Rule 16 To Rule 19

CIVIL PROCEDURE DIGEST - ATTY.
QUICHO
2017-2018
Acosta, Cabel, Cruz, Culajara, Justiniano, Nieto, Pracuelles, Religioso
Motion to Dismiss
1. Reynaldo Halimao vs Atty. Daniel Villanueva and Atty Inocencio Ferrer, A.C. No. 3825. February 1,
1996 (ACOSTA)
I. Established Facts
Reynaldo Halimao was the caretaker of Oo Kian Tiok in Cainta, Rizal. He wrote to the Chief Justice
alleging that Respondents Atty. Daniel Vilanueva and Atty. Inocencio Ferrer unlawfully entered the said
compound on April 4, 1992 armed with hand guns and “armalites” or machine guns. Halimao prayed for the
disbarment of said respondents.
Danilo Hernandez, the security guard of Oo Kian Tiok Compound filed an Administrative Complaint with
the same allegations against respondents. However, it was dismissed for lack of merit.
II. Halimao’s Complaint
• Attached to the complaint was an affidavit by Danilo Hernadez, the same security guard who filed the
administrative complaint
• Respondents’ comment
o [Motion to dismiss] The complaint is a mere duplication of the complaint filed by Danilo
Hernandez in Administrative Case No. 3835, which this Court had already dismissed on August 5, 1992 for lack
of merit.
o Atty. Ferrer alleged he was never near the compound as he spent the day with his family in
Makati.
o In addition, the complaints were intended to harass Atty. Ferrer as he was the principal lawyer
in a case involving ownership and control of Filipinas Textile Mills (Filtex), which is owned by Villanueva’s family
and whose premises are the Oo Kian Tiok compound.
SC: referred Halimao’s complaint to Integrated Bar of the Philippines (IBP)
III. IBP Resolution

The complaint is barred by the decision in Administrative Case No. 3835 which involved the same incident.
Res judicata applies because there is identity of interests of the parties. In this case, Halimao’s complaint even
included Danilo Hernandez’ affidavit. Thus, even if there is no absolute identity of parties, there is identity of
interests
IV. Motion for Reconsideration by Halimao

By filing a motion to dismiss the complaint in this case, private respondents must be deemed to have
hypothetically admitted the material allegations in the complaint and, therefore, private respondents must be
deemed to have confessed to the charge of serious misconduct.
V. Supreme Court Ruling
W.O.N filing a motion to dismiss is a hypothetical admission of the material allegations.
No.
The rule that a motion to dismiss is to be considered as a hypothetical admission of the facts alleged in
the complaint applies more particularly to cases in which the ground for dismissal is the failure of the
complaint to state a cause of action.
When it appears on the face of the complaint that the plaintiff is not entitled to any relief under the facts alleged,
the defendant may file a motion to dismiss hypothetically admitting the facts alleged in the complaint. By filing
such a motion, the defendant in effect says that even assuming the facts to be as alleged by the plaintiff, the
latter has failed to prove that he has a right which the former has violated.
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2017-2018
The rule does not unqualifiedly apply to a case where:
• the motion to dismiss is based on lack of jurisdiction of the court or tribunal over the person of the
defendant or over the subject matter or over the nature of the action;
• or on improper venue;
• or on lack of capacity to sue of the plaintiff
• or on litis pendentia, res judicata, prescription, unenforceability,
• or on the allegation that the suit is between members of the same family and no earnest efforts towards
a compromise have been made.
In such cases, the hypothetical admission is limited to the facts alleged in the complaint which relate to and are
necessary for the resolution of these grounds as preliminary matters involving substantive or procedural laws, but
not to the other facts of the case.
On the other hand, when a motion to dismiss is based on payment, waiver, abandonment, release, compromise,
or other form of extinguishment, the motion to dismiss does not hypothetically, but actually, admits the facts
alleged in the complaint, i.e., the existence of the obligation or debt, only that the plaintiff claims that the
obligation has been satisfied. So that when a motion to dismiss on these grounds is denied, what is left to be
proven in the trial is no longer the existence of the debt but the fact vel non of payment by the defendant.
Therefore, in this case, the IBP properly dismissed the complaint on the ground of res judicata.
2. ROSITA G. TAN, EUSEBIO V. TAN, REMIGIO V. TAN, JR., EUFROSINA V. TAN, VIRGILIO V. TAN and
EDUARDO V. TAN vs. COURT OF APPEALS and FERNANDO TAN KIAT
G.R. No. 125861. September 9, 1998 (Cabel)
The controversy centers on two (2) parcels of land situated at 970 M.H. del Pilar Street, Malate, Manila
previously owned by one Alejandro Tan Keh and which were then covered by Transfer Certificate of Title No.
35656.
Private respondent claimed that he bought the subject properties from Mr. Tan Keh in 1954. He built his
house thereon, but was unable to effect immediate transfer of title in his favor in view of his foreign nationality at
the time of the sale. Nonetheless, as an assurance in good faith of the sales agreement, Mr. Tan Keh turned over
to private respondent the owners duplicate copy of TCT and, in addition, executed a lease contract in favor of
private respondent for a duration of forty (40) years.
However, in 1958, Mr. Tan Keh sold the subject properties to Remigio Tan, his brother and father of
petitioners, with the understanding that the subject properties are to be held in trust by Remigio for the benefit of
private respondent and, that Remigio would execute the proper documents of transfer in favor of private
respondent should the latter at anytime demand recovery of the subject properties. TCT No. 35656 was thus
cancelled and in lieu thereof TCT No. 53284 was issued in the name of Remigio.
Private respondent never paid any rental and no demand whatsoever for the payment thereof had been
made on him. Remigio was killed in 1968. At his wake, petitioners were reminded of private respondent’s
ownership of the subject properties and they promised to transfer the subject properties to private respondent
who by then had already acquired Filipino citizenship by naturalization. Petitioners, however, never made good
their promise to convey the subject properties despite repeated demands by private respondent. In fact,
petitioners had the subject properties fraudulently transferred to their names under TCT No. 117898. Thus, the
filing of the complaint for recovery of property.
II. Complaint for Recovery of Property
Motion to Dismiss
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Petitioners Contentions:
(1) the complaint stated no cause of action
(2) the cause of action has long prescribed
(3) the cause of action has long been barred by a prior judgment
(4) the claim has been waived, abandoned and/or extinguished by laches and estoppel.
An Opposition to Motion To Dismiss with Memorandum was filed by private respondent. In turn, petitioners
filed their Memorandum of Authorities.
Complaint for Recovery of Property

The trial court issued an order dismissing private respondent’s complaint, acceding to all the grounds set forth by
petitioners in their motion to dismiss.
Ordinary Appeal
Dissatisfied, private respondent appealed to public respondent CA which set aside the dismissal and ordered the
remand of the case for further proceedings. Petitioners’ motion for reconsideration was denied by respondent CA
III. Issues (via petition for review)

1) Did CA err in not holding that the complaint failed to state a cause of action?
2) Did CA err in not holding that the respondent’s cause of action has prescribed?
3) Did CA err in not holding that respondent’s cause of action is barred by prior judgement?
4) Did CA err in not holding that respondent’s claim has been waived, abandoned or extinguished?
IV. Held
(Respondent Court’s decision)

The legal right of the appellant is his right to demand transfer of title to him the property which is held in
trust for him by the appellees. The correlative obligation of the appellees is to deliver title over the property to the
appellant which they are holding in trust for the former, upon the termination of the trust relationship. The
termination of the trust relationship is when the appellant finally demanded that the title of the property be
transferred in his name. The act or omission on the part of the appellees is their refusal to transfer the title of the
property in the appellant’s name. All these averments the appellees hypothetically admit when they filed a MTD
on the ground that the complaint does not state a cause of action. The trial court could have rendered a valid
judgment upon these hypothetically admitted averments in accordance with the prayer in the complaint which is
to have the title to the property held in trust by the appellee transferred in the appellants name.
The flaw in this conclusion is that, while conveniently echoing the general rule that averments in
the complaint are deemed hypothetically admitted upon the filing of a motion to dismiss grounded on the
failure to state a cause of action, it did not take into account the equally established limitations to such
rule, i.e., that a motion to dismiss does not admit the truth of mere epithets of fraud; nor allegations of
legal conclusions; nor an erroneous statement of law; nor mere inferences or conclusions from facts not
stated; nor mere conclusions of law; nor allegations of fact the falsity of which is subject to judicial
notice; nor matters of evidence; nor surplusage and irrelevant matter; nor scandalous matter inserted
merely to insert the opposing party; nor to legally impossible facts; nor to facts which appear unfounded
by a record incorporated in the pleading, or by a document referred to; and, nor to general averments
contradicted by more specific averments. A more judicious resolution of a motion to dismiss, therefore,
necessitates that the court be not restricted to the consideration of the facts alleged in the complaint and
inferences fairly deducible therefrom. Courts may consider other facts within the range of judicial notice
as well as relevant laws and jurisprudence which the courts are bound to take into account, and they are
also fairly entitled to examine records/documents duly incorporated into the complaint by the pleader
himself in ruling on the demurrer to the complaint.
Guided by these crucial limitations on hypothetical admissions, the trust theory being espoused by
private respondent in his complaint, and upon which his claim over the subject properties is principally anchored,
cannot hold water for the following reasons:
First: The execution of a lease contract between Remigio Tan as lessor and private
respondent as lessee over the subject properties, the existence of which is established not only
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by a copy thereof attached to petitioners motion to dismiss but by private respondents own
admission in the complaint, already belies private respondents claim of ownership. This is so
because Article 1436 of the Civil Code, Section 2, Rule 131 of the Rules of Court and settled
jurisprudence consistently instruct that a lessee is estopped or prevented from disputing the
title of his landlord.
Second: In the Memorandum of Encumbrances found at the back of TCT No. 53284
issued in the name of Remigio Tan in 1958 to the complaint, there appears a mortgage
constituted by Remigio Tan over the subject properties in favor of PCIB to guarantee a
principal obligation. Remigio could not have mortgaged the subject properties had he not been
the true owner thereof, inasmuch as under Article 2085 of the New Civil Code, one of the
essential requisites for the validity of a mortgage contract is that the mortgagor be the absolute
owner of the thing mortgaged. There is thus no denying that Remigio Tans successful
acquisition of a transfer certificate of title the subject properties in his name after having his
brother’s title thereto cancelled, and execution of a mortgage over the same properties in favor
of PCIB are acts of strict dominion which are anathema to the concept of a continuing and
subsisting trust private respondent relies upon.
Third: There being no trust, express or implied, established in favor of private

respondent, the only transaction that can be gleaned from the allegations in the complaint is a
double sale, the controlling provision for which is Article 1544 of the Civil Code, to wit:
Article 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession thereof in
good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof, to the person who presents the
oldest title, provided there is good faith.
Private respondent alleged that he bought the subject properties from Tan Keh in
1954 but failed to present any document evidencing the same, while Remigio Tan, as the other
buyer, had in his name TCT No. 53284. Remigio Tan, beyond doubt, was the buyer entitled to
the subject properties since the prevailing rule is that in the double sale of real property, the
buyer who is in possession of a Torrens title and had the deed of sale registered must prevail.
Fourth: Petitioners are in possession of TCT No. 117898 which evidences their
ownership of the subject properties. On the other hand, private respondent relies simply on the
allegation that he is entitled to the properties by virtue of a sale between him and Alejandro Tan
Keh who is now dead. Obviously, private respondent will rely on parol evidence which, under
the circumstances obtaining, cannot be allowed without violating the Dead Man’s Statute found
in Section 23, Rule 130 of the Rules of Court.
The object and purpose of the rule is to guard against the temptation to give false testimony in regard of
the transaction in question on the part of the surviving party, and further to put the two parties to a suit upon
terms of equality in regard to the opportunity to giving testimony. If one party to the alleged transaction is
precluded from testifying by death, insanity, or other mental disabilities, the other party is not entitled to the undue
advantage of giving his own uncontradicted and unexplained account of the transaction.
Clearly then, from a reading of the complaint itself, the annexes attached thereto and relevant laws and
jurisprudence, the complaint indeed does not spell out any cause of action.
We agree with the petitioners submission that private respondent’s cause of action has prescribed. TCT
No. 53284 in the name of Remigio Tan was registered on October 13, 1958, while TCT No. 117898 in the name
of his heirs, herein petitioners, was issued on April 21, 1975. Private respondent filed his complaint on October
18, 1993. CA held that the ten year prescriptive period for the reconveyance of property based on an implied trust
cannot apply in this case since private respondent was in actual possession of the subject properties.
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Private respondent's occupation of the subject properties was never in the concept of an owner since he
was a mere lessee who is estopped from denying the title of Remigio as owner-lessor. At best, private
respondent's stay on the properties as lessee was by "license or by mere tolerance" which, under Article 1119 of
the Civil Code, "shall not be available for the purposes of possession."
Finally, private respondent is guilty of laches. Private respondent's possession of the subject properties
cannot be made the basis to deflect the effects of laches because he is a mere lessee who, to repeat, cannot
assert any adverse claim of ownership over the subject properties against the lessor-owner. What ought to be in
focus is that, as alleged by private respondent in his complaint, he was not able to effect the transfer of title over
the subject properties in his favor upon his purchase thereof from Alejandro Tan Keh in 1954 because he was still
a foreigner at that time. But private respondent later on claimed that he was already a Filipino national when he
reminded petitioners of his ownership of the subject properties during Remigio Tans wake sometime in 1968. It
may be reasonably deduced from these allegations that private respondent acquired Filipino citizenship by
naturalization, thus entitling him to own properties in the 1960s, more or less. His mistake, if it is one, is that he
tarried for thirty (30) years before formally laying claim to the subject properties before the court. Considerable
delay in asserting one’s right before a court of justice is strongly persuasive of the lack of merit of his claim, since
it is human nature for a person to enforce his right when the same is threatened or invaded. Thus, private
respondent is estopped by laches from questioning the ownership of the subject properties.
3. ASIA PRODUCTION CO., INC., WANG TA PENG and WINSTON WANG vs.
HON. ERNANI CRUZ PAñO, as Judge of the Court of First Instance of Rizal (Quezon City, Branch XVIII),
LOLITA LEE LE HUA and ALBERTO DY
G.R. No. L-51058 January 27, 1992 (Cruz)
I. ESTABLISHED FACTS
Sometime in March 1976, private respondents, who claimed to be the owners of a building constructed
on a lot leased from Lucio San Andres and located in Valenzuela, Bulacan, offered to sell the building to the
petitioners for P170,000.00. Petitioners agreed because of private respondents' assurance that they will also
assign to the petitioners the contract of lease over the land. The above agreement and promise were not reduced
to writing. Private respondents undertook to deliver to the petitioners the deed of conveyance over the building
and the deed of assignment of the contract of lease within sixty (60) days from the date of payment of the
downpayment of P20,000.00. The balance was to be paid in monthly installments. On 20 March 1976, petitioners
paid the downpayment and issued eight (8) postdated checks drawn against the Equitable Banking Corporation
for the payment of the eight (8) monthly installments.
Relying on the good faith of private respondents, petitioners constructed in May 1976 a weaving factory on the
leased lot. Unfortunately, private respondents, despite extensions granted, failed to comply with their undertaking
to execute the deed to sale and to assign the contract despite the fact that they were able to encash the checks
dated 30 June and 30 July 1976 in the total amount of P30,000.00. Worse, the lot owner made it plain to
petitioners that he was unwilling to give consent to the assignment of the lease unless petitioners agreed to
certain onerous terms, such as an increase in rental, or the purchase of the land at a very unconscionable price.
Petitioners were thus compelled to request for a stop payment order of the six (6) remaining checks. Succeeding
negotiations to save the transaction proved futile by reason of the continued failure of private respondents to
execute the deed of sale of the building and the deed of assignment of the contract of lease.
So, on or about 29 December 1976, upon prior agreement with private respondents, petitioners
removed all their property, machinery and equipment from the building, vacated the same and returned its
possession to private respondents. Petitioners demanded from the latter the return of their partial payment for the
purchase price of the building in the total sum of P50,000.00. Private respondents refused to return it.
II. COMPLAINT
Petitioners, filed against private respondents a complaint 1 for its recovery and for actual, moral and
exemplary damages and attorney's fees with the then Court of First Instance (now Regional Trial Court) of
Quezon City, which was docketed as Civil Case No. Q-23593. The case was raffled to Branch XVIII of the court
which was then presided over by herein respondent Judge.
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Private respondent Lolita Lee Le Hua did not file an Answer; hence, she was declared in default.
III. MOTION TO DISMISS FILED BY PRIVATE RESPONDENT

Private respondent Alberto Dy filed a motion to dismiss the complaint on the ground that the claim on
which the action is based — an alleged purchase of a building which is not evidenced by any writing — cannot be
proved by parol evidence since Article 1356 in relation to Article 1358 of the Civil Code requires that it should be
in writing.
IV. PETITIONER’S OPPOSITION
Petitioners argue that their complaint is essentially for collection of a sum of money; it does not seek to
enforce the sale, but aims to compel private respondents to refund a sum of money which was paid to them as
purchase price in a sale which did not materialize by reason of their bad faith. Furthermore, the execution of the
document was an undertaking of the private respondents, which they refused to comply with. Hence, they cannot
now be heard to complain against something which they themselves brought about.
V. RESPONDENT JUDGE GRANTED PRIVATE RESPONDENT’S MOTION TO DISMISS
In his Order of 18 April 1979, respondent Judge granted the motion to dismiss on the ground that the
complaint is barred by the Statute of Frauds. He says:
It cannot be disputed that the contract in this case is condemned by the Statutes of Fraud (sic)
it involves not merely the sale of real property (the building), it also includes an alleged lease
agreement that must certainly be for more than one year (See Art. 1403, No. 2, subparagraph
e, New Civil Code).
Plaintiffs cannot avoid the Statutes of Fraud (sic) by saying that this is merely an action for the
collection of a sum of money. To be entitled to the sum of P50,000.00, it is necessary to show
that such contract was executed and the same was violated but — plaintiffs are prevented from
proving this alleged agreement by parol evidence.
Neither may plaintiffs claim that by the payment of the sum of P50,000.00 the contract was
removed from the Statutes of Fraud (sic). This is so because plaintiffs have not fully complied
with their obligation to pay P170,000.00. If there had been full payment of P170,000.00, the
situation would have been different.
Plaintiffs knew or should have known that their contract (as described by them in their
complaint) was unenforceable; they had thereby voluntarily assumed the risks attendant to
such contract. Moreover, the primordial aim of the Statutes of Fraud (sic) is to prevent fraud
and perjury in the enforcement of obligations depending upon the unassisted memory of
witnesses (Shoemaker vs. La Tondeña, 68 Phil. 24). The Court would find it difficult to
determine whether the sum of P50,000.00 was paid because of the unenforceable contract or
for some other transactions.
VI. MOTION FOR RECONSIDERATION DENIED BY RESPONDENT JUDGE; HENCE, THIS PETITION FOR
CERTIORARI UNDER RULE 65 (GRANTED)
Their motion for reconsideration having been denied by respondent Judge in his Order of 21 June 1979
for the reason that the oral contract in this case was not removed from the operation of the Statute of Frauds
because there was no full or complete performance by the petitioners of the contract as required in Paterno vs.
Jao Yan and Babao vs. Perez, petitioners filed this petition on 16 July 1979, alleging therein as ground therefor
grave abuse of discretion on the part of respondent Judge in issuing the orders of 18 April 1979 and 21 June
1979.
VII. ISSUE
Whether or not Respondent Judge committed grave abuse of discretion in dismissing the complaint on
the ground that the claim is barred by the Statute of Frauds.
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VIII. HELD
Respondent Judge committed grave abuse of discretion in dismissing the complaint on the ground that
the claim is barred by the Statute of Frauds.
Article 1403 of the Civil Code declares the following contracts, among others, as unenforceable, unless they are
ratified:
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In the
following cases an agreement hereafter made shall be unenforceable by action, unless the
same, or some note or memorandum thereof, be in writing, and subscribed by the party
charged, or by his agent; evidence, therefore, of the agreement cannot be received without the
writing, or a secondary evidence of its contents:
(a) An agreement that by its terms is not to be performed within a year from
the making thereof;
(b) A special promise to answer for the debt, default, or miscarriage of
another;
(c) An agreement made in consideration of marriage, other than a mutual
promise to marry;
(d) An agreement for the sale of goods, chattels or things in action, at a price
not less than five hundred pesos, unless the buyer accept and receive part of
such goods and chattels, or the evidences, or some of them, of such things
in action, or pay at the time some part of the purchase money; but when a
sale is made by auction and entry is made by the auctioneer in his sales
book, at the time of the sale, of the amount and kind of property sold, terms
of sale, price, names of the purchasers and person on whose account the
sale is made, it is a sufficient memorandum;
(e) An agreement for the leasing for a longer period than one year, or for the
sale of real property or of an interest therein;
(f) A representation to the credit of a third person.
The purpose of the statute is to prevent fraud and perjury in the enforcement of obligations depending
for their evidence on the unassisted memory of witnesses by requiring certain enumerated contracts and
transactions to be evidenced by a writing signed by the party to be charged. It was not designed to further or
perpetuate fraud. Accordingly, its application is limited. It makes only ineffective actions for specific performance
of the contracts covered by it; it does not declare them absolutely void and of no effect. As explicitly provided for
in the above-quoted paragraph (2), Article 1403 of the Civil Code, the contracts concerned are simply
"unenforceable" and the requirement that they — or some note or memorandum thereof — be in writing refers
only to the manner they are to be proved. It goes without saying then, as held in the early case of Almirol, et al.
vs. Monserrat, that the statute will apply only to executory rather than executed contracts. Partial execution is
even enough to bar the application of the statute.
There can be no dispute that the instant case is not for specific performance of the agreement to sell the
building and to assign the leasehold right. Petitioners merely seek to recover their partial payment for the agreed
purchase price of the building, which was to be paid on installments, with the private respondents promising to
execute the corresponding deed of conveyance, together with the assignment of the leasehold rights, within two
(2) months from the payment of the agreed downpayment of P20,000.00. By their motion to dismiss, private
respondents theoretically or hypothetically admitted the truth of the allegations of fact in the complaint. 20 Among
the allegations therein are:
(1) that the P50,000.00 sought to be recovered represents the downpayment of P20,000.00 and two (2)
monthly installments of the purchase price, and (2) that petitioners decided, in effect, to withdraw from
the agreement by ordering the stop payment of the remaining six (6) checks and to return the
possession of the building to private respondents because of the latter's failure to comply with their
agreement. The action is definitely not one for specific performance, hence the Statute of Frauds does
not apply. And even if it were for specific performance, partial execution thereof by petitioners effectively
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bars the private respondents from invoking it. Since it is for refund of what petitioners had paid under the
agreement, originally unenforceable under the statute, because petitioners had withdrawn therefrom due
to the "bad faith" of the private respondents, the latter cannot be allowed to take shelter under the
statute and keep the P50,000.00 for themselves. If this were the case, the statute would only become a
shield for fraud, allowing private respondents not only to escape performance of their obligations, but
also to keep what they had received from petitioners, thereby unjustly enriching themselves.
Besides, even if the action were for specific performance, it was premature for the respondent Judge to
dismiss the complaint by reason of the Statute of Frauds despite the explicit allegations of partial payment.
We thus rule that an action by a withdrawing party to recover his partial payment of the consideration of
a contract, which is otherwise unenforceable under the Statute of Frauds, by reason of the failure of the other
contracting party to comply with his obligation, is not covered by the Statute of Frauds.
4. SUNVILLE TIMBER PRODUCTS, INC., petitioner, vs. HON. ALFONSO G. ABAD as Judge RTC, Br. 22 of
Pagadian City, COURT OF APPEALS, ISIDRO GILBOLINGO AND ROBUSTIANO BUGTAI, respondents.
(Culajara)
The petitioner was granted a Timber License Agreement (TLA), authorizing it to cut, remove and utilize
timber within the concession area covering 29,500 hectares of forest land in Zamboanga del Sur, for a period of
ten years expiring on September 31, 1992.
II. COMPLAINT
Herein private respondents filed a petition with the Department of Environment and Natural Resources
for the cancellation of the TLA on the ground of serious violations of its conditions and the provisions of forestry
laws and regulations.
The same charges were subsequently made, also by the herein private respondents, in a complaint for
injunction with damages against the petitioner, which was docketed as Civil Case No. 2732 in the Regional Trial
Court of Pagadian City.
The petitioner moved to dismiss this case on three grounds, to wit: 1) the court had no jurisdiction over
the complaint; 2) the plaintiffs had not yet exhausted administrative remedies; and 3) the injunction sought was
expressly prohibited by Section 1 of PD 605.
RTC: Judge Alfonso G. Abad denied the motion to dismiss on December 11, 1987, and the motion for
reconsideration on February 15, 1988
III. APPEAL
The petitioner then elevated the matter to the respondent Court of Appeals, which sustained the trial
court. The Court of Appeals held that the doctrine of exhaustion of administrative remedies was not without
exception and pointed to the several instances approved by this Court where it could be dispensed with. The
respondent court found that in the case before it, the applicable exception was the urgent need for judicial
intervention.
As found by the City Council of Pagadian in its resolution, “Floods are unknown phenomena in heavily
forested areas years back, particularly in the Island of Mindanao. When the grant of logging concessions started,
so was the denotation of forests. . . . It is common knowledge that heavy floods have occurred in areas/places
adjoining logging concessions.” Thus, it is urgent that indiscriminate logging be stopped. Irreparable damage
would ensue unless the court intervenes. Reliance on the DENR may not be enough, judging from its inaction on
the council's request seven years back.
ISSUE: W/N the doctrine of exhaustion of administrative remedies was not correctly applied
RULING:
The doctrine of exhaustion of administrative remedies calls for resort first to the appropriate
administrative authorities in the resolution of a controversy falling under their jurisdiction before the
same may be elevated to the courts of justice for review. Non- observance of the doctrine results in lack
of a cause of action, which is one of the grounds allowed in the Rules of Court for the dismissal of the
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complaint. The deficiency is not jurisdictional. Failure to invoke it operates as a waiver of the objection
as a ground for a motion to dismiss and the court may then proceed with the case as if the doctrine had
been observed.
One of the reasons for the doctrine of exhaustion is the separation of powers, which enjoins upon the
Judiciary a becoming policy of non-interference with matters coming primarily (albeit not exclusively) within the
competence of the other departments. The theory is that the administrative authorities are in a better position to
resolve questions addressed to their particular expertise and that errors committed by subordinates in their
resolution may be rectified by their superiors if given a chance to do so. A no less important consideration is that
administrative decisions are usually questioned in the special civil actions of certiorari, prohibition and
mandamus, which are allowed only when there is no other plain, speedy and adequate remedy available to the
petitioner. It may be added that strict enforcement of the rule could also relieve the courts of a considerable
number of avoidable cases which otherwise would burden their heavily loaded dockets.
However, there are a number of instances when the doctrine may be dispensed with and judicial action
validly resorted to immediately. Among these exceptional cases are:
1) when the question raised is purely legal;
2) when the administrative body is in estoppel;
3) when the act complained of is patently illegal;
4) when there is urgent need for judicial intervention;
5) when the claim involved is small;
6) when irreparable damage will be suffered;
7) when there is not other plain, speedy and adequate remedy;
8) when strong public interest is involved;
9) when the subject of the controversy is private land; and
10) in quo warranto proceedings.
The private respondents now submit that their complaint comes under the exceptions because forestry
laws do not require observance of the doctrine as a condition precedent to judicial action; the question they are
raising is purely legal; application of the doctrine will cause great and irreparable damage; and public interest is
involved.
We rule for the petitioner. Even if it be assumed that the forestry laws do not expressly require prior
resort to administrative remedies, the reasons for the doctrine above given, if nothing else, would suffice to still
require its observance. Even if such reasons were disregarded, there would still be the explicit language of
pertinent laws vesting in the DENR the power and function "to regulate the development, disposition, extraction,
exploration and use of the country's forests" and "to exercise exclusive jurisdiction" in the "management and
disposition of all lands of the public domain," and in the Forest Management Bureau (formerly the Bureau of
Forest Development) the responsibility for the enforcement of the forestry laws and regulations here claimed to
have been violated. This comprehensive conferment clearly implies at the very least that the DENR should be
allowed to rule in the first instance on any controversy coming under its express powers before the courts of
justice may intervene.
As for the alleged urgent necessity for judicial action and the claimed adverse impact of the case on the
national interest, the record does not show that the petitioners have satisfactorily established these extraordinary
circumstances to justify deviation from the doctrine of exhaustion of administrative remedies and immediate
resort to the courts of justice. In fact, this particular submission must fall flat against the petitioner's uncontested
contention that it has since 1988 stopped its operations under the TLA in compliance with the order of the DENR.
5. MUNICIPALITY OF BIÑAN, LAGUNA, represented by Hon. Bayani M. Alonte, Municipal Mayor

of Biñan, Laguna vs. HON. COURT OF APPEALS, and JESUS M. GARCIA, (Justiniano)
Facts:
I. Municipal Trial Court of Binan, Laguna:
1. Petitioner filed an unlawful detainer, with a prayer for a writ of preliminary mandatory
injunction against private Respondent Garcia alleging that it was no longer amenable to the renewal of
its 25-year lease contract with private respondent over the premises involved because of its pressing
need to use the same for national and provincial offices therein.
2. Respondent filed his answer to the complaint contending that the contract of lease for the
original period of 25 years had not yet expired and, assuming it had expired, he has exercised his option
to stay in the premises for another 25 years as expressly provided in the said contract.
3. Petitioner then filed its reply.
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4. Private respondent filed this time a "Motion for Preliminary Hearing as if a Motion to Dismiss
Has Been Filed" on the ground that the complaint states no cause of action, reiterating its argument that the
original term of 25 years stipulated in the contract of lease had not yet expired and that, at any rate, under said
contract he has the exclusive option to renew the same for another 25 years.
5. After some further exchanges consisting of petitioner's opposition to private respondent's
aforesaid motion for preliminary hearing, the latter's reply thereto, and the parties' respective position
papers, the municipal trial court rendered judgment on October 26, 1989 ordering private respondent to
vacate the premises subject of the ejectment case.
6. Private respondent filed a "Manifestation/Motion" before said trial court praying that the
issues raised in the motion for preliminary hearing, apparently because it was in the nature of a motion
to dismiss, be first resolved instead of rendering judgment on the pleadings. Private respondent later
received the a copy of the decision of the trial court.
II. RTC of Laguna:
1. Private respondent filed a notice of appeal to the Regional Trial Court of Laguna.
2. Petitioner filed before said court a motion for execution pending appeal and on
December 14, 1989, Hon. Jose Mar. Garcia, presiding judge of said branch of the regional trial court
granted petitioner's aforesaid motion for discretionary execution. The following day, a writ of execution
was issued directing the deputy sheriff or his duly authorized representative to enforce the terms of the
judgment of the court a quo.
III. Court of Appeals:
1. Private respondent filed a petition for certiorari, with a prayer for the issuance of a writ of
preliminary injunction, assailing the aforesaid order of execution pending appeal on the ground that
petitioner failed to furnish private respondent with a copy of the motion therefor filed by it in the
aforementioned Civil Case, contrary to Section 6, Rule 15 of the Rules of Court, hence the invalidity of
the lower court s order of December 14, 1989 which granted the writ of execution. Petitioner seasonably
filed its comment and/or opposition to said petition.
2. The CA set aside the questioned order for being violative of the requirement in Section 6, Rule
15 of the Rules of Court which provides that no motion shall be acted upon by the court without proof of
prior notice thereof to the adverse party. Aside from annulling the controversial order, however,
respondent court likewise annulled the judgment of the court a quo in Civil Case No. 2473, which
judgment is pending on appeal in Civil Case No. B-3201 of the aforesaid regional trial court. Respondent
court granted the second additional relief on the ground that the decision is contrary to the agreement of
the parties which should be considered the law between them.
3. Petitioner filed a motion for reconsideration of said judgment on the ground that the Court of
Appeals should have confined itself to the questioned order of the respondent regional trial court dated
December 14, 1989 and subject of private respondent's petition for certiorari with preliminary injunction
in CA-G.R. SP No 19582.
4. The CA denied said motion.
IV. Supreme Court:
1. Petitioner then filed an appeal via certiorari from the judgment of respondent CA wherein it set
aside the order granting a writ of execution pending appeal by the RTC of Laguna thereof; and further
annulled the judgment rendered by the MTC of Binan, Laguna in the ejectment case and which case is
pending on appeal.
2. Petitioner contends that the Court of Appeals overstepped the bounds of its authority in
annulling the decision of the municipal trial court even if said decision was not an issue raised by private
respondent in CA-G.R. SP No. 19582 and which decision is in fact pending on appeal with the regional
trial court.
3. In his comment, private respondent refutes petitioner's contention and claims that the issue of the merits
of the judgment of the municipal trial court was sufficiently raised and controverted, hence respondent court was
not in error when it passed judgment on the same. Moreover, private respondent makes the riposte that it is a
cherished rule in procedural law that a controversy should be settled in one single proceeding in order to avoid
multiplicity of suits.
Issue: Whether or not the Court of Appeals overstepped its boundaries when it rendered the assailed
decisions.
Held: Yes, the Supreme Court stated that:
Respondent Court of Appeals has no jurisdiction in a certiorari proceeding involving an incident
in a case to rule on the merits of the main case itself which was not on appeal before it. The validity of
the order of the regional trial court, dated December 14, 1989, authorizing the issuance of a writ of
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execution during the pendency of the appeal therein was the sole issue raised in the petition for
certiorari filed in respondent Court of Appeals. 9 The allegation that the decision of the municipal trial
court was improvidently and irregularly issued was raised by private respondent only as an additional or
alternative argument to buttress his theory that the issuance of a discretionary writ of execution was not
in order, as can be gleaned from the text of said petition itself, to wit:
"V. ERRORS/ISSUES
xxx xxx xxx
"Besides, when the respondent Judge issued the writ, it (sic) failed to consider that the
judgment rendered by the inferior court was improvidently and irregularly issued, when said
court failed to resolve first the pending Motion To Dismiss, a procedural process before any
judgment on the merit(s) may be had."
Further, even assuming that the said issue was squarely raised and sufficiently controverted, the same
cannot be considered a proper subject of a special civil action for certiorari under Rule 65 which is limited only to
challenges against errors of jurisdiction. The jurisdiction of the municipal trial court over the ejectment case filed
by petitioner against private respondent is not disputed. Thus, assuming that the said lower court committed a
mistake on the merits of the case, it was nonetheless in the due exercise of its jurisdiction. The error, if any was
committed by the trial court, was at most one of judgment or procedure correctible by ordinary appeal. cdphil
Neither can it be said that the lower court committed a grave abuse of discretion or exceeded its
jurisdiction when it failed to conduct a preliminary hearing, as prayed for in private respondent's "Motion for
Preliminary Hearing as if a Motion to Dismiss Has Been filed," before summarily rendering judgment on the
merits of the case. The said motion of private respondent is anchored on the ground that the complaint allegedly
states no cause of action since the original term of 25 years stipulated in the contract of lease had not yet expired
and assuming that it had expired, private respondent had made known to petitioner his exclusive option to renew
it for another 25 years. 11
Section 5, Rule 16 of the Rules of Court pertinently provides: (IMPORTANT)
"SECTION 5. Pleading grounds as affirmative defenses. — Any of the grounds for dismissal
provided for in this Rule, except improper venue, may be pleaded as an affirmative defense,
and a preliminary hearing may be had thereon as if a motion to dismiss had been filed."
The aforequoted provision allows the grounds for a motion to dismiss to be set up as affirmative defenses in
the answer if no motion to dismiss has been filed.
However, contrary to the claim of private respondent, the preliminary hearing permitted under the said
provision is not mandatory even when the same is prayed for. It rests largely on the sound discretion of
the trial court. The use of the word "may" in said provision shows that such a hearing is not a matter of
right demandable from the trial court. Where the provision reads "may," this word shows that it is not
mandatory but discretional. It is an auxiliary verb indicating liberty, opportunity, permission and
possibility.
Moreover, a preliminary hearing on an affirmative defense for failure to state a cause of action is not necessary.
It is a familiar doctrine in this jurisdiction that certiorari will issue only to correct errors of jurisdiction and that no
error or mistake committed by a court will be corrected by certiorari unless said court had acted in the premises
without jurisdiction or in excess thereof or with such grave abuse of discretion as would amount to lack of
jurisdiction. It is available only for these purposes and not to correct errors of procedure or mistakes in the judge's
findings or conclusions.
If a judgment of a municipal trial court is sought to be reviewed, the remedy is an appeal to the regional trial
court, not the filing of a special civil action of certiorari Appeal, whether from an inferior court or a regional trial
court, is antithetical to a special civil action of certiorari. When the remedy of appeal is available, the
extraordinary remedy of certiorari cannot be resorted to because the availability of appeal proscribes recourse to
the special civil action of certiorari.
Indeed, the respondent Court of Appeals went beyond the realm of its authority and its pronouncements on the
judgment rendered by the municipal trial court on the ejectment case were ultra jurisdiction. That judgment was
on appeal before the regional trial court. Respondent court's authority was, therefore, limited to ruling upon the
issue of whether or not the regional trial court committed grave abuse of discretion in issuing the order directing
the issuance of a discretionary writ of execution against private respondent. Whether or not the municipal trial
court committed a mistake in arriving at its decision is an issue that is beyond the authority of respondent court to
decide. It is lodged in another and appropriate forum with appellate powers the exercise of which should not be
usurped or preempted by respondent Court of Appeals.
WHEREFORE, the petition at bar is GRANTED. The decision of respondent Court of Appeals dated May 31,
1990, insofar as it annulled the decision of the Municipal Trial Court of Biñan, Laguna in Civil Case No. 2473, and
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its resolution of August 9, 1990 are hereby REVERSED and SET ASIDE. Let this case be REMANDED to the
Regional Trial Court of Biñan, Laguna for further appropriate proceedings.
6. NATIONAL POWER CORPORATION (NAPOCOR) VS. THE COURT OF APPEALS, G.R. No. 84695, May 8,
1990 (Nieto)
Petitioner FINE Chemicals (Phils.) Inc. (FINE for short) is a corporation registered with the Board of Investments
(BOI for short) and engaged in the manufacture of plastics for export.
Sometime in September, 1986, it filed an application for direct power connection with herein co-petitioner
National Power Corporation (NPC for short). NPC, acting on the same, wrote a letter to herein private respondent
Manila Electric Company (MERALCO for short), wherein it stated that as per Memorandum of Understanding
between NPC and BOI, the NPC is authorized to connect directly to its system qualified industrial consumers.
However, due to its policy not to compete directly with its customers, NPC requests that it be informed whatever
definite decision MERALCO is contemplating on the requests of FINE and of Rizal Cement for such direct
connection. MERALCO, advised NPC that they are not in a position to grant the request since to allow large
consumers to tap directly to NPC will mean foregoing the share of the subsidy burden which will ultimately be
borne by the other remaining large consumers, and that it will also mean costly duplication of facilities.
MERALCO, further stated, among others, that the direct connection of industries under BOI-NPC memorandum
of understanding, presupposes the inability of the utility/cooperatives to meet certain standard of financial and
technical capability, both of which are not true in the case of MERALCO. NPC, informed MERALCO that in the
absence of a clear-cut policy that will inhibit NPC from acceding to the said request, NPC is now preparing and
will put up the necessary facilities to supply power to FINE; and that they are now negotiating the terms and
conditions of the supply. MERALCO, in a letter, registered its strong objection; reiterated its assurance that it is
financially and technically capable of serving the power requirements of FINE. But on July 12, 1987, NPC started
to supply the electric requirements of FINE by direct power supply connection.
II. Complaint
MERALCO filed with the Regional Trial Court of Pasig, a petition for Prohibition, Mandamus and
Damages with Preliminary Injunction against petitioners NPC and FINE Chemicals (Phil.) Inc., docketed
therein as Civil Case No. 54733.
FINE filed its opposition to MERALCO's application for preliminary injunction, maintaining that the
application for injunctive relief had become moot and academic since, prior to the filing of the petition, the direct
power service had already been consummated and the requisite power lines and facilities of NPC had long been
installed and fully operational.
MERALCO amended its petition by incorporating therein an application for a writ of preliminary mandatory
injunction.
III. Motion
FINE moved to dismiss the amended petition on the ground of insufficiency of the allegations in the petition to
plead a cause of action. NPC adopted FINE's motion to dismiss.
Meanwhile, trial judge allowed reception of MERALCO's evidence in support of its application for a writ of
preliminary mandatory injunction, over FINE's objection.
On August 25, 1987, MERALCO was granted leave to file its second amended petition so as to incorporate
this time an allegation of grave and irreparable injury.
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With the admission of MERALCO's second amended petition, FINE filed a manifestation adopting its motion to
dismiss dated August 10, 1987 as its motion to dismiss the second amended petition.
IV. RTC
Respondent Judge, denied the motion to dismiss, the pertinent portion of which, reads: "The Motion to
Dismiss is anchored on the ground of lack of cause of action. lack of cause of action, the facts alleged in the
complaint are assumed and no other fact can be considered in resolving said motion. After going carefully over
the complaint, the Court believes, and so holds, that if not properly traversed, it can render a valid judgment
thereon.”
V. CA
FINE, without filing a motion for reconsideration, on October 1, 1987, filed with respondent Court of Appeals a
Petition for Certiorari, Prohibition and Mandamus.
NPC, on the other hand, on October 13, 1987, filed a Petition for Leave to File Intervention to Adopt Petition and
Motion for Extension of Time to File Supplemental Petition.
Respondent Court of Appeals, in a decision promulgated on August 11, 1988, dismissed the petition for
certiorari, prohibition and mandamus.
HENCE, the instant petition. (Petition for Review on Certiorari)
VI. ISSUE
Whether the petition for certiorari in the CA is the proper remedy for denial of motion to dismiss. YES
whether or not MERALCO's petition in the lower court should be dismissed. YES
VII. SC
1st ISSUE
It is significant that this case is elevated to the Court of Appeals and now to this Court because of the denial of
petitioner's motion to dismiss the amended petition of MERALCO. Unquestionably, it is but an incident to the
main case and the ordinary procedure would have been to file an answer, go to trial and if the decision is
adverse, reiterate the issue on appeal. But this general rule is subject to certain exceptions, among
which are, if the court in denying the motion to dismiss acts without or in excess of jurisdiction or with
grave abuse of discretion. The reason is, it would be unfair to require the defendant to undergo the ordeal and
expense of trial under such circumstances as the remedy of appeal would not be plain and adequate. More
importantly, petitioner's motion to dismiss is based on the ground that the complaint states no cause of
action, so that there is no need for a full blown trial.
In addition, applying the rule enunciated in Gayos v. Gayos and reiterated in Alger Electric, Inc. v. Court of
Appeals, that it is a cherished rule of procedure for this Court to always strive to settle the entire controversy in a
single proceeding leaving no root or branch to bear the seeds of future
litigation, it appears that the disposition of the incident as well as the main issue in the case at bar is in
consonance with an efficient administration of justice, now that the facts are before this Court.
2ND ISSUE
MERALCO's claim in its petition for Prohibition and Mandamus before the Regional Trial Court is anchored on its
standing as a holder of a franchise for the sale and distribution of electric power in various areas of the country
including Calamba, Laguna. MERALCO asserts that it has the right to be heard on any application for direct
power connection and to defeat such application by showing its ability or willingness to match the rates of NPC.
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As consistently ruled by this Court pursuant to P.D. No. 380 as amended by P.D. No. 395, NPC is statutorily
empowered to directly service all the requirements of a BOI registered enterprise provided that, first, any affected
private franchise holder is afforded an opportunity to be heard on the application therefor and second, from such
a hearing, it is established that said private franchise holder is incapable or unwilling to match the reliability and
rates of NPC for directly serving the latter. While initially, MERALCO may have been deprived of the right to be
heard in an administrative proceeding, but in subsequent proceedings before the courts, it had been given ample
opportunity to show that it is capable and willing to match NPC rates but failed.
While initially, MERALCO may have been deprived of the right to be heard in an administrative proceeding, but in
subsequent proceedings before the courts, it had been given ample opportunity to show that it is capable and
willing to match NPC rates but failed. On the contrary, in a hearing before the trial court on August 12, 1987, for
the issuance of preliminary mandatory injunction, MERALCO thru its witness V.C. Flordeliza, admitted on cross
examination that it cannot charge the same rate NPC is charging because MERALCO has to make a profit on its
investment.
7. Pacsports vs Niccolo Sports (Pracuelles)
FACTS: On April 28, 1998, petitioner PPI and Niccolo Sports, Inc. (NSI), respondent, entered into two (2)
separate Exclusive Retail Agreements by virtue of which petitioner supplied respondent, on consignment basis,
assorted Bridgestone and Cross Creek golf products to be sold by the latter in its outlet situated at the Second
Level, Shangri-La Plaza Shopping Mall, Edsa corner Shaw Boulevard, Mandaluyong City. Petitioner PPI claims
that after months of operation, respondent's obligations to it amounted to about P1.5 Million. Despite demand,
respondent failed to pay and eventually, it pre-terminated the contracts. This prompted petitioner to file, on
January 28, 1999, with the Regional Trial Court, Branch 141, Makati City, Civil Case No. 99-221 for damages
with application for a writ of replevin against respondent. On the same day, the Makati RTC issued an order
granting petitioner's application for a writ of replevin. However, petitioner did not pursue the implementation of
this writ because respondent concealed the golf equipment to be seized. Instead, on February 26, 1999,
petitioner applied for the issuance of a writ of preliminary injunction to compel respondent to turn over to
petitioner the golf equipment and sales proceeds amounting to P1,186,468.65.
For its part, respondent NSI, on February 16, 1999, filed with the Regional Trial Court, Branch 91, Quezon City,
Civil Case No. Q-99-36797 for "Breach and Confirmation of Termination of Contracts and Damages" against
petitioner.
RTC: On January 29, 1999, respondent NSI, citing the pendency of the Quezon City case, filed with the Makati
RTC a motion to dismiss or suspend the proceedings in Civil Case No. 99-221.
Thereupon, petitioner PPI also filed with the Quezon City RTC a motion to dismiss Civil Case No. Q-99-36797 on
the ground of pendency of the Makati City case.
On April 20, 1999, the Makati RTC issued an order denying respondent's motion to dismiss. In the same order,
the Makati Court granted petitioner's application for a writ of preliminary mandatory injunction. Respondent filed a
motion for reconsideration but was denied on May 6, 1999.
Meanwhile, the Quezon City RTC has not resolved petitioner's motion to dismiss.
CA: Then, in a petition for certiorari and prohibition, respondent NSI questioned the orders of the Makati RTC
dated April 20, 1999 and May 6, 1999 before the Court of Appeals in CA-G.R. SP No. 52666.
On December 6, 1999, the Court of Appeals promulgated a Decision, the dispositive portion of which reads:
"WHEREFORE, the petition is hereby GRANTED. The impugned
Orders dated January 29, 1999 and May 6, 1999 of the respondent
Judge are REVERSED and SET ASIDE. Respondent Judge is hereby
directed to dismiss Civil Case No. 99-221, entitled: "Pacsports Phils.,
Inc. vs. Niccolo Sports, Inc. without prejudice to private respondent
interposing its claim before the Quezon City case.
"SO ORDERED."
On January 17, 2000, the Court of Appeals denied petitioner's motion for reconsideration.
SC: Petition for review on certiorari.
ISSUE:
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1) Which of the two cases should be dismissed by reason of litis pendentia — the
Makati City case which was filed earlier or the Quezon City case which was filed later;
and
2) Whether the order of the Makati RTC dated April 20, 1999 granting petitioner's
application for a writ of preliminary mandatory injunction was issued with grave abuse
of discretion.
HELD:
1.) (QUEZON CITY RTC case should be dismissed) As to the first issue, the parties concede that the Makati
City case and the Quezon City case involve the same parties, rights asserted and reliefs prayed for, being
founded on the same facts; and that judgment in one would constitute res judicata on the other. Because of the
concurrence of these similarities, petitioner and respondent sought the abatement of each other's suit on the
ground of litis pendentia.
The firmly established rule 1 is that one of two actions will be dismissed on ground of litis pendentia if the
following requisites concur: (a) identity of parties, or at least such as representing the same interest in both
actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the
identity in the two (2) cases should be such that judgment in one would amount to res judicata in the other.
Undisputably, the parties in the Makati case and the Quezon City case are the same. Petitioner is the plaintiff in
the Makati case and the defendant in the Quezon City case; and respondent is the defendant in the Makati case
and the plaintiff in the Quezon City case.
The rights asserted and the reliefs prayed for by petitioner in the Makati City case and the rights asserted and the
reliefs prayed for by respondent in the Quezon City case are all based on the validity of the pre-termination of the
Exclusive Retail Agreements.
In view of those similarities in the two actions, a final judgment on the merits in one would be a bar against the
other on the ground of res judicata.
This Court held in several cases 2 that when the elements of litis pendentia exist, the action filed later should be
abated to avoid multiplicity of suits. This is based on the maxim Qui prior est tempore, potior est jure (He who is
before in time is the better in right). This is the general rule.
In ordering the dismissal of the Makati City case filed earlier than the Quezon City case, the Court of Appeals
deviated from the said general rule.
The Court of Appeals correctly observed that: (1) both actions arose from the two (2) Exclusive Retail
Agreements entered into by the parties, and the asserted rights are founded on an identical set of facts; and (2)
there is a claim of breach of the said Agreements by one of the parties against the other. However, we can not go
along with the Court of Appeals in concluding that the Quezon City case "involves a broader scope of inquiry"
than the Makati case. The Appellate Court did not explain why the Quezon City case is broader in scope than the
Makati case. In fact, it did not point out the issues in the Quezon City case that are not involved in the Makati
case. It bears stressing that the only basic issue between the parties in both cases is whether the pre-termination
of the agreements is valid as claimed by respondent or invalid as claimed by petitioner. As crafted, the
complaints differ from each other in some details but such details are mere incidents to the basic issue of the
validity of the pre-termination of the exclusive retail agreements. Clearly, the Quezon City RTC's deviation from
the general rule cannot be sustained on the ground that the case before it involves a broader scope of inquiry.
2.) YES. There is no question that petitioner, as owner of the items being withheld by respondent, is entitled to
possession thereof. Respondent's refusal to deliver them to petitioner is a breach of that right. Its claim for
reimbursement and retention of the items in pledge under Articles 1912, 1913 and 1914 of the Civil Code 6 are
being disputed by petitioner. Actually, respondent's claims are not clearly established but yet to be resolved.
Secondly, in light of the bond posted by petitioner which would guaranty payment of respondent's claims if found
meritorious, respondent has lost its basis for withholding the disputed items and money as security. Finally, by
their nature, the golf equipment, accessories and apparel may not be kept in storage indefinitely or until the
dispute between the parties is finally resolved without impairing their market value which would prejudice the
petitioner as owner.
We thus rule that the Court of Appeals erred in finding that the Makati RTC, in denying respondent's motion to
dismiss the complaint in Civil Case No. 99-221 and in issuing the writ of preliminary mandatory injunction, acted
with grave abuse of discretion.
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8. HACIENDA BIGAA, INC., petitioner, vs. EPIFANIO V. CHAVEZ (deceased), substituted by SANTIAGO V.
CHAVEZ, respondent. [G.R. No. 174160. April 20, 2010.] (RELIGIOSO)
I.FACTS
On June 5, 1996, petitioner Hacienda Bigaa, Inc. (Hacienda Bigaa) filed with the MTC of Calatagan,
Batangas a complaint for ejectment (forcible entry) and damages with application for writ of preliminary injunction
against respondent Epifanio V. Chavez. The complaint alleged that Chavez, by force, strategy and/or stealth,
entered the premises of Hacienda Bigaa's properties covered by Transfer Certificate of Title (TCT) Nos. 44695
and 56120 by cutting through a section of the barbed wire fence surrounding the properties and destroying the
lock of one of its gates, subsequently building a house on the property, and occupying the lots without the prior
consent and against the will of Hacienda Bigaa. The records show that the lots were originally covered by TCT
No. 722 owned by Ayala y Cia and/or Alfonso, Jacobo and Enrique Zobel known as Hacienda Calatagan. Ayala
and/or the Zobels expanded TCT No. 722 to cover an additional 2,000 hectares of land consisting, among others,
of beach, foreshore and bay areas, and navigable waters, making it appear that these excess areas are part of
Hacienda Calatagan's TCT No. 722. The Ayalas and/or the Zobels later ordered the subdivision of the hacienda,
including these excess areas, and sold the subdivided lots to third parties.
Among the buyers or transferees of the expanded and subdivided areas was Hacienda Bigaa which
caused the issuance of titles — TCT Nos. 44695 and 56120 — under its name covering the purchased
subdivided areas. Thus, in his answer before the MTC of Calatagan, then defendant (now respondent) Epifanio
V. Chavez alleged that then plaintiff (now petitioner) Hacienda Bigaa is the successor-in-interest of Ayala y Cia,
Hacienda Calatagan, Alfonso Zobel, Jacobo Zobel and Enrique Zobel — the original titular owners of TCT No.
722. Portions of the same lands — foreshore lands — were leased out by the Republic, through the Bureau of
Fisheries, to qualified applicants in whose favor fishpond permits were issued. The government-issued fishpond
permits pertaining to lands covered by titles derived from TCT No. 722 of Ayala y Cia and/or the Zobels, gave
rise to ownership and/or possessory disputes between the owners of Hacienda Calatagan and their privies and/or
successors-in-interest, on the one hand, and the Republic or its lessees or fishpond permittees, on the other.
Suits were filed in various courts in Batangas for the recovery of the areas in excess of the area originally
covered by TCT No. 722, which suits ultimately reached the Supreme Court. In the Court's 1965 decisions in
Dizon v. Rodriguez (for quieting of title) and Republic v. Ayala y Cia and/or Hacienda Calatagan, et al.
(for annulment of titles), the excess areas of TCT No. 722 were categorically declared as unregisterable
lands of the public domain such that any title covering these excess areas are necessarily null and void.
In these cases, the Ayalas and the Zobels were found to be mere usurpers of public domain areas, and all
subdivision titles issued to them or their privies and covering these areas were invalidated; the
wrongfully registered public domain areas reverted to the Republic. In Dizon, the Court declared as void
the Zobels' TCT No. 2739 and its derivative titles covering subdivision Lots 1 and 49 — areas sold to the
Dizons — as areas in excess of TCT No. 722 and are properly part of the public domain. In Ayala y Cia,
the Court invalidated TCT No. 9550 and "all other subdivision titles" issued in favor of Ayala y Cia and/or
the Zobels of Hacienda Calatagan over the areas outside its private land covered by TCT No. 722. These
areas, including the lots covered by TCT No. 9550, reverted to public dominion.
To return to the forcible entry case, then defendant (now respondent) Chavez alleged in his answer
before the MTC of Calatagan that his mother, Zoila de Chavez (who died intestate on September 14, 1979) was
a fishpond permittee/lessee under Fishpond Permit issued by the Bureau of Fisheries; that the areas covered by
the permits are the same parcels of land which he presently occupies as Zoila's successor-in-interest and which
Hacienda Bigaa also claims. Chavez likewise asserted that Hacienda Bigaa is the successor-in-interest of Ayala
y Cia, Hacienda Calatagan, Alfonso Zobel, Jacobo Zobel and Enrique Zobel who owned land with an area of
9,652.583 hectares, covered by TCT No. 722 in the Registry of Deeds of Batangas; that Ayala y Cia, the Zobels,
or Hacienda Calatagan, illegally expanded the original area of TCT No. 722 by 2,000 hectares; that suits were
filed to recover the expanded area; that these suits reached the Supreme Court which declared that these excess
areas are part of the public domain and ordered their reversion to the Republic; that the Supreme Court likewise
declared certain TCTs covering the subdivision lots outside the area of TCT No. 722 and issued to transferees as
null and void; therefore, Hacienda Bigaa's titles — TCT Nos. 44695 and 56120 — carry no probative value as
they are of dubious origins and have been nullified by the Supreme Court. Chavez further argued that the suit
is barred by prior judgment in two prior cases — (1) Civil Case No. 78, a suit for unlawful detainer filed by
the Zobels against Chavez's predecessor-in- interest, Zoila de Chavez, before the then Justice of the
Peace Court (now Municipal Trial Court) of Calatagan, Batangas; and (2) Civil Case No. 653, a case of
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accion reinvindicatoria with prayer for preliminary mandatory injunction filed by the Republic, Zoila de
Chavez, and other lessees or fishpond permittees of the Republic, against Enrique Zobel (Hacienda
Bigaa's predecessor-in- interest) before the then Court of First Instance of Batangas.
II. COMPLAINT
Petitioner filed with the MTC of Calatagan, Batangas a complaint for ejectment (forcible entry) and
damages with application for writ of preliminary injunction against respondent Epifanio V. Chavez. The complaint
alleged that Chavez, by force, strategy and/or stealth, entered the premises of Hacienda Bigaa's properties
covered by Transfer Certificate of Title (TCT) Nos. 44695 and 56120 by cutting through a section of the barbed
wire fence surrounding the properties and destroying the lock of one of its gates, subsequently building a house
on the property, and occupying the lots without the prior consent and against the will of Hacienda Bigaa.
III. MTC
The MTC ruled that the elements of res judicata are present. The forcible entry case before it shared an
identity of parties with Civil Case No. 78 for unlawful detainer and Civil Case No. 653 (the Delos Angeles case)
of accion reinvindicatoria because all of these cases involve the predecessors-in-interest of the present parties.
In Civil Case No. 78, the plaintiff was Enrique Zobel, predecessor of Hacienda Bigaa, and the defendant was
Zoila de Chavez, mother and predecessor of Epifanio V. Chavez. In Civil Case No. 653 which reached and was
decided by this Court in 1988 as Republic vs. De los Angeles, Zoila de Chavez was one of the plaintiffs and
Enrique Zobel was one of the defendants. The MTC also found identity of subject matter because the forcible
entry case shared with the previous cases the same subject matter, i.e., the same lands adjudged by the
Supreme Court as part of the public domain usurped by the Zobels, et al. through their illegally expanded titles.
As to identity of causes of action, the MTC held that although the previous cases were for unlawful detainer
and accion reinvindicatoria while the case before it was for forcible entry, an identity of issues existed because
all these cases involved conflicting claims of ownership, occupation and possession of the property which have
long been settled by the Supreme Court. It recognized that under the concept of conclusiveness of judgment, res
judicata merely requires an identity of issue, not an absolute identity of causes of action.
IV. Hacienda Bigaa appealed the MTC's decision to the Regional Trial Court (RTC) of Batangas 26 which
affirmed in toto the appealed decision.
V. Hacienda Bigaa filed its petition for review with the Court of Appeals (CA).
VI. CA The CA in its decision of June 1, 2001 dismissed the petition for review, totally affirming the RTC and
MTC decisions.
VII. Hacienda Bigaa filed a motion for reconsideration.
VIII. COURT OF APPEALS
Rendered its resolution on the motion for reconsideration. It denied reconsideration on the reasoning that the
grounds and arguments raised were mere iterations of those already raised in the petition for review.
IX. PETITION TO THE SUPREME COURT UNDER RULE 45

Hacienda Bigaa is now before the SC via a petition forreview under Rule 45 of the Rules of Court to
assail the CA ruling. Among other things, it argues that the CA's Resolution is patently erroneous because the
grounds and arguments raised in its motion for reconsideration were not mere reiterations; it claims, as one of the
grounds in its motion for reconsideration, that the "final determination of the scope and extent" of the area
allegedly in excess of that covered by TCT No. 722 of Ayala y Cia — was made only after the petition for review
was filed on February 16, 1998 .
X. ISSUE
Whether res judicata exist, hence, motion to dismiss is proper.
XI. SUPREME COURT
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The Supreme Court ruled that the present case is a stark repetition of scenarios in these cases.
The protagonists remain virtually the same — with petitioner Hacienda Bigaa taking the place of its
predecessors-in- interest Ayala y Cia and/or the Zobels of Hacienda Calatagan, and respondent Epifanio
V. Chavez taking the place of his predecessor-in-interest Zoila de Chavez whose possession was under
bona fide authority from the Republic. Considering that in this case the disputed lots are among those litigated
in the antecedent cases and the issues of ownership and possession are again in issue, the principle of res
judicata inevitably must be considered and applied, if warranted.
The doctrine of res judicata is set forth in Section 47 of Rule 39 of the Rules of Court, which in its relevant part
reads:
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:
xxx xxx xxx

(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 or 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.
Under the first concept, res judicata absolutely bars any subsequent action when the following requisites concur:
(a) the former judgment or order was final;

(b) it adjudged the pertinent issue or issues on their merits;
(c) it was rendered by a court that had jurisdiction over the subject matter and the parties; and
(d) between the first and the second actions, there was identity of parties, of subject matter, and of
causes of action.
Where no identity of causes of action but only identity of issues exists, res judicata comes under
the second concept — i.e., under conclusiveness of judgment. Under this concept, the rule bars the re-
litigation of particular facts or issues involving the same parties even if raised under different claims or causes of
action. Conclusiveness of judgment finds application when a fact or question has been squarely put in issue,
judicially passed upon, and adjudged in a former suit by a court of competent jurisdiction. The fact or question
settled by final judgment or order binds the parties to that action (and persons in privity with them or their
successors-in-interest), and continues to bind them while the judgment or order remains standing and unreversed
by proper authority on a timely motion or petition; the conclusively settled fact or question furthermore cannot
again be litigated in any future or other action between the same parties or their privies and successors-in-
interest, in the same or in any other court of concurrent jurisdiction, either for the same or for a different cause of
action. Thus, only the identities of parties and issues are required for the operation of the principle of
conclusiveness of judgment.
While conclusiveness of judgment does not have the same barring effect as that of a bar by former
judgment that proscribes subsequent actions, the former nonetheless estops the parties from raising in a later
case the issues or points that were raised and controverted, and were determinative of the ruling in the earlier
case. In other words, the dictum laid down in the earlier final judgment or order becomes conclusive and
continues to be binding between the same parties, their privies and successors-in-interest, as long as the facts
on which that judgment was predicated continue to be the facts of the case or incident before the court in a later
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case; the binding effect and enforceability of that earlier dictum can no longer be re-litigated in a later case since
the issue has already been resolved and finally laid to rest in the earlier case.
A. Identity of Parties
As already stated above, the parties to the present case are virtually the same as those in the
antecedent cases. Specifically in De los Angeles, the parties were Enrique Zobel, the predecessor- in-interest of
petitioner Hacienda Bigaa, and Zoila de Chavez, the mother and predecessor-in-interest of Chavez.
B. Identity of Subject Matter

Hacienda Bigaa and Chavez are litigating the same properties subject of the antecedent cases
inasmuch as they claim better right of possession to parcels of land covered by subdivision titles derived from
Hacienda Calatagan's TCT No. 722 and by government- issued fishpond permits. Specifically in De los Angeles,
the Zobels and Zoila de Chavez litigated the disputed lots covered by subdivision titles in Zobel's name and by
fishpond permits the Republic issued in favor of de Chavez.
In ruling that the subject lots are the same lots litigated in the previously decided cases, the courts below
based their findings on De los Angeles that in turn was guided by our rulings in Dizon and Ayala y Cia. For
emphasis, we reiterate our ruling in De los Angeles: all areas the Ayalas and/or the Zobels made to appear to
be covered by TCT No. 722 are owned by the Republic because they form part of the public domain;
specifically, portions of the navigable water or of the foreshores of the bay converted into fishponds are
parts of the public domain that cannot be sold by the Ayalas and/or the Zobels to third parties.
c.) Identity of Issues
This case and the antecedent cases all involve the issue of ownership or better right of possession.
In Ayala y Cia, we affirmed an RTC decision that decreed: (a) Declaring as null and void Transfer Certificate of
Title No. T-9550 (or Exhibit "24") of the Register of Deeds of the Province of Batangas and other subdivision
titles issued in favor of Ayala y Cia and; or Hacienda de Calatagan over the areas outside its private land
covered by TCT No. 722, which, including the lots in T-9550 (lots 360, 362, 363 and 182) are hereby reverted to
public dominion.
Consequently, lots and their titles derived from the Ayala's and the Zobels' TCT No. 722 not shown to be
within the original coverage of this title are conclusively public domain areas and their titles will be struck down as
nullities.
Thus, De los Angeles effectively annulled the subdivision titles disputed in the case for being among the
"other subdivision titles" declared void for covering public domain areas, and ordered their reversion to the
Republic. De los Angeles recognized, too, the right of the Republic's lessees and public fishpond permittees
(among them Zoila de Chavez, mother and predecessor-in-interest of Chavez) to possess the fishpond
lots in question because they derive their right of possession from the Republic — the rightful owner of
these lots.
We reject, based on these discussions, Hacienda Bigaa's position that there could be no res
judicata in this case because the present suit is for forcible entry while the antecedent cases adverted
were based on different causes of action — i.e., quieting of title, annulment of titles and accion
reinvindicatoria. For, res judicata, under the concept of conclusiveness of judgment, operates even if no
absolute identity of causes of action exists. Res judicata, in its conclusiveness of judgment concept,
merely requires identity of issues. We thus agree with the uniform view of the lower courts — the MTC,
RTC and the CA — on the application of res judicata to the present case.
9. Fels Energy Inc. vs Province of Batangas, G.R. No. 168557. February 16, 2007 (ACOSTA)
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National Power Corporation (NAPOCOR) entered into a lease agreement with Polar Energy, Inc. over Power
Barges which were docked in Balayan Bay in Calacay, Batangas. In the agreement, NAPOCOR would be
responsible for the payment of taxes levied by the National Government or its instrumentalities. Polar Energy
assigned its rights to Fels Energy Inc.
On August 7, 1995, the Province of Batangas assessed FELS real property taxes amounting to P56,184,088.40
for the year 1994. On September 7, 1995, NAPOCOR sought reconsideration of assessed taxes before
Provincial Assessor. However, it was denied on September 22, 1995.
II. Petition by NAPOCOR before Local Board of Assessment Appeals (LBAA)
· NPC Contention
o The barges are not real property
o the Department of Finance (DOF) had rendered an opinion that barges are not real property
o Assuming arguendo they are real property, a wrong assessment was made.
· Answer by Provincial Assessor

o the barges were real property for purposes of taxation
III. LBAA Decision

The barges were real property for purposes of taxation.
IV. Appeal to Central Board of Assessment Appeals (CBAA)
On April 6, 2000, the CBAA rendered ruled in favor of NAPOCOR on ground that since the barge was actually,
directly, and exclusively, used by NAPOCOR, the tax exemption granted to it may extend to the barge.
However, on July 31, 2001, the CBAA made a complete volte face (a total change of position), and ruled that the
barges were subject to real property taxes.
V. Appeal to CA petition for review on Certiorari
Napocor and Fels filed separate petitions for Review on Certiorari.
The Petition by NAPOCOR was denied for of lack of merit.
The Petition by Fels was denied on the ground of prescription.
VI. Appeal to SC under Rule 45
The two cases by NAPOCOR and Fels were consolidated.
The Provincial Assessor, contends that the instant petition is barred by res judicata as the CA dismissed it on
ground of prescription
FELS maintains that the argument of the Provincial Assessor is completely misplaced since it was not a party to
the erroneous petition which the NPC filed.
VII. SC Ruling
W.O.N prescription set in.
Yes
The CA is correct in saying that the 60-day period for making the appeal to the LBAA, [from the Provincial
Assessor’s Assesssment], runs without interruption.
If the taxpayer fails to appeal in due course, the right of the local government to collect the taxes due with respect
to the taxpayers property becomes absolute upon the expiration of the period to appeal.
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Elementary is the rule that the perfection of an appeal within the period therefor is both mandatory and
jurisdictional, and failure in this regard renders the decision final and executory.
In this case, the 60 day period expired when NAPOCOR opted to file a motion for reconsideration of the
Provincial Assessors decision, a remedy not sanctioned by law, instead of appealing it to the LBAA.
W.O.N the action is barred by res judicata
Yes.
Res judicata pervades every organized system of jurisprudence and is founded upon two grounds embodied in
various maxims of common law, namely:
(1) public policy and necessity, which makes it to the interest of the State that there should be an end to litigation
(republicae ut sit litium); and
(2) the hardship on the individual of being vexed twice for the same cause (nemo debet bis vexari et eadem
causa)
Res judicata has the following elements:

(1) the former judgment must be final;
(2) the court which rendered it had jurisdiction over the subject matter and the parties;
(3) the judgment must be on the merits; and
(4) there must be between the first and the second actions, identity of parties, subject matter and causes of
action.
The application of the doctrine of res judicata does not require absolute identity of parties but merely
substantial identity of parties. There is substantial identity of parties when there is community of interest
or privity of interest between a party in the first and a party in the second case even if the first case did
not implead the latter.
In this case, FELS gave NAPOCOR the full power and authority to represent it in any proceeding regarding real
property assessment. Therefore, when petitioner NPC filed its petition for review, it did so not only on its behalf
but also on behalf of FELS.
SUGA SOTTO YUVIENCO, BRITANIA SOTTO, and MARCELINO SOTTO vs. HON. AUXENCIO C.
DACUYCUY, Judge of the CFI of Leyte, DELY RODRIGUEZ, FELIPE ANG CRUZ, CONSTANCIA NOGAR,
MANUEL GO, INOCENTES DIME, WILLY JULIO, JAIME YU, OSCAR DY, DY CHIU SENG, BENITO YOUNG,
FERNANDO YU, SEBASTIAN YU, CARLOS UY, HOC CHUAN and MANUEL DY
G.R. No. L-55048 May 27, 1981 (Cabel)
Nature: Petition for certiorari and prohibition to declare void for being in grave abuse of discretion the orders of
respondent judge in Civil Case No. 5759, which denied the motion filed by petitioners to dismiss the complaint of
private respondents for specific performance of an alleged agreement of sale of real property, the said motion
being based on the grounds that the respondents' complaint states no cause of action and/or that the claim
alleged therein is unenforceable under the Statute of Frauds.
Finding initially prima facie merit in the petition, We required respondents to answer and We issued a
temporary restraining order enjoining the execution of the questioned orders.
Action for Specific Performance

On July 12, 1978, Petitioners (private respondents sa petition for certiorari case), through a certain Atty.
Pedro Gamboa, expressed willingness to sell to private respondents (petitioner sa certiorari case) the subject
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property for P6,500,000 provided the latter made known their own decision to buy it not later than July 31, 1978.
The respondents replied that they agree to buy the property and they shall negotiate details. When petitioners'
representative (Atty Gamboa) went to Cebu City with a prepared and duly signed contract for the purpose of
perfecting and consummating the transaction, respondents and said representative found variance between the
terms of payment stipulated in the prepared document and what respondents had in mind. Defendant (client ni
Atty. Gamboa) without giving notice to plaintiffs, changed the mode of payment with respect to the balance of
P4,500,000.00 by imposing upon plaintiffs to pay same amount within thirty (30) days from execution of the
contract instead of the former term of ninety (90) days as stated in paragraph 8 hereof. Hence, the bankdraft
which respondents were delivering to petitioners' representative was returned and the document remained
unsigned by respondents. Hence the action below for specific performance.
II. Motion to Dismiss

Petitioner’s main grounds:
1. That plaintiff, TACLOBAN MERCHANTS' REALTY DEVELOPMENT CORPORATION, amended
complaint, does not state a cause of action and the claim on which the action is founded is likewise
unenforceable under the provisions of the Statute of Frauds.
2. That as to the rest of the plaintiffs, their amended complaint does not state a cause of action and the
claim on which the action is founded is likewise unenforceable under the provisions of the Statute of Frauds.
Respondent judge ruled negatively on the motion to dismiss, discoursing at length on the personality as
real party-in-interest of respondent corporation, while passing lightly, however, on what to Us are the more
substantial and decisive issues of whether or not the complaint sufficiently states a cause of action and whether
or not the claim alleged therein is unenforceable under the Statute of Frauds.
III. Issue
Whether or not the complaint states sufficiently a cause of action.
This issue necessarily entails the determination of whether or not the plaintiffs have alleged facts adequately
showing the existence of a perfected contract of sale between herein petitioners and the occupant represented
by respondent Yao King Ong.
IV. Held
In this respect, the governing legal provision is, of course, Article 1319 of the Civil Code which
provides:
ART. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are constitute the contract. The offer must be certain the acceptance
absolute. A qualified acceptance constitute a counter-offer.
Acceptance made by letter or telegram does not bind offerer except from the time it came to his
knowledge. The contract, in a case, is presumed to have been entered into in the place where the offer
was made.
In the instant case, We can lay aside, for the moment, petitioners' contention that the letter of July 12,
1978 of Atty. Pedro C. Gamboa to respondents Yao King Ong and his companions constitute an offer that is
"certain", although the petitioners claim that it was a mere expression of willingness to sell the subject property
and not a direct offer of sale to said respondents. What We consider as more important and truly decisive is what
is the correct juridical significance of the telegram of respondents instructing Atty. Gamboa to "proceed to
Tacloban to negotiate details." We underline the word "negotiate" advisedly because to Our mind it is the key
word that negates and makes it legally impossible for Us to hold that respondents' acceptance of petitioners'
offer, assuming that it was a "certain" offer indeed, was the "absolute" one that Article 1319 above-quoted
requires.
Respondents now maintain that what the telegram refers to as "details" to be "negotiated" are mere
"accidental elements", not the essential elements of the contract. They even invite attention to the fact that they
have alleged in their complaint that it was as early as "in the month of October, 1977 (that) negotiations between
plaintiffs and defendants for the purchase and sale (in question) — were made, thus resulting to offers of same
defendants and counter-offer of plaintiffs". But to Our mind such alleged facts precisely indicate the failure of any
meeting of the minds of the parties, and it is only from the letter and telegrams above-quoted that one can
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determine whether or not such meeting of the minds did materialize. As We see it, what such allegations bring
out in bold relief is that it was precisely because of their past failure to arrive at an agreement that petitioners had
to put an end to the uncertainty by writing the letter of July 12, 1978. On the other hand, that respondents were all
the time agreeable to buy the property may be conceded, but what impresses Us is that instead of "absolutely"
accepting the "certain" offer — if there was one — of the petitioners, they still insisted on further negotiation of
details. For anyone to read in the telegram of Yao that they accepted the price of P6,500,000.00 would be an
inference not necessarily warranted by the words "we agree to buy" and "proceed Tacloban to negotiate details".
If indeed the details being left by them for further negotiations were merely accidental or formal ones, what need
was there to say in the telegram that they had still "to negotiate (such) details", when, being unessential per their
contention, they could have been just easily clarified and agreed upon when Atty. Gamboa would reach
Tacloban?
Respondents maintain that under existing jurisprudence relative to a motion to dismiss on the ground of
failure of the complaint to state a cause of action, the movant-defendant is deemed to admit the factual
allegations of the complaint, hence, petitioners cannot deny, for purposes of their motion, that such terms of
payment had indeed been agreed upon.
While such is the rule, those allegations do not detract from the fact that under Article 1319 of the Civil
Code and judged in the light of the telegram-reply of Yao to Atty. Gamboa's letter, there was not an absolute
acceptance, hence from that point of view, petitioners' contention that the complaint of respondents state no
cause of action is correct.
Nonetheless, the alleged subsequent agreement about the P2 M down and P4.5 M in 90 days may at
best be deemed as a distinct cause of action. And placed against the insistence of petitioners, as demonstrated
in the two deeds of sale taken by Atty. Gamboa to Tacloban, Annexes 9 and 10 of the answer of herein
respondents, that there was no agreement about 90 days, an issue of fact arose, which could warrant a trial in
order for the trial court to determine whether or not there was such an agreement about the balance being
payable in 90 days instead of the 30 days stipulated in Annexes 9 and 10 above-referred to. Our conclusion,
therefore, is that although there was no perfected contract of sale in the light of the letter of Atty. Gamboa of July
12, 1978 and the letter-reply thereto of Yao; it being doubtful whether or not, under Article 1319 of the Civil Code,
the said letter may be deemed as an offer to sell that is "certain", and more, the Yao telegram is far from being an
"absolute" acceptance under said article, still there appears to be a cause of action alleged in Paragraphs 8 to 12
of the respondents' complaint, considering it is alleged therein that subsequent to the telegram of Yao, it was
agreed that the petitioners would sell the property to respondents for P6.5 M, by paving P2 M down and the
balance in 90 days and which agreement was allegedly violated when in the deeds prepared by Atty. Gamboa
and taken to Tacloban, only 30 days were given to respondents.
But the foregoing conclusion is not enough to carry the day for respondents. It only brings Us to the
question of whether or not the claim for specific performance of respondents is enforceable under the Statute of
Frauds. In this respect, We view the situation at hand from two angles, namely, (1) that the allegations contained
in respondents' complaint should be taken together with the documents already aforementioned and (2) that the
said allegations constitute a separate and distinct cause of action. We hold that either way We view the situation,
the conclusion is inescapable e that the claim of respondents that petitioners have unjustifiably refused to
proceed with the sale to them of the property v in question is unenforceable under the Statute of Frauds.
It is nowhere alleged in the complaint that there is any writing or memorandum, much less a duly signed
agreement to the effect that the price of P6.5M fixed by petitioners for the real property herein involved was
agreed to be paid not in cash but in installments as alleged by respondents. The 90-day term for the balance of
P4.5 M insisted upon by respondents choices not appear in any note, writing or memorandum signed by either
the petitioners or any of them, not even by Atty. Gamboa. Hence, looking at the pose of respondents that there
was a perfected agreement of purchase and sale between them and petitioners under which they would pay in
installments of P2 M down and P4.5 M within ninety 90 days afterwards it is evident that such oral contract
involving the "sale of real property" comes squarely under the Statute of Frauds (Article 1403, No. 2(e), Civil
Code.)
Respondent Judge’s Decision
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On the other score of considering the supposed agreement of paying installments as partly
supported by the letter and t telegram earlier quoted herein, His Honor declared with well-studied
ratiocination, albeit legally inaccurate, that:
The next issue relate to the State of Frauds. It is contended that plaintiffs' action for
specific performance to compel the defendants to execute a good and sufficient conveyance of
the property in question is unenforceable because there is no other note memorandum or
writing except annexes "C", "C-l" and "D", which by themselves did not give birth to a contract
to sell. The argument is not well founded. The rules of pleading limit the statement of the cause
of action only to such operative facts as give rise to the right of action of the plaintiff to obtain
relief against the wrongdoer. The details of probative matter or particulars of evidence,
statements of law, inferences and arguments need not be stated. Thus, Sec. 1 of Rule 8
provides that 'every pleading shall contain in a methodical and logical form, a plain concise and
direct statement of the ultimate facts on which the party pleading relies for his claim or defense,
as the case may be, omitting the statement of mere evidentiary facts.' Exhibits need not be
attached. The contract of sale sued upon in this case is supported by letters and telegrams
annexed to the complaint and plaintiffs have announced that they will present additional
evidences during the trial to prove their cause of action. The plaintiffs having alleged that the
contract is backed up by letters and telegrams, and the same being sufficient memorandum,
the complaint states a cause of action and they should be given their day in court and allowed
to substantiate their allegations.
The foregoing disquisition of respondent judge misses at least two (2) juridical substantive aspects of
the Statute of Frauds insofar as sale of real property is concerned. First, His Honor assumed that the requirement
of perfection of such kind of contract under Article 1475 of the Civil Code which provides that "(t)he contract of
sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract
and upon the price", the Statute would no longer apply as long as the total price or consideration is mentioned in
some note or memorandum and there is no need of any indication of the manner in which such total price is to be
paid.
We cannot agree. In the reality of the economic world and the exacting demands of business interests
monetary in character, payment on installments or staggered payment of the total price is entirely a different
matter from cash payment, considering the unpredictable trends in the sudden fluctuation of the rate of interest.
In other words, it is indisputable that the value of money - varies from day to day, hence the indispensability of
providing in any sale of the terms of payment when not expressly or impliedly intended to be in cash.
Thus, We hold that in any sale of real property on installments, the Statute of Frauds read together with
the perfection requirements of Article 1475 of the Civil Code must be understood and applied in the sense that
the idea of payment on installments must be in the requisite of a note or memorandum therein contemplated.
Stated otherwise, the inessential elements" must be deemed to include the requirement just discussed when it
comes to installment sales. Under the Statute of Frauds, the contents of the note or memorandum, whether in
one writing or in separate ones merely indicative for an adequate understanding of all the essential elements of
the entire agreement, may be said to be the contract itself, except as to the form.
Secondly, We are of the considered opinion that under the rules on proper pleading, the ruling of the
trial court that, even if the allegation of the existence of a sale of real property in a complaint is challenged as
barred from enforceability by the Statute of Frauds, the plaintiff may simply say there are documents, notes or
memoranda without either quoting them in or annexing them to the complaint, as if holding an ace in the sleeves
is not correct. To go directly to the point, for Us to sanction such a procedure is to tolerate and even encourage
undue delay in litigation, for the simple reason that to await the stage of trial for the showing or presentation of
the requisite documentary proof when it already exists and is asked to be produced by the adverse party would
amount to unnecessarily postponing, with the concomitant waste of time and the prolongation of the proceedings,
something that can immediately be evidenced and thereby determinable with decisiveness and precision by the
court without further delay.
In this connection, Moran observes that unlike when the ground of dismissal alleged is failure of
the complaint to state a cause of action, a motion to dismiss invoking the Statute of Frauds may be filed
even if the absence of compliance does not appear an the face of the complaint. Such absence may be
the subject of proof in the motion stage of the proceedings. It follows then that when such a motion is
filed and all the documents available to movant are before the court, and they are insufficient to comply
with the Statute, it becomes incumbent upon the plaintiff, for the reasons of policy We have just'
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indicated regarding speedy administration of justice, to bring out what note or memorandum still exists
in his possession in order to enable the court to expeditiously determine then and there the need for
further proceedings. In other words, it would be inimical to the public interests in speedy justice for
plaintiff to play hide and seek at his own convenience, particularly, when, as is quite apparent as in the
instant case that chances are that there are no more writings, notes or memoranda of the installment
agreement alleged by respondents. We cannot divine any reason why any such document would be
withheld if they existed, except the unpermissible desire of the respondents to force the petitioners to
undergo the ordeals, time, effort and expenses of a futile trial.
In the foregoing premises, We find no alternative than to render judgment in favor of petitioners in this certiorari
and prohibition case. If at all, appeal could be available if the petitioners subjected themselves to the trial ruled to
be held by the trial court. We foresee even at this point, on the basis of what is both extant and implicit in the
records, that no different result can be probable. We consider it as sufficiently a grave abuse of discretion
warranting the special civil actions herein the failure of respondent judge to properly apply the laws on perfection
of contracts in relation to the Statute of Frauds and the pertinent rules of pleading and practice, as We have
discussed above.
10. BANK OF AMERICA NT&SA, BANK OF AMERICA INTERNATIONAL, LTD, vs. COURT OF APPEALS,
HON. MANUEL PADOLINA, EDUARDO LITONJUA, SR., and AURELIO K. LITONJUA JR.
[G.R. No. 120135. March 31, 2003]
(CRUZ)
On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for brevity) filed a Complaint
before the Regional Trial Court of Pasig against the Bank of America NT&SA and Bank of America International,
Ltd. (defendant banks for brevity) alleging that: they were engaged in the shipping business; they owned two
vessels: Don Aurelio and El Champion, through their wholly-owned corporations; they deposited their revenues
from said business together with other funds with the branches of said banks in the United Kingdom and
Hongkong up to 1979; with their business doing well, the defendant banks induced them to increase the number
of their ships in operation, offering them easy loans to acquire said vessels; thereafter, the defendant banks
acquired, through their (Litonjuas) corporations as the borrowers: (a) El Carrier (b) El General; (c) El Challenger;
and (d) El Conqueror; the vessels were registered in the names of their corporations; the operation and the funds
derived therefrom were placed under the complete and exclusive control and disposition of the petitioners; and
the possession the vessels was also placed by defendant banks in the hands of persons selected and designated
by them (defendant banks).
The Litonjuas claimed that defendant banks as trustees did not fully render an account of all the income
derived from the operation of the vessels as well as of the proceeds of the subsequent foreclosure sale; [10]
because of the breach of their fiduciary duties and/or negligence of the petitioners and/or the persons designated
by them in the operation of private respondents six vessels, the revenues derived from the operation of all the
vessels declined drastically; the loans acquired for the purchase of the four additional vessels then matured and
remained unpaid, prompting defendant banks to have all the six vessels, including the two vessels originally
owned by the private respondents, foreclosed and sold at public auction to answer for the obligations incurred for
and in behalf of the operation of the vessels; they (Litonjuas) lost sizeable amounts of their own personal funds
equivalent to ten percent (10%) of the acquisition cost of the four vessels and were left with the unpaid balance of
their loans with defendant banks.
II. COMPLAINT
The Litonjuas prayed for the accounting of the revenues derived in the operation of the six vessels and of the
proceeds of the sale thereof at the foreclosure proceedings instituted by petitioners; damages for breach of trust;
exemplary damages and attorneys fees.
III. DEFENDANTS FILED MOTION TO DISMISS
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Defendant banks filed a Motion to Dismiss on grounds of forum non conveniens and lack of cause of action
against them.
IV. TRIAL COURT ISSUED AN ORDER DENYING THE MOTION TO DISMISS
V. PETITION FOR REVIEW ON CERTIORARI BEFORE THE CA
Instead of filing an answer the defendant banks went to the Court of Appeals on a Petition for Review on
Certiorari ]which was aptly treated by the appellate court as a petition for certiorari. They assailed the above-
quoted order as well as the subsequent denial of their Motion for Reconsideration. The appellate court dismissed
the petition and denied petitioners Motion for Reconsideration.
VI. ISSUE
1. Whether or not the trial court commit grave abuse of discretion in refusing to dismiss the complaint on
the ground that plaintiffs have no cause of action against defendants since plaintiffs are merely
stockholders of the corporations which are the registered owners of the vessels and the borrowers of
petitioners.
2. Whether or not the complaint be dismissed on the ground of forum non-conveniens.
3. Whether or not the private respondents are guilty of forum shopping because of the pendency of
foreign action.
PETITIONER’S CONTENTIONS
A. that while the application of the principle of forum non conveniens is
discretionary on the part of the Court, said discretion is limited by the guidelines
pertaining to the private as well as public interest factors in determining whether
plaintiffs choice of forum should be disturbed
B. that the loan agreements, security documentation and all subsequent

restructuring agreements uniformly, unconditionally and expressly provided that they
will be governed by the laws of England; that Philippine Courts would then have to
apply English law in resolving whatever issues may be presented to it in the event it
recognizes and accepts herein case; that it would then be imposing a significant and
unnecessary expense and burden not only upon the parties to the transaction but also
to the local court. Petitioners insist that the inconvenience and difficulty of applying
English law with respect to a wholly foreign transaction in a case pending in the
Philippines may be avoided by its dismissal on the ground of forum non conveniens.
C. that private respondents have already waived their alleged causes of

action in the case at bar for their refusal to contest the foreign civil cases earlier filed
by the petitioners against them in Hongkong and England and that private
respondents alleged cause of action is already barred by the pendency of another
action or by litis pendentia
RESPONDENT’S CONTENTION:
That certain material facts and pleadings are omitted and/or misrepresented in the
present petition for certiorari; that the prefatory statement failed to state that part of
the security of the foreign loans were mortgages on a 39-hectare piece of real estate
located in the Philippines; that while the complaint was filed only by the stockholders
of the corporate borrowers, the latter are wholly-owned by the private respondents
who are Filipinos and therefore under Philippine laws, aside from the said corporate
borrowers being but their alter-egos, they have interests of their own in the vessels.
Private respondents also argue that the dismissal by the Court of Appeals of the
petition for certiorari was justified because there was neither allegation nor any
showing whatsoever by the petitioners that they had no appeal, nor any plain, speedy,
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and adequate remedy in the ordinary course of law from the Order of the trial judge
denying their Motion to Dismiss; that the remedy available to the petitioners after their
Motion to Dismiss was denied was to file an Answer to the complaint; that as upheld
by the Court of Appeals, the decision of the trial court in not applying the principle of
forum non conveniens is in the lawful exercise of its discretion. Finally, private
respondents aver that the statement of petitioners that the doctrine of res judicata also
applies to foreign judgment is merely an opinion advanced by them and not based on
a categorical ruling of this Court; and that herein private respondents did not actually
participate in the proceedings in the foreign courts
VII. HELD
It is a well-settled rule that the order denying the motion to dismiss cannot be the subject of petition for
certiorari. Petitioners should have filed an answer to the complaint, proceed to trial and await judgment before
making an appeal. As repeatedly held by this Court:
An order denying a motion to dismiss is interlocutory and cannot be the subject of the extraordinary
petition for certiorari or mandamus. The remedy of the aggrieved party is to file an answer and to interpose as
defenses the objections raised in his motion to dismiss, proceed to trial, and in case of an adverse decision, to
elevate the entire case by appeal in due course. xxx Under certain situations, recourse to certiorari or mandamus
is considered appropriate, i.e., (a) when the trial court issued the order without or in excess of jurisdiction; (b)
where there is patent grave abuse of discretion by the trial court; or (c) appeal would not prove to be a speedy
and adequate remedy as when an appeal would not promptly relieve a defendant from the injurious effects of the
patently mistaken order maintaining the plaintiffs baseless action and compelling the defendant needlessly to go
through a protracted trial and clogging the court dockets by another futile case. [34]
Records show that the trial court acted within its jurisdiction when it issued the assailed Order denying
petitioners motion to dismiss. Does the denial of the motion to dismiss constitute a patent grave abuse of
discretion? Would appeal, under the circumstances, not prove to be a speedy and adequate remedy? We will
resolve said questions in conjunction with the issues raised by the parties.
First issue. Did the trial court commit grave abuse of discretion in refusing to dismiss the complaint
on the ground that plaintiffs have no cause of action against defendants since plaintiffs are merely
stockholders of the corporations which are the registered owners of the vessels and the borrowers of
petitioners?
No. Petitioners argument that private respondents, being mere stockholders of the foreign corporations,
have no personalities to sue, and therefore, the complaint should be dismissed, is untenable.A case is
dismissible for lack of personality to sue upon proof that the plaintiff is not the real party-in-interest. Lack of
personality to sue can be used as a ground for a Motion to Dismiss based on the fact that the complaint, on the
face thereof, evidently states no cause of action.[35] In San Lorenzo Village Association, Inc. vs. Court of
Appeals,[36] this Court clarified that a complaint states a cause of action where it contains three essential
elements of a cause of action, namely: (1) the legal right of the plaintiff, (2) the correlative obligation of the
defendant, and (3) the act or omission of the defendant in violation of said legal right. If these elements are
absent, the complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of
action.[37] To emphasize, it is not the lack or absence of cause of action that is a ground for dismissal of the
complaint but rather the fact that the complaint states no cause of action.[38] Failure to state a cause of action
refers to the insufficiency of allegation in the pleading, unlike lack of cause of action which refers to the
insufficiency of factual basis for the action. Failure to state a cause of action may be raised at the earliest stages
of an action through a motion to dismiss the complaint, while lack of cause of action may be raised any time after
the questions of fact have been resolved on the basis of stipulations, admissions or evidence presented. [39]
In the case at bar, the complaint contains the three elements of a cause of action. It alleges that: (1)
plaintiffs, herein private respondents, have the right to demand for an accounting from defendants (herein
petitioners), as trustees by reason of the fiduciary relationship that was created between the parties involving the
vessels in question; (2) petitioners have the obligation, as trustees, to render such an accounting; and (3)
petitioners failed to do the same.
Petitioners insist that they do not have any obligation to the private respondents as they are mere
stockholders of the corporation; that the corporate entities have juridical personalities separate and distinct from
those of the private respondents. Private respondents maintain that the corporations are wholly owned by them
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and prior to the incorporation of such entities, they were clients of petitioners which induced them to acquire
loans from said petitioners to invest on the additional ships.
We agree with private respondents.
Second Issue. Should the complaint be dismissed on the ground of forum non-conveniens?
No. The doctrine of forum non-conveniens, literally meaning the forum is inconvenient, emerged in private
international law to deter the practice of global forum shopping, that is to prevent non-resident litigants from
choosing the forum or place wherein to bring their suit for malicious reasons, such as to secure procedural
advantages, to annoy and harass the defendant, to avoid overcrowded dockets, or to select a more friendly
venue. Under this doctrine, a court, in conflicts of law cases, may refuse impositions on its jurisdiction where it is
not the most convenient or available forum and the parties are not precluded from seeking remedies elsewhere.
Whether a suit should be entertained or dismissed on the basis of said doctrine depends largely upon the
facts of the particular case and is addressed to the sound discretion of the trial court. [44] In the case of
Communication Materials and Design, Inc. vs. Court of Appeals,[45] this Court held that xxx [a] Philippine Court
may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met: (1)
that the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is in a
position to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is
likely to have power to enforce its decision.[46] Evidently, all these requisites are present in the instant case.
Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of Appeals,[47] that the
doctrine of forum non conveniens should not be used as a ground for a motion to dismiss because Sec. 1, Rule
16 of the Rules of Court does not include said doctrine as a ground. This Court further ruled that while it is within
the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after vital
facts are established, to determine whether special circumstances require the courts desistance; and that the
propriety of dismissing a case based on this principle of forum non conveniens requires a factual determination,
hence it is more properly considered a matter of defense.
Third issue. Are private respondents guilty of forum shopping because of the pendency of foreign
action?
No. Forum shopping exists where the elements of litis pendentia are present and where a final judgment in
one case will amount to res judicata in the other. Parenthetically, for litis pendentia to be a ground for the
dismissal of an action there must be: (a) identity of the parties or at least such as to represent the same interest
in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same acts; and
(c) the identity in the two cases should be such that the judgment which may be rendered in one would,
regardless of which party is successful, amount to res judicata in the other.
In case at bar, not all the requirements for litis pendentia are present. While there may be identity of parties,
notwithstanding the presence of other respondents, as well as the reversal in positions of plaintiffs and
defendants, still the other requirements necessary for litis pendentia were not shown by petitioner. It merely
mentioned that civil cases were filed in Hongkong and England without however showing the identity of rights
asserted and the reliefs sought for as well as the presence of the elements of res judicata should one of the
cases be adjudged.
11. ASSOCIATED BANK vs. SPOUSES JUSTINIANO S. MONTANO, SR., AND LIGAYA MONTANO and
TRES CRUCES AGRO- INDUSTRIAL CORPORATION ( Culajara)
In 1964, spouses Justiniano and Ligaya Montano (the Montanos) owned three (3) parcels of land
situated in Tanza, Cavite with an aggregate area of 590,558 square meters, more or less, utilized as an
integrated farm and as a stud farm used for raising horses. Justiniano was then serving as congressman for the
lone district of Cavite and as minority oor leader. In 1972, when then President Ferdinand Marcos placed the
country under martial law, Justiniano went on self-exile to the United States of America (USA) to avoid the
harassment and threats made against him by the dictator.
Sometime in 1975, while still in the USA, the Montanos transferred the said properties to Tres Cruces
Agro-Industrial Corporation (TCAIC) in exchange for shares of stock in the company, allowing the Montanos to
control 98% of the stockholdings of TCAIC. Thus, on February 17, 1975, the certificates of title registered in the
name of the Montanos were cancelled and were replaced with transfer certificates of title (TCTs) in TCAIC's
name.
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A year later, in October 1976, TCAIC sold the properties to International Country Club, Inc. (ICCI) for
P6,000,000.00. The sale resulted in the cancellation of the titles of TCAIC, and in their transfer to ICCI on May
27, 1977.
After the transfer, ICCI immediately mortgaged the parcels of land to Citizens Bank and Trust Co. (later
renamed as Associated Bank) for P2,000,000.00. The loan matured but remained unpaid, prompting Associated
Bank to foreclose the mortgage on May 31, 1984. The properties were then put on public auction and were sold
for P5,700,000.00 to Associated Bank, the sole and highest bidder. Ownership over the said properties was
consolidated by Associated Bank and, on May 19, 1987, new TCTs were issued in its name.
II. COMPLAINT
Meanwhile, in 1986, following the ouster of Marcos, the Montanos returned to the country. After
discovering the transfer of the properties, the Montanos immediately took physical possession of the same and
began cultivating the land. On September 15, 1989, the Montanos filed an action for reconveyance of title against
herein petitioner, praying, in sum, that the transfer of the properties from TCAIC to ICCI, and from ICCI to
Associated Bank, be declared null and void.
Respondent’s averment:
The transfer of the parcels of land to TCAIC was done only to avoid the con scatory acts being applied
by the dictator against the Montanos' properties, in retaliation for the latter's open opposition to Marcos.
On October 11, 1989, Associated Bank filed an Answer setting forth affirmative defenses.
On February 17, 1997, eight (8) years after Associated Bank led its answer and while the case was still
on its pretrial stage, the bank led a Motion for Preliminary Hearing on the Af rmative Defenses and/or Motion to
Dismiss 22 focused on two crucial points, namely: that the complaint stated no cause of action; and that the case
was already barred by the statute of limitations.
RTC: Dismissed the complaint

An action for reconveyance of real property resulting from fraud may be barred by the statute of
limitations, which requires that the action shall be led within four (4) years from the discovery of the fraud. Under
the circumstances of this case, such discovery must be deemed to have taken place when TCT were issued in
the name of Tres Cruces in 1975 and TCT to the properties in the name of International Country Club, Inc., in
1977, because the registration of the deeds of sale is considered a constructive notice to the whole world of its
contents, and all interests, legal and equitable, included therein. Here plaintiffs waited for a period of around
fourteen (14) years or at least around twelve (12) years from the date of the issuance of the certificates of title
before filing the instant complaint in 1989.
III. APPEAL
Upon appeal, the CA, on October 27, 2003, reversed the RTC's ruling and reinstated the case for further
proceedings.
The trial court discusses the issue as if it is an established fact that the bank was a buyer in good faith
and without prior notice of the adverse interests of the plaintiffs in the properties. We really do not know this until
trial is held and evidence presented. That is why it is necessary that the parties be heard. The court fails to follow
the basic and simple rule that in resolving a motion to dismiss based on insufficiency of the complaint, it must
hypothetically admit the facts alleged.
IV. RULING
ISSUE: (1) whether it is proper to le a motion to dismiss after an answer has already been filed; and (2) whether
the complaint should be dismissed on the grounds set forth therein.
(1) Section 6, Rule 16 of the Rules of Court provides:

SEC. 6. Pleading grounds as affirmative defenses. — If no motion to dismiss has been led, any
of the grounds for dismissal provided for in this Rule may be pleaded as an affirmative defense
in the answer and, in the discretion of the court, a preliminary hearing may be had thereon as if
a motion to dismiss had been filed.
The dismissal of the complaint under this section shall be without prejudice
to the prosecution in the same or separate action of a counterclaim pleaded in the answer.
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The rule is based on practicality. Both the parties and the court can conveniently save time and
expenses necessarily involved in a case preparation and in a trial at large, when the issues involved in a
particular case can otherwise be disposed of in a preliminary hearing.
Since the rule provides that the "preliminary hearing may be had thereon as if a motion to dismiss had
been filed", such hearing shall therefore be conducted in the manner provided in Section 2, Rule 16 of the Rules
of Court, which reads:
SEC. 2. Hearing of motion. — At the hearing of the motion, the parties shall submit their
arguments on the question of law and their evidence on the questions of fact involved except
those not available at that time. Should the case go to trial, the evidence presented during the
hearing shall automatically be part of the evidence of the party presenting the same.
It is, therefore, inconsequential that petitioner had already led an answer to the complaint prior to its
ling of a motion to dismiss. The option of whether to set the case for preliminary hearing after the ling of an
answer which raises affirmative defenses, or to file a motion to dismiss raising any of the grounds set forth in
Section 1, Rule 16 of the Rules are procedural options which are not mutually exclusive of each other. Moreover,
as petitioner correctly pointed out, respondents failed to oppose the motion to dismiss despite having been given
the opportunity to do so by the RTC. Therefore, any right to contest the same was already waived by them.
(2) It is true that an action for reconveyance of real property resulting from fraud may be barred by the
statute of limitations, which requires that the action shall be led within four (4) years from the discovery of the
fraud. The RTC, however, seemed to have overlooked the fact that the basis of respondents' complaint for
reconveyance is not fraud but threat, duress and intimidation, allegedly employed by Marcos' cronies upon the
relatives of the Montanos while the latter were on self-exile. In fact, fraud was neither specifically alleged nor
remotely implied in the complaint.
In the circumstances prevailing in this case, the threat or intimidation upon respondents is deemed to
have ceased only upon the ouster of then President Marcos from power on February 21, 1986. The four-year
prescriptive period must, therefore, be reckoned from the said date. Thus, when respondents led their complaint
for reconveyance on September 15, 1989, the period provided for by law had not yet prescribed. Therefore,
petitioner's motion to dismiss should be denied.
12. DOUGLAS LU YM, , vs. GERTRUDES NABUA, GEORGE N. LU, ALEX N. LU, CAYETANO N.
LU, JR., JULIETA N. LU AND BERNADITA N. LU. (JUSTINIANO)
One of the innovations introduced by the 1997 Rules of Civil Procedure is that the resolution of a motion to
dismiss shall state clearly and distinctly the reasons therefor. In the case at bar, the Court is provided with the
opportunity and task to elucidate on the meaning and application of the new requirement.
Facts:
Private respondents claims that Petitioner Lu Ym has unduly influenced induced Cayetano Ludo to execute a
‘simulated will’. Nabua claims that she is the common law wife of Ludo and that she and their children are entitled
to a part of the estate of Ludo.
I. RTC (case did not specify where):
1. Instant petition stemmed from an Amended Complaint filed by the private respondents
against the petitioner, for Accounting with TRO and Injuction.
2. Petitioner filed an Omnibus Motion to Dismiss the Amended Complaint based on the
following grounds:
“A. Plaintiffs' claims are barred by a prior judgment or by the statute of limitations
{Rule 16, Sec. 1 (f)}.
B. Plaintiffs have no legal capacity to sue and/or do not have a cause of action {Rule
16, Sec. 1(d) and/or 1(g)}.
C. Fraud and equity.
D. Docket fees not deemed paid, therefore, a condition precedent for filing the claim has not
been complied with {Rule 16, Sec. 1(j)}.”
3. Private respondents filed their Opposition to the Omnibus Motion to Dismiss Amended Complaint
alleging the ff:
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“a. Plaintiffs' claims are not barred by prior judgment nor by statute of
limitations;
b. Plaintiffs have the legal capacity to sue and have valid cause of action;
c. Docket fees have been paid by plaintiffs.”
4. The lower court ruled as follows: “There are justiciable questions raised in the
pleadings of the herein parties which are proper subject of a full blown trial.
The Omnibus Motion to Dismiss Amended Complaint is hereby denied.”
5. Motion for Reconsideration filed by the petitioner was denied.
II. Court of Appeals:
1. Petitioner filed a Petition for Certiorari and Prohibition under Rule 65 With Prayer for the Issuance
of TRO and/or Writ of Preliminary Injunction, contending that the trial court committed grave abuse
of discretion in denying his motion to dismiss.
2. The appellate court dismissed the petition holding that the assailed orders may only be reviewed
in the ordinary course of law by an appeal from the judgment after trial. Thus, the proper recourse
was for petitioner to have filed an answer and proceeded to trial since the issues raised in his
motion to dismiss require presentation of evidence aliunde. An exception is when the trial court acts
with grave abuse of discretion in denying the motion to dismiss, in which case a petition for
certiorari under Rule 65 may be proper. This, the trial court did not commit. Moreover, the Court of
Appeals declared that although the assailed orders were briefly phrased, the trial court complied
with the requirements set forth under Rule 16 of the 1997 Rules of Civil Procedure (Rules) on the
resolution of motions to dismiss.
III. Supreme Court:

Petitioner’s Contentions: With the denial of his Motion for Reconsideration, petitioner is now
before this Court seeking a review of the appellate court's Decision and Resolution claiming that the
denial of his motion to dismiss was a disguised deferment of the resolution of the said motion and
that the trial court failed to discuss and address each of the grounds cited therein contrary to the
express mandate of Section 3, Rule 16 of the Rules. Petitioner further argues that the trial court
committed grave abuse of discretion in refusing to address his grounds to dismiss and thereby
postponing their proper ventilation until trial. According to him, Section 2 of the Rules provides that
all available evidence on the question of fact involved in the motion to dismiss may be presented
including evidence aliunde. Thus, the grounds for dismissal raised in his motion to dismiss could
have been resolved in a hearing prior to a full-blown trial.
Even assuming that the presentation of evidence aliunde is not allowed, petitioner contends that the
trial court and the Court of Appeals both erred in refusing to rule on the other grounds to dismiss
which do not require presentation of evidence aliunde such as failure of the Amended Complaint to
state a cause of action/the application of the "clean hands" doctrine, and the trial court's lack of
jurisdiction for failure of the respondents to pay the proper filing and docket fees.
Petitioner also avers that there are other grounds to dismiss the case such as res judicata,
respondents' lack of capacity to sue/waiver and prescription, all of which are allegedly supported by
evidence on record. It is petitioner's theory that the Amended Complaint is a collateral attack on the
duly probated and fully implemented Last Will and Testament of Cayetano Ludo. According to
petitioner, Cayetano Ludo's estate had been distributed by virtue of a Project of Partition approved
by the estate court in its Order dated January 18, 1984 in Sp. Proc. No. 167-CEB. There are,
between the estate case and Civil Case No. 27717, identity of parties, subject matter and cause of
action. Hence, any further issue regarding the recovery of respondents' supposed shares in Mr.
Ludo's estate through Civil Case No. 27717 is precluded by the estate court's final and fully
executed orders.
Issue: Whether or not the CA erred in dismissing the petition for certiorari and in holding that the trial court did
not commit grave abuse of discretion in denying petitioner’s motion to dismiss.
Held: Yes.
An order denying a motion to dismiss is an interlocutory order which neither terminates nor finally disposes of a
case, as it leaves something to be done by the court before the case is finally decided on the merits. As such, the
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general rule is that the denial of a motion to dismiss cannot be questioned in a special civil action for certiorari
which is a remedy designed to correct errors of jurisdiction and not errors of judgment. Neither can a denial of a
motion to dismiss be the subject of an appeal unless and until a final judgment or order is rendered. In order to
justify the grant of the extraordinary remedy ofcertiorari, the denial of the motion to dismiss must have been
tainted with grave abuse of discretion amounting to lack or excess of jurisdiction. 19
At the core of the present petition is the question of whether the trial court's denial of petitioner's motion to
dismiss on the ground that "[T]here are justiciable questions raised in the pleadings of the herein parties
which are proper subject of a full blown trial" contravenes Sec. 3, Rule 16 of the Rules and constitutes
grave abuse of discretion on the part of the trial court.” cCAIaD
Sec. 3, Rule 16 of the Rules provides:
Sec. 3. Resolution of motion. — After the hearing, the court may dismiss the action or claim,
deny the motion or order the amendment of the pleading.
The court shall not defer the resolution of the motion for the reason that the ground relied
upon is not indubitable.
In every case, the resolution shall state clearly and distinctly the reasons therefor.
Under this provision, there are three (3) courses of action which the trial court may take in resolving a motion to
dismiss, i.e., to grant, to deny, or to allow amendment of the pleading. Deferment of the resolution of a motion to
dismiss if the ground relied upon is not indubitable is now disallowed in view of the provision requiring
presentation of all available arguments and evidence. Thus, there is no longer any need to defer action until the
trial as the evidence presented, and such additional evidence as the trial court may require, would already enable
the trial court to rule upon the dubitability of the ground alleged.
Further, it is now specifically required that the resolution on the motion shall clearly and distinctly state the
reasons therefor. This proscribes the common practice of perfunctorily dismissing the motion for "lack of merit."
Such cavalier dispositions can often pose difficulty and misunderstanding on the part of the aggrieved party in
taking recourse therefrom and likewise on the higher court called upon to resolve the same, usually on certiorari.
The questioned order of the trial court denying the motion to dismiss with a mere statement that there are
justiciable questions which require a full blown trial falls short of the requirement of Rule 16 set forth above.
Owing to the terseness of its expressed justification, the challenged order ironically suffers from undefined
breadth which is a hallmark of imprecision. With its unspecific and amorphous thrust, the issuance is
inappropriate to the grounds detailed in the motion to dismiss.
While the requirement to state clearly and distinctly the reasons for the trial court's resolutory order under Sec. 3,
Rule 16 of the Rules does call for a liberal interpretation, especially since jurisprudence dictates that it is
decisions on cases submitted for decision that are subject to the stringent requirement of specificity of rulings
under Sec. 1, Rule 36 of the Rules, the trial court's order in this case leaves too much to the imagination.
It should be noted that petitioner raised several grounds in his motion to dismiss, i.e., bar by prior judgment or by
the statute of limitations, lack of capacity to sue, lack of cause of action, and non-payment of docket fees.
Specifically, petitioner sought the dismissal of the complaint, arguing as follows:
A. Plaintiffs' claims are barred by a prior judgment or by the statute of limitations (Rule 16,
Sec. 1(f))
xxx xxx xxx
5. Plaintiffs now raise the issue that Cayetano Ludo, allegedly then "in failing health" was
unduly influenced by the defendant to execute a "simulated will" to cheat the government of
enormous amounts of estate and inheritance taxes.
6. Plaintiffs may no longer do so, for, subject to the right to appeal, the allowance of a will is
conclusive as to its due execution, Rule 75, Sec. 1. "Due execution" settles the extrinsic
validity of the will, i.e., whether the testator, being of sound mind freely executed the will
in accordance with the formalities by law.
7. It was conclusively established by the allowance of the will, which plaintiffs did not appeal,
that the following circumstances were not present:
Rule 76, Sec. 9
(b) . . . the testator was insane, or otherwise mentally incapable to make a will, at the time of
its execution; aSCHcA
(c) . . . (the will) was executed under duress, or the influence of fear, or threats;
(d) . . . (the will) was procured by undue and improper pressure and influence, on the part of
the beneficiary, or of some other person for his benefit;
8. The foregoing are the precise sort of questions and issues plaintiffs Nabua and her
children are illicitly seeking to try by independent action in a different sala. Why are they
doing this? Because the time for them to bring their claims in the probate court has
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prescribed. The judicial decree of distribution vests title in the distributees and any objections
thereto should be raised in a seasonable appeal, otherwise it will have binding effect like
any other judgment in rem.
xxx xxx xxx
B. Plaintiffs have no legal capacity to sue and/or do not have a cause of action (Rule 16,
Secs. 1(d) and/or 1(g))
12. The following documents reveal that the plaintiff Nabua could never have been the
common-law wife that she claims to be, because Cayetano Ludo was married to someone
else:
(a) Petition for Naturalization by Cayetano Ludo filed in 1946, wherein he declares in
paragraph FIFTH that he is married to Uy Ching Gee (ANNEX "J");
(b) Order of the Court of First Instance dated June 7, 1949, wherein it is stated that Cayetano
Ludo has established in open court that he is married to Uy Ching Gee, a native of Amoy,
China, who likewise lived with him in the Philippines and that they have three legitimate
children born 1937, 1939 and 1942 (ANNEX "K");
(c) Identification Certificate No. 5697 issued by the Bureau of Immigration to Liong Cheng on
November 18, 1957, also known as Visitacion Uy Ching Gui, recognizing her as a citizen of
the Philippines being the lawful wife of Cayetano Ludo (ANNEX "L");
(d) Death Certificate of Visitacion Uy dated August 7, 1969, wherein it is indicated that her
civil status is married and the surviving spouse is Cayetano Ludo (ANNEX "M");
(e) Death Certificate of Cayetano Ludo dated July 16, 1986, wherein it is indicated that his
surviving spouse is Florame delos Reyes Ludo (ANNEX "B").
13. Plaintiffs-children of Nabua do not have legal capacity or cause of action because they
are not the real parties in interest.
13. [sic] Their distributive share in the estate of Cayetano Ludo having been assigned to
Ludo and LuYm Corporation (ANNEX "G"), plaintiffs-children of Nabua are not real
parties in interest; Ludo &LuYm Corp. is. Every action must be prosecuted or defended
in the name of the real party in interest.
xxx xxx xxx
C. Fraud and Equity
14. The "fraud" (confused by plaintiffs to mean undue influence) of "imposing" a "stimulated
will" on Cayetano Ludo has been conclusively negated by the allowance of the will, as
provided in Rule 75, Sec. 1, above discussed.
15. Furthermore, an action for fraud prescribes 4 years from the execution of the "fraudulent"
or "simulated will," which was long ago in this case. DACTSH
16. But more important than any of the foregoing is that plaintiffs who participated in the
probate proceedings and signed the settlement are precluded by "dirty hands" from claiming
relief.
17. By their own admission (to which they are bound by Rule 130, Sec. 26), plaintiffs were
parties to a settlement pursuant to a fraudulent "simulated will" which they portrayed as a
massive scheme to defraud the government of estate and inheritance taxes.
xxx xxx xxx 25 (Emphases in the original.)
Having raised substantial grounds for dismissal, the trial court should have, at the very least, specified
which of these grounds require a full-blown trial. This would have enabled the defendant to determine the
errors that should be the subject of his motion for reconsideration or petition for certiorari, and given the
appellate court sufficient basis for determining the propriety of the denial of the motion to dismiss.
Accordingly, considering that the order of the trial court is a patent nullity for failure to comply with a mandatory
provision of the Rules, petitioner was correct in directly assailing the order on certioraribefore the Court of
Appeals.
However, while it was error for the appellate court to rule that the trial court did not commit grave abuse of
discretion in denying petitioner's motion to dismiss, it does not necessarily follow that the motion to dismiss
should have been granted. The instant petition raises significant factual questions as regards petitioner's claim
that the Amended Complaint should have been dismissed which are properly addressed to the trial court.
Moreover, it cannot be gainsaid that the trial court should be given the opportunity to correct itself by evaluating
the evidence, applying the law and making an appropriate ruling.27 A remand of the case to the trial court for
further proceedings is, therefore, in order.
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WHEREFORE, the petition is GRANTED in part. The Decision of the Court of Appeals dated August 20, 2003
sustaining the trial court's denial of petitioner's motion to dismiss, as well as its Resolution dated December 16,
2003 denying reconsideration, is REVERSED and SET ASIDE. The case is REMANDED to the Regional Trial
Court of Cebu City for further proceedings to resolve anew with deliberate dispatch the motion to dismiss in
accordance with Section 3, Rule 16 of the 1997 Rules of Civil Procedure as elucidated in this Decision. STaHIC
SO ORDERED.
Dismissal of Actions
1. O.B. JOVENIR CONSTRUCTION AND DEVELOPMENT CORPORATION vs MACAMIR REALTY AND

DEVELOPMENT CORPORATION, G.R. NO. 135803, March 28, 2006 (Nieto/Pracuelles)
FACTS: On 3 February 1997, a complaint was filed before the Regional Trial Court (RTC) of Makati City, with
private respondents Macamir Realty and Development Corp. (Macamir Realty) and spouses Rosauro and Gloria
Miranda as plaintiffs, and petitioners O.B. Jovenir Construction and Development Corp. (Jovenir Construction),
Oscar B. Jovenir, and Gregorio Liongson being among the defendants. The complaint, docketed as Civil Case
No. 97-256, sought the annulment of certain agreements between private respondents and petitioners, as well as
damages. It was alleged that Jovenir Construction was contracted to complete the construction of private
respondents condominium project. Private respondents subsequently sought the termination of their agreements
with petitioners after it was discovered that Jovenir Construction had misrepresented itself as a legitimate
contractor. Respondents likewise prayed for the issuance of a writ of preliminary injunction. A hearing on the
prayer appears to have been conducted on 6 February 1997. It was also alleged in the complaint that Gloria
Miranda was the principal stockholder and President of Macamir Realty while her husband Rosauro was the
owner of the real properties on which the condominium project was being constructed.
Almost immediately, two of the impleaded defendants filed their respective motions to dismiss. Defendant Salud
Madeja filed her motion on 6 February 1997, while Cesar Mangrobang, Sr. and Cesar Mangrobang, Jr. followed
suit with their motion dated 13 February 1997. Madeja pertinently alleged that while the spouses Miranda had
initiated the complaint on behalf of Macamir Realty, the real party-in-interest, they failed to attach any Board
Resolution authorizing them to file suit on behalf of the corporation. Oddly enough, Madeja was a member of the
Board of Directors of Macamir Realty, and she averred as a fact that said Board of Directors had not authorized
the spouses Miranda to initiate the complaint against Jovenir Realty.
On 13 February 1997, or 10 days after the filing of the complaint, private respondents filed a Motion to Withdraw
Complaint, alleging that during the initial hearing on the prayer for preliminary injunction on 6 February 1997,
counsel for plaintiffs "discovered a supposed technical defect in the complaint . . . that . . . may be a ground for
the dismissal of this case." Thus, private respondents prayed that the plaintiffs be allowed to withdraw the
complaint without prejudice. DIECTc
Petitioners filed an opposition to the Motion to Withdraw Complaint on 18 February 1997, wherein they adopted
Madeja's arguments as to the lack of authority on the part of the spouses Miranda to sue on behalf of Macamir
Realty. However, just one day earlier, or on 17 February 1997, private respondents filed another complaint
against the same defendants save for Madeja, and seeking the same reliefs as the first complaint. This time, a
Board Resolution dated 10 February 1997 authorizing the spouses Miranda to file the Complaint on behalf of
Macamir Realty was attached to the complaint. This second complaint was also filed with the Makati RTC and
docketed as Civil Case No. 97-379. The Verification and Certification [of] Non-Forum Shopping in the second
complaint was accomplished by Rosauro Miranda. On 24 February 1997, 11 days after the filing of the Motion to
Withdraw Complaint and seven days after the filing of the second Complaint, the Makati RTC, Branch 149, acting
in Civil Case No. 97-256, granted the Motion to Withdraw Complaint. The RTC noted in its Order that "an action
may be dismissed by the plaintiffs even without Order of the Court by filing a notice of dismissal at anytime before
the service of the answer under Rule 17, Section 1 of the Rules of Court," and accordingly considered the
complaint withdrawn without prejudice.
The battle then shifted to Civil Case No. 97-379, which had been raffled to Branch 136 of the Makati RTC. On 4
March 1997, petitioners filed a Motion to Dismiss the second complaint on the ground of forum-shopping. They
pointed out that at the time of the filing of the second complaint on 17 February 1997, the first complaint was still
pending.
RTC: The Makati RTC denied the Motion to Dismiss in an Order dated 23 May 1997, observing that at the time
the Motion to Withdraw Complaint was filed, none of the defendants had filed any answer or any responsive
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pleading. Thus, it was then within respondents' right to cause the dismissal of the complaint without having to
await action of the court on their motion.
CA: This Order was affirmed by the Court of Appeals Special Sixth Division in its Decision dated 23 June 1998
after petitioners had assailed the RTC's order via a special civil action for certiorari filed with the appellate court.
Hence, the present petition.
ISSUE: Whether the denial of motion to dismiss was proper.
HELD: YES. Section 1, Rule 17 of the 1964 Rules of Civil Procedure stated:
Dismissal by the plaintiff — An action may be dismissed by the plaintiff without order of court by filing
a notice of dismissal at any time before service of the answer or of a motion for summary judgment.
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. A class suit shall not be dismissed or
compromised without the approval of the court. 17
Indubitably, the provision ordained the dismissal of the complaint by the plaintiff as a matter of right at any time
before service of the answer. 18 The plaintiff was accorded the right to dismiss the complaint without the
necessity of alleging in the notice of dismissal any ground nor of making any reservation.
In Go v. Cruz, the Court, through Chief Justice Narvasa, has recognized that "where the dismissal of an action
rests exclusively on the will of a plaintiff or claimant, to prevent which the defending party and even the court itself
is powerless, requiring in fact no action whatever on the part of the court except the acceptance and recording of
the causative document." 21 The facts in that case are well worth considering. Therein, the notice of dismissal
was filed by the plaintiff on 12 November 1981. Respondent filed his answer three days earlier, or on 9
November, but plaintiff was served a copy of the answer by registered mail only on 16 November.
Notwithstanding the fact that the answer was filed with the trial court three days prior to the filing of the notice of
dismissal, the Court still affirmed the dismissal sought by the plaintiff. The Court declared that the right of the
plaintiff to cause the dismissal of the complaint by mere notice is lost not by the filing of the answer with the trial
court, but upon the actual service to the plaintiff of the answer.
The Court further ruled that "[plaintiff's] notice ipso facto brought about the dismissal of the action then pending in
the Manila Court, without need of any order or other action by the Presiding Judge. The dismissal was effected
without regard to whatever reasons or motives [plaintiff] might have had for bringing it about, and was, as the
same Section 1, Rule 17 points out, 'without prejudice,' the contrary not being otherwise 'stated in the notice' and
it being the first time the action was being so dismissed."
It is quite clear that under Section 1, Rule 17 of the old Rules, the dismissal contemplated therein could be
accomplished by the plaintiff through mere notice of dismissal, and not through motion subject to approval by the
Court. Dismissal is ipso facto upon notice, and without prejudice unless otherwise stated in the notice. It is due to
these considerations that the petition should be denied. CTHDcE
Evidently, respondents had the right to dismiss their complaint by mere notice on 13 February 1997, since as of
even date, petitioners had not yet served their answer on respondents. The Motion to Withdraw Complaint makes
clear respondents' "desire to withdraw the complaint without prejudice." That respondents resorted to a motion to
effect what they could have instead by mere notice may be indicative of a certain degree of ignorance of
procedural rules on the part of respondents' counsel. Yet such "error," if it could be called as such, should hardly
be of fatal consequence. Petitioners posit that the "remedy" of filing a notice of dismissal is not exclusive,
respondents having the "option" of securing the court's approval to the dismissal. On the contrary, the 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 ground.
We are in accord with the Court of Appeals when it pronounced:
While [the Motion to Withdraw Complaint] is styled as a "motion" and contains a "prayer", these are
innocuous errors and superfluities that do not detract from its being a notice of dismissal made under
said Section 1 of Rule 17 and which ipso facto dismissed the case. It is a hornbook rule that it is not
the caption of a pleading but the allegations thereat that determines its nature. The court order of
dismissal is a mere surplusage under the circumstances and emphasized by the court a quo itself
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when it granted the motion "[. . .] considering that an action may be dismissed by the plaintiffs even
without Order of the Court [. . .]"
Thus, the complaint could be properly considered as having been dismissed or withdrawn as of 13 February
1997. Accordingly, when respondents filed their new complaint relating to the same cause of action on 17
February 1997, the old complaint was no longer pending. The certification against forum-shopping attached to
the new complaint correctly asseverated that the old complaint "was withdrawn on February 13, 1997."
2. JOSEFINA M. CRUZ and ERNESTINA M. CONCEPCION, petitioners, vs. THE HON. COURT OF APPEALS,
SECOND DIVISION, MARIANO "BOY" BUNAG and ROLANDO BUNAG, respondents.||| (Cruz v. Court of
Appeals, G.R. No. 164797, [February 13, 2006], 517 PHIL 572-587) (Religioso)
I. Facts
There are four (4) cases involved in this controversy. The first case that was filed between the parties is
Civil Case No. 4365 for Unlawful Detainer litigated before the Municipal Trial Court of Gapan, Nueva
Ecija entitled "Josefina M. Cruz and Ernestina M. Concepcion, plaintiffs, vs. Mariano 'Boy' Bunag,
Rolando Bunag, Remedios Bunag, et al., Defendants." This case was decided on 6 November 1998
by the Municipal Trial Court in favor of herein petitioner Josefina M. Cruz and Ernestina M.
Concepcion.
The second case is Civil Case No. 1600 for Quieting of Title, filed before the Regional Trial Court of
Gapan, Nueva Ecija, Branch 36 with "Carlos L. Bunag, Elias Bunag Natividad, Mariano Bunag, Salud
Bunag Clanaoc and Juliana Bunag Arevalo, as Plaintiffs and Josefina M. Cruz and Ernestina M.
Concepcion as Heirs of Sps. Carlos Maniquis and Marina Bunag, as Defendants." This case was
dismissed for failure to prosecute as evidenced by the Regional Trial Court Order dated 10 March
2000.
The third case is Civil Case No. 2573-02 for Injunction, with "Mariano 'Boy' Bunag and Rolando
Bunag as Petitioners against Carlos Bunag, Elias Bunag Natividad, Mariano Bunag, Salud Bunag
Clanaoc and Juliana Bunag Arevalo as Defendants." This case, which was filed before the Regional
Trial Court of Gapan City, Branch 35, was dismissed on ground of res judicata. The 6 November
2002 Order, in effect, ruled that there is a substantial identity of parties in this case and in Civil
Case No. 1600, a Petition for Quieting of Title. CScTED
The fourth case is the instant controversy for Annulment of Title With Damages. Docketed as Civil
Case No. 2583-02, it was lodged by herein private respondents Mariano "Bo[y]" Bunag and Rolando
Bunag against herein petitioners Josefina M. Cruz and Ernestina M. Concepcion before the sala of
Branch 35, Regional Trial Court of Gapan City.
II. COMPLAINT
Herein petitioners interposed a Motion for Outright Dismissal of Civil Case No. 2583
which was granted by the Court a quo as evidenced by an Order dated 18 February 2003
III. RTC
The Court has found that herein case (2583) involve the same parties, subject matter
and issue as that in Civil Case No. 1600 which has become final and executory and Civil Case
No. 2573-02 which was already dismissed by this Court on the ground of res judicata. In all three
cases, Mariano Bunag was included as party-plaintiff and Ernestina Concepcion as party-defendant.
The subject matter involves a parcel of land located in San Nicolas, Gapan City with an area of 1,160
square meters, more or less, and the issue is who between the two parties has the lawful title over the
same. Clearly, not only res judicata but also accion pendente lite is present in herein case which
the plaintiffs and their counsel should have revealed in the Certificate/Verification of their
complaint. The allegation that it is only now that they have learned of the existence of Civil Case No.
1600 is without merit considering that in the Motion for the Outright Dismissal of Civil Case No. 2573,
dated September 19, 2002, its existence was already disclosed and even became the ground for the
dismissal of Civil Case No. 2573 on the ground of res judicata. The Court a quo gratedn the Motion
for Outright Dismissal by reason of res judicata and accion pendente lite.
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IV. MOTION FOR RECONSIDERATION

Private respondents interposed their Motion for Reconsideration, the court a quo granted the
MOR and it reinstated and the defendants are directed to file their answer/responsive pleading within
fifteen (15) days from receipt of this order.
V. PETITION FOR REVIEW TO THE COURT OF APPEALS
Via petition for review, petitioners went to the Court of Appeals. The latter dismissed the petition for lack
of merit. It ruled that one of the elements of res judicata, i.e., that there must be, between the first
and the second actions, identity of parties, of subject matter and of cause of action, is lacking. It
explained:
First. The issue in the Injunction case is the propriety of the demolition order; while in the
present action (Petition for Annulment of Title With Damages), the pivot of inquiry is the
ownership of the controversial estate.
Second. Private respondent Mariano Bunag denied that he authorized Carlos Bunag to sign the Verified
Complaint in his behalf. Because of this, Mariano Bunag cannot be considered as a party litigant in the
Injunction case. Concomitantly, there is no identity of parties between the present case and in Civil Case
No. 2573-02 (Injunction).
Third. As the court of justice abhors the disposition of the case based on technicalities, this Court
further concurs with the trial court's disquisition, that to technicalities should not be allowed to prevail
over the substantive rights of a party-litigant. If the subject property is really owned by the plaintiffs, then
it would be the height of injustice if they are not allowed to prove their cause of action because of mere
technicality. It would amount to deprivation of their property without due process.
VI. MOTION FOR RECONSIDERATION (Petitioners) - was DENIED
Petitioners claim res judicata applies in this case because all the elements thereof are present.
VII. PETITION FOR CERTIORARI under RULE 65

Petitioners now before the Supreme Court charging that the Court of Appeals committed grave abuse of
discretion amounting to lack or excess of jurisdiction in rendering the assailed decision and resolution and it
seeks to reverse and set aside the decision 1 of public respondent Court of Appeals dated 19 March 2004 which
dismissed the petition for certiorari asking for the nullity of the 13 May 2003 Order of the Regional Trial Court of
Gapan, Nueva Ecija, Branch 35, in Civil Case No. 2583-02, and its Resolution dated 29 June 2004 denying
petitioners' motion for reconsideration.
Petitioners contend that all the elements of res judicata are present in the instant case. They
argue that the shuffling of parties should not prevent the application of res judicata considering that
three prior cases (Civil Case No. 4365 for Unlawful Detainer, Civil Case No. 1600 for Quieting of Title and
Civil Case No. 2573 for Injunction) against substantially the same parties over the same subject matter
and cause of action have all been decided in their favor. They point out that private respondent Mariano
"Boy" Bunag was one of the parties in the Ejectment and Quieting of Title cases (and Injunction), and
that his allegation in his affidavit that he neither authorized Carlos Bunag to include him in the Quieting
of Title case nor was he (Mariano) informed thereof, leaves too much to be desired and that same was
merely intended for delay. As regards the non-inclusion of private respondent Rolando Bunag in the case
for Quieting of Title but who was a party in the Ejectment case (as well as in the Injunction case), they
claim that same was in preparation for this stage of the proceedings. They added that insofar as identity
of causes of action is concerned, it cannot be denied that the ownership and its concomitant right of
possession are the issues in the cases for Quieting of Title, Injunction and Annulment of Title.
VIII. PRIVATE RESPONDENTS’ COMMENT

Private respondents Rolando Bunag and Monina Luzong Vda. de Bunag maintain that the public
respondent did not err when it held that there was no res judicata in the instant case and that the disposition of
the case should not be based on technicalities. Private Respondent argues that the second and fourth elements
of res judicata are lacking.
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IX.ISSUE
1. Whether or not res judicata apply in the case at bar.
2. Whether or not the case should be dismissed for failure to prosecute.
X. SUPREME COURT’S RULING

1. Under the rule of res judicata, also known as "bar by prior judgment," 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 successor-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.
a. The requisites essential for the application of the principle are:
i. (1) there must be a final judgment or order;
ii. (2) said judgment or order must be on the merits;
iii. (3) the Court rendering the same must have jurisdiction on the subject matter and the
parties; and
iv. (4) there must be between the two cases identity of parties, identity of subject matter,
and identity of causes of action.
The Supreme Court did agree to the private respondent when it argue that, on the second element, the
dismissal of Civil Case No. 1600 (for Quieting of Title) was not a dismissal on the merits. The dismissal of this
case, they claim, will not bar the filing of the instant case (Civil Case No. 2583-02 for Annulment of Title) because
there was neither litigious consideration of the evidence nor any stipulations submitted by the parties at the trial.
In fact, there was no pre-trial conference and that after four years of court inactivity, the case was dismissed for
failure to prosecute. According to the Supreme Court, Under Section 3 of Rule 17 of the 1997, Rules of Civil
Procedure, it provides that:
Section 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.
The rule enumerates the instances where the complaint may be dismissed due to plaintiff's fault: (1) if
he fails to appear on the date for the presentation of his evidence in chief; (2) if he fails to prosecute his action for
an unreasonable length of time; or (3) if he fails to comply with the rules or any order of the court. Once a case is
dismissed for failure to prosecute, this has the effect of an adjudication on the merits and is understood to be with
prejudice to the filing of another action unless otherwise provided in the order of dismissal. In other words, unless
there be a qualification in the order of dismissal that it is without prejudice, the dismissal should be regarded as
an adjudication on the merits and is with prejudice. The order dismissing Civil Case No. 1600 reads:
For failure of the plaintiffs as well as counsel to appear on several settings despite due notices, precisely for the
reception of plaintiffs' evidence, upon motion of the defendant through Atty. Mark Arcilla, this case is dismissed
for failure to prosecute.
It is clear from the afore-mentioned order that said case was dismissed, upon petitioners'
motion, for failure of private respondents and their counsel to attend several scheduled hearings for the
presentation of their evidence. Since the order did not contain a qualification whether same is with or
without prejudice, following Section 3, it is deemed to be with prejudice and shall have the effect of an
adjudication on the merits. A ruling based on a motion to dismiss, without any trial on the merits or
formal presentation of evidence, can still be a judgment on the merits.
We now go to the fourth element — identity of parties, subject matter and cause of action.
Petitioners, citing jurisprudence, argue that res judicata is not defeated by a minor difference of parties,
as it does not require absolute but only substantial identity of parties in light of the fact that three prior cases
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before the instant case have been decided in their favor against substantially the same parties over the same
subject matter and cause of action.
Public respondent ruled there was no identity of parties for two reasons: (1) Private respondent Mariano
Bunag was not a party litigant in the Quieting of Title 17 case because he denied in an affidavit that he authorized
Carlos Bunag to sign the Verified Complaint and to make him a party thereof; (2) Private respondent Rolando
Bunag was not made a party in the Quieting of Title case.
Private respondent Mariano "Boy" Bunag's claim that the Quieting of Title case was filed without his
knowledge does not inspire belief. In the decision of the trial court in Civil Case No. 4365 (for Unlawful Detainer),
it is very clear that the defendants in said case that included both private respondents, have knowledge of the
pendency of the Quieting of Title case. A portion of the decision reads:
Defendants claim of ownership of the property involved in this case which is now pending with the
Regional Trial Court of Gapan, Nueva Ecija (paragraph 3, Pre-Trial brief of
defendants) where the issue of ownership is the subject of the proceedings . . . .
It was the defendants, through their trial brief, that informed the court hearing the ejectment case that a case
(Civil Case No. 1600 for Quieting of Title) is pending where the issue of ownership is the subject of the
proceedings. Thus, as early as the pendency of the Ejectment case, private respondents had known of the
case for Quieting of Title. If he really did not authorize Carlos Bunag to include him as one of the plaintiffs
in the Quieting of Title case, he could have easily questioned his inclusion therein at an earlier time. This,
he did not do. He executed his affidavit only on 14 April 2003 or more than three years after the case for
Quieting of Title has been dismissed, and after the Injunction case which he and private respondent
Rolando Bunag filed, was dismissed. It is evident that his affidavit is a mere afterthought executed after his
Motion for Reconsideration in the injunction case was denied because the court gave no weight on his
counsel's allegation that he (Mariano Bunag) was unaware of the complaint signed and filed by Carlos
Bunag. It is too late in the day for him to claim lack of knowledge. It is very clear that the execution of the
affidavit is to make it appear that there is no identity of parties in the instant case and in the case for
Quieting of Title. EDCcaS
Private respondents add that since Rolando Bunag was not a party in the Quieting of Title case, the
dismissal of said case will not bind him and thus not bar the filing of the instant case.
We do not agree. The principle of res judicata may not be evaded by the mere expedient of including an
additional party to the first and second action. Only substantial identity is necessary to warrant the application of
res judicata. The addition or elimination of some parties does not alter the situation. There is substantial identity
of parties when there is a community of interest between a party in the first case and a party in the second case
albeit the latter was not impleaded in the first case.
In the case at bar, it is apparent that from the face of the complaint for Quieting of Title, private
respondent Rolando Bunag was not a party therein as his name does not appear in the title. This,
notwithstanding, his claim and that of the plaintiffs therein, which included private respondent Mariano Bunag, are
the same — to be declared the true owners of the parcel of land covered by Original Certificate of Title (OCT) No.
22262 and Transfer Certificate of Title (TCT) No. 67161 of the Registry of Deeds of Nueva Ecija. Private
respondent Rolando Bunag and the plaintiffs are all heirs of the alleged owners of the parcel of land covered by
OCT No. 22262. Private respondent Rolando Bunag, though not a party therein, shared an identity of interest
from which flowed an identity of relief sought, namely, to declare them the true owners of the parcel of land
covered by OCT No. 22262 and TCT No. 67161. Such identity of interest is sufficient to make them privy-in-law,
thereby satisfying the requisite of substantial identity of parties.
As regards the identity of subject matter, we find that there is. In both Civil Case No. 1600 (for Quieting of Title)
and Civil Case No. 2583 (for Annulment of Title), what is involved is one and the same parcel of land covered by
TCT No. 67161.
We likewise rule that there is identity of causes of action. Hornbook is the rule that identity of causes of
action does not mean absolute identity. Otherwise, a party could easily escape the operation of res judicata by
changing the form of the action or the relief sought. The test to determine whether the causes of action are
identical is to ascertain whether the same evidence will sustain both actions, or whether there is an identity in the
facts essential to the maintenance of the two actions. If the same facts or evidence would sustain both, the two
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actions are considered the same, and a judgment in the first case is a bar to the subsequent action. In
Stilianopulos v. The City of Legaspi, this Court had this to say:
The underlying objectives or reliefs sought in both the quieting-of-title and the annulment-of-title
cases are essentially the same — adjudication of the ownership of the disputed lot
and nullification of one of the two certificates of title. Thus, it becomes readily
apparent that the same evidence or set of facts as those considered in the quieting-of-
title case would also be used in this Petition. DISaEA
The difference in form and nature of the two actions is immaterial and is not a reason to exempt
petitioner from the effects of res judicata. The philosophy behind this rule prohibits the
parties from litigating the same issue more than once. When a right or fact has been
judicially tried and determined by a court of competent jurisdiction or an opportunity
for such trial has been given, the judgment of the court, as long as it remains
unreversed, should be conclusive upon the parties and those in privity with them.
Verily, there should be an end to litigation by the same parties and their privies over a
subject, once it is fully and fairly adjudicated.
Civil Case No. 1600 was for Quieting of Title, while Civil Case No. 2583 is for Annulment of Title with
Damages. The two cases are different only in the form of action but an examination of the allegations in the
second case would reveal that the issue raised — ownership of the land — and the relief sought — be declared
as owner and TCTs be issued in their names — are substantially the same. The evidence required to
substantiate their claims are likewise the same. The proceedings in the instant case, if permitted to continue,
would entail the presentation of evidence which should have been adduced in the case for Quieting of Title. The
case for Annulment of Title is simply a second cycle of review involving a subject matter that has already been
decided with finality in the Quieting of Title case.
Finally, private respondents ask that the instant case be not decided based on technicalities, for
substantial justice demands that technicalities should not be allowed to prevail over the substantive right of a
party litigant.
We find no reason not to adhere to the doctrine of res judicata. A case for Quieting of Title had been filed for the
purpose of determining the ownership of the subject land, but same was dismissed because the plaintiffs therein
failed to attend the scheduled hearings for the presentation of their evidence. As above discussed, the dismissal
was an adjudication on the merits. They had all the opportunity to present all the evidence for their cause but they
failed to do so. It is undeniable that there was no denial of due process in this case.
The doctrine of res judicata is a rule which pervades every well-regulated system of jurisprudence and is
founded upon two grounds embodied in various maxims of the common law, namely: (1) public policy and
necessity, which makes it to the interest of the State that there should be an end to litigation — republicae ut sit
litium, and (2) the hardship on the individual that he should be vexed twice for the same cause — nemo debet bis
vexari et eadem causa. A contrary doctrine would subject the public peace and quiet to the will and neglect of
individuals and prefer the gratification of the litigious disposition on the part of suitors to the preservation of the
public tranquility and happiness.
WHEREFORE, premises considered, the petition is GRANTED. The decision of the Court of Appeals dated 19
March 2004 and its resolution dated 29 June 2004 are REVERSED and SET ASIDE. Civil Case No. 2583-02 for
Annulment of Title with Damages, pending before Branch 35 of the Regional Trial Court of Gapan City, Nueva
Ecija, is herby ordered DISMISSED. With costs. SIAEHC
SO ORDERED.
3. Lullete Ko and Arlette Basilio vs Philippine National Bank (PNB), G.R. Nos. 169131-32. January 20,
2006 (ACOSTA)
I. Facts
Ko filed a petition for Annulment of Mortgage, Extra-judicial Foreclosure Sale, Annulment of Transfer Certificate
of Title before the RTC of Laoag City.
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She alleged that the mortgage and the foreclosure proceedings were null and void since their written consent
was not secured. PNB denied and argues that petitioners, in fact, gave their consent.
II. RTC of Laoag
Petitioners and their counsel failed to attend a scheduled trial.
Upon motion of respondent bank, the complaint was dismissed on ground of failure to prosecute. Petitioners filed
a motion for reconsideration but was denied.
III. Petition for Review on Certiorari under Rule 45 with SC
Petitioners filed a petition for Review on Certiorari under Rule 45 directly with the SC.
Petitioners argue that their repeated failure to attend the hearing was caused by conflicts in his schedule and by
his lack of knowledge of the trial dates. Hence, they invoke liberality and the primordial interest of substantial
justice over the strict enforcement of the rules of technicality.
IV. SC Ruling
W.O.N petition for Review under Rule 45 is proper

No.
The proper recourse was an ordinary appeal with the Court of Appeals under Rule 41.
The rules of procedure do not exist for the convenience of the litigants. These rules are established to
provide order to and enhance the efficiency of our judicial system. They are not to be trifled with lightly
or overlooked by mere expedience of invoking substantial justice.
In Balindong v. Court of Appeals: “rules of procedure must be faithfully followed except only when for persuasive
reasons, they may be relaxed to relieve a litigant of an injustice not commensurate with his failure to
comply with the prescribed procedure.”
W.O.N the case should be dismissed for failure to prosecute

Yes.
SEC. 3, Rule 17, Rules of Court provides
“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 the motion of the defendant or upon the courts 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.”
In every action, the plaintiff is duty-bound to prosecute the same with utmost diligence and with
reasonable dispatch to enable him to obtain the relief prayed for and, at the same time, minimize the
clogging of the court dockets. The expeditious disposition of cases is as much the duty of the plaintiff as the
court. It must be remembered that a defendant in a case likewise has the right to the speedy disposition of the
action filed against him considering that any delay in the proceedings entail prolonged anxiety and valuable time
wasted.
In this case, failure to prosecute their case and proceed with the trial during the span of three years leads to no
other conclusion than that petitioners have no interest in seeing their case terminated at the earliest possible
time; or that petitioner’s case is unmeritorious from inception.
4. G.R. No. 101789. April 28, 1993.
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BHAGWAN RAMNANI, vs COURT OF APPEALS, HON. BUENAVENTURA J. GUERRERO, as Makati RTC

Judge, Branch 133, SPOUSES CENON G. DIZON and JULIETTE B. DIZON (Cabel)
Facts: On March 13, 1990, the spouses Juliette Dizon and Cenen Dizon filed a complaint in the RTC Makati
against the spouses Josephine Anne Ramnani and Bhagwan Ramnani for the collection of a sum of money
representing the alleged unremitted value of jewelry received by Josephine from Juliette on consignment basis.
Josephine Ramnani submitted an answer with counterclaim. She alleged that she did receive pieces
of jewelry worth P934,347.00 from Dizon, the latter had likewise received from her jewelries worth
P1,671,842,00, including cash and unpaid checks in the amount of P159,742.50. She also alleged that she paid
Dizon P50,000 and Dizon still owes her P787,495.00;
This only indicates her light regard of her duty to appear in court. Moreover, the other
defendant Bhagwan Ramnani did not submit any other plausible explanation for his absence in the pre-
trial.
A satisfactory showing by the movant of the existence of fraud, accident, mistake or excusable
neglect is an indispensable requirement for the setting aside of a judgment of default or the order of
default. After going over the pleadings of the parties and the decision of the respondent court, we find
that the motion to lift the order of default was properly denied for non-compliance with this requirement.
The defendants were less than conscientious in defending themselves and protecting their rights before
the trial court. They did not pay proper attention and respect to its directive. The petitioner has not shown that his
and his wife's failure to attend the pre-trial hearing as required was due to excusable neglect, much less to fraud,
accident or mistake.
The petitioner insists, however, that they had a meritorious defense which the trial court should not have
disregarded. A meritorious defense is only one of the two conditions. Even if it be assumed for the sake of
argument that the private respondents did owe Josephine Ramnani P900,000, as alleged in the counterclaim,
that circumstance alone is not sufficient to justify the lifting of the order of default and the default judgment. The
obvious reason is that a meritorious defense must concur with the satisfactory reason for the non-
appearance of the defaulted party. There is no such reason in this case.
The appropriate remedy is an ordinary appeal under Section 2 of Rule 41 of the Rules of Court providing
in part as follows:
A party who has been declared in default may likewise appeal from the judgment rendered
against him as contrary to the evidence or to the law, even if no petition for relief to set aside the order
of default has been presented by him in accordance with Rule 38.
In questioning the dismissal of its petition by the respondent court, the petitioner invokes the case of
Pioneer Insurance and Surety Corporation v. Hontanosas, where the Court sustained the challenge to an order of
default in a petition for certiorari rather than in an ordinary appeal, which was held as not an adequate remedy.
As we held in Pure Foods Corporation v. NLRC:

xxx The special civil action for certiorari is a remedy designed for the correction of
errors of jurisdiction and not errors of judgment. The reason for the rule is simple. When a court
exercises its jurisdiction, an error committed while so engaged does not deprive it of the
jurisdiction being exercised when the error is committed. If it did, every error committed by a
court would deprive it of its jurisdiction and every erroneous judgment would be a void
judgment. This cannot be allowed. The administration of justice would not survive such a rule.
Consequently, an error of judgment that the court may commit in the exercise of its jurisdiction
is not correctible through the original civil action of certiorari.
Even on the supposition that certiorari was an appropriate remedy, the petition would still fail because it
has not been clearly shown that the trial court committed grave abuse of discretion in refusing to set aside the
default order and the default judgment.
It is within the sound discretion of the court to set aside an order of default and to permit a defendant to
file his answer and to be heard on the merits even after the reglementary period for the filing of the answer has
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expired, but it is not error, or an abuse of discretion, on the part of the court to refuse to set aside its order of
default and to refuse to accept the answer where it finds no justifiable reason for the delay in the filing of the
answer. In motions for reconsideration of an order of default, the moving party has the burden of showing such
diligence as would justify his being excused from not filing the answer within the reglementary period as provided
by the Rules of Court, otherwise, these guidelines for an orderly and expeditious procedure would be rendered
meaningless. Unless it is shown clearly that a party has justifiable reason for the delay the court will not ordinarily
exercise its discretion in his favor.
The above doctrine is applicable to the inexcusable neglect of the herein petitioner and his wife to appear at the
pre-trial hearing duly scheduled and of which they were properly notified.
5. G.R. No. 160895 October 30, 2006

JOSE R. MARTINEZ vs. REPUBLIC OF THE PHILIPPINES (CRUZ)
Petitioner Jose R. Martinez (Martinez) filed a petition for the registration in his name of three (3) parcels of land
included in the Cortes, Surigao del Sur Cadastre. The lots, individually identified as Lot No. 464-A, Lot No. 464-B,
and Lot No. 370. Martinez alleged that he had purchased lots in 1952 from his uncle, whose predecessors-in-
interest were traceable up to the 1870s. It was claimed that Martinez had remained in continuous possession of
the lots; that the lots had remained unencumbered; and that they became private property through prescription
pursuant to Section 48(b) of Commonwealth Act No. 141. Martinez further claimed that he had been constrained
to initiate the proceedings because the Director of the Land Management Services had failed to do so despite the
completion of the cadastral survey of Cortes, Surigao del Sur.
II. COMPLAINT – PETITION FOR REGISTRATION OF THE PARCELS OF LAND
The case was docketed as Land Registration Case No. N-30 and raffled to the Regional Trial Court (RTC) of
Surigao del Sur, Branch 27. The Office of the Solicitor General (OSG) was furnished a copy of the petition. The
trial court set the case for hearing and directed the publication of the corresponding Notice of Hearing in the
Official Gazette.
III. OPPOSITION OF THE OSG
The OSG, in behalf of the Republic of the Philippines, opposed the petition on the grounds that appellee’s
possession was not in accordance with Section 48(b) of Commonwealth Act No. 141; that his muniments of title
were insufficient to prove bona-fide acquisition and possession of the subject parcels; and that the properties
formed part of the public domain and thus not susceptible to private appropriation.
IV. RTC
a. Issued general order of default
Despite the opposition filed by the OSG, the RTC issued an order of general default, even
against the Republic of the Philippines, on 29 March 2000. This ensued when during the
hearing of even date, no party appeared before the Court to oppose Martinez’s petition.
b. Rendered a decision in favor of Martinez
Afterwards, the trial court proceeded to receive Martinez’s oral and documentary evidence in
support of his petition. On 1 August 2000, the RTC rendered a Decision concluding that
Martinez and his predecessors-in-interest had been for over 100 years in possession
characterized as continuous, open, public, and in the concept of an owner. The RTC thus
decreed the registration of the three (3) lots in the name of Martinez.
V. OSG FILED NOTICE OF APPEAL
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From this Decision, the OSG filed a Notice of Appeal dated 28 August 2000, which was approved by the RTC.
However, after the records had been transmitted to the Court of Appeals, the RTC received a letter dated 21
February 2001, from the Land Registration Authority (LRA) stating that only Lot Nos. 464-A and 464-B were
referred to in the Notice of Hearing published in the Official Gazette; and that Lot No. 370, Cad No. 597 had been
deliberately omitted due to the lack of an approved survey plan for that property. Accordingly, the LRA
manifested that this lot should not have been adjudicated to Martinez for lack of jurisdiction. This letter was
referred by the RTC to the Court of Appeals for appropriate action.
VI. CA – REVERSED RTC DECISION
The Court of Appeals promulgated the assailed Decision, reversing the RTC and instead ordering the dismissal
of the petition for registration. In light of the opposition filed by the OSG, the appellate court found the evidence
presented by Martinez as insufficient to support the registration of the subject lots. The Court of Appeals
concluded that the oral evidence presented by Martinez merely consisted of general declarations of ownership,
without alluding to specific acts of ownership performed by him or his predecessors-in-interest. It likewise
debunked the documentary evidence presented by Martinez, adjudging the same as either inadmissible or
ineffective to establish proof of ownership.
VII. PRESENT PETITION (PETITION FOR REVIEW)
VIII. ISSUE: The central issue presented in this Petition for Review is whether an order of general default issued
by a trial court in a land registration case bars the Republic of the Philippines, through the Office of the Solicitor
General, from interposing an appeal from the trial court’s subsequent decision in favor of the applicant.
IX. RULING
Strangely, the OSG did not challenge the propriety of the default order, whether in its appeal before the Court of
Appeals or in its petition before this Court. It would thus be improper for the Court to make a pronouncement on
the validity of the default order since the same has not been put into issue. Nonetheless, we can, with comfort,
proceed from same apparent premise of the OSG that the default order was proper or regular.
The juridical utility of a declaration of default cannot be disputed. By forgoing the need for adversarial
proceedings, it affords the opportunity for the speedy resolution of cases even as it penalizes parties who fail to
give regard or obedience to the judicial processes.
The extent to which a party in default loses standing in court has been the subject of considerable jurisprudential
debate. Way back in 1920, in Velez v. Ramas, we declared that the defaulting defendant "loses his standing in
court, he not being entitled to the service of notices in the case, nor to appear in the suit in any way. He cannot
adduce evidence; nor can he be heard at the final hearing." These restrictions were controversially expanded in
Lim Toco v. Go Fay, decided in 1948, where a divided Court pronounced that a defendant in default had no right
to appeal the judgment rendered by the trial court, except where a motion to set aside the order of default had
been filed. This, despite the point raised by Justice Perfecto in dissent that there was no provision in the then
Rules of Court or any law "depriving a defaulted defendant of the right to be heard on appeal."
The enactment of the 1964 Rules of Court incontestably countermanded the Lim Toco ruling. Section 2, Rule 41
therein expressly stated that "[a] party who has been declared in default may likewise appeal from the judgment
rendered against him as contrary to the evidence or to the law, even if no petition for relief to set aside the order
of default has been presented by him in accordance with Rule 38." By clearly specifying that the right to appeal
was available even if no petition for relief to set aside the order of default had been filed, the then fresh Rules
clearly rendered the Lim Toco ruling as moot.
Another provision in the 1964 Rules concerning the effect of an order of default acknowledged that "a party
declared in default shall not be entitled to notice of subsequent proceedings, nor to take part in the trial." Though
it might be argued that appellate proceedings fall part of "the trial" since there is no final termination of the case
as of then, the clear intent of the 1964 Rules was to nonetheless allow the defaulted defendant to file an appeal
from the trial court decision. Indeed, jurisprudence applying the 1964 Rules was unhesitant to affirm a defaulted
defendant’s right to appeal, as guaranteed under Section 2 of Rule 41, even as Lim Toco was not explicitly
abandoned.
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It cannot be escaped that the old provision expressly guaranteeing the right of a defendant declared in default to
appeal the adverse decision was not replicated in the 1997 Rules of Civil Procedure. Should this be taken as a
sign that under the 1997 Rules a defaulted defendant no longer has the right to appeal the trial court decision, or
that the Lim Toco doctrine has been reinstated?
If post-1997 jurisprudence and the published commentaries to the 1997 Rules were taken as an indication, the
answer should be in the negative. The right of a defaulted defendant to appeal remains extant.
By 1997, the doctrinal rule concerning the remedies of a party declared in default had evolved into a fairly
comprehensive restatement as offered in Lina v. Court of Appeals:
a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion,
under oath, to set aside the order of default on the ground that his failure to answer was due to fraud,
accident, mistake or excusable neglect, and that he has meritorious defenses; (Sec 3, Rule 18)
b) If the judgment has already been rendered when the defendant discovered the default, but before the
same has become final and executory, he may file a motion for new trial under Section 1(a) of Rule 37;
c) If the defendant discovered the default after the judgment has become final and executory, he may
file a petition for relief under Section 2 of Rule 38; and
d) He may also appeal from the judgment rendered against him as contrary to the evidence or to the
law, even if no petition to set aside the order of default has been presented by him. (Sec. 2, Rule 41)31
Yet even if it were to assume the doubtful proposition that this contested right of appeal finds no anchor in the
1997 Rules, the doctrine still exists, applying the principle of stare decisis. Jurisprudence applying the 1997 Rules
has continued to acknowledge the Lina doctrine which embodies this right to appeal as among the remedies of a
defendant, and no argument in this petition persuades the Court to rule otherwise.
If it cannot be made any clearer, we hold that a defendant party declared in default retains the right to
appeal from the judgment by default on the ground that the plaintiff failed to prove the material
allegations of the complaint, or that the decision is contrary to law, even without need of the prior filing
of a motion to set aside the order of default. We reaffirm that the Lim Toco doctrine, denying such right
to appeal unless the order of default has been set aside, was no longer controlling in this jurisdiction
upon the effectivity of the 1964 Rules of Court, and up to this day.
Turning to the other issues, we affirm the conclusion of the Court of Appeals that Martinez failed to adduce the
evidence needed to secure the registration of the subject lots in his name.
It should be noted that the OSG, in appealing the case to the Court of Appeals, did not introduce any new
evidence, but simply pointed to the insufficiency of the evidence presented by Martinez before the trial court. The
Court of Appeals was careful to point out that the case against Martinez was established not by the OSG’s
evidence, but by petitioner’s own insufficient evidence.
6. INDIANA AEROSPACE UNIVERSITY, petitioner, vs. COMMISSION ON HIGHER EDUCATION (CHED),

respondent. (Culajara)
Sometime in October 1996, Dr. Reynaldo B. Vera, Chairman, Technical Panel for Engineering,
Architecture, and Maritime Education (TPRAM) of [CHED], received a letter dated October 18, 1998 (Annex 'C')
from Douglas R. Macias, Chairman, Board of Aeronautical Engineering, Professional Regulatory Commission
(PRC) and Chairman, Technical Committee for Aeronautical Engineering (TPRAME) inquiring whether petitioner
had already acquired university status in view of the latter's advertisement in the Manila Bulletin.
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On February 3, 1997, respondent directed petitioner to desist from using the term University, including
the use of the same in any of its alleged branches. In the course of its investigation, [respondent] was able to
verify from the Securities and Exchange Commission (SEC) that [petitioner had] filed a proposal to amend its
corporate name from Indiana School of Aeronautics to Indiana Aerospace University, which was supposedly
favorably recommended by the Department of Education, Culture and Sports (DECS) per its Indorsement dated
17 July 1995, and on [that] basis, SEC issued to [petitioner] Certificate of Registration No. AS-083-002689 dated
August 7, 1995.
In reaction to respondent's order for petitioner to desist from using the word 'University', Jovenal Toring,
chairman and founder of petitioner wrote a letter dated February 24, 1997 appealing for reconsideration of
respondent's Order, with a promise to follow the provisions of CMO No. 48.
The appeal of petitioner was however rejected by respondent in its decision dated July 30, 1998 and [the latter]
ordered the former to cease and desist from using the word 'University.' However, prior to said date, on April 2,
1998, [petitioner] filed a Complaint for Damages with prayer for Writ of Preliminary and Mandatory Injunction and
Temporary Restraining Order against respondent, docketed as Civil Case No. 98- 811 before public respondent
judge.
II. COMPLAINT
On April 7, 1998, respondent filed a Special Appearance with Motion to Dismiss, based on 1) improper
venue; 2) lack of authority of the person instituting the action; and 3) lack of cause of action. On April 17, 1998,
petitioner filed its Opposition to the Motion to Dismiss on grounds stated therein, to which respondent filed a
Reply on April 21, 1998, reiterating the same arguments in its Motion to Dismiss. After due hearing, petitioner
formally offered its evidence on July 23, 1998 while respondent made a formal offer of evidence on July 28, 1998
to which petitioner filed its Comments/Objections and finally, respondent submitted its Memorandum relative
thereto on October 1, 1998.
Public respondent judge, in an Order dated August 14, 1998, denied respondent’s Motion to Dismiss
and at the same time, issued a Writ of Preliminary Injunction in favor of petitioner. Respondent, in the same
Order, was directed to file its Answer within fifteen (15) days from receipt of said Order, which was August 15,
1998.
On September 22, 1998, petitioner filed before public respondent a Motion To Declare Respondent in
Default pursuant to Section 3, Rule 9 in relation to Section 4, Rule 16 of the Rules of Court, as amended, and at
the same time praying for the Motion to Set for Hearing. On the same date, respondent filed a Motion For
Extension of Time to File its Answer, . . . until November 18, 1998. On November 17, 1998, respondent filed its
Answer.
Public respondent judge ruled on Petitioner's Motion to Declare Respondent in Default.
III. APPEAL
Respondent filed with the CA a Petition for Certiorari, arguing that the RTC had committed grave abuse
of discretion (a) in denying the former's Motion to Dismiss, (b) in issuing a Writ of Preliminary Injunction, and (c)
in declaring respondent in default despite its filing an Answer.
The CA ruled that petitioner had no cause of action against respondent. Petitioner failed to show any
evidence that it had been granted university status by respondent as required under existing law and CHED rules
and regulations. A certificate of incorporation under an unauthorized name does not confer upon petitioner the
right to use the word "university" in its name.
Respondent should not have been declared in default, because its Answer had been filed long before
the RTC ruled upon petitioner's Motion to declare respondent in default. Thus, respondent had not obstinately
refused to file an Answer; on the contrary, its failure to do so on time was due to excusable negligence. Declaring
it in default did not serve the ends of justice, but only prevented it from pursuing the merits of its case.
IV. RULING
ISSUE: W/N the complaint should be dismissed
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Petitioner claims that the CA went beyond its limited jurisdiction under Rule 65 when it reversed the trial
court and dismissed the Complaint on the ground that petitioner had failed to state a cause of action. The RTC
had yet to conduct trial, but the CA already determined the factual issue regarding petitioner's acquisition of
university status, a determination that is not permitted in certiorari proceedings.
The CA ruled that the trial court gravely abused its discretion in denying respondent's Motion to Dismiss
on the ground of lack of cause of action because of petitioner's lack of legal authority or right to use the word
“university."
“No matter how we interpret the Corporation Code and the law granting the Securities and Exchange
Commission its powers and duties, there is nothing there which grants it the power or authority to confer
University Status to an educational institution.”
An order denying a motion to dismiss is interlocutory, and so the proper remedy in such a case is to
appeal after a decision has been rendered. A writ of certiorari is not intended to correct every controversial
interlocutory ruling; it is resorted to only to correct a grave abuse of discretion or a whimsical exercise of
judgment equivalent to lack of jurisdiction. Its function is limited to keeping an inferior court within its jurisdiction
and to relieve persons from arbitrary acts — acts which courts or judges have no power or authority in law to
perform It is not designed to correct erroneous findings and conclusions made by the Court.
In the case at bar, we find no grave abuse of discretion in the RTCs denial of the Motion to Dismiss, as
contained in the August 14, 1998 Order. The CA erred in ruling otherwise. The trial court stated in its Decision
that petitioner was an educational institution, originally registered with the Securities and Exchange Commission
as the "Indiana School of Aeronautics, Inc.” That name was subsequently changed to "Indiana Aerospace
University" after the Department of Education, Culture and Sports had interposed no objection to such change.
Respondent issued a formal Cease and Desist Order directing petitioner to stop using the word
"university" in its corporate name. The former also published an announcement in the March 21, 1998 issue of
Freeman, a local newspaper in Cebu City, that there was no institution of learning by that name. The counsel of
respondent was quoted as saying in the March 28, 1998 issue of the newspaper Today that petitioner had been
ordered closed by the respondent for illegal advertisement, fraud and misrepresentation of itself as a university.
Such acts, according to the RTC undermined the public's confidence in petitioner as an educational institution.
This was a clear statement of a sufficient cause of action.
When a motion to dismiss is grounded on the failure to state a cause of action, a ruling thereon should
be based only on the facts alleged in the complaint. The court must pass upon this issue based solely on such
allegations, assuming them to be true. For it to do otherwise would be a procedural error and a denial of plaintiff's
right to due process.
WHEREFORE, the Petition is hereby GRANTED IN PART, and the assailed Decision MODIFIED. The trial court
is DIRECTED to SET ASIDE the Order of Default of December 9, 1998; to ADMIT the Answer dated November
5, 1998; to LIFT the preliminary injunction; and to CONTINUE, with all deliberate speed, the proceedings in Civil
Case No. 98-811.
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Pre-Trial
1. LCK INDUSTRIES INC., CHIKO LIM and ELIZABETH T. LIM , vs. PLANTERS DEVELOPMENT
BANK, (JUSTINIANO)
Facts:
Petitioner LCK obtained a loan from the respondent bank in the amount of P3,000,000.00 as evidenced
by two promissory notes.
As a security for the loan obligation, petitioners-spouses Chiko and Elizabeth Lim executed a Real Estate
Mortgage over a parcel of land covered by Transfer Certificate of Title (TCT) No. T-138623, registered under their
names and located at Quezon City, with an area of 68 square meters (Quezon City property). Later on, to secure
the same obligation, another Real Estate Mortgage was executed over another parcel of land covered by TCT
No. T-62773, also registered under the names of the petitioner-spouses, with an area of 71 square meters
located at Baguio City (Baguio City property).
Subsequently, petitioner LCK incurred default in its payment; thus, making the obligation due and
demandable. Several demands were thereafter made by the respondent bank to no avail. On 13 October 1997,
a final letter-demand was sent by respondent bank to petitioner LCK asking for the payment of its obligation in
the amount of P2,962,500.00. Such final demand notwithstanding, petitioner LCK failed or refused to pay its
obligation.
Consequently, respondent bank caused the extrajudicial foreclosure of the Baguio City
property which was sold at the public auction for P2,625,000.00 as shown in the Certificate of Sale
dated 29 January 1998. Since the proceeds of the foreclosed Baguio City property were not enough to
satisfy the entire loan obligation which amounted to P2,962,500.00, respondent bank further caused the
extrajudicial foreclosure of the Quezon City property. As evidenced by the Certificate of Sale dated 18
March 1998, the foreclosed Quezon City property was sold at a public auction for P2,231,416.67. The
respondent bank was the highest bidder on both occasions.
I. RTC of Quezon City:
1. Prior to the auction sale of the QC property, petitioners filed an action for Annulment of the
Foreclosure of Mortgage and Auction Sale of the Quezon City property with Restraining
Order/Preliminary Injunction and with Damages against respondent bank and Atty. Anigan.
2. Petitioners alleged that respondent bank failed to comply with the posting and publication
requirements as well as with the filing of the Petition for the Extrajudicial Foreclosure of the Real Estate
Mortgage with the Clerk of Court as required by Act No. 3135. Petitioners prayed for the issuance of
temporary restraining order (TRO) in order to enjoin the respondent bank from conducting the auction
sale, and in the alternative, to enjoin the Registry of Deeds of Quezon City from transferring the
ownership of the Quezon City property to the purchaser at the auction sale.
3. In its Answer with the Opposition to the Prayer for the Issuance of Temporary Restraining
Order (TRO), respondent bank averred that it had fully observed the posting and publication
requirements of Act No. 3135. It insisted that the filing of the Petition for Extrajudicial Foreclosure of the
Mortgage Property with the Notary Public was sanctioned by the same statute. Respondent bank thus
prayed for the dismissal of petitioners' complaint for lack of merit.
4. For failure of the counsels for both petitioners and respondent bank to appear in the scheduled
hearing for the issuance of temporary restraining order, the RTC, in an Order dated 15 May 1998,
deemed the prayer for TRO abandoned.
5. Thereafter, the RTC conducted a pre-trial conference. In the Pre-Trial Order dated 8
September 2000, the parties made the following admissions and stipulations: (Important)
(1) the real estate mortgage executed by the plaintiffs in favor of the defendant bank
covers the loan obligation in the total amount of P3,000,000.00;
(2) there were two promissory notes executed by the plaintiffs: one for P2,700,000.00
and another for P300,000.00;
(3) a demand letter dated 13 October 1997 was sent to petitioner LCK by respondent
bank stating that the remaining balance of petitioner LCK's loan obligation was
P2,962,500.00 as of 13 October 1997;
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(4) a Notice of Auction Sale by Notary Public was made by the respondent bank in
foreclosing the Baguio City property, and in the Certificate of Sale issued by the
Notary Public, the respondent bank bid P2,625,000.00 for the property;
(5) the respondent bank also foreclosed the real estate mortgage over the petitioners'
Quezon City property on 18 March 1998 and said defendant bank bid P2,231,416.67
for the property;
(6) the foreclosure of petitioners' Quezon City property was made by a notary public;
(7) the petition for foreclosure was not included in the raffle of judicial notice; ECaSIT
(8) the petitioners failed to fully pay their loan obligation as of 13 October 1997 in the
amount of P962,500.00; and
(9) despite the demands, petitioners failed to pay their due obligations.
6. The parties agreed to submit the case for the decision of the RTC based on the stipulations and
admissions made at the pre-trial conference. RTC required the partied to submit their respective
memoranda.
7. Petitioners, aside from reiterating issues previously raised in their Complaint, further claimed that there was an
overpayment of the loan obligation by P1,856,416.67. As shown in the letter-demand dated 13 October 1997
received by petitioner LCK, its outstanding loan obligation amounted to P2,962,500.00. The Baguio City property
was purchased by respondent bank at the public auction for P2,625,000.00, while the Quezon City property was
purchased for P2,231,416.67.
8. Respondent bank maintained in its Memorandum that the complaint filed by petitioners is devoid of merit. It
further asseverated that petitioners' claim for overpayment was not among the issues submitted for the resolution
of the RTC. It is clear from the Pre-Trial Order that the issues to be resolved are limited to whether the petition for
the foreclosure of the real estate mortgage was filed before the Clerk of Court and whether or not the extrajudicial
foreclosure of real estate mortgage was made by the respondent bank in accordance with the provisions of Act
No. 3135. For failure of petitioners to promptly raise the alleged overpayment, the RTC is now barred from
adjudicating this issue.
9. The RTC rendered its decision declaring the foreclosure and the auction sale of the Quezon City property legal
and valid, but ordered respondent bank to return the overpayment made by petitioners in the amount of
P1,856,416.67.
10. Motion for Reconsideration filed by respondent bank was denied.
II. Court of Appeals

1. Respondent bank then appealed said decision of the RTC which ordered it to pay petitioners the
amount of P1,856,416.67 representing the alleged overpayment.
2. The Court of Appeals granted the appeal of the respondent bank and partially reversed the RTC
Decision insofar as it ordered respondent bank to pay the overpaid amount of P1,856,416.67 to
petitioners. In deleting the award of overpayment, the appellate court emphasized that the primary
purpose of pre-trial is to make certain that all issues necessary for the disposition of the case are
properly raised in order to prevent the element of surprise. Since the alleged overpayment was only
raised by the petitioners long after the pre-trial conference, the court a quo cannot dispose of such
issue without depriving the respondent bank of its right to due process.
3. Motion for Reconsideration filed by petitioners was denied.
III. Supreme Court:

1. Petitioners filed a petition for review on certiorari under rule 45 assailing the CA decision.
2. The petition centers on the claim propounded by petitioners that there was an overpayment of
the loan obligation in the amount of P1,856,416.67. Petitioners insist they are entitled to the
reimbursement of the overpaid amount invoking the elementary principle of in rem verso 30 in
human relations and the rule on the disposition of the proceeds of the sale providing that the
balance or the residue after deducting the cost of the sale and the payment of the mortgage
debt due, shall be paid to the junior encumbrancers, and in the absence of junior
encumbrancers, to the mortgagor or his duly authorized representative.
3. On the other hand, respondent bank counters that the question of overpayment, not being
included in the issues stipulated in Pre-Trial Order dated 8 September 2000, and totally
unrelated therein, cannot be considered by the RTC. The belated ventilation of the alleged
overpayment precluded the RTC from ruling on the matter in consonance with the primordial
purpose of the pre-trial conference which is to delineate the issues necessary for the
disposition of the case. (important)
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ISSUES:
1. WHETHER OR NOT THE EXCESS AMOUNT OF P1,893,916.67 WHICH THE RESPONDENT
BANK ACQUIRED FROM THE AUCTION SALE OF THE PETITIONERS' PROPERTIES SHALL
BE RETURNED TO THEM.
2. WHETHER OR NOT THE ISSUE OF OVERPAYMENT WAS RAISED BY THE PARTIES AND
INCLUDED IN THE PRE-TRIAL ORDER.
Held: Yes to both. The Supreme Court stated that:

The purpose of entering into a stipulation of facts is to expedite trial and to relieve the parties and the
court as well of the costs of proving facts which will not be disputed on trial and the truth of which can be
ascertained by reasonable inquiry. Its main objective is to simplify, abbreviate and expedite the trial, or totally
dispense with it. 40
The parties themselves or their representative with written authority from them are required to attend in
order to arrive at a possible amicable settlement, to submit to alternative modes of dispute resolution, and to
enter into stipulations or admissions of facts and documents. All of the matters taken up during the pre-trial,
including the stipulation of facts and the admissions made by the parties, are required to be recorded in a pre-trial
order. 41
Thus, Section 7, Rule 18 of the Revised Rules of Court provides:
SEC. 7. Record of pre-trial. — The proceedings in the pre-trial shall be recorded. Upon the
termination thereof, the court shall issue an order which shall recite in detail the matters
taken up in the conference, the action taken thereon, the amendments allowed to the
pleadings, and the agreements or admissions made by the parties as to any of the matters
considered. Should the action proceed to trial, the order shall explicitly define and limit the
issues to be tried. The contents of the order shall control the subsequent course of the
action, unless modified before trial to prevent manifest injustice. IDATCE
In the Pre-Trial Order dated 8 September 2000, the RTC defined the issues as follows: (1) whether or
not the petition was filed with the Office of the Clerk of Court; (2) whether or not the extrajudicial foreclosure of
real estate mortgage by defendant bank was made in accordance with the provisions of Act No. 3135; and (3)
whether or not the parties are entitled to their respective claims for attorney's fees and damages.
Based on the admissions and stipulations during the pre-trial conference and the issues defined by the
court a quo as embodied in the Pre-Trial Order, the parties agreed to submit the case for the resolution of the
RTC. Both petitioners and respondent also manifested that they would forego their respective claims for
attorney's fees, leaving solely the issue of the validity of the foreclosure of mortgage and auction sale for the
RTC's disposition. However, in petitioners' Memorandum filed after the case was submitted for resolution,
petitioners raised the question of overpayment, a new issue that was included neither in their Complaint nor in
the issues defined in the Pre-Trial Order issued by the RTC.
Generally, pre-trial is primarily intended to make certain that all issues necessary to the disposition of a
case are properly raised. Thus, to obviate the element of surprise, parties are expected to disclose at the pre-trial
conference all issues of law and fact they intend to raise at the trial. However, in cases in which the issue may
involve privileged or impeaching matters, or if the issues are impliedly included therein or may be inferable
therefrom by necessary implication to be integral parts of the pre-trial order as much as those that are expressly
stipulated, the general rule will not apply. Thus, in Velasco v. Apostol, this Court highlighted the aforesaid
exception and ruled in this wise:
A pre-trial order is not meant to be a detailed catalogue of each and every issue that is to be
or may be taken up during the trial. Issues that are impliedly included therein or may be
inferable therefrom by necessary implication are as much integral parts of the pre-trial
order as those that are expressly stipulated.
In fact, it would be absurd and inexplicable for the respondent company to knowingly
disregard or deliberately abandon the issue of non-payment of the premium on the policy
considering that it is the very core of its defense. Correspondingly, We cannot but perceive
here an undesirable resort to technicalities to evade an issue determinative of a defense duly
averred. (Emphasis supplied).
The case at bar falls under this particular exception. Upon scrupulous examination of the Pre-Trial Order
dated 8 September 2000, it can be deduced that the parties stipulated that the remaining sum of petitioner LCK's
obligation as of 13 October 1997 was P2,962,500.00. In the same Pre-Trial Order, the parties likewise stipulated
that the Baguio City property was sold at the public auction for P2,625,000.00 and the Quezon City property for
P2,231,416.67. On both occasions, respondent bank emerged as the highest bidder. By applying simple
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mathematical operation, the mortgaged properties were purchased by the respondent at the public auctions for
P4,856,416.67; thus, after deducting therefrom the balance of petitioner LCK's obligation in the amount of
P2,962,500.00, an excess in the sum of P1,893,916.67 remains.
Needless to say, the fact of overpayment, though not expressly included in the issues raised in the Pre-
Trial Order dated 8 September 2000, can be evidently inferred from the stipulations and admissions made by the
parties therein. Even only upon plain reading of the said Pre-Trial Order, it can be readily discerned that there
was an overpayment. IcESaA
The pertinent provisions of the Revised Rules of Court on extrajudicial foreclosure sale provide:
Rule 39. SEC. 21. Judgment obligee as purchaser. — When the purchaser is the judgment
obligee, and no third-party claim has been filed, he need not pay the amount of the bid if it
does not exceed the amount of the judgment. If it does, he shall pay only the excess.
Rule 68. SEC. 4. Disposition of proceeds of sale. — The amount realized from the
foreclosure sale of the mortgaged property shall, after deducting the costs of the sale, be
paid to the person foreclosing the mortgage, and when there shall be any balance or residue,
after paying off the mortgage debt due, the same shall be paid to junior encumbrancers in
the order of their priority, to be ascertained by the court, or if there be no such
encumbrancers or there be a balance or residue after payment to them, then to the
mortgagor or his duly authorized agent, or to the person entitled to it.
The renowned jurist Florenz Regalado, in Sulit v. Court of Appeals, underscored the obligation of the mortgagee
with respect to the surplus money resulting from a foreclosure sale of the mortgaged property:
The application of the proceeds from the sale of the mortgaged property to the mortgagor's
obligation is an act of payment, not payment by dation; hence, it is the mortgagee's duty to
return any surplus in the selling price to the mortgagor. Perforce, a mortgagee who
exercises the power of sale contained in a mortgage is considered a custodian of the
fund, and, being bound to apply it properly, is liable to the persons entitled thereto if
he fails to do so. And even though the mortgagee is not strictly considered a trustee in a
purely equitable sense, but as far as concerns the unconsumed balance, the mortgagee is
deemed a trustee for the mortgagor or owner of the equity of redemption. SAHIDc
Commenting on the theory that a mortgagee, when he sells under a power, cannot be
considered otherwise than as a trustee, the vice-chancellor in Robertson v. Norris (1 Giff.
421) observed: "That expression is to be understood in this sense: that with the power being
given to enable him to recover the mortgage money, the court requires that he shall
exercise the power of sale in a provident way, with a due regard to the rights and
interests of the mortgagor in the surplus money to be produced by the sale.
Petitioner LCK's obligation with the respondent bank was already fully satisfied after the mortgaged properties
were sold at the public auction for more than the amount of petitioner LCK's remaining debt with the respondent
bank. As the custodian of the proceeds from the foreclosure sale, respondent bank has no legal right whatsoever
to retain the excess of the bid price in the sum of P1,893,916.67, and is under clear obligation to return the same
to petitioners.
In any case, this Court would not allow respondent bank to hide behind the cloak of procedural technicalities in
order to evade its obligation to return the excess of the bid price, for such an act constitutes a violation of the
elementary principle of unjust enrichment in human relations.
Under the principle of unjust enrichment — nemo cum alterius detrimento locupletari potest — no person shall be
allowed to enrich himself unjustly at the expense of others. This principle of equity has been enshrined in our Civil
Code, Article 22 of which provides:
Art. 22. Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or
legal ground, shall return the same to him.
We have held that there is unjust enrichment when a person unjustly retains a benefit to the loss of another, or
when a person retains the money or property of another against the fundamental principles of justice, equity and
good conscience.
WHEREFORE, premises considered, the instant Petition is GRANTED. The Court of Appeals Decision dated 1
April 2005 and its Resolution dated 29 November 2005 in CA-G.R. CV No. 73944 are hereby REVERSED.
Respondent Planters Development Bank is ORDERED to return to the petitioners LCK Industries Inc., Chiko Lim
and Elizabeth Lim, the sum of P1,893,916.67 with interest computed at 6% per annum from the time of the filing
of the complaint until its full payment before finality of judgment. Thereafter, if the amount adjudged remains
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unpaid, the interest rate shall be 12% per annum computed from the time the judgment became final and
executory until fully satisfied. Costs against respondent Planters Development Bank.
2. CONRADO CALALANG VS. THE COURT OF APPEALS AND FILIPINAS MANUFACTURERS BANK, G.R.
No. 103185, January 22, 1993 (Nieto)
FACTS:
On April 29, 1980, respondent Filipinas Manufacturers Bank filed a complaint for collection of a sum of money
against petitioner Conrado Calalang and 3 other defendants namely, Hugo M. Arca, Rio Arturo Salceda and the
Acropolis Trading Corporation with the CFI of Rizal.
Petitioner, after having been served with summons on May 19, 1980, filed a Motion to Dismiss on June 2,
1980.
The other summoned defendant, Hugo M. Arca, filed a Motion for Bill of Particulars on June 5, 1980.
The two other defendants namely, the Acropolis Trading Corporation and Rio Arturo Salceda were also
summoned but only a clerk-employee of the Acropolis Trading Corporation received the summons while Arturo R.
Salceda was no longer residing at his given address.
On August 10, 1981, Batas Pambansa Blg. 129 (The Judiciary Reorganization Act) was passed by the Batasang
Pambansa and subsequently approved by then President Marcos on August 14, 1981.
On November 27, 1981, defendant Arca filed a Motion to Dismiss which necessitated the filing of various
pleadings in relation thereto by respondent bank herein, and defendant Arca.
Makati RTC issued and order:
After a careful and thorough study of the defendant Calalang's (petitioner herein) motion to dismiss, dated May
31, 1980 and the Counter Manifestation and motion to dismiss dated November 25, 1981, filed by defendant
Arca, together with the plaintiff's opposition, defendant movants' replies or rejoinder, the Court finds that the
matters relied upon by said movants for the dismissal of the Complaint are evidentiary in character, the truth or
veracity of which are better determined at the hearing on the merits and, therefore, said motions are DENIED for
lack of merit.
WHEREFORE, defendants are hereby ordered to file their answers to the Complaint within the reglementary
period.
It appears that this case has been set several times for pre-trial (November 29, 1985, January 29, 1986,
May 12,1986, November 19, 1986, January 14, 1987 and February 27, 1987).
-For the first two scheduled hearings, respondent bank's counsel failed to appear causing the dismissal
without prejudice of the case which was nevertheless set aside upon respondent bank's motion for
reconsideration of the dismissal.
-The November 19, 1986 hearing was transferred to January 14, 1987 upon agreement by both
counsels.
-For the last two scheduled dates counsel for the defendant Hugo Arca failed to appear.
Makati RTC issued an Order:
The Court hereby informs the plaintiff that it shall not consider defendant Acropolis Trading Corporation as having
been properly brought under the jurisdiction of this Court in view of the improper service of summons on said
corporation (Sec. 13 of Rule 14, Revised Rules of Court).
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In view of the foregoing, plaintiff is hereby directed to inform the Court, within ten (10) days from its receipt
hereof, what steps plaintiff intends to take with respect to the said two defendants so that the Court will know
whether plaintiff is still interested in the prosecution and/or outcome of this case.
With respect to defendants Conrado T. Calalang, the latter had filed a motion to dismiss which, however, was
denied by the Court per Order dated August 8, 1985.
Inasmuch as it would appear that the setting of this case for pre-trial was premature, since issues herein
do not appear to have been really joined, the pre-trial conference scheduled in this case for April 8, 1987
is cancelled until further assignment or until any of the parties herein shall make the appropriate steps in
connection therewith.
The above Order was received by petitioner's counsel on March 13, 1987.
-On March 17, 1987, respondent bank, in response to the Order dated March 6, 1987, filed a manifestation
stating that:
1. It is very much interested in prosecuting the complaint against the defendants Acropolis Trading and Salceda;
Thereafter, on March 24, 1987, petitioner Calalang moved to dismiss the complaint on the ground that
respondent bank failed to prosecute the case for an unreasonable length of time.
-Makati RTC issued an order denying the Motion to Dismiss filed by petitioner for lack of merit.
II. Pre-Trial
On November 16, 1987, the trial court issued an Order setting the pre-trial of the case for January 7, 1988 at
8:30 a.m.
At the pre-trial conference, respondent bank's counsel arrived 15 minutes late or at 8:45 a.m..
However, the case had already been dismissed. Thus, in the Order of January 7, 1988, the court declared:
For failure of plaintiff's counsel to appear inspite of notice and considering that this case has been pending for
seven (7) years, without plaintiff having taken positive steps to prosecute the same, it is hereby DISMISSED
pursuant to Section 3, Rule 17, Rules of Court. Defendants' counterclaim is likewise dismissed.
On January 12, 1988, counsel for the respondent bank filed a Motion for Reconsideration of the order of
dismissal citing as reason for his late arrival "the unusually heavy traffic he encountered along Kamias Road in
Quezon City, which was caused by a stalled jeepney along the main thoroughfare." The motion was denied on
January 26, 1988.
The respondent bank appealed the dismissal to the respondent Court.

-On October 25, 1991, the respondent Court promulgated the assailed decision, which set
aside the order of the trial court and ordered that the case be remanded to the court of origin for
further proceedings.
III. Petition for review on certiorari
The petitioner's Motion for Reconsideration having been denied by the Court of Appeals,
he filed this instant petition with this Court alleging that the respondent Court erred in:
1.) absolving respondent bank for the delay in the pursuit of the case;
2.) declaring the January 7, 1988 pre-trial as premature;
3.) holding that respondent bank "did not entirely fail to appear;
4.) invoking the liberal application of the rules of procedure in
favor of the respondent bank;
IV. SC
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The pre-trial conference scheduled for January 8, 1987 was not premature.
A pre-trial cannot validly be held until the last pleading has been filed, which last pleading may be the plaintiff's
reply, except where the period to file the last pleading has lapsed. The period to appear and file the necessary
pleading having expired on the Acropolis Trading Corporation, the lower court can direct that a pre- trial
conference be held among the answering defendants.
However, though it is within the discretion of the trial court to declare a party non-suited for non-
appearance in the pre-trial conference, such discretion must not be abused. The precipitate haste of the
lower court in declaring the respondent bank non-suited was uncalled for and deserved a second look.
Considering the fact that the counsel for the plaintiff/respondent bank did arrive for the pre-trial
conference, though a bit late and that counsel for the defendant was himself also late, the trial court
should have called the case again. An admonition to both counsels to be more prompt in appearing before the
Court as scheduled would have sufficed, instead of having dismissed the complaint outright.
Unless a party's conduct is so negligent, irresponsible, contumacious, or dilatory as to provide

substantial grounds for dismissal for non- appearance, the courts should consider lesser sanctions
which would still amount into achieving the desired end.
Inconsiderate dismissals, even if without prejudice, do not constitute a panacea nor a solution to the congestion
of court dockets; while they lend a deceptive aura of efficiency to records of individual judges, they merely
postpone the ultimate reckoning between the parties. In the absence of clear lack of merit or intention to delay,
justice is better served by a brief continuance, trial on the merits, and final disposition of the cases before the
court. And there is authority that an order dismissing a plaintiff's complaint without prejudice for failure of his
counsel to appear at a pre-trial conference must be reversed as too severe a sanction to visit on a litigant where
the record is devoid of evidence reflecting the litigant's willful or flagrant disregard for the Court's authority.
Petitioner's contention that the respondent Court erred in absolving respondent bank for the delay in the
resolution of this case, maintaining that "the case was dismissed out of its inordinate refusal to heed the warnings
of the court", is not borne out by the records of this case. The seven-year delay is not attributable to the
respondent bank alone but to circumstances beyond its control.
Considering the judicial reorganization which took place during the pendency of this case and the numerous
instances raised by both petitioner and respondent bank as contributing to the delay, petitioner cannot now claim
that respondent bank's "abuse of judicial leniency and tolerance is the single greatest component of this delay".
The acts of the respondent bank do not manifest lack of interest to prosecute, in the absence of proof
that it indeed abandoned or intended to abandon its case against petitioner and the other defendants.
Admittedly there was delay in this case, but such delay, we hold, is not the delay warranting dismissal. To be a
sufficient ground for dismissal, delay must not only be lengthy but also unnecessary and dilatory resulting in the
trifling of judicial processes.
IN VIEW OF THE FOREGOING, the petition is DISMISSED. The decision of the Court of Appeals dated October
25, 1991 and its Resolution of December 12, 1991 are both AFFIRMED. Costs against petitioner.
3. Citibank NA vs Chua (Pracuelles)
DOCTRINE: Corporate powers may be directly conferred upon corporate officers or agents by statute, the
articles of incorporation, the by-laws or by resolution or other act of the board of directors. In addition, an officer
who is not a director may also appoint other agents when so authorized by the by-laws or by the board of
directors. Such are referred to as express powers. There are also powers incidental to express powers conferred.
It is a fundamental principle in the law of agency that every delegation of authority, whether general or special,
carries with it, unless the contrary be expressed, implied authority to do all of those acts, naturally and ordinarily
done in such cases, which are reasonably necessary and proper to be done in order to carry into effect the main
authority conferred. Since the by-laws are a source of authority for corporate officers and agents of the
corporation, a resolution of the Board of Directors of Citibank appointing an attorney in fact to represent and bind
it during the pre-trial conference of the case at bar is not necessary because its by-laws allow its officers, the
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Executing Officer and the Secretary Pro-Tem, to execute a power of attorney to a designated bank officer,
William W. Ferguson in this case, clothing him with authority to direct and manage corporate affairs.
FACTS: Private respondents alleged in their complaint that the petitioner bank extended to them credit lines
sufficiently secured with real estate and chattel mortgages on equipment. They claim that petitioner offered them
special additional accommodation of Five Million Pesos (P5,000,000.00) to be availed of in the following manner:
"a. Defendant would and did purchase check or checks from the plaintiffs by exchanging it with defendant's
manager's check on a regular daily basis as reflected in the defendant's own ledger furnished to plaintiffs;
b. It was further agreed that on the following day, defendant CITIBANK would again purchase from the plaintiffs,
check or checks, by exchanging the same with defendant's manager's check, which check, however, will be
deposited by the plaintiffs with their other banks to cover the check or checks previously issued by the plaintiffs
mentioned above; c. The same regular and agreed activity would be undertaken by the plaintiffs and defendant
CITIBANK herein every banking day thereafter;"
This arrangement started on September 4, 1985 until March 11, 1986, when private respondents tried to
exchange with petitioner bank six checks amounting to P3,095,000.00 but petitioner bank allegedly refused to
continue with the arrangement even after repeated demands. Instead, petitioner bank suggested to private
respondents that the total amount covered by the "arrangement be restructured to thirty (30) months with
prevailing interest rate on the diminishing balance". 2 Private respondents agreed to such a proposal. Then as a
sign of good faith, they issued and delivered a check for P75,000.00 in favor of petitioner bank which was refused
by the latter demanding instead full payment of the entire amount.
For the failure of petitioner bank to comply with this restructuring agreement private respondents sued for specific
performance and damages.
Subsequently, on August 19, 1986, petitioner bank filed a criminal complaint against private
respondents for violation of Batas Pambansa Blg. 22 (Bouncing Checks Law) and estafa (six counts) under
Article 315 par. 2(d) of the Revised Penal Code. On April 28, 1988, the investigating recommended the filing of
an information against private respondents for violations of the mentioned laws.
On June 13, 1989, petitioner bank submitted its answer to the complaint filed by private respondents. In
the Order dated February 20, 1990, the case was set for pre-trial on March 30, 1990 and petitioner bank was
directed to submit its pre-trial brief at least 3 days before the pre-trial conference. Petitioner bank only filed its
pre-trial brief on March 30, 1990.
On March 30, 1990, the date of the pre-trial conference, counsel for petitioner bank appeared,
presenting a special power of attorney executed by Citibank officer Florencia Tarriela in favor of petitioner bank's
counsel, the J.P. Garcia & Associates, to represent and bind petitioner bank at the pre-trial conference of the
case at bar.
Inspite of this special power of attorney, counsel for private respondents orally moved to declare
petitioner bank as in default on the ground that the special power of attorney was not executed by the Board of
Directors of Citibank. Petitioner bank was then required to file a written opposition to this oral motion to declare it
as in default. In said opposition petitioner bank attached another special power of attorney made by William W.
Ferguson, Vice President and highest ranking officer of Citibank, Philippines, constituting and appointing the J.P.
Garcia & Associates to represent and bind the BANK at the pre-trial conference and/or trial of the case of
"Cresencio Velez, et al. vs. Citibank, N.A.". 4 In an Order dated April 23, 1990, respondent judge denied private
respondents' oral motion to declare petitioner bank as in default and set the continuation of the pre-trial
conference for May 2, 1990.
On the scheduled pre-trial conference, private respondents reiterated, by way of asking for reconsideration, their
oral motion to declare petitioner bank as in default for its failure to appear through an authorized agent and that
the documents presented are not in accordance with the requirements of the law.
In compliance with the above promise, petitioner bank filed a manifestation, dated May 23, 1990, attaching
therewith a special power of attorney executed by William W. Ferguson in favor of Citibank employees to
represent and bind Citibank on the pre-trial conference of the case at bar.
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FACTS: Private respondents alleged in their complaint that the petitioner bank extended to them credit lines
sufficiently secured with real estate and chattel mortgages on equipment. They claim that petitioner offered them
special additional accommodation of Five Million Pesos (P5,000,000.00) to be availed of in the following manner:
"a. Defendant would and did purchase check or checks from the plaintiffs by exchanging it with defendant's
manager's check on a regular daily basis as reflected in the defendant's own ledger furnished to plaintiffs;
b. It was further agreed that on the following day, defendant CITIBANK would again purchase from the plaintiffs,
check or checks, by exchanging the same with defendant's manager's check, which check, however, will be
deposited by the plaintiffs with their other banks to cover the check or checks previously issued by the plaintiffs
mentioned above; c. The same regular and agreed activity would be undertaken by the plaintiffs and defendant
CITIBANK herein every banking day thereafter;"
This arrangement started on September 4, 1985 until March 11, 1986, when private respondents tried to
exchange with petitioner bank six checks amounting to P3,095,000.00 but petitioner bank allegedly refused to
continue with the arrangement even after repeated demands. Instead, petitioner bank suggested to private
respondents that the total amount covered by the "arrangement be restructured to thirty (30) months with
prevailing interest rate on the diminishing balance". 2 Private respondents agreed to such a proposal. Then as a
sign of good faith, they issued and delivered a check for P75,000.00 in favor of petitioner bank which was refused
by the latter demanding instead full payment of the entire amount.
For the failure of petitioner bank to comply with this restructuring agreement private respondents sued for specific
performance and damages.
Subsequently, on August 19, 1986, petitioner bank filed a criminal complaint against private
respondents for violation of Batas Pambansa Blg. 22 (Bouncing Checks Law) and estafa (six counts) under
Article 315 par. 2(d) of the Revised Penal Code. On April 28, 1988, the investigating recommended the filing of
an information against private respondents for violations of the mentioned laws.
On June 13, 1989, petitioner bank submitted its answer to the complaint filed by private respondents. In the
Order dated February 20, 1990, the case was set for pre-trial on March 30, 1990 and petitioner bank was
directed to submit its pre-trial brief at least 3 days before the pre-trial conference. Petitioner bank only filed its
pre-trial brief on March 30, 1990.
On March 30, 1990, the date of the pre-trial conference, counsel for petitioner bank appeared,
presenting a special power of attorney executed by Citibank officer Florencia Tarriela in favor of petitioner bank's
counsel, the J.P. Garcia & Associates, to represent and bind petitioner bank at the pre-trial conference of the
case at bar.
Inspite of this special power of attorney, counsel for private respondents orally moved to declare petitioner bank
as in default on the ground that the special power of attorney was not executed by the Board of Directors of
Citibank. Petitioner bank was then required to file a written opposition to this oral motion to declare it as in
default. In said opposition petitioner bank attached another special power of attorney made by William W.
Ferguson, Vice President and highest ranking officer of Citibank, Philippines, constituting and appointing the J.P.
Garcia & Associates to represent and bind the BANK at the pre-trial conference and/or trial of the case of
"Cresencio Velez, et al. vs. Citibank, N.A.". 4 In an Order dated April 23, 1990, respondent judge denied private
respondents' oral motion to declare petitioner bank as in default and set the continuation of the pre-trial
conference for May 2, 1990.
On the scheduled pre-trial conference, private respondents reiterated, by way of asking for
reconsideration, their oral motion to declare petitioner bank as in default for its failure to appear through an
authorized agent and that the documents presented are not in accordance with the requirements of the law.
In compliance with the above promise, petitioner bank filed a manifestation, dated May 23, 1990, attaching
therewith a special power of attorney executed by William W. Ferguson in favor of Citibank employees to
represent and bind Citibank on the pre-trial conference of the case at bar.
Petitioner’s contention:
Petitioner bank filed a criminal complaint against private respondents for violation of Batas Pambansa
Blg. 22 (Bouncing Checks Law) and estafa (six counts) under Article 315 par. 2(d) of the Revised Penal Code.
On April 28, 1988, the investigating fiscal recommended the filing of an information against private respondents
for violations of the mentioned laws.
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RTC: On August 15, 1990, respondent judge issued an order declaring petitioner bank as in default. This
order, received by petitioner bank on September 27, 1990, cited the following as reason for the declaration of
default:
"Defendant-bank, although a foreign corporation, is bound by Philippine laws when doing and conducting
business in the Philippines (Sec. 129, B.P. Blg. 68), and its corporate powers could only be exercised by its
Board of Directors (Sec. 23, B.P. Blg. 68). The exercise by the Board of Directors of such power could only be
valid if it bears the approval of the majority of the Board (Sec. 25, par. 2, Corporation Code). The records does
not show the requisite document. The alleged authority (Special Power of Attorney, Annex "A") executed by Mr.
William W. Ferguson in favor of the alleged Citibank employees, assuming the same to be a delegable authority,
to represent the defendant in the pre-trial conference, made no mention of J.P. Garcia & Associates as one of the
employees of the defendant.
CA: Petitioner bank then filed a petition for certiorari, prohibition and mandamus with preliminary injunction and/or
temporary restraining order with the Court of Appeals. On June 26, 1991, the Court of Appeals dismissed the
petition.
SC: Petition for review
ISSUE: Whether or not the petitioner corporation was properly represented in the pre trial.
HELD: YES. In the corporate hierarchy, there are three levels of control: (1) the board of directors, which is
responsible for corporate policies and the general management of the business affairs of the corporation; (2) the
officers, who in theory execute the policies laid down by the board, but in practice often have wide latitude in
determining the course of business operations; and (3) the stockholders who have the residual power over
fundamental corporate changes, like amendments of the articles of incorporation. However, just as a natural
person may authorize another to do certain acts in his behalf, so may the board of directors of a corporation
validly delegate some of its functions to individual officers or agents appointed by it.
Section 23 of the Corporation Code of the Philippines in part provides:

"SEC. 23. The board of directors or trustees. Unless otherwise provided in this Code, the
corporate powers of all corporations formed under this Code shall be exercised, all business
conducted and all property of such corporations controlled and held by the board of directors
or trustees to be elected from among the holders of stocks, or where there is no stock, from
among the members of the corporation, who shall hold office for one (1) year and until their
successors are elected and qualified.
Thus, although as a general rule, all corporate powers are to be exercised by the board of directors,
exceptions are made where the Code provides otherwise.
Section 25 of said Code provides that the directors of the corporation shall elect its corporate officers,
and further provides as follows:
"SEC. 25. Corporate officers; quorum. The directors or trustees and officers to be elected shall perform
the duties enjoined on them by law and by the by-laws of the corporation . . ."
Furthermore, Section 47 of the same Code enumerates what may be contained in the by-laws, among
which is a provision for the "qualifications, duties and compensation of directors or trustees, officers and
employees". Taking all the above provisions of law together, it is clear that corporate powers may be directly
conferred upon corporate officers or agents by statute, the articles of incorporation, the by-laws or by resolution
or other act of the board of directors. In addition, an officer who is not a director may also appoint other agents
when so authorized by the by-laws or by the board of directors. Such are referred to as express powers. 9 There
are also powers incidental to express powers conferred. It is a fundamental principle in the law of agency that
every delegation of authority, whether general or special, carries with it, unless the contrary be expressed,
implied authority to do all of those acts, naturally and ordinarily done in such cases, which are reasonably
necessary and proper to be done in order to carry into effect the main authority conferred.
Since the by-laws are a source of authority for corporate officers and agents of the corporation, a
resolution of the Board of Directors of Citibank appointing an attorney in fact to represent and bind it during the
pre-trial conference of the case at bar is not necessary because its by-laws allow its officers, the Executing
Officer and the Secretary Pro-Tem, ** to execute a power of attorney to a designated bank officer, William W.
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Ferguson in this case, clothing him with authority to direct and manage corporate affairs. The relevant provision
in the general power of attorney granted to him are as follows:
"A. That the Executing Officer and the Secretary Pro-Tem are of full age, competent to act in
the premises, to me personally known, and that they are authorized to execute this instrument
by virtue of the powers granted to them pursuant to the By-Laws of the Bank and the laws of
the United States of America, and that the Executing Officer said that he, on the one hand,
hereby revokes and cancels any instrument of power of attorney previously executed on behalf
of the Bank for use in the PHILIPPINES, in favor of WILLIAM W. FERGUSON (hereinafter
referred to as the "Attorney-in-fact"), of legal age, a Banker, and now residing in the
PHILIPPINES, and that he (the Executing Officer), on the other hand, does hereby authorize
and empower the Attorney-in-fact, acting in the name or on behalf of the Bank, or any of its
Branches, or any interest it or they may have or represent, said revocation and authorization to
be effective as of this date as follows:
XVII. To represent and defend the Bank and its interest before any and all judges and courts,
of all classes and jurisdictions, in any action, suit or proceeding in which the Bank may be a
party or may be interested in administrative, civil, criminal, contentious or contentious-
administrative matters, and in all kinds of lawsuits, recourses or proceedings of any kind or
nature, with complete and absolute representation of the Bank, whether as plaintiff or
defendant, or as an interested party for any reason whatsoever . . .
XXI. To substitute or delegate this Power of Attorney in whole or in part in favor of such one or
more employees of the Bank, as he may deem advisable, but without divesting himself of any
of the powers granted to him by this Power of Attorney; and to grant and execute in favor of
any one or more such employees, powers of attorney containing all or such authorizations, as
he may deem advisable. . . " 11
Since paragraph XXI above specifically allows Ferguson to delegate his powers in whole or in
part, there can be no doubt that the special power of attorney in favor, first, of J.P. Garcia &
Associates and later, of the bank's employees, constitutes a valid delegation of Ferguson's
express power (under paragraph XVII above) to represent petitioner bank in the pre-trial
conference in the lower court.
This brings us to the second query: whether petitioner bank's by-laws, which constitute the basis for Ferguson's
special power of attorney in favor of petitioner bank's legal counsel are effective, considering that petitioner bank
has been previously granted a license to do business in the Philippines.
The Court of Appeals relied on Section 46 of the Corporation Code to support its conclusion that the by-laws in
question are without effect because they were not approved by the SEC. Said section reads as follows:
"SEC. 46. Adoption of by-laws. — Every corporation formed under this Code must, within one
(1) month after receipt of official notice of the issuance of its certificate of incorporation by the
Securities and Exchange Commission, adopt a code of by-laws for its government not
inconsistent with this Code. For the adoption of by-laws by the corporation, the affirmative vote
of the stockholders representing at least a majority of the outstanding capital stock, or of at
least a majority of the members in the case of non-stock corporations, shall be necessary. The
by-laws shall be signed by the stockholders or members voting for them and shall be kept in
the principal office of the corporation, subject to the inspection of the stockholders or members
during office hours; and a copy thereof, duly certified to by a majority of the directors or
trustees and countersigned by the secretary of the corporation, shall be filed with the Securities
and Exchange Commission which shall be attached to the original articles of incorporation.
Notwithstanding the provisions of the preceding paragraph, by-laws may be adopted and filed prior to
incorporation; in such case, such by-laws shall be approved and signed by all the incorporators and submitted to
the Securities and Exchange Commission, together with the articles of incorporation.
In all cases, by-laws shall be effective only upon the issuance by the Securities and Exchange
Commission of a certification that the by-laws are not inconsistent with this Code."
A careful reading of the above provision would show that a corporation can submit its by-laws, prior to
incorporation, or within one month after receipt of official notice of the issuance of its certificate of incorporation
by the SEC. When the third paragraph of the above provision mentions "in all cases", it can only refer to these
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two options; i.e., whether adopted prior to incorporation or within one month after incorporation, the by-laws shall
be effective only upon the approval of the SEC. But even more important, said provision starts with the phrase
"Every corporation formed under this Code", which can only refer to corporations incorporated in the Philippines.
Hence, Section 46, in so far as it refers to the effectivity of corporate by-laws, applies only to domestic
corporations and not to foreign corporations.
On the other hand, Section 125 of the same Code requires that a foreign corporation applying for a
license to transact business in the Philippines must submit, among other documents, to the SEC, a copy of its
articles of incorporation and by-laws, certified in accordance with law. Unless these documents are submitted, the
application cannot be acted upon by the SEC. In the following section, the Code specifies when the SEC can
grant the license applied for. Section 126 provides in part:
"SEC. 126. Issuance of a license. — If the Securities and Exchange Commission is satisfied
that the applicant has complied with all the requirements of this Code and other special laws,
rules and regulations, the Commission shall issue a license to the applicant to transact
business in the Philippines for the purpose or purposes specified in such license . . ."
Since the SEC will grant a license only when the foreign corporation has complied with all the
requirements of law, it follows that when it decides to issue such license, it is satisfied that the applicant's by-
laws, among the other documents, meet the legal requirements. This, in effect, is an approval of the foreign
corporations by-laws. It may not have been made in express terms, still it is clearly an approval. Therefore,
petitioner bank's by-laws, though originating from a foreign jurisdiction, are valid and effective in the Philippines.
In pursuance of the authority granted to him by petitioner bank's by-laws, its Executing Officer appointed William
W. Ferguson, a resident of the Philippines, as its Attorney-in-Fact empowering the latter, among other things, to
represent petitioner bank in court cases. In turn, William W. Ferguson executed a power of attorney in favor of
J.P. Garcia & Associates (petitioner bank's counsel) to represent petitioner bank in the pre-trial conference before
the lower court. This act of delegation is explicity authorized by paragraph XXI of his own appointment, which we
have previously cited.
documents are submitted, the application cannot be acted upon by the SEC. In the following section, the Code
specifies when the SEC can grant the license applied for. Section 126 provides in part:
"SEC. 126. Issuance of a license. — If the Securities and Exchange Commission is satisfied
that the applicant has complied with all the requirements of this Code and other special laws,
rules and regulations, the Commission shall issue a license to the applicant to transact
business in the Philippines for the purpose or purposes specified in such license . . ."
Since the SEC will grant a license only when the foreign corporation has complied with all the
requirements of law, it follows that when it decides to issue such license, it is satisfied that the applicant's by-
laws, among the other documents, meet the legal requirements. This, in effect, is an approval of the foreign
corporations by-laws. It may not have been made in express terms, still it is clearly an approval. Therefore,
petitioner bank's by-laws, though originating from a foreign jurisdiction, are valid and effective in the Philippines.
In pursuance of the authority granted to him by petitioner bank's by-laws, its Executing Officer appointed
William W. Ferguson, a resident of the Philippines, as its Attorney-in-Fact empowering the latter, among other
things, to represent petitioner bank in court cases. In turn, William W. Ferguson executed a power of attorney in
favor of J.P. Garcia & Associates (petitioner bank's counsel) to represent petitioner bank in the pre-trial
conference before the lower court. This act of delegation is explicity authorized by paragraph XXI of his own
appointment, which we have previously cited.
4. RODOLFO PAREDES, TITO ALAGO AND AGRIPINO BAYBAY, SR. vs. ERNESTO VERANO and COSME
HINUNANGAN, (Religioso)
I.FACTS
Petitioner as plaintiffs filed a complaint for the establishment of a right of way against respondents as defendants.
The complaint, docketed as Civil Case No. 2767 of the Regional Trial Court (RTC) of Maasin City, Southern
Leyte, Branch 24, culminated in a judgment by compromise dated 26 April 1994. In the Compromise
Agreement, respondent Cosme Hinunangan granted a two (2) meter-wide right of way in favor of
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petitioners in consideration of the amount of P6,000.00 which petitioners agreed to pay. Alleging that
petitioners had blocked the passageway in violation of the Compromise Agreement, on 28 September
1999, respondents filed a complaint for specific performance with damages against petitioners. It was
docketed as Civil Case No. R-3111 also of the RTC of Maasin City, Southern Leyte, Branch 24.
In their answer, petitioners denied having violated the Compromise Agreement. They alleged that like
them, respondents were not actual residents of Barangay Tagnipa where the "road right of way" was
established and that respondent Cosme Hinunangan had already sold his only remaining lot in the
vicinity to petitioner Rodolfo Paderes.
Subsequent to the answer, petitioners filed a motion to dismiss on the ground of lack of cause of action. The trial
court, presided by Judge Bethany G. Kapili, denied the motion to dismiss. Petitioners elevated the order of denial
to the Court of Appeals and thereafter to this Court, both to no avail.
Petitioners asked Judge Kapili to inhibit himself from the case. The judge denied the motion.
Pre-trial was initially set for 24 April 2003, but this was reset to 3 June 2003 on motion of respondents'
counsel. But the pre-trial set on 3 June 2003 did not push through either because none of the parties
appeared.
So, pre-trial was reset to 11 November 2003. Petitioner Baybay's counsel moved to reset it to another
date on account of a conflicting hearing. However, petitioner Baybay, who is the father of the counsel for
petitioners, was present in court along with the other defendants, when the case was called on 11
November 2003. The RTC was informed then of a proposed settlement between the parties, although
respondent Baybay qualified his reaction by telling the court that he would first have to inform his lawyer
and the co-defendants of the said proposal. The RTC then commented unfavorably on the absence of
petitioners' counsel, expressing disappointment towards his attitude, even making note of the fact that
not once had the counsel appeared before the RTC, even though the case had already reached the
Supreme Court over the denial of the motion to dismiss. At the same time, the RTC acceded and reset
the pre-trial for 23 January 2004. Shortly before the new pre-trial date, counsel for petitioners filed a
Manifestation of Willingness to Settle With Request for Cancellation the complaint dated 5 January 2004.
Also, petitioners' counsel through the Manifestation suggested to the opposing counsel that he be informed of the
terms of the proposed settlement. Correspondingly, petitioners' counsel requested the cancellation of the 23
January 2004 hearing.
However, the hearing did push through on 23 January 2004. The private respondents and their counsel were
present. So were petitioners Baybay and Paderes, and co-defendant Alago, but not their counsel.
An order of even date formalized what had transpired during the hearing.
II. RTC
The RTC allowed respondents to present their evidence ex parte, "for failure of the defendants['] counsel to
appear before [the RTC]". Petitioners filed a motion for reconsideration, but this was denied by the RTC.
III. PETITION FOR CERTIORARI with CA
Petitioners filed a petition for certiorari with the Court of Appeals, assailing the orders of the RTC. However, on 28
April 2004, the Court of Appeals dismissed the petition outright, for failure to attach duplicate original
copies of the annexes to the petition other than the RTC Orders dated 23 January 2004 and 17 February
2004 (attaching photocopies instead), as well as for failure to submit such other pleadings relevant and
pertinent to the petition.
IV. Petitioners filed a Motion for Reconsideration with Motion to Admit Additional Exhibits, adverting to the
documents previously missing from the petition but attached to the motion.
V. COURT OF APPEALS ISSUED A RESOLUTION
CA denied the motion for reconsideration. In doing so, the Court of Appeals resolved the petition on its merits, as
it ruled that "even with the submission by petitioners of the required pleadings and documents, the instant petition
must nevertheless fail." It conceded that under Section 5, Rule 18 of the 1997 Rules of Civil Procedure, it is
the failure of the defendant, and not defendant's counsel, to appear at the pre-trial that would serve
cause to allow plaintiff to present evidence ex parte. Nevertheless, the Court of Appeals noted that
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petitioner Baybay had made it clear that he would never enter into any amicable settlement without the
advice of his counsel. Thus, the Court of Appeals concluded that Judge Kapili's "hands were tied,"
explaining, thus: "He was held hostage by the blatant display of arrogance exhibited by petitioner's
counsel in assiduously failing to appear before the trial court. Were he to close his eyes to the
reprehensible scheme of Atty. Baybay in delaying the disposition of the main case, the resulting impassé
would only strain further the meager resources of the court and prejudice the rights of private
respondents."
Finally, the trial court admonished petitioners' counsel to "bear in mind that as an officer of the court, he is tasked
to observe the rules of procedure, not to unduly delay a case and defeat the ends of justice but to promote
respect for the law and legal processes."
VI. SUPREME COURT’S RULING
The Supreme Court decided to reverse the trial court and the Court of Appeals’ decision. Ultimately, there are
important reasons to consider the case on the merits. This case affords the Court the opportunity to clarify the
authority granted to a trial judge in relation to pre-trial proceedings.
The order of the RTC allowing respondents to present evidence ex parte was undoubtedly to the
detriment of petitioners. Since the RTC would only consider the evidence presented by respondents, and
not that of petitioners, the order strikes at the heart of the case, disallowing as it does any meaningful
defense petitioners could have posed. A judgment of default against a defendant who failed to attend
pre-trial, or even any defendant who failed to file an answer, implies a waiver only of their right to be
heard and to present evidence to support their allegations but not all their other rights.
The Constitution guarantees that no person shall be deprived of property without due process of law. One
manner by which due process is assured is through the faithful adherence to the procedural rules that govern the
behavior of the party-litigants. The Rules of Court do sanction, on several instances, penalties for violation of the
Rules that causes the termination of an action without a ruling on the merits, or bars one party from litigating the
same while permitting the other to do so. We noted earlier that Section 3, Rule 46 authorizes the dismissal of an
original petition before the Court of Appeals for failure to append material portions of the record. Pursuant to
Section 5, Rule 17, the failure of the plaintiff to appear on the date of the presentation of his/her evidence
in chief on the complaint is ground for the court to dismiss the complaint, without prejudice to the right
of the defendant to prosecute the counterclaim in the same or in a separate action. And under Section 5,
Rule 18, the failure of the plaintiff or defendant to appear during pre-trial authorizes the court to either
dismiss the complaint, if the plaintiff were absent; or to allow the plaintiff to present evidence ex parte, if
the defendant were absent.
The operation of the above-cited provisions may defeat the cause of action or the defense of the party
who violated the procedural rule. Yet it could not be said that any resultant adverse judgment would
contravene the due process clause, as the parties are presumed to have known the governing rules and
the consequences for the violation of such rules. In contrast, the same presumption could not attach if a
party were condemned to the same outcome even if the party did not violate a prescribed rule of
procedure. Any ruling that disposes of an action or precludes a party from presenting evidence in support or
against thereof must have basis in law, and any ruling so intentioned without legal basis is deemed as issued
with grave abuse of discretion. In the end, a person who is condemned to suffer loss of property without
justifying legal basis is denied due process of law.
Simply put, nothing in the Rules of Court authorizes a trial judge to allow the plaintiff to present evidence ex parte
on account of the absence during pre-trial of the counsel for defendant.
Sections 4 and 5 of Rule 18 warrant examination:
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.
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Section 4 imposes the duty on litigating parties and their respective counsel during pre-trial. The
provision also provides for the instances where the non-appearance of a party may be excused. Nothing,
however, in Section 4 provides for a sanction should the parties or their respective counsel be absent
during pre-trial. Instead, the penalty is provided for in Section 5. Notably, what Section 5 penalizes is the
failure to appear of either the plaintiff or the defendant, and not their respective counsel.
Indeed, the Court has not hesitated to affirm the dismissals of complaints or the allowance of plaintiffs to
present evidence ex parte on account of the absence of a party during pre-trial.
There are two cases which, at first blush, may seem to affirm the action of the RTC. In the disbarment case of
Miwa v. Medina, a lawyer was suspended from the practice for one (1) month for, among others, failing to
appear during pre-trial, thus leading to the declaration of his client, the defendant, in default. At the same time,
the Court in Miwa did take the defendant herself to task for also failing to appear during pre-trial, observing that
"the failure of a party to appear at pre-trial, given its mandatory character, may cause her to be non-suited or
considered as in default."
In Social Security System v. Chaves, the Social Security System (SSS) itself was named as the defendant in a
complaint filed with the RTC of Cagayan de Oro City. The pre-trial brief was filed by the acting assistant branch
manager of the SSS in Cagayan de Oro City, who happened to be a lawyer and who also entered his
appearance as counsel for the SSS. However, said lawyer was not present during pre-trial, and the SSS was
declared in default and the complainants allowed to present their evidence ex parte. The Court affirmed such
order of default, noting other procedural violations on the part of SSS, such as the fact that the motion for
reconsideration to lift the order of default lacked verification, notice of hearing and affidavit of merit.
Notwithstanding, the Court is not convinced that SSS is ample precedent to affirm an order of default where even
though the defendant was present during pre-trial, defendant's counsel failed to appear for the same hearing.
The Court in SSS did not make any categorical declaration to this effect. Moreover, it can be observed that in
SSS, the counsel himself, the acting assistant branch manager of the SSS, would have been in addition, the
representative of the SSS itself, a juridical person which can only make an appearance during pre-trial through a
natural person as its duly authorized representative. The Court of Appeals decision upheld in SSS, cited
extensively in our decision therein, expressly affirmed the order of default on the ground that "it is the discretion
of the trial judge to declare a party-defendant as in default for failure to appear at a pre-trial conference."
However, in SSS, neither the Court of Appeals nor this Court expressly laid relevance to the fact that the counsel
himself, as opposed to the defendant, had not attended the pre-trial. EcASIC
Upon the other hand, Africa v. Intermediate Appellate Court illuminates the proper standard within which to
view the instant petition. It appeared therein that on the day of the pre-trial, counsel for the defendant (therein
petitioner) had arrived ten minutes after the case was called. Within that ten-minute span, the trial court had
issued an order in open court declaring the defendant in default and authorizing the plaintiff to present its
evidence ex parte. A mere two days later, the trial court rendered judgment in favor of plaintiff. The Court
reversed the trial court, holding that the order of default was issued with grave abuse of discretion. The reasoning
of the Court was grounded primarily on the doctrinal rule that frowned against "the injudicious and often
impetuous issuance of default orders," which led in that case to "a deni[al of the defendant's] basic right to be
heard, even after his counsel had promptly explained the reason for his tardiness at the pre-trial."
Still, it would not be proper to consider Africa as the governing precedent herein, influential as it may be to our
disposition. It was not clear from the narration in Africa whether the defendant himself was absent during the pre-
trial, a circumstance which is determinative to this petition. Moreover, the Court's tone in Africa indicated that it
was animated by a liberal philosophy towards the procedural rule, implying that the trial court's reversed action
was nonetheless adherent to the strict letter of the rule. Whether or not the trial court in Africa acted conformably
with the rules depends upon the presence or absence of the defendant therein during pre-trial. It can no longer
be discerned whether the Court so ruled in Africa notwithstanding the presence or absence of the defendant
therein. It would be disingenuous though to assume, as a means of applying that case as precedent herein, that
the defendant was actually present during the pre-trial in Africa.
Hence, we pronounce that the absence of counsel for defendants at pre-trial does not ipso facto
authorize the judge to declare the defendant as in default and order the presentation of evidence ex
parte. It bears stressing that nothing in the Rules of Court sanctions the presentation of evidence ex
parte upon instances when counsel for defendant is absent during pre-trial. The Rules do not
countenance stringent construction at the expense of justice and equity. As the Court has previously
enunciated:
We cannot look with favor on a course of action which would place the administration of
justice in a straightjacket for then the result would be a poor kind of justice if there would be
justice at all. Verily, judicial orders, such as the one subject of this petition, are issued to be
obeyed, nonetheless a non-compliance is to be dealt with as the circumstances attending the
case may warrant. What should guide judicial action is the principle that a party-litigant
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is to be given the fullest opportunity to establish the merits of his complaint or

defense rather than for him to lose life, liberty or properties on technicalities.
Due process dictates that petitioners be deprived of their right to be heard and to present evidence to
support their allegations if, and only if, there exists sufficient basis in fact and in law to do so. There
being a manifest lack of such basis in this case, petitioners would be unjustly denied of the opportunity to fully
defend themselves should the Court affirm the questioned orders which were evidently issued by the RTC with
grave abuse of discretion. The better and certainly more prudent course of action in every judicial proceeding is
to hear both sides and decide on the merits rather than dispose of a case on technicalities.
While counsel is somewhat to blame for his non-attendance at pre-trial, incidentally the operative act which gave
birth to the controversy at bar, it would be most unfair to penalize petitioners for what may be the deficiency of
their lawyer when the consequent penalty has no basis in law.
Intervention
1. Mactan Cebu International Airport Authority vs. Heirs of Estanislao Mioza, GR 186045. February 2, 2011
(ACOSTA)
I. Facts
The late Estanislao Mioza was allegedly the owner of parcels of land in the Banilad Estate, Cebu City.
Estanislao had three children Adriana, Patricio, and Santiago. The 3 allegedly sold Lot No. 986 to the NAC for
only P157.20 and Lot No. 991-A for P105.40. It was allegedly sold with the option to buy it back when the land
was no longer needed.
Leila M. Hermosisima, representing Adriana, Patricio, and Santiago, filed a Complaint for
Reconveyance, Cancellation of Defendants Title, Issuance of New Title to Plaintiffs and Damages before the
RTC of Cebu against Mactan Cebu International Airport Authority (MICAA). They allege that the project did not
push through for more than 40 years.
Mactan Cebu International Airport Authority (MICAA), represented by the OSG, filed an answer with
counterclaim.
II. RTC of Cebu
A motion for intervention, with an attached complaint-in-intervention, was filed by the heirs of Filomeno
T. Mioza, represented by Laureano M. Mioza; the heirs of Pedro T, Mioza, represented by Leoncio J. Mioza; and
the Heirs of Florencia T. Mioza, represented by Antonio M. Urbiztondo (Intervenors), who claimed to be the true,
legal, and legitimate heirs of the late Estanislao Mioza.
The intervenors allege that Adriana, Patricio, and Santiago fraudulently executed an Extrajudicial
Settlement of the Estate of the late spouses Estanislao Mioza and Inocencia Togono and adjudicated unto
themselves the estate of the deceased spouses.
The RTC of Cebu denied the Motion for intervention on ground that the ownership of the subject lots
was merely a collateral issue in the action. In addition, the complaint-in-intervention was flawed, considering that
it was not verified and does not contain the requisite certification of non-forum shopping.
The intervenors filed a motion for reconsideration but was denied. Thus, they filed petition for Certiorari under
Rule 65 with the CA.
III. Petition for Review on Certiorari under Rule 65 with CA
The CA granted the petition for certiorari ratiocinating that the determination of the true heirs of the late
Estanislao Mioza is not only a collateral, but the focal issue of the case, for if the intervenors can prove that they
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are indeed the true heirs of Estanislao Mioza, there would be no more need to determine whether the right to buy
back the subject lots exists or not as the MCIAA would not have acquired rights to the subject lots in the first
place.
Thus, the petitioners filed a petition for Review on Certiorari under Rule 45 with the SC.
IV. SC Ruling
W.O.N the grant of motion for intervention was proper

No.
Under Sec. 1, Rule 19, intervention shall be allowed when a person has:
(1) a legal interest in the matter in litigation;
(2) or in the success of any of the parties;
(3) or an interest against the parties;
(4) or when he is so situated as to be adversely affected by a distribution or disposition of property in the

custody of the court or an officer thereof.
In general, an independent controversy cannot be injected into a suit by intervention, hence, such
intervention will not be allowed where it would enlarge the issues in the action and expand the scope of
the remedies.
It is not proper where there are certain facts giving the intervenors case an aspect peculiar to himself and
differentiating it clearly from that of the original parties; the proper course is for the would-be intervenor to litigate
his claim in a separate suit. Intervention is not intended to change the nature and character of the action itself, or
to stop or delay the placid operation of the machinery of the trial. The remedy of intervention is not proper where
it will have the effect of retarding the principal suit or delaying the trial of the action.
As an exception, the allowance or disallowance of a motion for intervention rests on the sound discretion of the
court after consideration of the appropriate circumstances.
The interest contemplated by law must be actual, substantial, material, direct and immediate, and not
simply contingent or expectant. It must be of such direct and immediate character that the intervenor will
either gain or lose by the direct legal operation and effect of the judgment. Otherwise, if persons not
parties to the action were allowed to intervene, proceedings would become unnecessarily complicated,
expensive and interminable.
In this case, the allegation of the intervenors are independent of the controversy between the original parties
because the allegation of fraud would enlarge the issues and expand the remedies.
W.O.N the Court erred in allowing the Complaint-in-intervention without verification and certification.
No.
As to verification, non-compliance therewith or a defect therein does not necessarily render the pleading
fatally defective. The court may order its submission or correction, or act on the pleading if the attending
circumstances are such that strict compliance with the Rule may be dispensed with in order that the ends of
justice may be served thereby.
Further, a verification is deemed substantially complied with when one who has ample knowledge to swear to the
truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the petition
have been made in good faith or are true and correct.
64
2017-2018
As to the certification against forum shopping, non-compliance therewith or a defect therein, unlike in
verification, is generally not curable by its subsequent submission or correction thereof, unless there is
a need to relax the Rules on the ground of substantial compliance or presence of special circumstances
or compelling reasons. Also, the certification against forum shopping must be signed by all the plaintiffs or
petitioners in a case; otherwise, those who did not sign will be dropped as parties to the case. Under reasonable
or justifiable circumstances, however, as when all the plaintiffs or petitioners share a common interest
and invoke a common cause of action or defense, the signature of only one of them in the certification
against forum shopping substantially complies with the Rule.
65

Rule 16 To Rule 19

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Rule 16 To Rule 19

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CIVIL PROCEDURE DIGEST - ATTY.

II. Halimao’s Complaint

SC: referred Halimao’s complaint to Integrated Bar of the Philippines (IBP)

III. IBP Resolution

IV. Motion for Reconsideration by Halimao

V. Supreme Court Ruling

W.O.N filing a motion to dismiss is a hypothetical admission of the material allegations.

The rule does not unqualifiedly apply to a case where:

II. Complaint for Recovery of Property

Complaint for Recovery of Property

III. Issues (via petition for review)

(Respondent Court’s decision)

Third: There being no trust, express or implied, established in favor of private

III. MOTION TO DISMISS FILED BY PRIVATE RESPONDENT

IV. PETITIONER’S OPPOSITION

V. RESPONDENT JUDGE GRANTED PRIVATE RESPONDENT’S MOTION TO DISMISS

5. MUNICIPALITY OF BIÑAN, LAGUNA, represented by Hon. Bayani M. Alonte, Municipal Mayor

HENCE, the instant petition. (Petition for Review on Certiorari)

7. Pacsports vs Niccolo Sports (Pracuelles)

VII. Hacienda Bigaa filed a motion for reconsideration.

VIII. COURT OF APPEALS

IX. PETITION TO THE SUPREME COURT UNDER RULE 45

XI. SUPREME COURT

xxx xxx xxx

This provision comprehends two distinct concepts of res judicata:

(1) bar by former judgment and

(a) the former judgment or order was final;

B. Identity of Subject Matter

c.) Identity of Issues

II. Petition by NAPOCOR before Local Board of Assessment Appeals (LBAA)

· Answer by Provincial Assessor

III. LBAA Decision

IV. Appeal to Central Board of Assessment Appeals (CBAA)

V. Appeal to CA petition for review on Certiorari

Napocor and Fels filed separate petitions for Review on Certiorari.

The Petition by NAPOCOR was denied for of lack of merit.

The Petition by Fels was denied on the ground of prescription.

VI. Appeal to SC under Rule 45

The two cases by NAPOCOR and Fels were consolidated.

W.O.N the action is barred by res judicata

Res judicata has the following elements:

G.R. No. L-55048 May 27, 1981 (Cabel)

Action for Specific Performance

II. Motion to Dismiss

Respondent Judge’s Decision

III. DEFENDANTS FILED MOTION TO DISMISS

IV. TRIAL COURT ISSUED AN ORDER DENYING THE MOTION TO DISMISS

V. PETITION FOR REVIEW ON CERTIORARI BEFORE THE CA

2. Whether or not the complaint be dismissed on the ground of forum non-conveniens.

B. that the loan agreements, security documentation and all subsequent

C. that private respondents have already waived their alleged causes of

RTC: Dismissed the complaint

(1) Section 6, Rule 16 of the Rules of Court provides:

III. Supreme Court:

1. O.B. JOVENIR CONSTRUCTION AND DEVELOPMENT CORPORATION vs MACAMIR REALTY AND

ISSUE: Whether the denial of motion to dismiss was proper.

IV. MOTION FOR RECONSIDERATION

V. PETITION FOR REVIEW TO THE COURT OF APPEALS

VI. MOTION FOR RECONSIDERATION (Petitioners) - was DENIED

VII. PETITION FOR CERTIORARI under RULE 65

VIII. PRIVATE RESPONDENTS’ COMMENT

X. SUPREME COURT’S RULING

II. RTC of Laoag