing chances of recovery from the
28

favorable Decision is a good reason to justify immediate execution; hence,


it would be improper to set aside the order granting execution pending
appeal.

That CGAC’s financial standing differs from that of NSSC does not negate the
order of execution pending appeal. As the latter’s surety, CGAC is considered
by law as being the same party as the debtor in relation to whatever is
adjudged touching the obligation of the latter, and their liabilities are
interwoven as to be inseparable.29 Verily,in a contract of suretyship, one lends
his credit by joining in the principal debtor’s obligation so as to render himself
directly and primarily responsible with him, and without reference to the
solvency of the principal.30 Thus, execution pending appeal against NSSC
means that the same course of action is warranted against its surety, CGAC.
The same reason stands for CGAC’s other principal, Orimaco, who was
determined to have permanently left the country with his family to evade
execution of any judgment against him.

Now, going to the second issue as above-stated, the Court resolves that CGAC’s
liability should – as the CA correctly ruled – be confined to the amount of
P1,000,000.00, and not P500,000.00 as the latter purports.

Section 4(b), Rule 58 of the Rules provides that the injunction bond is
answerable for all damages that may be occasioned by the improper issuance
of a writ of preliminary injunction.31 The Court has held in Paramount
Insurance Corp. v. CA32 that:chanRoblesvirtualLawlibrary

The bond insures with all practicable certainty that the defendant may sustain
no ultimate loss in the event that the injunction could finally be dissolved.
Consequently, the bond may obligate the bondsmen to account to the
defendant in the injunction suit for all: (1) such damages; (2) costs and
damages; (3) costs, damages and reasonable attorney’s fees as shall be
incurred or sustained by the person enjoined in case it is determined that the
injunction was wrongfully issued.33

In this case, the RTC, in view of the improvident issuance of the April 2, 2002
Writ of Preliminary Injunction,adjudged CGAC’s principals, NSSC and
Orimaco, liable not only for damages as against NCOD, Rolida, and Yap but
also as against UMC.Asmay be gleaned from the dispositive portion of the RTC
Decision, the amount adjudged to the former group was P500,000.00,34 while it
was found – this time, contained in the body of the same decision – that
damages in the amount P4,199,355.00 due to loss of sales was incurred by
UMC in the year 2002,35 or the year in which the latter was prevented from
selling their products pursuant to the April 2, 2002 Writ of Preliminary
Injunction. Since CGAC is answerable jointly and severally with NSSC and
Orimaco for their liabilities to the above-mentioned parties for all damages
caused by the improvident issuance of the said injunctive writ, and considering
that the total amount of damages as above-stated evidently exhausts the full
P1,000,000.00 amount of the injunction bond, there is perforce no reason to
reverse the assailed CA Decision even on this score.

WHEREFORE, the petition is DENIED. The Decision dated February 25, 2009
and the Resolution dated August 14, 2009 of the Court of Appeals in CA-G.R.
SP No. 02459-MIN are hereby AFFIRMED.

SO ORDERED.cralawred
G.R. No. 167052, March 11, 2015

BANK OF THE PHILIPPINE ISLANDS SECURITIES


CORPORATION, Petitioner, v. EDGARDO V. GUEVARA, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court is a Petition for Review under Rule 45 of the Rules of Court
seeking the reversal and setting aside of the Decision1 dated December 19,
2003 and Resolution2 dated February 9, 2005 of the Court Appeals in CA-G.R.
CV No. 69348, affirming the Decision3 dated September 11, 2000 of the
Regional Trial Court (RTC) of Makati City, Branch 57 in Civil Case No. 92-
1445. The RTC acted favorably on the action instituted by respondent Edgardo
V. Guevara for the enforcement of a foreign judgment, particularly, the
Order4 dated March 13, 1990 of the United States (U.S.) District Court for the
Southern District of Texas, Houston Division (U.S. District Court), in Civil
Action No. H-86-440, and ordered petitioner Bank of the Philippine Islands
(BPI) Securities Corporation to pay respondent (a) the sum of US$49,500.00
with legal interest; (b) P250,000.00 attorney’s fees and litigation expenses; and
(c) costs of suit.

The facts are culled from the records of the case.

Ayala Corporation, a holding company, and its subsidiaries are engaged in a


wide array of businesses including real estate, financial services,
telecommunications, water and used water, electronics manufacturing
services, automotive dealership and distributorship, business process
outsourcing, power, renewable energy, and transport infrastructure.5

In the 1980s, Ayala Corporation was the majority stockholder of Ayala


Investment and Development Corporation (AIDC). AIDC, in turn, wholly owned
Philsec Investment Corporation (PHILSEC), a domestic stock brokerage firm,
which was subsequently bought by petitioner; and Ayala International Finance
Limited (AIFL), a Hong Kong deposit-taking corporation, which eventually
became BPI International Finance Limited (BPI-IFL). PHILSEC was a member
of the Makati Stock Exchange and the rules of the said organization required
that a stockbroker maintain an amount of security equal to at least 50% of a
client’s outstanding debt.

Respondent was hired by Ayala Corporation in 1958. Respondent later became


the Head of the Legal Department of Ayala Corporation and then the President
of PHILSEC from September 1, 1980 to December 31, 1983. Thereafter,
respondent served as Vice-President of Ayala Corporation until his retirement
on August 31, 1997.
While PHILSEC President, one of respondent’s obligations was to resolve the
outstanding loans of Ventura O. Ducat (Ducat), which the latter obtained
separately from PHILSEC and AIFL. Although Ducat constituted a pledge of
his stock portfolio valued at approximately US$1.4 million, Ducat’s loans
already amounted to US$3.1 million. Because the security for Ducat’s debts
fell below the 50% requirement of the Makati Stock Exchange, the trading
privileges of PHILSEC was in peril of being suspended.

Ducat proposed to settle his debts by an exchange of assets. Ducat owned


several pieces of real estate in Houston, Texas, in partnership with Drago Daic
(Daic), President of 1488, Inc., a U.S.-based corporation. Respondent relayed
Ducat’s proposal to Enrique Zobel (Zobel), the Chief Executive Officer of Ayala
Corporation. Zobel was amenable to Ducat’s proposal but advised respondent
to send Thomas Gomez (Gomez), an AIFL employee who traveled often to the
U.S., to evaluate Ducat’s properties.

In December of 1982, Gomez examined several parcels of real estate that were
being offered by Ducat and 1488, Inc. for the exchange. Gomez, in a telex to
respondent, recommended the acceptance of a parcel of land in Harris County,
Texas (Harris County property), which was believed to be worth around US$2.9
million. Gomez further opined that the “swap would be fair and reasonable”
and that it would be better to take this opportunity rather than pursue a
prolonged legal battle with Ducat. Gomez’s recommendation was brought to
Zobel’s attention. The property-for-debt exchange was subsequently approved
by the AIFL Board of Directors even without a prior appraisal of the Harris
County property. However, before the exchange actually closed, an AIFL
director asked respondent to obtain such an appraisal.

William Craig (Craig), a former owner of the Harris County property, conducted
the appraisal of the market value of the said property. In his January 1983
appraisal, Craig estimated the fair market value of the Harris County property
at US$3,365,000.

Negotiations finally culminated in an Agreement,6 executed on January 27,


1983 in Makati City, Philippines, among 1488, Inc., represented by Daic;
Ducat, represented by Precioso Perlas (Perlas); AIFL, represented by Joselito
Gallardo (Gallardo); and PHILSEC and Athona Holdings, N. V. (ATHONA), both
represented by respondent. Under the Agreement, the total amount of Ducat’s
debts was reduced from US$3.1 million to US$2.5 million; ATHONA, a
company wholly owned by PHILSEC and AIFL, would buy the Harris County
property from 1488, Inc. for the price of US$2,807,209.02; PHILSEC and AIFL
would grant ATHONA a loan of US$2.5 million, which ATHONA would entirely
use as initial payment for the purchase price of the Harris County property;
ATHONA would execute a promissory note in favor of 1488, Inc. in the sum of
US$307,209.02 to cover the balance of the purchase price for the Harris
County property; upon its receipt of the initial payment of US$2.5 million from
ATHONA, 1488, Inc. would then fully pay Ducat’s debts to PHILSEC and AIFL
in the same amount; for their part, PHILSEC and AIFL would release and
transfer possession of Ducat’s pledged stock portfolio to 1488, Inc.; and 1488,
Inc. would become the new creditor of Ducat, subject to such other terms as
they might agree upon.

The series of transactions per the Agreement was eventually executed.


However, after acquiring the Harris County property, ATHONA had difficulty
selling the same. Despite repeated demands by 1488, Inc., ATHONA failed to
pay its promissory note for the balance of the purchase price for the Harris
County property, and PHILSEC and AIFL refused to release the remainder of
Ducat’s stock portfolio, claiming that they were defrauded into believing that
the said property had a fair market value higher than it actually had.

Civil Action No. H-86-440 before the


U.S. District Court of Southern District
of Texas, Houston Division

On October 17, 1985, 1488, Inc. instituted a suit against PHILSEC, AIFL, and
ATHONA for (a) misrepresenting that an active market existed for two shares of
stock included in Ducat’s portfolio when, in fact, said shares were to be
withdrawn from the trading list; (b) conversion of the stock portfolio; (c) fraud,
as ATHONA had never intended to abide by the provisions of its promissory
note when they signed it; and (d) acting in concert as a common enterprise or
in the alternative, that ATHONA was the alter ego of PHILSEC and AIFL. The
suit was docketed as Civil Action No. H-86-440 before the U.S. District Court.

PHILSEC, AIFL, and ATHONA filed counterclaims against 1488, Inc., Daic,
Craig, Ducat, and respondent, for the recovery of damages and excess payment
or, in the alternative, the rescission of the sale of the Harris County property,
alleging fraud, negligence, and conspiracy on the part of counter-defendants
who knew or should have known that the value of said property was less than
the appraisal value assigned to it by Craig.

Before the referral of the case to the jury for verdict, the U.S. District Court
dropped respondent as counter-defendant for lack of evidence to support the
allegations against him. Respondent then moved in open court to sanction
petitioner (formerly PHILSEC), AIFL, and ATHONA based on Rule 11 of the U.S.
Federal Rules of Civil Procedure.7

In its Order dated March 13, 1990, the U.S. District Court stated that on
February 14, 1990, after trial, the jury returned a verdict for 1488, Inc. In the
same Order, the U.S. District Court ruled favorably on respondent’s pending
motion for sanction, thus:
During the course of the trial, the Court was required to review plaintiff’s
Exhibit No. 91 to determine whether the exhibit should be admitted. After
reviewing the exhibit and hearing the evidence, the Court concluded that the
defendants’ counterclaims against Edgardo V. Guevara are frivolous and
brought against him simply to humiliate and embarrass him. It is the opinion
of the Court that the defendants, Philsec Investment Corporation, A/K/A BPI
Securities, Inc., and Ayala International Finance Limited, should be sanctioned
appropriately based on Fed. R. Civ. P. 11 and the Court’s inherent powers to
punish unconscionable conduct. Based upon the motion and affidavit of
Edgardo V. Guevara, the Court finds that $49,450 is reasonable punishment.

ORDERED that defendants, Philsec Investment Corporation A/K/A BPI


Securities, Inc., and Ayala International Finance Limited, jointly and severally,
shall pay to Edgardo V. Guevara $49,450 within 30 days of the entry of this
order.8

Petitioner, AIFL, and ATHONA appealed the jury verdict, as well as the
aforementioned order of the U.S. District Court for them to pay respondent
US$49,450.00; while 1488, Inc. appealed a post-judgment decision of the U.S.
District Court to amend the amount of attorney’s fees awarded. The appeals
were docketed as Case No. 90-2370 before the U.S. Court of Appeals, Fifth
Circuit.

The U.S. Court of Appeals rendered its Decision on September 3, 1991


affirming the verdict in favor of 1488, Inc. The U.S. Court of Appeals found no
basis for the allegations of fraud made by petitioner, AIFL, and ATHONA
against 1488, Inc., Daic, Craig, and Ducat:

[2] To state a cause of action for fraud under Texas law, a plaintiff must allege
sufficient facts to show:

(1) that a material representation was made;


(2) that it was false;
(3) that when the speaker made it he knew that it was false or made it
recklessly without any knowledge of the truth and as a positive
assertion;
(4) that he made it with the intention that it should be acted on by the
party;
(5) that the party acted in reliance upon it;
(6) that he thereby suffered injury.

Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 185 (Tex.1977). We agree
with the district court’s decision to grant a directed verdict against the
defendants. The defendants failed to allege sufficient facts to establish the
elements necessary to demonstrate fraud. In particular, the defendants have
failed to allege any facts that would tend to show that the plaintiff or any of the
third party defendants made a false representation or a representation with
reckless disregard as to its truth.

The Houston real estate market was extremely volatile during the late 1970’s
and the early 1980’s. Like a stream of hot air, property values rose rapidly as
the heat and fury generated by speculation and construction plans mounted,
but, just as rapidly, the climate cooled and the high-flying market came
crashing to an all time low. The real estate transaction involved in this case
was certainly affected by this environment of capriciousness. Moreover, a
number of additional variables may have contributed to the uncertainty of its
value. For instance, the land abutted a two-lane asphalt road that had been
targeted by the state for conversion into a major multi-lane divided
highway. Water and sewage treatment facilities were located near the
boundary lines of the property. In addition, Houston’s lack of conventional
zoning ordinances meant that the value of the property could fluctuate
depending upon the use (commercial or residential) for which the property
would ultimately be used.

[3] The fact that the defendants were unable to sell the property at the price for
which it had been appraised does not demonstrate that the plaintiff or the third
party defendants knew that the value of the property was less than the
appraised value, nor does it establish that the opposing parties were guilty of
negligent misrepresentation or negligence.

[4] In support of their allegation of fraud, the defendants rely heavily on a loan
application completed by 1488 shortly before the subject property was
transferred to Athona. See Defendant’s Exhibit 29. At the time, 1488 still owed
approximately $300,000 to Republic of Texas Savings Association on its
original loan for the subject property. The debt had matured and 1488 was
planning to move the loan to Home Savings Association of Houston, that is,
take out a loan from Home Savings to pay off the debt to Republic. 1488 had
planned to borrow $350,000 for that purpose. A line item on the Home
Savings loan application form asked for the amount of the loan as a percentage
of the appraised value of the land. A figure of thirty-nine percent was typed
into that space, and the defendants suggest that this proves that the plaintiff
knew Craig’s appraisal was erroneous. The defendants reason that if the
$350,000 loan amount was only thirty-nine percent of the land’s appraised
value, then the real estate must have been worth approximately $897,436.

Although their analysis is sound, the conclusion reached by the defendants


cannot withstand additional scrutiny. At the time that the loan application
was completed, 1488 did not request to have a new appraisal done for the
property. Instead, 1488 planned to use the numbers that had been generated
for a quasi-appraisal done in 1977. The 1977 report purported only to
“supplement” an earlier appraisal that had been conducted in 1974, and the
supplement described its function as estimating market value “for mortgage
loan purposes” only. See Defendant’s Trial Exhibit 4. The two page supplement
was based on such old information that even the Home Savings Association
would not accept it without additional collateral as security for the loan. See
Record on Appeal, Vol. 17 at 5-29 to 5-30. The loan, however, was never made
because the property was transferred to Athona, and the outstanding loan to
Republic was paid off as part of that transaction. In addition, the loan
application itself was never signed by anyone affiliated with 1488. The district
court was correct in dismissing this argument in support of the defendant’s
fraud allegations.

[5] The defendants also allege that the plaintiff and counter defendants knew
that Craig’s appraisal was fraudulent because the purchaser’s statement
signed by their own representative, and the seller’s statement, signed by the
plaintiff, as well as the title insurance policy all recited a purchase price of
$643,416.12. Robert Higgs, general counsel for 1488, explained that because
of the nature of the transaction, 1488, for tax purposes, wanted the purchase
price on the closing statement to reflect only that amount of cash actually
exchanged at the closing as well as the promissory note given at the closing.
See Record on Appeal, Vol. 17 at 5-127. Although the closing documents recite
a purchase price well under the actual sales price, nothing indicates that any
of the parties actually believed the property to be worth less than the sales
amount.

The defendants also assert that it was error for the district court to deny them
permission to designate O. Frank McPherson, a Houston appraiser, as an
expert witness after the cutoff date established by a pretrial order for such
designations. The defendants contend that the error prevented them from
presenting facts that would support their fraud allegations. Although the
defendants were allowed to present the testimony of another expert witness on
the subject of valuation, they argue that McPherson’s testimony was critical
because he had performed an appraisal of the property for the Texas Highway
Department close to the time period during which Craig had made his
appraisal. McPherson’s appraisal was performed as part of the State’s
condemnation proceedings that preceded the planned highway expansion next
to the subject property.

x x x x

[9] In their briefs, the defendants fail to provide an adequate explanation for
their failure to identify their expert witness in accordance with the district
court’s pretrial order. This law suit was initiated in 1985, and the defendants
had until November of 1988 to designate their expert witnesses. The
defendants were aware of the condemnation proceedings, and they, therefore,
had approximately three years to determine the identity of any appraiser used
by the state. The defendants simply failed to make this inquiry.
Enforcement of the district court’s pretrial order did not leave the defendants
without an expert witness on the issue of valuation, and the available expert
had also conducted appraisals for the Texas Highway Department in the area
surrounding the subject property. x x x

Although the degree of prejudice suffered by the plaintiff due to the late
designation of an expert would not have been great, a district court still has the
discretion to control pretrial discovery and sanction a party’s failure to follow a
scheduling order. See id. at 791. Such action is particularly appropriate here,
where the defendants have failed to provide an adequate explanation for their
failure to identify their expert within the designated timetable.

x x x x

The defendants failed to produce enough evidence from which fraud could be
inferred to justify the submission of the issue to a jury. Conclusional
allegations or speculation regarding what the plaintiff knew or did not know
concerning the value of the subject property are insufficient to withstand a
motion for a directed verdict. The district court committed no error in granting
the motion.

x x x x

Since the defendants failed to present the district court with any facts that
would tend to show that the plaintiffs committed a fraud against them, their
claim of a conspiracy to commit fraud must also fail.9

The U.S. Court of Appeals likewise adjudged that petitioner, AIFL, and
ATHONA failed to prove negligence on the part of 1488, Inc., Daic, Craig, and
Ducat in the appraisal of the market value of the said property:

[10, 11] The defendants have likewise failed to present any facts that would
tend to support their claim of negligent misrepresentation or negligence. The
defendants rely on assumptions and unsupportable conclusions of law in
establishing their case for negligence: “Assuming the Property’s true value is
less than $800,000, it is reasonable to assume that the counter defendants
failed to exercise reasonable care or competence . . .” Brief for Athona at 45-46
x x x. A party may not rely on assumptions of fact to carry their case
forward. The defendants have presented no facts to suggest that the plaintiff
was negligent in acquiring its appraisal. The plaintiff hired Craig, a real estate
broker, to perform the appraisal after the defendants had already given their
initial approval for the transaction. Craig had performed real estate appraisals
in the past, and Texas law permits real estate brokers to conduct such
appraisals, see Tex.Rev.Civ.Stat.Ann. art. 6573a, §2(2)(E) (Vernon Supp. 1988)
(Original version at Tex.Rev.Civ.Stat.Ann. art. 6573a, §4(1)(e) (Vernon
1969). These facts do not support a claim of negligence.

For the foregoing reasons the district court committed no error in granting a
directed verdict against the counterclaims advanced by the defendants.10

The U.S. Court of Appeals, however, vacated the award of exemplary damages
in favor of 1488, Inc. for the fraudulent misrepresentation regarding the
marketability of the two shares of stock in Ducat’s portfolio. Under Texas law,
a jury may not award damages unless it was determined that the plaintiff had
also sustained actual damages. The U.S. Court of Appeals agreed with
petitioner, AIFL, and ATHONA that 1488, Inc. brought its suit alleging
fraudulent misrepresentation after the two-year statute of limitation had
expired. The misrepresentation issue should never have gone to the
jury. Therefore, the jury’s finding of actual damages is nullified; and since the
jury verdict is left without a specific finding of actual damages, the award of
exemplary damages must be vacated.

The U.S. Court of Appeals also vacated the award of Rule 11 sanctions in favor
of respondent and against petitioner, AIFL, and ATHONA for being rendered
without due process, and remanded the issue to the U.S. District Court:

[18-20] The Rule 11 motion was first made by Guevara on February 14, 1990,
and the court immediately ruled on the issue without giving the defendants an
opportunity to prepare a written response. See Record on Appeal, Vol. 22 at
10-25 to 10-37. Although, the defendants were given an opportunity to speak,
we conclude that the hearing failed to comport with the requirements of due
process, which demand that the defendants be provided with adequate notice
and an opportunity to prepare a response. See Henderson v. Department of
Public Safety and Corrections, 901 F.2d 1288, 1293-94 (5th
Cir.1990). Providing specific notice and an opportunity to respond is
particularly important in cases, such as the one before us, in which the
sanctions have been imposed on the clients and not the attorneys. See
Donaldson v. Clark, 819 F.2d 1551, 1560 (11th Cir.1987) (“If sanctions are
proposed to be imposed on the client, due process will demand more specific
notice because the client is likely unaware of the existence of Rule 11 and
should be given the opportunity to prepare a defense.”). A separate hearing is
not a prerequisite to the imposition of Rule 11 sanctions, see Donaldson, 819
F.2d at 1560 n. 12, but the defendants in this case, should have been given
more of an opportunity to respond to the motion than that provided at the
hearing in which the motion was first raised. Providing the defendant with an
opportunity to mount a defense “on the spot” does not comport with due
process. Given that the defendants were not provided with adequate notice or
an opportunity to be heard, we vacate the award of sanctions and remand so
that the district court can provide the defendants with an adequate opportunity
to be heard.11
Finally, the U.S. Court of Appeals similarly vacated the award of attorney’s fees
and remanded the matter to the U.S. District Court for recalculation to
conform with the requirements provided in the promissory note.

In accordance with the Decision dated September 3, 1991 of the U.S. Court of
Appeals, the U.S. District Court issued an Order12 dated October 28, 1991
giving petitioner, AIFL, and ATHONA 20 days to formally respond to
respondent’s motion for Rule 11 sanctions. Petitioner, AIFL, and ATHONA
jointly filed before the U.S. District Court their opposition to respondent’s
motion for Rule 11 sanctions.13 Respondent filed his reply to the opposition, to
which petitioner, AIFL, and ATHONA, in turn, filed a reply-brief.14

In an Order15 dated December 31, 1991, the U.S. District Court still found
respondent’s motion for Rule 11 sanctions meritorious and reinstated its Order
dated March 13, 1990:

The basis of the Court’s prior decision as well as now is the fact that the
defendants filed suit against Guevara with knowledge that the basis of the suit
was unfounded. In the defendants’ file was an appraisal from an international
appraisal firm, which the defendants refused to disclose during discovery and
was only discovered at a bench conference during a discussion about
appraisers. Based on the defendants’ own appraisers, no basis existed for a
suit by the defendants against their employee.

The previous judgment entered by this Court is REINSTATED.

The above-quoted Order of the U.S. District Court attained finality as it was no
longer appealed by petitioner, AIFL, and ATHONA.

Through a letter dated February 18, 1992, respondent demanded that


petitioner pay the amount of US$49,450.00 awarded by the U.S. District Court
in its Order dated March 13, 1990. Given the continuous failure and/or
refusal of petitioner to comply with the said Order of the U.S. District Court,
respondent instituted an action for the enforcement of the same, which was
docketed as Civil Case No. 92-1445 and raffled to the RTC of Makati City,
Branch 57.

Civil Case No. 92-1445 before


Branch 57 of the RTC of Makati City

In his Complaint for the enforcement of the Order dated March 13, 1990 of the
U.S. District Court in Civil Action No. H-86-440, respondent prayed that
petitioner be ordered to pay:
1. The sum of US$49,450.00 or its equivalent in Philippine Pesos x x x with
interest from date of demand;

2. Attorney’s fees and litigation expenses in the sum of P250,000.00;

3. Exemplary damages of P200,000.00; and

4. Costs of the suit.16

In its Amended Answer Ad Cautelam,17 petitioner opposed the enforcement of


the Order dated March 13, 1990 of the U.S. District Court on the grounds that
it was rendered upon a clear mistake of law or fact and/or in violation of its
right to due process.

In the course of the pre-trial and scheduled trial proceedings, the parties
respectively manifested before the court that they were dispensing with the
presentation of their witnesses since the subject matter of their testimonies
had already been stipulated upon.18

Thereafter, the parties formally offered their respective evidence which entirely
consisted of documentary exhibits. Respondent submitted authenticated and
certified true copies of Rule 11 of the U.S. Federal Rules of Civil
Procedure;19 the Orders dated March 13, 1990, October 28, 1991, and
December 31, 1991 of the U.S. District Court in Civil Action No. H-86-
440;20 the Decision dated September 3, 1991 of the U.S. Court of Appeals in
Case No. 90-2370;21 and the opposition to respondent’s motion for Rule 11
sanctions and reply-brief filed by PHILSEC, AIFL, and ATHONA before the U.S.
District Court.22 Petitioner presented photocopies of pleadings, documents,
and transcripts of stenographic notes in Civil Action No. H-86-440 before the
U.S. District Court;23 the pleadings filed in other cases related to Civil Case No.
92-1440;24 and a summary of lawyer’s fees incurred by petitioner in the
U.S.25 The RTC admitted in evidence the documentary exhibits of the parties
in its Orders dated September 21, 1998 and February 8, 1999,26 and then
deemed the case submitted for decision.

The RTC rendered a Decision on September 11, 2000 with the following
dispositive portion:

WHEREFORE, judgment is hereby rendered in favor of [respondent] Edgardo V.


Guevara ordering [petitioner] BPI Securities Corporation to pay [respondent]
the following:

1. the sum of US$49,500.00 with legal interest from the filing of this case
until fully paid;
2. the sum of P250,000.00 as attorney’s fees and litigation expenses; and

3. the costs of suit.

An award of exemplary damages for P200,000.00 is denied for being


speculative.27

Petitioner appealed to the Court of Appeals, assigning the following errors on


the part of the RTC:

A. The trial court erred in not passing upon the merit or validity of
[petitioner’s] defenses against the enforcement of the foreign judgment in
the Philippines.

Had the trial court considered [petitioner’s] defenses, it would have


concluded that the foreign judgment was not enforceable because it was
made upon a clear mistake of law or fact and/or was made in violation of
the [petitioner’s] right to due process.

B. The trial court erred in not utilizing the standard for determining the
enforceability of the foreign award that was agreed upon by the parties to
this case during the pre-trial, namely, did the defendants in the Houston
case (PHILSEC, AIFL, AND ATHONA) have reasonable grounds to implead
[respondent] in the Houston case based upon the body of the evidence
submitted therein. Thus, whether or not PHILSEC, AIFL and ATHONA
ultimately prevailed against [respondent] was immaterial or irrelevant;
the question only was whether they had reasonable grounds to proceed
against him, for if they had, then there was admittedly no basis for the
Rule 11 award against them by the Houston Court.

xxxx

C. In the light of its ruling, the trial court failed to pass upon and resolve
the other issues and/or defenses expressly raised by [petitioner],
including the defense that PHILSEC, AIFL, and ATHONA were deprived of
their right to defend themselves against the Rule 11 sanction and the
main decision because of the prohibitive cost of legal representation in
the us and also because of the gross negligence of its US counsel. x x
x.28

In its Decision dated December 19, 2003, the Fifth Division of the Court of
Appeals decreed:
WHEREFORE, the Decision dated 11 September 2000 in Civil Case No. 92-
1445 of the Regional Trial Court of Makati, Branch 57, is hereby AFFIRMED in
all respect with costs against [petitioner].29

In its Motion for Reconsideration,30 petitioner lamented that the Fifth Division
of the Court of Appeals failed to resolve on its own petitioner’s appeal as the
Decision dated December 19, 2003 of the said Division was copied
almost verbatim from respondent’s brief. Thus, petitioner prayed that the Fifth
Division of the Court of Appeals recuse itself from deciding petitioner’s Motion
for Reconsideration and that the case be re-raffled to another division.

The Fifth Division of the Court of Appeals maintained in its Resolution dated
May 25, 2004 that the issues and contentions of the parties were all duly
passed upon and that the case was decided according to its merits. The said
Division, nonetheless, abstained from resolving petitioner’s Motion for
Reconsideration and directed the re-raffle of the case.31

Petitioner’s Motion for Reconsideration was re-raffled to and subsequently


resolved by the Tenth Division of the Court of Appeals. In its Resolution dated
February 9, 2005, the Tenth Division of the appellate court denied the said
Motion for lack of merit.32

Hence, petitioner seeks recourse from this Court via the instant Petition for
Review, insisting that the Court of Appeals erred in affirming the RTC judgment
which enforced the Order dated March 13, 1990 of the U.S. District Court in
Civil Action No. H-86-440.

Petitioner contends that it was not accorded by the Court of Appeals the right
to refute the foreign judgment pursuant to Rule 39, Section 48 of the Rules of
Court because the appellate court gave the effect of res judicata to the said
foreign judgment. The Court of Appeals copied wholesale orverbatim the
respondent’s brief without addressing the body of evidence adduced by
petitioner showing that it had reasonable grounds to implead respondent in
Civil Action No. H-86-440.

Petitioner asserts that the U.S. District Court committed a clear mistake of law
and fact in its issuance of the Order dated March 13, 1990, thus, said Order is
unenforceable in this jurisdiction. Petitioner discusses in detail its evidence
proving that respondent, together with 1488, Inc., Ducat, Craig, and Daic,
induced petitioner to agree to a fraudulent deal. Petitioner points out that
respondent had the duty of looking for an independent and competent
appraiser of the market value of the Harris County property; that instead of
choosing an unbiased and skilled appraiser, respondent connived with 1488,
Inc., Ducat, and Daic in selecting Craig, who turned out to be the former owner
of the Harris County property and a close associate of 1488, Inc. and Daic; and
that respondent endorsed to petitioner Craig’s appraisal of the market value of
the Harris County property, which was overvalued by more than 400%.

According to petitioner, it had reasonable grounds to implead respondent in


Civil Action No. H-86-440 so the sanction imposed upon it under Rule 11 of the
U.S. Federal Rules of Civil Procedure was unjustified. Petitioner additionally
argues that there is no basis for the U.S. District Court to impose upon it the
Rule 11 sanction as there is nothing in the said provision which allows “the
imposition of sanctions for simply bringing a meritless lawsuit.” If the Rule 11
sanction was imposed upon petitioner as punishment for impleading a party
(when it had reasonable basis for doing so) and not prevailing against said
party, then, petitioner claims that such a sanction is against Philippine public
policy and should not be enforced in this jurisdiction. Settled in this
jurisdiction that there should be no premium attached to the right to litigate,
otherwise parties would be very hesitant to assert a claim in court.

Petitioner further alleges that it was denied due process in Civil Action No H-
86-440 because: (1) the U.S. District Court imposed the Rule 11 sanction on
the basis of a single document, i.e., the letter dated September 26, 1983 of
Bruce C. Bossom, a partner at Jones Lang Wooton, a firm of chartered
surveyors and international real estate consultants, addressed to a Mr. Senen
L. Matoto of AIFL (marked as Exhibit 91 before the U.S. District Court), which
was never admitted into evidence; (2) in said letter, Jones Lang Wooton was
“soliciting a listing agreement” and in which the “said firm unilaterally, without
being asked as to the value of the [Harris County] property, indicated a value
for the [same] which approximate[d] with the value given in the Craig
appraisal,” hence, it cannot be used as basis to conclude that petitioner, AIFL,
and ATHONA assented to Craig’s appraisal of the Harris County property; (3)
the counsel who represented petitioner, AIFL, and ATHONA in Civil Action No.
H-86-440 before the U.S. District Court was grossly ignorant and/or negligent
in the prosecution of their counterclaims and/or in proving their defenses,
such as when said counsel failed to present an expert witness who could have
testified as to the actual market value of the Harris County property or when
said counsel failed to discredit respondent’s credibility despite the availability
of evidence that respondent had been previously fined by the Philippine
Securities and Exchange Commission for “stock manipulation;” and (4) the
excessive and unconscionable legal fees charged by their U.S. counsel
effectively prevented them from making further appeal.

The Court finds the Petition bereft of merit.

In Mijares v. Rañada,33 the Court extensively discussed the underlying


principles for the recognition and enforcement of foreign judgments in
Philippine jurisdiction:

There is no obligatory rule derived from treaties or conventions that requires


the Philippines to recognize foreign judgments, or allow a procedure for the
enforcement thereof. However, generally accepted principles of international
law, by virtue of the incorporation clause of the Constitution, form part of the
laws of the land even if they do not derive from treaty obligations. The classical
formulation in international law sees those customary rules accepted as
binding result from the combination two elements: the established, widespread,
and consistent practice on the part of States; and a psychological element
known as the opinion juris sive necessitates (opinion as to law or necessity).
Implicit in the latter element is a belief that the practice in question is rendered
obligatory by the existence of a rule of law requiring it.

While the definite conceptual parameters of the recognition and enforcement of


foreign judgments have not been authoritatively established, the Court can
assert with certainty that such an undertaking is among those generally
accepted principles of international law. As earlier demonstrated, there is a
widespread practice among states accepting in principle the need for such
recognition and enforcement, albeit subject to limitations of varying
degrees. The fact that there is no binding universal treaty governing the
practice is not indicative of a widespread rejection of the principle, but only a
disagreement as to the imposable specific rules governing the procedure for
recognition and enforcement.

Aside from the widespread practice, it is indubitable that the procedure for
recognition and enforcement is embodied in the rules of law, whether statutory
or jurisprudential, adopted in various foreign jurisdictions. In the Philippines,
this is evidenced primarily by Section 48, Rule 39 of the Rules of Court which
has existed in its current form since the early 1900s. Certainly, the Philippine
legal system has long ago accepted into its jurisprudence and procedural rules
the viability of an action for enforcement of foreign judgment, as well as the
requisites for such valid enforcement, as derived from internationally accepted
doctrines. Again, there may be distinctions as to the rules adopted by each
particular state, but they all prescind from the premise that there is a rule of
law obliging states to allow for, however generally, the recognition and
enforcement of a foreign judgment. The bare principle, to our mind, has
attained the status of opinio juris in international practice.

This is a significant proposition, as it acknowledges that the procedure and


requisites outlined in Section 48, Rule 39 derive their efficacy not merely from
the procedural rule, but by virtue of the incorporation clause of the
Constitution. Rules of procedure are promulgated by the Supreme Court, and
could very well be abrogated or revised by the high court itself. Yet the
Supreme Court is obliged, as are all State components, to obey the laws of the
land, including generally accepted principles of international law which form
part thereof, such as those ensuring the qualified recognition and enforcement
of foreign judgments. (Citations omitted.)

It is an established international legal principle that final judgments of foreign


courts of competent jurisdiction are reciprocally respected and rendered
efficacious subject to certain conditions that vary in different countries.34 In
the Philippines, a judgment or final order of a foreign tribunal cannot be
enforced simply by execution. Such judgment or order merely creates a right of
action, and its non-satisfaction is the cause of action by which a suit can be
brought upon for its enforcement.35 An action for the enforcement of a foreign
judgment or final order in this jurisdiction is governed by Rule 39, Section 48
of the Rules of Court, which provides:

SEC. 48. Effect of foreign judgments or final orders. – The effect of a judgment
or final order of a tribunal of a foreign country, having jurisdiction to render
the judgment or final order is as follows:

(a) In case of a judgment or final order upon a specific thing, the judgment or
final order is conclusive upon the title to the thing; and

(b) In case of a judgment or final order against a person, the judgment or final
order is presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title.

In either case, the judgment or final order may be repelled by evidence of a


want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.

The Court expounded in Mijares on the application of the aforequoted


provision:

There is an evident distinction between a foreign judgment in an action


in rem and onein personam. For an action in rem, the foreign judgment is
deemed conclusive upon the title to the thing, while in an action in personam,
the foreign judgment is presumptive, and not conclusive, of a right as between
the parties and their successors in interest by a subsequent title. However, in
both cases, the foreign judgment is susceptible to impeachment in our local
courts on the grounds of want of jurisdiction or notice to the party, collusion,
fraud, or clear mistake of law or fact. Thus, the party aggrieved by the foreign
judgment is entitled to defend against the enforcement of such decision in the
local forum. It is essential that there should be an opportunity to challenge the
foreign judgment, in order for the court in this jurisdiction to properly
determine its efficacy.

It is clear then that it is usually necessary for an action to be filed in order


to enforce a foreign judgment, even if such judgment has conclusive
effect as in the case of in rem actions, if only for the purpose of allowing
the losing party an opportunity to challenge the foreign judgment, and in
order for the court to properly determine its efficacy. Consequently, the
party attacking a foreign judgment has the burden of overcoming the
presumption of its validity.

The rules are silent as to what initiatory procedure must be undertaken in


order to enforce a foreign judgment in the Philippines. But there is no question
that the filing of a civil complaint is an appropriate measure for such purpose.
A civil action is one by which a party sues another for the enforcement or
protection of a right, and clearly an action to enforce a foreign judgment is in
essence a vindication of a right prescinding either from a “conclusive judgment
upon title” or the “presumptive evidence of a right.” Absent perhaps a
statutory grant of jurisdiction to a quasi-judicial body, the claim for
enforcement of judgment must be brought before the regular courts.

There are distinctions, nuanced but discernible, between the cause of action
arising from the enforcement of a foreign judgment, and that arising from the
facts or allegations that occasioned the foreign judgment. They may pertain to
the same set of facts, but there is an essential difference in the right-duty
correlatives that are sought to be vindicated. For example, in a complaint for
damages against a tortfeasor, the cause of action emanates from the violation
of the right of the complainant through the act or omission of the respondent.
On the other hand, in a complaint for the enforcement of a foreign
judgment awarding damages from the same tortfeasor, for the violation of
the same right through the same manner of action, the cause of action
derives not from the tortious act but from the foreign judgment itself.

More importantly, the matters for proof are different. Using the above example,
the complainant will have to establish before the court the tortious act or
omission committed by the tortfeasor, who in turn is allowed to rebut these
factual allegations or prove extenuating circumstances. Extensive litigation is
thus conducted on the facts, and from there the right to and amount of
damages are assessed. On the other hand,in an action to enforce a foreign
judgment, the matter left for proof is the foreign judgment itself, and not
the facts from which it prescinds.

As stated in Section 48, Rule 39, the actionable issues are generally
restricted to a review of jurisdiction of the foreign court, the service of
personal notice, collusion, fraud, or mistake of fact or law. The limitations
on review [are] in consonance with a strong and pervasive policy in all
legal systems to limit repetitive litigation on claims and
issues. Otherwise known as the policy of preclusion, it seeks to protect
party expectations resulting from previous litigation, to safeguard against
the harassment of defendants, to insure that the task of courts not be
increased by never-ending litigation of the same disputes, and – in a
larger sense – to promote what Lord Coke in the Ferrer’s Case of 1599
stated to be the goal of all law: “rest and quietness.” If every judgment of
a foreign court were reviewable on the merits, the plaintiff would be
forced back on his/her original cause of action, rendering immaterial the
previously concluded litigation.36 (Emphases supplied, citations omitted.)

Also relevant herein are the following pronouncements of the Court in Minoru
Fujiki v. Marinay37:

A petition to recognize a foreign judgment declaring a marriage void does not


require relitigation under a Philippine court of the case as if it were a new
petition for declaration of nullity of marriage. Philippine courts cannot
presume to know the foreign laws under which the foreign judgment was
rendered. They cannot substitute their judgment on the status, condition
and legal capacity of the foreign citizen who is under the jurisdiction of
another state. Thus, Philippine courts can only recognize the foreign
judgment as a fact according to the rules of evidence.

Section 48(b), Rule 39 of the Rules of Court provides that a foreign judgment or
final order against a person creates a “presumptive evidence of a right as
between the parties and their successors in interest by a subsequent
title.” Moreover, Section 48 of the Rules of Court states that “the judgment or
final order may be repelled by evidence of a want of jurisdiction, want of notice
to the party, collusion, fraud, or clear mistake of law or fact.” Thus,
Philippine courts exercise limited review on foreign judgments. Courts
are not allowed to delve into the merits of a foreign judgment. Once a
foreign judgment is admitted and proven in a Philippine court, it can only
be repelled on grounds external to its merits, i.e., “want of jurisdiction,
want of notice to the party, collusion, fraud, or clear mistake of law or
fact.” The rule on limited review embodies the policy of efficiency and
the protection of party expectations, as well as respecting the jurisdiction
of other states. (Emphases supplied, citations omitted.)

As the foregoing jurisprudence had established, recognition and enforcement of


a foreign judgment or final order requires only proof of fact of the said
judgment or final order. In an action in personam, as in the case at bar, the
foreign judgment or final order enjoys the disputable presumption of
validity. It is the party attacking the foreign judgment or final order that is
tasked with the burden of overcoming its presumptive validity.38 A foreign
judgment or final order may only be repelled on grounds external to its merits,
particularly, want of jurisdiction, want of notice to the party, collusion, fraud,
or clear mistake of law or fact.

The fact of a foreign final order in this case is not disputed. It was duly
established by evidence submitted to the RTC that the U.S. District Court
issued an Order on March 13, 1990 in Civil Action No. H-86-440 ordering
petitioner, AIFL, and ATHONA, to pay respondent the sum of US$49,450.00 as
sanction for filing a frivolous suit against respondent, in violation of Rule 11 of
the U.S. Federal Rules of Civil Procedure. The said Order became final when
its reinstatement in the Order dated December 31, 1991 of the U.S. District
Court was no longer appealed by petitioner, AIFL, and/or ATHONA.

The Order dated March 13, 1990 of the U.S. District Court in Civil Action No.
H-86-440 is presumptive evidence of the right of respondent to demand from
petitioner the payment of US$49,450.00 even in this jurisdiction. The next
question then is whether petitioner was able to discharge the burden of
overcoming the presumptive validity of said Order.

The Court rules in the negative.

In complete disregard of the limited review by Philippine courts of foreign


judgments or final orders, petitioner opposes the enforcement of the Order
dated March 13, 1990 of the U.S. District Court on the very same allegations,
arguments, and evidence presented before and considered by the U.S. District
Court when it rendered its verdict imposing the Rule 11 sanction against
petitioner. Petitioner attempts to convince the Court that it is necessary to
look into the merits of the Order dated March 13, 1990 because the U.S.
District Court committed clear mistake of law and fact in issuing the
same. The Court, however, is not convinced. A Philippine court will not
substitute its own interpretation of any provision of the law or rules of
procedure of another country, nor review and pronounce its own judgment on
the sufficiency of evidence presented before a competent court of another
jurisdiction. Any purported mistake petitioner attributes to the U.S. District
Court in the latter’s issuance of the Order dated March 13, 1990 would merely
constitute an error of judgment in the exercise of its legitimate jurisdiction,
which could have been corrected by a timely appeal before the U.S. Court of
Appeals.

Petitioner cannot insist that the RTC and the Court of Appeals resolve the issue
of whether or not petitioner, AIFL, and ATHONA had reasonable grounds to
implead respondent as a counter-defendant in Civil Action No. H-86-
440. Although petitioner submitted such an issue for resolution by the RTC in
its Pre-Trial Brief, the RTC did not issue any pre-trial order actually adopting
the same. In addition, petitioner was also unable to lay the basis, whether in
U.S. or Philippine jurisdiction, for the use of the “reasonable grounds standard”
for determining a party’s liability for or exemption from the sanctions imposed
for violations of Rule 11 of the U.S. Federal Rules of Civil Procedure. Equally
baseless is petitioner’s assertion that the Rule 11 sanction is contrary to public
policy and in effect, puts a premium on the right to litigate. It bears to stress
that the U.S. District Court imposed the Rule 11 sanction upon petitioner,
AIFL, and ATHONA for their frivolous counterclaims against respondent
intended to simply humiliate and embarrass respondent; and not because
petitioner, AIFL, and ATHONA impleaded but lost to respondent.

Contrary to the claims of petitioner, both the RTC and the Court of Appeals
carefully considered the allegations, arguments, and evidence presented by
petitioner to repel the Order dated March 13, 1990 of the U.S. District Court in
Civil Action No. H-86-440. Worthy of reproducing herein are the following
portions of the RTC judgment:

[Petitioner’s] contention that the judgment sought to be enforced herein is


violative of its right to due process and contrary to public policy because the
Houston Court relied upon Exhibit 91 (which is [petitioner BPI Securities’] Exh.
“1” in this case) and the US Court disregarded the evidence on record in the
Houston Action is unavailing. Whether or not said Exhibit 91 (petitioner’s
Exh. “1”) is inadmissible or is not entitled to any weight is a question
which should have been addressed to the US of Court of Appeals by
[petitioner]. To ask a Philippine court to pass upon the admissibility or
weight of Exh. 91 is violative of our public policy not to substitute our
judgment for that of a competent court of another jurisdiction.

[Petitioner] does not deny the fact that the judgment awarding sanctions based
on [Rule 11 of the U.S.] Federal Rules of Civil Procedure was elevated to the
United States Court of Appeals for the Fifth Circuit which remanded the case to
the District Court precisely to give [petitioner] a reasonable opportunity to be
heard. After remand, the District Court ordered [petitioner] to file its response
to the motion of [respondent] for sanctions and after the filing of their
respective briefs, the District Court reinstated the former judgment.

Certainly, under these circumstances, the claim of violation of due process


cannot be sustained since [petitioner] was given reasonable opportunity to
present its side before the imposition of sanctions.

x x x x

[Petitioner] likewise argued that the US District Court committed a clear


mistake of law or fact and in support thereof presented Exhibits “10” to “18” to
establish that the fair market value of the Houston property in January 1983
was no longer US$800,000.00 by the admissions against interest of 1488 itself,
of Craig who submitted the fraudulent appraisal, and by the previous owners of
the said property and to “show that [respondent] Guevara was either directly
involved in the conspiracy against the Houston defendants in submitting to the
latter a fraudulent appraisal of W. Craig (or was at least responsible to the
Houston defendants for the injury that they suffered) and that the Houston
defendants had reasonable basis to implead him as a defendant in the Houston
Case on account of his participation in the conspiracy or his fault of
responsibility for the injury suffered by them.”

However, none of these documents show that [respondent] had any


participation nor knowledge in the execution, custody or other intervention
with respect to the said. Thus, said Exhibits “10” to “18” are irrelevant and
immaterial to the issue of the enforceability of a foreign judgment. It
must be emphasized that the imposition of the sanctions under [Rule 11
of the U.S.] Federal Rules of Civil Procedure did not flow from the merits
of the civil case in the US District Court but from the lack of even an iota
of evidence against [respondent] Guevara. To quote the US District Court:

THE COURT

x x x x

I am disturbed about that. I don’t see any evidence at all in this case, after
listening to all of this evidence, that there ever was a lawsuit that could have
been brought against Guevara, and even after all of the discovery was done,
there was still no evidence of a conspiracy. There is no evidence of any
conspiracy to this good day that he could have been, but there is no proof of it,
and that’s what we base these lawsuits on. That’s what the Rule 11 is designed
to do, to deal with the circumstance.

So, I brought it up to Mr. Guevara because I know the frustration, and


irrespective as to whether or not he brought it up, it would have been my
position, my own position as an officer of this Court to sanction the defendants in
this case. That is my opinion, that they are to be sanctioned because they have
brought all of the power that they have in the Philippines to bear and put
pressure on this man so that he would have to come over 10,000 miles to defend
himself or to hire lawyers to defend himself against a totally frivolous
claim.39 (Emphases supplied.)

As for petitioner’s contention that the Fifth Division of the Court of Appeals, in
its Decision dated December 19, 2003, copied verbatim or wholesale from
respondent’s brief, the Court refers to its ruling in Halley v. Printwell,
Inc.,40 thus:

It is noted that the petition for review merely generally alleges that starting
from its page 5, the decision of the RTC “copied verbatim the allegations of
herein Respondents in its Memorandum before the said court,” as if “the
Memorandum was the draft of the Decision of the Regional Trial Court of
Pasig,” but fails to specify either the portions allegedly lifted verbatim from the
memorandum, or why she regards the decision as copied. The omission
renders the petition for review insufficient to support her contention,
considering that the mere similarity in language or thought between Printwell’s
memorandum and the trial court’s decision did not necessarily justify the
conclusion that the RTC simply lifted verbatim or copied from the
memorandum.

It is to be observed in this connection that a trial or appellate judge may


occasionally view a party’s memorandum or brief as worthy of due
consideration either entirely or partly. When he does so, the judge may adopt
and incorporate in his adjudication the memorandum or the parts of it he
deems suitable, and yet not be guilty of the accusation of lifting or copying
from the memorandum. This is because of the avowed objective of the
memorandum to contribute in the proper illumination and correct
determination of the controversy. Nor is there anything untoward in the
congruence of ideas and views about the legal issues between himself and the
party drafting the memorandum. The frequency of similarities in
argumentation, phraseology, expression, and citation of authorities between
the decisions of the courts and the memoranda of the parties, which may be
great or small, can be fairly attributable to the adherence by our courts of law
and the legal profession to widely know nor universally accepted precedents set
in earlier judicial actions with identical factual milieus or posing related
judicial dilemmas. (Citations omitted.)

The Court is unmoved by petitioner’s allegations of denial of due process


because of its U.S. counsel’s exorbitant fees and negligence. As aptly pointed
out by respondent in his Memorandum:

On the specific claim that petitioner has been denied legal representation in the
United States in view of the exorbitant legal fees of US counsel, petitioner is
now estopped from asserting that the costs of litigation resulted in a denial of
due process because it was petitioner which impleaded Guevara. If petitioner
cannot prosecute a case to its final stages, then it should not have filed a
counterclaim against Guevara in the first place. Moreover, there is no showing
that petitioner could not find a less expensive counsel. Surely, petitioner could
have secured the services of another counsel whose fees were more
“affordable.”41

Moreover, petitioner is bound by the negligence of its counsel. The


declarations of the Court inGotesco Properties, Inc. v. Moral42 is applicable to
petitioner:

The general rule is that a client is bound by the acts, even mistakes, of his
counsel in the realm of procedural technique. The basis is the tenet that an
act performed by counsel within the scope of a “general or implied authority” is
regarded as an act of the client. While the application of this general rule
certainly depends upon the surrounding circumstances of a given case, there
are exceptions recognized by this Court: “(1) where reckless or gross negligence
of counsel deprives the client of due process of law; (2) when its application will
result in outright deprivation of the client’s liberty or property; or (3) where the
interests of justice so require.”

The present case does not fall under the said exceptions. In Amil v. Court of
Appeals,the Court held that “to fall within the exceptional circumstance relied
upon x x x, it must be shown that the negligence of counsel must be so gross
that the client is deprived of his day in court. Thus, “where a party was given
the opportunity to defend [its] interests in due course, [it] cannot be said to
have been denied due process of law, for this opportunity to be heard is the
very essence of due process.” To properly claim gross negligence on the part of
the counsel, the petitioner must show that the counsel was guilty of nothing
short of a clear abandonment of the client’s cause. (Citations omitted.)

Finally, it is without question that the U.S. District Court, in its Order dated
March 13, 1990 in Civil Action No. H-86-440, ordered petitioner, AIFL, and
ATHONA to pay respondent US$49,450.00 as sanction for violating Rule 11 of
the U.S. Federal Rules of Civil Procedure. The Court noticed that throughout
its Decision dated September 11, 2000 in Civil Case No. 92-1445, the RTC
variably mentioned the amount of Rule 11 sanction imposed by the U.S.
District Court as US$49,450.00 and US$49,500.00, the latter obviously being a
typographical error. In the dispositive portion, though, the RTC ordered
petitioner to pay respondent US$49,500.00, which the Court hereby
corrects motu proprio to US$49,450.00 in conformity with the U.S. District
Court Order being enforced.

The Court notes that during the pendency of the instant Petition before this
Court, respondent passed away on August 17, 2007, and is survived and
substituted by his heirs, namely: Ofelia B. Guevara, Ma. Leticia G. Allado,
Jose Edgardo B. Guevara, Jose Emmanuel B. Guevara, and Ma. Joselina G.
Gepuela.

WHEREFORE, the instant Petition is hereby DENIED for lack of merit. The
Decision dated December 19, 2003 and Resolution dated February 9, 2005 of
the Court Appeals in CA-G.R. CV No. 69348, affirming the Decision dated
September 11, 2000 of the Regional Trial Court of Makati City, Branch 57 in
Civil Case No. 92-1445, is hereby AFFIRMED with MODIFICATION that
petitioner BPI Securities Corporation is ordered to pay respondent Edgardo V.
Guevara the sum of US$49,450.00 or its equivalent in Philippine Peso, with
interest at six percent (6%) per annum from the filing of the case before the
trial court on May 28, 1992 until fully paid.43

SO ORDERED.
EN BANC

G.R. No. 213525, January 27, 2015

FORTUNE LIFE INSURANCE COMPANY, INC., Petitioner, v. COMMISSION ON


AUDIT (COA) PROPER; COA REGIONAL OFFICE NO. VI-WESTERN
VISAYAS; AUDIT GROUP LGS-B, PROVINCE OF ANTIQUE; AND
PROVINCIAL GOVERNMENT OF ANTIQUE, Respondents.

RESOLUTION

BERSAMIN, J.:

Petitioner Fortune Life Insurance Company, Inc. seeks the reconsideration1 of


the resolution promulgated on August 19, 2014,2 whereby the Court dismissed
its petition for certiorari under Rule 64 in relation to Rule 65 of the Rules of
Court due to its non-compliance with the provisions of Rule 64, particularly for:
(a) the late filing of the petition; (b) the non-submission of the proof of service
and verified declaration; and (c) the failure to show grave abuse of discretion on
the part of the respondents.3chanRoblesvirtualLawlibrary

Antecedents

Respondent Provincial Government of Antique (LGU) and the petitioner


executed a memorandum of agreement concerning the life insurance coverage
of qualified barangay secretaries, treasurers andtanod, the former obligating
P4,393,593.60 for the premium payment, and subsequently submitting the
corresponding disbursement voucher to COA-Antique for pre-audit.4 The latter
office disallowed the payment for lack of legal basis under Republic Act No.
7160 (Local Government Code). Respondent LGU appealed but its appeal was
denied.

Consequently, the petitioner filed its petition for money claim in the COA.5 On
November 15, 2012, the COA issued its decision denying the petition,6 holding
that under Section 447 and Section 458 of theLocal Government Code only
municipal or city governments are expressly vested with the power to secure
group insurance coverage for barangay workers; and noting the LGU’s failure
to comply with the requirement of publication under Section 21 of Republic Act
No. 9184 (Government Procurement Reform Act).

The petitioner received a copy of the COA decision on December 14, 2012,7 and
filed its motion for reconsideration on January 14, 2013.8 However, the COA
denied the motion,9 the denial being received by the petitioner on July 14,
2014.10chanRoblesvirtualLawlibrary

Hence, the petitioner filed the petition for certiorari on August 12, 2014, but the
petition for certiorariwas dismissed as earlier stated through the resolution
promulgated on August 19, 2014 for (a) the late filing of the petition; (b) the
non-submission of the proof of service and verified declaration; and (c) the
failure to show grave abuse of discretion on the part of the
respondents.cralawred

Issues

In its motion for reconsideration, the petitioner submits that it filed the petition
for certiorari within the reglementary period following the fresh period rule
enunciated in Neypes v. Court of Appeals;11 and that the petition for certiorari
included an affidavit of service in compliance with Section 3, Rule 13 of
the Rules of Court. It admits having overlooked the submission of a verified
declaration; and prays that the declaration attached to the motion for
reconsideration be admitted by virtue of its substantial compliance with the
Efficient Use of Paper Rule12 by previously submitting a compact disc (CD)
containing the petition for certiorari and its annexes. It disagrees with the
Court, insisting that it showed and proved grave abuse of discretion on the part
of the COA in issuing the assailed decision.cralawred

Ruling

We deny the motion for reconsideration for being without merit.

I
Petitioner did not comply with
the rule on proof of service

The petitioner claims that the affidavit of service attached to the petition
for certiorari complied with the requirement on proof of service.

The claim is unwarranted. The petitioner obviously ignores that Section 13,
Rule 13 of the Rules of Court concerns two types of proof of service, namely: the
affidavit and the registry receipt, viz:chanroblesvirtuallawlibrary

Section 13. Proof of Service. – x x x. If service is made by registered mail, proof


shall be made by such affidavit and the registry receipt issued by the
mailing office. The registry return card shall be filed immediately upon its
receipt by the sender, or in lieu thereof the unclaimed letter together with the
certified or sworn copy of the notice given by the postmaster to the addressee.

Section 13 thus requires that if the service is done by registered mail, proof of
service shall consist of the affidavit of the person effecting the mailing and the
registry receipt, both of which must be appended to the paper being served. A
compliance with the rule is mandatory, such that there is no proof of service if
either or both are not submitted.13chanRoblesvirtualLawlibrary
Here, the petition for certiorari only carried the affidavit of service executed by
one Marcelino T. Pascua, Jr., who declared that he had served copies of the
petition by registered mail “under Registry Receipt Nos. 70449, 70453, 70458,
70498 and 70524 attached to the appropriate spaces found on pages 64-65 of
the petition.”14 The petition only bore, however, the cut print-outs of
what appeared to be the registry receipt numbers of the registered matters, not
the registry receipts themselves. The rule requires to be appended the registry
receipts, not their reproductions. Hence, the cut print-outs did not
substantially comply with the rule. This was the reason why the Court held in
the resolution of August 19, 2014 that the petitioner did not comply with the
requirement of proof of service.15chanRoblesvirtualLawlibrary

II
Fresh Period Rule under Neypes
did not apply to the petition for certiorari
under Rule 64 of the Rules of Court

The petitioner posits that the fresh period rule applies because its Rule 64
petition is akin to a petition for review brought under Rule 42 of the Rules of
Court; hence, conformably with the fresh period rule,the period to file a Rule 64
petition should also be reckoned from the receipt of the order denying the
motion for reconsideration or the motion for new
trial. chanRoblesvirtualLawlibrary
16

The petitioner’s position cannot be sustained.

There is no parity between the petition for review under Rule 42 and the
petition for certiorari under Rule 64.

As to the nature of the procedures, Rule 42 governs an appeal from the


judgment or final order rendered by the Regional Trial Court in the exercise of
its appellate jurisdiction. Such appeal is on a question of fact, or of law, or of
mixed question of fact and law, and is given due course only upon aprima
facie showing that the Regional Trial Court committed an error of fact or law
warranting the reversal or modification of the challenged judgment or final
order.17 In contrast, the petition forcertiorari under Rule 64 is similar to the
petition for certiorari under Rule 65, and assails a judgment or final order of
the Commission on Elections (COMELEC), or the Commission on Audit (COA).
The petition is not designed to correct only errors of jurisdiction, not errors of
judgment.18 Questions of fact cannot be raised except to determine whether the
COMELEC or the COA were guilty of grave abuse of discretion amounting to
lack or excess of jurisdiction.

The reglementary periods under Rule 42 and Rule 64 are different. In the
former, the aggrieved party is allowed 15 days to file the petition for review
from receipt of the assailed decision or final order, or from receipt of the denial
of a motion for new trial or reconsideration.19 In the latter, the petition is filed
within 30 days from notice of the judgment or final order or resolution sought
to be reviewed. The filing of a motion for new trial or reconsideration, if allowed
under the procedural rules of the Commission concerned, interrupts the
period; hence, should the motion be denied, the aggrieved party may file the
petition within the remaining period, which shall not be less than five days in
any event, reckoned from the notice of denial.20chanRoblesvirtualLawlibrary

The petitioner filed its motion for reconsideration on January 14, 2013, which
was 31 days after receiving the assailed decision of the COA on December 14,
2012.21 Pursuant to Section 3 of Rule 64, it had only five days from receipt of
the denial of its motion for reconsideration to file the petition. Considering that
it received the notice of the denial on July 14, 2014, it had only until July 19,
2014 to file the petition. However, it filed the petition on August 13, 2014,
which was 25 days too late.

We ruled in Pates v. Commission on Elections22 that the belated filing of the


petition for certiorariunder Rule 64 on the belief that the fresh period
rule should apply was fatal to the recourse. As such, the petitioner herein
should suffer the same fate for having wrongly assumed that the fresh period
rule under Neypes23 applied. Rules of procedure may be relaxed only to relieve
a litigant of an injustice that is not commensurate with the degree of his
thoughtlessness in not complying with the prescribed procedure.24 Absent this
reason for liberality, the petition cannot be allowed to prosper.

III
Petition for certiorari further lacked merit

The petition for certiorari is also dismissible for its lack of merit.

The petitioner insists on having fully shown that the COA committed grave
abuse of discretion, to wit: (1) the challenged decision was rendered by a
divided COA proper; (2) the COA took almost a year before promulgating its
decision, and more than a year in resolving the motion for reconsideration, in
contravention of the express mandate of the Constitution; (3) the resolution
denying the motion for reconsideration was made up of only two sentences;
(4) the matter involved a novel issue that called for an interpretation of the
pertinent provisions of the Local Government Code; and (5) in issuing the
resolution, COA Commissioners Grace Pulido-Tan and Heidi L. Mendoza made
it appear that they knew the Local Government Code better than former Senator
Aquilino Pimentel who offered an opinion on the
matter. chanRoblesvirtualLawlibrary
25

Grave abuse of discretion implies such capricious and whimsical exercise of


judgment as to be equivalent to lack or excess of jurisdiction; in other words,
power is exercised in an arbitrary or despotic manner by reason of passion,
prejudice, or personal hostility; and such exercise is so patent or so gross as to
amount to an evasion of a positive duty or to a virtual refusal either to perform
the duty enjoined or to act at all in contemplation of
law.26chanRoblesvirtualLawlibrary

A close look indicates that the petition for certiorari did not sufficiently disclose
how the COA committed grave abuse of its discretion. For sure, the bases cited
by the petitioner did not approximate grave abuse of discretion. To start with,
the supposed delays taken by the COA in deciding the appeal were neither
arbitrary nor whimsical on its part. Secondly, the mere terseness of the denial
of the motion for reconsideration was not a factor in demonstrating an abuse of
discretion. And, lastly, the fact that Senator Pimentel, even if he had been the
main proponent of the Local Government Code in the Legislature, expressed an
opinion on the issues different from the COA Commissioners’ own did not
matter, for it was the latter’s adjudication that had any value and decisiveness
on the issues by virtue of their being the Constitutionally officials entrusted
with the authority for that purpose.

It is equally relevant to note that the COA denied the money claim of the
petitioner for the further reason of lack of sufficient publication as required by
the Government Procurement Act. In that light, the COA acted well within its
authority in denying the petitioner’s claim.

IV
Petitioner and its counsel
exhibited harshness and disrespect
towards the Court and its Members

The petitioner contends that the Court erred in appreciating the petitioner’s
non-compliance with the requirement of the proof of service, alleging that even
“a perfunctory scrutiny” of the petition forcertiorari and its annexes could have
easily shown that it had attached an affidavit of service to the petition. It goes
on to make the following statements, viz:chanroblesvirtuallawlibrary

25. Apparently, the staff of the Justice-in-charge failed to verify the PETITION
and its annexes up to its last page, thus, the erroneous finding that there was
non-submission of the proof of service;

26. In turn, the same omission was hoisted upon the other members of this
Honorable Court who took the observation from the office of the Justice-in-
charge, to be the obtaining fact, when in truth and in fact, it is not;27

The petitioner and its counsel thereby exhibited their plain inability to accept
the ill consequences of their own shortcomings, and instead showed an
unabashed propensity to readily lay blame on others like the Court and its
Members. In doing so, they employed harsh and disrespectful language that
accused the Court and its Members of ignorance and recklessness in the
performance of their function of adjudication.

We do not tolerate such harsh and disrespectful language being uttered against
the Court and its Members. We consider the accusatory language particularly
offensive because it was unfounded and undeserved. As this resolution earlier
clarifies, the petition for certiorari did not contain a proper affidavit of service.
We do not need to rehash the clarification. Had the petitioner and its counsel
been humbler to accept their self-inflicted situation and more contrite, they
would have desisted from their harshness and disrespect towards the Court
and its Members. Although we are not beyond error, we assure the petitioner
and its counsel that our resolutions and determinations are arrived at or
reached with much care and caution, aware that the lives, properties and
rights of the litigants are always at stake. If there be errors, they would be
unintended, and would be the result of human oversight. But in this instance
the Court and its Members committed no error. The petition bore only cut
reproductions of the supposed registry receipts, which even a mere
“perfunctory scrutiny” would not pass as the original registry receipts required
by the Rules of Court.

Accordingly, the petitioner and its counsel, Atty. Eduardo S. Fortaleza, should
fully explain in writing why they should not be punished for indirect contempt
of court for their harsh and disrespectful language towards the Court and its
Members; and, in his case, Atty. Fortaleza should further show cause why he
should not be disbarred.chanrobleslaw

WHEREFORE, the Court DENIES the Motion for Reconsideration for its lack of
merit; ORDERS the petitioner and its counsel, Atty. Eduardo S. Fortaleza, to
show cause in writing within ten (10) days from notice why they should not be
punished for indirect contempt of court; and FURTHER DIRECTSAtty.
Fortaleza to show cause in the same period why he should not be disbarred.

SO ORDERED.cralawlawlibrary
SECOND DIVISION

G.R. No. 189850, September 22, 2014

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. REYNALDO TORRES,


JAY TORRES, BOBBY TORRES @ ROBERTO TORRES Y NAVA, BRION, AND
RONNIE TORRES, Accused, BOBBY TORRES @ ROBERTO TORRES Y
NAVA, Accused-Appellant.

DECISION

DEL CASTILLO, J.:

This is an appeal from the July 23, 2009 Decision1of the Court of Appeals (CA)
in CA-G.R. CR-H.C. No. 02925, which modified the December 5, 2006
Decision2 of the Regional Trial Court (RTC), Manila, Branch 27 in Criminal
Case No. 02-200171. The RTC found appellant Bobby Torres @ Roberto Torres
y Nava (appellant) guilty beyond reasonable doubt of the crime of murder but
on appeal, the CA found appellant guilty of the special complex crime of
robbery with homicide.

Factual Antecedents

On January 28, 2004, an Amended Information3 was filed before the RTC,

charging siblings Reynaldo Torres (Reynaldo), Jay Torres (Jay), Ronnie Torres
(Ronnie) and appellant with the special complex crime of robbery with homicide
committed against Jaime M. Espino (Espino). The Amended Information
contained the following accusatory allegations:ChanRoblesVirtualawlibrary

That on or about September 21, 2001, in the City of Manila, Philippines, the
said accused, armed with bladed weapons, conspiring and confederating
together with one malefactor whose true name, real identity and present
whereabouts [is] still unknown and helping one another, did then and there
willfully, unlawfully and feloniously, with intent of gain and by means of force,
violence, and intimidation, to wit: while one JAIME M. ESPINO was on board
his car and travelling along C.M. Recto Avenue corner Ylaya St., Tondo , this
City, by blocking his path and forcibly grabbing from the latter his belt-bag;
that on the occasion of the said robbery and by reason thereof, the herein
accused, in pursuance of their conspiracy, did then and there willfully,
unlawfully and feloniously, with intent to kill, attack, assault, use personal
violence and abuse of superior strength upon the said JAIME M. ESPINO and
that when the latter resisted, by then and there stabbing the latter with bladed
weapons on x x x different parts of his body, thereby inflicting upon the latter
multiple stab wounds which were the direct and immediate cause of his death
thereafter, and afterwhich, divest, take, rob and carry away a belt-bag, wallet,
necklace, watch and ring of undetermined amount, belonging to said JAIME M.
ESPINO.

Contrary to law.4cralawred

Only appellant was arrested. Reynaldo, Jay and Ronnie remain at-large to
date. During arraignment, appellant entered a plea of “not guilty”.5 After the
termination of the pre-trial conference, trial ensued.6cralawred

Version of the Prosecution

The prosecution presented as eyewitnesses Eduardo Umali (Umali), a butcher,


and Merlito Macapar (Macapar), a cigarette vendor. Also presented were Dr.
Romeo T. Salen (Dr. Salen), who testified on the cause of death of
Espino. From their testimonies,7 the following facts
emerged:ChanRoblesVirtualawlibrary

At around 10:00 p.m. of September 21, 2001, Espino was driving his car along
C.M. Recto Avenue in Divisoria, Manila when Ronnie suddenly blocked his
path. Espino alighted from his vehicle and approached Ronnie, who tried to
grab his belt-bag. Espino resisted and struggled with Ronnie for the
possession of his belt-bag but the latter’s brothers, Jay, Rey, appellant, and an
unidentified companion suddenly appeared. With all of them brandishing
bladed weapons, appellant and his brothers took turns in stabbing Espino in
different parts of his body while the unidentified companion held him by the
neck. When Espino was already sprawled on the ground, they took his belt-
bag, wallet and jewelries and immediately fled.

Espino was rushed to the hospital but was pronounced dead on arrival. In his
Medico-Legal Report No. W-658-2001,8 Dr. Salen concluded that Espino died of
multiple stab wounds caused by sharp bladed instruments. The back portion
of his head bore two stab wounds while his body suffered four stab wounds
which proved fatal. Considering the number and varying measurements of the
wounds, Dr. Salen opined that there were more than one assailant.

To prove the civil aspect of the case, Espino’s daughter, Winnie Espino-Fajardo
(Winnie) testified that the pieces of jewelry stolen from her father consisted of a
necklace worth P35,000.00, bracelet worth P15,000.00, wristwatch worth
P10,000.00 and two rings worth P10,000.00 each. As for their expenses,
Winnie said that P25,000.00 was spent for the burial lot and P37,000.00 for
the funeral services. She stated further that Espino was 51 years old at the
time of his death and was earning P3,000.00 a day as a meat
vendor.9cralawred

Version of the Defense


Appellant denied any participation in the crime. He testified that at around
10:00 p.m. of September 21, 2001, he was with his girlfriend, Merlita Hilario
(Merlita). They proceeded to the house of their friend, Marilou Garcia (Marilou),
in Villaruel, Tayuman, Manila where they had a drinking session which lasted
until they fell asleep. They did not leave their friend’s house until the following
morning when they went home. Thereupon, he was told that policemen were
looking for him because his brothers got involved in an altercation that
resulted in the death of someone.10 Merlita and Marilou corroborated
appellant’s alibi in their respective testimonies.11cralawred

From the testimony of another defense witness, Jorna Yabut-Torres (Jorna),


wife of Ronnie, the defense’s version of the incident emerged as
follows:ChanRoblesVirtualawlibrary

In the evening of September 21, 2001, Jorna and Ronnie were sharing jokes
with other vendors in Divisoria when a car stopped a few meters from their
stall. The driver alighted and asked why they were laughing. Ronnie replied
that it had nothing to do with him. The driver seemed drunk since he walked
back to his vehicle in an unsteady manner. Moments later, the driver returned
and stabbed Ronnie on the wrist with a knife. Jay saw the assault on his
brother, Ronnie, and got a bolo which he used to hack the driver
repeatedly. Thereafter, Ronnie and Jay fled.12cralawred

Ditas Biescas-Mangilya, a vegetable vendor in Divisoria, corroborated Jorna’s


version of the incident in her testimony.13cralawred

Ruling of the Regional Trial Court

In its December 5, 2006 Decision,14 the RTC held that appellant could not have
committed robbery. It ratiocinated, viz:ChanRoblesVirtualawlibrary

Prosecution witness Merlito D. Macapar testified that Ronnie took the belt bag
of the deceased while Bobby and the rest took his wristwatch, ring and
necklace. However, on cross-examination, witness admitted that he did not see
who took the ring, wristwatch and necklace because as soon as the deceased
fell on the ground, accused and companions surrounded him. Merlito’s
testimony was contradicted by Eduardo Umali on a vital point. Thus, Merlito
testified that there was an exchange of heated words. There was no intimation
whatsoever what the altercation was about. He was ten meters away. No such
altercation, however, took place according to Eduardo who was barely five
meters away. This tainted the testimony of Merlito and Eduardo with
suspicion. When material witnesses contradict themselves on vital points, the
element of doubt is injected and cannot be lightly disregarded. That was not
all though. Merlito testified [that] several people witnessed the incident. The
stall of the victim’s daughter was about ten meters from the crime scene, which
was a few meters from the stall of Ronnie. They both had been in their
respective stalls for quite sometime. The principal prosecution witnesses are
familiar with the deceased and the accused except for the unidentified
companion as they often see them at the vicinity. Thus, in all likelihood,
accused and the victim are familiar if not know each other very well. The
perpetration of robbery at the place was thus unlikely.

Even granting that the element of taking is present, still, accused cannot be
held liable for the complex crime of robbery with homicide for the reason that it
was not indubitably shown that the main purpose of the accused was to rob
the victim. To the mind of the Court, this is precisely the reason why the
prosecution skipped the utterances made by the protagonist[s] during the
attack. To sustain a [conviction] for the special complex crime of robbery with
homicide, the original criminal design of the culprit must be robbery and the
homicide is perpetrated with a view to the consummation of the robbery, or by
reason or on the occasion of the robbery (People vs. Ponciano, 204 SCRA 627).

x x x x

The crime of robbery not having been indubitably established, the accused
cannot be convicted of the special complex crime of robbery with homicide.15

The RTC thus concluded that appellant can only be liable for the killing of
Espino. It held him guilty of murder after it found the qualifying circumstance
of abuse of superior strength, which was alleged in the Information and duly
established by the prosecution. Moreover, the RTC ruled that conspiracy
among the accused attended the crime.

Anent the civil aspect of the case, the RTC granted civil indemnity, actual and
moral damages to the heirs of Espino, but denied the claim for loss of earning
capacity for lack of documentary evidence.

The dispositive portion of the RTC Decision reads:ChanRoblesVirtualawlibrary

WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Court finds accused


Bobby Torres y Nava, “Guilty” beyond reasonable doubt of the crime of Murder
as the qualifying circumstance of abuse of superior strength attended the
commission of the crime and hereby sentences him to suffer the penalty of
Reclusion Perpetua, to indemnify the heirs of the victim the sum of P50,000.00,
the additional sum of P50,000.00 as moral damages, actual damages in the
amount of P62,000.00 and to pay the costs.

Let alias warrant of arrest issue against accused Reynaldo Torres, Jay Torres
and Ronnie Torres.

SO ORDERED.16
Appellant filed a Motion for Reconsideration17 which was denied in an
Order18 dated April 10, 2007.

Hence, appellant appealed to the CA.19cralawred

Ruling of the Court of Appeals

In modifying the ruling of the RTC, i.e., finding appellant guilty of robbery with
homicide instead of murder, the CA found that the primary intention of
appellant and his co-accused was to rob Espino and his killing was only
incidental to the robbery. The blocking of Espino’s car and the struggle for
possession of his belt-bag after he alighted are clear manifestations of the
intent to commit robbery. The dispositive portion of the July 23, 2009
Decision20 of the CA reads as follows:ChanRoblesVirtualawlibrary

WHEREFORE, in view of foregoing, the appealed decision of the RTC Manila,


Branch 27 dated December 5, 2006 is hereby MODIFIED in that appellant is
found GUILTY beyond reasonable doubt of the crime of ROBBERY with
HOMICIDE and he is hereby sentenced to suffer the penalty of reclusion
perpetua. The trial court’s award to the heirs of the victim, Jaime Espino, of
civil indemnity in the amount of P50,000.00, moral damages in the amount of
P50,000.00, and actual damages in the amount of P62,000.00 as well as its
order to appellant to pay the costs of suit, are hereby AFFIRMED.

SO ORDERED.21

Hence, this present appeal.

Assignment of Errors

Appellant imputes upon the CA the following errors in his Supplemental


Brief.22cralawred

The acquittal of the accused-appellant in the robbery charge should be left


undisturbed as being final and executory which cannot be overturned without
violating the proscription against double jeopardy.23cralawred

The appellate court exceeded its jurisdiction when it reviewed the entire case
despite the fact that the accused-appellant only appealed his conviction for
murder.24cralawred

It was an error to convict the accused-appellant of the crimes charged


considering that his guilt was not proven beyond reasonable doubt.25cralawred

Our Ruling
The appeal is unmeritorious.

In an appeal by an accused, he waives


his right not to be subject to double
jeopardy.

Appellant maintains that the CA erred in finding him liable for robbery with
homicide as charged in the Amended Information. He argues that his appeal to
the CA was limited to his conviction for murder and excluded his acquittal for
robbery. And by appealing his conviction for murder, he does not waive his
constitutional right not to be subject to double jeopardy for the crime of
robbery. He claims that even assuming that the RTC erred in acquitting him of
the robbery charge, such error can no longer be questioned on appeal.

We cannot give credence to appellant’s contentions. “An appeal in [a] criminal


case opens the entire case for review on any question including one not raised
by the parties.”26 “[W]hen an accused appeals from the sentence of the trial
court, he waives the constitutional safeguard against double jeopardy and
throws the whole case open to the review of the appellate court, which is then
called upon to render such judgment as law and justice dictate, whether
favorable or unfavorable to the appellant.”27 In other words, when appellant
appealed the RTC’s judgment of conviction for murder, he is deemed to have
abandoned his right to invoke the prohibition on double jeopardy since it
became the duty of the appellate court to correct errors as may be found in the
appealed judgment. Thus, appellant could not have been placed twice in
jeopardy when the CA modified the ruling of the RTC by finding him guilty of
robbery with homicide as charged in the Information instead of murder.

Appellant is guilty of the crime of


robbery with homicide.

“Robbery with homicide exists ‘when a homicide is committed either by reason,


or on occasion, of the robbery. To sustain a conviction for robbery with
homicide, the prosecution must prove the following elements: (1) the taking of
personal property belonging to another; (2) with intent to gain; (3) with the use
of violence or intimidation against a person; and (4) on the occasion or by
reason of the robbery, the crime of homicide, as used in its generic sense, was
committed. A conviction requires certitude that the robbery is the main
purpose and objective of the malefactor and the killing is merely incidental to
the robbery. The intent to rob must precede the taking of human life but the
killing may occur before, during or after the robbery’.”28cralawred

In this case, the prosecution adduced proof beyond reasonable doubt that the
primary intention of appellant and his companions was to rob Espino. Umali
and Macapar, the eyewitnesses presented by the prosecution, testified that at
around 10:00 p.m. of September 21, 2001, appellant’s brother and co-accused,
Ronnie, blocked Espino’s car at the corner of C.M. Recto Avenue and Ylaya
Street. When Espino alighted from his vehicle, Ronnie attempted to grab his
belt-bag. A struggle for possession of the belt-bag ensued. It was at this
juncture that appellant and the other co-accused joined the fray and stabbed
Espino several times in the head and body. When Espino fell to the pavement
from his stab wounds, appellant, Ronnie and their cohorts got hold of the
victim’s wallet, belt-bag, wristwatch and jewelry then fled together.29cralawred

From the foregoing, it is clear that the primordial intention of appellant and his
companions was to rob Espino. Had they primarily intended to kill Espino,
they would have immediately stabbed him to death. However, the fact that
Ronnie initially wrestled with appellant for possession of the belt-bag clearly
shows that the central aim was to commit robbery against Espino. This
intention was confirmed by the accused’s taking of Espino’s belt-bag, wallet,
wrist-watch and jewelries after he was stabbed to death. The killing was
therefore merely incidental, resulting by reason or on occasion of the robbery.

The testimonies of the prosecution


eyewitnesses are worthy of credence.

Appellant attempts to discredit Umali and Macapar by asserting that there are
glaring contradictions in their testimonies. He calls attention to the RTC’s
observation that Macapar gave conflicting testimonies on whether he actually
witnessed who among appellant and his cohorts took Espino’s valuables after
he fell to the ground. Appellant asserts further that Umali’s testimony that an
altercation did not precede the commission of the crime contradicts the
testimony of Macapar that a heated exchange of words occurred prior to the
incident. He also claims that it is contrary to human nature for Espino to
alight from his car at 10:00 p.m. while in possession of a large amount of
money without fear of an impending hold-up.

We are not persuaded. The inconsistencies attributed to the prosecution’s


eyewitnesses involve minor details, too trivial to adversely affect their
credibility. Said inconsistencies do not depart from the fact that these
eyewitnesses saw the robbery and the fatal stabbing of Espino by appellant and
his cohorts. “[T]o the extent that inconsistencies were in fact shown, they
appear to the Court to relate to details of peripheral significance which do not
negate or dissolve the positive identification by [Umali and Macapar of
appellant] as the perpetrator of the crime.”30 “Inaccuracies may in fact suggest
that the witnesses are telling the truth and have not been
rehearsed. Witnesses are not expected to remember every single detail of an
incident with perfect or total recall.”31cralawred

Moreover, it is unlikely that Espino feared alighting from his vehicle at a late
hour while in possession of a huge amount of money since he was a vendor
doing business in the vicinity where the incident occurred. He was familiar
with the people and their activities in the premises.

In view of the above, the Court finds that the CA properly lent full credence to
the testimonies of Umali and Macapar.

The weapons are not the corpus delicti.

Appellant contends that the evidence is insufficient for his conviction since the
weapons used in the stabbing of Espino were not presented. In other words,
he asserts that it was improper to convict him because the corpus delicti had
not been established.

We disagree. ‘“[C]orpus delicti refers to the fact of the commission of the crime
charged or to the body or substance of the crime. In its legal sense, it does not
refer to the ransom money in the crime of kidnapping for ransom or to the body
of the person murdered’ or, in this case, [the weapons used in the commission
of robbery with homicide]. ‘Since the corpus delicti is the fact of the
commission of the crime, this Court has ruled that even a single witness’
uncorroborated testimony, if credible may suffice to prove it and warrant a
conviction therefor. Corpus delicti may even be established by circumstantial
evidence.’”32cralawred

In this case, the corpus delicti was established by the evidence on record. The
prosecution eyewitnesses testified that appellant and his cohorts used knives
to perpetrate the crime. Their testimonies on the existence and use of weapons
in committing the offense was supported by the medical findings of Dr. Salen
who conducted the post-mortem examination. Dr. Salen found that Espino
sustained several stab wounds with varying measurements which were caused
by sharp bladed instruments. Appellant is therefore mistaken in arguing that
the failure to present the weapons used in killing Espino was fatal to the cause
of the prosecution.

The defenses of denial and alibi cannot prosper.

We are in complete agreement with the RTC and the CA in finding lack of merit
in appellant’s defenses of denial and alibi.

Appellant claims that he was in a drinking session in his friend’s house in


Villaruel, Tayuman, Manila, from 10:00 p.m. of September 21, 2001 until 1:00
a.m. of the following day. He alleges to have slept at the place and went home
at around 7:00 a.m. of September 22, 2001. According to appellant, he did not
depart from his friend’s house from the time they started drinking until he
went home the following morning.
Appellant’s alibi is unworthy of credence. Appellant himself testified that
Villaruel is less than two kilometers away from Divisoria and that it would only
take a few minutes to go to Divisoria from Villaruel.33 Clearly, it was not
impossible for appellant to be physically present at the crime scene during its
commission. “For alibi to prosper, it must strictly meet the requirements of
time and place. It is not enough to prove that the accused was somewhere else
when the crime was committed, but it must also be demonstrated that it was
physically impossible for him to have been at the crime scene at the time the
crime was committed.”34cralawred

The fact that appellant presented witnesses to corroborate his alibi deserves
scant consideration. Their testimonies are viewed with skepticism due to the
very nature of alibi the witnesses affirm.35 Appellant can easily fabricate an
alibi and ask relatives and friends to corroborate it.36cralawred

We have always ruled that alibi and denial are inherently weak defenses and
must be brushed aside when the prosecution has sufficiently and positively
ascertained the identity of the accused. Moreover, it is only axiomatic that
positive testimony prevails over negative testimony.37cralawred

The evidence was sufficient to establish


the presence of abuse of superior strength.

Appellant argues that mere superiority in numbers does not indicate the
presence of abuse of superior strength. In the same manner, appellant claims
that the number of wounds inflicted on the victim is not the criterion for the
appreciation of this circumstance.

“There is abuse of superior strength when the offenders took advantage of their
combined strength in order to consummate the offense.”38 Here, appellant and
his four companions not only took advantage of their numerical superiority,
they were also armed with knives. Espino, on the other hand, was unarmed
and defenseless. While Ronnie was wrestling with Espino, appellant and his
co-accused simultaneously assaulted the latter. The unidentified companion
locked his arm around the neck of Espino while appellant and his co-accused
stabbed and hacked him several times. While Espino was lying defenseless on
the ground, they divested him of all his valuables. Thereafter, they
immediately fled the scene of the crime.39 It is clear that they executed the
criminal act by employing physical superiority over Espino.

The Proper Penalty

Nonetheless, the presence of abuse of superior strength should not result in


qualifying the offense to murder. When abuse of superior strength obtains in
the special complex crime of robbery with homicide, it is to be regarded as a
generic circumstance, robbery with homicide being a composite crime with its
own definition and special penalty in the Revised Penal Code. With the penalty
ofreclusion perpetua to death imposed for committing robbery with
homicide,40 “[t]he generic aggravating circumstance of [abuse of superior
strength] attending the killing of the victim qualifies the imposition of the death
penalty on [appellant].”41 In view, however, of Republic Act No. 9346, entitled
“An Act Prohibiting the Imposition of the Death Penalty in the Philippines,” the
penalty that must be imposed on appellant is reclusion perpetua without
eligibility for parole.42cralawred

The Civil Liabilities

In robbery with homicide, civil indemnity and moral damages are awarded
automatically without need of allegation and evidence other than the death of
the victim owing to the commission of the crime.43 Here, the RTC and CA
granted civil indemnity and moral damages to Espino’s heirs in the amount of
P50,000.00 each. These courts were correct in granting the awards, but the
awards should have been P100,000.00 each. Recent jurisprudence44 declares
that when the imposable penalty is death, the awards of civil indemnity and
moral damages shall be P100,000.00 each.

In granting compensatory damages, the prosecution must “prove the actual


amount of loss with a reasonable degree of certainty, premised upon competent
proof and the best evidence obtainable to the injured party.”45 ‘“Receipts
should support claims of actual damages.’ Thus, as correctly held by the [RTC]
and affirmed by the CA, the amount of [P62,000.00] incurred as funeral
expenses can be sustained since these are expenditures supported by
receipts.”46cralawred

The existence of one aggravating circumstance also merits the grant of


exemplary damages under Article 2230 of the New Civil Code. Pursuant to
prevailing jurisprudence, we likewise award P100,000.00 as exemplary
damages to the victim’s heirs.47 An interest at the legal rate of 6% per
annum on all awards of damages from the finality of this judgment until fully
paid should likewise be granted to the heirs of Espino.48cralawred

Lastly, the RTC did not err in refusing to award indemnity for loss of earning
capacity of Espino despite the testimony of his daughter that he earned
P3,000.00 a day as a meat dealer. “Such indemnity is not awarded in the
absence of documentary evidence except where the victim was either self-
employed or was a daily wage worker earning less than the minimum wage
under current labor laws. Since it was neither alleged nor proved that the
victim was either self-employed or was a daily wage earner, indemnity for loss
of earning capacity cannot be awarded to the heirs of the victim.”49cralawred

WHEREFORE, the July 23, 2009 Decision of the Court of Appeals in CA-G.R.
CR-H.C. No. 02925 that affirmed with modifications the December 5, 2006
Decision of the Regional Trial Court of Manila, Branch 27, in Criminal Case No.
02-200171 is AFFIRMED with further MODIFICATIONS. Appellant Bobby
Torres @ Roberto Torres y Nava is ordered to pay the heirs of the victim, Jaime
M. Espino, P100,000.00 as civil indemnity; P100,000.00 as moral damages,
and P100,000.00 as exemplary damages. The interest rate of 6% per annum is
imposed on all damages awarded from the finality of this Decision until fully
paid.

SO ORDERED.cralawlaw library
SECOND DIVISION

G.R. No. 207443, July 23, 2014

GENATO INVESTMENTS, INC., Petitioner, v. HON. JUDGE OSCAR P.


BARRIENTOS, In His Capacity As The Presiding Judge of The Regional
Trial Court, of Caloocan City, Branch 123, EMILY P. DIZON, In Her
Capacity As The Branch Clerk of Court of The Regional Trial Court of
Caloocan City, Branch 123, JIMMY T. SORO, Court Process Server of The
Regional Trial Court of Caloocan, Branch 123, EVELINA M. GARMA, CITY
TREASURER OF CALOOCAN CITY, PHILLIP L. YAM, Officer-In-Charge,
Real Property Tax Division of The Caloocan City Treasurer’s Office,
ANTHONY B. PULMANO, Officer-In-Charge, City Assessor of Caloocan City,
And LAVERNE REALTY & DEVELOPMENT CORPORATION, Respondents.

DECISION

PEREZ, J.:

This is a Petition for Review on Certiorari1 of the Resolution2 of the Court of


Appeals (CA) dated 27 February 2013, which denied petitioner Genato
Investment, Inc.’s (petitioner) Petition3 for Annulment of Judgment against the
Orders dated 31 August 20114 and 26 April 20125 of the Regional Trial Court
of Caloocan City (RTC Caloocan) in LRC-Case No. C-5748. In the said orders,
the RTC Caloocan granted private respondent Laverne Realty & Development
Corporation’s (private respondent) Petition6 for the cancellation of Transfer
Certificate of Title (TCT) No. 333417 of the Register of Deeds of Caloocan City in
the name of petitioner and the issuance of a new title in the name of private
respondent, and directed the issuance of a Writ of Possession8 over the subject
property in favor of private respondent.

Antecedent Facts

TCT No. 33341 is registered under the name of petitioner and covers two (2)
adjacent parcels of land, Lots Nos. 1-A and 13-B-1, situated at Rizal Avenue
Extension, Caloocan City, with a combined area of 796.80 sq.m., with Lot No.
1-A having an area of 341.00 sq.m., and Lot No. 13-B-1 having an area of
445.80 sq.m., more or less. Together, both lots have a total assessed value of
P8,697,870.00.

On 14 October 2009, due to alleged deficiency in real property taxes due on Lot
No. 13-B-1 for the years 1993 to 2008 in the amount of P2,678,439.04, the
Office of the City Treasurer of Caloocan City sold at public auction Lot No. 13-
B-1, in which private respondent emerged as the highest bidder.

The Office of the City Treasurer, through the City Treasurer of Caloocan,
Evelina M. Garma (respondent Garma), issued on 15 October 2009, a
Certificate of Sale of Delinquent Property to Purchaser9 and on 21 January
2011, a Final Deed of Conveyance10 over Lot 13-B-1 in favor of private
respondent.

Petitioner was not made aware of any of the proceedings before the Office of the
City Treasurer, as the Notice of Levy11 and Warrant of Levy12 issued by the
Office of the City Treasurer, through respondent Garma, were sent to petitioner
at an inexistent office in Tondo, Manila and were, thus, returned
unserved.13cralawred

By virtue of the above-mentioned final deed of conveyance, private respondent


on 4 May 2011 filed LRC-Case No. C-5748 with the RTC Caloocan praying for
the consolidation of the ownership of the property covered by TCT No. 33341,
the cancellation of the same TCT in the name of petitioner, and the issuance of
a new title in the name of private respondent, notwithstanding the fact that the
delinquency sale involved only Lot No. 13-B-1.14cralawred

The RTC issued an Order on 13 June 2011 setting the initial hearing on the
Petition, and directing that copies of the said order be posted at the subject
premises and furnished petitioner. However, the records of the case,
particularly the Certificate of Posting15 dated 16 July 2011 and the Process
Server's Returns dated 13 and 16 July 201116 executed by respondent Jimmy
T. Soro (respondent Soro), the Process Server of RTC Caloocan, will show that
the order was not posted at the subject premises, and that petitioner did not
receive any such copies of the Order, as respondent Soro sought to serve the
same at the inexistent offices.

On 31 August 2011, after private respondent adduced its evidence, the RTC
Caloocan issued an Order17 granting private respondent's petition. Inasmuch
as petitioner was unaware of the proceedings, the same order became final and
executory. Thereafter, RTC Caloocan, upon motion18of private respondent,
issued another Order dated 26 April 2012 directing the issuance of a Writ of
Possession in favor of private respondent. The said writ,19 signed by the Branch
Clerk of the RTC Caloocan, respondent Emily P. Dizon (respondent Dizon), was
issued on 27 April 2012.

Petitioner learned of the auction sale only after 9 May 2012, when the Sheriff of
the RTC Caloocan, respondent Renebert B. Baloloy (respondent Baloloy), left a
Notice to Vacate20 in the subject premises. Petitioner claimed that it was very
much surprised at the auction sale of Lot 13-B-1 because it had been
religiously paying its real property taxes thereon up to 2012. In fact, it had in
its possession a Certification21 dated 19 September 2011 issued by the Office of
the City Treasurer of Caloocan, through its OIC Land Tax Division, respondent
Phillip L. Yam (respondent Yam), stating that the real property taxes due on
Lots 1-A and 13-B-1, with a combined assessed value of P8,697,870.00, up to
the 4th quarter of 2011, have been duly paid by petitioner.

Notwithstanding the representations made by petitioner with the RTC


Caloocan22 and Office of the City Treasurer, Baloloy, proceeded to implement
the Writ of Possession on 15 May 2012 over both Lots Nos. 1-A and 13-B-1 and
their improvements. As a result thereof, private respondent wrested physical
possession of the entire property covered by TCT No. 33341 from petitioner.

Feeling aggrieved, petitioner filed with the CA a Petition for Certiorari23 under
Rule 65 of the Rules of Court, but later withdrew24 the same, reasoning that
the withdrawal would enable it to comply with the rules on forum
shopping. The CA granted petitioner’s prayer to withdraw.25cralawred

On 14 January 2013, petitioner, filed with the CA a Petition for Annulment of


Judgment praying, among others, for the annulment and setting aside of the
Orders dated 31 August 2011 and 26 April 2012 and the Writ of Possession
issued by the RTC Caloocan. Petitioner likewise prayed that the CA direct
private respondent to vacate the property and surrender possession thereof to
petitioner.

Ruling of the Court of Appeals

On 27 February 2013, the CA issued a Resolution26 dismissing CA G.R. SP No.


128187 on the ground that the Petition for Annulment of Judgment that
petitioner filed is not the proper remedy, as it had other available remedies to
question the Orders of the RTC Caloocan. Citing Estate of the late Mercedes
Jacob v. Court of Appeals27 the CA, stated that where the land subject of the
case was already registered in the name of the buyer in the auction sale, the
proper remedy to annul said transfer was to file an action for reconveyance on
the ground of fraud. The CA added that the Petition for Certiorari petitioner
had earlier filed but later withdrew showed that other remedies were available
to petitioner. The CA, likewise, denied petitioner's motion for
reconsideration. cralawred
28

Hence, this Petition.

Our Ruling

Petitioner questions the dismissal by the CA in CA-G.R. SP No. 128187, and


contends that:chanRoblesvirtualLawlibrary

a. Under the particular factual circumstances surrounding this case, a petition


for annulment of judgment is the only and appropriate remedy of petitioner to
question the Orders of the RTC Caloocan, which allowed private respondent to
consolidate ownership and take possession of the property covered by TCT No.
33341; andChanRoblesVirtualawlibrary
b. All the requisite elements for the filing of a petition for annulment of
judgment on the grounds of extrinsic fraud, lack of jurisdiction, and want of
due process, are present in this case.

We grant the Petition.

We first tackle the procedural issue. Based on the records of this case, it is
undisputed that the Order of the RTC Caloocan dated 31 August 2011 became
final and executory on 11 October 2011, when the latter issued an Entry of
Judgment for the same. The general rule is that a final and executory
judgment can no longer be disturbed, altered, or modified in any respect, and
that nothing further can be done but to execute it. A final and executory
decision may, however, be invalidated via a Petition for Relief or a Petition to
Annul the same under Rules 38 or 47, respectively, of the Rules of
Court.29cralawred

Under Rule 38, when a judgment or final order is entered, or any other
proceeding is thereafter taken against a party in any court through fraud,
accident, mistake, or excusable negligence, he may file a petition in such court
and in the same case praying that the judgment, order or proceeding be set
aside. The verified petition must be filed within sixty (60) days after the
petitioner learns of the judgment, final order, or other proceeding to be set
aside, and not more than six (6) months after such judgment or final order was
entered. However, it is uncontested that petitioner learned about the
proceedings in LRC-Case No. C-5748 more than six (6) months after the Order
dated 31 August 2011 had become final and executory on 11 October
2011. Thus, this remedy under Rule 38 of the Rules of Court was clearly
unavailing.

Thus, the only remedy left to petitioner in this case is a petition for annulment
of judgment under Rule 47, which it, in fact, filed.

The principle we laid down in Estate of the late Mercedes Jacob v. Court of
Appeals is not applicable. We disagree with the reasoning of the CA and
respondents that petitioner in this particular case should have filed either an
action for reconveyance or annulment of the auction sale, because to do so
would have required the court hearing the action to modify or interfere with the
judgment or order of another co-equal court, especially in this case where the
said judgment or order had attained finality. Well-entrenched in our
jurisdiction is the doctrine that a court has no power to do so, as that action
may lead to confusion and seriously hinder the administration of
justice.30cralawred

We have repeatedly ruled that a Petition for Annulment of Judgment under


Rule 47 of the Rules of Court is a remedy granted only under exceptional
circumstances where a party, without fault on his part, has failed to avail of
the ordinary remedies of new trial, appeal, petition for relief or other
appropriate remedies. The same petition is not available as a substitute for a
remedy which was lost due to the party’s own neglect in promptly availing of
the same.31 There is here no attempted substitution; annulment of judgment is
the only remedy available to petitioner.

Regarding the previous filing of a Petition for Certiorari under Rule 65 such is
of no moment as petitioner timely withdrew the same before any relief could be
afforded by the CA.

We now proceed to the substantive and more pressing issue. We agree with the
position of petitioner that all the requisite elements for the filing of a petition
for annulment of judgment on the grounds of extrinsic fraud, lack of
jurisdiction, and want of due process, are present in this case.

It should be stressed that petitioner instituted the case before the CA precisely
to seek relief from the declaration of nullity of TCT No. 33341, which had been
issued without first giving petitioner an opportunity to be heard.

In Castigador v. Nicolas,32 we had the occasion to state


that:chanRoblesvirtualLawlibrary

The petition filed with the CA contained the following allegations, among
others: (1) the auction sale of the land is null and void for lack of actual and
personal notice to herein petitioner; (2) the RTC did not comply with the
procedure prescribed in Section 71, Presidential Decree No. 1529 requiring
notice by the Register of Deeds to the registered owner as to the issuance of a
certificate of sale; and (3) petitioner was not afforded due process when she was
not notified of the proceedings instituted by respondent for the cancellation of
her title. The petition need not categorically state the exact words extrinsic
fraud; rather, the allegations in the petition should be so crafted to easily point
out the ground on which it was based. The allegations in the petition filed with
the CA sufficiently identify the ground upon which the petition was based -
extrinsic fraud. Fraud is extrinsic where it prevents a party from having a trial
or from presenting his entire case to the court, or where it operates upon
matters pertaining not to the judgment itself but to the manner in which it is
procured. The overriding consideration when extrinsic fraud is alleged is that
the fraudulent scheme of the prevailing litigant prevented a party from having
his day in court. The allegations clearly charged the RTC and respondent with
depriving petitioner of the opportunity to oppose the auction sale and the
cancellation of her title and ventilate her side. This allegation, if true,
constitutes extrinsic fraud.chanrobleslaw

Petitioner not only puts in question the complete lack of due process in the
conduct of the auction sale and the proceedings before the RTC Caloocan, but
the absolute lack of basis for the declaration by the Office of the City Treasurer
that it had been delinquent in the payment of real property taxes due on its
property, particularly Lot 13-B-1.

Technicalities aside, we are particularly alarmed by the material allegations


and serious charges brought up by petitioner in its pleadings, which go into the
very core of the action for annulment of judgment and, more importantly,
which none of the respondents dispute.

Petitioner fully paid its real estate taxes due on Lot 13-B-1.

Petitioner confronts respondents with copies of its Real Property Tax


Receipts33 issued by the Office of the City Treasurer of the City of Caloocan
spanning the period from 2000 to 2012, as well as the Payment History34 from
1995 to 2011 evidencing full payment of real property taxes due on its land,
whose assessed value was adjusted in 2005 to P8,697,870.00.

Petitioner likewise confronts respondents with the Certification35 dated 19


September 2011 issued by the Office of the City Treasurer of Caloocan, through
its OIC Land Tax Division, respondent Yam, certifying that the real property
taxes due on Lots 1-A and 13-B-1, with an assessed value of P8,697,870.00,
up to the 4th quarter of 2011, and previous years, have been duly paid by
petitioner.

We note that respondents, particularly respondents Garma and Yam, the City
Treasurer and the OIC Land Tax Division, have been inexplicably silent as
regards all that petitioner presented for our consideration.

Multiple Tax Declarations refer to one and the same property.

Petitioner alleges and brings to our attention the matter that it religiously paid
in full its real property taxes due on its land, Lots Nos. 1-A and 13-B-1, with an
assessed value of P8,697,870.00, under a single tax declaration issued by the
Office of the City Assessor of Caloocan,36 no. D12-109-00012-C under Property
Index No. 113-12-109-01-013, as certified by the OIC City Assessor,
respondent Anthony L. Pulmano (respondent Pulmano).37cralawred

The alleged delinquency of petitioner in its real property taxes and the basis for
the auction sale stemmed from the supposed non-payment of real property
taxes due on Lot 13-B-1, with an assessed value of P4,866,350.00 covered by
another tax declaration,38 D12-109-00013-C under Property Index No. 113-12-
109-01-014.

Shortly before private respondent took over the property of petitioner in 2012,
the Office of the City Assessor, through respondent Pulmano, issued yet
another tax declaration, no. 12-109-00153-12-C under Property Index No. 113-
12-109-01-013, this time covering only Lot No. 1-A, with an assessed value of
P3,831,520.00. This new issuance cancelled petitioner’s original Tax
Declaration No. D12-109-00012-C under Property Index No. 113-12-109-01-
013, which previously covered both Lots Nos. 1-A and 13-B-1.

As petitioner duly points out,39 a simple mathematical application would show


that if the assessed values in the 2nd and 3rd tax declarations were
added, P4,866,350.00 and P3,831,520.00, the same would amount to
P8,697,870.00, the assessed value of the property as indicated in the original
tax declaration.

Therefore, if all the tax declarations issued by respondent Pulmano refer to one
and the same property of petitioner, and the latter fully paid all its realty taxes
due on the same, then it would follow that the finding of delinquency did not
have any basis.

We note that respondent Pulmano, much like respondents Garma and Yam,
has been inexplicably silent as regards the foregoing.

Private respondent took possession of both Lots Nos. 1-A and 13-B-1.

Notwithstanding the foregoing serious anomalies attending the delinquency


sale, petitioner, again, confronts respondents, particularly public respondents
Judge Oscar P. Barrientos, Dizon and Baloloy, as well as private respondent,
with the charge that the latter, with the assistance of respondent Baloloy,
forcibly ejected petitioner from the whole property, even if it was only Lot 13-B-
1 that was the subject of the writ of possession.

Again, none of the respondents contested this claim.

It certainly is unallowable that petitioner be deprived of his property, or a


portion thereof, without any lawful court order or process. We take into
consideration the previous actions of private respondent, which as again
pointed out by petitioner, appear to indicate that it was the intention of private
respondent all along to gain possession over both lots covered by TCT No.
33341.

We are called upon to read the foregoing act of deprivation in totality with the
other actions of respondents, which none of them deny, despite being given
ample opportunity to do so. It would have been a simple matter for
respondents to refute the allegations of petitioner and aver that the evidence
presented by petitioner to prove full payment of real property taxes do not refer
to the same property subject of the auction sale; or that the tax declarations
refer to different properties owned by petitioner, and not those subject of this
case; or that respondent Baloloy neither implemented the writ of possession
over, nor did private respondent take possession of Lot No. 1-A. Instead,
respondents Garma and Yam, in their Comment,40 make no factual
declarations and curiously limit their allegations to a purely procedural
standpoint – that petitioner should have pursued an action for reconveyance of
the property, a point we have already resolved. Respondent Pulmano, for his
part, alleged in his Manifestation41 that he chose not to file any comment to the
Petition, despite our express directive in Our Resolution dated 24 July 2013
requiring all the respondents to comment in the petition. Respondent Pulmano
went so far as to impose his own condition on us, that he shall file his
Comment in the event that we give due course to the petition.

Indeed, it is evident that respondents have chosen, by their complete and


palpable silence on the substantive matter, to merely rely on the presumption
of regularity in the performance of official duties.42cralawred

As a general rule, we have time and again stated that we are not a trier of
facts. However, such rule is subject to several recognized
exceptions: cralawred
43

(1) When the findings are grounded entirely on speculation, surmises and
conjectures;
(2) When the inference made is manifestly mistaken, absurd or impossible;
(3) When there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the findings of fact are conflicting;
(6) When in making its findings the Court of Appeals went beyond the issues
of the case, or its findings are contrary to the admissions of both appellant
and appellee;
(7) When the findings are contrary to those of the trial court;
(8) When the findings of fact are conclusions without citation of specific
evidence on which they are based;
(9) When the facts set forth in the petition as well as in the petitioners’
main and reply briefs are not disputed by the respondents; and
(10) When the findings of fact of the Court of Appeals are premised on the
supposed absence of evidence and contradicted by the evidence on record.
(11) When the Court of Appeals manifestly overlooked certain relevant facts not
disputed by the parties, which, if properly considered, would justify a
different conclusion. (Emphasis and underscoring supplied)

In this case, we stress that the factual allegations in the petition, showing that
petitioner fully paid its real property taxes on Lot No. 13-B-1 until 2011, were
not refuted by any of the respondents. Further, petitioner presented more than
sufficient evidence to support the said factual allegations. This failure of
respondents to refute such claim affords us the opportunity to go over the
factual antecedents to aid us in the resolution of this case. In the face of
overwhelming evidence, respondents’ reliance on the presumption of regularity
in the performance by public respondents of their official duties must fail. The
presumption of regularity is a disputable presumption under Rule 131 of the
Rules of Court, which may be rebutted by affirmative evidence.44cralawred

As mentioned above, the Notice of Levy and Warrant of Levy, were sent to an
inexistent office of petitioner at Tondo, Manila and were, thus, returned
unserved. Further, the Order dated 13 June 2011, setting the initial hearing
on the petition, was neither posted nor properly served upon
petitioner. Clearly, petitioner was deprived of its property without due process
of law. Inasmuch as it had sufficiently shown that it fully paid its real estate
taxes up to 2011, there was no basis to collect any tax liability, and no
obligation arose on the part of petitioner to pay the amount of real property
taxes sought to be collected. Consequently, petitioner should not have been
declared delinquent in the payment of the said taxes to Caloocan City, and the
latter did not acquire any right to sell Lot 13-B-1 in a public auction. Besides,
it appears that private respondent acted hastily in filing LRC-Case No. C-5748
by failing to ascertain the actual principal office of petitioner to enable the RTC
Caloocan to properly acquire jurisdiction over the person of petitioner.

Considering the foregoing, private respondent did not acquire any valid right to
petition the RTC Caloocan for the cancellation of TCT No. 33341 and, more
importantly, take possession of Lot 13-B-1, much less Lot 1-A. We reiterate
the principle that strict adherence to the statutes governing tax sales is
imperative, not only for the protection of the taxpayers, but also to allay any
possible suspicion of collusion between the buyer and the public officials called
upon to enforce the laws.45cralawred

WHEREFORE, the petition is GRANTED. The Resolutions of the Court of


Appeals dated 27 February 2013 and 30 May 2013 in CA-G.R. SP No. 128187
are SET ASIDE. Necessarily, the Orders dated 31 August 2011, 26 April 2012
and 19 November 2012, and the Writ of Possession dated 27 April 2012 in LRC
Case No. C-5748, are all vacated.

SO ORDERED.