CIVPRO – BATCH II of III
Later on, the same
THIRD DIVISION
[G.R. NO. 169116 : March 28, 2007]
BANK OF THE PHILIPPINE ISLANDS, Petitioner, v. SPS. IRENEO M. SANTIAGO and
LIWANAG P. SANTIAGO, CENTROGEN, INC., REPRSENTED BY EDWIN
SANTIAGO, Respondent.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari filed by petitioner Bank of the
Philippine Islands (BPI) seeking to reverse and set aside the Decision 1 of the Court of
Appeals dated 3 March 2005 and its Resolution 2 dated 28 July 2005 affirming the Order 3 of
the Regional Trial Court (RTC) of Santa Cruz, Laguna, Branch 91, dated 20 March 2003
enjoining the extrajudicial foreclosure sale of a parcel of land covered by Transfer Certificate
of Title (TCT) No. T-131382 registered under the name of Spouses Ireneo and Liwanag
Santiago. The dispositive portion of the Court of Appeals Decision reads:
WHEREFORE, premises considered, the petition is DISMISSED. The assailed orders dated
March 20, 2003 and August 25, 2003 of the respondent court in Civil Case No. SC-4259 are
hereby AFFIRMED.
Petitioner BPI is a banking institution duly organized and existing as such under the
Philippine laws.
Private respondent Centrogen, Inc. (Centrogen) is a domestic corporation engaged in
pharmaceutical business, duly organized and existing as such under the Philippine laws and
represented in this act by its President, Edwin Santiago, son of private respondents Spouses
Ireneo M. Santiago and Liwanag P. Santiago.
On several occasions, private respondent Centrogen obtained loans from Far East Bank and
Trust Company (FEBTC) in different amounts, the total of which reached the
sum P4,650,000.00, as evidenced by promissory notes executed by Edwin Santiago.
As a security for a fraction of the loan obligation, Ireneo M. Santiago executed a Real Estate
Mortgage over a parcel of land covered by TCT No. T-131382 registered under his name and
located at Sta Cruz, Laguna, with an area of 2,166 square meters (subject property). 4 The
mortgage secured the principal loan in the amount of P490,000.00.
property secured another loan obligation in the amount of P1,504,280.00.5
Subsequently, however, Centrogen incurred default and therefore the loan obligation became
due and demandable.
Meanwhile, FEBTC merged with the BPI with the latter as the surviving corporation. As a
result, BPI assumed all the rights, privileges and obligations of FEBTC.
On 13 December 2002, BPI filed an Extra-Judicial Foreclosure of Real Estate Mortgage 6 over
the subject property before the RTC of Sta. Cruz, Laguna. In order to validly effect the
foreclosure, a Notice of Sale was issued by the Provincial Sheriff on 21 January 2003. On the
same day, the Spouses Santiago were served with the copy of the Notice of Sale.
Upon receipt of the Notice of Sale, the Spouses Santiago and Centrogen filed a Complaint
seeking the issuance of a Temporary Restraining Order and Preliminary and Final Injunction
and in the alternative, for the annulment of the Real Estate Mortgage with BPI.
The complaint alleged that the initial loan obligation in the amount of P490,000.00, including
interest thereon was fully paid as evidenced by Union Bank Check No. 0363020895 dated 20
December 2001 in the amount of P648,521.51 with BPI as payee. Such payment
notwithstanding, the amount was still included in the amount of computation of the arrears as
shown by the document of Extra-Judicial Foreclosure of Real Estate Mortgage filed by the
latter.
In addition, the Spouses Santiago and Centrogen asseverated that the original loan
agreement was for the amount of Five Million Pesos. Such amount will be supposedly utilized
to finance the squalene project of the company. However, after the amount of Two Million
Pesos was released and was accordingly used in funding the erection of the structural details
of the project, FEBTC, in gross violation of the agreement, did not release the balance of
Three Million Pesos that will supposedly finance the purchase of machineries and equipment
necessary for the operation. As a result, the squalene project failed and the company groped
for funds to pay its loan obligations.
On 27 February 2003, BPI was summoned to file and serve its Answer to the Complaint filed
by Spouses Santiago and Centrogen. On the same day, the Sheriff served a copy of the
summons to the Branch Manager of BPI Sta. Cruz, Laguna Branch, as evidenced by the
Sheriff's Return,7 which reads:
SHERIFF'S RETURN
Respectfully returned the original summons and order dated February 2003 with the
information that on February 27, 2003 the undersigned served the copy of summons together
with the corresponding copy of complaint and its Annexes and order dated February 27,
1
2003, to defendants (sic) Bank of the Philippine Islands (BPI) thru the manager Ms. Glona One Hundred Thousand Pesos (P100,000.00) to answer for damages that Defendant Bank
Ramos at Sta. Cruz Laguna Branch, at Sta. Cruz, Laguna, to defendant Sheriff Marcial may sustain if the court should finally decide that the plaintiffs are not entitled thereto.
Opinion at the Office of the Provincial Sheriff of Laguna, R.T.C. (sic) Sta. Cruz, Laguna as
shown by their signatures on the original summons and order.
On 6 March 2003, the RTC ordered the service of new summons to BPI in accordance with
the provisions of the Revised Rules of Court. The aforesaid Order reads:
Instead of filing an Answer, BPI filed a Motion to Dismiss 8 the complaint on the ground of lack
of jurisdiction over the person of the defendant and other procedural infirmities attendant to
To avoid further argument as regards the proper service of summons to Defendant Bank, the
the filing of the complaint. In its Motion to Dismiss, BPI claimed that the Branch Manager of
Branch Clerk of Court is hereby directed to issue another summons and serve copy of the
its Sta. Cruz, Laguna Branch, was not one of those authorized by Section 11, Rule 14 of the
same together with the complaint and its annexes to any of the officers of the Defendant
Revised Rules of Court9 to receive summons on behalf of the corporation. The summons
Bank as provided by the rules of civil procedure.15
served upon its Branch Manager, therefore, did not bind the corporation. In addition, it was
alleged that the complaint filed by the Spouses Santiago and Centrogen lacked a Certificate
of Non-Forum Shopping10 and was therefore dismissible. Finally, BPI underscored that the In compliance with the aforesaid Order, the Branch Clerk of Court caused the issuance of a
person who verified the complaint was not duly authorized by Centrogen's Board of Directors new summons on 7 March 2003, a copy of which was served upon the Office of the
to institute the present action as required by Section 23 of the Corporation Code. 11 Corporate Secretary of the BPI on 11 March 2003, as evidenced by the Sheriff's
Return,16 which reads:
In an Order12 dated 28 February 2003, the RTC denied the Motion to Dismiss and
emphasized that the nature of the case merited its removal from the purview of Section 11, Sheriff's Return
Rule 14 of the Revised Rules of Court. Based on the provisions of Section 5, Rule 58 of the
Revised Rules of Court,13 the RTC declared that the instant Order is still valid and binding
This is to Certify that on March 11, 2003 the undersigned caused the service of summons
despite non-compliance with the provisions of Section 11, Rule 14 of the same Rules. The
together with the copy of complaint and its annexes to defendant Bank of the Philippine
dispositive portion of the Order reads:
Islands (BPI) and receive (sic) by the Office of the Corporate Secretary dated March 11, 2003
at the BPI Building Ayala Avenue, Makati City.
WHEREFORE, premises considered, the motion to dismiss is hereby denied because of the
presence of extreme urgency wherein the Court has jurisdiction to act on the TRO despite
On 20 March 2003, the RTC issued an Order granting the application for the issuance of a
lack of proper service of summons. Let the instant case be called for summary hearing on
Writ of Preliminary Injunction filed by the Spouses Santiago and Centrogen. It enjoined the
plaintiff's application for temporary restraining order.
extra-judicial foreclosure sale of the subject property pending resolution of the main action for
Annulment of Real Estate Mortgage or until further orders of the trial court. In issuing the Writ
After summary hearing on the Spouses Santiago and Centrogen's application for Temporary of Preliminary Injunction, it rationalized that to allow the foreclosure without hearing the main
Restraining Order, the RTC, on 28 February 2003, issued an Order 14 enjoining the Provincial case would work injustice to the complainant and since Spouses Santiago and Centrogen
Sheriff from proceeding with the extra-judicial foreclosure sale of the subject property until the claimed that the first loan in the amount of P490,000.00 secured by the property subject of
propriety of granting a preliminary injunction is ascertained. The decretal portion of the said the extra-judicial sale had long been paid by Centrogen through a Union Bank Check No.
Order reads: 0363020895 presented as evidence. The dispositive part of the Order reads:

Wherefore, premises considered, the Court orders that pending the resolution of the plaintiff's Wherefore, premises considered, the Court orders that pending the resolution of the main
prayer for preliminary injunction: action for the annulment of the real estate mortgage, etc., and /or order from this Court:

1. The Defendant Provincial Sheriff, his deputies, employees, and agents are enjoined from 1. The Defendant Provincial Sheriff, his deputies, employees, and agents are enjoined from
proceeding with the threatened extra-judicial foreclosure sale (to be conducted today) of the proceeding with the threatened extra-judicial foreclosure sale of the parcel of land covered by
parcel of land owned by plaintiffs Spouses Ireneo M. Santiago and Liwanag P. Santiago TCT No. T-131382 owned by Plaintiffs Spouses Ireneo M. Santiago and Liwanag P. Santiago
located in (sic) Brgy. Sto. Angel Norte, Sta. Cruz, Laguna. located in Brgy. Sto. Angel, Sta. Cruz, Laguna.

2. The application for a preliminary injunction is hereby set for hearing on March 10, 2003 at 2. The bond in the amount of One Hundred Thousand (P100,000.00) Pesos ordered by the
1:30 pm. Further, the plaintiffs are hereby ordered to immediately file a bond amounting to Court to be posted by the plaintiffs to answer for damages that defendant bank may sustain if
the court should finally decide that the plaintiffs are entitled thereto still stands.

2
The Motion for Reconsideration filed by BPI was denied by the RTC in its Order 17 dated 25
August 2003.
Aggrieved, BPI filed a Petition for Certiorari before the Court of Appeals seeking the reversal
of the adverse Orders of the RTC.
18
On 3 March 2005, the Court of Appeals rendered a Decision  affirming the assailed Orders
of the RTC and dismissing the Petition for Certiorari filed by BPI. The Court of Appeals
declared that jurisdiction was acquired upon the service of new summons. Before the
assailed Orders were therefore issued, the RTC properly acquired jurisdiction over the
person of BPI.
Undaunted, BPI filed this instant Petition for Review on Certiorari under Rule 45 of the
Revised Rules of Court. For our resolution are the following issues:
I.
WHETHER OR NOT THE RTC ACQUIRED JURISDICTION OVER THE PERSON OF BPI
WHEN THE ORIGINAL SUMMONS WAS SERVED UPON THE BRANCH MANAGER OF
ITS STA. CRUZ, LAGUNA BRANCH.
II.
WHETHER OR NOT THE RTC COMMITTED A GRAVE ABUSE OF DISCRETION IN
ISSUING THE WRIT OF PRELIMINARY INJUNCTION.
BPI vehemently insists that the court a quo did not acquire jurisdiction over its person and
consequently, the Order issued by the RTC, permanently enjoining the foreclosure sale, was
therefore void and does not bind BPI.
We are not persuaded.
The pertinent provision of the Revised Rules of Court provides:
Sec. 11, Rule 14. Service upon domestic private juridical entity - When the defendant is a
corporation, partnership or association organized under the laws of the Philippines with a
juridical personality service may be made on the president, managing partner, general
manager, corporate secretary, treasurer or in-house counsel.
Basic is the rule that a strict compliance with the mode of service is necessary to confer
jurisdiction of the court over a corporation. The officer upon whom service is made must be
one who is named in the statute; otherwise, the service is insufficient. 19 The purpose is to
render it reasonably certain that the corporation will receive prompt and proper notice in an
action against it or to insure that the summons be served on a representative so integrated
with the corporation that such person will know what to do with the legal papers served on
him.
Applying the aforestated principle in the case at bar, we rule that the service of summons on
BPI's Branch Manager did not bind the corporation for the branch manager is not included in
the enumeration of the statute of the persons upon whom service of summons can be validly
made in behalf of the corporation. Such service is therefore void and ineffectual.
However, upon the issuance and the proper service of new summons on 11 March 2003,
before the Writ of Preliminary Injunction was issued on 20 March 2003, whatever defect
attended the service of the original summons, was promptly and accordingly cured.
It bears stressing, that on 7 March 2003, the Branch Clerk of Court issued a new summons
which was properly served upon BPI's Corporate Secretary on 11 March 2003, as evidenced
by the Sheriff's Return.
The subsequent service of summons was neither disputed nor was it mentioned by BPI
except in a fleeting narration of facts and therefore enjoys the presumption that official duty
has been regularly performed. 20 The Process Server's Certificate of Service of Summons is
a prima facie evidence of facts set out in that certificate. 21
Inarguably, before the Order granting the application for Writ of Preliminary Injunction was
issued, the RTC already acquired jurisdiction over the person of BPI by virtue of the new
summons validly served on the Corporate Secretary. The fact that the original summons was
invalidly served is of no moment since jurisdiction over BPI was subsequently acquired by the
service of a new summons.
In the case of The Philippine American Life and General Insurance Company v. Brevea,
[22] we ruled:
A case should not be dismissed simply because an original summons was wrongfully
served. It should be difficult to conceive, for example, that when a defendant personally
appears before a Court complaining that he had not been validly summoned, that the case
against him should be dismissed. An alias  summons can be actually served on said
defendant.
x   x   x
x x x It is not pertinent whether the summons is designated as an "original" or an
"alias" summons as long as it has adequately served its purpose. What is essential is
that the summons complies with the requirements under the Rules of Court and it has
been duly served on the defendant together with the prevailing complaint. x x x
3
Moreover, the second summons was technically not an alias summons but more of a new
summons on the amended complaint. It was not a continuation of the first summons
considering that it particularly referred to the amended complaint and not to the original
complaint. (Emphases supplied.)
BPI's lamentation, at every turn, on the invalidity of the service of summons made on the
Branch Manager and its deliberate neglect to acknowledge the fact that a new summons was
accordingly served on its Corporate Secretary, is an attempt in futility to mislead this Court
into believing that the court a quo never acquired jurisdiction over the case and thus the
issuance of the Writ of Preliminary Injunction was invalid.
We are not drawn into petitioner's sophistry.
In the case of G&G Trading Corporation v. Court of Appeals,23 this Court made the following
pronouncements:
Although it may be true that the service of summons was made on a person not authorized to
receive the same in behalf of the petitioner, nevertheless since it appears that the summons
and complaint were in fact received by the corporation through its said clerk, the Court finds
that there was substantial compliance with the rule on service of summons. x x x The need
for speedy justice must prevail over a technicality.
In explaining the test on the validity of service of summons, Justice Florenz
Regalado24 stressed that substantial justice must take precedence over technicality and thus
stated:
The ultimate test on the validity and sufficiency on service of summons is whether the same
and the attachments thereto where ultimately received by the corporation under such
circumstances that no undue prejudice is sustained by it from the procedural lapse and it was
afforded full opportunity to present its responsive pleadings. This is but in accord with the
entrenched rule that the ends of substantial justice should not be subordinated to
technicalities and, for which purpose, each case should be examined within the factual milieu
peculiar to it.
Prescinding from the above, we deem it best to underscore that there is no hard and fast rule
pertaining to the manner of service of summons. Rather, substantial justice demands that
every case should be viewed in light of the peculiar circumstances attendant to each.
In any event, as it is glaringly evident from the records of the case that jurisdiction over the
person of the defendant was validly acquired by the court by the valid service of a new
summons before the writ of preliminary injunction was issued and guided by jurisprudential
pronouncements heretofore adverted to, we hold that the proceedings attendant to the
issuance of the writ of preliminary injunction were regular.
Having settled this issue necessitates us to look into the propriety of the issuance of the Writ
of Preliminary Injunction.
BPI asserts that the RTC gravely abused its discretion in granting the Spouses Santiago and
Centrogen's application for the Writ of Preliminary Injunction in the absence of showing that
the latter have a clear legal right sought to be protected.
Again, we do not agree.
An injunction is a preservative remedy for the protection of one's substantive right or interest;
it is not a cause of action by itself but merely a provisional remedy, an adjunct to the main
suit.25 The purpose of injunction is to prevent threatened or continuous irremediable injury to
some of the parties before their claims can be thoroughly studied and educated. Its sole aim
is to preserve the status quo until the merits of the case is heard fully.26
The issuance of the writ of preliminary injunction as an ancillary or preventive remedy to
secure the rights of a party in a pending case is entirely within the discretion of the court
taking cognizance of the case, the only limitation being that the discretion should be
exercised based upon the grounds and in a manner provided by law. Before a writ of
preliminary injunction may be issued, the following requisites must be complied with: (1) a
right in esse or a clear or unmistakable right to be protected; (2) violation of that right; and (3)
that there is an urgent and permanent act and urgent necessity for the writ to prevent serious
damage.27
Verily, the aforestated requisites for the issuance of the Writ of Preliminary Injunction have
been fully complied with. The right of Spouses Santiago over the property clearly exists since
they are the registered owners thereof, and the existence of a Real Estate Mortgage does not
undermine the right of the absolute owner over the property. The violation of such right is
manifest in the threatened foreclosure proceedings commenced by BPI amidst the claim that
the principal obligation has been fully paid. Finally, to allow the foreclosure of the subject
property without first calibrating the evidence of opposing parties pertaining to the action for
the annulment of mortgage would cause irreparable damage to the registered owner.
The right of BPI to foreclose the subject property is under dispute upon the claim interposed
by the Spouses Santiago and Centrogen that payments for the loan secured by the property
subject to the threatened foreclosure proceedings were already made. To support their
assertions, Spouses Santiago and Centrogen presented as evidence Union Bank Check No.
0363020895 dated 20 December 2001 in the amount of P648,521.51, with BPI as payee.
From this, we can deduce that the right of BPI to foreclose the subject property is
questionable. We cannot therefore allow the foreclosure of the Real Estate Mortgage to
proceed without first setting the main case for hearing so that based on the evidence
presented by the parties, the trial court can determine who between them has the better right
over the subject property. To rule otherwise would cause a grave irreparable damage to the
Spouses Santiago and Centrogen.
4
Parenthetically, this petition affords us the opportunity to once again reiterate the rule that the SO ORDERED.
issuance of the writ of preliminary injunction rests entirely within the discretion of the court
and generally not interfered with except in case of manifest abuse. The assessment and
evaluation of evidence in the issuance of the writ of preliminary injunction involve finding of AM. No. 11-3-6-SC
facts ordinarily left to the trial court for its conclusive determination. 28

In Toyota Motor Phils. Corp. Workers' Association v. Court of Appeals, 29 citing Ubanes, Jr. v. AMENDMENT OF SECTION 12, RULE 14 •
Court of Appeals,30 we made the following declaration:
OF THE RULES OF COURT ON SERVICE UPON
[T]he matter of the issuance of writ of a preliminary injunction is addressed to the sound FOREIGN PRIVATE JURIDICAL ENTITY
discretion of the trial court, unless the court commits a grave abuse of discretion. Grave
abuse of discretion in the issuance of writs of preliminary injunction implies a capricious and Section 12, Rule 14 of the Rules of Court is hereby amended to read
whimsical exercise of judgment that is equivalent to lack of jurisdiction or whether the power
is exercised in an arbitrary or despotic manner by reason of passion, prejudice or personal as follows:
aversion amounting to an evasion of positive duty or to a virtual refusal to perform the duty
enjoined, or to act at all in contemplation of law. x x x.
"SEC. 12. Service upon foreign private juridical entity. —
In the case at bar, after summary hearing and evaluation of evidence presented by both When the defendant is a foreign private juridical entity which
contending parties, the RTC ruled that justice would be better served if status quo is
preserved until the final determination of the merits of the case, to wit: has transacted business in the Philippines, service may be made

on its resident agent designated in accordance with law for that

For purposes of preliminary injunction, between the evidence presented by [the spouses
Santiago and Centrogen] and [BPI], the evidence of the former carries more weight. The purpose, or, i f there be no such agent, on the government
evidence of [the spouses Santiago and Centrogen] established that to allow extra-judicial
foreclosure without hearing the main action for the annulment of mortgage would probably official designated by law to that effect, or on any of its officers
work injustice to the plaintiffs and would probably violate their rights over the subject lot.
or agents within the Philippines.

Furthermore, this case involves complicated issues that must be resolved first before altering
the status quo. The issue of payment and non-payment of the loan and the issue of breach of
If the foreign private juridical entity is not registered in
the second loan directly affect the rights of the plaintiffs over the subject lot. Hence, the last
actual, peaceable, uncontested status of the parties before the controversy must be the Philippines or has no resident agent, service may, with leave
preserved.
of court, be effected out of the Philippines through any of the
The unyielding posture of BPI that its right to foreclose the subject property was violated following means:
since it is permanently barred from proceeding with the auction sale is patently erroneous.
The RTC, in the exercise of its discretion merely intended to preserve the status quo while
the principal action for the annulment of mortgage is heard with the end view that no
irreversible damage may be caused to the opposing parties. We find nothing whimsical, a) B y personal service coursed through the
arbitrary or capricious in the exercise of the RTC of its discretion. appropriate court in the foreign country with the

WHEREFORE, IN VIEW OF THE FOREGOING, the instant petition is DENIED. The Decision assistance of the Department of Foreign Affairs;
dated 3 March 2005, and the Resolution dated 28 July 2005, rendered by the Court of
Appeals in CA-G.R. SP No. 80643, are hereby AFFIRMED. Costs against petitioner.
b) B y publication once in a newspaper of general

5
 WHEREFORE, premises considered, the instant petition is DENIED DUE COURSE and is
circulation in the country where the defendant may be accordingly DISMISSED. The assailed Decision of the Regional Trial Court, Branch 6,
Legazpi City dated February 21, 2002 and its Order dated March 15, 2002 are AFFIRMED.
found and by serving a copy of the summons and the

court order by-registered mail at the last known address SO ORDERED.4

of the defendant;
Factual Antecedents

c) B y facsimile or any recognized electronic Respondent-spouses Fidel and Florinda See (respondent-spouses) were the highest bidders
in the extrajudicial foreclosure sale of a property 5 that was mortgaged to petitioner Home
means that could generate proof of service; or Development Mutual Fund or Pag-ibig Fund (Pag-ibig). They paid the bid price of
₱272,000.00 in cash to respondent Sheriff Manuel L. Arimado (Sheriff Arimado). In turn,
respondent-spouses received a Certificate of Sale wherein Sheriff Arimado acknowledged
d) B y such other means as the court may in its receipt of the purchase price, and an Official Receipt No. 11496038 dated January 28, 2000
from Atty. Jaime S. Narvaez, the clerk of court with whom Sheriff Arimado deposited the
discretion direct." respondent-spouses’ payment.6

This rule shall take effect fifteen (15) days after publication in a
newspaper of general circulation in the Philippines.
Despite the expiration of the redemption period, Pag-ibig refused to surrender its certificate of
title to the respondent-spouses because it had yet to receive the respondent-spouses’
payment from Sheriff Arimado7 who failed to remit the same despite repeated demands. 8 It
turned out that Sheriff Arimado withdrew from the clerk of court the ₱272,000.00 paid by
respondent-spouses, on the pretense that he was going to deliver the same to Pag-ibig. The
money never reached Pag-ibig and was spent by Sheriff Arimado for his personal use. 9

March 15, 2011

Considering Pag-ibig’s refusal to recognize their payment, respondent-spouses filed a
complaint for specific performance with damages against Pag-ibig and Sheriff Arimado before
G.R. No. 170292               June 22, 2011 Branch 3 of the Regional Trial Court (RTC) of Legazpi City. The complaint alleged that the
law on foreclosure authorized Sheriff Arimado to receive, on behalf of Pag-ibig, the
HOME DEVELOPMENT MUTUAL FUND (HDMF), Petitioner, respondent-spouses’ payment. Accordingly, the payment made by respondent-spouses to
vs. Pag-ibig’s authorized agent should be deemed as payment to Pag-ibig. 10 It was prayed that
Spouses FIDEL and FLORINDA R. SEE and Sheriff MANUEL L. Sheriff Arimado be ordered to remit the amount of ₱ 272,000.00 to Pag-ibig and that the
ARIMADO, Respondents. latter be ordered to release the title to the auctioned property to respondent-spouses. 11

DECISION
DEL CASTILLO, J.:
A party that loses its right to appeal by its own negligence cannot seek refuge in the remedy
of a writ of certiorari.
This is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court assailing the
August 31, 2005 Decision, 2 as well as the October 26, 2005 Resolution, 3 of the Court of
Appeals (CA) in CA-G.R. SP No. 70828. The dispositive portion of the assailed CA Decision
reads thus:
Pag-ibig admitted the factual allegations of the complaint (i.e., the bid of respondent-
spouses,12 their full payment in cash to Sheriff Arimado, 13 and the fact that Sheriff Arimado
misappropriated the money14) but maintained that respondent-spouses had no cause of
action against it. Pag-ibig insisted that it has no duty to deliver the certificate of title to
respondent-spouses unless Pag-ibig actually receives the bid price. Pag-ibig denied that the
absconding sheriff was its agent for purposes of the foreclosure proceedings. 15
When the case was called for pre-trial conference, the parties submitted their Compromise
Agreement for the court’s approval. The Compromise Agreement reads:

6
Undersigned parties, through their respective counsels[,] to this Honorable Court respectfully 7. In the event [respondent] Manuel L. Arimado complies with the payment as
submit this Compromise Agreement for their mutual interest and benefit that this case be above-stated, the parties mutually agree to withdraw all claims and counterclaim[s]
amicably settled, the terms and conditions of which are as follows: they may have against each other arising out of the above-entitled case.16

1. [Respondent] Manuel L. Arimado, Sheriff IV RTC, Legazpi acknowledges his The trial court approved the compromise agreement and incorporated it in its Decision dated
obligation to the Home Development Mutual Fund (PAG-IBIG), Regional Office V, October 31, 2001. The trial court stressed the implication of paragraph 6 of the approved
Legazpi City and/or to [respondent-spouses] the amount of ₱300,000.00, compromise agreement:
representing payment for the bid price and other necessary expenses incurred by
the [respondent-spouses], the latter being the sole bidder of the property subject
Accordingly, the parties are enjoined to comply strictly with the terms and conditions of their
matter of the Extrajudicial Foreclosure Sale conducted by Sheriff Arimado on
Compromise Agreement.
January 14, 2000, at the Office of the Clerk of Court, RTC, Legazpi;

In the event that [respondent] Manuel L. Arimado fails to pay [petitioner] HDMF (Pag-ibig), or
xxxx
[respondent-spouses] the amount of ₱272,000.00 on October 31, 2001, the Court, upon
motion of [respondent-spouses], may issue the necessary writ of execution.
3. Respondent Manuel L. Arimado due to urgent financial need acknowledge[s]
that he personally used the money paid to him by [respondent-spouses] which
In this connection, with respect to the issue as to whether or not [petitioner] HDMF (Pag-ibig)
represents the bid price of the above[-]mentioned property subject of the
shall be liable for the release of the title of the [respondent-spouses] under the circumstances
foreclosure sale. The [money] should have been delivered/paid by Respondent
narrated in the Complaint which necessitates further litigation in court, let the hearing of the
Arimado to Home Development Mutual Fund (PAG-IBIG) as payment and in
same be set on December 14, 2001 at 9:00 o’clock in the morning.
satisfaction of its mortgage claim.

SO ORDERED.17
4. Respondent Manuel L. Arimado obligates himself to pay in cash to [petitioner]
Home Development Mutual Fund (PAG-IBIG) the amount of ₱272,000.00
representing full payment of its claim on or before October 31, 2001 [so] that the None of the parties sought a reconsideration of the aforequoted Decision.
title to the property [could] be released by PAG-IBIG to [respondent-spouses]. An
additional amount of ₱28,000.00 shall likewise be paid by [respondent] Arimado to
When Sheriff Arimado failed to meet his undertaking to pay on or before October 31, 2001,
the [respondent-spouses] as reimbursement for litigation expenses;
the trial court proceeded to rule on the issue of whether Pag-ibig is liable to release the title to
respondent-spouses despite non-receipt of their payment.18
5. [Petitioner] Home Development Mutual Fund (PAG-IBIG) shall upon receipt of
the ₱272,000.00 from [respondent] Manuel L. Arimado release immediately within
Ruling of the Regional Trial Court19
a period of three (3) days the certificate of title of the property above-mentioned to
[respondent-spouses] being the rightful buyer or owner of the property;
The trial court rendered its Decision dated February 21, 2002 in favor of respondent-spouses,
reasoning as follows: Under Article 1240 of the Civil Code, payment is valid when it is made
6. In the event [respondent] Manuel L. Arimado fails to pay [petitioner] Home
to a person authorized by law to receive the same. In foreclosure proceedings, the sheriff is
Development Mutual Fund (PAG-IBIG), or, [respondent-spouses] the amount of
authorized by Act No. 3135 and the Rules of Court to receive payment of the bid price from
₱272,000.00 on or before October 31, 2001, the [respondent-spouses] shall be
the winning bidder. When Pag-ibig invoked the provisions of these laws by applying for
entitled to an immediate writ of execution without further notice to respondent
extrajudicial foreclosure, it likewise constituted the sheriff as its agent in conducting the
Manuel L. Arimado and the issue as to whether [petitioner] Home Development
foreclosure and receiving the proceeds of the auction. Thus, when the respondent-spouses
Mutual Fund (PAG-IBIG) shall be liable for the release of the title to [respondent
paid the purchase price to Sheriff Arimado, a legally authorized representative of Pag-ibig,
spouses] under the circumstances or allegations narrated in the complaint shall
this payment effected a discharge of their obligation to Pag-ibig.
continue to be litigated upon in order that the Honorable Court may resolve the
legality of said issue;
The trial court thus ordered Pag-ibig to deliver the documents of ownership to the
respondent-spouses. The dispositive portion reads thus:

7
WHEREFORE, premises considered, decision is hereby rendered in favor of the [respondent- 65. At the time the petition was filed, the Decision of the trial court had already attained
spouses] and against the [petitioner] HDMF, ordering said [petitioner] to execute a Release finality. The CA then held that the remedy of certiorari was not a substitute for a lost appeal. 30
and/or Discharge of Mortgage, and to deliver the same to the [respondent-spouses] together
with the documents of ownership and the owner’s copy of Certificate of Title No. T-78070
The CA also ruled that petitioner’s case fails even on the merits. It held that the February 21,
covering the property sold [to respondent-spouses] in the auction sale within ten (10) days
2002 Decision did not modify the October 31, 2001 Decision of the trial court. The latter
from the finality of this decision.
Decision of the trial court expressly declared that in case Sheriff Arimado fails to pay the
₱272,000.00 to Pag-ibig, the court will resolve the remaining issue regarding Pag-ibig’s
Should [petitioner] HDMF fail to execute the Release and/or Discharge of Mortgage and to obligation to deliver the title to the respondent-spouses. 31
deliver the same together with the documents of ownership and TCT No. T-78070 within ten
(10) days from the finality of this decision, the court shall order the Clerk of Court to execute
As to the contention that petitioner was denied due process when no trial
the said Release and/or Discharge of Mortgage and shall order the cancellation of TCT No.
T-78070 and the issuance of a second owner’s copy thereof.
was conducted for the reception of evidence, the CA held that there was no need for the trial
20 court to conduct a full-blown trial given that the facts of the case were already admitted by
SO ORDERED.
Pag-ibig and what was decided in the February 21, 2002 Decision was only a legal issue. 32

Pag-ibig filed a motion for reconsideration on the sole ground that "[Pag-ibig] should not be
Petitioner filed a motion for reconsideration 33 which was denied for lack of merit in the
compelled to release the title to x x x [respondent-spouses] See because Manuel Arimado
Resolution dated October 26, 2005.34
[has] yet to deliver to [Pag-ibig] the sum of ₱272,000.00." 21

Issues
The trial court denied the motion on March 15, 2002. It explained that the parties’
compromise agreement duly authorized the court to rule on Pag-ibig’s liability to respondent-
spouses despite Sheriff Arimado’s non-remittance of the proceeds of the auction. 22 Petitioner then raises the following issues for the Court’s consideration:

Pag-ibig received the denial of its motion for reconsideration on March 22, 2002 23 but took no 1. Whether certiorari was the proper remedy;
further action. Hence, on April 23, 2002, the trial court issued a writ of execution of its
February 21, 2002 Decision.24
2. Whether the February 21, 2002 Decision of the trial court modified its October
31, 2001 Decision based on the compromise agreement;
On May 24, 2002,25 Pag-ibig filed before the CA a Petition for Certiorari under Rule 65 in
order to annul and set aside the February 21, 2002 Decision of the trial court. Pag-ibig
3. Whether petitioner was entitled to a trial prior to the rendition of the February 21,
argued that the February 21, 2002 Decision, which ordered Pag-ibig to deliver the title to
2002 Decision.
respondent-spouses despite its non-receipt of the proceeds of the auction, is void because it
modified the final and executory Decision dated October 31, 2001. 26 It maintained that the
October 31, 2001 Decision already held that Pag-ibig will deliver its title to respondent- Our Ruling
spouses only upon receipt of the proceeds of the auction from Sheriff Arimado. Since Sheriff
Arimado did not remit the said amount to Pag-ibig, the latter has no obligation to deliver the
title to the auctioned property to respondent-spouses. 27 Petitioner argues that the CA erred in denying due course to its petition for certiorari and
maintains that the remedy of certiorari is proper for two reasons: first, the trial court rendered
its February 21, 2002 Decision without the benefit of a trial; and second, the February 21,
Further, Pag-ibig contended that the February 21, 2002 Decision was null and void because it 2002 Decision modified the October 31, 2001 Decision, which has already attained finality.
was issued without affording petitioner the right to trial.28 These are allegedly two recognized instances where certiorari lies to annul the trial court’s
Decision because of grave abuse of discretion amounting to lack of jurisdiction. 35
Ruling of the Court of Appeals29
The argument does not impress.
The CA denied the petition due course. The CA noted that petitioner’s remedy was to appeal
the February 21, 2002 Decision of the trial court and not a petition for certiorari under Rule

8
"[C]ertiorari is a limited form of review and is a remedy of last recourse." 36 It is proper only Under the Omnibus Motion Rule embodied in Section 8 of Rule 15 of the Rules of Court, all
when appeal is not available to the aggrieved party. 37 In the case at bar, the February 21, available objections that are not included in a party’s motion shall be deemed waived.
2002 Decision of the trial court was appealable under Rule 41 of the Rules of Court because
it completely disposed of respondent-spouses’ case against Pag-ibig. Pag-ibig does not
Pag-ibig next argues that the February 21, 2002 Decision of the trial court, in ordering Pag-
explain why it did not resort to an appeal and allowed the trial court’s decision to attain
ibig to release the title despite Sheriff Arimado’s failure to remit the ₱272,000.00 to Pag-ibig,
finality. In fact, the February 21, 2002 Decision was already at the stage of execution when
"modified" the October 31, 2001 Decision. According to Pag-ibig, the October 31, 2001
Pag-ibig belatedly resorted to a Rule 65 Petition for Certiorari. Clearly, Pag-ibig lost its right to
Decision allegedly decreed that Pag-ibig would deliver the title to respondent-spouses only
appeal and tried to remedy the situation by resorting to certiorari. It is settled, however, that
after Sheriff Arimado has paid the ₱272,000.00. 44 In other words, under its theory, Pag-ibig
certiorari is not a substitute for a lost appeal, "especially if the [party’s] own negligence or
cannot be ordered to release the title if Sheriff Arimado fails to pay the said amount.
error in [the] choice of remedy occasioned such loss or lapse." 38

The Court finds no merit in this argument. The October 31, 2001 Decision (as well as the
Moreover, even assuming arguendo that a Rule 65 certiorari could still be resorted to, Pag-
Compromise Agreement on which it is based) does not provide that Pag-ibig cannot be
ibig’s petition would still have to be dismissed for having been filed beyond the reglementary
ordered to release the title if Sheriff Arimado fails to pay. On the contrary, what the Order
period of 60 days from notice of the denial of the motion for reconsideration. 39 Pag-ibig
provides is that if Sheriff Arimado fails to pay, the trial court shall litigate (and, necessarily,
admitted receiving the trial court’s Order denying its Motion for Reconsideration on March 22,
resolve) the issue of whether Pag-ibig is obliged to release the title. This is based on
2002;40 it thus had until May 21, 2002 to file its petition for certiorari. However, Pag-ibig filed
paragraph 6 of the Compromise Agreement which states that in the event Sheriff Arimado
its petition only on May 24, 2002,41 which was the 63rd day from its receipt of the trial court’s
fails to pay, "the [respondent-spouses] shall be entitled to an immediate writ of execution
order and obviously beyond the reglementary 60-day period.
without further notice to [Sheriff] Arimado and the issue as to whether [Pag-ibig] shall be
liable for the release of the title to [respondent spouses] under the circumstances or
Pag-ibig stated that its petition for certiorari was filed "within sixty (60) days from receipt of allegations narrated in the complaint shall continue to be litigated upon in order that the
the copy of the writ of execution by petitioner [Pag-ibig] on 07 May 2002," which writ sought Honorable Court may resolve the legality of said issue." In fact, the trial court, in its October
to enforce the Decision assailed in the petition. 42 This submission is beside the point. Rule 31, 2001 Decision, already set the hearing of the same "on December 14, 2001 at 9:00
65, Section 4 is very clear that the reglementary 60-day period is counted "from notice of the o’clock in the morning."45
judgment, order or resolution" being assailed, or "from notice of the denial of the motion [for
reconsideration]," and not from receipt of the writ of execution which seeks to enforce the
It is thus clear from both the October 31, 2001 Decision and the Compromise Agreement that
assailed judgment, order or resolution. The date of Pag-ibig’s receipt of the copy of the writ of
the trial court was authorized to litigate and resolve the issue of whether Pag-ibig should
execution is therefore immaterial for purposes of computing the timeliness of the filing of the
release the title upon Sheriff Arimado’s failure to pay the ₱272,000.00. As it turned out, the
petition for certiorari.1avvphi1
trial court eventually resolved the issue against Pag-ibig, i.e., it ruled that Pag-ibig is obliged
to release the title. In so doing, the trial court simply exercised the authority provided in the
Since Pag-ibig’s petition for certiorari before the CA was an improper remedy and was filed October 31, 2001 Decision (and stipulated in the Compromise Agreement). The trial court did
late, it is not even necessary to look into the other issues raised by Pag-ibig in assailing the not thereby "modify" the October 31, 2001 Decision.
February 21, 2002 Decision of the trial court and the CA’s rulings sustaining the same. At any
rate, Pag-ibig’s arguments on these other issues are devoid of merit.
WHEREFORE, premises considered, the petition is DENIED. The assailed August 31, 2005
Decision, as well as the October 26, 2005 Resolution, of the Court of Appeals in CA-G.R. SP
As to Pag-ibig’s argument that the February 21, 2002 Decision of the RTC is null and void for No. 70828 are AFFIRMED.
having been issued without a trial, it is a mere afterthought which deserves scant
consideration. The Court notes that Pag-ibig did not object to the absence of a trial when it
SO ORDERED.
sought a reconsideration of the February 21, 2002 Decision. Instead, Pag-ibig raised the
following lone argument in their motion:

3. Consequently, [Pag-ibig] should not be compelled to release the title to other [respondent-
spouses] See because Manuel Arimado [has] yet to deliver to [Pag-ibig] the sum of ₱
272,000.00.43
THIRD DIVISION

9
[G.R. NO. 182673 : October 5, 2009]
AQUALAB PHILIPPINES, INC., Petitioner, v. HEIRS OF MARCELINO PAGOBO, namely:
PELAGIO PAGOBO, GONZALO PAGOBO, ANIANA PAGOBO, ALFREDO SALVADOR,
SAMUEL PAGOBO, REMEDIOS PAGOBO, VALENTINA PAGOBO, JONATHAN
PAGOBO, VIRGILIO PAGOBO, FELISA YAYON, SIMPLICIO YAYON, BARTOLOME
YAYON, BERNARDINA YAYON, and ISIDRA YAYON; HEIRS OF HILARION PAGOBO,
namely: PABLO PAGOBO, ALFREDO PAGOBO, FELIX PAGOBO, RUFINA P. DAHIL,
BRIGIDA P. GODINEZ, HONORATA P. GODINEZ, MAXIMO PAGOBO, ADRIANA
PAGOBO, CECILIA PAGOBO, LILIA PAGOBO, CRESCENCIO PAGOBO, ROBERTO
PAGOBO, ALFONSO PAGOBO, CANDIDO PAGOBO, BARTOLOME PAGOBO, ELPIDIO
PAGOBO, PEDRO PAGOBO, ROGELIO PAGOBO, SHIRLEY P. CAÑETE, MILAGROS
PAGOBO, JUANITO PAGOBO, JR., ANTONIO PAGOBO, IRENEA PAGOBO, and
ANIANO P. WAGWAG; HEIRS OF ANTONIO PAGOBO, namely: GAUDENCIO PAGOBO,
LOTITA PAGOBO, ERNESTO PAGOBO, ROMANA P. DANIL, FELISA PAGOBO,
CARMEN PAGOBO, and SALUD PAGOBO; HEIRS OF MAXIMO PAGOBO, namely:
RAMON PAGOBO, RODULFO PAGOBO, CRIPSIN PAGOBO, and URBANO
PAGOBO; HEIRS OF DONATA PAGOBO WAGWAG, namely: FELISA WAGWAG,
ANASTACIO WAGWAG, FILDEL WAGWAG, and NEMESIA WAGWAG; HEIR OF
AQUILINA PAGOBO: VICTOR PAGOBO; HEIRS OF JUANITO PAGOBO EYAS, namely:
MARCELO P. EYAS, ROCHI P. FLORES, and ORDIE P. FLORES; HEIRS OF CATALINA
PAGOBO, namely: RESTITUTO PAGOBO, CARLINA P. TALINGTING, TEOFILO P.
TALINGTING, and JUANITO P. TALINGTING, Respondents.
DECISION
VELASCO, JR., J.:
The Case
In this Petition for Review on Certiorari under Rule 45, Aqualab Philippines, Inc. (Aqualab)
assails the March 15, 2007 Decision 1 and April 22, 2008 Resolution2 of the Court of Appeals
(CA) in CA-G.R. CV No. 58540, which reversed the September 30, 1997 Order 3 of the
Regional Trial Court (RTC), Branch 53 in Lapu-lapu City, Cebu. The RTC dismissed Civil
Case No. 4086-L for Partition, Declaration of Nullity of Documents, Cancellation of Transfer
Certificate of Titles, Reconveyance with Right of Legal Redemption, Damages and Attorney's
Fees filed by Respondents.
The Facts
Subject of the complaint initiated by respondents are Lots 6727-Q and 6727-Y of the Opon
Cadastre, situated in Punta Engaño, Lapu-lapu City, Mactan Island, Cebu, particularly
described as follows:
LOT NO. 6727-Q
A parcel of land (Lot 6727-Q of the subdivision on plan (LRC) Psd-117050, being a portion of
Lot 6727 of the Cadastral Survey of Opon, L.R.C. (GLRO) Cad. Rec. No. 1004), situated in
the Barrio of Punta Engaño, City of Lapu-lapu, Island of Mactan x x x containing an area of
ONE THOUSAND (1,000) SQUARE METERS, more or less. All points referred to are
indicated on the plan and marked on the ground as follows: x x x date of the original survey,
Aug. 1927 - Dec. 1928, and that of the subdivision survey, Aug. 7, and 10, 1963, and Sept.
27 and 30, 1967.
LOT NO. 6727-Y
A parcel of land (Lot 6727-Y of the subdivision on plan (LRC) Psd-117050, being a portion of
Lot 6727 of the Cadastral Survey of Opon, L.R.C. (GLRO) Cad. Rec. No. 1004), situated in
the Barrio of Punta Engaño, City of Lapu-lapu, Island of Mactan x x x containing an area of
SIXTEEN THOUSAND ONE HUNDRED SIXTY SEVEN (16,167) SQUARE METERS, more
or less. All points referred to are indicated on the plan and marked on the ground as follows:
x x x date of the original survey, Aug. 1927 - Dec. 1928, and that of the subdivision survey,
Aug. 7, and 10, 1963, and Sept. 27 and 30, 1967.
Lot 6727-Q and Lot 6727-Y used to form part of Lot 6727 owned by respondents' great
grandfather, Juan Pagobo, covered by Original Certificate of Title No. (OCT) RO-
22464 containing an area of 127,436 square meters.
Lot 6727 was once covered by Juan Pagobo's homestead application. Upon his death on
January 18, 1947,5 his homestead application continued to be processed culminating in the
issuance on December 18, 1969 of Homestead Patent No. 128470 for Lot 6727. On the basis
of this homestead patent, OCT RO-2246 was issued in the name of Juan Pagobo.
Apparently, from the description of the subdivision lots of Lot 6727, particularly those of
subject Lots 6727-Q and 6727-Y above, and even before the issuance of OCT RO-2246, the
mother Lot 6727 was surveyed in 1963 and 1967 and eventually subdivided into 34
subdivision lots denominated as Lots 6727-A to 6727-HH.
Incidentally, on the same date that OCT RO-2246 was issued covering Lot 6727, OCT RO-
12776 was likewise issued also covering Lot 6727 in the name of the late Juan Pagobo also
pursuant to Homestead Patent No. 128470. Subsequently, however, on August 10, 1977,
OCT RO-1277 was canceled for being null and void pursuant to an Order issued on August
4, 1977 by the Court of First Instance in Lapu-lapu City in view of the issuance of OCT RO-
2246.7
Shortly after OCT RO-1277 and OCT RO-2246 were issued, subject Lots 6727-Q and 6727-Y
were subsequently sold to Tarcela de Espina who then secured Transfer Certificate of Title
No. (TCT) 32948 therefor on April 21, 1970. The purchase by Tarcela de Espina of subject
Lot 6727-Y from the heirs of Juan Pagobo and subject Lot 6727-Q from one Antonio
10
Alcantara was duly annotated on the Memorandum of Incumbrances of both OCT RO-
12779 and OCT RO-2246.10
Subsequently, Tarcela de Espina sold subject lots to Rene Espina who was issued, on
September 28, 1987, TCT 1783011 for Lot 6727-Q and TCT 1783112 for Lot 6727-Y.
Thereafter, Rene Espina sold subject lots to Anthony Gaw Kache, who in turn was issued
TCT 1791813 and TCT 18177,14 respectively, on November 9, 1987. Finally, Aqualab acquired
subject lots from Anthony Gaw Kache and was issued TCT 18442 15 and TCT
18443,16 respectively, on May 4, 1988.
On August 10, 1994, respondents, alleging that Aqualab has disturbed their peaceful
occupation of subject lots in 1991, filed a Complaint17 for Partition, Declaration of Nullity of
Documents, Cancellation of Transfer Certificate of Titles, Reconveyance with Right of Legal
Redemption, Damages and Attorney's Fees against Aqualab, the Register of Deeds of Lapu-
Lapu City, Cebu, and, for being unwilling co-plaintiffs and alleged refusal to have subject lots
partitioned, the Heirs of Bernabe Pagobo, namely: Anastacio Pagobo, Demetrio Pagobo,
Felix Pagobo, Olympia P. Tampus, Damasa Pagobo, Salud P. Maloloy-on, Candida Pagobo,
and Adriana P. Mahusay.
The Complaint pertinently alleged that:
ALLEGATIONS COMMON TO ALL CAUSE OF ACTION
4. Plaintiffs are the absolute and legal owners and rightful possessors of Lot [no.] 6727-Q and
Lot no. 6727-Y. These are ancestral lands which are part of a bigger parcel of land,
registered in the name of the plaintiffs' great grandfather Juan Pagobo and more particularly
described as follows:
xxx
5. Ownership and Possession by plaintiff's [sic] predecessors-in-interest, and plaintiffs herein,
respectively, over the said land, have been peaceful, continuous [sic] open, public and
adverse, since the year 1936 or even earlier. Their peaceful possession was disturbed only in
1991 as hereinafter described.
xxx
15. In the records with the office of the Registry of Deeds of Lapu-Lapu City, Lot No. 6727 of
the Opon Cadastre has been subdivided in to THIRTY-FOUR (34) lots and are denominated
as Lots Nos. 6727-A to 6727-HH, respectively, as per subdivision plan, a machine copy of
which is hereto attached and marked as Annex "A" hereof.
16. Defendants Anastacio Pagobo, x x x are the surviving children and grandchildren,
respectively, of the late BERNABE PAGOBO and are herein joined as party-defendants for
being "unwilling co-plaintiffs"; and also because despite demands by plaintiffs upon these
aforenamed defendants for the partition of the aforesaid land, the latter refused and still
refuses to have the same partitioned.
FIRST CAUSE OF ACTION AGAINST DEFENDANT
AQUALAB PHILIPPINES, INC. AND SANTIAGO TANCHAN, JR.
17. Sometime in 1991, defendant Aqualab Philippines Inc. represented by Santiago Tanchan,
Jr., claiming ownership of Lot Nos. 6727-Q and 6727-Y, forcibly entered, and without any
court Order, and against the will of the plaintiffs, said Lot no. 6727-Q and Lot no. 6727-Y. The
truth of the matter is that these defendants despite full knowledge that absolute and legal
ownership of Lot no. 6727-Q and Lot no. 6727-Y belonged to plaintiffs, and despite
knowledge that peaceful, public and adverse possession were being continuously exercised
by plaintiff over said land for a period in excess of THIRTY (30) years, did there and then, by
the use of fraud and misrepresentation and without informing the plaintiffs, caused the
transfer into the name of defendant Aqualab Philippines Inc., Lot no. 6727-Q and Lot no.
6727-Y, consisting of an area of ONE THOUSAND (1,000) SQUARE METERS and SIXTEEN
THOUSAND ONE HUNDRED SIXTY SEVEN (16,167) SQUARE METERS, respectively.
Lots No. 6727-Q and Lot no. 6727-Y are presently covered by Transfer Certificate of Titles
No. 18442 and CTC No. 18443, respectively, copies of which are hereto attached as
Annexes "B" and "C", respectively.
18. The defendants entered into transactions of the lands subject matter of this case, without
the knowledge of plaintiffs and their predecessors-in-interest, and defendants did so despite
full knowledge that ownership of said lands belonged to plaintiffs and their predecessors-in-
interest; and that defendants entered into said transactions despite full knowledge by them
and their predecessors-in-interest that the lots was [sic] covered by a homestead patent and
as such cannot be alienated within twenty-five (25) years from its issuance on February 10,
1970.
SECOND CAUSE OF ACTION
xxx
20. Granting, without necessarily admitting, that the transaction entered into by the
defendants are legal and binding; Plaintiffs then have not been duly notified of the said sale
and therefore, have the right to redeem the same under Article 1620 in relation to Article
1623 of the New Civil Code, and also under Commonwealth Acts [sic] No. 141, as
amended.18
11
On August 26, 1994, the heirs of Bernabe Pagobo filed their Answer, 19 asserting that subject
Lot 6727-Y was owned by their predecessor Bernabe Pagobo as evidenced by Tax
Declaration No. (TD) 00520. 20 They maintained that even before the Second World War and
before the death of Juan Pagobo on January 18, 1947, Bernabe Pagobo already had
possession of subject Lot 6727-Y which was the portion assigned to him. Moreover, they
contended that respondents never made any demands for partition of subject Lot 6727-Y.
instant appeal is GRANTED, hereby declaring the sale of the homestead and TCT Nos.
18442 and 18443 under the name of Aqualab null and void, and ordering the Register of
Deeds for the City of Lapu-lapu to cancel both certificates of title and to issue new certificates
of title over Lots 6727-Q and 6727-Y under the name of appellants, and let this case be
REMANDED to the trial court for the presentation of evidence on the claim for partition and
for damages.

On September 12, 1994, Aqualab filed its Motion to Dismiss 21 on the grounds of: (1) SO ORDERED.23
prescription of the action for declaration of nullity of documents, cancellation of transfer
certificates of title, and reconveyance; and (2) no cause of action for partition and legal
The CA resolved the following issues: (1) the propriety of the dismissal of the complaint by
redemption of the mother title of subject lots, i.e., OCT RO-2246 had already been subdivided
the RTC; and, (2) whether respondents have the right to redeem subject lots. The CA ruled
and several conveyances made of the subdivided lots.
that the trial court erred in dismissing the complaint as the sale of subject lots to Tarcela de
Espina was void, thus making the subsequent conveyances ineffective and no titles were
Ruling of the Trial Court validly transferred. Moreover, it ruled that Aqualab is not an innocent purchaser for value, and
held that respondents, as heirs of the homestead grantee, never lost their valid title to the
subject lots.
By Order dated September 30, 1997, the RTC granted Aqualab's motion and dismissed
respondents' complaint, disposing as follows:
Through the equally assailed April 22, 2008 Resolution, the CA denied Aqualab's motion for
reconsideration.
Wherefore, in the light of the foregoing considerations, defendant Aqualab's motion to
dismiss, being impressed with merit, is hereby granted. The complaint in the above-entitled
case is hereby dismissed. Hence, we have this petition.

SO ORDERED.22 The Issues

In granting Aqualab's motion to dismiss, the trial court ruled that prescription has set in. (A)
Moreover, the trial court held that Aqualab is an innocent purchaser for value and, thus, its
rights are protected by law. Finally, it concluded that legal redemption or reconveyance was
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A RADICAL DEPARTURE
no longer available to respondents.
FROM THE USUAL AND ACCEPTED COURSE OF JUDICIAL PROCEEDINGS THAT
WOULD WARRANT THE REVERSAL OF THE COURT OF APPEALS' DECISION
Undaunted, respondents appealed the above dismissal to the CA. The parties thereafter filed
their respective briefs.
(B)

Ruling of the Appellate Court

WHETHER OR NOT THE COMPLAINT SHOULD BE DISMISSED COMPLAINT [SIC] ON
THE GROUND OF LACK OF CAUSE OF ACTION
The CA saw things differently. On March 15, 2007, it rendered the assailed decision,
reversing the September 30, 1997 Order of dismissal by the RTC, declaring the sale of
(C)
subject lots as null and void, and remanding the case to the trial court for partition
proceedings. The fallo reads:
WHETHER OR NOT THE TRANSFERS OF THE DISPUTED PROPERTY TO HEREIN
PETITIONER'S PREDECESSORS-IN-INTEREST WERE VIOLATIVE OF THE FIVE (5)
WHEREFORE, in view of the foregoing premises, the Order of the Regional Trial Court
YEAR PROHIBITIVE PERIOD UNDER SECTION 118 OF THE PUBLIC LAND ACT SO AS
dismissing the instant Complaint for Partition, Declaration of Nullity of Documents,
TO WARRANT THEIR NULLIFICATION
Cancellation of Transfer Certificates of Title, Reconveyance with Right of Legal Redemption,
Damages and Attorney's Fees, and other Reliefs is REVERSED and SET ASIDE, and the

12
(D)
WHETHER OR NOT THE PETITIONER IS AN INNOCENT PURCHASER IN GOOD FAITH
(E)
WHETHER OR NOT THE RESPONDENTS' CAUSE OF ACTION HAS PRESCRIBED
WARRANTING THE DISMISSAL OF THEIR COMPLAINT ON THE GROUND OF
PRESCRIPTION
(F)
WHETHER OR NOT THE RESPONDENTS' COMPLAINT CONSTITUTES A COLLATERAL
ATTACK AGAINST THE TITLES OF HEREIN PETITIONER'S PREDECESSORS-IN-
INTEREST WARRANTING THE DISMISSAL THEREOF
(G)
WHETHER OR NOT THE RESPONDENTS' APPEAL BEFORE THE COURT OF APPEALS
SHOULD HAVE BEEN DISMISSED IN VIEW OF THE RESPONDENTS' ADMISSION THAT
THE CONVEYANCE OF THE DISPUTED PROPERTY TO HEREIN PETITIONER WAS
VALID
(H)
WHETHER OR NOT THE COURT OF APPEALS DEPRIVED THE PETITIONER OF ITS
PROPERTY WITHOUT DUE PROCESS OF LAW WHEN IT NULLIFIED THE
PETITIONER'S TITLE AND OWNERSHIP OVER SUBJECT PROPERTY WITHOUT TRIAL
THEREBY DEPRIVING THE PETITIONER OF ITS PROPERTY WITHOUT DUE PROCESS
OF LAW24
The Court's Ruling
The petition is partly meritorious.
The core issues raised in the instant petition are factual in nature and can be summed up into
two: first, whether the action of respondents is barred by prescription; and second, whether
Aqualab is an innocent purchaser for value.
Hypothetical Admission of Factual
in the Complaint by Filing a Motion to Dismiss
In filing a motion to dismiss, the movant hypothetically admits the truth of the material and
relevant facts alleged and pleaded in the complaint. The court, in resolving the motion to
dismiss, must consider such hypothetical admission, the documentary evidence presented
during the hearing thereof, and the relevant laws and jurisprudence bearing on the issues or
subject matter of the complaint.
Dismissal by Trial Court on Prescription and
Finding Defendant an Innocent Purchaser for Value
The trial court ruled that prescription has set in, since respondents alleged in the complaint
fraud and misrepresentation in procuring the transfer of subject lots, and such transfer was
made on April 21, 1970, while the instant complaint was filed only on August 10, 1994, or a
little over 24 years. Relying on Buenaventura v. Court of Appeals,25 where the Court held that
an action for reconveyance of title due to fraud is susceptible to prescription either within four
or 10 years, the trial court held that the instant action is definitely barred. It also ruled that
even if a constructive trust was created as averred by respondents, still, the instant action
has prescribed for a constructive trust prescribes in 10 years, relying on Tenio-Obsequio v.
Court of Appeals.26
Moreover, the trial court, also relying on Tenio-Obsequio, agreed with Aqualab's assertion
that it was an innocent purchaser for value, which merely relied on the correctness of the
TCTs covering subject lots, i.e., TCT 17918 and TCT 18177 in the name of Anthony Gaw
Kache, and, as such, Aqualab, as vendee, need not look beyond the certificate of title and
investigate the title of the vendor appearing on the face of said titles.
Finally, the trial court concluded that respondents cannot invoke legal redemption under
Article 1620 in relation to Art. 1623 of the Civil Code and under Commonwealth Act No. (CA)
141, as amended,27 for Lot 6727 had already been divided into subdivision lots, the subject of
numerous transactions. Besides, it reasoned that legal redemption under CA 141 is only
applicable to cases of proper conveyance of a land covered by a homestead patent, but not,
as in the instant case, when the conveyances were assailed to be improper.
Aqualab Hypothetically Admitted the Fraudulent Conveyances
and Respondents' Possession of Subject Lots
Respondents aver that they are the absolute and lawful owners of subject properties, i.e.,
Lots 6727-Q and 6727-Y, over which they have had actual possession since 1936 or earlier
until sometime in 1991, when Aqualab disturbed such possession. 28 While the records show
that respondents did not have in their names the certificate of titles over subject lots, the
factual assertion of open, peaceful, public, and adverse possession is hypothetically admitted
by Aqualab.
Allegations Moreover, respondents allege that the conveyances of subject lots were fraudulently made in
violation of the restrictions on alienation of homesteads under CA 141, and that said
conveyances were made without their knowledge and, thus, asserting their right to redeem
13
the subject properties in line with the policy of CA 141 that the homestead should remain with
the grantee and his family.29 The alleged fraudulent conveyances were likewise hypothetically
admitted by Aqualab.
On the other hand, Aqualab's co-defendants, the heirs of Bernabe Pagobo, to respondents'
complaint, filed their Answer asserting possession and ownership over subject Lot 6727-Y by
submitting TD 00520 to prove payment of the real estate tax thereon. However, on the
allegation of disturbance of possession and fraudulent conveyances without knowledge of
respondents, the heirs of Bernabe Pagobo merely maintained that they had no knowledge
and information sufficient to form a belief as to the truth thereof.
It is, thus, clear that by filing its motion to dismiss, Aqualab hypothetically admitted the
veracity of respondents' continuous possession of subject lots until 1991 when Aqualab
disturbed such possession. Aqualab likewise hypothetically admitted the fraudulent and
illegal conveyances of subject lots.
In its Motion to Dismiss, Aqualab moved for the dismissal of respondents' complaint on the
ground of prescription, that it is an innocent purchaser for value whose rights are protected by
law, and that the complaint failed to state a cause of action for partition and legal redemption.
Prescription Is Not Apparent
on the Face of the Complaint
From the foregoing premises, the trial court erred in finding prescription. Prescription, as a
ground for a motion to dismiss, is adequate when the complaint, on its face, shows that the
action has already prescribed.30 Such is not the case in this instance. Respondents have duly
averred continuous possession until 1991 when such was allegedly disturbed by Aqualab.
Being in possession of the subject lots'hypothetically admitted by Aqualab respondents' right
to reconveyance or annulment of title has not prescribed or is not time-barred.
Verily, an action for annulment of title or reconveyance based on fraud is imprescriptible
where the plaintiff is in possession of the property subject of the acts.31 And the prescriptive
period for the reconveyance of fraudulently registered real property is 10 years, reckoned
from the date of the issuance of the certificate of title, if the plaintiff is not in
possession.32 Thus, one who is in actual possession of a piece of land on a claim of
ownership thereof may wait until his possession is disturbed or his title is attacked before
taking steps to vindicate his right.33
In the instant case, as hypothetically admitted, respondents were in possession until 1991,
and until such possession is disturbed, the prescriptive period does not run. Since
respondents filed their complaint in 1994, or three years after their possession was allegedly
disturbed, it is clear that prescription has not set in, either due to fraud or constructive trust.
Besides, if the plaintiff, as the real owner of the property, remains in possession of the
property, the prescriptive period to recover title and possession of the property does not run
against him. In such a case, an action for reconveyance, if nonetheless filed, would be in the
nature of a suit for quieting of title, an action that is imprescriptible. 34
Thus, the trial court's reliance on Buenaventura35 and Tenio-Obsequio36 for prescription on
the right of reconveyance due to fraud and constructive trust, respectively, is misplaced, for in
both cases, the plaintiffs before the trial court were not in possession of the lots subject of
their action.
Aqualab Not an Innocent Purchaser for Value Due to the Hypothetically Admitted
Respondents' Possession of Subject Lots
In the instant case, again based on the hypothetically admitted allegations in the complaint, it
would appear that Anthony Gaw Kache, Aqualab's predecessor-in-interest, was not in
possession of subject lots. Such a fact should have put Aqualab on guard relative to the
possessors' (respondents') interest over subject lots. A buyer of real property that is in the
possession of a person other than the seller must be wary, and a buyer who does not
investigate the rights of the one in possession can hardly be regarded as a buyer in good
faith.37
Having hypothetically admitted respondents' possession of subject lots, Aqualab cannot be
considered, in the context of its motion to dismiss, to be an innocent purchaser for value or a
purchaser in good faith. Moreover, the defense of indefeasibility of a Torrens title does not
extend to a transferee who takes it with notice of a flaw in the title of his transferor. 38
The Complaint Sufficiently
States a Cause of Action
Upon the foregoing disquisitions, it is abundantly clear to the Court that respondents'
complaint sufficiently stated, under the premises, a cause of action. Not lost on us is the fact
that the RTC dismissed the complaint of respondents on the grounds of prescription and in
the finding that Aqualab is an innocent purchaser for value of the subject lots.
Quoting Philippine Bank of Communications v. Trazo,39 the Court said in Bayot v. Court of
Appeals40 that:
A cause of action is an act or omission of one party in violation of the legal right of the other.
A motion to dismiss based on lack of cause of action hypothetically admits the truth of the
allegations in the complaint. The allegations in a complaint are sufficient to constitute a cause
of action against the defendants if, hypothetically admitting the facts alleged, the court can
render a valid judgment upon the same in accordance with the prayer therein. A cause of
action exists if the following elements are present, namely: (1) a right in favor of the plaintiff
by whatever means and under whatever law it arises or is created; (2) an obligation on the
part of the named defendant to respect or not to violate such right; and (3) an act or omission
on the part of such defendant violative of the right of the plaintiff or constituting a breach of
14
the obligation of the defendant to the plaintiff for which the latter may maintain an action for
recovery of damages.41
Indeed, to sustain a motion to dismiss for lack of cause of action, the complaint must show
that the claim for relief does not exist rather than that a claim has been defectively stated or is
ambiguous, indefinite, or uncertain. 42 However, a perusal of respondents' Complaint before
the RTC, in light of Aqualab's motion to dismiss which hypothetically admitted the truth of the
allegations in the complaint, shows that respondents' action before the RTC has sufficiently
stated a cause of action. Hypothetically admitting fraud in the transfers of subject lots, which
indisputably were first transferred in apparent violation of pertinent provisions in CA 141
prohibiting alienation of homesteads within five years from the grant of the homestead patent,
and the continuing possession of respondents until 1991 of the subject lots, the action for
reconveyance and nullification filed in 1994 not only sufficiently stated a cause of action but
also has not yet prescribed
G.R. No. 171219               September 3, 2012
ATTY. FE Q. PALMIANO-SALVADOR, Petitioner,
vs.
CONSTANTINO ANGELES, substituted by LUZ G. ANGELES*, Respondent.
DECISION
PERALTA, J.:
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court,
praying that the Decision1 of the Court of Appeals (CA) promulgated on September 16, 2005
dismissing the petition before it, and its Resolution 2 dated January 13, 2006, denying
petitioner's Motion for Reconsideration, be reversed and set aside.
The records reveal the CA's narration of facts to be accurate, to wit:
xxxx
Respondent-appellee ANGELES is one of the registered owners of a parcel of land located at
1287 Castanos Street, Sampaloc, Manila, evidenced by Transfer Certificate of Title No.
150872. The subject parcel of land was occupied by one Jelly Galiga (GALIGA) from 1979 up
to 1993, as a lessee with a lease contract. Subsequently, Fe Salvador (SALVADOR) alleged
that she bought on September 7, 1993 the subject parcel of land from GALIGA who
represented that he was the owner, being one in possession. Petitioner-appellant
SALVADOR remained in possession of said subject property from November 1993 up to the
present.
On November 18, 1993, the registered owner, the respondentappellee ANGELES, sent a
letter to petitioner-appellant SALVADOR demanding that the latter vacate the subject
property, which was not heeded by petitioner-appellant SALVADOR. Respondent-appellee
ANGELES, thru one Rosauro Diaz, Jr. (DIAZ), filed a complaint for ejectment on October 12,
1994 with the Metropolitan Trial Court [MeTC] of Manila, Branch 16, docketed as Civil Case
No. 146190-CV.
The Assailed Decision of the Trial Courts
The [MeTC] rendered its decision on November 29, 1999 in favor of herein respondent-
appellee ANGELES, the dispositive portion of which reads, to wit:
WHEREFORE, judgment is hereby rendered for the plaintiff and against the defendant
ordering the latter and all persons claiming under her to:
1) vacate the parcel of land located at 1287 Castanos Street, Sampaloc, Manila,
and surrender the same to the plaintiff;
2) pay the plaintiff the sum of Php1,000.00 monthly as reasonable compensation
for her use and occupancy of the above parcel of land beginning November 1993
up to the time she has actually vacated the premises;
3) pay the plaintiff the sum of Php5,000.00 as attorney's fees and the cost of suit.
SO ORDERED.
In the appeal filed by petitioner-appellant SALVADOR, she alleged, among others, that DIAZ,
who filed the complaint for ejectment, had no authority whatsoever from respondent-appellee
ANGELES at the time of filing of the suit. Petitioner-appellant SALVADOR's appeal was
denied by the [Regional Trial Court] RTC in a Decision dated March 12, 2003. The Motion for
Reconsideration filed by SALVADOR was denied in an Order dated March 16, 2004. 3
Petitioner elevated the case to the CA via a petition for review, but in a Decision dated
September 16, 2005, said petition was dismissed for lack of merit. The CA affirmed the
factual findings of the lower courts that Galiga, the person who supposedly sold the subject
premises to petitioner, was a mere lessee of respondent, the registered owner of the land in
question. Such being the case, the lower court ruled that Galiga could not have validly
transferred ownership of subject property to herein petitioner. It was ruled by the CA that
there were no significant facts or circumstances that the trial court overlooked or
misinterpreted, thus, it found no reason to overturn the factual findings of the MeTC and the
15
RTC. A motion for reconsideration of said Decision was denied in a Resolution dated January the very merits of the case, because legally, there was no complaint to speak of. The court's
13, 2006. jurisdiction cannot be deemed to have been invoked at all.

Hence, the present petition, where one of the important issues for resolution is the effect of
Rosauro Diaz's (respondent's representative) failure to present proof of his authority to
represent respondent (plaintiff before the MeTC) in filing the complaint. This basic issue has
been ignored by the MeTC and the RTC, while the CA absolutely failed to address it, despite
petitioner's insistence on it from the very beginning, i.e., in her Answer filed with the MeTC.
This is quite unfortunate, because this threshold issue should have been resolved at the
outset as it is determinative of the court's jurisdiction over the complaint and the plaintiff.
IN VIEW OF THE FOREGOING, the Petition is GRANTED. The Decision of the Metropolitan
Trial Court in Civil Case No. 146190, dated November 29, 1999; the Decision of the Regional
Trial Court in Civil Case No. 00-96344, dated March 12, 2003; and the Decision of the Court
of Appeals in CA-G.R. SP No. 83467, are SET ASIDE AND NULLIFIED. The complaint filed
by respondent before the Metropolitan Trial Court is hereby DISMISSED.
SO ORDERED.

Note that the complaint before the MeTC was filed in the name of respondent, but it was one
DIOSDADO M. PERALTA
Rosauro Diaz who executed the verification and certification dated October 12, 1994, alleging
Associate Justice
therein that he was respondent's attorney-in-fact. There was, however, no copy of any
document attached to the complaint to prove Diaz's allegation regarding the authority
supposedly granted to him. This prompted petitioner to raise in her Answer and in her
Position Paper, the issue of Diaz's authority to file the case. On December 11, 1995, more SECOND DIVISION
than a year after the complaint was filed, respondent attached to his Reply and/or Comment
to Respondent's (herein petitioner) Position Paper,4 a document entitled Special Power of
 
Attorney (SPA)5 supposedly executed by respondent in favor of Rosauro Diaz.
However, said SPA was executed only on November 16, 1994, or more than a month
after the complaint was filed, appearing to have been notarized by one Robert F. McGuire SPS. ENRIQUETA RASDAS, G.R. No. 157605
of Santa Clara County. Observe, further, that there was no certification from the Philippine
Consulate General in San Francisco, California, U.S.A, that said person is indeed a notary
and TOMAS RASDAS, SPS.
public in Santa Clara County, California. Verily, the court cannot give full faith and credit to
the official acts of said Robert McGuire, and hence, no evidentiary weight or value can be
attached to the document designated as an SPA dated November 16, 1994. Thus, there is ESPERANZA A. VILLA, and
nothing on record to show that Diaz had been authorized by respondent to initiate the action
against petitioner.1âwphi1
ERNESTO VILLA, and LOLITA ' Present:

What then, is the effect of a complaint filed by one who has not proven his authority to
represent a plaintiff in filing an action? In Tamondong v. Court of Appeals,6 the Court GALLEN,
categorically stated that "[i]f a complaint is filed for and in behalf of the plaintiff [by one] who is
not authorized to do so, the complaint is not deemed filed. An unauthorized complaint does Petitioners,
not produce any legal effect. Hence, the court should dismiss the complaint on the ground
that it has no jurisdiction over the complaint and the plaintiff." 7 This ruling was reiterated
in Cosco Philippines Shipping, Inc. v. Kemper Insurance Company,8 where the Court went on - versus' - PUNO,
to say that "[i]n order for the court to have authority to dispose of the case on the merits, it
must acquire jurisdiction over the subject matter and the parties. Courts acquire jurisdiction Chairman,
over the plaintiffs upon the filing of the complaint, and to be bound by a decision, a party
should first be subjected to the court's jurisdiction. Clearly, since no valid complaint was ever
filed with the [MeTC], the same did not acquire jurisdiction over the person of respondent AUSTRIA-MARTINEZ,
[plaintiff before the lower court]."9
JAIME ESTENOR, ' CALLEJO, SR.,
Pursuant to the foregoing rulings, therefore, the MeTC never acquired jurisdiction over this
case and all proceedings before it were null and void. The courts could not have delved into Respondent. TINGA, and

16
CHICO-NAZARIO,
 
 

 
December 13, 2005

  The dispute centers on a parcel of land with an area of 703 square meters, situated in Ilagan,

  Isabela. On 29 October 1992, respondent as plaintiff filed a Complaint For Recovery Of

Ownership And Possession With Damages against petitioners as defendants. The complaint

DECISION
was' docketed as Civil Case No. 673 and tried by the Regional Trial Court (RTC) of Ilagan,
 
Isabela, Branch 16. In the same complaint, respondent asserted that he was the owner of the

TINGA, J. : subject property, which was then in the possession of petitioners.

 
 

The main issue in this Petition for Review under Rule 45 is whether the complaint below is
On 6 November 1995, the RTC decided Civil Case No. 673 in favor of petitioners.
barred by res judicata. We find that res judicata indeed obtains in this case, albeit of a mode
Respondent appealed the RTC decision before the Court of Appeals, and his appeal was
different from that utilized by the trial court and the Court of Appeals in dismissing the
docketed as CA-G.R. No. 52338.
complaint.

 
 

On 25 September 1997, the Court of Appeals reversed the judgment of the RTC, and
The antecedent facts, as culled from the assailed Decision [1] of the Court of Appeals Tenth
declared respondent as the owner of the subject property. As a result, petitioners were
Division, follow.
ordered to vacate the land. The dispositive portion of the appellate court's decision reads:

 
 

  WHEREFORE, the Decision of the trial court dated November 6,

1995 is REVERSED and SET ASIDE, and a new one is rendered declaring
the plaintiff as the owner of the land in question; and ordering the defendants-

17
 appellees to vacate the same and jointly and severally to pay the plaintiff
reasonable compensation of P300.00 a month for the use and enjoyment of demolished. [5] They posited that without such reimbursement, they could not be ejected from
the land from June 1991 up to the time the land is vacated; attorney's fees
of P10,000.00 and litigation expenses of P5,000.00. their houses.
 
Costs against the defendants-appellees.
   
SO ORDERED. [2]
 

Respondent as defendant countered with a Motion to Dismiss , arguing that petitioners'

 
complaint was barred by res judicata , owing to the final and executory judgment of the Court

The decision became final and executory after a petition for certiorari assailing its validity was of Appeals. The Motion to Dismiss was initially denied by the RTC in an Order dated 4 August

dismissed by this Court. [3] Thereafter, a Writ of Execution and Writ of Demolition was issued 1999 [6] , and pre-trial ensued. However, before trial proper could begin, respondent filed a

against petitioners, who were ordered to demolish their houses, structures, and improvements motion for preliminary hearing on the affirmative defense of lack of jurisdiction and  res

on the property. judicata .

   

Petitioners as plaintiffs then filed a Complaint dated 6 July 1999 against respondent for just This motion was resolved in an Order dated 16 February 2000, wherein the RTC declared

compensation and preliminary injunction with temporary restraining order. The case was itself 'constrained to apply the principle of res judicata, thus reversing its earlier order. In doing

docketed as Civil Case No. 1090, and heard by the same RTC Branch 16 that ruled on the so, the RTC concluded that the earlier decision of the Court of Appeals had already effectively

first complaint. Notwithstanding the earlier pronouncement of the Court of Appeals, petitioners settled that petitioners were in fact builders in bad faith. Citing Mendiola v. Court of

asserted therein that they were the lawful owners of the subject property [4], although they Appeals, [7] the RTC held that the causes of action between the final judgment and the instant

ultimately conceded the efficacy of the appellate court's final and executory decision. Still, complaint of petitioners were identical, as it would entail the same evidence that would

they alleged that they were entitled to just compensation relating to the value of the houses support and establish the former and present causes of action. Accordingly, the RTC ordered

they had built on the property, owing to their purported status as builders in good faith. They the dismissal of petitioners' complaint. The counsel for petitioners was likewise issued a

claimed that the Court of Appeals decision did not declare them as builders in bad faith, and warning for having violated the prohibition on forum-shopping on account of the filing of the

thus, they were entitled to be reimbursed of the value of their houses before these could be complaint barred by res judicata .

18

The finding of res judicata was affirmed by the Court of Appeals in its assailed Decision . It is
this finding that is now subject to review by this Court. Petitioners argue that since
respondents' Motion to Dismiss on the ground of res judicata had already been denied, the
consequent preliminary hearing on the special defenses which precluded the dismissal of the
complaint was null and void. [8] Petitioners also claim that there was no identity of causes of
action in Civil Case No. 673, which concerned the ownership of the land, and in Civil Case
No. 1090, which pertained to just compensation under Article 448 of the Civil Code. Even
assuming that res judicata obtains, petitioners claim that the said rule may be disregarded if
its application would result in grave injustice.
 
We observe at the onset that it does appear that the RTC's act of staging preliminary hearing
on the affirmative defense of lack of jurisdiction and res judicata is not in regular order. Under
Section 6, Rule 16 of the 1997 Rules of Civil Procedure, the allowance for a preliminary
hearing, while left in the discretion of the court, is authorized only if no motion to dismiss has
been filed but any of the grounds for a motion to dismiss had been pleaded as an affirmative
defense in the answer. In this case, respondents had filed a motion to dismiss on the ground
of res judicata , but the same was denied. They thus filed an answer alleging res judicata as a
special affirmative defense, but later presented a Motion for Preliminary Hearing which was
granted, leading to the dismissal of the case.
The general rule must be reiterated that the preliminary hearing contemplated under Section
6, Rule 16 applies only if no motion to dismiss has been filed. This is expressly provided
under the rule, which relevantly states '[i]f no motion to dismiss has been filed, any of the
grounds for dismissal provided for in [Rule 16] 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. An exception was carved out in California and Hawaiian
Sugar Company v. Pioneer Insurance, [9] wherein the Court noted that while Section 6
disallowed a preliminary hearing of affirmative defenses once a motion to dismiss has been
filed, such hearing could nonetheless be had if the trial court had not categorically resolved
the motion to dismiss. [10] Such circumstance does not obtain in this case, since the trial
court had already categorically denied the motion to dismiss prior to the filing of the answer
and the motion for preliminary hearing.
We observe in this case that the judge who had earlier denied the motion to dismiss, Hon.
Teodulo E. Mirasol, was different from the judge who later authorized the preliminary
hearing, [11] Hon. Isaac R. de Alban, a circumstance that bears some light on why the RTC
eventually changed its mind on the motion to dismiss. Still, this fact does not sanction the
staging of a preliminary hearing on affirmative defenses after the denial of the motion to
dismiss. If a judge disagrees with his/her predecessor's previous ruling denying a motion to
dismiss, the proper recourse is not to conduct a preliminary hearing on affirmative defenses,
but to utilize the contested ground as part of the basis of the decision on the merits
On the part of the movant whose motion to dismiss had already been filed and denied, the
proper remedy is to file a motion for reconsideration of the denial of the motion. If such motion
for reconsideration is denied, the ground for the dismissal of the complaint may still be
litigated at the trial on the merits.
Clearly, the denial of a motion to dismiss does not preclude any future reliance on the grounds
relied thereupon. However, nothing in the rules expressly authorizes a preliminary hearing of
affirmative defenses once a motion to dismiss has been filed and denied. Thus, the strict
application of Section 6, Rule 16 in this case should cause us to rule that the RTC erred in
conducting the preliminary hearing.
However, there is an exceptional justification for us to overlook this procedural error and
nonetheless affirm the dismissal of the complaint. The complaint in question is so evidently
barred by res judicata , it would violate the primordial objective of procedural law to secure a
just, speedy and inexpensive disposition of every action and proceeding [12] should the Court
allow this prohibited complaint from festering in our judicial system. Indeed, the rule
sanctioning the liberal construction of procedural rules is tailor-made for a situation such as
this, when a by-the-numbers application of the rule would lead to absurdity, such as the
continued litigation of an obviously barred complaint.
Why is the subject complaint barred by res judicata ? It is uncontroverted that in the decision
by the Court of Appeals in Civil Case No. 673, it was observed:
 
19
 When the occupancy of the lot by Luis Aggabao which was transmitted to his
son Vivencio Aggabao, and later transmitted to the latter's children . . . expired
in April 1965, the late Vivencio Aggabao verbally begged and pleaded to
plaintiff-appellant that he be allowed to stay on the premises of the land in
question as his children, herein appellees, were still studying and it would be
very hard fro them to transfer residence at that time. The plaintiff, out of
Christian fellowship and compassion, allowed the appellees to stay
temporarily on the land in question.
....
In this case, the possession of the land by the appellees derived from their
father Luis Aggabao from March 31, 1955 to March 31, 1965 was by virtue of
a stipulation in the deed of sale (exh. G), while their possession derived from
their father, Vivencio Aggabao, from March 31, 1965 to 1982 (the latter died in
1982) was only by tolerance because of the pleading of Vivencio Aggabao to
the plaintiff-appellant that he be allowed to stay because of the children going
to school. . . . [13]
Evidently, the Court of Appeals had previously ruled in the first case that as early as 1965, the
father of the petitioners (and their predecessor-in-interest) had already known that he did not
own the property, and that his stay therein was merely out of tolerance. Such conclusion in
fact bolstered the eventual conclusion that respondents were the owners of the land and that
petitioners should vacate the same.
This fact should be seen in conjunction with the findings of the RTC and the Court of Appeals
in this case that the structures for which petitioners sought to be compensated were
constructed in 1989 and 1990, or long after they had known they were not the owners of the
subject property.
These premises remaining as they are, it is clear that petitioners are not entitled to the just
compensation they seek through the present complaint. Under Article 448 of the Civil Code,
the builder in bad faith on the land of another loses what is built without right to
indemnity. [14] Petitioners were in bad faith when they built the structures as they had known
that the subject property did not belong to them. Are these conclusions though sufficient to
justify dismissal on the ground of res judicata ?
The doctrine of res judicata has two aspects. [15] The first, known as "bar by prior judgment,"
or 'estoppel by verdict, is the effect of a judgment as a bar to the prosecution of a second
action upon the same claim, demand or cause of action. The second, known as
"conclusiveness of judgment" or otherwise known as the rule of auter action pendant, ordains
that issues actually and directly resolved in a former suit cannot again be raised in any future
case between the same parties involving a different cause of action. [16] It has the effect of
preclusion of issues only. [17]
It appears that both the RTC and the Court of Appeals deemed that the first aspect of res
judicata , 'bar by prior judgment, applied in this case. [18] We hold that it is the second kind
of res judicata , 'conclusiveness of judgment, that barred the instant complaint. As previously
explained by this Court:
[C]onclusiveness of judgment ' states that a fact or question which was in
issue in a former suit and there was judicially passed upon and determined by
a court of competent jurisdiction, is conclusively settled by the judgment
therein as far as the parties to that action and persons in privity with them are
concerned and cannot be again litigated in any future action between such
parties or their privies, in the same court or any other court of concurrent
jurisdiction on either the same or different cause of action, while the judgment
remains unreversed by proper authority. It has been held that in order that a
judgment in one action can be conclusive as to a particular matter in another
action between the same parties or their privies, it is essential that the issue
be identical. If a particular point or question is in issue in the second action,
and the judgment will depend on the determination of that particular point or
question, a former judgment between the same parties or their privies will be
final and conclusive in the second if that same point or question was in issue
and adjudicated in the first suit. Identity of cause of action is not required but
merely identity of issues. [19]
Stated differently, any right, fact, or matter in issue directly adjudicated or necessarily involved
in the determination of an action before a competent court in which judgment is rendered on
the merits is conclusively settled by the judgment therein and cannot again be litigated
between the parties and their privies whether or not the claim, demand, purpose, or subject
matter of the two actions is the same. [20]
Indeed, in cases wherein the doctrine of 'conclusiveness of judgment is applicable,
there is, as in the two cases subject of this petition, identity of parties but not of causes of
action. The judgment is conclusive in the second case, only as to those matters actually and
directly controverted and determined, and not as to matters merely involved
therein. [21] Herein, the fact that petitioners were in possession in bad faith as early as 1965
20
was already determined in the first case. In order that they could successfully litigate their petitioners' alonewere had been in possession of the property in bad faith. We are not wont to
second cause of action, petitioners will have to convince that they were in possession in good ascribe points of fact in the said decision which were not expressly established or affirmed.
faith at the time they built their structures, an argument that deviates the previous
determination made in the final judgment that resolved the first case.
 

 
WHEREFORE, the petition is DENIED. Costs against petitioners.

The reasons for establishing the principle of 'conclusiveness of judgment are

founded on sound public policy, and to grant this petition would have the effect of unsettling  
this well-settled doctrine. It is allowable to reason back from a judgment to the basis on which
it stands, upon the obvious principle that where a conclusion is indisputable, and could have
been drawn only from certain premises, the premises are equally indisputable with the
conclusion. [22] When a fact has been once determined in the course of a judicial proceeding, SO ORDERED.
and a final judgment has been rendered in accordance therewith, it cannot be again litigated
between the same parties without virtually impeaching the correctness of the former decision,
which, from motives of public policy, the law does not permit to be done. [23]  

  THIRD DIVISION

Contrary to the holdings of both courts below, in the case of Mendiola v. Court of
Appeals [24] which they relied upon, this Court observed that the causes of action in the two
cases involved were so glaringly similar that it had to affirm the dismissal of the second case
by virtue of the 'bar of former judgment rule.
One final note. Petitioners, in their Reply before this Court, raise the argument that
assuming that they were builders in bad faith, respondents should likewise be considered as
being in bad faith, as the structures were built with their knowledge and without their
opposition. That being the case, Article 453 of the Civil Code would apply to the effect both
parties could thus be deemed as being in good faith. Accordingly, petitioners would still be
entitled to compensation on the structures they built.
[G.R. NO. 182426 : February 13, 2009]
ZENAIDA POLANCO, CARLOS DE JESUS, AVELINO DE JESUS, BABY DE JESUS, LUZ
DE JESUS, and DEMETRIO SANTOS, Petitioners, v. CARMEN CRUZ, represented by her
attorney-in-fact, VIRGILIO CRUZ, Respondent.
DECISION
YNARES-SANTIAGO, J.:
This Petition for Review on Certiorari1 assails the August 28, 2007 Decision2 of the Court of
Appeals in CA-G.R. CV No. 75079, setting aside the Order 3 of Branch 17 of the Regional
Trial Court of Malolos in Civil Case No. 542-M-2000, which dismissed respondent's
Complaint4 for failure to prosecute. Also assailed is the March 28, 2008 Resolution 5 denying
petitioners' Motion for Reconsideration. 6

We are disinclined to accord merit to this argument. For one, it was raised for the
first time in the Reply before this Court. It was not even raised in the Complaint filed with the
RTC, hence it could not be said that petitioners' cause of action is grounded on Article 453.
Issues not previously ventilated cannot be raised for the first time on appeal [25], much less
when first proposed in the reply to the comment on the petition for review. Even assuming the
issue is properly litigable, the Court can find no basis to declare that respondents were in bad
faith as a matter of fact. Certainly, nothing in the first decision of the Court of Appeals
conclusively establishes that claim, its factual determination being limited to the finding that
The facts are as follows:
Respondent Carmen Cruz, through her attorney-in-fact, Virgilio Cruz, filed a complaint for
damages7 against petitioners for allegedly destroying her palay crops. While admitting that
petitioners own the agricultural land she tilled, respondent claimed she was a lawful tenant
thereof and had been in actual possession when petitioners maliciously filled so with soil and
palay husk on July 1 and 2, 2000. Respondent prayed that petitioners be held liable for actual

21
damages, moral damages, exemplary damages, litigation expenses and attorney's fees, and
costs of the suit.
Petitioners filed a Motion to Dismiss,8 which was denied by the trial court in an Order9 dated
December 4, 2000. It held that it has jurisdiction over the case because the allegations in the
Complaint made a claim for damages, and not an agrarian dispute which should be referred
to the Department of Agrarian Reform Adjudication Board (DARAB); and that the Complaint
was properly filed because the Certification of Non-forum Shopping was signed by
respondent's attorney-in-fact.
Petitioners simultaneously filed an Answer 10 to the complaint and a Motion for
Reconsideration11 of the December 4, 2000 Order. However, the court a quo denied the
motion for lack of merit in an Order12 dated September 10, 2001. On January 9, 2002, the trial
court issued an Order13 dismissing the case due to respondent's failure to prosecute.
With the denial 14 of her Motion for Reconsideration, 15 respondent interposed an appeal to the
Court of Appeals which rendered the assailed Decision dated August 28, 2007, the
dispositive portion of which states:
WHEREFORE, the appeal is hereby GRANTED. Accordingly, the Order, dated January 9,
2002, of the RTC [Branch 17, Malolos] is hereby REVERSED and SET ASIDE. Plaintiff-
appellant's Complaint is hereby REINSTATED and the case is hereby REMANDED to the
RTC [Branch 17, Malolos] for further proceedings.
SO ORDERED.16
The Court of Appeals ruled that the trial court erred in finding that the parties failed to take
necessary action regarding the case because the records plainly show that petitioners filed
an Answer to the complaint, while respondent filed an Opposition to the Motion for
Reconsideration with Manifestation Re: Answer of Defendants. 17
With regard to the order of the trial court dismissing the complaint on the ground of failure to
prosecute, the appellate court held that the previous acts of respondent do not manifest lack
of interest to prosecute the case; that since filing the Complaint, respondent filed an
Opposition to petitioners' Motion to Dismiss, an Answer to petitioners' counterclaim, and a
Comment to petitioners' Motion for Reconsideration; that respondent did not ignore
petitioners' Motion to Dismiss nor did she repeatedly fail to appear before the court; that no
substantial prejudice would be caused to petitioners and that strict application of the rule on
dismissal is unjustified considering the absence of pattern or scheme to delay the disposition
of the case on the part of respondent; and that justice would be better served if the case is
remanded to the trial court for further proceedings and final disposition.
On March 28, 2008, the Court of Appeals denied petitioners' Motion for Reconsideration;
hence, this petition based on the following ground:
WHETHER OR NOT THE DECISION OF THE HONORABLE COURT OF APPEALS IN C.A.-
G.R. CV No. 75079, NULLIFYING AND/OR REVERSING AND/OR SETTING ASIDE THE
ORDERS DATED JANUARY 9, 2002 AND MAY 8, 2002 ISSUED BY THE RTC-BULACAN
IN CIVIL CASE No. 542-M-00, IS CONTRARY TO LAW AND PREVAILING
JURISPRUDENCE.
Petitioners allege that respondent failed to comply with the mandate of the 1997 Rules of
Civil Procedure to promptly move for the setting of the case for pre-trial; that "heavy
pressures of work" does not justify the failure to move for the setting of the case for pre-trial;
that the allegations in the Complaint which pertain to respondent's status as a tenant of Elena
C. De Jesus amount to forum shopping that would extremely prejudice them. Petitioners thus
pray for the nullification of the Decision and Resolution of the Court of Appeals and the
affirmation of the dismissal of the Complaint by the trial court.
The petition lacks merit.
The Court of Appeals correctly noted that petitioners raised the matter of respondent's
alleged forum shopping for the first time only in their Motion for Reconsideration. Issues not
previously ventilated cannot be raised for the first time on appeal, 18 much less when first
raised in the motion for reconsideration of a decision of the appellate court.
At any rate, this Court does not find respondent's allegations in her complaint in Civil Case
No. 542-M-00 to be constitutive of the elements of forum-shopping. Respondent merely
described herself as a tenant of petitioners and mentioned that there was an unlawful
detainer case19 involving the parcel of land which is also involved in the instant civil case for
damages.
There is forum-shopping when as a result of an adverse decision in one forum, or in
anticipation thereof, a party seeks a favorable opinion in another forum through means other
than appeal or certiorari. Forum-shopping exists when two or more actions involve the same
transactions, essential facts, and circumstances; and raise identical causes of action, subject
matter, and issues. Still another test of forum-shopping is when the elements of litis
pendencia are present or where a final judgment in one case will amount to res judicata in
another - whether in the two or more pending cases, there is an identity of (a) parties (or at
least such parties as represent the same interests in both actions), (b) rights or causes of
action, and (c) reliefs sought.20
Although there is an identity of some of the parties in the instant case for damages and the
unlawful detainer case, there is, however, no identity of reliefs prayed for. The former is for
recovery of damages allegedly caused by petitioners' acts on respondent's palay crops; while
the latter case involved possessory and tenancy rights of respondent. As such, respondent
did not violate the rule on forum-shopping.
Section 1, Rule 18 of the 1997 Rules of Civil Procedure imposes upon the plaintiff the duty to
promptly move ex parte to have the case set for pre-trial after the last pleading has been
22
served and filed. Moreover, Section 3, Rule 17 21 provides that failure on the part of the Measures, which took effect on August 16, 2004, aims to abbreviate court proceedings,
plaintiff to comply with said duty without any justifiable cause may result to the dismissal of ensure prompt disposition of cases and decongest court dockets, and to further implement
the complaint for failure to prosecute his action for an unreasonable length of time or failure the pre-trial guidelines laid down in Administrative Circular No. 3-99 28 dated January 15,
to comply with the rules of procedure.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ 1999. A.M. No. 03-1-09-SC states that: "Within five (5) days from date of filing of the
reply,29 the plaintiff must promptly move ex parte that the case be set for pre-trial
conference.30 If the plaintiff fails to file said motion within the given period, the Branch COC
It must be stressed that even if the plaintiff fails to promptly move for pre-trial without any
shall issue a notice of pre-trial." As such, the clerk of court of Branch 17 of the Regional Trial
justifiable cause for such delay, the extreme sanction of dismissal of the complaint might not
Court of Malolos should issue a notice of pre-trial to the parties and set the case for pre-trial.
be warranted if no substantial prejudice would be caused to the defendant, and there are
special and compelling reasons which would make the strict application of the rule clearly
unjustified.22 WHEREFORE, the Petition for Review on Certiorari is DENIED. The August 28, 2007
Decision of the Court of Appeals in CA-G.R. CV No. 75079, setting aside the Order of Branch
17 of the Regional Trial Court of Malolos dismissing Civil Case No. 542-M-2000 for
In the instant case, the Court of Appeals correctly held that the dismissal of respondent's
respondent's failure to prosecute, and its March 28, 2008 Resolution denying petitioners'
complaint is too severe a sanction for her failure to file a motion to set the case for pre-trial. It
Motion for Reconsideration are AFFIRMED. The clerk of court of Branch 17 of the Regional
must be pointed out that respondent prosecuted her action with utmost diligence and with
Trial Court of Malolos is DIRECTED to issue a notice of pre-trial to the parties.
reasonable dispatch since filing the complaint - she filed an opposition to petitioners' motion
to dismiss the complaint; a comment to petitioners' motion for reconsideration of the
December 4, 2000 Order of the trial court; and an Answer to Counterclaim of petitioners . SO ORDERED.
When the trial court issued an order dismissing the case, respondent filed without delay a
motion for reconsideration; and upon its denial, she immediately filed a Notice of
THIRD DIVISION
Appeal.23 Moreover, contrary to petitioners' claim that respondent was silent for one year
since she filed her Answer to Counterclaim until the trial court's dismissal order, 24 records
show that between said period, both parties and the trial court were threshing out petitioners' [G.R. NO. 181020 : November 25, 2009]
motion for reconsideration of the December 4, 2000 Order.
JAZMIN L. ESPIRITU and PORFIRIO LAZARO, JR., Petitioners, v. VLADIMIR G. LAZARO,
While "heavy pressures of work" was not considered a persuasive reason to justify the failure MA. CORAZON S. LAZARO, MA. ESPERENZA S. LAZARO, VLADI MIGUEL S. LAZARO,
to set the case for pre-trial in Olave v. Mistas,25 however, unlike the respondents in the said CHINA BANKING CORPORATION, and WINIFRIDA B. SISON, Respondents.
case, herein respondent never failed to comply with the Rules of Court or any order of the
trial court at any other time. Failing to file a motion to set the case for pre-trial was her first
DECISION
and only technical lapse during the entire proceedings. Neither has she manifested an
evident pattern or a scheme to delay the disposition of the case nor a wanton failure to
observe the mandatory requirement of the rules. Accordingly, the ends of justice and fairness NACHURA, J.:
would best be served if the parties are given the full opportunity to litigate their claims and the
real issues involved in the case are threshed out in a full-blown trial. Besides, petitioners
would not be prejudiced should the case proceed as they are not stripped of any affirmative This Petition for Review on Certiorari assails the June 29, 2007 Decision1 of the Court of
defenses nor deprived of due process of law. Appeals (CA), which affirmed the dismissal of the case for failure to prosecute. Likewise
assailed in this petition is its Resolution dated December 19, 2007, which denied the motion
for reconsideration of the said decision.
This is not to say that adherence to the Rules could be dispensed with. However, exigencies
and situations might occasionally demand flexibility in their application. 26 Indeed, on several
occasions, the Court relaxed the rigid application of the rules of procedure to afford the On June 29, 1998, petitioners Jazmin L. Espiritu and Porfirio Lazaro, Jr., together with a
parties opportunity to fully ventilate the merits of their cases. This is in line with the time- certain Mariquit Lazaro, filed a complaint for recovery of personal property with damages and
honored principle that cases should be decided only after giving all parties the chance to preliminary attachment against respondents, Vladimir G. Lazaro, Ma. Corazon S. Lazaro, Ma.
argue their causes and defenses. Technicality and procedural imperfection should thus not Esperanza S. Lazaro, Vladi Miguel S. Lazaro, China Banking Corporation, and Winifrida B.
serve as basis of decisions.27 Sison. Petitioners, Mariquit Lazaro and respondent Vladimir Lazaro are the legitimate
children and only surviving heirs of the late Porfirio Lazaro, Sr. who died on March 13, 1998.
Respondent Ma. Corazon Lazaro is the wife of Vladimir Lazaro, while respondents Ma.
Finally, A.M. No. 03-1-09-SC or the new Guidelines To Be Observed By Trial Court Judges Esperanza Lazaro and Vladi Miguel Lazaro are their children.
And Clerks Of Court In The Conduct Of Pre-Trial And Use Of Deposition-Discovery

23
The complaint alleged that (1) the deceased had two dollar time deposit accounts with
respondent China Banking Corporation in the amounts of US$117,859.99 and
US$163,492.32; (2) petitioners demanded from respondents Vladimir and Ma. Corazon
Lazaro their share in the said amounts but the latter told them that the deposits had already
been transferred to their children; (3) they requested respondent Winifrida Sison, branch
manager of the bank, to freeze the time deposit accounts in the names of said children; (4)
respondent Sison subsequently replied that there were no existing accounts under the
children's names; (5) petitioners then requested respondent Sison to apprise them of the
status of the two dollar time deposit accounts; and (6) respondent Sison refused to comply,
saying that, unless there is a court order, she may not give out the details of the time deposit
accounts because of the Bank Secrecy Law. Petitioners prayed that respondents be ordered
to pay them their three-fourths share in the time deposit accounts or US$211,014.23, with
interest, P1,000,000.00 as moral damages, P1,000,000.00 as exemplary
damages, P300,000.00 as attorney's fees and costs of the suit.2
The trial court granted the prayer for preliminary attachment and the corresponding writ was
subsequently issued after petitioners posted a bond. Five real properties were levied
upon.3 Respondents Lazaro filed an urgent motion to set aside and discharge the
attachment,4 which was opposed by petitioners. They, likewise, filed a motion to dismiss 5 the
complaint for failure to state a cause of action. Respondent Sison also filed a motion to
dismiss6 on the same ground.
On February 12, 1999, the trial court denied the motion to discharge the attachment and the
two motions to dismiss and directed respondents to file their answer. Respondents Lazaro
and Sison filed their respective motions for reconsideration, 7 which were again opposed by
petitioners.8 In an Omnibus Order dated January 20, 2000, the trial court partially granted
respondents Lazaro's prayer for a partial discharge of their attached properties.
On March 31, 2000, respondent Sison filed her Answer with Counterclaim and Crossclaim.9
Respondents Lazaro questioned the February 12, 1999 Order in a petition for certiorari filed
with the CA. When the latter did not rule favorably, they elevated the case to this Court. In a
Resolution dated January 21, 2002, this Court denied the petition. The Resolution became
final and executory on July 17, 2002.10
On July 19, 2002, respondents Lazaro filed a Cautionary Answer with Manifestation and a
Motion to File a Supplemental/Amended Answer. On August 5, 2002, petitioners received a
copy of the cautionary answer, pertinent portions of which are quoted as follows'
3. Undersigned counsel, on account of his heavy workload in equally important cases, would
be needing more time to file herein defendants' Answer. In the meantime however, by way of
a Cautionary Answer, herein defendants hereby manifest that they are adopting subject to
further qualification part of co-defendant Sison's Answer dated March 29, 2000, more
particularly, portions of sub-headings I. Denials and Admissions, II. Special and Affirmative
Defenses and III. Counterclaim which are personal, relevant and pertinent to their defense.
4. Nonetheless, herein defendants reserve their right to file a Supplemental/Amended Answer
in due time;
WHEREFORE, in view of the foregoing, it is respectfully prayed that the instant Cautionary
Answer with Manifestation be admitted and herein defendants given a twenty (20)-day period
within which to file a Supplemental/Amended Answer.11
On July 24, 2003, the trial court dismissed the complaint due to petitioners' failure to
prosecute for an unreasonable length of time. The court noted that despite the lapse of time
since respondents filed a cautionary answer, petitioners failed to file a motion to set the case
for pre-trial, which under Section 1, Rule 18 of the 1997 Rules of Civil Procedure is
petitioners' duty as plaintiffs. 12 The trial court denied petitioners' Motion for Reconsideration of
the said order.13 ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
On June 29, 2007, the CA affirmed the dismissal of the case. 14 Citing Olave v. Mistas,15 the
CA stressed that it is plaintiff's duty to promptly set the case for pre-trial, and that failure to do
so may result in the dismissal of the case. According to the CA, petitioners should not have
waited for a supplemental answer or an order by the trial court and done nothing for more
than 11 months from the receipt of the last pleading.
The CA also denied petitioners' motion for reconsideration of the said decision; 16 hence, this
petition.
Petitioners assign the following errors to the CA:
A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE
RULING OF THE SUPREME COURT IN OLAVE v. MISTAS [TO THE] CASE.
B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT RULING THAT
THE CASE WAS NOT YET RIPE FOR PRE-TRIAL.
C. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISMISSING THE
APPEAL BASED ON SECTION 3, RULE 17 OF THE RULES OF COURT.
D. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT TAKING
COGNIZANCE OF SECTION 1.2 OF A.M. NO. 03-1-09-SC, IN EFFECT SINCE AUGUST
16, 2004.17
On the grounds of equity, due process and fair play, petitioners urge the Court to set aside
technicalities and to allow the case to proceed and be resolved on the merits. They, likewise,
point out that, in accordance with the Court's pronouncement in Olave v. Mistas, 18 dismissal
of their case is not warranted since no substantial prejudice was caused to respondents, and
strong and compelling reasons justify a liberal application of the rule. They explain that the
24
reason why they did not move to set the case for pre-trial was that the case was not yet ripe
for it. They point out that the trial court had not yet resolved respondents' motion for
extension to file a supplemental answer and respondents had not yet filed their supplemental
answer. Petitioners stress that the delay was, therefore, not due to their inaction; hence, the
dismissal of their case was not justified.
Further, petitioners cite A.M. No. 03-1-09-SC (Guidelines to be Observed by Trial Court
Judges and Clerks of Court in the Conduct of Pre-Trial and Use of Deposition-Discovery
Measures) which allegedly provides that it is not solely the duty of the plaintiff to set the case
for pre-trial as the Clerk of Court is likewise directed to issue the notice of pre-trial should the
plaintiff fail to do so.
defendant resulting from the failure of the plaintiff to comply with the rules. 20 The failure of the
plaintiff to prosecute the action without any justifiable cause within a reasonable period of
time will give rise to the presumption that he is no longer interested in obtaining the relief
prayed for.21
In this case, there was no justifiable reason for petitioners' failure to file a motion to set the
case for pre-trial. Petitioners' stubborn insistence that the case was not yet ripe for pre-trial is
erroneous. Although petitioners state that there are strong and compelling reasons justifying
a liberal application of the rule, the Court finds none in this case. The burden to show that
there are compelling reasons that would make a dismissal of the case unjustified is on
petitioners, and they have not adduced any such compelling reason.

The petition has no merit. WHEREFORE, the petition is DENIED DUE COURSE. The Court of Appeals Decision dated
June 29, 2007 and Resolution dated December 19, 2007 are AFFIRMED.
In every action, the plaintiffs are duty-bound to prosecute their case with utmost diligence and
with reasonable dispatch to enable them to obtain the relief prayed for and, at the same time, SO ORDERED.
to minimize the clogging of the court dockets.19 Parallel to this is the defendants' right to have
a speedy disposition of the case filed against them, essentially, to prevent their defenses
G.R. No. 187640               June 15, 2011
from being impaired.

PHILIPPINE NATIONAL BANK, Petitioner,

Since the incidents occurred prior to the effectivity of A.M. No. 03-1-09-SC on August 16,
vs.
2004, the guidelines stated therein should not be made applicable to this case. Instead, the
THE SPS. ANGELITO PEREZ and JOCELYN PEREZ, Respondents.
prevailing rule and jurisprudence at that time should be utilized in resolving the case.

x-----------------------x
Section 1 of Rule 18 of the Rules of Court imposes upon the plaintiff the duty to set the case
for pre-trial after the last pleading is served and filed. Under Section 3 of Rule 17, failure to
comply with the said duty makes the case susceptible to dismissal for failure to prosecute for G.R. No. 187687
an unreasonable length of time or failure to comply with the rules.
SPS. ANGELITO PEREZ and JOCELYN PEREZ, Petitioners,
Respondents Lazaro filed the Cautionary Answer with Manifestation and Motion to File a vs.
Supplemental/Amended Answer on July 19, 2002, a copy of which was received by PHILIPPINE NATIONAL BANK, Respondent.
petitioners on August 5, 2002. Believing that the pending motion had to be resolved first,
petitioners waited for the court to act on the motion to file a supplemental answer. Despite the
DECISION
lapse of almost one year, petitioners kept on waiting, without doing anything to stir the court
into action.
VELASCO, JR., J.:
In any case, petitioners should not have waited for the court to act on the motion to file a
supplemental answer or for the defendants to file a supplemental answer. As previously Before Us are two Petitions for Review on Certiorari under Rule 45 docketed as G.R. No.
stated, the rule clearly states that the case must be set for pre-trial after the last pleading is 187640 and G.R. No. 187687, seeking the review of the Decision and Resolution of the Court
served and filed. Since respondents already filed a cautionary answer and [petitioners did not of Appeals (CA) dated October 23, 2008 and April 28, 2009, respectively, in CA-G.R. SP No.
file any reply to it] the case was already ripe for pre-trial. 96534. We consolidated the two cases as they involve identical parties, arose from the same
facts, and raise interrelated issues.
It bears stressing that the sanction of dismissal may be imposed even absent any allegation
and proof of the plaintiff's lack of interest to prosecute the action, or of any prejudice to the The Facts

25
In 1988, spouses Angelito Perez and Jocelyn Perez (Spouses Perez) obtained a revolving
credit line from Philippine National Bank’s (PNB’s) branch in Cauayan City, Province of
Isabela. The credit line was secured by several chattel mortgages over palay stocks inventory
and real estate mortgages over real properties.
Sometime in 2001, Spouses Perez defaulted on their financial obligations, prompting PNB to
institute extra-judicial foreclosure proceedings over the aforementioned securities on
November 13 of that year. On November 19, 2001, the sheriff instituted a Notice of Extra-
Judicial Sale for the mortgaged properties by public auction on December 20, 2001.
Meanwhile, on November 26, 2001, Spouses Perez filed an Amended Complaint for Release
or Discharge of Mortgaged Properties, Breach of Contract, Declaration of Correct Amount of
Obligation, Injunction, Damages, Annulment of Sheriff’s Notice of Extra-Judicial Sale, with a
Prayer for the Issuance of a Preliminary Mandatory Injunctive Writ and a Temporary
Restraining Order docketed as Civil Case No. 20-1155. 1
At the hearing of the application for the issuance of a writ of preliminary mandatory injunction
on April 19, 2002, Spouses Perez and their counsel failed to appear. As a result, the prayer
for injunctive relief was denied.
Similarly, at the pre-trial conference scheduled on September 19, 2002, Spouses Perez and
their counsel again failed to appear. Spouses Perez alleged that they previously filed a
Motion for Postponement dated August 28, 2002. On the same date, the trial court issued an
Order denying the Motion for Postponement and, accordingly, dismissed the case.
Spouses Perez then filed a Motion for Reconsideration which was subsequently denied. They
also filed a Second Motion for Reconsideration dated January 16, 2003 which was also
denied by the trial court.
After this, Spouses Perez filed a Notice of Appeal. It was also denied by the trial court in an
Order dated April 11, 2003 for being filed out of time. Spouses Perez then filed a Motion for
Reconsideration dated April 29, 2003 seeking the reconsideration of the Order dismissing the
appeal.
The Motion for Reconsideration dated April 29, 2003 was originally set for hearing on July 30,
2003. However, Spouses Perez filed five (5) motions to postpone the hearing. The trial court
granted the first four (4) motions but denied the fifth one. Spouses Perez filed a Motion for
Reconsideration of the Order denying the fifth Motion for Postponement which was also
subsequently denied.
Consequently, Spouses Perez appealed the denial of their Motion for Reconsideration to the
CA. The petition was docketed as CA-G.R. SP No. 85491. On January 25, 2005, the CA
rendered a Decision denying the petition filed by Spouses Perez. It reasoned:
Neither did respondent court gravely abuse its discretion in resolving to dismiss Civil Case
No. 20-1155 for failure of the plaintiffs and their time, allegedly because their counsel had to
attend a pre-trial hearing in another case. True is it that procedural rules may be relaxed to
relieve a litigant of an injustice not commensurate with the degree of his noncompliance with
the procedure required. But equally true is it that the law mandates that the appearance of
parties at the pre-trial conference is mandatory. Here, as borne out by the records of this
case, counsel for petitioners received the notice of pre-trial conference in another case a long
while before they were notified of the pre-trial conference in the case at bench. As shown in
the notice dated August 15, 2002, counsel already knew that the pre-trial conference in the
present case was set for September 19, 2002. By the time he received the notice of pre-trial
hearing in the case at bench on August 22, 2002, counsel thus must have seen and realized
the obvious conflict in schedules between the two cases. However, instead of taking timely
measures to prevent an impending snafu, it took counsel more than a week to file a motion
for postponement of the pre-trial conference in Civil Case No. 20-1155. Worse, although
received by respondent court on September 3, 2002, that motion did not contain any request
that said motion be scheduled for hearing. Equally distressing, it is not clearly shown that the
requirement on notice to the other party was likewise complied with. Counsel evidently failed
to take into account the fact that, just like him, the court must need also to calendar its own
cases. Further, as stressed by respondent court in its challenged order of September 19,
2002, petitioners’ counsel works for a law firm staffed by several lawyers, and any of these
lawyers could have represented petitioners at the pre-trial conference in this case. That
counsel had to allegedly appear in another case (which purportedly explained his inability to
appear in the present case) is a stale, banal, and prosaic excuse. Some such flimsy
ratiocination, added to counsel’s filing of an erroneous pleading (the second motion for
reconsideration), which because it is a prohibited pleading, unfortunately did not toll the
running of the prescriptive period for filing a notice of appeal, did prove fatal to petitioner’s
cause. Settled is the rule that parties are bound by the action or inaction of their counsel; this
rule extends even to the mistakes and simple negligence committed by their counsel.
Simply put, petitioners trifled with the mandatory character of a pre-trial conference in the
speedy disposition of cases. Petitioners should have known that pre-trial in civil actions has
been peremptorily required these many years. It is a procedural device intended to clarify and
limit the basic issues between the parties and paves the way for a less cluttered trial and
resolution of the case. Its main objective is to simplify, abbreviate and expedite the trial, or,
propitious circumstance permitting (as when the parties can compound or compromise their
differences), even to totally dispense with it altogether. Thus, it should never be taken lightly
– or for granted! A party trifles with it at his peril.
UPON THE VIEW WE TAKE OF THIS CASE, THUS, the petition at bench must be, as it
hereby, is DENIED and consequently DISMISSED, for lack of merit. Costs shall be assessed
against the petitioners.
SO ORDERED.2
26
Spouses Perez filed a Motion for Reconsideration of the aforementioned decision.
Surprisingly, on April 14, 2005, the CA issued an Amended Decision 3 granting the Motion for
Reconsideration citing that the higher interest of substantial justice should prevail and not
mere technicality. The dispositive part of the Amended Decision reads:
WHEREFORE, finding merit in the motion for reconsideration, we hereby resolve, to wit:
(1) To SET ASIDE and VACATE our Decision of January 25, 2005;
(2) To GRANT this petition. Consequently we hereby direct the annulment or
invalidation of the following orders issued by the respondent court, to wit:
1. The April 11, 2003 order, denying petitioners’ notice of appeal; and the
March 17, 2004 order, denying petitioners’ motion for reconsideration
thereon;
2. The September 19, 2002 order, denying petitioners’ motion for
postponement in Civil Case No. 20-1155 entitled "Sps. Angelito A. Perez
v. Philippine National Bank, et al." thereby resulting in the dismissal of
the said case;
3. The January 6, 2003 order, denying petitioners’ motion for
reconsideration in the above mentioned case; and
4. The February 7, 2003 order, denying petitioners’ second motion for
reconsideration in the above stated case.
(3) To REINSTATE Civil Case No. 20-1155 in the docket of respondent court, the
Regional Trial Court of Cauayan City, Branch 20, which is now hereby ordered to
conduct the pre-trial therein, and thereafter to proceed to try the case on the merits.
Without costs.
SO ORDERED.4
Accordingly, the case was remanded to the trial court. On January 20, 2006, the trial court
issued an Order setting the case for hearing on March 8, 2006. The said Order reads in full:
On October 20, 2005, [Spouses Perez] filed their motion to require [PNB] to submit [its]
statement of account for the period beginning 1995 to 2000.
The motion was heard on November 7, 2005 but only the counsel for [Spouses Perez]
appeared. On December 9, 2005, [PNB] also filed a motion for the production or inspection of
books of accounts regarding payments in the years 1997 to 2000 and thereafter, if any. The
same motion was heard on December 15, 2005 but again, despite due notice, only the
counsel for [Spouses Perez] appeared and reiterated his motions.
WHEREFORE, there being no opposition to the twin motion of [Spouses Perez], the same
are hereby granted. Accordingly, let this case be set for hearing on March 8, 2006 at 8:30
o’clock in the morning. [PNB] is hereby directed to prepare and complete within thirty (30)
days from receipt of this order a statement of account for [Spouses Perez] covering payments
made for the period beginning 1995 to 2000, allowing [Spouses Perez] or their duly
authorized representatives to inspect the same at the bank premises during regular banking
hours.
SO ORDERED.5
PNB, however, failed to receive a copy of the aforementioned order and was, thus, unable to
attend the hearing on March 8, 2006. Questionably, on said date, the trial court issued an
Order allowing Spouses Perez to adduce evidence and considered the hearing as a pre-trial
conference, to wit:
WHEREFORE, for failure to appear in today’s pre-trial and for failure to comply with the order
of this Court dated January 20, 2006, [Spouses Perez] are hereby allowed to adduce
evidence before the Branch Clerk of Court and the Branch Clerk of Court is ordered to submit
her report within ten (10) days.
SO ORDERED.6
On March 15, 2006, PNB filed a Motion for Reconsideration7 of the said Order.
Nevertheless, on July 5, 2006, the trial court decided in favor of Spouses Perez. In its
Decision, the trial court denied PNB’s Motion for Reconsideration but failed to mention such
denial in the dispositive portion of the Decision, viz:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Declaring that due and full payments were made by [Spouses Perez] on their
principal obligation to [PNB] including interest and directing the release and
discharge of all the properties covered by the real estate mortgages executed by
[Spouses Perez];
27
 2. Declaring the Sheriff’s Notice of Extrajudicial Sale as null and void, and enjoining
defendant from foreclosing any and all of the properties mortgaged by [Spouses
Perez] as collateral for the said loan obligations;
3. Ordering [PNB] to pay [Spouses Perez] the sum of:
a. ONE HUNDRED FORTY FIVE MILLION ONE HUNDRED
SEVENTEEN THOUSAND THREE HUNDRED SIX PESOS AND SIXTY
SEVEN CENTAVOS (PHP145,117,306.67) representing the amount
overpaid by [Spouses Perez] under the revolving credit loan facility and
promissory notes executed between the parties;
b. TWO MILLION PESOS (PHP2,000,000.00) as moral damages;
c. ONE MILLION FIVE HUNDRED THOUSAND PESOS as Exemplary
damages;
[d.] ONE MILLION PESOS (PHP1,000,000.00) as Attorney’s Fees and
[e.] Costs of suit.
SO ORDERED.8
PNB again filed a Motion for Reconsideration dated July 24, 2006 but due to certain reasons,
the counsel for PNB failed to send a copy of the said motion to the trial court. As a result, the
trial court denied the Motion for Reconsideration for having been filed outside the
reglementary period and concluded that the Decision already became "final and executory by
operation of law."9 Accordingly, the trial court issued an Order of Execution dated August 14,
2006.10 The very next day, a Writ of Execution was issued to implement the aforesaid order
and to demand payment from PNB.
On August 15, 2006, PNB filed a Petition for Relief from Judgment/Order of Execution 11 with
a prayer for the issuance of a writ of preliminary injunction, alleging that the failure to file the
Motion for Reconsideration was due to mistake and/or excusable negligence. Afterwards, on
August 16, 2006, the trial court issued an Order denying the prayer for preliminary injunction.
Also, on August 17, 2006, the trial court issued an Order annulling the certificates of title
issued to PNB covering the properties subject of the case and directed the Register of Deeds
of Isabela to issue new certificates of title in the names of Spouses Perez.
On October 18, 2006, PNB filed a Petition for Certiorari (with Prayer for the Issuance of an
Ex-Parte Temporary Restraining Order/Writ of Preliminary Injunction) 12 before the CA
docketed as CA-G.R. SP No. 96543 seeking the annulment of the Order of Execution dated
August 14, 2006, the Writ of Execution dated August 15, 2006, Order dated August 16, 2006
and the Order dated August 17, 2006. Similarly, on October 30, 2006 and November 6, 2006,
PNB filed a Supplement to the Petition for Certiorari (with Urgent Prayer for the Issuance of
an Ex-Parte Temporary Restraining Order/Writ of Preliminary Injunction) 13 and an Urgent
Motion for the Issuance of an Ex-Parte Temporary Restraining Order with Supplement to
Petition,14 respectively.
Consequently, the CA issued a Resolution dated November 7, 2006, which was received by
PNB on November 8, 2006, granting the prayer for a temporary restraining order (TRO) and,
likewise, issued a Temporary Restraining Order on the same date. The Resolution reads:
On account of the extreme urgency of the matter and in order not to frustrate the ends of
justice, or to render the issues raised herein moot and academic, this Court, pending the
resolution of the instant petition, hereby resolves to GRANT [PNB’s] prayer for issuance of a
temporary restraining order within a period of sixty (60) days from notice hereof or until earlier
terminated by this Court, thereby directing public respondent, or any person acting for and on
his behalf, to CEASE and DESIST from IMPLEMENTING the assailed Orders dated August
16 and 17, 2006 in Civil Case No. Br. 19-1155 or otherwise ENFORCING the Order of
Execution dated August 14, 2006 or the Writ of Execution dated August 15, 2006 in said
case.
[Spouses Perez] are, in the meantime, required to file their COMMENT (and not a motion to
dismiss) on the petition within ten (10) days from notice hereof and SHOW cause within the
same period why a writ of preliminary injunction should not issue.
SO ORDERED.15
Despite the issuance of the TRO, Spouses Perez were able to garnish Two Million Six
Hundred Seventy-Six Thousand One Hundred Forty Pesos and Seventy Centavos (Php
2,676,140.70) from PNB’s account with Equitable PCI Bank (EPCIB) on the same date the
TRO was issued, November 7, 2006. In a letter dated November 8, 2006, from Atty. Gerardo
I. Banzon, EPCIB’s Head of Legal Advisory and Research Department, Legal Services
Division, informed PNB regarding this, viz:
As much as we would like to heed to your request for the lifting and that a STOP PAYMENT
ORDER of the check issued in favor of the Spouses Perez, be issued immediately, we regret
to inform you that Sheriff Asirit, together with the Spouses Perez, went to our Salcedo St. –
Legaspi Village at about 10:30am yesterday to pick-up the check. Proceeds of the said check
were credited to the account of the Spouses Perez, who has an account with our Cauayan –
Isabela branch, before noon yesterday. Regrettably, we were only informed of the existence
of the TRO at about 4:49pm yesterday. Moreover, we only received the copy of the TRO itself
at 2:07pm today. Sad to say but all matters are already moot and academic. 16 (Emphasis
supplied.)
In view of this development, PNB filed a Supplemental Petition for Certiorari (with Urgent
Prayer for the Issuance of an Ex-Parte Writ of Preliminary Injunction) 17 seeking additional
28
reliefs for the return or reinstatement of the garnished amount and/or the appointment of a the garnished amount. On the other hand, Spouses Perez also filed their Motion for
receiver over the said funds to administer and preserve the same pending the final Reconsideration.21
disposition of the case.
In a Resolution dated April 28, 2009, the CA denied both motions. Hence, PNB and Spouses
The Decision of the Court of Appeals Perez filed their separate petitions with this Court assailing both the decision and the
resolution of the CA.
On October 23, 2008, the CA issued the assailed Decision in CA-G.R. SP No.
96534,18 granting the petition of PNB. It ruled that the sending of a notice of pre-trial is The Issues
mandatory and that the Order dated March 8, 2006 issued by the trial court cannot be
considered as such. Therefore, the CA held that all orders issued subsequent to the said
In G.R. No. 187640, PNB raises the following arguments in support of its petition:
order are, likewise, null and void. It disposed of the case as follows:

Whether the [CA] has decided a question of substance in a way not in accord with law or with
It is not only the Order of March 8, 2006 which allowed the presentation of [Spouses Perez’s]
the applicable decisions of this Honorable Court on the following issues:
evidence ex parte which is null and void. All the Orders assailed in the instant petition, as
follows:
I. Whether a garnishment/execution erected on the same day and date that a TRO
is issued to enjoin the garnishment/execution is valid.
a) Order of Execution dated August 14, 2006;

II. Whether an earlier garnishment effected pursuant to a writ of execution survives

b) Writ of Execution dated August 15, 2006;
the subsequent annulment of the writ.

c) Order dated August 16, 2006 which denied PNB’s application for
III. Whether the dissipation/loss of, or inability to return/recover the property,
TRO/preliminary injunction; and
constitutes an irreparable injury to warrant the issuance of a mandatory
injunction.22
d) the Order of August 17, 2006 which annulled PNB’s fourteen (14) titles and
directed issuance of new titles to herein private respondents;
In G.R. No. 187687, Spouses Perez raise the following issues for our consideration:

having been issued subsequent to the pre-trial improperly conducted on March 8, 2006 are
I.
declared voided and nullified for having been issued with grave abuse of discretion
amounting to lack or excess of jurisdiction.
The Respondent Honorable [CA] committed a reversible error on [a] question of law in not
dismissing the petition for certiorari outrightly on [the] ground that a petition for certiorari
WHEREFORE, in view of the foregoing, the petition is GRANTED. The assailed Orders are
under Rule 65 of [the] 1997 Rules on Civil Procedure is not a substitute for [a] lost appeal[;]
declared void and nullified. The trial court is directed to conduct the pre-trial therein after
proper notice had been served on both parties and thereafter to proceed to try the case on
the merits. II.

SO ORDERED.19
The Decision of the CA, however, failed to address PNB’s prayer for the issuance of a writ of
mandatory injunction and the return/reinstatement of the Php 2,676,140.70. Thus, PNB filed
a Motion for Clarificatory Order and/or Ad Cautelam Motion for Partial Reconsideration. 20 In
support of its motion, PNB argued that considering the garnishment of the amount of money
was based on the orders already voided by the CA, it is entitled to the return/reinstatement of
The Respondent Honorable [CA] committed a reversible error on [a] question of law in not
dismissing the petition for certiorari on the ground that the decision of the lower court has
already become final and executory; in fact, a writ of execution was already issued and the
respondent [PNB] has already partially satisfied the money judgment at its branch of
P10,000.00 and then at the Equitable Bank Manila in the sum of P2,676,140.70 and the
certificates of title in the name of respondent bank was ordered cancelled and the certificates
of titles of the petitioners to the subject properties were reinstated in the name of petitioners
who already sold the same to innocent purchasers for value and therefore, by estoppel

29
respondent bank is precluded to assail by petition for certiorari the final and executory
decision, writ of execution and partial satisfaction of the money judgment[;]
III.
The Respondent Honorable [CA] committed a reversible error on [a] question of law in not
dismissing [the] petition for certiorari outrightly on [the] ground that there are pending petition
for relief from judgment and motion for [reconsideration] with the lower court[;]
IV.
The Respondent Honorable [CA] committed a reversible error on [a] question of law in not
dismissing the petition for certiorari on [the] ground that the order of the lower court[,]
although [it] did not state [the] notice of pre-trial, the respondent bank and its counsel knew
that the Honorable [CA] in its Amended Decision in remanding the case to the lower court is
to conduct a pre-trial and therefore, there was nothing to suppose that the scheduled hearing
was anything other than pre-trial as enunciated by this Honorable Court in the case of Bembo
et. al. vs. Court of Appeals, et. al. G.R. No. 116845, November 29, 1995.23
The issues presented can be summarized as follows: (1) Whether a petition for certiorari is a
proper remedy; and (2) Whether a pre-trial notice is mandatory and, as a consequence,
whether the lack of notice of pre-trial voids a subsequently issued decision.
Petition for Certiorari is the Proper Remedy
In their petition, Spouses Perez argue that the filing of a petition for certiorari by PNB before
the CA was improper for two reasons: (a) a petition for certiorari is not a substitute for a lost
appeal; and (b) there were other pending petitions for relief from judgment and a motion for
reconsideration with the lower court.
The argument is bereft of merit.
A special petition for certiorari under Rule 65 of the Rules of Court is availed of when a
"tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in
excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess
of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the
ordinary course of law."24
It is intended to correct errors of jurisdiction only or grave abuse of discretion amounting to
lack or excess of jurisdiction. Its primary purpose is to keep an inferior court within the
parameters of its jurisdiction or to prevent it from committing such grave abuse of discretion
amounting to lack or excess of jurisdiction. 25
The essential requisites for a petition for certiorari under Rule 65 are: (1) the writ is directed
against a tribunal, a board, or an officer exercising judicial or quasi-judicial functions; (2) such
tribunal, board, or officer has acted without or in excess of jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain,
speedy, and adequate remedy in the ordinary course of law.261âwphi1
In Chamber of Real Estate and Builders Associations, Inc. v. The Secretary of Agrarian
Reform, the Court discussed the differences between "excess of jurisdiction", "without
jurisdiction" and "grave abuse of discretion", to wit:
Excess of jurisdiction as distinguished from absence of jurisdiction means that an act, though
within the general power of a tribunal, board or officer, is not authorized and invalid with
respect to the particular proceeding, because the conditions which alone authorize the
exercise of the general power in respect of it are wanting. Without jurisdiction means lack or
want of legal power, right or authority to hear and determine a cause or causes, considered
either in general or with reference to a particular matter. It means lack of power to exercise
authority. Grave abuse of discretion implies such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction or, in other words, where the power is
exercised in an arbitrary manner by reason of passion, prejudice, or personal hostility, and it
must be so patent or gross as to amount to an evasion of a positive duty or to a virtual refusal
to perform the duty enjoined or to act at all in contemplation of law.27
In Agulto v. Tecson, We likewise discussed that an order by the trial court allowing a party to
present his evidence ex-parte without due notice of pre-trial to the other party constitutes
grave abuse of discretion.28
Here, the trial court failed to issue a proper notice of pre-trial to PNB. Thus, it committed
grave abuse of discretion when it issued the Order dated March 8, 2006 allowing Spouses
Perez to present their evidence ex-parte.
Considering that the trial court’s action in issuing such order constituted grave abuse of its
discretion, PNB availed of the proper remedy when it filed a petition for certiorari with the CA.
Nevertheless, even with the existence of the remedy of appeal, this Court has, in certain
cases, allowed a writ of certiorari where the order complained of is a patent nullity. 29 In the
instant case, the lack of notice of pre-trial rendered all subsequent proceedings null and void.
Hence, the CA was correct in not dismissing the petition for certiorari.
Moreover, it is a basic tenet that a petition for certiorari under Rule 65 is an original and
independent action. It is not a part or a continuation of the trial which resulted in the rendition
of the judgment complained of. 30 Neither does it "interrupt the course of the principal action
nor the running of the reglementary periods involved in the proceedings, unless an
application for a restraining order or a writ of preliminary injunction to the appellate court is
granted."31
30
Evidently, the argument that the petition for certiorari is precluded by the motion for
reconsideration and the petition for relief from judgment filed before the trial court is
untenable.
Pre-trial Notice is Mandatory
Spouses Perez further contend that the Order dated January 8, 2006 setting the case for
hearing cannot be interpreted any other way except as a notice for pre-trial. They assert that
the Amended Decision of the CA dated April 14, 2005 remanded the case to the lower court
to conduct a pre-trial; therefore, the hearing in question was just following the order of the CA
to set the case for a pre-trial.
More recently, in Agulto,35 this Court again had the chance to rule upon the same issue and
reiterated the importance of the notice of pre-trial, to wit:
The failure of a party to appear at the pre-trial has adverse consequences. If the absent party
is the plaintiff, then he may be declared non-suited and his case dismissed. If it is the
defendant who fails to appear, then the plaintiff may be allowed to present his evidence ex
parte and the court to render judgment on the basis thereof.
Thus, sending a notice of pre-trial stating the date, time and place of pre-trial is mandatory.
Its absence will render the pre-trial and subsequent proceedings void. This must be so as
part of a party’s right to due process. (Emphasis supplied.)

We do not agree.
Section 3, Rule 18 of the 1997 Rules on Civil Procedure unequivocally requires that "[t]he
notice of pre-trial shall be served on counsel, or on the party who has no counsel." 32 It is
elementary in statutory construction that the word "shall" denotes the mandatory character of
the rule. Thus, it is without question that the language of the rule undoubtedly requires the
trial court to send a notice of pre-trial to the parties.
In the case at bar, the order issued by the trial court merely spoke of a "hearing on March 8,
2006"36 and required PNB "to prepare and complete x x x a statement of account." 37 The said
order does not mention anything about a pre-trial to be conducted by the trial court.
In contrast, the Notice of Pre-trial dated August 22, 2002 issued by the trial court categorically
states that a pre-trial is to be conducted, requiring the parties to submit their respective pre-
trial briefs. It reads:

More importantly, the notice of pre-trial seeks to notify the parties of the date, time and place NOTICE OF PRE-TRIAL
of the pre-trial and to require them to file their respective pre-trial briefs within the time
prescribed by the rules. Its absence, therefore, renders the pre-trial and all subsequent
You are hereby notified that the Pre-trial of this case will be held on September 19, 2002 at
proceedings null and void.33
8:30 o’clock in the morning.

In Pineda v. Court of Appeals, 34 the Court therein discussed the importance of the notice of
Pursuant to the Supreme Court Circular No. 1-89, you are requested to submit Pre-trial brief,
pre-trial. It pointed out that the absence of the notice of pre-trial constitutes a violation of a
at least three (3) days before said date, containing the following:
person’s constitutional right to due process. Further, the Court ruled that all subsequent
orders, including the default judgment, are null and void and without effect, viz:
A. Brief Statement of the parties respective claims and defenses;
Reason and justice ordain that the court a quo should have notified the parties in the case at
bar. Otherwise, said parties without such notice would not know when to proceed or resume B. The number of witnesses to be presented;
proceedings. With due notice of the proceedings, the fate of a party adversely affected would
not be adjudged ex parte and without due process, and he would have the opportunity of
C. An abstract of the testimonies of witnesses to be presented by the parties and
confronting the opposing party, and the paramount public interest which calls for a proper
approximate number of hours that will be required for the presentation of their
examination of the issues in any justiciable case would be subserved. The absence,
respective evidence;
therefore, of the requisite notice of pre-trial to private respondents through no fault or
negligence on their part, nullifies the order of default issued by the petitioner Judge for
denying them their day in court — a constitutional right. In such, the order suffers from an D. Copies of all document intended to be presented;
inherent procedural defect and is null and void. Under such circumstance, the granting of
relief to private respondents becomes a matter of right; and the court proceedings starting
from the order of default to the default judgment itself should be considered null and void and E. Admission;
of no effect. (Emphasis supplied.)
F. Applica[ble] laws and jurisprudence;

31
 G. The parties[’] respective statement of the issues; and
H. The available trial dates of counsel for complete evidence presentation, which
must be within a period of three (3) months from the first day of trial.
You are further warned that the failure to submit said brief could be a ground for non-suit or
declaration of default.
Cauayan City, Isabela, this 19th day of August 2002.38 (Emphasis supplied.)
What is more, PNB even claims that it failed to receive a copy of the said order. Clearly, no
amount of reasoning will logically lead to the conclusion that the trial court issued, or that
PNB received, a notice of pre-trial.
As such, We find that the CA aptly held that the Order dated March 8, 2006, which declared
the hearing to be a pre-trial and allowed Spouses Perez to adduce evidence ex parte, is void.
Similarly, its ruling that the Decision dated July 5, 2006 and all subsequent orders 39 issued
pursuant to the said judgment are also null and void, is proper.
In Padre v. Badillo, it was held that "[a] void judgment is no judgment at all. It cannot be the
source of any right nor the creator of any obligation. All acts performed pursuant to it and all
claims emanating from it have no legal effect."40
Necessarily, it follows that the nullity of the Writ of Execution carries with it the nullity of all
acts done which implemented the writ. This includes the garnishment of Php 2,676,140.70
from PNB’s account. Its return to PNB’s account is but a necessary consequence of the void
writ.
Similarly, the nullity of the Order dated August 17, 2006, 41 which cancelled PNB’s fourteen
(14) titles and directed the issuance of new titles to Spouses Perez, has the effect of
annulling all the fourteen (14) titles issued in the name of Spouses Perez. The titles should
revert back to PNB.
The argument that the subject properties were sold to certain innocent purchasers for value
cannot stand. First of all, such allegation is a question of fact, not a question of law. Time and
again, this Court has pronounced that the issues that can be raised in a petition for review on
certiorari under Rule 45 are limited only to questions of law. 42 The test of whether the
question is one of law or of fact is whether the appellate court can determine the issue raised
without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise,
it is a question of fact.43
Furthermore, it is settled that matters not raised in the trial court or lower courts cannot be
raised for the first time on appeal. "They must be raised seasonably in the proceedings
before the lower courts. Questions raised on appeal must be within the issues framed by the
parties; consequently, issues not raised before the trial court cannot be raised for the first
time on appeal."44 Spouses Perez never raised this issue before the CA. Hence, they cannot
raise it before this Court now.
WHEREFORE, the petition in G.R. No. 187640 is GRANTED. The Decision of the Court of
Appeals (CA) in CA-G.R. SP No. 96534 dated October 23, 2008 is AFFIRMED with the
MODIFICATION that the July 5, 2006 Decision of the Regional Trial Court of Isabela in Civil
Case No. 20-1155 is NULLIFIED and SET ASIDE, the titles issued to Spouses Angelito
Perez and Jocelyn Perez by virtue of the aforesaid August 17, 2006 Order and all derivative
titles emanating thereon are cancelled and declared null and void and directing the Register
of Deeds of Isabela to issue new certificates of title in the name of the Philippine National
Bank (PNB) to replace the fourteen (14) titles previously issued to Spouses Angelito and
Jocelyn Perez pursuant to the August 17, 2006 Order and for Spouses Angelito and Jocelyn
Perez to pay to PNB the amount of PhP 2,676,140.70 representing the amount garnished
from PNB’s account with Equitable PCI Bank (EPCIB) by virtue of the August 15, 2006 Writ of
Execution issued pursuant to the July 5, 2006 Decision.
As modified, the CA Decision shall read:
WHEREFORE, in view of the foregoing, the petition is GRANTED. The following orders and
writ issued by the Regional Trial Court of Isabela in Civil Case No. 20-1155 are declared null
and void:
a. Order dated March 8, 2006 which allowed the presentation of [Spouses Perez’s]
evidence ex parte;
b. Order of Execution dated August 14, 2006;
c. Writ of Execution dated August 15, 2006;
d. Order dated August 16, 2006 which denied PNB’s application for
TRO/preliminary injunction; and
e. the Order of August 17, 2006 which annulled PNB’s fourteen (14) titles and
directed issuance of new titles to herein private respondents;
The July 5, 2006 Decision of the Isabela RTC is nullified and set aside.
The fourteen (14) new titles issued to Spouses Angelito Perez and Jocelyn Perez by virtue of
the August 17, 2006 Order and all derivative titles issued therefrom are declared null and void
and cancelled. The Register of Deeds of Isabela are directed to cancel said titles issued to
Spouses Perez and issue new certificates of titles in the name of Philippine National Bank
32
(PNB) which shall contain a memorandum of the annulment of the outstanding duplicate
certificates issued to said spouses.1âwphi1
Spouses Angelito Perez and Jocelyn Perez are ordered to pay PNB the amount of
P2,767,140.70 representing the amount illegally garnished from PNB’s account with
Equitable PCI Bank (EPCIB) by virtue of the August 15, 2006 writ of execution with interest
thereon at six percent (6%) per annum from August 15, 2006 up to the finality of judgment
and at twelve percent (12%) per annum from the date of finality of judgment until paid.
The trial court is directed to conduct further proceedings in Civil Case No. 20-1155 with
dispatch.
The petition in G.R. No. 187687 is DENIED for lack of merit.
No costs.
SO ORDERED.
THIRD DIVISION
[G.R. NO. 172242 : August 14, 2007]
PERKIN ELMER SINGAPORE PTE LTD., Petitioner, v. DAKILA TRADING
CORPORATION, Respondent.
DECISION
CHICO-NAZARIO, J.:
The case before this Court is a Petition for Review 1 on Certiorari under Rule 45 of the 1997
Revised Rules of Civil Procedure seeking to annul and set aside the Decision, 2 dated 4 April
2006, of the Court of Appeals in CA-G.R. SP No. 78981, which affirmed the Orders, dated 4
November 20023 and 20 June 2003,4 of the Mandaluyong City Regional Trial Court (RTC),
Branch 212, in Civil Case No. MC99-605, which, in turn, denied the Motion to Dismiss and
subsequent Motion for Reconsideration of herein petitioner Perkin Elmer Singapore Pte Ltd.
Petitioner is a corporation duly organized and existing under the laws of Singapore. It is not
considered as a foreign corporation "doing business" in the Philippines. Herein respondent
Dakila Trading Corporation is a corporation organized and existing under Philippine laws, and
engaged in the business of selling and leasing out laboratory instrumentation and process
control instrumentation, and trading of laboratory chemicals and supplies.
The antecedents of the present case are as follows:
Respondent entered into a Distribution Agreement 5 on 1 June 1990 with Perkin-Elmer
Instruments Asia Pte Ltd. (PEIA), a corporation duly organized and existing under the laws of
Singapore and engaged in the business of manufacturing, producing, selling or distributing
various laboratory/analytical instruments. By virtue of the said agreement, PEIA appointed
the respondent as the sole distributor of its products in the Philippines. The respondent was
likewise granted the right to purchase and sell the products of PEIA subject to the terms and
conditions set forth in the Distribution Agreement. PEIA, on the other hand, shall give
respondent a commission for the sale of its products in the Philippines.
Under the same Distribution Agreement, respondent shall order the products of PEIA, which
it shall sell in the Philippines, either from PEIA itself or from Perkin-Elmer Instruments
(Philippines) Corporation (PEIP), an affiliate of PEIA. PEIP is a corporation duly organized
and existing under Philippine laws, and involved in the business of wholesale trading of all
kinds of scientific, biotechnological, and analytical instruments and appliances. PEIA
allegedly owned 99% of the shares of PEIP.
On 2 August 1997, however, PEIA unilaterally terminated the Distribution Agreement,
prompting respondent to file before the RTC of Mandaluyong City, Branch 212, a
Complaint6 for Collection of Sum of Money and Damages with Prayer for Issuance of a Writ
of Attachment against PEIA and PEIP, docketed as Civil Case No. MC99-605.
The RTC issued an Order, 7 dated 26 March 1999, denying respondent's prayer for the
issuance of a writ of attachment. The respondent moved for the reconsideration of the said
Order but it was denied in another Order, dated 11 January 2000. 8
Respondent then filed Ex-Parte Motions for Issuance of Summons and for Leave of Court to
Deputize Respondent's General Manager, Richard A. Tee, to Serve Summons Outside of the
Philippines,9 which the RTC granted in its Order, dated 27 April 2000. 10 Thus, an Alias
Summons, dated 4 September 2000, was issued by the RTC to PEIA. But the said Alias
Summons was served on 28 September 2000 and received by Perkinelmer Asia, a
Singaporean based sole proprietorship, owned by the petitioner and, allegedly, a separate
and distinct entity from PEIA.
PEIP moved to dismiss11 the Complaint filed by respondent on the ground that it states no
cause of action. Perkinelmer Asia, on the other hand, through its counsel, sent letters, dated
12 October 200012 and 15 November 2000,13 to the respondent and to the RTC, respectively,
to inform them of the wrongful service of summons upon Perkinelmer Asia.
Accordingly, respondent filed an Ex-Parte Motion to Admit Amended Complaint, together with
the Amended Complaint claiming that PEIA had become a sole proprietorship 14 owned by the
petitioner, and subsequently changed its name to Perkinelmer Asia. Being a sole
proprietorship of the petitioner, a change in PEIA's name and juridical status did not detract
from the fact that all its due and outstanding obligations to third parties were assumed by the
33
petitioner. Hence, in its Amended Complaint 15 respondent sought to change the name of The three (3) essential elements of a cause of action are the following:
PEIA to that of the petitioner. In an Order, dated 24 July 2001, 16 the RTC admitted the
Amended Complaint filed by the respondent. Respondent then filed another Motion 17 for the
a) The plaintiff's legal rights;
Issuance of Summons and for Leave of Court to Deputize Respondent's General Manager,
Richard A. Tee, to Serve Summons Outside the Philippines. In another Order, dated 4 March
2002,18 the RTC deputized respondent's General Manager to serve summons on petitioner in b) A correlative obligation of the defendant;
Singapore. The RTC thus issued summons 19 to the petitioner. Acting on the said Order,
respondent's General Manager went to Singapore and served summons on the petitioner.
c) The omission of the defendant in violation of the legal rights.

Meanwhile, in an Order, dated 10 October 2001, the RTC denied the Motion to Dismiss filed
A cursory reading of the Amended Complaint would reveal that all of the essential elements
by PEIP, compelling the latter to file its Answer to the Amended Complaint.
of a cause of action are attendant in the Amended Complaint.

Petitioner subsequently filed with the RTC a Special Appearance and Motion to
As for the contention that venue was improperly laid, x x x, the [RTC] in its ultimate desire
Dismiss20 respondent's Amended Complaint on 30 May 2002 based on the following grounds:
that the ends of justice could be served in its fullest, cannot rule that venue was improperly
(1) the RTC did not acquire jurisdiction over the person of the petitioner; (2) the respondent
laid.
failed to state a cause of action against the petitioner because it is not the real party-in-
interest; (3) even assuming arguendo that the respondent correctly filed the case against the
petitioner, the Distribution Agreement which was the basis of its claim grants PEIA the right to xxx
terminate the contract at any time; and (4) the venue was improperly laid. The RTC in its
Order, dated 4 November 2002, denied petitioner's Motion to Dismiss, ratiocinating as
follows: The stipulation as to the venue of a prospective action does not preclude the filing of the suit
in the residence of the [respondent] under Section 2, Rule 4, Rules of Court, especially where
the venue stipulation was imposed by the [petitioner] for its own benefits.
Prescinding from the above arguments of both parties, the [RTC] is inclined to DENY the
Motion to Dismiss.
xxx

A careful scrutiny on (sic) the allegation in the (Amended) Complaint would show that [herein
respondent] alleges ownership by the [herein petitioner] of shares of stocks in the [PEIP].
Such allegation of ownership of shares of stocks by the [petitioner] would reveal that there is
an allegation of personal property in the Philippines. Shares of stocks represent personal
property of the shareholder. Thus, it follows that even though the Amended Complaint is
primarily for damages, it does relate to a property of the [petitioner], to which the latter has a
claim interest (sic), or an actual or contingent lien, which will make it fall under one of the
requisite (sic) for extraterritorial service under Section 15, Rule 14, of the Rules of Court.
Thus, it could be gainfully said that the summons had been validly served for [RTC] to
acquire jurisdiction over the [petitioner].
The [petitioner] hinges its dismissal on the failure of the [respondent] to state a cause of
action. The [RTC] would like to emphasize that in a Motion to Dismiss, it hypothetically admits
the truth of the facts alleged in a complaint.
The [RTC] further believes that it is imperative that in order to ferret out the truth, a full-blown
trial is necessary for parties to be able to prove or disprove their allegations. 21
Petitioner moved for the reconsideration of the aforesaid Order but, it was denied by the RTC
in its Order, dated 20 June 2003.
Consequently, petitioner filed a Petition for Certiorari under Rule 65 of the 1997 Revised
Rules of Civil Procedure with application for temporary restraining order and/or preliminary
injunction before the Court of Appeals alleging that the RTC committed grave abuse of
discretion amounting to lack or excess of jurisdiction in refusing to dismiss the Amended
Complaint. The Court of Appeals never issued any temporary restraining order or writ of
injunction. On 4 April 2006, the Court of Appeals rendered a Decision affirming the RTC
Orders of 4 November 2002 and 20 June 2003.

When the ground for dismissal is that the complaint states no cause of action, such fact can This brings us to the present Petition before this Court wherein petitioner raised the following
be determined only from the facts alleged in the complaint x x x and from no other x x x and issues.
the Court cannot consider other matters aliunde x x x. This implies that the issue must be
passed upon on the basis of the allegations and declare them to be false, otherwise it would
be a procedural error and a denial of due process to the [respondent] x x x. I.

34
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN
NOT RULING THAT THE SERVICE OF SUMMONS ON PETITIONER WAS DEFECTIVE
AND THAT THE TRIAL COURT THUS FAILED TO ACQUIRE JURISDICTION OVER THE
PERSON OF THE PETITIONER.
II.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN
RULING THAT THE "SOLE ISSUE" IN THE PETITION FOR CERTIORARI FILED BEFORE
IT IS THE QUESTION OF WHETHER THE TRIAL COURT ACQUIRED JURISDICTION
OVER THE PERSON OF THE PETITIONER THROUGH THE EXTRATERRITORIAL
SERVICE OF SUMMONS.
A.
WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE GRANTED THE
PETITION FOR CERTIORARI AND REVERSED THE RTC ORDERS ON THE GROUND
THAT THE AMENDED COMPLAINT FAILED TO STATE A CAUSE OF ACTION AGAINST
PETITIONER.
1. BASED ON THE ALLEGATIONS IN THE EX-PARTE MOTION TO ADMIT AMENDED
COMPLAINT, AMENDED COMPLAINT, AND ALL DOCUMENTS ATTACHED AND/OR
RELATED THERETO, PETITIONER IS NOT THE REAL PARTY-IN-INTEREST
DEFENDANT IN THE CASE BELOW.
2. ASSUMING ARGUENDO THAT RESPONDENT DAKILA FILED THIS CASE AGAINST
THE CORRECT [PARTY], INASMUCH AS THE DISTRIBUTION AGREEMENT DATED 1
JUNE 1990 GRANTS [PEIA] THE RIGHT TO TERMINATE THE CONTRACT AT ANY TIME,
RESPONDENT DAKILA FAILS TO STATE A CAUSE OF ACTION IN THE CASE BELOW.
B.
WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE GRANTED THE
PETITION FOR CERTIORARI AND REVERSED THE RTC ORDERS ON THE GROUND OF
IMPROPER VENUE.
III.
WHETHER OR NOT PETITIONER IS ENTITLED TO A TEMPORARY RESTRAINING
ORDER AND/OR WRIT OF INJUNCTION.
The foregoing issues raised by petitioner essentially requires this Court to make a
determination of the (1) proper service of summons and acquisition of jurisdiction by the RTC
over the person of the petitioner; (2) existence of a cause of action against petitioner in
respondent's Amended Complaint; and (3) proper venue for respondent's civil case against
petitioner.
Petitioner contends that Civil Case No. MC99-605 involves an action for collection of sum of
money and damages arising from the alleged breach of the Distribution Agreement. The
action is one in personam, or an action against a person based on his personal liability; and
for the court a quo to acquire jurisdiction over the person of the petitioner, personal service of
summons, and not extraterritorial service of summons, must be made within the state even if
the petitioner is a non-resident. Petitioner avers that extraterritorial service of summons
stated under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure, is only proper
in in rem and quasi in rem cases; thus, resort to an extraterritorial service of summons in the
case at bar was erroneous. Petitioner asseverates that the allegations in the respondent's
Amended Complaint that the petitioner has personal properties within the Philippines does
not make the present case one that relates to, or the subject of which is, property within the
Philippines warranting the extraterritorial service of summons under Section 15, Rule 14 of
the 1997 Revised Rules of Civil Procedure. Petitioner states that for an action to be
considered as one that relates to, or the subject of which is, property within the Philippines,
the main subject matter of the action must be the property within the Philippines itself, and
such was not the situation in this case. Likewise, the prayer in respondent's Amended
Complaint for the issuance of a writ of attachment over the personal property of PEIP, which
is 99% owned by petitioner (as the supposed successor of PEIA), did not convert the action
from one in personam to one that is quasi in rem. Also, the petitioner points out that since the
respondent's prayer for the issuance of a writ of attachment was denied by the RTC in its
Order, dated 26 March 1999, then the nature of Civil Case No. MC99-605 remains in
personam, contrary to the ruling of the Court of Appeals that by the attachment of the
petitioner's interest in PEIP the action in personam was converted to an action quasi in rem.
Resultantly, the extraterritorial service of summons on the petitioner was not validly effected,
and did not give the RTC jurisdiction over the petitioner.
Petitioner further argues that the appellate court should have granted its Petition
for Certiorari on the ground that the RTC committed grave abuse of discretion amounting to
lack or excess of jurisdiction in refusing to dismiss respondent's Amended Complaint for
failure to state a cause of action against petitioner which was not the real party-in-interest in
Civil Case No. MC99-605. Petitioner claims that it had never used the name PEIA as its
corporate name, and neither did it change its name from that of PEIA. Petitioner stresses that
PEIA is an entirely different corporate entity that is not connected in whatever manner to the
petitioner. Even assuming arguendo that petitioner is the real party-in-interest in Civil Case
No. MC99-605 or that petitioner and PEIA are one and the same entity, petitioner still avows
that the respondent failed to state a cause of action against it because the Distribution
Agreement expressly grants PEIA the right to terminate the said contract at any time.
Lastly, it is the contention of the petitioner that the appellate court should have granted its
Petition for Certiorari because the RTC committed grave abuse of discretion amounting to
lack or excess of jurisdiction in refusing to dismiss Civil Case No. MC99-605 for having been
filed in an improper venue. Petitioner asserts that in the Distribution Agreement entered into
between the respondent and PEIA, both had mutually agreed to the exclusive jurisdiction of
35
the courts of Singapore or of the Philippines as elected by PEIA. Absent any waiver by PEIA
of its right to choose the venue of the dispute, the Complaint filed by the respondent before
the RTC in the Philippines should have been dismissed on the ground of improper venue.
The Petition is meritorious.
Jurisdiction is the power with which courts are invested for administering justice; that is, for
hearing and deciding cases. In order for the court to have authority to dispose of the case on
the merits, it must acquire jurisdiction over the subject matter and the parties. 22
Jurisdiction of the court over the subject matter is conferred only by the Constitution or by
law. It is determinable on the basis of allegations in the complaint. 23
Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint, while jurisdiction
over the defendants in a civil case is acquired either through the service of summons upon
them in the manner required by law or through their voluntary appearance in court and their
submission to its authority. If the defendants have not been summoned, unless they
voluntarily appear in court, the court acquires no jurisdiction over their persons and a
judgment rendered against them is null and void. To be bound by a decision, a party should
first be subjected to the court's jurisdiction. 24
Thus, one of the modes of acquiring jurisdiction over the person of the defendant or
respondent in a civil case is through service of summons. It is intended to give notice to the
defendant or respondent that a civil action has been commenced against him. The defendant
or respondent is thus put on guard as to the demands of the plaintiff or the petitioner. 25
The proper service of summons differs depending on the nature of the civil case instituted by
the plaintiff or petitioner: whether it is in personam, in rem, or quasi in rem. Actions in
personam, are those actions brought against a person on the basis of his personal liability;
actions in rem are actions against the thing itself instead of against the person; and actions
are quasi in rem, where an individual is named as defendant and the purpose of the
proceeding is to subject his or her interest in a property to the obligation or loan burdening
the property.26
Under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure, there are only four
instances wherein a defendant who is a non-resident and is not found in the country may be
served with summons by extraterritorial service, to wit: (1) when the action affects the
personal status of the plaintiff; (2) when the action relates to, or the subject of which is
property, within the Philippines, in which the defendant claims a lien or an interest, actual or
contingent; (3) when the relief demanded in such action consists, wholly or in part, in
excluding the defendant from any interest in property located in the Philippines; and (4) when
the defendant non-resident's property has been attached within the Philippines. In these
instances, service of summons may be effected by (a) personal service out of the country,
with leave of court; (b) publication, also with leave of court; or (c) any other manner the court
may deem sufficient.27
Undoubtedly, extraterritorial service of summons applies only where the action is in rem or
quasi in rem, but not if an action is in personam.
When the case instituted is an action in rem or quasi in rem, Philippine courts already have
jurisdiction to hear and decide the case because, in actions in rem and quasi in rem,
jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the
court, provided that the court acquires jurisdiction over the res. 28 Thus, in such instance,
extraterritorial service of summons can be made upon the defendant. The said extraterritorial
service of summons is not for the purpose of vesting the court with jurisdiction, but for
complying with the requirements of fair play or due process, so that the defendant will be
informed of the pendency of the action against him and the possibility that property in the
Philippines belonging to him or in which he has an interest may be subjected to a judgment in
favor of the plaintiff, and he can thereby take steps to protect his interest if he is so
minded.29 On the other hand, when the defendant or respondent does not reside and is not
found in the Philippines, 30 and the action involved is in personam, Philippine courts cannot try
any case against him because of the impossibility of acquiring jurisdiction over his person
unless he voluntarily appears in court.31
In the case at bar, this Court sustains the contention of the petitioner that there can never be
a valid extraterritorial service of summons upon it, because the case before the court a quo
involving collection of a sum of money and damages is, indeed, an action in personam, as it
deals with the personal liability of the petitioner to the respondent by reason of the alleged
unilateral termination by the former of the Distribution Agreement. Even the Court of Appeals,
in its Decision dated 4 April 2004, upheld the nature of the instant case as an action in
personam. In the said Decision the appellate court ruled that:
In the instant petition, [respondent's] cause of action in Civil Case No. MC99-605 is anchored
on the claim that petitioner unilaterally terminated the Distribution Agreement. Thus,
[respondent] prays in its [C]omplaint that "Upon the filing of the Complaint, issue an Order
fixing the amount of the bond and issue a writ of attachment requiring the sheriff to attach the
properties of [Perkin-Elmer Philippines], which are not exempt from execution, and as much
as may be sufficient to satisfy [respondent's] demands."
The action instituted by [respondent] affects the parties alone, not the whole world. Hence, it
is an action in personam, i.e., any judgment therein is binding only upon the parties properly
impleaded.
x    x    x
The objective sought in [respondent's] [C]omplaint was to establish a claim against petitioner
for its alleged unilateral termination of [D]istribution [A]greement. Hence, to repeat, Civil Case
No. MC99-605 is an action in personam because it is an action against persons, namely,
herein petitioner, on the basis of its personal liability. As such, personal service of summons
upon the [petitioner] is essential in order for the court to acquire of (sic) jurisdiction over [its
person].32 (Emphasis supplied.)
36
Thus, being an action in personam, personal service of summons within the Philippines is However, let it be emphasized that in the [C]omplaint filed before the trial court, [respondent]
necessary in order for the RTC to validly acquire jurisdiction over the person of the petitioner, prayed that "Upon the filing of the Complaint, issue an Order fixing the amount of the bond
and this is not possible in the present case because the petitioner is a non-resident and is not and issue a writ of attachment requiring the sheriff to attach the properties of [Perkin-Elmer
found within the Philippines. Respondent's allegation in its Amended Complaint that petitioner Philippines], which are not exempt from execution, and as much as may be sufficient to
had personal property within the Philippines in the form of shares of stock in PEIP did not satisfy [respondent's] demands.
make Civil Case No. MC99-605 fall under any of the four instances mentioned in Section 15,
Rule 14 of the Rules of Court, as to convert the action in personam to an action in rem or
In other words, although the [C]omplaint before the trial court does not involve the personal
quasi in rem and, subsequently, make the extraterritorial service of summons upon the
status of the [respondent], nevertheless, the case involves property within the Philippines in
petitioner valid.
which the [petitioner] has or claim an interest, or which the [respondent] has attached, which
is one of the instances where extraterritorial service of summons is proper.
It is incorrect for the RTC to have ruled that the allegations made by the respondent in its
Amended Complaint, which is primarily for collection of a sum of money and damages, that
x    x    x
the petitioner owns shares of stock within the Philippines to which the petitioner claims
interest, or an actual or contingent lien, would make the case fall under one of the aforesaid
instances wherein extraterritorial service of summons under Section 15, Rule 14 of the 1997 Hence, it is submitted that one of the instances when exterritorial service of summons under
Revised Rules of Civil Procedure, would be valid. The RTC in arriving at such conclusions Section 15, Rule 14 of the Rules of Court is proper may be considered to have been met.
relied on the second instance, mentioned under Section 15, Rule 14 of the 1997 Revised This is because the [C]omplaint for collection of sum of money which is an action in
Rules of Civil Procedure (i.e., when the action relates to, or the subject of which is property, personam was converted into an action quasi in rem by the attachment of [petitioner's]
within the Philippines, in which the defendant claims a lien or interest, actual or contingent), interest in [Perkin-Elmer Philippines].34 (Emphasis supplied.)
where extraterritorial service of summons can be properly made. However, the aforesaid
second instance has no application in the case before this Court. Primarily, the Amended
Respondent's allegation in its Amended Complaint that petitioner had personal property
Complaint filed by the respondent against the petitioner was for the collection of sum of
within the Philippines in the form of shares of stock in PEIP does not convert Civil Case No.
money and damages. The said case was neither related nor connected to any property of the
MC99-605 from an action in personam to one quasi in rem, so as to qualify said case under
petitioner to which it claims a lien or interest. The action for collection of a sum of money and
the fourth instance mentioned in Section 15, Rule 14 of the 1997 Revised Rules of Civil
damages was purely based on the personal liability of the petitioner towards the respondent.
Procedure (i.e., when the non-resident defendant's property has been attached within the
The petitioner is correct in saying that "mere allegations of personal property within the
Philippines), wherein extraterritorial service of summons upon the petitioner would have been
Philippines does not necessarily make the action as one that relates to or the subject of
valid. It is worthy to note that what is required under the aforesaid provision of the Revised
which is, property within the Philippines as to warrant the extraterritorial service of summons.
For the action to be considered one that relates to, or the subject of which, is the property Rules of Civil Procedure is not a mere allegation of the existence of personal property
belonging to the non-resident defendant within the Philippines but, more precisely, that the
within the Philippines, the main subject matter of the action must be the property itself of the
non-resident defendant's personal property located within the Philippines must have been
petitioner in the Philippines." By analogy, an action involving title to or possession of real or
actually attached. This Court in the case of Venturanza v. Court of Appeals 35 ruled that when
personal property - - such as the foreclosure of real estate or chattel mortgage where the
the attachment was void from the beginning, the action in personam which required personal
mortgagor does not reside or is not found in the Philippines - - can be considered as an
service of summons was never converted into an action in rem where service by publication
action which relates to, or the subject of which is, property within the Philippines, in which the
would have been valid. Hence, the appellate court erred in declaring that the present case,
defendant claims a lien or interest, actual or contingent; and in such instance, judgment will
which is an action in personam, was converted to an action quasi in rem because of
be limited to the res.33
respondent's allegations in its Amended Complaint that petitioner had personal property
within the Philippines.
Moreover, the allegations made by the respondent that the petitioner has property within the
Philippines were in support of its application for the issuance of a writ of attachment, which
Glaringly, respondent's prayer in its Amended Complaint for the issuance of a writ of
was denied by the RTC. Hence, it is clear from the foregoing that the Complaint filed by the
attachment over petitioner's purported shares of stock in PEIP located within the Philippines
respondent against the petitioner does not really relate to, or the subject of which is, property
was denied by the court a quo in its Order dated 26 March 1999. Respondent's Motion for
within the Philippines of the petitioner.
Reconsideration of the said Order was likewise denied by the RTC in its subsequent Order,
dated 11 January 2000. Evidently, petitioner's alleged personal property within the
This Court also finds error in the Decision of the Court of Appeals. It is provided for in the said Philippines, in the form of shares of stock in PEIP, had not been attached; hence, Civil Case
Decision, thus: No. MC99-605, for collection of sum of money and damages, remains an action in personam.
As a result, the extraterritorial service of summons was not validly effected by the RTC
against the petitioner, and the RTC thus failed to acquire jurisdiction over the person of the

37
petitioner. The RTC is therefore bereft of any authority to act upon the Complaint filed before
it by the respondent insofar as the petitioner is concerned.
If there was no valid summons served upon petitioner, could RTC have acquired jurisdiction
over the person of the petitioner by the latter's voluntary appearance? As a rule, even if the
service of summons upon the defendant or respondent in a civil case is defective, the court
can still acquire jurisdiction over his person when he voluntary appears in court or submits
himself to its authority. Nonetheless, voluntary appearance, as a mode of acquiring
jurisdiction over the person of the defendant, is likewise inapplicable in this case.
It is settled that a party who makes a special appearance in court for the purpose of
challenging the jurisdiction of said court, based on the invalidity of the service of summons,
cannot be considered to have voluntarily submitted himself to the jurisdiction of the court. 36 In
the present case, petitioner has been consistent in all its pleadings in assailing the service of
summons upon it and the jurisdiction of the RTC over its person. Thus, the petitioner cannot
be declared in estoppel when it filed an Answer ad cautelam with compulsory counterclaim
before the RTC while the instant Petition was still pending before this Court. The petitioner
was in a situation wherein it had no other choice but to file an Answer; otherwise, the RTC
would have already declared that petitioner had waived its right to file responsive
pleadings.37 Neither can the compulsory counterclaim contained in petitioner's Answer ad
cautelam be considered as voluntary appearance of petitioner before the RTC. Petitioner
seeks to recover damages and attorney's fees as a consequence of the unfounded suit filed
by respondent against it. Thus, petitioner's compulsory counterclaim is only consistent with its
position that the respondent wrongfully filed a case against it and the RTC erroneously
exercised jurisdiction over its person.
Distinction must be made in Civil Case No. MC99-605 as to the jurisdiction of the RTC over
respondent's complaint and over petitioner's counterclaim - - while it may have no jurisdiction
over the former, it may exercise jurisdiction over the latter. The compulsory counterclaim
attached to petitioner's Answer ad cautelam can be treated as a separate action, wherein
petitioner is the plaintiff while respondent is the defendant. 38 Petitioner could have instituted a
separate action for the very same claims but, for the sake of expediency and to avoid
multiplicity of suits, it chose to demand the same in Civil Case No. MC99-605. 39 Jurisdiction
of the RTC over the subject matter and the parties in the counterclaim must thus be
determined separately and independently from the jurisdiction of the same court in the same
case over the subject matter and the parties in respondent's complaint.
Moreover, even though the petitioner raised other grounds in its Motion to Dismiss aside from
lack of jurisdiction over its person, the same is not tantamount to its voluntary appearance or
submission to the authority of the court a quo. While in De Midgely v. Ferandos, 40 it was held
that, in a Motion to Dismiss, the allegation of grounds other than lack of jurisdiction over the
person of the defendant, including a prayer "for such other reliefs as" may be deemed
"appropriate and proper" amounted to voluntary appearance, such ruling must be deemed
superseded by the declaration of this Court in La Naval Drug Corporation v. Court of
Appeals41 that estoppel by jurisdiction must be unequivocal and intentional. It would be
absurd to hold that petitioner unequivocally and intentionally submitted itself to the jurisdiction
of the court by seeking other reliefs to which it might be entitled when the only relief that it
could properly ask from the trial court is the dismissal of the complaint against it. 42 Thus, the
allegation of grounds other than lack of jurisdiction with a prayer "for such other reliefs" as
may be deemed "appropriate and proper" cannot be considered as unequivocal and
intentional estoppel. Most telling is Section 20, Rule 14 of the Rules of Court, which expressly
provides:
SEC. 20. Voluntary appearance. - The defendant's voluntary appearance in the action shall
be equivalent to service of summons. The inclusion in a motion to dismiss of other grounds
aside from lack of jurisdiction over the person of the defendant shall not be deemed a
voluntary appearance.43 (Emphasis supplied.)
In sum, this Court finds that the petitioner did not submit itself voluntarily to the authority of
the court a quo; and in the absence of valid service of summons, the RTC utterly failed to
acquire jurisdiction over the person of the petitioner.
Anent the existence of a cause of action against petitioner and the proper venue of the case,
this Court upholds the findings of the RTC on these issues.
Dismissal of a Complaint for failure to state a cause of action is provided for by the Rules of
Court.44 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. 45 While,
truly, there are well-recognized exceptions 46 to the rule that the allegations are hypothetically
admitted as true and inquiry is confined to the face of the complaint, 47 none of the exceptions
apply in this case. Hence, the general rule applies. The defense of the petitioner that it is not
the real party-in-interest is evidentiary in nature which must be proven in trial. The appellate
court, then, cannot be faulted for not granting petitioner's Motion to Dismiss on the ground of
failure to state a cause of action.
In the same way, the appellate court did not err in denying petitioner's Motion to Dismiss Civil
Case No. MC99-605 on the ground of improper venue. In arriving at such conclusion, this
Court quotes with approval the following ratiocination of the RTC:
As for the contention that venue was improperly laid, x x x, the [trial court] in its ultimate
desire that the ends of justice could be served in its fullest, cannot rule that venue was
improperly laid.
x    x    x
The stipulation as to the venue of a prospective action does not preclude the filing of the suit
in the residence of the [respondent] under Section 2, Rule 4, Rules of Court, especially where
38
the venue stipulation was imposed by the [petitioner] for its own benefits. 48 (Emphasis
supplied.)
Despite the venue stipulation found in the Distribution Agreement stipulating that the
exclusive jurisdiction over disputes arising from the same shall lie in the courts of Singapore
or of the Territory (referring to the Philippines), whichever is elected by PEIA (or petitioner, as
PEIA's alleged successor), the RTC of the Philippines cannot be considered as an improper
venue. Truly, the venue stipulation used the word "exclusive," however, a closer look on the
Distribution Agreement would reveal that the venue stipulation was really in the alternative
i.e., courts of Singapore or of the Territory, meaning, the Philippines; thus, the court a quo is
not an improper venue for the present case.
Nonetheless, it bears to emphasize that despite our findings that based on the allegations in
respondent's Complaint in Civil Case No. MC99-605, respondent appears to have a cause of
action against the petitioner and that the RTC is the proper venue for the said case, Civil
Case No. MC99-605 is still dismissible, for the RTC never acquired jurisdiction over the
person of the petitioner. The extraterritorial service of summons upon the petitioner produces
no effect because it can only be done if the action is in rem or quasi in rem. The case for
collection of sum of money and damages filed by the respondent against the petitioner being
an action in personam, then personal service of summons upon the petitioner within the
Philippines is essential for the RTC to validly acquire jurisdiction over the person of the
petitioner. Having failed to do so, the RTC can never subject petitioner to its jurisdiction. The
mere allegation made by the respondent that the petitioner had shares of stock within the
Philippines was not enough to convert the action from one in personam to one that was quasi
in rem, for petitioner's purported personal property was never attached; thus, the
extraterritorial service of summons upon the petitioner remains invalid. In light of the
foregoing findings, this Court concludes that the RTC has no power to hear and decide the
case against the petitioner, because the extraterritorial service of summons was not validly
effected upon the petitioner and the RTC never acquired jurisdiction over its person.
Finally, as regards the petitioner's counterclaim, which is purely for damages and attorney's
fees by reason of the unfounded suit filed by the respondent against it, it has long been
settled that the same truly falls under the classification of compulsory counterclaim and it
must be pleaded in the same action, otherwise, it is barred. 49 In the case at bar, this Court
orders the dismissal of the Complaint filed by the respondent against the petitioner because
the court a quo failed to acquire jurisdiction over the person of the latter. Since the Complaint
of the respondent was dismissed, what will happen then to the counterclaim of the petitioner?
Does the dismissal of the complaint carry with it the dismissal of the counterclaim?cralaw
library
In the cases of Metal Engineering Resources Corp. v. Court of Appeals, 50 International
Container Terminal Services, Inc. v. Court of Appeals, 51 and BA Finance Corporation v.
Co.,52 the Court ruled that if the court does not have jurisdiction to entertain the main action of
the case and dismisses the same, then the compulsory counterclaim, being ancillary to the
principal controversy, must likewise be dismissed since no jurisdiction remained for any grant
of relief under the counterclaim.53 If we follow the aforesaid pronouncement of the Court in
the cases mentioned above, the counterclaim of the herein petitioner being compulsory in
nature must also be dismissed together with the Complaint. However, in the case of Pinga v.
Heirs of German Santiago,54 the Court explicitly expressed that:
Similarly, Justice Feria notes that "the present rule reaffirms the right of the defendant to
move for the dismissal of the complaint and to prosecute his counterclaim, as stated in the
separate opinion [of Justice Regalado in BA Finance]. Retired Court of Appeals Justice
Hererra pronounces that the amendment to Section 3, Rule 17 [of the 1997 Revised Rules of
Civil Procedure] settles that "nagging question "whether the dismissal of the complaint carries
with it the dismissal of the counterclaim, and opines that by reason of the amendments, the
rulings in Metals Engineering, International Container, and BA Finance "may be deemed
abandoned." x x x.
x x x, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended
Rule 17, those previous jural doctrines that were inconsistent with the new rules incorporated
in the 1997 Rules of Civil Procedure were implicitly abandoned insofar as incidents arising
after the effectivity of the new procedural rules on 1 July 1997. BA Finance, or even the
doctrine that a counterclaim may be necessarily dismissed along with the complaint, clearly
conflicts with the 1997 Rules of Civil Procedure. The abandonment of BA Finance as doctrine
extends as far back as 1997, when the Court adopted the new Rules of Civil Procedure. If,
since then, abandonment has not been affirmed in jurisprudence, it is only because no proper
case has arisen that would warrant express confirmation of the new rule. That opportunity is
here and now, and we thus rule that the dismissal of a complaint due to fault of the plaintiff is
without prejudice to the right of the defendant to prosecute any pending counterclaims of
whatever nature in the same or separate action. We confirm that BA Finance and all previous
rulings of the Court that are inconsistent with this present holding are now
abandoned.55 [Emphasis supplied].
It is true that the aforesaid declaration of the Court refers to instances covered by Section 3,
Rule 17 of the 1997 Revised Rules of Civil Procedure 56 on dismissal of the complaint due to
the fault of the plaintiff. Nonetheless, it does not also preclude the application of the same to
the instant case just because the dismissal of respondent's Complaint was upon the instance
of the petitioner who correctly argued lack of jurisdiction over its person.
Also in the case of Pinga v. Heirs of German Santiago, the Court discussed the situation
wherein the very filing of the complaint by the plaintiff against the defendant caused the
violation of the latter's rights. As to whether the dismissal of such a complaint should also
include the dismissal of the counterclaim, the Court acknowledged that said matter is still
debatable, viz:
Whatever the nature of the counterclaim, it bears the same integral characteristics as a
complaint; namely a cause (or causes) of action constituting an act or omission by which a
party violates the right of another. The main difference lies in that the cause of action in the
counterclaim is maintained by the defendant against the plaintiff, while the converse holds
true with the complaint. Yet, as with a complaint, a counterclaim without a cause of action
cannot survive.
39
x x x if the dismissal of the complaint somehow eliminates the cause(s) of the counterclaim,
then the counterclaim cannot survive. Yet that hardly is the case, especially as a general rule.
More often than not, the allegations that form the counterclaim are rooted in an act or
omission of the plaintiff other than the plaintiff's very act of filing the complaint. Moreover,
such acts or omissions imputed to the plaintiff are often claimed to have occurred prior to the
filing of the complaint itself. The only apparent exception to this circumstance is if it is alleged
in the counterclaim that the very act of the plaintiff in filing the complaint precisely causes the
violation of the defendant's rights. Yet even in such an instance, it remains debatable whether
the dismissal or withdrawal of the complaint is sufficient to obviate the pending cause of
action maintained by the defendant against the plaintiff. 57 Ï‚ηαñrοblεš  Î½Î¹r†υαl  lαÏ
‰  lιbrαrÿ
Based on the aforequoted ruling of the Court, if the dismissal of the complaint somehow
eliminates the cause of the counterclaim, then the counterclaim cannot survive. Conversely, if
the counterclaim itself states sufficient cause of action then it should stand independently of
and survive the dismissal of the complaint. Now, having been directly confronted with the
problem of whether the compulsory counterclaim by reason of the unfounded suit may
prosper even if the main complaint had been dismissed, we rule in the affirmative.
It bears to emphasize that petitioner's counterclaim against respondent is for damages and
attorney's fees arising from the unfounded suit. While respondent's Complaint against
petitioner is already dismissed, petitioner may have very well already incurred damages and
litigation expenses such as attorney's fees since it was forced to engage legal representation
in the Philippines to protect its rights and to assert lack of jurisdiction of the courts over its
person by virtue of the improper service of summons upon it. Hence, the cause of action of
petitioner's counterclaim is not eliminated by the mere dismissal of respondent's complaint.
Since petitioner's counterclaim is compulsory in nature and its cause of action survives that of
the dismissal of respondent's complaint, then it should be resolved based on its own merits
and evidentiary support.
WHEREFORE, premises considered, the instant Petition is hereby GRANTED. The Decision
of the Court of Appeals, dated 4 April 2006, in CA-G.R. SP No. 78981, affirming the Orders,
dated 4 November 2002 and 20 June 2003, of the Regional Trial Court of Mandaluyong City,
Branch 212, in Civil Case No. MC99-605, is hereby REVERSED AND SET ASIDE.
Respondent's Amended Complaint in Civil Case No. MC99-605 as against the petitioner is
hereby ordered DISMISSED, and all the proceedings against petitioner in the court a quo by
virtue thereof are hereby DECLARED NULL AND VOID. The Regional Trial Court of
Mandaluyong City, Branch 212, is DIRECTED to proceed without further delay with the
resolution of respondent's Complaint in Civil Case No. MC99-605 as to defendant PEIP, as
well as petitioner's counterclaim. No costs.
SO ORDERED.
G.R. No. 171805               May 30, 2011
PHILIPPINE NATIONAL BANK, Petitioner,
vs.
MERELO B. AZNAR; MATIAS B. AZNAR III; JOSE L. AZNAR (deceased), represented
by his heirs; RAMON A. BARCENILLA; ROSARIO T. BARCENILLA; JOSE B. ENAD
(deceased), represented by his heirs; and RICARDO GABUYA (deceased), represented
by his heirs, Respondents.

It may also do well to remember that it is this Court which mandated that claims for damages x - - - - - - - - - - - - - - - - - - - - - - -x
and attorney's fees based on unfounded suit constitute compulsory counterclaim which must
be pleaded in the same action or, otherwise, it shall be barred. It will then be iniquitous and
G.R. No. 172021
the height of injustice to require the petitioner to make the counterclaim in the present action,
under threat of losing his right to claim the same ever again in any other court, yet make his
right totally dependent on the fate of the respondent's complaint. MERELO B. AZNAR and MATIAS B. AZNAR III, Petitioners,
vs.
PHILIPPINE NATIONAL BANK, Respondent.
If indeed the Court dismisses petitioner's counterclaim solely on the basis of the dismissal of
respondent's Complaint, then what remedy is left for the petitioner? It can be said that he can
still file a separate action to recover the damages and attorney's fees based on the DECISION
unfounded suit for he cannot be barred from doing so since he did file the compulsory
counterclaim in the present action, only that it was dismissed when respondent's Complaint
was dismissed. However, this reasoning is highly flawed and irrational considering that LEONARDO-DE CASTRO, J.:
petitioner, already burdened by the damages and attorney's fees it may have incurred in the
present case, must again incur more damages and attorney's fees in pursuing a separate Before the Court are two petitions for review on certiorari under Rule 45 of the Rules of Court
action, when, in the first place, it should not have been involved in any case at all. both seeking to annul and set aside the Decision 1 dated September 29, 2005 as well as the
Resolution2 dated March 6, 2006 of the Court of Appeals in CA-G.R. CV No. 75744, entitled
"Merelo B. Aznar, Matias B. Aznar III, Jose L. Aznar (deceased) represented by his heirs,
Ramon A. Barcenilla (deceased) represented by his heirs, Rosario T. Barcenilla, Jose B.

40
Enad (deceased) represented by his heirs, and Ricardo Gabuya (deceased) represented by xxxx
his heirs v. Philippine National Bank, Jose Garrido and Register of Deeds of Cebu City." The
September 29, 2005 Decision of the Court of Appeals set aside the Decision 3 dated
3. The President then explained that in a special meeting of the stockholders previously
November 18, 1998 of the Regional Trial Court (RTC) of Cebu City, Branch 17, in Civil Case
called for the purpose of putting up certain amount of ₱212,720.00 for the rehabilitation of the
No. CEB-21511. Furthermore, it ordered the Philippine National Bank (PNB) to pay Merelo B.
Company, the following stockholders contributed the amounts indicated opposite their
Aznar; Matias B. Aznar III; Jose L. Aznar (deceased), represented by his heirs; Ramon A.
names:
Barcenilla (deceased), represented by his heirs; Rosario T. Barcenilla; Jose B. Enad
(deceased), represented by his heirs; and Ricardo Gabuya (deceased), represented by his
heirs (Aznar, et al.), the amount of their lien based on the Minutes of the Special Meeting of CONTRIBUTED SURPLUS
the Board of Directors4 (Minutes) of the defunct Rural Insurance and Surety Company, Inc.
(RISCO) duly annotated on the titles of three parcels of land, plus legal interests from the
time of PNB’s acquisition of the subject properties until the finality of the judgment but MERELO B. AZNAR ₱50,000.00
dismissing all other claims of Aznar, et al. On the other hand, the March 6, 2006 Resolution
of the Court of Appeals denied the Motion for Reconsideration subsequently filed by each MATIAS B. AZNAR 50,000.00
party.
JOSE L. AZNAR 27,720.00
The facts of this case, as stated in the Decision dated September 29, 2005 of the Court of
Appeals, are as follows: RAMON A. BARCENILLA 25,000.00

ROSARIO T. BARCENILLA 25,000.00

In 1958, RISCO ceased operation due to business reverses. In plaintiffs’ desire to rehabilitate
RISCO, they contributed a total amount of ₱212,720.00 which was used in the purchase of
JOSE B. ENAD 17,500.00
the three (3) parcels of land described as follows:
RICARDO GABUYA 17,500.00
"A parcel of land (Lot No. 3597 of the Talisay-Minglanilla Estate, G.L.R.O. Record No. 3732)
situated in the Municipality of Talisay, Province of Cebu, Island of Cebu. xxx containing an
area of SEVENTY[-]EIGHT THOUSAND ONE HUNDRED EIGHTY[-]FIVE SQUARE
METERS (78,185) more or less. x x x" covered by Transfer Certificate of Title No. 8921 in the   212,720.00
name of Rural Insurance & Surety Co., Inc.";

"A parcel of land (Lot 7380 of the Talisay Minglanilla Estate, G.L.R.O. Record No. 3732),
situated in the Municipality of Talisay, Province of Cebu, Island of Cebu. xxx containing an
area of THREE HUNDRED TWENTY[-]NINE THOUSAND FIVE HUNDRED
FORTY[-]SEVEN SQUARE METERS (329,547), more or less. xxx" covered by Transfer
Certificate of Title No. 8922 in the name of Rural Insurance & Surety Co., Inc." and
"A parcel of land (Lot 1323 of the subdivision plan Psd-No. 5988), situated in the District of
Lahug, City of Cebu, Island of Cebu. xxx containing an area of FIFTY[-]FIVE THOUSAND
SIX HUNDRED FIFTY[-]THREE (55,653) SQUARE METERS, more or less." covered by
Transfer Certificate of Title No. 24576 in the name of Rural Insurance & Surety Co., Inc."
After the purchase of the above lots, titles were issued in the name of RISCO. The amount
contributed by plaintiffs constituted as liens and encumbrances on the aforementioned
properties as annotated in the titles of said lots. Such annotation was made pursuant to the
Minutes of the Special Meeting of the Board of Directors of RISCO (hereinafter referred to as
the "Minutes") on March 14, 1961, pertinent portion of which states:
xxxx
And that the respective contributions above-mentioned shall constitute as their lien or interest
on the property described above, if and when said property are titled in the name of RURAL
INSURANCE & SURETY CO., INC., subject to registration as their adverse claim in
pursuance of the Provisions of Land Registration Act, (Act No. 496, as amended) until such
time their respective contributions are refunded to them completely.
x x x x"
Thereafter, various subsequent annotations were made on the same titles, including the
Notice of Attachment and Writ of Execution both dated August 3, 1962 in favor of herein
defendant PNB, to wit:
On TCT No. 8921 for Lot 3597:

41
Entry No. 7416-V-4-D.B. – Notice of Attachment – By the Provincial Sheriff of Cebu, Civil (Same as the annotations on TCT 8921)
Case No. 47725, Court of First Instance of Manila, entitled "Philippine National Bank, Plaintiff,
versus Iluminada Gonzales, et al., Defendants", attaching all rights, interest and participation
On TCT No. 24576 for Lot 1328 (Corrected to Lot 1323-c per court order):
of the defendant Iluminada Gonzales and Rural Insurance & Surety Co., Inc. of the two
parcels of land covered by T.C.T. Nos. 8921, Attachment No. 330 and 185.
Entry No. 1660-V-7-D.B. – Notice of Attachment – by the Provincial Sheriff of Cebu, Civil
Case No. 47725, Court of First Instance of Manila, entitled "Philippine National Bank, Plaintiff,
Date of Instrument – August 3, 1962.
versus, Iluminada Gonzales, et al., Defendants", attaching all rights, interest, and
participation of the defendants Iluminada Gonzales and Rural Insurance & Surety Co., Inc. of
Date of Inscription – August 3, 1962, 3:00 P.M. the parcel of land herein described.

Entry No. 7417-V-4-D.B. – Writ of Execution – By the Court of First Instance of Manila, Attachment No. 330 & 185.
commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants, to
make the sum of Seventy[-]One Thousand Three Hundred Pesos (₱71,300.00) plus interest
Date of Instrument – August 3, 1962.
etc., in connection with Civil Case No. 47725, File No. T-8021.

Date of Inscription – August 3, 1962, 3:00 P.M.

Date of Instrument – July 21, 1962.

Entry No. 1661-V-7-D.B. – Writ of Execution by the Court of First Instance of Manila
Date of Inscription – August 3, 1962, 3:00 P.M.
commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants to
make the sum of Seventy[-]One Thousand Three Hundred Pesos (₱71,300.00), plus interest,
Entry No. 7512-V-4-D.B. – Notice of Attachment – By the Provincial Sheriff of Cebu, Civil etc., in connection with Civil Case No. 47725.
Case Nos. IV-74065, 73929, 74129, 72818, in the Municipal Court of the City of Manila,
entitled "Jose Garrido, Plaintiff, versus Rural Insurance & Surety Co., Inc., et als.,
File No. T-8921.
Defendants", attaching all rights, interests and participation of the defendants, to the parcels
of land covered by T.C.T. Nos. 8921 & 8922 Attachment No. 186, File No. T-8921.
Date of the Instrument – July 21, 1962.
Date of the Instrument – August 16, 1962.
Date of the Inscription – August 3, 1962 3:00 P.M.
Date of Inscription – August 16, 1962, 2:50 P.M.
Entry No. 1861-V-7-D.B. - Notice of Attachment – By the Provincial Sheriff of Cebu, Civil
Case Nos. IV-74065, 73929, 74129, 72613 & 72871, in the Municipal Court of the City of
Entry No. 7513-V-4-D.B. – Writ of Execution – By the Municipal Court of the City of Manila,
Manila, entitled "Jose Garrido, Plaintiff, versus Rural Insurance & Surety Co., Inc., et als.,
commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants, to
Defendants", attaching all rights, interest and participation of the defendants, to the parcel of
make the sum of Three Thousand Pesos (₱3,000.00), with interest at 12% per annum from
land herein described.
July 20, 1959, in connection with Civil Case Nos. IV-74065, 73929, 74613 annotated above.

Attachment No. 186.

File No. T-8921

File No. T-8921.

Date of the Instrument – August 11, 1962.

Date of the Instrument – August 16, 1962.

Date of the Inscription – August 16, 1962, 2:50 P.M.

Date of the Instription – August 16, 1962 2:50 P.M.

On TCT No. 8922 for Lot 7380:

42
Entry No. 1862-V-7-D.B. – Writ of Execution – by the Municipal Court of Manila, commanding
the Provincial Sheriff of Cebu, of the lands and buildings of the Defendants, to make the sum
of Three Thousand Pesos (P3,000.00), with interest at 12% per annum from July 20, 1959, in
connection with Civil Case Nos. IV-74065, 73929, 74129, 72613 & 72871 annotated above.
File No. T-8921.
Date of the Instrument – August 11, 1962.
Date of the Inscription – August 16, 1962 at 2:50 P.M.
As a result, a Certificate of Sale was issued in favor of Philippine National Bank, being the
lone and highest bidder of the three (3) parcels of land known as Lot Nos. 3597 and 7380,
covered by T.C.T. Nos. 8921 and 8922, respectively, both situated at Talisay, Cebu, and Lot
No. 1328-C covered by T.C.T. No. 24576 situated at Cebu City, for the amount of Thirty-One
Thousand Four Hundred Thirty Pesos (P31,430.00). Thereafter, a Final Deed of Sale dated
May 27, 1991 in favor of the Philippine National Bank was also issued and Transfer
Certificate of Title No. 24576 for Lot 1328-C (corrected to 1323-C) was cancelled and a new
certificate of title, TCT 119848 was issued in the name of PNB on August 26, 1991.
WHEREFORE, judgment is hereby rendered as follows:
a) Declaring the Minutes of the Special Meeting of the Board of Directors of RISCO
approved on March 14, 1961 (Annex "E," Complaint) annotated on the titles to
subject properties on May 15, 1962 as an express trust whereby RISCO was a
mere trustee and the above-mentioned stockholders as beneficiaries being the true
and lawful owners of Lots 3597, 7380 and 1323;
b) Declaring all the subsequent annotations of court writs and processes, to wit:
Entry No. 7416-V-4-D.B., 7417-V-4-D.B., 7512-V-4-D.B., and 7513-V-4-D.B. in
TCT No. 8921 for Lot 3597 and TCT No. 8922 for Lot 7380; Entry No. 1660-V-7-
D.B., Entry No. 1661-V-7-D.B., Entry No. 1861-V-7-D.B., Entry No. 1862-V-7-D.B.,
Entry No. 4329-V-7-D.B., Entry No. 3761-V-7-D.B. and Entry No. 26522 v. 34, D.B.
on TCT No. 24576 for Lot 1323-C, and all other subsequent annotations thereon in
favor of third persons, as null and void;
c) Directing the Register of Deeds of the Province of Cebu and/or the Register of
Deeds of Cebu City, as the case may be, to cancel all these annotations mentioned
in paragraph b) above the titles;

d) Directing the Register of Deeds of the Province of Cebu to cancel and/or annul
This prompted plaintiffs-appellees to file the instant complaint seeking the quieting of their
TCTs Nos. 8921 and 8922 in the name of RISCO, and to issue another titles in the
supposed title to the subject properties, declaratory relief, cancellation of TCT and
names of the plaintiffs; and
reconveyance with temporary restraining order and preliminary injunction. Plaintiffs alleged
that the subsequent annotations on the titles are subject to the prior annotation of their liens
and encumbrances. Plaintiffs further contended that the subsequent writs and processes e) Directing Philippine National Bank to reconvey TCT No. 119848 in favor of the
annotated on the titles are all null and void for want of valid service upon RISCO and on plaintiffs.7
them, as stockholders. They argued that the Final Deed of Sale and TCT No. 119848 are null
and void as these were issued only after 28 years and that any right which PNB may have
PNB appealed the adverse ruling to the Court of Appeals which, in its September 29, 2005
over the properties had long become stale.
Decision, set aside the judgment of the trial court. Although the Court of Appeals agreed with
the trial court that a judgment on the pleadings was proper, the appellate court opined that
Defendant PNB on the other hand countered that plaintiffs have no right of action for quieting the monetary contributions made by Aznar, et al., to RISCO can only be characterized as a
of title since the order of the court directing the issuance of titles to PNB had already become loan secured by a lien on the subject lots, rather than an express trust. Thus, it directed PNB
final and executory and their validity cannot be attacked except in a direct proceeding for their to pay Aznar, et al., the amount of their contributions plus legal interest from the time of
annulment. Defendant further asserted that plaintiffs, as mere stockholders of RISCO do not acquisition of the property until finality of judgment.lawphil The dispositive portion of the
have any legal or equitable right over the properties of the corporation. PNB posited that decision reads:
even if plaintiff’s monetary lien had not expired, their only recourse was to require the
reimbursement or refund of their contribution. 51awphi1
WHEREFORE, premises considered, the assailed Judgment is hereby SET ASIDE.
6
Aznar, et al., filed a Manifestation and Motion for Judgment on the Pleadings  on October 5,
A new judgment is rendered ordering Philippine National Bank to pay plaintiffs-appellees the
1998. Thus, the trial court rendered the November 18, 1998 Decision, which ruled against
amount of their lien based on the Minutes of the Special Meeting of the Board of Directors
PNB on the basis that there was an express trust created over the subject properties
duly annotated on the titles, plus legal interests from the time of appellants’ acquisition of the
whereby RISCO was the trustee and the stockholders, Aznar, et al., were the beneficiaries or
subject properties until the finality of this judgment.
the cestui que trust. The dispositive portion of the said ruling reads:

All other claims of the plaintiffs-appellees are hereby DISMISSED. 8

43
Both parties moved for reconsideration but these were denied by the Court of Appeals.
Hence, each party filed with this Court their respective petitions for review on certiorari under
Rule 45 of the Rules of Court, which were consolidated in a Resolution 9 dated October 2,
2006.
In PNB’s petition, docketed as G.R. No. 171805, the following assignment of errors were
raised:
I the pleadings of the parties and the annexes, if any, without consideration of any evidence
THE COURT OF APPEALS ERRED IN AFFIRMING THE FINDINGS OF THE
TRIAL COURT THAT A JUDGMENT ON THE PLEADINGS WAS WARRANTED
DESPITE THE EXISTENCE OF GENUINE ISSUES OF FACTS ALLEGED IN
PETITIONER PNB’S ANSWER.
II
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
RIGHT OF RESPONDENTS TO REFUND OR REPAYMENT OF THEIR
CONTRIBUTIONS HAD NOT PRESCRIBED AND/OR THAT THE MINUTES OF
THE SPECIAL MEETING OF THE BOARD OF DIRECTORS OF RISCO
CONSTITUTED AS AN EFFECTIVE ADVERSE CLAIM.
III
THE COURT OF APPEALS ERRED IN NOT CONSIDERING THE DISMISSAL OF
THE COMPLAINT ON GROUNDS OF RES JUDICATA AND LACK OF CAUSE OF
ACTION ALLEGED BY PETITIONER IN ITS ANSWER.10
On the other hand, Aznar, et al.’s petition, docketed as G.R. No. 172021, raised the following
issue:
THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE CONTRIBUTIONS MADE
BY THE STOCKHOLDERS OF RISCO WERE MERELY A LOAN SECURED BY THEIR
LIEN OVER THE PROPERTIES, SUBJECT TO REIMBURSEMENT OR REFUND, RATHER
THAN AN EXPRESS TRUST.11
Anent the first issue raised in G.R. No. 171805, PNB argues that a judgment on the
pleadings was not proper because its Answer,12 which it filed during the trial court
proceedings of this case, tendered genuine issues of fact since it did not only deny material
allegations in Aznar, et al.’s Complaint 13 but also set up special and affirmative defenses.
Furthermore, PNB maintains that, by virtue of the trial court’s judgment on the pleadings, it
was denied its right to present evidence and, therefore, it was denied due process.
The contention is meritorious.
The legal basis for rendering a judgment on the pleadings can be found in Section 1, Rule 34
of the Rules of Court which states that "[w]here an answer fails to tender an issue, or
otherwise admits the material allegations of the adverse party’s pleading, the court may, on
motion of that party, direct judgment on such pleading. x x x."
Judgment on the pleadings is, therefore, based exclusively upon the allegations appearing in
aliunde.14 However, when it appears that not all the material allegations of the complaint were
admitted in the answer for some of them were either denied or disputed, and the defendant
has set up certain special defenses which, if proven, would have the effect of nullifying
plaintiff’s main cause of action, judgment on the pleadings cannot be rendered. 15
In the case at bar, the Court of Appeals justified the trial court’s resort to a judgment on the
pleadings in the following manner:
Perusal of the complaint, particularly, Paragraph 7 thereof reveals:
"7. That in their desire to rehabilitate RISCO, the above-named stockholders contributed a
total amount of Ph₱212,720.00 which was used in the purchase of the above-described
parcels of land, which amount constituted liens and encumbrances on subject properties in
favor of the above-named stockholders as annotated in the titles adverted to above, pursuant
to the Minutes of the Special Meeting of the Board of Directors of RISCO approved on March
14, 1961, a copy of which is hereto attached as Annex "E".
On the other hand, defendant in its Answer, admitted the aforequoted allegation with the
qualification that the amount put up by the stockholders was "used as part payment" for the
properties. Defendant further averred that plaintiff’s liens and encumbrances annotated on
the titles issued to RISCO constituted as "loan from the stockholders to pay part of the
purchase price of the properties" and "was a personal obligation of RISCO and was thus not
a claim adverse to the ownership rights of the corporation." With these averments, We do not
find error on the part of the trial court in rendering a judgment on the pleadings. For one, the
qualification made by defendant in its answer is not sufficient to controvert the allegations
raised in the complaint. As to defendants’ contention that the money contributed by plaintiffs
was in fact a "loan" from the stockholders, reference can be made to the Minutes of the
Special Meeting of the Board of Directors, from which plaintiffs-appellees anchored their
complaint, in order to ascertain the true nature of their claim over the properties. Thus, the
issues raised by the parties can be resolved on the basis of their respective pleadings and
the annexes attached thereto and do not require further presentation of evidence aliunde. 16
However, a careful reading of Aznar, et al.’s Complaint and of PNB’s Answer would reveal
that both parties raised several claims and defenses, respectively, other than what was cited
by the Court of Appeals, which requires the presentation of evidence for resolution is , to wit:
44
 A thorough and comprehensive scrutiny of the records would reveal that this case should be
Complaint (Aznar, et al.)
dismissed because Aznar, et al., have no title to quiet over the subject properties and their
true cause of action is already barred by prescription.
11. That these subsequent annotations on the titles of the properties in question are subject to the
prior annotation of liens and encumbrances of the above-named stockholders per Entry No. 458-V-
7-D.B. inscribed on TCT No. 24576 on May 15, 1962 and per Entry No. 6966-V-4-D.B. on TCT At the
No.outset, the Court agrees with the Court of Appeals that the agreement contained in the
8921 and TCT No. 8922 on May 15, 1962; Minutes of the Special Meeting of the RISCO Board of Directors held on March 14, 1961 was
a loan by the therein named stockholders to RISCO. We quote with approval the following
discussion
12. That these writs and processes annotated on the titles are all null and void for total want of from the Court of Appeals Decision dated September 29, 2005:
valid service upon RISCO and the above-named stockholders considering that as early as
sometime in 1958, RISCO ceased operations as earlier stated, and as early as May 15, 1962, the perusal of the Minutes relied upon by plaintiffs-appellees in their claim, showed that
Careful
liens and encumbrances of the above-named stockholders were annotated in the titles of subject
their contributions shall constitute as "lien or interest on the property" if and when said
properties; properties are titled in the name of RISCO, subject to registration of their adverse claim under
the Land Registration Act, until such time their respective contributions are refunded to them
13. That more particularly, the Final Deed of Sale (Annex "G") and TCT No. 119848 are null and
completely.
void as these were issued only after 28 years and 5 months (in the case of the Final Deed of Sale)
and 28 years, 6 months and 29 days (in the case of TCT 119848) from the invalid auction sale on
December 27, 1962, hence, any right, if any, which PNB had over subject properties had It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear
long
become stale; and leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulation shall control. When the language of the contract is explicit leaving no doubt as to
the intention of the drafters thereof, the courts may not read into it any other intention that
14. That plaintiffs continue to have possession of subject properties and of their corresponding
titles, but they never received any process concerning the petition filed by PNB to have TCT would
24576contradict its plain import.
over Lot 1323-C surrendered and/or cancelled;
The term lien as used in the Minutes is defined as "a discharge on property usually for the
15. That there is a cloud created on the aforementioned titles of RISCO by reason of the annotate payment of some debt or obligation. A lien is a qualified right or a proprietary interest which
writs, processes and proceedings caused by Jose Garrido and PNB which were apparently valid may or
be exercised over the property of another. It is a right which the law gives to have a debt
effective, but which are in truth and in fact invalid and ineffective, and prejudicial to said titles and out of a particular thing. It signifies a legal claim or charge on property; whether real
satisfied
to the rights of the plaintiffs, which should be removed and the titles quieted. 17 or personal, as a collateral or security for the payment of some debt or obligation." Hence,
from the use of the word "lien" in the Minutes, We find that the money contributed by
plaintiffs-appellees was in the nature of a loan, secured by their liens and interests duly
Furthermore, apart from refuting the aforecited material allegations made by Aznar, et al., annotated on the titles. The annotation of their lien serves only as collateral and does not in
PNB also indicated in its Answer the special and affirmative defenses of (a) prescription; (b) any way vest ownership of property to plaintiffs.20 (Emphases supplied.)
res judicata; (c) Aznar, et al., having no right of action for quieting of title; (d) Aznar, et al.’s
lien being ineffective and not binding to PNB; and (e) Aznar, et al.’s having no personality to
We are not persuaded by the contention of Aznar, et al., that the language of the subject
file the suit.19
Minutes created an express trust.

From the foregoing, it is indubitably clear that it was error for the trial court to render a
Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in
judgment on the pleadings and, in effect, resulted in a denial of due process on the part of
another. It is a fiduciary relationship that obliges the trustee to deal with the property for the
PNB because it was denied its right to present evidence. A remand of this case would
benefit of the beneficiary. Trust relations between parties may either be express or implied.
ordinarily be the appropriate course of action. However, in the interest of justice and in order
An express trust is created by the intention of the trustor or of the parties. An implied trust
to expedite the resolution of this case which was filed with the trial court way back in 1998,
comes into being by operation of law.21
the Court finds it proper to already resolve the present controversy in light of the existence of
legal grounds that would dispose of the case at bar without necessity of presentation of
further evidence on the other disputed factual claims and defenses of the parties. Express trusts, sometimes referred to as direct trusts, are intentionally created by the direct
and positive acts of the settlor or the trustor - by some writing, deed, or will or oral
declaration. It is created not necessarily by some written words, but by the direct and positive
acts of the parties.22 This is in consonance with Article 1444 of the Civil Code, which states

45
that "[n]o particular words are required for the creation of an express trust, it being sufficient
that a trust is clearly intended."
In other words, the creation of an express trust must be manifested with reasonable certainty
and cannot be inferred from loose and vague declarations or from ambiguous circumstances
susceptible of other interpretations. 23
No such reasonable certitude in the creation of an express trust obtains in the case at bar. In
fact, a careful scrutiny of the plain and ordinary meaning of the terms used in the Minutes
does not offer any indication that the parties thereto intended that Aznar, et al., become
beneficiaries under an express trust and that RISCO serve as trustor.
Indeed, we find that Aznar, et al., have no right to ask for the quieting of title of the properties
at issue because they have no legal and/or equitable rights over the properties that are
derived from the previous registered owner which is RISCO, the pertinent provision of the law
is Section 2 of the Corporation Code (Batas Pambansa Blg. 68), which states that "[a]
corporation is an artificial being created by operation of law, having the right of succession
and the powers, attributes and properties expressly authorized by law or incident to its
existence."
As a consequence thereof, a corporation has a personality separate and distinct from those
of its stockholders and other corporations to which it may be connected. 24 Thus, we had
previously ruled in Magsaysay-Labrador v. Court of Appeals 25 that the interest of the
stockholders over the properties of the corporation is merely inchoate and therefore does not
entitle them to intervene in litigation involving corporate property, to wit:
Here, the interest, if it exists at all, of petitioners-movants is indirect, contingent, remote,
conjectural, consequential and collateral. At the very least, their interest is purely inchoate, or
in sheer expectancy of a right in the management of the corporation and to share in the
profits thereof and in the properties and assets thereof on dissolution, after payment of the
corporate debts and obligations.
While a share of stock represents a proportionate or aliquot interest in the property of the
corporation, it does not vest the owner thereof with any legal right or title to any of the
property, his interest in the corporate property being equitable or beneficial in nature.
Shareholders are in no legal sense the owners of corporate property, which is owned by the
corporation as a distinct legal person. 26
In the case at bar, there is no allegation, much less any proof, that the corporate existence of
RISCO has ceased and the corporate property has been liquidated and distributed to the
stockholders. The records only indicate that, as per Securities and Exchange Commission
(SEC) Certification27 dated June 18, 1997, the SEC merely suspended RISCO’s Certificate of
Registration beginning on September 5, 1988 due to its non-submission of SEC required
reports and its failure to operate for a continuous period of at least five years.
Verily, Aznar, et al., who are stockholders of RISCO, cannot claim ownership over the
properties at issue in this case on the strength of the Minutes which, at most, is merely
evidence of a loan agreement between them and the company. There is no indication or
even a suggestion that the ownership of said properties were transferred to them which
would require no less that the said properties be registered under their names. For this
reason, the complaint should be dismissed since Aznar, et al., have no cause to seek a
quieting of title over the subject properties.
At most, what Aznar, et al., had was merely a right to be repaid the amount loaned to RISCO.
Unfortunately, the right to seek repayment or reimbursement of their contributions used to
purchase the subject properties is already barred by prescription.
Section 1, Rule 9 of the Rules of Court provides that when it appears from the pleadings or
the evidence on record that the action is already barred by the statute of limitations, the court
shall dismiss the claim, to wit:
Defenses and objections not pleaded either in a motion to dismiss or in the answer are
deemed waived. However, when it appears from the pleadings or the evidence on record that
the court has no jurisdiction over the subject matter, that there is another action pending
between the same parties for the same cause, or that the action is barred by a prior judgment
or by statute of limitations, the court shall dismiss the claim. (Emphasis supplied.)
In Feliciano v. Canoza, 28 we held:
We have ruled that trial courts have authority and discretion to dismiss an action on the
ground of prescription when the parties’ pleadings or other facts on record show it to be
indeed time-barred x x x; and it may do so on the basis of a motion to dismiss, or an answer
which sets up such ground as an affirmative defense; or even if the ground is alleged after
judgment on the merits, as in a motion for reconsideration; or even if the defense has not
been asserted at all, as where no statement thereof is found in the pleadings, or where a
defendant has been declared in default. What is essential only, to repeat, is that the facts
demonstrating the lapse of the prescriptive period, be otherwise sufficiently and
satisfactorily apparent on the record; either in the averments of the plaintiffs
complaint, or otherwise established by the evidence.29 (Emphasis supplied.)
The pertinent Civil Code provision on prescription which is applicable to the issue at hand is
Article 1144(1), to wit:
The following actions must be brought within ten years from the time the right of action
accrues:
1. Upon a written contract;
2. Upon an obligation created by law;
46
 3. Upon a judgment. (Emphasis supplied.) HEIRS OF FRANCISCA MEDRANO, namely YOLANDA R. MEDRANO, ALFONSO R.
MEDRANO, JR., EDITA M. ALFARO, MARITES M. PALENTINOS, and GIOVANNI
MEDRANO, represented by their legal representative, Marites Medrano-
Moreover, in Nielson & Co., Inc. v. Lepanto Consolidated Mining Co., 30 we held that the term
Palentinos, Petitioners,
"written contract" includes the minutes of the meeting of the board of directors of a
vs.
corporation, which minutes were adopted by the parties although not signed by them, to wit:
ESTANISLAO DE VERA, Respondent.

Coming now to the question of prescription raised by defendant Lepanto, it is contended by

DECISION
the latter that the period to be considered for the prescription of the claim regarding
participation in the profits is only four years, because the modification of the sharing
embodied in the management contract is merely verbal, no written document to that effect DEL CASTILLO, J.:
having been presented. This contention is untenable. The modification appears in the
minutes of the special meeting of the Board of Directors of Lepanto held on August 21, 1940,
In cases where the subject property is transferred by the defendant during the pendency of
it having been made upon the authority of its President, and in said minutes the terms of
the litigation, the interest of the transferee pendente lite cannot be considered independent of
modification had been specified. This is sufficient to have the agreement considered, for the
the interest of his transferors. If the transferee files an answer while the transferor is declared
purpose of applying the statute of limitations, as a written contract even if the minutes were
in default, the case should be tried on the basis of the transferee’s answer and with the
not signed by the parties (3 A.L.R., 2d, p. 831). It has been held that a writing containing the
participation of the transferee.
terms of a contract if adopted by two persons may constitute a contract in writing even if the
same is not signed by either of the parties (3 A.L.R., 2d, pp. 812-813). Another authority says
that an unsigned agreement the terms of which are embodied in a document unconditionally This Petition for Review on Certiorari1 assails the June 25, 2004 Decision 2 of the Court of
accepted by both parties is a written contract (Corbin on Contracts, Vol. I, p. 85). 31 Appeals (CA) in CA-G.R. SP No. 80053, which contained the following dispositive portion:

Applied to the case at bar, the Minutes which was approved on March 14, 1961 is considered WHEREFORE, premises considered, the petition is hereby GRANTED and this Court orders
as a written contract between Aznar, et al., and RISCO for the reimbursement of the that the case be remanded to the court a quo for further trial.
contributions of the former. As such, the former had a period of ten (10) years from 1961
within which to enforce the said written contract. However, it does not appear that Aznar, et
SO ORDERED.3
al., filed any action for reimbursement or refund of their contributions against RISCO or even
against PNB. Instead the suit that Aznar, et al., brought before the trial court only on January
28, 1998 was one to quiet title over the properties purchased by RISCO with their Likewise assailed is the appellate court’s October 6, 2004 Resolution 4 denying petitioners’
contributions. It is unmistakable that their right of action to claim for refund or payment of their Motion for Reconsideration.
contributions had long prescribed. Thus, it was reversible error for the Court of Appeals to
order PNB to pay Aznar, et al., the amount of their liens based on the Minutes with legal
interests from the time of PNB’s acquisition of the subject properties. Factual Antecedents

In view of the foregoing, it is unnecessary for the Court to pass upon the other issues raised
by the parties.
WHEREFORE, the petition of Aznar, et al., in G.R. No. 172021 is DENIED for lack of merit.
The petition of PNB in G.R. No. 171805 is GRANTED. The Complaint, docketed as Civil
Case No. CEB-21511, filed by Aznar, et al., is hereby DISMISSED. No costs.
SO ORDERED.
G.R. No. 165770               August 9, 2010
This case concerns a 463-square meter parcel of land5 covered by Transfer Certificate of
Title (TCT) No. 41860 in the name of Flaviana De Gracia (Flaviana). In 1980, Flaviana
died6 intestate, leaving her half-sisters Hilaria Martin-Paguyo (Hilaria) and Elena Martin-
Alvarado (Elena) as her compulsory heirs.
In September 1982, Hilaria and Elena, by virtue of a private document denominated "Tapno
Maamoan ti Sangalobongan,"7 waived all their hereditary rights to Flaviana’s land in favor of
Francisca Medrano (Medrano). It stated that the waiver was done in favor of Medrano in
consideration of the expenses that she incurred for Flaviana’s medication, hospitalization,
wake and burial. In the same year, Medrano built her concrete bungalow on the land in
question without any objection from Hilaria and Elena or from their children.

47
When Hilaria and Elena died, some of their children affirmed the contents of the private
document executed by their deceased mothers. To that end, they executed separate Deeds
of Confirmation of Private Document and Renunciation of Rights in favor of Medrano. 8 They
likewise affirmed in said documents that Medrano had been occupying and possessing the
subject property as owner since September 1982.
Due to the refusal of the other children 9 to sign a similar renunciation, Medrano filed a
Complaint10 on April 27, 2001 for quieting of title, reconveyance, reformation of instrument,
and/or partition with damages against Pelagia M. Paguyo-Diaz (Pelagia), Faustina Paguyo-
Asumio (Faustina), Jesus Paguyo (Jesus), Veneranda Paguyo-Abrenica, Emilio a.k.a.
Antonio Alvarado, Francisca Alvarado-Diaz (Francisca) and Estrellita Alvarado-Cordero
(Estrellita). The case was docketed as Civil Case No. U-7316 and raffled to Branch 48 of the
Regional Trial Court (RTC) of Urdaneta, Pangasinan. Medrano then caused the annotation of
a notice of lis pendens on TCT No. 4186011 on May 3, 2001.
Summons upon the original complaint was duly served upon Pelagia and Estrellita .12
On August 29, 2001, Medrano filed an Amended Complaint 13 impleading the widow and
children of Antonio Alvarado, in view of the latter’s death. 14 Summons upon the amended
complaint was served upon the other defendants, 15 but no longer served upon Pelagia and
Estrellita.
On April 2, 2002, respondent Estanislao D. De Vera (De Vera) filed an Answer with
Counterclaim.16 De Vera presented himself as the real party-in-interest on the ground that
some of the named defendants (Faustina, Pelagia, Francisca, Elena Kongco-Alvarado,
Jesus, and Estrellita) had executed a Deed of Renunciation of Rights 17 in his favor on March
23, 2002. He maintained that the "Tapno Maamoan ti Sangalobongan" that was executed by
the defendants’ predecessors in favor of Medrano was null and void for want of
consideration. Thus, while some children affirmed the renunciation of their deceased
mothers’ rights in the lot in favor of Medrano, the other children renounced their hereditary
rights in favor of De Vera.
Medrano filed a Motion to Expunge Answer with Counterclaim of Estanislao D. De Vera and
to Declare Defendants in Default. 18 She argued that respondent De Vera had no personality
to answer the complaint since he was not authorized by the named defendants to answer in
their behalf.
In an Order,19 dated July 30, 2002, the trial court disagreed with Medrano’s argument and
admitted De Vera’s Answer with Counterclaim. The trial court opined that De Vera did not
need a special power of attorney from the defendants because he did not answer the
complaint in their behalf. De Vera made a voluntary appearance in the case as the transferee
of the defendants’ rights to the subject property. The trial court further explained that when
the presence of other parties is required for granting complete relief, the court shall order
them to be brought in as defendants. While it was unsure whether De Vera was an
indispensable party to the case, the trial court opined that at the very least he was a
necessary party for granting complete relief. It thus held that the admission of De Vera’s
Answer with Counterclaim is proper in order to avoid multiplicity of suits. 20 In the same Order,
the court declared the named defendants in default for not answering the complaint despite
valid service of summons. Thus, it appears that the court a quo treated the named
defendants and De Vera as distinct and separate parties.
Medrano’s response to the aforesaid order was two-fold. With regard to the order declaring
the named defendants in default, Medrano filed on February 13, 2003 a Motion to Set
Reception of Evidence Before the Branch Clerk of Court.21 She argued that she could present
evidence ex parte against the defaulting defendants on the ground that she presented
alternative causes of action against them in her complaint. Her cause of action on the basis
of acquisitive prescription can be raised solely against the defaulting original
defendants.22 She thus prayed to be allowed to present evidence ex parte with respect to her
claim of acquisitive prescription against the defaulting defendants. As for the order admitting
De Vera’s Answer with Counterclaim, Medrano filed on February 21, 2003 a Motion for
Reconsideration of Order dated July 30, 2002. 23 She asked the court to order De Vera to file
a pleading-in-intervention so that he could be properly named as a defendant in the case.
In an Order24 dated March 6, 2003, the trial court resolved to grant Medrano’s Motion to Set
Reception of Evidence. It ordered the conduct of ex parte presentation of evidence on the
same day and the continuation thereof to proceed on March 10, 2003. Thus, Medrano
presented her evidence ex parte on the set dates. On March 10, 2003, the case was
submitted for resolution.25
Given the court’s standing order which admitted De Vera’s Answer with Counterclaim, De
Vera filed a Motion to Set the Case for Preliminary Conference on March 27, 2003. 26
The trial court resolved petitioners’ and De Vera’s respective pending motions in its March
31, 2003 Order.27 The trial court granted Medrano’s motion and set aside its Order which
admitted De Vera’s Answer with Counterclaim. Citing Rule 19 of the Rules of Court, the court
ordered De Vera to file a pleading-in-intervention so that he could be recognized as a party-
defendant. As a necessary consequence to this ruling, the trial court denied De Vera’s motion
to set the case for preliminary conference for prematurity.
De Vera did not comply with the court’s order despite service upon his lawyer, Atty. Simplicio
M. Sevilleja, on April 2, 2003.
Ruling of the Regional Trial Court
The RTC rendered its Decision 28 on April 21, 2003. It ruled that ownership over the titled
property has vested in petitioners by virtue of good faith possession for more than 10 years;
thus, it was no longer necessary to compel the defendants - heirs of Hilaria and Elena - to
execute an instrument to confirm Medrano’s rightful ownership over the land.
48
The trial court likewise held that the private document denominated as "Tapno Maamoan Ti
Sangalobongan" sufficiently conveyed to Medrano the subject property. The court held that
the conveyance was done in consideration of the various expenses that Medrano incurred for
Flaviana’s benefit. While the court conceded that the parcel of land was not adequately
described in the "Tapno Maamoan ti Sangalobongan," its location, metes and bounds were
nonetheless confirmed by the defendants’ siblings in their respective deeds of confirmation.
The dispositive portion of the Decision reads, in toto:
WHEREFORE, judgment is hereby rendered:
(1) Declaring [Medrano], substituted by her heirs, as the rightful and lawful owner of
the land covered by T.C.T. No. 41860; 29
(2) Ordering the Register of Deeds of Tayug, Pangasinan to cancel T.C.T. No.
41860 and to issue another Transfer Certificate of Title in the name of [Medrano];
All other claims are hereby denied for lack of merit.
SO ORDERED.30
De Vera filed a Motion for Reconsideration 31 arguing that he was an indispensable party who
was not given an opportunity to present his evidence in the case. He also maintained that
Medrano was not the owner of the property, but a mere administratrix of the land as
evidenced by the records in SP Proc. No. 137577.32
De Vera’s motion was denied 33 for lack of merit on July 22, 2003. The court noted that De
Vera had no legal personality to file a motion for reconsideration because he did not file a
pleading-in-intervention. The trial court explained it would have allowed De Vera to present
his evidence in the case had he complied with the court’s order to file a pleading-in-
intervention.
On September 10, 2003, De Vera filed a Manifestation 34 informing the trial court of his
intention to file a petition for certiorari and mandamus before the CA, pursuant to Rule 41,
Section 1, second paragraph and Rule 65 of the Rules of Court.
On October 7, 2003, petitioners filed a Motion for Entry of Judgment and Execution 35 before
the trial court. They also filed a Counter-Manifestation 36 to De Vera’s Manifestation.
Petitioners insisted that De Vera, as a transferee pendente lite, was bound by the final
judgment or decree rendered against his transferors. Even assuming that De Vera had a right
to appeal, the period therefor had already lapsed on August 12, 2003.
In its Order37 dated December 10, 2003, the court a quo maintained that De Vera was not a
party to the suit, hence his appeal would not stay the finality and execution of judgment. Thus
the trial court ordered the entry of judgment in Civil Case No. U-7316. The writ of execution
was issued on December 12, 2003.
De Vera sought reconsideration38 of the above order but the same was denied 39 on the basis
that De Vera had no personality to assail any order, resolution, or decision of the trial court in
Civil Case No. U-7316.
The Register of Deeds of Tayug, Pangasinan complied with the writ by canceling TCT No.
41860 in the name of Flaviana De Gracia and issuing TCT No. 65635 in the names of
petitioners40 on April 19, 2004.
Proceedings before the Court of Appeals
De Vera argued in his Petition for Certiorari and Mandamus41 before the CA that the trial
court erred in declaring the defendants in default and sought a writ compelling the trial court
to try the case anew. He insisted that he stepped into the shoes of the defendants with
regard to the subject property by virtue of the quitclaim that the defendants executed in his
favor. Thus, the trial court should have considered the defendants as properly substituted by
De Vera when he filed his Answer.
The standing order of the trial court with regard to De Vera at the time that it allowed
Medrano to present her evidence was to admit De Vera’s Answer with Counterclaim. Thus,
De Vera argued that it was improper for the trial court to have allowed Medrano to present
her evidence ex parte because it had yet to rule on whether De Vera had personality to
participate in the proceedings.
Ruling of the Court of Appeals
The appellate court agreed with De Vera. The CA noted that the ex parte presentation of
evidence took place on March 6 and 10, 2003; while the Motion to Expunge Answer and
Require Filing of Pleading-in-Intervention was granted much later on March 31, 2003. The CA
held that the trial court gravely abused its discretion by allowing Medrano to present her
evidence ex parte while De Vera’s personality to participate in the case still remained
unresolved. The premature ex parte presentation of evidence rendered a pleading-in-
intervention moot and academic.
The CA pointed out that the trial court should have exercised its authority to order the
substitution of the original defendants instead of requiring De Vera to file a pleading-in-
intervention. This is allowed under Rule 3, Section 19 of the Rules of Court. Since a
transferee pendente lite is a proper party 42 to the case, the court can order his outright
substitution for the original defendants.
49
The CA further held that De Vera’s failure to file the necessary pleading-in-intervention was a
technical defect that could have been easily cured. The trial court could have settled the
controversy completely on its merits had it admitted De Vera’s Answer with Counterclaim. Not
affording De Vera his right to adduce evidence is not only a manifest grave abuse of
discretion amounting to lack or excess of jurisdiction but also runs counter to the avowed
policy of avoiding multiplicity of suits.
The appellate court then ordered the case remanded to the trial court to afford De Vera an
opportunity to present his evidence.
Petitioners filed a Motion for Reconsideration, 43 which motion was denied44 for lack of merit
on October 6, 2004.
Issues
I SEC. 19. Transfer of interest. – In case of any transfer of interest, the action may be
Whether De Vera could participate in Civil Case No. U-7316
without filing a motion to intervene
II
Whether De Vera is bound by the judgment against his transferors
III
Whether it was proper for the CA to take cognizance of respondent’s Petition
for Certiorari and Mandamus
Our Ruling
We sustain the CA’s ruling that the trial court gravely abused its discretion in refusing to allow
De Vera to participate in the case and requiring him to file a motion to intervene.
The trial court misjudged De Vera’s interest in Civil Case No. U-7316. It held that De Vera’s
right to participate in the case was independent of the named defendants. Because of its
ruling that De Vera had an "independent interest," the trial court considered his interest as
separate from Medrano’s claims against the named defendants, and allowed the latter to be
tried separately. Thus, it admitted De Vera’s Answer with Counterclaim but declared the
named defendants in default and allowed the ex parte presentation of evidence by Medrano
against the named defendants.
The trial court’s approach is seriously flawed because De Vera’s interest is not independent
of or severable from the interest of the named defendants. De Vera is a transferee pendente
lite of the named defendants (by virtue of the Deed of Renunciation of Rights that was
executed in his favor during the pendency of Civil Case No. U-7316). His rights were derived
from the named defendants and, as transferee pendente lite, he would be bound by any
judgment against his transferors under the rules of res judicata. 45 Thus, De Vera’s interest
cannot be considered and tried separately from the interest of the named defendants.
It was therefore wrong for the trial court to have tried Medrano’s case against the named
defendants (by allowing Medrano to present evidence ex parte against them) after it had
already admitted De Vera’s answer. What the trial court should have done is to treat De Vera
(as transferee pendente lite) as having been joined as a party-defendant, and to try the case
on the basis of the answer De Vera had filed and with De Vera’s participation. As transferee
pendente lite, De Vera may be allowed to join the original defendants under Rule 3, Section
19:
continued by or against the original party, unless the court upon motion directs the person to
whom the interest is transferred to be substituted in the action or joined with the original
party. (Emphasis supplied)
The above provision gives the trial court discretion to allow or disallow the substitution or
joinder by the transferee. Discretion is permitted because, in general, the transferee’s interest
is deemed by law as adequately represented and protected by the participation of his
transferors in the case. There may be no need for the transferee pendente lite to be
substituted or joined in the case because, in legal contemplation, he is not really denied
protection as his interest is one and the same as his transferors, who are already parties to
the case.46
While the rule allows for discretion, the paramount consideration for the exercise thereof
should be the protection of the parties’ interests and their rights to due process. In the instant
case, the circumstances demanded that the trial court exercise its discretion in favor of
allowing De Vera to join in the action and participate in the trial. It will be remembered that the
trial court had already admitted De Vera’s answer when it declared the original defendants in
default. As there was a transferee pendente lite whose answer had already been admitted,
the trial court should have tried the case on the basis of that answer, based on Rule 9,
Section 3(c):
Effect of partial default. – When a pleading asserting a claim states a common cause of
action against several defending parties, some of whom answer and the others fail to do so,
the court shall try the case against all upon the answers thus filed and render judgment upon
the evidence presented.
Thus, the default of the original defendants should not result in the ex parte presentation of
evidence because De Vera (a transferee pendente lite who may thus be joined as defendant
50
under Rule 3, Section 19) filed an answer. The trial court should have tried the case based on
De Vera’s answer, which answer is deemed to have been adopted by the non-answering
defendants.47
To proceed with the ex parte presentation of evidence against the named defendants after
De Vera’s answer had been admitted would not only be a violation of Rule 9, Section 3(c),
but would also be a gross disregard of De Vera’s right to due process. This is because the ex
parte presentation of evidence would result in a default judgment which would bind not just
the defaulting defendants, but also De Vera, precisely because he is a transferee pendente
lite.48 This would result in an anomaly wherein De Vera would be bound by a default
judgment even if he had filed an answer and expressed a desire to participate in the case.
We note that under Rule 3, Section 19, the substitution or joinder of the transferee is "upon
motion", and De Vera did not file any motion for substitution or joinder. However, this
technical flaw may be disregarded for the fact remains that the court had already admitted his
answer and such answer was on record when the ex parte presentation of evidence was
allowed by the court. Because De Vera’s answer had already been admitted, the court should
not have allowed the ex parte presentation of evidence.
We are not persuaded by petitioners’ insistence that De Vera could not have participated in
the case because he did not file a motion to intervene. The purpose of intervention is to
enable a stranger to an action to become a party in order for him to protect his interest and
for the court to settle all conflicting claims. Intervention is allowed to avoid multiplicity of suits
more than on due process considerations. The intervenor can choose not to participate in the
case and he will not be bound by the judgment.
In this case, De Vera is not a stranger to the action but a transferee pendente lite. As
mentioned, a transferee pendente lite is deemed joined in the pending action from the
moment when the transfer of interest is perfected. 49 His participation in the case should have
been allowed by due process considerations.50
We likewise adopt with approval the appellate court’s observation that De Vera’s failure to file
a pleading-in-intervention will not change the long foregone violation of his right to due
process. The ex parte presentation of evidence had already been terminated when the trial
court required De Vera to file his pleading-in-intervention. Even if he complied with the order
to file a pleading-in-intervention, the damage had already been done. The precipitate course
of action taken by the trial court rendered compliance with its order moot.
Given the Court’s finding that the ex parte presentation of evidence constituted a violation of
due process rights, the trial court’s judgment by default cannot bind De Vera. A void judgment
cannot attain finality and its execution has no basis in law. The case should be remanded to
the trial court for trial based on De Vera’s answer and with his participation.
Certiorari petition before the CA proper
Petitioners point out that De Vera admitted receiving the trial court’s Order denying his motion
for reconsideration on July 28, 2003. Thus he only had until August 12, 2003 to file an appeal
of the decision. Having lost his right to appeal by allowing the period therefor to lapse,
respondent has also lost his right to file a petition for certiorari before the CA. A special civil
action for certiorari is not a substitute for the lost remedy of appeal.
Respondent argues that a Rule 65 certiorari petition before the CA is proper because an
ordinary appeal would not have been speedy and adequate remedy to properly relieve him
from the injurious effects of the trial court’s orders.
We agree with respondent that ordinary appeal was not an adequate remedy under the
circumstances of the case. An appeal seeks to correct errors of judgment committed by a
court, which has jurisdiction over the person and the subject matter of the dispute. In the
instant case, the trial court maintained that it had no jurisdiction over De Vera because it did
not consider him a party to the case. Its stance is that De Vera, as a non-party to the case,
could not participate therein, much less assail any of the orders, resolutions, or judgments of
the trial court. An appeal would have been an illusory remedy in this situation because his
notice of appeal would have certainly been denied on the ground that he is not a party to the
case.
On the other hand, certiorari is an extraordinary remedy for the correction of errors of
jurisdiction. It is proper if the court acted without or in grave abuse of discretion amounting to
lack or excess of jurisdiction and there is no appeal or any plain, speedy, and adequate
remedy in law. Given the circumstance that the final decision in Civil Case No. U-7316
prejudices De Vera’s rights despite the fact that he was not recognized as a party thereto and
was not allowed to assail any portion thereof, De Vera’s remedy was to annul the trial court
proceedings on the ground that it was conducted with grave abuse of discretion amounting to
lack of jurisdiction. With such annulment, the trial court should hear the case anew with De
Vera fully participating therein.
WHEREFORE, the petition is DENIED. The June 25, 2004 Decision of the Court of Appeals
in CA-G.R. SP No. 80053 and its October 6, 2004 Resolution are AFFIRMED.
Costs against petitioners.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
G.R. No. 171805               May 30, 2011
51
PHILIPPINE NATIONAL BANK, Petitioner, In 1958, RISCO ceased operation due to business reverses. In plaintiffs’ desire to rehabilitate
vs. RISCO, they contributed a total amount of ₱212,720.00 which was used in the purchase of
MERELO B. AZNAR; MATIAS B. AZNAR III; JOSE L. AZNAR (deceased), represented the three (3) parcels of land described as follows:
by his heirs; RAMON A. BARCENILLA; ROSARIO T. BARCENILLA; JOSE B. ENAD
(deceased), represented by his heirs; and RICARDO GABUYA (deceased), represented
"A parcel of land (Lot No. 3597 of the Talisay-Minglanilla Estate, G.L.R.O. Record No. 3732)
by his heirs, Respondents.
situated in the Municipality of Talisay, Province of Cebu, Island of Cebu. xxx containing an
area of SEVENTY[-]EIGHT THOUSAND ONE HUNDRED EIGHTY[-]FIVE SQUARE
x - - - - - - - - - - - - - - - - - - - - - - -x METERS (78,185) more or less. x x x" covered by Transfer Certificate of Title No. 8921 in the
name of Rural Insurance & Surety Co., Inc.";
G.R. No. 172021
"A parcel of land (Lot 7380 of the Talisay Minglanilla Estate, G.L.R.O. Record No. 3732),
situated in the Municipality of Talisay, Province of Cebu, Island of Cebu. xxx containing an
MERELO B. AZNAR and MATIAS B. AZNAR III, Petitioners,
area of THREE HUNDRED TWENTY[-]NINE THOUSAND FIVE HUNDRED
vs.
FORTY[-]SEVEN SQUARE METERS (329,547), more or less. xxx" covered by Transfer
PHILIPPINE NATIONAL BANK, Respondent.
Certificate of Title No. 8922 in the name of Rural Insurance & Surety Co., Inc." and

DECISION
"A parcel of land (Lot 1323 of the subdivision plan Psd-No. 5988), situated in the District of
Lahug, City of Cebu, Island of Cebu. xxx containing an area of FIFTY[-]FIVE THOUSAND
LEONARDO-DE CASTRO, J.: SIX HUNDRED FIFTY[-]THREE (55,653) SQUARE METERS, more or less." covered by
Transfer Certificate of Title No. 24576 in the name of Rural Insurance & Surety Co., Inc."
Before the Court are two petitions for review on certiorari under Rule 45 of the Rules of Court
both seeking to annul and set aside the Decision 1 dated September 29, 2005 as well as the After the purchase of the above lots, titles were issued in the name of RISCO. The amount
Resolution2 dated March 6, 2006 of the Court of Appeals in CA-G.R. CV No. 75744, entitled contributed by plaintiffs constituted as liens and encumbrances on the aforementioned
"Merelo B. Aznar, Matias B. Aznar III, Jose L. Aznar (deceased) represented by his heirs, properties as annotated in the titles of said lots. Such annotation was made pursuant to the
Ramon A. Barcenilla (deceased) represented by his heirs, Rosario T. Barcenilla, Jose B. Minutes of the Special Meeting of the Board of Directors of RISCO (hereinafter referred to as
Enad (deceased) represented by his heirs, and Ricardo Gabuya (deceased) represented by the "Minutes") on March 14, 1961, pertinent portion of which states:
his heirs v. Philippine National Bank, Jose Garrido and Register of Deeds of Cebu City." The
September 29, 2005 Decision of the Court of Appeals set aside the Decision 3 dated
xxxx
November 18, 1998 of the Regional Trial Court (RTC) of Cebu City, Branch 17, in Civil Case
No. CEB-21511. Furthermore, it ordered the Philippine National Bank (PNB) to pay Merelo B.
Aznar; Matias B. Aznar III; Jose L. Aznar (deceased), represented by his heirs; Ramon A. 3. The President then explained that in a special meeting of the stockholders previously
Barcenilla (deceased), represented by his heirs; Rosario T. Barcenilla; Jose B. Enad called for the purpose of putting up certain amount of ₱212,720.00 for the rehabilitation of the
(deceased), represented by his heirs; and Ricardo Gabuya (deceased), represented by his Company, the following stockholders contributed the amounts indicated opposite their
heirs (Aznar, et al.), the amount of their lien based on the Minutes of the Special Meeting of names:
the Board of Directors4 (Minutes) of the defunct Rural Insurance and Surety Company, Inc.
(RISCO) duly annotated on the titles of three parcels of land, plus legal interests from the
CONTRIBUTED SURPLUS
time of PNB’s acquisition of the subject properties until the finality of the judgment but
dismissing all other claims of Aznar, et al. On the other hand, the March 6, 2006 Resolution
of the Court of Appeals denied the Motion for Reconsideration subsequently filed by each
party. MERELO B. AZNAR ₱50,000.00

MATIAS B. AZNAR 50,000.00

The facts of this case, as stated in the Decision dated September 29, 2005 of the Court of
Appeals, are as follows: JOSE L. AZNAR 27,720.00

RAMON A. BARCENILLA 25,000.00

52

ROSARIO T. BARCENILLA 25,000.00
JOSE B. ENAD 17,500.00
RICARDO GABUYA 17,500.00
  212,720.00
xxxx
And that the respective contributions above-mentioned shall constitute as their lien or interest
on the property described above, if and when said property are titled in the name of RURAL
INSURANCE & SURETY CO., INC., subject to registration as their adverse claim in
pursuance of the Provisions of Land Registration Act, (Act No. 496, as amended) until such
time their respective contributions are refunded to them completely.
x x x x"
Thereafter, various subsequent annotations were made on the same titles, including the
Notice of Attachment and Writ of Execution both dated August 3, 1962 in favor of herein
defendant PNB, to wit:
On TCT No. 8921 for Lot 3597:
Entry No. 7416-V-4-D.B. – Notice of Attachment – By the Provincial Sheriff of Cebu, Civil
Case No. 47725, Court of First Instance of Manila, entitled "Philippine National Bank, Plaintiff,
versus Iluminada Gonzales, et al., Defendants", attaching all rights, interest and participation
of the defendant Iluminada Gonzales and Rural Insurance & Surety Co., Inc. of the two
parcels of land covered by T.C.T. Nos. 8921, Attachment No. 330 and 185.
Date of Instrument – August 3, 1962.
Date of Inscription – August 3, 1962, 3:00 P.M.
Entry No. 7417-V-4-D.B. – Writ of Execution – By the Court of First Instance of Manila,
commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants, to
make the sum of Seventy[-]One Thousand Three Hundred Pesos (₱71,300.00) plus interest
etc., in connection with Civil Case No. 47725, File No. T-8021.
Date of Instrument – July 21, 1962.
Date of Inscription – August 3, 1962, 3:00 P.M.
Entry No. 7512-V-4-D.B. – Notice of Attachment – By the Provincial Sheriff of Cebu, Civil
Case Nos. IV-74065, 73929, 74129, 72818, in the Municipal Court of the City of Manila,
entitled "Jose Garrido, Plaintiff, versus Rural Insurance & Surety Co., Inc., et als.,
Defendants", attaching all rights, interests and participation of the defendants, to the parcels
of land covered by T.C.T. Nos. 8921 & 8922 Attachment No. 186, File No. T-8921.
Date of the Instrument – August 16, 1962.
Date of Inscription – August 16, 1962, 2:50 P.M.
Entry No. 7513-V-4-D.B. – Writ of Execution – By the Municipal Court of the City of Manila,
commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants, to
make the sum of Three Thousand Pesos (₱3,000.00), with interest at 12% per annum from
July 20, 1959, in connection with Civil Case Nos. IV-74065, 73929, 74613 annotated above.
File No. T-8921
Date of the Instrument – August 11, 1962.
Date of the Inscription – August 16, 1962, 2:50 P.M.
On TCT No. 8922 for Lot 7380:
(Same as the annotations on TCT 8921)
On TCT No. 24576 for Lot 1328 (Corrected to Lot 1323-c per court order):
Entry No. 1660-V-7-D.B. – Notice of Attachment – by the Provincial Sheriff of Cebu, Civil
Case No. 47725, Court of First Instance of Manila, entitled "Philippine National Bank, Plaintiff,
versus, Iluminada Gonzales, et al., Defendants", attaching all rights, interest, and
participation of the defendants Iluminada Gonzales and Rural Insurance & Surety Co., Inc. of
the parcel of land herein described.
Attachment No. 330 & 185.
Date of Instrument – August 3, 1962.
Date of Inscription – August 3, 1962, 3:00 P.M.
53
Entry No. 1661-V-7-D.B. – Writ of Execution by the Court of First Instance of Manila
commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants to
make the sum of Seventy[-]One Thousand Three Hundred Pesos (₱71,300.00), plus interest,
etc., in connection with Civil Case No. 47725.
File No. T-8921.
Date of the Instrument – July 21, 1962.
Date of the Inscription – August 3, 1962 3:00 P.M.
Entry No. 1861-V-7-D.B. - Notice of Attachment – By the Provincial Sheriff of Cebu, Civil
Case Nos. IV-74065, 73929, 74129, 72613 & 72871, in the Municipal Court of the City of
Manila, entitled "Jose Garrido, Plaintiff, versus Rural Insurance & Surety Co., Inc., et als.,
Defendants", attaching all rights, interest and participation of the defendants, to the parcel of
land herein described.
Attachment No. 186.
File No. T-8921.
Date of the Instrument – August 16, 1962.
Date of the Instription – August 16, 1962 2:50 P.M.
Entry No. 1862-V-7-D.B. – Writ of Execution – by the Municipal Court of Manila, commanding
the Provincial Sheriff of Cebu, of the lands and buildings of the Defendants, to make the sum
of Three Thousand Pesos (P3,000.00), with interest at 12% per annum from July 20, 1959, in
connection with Civil Case Nos. IV-74065, 73929, 74129, 72613 & 72871 annotated above.
File No. T-8921.
Date of the Instrument – August 11, 1962.
Date of the Inscription – August 16, 1962 at 2:50 P.M.
As a result, a Certificate of Sale was issued in favor of Philippine National Bank, being the
lone and highest bidder of the three (3) parcels of land known as Lot Nos. 3597 and 7380,
covered by T.C.T. Nos. 8921 and 8922, respectively, both situated at Talisay, Cebu, and Lot
No. 1328-C covered by T.C.T. No. 24576 situated at Cebu City, for the amount of Thirty-One
Thousand Four Hundred Thirty Pesos (P31,430.00). Thereafter, a Final Deed of Sale dated
May 27, 1991 in favor of the Philippine National Bank was also issued and Transfer
Certificate of Title No. 24576 for Lot 1328-C (corrected to 1323-C) was cancelled and a new
certificate of title, TCT 119848 was issued in the name of PNB on August 26, 1991.
This prompted plaintiffs-appellees to file the instant complaint seeking the quieting of their
supposed title to the subject properties, declaratory relief, cancellation of TCT and
reconveyance with temporary restraining order and preliminary injunction. Plaintiffs alleged
that the subsequent annotations on the titles are subject to the prior annotation of their liens
and encumbrances. Plaintiffs further contended that the subsequent writs and processes
annotated on the titles are all null and void for want of valid service upon RISCO and on
them, as stockholders. They argued that the Final Deed of Sale and TCT No. 119848 are null
and void as these were issued only after 28 years and that any right which PNB may have
over the properties had long become stale.
Defendant PNB on the other hand countered that plaintiffs have no right of action for quieting
of title since the order of the court directing the issuance of titles to PNB had already become
final and executory and their validity cannot be attacked except in a direct proceeding for their
annulment. Defendant further asserted that plaintiffs, as mere stockholders of RISCO do not
have any legal or equitable right over the properties of the corporation. PNB posited that
even if plaintiff’s monetary lien had not expired, their only recourse was to require the
reimbursement or refund of their contribution.51awphi1
Aznar, et al., filed a Manifestation and Motion for Judgment on the Pleadings 6 on October 5,
1998. Thus, the trial court rendered the November 18, 1998 Decision, which ruled against
PNB on the basis that there was an express trust created over the subject properties
whereby RISCO was the trustee and the stockholders, Aznar, et al., were the beneficiaries or
the cestui que trust. The dispositive portion of the said ruling reads:
WHEREFORE, judgment is hereby rendered as follows:
a) Declaring the Minutes of the Special Meeting of the Board of Directors of RISCO
approved on March 14, 1961 (Annex "E," Complaint) annotated on the titles to
subject properties on May 15, 1962 as an express trust whereby RISCO was a
mere trustee and the above-mentioned stockholders as beneficiaries being the true
and lawful owners of Lots 3597, 7380 and 1323;
b) Declaring all the subsequent annotations of court writs and processes, to wit:
Entry No. 7416-V-4-D.B., 7417-V-4-D.B., 7512-V-4-D.B., and 7513-V-4-D.B. in
TCT No. 8921 for Lot 3597 and TCT No. 8922 for Lot 7380; Entry No. 1660-V-7-
D.B., Entry No. 1661-V-7-D.B., Entry No. 1861-V-7-D.B., Entry No. 1862-V-7-D.B.,
Entry No. 4329-V-7-D.B., Entry No. 3761-V-7-D.B. and Entry No. 26522 v. 34, D.B.
on TCT No. 24576 for Lot 1323-C, and all other subsequent annotations thereon in
favor of third persons, as null and void;
54
 c) Directing the Register of Deeds of the Province of Cebu and/or the Register of
Deeds of Cebu City, as the case may be, to cancel all these annotations mentioned
in paragraph b) above the titles;
d) Directing the Register of Deeds of the Province of Cebu to cancel and/or annul
TCTs Nos. 8921 and 8922 in the name of RISCO, and to issue another titles in the
names of the plaintiffs; and
e) Directing Philippine National Bank to reconvey TCT No. 119848 in favor of the
plaintiffs.7
PNB appealed the adverse ruling to the Court of Appeals which, in its September 29, 2005
Decision, set aside the judgment of the trial court. Although the Court of Appeals agreed with
the trial court that a judgment on the pleadings was proper, the appellate court opined that
the monetary contributions made by Aznar, et al., to RISCO can only be characterized as a
loan secured by a lien on the subject lots, rather than an express trust. Thus, it directed PNB
to pay Aznar, et al., the amount of their contributions plus legal interest from the time of
acquisition of the property until finality of judgment.lawphil The dispositive portion of the
decision reads:
WHEREFORE, premises considered, the assailed Judgment is hereby SET ASIDE.
A new judgment is rendered ordering Philippine National Bank to pay plaintiffs-appellees the
amount of their lien based on the Minutes of the Special Meeting of the Board of Directors
duly annotated on the titles, plus legal interests from the time of appellants’ acquisition of the
subject properties until the finality of this judgment.
All other claims of the plaintiffs-appellees are hereby DISMISSED. 8
Both parties moved for reconsideration but these were denied by the Court of Appeals.
Hence, each party filed with this Court their respective petitions for review on certiorari under
Rule 45 of the Rules of Court, which were consolidated in a Resolution 9 dated October 2,
2006.
In PNB’s petition, docketed as G.R. No. 171805, the following assignment of errors were
raised:
I the pleadings of the parties and the annexes, if any, without consideration of any evidence
THE COURT OF APPEALS ERRED IN AFFIRMING THE FINDINGS OF THE
TRIAL COURT THAT A JUDGMENT ON THE PLEADINGS WAS WARRANTED
DESPITE THE EXISTENCE OF GENUINE ISSUES OF FACTS ALLEGED IN
PETITIONER PNB’S ANSWER.
II
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
RIGHT OF RESPONDENTS TO REFUND OR REPAYMENT OF THEIR
CONTRIBUTIONS HAD NOT PRESCRIBED AND/OR THAT THE MINUTES OF
THE SPECIAL MEETING OF THE BOARD OF DIRECTORS OF RISCO
CONSTITUTED AS AN EFFECTIVE ADVERSE CLAIM.
III
THE COURT OF APPEALS ERRED IN NOT CONSIDERING THE DISMISSAL OF
THE COMPLAINT ON GROUNDS OF RES JUDICATA AND LACK OF CAUSE OF
ACTION ALLEGED BY PETITIONER IN ITS ANSWER.10
On the other hand, Aznar, et al.’s petition, docketed as G.R. No. 172021, raised the following
issue:
THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE CONTRIBUTIONS MADE
BY THE STOCKHOLDERS OF RISCO WERE MERELY A LOAN SECURED BY THEIR
LIEN OVER THE PROPERTIES, SUBJECT TO REIMBURSEMENT OR REFUND, RATHER
THAN AN EXPRESS TRUST.11
Anent the first issue raised in G.R. No. 171805, PNB argues that a judgment on the pleadings
was not proper because its Answer, 12 which it filed during the trial court proceedings of this
case, tendered genuine issues of fact since it did not only deny material allegations in Aznar,
et al.’s Complaint13 but also set up special and affirmative defenses. Furthermore, PNB
maintains that, by virtue of the trial court’s judgment on the pleadings, it was denied its right
to present evidence and, therefore, it was denied due process.
The contention is meritorious.
The legal basis for rendering a judgment on the pleadings can be found in Section 1, Rule 34
of the Rules of Court which states that "[w]here an answer fails to tender an issue, or
otherwise admits the material allegations of the adverse party’s pleading, the court may, on
motion of that party, direct judgment on such pleading. x x x."
Judgment on the pleadings is, therefore, based exclusively upon the allegations appearing in
aliunde.14 However, when it appears that not all the material allegations of the complaint were
admitted in the answer for some of them were either denied or disputed, and the defendant
has set up certain special defenses which, if proven, would have the effect of nullifying
plaintiff’s main cause of action, judgment on the pleadings cannot be rendered. 15
55
In the case at bar, the Court of Appeals justified the trial court’s resort to a judgment on the
void as these were issued only after 28 years and 5 months (in the case of the Final Deed of Sale) t
pleadings in the following manner:
and 28 years, 6 months and 29 days (in the case of TCT 119848) from the invalid auction sale on p
December 27, 1962, hence, any right, if any, which PNB had over subject properties had long a
Perusal of the complaint, particularly, Paragraph 7 thereof reveals: become stale;

"7. That in their desire to rehabilitate RISCO, the above-named stockholders contributed a
total amount of Ph₱212,720.00 which was used in the purchase of the above-described
parcels of land, which amount constituted liens and encumbrances on subject properties in
favor of the above-named stockholders as annotated in the titles adverted to above, pursuant
to the Minutes of the Special Meeting of the Board of Directors of RISCO approved on March
14, 1961, a copy of which is hereto attached as Annex "E".
On the other hand, defendant in its Answer, admitted the aforequoted allegation with the
qualification that the amount put up by the stockholders was "used as part payment" for the
properties. Defendant further averred that plaintiff’s liens and encumbrances annotated on
the titles issued to RISCO constituted as "loan from the stockholders to pay part of the
purchase price of the properties" and "was a personal obligation of RISCO and was thus not
a claim adverse to the ownership rights of the corporation." With these averments, We do not
find error on the part of the trial court in rendering a judgment on the pleadings. For one, the
qualification made by defendant in its answer is not sufficient to controvert the allegations
raised in the complaint. As to defendants’ contention that the money contributed by plaintiffs
was in fact a "loan" from the stockholders, reference can be made to the Minutes of the
Special Meeting of the Board of Directors, from which plaintiffs-appellees anchored their
complaint, in order to ascertain the true nature of their claim over the properties. Thus, the
issues raised by the parties can be resolved on the basis of their respective pleadings and
the annexes attached thereto and do not require further presentation of evidence aliunde. 16
However, a careful reading of Aznar, et al.’s Complaint and of PNB’s Answer would reveal
that both parties raised several claims and defenses, respectively, other than what was cited
by the Court of Appeals, which requires the presentation of evidence for resolution, to wit:
Complaint (Aznar, et al.)
14. That plaintiffs continue to have possession of subject properties and of their corresponding 1
titles, but they never received any process concerning the petition filed by PNB to have TCT 24576 o
over Lot 1323-C surrendered and/or cancelled; f
15. That there is a cloud created on the aforementioned titles of RISCO by reason of the annotate 1
writs, processes and proceedings caused by Jose Garrido and PNB which were apparently valid or i
effective, but which are in truth and in fact invalid and ineffective, and prejudicial to said titles and a
to the rights of the plaintiffs, which should be removed and the titles quieted. 17 p
Furthermore, apart from refuting the aforecited material allegations made by Aznar, et al.,
PNB also indicated in its Answer the special and affirmative defenses of (a) prescription; (b)
res judicata; (c) Aznar, et al., having no right of action for quieting of title; (d) Aznar, et al.’s
lien being ineffective and not binding to PNB; and (e) Aznar, et al.’s having no personality to
file the suit.19
From the foregoing, it is indubitably clear that it was error for the trial court to render a
judgment on the pleadings and, in effect, resulted in a denial of due process on the part of
PNB because it was denied its right to present evidence. A remand of this case would
ordinarily be the appropriate course of action. However, in the interest of justice and in order
to expedite the resolution of this case which was filed with the trial court way back in 1998,
the Court finds it proper to already resolve the present controversy in light of the existence of
legal grounds that would dispose of the case at bar without necessity of presentation of
further evidence on the other disputed factual claims and defenses of the parties.
A thorough and comprehensive scrutiny of the records would reveal that this case should be
dismissed because Aznar, et al., have no title to quiet over the subject properties and their
true cause of action is already barred by prescription.

11. That these subsequent annotations on the titles of the properties in question are subjectAttothe
theoutset, the Court agrees with the Court of Appeals that the agreement contained in the
prior annotation of liens and encumbrances of the above-named stockholders per Entry No. 458-V-
Minutes of the Special Meeting of the RISCO Board of Directors held on March 14, 1961 was
7-D.B. inscribed on TCT No. 24576 on May 15, 1962 and per Entry No. 6966-V-4-D.B. on TCT No. by the therein named stockholders to RISCO. We quote with approval the following
a loan
8921 and TCT No. 8922 on May 15, 1962; discussion from the Court of Appeals Decision dated September 29, 2005:

12. That these writs and processes annotated on the titles are all null and void for total want of
Careful perusal of the Minutes relied upon by plaintiffs-appellees in their claim, showed that
valid service upon RISCO and the above-named stockholders considering that as early as
their contributions shall constitute as "lien or interest on the property" if and when said
sometime in 1958, RISCO ceased operations as earlier stated, and as early as May 15, 1962, the
properties are titled in the name of RISCO, subject to registration of their adverse claim under
liens and encumbrances of the above-named stockholders were annotated in the titles of subject
the Land Registration Act, until such time their respective contributions are refunded to them
properties;
completely.
13. That more particularly, the Final Deed of Sale (Annex "G") and TCT No. 119848 are null and

56
It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear
and leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulation shall control. When the language of the contract is explicit leaving no doubt as to
the intention of the drafters thereof, the courts may not read into it any other intention that
would contradict its plain import.
The term lien as used in the Minutes is defined as "a discharge on property usually for the
payment of some debt or obligation. A lien is a qualified right or a proprietary interest which
may be exercised over the property of another. It is a right which the law gives to have a debt
satisfied out of a particular thing. It signifies a legal claim or charge on property; whether real
or personal, as a collateral or security for the payment of some debt or obligation." Hence,
from the use of the word "lien" in the Minutes, We find that the money contributed by
plaintiffs-appellees was in the nature of a loan, secured by their liens and interests duly
annotated on the titles. The annotation of their lien serves only as collateral and does not in
any way vest ownership of property to plaintiffs. 20 (Emphases supplied.)
We are not persuaded by the contention of Aznar, et al., that the language of the subject
Minutes created an express trust.
Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in
another. It is a fiduciary relationship that obliges the trustee to deal with the property for the
benefit of the beneficiary. Trust relations between parties may either be express or implied.
An express trust is created by the intention of the trustor or of the parties. An implied trust
comes into being by operation of law.21
Express trusts, sometimes referred to as direct trusts, are intentionally created by the direct
and positive acts of the settlor or the trustor - by some writing, deed, or will or oral
declaration. It is created not necessarily by some written words, but by the direct and positive
acts of the parties.22 This is in consonance with Article 1444 of the Civil Code, which states
that "[n]o particular words are required for the creation of an express trust, it being sufficient
that a trust is clearly intended."
In other words, the creation of an express trust must be manifested with reasonable certainty
and cannot be inferred from loose and vague declarations or from ambiguous circumstances
susceptible of other interpretations. 23
No such reasonable certitude in the creation of an express trust obtains in the case at bar. In
fact, a careful scrutiny of the plain and ordinary meaning of the terms used in the Minutes
does not offer any indication that the parties thereto intended that Aznar, et al., become
beneficiaries under an express trust and that RISCO serve as trustor.
Indeed, we find that Aznar, et al., have no right to ask for the quieting of title of the properties
at issue because they have no legal and/or equitable rights over the properties that are
derived from the previous registered owner which is RISCO, the pertinent provision of the law
is Section 2 of the Corporation Code (Batas Pambansa Blg. 68), which states that "[a]
corporation is an artificial being created by operation of law, having the right of succession
and the powers, attributes and properties expressly authorized by law or incident to its
existence."
As a consequence thereof, a corporation has a personality separate and distinct from those
of its stockholders and other corporations to which it may be connected. 24 Thus, we had
previously ruled in Magsaysay-Labrador v. Court of Appeals 25 that the interest of the
stockholders over the properties of the corporation is merely inchoate and therefore does not
entitle them to intervene in litigation involving corporate property, to wit:
Here, the interest, if it exists at all, of petitioners-movants is indirect, contingent, remote,
conjectural, consequential and collateral. At the very least, their interest is purely inchoate, or
in sheer expectancy of a right in the management of the corporation and to share in the
profits thereof and in the properties and assets thereof on dissolution, after payment of the
corporate debts and obligations.
While a share of stock represents a proportionate or aliquot interest in the property of the
corporation, it does not vest the owner thereof with any legal right or title to any of the
property, his interest in the corporate property being equitable or beneficial in nature.
Shareholders are in no legal sense the owners of corporate property, which is owned by the
corporation as a distinct legal person.26
In the case at bar, there is no allegation, much less any proof, that the corporate existence of
RISCO has ceased and the corporate property has been liquidated and distributed to the
stockholders. The records only indicate that, as per Securities and Exchange Commission
(SEC) Certification27 dated June 18, 1997, the SEC merely suspended RISCO’s Certificate of
Registration beginning on September 5, 1988 due to its non-submission of SEC required
reports and its failure to operate for a continuous period of at least five years.
Verily, Aznar, et al., who are stockholders of RISCO, cannot claim ownership over the
properties at issue in this case on the strength of the Minutes which, at most, is merely
evidence of a loan agreement between them and the company. There is no indication or
even a suggestion that the ownership of said properties were transferred to them which
would require no less that the said properties be registered under their names. For this
reason, the complaint should be dismissed since Aznar, et al., have no cause to seek a
quieting of title over the subject properties.
At most, what Aznar, et al., had was merely a right to be repaid the amount loaned to RISCO.
Unfortunately, the right to seek repayment or reimbursement of their contributions used to
purchase the subject properties is already barred by prescription.
Section 1, Rule 9 of the Rules of Court provides that when it appears from the pleadings or
the evidence on record that the action is already barred by the statute of limitations, the court
shall dismiss the claim, to wit:
57
Defenses and objections not pleaded either in a motion to dismiss or in the answer are
deemed waived. However, when it appears from the pleadings or the evidence on record that
the court has no jurisdiction over the subject matter, that there is another action pending
between the same parties for the same cause, or that the action is barred by a prior judgment
or by statute of limitations, the court shall dismiss the claim. (Emphasis supplied.)
In Feliciano v. Canoza,28 we held:
We have ruled that trial courts have authority and discretion to dismiss an action on the
ground of prescription when the parties’ pleadings or other facts on record show it to be
indeed time-barred x x x; and it may do so on the basis of a motion to dismiss, or an answer
which sets up such ground as an affirmative defense; or even if the ground is alleged after
judgment on the merits, as in a motion for reconsideration; or even if the defense has not
been asserted at all, as where no statement thereof is found in the pleadings, or where a
defendant has been declared in default. What is essential only, to repeat, is that the facts
demonstrating the lapse of the prescriptive period, be otherwise sufficiently and
satisfactorily apparent on the record; either in the averments of the plaintiffs
complaint, or otherwise established by the evidence.29 (Emphasis supplied.)
The pertinent Civil Code provision on prescription which is applicable to the issue at hand is
Article 1144(1), to wit:
The following actions must be brought within ten years from the time the right of action
accrues:
1. Upon a written contract;
2. Upon an obligation created by law;
3. Upon a judgment. (Emphasis supplied.)
Moreover, in Nielson & Co., Inc. v. Lepanto Consolidated Mining Co., 30 we held that the term
"written contract" includes the minutes of the meeting of the board of directors of a
corporation, which minutes were adopted by the parties although not signed by them, to wit:
Coming now to the question of prescription raised by defendant Lepanto, it is contended by
the latter that the period to be considered for the prescription of the claim regarding
participation in the profits is only four years, because the modification of the sharing
embodied in the management contract is merely verbal, no written document to that effect
having been presented. This contention is untenable. The modification appears in the
minutes of the special meeting of the Board of Directors of Lepanto held on August 21, 1940,
it having been made upon the authority of its President, and in said minutes the terms of
modification had been specified. This is sufficient to have the agreement considered, for the
purpose of applying the statute of limitations, as a written contract even if the minutes were
not signed by the parties (3 A.L.R., 2d, p. 831). It has been held that a writing containing the
terms of a contract if adopted by two persons may constitute a contract in writing even if the
same is not signed by either of the parties (3 A.L.R., 2d, pp. 812-813). Another authority says
that an unsigned agreement the terms of which are embodied in a document unconditionally
accepted by both parties is a written contract (Corbin on Contracts, Vol. I, p. 85). 31
Applied to the case at bar, the Minutes which was approved on March 14, 1961 is considered
as a written contract between Aznar, et al., and RISCO for the reimbursement of the
contributions of the former. As such, the former had a period of ten (10) years from 1961
within which to enforce the said written contract. However, it does not appear that Aznar, et
al., filed any action for reimbursement or refund of their contributions against RISCO or even
against PNB. Instead the suit that Aznar, et al., brought before the trial court only on January
28, 1998 was one to quiet title over the properties purchased by RISCO with their
contributions. It is unmistakable that their right of action to claim for refund or payment of their
contributions had long prescribed. Thus, it was reversible error for the Court of Appeals to
order PNB to pay Aznar, et al., the amount of their liens based on the Minutes with legal
interests from the time of PNB’s acquisition of the subject properties.
In view of the foregoing, it is unnecessary for the Court to pass upon the other issues raised
by the parties.
WHEREFORE, the petition of Aznar, et al., in G.R. No. 172021 is DENIED for lack of merit.
The petition of PNB in G.R. No. 171805 is GRANTED. The Complaint, docketed as Civil
Case No. CEB-21511, filed by Aznar, et al., is hereby DISMISSED. No costs.
SO ORDERED.
FIRST DIVISION
[G.R. No. 172448 : February 22, 2012]
THE BOARD OF REGENTS OF THE MINDANAO STATE UNIVERSITY REPRESENTED
BY ITS CHAIRMAN, PETITIONER, VS. ABEDIN LIMPAO OSOP, RESPONDENT.
DECISION
LEONARDO-DE CASTRO, J.:
This Petition for Review under Rule 45 of the Rules of Court assails the Decision [1] dated
March 14, 2006 of the Court of Appeals in CA-G.R. SP No. 82052.  The Court of Appeals
dismissed the Petition for Certiorari filed by therein petitioner Dr. Macapado A. Muslim
(Muslim) and declared the Motion for Intervention of the Board of Regents of the Mindanao
State University (MSU) as a stray pleading proscribed by Rule 19, Section 2 of the Rules of
Court.cralaw
The instant controversy arose from the following factual background:
58

Herein respondent Abedin Limpao Osop (Osop) is the former Chancellor of the Mindanao
State University-General Santos City (MSU-GSC) campus.  Osop retired in 1987 under the
Early Retirement Law, but several years after his retirement, he was appointed by Moner M.
Bajunaid, then MSU-GSC Chancellor, as a substitute for another professor of the Electrical
Engineering Department, College of Engineering, of MSU-GSC, who was on study leave. 
Osop’s appointment took effect on July 1, 1994. [2]
In 1997, Muslim, the succeeding Chancellor of MSU-GSC, renewed Osop’s appointment as
Assistant Professor IV, effective January 1, 1997 until December 31, 1997.  His appointment
was duly noted by the MSU Board of Regents during its 166th Meeting held at DECS
Conference Room, U.L. Complex, Meralco Avenue, Pasig City, on February 19, 1997. [3]
Muslim allowed Osop to continue teaching at MSU-GSC even after December 31, 1997.   On
April 17, 1998, Muslim issued Special Order No. 144-98C designating Osop as Chairperson
of the Electrical Engineering Department, College of Engineering, of MSU-GSC, with a term
of office from April 18, 1998 to April 17, 1999, unless revoked or amended by competent
authority.[4]
However, on July 15, 1998, Muslim caused to be served upon the College of Engineering and
other offices of MSU-GSC a letter[5] dated July 14, 1998 addressed to Osop that reads in full:
Dear Prof. Osop:
In view of the return to the campus of Prof. Danilo Dadula for whom you have been serving
as substitute since July 1, 1994, and considering the expiration of your temporary
appointment last December 31, 1997, I regret to inform you that your services with the
university will have to end.  And since I am not renewing your appointment, you are hereby
advised to cease from reporting to duty effective immediately.  Moreover, you should clear
yourself from monetary and other official accountabilities with the university.
On behalf of MSU-GSC, we thank you for your services.
July 16, 1998 that there was no request for the appointment of a substitute for Prof. Danilo
Dadula (Dadula) when the latter went on a study leave.  He explained:
Basing on our records, there was no request for substitute of Engr. Danilo P. Dadula when he
went on study leave in June 1994.
On 17 June 1994, Engr. Noel S. Gunay, then the Chairman of the Electrical Engineering
Department, recommended the hiring of Prof. Abedin Limpao Osop in view of the study leave
of Julito G. Fuerzas, PEE. Chancellor Moner M. Bajunaid, in his letter dated 30 June 1994,
informed Dean Carlos B. Cuanan of the approval of the higher management to hire Prof.
Abedin Limpao Osop as substitute of Engr. Julito G. Fuerzas effective 1 July 1994.   After
more than a semester, Engr. Fuerzas stopped schooling but did not return to this campus. 
Since then, Prof. Abedin Limpao Osop went on teaching with the College of Engineering and
his appointment was renewable yearly as those on probationary status.
Per DBM Plantilla of Personnel, page 336 of 444 pages, Prof. Abedin Limpao Osop has an
item. For this, I presumed Prof. A.L. Osop was not a contractual or substitute faculty of the
college.
x x x x
Regarding the distribution of Prof. A. L. Osop’s teaching load to appropriate faculty members
at this time poses some problems.  He is handling major courses in electrical engineering and
the electrical engineers have excessive overload.
x x x x
It has been noted and experienced that real excessive overload is more on the number of
preparations than on overload teaching units.  For the interest of our students and with much
concern on the efficient delivery of instruction, the faculty of the Electrical Engineering
Department could not absorb the load of Prof. A. L. Osop.  Since his load are major EE
courses, the same could not be handled by any of the faculty in the other departments.

Very truly yours, In view thereof, may we request for the reconsideration of your decision to terminate the
services of Prof. Abedin Limpao Osop.[7]
(signed)
MACAPADO A. MUSLIM, Ph. D. Muslim responded by issuing handwritten Memorandum Order No. 012-98C [8] dated July 17,
Chancellor 1998, in which he reiterated his earlier order to Ramos to already distribute Osop’s teaching
load.
Muslim also issued Memorandum Order No. 010-98C [6] dated July 14, 1998, addressed to
Virgilio Ramos (Ramos), Dean of the College of Engineering of MSU-GSC, concerning the On July 21, 1998, Osop filed before the Regional Trial Court (RTC) of General Santos City,
expiration and non-renewal of Osop’s appointment and directing Ramos to already distribute Branch 22, a Complaint for Injunction with Prayer for Writ of Preliminary Injunction/Temporary
Osop’s teaching load to the remaining faculty members of the College.  In the same Restraining Order (TRO), Damages and Attorney’s Fees against Muslim and Ramos.  The
Memorandum Order, Muslim asked Ramos to explain the latter’s failure to include Osop in Complaint was docketed as Civil Case No. 6381. [9]
the list of substitute faculty members which he submitted to the Office of the Chancellor
before the start of the 1st semester of 1998. Osop filed two days later, on July 23, 1998, an Urgent Motion for Writ of Preliminary
Mandatory Injunction and/or Temporary Restraining Order.  At the hearing held the very next
In compliance with Memorandum Order No. 010-98C, Ramos explained in his letter dated day, on July 24, 1998, the RTC issued an Order in which it noted the absence of Muslim, and

59
to give chance for the possibility of an amicable settlement, it reset the hearing for the
issuance of a TRO to July 27, 1998.  Nevertheless, in the same Order, the RTC already Thus, the RTC decreed:
directed Osop to submit a bond of P20,000.00 to answer for damages that Muslim and
Ramos might suffer if it turns out that Osop was not entitled to an injunction/TRO.   Osop filed WHEREFORE, in view of the foregoing, the instant complaint is hereby DISMISSED for lack
his injunction/TRO bond on July 27, 1998. of jurisdiction.  Accordingly, [Osop’s] application for preliminary injunction, being merely
ancillary to the principal action is also hereby dismissed without prejudice.  The injunction
At the hearing of Osop’s application for the issuance of a TRO on July 27, 1998, the RTC bond is cancelled ipso facto.[16]
issued an Order,[10] whereby, in consideration of the principle of exhaustion of administrative
remedies, it suggested that Osop first write Muslim to seek reconsideration of Muslim’s letter The RTC denied Osop’s Motion for Reconsideration in an Order [17] dated September 25,
and Memorandum Order No. 010-98C both dated July 14, 1998. Osop accordingly wrote 1998, prompting him to file with the Court of Appeals a Petition
Muslim such a letter dated July 27, 1998. [11] for Certiorari and Mandamus, [18] under Rule 65 of the Rules of Court, docketed as CA-G.R.
SP No. 49966, in which he argued, inter alia, that:
Muslim endorsed Osop’s letter dated July 27, 1998 to Emily Marohombsar (Marohombsar),
then MSU President.  In a letter[12] dated August 7, 1998, Marohombsar wrote:
2) The issue of removal from office of [Osop], who is faculty member of a state university, is
beyond the jurisdiction of the Civil Service Commission;
Based on the meticulous study made, the management is not legally nor morally under
obligation to retain Prof. Osop in the service or liable for the non-renewal of his appointment x x x x
the nature of which was temporary and contingent on the return of Prof. Danilo Dadula.  With
the return of Prof. Dadula, the renewal of the appointment of Prof. Osop would have been an 4) In Civil Case No. 6381 [Osop] is suing [Muslim and Ramos] also for damages, a subject
unjustifiable superfluity. matter that is beyond the jurisdiction of the Civil Service Commission. [19]
This Office, concurring with the opinion of Director Imam, upholds your position on the case In the meantime, concerned students of MSU-GSC filed before the Civil Service Commission
of Prof. Osop. (CSC) Regional Office No. 11 a Complaint for the illegal termination of Osop by Muslim.  
CSC Regional Office No. 11 issued an Order dated November 27, 1998 finding that Osop’s
Marohombsar’s aforequoted decision was based on the Brief from the MSU Human termination was in order given that his appointment as a substitute was good only until the
Resources Development Office dated August 6, 1998, signed by Director Lomala O. Imam, return of the person being substituted. [20]
stating that “[t]he issue is not one of termination or dismissal but an expiration of an
appointment which is not permanent in nature” and that “[t]he renewal or non-renewal of a Eventually, on June 7, 1999, the Court of Appeals rendered a Decision [21] in CA-G.R. SP No.
temporary or probationary appointment is a management prerogative.” [13] 49966, granting Osop’s Petition for Certiorari, based on the following ratiocination:
On August 6, 1998, Muslim and Ramos filed before the RTC a Motion to Dismiss Civil Case
No. 6381 citing the following grounds: (1) lack of cause of action due to non-exhaustion of Anent the order of the Civil Service Commission Regional Office dated November 27, 1998
administrative remedies and non-inclusion of indispensable parties; (2) appointment in a holding the termination of [Osop] as legal, we agree with [Osop] that this finding should not
temporary character; (3) presumption of regularity; and (4) forum shopping. [14] be legally binding upon him because he is not a party to the complaint apparently initiated by
alleged concerned students of MSU-GSC.
The RTC issued an Omnibus Order on September 10, 1998, dismissing Civil Case No. 6381,
for the following reasons: Secondly, [Osop’s] side of the issue was never heard because only Muslim was allowed to
adduce evidence hence a denial of due process on the part of [Osop].
The complaint is essentially one for illegal dismissal filed by [herein respondent] Abedin Coming now to the issue of whether or not [Osop’s] complaint was correctly dismissed by the
Limpao Osop, a faculty member of the Mindanao State University (MSU), against defendant trial court for having failed to exhaust administrative remedies and that consequently this
Macapagal A. Muslim, Chancellor of the MSU, and Virgilio Ramos, Dean of the College of case falls with the Civil Service Commission, we answer in the negative.
Engineering of the same university.  A party aggrieved by a decision, ruling, order or action of
an agency of the government involving termination of services may appeal to the Civil [Osop] cites Sections 4, 5 and 6(e)(h) of the MSU charter R.A. 1387 as amended by R.A.
Service Commission.  Regional Trial Courts have no jurisdiction to entertain cases involving Nos. 1893, 3791, 3868, to wit:
dismissal of officers and employees covered by the Civil Service Law.  (Mateo v. C.A., 247
SCRA 284).  The Civil Service Commission is the sole arbiter of all controversies pertaining
to the Civil Service. (Dario v. Mison, 176 SCRA 84).[15] Sec. 4.  The government of said University is vested in a board of regents to be known as the
Board of Regents of the Mindanao State University. (R.A. 1893)

60
Sec. 5. The Mindanao State University shall have the general powers set out in Section The doctrine of exhaustion of administrative remedies admits of several exception[s], to wit:
thirteen of Act Numbered Fourteen hundred and fifty-nine and the administration of said
university and the exercise of its corporate powers are hereby vested exclusively in the Board 1. When there is a violation of due process.
of Regents and in the President of the University, insofar as authorized by said Board.
x x x x
Sec. 6.  The Board of Regents shall have the following powers of administration and the
exercise of the powers of the corporation. On another point, the two grounds relied upon by Muslim for terminating [Osop] to wit: (1) that
Prof. Danilo Dadula for whom [Osop] has been serving as substitute since July 1, 1997 had
x x x x already returned to MSU, and: (2) [Osop’s] temporary appointment expired on December 31,
1997, clearly appears to be without basis.
(e) To appoint, on the recommendation of the President of the University, professors,
instructors, lecturers, and other employees of the University; to fix their compensation, hours [Osop] contends and respondent Muslim does not deny that the notation “vice Danilo Dadula
of service, and such other duties and conditions as it may deem proper; to grant to them in its on study grant” contained in [Osop’s] appointment is erroneous because [Osop] was recruited
discretion leave of absence under such regulations as it may promulgate, any provisions of as a substitute for Engineer Julito Fuerzas.
law to the contrary notwithstanding, and to remove them for cause after an investigation and
hearing shall have been had; and to extend with their consent the tenure of faculty members Assuming that [Osop] merely substituted for Dadula, [Muslim] does not deny that Danilo
of the University beyond the age of sixty-five, any other provision of law to the contrary Dadula returned to MSU General Santos from his study grant in June 1996 and has taught in
notwithstanding, on recommendation of the President of the University, whenever in his the Department of Mechanical Engineering of the College of Engineering since then up to
opinion their services are specially needed; Provided, however, that no extension of service April 1998.  During the said period, [Osop] was also teaching in the said University and
shall be made beyond the age of seventy. before the letter of July 15, 1998 advising [Osop] of his termination, he was teaching at the
same time as Dadula for which he was never asked to leave contrary to Muslim’s claim that
x x x x [Osop] merely acted as a substitute of Dadula.  Meanwhile Dadula has filed a leave of
absence and has not reported for duty for the first semester of SY 1998-1999.  To repeat,
(h) To prescribe rules for its own government, and to enact for the government of the from June 1996 up to April 1998, Dadula and [Osop] taught together in the College of
University such general ordinances and regulations, not contrary to law, as are consistent Engineering of MSU.  Hence, if [Osop] was merely a substitute for Dadula, he should have
with the purposes of the University as defined in Section 2 of this Act. been required to leave as early as June 1996, upon Dadula’s return.

Moreover, Article 152 of the Code of MSU provides: Further, contradicting Muslim’s claim that [Osop] is a mere substitute of Dadula on April 17,
1998, Muslim issued Special Order 144-98C designating [Osop] as Chairperson of the
Art. 152. Terms and Conditions of Appointment. – The precise terms and conditions of every Electrical Engineering Department of the College of Engineering with a term of office from
appointment shall be stated in writing.  In case of a non-renewal of a probationary April 18, 1998 up to April 17, 1999.  Clearly, therefore, when [Osop] continued teaching up to
appointment the person so concerned shall be so informed in writing at least sixty days July 15, 1998 and even his appointment as Chairperson of the Electrical Engineering
before the termination date. Department until April 17, 1999 by Muslim himself, his appointment has ceased to be
probationary in character.[22]
Proceeding from all the foregoing, it appears clearly that the authority to remove is vested in
the Board of Regents and only after an investigation and hearing. In the end, the Court of Appeals decreed:

Due process was clearly not observed in the removal of [Osop].  First of all, only the Board of WHEREFORE, premises considered, the petition for certiorari is GRANTED.  The Omnibus
Regents have the power of removal which must be for cause and after an investigation and Order of the RTC of General Santos City, Branch 22 dated September 10, 1998 is hereby
hearing shall have been had.  Secondly, even a mere probationary appointment requires that SET ASIDE.  The RTC is directed to hear and try Civil Case No. 6381 with utmost dispatch.
[23]
in case of non-renewal the person so concerned shall be informed in writing at least sixty (60)
days before termination date.  These basic requisites were not at all observed in the
termination of [Osop]. The Motion for Reconsideration of Muslim and Ramos was denied by the Court of Appeal in
its Resolution dated November 11, 1999. [24]
Therefore, we agree with [Osop] that his non-referral of the matter of his removal to the Board
of Regents before he resorted to court action is accepted as an exception to the doctrine of Muslim then appealed the foregoing judgment of the Court of Appeals in CA-G.R. SP No.
exhaustion of administrative remedies. 49966 by way of a Petition for Review before this Court, docketed as G.R. No. 141276. 

61
However, in a Resolution dated July 3, 2000, the Court denied Muslim’s Petition for Review;
and in a Resolution dated April 4, 2001, the Court likewise denied Muslim’s Motion for
Reconsideration.[25]
On June 26, 2001, Osop filed an Amended Complaint [26] before the RTC impleading MSU as
a defendant in Civil Case No. 6381.  Despite the opposition of Muslim and Ramos, the RTC
admitted the Amended Complaint in its Order[27] dated July 11, 2001, which reads:
Considering that no responsive pleading has yet been filed by [Muslim and Ramos], the
amended complaint is hereby ADMITTED.
WHEREFORE, the defendants Macapado Muslim and Virgilio Ramos are ordered to file their
answers within ten (10) days from today, and as prayed for by the counsel of [Osop], issue
the corresponding summons to newly impleaded defendant Mindanao State University (MSU)
at its main office in Marawi City.  The summons to defendant MSU, Marawi City shall be sent
via registered mail to the Clerk of Court of Marawi City who is requested to serve the same
and thereafter to make a return to this court.
The Solicitor General is hereby ordered to enter his appearance as counsel for defendant
Macapado A. Muslim and Virgilio Ramos, who were both sued in their official and personal
capacities and defendant MSU.
Muslim and Ramos, through counsel, Atty. Emmanuel C. Fontanilla, filed their Answer to
Amended Complaint on July 20, 2001. [28]
On July 27, 2001, RTC Clerk of Court Asuncion de Leon Omila served summons upon MSU
at its main campus in Marawi City which required the university to enter its appearance in
Civil Case No. 6381 and to answer Osop’s Amended Complaint within 15 days after service
of said summons.[29]
The Office of the Solicitor General (OSG) entered its appearance before the RTC in Civil
Case No. 6381 on September 14, 2001 as counsel for Muslim, Ramos, and MSU (Muslim, et
al.).  The OSG requested that it be furnished with a copy of the Amended Complaint and that
the period to file the answer be suspended until receipt of said Amended Complaint. [30]  In its
Order[31] dated September 26, 2001, the RTC granted the OSG a period of 15 days from
receipt of a copy of the Amended Complaint from Osop within which to file a responsive
pleading.
For failure of MSU to file an answer to the Amended Complaint within the given period, Osop
filed a Motion to Declare Defendant MSU in Default.[32]  Osop’s Motion was denied by the
RTC in its Order[33] dated February 1, 2002 since there was no proof as to when the OSG
received a copy of the Amended Complaint from Osop.
The OSG filed a Manifestation on February 14, 2002 which stated that upon verification with
its Record Section, it discovered that Atty. Fontanilla, counsel for Muslim and Ramos, was
actually deputized by the OSG to handle Civil Case No. 6381; and that MSU is adopting the
Answer to the Amended Complaint already filed by Ramos and Muslim, as all the defendants
in said case were in the same position. [34]
Osop filed a Motion for Reconsideration of the RTC Order dated February 1, 2002 denying
his Motion to Declare Defendant MSU in Default.  In another Order[35] dated June 21, 2002,
the RTC denied Osop’s Motion for Reconsideration for being moot and academic in light of
the Manifestation of the OSG that MSU was adopting the Answer to the Amended Complaint
of Muslim and Ramos.
Meanwhile, Osop filed on January 11, 2002 a Motion for Summary Judgment [36] in Civil Case
No. 6381, to which Muslim and Ramos filed on January 16, 2002 an Opposition. [37]
In an Order[38] dated October 21, 2002, Judge Antonio Lubao of RTC-Branch 22 voluntarily
inhibited himself from further hearing Civil Case No. 6381 to avoid conflict of interest
considering that he was a faculty member at the MSU College of Law.   Thus, the case was
re-raffled to RTC-Branch 37, presided over by Judge Eddie R. Rojas.
After an exchange of pleadings among the parties, the RTC issued an Order [39] dated March
20, 2003, which granted Osop’s Motion for Summary Judgment in Civil Case No. 6381
pursuant to Rule 35, Section 1 of the Rules of Court.  The RTC explicated that:
The law itself determines when a summary judgment is proper.  Under the rules, summary
judgment is appropriate when there are no genuine issues of fact which call for the
presentation of evidence in a full-blown trial.  Even if on their face the pleading appear to
raise issues, when the affidavits, depositions and admissions show that such issues are not
genuine, then summary judgment as prescribed by the rules must ensure as a matter of law. 
What is crucial for determination, therefore, is the presence of a genuine issue as to any
material fact.
A “genuine issue” is an issue of fact which require (sic) the presentation of evidence as
distinguished from a sham, fictitious, contrived or false claim.  When the facts as pleaded
appear uncontested or undisputed, then there is no real or genuine issue or question as to
the facts, and summary judgment is called for.  The party who moves for summary judgment
has the burden of demonstrating clearly the absence of any genuine issue of fact, or that the
issue posed in the complaint is patently unsubstantial so as not to constitute a genuine issue
of trial.
Applying these (sic) principle to the present case, it can be said that [Osop] has clearly
demonstrate (sic) the absence of any genuine issue of fact, as well as the issue posed by
[Muslim, et al.] that [Osop] is a contractual employee is patently unsubstantial so as not to
constitute a genuine issue for a full-blown trial.
From the decision rendered by the Seventeenth Division Court of Appeals concerning the
petition for Certiorari and Mandamus filed by [Osop], in this case it ruled that the appointment
of [Osop] by [Muslim] ceases to be probationary in character when the former was allowed to
continue teaching up to July 15, 1998 (sic) and even appointed as Chairperson of the
Electrical Engineering Department.  The issue raised by [Muslim, et al.] in their answer that
[Osop] is a contractual employee is indeed patently unsubstantial as to constitute a genuine
issue in this case for trial.  Once and for all, such an issue has already been settled by the
62
honorable Court of Appeals whose decision has become final and executory.  Thus, there
was no more genuine issue that was left to be tried except the amount of damages and
attorney’s fees.
x x x x
After having been taken into account the foregoing premises and pleadings of the parties in
support of their respective stand on the matter under consideration as well as from the
implied admissions arising from the failure of [Muslim, et al.] to set forth reasons why [they]
could not truthfully either admit or deny those matters alleged in the amended complaint, and
having concluded from the attendant circumstances that [Osop] is entitled to judgment as a
matter of law for such amount as may be found to be due him in damages.
Consequently, the RTC disposed:
WHEREFORE, a summary judgment is hereby rendered in favor of [Osop] by ordering
[Muslim and Ramos] or their successors, and defendant Mindanao State University to give
teaching loads to [Osop] and to pay such amount as may be found to be due him in
damages.
For the meantime, let this case be called for trial to resolve the sole issue of damages that
may be awarded in favor of [Osop] on May 30, 2003, at 2:00 o’clock in the afternoon. [40]
Muslim, et al. filed a Motion for Reconsideration of the aforementioned Order on April 1,
2003, which Osop opposed.
Osop, for his part, filed a Motion for Execution Pending Appeal, and Muslim, et al. filed a
Comment thereon.
In an Order [41] dated August 21, 2003, the RTC denied the Motion for Reconsideration of the
Order dated March 20, 2003 filed by Muslim, et al., thus:
In resolving [Muslim, et al.’s] Motion for Reconsideration, the Court casts doubt on the
veracity of [Muslim, et al.’s] claim that the findings of the Court of Appeals as to the
appointment of [Osop] was a mere opinion and that there could be no final determination on
the matters not principally raised before it.  It was emphasized in the ruling of the Honorable
Supreme Court in the case of Padua vs. Robles, G.R. No. 127930, December 15, 2000,
which lays down the rules in construing judgments.  It was held that the sufficiency and
efficacy of a judgment must be tested by its substance rather than its form.   In construing a
judgment, its legal effects including such effects that necessarily follows because of legal
implications, rather than the language used, govern. Also, its meaning, operations, and
consequences must be ascertained like any other written instrument.  If the record shows
that the judgment could not have been rendered without deciding the particular matter, it will
be considered as having settled that matter as to all future actions between the parties, and if
a judgment necessarily presupposes certain premises, they are as conclusive as the
judgment itself.  Reasons for the rule are that a judgment is an adjudication on all the matters
which are essential to support it, and that every proposition assumed or decided by the court
leading up to the final conclusions and upon which such conclusion is based is as effectually
passed upon as the ultimate question which is solved.  Thus a judgment rest on the intent of
the court as gathered from every part thereof, including the situation to which it applies and
attendant circumstances.
[Muslim, et al.] lost sight of the fact that the court gave due course to [Osop’s] Motion for
Summary Judgment only after finding that the issue raised by them in their answer was
patently unsubstantial as to constitute a genuine issue.  Inasmuch as [Muslim, et al.] failed to
show a plausible ground of defense something fairly arguable and of substantial character,
they cannot therefore further insist that they have a genuine issue to warrant this Court to
hear and try the above-entitled case.
Hence, in the present recourse, [Muslim, et al.’s] Motion for Reconsideration is hereby denied
due course for bereft of any merit.
In the same Order, the RTC granted Osop’s Motion for Execution Pending Appeal, to wit:
Anent [Osop’s] Motion for Execution Pending Appeal, it alleged that [Osop] has been
unemployed for almost five (5) years and if [Muslim, et al.’s] appeal on the resolution of this
Court, it will be just for the purpose of delaying the termination of the case and to cause
further misery to [Osop].
Section 2, Rule 39 of the 1997 Rules of Civil Procedure, lays down the rule for execution
pending appeal, categorized as discretionary execution.  It is evident from the said provision
that a primary consideration for allowing execution pending appeal would be the existence of
good reasons.  In turn, “good reasons” has been held to consist of compelling circumstances
justifying the immediate execution lest judgment becomes illusory.  Such reason must
constitute superior circumstances demanding urgency which will outweigh the injury or
damages should the losing party secure a reversal of the resolution issued by this Court.
After weighing the reasons presented, the Court deemed it wise to give due course to
[Osop’s] Motion for Execution Pending Appeal.  The effective and efficient administration of
justice requires that the prevailing party should not be deprived of the fruits of the verdict
rendered in his favor.  The system of judicial review should not be misused and abused to
evade the decision/order from attaining finality.
With the foregoing reasons, [Osop’s] Motion for Execution Pending Appeal is hereby given
due course, but insofar as to the giving of teaching loads to [Osop] only inasmuch as no
amount of damages could be ascertained at this moment.
Let therefore a Writ of Execution Pending Appeal be issued in this case directing [Muslim and
Ramos] or their successors and defendant Mindanao State University to give teaching loads
to [Osop] with a bond fix at Five Thousand (P5,000.00) Pesos. [42]
Muslim, et al., filed a Motion for Reconsideration [43] of the Order dated August 21, 2003,
which Osop again opposed. [44]
On October 1, 2003, Osop filed a Motion for Partial Execution (Based on a Final Executory
63
Judgment) praying that a writ of execution be issued ordering Muslim, et al. to give him
teaching loads.[45]
Two days after, on October 3, 2003, Muslim, et al. filed a Second Motion for Reconsideration
and Supplement to the Opposition (also Reply to Motion for Partial Execution). [46]
In an Order[47] dated October 9, 2003 the RTC denied Muslim, et al.’s Second Motion for
Reconsideration and Supplement to the Opposition (also Reply to Motion for Partial
Execution) for being a pro forma motion.
Subsequently, the RTC issued an Order [48] dated November 10, 2003 granting Osop’s Motion
for Partial Execution and ordering the issuance of a writ for the partial execution of the Order
dated March 20, 2003, particularly, for its directive that Muslim, et al. give Osop teaching
load.
RTC Clerk of Court Fulgar issued the Writ of Execution [49] the next day, November 11, 2003.  finding that there is no genuine issue to thus call for the rendition of a summary judgment, the
As shown in the Sheriff’s Return [50] dated November 17, 2003, original copies of RTC Order
dated November 10, 2003 and Writ of Execution dated November 11, 2003 were duly served
upon Muslim, et al. on November 12, 2003.
Aggrieved, Muslim, in his personal capacity, [51] filed on January 12, 2004, with the Court of
Appeals, a Petition for Certiorari and Prohibition with Prayer for a Writ of Preliminary and
Instant Issuance of Temporary Restraining Order, which was docketed as CA-G.R. SP No.
82052.[52]  Muslim averred that in issuing the Order dated November 10, 2003, the RTC
committed grave abuse of discretion amounting to lack or excess of jurisdiction as it:
1. Consider[ed] the Decision of the Court of Appeals in a Certiorari as a
judgment on the merit.
2. Plac[ed] the action in the lower court within the purview of summary
procedure.
3. Grant[ed] partial execution.
4. Consider[ed] the order of finding no genuine issue as a final order.[53]
After the parties filed their respective Memorandum, the Court of Appeals issued a Resolution
dated October 6, 2004 considering the case submitted for decision. [54]
On January 14, 2005, MSU, through the OSG, filed before the Court of Appeals a Motion to
Intervene (with Motion to Admit Memorandum) in CA-G.R. SP No. 82052. [55]  Osop opposed
the intervention of MSU.[56]
The Court of Appeals rendered its Decision in CA-G.R. SP No. 82052 on March 14, 2006,
dismissing Muslim’s Petition for Certiorari and Prohibition. [57]  It held that:
In the instant case, it is indubitably shown that the main issue that needs to be resolved is
whether or not [Osop] was a probationary employee.  In CA-G.R. SP No. 49966, the
appellate court, despite the fact that the issue brought therein was whether or not public
respondent gravely abused his discretion in dismissing the case for lack of jurisdiction,
nevertheless ruled that the appointment of [Osop] ceased to be probationary in character.  
Respondent judge merely took judicial notice of the appellate court’s findings that [Osop] had
indeed ceased to be a probationary employee.  To Our assessment, what respondent judge
may have had on his mind was that even if he decided otherwise, the case would still be
appealed to the Court of Appeals which, as adverted to, already made a finding that [Osop]
was a permanent employee.  Moreover, the appellate court’s decision was also binding
between the parties; it was deemed to be the “law of the case,” hence, it was only proper for
public respondent to conform to this Court’s decision.
x x x x
A trial court which has jurisdiction over the person and subject matter of the case, can grant a
motion for summary judgment, and such is within its power or authority in law to perform.   Its
propriety rests on its sound exercise of discretion and judgment.  In the event that it errs in
resulting decision may not be set aside either directly or indirectly by petition for certiorari, but
may only be corrected on appeal or other direct review.  The court a quo categorically stated
that its March 20, 2003 [Order] had become final and executory as quoted hereunder:
“A review of the records of the case will show that the [Muslim, et al.] received the Order
dated [20] March 2003, granting the summary judgment, on March 25, 2003.  On that date, the
fifteen (15) days prescriptive period within which to file an appeal began to run.  Instead of
preparing an appeal, [Muslim, et al.] filed their Motion for Reconsideration on April 1, 2003. 
The filing of the said Motion interrupted the reglementary period to appeal.  By that time,
however, eight (8) days had already lapsed; thus, from their receipt of the Order dated
August 21, 2003, denying their Motion for Reconsideration, on September 2, 2003, they had
only seven (7) days left or until September 9, 2003 within which to file a notice of appeal.
However, on said date, [Muslim, et al.] filed another Motion for Reconsideration praying that
the order for execution pending appeal be recalled.  On October 9, 2003, an Order had been
issued denying [Muslim, et al.’s] Motion for Reconsideration, copy of which was received by
[Muslim, et al.] on that same day.
Again, carefully going over the records, the Court finds that the Orders issued were already
final and executory.  [Muslim, et al.] received the Order granting the summary judgment of
[Osop] dated March 20, 2003.  Hence, they had until September 9, 2003 within which to file
its appeal.  [Muslim, et al.] filed a Motion for Reconsideration and the Court on its Order
dated August 21, 2003 denied the same.  [Muslim, et al.] received a copy of the denial of its
Motion for Reconsideration, which was considered pro-forma, was likewise denied on
October 9, 2003, [Muslim, et al.] received copy of the order of denial on that very same day.  
Such second motion for reconsideration filed by [Muslim, et al.], being a pro-forma, does (sic)
not toll the running of the period to perfect an appeal or any remedy provided by law.  Thus, it
can be concluded that the subject orders issued by this Court are now final and executory. 
Now, once a judgment attains finality it becomes the ministerial duty of the trial court to order
its execution.”
Indeed, it bears stressing that the right to appeal is not a natural right or a part of due
process.  It is a procedural remedy of statutory origin and, as such, may be exercised only in
64
the manner and within the time frame provided by the provisions of law authorizing its
exercise.  Failure of a party to perfect an appeal within the period fixed by law renders the
decision sought to be appealed final and executory.  After a decision is declared final and
executory, vested rights are acquired by the winning party who has the right to enjoy the
finality of the case.
To determine whether a judgment or order is final or interlocutory, the test is:  Does it leave
something to be done in the trial court with respect to the merits of the case?   If it does, it is
interlocutory, if it does not, it is final.  A final judgment is one that disposes of a case in a
manner that leaves nothing more to be done by the court in respect thereto.   A summary
judgment is one which is final as it already adjudicated the issues and determined the rights
of the parties.  It is only interlocutory when the court denies a motion for summary judgment
or renders a partial summary judgment as there would still be issues left to be determined by
the court.  In the instant case, the March 20, 2003 Order was unequivocal, other than setting
a hearing to determine the amount of damages, but had, on the other hand, already disposed
of the case.  As such, the issuance of the November 10, 2003 Order granting the motion for
partial execution was proper as the summary judgment already became final and executory
as adverted
In a petition for certiorari, even if, in the greater interest of substantial justice, certiorari may
be availed of, it must be shown that the trial court acted with grave abuse of discretion
amounting to lack or excess of jurisdiction, that is, that the trial court exercised its powers in
an arbitrary or despotic manner by reason of passion or personal hostilities, so patent and
gross as to amount to an evasion or virtual refusal to perform the duty enjoined or to act in
contemplation of law.”  We find that such abuse is not extant in the instant case.[58]
Muslim filed a Motion for Reconsideration of the foregoing judgment on May 9, 2006 [59]  and a
Supplemental Motion for Reconsideration on June 23, 2006. [60]
On July 11, 2006, the Court of Appeals issued a Resolution stating that it received on June 8,
2006 a copy of the instant Petition (G.R. No. 172448) filed by MSU; and since said Petition
assails its Decision dated March 14, 2006 in CA-G.R. SP No. 82052, it was constrained to
await the ruling of the Supreme Court in G.R. No. 172448.  Hence, the Court of Appeals
opted to hold in abeyance the resolution of Muslim’s Motion for Reconsideration and
Supplemental Motion for Reconsideration of the Decision dated March 14, 2006 in CA-G.R.
SP No. 82052.
The issue relevant to the Petition at bar insofar as MSU is concerned arises from the
pronouncement of the Court of Appeals in the same Decision dated March 14, 2006 in CA-
G.R. SP No. 82052 quoted hereunder:
The instant Petition of MSU presented the following assignment of errors:
I
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER’S
MOTION FOR INTERVENTION WAS IMPROVIDENTLY FILED.
II
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT RESPONDENT’S
MOTION FOR SUMMARY JUDGMENT WAS PROPER ALTHOUGH PETITIONER
PRESENTED DEFENSES IN THEIR ANSWER TO AMENDED COMPLAINT TENDERING
FACTUAL ISSUES WHICH REQUIRE TRIAL ON THE MERITS.
III
to.
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT RESPONDENT
ACQUIRED PERMANENT STATUS.
IV
THE COURT OF APPEALS GRAVELY ERRED UPHOLDING THE TRIAL COURT’S ORDER
GRANTING RESPONDENT MOTION FOR ISSUANCE OF PARTIAL WRIT OF
EXECUTION.[62]
MSU anchors its right to intervene on Rule 19, Section 1 of the Rules of Court.  MSU
stresses that it has a legal interest in the controversy considering that, ultimately, it will be the
one liable for the relief Osop prays for, particularly, Osop’s reinstatement at MSU-GSC.
Rule 19, Section 1 of the Rules of Court provides:
Section 1.  Who may intervene. – A person who has a legal interest in the matter in litigation,
or in the success of either of the parties, or an interest against both, or is so situated as to be
adversely affected by a distribution or other disposition of property in the custody of the court
or of an officer thereof may, with leave of court, be allowed to intervene in the action.  The
court shall consider whether or not the intervention will unduly delay or prejudice the
adjudication of the rights of the original parties, and whether or not the intervenor’s rights may
be fully protected in a separate proceeding.

At the outset this case was deemed submitted for decision on October 6, 2004.   On January In Alfelor v. Halasan,[63] the Court held that:
10, 2005, this Court received a Motion to Intervene (with Motion to Admit Memorandum) filed
by Mindanao State University (MSU) through the Office of the Solicitor General (OSG). 
Under this Rule, intervention shall be allowed when a person has (1) a legal interest in the
However, Section 2, Rule 19 of the Rules of Court, allows intervention only at any time before
matter in litigation; (2) or in the success of any of the parties; (3) or an interest against the
rendition of judgment by the trial court, and We hold the motion to intervene is a stray
parties; (4) or when he is so situated as to be adversely affected by a distribution or
pleading and is deemed not filed. [61]
disposition of property in the custody of the court or an officer thereof. [64]

65
Jurisprudence describes intervention as “a remedy by which a third party, not originally SO ORDERED.
impleaded in the proceedings, becomes a litigant therein to enable him, her or it to protect or
preserve a right or interest which may be affected by such proceedings.” [65]  “The right to
G.R. No. 183952               September 9, 2013
intervene is not an absolute right; it may only be permitted by the court when the movant
establishes facts which satisfy the requirements of the law authorizing it.” [66]
CZARINA T. MALVAR, Petitioner,
While undoubtedly, MSU has a legal interest in the outcome of the case, it may not avail itself vs.
of the remedy of intervention in CA-G.R. SP No. 82052 simply because MSU is not a third KRAFT FOOD PHILS., INC. and/or BIENVENIDO BAUTISTA, KRAFT FOODS
party in the proceedings herein. INTERNATIONAL, Respondents.

In Osop’s Amended Complaint before the RTC, MSU was already impleaded as one of the
DECISION
defendants in Civil Case No. 6381.  MSU came under the jurisdiction of the RTC when it was
served with summons.  It participated in Civil Case No. 6381, where it was represented by
Atty. Fontanilla, counsel for Muslim and Ramos, who was deputized by the OSG as counsel BERSAMIN, J.:
for MSU.  MSU adopted the Answer to the Amended Complaint of its co-defendants, Muslim
and Ramos, and also joined Muslim and Ramos in subsequent pleadings filed before the
RTC in Civil Case No. 6381.  Evidently, the rights and interests of MSU were duly presented Although the practice of law is not a business, an attorney is entitled to be properly
before the RTC in Civil Case No. 6381.  Unfortunately, the RTC issued the Orders dated compensated for the professional services rendered for the client, who is bound by her
March 20, 2003 and August 21, 2003 in Civil Case No. 6381 adverse to MSU and its co- express agreement to duly compensate the attorney. The client may not deny her attorney
defendants, Muslim and Ramos. such just compensation.

The Orders dated March 20, 2003 and August 21, 2003 of the RTC in Civil Case No. 6381 The Case
granted summary judgment in Osop’s favor.  Muslim filed his Petition for Certiorari and
Prohibition in CA-G.R. SP No. 82052 which is still pending before the Court of Appeals
(which has yet to resolve Muslim’s Motion for Reconsideration and Supplemental Motion for The case initially concerned the execution of a final decision of the Court of Appeals (CA) in a
Reconsideration).  Consequently, we are careful not to make any declarations herein that will labor litigation, but has mutated into a dispute over attorney's fees between the winning
prematurely judge the merits of CA-G.R. SP No. 82052. employee and her attorney after she entered into a compromise agreement with her
employer under circumstances that the attorney has bewailed as designed to prevent the
MSU, on its part, neither filed an appeal nor a Petition for Certiorari before the Court of recovery of just professional fees.
Appeals to challenge the adverse RTC Orders.  MSU sat on its rights.  Despite receiving
on September 2, 2003[67] a copy of the RTC Order dated August 21, 2003 (denying the Antecedents
Motion for Reconsideration of the RTC Order dated March 20, 2003 filed by MSU, together
with Muslim and Ramos) in Civil Case No. 6381, MSU did not act until it filed its Motion for
Intervention on January 14, 2005[68] in CA-G.R. SP No. 82052, after an interval of 16 On August 1, 1988, Kraft Foods (Phils.), Inc. (KFPI) hired Czarina Malvar (Malvar) as its
months.  Evidently, it was already way beyond the reglementary period for MSU to file an Corporate Planning Manager. From then on, she gradually rose from the ranks, becoming in
appeal (15 days)[69] or a Petition for Certiorari (60 days).[70]  The RTC Orders dated March 20, 1996 the Vice President for Finance in the Southeast Asia Region of Kraft Foods
2003 and August 21, 2003 had already become final and executory as to MSU.  It cannot International (KFI),KFPI’s mother company. On November 29, 1999, respondent Bienvenido
now circumvent the finality of the RTC Orders by seeking to intervene in CA-G.R. SP No. S. Bautista, as Chairman of the Board of KFPI and concurrently the Vice President and Area
82052 and thereby, to unduly benefit from the timely action taken by Muslim, who alone, filed Director for Southeast Asia of KFI, sent Malvar a memo directing her to explain why no
the Petition in CA-G.R. SP No. 82052.cralaw administrative sanctions should be imposed on her for possible breach of trust and
confidence and for willful violation of company rules and regulations. Following the
In view of the foregoing, the Court finds no further need to address the other assignment of submission of her written explanation, an investigating body was formed. In due time, she
errors of MSU.  Given that the Court of Appeals did not allow MSU to intervene in CA-G.R. was placed under preventive suspension with pay. Ultimately, on March 16, 2000, she was
SP No. 82052, it has no personality to question the judgment of the appellate court in this served a notice of termination.
case.
Obviously aggrieved, Malvar filed a complaint for illegal suspension and illegal dismissal
WHEREFORE, the instant Petition for Review is hereby DENIED. against KFPI and Bautista in the National Labor Relations Commission (NLRC). In a decision

66
dated April 30, 2001, 1 the Labor Arbiter found and declared her suspension and dismissal
1/1-26/05 = 87 mos.
illegal, and ordered her reinstatement, and the payment of her full backwages, inclusive of
allowances and other benefits, plus attorney’s fees.
₱344,575.83 x 87 = 299,780.97

On October 22, 2001, the NLRC affirmed the decision of the Labor Arbiter but additionally 3. Holiday Pay
ruled that Malvar was entitled to "any and all stock options and bonuses she was entitled to
or would have been entitled to had she not been illegally dismissed from her employment," as 4/1/00-1/26/05 = 55 holidays
well as to moral and exemplary damages. 2
₱4,134,910/12 mos/20.83 days x 55 days 909,825.77
KFPI and Bautista sought the reconsideration of the NLRC’s decision, but the NLRC denied
their motion to that effect.3 4. Unpaid 13th month pay for Dec 2000 344,575.83

5. Sick Leave Pay

Undaunted, KFPI and Bautista assailed the adverse outcome before the CA on certiorari
(CA-G.R. SP No. 69660), contending that the NLRC thereby committed grave abuse of
discretion. However, the petition for certiorari was dismissed by the CA on December 22, Year 1999 to 2004 = 6 yrs
2004, but with the CA reversing the order of reinstatement and instead directing the payment
of separation pay to Malvar, and also reducing the amounts awarded as moral and exemplary ₱344,575.88/20.83 x 15 days x 6 = 1,488,805.79
damages.4
Year 2005

After the judgment in her favor became final and executory on March14, 2006, Malvar moved ₱344,575.83/20.83 x 15/12 x 1 20,677.86 1,509,483.65
for the issuance of a writ of execution. 5 The Executive Labor Arbiter then referred the case to
the Research and Computation Unit (RCU) of the NLRC for the computation of the monetary 6. Vacation Leave Pay
awards under the judgment. The RCU’s computation ultimately arrived at the total sum of
₱41,627,593.75.6
Year 1999 to 2004 = 6 years

On November 9, 2006, however, Labor Arbiter Jaime M. Reyno issued an order, 7 finding that ₱344,575.88/20.83 x 22 days x 6 = 2,183,581.83
the RCU’s computation lacked legal basis for including the salary increases that the decision
promulgated in CA-G.R. SP No. 69660 did not include. Hence, Labor Arbiter Reyno reduced Year 2005
Malvar’s total monetary award to ₱27,786,378.11, viz:
₱344,575.83/20.83 x 22/12 x 1 30,327.55 2,213,909.36
WHEREFORE, premises considered, in so far as the computation of complainant’s other
benefits and allowances are concerned, the same are in order. However, insofar as the
computation of her backwages and other monetary benefits (separation pay, unpaid salary 10,790,788.86
for January 1 to 26, 2005,holiday pay, sick leave pay, vacation leave pay, 13th month pay),
the same are hereby recomputed as follows:
Backwages (from 3/7/00-4/30/01, award in LA Sytian’s
4,651,773.75
Decision
1. Separation Pay
Allowances & Other Benefits:
8/1/88-1/26/05 = 16 yrs
Management Incentive Plan 7,355,166.58
₱344,575.83 x 16 = 5,513,213.28
Cash Dividend on Philip Morris Shares 2,711,646.00
2. Unpaid Salary
Car Maintenance 381,702.92

67
 On April 17, 2008, the CA rendered its decision in CA-G.R. SP No. 99865, 12 disposing thusly:
Gas Allowance 198,000.00

Entitlement to a Company Driver 438,650.00 WHEREFORE, premises considered, the herein Petition is GRANTED and the 19 April 2007
Decision of the NLRC and the 31May 2007 Resolution in NLRC NCR 30-07-02316-00 are
Rice Subsidy 58,650.00 hereby REVERSED and SET ASIDE.

Moral Damages 500,000.00 The matter of computation of monetary awards for private respondent is hereby REMANDED
to the Labor Arbiter and he is DIRECTED to recompute the monetary award due to private
Exemplary Damages 200,000.00 respondent based on her salary at the time of her termination, without including projected
salary increases. In computing the said benefits, the Labor Arbiter is further directed to
Attorney’s Fees 500,000.00 DISREGARD monetary awards arising from: (a) the management incentive plan and (b) the
share option grant, including cash dividends arising therefrom without prejudice to the filing of
Entitlement to Philip Sch G Subject to the appropriate remedy by the private respondent in the proper forum. Private respondent’s
allowances for car maintenance and gasoline are likewise DELETED unless private
"Share Option Grant" Market Price respondent proves, by appropriate receipts, her entitlement thereto.

With respect to the Motion to Exclude the Undisputed Amount of ₱14,252,192.12 from the
27,786,378.11 coverage of the Writ of Preliminary Injunction and to order its immediate release, the same is
hereby GRANTED for reasons stated therefor, which amount shall be deducted from the
amount to be given to private respondent after proper computation.
SO ORDERED.
As regards the Motions for Reconsideration of the Resolution denying the Motion for
Both parties appealed the computation to the NLRC, which, on April19, 2007, rendered its Voluntary Inhibition and the Omnibus Motion dated 30 October 2007, both motions are
decision setting aside Labor Arbiter Reyno’s November 9, 2006 order, and adopting the hereby DENIED for lack of merit.
computation by the RCU.8
SO ORDERED.13
9
In its resolution dated May 31, 2007,  the NLRC denied the respondents’ motion for
reconsideration. Malvar sought reconsideration, but the CA denied her motion on July30, 2008. 14

Malvar filed a second motion for the issuance of a writ of execution to enforce the decision of
the NLRC rendered on April 19, 2007. After the writ of execution was issued, a partial
enforcement as effected by garnishing the respondents’ funds deposited with Citibank worth
37,391,696.06.10
On July 27, 2007, the respondents went to the CA on certiorari (with prayer for the issuance
of a temporary restraining order (TRO) or writ of preliminary injunction), assailing the NLRC’s
setting aside of the computation by Labor Arbiter Reyno (CA-G.R. SP No. 99865). The
petition mainly argued that the NLRC had gravely abused its discretion in ruling that: (a) the
inclusion of the salary increases and other monetary benefits in the award to Malvar was final
and executory; and (b) the finality of the ruling in CA-G.R. SP No. 69660 precluded the
respondents from challenging the inclusion of the salary increases and other monetary
benefits. The CA issued a TRO, enjoining the NLRC and Malvar from implementing the
NLRC’s decision.11
Aggrieved, Malvar appealed to the Court, assailing the CA’s decision.
On December 9, 2010, while her appeal was pending in this Court, Malvar and the
respondents entered into a compromise agreement, the pertinent dispositive portion of which
is quoted as follows:
NOW, THEREFORE, for and in consideration of the covenants and understanding between
the parties herein, the parties hereto have entered into this Agreement on the following terms
and conditions:
1. Simultaneously upon execution of this Agreement in the presence of Ms. Malvar’s attorney,
KFPI shall pay Ms. Malvar the amount of Philippine Pesos Forty Million (Php 40,000,000.00),
which is in addition to the Philippine Pesos Fourteen Million Two Hundred Fifty-Two
Thousand One Hundred Ninety-Two and Twelve Centavos (Php14,252,192.12) already paid

68
to and received by Ms. Malvar from KFPI in August2008 (both amounts constituting the Lawyers, oftentimes, are caricatured as alligators or some other specie of voracious
"Compromise Payment"). carnivore; perceived also as leeches sucking dry the blood of their adversaries, and even
their own clients they are sworn to serve and protect! As we lay down the facts in this case,
this popular, rather unpopular, perception will be shown wrong. This case is a reversal of this
The Compromise Payment includes full and complete payment and settlement of Ms.
perception.
Malvar’s salaries and wages up to the last day of her employment, allowances, 13th and 14th
month pay, cash conversion of her accrued vacation, sick and emergency leaves, separation
pay, retirement pay and such other benefits, entitlements, claims for stock, stock options or xxxx
other forms of equity compensation whether vested or otherwise and claims of any and all
kinds against KFPI and KFI and Altria Group, Inc., their predecessors-in-interest, their
Here, it is the lawyer who is eaten up alive by the warring but conspiring litigants who finally
stockholders, officers, directors, agents or successors-in-interest, affiliates and subsidiaries,
settled their differences without the knowledge, much less, participation, of Petitioner’s
up to the last day of the aforesaid cessation of her employment.
counsel that labored hard and did everything to champion her cause.

2. In consideration of the Compromise Payment, Ms. Malvar hereby freely and voluntarily
xxxx
releases and forever discharges KFPI and KFI and Altria Group, Inc., their predecessors or
successors-in-interest, stockholders, officers, including Mr. Bautista who was impleaded in
the Labor Case as a party respondent, directors, agents or successors-in-interest, affiliates This Motion for Intervention will illustrate an aberration from the norm where the lawyer ends
and subsidiaries from any and all manner of action, cause of action, sum of money, up seeking protection from his client’s and Respondents’ indecent and cunning
damages, claims and demands whatsoever in law or in equity which Ms. Malvar or her heirs, maneuverings. x x x.
successors and assigns had, or now have against KFPI and/or KFI and/or Altria Group, Inc.,
including but not limited to, unpaid wages, salaries, separation pay, retirement pay, holiday
xxxx
pay, allowances, 13th and 14th month pay, claims for stock, stock options or other forms of
equity compensation whether vested or otherwise whether arising from her employment
contract, company grant, present and future contractual commitments, company policies or On 18 March 2008 Petitioner engaged the professional services of Intervenor x x x on a
practices, or otherwise, in connection with Ms. Malvar’s employment with KFPI. 15 contingency basis whereby the former agreed in writing to pay the latter contingency fees
amounting to almost ₱19,600,000.00 (10% of her total claim of almost ₱196,000,000.00 in
connection with her labor case against Respondents. x x x.
xxxx

Thereafter, Malvar filed an undated Motion to Dismiss/Withdraw Case, 16 praying that the
appeal be immediately dismissed/withdrawn in view of the compromise agreement, and that
the case be considered closed and terminated.
Intervention
xxxx
According to their agreement (Annex "A"), Petitioner bound herself to pay Intervenor
contingency fees as follows (a) 10% of ₱14,252, 192.12 upon its collection; (b) 10% of the
remaining balance of ₱41,627,593.75; and (c)10% of the value of the stock options Petitioner
claims to be entitled to, or roughly ₱154,000,000.00 as of April 2008.

Before the Court could act on Malvar’s Motion to Dismiss/Withdraw Case, the Court received
xxxx
on February 15, 2011 a so-called Motion for Intervention to Protect Attorney’s Rights 17 from
The Law Firm of Dasal, Llasos and Associates, through its Of Counsel Retired Supreme
Court Associate Justice Josue N. Bellosillo18 (Intervenor), whereby the Intervenor sought, Intervenor’s efforts resulted in the award and partial release of Petitioner’s claim amounting to
among others, that both Malvar and KFPI be held and ordered to pay jointly and severally the ₱14,252,192.12 out of which Petitioner paid Intervenor 10% or ₱1,425,219.21 as contingency
Intervenor’s contingent fees. fees pursuant to their engagement agreement (Annex "A"). Copy of the check payment of
Petitioner payable to Intervenor’s Of Counsel is attached as Annex "C".
The Motion for Intervention relevantly averred:
xxxx
xxxx

69
On 12 September 2008 Intervenor filed an exhaustive Petition for Review with the Supreme
Court containing 70 pages, including its Annexes "A" to "R", or a total of 419 pages against
Respondents to collect on the balance of Petitioner’s claims amounting to at least
₱27,000,000.00 and ₱154,000,000.00 the latter representing the estimated value of
Petitioner’s stock options as of April 2008.
xxxx
On 15 January 2009 Respondents filed their Comment to the Petition for Review.
xxxx
On 13 April 2009 Intervenor, in behalf of Petitioner, filed its Reply to the Comment.
xxxx
All the pleadings in this Petition have already been submitted on time with nothing more to be
done except to await the Resolution of this Honorable Court which, should the petition be
decided in her favor, Petitioner would stand to gain ₱182,000,000.00, more or less, which
victory would be largely through the efforts of Intervenor. 19 (Bold emphasis supplied).
xxxx
It appears that in July 2009, to the Intervenor’s surprise, Malvar unceremoniously and without
any justifiable reason terminated its legal service and required it to withdraw from the
case.20 Hence, on October 5,2009, the Intervenor reluctantly filed a Manifestation (With
Motion to Withdraw as Counsel for Petitioner), 21 in which it spelled out: (a) the terms of and
conditions of the Intervenor’s engagement as counsel; (b) the type of legal services already
rendered by the Intervenor for Malvar; (c) the absence of any legitimate reason for the
termination of their attorney-client relationship; (d) the reluctance of the Intervenor to
withdraw as Malvar’s counsel; and (e) the desire of the Intervenor to assert and claim its
contingent fee notwithstanding its withdrawal as counsel. The Intervenor prayed that the
Court furnish it with copies of resolutions, decisions and other legal papers issued or to be
issued after its withdrawal as counsel of Malvar in the interest of protecting its interest as her
attorney.
The Intervenor indicated that Malvar’s precipitate action had baffled, shocked and even
embarrassed the Intervenor, because it had done everything legally possible to serve and
protect her interest. It added that it could not recall any instance of conflict or
misunderstanding with her, for, on the contrary, she had even commended it for its dedication
and devotion to her case through her following letter to Justice Bellosillo, to wit:
July 16, 2008
Justice Josue Belocillo (sic)
Dear Justice,
It is almost morning of July 17 as I write this letter to you. Let me first thank you for your
continued and unrelenting lead, help and support in the case. You have been our "rock" as
far as this case is concerned. Jun and I are forever grateful to you for all your help. I just
thought I’d express to you what is in the innermost of my heart as we proceed in the case. It
has been around four months now since we met mid-March early this year.
The most important and immediate aspect of the case at this time for me is the collection of
the undisputed amount of Pesos 14million which the Court has clearly directed and ordered
the NLRC to execute. The only impending constraint for NLRC to execute and collect this
amount from the already garnished amount of Pesos 41 million at Citibank is the MR of Kraft
on the Order of the Court (CA) to execute collection. We need to get a denial of this motion
for NLRC to execute immediately. We already obtained commitment from NLRC that all it
needed to execute collection is the denial of the MR. Jun and I applaud your initiative and
efforts to mediate with Romulo on potential settlement. However, as I expressed to you in
several instances, I have serious reservations on the willingness of Romulo to settle within
reasonable amounts specifically as it relates to the stock options. Let us continue to pursue
this route vigorously while not setting aside our efforts to influence the CA to DENY their
Motion on the Undisputed amount of Pesos 14million.
At this point, I cannot overemphasize to you our need for funds. We have made financial
commitments that require us to raise some amount. But we can barely meet our day to day
business and personal requirements given our current situation right now.
Thank you po for your understanding and support. 22
According to the Intervenor, it was certain that the compromise agreement was authored by
the respondents to evade a possible loss of ₱182,000,000.00 or more as a result of the labor
litigation, but considering the Intervenor’s interest in the case as well as its resolve in
pursuing Malvar’s interest, they saw the Intervenor as a major stumbling block to the
compromise agreement that it was then brewing with her. Obviously, the only way to remove
the Intervenor was to have her terminate its services as her legal counsel. This prompted the
Intervenor to bring the matter to the attention of the Court to enable it to recover in full its
compensation based on its written agreement with her, averring thus:
xxxx
28. Upon execution of the Compromise Agreement and pursuant thereto, Petitioner
immediately received (supposedly) from Respondents₱40,000,000.00. But despite the
settlement between the parties, Petitioner did not pay Intervenor its just compensation as set
70
forth in their engagement agreement; instead, she immediately moved to Dismiss/Withdraw
the Present Petition.
29. To parties’ minds, with the dismissal by Petitioner of Intervenor as her counsel, both
Petitioner and Respondents probably thought they would be able to settle the case without
any cost to them, with Petitioner saving on Intervenor’s contingent fees while Respondents
able to take advantage of the absence of Intervenor in determining the settlement price.
30. The parties cannot be any more mistaken. Pursuant to the Second Paragraph of Section
26, Rule 138, of the Revised Rules of Court quoted in paragraph 3 hereof, Intervenor is still
entitled to recover from Petitioner the full compensation it deserves as stipulated in its
contract.
31. All the elements for the full recovery of Intervenor’s compensation are present. First, the
contract between the Intervenor and Petitioner is reduced into writing. Second, Intervenor is
dismissed without justifiable cause and at the stage of proceedings where there is nothing
more to be done but to await the Decision or Resolution of the Present Petition. 23
xxxx
In support of the Motion for Intervention, the Intervenor cites the rulings in Aro v.
Nañawa24 and Law Firm of Raymundo A. Armovit v. Court of Appeals, 25 particularly the
following passage:
x x x. While We here reaffirm the rule that "the client has an undoubted right to compromise a
suit without the intervention of his lawyer," We hold that when such compromise is entered
into in fraud of the lawyer, with intent to deprive him of the fees justly due him, the
compromise must be subject to the said fees and that when it is evident that the said fraud is
committed in confabulation with the adverse party who had knowledge of the lawyer’s
contingent interest or such interest appears of record and who would benefit under such
compromise, the better practice is to settle the matter of the attorney’s fees in the same
proceeding, after hearing all the affected parties and without prejudice to the finality of the
compromise agreement in so far as it does not adversely affect the right of the lawyer.26 x x x.
The Intervenor prays for the following reliefs:
a) Granting the Motion for Intervention to Protect Attorney’s Rights in favor of the
Intervenor;
b) Directing both Petitioner and Respondents jointly and severally to pay Intervenor
its contingent fees;
c) Granting a lien upon all judgments for the payment of money and executions
issued in pursuance of such judgments; and
d) Holding in Abeyance in the meantime the Resolution of the Motion to
Dismiss/Withdraw Case filed by Petitioner and granting the Motion only after
Intervenor has been fully paid its just compensation; and
e) Other reliefs just and equitable. 27
Opposing the Motion for Intervention, 28 Malvar stresses that there was no truth to the
Intervenor’s claim to defraud it of its professional fees; that the Intervenor lacked the legal
capacity to intervene because it had ceased to exist after Atty. Marwil N. Llasos resigned
from the Intervenor and Atty. Richard B. Dasal became barred from private practice upon his
appointment as head of the Legal Department of the Small Business Guarantee and Finance
Corporation, a government subsidiary; and that Atty. Llasos and Atty. Dasal had personally
handled her case.
Malvar adds that even assuming, arguendo, that the Intervenor still existed as a law firm, it
was still not entitled to intervene for the following reasons, namely: firstly, it failed to attend to
her multiple pleas and inquiries regarding the case, as when communications to the
Intervenor through text messages were left unanswered; secondly, maintaining that this was
a justifiable cause to dismiss its services, the Intervenor only heeded her repeated demands
to withdraw from the case when Atty. Dasal was confronted about his appointment to the
government subsidiary; thirdly, it was misleading and grossly erroneous for the Intervenor to
claim that it had rendered to her full and satisfactory services when the truth was that its
participation was strictly limited to the preparation, finalization and submission of the petition
for review with the Supreme Court; and finally, while the Intervenor withdrew its services on
October 5, 2009, the compromise agreement was executed with the respondents on
December 9,2010 and notarized on December 14, 2010, after more than a year and two
months, dispelling any badge of bad faith on their end.
On June 21, 2011, the respondents filed their comment to the Intervenor’s Motion for
Intervention.
On November 18, 2011, the Intervenor submitted its position on the respondent’s comment
dated June 21, 2011,29 and thereafter the respondents sent in their reply.30
Issues
The issues for our consideration and determination are two fold, namely: (a) whether or not
Malvar’s motion to dismiss the petition on the ground of the execution of the compromise
agreement was proper; and (b) whether or not the Motion for Intervention to protect
attorney’s rights can prosper, and, if so, how much could it recover as attorney’s fees.
71
Ruling of the Court
We shall decide the issues accordingly.
1.
Client’s right to settle litigation
by compromise agreement, and
to terminate counsel; limitations
A compromise agreement is a contract, whereby the parties undertake reciprocal obligations
to avoid litigation, or put an end to one already commenced. 31 The client may enter into a
compromise agreement with the adverse party to terminate the litigation before a judgment is
rendered therein.32 If the compromise agreement is found to be in order and not contrary to
law, morals, good customs and public policy, its judicial approval is in order. 33 A compromise
agreement, once approved by final order of the court, has the force of res judicata between
the parties and will not be disturbed except for vices of consent or forgery. 34
A client has an undoubted right to settle her litigation without the intervention of the attorney,
for the former is generally conceded to have exclusive control over the subject matter of the
litigation and may at anytime, if acting in good faith, settle and adjust the cause of action out
of court before judgment, even without the attorney’s intervention. 35 It is important for the
client to show, however, that the compromise agreement does not adversely affect third
persons who are not parties to the agreement.36
By the same token, a client has the absolute right to terminate the attorney-client relationship
at any time with or without cause.37 But this right of the client is not unlimited because good
faith is required in terminating the relationship. The limitation is based on Article 19 of the
Civil Code, which mandates that "every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe honesty and
good faith." The right is also subject to the right of the attorney to be compensated. This is
clear from Section 26, Rule 138 of the Rules of Court, which provides:
Section 26. Change of attorneys. - An attorney may retire at anytime from any action or
special proceeding, by the written consent of his client filed in court. He may also retire at any
time from an action or special proceeding, without the consent of his client, should the court,
on notice to the client and attorney, and on hearing, determine that he ought to be allowed to
retire. In case of substitution, the name of the attorney newly employed shall be entered on
the docket of the court in place of the former one, and written notice of the change shall be
given to the adverse party.
A client may at any time dismiss his attorney or substitute another in his place, but if the
contract between client and attorney has been reduced to writing and the dismissal of the
attorney was without justifiable cause, he shall be entitled to recover from the client the full
compensation stipulated in the contract. However, the attorney may, in the discretion of the
court, intervene in the case to protect his rights. For the payment of his compensation the
attorney shall have a lien upon all judgments for the payment of money, and executions
issued in pursuance of such judgment, rendered in the case wherein his services had been
retained by the client. (Bold emphasis supplied)
In fine, it is basic that an attorney is entitled to have and to receive a just and reasonable
compensation for services performed at the special instance and request of his client. The
attorney who has acted in good faith and honesty in representing and serving the interests of
the client should be reasonably compensated for his service.38
2.
Compromise agreement is to be approved
despite favorable action on the
Intervenor’s Motion for Intervention
On considerations of equity and fairness, the Court disapproves of the tendencies of clients
compromising their cases behind the backs of their attorneys for the purpose of unreasonably
reducing or completely setting to naught the stipulated contingent fees. 39 Thus, the Court
grants the Intervenor’s Motion for Intervention to Protect Attorney’s Rights as a measure of
protecting the Intervenor’s right to its stipulated professional fees that would be denied under
the compromise agreement. The Court does so in the interest of protecting the rights of the
practicing Bar rendering professional services on contingent fee basis.
Nonetheless, the claim for attorney’s fees does not void or nullify the compromise agreement
between Malvar and the respondents. There being no obstacles to its approval, the Court
approves the compromise agreement. The Court adds, however, that the Intervenor is not left
without a remedy, for the payment of its adequate and reasonable compensation could not
be annulled by the settlement of the litigation without its participation and conformity. It
remains entitled to the compensation, and its right is safeguarded by the Court because its
members are officers of the Court who are as entitled to judicial protection against injustice or
imposition of fraud committed by the client as much as the client is against their abuses as
her counsel. In other words, the duty of the Court is not only to ensure that the attorney acts
in a proper and lawful manner, but also to see to it that the attorney is paid his just fees. Even
if the compensation of the attorney is dependent only on winning the litigation, the
subsequent withdrawal of the case upon the client’s initiative would not deprive the attorney
of the legitimate compensation for professional services rendered. 40
The basis of the intervention is the written agreement on contingent fees contained in the
engagement executed on March 19, 2008 between Malvar and the Intervenor, 41 the pertinent
portion of which stipulated that the Intervenor would "collect ten percent (10%) of the amount
of Ph₱14,252,192.12 upon its collection and another ten percent (10%) of the remaining
balance of Ph₱41,627,593.75 upon collection thereof, and also ten percent (10%) of
whatever is the value of the stock option you are entitled to under the Decision." There is no
72
question that such arrangement was a contingent fee agreement that was valid in this
jurisdiction, provided the fees therein fixed were reasonable. 42
We hold that the contingent fee of 10% of ₱41,627,593.75 and 10% of the value of the stock
option was reasonable. The ₱41,627,593.75 was already awarded to Malvar by the NLRC
but the award became the subject of the appeal in this Court because the CA reversed the
NLRC. Be that as it may, her subsequent change of mind on the amount sought from the
respondents as reflected in the compromise agreement should not negate or bar the
Intervenor’s recovery of the agreed attorney’s fees.
Considering that in the event of a dispute between the attorney and the client as to the
amount of fees, and the intervention of the courts is sought, the determination requires that
there be evidence to prove the amount of fees and the extent and value of the services
rendered, taking into account the facts determinative thereof, 43 the history of the Intervenor’s
legal representation of Malvar can provide a helpful predicate for resolving the dispute
between her and the Intervenor.
The records reveal that on March 18, 2008, Malvar engaged the professional services of the
Intervenor to represent her in the case of illegal dismissal. At that time, the case was pending
in the CA at the respondents’ instance after the NLRC had set aside the RCU’s computation
of Malvar’s backwages and monetary benefits, and had upheld the computation arrived at by
the NLRC Computation Unit. On April 17, 2008, the CA set aside the assailed resolution of
the NLRC, and remanded the case to the Labor Arbiter for the computation of her monetary
awards. It was at this juncture that the Intervenor commenced its legal service, which
included the following incidents, namely:
a) Upon the assumption of its professional duties as Malvar’s counsel, a Motion for
Reconsideration of the Decision of the Court of Appeals dated April 17, 2008
consisting of thirty-eight pages was filed before the Court of Appeals on May 6,
2008.
b) On June 2, 2009, Intervenors filed a Comment to Respondents’ Motion for
Partial Reconsideration, said Comment consisted 8 pages.
c) In the execution proceedings before Labor Arbiter Jaime Reyno, Intervenor
prepared and filed on Malvar’s behalf an "Ex-Parte Motion to Release to
Complainant the Undisputed amount of ₱14,252,192.12" in NLRC NCR Case No.
30-07-02716-00.
d) On July 29, 2000, Intervenor prepared and filed before theLabor Arbiter a
Comment to Respondents’ Opposition to the "Ex-Parte Motion to Release" and a
"Motion Reiterating Immediate Implementation of the Writ of Execution"
e) On August 6, 2008, Intervenor prepared and filed before the Labor Arbiter
Malvar’s Motion Reiterating Motion to Release the Amount of ₱14,252,192.12. 44
The decision promulgated on April 17, 2008 45 and the resolution promulgated on July 30,
200846 by the CA prompted Malvar to appeal on August 15, 2008 to this Court with the
assistance of the Intervenor. All the subsequent pleadings, including the reply of April 13,
2009,47 were prepared and filed in Malvar’s behalf by the Intervenor.
Malvar should accept that the practice of law was not limited to the conduct of cases or
litigations in court but embraced also the preparation of pleadings and other papers incidental
to the cases or litigations as well as the management of such actions and proceedings on
behalf of the clients. 48 Consequently, fairness and justice demand that the Intervenor be
accorded full recognition as her counsel who discharged its responsibility for Malvar’s cause
to its successful end.
But, as earlier pointed out, although a client may dismiss her lawyer at any time, the
dismissal must be for a justifiable cause if a written contract between the lawyer and the
client exists.49
Considering the undisputed existence of the written agreement on contingent fees, the
question begging to be answered is: Was the Intervenor dismissed for a justifiable cause?
We do not think so.
In the absence of the lawyer’s fault, consent or waiver, a client cannot deprive the lawyer of
his just fees already earned in the guise of a justifiable reason. Here, Malvar not only
downplayed the worth of the Intervenor’s legal service to her but also attempted to
camouflage her intent to defraud her lawyer by offering excuses that were not only
inconsistent with her actions but, most importantly, fell short of being justifiable.
The letter Malvar addressed to Retired Justice Bellosillo, who represented the Intervenor,
debunked her allegations of unsatisfactory legal service because she thereby lavishly lauded
the Intervenor for its dedication and devotion to the prosecution of her case and to the
protection of her interests. Also significant was that the attorney-client relationship between
her and the Intervenor was not severed upon Atty. Dasal’s appointment to public office and
Atty. Llasos’ resignation from the law firm. In other words, the Intervenor remained as her
counsel of record, for, as we held in Rilloraza, Africa, De Ocampo and Africa v. Eastern
Telecommunication Philippines, Inc., 50 a client who employs a law firm engages the entire law
firm; hence, the resignation, retirement or separation from the law firm of the handling lawyer
does not terminate the relationship, because the law firm is bound to provide a replacement.
The stipulations of the written agreement between Malvar and the Intervenors, not being
contrary to law, morals, public policy, public order or good customs, were valid and binding
on her. They expressly gave rise to the right of the Intervenor to demand compensation. In a
73
word, she could not simply walk away from her contractual obligations towards the
Intervenor, for Article 1159 of the Civil Code provides that obligations arising from contracts
have the force of law between the parties and should be complied with in good faith.
To be sureJr, the Intervenor’s withdrawal from the case neither cancelled nor terminated the
written agreement on the contingent attorney’s fees. Nor did the withdrawal constitute a
waiver of the agreement. On the contrary, the agreement continued between them because
the Intervenor’s Manifestation (with Motion to Withdraw as Counsel for Petitioner)explicitly
called upon the Court to safeguard its rights under the written agreement, to wit:
WHEREFORE, premises considered, undersigned counsel respectfully pray that instant
Motion to Withdraw as Counsel for Petitioner be granted and their attorney’s lien pursuant to
the written agreement be reflected in the judgment or decision that may be rendered
hereafter conformably with par. 2, Sec. 26, Rule 138 of the Rules of Court.
Undersigned counsel further requests that they be furnished copy of the decision, resolutions
and other legal processes of this Honorable Court to enable them to protect their interests. 51
Were the respondents also liable?
The respondents would be liable if they were shown to have connived with Malvar in the
execution of the compromise agreement, with the intention of depriving the Intervenor of its
attorney’s fees. Thereby, they would be solidarily liable with her for the attorney’s fees as
stipulated in the written agreement under the theory that they unfairly and unjustly interfered
with the Intervenor’s professional relationship with Malvar.
The respondents insist that they were not bound by the written agreement, and should not be
held liable under it.1âwphi1
We disagree with the respondents’ insistence. The respondents were complicit in Malvar’s
move to deprive the Intervenor of its duly earned contingent fees.
First of all, the unusual timing of Malvar’s letter terminating the Intervenor’s legal
representation of her, of her Motion to Dismiss/Withdraw Case, and of the execution of
compromise agreement manifested her desire to evade her legal obligation to pay to the
Intervenor its attorney’s fees for the legal services rendered. The objective of her withdrawal
of the case was to release the respondents from all her claims and causes of action in
consideration of the settlement in the stated amount of ₱40,000.000.00, a sum that was
measly compared to what she was legally entitled to, which, to begin with, already included
the ₱41,627,593.75 and the value of the stock option already awarded to her. In other words,
she thereby waived more than what she was lawfully expected to receive from the
respondents.
Secondly, the respondents suddenly turned around from their strong stance of berating her
demand as offensive to all precepts of justice and fair play and as a form of unjust enrichment
for her to a surprisingly generous surrender to her demand, allowing to her through their
compromise agreement the additional amount of ₱40,000,000.00 on top of
the₱14,252,192.12 already received by her in August 2008. The softening unavoidably gives
the impression that they were now categorically conceding that Malvar deserved much more.
Under those circumstances, it is plausible to conclude that her termination of the Intervenor’s
services was instigated by their prodding in order to remove the Intervenor from the picture
for being a solid obstruction to the settlement for a much lower liability, and thereby save for
themselves and for her some more amount.
Thirdly, the compromise agreement was silent on the Intervenor’s contingent fee, indicating
that the objective of the compromise agreement was to secure a huge discount from its
liability towards Malvar.
Finally, contrary to the stipulation in the compromise agreement, only Malvar, minus the
respondents, filed the Motion to Dismiss/Withdraw Case.
At this juncture, the Court notes that the compromise agreement would have Malvar waive
even the substantial stock options already awarded by the NLRC’s decision, 52 which ordered
the respondents to pay to her, among others, the value of the stock options and all other
bonuses she was entitled to or would have been entitled to had she not been illegally
dismissed from her employment. This ruling was affirmed by the CA. 53 But the waiver could
not negate the Intervenor’s right to 10% of the value of the stock options she was legally
entitled to under the decisions of the NLRC and the CA, for that right was expressly stated in
the written agreement between her and the Intervenor. Thus, the Intervenor should be
declared entitled to recover full compensation in accordance with the written agreement
because it did not assent to the waiver of the stock options, and did not waive its right to that
part of its compensation.
These circumstances show that Malvar and the respondents needed an escape from greater
liability towards the Intervenor, and from the possible obstacle to their plan to settle to pay. It
cannot be simply assumed that only Malvar would be liable towards the Intervenor at that
point, considering that the Intervenor, had it joined the negotiations as her lawyer, would
have tenaciously fought all the way for her to receive literally everything that she was entitled
to, especially the benefits from the stock option. Her rush to settle because of her financial
concerns could have led her to accept the respondents’ offer, which offer could be further
reduced by the Intervenor’s expected demand for compensation. Thereby, she and the
respondents became joint tort-feasors who acted adversely against the interests of the
Intervenor. Joint tort-feasors are those who command, instigate, promote, encourage, advise,
countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it
is done, if done for their benefit. 54
They are also referred to as those who act together in committing wrong or whose acts, if
independent of each other, unite in causing a single injury. 55 Under Article 2194 of the Civil
Code, joint tort-feasors are solidarily liable for the resulting damage. As regards the extent of
74
their respective liabilities, the Court said in Far Eastern Shipping Company v. Court of see to it that attorneys act in a proper and lawful manner, but also to see to it that attorneys
Appeals:56 are paid their just and lawful fees. 61

x x x. Where several causes producing an injury are concurrent and each is an efficient
cause without which the injury would not have happened, the injury may be attributed to all or
any of the causes and recovery may be had against any or all of the responsible persons
although under the circumstances of the case, it may appear that one of them was more
culpable, and that the duty owed by them to the injured person was not same. No actor’s
negligence ceases to be a proximate cause merely because it does not exceed the
negligence of other acts. Each wrongdoer is responsible for the entire result and is liable as
though his acts were the sole cause of the injury.
WHEREFORE, the Court APPROVES the compromise agreement; GRANTS the Motion for
Intervention to Protect Attorney's Rights; and ORDERS Czarina T. Malvar and respondents
Kraft Food Philippines Inc. and Kraft Foods International to jointly and severally pay to
Intervenor Law Firm, represented by Retired Associate Justice Josue N. Bellosillo, its
stipulated contingent fees of 10% of ₱41,627,593.75, and the further sum equivalent to 10%
of the value of the stock option. No pronouncement on costs of suit.
SO ORDERED.

There is no contribution between joint tort-feasors whose liability is solidary since both of
LUCAS P. BERSAMIN
them are liable for the total damage. Where the concurrent or successive negligent acts or
Associate Justice
omissions of two or more persons, although acting independently, are in combination the
direct and proximate cause of a single injury to a third person, it is impossible to determine in
what proportion each contributed to the injury and either of them is responsible for the whole THIRD DIVISION
injury. x x x
 
Joint tort-feasors are each liable as principals, to the same extent and in the same manner as
if they had performed the wrongful act themselves. It is likewise not an excuse for any of the
 
joint tort-feasors that individual participation in the tort was insignificant as compared to that
of the other.57 To stress, joint tort-feasors are not liable pro rata. The damages cannot be
apportioned among them, except by themselves. They cannot insist upon an apportionment, JOWEL SALES ,   G.R. No. 133154
for the purpose of each paying an aliquot part. They are jointly and severally liable for the
whole amount.58 Thus, as joint tort-feasors, Malvar and the respondents should be held
solidarily liable to the Intervenor. There is no way of appreciating these circumstances except Petitioner,  
in this light.
   
That the value of the stock options that Malvar waived under the compromise agreement has
not been fixed as yet is no hindrance to the implementation of this decision in favor of the   Present:
Intervenor. The valuation could be reliably made at a subsequent time from the finality of this
adjudication. It is enough for the Court to hold the respondents and Malvar solidarily liable for
the 10% of that value of the stock options.    

As a final word, it is necessary to state that no court can shirk from enforcing the contractual   PANGANIBAN, J., Chairman
stipulations in the manner they have agreed upon and written. As a rule, the courts, whether
trial or appellate, have no power to make or modify contracts between the parties. Nor can   SANDOVAL-GUTIERREZ,
the courts save the parties from disadvantageous provisions. 59 The same precepts hold sway
when it comes to enforcing fee arrangements entered into in writing between clients and
attorneys. In the exercise of their supervisory authority over attorneys as officers of the Court,   CORONA,
the courts are bound to respect and protect the attorney’s lien as a necessary means to
preserve the decorum and respectability of the Law Profession. 60 Hence, the Court must - versus - CARPIO MORALES, and
thwart any and every effort of clients already served by their attorneys’ worthy services to
deprive them of their hard-earned compensation. Truly, the duty of the courts is not only to
  GARCIA, JJ.

75
  
2.      Resolution [2] dated March 22, 1998, denying petitioner's motion
   
for reconsideration.

   
 

  Promulgated:
Briefly, the facts may be stated as follows:

   
 

   
On February 20, 1995, in the Regional Trial Court (RTC) at Pasig City, Metro , herein
respondent Cyril A. Sabino filed an amended complaint [3] for damages against, among
CYRIL A. SABINO, December 9, 2005 others, herein petitioner Jowel Sales, driver of the vehicle involved in the accident which
ultimately caused the death of respondent's son, Elbert.
Respondent.
 
x-----------------------------------------------------------------------------------x
Before any responsive pleading could be filed, respondent, as plaintiff a quo, notified the
defendants that he will take the deposition of one Buaneres Corral before the Clerk of
  Court, RTC- Pasig City.

DECISION  

  On December 27, 1995 and resumed on January 3, 1996, the deposition on oral examination
of Buaneres Corral was taken before the Clerk of Court of Pasig, in the presence and with the
  active participation of petitioner's counsel, Atty. Roldan Villacorta, who even lengthily cross-
examined the deponent. In the course of trial, respondent had the deposition of Buaneres
Corral marked as her Exhibits 'DD [4] and 'EE [5] , with submarkings.
GARCIA, J.:

Upon conclusion of her evidentiary presentation, respondent made a Formal Offer of

 
Assailed and sought to be set aside in this petition for review on certiorari under Rule 45 of
the Rules of Court are the following issuances of the Court of Appeals (CA) in CA-G.R. SP
No. 44078, to wit:
Exhibits, [6] among which are Exhibits 'DD and 'EE. Likewise offered in evidence as Exhibit
'BB [7] is a certification from the Bureau of Immigration attesting to the May 28,
1996 departure for abroad of Buaneres Corral via Flight No. PR 658.
 

 
1.      Decision [1] dated January 20, 1998, affirming an earlier order of
the Regional Trial Court, Branch 152, National Capital Judicial
Region, which admitted the deposition of one Buaneres Corral
as part of respondent's evidence in an action for damages;
and
Petitioner opposed the admission of Exhs. 'DD and 'EE and even asked that they be
expunged from the records on the ground that the jurisdictional requirements for their
admission under Section 4, Rule 23 of the Rules of Court, infra, were not complied with. He
also downplayed the evidentiary value of Exhibit 'BB for reasons he would repeat in this
petition.

76

In its order of February 3, 1997, [8] the trial court admitted, among other evidence,
respondent's Exhibits 'DD', 'EE and 'BB. With his motion for reconsideration  [9] having been
denied by the court in its subsequent order of March 25, 1997, [10] petitioner went
on certiorari to the Court of Appeals in CA-G.R. SP No. 44078, imputing grave abuse of
discretion on the part of the trial court in admitting in evidence the deposition in question
(Exhibits 'DD and 'EE').
 
As stated at the threshold hereof, the appellate court, in the herein assailed decision dated
January 20, 1998, [11] upheld the trial court and effectively denied due course to and
dismissed petitioner's recourse, explaining, inter alia, that petitioner's active participation,
through counsel, during the taking of subject deposition and adopting it as his own exhibits,
has thereby estopped him from assailing the admissibility thereof as part of respondent's
evidence. His motion for reconsideration having been denied by the appellate court in its
equally assailed resolution of March 22, 1998, petitioner is now with us via 'the instant
petition, raising the following issues of his own formulation:
1. Whether or not the requirements of Section 4, Rule 24 (now Section 3)
of the Revised Rules of Court were satisfied by the respondent when it
presented a certification attesting to the fact that deponent has left the
country but silent as to whether or not at the time his deposition was
offered in evidence is in the Philippines
 
2. Whether or not the petitioner in cross-examining the deponent during
the taking of his deposition waived any and all objections in connection
therewith. [12]
The petition lacks merit.
 
Section 4, Rule 23 [13] of the Rules of Court, upon which petitioner mounts his challenge to
the admission in evidence of the subject deposition, pertinently reads:
SEC. 4. Use of depositions.- At the trial . . . any part or all of a
deposition, so far as admissible under the rules of evidence, may be
used against any party who was present or represented at the taking of
the deposition or who had due notice thereof, in accordance with any of
the following provisions:
xxx xxx xxx
(c) The deposition of a witness, whether or not a party, may be used by
any party for any purpose if the court finds: (1) that the witness is dead;
or (2) that the witness resides at a distance more than one hundred
(100) kilometers from the place of trial or hearing, or is out of the
Philippines, unless it appears that his absence was procured by the
party offering the deposition; or (3) that the witness is unable to
attend or testify because of age, sickness, infirmity, or
imprisonment; or (4) that the party offering the deposition has been
unable to procure the attendance of the witness by subpoena; or (5)
upon application and notice, that such exception circumstances
exist and with due regard to the importance of presenting the
testimony of witnesses orally in open court, to allow the deposition
to be used. (Emphasis supplied).
 
It is petitioner's posture that none of the above conditions exists in this case to justify the
admission in evidence of respondent's Exhibits 'DD and 'EE. Hence, it was error for the
appellate court to have upheld the admission thereof by the trial court. Discounting the
probative value of the certification from the Bureau of Immigration (Exh. 'BB') that deponent
Buaneres Corral departed for abroad on May 28, 1996, petitioner argues that said
certification merely proves the fact of Corral having left the country on the date therein
mentioned. It does not, however, establish that he has not returned since then and is
unavailable to be present in court to personally testify.
While depositions may be used as evidence in court proceedings, they are generally not
meant to be a substitute for the actual testimony in open court of a party or witness. Stated a
bit differently, a deposition is not to be used when the deponent is at hand. [14] Indeed, any
deposition offered during a trial to prove the facts therein set out, in lieu of the actual ora l
testimony of the deponent in open court, may be opposed and excluded on the ground of
hearsay. However, depositions may be used without the deponent being called to the witness
stand by the proponent, provided the existence of certain conditions is first satisfactorily
established. Five (5) exceptions for the admissibility of a deposition are listed in Section 4,
Rule 23, supra, of the Rules of Court. Among these is when the witness is out of
the Philippines.
 
The trial court had determined that deponent Bueneres Corral was abroad when the offer of
his deposition was made. This factual finding of absence or unavailability of witness to testify
77
deserves respect, having been adequately substantiated. As it were, the certification by the  
Bureau of Immigration ' Exh. 'BB- provides that evidentiary support. Accordingly, the
attribution of grave abuse of discretion on the part of the trial court must be struck down. It
WHEREFORE , the instant petition is hereby DENIED.
has been said to be customary for courts to accept statements of parties as to the
unavailability of a witness as a predicate to the use of depositions. [15] Had deponent
Buaneres Corral indeed returned to the Philippines subsequent to his departure via Flight No.  
PR 658, petitioner could have presented evidence to show that such was the case. As it is,
however, the petitioner does not even assert the return as a fact, only offering it as a
Costs against petitioner.
possibility since no contrary proof had been adduced.

 
 

Given the foregoing perspective, the second issue of whether or not petitioner is estopped
from objecting to the use of Corral's deposition as part of respondent's evidence is really no
longer determinative of the outcome of this case, and need not detain us long. Suffice it to
state that, as a rule, the inadmissibility of testimony taken by deposition is anchored on the
ground that such testimony is hearsay, i.e., the party against whom it is offered has no
opportunity to cross-examine the deponent at the time his testimony is offered. But as
jurisprudence teaches, it matters not that opportunity for cross-examination was afforded
during the taking of the deposition; for normally, the opportunity for cross-examination must
be accorded a party at the time the testimonial evidence is actually presented against him
during the trial or hearing. [16] In fine, the act of cross-examining the deponent during the
taking of the deposition cannot, without more, be considered a waiver of the right to object to
its' admissibility as evidence in the trial proper. In participating, therefore, in the taking of the
deposition, but objecting to its admissibility in court as evidence, petitioner did not assume
inconsistent positions. He is not, thus, estopped from challenging the admissibility of the
deposition just because he participated in the taking thereof.
 
Lest it be overlooked, Section 29, Rule 23 of the Rules of Court, no less, lends support to the
conclusion just made. In gist, it provides that, while errors and irregularities in depositions as
to notice, qualifications of the officer conducting the deposition, and manner of taking the
deposition are deemed waived if not objected to before or during the taking of the deposition,
objections to the competency of a witness or the competency, relevancy, or materiality of
testimony may be made for the first time at the trial and need not be made at the time of the
taking of the deposition, unless they could be obviated at that point. [17]
SO ORDERED.
G.R. No. 185145               February 5, 2014
SPOUSES VICENTE AFULUGENCIA and LETICIA AFULUGENCIA, Petitioners,
vs.
METROPOLITAN BANK & TRUST CO. and EMMANUEL L. ORTEGA, Clerk of Court,
Regional Trial Court and Ex-Officio Sheriff, Province of Bulacan, Respondents.
DECISION
DEL CASTILLO, J.:
Section 6,1 Rule 25 of the Rules of Court (Rules) provides that "a party not served with
written interrogatories may not be compelled by the adverse party to give testimony in open
court, or to give a deposition pending appeal." The provision seeks to prevent fishing
expeditions and needless delays. Its goal is to maintain order and facilitate the conduct of
trial.
Assailed in this Petition for Review on Certiorari 2 are the April 15, 2008 Decision 3 of the Court
of Appeals (CA) in CA-G.R. SP No. 99535 which dismissed petitioners' Petition for Certiorari
for lack of merit and its October 2, 2008 Resolution 4 denying petitioners' Motion for
Reconsideration.5

  Factual Antecedents

While perhaps a bit anti-climactic to state at this point, certiorari will not lie against an order
admitting or rejecting a deposition in evidence, the remedy being an appeal from the final
judgment. [18] For this singular reason alone, the appellate court could have had already
dismissed herein petitioner's invocation of its certiorari jurisdiction.
Petitioners, spouses Vicente and Leticia Afulugencia, filed a Complaint6 for nullification of
mortgage, foreclosure, auction sale, certificate of sale and other documents, with damages,
against respondents Metropolitan Bank & Trust Co. (Metrobank) and Emmanuel L. Ortega
(Ortega) before the Regional Trial Court (RTC) of Malolos City, where it was docketed as
Civil Case No. 336-M-2004 and assigned to Branch 7.

78
Metrobank is a domestic banking corporation existing under Philippine laws, while Ortega is
the Clerk of Court and Ex-Officio Sheriff of the Malolos RTC.
After the filing of the parties’ pleadings and with the conclusion of pre-trial, petitioners filed a
Motion for Issuance of Subpoena Duces Tecum Ad Testificandum 7 to require Metrobank’s
officers8 to appear and testify as the petitioners’ initial witnesses during the August 31, 2006
hearing for the presentation of their evidence-in-chief, and to bring the documents relative to
their loan with Metrobank, as well as those covering the extrajudicial foreclosure and sale of
petitioners’ 200-square meter land in Meycauayan, Bulacan covered by Transfer Certificate
of Title No. 20411 (M). The Motion contained a notice of hearing written as follows:
NOTICE
The Branch Clerk of Court
Regional Trial Court
Branch 7, Malolos, Bulacan
Greetings:
Please submit the foregoing motion for the consideration and approval of the Hon. Court
immediately upon receipt hereof.
(signed)
Vicente C. Angeles 9
Metrobank filed an Opposition10 arguing that for lack of a proper notice of hearing, the Motion
must be denied; that being a litigated motion, the failure of petitioners to set a date and time
for the hearing renders the Motion ineffective and pro forma; that pursuant to Sections 1 and
611 of Rule 25 of the Rules, Metrobank’s officers – who are considered adverse parties – may
not be compelled to appear and testify in court for the petitioners since they were not initially
served with written interrogatories; that petitioners have not shown the materiality and
relevance of the documents sought to be produced in court; and that petitioners were merely
fishing for evidence.
Petitioners submitted a Reply12 to Metrobank’s Opposition, stating that the lack of a proper
notice of hearing was cured by the filing of Metrobank’s Opposition; that applying the principle
of liberality, the defect may be ignored; that leave of court is not necessary for the taking of
Metrobank’s officers’ depositions; that for their case, the issuance of a subpoena is not
unreasonable and oppressive, but instead favorable to Metrobank, since it will present the
testimony of these officers just the same during the presentation of its own evidence; that the
documents sought to be produced are relevant and will prove whether petitioners have paid
their obligations to Metrobank in full, and will settle the issue relative to the validity or
invalidity of the foreclosure proceedings; and that the Rules do not prohibit a party from
presenting the adverse party as its own witness.
Ruling of the Regional Trial Court
On October 19, 2006, the trial court issued an Order 13 denying petitioners’ Motion for
Issuance of Subpoena Duces Tecum Ad Testificandum, thus:
The motion lacks merit.
As pointed out by the defendant bank in its opposition, the motion under consideration is a
mere scrap of paper by reason of its failure to comply with the requirements for a valid notice
of hearing as specified in Sections 4 and 5 of Rule 15 of the Revised Rules of Court.
Moreover, the defendant bank and its officers are adverse parties who cannot be summoned
to testify unless written interrogatories are first served upon them, as provided in Sections 1
and 6, Rule 25 of the Revised Rules of Court.
In view of the foregoing, and for lack of merit, the motion under consideration is hereby
DENIED.
SO ORDERED.14
Petitioners filed a Motion for Reconsideration 15 pleading for leniency in the application of the
Rules and claiming that the defective notice was cured by the filing of Metrobank’s
Opposition, which they claim is tantamount to notice. They further argued that Metrobank’s
officers – who are the subject of the subpoena – are not party-defendants, and thus do not
comprise the adverse party; they are individuals separate and distinct from Metrobank, the
defendant corporation being sued in the case.
In an Opposition16 to the Motion for Reconsideration, Metrobank insisted on the procedural
defect of improper notice of hearing, arguing that the rule relative to motions and the
requirement of a valid notice of hearing are mandatory and must be strictly observed. It
added that the same rigid treatment must be accorded to Rule 25, in that none of its officers
may be summoned to testify for petitioners unless written interrogatories are first served upon
them. Finally, it said that since a corporation may act only through its officers and employees,
they are to be considered as adverse parties in a case against the corporation itself.
In another Order 17 dated April 17, 2007, the trial court denied petitioners’ Motion for
Reconsideration. The trial court held, thus:
Even if the motion is given consideration by relaxing Sections 4 and 5, Rule 15 of the Rules
of Court, no such laxity could be accorded to Sections 1 and 6 of Rule 25 of the Revised
Rules of Court which require prior service of written interrogatories to adverse parties before
any material and relevant facts may be elicited from them more so if the party is a private
corporation who could be represented by its officers as in this case. In other words, as the
persons sought to be subpoenaed by the plaintiffs-movants are officers of the defendant
bank, they are in effect the very persons who represent the interest of the latter and
79
necessarily fall within the coverage of Sections 1 and 6, Rule 25 of the Revised Rules of
Court.
In view of the foregoing, the motion for reconsideration is hereby denied.
SO ORDERED.18
Ruling of the Court of Appeals
Petitioners filed a Petition for Certiorari 19 with the CA asserting this time that their Motion for
Issuance of Subpoena Duces Tecum Ad Testificandum is not a litigated motion; it does not
seek relief, but aims for the issuance of a mere process. For these reasons, the Motion need
not be heard. They likewise insisted on liberality, and the disposition of the case on its merits
and not on mere technicalities. 20 They added that Rule 21 21 of the Rules requires prior notice
and hearing only with respect to the taking of depositions; since their Motion sought to require
Metrobank’s officers to appear and testify in court and not to obtain their depositions, the
requirement of notice and hearing may be dispensed with. Finally, petitioners claimed that the
Rules – particularly Section 10,22 Rule 132 – do not prohibit a party from presenting the
adverse party as its own witness.
On April 15, 2008, the CA issued the questioned Decision, which contained the following
decretal portion:
WHEREFORE, the petition is DISMISSED for lack of merit. The assailed orders dated
October 19, 2006 and April 17, 2007 in Civil Case No. 336-M-2004 issued by the RTC,
Branch 7, Malolos City, Bulacan, are AFFIRMED. Costs against petitioners.
SO ORDERED.23
The CA held that the trial court did not commit grave abuse of discretion in issuing the
assailed Orders; petitioners’ Motion is a litigated motion, especially as it seeks to require the
adverse party, Metrobank’s officers, to appear and testify in court as petitioners’ witnesses. It
held that a proper notice of hearing, addressed to the parties and specifying the date and
time of the hearing, was required, consistent with Sections 4 and 5,24 Rule 15 of the Rules.
The CA held further that the trial court did not err in denying petitioners’ Motion to secure a
subpoena duces tecum/ad testificandum, ratiocinating that Rule 25 is quite clear in providing
that the consequence of a party’s failure to serve written interrogatories upon the opposing
party is that the latter may not be compelled by the former to testify in court or to render a
deposition pending appeal. By failing to serve written interrogatories upon Metrobank,
petitioners foreclosed their right to present the bank’s officers as their witnesses.
The CA declared that the justification for the rule laid down in Section 6 is that by failing to
seize the opportunity to inquire upon the facts through means available under the Rules,
petitioners should not be allowed to later on burden Metrobank with court hearings or other
processes. Thus, it held:
x x x Where a party unjustifiedly refuses to elicit facts material and relevant to his case by
addressing written interrogatories to the adverse party to elicit those facts, the latter may not
thereafter be compelled to testify thereon in court or give a deposition pending appeal. The
justification for this is that the party in need of said facts having foregone the opportunity to
inquire into the same from the other party through means available to him, he should not
thereafter be permitted to unduly burden the latter with courtroom appearances or other
cumbersome processes. The sanction adopted by the Rules is not one of compulsion in the
sense that the party is being directly compelled to avail of the discovery mechanics, but one
of negation by depriving him of evidentiary sources which would otherwise have been
accessible to him.25
Petitioners filed their Motion for Reconsideration, 26 which the CA denied in its assailed
October 2, 2008 Resolution. Hence, the present Petition.
Issues
Petitioners now raise the following issues for resolution:
I
THE COURT OF APPEALS COMMITTED REVERSIBLE ERRORS IN REQUIRING NOTICE
AND HEARING (SECS. 4 AND 5, RULE 15, RULES OF COURT) FOR A MERE MOTION
FOR SUBPOENA OF RESPONDENT BANK’S OFFICERS WHEN SUCH REQUIREMENTS
APPLY ONLY TO DEPOSITION UNDER SEC. 6, RULE 25, RULES OF COURT.
II
THE COURT OF APPEALS COMMITTED (REVERSIBLE) ERROR IN HOLDING THAT THE
PETITIONERS MUST FIRST SERVE WRITTEN INTERROGATORIES TO RESPONDENT
BANK’S OFFICERS BEFORE THEY CAN BE SUBPOENAED. 27
Petitioners’ Arguments
Praying that the assailed CA dispositions be set aside and that the Court allow the issuance
of the subpoena duces tecum/ad testificandum, petitioners assert that the questioned Motion
is not a litigated motion, since it seeks not a relief, but the issuance of process. They insist
that a motion which is subject to notice and hearing under Sections 4 and 5 of Rule 15 is an
application for relief other than a pleading; since no relief is sought but just the process of
80
subpoena, the hearing and notice requirements may be done away with. They cite the case
of Adorio v. Hon. Bersamin,28 which held that –
Requests by a party for the issuance of subpoenas do not require notice to other parties to
the action.1âwphi1 No violation of due process results by such lack of notice since the other
parties would have ample opportunity to examine the witnesses and documents subpoenaed
once they are presented in court.29
Petitioners add that the Rules should have been liberally construed in their favor, and that
Metrobank’s filing of its Opposition be considered to have cured whatever defect the Motion
suffered from.
Petitioners likewise persist in the view that Metrobank’s officers – the subject of the Motion –
do not comprise the adverse party covered by the rule; they insist that these bank officers are
mere employees of the bank who may be called to testify for them.
Respondents’ Arguments
Metrobank essentially argues in its Comment30 that the subject Motion for the issuance of a
subpoena duces tecum/ad testificandum is a litigated motion, especially as it is directed
toward its officers, whose testimony and documentary evidence would affect it as the adverse
party in the civil case. Thus, the lack of a proper notice of hearing renders it useless and a
mere scrap of paper. It adds that being its officers, the persons sought to be called to the
stand are themselves adverse parties who may not be compelled to testify in the absence of
prior written interrogatories; they are not ordinary witnesses whose presence in court may be
required by petitioners at any time and for any reason.
Finally, Metrobank insists on the correctness of the CA Decision, adding that since petitioners
failed up to this time to pay the witnesses’ fees and kilometrage as required by the
Rules,31 the issuance of a subpoena should be denied.
Our Ruling
The Court denies the Petition.
On the procedural issue, it is quite clear that Metrobank was notified of the Motion for
Issuance of Subpoena Duces Tecum Ad Testificandum; in fact, it filed a timely Opposition
thereto. The technical defect of lack of notice of hearing was thus cured by the filing of the
Opposition.32
Nonetheless, contrary to petitioners’ submission, the case of Adorio cannot apply squarely to
this case. In Adorio, the request for subpoena duces tecum was sought against bank officials
who were not parties to the criminal case for violation of Batas Pambansa Blg. 22. The
situation is different here, as officers of the adverse party Metrobank are being compelled to
testify as the calling party’s main witnesses; likewise, they are tasked to bring with them
documents which shall comprise the petitioners’ principal evidence. This is not without
significant consequences that affect the interests of the adverse party, as will be shown
below.
As a rule, in civil cases, the procedure of calling the adverse party to the witness stand is not
allowed, unless written interrogatories are first served upon the latter. This is embodied in
Section 6, Rule 25 of the Rules, which provides –
Sec. 6. Effect of failure to serve written interrogatories.
Unless thereafter allowed by the court for good cause shown and to prevent a failure of
justice, a party not served with written interrogatories may not be compelled by the adverse
party to give testimony in open court, or to give a deposition pending appeal.
One of the purposes of the above rule is to prevent fishing expeditions and needless delays;
it is there to maintain order and facilitate the conduct of trial. It will be presumed that a party
who does not serve written interrogatories on the adverse party beforehand will most likely be
unable to elicit facts useful to its case if it later opts to call the adverse party to the witness
stand as its witness. Instead, the process could be treated as a fishing expedition or an
attempt at delaying the proceedings; it produces no significant result that a prior written
interrogatories might bring.
Besides, since the calling party is deemed bound by the adverse party’s
testimony,33 compelling the adverse party to take the witness stand may result in the calling
party damaging its own case. Otherwise stated, if a party cannot elicit facts or information
useful to its case through the facility of written interrogatories or other mode of discovery,
then the calling of the adverse party to the witness stand could only serve to weaken its own
case as a result of the calling party’s being bound by the adverse party’s testimony, which
may only be worthless and instead detrimental to the calling party’s cause.
Another reason for the rule is that by requiring prior written interrogatories, the court may limit
the inquiry to what is relevant, and thus prevent the calling party from straying or harassing
the adverse party when it takes the latter to the stand.
Thus, the rule not only protects the adverse party from unwarranted surprises or harassment;
it likewise prevents the calling party from conducting a fishing expedition or bungling its own
case. Using its own judgment and discretion, the court can hold its own in resolving a dispute,
and need not bear witness to the parties perpetrating unfair court practices such as fishing for
evidence, badgering, or altogether ruining their own cases. Ultimately, such unnecessary
processes can only constitute a waste of the court’s precious time, if not pointless
entertainment.
81
In the present case, petitioners seek to call Metrobank’s officers to the witness stand as their
initial and main witnesses, and to present documents in Metrobank’s possession as part of
their principal documentary evidence. This is improper. Petitioners may not be allowed, at the
incipient phase of the presentation of their evidence-in-chief at that, to present Metrobank’s
officers – who are considered adverse parties as well, based on the principle that
corporations act only through their officers and duly authorized agents 34 – as their main
witnesses; nor may they be allowed to gain access to Metrobank’s documentary evidence for
the purpose of making it their own. This is tantamount to building their whole case from the
evidence of their opponent. The burden of proof and evidence falls on petitioners, not on
Metrobank; if petitioners cannot prove their claim using their own evidence, then the adverse
party Metrobank may not be pressured to hang itself from its own defense.
It is true that under the Rules, a party may, for good cause shown and to prevent a failure of
justice, be compelled to give testimony in court by the adverse party who has not served
written interrogatories. But what petitioners seek goes against the very principles of justice
and fair play; they would want that Metrobank provide the very evidence with which to
prosecute and build their case from the start. This they may not be allowed to do.
Finally, the Court may not turn a blind eye to the possible consequences of such a move by
petitioners. As one of their causes of action in their Complaint, petitioners claim that they
were not furnished with specific documents relative to their loan agreement with Metrobank at
the time they obtained the loan and while it was outstanding. If Metrobank were to willingly
provide petitioners with these documents even before petitioners can present evidence to
show that indeed they were never furnished the same, any inferences generated from this
would certainly not be useful for Metrobank. One may be that by providing petitioners with
these documents, Metrobank would be admitting that indeed, it did not furnish petitioners with
these documents prior to the signing of the loan agreement, and while the loan was
outstanding, in violation of the law.
With the view taken of the case, the Court finds it unnecessary to further address the other
issues raised by the parties, which are irrelevant and would not materially alter the
conclusions arrived at.
CHICO-NAZARIO, J.:
Petitioner Air Philippines Corporation seeks, via the instant Petition for Review under Rule 45
of the Rules of Court, the nullification of the 16 February 2006 Decision 1 and the 25 May
2006 Resolution2 of the Court of Appeals in CA-G.R. SP No. 86329, which affirmed the
Order3 dated 30 June 2004 of the Regional Trial Court (RTC), Makati City, Branch 64, in Civil
Case No. 00-561.
Petitioner Air Philippines Corporation is a domestic corporation engaged in the business of air
transportation services. On the other hand, respondent Pennswell, Inc. was organized to
engage in the business of manufacturing and selling industrial chemicals, solvents, and
special lubricants.
On various dates, respondent delivered and sold to petitioner sundry goods in trade, covered
by Sales Invoices No. 8846, 4 9105,5 8962,6 and 8963,7 which correspond to Purchase Orders
No. 6433, 6684, 6634 and 6633, respectively. Under the contracts, petitioner's total
outstanding obligation amounted to P449,864.98 with interest at 14% per annum until the
amount would be fully paid. For failure of the petitioner to comply with its obligation under
said contracts, respondent filed a Complaint 8 for a Sum of Money on 28 April 2000 with the
RTC.
In its Answer,9 petitioner contended that its refusal to pay was not without valid and justifiable
reasons. In particular, petitioner alleged that it was defrauded in the amount of P592,000.00
by respondent for its previous sale of four items, covered by Purchase Order No. 6626. Said
items were misrepresented by respondent as belonging to a new line, but were in truth and in
fact, identical with products petitioner had previously purchased from respondent. Petitioner
asserted that it was deceived by respondent which merely altered the names and labels of
such goods. Petitioner specifically identified the items in question, as follows:
Label/Description Item No. Amount P.O. Date

1. a. Anti-Friction Fluid MPL-800 153,941.40 5714 05/20/99

WHEREFORE, the Petition is DENIED. The assailed April 15, 2008 Decision and October 2,
b. Excellent Rust MPL-008 155,496.00 5888 06/20/99
2008 Resolution of the Court of Appeals in CA-G.R. SP No. 99535 are AFFIRMED.
Corrosion (fake)

SO ORDERED.

2. a. Contact Grease COG #2 115,236.00 5540 04/26/99

MARIANO C. DEL CASTILLO b. Connector Grease CG 230,519.52 6327 08/05/99
Associate Justice (fake)

AIR PHILIPPINES CORPORATION, Petitioner, v. PENNSWELL, INC. Respondent.

3. a. Trixohtropic Grease EPC 81,876.96 4582 01/29/99
DECISION b. Di-Electric Strength EPC#2 81,876.96 5446 04/21/99

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 [Respondent] Pennswell, Inc. is given fifteen (15) days from receipt of this Order to submit to
Protective Coating (fake) [petitioner] Air Philippines Corporation the chemical components of all the above-mentioned
products for chemical comparison/analysis. 12

4. a. Dry Lubricant ASC-EP 87,346.52 5712 05/20/99 Respondent sought reconsideration of the foregoing Order, contending that it cannot be
b. Anti-Seize Compound ASC-EP 124,108.10 4763 & 02/16/99 & compelled to disclose the chemical components sought because the matter is confidential. It
(fake) 2000 5890 06/24/99 argued that what petitioner endeavored to inquire upon constituted a trade secret which
respondent cannot be forced to divulge. Respondent maintained that its products are
specialized lubricants, and if their components were revealed, its business competitors may
easily imitate and market the same types of products, in violation of its proprietary rights and
to its serious damage and prejudice.
According to petitioner, respondent's products, namely Excellent Rust Corrosion, Connector
Grease, Electric Strength Protective Coating, and Anti-Seize Compound, are identical with its
Anti-Friction Fluid, Contact Grease, Thixohtropic Grease, and Dry Lubricant, respectively. The RTC gave credence to respondent's reasoning, and reversed itself. It issued an Order
Petitioner asseverated that had respondent been forthright about the identical character of dated 30 June 2004, finding that the chemical components are respondent's trade secrets
the products, it would not have purchased the items complained of. Moreover, petitioner and are privileged in character. A priori, it rationalized:
alleged that when the purported fraud was discovered, a conference was held between
petitioner and respondent on 13 January 2000, whereby the parties agreed that respondent The Supreme Court held in the case of Chavez v. Presidential Commission on Good
would return to petitioner the amount it previously paid. However, petitioner was surprised Government, 299 SCRA 744, p. 764, that "the drafters of the Constitution also unequivocally
when it received a letter from the respondent, demanding payment of the amount affirmed that aside from national security matters and intelligence information, trade or
of P449,864.94, which later became the subject of respondent's Complaint for Collection of a industrial secrets (pursuant to the Intellectual Property Code and other related laws) as well
Sum of Money against petitioner. as banking transactions (pursuant to the Secrecy of Bank Deposit Act) are also exempted
from compulsory disclosure."
During the pendency of the trial, petitioner filed a Motion to Compel 10 respondent to give a
detailed list of the ingredients and chemical components of the following products, to wit: (a) Trade secrets may not be the subject of compulsory disclosure. By reason of [their]
Contact Grease and Connector Grease; (b) Thixohtropic Grease and Di-Electric Strength confidential and privileged character, ingredients or chemical components of the products
Protective Coating; and (c) Dry Lubricant and Anti-Seize Compound. 11 It appears that ordered by this Court to be disclosed constitute trade secrets lest [herein respondent] would
petitioner had earlier requested the Philippine Institute of Pure and Applied Chemistry eventually be exposed to unwarranted business competition with others who may imitate and
(PIPAC) for the latter to conduct a comparison of respondent's goods. market the same kinds of products in violation of [respondent's] proprietary rights. Being
privileged, the detailed list of ingredients or chemical components may not be the subject of
On 15 March 2004, the RTC rendered an Order granting the petitioner's motion. It disposed, mode of discovery under Rule 27, Section 1 of the Rules of Court, which expressly makes
thus: privileged information an exception from its coverage. 13

The Court directs [herein respondent] Pennswell, Inc. to give [herein petitioner] Air Alleging grave abuse of discretion on the part of the RTC, petitioner filed a Petition
Philippines Corporation[,] a detailed list of the ingredients or chemical components of the for Certiorari under Rule 65 of the Rules of Court with the Court of Appeals, which denied the
following chemical products: Petition and affirmed the Order dated 30 June 2004 of the RTC.

A. Contact Grease to be compared with Connector Grease;
b. Thixohtropic Grease to be compared with Di-Electric Strength Protective Coating;
andcralawlibrary
The Court of Appeals ruled that to compel respondent to reveal in detail the list of ingredients
of its lubricants is to disregard respondent's rights over its trade secrets. It was categorical in
declaring that the chemical formulation of respondent's products and their ingredients are
embraced within the meaning of "trade secrets." In disallowing the disclosure, the Court of
Appeals expounded, thus:

c. Dry Lubricant to be compared with Anti-Seize Compound[.] The Supreme Court in Garcia v. Board of Investments (177 SCRA 374 [1989]) held that trade
secrets and confidential, commercial and financial information are exempt from public
scrutiny. This is reiterated in Chavez v. Presidential Commission on Good Government (299

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SCRA 744 [1998]) where the Supreme Court enumerated the kinds of information and
transactions that are recognized as restrictions on or privileges against compulsory
disclosure. There, the Supreme Court explicitly stated that:
"The drafters of the Constitution also unequivocally affirmed that, aside from national security
matters and intelligence information, trade or industrial secrets (pursuant to the Intellectual
Property Code and other related laws) as well as banking transactions (pursuant to the
Secrecy of Bank Deposits Act) re also exempt from compulsory disclosure."
It is thus clear from the foregoing that a party cannot be compelled to produce, release or
disclose documents, papers, or any object which are considered trade secrets.
In the instant case, petitioner [Air Philippines Corporation] would have [respondent]
Pennswell produce a detailed list of ingredients or composition of the latter's lubricant
products so that a chemical comparison and analysis thereof can be obtained. On this note,
We believe and so hold that the ingredients or composition of [respondent] Pennswell's
lubricants are trade secrets which it cannot be compelled to disclose.
[Respondent] Pennswell has a proprietary or economic right over the ingredients or
components of its lubricant products. The formulation thereof is not known to the general
public and is peculiar only to [respondent] Pennswell. The legitimate and economic interests
of business enterprises in protecting their manufacturing and business secrets are well-
recognized in our system.
[Respondent] Pennswell has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information against the public.
Otherwise, such information can be illegally and unfairly utilized by business competitors
who, through their access to [respondent] Pennswell's business secrets, may use the same
for their own private gain and to the irreparable prejudice of the latter.
xxx
In the case before Us, the alleged trade secrets have a factual basis, i.e., it comprises of the
ingredients and formulation of [respondent] Pennswell's lubricant products which are
unknown to the public and peculiar only to Pennswell.
All told, We find no grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of public respondent Judge in finding that the detailed list of ingredients or
composition of the subject lubricant products which petitioner [Air Philippines Corporation]
seeks to be disclosed are trade secrets of [respondent] Pennswell; hence, privileged against
compulsory disclosure.14
Petitioner's Motion for Reconsideration was denied.
Unyielding, petitioner brought the instant Petition before us, on the sole issue of:
WHETHER THE COURT OF APPEALS RULED IN ACCORDANCE WITH PREVAILING
LAWS AND JURISPRUDENCE WHEN IT UPHELD THE RULING OF THE TRIAL COURT
THAT THE CHEMICAL COMPONENTS OR INGREDIENTS OF RESPONDENT'S
PRODUCTS ARE TRADE SECRETS OR INDUSTRIAL SECRETS THAT ARE NOT
SUBJECT TO COMPULSORY DISCLOSURE.15
Petitioner seeks to convince this Court that it has a right to obtain the chemical composition
and ingredients of respondent's products to conduct a comparative analysis of its products.
Petitioner assails the conclusion reached by the Court of Appeals that the matters are trade
secrets which are protected by law and beyond public scrutiny. Relying on Section 1, Rule 27
of the Rules of Court, petitioner argues that the use of modes of discovery operates with
desirable flexibility under the discretionary control of the trial court. Furthermore, petitioner
posits that its request is not done in bad faith or in any manner as to annoy, embarrass, or
oppress respondent.
A trade secret is defined as a plan or process, tool, mechanism or compound known only to
its owner and those of his employees to whom it is necessary to confide it. 16 The definition
also extends to a secret formula or process not patented, but known only to certain
individuals using it in compounding some article of trade having a commercial value. 17 A trade
secret may consist of any formula, pattern, device, or compilation of information that: (1) is
used in one's business; and (2) gives the employer an opportunity to obtain an advantage
over competitors who do not possess the information. 18 Generally, a trade secret is a process
or device intended for continuous use in the operation of the business, for example, a
machine or formula, but can be a price list or catalogue or specialized customer list. 19 It is
indubitable that trade secrets constitute proprietary rights. The inventor, discoverer, or
possessor of a trade secret or similar innovation has rights therein which may be treated as
property, and ordinarily an injunction will be granted to prevent the disclosure of the trade
secret by one who obtained the information "in confidence" or through a "confidential
relationship."20 American jurisprudence has utilized the following factors 21 to determine if an
information is a trade secret, to wit:
(1) the extent to which the information is known outside of the employer's business;
(2) the extent to which the information is known by employees and others involved in the
business;
(3) the extent of measures taken by the employer to guard the secrecy of the information;
(4) the value of the information to the employer and to competitors;
(5) the amount of effort or money expended by the company in developing the information;
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(6) the extent to which the information could be easily or readily obtained through an
independent source.22
In Cocoland Development Corporation v. National Labor Relations Commission, 23 the issue
was the legality of an employee's termination on the ground of unauthorized disclosure of
trade secrets. The Court laid down the rule that any determination by management as to the
confidential nature of technologies, processes, formulae or other so-called trade secrets must
have a substantial factual basis which can pass judicial scrutiny. The Court rejected the
employer's naked contention that its own determination as to what constitutes a trade secret
should be binding and conclusive upon the NLRC. As a caveat, the Court said that to rule
otherwise would be to permit an employer to label almost anything a trade secret, and
thereby create a weapon with which he/it may arbitrarily dismiss an employee on the pretext
that the latter somehow disclosed a trade secret, even if in fact there be none at all to speak
of.24 Hence, in Cocoland, the parameters in the determination of trade secrets were set to be
such substantial factual basis that can withstand judicial scrutiny.
The chemical composition, formulation, and ingredients of respondent's special lubricants are
trade secrets within the contemplation of the law. Respondent was established to engage in
the business of general manufacturing and selling of, and to deal in, distribute, sell or
otherwise dispose of goods, wares, merchandise, products, including but not limited to
industrial chemicals, solvents, lubricants, acids, alkalies, salts, paints, oils, varnishes, colors,
pigments and similar preparations, among others. It is unmistakable to our minds that the
manufacture and production of respondent's products proceed from a formulation of a secret
list of ingredients. In the creation of its lubricants, respondent expended efforts, skills,
research, and resources. What it had achieved by virtue of its investments may not be
wrested from respondent on the mere pretext that it is necessary for petitioner's defense
against a collection for a sum of money. By and large, the value of the information to
respondent is crystal clear. The ingredients constitute the very fabric of respondent's
production and business. No doubt, the information is also valuable to respondent's
competitors. To compel its disclosure is to cripple respondent's business, and to place it at an
undue disadvantage. If the chemical composition of respondent's lubricants are opened to
public scrutiny, it will stand to lose the backbone on which its business is founded. This would
result in nothing less than the probable demise of respondent's business. Respondent's
proprietary interest over the ingredients which it had developed and expended money and
effort on is incontrovertible. Our conclusion is that the detailed ingredients sought to be
revealed have a commercial value to respondent. Not only do we acknowledge the fact that
the information grants it a competitive advantage; we also find that there is clearly a glaring
intent on the part of respondent to keep the information confidential and not available to the
prying public.
We now take a look at Section 1, Rule 27 of the Rules of Court, which permits parties to
inspect documents or things upon a showing of good cause before the court in which an
action is pending. Its entire provision reads:
SECTION 1. Motion for production or inspection order. - Upon motion of any party showing
good cause therefore, the court in which an action is pending may (a) order any party to
produce and permit the inspection and copying or photographing, by or on behalf of the
moving party, of any designated documents, papers, books, accounts, letters, photographs,
objects or tangible things, not privileged, which constitute or contain evidence material to any
matter involved in the action and which are in his possession, custody or control; or (b) order
any party to permit entry upon designated land or other property in his possession or control
for the purpose of inspecting, measuring, surveying, or photographing the property or any
designated relevant object or operation thereon. The order shall specify the time, place and
manner of making the inspection and taking copies and photographs, and may prescribe
such terms and conditions as are just.
A more than cursory glance at the above text would show that the production or inspection of
documents or things as a mode of discovery sanctioned by the Rules of Court may be availed
of by any party upon a showing of good cause therefor before the court in which an action is
pending. The court may order any party: a) to produce and permit the inspection and copying
or photographing of any designated documents, papers, books, accounts, letters,
photographs, objects or tangible things, which are not privileged; 25 which constitute or contain
evidence material to any matter involved in the action; and which are in his possession,
custody or control; or b) to permit entry upon designated land or other property in his
possession or control for the purpose of inspecting, measuring, surveying, or photographing
the property or any designated relevant object or operation thereon.
Rule 27 sets an unequivocal proviso that the documents, papers, books, accounts, letters,
photographs, objects or tangible things that may be produced and inspected should not be
privileged.26 The documents must not be privileged against disclosure. 27 On the ground of
public policy, the rules providing for production and inspection of books and papers do not
authorize the production or inspection of privileged matter; that is, books and papers which,
because of their confidential and privileged character, could not be received in
evidence.28 Such a condition is in addition to the requisite that the items be specifically
described, and must constitute or contain evidence material to any matter involved in the
action and which are in the party's possession, custody or control.
Section 2429 of Rule 130 draws the types of disqualification by reason of privileged
communication, to wit: (a) communication between husband and wife; (b) communication
between attorney and client; (c) communication between physician and patient; (d)
communication between priest and penitent; and (e) public officers and public interest. There
are, however, other privileged matters that are not mentioned by Rule 130. Among them are
the following: (a) editors may not be compelled to disclose the source of published news; (b)
voters may not be compelled to disclose for whom they voted; (c) trade secrets; (d)
information contained in tax census returns; and (d) bank deposits. 30
We, thus, rule against the petitioner. We affirm the ruling of the Court of Appeals which
upheld the finding of the RTC that there is substantial basis for respondent to seek protection
of the law for its proprietary rights over the detailed chemical composition of its products.
That trade secrets are of a privileged nature is beyond quibble. The protection that this
jurisdiction affords to trade secrets is evident in our laws. The Interim Rules of Procedure on
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Government Rehabilitation, effective 15 December 2000, which applies to: (1) petitions for
rehabilitation filed by corporations, partnerships, and associations pursuant to Presidential
Decree No. 902-A,31 as amended; and (2) cases for rehabilitation transferred from the
Securities and Exchange Commission to the RTCs pursuant to Republic Act No. 8799,
otherwise known as The Securities Regulation Code, expressly provides that the court may
issue an order to protect trade secrets or other confidential research, development, or
commercial information belonging to the debtor. 32 Moreover, the Securities Regulation Code
is explicit that the Securities and Exchange Commission is not required or authorized to
require the revelation of trade secrets or processes in anyapplication, report or document
filed with the Commission. 33 This confidentiality is made paramount as a limitation to the right
of any member of the general public, upon request, to have access to all information filed with
the Commission.34
Furthermore, the Revised Penal Code endows a cloak of protection to trade secrets under
the following articles:
Art. 291. Revealing secrets with abuse of office. - The penalty of arresto mayor and a fine not
exceeding 500 pesos shall be imposed upon any manager, employee or servant who, in such
capacity, shall learn the secrets of his principal or master and shall reveal such secrets.
Art. 292. Revelation of industrial secrets. - The penalty of prision correccional in its minimum
and medium periods and a fine not exceeding 500 pesos shall be imposed upon the person
in charge, employee or workman of any manufacturing or industrial establishment who, to the
prejudice of the owner thereof, shall reveal the secrets of the industry of
the latter.
Similarly, Republic Act No. 8424, otherwise known as the National Internal Revenue Code of
1997, has a restrictive provision on trade secrets, penalizing the revelation thereof by internal
revenue officers or employees, to wit:
SECTION 278. Procuring Unlawful Divulgence of Trade Secrets. - Any person who causes or
procures an officer or employee of the Bureau of Internal Revenue to divulge any confidential
information regarding the business, income or inheritance of any taxpayer, knowledge of
which was acquired by him in the discharge of his official duties, and which it is unlawful for
him to reveal, and any person who publishes or prints in any manner whatever, not provided
by law, any income, profit, loss or expenditure appearing in any income tax return, shall be
punished by a fine of not more than two thousand pesos (P2,000), or suffer imprisonment of
not less than six (6) months nor more than five (5) years, or both.
Republic Act No. 6969, or the Toxic Substances and Hazardous and Nuclear Wastes Control
Act of 1990, enacted to implement the policy of the state to regulate, restrict or prohibit the
importation, manufacture, processing, sale, distribution, use and disposal of chemical
substances and mixtures that present unreasonable risk and/or injury to health or the
environment, also contains a provision that limits the right of the public to have access to
records, reports or information concerning chemical substances and mixtures
including safety data submitted and data on emission or discharge into the
environment, if the matter is confidential such that it would divulge trade secrets,
production or sales figures; or methods, production or processes unique to such
manufacturer, processor or distributor; or would otherwise tend to affect adversely the
competitive position of such manufacturer, processor or distributor.35
Clearly, in accordance with our statutory laws, this Court has declared that intellectual and
industrial property rights cases are not simple property cases. 36 Without limiting such
industrial property rights to trademarks and trade names, this Court has ruled that all
agreements concerning intellectual property are intimately connected with economic
development.37 The protection of industrial property encourages investments in new ideas
and inventions and stimulates creative efforts for the satisfaction of human needs. It speeds
up transfer of technology and industrialization, and thereby bring about social and economic
progress.38 Verily, the protection of industrial secrets is inextricably linked to the advancement
of our economy and fosters healthy competition in trade.
Jurisprudence has consistently acknowledged the private character of trade
secrets.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ
There is a privilege not to disclose one's trade secrets. 39 Foremost, this Court has declared
that trade secrets and banking transactions are among the recognized restrictions to the right
of the people to information as embodied in the Constitution. 40 We said that the drafters of the
Constitution also unequivocally affirmed that, aside from national security matters and
intelligence information, trade or industrial secrets (pursuant to the Intellectual Property Code
and other related laws) as well as banking transactions (pursuant to the Secrecy of Bank
Deposits Act), are also exempted from compulsory disclosure. 41
Significantly, our cases on labor are replete with examples of a protectionist stance towards
the trade secrets of employers. For instance, this Court upheld the validity of the policy of a
pharmaceutical company prohibiting its employees from marrying employees of any
competitor company, on the rationalization that the company has a right to guard its trade
secrets, manufacturing formulas, marketing strategies and other confidential programs and
information from competitors. 42 Notably, it was in a labor-related case that this Court made a
stark ruling on the proper determination of trade secrets.
In the case at bar, petitioner cannot rely on Section 77 43 of Republic Act 7394, or the
Consumer Act of the Philippines, in order to compel respondent to reveal the chemical
components of its products. While it is true that all consumer products domestically sold,
whether manufactured locally or imported, shall indicate their general make or active
ingredients in their respective labels of packaging, the law does not apply to respondent.
Respondent's specialized lubricants - - namely, Contact Grease, Connector Grease,
Thixohtropic Grease, Di-Electric Strength Protective Coating, Dry Lubricant and Anti-Seize
Compound - - are not consumer products. "Consumer products," as it is defined in Article
4(q),44 refers to goods, services and credits, debts or obligations which are primarily for
personal, family, household or agricultural purposes, which shall include, but not be limited to,
food, drugs, cosmetics, and devices. This is not the nature of respondent's products. Its
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products are not intended for personal, family, household or agricultural purposes. Rather,
they are for industrial use, specifically for the use of aircraft propellers and engines.
Petitioner's argument that Republic Act No. 8203, or the Special Law on Counterfeit Drugs,
requires the disclosure of the active ingredients of a drug is also on faulty
ground.45 Respondent's products are outside the scope of the cited law. They do not come
within the purview of a drug 46 which, as defined therein, refers to any chemical compound or
biological substance, other than food, that is intended for use in the treatment, prevention or
diagnosis of disease in man or animals. Again, such are not the characteristics of
respondent's products.
What is clear from the factual findings of the RTC and the Court of Appeals is that the
chemical formulation of respondent's products is not known to the general public and is
unique only to it. Both courts uniformly ruled that these ingredients are not within the
knowledge of the public. Since such factual findings are generally not reviewable by this
Court, it is not duty-bound to analyze and weigh all over again the evidence already
considered in the proceedings below.47 We need not delve into the factual bases of such
findings as questions of fact are beyond the pale of Rule 45 of the Rules of Court. Factual
findings of the trial court when affirmed by the Court of Appeals, are binding and conclusive
on the Supreme Court.48
We do not find merit or applicability in petitioner's invocation of Section 12 49 of the Toxic
Substances and Hazardous and Nuclear Wastes Control Act of 1990, which grants the public
access to records, reports or information concerning chemical substances and mixtures,
including safety data submitted, and data on emission or discharge into the environment . To
reiterate, Section 1250 of said Act deems as confidential matters, which may not be made
public, those that would divulge trade secrets, including production or sales figures or
methods; production or processes unique to such manufacturer, processor or distributor, or
would otherwise tend to affect adversely the competitive position of such manufacturer,
processor or distributor. It is true that under the same Act, the Department of Environment
and Natural Resources may release information; however, the clear import of the law is that
said authority is limited by the right to confidentiality of the manufacturer, processor or
distributor, which information may be released only to a medical research or scientific
institution where the information is needed for the purpose of medical diagnosis or treatment
of a person exposed to the chemical substance or mixture. The right to confidentiality is
recognized by said Act as primordial. Petitioner has not made the slightest attempt to show
that these circumstances are availing in the case at bar.
Indeed, the privilege is not absolute; the trial court may compel disclosure where it is
indispensable for doing justice.51 We do not, however, find reason to except respondent's
trade secrets from the application of the rule on privilege. The revelation of respondent's
trade secrets serves no better purpose to the disposition of the main case pending with the
RTC, which is on the collection of a sum of money. As can be gleaned from the facts,
petitioner received respondent's goods in trade in the normal course of business. To be sure,
there are defenses under the laws of contracts and sales available to petitioner. On the other
hand, the greater interest of justice ought to favor respondent as the holder of trade secrets.
If we were to weigh the conflicting interests between the parties, we rule in favor of the
greater interest of respondent. Trade secrets should receive greater protection from
discovery, because they derive economic value from being generally unknown and not
readily ascertainable by the public. 52 To the mind of this Court, petitioner was not able to
show a compelling reason for us to lift the veil of confidentiality which shields respondent's
trade secrets.
WHEREFORE, the Petition is DENIED. The Decision dated 16 February 2006, and the
Resolution dated 25 May 2006, of the Court of Appeals in CA-G.R. SP No. 86329 are
AFFIRMED. No costs.
SO ORDERED.
G.R. No. 204700               November 24, 2014
EAGLERIDGE DEVELOPMENT CORPORATION, MARCELO N. NAVAL and CRISPIN I.
OBEN, Petitioners,
vs.
CAMERON GRANVILLE 3 ASSET MANAGEMENT, INC., Respondent.
RESOLUTION
LEONEN, J.:
For resolution is respondent Cameron Granville 3 Asset Management, Inc. 's motion for
reconsideration1 of our April 10, 2013 decision, 2 which reversed and set aside the Court of
Appeals' resolutions3 and ordered respondent to produce the Loan Sale and Purchase
Agreement (LSPA) dated April 7, 2006, including its annexes and/or attachments, if any, in
order that petitioners may inspect or photocopy the same.
Petitioners Eagleridge Development Corporation, Marcelo N. Naval, and Crispin I. Oben filed
on June 7, 2013 their motion to ad.mit attached opposition. 4 Subsequently, respondent filed
its reply5 and petitioners their motion to admit attached rejoinder. 6
The motion for reconsideration raises the following points:
(1) The motion for production was filed out of time;7
(2) The production of the LSPA would violate the parol evidence rule; and8
(3) The LSPA is a privileged and confidential document. 9
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Respondent asserts that there was no "insistent refusal" on its part to present the LSPA, but
that petitioners filed their motion for production way out of time, even beyond the protracted
pre-trial period from September 2005 to 2011. 10 Hence, petitioners had no oneto blame but
themselves when the trial court denied their motion as it was filed only during the trial
proper.11
Respondent further submits that "Article 1634 [of the] Civil Code had been inappropriately
cited by [p]etitioners"12 inasmuch as it is Republic Act No. 9182 (Special Purpose Vehicle Act)
that is applicable. 13 Nonetheless, even assuming that Article 1634 is applicable, respondent
argued that petitioners are: 1) still liable to pay the whole of petitioner Eagleridge
Development Corporation’s (EDC) loanobligation, i.e., ₱10,232,998.00 exclusive of interests
and/or damages;14 and 2) seven (7) years late in extinguishing petitioner EDC’s loan
obligation because pursuant to Article 1634, they should have exercised their right of
extinguishment within 30 days from the substitution of Export and Industry Bank or EIB (the
original creditor) by respondent in December 2006. 15 According to respondent, the trial court
order "granting the substitution constituted sufficient judicial demand as contemplated under
Article 1634."16 Also, maintaining that the LSPA is immaterial or irrelevant to the case,
respondent contends that the "[o]rder of substitution settled the issue of [respondent’s]
standing before the [c]ourt and its right to fill in the shoes of [EIB]." 17 It argues that the
production of the LSPA will neither prevent respondent from pursuing its claim of
10,232,998.00, exclusive of interests and penalties, from petitioner EDC, nor write off
petitioner EDC’s liability to respondent.18 The primordial issue of whether petitioners owe
respondent a sum of money via the deed of assignment can allegedly "be readily resolved by
application of Civil Code provisions and/or applicable jurisprudence and not by the
production/inspection of the LSPA[.]"19 Respondent also argues that "a consideration is not
always a requisite [in assignment of credits, and] an assignee may maintain an action based
on his title and it is immaterial whether ornot he paid any consideration [therefor][.]" 20
Respondent also contends that: (1) the production of the LSPA will violate the parol evidence
rule21 under Rule 130, Section 9 of the Rules of Court; (2) the LSPA is a
privileged/confidential bank document;22 and (3) under the Special Purpose Vehicle Act, "the
only obligation of both the assignor (bank) and the assignee (the SPV; respondent Cameron)
is to give notice to the debtor (Eagleridge, Naval,and Oben) that its account has been
assigned/transferred to a special purpose vehicle (Sec. 12, R.A. 9182) [and] [i]t does not
require of the special purpose vehicle or the bank to disclose all financial documents included
in the assignment/sale/transfer[.]"23
Finally, respondent points out that the deed of assignment is a contested document. "Fair
play would be violated if the LSPA is produced without [p]etitioners acknowledging that
respondent Cameron Granville 3 Asset Management, Inc. is the real party-in-interest
because petitioners . . . would [thereafter] use . . . the contents of a document (LSPA) to its
benefit while at the same time"24 refuting the integrity of the deed and the legal personality of
respondent to sue petitioners.25
For their part, petitioners counter that their motion for production was not filed out of time, and
"[t]here is no proscription, under Rule 27 or any provision of the Rules of Court, from filing
motions for production, beyond the pre-trial."26
Further, assuming that there was a valid transfer of the loan obligation of petitioner EDC,
Article 1634 is applicable and, therefore, petitioners must be informed of the actual transfer
price, which information may only be supplied by the LSPA. 27 Petitioners argue that the
substitution of respondent in the case a quowas "not sufficient ‘demand’as contemplated
under Article 1634 of the Civil Code inasmuch asrespondent Cameron failed . . . to inform
petitioner EDC of the price it paid for the [transfer of the] loan obligation," 28 which made it
"impossible for petitioners to reimburse what was paid for the acquisition of the . . . loan
obligation [of EDC]."29 Additionally, petitioners contend that respondent was not a party to the
deed of assignment, but Cameron Granville Asset Management (SPV-AMC), Inc., hence, "as
[to] the actual parties to the Deed of Assignment are concerned, no such demand has yet
been made."30
Petitioners add that the amount of their liability to respondent is one of the factual issues to
be resolved as stated in the November 21, 2011 pretrial order of the Regional Trial Court,
which makes the LSPA clearly relevant and material to the disposition of the case. 31
Petitioners next argue that the parol evidence rule is not applicable to them because they
were not parties tothe deed of assignment, and "they cannot be prevented from seeking
evidence to determine the complete terms of the Deed of Assignment." 32 Besides, the deedof
assignment made express reference to the LSPA, hence,the latter cannot be considered as
extrinsic to it.33
As to respondent’s invocation that the LSPA is privileged/confidential, petitioners counter that
"it has not been shown that the parties fall under . . . or, at the very least . . . analogous to
[any of the relationships enumerated in Rule 130, Section 124] that would exempt
[respondent] from disclosing information as to their transaction." 34
In reply, respondent argues that "[petitioners] cannot accept and reject the same instrument
at the same time."35 According to respondent, by allegedly "uphold[ing] the truth of the
contents as well as the validity of [the] Deed of Assignment [in] seeking the production of the
[LSPA],"36 petitioners could no longer be allowed to impugn the validity of the same deed. 37
In their rejoinder, petitioners clarified that their consistent position was always to assail the
validity of the deed of assignment; that alternatively, they invoked the application of Article
1634 should the court uphold the validity of the transfer of their alleged loan obligation; and
that Rule 8, Section 2 of the Rules of Court "permits parties to set forth alternative causes of
action or defenses."38
We deny the motion for reconsideration.
Discovery mode of
production/inspection of
88
document may be availed of Technicalities in pleading should be avoided in order to obtain substantial justice. In Mutuc v.
even beyond pre-trial upon a Judge Agloro,49 this court directed the bank to give Mutuc a complete statement asto how his
showing of good cause debt was computed, and should he be dissatisfied with that statement, pursuant to Rule 27 of
the Rules of Court, to allow him to inspect and copy bank records supporting the items in that
statement.50 This was held to be "in consonance with the rules on discovery and the avowed
The availment of a motion for production, as one of the modes of discovery, is not limited to
policy of the Rules of Court . . . to require the parties to lay their cards on the table to facilitate
the pre-trial stage. Rule 27 does not provide for any time frame within which the discovery
a settlement of the case before the trial."51
mode of production or inspection of documents can be utilized. The rule only requires leave
of court "upon due application and a showing of due cause." 39 Rule 27, Section 1 of the 1997
Rules of Court, states: We have determined that the LSPA isrelevant and material to the issue on the validity of the
deed of assignment raised by petitioners in the court a quo, and allowing its production and
inspection by petitioners would be more in keeping with the objectives of the discovery rules.
SECTION 1. Motion for production or inspection order — Upon motion of any party showing
We find no great practical difficulty, and respondent continuously fails to allege any, in
good cause therefor the court in which an action is pending may (a) order any party to
presenting the document for inspection and copying of petitioners. On the other hand, to
produce and permit the inspection and copying or photographing, by or on behalf of the
deny petitioners the opportunity to inquire into the LSPA would bar their access to relevant
moving party, of any designated documents, papers, books, accounts, letters, photographs,
evidence and impair their fundamental right to due process. 52
objects or tangible things, not privileged, which constitute or contain evidence material to any
matter involved in the action and which are in his possession, custody or control[.] (Emphasis
supplied) Article 1634 of the New Civil Code is applicable

In Producers Bank of the Philippines v. Court of Appeals, 40 this court held that since the rules Contrary to respondent’s stance, Article 1634 of the Civil Code on assignment of credit in
are silent asto the period within which modes of discovery (in that case, written litigation is applicable.
interrogatories) may still be requested, it is necessary to determine: (1) the purposeof
discovery; (2) whether, based on the stage of the proceedings and evidence presented thus
Section 13 of the Special Purpose Vehicle Act clearly provides that in the transfer of the non-
far, allowing it is proper and would facilitate the disposition of the case; and (3) whether
performing loans to a special purpose vehicle, "the provisions on subrogation and
substantial rights of parties would be unduly prejudiced. 41 This court further held that "[t]he
assignment of credits under the New Civil Code shall apply." Thus:
use of discovery is encouraged, for it operates with desirable flexibility under the discretionary
control of the trial court."42
Sec. 13. Nature of Transfer. – All sales or transfers of NPAs to an SPV shall be in the nature
of a true sale after proper notice in accordance with the procedures asprovided for in Section
In Dasmariñas Garments, Inc. v. Reyes,43 this court declared that depositions, as a mode
12: Provided, That GFIs and GOCCs shall be subject to existing law on the disposition of
ofdiscovery, "may be taken at any time after the institution of any action [as there is] no
assets: Provided, further, That in the transfer of the NPLs, the provisions on subrogation and
prohibition against the taking of depositions after pre-trial."44 Thus:
assignment of credits under the New Civil Code shall apply.

Dasmariñas also contends that the "taking of deposition is a mode of pretrial discovery to be
Furthermore, Section 19 of the Special Purpose Vehicle Act expressly states that redemption
availed of before the action comes to trial." Not so. Depositions may be taken at any time
periods allowed to borrowers under the banking law, the Rules of Court, and/or other laws
after the institution of any action, whenever necessary or convenient. There is no rule that
are applicable. Hence, the right of redemption allowed to a debtor under Article 1634 of the
limits deposition-taking only to the period of pre-trial or before it; no prohibition against the
Civil Code is applicable to the case a quo.
taking of depositions after pre-trial. Indeed, the law authorizes the taking of depositions of
witnesses before or after an appeal is taken from the judgment of a Regional Trial Court "to
perpetuate their testimony for use in the event of further proceedings in the said court" (Rule Accordingly, petitioners may extinguish their debt by paying the assignee-special purpose
134, Rules of Court), and even during the process of execution of a final and executory vehicle the transfer price plus the cost of money up to the time of redemption and the judicial
judgment (East Asiatic Co. v. C.I.R., 40 SCRA 521, 544). 45 costs.

"The modes of discovery are accorded a broad and liberal treatment." 46 The evident purpose Petitioners’ right to
of discovery procedures is "to enable the parties, consistent with recognized privileges, to extinguish their debt has not
obtain the fullest possible knowledge of the issues and facts before civil trials" 47 and, thus, yet lapsed
facilitating an amicable settlement or expediting the trial of the case.48

89
Petitioners’ right to extinguish their debt under Article 1634 on assignment of credits has not
yet lapsed. The pertinent provision is reproduced here:
Art. 1634. When a credit or other incorporeal right in litigation is sold, the debtor shall have a
right to extinguish it by reimbursing the assignee for the price the latter paid therefor, the
judicial costs incurred by him, and the interest on the price from the day on which the same
was paid. A credit or other incorporeal right shall be considered in litigation from the time the
complaint concerning the same is answered.
The debtor may exercise his right within thirty days from the date the assignee demands
payment from him. (Emphasis supplied)
Under the last paragraph of Article 1634, the debtor may extinguish his or her debt within 30
days from the date the assignee demands payment. In this case, insofar as the actual parties
to the deed of assignment are concerned, no demand has yet been made, and the 30-day
period did not begin to run. Indeed, petitioners assailed before the trial court the validity of the
deed of assignment on the groundsthat it did not comply with the mandatory requirements of
the Special Purpose Vehicle Act, 53 and it referred to Cameron Granville Asset Management
(SPV-AMC), Inc., as the assignee, and not respondent Cameron Granville 3 Asset
Management, Inc.54 The law requires that payment should be made only "to the person in
whose favor the obligation has been constituted, or his [or her] successor in interest, or any
person authorized to receive it." 55 It was held that payment made to a person who is not the
creditor, his or her successor-in-interest, or a person who is authorized to receive payment,
even through error or good faith, is not effective payment which will bind the creditor or
release the debtor from the obligation to pay. 56 Therefore, it was important for petitioners to
determine for sure the proper assignee of the EIB credit or who to pay, in order to effectively
extinguish their debt.
Moreover, even assuming that respondent is the proper assignee of the EIB credit,
petitioners could not exercise their right of extinguishment because they were not informed of
the consideration paid for the assignment.57
Respondent must, pursuant to Article 1634 of the Civil Code, disclose how much it paid to
acquire the EIB credit, so that petitioners could make the corresponding offer to pay, by way
of redemption, the same amount in final settlement of their obligation.
Respondent insists that the transfer price of the EIB credit is ₱10,232,998.00 (the actual
amount and value of the credit), and that petitioners should have paid the said amount within
30 days from the December 8, 2006 order of the Regional Trial Court approving its
substitution of EIB.58 Petitioners believe otherwise, and as the deed of assignment was silent
on the matter, it becomes necessary to verify the amount of the consideration from the LSPA.
Assuming indeed that respondent acquired the EIB credit for a lesser consideration, it cannot
compel petitioners to pay or answer for the entire original EIB credit, or more thanwhat it paid
for the assignment.
Under the circumstances of this case, the 30-day period under Article 1634 within which
petitioners could exercise their right to extinguish their debt should begin to run only from the
time they were informed of the actual price paid by the assignee for the transfer of their debt.
Parol evidence rule is not applicable
Claiming further the impropriety of allowing the production of the LSPA, respondent contends
that the presentation of the document and its annexes would violate the parol evidence rule
in Rule 130, Section 9:
SEC. 9. Evidence of written agreements.—When the terms of an agreement have been
reduced to writing, it is considered as containing all the terms agreed upon and there can be,
between the parties and their successors in interest, no evidence of such terms other than
the contents of the written agreement.
However, a party may present evidence to modify, explain or add to the terms of the written
agreement ifhe puts in issue in his pleading:
(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;
(b) The failure of the written agreement to express the true intent and agreement of
the parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties or their successors in
interest after the execution of the written agreement.
The term "agreement" includes wills.
We disagree.
The parol evidence rule does notapply to petitioners who are not parties to the deed of
assignment and do not base a claim on it. 59 Hence, they cannot be prevented from seeking
evidence to determine the complete terms of the deed of assignment.
Even assuming that Rule 130, Section 9 is applicable, an exception to the rule under the
second paragraph iswhen the party puts in issue the validity of the written agreement, as in
the case a quo.
Besides, what is forbidden under the parol evidence rule is the presentation of oral or
extrinsic evidence, not those expressly referred to in the written agreement. "[D]ocuments
canbe read together when one refers to the other." 60 By the express terms of the deed of
90
assignment, it is clear that the deed of assignment was meant to be read in conjunction with
the LSPA.
As we have stated in our decision, Rule 132, Section 17 61 of the Rules of Court allows a party
to inquire into the whole of the writing or record when a part of it is given in evidence by the
other party. Since the deed of assignment was produced in court by respondent and marked
as one of its documentary exhibits, the LSPA which was made a part thereof by explicit
reference and which is necessary for its understanding may also be inquired into by
petitioners.
The LSPA is not privileged
and confidential in nature
Respondent’s contention that the LSPAis privileged and confidential is likewise untenable.
Indeed, Rule 27 contains the proviso that the documents sought to be produced and
inspected must not be privileged against disclosure. Rule 130, Section 24 describes the types
of privileged communication. These are communication between or involving the following:
(a) between husband and wife; (b) between attorney and client; (c) between physician and
patient; (d) between priest and penitent; and (e) public officers and public interest.
Privileged communications under the rules of evidence is premised on an accepted need to
protect a trust relationship. It has not been shown that the parties to the deed of assignment
fall under any of the foregoing categories.
This court has previously cited other privileged matters such as the following: "(a) editors may
not be compelled to disclose the source of published news; (b) voters may not be compelled
to disclose for whom they voted; (c) trade secrets; (d) information contained in tax census
returns; . . . (d) bank deposits" 62 (pursuant to the Secrecy of Bank Deposits Act); (e) national
security matters and intelligence information; 63 and (f) criminal matters.64 Nonetheless, the
LSPA does not fall within any of these classes of information. Moreover, the privilegeis not
absolute, and the court may compel disclosure where it is indispensable for doing justice.
At any rate, respondent failed to discharge the burden of showing that the LSPA is a
privileged document.1âwphi1 Respondent did not present any law or regulation that
considers bank documents such as the LSPA as classified information. Its contention that the
Special Purpose Vehicle Act65 only requires the creditor-bank to give notice to the debtor of
the transfer of his or her account to a special purpose vehicle, and that the assignee-special
purpose vehicle has no obligation to disclose other financial documents related to the sale, is
untenable. The Special Purpose Vehicle Act does not explicitly declare these financial
documents as privileged matters. Further, as discussed, petitioners are not precluded from
inquiring as to the true consideration of the assignment, precisely because the same law in
relation to Article 1634 allows the debtor to extinguish its debt by reimbursing the assignee-
special purpose vehicle of the actual price the latter paid for the assignment.
An assignment of a credit "produce[s] no effect as against third persons, unless it appears ina
public instrument[.]"66 It strains reason why the LSPA, which by law must be a
publicinstrument to be binding against third persons such as petitioners-debtors, is privileged
and confidential.
Alternative defenses are
allowed under the Rules
Finally, respondent’s contention that petitioners cannot claim the validity and invalidity of the
deed ofassignment at the same time is untenable.
The invocation by petitioners of Article 1634, which presupposes the validity of the deed of
assignment orthe transfer of the EIB credit to respondent, even if it would run counter to their
defense on the invalidity of the deed of assignment, is proper and sanctioned by Rule 8,
Section 2 of the Rules of Court, which reads:
SEC. 2. Alternative causes of action or defenses. — A party may set forth two or more
statements of a claim or defense alternatively or hypothetically, either in one causeof action
or defense or in separate causes of action or defenses. When two or more statements are
made in the alternative and one of them if made independently would be sufficient, the
pleading is not made insufficient by the insufficiency of one or more of the alternative
statements. (Emphasis supplied)
All told, respondent failed to allege sufficient reasons for us to reconsider our decision. Verily,
the production and inspection of the LSPA and its annexes fulfill the discovery-procedures
objective of making the trial "less a game of blind man’s buff and morea fair contest with the
basic issues and facts disclosed to the fullest practicable extent."67
WHEREFORE, the motion for reconsideration is DENIED WITH FINALITY.
SO ORDERED.
G.R. No. 152375               December 16, 2011
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
SANDIGANBAYAN (FOURTH DIVISION), JOSE L. AFRICA (substituted by his heirs),
MANUEL H. NIETO, JR., FERDINAND E. MARCOS (substituted by his heirs), IMELDA R.
MARCOS, FERDINAND R. MARCOS, JR., JUAN PONCE ENRILE, and POTENCIANO
ILUSORIO (substituted by his heirs), Respondents.
DECISION
91
BRION, J.:
Before us is the petition for certiorari1 filed by the Republic of the Philippines (petitioner) to set
aside the February 7, 2002 resolution (2002 resolution) 2 of the Sandiganbayan3 denying the
petitioner’s Motion to Admit Supplemental Offer of Evidence (Re: Deposition of Maurice V.
Bane) (3rd motion).
THE ANTECEDENTS
On July 22, 1987, the petitioner Republic of the Philippines, through the Presidential
Commission on Good Government (PCGG), filed a complaint (docketed as Civil Case No.
0009) against Jose L. Africa, Manuel H. Nieto, Jr., Ferdinand E. Marcos, Imelda R. Marcos,
Ferdinand R. Marcos, Jr., Juan Ponce Enrile, and Potenciano Ilusorio
(collectively, the respondents) for reconveyance, reversion, accounting, restitution, and
damages before the Sandiganbayan. The petitioner alleged, inter alia, that the respondents
illegally manipulated the purchase of the major shareholdings of Cable and Wireless Limited
in Eastern Telecommunications Philippines, Inc. (ETPI), which shareholdings respondents
Jose Africa and Manuel Nieto, Jr. held for themselves and, through their holdings and the
corporations they organized, beneficially for respondents Ferdinand E. Marcos and Imelda R.
Marcos.4
Civil Case No. 0009 is the main case subject of the present petition. Victor Africa (Africa), son
of the late Jose L. Africa, was not impleaded in and so is plainly not a party to Civil Case No.
0009.5
Civil Case No. 0009 spawned numerous incidental cases, 6 among them, Civil Case No.
0130.7 The present respondents were not made parties either in Civil Case No. 0130.
I. Civil Case No. 0130
In the August 7, 1991 PCGG-conducted ETPI stockholders meeting, a PCGG-controlled
board of directors was elected. Later, the registered ETPI stockholders convened a special
stockholders meeting wherein another set of board of directors was elected. As a result, two
sets of ETPI board and officers were elected.8
Thereafter, Africa, as an ETPI stockholder, filed a petition for certiorari, with prayer for a
temporary restraining order/preliminary injunction with the Sandiganbayan (docketed as Civil
Case No. 0130), seeking to nullify the August 5, 1991 and August 9, 1991 Orders of the
PCGG. These Orders directed Africa:
[T]o account for his sequestered shares in ETPI and to cease and desist from exercising
voting rights on the sequestered shares in the special stockholders’ meeting to be held on
August 12, 1991, from representing himself as a director, officer, employee or agent of ETPI,
and from participating, directly or indirectly[,] in the management of ETPI. 9
During the pendency of Africa’s petition, Civil Case No. 0130, Africa filed a motion with the
Sandiganbayan, alleging that since January 29, 1988 the PCGG had been "illegally
‘exercising’ the rights of stockholders of ETPI," 10 especially in the election of the members of
the board of directors. Africa prayed for the issuance of an order for the "calling and holding
of [ETPI] annual stockholders meeting for 1992 under the [c]ourt’s control and supervision
and prescribed guidelines."11
In its November 13, 1992 resolution, the Sandiganbayan favored Africa’s motion in this wise:
WHEREFORE, it is ordered that an annual stockholders meeting of the [ETPI], for 1992 be
held on Friday, November 27, 1992, at 2:00 o’clock in the afternoon, at the ETPI Board
Room, Telecoms Plaza, 7th Floor, 316 Gil J. Puyat Avenue, Makati, Metro Manila. x x x The
stockholders meeting shall be conducted under the supervision and control of this Court,
through Mr. Justice Sabino R. de Leon, Jr. [O]nly the registered owners, their duly authorized
representatives or their proxies may vote their corresponding shares.
The following minimum safeguards must be set in place and carefully maintained until final
judicial resolution of the question of whether or not the sequestered shares of stock (or in a
proper case the underlying assets of the corporation concerned) constitute ill-gotten
wealth[.]12
The PCGG assailed this resolution before this Court via a petition for certiorari docketed as
G.R. No. 10778913 (PCGG’s petition), imputing grave abuse of discretion on the
Sandiganbayan for holding, inter alia, that the registered stockholders of ETPI had the right to
vote.14 In our November 26, 1992 Resolution, we enjoined the Sandiganbayan from
implementing its assailed resolution.
In the meantime, in an April 12, 1993 resolution, the Sandiganbayan ordered the
consolidation of Civil Case No. 0130, among others, with Civil Case No. 0009, with the latter
as the main case and the former merely an incident.15
During the pendency of PCGG’s petition (G.R. No. 107789), the PCGG filed with this Court a
"Very Urgent Petition for Authority to Hold Special Stockholders’ Meeting for [the] Sole
Purpose of Increasing [ETPI’s] Authorized Capital Stock" (Urgent Petition). In our May 7,
1996 Resolution, we referred this Urgent Petition to the Sandiganbayan for reception of
evidence and immediate resolution. 16 The Sandiganbayan included the Urgent Petition in
Civil Case No. 0130.17
In the proceedings to resolve the Urgent Petition, the testimony of Mr. Maurice V. Bane
(former director and treasurer-in-trust of ETPI) was taken– at the petitioner’s instance and
after serving notice of the deposition-taking on the respondents 18 – on October 23 and 24,
1996 by way of deposition upon oral examination (Bane deposition) before Consul General
Ernesto Castro of the Philippine Embassy in London, England.
92
Invoking Section 1, Rule 24 (of the old Rules of Court), purportedly allowing the petitioner to In its Pre-Trial Brief26 dated August 30, 1996, the petitioner offered to present the following
depose Bane without leave of court, i.e., as a matter of right after the defendants have filed witnesses:
their answer, the notice stated that "[t]he purpose of the deposition is for [Bane] to identify
and testify on the facts set forth in his affidavit19 x x x so as to prove the ownership issue in
WITNESSES TO BE PRESENTED AND A BRIEF DESCRIPTION OF THEIR TESTIMONIES
favor of [the petitioner] and/or establish the prima facie factual foundation for sequestration of
[ETPI’s] Class A stock in support of the [Urgent Petition]." 20 The notice also states that the
petitioner shall use the Bane deposition "in evidence… in the main case of Civil Case No. (1) Maurice V. Bane – representative of Cable and Wireless Limited (C & W) at the
0009."21 On the scheduled deposition date, only Africa was present and he cross-examined time ETPI was organized.
Bane.
xxxx
On December 13, 1996, the Sandiganbayan resolved the Urgent Petition by granting
authority to the PCGG (i) "to cause the holding of a special stockholders’ meeting of ETPI for
(2) Mr. Manuel H. Nieto – x x x
the sole purpose of increasing ETPI’s authorized capital stock" and (ii) "to vote therein the
sequestered Class ‘A’ shares of stock." 22 Thus, a special stockholders meeting was held, as
previously scheduled, on March 17, 1997 and the increase in ETPI’s authorized capital stock (3) Ms. Evelyn Singson – x x x
was "unanimously approved."23 From this ruling, Africa went to this Court via a petition
for certiorari24 docketed as G.R. No. 147214 (Africa’s petition).
(4) Mr. Severino P. Buan, Jr. – x x x

We jointly resolved the PCGG’s and Africa’s petitions, and ruled:

(5) Mr. Apolinario K. Medina - x x x

This Court notes that, like in Africa’s motion to hold a stockholders meeting (to elect a board
of directors), the Sandiganbayan, in the PCGG’s petition to hold a stockholders meeting (to (6) Mr. Potenciano A. Roque – x x x
amend the articles of incorporation to increase the authorized capital stock), again failed to
apply the two-tiered test. On such determination hinges the validity of the votes cast by the (7) Caesar Parlade - x x x
PCGG in the stockholders meeting of March 17, 1997. This lapse by the Sandiganbayan
leaves this Court with no other choice but to remand these questions to it for proper
determination. IIa. Motion to Admit the Bane Deposition

xxxx At the trial of Civil Case No. 0009, the petitioner filed a Motion27 (1st motion), stating that –

WHEREFORE, this Court Resolved to REFER the petitions at bar to the Sandiganbayan for 1. In the hearings of the incidents of [Civil Case No. 0009], i.e., Civil Case Nos.
reception of evidence to determine whether there is a prima facie evidence showing that the 0048, 0050, 0130, 014628 the following witnesses were presented therein:
sequestered shares in question are ill-gotten and there is an imminent danger of dissipation
to entitle the PCGG to vote them in a stockholders meeting to elect the ETPI Board of a. Cesar O.V. Parlade
Directors and to amend the ETPI Articles of Incorporation for the sole purpose of increasing
the authorized capital stock of ETPI.
b. Maurice Bane

The Sandiganbayan shall render a decision thereon within sixty (60) days from receipt of this
Resolution and in conformity herewith. c. Evelyn Singson

II. Civil Case No. 0009 d. Leonorio Martinez

Although Civil Case No. 0009 was filed on July 22, 1987, it was only on November 29, 1996 e. Ricardo Castro; and
and March 17, 1997 that the first pre-trial conference was scheduled and concluded. 25

93
 f. Rolando Gapud
2. [The petitioner] wishes to adopt in [Civil Case No. 0009] their testimonies and
the documentary exhibits presented and identified by them, since their testimonies
and the said documentary exhibits are very relevant to prove the case of the
[petitioner] in [Civil Case No. 0009].
3. The adverse parties in the aforementioned incidents had the opportunity to
cross-examine them.
29
The respondents filed their respective Oppositions to the 1st motion;  in turn, the petitioner
filed a Common Reply30 to these Oppositions.
On April 1, 1998, the Sandiganbayan 31 promulgated a resolution32 (1998 resolution) denying
the petitioner’s 1st motion, as follows:
Wherefore, the [petitioner’s] Motion x x x is –
1. partly denied insofar as [the petitioner] prays therein to adopt the testimonies on
oral deposition of Maurice V. Bane and Rolando Gapud as part of its evidence in
Civil Case No. 0009 for the reason that said deponents according to the
[petitioner] are not available for cross-examination in this Court by the
[respondents]. (emphasis added)
2. partly Granted, in the interest of speedy disposition of this long pending case,
insofar as plaintiff prays therein to adopt certain/particular testimonies of Cesar O.
Parlade, Evelyn Singson, Leoncio Martinez, and Ricardo Castro and documentary
exhibits which said witnesses have identified in incident Civil Case Nos. xxx 0130
xxx, subject to the following conditions :
1. xxx
2. xxx
3. That the said witnesses be presented in this Court so that they can be
cross-examined on their particular testimonies in incident Civil Cases xxx
[by the respondents].
IIb. Urgent Motion and/or Request for Judicial Notice
The petitioner did not in any way question the 1998 resolution, and instead made its Formal
Offer of Evidence on December 14, 1999. 33 Significantly, the Bane deposition was not
included as part of its offered exhibits. Rectifying the omission, the petitioner filed an  Urgent
Motion and/or Request for Judicial Notice34 (2nd motion) dated February 21, 2000, with the
alternative prayer that:
1. An order forthwith be issued re-opening the plaintiff’s case and setting the same
for trial any day in April 2000 for the sole purpose of introducing additional
evidence and limited only to the marking and offering of the [Bane deposition]
which already forms part of the records and used in Civil Case No. 0130 x x x;
2. In the alternative, x x x the [Sandiganbayan] to take judicial notice of the facts
established by the [Bane deposition], together with the marked exhibits appended
thereto. [emphasis ours]
On August 21, 2000, the Sandiganbayan promulgated a resolution 35 (2000 resolution)
denying the petitioner’s 2nd motion:
Judicial notice is found under Rule 129 which is titled "What Need Not Be Proved."
Apparently, this provision refers to the Court’s duty to consider admissions made by the
parties in the pleadings, or in the course of the trial or other proceedings in resolving cases
before it. The duty of the Court is mandatory and in those cases where it is discretionary, the
initiative is upon the Court. Such being the case, the Court finds the Urgent Motion and/or
Request for Judicial Notice as something which need not be acted upon as the same is
considered redundant.
On the matter of the [Bane deposition], [its] admission is done through the ordinary formal
offer of exhibits wherein the defendant is given ample opportunity to raise objection on
grounds provided by law. Definitely, it is not under Article (sic) 129 on judicial notice.
[Emphasis ours]
On November 6, 2000 and on several dates thereafter, the respondents separately filed their
respective demurrers to evidence. 36 On the other hand, the petitioner moved for the
reconsideration of the 2000 resolution, but was rebuffed by the Sandiganbayan in its April 3,
2001 resolution37 (2001 resolution).
IIc. Motion to Admit Supplemental Offer of
Evidence (Re: Deposition of Maurice Bane)
On November 16, 2001, the petitioner filed its 3rd Motion, seeking once more the admission
of the Bane deposition. 38 On February 7, 2002 (pending resolution of the respondents’
demurrers to evidence), 39 the Sandiganbayan promulgated the assailed 2002
resolution,40 denying the petitioner’s 3rd motion. The Sandiganbayan ruled:
But in the court’s view, it is not really a question of whether or not plaintiff has already rested
its case as to obviate the further presentation of evidence. It is not even a question of
94
whether the non-appearing defendants are deemed to have waived their right to cross-
examine Bane as to qualify the admission of the deposition sans such cross-examination.
Indeed, We do not see any need to dwell on these matters in view of this Court’s Resolution
rendered on April 1, 1998 which already denied the introduction in evidence of Bane’s
deposition and which has become final in view of plaintiff’s failure to file any motion for
reconsideration or appeal within the 15-day reglementary period. Rightly or wrongly, the
resolution stands and for this court to grant plaintiff’s motion at this point in time would in
effect sanction plaintiff’s disregard for the rules of procedure. Plaintiff has slept on its rights
for almost two years and it was only in February of 2000 that it sought to rectify its ineptitude
by filing a motion to reopen its case as to enable it to introduce and offer Bane’s deposition
as additional evidence, or in the alternative for the court to take judicial notice of the
allegations of the deposition. But how can such a motion be granted when it has been
resolved as early as 1998 that the deposition is inadmissible. Without plaintiff having moved
for reconsideration within the reglementary period, the resolution has attained finality and
its effect cannot be undone by the simple expedient of filing a motion, which though
purporting to be a novel motion, is in reality a motion for reconsideration of this court’s
1998 ruling. [emphases ours]
The resolution triggered the filing of the present petition.
THE PETITION
The petitioner filed the present petition claiming that the Sandiganbayan committed grave
abuse of discretion:
I.
x x x IN HOLDING THAT ITS INTERLOCUTORY ORDER IN 1998 HAD BECOME
FINAL.
II.
x x x IN x x x REFUSING TO ADMIT THE BANE DEPOSITION –WHICH WAS
ALREADY ADMITTED AS EVIDENCE IN AN INCIDENT CASE (CIVIL CASE NO.
0130) – AS PART OF PETITIONER’S EVIDENCE IN THE MAIN x x x CASE
(CIVIL CASE NO. 0009).
III.
x x x IN REFUSING TO ADMIT A HIGHLY RELEVANT AND IMPORTANT PIECE
OF EVIDENCE FOR THE PETITIONER ON THE BASIS OF FLIMSY AND
TENUOUS TECHNICAL GROUNDS.
The petitioner41 argues that the 1998 resolution of the Sandiganbayan is merely an
interlocutory order; thus, the petitioner’s failure to question this 1998 resolution could not
have given it a character of "finality" so long as the main case remains pending. 42 On this
basis, the petitioner concludes that the Sandiganbayan’s denial of its 3rd motion was plainly
tainted with grave abuse of discretion.
On the issue of the Sandiganbayan’s refusal (in its 2002 resolution) either to take judicial
notice of or to admit the Bane deposition as part of its evidence, the petitioner asserts that
Civil Case No. 0130 (where the Bane deposition was originally taken, introduced and
admitted in evidence) is but a "child" of the "parent" case, Civil Case No. 0009; under this
relationship, evidence offered and admitted in any of the "children" cases should be
considered as evidence in the "parent" case.
Lastly, the petitioner claims that given the crucial importance of the Bane deposition, the
Sandiganbayan should not have denied its admission on "flimsy grounds," considering that:
1. It was also already stated in the notice (of the taking of the Bane deposition) that
it would be used as evidence in Civil Case No. 0009. Notices having been duly
served on all the parties concerned, they must accordingly be deemed to
have waived their right to cross-examine the witness when they failed to show up.
2. The Bane deposition was a very vital cog in the case of the petitioner relative to
its allegation that the respondents’ interest in ETPI and related firms properly
belongs to the government.
3. The non-inclusion of the Bane deposition in the petitioner’s formal offer of
evidence was obviously excusable considering the period that had lapsed from the
time the case was filed and the voluminous records that the present case has
generated.43
THE RESPONDENTS’ COMMENTS
and THE PETITIONER’S REPLY
In the respondents’ Comments44 (filed in compliance with our Resolution of April 10, 2002 45 ),
they claim that the present petition was filed out of time - i.e., beyond the 60-day
reglementary period prescribed under Section 4, Rule 65 of the Rules of Court. 46 This
assertion proceeds from the view that the petitioner’s 3rd motion, being a mere rehash of
similar motions earlier filed by the petitioner, likewise simply assails the Sandiganbayan’s
1998 resolution. Along the same line, they posit that the petitioner’s 3rd motion actually
partakes of a proscribed third motion for reconsideration of the Sandiganbayan’s 1998
resolution.47 They likewise assert, on the assumption that the 1998 resolution is interlocutory
in character, that the petitioner’s failure to contest the resolution by way of certiorari within
the proper period gave the 1998 resolution a character of "finality."
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The respondents further claim that after a party has rested its case, the admission of a On the basis of the pleadings, we summarize the pivotal issues for our resolution, as follows:
supplemental offer of evidence requires the reopening of the case at the discretion of the trial
court; the Sandiganbayan simply exercised its sound discretion in refusing to reopen the case
1. Whether the petition was filed within the required period.
since the evidence sought to be admitted was "within the knowledge of the [petitioner] and
available to [it] before [it] rested its case." 48 The respondents also advert to the belated filing
of the petitioner’s 3rd motion – i.e., after the respondents had filed their respective demurrers 2. Whether the Sandiganbayan committed grave abuse of discretion –
to evidence.
i. In holding that the 1998 resolution has already attained finality;
On the petitioner’s claim of waiver, the respondents assert that they have not waived their
right to cross-examine the deponent; the Sandiganbayan recognized this right in its 1998
ii. In holding that the petitioner’s 3rd motion partakes of a prohibited
resolution and the petitioner never questioned this recognition. They also assert that the
motion for reconsideration;
allegations in the Bane deposition cannot be a proper subject of judicial notice under Rule
129 of the Rules of Court. The respondents lastly submit that the Bane deposition is
inadmissible in evidence because the petitioner failed to comply with the requisites for iii. In refusing to re-open the case given the critical importance of the
admission under Section 47, Rule 130 of the Rules of Court. Bane deposition to the petitioner’s cause; and

In its Reply,49 the petitioner defends the timeliness of the present petition by arguing that a
party may opt to wait out and collect a pattern of questionable acts before resorting to the
extraordinary remedy of certiorari. The petitioner stresses that it filed the 3rd motion precisely
because of the Sandiganbayan’s 2000 resolution, which held that the admission of the Bane
deposition should be done through the ordinary formal offer of evidence. Thus, the
Sandiganbayan seriously erred in considering the petitioner’s 3rd motion as a proscribed
motion for reconsideration. The petitioner generally submits that the dictates of substantial
justice should have guided the Sandiganbayan to rule otherwise.
iv. In refusing to admit the Bane deposition notwithstanding the prior
consolidation of Civil Case No. 0009 and Civil Case No. 0130.
3. Whether the Bane deposition is admissible under -
i. Rule 23, Section 4, par. (c) alone or in relation to Section 47, Rule 130
of the Rules of Court; and

The petitioner also clarifies that it has not yet rested its case although it has filed a formal
offer of evidence. A party normally rests his case only after the admission of the pieces of
evidence he formally offered; before then, he still has the opportunity to present further
evidence to substantiate his theory of the case should the court reject any piece of the
offered evidence.50
The petitioner further maintains that the mere reasonable opportunity to cross-examine the
deponent is sufficient for the admission of the Bane deposition considering that the deponent
is not an ordinary witness who can be easily summoned by our courts in light of his foreign
residence, his citizenship, and his advanced age. The petitioner asserts that Rule 24 (now
Rule 23), and not Section 47, Rule 130, of the Rules of Court should apply to the present
case, as explicitly stated in the notice of the deposition-taking.
To date, respondents Imelda Marcos and the heirs of Potenciano Ilusorio have yet to file their
respective comments on the petition. Given the time that had lapsed since we required their
comments, we resolve to dispense with the filing of these comments and to consider this
petition submitted for decision.
THE ISSUES
ii. The principle of judicial notice.
THE COURT’S RULING
We deny the petition for lack of merit.
I. Preliminary Considerations
I (a). The interlocutory nature of the Sandiganbayan’s 1998 resolution.
In determining the appropriate remedy or remedies available, a party aggrieved by a court
order, resolution or decision must first correctly identify the nature of the order, resolution or
decision he intends to assail.51 In this case, we must preliminarily determine whether the
1998 resolution is "final" or "interlocutory" in nature.
Case law has conveniently demarcated the line between a final judgment or order and an
interlocutory one on the basis of the disposition made. 52 A judgment or order is considered
final if the order disposes of the action or proceeding completely, or terminates a particular
stage of the same action; in such case, the remedy available to an aggrieved party is appeal.

96
If the order or resolution, however, merely resolves incidental matters and leaves something
more to be done to resolve the merits of the case, the order is interlocutory 53 and the
aggrieved party’s remedy is a petition for certiorari under Rule 65. Jurisprudence pointedly
holds that:
As distinguished from a final order which disposes of the subject matter in its entirety or
terminates a particular proceeding or action, leaving nothing else to be done but to enforce
by execution what has been determined by the court, an interlocutory order does not dispose
of a case completely, but leaves something more to be adjudicated upon. The term "final"
judgment or order signifies a judgment or an order which disposes of the case as to all the
parties, reserving no further questions or directions for future determination.
On the other hand, a court order is merely interlocutory in character if it leaves substantial
proceedings yet to be had in connection with the controversy. It does not end the task of the
court in adjudicating the parties’ contentions and determining their rights and liabilities as
against each other. In this sense, it is basically provisional in its application.54 (emphasis
supplied)
Under these guidelines, we agree with the petitioner that the 1998 resolution is interlocutory.
The Sandiganbayan’s denial of the petitioner’s 1st motion through the 1998 Resolution came
at a time when the petitioner had not even concluded the presentation of its evidence.
Plainly, the denial of the motion did not resolve the merits of the case, as something still had
to be done to achieve this end.
We clarify, too, that an interlocutory order remains under the control of the court until the case
is finally resolved on the merits. The court may therefore modify or rescind the order upon
sufficient grounds shown at any time before final judgment. 55 In this light, the
Sandiganbayan’s 1998 resolution – which merely denied the adoption of the Bane deposition
as part of the evidence in Civil Case No. 0009 – could not have attained finality (in the
manner that a decision or final order resolving the case on the merits does) despite the
petitioner’s failure to move for its reconsideration or to appeal. 56
I (b). The 3rd motion was not prohibited by the Rules.
We also agree with the petitioner that its 3rd motion cannot be considered as a proscribed
third (actually second) motion for reconsideration of the Sandiganbayan’s 1998 resolution. As
Section 5, Rule 37 of the Rules of Court clearly provides, the proscription against a second
motion for reconsideration is directed against "a judgment or final order." Although a second
motion for reconsideration of an interlocutory order can be denied on the ground that it is a
mere "rehash" of the arguments already passed upon and resolved by the court, it cannot be
rejected on the ground that it is forbidden by the law or by the rules as a prohibited motion. 57
I (c). The 1998 resolution was not ripe for a petition for certiorari.
Under Section 1, Rule 41 of the Rules of Court, an aggrieved party may appeal from a
judgment or final order which completely disposes of a case or from an order that the Rules
of Court declares to be appealable. While this provision prohibits an appeal from an
interlocutory order, the aggrieved party is afforded the chance to question an interlocutory
order through a special civil action of certiorari under Rule 65; the petition must be filed within
sixty days from notice of the assailed judgment, order, resolution, or denial of a motion for
reconsideration.
On the premise that the 1998 resolution is interlocutory in nature, the respondents insist that
the 60-day period for filing a petition for certiorari should be reckoned from the petitioner’s
notice of the Sandiganbayan’s 1998 resolution. They argue that since this ruling had long
been rendered by the court, the petitioner’s subsequent filing of similar motions was actually
a devious attempt to resuscitate the long-denied admission of the Bane deposition.
We do not find the respondents’ submission meritorious. While the 1998 resolution is an
interlocutory order, as correctly argued by the petitioner and impliedly conceded by the
respondents, the claim that the 1998 resolution should have been immediately questioned by
the petitioner on certiorari is not totally correct as a petition for certiorari is not grounded
solely on the issuance of a disputed interlocutory ruling. 58 For a petition for certiorari to
prosper, Section 1, Rule 65 of the Rules of Court requires, among others, that neither an
appeal nor any plain, speedy and adequate remedy in the ordinary course of law is available
to the aggrieved party. As a matter of exception, the writ of certiorari may issue
notwithstanding the existence of an available alternative remedy, if such remedy is
inadequate or insufficient in relieving the aggrieved party of the injurious effects of the order
complained of.59
We note that at the time of its 1st motion in Civil Case No. 0009, the petitioner had not yet
concluded the presentation of its evidence, much less made any formal offer of evidence. At
this stage of the case, the prematurity of using the extraordinary remedy of certiorari to
question the admission of the Bane deposition is obvious. After the denial of the 1st motion,
the plain remedy available to the petitioner was to move for a reconsideration to assert and
even clarify its position on the admission of the Bane deposition. The petitioner could
introduce60 anew the Bane deposition and include this as evidence in its formal offer 61 – as
the petitioner presumably did in Civil Case No. 0130.
Thus, at that point, the case was not yet ripe for the filing of a petition for certiorari, and the
denial of the 1st motion could not have been the reckoning point for the period of filing such a
petition.
II. The Sandiganbayan’s ruling on the finality of its 1998 resolution was legally
erroneous but did not constitute grave abuse of discretion
In light of the above discussions and conclusions, the Sandiganbayan undoubtedly erred on
a question of law in its ruling, but this legal error did not necessarily amount to a grave
abuse of discretion in the absence of a clear showing that its action was a capricious and
97
whimsical exercise of judgment affecting its exercise of jurisdiction. 62 Without this showing,
the Sandiganbayan’s erroneous legal conclusion was only an error of judgment, or, at best,
an abuse of discretion but not a grave one. For this reason alone, the petition should be
dismissed.
Despite this conclusion, however, we opt not to immediately dismiss the petition in light of the
unique circumstances of this case where the petitioner cannot entirely be faulted for not
availing of the remedy at the opportune time, and where the case, by its nature, is
undoubtedly endowed with public interest and has become a matter of public concern. 63 In
other words, we opt to resolve the petition on the merits to lay the issues raised to rest and to
avoid their recurrence in the course of completely resolving the merits of Civil Case No. 0009.
Although the word "rested" nowhere appears in the Rules of Court, ordinary court procedure
has inferred it from an overview of trial sequence under Section 5, Rule 30 (which capsulizes
the order of presentation of a
party’s evidence during trial), read in relation to Rule 18 on Pre-Trial, 64 both of the Rules of
Court. Under Section 5, Rule 30, after a party has adduced his direct evidence in the course
of discharging the burden of proof, 65 he is considered to have rested his case, and is
thereafter allowed to offer rebutting evidence only. 66 Whether a party has rested his case in
some measure depends on his manifestation in court on whether he has concluded his
presentation of evidence.67
In its second and third motions, respectively, the petitioner expressly admitted that "due to
oversight, [the petitioner] closed and rested its case";68 and that it "had terminated the
presentation of its evidence in x x x Civil Case No. 0009." 69 In the face of these
categorical judicial admissions,70 the petitioner cannot suddenly make an about-face and
insist on the introduction of evidence out of the usual order. Contrary to the petitioner’s
assertion, the resting of its case could not have been conditioned on the admission of the
evidence it formally offered. To begin with, the Bane deposition, which is the  lone piece of
evidence subject of this present petition, was not among the pieces of evidence included in
its formal offer of evidence and thus could not have been admitted or rejected by the trial
court.
The Court observes with interest that it was only in this present petition for certiorari that the
petitioner had firmly denied having rested its case. 71 Before then, the petitioner never found it
appropriate to question on certiorari the Sandiganbayan’s denial of its 2nd motion which
prayed, inter alia, for the reopening of the case. This is a fatal defect in the petitioner’s case.
Although the denial of the petitioner’s first motion did not necessitate an immediate recourse
to the corrective writ of certiorari, the denial of the 2nd motion dictated a different course of
action. The petitioner’s non-observance of the proper procedure for the admission of the
Bane deposition, while seemingly innocuous, carried fatal implications for its case. Having
been rebuffed on its first attempt to have the Bane deposition adopted in Civil Case No.
0009, and without seeking reconsideration of the denial, the petitioner presented its other
pieces of evidence and eventually rested its case. This time, the petitioner forgot about the
Bane deposition and so failed to include that piece of evidence in its formal offer of evidence.
More than two years later, the petitioner again tried to squeeze in the Bane deposition into its
case. In resolving the petitioner’s motion for reconsideration of the Sandiganbayan’s 2000
resolution, the Sandiganbayan held that the Bane deposition has "become part and parcel" of
Civil Case No. 0009. This pronouncement has obscured the real status of the Bane
deposition as evidence (considering that, earlier, the Sandiganbayan already denied the
petitioner’s attempt to adopt the Bane deposition as evidence in Civil Case No. 0009 for the
deponent cannot be cross-examined in court). Nevertheless, the Sandiganbayan ultimately
denied the petitioner’s motion to reopen the case. Having judicially admitted the resting of its
case, the petitioner should have already questioned the denial of its 2nd motion by way
of certiorari, since the denial of its attempt to reopen the case effectively foreclosed all
avenues available to it for the consideration of the Bane deposition. Instead of doing so,
however, the petitioner allowed the 60-day reglementary period, under Section 4, Rule
65 of the Rules of Court, to lapse, and proceeded to file its 3rd motion.
Significantly, the petitioner changed its legal position in its 3rd motion by denying having
rested its case and insisting on the introduction of the Bane deposition. Rebuffed once more,
the petitioner filed the present petition, inviting our attention to the Sandiganbayan’s
resolutions,72 which allegedly gave it "mixed signals." 73 By pointing to these resolutions,
ironically, even the petitioner impliedly recognized that they were then already ripe for review
on certiorari. What the petitioner should have realized was that its 2nd motion unequivocally
aimed to reopen the case for the introduction of further evidence consisting of the Bane
deposition. Having been ultimately denied by the court, the petitioner could not have been
prevented from taking the proper remedy notwithstanding any perceived ambiguity in the
resolutions.
On the other end, though, there was nothing intrinsically objectionable in the petitioner’s
motion to reopen its case before the court ruled on its formal offer of evidence. The Rules of
Court does not prohibit a party from requesting the court to allow it to present additional
evidence even after it has rested its case. Any such opportunity, however, for the ultimate
purpose of the admission of additional evidence is already addressed to the sound discretion
of the court. It is from the prism of the exercise of this discretion that the Sandiganbayan’s
refusal to reopen the case (for the purpose of introducing, "marking and offering" additional
evidence) should be viewed. We can declare this Sandiganbayan action invalid if it had acted
with grave abuse of discretion.
III. The Sandiganbayan gravely abused its discretion in ultimately refusing to reopen
the case for the purpose of introducing and admitting in evidence the Bane deposition
The basis for a motion to reopen a case to introduce further evidence is Section 5, Rule 30 of
the Rules of Court, which reads:
98
Sec. 5. Order of trial. – Subject to the provisions of section 2 of Rule 31, and unless the court
for special reasons otherwise directs, the trial shall be limited to the issues stated in the pre-
trial order and shall proceed as follows:
xxxx
(f) The parties may then respectively adduce rebutting evidence only, unless the court,
for good reasons and in the furtherance of justice, permits them to adduce evidence
upon their original case[.] [emphases ours]
Under this rule, a party who has the burden of proof must introduce, at the first instance, all
the evidence he relies upon74 and such evidence cannot be given piecemeal. 75 The obvious
rationale of the requirement is to avoid injurious surprises to the other party and the
consequent delay in the administration of justice.76
A party’s declaration of the completion of the presentation of his evidence prevents him from
introducing further evidence;77 but where the evidence is rebuttal in character, whose
necessity, for instance, arose from the shifting of the burden of evidence from one party to
the other;78 or where the evidence sought to be presented is in the nature of newly
discovered evidence,79 the party’s right to introduce further evidence must be recognized.
Otherwise, the aggrieved party may avail of the remedy of certiorari.
Largely, the exercise of the court’s discretion 80 under the exception of Section 5(f), Rule 30 of
the Rules of Court depends on the attendant facts – i.e., on whether the evidence would
qualify as a "good reason" and be in furtherance of "the interest of justice." For a reviewing
court to properly interfere with the lower court’s exercise of discretion, the petitioner must
show that the lower court’s action was attended by grave abuse of discretion. Settled
jurisprudence has defined this term as the capricious and whimsical exercise of judgment,
equivalent to lack of jurisdiction; or, the exercise of power in an arbitrary manner by reason of
passion, prejudice, or personal hostility, so patent or so gross as to amount to an evasion of a
positive duty, to a virtual refusal to perform the mandated duty, or to act at all in
contemplation of the law.81 Grave abuse of discretion goes beyond the bare and unsupported
imputation of caprice, whimsicality or arbitrariness, and beyond allegations that merely
constitute errors of judgment82 or mere abuse of discretion.83
In Lopez v. Liboro,84 we had occasion to make the following pronouncement:
After the parties have produced their respective direct proofs, they are allowed to offer
rebutting evidence only, but, it has been held, the court, for good reasons, in the furtherance
of justice, may permit them to offer evidence upon their original case, and its ruling will not be
disturbed in the appellate court where no abuse of discretion appears. So, generally,
additional evidence is allowed when it is newly discovered, or where it has been omitted
through inadvertence or mistake, or where the purpose of the evidence is to correct
evidence previously offered. The omission to present evidence on the testator's knowledge of
Spanish had not been deliberate. It was due to a misapprehension or oversight. (citations
omitted; emphases ours)
Likewise, in Director of Lands v. Roman Archbishop of Manila,85 we ruled:
The strict rule is that the plaintiff must try his case out when he commences. Nevertheless, a
relaxation of the rule is permitted in the sound discretion of the court. "The proper rule for the
exercise of this discretion," it has been said by an eminent author, "is, that material
testimony should not be excluded because offered by the plaintiff after the defendant
has rested, although not in rebuttal, unless it has been kept back by a trick, and for the
purpose of deceiving the defendant and affecting his case injuriously."
These principles find their echo in Philippine remedial law. While the general rule is rightly
recognized, the Code of Civil Procedure authorizes the judge "for special reasons," to change
the order of the trial, and "for good reason, in the furtherance of justice," to permit the parties
"to offer evidence upon their original case." These exceptions are made stronger when one
considers the character of registration proceedings and the fact that where so many parties
are involved, and action is taken quickly and abruptly, conformity with precise legal rules
should not always be expected. Even at the risk of violating legal formulæ, an
opportunity should be given to parties to submit additional corroborative evidence in
support of their claims of title, if the ends of justice so require. (emphases ours)
In his commentaries, Chief Justice Moran had this to say:
However, the court for good reasons, may, in the furtherance of justice, permit the parties to
offer evidence upon their original case, and its ruling will not be disturbed where no abuse of
discretion appears, Generally, additional evidence is allowed when x x x; but it may be
properly disallowed where it was withheld deliberately and without justification.86
The weight of the exception is also recognized in foreign jurisprudence. 87
Under these guidelines, we hold that the Sandiganbayan gravely abused its discretion in
refusing to reopen the case. Instead of squarely ruling on the petitioner’s 2nd motion to avoid
any uncertainty on the evidentiary status of the Bane deposition, the Sandiganbayan’s action
actually left the petitioner’s concern in limbo by considering the petitioner’s motion
"redundant." This is tantamount to a refusal to undertake a positive duty as mandated by the
circumstances and is equivalent to an act outside the contemplation of law.
It has not escaped our notice that at the time the petitioner moved to re-open its case, the
respondents had not yet even presented their evidence in chief. The respondents, therefore,
would not have been prejudiced by allowing the petitioner’s introduction of the Bane
deposition, which was concededly omitted "through oversight." 88 The higher interest of
substantial justice, of course, is another consideration that cannot be taken lightly. 89
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In light of these circumstances, the Sandiganbayan should not have perfunctorily applied
Section 5, Rule 30 of the Rules of Court on the petitioner’s request to reopen the case for the
submission of the Bane deposition.
On the basis of this conclusion, a remand of this case should follow as a matter of course.
The state of the parties’ submissions and the delay that has already attended this aspect of
Civil Case No. 0009, however, dictate against this obvious course of action. At this point, the
parties have more than extensively argued for or against the admission of the Bane
deposition. Civil Case No. 0009 is a 25-year old sequestration case that is now crying out for
complete resolution. Admissibility, too, is an issue that would have again been raised on
remand and would surely stare us in the face after remand. 90 We are thus left with no choice
but to resolve the issue of admissibility of the Bane deposition here and now.
IV. The admissibility of the Bane deposition
IV (a). The consolidation of Civil Case No. 0009 and Civil Case No. 0130 did not
dispense with the usual requisites of admissibility
In support of its 3rd motion, the petitioner argues that the Bane deposition can be admitted in
evidence without observing the provisions of Section 47, Rule 130 of the Rules of
Court.91 The petitioner claims that in light of the prior consolidation of Civil Case No. 0009 and
Civil Case No. 0130, among others, 92 the "former case or proceeding" that Section 47, Rule
130 speaks of no longer exists.
93
Rule 31 of the old Rules of Court  – the rule in effect at the time Civil Case Nos. 0009 and
0130 were consolidated – provided that:
Rule 31
Consolidation or Severance
Section 1. Consolidation. – When actions involving a common question of law or fact are
pending before the court, it may order a joint hearing or trial of any or all the matters in issue
in the actions; it may order all the actions consolidated; and it may make such orders
concerning proceedings therein as may tend to avoid unnecessary costs or
delay.94 (emphases ours)
Consolidation is a procedural device granted to the court as an aid in deciding how cases in
its docket are to be tried so that the business of the court may be dispatched expeditiously
and with economy while providing justice to the parties. To promote this end, the rule permits
the consolidation and a single trial of several cases in the court’s docket, or the consolidation
of issues within those cases.95
A reading of Rule 31 of the Rules of Court easily lends itself to two observations. First, Rule
31 is completely silent on the effect/s of consolidation on the cases consolidated; on the
parties and the causes of action involved; and on the evidence presented in the consolidated
cases. Second, while Rule 31 gives the court the discretion either to order a joint hearing or
trial, or to order the actions consolidated, jurisprudence will show that the term "consolidation"
is used generically and even synonymously with joint hearing or trial of several causes. 96 In
fact, the title "consolidation" of Rule 31 covers all the different senses of consolidation, as
discussed below.
These observations are not without practical reason. Considering that consolidation is
basically a function given to the court, the latter is in the best position to determine for itself
(given the nature of the cases, the complexity of the issues involved, the parties affected, and
the court’s capability and resources vis-à-vis all the official business pending before it, among
other things) what "consolidation" will bring, bearing in mind the rights of the parties
appearing before it.
To disregard the kind of consolidation effected by the Sandiganbayan on the simple and
convenient premise that the deposition-taking took place after the Sandiganbayan ordered
the consolidation is to beg the question. It is precisely the silence of our Rules of Procedure
and the dearth of applicable case law on the effect of "consolidation" that strongly compel this
Court to determine the kind of "consolidation" effected to directly resolve the very issue of
admissibility in this case.
In the context of legal procedure, the term "consolidation" is used in three different senses: 97
(1) Where all except one of several actions are stayed until one is tried, in which
case the judgment in the one trial is conclusive as to the others. This is not actually
consolidation but is referred to as such. (quasi-consolidation)98
(2) Where several actions are combined into one, lose their separate identity, and
become a single action in which a single judgment is rendered. This is illustrated by
a situation where several actions are pending between the same parties stating
claims which might have been set out originally in one complaint. (actual
consolidation)99
(3) Where several actions are ordered to be tried together but each retains its
separate character and requires the entry of a separate judgment. This type of
consolidation does not merge the suits into a single action, or cause the parties to
one action to be parties to the other. (consolidation for trial)100
Considering that the Sandiganbayan’s order 101 to consolidate several incident cases does not
at all provide a hint on the extent of the court’s exercise of its discretion as to the effects of
the consolidation it ordered – in view of the function of this procedural device to principally aid
the court itself in dealing with its official business – we are compelled to look deeper into the
voluminous records of the proceedings conducted below. We note that there is nothing that
would even suggest that the Sandiganbayan in fact intended a merger of causes of action,
parties and evidence.102 To be sure, there would have been no need for a motion to adopt
100
(which did not remain unopposed) the testimonies in the incident cases had a merger actually
resulted from the order of consolidation, for in that case, the Sandiganbayan can already take
judicial notice of the same.
Significantly, even the petitioner itself viewed consolidation, at most, to be merely a
consolidation for trial.103 Accordingly, despite the consolidation in 1993, the petitioner
acceded to the Sandiganbayan’s 1998 Resolution (which denied the petitioner’s 1st Motion
on the ground that the witnesses, whose testimony in the incident cases is sought to be
adopted, "are not available for cross-examination in" the Sandiganbayan) by presenting these
other witnesses again in the main case, so that the respondents can cross-examine them.
These considerations run counter to the conclusion that the Sandiganbayan’s order of
consolidation had actually resulted in the complete merger of the incident cases with the main
case, in the sense of actual consolidation, and that the parties in these consolidated cases
had (at least constructively) been aware of and had allowed actual consolidation without
objection.104
Considering, too, that the consolidated actions were originally independent of one another
and the fact that in the present case the party respondents to Civil Case No. 0009 (an action
for reconveyance, accounting, restitution and damages) are not parties to Civil Case No.
0130 (a special civil action filed by an ETPI stockholder involving a corporate squabble within
ETPI), the conclusion that the Sandiganbayan in fact intended an actual consolidation and,
together with the parties affected, 105 acted towards that end - where the actions become
fused and unidentifiable from one another and where the evidence appreciated in one action
is also appreciated in another action – must find support in the proceedings held below. This
is particularly true in a case with the magnitude and complexity of the present case.
Otherwise, to impose upon the respondents the effects of an actual consolidation (which find
no clear support in the provisions of the Rules of Court, jurisprudence, 106 and even in the
proceedings before the Sandiganbayan itself and despite the aforementioned considerations)
results in an outright deprivation of the petitioner’s right to due process. We reach this
conclusion especially where the evidence sought to be admitted is not simply a testimony
taken in one of the several cases, but a deposition upon oral examination taken in another
jurisdiction and whose admission is governed by specific provisions on our rules on evidence.
We stress on this point, too, that while the Sandiganbayan ordered the consolidation in 1993
(that is, before the deposition was taken), neither does the Pre-Trial Order 107 issued by the
Sandiganbayan in 1997 in Civil Case No. 0009 contain any reference, formal or substantive,
to Civil Case No. 0130. 108 Interestingly, in its Pre-Trial Brief dated August 30, 1996, 109 the
petitioner even made a representation to present Bane as one of its witnesses.
IV (b). Use of deposition under Section 4, Rule 23 and as a former testimony under
Section 47, Rule 130
Since the present consolidation did not affect Civil Case No. 0130 as an original, albeit
incidental, case, the admissibility of the Bane deposition cannot avoid being measured
against the requirements of Section 47, Rule 130 of the Rules of Court – the rule on the
admissibility of testimonies or deposition taken in a different proceeding. In this regard, the
petitioner argues that Section 4, Rule 23 of the Rules of Court (then Rule 24) 110 must, at any
rate, prevail over Section 47, Rule 130111 of the same Rules.
At the outset, we note that when the petitioner’s motion to adopt the testimonies taken in the
incident cases drew individual oppositions from the respondents, the petitioner represented to
the Sandiganbayan its willingness to comply with the provisions of Section 47, Rule 130 of
the Rules of Court,112 and, in fact, again presented some of the witnesses. The petitioner’s
about-face two years thereafter even contributed to the Sandiganbayan’s own inconsistency
on how to treat the Bane deposition, in particular, as evidence.
Section 4, Rule 23 of the Rules of Court on "Deposition Pending Action" (deposition de bene
esse) provides for the circumstances when depositions may be used in the trial, or at the
hearing of a motion or an interlocutory proceeding.
SEC. 4. Use of depositions. — At the trial or upon the hearing of a motion or an
interlocutory proceeding, any part or all of a deposition, so far as admissible under the
rules of evidence, may be used against any party who was present or represented at the
taking of the deposition or who had due notice thereof, in accordance with any one of the
following provisions:
xxxx
(c) The deposition of a witness, whether or not a party, may be used by any party for any
purpose if the court finds: (1) that the witness is dead; or (2) that the witness resides at a
distance more than one hundred (100) kilometers from the place of trial or hearing, or is out
of the Philippines, unless it appears that his absence was procured by the party offering the
deposition; or (3) that the witness is unable to attend or testify because of age, sickness,
infirmity, or imprisonment; or (4) that the party offering the deposition has been unable to
procure the attendance of the witness by subpoena; or (5) upon application and notice, that
such exceptional circumstances exist as to make it desirable, in the interest of justice and
with due regard to the importance of presenting the testimony of witnesses orally in open
court, to allow the deposition to be used[.] [emphasis ours]
On the other hand, Section 47, Rule 130 of the Rules of Court provides:
SEC. 47. Testimony or deposition at a former proceeding. – The testimony or deposition
of a witness deceased or unable to testify, given in a former case or proceeding, judicial or
administrative, involving the same parties and subject matter, may be given in
evidence against the adverse party who had the opportunity to cross-examine him.
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A plain reading of Rule 23 of the Rules of Court readily rejects the petitioner’s position that
the Bane deposition can be admitted into evidence without observing the requirements of
Section 47, Rule 130 of the Rules of Court.
Before a party can make use of the deposition taken at the trial of a pending action, Section
4, Rule 23 of the Rules of Court does not only require due observance of its sub-paragraphs
(a) to (d); it also requires, as a condition for admissibility, compliance with "the rules on
evidence." Thus, even Section 4, Rule 23 of the Rules of Court makes an implied reference
to Section 47, Rule 130 of the Rules of Court before the deposition may be used in evidence.
By reading Rule 23 in isolation, the petitioner failed to recognize that the principle conceding
admissibility to a deposition under Rule 23 should be consistent with the rules on evidence
under Section 47, Rule 130. 113 In determining the admissibility of the Bane deposition,
therefore, reliance cannot be given on one provision to the exclusion of the
other; both provisions must be considered. This is particularly true in this case where the
evidence in the prior proceeding does not simply refer to a witness’ testimony in open court
but to a deposition taken under another and farther jurisdiction.
A common thread that runs from Section 4, Rule 23 of the Rules of Court and Section 47,
Rule 130 of the same Rules is their mutual reference to depositions.
A deposition is chiefly a mode of discovery whose primary function is to supplement the
pleadings for the purpose of disclosing the real points of dispute between the parties and
affording an adequate factual basis during the preparation for trial. 114 Since depositions are
principally made available to the parties as a means of informing themselves of all the
relevant facts, depositions are not meant as substitute for the actual testimony in open court
of a party or witness. Generally, the deponent must be presented for oral examination in
open court at the trial or hearing. This is a requirement of the rules on evidence under
Section 1, Rule 132 of the Rules of Court.115
Examination to be done in open court. — The examination of witnesses presented in a
trial or hearing shall be done in open court, and under oath or affirmation. Unless the witness
is incapacitated to speak, or the question calls for a different mode of answer, the answers of
the witness shall be given orally.
Indeed, any deposition offered to prove the facts set forth therein, in lieu of the actual oral
testimony of the deponent in open court, may be opposed by the adverse party and excluded
under the hearsay rule – i.e., that the adverse party had or has no opportunity to cross-
examine the deponent at the time that his testimony is offered. That opportunity for cross-
examination was afforded during the taking of the deposition alone is no argument, as the
opportunity for cross-examination must normally be accorded a party at the time that the
testimonial evidence is actually presented against him during the trial or hearing of a
case.116 However, under certain conditions and for certain limited purposes laid down in
Section 4, Rule 23 of the Rules of Court, the deposition may be used without the deponent
being actually called to the witness stand. 117
Section 47, Rule 130 of the Rules of Court is an entirely different provision. While a former
testimony or deposition appears under the Exceptions to the Hearsay Rule, the classification
of former testimony or deposition as an admissible hearsay is not universally conceded. 118 A
fundamental characteristic of hearsay evidence is the adverse party’s lack of opportunity to
cross-examine the out-of-court declarant. However, Section 47, Rule 130 explicitly
requires, inter alia, for the admissibility of a former testimony or deposition that the adverse
party must have had an opportunity to cross-examine the witness or the deponent in the prior
proceeding.
This opportunity to cross-examine though is not the ordinary cross-examination 119 afforded an
adverse party in usual trials regarding "matters stated in the direct examination or connected
therewith." Section 47, Rule 130 of the Rules of Court contemplates a different kind of cross-
examination, whether actual or a mere opportunity, whose adequacy depends on the
requisite identity of issues in the former case or proceeding and in the present case where
the former testimony or deposition is sought to be introduced.
Section 47, Rule 130 requires that the issues involved in both cases must, at least, be
substantially the same; otherwise, there is no basis in saying that the former statement was -
or would have been - sufficiently tested by cross-examination or by an opportunity to do
so.120 (The requirement of similarity though does not mean that all the issues in the two
proceedings should be the same.121 Although some issues may not be the same in the two
actions, the admissibility of a former testimony on an issue which is similar in both actions
cannot be questioned.122 )
These considerations, among others, make Section 47, Rule 130 a distinct rule on evidence
and therefore should not be confused with the general provisions on deposition under Rule
23 of the Rules of Court. In other words, even if the petitioner complies with Rule 23 of the
Rules of Court on the use of depositions, the observance of Section 47, Rule 130 of the
Rules of Court cannot simply be avoided or disregarded.
Undisputably, the Sandiganbayan relied on the Bane deposition, taken in Civil Case No.
0130, for purposes of this very same case. Thus, what the petitioner established and what
the Sandiganbayan found, for purposes of using the Bane deposition, refer only to the
circumstances laid down under Section 4(c), Rule 23 of the Rules of Court, not necessarily to
those of Section 47, Rule 130 of the Rules of Court, as a distinct rule on evidence that
imposes further requirements in the use of depositions in a different case or proceeding. In
other words, the prior use of the deposition under Section 4(c), Rule 23 cannot be taken as
compliance with Section 47, Rule 130 which considers the same deposition as hearsay,
unless the requisites for its admission under this rule are observed. The aching question is
whether the petitioner complied with the latter rule.
Section 47, Rule 130 of the Rules of Court lays down the following requisites for
the admission of a testimony or deposition given at a former case or proceeding.
1. The testimony or deposition of a witness deceased or otherwise unable to testify;
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 2. The testimony was given in a former case or proceeding, judicial or
administrative;
3. Involving the same parties;
4. Relating to the same matter;
5. The adverse party having had the opportunity to cross-examine him.123
The reasons for the admissibility of testimony or deposition taken at a former trial or
proceeding are the necessity for the testimony and its trustworthiness. 124 However, before
the former testimony or deposition can be introduced in evidence, the proponent must first
lay the proper predicate therefor,125 i.e., the party must establish the basis for the admission
of the Bane deposition in the realm of admissible evidence. This basis is the prior issue that
we must now examine and resolve.
IV (c). Unavailability of witness
For the admission of a former testimony or deposition, Section 47, Rule 130 of the Rules of
Court simply requires, inter alia, that the witness or deponent be "deceased or unable to
testify." On the other hand, in using a deposition that was taken during the pendency of an
action, Section 4, Rule 23 of the Rules of Court provides several grounds that will justify
dispensing with the actual testimony of the deponent in open court and specifies, inter alia,
the circumstances of the deponent’s inability to attend or testify, as follows:
(3) that the witness is unable to attend or testify because of age, sickness, infirmity, or
imprisonment[.] [emphases ours]126
The phrase "unable to testify" appearing in both Rule 23 and Rule 130 of the Rules of Court
refers to a physical inability to appear at the witness stand and to give a testimony. 127 Hence
notwithstanding the deletion of the phrase "out of the Philippines," which previously appeared
in Section 47, Rule 130 of the Rules of Court, absence from jurisdiction128 - the petitioner’s
excuse for the non-presentation of Bane in open court - may still constitute inability to testify
under the same rule. This is not to say, however, that resort to deposition on this instance of
unavailability will always be upheld. Where the deposition is taken not for discovery
purposes, but to accommodate the deponent, then the deposition should be rejected in
evidence.129
Although the testimony of a witness has been given in the course of a former proceeding
between the parties to a case on trial, this testimony alone is not a ground for its admission in
evidence. The witness himself, if available, must be produced in court as if he were
testifying de novo since his testimony given at the former trial is mere hearsay. 130 The
deposition of a witness, otherwise available, is also inadmissible for the same reason.
Indeed, the Sandiganbayan’s reliance on the Bane deposition in the other case (Civil Case
No. 0130) is an argument in favor of the requisite unavailability of the witness. For purposes
of the present case (Civil Case No. 0009), however, the Sandiganbayan would have no basis
to presume, and neither can or should we, that the previous condition, which previously
allowed the use of the deposition, remains and would thereby justify the use of the same
deposition in another case or proceeding, even if the other case or proceeding is before the
same court. Since the basis for the admission of the Bane deposition, in principle, being
necessity,131 the burden of establishing its existence rests on the party who seeks the
admission of the evidence. This burden cannot be supplanted by assuming the continuity of
the previous condition or conditions in light of the general rule against the non-presentation of
the deponent in court.132
IV (d). The requirement of opportunity of the adverse party to cross-examine; identity
of parties; and identity of subject matter
The function of cross-examination is to test the truthfulness of the statements of a witness
made on direct examination. 133 The opportunity of cross-examination has been regarded as
an essential safeguard of the accuracy and completeness of a testimony. In civil cases, the
right of cross-examination is absolute, and is not a mere privilege of the party against whom a
witness may be called. 134 This right is available, of course, at the taking of depositions, as
well as on the examination of witnesses at the trial. The principal justification for the general
exclusion of hearsay statements and for the admission, as an exception to the hearsay rule,
of reported testimony taken at a former hearing where the present adversary was afforded
the opportunity to cross-examine, is based on the premise that the opportunity of cross-
examination is an essential safeguard135 against falsehoods and frauds.
In resolving the question of whether the requirement of opportunity to cross-examine has
been satisfied, we have to consider first the required identity of parties as the present
opponent to the admission of the Bane deposition to whom the opportunity to cross-examine
the deponent is imputed may not after all be the same "adverse party" who actually had such
opportunity.
To render the testimony of a witness admissible at a later trial or action, the parties to the first
proceeding must be the same as the parties to the later proceeding. Physical identity,
however, is not required; substantial identity 136 or identity of interests 137 suffices, as where the
subsequent proceeding is between persons who represent the parties to the prior proceeding
by privity in law, in blood, or in estate. The term "privity" denotes mutual or successive
relationships to the same rights of property.138
In the present case, the petitioner failed to impute, much less establish, the identity of interest
or privity between the then opponent, Africa, and the present opponents, the respondents.
While Africa is the son of the late respondent Jose Africa, at most, the deposition should be
admissible only against him as an ETPI stockholder who filed the certiorari petition docketed
as Civil Case No. 0130 (and, unavoidably, as successor-in-interest of the late respondent
Jose Africa). While Africa and the respondents are all ETPI stockholders, this commonality
does not establish at all any privity between them for purposes of binding the latter to the acts
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or omissions of the former respecting the cross-examination of the deponent. The
sequestration of their shares does not result in the integration of their rights and obligations
as stockholders which remain distinct and personal to them, vis-a-vis other stockholders.139
IV (d1). The respondents’ notice of taking of Bane deposition is insufficient evidence of
waiver
The petitioner staunchly asserts that the respondents have waived their right to cross-
examine the deponent for their failure to appear at the deposition-taking despite individual
notices previously sent to them.140
In its first Notice to Take Oral Deposition of Mr. Maurice V. Bane dated August 30,
1996,141 the petitioner originally intended to depose Mr. Bane on September 25-26 1996.
Because it failed to specify in the notice the purpose for taking Mr. Bane’s deposition, the
petitioner sent a Second Amended Notice to Take Deposition of Mr. Maurice V. Bane Upon
Oral Examination where it likewise moved the scheduled deposition-taking to October 23-26,
1996.
The records show that Africa moved several times for protective orders against the intended
deposition of Maurice Bane. 142 On the other hand, among the respondents, only respondent
Enrile appears to have filed an Opposition 143 to the petitioner’s first notice, where he squarely
raised the issue of reasonability of the petitioner’s nineteen-day first notice. While the
Sandiganbayan denied Africa’s motion for protective orders, 144 it strikes us that no ruling was
ever handed down on respondent Enrile’s Opposition.145
It must be emphasized that even under Rule 23, the admission of the deposition upon oral
examination is not simply based on the fact of prior notice on the individual sought to be
bound thereby. In Northwest Airlines v. Cruz, 146 we ruled that -
The provision explicitly vesting in the court the power to order that the deposition shall not be
taken connotes the authority to exercise discretion on the matter. However, the discretion
conferred by law is not unlimited. It must be exercised, not arbitrarily or oppressively, but in a
reasonable manner and in consonance with the spirit of he law. The courts should always
see to it that the safeguards for the protection of the parties and deponents are firmly
maintained. As aptly stated by Chief Justice Moran:
. . . . (T)his provision affords the adverse party, as well as the deponent, sufficient protection
against abuses that may be committed by a party in the exercise of his unlimited right to
discovery. As a writer said: "Any discovery involves a prying into another person's affairs —
prying that is quite justified if it is to be a legitimate aid to litigation, but not justified if it is not
to be such an aid." For this reason, courts are given ample powers to forbid discovery which
is intended not as an aid to litigation, but merely to annoy, embarrass or oppress either the
deponent or the adverse party, or both. (emphasis ours)
In the present case, not only did the Sandiganbayan fail to rule on respondent Enrile’s
Opposition (which is equally applicable to his co-respondents), it also failed to provide even
the bare minimum "safeguards for the protection of," (more so) non-parties, 147 and to ensure
that these safeguards are firmly maintained. Instead, the Sandiganbayan simply bought the
petitioner’s assertion (that the taking of Bane deposition is a matter of right) and treated the
lingering concerns – e.g., reasonability of the notice; and the non-party status of the
respondents in Civil Case No. 0130 - at whose incident (docketed as G.R. No. 107789) the
Bane deposition was taken - rather perfunctorily to the prejudice of the respondents.
In conjunction with the order of consolidation, the petitioner’s reliance on the prior notice on
the respondents, as adequate opportunity for cross-examination, cannot override the non-
party status of the respondents in Civil Case No. 0130 – the effect of consolidation being
merely for trial. As non-parties, they cannot be bound by proceedings in that case.
Specifically, they cannot be bound by the taking of the Bane deposition without the
consequent impairment of their right of cross-examination. 148 Opportunity for cross-
examination, too, even assuming its presence, cannot be singled out as basis for the
admissibility of a former testimony or deposition since such admissibility is also anchored on
the requisite identity of parties. To reiterate, although the Sandiganbayan considered the
Bane deposition in resolving Civil Case No. 0130, its action was premised on Africa’s status
as a party in that case where the Bane deposition was taken.
Corollarily, the idea of privity also permeates Rule 23 of the Rules of Court through its
Section 5 which provides:
Effect of substitution of parties. — Substitution of parties does not affect the right to use
depositions previously taken; and, when an action has been dismissed and another action
involving the same subject is afterward brought between the same parties or their
representatives or successors in interest, all depositions lawfully taken and duly filed in the
former action may be used in the latter as if originally taken therefor. [italics and underscoring
ours]
In light of these considerations, we reject the petitioner’s claim that the respondents waived
their right to cross-examination when they failed to attend the taking of the Bane deposition.
Incidentally, the respondents’ vigorous insistence on their right to cross-examine the
deponent speaks loudly that they never intended any waiver of this right.
Interestingly, the petitioner’s notice of the deposition-taking relied on Rule 23 of the Rules of
Court. Section 15 of this rule reads:
Deposition upon oral examination; notice; time and place. — A party desiring to take the
deposition of any person upon oral examination shall give reasonable notice in writing to
every other party to the action. The notice shall state the time and place for taking the
deposition and the name and address of each person to be examined, if known, and if the
name is not known, a general description sufficient to identify him or the particular class or
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group to which he belongs. On motion of any party upon whom the notice is served, the court deposition in an incident case (instead of the main case) at a time when it became the
may for cause shown enlarge or shorten the time. technical right of the petitioner to do so.

Under this provision, we do not believe that the petitioner could reasonably expect that the V. The petitioner cannot rely on principle of judicial notice
individual notices it sent to the respondents would be sufficient to bind them to the conduct of
the then opponent’s (Africa’s) cross-examination since, to begin with, they were not even
The petitioner also claims that since the Bane deposition had already been previously
parties to the action. Additionally, we observe that in the notice of the deposition taking,
introduced and admitted in Civil Case No. 0130, then the Sandiganbayan should have taken
conspicuously absent was any indication sufficient to forewarn the notified persons that their
judicial notice of the Bane deposition as part of its evidence.
inexcusable failure to appear at the deposition taking would amount to a waiver of their right
of cross-examination, without prejudice to the right of the respondents to raise their
objections at the appropriate time.149 We would be treading on dangerous grounds indeed Judicial notice is the cognizance of certain facts that judges may properly take and act on
were we to hold that one not a party to an action, and neither in privity nor in without proof because these facts are already known to them. 152 Put differently, it is the
substantial identity of interest with any of the parties in the same action, can be bound assumption by a court of a fact without need of further traditional evidentiary support. The
by the action or omission of the latter, by the mere expedient of a notice. Thus, we principle is based on convenience and expediency in securing and introducing evidence on
cannot simply deduce a resultant waiver from the respondents’ mere failure to attend the matters which are not ordinarily capable of dispute and are not bona fide disputed.153
deposition-taking despite notice sent by the petitioner.
The foundation for judicial notice may be traced to the civil and canon law
Lastly, we see no reason why the Bane deposition could not have been taken earlier in Civil maxim, manifesta (or notoria) non indigent probatione.154 The taking of judicial notice means
Case No. 0009 – the principal action where it was sought to be introduced – while Bane was that the court will dispense with the traditional form of presentation of evidence. In so doing,
still here in the Philippines. We note in this regard that the Philippines was no longer under the court assumes that the matter is so notorious that it would not be disputed.
the Marcos administration and had returned to normal democratic processes when Civil Case
No. 0009 was filed. In fact, the petitioner’s notice itself states that the "purpose of the
The concept of judicial notice is embodied in Rule 129 of the Revised Rules on Evidence.
deposition is for Mr. Maurice Bane to identify and testify on the facts set forth in his Affidavit,"
Rule 129 either requires the court to take judicial notice, inter alia, of "the official acts of the x
which Mr. Bane had long executed in 1991 in Makati, Metro Manila. 150 Clearly, a deposition
x x judicial departments of the Philippines," 155 or gives the court the discretion to take judicial
could then have been taken - without compromising the respondents’ right to cross-examine
notice of matters "ought to be known to judges because of their judicial functions." 156 On the
a witness against them - considering that the principal purpose of the deposition is chiefly a
other hand, a party-litigant may ask the court to take judicial notice of any matter and the
mode of discovery. These, to our mind, are avoidable omissions that, when added to the
court may allow the parties to be heard on the propriety of taking judicial notice of the matter
deficient handling of the present matter, add up to the gross deficiencies of the petitioner in
involved.157 In the present case, after the petitioner filed its Urgent Motion and/or Request for
the handling of Civil Case No. 0009.
Judicial Notice, the respondents were also heard through their corresponding oppositions.

After failing to take Bane’s deposition in 1991 and in view of the peculiar circumstances of
In adjudicating a case on trial, generally, courts are not authorized to take judicial notice of
this case, the least that the petitioner could have done was to move for the taking of the Bane
the contents of the records of other cases, even when such cases have been tried or are
deposition and proceed with the deposition immediately upon securing a favorable ruling
pending in the same court, and notwithstanding that both cases may have been tried or are
thereon. On that occasion, where the respondents would have a chance to be heard, the
actually pending before the same judge. 158 This rule though admits of exceptions.
respondents cannot avoid a resultant waiver of their right of cross-examination if they still fail
to appear at the deposition-taking. Fundamental fairness dictates this course of action. It
must be stressed that not only were the respondents non-parties to Civil Case No. 0130, they As a matter of convenience to all the parties, a court may properly treat all or any part of the
likewise have no interest in Africa’s certiorari petition asserting his right as an ETPI original record of a case filed in its archives as read into the record of a case pending before
stockholder. it, when, with the knowledge of, and absent an objection from, the adverse
party, reference is made to it for that purpose, by name and number or in some other
manner by which it is sufficiently designated; or when the original record of the former case
Setting aside the petitioner’s flip-flopping on its own representations, 151 this Court can only
or any part of it, is actually withdrawn from the archives at the court's direction, at the request
express dismay on why the petitioner had to let Bane leave the Philippines before taking his
or with the consent of the parties, and admitted as a part of the record of the case then
deposition despite having knowledge already of the substance of what he would testify on.
pending.159
Considering that the testimony of Bane is allegedly a "vital cog" in the petitioner’s case
against the respondents, the Court is left to wonder why the petitioner had to take the

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Courts must also take judicial notice of the records of another case or cases, where sufficient
basis exists in the records of the case before it, warranting the dismissal of the latter case. 160
The issue before us does not involve the applicability of the rule on mandatory taking of
judicial notice; neither is the applicability of the rule on discretionary taking of judicial notice
seriously pursued. Rather, the petitioner approaches the concept of judicial notice from a
genealogical perspective of treating whatever evidence offered in any of the "children" cases
– Civil Case 0130 – as evidence in the "parent" case – Civil Case 0009 - or "of the whole
family of cases."161 To the petitioner, the supposed relationship of these cases warrants the
taking of judicial notice.
We strongly disagree. First, the supporting cases162 the petitioner cited are inapplicable either
because these cases involve only a single proceeding or an exception to the rule, which
proscribes the courts from taking judicial notice of the contents of the records of other
cases.163 Second, the petitioner’s proposition is obviously obnoxious to a system of orderly
procedure. The petitioner itself admits that the present case has generated a lot of cases,
which, in all likelihood, involve issues of varying complexity. If we follow the logic of the
petitioner’s argument, we would be espousing judicial confusion by indiscriminately allowing
the admission of evidence in one case, which was presumably found competent and relevant
in another case, simply based on the supposed lineage of the cases. It is the duty of the
petitioner, as a party-litigant, to properly lay before the court the evidence it relies upon in
support of the relief it seeks, instead of imposing that same duty on the court. We invite the
petitioner’s attention to our prefatory pronouncement in Lopez v. Sandiganbayan:164
Down the oft-trodden path in our judicial system, by common sense, tradition and the law, the
Judge in trying a case sees only with judicial eyes as he ought to know nothing about the
facts of the case, except those which have been adduced judicially in evidence. Thus, when
the case is up for trial, the judicial head is empty as to facts involved and it is incumbent upon
the litigants to the action to establish by evidence the facts upon which they rely. (emphasis
ours)
We therefore refuse, in the strongest terms, to entertain the petitioner’s argument that we
should take judicial notice of the Bane deposition.
VI. Summation
To recapitulate, we hold that: (1) the Sandiganbayan’s denial of the petitioner’s 3rd motion –
the Motion to Admit Supplemental Offer of Evidence (Re: Deposition of Maurice Bane) – was
a legal error that did not amount to grave abuse of discretion; (2) the Sandiganbayan’s
refusal to reopen the case at the petitioner’s instance was tainted with grave abuse of
discretion; and (3) notwithstanding the grave abuse of discretion, the petition must ultimately
fail as the Bane deposition is not admissible under the rules of evidence. 165
VII. Refutation of Justice Carpio’s Last Minute Modified Dissent
At the last minute, Justice Carpio circulated a modified dissent, quoting the Bane deposition.
His covering note states:
I have revised my dissenting opinion to include the Bane deposition so that the Court and the
public will understand what the Bane deposition is all about. (underlining added)
In light of this thrust, a discussion refuting the modified dissent is in order.
First: Contents of the Bane deposition not an Issue. The dissent perfectly identified what is at
issue in this case – i.e., the admissibility of the Bane deposition. Admissibility is concerned
with the competence and relevance166 of the evidence, whose admission is sought. While the
dissent quoted at length the Bane deposition, it may not be amiss to point out that the
relevance of the Bane deposition (or, to adopt the dissent’s characterization, whether
"Maurice V. Bane is a vital witness") is not an issue here unless it can be established first that
the Bane deposition is a competent evidence.
Second: Misrepresentation of Cited Authority. The dissent insists that "in Philippine
Jurisprudence, the consolidation of cases merges the different actions into one and the rights
of the parties are adjudicated in a single judgment," citing Vicente J. Francisco. In our
discussion on consolidation, we footnoted the following in response to the dissent’s position,
which we will restate here for emphasis:
In the 1966 edition of Vicente J. Francisco’s Revised Rules of Court, Francisco wrote:
The effect of consolidation of actions is to unite and merge all of the different actions
consolidated into a single action, in the same manner as if the different causes of actions
involved had originally been joined in a single action, and the order of consolidation, if made
by a court of competent jurisdiction, is binding upon all the parties to the different actions until
it is vacated or set aside. After the consolidation there can be no further proceedings in the
separate actions, which are by virtue of the consolidation discontinued and superseded by a
single action, which should be entitled in such manner as the court may direct, and all
subsequent proceedings therein be conducted and the rights of the parties adjudicated in a
single action (1 C.J.S., 113, pp. 1371-1372).
At the very beginning of the discussion on consolidation of actions in the Corpus Juris
Secundum, the following caveat appears:
The term consolidation is used in three different senses. First, where several actions are
combined into one and lose their separate identity and become a single action in which a
single judgment is rendered; second, where all except one of several actions are stayed until
one is tried, in which case the judgment in the one is conclusive as to the others; third, where
several actions are ordered to be tried together but each retains its separate character and
requires the entry of a separate judgment. The failure to distinguish between these methods
of procedure, which are entirely distinct, the two latter, strictly speaking, not being
106
consolidation, a fact which has not always been noted, has caused some confusion and
conflict in the cases. (1 C.J.S., 107, pp. 1341-1342) (Emphasis added).
In defining the term "consolidation of actions," Francisco provided a colatilla that the term
"consolidation" is used in three different senses, citing 1 C.J.S. 1341 and 1 Am. Jur. 477
(Francisco, Revised Rules of Court, p. 348).
From the foregoing, it is clear that the dissent appears to have quoted Francisco’s statement
out of context. As it is, the issue of the effect of consolidation on evidence is at most an
unsettled matter that requires the approach we did in the majority’s discussion on
consolidation.167
Third: Misappreciation of the Purpose of Consolidation. The dissent then turns to the purpose
of consolidation – to "expeditiously settle the interwoven issues involved in the consolidated
cases" and "the simplification of the proceedings." It argues that this can only be achieved if
the repetition of the same evidence is dispensed with.
It is unfortunate that the dissent refuses to recognize the fact that since consolidation is
primarily addressed to the court concerned to aid it in dispatching its official business, it
would be in keeping with the orderly trial procedure if the court should have a say on what
consolidation would actually bring 168 (especially where several cases are involved which have
become relatively complex). In the present case, there is nothing in the proceedings below
that would suggest that the Sandiganbayan or the parties themselves (the petitioner and the
respondents) had in mind a consolidation beyond joint hearing or trial. Why should this Court
– which is not a trial court – impose a purported effect that has no factual or legal grounds?
Fourth: The Due Process Consideration. The dissent argues that even if the consolidation
only resulted in a joint hearing or trial, the "respondents are still bound by the Bane
deposition considering that they were given notice of the deposition-taking." The issue here
boils down to one of due process – the fundamental reason why a hearsay statement (not
subjected to the rigor of cross-examination) is generally excluded in the realm of admissible
evidence – especially when read in light of the general rule that depositions are not meant as
substitute for the actual testimony, in open court, of a party or witness.
Respondent Enrile had a pending Opposition to the notice of deposition-taking (questioning
the reasonableness thereof – an issue applicable to the rest of the respondents) which the
Sandiganbayan failed to rule on. To make the Sandiganbayan’s omission worse, the
Sandiganbayan blindly relied on the petitioner’s assertion that the deposition-taking was a
matter of right and, thus, failed to address the consequences and/or issues that may arise
from the apparently innocuous statement of the petitioner (that it intends to use the Bane
deposition in Civil Case No. 0009, where only the respondents, and not Africa, are the
parties).169 There is simply the absence of "due" in due process.
Fifth: Misstatement of the Sandiganbayan’s Action. The dissent repeatedly misstates that the
Sandiganbayan "granted" the request for the deposition-taking. For emphasis, the
Sandiganbayan did not "grant" the request since the petitioner staunchly asserted that the
deposition-taking was a matter of right. No one can deny the complexity of the issues that
these consolidated cases have reached. Considering the consolidation of cases of this
nature, the most minimum of fairness demands upon the petitioner to move for the taking of
the Bane deposition and for the Sandiganbayan to make a ruling thereon (including the
opposition filed by respondent Enrile which equally applies to his co-respondents). The
burgeoning omission and failures that have prevailed in this case cannot be cured by this
Court without itself being guilty of violating the constitutional guarantee of due process.
Sixth: Issues Posed and Resolved Go Beyond Technicalities. The above conclusions,
contrary to the petitioner’s claim, are not only matters of technicality. Admittedly, rules of
procedure involve technicality, to which we have applied the liberality that technical rules
deserve. But the resolution of the issues raised goes beyond pure or mere technicalities as
the preceding discussions show. They involve issues of due process and basic unfairness to
the respondents, particularly to respondent Enrile, who is portrayed in the Bane deposition to
be acting in behalf of the Marcoses so that these shares should be deemed to be those of the
Marcoses. They involved, too, principles upon which our rules of procedure are founded and
which we cannot disregard without flirting with the violation of guaranteed substantive rights
and without risking the disorder that these rules have sought to avert in the course of their
evolution.
In the Court En Banc deliberations of December 6, 2011, the Court failed to arrive at a
conclusive decision because of a tie vote (7-7, with one Justice taking no part). The same
vote resulted in the re-voting of December 13, 2011. In this light, the ponencia is deemed
sustained.
WHEREFORE, premises considered, we DISMISS the petition for lack of merit. No costs.
SO ORDERED.
G.R. No. 173008               February 22, 2012
NENITA GONZALES, SPOUSES GENEROSA GONZALES and RODOLFO FERRER,
SPOUSES FELIPE GONZALES and CAROLINA SANTIAGO, SPOUSES LOLITA
GONZALES and GERMOGENES GARLITOS, SPOUSES DOLORES GONZALES and
FRANCISCO COSTIN, SPOUSES CONCHITA GONZALES and JONATHAN CLAVE, and
SPOUSES BEATRIZ GONZALES and ROMY CORTES, REPRESENTED BY THEIR
ATTORNEY-IN-FACT and CO-PETITIONER NENITA GONZALES, Petitioners,
vs.
MARIANO BUGAAY AND LUCY BUGAAY, SPOUSES ALICIA BUGAAY AND FELIPE
BARCELONA, CONEY "CONIE" BUGAAY, JOEY GATAN, LYDIA BUGAAY, SPOUSES
LUZVIMINDA BUGAAY AND REY PAGATPATAN AND BELEN BUGAAY, Respondents.
DECISION
107
PERLAS-BERNABE, J.:
Assailed in this Petition for Review on Certiorari under Rule 45 is the Decision 1 of the Court of
Appeals (CA) dated March 23, 2006 in CA-G.R. SP No. 91381 as well as the
Resolution2 dated June 2, 2006 dismissing petitioners' motion for reconsideration. The CA
reversed and set aside the assailed Orders 3 of the Regional Trial Court (RTC) of Lingayen,
Pangasinan, Branch 39, dated April 13, 2005 and August 8, 2005, respectively, in Civil Case
No. 16815, denying the demurrer to evidence filed by herein respondents and instead
dismissed petitioners' complaint.
The Facts
Consolacion as the heirs of the Spouses Ayad, excluding Mariano who predeceased them. It
likewise declared the Deed of Extrajudicial Settlement and Partition executed by Enrico and
respondents, as well as all other documents and muniments of title in their names, as null
and void. It also directed the parties to submit a project of partition within 30 days from finality
of the Decision.
On December, 13, 1995,7 respondents filed a motion for reconsideration and/or new trial from
the said Decision. On November 7, 1996, the RTC, through Judge Eugenio Ramos, issued
an Order which reads: "in the event that within a period of one (1) month from today, they
have not yet settled the case, it is understood that the motion for reconsideration and/or new
trial is submitted for resolution without any further hearing."8

Without resolving the foregoing motion, the RTC, noting the failure of the parties to submit a
The deceased spouses Bartolome Ayad and Marcelina Tejada ("Spouses Ayad") had five (5)
project of partition, issued a writ of execution 9 on February 17, 2003 giving them a period of
children: Enrico, Encarnacion, Consolacion, Maximiano and Mariano. The latter, who was
15 days within which to submit their nominees for commissioner, who will partition the subject
single, predeceased his parents on December 4, 1943. Marcelina died in September 1950
estate.
followed by Bartolome much later on February 17, 1964.

Subsequently, the RTC, through then Acting Presiding Judge Emilio V. Angeles, discovered
Enrico has remained single. Encarnacion died on April 8, 1966 and is survived by her
the pendency of the motion for reconsideration and/or new trial and set the same for hearing.
children, Nenita Gonzales, Generosa Gonzales, Felipe Gonzales, Lolita Gonzales, Dolores
In the Order10 dated August 29, 2003, Judge Angeles granted respondents' motion for
Gonzales, Conchita Gonzales and Beatriz Gonzales, the petitioners in this case.
reconsideration and/or new trial for the specific "purpose of receiving and offering for
Consolacion, meanwhile, was married to the late Imigdio Bugaay. Their children are Mariano
admission the documents referred to by the [respondents]." 11
Bugaay, Alicia Bugaay, Amelita Bugaay, Rodolfo Bugaay, Letecia Bugaay, Lydia Bugaay,
Luzviminda Bugaay and Belen Bugaay, respondents herein. Maximiano died single and
without issue on August 20, 1986. The spouses of petitioners, except Nenita, a widow, and However, instead of presenting the documents adverted to, consisting of the documents
those of the respondents, except Lydia and Belen, were joined as parties in this case. sought to be annulled, respondents demurred 12 to petitioners' evidence on December 6, 2004
which the RTC, this time through Presiding Judge Dionisio C. Sison, denied in the
Order13 dated April 13, 2005 as well as respondents' motion for reconsideration in the August
In their Amended Complaint 4 for Partition and Annulment of Documents with Damages dated
8, 2005 Order.14
February 5, 1991 against Enrico, Consolacion and the respondents, petitioners alleged, inter
alia, that the only surviving children of the Spouses Ayad are Enrico and Consolacion, and
that during the Spouses Ayad's lifetime, they owned several agricultural as well as residential Aggrieved, respondents elevated their case to the CA through a petition for certiorari,
properties. imputing grave abuse of discretion on the part of the RTC in denying their demurrer
notwithstanding petitioners' failure to present the documents sought to be annulled. On
March 23, 2006, the CA rendered the assailed Decision reversing and setting aside the
Petitioners averred that in 1987, Enrico executed fraudulent documents covering all the
Orders of the RTC disposing as follows:
properties owned by the Spouses Ayad in favor of Consolacion and respondents, completely
disregarding their rights. Thus, they prayed, among others, for the partition of the Spouses
Ayad's estate, the nullification of the documents executed by Enrico, and the award of actual, "WHEREFORE, the instant petition is hereby GRANTED. Accordingly, the assailed Orders of
moral and exemplary damages, as well as attorney's fees. the trial court dated April 13, 2006 and August 8, 2005 are hereby both SET ASIDE and in
lieu thereof, another Order is hereby issued DISMISSING the Complaint, as amended.
As affirmative defenses 5 , Enrico, Consolacion and respondents claimed that petitioners had
long obtained their advance inheritance from the estate of the Spouses Ayad, and that the No pronouncement as to costs.
properties sought to be partitioned are now individually titled in respondents' names.
SO ORDERED."15
After due proceedings, the RTC rendered a Decision 6 dated November 24, 1995, awarding
one-fourth (¼) pro-indiviso share of the estate each to Enrico, Maximiano, Encarnacion and

108
In dismissing the Amended Complaint, the appellate court ratiocinated in the following
manner:
"In the light of the foregoing where no sufficient evidence was presented to grant the reliefs
being prayed for in the complaint, more particularly the absence of the documents sought to
be annulled as well as the properties sought to be partitioned, common sense dictates that
the case should have been dismissed outright by the trial court to avoid unnecessary waste
of time, money and efforts."16
Subsequently, the CA denied petitioners' motion for reconsideration in its Resolution 17 dated
June 2, 2006.
In this case, respondents demurred to petitioners' evidence after the RTC promulgated its
Decision.1âwphi1 While respondents' motion for reconsideration and/or new trial was
granted, it was for the sole purpose of receiving and offering for admission the documents not
presented at the trial. As respondents never complied with the directive but instead filed a
demurrer to evidence, their motion should be deemed abandoned. Consequently, the RTC's
original Decision stands.
Accordingly, the CA committed reversible error in granting the demurrer and dismissing the
Amended Complaint a quo for insufficiency of evidence. The demurrer to evidence was
clearly no longer an available remedy to respondents and should not have been granted, as
the RTC had correctly done.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the CA
The Issues
are SET ASIDE and the Orders of the RTC denying respondents' demurrer are
REINSTATED. The Decision of the RTC dated November 24, 1995 STANDS.
In this petition for review, petitioners question whether the CA's dismissal of the Amended
Complaint was in accordance with law, rules of procedure and jurisprudence.
SO ORDERED.

The Ruling of the Court

ESTELA M. PERLAS-BERNABE
Associate Justice
The RTC Orders assailed before the CA basically involved the propriety of filing a demurrer
to evidence after a Decision had been rendered in the case.
G.R. No. 170026               June 20, 2012

Section 1, Rule 33 of the Rules of Court provides:

SHIMIZU PHILIPPINES CONTRACTORS, INC., Petitioner,
vs.
"SECTION 1. Demurrer to evidence. - After the plaintiff has completed the presentation of his MRS. LETICIA B. MAGSALIN, doing business under the trade name "KAREN'S
evidence, the defendant may move for dismissal on the ground that upon the facts and the TRADING," FGU INSURANCE CORPORATION, GODOFREDO GARCIA, CONCORDIA
law the plaintiff has shown no right to relief. If his motion is denied, he shall have the right to GARCIA, and REYNALDO BAETIONG, Respondents.
present evidence. If the motion is granted but on appeal the order of dismissal was reversed
he shall be deemed to have waived the right to present evidence."
DECISION

The Court has previously explained the nature of a demurrer to evidence in the case of
BRION, J.:
Celino v. Heirs of Alejo and Teresa Santiago 18 as follows:

We resolve the petition for review on certiorari1 filed by Shimizu Philippines Contractors, Inc.
"A demurrer to evidence is a motion to dismiss on the ground of insufficiency of evidence and
(petitioner) to challenge the twin resolutions of the Court of Appeals (CA)2 in CA-G.R. CV No.
is presented after the plaintiff rests his case. It is an objection by one of the parties in an
83096 which dismissed the appeal of the petitioner on the ground of lack of jurisdiction 3 and
action, to the effect that the evidence which his adversary produced is insufficient in point of
denied the petitioner’s subsequent motion for reconsideration. 4 The appeal in CA-G.R. CV
law, whether true or not, to make out a case or sustain the issue. The evidence contemplated
No. 83096 had sought to nullify the December 16, 2003 order 5 of the Regional Trial Court
by the rule on demurrer is that which pertains to the merits of the case."
(RTC) dismissing the petitioner’s complaint for sum of money and damages on the ground
of non prosequitur.
In passing upon the sufficiency of the evidence raised in a demurrer, the court is merely
required to ascertain whether there is competent or sufficient proof to sustain the
The Antecedents
judgment.19 Being considered a motion to dismiss, thus, a demurrer to evidence must clearly
be filed before the court renders its judgment.

109
The antecedent facts of the petition before us are not disputed. In June 2003, Baetiong filed his answer to the third-party complaint. He denied any personal
knowledge about the surety and performance bonds for the subcontract with Magsalin. 7 Of
the three (3) persons named as third-party defendants, only Baetiong filed an answer to the
An alleged breach of contract was the initial event that led to the present petition. The
third-party complaint; the officer’s returns on the summons to the Garcias state that both
petitioner claims that one Leticia Magsalin, doing business as "Karen’s Trading," had
could not be located at their given addresses. Incidentally, the petitioner claims, and Baetiong
breached their subcontract agreement for the supply, delivery, installation, and finishing of
does not dispute, that it was not served with a copy of Baetiong’s answer. The petitioner now
parquet tiles for certain floors in the petitioner’s Makati City condominium project called "The
argues before us that FGU Insurance, which is the plaintiff in the third-party complaint, had
Regency at Salcedo." The breach triggered the agreement’s termination. When Magsalin
failed to exert efforts to serve summons on the Garcias. It suggests that a motion to serve
also refused to return the petitioner’s unliquidated advance payment and to account for other
summons by publication should have been filed for this purpose. The petitioner also asserts
monetary liabilities despite demand, the petitioner sent a notice to respondent FGU Insurance
that the RTC should have scheduled a hearing to determine the status of the summons to the
Corporation (FGU Insurance) demanding damages pursuant to the surety and performance
third-party defendants.8
bonds the former had issued for the subcontract.

The Order Of Dismissal

On April 30, 2002, the petitioner filed a complaint docketed as Civil Case No. 02-488 against
both Magsalin and FGU Insurance. It was raffled to Branch 61 of the RTC of Makati City. The
complaint sought Two Million Three Hundred Twenty-Nine Thousand One Hundred Twenty
Four Pesos and Sixty Centavos (₱2,329,124.60) as actual damages for the breach of
contract.
With the above procedural events presented by both parties as the only backdrop, on
December 16, 2003 the RTC issued a tersely worded order 9 dismissing Civil Case No. 02-
488. For clarity, we quote the dismissal order in full:

FGU Insurance was duly served with summons. With respect to Magsalin, however, the ORDER
corresponding officer’s return declared that both she and "Karen’s Trading" could not be
located at their given addresses, and that despite further efforts, their new addresses could
For failure of [petitioner] to prosecute, the case is hereby DISMISSED.
not be determined.

SO ORDERED.
In August 2002, FGU Insurance filed a motion to dismiss the complaint. The petitioner filed its
opposition to the motion. The motion to dismiss was denied as well as the ensuing motion for
reconsideration, and FGU Insurance was obliged to file an answer. The RTC denied the petitioner’s motion for reconsideration, 10 prompting the latter to elevate
its case to the CA via a Rule 41 petition for review.11
In October 2002, in an effort to assist the RTC in acquiring jurisdiction over Magsalin, the
petitioner filed a motion for leave to serve summons on respondent Magsalin by way of The Ruling of the Appellate Court
publication. In January 2003, the petitioner filed its reply to FGU Insurance’s answer.
FGU Insurance moved for the dismissal of the appeal on the ground of lack of jurisdiction. It
In February 2003, FGU Insurance filed a motion for leave of court to file a third-party argued that the appeal raised a pure question of law as it did not dispute the proceedings
complaint. Attached to the motion was the subject complaint, 6 with Reynaldo Baetiong, before the issuance of the December 16, 2003 dismissal order.
Godofredo Garcia and Concordia Garcia named as third-party defendants. FGU Insurance
claims that the three had executed counter-guaranties over the surety and performance
The petitioner, on the other hand, insisted that it had raised questions of fact in the
bonds it executed for the subcontract with Magsalin and, hence, should be held jointly and
appeal.12 Thus -
severally liable in the event it is held liable in Civil Case No. 02-488.

The RTC admitted the third-party complaint and denied the motion to serve summons by
publication on the ground that the action against respondent Magsalin was in personam.
In May 2003, the RTC issued a notice setting the case for hearing on June 20, 2003. FGU
Insurance filed a motion to cancel the hearing on the ground that the third-party defendants
had not yet filed their answer. The motion was granted.
While, the instant appeal does not involve the merits of the case, the same
involves questions of fact based on the records of the case. It must be emphasized that
the lower court’s dismissal of the case based on alleged failure to prosecute on the part of
plaintiff-appellant was too sudden and precipitate. This being the case, the facts [sic] to be
determined is whether based on the records of the case, was there a definite inaction on the
part of plaintiff-appellant? A careful examination of all pleadings filed as well as the orders of

110
the lower court vis-à-vis the rules should now be made in order to determine whether there
was indeed a "failure to prosecute" on the part of plaintiff-appellant[.] 13 (emphases supplied)
The CA agreed with FGU Insurance and dismissed the appeal, and denied as well the
subsequent motion for reconsideration. 14 The petitioner thus filed the present petition for
review on certiorari.
The Present Petition
The petitioner pleads five (5) grounds to reverse the CA’s resolutions and to reinstate Civil
Case No. 02-488. In an effort perhaps to make sense of the dismissal of the case
(considering that the trial court had not stated the facts that justify it), the petitioner draws this
Court’s attention to certain facts and issues that we find to be of little materiality to the
disposition of this petition:
Grounds/ Statement of Matters Involved
I. The Appellate Court has jurisdiction to determine the merits of the Appeal as the
matters therein involve both questions of law and fact.
II. The lower court erred in declaring that petitioner failed to prosecute the case
despite the fact that petitioner never received a copy of the Answer of Third-party
defendant-respondent Reynaldo Baetiong.
III. The lower court erred in declaring that petitioner failed to prosecute the case
despite the fact that there is no joinder of indispensable parties and issues yet
because defendant-respondent Leticia B. Magsalin as well as third-party
defendant-respondents Godofredo and Concordia Garcia’s whereabouts were
unknown, hence no service yet on them of the copy of the summons and complaint
with annexes[.]
IV. The lower court erred in declaring that Petitioner failed to prosecute the case
despite the fact that it was party respondent FGU which caused the cancellation of
the hearing.
V. It is evident that the lower court’s dismissal of the case is a clear denial of due
process.15
In our Resolution dated February 13, 2006,16 we required the respondents to comment. FGU
Insurance’s comment17 alleges that the present petition is "fatally defective" for being
unaccompanied by material portions of the record. It reiterates that the appeal in CA-G.R. CV
No. 83096 was improperly filed under Rule 41 and should have been filed directly with this
Court under Rule 45 of the Rules of Court. Baetiong, in his comment, 18 asserts that the
dismissal of the appeal was in accord with existing laws and applicable jurisprudence.
The Ruling Of The Court
Preliminarily, we resolve the claim that the petition violates Rule 45 of the Rules of Court on
the attachment of material portions of the record. We note that FGU Insurance fails to
discharge its burden of proving this claim by not specifying the material portions of the record
the petitioner should have attached to the petition. At any rate, after a careful perusal of the
petition and its attachments, the Court finds the petition to be sufficient. In other words, we
can judiciously assess and resolve the present petition on the basis of its allegations and
attachments.
After due consideration, we resolve to grant the petition on the ground that the December 16,
2003 dismissal order is null and void for violation of due process. We are also convinced that
the appeal to challenge the dismissal order was properly filed under Rule 41 of the Rules of
Court. We further find that the dismissal of Civil Case No. 02-488 for failure to prosecute is
not supported by facts, as shown by the records of the case.
The Dismissal Order is Void
The nullity of the dismissal order is patent on its face. It simply states its conclusion that the
case should be dismissed for non prosequitur, a legal conclusion, but does not state the facts
on which this conclusion is based.
Dismissals of actions for failure of the plaintiff to prosecute is authorized under Section 3,
Rule 17 of the Rules of Court. A plain examination of the December 16, 2003 dismissal order
shows that it is an unqualified order and, as such, is deemed to be a dismissal with prejudice.
"Dismissals of actions (under Section 3) which do not expressly state whether they are with
or without prejudice are held to be with prejudice[.]" 19 As a prejudicial dismissal, the
December 16, 2003 dismissal order is also deemed to be a judgment on the merits so that
the petitioner’s complaint in Civil Case No. 02-488 can no longer be refiled on the principle
of res judicata. Procedurally, when a complaint is dismissed for failure to prosecute and the
dismissal is unqualified, the dismissal has the effect of an adjudication on the merits.20
As an adjudication on the merits, it is imperative that the dismissal order conform with Section
1, Rule 36 of the Rules of Court on the writing of valid judgments and final orders. The rule
states:
RULE 36
Judgments, Final Orders and Entry Thereof
Section 1. Rendition of judgments and final orders. — A judgment or final order determining
the merits of the case shall be in writing personally and directly prepared by the judge, stating
111
clearly and distinctly the facts and the law on which it is based, signed by him, and filed with
the clerk of the court.
The December 16, 2003 dismissal order clearly violates this rule for its failure to disclose
how and why the petitioner failed to prosecute its complaint. Thus, neither the petitioner nor
the reviewing court is able to know the particular facts that had prompted the prejudicial
dismissal. Had the petitioner perhaps failed to appear at a scheduled trial date? Had it failed
to take appropriate actions for the active prosecution of its complaint for an unreasonable
length of time? Had it failed to comply with the rules or any order of the trial court? The
December 16, 2003 dismissal order does not say.
We have in the past admonished trial courts against issuing dismissal orders similar to that
appealed in CA-G.R. CV No. 83096. A trial court should always specify the reasons for a
complaint’s dismissal so that on appeal, the reviewing court can readily determine the prima
facie justification for the dismissal.21 A decision that does not clearly and distinctly state the
facts and the law on which it is based leaves the parties in the dark and is especially
prejudicial to the losing party who is unable to point the assigned error in seeking a review by
a higher tribunal.22
We thus agree with the petitioner that the dismissal of Civil Case No. 02-488 constituted a
denial of due process. Elementary due process demands that the parties to a litigation be
given information on how the case was decided, as well as an explanation of the factual and
legal reasons that led to the conclusions of the court. 23 Where the reasons are absent, a
decision (such as the December 16, 2003 dismissal order) has absolutely nothing to support
it and is thus a nullity.24
For this same reason, we are not moved by respondent FGU Insurance’s statement that the
disposition of the present petition must be limited to the issue of whether the CA had correctly
dismissed the appeal in CA-G.R. CV No. 83096. 25 This statement implies that we cannot
properly look into the validity of the December 16, 2003 dismissal order in this Rule 45
petition. A void decision, however, is open to collateral attack. While we note that the validity
of the dismissal order with respect to Section 1, Rule 36 of the Rules of Court was never
raised by the petitioner as an issue in the present petition, the Supreme Court is vested with
ample authority to review an unassigned error if it finds that consideration and resolution are
indispensable or necessary in arriving at a just decision in an appeal. 26 In this case, the
interests of substantial justice warrant the review of an obviously void dismissal order.
The appeal was properly filed
under Rule 41 of the Rules of Court
While the nullity of the December 16, 2003 dismissal order constitutes the ratio decidendi for
this petition, we nevertheless rule on the contention that the appeal was erroneously filed. 27
In dismissing the appeal, the CA relied on the premise that since the facts presented in the
petitioner’s appeal were admitted and not disputed, the appeal must thereby raise a pure
question of law proscribed in an ordinary appeal. This premise was effectively the legal
principle articulated in the case of Joaquin v. Navarro,28 cited by the CA in its April 8, 2005
resolution. Respondent FGU Insurance thus contends that the proper remedy to assail the
dismissal of Civil Case No. 02-488 was an appeal filed under Rule 45 of the Rules of Court.
The reliance on Joaquin is misplaced as it is based on the conclusion the appellate court
made in its April 8, 2005 resolution — i.e., that the pleading of undisputed facts is equivalent
to a prohibited appeal. The reliance is inattentive to both the averments of the subject appeal
and to the text of the cited case. The operative legal principle in Joaquin is this: "[W]here a
case is submitted upon an agreement of facts, or where all the facts are stated in the
judgment and the issue is the correctness of the conclusions drawn therefrom, the question
is one of law which [is properly subject to the review of this Court.]" 29 In this case, as already
pointed out above, the facts supposedly supporting the trial court’s conclusion of non
prosequitur were not stated in the judgment. This defeats the application of Joaquin.
At any rate, we believe that the filing of the appeal in CA-G.R. CV No. 83096 under Rule 41
of the Rules of Court was proper as it necessarily involved questions of fact.
An authority material to this case is the case of Olave v. Mistas.30 Directly addressed
in Olave was the CA’s jurisdiction over an ordinary appeal supported by undisputed facts and
seeking the review of a prejudicial order of dismissal. In this case, a complaint was filed
before the RTC in Lipa City to nullify an instrument titled "Affidavit of Adjudication By The
Heirs of the Estate of Deceased Persons With Sale." The RTC dismissed the complaint, with
prejudice, after the plaintiffs had moved to set the case for pre-trial only after more than three
(3) months had lapsed from the service and filing of the last pleading in the case. The
plaintiffs thereafter went to the CA on a Rule 41 petition, contending, among others, that the
trial court had erred and abused its discretion. As in the present case, the defendants moved
to dismiss the appeal on the ground that the issues therein were legal; they pointed out that
the circumstances on record were admitted.31 They argued that the proper remedy was a
petition for review on certiorari under Rule 45 of the Rules of Court.
The CA denied the motion and entertained the appeal. It rendered a decision reinstating the
complaint on the ground that there was no evidence on record that the plaintiffs had
deliberately failed to prosecute their complaint.
When the case was elevated to this court on a Rule 45 petition, we squarely addressed the
propriety of the plaintiffs’ appeal. Though mindful that the circumstances pleaded in the
appeal were all admitted, we categorically held in Olave that the appeal was correctly filed.
We observed that despite undisputed records, the CA, in its review, still had to respond to
factual questions such as the length of time between the plaintiffs’ receipt of the last pleading
filed up to the time they moved to set the case for pre-trial, whether there had been any
manifest intention on the plaintiffs’ part not to comply with the Rules of Court, and whether
the plaintiffs’ counsel was negligent.
112
Significantly, in Olave, we agreed with the plaintiffs that among the critical factual questions In this case, the parties’ own narrations of facts demonstrate the petitioner’s willingness to
was whether, based on the records, there had been factual basis for the dismissal of the prosecute its complaint.1âwphi1 Indeed, neither respondents FGU Insurance nor Baetiong
subject complaint. This same question is particularly significant in the present case given that was able to point to any specific act committed by the petitioner to justify the dismissal of their
the order appealed from in CA-G.R. CV No. 83096 does not even indicate the factual case.
basis for the dismissal of Civil Case No. 02-488. Due to the absence of any stated factual
basis, and despite the admissions of the parties, the CA, in CA-G.R. CV No. 83096, still had
While it is discretionary on the trial court to dismiss cases, dismissals of actions should be
to delve into the records to check whether facts to justify the prejudicial dismissal even exist.
made with care. The repressive or restraining effect of the rule amounting to adjudication
Since the dismissal of Civil Case No. 02-488 appears to have been rendered  motu
upon the merits may cut short a case even before it is fully litigated; a ruling of dismissal may
proprio (as the December 16, 2003 dismissal order does not state if it was issued upon the
forever bar a litigant from pursuing judicial relief under the same cause of action. Hence,
respondents’ or the trial court’s motion), the facts to be determined by the CA should include
sound discretion demands vigilance in duly recognizing the circumstances surrounding the
the grounds specified under Section 3, Rule 17 of the Rules of Court. A court could only issue
case to the end that technicality shall not prevail over substantial justice.36
a motu proprio dismissal pursuant to the grounds mentioned in this rule and for lack of
jurisdiction over the subject matter.32 These grounds are matters of facts. Thus, given that the
dismissal order does not disclose its factual basis, we are thus persuaded that the petitioner This court is thus of the opinion that the dismissal of Civil Case No. 02-488 is not warranted.
had properly filed its appeal from the dismissal order under Rule 41 of the Rules of Court. Neither facts, law or jurisprudence supports the RTC’s finding of failure to prosecute on the
part of the petitioner.
The Dismissal of Civil Case No. 02-488 is not Supported by the Facts of the Case
Wherefore, premises considered, the instant petition is Granted. The resolutions of the Court
of Appeals dated April 8, 2005 and October 4, 2005 are REVERSED and  SET ASIDE. The
We also find that the dismissal of Civil Case No. 02-488 is not warranted. Based on available
order dated December 16, 2003 of the Regional Trial Court, Branch 61, Makati City, in Civil
records and on the averments of the parties, the following events were chronologically
Case No. 02-488 is declared NULL and VOID, and the petitioner’s complaint therein is
proximate to the dismissal of Civil Case No. 02-488: (a) on March 24, 2003, the court
ordered REINSTATED for further proceedings. No costs.
admitted FGU Insurance’s third-party complaint; (b) the trial court cancelled the June 20,
2003 hearing upon FGU Insurance’s motion; and (c) on June 16, 2003, Baetiong filed
his Answer to the third-party complaint but did not serve it upon the petitioner. SO ORDERED.

None of these events square with the grounds specified by Section 3, Rule 17 of the Rules of G.R. No. 199687
Court for the motu proprio dismissal of a case for failure to prosecute. These grounds are as
follows:
PACIFIC REHOUSE CORPORATION, Petitioners,
vs.
(a) Failure of the plaintiff, without justifiable reasons, to appear on the date of the COURT OF APPEALS and EXPORT AND INDUSTRY BANK, INC., Respondents.
presentation of his evidence in chief;
x-----------------------x
(b) Failure of the plaintiff to prosecute his action for an unreasonable length of time;
G.R. No. 201537
(c) Failure of the plaintiff to comply with the Rules of Court; or
PACIFIC REHOUSE CORPORATION, PACIFIC CONCORDE CORPORATION, MIZPAH
(d) Failure of the plaintiff to obey any order of the court. HOLDINGS, INC., FORUM HOLDINGS CORPORATION and EAST ASIA OIL COMPANY,
INC., Petitioners,
vs.
In our view, the developments in the present case do not satisfy the stringent standards set in
EXPORT AND INDUSTRY BANK, INC., Respondent.
law and jurisprudence for a non prosequitur.33 The fundamental test for non prosequitur is
whether, under the circumstances, the plaintiff is chargeable with want of due diligence in
failing to proceed with reasonable promptitude. 34 There must be unwillingness on the part of DECISION
the plaintiff to prosecute.35
REYES, J.:

113
On the scales of justice precariously lie the right of a prevailing party to his victor's cup, no
more, no less; and the right of a separate entity from being dragged by the ball and chain of
the vanquished party.
The facts of this case as garnered from the Decision 1 dated April 26, 2012 of the Court of
Appeals (CA) in CA-G.R. SP No. 120979 are as follows:
We trace the roots of this case to a complaint instituted with the Makati City Regional Trial
Court (RTC), Branch 66, against EIB Securities Inc. (E-Securities) for unauthorized sale of
32,180,000 DMCI shares of private respondents Pacific Rehouse Corporation, Pacific
Concorde Corporation, Mizpah Holdings, Inc., Forum Holdings Corporation, and East Asia Oil
Company, Inc. In its October 18, 2005 Resolution, the RTC rendered judgment on the
pleadings. The fallo reads:
WHEREFORE, premises considered, judgment is hereby rendered directing the defendant
[E-Securities] to return the plaintiffs’ [private respondents herein] 32,180,000 DMCI
shares, as of judicial demand.
On the other hand, plaintiffs are directed to reimburse the defendant the amount of
[P]10,942,200.00, representing the buy back price of the 60,790,000 KPP shares of stocks at
[P]0.18 per share.
SO ORDERED. x x x
The Resolution was ultimately affirmed by the Supreme Court and attained finality.
When the Writ of Execution was returned unsatisfied, private respondents moved for the
issuance of an alias writ of execution to hold Export and Industry Bank, Inc. liable for the
judgment obligation as E- Securities is "a wholly-owned controlled and dominated subsidiary
of Export and Industry Bank, Inc., and is[,] thus[,] a mere alter ego and business conduit of
the latter. E-Securities opposed the motion[,] arguing that it has a corporate personality that
is separate and distinct from petitioner. On July 27, 2011, private respondents filed their (1)
Reply attaching for the first time a sworn statement executed by Atty. Ramon F. Aviado, Jr.,
the former corporate secretary of petitioner and E-Securities, to support their alter ego theory;
and (2) Ex-Parte Manifestation alleging service of copies of the Writ of Execution and Motion
for Alias Writ of Execution on petitioner.
On July 29, 2011, the RTC concluded that E-Securities is a mere business conduit or alter
ego of petitioner, the dominant parent corporation, which justifies piercing of the veil of
corporate fiction. The trial court brushed aside E-Securities’ claim of denial of due process on
petitioner as "xxx case records show that notices regarding these proceedings had been
tendered to the latter, which refused to even receive them. Clearly, [petitioner] had been
sufficiently put on notice and afforded the chance to give its side[,] yet[,] it chose not
to." Thus, the RTC disposed as follows:
WHEREFORE, xxx,
Let an Alias Writ of Execution be issued relative to the above-entitled case and pursuant to
the RESOLUTION dated October 18, 2005 and to this Order directing defendant EIB
Securities, Inc., and/or Export and Industry Bank, Inc., to fully comply therewith.
The Branch Sheriff of this Court is directed to cause the immediate implementation of the
given alias writ in accordance with the Order of Execution to be issued anew by the Branch
Clerk of Court.
SO ORDERED. x x x
With this development, petitioner filed an Omnibus Motion (Ex Abundanti Cautela)
questioning the alias writ because it was not impleaded as a party to the case. The RTC
denied the motion in its Order dated August 26, 2011 and directed the garnishment of
P1,465,799,000.00, the total amount of the 32,180,000 DMCI shares at P45.55 per share,
against petitioner and/or E-Securities.2 x x x. (Citations omitted)
The Regional Trial Court (RTC) ratiocinated that being one and the same entity in the eyes of
the law, the service of summons upon EIB Securities, Inc. (E-Securities) has bestowed
jurisdiction over both the parent and wholly-owned subsidiary. 3 The RTC cited the cases
of Sps. Violago v. BA Finance Corp. et al.4 and Arcilla v. Court of Appeals 5 where the doctrine
of piercing the veil of corporate fiction was applied notwithstanding that the affected
corporation was not brought to the court as a party. Thus, the RTC held in its Order 6 dated
August 26, 2011:
WHEREFORE, premises considered, the Motion for Reconsideration with Motion to Inhibit
filed by defendant EIB Securities, Inc. is denied for lack of merit. The Omnibus Motion Ex
Abundanti C[au]tela is likewise denied for lack of merit.
Pursuant to Rule 39, Section 10 (a) of the Rules of Court, the Branch Clerk of Court or the
Branch Sheriff of this Court is hereby directed to acquire 32,180,000 DMCI shares of stock
from the Philippine Stock Exchange at the cost of EIB Securities, Inc. and Export and
Industry Bank[,] Inc. and to deliver the same to the plaintiffs pursuant to this Court’s
Resolution dated October 18, 2005.
To implement this Order, let GARNISHMENT issue against ALL THOSE HOLDING
MONEYS, PROPERTIES OF ANY AND ALL KINDS, REAL OR PERSONAL BELONGING
TO OR OWNED BY DEFENDANT EIB SECURITIES, INC. AND/OR EXPORT AND
INDUSTRY BANK[,] INC., [sic] in such amount as may be sufficient to acquire 32,180,000
DMCI shares of stock to the Philippine Stock Exchange, based on the closing price of
Php45.55 per share of DMCI shares as of August 1, 2011, the date of the issuance of the
Alias Writ of Execution, or the total amount of PhP1,465,799,000.00.
114
SO ORDERED.7
CA-G.R. SP No. 120979
Export and Industry Bank, Inc. (Export Bank) filed before the CA a petition for certiorari with
prayer for the issuance of a temporary restraining order (TRO) 8 seeking the nullification of the
RTC Order dated August 26, 2011 for having been made with grave abuse of discretion
amounting to lack or excess of jurisdiction. In its petition, Export Bank made reference to
several rulings9 of the Court upholding the separate and distinct personality of a corporation.
In a Resolution10 dated September 2, 2011, the CA issued a 60-day TRO enjoining the
execution of the Orders of the RTC dated July 29, 2011 and August 26, 2011, which granted
the issuance of an alias writ of execution and ordered the garnishment of the properties of E-
Securities and/or Export Bank. The CA also set a hearing to determine the necessity of
issuing a writ of injunction, viz:
Considering the amount ordered to be garnished from petitioner Export and Industry Bank,
Inc. and the fiduciary duty of the banking institution to the public, there is grave and
irreparable injury that may be caused to [Export Bank] if the assailed Orders are immediately
implemented. We thus resolve to GRANT the Temporary Restraining Order effective for a
period of sixty (60) days from notice, restraining/enjoining the Sheriff of the Regional Trial
Court of Makati City or his deputies, agents, representatives or any person acting in their
behalf from executing the July 29, 2011 and August 26, 2011 Orders. [Export Bank] is
DIRECTED to POST a bond in the sum of fifty million pesos (P50,000,000.00) within ten (10)
days from notice, to answer for any damage which private respondents may suffer by reason
of this Temporary Restraining Order; otherwise, the same shall automatically become
ineffective.
Let the HEARING be set on September 27, 2011 at 2:00 in the afternoon at the Paras Hall,
Main Building, Court of Appeals, to determine the necessity of issuing a writ of preliminary
injunction. The Division Clerk of Court is DIRECTED to notify the parties and their counsel
with dispatch.
xxxx
SO ORDERED.11
Pacific Rehouse Corporation (Pacific Rehouse), Pacific Concorde Corporation, Mizpah
Holdings, Inc., Forum Holdings Corporation and East Asia Oil Company, Inc. (petitioners)
filed their Comment12 to Export Bank’s petition and proffered that the cases mentioned by
Export Bank are inapplicable owing to their clearly different factual antecedents. The
petitioners alleged that unlike the other cases, there are circumstances peculiar only to E-
Securities and Export Bank such as: 499,995 out of 500,000 outstanding shares of stocks of
E-Securities are owned by Export Bank; 13 Export Bank had actual knowledge of the subject
matter of litigation as the lawyers who represented E-Securities are also lawyers of Export
Bank.14 As an alter ego, there is no need for a finding of fraud or illegality before the doctrine
of piercing the veil of corporate fiction can be applied.15
After oral arguments before the CA, the parties were directed to file their respective
memoranda.16
On October 25, 2011, the CA issued a Resolution, 17 granting Export Bank’s application for
the issuance of a writ of preliminary injunction, viz:
WHEREFORE, finding [Export Bank’s] application for the ancillary injunctive relief to be
meritorious, and it further appearing that there is urgency and necessity in restraining the
same, a Writ of Preliminary Injunction is hereby GRANTED and ISSUED against the Sheriff
of the Regional Trial Court of Makati City, Branch 66, or his deputies, agents, representatives
or any person acting in their behalf from executing the July 29, 2011 and August 26, 2011
Orders. Public respondents are ordered to CEASE and DESIST from enforcing and
implementing the subject orders until further notice from this Court.18
The petitioners filed a Manifestation 19 and Supplemental Manifestation20 challenging the
above-quoted CA resolution for lack of concurrence of Associate Justice Socorro B. Inting
(Justice Inting), who was then on official leave.
On December 22, 2011, the CA, through a Special Division of Five, issued another
Resolution,21 which reiterated the Resolution dated October 25, 2011 granting the issuance of
a writ of preliminary injunction.
On January 2, 2012, one of the petitioners herein, Pacific Rehouse filed before the Court a
petition for certiorari22 under Rule 65, docketed as G.R. No. 199687, demonstrating its
objection to the Resolutions dated October 25, 2011 and December 22, 2011 of the CA.
On April 26, 2012, the CA rendered the assailed Decision 23 on the merits of the case,
granting Export Bank’s petition. The CA disposed of the case in this wise:
We GRANT the petition. The Orders dated July 29, 2011 and August 26, 2011 of the Makati
City Regional Trial Court, Branch 66, insofar as [Export Bank] is concerned, are NULLIFIED.
The Writ of Preliminary Injunction (WPI) is rendered PERMANENT.
SO ORDERED.24
The CA explained that the alter ego theory cannot be sustained because ownership of a
subsidiary by the parent company is not enough justification to pierce the veil of corporate
fiction. There must be proof, apart from mere ownership, that Export Bank exploited or
misused the corporate fiction of E-Securities. The existence of interlocking incorporators,
115
directors and officers between the two corporations is not a conclusive indication that they
are one and the same.25 The records also do not show that Export Bank has complete control
over the business policies, affairs and/or transactions of E-Securities. It was solely E-
Securities that contracted the obligation in furtherance of its legitimate corporate purpose;
thus, any fall out must be confined within its limited liability. 26
The petitioners, without filing a motion for reconsideration, filed a Petition for Review 27 under
Rule 45 docketed as G.R. No. 201537,28 impugning the Decision dated April 26, 2012 of the
CA.
Considering that G.R. Nos. 199687 and 201537 originated from the same set of facts,
involved the same parties and raised intertwined issues, the cases were then consolidated
per Resolution dated September 26, 2012, for a thorough discussion of the merits of the
case.
Issues
In précis, the issues for resolution of this Court are the following:
In G.R. No. 199687,
WHETHER THE CA COMMITTED GRAVE ABUSE OF DISCRETION IN GRANTING
EXPORT BANK’S APPLICATION FOR THE ISSUANCE OF A WRIT OF PRELIMINARY
INJUNCTION.
In G.R. No. 201537,
I.
WHETHER THE CA COMMITTED A REVERSIBLE ERROR IN RULING THAT EXPORT
BANK MAY NOT BE HELD LIABLE FOR A FINAL AND EXECUTORY JUDGMENT
AGAINST E-SECURITIES IN AN ALIAS WRIT OF EXECUTION BY PIERCING ITS VEIL OF
CORPORATE FICTION; and
II.
WHETHER THE CA COMMITTED A REVERSIBLE ERROR IN RULING THAT THE ALTER
EGO DOCTRINE IS NOT APPLICABLE.
Ruling of the Court
G.R. No. 199687
The Resolution dated October 25, 2011 was initially challenged by the petitioners in its
Manifestation29 and Supplemental Manifestation30 due to the lack of concurrence of Justice
Inting, which according to the petitioners rendered the aforesaid resolution null and void.
To the petitioners’ mind, Section 5, Rule VI of the Internal Rules of the CA (IRCA) 31 requires
the submission of the resolution granting an application for TRO or preliminary injunction to
the absent Justice/s when they report back to work for ratification, modification or recall, such
that when the absent Justice/s do not agree with the issuance of the TRO or preliminary
injunction, the resolution is recalled and without force and effect. 32 Since the resolution which
granted the application for preliminary injunction appears short of the required number of
consensus, owing to the absence of Justice Inting’s signature, the petitioners contest the
validity of said resolution.
The petitioners also impugn the CA Resolution dated December 22, 2011 rendered by the
Special Division of Five. The petitioners maintain that pursuant to Batas Pambansa Bilang
12933 and the IRCA,34 such division is created only when the three members of a division
cannot reach a unanimous vote in deciding a case on the merits. 35 Furthermore, for petitioner
Pacific Rehouse, this Resolution is likewise infirm because the purpose of the formation of
the Special Division of Five is to decide the case on the merits and not to grant Export Bank’s
application for a writ of preliminary injunction.36
We hold that the opposition to the CA resolutions is already nugatory because the CA has
already rendered its Decision on April 16, 2012, which disposed of the substantial merits of
the case. Consequently, the petitioners’ concern that the Special Division of Five should have
been created to resolve cases on the merits has already been addressed by the rendition of
the CA Decision dated April 16, 2012.
"It is well-settled that courts will not determine questions that have become moot and
academic because there is no longer any justiciable controversy to speak of. The judgment
will not serve any useful purpose or have any practical legal effect because, in the nature of
things, it cannot be enforced." 37 In such cases, there is no actual substantial relief to which
the petitioners would be entitled to and which would be negated by the dismissal of the
petition.38 Thus, it would be futile and pointless to address the issue in G.R. No. 199687 as
this has become moot and academic.
G.R. No. 201537
The petitioners bewail that the certified true copy of the CA Decision dated April 26, 2012
along with its Certification at the bottom portion were not signed by the Chairperson 39 of the
Special Division of Five; thus, it is not binding upon the parties. 40 The petitioners quoted this
Court’s pronouncement in Limkaichong v. Commission on Elections,41 that a decision must
not only be signed by the Justices who took part in the deliberation, but must also be
promulgated to be considered a Decision. 42
116
A cursory glance on a copy of the signature page 43 of the decision attached to the records
would show that, indeed, the same was not signed by CA Associate Justice Magdangal M.
De Leon. However, it must be noted that the CA, on May 7, 2012, issued a
Resolution44 explaining that due to inadvertence, copies of the decision not bearing the
signature of the Chairperson were sent to the parties on the same day of promulgation. The
CA directed the Division Clerk of Court to furnish the parties with copies of the signature page
with the Chairperson’s signature. Consequently, as the mistake was immediately clarified and
remedied by the CA, the lack of the Chairperson’s signature on the copies sent to the parties
has already become a non-issue.
It must be emphasized that the instant cases sprang from Pacific Rehouse Corporation v.
EIB Securities, Inc.45 which was decided by this Court last October 13, 2010. Significantly,
Export Bank was not impleaded in said case but was unexpectedly included during the
execution stage, in addition to E-Securities, against whom the writ of execution may be
enforced in the Order46 dated July 29, 2011 of the RTC. In including Export Bank, the RTC
considered E-Securities as a mere business conduit of Export Bank. 47 Thus, one of the
arguments interposed by the latter in its Opposition 48 that it was never impleaded as a
defendant was simply set aside.
This action by the RTC begs the question: may the RTC enforce the alias writ of execution
against Export Bank?
The question posed before us is not novel.
The Court already ruled in Kukan International Corporation v. Reyes49 that compliance with
the recognized modes of acquisition of jurisdiction cannot be dispensed with even in piercing
the veil of corporate fiction, to wit:
The principle of piercing the veil of corporate fiction, and the resulting treatment of two related
corporations as one and the same juridical person with respect to a given transaction, is
basically applied only to determine established liability; it is not available to confer on the
court a jurisdiction it has not acquired, in the first place, over a party not impleaded in a case.
Elsewise put, a corporation not impleaded in a suit cannot be subject to the court’s
process of piercing the veil of its corporate fiction. In that situation, the court has not
acquired jurisdiction over the corporation and, hence, any proceedings taken against that
corporation and its property would infringe on its right to due process. Aguedo Agbayani, a
recognized authority on Commercial Law, stated as much:
"23. Piercing the veil of corporate entity applies to determination of liability not of jurisdiction.
xxx
This is so because the doctrine of piercing the veil of corporate fiction comes to
play only during the trial of the case after the court has already acquired jurisdiction
over the corporation. Hence, before this doctrine can be applied, based on the evidence
presented, it is imperative that the court must first have jurisdiction over the corporation. x x
x"50 (Citations omitted)
From the preceding, it is therefore correct to say that the court must first and foremost
acquire jurisdiction over the parties; and only then would the parties be allowed to present
evidence for and/or against piercing the veil of corporate fiction. If the court has no jurisdiction
over the corporation, it follows that the court has no business in piercing its veil of corporate
fiction because such action offends the corporation’s right to due process.
"Jurisdiction over the defendant is acquired either upon a valid service of summons or the
defendant’s voluntary appearance in court. When the defendant does not voluntarily submit
to the court’s jurisdiction or when there is no valid service of summons, ‘any judgment of the
court which has no jurisdiction over the person of the defendant is null and void.’" 51 "The
defendant must be properly apprised of a pending action against him and assured of the
opportunity to present his defenses to the suit. Proper service of summons is used to protect
one’s right to due process."52
As Export Bank was neither served with summons, nor has it voluntarily appeared before the
court, the judgment sought to be enforced against E-Securities cannot be made against its
parent company, Export Bank. Export Bank has consistently disputed the RTC jurisdiction,
commencing from its filing of an Omnibus Motion 53 by way of special appearance during the
execution stage until the filing of its Comment54 before the Court wherein it was pleaded that
"RTC [of] Makati[, Branch] 66 never acquired jurisdiction over Export [B]ank. Export [B]ank
was not pleaded as a party in this case. It was never served with summons by nor did it
voluntarily appear before RTC [of] Makati[, Branch] 66 so as to be subjected to the latter’s
jurisdiction."55
In dispensing with the requirement of service of summons or voluntary appearance of Export
Bank, the RTC applied the cases of Violago and Arcilla. The RTC concluded that in these
cases, the Court decided that the doctrine of piercing the veil of corporate personality can be
applied even when one of the affected parties has not been brought to the Court as a party. 56
A closer perusal on the rulings of this Court in Violago and Arcilla, however, reveals that the
RTC misinterpreted the doctrines on these cases. We agree with the CA that these cases are
not congruent to the case at bar. In Violago, Spouses Pedro and Florencia Violago (Spouses
Violago) filed a third party complaint against their cousin Avelino Violago (Avelino), who is
also the president of Violago Motor Sales Corporation (VMSC), for selling them a vehicle
which was already sold to someone else. VMSC was not impleaded as a third party
defendant. Avelino contended that he was not a party to the transaction personally, but
VMSC. The Court ruled that "[t]he fact that VMSC was not included as defendant in [Spouses
Violago’s] third party complaint does not preclude recovery by Spouses Violago from Avelino;
neither would such non-inclusion constitute a bar to the application of the piercing-of-the-
corporate-veil doctrine."57 It should be pointed out that although VMSC was not made a third
party defendant, the person who was found liable in Violago, Avelino, was properly made a
third party defendant in the first instance. The present case could not be any more poles
117
apart from Violago, because Export Bank, the parent company which was sought to be
accountable for the judgment against E-Securities, is not a party to the main case.
In Arcilla, meanwhile, Calvin Arcilla (Arcilla) obtained a loan in the name of Csar Marine
Resources, Inc. (CMRI) from Emilio Rodulfo. A complaint was then filed against Arcilla for
non-payment of the loan. CMRI was not impleaded as a defendant. The trial court eventually
ordered Arcilla to pay the judgment creditor for such loan. Arcilla argued that he is not
personally liable for the adjudged award because the same constitutes a corporate liability
which cannot even bind the corporation as the latter is not a party to the collection suit. The
Court made the succeeding observations:
[B]y no stretch of even the most fertile imagination may one be able to conclude that the
challenged Amended Decision directed Csar Marine Resources, Inc. to pay the amounts
adjudged. By its clear and unequivocal language, it is the petitioner who was declared liable
therefor and consequently made to pay. x x x, even if We are to assume  arguendo that the
obligation was incurred in the name of the corporation, the petitioner would still be personally
liable therefor because for all legal intents and purposes, he and the corporation are one and
the same. Csar Marine Resources, Inc. is nothing more than his business conduit and alter
ego. The fiction of a separate juridical personality conferred upon such corporation by law
should be disregarded. x x x.58 (Citation omitted)
It is important to bear in mind that although CMRI was not a party to the suit, it was Arcilla,
the defendant himself who was found ultimately liable for the judgment award. CMRI and its
properties were left untouched from the main case, not only because of the application of the
alter ego doctrine, but also because it was never made a party to that case.
The disparity between the instant case and those of Violago and Arcilla is that in said cases,
although the corporations were not impleaded as defendant, the persons made liable in the
end were already parties thereto since the inception of the main case. Consequently, it
cannot be said that the Court had, in the absence of fraud and/or bad faith, applied the
doctrine of piercing the veil of corporate fiction to make a non-party liable. In short, liabilities
attached only to those who are parties. None of the non-party corporations (VMSC and
CMRI) were made liable for the judgment award against Avelino and Arcilla.
The Alter Ego Doctrine is not applicable
"The question of whether one corporation is merely an alter ego of another is purely one of
fact. So is the question of whether a corporation is a paper company, a sham or subterfuge
or whether petitioner adduced the requisite quantum of evidence warranting the piercing of
the veil of respondent’s corporate entity." 59
As a rule, the parties may raise only questions of law under Rule 45, because the Supreme
Court is not a trier of facts. Generally, we are not duty-bound to analyze again and weigh the
evidence introduced in and considered by the tribunals below. 60 However, justice for all is of
primordial importance that the Court will not think twice of reviewing the facts, more so
because the RTC and the CA arrived in contradicting conclusions.
"It is a fundamental principle of corporation law that a corporation is an entity separate and
distinct from its stockholders and from other corporations to which it may be connected. But,
this separate and distinct personality of a corporation is merely a fiction created by law for
convenience and to promote justice. So, when the notion of separate juridical personality is
used to defeat public convenience, justify wrong, protect fraud or defend crime, or is used as
a device to defeat the labor laws, this separate personality of the corporation may be
disregarded or the veil of corporate fiction pierced. This is true likewise when the corporation
is merely an adjunct, a business conduit or an alter ego of another corporation." 61
"Where one corporation is so organized and controlled and its affairs are conducted so that it
is, in fact, a mere instrumentality or adjunct of the other, the fiction of the corporate entity of
the "instrumentality" may be disregarded. The control necessary to invoke the rule is not
majority or even complete stock control but such domination of finances, policies and
practices that the controlled corporation has, so to speak, no separate mind, will or existence
of its own, and is but a conduit for its principal. It must be kept in mind that the control must
be shown to have been exercised at the time the acts complained of took place. Moreover,
the control and breach of duty must proximately cause the injury or unjust loss for which the
complaint is made."62
The Court has laid down a three-pronged control test to establish when the alter ego doctrine
should be operative:
(1) Control, not mere majority or complete stock control, but complete domination,
not only of finances but of policy and business practice in respect to the transaction
attacked so that the corporate entity as to this transaction had at the time no
separate mind, will or existence of its own;
(2) Such control must have been used by the defendant to commit fraud or wrong,
to perpetuate the violation of a statutory or other positive legal duty, or dishonest
and unjust act in contravention of plaintiff’s legal right; and
(3) The aforesaid control and breach of duty must [have] proximately caused the
injury or unjust loss complained of.63
The absence of any one of these elements prevents ‘piercing the corporate veil’ in applying
the ‘instrumentality’ or ‘alter ego’ doctrine, the courts are concerned with reality and not form,
with how the corporation operated and the individual defendant’s relationship to that
operation.64 Hence, all three elements should concur for the alter ego doctrine to be
applicable.
118
In its decision, the RTC maintained that the subsequently enumerated factors betray the true
nature of E-Securities as a mere alter ego of Export Bank:
1. Defendant EIB Securities, a subsidiary corporation 100% totally owned by
Export and Industry Bank, Inc., was only re-activated by the latter in 2002-2003
and the continuance of its operations was geared for no other reason tha[n] to
serve as the securities brokerage arm of said parent corporation bank;
2. It was the parent corporation bank that provided and infused the fresh working
cash capital needed by defendant EIB Securities which prior thereto was non-
operating and severely cash-strapped. [This was so attested by the then Corporate
Secretary of both corporations, Atty. Ramon Aviado, Jr., in his submitted Sworn
Statement which is deemed allowable "evidence on motion", under Sec. 7, Rule
133, Rules on Evidence; Bravo vs. Borja, 134 SCRA 438];
3. For effective control purposes, defendant EIB Securities and its operating office
and staff are all housed in Exportbank Plaza located at Chino Roces cor. Sen. Gil
Puyat Avenue, Makati City which is the same building w[h]ere the bank parent
corporation has its headquarters;
4. As shown in the General Information Sheets annually filed with the S.E.C. from
2002 to 2011, both defendant EIB Securities and the bank parent corporation
share common key Directors and corporate officers. Three of the 5-man Board of
Directors of defendant EIB Securities are Directors of the bank parent corporation,
namely: Jaime C. Gonzales, Pauline C. Tan and Dionisio E. Carpio, Jr. In addition,
Mr. Gonzales is Chairman of the Board of both corporations, whereas Pauline C.
Tan is concurrently President/General Manager of EIB Securities, and Dionisio
Carpio Jr., is not only director of the bank, but also Director Treasurer of defendant
EIB Securities;
5. As admitted by the bank parent corporation in its consolidated audited financial
statements[,] EIB Securities is a CONTROLLED SUBSIDIARY, and for which
reason its financial condition and results of operations are included and integrated
as part of the group’s consolidated financial statements, examined and audited by
the same auditing firm;
6. The lawyers handling the suits and legal matters of defendant EIB Securities are
the same lawyers in the Legal Department of the bank parent
corporation.1âwphi1 The Court notes that in [the] above-entitled suit, the lawyers
who at the start represented said defendant EIB Securities and filed all the
pleadings and filings in its behalf are also the lawyers in the Legal Services
Division of the bank parent corporation. They are Attys. Emmanuel A. Silva,
Leonardo C. Bool, Riva Khristine E. Maala and Ma. Esmeralda R. Cunanan, all of
whom worked at the Legal Services Division of Export Industry Bank located at
36/F, Exportbank Plaza, Don Chino Roces Avenue, cor. Sen. Gil Puyat Avenue,
Makati City.
7. Finally[,] and this is very significant, the control and sway that the bank parent
corporation held over defendant EIB Securities was prevailing in June 2004 when
the very act complained of in plaintiff’s Complaint took place, namely the
unauthorized disposal of the 32,180,000 DMCI shares of stock. Being then under
the direction and control of the bank parent corporation, the unauthorized disposal
of those shares by defendant EIB Securities is attributable to, and the responsibility
of the former.65
All the foregoing circumstances, with the exception of the admitted stock ownership, were
however not properly pleaded and proved in accordance with the Rules of Court. 66 These
were merely raised by the petitioners for the first time in their Motion for Issuance of an Alias
Writ of Execution67 and Reply,68 which the Court cannot consider. "Whether the separate
personality of the corporation should be pierced hinges on obtaining facts appropriately
pleaded or proved."69
Albeit the RTC bore emphasis on the alleged control exercised by Export Bank upon its
subsidiary E-Securities, "[c]ontrol, by itself, does not mean that the controlled corporation is a
mere instrumentality or a business conduit of the mother company. Even control over the
financial and operational concerns of a subsidiary company does not by itself call for
disregarding its corporate fiction. There must be a perpetuation of fraud behind the control or
at least a fraudulent or illegal purpose behind the control in order to justify piercing the veil of
corporate fiction. Such fraudulent intent is lacking in this case." 70
Moreover, there was nothing on record demonstrative of Export Bank’s wrongful intent in
setting up a subsidiary, E-Securities. If used to perform legitimate functions, a subsidiary’s
separate existence shall be respected, and the liability of the parent corporation as well as
the subsidiary will be confined to those arising in their respective business. 71 To justify
treating the sole stockholder or holding company as responsible, it is not enough that the
subsidiary is so organized and controlled as to make it "merely an instrumentality, conduit or
adjunct" of its stockholders. It must further appear that to recognize their separate entities
would aid in the consummation of a wrong. 72
As established in the main case73 and reiterated by the CA, the subject 32,180,000 DMCI
shares which E-Securities is obliged to return to the petitioners were originally bought at an
average price of P0.38 per share and were sold for an average price of P0.24 per share. The
proceeds were then used to buy back 61,100,000 KPP shares earlier sold by E-Securities.
Quite unexpectedly however, the total amount of these DMCI shares ballooned to
P1,465,799,000.00.74 It must be taken into account that this unexpected turnabout did not
inure to the benefit of E-Securities, much less Export Bank.
Furthermore, ownership by Export Bank of a great majority or all of stocks of E-Securities and
the existence of interlocking directorates may serve as badges of control, but ownership of
119
another corporation, per se, without proof of actuality of the other conditions are insufficient to
establish an alter ego relationship or connection between the two corporations, which will
justify the setting aside of the cover of corporate fiction. The Court has declared that "mere
ownership by a single stockholder or by another corporation of all or nearly all of the capital
stock of a corporation is not of itself sufficient ground for disregarding the separate corporate
personality." The Court has likewise ruled that the "existence of interlocking directors,
corporate officers and shareholders is not enough justification to pierce the veil of corporate
fiction in the absence of fraud or other public policy considerations." 75
While the courts have been granted the colossal authority to wield the sword which pierces
through the veil of corporate fiction, concomitant to the exercise of this power, is the
responsibility to uphold the doctrine of separate entity, when rightly so; as it has for so long
encouraged businessmen to enter into economic endeavors fraught with risks and where only
a few dared to venture.
Hence, any application of the doctrine of piercing the corporate veil should be done with
caution. A court should be mindful of the milieu where it is to be applied. It must be certain
that the corporate fiction was misused to such an extent that injustice, fraud, or crime was
committed against another, in disregard of its rights. The wrongdoing must be clearly and
convincingly established; it cannot be presumed. Otherwise, an injustice that was never
unintended may result from an erroneous application. 76
In closing, we understand that the petitioners are disgruntled at the turnout of this case-that
they cannot enforce the award due them on its entirety; however, the Court cannot supplant a
remedy which is not sanctioned by our laws and prescribed rules.
WHEREFORE, the petition in G.R. No. 199687 is hereby DISMISSED for having been
rendered moot and academic. The petition in G.R. No. 201537, meanwhile, is hereby
DENIED for lack of merit. Consequently, the Decision dated April 26, 2012 of the Court of
Appeals in CA-G.R. SP No. 120979 is AFFIRMED.
SO ORDERED.
BIENVENIDO L. REYES
Associate Justice
G.R. No. 178899               November 15, 2010
PHILIPPINE BUSINESS BANK, Petitioner,
vs.
FELIPE CHUA, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari 1 filed by Philippine Business Bank (PBB)
challenging the decision of the Court of Appeals (CA) in CA-G.R. SP No. 94883 dated
February 8, 2007,2 insofar as it overturned the Regional Trial Court’s (RTC’s) order dated
December 16, 2005 declaring the finality of its Partial Summary Judgment and granting the
issuance of a writ of execution against respondent Felipe Chua (respondent Chua). PBB also
seeks to overturn the resolution of the CA dated July 18, 2007, which denied its motion for
reconsideration.
FACTUAL ANTECEDENTS
From the records, the following facts are not in dispute.
On March 22, 2002, Tomas Tan (Tan), a stockholder and director/Treasurer of CST
Enterprises, Inc. (CST), filed a derivative suit for the Declaration of Unenforceability of
Promissory Notes and Mortgage, Nullity of Secretary’s Certificate, Injunction, Damages with
Prayer for the Issuance of Temporary Restraining Order/Writ of Preliminary Injunction against
PBB, Francis Lee, Alfredo Yao, Rodulfo Besinga, Stephen Taala, Rose Robles, Henry
Ramos, Yu Heng, Mabuhay Sugar Central, Inc., Nancy Chan, Henry Chan, John Dennis
Chua, Jaime Soriano, Voltaire Uychutin, Peter Salud, Edgar Lo, respondent Felipe Chua, and
John Does before the Makati City Regional Trial Court.3
In Tan’s amended complaint dated January 9, 2003, he alleged that sometime in February
2001, before he went abroad for medical treatment, he turned over to respondent Chua, a
director and the President of CST, the original copies of Transfer Certificate of Title Nos.
124275 and 157581, titles to lands owned by, and registered in the name of, CST. In January
2002, the respondent informed him that CST’s properties had been fraudulently used as
collateral for loans allegedly taken out in CST’s name, but without proper authority from CST
stockholders and/or the Board of Directors.4
From his investigation, Tan discovered that a certain Atty. Jaime Soriano had issued a
Secretary’s certificate, which stated that John Dennis Chua was authorized during a duly
constituted CST board meeting to open a bank account and obtain credit facilities under the
name of CST with PBB. This Secretary’s Certificate also authorized John Dennis Chua to use
CST’s properties as security for these loans. 5 Using this Secretary’s Certificate, John Dennis
Chua took out loans with PBB in the total amount of Ninety-One Million One Hundred
Thousand Pesos (₱91,100,000.00),6 and used CST properties as collateral. 7 Respondent
Chua signed as co-maker with John Dennis Chua, who signed both as the representative of
CST, as well as in his personal capacity, on six promissory notes to PBB to evidence parts of
this loan.8
When PBB threatened to foreclose the mortgage on these properties after CST
defaulted,9 Tan filed the present complaint, essentially arguing that the loans/promissory
120
notes and mortgage made out in CST’s name are unenforceable against it, since they were
entered into by persons who were unauthorized to bind the company.10
In its Amended Answer, 11 PBB claimed that the loans to CST, as well as the corresponding
mortgage over CST properties, were all valid and binding since the loan applications and
documents accomplished by John Dennis Chua were supported by the duly accomplished
secretary’s certificate, which authorized him to obtain credit facilities in behalf of CST. In
addition, the original copies of the titles to the properties were offered to PBB as collaterals.
PBB’s Amended Answer also included a cross-claim against respondent Chua, demanding
payment of the promissory notes he signed as co-maker with John Dennis Chua. 12
13
In respondent Chua’s Answer to the Cross-Claim of PBB,  he claimed that he never applied
for a loan with the PBB. He further denied authorizing John Dennis Chua to apply for any
loans in CST’s name, or to use CST properties as security for any loans. 14 Nevertheless, he
admitted that he signed, as co-maker, six promissory notes covering the loans obtained by
John Dennis Chua with PBB. According to respondent Chua, he executed these promissory
notes after the loans had already been consummated, "in a sincere effort to persuade John
Dennis Chua to pay off the unauthorized loan and retrieve from cross-claimant PBB the CST
titles."15
PBB subsequently filed a Motion for Partial Summary Judgment based on Section 1, Rule 35
of the 1997 Rules of Civil Procedure (Rules), claiming that since respondent Chua already
admitted the execution of the promissory notes in favor of PBB amounting to Seventy Five
Million Pesos (₱75,000,000.00), 16 insofar as its cross-claim against him was concerned, there
was no genuine issue on any material fact on the issue of his liability to PBB. PBB argued
that although respondent Chua claimed that he signed the promissory notes merely to
persuade John Dennis Chua to pay off his loan to PBB, he was still liable as an
accommodation party under Section 29 of the Negotiable Instruments Law.17
THE RTC’S PARTIAL SUMMARY JUDGMENT
Acting on PBB’s motion, the RTC issued a partial summary judgment on PBB’s cross-claim
on July 27, 2005, finding respondent Chua liable as a signatory to the promissory notes
amounting to Seventy-Five Million Pesos (₱75,000,000.00). The RTC reasoned that by
signing as a co-maker, he obligated himself to pay the amount indicated in the promissory
notes, even if he received no consideration in return. Thus, the RTC ordered him to pay PBB
the amount of ₱75,000,000.00, plus interests and costs.18
In its order dated December 16, 2005, the RTC resolved respondent Chua’s Notice of
Appeal, as well as PBB’s Motion to Disallow Appeal and to Issue Execution. Citing Section 1,
Rule 41 of the Rules, the RTC ruled that respondent Chua could not file a notice of appeal.
Instead, he should have filed a special civil action for certiorari under Rule 65 of the Rules.
However, since the period for filing a certiorari petition had already lapsed without respondent
filing any petition, the partial summary judgment had become final and executory. Thus, it
ordered the issuance of a writ of execution for the satisfaction of the partial summary
judgment in favor of PBB.19
On December 21, 2005, the RTC issued an order appointing Renato Flora as the special
sheriff to implement the writ of execution. In line with this order, Renato Flora, on December
23, 2005, issued a Notice of Levy and Sale on Execution of Personal Properties, addressed
to respondent Chua. He proceeded with the execution sale, and on December 28, 2005, he
issued a certificate of sale over respondent Chua’s 900 shares of stock in CST in favor of
PBB. He also posted a notice of sheriff’s sale on January 10, 2006 over respondent Chua’s
five parcels of land located in Las Pinas, Pasay City, and Muntinlupa. 20
THE COURT OF APPEALS DECISION
Respondent Chua filed a petition for certiorari and mandamus with the CA to challenge: (a)
the December 16, 2005 order, granting PBB’s motion to disallow his appeal; (b) the
December 21, 2005 order, granting PBB’s motion to appoint Renato Flora as special sheriff
to implement the writ of execution; and (c) the February 16, 2006 order denying his motion for
reconsideration and to suspend execution. In essence, respondent Chua alleged that the
RTC acted with grave abuse of discretion in disallowing his appeal of the partial summary
judgment, and in issuing a writ of execution. Significantly, respondent Chua did not question
the propriety of the partial summary judgment.
On February 8, 2007, the CA issued the assailed decision, partly affirming the RTC order
dated December 16, 2005 on the matter of the disallowance of respondent Chua’s appeal.
The CA held that respondent Chua could not appeal the partial summary judgment while the
main case remained pending, in keeping with Section 1(g), Rule 41 of the Rules.
However, the CA held that the RTC committed grave abuse of discretion when it issued the
writ of execution against respondent Chua. As found by the CA, the RTC grievously erred
when it held that the partial judgment had become final and executory when respondent
Chua failed to avail of the proper remedy of certiorari within the 60 day reglementary period
under Rule 65. Since a partial summary judgment does not finally dispose of the action, it is
merely an interlocutory, not a final, order. Thus, it could not attain finality.
The CA further noted that certiorari is an independent action and not part of the appeal
proceedings, and failure to file a certiorari petition would not result in the finality of the
judgment or final order. The RTC, thus, committed grave abuse of discretion amounting to
lack of jurisdiction when it granted the issuance of a writ of execution, and the corresponding
writ of execution issued by the court a quo, as well as the subsequent implementing
proceedings, were void.
THE PETITION
PBB submits two issues for our resolution:
121
 I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED AN
ERROR IN APPLYING JURISPRUDENCE NOT ON ALL FOURS [WITH] THE
FACTUAL BACKDROP OF THE CASE.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED AN
ERROR IN RECALLING AND SETTING ASIDE THE WRIT OF EXECUTION AND
ALL THE PROCEEDINGS TAKEN FOR ITS IMPLEMENTATION ON THE
WRONG NOTION THAT THE PARTIAL SUMMARY JUDGMENT HAS NOT
BECOME FINAL AND EXECUTORY.
THE RULING
We DENY the petition for being unmeritorious.
Nature of Partial Summary Judgment
PBB’s motion for partial summary judgment against respondent Chua was based on Section
1, Rule 35 of the Rules, which provides:
Section 1. Summary Judgment for claimant. - A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the
pleading in answer thereto has been served, move with supporting affidavits, depositions or
admissions for a summary judgment in his favor upon all or any part thereof.
A summary judgment, or accelerated judgment, is a procedural technique to promptly
dispose of cases where the facts appear undisputed and certain from the pleadings,
depositions, admissions and affidavits on record, or for weeding out sham claims or defenses
at an early stage of the litigation to avoid the expense and loss of time involved in a
trial.21 When the pleadings on file show that there are no genuine issues of fact to be tried,
the Rules allow a party to obtain immediate relief by way of summary judgment, that is, when
the facts are not in dispute, the court is allowed to decide the case summarily by applying the
law to the material facts.22
The rendition by the court of a summary judgment does not always result in the full
adjudication of all the issues raised in a case. For these instances, Section 4, Rule 35 of the
Rules provides:
Section 4. Case not fully adjudicated on motion. – If on motion under this Rule, judgment is
not rendered upon the whole case or for all the reliefs sought and a trial is necessary, the
court at the hearing of the motion, by examining the pleadings and the evidence before it and
by interrogating counsel shall ascertain what material facts exist without substantial
controversy and what are actually and in good faith controverted. It shall thereupon make an
order specifying the facts that appear without substantial controversy, including the extent to
which the amount of damages or other relief is not in controversy, and directing such further
proceedings in the action as are just. The facts so specified shall be deemed established,
and the trial shall be conducted on the controverted facts accordingly.
This is what is referred to as a partial summary judgment. A careful reading of this section
reveals that a partial summary judgment was never intended to be considered a "final
judgment," as it does not "[put] an end to an action at law by declaring that the plaintiff either
has or has not entitled himself to recover the remedy he sues for."23 The Rules provide for a
partial summary judgment as a means to simplify the trial process by allowing the court to
focus the trial only on the assailed facts, considering as established those facts which are not
in dispute.
After this sifting process, the court is instructed to issue an order, the partial summary
judgment, which specifies the disputed facts that have to be settled in the course of trial. In
this way, the partial summary judgment is more akin to a record of pre-trial, 24 an interlocutory
order, rather than a final judgment.
The differences between a "final judgment" and an "interlocutory order" are well-established.
We said in Denso (Phils.) Inc. v. Intermediate Appellate Court25 that:
[A] final judgment or order is one that finally disposes of a case, leaving nothing more to be
done by the Court in respect thereto, e.g., an adjudication on the merits which, on the basis
of the evidence presented at the trial, declares categorically what the rights and obligations of
the parties are and which party is in the right; or a judgment or order that dismisses an action
on the ground, for instance, of res judicata or prescription. Once rendered, the task of the
Court is ended, as far as deciding the controversy or determining the rights and liabilities of
the litigants is concerned. Nothing more remains to be done by the Court except to await the
parties' next move . . . and ultimately, of course, to cause the execution of the judgment once
it becomes "final" or, to use the established and more distinctive term, "final and executory."
xxxx
Conversely, an order that does not finally dispose of the case, and does not end the Court's
task of adjudicating the parties' contentions and determining their rights and liabilities as
regards each other, but obviously indicates that other things remain to be done by the Court,
is "interlocutory", e.g., an order denying a motion to dismiss under Rule 16 of the Rules x x x
Unlike a 'final judgment or order, which is appealable, as above pointed out, an 'interlocutory
order may not be questioned on appeal except only as part of an appeal that may eventually
be taken from the final judgment rendered in the case.26
122
Bearing in mind these differences, there can be no doubt that the partial summary judgment
envisioned by the Rules is an interlocutory order that was never meant to be treated
separately from the main case. As we explained in Guevarra v. Court of Appeals: 27
It will be noted that the judgment in question is a "partial summary judgment." It was rendered
only with respect to the private respondents’ first and second causes of action alleged in their
complaint. It was not intended to cover the other prayers in the said complaint, nor the
supplementary counterclaim filed by the petitioners against the private respondents, nor the
third-party complaint filed by the petitioners against the Security Bank and Trust Company. A
partial summary judgment "is not a final or appealable judgment." (Moran, Vol. 2, 1970
Edition, p. 189, citing several cases.) "It is merely a pre-trial adjudication that said issues in
the case shall be deemed established for the trial of the case." (Francisco, Rules of Court,
Vol. II, p. 429.)
xxxx
The partial summary judgment rendered by the trial court being merely interlocutory and not
‘a final judgment’, it is puerile to discuss whether the same became final and executory due to
the alleged failure to appeal said judgment within the supposed period of appeal. What the
rules contemplate is that the appeal from the partial summary judgment shall be taken
together with the judgment that may be rendered in the entire case after a trial is conducted
on the material facts on which a substantial controversy exists. This is on the assumption that
the partial summary judgment was validly rendered, which, as shown above, is not true in the
case at bar.28
29
We reiterated this ruling in the cases of Province of Pangasinan v. Court of Appeals  and
Government Service Insurance System v. Philippine Village Hotel, Inc. 30
In the Guevarra case, the Court held that the summary judgment rendered by the lower court
was in truth a partial summary judgment because it failed to resolve the other causes of
action in the complaint, as well as the counterclaim and the third party complaint raised by
the defendants.
Contrary to PBB’s assertions, the same could be said for the case presently before us. The
partial summary judgment in question resolved only the cross-claim made by PBB against its
co-defendant, respondent Chua, based on the latter’s admission that he signed promissory
notes as a co-maker in favor of PBB. This is obvious from the dispositive portion of the partial
summary judgment, quoted below for convenient reference:
WHEREFORE, a partial summary judgment is hereby rendered on the cross-claim of cross-
defendant Philippine Business Bank against cross-defendant Felipe Chua, ordering the latter
to pay the former as follows:
1. The amount of Ten Million (₱10,000,000.00) Pesos, representing the value of
the Promissory Note dated April 17, 2001, plus interest thereof at the rate of 16%
from April 12, 2002, until fully paid;
2. The amount of Twelve Million (₱12,000,000.00) Pesos, representing the value of
the Promissory Note dated April 5, 2001, plus interest thereon at the rate of 17%
from April 1, 2002, until fully paid;
3. The amount of Twenty Three Million (₱23,000,000.00) Pesos, representing the
value of the Promissory Note dated April 25, 2001, plus interest thereon at the rate
of 16% from April 19, 2002, until fully paid;

4. The amount of Eight Million (₱8,000,000.00) Pesos, representing the value of

Applicability of Guevarra
the Promissory Note dated June 20, 2001, plus interest thereon at the rate of 17%
from June 20, 2001, until fully paid;
PBB asserts that our pronouncement in the cases of Guevarra, Province of Pangasinan, and
Government Service Insurance System cannot be applied to the present case because these
5. The amount of Seven Million (₱7,000,000.00) Pesos, representing the value of
cases involve factual circumstances that are completely different from the facts before us.
the Promissory Note dated June 22, 2001, plus interest thereon at the rate of 17%
While the partial summary judgments in the cited cases decided only some of the causes of
from June 17, 2002, until fully paid;
action presented, leaving other issues unresolved, PBB insists that as far as its cross-claim
against respondent Chua is concerned, the court a quo’s partial summary judgment is a full
and complete adjudication because the award is for the whole claim. 31 According to PBB, 6. The amount of Fifteen Million (₱15,000,000.00) Pesos, representing the value of
whatever the court decides as regards the main case, this will not affect the liability of the Promissory Note dated June 28, 2001, plus interest thereon at the rate of 17%
respondent Chua as a solidary debtor in the promissory notes, since the creditor can proceed from June 24, 2002, until fully paid;
against any of the solidary debtors. In other words, no substantial controversy exists between
PBB and respondent Chua, and there is nothing more to be done on this particular issue.
7. Plus cost of suit.

We do not agree with PBB’s submission.

SO ORDERED. 32

123
Clearly, this partial summary judgment did not dispose of the case as the main issues raised of any separate issue or of any number of claims, cross-claims, counterclaims, third-party
in plaintiff Tomas Tan’s complaint, i.e., the validity of the secretary’s certificate which complaints or issues.
authorized John Dennis Chua to take out loans, and execute promissory notes and
mortgages for and on behalf of CST, as well as the validity of the resultant promissory notes
That the trial court did not do so belies PBB’s contention.
and mortgage executed for and on behalf of CST, remained unresolved.

Chua shares common interest with co-defendant- debtors
Still, PBB insists that the partial summary judgment is a final judgment as regards PBB’s
cross-claim against respondent Chua since respondent Chua’s liability will not be affected by
the resolution of the issues of the main case.
It has also not escaped our attention that PBB, in its Motion to Disallow Appeal and to Issue
Execution Against Cross-Defendant Felipe Chua, 33 already admitted that the partial summary
judgment is not a judgment or final order that completely disposes of the case. In its own
words:
xxxx

On its face, the promissory notes were executed by John Dennis Chua in two capacities – as
3. However, the remedy availed of by [respondent Chua] is patently erroneous
the alleged representative of CST, and in his personal capacity. Thus, while there can be no
because under Rule 41 Section 1 of the Rules of Court, an appeal may be taken
question as to respondent Chua’s liability to PBB (since he already admitted to executing
only from a judgment or final order that completely disposes the case;
these promissory notes as a co-maker), still, the court a quo’s findings on: (a) whether John
Dennis Chua was properly authorized to sign these promissory notes on behalf of CST, and
(b) whether John Dennis Chua actually signed these promissory notes in his personal 4. The judgment rendered by [the RTC] dated July 27, 2005 is only a partial
capacity, would certainly have the effect of determining whether respondent Chua has the summary judgment against [respondent Chua], on the crossclaim of cross-claimant
right to go after CST and/or John Dennis Chua for reimbursement on any payment he makes Philippine Business Bank. The main case which involves the claim of plaintiffs
on these promissory notes, pursuant to Article 1217 of the Civil Code, which states: against the principal defendants is still pending and has not yet been adjudged by
[the RTC].34
Article 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two
or more solidary debtors offer to pay, the creditor may choose which offer to accept. Thus, PBB cannot now be allowed to deny the interlocutory nature of the partial summary
judgment.
He who made the payment may claim from his co-debtors only the share which corresponds
to each, with the interest for the payment already made. If the payment is made before the Certiorari not the proper remedy
debt is due, no interest for the intervening period may be demanded.
PBB also maintains that the partial summary judgment attained finality when respondent
When one of the solidary debtors cannot, because of his insolvency, reimburse his share to Chua failed to file a certiorari petition, citing the last paragraph of Section 1, Rule 41 of the
the debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion Rules as basis. We quote:
to the debt of each.
Section 1. Subject of appeal. – An appeal maybe taken from a judgment or final order that
In other words, PBB has a common cause of action against respondent Chua with his alleged completely disposes of the case, or of a particular matter therein when declared by these
co-debtors, John Dennis Chua and CST, it would simply not be proper to treat respondent Rules to be appealable.
Chua separately from his co-debtors.
No appeal may be taken from:
Moreover, we cannot turn a blind eye to the clear intention of the trial court in rendering a
partial summary judgment. Had the trial court truly intended to treat PBB’s cross-claim
xxxx
against respondent Chua separately, it could easily have ordered a separate trial via Section
2, Rule 31 of the Rules, which states:
(g) A judgment or final order for or against one or more of several parties or in separate
claims, counterclaims, cross-claims and third party complaints, while the main case is
Section 2. Separate trials. – The court, in furtherance of convenience or to avoid prejudice,
pending, unless the court allows an appeal therefrom;
may order a separate trial of any claim, cross-claim, counterclaim, or third-party complaint, or

124
xxxx
In all the above instances where the judgment, or final order is not appealable, the aggrieved
party may file an appropriate special civil action under Rule 65.
Contrary to PBB’s contention, however, certiorari was not the proper recourse for respondent
Chua. The propriety of the summary judgment may be corrected only on appeal or other
direct review, not a petition for certiorari, 35 since it imputes error on the lower court’s
judgment. It is well-settled that certiorari is not available to correct errors of procedure or
mistakes in the judge’s findings and conclusions of law and fact. 36 As we explained in Apostol
v. Court of Appeals:37
Another recognized reason of the law in permitting appeal only from a final order or judgment,
and not from an interlocutory or incidental one, is to avoid multiplicity of appeals in a single
action, which must necessarily suspend the hearing and decision on the merits of the case
during the pendency of the appeal. If such appeal were allowed, the trial on the merits of the
case would necessarily be delayed for a considerable length of time, and compel the adverse
party to incur unnecessary expenses, for one of the parties may interpose as many appeals
as incidental questions may be raised by him, and interlocutory orders rendered or issued by
the lower court.
WHEREFORE, premises considered, we DENY the petition for lack of merit and AFFIRM the
Decision of the Court of Appeals in CA-G.R. SP No. 94883 dated February 8, 2007, as well
as its Resolution dated July 18, 2007. Costs against the petitioner, Philippine Business Bank.

As a legal recourse, the special civil action of certiorari is a limited form of review. The
SO ORDERED.
jurisdiction of this Court is narrow in scope; it is restricted to resolving errors of jurisdiction,
not errors of judgment. Indeed, as long as the courts below act within their jurisdiction,
alleged errors committed in the exercise of their discretion will amount to mere errors of
judgment correctable by an appeal or a petition for review.38 Home > ChanRobles Virtual Law Library > Philippine Supreme Court
Jurisprudence > 2005 Decisions > Neypes vs CA : 141524 : September 14, 2005 : J.
Corona : En Banc : Decision
In light of these findings, we affirm the CA’s ruling that the partial summary judgment is an
interlocutory order which could not become a final and executory judgment, notwithstanding
respondent Chua’s failure to file a certiorari petition to challenge the judgment. Accordingly,     
the RTC grievously erred when it issued the writ of execution against respondent Chua.

In view of this conclusion, we find it unnecessary to resolve the issue raised by respondent
Chua on the validity of the RTC’s appointment of a special sheriff for the implementation of
the execution writ.

Propriety of Summary Judgment Reserved for Appeal

 
As a final point, we note that respondent Chua has raised with this Court the issue of the
propriety of the partial summary judgment issued by the RTC. Notably, respondent Chua  
never raised this issue in his petition for certiorari before the CA. It is well settled that no
question will be entertained on appeal unless it has been raised in the proceedings EN BANC
below.39 Basic considerations of due process impel the adoption of this rule.40

 
Furthermore, this issue would be better resolved in the proper appeal, to be taken by the
parties once the court a quo has completely resolved all the issues involved in the present
case in a final judgment.1avvphi1 If we were to resolve this issue now, we would be DOMINGO NEYPES, LUZ G.R. No. 141524
preempting the CA, which has primary jurisdiction over this issue.
FAUSTINO, ROGELIO FAUSTINO,
Lastly, taking jurisdiction over this issue now would only result in multiple appeals from a
single case which concerns the same, or integrated, causes of action. As we said in Santos
LOLITO VICTORIANO, JACOB
v. People:41

125
OBANIA AND DOMINGO ' Present : OF THE PHILIPPINES AND HON.

CABACUNGAN , ANTONIO N. ROSALES, Presiding

Petitioners, DAVIDE, JR., C.J. Judge, Branch 43, Regional Trial

PUNO, Court, Roxas, Oriental Mindoro,

PANGANIBAN, Respondents . Promulgated :

QUISUMBING,
YNARES-SANTIAGO,
September 14, 2005

SANDOVAL-GUTIERREZ,
x-----------------------------------------x

CARPIO,
 

- v e r s u s' - AUSTRIA-MARTINEZ,
DECISION

CORONA,
 

CARPIO MORALES,
CORONA, J.:

CALLEJO, SR.,
 
AZCUNA,
TINGA,
CHICO-NAZARIO and Petitioners Domingo Neypes, Luz Faustino, Rogelio Faustino, Lolito Victoriano, Jacob
GARCIA, JJ. Obania and Domingo Cabacungan filed an action for annulment of judgment and titles of
land and/or reconveyance and/or reversion with preliminary injunction before the
Regional Trial Court, Branch 43, of Roxas, Oriental Mindoro, against the Bureau of
HON. COURT OF APPEALS, HEIRS
Forest Development, Bureau of Lands, Land Bank of the Philippines and the heirs of
Bernardo del Mundo, namely, Fe, Corazon, Josefa, Salvador and Carmen.
OF BERNARDO DEL MUNDO ,
 
namely : FE, CORAZON, JOSEFA,

SALVADOR and CARMEN, all In the course of the proceedings, the parties (both petitioners and respondents) filed

various motions with the trial court. Among these were: (1) the motion filed by petitioners
surnamed DEL MUNDO, LAND BANK
to declare the respondent heirs, the Bureau of Lands and the Bureau of Forest

126
Development in default and (2) the motions to dismiss filed by the respondent heirs and March 18, 1998, filed a motion for reconsideration. On July 1, 1998, the trial court issued

the Land Bank of the Philippines, respectively. another order dismissing the motion for reconsideration [3] which petitioners received on

July 22, 1998. Five days later, on July 27, 1998, petitioners filed a notice of
 
appeal [4] and paid the appeal fees on August 3, 1998.

In an order dated May 16, 1997, the trial court, presided by public respondent Judge  
Antonio N. Rosales, resolved the foregoing motions as follows: (1) the petitioners' motion

to declare respondents Bureau of Lands and Bureau of Forest Development in default On August 4, 1998, the court a quo denied the notice of appeal, holding that it was filed

was granted for their failure to file an answer, but denied as against the respondent heirs eight days late. [5] This was received by petitioners on July 31, 1998. Petitioners filed a

of del Mundo because the substituted service of summons on them was improper; (2) the motion for reconsideration but this too was denied in an order dated September 3,

Land Bank's motion to dismiss for lack of cause of action was denied because there were 1998. [6]

hypothetical admissions and matters that could be determined only after trial, and (3) the
 
motion to dismiss filed by respondent heirs of del Mundo, based on prescription, was also

denied because there were factual matters that could be determined only after trial. [1] Via a petition for certiorari and mandamus under Rule 65 of the 1997 Rules of Civil

Procedure, petitioners assailed the dismissal of the notice of appeal before the Court of
 
Appeals.

The respondent heirs filed a motion for reconsideration of the order denying their motion
 
to dismiss on the ground that the trial court could very well resolve the issue of

prescription from the bare allegations of the complaint itself without waiting for the trial In the appellate court, petitioners claimed that they had seasonably filed their notice of

proper. appeal. They argued that the 15-day reglementary period to appeal started to run only on

July 22, 1998 since this' was' the day they received the final order of the trial court
 
denying their motion for reconsideration. When they filed their notice of appeal on July

In an order [2] dated February 12, 1998, the trial court dismissed petitioners' complaint 27, 1998, only five days had elapsed and they were well within the reglementary period

on the ground that the action had already prescribed. Petitioners allegedly received a for appeal. [7]

copy of the order of dismissal on March 3, 1998 and, on the 15 th day thereafter or on

127

On September 16, 1999, the Court of Appeals (CA) dismissed the petition. It ruled that
the 15-day period to appeal should have been reckoned from March 3, 1998 or the day
they received the February 12, 1998 order dismissing their complaint. According to the
appellate court, the order was the 'final order appealable under the Rules. It held further:
 
Perforce the petitioners' tardy appeal was correctly dismissed for the
(P)erfection of an appeal within the reglementary period and in the
manner prescribed by law is jurisdictional and non-compliance with
such legal requirement is fatal and effectively renders the judgment
final and executory. [8]
 
 
Petitioners filed a motion for reconsideration of the aforementioned decision. This was
denied by the Court of Appeals on January 6, 2000.
In this present petition for review under Rule 45 of the Rules, petitioners ascribe the
following errors allegedly committed by the appellate court:
I
 
THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING
THE PETITIONERS' PETITION FOR CERTIORARI AND
MANDAMUS AND IN AFFIRMING THE ORDER OF THE HON.
JUDGE ANTONIO N. ROSALES WHICH DISMISSED THE
PETITIONERS' APPEAL IN CIVIL CASE NO. C-36 OF THE
REGIONAL TRIAL COURT, BRANCH 43, ROXAS, ORIENTAL
MINDORO, EVEN AFTER THE PETITIONERS HAD PAID THE
APPEAL DOCKET FEES.
II
 
THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN
RULING AND AFFIRMING THE DECISION OR ORDER OF THE
RESPONDENT HON. ANTONIO M. ROSALES THAT
PETITIONERS' APPEAL WAS FILED OUT OF TIME WHEN
PETITIONERS RECEIVED THE LAST OR FINAL ORDER OF THE
COURT ON JULY 22, 1998 AND FILED THEIR NOTICE OF
APPEAL ON JULY 27, 1998 AND PAID THE APPEAL DOCKET
FEE ON AUGUST 3, 1998.
 
III
 
THE HONORABLE COURT OF APPEALS FURTHER ERRED IN
RULING THAT THE WORDS 'FINAL ORDER IN SECTION 3, RULE
41, OF THE 1997 RULES OF CIVIL PROCEDURE WILL REFER TO
THE [FIRST] ORDER OF RESPONDENT JUDGE HON. ANTONIO
M. MORALES DATED FEBRUARY 12, 1998 INSTEAD OF THE
LAST AND FINAL ORDER DATED JULY 1, 1998 COPY OF WHICH
WAS RECEIVED BY PETITIONERS THROUGH COUNSEL ON
JULY 22, 1998.
IV.
THE HONORABLE COURT OF APPEALS FINALLY ERRED IN
FINDING THAT THE DECISION IN THE CASE OF DENSO, INC. V.
IAC, 148 SCRA 280, IS APPLICABLE IN THE INSTANT CASE
THEREBY IGNORING THE PECULIAR FACTS AND
CIRCUMSTANCES OF THIS CASE AND THE FACT THAT THE
SAID DECISION WAS RENDERED PRIOR TO THE ENACTMENT
OF THE 1997 RULES OF CIVIL PROCEDURE. [9]
The foregoing issues essentially revolve around the period within which petitioners
should have filed their notice of appeal.
128
First and foremost, the right to appeal is neither a natural right nor a part of due process. Based on the foregoing, an appeal should be taken within 15 days from the notice of

It is merely a statutory privilege and may be exercised only in the manner and in judgment or final order appealed from. A final judgment or order is one that finally

accordance with the provisions of law. Thus, one who seeks to avail of the right to appeal disposes of a case, leaving nothing more for the court to do with respect to it. It is an

must comply with the requirements of the Rules. Failure to do so often leads to the loss adjudication on the merits which, considering the evidence presented at the trial,

of the right to appeal. [10] The period to appeal is fixed by both statute and procedural declares categorically what the rights and obligations of the parties are; or it may be an

rules. BP 129, [11] as amended, provides: order or judgment that dismisses an action. [12]

   

Sec. 39. Appeals. ' The period for appeal from final orders, resolutions,
awards, judgments, or decisions of any court in all these cases shall As already mentioned, petitioners argue that the order of July 1, 1998 denying their
be fifteen (15) days counted from the notice of the final order,
resolution, award, judgment, or decision appealed from. Provided, motion for reconsideration should be construed as the 'final order, not the February 12,
however, that in habeas corpus cases, the period for appeal shall be
(48) forty-eight hours from the notice of judgment appealed from. x x 1998 order which dismissed their complaint. Since they received their copy of the denial
x
  of their motion for reconsideration only on July 22, 1998, the 15-day reglementary period

to appeal had not yet lapsed when they filed their notice of appeal on July 27, 1998.
 

 
Rule 41, Section 3 of the 1997 Rules of Civil Procedure states:

What therefore should be deemed as the 'final order, receipt of which triggers the start of
 
SEC. 3. Period of ordinary appeal. ― The appeal shall be taken the 15-day reglementary period to appeal 'the February 12, 1998 order dismissing the
within fifteen (15) days from the notice of the judgment or final
order appealed from. Where a record on appeal is required, the complaint or the July 1, 1998 order dismissing the MR?
appellant shall file a notice of appeal and a record on appeal within
thirty (30) days from the notice of judgment or final order.
 
The period to appeal shall be interrupted by a timely motion for new In the recent case of Quelnan v. VHF Philippines, Inc., [13] the trial court declared
trial or reconsideration. No motion for extension of time to file a
motion for new trial or reconsideration shall be allowed. (emphasis petitioner Quelnan non-suited and accordingly dismissed his complaint. Upon receipt of
supplied)
the order of dismissal, he filed an omnibus motion to set it aside. When the omnibus
 
 
motion was filed, 12 days of the 15-day period to appeal the order had lapsed. He later

on received another order, this time dismissing his omnibus motion. He then filed his

129
notice of appeal. But this was likewise dismissed ― for having been filed out of time.
The court a quo ruled that petitioner should have appealed within 15 days after the
dismissal of his complaint since this was the final order that was appealable under the
Rules. We reversed the trial court and declared that it was the denial of the motion for
reconsideration of an order of dismissal of a complaint which constituted the final
order as it was what ended the issues raised there.
 
This pronouncement was reiterated in the more recent case of Apuyan v. Haldeman et
al. [14] where we again considered the order denying petitioner Apuyan's motion for
reconsideration as the final order which finally disposed of the issues involved in the
case.
Based on the aforementioned cases, we sustain petitioners' view that the order dated
July 1, 1998 denying their motion for reconsideration was the final order contemplated in
the Rules.
We now come to the next question: if July 1, 1998 was the start of the 15-day
reglementary period to appeal, did petitioners in fact file their notice of appeal on time?
Under Rule 41, Section 3, petitioners had 15 days from notice of judgment or final
order to appeal the decision of the trial court. On the 15 th day of the original appeal period
(March 18, 1998), petitioners did not file a notice of appeal but instead opted to file a
motion for reconsideration. According to the trial court, the MR only interrupted the
running of the 15-day appeal period. [15] It ruled that petitioners, having filed their MR on
the last day of the 15-day reglementary period to appeal, had only one (1) day left to file
the notice of appeal upon receipt of the notice of denial of their MR. Petitioners, however,
argue that they were entitled under the Rules to a fresh period of 15 days from receipt of
the 'final order or the order dismissing their motion for reconsideration.
In Quelnan and Apuyan, both petitioners filed a motion for reconsideration of the decision
of the trial court. We ruled there that they only had the remaining time of the 15-day
appeal period to file the notice of appeal. We consistently applied this rule in similar
cases, [16] premised on the long-settled doctrine that the perfection of an appeal in the
manner and within the period permitted by law is not only mandatory but also
jurisdictional. [17] The rule is also founded on deep-seated considerations of public policy
and sound practice that, at risk of occasional error, the judgments and awards of courts
must become final at some definite time fixed by law. [18]
 
Prior to the passage of BP 129, Rule 41, Section 3 of the 1964 Revised Rules of Court
read:
Sec. 3. How appeal is taken. ' Appeal maybe taken by serving
upon the adverse party and filing with the trial court within
130
 thirty (30) days from notice of order or judgment, a notice of
appeal, an appeal bond, and a record on appeal. The time during
which a motion to set aside the judgment or order or for new trial has
In de la Rosa v. Court of Appeals, [24] we stated that, as a rule, periods which require
been pending shall be deducted, unless such motion fails to satisfy
the requirements of Rule 37. litigants to do certain acts must be followed unless, under exceptional circumstances, a
 
But where such motion has been filed during office hours of the last delay in the filing of an appeal may be excused on grounds of substantial justice. There,
day of the period herein provided, the appeal must be perfected
within the day following that in which the party appealing received we condoned the delay incurred by the appealing party due to strong considerations of
notice of the denial of said motion. [19] (emphasis supplied)
  fairness and justice.

 
In setting aside technical infirmities and thereby giving due course to tardy appeals, we

According to the foregoing provision, the appeal period previously consisted of 30 days. have not been oblivious to or unmindful of the extraordinary situations that merit liberal

BP 129, however, reduced this appeal period to 15 days. In the deliberations of the application of the Rules. In those situations where technicalities were dispensed with, our

Committee on Judicial Reorganization [20] that drafted BP 129, the raison d etre behind decisions were not meant to undermine the force and effectivity of the periods set by law.

the amendment was to shorten the period of appeal [21] and enhance the efficiency and But we hasten to add that in those rare cases where procedural rules were not stringently

dispensation of justice. We have since required strict observance of this reglementary applied, there always existed a clear need to prevent the commission of a grave injustice.

period of appeal. Seldom have we condoned late filing of notices of appeal, [22] and only Our judicial system and the courts have always tried to maintain a healthy balance

in very exceptional instances to better serve the ends of justice. between the strict enforcement of procedural laws and the guarantee that every litigant

be given the full opportunity for the just and proper disposition of his cause. [25]
 

The Supreme Court may promulgate procedural rules in all courts. [26] It has the sole
In National Waterworks and Sewerage Authority and Authority v. Municipality of
prerogative to amend, repeal or even establish new rules for a more simplified and
Libmanan, [23] however, we declared that appeal is an essential part of our judicial
inexpensive process, and the speedy disposition of cases. In the rules governing appeals
system and the rules of procedure should not be applied rigidly. This Court has on
to it and to the Court of Appeals, particularly Rules 42, [27] 43 [28] and 45, [29] the Court
occasion advised the lower courts to be cautious about not depriving a party of the right
allows extensions of time, based on justifiable and compelling reasons, for parties to file
to appeal and that every party litigant should be afforded the amplest opportunity for the
their appeals. These extensions may consist of 15 days or more.
proper and just disposition of his cause, free from the constraint of technicalities.
 
 

131
To standardize the appeal periods provided in the Rules and to afford litigants fair reconsideration.

opportunity to appeal their cases, the Court deems it practical to allow a fresh period of
 
15 days within which to file the notice of appeal in the Regional Trial Court, counted from

receipt of the order dismissing a motion for a new trial or motion for reconsideration. [30] Neither does this new rule run counter to the spirit of Section 39 of BP 129 which

shortened the appeal period from 30 days to 15 days to hasten the disposition of cases.
 
The original period of appeal (in this case March 3-18, 1998) remains and the

Henceforth, this 'fresh period rule shall also apply to Rule 40 governing appeals from the requirement for strict compliance still applies. The fresh period of 15 days becomes

Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from significant only when a party opts to file a motion for new trial or motion for

the Regional Trial Courts to the Court of Appeals; Rule 43 on appeals from quasi-judicial reconsideration. In this manner, the trial court which rendered the assailed decision is

agencies [31] to the Court of Appeals and Rule 45 governing appeals by certiorari to the given another opportunity to review the case and, in the process, minimize and/or rectify

Supreme Court. [32] The new rule aims to regiment or make the appeal period uniform, any error of judgment. While we aim to resolve cases with dispatch and to have

to be counted from receipt of the order denying the motion for new trial, motion for judgments of courts become final at some definite time, we likewise aspire to deliver

reconsideration (whether full or partial) or any final order or resolution. justice fairly.

 
We thus hold that petitioners seasonably filed their notice of appeal within the fresh

period of 15 days, counted from July 22, 1998 (the date of receipt of notice denying their
In this case, the new period of 15 days eradicates the confusion as to when the 15-day
motion for reconsideration). This pronouncement is not inconsistent with Rule 41, Section
appeal period should be counted ' from receipt of notice of judgment (March 3, 1998) or
3 of the Rules which states that the appeal shall be taken within 15 days from notice of
from receipt of notice of 'final order appealed from (July 22, 1998).
judgment or final order appealed from. The use of the disjunctive word 'or signifies
 
disassociation and independence of one thing from another. It should, as a rule, be

construed in the sense in which it ordinarily implies. [33] Hence, the use of 'or in the
To recapitulate, a party litigant may either file his notice of appeal within 15 days from
above provision supposes that the notice of appeal may be filed within 15 days from the
receipt of the Regional Trial Court's decision or file it within 15 days from receipt of the
notice of judgment or within 15 days from notice of the 'final order, which we already
order (the 'final order') denying his motion for new trial or motion for reconsideration.
determined to refer to the July 1, 1998 order denying the motion for a new trial or
Obviously, the new 15-day period may be availed of only if either motion is filed;

132

otherwise, the decision becomes final and executory after the lapse of the original appeal
period provided in Rule 41, Section 3.
Petitioners here filed their notice of appeal on July 27, 1998 or five days from receipt of
the order denying their motion for reconsideration on July 22, 1998. Hence, the notice of
appeal was well within the fresh appeal period of 15 days, as already discussed. [34]
We deem it unnecessary to discuss the applicability of Denso (Philippines), Inc. v.
IAC [35] since the Court of Appeals never even referred to it in its assailed decision.
WHEREFORE , the petition is hereby GRANTED and the assailed decision of the Court
of Appeals REVERSED and SET ASIDE. Accordingly, let the records of this case be
remanded to the Court of Appeals for further proceedings.
No costs.
SO ORDERED.
HIRD DIVISION
[G.R. NO. 151973 : July 23, 2009]
NATIONAL POWER CORPORATION, Petitioner, v. SPOUSES LORENZO L. LAOHOO and
VISITACION LIM-LAOHOO; and LUZ LOMUNTAD-MIEL, Respondents.
DECISION
PERALTA, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
seeking to annul and set aside the Decision 1 of the Court of Appeals (CA) dated January 25,
2002 in CA-G.R. SP No. 49383.
Petitioner National Power Corporation (NAPOCOR) is a government-owned and controlled
corporation created under Republic Act (RA) No. 6395, as amended, with the mandate to
undertake the development of hydroelectric generation of power and the production of
electricity from nuclear, geothermal and other sources, as well as the transmission of electric
power on a nationwide basis. 2 Petitioner decided to acquire an easement of right-of-way over
respondents' properties located at Barangay San Andres and Poblacion, Municipality of
Catbalogan, Samar for its proposed 350 KV LEYTE-LUZON HVDC POWER TL PROJECT.
On October 2, 1996, petitioner filed two complaints before the Regional Trial Court (RTC) of
Catbalogan, Samar, docketed as Civil Case No. 6890, 3 entitled National Power Corporation
v. Sps. Lorenzo L. Laohoo and Visitacion Lim and Civil Case No. 6891, 4 entitled National
Power Corporation v. Sps. Ernesto Miel and Luz Lomuntad. Both actions seek to acquire an
easement of right-of-way over portions of respondents' properties consisting of 3,258 square
meters for the properties of spouses Lorenzo Laohoo and Visitacion Lim-Laohoo (the
Spouses Laohoo) and 4,738 square meters for the properties of spouses Ernesto Miel and
Luz Lomuntad-Miel (the Spouses Miel).
Petitioner then filed an Urgent Ex-Parte Motion for the Issuance of a Writ of Possession 5 in
both cases.
On November 5, 1996, the Spouses Laohoo in Civil Case No. 6890 filed their Answer to the
complaint acknowledging petitioner's right to expropriate their property, but prayed for
payment of just compensation, damages and attorney's fees. 6
The RTC issued two Orders,7 both dated November 13, 1996, directing the Sheriff of the RTC
to place petitioner in possession of the premises upon deposit with the Philippine National
Bank (PNB) of the amount of P8,000,000.00, as provisional value fixed by the trial court in
Civil Case No. 6891 and the amount of P6,000,000.00, as provisional value fixed by the trial
court in Civil Case No. 6890.
On November 27, 1996, the Spouses Miel filed a Motion to Dismiss the complaint. They
alleged that petitioner could ignore their property and use another land instead. However, in
case their property was condemned, they prayed for payment for the improvements on their
land, just compensation, damages and attorney's fees.8
On January 31, 1997, petitioner filed an Urgent Joint Motion to Reduce Amount of
Report,9 praying that the provisional deposit fixed in both cases be reduced to a reasonable
amount, as determined by the trial court. During the hearing on the motion to reduce amount
of report, the Spouses Laohoo manifested their willingness to reduce the amount of
provisional deposit to P5,500,000.00. The trial court set the case for further hearing to give
the petitioner time to consider the proposal of the Spouses Laohoo. Eventually, the
133
provisional amounts of deposit were reduced to P2,500,000.00 in Civil Case No. 6890
and P3,000,000.00 in Civil Case No. 6891. Petitioner deposited the aforementioned amounts
with the PNB Catbalogan, Samar Branch. Thus, on February 28, 1997, the RTC issued an
Order10 allowing the petitioner to enter the subject properties.
On February 13, 1997, the RTC appointed three (3) commissioners, namely: Provincial
Assessor Engineer Leo N. Dacaynos, Architect Gilbert C. Cinco, and Mr. Eulalio C. Yboa for
the purpose of determining the fair and just compensation due the respondents relative to
petitioner's installation of its electric transmission lines on their properties. On April 2, 1997,
the Commissioners submitted their appraisal report 11 and recommended an amount not lower
than P1,900.00 per square meter as the fair market value of the properties in controversy.
During the hearing on April 3, 1997, respondents moved that the market value of P1,900.00
per square meter recommended by the commissioners be increased to P2,200.00 per square
meter in Civil Case No. 6890 and to P2,500.00 per square meter in Civil Case No. 6891. The
trial court set the case for further hearing to give petitioner the opportunity to be heard on the
matter. In the meantime, upon motion of the Spouses Laohoo in Civil Case No. 6890, the
RTC, on April 8, 1997, issued an Order 12 allowing them to withdraw P2,000,000.00 from the
amount deposited by petitioner at PNB. Upon a similar motion of the Spouses Miel in Civil
Case No. 6891, the RTC issued an Order 13 dated April 8, 1997 allowing the Spouses Miel to
withdraw P2,500,000.00 from the amount deposited by petitioner at PNB.
On July 2, 1997, petitioner, through Atty. Neon Cinco, filed its Comment and/or
Opposition14 to the commissioner's report. The petitioner prayed that the amount of just
compensation be based on the average of the prices as recommended by the Provincial
Appraisal Committee of the Province of Samar and as certified by the Provincial Assessor,
the average of which was much lower than the amount determined by the commissioners.
On September 15, 1997, the trial court issued two Orders 15 requiring the petitioner to pay the
amount fixed as just compensation at P2,000.00 per square meter or the total amount
of P6,616,000.00 for Civil Case No. 6890 and P9,476,000.00 for Civil Case No. 6891.
On October 2, 1997, petitioner filed Motions for Reconsideration 16 in both cases, which the
RTC denied in an Order17 dated October 14, 1997.
Petitioner filed Notices of Appeal, 18 which were dismissed by the trial court in an
Order19 dated December 10, 1997, for being filed out of time.
On March 13, 1998, the trial court issued two Orders 20 directing petitioner to deposit with PNB
the balance of the just compensation for the properties of the respondents in the amounts
of P4,116,000.00 in Civil Case No.6890 and P6,476,000.00 in Civil Case No. 6891. Petitioner
filed a Motion for Reconsideration 21 of the Orders dated December 10, 1997 and March 13,
1998, praying that its notices of appeal be admitted. The said Motion was denied in a
Resolution22 dated July 2, 1998.
On August 27, 1998, the trial court issued two separate Orders23 reiterating its previous
orders for petitioner to deposit with PNB the amounts adjudged as just compensation on or
before September 16, 1998.
During the hearing on September 29, 1998, 24 the trial court was informed by the manager of
PNB, Catbalogan, Samar Branch, that petitioner had not yet deposited the prescribed
amounts with the PNB. On October 1, 1998, the RTC directed the issuance of the writs of
execution for the enforcement of the court's judgment dated September 15, 1997, 25 on the
premise that the judgment of the RTC ordering petitioner to pay respondents the amounts
due them, as payment for their expropriated property, had become final and executory. On
October 2, 1998, the RTC issued the Writs of Execution 26 in Civil Case Nos. 6890 and 6891,
and also issued Notices of Garnishment 27 on the petitioner's accounts with the Land Bank of
the Philippines (LBP). On October 13, 1998, petitioner received copies of the RTC Orders
dated October 1, 1998.
On October 27, 1998, petitioner filed a Petition for Certiorari, Prohibition and Preliminary
Injunction with Prayer for a Temporary Restraining Order with the CA, docketed as CA-G.R.
SP No. 49383.28 In a Decision29 dated January 25, 2002, the CA dismissed the petition for
late filing. It ruled that:
It appears from the records of this case that Petitioner's Notice of Appeal was denied by
Respondent Court in an Order dated December 10, 1997, a copy of which was received by
Petitioner on December 23, 1997 (Annex "2" of Private Respondents' Consolidated
Comments on the Petition). Accordingly, pursuant to Section 4, Rule 65 of the 1997 Rules
on Civil Procedure, Petitioner had sixty (60) days from December 23, 1997 within which to
assail the Respondents Court's denial of its Notice of Appeal via Petition for certiorari as in
the present recourse. Petitioner, however, instituted the present recourse only on October 27,
1998, which is way beyond the sixty (60)-day reglementary period provided by law.
From the foregoing disquisitions, the instant petition must perforce be denied due course for
having been filed out of time.
Hence, the instant petition assigning the following errors:
THE COURT OF APPEALS' QUESTIONED DECISION DATED JANUARY 25, 2002 IS NOT
IN ACCORD WITH LAW AND APPLICABLE JURISPRUDENCE CONSIDERING THAT:
I
THE DETERMINATION OF THE AMOUNT OF JUST COMPENSATION WAS
SPECULATIVE, ARBITRARY AND DEVOID OF ANY FACTUAL OR LEGAL BASIS.
II
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THE DISMISSAL OF THE PETITION FOR CERTIORARI ON A MERE TECHNICALITY IS
CONTRARY TO THE TIME HONORED DOCTRINE THAT LITIGATION IS NOT A GAME OF
TECHNICALITIES AND THERE IS NO VESTED RIGHT IN IT BECAUSE THE GENERAL
AIM OF PROCEDURAL LAW IS TO FACILITATE THE APPLICATION OF JUSTICE TO THE
PARTY - LITIGANTS.
The petition is not meritorious.
Although the dismissal of the petition by the CA was based on the failure to timely file the
petition, such dismissal was not merely based on technicality, but on petitioner's failure to
perfect its appeal on time with the RTC.
Records show that, on September 15, 1997, the RTC, in both civil cases, issued orders
directing the petitioner to pay the amount fixed as just compensation. Petitioner, through its
counsel, received the said Orders on September 25, 1997. On October 2, 1997, petitioner
filed by registered mail, a Motion for Reconsideration of the said Orders which the RTC
denied in an Order dated October 14, 1997.
On October 30, 1997, petitioner filed a Notice of Appeal by registered mail for the two civil
cases. Respondent Spouses Laohoo filed their Comment and Opposition to the notice of
appeal, contending that the said appeal was filed six days late.
Petitioner argued that it was only on October 23, 1997 that the Office of the Regional Legal
Counsel, NPC-Visayas Region in Cebu City, received a copy of the Order of October 14,
1997 denying its motion for reconsideration. By computing the remaining eight days reckoned
from the date of receipt on October 23, 1997 of the RTC's Order dated October 14, 1997,
petitioner insisted that it had until October 31, 1997 within which to file the notice of appeal
and, thus, the filing thereof on October 30, 1997 was well within the 15-day reglementary
period for taking an appeal as provided by the rules.
In an Order dated December 10, 1997, the RTC dismissed the petitioner's appeal and ruled
that:
It appears from the record that the National Power Corporation received the resolution of this
court dated October 14, 1997 denying their motion for reconsideration through their lawyer,
Atty. Neon Cinco, on October 15, 1997. It is not, therefore, true that NAPOCOR received the
order of denial of said motion for reconsideration on October 23, 1997 as alleged by Atty.
Marianito delos Santos.
WHEREFORE, and it appearing that plaintiff's notice of appeal was filed six (6) days beyond
the reglementary period, it is ordered that plaintiff's appeal be, and is hereby, dismissed.
There appears to be a controversy between the petitioner and the respondents as to when
the petitioner received the RTC Order dated October 14, 1997 denying the petitioner's motion
for reconsideration. This issue needs to be settled, because the remaining period (i.e., eight
days) within which to appeal is reckoned from the actual date of receipt of the RTC's Order of
denial. The determination as to whether petitioner's notice of appeal was filed on time crucial,
because if it was seasonably filed, then the RTC gravely abused its discretion in dismissing
the same. On the contrary, if it was filed out of time, then the RTC correctly dismissed the
notice of appeal and the RTC's Order dated September 15, 1997 had already become final
and executory.
This Court finds that the petitioner's appeal before the RTC was filed out of time.
In the Order dated December 10, 1997 dismissing the petitioner's appeal, the RTC made a
finding that its counsel, Atty. Neon Cinco, received the Order denying its motion for
reconsideration on October 15, 1997. The date of receipt by petitioner, as found by the RTC,
was based on the records of the case. Petitioner failed to disprove what was reflected in the
records of the RTC that Atty. Cinco received the Order dated October 14, 1997 on October
15, 1997. If the records of the RTC do not show that Atty. Cinco received the same on
October 15, 1997, the petitioner could have presented certified true copies of the records of
the case in order to disprove the trial court's finding. In the absence of such evidence, the trial
court's declaration should be taken as true on its face, as it enjoys the presumption of
regularity in the performance of its official duties. 30 Because of the foregoing, We are inclined
to rule that petitioner's counsel, Atty. Neon Cinco, received the Order on October 15, 1997.
The trial court's Order dated September 15, 1997 was a final order fixing the just
compensation for the expropriated lots of the respondents and, thus, completely disposed of
the controversy between the party litigants. Petitioner should have timely appealed the
assailed RTC Order under Section 1, Rule 41 of the Rules of Court. In this case, petitioner
received on September 25, 1997 a copy of the Order of the trial court dated September 15,
1997 fixing the amount of just compensation on the respondents' properties. On October 2,
1997, or on the seventh day from receipt of the Order dated September 15, 1997, petitioner
filed a motion for reconsideration. The RTC denied the motion in an Order dated October 14,
1997, which was received by petitioner's counsel on October 15, 1997. Therefore, petitioner
had the remaining period of eight days, or until October 23, 1997, within which to appeal.
Perforce, the filing of the Notice of Appeal on October 30, 1997 was already late.
Since the appeal was not filed within the reglementary period of 15 days as provided by the
Rules,31 the appeal is dismissible32 for having been filed out of time. The approval of a notice
of appeal becomes the ministerial duty of the lower court, provided the appeal is filed on time.
If the notice of appeal is, however, filed beyond the reglementary period, the trial court may
exercise its power to refuse or disallow the same in accordance with Section 13 of Rule 41 of
the Rules.33 Let it not be overlooked that the timeliness of an appeal is a jurisdictional caveat
that not even this Court can trifle with. 34 Consequently, the trial court committed no error in
dismissing the appeal.
The failure of the petitioner to perfect an appeal within the period fixed by law renders final
the decision sought to be appealed. As a result, no court could exercise appellate jurisdiction
to review the decision. 35 It is settled that a decision that has acquired finality becomes
135
immutable and unalterable and may no longer be modified in any respect, even if the
modification is meant to correct erroneous conclusions of fact or law and whether it will be
made by the court that rendered it or by the highest court of the land. 36 Otherwise, there will
be no end to litigation and this will set to naught the main role of courts of justice to assist in
the enforcement of the rule of law and the maintenance of peace and order by settling
justiciable controversies with finality.37
Once a judgment becomes final and executory, all the issues between the parties are
deemed resolved and laid to rest. All that remains is the execution of the decision which is a
matter of right.38 The prevailing party is entitled to a writ of execution, the issuance of which is
the trial court's ministerial duty.39
In addition to the non-perfection of the appeal on time, records show that the notice of appeal
failed to indicate the date when the petitioner received the Order denying its motion for
reconsideration. The rules require that the notice of appeal shall state the material dates
showing the timeliness of the appeal. 40 The indication of date is important in order for the trial
court to determine the timeliness of the petitioner's appeal.
Likewise, petitioner did not pay the appellate court's docket and other lawful fees on time.
Respondents pointed out that the payment of the fees, as reflected by the official
receipts,41 was made only after five months from the filing of the notice of appeal.
It is a rule that within the period for taking an appeal, the appellant shall pay the full amount
of the appellate court's docket and other lawful fees. 42 In the absence of such payment, the
trial court may, motu proprio or on motion, dismiss the appeal for non-payment of the docket
fees and other lawful fees within the reglementary period. 43 Since petitioner failed to pay the
docket fees and other lawful fees within the reglementary period, it is apparent that the
dismissal of the appeal by the trial court was in order. In Fil-Estate Properties, Inc. v.
Homena-Valencia,44 this Court upheld the dismissal of an appeal or notice of appeal for
failure to pay the full docket fees within the period for taking the appeal. The payment of
docket fees within the prescribed period is mandatory for the perfection of the appeal.
Without such payment, the appellate court does not acquire jurisdiction over the subject
matter of the action, and the decision sought to be appealed from becomes final and
executory. In the present case, petitioner failed to offer any explanation for the belated
payment of the required fees.
Furthermore, as pointed out by the respondents, and as proven by the records of the case,
the Order of the trial court dated September 15, 1997 was already fully executed. The
Sheriff's Report45 relative to the satisfaction of judgment in Civil Case Nos. 6890 and 6891,
dated November 17, 1998, provided that the writ of garnishment was duly satisfied. The PNB
had already delivered the money under garnishment by issuing certified checks in the amount
of P4,616,000.00 in favor of the Spouses Laohoo and in the amount of P6,476,000.00 in
favor of the Spouses Miel.
In an effort to justify its belated filing of the notice of appeal within the reglementary period of
fifteen days, petitioner, in its Reply, 46 cited Municipality of Biñan v. Garcia47 which explained
that since no less than two appeals are allowed in an action for eminent domain, as in actions
for partition, the period of appeal from an order of condemnation is thirty days counted from
notice of said Order, a record of appeal being required, and not the ordinary period of fifteen
days prescribed for actions in general.
Petitioner's argument is self-defeating, considering that it did not file any record on appeal
within the reglementary period provided by the Rules after its receipt of the trial court's order.
Further, the filing of a record on appeal is no longer necessary, as the RTC has fully resolved
all the issues in the present case. In the recent case of Marinduque Mining and Industrial
Corporation and Industrial Enterprises, Inc. v. Court of Appeals and National Power
Corporation,48 the Court held that no record on appeal shall be required, except in special
proceedings and other cases of multiple or separate appeals where the law or the rules so
require. The reason for multiple appeals in the same case is to enable the rest of the case to
proceed in the event that a separate and distinct issue is resolved by the trial court and held
to be final. In such case, the filing of a record on appeal becomes indispensable only when a
particular incident of the case is brought to the appellate court for resolution with the rest of
the proceedings remaining within the jurisdiction of the trial court. Hence, if the trial court has
already fully and finally resolved all conceivable issues in the complaint for expropriation,
then there is no reason why the original records of the case must remain with the trial court.
Therefore, there was no need to file a record on appeal because the original records would
already be sent to the appellate court.
Petitioner cannot take refuge in the "fresh period rule." In Neypes v. Court of Appeals,49 the
Court standardized the appeal periods provided in the rules in order to afford litigants a fair
opportunity to appeal their cases. We allowed a fresh period of fifteen days within which to
file a notice of appeal in the RTC, counted from receipt of the order dismissing a motion for a
new trial or motion for reconsideration. Neypes is inapplicable to the present case, although
procedural laws may be given retroactive effect to actions pending and undetermined at the
time of their passage; there being no vested rights in the rules of procedure, 50 said retroactive
application of procedural rule does not extend to actions that have already become final and
executory,51 like the Order of the trial court in the instant case.
Furthermore, petitioner's lame allegation that Atty. Cinco failed to inform petitioner of the
denial of its motion for reconsideration cannot be used as a basis to defeat the rules of
procedure relative to the timeliness of an appeal.
Petitioner was represented in the trial court by three lawyers, namely: Attys. Marianito delos
Santos, Rosalito Castillo and Neon Cinco. These lawyers hold office at Martinez Bldg., Jones
Ave., Cebu City. During the proceedings in the trial court, Atty. Cinco attended the hearings
and even filed a pleading on behalf of the petitioner. Thus, he was one of the counsels of
record in the case before the RTC.
The rules provide that if a party is appearing by counsel, service upon him shall be made
upon his counsel or one of them unless service upon the party himself is ordered by the
136
court.52 In Ortega v. Pacho,53 this Court ruled that service to one of plaintiff's several counsels It may be logically inferred in this case that NAPOCOR lawyers, who had been designated or
is sufficient. It was further held that when the rule employs the words "his attorneys or one of deputized as special attorneys of the OSG, had the authority to represent the petitioner and
them," it can only refer to those employed regardless of whether they belong to the same law file the notice of appeal. Additionally, in Republic v. Soriano, 58 We ruled that:
firm or office, otherwise that meaning would have been expressed therein. The reason for the
rule undoubtedly is that, when more than one attorney appears for a party, notice to one
The petitioner's contention that service of the questioned Orders to deputized special
would suffice upon the theory that he would notify or relay the notice to his colleagues in the
attorneys of the OSG would not bind the OSG so that the Orders did not attain their finality
case. This is a rational and logical interpretation, and we find no plausible reason to rule
when the Motion was filed, does not have a leg to stand on. It is a well-settled principle that
otherwise. Accordingly, service of a copy of the decision or orders of the court on Atty. Cinco
the acts of the authorized Deputy bind the principal counsel. Thus, service on the Deputy is
is deemed service upon the petitioner. The failure of Atty. Cinco to file the necessary notice of
service to the OSG.
appeal on time binds the petitioner.

Moreover, the records will disclose that Atty. Fidel Evangelista, who is a deputized attorney,
The general rule is that a client is bound by the acts, even mistakes, of his counsel in the
was the one who appeared for the petitioner in the lower court. It is not only lawful, but also in
realm of procedural technique. The exception to this rule is when the negligence of counsel is
accordance with the normal and standard practice that notices be sent to said special
so gross, reckless and inexcusable that the client is deprived of his day in court. 54 The failure
Attorney to avoid delays and complications. Precisely, the OSG has no time and manpower
of a party's counsel to notify him on time of the adverse judgment to enable him to appeal
to handle all the cases of multifarious government entities such that deputization is
therefrom is negligence, which is not excusable. Notice sent to counsel of record is binding
authorized by law to cope with such contingencies.
upon the client, and the neglect or failure of counsel to inform him of an adverse judgment
resulting in the loss of his right to appeal is not a ground for setting aside a judgment valid
and regular on its face.55 Since NAPOCOR lawyers had the authority to represent petitioner, the notice of appeal filed
by these special attorneys was binding upon it, and so was their omission to file the same on
time. Petitioner cannot now put the blame on its special attorneys in order to circumvent the
To sustain petitioner's self-serving argument that it cannot be bound by its counsel's
rule on perfection of appeal.
negligence would set a dangerous precedent, as it would enable every party-litigant to render
inoperative any adverse order or decision of the courts, through the simple expedient of
alleging gross negligence on the part of its counsel. National Power Corporation v. NLRC,59 as cited by the petitioner insofar as the rule on
mandatory service of orders and decisions to the OSG is concerned, cannot be applied to the
present case. In the said case, the OSG entered its appearance as counsel for National
Petitioner contends that the Office of the Solicitor General (OSG) was not furnished with a
Power Corporation at the first instance. The deputization of Atty. Restituto O. Mallo was
copy of the Order dated December 10, 1997 in Civil Case Nos. 6890 and 6891, dismissing
made only after the entry of appearance of the OSG, thus, making it the primary counsel of
the notice of appeal, or the Order dated July 2, 1998, denying petitioner's motion for
record. The appearance of the deputized special attorney in the proceedings before the
reconsideration. Hence, the period to appeal the decision to the CA did not even begin to run.
Labor Arbiter did not divest the OSG of control over the case and did not make the deputized
It postulated that the period to file an appeal is to be counted from the receipt by the OSG of
special attorney the counsel of record. Ad contrarium, in the present case, the NAPOCOR
the order or decision and not from the receipt by the NAPOCOR lawyers, who were merely
lawyers had been the counsels of record from the very beginning of the case, and the OSG
deputized as Special Attorneys. Such contention is equally bereft of merit.
never made any formal entry of appearance.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

In National Power Corporation v. Vine Development Corporation,56 it was held that under
Section 2(a), Rule 4157 of the Revised Rules of Court, which pertains to ordinary appeals, the
notice of appeal is filed in the very same court that rendered the assailed decision. Since the
notice was filed before the RTC, the NAPOCOR lawyers acted clearly within their authority.
Indeed, their action ensured that the appeal was filed within the reglementary period.
Regardless of which mode of appeal is used, the appeal itself is presumed beneficial to the
government; hence, it should be allowed. After all, the OSG may withdraw it, if it believes that
the appeal will not advance the government's cause. This case affirmed the authority of
National Power Corporation's lawyers to file notices of appeal of adverse decisions rendered
by the trial courts.
Now we go to the propriety of the petitioner's choice of the remedy of a special civil action
for certiorari which questions the dismissal of the notice of appeal, and prays for the
annulment of the writ of execution issued by the trial court.
Time and again, this Court has emphasized that a special civil action for certiorari under Rule
65 lies only when there is no appeal, nor plain, speedy and adequate remedy in the ordinary
course of law. That action is not a substitute for a lost appeal in general; it is not allowed
when a party to a case fails to appeal a judgment to the proper forum. 60 In Madrigal Transport
Inc., v. Lapanday Holdings Corporation,61 We held that where an appeal is available to the
aggrieved party, the action for certiorari will not be entertained. Remedies of appeal
and certiorari are mutually exclusive, not alternative or successive. Where an appeal is
available, certiorari will not prosper, even if the ground therefor is grave abuse of discretion.

137
Obviously, this remedy was resorted to by the petitioner due to the fact that its notice of
appeal was dismissed by the RTC for having been filed out of time.
Petitioner went to the CA alleging grave abuse of discretion on the part of the trial court in
dismissing its notice of appeal. However, no grave abuse of discretion can be attributed to
the trial court in dismissing the appeal, as the same was filed beyond the period provided by
the rules, more so because the issuance of the order of execution was in accordance with
law, as the order to be implemented had already attained finality. Execution shall issue as a
matter of right if no appeal has been duly perfected. 62
The core issue in the petition for certiorari with the CA was the alleged exercise of grave
abuse of discretion by the RTC in dismissing petitioner's notice of appeal. When the CA
denied the said petition for being filed out of time, petitioner sought relief before this Court
through the instant Petition for Review . However, a perusal of the petition before Us would
readily show that the petitioner is now suddenly questioning not only the CA's order of
dismissal, but also the determination of the amount of just compensation by the RTC, which
is a question of fact. This requires a review of the evidence presented by the parties before
the trial court. It is aphoristic that this kind of reexamination cannot be done through a Petition
for Review on Certiorari under Rule 45 of the Rules of Court, because this Court is not a trier
of facts; it reviews only questions of law. The Court is not duty-bound to analyze and weigh
again the evidence considered in the proceedings below.63
Assuming arguendo that the petition for certiorari under Rule 65 is the proper remedy of the
petitioner to question the Order dismissing its notice of appeal, still, the same was filed
beyond the period provided by the Rules. Petitioner received the Order dismissing its notice
of appeal on December 23, 1997. Accordingly, petitioner had a period of 60 days 64 from its
receipt to assail the trial court's dismissal of its notice of appeal via a petition
for certiorari with the CA. Petitioner, however, instituted the petition for certiorari only on
October 27, 1998, or after a period of 10 months, which was definitely beyond the 60-day
reglementary period provided by the Rules.
The petitioner cannot invoke the doctrine that rules of technicality must yield to the broader
interest of substantial justice to spare itself from the consequences of belatedly filing an
appeal. While every litigant must be given the amplest opportunity for the proper and just
determination of his cause, free from the constraints of technicalities, the failure to perfect an
appeal within the reglementary period is not a mere technicality. It raises a jurisdictional
problem, as it deprives the appellate court of its jurisdiction over the appeal. 65 After a decision
is declared final and executory, vested rights are acquired by the winning party. Just as a
losing party has the right to appeal within the prescribed period, the winning party has the
correlative right to enjoy the finality of the decision on the case. 66 After all, a denial of a
petition for being time-barred is tantamount to a decision on the merits. 67
In Peña v. Government Service Insurance System,68 We held that there are certain
procedural rules that must remain inviolable, like those setting the periods for perfecting an
appeal, for it is doctrinally entrenched that the right to appeal is a statutory right, and one who
seeks to avail oneself of that right must comply with the statute or rules. These rules,
particularly the requirements for perfecting an appeal within the reglementary period specified
in the law, must be strictly followed, as they are considered indispensable interdictions
against needless delays and for an orderly discharge of judicial business.
Maunlad Savings & Loan Association, Inc. v. CA 69 and Samala v. Court of Appeals, 70 cited by
the petitioner, cannot be applied on the present case. In Maunlad, We allowed the admission
of the respondent's documentary exhibits, although its counsel had failed to formally offer
them in evidence. We ruled that the failure of the respondent's counsel was excusable since
the documents were in the possession of the petitioner. Since the documents were never in
the possession of the respondent, and considering the amount of time that had passed since
their presentation, it was understandable that they were overlooked when the time came to
formally offer the evidence. We likewise ruled that a judgment based on the merits should
prevail over the primordial interest of strict enforcement of matters of
technicalities.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
In Samala, We granted the petition because petitioner Jose Samala, who was entrusted with
the filing of the notice of appeal, suffered stomach pains, which lasted for several days. As a
result, the notice of appeal was filed one day late. In this case, We held that the failure to
appeal in due time amounted to excusable negligence.
The foregoing rulings cannot be applied to the present case, as Atty. Neon Cinco's failure to
file the appeal in due time does not amount to excusable negligence. Accordingly, the non-
perfection of the appeal on time is not a mere technicality. Besides, to grant the petitioner's
plea for the relaxation of the rule on technicality would disturb a well-entrenched ruling that
could make uncertain when a judgment attains finality, leaving the same to depend upon the
resourcefulness of a party in concocting implausible excuses to justify an unwarranted
departure from the time-honored policy of the law that the period for the perfection of an
appeal is mandatory and jurisdictional. 71
Attention should also be called to the fact that petitioner failed to act promptly to protect its
rights after the RTC dismissed its notice of appeal. It did not even offer an explanation of why
it took so many months before it filed its petition for certiorari with the CA.
We also note that, during the proceedings before the RTC relative to the fixing of the amount
of provisional deposit, the petitioner disagreed with the amount fixed by the trial court.
Despite its objection, however, petitioner did not contest the fixing of the amount before the
proper forum. Thus, it is now too late to question the Order of the RTC fixing the amount of
provisional deposits, which petitioner had already deposited 72 and which had already been
deducted from the amount of just compensation finally adjudged by the trial court.
In sum, petitioner disregarded the rules on the perfection of appeal and the requisites for an
appeal to be valid, like the indication of material dates showing the timeliness of the appeal
and the payment of the appellate court docket fees and other lawful fees. Petitioner failed to
question on time the dismissal of the notice of appeal, and instead availed itself of the
138
remedy of a petition for certiorari as a substitute for a lost appeal to assail the RTC's Order
which had already attained finality and had been fully executed.
WHEREFORE, the petition is DENIED. The Decision dated January 25, 2002 of the Court of
Appeals in CA-G.R. SP No. 49383 is AFFIRMED.
SO ORDERED.
[G.R. NO. 184915 : June 30, 2009]
NILO T. PATES, Petitioner, v. COMMISSION ON ELECTIONS and EMELITA B.
ALMIRANTE, Respondents.
RESOLUTION
BRION, J.:
Our Resolution of November 11, 2008 dismissed the petition in caption pursuant to Section 3,
Rule 64 of the Rules of Court which provides:
SEC. 3. Time to file petition.' The petition shall be filed within thirty (30) days from notice of
the judgment or final order or resolution sought to be reviewed. The filing of a motion for new
trial or reconsideration of said judgment or final order or resolution, if allowed under the
procedural rules of the Commission concerned, shall interrupt the period herein fixed. If the
motion is denied, the aggrieved party may file the petition within the remaining period, but
which shall not be less than five (5) days in any event, reckoned from notice of denial.
taking into account the following material antecedents:
A. February 1, 2008 - The COMELEC First Division issued its Resolution (assailed in the
petition);
b. February 4, 2008 - The counsel for petitioner Nilo T. Pates (Petitioner) received a copy of
the February 1, 2008 Resolution;
c. February 8, 2008 - The petitioner filed his motion for reconsideration (MR) of the February
1, 2008 Resolution (4 days from receipt of the February 1, 2008 Resolution)
d. September 18, 2008 - The COMELEC en banc issued a Resolution denying the
petitioner's MR (also assailed in the petition).
e. September 22, 2008 - The petitioner received the COMELEC en banc Resolution of
September 18, 2008
Under this chronology, the last day for the filing of a Petition for Certiorari, i.e., 30 days from
notice of the final COMELEC Resolution, fell on a Saturday (October 18, 2008), as the
petitioner only had the remaining period of 26 days to file his petition, after using up 4 days in
preparing and filing his Motion for Reconsideration. Effectively, the last day for filing was
October 20, 2008 - the following Monday or the first working day after October 18, 2008. The
petitioner filed his petition with us on October 22, 2008 or two days late; hence, our
Resolution of dismissal of November 11, 2008.
The Motion for Reconsideration
The petitioner asks us in his "Urgent Motion for Reconsideration with Reiteration for the
Issuance of a Temporary Restraining Order" to reverse the dismissal of his petition, arguing
that the petition was seasonably filed under the fresh period rule enunciated by the Supreme
Court in a number of cases decided beginning the year 2005. The "fresh period" refers to the
original period provided under the Rules of Court counted from notice of the ruling on the
motion for reconsideration by the tribunal below, without deducting the period for the
preparation and filing of the motion for reconsideration.
He claims that, historically, the fresh period rule was the prevailing rule in filing petitions
for certiorari. This Court, he continues, changed this rule when it promulgated the 1997 Rules
of Civil Procedure and Circular No. 39-98, which both provided for the filing of petitions within
the remainder of the original period, the "remainder" being the original period less the days
used up in preparing and filing a motion for reconsideration. He then points out that on
September 1, 2000 or only three years after, this Court promulgated A.M. No. 00-02-03-SC
bringing back the fresh period rule. According to the petitioner, the reason for the change,
which we supposedly articulated in Narzoles v. National Labor Relations Commission, 1 was
the tremendous confusion generated by Circular No. 39-98.
The fresh period rule, the petitioner further asserts, was subsequently applied by this Court in
the following cases:
(1) Neypes v. Court of Appeals2 which thenceforth applied the fresh
eriod rule to ordinary appeals of decisions of the Regional Trial Court to the Court of Appeals;
(2) Spouses de los Santos v. Vda. de Mangubat3 reiterating Neypes;
(3) Active Realty and Development Corporation v. Fernandez 4 which, following Neypes,
applied the fresh period rule to ordinary appeals from the decisions of the Municipal Trial
Court to the Regional Trial Court; andcralawlibrary
139
(4) Romero v. Court of Appeals 5 which emphasized that A.M. No. 00-02-03-SC is a curative
statute that may be applied retroactively.
A reading of the ruling in these cases, the petitioner argues, shows that this Court has
consistently held that the order or resolution denying the motion for reconsideration or new
trial is considered as the final order finally disposing of the case, and the date of its receipt by
a party is the correct reckoning point for counting the period for appellate review.
The Respondent's Comment
We asked the respondents to comment on the petitioner's motion for reconsideration. The
Office of the Solicitor General (OSG), citing Section 5, Rule 65 of the Rules of Court and its
related cases, asked via a "Manifestation and Motion" that it be excused from filing a
separate comment. We granted the OSG's manifestation and motion.
For her part, respondent Emelita B. Almirante (respondent Almirante) filed a comment stating
that: (1) we are absolutely correct in concluding that the petition was filed out of time; and (2)
the petitioner's reliance on Section 4, Rule 65 of the Rules of Court (as amended by A.M. No.
00-02-03-SC) is totally misplaced, as Rule 64, not Rule 65, is the vehicle for review of
judgments and final orders or resolutions of the COMELEC. Respondent Almirante points out
that Rule 64 and Rule 65 are different; Rule 65 provides for a 60-day period for filing petitions
for certiorari, while Rule 64 provides for 30 days.
OUR RULING
We do not find the motion for reconsideration meritorious.
A. As a Matter of Law
Section 7, Article IX-A of the Constitution provides that unless otherwise provided by the
Constitution or by law, any decision, order, or ruling of each Commission may be brought to
the Court on certiorari by the aggrieved party within 30 days from receipt of a copy thereof.
For this reason, the Rules of Court provide for a separate rule (Rule 64) specifically
applicable only to decisions of the COMELEC and the Commission on Audit. This Rule
expressly refers to the application of Rule 65 in the filing of a Petition for Certiorari, subject to
the exception clause - "except as hereinafter provided." 6
Even a superficial reading of the motion for reconsideration shows that the petitioner has not
challenged our conclusion that his petition was filed outside the period required by Section 3,
Rule 64; he merely insists that the fresh period rule applicable to a petition for certiorari under
Rule 65 should likewise apply to petitions for certiorari of COMELEC rulings filed under Rule
64.
Rule 64, however, cannot simply be equated to Rule 65 even if it expressly refers to the latter
rule. They exist as separate rules for substantive reasons as discussed below. Procedurally,
the most patent difference between the two - i.e., the exception that Section 2, Rule 64 refers
to - is Section 3 which provides for a special period for the filing of petitions for  certiorari from
decisions or rulings of the COMELEC en banc. The period is 30 days from notice of the
decision or ruling (instead of the 60 days that Rule 65 provides), with the intervening period
used for the filing of any motion for reconsideration deductible from the originally-granted 30
days (instead of the fresh period of 60 days that Rule 65 provides).
Thus, as a matter of law, our ruling of November 11, 2008 to dismiss the petition for late filing
cannot but be correct. This ruling is not without its precedent; we have previously ordered a
similar dismissal in the earlier case of Domingo v. Commission on Elections. 7 The Court, too,
has countless times in the past stressed that the Rules of Court must be followed. Thus, we
had this to say in Fortich v. Corona:8
Procedural rules, we must stress, should be treated with utmost respect and due regard since
they are designed to facilitate the adjudication of cases to remedy the worsening problem of
delay in the resolution of rival claims and in the administration of justice. The requirement is
in pursuance to the bill of rights inscribed in the Constitution which guarantees that "all
persons shall have a right to the speedy disposition of their before all judicial, quasi-judicial
and administrative bodies," the adjudicatory bodies and the parties to a case are thus
enjoined to abide strictly by the rules. While it is true that a litigation is not a game of
technicalities, it is equally true that every case must be prosecuted in accordance with the
prescribed procedure to ensure an orderly and speedy administration of justice. There have
been some instances wherein this Court allowed a relaxation in the application of the rules,
but this flexibility was "never intended to forge a bastion for erring litigants to violate the rules
with impunity." A liberal interpretation and application of the rules of procedure can be
resorted to only in proper cases and under justifiable causes and circumstances. (Emphasis
supplied)cralawlibrary
As emphasized above, exceptional circumstances or compelling reasons may have existed in
the past when we either suspended the operation of the Rules or exempted a particular case
from their application. 9 But, these instances were the exceptions rather than the rule, and we
invariably took this course of action only upon a meritorious plea for the liberal construction of
the Rules of Court based on attendant exceptional circumstances. These uncommon
exceptions allowed us to maintain the stability of our rulings, while allowing for the unusual
cases when the dictates of justice demand a correspondingly different treatment.
Under this unique nature of the exceptions, a party asking for the suspension of the Rules of
Court comes to us with the heavy burden of proving that he deserves to be accorded
exceptional treatment. Every plea for a liberal construction of the Rules must at least be
accompanied by an explanation of why the party-litigant failed to comply with the rules and by
a justification for the requested liberal construction.10
Significantly, the petitioner presented no exceptional circumstance or any compelling reason
to warrant the non-application of Section 3, Rule 64 to his petition. He failed to explain why
140
his filing was late. Other than his appeal to history, uniformity, and convenience, he did not
explain why we should adopt and apply the fresh period rule to an election case.
To us, the petitioner's omissions are fatal, as his motion does not provide us any reason
specific to his case why we should act as he advocates.
made clear above, is constitutionally-based and is no less than the importance our
Constitution accords to the prompt determination of election results. This reason far
outweighs convenience and uniformity. We significantly note that the present petition itself,
through its plea for the grant of a restraining order, recognizes the need for haste in deciding
election cases.

C. Our Liberal Approach

B. As a Matter of Policy

Largely for the same reason and as discussed below, we are not inclined to suspend the
In harking back to the history of the fresh period rule, what the petitioner apparently wants -
rules to come to the rescue of a litigant whose counsel has blundered by reading the wrong
for reasons of uniformity and convenience - is the simultaneous amendment of Section 3,
applicable provision. The Rules of Court are with us for the prompt and orderly administration
Rule 64 and the application of his proposed new rule to his case. To state the obvious, any
of justice; litigants cannot, after resorting to a wrong remedy, simply cry for the liberal
amendment of this provision is an exercise in the power of this Court to promulgate rules on
construction of these rules. 12 Our ruling in Lapid v. Laurea 13 succinctly emphasized this point
practice and procedure as provided by Section 5(5), Article VIII of the Constitution. Our
when we said:
rulemaking, as every lawyer should know, is different from our adjudicatory function.
Rulemaking is an act of legislation, directly assigned to us by the Constitution, that requires
the formulation of policies rather than the determination of the legal rights and obligations of Members of the bar are reminded that their first duty is to comply with the rules of procedure,
litigants before us. As a rule, rulemaking requires that we consult with our own rather than seek exceptions as loopholes. Technical rules of procedure are not designed to
constituencies, not necessarily with the parties directly affected in their individual cases, in frustrate the ends of justice. These are provided to effect the prompt, proper and orderly
order to ensure that the rule and the policy that it enunciates are the most reasonable that we disposition of cases and, thus, effectively prevent the clogging of court dockets. Utter
can promulgate under the circumstances, taking into account the interests of everyone - not disregard of these rules cannot justly be rationalized by harking on the policy of liberal
the least of which are the constitutional parameters and guidelines for our actions. We point construction. [Emphasis supplied.]
these out as our adjudicatory powers should not be confused with our rulemaking
prerogative.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
We add that even for this Court, liberality does not signify an unbridled exercise of discretion.
It has its limits; to serve its purpose and to preserve its true worth, it must be exercised only
We acknowledge that the avoidance of confusion through the use of uniform standards is not in the most appropriate cases.14
without its merits. We are not unmindful, too, that no less than the Constitution requires that
"motions for reconsideration of [division] decisions shall be decided by the Commission en
WHEREFORE, premises considered, we DENY the motion for reconsideration for lack of
banc."11 Thus, the ruling of the Commission en banc on reconsideration is effectively a new
merit. Our Resolution of November 11, 2008 is hereby declared FINAL. Let entry of judgment
ruling rendered separately and independently from that made by a division.
be made in due course.

Counterbalanced against these reasons, however, are other considerations no less weighty,
SO ORDERED.
the most significant of which is the importance the Constitution and this Court, in obedience
to the Constitution, accord to elections and the prompt determination of their
results.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ THIRD DIVISION

Section 3, Article IX-C of the Constitution expressly requires that the COMELEC's rules of [G.R. NO. 158877 : June 16, 2009]
procedure should expedite the disposition of election cases. This Court labors under the
same command, as our proceedings are in fact the constitutional extension of cases that start
JOVEN DE GRANO, represented by Venus P. de Grano, Ernesto H. Malabanan, and
with the COMELEC.
Simplicia D. Malabanan, Petitioner, v. GREGORIO LACABA, Respondent.

Based on these considerations, we do not find convenience and uniformity to be reasons

DECISION
sufficiently compelling to modify the required period for the filing of petitions
for certiorari under Rule 64. While the petitioner is correct in his historical data about the
Court's treatment of the periods for the filing of the different modes of review, he misses out NACHURA, J.:
on the reason why the period under Section 3, Rule 64 has been retained. The reason, as

141
Assailed in this Petition for Review on Certiorari is the Decision1 of the Court of Appeals (CA)
in CA-G.R. SP No. 67852 dated October 16, 2002 and Resolution dated June 18, 2003. This
decision reversed the uniform decisions of the municipal and regional trial courts dismissing a
forcible entry case filed by respondent Gregorio Lacaba. The antecedents of the petition are
as follows:
Respondent Gregorio Lacaba2 claims that he is the owner of two adjacent parcels of land,
located in Barangay Niugan, Laurel, Batangas and identified as Cadastral Lot Nos. 6916 and
6917 in Survey No. REI-041011-001184. Lot No. 6916 has an area of 5,743 square meters,
while Lot No. 6917 has an area of 804 square meters. Each parcel of land is covered by a
separate tax declaration in the name of respondent.
and Subdivision Plan, which determined the metes and bounds of the properties of the
Malabanans. Petitioner alleged that the Office of the Building Official approved the application
of the Malabanans for the construction of a fence on a portion of their property; and
petitioner, acting in accordance with the instructions of the Malabanans, caused the clearing
of the property.7 Petitioner submitted in evidence a copy of TCT No. T-31929; 8 Relocation
Survey Plan No. REI-041011-001184 with a "cancelled" marking; 9 Order of cancellation of
Relocation Survey Plan No. REI-041011-001184;10 Consolidation and Subdivision Plan No.
Pcs-04-015296;11 Sinumpaang Salaysay 12 of Nepumuceno Noveno, also a caretaker of the
Malabanan family; and uniformly worded affidavits 13 of the occupants of the property, stating
that they were not connected with respondent, and that they were occupying the property
upon the permission of Ernesto Malabanan.

On August 11, 2000, the Municipal Circuit Trial Court (MCTC) dismissed the complaint for
On May 30, 2000, respondent filed a complaint for forcible entry with prayer for a temporary
lack of cause of action. 14 The court a quo found that respondent's claim, that he was in actual
restraining order and/or preliminary injunction against petitioner Joven de Grano. According
possession of the property through the possession of his caretakers and the other spouses
to respondent, he has been in physical possession of the two parcels of land for more than
he allowed to occupy the property, was belied by his own statement and that of Mr.
30 years and has been paying real property taxes thereon. In 1978, respondent purportedly
Nepomuceno Noveno, a resident of the barangay where the property is located, who testified
designated as caretakers the spouses Ely and Anita Mojica (spouses Mojica), who occupied
for petitioner.15
the property until the present, and allowed three other spouses, including the spouses
Silvestre and Amor Matilla (spouses Matilla), to build their respective houses on the property
and conduct fruit vending and carinderia business.3 On November 13, 2000, the Regional Trial Court (RTC) affirmed the MCTC
Decision.16 Respondent's counsel received a copy of the decision on November 21, 2000. On
December 14, 2000, respondent filed a motion for reconsideration.
Respondent alleged that, sometime during the second week of May 2000, petitioner, by
means of force, intimidation, strategy and threats, and with the help of his men, destroyed the
perimeter fence built by respondent. The fence was made of concrete posts and barbed wire. In an Order dated March 28, 2001, the RTC denied the motion for reconsideration, thus:
Respondent averred that petitioner effectively disrupted respondent's peaceful possession
and occupation of the property by clearing the land of plants, bushes and trees and
Finding no cogent reason to modify the decision of the Court dated November 13, 2000,
demolishing the house owned by the spouses Matilla. The continuous intrusion of petitioner
defendant's Motion for Reconsideration is hereby DENIED for lack of merit.17
caused serious fear and anxiety to the occupants of the properties.4

Respondent's counsel received a copy of the Resolution on April 18, 2001.

Respondent attached to the complaint Tax Declaration Nos. 016-00618 and 016-00619 and a
copy of Official Receipt No. 5342125 dated May 30, 2000 of the payment of real property tax
from 1998 until 2000.5 In addition, respondent later submitted a Certification issued by On October 23, 2001, upon manifestation of petitioner that it was not he who filed the motion
Barangay Captain Marcelo Balba stating that respondent was the declared owner of Lot Nos. for reconsideration, the RTC modified the dispositive portion of its March 28, 2001 Order,
6916 and 6917 based on Relocation Survey Plan No. REI-041011-001184, and a changing "defendant" to "plaintiff." 18 Respondent received a copy of this resolution on
Certification dated June 6, 1997 issued by the Municipal Assessor of Laurel, Batangas stating November 12, 2001.
that their records showed that respondent was the true and lawful owner of the properties
covered by Tax Declaration Nos. 016-006618 and 016-00619, and that real property tax had
Alleging that the October 23, 2001 RTC Resolution was the resolution denying his motion for
been paid from previous years until 1997. Respondent's counsels also executed a Joint
reconsideration, respondent filed a motion for extension of time to file a Petition for Review
Affidavit6 stating that they prepared affidavits for the caretakers and neighbors to sign, but the
with the CA on November 27, 2001. The CA granted the motion subject to its timeliness.
latter refused to sign for fear of their lives.
Finally on December 12, 2001, respondent filed a Petition for Review with the CA.

In his Answer, petitioner averred that the real owners and possessors of the property were
On January 8, 2002, petitioner filed a Manifestation with Motion to Dismiss Instant Petition
the family of Ernesto Malabanan, as evidenced by Transfer Certificate of Title (TCT) No. T-
and to Cite Petitioner (herein respondent) and Petitioner's Counsel for Contempt. 19 Petitioner
31929 of the Register of Deeds of Tanauan, Batangas. He pointed out that Relocation
alleged therein that respondent deliberately concealed the fact that the petition was filed out
Survey Plan No. REI-041011-001184 had already been cancelled by the Bureau of Lands on
October 8, 1999; and that, on April 13, 2000, the Bureau of Lands approved a Consolidation

142
of time by not attaching the March 28, 2001 RTC Order which denied respondent's motion for
reconsideration.
On October 16, 2002, the CA rendered a Decision with the following dispositive portion:
WHEREFORE, the decision dated November 13, 2000, as well as the Order dated October
23, 2001 denying the motion for reconsideration of said decision, is hereby REVERSED and
SET ASIDE. The respondent and all persons acting under his authority and/or in his behalf is
hereby ordered to vacate the subject premises and to cease and desist from occupying the
subject parcel of land, as well as from exercising any and all acts of possession and dominion
over the same.
SO ORDERED.20
The CA dismissed the issue of the timeliness of the filing of respondent's motion for
reconsideration before the RTC on the ground that such issue was raised for the first time
before the appellate court. It, likewise, ignored the issue of the belated filing of the Petition for
Review with the CA, ratiocinating that petitioner was barred by estoppel from questioning the
timeliness of the petition, and that dismissing the case would not serve the ends of justice. 21
On the merits, the CA concluded that respondent had been in prior, actual, open, peaceful,
uninterrupted and adverse possession of the subject properties for more than 40 years based
on the fact that he was paying taxes thereon. The CA did not give credence to the written
manifestations of petitioner's witnesses whose statements were drafted in identical form.
Instead, the CA gave weight to the statement of respondent's counsels that they failed to
secure affidavits from the caretakers and the neighbors because the latter feared for their
lives.22 Ï‚ηαñrοblεš νιr†υαl lαω lιbrαrÿ
Petitioner filed a motion for reconsideration. Thereafter, he filed a Manifestation with Request
for Judicial Notice of the verification survey conducted by the DENR on February 15, 2002,
which shows that the subject property was part of the parcel of land registered in the name of
the Malabanan family.
On June 18, 2003, the CA issued a Resolution denying petitioner's Motion for
Reconsideration. In the same Resolution, the CA noted that Verification Plan No. VS-04-
000534 was approved long after it had already rendered its decision.23
Disgruntled, petitioner filed this Petition for Review, raising the following issues:
I. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN TAKING
COGNIZANCE AND/OR GIVING DUE COURSE TO THE PETITION FOR REVIEW FILED
BEFORE IT BY RESPONDENT LACABA.
II. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT
HEREIN RESPONDENT LACABA IS ENTITLED TO THE RELIEF BEING SOUGHT IN THE
COMPLAINT FILED BEFORE THE MCTC.
III. WHETHER OR NOT THE COURT OF APPEALS PATENTLY ERRED IN NOT FINDING
THAT HEREIN PETITIONER DE GRANO IS NOT THE REAL PARTY IN INTEREST. 24
The petition is meritorious.
The CA erred in taking cognizance of the Petition for Review that was filed way beyond the
reglementary period. Rules of procedure may be relaxed in the interest of substantial justice
and in order to give a litigant the fullest opportunity to establish the merits of his complaint.
However, concomitant to a liberal application of the rules of procedure should be an effort on
the part of the party invoking liberality to explain its failure to comply with the rules 25 and
prove the existence of exceptionally meritorious circumstances warranting such liberality. 26
Respondent proffered no explanation for the delay as, in fact, he did not acknowledge that he
filed his Petition for Review with the CA beyond the prescriptive period. In his motion for
extension of time to file the Petition for Review with the CA, respondent alleged that it was
the October 28, 2001 RTC Order that denied his motion for reconsideration. As a stratagem
or out of plain ignorance, he counted the reglementary period from the date of his receipt of
the said order. But, as the CA was well aware, the reglementary period should have been
counted from the receipt of the March 28, 2001 Order.
Respondent might have been confused with the rule that, when a judgment is amended, the
date of the amendment should be considered the date of the decision in the computation of
the period for perfecting the appeal. For all intents and purposes, the lower court rendered a
new judgment from which the time to appeal must be reckoned. 27 However, this rule
presupposes that the amendment consists of a material alteration of such substance and
proportion that would, in effect, give rise to an entirely new judgment. 28 But when the
amendment merely consists of the correction of a clerical error, no new judgment arises. In
such case, the period for filing the appeal should still be counted from the receipt of the
original judgment.
In this case, there was no material alteration of the judgment. The amendment merely
consisted of changing the word "defendant" with "plaintiff" in the dispositive portion, and it is
obvious that it was "plaintiff" (herein respondent) who filed the motion for reconsideration.
Hence, the prescriptive period for filing the Petition for Review with the CA should be counted
from the date respondent received a copy of the first judgment denying his motion for
reconsideration, which was on April 18, 2001. Respondent had until May 3, 2001 to file a
Petition for Review, but he filed a motion for extension to file the petition only on November
27, 2001, or almost seven months later. In one case, the Court declared that a delay of
almost seven months is far from reasonable.29
143
Despite respondent's failure to acknowledge his error, the CA, finding the petition to be
meritorious, chose to excuse the belated filing of the petition to serve the ends of justice. This
Court, however, finds otherwise, and holds that the MCTC, as affirmed by the RTC, was
correct in dismissing the complaint.
For a forcible entry suit to prosper, the complainant must allege and prove that he was in
prior physical possession of the property and that he was deprived of such possession by
means of force, intimidation, threat, strategy, or stealth. 30 A party who can prove prior
possession can recover such possession even against the owner himself. Whatever may be
the character of his possession, if he has in his favor prior possession in time, he has the
security that entitles him to remain in the property until a person with a better right lawfully
ejects him.31
More importantly, no substantial injustice would be caused the respondent if we uphold the
finality of the RTC judgment, considering that he still has another remedy to recover his
alleged right to possess the property. Since respondent anchors his right to possess the
property on his alleged ownership of the same, he may file the appropriate action to recover
such ownership.
With the foregoing disquisition, we find no necessity to discuss the issue of whether petitioner
is the real party in interest.
WHEREFORE, premises considered, the petition is GRANTED. The Court of Appeals'
Decision dated October 16, 2002 and Resolution dated June 18, 2003 are REVERSED and
SET ASIDE.

A party having the burden of proof must establish his case by a preponderance of evidence.
SO ORDERED.
In doing so, he must rely on the strength of his own evidence, not on the weakness of the
defendant's.32 To prove prior possession, respondent presented his tax declarations, tax
receipt and a certification from the municipal assessor attesting that he has paid real property G.R. No. 167237               April 23, 2010
tax from previous years. He, likewise, testified that he appointed the spouses Mojica as his
caretakers, and allowed three other spouses to build their houses on the property.
ASSOCIATED ANGLO-AMERICAN TOBACCO CORPORATION and FLORANTE
Respondent's counsels also explained that they were not able to secure the affidavits of the
DY, Petitioners,
occupants of the property and the neighbors because they feared for their lives.
vs.
HON. COURT OF APPEALS, HON. CRISPIN C. LARON, in his capacity as PRESIDING
Respondent's evidence fails to make out a prima facie case of forcible entry as it does not JUDGE, REGIONAL TRIAL COURT, REGION 1, BRANCH 44, DAGUPAN CITY, SHERIFF
satisfactorily establish that respondent has been in physical possession of the subject VIRGILIO F. VILLAR, OFFICE OF THE EX-OFFICIO SHERIFF OF PASAY CITY,
property prior to petitioner's occupation thereof. REGISTER OF DEEDS OF LINGAYEN, PANGASINAN and SPOUSES PAUL PELAEZ,
JR. and ROCELI MAMISAY PELAEZ, Respondents.
For one, we cannot tack respondent's possession of the property on his alleged tenants'
actual possession absent any proof that said tenants acknowledge that respondent is the DECISION
owner and that they have occupied the property as respondent's tenants. For all we know,
these tenants could have been in adverse possession of the property. We cannot simply rely
DEL CASTILLO, J.:
on respondent's self-serving testimony that he designated the spouses Mojica as his
caretakers and allowed the other families to occupy the property.ςηαñrοblεš νιr†υ
αl lαω lιbrαrÿ The appeal of a final order substantially amending only some matters in a previously
rendered Decision is also an appeal of the other intimately interwoven matters passed upon
in the original decision.
Tax declarations and realty tax payments are not conclusive proof of possession. 33 They are
merely good indicia of possession in the concept of owner based on the presumption that no
one in his right mind would be paying taxes for a property that is not in his actual or In the present Petition for Certiorari and Prohibition, petitioners assail the May 31, 2004
constructive possession.34 It bears emphasizing that the word "possession," as used in Decision1 and the January 17, 20052 Resolution of the Court of Appeals (CA) in CA-G.R. SP.
forcible entry and unlawful detainer cases, means nothing more than physical possession, No. 75347. The CA dismissed the Petition for Certiorari filed before it assailing the Decision
not legal possession in the sense contemplated in civil law. 35 When the law speaks of and several Orders of the Regional Trial Court (RTC) of Dagupan City, Branch 44 in Civil
possession, the reference is to prior physical possession or possession de facto, as contra- Case No. D-8732.
distinguished from possession de jure.36 Only prior physical possession, not title, is the
issue.37 Issues as to the right of possession or ownership are not involved in the action;
evidence thereon is not admissible, except only for the purpose of determining the issue of Factual Antecedents
possession.38

144
Spouses Paul Pelaez, Jr. (Paul) and Roceli Mamisay Pelaez (Roceli) were employees of Upon motion of the spouses Pelaez, the RTC amended its Decision in its February 7, 2001
petitioner Associated Anglo-American Tobacco Corporation (the Corporation). Paul worked Order, to wit:
as Sales Supervisor and later as Senior Salesman while Roceli worked as secretary.
WHEREFORE, the Motion for Partial Reconsideration is granted and the dispositive portion
As salesman, Paul was required, on April 17, 1986, by the Corporation to post a bond to of the Decision dated September 14, 2000 is hereby modified as follows:
answer for any amount which he might fail to turnover to the Corporation. He complied by
executing a mortgage bond over his family's house and lot in favor of the Corporation. The
The defendants Associated Anglo-American Tobacco Corp. and Florante C. Dy are ordered
mortgaged real estate was covered by Transfer Certificate of Title (TCT) No. 155994 of the
to jointly and severally pay plaintiffs the amount of ₱843,383.11 representing the overage
Registry of Deeds of Pangasinan.
and the amount of award of moral and exemplary damages and attorney's fees is increased
from ₱50,000.00 to ₱2,000,000.00.
Upon its determination that Paul had defaulted in remitting the sales proceeds, the
Corporation initiated the extrajudicial foreclosure of the mortgage bond.
Furnish copies of this Order to Atty. Efren Moncupa and Atty. Da Vinci Crisostomo.

To stop the extrajudicial sale, Paul and Roceli filed on August 21, 1987, a Complaint against
SO ORDERED.4
the Corporation, Dy and the Sheriff Virgilio S. Villar (Sheriff) before the RTC.

Ruling of the Regional Trial Court
The RTC issued a restraining order and, subsequently, a writ of preliminary injunction to stop
the extrajudicial sale. Then, on September 14, 2000, after due hearing, Judge Crispin C.
Laron, issued a Decision in favor of the spouses Pelaez, the fallo of which reads:
WHEREFORE, judgment is rendered in favor of the plaintiffs and against the defendants, as
follows:
1. The defendants Associated Anglo-American Tobacco Corporation and Florante
C. Dy are ordered to jointly and severally pay plaintiffs the amount of ₱23,820.16
representing the overage and the account of Plaintiff Paul Pelaez, Jr. and to
release the mortgage on the parcel of land covered by, and release to plaintiffs,
Transfer Certificate of Title No. 155994;
On February 20, 2001, petitioners received their copy of the February 7, 2001 Order and on
March 6, 2001, they filed a Notice of Appeal of the September 14, 2000 Decision and the
February 7, 2001 Order of the RTC. The spouses Pelaez, on the other hand, filed a "Motion
to Dismiss the Appeal and Motion for Partial Execution" dated August 22, 2001.
Ruling on the motion, the RTC in its May 9, 2002 Order, found that the petitioners’ Notice of
Appeal was filed timely "only insofar as the Order of the Court dated February 7, 2001 is
concerned." Hence, it disposed as follows:
WHEREFORE, the appeal insofar as to all matters not raised in the plaintiffs' Motion for
Partial Reconsideration is DISMISSED.
Let a writ of execution issue for the release of the mortgage on the parcel of land covered by,
and release to plaintiffs Transfer Certificate of Title No. 155994 and that the injunction is
made permanent.

2. The defendants Associated Anglo-American Tobacco Corporation and Florante

Furnish copies of this Order to Atty. Rafael Declaro, Jr., Atty. Da Vinci Crisostomo and Mr.
C. Dy are ordered to pay the plaintiffs moral, exemplary damages, attorney's fees
Sancho Esquillo.
and litigation expenses in the amount of ₱50,000.00;

SO ORDERED.5
3. The injunction is made permanent.

On June 7, 2002, a Writ of Execution in favor of the spouses Pelaez was issued and on
With costs against defendants.
December 12, 2002, the RTC issued two Orders, one denying petitioners’ motion for
reconsideration of the May 9, 2002 Order; and the other mandating the release of the
SO ORDERED.3 mortgage under TCT No. 155994 and causing the issuance of a new title in the name of
spouses Pelaez free from any liens or encumbrances.

145
Ruling of the Court of Appeals
Petitioners then filed a Petition for Certiorari with the CA. The CA found that the September
14, 2000 Decision of the RTC had become final and executory. It found no cogent reason to
disturb the RTC's Decision and its subsequent amendment as embodied in the February 7,
2001 Order. The dispositive portion of the CA Decision states:
WHEREFORE, premises considered, the petition is DISMISSED for lack of merit.
SO ORDERED.6
After the denial by the CA of their motion for reconsideration, petitioners filed the present
Petition for Certiorari and Prohibition.
Issues
Petitioners raise the following issues:
Whether or not the Court of Appeals committed grave abuse of discretion tantamount to lack
of jurisdiction in holding the trial court's decision to be final and executory notwithstanding
that said decision had been modified, superseded and substituted by a subsequent order
upon which petitioner had duly perfected an appeal?
Whether or not the Court of Appeals gravely abused its discretion in holding that the petition
for certiorari is not the right judicial remedy but ordinary appeal notwithstanding the latter
course of action had already been availed of to no avail?
Whether or not the Court of Appeals committed grave abuse of discretion when in dismissing
the petition for certiorari it validated in effect the trial court's order to release the mortgage
and declaring the injunction permanent notwithstanding the loss of jurisdiction due to the
perfection of an appeal?7
Petitioners' Arguments
Petitioners contend that their petition for certiorari is the proper remedy and that it was filed
on time within 60 days from their receipt of the CA's assailed Resolution.
They contend that the CA gravely abused its discretion when it regarded the September 14,
2000 Decision of the trial court as final and executory even if said Decision was already
modified, superseded, vacated and substituted by the subsequent February 7, 2001 Order.
They also contend that it is grossly erroneous for the CA to conclude that the Petition
for Certiorari and Prohibition is not the right judicial remedy but ordinary appeal, when the
latter action had already been taken and perfected by petitioners but the trial court simply
refused to elevate the records to the CA.
Respondents' Arguments
Respondents on the other hand contend that petitioners failed to demonstrate patent and
gross abuse of discretion on the part of the CA and since all they say is that the CA erred in
dismissing their petition, the CA Resolution can only be assailed by means of a petition for
review, not an original petition for certiorari. They also contend that the availability of the
remedy of filing a petition for review foreclosed the filing of this original petition
for certiorari and justifies its dismissal.
Respondents also submit that the February 7, 2001 RTC Order granting the spouses Pelaez'
Partial Motion for Reconsideration by increasing the monetary awards only, did not amend
the RTC Decision but merely supplemented it. Thus, they contend that the finality of the
Decision was therefore not affected.
Our Ruling
The petition has merit.
Mode of Appeal
Petitioners are questioning a final decision of the CA by resorting to Rule 65, when their
remedy should be based on Rule 45. This case would normally have been dismissed outright
for failure of the petitioners to adopt the proper remedy. While ordinarily, certiorari is
unavailing where the appeal period has lapsed, there are exceptions. Among them are (a)
when public welfare and the advancement of public policy dictates; (b) when the broader
interest of justice so requires; (c) when the writs issued are null and void; or (d) when the
questioned order amounts to an oppressive exercise of judicial authority. 8 In the present
case, the CA's act of dismissing petitioners' petition for certiorari and in finding the RTC's
Decision already final and executory in its entirety, despite the filing by the petitioners of a
Notice of Appeal within 15 days from their receipt of the February 7, 2001 RTC Order
amending the said RTC Decision is an oppressive exercise of judicial authority. Hence, in the
interest of substantial justice, we deem it wise to overlook the procedural technicalities.
Trial Court's Decision and Its Modification
Both parties agree that the February 7, 2001 Order increased the monetary awards in the
Decision, specifically, the amount of overage from ₱23,820.16 to ₱843,383.11 and the award
of moral and exemplary damages and attorney's fees from ₱50,000.00 to ₱2,000,000.00.
They however, differ on whether these changes constituted an amendment of the Decision or
146
merely provided a supplement to the Decision. Petitioners argue that the change constituted
a substantial amendment, which therefore makes the entire case reviewable on appeal, while
respondents argue that the Order merely supplements the Decision which therefore makes
only the changes reviewable on appeal. They both cite Esquivel v. Alegre9 which states:
There is a difference between an amended judgment and a supplemental
judgment.1avvphi1 In an amended and clarified judgment, the lower court makes a thorough
study of the original judgment and renders the amended and clarified judgment only after
considering all the factual and legal issues. The amended and clarified decision is an entirely
new decision which supersedes the original decision. Following the court's differentiation of a
supplemental pleading from an amending pleading, it can be said that a supplemental
decision does not take the place or extinguish the existence of the original. As its very name
denotes, it only serves to bolster or adds something to the primary decision. A supplement
exists side by side with the original. It does not replace that which it supplements.1awph!1
In the present case, the dispositive portion of the February 7, 2001 Order was crafted in such
a way that it initially evades a categorical classification into either of the situations as
described in the above-cited case.
Hence, we further take into consideration that what plaintiffs filed was merely a Partial Motion
for Reconsideration. It is clear they were seeking a partial change in the original Decision. It
follows that there were some parts of the Decision that they sought to remain unchanged.
The RTC, thus made a study of only a portion of its original Decision and then amended the
pertinent portion. The RTC Decision was indeed, only partially amended. The February 7,
2001 Order cannot be considered as a supplemental Decision because it cannot exist side by
side with the original pertinent portion on overage, damages and attorney's fees. The former
replaced and superceded the latter.
Now what is the effect of this partial amendment? Is the subject RTC Decision divisible, such
that a portion may be considered already final and unappealable while another portion may
be considered as not yet final and unappealable? To answer this question we draw some
light from some provisions of the Rules of Court that permit divisions, to wit:
Rule 37, Sec. 7. Partial new trial or reconsideration.- If the grounds for a motion under this
Rule appear to the court to affect the issues as to only a part, or less than all of the matter in
controversy, or only one, or less than all, of the parties to it, the court may order a new trial or
grant reconsideration as to such issues if severable without interfering with the judgment or
final order upon the rest. (Italics and emphasis supplied)
Rule 36, Sec. 5. Separate judgments.-When more than one claim for relief is presented in an
action, the court, at any stage, upon a determination of the issues material to a particular
claim and all counterclaims arising out of the transaction or occurrence which is the
subject matter of the claim, may render a separate judgment disposing of such claim. The
judgment shall terminate the action with respect to the claim so disposed of and the action
shall proceed as to the remaining claims.
It can be seen that when matters, issues or claims can properly and conveniently be
separately resolved, then division is permitted, otherwise it is not. We see no hindrance in
applying this thesis to the current situation.
In the present case, the matter of the release of the mortgaged property is material and
intertwined with the issue of the amount of overage as well as the issue on the amount of
damages.10 It is difficult to separate these matters because a determination of the correct
amount of overage would require the examination and computation of the entire account of
deliveries and payments. Necessarily, upon re-examination of the subject account during an
appeal, the possibility of finding a shortage instead of an overage is present. And dependent
on the result of the re-examination of the entire account is the determination of the
correctness of either the foreclosure or release of the mortgaged property. It follows that the
ruling on the amount of damages and attorney's fees, if any, may also be affected by a re-
examination of the entire account.
As the disposition of some inter-related issues in the original RTC Decision were materially
amended by the February 7, 2001 RTC Order, these two issuances must be taken in
conjunction with each other. Together, these two issuances form one integrated amended
decision.11 Hence, an appeal from the February 7, 2001 RTC Order must be deemed to be an
appeal from the whole integrated amended Decision.
Appeal and Partial Execution
Petitioners received their copy of the February 7, 2001 Order on February 20, 2001. They
timely filed a notice of appeal on March 6, 2001, or after 14 days. The appeal was duly
perfected.
When an appeal had been duly perfected, execution of the judgment, whether wholly or
partially,12 was not a matter of right, but of discretion provided good reasons therefor existed.
The compelling grounds for the issuance of the writ must be stated in a special order after
due hearing. Aside from the existence of good reasons, the rules also require that the motion
for partial execution should have been filed while the trial court still had jurisdiction over the
case.13
In the present case, the RTC's May 9, 2002 Order granting the issuance of the writ of
execution failed to state good reasons for the issuance of the writ. The RTC mistakenly
deemed that the execution should issue as a matter of right because it had held that part of
its September 14, 2001 Decision had become final and executory. As previously discussed,
the said proposition is erroneous because the Decision in the present case is not properly
severable.
Furthermore, the motion for partial execution was filed only on August 22, 2001, more than
four months after the appeal was perfected. "In appeals by notice of appeal, the court loses
jurisdiction over the case upon the perfection of the appeals filed in due time and the
expiration of the time to appeal of the other parties."14 Each party only has at most 15 days
147
from their receipt of the final order to appeal it. Thus, when respondents filed their motion for
partial execution the RTC no longer had jurisdiction over the case and it no longer had
jurisdiction to act on the said motion for partial execution.
Aside from the fact that the appeal was filed on time and should thus not have been
dismissed in the assailed May 9, 2002 Order, the said Order, which also resolved the motion
for partial execution, fell short of the requirements of Section 2, Rule 39, as previously
discussed. Where the order of execution is not in conformity with the rules, the same is null
and void.15 Therefore, the CA erred in not nullifying the May 9, 2002 Order.
Finally, we address the December 12, 2002 RTC Orders. These Orders proceeded from, and
implemented, the May 9, 2002 Order that was null and void. These Orders were also issued
more than a year after the RTC had already lost jurisdiction over the case. Clearly, like the
May 9, 2002 Order, the December 12, 2002 Orders were also null and void. Thus the CA
should have also nullified these Orders instead of dismissing the petition
for certiorari questioning these Orders before it.
WHEREFORE, the petition is GRANTED. The assailed May 31, 2004 Decision and January
17, 2005 Resolution of the Court of Appeals in CA-G.R. SP. No. 75347 are REVERSED and
SET ASIDE. The May 9, 2002 and both December 12, 2002 Orders of the Regional Trial
Court in Civil Case No. D-8732 are DECLARED NULL and VOID. The Regional Trial Court of
Dagupan City, Branch 44 is ORDERED to TRANSMIT forthwith the records of Civil Case No.
D-8732 to the Court of Appeals for the appeal.
SO ORDERED.
THIRD DIVISION
[G.R. No. 165273 : March 10, 2010]
LEAH PALMA, PETITIONER, VS. HON. DANILO P. GALVEZ, IN HIS CAPACITY AS
PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF ILOILO CITY, BRANCH 24;
AND PSYCHE ELENA AGUDO, RESPONDENTS.
DECISION
PERALTA, J.:
Assailed in this petition for certiorari under Rule 65 of the Rules of Court are the Orders dated
May 7, 2004[1] and July 21, 2004[2] of the Regional Trial Court (RTC) of Iloilo City, Branch 24,
granting the motion to dismiss filed by private respondent Psyche Elena Agudo and denying
reconsideration thereof, respectively.
On July 28, 2003, petitioner Leah Palma filed with the RTC an action for damages against the
Philippine Heart Center (PHC), Dr. Danilo Giron and Dr. Bernadette O. Cruz, alleging that the
defendants committed professional fault, negligence and omission for having removed her
right ovary against her will, and losing the same and the tissues extracted from her during the
surgery; and that although the specimens were subsequently found, petitioner was doubtful
and uncertain that the same was hers as the label therein pertained that of somebody else.
Defendants filed their respective Answers. Petitioner subsequently filed a Motion for Leave to
Admit Amended Complaint, praying for the inclusion of additional defendants who were all
nurses at the PHC, namely, Karla Reyes, Myra Mangaser and herein private respondent
Agudo. Thus, summons were subsequently issued to them.
On February 17, 2004, the RTC's process server submitted his return of summons stating
that the alias summons, together with a copy of the amended complaint and its annexes,
were served upon private respondent thru her husband Alfredo Agudo, who received and
signed the same as private respondent was out of the country. [3]
On March 1, 2004, counsel of private respondent filed a Notice of Appearance and a Motion
for Extension of Time to File Answer [4] stating that he was just engaged by private
respondent's husband as she was out of the country and the Answer was already due.
On March 15, 2004, private respondent's counsel filed a Motion for Another Extension of
Time to File Answer, [5] and stating that while the draft answer was already finished, the same
would be sent to private respondent for her clarification/verification before the Philippine
Consulate in Ireland; thus, the counsel prayed for another 20 days to file the Answer.
On March 30, 2004, private respondent filed a Motion to Dismiss [6] on the ground that the
RTC had not acquired jurisdiction over her as she was not properly served with summons,
since she was temporarily out of the country; that service of summons on her should conform
to Section 16, Rule 14 of the Rules of Court. Petitioner filed her Opposition [7] to the motion to
dismiss, arguing that a substituted service of summons on private respondent's husband was
valid and binding on her; that service of summons under Section 16, Rule 14 was not
exclusive and may be effected by other modes of service, i.e., by personal or substituted
service. Private respondent filed a Comment [8] on petitioner's Opposition, and petitioner filed
a Reply[9] thereto.
On May 7, 2004, the RTC issued its assailed Order granting private respondent's motion to
dismiss. It found that while the summons was served at private respondent's house and
received by respondent's husband, such service did not qualify as a valid service of
summons on her as she was out of the country at the time the summons was served, thus,
she was not personally served a summons; and even granting that she knew that a complaint
was filed against her, nevertheless, the court did not acquire jurisdiction over her person as
she was not validly served with summons; that substituted service could not be resorted to
since it was established that private respondent was out of the country, thus, Section 16,
Rule 14 provides for the service of summons on her by publication.
Petitioner filed a motion for reconsideration, which the RTC denied in its Order dated July 21,
2004.
Petitioner is now before us alleging that the public respondent committed a grave abuse of
discretion amounting to lack or excess of jurisdiction when he ruled that:
148
I. Substituted service of summons upon private respondent, a defendant residing in the
Philippines but temporarily outside the country is invalid;
II. Section 16, Rule 14, of the 1997 Rules of Civil Procedure limits the mode of service of
summons upon a defendant residing in the Philippines, but temporarily outside the country,
exclusively to extraterritorial service of summons under section 15 of the same rule;
III. In not ruling that by filing two (2) motions for extension of time to file Answer, private
respondent had voluntarily submitted herself to the jurisdiction of respondent court, pursuant
to Section 20, Rule 14 of the 1997 Rules of Civil Procedure, hence, equivalent to having been
served with summons;
IV. The cases cited in his challenged Order of May 7, 2004 constitute stare decisis despite
his own admission that the factual landscape in those decided cases are entirely different
from those in this case. [10]
Petitioner claims that the RTC committed a grave abuse of discretion in ruling that Section
16, Rule 14, limits the service of summons upon the defendant-resident who is temporarily
out of the country exclusively by means of extraterritorial service, i.e., by personal service or
by publication, pursuant to Section 15 of the same Rule. Petitioner further argues that in filing
two motions for extension of time to file answer, private respondent voluntarily submitted to
the jurisdiction of the court.
In her Comment, private respondent claims that petitioner's certiorari under Rule 65 is not the
proper remedy but a petition for review under Rule 45, since the RTC ruling cannot be
considered as having been issued with grave abuse of discretion; that the petition was not
properly verified because while the verification was dated September 15, 2004, the petition
was dated September 30, 2004. She insists that since she was out of the country at the time
the service of summons was made, such service should be governed by Section 16, in
relation to Section 15, Rule 14 of the Rules of Court; that there was no voluntary appearance
on her part when her counsel filed two motions for extension of time to file answer, since she
filed her motion to dismiss on the ground of lack of jurisdiction within the period provided
under Section 1, Rule 16 of the Rules of Court.
In her Reply, petitioner claims that the draft of the petition and the verification and certification
against forum shopping were sent to her for her signature earlier than the date of the finalized
petition, since the petition could not be filed without her signed verification. Petitioner avers
that when private respondent filed her two motions for extension of time to file answer, no
special appearance was made to challenge the validity of the service of summons on her.
The parties subsequently filed their respective memoranda as required.
We shall first resolve the procedural issues raised by private respondent.
Private respondent's claim that the petition for certiorari under Rule 65 is a wrong remedy
thus the petition should be dismissed, is not persuasive. A petition for certiorari is proper
when any tribunal, board or officer exercising judicial or quasi-judicial functions has acted
without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction and there is no appeal, or any plain, speedy, and adequate remedy at
law.[11] There is "grave abuse of discretion" when public respondent acts in a capricious or
whimsical manner in the exercise of its judgment as to be equivalent to lack of jurisdiction.
Section 1, Rule 41 of the 1997 Rules of Civil Procedure states that an appeal may be taken
only from a final order that completely disposes of the case; that no appeal may be taken
from (a) an order denying a motion for new trial or reconsideration; (b) an order denying a
petition for relief or any similar motion seeking relief from judgment; (c) an interlocutory order;
(d) an order disallowing or dismissing an appeal; (e) an order denying a motion to set aside a
judgment by consent, confession or compromise on the ground of fraud, mistake or duress,
or any other ground vitiating consent; (f) an order of execution; (g) a judgment or final order
for or against one or more of several parties or in separate claims, counterclaims,
cross-claims and third-party complaints, while the main case is pending, unless the
court allows an appeal therefrom; or (h) an order dismissing an action without prejudice. In
all the above instances where the judgment or final order is not appealable, the aggrieved
party may file an appropriate special civil action for certiorari under Rule 65.
In this case, the RTC Order granting the motion to dismiss filed by private respondent is a
final order because it terminates the proceedings against her, but it falls within exception (g)
of the Rule since the case involves several defendants, and the complaint for damages
against these defendants is still pending. [12] Since there is no appeal, or any plain, speedy,
and adequate remedy in law, the remedy of a special civil action for certiorari is proper as
there is a need to promptly relieve the aggrieved party from the injurious effects of the acts of
an inferior court or tribunal. [13]
Anent private respondent's allegation that the petition was not properly verified, we find the
same to be devoid of merit. The purpose of requiring a verification is to secure an assurance
that the allegations of the petition have been made in good faith, or are true and correct, not
merely speculative.[14] In this instance, petitioner attached a verification to her petition
although dated earlier than the filing of her petition. Petitioner explains that since a draft of
the petition and the verification were earlier sent to her in New York for her signature, the
verification was earlier dated than the petition for certiorari filed with us. We accept such
explanation. While Section 1, Rule 65 requires that the petition for certiorari be verified, this is
not an absolute necessity where the material facts alleged are a matter of record and the
questions raised are mainly of law.[15] In this case, the issue raised is purely of law.
Now on the merits, the issue for resolution is whether there was a valid service of summons
on private respondent.
In civil cases, the trial court acquires jurisdiction over the person of the defendant either by
the service of summons or by the latter's voluntary appearance and submission to the
authority of the former.[16] Private respondent was a Filipino resident who was temporarily out
of the Philippines at the time of the service of summons; thus, service of summons on her is
governed by Section 16, Rule 14 of the Rules of Court, which provides:
Sec. 16. Residents temporarily out of the Philippines. - When an action is commenced
against a defendant who ordinarily resides within the Philippines, but who is temporarily out
of it, service may, by leave of court, be also effected out of the Philippines, as under the
preceding section. (Emphasis supplied)
149

The preceding section referred to in the above provision is Section 15, which speaks of
extraterritorial service, thus:
SEC. 15. Extraterritorial service. ─ When the defendant does not reside and is not found in
the Philippines, and the action affects the personal status of the plaintiff or relates to, or the
subject of which is, property within the Philippines, in which the defendant has or claims a lien
or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in
excluding the defendant from any interest therein, or the property of the defendant has been
attached within the Philippines, service may, by leave of court, be effected out of the
Philippines by personal service as under section 6; or by publication in a newspaper of
general circulation in such places and for such time as the court may order, in which case a
copy of the summons and order of the court shall be sent by registered mail to the last known
address of the defendant, or in any other manner the court may deem sufficient. Any order
granting such leave shall specify a reasonable time, which shall not be less than sixty (60)
days after notice, within which the defendant must answer.
The RTC found that since private respondent was abroad at the time of the service of
summons, she was a resident who was temporarily out of the country; thus, service of
summons may be made only by publication.
We do not agree.
In Montefalcon v. Vasquez,[17] we said that because Section 16 of Rule 14 uses the words
"may" and "also," it is not mandatory. Other methods of service of summons allowed under
the Rules may also be availed of by the serving officer on a defendant-resident who is
temporarily out of the Philippines. Thus, if a resident defendant is temporarily out of the
country, any of the following modes of service may be resorted to: (1) substituted service set
forth in section 7 ( formerly Section 8), Rule 14; (2) personal service outside the country, with
leave of court; (3) service by publication, also with leave of court; or (4) in any other manner
the court may deem sufficient. [18]
In Montalban v. Maximo,[19] we held that substituted service of summons under the present
Section 7, Rule 14 of the Rules of Court in a suit in personam against residents of the
Philippines temporarily absent therefrom is the normal method of service of summons that
will confer jurisdiction on the court over such defendant. In the same case, we expounded on
the rationale in providing for substituted service as the normal mode of service for residents
temporarily out of the Philippines.
x x x A man temporarily absent from this country leaves a definite place of residence, a
dwelling where he lives, a local base, so to speak, to which any inquiry about him may be
directed and where he is bound to return. Where one temporarily absents himself, he leaves
his affairs in the hands of one who may be reasonably expected to act in his place and stead;
to do all that is necessary to protect his interests; and to communicate with him from time to
time any incident of importance that may affect him or his business or his affairs. It is usual
for such a man to leave at his home or with his business associates information as to where
he may be contacted in the event a question that affects him crops up. If he does not do what
is expected of him, and a case comes up in court against him, he cannot just raise his voice
and say that he is not subject to the processes of our courts. He cannot stop a suit from
being filed against him upon a claim that he cannot be summoned at his dwelling house or
residence or his office or regular place of business.
Not that he cannot be reached within a reasonable time to enable him to contest a suit
against him. There are now advanced facilities of communication. Long distance telephone
calls and cablegrams make it easy for one he left behind to communicate with him.[20]
Considering that private respondent was temporarily out of the country, the summons and
complaint may be validly served on her through substituted service under Section 7, Rule 14
of the Rules of Court which reads:
SEC. 7. Substituted service. -- If, for justifiable causes, the defendant cannot be served within
a reasonable time as provided in the preceding section, service may be effected (a) by
leaving copies of the summons at the defendant's residence with some person of suitable
age and discretion then residing therein, or (b) by leaving the copies at defendant's office or
regular place of business with some competent person in charge thereof.
We have held that a dwelling, house or residence refers to the place where the person
named in the summons is living at the time when the service is made, even though he may
be temporarily out of the country at the time.[21] It is, thus, the service of the summons
intended for the defendant that must be left with the person of suitable age and discretion
residing in the house of the defendant. Compliance with the rules regarding the service of
summons is as important as the issue of due process as that of jurisdiction. [22]
Section 7 also designates the persons with whom copies of the process may be left. The rule
presupposes that such a relation of confidence exists between the person with whom the
copy is left and the defendant and, therefore, assumes that such person will deliver the
process to defendant or in some way give him notice thereof. [23]
In this case, the Sheriff's Return stated that private respondent was out of the country; thus,
the service of summons was made at her residence with her husband, Alfredo P. Agudo,
acknowledging receipt thereof. Alfredo was presumably of suitable age and discretion, who
was residing in that place and, therefore, was competent to receive the summons on private
respondent's behalf.
Notably, private respondent makes no issue as to the fact that the place where the summons
was served was her residence, though she was temporarily out of the country at that time,
and that Alfredo is her husband. In fact, in the notice of appearance and motion for extension
of time to file answer submitted by private respondent's counsel, he confirmed the Sheriff's
Return by stating that private respondent was out of the country and that his service was
engaged by respondent's husband. In his motion for another extension of time to file answer,
private respondent's counsel stated that a draft of the answer had already been prepared,
which would be submitted to private respondent, who was in Ireland for her clarification
and/or verification before the Philippine Consulate there. These statements establish the fact
that private respondent had knowledge of the case filed against her, and that her husband
had told her about the case as Alfredo even engaged the services of her counsel.
150
In addition, we agree with petitioner that the RTC had indeed acquired jurisdiction over the
person of private respondent when the latter's counsel entered his appearance on private
respondent's behalf, without qualification and without questioning the propriety of the service
of summons, and even filed two Motions for Extension of Time to File Answer. In effect,
private respondent, through counsel, had already invoked the RTC's jurisdiction over her
person by praying that the motions for extension of time to file answer be granted. We have
held that the filing of motions seeking affirmative relief, such as, to admit answer, for
additional time to file answer, for reconsideration of a default judgment, and to lift order of
default with motion for reconsideration, are considered voluntary submission to the
jurisdiction of the court.[24] When private respondent earlier invoked the jurisdiction of the RTC
to secure affirmative relief in her motions for additional time to file answer, she voluntarily
submitted to the jurisdiction of the RTC and is thereby estopped from asserting otherwise. [25]
Considering the foregoing, we find that the RTC committed a grave abuse of discretion
amounting to excess of jurisdiction in issuing its assailed Orders.
WHEREFORE, the petition is GRANTED. The Orders dated May 7, 2004 and July 21, 2004
of the Regional Trial Court of Iloilo City, Branch 24, are hereby SET ASIDE. Private
respondent is DIRECTED to file her Answer within the reglementary period from receipt of
this decision.
SO ORDERED.
[G.R. No. 156375, May 30 : 2011]
DOLORES ADORA MACASLANG, PETITIONER, VS. RENATO AND MELBA ZAMORA,
RESPONDENTS.
DECISION
BERSAMIN, J.:
The Regional Trial Court (RTC) is not limited in its review of the decision of the Municipal
Trial Court (MTC) to the issues assigned by the appellant, but can decide on the basis of the
entire records of the proceedings of the trial court and such memoranda or briefs as may be
submitted by the parties or required by the RTC.
The petitioner appeals the decision promulgated on July 3, 2002, [1] whereby the Court of
Appeals (CA) reversed"for having no basis in fact and in law" the decision rendered on May
18, 2000[2] by the Regional Trial Court, Branch 25, in Danao City (RTC) thathad dismissed
the respondents' action for ejectment against the petitioner, andreinstated the decision dated
September 13, 1999 of the Municipal Trial Court in Cities (MTCC) of DanaoCity (ordering the
petitioner as defendant to vacate the premises and to pay attorney's fees of P10,000.00 and
monthly rental of P5,000.00 starting December 1997 until they vacated the premises). [3]
We grant the petition for review and rule that contrary to the CA's conclusion, the RTCas an
appellate court properly considered and resolved issues even if not raised in the appeal from
the decisionrendered in an ejectment case by the MTCC.
ANTECEDENTS
On March 10, 1999, the respondents filed a complaint for unlawful detainer in the MTCC,
alleging that "the [petitioner] sold to [respondents] a residential land located in Sabang,
DanaoCity" and that "the [petitioner] requested to be allowed to live in the house" with a
"promise to vacate as soon as she would be able to find a new residence." They further
alleged thatdespitetheir demand after a year, the petitioner failed or refused to vacate the
premises.
Despite the due service of the summons and copy of the complaint, the petitioner did not file
heranswer. The MTCC declared her in defaultupon the respondents' motion to declare her in
default, and proceeded to receivethe respondents'oral testimony and documentary evidence.
Thereafter, on September 13, 1999, the MTCC rendered judgment against her, disposing:
WHEREFORE, considering the foregoing, Judgment is hereby rendered in favor [of] plaintiffs
(sic) spouses Renato Zamora and Melba Zamora and against defendant Dolores
AdoraMacaslang, ordering defendant to vacate the properties in question, to pay to plaintiffs
Attorney's Fees in the sum of P10,000.00 and monthly rental of P5,000.00 starting
December, 1997 until the time the defendant shall have vacated the properties in question.
SO ORDERED.[4]
The petitioner appealed to the RTC, averring the following as reversible errors, namely:
1. Extrinsic Fraud was practiced upon defendant-appellant which ordinary
prudence could not have guarded against and by reason of which she
has been impaired of her rights.
2. Defendant-Appellant has a meritorious defense in that there was no
actual sale considering that the absolute deed of sale relied upon by the
plaintiff-appell[ees] is a patent-nullity as her signature therein was
procured through fraud and trickery.[5]
and praying through her appeal memorandum as follows:
Wherefore, in view of the foregoing, it is most respectfully prayed for that judgment be
rendered in favor of defendant-appellant ordering that this case be remanded back to the
Court of Origin, Municipal Trial Court of Danao City, for further proceedings to allow the
defendant to present her evidence, and thereafter, to render a judgment anew. [6]
On May 18, 2000, the RTC resolved the appeal, to wit:[7]
WHEREFORE,judgment is hereby rendered dismissing the complaint for failure to state a
cause of action.
151
The same may, however, be refiled in the same Court, by alleging plaintiffs' cause of action, if
any.
Plaintiffs' Motion for Execution of Judgment of the lower court is rendered moot by this
judgment.
SO ORDERED.
The respondents appealed to the CA, assailing the RTC's decision for "disregarding the
allegations in the complaint" in determining the existence or non-existence of a cause of
action.
On July 3, 2002, the CA reversed and set aside the RTC's decision and reinstated the
MTCC's decision in favor of the respondents, disposing:
WHEREFORE,foregoing premises considered, the Petition is hereby GIVEN DUE COURSE.
Resultantly, the impugned decision of the Regional Trial Court is hereby REVERSED and
SET ASIDE for having no basis in fact and in law, and the Decision of the Municipal Trial
Court in Cities REINSTATED and AFFIRMED. No costs.
SO ORDERED.[8]
The petitioner'smotion for reconsideration was denied onNovember 19, 2002.
ISSUES
Hence, the petitioner appeals the CA's adverse decision, submitting legal issues, as follows:
1. Whether or not the Regional Trial Court in the exercise of its Appellate
Jurisdiction is limited to the assigned errors in the Memorandum or brief
filed before it or whether it can decide the case based on the entire
records of the case, as provided for in Rule 40, Sec. 7. This is a novel
issue which, we respectfully submit, deserves a definitive ruling by this
Honorable Supreme Court since it involves the application of a new
provision, specifically underlined now under the 1997 Revised Rules on
Civil procedure.
2. Whether or not in an action for unlawful detainer, where there was no
prior demand to vacate and comply with the conditions of the lease
made, a valid cause of action exists?
3. Whether or not in reversing the Regional Trial Court Decision and
reinstating and affirming the decision of the Municipal Circuit Trial Court,
which was tried and decided by the MCTC in violation of the Rules on
Summary Procedure, the Court of Appeals sanctioned a gross departure
from the usual course of judicial proceedings?[9]
The issues that this Court has to resolve are stated thuswise:
1. Whether or not the CA correctly found that the RTC committed reversible error in
ruling on issues not raised by the petitioner in her appeal;
2. Whether or not the CA correctly found that the complaint stated a valid cause of
action;
3. Whether or not the CA erred in finding that there was a valid demand to vacate
made by the respondents on the petitioner; and
4. Whether or not the petitioner's defense of ownership was meritorious.
RULING
We grant the petition for review.
A.
As an appellate court, RTC may rule
upon an issue notraised on appeal
In its decision, the CA ruled that the RTC could not resolve issues that were not assigned by
the petitioner in her appeal memorandum, explaining:
Indeed(,) We are rather perplexed why the Regional Trial Court, in arriving at its decision,
discussed and ruled on issues or grounds which were never raised, assigned, or argued on
by the Defendant-appellee in her appeal to the former. A careful reading of the Defendant-
appellee's appeal memorandum clearly shows that it only raised two (2) grounds, namely (a)
alleged extrinsic fraud, (b) meritorious defenses based on nullity of the Deed of Sale
Instrument. And yet the Trial Court, in its decision, ruled on issues not raised such as lack of
cause of action and no prior demand to vacate having been made.
Only errors assigned and properly argued on the brief and those necessarily related thereto,
may be considered by the appellate court in resolving an appeal in a civil case. Based on
said clear jurisprudence, the court a quo committed grave abuse of discretion amounting to
lack of jurisdiction when it resolved Defendant-appellee's appeal based on grounds or issues
not raised before it, much less assigned by Defendant-appellee as an error.
Not only that. It is settled that an issue which was not raised during the Trial in the court
below would not be raised for the first time on appeal as to do so would be offensive to the
basic rules of fair play, justice and due process (Victorias Milling Co., Inc. vs. CA, 333 SCRA
663). We can therefore appreciate Plaintiffs-appellants' dismay caused by the Regional Trial
Court's blatant disregard of a basic and fundamental right to due process. [10]
152

The petitioner disagrees with the CA and contends that the RTC as an appellate courtcould
rule on the failure of the complaint to state a cause of action and the lack of demand to
vacate even if not assigned in the appeal.
We concur with the petitioner's contention.
The CA might have been correct had the appeal been a first appeal from the RTC to the CA
or another proper superior court, in which instance Section 8 of Rule 51, which applies to
appeals from the RTC to the CA,imposesthe express limitation of the review to only those
specified in the assignment of errorsor closely related to or dependent on an assigned error
and properly argued in the appellant's brief, viz:
Section 8. Questions that may be decided. - No error which does not affect the jurisdiction
over the subject matter or the validity of the judgment appealed from or the proceeding
therein will be considered unless stated in the assignment of errors, or closely related
to or dependent on an assigned error and properly argued in the brief, save as the court
may pass upon plain errors and clerical errors.
Butthe petitioner's appeal herein,being taken from the decision of the MTCC to the RTC, was
governed by a different rule, specifically Section 18 of Rule 70 of the Rules of Court, to wit:
Section 18. xxx
xxx
The judgment or final order shall be appealable to the appropriate Regional Trial Court
which shall decide the same on the basis of the entire record of the proceedings had
in the court of origin and such memoranda and/or briefs as may be submitted by the
parties or required by the Regional Trial Court. (7a)
As such,the RTC, in exercising appellate jurisdiction,was not limited to the errors assigned in
the petitioner's appeal memorandum, but coulddecide on the basis of the entire record of the
proceedingshad in the trial court and such memoranda and/or briefs as may be submitted by
the parties or required by the RTC.
The difference between the procedures for deciding on review is traceable to Section 22
of Batas PambansaBlg. 129,[11]which provides:
Section 22. Appellate Jurisdiction. - Regional Trial Courts shall exercise appellate jurisdiction
over all cases decided by Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts in their respective territorial jurisdictions.Such cases shall be decided
on the basis of the entire record of the proceedings had in the court of origin [and]
such memoranda and/or briefs as may be submitted by the parties or required by the
Regional Trial Courts. The decision of the Regional Trial Courts in such cases shall be
appealable by petition for review to the Court of Appeals which may give it due course only
when the petition shows prima facie that the lower court has committed an error of fact or law
that will warrant a reversal or modification of the decision or judgment sought to be reviewed.
[12]
As its compliance with the requirement of Section 36 of Batas PambansaBlg. 129to "adopt
special rules or procedures applicable to such cases in order to achieve an expeditious and
inexpensive determination thereof without regard to technical rules," the Court promulgated
the 1991 Revised Rules on Summary Procedure, whereby it institutionalized the summary
procedure for all the first level courts. Section 21 of the 1991 Revised Rules on Summary
Procedurespecifically stated:
Section 21. Appeal. - Thejudgment or final order shall be appealable to the appropriate
Regional Trial Court which shall decide the same in accordance with Section 22 of
Batas PambansaBlg. 129. The decision of the Regional Trial Court in civil cases governed
by this Rule, including forcible entry and unlawful detainer shall be immediately executory,
without prejudice to a further appeal that may be taken therefrom. Section 10 of Rule 70 shall
be deemed repealed.
Later on, the Court promulgated the 1997 Rules of Civil Procedure, effective on July 1, 1997,
and incorporated in Section 7 of Rule 40 thereof the directive to the RTC to decide appealed
cases"on the basis of the entire record of the proceedings had in the court of origin and such
memoranda as are filed,"viz:
Section 7. Procedure in the Regional Trial Court. -
(a) Upon receipt of the complete record or the record on appeal, the clerk of court of the
Regional Trial Court shall notify the parties of such fact.
(b) Within fifteen (15) days from such notice, it shall be the duty of the appellant to submit a
memorandum which shall briefly discuss the errors imputed to the lower court, a copy of
which shall be furnished by him to the adverse party. Within fifteen (15) days from receipt of
the appellant's memorandum, the appellee may file his memorandum. Failure of the appellant
to file a memorandum shall be a ground for dismissal of the appeal.
(c) Upon the filing of the memorandum of the appellee, or the expiration of the period to do
so, the case shall be considered submitted for decision. The Regional Trial Court shall
decide the case on the basis of the entire record of the proceedings had in the court of
origin and such memoranda as are filed. (n)
As a result, the RTC presently decides all appeals from the MTC based on the entire record
of the proceedings had in the court of origin and such memoranda or briefs as are filed in the
RTC.
Yet, even withoutthe differentiation in the procedures of deciding appeals, thelimitation of the
review to onlythe errors assigned and properly argued in the appeal brief or memorandum
and the errors necessarily related to such assigned errorsought not to have obstructed the
CA from resolving the unassigned issues by virtue of their coming under one or several of the
following recognized exceptions to the limitation, namely:
153
(a) When the question affectsjurisdiction over the subject matter; (a) Initially, the possession of the property by the defendant was by contract with or by
(b) Matters that are evidently plain or clerical errors within contemplation of law; tolerance of the plaintiff;
(c) Matters whose consideration is necessary in arriving at a just decision and complete
resolution of the case or in serving the interests of justice or avoiding dispensing (b) Eventually, such possession became illegal upon notice by the plaintiff to the defendant
piecemeal justice; about the termination of the latter's right of possession;
(d) Matters raised in the trial court and are of record having some bearing on the issue
submitted that the parties failed to raise or that the lower court ignored;
(e) Matters closely related to an error assigned; and (c) Thereafter, the defendant remained in possession of the property and deprived the
(f) Matters upon which the determination of a question properly assigned is dependent. [13] plaintiff of its enjoyment; and

Consequently, the CA improperly disallowed the consideration and resolution of the two
errors despite their being: (a)necessary in arriving at a just decision and acomplete resolution
of the case; and (b) matters of record having some bearing on the issues submitted that the
lower court ignored.
B.
CA correctly delved into and determined
whether or not complaint stateda cause of action
The RTC opined that the complaint failed to state a cause of action because the evidence
showed that there was no demand to vacate made upon the petitioner.
The CA disagreed, observingin its appealed decision:
But what is worse is that a careful reading of Plaintiffs-appellants' Complaint would readily
reveal that they have sufficiently established (sic) a cause of action against Defendant-
appellee. It is undisputed that as alleged in the complaint and testified to by Plaintiffs-
appellants, a demand to vacate was made before the action for unlawful detainer was
instituted.
A complaint for unlawful detainer is sufficient if it alleges that the withholding of possession or
the refusal is unlawful without necessarily employing the terminology of the law (Jimenez vs.
Patricia, Inc., 340 SCRA 525). In the case at bench, par. 4 of the Complaint alleges, thus:
"4. After a period of one (1) year living in the aforementioned house, Plaintiff demanded upon
defendant to vacate but she failed and refused;"
From the foregoing allegation, it cannot be disputed that a demand to vacate has not only
been made but that the same was alleged in the complaint. How the Regional Trial Court
came to the questionable conclusion that Plaintiffs-appellants had no cause of action is
beyond Us.[14]
We concur with the CA.
A complaint sufficiently alleges a cause of action for unlawful detainer if it states the following:
(d) Within one year from the making of the last demand to vacate the propertyon the
defendant, the plaintiff instituted the complaint for ejectment.[15]
In resolving whether the complaint states a cause of actionor not, only the facts alleged in the
complaint are considered. The test is whether the court can render a valid judgment on the
complaint based on the facts alleged and the prayer asked for. [16] Only ultimate facts, not
legal conclusions or evidentiary facts, are considered for purposes of applying the test. [17]
To resolve the issue, therefore, a look at the respondents' complaint is helpful:
2. On September 10, 1997, defendant sold to plaintiffs a residential land located in
Sabang, Danao City, covered by Tax Dec.0312417 RB with an area of 400 square meters,
including a residential house where defendant was then living covered by Tax Dec. 0312417
RB, a copy of the deed of absolute [sale] of these properties is hereto attached as Annex "A";
3. After the sale, defendant requested to be allowed to live in the house which plaintiff
granted on reliance of defendant's promise to vacate as soon as she would be able to find
a new residence;
4. After a period of one (1) year living in the aforementioned house, plaintiffs demanded
upon defendant to vacate but she failed or refused.
5. Plaintiffs sought the aid of the barangay Lupon of Sabang, Danao City for arbitration but no
settlement was reached as shown by a certification to file action hereto attached as Annex
"B";
6. Plaintiffs were compelled to file this action and hire counsel for P10,000 by way of
attorney's fee;
7. Defendant agreed to pay plaintiffs a monthly rental of P5,000 for the period of time that the
former continued to live in the said house in question.
WHEREFORE, it is respectfully prayed of this Honorable Court to render judgment ordering
the defendant to vacate the properties in question, ordering the defendant to pay plaintiffs
attorney's fees in the sum of P10,000, ordering the defendant to pay the plaintiffs a monthly
rental of P5,000 starting in October 1997, until the time that defendant vacates the properties
in question. Plaintiffs pray for such other refiefs consistent with justice and equity. [18]

154

Based on its allegations, the complaintsufficiently stated a cause of action for unlawful
detainer. Firstly, it averred that the petitioner possessed the property by the mere tolerance of
the respondents. Secondly, the respondents demanded that the petitioner vacate the
property, thereby rendering her possession illegal. Thirdly,she remained in possession of the
property despite the demand to vacate. And, fourthly, the respondents instituted the
complaint on March 10, 1999,which was well within a year after the demand to vacate was
made around September of 1998 or later.
Yet, even as we rule that the respondents' complaint stated a cause of action, we must find
and hold that both the RTC and the CA erroneously appreciatedthe real issue to be about the
complaint's failure to state a cause of action. It certainly was not so, butthe respondents' lack
of cause of action. Their erroneous appreciationexpectedly prevented the correct resolution
of the action.
Failure to state a cause of action and lack of cause of action are really different from each
other.On the one hand, failure to state a cause of actionrefers to the insufficiency of the
pleading, and is a ground for dismissal under Rule 16 of the Rules of Court. On the other
hand, lack of cause action refers to a situation where the evidence does not prove the cause
of action alleged in the pleading. Justice Regalado, a recognized commentator on remedial
law, has explained the distinction:[19]
xxx What is contemplated, therefore, is a failure to state a cause of action which is provided
in Sec. 1(g) of Rule 16. This is a matter of insufficiency of the pleading. Sec. 5 of Rule 10,
which was also included as the last mode for raising the issue to the court, refers to the
situation where the evidence does not prove a cause of action. This is, therefore, a matter of
insufficiency of evidence. Failure to state a cause of action is different from failure to prove a
cause of action. The remedy in the first is to move for dismissal of the pleading, while the
remedy in the second is to demur to the evidence, hence reference to Sec. 5 of Rule 10 has
been eliminated in this section. The procedure would consequently be to require the pleading
to state a cause of action, by timely objection to its deficiency; or, at the trial, to file a
demurrer to evidence, if such motion is warranted.
been resolved on the basis of the stipulations, admissions, or evidence presented. [20]
Having found that neither Exhibit C nor Exhibit E was a proper demand to vacate,
[21]
 considering that Exhibit C (the respondents' letter dated February 11, 1998)demanded the
payment of P1,101,089.90, and Exhibit E (theirletter dated January 21, 1999) demandedthe
payment of P1,600,000.00, the RTC concluded that the demand alleged in the complaint did
not constitute a demand to pay rent and to vacate the premises necessary in an action for
unlawful detainer. It was this conclusion that caused the RTC to confuse the defect as failure
of the complaint to state a cause of action for unlawful detainer.
The RTCerred even in that regard.
To begin with, it was undeniable that Exhibit D (the respondents' letter dated April 28, 1998)
constitutedthedemand to vacate that validly supported their action for unlawful detainer,
because of its unmistakable tenor as a demand to vacate, which the following portion
indicates:[22]
This is to give notice that since the mortgage to your property has long expired and that since
the property is already in my name, I will be taking over the occupancy of said property
two (2) months from date of this letter.
Exhibit D, despite not explicitly using the wordvacate, relayed to the petitionerthe
respondents' desire to take over the possession of the property by givingher no alternative
exceptto vacate.The word vacate,according toGolden Gate Realty Corporation v.
Intermediate Appellate Court,[23]is not a talismanic word that must be employed in all notices
to vacate.The tenantsin Golden Gate Realty Corporationhad defaulted in the payment of
rents, leading theirlessorto notify them to pay with a warning that a case of ejectment would
be filed against themshould they not do so. The Court held that the lessor had thereby given
strong notice that "you either pay your unpaid rentals or I will file a court case to have you
thrown out of my property,"for therewas no other interpretation of the import of the notice due
to the alternatives being clear cut, in that the tenants must pay rentals that had been fixed
and had become payable in the past, failing in which they must move out. [24]

A complaint states a cause of action if it avers the existence of the three essential elements Also, the demand not being to pay rent and to vacate did not render the cause of action
of a cause of action, namely: deficient. Based on the complaint, the petitioner's possession was allegedly based on the
respondents' tolerance, not on any contract between them. Hence, thedemand to vacate
(a) The legal right of the plaintiff; sufficed.

(b) The correlative obligation of the defendant; and C.

Ejectment was not proper due
(c) The act or omission of the defendant in violation of said legal right. to defense of ownership being established

If the allegations of the complaint do not aver the concurrence of these elements, the The respondents' cause of action for unlawful detainer was based on their supposed right to
complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause possession resulting from their having acquired it through sale.
of action.Evidently, it is not the lack or absence of a cause of action that is a ground for the
dismissal of the complaint but the fact that the complaint states no cause of action.Failure to The RTCdismissed the complaint based on its following findings, to wit:
state a cause of action may be raised at the earliest stages of an action through a motion to
dismiss, but lack of cause of action may be raised at any time after the questions of fact have

155
In the case at bench, there is conflict between the allegation of the complaint and the (a)The petitioner, as the vendor, was paid the amount of only P100,000.00, [26] a price too
document attached thereto. inadequate in comparison with the sum of P1,600,000.00 demanded in Exhibit E; [27]

Simply stated, plaintiff alleged that she bought the house of the defendant for P100,000.00 (b) The petitioner retained possession of the property despite the supposed sale; and
on September 10, 1997 as stated in an alleged Deed of Absolute Sale marked as Exhibit "A"
to the complaint. Insofar as plaintiff is concerned, the best evidence is the said Deed of (c) The deed of sale wasexecuted as a result or by reason of the loan the respondents
Absolute Sale. extended to the petitioner,because they still allowed the petitioner to "redeem" the property
by paying her obligation under the loan.[28]
The Court is surprised why in plaintiff's letter dated February 11, 1998, marked as Exhibit "C"
and attached to the same complaint, she demanded from the defendant the whooping sum of Submissions of the petitioner further supported the findings of the RTCon the equitable
P1,101,089.90. It must be remembered that this letter was written five (5) months after the mortgage. Firstly, there was the earlier dated instrument (deed of pactode retro)involving the
deed of absolute sale was executed. same property, albeit the consideration was only P480,000.00, executed between the
petitioner as vendor a retro and the respondent Renato Zamora as vendee a retro.
[29]
The same letter (Exhibit "C") is not a letter of demand as contemplated by law and  Secondly, there were two receipts for the payments the petitioner had made to the
jurisprudence. The plaintiff simply said that she will appreciate payment per notarized respondentstotaling P300,000.00.[30] And, thirdly, the former secretary of respondent Melba
document. There is no explanation what this document is. Zamora executed an affidavit acknowledging that the petitioner had already paid a total of
P500,000.00 to the respondents. [31] All these confirmed the petitioner's claim that she
Plaintiff's letter dated April 28, 1998 (Exhibit "D") contradicts her allegation that she remained the owner of the property and was still entitled to its possession.
purchased the house and lot mentioned in the complaint. Exhibit "D", which is part of the
pleading and a judicial admission clearly shows that the house and lot of the defendant was Article 1602 of the Civil Codeenumerates the instances when a contract, regardless of its
not sold but mortgaged. nomenclature, may be presumed to be an equitable mortgage, namely:

Again, for purposes of emphasis and clarity, a portion of the letter (Exhibit "D") reads: (a) When the price of a sale with right to repurchase is unusually inadequate;
(b) When the vendor remains in possession as lessee or otherwise;
`This is to give notice that since the mortgage to your property has long expired and that (c) When upon or after the expiration of the right to repurchase another instrument
since the property is already in my name, I will be taking over the occupancy of said property extending the period of redemption or granting a new period is executed;
two (2) months from date of this letter.' (d) When the purchaser retains for himself a part of the purchase price;
(e) When the vendor binds himself to pay the taxes on the thing sold; and,
xxxx (f) In any other case where it may be fairly inferred that the real intention of the parties is
that the transaction shall secure the payment of a debt or the performance of any other
Exhibit "E", which is a letter dated January 21, 1999, shows the real transaction between the obligation.
parties in their case. To reiterate, the consideration in the deed of sale (Exhibit "A") is
P100,000.00 but in their letter (Exhibit "E") she is already demanding the sum of The circumstances earlier mentioned were, indeed, badges of an equitable mortgage within
P1,600,000.00 because somebody was going to buy it for P2,000,000.00. the context ofArticle 1602 of the Civil Code.

There are indications that point out that the real transaction between the parties is one of Nonetheless, the findingsfavorable to the petitioner's ownership are neitherfinally
equitable mortgage and not sale.[25] determinative of the title in the property, nor conclusive in any other proceeding where
ownership of the property involved herein may be more fittingly adjudicated.Verily, where the
Despite holding herein that the respondents' demand to vacate sufficed, we uphold the result cause of action in an ejectment suit is based on ownership of the property, the defense that
of the RTC decision in favor of the petitioner. This we do,because therespondents' Exhibit the defendantretainedtitle or ownership is a proper subject for determination by the MTC but
Cand Exhibit E, by demandingpayment from the petitioner, respectively,of P1,101,089.90 and only for the purpose of adjudicating the rightful possessor of the property. [32]This is based on
P1,600,000.00, revealedthe true nature of the transaction involving the property in question Rule 70 of the Rules of Court, viz:
as one of equitable mortgage, not a sale.
Section 16. Resolving defense of ownership. -- When the defendant raises the defense of
Our upholding of the result reached by the RTC rests on the following circumstancesthat ownership in his pleadings and the question of possession cannot be resolved without
tended to show that the petitioner had not really sold the property to the respondents, deciding the issue of ownership, the issue of ownership shall be resolved only to determine
contrary to the latter's averments, namely: the issue of possession.(4a)

156
D. G.R. No. 184732               September 9, 2013
MTC committed procedural lapses
that must be noted and corrected
CORAZON S. CRUZ under the name and style, VILLA CORAZON CONDO
DORMITORY, Petitioner,
The Court seizes theopportunity to note and to correctseveralnoticeable procedural lapses on
vs.
the part of the MTCC, to avoid the impression that the Court condones or tolerates the
MANILA INTERNATIONAL AIRPORT AUTHORITY, Respondent.
lapses.

The first lapse wasthe MTCC's granting of the respondents' motion to declare the petitioner in RESOLUTION
default following her failure to file an answer. The proper procedurewas not for the plaintiffs to
move for the declaration in default of the defendant who failed to file the answer. Such a
PERLAS-BERNABE, J.:
motion to declare in default has been expressly prohibited under Section 13, Rule 70 of
theRules of Court.[33]Instead, the trial court, either motuproprio or on motion of the plaintiff,
should render judgment as the facts alleged in the complaint might warrant. [34]In other words, Assailed in this petition for review on certiorari 1 are the Decision2 dated November 27, 2007
the defendant's failure to file an answer under Rule 70 of the Rules of Courtmight result to a and Resolution3 dated September 26, 2008 of the Court of Appeals in CA-G.R. CV No.
judgment by default, not to a declaration of default. 88308, which dismissed the appeal filed by petitioner Corazon S. Cruz (Cruz), affirming with
modification the court a quo’s dismissal of Civil Case No. 70613 on the ground of improper
The second lapse wasthe MTCC'sreception of the oral testimony of respondent Melba venue.
Zamora. Rule 70 of the Rules of Courthas envisioned the submission only of affidavits of the
witnesses (not oral testimony) and other proofs on the factual issues defined in the order
issued within five days from the termination of the preliminary conference; [35]and has The Facts
permittedthe trial court, should it find the need to clarify material facts, to thereafterissue an
order during the 30-day period from submission of the affidavits and other proofs specifying On December 7, 2005, Cruz filed before the Regional Trial Court(RTC) of Pasig City, Branch
the matters to be clarified, and requiring the parties to submit affidavits or other evidence 68 (RTC-Pasig City) a complaint 4 for breach of contract, consignation, and damages
upon such matters within ten days from receipt of the order.[36] (complaint for breach of contract)against respondent Manila International Airport Authority
(MIAA),docketed as Civil Case No. 70613 (Pasig case). In her complaint, Cruz alleged that
The procedural lapses committed in this case are beyond comprehension.The MTCC judge on August 12, 2003, she executed a Contract of Lease (lease contract)with MIAA over a
could not have been unfamiliar with the prevailing procedure, considering that therevised 1,411.98 square meter-property, situated at BAC 1-11,Airport Road, Pasay City, in order to
version of Rule 70, although taking effect only on July 1, 1997,was derived from the  1991 establish a commercial arcade for sublease to other businesses. 5 She averred that MIAA
Revised Rule on Summary Procedure, in effect since November 15, 1991. It was not likely, failed to inform her that part of the leased premises is subject to an easement of public
therefore, that the MTCC judge committed the lapses out of his unfamiliarity with the relevant use6 (easement) since the same was adjacent to the Parañaque River. 7 As a result, she was
rule. We discern thatthe cause of the lapses was his lack of enthusiasm in not able to obtain a building permit as well as a certificate of electrical inspection from the
implementingcorrect procedures in this case. If that was the true reason, the Court can only Manila Electric Company, leading to her consequent failure to secure an electrical connection
be alarmed and concerned, for a judge should not lack enthusiasm in applying the rules of for the entire leased premises.8
procedure lest the worthy objectives of their promulgation be unwarrantedly sacrificed and
brushed aside. The MTCC judge should not forget that the rules of procedure were always
meant to be implemented deliberately, not casually, and their non-compliance should only be Due to the lack of electricity, Cruz’s tenants did not pay rent; hence, she was unable to pay
excused in the higher interest of the administration of justice. her own rental obligations to MIAA from December 2004 onwards. 9 Further, since some of
Cruz’s stalls were located in the easement area, the Metropolitan Manila Development
It is timely, therefore, to remind all MTC judges to display full and enthusiastic compliance Authority demolished them, causing her to suffer actual damages in the amount of
with all the rules of procedure, especially those intended for expediting proceedings. ₱633,408.64.10 In view of the foregoing, Cruz sent MIAA her rental computation, pegged at
the amount of ₱629,880.02,wherein the aforesaid damages have been deducted. However,
WHEREFORE,we grant the petition for review on certiorari; set aside the decision instead of accepting Cruz’s payment, MIAA sent a letter terminating the lease contract. 11
promulgated on July 3, 2002 by the Court of Appeals; and dismiss the complaint for unlawful
detainer for lack of a cause of action. For its part, MIAA filed a Motion to Dismiss12 (motion to dismiss)hinged on the following
grounds: (a) violation of the certification requirement against forum shopping under Section
The respondents shall pay the costs of suit. 5,Rule 713 of the Rules of Court, given that the lease contract subject of the Pasig case is the
same actionable document subject of Civil Case No. 1129918 (Manila case) which is a
SO ORDERED.

157
complaint for partial annulment of contract (complaint for annulment of contract)also filed by The Issue Before the Court
Cruz before the RTC of Manila, Branch 1;14 and (b) improper venue, since in the complaint for
annulment of contract, as well as the verification/certification and the annexes attached there
The essential issue in this case is whether or not the CA erred in dismissing Cruz’s appeal on
to, it is indicated that Cruz is a resident of 506, 2nd Street, San Beda Subdivision, San
the basis of improper venue.
Miguel, Manila.15

Cruz contends that the CA may only resolve errors assigned by the appellant and,
The RTC Ruling
conversely, cannot rule on a distinct issue raised by the appellee. 31 In this accord, she argues
that in ruling on the issue of improper venue, the CA practically allowed MIAA to pursue a lost
On August 15, 2006, the RTC-Pasig City issued an Order 16 dismissing Cruz’s complaint for appeal, although the latter did not file a notice of appeal within the proper reglementary
breach of contract due to forum shopping since both the Pasig and Manila cases are founded period nor pay the prescribed docket fees.32
on the same actionable document between the same parties. In addition, it observed that the
Pasig case was not being prosecuted by the real party-in-interest since the lessee named in
On the other hand, MIAA maintains, inter alia, that despite raising the issue on improper
the lease contract is one Frederick Cruz and not Cruz. It did not, however, sustain MIAA’s
venue before the CA, the RTC-Pasig City did not categorically rule on the said issue. As
argument on improper venue since Cruz alleged to be a resident of San Juan, Metro Manila;
such, it claims that it could raise the foregoing ground as one of the issues before the CA.33
therefore, unless proven otherwise, the complaint shall be taken on its face value. 17

The Court’s Ruling

Aggrieved, petitioner filed a motion for reconsideration 18 which was, however, denied by the
RTC-Pasig City in an Order19 dated October 2,2006.Thus, Cruz filed a notice of appeal.20
The petition is meritorious.
The Proceedings Before the CA
Jurisprudence dictates that the appellee’s role in the appeal process is confined only to the
21 task of refuting the assigned errors interposed by the appellant. Since the appellee is not the
In her Appellant’s Brief,  Cruz assigned the following errors: (a) that the RTC-Pasig City
party who instituted the appeal and accordingly has not complied with the procedure
erred in holding that there was forum shopping, considering that the causes of action in the
prescribed therefor, he merely assumes a defensive stance and his interest solely relegated
complaints for breach of contract and annulment of contract are separate and distinct; (b) that
to the affirmance of the judgment appealed from. Keeping in mind that the right to appeal is
the RTC-Pasig City erred in ruling that Cruz is not the real party-in-interest considering that
essentially statutory in character, it is highly erroneous for the appellee to either assign any
Frederick Cruz merely signed the lease contract as her attorney-in-fact; and(c) that the RTC-
error or seek any affirmative relief or modification of the lower court’s judgment without
Pasig City erred in not denying MIAA’s motion to dismiss since it was set for hearing more
interposing its own appeal. As held in the case of Medida v. CA:34
than 10 days from its filing.22

On the other hand, MIAA filed its Defendant-Appellee’s Brief 23 refuting the foregoing
arguments. In addition, MIAA raised before the CA its argument on improper venue 24 which
had been previously denied by the RTC-Pasig City.
On November 27, 2007, the CA rendered a Decision, 25 affirming with modification the RTC-
Pasig City’s dismissal of the Pasig case. It held that while Cruz did not commit forum
shopping (since the Pasig and Manila cases involve distinct causes of action and issues 26)
and that Cruz should be considered as a real party-in-interest in the Pasig case (since
Frederick Cruz was merely her appointed attorney-in-fact in connection with the execution of
the lease contract27), the Pasig case remains dismissible on the ground of improper venue as
Cruz was bound by her judicial admission that her residence was actually in Manila and not in
San Juan.28
Dissatisfied, Cruz moved for reconsideration 29 but was denied by the CA in a
Resolution30 dated September 26, 2008.Hence, this petition.
An appellee who has not himself appealed cannot obtain from the appellate court any
affirmative relief other than the ones granted in the decision of the court below. He cannot
impugn the correctness of a judgment not appealed from by him. He cannot assign such
errors as are designed to have the judgment modified. All that said appellee can do is to
make a counter-assignment of errors or to argue on issues raised at the trial only for the
purpose of sustaining the judgment in his favor, even on grounds not included in the decision
of the court a quo nor raised in the appellant's assignment of errors or
arguments.35 (Emphasis supplied)
In the case at bar, the Court finds that the CA committed a reversible error in sustaining the
dismissal of the Pasig case on the ground of improper venue because the same was not an
error raised by Cruz who was the appellant before it. Pursuant to the above-mentioned
principles, the CA cannot take cognizance of MIAA’s position that the venue was improperly
laid since, being the appellee, MIAA’s participation was confined to the refutation of the
appellant’s assignment of errors. As MIAA’s interest was limited to sustaining the RTC-Pasig
City’s judgment, it cannot, without pursuing its own appeal, deviate from the pronouncements

158
made therein. In particular, records bear out that the RTC-Pasig City, while granting MIAA’s
motion to dismiss, found the latter’s argument on improper venue to be erroneous. Hence,
given that the said conclusion was not properly contested by MIAA on appeal, the RTC-Pasig
City’s ruling on the matter should now be deemed as conclusive. Corollary, the CA should not
have taken this ground into consideration when it appreciated the case before it. By acting
otherwise, it therefore committed a reversible error, which thereby warrants the reversal of its
Decision.1âwphi1
WHEREFORE, the petition is GRANTED. The Decision dated November 27, 2007 and
Resolution dated September 26, 2008 of the Court of Appeals in CA-G.R. CV No. 88308 are
hereby SET ASIDE. Accordingly, the case is REMANDED to the Regional Trial Court of
Pasig City, Branch 68 for further proceedings.
SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice
transacting business with petitioner Spouses Nestor Victor Rodriguez and Ma. Lourdes
Rodriguez.  The Department of Public Works and Highways (DPWH) awarded two contracts
in favor of petitioner Nestor Rodriguez for the following projects, namely, construction of
"Lanot-Banga Road (Kalibo Highway) km. 39 + 200 to km. 40 + 275 Section IV (Aklan side)"
and concreting of "Laua-an Pandan Road (Tibial-Culasi Section), Province of Antique."  In
1998, respondent agreed to supply cement for the construction projects of petitioner Spouses
Rodriguez.  Petitioner Nestor Rodriguez availed of the DPWH's pre-payment program for
cement requirement regarding the Lanot-Banga Road, Kalibo Highway project (Kalibo
project), wherein the DPWH would give an advance payment even before project completion
upon his presentment, among others, of an official receipt for the amount advanced. 
Petitioner Nestor Rodriguez gave Land Bank of the Philippines (LBP) Check No. 6563066 to
respondent, which was signed by co-petitioners (his wife Ma. Lourdes Rodriguez and his
business partner Augustus Gonzales), but leaving the amount and date in blank.  The blank
LBP check was delivered to respondent to guarantee the payment of 15,698 bags of Portland
cement valued at P1,507,008.00, covered by Official Receipt No. 1175, [5] issued by
respondent (as owner of Antique Commercial), in favor of petitioner Nestor Rodriguez (as
owner of Greenland Builders).  However, a year later, respondent filled up blank LBP Check
No. 6563066, by placing P2,062,000.00 and June 30, 1999, corresponding to the amount
and date.

THIRD DIVISION On December 9, 1999, petitioners filed an Amended Complaint [6] for Declaration of Payment,
Cancellation of Documents and Damages against respondent with the RTC, Branch 31, Iloilo
[G.R. No. 167398 : August 09, 2011] City, docketed as Civil Case No. 25945.  The amended complaint alleged that they entrusted
blank LBP Check No. 6563066 to respondent so as to facilitate the approval of the pre-
AUGUSTUS GONZALES AND SPOUSES NESTOR VICTOR AND MA. LOURDES payment application of petitioner Nestor Rodriguez with the DPWH.  They stated that the
RODRIGUEZ, PETITIONERS, VS. QUIRICO PE, RESPONDENT. blank LBP check would "serve as collateral" to guarantee the payment for 15,698 bags to be
used for the Kalibo project, amounting to P1,507,008.00, and that after payment of the said
DECISION amount, respondent would return the LBP check. According to them, after having paid
respondent the amount of P2,306,500.00, which is P139,160.00 more than the amount of
PERALTA, J.: P2,167,340.00 (representing the value for 23,360 bags of cement taken for the Kalibo
project), they were cleared of any liability.
Before the Court is a petition for review on certiorari seeking to set aside the Decision[1] dated
June 23, 2004 and Resolution [2] dated February 23, 2005 of the Court of Appeals (CA),  On January 6, 2000, respondent filed an Answer to Amended Complaint, [7] averring that he
Twentieth Division, in CA-G.R. SP No. 73171, entitled Quirico Pe v. Honorable Judge Rene had so far delivered 40,360 bags of cement to petitioners who remitted P2,306,500.00,
Hortillo, in his capacity as Presiding Judge  of  the  Regional Trial  Court  of Iloilo  City, thereby leaving an outstanding amount of P2,062,000.00.  He countered that when
Branch 31, Augustus Gonzales and Spouses Engr. Nestor Victor and Dr. Ma. Lourdes petitioners stopped the bank-to-bank online payments to him, he filled up the amount of
Rodriguez, which granted the petition of respondent Quirico Pe.  The CA Decision reversed P2,062,000.00 and made the LBP check payable on June 30, 1999.  The LBP check was
and set aside the Order [3] dated September 23, 2002 of the Regional Trial Court (RTC) of dishonored for being "drawn against insufficient funds (DAIF)."  By way of compulsory
Iloilo City, Branch 31, which dismissed respondent's appeal for non-payment of docket and counterclaim, he sought recovery of the balance of P2,062,000.00, with interest at 24% from
other lawful fees, and directing the issuance of the writ of execution for the implementation of January 29, 1999 until fully paid as actual damages.
its Decision[4] dated June 28, 2002 in favor of the petitioners and against the respondent.  The
CA Decision also directed the RTC to assess the appellate docket fees to be paid by the In the Pre-trial Order [8] dated January 28, 2000, the trial court determined the following to be
respondent, if it has not done so, and allow him to pay such fees and give due course to his the delimited issues, to wit:
appeal.
(1)  whether plaintiffs' [herein petitioners] liability to defendant [herein respondent] for 15,698
The antecedents are as follows: bags priced at P1,507,008.00 subject of the earlier-mentioned pre-payment program and
covered by the "blank" LBP Check No. 6563066 has already been paid, hence, plaintiffs are
Respondent Quirico Pe was engaged in the business of construction materials, and had been no longer liable to the defendant for this amount;

159
 In an Order[12] dated August 5, 2002, the trial court gave due course to respondent's appeal,
(2) whether this LBP Check No. 6563066 should not be returned by defendant to plaintiffs, or and directed the Branch Clerk of Court to transmit the entire records of the case to the CA.
failing in which, should now be declared as cancelled, null and void;
On August 26, 2002, petitioners filed a Motion for Reconsideration, to Dismiss Appeal, and
for Issuance of Writ of Execution, [13] stating that respondent's appeal should be dismissed as
(3) whether plaintiffs have completely paid to the defendant the price of the cement used for the same was not perfected due to non-payment of docket and other lawful fees as required
the Kalibo project which specifically is the amount of 23,360 bags of cement valued in the under Section 4, Rule 41 of the Rules of Court. Claiming that since the respondent's appeal
total amount of P2,167,340.00; was not perfected and, as a consequence, the RTC Decision dated June 28, 2002 became
final and executory, petitioners sought the issuance of a writ of execution for the
(4) whether plaintiffs are entitled to damages and attorney's fees; and implementation of the said RTC Decision.  To buttress their motion, petitioners also
appended a Certification[14] dated August 19, 2002, issued by the Clerk of Court of the Office
(5) whether this case be dismissed and with the dismissal of the complaint to proceed with of the Clerk of Court (OCC) of the RTC, Iloilo City, certifying that no appeal fees in the case
the counterclaim.[9] had been paid and received by the OCC.

In a Decision dated June 28, 2002, the trial court, applying Section 14 [10] of the Negotiable
Instruments Law, found that respondent's subsequent filling up of LBP Check No. 6563066 in
the amount of P2,062,000.00 was not made strictly in accordance with the authority given to
him by petitioner Nestor Rodriguez, and that since one year had already lapsed, the same
was not done within a reasonable time. As to the 23,360 bags of cement for the Kalibo
project, valued at P2,167,340.00 which was subject of previous transactions, the trial court
ruled that the same had been fully paid and considered a settled issue.  Consequently, the
RTC rendered judgment in favor of the petitioners and against the respondent, the dispositive
portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the
defendant, as follows:
In the Order dated September 23, 2002, the trial court dismissed respondent's appeal and
directed the issuance of a writ of execution to implement the RTC Decision dated June 28,
2002.
On October 2, 2002, the Clerk of Court and Ex-officio Provincial Sheriff of Iloilo issued the
Writ of Execution[15] directing the execution of the RTC Decision dated June 28, 2002.
On October 7, 2002, respondent filed a Petition for Certiorari and Prohibition with Application
for Writ of Preliminary Injunction and Prayer for Temporary Restraining Order, [16] seeking to
set aside the RTC Order dated September 23, 2002 (which dismissed his appeal and
directed the issuance of a writ of execution to implement the RTC Decision dated June 28,
2002), and to enjoin the implementation of the Writ of Execution dated October 2, 2002.

1.  Declaring plaintiffs' obligation to the defendant for the cement supplied for the Kalibo In a Resolution[17] dated October 9, 2002, the CA granted the respondents' prayer for
(Lanot-Banga) Road Construction Project in the amount of P2,167,340.00 as already and Temporary Restraining Order and, in the Resolution [18] dated August 20, 2003, approved the
fully paid, hence, plaintiffs are no longer liable to the defendant; respondent's injunction bond and directed the Division Clerk of Court to issue the writ of
preliminary injunction.
2.  Declaring Land Bank Check No. 6563066 dated June 30, 1999 for P2,062,000.00 as null
and void and without any legal effect; On August 20, 2003, the Division Clerk of Court issued the Writ of Preliminary Injunction,
[19]
 thereby enjoining the implementation of the Writ of Execution dated October 2, 2002.
3. Ordering defendant to pay each plaintiff the sums of P100,000.00 as actual damages;
P500,000.00 as moral damages; P200,000.00 as attorney's fees and P2,000.00 per hearing On June 23, 2004, the CA rendered a Decision in favor of the respondent, the dispositive
as appearance fee; P50,000.00 as miscellaneous actual and necessary litigation expenses; portion of which reads:
and
WHEREFORE, the petition is granted.  The assailed order and writ of execution of the
4.  To pay the costs. Regional Trial Court must be, as it is hereby, SET ASIDE.  The trial court is hereby ordered to
assess the appellate docket fees, if it has not done so, and allow the petitioner to pay such
Defendant's counterclaim is hereby DISMISSED. fees and give due course to the petitioner's appeal. No costs.

SO ORDERED.[11] SO ORDERED.[20]

After receipt of a copy of the said RTC Decision on July 26, 2002, respondent filed a Notice Aggrieved, petitioners filed a Motion for Reconsideration [21] on August 24, 2004, which,
of Appeal on July 30, 2002. however, was denied by the CA in a Resolution [22] dated February 23, 2005.

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Hence, petitioner filed this present petition raising the sole issue that:
THE COURT OF APPEALS PATENTLY ERRED IN REVERSING THE  DECISION OF THE
LOWER COURT AND ALLOWING RESPONDENT TO BELATEDLY PAY THE REQUIRED
APPELLATE DOCKET AND OTHER LEGAL FEES.
Petitioners allege that since respondent failed to pay the docket and other legal fees at the
time he filed the Notice of Appeal, his appeal was deemed not perfected in contemplation of
the law.  Thus, petitioners pray that the CA decision be set aside and a new one be rendered
dismissing the respondent's appeal and ordering the execution of the RTC Decision dated
June 28, 2002.
On the other hand, respondent, citing Section 9, Rule 41 of the Rules of Court, maintains that
his appeal has been perfected by the mere filing of the notice of appeal.  Respondent
theorizes that with the perfection of his appeal, the trial court is now divested of jurisdiction to
dismiss his appeal and, therefore, only the CA has jurisdiction to determine and rule on the
propriety of his appeal.  He raises the defense that his failure to pay the required docket and
other legal fees was because the RTC Branch Clerk of Court did not make an assessment of
the appeal fees to be paid when he filed the notice of appeal.
The petition is meritorious.
In cases of ordinary appeal, Section 2, Rule 41 of the Rules of Court provides that the appeal
to the CA in cases decided by the RTC in the exercise of its original jurisdiction shall be taken
by filing a notice of appeal with the RTC (the court which rendered the judgment or final order
appealed from) and serving a copy thereof upon the adverse party.  Section 3 thereof states
that the appeal shall be taken within fifteen (15) days from notice of the judgment or final
order appealed from.  Concomitant with the filing of a notice of appeal is the payment of the
required appeal fees within the 15-day reglementary period set forth in Section 4 of the said
Rule.  Thus,
SEC. 4.  Appellate court docket and other lawful fees. - Within the period for taking an
appeal, the appellant shall pay to the clerk of the court which rendered the judgment or final
order appealed from, the full amount of the appellate court docket and other lawful fees.   Respondent's counsel should keep abreast of procedural laws and his ignorance of the
Proof of payment of said fees shall be transmitted to the appellate court together with the
original record or the record on appeal.
In reversing the ruling of the trial court, the CA cited Yambao v. Court of Appeals [23] as
justification for giving due course to respondent's petition and ordering the belated payment
of docket and other legal fees.  In Yambao, the CA dismissed therein petitioners' appeal from
the RTC decision for failure to pay the full amount of the required docket fee.   Upon elevation
of the case, the Court, however, ordered the CA to give due course to their appeal, and ruled
that their subsequent payment of the P20.00 deficiency, even before the CA had passed
upon their motion for reconsideration, was indicative of their good faith and willingness to
comply with the Rules.
The ruling in Yambao is not applicable to the present case as herein respondent never made
any payment of the docket and other lawful fees, not even an attempt to do so, simultaneous
with his filing of the Notice of Appeal.  Although respondent was able to file a timely Notice of
Appeal, however, he failed to pay the docket and other legal fees, claiming that the Branch
Clerk of Court did not issue any assessment.  This procedural lapse on the part of the
respondent rendered his appeal with the CA to be dismissible and, therefore, the RTC
Decision, dated June 28, 2002, to be final and executory.
In Far Corporation v. Magdaluyo,[24] as with other subsequent cases[25] of the same ruling, the
Court explained that the procedural requirement under Section 4 of Rule 41 is not merely
directory, as the payment of the docket and other legal fees within the prescribed period is
both mandatory and jurisdictional.  It bears stressing that an appeal is not a right, but a mere
statutory privilege. An ordinary appeal from a decision or final order of the RTC to the CA
must be made within 15 days from notice. And within this period, the full amount of the
appellate court docket and other lawful fees must be paid to the clerk of the court which
rendered the judgment or final order appealed from. The requirement of paying the full
amount of the appellate docket fees within the prescribed period is not a mere technicality of
law or procedure.  The payment of docket fees within the prescribed period is mandatory for
the perfection of an appeal.  Without such payment, the appeal is not perfected.  The
appellate court does not acquire jurisdiction over the subject matter of the action and the
Decision sought to be appealed from becomes final and executory.  Further, under Section 1
(c), Rule 50, an appeal may be dismissed by the CA, on its own motion or on that of the
appellee, on the ground of the non-payment of the docket and other lawful fees within the
reglementary period as provided under Section 4 of Rule 41.  The payment of the full amount
of the docket fee is an indispensable step for the perfection of an appeal.  In both original and
appellate cases, the court acquires jurisdiction over the case only upon the payment of the
prescribed docket fees.
Respondent's claim that his non-payment of docket and other lawful fees should be treated
as mistake and excusable negligence, attributable to the RTC Branch Clerk of Court, is too
superficial to warrant consideration.  This is clearly negligence of respondent's counsel,
which is not excusable. Negligence to be excusable must be one which ordinary diligence
and prudence could not have guarded against.[26] Respondent's counsel filed a notice of
appeal within the reglementary period for filing the same without, however, paying the
appellate docket fees.  He simply ignored the basic procedure of taking an appeal by filing a
notice of appeal, coupled with the payment of the full amount of docket and other lawful fees.
procedural requirements shall bind the respondent.  In National Power Corporation v.
Laohoo,[27] we ruled that therein counsel's failure to file the appeal in due time does not
amount to excusable negligence.  The non-perfection of the appeal on time is not a mere
technicality. Besides, to grant therein petitioner's plea for the relaxation of the rules on
technicality would disturb a well-entrenched ruling that could make uncertain when a
judgment attains finality, leaving the same to depend upon the resourcefulness of a party in
concocting implausible excuses to justify an unwarranted departure from the time-honored
policy of the law that the period for the perfection of an appeal is mandatory and jurisdictional.
The CA took cognizance over the case, based on the wrong premise that when the RTC
issued the Order dated August 5, 2002 giving due course to respondent's Notice of Appeal
and directing the Branch Clerk of Court to transmit the entire records of the case to the CA,
it ipso facto lost jurisdiction over the case. Section 9, [28] Rule 41 of the Rules explains that the
161
court of origin loses jurisdiction over the case only upon the perfection of the appeal filed in reconsideration, an appellant may take an appeal to the CA by filing a notice of appeal with
due time by the appellant and the expiration of the time to appeal of the other parties.  Withal, the RTC and paying the required docket and other lawful fees with the RTC Branch Clerk of
prior to the transmittal of the original records of the case to the CA, the RTC may issue orders Court, within the 15-day reglementary period for the perfection of an appeal.  Otherwise, the
for the protection and preservation of the rights of the prevailing party, as in this case, the appellant's appeal is not perfected, and the CA may dismiss the appeal on the ground of non-
issuance of the writ of execution because the respondent's appeal was not perfected. payment of docket and other lawful fees.  As a consequence, the assailed RTC decision shall
become final and executory and, therefore, the prevailing parties can move for the issuance
Moreover, Section 13, Rule 41 of the Rules states that the CA may dismiss an appeal taken of a writ of execution.
from the RTC on the ground of non-payment of the docket and other lawful fees within the
15-day reglementary period: Since the CA erroneously took cognizance over the case, its Decision dated June 23, 2004
and Resolution dated February 23, 2005 should be overturned, and the Writ of Preliminary
SEC 13. Dismissal of appeal. -- Prior to the transmittal of the original record or the record on Injunction issued on August 20, 2003 should likewise be lifted.  Thus, the RTC Decision
appeal to the appellate court, the trial court may motu proprio or on motion dismiss the dated June 28, 2002 is reinstated and, as the said decision having become final and
appeal for having been taken out of time, or for non-payment of the docket and other lawful executory, the case is remanded for its prompt execution.
fees within the reglementary period. (As amended by A.M. No. 00-2-10-SC, May 1, 2000.)
While every litigant must be given the amplest opportunity for the proper and just
Since respondent's appeal was not perfected within the 15-day reglementary period, it was determination of his cause, free from the constraints of technicalities, the failure to perfect an
as if no appeal was actually taken. Therefore, the RTC retains jurisdiction to rule on pending appeal within the reglementary period is not a mere technicality.  It raises jurisdictional
incidents lodged before it, such as the petitioner's Motion for Reconsideration, to Dismiss problem, as it deprives the appellate court of its jurisdiction over the appeal.  After a decision
Appeal, and for Issuance of Writ of Execution, filed on August 26, 2002, which sought to set is declared final and executory, vested rights are acquired by the winning party.  Just as a
aside its Order dated August 5, 2002 that gave due course to respondent's Notice of Appeal, losing party has the right to appeal within the prescribed period, the winning party has the
and directed the issuance of a writ of execution.  Having no jurisdiction over the case, the correlative right to enjoy the finality of the decision on the case. [31]
prudent thing that the CA should have done was to dismiss the respondent's appeal for
failure to pay the appeal fees, and declare that the RTC Decision dated June 28, 2002 has WHEREFORE, the petition is GRANTED.  The Decision dated June 23, 2004 and Resolution
now become final and executory. dated February 23, 2005 of the Court of Appeals, in CA-G.R. SP No. 73171, are REVERSED
and SET ASIDE.  The Writ of Preliminary Injunction, issued by the Court of Appeals on
As an incidental matter on the propriety of petitioners' petition for review on certiorari under August 20, 2003, is LIFTED.
Rule 45 of the Rules, respondent raises the argument that since the subject of the present
petition is the writ of preliminary injunction granted by the CA (in favor of the respondent The Decision dated June 28, 2002 of the Regional Trial Court, Branch 31, Iloilo City
enjoining the execution of the RTC Decision dated June 28, 2002), in CA-G.R. SP No. 73171, is REINSTATED and, in view of its finality, the case is REMANDED for its prompt execution.
which is interlocutory in nature, petitioners' petition should be denied for being the wrong
remedy.  In other words, respondent advances the theory that since the assailed CA Decision SO ORDERED.
dated June 23, 2004 partakes of an interlocutory order, i.e., enjoining the finality of the RTC THIRD DIVISION
Decision dated June 28, 2002, petitioners should have availed of the remedy of a petition
for certiorari under Rule 65, not a petition for review on certiorari under Rule 45. [G.R. No. 190660, April 11 : 2011]

Respondent's argument is unfounded.  The proper remedy of a party aggrieved by a decision LAND BANK OF THE PHILIPPINES, PETITIONER, VS. COURT OF APPEALS AND
of the CA is a petition for review on certiorari under Rule 45, which is not identical to a ELIZABETH DIAZ, REPRESENTED BY FRANCISCA P. DE GUZMAN AS ATTORNEY-IN-
petition for certiorari under Rule 65.  Rule 45 provides that decisions, final orders or FACT, RESPONDENTS.
resolutions of the CA in any case, i.e., regardless of the nature of the action or proceedings
involved, may be appealed to Us by filing a petition for review on certiorari, which would be DECISION
but a continuation of the appellate process over the original case. [29]  Therefore, petitioners'
filing of the present petition for review on certiorari under Rule 45 is the proper and adequate CARPIO MORALES, J.:
remedy to challenge the Decision dated June 24, 2004 and Resolution dated February 23,
2005 of the CA. Private respondent Elizabeth P. Diaz (Elizabeth) was the registered owner of a parcel of
agricultural land measuring approximately 15 hectares, situated in San Ricardo, Talavera,
To recapitulate, one who seeks to avail of the right to appeal must strictly comply with the Nueva Ecija and covered by Transfer Certificate of Title (TCT) No. 197132. Ten hectares of
requirements of the rules, and failure to do so leads to the loss of the right to appeal. [30]  The the land were expropriated by the Department of Agrarian Reform (DAR) under Presidential
rules require that from the date of receipt of the assailed RTC order denying one's motion for Decree No. 27 and Executive Order No. 228.

162
The DAR valued the expropriated land (the land) at P54,880.59 plus increment of
P143,041.59 or a total of P197,922.18. Not satisfied with the valuation, Elizabeth, through her Indeed, following Land Bank of the Philippines v. De Leon,[11] the proper mode of appeal from
attorney-in-fact Francisca P. De Guzman (Francisca), filed a complaint [1] on November 28, decisions of Regional Trial Courts sitting as SACs is by petition for review under Rule 42 of
2001 against the Land Bank of the Philippines (Land Bank) and the DAR before the Regional the Rules of Court and not through an ordinary appeal under Rule 41. The Court, in the
Trial Court of Guimba, Nueva Ecija, Branch 33, acting as a Special Agrarian Court (SAC).  immediately cited case of Land Bank, observing that "before the instant case reached us,
The complaint, docketed as Special Agrarian Case No. 1194-G, prayed that just Land Bank of the Philippines had no authoritative guideline on how to appeal decisions of
compensation be fixed at P350,000 per hectare or a total of P5,250.000. SACs considering the seemingly conflicting provisions of Sections 60 and 61 of RA 6657,"
held that "Sec. 60 of RA 6657[12] clearly and categorically states that the said mode of appeal
Upon Elizabeth's motion, three Commissioners were appointed to determine the just (petition for review) should be adopted."
compensation for the land.
First, there is no conflict between Section[s] 60 and 61 of RA 6657 inasmuch as the Rules of
By Decision of June 21, 2006, [2] the SAC, adopted the DAR's valuation on the basis of Court do not at all prescribe the procedure for ordinary appeals as the proper mode of appeal
average gross production and fixed the just compensation plus increment at P19,107.235 per for decisions of Special Agrarian Courts.  Section 61 in fact makes no more than a general
hectare or a total of P197,922.29.  It held that given  the formula used in Gabatin v. LBP, reference to the Rules of Court and does not even mention the procedure for ordinary
[3]
 the Commissioner's Report and the fair market or assessed value of the land can not be appeals in Section 2, Rule 41 of the 1997 Revised Rules of Civil Procedure as the
considered in the valuation. appropriate method of elevating to the Court of Appeals decisions of Special method of
elevating to the Court of Appeals decisions of Special Agrarian Courts in eminent domain
Elizabeth's motion for reconsideration was denied by Order dated August 31, 2006, [4] hence, cases.
she elevated the case to the Court of Appeals. [5]
Second, the failure to mention Special Agrarian Courts in Section 1 of Rule 43 of the Revised
Land Bank and the DAR failed to file their appellees' brief.  During the pendency of the Rules of Civil Procedure cannot be construed to mean that a petition for review is not
appeal, Land Bank filed a Motion for Leave to Admit Defendant-Appellee['s] Motion to permissible for decisions of the said special courts.  In fact, the said Rule is not relevant to
Dismiss Appeal,[6] maintaining that the appeal should be dismissed because an ordinary determine whether a petition for review is the proper mode of appeal from decisions of
appeal is the wrong remedy, the proper mode being by way of a petition for review, citing Regional Trial Courts in agrarian cases, that is, why they act as Special Agrarian Courts.
Section 60 of Republic Act No. 6657 or the Comprehensive Agrarian Reform Law. Hence, Section 1 of Rule 43 of the 1997 Revised Rules of Civil Procedure merely mentions the Court
Land Bank concluded that the appellate court had no jurisdiction over the case, the SAC of Tax Appeals and the other different quasi-judicial agencies without exclusivity in its
decision having attained finality following Land Bank of the Philippines v. De Leon [7] which phraseology.  Such omission cannot be construed to justify the contention that a petition for
held that failure of a party to file the proper remedy within fifteen (15) days from receipt of review is prohibited for decisions on special agrarian cases inasmuch as the category is for
notice of the assailed decision renders it final. quasi-judicial agencies and tax courts to which the Regional Trial Courts do not properly
belong.  Although Supreme Court of Circular No. 1-91 (precursor to Rule 43 of the Revised
By Resolution[8] of June 2, 2009, the appellate court denied Land Bank's motion to dismiss.  It Rules of Civil Procedure) included the decisions of Special Agrarian Courts in the
faulted Land Bank for not filing an appellee's brief as directed, and for filing the motion to enumeration requiring petition for review, its non-inclusion later on in Rule 43 merely signifies
dismiss the appeal after the lapse of 157 days from the last day for filing the brief. that it was inappropriately classified as a quasi-judicial agencies.
Hence, the present petition for review on certiorari, [9] Land Bank maintaining that the SAC What is indisputable is that Section 60 expressly regards a petition for review as the
Decision had become final and executory and, therefore, the appellate court never acquired proper way of appealing decisions of agrarian courts.  So far, there is no rule
jurisdiction over the appeal filed by Elizabeth, a wrong mode of appeal. prescribed by this Court expressly disallowing the said procedure.
Additionally, Land Bank ascribes bad faith on the part of Elizabeth for, instead of sending a Third, far from being in conflict, Section 61 of RA 6657 can easily be harmonized with Section
copy of her motion for reconsideration before the SAC and her subsequent Notice of Appeal 60.  The reference to the Rules of Court means that the specific rules for petitions for review
to Land Bank's counsel of record Atty. Graciela L. Gutierrez at her address at the Land Bank in the Rules of Court and other relevant procedures in appeals filed before the Court of
Field Office in Cabanatuan City, Elizabeth sent them to the Land Bank's main office in Appeals shall be followed in appealed decisions of Special Agrarian Courts.  Considering that
Malate, Manila where, it points out, the lawyers neither have control nor possession of the RA 6657 cannot and does not provide the details on how the petition for review shall be
records of the case. conducted, a suppletory application of the pertinent provisions of the Rules of Court is
necessary.  In fact, Section 61 uses the word "review" to designate the mode by which the
In view of the filing of the present petition, action on Elizabeth's appeal was held in abeyance appeal is to be effected.  The reference therefore by Section 61 to the Rules of Court
by the appellate court per Resolution dated June 7, 2010. [10] only means that the procedure under Rule 42 for petitions for review is to be followed
The petition is meritorious.

163
for appeals in agrarian cases.[13] (italics in the original; emphasis and underscoring
supplied) SO ORDERED.

The adoption of a petition for review as the mode of appeal is justified in order to "hasten" the
G.R. No. 159792               December 23, 2009
resolution of cases involving issues on just compensation of expropriated lands under RA
6657.  Thus the Court, still in the immediately cited Land Bank case, pronounced:
BARANGAY SANGALANG, represented by its Chairman DANTE C.
The reason why it is permissible to adopt a petition for review when appealing cases MARCELLANA, Petitioner,
decided by the Special Agrarian Courts in eminent domain case is the need for vs.
absolute dispatch in the determination of just compensation.  Just compensation means BARANGAY MAGUIHAN, represented by its Chairman ARNULFO
not only paying the correct amount but also paying for the land within a reasonable time from VILLAREZ, Respondent.
its acquisition. Without prompt payment, compensation cannot be considered "just" for the
property owner is made to suffer the consequences of being immediately deprived of his land DECISION
while being made to wait for a decade or more before actually receiving the amount
necessary to cope with his loss.  Such objective is more in keeping with the nature of a
petition for review. PERALTA, J.:

Unlike an ordinary appeal, a petition for review dispenses with the filing of a notice of appeal Before this Court is a Petition for Review 1 on certiorari, under Rule 45 of the Rules of Court,
or completion of records as requisites before any pleading is submitted.  A petition for seeking to set aside the October 17, 2002 Decision 2 and August 25, 2003 Resolution 3 of the
review hastens  the award of fair recompense  to deprived landowners for the Court of Appeals (CA) in CA-G.R. CV No. 70021.
government-acquired property, an end not foreseeable in an ordinary appeal. . . .[14] 
(Italics in the original; emphasis and underscoring supplied)
The facts of the case:
Following then the same Land Bank case, resort by Elizabeth to a wrong mode of appeal was
fatal to her cause as it resulted in rendering the decision appealed from final and executory.  The controversy has its roots in a barangay jurisdiction dispute between petitioner Barangay
Her notice of appeal did not, it bears emphasis, stop the running of the reglementary period Sangalang and respondent Barangay Maguihan, both situated in Lemery, Batangas.
to file a petition for review. Specifically, the properties involved in the controversy are those covered by Tax Declaration
Nos. 038-00315, 038-00316, and 038-00317. Petitioner claims the lots to be within their
Although appeal is an essential part of our judicial process, it has been held, time and territorial jurisdiction, whereas respondent maintains that they are within their territorial
again, that the right thereto is not a natural right or a part of due process but is merely boundary.
a statutory privilege. Thus, the perfection of an appeal in the manner and within the
period prescribed by law is not only mandatory but also jurisdictional and failure of a
The case was lodged before the Sangguniang Bayan, which referred it to a hearing
party to conform to the rules regarding appeal will render the judgment final and
committee. In turn, the committee formed rendered a report 4 to the effect that the properties
executory. Once a decision attains finality, it becomes the law of the case irrespective
in dispute belonged to petitioner. The recommendation was subsequently affirmed in
of whether the decision is erroneous or not and no court - not even the Supreme Court
Resolution No. 75-965 passed on November 14, 1996 by the Sangguniang Bayan of Lemery,
- has the power to revise, review, change or alter the same. The basic rule of finality of
Batangas, the pertinent portion of which reads:
judgment is grounded on the fundamental principle of public policy and sound practice that,
at the risk of occasional error, the judgment of courts and the award of quasi-judicial
agencies must become final at some definite date fixed by law.[15] (emphasis and Resolved, as it hereby resolves to recognize as it hereby recognizes the old boundaries of
underscoring supplied) Barangay Maguihan and Sangalang, specifically the areas which are the subject of a
barangay dispute covered by TD Nos. 038-00315, 038-00316 and 038-00317 are within the
WHEREFORE, the petition is GRANTED.  The Resolution of the Court of Appeals dated territorial jurisdiction of Barangay Sangalang.6
June 2, 2009 is SET ASIDE.

The Decision dated June 21, 2006 of the Regional Trial Court of Guimba, Nueva Ecija, Respondent appealed the decision to the Regional Trial Court (RTC) pursuant to Section
Branch 33 sitting as a Special Agrarian Court in Agr. Case No. 1194-G is deemed  final and 1197 of the Local Government Code, and the same was docketed as Barangay Jurisdiction
executory. Dispute No. 1.

164
On April 27, 2000, the RTC rendered a Decision8 ruling in favor of respondent, the dispositive Petitioner filed a Motion for Reconsideration, which was, however, denied by the CA in a
portion of which states: Resolution dated August 25, 2003.

WHEREFORE, Resolution No. 75-96, Series of 1996 of the Sangguniang Bayan of Lemery, Hence, herein petition, with petitioner raising the following assignment of errors, to wit:
Batangas is hereby reversed and set aside and that Lot Nos. 4469 and 6650, covered by and
embraced in Tax Declaration Nos. 038-00315, 038-00316, and 038-00317 of the Municipal
A.
Assessor of Lemery, Batangas, are hereby adjudged and declared as within the territorial
jurisdiction of appellant Barangay Maguihan and, consequently, the Municipal Assessor of
Lemery, Batangas and the Provincial Assessor of the Province of Batangas are hereby THE COURT A QUO COMMITTED GRAVE ABUSE OF DISCRETION IN DISMISSING THE
ordered to make the necessary corrections in its records implemental of this decision. APPEAL OF PETITIONER SOLELY BASED ON THE RIGID AND STRICT APPLICATION
OF TECHNICALITIES OVERRIDING SUBSTANTIAL JUSTICE, THAT IS, THE MERIT OF
THE PETITIONER’S APPEAL, IN UTTER VIOLATION OF EXISTING AND WELL SETTLED
SO ORDERED.9
NUMEROUS DECISIONS OF THIS HONORABLE SUPREME COURT.

Petitioner filed a Motion for Reconsideration, 10 which was, however, denied by the RTC in an
B.
Order11 dated December 20, 2000.

THE DECISION, ANNEX "I", AND THE ORDER, ANNEX "K", RENDERED BY THE
Aggrieved, petitioner then filed a Notice of Appeal. 12 Later, petitioner filed an Amended Notice
REGIONAL TRIAL COURT OF BATANGAS, BRANCH V, LEMERY, BATANGAS, IN CIVIL
of Appeal.
CASE BOUNDARY JURISDICTIONAL DISPUTE NO. 01, REVERSING AND SETTING
ASIDE THE APPEALED RESOLUTION NO. 75-96, SERIES OF 1996, OF THE
On October 17, 2002, the CA rendered a Decision 13 dismissing the appeal, the dispositive SANGGUNIANG BAYAN OF LEMERY, BATANGAS, ARE NULL AND VOID BECAUSE
portion of which reads: RESPONDENT MAGUIHAN HAS NOT PERFECTED ITS APPEAL AND BY REASON
THEREOF, THE TRIAL COURT HAS NOT ACQUIRED APPELLATE JURISDICTION.
IN VIEW OF ALL THE FOREGOING, the present appeal is ordered DISMISSED. No cost.
C.
14
SO ORDERED.
THE TRIAL COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF OR IN EXCESS OF JURISDICTION IN SUBSTITUTING ITS OWN JUDGMENT
In dismissing the appeal, the CA ruled that petitioner had availed itself of the wrong remedy in
OVER AND ABOVE THE JUDGMENT OF THE SANGGUNIANG BAYAN OF LEMERY,
filing a notice of appeal instead of filing a petition for review under Rule 42 of the Rules of
BATANGAS, WHICH IS SUPPORTED BY SUBSTANTIAL EVIDENCE LIKEWISE IN
Court. The pertinent portions of said decision is hereunder reproduced, to wit:
DISREGARD OF THE EXISTING AND WELL SETTLED DECISIONS OF THIS
HONORABLE SUPREME COURT.17
Given the procedural mandates, the Decision of the Regional Trial Court of Lemery,
Batangas, dated April 27, 2000, was rendered by the Regional Trial Court in the exercise of
At the outset, this Court shall first address the procedural issues raised by petitioner.
its appellate jurisdiction. Appropriately, under Section 22 of Batas Pambansa Blg. 129,
decisions of the Regional Trial Court in the exercise of its appellate jurisdiction, shall be
appealable to the Court of Appeals by way of petitions for review under Rule 42 of the 1997 This Court is bewildered by petitioner’s posture to tailor-fit the rules of court to its own
Rules of Civil Procedure. 15 convenience. The first and second assigned errors involve a question of the propriety of a
strict application of the rules. It seems, however, that petitioner has taken a divergent stand
on the said matter depending, on whether the same would be favorable to his cause. As to
The CA also ruled that if said appeal were to be considered as an ordinary appeal under Rule
his first assigned error, petitioner faults the CA for having strictly applied the rules of court
41, it still should be dismissed, because the submitted appellant’s brief failed to contain a
notwithstanding his choice of the wrong remedy; yet, on the other hand, as to his second
subject index and page references to the records requirement in its Statement of Facts and
assigned error, petitioner faults the RTC for not having strictly applied the rules of court to
Case and Argument, as provided for in Section 13 of Rule 44 of the 1997 Rules of
respondent’s alleged failure to pay the corresponding docket fees.
Procedure.16

165
Anent the issue of docket fees, this Court, in Yambao v. Court of Appeals,18 declared:
x x x Considering the importance and purpose of the remedy of appeal, an essential part of
our judicial system, courts are well-advised to proceed with caution so as not to deprive a
party of the right to appeal, but rather, ensure that every party-litigant has the "amplest
opportunity for the proper and just disposition of his cause, freed from constraints of
technicalities." In line with this policy, we have held that, in appealed cases, the failure to pay
the appellate docket fee does not automatically result in the dismissal of the appeal x x x
A reading of the records of the case shows that it was only in his Supplemental Motion for
Reconsideration19 to the RTC Decision that petitioner first raised the issue of non-payment of
docket fees. Respondent, for his part, filed with the RTC an Opposition and
Comment20 explaining his failure to file the corresponding docket fees, thus:
1. That as regards the claim of appellee that the docket fee has not been paid by the
appellant the same is correct. But the appellant who appealed the case by himself and being
a layman was not aware that a docket fee should be paid in case perfection of an appeal and
no one from the court’s personnel reminds (sic) him of this requirement. But in order not to
sacrifice the ends of justice, the appellant is willing to pay the docket fee and other lawful
charges necessary for the perfection of an appeal. 211avvphi1
The Order denying petitioner’s motion for reconsideration was silent as to the issue of the
non-payment of docket fees; however, this Court deems that the RTC must have accepted
the explanation given by respondent, otherwise, said court would have dismissed the appeal
and reconsidered its decision. The failure to pay docket fees does not automatically result in
the dismissal of an appeal, it being discretionary on the part of the appellate court to give it
due course or not.22 This Court will then not interfere with matters addressed to the sound
discretion of the RTC in the absence of proof that the exercise of such discretion was tainted
with bias or prejudice, or made without due circumspection of the attendant circumstances of
the case.23
In any case, the more pressing issue is whether or not this Court should even entertain
petitioner’s appeal.
By filing a Notice of Appeal assailing the RTC Decision, petitioner has availed itself of the
remedy provided for under Rule 41 of the Rules of Court, which provides for the ordinary
mode of appeal. The CA, however, considered petitioner’s choice to be the wrong remedy
and, forthwith, dismissed the petition.
After an examination of relevant laws pertinent to herein petition, this Court finds that the CA
was correct in holding that petitioner had availed itself of the wrong remedy.
As correctly observed by the CA, under Section 118 of the Local Government Code, the
jurisdictional responsibility for settlement of boundary disputes between and among local
government units is to be lodged before the proper Sangguniang Panlungsod or
Sangguniang Bayan concerned, if it involves two or more barangays in the same city or
municipality. Under Section 118(e) of the same Code, if there is a failure of amicable
settlement, the dispute shall be formally tried by the sanggunian concerned and shall decide
the same within (60) days from the date of the certification referred to.24
Section 119 of the Local Government Code also provides that the decision of the sanggunian
concerned may be appealed to the RTC having jurisdiction over the area in dispute, within
the time and manner prescribed by the Rules of Court.
In the case at bar, it is clear that when the case was appealed to the RTC, the latter took
cognizance of the case in the exercise of its appellate jurisdiction, not its original jurisdiction.
Hence, any further appeal from the RTC Decision must conform to the provisions of the
Rules of Court dealing with said matter. On this score, Section 2, Rule 41 of the Rules of
Court provides:
Sec. 2. Modes of appeal.
(a) Ordinary appeal. – The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing
a notice of appeal with the court which rendered the judgment or final order
appealed from and serving a copy thereof upon the adverse party. No record on
appeal shall be required except in special proceedings and other cases of multiple
or separate appeals where the law or these Rules so require. In such cases, the
record on appeal shall be filed and served in like manner.
(b) Petition for review. - The appeal to the Court of Appeals in cases decided
by the Regional Trial Court in the exercise of its appellate jurisdiction shall
be by petition for review in accordance with Rule 42.25
Based on the foregoing, it is apparent that petitioner has availed itself of the wrong remedy.
Since the RTC tried the case in the exercise of its appellate jurisdiction, petitioner should
have filed a petition for review under Rule 42 of the Rules of Court, instead of an ordinary
appeal under Rule 41. The law is clear in this respect.
In any case, as in the past, this Court has recognized the emerging trend towards a liberal
construction of the Rules of Court. In Ong Lim Sing, Jr. v. FEB Leasing and Finance
Corporation,26 this Court stated:
Courts have the prerogative to relax procedural rules of even the most mandatory character,
mindful of the duty to reconcile both the need to speedily put an end to litigation and the
parties' right to due process. In numerous cases, this Court has allowed liberal construction
of the rules when to do so would serve the demands of substantial justice and equity.
In Aguam v. Court of Appeals, the Court explained:
166
The court has the discretion to dismiss or not to dismiss an appellant's appeal. It is a power 3. Old Map of Barangay Sangalang.31
conferred on the court, not a duty. The "discretion must be a sound one, to be exercised in
accordance with the tenets of justice and fair play, having in mind the circumstances
Respondent, for its part, presents the following documents:
obtaining in each case." Technicalities, however, must be avoided. The law abhors
technicalities that impede the cause of justice. The court's primary duty is to render or
dispense justice. "A litigation is not a game of technicalities." "Lawsuits, unlike duels, are not 1. Certified copy of the cadastral map of the Lemery Cadastre, which was
to be won by a rapier's thrust. Technicality, when it deserts its proper office as an aid to approved on March 17, 1983 by the Director of Lands, Department of Environment
justice and becomes its great hindrance and chief enemy, deserves scant consideration from and Natural Resources;32 and
courts." Litigations must be decided on their merits and not on technicality. Every party-
litigant must be afforded the amplest opportunity for the proper and just determination of his
2. Certification of the Community Environment and Natural Resources Office,
cause, free from the unacceptable plea of technicalities. Thus, dismissal of appeals purely on
Department of Environment and Natural Resources dated September 9, 1997. 33
technical grounds is frowned upon where the policy of the court is to encourage hearings of
appeals on their merits and the rules of procedure ought not to be applied in a very rigid,
technical sense; rules of procedure are used only to help secure, not override substantial Article 17, Rule III of the Rules and Regulations Implementing the Local Government Code of
justice. It is a far better and more prudent course of action for the court to excuse a technical 1991, outlines the procedures governing boundary disputes, including the documents that
lapse and afford the parties a review of the case on appeal to attain the ends of justice rather should be attached to the petition, to wit:
than dispose of the case on technicality and cause a grave injustice to the parties, giving a
false impression of speedy disposal of cases while actually resulting in more delay, if not a
miscarriage of justice.27 Art. 17. Procedures for Settling Boundary Disputes. – The following procedures shall govern
the settlement of boundary disputes:

Thus, notwithstanding petitioner’s wrong mode of appeal, the CA should not have so easily
dismissed the petition, considering that the parties involved are local government units and xxxx
that what is involved is the determination of their respective territorial jurisdictions. In the
same vein, the CA’s strict reliance on the requirements under Section 13 of Rule 44 of the (c) Documents attached to petition - The petition shall be accompanied by:
1997 Rules of Procedure relating to subject index and page references in an appellant’s brief
is, to stress, putting a premium on technicalities. While the purpose of Section 13, Rule 44, is
to present to the appellate court in the most helpful light, the factual and legal antecedents of 1. Duly authenticated copy of the law or statute creating the LGU or any other
a case on appeal,28 said rule should not be strictly applied considering that petitioner’s brief document showing proof of creation of the LGU;
before the CA contained only 9 pages, the records of the case consisted only of a few
documents and pleadings, and there was no testimonial evidence. 2. Provincial, city, municipal, or barangay map, as the case may be, duly certified
by the LMB.
Moving on to the substantive merits of the case, what it basically involves is adjudication as
to which barangay the lots in dispute belong. Ideally, herein petition should be remanded to 3. Technical description of the boundaries of the LGUs concerned;
the CA, as the same inherently involves a question of fact. However, since this case has
been pending for almost 13 years now, this Court deems it best to once and for all settle the
controversy. 4. Written certification of the provincial, city, or municipal assessor, as the case
may be, as to territorial jurisdiction over the disputed area according to records in
custody;
Petitioner presents the following documents to prove its claim:
5. Written declarations or sworn statements of the people residing in the disputed
1. Copy of a certification from the Office of the Provincial Assessor stating that the area; and
area covered by Tax Declaration Nos. 038-00315, 038-00316 and 038-00317 are
all within the territorial jurisdiction of Barangay Sangalang, Lemery, Batangas; 29
6. Such other documents or information as may be required by
the sanggunian hearing the dispute.
2. Copies of Tax Declaration Nos. 038-00315, 038-00316 and 038-00317; 30 and

167
The RTC observed that neither of the parties satisfied the requirement that all the
enumerated documents must be attached to the petition. Hence, like the RTC, this Court is
left with no other option but to select which between the documents presented by the parties
carries greater weight in proving its claim. The documents presented by petitioner were
sourced from the tax assessor’s office, whereas the documents presented by respondent
were sourced from the land management bureau. The answer is very apparent and needs
little discussion.
To this Court’s mind, the presence of the cadastral map, which was approved by the Director
of Lands, should be given more weight than the documents sourced by petitioner from the
assessor’s office. Said map was approved on March 17, 1986, which was approximately 10
years before the controversy in hand developed. Hence, the same should be controlling in
the absence of proof that such document is invalid or inaccurate. As a matter of fact,
notwithstanding the hearing committee’s recommendation to rule in favor of petitioner, the
committee itself stated in its report that the cadastral map submitted by respondent was
authentic.34
Moreover, in ruling against petitioner, the RTC also gave greater weight to the documents
submitted by respondent, thus:
x x x This Court is mindful of the fact and takes judicial notice that the Land Management
Bureau is manned by geodetic engineers with sufficient expertise and is the cognizant
agency of government charged with the responsibility of matters respecting surveys of land.
This Court likewise takes into consideration that the duty of the provincial and municipal
assessors are primarily assessments of taxes. 35
This Court shares the view of the RTC. It is undisputed that the Land Management Bureau is
the principal government agency tasked with the survey of lands, and thus, more weight
should be given to the documents relating to its official tasks which are presumed to be done
in the ordinary course of business. Between a geodetic engineer and a tax assessor, the
conclusion is inevitable that it is the former’s certification as to the location of properties in
dispute that is controlling, absent any finding of abuse of discretion. As correctly observed by
respondent and the RTC, the duty of provincial and municipal assessors is primarily the
assessment of taxes and not the survey of lands.
Lastly, petitioner alludes to a petition/resolution allegedly of persons residing in the properties
in dispute to the effect they are under the jurisdiction of petitioner. On this note, this Court
agrees with the observation of the RTC that the determination as to whether the properties in
dispute are within a certain jurisdiction is not a decision to be made by the populace, to wit:
x x x In simple language, the population follows the territory and not vice versa. It is the
determination of the ambit and sphere of the land area as culled in the approved barangay
map that determines the jurisdiction of the barangay and not the decision of the populace. To
allow the latter will open endless litigation concerning disputes of jurisdiction. 36
In sum, this Court does not belittle the documents presented by petitioner or the duties of the
provincial and municipal assessors; however, since the documents presented by respondent
are sourced from the very agency primarily tasked with the survey of lands, more credence
must be given to the same in the absence of proof that would cast doubt on the contents
thereof.
WHEREFORE, premises considered, the petition is PARTLY GRANTED. The October 17,
2002 Decision and August 25, 2003 Resolution of the Court of Appeals in CA-G.R. CV No.
70021 are hereby REVERSED and SET ASIDE. The April 27, 2000 Decision and December
20, 2000 Order of the Regional Trial Court, Lemery, Batangas, in Barangay Jurisdiction
Dispute No. 1, are hereby AFFIRMED.
SO ORDERED.
EN BANC
[G.R. NO. 182374 : November 11, 2008]
JEREMIAS V. ESTEVES, Petitioner v. RENE V. SARMIENTO, NICODEMO T. FERRER, in
their respective and Member of the Second Division COMELEC, Manila and
REYNALDO TEH BITONG, Respondents.
DECISION
TINGA, J.:
This is a special civil action for certiorari and prohibition1 under Rule 65 of the 1997 Rules of
Civil Procedure, assailing the Resolution 2 of the Second Division of the Commission on
Elections (COMELEC) in SPR No. 46-2007. Said resolution set aside the Order 3 dated 8
September 2007 issued by the Regional Trial Court (RTC), Branch 96, Baler, Aurora and
consequently dismissed the election protest filed by herein petitioner Jeremias V. Esteves
against private respondent Mayor Reynaldo Teh Bitong.
As culled from the records of the case, the following antecedent facts appear:
In the national and local elections conducted last 14 May 2007, petitioner and private
respondent both ran for the position of municipal mayor of the Municipality of Casiguran,
Aurora. On 15 May 2007, the Municipal Board of Canvassers proclaimed private respondent
as the duly-elected Mayor of Casiguran on the basis of the results of the canvassing, which
showed him having garnered 3,342 votes or with a margin of 48 votes over petitioner, who
obtained 3,294 votes.4
168
On 25 May 2007, petitioner filed an election protest before the Regional Trial Court of Baler, On 29 February 2008, the COMELEC (Second Division) issued the assailed resolution
Aurora. The protest was docketed as Election Protest Case (EPC) No. 99 and raffled to penned by Commissioner Nicodemo T. Ferrer. The assailed resolution nullified the 8
Branch 96 presided by Judge Corazon D. Soluren.5 September 2007 Order of the RTC and, accordingly, dismissed EPC No. 99. 12 The other
member of the Second Division, Commissioner Rene V. Sarmiento, wrote a dissenting
opinion.13 It appears that before the issuance of the assailed resolution, the third member of
The RTC then issued a precautionary protection order directing the Municipal Treasurer and
the Second Division, Presiding Commissioner Florentino A. Tuazon, Jr. had retired from the
Election Officer of Casiguran to take immediate steps to safeguard the integrity of all the
service.
ballot boxes, lists of voters and other paraphernalia used in the elections and thereafter
directed that all the election paraphernalia, including the ballot boxes and lists of voters,
subject of the protest be brought before the court.6 Hence, the instant petition, raising the following arguments: (1) the COMELEC (Second
Division) has no jurisdiction to entertain special relief cases like petitions for certiorari,
prohibition or mandamus; (2) the challenged resolution did not comply with the constitutional
Private respondent then filed an answer, which the RTC admitted in an Order dated 2 August
requirement that it must be decided by a majority vote of all the members; and (3) the
2007. In the same order, the RTC denied the motion for reconsideration of the dismissal of
challenged resolution negated the spirit and very purpose of A.M. No. 07-4-15-SC.
private respondent's counter-protest on the ground of non-payment of filing fee. Thereafter,
the RTC ordered the creation of the revision committees. 7
The Office of the Solicitor General (OSG) manifested that under Section 5, Rule 65 of the
Rules of Court, only the private respondent is required to appear and defend the case, both
On 6 September 2007, private respondent filed a motion to dismiss the election protest,
on his own behalf and on behalf of the public respondent COMELEC, and prayed that the
arguing that it was defective in form and substance as it did not specify the precincts where
COMELEC be excused from filing the required comment. 14 In a Resolution dated 12 August
fraud and irregularities were committed. On 8 September 2007, the RTC issued the order
2008, the Court granted the motion of the OSG.15
denying private respondent's motion to dismiss for lack of merit.8

The petition deserves dismissal.

Thus, private respondent filed before the COMELEC a petition for certiorari and prohibition
with application for temporary restraining order (TRO) and/or writ of preliminary
injunction.9 The petition sought to nullify the RTC Order dated 8 September 2007 denying Section 3, Article IX-C of the Constitution expressly states:
private respondent's motion to dismiss. It also prayed that the election protest filed by
petitioner be dismissed and the proceedings thereon enjoined on the ground that the election
Section 3. The Commission on Elections may sit en banc or in two divisions, and shall
protest failed to comply with the requirements of Section 11(f), Rule 2 10 of A.M. No. 07-4-15-
promulgate its rules of procedure in order to expedite disposition of election cases, including
SC. Petitioner filed an answer on 5 December 2007.
pre-proclamation controversies. All such election cases shall be heard and decided in
division, provided that motions for reconsideration of decisions shall be decided by the
After hearing private respondent's application, the COMELEC (Second Division) issued a Commission en banc.
temporary restraining order (TRO) on 06 December 2007, which directed Judge Soluren to
desist from further proceeding with Election Protest Case No. 96 until further orders from the
Also, Section 7, Article IX-A of the Constitution provides:
COMELEC.11

Section 7. Each Commission shall decide by a majority vote of all its Members any case or
Thereafter, petitioner filed before this Court a special civil action for certiorari and prohibition
matter brought before it within sixty days from the date of its submission for decision or
with application for issuance of a temporary restraining order and/or writ of preliminary
resolution. A case or matter is deemed submitted for decision or resolution upon the filing of
injunction. The petition, docketed as G.R. No. 180792, prayed that a temporary restraining
the last pleading, brief, or memorandum required by the rules of the Commission or by the
order be issued enjoining the COMELEC (Second Division) from taking cognizance of SPR
Commission itself. Unless otherwise provided by this Constitution or by law, any decision,
Case No. 46-2007 and that the TRO issued by the COMELEC be ordered lifted.
order, or ruling of each Commission may be brought to the Supreme Court on certiorari by
the aggrieved party within thirty days from receipt of a copy thereof.
On 15 January 2008, the Court resolved to dismiss G.R. No. 180792 for failure of the petition
to state the material dates showing that the petition was filed on time, failure to submit the
Under the aforequoted constitutional provisions, the requirement that an aggrieved party
required competent proof of identity in the verification/certification, failure to give an
must first file a motion for reconsideration of a resolution of the Division to the COMELEC en
explanation why service was not personally made and failure to show that any grave abuse of
banc is mandatory and jurisdictional in invoking the power of review of the Supreme Court.
discretion was committed by the COMELEC in rendering the challenged order.

169
Failure to abide by this procedural requirement constitutes a ground for dismissal of the
petition.16
All election cases, including pre-proclamation controversies, shall be decided by the
COMELEC in division, and the motion for reconsideration shall be decided by the COMELEC
en banc.17 As held in Ambil v. Commission on Elections,18 the power of review of the
Supreme Court of the rulings of the COMELEC is limited only to the final decision or
resolution of the COMELEC en banc and not the final resolution of its Division. The Supreme
Court has no power to review, via certiorari, an interlocutory order or even a final resolution
of a Division of the Commission on Elections.
Moreover, pursuant to Section 5 (c), Rule 3 19 of the COMELEC Rules of Procedure, a
resolution issued by a Division of the COMELEC must first be elevated to the COMELEC en
banc by filing a motion for reconsideration.
The filing of a motion for reconsideration is mandatory because the mode by which a
decision, order or ruling of the COMELEC en banc may be elevated to the Supreme Court is
by the special civil action of certiorari under Rule 64 of the Rules of Civil Procedure. It is
settled that the filing of a motion for reconsideration of the order, resolution or decision of the
tribunal, board or office is, subject to well-recognized exceptions, a condition sine qua non to
the institution of a special civil action for certiorari . The rationale therefore is that the law
intends to afford the tribunal, board or office an opportunity to rectify the errors and mistakes
it may have lapsed into before resort to the courts of justice can be had. 20
Since the COMELEC Rules of Procedure allows the review of a resolution of the Division by
the COMELEC en banc, the filing of the instant petition for certiorari and prohibition is
premature. The petition does not allege that petitioner indeed filed a motion for
reconsideration before the COMELEC en banc. The unquestioned rule in this jurisdiction is
that certiorari will lie only if there is no appeal or any other plain, speedy and adequate
remedy in the ordinary course of law against the acts of public respondent. 21 Certiorari cannot
be resorted to as a shield from the adverse consequences of petitioner's own omission to file
the required motion for reconsideration. 22 A litigant should first exhaust the administrative
remedies provided by law before seeking judicial intervention in order to give the
administrative agency an opportunity to decide correctly the matter and prevent unnecessary
and premature resort to the court.23 The premature invocation of judicial intervention is fatal to
one's cause of action.24
WHEREFORE, the instant petition for certiorari and prohibition is DENIED. Costs against
petitioner.
SO ORDERED.
THIRD DIVISION
[G.R. NO. 166260 : February 18, 2009]
METROPOLITAN BANK & TRUST COMPANY, Petitioner, v. THE HONORABLE COURT
OF APPEALS and UNITED OVERSEAS BANK (formerly known as WESTMONT
BANK), Respondents.
DECISION
NACHURA, J.:
The Court reviews in this Rule 45 petition the November 30, 2004 Decision 1 of the Court of
Appeals (CA) in CA G.R. SP No. 78796. In the said decision, the appellate court affirmed the
dismissal by the trial court of Civil Case No. 00-595, 2 a petition for the review of Philippine
Clearing House Corporation (PCHC) Board Resolution No. 08-2000. 3
The antecedent facts and proceedings follow.
Check No. 08012663814 dated January 13, 1997, payable to cash, and drawn against the
account of Bienvenido C. Tan with petitioner Metropolitan Bank & Trust Company
(Metrobank) was deposited with respondent United Overseas Bank (UOB). The check was
then forwarded for clearing on January 14, 1997 through the PCHC, and, on the same date,
Metrobank cleared the check.5 In its January 27, 1997 Letter, 6 however, Metrobank informed
UOB that it was returning the check on account of material alteration the date was changed
from "January 23, 1997" to "January 13, 1997," and the amount was altered from "P1,000.00"
to "P91,000.00."7
Because UOB refused to accept the return and to reimburse Metrobank the amount it paid on
the check, the latter, on July 18, 1997, filed a Complaint 8 (Arbicom Case No. 97-093) before
the PCHC Arbitration Committee, contending in the main that UOB had the duty to examine
the deposited check for any material alteration; but since UOB failed to exercise due
diligence in determining that the check had been altered, UOB should bear the loss. 9 In its
Answer with Counterclaim,10 UOB interposed the defenses that it exercised due diligence,
and that Metrobank failed to comply with the 24-hour clearing house rule, and, with gross
negligence, cleared the check.11
On November 11, 1997, the Arbitration Committee directed Metrobank to submit the check to
the Philippine National Police (PNP) Crime Laboratory for examination. 12
After almost a year or on October 9, 1998, Metrobank moved for the postponement of the
October 12 and 19, 1998 hearings and their resetting to November 16, 1998, on the ground
that the PNP Crime Laboratory document examination results were not yet available. 13 On
170
November 14, 1998, however, Metrobank again moved for the cancellation of the November dismissed on account of Metrobank's lack of interest to prosecute and of its violation of the
16, 1998 hearing and its resetting on December 10, 1998, on the same ground that the said 24-hour clearing house rule.29
results were not yet available for release. 14
Undaunted, petitioner instituted the instant Petition for Review on Certiorari before this Court.
In the scheduled December 10, 1998 hearing, Metrobank's counsel failed to appear. 15 UOB
thus moved for the dismissal of the case, which the Arbitration Committee granted. 16
The petition is denied.

On March 9, 1999, following its receipt of the Transcript of Stenographic Notes 17 of the
The Court notes that, after the PCHC Board of Directors issued Resolution No. 08-2000
December 10, 1998 hearing, Metrobank filed a Motion for Reconsideration 18 of the dismissal
denying petitioner's motion for reconsideration, petitioner moved for reconsideration of that
order, attaching thereto a copy of the Medical Certificate 19 declaring that its counsel had been
resolution. Following the incorrect advice of the PCHC Executive Secretary that the proper
afflicted with influenza during the December 10, 1998 hearing, and a copy of PNP Crime
remedy under Section 13 of the PCHC Rules was for petitioner to file a notice of appeal with
Laboratory Document Examination Report No. 102-98 20 stating that the subject check had
the PCHC and a Petition for Review with the RTC, petitioner consequently filed the Petition
been altered.
for Review with the trial court.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

As expected, UOB opposed the motion and argued that Metrobank was not serious in
This erroneous move of the petitioner was fatal to its cause. The Court has already explained
prosecuting the case considering the numerous postponements of hearings made by its
in Insular Savings Bank v. Far East Bank and Trust Company, 30 that the PCHC Rules cannot
counsel; and that the said counsel was trifling with the processes of the Arbitration
confer jurisdiction on the RTC to review arbitral awards, thus'
Committee because, upon verification with his secretary, he was not really sick on December
10, 1998. Further, the examination by the PNP Crime Laboratory of the check had already
been completed on July 6, 1998.21 Furthermore, petitioner had several judicial remedies available at its disposal after the
Arbitration Committee denied its Motion for Reconsideration. It may petition the proper RTC
to issue an order vacating the award on the grounds provided for under Section 24 of the
On February 28, 2000, the Arbitration Committee denied Metrobank's motion. 22 Unrelenting,
Arbitration Law. Petitioner likewise has the option to file a Petition for Review under Rule 43
Metrobank filed its Second Motion for Reconsideration 23 on March 20, 2000.
of the Rules of Court with the Court of Appeals on questions of fact, of law, or mixed
questions of fact and law. Lastly, petitioner may file a petition for certiorari under Rule 65 of
On April 14, 2000, the PCHC Board of Directors issued Resolution No. 08-2000, 24 denying the Rules of Court on the ground that the Arbitrator Committee acted without or in excess of
the second motion for reconsideration. Metrobank again moved for the reconsideration of this its jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction.
resolution. On May 5, 2000, however, it received communication from the PCHC Executive Since this case involves acts or omissions of a quasi-judicial agency, the petition should be
Secretary informing it that the proper remedy following Section 13 of the PCHC Rules of filed in and cognizable only by the Court of Appeals.
Procedure for Arbitration (PCHC Rules) was for it to file a notice of appeal with the PCHC
and a Petition for Review with the Regional Trial Court (RTC) within a non-extendible period
In this instance, petitioner did not avail of any of the abovementioned remedies available to it.
of fifteen (15) days counted from the receipt of the PCHC board resolution.25
Instead it filed a Petition for Review with the RTC where Civil Case No. 92-145 is pending
pursuant to Section 13 of the PCHC Rules to sustain its action. Clearly, it erred in the
Hence, on May 9, 2000, Metrobank filed its Petition for Review (Civil Case No. 00-595) with procedure it chose for judicial review of the arbitral award.
the RTC of Makati City. On July 25, 2003, the trial court rendered its Decision 26 dismissing
the petition. It ruled that it had no jurisdiction over the petition, the same having been filed out
Having established that petitioner failed to avail of the abovementioned remedies, we now
of time. The trial court further ruled that the Arbitration Committee correctly dismissed the
discuss the issue of the jurisdiction of the trial court with respect to the Petition for Review
original case on account of Metrobank's failure to prosecute, and that Metrobank's claim
filed by petitioner.
could not be sustained considering that under prevailing jurisprudence the drawee-bank
should bear the loss if it had mistakenly cleared a forged or an altered check. 27
Jurisdiction is the authority to hear and determine a cause - the right to act in a case.
Jurisdiction over the subject matter is the power to hear and determine the general class to
Dissatisfied, Metrobank appealed the case to the CA. In the assailed November 30, 2004
which the proceedings in question belong. Jurisdiction over the subject matter is conferred by
Decision,28 the appellate court affirmed the ruling of the trial court. The CA ratiocinated,
law and not by the consent or acquiescence of any or all of the parties or by erroneous belief
however, that the Petition for Review before the trial court was filed on time its filing was in
of the court that it exists.
accordance with the PCHC Rules. The CA nevertheless ruled that the case was correctly

171
In the instant case, petitioner and respondent have agreed that the PCHC Rules would
govern in case of controversy. However, since the PCHC Rules came about only as a result
of an agreement between and among member banks of PCHC and not by law, it cannot
confer jurisdiction to the RTC. Thus, the portion of the PCHC Rules granting jurisdiction to the
RTC to review arbitral awards, only on questions of law, cannot be given effect.
Consequently, the proper recourse of petitioner from the denial of its motion for
reconsideration by the Arbitration Committee is to file either a motion to vacate the arbitral
award with the RTC, a Petition for Review with the Court of Appeals under Rule 43 of the
Rules of Court, or a petition for certiorari under Rule 65 of the Rules of Court. In the case at
bar, petitioner filed a Petition for Review with the RTC when the same should have been filed
with the Court of Appeals under Rule 43 of the Rules of Court. Thus, the RTC of Makati did
not err in dismissing the Petition for Review for lack of jurisdiction but not on the ground that
petitioner should have filed a separate case from Civil Case No. 92-145 but on the necessity
of filing the correct petition in the proper court. It is immaterial whether petitioner filed the
Petition for Review in Civil Case No. 92-145 as an appeal of the arbitral award or whether it
filed a separate case in the RTC, considering that the RTC will only have jurisdiction over an
arbitral award in cases of motions to vacate the same. Otherwise, as elucidated herein, the
Court of Appeals retains jurisdiction in petitions for review or in petitions for certiorari . x x x.31
As in Insular, the trial court, in this case, properly dismissed Civil Case No. 00-595 for lack of
jurisdiction, not because the petition had been filed out of time, but because the court had no
jurisdiction over the subject matter of the petition.
We are aware that the Supreme Court has ample authority to go beyond the pleadings when,
in the interest of justice and the promotion of public policy, there is a need to make its own
finding to support its conclusion. 32 In this case, however, we find no compelling reason to
resolve the other issues raised in the petition.
WHEREFORE, premises considered, the Petition for Review on Certiorari is DENIED.
SO ORDERED.
FIRST DIVISION
G.R. No. 163602               September 7, 2011
SPOUSES EULOGIA MANILA and RAMON MANILA, Petitioners,
vs.
SPOUSES EDERLINDA GALLARDO-MANZO and DANIEL MANZO, Respondents.
DECISION
VILLARAMA, JR., J.:
This resolves the petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the Decision1 dated February 27, 2004 and
Resolution2 dated May 14, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 49998
which granted the petition for annulment of judgment filed by the respondents.
The controversy stemmed from an action for ejectment 3 filed by the respondents, spouses
Ederlinda Gallardo-Manzo and Daniel Manzo, against the petitioners, spouses Ramon and
Eulogia Manila, before the Metropolitan Trial Court (MeTC) of Las Piñas City, Branch 79
(Civil Case No. 3537). The facts as summarized by the said court are as follows:
On June 30, 1982, Ederlinda Gallardo leased two (2) parcels of land situated along Real St.,
Manuyo, Las Piñas, Metro Manila, to Eulogia Manila for a period of ten (10) years at a
monthly rental(s) of P2,000.00 for the first two years, and thereafter an increase of ten (10)
percent every after two years. They also agreed that the lessee shall have the option to buy
the property within two (2) years from the date of execution of the contract of lease at a fair
market value of One Hundred and Fifty Thousand Pesos (P150,000.00)
The contract of lease expired on July 1, 1992 but the lessee continued in possession of the
property despite a formal demand letter dated August 8, 1992, to vacate the same and pay
the rental arrearages. In a letter reply dated August 12, 1992, herein defendant claimed that
no rental fee is due because she allegedly became the owner of the property at the time she
communicated to the plaintiff her desire to exercise the option to buy the said property.
Their disagreement was later brought to the Barangay for conciliation but the parties failed to
reach a compromise, hence the present action. 4
On July 14, 1993, the MeTC rendered its decision,5 the dispositive portion of which reads:
WHEREFORE, a judgment is rendered in favor of the plaintiffs ordering the defendants:
1) To vacate the subject parcels of land and surrender possession thereof upon the
payment by the plaintiff of one-half of the value of the building constructed by the
lessee. Should the lessor refuse to reimburse the aforesaid amount, the lessee
shall have the option to exercise her right under Article 1678 of the New Civil Code;
2) To pay rental arrearages up to July 1, 1992 in the amount of Two Hundred
Twenty Eight Thousand and Forty Four 80/100 Pesos (P228,044.80);
3) To pay, as reasonable compensation for their continued withholding of
possession of the subject lots, the sum of Three Thousand Two Hundred and
Twenty One Pesos (P3,221.00) every month, commencing July 2, 1992 up to such
172
 time that they finally yield possession thereof to the plaintiffs, subject to an increase
of ten percent (10%) after every two (2) years from said date; and
4) To pay plaintiffs attorney’s fees in the sum of Five Thousand Pesos (P5,000.00)
No pronouncement as to costs.
SO ORDERED.6
Petitioners appealed to the Regional Trial Court (RTC) of Makati City, Branch 63 (Civil Case
No. 93-3733) which reversed the MeTC. The RTC found that petitioners have in fact
exercised their option to buy the leased property but the respondents refused to honor the
same. It noted that respondents even informed the petitioners about foreclosure proceedings
on their property, whereupon the petitioners tried to intervene by tendering rental payments
but the respondents advised them to withhold such payments until the appeal of respondents
in the case they filed against the Rural Bank of Bombon (Camarines Sur), Inc. (Civil Case No.
6062) is resolved. It further noted that respondents’ intention to sell the lot to petitioners is
confirmed by the fact that the former allowed the latter to construct a building of strong
materials on the premises. The RTC thus decreed:
IN THE LIGHT OF THE FOREGOING, judgment is hereby rendered reversing the decision of
the lower court dated July 14, 1993 and ordering as follows:
1) That plaintiffs execute a deed of absolute sale over that parcel of land subject of
the Contract of Lease dated June 30, 1982 after full payment of defendants of the
purchase price of P150,000.00;
2) That plaintiffs pay the costs of suit.
SO ORDERED.7
Respondents filed a motion for reconsideration on December 23, 1994. In its Order dated
March 24, 1995, the RTC denied the motion for having been filed beyond the fifteen (15)-day
period considering that respondents received a copy of the decision on December 7,
1994.8 Consequently, the November 18, 1994 decision of the RTC became final and
executory.9
On December 22, 1998, respondents filed a petition for annulment of the RTC decision in the
CA. Respondents assailed the RTC for ordering them to sell their property to petitioners
arguing that said court’s appellate jurisdiction in ejectment cases is limited to the
determination of who is entitled to the physical possession of real property and the only
judgment it can render in favor of the defendant is to recover his costs, which judgment is
conclusive only on the issue of possession and does not affect the ownership of the land.
They contended that the sale of real property by one party to another may be ordered by the
RTC only in a case for specific performance falling under its original exclusive jurisdiction, not
in the exercise of its appellate jurisdiction in an ejectment case. Respondents also alleged
that the petition for annulment is the only remedy available to them because the ordinary
remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer
available through no fault on their part.
By Decision dated February 27, 2004, the CA granted the petition, annulled the November
18, 1994 RTC decision and reinstated the July 14, 1993 MeTC decision. On the issue of lack
of jurisdiction raised by the respondents, the CA ruled as follows:
It must be stressed that the main action before the Metropolitan Trial Court is one for
ejectment grounded on the expiration of the parties’ contract of lease. And said court, finding
that petitioners have a valid right to ask for the ejectment of private respondents, ordered the
latter to vacate the premises and to pay their rentals in arrears. To Our mind, what the
respondent court should have done in the exercise of its appellate jurisdiction, was to confine
itself to the issue of whether or not petitioners have a valid cause of action for ejectment
against the private respondents.
Unfortunately, in the decision herein sought to be annulled, the respondent court went further
than what is required of it as an appellate court when it ordered the petitioners to sell their
properties to the private respondents. In a very real sense, the respondent court materially
changed the nature of petitioners’ cause of action by deciding the question of ownership even
as the appealed case involves only the issue of prior physical possession which, in every
ejectment suit, is the only question to be resolved. As it were, the respondent court converted
the issue to one for specific performance which falls under its original, not appellate
jurisdiction. Sad to say, this cannot be done by the respondent court in an appealed
ejectment case because the essential criterion of appellate jurisdiction is that it revises and
corrects the proceedings in a cause already instituted and does not create that cause
(Marbury v. Madison, 1 Cranch (U.S.), 137, 172, 2 L. edition 60, cited in 15 Corpus Juris
727).
It follows that the respondent Regional Trial Court clearly acted without jurisdiction when it
ordered the petitioners to sell their properties to the private respondents. The order to sell can
be made only by the respondent court in an action for specific performance under its
exclusive original jurisdiction, and not in the exercise of its appellate jurisdiction in an
appealed ejectment suit, as in this case. Worse, the relief granted by the same court was not
even prayed for by the private respondents in their Answer and position paper before the
MTC, whereat they only asked for the dismissal of the complaint filed against
them.10 (Emphasis supplied.)
With the denial of their motion for reconsideration, petitioners filed the present petition raising
the following issues:
A
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 WHETHER THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN
ANNULLING THE JUDGMENT BY THE REGIONAL TRIAL COURT OF MAKATI
CITY NOTWITHSTANDING THE FINDING THAT THE ORDINARY REMEDIES
OF NEW TRIAL, APPEAL, PETITION FOR RELIEF OR OTHER APPROPRIATE
REMEDIES WERE LOST THROUGH THE FAULT OF THE RESPONDENTS
B
WHETHER THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN
ANNULLING THE JUDGMENT BY THE REGIONAL TRIAL COURT OF MAKATI
CITY ON THE GROUND OF "LACK OF JURISDICTION" WHEN IT HAS NOT
BEEN SHOWN THAT THE REGIONAL TRIAL COURT OF MAKATI CITY HAD NO
JURISDICTION OVER THE PERSON OF THE RESPONDENTS OR THE
SUBJECT MATTER OF THE CLAIM11
The petition is meritorious.
A petition for annulment of judgments or final orders of a Regional Trial Court in civil actions
can only be availed of where "the ordinary remedies of new trial, appeal, petition for relief or
other appropriate remedies are no longer available through no fault of the petitioner." 12 It is a
remedy granted only under exceptional circumstances and such action is never resorted to
as a substitute for a party’s own neglect in not promptly availing of the ordinary or other
appropriate remedies.13 The only grounds provided in Sec. 2, Rule 47 are extrinsic fraud and
lack of jurisdiction.
In this case, respondents alleged that the loss of remedies against the RTC decision was
attributable to their former counsel’s late filing of their motion for reconsideration and failure to
file any proper petition to set aside the said decision. They claimed that they had been
constantly following up the status of the case with their counsel, Atty. Jose Atienza, who
repeatedly assured them he was on top of the situation and would even get angry if
repeatedly asked about the case. Out of their long and close relationship with Atty. Atienza
and due regard for his poor health due to his numerous and chronic illnesses which required
frequent prolonged confinement at the hospital, respondents likewise desisted from hiring the
services of another lawyer to assist Atty. Atienza, until the latter’s death on September 10,
1998. Thus, it was only on November 1998 that respondents engaged the services of their
new counsel who filed the petition for annulment of judgment in the CA.
We are not persuaded by respondents’ asseveration. They could have directly followed up
the status of their case with the RTC especially during the period of Atty. Atienza’s hospital
confinement. As party litigants, they should have constantly monitored the progress of their
case. Having completely entrusted their case to their former counsel and believing his word
that everything is alright, they have no one to blame but themselves when it turned out that
their opportunity to appeal and other remedies from the adverse ruling of the RTC could no
longer be availed of due to their counsel’s neglect. That respondents continued to rely on the
services of their counsel notwithstanding his chronic ailments that had him confined for long
periods at the hospital is unthinkable. Such negligence of counsel is binding on the client,
especially when the latter offered no plausible explanation for his own inaction. The Court has
held that when a party retains the services of a lawyer, he is bound by his counsel’s actions
and decisions regarding the conduct of the case. This is true especially where he does not
complain against the manner his counsel handles the suit. 14 The oft-repeated principle is that
an action for annulment of judgment cannot and is not a substitute for the lost remedy of
appeal.15
In any event, the petition for annulment was based not on fraudulent assurances or negligent
acts of their counsel, but on lack of jurisdiction.
Petitioners assail the CA in holding that the RTC decision is void because it granted a relief
inconsistent with the nature of an ejectment suit and not even prayed for by the respondents
in their answer. They contend that whatever maybe questionable in the decision is a ground
for assignment of errors on appeal – or in certain cases, as ground for a special civil action
for certiorari under Rule 65 – and not as ground for its annulment. On the other hand,
respondents assert that the CA, being a higher court, has the power to adopt, reverse or
modify the findings of the RTC in this case. They point out that the CA in the exercise of its
sound discretion found the RTC’s findings unsupported by the evidence on record which also
indicated that the loss of ordinary remedies of appeal, new trial and petition for review was
not due to the fault of the respondents.
We agree with the petitioners.
Lack of jurisdiction as a ground for annulment of judgment refers to either lack of jurisdiction
over the person of the defending party or over the subject matter of the claim. 16 In a petition
for annulment of judgment based on lack of jurisdiction, petitioner must show not merely an
abuse of jurisdictional discretion but an absolute lack of jurisdiction. Lack of jurisdiction
means absence of or no jurisdiction, that is, the court should not have taken cognizance of
the petition because the law does not vest it with jurisdiction over the subject matter.
Jurisdiction over the nature of the action or subject matter is conferred by law. 17
There is no dispute that the RTC is vested with appellate jurisdiction over ejectment cases
decided by the MeTC, MTC or MCTC. We note that petitioners’ attack on the validity of the
RTC decision pertains to a relief erroneously granted on appeal, and beyond the scope of
judgment provided in Section 6 (now Section 17) of Rule 70.18 While the court in an ejectment
case may delve on the issue of ownership or possession de jure solely for the purpose of
resolving the issue of possession de facto, it has no jurisdiction to settle with finality the issue
of ownership19 and any pronouncement made by it on the question of ownership is
provisional in nature. 20 A judgment in a forcible entry or detainer case disposes of no other
issue than possession and establishes only who has the right of possession, but by no
means constitutes a bar to an action for determination of who has the right or title of
ownership.21 We have held that although it was proper for the RTC, on appeal in the
ejectment suit, to delve on the issue of ownership and receive evidence on possession de
jure, it cannot adjudicate with semblance of finality the ownership of the property to either
party by ordering the cancellation of the TCT.22
174
In this case, the RTC acted in excess of its jurisdiction in deciding the appeal of respondents
when, instead of simply dismissing the complaint and awarding any counterclaim for costs
due to the defendants (petitioners), it ordered the respondents-lessors to execute a deed of
absolute sale in favor of the petitioners-lessees, on the basis of its own interpretation of the
Contract of Lease which granted petitioners the option to buy the leased premises within a
certain period (two years from date of execution) and for a fixed price (₱150,000.00). 23 This
cannot be done in an ejectment case where the only issue for resolution is who between the
parties is entitled to the physical possession of the property.
Such erroneous grant of relief to the defendants on appeal, however, is but an exercise of
jurisdiction by the RTC. Jurisdiction is not the same as the exercise of jurisdiction. As
distinguished from the exercise of jurisdiction, jurisdiction is the authority to decide a cause,
and not the decision rendered therein. 24 The ground for annulment of the decision is absence
of, or no, jurisdiction; that is, the court should not have taken cognizance of the petition
because the law does not vest it with jurisdiction over the subject matter.25
omission to assert a right within a reasonable time, warrants a presumption that the party
entitled to assert it has abandoned it or declined to assert it. 28 There is no absolute rule as to
what constitutes laches or staleness of demand; each case is to be determined according to
its particular circumstances.29
Here, respondents’ failure to assail the RTC ruling in a petition for review or certiorari before
the CA, rendered the same final and executory. Having lost these remedies due to their
lethargy for three and a half years, they cannot now be permitted to assail anew the said
ruling rendered by the RTC in the exercise of its appellate jurisdiction. Their inaction and
neglect to pursue available remedies to set aside the RTC decision for such length of time,
without any acceptable explanation other than the word of a former counsel who already
passed away, constitutes unreasonable delay warranting the presumption that they have
declined to assert their right over the leased premises which continued to be in the
possession of the petitioners. Clearly, respondents’ petition to annul the final RTC decision is
barred under the equitable doctrine of laches.

Thus, while respondents assailed the content of the RTC decision, they failed to show that WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated
the RTC did not have the authority to decide the case on appeal. As we held in Ybañez v. February 27, 2004 and Resolution dated May 14, 2004 of the Court of Appeals in CA-G.R.
Court of Appeals:26 SP No. 49998 are SET ASIDE. The petition for annulment of judgment filed by herein
respondents is DISMISSED.
On the first issue, we feel that respondent court acted inadvertently when it set aside the RTC
ruling relative to the validity of the substituted service of summons over the persons of the No costs.
petitioners in the MTC level. We must not lose sight of the fact that what was filed before
respondent court is an action to annul the RTC judgment and not a petition for review.
SO ORDERED.
Annulment of judgment may either be based on the ground that a judgment is void for want of
jurisdiction or that the judgment was obtained by extrinsic fraud. There is nothing in the
records that could cogently show that the RTC lacked jurisdiction. Chiefly, Section 22 of B.P.
Blg. 129, otherwise known as the Judiciary Reorganization Act of 1980, vests upon the RTC
the exercise of an "appellate jurisdiction over all cases decided by the Metropolitan Trial
Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts in their respective territorial
jurisdictions." Clearly then, when the RTC took cognizance of petitioners’ appeal from the
adverse decision of the MTC in the ejectment suit, it (RTC) was unquestionably exercising its
appellate jurisdiction as mandated by law. Perforce, its decision may not be annulled on the
basis of lack of jurisdiction as it has, beyond cavil, jurisdiction to decide the
appeal.27 (Emphasis supplied.)

The CA therefore erred in annulling the November 18, 1994 RTC decision on the ground of
lack of jurisdiction as said court had jurisdiction to take cognizance of petitioners’
appeal.1avvphi1

On the timeliness of the petition for annulment of judgment filed with the CA, Section 3, Rule
47 of the Rules of Court provides that a petition for annulment of judgment based on extrinsic
fraud must be filed within four years from its discovery; and if based on lack of jurisdiction,
before it is barred by laches or estoppel. The principle of laches or "stale demands" ordains
that the failure or neglect, for an unreasonable and unexplained length of time, to do that
which by exercising due diligence could or should have been done earlier—negligence or

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