RULE 8 MANNER OF MAKING ALLEGATIONS IN A PLEADING
G.R. No. 207970, January 20, 2016
FERNANDO MEDICAL ENTERPRISES, INC., , v. WESLEYAN
UNIVERSITY PHILIPPINES, INC.,
The trial court may render a judgment on the pleadings upon motion
of the claiming party when the defending party's answer fails to
tender an issue, or otherwise admits the material allegations of the
adverse party's pleading. For that purpose, only the pleadings of the
parties in the action are considered. It is error for the trial court to
deny the motion for judgment on the pleadings because the
defending party's pleading in another case supposedly tendered an
issue of fact.
FACTS:
Petitioner, a domestic corporation dealing with medical equipment
and supplies, delivered to and installed medical equipment and
supplies at the respondent's hospital under three Deed of
Undertakings.
Respondent paid only P67,3 57,683.23 of its total obligation of
P123,901,650.00, leaving unpaid the sum of P54,654,195.54.
The petitioner sent a demand letter to the respondent.
Due to the respondent's failure to pay as demanded, the petitioner
filed its complaint for sum of money in the RTC. The respondent
moved to dismiss the complaint upon the following
grounds,14 namely: (a) lack of jurisdiction over the person of the
defendant; (b) improper venue; (c) litis pendentia; and (d) forum
shopping. In support of the ground of litis pendentia, it stated that
it had earlier filed a complaint for the rescission of the four contracts
and of the February 11, 2009 agreement in the RTC in Cabanatuan
City; and that the resolution of that case would be determinative of
the petitioner's action for collection.
After the RTC denied the motion to dismiss on July 19, 2009, 16 the
respondent filed its answer (ad cautelam), averring
2. The allegations in Paragraphs Nos. 2, 3, 4, and 5 of the complaint
are ADMITTED subject to the special and affirmative defenses
hereafter pleaded;
3. The allegations in Paragraphs Nos. 6, 7 and 8 of the complaint
are DENIED for lack of knowledge or information sufficient to form
a belief as to the truth or falsity thereof, inasmuch as the alleged
transactions were undertaken during the term of office of the past
officers of defendant Wesleyan University-Philippines. At any rate,
these allegations are subject to the special and affirmative defenses
hereafter pleaded;
4. The allegations in Paragraphs Nos. 9 and 10 of the complaint are
ADMITTED subject to the special and affirmative defenses hereafter
pleaded;
5. The allegations in Paragraphs Nos. 11 and 12 of the complaint
are DENIED for being conclusions of law.
Petitioner filed its Motion for Judgment Based on the
Pleadings, stating that the respondent had admitted the
material allegations of its complaint and thus did not tender
any issue as to such allegations. The respondent opposed
the Motion for Judgment Based on the Pleadings, arguing that it had
specifically denied the material allegations in the complaint,
particularly paragraphs 6, 7, 8, 11 and 12.
RTC issued the order denying the Motion for Judgment Based on the
Pleadings of the petitioner.
CA promulgated its decision. Although observing that the
respondent had admitted the contracts as well as the February 11,
2009 agreement, viz.: It must be remembered that Private
Respondent admitted the existence of the subject contracts,
including Petitioner's fulfilment of its obligations under the same,
but subjected the said admission to the "special and affirmative
defenses" earlier raised in its Motion to Dismiss.
Private Respondent's special and affirmative defenses are not of
such character as to avoid Petitioner's claim. The same special and
affirmative defenses have been passed upon by the RTC in its Order
dated July 19, 2010 when it denied Private Respondent's Motion to
Dismiss. As correctly found by the RTC, Private Respondent's special
and affirmative defences of lack of jurisdiction over its person,
improper venue, litis pendentia and wilful and deliberate forum
1
shopping are not meritorious and cannot operate to dismiss
Petitioner's Complaint. Hence, when Private Respondent subjected
its admission to the said defenses, it is as though it raised no
defense at all.
Private Respondent admitted that it entered into the subject
contracts and that Petitioner had performed its obligations under the
same.
The CA ruled that a judgment on the pleadings would be improper
because the outstanding balance due to the petitioner remained to
be an issue in the face of the allegations of the respondent in its
complaint for rescission in the RTC in Cabanatuan City.
PETITIONER’S CONTENTION: The petitioner posits that the CA erred
in going outside of the respondent's answer by relying on the
allegations contained in the latter's complaint for rescission; and
insists that the CA should have confined itself to the respondent's
answer in the action in order to resolve the petitioner's motion for
judgment based on the pleadings.
RESPONDENT’S CONTENTION: It had specifically denied the
material allegations of the petitioner's complaint, including the
amount claimed; and that the CA only affirmed the previous ruling
of the RTC that the pleadings submitted by the parties tendered an
issue as to the balance owing to the petitioner.
ISSUE: Whether the CA commit reversible error in affirming the
RTC's denial of the petitioner's motion for judgment on the
pleadings?
RULING: The appeal is meritorious.
The rule on judgment based on the pleadings is Section 1, Rule 34
of the Rules of Court, which provides thus: Section 1. Judgment on
the pleadings. - Where an answer fails to tender an issue, or
otherwise admits the material allegations of the adverse party's
pleading, the court may, on motion of that party, direct judgment
on such pleading.
The essential query in resolving a motion for judgment on the
pleadings is whether or not there are issues of fact generated
by the pleadings. Whether issues of fact exist in a case or not
depends on how the defending party's answer has dealt with the
ultimate facts alleged in the complaint. The defending party's
answer either admits or denies the allegations of ultimate facts in
the complaint or other initiatory pleading. The allegations of
ultimate facts the answer admit, being undisputed, will not require
evidence to establish the truth of such facts, but the allegations of
ultimate facts the answer properly denies, being disputed, will
require evidence.
The answer admits the material allegations of ultimate facts of the
adverse party's pleadings not only when it expressly confesses the
truth of such allegations but also when it omits to deal with them at
all.29 The controversion of the ultimate facts must only be by specific
denial. Section 10, Rule 8 of the Rules of Court recognizes only
three modes by which the denial in the answer raises an
issue of fact. The first is by the defending party specifying each
material allegation of fact the truth of which he does not admit and,
whenever practicable, setting forth the substance of the matters
upon which he relies to support his denial. The second applies to
the defending party who desires to deny only a part of an averment,
and the denial is done by the defending party specifying so much of
the material allegation of ultimate facts as is true and material and
denying only the remainder. The third is done by the defending
party who is without knowledge or information sufficient to form a
belief as to the truth of a material averment made in the complaint
by stating so in the answer. Any material averment in the complaint
not so specifically denied are deemed admitted except an averment
of the amount of unliquidated damages.
In the case of a written instrument or document upon which an
action or defense is based, which is also known as the actionable
document, the pleader of such document is required either to set
forth the substance of such instrument or document in the pleading,
and to attach the original or a copy thereof to the pleading as an
exhibit, which shall then be deemed to be a part of the pleading, or
to set forth a copy in the pleading.31 The adverse party is deemed
to admit the genuineness and due execution of the actionable
document unless he specifically denies them under oath, and sets
forth what he claims to be the facts, but the requirement of an oath
does not apply when the adverse party does not appear to be a
2
party to the instrument or when compliance with an order for an
inspection of the original instrument is refused.
In Civil Case No. 09-122116, the respondent expressly
admitted paragraphs no. 2, 3, 4, 5, 9 and 10 of the complaint.
The admission related to the petitioner's allegations on: (a) the four
transactions for the delivery and installation of various hospital
equipment; (b) the total liability of the respondent; (c) the
payments made by the respondents; (d) the balance still due to the
petitioner; and (e) the execution of the February 11, 2009
agreement. The admission of the various agreements, especially the
February 11, 2009 agreement, significantly admitted the petitioner's
complaint. To recall, the petitioner's cause of action was based on
the February 1 1, 2009 agreement, which was the actionable
document in the case. The complaint properly alleged the substance
of the February 11, 2009 agreement, and contained a copy thereof
as an annex. Upon the express admission of the genuineness and
due execution of the February 11, 2009 agreement, judgment on
the pleadings became proper.33 As held in Santos v. Alcazar:
There is no need for proof of execution and authenticity with respect
to documents the genuineness and due execution of which are
admitted by the adverse party. With the consequent admission
engendered by petitioners' failure to properly deny the
Acknowledgment in their Answer, coupled with its proper
authentication, identification and offer by the respondent, not to
mention petitioners' admissions in paragraphs 4 to 6 of their Answer
that they are indeed indebted to respondent, the Court believes that
judgment may be had solely on the document, and there is no need
to present receipts and other documents to prove the claimed
indebtedness. The Acknowledgment, just as an ordinary
acknowledgment receipt, is valid and binding between the parties
who executed it, as a document evidencing the loan agreement they
had entered into. The absence of rebutting evidence occasioned by
petitioners' waiver of their right to present evidence renders the
Acknowledgment as the best evidence of the transactions between
the parties and the consequential indebtedness incurred. Indeed,
the effect of the admission is such that a prima facie case is made
for the plaintiff which dispenses with the necessity of evidence on
his part and entitled him to a judgment on the pleadings unless a
special defense of new matter, such as payment, is interposed by
the defendant.
The respondent denied paragraphs no. 6, 7 and 8 of the complaint
"for lack of knowledge or information sufficient to form a belief as
to the truth or falsity thereof, inasmuch as the alleged transactions
were undertaken during the term of office of the past officers of
defendant Wesleyan University-Philippines." Was the manner of
denial effective as a specific denial?
We answer the query in the negative. Paragraph no. 6 alleged
that the respondent's total obligation as of February 15, 2009 was
P123,901,650.00, but its balance thereafter became only
P54,654,195.54 because it had since then paid P67,357,683.23 to
the petitioner. Paragraph no. 7 stated that the petitioner had agreed
with the respondent on February 11, 2009 to reduce the balance to
only P50,400,000.00, which the respondent would pay in 36 months
through 36 postdated checks of P1,400,000.00 each, which the
respondent then issued for the purpose. Paragraph no. 8 averred
that after four of the checks totalling P5,600,000.00 were paid the
respondent stopped payment of the rest, rendering the entire
obligation due and demandable pursuant to the February 11, 2009
agreement. Considering that paragraphs no. 6, 7 and 8 of the
complaint averred matters that the respondent ought to know or
could have easily known, the answer did not specifically deny such
material averments. It is settled that denials based on lack of
knowledge or information of matters clearly known to the pleader,
or ought to be known to it, or could have easily been known by it
are insufficient, and constitute ineffective 36 or sham denials.
That the respondent qualified its admissions and denials by
subjecting them to its special and affirmative defenses of lack of
jurisdiction over its person, improper venue, litis pendentia and
forum shopping was of no consequence because the affirmative
defenses, by their nature, involved matters extrinsic to the merits
of the petitioner's claim, and thus did not negate the material
averments of the complaint.
Lastly, we should emphasize that in order to resolve the
petitioner's Motion for Judgment Based on the Pleadings, the
trial court could rely only on the answer of the respondent
filed in Civil Case No. 09-122116. Under Section 1, Rule 34 of
the Rules of Court, the answer was the sole basis for ascertaining
whether the complaint's material allegations were admitted or
3
properly denied. As such, the respondent's averment of payment of
the total of P78,401,650.00 to the petitioner made in its complaint
for rescission had no relevance to the resolution of the Motion for
Judgment Based on the Pleadings. The CA thus wrongly held that a
factual issue on the total liability of the respondent remained to be
settled through trial on the merits. It should have openly wondered
why the respondent's answer in Civil Case No. 09-122116 did not
allege the supposed payment of the P78,401,650.00, if the payment
was true, if only to buttress the specific denial of its alleged liability.
The omission exposed the respondent's denial of liability as
insincere.
G.R. No. 187487, June 29, 2015
GO TONG ELECTRICAL SUPPLY CO., INC. AND GEORGE C. GO v. BPI
FAMILY SAVINGS BANK, INC., SUBSTITUTED BY PHILIPPINE
INVESTMENT ONE [SPV-AMC], INC.
FACTS: Respondent filed a complaint5 against petitioners Go Tong
Electrical Supply Co., Inc. (Go Tong Electrical) and its President,
George C. Go seeking that the latter be held jointly and severally
liable to it for the payment of their loan obligation in the aggregate
amount of P87,086,398.71, inclusive of the principal sum, interests,
and penalties as of May 28, 2002, as well as attorney's fees,
litigation expenses, and costs of suit.6 As alleged by respondent, as
early as 1996, Go Tong Electrical had applied for and was granted
financial assistance by the then Bank of South East Asia (BSA).
Subsequently, DBS7 Bank of the Philippines, Inc. (DBS) became the
successor-in-interest of BSA. The application for financial assistance
was renewed on January 6, 1999 through a Credit Agreement.
On even date, Go Tong Electrical, represented by Go, among others,
obtained a loan from DBS in the principal amount of
P40,491,051.65, for which Go Tong Electrical executed Promissory
Note No. 82-91 -00176-79 (PN) for the same amount in favor of
DBS, maturing on February 5, 2000.10 Under the PN's terms, Go
Tong Electrical bound itself to pay a default penalty interest at the
rate of one percent (1%) per month in addition to the current
interest rate,11 as well as attorney's fees equivalent to twenty-five
percent (25%) of the amount sought to be recovered.12 As
additional security, Go executed a Comprehensive Surety
Agreement13 (CSA) covering any and all obligations undertaken by
Go Tong Electrical, including the aforesaid loan.14 Upon default of
petitioners, DBS - and later, its successor-in-interest, herein
respondent15 - demanded payment from petitioners,16 but to no
avail,17 hence, the aforesaid complaint.
In their Answer with Counterclaim18 (Answer), petitioners merely
stated that they "specifically deny"19 the allegations under
the complaint. Of particular note is their denial of the execution of
the loan agreement, the PN, and the CSA "for being self-serving and
pure conclusions intended to suit [respondent's] purposes." By way
of special and affirmative defenses, petitioners argued, among
others, that: (a) the real party-in-interest should be DBS and not
respondent; (b) no demand was made upon them; and (c) Go
cannot be held liable under the CSA since there was supposedly no
solidarity of debtors.21 Petitioners further interposed counterclaims
for the payment of moral and exemplary damages, as well as
litigation and attorney's fees in the total amount of P1,250,000.00.
During trial, respondent presented Ricardo O. Suñio23 (Suñio), the
Account Officer handling petitioners' loan accounts, as its witness.
Suñio nonetheless admitted that he had no knowledge of how the
PN was prepared, executed, and signed, nor did he witness its
signing.
For their part, petitioners presented Go Tong Electrical's Finance
Officer, Jocelyn Antonette Lim, who testified that Go Tong Electrical
was able to pay its loan, albeit partially. However, she admitted that
she does not know how much payments were made, nor does she
have a rough estimate thereof, as these were allegedly paid for in
dollars.
RTC RULING: Ruled in favor of respondent.
CA RULING: Sustained the RTC's ruling.
ISSUE: Whether or not the CA erred in upholding the RTC's ruling.
RULING: The petition lacks merit.
The Court concurs with the CA Decision holding that the
genuineness and due execution of the loan documents in this
case were deemed admitted by petitioners under the
parameters of Section 8, Rule 8 of the Rules which provides:
4
SEC. 8. How to contest such documents. — When an action or
defense is founded upon a written instrument, copied in or attached
to the corresponding pleading as provided in the preceding Section,
the genuineness and due execution of the instrument shall be
deemed admitted unless the adverse party, under oath, specifically
denies them, and sets forth what he claims to be the facts; but the
requirement of an oath does not apply when the adverse party does
not appear to be a party to the instrument or when compliance with
an order for an inspection of the original instrument is refused.
Petitioners failed to specifically deny the execution of the Credit
Agreement, PN, and CSA under the auspices of the above-quoted
rule. The mere statement in paragraph 4 of their Answer, i.e., that
they "specifically deny" the pertinent allegations of the Complaint
"for being self-serving and pure conclusions intended to suit
plaintiffs purposes,"44 does not constitute an effective specific denial
as contemplated by law.45 Verily, a denial is not specific simply
because it is so qualified by the defendant. Stated otherwise, a
general denial does not become specific by the use of the word
"specifically."46 Neither does it become so by the simple expedient
of coupling the same with a broad conclusion of law that the
allegations contested are "self-serving" or are intended "to suit
plaintiffs purposes."
The defendant must declare under oath that he did not sign the
document or that it is otherwise false or fabricated. Neither does the
statement of the answer to the effect that the instrument was
procured by fraudulent representation raise any issue as to its
genuineness or due execution. On the contrary such a plea is an
admission both of the genuineness and due execution thereof, since
it seeks to avoid the instrument upon a ground not affecting either.
To add, Section 8, Rule 8 of the Rules further requires that the
defendant "sets forth what he claims to be the facts," which
requirement, likewise, remains absent from the Answer in this case.
Thus, with said pleading failing to comply with the "specific denial
under oath" requirement under Section 8, Rule 8 of the Rules, the
proper conclusion, as arrived at by the CA, is that petitioners had
impliedly admitted the due execution and genuineness of the
documents evidencing their loan obligation to respondent.
To this, case law enlightens that "[t]he admission of the
genuineness and due execution of a document means that the party
whose signature it bears admits that he voluntarily signed the
document or it was signed by another for him and with his authority;
that at the time it was signed it was in words and figures exactly as
set out in the pleading of the party relying upon it; that the
document was delivered; and that any formalities required by law,
such as a seal, an acknowledgment, or revenue stamp, which it
lacks, are waived by him. Also, it effectively eliminated any defense
relating to the authenticity and due execution of the document, e.g.,
that the document was spurious, counterfeit, or of different import
on its face as the one executed by the parties; or that the signatures
appearing thereon were forgeries; or that the signatures were
unauthorized."50ChanRoblesVirtualawlibrary
Accordingly, with petitioners' admission of the genuineness and due
execution of the loan documents as above-discussed, the
competence of respondent's witness Suñio to testify in order to
authenticate the same is therefore of no moment. As the Court
similarly pointed out in Permanent Savings & Loan Bank, "[w]hile
Section [20],51 Rule 132 of the [Rules] requires that private
documents be proved of their due execution and authenticity before
they can be received in evidence, i.e., presentation and examination
of witnesses to testify on this fact; in the present case, there is no
need for proof of execution and authenticity with respect to the loan
documents because of respondent's implied admission thereof."
The Court clarifies that while the "[f]ailure to deny the genuineness
and due execution of an actionable document does not preclude a
party from arguing against it by evidence of fraud, mistake,
compromise, payment, statute of limitations, estoppel and want of
consideration [nor] bar a party from raising the defense in his
answer or reply and prove at the trial that there is a mistake or
imperfection in the writing, or that it does not express the true
agreement of the parties, or that the agreement is invalid or that
there is an intrinsic ambiguity in the writing," 53 none of these
defenses were adequately argued or proven during the proceedings
of this case.
Of particular note is the affirmative defense of payment raised
5
during the proceedings a quo. While petitioners insisted that they
had paid, albeit partially, their loan obligation to respondent, the
fact of such payment was never established by petitioners in this
case. Jurisprudence abounds that, in civil cases, one who pleads
payment has the burden of proving it; the burden rests on the
defendant, i.e., petitioners, to prove payment, rather than on the
plaintiff, i.e., respondent, to prove non-payment. When the creditor
is in possession of the document of credit, proof of non-payment is
not needed for it is presumed.54 Here, respondent's possession of
the Credit Agreement, PN, and CSA, especially with their
genuineness and due execution already having been admitted,
cements its claim that the obligation of petitioners has not been
extinguished.
He who alleges the affirmative of the issue has the burden of proof,
and upon the plaintiff in a civil case, the burden of proof never parts.
However, in the course of trial in a civil case, once plaintiff makes
out a prima facie case in his favor, the duty or the burden of
evidence shifts to defendant to controvert plaintiffs prima facie case,
otherwise, a verdict must be returned in favor of plaintiff. Moreover,
in civil cases, the party having the burden of proof must produce a
preponderance of evidence thereon, with plaintiff having to rely on
the strength of his own evidence and not upon the weakness of the
defendant's. The concept of "preponderance of evidence" refers to
evidence which is of greater weight, or more convincing, that which
is offered in opposition to it; at bottom, it means probability of truth.
G.R. No. 117434. February 9, 2001
BENGUET EXPLORATION, INC., v. COURT OF APPEALS,
SWITZERLAND GENERAL INSURANCE, CO., LTD., and SEAWOOD
SHIPPING, INC.
FACTS: Petitioner Benguet Exploration, Inc. (Benguet) filed a
complaint for damages against Seawood Shipping, Inc. (Seawood
Shipping) with the Regional Trial Court of Makati. On March 4, 1986,
petitioner Benguet filed another complaint for damages against
respondent Switzerland General Insurance, Co., Ltd. (Switzerland
Insurance).
The two cases were consolidated. Switzerland Insurance filed a
third-party complaint against Seawood Shipping, praying that the
latter be ordered to indemnify it for whatever might be adjudged
against it in favor of petitioner. 4 Thereafter, the cases were jointly
tried, during which petitioner Benguet presented its employees,
Rogelio Lumibao and Ernesto Cayabyab, as witnesses.
Rogelio Lumibao, marketing assistant of Benguet, was in charge of
exportation. His responsibilities included the documentation of
export products, presentations with banks, and other duties
connected with the export of products. He explained that private
respondent Seawood Shipping was chartered by petitioner Benguet
to transport copper concentrates. The bill of lading (Exh. A) stated
that the cargo, consisting of 2,243.496 wet metric tons of copper
concentrates, was loaded on board Sangkulirang No. 3 at Poro Point,
San Fernando, La Union. It was insured by Switzerland Insurance
(marine insurance policy was marked Exh. C). When the cargo was
unloaded in Japan, however, Rogelio Lumibao received a report
(Exh. B), dated August 19, 1985, from a surveyor in Japan stating
that the cargo was 355 metric tons short of the amount stated in
the bill of lading. For this reason, petitioner Benguet made a claim
of the loss to Seawood Shipping and Switzerland Insurance. In its
letter, dated August 21, 1985 (Exh. D), petitioner Benguet made a
formal demand for the value of the alleged shortage. As both
Seawood Shipping and Switzerland Insurance refused the demand,
petitioner Benguet brought these cases against Seawood Shipping
and Switzerland Insurance.
On cross-examination, Lumibao admitted that he did not see the
actual loading of the cargo at Poro Point and that his knowledge was
limited to what was contained in the bill of lading which he received
about two days after the loading. Lumibao testified that at Camp 6,
Kennon Road, Baguio, the copper concentrates were weighed prior
to being transported to Poro Point, where they were once more
weighed before being loaded on the vessel. But again he admitted
that he had not seen the actual weighing and loading of the copper
concentrates because he was not the one in charge of the operation.
Nor was he in Japan when the cargo was unloaded. He also did not
know how to perform the procedure for weighing cargo. Thus, he
could not determine the truth or falsity of the contents of the draft
survey. He only knew that there was in fact a shortage based on his
reading of the draft report. 6 Further, Lumibao testified that,
although he prepared the export declaration, he did not prepare the
bill of lading. The bill of lading was made on the basis of the draft
6
survey conducted by the Overseas Merchandise Inspection Co., Ltd.
or OMIC. 7 Some other person undertook the weighing of the cargo,
and Lumibao was only informed by telephone of the cargos weight
during its loading and unloading.
Lumibao had nothing to do with the preparation of the bill of lading,
the weighing of the copper concentrates, and the shipment of the
cargo. He did not accompany the trucks which transferred the cargo
from Baguio to Poro Point. He was not on the ship when the cargo
was loaded at Poro Point. Nor did he know if spillage occurred during
the loading or unloading of the copper concentrates.
Lumibao said that the buyer of the copper concentrates was the
Brandeis Intsel Co., Inc. Upon receipt of the cargo, Brandeis Intsel
Co., Inc. paid for the cargo based on its weight in dry metric tons,
or 90 percent more or less of the price of 2,243.496 tons, the weight
of the cargo in wet metric tons. With regard to the insurance policy,
he testified that petitioner Benguet made no objection to any of the
terms stated on the face of the policy.
Ernesto Cayabyab next testified for petitioner. He had been with
Benguet for 13 years and, at the time of his testimony, he was
secretary of Nil Alejandre, manager of Benguet. According to
Cayabyab, on July 28, 1985, he was sent to the warehouse (bodega)
at Poro Point, La Union to assist in the loading of the copper
concentrates. These copper concentrates were to be loaded on the
ship Sangkulirang No. 3. Cayabyab said he was present when the
cargo was loaded on the ship, as evidenced by the Certificate of
Loading (Exh. E), Certificate of Weight (Exh. F), and the Mates
Receipt (Exh. G), all dated July 28, 1985. According to Cayabyab,
the Marine Surveyor and the Chief Mate would go around the boat
to determine how much was loaded on the ship. Cayabyab stated
that he saw petitioner Benguets representative and his immediate
superior, Mr. Alejandre, and the Inspector of Customs, Mr.
Cardenas, sign the Certificate of Weight. Cayabyab also witnessed
the ship captain sign the Certificate of Weight, 9 which stated therein
that 2,243.496 wet metric tons of copper concentrates were loaded
on the ship. 10 Cayabyab likewise confirmed the authenticity of the
Mates Receipt, saying that he witnessed the Chief Mate sign the
document.
When cross-examined, Cayabyab said that, as a secretary, his
duties included computing the companys daily main production in
the mine site and accompanying his superior, Mr. Alejandre, during
shipments. He explained that the copper concentrates were
transported by dump trucks from the mining site to Poro Point for
over a month, possibly even three to six months. Cayabyab went to
Poro Point on July 27, 1985 to witness the loading of the copper
concentrates on the vessel Sangkulirang No. 3. But the copper
concentrates had already been delivered and stored in
a bodega when he arrived. These concentrates were placed on the
cemented ground inside the bodega after their weight was recorded.
Describing the procedure for weighing, he said that the trucks,
without the copper concentrates, were weighed. Then, after they
had been loaded with copper concentrates, the trucks were placed
in the bodega and weighed again. To determine the weight of the
copper concentrates, the weight of the trucks was deducted from
the weight of the trucks loaded with copper concentrates. The
copper concentrates were then loaded on the ship by means of a
conveyor at the average rate of 400 tons an hour. Cayabyab did not
know, however, how many trucks were used to load the entire cargo
of the copper concentrates nor did he know exactly how many hours
were spent loading the copper concentrates to the ship. He could
only remember that he reported for work in the morning and that
he worked overtime because he had to wait until the loading of the
cargo was finished before he could leave. During the loading, he
moved from place to place, and his attention was sometimes
distracted. Thus, he could not tell with certainty that no spillage took
place during the loading. The figure of 2,243.496 wet metric tons
was computed by the Marine Surveyor and the Chief Mate.
Respondent Switzerland Insurance then presented its evidence.
Three witnesses, Eduardo Pantoja, Anastacio Fabian, and Edgardo
Dio, testified for it.
TRIAL COURT’S RULING: Dismissed petitioners complaint as well as
Switzerland Insurances third-party complaint against Seawood
Shipping.
CA RULING: Affirmed the TC’s ruling.
ISSUE: Whether the Court of Appeals gravely erred in ruling that it
failed to establish the loss or shortage of the subject cargo because
such loss was sufficiently established by documentary and
7
testimonial evidence, as well as the admissions of private
respondents.
Petitioner argues that documents regarding the tonnage of the
copper concentrates have been properly identified and that the bill
of lading (Exh. A), the Certificate of Weight (Exh. F), and the Mates
Receipt (Exh. G), all of which stated that 2,243.496 wet metric tons
of copper concentrates were loaded on the ship, create a prima
facie presumption that such amount was indeed what was loaded on
the vessel. Petitioner asserts that the Draft Survey Report of OMIC
(Exh. B) was sufficient evidence to prove that the cargo which
arrived in Japan had a shortage of 355 wet metric tons.
RULING: We find petitioners contentions to be without merit.
First. Petitioner failed to present evidence to prove that the weight
of the copper concentrates actually loaded on the ship Sangkulirang
No. 3 was 2,243.496 wet metric tons and that there was a shortage
of 355 metric tons when the cargo was discharged in Japan.
Petitioners own witness, Rogelio Lumibao, admitted that he was not
present at the actual loading of the cargo at Poro Point, his
information being limited to what was contained in the bill of lading.
As he was not in charge of the operation, he did not see the actual
weighing and loading of the copper concentrates. Nor did he prepare
the bill of lading. He only verified the weight of the cargo, from the
time it was loaded on the ship to the time it was unloaded in Japan,
through the telephone. Neither was he present when the cargo was
discharged in Japan.
Second. Petitioner contends that the genuineness and due execution
of the documents presented, i.e., Bill of Lading, Certificate of
Loading, Certificate of Weight, Mates Receipt, were properly
established by the testimony of its witness, Ernesto Cayabyab, and
that as a result, there is a prima facie presumption that their
contents are true.
This contention has no merit. The admission of the due execution
and genuineness of a document simply means that the party whose
signature it bears admits that he signed it or that it was signed by
another for him with his authority; that at the time it was signed it
was in words and figures exactly as set out in the pleading of the
party relying upon it; that the document was delivered; and that
any formal requisites required by law, such as a seal, an
acknowledgment, or revenue stamp, which it lacks, are waived by
him. 29 In another case, we held that When the law makes use of
the phrase genuineness and due execution of the instrument it
means nothing more than that the instrument is not spurious,
counterfeit, or of different import on its face from the one
executed. 30 It is equally true, however, that execution can only
refer to the actual making and delivery, but it cannot involve other
matters without enlarging its meaning beyond reason. The only
object of the rule was to enable a plaintiff to make out a prima facie,
not a conclusive case, and it cannot preclude a defendant from
introducing any defense on the merits which does not contradict the
execution of the instrument introduced in evidence.
In this case, respondents presented evidence which casts
doubt on the veracity of these documents. Respondent
Switzerland Insurance presented Export Declaration No. 1131/85
(Exh. 11) 32 which petitioners own witness, Rogelio Lumibao,
prepared, 33 in which it was stated that the copper concentrates to
be transported to Japan had a gross weight of only 2,050 wet metric
tons or 1,845 dry metric tons, 10 percent more or less. 34 On the
other hand, Certified Adjusters, Inc., to which Switzerland Insurance
had referred petitioners claim, prepared a report which showed that
a total of 2,451.630 wet metric tons of copper concentrates were
delivered at Poro Point.
Considering the discrepancies in the various documents showing the
actual amount of copper concentrates transported to Poro Point and
loaded in the vessel, there is no evidence of the exact amount of
copper concentrates shipped. Thus, whatever presumption of
regularity in the transactions might have risen from the genuineness
and due execution of the Bill of Lading, Certificate of Weight,
Certificate of Loading, and Mates Receipt was successfully rebutted
by the evidence presented by respondent Switzerland Insurance
which showed disparities in the actual weight of the cargo
transported to Poro Point and loaded on the vessel. This fact is
compounded by the admissions made by Lumibao and Cayabyab
that they had no personal knowledge of the actual amount of copper
concentrates loaded on the vessel.
8
 [G.R. NO. 160242 : May 17, 2005]
ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION
v. COURT OF APPEALS and MONARK EQUIPMENT CORPORATION
FACTS: Monark Equipment Corporation (MEC) filed a Complaint1 for
a sum of money with damages against the Asian Construction and
Development Corporation (ACDC) with the Regional Trial Court
(RTC) of Quezon City. The complaint alleged the following: ACDC
leased Caterpillar generator sets and Amida mobile floodlighting
systems from MEC during the period of March 13 to July 15, 1998
but failed, despite demands, to pay the rentals therefor in the total
amount of P4,313,935.00; from July 14 to August 25, 1998, various
equipments from MEC were, likewise, leased by ACDC for the latter's
power plant in Mauban, Quezon, and that there was still a balance
of P456,666.67; and ACDC also purchased and took custody of
various equipment parts from MEC for the agreed price
of P237,336.20 which, despite demands, ACDC failed to pay.
ACDC filed a motion to file and admit answer with third-party
complaint against Becthel Overseas Corporation (Becthel). In its
answer, ACDC admitted its indebtedness to MEC in the amount
of P5,071,335.86 but alleged several special and affirmative
defenses.
MEC opposed the motion of ACDC to file a third-party complaint
against Becthel on the ground that the defendant had already
admitted its principal obligation to MEC in the amount
of P5,071,335.86; the transaction between it and ACDC, on the one
hand, and between ACDC and Becthel, on the other, were
independent transactions. Furthermore, the allowance of the third-
party complaint would result in undue delays in the disposition of
the case.
In its reply, MEC alleged that the demand of ACDC in its special and
affirmative defenses partook of the nature of a negative pregnant,
and that there was a need for a hearing on its claim for damages.
TRIAL COURT’S RULING: Denied the motion of ACDC for leave to file
a third-party complaint and granting the motion of MEC, which the
trial court considered as a motion for a judgment on the pleadings.
CA RULING: Dismissed the appeal and affirming the assailed
decision.
ISSUE:
I. WHETHER OR NOT A THIRD-PARTY COMPLAINT IS PROPER; AND
II. WHETHER OR NOT JUDGMENT ON THE PLEADINGS IS PROPER.11
Citing the rulings of this Court in Allied Banking Corporation v. Court
of Appeals12 and British Airways v. Court of Appeals,13 the petitioner
avers that the CA erred in ruling that in denying its motion for leave
to file a third-party complaint, the RTC acted in accordance with the
Rules of Court and case law. The petitioner maintains that it raised
genuine issues in its answer; hence, it was improper for the trial
court to render judgment on the pleadings.
RULING: The petition is denied for lack of merit.
Section 11, Rule 6 of the Rules of Court provides:
Sec. 11. Third (fourth, etc.)-party complaint. - A third (fourth, etc.)
- party complaint is a claim that a defending party may, with leave
of court, file against a person not a party to the action, called the
third (fourth, etc.) - party defendant, for contribution, indemnity,
subrogation or any other relief, in respect of his opponent's claim.
Furthermore, Section 1, Rule 34 of the Rules of Court provides that
the Court may render judgment on the pleadings, as follows:
Section 1. Judgment on the pleadings. - Where an answer fails to
tender an issue, or, otherwise, admits the material allegations of the
adverse party's pleading, the court may, on motion of that party,
direct judgment on such pleading. However, in actions for
declaration of nullity or annulment of marriage or for legal
separation, the material facts alleged in the complaint shall always
be proved.
The purpose of Section 11, Rule 6 of the Rules of Court is to permit
a defendant to assert an independent claim against a third-party
which he, otherwise, would assert in another action, thus preventing
multiplicity of suits. All the rights of the parties concerned would
then be adjudicated in one proceeding. This is a rule of procedure
and does not create a substantial right. Neither does it abridge,
enlarge, or nullify the substantial rights of any litigant.15 This right
to file a third-party complaint against a third-party rests in the
discretion of the trial court. The third-party complaint is actually
9
independent of, separate and distinct from the plaintiff's complaint,
such that were it not for the rule, it would have to be filed separately
from the original complaint.16
A prerequisite to the exercise of such right is that some substantive
basis for a third-party claim be found to exist, whether the basis be
one of indemnity, subrogation, contribution or other substantive
right.17 The bringing of a third-party defendant is proper if he would
be liable to the plaintiff or to the defendant or both for all or part of
the plaintiff's claim against the original defendant, although the
third-party defendant's liability arises out of another
transaction.18 The defendant may implead another as third-party
defendant (a) on an allegation of liability of the latter to the
defendant for contribution, indemnity, subrogation or any other
relief; (b) on the ground of direct liability of the third-party
defendant to the plaintiff; or (c) the liability of the third-party
defendant to both the plaintiff and the defendant.19 There must be
a causal connection between the claim of the plaintiff in his
complaint and a claim for contribution, indemnity or other relief of
the defendant against the third-party defendant. In Capayas v.
Court of First Instance,20 the Court made out the following tests: (1)
whether it arises out of the same transaction on which the plaintiff's
claim is based; or whether the third-party claim, although arising
out of another or different contract or transaction, is connected with
the plaintiff's claim; (2) whether the third-party defendant would be
liable to the plaintiff or to the defendant for all or part of the
plaintiff's claim against the original defendant, although the third-
party defendant's liability arises out of another transaction; and (3)
whether the third-party defendant may assert any defenses which
the third-party plaintiff has or may have to the plaintiff's claim.
The third-party complaint does not have to show with certainty that
there will be recovery against the third-party defendant, and it is
sufficient that pleadings show possibility of recovery.21 In
determining the sufficiency of the third-party complaint, the
allegations in the original complaint and the third-party complaint
must be examined.22 A third-party complaint must allege facts
which prima facie show that the defendant is entitled to contribution,
indemnity, subrogation or other relief from the third-party
defendant.23
It bears stressing that common liability is the very essence for
contribution. Contribution is a payment made by each, or by any of
several having a common liability of his share in the damage
suffered or in the money necessarily paid by one of the parties in
behalf of the other or others.24 The rule on common liability is
fundamental in the action for contribution.25 The test to determine
whether the claim for indemnity in a third-party complaint is,
whether it arises out of the same transaction on which the plaintiff's
claim is based, or the third-party plaintiff's claim, although arising
out of another or different contract or transaction, is connected with
the plaintiff's claim.26
In this case, the claims of the respondent, as plaintiff in the RTC,
against the petitioner as defendant therein, arose out of the
contracts of lease and sale; such transactions are different and
separate from those between Becthel and the petitioner as third-
party plaintiff for the construction of the latter's project in Mauban,
Quezon, where the equipment leased from the respondent was used
by the petitioner. The controversy between the respondent and the
petitioner, on one hand, and that between the petitioner and
Becthel, on the other, are thus entirely distinct from each other.
There is no showing in the proposed third-party complaint that the
respondent knew or approved the use of the leased equipment by
the petitioner for the said project in Quezon. Becthel cannot invoke
any defense the petitioner had or may have against the claims of
the respondent in its complaint, because the petitioner admitted its
liabilities to the respondent for the amount of P5,075,335.86. The
barefaced fact that the petitioner used the equipment it leased from
the respondent in connection with its project with Becthel does not
provide a substantive basis for the filing of a third-party complaint
against the latter. There is no causal connection between the claim
of the respondent for the rental and the balance of the purchase
price of the equipment and parts sold and leased to the petitioner,
and the failure of Becthel to pay the balance of its account to the
petitioner after the completion of the project in Quezon.27
We note that in its third-party complaint, the petitioner alleged that
Becthel should be ordered to pay the balance of its account
of P456,666.67, so that the petitioner could pay the same to the
respondent. However, contrary to its earlier plea for the admission
of its third-party complaint against Becthel, the petitioner also
sought the dismissal of the respondent's complaint. The amount
of P456,666.67 it sought to collect from Becthel would not be
remitted to the respondent after all.
It goes without saying that the denial of the petitioner's motion with
leave to file a third-party complaint against Becthel is without
prejudice to its right to file a separate complaint against the latter.
10
Considering that the petitioner admitted its liability for the principal
claim of the respondent in its Answer with Third-Party Complaint,
the trial court did not err in rendering judgment on the pleadings
against it.
--------------------------------------------------------------------------
G.R. No. 199990, February 04, 2015
SPOUSES ROLANDO AND HERMINIA
SALVADOR, Petitioners, v. SPOUSES ROGELIO AND ELIZABETH
RABAJA AND ROSARIO GONZALES, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari seeking to reverse and set
aside the August 22, 2011 Decision1 and the January 5, 2012
Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 90296
which affirmed with modification the March 29, 2007 Decision of the
Regional Trial Court Branch 214 (RTC-Branch 214), Mandaluyong
City in Civil Case No. MC-03-2175, for rescission of a contract
(rescission case).
The Facts
This case stemmed from a dispute involving the sellers, petitioner
spouses Rolando and Herminia Salvador (Spouses Salvador); the
sellers’ agent, Rosario Gonzales (Gonzales); and the buyers,
respondent Spouses Rogelio and Elizabeth Rabaja (Spouses
Rabaja), over a parcel of land situated at No. 25, Merryland Village,
375 Jose Rizal Street, Mandaluyong City (subject property), covered
by Transfer Certificate of Title (TCT) No. 13426 and registered in the
names of Spouses Salvador. From 1994 until 2002, Spouses Rabaja
were leasing an apartment in the subject lot.
Sometime in July 1998, Spouses Rabaja learned that Spouses
Salvador were looking for a buyer of the subject property. Petitioner
Herminia Salvador (Herminia) personally introduced Gonzales to
them as the administrator of the said property. Spouses Salvador
even handed to Gonzales the owner’s duplicate certificate of title
over the subject property. On July, 3, 1998, Spouses Rabaja made
an initial payment of P48,000.00 to Gonzales in the presence of
Herminia. Gonzales then presented the Special Power of
Attorney3 (SPA), executed by Rolando Salvador (Rolando) and dated
July 24, 1998. On the same day, the parties executed the Contract
to Sell4 which stipulated that for a consideration of P5,000,000.00,
Spouses Salvador sold, transferred and conveyed in favor of
Spouses Rabaja the subject property. Spouses Rabaja made several
payments totalling P950,000.00, which were received by Gonzales
pursuant to the SPA provided earlier as evidenced by the check
vouchers signed by Gonzales and the improvised receipts signed by
Herminia.
Sometime in June 1999, however, Spouses Salvador complained to
Spouses Rabaja that they did not receive any payment from
Gonzales. This prompted Spouses Rabaja to suspend further
payment of the purchase price; and as a consequence, they received
a notice to vacate the subject property from Spouses Salvador for
non-payment of rentals.
Thereafter, Spouses Salvador instituted an action for ejectment
against Spouses Rabaja. In turn, Spouses Rabaja filed an action for
rescission of contract against Spouses Salvador and Gonzales, the
subject matter of the present petition.
In the action for ejectment, the complaint was filed before the
Metropolitan Trial Court of Mandaluyong City, Branch 60 (MeTC),
where it was docketed as Civil Case No. 17344. In its August 14,
2002 Decision,5 the MeTC ruled in favor of Spouses Salvador finding
that valid grounds existed for the eviction of Spouses Rabaja from
the subject property and ordering them to pay back rentals. Spouses
Salvador were able to garnish the amount of P593,400.00 6 from
Spouses Rabaja’s time deposit account pursuant to a writ of
execution issued by the MeTC.7 Spouses Rabaja appealed to the
Regional Trial Court, Branch 212, Mandaluyong City (RTC-Br. 212)
which reversed the MeTC ruling in its March 1, 2005 decision. 8 The
RTC-Br. 212 found that no lease agreement existed between the
parties. Thereafter, Spouses Salvador filed an appeal with the CA
which was docketed as CA-G.R. SP No. 89259. On March 31, 2006,
the CA ruled in favor of Spouses Salvador and reinstated the MeTC
ruling ejecting Spouses Rabaja.9 Not having been appealed, the CA
decision in CA-G.R. SP No. 89259 became final and executory on
May 12, 2006.10chanroblesvirtuallawlibrary
Meanwhile, the rescission case filed by Spouses Rabaja against
11
Spouses Salvador and Gonzales and docketed as Civil Case No. MC
No. 03-2175 was also raffled to RTC-Br. 212. In their
complaint,11 dated July 7, 2003, Spouses Rabaja demanded the
rescission of the contract to sell praying that the amount of
P950,000.00 they previously paid to Spouses Salvador be returned
to them. They likewise prayed that damages be awarded due to the
contractual breach committed by Spouses Salvador.
Spouses Salvador filed their answer with counterclaim and cross-
claim12 contending that there was no meeting of the minds between
the parties and that the SPA in favor of Gonzales was falsified. In
fact, they filed a case for falsification against Gonzales, but it was
dismissed because the original of the alleged falsified SPA could not
be produced. They further averred that they did not receive any
payment from Spouses Rabaja through Gonzales. In her defense,
Gonzales filed her answer13 stating that the SPA was not falsified
and that the payments of Spouses Rabaja amounting to
P950,000.00 were all handed over to Spouses Salvador.
The pre-trial conference began but attempts to amicably settle the
case were unsuccessful. It was formally reset to February 4, 2005,
but Spouses Salvador and their counsel failed to attend.
Consequently, the RTC issued the pre-trial order14declaring Spouses
Salvador in default and allowing Spouses Rabaja to present their
evidence ex parte against Spouses Salvador and Gonzales to
present evidence in her favor.
A motion for reconsideration,15 dated March 28, 2005, was filed by
Spouses Salvador on the said pre-trial order beseeching the
liberality of the court. The rescission case was then re-raffled to
RTC-Br. 214 after the Presiding Judge of RTC-Br. 212 inhibited
herself. In the Order,16 dated October 24, 2005, the RTC-Br. 214
denied the motion for reconsideration because Spouses Salvador
provided a flimsy excuse for their non-appearance in the pre-trial
conference.
Thereafter, trial proceeded and Spouses Rabaja and Gonzales
presented their respective testimonial and documentary evidence.
RTC Ruling
On March 29, 2007, the RTC-Br. 214 rendered a decision17 in favor
of Spouses Rabaja. It held that the signature of Spouses Salvador
affixed in the contract to sell appeared to be authentic. It also held
that the contract, although denominated as “contract to sell,” was
actually a contract of sale because Spouses Salvador, as vendors,
did not reserve their title to the property until the vendees had fully
paid the purchase price. Since the contract entered into was a
reciprocal contract, it could be validly rescinded by Spouses Rabaja,
and in the process, they could recover the amount of P950,000.00
jointly and severally from Spouses Salvador and Gonzales. The RTC
stated that Gonzales was undoubtedly the attorney-in-fact of
Spouses Salvador absent any taint of irregularity. Spouses Rabaja
could not be faulted in dealing with Gonzales who was duly equipped
with the SPA from Spouses Salvador.
The RTC-Br. 214 then ruled that the amount of P593,400.00
garnished from the time deposit account of Spouses Rabaja,
representing the award of rental arrearages in the separate
ejectment suit, should be returned by Spouses Salvador.18 The court
viewed that such amount was part of the purchase price of the
subject property which must be returned. It also awarded moral and
exemplary damages in favor of Spouses Rabaja and attorney’s fees
in favor of Gonzales. The dispositive portion of the said decision
reads:chanRoblesvirtualLawlibrary
WHEREFORE, this court renders judgment as
follows:chanRoblesvirtualLawlibrary
Ordering the “Contract to Sell” entered into by the plaintiff and
defendant spouses Rolando and Herminia Salvador on July 24, 1998
as RESCINDED;chanrobleslaw
Ordering defendant spouses Rolando and Herminia Salvador and
defendant Rosario S. Gonzales jointly and severally liable to pay
plaintiffs:chanRoblesvirtualLawlibrary
the amount of NINE HUNDRED FIFTY THOUSAND PESOS
(P950,000.00), representing the payments made by the latter for
the purchase of subject property;chanrobleslaw
the amount of TWENTY THOUSAND PESOS (P20,000.00), as moral
damages;chanrobleslaw
the amount of TWENTY THOUSAND PESOS (P20,000.00), as
exemplary damages;chanrobleslaw
the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00), as
attorney’s fees;chanrobleslaw
the cost of suit.
12
Ordering defendant Spouses Rolando and Herminia Salvador to pay
plaintiffs the amount of FIVE HUNDRED NINETY THREE THOUSAND
PESOS (P593,000.00) (sic), representing the amount garnished
from the Metrobank deposit of plaintiffs as payment for their alleged
back rentals;chanrobleslaw
Ordering the defendant Spouses Rolando and Herminia Salvador to
pay defendant Rosario Gonzales on her cross-claim in the amount
of ONE HUNDRED THOUSAND PESOS (P100,000.00);chanrobleslaw
Dismissing the counterclaims of the defendants against the plaintiff.
SO ORDERED.19
Gonzales filed a motion for partial reconsideration, but it was denied
by the RTC-Br. 114 in its Order,20 dated September 12, 2007.
Undaunted, Spouses Salvador and Gonzales filed an appeal before
the CA.
CA Ruling
On March 29, 2007, the CA affirmed the decision of the RTC-Br. 114
with modifications. It ruled that the “contract to sell” was indeed a
contract of sale and that Gonzales was armed with an SPA and was,
in fact, introduced to Spouses Rabaja by Spouses Salvador as the
administrator of the property. Spouses Rabaja could not be blamed
if they had transacted with Gonzales.
The CA then held that Spouses Salvador should return the amount
of P593,400.00 pursuant to a separate ejectment case, reasoning
that Spouses Salvador misled the court because an examination
of CA-G.R. SP No. 89260 showed that Spouses Rabaja were not
involved in that case. CA-G.R. SP No. 59260 was an action between
Spouses Salvador and Gonzales only and involved a completely
different residential apartment located at 302-C Jupiter Street,
Dreamland Subdivision, Mandaluyong City.
The CA, however, ruled that Gonzales was not solidarily liable with
Spouses Salvador. The agent must expressly bind himself or exceed
the limit of his authority in order to be solidarily liable. It was not
shown that Gonzales as agent of Spouses Salvador exceeded her
authority or expressly bound herself to be solidarily liable. The
decretal portion of the CA decision
reads:chanRoblesvirtualLawlibrary
WHEREFORE, the appeal is PARTLY GRANTED. The assailed Decision
dated March 29, 2007 and the Order dated September 12, 2007, of
the Regional Trial Court, Branch 214, Mandaluyong City, in Civil
Case No. MC-03-2175, are AFFIRMED with MODIFICATION in that
Rosario Gonzalez is not jointly and severally liable to pay Spouses
Rabaja the amounts enumerated in paragraph (b) of the Decision
dated March 29, 2007.
SO ORDERED.21
Spouses Salvador filed a motion for reconsideration but it was
denied by the CA in its January 5, 2012 Resolution.
Hence, this petition.
ASSIGNMENT OF ERRORS
I
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE
LOWER COURT GRAVELY ABUSED ITS DISCRETION IN
DECLARING PETITIONERS IN DEFAULT AND IN DEPRIVING
THEM OF THE OPPORTUNITY TO CROSS-EXAMINE
RESPONDENTS SPS. RABAJA AS WELL AS TO PRESENT
EVIDENCE FOR AND IN THEIR BEHALF, GIVEN THE
MERITORIOUS DEFENSES RAISED IN THEIR ANSWER THAT
CATEGORICALLY AND DIRECTLY DISPUTE RESPONDENTS
SPS. RABAJA’S CAUSE OF ACTION.
II
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE
TRIAL COURT GRAVELY ERRED IN GIVING CREDENCE TO THE
TESTIMONY OF RESPONDENT GONZALES THAT PAYMENTS
WERE INDEED REMITTED TO AND RECEIVED BY PETITIONER
HERMINIA SALVADOR EVEN AS THE IMPROVISED RECEIPTS
WERE EVIDENTLY MADE UP AND FALSIFIED BY RESPONDENT
GONZALES.
III
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE
TRIAL COURT GRAVELY ERRED IN RESCINDING THE
CONTRACT TO SELL WHEN THERE IS NOTHING TO RESCIND
AS NO VALID CONTRACT TO SELL WAS ENTERED INTO, AND
IN DIRECTING THE REFUND OF THE AMOUNT OF P950,000.00
WHEN THE EVIDENCE CLEARLY SHOWS THAT SAID AMOUNT
WAS PAID TO AND RECEIVED BY RESPONDENT GONZALES
ALONE WHO MISAPPROPRIATED THE SAME.
IV
13
THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL
COURT’S DECISION FOR PETITIONERS TO RETURN THE
AMOUNT OF P543,400.00 REPRESENTING RENTALS IN
ARREARS GARNISHED OR WITHDRAWN BY VIRTUE OF A
WRIT OF EXECUTION ISSUED IN AN EJECTMENT CASE
WHICH WAS TRIED AND DECIDED BY ANOTHER COURT.
V Spouses Salvador before the CA. On November 15, 2013, Spouses
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE
LOWER COURT GRAVELY ERRED IN AWARDING DAMAGES TO
RESPONDENTS SPS. RABAJA, THERE BEING NO FACTUAL AND
LEGAL BASES FOR SUCH AWARD.
VI
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
TRIAL COURT GRAVELY ERRED IN AWARDING P100,000.00
TO RESPONDENT GONZALES AS ATTORNEY’S FEES WHEN
RESPONDENT GONZALES, IN FACT, COMMITTED FORGERY
AND FALSIFICATION IN DEALING WITH THE PROPERTY OF
PETITIONERS AND MISAPPROPRIATED THE MONIES PAID
TO HER BY RESPONDENTS SPS. RABAJA, THUS GIVING
PREMIUM TO HER FRAUDULENT ACTS.22
The foregoing can be synthesized into three main issues. First,
Spouses Salvador contend that the order of default must be lifted
because reasonable grounds exist to justify their failure to attend
the pre-trial conference on February 4, 2005. Second, Spouses
Salvador raise in issue the veracity of the receipts given by
Gonzales, the SPA and the validity of the contract to sell. They claim
that the improvised receipts should not be given credence because
these were crude and suspicious, measuring only by 2 x 2 inches
which showed that Gonzales misappropriated the payments of
Spouses Rabaja for herself and did not remit the amount of
P950,000.00 to them. As there was no consideration, then no valid
contract to sell existed. Third, Spouses Salvador argue that the
ejectment case, from which the amount of P593,400.00 was
garnished, already became final and executory and could not
anymore be disturbed. Lastly, the award of damages in favor of
Spouses Rabaja and Gonzales was improper absent any legal and
factual bases.
On January 21, 2013, Spouses Salvador filed their supplemental
petition23 informing the Court that RTC-Br. 213 had rendered a
decision in Civil Case No. MC00-1082, an action for rescission of the
SPA. The said decision held that Spouses Salvador properly revoked
the SPA in favor of Gonzales due to loss of trust and confidence. On
September 11, 2013, Gonzales filed her comment to the
supplemental petition,24 contending that the RTC-Branch 213
decision had no bearing because it had not yet attained finality. On
even date, Spouses Rabaja filed their Comment,25 asserting that the
present petition is a mere rehash of the previous arguments of
Salvador replied that they merely wanted to show that the findings
by the RTC-Br. 213 should be given weight as a full-blown trial was
conducted therein.26chanroblesvirtuallawlibrary
The Court’s Ruling
As a general rule, the Court’s jurisdiction in a Rule 45 petition is
limited to the review of pure questions of law. A question of law
arises when the doubt or difference exists as to what the law is on
a certain state of facts. Negatively put, Rule 45 does not allow the
review of questions of fact. A question of fact exists when the doubt
or difference arises as to the truth or falsity of the
allegations.27chanroblesvirtuallawlibrary
The present petition presents questions of fact because it requires
the Court to examine the veracity of the evidence presented during
the trial, such as the improvised receipts, the SPA given to Gonzales
and the contract to sell. Even the petitioner spouses themselves
concede and ask the Court to consider questions of fact,28 but the
Court finds no reason to disturb the findings of fact of the lower
courts absent any compelling reason to the contrary.
The failure of Spouses Salvador to attend pre-trial conference
warrants the presentation of evidence ex parte by Spouses Rabaja
On the procedural aspect, the Court reiterates the rule that the
failure to attend the pre-trial conference does not result in the
default of an absent party. Under the 1997 Rules of Civil Procedure,
a defendant is only declared in default if he fails to file his Answer
within the reglementary period.29 On the other hand, if a defendant
fails to attend the pre-trial conference, the plaintiff can present his
evidence ex parte. Sections 4 and 5, Rule 18 of the Rules of Court
provide:chanRoblesvirtualLawlibrary
Sec. 4. Appearance of parties.
It shall be the duty of the parties and their counsel to appear at the
14
pre-trial. The non-appearance of a party may be excused only if a
valid cause is shown therefor or if a representative shall appear in
his behalf fully authorized in writing to enter into an amicable
settlement, to submit to alternative modes of dispute resolution,
and to enter into stipulations or admissions of facts and of
documents.
Sec. 5. Effect of failure to appear.
The failure of the plaintiff to appear when so required pursuant to
the next preceding section shall be cause for dismissal of the action.
The dismissal shall be with prejudice, unless otherwise ordered by
the court. A similar failure on the part of the defendant shall
be cause to allow the plaintiff to present his evidence ex
parte and the court to render judgment on the basis thereof.
[Emphasis supplied]
The case of Philippine American Life & General Insurance Company
v. Joseph Enario30 discussed the difference between the non-
appearance of a defendant in a pre-trial conference and the
declaration of a defendant in default in the present Rules of Civil
Procedure. The decision instructs:chanRoblesvirtualLawlibrary
Prior to the 1997 Revised Rules of Civil Procedure, the phrase "as in
default" was initially included in Rule 20 of the old rules, and which
read as follows:chanRoblesvirtualLawlibrary
Sec. 2. A party who fails to appear at a pre-trial conference may be
non-suited or considered as in default.cralawred
It was, however, amended in the 1997 Revised Rules of Civil
Procedure. Justice Regalado, in his book, REMEDIAL LAW
COMPENDIUM, explained the rationale for the deletion of the phrase
"as in default" in the amended provision, to
wit:chanRoblesvirtualLawlibrary
1. This is a substantial reproduction of Section 2 of the former Rule
20 with the change that, instead of defendant being declared "as in
default" by reason of his non-appearance, this section now spells
out that the procedure will be to allow the ex parte presentation of
plaintiff’s evidence and the rendition of judgment on the basis
thereof. While actually the procedure remains the same, the
purpose is one of semantical propriety or terminological accuracy as
there were criticisms on the use of the word "default" in the former
provision since that term is identified with the failure to file a
required answer, not appearance in court.cralawred
Still, in the same book, Justice Regalado clarified that while the
order of default no longer obtained, its effects were retained,
thus:chanRoblesvirtualLawlibrary
Failure to file a responsive pleading within the reglementary period,
and not failure to appear at the hearing, is the sole ground for an
order of default, except the failure to appear at a pre-trial
conference wherein the effects of a default on the part of the
defendant are followed, that is, the plaintiff shall be allowed to
present evidence ex parte and a judgment based thereon may be
rendered against defendant.cralawred
From the foregoing, the failure of a party to appear at the pre-trial
has indeed adverse consequences. If the absent party is the
plaintiff, then his case shall be dismissed. If it is the defendant who
fails to appear, then the plaintiff is allowed to present his
evidence ex parte and the court shall render judgment based on the
evidence presented. Thus, the plaintiff is given the privilege to
present his evidence without objection from the defendant, the
likelihood being that the court will decide in favor of the plaintiff, the
defendant having forfeited the opportunity to rebut or present its
own evidence.31 The stringent application of the rules on pre-trial is
necessitated from the significant role of the pre-trial stage in the
litigation process. Pre-trial is an answer to the clarion call for the
speedy disposition of cases. Although it was discretionary under the
1940 Rules of Court, it was made mandatory under the 1964 Rules
and the subsequent amendments in 1997.32 “The importance of pre-
trial in civil actions cannot be
overemphasized.”33chanroblesvirtuallawlibrary
There is no dispute that Spouses Salvador and their counsel failed
to attend the pre-trial conference set on February 4, 2005 despite
proper notice. Spouses Salvador aver that their non-attendance was
due to the fault of their counsel as he forgot to update his
calendar.34 This excuse smacks of carelessness, and indifference to
the pre-trial stage. It simply cannot be considered as a justifiable
excuse by the Court. As a result of their inattentiveness, Spouses
Salvador could no longer present any evidence in their favor.
Spouses Rabaja, as plaintiffs, were properly allowed by the RTC to
present evidence ex parte against Spouses Salvador as defendants.
Considering that Gonzales as co-defendant was able to attend the
pre-trial conference, she was allowed to present her evidence. The
RTC could only render judgment based on the evidence presented
during the trial.
15

Gonzales, as agent of Spouses Salvador, could validly receive the
payments of Spouses Rabaja
Even on the substantial aspect, the petition does not warrant
consideration. The Court agrees with the courts below in finding that
the contract entered into by the parties was essentially a contract
of sale which could be validly rescinded. Spouses Salvador insist
that they did not receive the payments made by Spouses Rabaja
from Gonzales which totalled P950,000.00 and that Gonzales was
not their duly authorized agent. These contentions, however, must
fail in light of the applicable provisions of the New Civil Code which
state:chanRoblesvirtualLawlibrary
Art. 1900. So far as third persons are concerned, an act is deemed
to have been performed within the scope of the agent's authority, if
such act is within the terms of the power of attorney, as written,
even if the agent has in fact exceeded the limits of his authority
according to an understanding between the principal and the agent.
xxxx
Art. 1902. A third person with whom the agent wishes to contract
on behalf of the principal may require the presentation of the power
of attorney, or the instructions as regards the agency. Private or
secret orders and instructions of the principal do not prejudice third
persons who have relied upon the power of attorney or instructions
shown them.
xxxx
Art. 1910. The principal must comply with all the obligations which
the agent may have contracted within the scope of his
authority.cralawred
Persons dealing with an agent must ascertain not only the fact of
agency, but also the nature and extent of the agent’s authority. A
third person with whom the agent wishes to contract on behalf of
the principal may require the presentation of the power of attorney,
or the instructions as regards the agency. The basis for agency is
representation and a person dealing with an agent is put upon
inquiry and must discover on his own peril the authority of the
agent.35chanroblesvirtuallawlibrary
According to Article 1990 of the New Civil Code, insofar as third
persons are concerned, an act is deemed to have been performed
within the scope of the agent's authority, if such act is within the
terms of the power of attorney, as written. In this case, Spouses
Rabaja did not recklessly enter into a contract to sell with Gonzales.
They required her presentation of the power of attorney before they
transacted with her principal. And when Gonzales presented the SPA
to Spouses Rabaja, the latter had no reason not to rely on it.
The law mandates an agent to act within the scope of his authority
which what appears in the written terms of the power of attorney
granted upon him.36 The Court holds that, indeed, Gonzales acted
within the scope of her authority. The SPA precisely stated that she
could administer the property, negotiate the sale and collect any
document and all payments related to the subject property.37 As the
agent acted within the scope of his authority, the principal must
comply with all the obligations.38 As correctly held by the CA,
considering that it was not shown that Gonzales exceeded her
authority or that she expressly bound herself to be liable, then she
could not be considered personally and solidarily liable with the
principal, Spouses Salvador.39chanroblesvirtuallawlibrary
Perhaps the most significant point which defeats the petition would
be the fact that it was Herminia herself who personally introduced
Gonzalez to Spouses Rabaja as the administrator of the subject
property. By their own ostensible acts, Spouses Salvador made third
persons believe that Gonzales was duly authorized to administer,
negotiate and sell the subject property. This fact was even affirmed
by Spouses Salvador themselves in their petition where they stated
that they had authorized Gonzales to look for a buyer of their
property.40 It is already too late in the day for Spouses Salvador to
retract the representation to unjustifiably escape their principal
obligation.
As correctly held by the CA and the RTC, considering that there was
a valid SPA, then Spouses Rabaja properly made payments to
Gonzales, as agent of Spouses Salvador; and it was as if they paid
to Spouses Salvador. It is of no moment, insofar as Spouses Rabaja
are concerned, whether or not the payments were actually remitted
to Spouses Salvador. Any internal matter, arrangement, grievance
or strife between the principal and the agent is theirs alone and
should not affect third persons. If Spouses Salvador did not receive
the payments or they wish to specifically revoke the SPA, then their
recourse is to institute a separate action against Gonzales. Such
16
action, however, is not any more covered by the present proceeding.
The amount of P593,400.00 should not be returned by Spouses
Salvador
Nevertheless, the assailed decision of the CA must be modified with
respect to the amount of P593,400.00 garnished by Spouses
Salvador and ordered returned to Spouses Rabaja. The RTC ordered
the return of the amount garnished holding that it constituted a part
of the purchase price. The CA ruled that Spouses Salvador misled
the Court when they improperly cited CA-G.R. SP No. 89260 to
prove their entitlement to the said amount. Both courts erred in
their ruling.
First, the garnishment of the amount of P593,400.00 against
Spouses Rabaja was pursuant to the CA decision in CA-G.R. SP No.
89259, an entirely different case involving an action for ejectment,
and it does not concern the rescission case which is on appeal before
this Court. Moreover, the decision on the ejectment case is final and
executory and an entry of judgment has already been
made.41 Nothing is more settled in law than that when a final
judgment is executory, it thereby becomes immutable and
unalterable. The judgment may no longer be modified in any
respect, even if the modification is meant to correct what is
perceived to be an erroneous conclusion of fact or law, and
regardless of whether the modification is attempted to be made by
the court which rendered it or by the highest Court of the land. The
doctrine is founded on consideration of public policy and sound
practice that, at the risk of occasional errors, judgments must
become final at some definite point in
time.42chanroblesvirtuallawlibrary
The March 31, 2006 CA decision43in CA-G.R. SP No. 89259 has
long been final and executory and cannot any more be disturbed by
the Court. Public policy dictates that once a judgment becomes final,
executory and unappealable, the prevailing party should not be
denied the fruits of his victory by some subterfuge devised by the
losing party. Unjustified delay in the enforcement of a judgment sets
at naught the role and purpose of the courts to resolve justiciable
controversies with finality.44chanroblesvirtuallawlibrary
Meanwhile, in ruling that the garnishment was improper and thus
ordering the return of the garnished amount, the CA referred to its
decision in CA-G.R. SP No. 89260. Spouses Salvador, however,
clarified in its motion for reconsideration45 before the CA and in the
present petition46 that the garnishment was pursuant to CA-G.R. SP
No. 89259, and not CA-G.R. SP No. 89260, another ejectment case
involving another property. A perusal of the records reveals that
indeed the garnishment was pursuant to the ejectment case in the
MeTC, docketed as Civil Case No. 17344,47 where Spouses Rabaja
were the defendants. The MeTC decision was then reinstated by the
CA in CA-G.R. SP No. 89259, not CA-G.R. SP No. 89260. There, a
writ of execution48 and notice of pay49 were issued against Spouses
Rabaja in the amount of P591,900.00.
Second, Spouses Rabaja’s appeal with the RTC never sought relief
in returning the garnished amount.50 Such issue simply emerged in
the RTC decision. This is highly improper because the court’s grant
of relief is limited only to what has been prayed for in the complaint
or related thereto, supported by evidence, and covered by the
party’s cause of action.51chanroblesvirtuallawlibrary
If Spouses Rabaja would have any objection on the manner and
propriety of the execution, then they must institute their opposition
to the execution proceeding a separate case. Spouses Rabaja can
invoke the Civil Code provisions on legal compensation or set-off
under Articles 1278, 1279 and 1270.52 The two obligations appear
to have respectively offset each other, compensation having taken
effect by operation of law pursuant to the said provisions of the Civil
Code, since all the requisites provided in Art. 1279 of the said Code
for automatic compensation are duly present.
No award of actual, moral and exemplary damages
The award of damages to Spouses Rabaja cannot be sustained by
this Court. The filing alone of a civil action should not be a ground
for an award of moral damages in the same way that a clearly
unfounded civil action is not among the grounds for moral
damages.53 Article 2220 of the New Civil Code provides that to
award moral damages in a breach of contract, the defendant must
act fraudulently or in bad faith. In this case, Spouses Rabaja failed
to sufficiently show that Spouses Salvador acted in a fraudulent
manner or with bad faith when it breached the contract of sale.
Thus, the award of moral damages cannot be warranted.
17
 “WHEREFORE, this Court renders judgment as
As to the award of exemplary damages, Article 2229 of the New Civil follows:chanRoblesvirtualLawlibrary
Code provides that exemplary damages may be imposed by way of Ordering the “Contract to Sell” entered into by Spouses Rogelio and
example or correction for the public good, in addition to the moral, Elizabeth Rabaja and Spouses Rolando and Herminia Salvador on
temperate, liquidated or compensatory damages.54 The claimant July 24, 1998 as RESCINDED;chanrobleslaw
must first establish his right to moral, temperate, liquidated or Ordering Spouses Rolando and Herminia Salvador to pay Spouses
compensatory damages. In this case, considering that Spouses Rogelio and Elizabeth Rabaja:chanRoblesvirtualLawlibrary
Rabaja failed to prove moral or compensatory damages, then there The amount of Nine Hundred Fifty Thousand (P950,000.00) Pesos,
could be no award of exemplary damages. representing the payments made by the latter for the purchase of
the subject property; and
With regard to attorney’s fees, neither Spouses Rabaja nor Gonzales The cost of suit;chanrobleslaw
is entitled to the award. The settled rule is that no premium should Dismissing the counterclaims of Spouses Rolando and Herminia
be placed on the right to litigate and that not every winning party is Salvador and Rosario Gonzales against Spouses Rogelio and
entitled to an automatic grant of attorney’s fees.55 The RTC Elizabeth Rabaja
reasoned that Gonzales was forced to litigate due to the acts of The amounts awarded are subject to interest at the legal rate of 6%
Spouses Salvador. The Court does not agree. Gonzales, as agent of per annum to be reckoned from the date of finality of this judgment
Spouses Salvador, should have expected that she would be called until fully paid.”
to litigation in connection with her fiduciary duties to the principal. As aforestated, this is without prejudice to the invocation by either
party of the Civil Code provisions on legal compensation or set-off
In view of all the foregoing, the CA decision should be affirmed with under Articles 1278, 1279 and 1270.
the following modifications:chanRoblesvirtualLawlibrary
The order requiring defendant Spouses Rolando and Herminia SO ORDERED.
Salvador to pay plaintiffs the amount of Five Hundred Ninety Three
Thousand (P593,000.00) Pesos, representing the amount garnished G.R. No. 181235 July 22, 2009
from the Metrobank deposit of plaintiffs as for their back rentals BANCO DE ORO-EPCI, INC. (formerly Equitable PCI
should be deleted;chanrobleslaw Bank), Petitioner,
The award of moral damages in the amount of Twenty Thousand vs.
(P20,000.00) Pesos; exemplary damages in the amount of Twenty JOHN TANSIPEK, Respondent.
Thousand (P20,000.00) Pesos, and attorney’s fees in the amount of DECISION
One Hundred Thousand (P100,000.00) Pesos in favor of Spouses CHICO-NAZARIO, J.:
Rabaja should be deleted; and Before Us is a Petition for Review on Certiorari assailing the
The award of attorney’s fees in amount of One Hundred Thousand Decision1 of the Court of Appeals in CA-G.R. CV No. 69130 dated 18
(P100,000.00) Pesos in favor of Gonzales should be deleted. August 2006 and the Resolution of the same court dated 9 January
The other amounts awarded are subject to interest at the legal rate 2008.
of 6% per annum, to be reckoned from the date of finality of this The facts of the case are as follows:
judgment until fully paid. J. O. Construction, Inc. (JOCI), a domestic corporation engaged in
the construction business in Cebu City, filed a complaint against
WHEREFORE, the petition is PARTLY GRANTED. The March 29, Philippine Commercial and Industrial Bank (PCIB) in the Regional
2007 Decision of the Regional Trial Court, Branch 214, Mandaluyong Trial Court (RTC) of Makati City docketed as Civil Case No. 97-508.
City, in Civil Case No. MC-03-2175, is MODIFIED to read as The Complaint alleges that JOCI entered into a contract with Duty
follows:chanRoblesvirtualLawlibrary Free Philippines, Inc. for the construction of a Duty Free Shop in
Mandaue City. As actual construction went on, progress billings were

18
made. Payments were received by JOCI directly or through herein
respondent John Tansipek, its authorized collector. Payments
received by respondent Tansipek were initially remitted to JOCI.
However, payment through PNB Check No. 0000302572 in the
amount of ₱4,050,136.51 was not turned over to JOCI. Instead,
respondent Tansipek endorsed said check and deposited the same
to his account in PCIB, Wilson Branch, Wilson Street, Greenhills, San
Juan, Metro Manila. PCIB allowed the said deposit, despite the fact
that the check was crossed for the deposit to payee’s account only,
and despite the alleged lack of authority of respondent Tansipek to
endorse said check. PCIB refused to pay JOCI the full amount of the
check despite demands made by the latter. JOCI prayed for the
payment of the amount of the check (₱4,050,136.51), ₱500,000.00
in attorney’s fees, ₱100,000.00 in expenses, ₱50,000.00 for costs
of suit, and ₱500,000.00 in exemplary damages.
PCIB filed a Motion to Dismiss the Complaint on the grounds that
(1) an indispensable party was not impleaded, and (2) therein
plaintiff JOCI had no cause of action against PCIB. The RTC denied
PCIB’s Motion to Dismiss.
PCIB filed its answer alleging as defenses that (1) JOCI had clothed
Tansipek with authority to act as its agent, and was therefore
estopped from denying the same; (2) JOCI had no cause of action
against PCIB ; (3) failure to implead Tansipek rendered the
proceedings taken after the filing of the complaint void; (4) PCIB’s
act of accepting the deposit was fully justified by established bank
practices; (5) JOCI’s claim was barred by laches; and (6) the
damages alleged by JOCI were hypothetical and speculative. PCIB
incorporated in said Answer its counterclaims for exemplary
damages in the amount of ₱400,000.00, and litigation expenses and
attorney’s fees in the amount of ₱400,000.00.
PCIB likewise moved for leave for the court to admit the former’s
third-party complaint against respondent Tansipek. The third-party
complaint alleged that respondent Tansipek was a depositor at its
Wilson Branch, San Juan, Metro Manila, where he maintained
Account No. 5703-03538-3 in his name and/or that of his wife,
Anita. Respondent Tansipek had presented to PCIB a signed copy of
the Minutes of the meeting of the Board of Directors of JOCI stating
the resolution that –
Checks payable to J.O. Construction, Inc. may be deposited to
Account No. 5703-03538-3 under the name of John and/or Anita
Tansipek, maintained at PCIB, Wilson Branch.2
Respondent Tansipek had also presented a copy of the Articles of
Incorporation of JOCI showing that he and his wife, Anita, were
incorporators of JOCI, with Anita as Treasurer. In the third-party
complaint, PCIB prayed for subrogation and payment of attorney’s
fees in the sum of ₱400,000.00.
PCIB filed a Motion to Admit Amended Third-Party Complaint. The
amendment consisted in the correction of the caption, so that PCIB
appeared as Third-Party Plaintiff and Tansipek as Third-Party
Defendant.
Upon Motion, respondent Tansipek was granted time to file his
Answer to the Third-Party Complaint. He was, however, declared in
default for failure to do so. The Motion to Reconsider the Default
Order was denied.
Respondent Tansipek filed a Petition for Certiorari with the Court of
Appeals assailing the Default Order and the denial of the Motion for
Reconsideration. The Petition was docketed as CA-G.R. SP No.
47727. On 29 May 1998, the Court of Appeals dismissed the Petition
for failure to attach the assailed Orders. On 28 September 1998, the
Court of Appeals denied respondent Tansipek’s Motion for
Reconsideration for having been filed out of time.
Pre-trial on the main case ensued, wherein JOCI and PCIB limited
the issues as follows:
1. Whether or not the defendant bank erred in allowing the deposit
of Check No. 0302572 (Exh. "A") in the amount of ₱4,050,136.51
drawn in favor of plaintiff JO Construction, Inc. in John Tansipek’s
account when such check was crossed and clearly marked for
payee’s account only.
2. Whether the alleged board resolution and the articles of
Incorporation are genuine and a valid defense against plaintiff’s
effort to collect the amount of ₱4,050,136.51.
On 14 July 2000, the RTC promulgated its Decision in Civil Case No.
97-508, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff
[JOCI] and against the defendant bank [PCIB] ordering the latter to
pay to the plaintiff the sum of ₱4,050,136.51 with interest at the
rate of twelve percent (12%) per annum from the filing of this
complaint until fully paid plus costs of suit. The other damages
claimed by the plaintiff are denied for being speculative.
On the third party complaint, third-party defendant John Tansipek
is ordered to pay the third-party plaintiff Philippine Commercial and
Industrial Bank all amounts said defendant/third-party plaintiff shall
have to pay to the plaintiff on account of this case.3
19
Respondent Tansipek appealed the Decision to the Court of Appeals.
The case was docketed as CA-G.R. CV No. 69130. Respondent
Tansipek assigned the following alleged errors:
a) The trial court’s decision upholding the order of default and the
consequent ex-parte reception of appellee’s evidence was anchored
on erroneous and baseless conclusion that:
1) The original reglementary period to plead has already expired.
2) The ten day extended period to answer has likewise expired.
3) There is no need to pass upon a second motion to plead much
less, any need for a new motion for extended period to plead.
b) The trial court erred in utterly depriving the appellant of his day
in court and in depriving constitutional, substantive and procedural
due process premised solely on pure and simple technicality which
never existed and are imaginary and illusory.
c) The trial court erred in ordering the third-party defendant-
appellant John Tansipek to pay the third party plaintiff-appellee
PCIBank all amounts said bank shall have to pay to the plaintiff-
appellee by way of subrogation since appellant if allowed to litigate
in the trial court, would have obtained a favorable judgment as he
has good, valid and meritorious defenses.4
On 18 August 2006, the Court of Appeals issued the assailed
Decision finding that it was an error for the trial court to have acted
on PCIB’s motion to declare respondent Tansipek in default. The
Court of Appeals thus remanded the case to the RTC for further
proceedings, to wit:
WHEREFORE, premises considered, the appeal is GRANTED. The
decision relative to the third party complaint is REVERSED and SET
ASIDE. The case is ordered REMANDED to the trial court for further
proceedings on the third party complaint.5
The Court of Appeals denied the Motion for Reconsideration of PCIB
in a Resolution dated 9 January 2008.
Petitioner Banco de Oro-EPCI, Inc., as successor-in-interest to PCIB,
filed the instant Petition for Review on Certiorari, assailing the above
Decision and Resolution of the Court of Appeals, and laying down a
lone issue for this Court’s consideration:
WHETHER OR NOT THE COURT OF APPEALS CAN REVERSE ITS
DECISION HANDED DOWN EIGHT YEARS BEFORE.6
To recapitulate, upon being declared in default, respondent Tansipek
filed a Motion for Reconsideration of the Default Order. Upon denial
thereof, Tansipek filed a Petition for Certiorari with the Court of
Appeals, which was dismissed for failure to attach the assailed
Orders. Respondent Tansipek’s Motion for Reconsideration with the
Court of Appeals was denied for having been filed out of time.
Respondent Tansipek did not appeal said denial to this Court.
Respondent Tansipek’s remedy against the Order of Default was
erroneous from the very beginning. Respondent Tansipek should
have filed a Motion to Lift Order of Default, and not a Motion for
Reconsideration, pursuant to Section 3(b), Rule 9 of the Rules of
Court:
(b) Relief from order of default.—A party declared in default may at
any time after notice thereof and before judgment file a motion
under oath to set aside the order of default upon proper showing
that his failure to answer was due to fraud, accident, mistake or
excusable negligence and that he has a meritorious defense. In such
case, the order of default may be set aside on such terms and
conditions as the judge may impose in the interest of justice.
A Motion to Lift Order of Default is different from an ordinary motion
in that the Motion should be verified; and must show fraud, accident,
mistake or excusable neglect, and meritorious defenses.7 The
allegations of (1) fraud, accident, mistake or excusable neglect, and
(2) of meritorious defenses must concur. 8
Assuming for the sake of argument, however, that respondent
Tansipek’s Motion for Reconsideration may be treated as a Motion
to Lift Order of Default, his Petition for Certiorari on the denial
thereof has already been dismissed with finality by the Court of
Appeals. Respondent Tansipek did not appeal said ruling of the Court
of Appeals to this Court. The dismissal of the Petition for Certiorari
assailing the denial of respondent Tansipek’s Motion constitutes a
bar to the retrial of the same issue of default under the doctrine of
the law of the case.
In People v. Pinuila,9 we held that:
"Law of the case" has been defined as the opinion delivered on a
former appeal. More specifically, it means that whatever is once
irrevocably established as the controlling legal rule of decision
between the same parties in the same case continues to be the law
of the case, whether correct on general principles or not, so long as
the facts on which such decision was predicated continue to be the
facts of the case before the court.
It may be stated as a rule of general application that, where the
evidence on a second or succeeding appeal is substantially the same
as that on the first or preceding appeal, all matters, questions,
points, or issues adjudicated on the prior appeal are the law of the
case on all subsequent appeals and will not be considered or
readjudicated therein.
20
xxxx
As a general rule a decision on a prior appeal of the same case is
held to be the law of the case whether that decision is right or wrong,
the remedy of the party deeming himself aggrieved being to seek a
rehearing.
Questions necessarily involved in the decision on a former appeal
will be regarded as the law of the case on a subsequent appeal,
although the questions are not expressly treated in the opinion of
the court, as the presumption is that all the facts in the case bearing
on the point decided have received due consideration whether all or
none of them are mentioned in the opinion. (Emphasis supplied.)
The issue of the propriety of the Order of Default had already been
adjudicated in Tansipek’s Petition for Certiorari with the Court of
Appeals. As such, this issue cannot be readjudicated in Tansipek’s
appeal of the Decision of the RTC on the main case. Once a decision
attains finality, it becomes the law of the case, whether or not said
decision is erroneous.10 Having been rendered by a court of
competent jurisdiction acting within its authority, the judgment may
no longer be altered even at the risk of legal infirmities and errors
it may contain.11
Respondent Tansipek counters that the doctrine of the law of the
case is not applicable, inasmuch as a Petition for Certiorari is not an
appeal. Respondent Tansipek further argues that the Doctrine of the
Law of the Case applies only when the appellate court renders a
decision on the merits, and not when such appeal was denied due
to technicalities.
We are not persuaded.
In Buenviaje v. Court of Appeals,12 therein respondent Cottonway
Marketing Corporation filed a Petition for Certiorari with this Court
assailing the Decision of the National Labor Relations Commission
(NLRC) ordering, inter alia, the reinstatement of therein petitioners
and the payment of backwages from the time their salaries were
withheld up to the time of actual reinstatement. The Petition for
Certiorari was dismissed by this Court. The subsequent Motion for
Reconsideration was likewise denied. However, the Labor Arbiter
then issued an Order limiting the amount of backwages that was
due to petitioners. The NLRC reversed this Order, but the Court of
Appeals reinstated the same. This Court, applying the Doctrine of
the Law of the Case, held:
The decision of the NLRC dated March 26, 1996 has become final
and executory upon the dismissal by this Court of Cottonway’s
petition for certiorari assailing said decision and the denial of its
motion for reconsideration. Said judgment may no longer be
disturbed or modified by any court or tribunal. It is a fundamental
rule that when a judgment becomes final and executory, it becomes
immutable and unalterable, and any amendment or alteration which
substantially affects a final and executory judgment is void,
including the entire proceedings held for that purpose. Once a
judgment becomes final and executory, the prevailing party can
have it executed as a matter of right, and the issuance of a writ of
execution becomes a ministerial duty of the court. A decision that
has attained finality becomes the law of the case regardless of any
claim that it is erroneous. The writ of execution must therefore
conform to the judgment to be executed and adhere strictly to the
very essential particulars.13 (Emphases supplied.)1avvphil
Furthermore, there is no substantial distinction between an appeal
and a Petition for Certiorari when it comes to the application of the
Doctrine of the Law of the Case. The doctrine is founded on the
policy of ending litigation. The doctrine is necessary to enable the
appellate court to perform its duties satisfactorily and efficiently,
which would be impossible if a question once considered and decided
by it were to be litigated anew in the same case upon any and every
subsequent appeal.14
Likewise, to say that the Doctrine of the Law the Case applies only
when the appellate court renders a decision on the merits would be
putting a premium on the fault or negligence of the party losing the
previous appeal. In the case at bar, respondent Tansipek would be
awarded (1) for his failure to attach the necessary requirements to
his Petition for Certiorari with the Court of Appeals; (2) for his failure
to file a Motion for Reconsideration in time; and (3) for his failure to
appeal the Decision of the Court of Appeals with this Court. The
absurdity of such a situation is clearly apparent.
It is important to note that a party declared in default – respondent
Tansipek in this case – is not barred from appealing from the
judgment on the main case, whether or not he had previously filed
a Motion to Set Aside Order of Default, and regardless of the result
of the latter and the appeals therefrom. However, the appeal should
be based on the Decision’s being contrary to law or the evidence
already presented, and not on the alleged invalidity of the default
order.15
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No.
69130 dated 18 August 2006 and the Resolution of the same court
dated 9 January 2008 are hereby REVERSED and SET ASIDE. The
Decision of the Regional Trial Court of Makati City in Civil Case No.
21
97-508 dated 14 July 2000 is hereby REINSTATED. No was in Australia and had no funds to spare for her travel to the
pronouncement as to costs. Philippines. To enable her to come to the country, Spouses Bitte
SO ORDERED. paid for her round trip ticket.

On October 10, 1996, shortly after her arrival here in the Philippines,
Rosa Elsa revoked the SPA, through an instrument of even date, and
MENDOZA, J.: handed a copy thereof to Andrea.
In this petition for review on certiorari[1] under Rule 45 of the Rules
of Court, the petitioners, Farida Yap Bitte and Heirs of Benjamin The next day, on October 11, 1996, the parties met at Farida Bitte's
Bitte (the petitioners), seek the review of the September 26, 2013 office, but no final agreement was reached. The next day, Rosa Elsa
Decision[2] and February 26, 2014 Resolution[3] of the Court of withdrew from the transaction.
Appeals (CA) in CA-G.R. CV No. 01596-MIN, which reversed the
January 18, 2007 Joint Decision[4] of the Regional Trial Court, On October 17, 1996, Spouses Bitte filed before the RTC a Complaint
Branch 13, Davao (RTC-Branch 13), arrived at in favor of for Specific Performance with Damages seeking to compel Rosa Elsa,
respondents, Spouses Fred and Rosa Elsa Serrano Jonas (Spouses Andrea and Cipriano to transfer to their names the title over the
Jonas). subject property. The case was docketed as Civil Case No. 24,771-
96 and raffled to RTC-Branch 13.

Factual Antecedents While the case was pending, Andrea sold the subject property to
Spouses Bitte, through a deed of absolute sale, dated February 25,
This controversy stemmed from two civil cases filed by the parties 1997, and notarized by one Atty. Bernardino Bolcan, Jr.
against each other relative to a purported contract of sale involving
a piece of property situated at 820 corner Jacinto Street and Quezon Immediately thereafter, Rosa Elsa asked Andrea about the sale. Her
Boulevard, Davao City (subject property). It was initially covered by questions about the sale, however, were ignored and her pleas for
TCT No. T-112717 in the name of Rosa Elsa Serrano Jonas (Rosa the cancellation of the sale and restoration of the property to her
Elsa) and presently by TCT No. T-315273 under the name of Ganzon possession were disregarded.
Yap, married to Haima Yap (Spouses Yap).
Undisputed by the parties is the fact that Rosa Elsa earlier
On July 19, 1985, before Rosa Elsa went to Australia, she had mortgaged the subject property to Mindanao Development Bank.
executed a Special Power of Attorney (SPA) authorizing her mother, Upon failure to pay the loan on maturity, the mortgage was
Andrea C. Serrano (Andrea), to sell the property. foreclosed and sold at a public auction on December 14, 1998 as
evidenced by the annotation on the title, Entry No. 1173153.[5]
Sometime in May 1996, Cipriano Serrano (Cipriano), son of Andrea
and brother of Rosa Elsa, offered the property for sale to Spouses Armed with the deed of absolute sale executed by Andrea, Spouses
Benjamin and Farida Yap Bitte (Spouses Bitte) showing them the Bitte were able to redeem the property on September 14, 1998 from
authority of Andrea. On September 3, 1996, Cipriano received from the highest bidder, Thelma Jean Salvana, for P1.6 Million Pesos.
Spouses Bitte the amount of P200,000.00 as advance payment for
the property. Later on, on September 10, 1996, he received the Thereafter, Spouses Bitte sold the property to Ganzon Yap
additional amount of P400,000.00. (Ganzon), married to Haima Yap.[6]

Spouses Bitte sought a meeting for final negotiation with Rosa Elsa, Civi Case No. 24,771-96
the registered owner of the subject property. At that time, Rosa Elsa (Spouses Bitte v. Rosa Elsa Serrano Jonas, Andrea C. Serrano and

22
Cipriano Serrano, Jr.)
As earlier recited, on October 17, 1996, Spouses Bitte filed before
the RTC Civil Case No. 24,771-96, a Complaint for Specific
Performance with Damages seeking to compel Rosa Elsa, Andrea
and Cipriano to transfer the title of the subject property to their
names.
In their Complaint, Spouses Bitte alleged that sometime in May
1996, the property was offered to them for sale by Cipriano, who
showed them the SPA in favor of Andrea; that on September 3, 1996
and September 10, 1996, Cipriano received from them the
respective amounts of P200,000.00 and then P400,000.00 as
advance payments for the property; that they sought a meeting for
final negotiation with Rosa Elsa, then the registered owner of the
subject property; that at that time, Rosa Elsa was in Australia and
had no funds to spare in order to return to the Philippines; that to
enable her to come to the country, they paid for her round trip
ticket; that on October 11, 1996, they and Rosa Elsa met at Farida
Bitte's office; that an agreement of sale of the subject property for
the total purchase price of P6.2 Million Pesos was reached; that P5
Million thereof would be paid on October 18, 1996 and the balance,
thirty (30) days thereafter; that on the following day, Rosa Elsa
withdrew from the transaction; and that on the same date, they
demanded, through a letter, the execution of the necessary
documents to effect the transfer of the property to their names, but
to no avail.
On October 18, 1996, RTC-Branch 13 granted the prayer for the
issuance of a Temporary Restraining Order (TRO) preventing Rosa
Elsa and her agents from disposing the subject property.
Subsequently, on November 8, 1996, a Writ of Preliminary
Injunction (WPI) was issued in favor of Spouses Bitte.
In response, Rosa Elsa countered that despite her appointment of
her mother, Andrea, as her attorney-in-fact/agent, she later gave
her instructions not to sell the property; that her revocation barred
the consummation of the contract to sell; that it was her belief that
her return to the Philippines was in connection with the sale of
another property situated in Cawag, San Isidro, Davao Oriental; that
it was a surprise to her when she learned that Cipriano was still
negotiating for the sale of the subject property; that for said reason,
she asked for a meeting with Spouses Bitte to discuss the issue;
that in the meeting, upon learning of the source of her air fare, she
offered to refund it and to return the unused ticket for her return
trip, but Spouses Bitte refused her offer; that no authority was given
to Cipriano to receive any advance payment for the property; and
that Andrea's authority was revoked through a Deed of Revocation
of the Special Power of Attorney (SPA), dated October 10, 1996.
During the pre-trial conference held on July 30, 1999, Spouses Bitte
failed to appear. Consequently, RTC-Branch 13 dismissed their
complaint and set the reception of Rosa Elsa's counterclaim for
hearing.
Later on, Benjamin Bitte manifested the withdrawal of their counsel.
RTC-Branch 13 then cancelled the reception of Rosa Elsa's evidence
without reconsidering the dismissal of the complaint.
Civil Case No. 27,667-99
(Spouses Fred Jonas and Rosa Elsa Serrano Jonas v. Sps. Benjamin
Bitte and Farida Yap Bitte, Andrea C. Serrano, Reg. of Deeds and
the Clerk of Court, RTC, Davao City)
On November 16, 1999, Spouses Jonas filed before the RTC Civil
Case No. 27,667-99, a complaint for Annulment of Deed of
Absolute Sale, Cancellation of TCT and Recovery of Possession,
Injunction, and Damages against Spouses Bitte.
In the Complaint, Spouses Jonas alleged that Rosa Elsa acquired the
property before marriage; that on July 19, 1985, when she decided
to leave for Australia to reside there, she executed an SPA of even
date, granting her mother, Andrea, the authority to sell the subject
property; that while in Australia, she decided that she would no
longer sell the property; that she instructed her mother to stop
offering the property to prospective buyers; that upon arrival here
in the Philippines in 1996, she revoked the SPA, through an
instrument, dated October 10, 1996, and handed a copy thereof to
Andrea; that later, she received information that the property was
subsequently sold to Spouses Bitte, through a Deed of Absolute
Sale, dated February 25, 1997, signed by her mother, Andrea; and
that she then pleaded for the return of the property, but Andrea
repeatedly ignored her.
23
Spouses Jonas eventually sought judicial recourse through the filing
of a complaint for the Annulment of the Deed of Absolute Sale and On January 18, 2007, RTC-Branch 13 rendered a Joint
Reconveyance of the Property which was raffled to RTC-Branch 9. Decision,[7] confirming the dismissal of Civil Case No. 24,771-96 and
directing Spouses Bitte to pay Rosa Elsa the amount of
On November 17, 1999, Branch 9 issued a 20-day TRO restraining PI,546,752.80, representing the balance of the sale of the subject.
Spouses Bitte from selling or disposing the subject property. On The dispositive portion of the Joint Decision reads:
December 6, 1999, after hearing, it issued a WPI for the same
purpose. WHEREFORE, judgment is hereby rendered in these cases as
follows:
On July 11, 2000, Rosa Elsa moved for the admission of an Amended
Complaint in order to implead Spouses Yap because the title over Reiterating the dismissal of Civil Case No. 24,771-96;
the subject property had been subsequently registered in their
names. Directing spouses Benjamin and Farida Bitte to pay Rosa Elsa
Serrano Jonas the amount of P1,546,752.80 (one million five
Consolidation of the Two Cases hundred forty-thousand seven hundred fifty two and 80/100 pesos)
representing the balance of the sale of the property subject of this
As earlier recited, RTC-Branch 13 dismissed the complaint of case to them;
Spouses Bitte and set the reception of Rosa Elsa's counterclaim for
hearing. Directing spouses Benjamin and Farida Bitte to pay interest on the
balance at the rate of 12% per annum from the date of this decision
Later on, RTC-Branch 13 cancelled the reception of Rosa Elsa's until fully paid.
evidence without reconsidering the dismissal of the complaint. SO ORDERED.[8]
Ruling of the CA
Nonetheless, on May 26, 2000, RTC-Branch 13 reconsidered its
earlier ruling after seeing the need to consolidate Civil Case No. Aggrieved, Spouses Jonas appealed to the CA. On September 26,
27,667-99 with Civil Case No. 24,771-99 pending before the 2013, the CA reversed the RTC-Branch 13 Joint Decision. In so
RTC, Branch 9, Davao (RTC-Branch 99). In the October 4, 2001 ruling, the CA focused on the validity and enforceability of the deed
Order, the cases were ordered consolidated and were thereafter of absolute sale executed by Andrea in the name of Rosa Elsa. The
scheduled to be jointly heard before Branch 13. CA explained:

On April 17, 2002, Spouses Bitte were again declared in default by 1. Andrea's execution on behalf of Rosa Elsa of the deed of absolute
RTC- Branch 13 for their failure to attend the pre-trial. sale in favor of Spouses Bitte was void and unenforceable as the
authority to represent Rosa Elsa had already been revoked as early
On January 4, 2003, the counsel of Spouses Bitte withdrew and a as October 10, 1996. Without the authority to effect the
new one entered his appearance and then filed a verified motion for conveyance, the contract was without effect to Rosa Elsa, who was
reconsideration. a stranger to the conveyance in favor of Spouses Bitte. Rosa Elsa
did not consent to the transaction either.
On August 21, 2003, Spouses Bitte once again failed to appear in
the pre-trial and were, thus, declared non-suited. Rosa Elsa then 2. Considering that no valid conveyance was effected, Spouses Bitte
presented her evidence ex parte. had no right to redeem the foreclosed property because they were
not among those persons who could redeem a property under Sec.
Joint Decision of the RTC-Branch 13 6 of Act. No. 3135 and Section 27 of Rule 39 of the Rules of Court.

24
They could not be considered successors-in-interest or transferees ISSUES
because no right was conveyed by Rosa Elsa on account of the
revocation of the authority given to Andrea. I

3. Ganzon, the one who subsequently purchased the property from WHETHER OR NOT THE COURT OF APPEALS-MINDANAO
Spouses Bitte, was not an innocent purchaser of the property as the STATION DEPARTED FROM THE ACCEPTED AND USUAL
conveyance was attended with circumstances which should have COURSE OF JUDICIAL PROCEEDINGS WHEN IT ALLOWED THE
alerted him of the fallibility of the title over the property. Ganzon APPELLANTS BRIEF FILED BY RESPONDENTS IN VIOLATION
transacted with Spouses Bitte, who were then not yet the registered OF SECTION 7, RULE 44 OF THE RULES OF COURT.
owners of the property. He should have made inquiries first as to
how Spouses Bitte acquired the rights over the property.
II
Thus, the CA disposed as follows:
WHETHER OR NOT THE RULING OF THE COURT OF APPEALS
WHEREFORE, premises considered, the instant appeal is FINDING THE REVOCATION OF THE SPA, DESPITE LACK OF
hereby GRANTED and the Joint Decision, dated 18 January 2007 of BASIS, ENFORCEABLE AGAINST THIRD PERSONS IS IN
the RTC, Eleventh Judicial Region, Branch 13, Davao City, insofar as ACCORD WITH LAW.
it pertains to Civil Case No. 27,667-99 is
hereby REVERSED and SET ASIDE. Accordingly,
III
The Deed of Absolute Sale dated 25 February 1997 is hereby
a)
declared NULL and VOID. WHETHER OR NOT THE RULING OF THE COURT OF APPEALS
FINDING THE DEED OF SALE INVALID IS SUPPORTED BY
Transfer Certificate of Title (TCT) No. T-315273 in the name of STRONG AND CONCLUSIVE EVIDENCE AS REQUIRED BY LAW.
Ganzon Yap, married to Haima Yap, is declared NULL and VOID,
b) and the Registry of Deeds of Davao City is hereby DIRECTED to
cancel TCT No. T-315273, and to issue a new title reinstating IV
TCT No. T-112717 in the name of Rosa Elsa S. Serrano; and
WHETHER OR NOT THE RULING OF THE COURT OF APPEALS
Ganzon and Haima Yap and/or whoever is in possession of the DISREGARDING THE LEGAL EFFECTS OF THE FORECLOSURE
subject property, or their agents and those acting for in their SALE IS A DEPARTURE FROM THE ESTABLISHED JURIDICIAL
c) behalf are hereby DIRECTED to VACATE the subject property PRONOUNCEMENTS.
and surrender the possession of the same to plaintiff-appellant
Rosa Elsa Serrano-Jonas. VI

SO ORDERED.[9] WHETHER OR NOT THE RULING OF THE COURT OF APPEALS

Aggrieved, Spouses Bitte moved for reconsideration, but their NOT FINDING GANZON YAP AS INNOCENT PURCHASER FOR
motion was denied by the CA on February 26, 2014. [10] VALUE IS CONSISTENT WITH THE PRINCIPLE OF
INDEFEASIBLITY OF TITLE.[12]
Hence, this petition by the petitioners, Farida Yap Bitte and the Heirs In advocacy of their positions, the petitioners submit the following
of Benjamin Bitte.[11] arguments:

25
The deed of absolute sale executed by Andrea was valid and legal
because the SPA was not validly revoked as the revocation was not
registered in the Office of the Register of Deeds of Davao City. Thus,
Andrea's authority to transact with them on behalf of Rosa Elsa
subsisted.
The CA decision, declaring the deed of absolute sale null and void,
directing the cancellation of TCT No. T-315273, and reinstating TCT
No. T-112717, without attacking the auction sale and redemption
made by Spouses Bitte was a highly questionable act.
Considering that the deed of absolute sale was valid, they could
redeem the property pursuant to Act. No. 3135, as amended, and
Sec. 27 of Rule 39 of the Rules of Court.
No evidence was presented showing that Ganzon indeed bought the
property in bad faith considering that the TCT No. T-112717 did not
bear any annotation that should have alarmed him before buying
the property. Ganzon could not have been expected to go beyond
the title and look for vices or defects that could have rendered him
not a purchaser in good faith and for value.
In their Comment,[13] Spouses Jonas called the attention of the
Court to the fact that Spouses Bitte had been declared in default by
the RTC. Spouses Jonas contended that, being in default, Spouses
already lost the legal personality to resort to this petition. They also
averred that the questions presented in this petition are one of facts
and not of law. Not being a trier of facts, this Court must deny the
petition.
On the merits, they argued that the SPA was not enforceable; that
the deed of absolute sale executed by Andrea was a nullity because
it was made with knowledge on the part of Spouses Bitte of the
revocation of Andrea's authority; and that Spouses Yap could not be
considered purchasers in good faith as they failed to verify the
authority of the vendors, Spouses Bitte, considering that the
certificate of title was still under Rosa Elsa's name.
In their Reply,[14] Spouses Bitte reiterated their positions as set out
in their petition.
Ruling of the Court
The Court denies the petition.
Procedural Issues
Before tackling the substantive issues, a few procedural matters
must first be threshed out.
The first is on the issue of the personality of the petitioners to file
this petition. Spouses Jonas claim that the door to any reliefs for
Spouses Bitte, be it through a motion for reconsideration or this
subject petition, was closed by the finality and immutability of the
RTC declaration of their default. In other words, it is their stand that
the petitioners do not have the right to obtain recourse from this
Court.
Spouses Jonas are mistaken.
The rule is that "right to appeal from the judgment by default is not
lost and can be done on grounds that the amount of the judgment
is excessive or is different in kind from that prayed for, or that the
plaintiff failed to prove the material allegations of his complaint, or
that the decision is contrary to law." [15] If a party who has been
declared in default has in his arsenal the remedy of appeal from the
judgment of default on the basis of the decision having been issued
against the evidence or the law, that person cannot be denied the
remedy and opportunity to assail the judgment in the appellate
court. Despite being burdened by the circumstances of default, the
petitioners may still use all other remedies available to question not
only the judgment of default but also the judgment on appeal before
this Court. Those remedies necessarily include an appeal
by certiorari under Rule 45 of the Rules of Court.
The second is on the propriety of the questions raised in the petition.
Spouses Jonas claims that that the issues raised here, being factual,
are inappropriate for being beyond the inquiry of this Court; that
the factual findings of the CA could no longer be modified or even
reviewed citing the long standing rule that they are final and
conclusive. Although the rule admits of exceptions, they insist that
none of them obtains in this case.
Indeed, the questions forwarded by Spouses Bitte are without doubt
26
factual issues. This Court, being not a trier of facts, has no recourse The written official acts, or records of the official acts of the
but to give credence to the findings of the CA. Although it is true (a) sovereign authority, official bodies and tribunals, and public
that there are exceptions as enumerated in Development Bank of officers, whether of the Philippines, or of a foreign country;
the Philippines v. Traders Royal Bank,[16] none of these were invoked Documents acknowledged before a notary public except last wills
(b)
or cited in the petition. and testaments; and
Public records, kept in the Philippines, of private documents
(c)
On that score alone, this petition should be denied outright. required by law to be entered therein.
All other writings are private.
Substantive Issues Not having been properly and validly notarized, the deed of sale
cannot be considered a public document. It is an accepted rule,
The Genuineness and Due Execution of the Deed of Sale in favor of however, that the failure to observe the proper form does not render
Spouses Bitte were not proven the transaction invalid. It has been settled that a sale of real
property, though not consigned in a public instrument or formal
The Court agrees with the CA that the genuineness and due writing is, nevertheless, valid and binding among the parties, for the
execution of the deed of sale in favor Spouses Bitte were not time-honored rule is that even a verbal contract of sale or real estate
established. Indeed, a notarized document has in its favor the produces legal effects between the parties.[19]
presumption of regularity. Nonetheless, it can be impugned by
strong, complete and conclusive proof of its falsity or nullity on Not being considered a public document, the deed is subject to the
account of some flaws or defects on the document.[17] requirement of proof under Section 20, Rule 132, which reads:

In the case at bench, it is on record that the National Archives, Section 20. Proof of private document. - Before any private
Records Management and Archives Office, Regional Archives document offered as authentic is received in evidence its due
Division, Davao City, certified that it had no copy on file of the Deed execution and authenticity must be proved either:
of Absolute Sale, dated February 25, 1997, sworn before Atty.
Bernardino N. Bolcan, Jr., denominated as Doc. No. 988, Page No. (a) By anyone who saw the document executed or written; or
198, Book No. 30, Series of 1997. Their record shows that, instead, By evidence of the genuineness of the signature or handwriting
(b)
the document executed on said date with exactly the same notarial of the maker.
entries pertained to a Deed of Assignment of Foreign Letter of Credit
in favor of Allied Banking Corporation.[18] Such irrefutable fact Any other private document need only be identified as that which it
rendered doubtful that the subject deed of absolute sale was is claimed to be.
notarized. Accordingly, the party invoking the validity of the deed of absolute
sale had the burden of proving its authenticity and due execution.
Article 1358 of the New Civil Code requires that the form of a Unfortunately, Spouses Bitte were declared as in default and, for
contract transmitting or extinguishing real rights over immovable said reason, they failed to discharge such burden in the court below.
property should be in a public document. Pertinently, Section 19, Thus, the Court agrees with the CA that the RTC erred in applying
Rule 132 of the Rules of Court reads: the presumption of regularity that attaches only to duly notarized
documents as distinguished from private documents.
Section 19 Classes of documents. - For the purposes of their
presentation in evidence, documents are either public or private. Without the presumption of regularity accorded to the deed coupled
with the default of the party relying much on the same, the
Public documents are: purported sale cannot be considered. It is as if there was no deed
of sale between Spouses Bitte and Spouses Jonas.

27

The genuineness and due execution of the deed of sale in favor of
Spouses Bitte not having been established, the said deed can be
considered non-existent.
Spouses Bitte, however, are questioning the "non-existent" deed of
sale.
Granting that its genuineness and due of execution were proven,
the deed of sale is still unenforceable; Doctrine of Apparent
Authority
Granting arguendo that the deed of sale may still be considered, the
transaction is, nevertheless, unenforceable.
In this regard, petitioners posit that the deed must be recognized
and enforced for the reason that, despite the revocation of the
authority of Andrea prior to the execution of the deed, they should
not be bound by that revocation for lack of notice. Consequently,
they contend that as far as they are concerned, the contract of sale
should be given effect for having been executed by someone
appearing to them as authorized to sell.
They further argue that the failure of Rosa Elsa to register, file and
enter the deed of revocation in the Registry of Deeds did not bind
Spouses Bitte under Section 52 of the Property Registration Decree.
Said section provides that "[e]very conveyance, mortgage, lease,
lien, attachment, order, judgment, instrument or entry affecting
registered land shall, if registered, filed or entered in the Office of
the Register of Deeds for the province or city where the land to
which it relates lies, be constructive notice to all persons from the
time of such registering, filing or entering." It is their position that
without the registration of the revocation, they cannot be bound by
it and the Court must respect the sale executed by her agent,
Andrea.
The Court is not persuaded.
Basic is the rule that the revocation of an agency becomes
operative, as to the agent, from the time it is made known to him.
Third parties dealing bona fide with one who has been accredited to
them as an agent, however, are not affected by the revocation of
the agency, unless notified of such revocation.[20] This refers to the
doctrine of apparent authority. Under the said doctrine, acts and
contracts of the agent within the apparent scope of the authority
conferred on him, although no actual authority to do such acts or
has been beforehand withdrawn, revoked or terminated, bind the
principal.[21] Thus, as to a third person, "apparent authority, when
present, trumps restrictions that the principal has privately imposed
on the agent. The relevant appearance is that the principal has
conferred authority on an agent. An actor may continue to possess
apparent authority although the principal has terminated the actor's
actual authority or the agency relationship between them. This is so
because a third party may reasonably believe that the actor
continues to act as an agent and within the scope of actual authority
on the basis of manifestations previously made by the principal.
Such a manifestation, once made, remains operative until the third
party has notice of circumstances that make it unreasonable to
believe that the actor continues to have actual authority." [22] Hence,
apparent authority may survive the termination of actual authority
or of an agency relationship.[23]
To persons who relied in good faith on the appearance of authority,
no prejudice must be had by virtue of such reliance on what
appeared to them as perfectly in accordance with the observable
authority of an agent. It must not be disturbed unless it can be
shown that they had been notified or became aware of the
termination of the agency. Stated differently, a third party cannot
be bound by a revocation unless he had notice or knowledge of such
revocation.
The notice or knowledge may be actual or implied. In either case,
there is no apparent authority to speak of and all contracts entered
into by the former agent with a third person cannot bind the
principal. The reason behind this is that a third person cannot feign
ignorance of facts which should have put him on guard and which
he had a means of knowing. "Apparent authority ends when it is no
longer reasonable for the third party with whom an agent deals to
believe that the agent continues to act with actual
authority."[24] In Cervantes v. Court of Appeals[25] the Court wrote
that "when the third person, knows that the agent was acting
beyond his power or authority, the principal cannot be held liable
for the acts of the agent."
28
Generally, implied notice, also known as constructive notice, is impliedly, by the person on whose behalf it has been executed,
attributed to third persons through the registration of the before it is revoked by the other contracting party." [27] Considering
termination in the Registry of Deeds. that the sale was executed by an agent whose authority, be it actual
or apparent, had been revoked, the transaction
Under Article 1924 of the New Civil Code, "an agency is revoked if is unenforceable pursuant to Article 1317 and 1403(1) of the Civil
the principal directly manages the business entrusted to the agent, Code which read:
dealing directly with third persons." Logic dictates that when a
principal disregards or bypasses the agent and directly deals with Article 1317. No one may contract in the name of another without
such person in an incompatible or exclusionary manner, said third being authorized by the latter, or unless he has by law a right to
person is deemed to have knowledge of the revocation of the represent him.
agency. They are expected to know circumstances that should have
put them on guard as to the continuing authority of that agent. The A contract entered into in the name of another by one who has no
mere fact of the principal dealing directly with the third person, after authority or legal representation, or who has acted beyond his
the latter had dealt with an agent, should be enough to excite the powers, shall be unenforceable, unless it is ratified, expressly or
third person's inquiring mind on the continuation of his authority. impliedly, by the person on whose behalf it has been executed,
before it is revoked by the other contracting party. (1259a)
In the case at bench, records show that Spouses Bitte initially
transacted with Andrea as Rosa Elsa's agent on the basis of the SPA, ART. 1403. The following contracts are unenforceable, unless they
dated July 19, 1985. Thereafter, however, Rosa Elsa returned to the are ratified:
Philippines and directly negotiated with them on October 11, 1996.
Rosa Elsa's act of taking over in the actual negotiation for the sale (1) Those entered into the name of another person by one who has
of the property only shows that Andrea's authority to act has been been given no authority or legal representation, or who has acted
revoked pursuant to Article 1924. At that point, Spouses Bitte had beyond his powers;
information sufficient enough to make them believe that Andrea was
no longer an agent or should have compelled them to make further xxx. [Emphases Supplied]
inquiries. No attempt was shown that Spouses Bitte took the Considering that the deed of absolute sale was executed at a time
necessary steps to inquire if Andrea was still authorized to act at when Spouses Bitte were deemed notified of the termination of the
that time. Despite their direct negotiation with Rosa Elsa, they still agency, the sale must be treated as having been entered into by
entered into a contract with Andrea on February 25, 1997. Andrea in her personal capacity. One can sell only what one owns
or is authorized to sell, and the buyer can acquire no more right
Persons dealing with an agent are bound at their peril, if they would than what the seller can transfer legally.[28] Accordingly, Spouses
hold the principal liable, to ascertain not only the fact of agency but Bitte acquired no better title than what Andrea had over the
also the nature and extent of the agents authority, and in case either property, which was nil.
is controverted, the burden of proof is upon them to establish it.[26]
Legal Consequence In sum, the deed of absolute sale executed by Andrea in favor of
Spouses Bitte is unenforceable against Rosa Elsa because of their
"It is a basic axiom in civil law embodied in our Civil Code that no notice of the revocation of the agency.
one may contract in the name of another without being authorized
by the latter, or unless he has by law a right to represent him. A Spouses Bitte did not possess the required personality to redeem
contract entered into in the name of another by one who has no the subject property
authority or legal representation, or who has acted beyond his
powers, shall be unenforceable, unless it is ratified, expressly or Obviously, Spouses Bitte acquired no interest in the subject property

29
because the deed that they were anchoring their claims on did not
bind Rosa Elsa. Hence, they did not have the personality to redeem
the foreclosed property as provided under Act No. 3135, as
amended by Act No. 4118, and of Section 27, Rule 39 of the Rules
of Court.
Act No. 3135, as amended, provides:
SEC. 6. In all cases in which an extrajudicial sale is made under the
special power hereinbefore referred to, the debtor, his successors
in interest or any judicial creditor or judgment creditor of said
debtor, or any person having a lien on the property subsequent
to the mortgage or deed of trust under which the property is
sold, may redeem the same at any time within the term of one
year from and after the date of the sale; and such redemption shall
be governed by the provisions of sections four hundred and sixty-
four to four hundred and sixty-six, inclusive, of the Code of Civil
Procedure, in so far as these are not inconsistent with the provisions
of this Act.
[Emphases Supplied]
Section 27 of Rule 39 of the Rules of Court enumerates the persons
who may exercise the right of redemption of a foreclosed property:
Section 27. Who may redeem real property so sold. — Real property
sold as provided in the last preceding section, or any part thereof
sold separately, may be redeemed in the manner hereinafter
provided, by the following persons:
The judgment obligor; or his successor in interest in the whole
(a)
or any part of the property; and
A creditor having a lien by virtue of an attachment, judgment or
mortgage on the property sold, or on some part thereof,
(c)
subsequent to the lien under which the property was sold. Such
redeeming creditor is termed a redemptioner.
In Castro v. IAC,[29] as correctly cited by the CA, "only such persons
as are authorized to do so by statute can redeem from an execution
sale." Spouses Bitte were not so authorized considering that they
were not among those enumerated in Act No. 3135 and Section 27
of Rule 39.
Spouses Yap were also not Purchasers in Good Faith and For Value
After the purported "transfer" to Spouses Yap, the subject property
was registered and a new title was issued in their names. Despite
being impleaded in the case, however, they were silent and did not
even join Spouses Bitte in the subject petition. It is Spouses
Bitte who have been taking the cudgels for them.
On the issue, Spouses Bitte contend that Spouses Yap were
purchasers in good faith and for value, and, for that reason, should
have been recognized to have good title over the subject property.
Settled is the rule that the burden of proving the status of a
purchaser in good faith and for value lies upon one who asserts that
status.[30] This onus probandi cannot be discharged by mere
invocation of the ordinary presumption of good faith.[31] Considering
that the title was still registered in the name of Rosa Elsa when
Spouses Yap bought it from Spouses Bitte, the burden was on them
to prove that they were purchasers in good faith. In this regard,
they failed. Not an iota of evidence was adduced by them to prove
their ignorance of the true situation.
Through Spouses Bitte, Spouses Yap are invoking good faith for
want of notice on their part that Andrea's authority had already been
revoked. They point out that Ganzon, being a layman, could not
have been expected to know the intricacies of the law for which
reason that he could not attribute any fault in the deed of sale
executed by a person with a SPA.
The Court is not persuaded.
Spouses Yap were not purchasers in good faith and for value.
Significantly, Ganzon transacted with someone who was not even
the registered owner of the property. At the time of the transfer, the
property was still registered in the name of Rosa Elsa.
The rule is that a person who buys from one who is not the
registered owner is expected to examine not only the certificate of
title but all factual circumstances necessary for [one] to determine
if there are any flaws in the title of the transferor, or in [the] capacity
to transfer the land. A higher degree of prudence is thus expected
from that person even if the land object of the transaction is
30
registered.[32] Prelude

Here, no evidence was presented to show that Spouses Yap exerted The Strategic Alliance Development Corporation (STRADEC) is a
that required diligence in determining the factual circumstances domestic corporation operating as a business development and
relating to the title and authority of Spouses Bitte as sellers of the investment company.
property. The records are bereft of any proof that Spouses Yap
showed eagerness to air their side despite being impleaded. In 2000, several stockholders4 of STRADEC executed Pledge
Agreements5 whereby they pledged a certain amount of their
Hence, the protection the law accords to purchasers in good faith stocks6 in the said company in favor of the respondent United
and for value cannot be extended to them. They have failed to show Resources Asset Management, Inc. (URAMI). These pledges were
the required diligence needed in protecting their rights as buyers of meant to secure the loan obligations of STRADEC to URAMI under
property despite knowledge of facts that should have led them to their Loan Agreement7 of 28 December 2000.
inquire and investigate the possible defects in the title of the seller.
Thus, in the same way that Spouses Bitte cannot claim valid title One of the stockholders of STRADEC who so pledged his shares in
over the property, Spouses Yap cannot also do the same. STRADEC was petitioner Aderito Z. Yujuico.

A purchaser cannot close his eyes to facts which should put a The Notice and Civil Case No. 70027
reasonable man upon his guard, and then claim that he acted in
good faith under the belief that there was no defect in the title of Apparently, STRADEC had not been able to comply with its payment
the vendor.[33] obligations under the Loan Agreement.
In sum, the transfer to Spouses Yap was null and void as Spouses
Bitte had nothing to sell or transfer to them. On 18 June 2004, STRADEC and its stockholders received
a notice8 informing them about an impending auction sale of the
WHEREFORE, the petition is DENIED. stocks pledged under the Pledge Agreements in order to satisfy
STRADEC's outstanding obligations9 under the Loan Agreement.
The notice was sent and signed by respondent Atty. Richard J.
G.R. No. 211113, June 29, 2015 Nethercott (Atty. Nethercott), who claimed to be the attorney-in-
fact of URAMI.
ADERITO Z. YUJUICO, Petitioner, v. UNITED RESOURCES
The notice stated that, pursuant to the request10 earlier filed by Atty.
ASSET MANAGEMENT, INC., ATTY. RICHARD J. NETHERCOTT
Nethercott before "the notary public of Bayambang, Pangasinan" the
AND ATTY. HONORATO R. MATABAN, Respondents.
public auction of the pledged STRADEC stocks had been set at 8:30
in the morning of 23 June 2004 in front of the municipal building of
DECISION Bayambang, Pangasinan.11ChanRoblesVirtualawlibrary

PEREZ, J.: On 21 June 2004, petitioner filed before the Regional Trial Court
(RTC) of Pasig City an injunction complaint 12 seeking to enjoin the
This case is an appeal1 from the Decision2 dated 12 August 2013 sale at public auction mentioned in Atty. Nethercott's notice.
and Resolution3 dated 29 January 2014 of the Court of Appeals in Impleaded as defendants in such complaint were URAMI, Atty.
CA-G.R. SP No. 117431. Nethercott and herein respondent Atty. Honorato R. Mataban (Atty.
Mataban)—the notary public referred to in the notice as the one
The antecedents: requested by Atty. Nethercott to conduct the auction of the pledged

31
stocks.
In the complaint, petitioner argued that the planned auction sale of
the stocks pledged under the Pledge Agreements is void as the same
suffers from a multitude of fatal defects; one of which is the
supposed lack of authority of Atty. Nethercott to initiate such a sale
on behalf of URAMI. As petitioner elaborated:
chanRoblesvirtualLawlibrary
(k) [Atty. Nethercott] has no valid authority to represent URAMI for
any purpose, xxx. He is neither the counsel nor the agent of URAMI,
whose authorized representative under Section 9, paragraph 10 of
the Loan Agreement is its Chief Operating Officer, Ms. Lorna P.
Feliciano. There has been no modification of this provision in
accordance with paragraph 9.04 of the same provision.13
chanroblesvirtuallawlibrary
The injunction complaint, which also contained prayers for the
issuance of a temporary restraining order and of a writ of
preliminary injunction, was docketed in the RTC as Civil Case No.
70027.
The Sale and URAMI's Answer with Counterclaim
As the RTC did not issue a temporary restraining order in Civil Case
No. 70027, the public auction of the pledged STRADEC stocks
pushed through, as scheduled, on 23 June 2004. In that auction,
URAMI emerged as the winning bidder for all of the stocks pledged
under the Pledge Agreements.
authorized Atty. Nethercott to cause the sale of the stocks pledged
under the Pledge Agreements. URAMI, however, pointed out that,
since it never sanctioned the 23 June 2004 auction sale, it similarly
cannot be held liable to the petitioner for any prejudice that may be
caused by the conduct of such auction sale, viz.:
chanRoblesvirtualLawlibrary
4.1 The [injunction complaint] dated 28 June 2004 fails to state a
cause of action only insofar as it seeks judgment ordering URAMI to
pay [petitioner] the amounts of Five Hundred Thousand Pesos (Php
500,000.00) as attorney's fees and One Hundred Thousand Pesos
(Php 100,000.00) as legal expenses.
4.1.1. It bears emphasizing that the extra-judicial foreclosure of the
pledged shares conducted by [Atty. Nethercott] was without valid
authority from URAMI. Consequently, it cannot be made liable for
the acts of another.
4.1.2. URAMI never sanctioned or directed the questioned auction
sale. Neither did URAMI give its consent, explicit or otherwise, to
said foreclosure or any subsequent acts of [Atty. Nethercott]
pursuant thereto. Hence, no liability whatsoever may be imputed to
URAMI.
4.1.3. If at all, the recourse of the plaintiff is solely against [Atty.
Nethercott].15
Hence, overall, URAMI prayed for the dismissal of the injunction
complaint against it.

On 5 July 2004, however, the RTC issued a writ of preliminary Petitioner's Motion for Summary Judgment and the Suspension of
injunction, which effectively prevented URAMI from appropriating Civil Case No. 70027
the stocks it had purchased during the auction sale. On the same
day, Atty. Nethercott filed his answer denying the material On 29 May 2007, petitioner filed with the RTC a motion for summary
allegations of the injunction complaint. judgment16 arguing that, in view of the admissions made by URAMI
in its answer regarding Atty. Nethercott's lack of authority to cause
More than a year later, or on 21 April 2006, URAMI—which until then the auction sale of pledged stocks, there was no longer any genuine
was still not able to file an answer of its own—filed with the RTC a issue left to be resolved in trial.
motion for leave to file an answer. Attached to the motion was a
copy of URAMFs answer.14 On 5 September 2006, the RTC granted URAMI and Atty. Nethercott both filed comments on petitioner's
URAMI's motion and allowed the admission of its answer. motion for summary judgment.

In its answer, URAMI agreed with the petitioner that the 23 June The resolution of petitioner's motion for summary judgment,
2004 auction sale was void; URAMI admitted that it never however, was deferred when, on 25 July 2007, this Court issued

32
in G.R. No. 17706817 a temporary restraining order18 calling to a the RTC explained that the amended answer could not be admitted
halt the conduct of further proceedings in Civil Case No. 70027. This just yet as the same had been filed by URAMI without first securing
temporary restraining order remained in effect for more than a year leave of court.
until it was finally lifted by this Court on 13 October
2008.19ChanRoblesVirtualawlibrary Thus, on 21 September 2009, URAMI filed with the RTC a motion
for leave to file an amended answer (motion for leave).22 In the said
Thereafter, proceedings in Civil Case No. 70027 resumed. motion, URAMI formally asked permission from the RTC to allow it
to file the amended answer explaining that the original answer filed
URAMI's Change of Counsel and Amended Answer by its previous counsel "does not bear truthful factual allegations
and is indubitably not supported by evidence on
On 26 January 2009, URAMI changed its counsel of record for Civil record."23ChanRoblesVirtualawlibrary
Case No. 70027. The law firm Villlanueva, Gabionza & De Santos
(VGD law firm), which hitherto had been URAMI's counsel of record, On 10 November 2009, the RTC issued an Order24 granting
was thus replaced by Atty. Edward P. Chico (Atty. Chico). URAMI's motion for leave.

Under the counsel of Atty. Chico, URAMI filed with the RTC Petitioner filed a motion for reconsideration against the 10
an amended answer with compulsory counterclaim (amended November 2009 Order, but the same was denied by the RTC in its
answer)20 on 23 February 2009. The amended answer was meant Order25 of 27 September 2010.
to supplant URAMI's original answer, which had been prepared by
the VGD law firm. CA-G.R. SP No. 117431 and the Present Appeal

In its amended answer, URAMI still vouched for the dismissal of the Defeated but undeterred, petitioner next challenged the Orders
injunction complaint but reneged from its previous admissions under dated 10 November 2009 and 27 September 2010 of the RTC
the original answer. This time, URAMI claimed that the 23 June 2004 through a certiorari petition before the Court of Appeals.
auction sale was valid and that it duly authorized Atty. Nethercott This certiorari petition was docketed in the Court of Appeals as CA-
to initiate such sale on its behalf.21ChanRoblesVirtualawlibrary G.R. SP No. 117431.

On 12 March 2009, petitioner filed with the RTC a motion to strike On 12 August 2013, the Court of Appeals rendered a
out URAMI's amended answer on the grounds that: (1) it was not Decision26 sustaining the challenged orders of the RTC and
timely filed; (2) it was filed without leave of court; and (3) its dismissing petitioner's certiorari petition. Petitioner moved for
admission would prejudice petitioner's rights. In an order of even reconsideration, but the Court of Appeals remained
date, however, the RTC denied petitioner's motion and allowed steadfast.27ChanRoblesVirtualawlibrary
admission of URAMI's amended answer.
Hence, the present appeal.

On 27 March 2009, petitioner filed with the RTC a motion for In the present appeal, petitioner argues that the Court of Appeals
reconsideration of the order allowing admission of erred in sustaining the orders of the RTC allowing URAMI to file
URAMI's amended answer. its amended answer. Petitioner argues that URAMI should not have
been so allowed for the following reasons:28
On 18 August 2009, the RTC issued an order granting petitioner's
motion for reconsideration and setting aside its earlier order 1. URAMI had not shown that the admissions it made under
allowing admission of URAMI's amended answer. In the said order, the original answer were made through "palpable mistake"

33
 Hence, pursuant to Section 4 of Rule 129 of the Rules of
Court,29 URAMI is barred from contradicting such Petitioner, however, opposes the grant of leave arguing that URAMI
admissions through the filing of its amended answer. is precluded from filing an amended answer by Section 4 of Rule
129 of the Rules of Court and claiming that URAMI's amended
2. The amended answer is merely a ploy of URAMI to further answer was only interposed for the purpose of delaying the
delay the proceedings in Civil Case No. 70027. proceedings in Civil Case No. 70027.

Thus, petitioner prays that we set aside the decision of the Court of We rule in favor of allowing URAMI's amended answer. Hence, we
Appeals, disallow URAMI's amended answer and direct the RTC in deny the present appeal.
Civil Case No. 70027 to resolve his motion for summary judgment
with dispatch.30ChanRoblesVirtualawlibrary First. We cannot subscribe to petitioner's argument that Section 4
of Rule 129 of the Rules of Court precludes URAMI from filing
its amended answer. To begin with, the said provision does not set
OUR RULING
the be-all and end-all standard upon which amendments to
pleadings may or may not be allowed. Matters involving the
Our rules of procedure allow a party in a civil action to amend his
amendment of pleadings are primarily governed by the pertinent
pleading as a matter of right, so long as the pleading is amended
provisions of Rule 10 and not by Section 4 of Rule 129 of the Rule
only once and before a responsive pleading is served (or, if the
of Court. Hence, allegations (and admissions) in a pleading—even if
pleading sought to be amended is a reply, within ten days after it is
not shown to be made through "palpable mistake"—can still be
served).31 Otherwise, a party can only amend his pleading upon
corrected or amended provided that the amendment is sanctioned
prior leave of court.32ChanRoblesVirtualawlibrary
under Rule 10 of the Rules of Court.
As a matter of judicial policy, courts are impelled to treat motions
Nevertheless, even if we are to apply Section 4 of Rule 129 to the
for leave to file amended pleadings with liberality.33 This is especially
present case, we still find the allowance of URAMI's amended
true when a motion for leave is filed during the early stages of
answer to be in order. To our mind, a consideration of the evidence
proceedings or, at least, before trial.34 Our case law had long taught
that URAMI plans to present during trial indubitably reveals that the
that bona fide amendments to pleadings should be allowed in the
admissions made by URAMI under its original answer were a product
interest of justice so that every case may, so far as possible, be
of clear and patent mistake.
determined on its real facts and the multiplicity of suits thus be
prevented.35 Hence, as long as it does not appear that the motion
One of the key documents that URAMI plans to present during trial,
for leave was made with bad faith or with intent to delay the
which it also attached in its amended answer as "Annex 8" thereof,
proceedings,36 courts are justified to grant leave and allow the filing
is URAMI's Board Resolution38 dated 21 June 2004 that evinces Atty.
of an amended pleading. Once a court grants leave to file an
Nethercott's authority to cause the foreclosure on the pledged
amended pleading, the same becomes binding and will not be
stocks on behalf of URAMI. With the existence of such board
disturbed on appeal unless it appears that the court had abused its
resolution, the statement in URAMI's original answer pertaining to
discretion.37ChanRoblesVirtualawlibrary
the lack of authority of Atty. Nethercott to initiate the 23 June 2004
auction sale thus appears mistaken, if not entirely baseless and
In this case, URAMI filed its motion for leave seeking the admission
unfounded. Hence, we find it only right and fair, that URAMI should
of its amended answer more than two (2) years after it filed its
be given a chance to file its amended answer in order to rectify such
original answer. Despite the considerable lapse of time between the
mistakes in its original answer.
filing of the original answer and the motion for leave, the RTC still
granted the said motion. Such grant was later affirmed on appeal
Second. We also cannot agree with the petitioner's accusation that
by the Court of Appeals.

34
the amended answer was only interposed to further delay the
proceedings in Civil Case No. 70027. As the previous discussion SO ORDERED.cral
reveal, the amended answer aims to correct certain allegations of
fact in the original answer which, needless to state, are crucial to a [G.R. No. 133657. May 29, 2002.]
full and proper disposition of Civil Case No. 70027. It is, therefore,
in the best interest of justice and equity that URAMI should be REMINGTON INDUSTRIAL SALES CORPORATION, Petitioner,
allowed to file the amended answer. v. THE COURT OF APPEALS and BRITISH STEEL (ASIA),
LTD., Respondents.
Third. The mere fact that URAMI filed its motion for leave years after
the original answer is also not reason enough in itself to discredit DECISION
the amended answer as a sheer dilatory measure. Readily
observable from the established facts is that the perceived delay
between the filing of the motion for leave and the filing of the YNARES-SANTIAGO, J.:
original answer is not purely attributable to URAMI. It must be
remembered that some time after the original answer was filed, we
issued a temporary restraining order in G.R. No. 177068 that Before us is a petition for review under Rule 45 of the Rules of Court
effectively suspended the proceedings in Civil Case No. 70027 for assailing the decision of the Court of Appeals in CA-G.R. SP No.
more than a year. Thus, even if it wanted to, URAMI really could not 44529 dated February 24, 1998, 1 which granted the petition
have filed a motion for leave to file amended answer sooner than it for certiorari filed by respondent British Steel Asia Ltd. (British Steel)
already had. On this score, we note that it only took URAMI a little and ordered the dismissal of petitioner Remington Industrial Sales
over three months after the lifting of the temporary restraining order Corporation’s (Remington) complaint for sum of money and
to replace its previous counsel of record in Civil Case No. 70027 and damages. Also assailed in this petition is the resolution 2 of the
to file its amended answer. Court of Appeals denying petitioner’s motion for reconsideration.

Fourth. All in all, we find absolutely no cause to overrule the grant The facts of the case, as culled from the records, are as
of leave granted to URAMI to file its amended answer. The said grant follows:chanrob1es virtual 1aw library
is consistent with our time-honored judicial policy of affording liberal
treatment to amendments to pleadings, especially those made On August 21, 1996, petitioner filed a complaint 3 for sum of money
before the conduct of trial. and damages arising from breach of contract, docketed as Civil Case
No. 96-79674, before the sala of Judge Marino M. De la Cruz of the
We should always remember that our rules of procedure are mere Regional Trial Court of Manila, Branch 22. Impleaded as principal
tools designed to facilitate the attainment of justice. Their defendant therein was Industrial Steels, Ltd. (ISL), with Ferro
application should never be allowed to frustrate the truth and the Trading GMBH (Ferro) and respondent British Steel as alternative
promotion of substantial justice.39 Were we to succumb to defendants.chanrobles virtual lawlibrary
petitioner's arguments today, however, we would have sanctioned
an outcome totally inconsistent with the underlying purpose of our ISL and respondent British Steel separately moved for the dismissal
procedural laws. That, we simply cannot countenance. of the complaint on the ground that it failed to state a cause of
action against them. On April 7, 1997, the RTC denied the motions
WHEREFORE, premises considered, the petition is to dismiss, 4 as well as the ensuing motion for reconsideration. 5
hereby DENIED. The Decision dated 12 August 2013 and Resolution ISL then filed its answer to the complaint.
dated 29 January 2014 of the Court of Appeals in CA-G.R. SP No.
117431 are hereby AFFIRMED. On the other hand, respondent British Steel filed a petition

35
for certiorari and prohibition before the Court of Appeals, 6 docketed SO ORDERED. 12
as CA-G.R. SP No. 44529. Respondent claimed therein that the
complaint did not contain a single averment that respondent Thereafter, on February 24, 1998, the Court of Appeals rendered
committed any act or is guilty of any omission in violation of the assailed decision in CA-G.R. SP No. 44529 as
petitioner’s legal rights. Apart from the allegation in the complaint’s follows:chanrob1es virtua1 1aw 1ibrary
"Jurisdictional Facts" that:chanrob1es virtual 1aw library
WHEREFORE, this Court grants the writ of certiorari and orders the
1.05. Defendants British Steel (Asia) Ltd. and Ferro Trading Gmbh, respondent judge to dismiss without prejudice the Complaint in Civil
while understood by the plaintiff as mere suppliers of goods for Case No. 96-79674 against petitioner British Steel (Asia) Ltd. Costs
defendant ISL, are impleaded as party defendants pursuant to against private Respondent.
Section 13, Rule 3 of the Revised Rules of Court. 7
SO ORDERED. 13
no other reference was made to respondent that would constitute a
valid cause of action against it. Since petitioner failed to plead any In the same decision, the Court of Appeals addressed petitioner’s
cause of action against respondent as alternative defendant under prayer for suspension of proceedings in this wise:chanrob1es virtual
Section 13, Rule 3, 8 the trial court should have ordered the 1aw library
dismissal of the complaint insofar as respondent was concerned.
The incident which transpired after the filing of the instant petition
Meanwhile, petitioner sought to amend its complaint by for certiorari and prohibition are immaterial in the resolution of this
incorporating therein additional factual allegations constitutive of its petition. What this Court is called upon to resolve is whether the
cause of action against Respondent. Pursuant to Section 2, Rule 10 lower court committed grave abuse of discretion when it denied
9 of the Rules of Court, petitioner maintained that it can amend the petitioner’s motion to dismiss the complaint against it. The
complaint as a matter of right because respondent has not yet filed admission or rejection by the lower court of said amended complaint
a responsive pleading thereto. 10 will not, insofar as this Court is concerned, impinge upon the issue
of whether or not said court gravely abused its discretion in denying
Subsequently, petitioner filed a Manifestation and Motion 11 in CA- petitioner’s motion to dismiss. 14
G.R. SP No. 44529 stating that it had filed a Motion to Admit
Amended Complaint together with said Amended Complaint before Petitioner filed a motion for reconsideration of the appellate court’s
the trial court. Hence, petitioner prayed that the proceedings in the decision, which was denied in a resolution dated April 28, 1998.
special civil action be suspended. Hence, this petition, anchored on the following grounds:chanrob1es
virtual 1aw library
On January 29, 1998, the trial court ruled on petitioner’s Motion to
Admit Amended Complaint thus:chanrob1es virtual 1aw library I

WHEREFORE, the Amended Complaint is NOTED and further

proceedings thereon and action on the other incidents as
aforementioned are hereby held in abeyance until final resolution by
the Honorable Court of Appeals (Special 6th Division) of the petition
for certiorari and prohibition of petitioner (defendant British) and/or
Manifestations and Motions of therein private respondent, herein
plaintiff.
THE HON. COURT OF APPEALS ERRED IN ORDERING THE
DISMISSAL OF THE COMPLAINT AGAINST THE PRIVATE
RESPONDENT FOR LACK OF CAUSE OF ACTION UNDER THE
ORIGINAL COMPLAINT EVEN AS SAID COMPLAINT WAS ALREADY
AMENDED AS A MATTER OF RIGHT AND SUFFICIENT CAUSES OF
ACTION ARE AVERRED IN THE AMENDED COMPLAINT, IN GROSS

36
VIOLATION OF SEC. 2, RULE 10 OF THE 1997 RULES OF CIVIL
PROCEDURE.
II
THE HON. COURT OF APPEALS ERRED IN HOLDING THAT IF THE
PETITIONER WANTS TO PURSUE ITS CASE AGAINST THE PRIVATE
RESPONDENT, IT HAS TO REFILE THE COMPLAINT, THUS PRE-
EMPTING THE RIGHT OF THE LOWER COURT TO RULE ON THE
AMENDED COMPLAINT AND COMPELLING THE PETITIONER TO
LITIGATE ITS CAUSES OF ACTION AGAINST THE PRIVATE
RESPONDENT AS AN ALTERNATIVE DEFENDANT IN A SEPARATE
ACTION, THEREBY ABETTING MULTIPLICITY OF SUITS. 15
The basic issue in this case is whether or not the Court of Appeals,
by granting the extraordinary writ of certiorari, correctly ordered the
dismissal of the complaint for failure to state a cause of action,
despite the fact that petitioner exercised its right to amend the
defective complaint under Section 2, Rule 10 of the Rules of Court.
Stated differently, the query posed before us is: can a complaint still
be amended as a matter of right before an answer has been filed,
even if there was a pending proceeding for its dismissal before the
higher court?
Section 2, Rule 10 16 of the Revised Rules of Court explicitly states
that a pleading may be amended as a matter of right before a
responsive pleading is served. This only means that prior to the filing
of an answer, the plaintiff has the absolute right to amend the
complaint whether a new cause of action or change in theory is
introduced. 17 The reason for this rule is implied in the subsequent
Section 3 of Rule 10. 18 Under this provision, substantial
amendment of the complaint is not allowed without leave of court
after an answer has been served, because any material change in
the allegations contained in the complaint could prejudice the rights
of the defendant who has already set up his defense in the
answer.chanrob1es virtua1 1aw 1ibrary
Conversely, it cannot be said that the defendant’s rights have been
violated by changes made in the complaint if he has yet to file an
answer thereto. In such an event, the defendant has not presented
any defense that can be altered 19 or affected by the amendment
of the complaint in accordance with Section 2 of Rule 10. The
defendant still retains the unqualified opportunity to address the
allegations against him by properly setting up his defense in the
answer. Considerable leeway is thus given to the plaintiff to amend
his complaint once, as a matter of right, prior to the filing of an
answer by the defendant.
The right granted to the plaintiff under procedural law to amend the
complaint before an answer has been served is not precluded by the
filing of a motion to dismiss 20 or any other proceeding contesting
its sufficiency. Were we to conclude otherwise, the right to amend
a pleading under Section 2, Rule 10 will be rendered nugatory and
ineffectual, since all that a defendant has to do to foreclose this
remedial right is to challenge the adequacy of the complaint before
he files an answer.
Moreover, amendment of pleadings is favored and should be
liberally allowed in the furtherance of justice in order to determine
every case as far as possible on its merits without regard to
technicalities. This principle is generally recognized to speed up trial
and save party litigants from incurring unnecessary expense, so that
a full hearing on the merits of every case may be had and multiplicity
of suits avoided. 21
In this case, the remedy espoused by the appellate court in its
assailed judgment will precisely result in multiple suits, involving the
same set of facts and to which the defendants would likely raise the
same or, at least, related defenses. Plainly stated, we find no
practical advantage in ordering the dismissal of the complaint
against respondent and for petitioner to re-file the same, when the
latter can still clearly amend the complaint as a matter of right. The
amendment of the complaint would not prejudice respondents or
delay the action, as this would, in fact, simplify the case and
expedite it disposition.
The fact that the other defendants below has filed their answers to
the complaint does not bar petitioner’s right to amend the complaint
as against Respondent. Indeed, where some but not all the
defendants have answered, the plaintiff may still amend its
complaint once, as a matter of right, in respect to claims asserted
solely against the non-answering defendant, but not as to claims
asserted against the other defendants. 22
37

Furthermore, we do not agree with respondent’s claim that it will be
prejudiced by the admission of the Amended Complaint because it
had spent time, money and effort to file its petition before the
appellate court. 23 We cannot see how the result could be any
different for respondent, if petitioner merely re-filed the complaint
instead of being allowed to amend it. As adverted to earlier,
amendment would even work to respondent’s advantage since it will
undoubtedly speed up the proceedings before the trial court.
Consequently, the amendment should be allowed in the case at bar
as a matter of right in accordance with the rules.chanrob1es virtua1
1aw 1ibrary
WHEREFORE, the petition is GRANTED. The assailed decision and
resolution of the Court of Appeals in CA-G.R. SP No. 44529 dated
February 24, 1998 and April 28, 1998, respectively, are REVERSED
and SET ASIDE. The Regional Trial Court of Manila, Branch 22 is
further ordered to ADMIT petitioner’s Amended Complaint in Civil
Case No. 96-79674 and to conduct further proceedings in said case.
SO ORDERED.
[G.R. NO. 151932 : August 19, 2009]
HENRY CHING TIU, CHRISTOPHER HALIN GO, and GEORGE
CO, Petitioners, v. PHILIPPINE BANK OF
COMMUNICATIONS, Respondent.
DECISION
PERALTA, J.:
This is a Petition for Review on Certiorari, under Rule 45 of the Rules
of Court, seeking to annul and set aside the Decision1 dated
September 28, 2001, rendered by the Court of Appeals (CA) in CA-
G.R. SP No. 57732, dismissing the petition and affirming the
assailed Orders of the Regional Trial Court (RTC) of Cagayan de Oro
City, Branch 21 in Civil Case No. 99-352, dated December 14, 1999
and January 11, 2000.
The factual and procedural antecedents are as follows:
In June 1993, Asian Water Resources, Inc. (AWRI), represented by
herein petitioners, applied for a real estate loan with the Philippine
Bank of Communications (PBCOM) to fund its purified water
distribution business. In support of the loan application, petitioners
submitted a Board Resolution2 dated June 7, 1993. The loan was
guaranteed by collateral over the property covered by Transfer
Certificate of Title No. T-13020.3 The loan was eventually approved.4
In August 1996, AWRI applied for a bigger loan from PBCOM for
additional capitalization using the same Board Resolution, but
without any additional real estate collateral. Considering that the
proposed additional loan was unsecured, PBCOM required all the
members of the Board of Directors of AWRI to become sureties.
Thus, on August 16, 1996, a Surety Agreement 5 was executed by
its Directors and acknowledged by a notary public on the same date.
All copies of the Surety Agreement, except two, were kept by
PBCOM. Of the two copies kept by the notary public, one copy was
retained for his notarial file and the other was sent to the Records
Management and Archives Office, through the Office of the RTC
Clerk of Court.6
Thereafter, on December 16, 1998, AWRI informed the bank of its
desire to surrender and/or assign in its favor, all the present
properties of the former to apply as dacion en pago for AWRI's
existing loan obligation to the bank.7 On January 11, 1999, PBCOM
sent a reply denying the request. On May 12, 1999, PBCOM sent a
letter to petitioners demanding full payment of its obligation to the
bank.8
Its demands having remained unheeded, PBCOM instructed its
counsel to file a complaint for collection against petitioners. The case
was docketed as Civil Case No. 99-352.
On July 3, 1999, petitioners filed their Answer. It alleged, among
other things, that they were not personally liable on the promissory
notes, because they signed the Surety Agreement in their capacities
as officers of AWRI. They claimed that the Surety Agreement
attached to the complaint as Annexes "A" to "A-2"9 were falsified,
considering that when they signed the same, the words "In his
personal capacity" did not yet appear in the document and were
merely intercalated thereon without their knowledge and consent.10
38
In support of their allegations, petitioners attached to their Answer
a certified photocopy of the Surety Agreement issued on March 25,
1999 by the Records Management and Archives Office in Davao
City,11 showing that the words "In his personal capacity" were not
found at the foot of page two of the document where their signatures
appeared.12
Because of this development, PBCOM's counsel searched for and
retrieved the file copy of the Surety Agreement. The notarial copy
showed that the words "In his personal capacity" did not appear on
page two of the Surety Agreement.13
Petitioners' counsel then asked PBCOM to explain the alteration
appearing on the agreement. PBCOM subsequently discovered that
the insertion was ordered by the bank auditor. It alleged that when
the Surety Agreement was inspected by the bank auditor, he called
the attention of the loans clerk, Kenneth Cabahug, as to why the
words "In his personal capacity" were not indicated under the
signature of each surety, in accordance with bank standard
operating procedures. The auditor then ordered Mr. Cabahug to type
the words "In his personal capacity" below the second signatures of
petitioners. However, the notary public was never informed of the
insertion.14 Mr. Cabahug subsequently executed an
affidavit15 attesting to the circumstances why the insertion was
made.
PBCOM then filed a Reply and Answer to Counterclaim with Motion
for Leave of Court to Substitute Annex "A" of the
Complaint,16 wherein it attached the duplicate original copy
retrieved from the file of the notary public. PBCOM also admitted its
mistake in making the insertion and explained that it was made
without the knowledge and consent of the notary public. PBCOM
maintained that the insertion was not a falsification, but was made
only to speak the truth of the parties' intentions. PBCOM also
contended that petitioners were already primarily liable on the
Surety Agreement whether or not the insertion was made, having
admitted in their pleadings that they voluntarily executed and
signed the Surety Agreement in the original form. PBCOM, invoking
a liberal application of the Rules, emphasized that the motion
incorporated in the pleading can be treated as a motion for leave of
court to amend and admit the amended complaint pursuant to
Section 3, Rule 10 of the Rules of Court.
On December 14, 1999, the RTC issued an Order17 allowing the
substitution of the altered document with the original Surety
Agreement, the pertinent portion of which reads:
August 16, 1996 attached as Annexes "A" to "A-2" of the reply and
answer Resolving the Motion to Substitute Annexes "A" to "A-2" of
the complaint and the opposition thereto by the defendant, this
Court, in the interest of justice, hereby allows the substitution of
said Annexes "A" to "A-2" of the complaint with the duplicate original
of notarial copy of the Agreement dated to counter-claim.
SO ORDERED.
Petitioners filed a motion for reconsideration,18 but it was denied in
the Order19 dated January 11, 2000, to wit:
Resolving the motion for reconsideration and the opposition thereto,
the Court finds the motion substantially a reiteration of the
opposition to plaintiff's motion.
Additionally, the instant motion for reconsideration treats on
evidentiary matter which can be properly ventilated in the trial
proper, hence, there is no cogent reason to disturb the Court's order
of December 14, 1999.
SO ORDERED.
Aggrieved, petitioners sought recourse before the CA via a petition
for certiorari under Rule 65 of the Rules of Court, docketed as CA-
G.R. SP No. 57732.
Petitioners claimed that the RTC acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction in denying their motion for reconsideration and
in allowing PBCOM to substitute the altered copy of the Surety
Agreement with the duplicate original notarial copy thereof
considering that the latter's cause of action was solely and
39
principally founded on the falsified document marked as Annexes
"A" to "A-2."20
On September 28, 2001, the CA rendered a Decision dismissing the
petition for lack of merit, the decretal portion of which reads:
WHEREFORE, foregoing considered, the instant petition is hereby
DENIED DUE COURSE and, accordingly, DISMISSED for lack of
merit. The assailed Orders dated December 14, 1999 and January
11, 2000 of the Regional Trial Court of Cagayan de Oro City, Branch
21, are hereby AFFIRMED in toto.
SO ORDERED. 21
Hence, the petition assigning the following errors:
I
The COURT committed a reversible error in affirming in toto the
order of the lower court allowing the substitution of the falsified
document by relying on the provision of section 3, rule 10 of the
rules of Court.
II
Acting as the court on the petition for certiorari, the court committed
a reversible error having no jurisdiction to rule on the obligation of
the petitioners based on the falsified document
III
The court erred in giving credence to the allegation of respondent
bank that from August 15 to December 9, 1997 asian water
resources inc. obtained several availments of new bigger and
additional loans totalLing p2,030,000.00 evidenced by 4 promissory
notes marked as annexes "B," "B-1," "B-2" and "B-3."
IV
The court failed to consider the misapplication of the principle of
equity committed by the lower court in ordering the substitution of
the falsified document.22
Petitioners argue that the CA committed a reversible error in
affirming the Order of the RTC allowing the substitution of the
document by relying on Section 3, Rule 10 of the Rules of Court.
Petitioners assert that the Rules do not allow the withdrawal and
substitution of a "falsified document" once discovered by the
opposing party.
Petitioners maintain that PBCOM's cause of action was solely and
principally founded on the alleged "falsified document" originally
marked as
Annexes "A" to "A-2." Thus, the "withdrawal" of the document
results in the automatic withdrawal of the whole complaint on the
ground that there is no more cause of action to be maintained or
enforced by plaintiff against petitioners. Also, petitioners argue that
if the substitution will be allowed, their defenses that were anchored
on Annexes "A" to "A-2" would be gravely affected. Moreover,
considering that the said document was already removed,
withdrawn, and disregarded by the RTC, the withdrawal and
substitution of the document would prevent petitioners from
introducing the falsified documents during the trial as part of their
evidence.23
Petitioners submit that the RTC misapplied the principle of equity
when it allowed PBCOM to substitute the document with the original
agreement. Petitioners also claim that the remedy of appeal after
the termination of the case in the RTC would become ineffective and
inadequate if the Order of the RTC allowing the "withdrawal" and
"substitution" of the document would not be nullified, because the
falsified document would no longer be found in the records of the
case during the appeal.24
Petitioners contend that the CA went beyond the issue raised before
it when it interpreted the provisions of the Surety Agreement,
particularly paragraph 4 thereof, and then ruled on the obligations
of the parties based on
40
the document. Petitioners posit that the CA prematurely ruled on
petitioners' obligations, considering that their obligations should be
determined during trial on the merits, after the parties have been
given the opportunity to present their evidence in support of their
respective claims. Petitioners stress that the CA went into the merit
of the case when it gave credence to the statement of fact of PBCOM
that "From August 15 to December 9, 1997, Asian Water Resources,
Inc. obtained several availments on its additional loans
totalling P2,030,000.00 as evidenced by 4 promissory notes marked
as Annexes B, B-1, B-2, and B-3. Thus, the conclusion of the CA in
declaring the petitioners liable as sureties violated their right to due
process.25
For its part, PBCOM argues that since the complaint is based on an
actionable document, i.e., the surety agreement, the original or a
copy thereof should be attached to the pleading as an exhibit, which
shall be deemed part of the pleading. Considering that the surety
agreement is annexed to the complaint, it is an integral part thereof
and its substitution with another copy is in the nature of a
substantial amendment, which is allowed by the Rules, but with
prior leave of court.
Moreover, PBCOM alleges that since the Rules provides that
substantial amendments may be made upon leave of court, the
authority of the RTC to allow the amendment is discretionary. Thus,
the CA correctly held that the act of granting the said substitution
was within the clear and proper discretion of the RTC.
The petition is without merit.
As to the substitution of the earlier surety agreement that was
annexed to the complaint with the original thereof, this Court finds
that the RTC did not err in allowing the substitution.
The pertinent rule on actionable documents is found in Section 7,
Rule 8 of the Rules of Court, which provides that when the cause of
action is anchored on a document, its substance must be set forth,
and the original or a copy thereof "shall" be attached to the pleading
as an exhibit and deemed a part thereof, to wit:
Section 7. Action or defense based on document. - Whenever an
action or defense is based upon a written instrument or document,
the substance of such instrument or document shall be set forth in
the pleading, and the original or a copy thereof shall be attached to
the pleading as an exhibit, which shall be deemed to be a part of
the pleading, or said copy may with like effect be set forth in the
pleading.
With respect to PBCOM's right to amend its complaint, including the
documents annexed thereto, after petitioners have filed their
answer, Section 3, Rule 10 of the Rules of Court specifically allows
amendment by leave of court. The said Section states:
SECTION 3. Amendments by leave of court. Except as provided in
the next preceding section, substantial amendments may be made
only upon leave of court. But such leave may be refused if it appears
to the court that the motion was made with intent to delay. Orders
of the court upon the matters provided in this section shall be made
upon motion filed in court, and after notice to the adverse party,
and an opportunity to be heard.
This Court has emphasized the import of Section 3, Rule 10 of the
1997 Rules of Civil Procedure in Valenzuela v. Court of
Appeals,26 thus:
Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure
amended the former rule in such manner that the phrase "or that
the cause of action or defense is substantially altered" was stricken-
off and not retained in the new rules. The clear import of such
amendment in Section 3, Rule 10 is that under the new rules, "the
amendment may (now) substantially alter the cause of action or
defense." This should only be true, however, when despite a
substantial change or alteration in the cause of action or defense,
the amendments sought to be made shall serve the higher interests
of substantial justice, and prevent delay and equally promote the
laudable objective of the rules which is to secure a "just, speedy and
inexpensive disposition of every action and proceeding."27
The granting of leave to file amended pleading is a matter
particularly addressed to the sound discretion of the trial court; and
that discretion is broad, subject only to the limitations that the
41
amendments should not substantially change the cause of action or
alter the theory of the case, or that it was not made to delay the
action.28 Nevertheless, as enunciated in Valenzuela, even if the
amendment substantially alters the cause of action or defense, such
amendment could still be allowed when it is sought to serve the
higher interest of substantial justice; prevent delay; and secure a
just, speedy and inexpensive disposition of actions and proceedings.
The courts should be liberal in allowing amendments to pleadings to
avoid a multiplicity of suits and in order that the real controversies
between the parties are presented, their rights determined, and the
case decided on the merits without unnecessary delay. This liberality
is greatest in the early stages of a lawsuit, especially in this case
where the amendment was made before the trial of the case,
thereby giving the petitioners all the time allowed by law to answer
and to prepare for trial.29
Furthermore, amendments to pleadings are generally favored and
should be liberally allowed in furtherance of justice in order that
every case, may so far as possible, be determined on its real facts
and in order to speed up the trial of the case or prevent the circuity
of action and unnecessary expense. That is, unless there are
circumstances such as inexcusable delay or the taking of the
adverse party by surprise or the like, which might justify a refusal
of permission to amend.30
In the present case, there was no fraudulent intent on the part of
PBCOM in submitting the altered surety agreement. In fact, the bank
admitted that it was a mistake on their part to have submitted it in
the first place instead of the original agreement. It also admitted
that, through inadvertence, the copy that was attached to the
complaint was the copy wherein the words "IN HIS PERSONAL
CAPACITY" were inserted to conform to the bank's standard
practice. This alteration was made without the knowledge of the
notary public. PBCOM's counsel had no idea that what it submitted
was the altered document, thereby necessitating the substitution of
the surety agreement with the original thereof, in order that the
case would be judiciously resolved.
Verily, it is a cardinal rule of evidence, not just one of technicality
but of substance, that the written document is the best evidence of
its own contents. It is also a matter of both principle and policy that
when the written contract is established as the repository of the
parties' stipulations, any other evidence is excluded, and the same
cannot be used to substitute for such contract, or even to alter or
contradict the latter.31 The original surety agreement is the best
evidence that could establish the parties' respective rights and
obligations. In effect, the RTC merely allowed the amendment of the
complaint, which consequently included the substitution of the
altered surety agreement with a copy of the original.
It is well to remember at this point that rules of procedure are but
mere tools designed to facilitate the attainment of justice. Their
strict and rigid application that would result in technicalities that
tend to frustrate rather than promote substantial justice must
always be avoided.32 Applied to the instant case, this not only
assures that it would be resolved based on real facts, but would also
aid in the speedy disposition of the case by utilizing the best
evidence possible to determine the rights and obligations of the
party - litigants.
Moreover, contrary to petitioners' contention, they could not be
prejudiced by the substitution since they can still present the
substituted documents, Annexes "A" to A-2," as part of the evidence
of their affirmative defenses. The substitution did not prejudice
petitioners or delay the action. On the contrary, it tended to
expedite the determination of the controversy. Besides, the
petitioners are not precluded from filing the appropriate criminal
action against PBCOM for attaching the altered copy of the surety
agreement to the complaint. The substitution of the documents
would not, in any way, erase the existence of falsification, if any.
The case before the RTC is civil in nature, while the alleged
falsification is criminal, which is separate and distinct from another.
Thus, the RTC committed no reversible error when it allowed the
substitution of the altered surety agreement with that of the
original.
A Petition for Certiorari under Rule 65 of the Rules of Court is
intended for the correction of errors of jurisdiction only or grave
abuse of discretion amounting to lack or excess of jurisdiction. Its
principal office is only to keep the inferior court within the
parameters of its jurisdiction or to prevent it from committing such
42
a grave abuse of discretion amounting to lack or excess of
jurisdiction.33
For a Petition for Certiorari to prosper, the essential requisites that
have to concur are: (1) the writ is directed against a tribunal, a
board or any 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.34 ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
The phrase without jurisdiction means that the court acted with
absolute lack of authority 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. Excess of jurisdiction occurs when the
court transcends its power or acts without any statutory authority;
or results when an act, though within the general power of a
tribunal, board or officer (to do) is not authorized, and is 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. Grave abuse of discretion implies such capricious and
whimsical exercise of judgment as to be equivalent to lack or excess
of jurisdiction; simply put, power is exercised in an arbitrary or
despotic manner by reason of passion, prejudice, or personal
hostility; and such exercise is so patent or so gross as to amount to
an evasion of a positive duty or to a virtual refusal either to perform
the duty enjoined or to act at all in contemplation of law.35
The present case failed to comply with the above-stated requisites.
In the instant case, the soundness of the RTC's Order allowing the
substitution of the document involves a matter of judgment and
discretion, which cannot be the proper subject of a petition
for certiorari under Rule 65. This rule is only intended to correct
defects of jurisdiction and not to correct errors of procedure or
matters in the trial court's findings or conclusions.
However, this Court agrees with the petitioners' contention that the
CA should not have made determinations as regards the parties'
respective rights based on the surety agreement. The CA went
beyond the issues brought before it and effectively preempted the
RTC in making its own determinations. It is to be noted that the
present case is still pending determination by the RTC. The CA
should have been more cautious and not have gone beyond the
issues submitted before it in the petition for certiorari; instead, it
should have squarely addressed whether or not there was grave
abuse of discretion on the part of the RTC in issuing the Orders dated
December 14, 1999 and January 11, 2000.
WHEREFORE, premises considered, the petition is DENIED. Subject
to the above disquisitions, the Decision of the Court of Appeals in
CA-G.R. SP No. 57732, dated September 28, 2001, and the Orders
of the Regional Trial Court of Cagayan de Oro City, Branch 21, in
Civil Case No. 99-352, dated December 14, 1999 and January 11,
2000, are AFFIRMED.
SO ORDERED.
G.R. No. 193650 October 8, 2014
GEORGE PIDLIP P. PALILEO and JOSE DE LA CRUZ, Petitioners,
vs.
PLANTERS DEVELOPMENT BANK, Respondent.
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 assails the July 28, 2009
Amended Decision2 of the Court of Appeals (CA) in CA-G.R. SP No.
01317-MIN, entitled "Planters Development Bank, Petitioner, versus
Hon. Eddie R. Roxas (in his capacity as the former Pairing Judge),
Hon. Panambulan M Mimbisa (in his capacity as the Presiding Judge
of RTC, Branch 37, General Santos City), Sheriff Marilyn P. Alano,
Sheriff Ramon A. Castillo, George Philip P. Palileo, and Jose Dela
Cruz, Respondents," as well as its August 23, 2010
Resolution3 denying reconsideration of the assailed amended
judgment.
Factual Antecedents
43
In a June 15, 2006 Decision4 rendered by the Regional Trial Court
(RTC) of General Santos City, Branch 37, in an action for specific
performance/sum of money with damages docketed as Civil Case
No. 6474 and entitled "George Philip P. Palileo and Jose Dela Cruz,
Plaintiffs, versus, Planters Development Bank, Engr. Edgardo R.
Torcende, Arturo R. delos Reyes, Benjamin N. Tria, Mao Tividad and
Emmanuel Tesalonia, Defendants," it was held thus:
Before this Court is a complaint for specific performance and/or sum
of money and damages with prayer for the issuance of writs of
preliminary attachment and preliminary injunction filed by Plaintiff
George Philip Palileo and Jose L. Dela Cruz against Engr. Edgardo R.
Torcende, Planters Development Bank (defendant Bank), Arturo R.
Delos Reyes, Benjamin N. Tria, Mao Tividad, and Emmanuel
Tesalonia on 22 December 1998.
After summons together with the verified Complaint and its annexes
were duly served upon defendants, the latter answered. During Pre-
Trial conference defendant Bank manifested [its] intention of
settling the case amicably and several attempts to explore the said
settlement [were] made as per records of this case. In the last pre-
trial hearing dated 17 November 2000, only plaintiffs[,] George
Philip Palileo and Jose L. Dela Cruz[,] and their counsel appeared,
thus, the latter move [sic] for the presentation of evidence ex-parte,
which was granted by the Court with the reservation of verifying the
return card [to determine] whether the order for the pre-trial was
indeed received by defendants. Finally, [at the] 21 November 2001
hearing, x x x defendants [again] failed to appear and their failure
to file pre-trial brief was noted; thus [plaintiffs were] allowed to
present evidence ex-parte before the Clerk of Court.
xxxx
IN LIGHT OF THE FOREGOING, defendants are hereby ORDERED to
jointly and severally PAY plaintiffs as follows:
i) Actual Damages;
a) Plaintiff George Philip Palileo[,] the amount of
Two Million Six Hundred Five Thousand Nine [sic]
Seventy Two Pesos and Ninety Two Centavos
(₱2,605,972.92), with 12% compounded interest
[per annum] reckoned from the filing of this case
until full settlement thereof;
b) Plaintiff Jose R. Dela Cruz[,] the amount of One
Million Five Hundred Twenty Nine Thousand Five
Hundred Eight Thousand [sic] and Eighty Centavos
(₱1,529,508.80), with 12% compounded interest
[per annum] reckoned from the filing of this case
until full settlement thereof;
ii) Moral damages in the amount of Five Hundred Thousand
Pesos (₱500,000.00) each;
iii) Exemplary Damages in the amount of Five Hundred
Thousand Pesos (₱500,000.00) each;
iv) Attorney’s Fees in the amount of Five Hundred Thousand
[Pesos] (₱500,000.00) each x x x and to pay the costs.
SO ORDERED.5
Respondent Planters Development Bank (PDB) received a copy of
the RTC Decision on July 17, 2006.
On July 31, 2006, PDB filed by private courier service – specifically
LBC6 – an Omnibus Motion for Reconsideration and for New
Trial,7 arguing therein that the trial court’s Decision was based on
speculation and inadmissible and selfserving pieces of evidence;
that it was declared in default after its counsel failed to attend the
pre-trial conference on account of the distance involved and
difficulty in booking a flight to General Santos City; that it had
adequate and sufficient defenses to the petitioners’ claims; that
petitioners’ claims are only against its codefendant, Engr. Edgardo
R. Torcende [Torcende]; that the award of damages and attorney’s
fees had no basis; and that in the interest of justice, it should be
given the opportunity to cross-examine the petitioners’ witnesses,
and thereafter present its evidence.
44
Petitioners’ copy of the Omnibus Motion for Reconsideration and for
New Trial was likewise sent on July 31, 2006 by courier service
through LBC, but in their address of record – Tupi, South Cotabato
– there was no LBC service at the time.
On August 2, 2006, PDB filed with the RTC another copy of the
Omnibus Motion for Reconsideration and for New Trial via registered
mail; another copy thereof was simultaneously sent to petitioners
by registered mail as well.
Meanwhile, petitioners moved for the execution of the Decision
pending appeal.
In an August 30, 2006 Order,8 the RTC denied the Omnibus Motion
for Reconsideration and for New Trial, while it granted petitioners’
motion for execution pending appeal, which it treated as a motion
for the execution of a final and executory judgment. The trial court
held, as follows:
Anent the first motion, records show that the Omnibus Motion for
Reconsideration and for New Trial dated 28 July 2006 was initially
filed via an LBC courier on 28 July 2006 and was actually received
by the Court on 31 July 2006, which was followed by filing of the
same motion thru registered mail on 2 August 2006. Said motion
was set for hearing by the movant on 18 August 2006 or 16 days
after its filing.
The motion fails to impress. Section 5, Rule 15 9 of the 1997 Rules
of Civil Procedure as amended is pertinent thus:
Section 5. Notice of hearing. – The notice of hearing shall be
addressed to all parties concerned, and shall specify the time and
date of the hearing which must not be later than ten (10) days after
the filing of the motion. (Underscoring and italics supplied)
The aforesaid provision requires [that] every motion shall be
addressed to all parties concerned, and shall specify the time and
date of the hearing NOT later than ten (10) days after the filing of
the motion. Being a litigated motion, the aforesaid rule should have
been complied [with]. Its noncompliance renders it defective.
[The] Rule is settled that a motion in violation thereof is pro forma
and a mere scrap of paper. It presents no question which the court
could decide [upon]. In fact, the court has NO reason to consider
it[;] neither [does] the clerk of court [have] the right to receive the
same. Palpably, the motion is nothing but an empty formality
deserving no judicial cognizance. Hence, the motion deserves a
short shrift and peremptory denial for being procedurally defective.
As such, it does not toll the running of the reglementary period thus
making the assailed decision final and executory. This supervening
situation renders the Motion for Execution pending appeal academic
but at the same time it operates and could serve [as] well as a
motion for execution of the subject final and executory decision.
Corollarily, it now becomes the ministerial duty of this Court to issue
a writ of execution thereon.
IN LIGHT OF THE FOREGOING, the Omnibus Motion for
Reconsideration and New Trial is hereby DENIED, and the Motion for
Execution Pending Appeal (which is treated as a motion for
execution of a final and executory judgment) is also GRANTED as
explained above. Accordingly, let A WRIT OF EXECUTION be issued
against herein defendants to enforce the FINAL and EXECUTORY
Decision dated 15 June 2006.
SO ORDERED.10
PDB received a copy of the above August 30, 2006 Order on
September 14, 2006.11
On August 31, 2006, a Writ of Execution12 was issued. PDB filed an
Urgent Motion to Quash Writ of Execution, 13 arguing that it was
prematurely issued as the June 15, 2006 Decision was not yet final
and executory; that its counsel has not received a copy of the writ;
and that no entry of judgment has been made with respect to the
trial court’s Decision. Later on, it filed a Supplemental Motion to
Quash Writ of Execution,14 claiming that the writ was addressed to
its General Santos branch, which had no authority to accept the writ.
On September 7, 2006, PDB filed a Notice of Appeal.15
45
In an October 6, 2006 Order,16 the RTC denied the motion to quash
the writ of execution.
On October 9, 2006, the RTC issued a second Writ of Execution. 17
Ruling of the Court of Appeals
On October 11, 2006, PDB filed with the CA an original Petition for
Certiorari, which was later amended,18 assailing 1) the trial court’s
August 30, 2006 Order – which denied the omnibus motion for
reconsideration of the RTC Decision and for new trial; 2) its October
6, 2006 Order – which denied the motion to quash the writ of
execution; and 3) the August 31, 2006 and October 9, 2006 writs
of execution.
On May 31, 2007, the CA issued a Decision19 dismissing PDB’s
Petition for lack of merit. It sustained the trial court’s
pronouncement, that by setting the hearing of the Omnibus Motion
for Reconsideration and for New Trial on August 18, 2006 – or 16
days after its filing on August 2, 2006 – PDB violated Section 5, Rule
15 of the Rules of Court which categorically requires that the notice
of hearing shall specify the time and date of the hearing which must
not be later than 10 days after the filing of the motion. Citing this
Court’s ruling in Bacelonia v. Court of Appeals,20 the CA declared
that the 10-day period prescribed in Section 5 is mandatory, and a
motion that fails to comply therewith is pro forma and presents no
question which merits the attention and consideration of the court.
The appellate court further characterized PDB’s actions as indicative
of a deliberate attempt to delay the proceedings, noting that it did
not timely move to reconsider the trial court’s November 17, 2000
ruling21 allowing petitioners to present their evidence ex parte, nor
did it move to be allowed to present evidence in support of its
defense. It was only after the RTC rendered its June 15, 2006
Decision that PDB moved to be allowed to cross-examine petitioners’
witnesses and to present its evidence on defense.
The CA likewise held that the RTC did not err in ruling that the
omnibus motion for reconsideration did not toll the running of the
prescriptive period, which thus rendered the June 15, 2006 Decision
final and executory. It noted as well that PDB’s September 7, 2006
notice of appeal was tardy.
The CA found no irregularity with respect to the writs of execution,
which contained the fallo of the June 15, 2006 Decision of the RTC
– thus itemizing the amount of the judgment obligation.
Additionally, it held that the fact that the judgment debtors are held
solidarily liable does not require that the writs should be served
upon all of the defendants; that it is not true that the sheriffs failed
to make a demand for the satisfaction of judgment upon PDB, as
the mere presentation of the writ to it operated as a demand to pay;
and that PDB failed to attach the Sheriff’s Return to its Petition,
which thus prevents the appellate court from resolving its claim that
the writs were not validly served.
PDB filed a Motion for Reconsideration,22 arguing that Rule 15,
Section 5 of the Rules of Court should be relaxed in view of the fact
that judgment against it was based on a technicality – and not on a
trial on the merits; that there was no deliberate intention on its part
to delay the proceedings; that the court acted with partiality in
declaring that the Omnibus Motion for Reconsideration and for New
Trial was pro forma; that its notice of appeal was timely; and that
the writs of execution are null and void.
On July 28, 2009, the CA made a complete turnaround and issued
the assailed Amended Decision, which decreed thus:
WHEREFORE, the motion for reconsideration is GRANTED. This
Court’s May 31, 2007 Decision is SET ASIDE and a new one is
rendered GRANTING the petition for certiorari. The trial court’s
Order dated August 30, 2006 is SET ASIDE and the Writ of Execution
issued by the trial court is QUASHED. The trial court is ORDERED to
hear and rule on the merits of petitioner’s "Omnibus Motion for
Reconsideration and New Trial."
SO ORDERED.23
The CA reversed its original finding that the Omnibus Motion for
Reconsideration and for New Trial was pro forma. This time, it held
just the opposite, ruling that PDB’s "tacit argument" that the
"distances involved in the case at bench call for a relaxation of the
46
application of Section 5, Rule 15 of the Rules of Court" deserved
consideration. It held that Section 5 should be read together with
Section 424 of the same Rule, thus:
When a pleading is filed and served personally, there is no question
that the requirements in Sections 4 and 5 of Rule 15 of the Revised
Rules of Civil Procedure pose no problem to the party pleading.
Under this mode of service and filing of pleadings, the party pleading
is able to ensure receipt by the other party of his pleading at least
three days prior to the date of hearing while at the same time setting
the hearing on a date not later than ten days from the filing of the
pleading.
When, as in the case at bench, the address of the trial court as well
as that of the opposing counsel is too distant from the office of the
counsel of the party pleading to personally effect the filing and
service of the pleading, the latter counsel faces a real predicament.
In a perfect world with the best postal service possible, it would be
problematic enough to ensure that both requisites are fully met:
that opposing counsel receives the pleading at least three days
before the date of hearing and that the date of hearing is no more
than ten days after the filing (mailing) of the pleading. But, as a
matter of fact, given the state of the postal service today – a matter
the Court takes judicial notice of – the party pleading often finds
himself [locked] between the horns of a dilemma.
The case at bench presents the Court with the novel issue of whether
the same rigid application of the cited Sections-and-Rule is
warranted when the filing and service of pleadings is by mail. The
Court is of the opinion that when confronted between [sic] the
demands of sufficient notice and due process on the one hand and
the requirement that the date of hearing be set no later than ten
days from filing, the stringent application of the Rules is not
warranted and a liberal posture is more in keeping with Section 6,
Rule 1 of the 1997 Rules of Civil Procedure which provides:
SECTION 6. Construction. - These Rules shall be liberally construed
in order to promote their objective of securing a just, speedy, and
inexpensive disposition of every action and proceeding.25
The CA further sustained PDB’s argument that since judgment
against it was arrived at by mere default or technicality, it is
correspondingly entitled to a relaxation of the Rules, in line with the
principles of substantial justice. It likewise held that PDB counsel’s
act of setting the hearing of the Omnibus Motion for Reconsideration
and for New Trial 16 days after its filing was an excusable lapse;
that no scheme to delay the case is evident from PDB’s actions; that
more telling is the trial court’s "blurring in cavalier fashion" the
distinction between Sections 1 and 2 of Rule 39 of the Rules of
Court,26 as well as its unequal treatment of the parties from its strict
application of Section 5, Rule 15 against respondent, while it bent
backward to accommodate petitioners by converting the latter’s
motion for execution pending appeal into a motion for execution of
a final and executor judgment.
Lastly, the appellate court concluded that the trial court committed
grave abuse of discretion, which thus warrants the grant of PDB’s
Petition for Certiorari.
Petitioners filed their Urgent Motion for Reconsideration,27 which the
CA denied through its assailed August 23, 2010 Resolution. Hence,
the instant Petition.
Issues
Petitioners frame the issues involved in this Petition, as follows:
Being assailed herein is the refusal of the Court of Appeals, which is
a patent error, for not giving credence to petitioners-appellants’
arguments that the respondent-appellees’ special civil action for
certiorari before it is clearly devoid of merit as (i) the Decision dated
June 15, 2006 of the RTC, Branch 37, General Santos City had
become final and executory before the special civil action for
Certiorari was filed before it which should have been dismissed
outright, and which issue of "finality" was never ruled upon, (ii)
granting arguendo that a certiorari proceeding could still be had, the
same should be filed under Rule 45 instead of Rule 65 of the 1997
Rules of Civil Procedure, (iii) the alleged attendant abuse of
discretion on the part of the public respondent judges, even granting
arguendo that it exist [sic], were [sic] not grave but on the contrary
were purely errors of judgment and, (iv) the substantial and glaring
47
defects of the petition in the special civil action for certiorari before
the Court of Appeals were consistently and clearly called to its
attention but were unjustifiably ignored by it.28
Petitioners’ Arguments
In their Petition and Reply,29 petitioners seek to reverse the assailed
CA dispositions and to reinstate the appellate court’s original May
31, 2007 Decision, arguing that the trial court’s June 15, 2006
Decision became final and executor on account of PDB’s failure to
timely file its Omnibus Motion for Reconsideration and for New Trial,
as it properly filed the same only on August 2, 2006 – or beyond the
15-day period allowed by the Rules of Court.
Petitioners argue that PDB’s filing of its Omnibus Motion for
Reconsideration and for New Trial on July 31, 2006 by courier
service through LBC was improper, since there was no LBC courier
service in Tupi, South Cotabato at the time; naturally, they did not
receive a copy of the omnibus motion. This is precisely the reason
why PDB re-filed its omnibus motion on August 2, 2006 through
registered mail, that is, to cure the defective service by courier; but
by then, the 15-day period within which to move for reconsideration
or new trial, or to file a notice of appeal, had already expired, as the
last day thereof fell on August 1, 2006 – counting from PDB’s receipt
of the trial court’s Decision on July 17, 2006.
Petitioners add that PDB’s notice of appeal – which was filed only on
September 7, 2006 – was tardy as well; that PDB’s resort to an
original Petition for Certiorari to assail the trial court’s August 30,
2006 Order denying the Omnibus Motion for Reconsideration and for
New Trial was improper, for as provided under Section 9, Rule 37 of
the Rules of Court,30 an order denying a motion for new trial or
reconsideration is not appealable, the remedy being an appeal from
the judgment or final order; that certiorari was resorted to only to
revive PDB’s appeal, which was already lost; and that it was merely
a face-saving measure resorted to by PDB to recover from its glaring
blunders, as well as to delay the execution of the RTC Decision. They
also assert that certiorari is not an available remedy, since PDB did
not file a motion for reconsideration with respect to the other
assailed orders of the trial court.
Petitioners maintain as well that the CA erred in relaxing the
application of the Rules of Court as to PDB, a banking institution
with adequate resources to engage counsel within General Santos
City and not relegate Civil Case No. 6474 to its Manila lawyers who
are thus constrained by the distance involved.
Respondent’s Arguments
Seeking the denial of the Petition, PDB in its Comment 31 maintains
that the CA did not err in declaring that its Omnibus Motion for
Reconsideration and for New Trial was not pro forma; that there are
justifiable grounds to move for reconsideration and/or new trial;
that it had no intention to delay the proceedings; that it was correct
for the appellate court to relax the application of Section 5, Rule 15;
and that the CA is correct in finding that the trial court committed
grave abuse of discretion in misapplying the Rules and in exhibiting
partiality.
Our Ruling
The Court grants the Petition.
The proceedings in the instant case would have been greatly
abbreviated if the court a quo and the CA did not overlook the fact
that PDB’s Omnibus Motion for Reconsideration and for New Trial
was filed one day too late. The bank received a copy of the trial
court’s June 15, 2006 Decision on July 17, 2006; thus, it had 15
days – or up to August 1, 2006 – within which to file a notice of
appeal, motion for reconsideration, or a motion for new trial,
pursuant to the Rules of Court.32 Yet, it filed the omnibus motion for
reconsideration and new trial only on August 2, 2006.
Indeed, its filing or service of a copy thereof to petitioners by courier
service cannot be trivialized.1âwphi1 Service and filing of pleadings
by courier service is a mode not provided in the Rules.33 This is not
to mention that PDB sent a copy of its omnibus motion to an address
or area which was not covered by LBC courier service at the time.
Realizing its mistake, PDB re-filed and re-sent the omnibus motion
by registered mail, which is the proper mode of service under the
circumstances. By then, however, the 15-day period had expired.
48
PDB’s Notice of Appeal, which was filed only on September 7, 2006,
was tardy; it had only up to August 1, 2006 within which to file the
same. The trial court therefore acted regularly in denying PDB’s
notice of appeal.
Since PDB’s Omnibus Motion for Reconsideration and for New Trial
was filed late and the 15-day period within which to appeal expired
without PDB filing the requisite notice of appeal, it follows that its
right to appeal has been foreclosed; it may no longer question the
trial court’s Decision in any other manner. "Settled is the rule that
a party is barred from assailing the correctness of a judgment not
appealed from by him."34 The "presumption that a party who did not
interject an appeal is satisfied with the adjudication made by the
lower court"35 applies to it. There being no appeal taken by PDB
from the adverse judgment of the trial court, its Decision has
become final and can no longer be reviewed, much less reversed,
by this Court. "Finality of a judgment or order becomes a fact upon
the lapse of the reglementary period to appeal if no appeal is
perfected, and is conclusive as to the issues actually determined and
to every matter which the parties might have litigated and have x x
x decided as incident to or essentially connected with the subject
matter of the litigation, and every matter coming within the
legitimate purview of the original action both in respect to matters
of claim and of defense."36 And "[i]n this jurisdiction, the rule is that
when a judgment becomes final and executory, it is the ministerial
duty of the court to issue a writ of execution to enforce the
judgment;"37 "execution will issue as a matter of right x x x (a) when
the judgment has become final and executory; (b) when the
judgment debtor has renounced or waived his right of appeal; [or]
(c) when the period for appeal has lapsed without an appeal having
been filed x x x."38
Neither can the Court lend a helping hand to extricate PDB from the
effects of its mistake; indeed, PDB erred more than once during the
course of the proceedings. For one, it did not attempt to set right its
failure to appear during pre-trial, which prompted the court to allow
petitioners to present evidence ex parte and obtain a favorable
default judgment. Second, assuming for the sake of argument that
it timely filed its Omnibus Motion for Reconsideration and for New
Trial, it nonetheless violated the ten-day requirement on the notice
of hearing under Section 5 of Rule 15. Third, even before it could be
notified of the trial court’s resolution of its omnibus motion on
September 14, 2006 – assuming it was timely filed, it filed a notice
of appeal on September 7, 2006 – which thus implies that it
abandoned its bid for reconsideration and new trial, and instead
opted to have the issues resolved by the CA through the remedy of
appeal. If so, then there is no Omnibus Motion for Reconsideration
and for New Trial that the trial court must rule upon; its August 30,
2006 Order thus became moot and academic and irrelevant.
"[W]here [an action] or issue has become moot and academic, there
is no justiciable controversy, so that a declaration thereon would be
of no practical use or value."39
Fourth, instead of properly pursuing its appeal to free itself from the
unfavorable effects of the trial court’s denial of its notice of appeal,
PDB chose with disastrous results to gamble on its Omnibus Motion
for Reconsideration and for New Trial by filing an original Petition for
Certiorari to assail the trial court’s denial thereof. Time and again,
it has been said that certiorari is not a substitute for a lost appeal,
especially if one’s own negligence or error in one’s choice of remedy
occasioned such loss.40
What remains relevant for this Court to resolve, then, is the issue
relative to the trial court’s October 6, 2006 Order – which denied
the motion to quash the writ of execution – and the August 31, 2006
and October 9, 2006 writs of execution. The Court observes that the
October 6, 2006 Order and the August 31, 2006 and October 9,
2006 writs of execution were set aside and quashed merely as a
necessary consequence of the CA’s directive in the Amended
Decision for the trial court to hear and rule on the merits of PDB’s
Omnibus Motion for Reconsideration and for New Trial. Other than
this singular reason, the CA would have sustained them, and this is
clear from a reading of both its original May 31, 2007 Decision and
its subsequent Amended Decision. Now, since the Court has herein
declared that PDB’s omnibus motion may not be considered for
being tardy and for having been superseded by the bank’s filing of
a notice of appeal, then the CA’s original pronouncement regarding
the October 6, 2006 Order and the August 31, 2006 and October 9,
2006 writs of execution should necessarily be reinstated as well.
In light of the above conclusions, the Court finds no need to further
discuss the other issues raised by the parties. They are rendered
irrelevant by the above pronouncements.
49
WHEREFORE, the Petition is GRANTED. The assailed July 28, 2009
Amended Decision and August 23, 2010 Resolution of the Court of
Appeals in CA-G.R. SP No. 01317-MIN are REVERSED and SET
ASIDE. The Regional Trial Court of General Santos City, Branch 37
is ORDERED to proceed with the execution ofits June 15, 2006
Decision in Civil Case No. 6474.
SO ORDERED.
G.R. No. 143264 April 23, 2012
LISAM ENTERPRISES, INC. represented by LOLITA A.
SORIANO, and LOLITA A. SORIANO, Petitioners,
vs.
BANCO DE ORO UNIBANK, INC. (formerly PHILIPPINE
COMMERCIAL INTERNATIONAL BANK),* LILIAN S. SORIANO,
ESTATE OF LEANDRO A. SORIANO, JR., REGISTER OF DEEDS
OF LEGASPI CITY, and JESUS L. SARTE, Respondents.
DECISION
PERALTA, J.:
This resolves the Petition for Review on Certiorari under Rule 45 of
the Rules of Court, praying that the Resolution1 of the Regional Trial
Court of Legaspi City (RTC), dated November 11, 1999, dismissing
petitioners’ complaint, and its Order2 dated May 15, 2000, denying
herein petitioners’ Motion for Reconsideration and Motion to Admit
Amended Complaint, be reversed and set aside.
The records reveal the following antecedent facts.
On August 13, 1999, petitioners filed a Complaint against
respondents for Annulment of Mortgage with Prayer for Temporary
Restraining Order & Preliminary Injunction with Damages with the
RTC of Legaspi City. Petitioner Lolita A. Soriano alleged that she is
a stockholder of petitioner Lisam Enterprises, Inc. (LEI) and a
member of its Board of Directors, designated as its Corporate
Secretary. The Complaint also alleged the following:
4. Sometime in 1993, plaintiff LEI, in the course of its
business operation, acquired by purchase a parcel of
residential land with improvement situated at Legaspi City,
covered by Transfer Certificate of Title No. 37866, copy
attached as Annex "A," which property is more particularly
described as follows:
xxxx
5. On or about 28 March 1996, defendant Lilian S. Soriano
and the late Leandro A. Soriano, Jr., as husband and wife
(hereafter "Spouses Soriano"), in their personal capacity
and for their own use and benefit, obtained a loan from
defendant PCIB (Legaspi Branch) (now known as Banco de
Oro Unibank, Inc.) in the total amount of ₱20 Million;
6. That as security for the payment of the aforesaid credit
accommodation, the late Leandro A. Soriano, Jr. and
defendant Lilian S. Soriano, as president and treasurer,
respectively of plaintiff LEI, but without authority and
consent of the board of said plaintiff and with the use of a
falsified board resolution, executed a real estate mortgage
on 28 March 1996, over the above-described property of
plaintiff LEI in favor of defendant PCIB, and had the same
registered with the Office of the Registry of Deeds, Legaspi
City, copy of the Real Estate Mortgage is hereto attached
and marked as Annex "B," and made part hereof, to the
prejudice of plaintiffs;
7. That specifically, the Spouses Soriano, with intent to
defraud and prejudice plaintiff LEI and its stockholders,
falsified the signatures of plaintiff Lolita A. Soriano as
corporate secretary and director of plaintiff LEI, in a
document denominated as board resolution purportedly
issued by the board of plaintiff LEI on 6 November 1995,
making it appear that plaintiff LEI's Board met and passed
a board resolution on said date authorizing the Spouses
Soriano to mortgage or encumber all or substantially all of
the properties of plaintiff LEI, when in fact and in truth, no
resolution of that nature was ever issued by the board of
plaintiff LEI, nor a meeting was called to that effect, copy of
50
the resolution in question is hereto attached and marked as
Annex "C," and made part hereof;
8. That plaintiff Lolita A. Soriano as Corporate Secretary of
plaintiff LEI, had never signed a board resolution nor issued
a Secretary's Certificate to the effect that on 6 November
1995 a resolution was passed and approved by plaintiff LEI
authorizing the Spouses Soriano as president and treasurer,
respectively, to mortgage the above-described property of
plaintiff LEI, neither did she appear personally before a
notary public on 28 March 1996 to acknowledge or attest to
the issuance of a supposed board resolution issued by
plaintiff LEI on 6 November 1995;
9. That defendant PCIB, knowing fully well that the property
being mortgaged by the Spouses Soriano belongs to plaintiff
LEI, a corporation, negligently and miserably failed to
exercise due care and prudence required of a banking
institution. Specifically, defendant PCIB failed to investigate
and to delve into the propriety of the issuance of or due
execution of subject board resolution, which is the very
foundation of the validity of subject real estate mortgage.
Further, it failed to verify the genuineness of the signatures
appearing in said board resolution nor to confirm the fact of
its issuance with plaintiff Lolita A. Soriano, as the corporate
secretary of plaintiff LEI. Furthermore, the height of its
negligence was displayed when it disregarded or failed to
notice that the questioned board resolution with a
Secretary's Certificate was notarized only on 28 March 1996
or after the lapse of more than four (4) months from its
purported date of issue on 6 November 1995. That these
circumstances should have put defendant PCIB on notice of
the flaws and infirmities of the questioned board resolution.
Unfortunately, it negligently failed to exercise due care and
prudence expected of a banking institution;
10. That having been executed without authority of the
board of plaintiff LEI said real estate mortgage dated 28
March 1996 executed by the Spouses Soriano, as officers of
plaintiff LEI in favor of defendant PCIB, is the null and void
and has no legal effect upon said plaintiff. Consequently,
said mortgage deed cannot be used nor resorted to by
defendant PCIB against subject property of plaintiff LEI as
no right or rights whatsoever were created nor granted
thereunder by reason of its nullity;
11. Worst, sometime in August 1998, in order to remedy the
defects in the mortgage transaction entered by the Spouses
Soriano and defendant PCIB, the former, with the unlawful
instigation of the latter, signed a document denominated as
"Deed of Assumption of Loans and Mortgage Obligations and
Amendment of Mortgage"; wherein in said document,
plaintiff LEI was made to assume the ₱20 Million personal
indebtedness of the Spouses Soriano with defendant PCIB,
when in fact and in truth it never so assumed the same as
no board resolution duly certified to by plaintiff Lolita A.
Soriano as corporate secretary was ever issued to that
effect, copy of said Deed is hereto attached and marked as
Annex "D," and made part hereof;
12. Moreover, to make it appear that plaintiff LEI had
consented to the execution of said deed of assumption of
mortgage, the Spouses Soriano again, through the unlawful
instigation and connivance of defendant PCIB, falsified the
signature of plaintiff Lolita A. Soriano as corporate secretary
of plaintiff LEI in a document denominated as "Corporate
Resolution to Borrow," to make it appear that plaintiff LEI
so authorized the Spouses Soriano to perform said acts for
the corporation, when in fact and in truth no such authority
or resolution was ever issued nor granted by plaintiff LEI,
nor a meeting called and held for said purpose in accordance
with its By-laws; copy of which is hereto attached and
marked as Annex "E" and made part hereof;
13. That said irregular transactions of defendant Lilian S.
Soriano and her husband Leandro A. Soriano, Jr., on one
hand, and defendant PCIB, on the other, were discovered
by plaintiff Lolita A. Soriano sometime in April 1999. That
immediately upon discovery, said plaintiff, for herself and
on behalf and for the benefit of plaintiff LEI, made demands
upon defendants Lilian S. Soriano and the Estate of Leandro
A. Soriano, Jr., to free subject property of plaintiff LEI from
51
such mortgage lien, by paying in full their personal
indebtedness to defendant PCIB in the principal sum of ₱20
Million. However, said defendants, for reason only known to
them, continued and still continue to ignore said demands,
to the damage and prejudice of plaintiffs;
14. Hence, on 25 June 1999, plaintiffs commenced a
derivative suit against defendants Lilian S. Soriano and the
Estate of Leandro A. Soriano, Jr., before the Securities and
Exchange Commission, docketed as SEC Case No. 06-99-
6339 for "Fraudulent Scheme and Unlawful Machination with
Damages" in order to protect and preserve the rights of
plaintiffs, copy of said complaint is hereto attached as
Annex"F";
15. That plaintiffs, in order to seek complete relief from the
unauthorized mortgage transaction between the Spouses
Soriano and defendant PCIB, were further compelled to
institute this instant case to seek the nullification of the real
estate mortgage dated 28 March 1999. Consequently,
plaintiffs were forced to retain the services of a lawyer with
whom they contracted to pay ₱100,000.00 as and for
attorney's fee;
16. That unfortunately, the plaintiffs learned that on 30 July
1999, defendant Sarte, in his capacity as Notary Public of
Daraga, Albay and upon application of defendant PCIB,
issued a notice of Auction/Foreclosure Sale of the property
subject of the mortgage in question and has set the auction
sale on 7 September 1999 x x x;
17. That by reason of the fraudulent and surreptitious
schemes perpetrated by defendant Lilian S. Soriano and her
husband, the late Leandro A. Soriano, Jr., in unlawful
connivance and through the gross negligence of defendant
PCIB, plaintiff Lolita A. Soriano, as stockholder, suffered
sleepless nights, moral shock, wounded feeling, hurt pride
and similar injuries, hence, should be awarded moral
damages in the amount of ₱200,000.00.
After service of summons on all defendants, the RTC issued a
temporary restraining order on August 25, 1990 and, after hearing,
went on to issue a writ of preliminary injunction enjoining
respondent PCIB (now known as Banco de Oro Unibank, Inc.) from
proceeding with the auction sale of the subject property.
Respondents Lilian S. Soriano and the Estate of Leandro A. Soriano,
Jr. filed an Answer dated September 25, 1999, stating that the
Spouses Lilian and Leandro Soriano, Jr. were duly authorized by LEI
to mortgage the subject property; that proceeds of the loan from
respondent PCIB were for the use and benefit of LEI; that all
notarized documents submitted to PCIB by the Spouses Soriano
bore the genuine signature of Lolita Soriano; and that although the
Spouses Soriano indeed received demands from petitioner Lolita
Soriano for them to pay the loan, they gave satisfactory
explanations to the latter why her demands could not be honored.
It was, likewise, alleged in said Answer that it was respondent Lilian
Soriano who should be entitled to moral damages and attorney's
fees.
On September 28, 1999, respondent PCIB filed a Motion to Dismiss
the Complaint on grounds of lack of legal capacity to sue, failure to
state cause of action, and litis pendencia. Petitioners filed an
Opposition thereto, while PCIB's co-defendants filed a Motion to
Suspend Action.
On November 11, 1999, the RTC issued the first assailed Resolution
dismissing petitioners' Complaint. Petitioners then filed a Motion for
Reconsideration of said Resolution. While awaiting resolution of the
motion for reconsideration, petitioners also filed, on January 4,
2000, a Motion to Admit Amended Complaint, amending paragraph
13 of the original complaint to read as follows:
13. That said irregular transactions of defendant Lilian S. Soriano
and her husband Leandro A. Soriano, Jr., on one hand, and
defendant PCIB, on the other, were discovered by plaintiff Lolita A.
Soriano sometime in April 1999. That immediately upon discovery,
said plaintiff, for herself and on behalf and for the benefit of plaintiff
LEI, made demands upon defendant Lilian S. Soriano and the Estate
of Leandro A. Soriano, Jr., to free subject property of plaintiff LEI
from such mortgage lien, by paying in full their personal
52
indebtedness to defendant PCIB in the principal sum of ₱20 Million.
However, said defendants, for reason only known to them,
continued and still continue to ignore said demands, to the damage
and prejudice of plaintiffs; that plaintiff Lolita A. Soriano likewise
made demands upon the Board of Directors of Lisam Enterprises,
Inc., to make legal steps to protect the interest of the corporation
from said fraudulent transaction, but unfortunately, until now, no
such legal step was ever taken by the Board, hence, this action for
the benefit and in behalf of the corporation;
On May 15, 2000, the trial court issued the questioned Order
denying both the Motion for Reconsideration and the Motion to
Admit Amended Complaint. The trial court held that no new
argument had been raised by petitioners in their motion for
reconsideration to address the fact of plaintiffs' failure to allege in
the complaint that petitioner Lolita A. Soriano made demands upon
the Board of Directors of Lisam Enterprises, Inc. to take steps to
protect the interest of the corporation against the fraudulent acts of
the Spouses Soriano and PCIB. The trial court further ruled that the
Amended Complaint can no longer be admitted, because the same
absolutely changed petitioners' cause of action.
Petitioners filed the present petition with this Court, alleging that
what are involved are pure questions of law, to wit:
FIRST, WHETHER OR NOT THE COURT COMMITTED A REVERSIBLE
ERROR WHEN IT DISMISSED THE ACTION ON THE GROUND THAT
PETITIONER LOLITA A. SORIANO HAS NO LEGAL CAPACITY TO SUE
AS SHE IS NOT A REAL PARTY-IN-INTEREST;
SECOND, WHETHER OR NOT THE COURT COMMITTED A
REVERSIBLE ERROR WHEN IT DISMISSED THE ACTION ON THE
GROUND THAT THERE IS ANOTHER ACTION PENDING BETWEEN
THE SAME PARTIES FOR THE SAME CAUSE;
THIRD, WHETHER OR NOT THE COURT COMMITTED A REVERSIBLE
ERROR WHEN IT DISMISSED THE ACTION ON THE GROUND THAT
THE COMPLAINT STATES NO CAUSE OF ACTION;
FOURTH, WHETHER OR NOT THE COURT COMMITTED A
REVERSIBLE ERROR WHEN IT DENIED THE ADMISSION OF
PETITIONERS' AMENDED COMPLAINT FILED AS A MATTER OF
RIGHT, AFTER THE ORDER OF DISMISSAL WAS ISSUED BUT
BEFORE ITS FINALITY.
FIFTH, WHETHER OR NOT THE COURT ERRED IN DISMISSING THE
ACTION, INSTEAD OF MERELY SUSPENDING THE SAME FOLLOWING
THE DOCTRINE LAID DOWN IN UNION GLASS. 3
The petition is impressed with merit.
The Court shall first delve into the matter of the propriety of the
denial of the motion to admit amended complaint. Pertinent
provisions of Rule 10 of the Rules of Court provide as follows:
Sec. 2. Amendments as a matter of right. − A party may amend his
pleadings once as a matter of right at any time before a responsive
pleading is served x x x.
Sec. 3. Amendments by leave of court. − Except as provided in the
next preceding section, substantial amendments may be made only
upon leave of court. But such leave may be refused if it appears to
the court that the motion was made with intent to delay. x x x
It should be noted that respondents Lilian S. Soriano and the Estate
of Leandro A. Soriano, Jr. already filed their Answer, to petitioners'
complaint, and the claims being asserted were made against said
parties. A responsive pleading having been filed, amendments to
the complaint may, therefore, be made only by leave of court and
no longer as a matter of right. However, in Tiu v. Philippine Bank of
Communications,4 the Court discussed this rule at length, to wit:
x x x [A]fter petitioners have filed their answer, Section 3, Rule 10
of the Rules of Court specifically allows amendment by leave of
court. The said Section states:
SECTION 3. Amendments by leave of court. - Except as provided in
the next preceding section, substantial amendments may be made
only upon leave of court. But such leave may be refused if it appears
to the court that the motion was made with intent to delay. Orders
of the court upon the matters provided in this section shall be made
53
upon motion filed in court, and after notice to the adverse party,
and an opportunity to be heard.
This Court has emphasized the import of Section 3, Rule 10 of the
1997 Rules of Civil Procedure in Valenzuela v. Court of Appeals,
thus:
Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure
amended the former rule in such manner that the phrase "or that
the cause of action or defense is substantially altered" was stricken-
off and not retained in the new rules. The clear import of such
amendment in Section 3, Rule 10 is that under the new rules, "the
amendment may (now) substantially alter the cause of action or
defense." This should only be true, however, when despite a
substantial change or alteration in the cause of action or defense,
the amendments sought to be made shall serve the higher interests
of substantial justice, and prevent delay and equally promote the
laudable objective of the rules which is to secure a "just, speedy and
inexpensive disposition of every action and proceeding."
The granting of leave to file amended pleading is a matter
particularly addressed to the sound discretion of the trial court; and
that discretion is broad, subject only to the limitations that the
amendments should not substantially change the cause of action or
alter the theory of the case, or that it was not made to delay the
action. Nevertheless, as enunciated in Valenzuela, even if the
amendment substantially alters the cause of action or defense, such
amendment could still be allowed when it is sought to serve the
higher interest of substantial justice, prevent delay, and secure a
just, speedy and inexpensive disposition of actions and proceedings.
The courts should be liberal in allowing amendments to
pleadings to avoid a multiplicity of suits and in order that the
real controversies between the parties are presented, their
rights determined, and the case decided on the merits
without unnecessary delay. This liberality is greatest in the
early stages of a lawsuit, especially in this case where the
amendment was made before the trial of the case, thereby
giving the petitioners all the time allowed by law to answer
and to prepare for trial.1âwphi1
Furthermore, amendments to pleadings are generally favored and
should be liberally allowed in furtherance of justice in order that
every case, may so far as possible, be determined on its real facts
and in order to speed up the trial of the case or prevent the circuitry
of action and unnecessary expense. That is, unless there are
circumstances such as inexcusable delay or the taking of the
adverse party by surprise or the like, which might justify a refusal
of permission to amend.5
Since, as explained above, amendments are generally favored, it
would have been more fitting for the trial court to extend such
liberality towards petitioners by admitting the amended complaint
which was filed before the order dismissing the original complaint
became final and executory. It is quite apparent that since trial
proper had not yet even begun, allowing the amendment would not
have caused any delay. Moreover, doing
so would have served the higher interest of justice as this would
provide the best opportunity for the issues among all parties to be
thoroughly threshed out and the rights of all parties finally
determined. Hence, the Court overrules the trial court's denial of the
motion to admit the amended complaint, and orders the admission
of the same.
With the amendment stating "that plaintiff Lolita A. Soriano likewise
made demands upon the Board of Directors of Lisam Enterprises,
Inc., to make legal steps to protect the interest of the corporation
from said fraudulent transaction, but unfortunately, until now, no
such legal step was ever taken by the Board, hence, this action for
the benefit and in behalf of the corporation," does the amended
complaint now sufficiently state a cause of action? In Hi-Yield Realty,
Incorporated v. Court of Appeals,6 the Court enumerated the
requisites for filing a derivative suit, as follows:
a) the party bringing the suit should be a shareholder as of
the time of the act or transaction complained of, the number
of his shares not being material;
b) he has tried to exhaust intra-corporate remedies, i.e.,
has made a demand on the board of directors for the
54
 appropriate relief but the latter has failed or refused to heed
his plea; and
c) the cause of action actually devolves on the corporation,
the wrongdoing or harm having been, or being caused to
the corporation and not to the particular stockholder
bringing the suit.7
A reading of the amended complaint will reveal that all the foregoing
requisites had been alleged therein. Hence, the amended complaint
remedied the defect in the original complaint and now sufficiently
states a cause of action.
Respondent PCIB should not complain that admitting the amended
complaint after they pointed out a defect in the original complaint
would be unfair to them. They should have been well aware that due
to the changes made by the 1997 Rules of Civil Procedure,
amendments may now substantially alter the cause of action or
defense. It should not have been a surprise to them that petitioners
would redress the defect in the original complaint by substantially
amending the same, which course of action is now allowed under
the new rules.
The next question then is, upon admission of the amended
complaint, would it still be proper for the trial court to dismiss the
complaint? The Court answers in the negative.
Saura v. Saura, Jr.8 is closely analogous to the present case.
In Saura,9 the petitioners therein, stockholders of a corporation, sold
a disputed real property owned by the corporation, despite the
existence of a case in the Securities and Exchange Commission
(SEC) between stockholders for annulment of subscription, recovery
of corporate assets and funds, etc. The sale was done without the
knowledge of the other stockholders, thus, said stockholders filed a
separate case for annulment of sale, declaration of nullity of deed
of exchange, recovery of possession, etc., against the stockholders
who took part in the sale, and the buyer of the property, filing said
case with the regular court (RTC). Petitioners therein also filed a
motion to dismiss the complaint for annulment of sale filed with the
RTC, on the ground of forum shopping, lack of jurisdiction, lack of
cause of action, and litis pendentia among others. The Court held
that the complaint for annulment of sale was properly filed with the
regular court, because the buyer of the property had no intra-
corporate relationship with the stockholders, hence, the buyer could
not be joined as party-defendant in the SEC case. To include said
buyer as a party-defendant in the case pending with the SEC would
violate the then existing rule on jurisdiction over intra-corporate
disputes. The Court also struck down the argument that there was
forum shopping, ruling that the issue of recovery of corporate assets
and funds pending with the SEC is a totally different issue from the
issue of the validity of the sale, so a decision in the SEC case would
not amount to res judicata in the case before the regular court.
Thus, the Court merely ordered the suspension of the proceedings
before the RTC until the final outcome of the SEC case.
The foregoing pronouncements of the Court are exactly in point with
the issues in the present case.1âwphi1 Here, the complaint is for
annulment of mortgage with the mortgagee bank as one of the
defendants, thus, as held in Saura,10 jurisdiction over said complaint
is lodged with the regular courts because the mortgagee bank has
no intra-corporate relationship with the stockholders. There can also
be no forum shopping, because there is no identity of issues. The
issue being threshed out in the SEC case is the due execution,
authenticity or validity of board resolutions and other documents
used to facilitate the execution of the mortgage, while the issue in
the case filed by petitioners with the RTC is the validity of the
mortgage itself executed between the bank and the corporation,
purportedly represented by the spouses Leandro and Lilian Soriano,
the President and Treasurer of petitioner LEI, respectively. Thus,
there is no reason to dismiss the complaint in this case.
IN VIEW OF THE FOREGOING, the Resolution of the Regional Trial
Court of Legaspi City, Branch 4, dated November 11, 1999,
dismissing petitioners’ complaint in Civil Case No. 9729, and its
Order dated May 15, 2000, denying herein petitioners’ Motion for
Reconsideration and Motion to Admit Amended Complaint, are
hereby REVERSED and SET ASIDE. The Regional Trial Court of
Legaspi City, Branch 4, is hereby DIRECTED to ADMIT the
Amended Complaint.
Considering further, that this case has been pending for some time
and, under R.A. No. 8799, it is now the regular courts which have
55
jurisdiction over intra-corporate disputes, the Regional Trial Court After trial, the RTC, Branch 256, rendered a Decision6 dated August
of Legaspi City, Branch 4 is hereby DIRECTED to PROCEED with 30, 1999, the dispositive portion of which reads:
dispatch in trying Civil Case No. 9729.
WHEREFORE, premises considered, this court resolves:
SO ORDERED.
1. To uphold and sustain the validity of TCT Nos. 186011, 186012,
G.R. No. 179638 July 8, 2013 and 186013;

HEIRS OF NUMERIANO MIRANDA, SR., namely: CIRILA
(deceased), CORNELIO, NUMERIANO, JR., ERLINDA, LOLITA,
RUFINA, DANILO, ALEJANDRO, FELIMON, TERESITA,
ELIZABETH and ANALIZA, all surnamed MIRANDA, Petitioners,
vs.
PABLO R. MIRANDA, Respondent.
2. Ordering Pablo Miranda to indemnify all other heirs of
NUMERIANO MIRANDA the amount equivalent to 12/13 fair market
value of the co-owned residential house, erected on the lot 826-A-
3 covered by TCT No. 186013 corresponding to their shares, and for
the said heirs to divide among themselves the aforesaid amount as
follows:

DECISION 1/13 to CIRILA MIRANDA

DEL CASTILLO, J.: 1/13 to CORNELIO MIRANDA

An action for revival of a judgment cannot modify, alter, or reverse 1/13 to NUMERIANO MIRANDA, JR.
the original judgment, which is already final and executory.1
1/13 to ERLINDA MIRANDA
This Petition for Review on Certiorari2 under Rule 45 of the Rules of
Court assails the Decision3 dated June 14, 2007 and the 1/13 to LOLITA MIRANDA
Resolution4 dated September 11, 2007 of the Court of Appeals (CA)
in CA-G.R. SP No. 97350.
1/13 to RUFINA MIRANDA

Factual Antecedents
1/13 to DANILO MIRANDA

In 1994, petitioners Cirila, Cornelio, Numeriano, Jr., Erlinda, Lolita,

1/13 to ALEJANDRO MIRANDA
Rufina, Danilo, Alejandro, Felimon, Teresita, Elizabeth, and Analiza,
all surnamed Miranda, representing themselves as the heirs of
Numeriano Miranda, Sr., filed before the Regional Trial Court (RTC) 1/13 to FELIMON MIRANDA
of Muntinlupa City, a Complaint5 for Annulment of Titles and Specific
Performance, docketed as Civil Case No. 94-612, against the heirs 1/13 to TERESITA MIRANDA
of Pedro Miranda, namely: Pacita and Oscar Miranda; the heir of
Tranquilino Miranda, Rogelio Miranda; and the spouses respondent 1/13 to ELIZABETH MIRANDA
Pablo Miranda and Aida Lorenzo.

1/13 to ANALIZA MIRANDA

56
3. Ordering Plaintiffs Lolita Miranda, Alejandro Miranda, Teresita
Miranda, Rufina Miranda and all persons claiming rights under them
to immediately vacate the abovementioned residential house and to
jointly and severally pay to the spouses Pablo and Aida Miranda a
monthly rental of ₱2,000.00 from the date of notice of the
promulgation of this judgment up to the time that they have actually
vacated the property;
4. Proclaiming that ROGELIO MIRANDA is not the biological son or
child by nature of TRANQUILINO MIRANDA, and therefore is not
entitled to inherit from the latter;
5. Declaring CORNELIO MIRANDA, NUMERIANO MIRANDA, JR.,
ERLINDA MIRANDA, LOLITA MIRANDA, RUFINA MIRANDA,
DANIL[O] MIRANDA, ALEJANDRO MIRANDA, FELIMON MIRANDA,
TERESITA MIRANDA, ELIZABETH MIRANDA, ANALIZA MIRANDA,
PABLO MIRANDA and PACITA MIRANDA as the lawful legal heirs of
the deceased TRANQUILINO MIRANDA and ordering them to
partition among themselves Lot 826-A-1 covered by TCT No.
186011 registered in the name of TRANQUILINO MIRANDA,
containing an area of 213 square meters, as follows:
1/13 aliquot share to Cornelio Miranda
1/13 aliquot share to Numeriano Miranda, Jr.
1/13 aliquot share to Erlinda Miranda
1/13 aliquot share to Lolita Miranda
1/13 aliquot share to Rufina Miranda
1/13 aliquot share to Danilo Miranda
1/13 aliquot share to Alejandro Miranda
1/13 aliquot share to Felimon Miranda
1/13 aliquot share to Teresita Miranda
1/13 aliquot share to Elizabeth Miranda
1/13 aliquot share to Analiza Miranda
1/13 aliquot share to Pablo Miranda
1/13 aliquot share to Pacita Miranda
6. Ordering all the abovenamed heirs to commission the survey of
Lot 826-A-1 or to authorize in writing, one of them to commission
such survey, in order to avoid a chaotic situation similar to the case
at bar. Should they not agree as to what particular portion shall
belong to one another, they may agree that it be allotted to one or
two or several of them, who shall indemnify the others at a price
agreed upon by all of them. Should they not agree as to whom shall
the property be allotted, to sell the property to a third person at a
price agreed upon by a majority of all of them, and to partition the
proceeds of the sale in accordance with No. 5 above.
SO ORDERED.7
Petitioners did not file any appeal hence the Decision became final
and executory.8
On December 11, 2001, the RTC issued a Writ of Execution, 9 which
was not implemented.10
On July 8, 2005, respondent filed an Ex-parte Motion11 praying that
the RTC issue a "Break-Open and Demolition Order" in order to
compel the petitioners to vacate his property.12 But since more than
five years have elapsed from the time the Writ of Execution should
have been enforced, the RTC denied the Motion in its Order13 dated
August 16, 2005.
This prompted respondent to file with the RTC a Petition14 for Revival
of Judgment, which was docketed as Civil Case No. 05-131.
Petitioners opposed the revival of judgment assailing, among
others, the jurisdiction of the RTC to take cognizance of the Petition
for Revival of Judgment.15
57
On June 20, 2006, the RTC rendered a Decision16 granting the SO ORDERED.27
Petition. Thus:
Petitioners moved for reconsideration but the same was denied by
WHEREFORE, finding the instant petition to be meritorious, the the CA in its Resolution28 dated September 11, 2007.
petition is hereby GRANTED. Pursuant to Rule 39, Section 6 of the
Rules of Court, the Decision dated August 30, 1999 in Civil Case No. Issues
94-612 is hereby REVIVED.
Hence, this recourse, with petitioners raising the following issues:
SO ORDERED.17
1. WHETHER X X X THE APPEAL WAS PERFECTED ON TIME?
On July 13, 2006, petitioners filed a Notice of Appeal 18 via
LBC,19 which was opposed by respondent on the ground that the
2. WHETHER X X X THE LATE (ONE DAY) FILING WAS
Decision dated August 30, 1999 has long become final and
JUSTIFIED?
executory.20 Petitioners, in turn, moved for the transmittal of the
original records of the case to the CA, insisting that respondent’s
opposition is without merit.21 3. WHETHER X X X AN ACTION FOR REVIVAL OF JUDGMENT
IS APPEALABLE?
Ruling of the Regional Trial Court
4. WHETHER THE APPEAL IS MERITORIOUS?
Finding the appeal barred by prescription, the RTC denied the Notice
of Appeal in its Order22 dated October 10, 2006, to wit: a. Whether the RTC below has exclusive original
jurisdiction over an action for revival of judgment?
WHEREFORE, in view of the foregoing, the notice of appeal herein
filed is hereby DENIED for lack of merit. b. Whether xxx respondent herein, plaintiff therein,
as one of the judgment creditors can file the said
action for revival ALONE?
SO ORDERED.23

c. Whether subsequent events or laws have

Feeling aggrieved, petitioners filed a Petition for Mandamus24 with
rendered the judgment sought to be revived
the CA praying that their Notice of Appeal be given due course.25
modified or altered, or prevent its enforcement?

Ruling of the Court of Appeals

d. Whether res judicata or laches has seeped in,
other judgment creditors not suing for any such
On June 14, 2007, the CA denied the Petition for Mandamus on the implementation of the 1999 judgment, ONLY
ground that the Notice of Appeal was filed out of time.26 The PLAINTIFF ALONE?
dispositive portion of the Decision reads:
e. Whether x x x the Petitioners are entitled to
WHEREFORE, premises considered, the petition is DENIED. The damages?29
appeal is hereby DISMISSED for having been filed out of time.
Petitioners’ Arguments

58
Petitioners assert that an action to revive judgment is
appealable,30 and that their appeal was perfected on time.31 They
insist that the Notice of Appeal, which they filed on the 15th day via
LBC, was seasonably filed since the law does not require a specific
mode of service for filing a notice of appeal.32
Besides, even if their appeal was belatedly filed, it should still be
given due course in the interest of justice,33 considering that their
counsel had to brave the storm and the floods caused by typhoon
"Florita" just to file their Notice of Appeal on time.34
Petitioners further contend that their appeal is meritorious.35 They
insist that it is the Metropolitan Trial Court (MeTC), not the RTC,
which has jurisdiction over the Petition for Revival of Judgment since
the amount in the tax declarations of the properties involved is less
than Fifty Thousand Pesos (₱50,000.00).36 They likewise assail the
Decision dated August 30, 1999, claiming that the deeds and
certificates of title subject of Civil Case No. 94-612 were falsified.37
Respondent’s Arguments
Respondent, on the other hand, maintains that the Notice of Appeal
was belatedly filed,38 and that the revival of judgment is
unappealable as it is barred by prescription.39
Our Ruling
The Petition lacks merit.
The Notice of Appeal was belatedly filed.
It is basic and elementary that a Notice of Appeal should be filed
"within fifteen (15) days from notice of the judgment or final order
appealed from."40
Under Section 3,41 Rule 13 of the Rules of Court, pleadings may be
filed in court either personally or by registered mail. In the first case,
the date of filing is the date of receipt. In the second case, the date
of mailing is the date of receipt.
In this case, however, the counsel for petitioners filed the Notice of
Appeal via a private courier, a mode of filing not provided in the
Rules. Though not prohibited by the Rules, we cannot consider the
filing of petitioners’ Notice of Appeal via LBC timely filed. It is
established jurisprudence that "the date of delivery of pleadings to
a private letter-forwarding agency is not to be considered as the
date of filing thereof in court;" instead, "the date of actual receipt
by the court x x x is deemed the date of filing of that
pleading."42 Records show that the Notice of Appeal was mailed on
the 15th day and was received by the court on the 16th day or one
day beyond the reglementary period. Thus, the CA correctly ruled
that the Notice of Appeal was filed out of time.
Neither can petitioners use typhoon "Florita" as an excuse for the
belated filing of the Notice of Appeal because work in government
offices in Metro Manila was not suspended on July 13, 2006, the day
petitioners’ Notice of Appeal was mailed via LBC.43
And even if we, in the interest of justice, give due course to the
appeal despite its late filing, the result would still be the same. The
appeal would still be denied for lack of merit.
The Decision dated August 30, 1999 is already final and executory.
An action for revival of judgment is a new and independent
action.44 It is different and distinct from the original judgment
sought to be revived or enforced.45 As such, a party aggrieved by a
decision of a court in an action for revival of judgment may appeal
the decision, but only insofar as the merits of the action for revival
is concerned. The original judgment, which is already final and
executory, may no longer be reversed, altered, or modified.46
In this case, petitioners assail the Decision dated August 30, 1999,
which is the original judgment sought to be revived or enforced by
respondent.1âwphi1 Considering that the said Decision had already
attained finality, petitioners may no longer question its correctness.
As we have said, only the merits of the action for revival may be
appealed, not the merits of the original judgment sought to be
revived or enforced.
RTC has jurisdiction over the Petition for Revival of Judgment
59
As to whether the RTC has jurisdiction, we rule in the affirmative.
An action for revival of judgment may be filed either "in the same
court where said judgment was rendered or in the place where the
plaintiff or defendant resides, or in any other place designated by
the statutes which treat of the venue of actions in general." 47 In this
case, respondent filed the Petition for Revival of Judgment in the
same court which rendered the Decision dated August 30, 1999.
All told, we find no error on the part of the CA in denying the Petition
and dismissing the appeal for having been filed out of time.
WHEREFORE, the Petition is hereby DENIED. The Decision dated
June 14, 2007 and the Resolution dated September 11, 2007 of the
Court of Appeals in CA-G.R. SP No. 97350 are hereby AFFIRMED.
SO ORDERED.
SUMMONS
G.R. No. 108538 January 22, 1996
LOURDES A. VALMONTE and ALFREDO D.
VALMONTE, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, THIRD DIVISION and
ROSITA DIMALANTA, respondents.
DECISION
MENDOZA, J.:
Petitioner Lourdes A. Valmonte is a foreign resident. The question is
whether in an action for partition filed against her and her husband,
who is also her attorney, summons intended for her may be served
on her husband, who has a law office in the Philippines. The Regional
Trial Court of Manila, Branch 48, said no and refused to declare
Lourdes A. Valmonte in default, but the Court of Appeals said yes.
Hence this petition for review on certiorari.
The facts of the case are as follows:
Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are
husband and wife. They are both residents of 90222 Carkeek Drive
South Seattle, Washington, U.S.A. Petitioner Alfredo D. Valmonte,
who is a member of the Philippine bar, however, practices his
profession in the Philippines, commuting for this purpose between
his residence in the state of Washington and Manila, where he holds
office at S-304 Gedisco Centre, 1564 A. Mabini Ermita, Manila.
On March 9, 1992, private respondent Rosita Dimalanta, who is the
sister of petitioner Lourdes A. Valmonte, filed a complaint for
partition of real property and accounting of rentals against
petitioners Lourdes A. Valmonte and Alfredo D. Valmonte before the
Regional Trial Court of Manila, Branch 48. The subject of the action
is a three-door apartment located in Paco, Manila.
In her Complaint, private respondent alleged:
The plaintiff is of legal age, a widow and is at present a
resident of 14823 Conway Road, Chesterfield, Missouri,
U.S.A., while the defendants are spouses, of legal age and
at present residents of 90222 Carkeek Drive, South Seattle,
Washington, U.S.A., but, for purposes of this complaint may
be served with summons at Gedisco Center, Unit 304, 1564
A. Mabini St., Ermita, Manila where defendant Alfredo D.
Valmonte as defendant Lourdes Arreola Valmonte's spouse
holds office and where he can be found.
Apparently, the foregoing averments were made on the basis of a
letter previously sent by petitioner Lourdes A. Valmonte to private
respondent's counsel in which, in regard to the partition of the
property in question, she referred private respondent's counsel to
her husband as the party to whom all communications intended for
her should be sent. The letter reads:
July 4, 1991
Dear Atty. Balgos:
60
 This is in response to your letter, dated 20 June 1991, which
I received on 3 July 1991. Please address all
communications to my lawyer, Atty. Alfredo D. Valmonte,
whose address, telephone and fax numbers appear below.
c/o Prime Marine
Gedisco Center, Unit 304
1564 A. Mabini, Ermita
Metro Manila
Telephone: 521-1736
Fax: 521-2095
Service of summons was then made upon petitioner Alfredo D.
Valmonte, who at the time, was at his office in Manila. Petitioner
Alfredo D. Valmonte accepted the summons, insofar as he was
concerned, but refused to accept the summons for his wife, Lourdes
A. Valmonte, on the ground that he was not authorized to accept
the process on her behalf. Accordingly the process server left
without leaving a copy of the summons and complaint for petitioner
Lourdes A. Valmonte.
Petitioner Alfredo D. Valmonte thereafter filed his Answer with
Counterclaim. Petitioner Lourdes A. Valmonte, however, did not file
her Answer. For this reason private respondent moved to declare
her in default. Petitioner Alfredo D. Valmonte entered a special
appearance in behalf of his wife and opposed the private
respondent's motion.
In its Order dated July 3, 1992, the trial court, denied private
respondent's motion to declare petitioner Lourdes A. Valmonte in
default. A motion for reconsideration was similarly denied on
September 23, 1992. Whereupon, private respondent filed a petition
for certiorari, prohibition and mandamus with the Court of Appeals.
On December 29, 1992, the Court of Appeals rendered a decision
granting the petition and declaring Lourdes A. Valmonte in default.
A copy of the appellate court's decision was received by petitioner
Alfredo D. Valmonte on January 15, 1993 at his Manila office and on
January 21, 1993 in Seattle, Washington. Hence, this petition.
The issue at bar is whether in light of the facts set forth above,
petitioner Lourdes A. Valmonte was validly served with summons.
In holding that she had been, the Court of Appeals stated:1
[I]n her above-quoted reply, Mrs. Valmonte clearly and
unequivocally directed the aforementioned counsel of Dimalanta to
address all communications (evidently referring to her controversy
with her sister Mrs. Dimalanta over the Paco property, now the
subject of the instant case) to her lawyer who happens also to be
her husband. Such directive was made without any qualification just
as was her choice/designation of her husband Atty. Valmonte as her
lawyer likewise made without any qualification or reservation. Any
disclaimer therefore on the part of Atty. Valmonte as to his being
his wife's attorney (at least with regard to the dispute vis-a-vis (sic)
the Paco property) would appear to be feeble or trifling, if not
incredible.
This view is bolstered by Atty. Valmonte's subsequent alleged
special appearance made on behalf of his wife. Whereas Mrs.
Valmonte had manifestly authorized her husband to serve as her
lawyer relative to her dispute with her sister over the Paco property
and to receive all communications regarding the same and
subsequently to appear on her behalf by way of a so-called special
appearance, she would nonetheless now insist that the same
husband would nonetheless had absolutely no authority to receive
summons on her behalf. In effect, she is asserting that
representation by her lawyer (who is also her husband) as far as the
Paco property controversy is concerned, should only be made by
him when such representation would be favorable to her but not
otherwise. It would obviously be inequitable for this Court to allow
private respondent Lourdes A. Valmonte to hold that her husband
has the authority to represent her when an advantage is to be
obtained by her and to deny such authority when it would turn out
to be her disadvantage. If this be allowed, Our Rules of Court,
instead of being an instrument to promote justice would be made
use of to thwart or frustrate the same.
xxx xxx xxx
Turning to another point, it would not do for Us to overlook
the fact that the disputed summons was served not upon
61
 just an ordinary lawyer of private respondent Lourdes A.
Valmonte, but upon her lawyer husband. But that is not all,
the same lawyer/husband happens to be also her co-
defendant in the instant case which involves real property
which, according to her lawyer/husband/co-defendant,
belongs to the conjugal partnership of the defendants (the
spouses Valmonte). It is highly inconceivable and certainly
it would be contrary to human nature for the
lawyer/husband/co-defendant to keep to himself the fact
that they (the spouses Valmonte) had been sued with
regard to a property which, he claims to be conjugal.
Parenthetically, there is nothing in the records of the case
before Us regarding any manifestation by private
respondent Lourdes A. Valmonte about her lack of
knowledge about the case instituted against her and her
lawyer/husband/co-defendant by her sister Rosita. . . .
PREMISES CONSIDERED, the instant petition for certiorari,
prohibition and mandamus is given due course. This Court
hereby Resolves to nullify the orders of the court a
quo dated July 3, 1992 and September 23, 1992 and further
declares private respondent Lourdes Arreola Valmonte as
having been properly served with summons.
Petitioners assail the aforequoted decision, alleging that the Court
of Appeals erred (1) in refusing to apply the provisions of Rule 14,
§17 of the Revised Rules of Court and applying instead Rule 14, §8
when the fact is that petitioner Lourdes A. Valmonte is a nonresident
defendant; and (2) because even if Rule 14, §8 is the applicable
provision, there was no valid substituted service as there was no
strict compliance with the requirement by leaving a copy of the
summons and complaint with petitioner Alfredo D. Valmonte. Private
respondent, upon the other hand, asserts that petitioners are
invoking a technicality and that strict adherence to the rules would
only result in a useless ceremony.
We hold that there was no valid service of process on Lourdes A.
Valmonte.
To provide perspective, it will be helpful to determine first the nature
of the action filed against petitioners Lourdes A. Valmonte and
Alfredo D. Valmonte by private respondent, whether it is an action in
personam, in rem or quasi in rem. This is because the rules on
service of summons embodied in Rule 14 apply according to whether
an action is one or the other of these actions.
In an action in personam, personal service of summons or, if this is
not possible and he cannot be personally served, substituted
service, as provided in Rule 14, §§7-82 is essential for the acquisition
by the court of jurisdiction over the person of a defendant who does
not voluntarily submit himself to the authority of the court.3 If
defendant cannot be served with summons because he is
temporarily abroad, but otherwise he is a Philippine resident, service
of summons may, by leave of court, be made by
publication.4 Otherwise stated, a resident defendant in an action in
personam, who cannot be personally served with summons, may be
summoned either by means of substituted service in accordance
with Rule 14, §8 or by publication as provided in §§ 17 and 18 of
the same Rule.5
In all of these cases, it should be noted, defendant must be a
resident of the Philippines, otherwise an action in personam cannot
be brought because jurisdiction over his person is essential to make
a binding decision.
On the other hand, if the action is in rem or quasi in rem, jurisdiction
over the person of the defendant is not essential for giving the court
jurisdiction so long as the court acquires jurisdiction over the res. If
the defendant is a nonresident and he is not found in the country,
summons may be served exterritorially in accordance with Rule 14,
§17, which provides:
§17. Extraterritorial service. - When the defendant does not
reside and is not found in the Philippines and the action
affects the personal status of the plaintiff or relates to, or
the subject of which is, property within the Philippines, in
which the defendant has or claims a lien or interest, actual
or contingent, or in which the relief demanded consists,
wholly or in part, in excluding the defendant from any
interest therein, or the property of the defendant has been
attached within the Philippines, service may, by leave of
court, be effected out of the Philippines by personal service
62
 as under section 7; or by publication in a newspaper of
general circulation in such places and for such time as the
court may order, in which case a copy of the summons and
order of the court shall be sent by registered mail to the last
known address of the defendant, or in any other manner the
court may deem sufficient. Any order granting such leave
shall specify a reasonable time, which shall not be less than
sixty (60) days after notice, within which the defendant
must answer..
In such cases, what gives the court jurisdiction in an action in
rem or quasi in rem is that it has jurisdiction over the res, i.e. the
personal status of the plaintiff who is domiciled in the Philippines or
the property litigated or attached.
Service of summons in the manner provided in §17 is not for the
purpose of vesting it with jurisdiction but for complying with the
requirements of fair play or due process, so that he 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.6
Applying the foregoing rules to the case at bar, private respondent's
action, which is for partition and accounting under Rule 69, is in the
nature of an action quasi in rem. Such an action is essentially for
the purpose of affecting the defendant's interest in a specific
property and not to render a judgment against him. As explained in
the leading case of Banco Español Filipino v. Palanca :7
[An action quasi in rem is] an action which while not strictly
speaking an action in rem partakes of that nature and is
substantially such. . . . The action quasi in rem differs from the true
action in rem in the circumstance that in the former an individual is
named as defendant and the purpose of the proceeding is to subject
his interest therein to the obligation or lien burdening the property.
All proceedings having for their sole object the sale or other
disposition of the property of the defendant, whether by
attachment, foreclosure, or other form of remedy, are in a general
way thus designated. The judgment entered in these proceedings is
conclusive only between the parties.
As petitioner Lourdes A. Valmonte is a nonresident who is not found
in the Philippines, service of summons on her must be in accordance
with Rule 14, §17. Such service, to be effective outside the
Philippines, must be made either (1) by personal service; (2) 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 should be sent by registered mail
to the last known address of the defendant; or (3) in any other
manner which the court may deem sufficient.
Since in the case at bar, the service of summons upon petitioner
Lourdes A. Valmonte was not done by means of any of the first two
modes, the question is whether the service on her attorney,
petitioner Alfredo D. Valmonte, can be justified under the third
mode, namely, "in any . . . manner the court may deem sufficient."
We hold it cannot. This mode of service, like the first two, must be
made outside the Philippines, such as through the Philippine
Embassy in the foreign country where the defendant
resides.8 Moreover, there are several reasons why the service of
summons on Atty. Alfredo D. Valmonte cannot be considered a valid
service of summons on petitioner Lourdes A. Valmonte. In the first
place, service of summons on petitioner Alfredo D. Valmonte was
not made upon the order of the court as required by Rule 14, §17
and certainly was not a mode deemed sufficient by the court which
in fact refused to consider the service to be valid and on that basis
declare petitioner Lourdes A. Valmonte in default for her failure to
file an answer.
In the second place, service in the attempted manner on petitioner
was not made upon prior leave of the trial court as required also in
Rule 14, §17. As provided in §19, such leave must be applied for by
motion in writing, supported by affidavit of the plaintiff or some
person on his behalf and setting forth the grounds for the
application.
Finally, and most importantly, because there was no order granting
such leave, petitioner Lourdes A. Valmonte was not given ample
time to file her Answer which, according to the rules, shall be not
less than sixty (60) days after notice. It must be noted that the
period to file an Answer in an action against a resident defendant
63
differs from the period given in an action filed against a nonresident
defendant who is not found in the Philippines. In the former, the
period is fifteen (15) days from service of summons, while in the
latter, it is at least sixty (60) days from notice.
Strict compliance with these requirements alone can assure
observance of due process. That is why in one case,9 although the
Court considered publication in the Philippines of the summons
(against the contention that it should be made in the foreign state
where defendant was residing) sufficient, nonetheless the service
was considered insufficient because no copy of the summons was
sent to the last known correct address in the Philippines..
Private respondent cites the ruling in De Leon v. Hontanosas, 67
SCRA 458,462-463 (1975), in which it was held that service of
summons upon the defendant's husband was binding on her. But
the ruling in that case is justified because summons were served
upon defendant's husband in their conjugal home in Cebu City and
the wife was only temporarily absent, having gone to Dumaguete
City for a vacation. The action was for collection of a sum of money.
In accordance with Rule 14, §8, substituted service could be made
on any person of sufficient discretion in the dwelling place of the
defendant, and certainly defendant's husband, who was there, was
competent to receive the summons on her behalf. In any event, it
appears that defendant in that case submitted to the jurisdiction of
the court by instructing her husband to move for the dissolution of
the writ of attachment issued in that case.
On the other hand, in the case of Gemperle v. Schenker, 10 it was
held that service on the wife of a nonresident defendant was found
sufficient because the defendant had appointed his wife as his
attorney-in-fact. It was held that although defendant Paul Schenker
was a Swiss citizen and resident of Switzerland, service of summons
upon his wife Helen Schenker who was in the Philippines was
sufficient because she was her husband's representative and
attorney-in-fact in a civil case, which he had earlier filed against
William Gemperle. In fact Gemperle's action was for damages
arising from allegedly derogatory statements contained in the
complaint filed in the first case. As this Court said, "[i]n other words,
Mrs. Schenker had authority to sue, and had actually sued, on behalf
of her husband, so that she was, also, empowered to represent him
in suits filed against him, particularly in a case, like the one at bar,
which is a consequence of the action brought by her on his
behalf" 11 Indeed, if instead of filing an independent action Gemperle
filed a counterclaim in the action brought by Mr. Schenker against
him, there would have been no doubt that the trial court could have
acquired jurisdiction over Mr. Schenker through his agent and
attorney-in-fact, Mrs. Schenker.
In contrast, in the case at bar, petitioner Lourdes A. Valmonte did
not appoint her husband as her attorney-in-fact. Although she wrote
private res- pondent's attorney that "all communications" intended
for her should be addressed to her husband who is also her lawyer
at the latter's address in Manila, no power of attorney to receive
summons for her can be inferred therefrom. In fact the letter was
written seven months before the filing of this case below, and it
appears that it was written in connection with the negotiations
between her and her sister, respondent Rosita Dimalanta,
concerning the partition of the property in question. As is usual in
negotiations of this kind, the exchange of correspondence was
carried on by counsel for the parties. But the authority given to
petitioner's husband in these negotiations certainly cannot be
construed as also including an authority to represent her in any
litigation.
For the foregoing reasons, we hold that there was no valid service
on petitioner Lourdes A. Valmonte in this case.
WHEREFORE, the decision appealed from is REVERSED and the
orders dated July 3, 1992 and September 23, 1992 of the Regional
Trial Court of Manila, Branch 48 are REINSTATED.
SO ORDERED.
[G.R. No. 131724. February 28, 2000.]
MILLENIUM INDUSTRIAL COMMERCIAL
CORPORATION, Petitioner, v. JACKSON TAN, Respondent.
DECISION
64
MENDOZA, J.:
In December 1994, Millennium Industrial Commercial Corporation,
petitioner herein, executed a Deed of Real Estate Mortgage 1 over
its real property covered by TCT No. 24069 in favor of respondent
Jackson Tan. The mortgage was executed to secure payment of
petitioner’s indebtedness to respondent in the amount of P2 million,
without monthly interest, but which, at maturity date on June 10,
1995, was payable in the amount of P 4 million.chanrobles.com :
chanrobles.com.ph
On November 9, 1995, respondent filed against petitioner a
complaint for foreclosure of mortgage in the Regional Trial Court,
Branch 6, Cebu City. On November 21, 1995, summons and a copy
of the complaint were served upon petitioner trough a certain
Lynverd Cinches, described in the Sheriff’s return, dated November
23, 1995, as "a Draftsman, a person of sufficient age and
(discretion) working therein, he is the highest ranking officer or
Officer-in-Charge of defendant’s Corporation, to receive processes
of the Court." 2 receive evidence. For the Court to validly decide the said plea of the
Petitioner moved for the dismissal of the complaint on the ground
that there was no valid service of summons upon it, as a result of
which the trial court did not acquire jurisdiction over it. Petitioner
invoked Rule 14, §13 of the 1964 Rules of Court and contended that
service on Lynverd Cinches, as alleged in the sheriff’s return, was
invalid as he is not one of the authorized persons on whom
summons may be served and that, in fact, he was not even its
employee.
Petitioner also sought the dismissal of the complaint against it on
the ground that it had satisfied its obligation to respondent when
the latter opted to be paid in shares of stock under the following
stipulation in the mortgage contract:chanrobles.com : law library
That in the remote possibility of failure on the part of the mortgagor
to pay the mortgage obligation and interest in cash, the
MORTGAGEE at his option may demand that payment be made in
the form of shares of stock of Millennium Industrial Commercial
Corporation totaling at least 4,000,000 shares.
Petitioner further prayed for "other reliefs just and equitable under
the premises." 5
On December 15,1995, the trial court denied petitioner’s Motion to
Dismiss. Its order stated:chanrob1es virtual 1aw library
This refers to the Motion to Dismiss, dated December 4, 1995, by
defendant anchored on the following grounds:chanrob1es virtual
1aw library
1. That the Court had not acquired jurisdiction over the person of
the defendant corporation because summons was served upon a
person who is not known to or an employee of the defendant
corporation.
2. That the obligation sought to be collected was already paid and
extinguished.
By interposing the second ground, the defendant has availed of an
affirmative defense on the basis of which the Court has to hear and
defendant. Thus, defendant is considered to have then abandoned
its first ground and is deemed to have voluntarily submitted itself to
the jurisdiction of the Court. It is a legal truism that voluntary
appearance cures the defect of the summons, if any. The
defendant’s filing of the motion to dismiss by pleading therein the
second ground amounts to voluntary appearance and it indeed
cured the defect.chanrobles.com : law library
3 Wherefore, Motion to Dismiss is hereby denied for lack of merit. 6
Petitioner moved for reconsideration, but its notion was denied by
the trial court in its order, dated January 16, 1996, for failure of
petitioner to raise any new ground. Petitioner then filed a petition
for certiorari in the Court of Appeals, assailing the aforesaid orders
of the trial court.
On September 18, 1997, the Court of Appeals dismissed the
petition. 7 The appellate court ruled that although petitioner denied
Lynverd Cinches’ authority to receive summons for it, its actual
4 receipt of the summons could be inferred from its filing of a motion
to dismiss, hence, the purpose for issuing summons had been
65
substantially achieved. Moreover, it was held, by including the
affirmative defense that it had already paid its obligation and
praying for other reliefs in its Motion to Dismiss, petitioner
voluntarily submitted to the jurisdiction of the court. 8
Hence, this petition for review. Petitioner raises the following
issues:chanrob1es virtual 1aw library
I. WHETHER OR NOT SERVICE OF SUMMONS UPON A MERE
DRAFTSMAN WHO IS NOT OF THOSE UPON WHOM SUMMONS MAY
BE SERVED IN CASE OF A DEFENDANT CORPORATION AS
MENTIONED IN THE RULES IS VALID.
II. WHETHER OR NOT THE INCLUSION OF ANOTHER AFFIRMATIVE
RELIEF IN A MOTION TO DISMISS ABANDONS AND WAIVES THE
GROUND OF LACK OF JURISDICTION OVER THE PERSON OF THE
DEFENDANT THEREIN ALSO PLEADED UNDER PREVAILING LAW
AND JURISPRUDENCE.chanrobles.com.ph:red
III. WHETHER OR NOT THERE IS A LEGAL GROUND TO GRANT
PETITIONER’S MOTION TO DISMISS THE COMPLAINT BELOW.
First. Petitioner objects to the application of the doctrine of
substantial compliance in the service of summons for two reasons:
(1) the enumeration of persons on whom service of summons on a
corporation may be effected in Rule 14, §13, is exclusive and
mandatory; and (2) even assuming that substantial compliance is
based on an unfounded speculation because there is nothing in the
records to show that Lynverd Cinches actually turned over the
summons to any of the officers of the corporation. 9 Petitioner
contends that it was able to file a motion to dismiss only because of
its timely discovery of the foreclosure suit against it when it checked
the records of the case in the trial court.
The contention is meritorious.
Summons is the means by which the defendant in a case is notified
of the existence of an action against him and, thereby, the court is
conferred jurisdiction over the person of the defendant. 10 If the
defendant is a corporation, Rule 14, §13 require that service of
summons be made upon the corporation’s president, manager,
secretary, cashier, agent, or any of its directors. 11 The rationale of
the rule is that service must be made on a representative so
integrated with the corporation sued as to make it a priori
presumable that he will realize his responsibilities and know what
he should do with any legal papers received by him. 12
Petitioner contends that the enumeration in Rule 14, §13 is
exclusive and that service of summons upon one who is not
enumerated therein is invalid. This is the general rule. 13 However,
it is settled that substantial compliance by serving summons on
persons other than those mentioned in the above rule may be
justified. In G & G Trading Corporation v. Court of Appeals, 14 we
ruled that although the service of summons was made on a person
not enumerated in Rule 14, §13, if it appears that the summons and
complaint were in fact received by the corporation, there is
substantial compliance with the rule as its purpose has been
attained.chanrobles.com : virtuallawlibrary
In Porac Trucking, Inc. v. Court of Appeals, 15 this Court
enumerated the requisites for the application of the doctrine of
substantial compliance, to wit: (a) there must be actual receipt of
the summons by the person served, i.e., transferring possession of
the copy of the summons from the sheriff to the person served;(b)
the person served must sign a receipt or the sheriff’s return; and
(c) there must be actual receipt of the summons by the corporation
through the person on whom the summons was actually served. 16
The third requisite is the most important for it is through such
receipt that the purpose of the rule on service of summons is
attained.
In this case, there is no dispute that the first and second requisites
were fulfilled. With respect to the third, the appellate court held that
petitioner’s filing of a motion to dismiss the foreclosure suit is proof
that it received the copy of the summons and the complaint. There
is, however, no direct proof of this or that Lynverd Cinches actually
turned over the summons to any of the officers of the corporation.
In contrast, in our cases applying the substantial compliance rule,
17 there was direct evidence, such as the admission of the
corporation’s officers, of receipt of summons by the corporation
through the person upon whom it was actually served. The question
is whether it is allowable to merely infer actual receipt of summons
by the corporation through the person on whom summons was
served. We hold that it can not be allowed, For there to be
66
substantial compliance, actual receipt of summons by the
corporation through the person served must be shown. Where a
corporation only learns of the service of summons and the filing of
the complaint against it through some person or means other than
the person actually served, the service of summons becomes
meaningless. This is particularly true in the present case where
there is serious doubt if Lynverd Cinches, the person on whom
service of summons was effected, is in fact an employee of the
corporation. Except for the sheriff’s return, there is nothing to show
that Lynverd Cinches was really a draftsman employed by the
corporation.chanroblesvirtuallawlibrary
Respondent casts doubt on petitioner’s claim that it came to know
about the summons and the complaint against it only after it learned
that there was a pending foreclosure of its mortgage. There is
nothing improbable about this claim. Petitioner was in default in the
payment of its loan. It had received demand letters
from Respondent. Thus, it had reason to believe that a foreclosure
suit would be filed against it. The appellate court was, therefore, in
error in giving weight to respondent’s claims. Receipt by petitioner
of the summons and complaint cannot be inferred from the fact that
it filed a Motion to Dismiss the case.chanrobles virtual lawlibrary
Second. We now turn to the issue of jurisdiction by estoppel. Both
the trial court and the Court of Appeals held that by raising the
affirmative defense of payment and by praying for other reliefs in
its Motion to Dismiss, petitioner in effect waived its objection to the
trial court’s jurisdiction over it. We think this is error.
Our decision in La Naval Drug Corporation v. Court of Appeals 18
settled this question. The rule prior to La Naval was that if a
defendant, in a motion to dismiss, alleges grounds for dismissing
the action other than lack of jurisdiction, he would be deemed to
have submitted himself to the jurisdiction of the court. 19 This rule
no longer holds true. Noting that the doctrine of estoppel by
jurisdiction must be unequivocal and intentional, we ruled in La
Naval:chanrobles virtual lawlibrary
Jurisdiction over the person must be seasonably raised, i.e., that it
is pleaded in a motion to dismiss or by way of an affirmative
defense. Voluntary appearance shall be deemed a waiver of this
defense. The assertion, however, of affirmative defenses shall not
be construed as an estoppel or as a waiver of such defense. 20
Third. Finally, we turn to the effect of petitioner’s prayer for "other
reliefs" in its Motion to Dismiss. In De Midgely v. Fernandos, 21 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. This, however, must be
deemed superseded by the ruling in La Naval 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 can properly ask from
the trial court is the dismissal of the complaint against it.chanrobles
virtual lawlibrary
WHEREFORE, the decision of the Court of Appeals is REVERSED and
the complaint against petitioner is DISMISSED.
[G.R. No. 136426. August 6, 1999.]
E.B. VILLAROSA & PARTNER CO., LTD., Petitioner, v. HON.
HERMINIO I. BENITO, in his capacity as Presiding Judge,
RTC, Branch 132, Makati City and IMPERIAL DEVELOPMENT
CORPORATION, Respondent.
DECISION
GONZAGA-REYES, J.:
Before this Court is a petition for certiorari and prohibition with
prayer for the issuance of a temporary restraining order and/or writ
of preliminary injunction seeking to annul and set aside the Orders
dated August 5, 1998 and November 20, 1998 of the public
respondent Judge Herminio I. Benito of the Regional Trial Court of
Makati City, Branch 132 and praying that the public respondent
court be ordered to desist from further proceeding with Civil Case
No. 98-824.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
67
Petitioner E.B. Villarosa & Partner Co., Ltd. is a limited partnership
with principal office address at 102 Juan Luna St., Davao City and
with branch offices at 2492 Bay View Drive, Tambo, Parañaque,
Metro Manila and Kolambog, Lapasan, Cagayan de Oro City.
Petitioner and private respondent executed a Deed of Sale with
Development Agreement wherein the former agreed to develop
certain parcels of land located at Barrio Carmen, Cagayan de Oro
belonging to the latter into a housing subdivision for the
construction of low cost housing units. They further agreed that in
case of litigation regarding any dispute arising therefrom, the venue
shall be in the proper courts of Makati.
On April 3, 1998, private respondent, as plaintiff, filed a Complaint
for Breach of Contract and Damages against petitioner, as
defendant, before the Regional Trial Court of Makati allegedly for
failure of the latter to comply with its contractual obligation in that,
other than a few unfinished low cost houses, there were no
substantial developments therein. 1 On August 5, 1998, the trial court issued an Order 7 denying
Summons, together with the complaint, were served upon the
defendant, through its Branch Manager Engr. Wendell Sabulbero at
the stated address at Kolambog, Lapasan, Cagayan de Oro City 2
but the Sheriff’s Return of Service 3 stated that the summons was
duly served "upon defendant E.B. Villarosa & Partner Co., Ltd. thru
its Branch Manager Engr. WENDELL SABULBERO on May 5, 1998 at
their new office Villa Gonzalo, Nazareth, Cagayan de Oro City, and
evidenced by the signature on the face of the original copy of the
summons."cralaw virtua1aw library
On June 9, 1998, defendant filed a Special Appearance with Motion
to Dismiss 4 alleging that on May 6, 1998, "summons intended for
defendant" was served upon Engr. Wendell Sabulbero, an employee
of defendant at its branch office at Cagayan de Oro City. Defendant
prayed for the dismissal of the complaint on the ground of improper
service of summons and for lack of jurisdiction over the person of
the defendant. Defendant contends that the trial court did not
acquire jurisdiction over its person since the summons was
improperly served upon its employee in its branch office at Cagayan
de Oro City who is not one of those persons named in Section 11,
Rule 14 of the 1997 Rules of Civil Procedure upon whom service of
summons may be made.
Meanwhile, on June 10, 1998, plaintiff filed a Motion to Declare
Defendant in Default 5 alleging that defendant has failed to file an
Answer despite its receipt allegedly on May 5, 1998 of the summons
and the complaint, as shown in the Sheriff’s Return.
On June 22, 1998, plaintiff filed an Opposition to Defendant’s Motion
to Dismiss 6 alleging that the records show that defendant, through
its branch manager, Engr. Wendell Sabulbero actually received the
summons and the complaint on May 8, 1998 as evidenced by the
signature appearing on the copy of the summons and not on May 5,
1998 as stated in the Sheriff’s Return nor on May 6, 1998 as stated
in the motion to dismiss; that defendant has transferred its office
from Kolambog, Lapasan, Cagayan de Oro to its new office address
at Villa Gonzalo, Nazareth, Cagayan de Oro; and that the purpose
of the rule is to bring home to the corporation notice of the filing of
the action.
defendant’s Motion to Dismiss as well as plaintiff’s Motion to Declare
Defendant in Default. Defendant was given ten (10) days within
which to file a responsive pleading. The trial court stated that since
the summons and copy of the complaint were in fact received by the
corporation through its branch manager Wendell Sabulbero, there
was substantial compliance with the rule on service of summons and
consequently, it validly acquired jurisdiction over the person of the
defendant.chanroblesvirtuallawlibrary
On August 19, 1998, defendant, by Special Appearance, filed a
Motion for Reconsideration 8 alleging that Section 11, Rule 14 of the
new Rules did not liberalize but, on the contrary, restricted the
service of summons on persons enumerated therein; and that the
new provision is very specific and clear in that the word "manager"
was changed to "general manager", "secretary" to "corporate
secretary", and excluding therefrom agent and director.
On August 27, 1998, plaintiff filed an Opposition to defendant’s
Motion for Reconsideration 9 alleging that defendant’s branch
manager "did bring home" to the defendant-corporation the notice
of the filing of the action and by virtue of which a motion to dismiss
was filed; and that it was one (1) month after receipt of the
summons and the complaint that defendant chose to file a motion
to dismiss.
68
 partnership. — If the defendant is a corporation organized under the
On September 4, 1998, defendant, by Special Appearance, filed a laws of the Philippines or a partnership duly registered, service may
Reply 10 contending that the changes in the new rules are be made on the president, manager, secretary, cashier, agent, or
substantial and not just general semantics. any of its directors." (Emphasis supplied).

Defendant’s Motion for Reconsideration was denied in the Order Petitioner contends that the enumeration of persons to whom
dated November 20, 1998. 11 summons may be served is "restricted, limited and exclusive"
following the rule on statutory construction expressio unios est
Hence, the present petition alleging that respondent court gravely exclusio alterius and argues that if the Rules of Court Revision
abused its discretion tantamount to lack or in excess of jurisdiction Committee intended to liberalize the rule on service of summons, it
in denying petitioner’s motions to dismiss and for reconsideration, could have easily done so by clear and concise language.
despite the fact that the trial court did not acquire jurisdiction over
the person of petitioner because the summons intended for it was We agree with petitioner.
improperly served. Petitioner invokes Section 11 of Rule 14 of the
1997 Rules of Civil Procedure. Earlier cases have uphold service of summons upon a construction
project manager 15; a corporation’s assistant manager 16; ordinary
Private respondent filed its Comment to the petition citing the cases clerk of a corporation 17; private secretary of corporate executives
of Kanlaon Construction Enterprises Co., Inc. v. NLRC 12 wherein it 18; retained counsel 19; officials who had charge or control of the
was held that service upon a construction project manager is valid operations of the corporation, like the assistant general manager
and in Gesulgon v. NLRC 13 which held that a corporation is bound 20; or the corporation’s Chief Finance and Administrative Officer 21
by the service of summons upon its assistant manager. . In these cases, these persons were considered as "agent" within
the contemplation of the old rule. 22 Notably, under the new Rules,
The only issue for resolution is whether or not the trial court service of summons upon an agent of the corporation is no longer
acquired jurisdiction over the person of petitioner upon service of authorized.chanrobles virtual lawlibrary
summons on its Branch Manager.
The cases cited by private respondent are therefore not in point. In
When the complaint was filed by Petitioner on April 3, 1998, the the Kanlaon case, this Court ruled that under the NLRC Rules of
1997 Rules of Civil Procedure was already in force. 14 Procedure, summons on the respondent shall be served personally
or by registered mail on the party himself; if the party is represented
Section 11, Rule 14 of the 1997 Rules of Civil Procedure provides by counsel or any other authorized representative or agent,
that:jgc:chanrobles.com.ph summons shall be served on such person. In said case, summons
was served on one Engr. Estacio who managed and supervised the
"When the defendant is a corporation, partnership or association construction project in Iligan City (although the principal address of
organized under the laws of the Philippines with a juridical the corporation is in Quezon City) and supervised the work of the
personality, service may be made on the president, managing employees. It was held that as manager, he had sufficient
partner, general manager, corporate secretary, treasurer, or in- responsibility and discretion to realize the importance of the legal
house counsel." (Emphasis supplied). papers served on him and to relay the same to the president or
other responsible officer of petitioner such that summons for
This provision revised the former Section 13, Rule 14 of the Rules petitioner was validly served on him as agent and authorized
of Court which provided that:jgc:chanrobles.com.ph representative of petitioner. Also in the Gesulgon case cited by
private respondent, the summons was received by the clerk in the
"SECTION 13. Service upon private domestic corporation or office of the Assistant Manager (at principal office address) and

69
under Section 13 of Rule 14 (old rule), summons may be made upon
the clerk who is regarded as agent within the contemplation of the
rule.
The designation of persons or officers who are authorized to accept
summons for a domestic corporation or partnership is now limited
and more clearly specified in Section 11, Rule 14 of the 1997 Rules
of Civil Procedure. The rule now states "general manager" instead
of only "manager" ; "corporate secretary" instead of "secretary" ;
and "treasurer" instead of "cashier." The phrase "agent, or any of
its directors" is conspicuously deleted in the new rule.
The particular revision under Section 11 of Rule 14 was explained
by retired Supreme Court Justice Florenz Regalado, thus: 23
". . . the then Sec. 13 of this Rule allowed service upon a defendant
corporation to ‘be made on the president, manager, secretary,
cashier, agent or any of its directors.’ The aforesaid terms were
obviously ambiguous and susceptible of broad and sometimes
illogical interpretations, especially the word ‘agent’ of the
corporation. The Filoil case, involving the litigation lawyer of the
corporation who precisely appeared to challenge the validity of
service of summons but whose very appearance for that purpose
was seized upon to validate the defective service is an illustration of
the need for this revised section with limited scope and specific
terminology. Thus the absurd result in the Filoil case necessitated
the amendment permitting service only on the in-house counsel of
the corporation who is in effect an employee of the corporation, as
distinguished from an independent practitioner." (Emphasis
supplied)
Retired Justice Oscar Herrera, who is also a consultant of the Rules
of Court Revision Committee, stated that" (T)he rule must be strictly
observed. Service must be made to one named in (the) statute . .
." 24
It should be noted that even prior to the effectivity of the 1997 Rules
of Civil Procedure, strict compliance with the rules has been
enjoined. In the case of Delta Motor Sales Corporation v. Mangosing,
25 the Court held:jgc:chanrobles.com.ph
"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. . .
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. In other words, ‘to bring
home to the corporation notice of the filing of the action.’ . . .
The liberal construction rule cannot be invoked and utilized as a
substitute for the plain legal requirements as to the manner in which
summons should be served on a domestic corporation. . ."
(Emphasis supplied).
Service of summons upon persons other than those mentioned in
Section 13 of Rule 14 (old rule) has been held as improper. 26 Even
under the old rule, service upon a general manager of a firm’s
branch office has been held as improper as summons should have
been served at the firm’s principal office. In First Integrated Bonding
& Ins. Co., Inc. v. Dizon, 27 it was held that the service of summons
on the general manager of the insurance firm’s Cebu branch was
improper; default order could have been obviated had the summons
been served at the firm’s principal office.
And in the case of Solar Team Entertainment, Inc. v. Hon. Helen
Bautista Ricafort, Et. Al. 28 the Court succinctly clarified that, for
the guidance of the Bench and Bar, "strictest" compliance with
Section 11 of Rule 13 of the 1997 Rules of Civil Procedure (on
Priorities in modes of service and filing) is mandated and the Court
cannot rule otherwise, lest we allow circumvention of the innovation
by the 1997 Rules in order to obviate delay in the administration of
justice.chanroblesvirtual|awlibrary
Accordingly, we rule that the service of summons upon the branch
manager of petitioner at its branch office at Cagayan de Oro, instead
of upon the general manager at its principal office at Davao City is
improper. Consequently, the trial court did not acquire jurisdiction
over the person of the petitioner.
The fact that defendant filed a belated motion to dismiss did not
70
operate to confer jurisdiction upon its person. There is no question
that the defendant’s voluntary appearance in the action is equivalent
to service of summons. 29 Before, the rule was that a party may
challenge the jurisdiction of the court over his person by making a
special appearance through a motion to dismiss and if in the same
motion, the movant raised other grounds or invoked affirmative
relief which necessarily involves the exercise of the jurisdiction of
the court, the party is deemed to have submitted himself to the
jurisdiction of the court. 30 This doctrine has been abandoned in the
case of La Naval Drug Corporation v. Court of Appeals, Et Al., 31
which became the basis of the adoption of a new provision in the
former Section 23, which is now Section 20 of Rule 14 of the 1997
Rules. Section 20 now provides that "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." The emplacement of this rule clearly underscores the
purpose to enforce strict enforcement of the rules on summons.
Accordingly, the filing of a motion to dismiss, whether or not
belatedly filed by the defendant, his authorized agent or attorney,
precisely objecting to the jurisdiction of the court over the person of
the defendant can by no means be deemed a submission to the
jurisdiction of the court. There being no proper service of summons,
the trial court cannot take cognizance of a case for lack of
jurisdiction over the person of the defendant. Any proceeding
undertaken by the trial court will consequently be null and void. 32
WHEREFORE, the petition is hereby GRANTED. The assailed Orders
of the public respondent trial court are ANNULLED and SET ASIDE.
The public respondent Regional Trial Court of Makati, Branch 132 is
declared without jurisdiction to take cognizance of Civil Case No. 98-
824, and all its orders and issuances in connection therewith are
hereby ANNULLED and SET ASIDE.
SO ORDERED.
G.R. No. 209518
MA. HAZELINA A. TUJAN-MILITANTE, Petitioner
vs.
ANA KARI CARMENCITA NUSTAD, as represented by ATTY.
MARGUERITE THERESE L. LUCILA, Respondent
DECISION
TIJAM, J.:
Petitioner Ma. Hazelina A. Tujan-Militante seeks to set aside and
reverse the: (1) Decision' dated February 27, 2013, which dismissed
petitioner's Petition for Certiorari under Rule 65; and (2)
Resolution2 dated October 2, 2013, which denied petitioner's Motion
for Reconsideration of the Court of Ap'peals3 (CA) in CA-G.R. SP No.
124811.
The Facts
On June 2, 2011, Respondent Ana Kari Carmencita Nustad (Nustad),
as represented by Atty. Marguerite Therese Lucila (Atty. Lucila),
filed a petition before the Regional Trial Court, Branch 55, Lucena
City (RTC) and prayed that Ma. Hazdina A. Tujan-Militante (Tujan-
'Militante) be orqered to surrender to the Register of Deeds of
Lucena City the owner's duplicate copy of the Transfer Certifi.cate
of Title Nos. T-435798, T-436799, T- 387158 and T-387159, which
'were all issued in Nustad's name. She averred that Tujan-Militante
has been withholding the said titles.
In its Order dated July 26, 2011, the RTC set the petition for a
hearing4
Instead of filing an Answer, Tujan-Militante filed an Omnibus Motion
to Dismiss and Annul Proceedings5 dated September 2, 2011. She
averred that the RTC did not acquire jurisdiction over her person as
she was not able to receive summons. Moreover, she argued that
the Order appeared to be a decision on the merits, as it already
ruled with certainty that she is in possession of the subject titles.
The Ruling of the RTC
In an Order dated November 23, 2011, the RTC6 denied
TujanMilitante' s Motion and ruled that it has jurisdiction over the
case. Further the RTC stated.that it has not yet decided on the
merits of the case when it ordered Tujan-Militante to surrender TCT
71
Nos. T-435798, T-436799, T- 387.158 and T-387159 because it
merely set the petition for a hearing.
Tujan-Militante filed a Motion for Reconsideration7 and alleged that
the Power of Attorney executed by Nustad in favor of Atty. Lucila is
void and non-existent. Tujan-Militante likewise averred that Atty.
Lucila is representing a Norwegian, who is not allowed to own lands
in the Philippines. Aside from the dismissal of the case, petitioner
prayed that the Office of the Solicitor General and the Land
Registration Authority be impleaded. Moreover, Tujan-Militante
prayed for moral and exemplary damages, attorney's fees, and
costs of suit.
In an Order8 dated February 27, 2012, the court a quo denied Tujan-
Militante's Motion for Reconsideration.
Aggrieved, Tujan-Militante filed a Petition for Certiorari before the
CA.
The Ruling of the CA
In a Decision9 dated February 27, 2013, the CA recognized the
jurisdictional defect over the person of Tujan-Militante, but
nevertheless ruled that the flaw was cured by Tujan-Militante's filing
of her Motion
Tujan-Militante filed a Motion for Reconsideration, which was denied
by the CA in a Resolution10 dated October 2, 2013.
Hence, this appeal.
The Court's Ruling
The appeal is bereft of merit.
A trial court acquires jurisdiction over the person of the defendant
by service of summons. However, it is equally significant that even
without valid service of summons, a court may still acquire
jurisdiction over the person of the defendant, if the latter voluntarily
appears before it. 11 Section 20, Rule 14 of the Rules of Court
provides:
Section 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 of relief aside
from lack of jurisdiction over the person of the defendant shall not
be deemed a voluntary appearance.
By seeking affirmative reliefs from the trial court, the individual
[petitioner is] deemed to have voluntarily submitted to the
jurisdiction of the court. A party cannot invoke the jurisdiction of the
court to secure the affirmative relief against his opponent and after
obtaining or failing to obtain such relief, repudiate or question that
same jurisdiction.12
In this case, while Tujan-Militante's motion to dismiss challenged
the jurisdiction of the court a quo on the ground of improper service
of summons, the ·subsequent filing of a Motion for Reconsideration
which sought for affirmative reliefs is tantamount to voluntary
appearance and submission to · the authority of such court. Such
affirmative relief is inconsistent with the position that no voluntary
appearance had been made, and to ask for such relief, without the
proper objection, necessitates submission to the [court]'s
jurisdiction. 13
As to the claim of Tujan-Militante that the requirements laid down
in Sec. 24, Rule 13214 of the Rules of Court apply with respect to
the power of attorney notarized abroad, he cited the ruling
in Lopez v. Court of Appeals. 15 In said case, this Court held that the
power of attorney must comply with the requirements set forth
under Sec. 25 (now Sec. 24), Rule 132 of the Rules of Court in order
to be considered as valid.
Section 24 of Rule 132 provides that:
Section 24. Proof of official record.- The record of public documents
referred to in paragraph (a) of Section 19, when admissible for any
purpose, may be evidenced by an official publication thereof or by a
copy attested by the officer having legal custody of the record, or
by his deputy, and accompanied, if the record is not kept in the
72
Philippines, with a certificate that such officer has the custody. If
the office in which the record is kept is in a foreign country, the
certificate may be made by a secretary of the embassy or legation,
consul general, consul, vice consul or consular agent or by any
officer in the foreign service of the Philippines stationed in the
foreign country in which the record is kept, andauthenticated by the
seal of his office. (emphasis supplied)
Section 19 of Rule 132 states that:
Section 19. Classes of documents. - For the purpose of their
presentation in evidence, documents are either public or private.
Public documents are:
(a) The written official· acts or records of the official
acts of the sovereign authority, official bodies and
tribunals, and public officers, whether of the
Philippines or of a foreign country;
(b) Documents acknowledged before a notary public
except last wills and testaments; and
(c) Public records kept in the Philippines, of private
documents required by law to be entered therein.
All other writings are private. (emphasis supplied)
In the Heirs of Spouses Arcilla v. Teodoro 16 , this Court clarified that
the ruling in the Lopez case is inapplicable because the Rules of
Evidence which were then effective we.re the old Rules, prior to their
amendment in 1989. When the Rules of Evidence were amended in
1989, the introductory phrase "An official record or an entry
therein " was substituted by the phrase "The record of public
documents referred to in paragraph (a) of Section . 19 ,;17 , as found
in the present Rules. Also, Section 25 of the former Rules became
Section 24 of the present Rules.
On this note, the case of Heirs of Spouses Arcilla explained further:
It cannot be overemphasized that the required certification of an
officer in the foreign service under Section 24 refers only to the
documents enumerated in Section 19 (a), to wit: written official acts
or records of the official acts of the sovereign authority, official
bodies and tribunals, and public officers of the Philippines, or of a
foreign country. The Court agrees with the CA that had the Court
intended to include notarial documents as one of the public
documents contemplated by ·the provisions of Section 24, it should
not have specified only the documents referred to under paragraph
(a) of Section 19.18 (emphasis supplied)
As the Rules explicitly provide that the required certification of an
officer in the foreign service refers only to written official acts or
records of the official acts of the sovereign authority, official bodies
and tribunals, and public officers of the Philippines, or of a. foreign
country, as found in Section 19(a), Rule 132, such enumeration
does not include documents acknowledged before a notary public
abroad.
With all these, We rule on the validity of the subject notarial
document. What is important is that [Nustad] certified before a
commissioned officer clothed with powers to administer an oath that
she is authorizing Atty. Lucila to institute the petition before the
court a quo on her behalf. 19
A notarized document has in its favor the presumption of regularity,
and to overcome the same, there must be evidence that is clear,
convincing and more than merely preponderant; otherwise, the
document should be upheld.20
Lastly, Tujan-Militante's contention that the TCTs under the name
of N ustad are invalid because of her citizenship constitutes a
collateral attack on the titles. The CA correctly ruled that the issue
as to whether an alien is or is not qualified to acquire the lands
covered by the subject titles can only be raised in an action
expressly instituted for that purpose.21
WHEREFORE, the instant appeal is DENIED. Accordingly, the.
Decision dated February 27, 2013 and Resolution dated October 2,
2013, of the Court of Appeals in CA-G.R. SP No. 124811 are
AFFIRMED in toto.
73
SO ORDERED. of Cupang and Rancho Estate Subdivision in Marikina City Traversing
Marcos Highway and Sumulong Highway Up to Barangay Munting
G.R. No. 158836, September 30, 2015 Dilao, Antipolo City Exiting or Egressing to Imelda Avenue, Cainta,
Rizal and Appropriating the Amount of Five Million (P5,000,000.00)
Pesos Therefore."2
SUNRISE GARDEN CORPORATION, Petitioner, v. COURT OF
APPEALS AND FIRST ALLIANCE REAL ESTATE DEVELOPMENT,
In 1999, the Sangguniang Barangay of Cupang requested the
INC., Respondents.
Sangguniang Panlungsod of Antipolo City to construct a city road to
connect Barangay Cupang and Marcos Highway.3 The request was
G.R. No. 158967
approved through the enactment of Resolusyon Big. 027-99.4
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY
The Technical Committee created by City Ordinance No. 08-98
ANTIPOLO CITY, Petitioner, v. COURT OF APPEALS AND FIRST
posted notices to property owners that would be affected by the
ALLIANCE REAL ESTATE DEVELOPMENT, INC., Respondents.
construction of the city road.5 The notices
stated:chanRoblesvirtualLawlibrary
G.R. No. 160726

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY NOTICE TO THE PUBLIC

ANTIPOLO CITY, Petitioner, v. FIRST ALLIANCE REAL ESTATE
DEVELOPMENT, INC., Respondents. PURSUANT TO CITY ORDINANCE NO. 08-98 DATED: NOVEMBER 11,
1998 AND BARANGAY RESOLUTION NO. 027-99 OF CUPANG
G.R. No. 160778 BARANGAY COUNCIL, DATED SEPTEMBER 10, 1999, CITY ROAD
(PHASE I), THE GENERAL PUBLIC IS HEREBY NOTIFIED THAT THE
SUNRISE GARDEN CORPORATION, Petitioner, v. FIRST CITY GOVERNMENT OF ANTIPOLO IS GOING TO CONSTRUCT THE
ALLIANCE REAL ESTATE DEVELOPMENT, INC., Respondent. 20.00 METERS WIDE CITY ROAD, LINKING MARCOS HIGHWAY TO
ANTIPOLO-SAN MATEO NATIONAL ROAD (C-6), ALL PROPERTY
OWNERS AFFECTED ARE ENJOINED TO SEE THE PLANNING
DECISION
OFFICER OF ANTIPOLO CITY FOR DETAILS OF THE
PROGRAM.6ChanRoblesVirtualawlibrary
LEONEN, J.:
In 2002, Engr. Eligio Cruz, Project Coordinator, submitted a
report7 to the City Mayor,8 a portion of which
A person who is not a party in the main action cannot be the subject states:chanRoblesvirtualLawlibrary
of the ancillary writ of preliminary injunction. These consolidated 3. Pilot Road had been determined and property owners had been
petitions arose out of a pending case between Sunrise Garden appraised [sic] like M[r]. Armando Carpio who owns majority of the
Corporation and Hardrock Aggregates, Inc. First Alliance Real Estate affected lots[,] Mr. Alonzo Espanola of Hard Rock, Heavens Gate,
Development, Inc. was not a party to that case. Josefma Santos through Mr. Manuel Santos, Jr., Heirs of Crispulo
Zapanta through Vice Mayor Lorenzo Zapanta, Gaudencio Caluma,
In 1998, the Sangguniang Panlungsod of Antipolo City passed City RCR Realty, Maxima Matias, Heirs of Gabriel Martinez through Sec.
Ordinance No. 08-981 entitled "An Ordinance Creating a Technical Martinez an[d] several actual occupants in the course traversed by
Committee to Conduct a Feasibility Study, Preliminary and the Pilot Road[.]9ChanRoblesVirtualawlibrary
Parcellary Survey for the Proposed Construction of a City Road
Connecting Four (4) Barangays in Antipolo City (Barangay Cupang, Sunrise Garden Corporation was an affected landowner. Its property
Mayamot, Mabugan and Munting Dilao) Starting From the Boundary was located in Barangay Cupang, which Sunrise Garden Corporation

74
planned to develop into a memorial park.10 On January 24, 2002, Sunrise Garden Corporation filed a
Complaint19 for damages with prayer for temporary restraining
Sunrise Garden Corporation, through Cesar T. Guy, Chair of the order and writ of preliminary injunction against Hardrock
Board of Directors, executed an Undertaking11 where Sunrise Aggregates, Inc.20
Garden Corporation would construct the city road at its own
expense, subject to reimbursement through tax credits.12 A portion Hardrock Aggregates, Inc. filed its Answer to the Complaint. 21
of the Undertaking states:chanRoblesvirtualLawlibrary
That I am the owner in fee simple of several parcels of land situated The trial court issued a temporary restraining order on February 15,
at Cupang, Antipolo, Rizal with a consolidated area of 116 Hectares, 2002, "directing Hardrock to cease and desist from
more or less;cralawlawlibrary preventing/blocking the contractor in moving its equipments to the
site of the proposed city road."22
. . . .
Undaunted by the temporary restraining order, Hardrock
That I have applied for the development of the aforestated Aggregates, Inc. continued to block the movement of the
consolidated lots into a memorial park known as "SUNRISE construction equipment.23
GARDEN["];cralawlawlibrary
On March 19, 2002, the trial court ordered the issuance of a Writ of
That setting aside of and/or providing a 6 hectares City Park is Preliminary Injunction, subject to the posting of a bond by Sunrise
among the conditions set forth by the Antipolo, [sic] City council in Garden Corporation.24 On March 22, 2002, the Writ of Preliminary
the approval of the said project;cralawlawlibrary Injunction was issued.25cralawred

. . . . While the Complaint was pending, informal settlers started to

encroach on the area of the proposed city road.26
That I am willing to undertake and finance development of the City
Park and City Road connecting Marcos Highway to Marikina - San Sunrise Garden Corporation, thus, filed a Motion and Manifestation
Mateo - Antipolo National Highway which cost shall be applied to our on May 16, 2002,27 praying for the amendment of the Writ of
[t]axes and other fees payable to the City Preliminary Injunction "to include any and all persons or group of
Government;cralawlawlibrary persons from interfering, preventing or obstructing all of petitioner's
contractors, equipment personnel and representatives in proceeding
That I am willing to sign and execute all legal instrument necessary with the construction of the city road as authorized by Ordinance
to transfer ownership of the same to the City No. 08-98 of Antipolo City."28
government[.]13ChanRoblesVirtualawlibrary
The city road project, thus, became a joint project of the
The trial court granted Sunrise Garden Corporation's Motion and
Sangguniang Panlungsod of Antipolo, Barangay Cupang, Barangay
Manifestation and issued an Amended Writ of Preliminary
Mayamot, and Sunrise Garden Corporation.14
Injunction29 on May 22, 2002,30 stating:chanRoblesvirtualLawlibrary
IT IS HEREBY ORDERED by the undersigned Judge of this Court,
Sunrise Garden Corporation's contractor15 began to position its
that, until further orders, you, the said defendant and all your
construction equipment.16 However, armed guards,17 allegedly hired
attorneys, representatives, agents and any other persons assisting
by Hardrock Aggregates, Inc., prevented Sunrise Garden
you including any and all persons or groups of persons from
Corporation's contractor from using an access road to move the
interfering, preventing or obstructing all of plaintiff's contractors,
construction equipment.18
equipment personnel and representatives in proceeding with the

75
construction of a new access road as authorized by the Antipolo City case. Neither did they claim authority from the defendant, for which
Government and Barangay Cupang, leading to its memorial project reason this Honorable Court did not acquire jurisdiction over them
site. As necessary, the services of Deputy Sheriff Rolando P. and could not validly enforce the Amended Writ of Injunction against
Palmares can be sought to enforce this Writ. them . . . .

Antipolo City, this 22nd day of May . . . .

2002.31ChanRoblesVirtualawlibrary
1.5 Moreover, insofar as the K-9 and the Security Guards are
In compliance with the Amended Writ of Preliminary Injunction, the
concerned, the amended Writ of Injunction is void, for lack of notice
informal settlers allowed the construction equipment passage to the
to them, in accordance with Sec. 5, Rule 58, Rules of Civil Procedure
city road project. The construction of the city road then continued.32
quoted in part as follows:chanRoblesvirtualLawlibrary
"Section 5. Preliminary Injunction not granted without notice;
Thereafter, armed guards of K-9 Security Agency, allegedly hired by
exception - no preliminary injunction shall be granted without
First Alliance Real Estate Development, Inc.,33 blocked Sunrise
hearing and prior notice to the party or person sought to be enjoined
Garden Corporation's contractor's employees and prevented them
xxx."46 (Emphasis supplied, citation
from proceeding with the construction.34
omitted)ChanRoblesVirtualawlibrary
First Alliance Real Estate Development, Inc., through its It was further alleged in the Opposition that Sunrise Garden
representative Mr. Boy Pineda, requested to have a dialogue with Corporation was intruding into First Alliance Real Estate
Sunrise Garden Corporation.35 It was agreed that the meeting would Development, Inc.'s titled properties.47
be between the representatives of First Alliance Real Estate
Development, Inc. and Sunrise Garden Corporation.36 A meeting On November 15, 2002, Sunrise Garden Corporation filed an Ex-
was scheduled on October 8, 2002 to be held at the Office of the parte Motion to require K-9 Security Agency and First Alliance Real
City Planning.37 On the day of the meeting, First Alliance Real Estate Estate Development, Inc. to comply with the May 22, 2002
Development, Inc.'s representative, however, did not arrive.38 Amended Writ of Preliminary Injunction.48

A verification with the Business Permit, License and Franchising The trial court granted Sunrise Garden Corporation's Motion and
Office of the City Mayor39 revealed that First Alliance Real Estate issued an Order dated November 22, 2002 requiring K-9 Security
Development, Inc. had no business record, and K-9 Security Agency Agency to comply with the Amended Writ of Preliminary
had no permit to post guards.40 Injunction.49

A Motion to cite K-9 Security Agency in contempt was filed on
October 11, 200241 by Sunrise Garden Corporation.42
On November 11, 2002, K-9 Security Agency, joined by First
Alliance Real Estate Development, Inc. and represented by the same
counsel,43 opposed the Motion to cite them in contempt, raising the
defense of lack of jurisdiction over their persons, since they were
not bound by the Amended Writ of Preliminary Injunction.44 The
Opposition45 stated that:chanRoblesvirtualLawlibrary
1.3 The purpose of the Writ of Injunction is to preserve the relation
between the parties during the pendency of the suit. This cannot be
applied to K-9 and the Security Guards who are not parties in the
Despite the issuance of the Order to comply, security guards
dressed in civilian clothes still allegedly prevented the workers from
proceeding to the construction site on November 28, 2002.50
Engr. Eligio Cruz, the Project Coordinator, spoke to the guards of K-
9 Security Agency on the site and showed them a copy of the Order
issued by the trial court.51 A copy of the Order shown to the guards
was allegedly already served by Sheriff Roland Palmares and
received by K-9 Security Agency's Bagong Nayon Office and First
Alliance Real Estate Development, Inc.52 However, the guards
replied that they were under Forefront Security Agency, not K-9
Security Agency.53 The guards informed Engr. Eligio Cruz that First

76
Alliance Real Estate Development, Inc. ordered them not to allow
the city road construction.54
On November 29, 2002, Engr. Eligio Cruz wrote a letter-report55 to
Hon. Mauricio M. Rivera, Executive Judge of the Regional Trial Court
of Antipolo City,56 as follows:chanRoblesvirtualLawlibrary
Relative to the Order dated November 22, 2002, I wish to inform
this Honorable Court that on November 28, 2002 at about 1:30 P.M.
several K-9 Security Guards dressed in civilian clothes armed with
shotguns, scattered and deployed in ambush position on the
mountain slope of the property of Armando Carpio, blocked the
buldozer [sic] clearing the City Road which had barely began [sic].
The undersigned explained to the four guards who approached the
contents of the Order and showed to the team leader (who refused
to give his name) the copy served by Sheriff Roland Palmares and
received by their Bagong Nayon Office as well as their principal First
Alliance Realty Corp.
That the aforestated team leader answered back that they are now
under FOREFRONT SECURITY AGENCY and have nothing to do with
K-9 SECURITY subject of the order. Further the same guards are
under the control of Officer-in-Charge ROLAND TOMINES, and have
instructions from their principal FIRST ALLIANCE REALTY not to
allow the construction of the City Road.
IN VIEW of the foregoing incident, which constitute [sic] a clear
defiance of the order, I am constrained to report the matters to this
Honorable Court for disposition.57ChanRoblesVirtualawlibrary
On November 29, 2002, Sunrise Garden Corporation filed a Motion
to cite Forefront Security Agency and First Alliance Real Estate
Development, Inc. in contempt.58 Sunrise Garden Corporation
alleged that First Alliance Real Estate Development, Inc. was notified
and voluntarily submitted to the jurisdiction of the court.59 Sunrise
Garden Corporation also alleged that First Alliance Real Estate
Development, Inc. adopted K-9 Security Agency's Opposition.60
On December 4, 2002, K-9 Security Agency filed a Motion for
Reconsideration of the November 22, 2002 Order.61 Allegedly
attached to the Motion were photocopies of TCT Nos. 342073-76
and 337784 to show that First Alliance Real Estate Development,
Inc. was the registered owner of the parcel of land where the pieces
of construction equipment were being placed.62
Apparently, to resolve the issue of ownership raised by First Alliance
Real Estate Development, Inc., the trial court ordered on December
9, 2002 the City Planning and Development Office to conduct a table
survey of the affected properties.63 The
Order64 states:chanRoblesvirtualLawlibrary
When this case was called for hearing today, counsel for First
Alliance Realty Corporation submitted the xerox copies of titles of
the Property which according to him are inside the area being built
as city road. Plaintiff's counsel also argued that the tiles [sic] of First
Alliance are outside the area where the road will traverse....
Now, each of the parties are authorized to send a representative for
the purpose of table survey and whatever the result of the table
survey, City Planning and Development Office shall submit a report
before this Court within five (5) days from the termination of table
survey. The table survey would contain the signatures of each
representative, the representative of the [sic] Sunrise and the
representative of First Alliance.65ChanRoblesVirtualawlibrary
On December 27, 2002, P/Supt. Jose Fenix Dayao of Antipolo City
dispatched SPO4 Conrado Abren Soza and other police officers to
inspect the construction site.66 Upon arrival, the police officers were
fired at by the security guards of Forefront Security Agency.67
On January 15, 2003, the City Planning and Development Office,
through Edgardo T. Cruz, reported68 to the court that it could not
accomplish the table survey, as required by the trial court in its
Order dated December 9, 2002, because the Register of Deeds could
not provide copies of First Alliance Real Estate Development, Inc.'s
transfer certificates of title.69 Attached to the City Planning and
Development Office's report was a letter70 from the Register of
Deeds of Marikina City, stating that a certain Arty. Benjamin A.
Flestado had filed a similar request in 2001, which request was
forwarded to the Land Registration Authority.71 Allegedly, the
existing request for verification shows that First Alliance Real Estate
Development, Inc. could not acquire a favorable report from the
Land Registration Authority proving ownership over the property.72
On January 29, 2003, the trial court issued an Order stating that
since First Alliance Real Estate Development, Inc. could not prove
ownership over the properties, then First Alliance Real Estate
77
Development, Inc. or any of its hired security agencies must comply
with the Amended Writ of Preliminary Injunction.73 Portions of the
January 29, 2003 Order74 read:chanRoblesvirtualLawlibrary
Considering the fact that the First Alliance Realty Corporation could
not prove that the titles of their land will be traversed or affected in
the road construction being made by Sunrise Garden Corporation[,]
it is incumbent [upon] the former to produce the certified copies of
the Certificate of Titles of the First Alliance Realty Corporation to this
Court so that the same will be sent to the CPDC of Antipolo City for
the compliance of the Court order to make a table survey. As it is
now, the First Alliance Realty Corporation is bound to comply with
the amended injunction order of this Court dated November 22,
2002 wherein it is ordered that IT IS HEREBY ORDERED by the
undersigned Judge of this Court, that, until further orders, you, the
said defendant and all your attorneys, representatives, agents and
any other persons assisting you including any and all persons or
groups of persons from interfering, preventing or obstructing all
plaintiff's contractors, equipment personnel and representatives in
proceeding with the construction of a new access road as authorized
by the Antipolo City Government and Barangay Cupang, leading to
its memorial project site. . .
WHEREFORE, the First Alliance Realty Corporation or any of its
Security Agencies acting as guard assigned in the Land must comply
with the amended writ of preliminary injunction, as above
mentioned.75ChanRoblesVirtualawlibrary
K-9 Security Agency and First Alliance Real Estate Development,
Inc. filed a Motion for Reconsideration76 reiterating their arguments
that since the trial court did not acquire jurisdiction over them, the
Writ of Preliminary Injunction could not be enforced against
them.77 First Alliance Real Estate Development, Inc. and K-9
Security Agency's Motion for Reconsideration was denied.78
First Alliance Real Estate Development, Inc. thus filed a Petition
for Certiorari with prayer for preliminary injunction and temporary
restraining order before the Court of Appeals.79 This was docketed
as CA-G.R. SP No. 75758.80
In a Resolution dated March 7, 2003, the Court of Appeals issued
ex-parte a temporary restraining order valid for 60 days.81
In the same Resolution, the Court of Appeals required the Office of
the Solicitor General to comment on the Petition for Certiorari .82 The
Office of the Solicitor General then entered its appearance and filed
its Comment.83
The Court of Appeals held two hearings with regard to the prayer
for the issuance of a Writ of Preliminary Injunction.84 During the
hearing on April 24, 2003, Justice Sabio requested counsels85 of the
parties to maintain the status quo even after the lapse of the
effectivity of the temporary restraining order, as follows:86
J. SABIO:
If we can have a word of honor among gentlemen that until the case
would be decided there should be no, [sic] if we maintain the status
quo. A gentleman's agreement. With the assurance that the court
will resolve the incident at the earliest possible time.87
On June 20, 2003, the Court of Appeals issued a Writ of Preliminary
Injunction.88 The Resolution89 stated:chanRoblesvirtualLawlibrary
It will be recalled that in the hearing of the prayer for injunctive
relief sought in this case last April 24, 2003, there was a gentleman's
agreement among counsels of parties that status quo be maintained
.
until such time that the main case will be resolved by this Court.
Petitioner, however, through a motion informed this Court that
private respondents are threatening to bulldoze the property subject
matter of this litigation. Petitioner further stated that such act of
private respondent will render judgment hereon moot and
academic. Under such circumstances, we are left with no choice but
to issue the injunctive relief sought, considering further that the
issuance thereof is warranted.
WHEREFORE, let a writ of Preliminary Injunction be issued
conditioned upon petitioner's posting of a cash or surety bond in the
amount of P200,000.00 to answer for the damages which may be
sustained by private respondent by reason of this injunction or if the
court should finally decide that the applicant is not entitled thereto.
After which, the Division Clerk of Court is directed to issue the writ
of preliminary injunction enjoining respondents, its agents or
representatives from implementing public respondent's amended
writ of injunction dated May 22, 2002, January 29, 2003 and
February 24, 2003 Orders.90 (Citation
omitted)ChanRoblesVirtualawlibrary
78
Sunrise Garden Corporation and the Republic of the Philippines,
through the Office of the Solicitor General, separately filed Petitions
for Certiorari and Prohibition, with prayer for temporary restraining
order and writ of preliminary injunction assailing the Writ of
Preliminary Injunction issued by the Court of Appeals. Sunrise
Garden Corporation's Petition91 was docketed as G.R. No. 158836,
and the Republic of the Philippines' Petition92 was docketed as G.R.
No. 158967.
Sunrise Garden Corporation offered93 to post a bond as provided
under Rule 58, Section 694 of the Rules of Court and prayed that this
court issue a temporary restraining order to prevent the Court of
Appeals from implementing the Writ of Preliminary Injunction. 95
Republic of the Philippines subsequently filed a Supplemental
Petition96 for Certiorari on August 21, 2003 informing this court that
the Court of Appeals allegedly issued a second Writ of Preliminary
Injunction dated August 13, 2003, which
states:chanRoblesvirtualLawlibrary
WHEREAS, in the Resolution promulgated August 13, 2003, the
Division Clerk of Court is directed to issue the Writ of Preliminary
Injunction pursuant to the June 20, 2003 Resolution of this Court.
NOW, THEREFORE, YOU RESPONDENT JUDGE OF THE REGIONAL
TRIAL COURT OF ANTIPOLO CITY, BRANCH 73, YOUR AGENTS,
EMPLOYEES, REPRESENTATIVES OR SUCH OTHER PERSON OR
PERSONS ACTING IN YOUR BEHALF ARE ENJOINED FROM
IMPLEMENTING THE AMENDED WRIT OF INJUNCTION DATED MAY
22, 2002, JANUARY 29, 2003 AND FEBRUARY 24, 2003 ORDERS.
GIVEN BY THE AUTHORITY OF THE HONORABLE COURT OF
APPEALS, Mme. Justice BENNIE ADEFUN-DE LA CRUZ [sic],
Chairman, Mr. Justice JOSE L. SABIO, JR. and Mr. Justice HAKIM S.
ABDULWAHID, Members, this 13th day of August 2003, Manila,
Philippines.97ChanRoblesVirtualawlibrary
Republic of the Philippines prayed that the second Writ of
Preliminary Injunction dated August 13, 2003 be dissolved. 98
While the Petitions for Certiorari and Prohibition were pending
before this court, the Court of Appeals, on November 5, 2003,
granted First Alliance Real Estate Development, Inc.'s Petition
for Certiorari and annulled the Amended Writ of Preliminary
Injunction issued by the trial court,99 reasoning as
follows:chanRoblesvirtualLawlibrary
Indeed, public respondent court acted with grave abuse of discretion
and without jurisdiction when it sought the enforcement of its
amended writ of preliminary injunction against petitioner, who was
never a party to the pending case. Worse, it threatened petitioner
with contempt of court for not following an unlawful order.
Sec. 5, Rule 58, 1st sentence provides, thus: "No preliminary
injunction shall be granted without hearing and prior notice to the
party or person sought to be enjoined" (underscoring for emphasis).
In the case at bench, petitioner was not only not impleaded as party
to the case, but that it was never given prior notice regarding the
writ of injunction.
Public respondents' assertion that notice was already made to
Hardrock Aggregates, Inc. is specious. There is no showing at all as
to the relationship between Hardrock Aggregates, Inc. and
petitioner. Since there is nothing to prove and establish that
Hardrock, Inc. and petitioner are one and the same, then they
should be treated as separate and distinct personalities.
. . . .
WHEREFORE, foregoing premises considered, the petition having
merit, in fact and in law is hereby GIVEN DUE COURSE.
Resultantly, the assailed ordered [sic] are
hereby ANNULLED and SET ASIDE for having been issued with
grave abuse of discretion and without jurisdiction. No costs.
SO ORDERED.100 (Emphasis and underscoring in the
original)ChanRoblesVirtualawlibrary
Republic of the Philippines then questioned the Court of Appeals'
Decision and filed a Petition for Review101 on Certiorari before this
court. The Petition was docketed as G.R. No. 160726.102 Sunrise
Garden Corporation also filed a separate Petition for Review
on Certiorari 103 before this court, docketed as G.R. No. 160778.104
First Alliance Real Estate Development, Inc. then filed its
Comment105 on the Petition for Certiorari filed by Sunrise Garden
and a Consolidated Comment,106 addressing the issues raised in the
Office of the Solicitor General's Petition for Certiorari and
79
Supplemental Petition for Certiorari . mandatory injunction in any case, dispute, or controversy involving
an infrastructure project, or a mining, fishery, forest or other natural
In a Resolution107 dated January 28, 2004, this court consolidated resource development project of the government, or any public
G.R. Nos. 158836, 158967, 160726, and 160778. utility operated by the government, including among others public
utilities for the transport of the goods or commodities, stevedoring
First Alliance Real Estate Development, Inc. filed an Omnibus and arrastre contracts, to prohibit any person or persons, entity or
Motion,108 praying that its Consolidated Comment in G.R. No. governmental official from proceeding with, or continuing the
158967 "be adopted as its Comment [for] G.R. No. 160726."109 First execution or implementation of any such project, or the operation
Alliance Real Estate Development, Inc. subsequently filed a of such public utility, or pursuing any lawful activity necessary for
Manifestation,110 praying that the Comment it filed in G.R. Nos. such execution, implementation or
158967 and 158836 be adopted as its Comment in G.R. No. operation.ChanRoblesVirtualawlibrary
160778.111
Sunrise Garden Corporation and Republic of the Philippines119 posit
that the term "infrastructure project" includes the construction of
Sunrise Garden Corporation and Republic of the Philippines argue
roads.120 Also, the construction of the city road is a capital
that the Court of Appeals committed grave abuse of discretion in not
investment on the part of government because payment to Sunrise
dismissing the Petition outright due to insufficiency of form and
Garden Corporation shall be through tax credits.121
substance.112 Sunrise Garden Corporation argues that First Alliance
Real Estate Development, Inc. failed to prove its ownership over the
Republic of the Philippines adds that Presidential Decree No. 1818
properties in dispute.113 Thus, it did not establish any right that
is applicable because it does not distinguish between local
would entitle it to the reliefs prayed for.114 Also, no evidence was
government projects and national government projects.122 Further,
presented before the trial court and the Court of Appeals that would
the city road project is intended to benefit not only the residents of
prove First Alliance Real Estate Development, Inc.'s claim that its
several barangay that it will traverse, but also the students of the
property would be affected by the city road project.115
barangay school.123 Once the city road project is completed, the
travel time of the students will be lessened from two hours to just
Sunrise Garden Corporation points out that First Alliance Real Estate
30 minutes.124
Development, Inc. still failed to attach a certified true copy of its
alleged titles to the properties affected by the city road
Sunrise Garden Corporation admits that the Writ of Preliminary
project.116 Sunrise Garden Corporation also manifests that the
Injunction was not issued against First Alliance Real Estate
alleged properties of First Alliance Real Estate Development, Inc.
Development, Inc.125 Nevertheless, the nullification of the trial
will not be affected by the city road project based on an alleged
court's Orders effectively hampered the city road project.126 The
study conducted by the Antipolo City Planning and Development
argument of First Alliance Real Estate Development, Inc. that "its
Office.117
property is being taken without just compensation" 127 proves that
the injury to First Alliance Real Estate Development, Inc. is
Further, Sunrise Garden Corporation and Republic of the Philippines
quantifiable.
argue that the Court of Appeals gravely abused its discretion when
it issued the Writ of Preliminary Injunction because the Writ violated
Sunrise Garden Corporation and Republic of the Philippines argue
Presidential Decree No. 1818.118
that the Writ of Preliminary Injunction did not state the law and facts
on which it was based.128 The Court of Appeals did not state what
Section 1 of Presidential Decree No. 1818
clear legal right was being protected.129 It merely stated that
provides:chanRoblesvirtualLawlibrary
"private respondents are threatening to bulldoze the property
Section 1. No court in the Philippines shall have jurisdiction to issue
subject matter of [the] litigation."130
any restraining order, preliminary injunction, or preliminary

80
As to the alleged "gentlemen's agreement" stated in the Order of
the Court of Appeals, Sunrise Garden Corporation points out that as
per the transcript of stenographic notes, the "gentlemen's
agreement" was merely a suggestion of the court, but the parties
themselves never came to an agreement.131
Sunrise Garden Corporation and Republic of the Philippines argue
that First Alliance Real Estate Development, Inc. was not denied due
process when the trial court issued the Amended Writ of Preliminary
Injunction because it was afforded several opportunities to be
heard.132
Republic of the Philippines acknowledges that the complaint for
damages filed by Sunrise Garden Corporation was only against
Hardrock Aggregates, Inc. because it was the entity that initially
blocked the movement of the construction equipment of Sunrise
Garden Corporation's contractor. However, First Alliance Real Estate
Development, Inc. was given several opportunities to air its side.
The first opportunity was the meeting scheduled on October 8, 2002
between First Alliance Real Estate Development, Inc., and Sunrise
Garden Corporation. However, First Alliance Real Estate
Development, Inc. did not appear despite being the requesting
party.133
Further, First Alliance Real Estate Development, Inc. was duly
notified when it allegedly received a copy of Sunrise Garden
Corporation's Motion to cite for contempt and filed an Opposition to
the Motion.134 Sunrise Garden Corporation points out that First
Alliance Real Estate Development, Inc. appeared in court to argue
why it should not be cited in contempt.135
First Alliance Real Estate Development, Inc. was given another
chance to be heard when it filed a Motion for Reconsideration on
February 6, 2003 before the trial court.136 Thus, First Alliance Real
Estate Development, Inc. cannot claim that it was denied due
process.137
In any case, Republic of the Philippines argues that the issuance of
a Writ of Preliminary Injunction does not require a trial-type hearing
under Rule 58, Section 5 of the Rules of Court.138
Sunrise Garden Corporation argues that the trial court had
jurisdiction to issue the Amended Writ of Preliminary Injunction and
enforce it against First Alliance Real Estate Development,
Inc.139 Assuming that the trial court did not have jurisdiction over
the person of First Alliance Real Estate Development, Inc., this was
cured when the latter voluntarily appeared in court.140 First Alliance
Real Estate Development, Inc. even filed pleadings such as an
Opposition and a Motion for Reconsideration.141 Other than filing
pleadings, First Alliance Real Estate Development, Inc. argued that
its properties will be affected by the city road project.142 This issue
was then submitted for resolution before the trial court.143
Sunrise Garden Corporation further argues that First Alliance Real
Estate Development, Inc. had a plain, speedy, and adequate
remedy, which was to present its title to the property.144
On the other hand, First Alliance Real Estate Development, Inc.
counters that the trial court did not acquire jurisdiction over its
person as it was not impleaded as a party-litigant in the Complaint
for damages filed by Sunrise Garden Corporation against Hardrock
Aggregates, Inc.145 Sunrise Garden Corporation does not deny that
First Alliance Real Estate Development, Inc. was not included in the
Complaint.146
First Alliance Real Estate Development, Inc. was not involved in the
Complaint for damages before the trial court.147 Nonetheless,
Sunrise Garden Corporation sought to enforce the Amended Writ of
Injunction against it even though the Amended Writ was addressed
to Hardrock Aggregates, Inc.148 First Alliance Real Estate
Development, Inc. alleges that it has no business relations with
Hardrock Aggregates, Inc.149 Thus, the Amended Writ of Preliminary
Injunction is not binding on First Alliance Real Estate Development,
Inc., and it cannot be held in contempt.150
First Alliance Real Estate Development, Inc. argues that the
Amended Writ of Preliminary Injunction dated May 22, 2002 was
void as to First Alliance Real Estate Development, Inc. since it was
never notified of the hearing.151 Further, to implement the Amended
Writ against First Alliance Real Estate Development, Inc. was
equivalent to deprivation of property without due process.152 First
Alliance Real Estate Development, Inc., or its properties, was not
involved in Civil Case No. 02-6396 and yet Sunrise Garden insists
on including First Alliance Real Estate Development, Inc.'s
81
properties in the city road project.153
First Alliance Real Estate Development, Inc. argues that the
Amended Writ of Preliminary Injunction will allow Sunrise Garden
Corporation to take possession and control of First Alliance Real
Estate Development, Inc.'s property without due process of
law.154 First Alliance Real Estate Development, Inc. cites Buayan
Cattle Co., Inc. v. Hon. Quintillan, etc., et al.155 where this court
held that "[injunctions are not available to take property out of the
possession or control of one party and place it into that of another
whose title was not clearly, been [sic] established." 156
First Alliance Real Estate Development, Inc. claims that the
construction of the city road has the effect of appropriating and
taking First Alliance Real Estate Development, Inc.'s private
property for public use.157 First Alliance Real Estate Development,
Inc. questions the lack of authority of Sunrise Garden Corporation
to take the property considering that the Office of the Solicitor
General admitted before the Court of Appeals that there was no
expropriation ordinance, as follows:158
J. Sabio:
xxx could you show this Court an Ordinance authorizing the
expropriation of that property? xxx
Sol. Saludares:
There is no expropriation Ordinance.
J. Sabio:
How can you enter a property without any authority, [sic] it [sic] is
basic that you can enter the property only upon a Court Order.
xxx
Sol. Saludares:
We have here a copy of the Ordinance, your honor.
J. Sabio:
What does it say?
Sol. Saludares:
An Ordinance creating a technical committee to conduct x x x.
J. Sabio:
That is not expropriation. I have read that. That is not
expropriation.159 (Emphasis supplied, citations omitted)
Further, the temporary restraining order and preliminary injunction
issued by the Court of Appeals is not violative of Presidential Decree
No. 1818.160 First Alliance Real Estate Development, Inc. argues that
the cases relied upon by Sunrise Garden Corporation and Republic
of the Philippines, Gov. Garcia v. Hon. Burgos161 and Republic v.
Silerio,162 are not applicable because in these cases, biddings were
conducted.163 No bidding was conducted for the city road project as
shown by Sunrise Garden Corporation's admission that it had an
agreement with the City Government of Antipolo.164 "There was no
bidding conducted and the agreement between the Petitioner
[Sunrise Garden Corporation] and the City Government of Antipolo
City relative to [the] construction of the access road and payment
by way of tax credit can still be questioned, for being illegal." 165
First Alliance Real Estate Development, Inc. also alleges that Sunrise
Garden Corporation disregarded the Court of Appeals' advice or their
"gentlemen's agreement" to maintain the status quo when Sunrise
Garden Corporation sought an Order from the trial court to enforce
the Amended Writ of Injunction.166
First Alliance Real Estate Development, Inc. also questions the
standing of Republic of the Philippines and the City Government of
Antipolo because they were not impleaded as parties in CA-G.R. SP
No. 75758 and Civil Case No. 02-6396.167 Since they were not
parties during the proceedings in the lower courts, they were not
affected by the Writ of Preliminary Injunction.168
Also, the Petitions filed by Republic of the Philippines through the
Office of the Solicitor General and before this court do not indicate
the authority of the City Government of Antipolo to "represent the
Republic"169 and sign the certification of non-forum shopping.170
82
With regard to Republic of the Philippines' claim that a second Writ Finally, whether the trial court acquired jurisdiction over respondent
of Preliminary Injunction was issued by the Court of Appeals on First Alliance Real Estate Development, Inc.
August 13, 2003, First Alliance Real Estate Development, Inc.
explains that this alleged second Writ of Preliminary Injunction was I
actually the Writ issued by the Court of Appeals in its Resolution
dated June 20, 2003.171 It is not a second Writ of Preliminary At the outset, G.R. Nos. 158836 and 158967 were rendered moot
Injunction. and academic when the Court of Appeals promulgated its Decision
in CA-G.R. SPNo. 75758 on November 5, 2003.
On the arguments raised by First Alliance Real Estate Development,
Inc., Republic of the Philippines counters that First Alliance Real A case that is moot and academic has been defined as
Estate Development, Inc. cannot claim denial of due process due to follows:chanRoblesvirtualLawlibrary
the lack of expropriation proceeding.172 A moot and academic case is one that ceases to present a justiciable
controversy by virtue of supervening events, so that a declaration
Republic of the Philippines argues that expropriation and eminent thereon would be of no practical use or value. 180 (Citation
domain are different, citing Section 19 173 of Republic Act No. omitted)ChanRoblesVirtualawlibrary
7160.174 Republic of the Philippines explained that if compensation
In Philippine Savings Bank (PSBANK) v. Senate Impeachment
for the property is accepted, then there is no need for an
Court,181 this court stated:chanRoblesvirtualLawlibrary
expropriation proceeding.175 In addition, First Alliance Real Estate
It is well-settled that courts will not determine questions that have
Development, Inc. is not an affected landowner. 176
become moot and academic because there is no longer any
justiciable controversy to speak of. The judgment will not serve any
As to the allegation that there was no public bidding, Republic of the
useful purpose or have any practical legal effect because, in the
Philippines discussed that the City Government of Antipolo had no
nature of things, it cannot be enforced.182 (Citation
funds for the road project, thus, it could not bid out the
omitted)ChanRoblesVirtualawlibrary
project.177 However, due to the urgent need for the construction of
the city road, the local government had to negotiate with a party While the Petitions for Certiorari are moot and academic, we clarify
"who [could] advance its realty taxes." 178 Sunrise Garden that Presidential Decree No. 1818, cited by the parties, has been
Corporation offered to do so, and the local government found the repealed by Republic Act No. 8975.183 The repealing clause of this
offer favorable.179 law provides for an express repeal,
thus:chanRoblesvirtualLawlibrary
The resolution of this case involves the following issues: SEC. 9. Repealing Clause.—All laws, decrees, including Presidential
Decree Nos. 605, 1818 and Republic Act No. 7160, as amended,
First, whether the Court of Appeals committed grave abuse of orders, rules and regulations or parts thereof inconsistent with this
discretion when it issued a Writ of Preliminary Injunction, contrary Act are hereby repealed or amended
to the provisions of Presidential Decree No. 1818;cralawlawlibrary accordingly.ChanRoblesVirtualawlibrary
This court has held that implied repeals are not favored, and "the
Second, whether respondent First Alliance Real Estate Development,
failure to add a specific repealing clause indicates that the intent
Inc. was denied due process when the trial court issued its January
was not to repeal any existing law[.]" 184 The express repeal of
29, 2003 Order requiring respondent First Alliance Real Estate
Presidential Decree No. 1818 clearly indicates Congress' intent to
Development, Inc. to comply with the Amended Writ of Preliminary
replace Presidential Decree No. 1818 with Republic Act No. 8975.
Injunction.
Republic Act No. 8975 was approved on November 7, 2000 and was
published in the Malaya and the Manila Bulletin on November 11,

83
2000. It was also published in the Official Gazette on May 7, (a) the inconvenience or costs to the party to whom the project is
2001.185 When this case was filed, Republic Act No. 8975 was awarded and (b) the public benefits that will result from the
already effective. completion of the project. The time periods for the validity of
temporary restraining orders issued by trial courts should be strictly
Section 3 of Republic Act No. 8975 followed. No preliminary injunction should issue unless the evidence
provides:chanRoblesvirtualLawlibrary to support the injunctive relief is clear and convincing.188 (Emphasis
SEC. 3. Prohibition on the Issuance of Temporary Restraining supplied)ChanRoblesVirtualawlibrary
Orders, Preliminary Injunctions and Preliminary Mandatory
In this case, the notice to the public states that "the City
Injunctions. — No court, except the Supreme Court, shall issue any
Government of Antipolo is going to construct the 20.00 meters wide
temporary restraining order, preliminary injunction or preliminary
city road[.]"189 Also, the funds for the project would come from the
mandatory injunction against the government, or any of its
Sangguniang Panlungsod of Antipolo City. There is nothing on record
subdivisions, officials or any person or entity, whether public or
to show that the city road project is a national government project.
private, acting under the government's direction, to restrain,
Hence, the prohibition on the issuance of restraining orders or
prohibit or compel the following acts:
injunctions against national government projects does not apply.
(a) Acquisition, clearance and development of the right-of-way
II
and/or site or location of any national government
project;cralawlawlibrary
Due process requires that a party be given the chance to be heard.
The general rule is that "no man shall be affected by any proceeding
(b) Bidding or awarding of contract/project of the national
to which he is a stranger, and strangers to a case are not bound by
government as defined under Section 2 hereof[.] (Emphasis
a judgment rendered by the court." 190 Corollarily, an ancillary writ
supplied)ChanRoblesVirtualawlibrary
of remedy cannot affect non-parties to a case.
In the recent decision of this court in Dynamic Builders v. Hon.
Presbitero, Jr.,186 we clarified that Republic Act No. 8975 is Fernandez v. Court of Appeals191 involved an Administrative
applicable to national government infrastructure projects.187 It also Complaint against three Court of Appeals Justices.192 One of the acts
discussed the remedies available to aggrieved parties in cases complained of was the issuance of a Writ of Preliminary Injunction,
involving local government infrastructure projects as enjoining the implementation of an Order of the trial court. 193 This
follows:chanRoblesvirtualLawlibrary court dismissed the Complaint on the ground that an Administrative
Republic Act No. 8975 does not sanction splitting a cause of action Complaint is not a substitute for a lost appeal.194 This court also held
in order for a party to avail itself of the ancillary remedy of a that in any case, complainants did not have the personality to
temporary restraining order from this court. Also, this law covers question the Writ of Preliminary Injunction since they were not the
only national government infrastructure projects. This case involves aggrieved parties.195 Complainants had the option to intervene in
a local government infrastructure project. the Petitions filed but did not do so.196 This court discussed
that:chanRoblesvirtualLawlibrary
For local government infrastructure projects, Regional Trial Courts Section 1 of Rule 19 of the Rules of Court provides that a person
may issue provisional injunctive reliefs against government who has a legal interest in the matter in litigation, or in the success
infrastructure projects only when (1) there are compelling and of either of the parties, or an interest against both, or is so situated
substantial constitutional violations; (2) there clearly exists a right as to be adversely affected by a distribution or other disposition of
in esse; (3) there is a need to prevent grave and irreparable injuries; property in the custody of the court or of an officer thereof may,
(4) there is a demonstrable urgency to the issuance of the injunctive with leave of court, be allowed to intervene in the
relief; and (5) when there are public interests] at stake in restraining action. Conversely, a person who is not a party in the main suit
or enjoining the project while the action is pending that far outweigh cannot be bound by an ancillary writ, such as a preliminary

84
injunction. Indeed, he cannot be affected by any proceeding to
which he is a stranger.197 (Emphasis supplied, citation
omitted)ChanRoblesVirtualawlibrary
In Mabayo Farms, Inc. v. Court of Appeals,198 a Writ of Preliminary
Injunction was issued against Juanito Infante, Domingo Infante, Lito
Mangalidan, Jaime Aquino, John Doe, Peter Doe, and Richard
Doe.199 A certain Antonio Santos, who claimed ownership over the
parcel of land, filed a Petition for Certiorari before the Court of
Appeals, arguing that to enforce the Writ of Preliminary Injunction
against him would be grave abuse of discretion since the trial court
did not acquire jurisdiction over his person.200 Mabayo Farms
countered that Antonio Santos was covered by the Writ because it
was issued against three Does, and these Does include Antonio
Santos.201 Also, since Santos received a copy of the Writ of
Preliminary Injunction, he cannot claim lack of due process, and it
was his duty to intervene in the case.202 The Court of Appeals
granted the Petition for Certiorari and enjoined the trial court from
enforcing the Writ of Preliminary Injunction against Santos.203 This
court affirmed204 the Decision of the Court of Appeals and held
that:chanRoblesvirtualLawlibrary
A preliminary injunction is an order granted at any stage of an action
prior to final judgment, requiring a person to refrain from a
particular act. As an ancillary or preventive remedy, a writ of
preliminary injunction may therefore be resorted to by a party to
protect or preserve his rights and for no other purpose during the
pendency of the principal action. Its object is to preserve the
status quo until the merits of the case can be heard. It is not a cause
of action in itself but merely a provisional remedy, an adjunct to a
main suit. Thus, a person who is not a party in the main suit, like
private respondent in the instant case, cannot be bound by an
ancillary writ, such as the writ of preliminary injunction issued
against the defendants in Civil Case No. 6695. He cannot be affected
by any proceeding to which he is a stranger.205 (Emphasis supplied,
citations omitted)ChanRoblesVirtualawlibrary
Regarding Mabayo Farms' argument that Santos should have
intervened, this court discussed that:chanRoblesvirtualLawlibrary
First, private respondent had no duty to intervene in the
proceedings in Civil Case No. 6695. Intervention in an action is
neither compulsory nor mandatory but only optional and permissive.
Second, to warrant intervention, two requisites must concur: (a) the
movant has a legal interest in the matter in litigation, and (b)
intervention must not unduly delay or prejudice the adjudication of
the rights of the parties nor should the claim of the intervenor be
capable of being properly decided in a separate proceeding. The
interest, which entitles a person to intervene in a suit, must involve
the matter in litigation and of such direct and immediate character
that the intervenor will either gain or lose by the direct legal
operation and effect of the judgment. Civil Case No. 6695 was an
action for permanent injunction and damages. As a stranger to the
case, private respondent had neither legal interest in a permanent
injunction nor an interest on the damages to be imposed, if any, in
Civil Case No. 6695. To allow him to intervene would have
unnecessarily complicated and prolonged the case.206 (Citations
omitted)ChanRoblesVirtualawlibrary
It may be argued that respondent First Alliance Real Estate
Development, Inc. should have intervened in the case filed before
the trial court. However, respondent First Alliance Real Estate
Development, Inc.'s interests, or its properties, were not part of the
issues raised in petitioner Sunrise Garden Corporation's Complaint.
That Complaint was against Hardrock Aggregates, Inc. and not
respondent First Alliance Real Estate Development, Inc. or its
properties.
III
We rule that the Court of Appeals did not err when it annulled and
set aside the trial court's Orders dated January 29, 2003, and
February 24, 2002.
The Court of Appeals discussed that:chanRoblesvirtualLawlibrary
Indeed public respondent court acted with grave abuse of discretion
and without jurisdiction when it sought the enforcement of its
amended writ of preliminary injunction against petitioner, who was
never a party to the pending case. Worse, it threatened petitioner
with contempt of court for not following an unlawful order.
Sec. 5, Rule 58, 1st sentence provides, thus: "No preliminary
injunction shall be granted without hearing and prior notice to the
party or person sought to be enjoined. . ." In the case at bench,
petitioner was not only not impleaded as party to the case, but that
it was never given prior notice regarding the writ of injunction.
Public respondents' [referring to the Republic] assertion that notice
85
was already made to Hardrock Aggregates, Inc. is specious. There Estate Development, Inc. was never a party to the case. During the
is no showing at all as to the relationship between Hardrock hearings before the Court of Appeals, counsel for petitioner Sunrise
Aggregates, Inc. and petitioner. Since there is nothing to prove and Garden Corporation placed much emphasis on its argument that
establish that Hardrock, Inc. and petitioners are one and the same, respondent First Alliance Real Estate Development, Inc. did not
then they should be treated as separate and distinct prove ownership over the property but did not refute the primary
personalities.207ChanRoblesVirtualawlibrary issue of lack of jurisdiction over respondent First Alliance Real Estate
Development, Inc. This is an admission that the trial court did not
Respondent First Alliance Real Estate Development, Inc. argues that
acquire jurisdiction over respondent First Alliance Real Estate
CA-G.R. SP No. 75758 is related to Civil Case No. 02-6396 where it
Development, Inc.
was not included as a party litigant.208 Respondent First Alliance Real
J. SABIO:
Estate Development, Inc. reiterates that it is not liable for contempt
because the trial court never acquired jurisdiction over it and,
It is fundamental that an order of a court cannot be enforced
hence, it is not bound by the Amended Writ of Preliminary
against a person who is not a party to a case.
Injunction.209
ATTY. GALIT [counsel for petitioner Sunrise Garden Corporation]:
Rule 58, Section 5 of the Rules of Court requires that the party to
be enjoined must be notified and heard. The rule
As I said, Your Honor, that is on my supposition. Earlier, Your
provides:chanRoblesvirtualLawlibrary
Honor, both my good Companeros here have intelligently and
RULE 58
clearly ventilated, open the eyes of the Honorable Court that this
particular person is claiming, Your Honor, a right which is not
PRELIMINARY INJUNCTION
existing. A right which is not existing, Your Honor. Why take
refuge from an allegation that according to him this is not the
. . . .
proper forum. This is now the proper forum for the petitioner to
prove his right because he is being challenged.
SEC. 5. Preliminary injunction not granted without notice;
exception.—No preliminary injunction shall be granted without
J. SABIO:
hearing and prior notice to the party or person sought to be
enjoined. If it shall appear from facts shown by affidavits or by the
He does not have to prove anything. He has the title in his
verified application that great or irreparable injury would result to
possession.
the applicant before the matter can be heard on notice, the court to
which the application for preliminary injunction was made, may
ATTY. GALIT:
issue ex parte a temporary restraining order to be effective only for
a period of twenty (20) days from service on the party or person
Mere title, Your Honor, without any specification to be attested
sought to be enjoined, except as herein provided. Within the said
by a competent person such as the expert witness, a geodetic
twenty-day period, the court must order said party or person to
engineer, a licensed geodetic engineer. . .
show cause, at a specified time and place, why the injunction should
not be granted, determine within the same period whether or not
J. SABIO:
the preliminary injunction shall be granted, and accordingly issue
the corresponding order. (Emphasis
That is not the issue in this case. As we said if you try to question
supplied)ChanRoblesVirtualawlibrary
the validity of the title of the petitioner[,] do it in a proper forum.
In this case, petitioners Republic of the Philippines and Sunrise This is not the proper forum. The issue here is not that. The issue
Garden Corporation did not refute that respondent First Alliance Real is whether a writ of injunction can be enforced against a person

86
 who is not a party to the case. That is the pure and simple issue
in this petition.
ATTY. GALIT:
We have made clear, Your Honor, as to the procedural aspect of
the case and as to the substantive aspect of the case. As to the
substantive aspect of the case the petitioner, despite several
challenges against them they failed and they continued to fail to
present any iota of evidence that would prove clear and
unmistakable right to warrant the. . .
J. SABIO:
That is not the issue where he has to defend his title. Because
his title is not the one, the subject matter of the case in the court
below.
ATTY. GALIT:
Your Honor, guided by the Supreme Court decision, a mere
photocopy, a mere xerox copy of any public document, alleged
public documents cannot be said to be a basis of any right. This
is a mere xerox copy to be treated as a mere scrap of paper.
J. SABIO:
Then you challenge it in a proper forum[,] not this forum. That
is not the issue here. That is beyond us to decide. The issue is
whether he [sic] injunction issued by the lower court should be
enforced [against] petitioner who is not a party to the case.
....
ATTY. GALIT:
To be clear, Your Honor, and with all due respect to this
Honorable Court. We take a parallel stand and we absolutely
submit to the pronouncement of this Honorable Court that a
party who is not a party litigant in the case below will never be
affected by any issuance of an injunction. That is precisely
correct and we do not dispute that, your Honor.
....
ATTY. SAAVEDRA [co-counsel for petitioner Sunrise Garden
Corporation]:
As a matter of fact insofar as we are concerned, Your Honor,
whether the lower court has jurisdiction over their person
because they were not impleaded is immaterial. Because they
are in the nature or category of strangers who refused to obey
the writ of injunction which was addressed to the squatters.
Since they have no right to be protected, they have not shown
that they own any portion of the land to be traversed what right
do they have to be protected for.
J. SABIO:
Again let us not go back to that issue so that we will not be
misled, we do not becloud the real issue. The issue here is basic
and fundamental. Whether petitioner [w]ho has not been a party
to the case because he has not been impleaded can be cited for
contempt for refusal to obey or comply with the amended writ of
preliminary injunction? That is all. 210
Petitioner Sunrise Garden Corporation additionally argues that the
trial court acquired jurisdiction because respondent First Alliance
Real Estate Development, Inc. voluntarily appeared in court to argue
why it should not be cited in contempt.211
While Rule 14, Section 20212 of the Rules of Court provides that
voluntary appearance is equivalent to service of summons, the same
rule also provides that "[t]he 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." 213
In Philippine Commercial International Bank v. Spouses Dy Hong Pi,
et al.,214 this court discussed that voluntary appearance in court may
not always result in submission to the jurisdiction of a court.
Preliminarily, jurisdiction over the defendant in a civil case is
acquired either by the coercive power of legal processes exerted
over his person, or his voluntary appearance in court. As a general
proposition, one who seeks an affirmative relief is deemed to have
submitted to the jurisdiction of the court. It is by reason of this rule
that we have had occasion to declare that the filing of motions to
87
admit answer, for additional time to file answer, for reconsideration
of a default judgment, and to lift order of default with motion for
reconsideration, is considered voluntary submission to the court's
jurisdiction. This, however, is tempered by the concept of
conditional appearance, such that a party who makes a special
appearance to challenge, among others, the court's jurisdiction over
his person cannot be considered to have submitted to its authority.
Prescinding from the foregoing, it is thus clear that:
(1) Special appearance operates as an exception to the general rule
on voluntary appearance;
(2) Accordingly, objections to the jurisdiction of the court over the
person of the defendant must be explicitly made, i.e., set forth
in an unequivocal manner; and
(3) Failure to do so constitutes voluntary submission to the
jurisdiction of the court, especially in instances where a pleading
or motion seeking affirmative relief is filed and submitted to the
court for resolution.215 (Citations omitted)
The appearance of respondent First Alliance Real Estate
Development, Inc. and K-9 Security Agency should not be deemed
as a voluntary appearance because it was for the purpose of
questioning the jurisdiction of the trial court. The records of this case
show that the defense of lack of jurisdiction was raised at the first
instance and repeatedly argued by K-9 Security Agency and
respondent First Alliance Real Estate Development, Inc. in their
pleadings.216
Petitioner Sunrise Garden Corporation posits that a third-party claim
would have been the proper remedy for respondent First Alliance
Real Estate Development, Inc., and not a petition
for certiorari before the Court of Appeals.217 Petitioner Sunrise
Garden Corporation cited Ciudad Real & Development Corporation
v. Court of Appeals218 where this court allegedly ruled that it is grave
abuse of discretion to allow a "petitioner who is not a party litigant
in the proceedings below [to file a petition] for certiorari ."219
Counsel for respondent First Alliance Real Estate Development, Inc.
countered that:chanRoblesvirtualLawlibrary
With respect to the comment of counsel for the respondent, Your
Honor, [sic] We [sic] have personality to challenge that because the
writ of injunction, the order citing us for contempt are [sic]
addressed to us, Your Honor. And we have the personality to ask for
the nullity of that order, Your Honor.220ChanRoblesVirtualawlibrary
The case cited by petitioner Sunrise Garden Corporation is not
applicable. In Ciudad Real, the trial court denied the Motion to
intervene filed by Magdiwang Realty Corporation.221 Magdiwang
Realty Corporation did not question the trial court's Order, and it
became final and executory.222 When the case was brought before
the Court of Appeals, the court recognized Magdiwang Realty
Corporation's standing.223 This court held
that:chanRoblesvirtualLawlibrary
Despite the finality of the order denying Magdiwang's intervention
way back in 1989, the respondent court in its Decision of August 20,
1992 recognized the standing of Magdiwang to assail in the
appellate court the Compromise Agreement. Again, this ruling
constitutes grave abuse of discretion for Magdiwang was not a party
in interest in Civil Case No. Q-35393.224ChanRoblesVirtualawlibrary
Considering that the trial court gravely abused its discretion when it
sought to enforce the Amended Writ of Preliminary Injunction
against respondent First Alliance Real Estate Development, Inc., the
Court of Appeals did not err in granting the Petition
for Certiorari filed by respondent First Alliance Real Estate
Development, Inc.
WHEREFORE, premises considered, the Petitions in G.R. Nos.
158836 and 158967 are DISMISSED for being moot and academic.
G.R. No. 201378, October 18, 2017
G.V. FLORIDA TRANSPORT, INC., Petitioner, v. TIARA
COMMERCIAL CORPORATION, Respondent.
DECISION
JARDELEZA, J.:
88
This is a petition for review on certiorari1 under Rule 45 of the Rules
of Court filed by petitioner G.V. Florida Transport Inc. (GV Florida)
to challenge the Decision of the Court of Appeals (CA) in CA-G.R. SP
No. 110760 dated October 13, 2011 (Decision)2 and its Resolution
dated March 26, 2012 (Resolution)3 which denied GV Florida's
subsequent motion for reconsideration. The CA granted respondent
Tiara Commercial Corporation's (TCC) petition for certiorari and
prohibition under Rule 65 of the Rules of Court. It found that Branch
129 of the Regional Trial Court (RTC), Caloocan City, acted with
grave abuse of discretion when it refused to grant TCC's motion to
dismiss GV Florida's third-party complaint in an action for damages
pending before the RTC.
The bus company Victory Liner, Inc. (VLI) filed an action for
damages4 against GV Florida and its bus driver Arnold Vizquera
(Vizquera) before the RTC. This action arose out of a vehicle collision
between the buses of VLI and GV Florida along Capirpiwan, Cordon,
Isabela on May 1, 2007. In its complaint, VLI claimed that Vizquera's
negligence was the proximate cause of the collision and GV Florida
failed to exercise due diligence in supervising its employee.5
In its Answer,6 GV Florida alleged that the Michelin tires of its bus
had factory and mechanical defects which caused a tire blow-out.
This, it claimed, was the proximate cause of the vehicle collision.7
On April 8, 2008, GV Florida instituted a third-party
complaint8 against TCC. According to GV Florida, on March 23, 2007,
it purchased from TCC fifty (50) brand new Michelin tires, four (4)
of which were installed into the bus that figured in the collision. It
claimed that though Vizquera exerted all efforts humanly possible
to avoid the accident, the bus nevertheless swerved to the oncoming
south-bound lane and into the VLI bus. GV Florida maintains that
the "proximate cause of the accident is the tire blow out which was
brought about by factory and mechanical defects in the Michelin
tires which third-party plaintiff GV Florida absolutely and totally had
no control over."9
The RTC ordered the service of summons on TCC. In the return of
summons, it appears that the sheriff served the summons to a
certain Cherry Gino-gino (Gino-gino) who represented herself as an
accounting manager authorized by TCC to receive summons on its
behalf.10
TCC filed a Special Entry of Appearance with an Ex-parte Motion for
Extension of Time to File Responsive Pleading and/or Motion to
Dismiss.11 Therein, it stated that the summons was received by
Gino-gino, its financial supervisor. The RTC granted TCC's prayer for
extension of time to file a responsive pleading or a motion to
dismiss.
TCC eventually filed a motion to dismiss12 GV Florida's third-party
complaint. First, it argued that the RTC never acquired jurisdiction
over it due to improper service of summons. Under Section 11 of
Rule 14, there is an exclusive list of the persons upon whom service
of summons on domestic juridical entities may be made. As the
summons in this case was not served on any of the persons listed
in Section 11of Rule 14, there was no proper service of summons
on TCC that would vest the RTC with jurisdiction over it. Second,
TCC stated that the purported cause of action in the third-party
complaint is a claim for an implied warranty which has already
prescribed, having been made beyond the six-month period allowed
in the Civil Code. Third, the third-party complaint failed to state a
cause of action against TCC. TCC harped on the fact that GV Florida
did not mention in the third-party complaint that the tires that blew
out were purchased from it. Moreover, a tire blow-out does not
relieve a common carrier of its liability. Fourth, TCC argues that
there is a condition precedent which the law requires before a claim
for implied warranty may be made. The party claiming must submit
a warranty claim and demand. GV Florida failed to do so in this case.
Fifth, GV Florida has the burden of first establishing that the cause
of the accident was not its own negligence before it can be allowed
to file a third-party complaint against TCC. Sixth, venue was
improperly laid since TCC's principal place of business is in Makati.
And finally, TCC states that the third-party complaint should be
dismissed due to GV Florida's failure to implead Michelin as an
indispensable party.13
The RTC denied TCC's motion to dismiss in an Order14 dated March
2, 2009. It also denied TCC's subsequent motion for reconsideration
in an Order15 dated July 16, 2009.
89
On October 5, 2009, TCC filed before the CA a petition
for certiorari and prohibition under Rule 65 of the Rules of Court
challenging the RTC's denial of its motion to dismiss and motion for
reconsideration.
In the meantime, TCC filed its Answer Ad Cautelam16which repeated
its arguments pertaining to jurisdiction, the prescription of the
implied warranty claim, the impropriety of the third-party complaint
and the venue of the action, and the failure to implead Michelin.
Upon order of the RTC, the case was set for pre-trial17 and the
parties submitted their respective pre-trial briefs. Notably, TCC filed
its pre-trial brief without any reservations as to the issue of
jurisdiction. Moreover, not only did it fail to include in its
identification of issues the question of the RTC's jurisdiction, TCC
even reserved the option to present additional evidence.18
On October 13, 2011, the CA rendered its Decision granting TCC's
petition and reversing the Orders of the RTC. Emphasizing that the
enumeration in Section 11 of Rule 14 of the Rules of Court is
exclusive, the CA found that the RTC never acquired jurisdiction over
TCC because of the improper service of summons upon a person not
named in the enumeration.19 It then proceeded to rule that GV
Florida's third-party complaint against TCC is a claim for implied
warranty which, under Article 1571 of the Civil Code, must be filed
within six months from delivery. While the CA noted that the
delivery receipt tor the tires is not in the records of the case, it may
be assumed that the tires were delivered a few days after the
purchase date of March 23, 2007. Since GV Florida only filed the
third party complaint on April 8, 2008, the action has prescribed.20
GV Florida thus filed this petition for review on certiorari under Rule
45 of the Rules of Court seeking the reversal of the CA's Decision.
GV Florida argues that the RTC acquired jurisdiction over TCC. While
it agrees that the enumeration in Section 11 of Rule 14 of the Rules
of Court is exclusive, GV Florida argues that service of summons is
not the only means through which a court acquires jurisdiction over
a party. Under Section 20 of Rule 14, voluntary appearance of a
defendant is equivalent to service of summons, which then gives a
court jurisdiction over such defendant. In this case, GV Florida
claims that TCC voluntarily appeared and submitted to the
jurisdiction of the RTC when it filed motions and pleadings seeking
affirmative relief from said court. It adds that Section 11 of Rule 14
is only a general rule which allows for substantial compliance when
there is clear proof that the domestic juridical entity in fact received
the summons. Moreover, GV Florida argues that improper service of
summons is not a ground for dismissal of the third-party complaint
since the RTC has the authority to issue alias summons.21
GV Florida also challenges the CA's ruling that its third-party
complaint against TCC should be dismissed on the ground of
prescription. It claims that prescription cannot be the basis of a
dismissal when the issue involves evidentiary matters that can only
be threshed out during trial. In this case, GV Florida asserts that the
issue of whether its action has prescribed requires a determination
of when the Michelin tires were delivered. Thus, there is a need to
examine the delivery receipts which, as GV Florida highlights, are
not in the records of the CA as stated in the Decision itself.22
In its Comment, TCC raises the procedural defense that GV Florida's
petition was filed out of time. It insists that GV Florida's motion for
extension of time to file its petition is no longer allowed by virtue of
AM No. 7-7-12-SC which prohibits the filing of motions for extension
of time in petitions filed under Rule 45 and Rule 65 of the Rules of
Court.23 Further, TCC repeats its position that the RTC did not
acquire jurisdiction over it due to improper service of summons. It
also disputes GV Florida's argument that it voluntarily appeared.
TCC insists that it initially filed a Special Entry of Appearance to
apprise the RTC that "[TCC] is represented without necessarily
waiving any right/s of the latter."24 TCC adds that in its motion to
dismiss and Answer Ad Cautelam, it consistently raised the question
of the propriety of the service of summons and the RTC's lack of
jurisdiction over it.25
Moreover, TCC insists that GV Florida's implied warranty claim has
prescribed and that the latter has, in any case, failed to comply with
a condition precedent—the filing of a warranty claim or demand.
TCC also insists that GV Florida has never complained about the
other Michelin tires it purchased. This, in TCC's view, belies GV
Florida's claim that the tires are defective.26
90
TCC also contends that GV Florida's filing of the third-party
complaint is improper. It explains that the test for ascertaining
whether a third-party complaint may be filed is whether the third-
party defendant may assert any defense which the third-party
plaintiff may have against the original plaintiff in the original case.
However, GV Florida's defense against VLI, which is lack of
negligence, is personal to GV Florida and cannot be raised by TCC
for its own benefit. TCC also asserts that in any case, the venue of
the third-party complaint is improperly laid since TCC's principal
place of business is in Makati.27
Finally, TCC claims that the third-party complaint should be
dismissed for failure to implead an indispensable party—Michelin,
the manufacturer of the tires which GV Florida claims are
defective.28
We GRANT the petition.
I one that finally disposes of a case—the proper remedy is an appeal.
We emphasize that GV Florida's appeal came from an original special
civil action for certiorari and prohibition under Rule 65 filed before
the CA. In cases such as this, the question of law presented before
us is whether the CA was correct in its ruling that the lower court
acted with grave abuse of discretion amounting to lack or excess of
jurisdiction.29
In particular, the main issue we must resolve is whether the CA
correctly found that the RTC's Order dismissing GV Florida's third-
party complaint is tainted with grave abuse of discretion which, in
turn, merits its reversal and the reinstitution of the third-party
complaint.
A
However, we shall first resolve the procedural issue raised by TCC
pertaining to the timeliness of this petition.
Section 2 of Rule 45 of the Rules of Court governing the procedure
for filing an appeal through a petition for review
on certiorari expressly allows the filing of a motion for extension of
time. Under the Rules, the period to file a petition for review
on certiorari is fifteen (15) days from receipt of the judgment,
resolution, or final order appealed from. Nevertheless, on motion of
the party filed before the reglementary period, this Court may grant
extension for a period not exceeding thirty (30) days. In a
Resolution30 dated July 16, 2012, we granted Florida's motion for
extension of time. We thus find GV Florida's petition to be timely
filed.
B
The central issue in this case arose from the RTC's Order dated
March 2, 2009 denying TCC's motion to dismiss GV Florida's third-
party complaint. In remedial law, an order denying a motion to
dismiss is classified as an interlocutory order.31 This classification is
vital because the kind of court order determines the particular
remedy that a losing party may pursue. In the case of a final order—
On the other hand, when an order is merely interlocutory—one
which refers to something between the commencement and end of
the suit which decides some point or matter but is not the final
decision of the whole controversy,32—Section 1 of Rule 41 provides
that an appeal cannot be had. In this instance, a party's recourse is
to file an answer, with the option to include grounds stated in the
motion to dismiss, and proceed to trial. In the event that an adverse
judgment is rendered, the party can file an appeal and raise the
interlocutory order as an error.33
This general rule is subject to a narrow exception. A party may
question an interlocutory order without awaiting judgment after trial
if its issuance is tainted with grave abuse of discretion amounting to
lack or excess of jurisdiction.34 In this case, the party can file a
special civil action for certiorari under Rule 65.
A special civil action for certiorari is an original civil action and not
an appeal. An appeal aims to correct errors in judgment and rectify
errors in the appreciation of facts and law which a lower court may
have committed in the proper exercise of its jurisdiction.35 A special
civil action for certiorari, on the other hand, is used to correct errors
in jurisdiction. We have defined an error in jurisdiction as "one
91
where the officer or tribunal acted without or in excess of its
jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction."36
This distinction finds concrete significance when a party pleads
before a higher court seeking the correction of a particular order.
When a party seeks an appeal of a final order, his or her petition
must identify the errors in the lower court's findings of fact and law.
Meanwhile, when a party files a special civil action for certiorari, he
or she must allege the acts constituting grave abuse of discretion.
Grave abuse of discretion has a precise meaning in remedial law. It
is not mere abuse of discretion but must be grave "as when the
power is exercised in an arbitrary or despotic manner by reason of
passion or personal hostility, and must be so patent and so 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."37 In more concrete terms, not every error committed by a
tribunal amounts to grave abuse of discretion. A misappreciation of
the facts or a misapplication of the law does not, by itself, warrant
the filing of a special civil action for certiorari. There must be a clear
abuse of the authority vested in a tribunal. This abuse must be so
serious and so grave that it warrants the interference of the court
to nullify or modify the challenged action and to undo the damage
done.38
In Pahila-Garrido v. Tortogo,39 we found grave abuse of discretion
when a trial court judge issued a temporary restraining order to
prevent the implementation of a writ of execution for an indefinite
period. There, we declared that the blatant violation of the Rules of
Court is clearly grave abuse of discretion.40 In Belongilot v.
Cua,41 we also ruled that the Ombudsman's dismissal of a complaint
for a violation of Republic Act No. 3019 was attended with grave
abuse of discretion because it used irrelevant considerations and
refused to properly examine pertinent facts in arriving at its decision
on the issue of probable cause.42 We held that "an examination of
the records reveal a collective pattern of action—done capriciously,
whimsically and without regard to existing rules and attendant
facts."43
There are instances when litigants file a petition seeking the reversal
of an interlocutory order yet their pleadings fail to allege any grave
abuse of discretion on the part of the lower tribunal. Instead, these
petitions merely identify errors of fact and law and seek their
reversal. In such a case, the higher court must dismiss the petition
because it fails to allege the core requirement of a Rule 65 petition—
the allegation of the presence of grave abuse of discretion. Without
this requirement, litigants can easily circumvent the rule that an
interlocutory order cannot be appealed. They will simply file a
pleading denominated as a special civil action for certiorari, but
which instead raises errors in judgment and is, in truth, an appeal.
An appeal and a special civil action for certiorari are, however, not
interchangeable remedies.44
In the present case, TCC's petition for certiorari did not identify the
RTC's specific acts constituting grave abuse of discretion. Rather, it
imputed errors in the RTC's proper interpretation of the law. Further,
the CA's Decision makes no finding of any grave abuse of discretion
on the part of the RTC. The penultimate paragraph of the Decision,
which summarizes the basis for its ruling, states:
In fine, the RTC failed to acquire jurisdiction over the person of
[TCC] since the service of summons to its Account Manager is not
binding on the corporation. Furthermore, the action brought by [GV
Florida] against [TCC] is already barred by prescription having filed
beyond the six-month prescriptive period. Having settled the pivotal
issues in this case, We find that it is no longer necessary to address
other arguments raised by the petitioner since those questions, if
considered, would not alter the outcome of this case.45
The CA, in choosing to reverse the RTC in a special civil action
for certiorari, based its decision on its disagreement with the RTC
as to the correct application of the law. This is not an error in
jurisdiction but merely an error in judgment. Instead of granting the
petition and reversing the RTC, what the CA should have done was
to dismiss the petition for certiorari for failing to allege grave abuse
of discretion. We further note that the RTC Order challenged before
the CA through the petition for certiorari is an interlocutory order.
As there was no showing of grave abuse of discretion, TCC's
recourse is to proceed to trial and raise this error in its appeal in the
event of an adverse judgment.
92
II
Nevertheless, we have examined the errors raised by GV Florida in
the appeal filed before us and hold that the CA erred in its
conclusions of law as well.
We agree that there was improper service of summons on TCC. We,
however, apply jurisprudence and rule that in cases of improper
service of summons, courts should not automatically dismiss the
complaint by reason of lack of jurisdiction over the person of the
defendant. The remedy is to issue alias summons and ensure that it
is properly served.46
Service of summons is the main mode through which a court
acquires jurisdiction over the person of the defendant in a civil case.
Through it, the defendant is informed of the action against him or
her and he or she is able to adequately prepare his or her course of
action. Rules governing the proper service of summons are not mere
matters of procedure. They go into a defendant's right to due
process.47 Thus, strict compliance with the rules on service of
summons is mandatory.
Section 11, Rule 14 of the Rules of Court provides the procedure for
the issuance of summons to a domestic private juridical entity. It
states:
Sec. 11. 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.
This enumeration is exclusive. Section 11 of Rule 14 changed the
old rules pertaining to the service of summons on corporations.
While the former rule allowed service on an agent of a corporation,
the current rule has provided for a list of specific persons to whom
service of summons must be made.
In Nation Petroleum Gas, Incorporated v. Rizal Commercial Banking
Corporation,48 we explained that the purpose of this rule is "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."49 This rule requires strict compliance; the
old doctrine that substantial compliance is sufficient no longer
applies.50 In E.B. Villarosa & Partner Co., Ltd. v. Benito,51 we ruled
that the liberal construction of the rules cannot be invoked as a
substitute for the plain requirements stated in Section 11 of Rule
14.52 In Mason v. Court of Appeals,53 we definitively ruled
that Villarosa settled the question of the application of the rule on
substantial compliance. It does not apply in the case of Section 11
of Rule 14. We said:
The question of whether the substantial compliance rule is still
applicable under Section II, Rule 14 of the 1997 Rules of Civil
Procedure has been settled in Villarosa which applies squarely to the
instant case. In the said case, petitioner E. B. Villarosa & Partner
Co. Ltd. (hereafter Villarosa) with principal office address at 102
Juan Luna St., Davao City and with branches at 2492 Bay View
Drive, Tambo, Parañaque, Metro Manila and Kolambog, Lapasan,
Cagayan de Oro City, entered into a sale with development
agreement with private respondent Imperial Development
Corporation. As Villarosa failed to comply with its contractual
obligation, private respondent initiated a suit for breach of contract
and damages at the Regional Trial Court of Makati. Summons,
together with the complaint, was served upon Villarosa through its
branch manager at Kolambog, Lapasan, Cagayan de Oro City.
Villarosa filed a Special Appearance with Motion to Dismiss on the
ground of improper service of summons and lack of jurisdiction. The
trial court denied the motion and ruled that there was substantial
compliance with the rule, thus, it acquired jurisdiction over Villarosa.
The latter questioned the denial before us in its petition
for certiorari. We decided in Villarosa's favor and declared the trial
court without jurisdiction to take cognizance of the case. We held
that there was no valid service of summons on Villarosa as service
was made through a person not included in the enumeration in
Section 11, Rule 14 of the 1997 Rules of Civil Procedure, which
revised [ ] Section 13, Rule 14 of the 1964 Rules of Court. We
discarded the trial court's basis for denying the motion to dismiss,
namely, private respondent's substantial compliance with the rule
on service of summons, and fully agreed with petitioner's assertions
that the enumeration under the new rule is restricted, limited and
exclusive, following the rule in statutory construction that expressio
93
unios est exclusio alterius. Had the Rules of Court Revision
Committee intended to liberalize the rule on service of summons,
we said, it could have easily done so by clear and concise language.
Absent a manifest intent to liberalize the rule, we stressed strict
compliance with Section 11, Rule 14 of the 1997 Rules of Civil
Procedure.54 (Italics in the original.)
Service of summons, however, is not the only mode through which
a court acquires jurisdiction over the person of the defendant.
Section 20 of Rule 14 of the Rules of Court states:
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.
There is voluntary appearance when a party, without directly
assailing the court's lack of jurisdiction, seeks affirmative relief from
the court.55 When a party appears before the court without
qualification, he or she is deemed to have waived his or her
objection regarding lack of jurisdiction due to improper service of
summons.56 When a defendant, however, appears before the court
for the specific purpose of questioning the court's jurisdiction over
him or her, this is a special appearance and does not vest the court
with jurisdiction over the person of the defendant.57 Section 20 of
Rule 14 of the Rules of Court provides that so long as a defendant
raises the issue of lack of jurisdiction, he or she is allowed to include
other grounds of objection. In such case, there is no voluntary
appearance.
Still, improper service of summons and lack of voluntary appearance
do not automatically warrant the dismissal of the complaint.
In Lingner & Fisher GMBH v. Intermediate Appellate Court,58 we
held:
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
filed against him should be dismissed. An alias summons can be
actually served on said defendant.59 (Italics in the original)
We repeated this doctrine in later cases such as Tung Ho Steel
Enterprises Corporation v. Ting Guan Trading Corporation,60Spouses
Anuncacion v. Bocanegra,61 and Teh v. Court of Appeals.62
In Philippine American Life & General Insurance Company v.
Breva,63 we even said that there is no grave abuse of discretion
when a trial court refuses to dismiss a complaint solely on the
ground of lack of jurisdiction over the person of the defendant
because of improper service of summons.64
Thus, when there is improper service of summons and the defendant
makes a special appearance to question this, the proper and speedy
remedy is for the court to issue alias summons.
In the present case, the summons was served to Gino-gino, a
financial supervisor of TCC. While she is not one of the officers
enumerated in Section 11 of Rule 14, we find that TCC has
voluntarily appeared before (and submitted itself to) the RTC when
it filed its pre-trial brief without any reservation as to the court's
jurisdiction over it. At no point in its pre-trial brief did TCC raise the
issue of the RTC's jurisdiction over it. In fact, it even asked the RTC
that it be allowed to reserve the presentation of additional evidence
through documents and witnesses. While it is true that TCC initially
filed an Answer Ad Cautelam, we rule that TCC waived any objection
raised therein as to the jurisdiction of the court when it subsequently
filed its pre-trial brief without any reservation and even prayed to
be allowed to present additional evidence. This, to this Court's mind,
is an unequivocal submission to the jurisdiction of the RTC to
conduct the trial.
Moreover, we apply the doctrine in Lingner & Fisher GMBH and hold
that the mere fact of improper service of summons does not lead to
the outright dismissal of the third-party complaint. While the RTC
should issue an alias summons to remedy the error, its refusal to
dismiss GV Florida's third-party complaint on the ground of lack of
jurisdiction (over TCC due to improper service of summons) does
not constitute grave abuse of discretion.
94
III
We also disagree with the CA that GV Florida's third-party complaint
should be dismissed on the ground of prescription.
Prescription is a ground for the dismissal of a complaint without
going to trial on the merits. Under Rule 16 of the Rules of Court, it
is raised in a motion to dismiss which is filed before the answer. It
may also be raised as an affirmative defense in the answer. At the
discretion of the court, a preliminary hearing on the affirmative
defense may be conducted as if a motion to dismiss was
filed.65 Nevertheless, this is only a general rule. When the issue of
prescription requires the determination of evidentiary matters, it
cannot be the basis of an outright dismissal without hearing.
In Sanchez v. Sanchez (Sanchez),66 we held that the trial court
erred when it dismissed an action on the ground of prescription on
the basis of the pleadings filed and without requiring any trial. The
issue of prescription in Sanchez required the prior determination of
whether the sale subject of the case was valid, void or voidable. This
is a matter that requires the presentation of evidence since the fact
of prescription is not apparent in the pleadings. We said:
The Court has consistently held that the affirmative defense of
prescription does not automatically warrant the dismissal of a
complaint under Rule 16 of the Rules of Civil Procedure. An
allegation of prescription can effectively be used in a motion to
dismiss only when the complaint on its face shows that indeed the
action has already prescribed. If the issue of prescription is one
involving evidentiary matters requiring a full-blown trial on the
merits, it cannot be determined in a motion to dismiss x x
x.67 (Citations omitted.)
Here, TCC alleges that GV Florida's third-party complaint (which it
argues is essentially an action for implied warranty) has already
prescribed. The Civil Code states that this claim must be made
within six months from the time of the delivery of the thing sold.
Without preempting the RTC's findings on the validity of the
argument that this is a warranty claim, a finding that the action has
prescribed requires the ascertainment of the delivery date of the
tires in question. This, in turn, requires the presentation of the
delivery receipts as well as their identification and authentication.
Under the Rules of Court, a party presenting a document as
evidence must first establish its due execution and authenticity as a
preliminary requirement for its admissibility.68
We find that the reckoning date from which the prescriptive period
may be ascertained is not apparent from the pleadings themselves.
We agree with GV Florida's observation that the CA itself admitted
in its Decision that the delivery receipts do not appear in the records.
A finding of fact as to the date of delivery can only be made after
hearing and reception of evidence. Thus, the CA erred in ruling that
GV Florida's third-party complaint should be dismissed on the
ground of prescription.
We further note that the CA based its finding on the delivery date
on mere presumptions. The assailed Decision states that since
Florida purchased the Michelin tires on March 23, 2007, it may be
presumed that the delivery was made in the ensuing days. Since the
third-party complaint was filed only on April 8, 2008, or more than
one year from the date of purchase, it concluded that the claim on
the implied warranty has prescribed.69 Findings of fact, however,
cannot be based on mere assumptions. The Rules of Court provide
the process through which factual findings are arrived at. This
procedure must be followed as it is the means chosen by law to
ascertain judicial truth. Relying on probabilities, when the rules
provide for a specific procedure to ascertain facts, cannot be
countenanced.
Since we cannot proceed to rule beyond the question of whether the
CA correctly ruled that the RTC committed grave abuse of discretion,
this being the only question of law presented before us in this
petition for review on certiorari, we shall withhold ruling on the other
issues raised by TCC in its Comment which have not been discussed
by the CA in its Decision. In any case, we find that the other matters
raised by TCC in its Comment are questions that should first be
threshed out before the RTC.
WHEREFORE, the petition is GRANTED. The Decision of the Court
of Appeals dated October 13, 2011 and its Resolution dated March
26, 2012 are REVERSED. The Order dated March 2, 2009 of Branch
129 of the Regional Trial Court of Caloocan City is REINSTATED.
95
G.R. No. 225035, February 08, 2017 responsive pleading.4

CARSON REALTY & MANAGEMENT Instead of filing a responsive pleading, Atty. Roxas moved to dismiss
CORPORATION, Petitioner, v. RED ROBIN SECURITY AGENCY the complaint, alleging that the Summons dated April 11, 2007 was
AND MONINA C. SANTOS, Respondents. not served on any of the officers and personnel authorized to receive
summons under the Rules of Court.5
DECISION
In her Comment, Santos countered that while the Summons was
initially received by Serrano, who as it turned out was a staff
VELASCO JR., J.: assistant and not the corporate secretary of Carson, the corporation
acknowledged receipt of the Summons when Atty. Roxas alleged in
Nature of the Case his Appearance and Motion that he may not be able to comply with
the 15-day prescribed period stated in the Summons within which
This is a petition for review under Rule 45 of the Rules of Court, to file a responsive pleading. Thus, when Carson sought for an
which seeks to reverse and set aside the August 20, 2015 affirmative relief of a 15-day extension from April 27, 2007 to file
Decision1 and June 8, 2016 Resolution2 of the Court of Appeals (CA) its pleading, it already voluntarily submitted itself to the jurisdiction
in CA-G.R. SP No. 121983.chanroblesvirtuallawlibrary of the RTC.6

Factual Antecedents The RTC denied Carson's Motion to Dismiss and directed the
issuance of an alias summons to be served anew upon the
The facts according to the CA are as follows: corporation. On November 9, 2007, Process Server Pajila submitted
his Officer's Report stating in essence that he attempted to serve
On March 23, 2007, respondent Monina C. Santos (Santos) filed a the alias Summons dated September 24, 2007 on the President and
Complaint for Sum of Money and Damages against petitioner Carson General Manager of Carson, as well as on the Board of Directors and
Realty & Management Corp. (Carson) with the Quezon City Regional Corporate Secretary, but they were not around. Hence, he was
Trial Court (RTC), Branch 216. As per the Officer's Return dated advised by a certain Lorie Fernandez, the '"secretary" of the
April 12, 2007 of Process Server Jechonias F. Pajila, Jr. (Process company, to bring the alias Summons to the law office of Atty.
Server Pajila), a copy of the Summons dated April 11, 2007, Roxas. Process Server Pajila attempted to serve the alias Summons
together with the Complaint and its annexes, was served upon at the law office of Atty. Roxas twice, but to no avail. This prompted
Carson at its business address at Unit 601 Prestige Tower him to resort to substituted service of the alias Summons by leaving
Condominium, Emerald Avenue, Ortigas Center, Pasig City, through a copy thereof with a certain Mr. JR Taganila, but the latter also
its "corporate secretary," Precilla S. Serrano. 3 refused to acknowledge receipt of the alias Summons.7

Thereafter, the appointed Corporate Secretary and legal counsel of
Carson, Atty. Tomas Z. Roxas, Jr. (Atty. Roxas), filed an Appearance
and Motion dated April 25, 2007 with the court wherein the latter
entered his appearance and acknowledged that the Summons was
served and received by one of the staff assistants of Carson. Atty.
Roxas prayed for an extension of fifteen (15) days from April 27,
2007 within which to file a responsive pleading. The RTC, in its Order
dated May 3, 2007, noted the appearance of Atty. Roxas as counsel
for Carson and granted his request for extension of time to file a
Atty. Roxas filed a Manifestation stating that the alias Summons was
again improperly and invalidly served as his law office was not
empowered to receive summons on behalf of Carson. In relation
thereto, Atty. Roxas maintained that substituted service is not
allowed if the party defendant is a corporation. Thus, Atty. Roxas
manifested his intention of returning the alias Summons to the RTC.
On December 10, 2007, Santos filed a Motion to Declare Defendant
in Default. Finding that there was an improper service of summons

96
on Carson, the RTC denied the motion.
Thereafter, Santos requested the RTC for the issuance of another
alias Summons. The RTC granted this request and issued an alias
Summons dated September 9, 2008. Process Server Pajila
submitted his Officer's Return dated October 28, 2008 on the
services of the alias Summons, quoted hereunder in full:
chanRoblesvirtualLawlibrary
THIS IS TO CERTIFY that on October 2, 2008 at around 12:51 in the
afternoon, when a copy of Alias Summons dated September 9, 2008
issued in the above-entitled case together with a copy of the
complaint and annexes attached thereto was brought for service to
the President/General Manager of CARSON REALTY & MANAGEMENT
CORP., in the person of Marcial M. Samson and/or Nieva A Cabrera
at its office address at Unit 601 Prestige Tower Condominium,
Emerald Avenue, Ortigas Center, 1605 Pasig City, undersigned was
informed by the secretary of the company in the person of Ms. Vina
Azonza that the abovementioned persons were not around and there
was no one in the company authorized to receive the aforesaid
summons. That the undersigned went back to the said office on
October 16, 2008 at around 3:08 in the afternoon and was entered
by Ms. Lorie Fernandez, also an employee of the company who is
authorized to receive the said process. On October 27, 2008, at
around 2:23 in the afternoon, undersigned tried again to serve the
same process to the President/General Manager of Carson Realty &
Management Corp. but with the same result.
Finally, on October 28, 2008 at around 1:03 in the afternoon, the
undersigned went back to the said company to personally serve the
Alias Summons together with the other pertinent documents, just
the same, the President/General Manager of the company was not
around, hence, substituted service of summons was resorted to by
leaving the copy of the Alias Summons at the company's office
through its employee, MS. LORIE FERNANDEZ, however, she
refused to acknowledge receipt of the
process.ChanRoblesVirtualawlibrary
Loreta M. Fernandez (Fernandez), the receptionist who received the
September 9, 2008 alias Summons, filed a Manifestation before the
RTC signifying her intention of returning the alias Summons,
together with the Complaint. Fernandez posited that, as a mere
receptionist, she had no authority to receive the said documents and
that there was an improper service of summons.
Santos filed a second Motion to Declare Defendant in Default in
January 2009. The RTC granted the motion and allowed her to
present her evidence ex-parte in its Order dated June 29, 2009.8
On August 27, 2009, Carson filed an Urgent Motion to Set Aside
Order of Default9 alleging that the RTC has yet to acquire jurisdiction
over its person due to improper service of summons. The RTC
denied the same in its December 4, 2009 Order.10
Carson filed an Urgent Motion for Reconsideration and for Leave of
Court to Admit Responsive Pleading on March 17, 2010, appending
thereto its Answer with Counterclaims. This was opposed by Santos
in her Comment/Opposition. In the meantime, Santos filed an Ex-
Parte Motion to Set for Hearing and for Reception of Evidence Before
the Branch Clerk of Court.11 On November 22, 2010, the RTC
rendered an Order12 denying Carson's Urgent Motion for
Reconsideration and granting Santos' Ex-Parte Motion to Set Case
for Hearing and for Reception of Evidence Before the Branch Clerk.13
Carson filed a Motion for Clarification and prayed for the annulment
of the Orders dated June 29, 2009, December 4, 2009, and
November 22, 2010. The RTC, however, maintained its stance and
denied the motion in its Order14 dated September 9, 2011.
Thus, Carson filed a Petition for Certiorari15 dated November 9, 2011
under Rule 65 of the Rules of Court with the CA, imputing grave
abuse of discretion amounting to lack or excess of jurisdiction to the
RTC for issuing the Orders dated June 29, 2009, December 4, 2009,
November 22, 2010, and September 9, 2011. Carson essentially
questioned the validity of the service of the second alias Summons
dated September 9, 2008, received by Fernandez, who is a
receptionist assigned at its office in
Ortigas.chanroblesvirtuallawlibrary
Ruling of the Court of Appeals
The CA denied the petition and ruled that the RTC had properly
acquired jurisdiction over Carson due to its voluntary appearance in
court. In ruling thus, the CA considered Carson's act of requesting
additional time to file its responsive pleading as voluntary
submission to the jurisdiction of the trial court.
97
 parties must: (a) indicate the impossibility of personal service of
Even on the assumption that Carson did not voluntarily submit to summons within a reasonable time; (b) specify the efforts exerted
the RTC's jurisdiction, the CA maintained that the RTC still acquired to locate the defendant; and (c) state that the summons was served
jurisdiction over it due to the substituted service of the alias upon a person of sufficient age and discretion who is residing in the
Summons dated September 9, 2008. The appellate court reasoned address, or who is in charge of the office or regular place of business
that Fernandez is a competent person charged with authority to of the defendant.18
receive court documents on behalf of the
corporation.16 Consequently, the CA upheld the Order dated June In relation to the foregoing, Manotoc v. Court of Appeals119 provides
29, 2009 declaring Carson in default. an exhaustive discussion on what constitutes valid resort to
substituted service of summons:
chanRoblesvirtualLawlibrary
Carson moved for reconsideration but was denied by the CA in its (1) Impossibility of Prompt Personal Service
Resolution dated June 8, 2016. Hence, this petition.
The party relying on substituted service or the sheriff must show
Carson, in the main, argues that the trial court did not acquire that defendant cannot be served promptly or there is impossibility
jurisdiction over its person because the summons was not properly of prompt service. Section 8, Rule 14 provides that the plaintiff or
served upon its officers as mandated under Section 11,17 Rule 14 of the sheriff is given a "reasonable time" to serve the summons to the
the Rules of Court. Thus, Carson posits, the RTC improperly declared defendant in person, but no specific time frame is mentioned.
it in default and should not have allowed Santos to present her "Reasonable time" is defined as "so much time as is necessary under
evidence ex-parte.chanroblesvirtuallawlibrary the circumstances for a reasonably prudent and diligent man to do,
conveniently, what the contract or duty requires that should be
Issues done, having a regard for the rights and possibility of loss, if any, to
the other party." Under the Rules, the service of summons has no
The pertinent issues for the resolution of this Court can be set period.
summarized, as follows:
However, when the court, clerk of court, or the plaintiff asks the
(1) Whether the RTC acquired jurisdiction over Carson. sheriff to make the return of the summons and the latter submits
the return of summons, then the validity of the summons lapses.
(2) Whether Carson was properly declared in The plaintiff may then ask for an alias summons if the service of
default.chanroblesvirtuallawlibrary summons has failed. What then is a reasonable time for the sheriff
to effect a personal service in order to demonstrate impossibility of
Our Ruling prompt service? To the plaintiff, "reasonable time" means no more
than seven (7) days since an expeditious processing of a complaint
The petition is bereft of merit. is what a plaintiff wants. To the sheriff: "reasonable time" means 15
to 30 days because at the end of the month, it is a practice for the
In actions in personam, such as the present case, the court acquires branch clerk of court to require the sheriff to submit a return of the
jurisdiction over the person of the defendant through personal or summons assigned to the sheriff for service. The Sheriffs Return
substituted service of summons. However, because substituted provides data to the Clerk of Court, which the clerk uses in the
service is in derogation of the usual method of service and personal Monthly Report of Cases to be submitted to the Office of the Court
service of summons is preferred over substituted service, parties do Administrator within the first ten (10) days of the succeeding month.
not have unbridled right to resort to substituted service of Thus, one month from the issuance of summons can be considered
summons. Before substituted service of summons is resorted to, the "reasonable time" with regard to personal service on the defendant.

98

Sheriffs are asked to discharge their duties on the service of
summons with due care, utmost diligence, and reasonable
promptness and speed so as not to prejudice the expeditious
dispensation of justice. Thus, they are enjoined to try their best
efforts to accomplish personal service on defendant. On the other
hand, since the defendant is expected to try to avoid and evade
service of summons, the sheriff must be resourceful, persevering,
canny, and diligent in serving the process on the defendant. For
substituted service of summons to be available, there must be
several attempts by the sheriff to personally serve the summons
within a reasonable period [of one month] which eventually resulted
in failure to prove impossibility of prompt service. "Several
attempts" means at least three (3) tries, preferably on at least two
different dates. In addition, the sheriff must cite why such efforts
were unsuccessful. It is only then that impossibility of service can
be confirmed or accepted.
(2) Specific Details in the Return
The sheriff must describe in the Return of Summons the facts and
circumstances surrounding the attempted personal service. The
efforts made to find the defendant and the reasons behind the
failure must be clearly narrated in detail in the Return. The date and
time of the attempts on personal service, the inquiries made to
locate the defendant, the name/s of the occupants of the alleged
residence or house of defendant and all other acts done, though
futile, to serve the summons on defendant must be specified in the
Return to justify substituted service. The form on Sheriffs Return of
Summons on Substituted Service prescribed in the Handbook for
Sheriffs published by the Philippine Judicial Academy requires a
narration of the efforts made to find the defendant personally and
the fact of failure. Supreme Court Administrative Circular No. 5
dated November 9, 1989 requires that "impossibility of prompt
service should be shown by stating the efforts made to find the
defendant personally and the failure of such efforts," which should
be made in the proof of service.
(3) A Person of Suitable Age and Discretion
If the substituted service will be effected at defendant's house or
residence, it should be left with a person of "suitable age and
discretion then residing therein." A person of suitable age and
discretion is one who has attained the age of full legal capacity (18
years old) and is considered to have enough discernment to
understand the importance of a summons. "Discretion" is defined as
"the ability to make decisions which represent a responsible choice
and for which an understanding of what is lawful, right or wise may
be presupposed". Thus, to be of sufficient discretion, such person
must know how to read and understand English to comprehend the
import of the summons, and fully realize the need to deliver the
summons and complaint to the defendant at the earliest possible
time for the person to take appropriate action. Thus, the person
must have the "relation of confidence" to the defendant, ensuring
that the latter would receive or at least be notified of the receipt of
the summons. The sheriff must therefore determine if the person
found in the alleged dwelling or residence of defendant is of legal
age, what the recipient's relationship with the defendant is, and
whether said person comprehends the significance of the receipt of
the summons and his duty to immediately deliver it to the defendant
or at least notify the defendant of said receipt of summons. These
matters must be clearly and specifically described in the Return of
Summons.
(4) A Competent Person in Charge
If the substituted service will be done at defendant's office or regular
place of business, then it should be served on a competent person
in charge of the place. Thus, the person on whom the substituted
service will be made must be the one managing the office or
business of defendant, such as the president or manager; and such
individual must have sufficient knowledge to understand the
obligation of the defendant in the summons, its importance, and the
prejudicial effects arising from inaction on the summons. Again,
these details must be contained in the
Return.ChanRoblesVirtualawlibrary
The substituted service of summons is valid
While Our pronouncement in Manotoc has been strictly applied to
several succeeding cases, We do not cling to such strictness in
instances where the circumstances justify substantial compliance
with the requirements laid down therein. It is the spirit of the
procedural rules, not their letter, that governs.20
99
In Sagana v. Francisco,21 the substituted service of summons was the summons on these officers were made on four separate
questioned for non-compliance with the Rules, since the summons occasions: October 2, 2008, October 16, 2008, October 27, 2008,
was not allegedly served at defendant's residence or left with any and October 28, 2008, but to no avail.
person who was authorized to receive it on behalf of the defendant.
We upheld the validity of the substituted service of summons due to On his fourth and final attempt, Process Server Pajila served the
the defendant's evident avoidance to receive the summons summons on Fernandez, Carson's receptionist, due to the
personally despite the process server's diligent efforts to effect unavailability and difficulty to locate the company's corporate
personal service upon him. We explained: officers. The pertinent portion of the Return states:
chanRoblesvirtualLawlibrary chanRoblesvirtualLawlibrary
We do not intend this ruling to overturn jurisprudence to the effect [S]ubstituted service of summons was resorted to by leaving the
that statutory requirements of substituted service must be followed copy of the Alias Summons at the company's office through its
strictly, faithfully, and fully, and that any substituted service other employee, MS. LORIE FERNANDEZ, however, she refused to
than that authorized by the Rules is considered ineffective. acknowledge receipt of the process.ChanRoblesVirtualawlibrary
However, an overly strict application of the Rules is not warranted
Based on the facts, there was a deliberate plan of Carson's for its
in this case, as it would clearly frustrate the spirit of the law as well
officers not to receive the Summons. It is a legal maneuver that is
as do injustice to the parties, who have been waiting for almost 15
in derogation of the rules on Summons. We cannot tolerate that.
years for a resolution of this case. We are not heedless of the
widespread and flagrant practice whereby defendants actively
The facts now show that the responsible officers did not intend to
attempt to frustrate the proper service of summons by refusing to
receive the alias Summons through substituted service. The
give their names, rebuffing requests to sign for or receive
Summons is considered validly served.
documents, or eluding officers of the court. Of course it is to be
expected that defendants try to avoid service of summons,
The RTC acquired jurisdiction over Carson
prompting this Court to declare that, "the sheriff must be
resourceful, persevering, canny, and diligent in serving the process
In any event, even if We concede the invalidity of the substituted
on the defendant." However, sheriffs are not expected to be sleuths,
service, such is of little significance in view of the fact that the RTC
and cannot be t1mlted where the defendants themselves engage in
had already acquired jurisdiction over Carson early on due to its
deception to thwart the orderly administration of
voluntary submission to the jurisdiction of the court.
justice.ChanRoblesVirtualawlibrary
Similarly, given the circumstances in the case at bench, We find that Courts acquire jurisdiction over the plaintiffs upon the filing of the
resort to substituted service was warranted since the impossibility complaint. On the other hand, jurisdiction over the defendants in a
of personal service is clearly apparent. civil case is acquired either through the service of summons upon
them or through their voluntary appearance in court and their
A perusal of the Officer's Return dated October 28, 2008 detailing submission to its authority,22 as provided in Section 20,23 Rule 14 of
the circumstances surrounding the service of the second alias the Rules of Court.
Summons dated September 9, 2008 shows that the foregoing
requirements for a valid substituted service of summons were On this score, Philippine Commercial International Bank v. Spouses
substantially complied with. Day24 instructs that:
chanRoblesvirtualLawlibrary
Indeed, the Return established the impossibility of personal service As a general proposition, one who seeks an affirmative relief is
to Carson's officers, as shown by the efforts made by Process Server deemed to have submitted to the jurisdiction of the court. It is by
Pajila to serve the September 8, 2008 alias Summons on Carson's reason of this rule that we have had occasion to declare that the
President/General Manager. In particular, several attempts to serve filing of motions to admit answer, for additional time to file answer,

10
0
for reconsideration of a default judgment, and to lift order of
default with motion for reconsideration, is considered voluntary
submission to the court's jurisdiction. This, however, is tempered
only by the concept of conditional appearance, such that a party
who makes a special appearance to challenge, among others, the
court's jurisdiction over his person cannot be considered to have
submitted to its authority. Prescinding from the foregoing, it is thus
clear that:
(1) Special appearance operates as an exception to the general rule
on voluntary appearance;chanrobleslaw
(2) Accordingly, objections to the jurisdiction of the court over the
person of the defendant must be explicitly made, i.e., set forth in
an unequivocal manner; and
(3) Failure to do so constitutes voluntary submission to the
jurisdiction of the court, especially in instances where a pleading or
motion seeking affirmative relief is filed and submitted to the court
for resolution. (underscoring supplied)ChanRoblesVirtualawlibrary
We have, time and again, held that the filing of a motion for
additional time to file answer is considered voluntary submission to
the jurisdiction of the court.25cralawred If the defendant knowingly
does an act inconsistent with the right to object to the lack of
personal jurisdiction as to him, like voluntarily appearing in the
action, he is deemed to have submitted himself to the jurisdiction
of the court.26 Seeking an affirmative relief is inconsistent with the
position that no voluntary appearance had been made, and to ask
for such relief, without the proper objection, necessitates
submission to the Court's jurisdiction.27
Carson voluntarily submitted to the jurisdiction of the RTC when it
filed, through Atty. Roxas, the Appearance and Motion dated April
25, 2007 acknowledging Carson's receipt of the Summons dated
April 11, 2007 and seeking additional time to file its responsive
pleading. As noted by the CA, Carson failed to indicate therein that
the Appearance and Motion was being filed by way of a conditional
appearance to question the regularity of the service of summons.
Thus, by securing the affirmative relief of additional time to file its
responsive pleading, Carson effectively voluntarily submitted to the
jurisdiction of the RTC.
Carson was properly declared in default
Section 3, Rule 9 of the Rules of Court states when a party may be
properly declared in default and the remedy available in such case:
chanRoblesvirtualLawlibrary
SEC. 3. Default; declaration of. - If the defending party fails to
answer within the time allowed therefor, the court shall, upon
motion of the claiming party with notice to the defending party, and
proof of such failure, declare the defending party in default.
Thereupon, the court shall proceed to render judgment granting the
claimant such relief as his pleading may warrant, unless the court
in its discretion requires the claimant to submit evidence. Such
reception of evidence may be delegated to the clerk of court.
(a) Effect of order of default. - A party in default shall be entitled to
notice of subsequent proceedings but not to take part in the trial.
(b) Relief from order of default. - A party declared in default may at
any time after notice thereof and before judgment file a motion
under oath to set aside the order of default upon proper showing
that his failure to answer was due to fraud, accident, mistake or
excusable negligence and that he has a meritorious defense. In such
case, the order of default may be set aside on such terms and
conditions as the judge may impose in the interest of justice.
(emphasis supplied)ChanRoblesVirtualawlibrary
Carson moved to dismiss the complaint instead of submitting a
responsive pleading within fifteen (15) days from April 27, 2007 as
prayed for in its Appearance and Motion. Clearly, Carson failed to
answer within the time allowed for by the RTC. At this point, Carson
could have already been validly declared in default. However,
believing that it has yet to acquire jurisdiction over Carson, the RTC
issued the September 24, 2007 and September 9, 2008 alias
Summons. This culminated in the issuance of the assailed June 29,
2009 Order declaring Carson in default on the basis of the
substituted service of the September 9, 2008 alias Summons. While
Carson filed its Urgent Motion to Lift Order of Default, the CA found
that the same failed to comply with the requirement under Sec. 3(b)
that the motion be under oath.
It bears noting that the propriety of the default order stems from
Carson's failure to file its responsive pleading despite its voluntary
submission to the jurisdiction of the trial court reckoned from its
filing of the Appearance and Motion, and not due to its failure to file
10
1
its answer to the September 8, 2008 alias Summons. This
conclusion finds support in Atiko Trans, Inc. and Cheng Lie
Navigation Co., Ltd v. Prudential Guarantee and Assurance,
Inc.,28 wherein We upheld the trial court's order declaring petitioner
Atiko Trans, Inc. (Atiko) in default despite the invalid service of
summons upon it. In this case, respondent Prudential Guarantee
and Assurance Inc. (Prudential) moved to declare Atiko in default
due to the latter's failure to file its responsive pleading despite
receipt of the summons. Acting on Prudential's motion, the trial
court declared Atiko in default. In affirming the validity of the default
order, We took note that the trial court acquired jurisdiction over
Atiko due to its voluntary submission to the jurisdiction of the court
by filing numerous pleadings seeking affirmative relief, and not on
the strength of the invalidly served summons.
In a similar vein, the erroneous basis cited in the June 29, 2009
Order, due to the RTC's mistaken belief that the substituted service
vested it with jurisdiction over Carson, does not render the
pronouncement invalid in view of the existence of a lawful ground
therefor.
WHEREFORE, the petition is DENIED. The Decision dated August
20, 2015 and Resolution dated June 8, 2016 of the Court of Appeals
in CA G.R. SP No. 121983 are AFFIRMED.
G.R. No. 206147, January 13, 2016
MICHAEL C. GUY, Petitioner, v. ATTY. GLENN C.
GACOTT, Respondent.
DECISION
MENDOZA, J.:
Before this Court is a petition for review on certiorari under Rule 45
of the Rules of Court filed by petitioner Michael C. Guy (Guy),
assailing the June 25, 2012 Decision1 and the March 5, 2013
Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 94816,
which affirmed the June 28, 2009 3 and February 19, 20104 Orders
of the Regional Trial Court, Branch 52, Puerto Princesa City, Palawan
(RTC), in Civil Case No. 3108, a case for damages. The assailed RTC
orders denied Guy's Motion to Lift Attachment Upon Personalty5 on
the ground that he was not a judgment debtor.
The Facts
It appears from the records that on March 3, 1997, Atty. Glenn
Gacott (Gacott) from Palawan purchased two (2) brand new
transreceivers from Quantech Systems Corporation (QSC) in Manila
through its employee Rey Medestomas (Medestomas), amounting
to a total of PI 8,000.00. On May 10, 1997, due to major defects,
Gacott personally returned the transreceivers to QSC and requested
that they be replaced. Medestomas received the returned
transreceivers and promised to send him the replacement units
within two (2) weeks from May 10, 1997.
Time passed and Gacott did not receive the replacement units as
promised. QSC informed him that there were no available units and
that it could not refund the purchased price. Despite several
demands, both oral and written, Gacott was never given a
replacement or a refund. The demands caused Gacott to incur
expenses in the total amount of P40,936.44. Thus, Gacott filed a
complaint for damages. Summons was served upon QSC and
Medestomas, afterwhich they filed their Answer, verified by
Medestomas himself and a certain Elton Ong (Ong). QSC and
Medestomas did not present any evidence during the trial.6
In a Decision,7 dated March 16, 2007, the RTC found that the two
(2) transreceivers were defective and that QSC and Medestomas
failed to replace the same or return Gacott's money. The dispositive
portion of the decision reads:chanRoblesvirtualLawlibrary
WHEREFORE, judgment is hereby rendered in favor of the plaintiff,
ordering the defendants to jointly and severally pay plaintiff the
following:chanRoblesvirtualLawlibrary
1. Purchase price plus 6% per annum from March 3,1997 up to and
until fully paid -------------------------------------------------------- P
18,000.00
2. Actual Damages ----------------------------------- 40,936.44
3. Moral Damages ----------------------------------- 75,000.00
4. Corrective Damages ---------------------------- 100,000.00
10
2
5. Attorney's Fees ------------------------------------ 60,000.00
6. Costs.
SO ORDERED.
cralawlawlibrary
The decision became final as QSC and Medestomas did not interpose
an appeal. Gacott then secured a Writ of Execution,8 dated
September 26, 2007.
During the execution stage, Gacott learned that QSC was not a
corporation, but was in fact a general partnership registered with
the Securities and Exchange Commission (SEC). In the articles of
partnership,9 Guy was appointed as General Manager of QSC.
To execute the judgment, Branch Sheriff Ronnie L. Felizarte (Sheriff
Felizarte) went to the main office of the Department of
Transportation and Communications, Land Transportation Office
(DOTC-LTO), Quezon City, and verified whether Medestomas, QSC
and Guy had personal properties registered therein. 10 Upon learning
that Guy had vehicles registered in his name, Gacott instructed the
sheriff to proceed with the attachment of one of the motor vehicles
of Guy based on the certification issued by the DOTC-LTO.11
On March 3, 2009, Sheriff Felizarte attached Guy's vehicle by virtue
of the Notice of Attachment/Levy upon Personalty 12 served upon the
record custodian of the DOTC-LTO of Mandaluyong City. A similar
notice was served to Guy through his housemaid at his residence.
Thereafter, Guy filed his Motion to Lift Attachment Upon Personalty,
arguing that he was not a judgment debtor and, therefore, his
vehicle could not be attached.13 Gacott filed an opposition to the
motion.
The RTC Order
On June 28, 2009, the RTC issued an order denying Guy's motion.
It explained that considering QSC was not a corporation, but a
registered partnership, Guy should be treated as a general partner
pursuant to Section 21 of the Corporation Code, and he may be held
jointly and severally liable with QSC and Medestomas. The trial court
wrote:chanRoblesvirtualLawlibrary
All persons who assume to act as a corporation knowing it to be
without authority to do so shall be liable as general partners for all
debts, liabilities and damages incurred or arising as a result thereof
x x x. Where, by any wrongful act or omission of any partner acting
in the ordinary course of the business of the partnership x x x, loss
or injury is caused to any person, not being a partner in the
partnership, or any penalty is incurred, the partnership is liable
therefore to the same extent as the partner so acting or omitting to
act. All partners are liable solidarity with the partnership for
everything chargeable to the partnership under Article 1822 and
1823.14cralawlawlibrary
Accordingly, it disposed:chanRoblesvirtualLawlibrary
WHEREFORE, with the ample discussion of the matter, this Court
finds and so holds that the property of movant Michael Guy may be
validly attached in satisfaction of the liabilities adjudged by this
Court against Quantech Co., the latter being an ostensible
Corporation and the movant being considered by this Court as a
general partner therein in accordance with the order of this court
impressed in its decision to this case imposing joint and several
liability to the defendants. The Motion to Lift Attachment Upon
Personalty submitted by the movant is therefore DENIED for lack of
merit.
SO ORDERED.15cralawlawlibrary
Not satisfied, Guy moved for reconsideration of the denial of his
motion. He argued that he was neither impleaded as a defendant
nor validly served with summons and, thus, the trial court did not
acquire jurisdiction over his person; that under Article 1824 of the
Civil Code, the partners were only solidarily liable for the partnership
liability under exceptional circumstances; and that in order for a
partner to be liable for the debts of the partnership, it must be
shown that all partnership assets had first been exhausted.16
On February 19, 2010, the RTC issued an order17 denying his
motion.
The denial prompted Guy to seek relief before the CA.
10
3
The CA Ruling
On June 25, 2012, the CA rendered the assailed decision dismissing
Guy's appeal for the same reasons given by the trial court. In
addition thereto, the appellate court
stated:chanRoblesvirtualLawlibrary
We hold that Michael Guy, being listed as a general partner of QSC
during that time, cannot feign ignorance of the existence of the court
summons. The verified Answer filed by one of the partners, Elton
Ong, binds him as a partner because the Rules of Court does not
require that summons be served on all the partners. It is sufficient
that service be made on the "president, managing partner, general
manager, corporate secretary, treasurer or in-house counsel." To
Our mind, it is immaterial whether the summons to QSC was served
on the theory that it was a corporation. What is important is that
the summons was served on QSC's authorized officer
xxx.18ChanRoblesVirtualawlibrary
cralawlawlibrary
The CA stressed that Guy, being a partner in QSC, was bound by
the summons served upon QSC based on Article 1821 of the Civil
Code. The CA further opined that the law did not require a partner
to be actually involved in a suit in order for him to be made liable.
He remained "solidarity liable whether he participated or not,
whether he ratified it or not, or whether he had knowledge of the
act or omission."19
Aggrieved, Guy filed a motion for reconsideration but it was denied
by the CA in its assailed resolution, dated March 5, 2013.
Hence, the present petition raising the following
ISSUE
THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR IN HOLDING THAT PETITIONER GUY IS
SOLIDARILY LIABLE WITH THE PARTNERSHIP FOR DAMAGES
ARISING FROM THE BREACH OF THE CONTRACT OF SALE
WITH RESPONDENT GACOTT.20ChanRoblesVirtualawlibrary
cralawlawlibrary
Guy argues that he is not solidarity liable with the partnership
because the solidary liability of the partners under Articles 1822,
1823 and 1824 of the Civil Code only applies when it stemmed from
the act of a partner. In this case, the alleged lapses were not
attributable to any of the partners. Guy further invokes Article 1816
of the Civil Code which states that the liability of the partners to the
partnership is merely joint and subsidiary in nature.
In his Comment,21 Gacott countered, among others, that because
Guy was a general and managing partner of QSC, he could not feign
ignorance of the transactions undertaken by QSC. Gacott insisted
that notice to one partner must be considered as notice to the whole
partnership, which included the pendency of the civil suit against it.
In his Reply,22 Guy contended that jurisdiction over the person of
the partnership was not acquired because the summons was never
served upon it or through any of its authorized office. He also
reiterated that a partner's liability was joint and subsidiary, and not
solidary.
The Court's Ruling
The petition is meritorious.
The service of summons was
flawed; voluntary appearance
cured the defect
Jurisdiction over the person, or jurisdiction in personam - the power
of the court to render a personal judgment or to subject the parties
in a particular action to the judgment and other rulings rendered in
the action - is an element of due process that is essential in all
actions, civil as well as criminal, except in actions in rem or quasi in
rem.23 Jurisdiction over the person of the plaintiff is acquired by the
mere filing of the complaint in court. As the initiating party, the
plaintiff in a civil action voluntarily submits himself to the jurisdiction
of the court. As to the defendant, the court acquires jurisdiction over
his person either by the proper service of the summons, or by his
voluntary appearance in the action.24
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Under Section 11, Rule 14 of the 1997 Revised Rules of Civil
Procedure, when the defendant is a corporation, partnership or
association organized under the laws of the Philippines with a
juridical personality, the service of summons may be made on the
president, managing partner, general manager, corporate
secretary, treasurer, or in-house counsel. Jurisprudence is replete
with pronouncements that such provision provides an exclusive
enumeration of the persons authorized to receive summons for
juridical entities.25cralawred
The records of this case reveal that QSC was never shown to have
been served with the summons through any of the enumerated
authorized persons to receive such, namely: president, managing
partner, general manager, corporate secretary, treasurer or in-
house counsel. Service of summons upon persons other than
those officers enumerated in Section 11 is invalid. Even
substantial compliance is not sufficient service of summons. The CA
was obviously mistaken when it opined that it was immaterial
whether the summons to QSC was served on the theory that it was
a corporation.27
Nevertheless, while proper service of summons is necessary to vest
the court jurisdiction over the defendant, the same is merely
procedural in nature and the lack of or defect in the service of
summons may be cured by the defendant's subsequent voluntary
submission to the court's jurisdiction through his filing a responsive
pleading such as an answer. In this case, it is not disputed that QSC
filed its Answer despite the defective summons. Thus, jurisdiction
over its person was acquired through voluntary appearance.
A partner must be separately
and distinctly impleaded before
he can be bound by a judgment
The next question posed is whether the trial court's jurisdiction over
QSC extended to the person of Guy insofar as holding him solidarity
liable with the partnership. After a thorough study of the relevant
laws and jurisprudence, the Court answers in the negative.
Although a partnership is based on delectus personae or mutual
agency, whereby any partner can generally represent the
partnership in its business affairs, it is non sequitur that a suit
against the partnership is necessarily a suit impleading each and
every partner. It must be remembered that a partnership is a
juridical entity that has a distinct and separate personality from the
persons composing it.28
In relation to the rules of civil procedure, it is elementary that a
judgment of a court is conclusive and binding only upon the parties
and their successors-in-interest after the commencement of the
action in court.29 A decision rendered on a complaint in a civil action
or proceeding does not bind or prejudice a person not impleaded
therein, for no person shall be adversely affected by the outcome of
a civil action or proceeding in which he is not a party.30 The principle
that a person cannot be prejudiced by a ruling rendered in an action
or proceeding in which he has not been made a party conforms to
the constitutional guarantee of due process of law.31
In Muñoz v. Yabut, Jr.,32 the Court declared that a person not
impleaded and given the opportunity to take part in the proceedings
was not bound by the decision declaring as null and void the title
from which his title to the property had been derived. The effect of
a judgment could not be extended to non-parties by simply issuing
an alias writ of execution against them, for no man should be
prejudiced by any proceeding to which he was a stranger.
In Aguila v. Court of Appeals33 the complainant had a cause of action
against the partnership. Nevertheless, it was the partners
themselves that were impleaded in the complaint. The Court
dismissed the complaint and held that it was the partnership, not its
partners, officers or agents, which should be impleaded for a cause
of action against the partnership itself. The Court added that the
partners could not be held liable for the obligations of the
partnership unless it was shown that the legal fiction of a different
juridical personality was being used for fraudulent, unfair, or illegal
purposes.34
Here, Guy was never made a party to the case. He did not have any
participation in the entire proceeding until his vehicle was levied
upon and he suddenly became QSC's "co-defendant debtor" during
the judgment execution stage. It is a basic principle of law that
money judgments are enforceable only against the property
incontrovertibly belonging to the judgment debtor.35 Indeed, the
10
5
power of the court in executing judgments extends only to
properties unquestionably belonging to the judgment debtor alone.
An execution can be issued only against a party and not against one
who did not have his day in court. The duty of the sheriff is to levy
the property of the judgment debtor not that of a third person. For,
as the saying goes, one man's goods shall not be sold for another
man's debts.36
In the spirit of fair play, it is a better rule that a partner must first
be impleaded before he could be prejudiced by the judgment against
the partnership. As will be discussed later, a partner may raise
several defenses during the trial to avoid or mitigate his obligation
to the partnership liability. Necessarily, before he could present
evidence during the trial, he must first be impleaded and informed
of the case against him. It would be the height of injustice to rob an
innocent partner of his hard-earned personal belongings without
giving him an opportunity to be heard. Without any showing that
Guy himself acted maliciously on behalf of the company, causing
damage or injury to the complainant, then he and his personal
properties cannot be made directly and solely accountable for the
liability of QSC, the judgment debtor, because he was not a party
to the case.
Further, Article 1821 of the Civil Code does not state that there
is no need to implead a partner in order to be bound by the
partnership liability. It provides that:chanRoblesvirtualLawlibrary
Notice to any partner of any matter relating to partnership
affairs, and the knowledge of the partner acting in the
particular matter, acquired while a partner or then present to his
mind, and the knowledge of any other partner who reasonably could
and should have communicated it to the acting partner, operate as
notice to or knowledge of the partnership, except in the case
of fraud on the partnership, committed by or with the consent of
that partner.
[Emphases and Underscoring Supplied]
cralawlawlibrary
A careful reading of the provision shows that notice to any partner,
under certain circumstances, operates as notice to or knowledge to
the partnership only. Evidently, it does not provide for the reverse
situation, or that notice to the partnership is notice to the partners.
Unless there is an unequivocal law which states that a partner is
automatically charged in a complaint against the partnership, the
constitutional right to due process takes precedence and a partner
must first be impleaded before he can be considered as a judgment
debtor. To rule otherwise would be a dangerous precedent, harping
in favor of the deprivation of property without ample notice and
hearing, which the Court certainly cannot countenance.
Partners' liability is subsidiary
and generally joint; immediate levy
upon the property of a partner
cannot be made
Granting that Guy was properly impleaded in the complaint, the
execution of judgment would be improper. Article 1816 of the Civil
Code governs the liability of the partners to third persons, which
states that:chanRoblesvirtualLawlibrary
Article 1816. All partners, including industrial ones, shall be
liable pro rata with all their property and after all the
partnership assets have been exhausted, for the contracts
which may be entered into in the name and for the account of the
partnership, under its signature and by a person authorized to act
for the partnership. However, any partner may enter into a separate
obligation to perform a partnership contract.
[Emphasis supplied]
cralawlawlibrary
This provision clearly states that, first, the partners' obligation with
respect to the partnership liabilities is subsidiary in nature. It
provides that the partners shall only be liable with their property
after all the partnership assets have been exhausted. To say that
one's liability is subsidiary means that it merely becomes secondary
and only arises if the one primarily liable fails to sufficiently satisfy
the obligation. Resort to the properties of a partner may be made
only after efforts in exhausting partnership assets have failed or that
such partnership assets are insufficient to cover the entire
obligation. The subsidiary nature of the partners' liability with the
partnership is one of the valid defenses against a premature
execution of judgment directed to a partner.
10
6

In this case, had he been properly impleaded, Guy's liability would
only arise after the properties of QSC would have been exhausted.
The records, however, miserably failed to show that the
partnership's properties were exhausted. The report37 of the sheriff
showed that the latter went to the main office of the DOTC-LTO in
Quezon City and verified whether Medestomas, QSC and Guy had
personal properties registered therein. Gaeott then instructed the
sheriff to proceed with the attachment of one of the motor vehicles
of Guy.38 The sheriff then served the Notice of Attachment/Levy
upon Personalty to the record custodian of the DOTC-LTO of
Mandaluyong City. A similar notice was served to Guy through his
housemaid at his residence.
Clearly, no genuine efforts were made to locate the properties of
QSC that could have been attached to satisfy the judgment -
contrary to the clear mandate of Article 1816. Being subsidiarily
liable, Guy could only be held personally liable if properly impleaded
and after all partnership assets had been exhausted.
Second, Article 1816 provides that the partners' obligation to third
persons with respect to the partnership liability is pro rata or joint.
Liability is joint when a debtor is liable only for the payment of only
a proportionate part of the debt. In contrast, a solidary liability
makes a debtor liable for the payment of the entire debt. In the
same vein, Article 1207 does not presume solidary liability unless:
1) the obligation expressly so states; or 2) the law or nature
requires solidarity. With regard to partnerships, ordinarily, the
liability of the partners is not solidary.39 The joint liability of the
partners is a defense that can be raised by a partner impleaded in
a complaint against the partnership.
In other words, only in exceptional circumstances shall the partners'
liability be solidary in nature. Articles 1822, 1823 and 1824 of the
Civil Code provide for these exceptional conditions, to
wit:chanRoblesvirtualLawlibrary
Article 1822. Where, by any wrongful act or omission of any partner
acting in the ordinary course of the business of the partnership or
with the authority of his co-partners, loss or injury is caused to any
person, not being a partner in the partnership, or any penalty is
incurred, the partnership is liable therefor to the same extent as the
partner so acting or omitting to act.
Article 1823. The partnership is bound to make good the
loss:chanRoblesvirtualLawlibrary
(1) Where one partner acting within the scope of his apparent
authority receives money or property of a third person and
misapplies it; and
(2) Where the partnership in the course of its business receives
money or property of a third person and the money or property so
received is misapplied by any partner while it is in the custody of
the partnership.
Article 1824. All partners are liable solidarity with the partnership
for everything chargeable to the partnership under Articles 1822
and 1823.
In essence, these provisions articulate that it is the act of a
partner which caused loss or injury to a third person that makes all
other partners solidarity liable with the partnership because of the
words "any wrongful act or omission of any partner acting in the
ordinary course of the business, " "one partner acting within the
scope of his apparent authority" and "misapplied by any partner
while it is in the custody of the partnership." The obligation is
solidary because the law protects the third person, who in good faith
relied upon the authority of a partner, whether such authority is real
or apparent.40
In the case at bench, it was not shown that Guy or the other partners
did a wrongful act or misapplied the money or property he or the
partnership received from Gacott. A third person who transacted
with said partnership can hold the partners solidarity liable for the
whole obligation if the case of the third person falls under
Articles 1822 or 1823.41 Gacott's claim stemmed from the alleged
defective transreceivers he bought from QSC, through the latter's
employee, Medestomas. It was for a breach of warranty in a
contractual obligation entered into in the name and for the account
of QSC, not due to the acts of any of the partners. For said reason,
it is the general rule under Article 1816 that governs the joint
liability of such breach, and not the exceptions under Articles 1822
10
7
to 1824. Thus, it was improper to hold Guy solidarity liable for the
obligation of the partnership.
Finally, Section 21 of the Corporation Code,42 as invoked by the RTC,
cannot be applied to sustain Guy's liability. The said provision states
that a general partner shall be liable for all debts, liabilities and
damages incurred by an ostensible corporation. It must be read,
however, in conjunction with Article 1816 of the Civil Code, which
governs the liabilities of partners against third persons. Accordingly,
whether QSC was an alleged ostensible corporation or a duly
registered partnership, the liability of Guy, if any, would remain to
be joint and subsidiary because, as previously stated, all
partners shall be liable pro rata with all their property and after all
the partnership assets have been exhausted for the contracts which
may be entered into in the name and for the account of the
partnership.
WHEREFORE, the petition is GRANTED. The June 25, 2012
Decision and the March 5, 2013 Resolution of the Court of Appeals
in CA-G.R. CV No. 94816 are hereby REVERSED and SET ASIDE.
Accordingly, the Regional Trial Court, Branch 52, Puerto Princesa
City, is ORDERED TO RELEASE Michael C. Guy's Suzuki Grand
Vitara subject of the Notice of Levy/Attachment upon Personalty.
Reconsideration.5chanrobleslaw
Factual Antecedents
Petitioner Greenstar Express, Inc. (Grepistar) is a domestic
corporation engaged in the business of public transportation, while
petitioner Fruto L. Sayson, Jr. (Sayson) is one of its bus drivers,
Respondents Universal Robina Corporation (URC) and Nissin
Universal Robina Corporation (NURC) are domestic corporations
engaged in the food business. NURC is a subsidiary of URC.
URC is the registered owner of a Mitsubishi L-300 van with plate
number WRN 403 (URC van).6chanrobleslaw
At about 6:50 a.m. on February 25, 2003, which was then a declared
national holiday,7 petitioner's bus, which was then being driven
toward the direction of Manila by Sayson, collided head-on with the
URC van, which was then being driven Quezon province-bound by
NURC's Operations Manager, Renante Bicomong (Bicomong). The
incident occurred along Km. 76, Maharlika Highway, Brgy. San
Agustin, Alaminos, Laguna. Bicomong died on the spot, while the
colliding vehicles sustained considerable damage.

On September 23, 2003, petitioners filed a Complaint 8 against NURC

G.R. No. 205090, October 17, 2016 to recover damages sustained during the collision, premised on
negligence. The case was docketed as Civil Case No. SPL-0969 and
assigned to Branch 31 of the RTC of San Pedro, Laguna, An
GREENSTAR EXPRESS, INC. AND FRUTO L. SAYSON,
Amended Complaint9 was later filed, wherein URC was impleaded as
JR., Petitioners, v. UNIVERSAL ROBINA CORPORATION AND
additional defendant.
NISSIN UNIVERSAL ROBINA CORPORATION, Respondent.
URC and NURC filed their respective Answers,10 where they
DECISION particularly alleged and claimed lack of negligence on their part and
on the part of Bicomong.
DEL CASTILLO, J.:
After the issues were joined, trial proceeded. During trial, only
This Petition for Review on Certiorari1 seeks to set aside; a) the Sayson was presented by petitioners as eyewitness to the collision.
September 26, 2012 Decision2 of the Court of Appeals (CA) in CA-
G.R. CV No, 96961 affirming the April 4, 2011 Decision3 of the Riding of the Regional Trial Court
Regional Trial Court (RTC) of San Pedro, Laguna, Branch 31 in Civil
Case No. SPL-0969; and b) the CA's December 28, 2012 On April 4, 2011, the RTC issued its Decision, which decreed thus:
Resolution4 denying herein petitioners' Motion for

10
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chanRoblesvirtualLawlibrary
During the trial on the merits, plaintiffs11 presented five witnesses
namely Josephine Gadiaza, Miguel Galvan, SPO3 Ernesto Marfori,
Fruto Sayson and Lilia Morales.
x x x x
Plaintiff Fruto Sayson testified that on that fateful day, he was
driving the plaintiff passenger bus from Lucena City going to Manila
at a speed of more or less 60 kilometers per hour when he met a
vehicular accident at Barangay San Agustin, Alaminos, Laguna. He
saw from afar an L-300 UV coming from the shoulder going on the
opposite direction to Lucena City. Said vehicle was already near his
bus when it (UV) managed to return to ifs proper lane, then hit and
swerved his vehicle.- "He tried to prevent the collision by swerving
to the right but it was too late. As a result, the left front portion of
the bus was damaged while the front portion of the L-300 UV was
totally wrecked- He and his conductor, one.Mendoza, managed to
get but of the bug by forcibly opening the automatic door which was
also damaged due to the impact After getting out of the bus, he
looked for the driver of the L300 UV but he was informed by a
bystander that he was thrown in a canal arid already dead. For fear
of possible reprisals from bystanders as experienced by most drivers
involved in an accident, he boarded smother bug owned by bis
employer. Before he left, he indorsed the matter to hip conductor
and line inspector. Thereafter, he reported to their office at San
Pedro, Laguna. He executed a statement on the same day x x x and
submitted the same to their operations department. He likewise
testified that before the incident, he was earning P700.00 to
P900,00 a day on commission basis and he drives 25 days in a
month. However, after the incident, he was not able to drive for
almost two months.
On cross-examination, it was established that the incident happened
along the Maharlika Highway along Kilometer 72. There were no
structures near the site of the incident, The highway ha§ two lanes
which can accommodate the size of the bus about 3 meters wide
and a. light vehicle. He was bound for Manila and had about ten
passengers. He saw the L-300 UV on the shoulder of the opposite
lane about 250 meters away from, his bus while he was driving [at]
a speed of 60 kilometers per hour. He did not sense any danger
when he saw the vehicle from afar. He cannot drive fast as there
were five vehicles ahead of his bus. When the L-300 UV managed
to return to it? proper lane coming from the shoulder, it was heading
directly towards his direction, at a distance of more or less five,
meters away from his bus, He noticed that the L-300 UV was running
at full speed as he saw dust clouds. "The point of impact happened
on his lane. He tried to swerve his bus to prevent the impact but lie
admitted that at his speed, it was difficult for him to maneuver his
vehicle
Investigator SPO3 Ernesto Marfori of the Alaminos Police Station
testified that at about 7:00 in the morning, he received a report
from the Barangay Chairman of a vehicular accident that occurred
at Brgy. §an Agustin, Alaminos, Laguna. He proceeded to the site
with SPO2 Rolando Alias. Upon arrival at the scene of the accident,
he attended to the victim, but found him dead inside the L- 300 UV.
He came to know later that he was Renante Bicomong. He
immediately called up his office and requested that funeral services
for the dead man. be arranged. Thereafter, he photographed the
damaged vehicles (Exhibits "F" and sub-markings) and interviewed
some witnesses. He made a sketch depicting the damages suffered
by both vehicles (Exhibit "D-2"), the L-300 IV at the front portion
(Exhibit "D-4") while the bus at the left side of its front portion
(Exhibit "D-3"). Based on the sketch he prepared, the impact
happened almost at the right lane which was the bus lane (Exhibit
"D-6"). He likewise noticed some debris also found at the bus lane.
He was able to interview the bus conductor and a fruit store owner
in [sic] the names of Apolinar Devilla and Virgilio Adao, He did not
see the driver of the bus at the scene of the accident and he was
told that he had left the place. Based on, his investigation, the
possible cause of the accident was the swerving to the left lane [by]
the driver of the L-300 UV which resulted in me encroaching of the
bus' lane. He reduced bis findings into writing in a Report dated
February 28, 2003 (Exhibits "D" and sub-markings).
On cross-examination, the witness admitted that he was not present
when the vehicles collided. The entries he made in the blotter report
were mainly based on the accounts of the witnesses he was able to
interview who however did not give their written statements. When
he arrived at the scene of the accident, the L-300 UV was already
on the shoulder of the road and it was totally wrecked. According to
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9
reports, the van spun around when it was bit causing the metal scar
found on the road.
On the other hand, the defendants12 presented three witnesses: its
employees Alexander Caoleng and John Legaspi and deceased
Renante Bicomong's widow, Gloria Bicomgng, These witnesses were
presented to prove that deceased Bicomong was acting in his
personal capacity when the mishap happened on February 25, 2003
as that day had been declared an official holiday and the L-300 UV
he was driving had not been issued to him, among others.
Alexander Caoleng, HR. Manager of defendant NURC, testified that
deceased Bicomong worked as the Operations Manager of defendant
NURC until his death as evidenced by a Certificate of Employment
dated December 9, 2008 (Exhibit "I"), His last assignment was in
First Cavite Industrial Estate (FCEB). He died in a vehicular accident
in Alaminos, Laguna on February 25, 2003 which was declared a
holiday by virtue of Proclamation No. 331 (Exhibit "2"). Despite
having been issued his own service vehicle (Exhibits "3", "4" and
"5"), he used the L-300 UV which was not officially issued to him
but in the name of Florante Soro-Soro, defendant NURC's Logistics
Manager at that time (Exhibits "7" and "B"). The said vehicle was
used mainly to transport items coming from their office at Pasig to
Cavite and vice versa (Exhibit "9").
John Legaspi, Project Manager of defendant NURC, testified that he
was first assigned in its Cavite Plant in 1999 with deceased
Bicomaog as his immediate supervisor being the Production
Manager then. He last saw him in the afternoon of February 24,
2003 at about 6:00 pm when they had a short chat He (Bicomong)
was then transferring his things from his executive vehicle which
was a Toyota Corolla to the L-300 UY which was a company vehicle.
He (Bicomong) shared that he would go home to Quezon Province
the following day (February 25) to give money to his daughter. He
knew that his trip to Quezon was not work-related as February 25,
2003 was declared a holiday. Besides, there exists no plant owned
by defendant NURC in the provinces of Quezon, Laguna or Bicol as
attested to by the General Manager of defendant NURC in a
Certification to that effect (Exhibit "11").
On cross-examination, he distinguished the use of an executive
vehicle assigned to an executive officer for his personal use and the
company vehicle which was supposed to be for official use only.
Finally, Gloria Bicomong, widow of deceased Reynante Bicomong
testified that she knew that her husband was going home to
Calendaria (sic), Quezon on February 25, 2003 because he informed
their daughter. He was on his way home when he met a vehicular-
accident in Alaminos. Laguna which claimed his life. She was
informed about the accident involving her husband by a high school
friend who was also traveling to Quezon at that time, She filed a
criminal complaint at Alaminos, Laguna but it was dismissed for
reasons unknown to her. She likewise filed a civil complaint for
damages before the Regional Trial Court of Lucena City docketed as
Civil Case No. 2.103-135.
On cross-examination, she narrated that aside from the Toyota
Corolla service of her husband, he would use the L-300 UV whenever
he had to bring bulky things home. As far as she can recall, he used
the L-300 UV about 5 times.
After an evaluation of the foregoing testimonies and documentary
evidence of the parties, the court had [sic] arrived at the following
findings and conclusions:
chanRoblesvirtualLawlibraryPlaintiff has no cause of action and
cannot recover from the defendants even assuming that the direct
and proximate cause of the accident was the negligence of the
defendant's employee Renato Bicomong.
Pursuant to Article 2184 of the New Civil Code, the owner of a motor
vehicle is solidarily liable with his driver if at the time of the mishap,
the owner was in the vehicle and by the use of due diligence could
have presented (sic) the misfortune; if the owner is not in the motor
vehicle, the provision of Article 2180 is applicable. The defendants
being juridical persons, the first paragraph of Article 2184 is
obviously not applicable.
Under Article 2180, "employers shall be liable tor the damages
caused by their employees and household helpers acting within the
scope of their assigned tasks, even though the former are not
engaged in any business or industry. "In other words, for the
employer to be liable for the damages caused by his employee, the
11
0
latter must have caused the damage in the course of doing his
assigned tasks or in the-performance of his duties" (Yambao vs.
Zuñiga, G.R. No: 146173, December 11, 2003)
In this case, it is beyond cavil that the deceased Renante Bicong
[sic] was not in the performance of his duty on that fateful day of
February 25, 2003. In the first place that day was a holiday; there
was no work and it was not shown that he was working as indeed
his work assignment is operations manager of the company's plant
m, Cavite while the accident happened while he was in Alaminos,
Laguna on his way home to Candelaria, Quezon. Secondly, as an
operations manager, he was issued an executive car for. Ms own
use, a Toyota Corolla vehicle and he merely preferred to use the L-
300 UV when going home to his family in Quezon. Even assuming
that the company allowed or tolerated this, by itself, the tolerance
did not make, the employer liable in the absence of showing that he
was using the vehicle in the performance of a duty or within the
scope of his assigned tasks. But as clearly relayed by defendant's
witnesses, defendants have no business or plant in Quezen. The L-
300 vehicle was for the hauling of items between their Pasig and
Cavite offices and was merely borrowed by Bicomong in going to
Candelaria, Quezon on that day.
The accident having occurred outside Remnte Bicomong's assigned
tasks, defendant employers cannot be held liable to the plaintiffs,
even assuming that it is the fault of defendants' employee that was
the direct and proximate cause of their damages.
However, the question of whose fault or negligence was the direct
and proximate cause of the mishap is material to the resolution of
defendants' counterclaim.
The rule is that the burden of proof lies on him who claims a fact
(Federico Ledesina vs. NLRC, G.R. No. 175585, October 19,2007).
Therefore, to be able to recover in their counterclaim, the
defendants must prove by preponderance of evidence that the direct
and proximate cause of their losses was the fault of the plaintiff-
driver.
Defendants were not able to present any witness as to how the
mishap occurred Their witnesses were limited to proving that
Renante Bicomong was not in the performance of his assigned task
when the incident happened.
A reading of their answer would reveal, that their attribution of fault
to the plaintiff-driver is based only on the point of impact of the two
vehicles. Thus:
chanRoblesvirtualLawlibrary
'4.3 Based on the damage sustained by the passenger bus, plaintiffs'
claim that Renante Bicomong swerved on the left lane and
encroached on the path of the said bus moments before the accident
could not have been true. Such claim would have resulted to a head-
on collision between the vehicle driven by Mr. Bicomong and the
bus; the latter would have sustained damage on its front side.
However, based on Annexes "B" and "C" of the Complaint, the. said
bus sustained damage on its left side. Clearly, it was the passenger
bus that swerved on the left lane, which was being traversed by
Renante Bicomong, and while returning to the right lane, said bus
hit the vehicle being driven by Mr. Bicomong. Thus, explaining the
damage sustained by the said bus on its left side just below the
driver's seat.'
The foregoing however is a mere interpretation or speculation and
not supported by any account, either by an eyewitness [or by] a
explanation tracing the relative positions of the two vehicles in
relation to the road at the time of impact and the movements of the
two vehicles after the impact. For this reason, it will be unfair to
make an interpretation of the events based alone on the point of
impact [on] the vehicles. The points of impact by themselves cannot
explain the positions of the vehicles on the road.
Defendants Memorandum attributed the cause of the mishap to the
excessive speed of the bus. In their Memorandum, the defendants
content [sic] that if the driver had seen the L-3G0 UV meters away
in front of him running along the shoulder and negotiating back to
its lane, the bus driver would have watched out and slackened his
speed. Considering the damage to both the vehicles and the fact
that the L-300,UV span [sic] and w,as thrown 40 feet away from the
point of impact and its driver was thrown 14 feet away from his
vehicle, defendant argued that the bus could not be running at 60
kilometers only. But assuming the bus indeed was running at high
speed that alone does not mean that the negligence of the driver
was the direct and proximate cause, If it is true that the L-300 UV
11
1
ran from the right shoulder, climbed up to the right lane but Say-son had the last clear chance to avert collision but he failed to
overshoot [sic] it and occupied the bus' lane, the speed of the bus take the necessary precaution under the circumstances, by reducing
cannot be considered the proximate and direct cause of the collision; his speed and applying the brakes on time to avoid collision.
But as stated earlier, this were [sic] merely conjectures and
surmises of the defendants and not proven by competent evidence. On September 26, 2012, the CA rendered the assailed Decision
containing the following pronouncement:
All told, defendants were not able to prove by their own evidence
that the direct and proximate cause of the collision was the fault of chanRoblesvirtualLawlibrary
plaintiffs driver. Hence, they cannot hold plaintiffs liable for the logs The present case involving an action for damages based on quasi-
of their L-300 UV. As both parties failed to prove by their respective delict is governed by Articles 2176 and 2180 of the New Civil Code,
evidence where the fault that occasioned their losses lie, they must pertinent provisions of which read:
bear their respective losses.
chanRoblesvirtualLawlibrary
Anent defendants' counterclaim for attorney's fees and exemplary 'ART. 2176, Whoever by act or omission causes damage to another,
damages, there is no evidence to show that the filing, of this suit there being fault or negligence, is obliged to pay for the damage
was motivated [by] malice. It cannot be denied that plaintiffs done. Such fault or negligence, if there is no pre-existing contractual
suffered damages. The court mainly, dismissed the complaint for relation between the parties, is called a quasi-delict and is governed
lack of cause of action as Renante Bicomong was not performing his by the provisions of this Chapter.
assigned tasks at the time of the incident. Besides, to hold them
liable to defendants for attorney's fees and exemplary damages ART. 2180. The obligation imposed by Article 2176 is demandable
simply because they failed to come up with sufficient evidence will not only for one's own acts or omission also for those of persons for
be tantamount to putting a price on one's right to sue. whom one is responsible.

WHEREFORE, judgment is hereby rendered dismissing the complaint xxx xxx xxx
as well as the counterclaim.
Employers shall be liable for the damages caused by their employees
No costs. and household helpers acting within the scope of their assigned
tasks even though the former are not engaged in any business or
SO ORDERED.13 industry.'
Ruling of the Court of Appeals Under Article 2180 of the New Civil Code, employers shall be held
primarily and solidarily liable for damages caused by their
Petitioners filed an appeal before the CA, docketed as CA-G.R. CV employees acting within the scope of their assigned tasks. To hold
No. 96961. They argued that Bicomong's negligence was the the employer liable under this provision, it must be shown that an
proximate cause of the collision, as the van he was 4rjvmg swerved employer-employee relationship exists, and that the employee was
to the opposite lane and hit the bus which was then traveling along acting within the scope of his assigned task when the act complained
its proper lane; that Bicomong's act of occupying the bus's lane was of was committed.
illegal and thus constituted a traffic violation; that respondents are
liable for damages as the registered owner of the van and failing to Records bear that the vehicular collision occurred on February 25,
exercise due diligence in the selection and supervision of its 2003 which was declared by former Executive Secretary Alberto G.
employee, Bicomong, Respondents, countered that the bus driven Romulo, by order of former President Gloria Macapagal-Arroyo, as
by Sayson was running at high speed when the, collision occurred, a special national holiday, per Proclamation No. 331 dated February
thus indicating that Sayson was in violation of traffic rules; and that 19, 2003. Renante Bicomong had no work on that day and at the

11
2
time the accident occurred, he was on his way home to Candelaria,
Quezon. There was no showing that on that day, Renante Bicomong
was given by defendants-appellees14 an assigned task, much less
instructed to go to Quezon. As testified to by Renante Bicomong's
widow Gloria Bicomong, Renante Bicomong was on the road that
day because he was going home to Candelaria, Quezon. Thus, he
was then carrying out a personal purpose and not performing work
for defendants-appellees.
Apropos is Castilex Industrial Corp. vs. Vicente Vasquez,
Jr.,15 wherein the Supreme Court held that the mere fact that an
employee was using a service vehicle at the time of the injurious
incident is not of itself sufficient to charge his employer with liability
for the operation of said vehicle unless it appeared that he was
operating the vehicle within the course or scope of bis employment.
Thus:ChanRoblesVirtualawlibrary
xxxx
'The court a quo and the Court of Appeals were one in holding that
the driving by a messenger of a company-issued vehicle is within
the scope of his assigned tasks regardless of the time and
circumstances.
We do not agree. The mere fact that ABAD was using a service
vehicle at the time of the injurious incident is not of itself sufficient
to charge petitioner with liability for the negligent operation of said
vehicle unless it appears mat he was operating the vehicle within
the course or scope of his employment.
The following are principles in American Jurisprudence on the
employer's liability for the injuries inflicted by the negligence of an
employee in the use of an employer's motor vehicle.
xxxx
III. Use of Employer's Vehicle Outside Regular Working Hours
An employer who loans his motor vehicle to an employee for the
latter's personal use outside of regular working hours is generally
not liable for the employees negligent operation of the vehicle during
the period of permissive use, even where the employer
contemplates that a regularly assigned motor vehicle will be used
by the employee for personal as well as business purposes and there
is some incidental benefit to the employer. Even where the
employee's personal purpose in using the vehicle has been
accomplished and he has started the return trip to his house where
the vehicle is normally kept, it has been held that he has not
resumed his employment, and the employer is not liable for the
employees negligent operation of the vehicle during the return trip.
The foregoing principles and jurisprudence are applicable in our
jurisdiction albeit based on the doctrine of respondent superior, not
on the principle of bonus pater familias as in ours. Whether the fault
or negligence of the employee is conclusive on his employer as in
American law or jurisprudence, or merely gives rise to the
presumption juris tantum of negligence on the part of the employer
as in ours, it is indispensable that the employee was acting in his
employer's business or within the scope of his assigned task.
In the case at bar, it is undisputed that ABAD did some overtime
work at Hie petitioner's office, which was located in Cabangcalan,
Mandaue City. Thereafter, he went to Goldie's Restaurant in Fuente
Osmefia, Cebu City, which is about seven kilometers away from
petitioner's place of business. A witness for the private respondents,
a sidewalk vendor, testified that Fuente Osmeña is a lively place
even at dawn because Goldie's Restaurant and Back Street were still
open and people were drinking thereat Moreover, prostitutes,
pimps, and drug addicts littered the place.
xxx xxx xxx
To the mind of this Court, ABAD was engaged in affairs of his own
or was carrying out a personal purpose not in line with his duties at
the time he figured in a vehicular accident. It was then about 2:00
a.m. of 28 August 1988, way beyond the normal working hours.
ABAD's working day had ended; his overtime work had already been
completed. His being at a place which, as petitioner put it, was
known as a haven for prostitutes, pimps, and drug pushers and
addicts, had no connection to petitioner's business; neither had it
any relation to his duties as a manager. Rather, using his service
vehicle even for personal purposes was a form of a fringe benefit or
one of the perks attached to his position.
Since there is paucity of evidence that ABAD was acting within the
11
3
scope of the functions entrusted to him, petitioner CASTILEX had no tasks, defendant employers cannot be held liable to the plaintiffs,
duty to show that it exercised the diligence of a good father of a even assuming that it is the fault of defendants' employee that was
family in providing ABAD with a service vehicle. Thus, justice and the direct and proximate cause of their damages.'
equity require that petitioner be relieved of vicarious liability for the
In sum, squarely applicable in this case is the well-entrenched
consequences of the negligence of ABAD in driving its vehicle.
doctrine that the assessment of the trial judge as to the issue of
Accordingly, in the absence of showing that Renante Bicomong was credibility binds the appellate court because he is in a better position
acting within the scope of his assigned task at the time of the to decide the issue, having heard the witnesses and observed their
vehicular collision, defendants-appellees had no duty to show that deportment and manner of testifying during the trial, except when
they exercised the diligence of a good father of a family in providing the trial court has plainly overlooked certain facts of substance and
Renante Bicomong with a service vehicle. Thus, the trial court did value, that, if considered, might affect the result of the case, or
not err in holding that: where the assessment is clearly shown to be arbitrary. Plaintiffs-
appellants have not shown this case to fall under the exception.
chanRoblesvirtualLawlibrary
'Under Article 2180, 'employers shall be liable for the damages WHEREFORE, the trial court's Decision dated April 4, 2011 is
caused by their employees and household helpers acting within the affirmed.
scope of their assigned tasks, even though the former are not
engaged in any business or industry. 'In other words, for the SO ORDERED.16chanroblesvirtuallawlibrary
employer to be liable for the damages caused by his employee, the
latter must have caused the damage in the course of doing his
Petitioners filed a Motion for Reconsideration, which the CA denied
assigned tasks or. in the performance of his duties.' (Yambao vs.
in its subsequent December 28, 2012 Resolution. Hence, the present
Zuñiga, G.R. No. 146173, December 11, 2003.)
Petition.
In this case, it is.beyond cavil that the deceased Renante Bicong
Issues
[sic] was not in the performance of his duty on that fateful day of
February 25, 2003. In the first place that day was a holiday; there
In a July 14, 2014 Resolution,17 this Court resolved to give due
was no work and it was not shown that he was working as indeed
course to the Petition, which contains the following assignment of
his work assignment [was as] operations manager of the company's
errors:
plant in Cavite while the accident happened while he was in
Alaminos, Laguna on his way home to Candelaria, Quezon.
chanRoblesvirtualLawlibrary
Secondly, as an operations manager, he was issued an executive
I.
car for his own use, a Toyota Corolla vehicle and. he merely
preferred to use the L-300 UV when going home to his family in
THE HONORABLE COURT OF APPEALS ERRED IN ISSUING THE
Quezon. Even assuming that the company allowed or tolerated this,
ASSAILED DECISION AND RESOLUTION THAT RESPONDENTS ARE
by itself, the tolerance did not make the employer liable in the
NOT LIABLE TO PETITIONERS FOR THE DAMAGES THEY SUSTAINED
absence of showing that he was using the vehicle in the performance
CONSIDERING THAT THE ACCIDENT WAS ATTRIBUTED TO THE
of a duty or within the scope of his assigned tasks. But as clearly
NEGLIGENCE OF RENANTE BICOMONG.
relayed by defendant's witnesses, defendants have no business or
plant in Quezon. The L-300 vehicle was for the hauling of items
between their Pasig and Cavite offices and was merely borrowed by II.
Bicomong in going to Candelaria, Quezon on that day.
THE HONORABLE COURT OF APPEALS ERRED IN ADMITTING
The accident having occurred outside Renante Bicomong's assigned

11
4
DEFENSES NOT PLEADED IN THE MOTION TO DISMISS OR IN
RESPONDENTS' ANSWER.18chanroblesvirtuallawlibrary
Petitioners' Arguments
Petitioners insist that respondents should be held liable for
Bicomong's negligence under Articles 2176, 2180, and 2185 of the
Civil Code;19 that Bicomong's negligence was the direct and
proximate eause of the accident, in that he unduly occupied the
opposite lane which the bus was lawfully traversing, thus resulting
in the collision with Greenstar's bus; that Bicomong's driving on the
opposite lane constituted a traffic violation, therefore giving rise to
the presumption of negligence on his part; that in view of this
presumption, it became incumbent upon respondents to rebut the
same by proving that they exercised care and diligence in the
selection and supervision of their employees; that in their respective
answers and motion to dismiss, respondents did not allege the
defense, which they tackled only during trial, that since February
25, 2003 was a declared national holiday, then Bicomong was not
acting within the scope of his assigned tasks at the time of the
collision; that for failure to plead this defense or allegation in their
respective answers and pleadings, it is deemed waived pursuant to
Section 1, Rule 9 of the 1997 Rules of Civil Procedure 20 (1997
Rules); that just the same, respondents failed to prove that
Bicomong was not in the official performance of his duties or that
the URC van was not officially issued to him at the time of the
accident - and for this reason, the presumption of negligence was
not overturned; and that URC should be held liable as the registered
owner of the van.
In their Reply,21 petitioners add that while some of the issues raised
in the Petition are factual in nature, this Court must review the case
as the CA gravely erred in its appreciation of the evidence and in
concluding that respondents are not liable. Finally, they argue that
URC should be held liable for allowing "a non-employee to use for
his personal use the vehicle owned" by it.
Respondents' Arguments
Pleading affirmance, respondents argue in their Comment 22 that the
issues raised in the Petition are factual in nature; that the collision
occurred on a holiday and while Bicomong was. using the URC van
for a purely personal purpose, it should be. sufficient to absolve
respondents of liability as evidently, Bicomong was not performing
his official duties on that day; that the totality of the evidence
indicates that it was Sayson who was negligent in the operation of
Greenstar's bus when the collision occurred; that Bicomong was not
negligent in driving the URC van; that petitioners' objection -
pertaining to their defense that the collision occurred on a holiday,
when Bicomong was not considered to be at work - was belatedly
raised; and that in any case, under Section 5, Rule 10 of the 1997
Rules,23 their pleadings should be deemed amended to conform to
the evidence presented at the trial, which includes proof that the
accident occurred on a holiday and while Bicomong was not in the
performance of his official tasks and instead going home to his
family in Quezon province.
Our Ruling
The Court denies the Petition.
In Caravan Travel and Tours International, Inc. v. Abejar,24 the
Court made the following relevant pronouncement:
chanRoblesvirtualLawlibrary
The resolution of this case must consider two (2) rules. First,
Article 2180's specification that '[e]mployers shall be liable
for the damages caused by their employees ... acting within
the scope of their assigned tasks [.]' Second, the operation
of the registered-owner rule that registered owners are
liable for death or injuries caused by the operation of their
Vehicles.
These rules appear to be in conflict when it comes to cases in which
the employer is also the registered owner of a vehicle. Article 2180
requires proof of two things: first, an employment relationship
between the driver and the owner; and second, that the driver acted
within the scope of his or her assigned tasks. On the other hand,
applying the registered-owner rule only requires the plaintiff to
prove that the defendant-employer is the registered owner of the
vehicle.
The registered-owner rule was articulated as early as 1957 in Erezo,
et al. v. Jepte,25cralawred where this court explained that the
11
5
registration of motor vehicles, as required by Section 5(a) of
Republic Act No. 41365 the and Transportation and Traffic Code, chanRoblesvirtualLawlibrary
was necessary 'not to make said registration the operative act by While Republic Act No. 4136 or the Land Transportation and Traffic
which ownership in vehicles is transferred, ... but to permit the use Code does not contain any provision on the liability of registered
and operation of the vehicle upon any public highway[.]' Its 'main owners in case of motor vehicle mishaps, Article 2176, in relation
aim ... is to identify the owner so that if any accident happens, or with Article 2180, of the Civil Code imposes an obligation upon
that any damage or injury is caused by the vehicle on the public Filcar, as registered owner, to answer for the damages caused to
highways, responsibility therefor can be fixed on a definite Espinas' car.
individual, the registered owner.'
Thus, it is imperative to apply the registered-owner rule in a manner
that harmonizes it with Articles 2176 and 2180 of the Civil Code.
x x x x
Rules must be construed in a manner that will harmonize them with
other rules so as to form a uniform and consistent system of
Aguilar, Sr. v. Commercial Savings Bank26 recognized the seeming
jurisprudence. In light of this, the words used in Del Carmen are
conflict between Article 2180 and the registered-owner rule and
particularly notable. There, this court stated that Article 2180
applied the latter.
'should defer to' the registered-owner rule. It never stated that
Article 2180 should be totally abandoned.
x x x x
Therefore, the appropriate approach is that in cases where
Preference for the registered-owner rule became more pronounced
both the registered-owner rule and Article 2180 apply, the
in Del Carmen, Jr. v. Bacoy:27chanrobleslaw
plaintiff must first establish that the employer is the
registered owner of the vehicle in question. Once the plaintiff
x x x x
successfully proves ownership, there arises a disputable
presumption that the requirements of Article 2180 have been
Filcar Transport Services v. Espinas28 stated that the registered
proven. As a consequence, the burden of proof shifts to the
owner of a vehicle can no longer use the defenses found in Article
defendant to show that no liability under Article 2180 has
2180:
arisen.
chanRoblesvirtualLawlibraryx x x x
This disputable presumption, insofar as the registered owner of the
vehicle in relation to the actual driver is concerned, recognizes that
Mendoza v. Spouses Gomez 29
reiterated this doctrine.
between the owner and the victim, it is the former that should carry
the costs of moving forward with the evidence. The victim is, in
However, Aguilar, Sr., Del Carmen, Filcar, and Mendoza should not
many cases, a hapless pedestrian or motorist with hardly any means
be taken to mean that Article 2180 of the Civil Code should be
to uncover the employment relationship of the owner and the driver,
completely discarded in cases where the registered-owner rule finds
or any act that the owner may have done in relation to that
application.
employment.
As acknowledged in Filcar, there is no categorical statutory
The registration of the vehicle, on the other hand, is accessible to
pronouncement in the Land Transportation and Traffic Code
the public.
stipulating the liability of a registered owner. The source of a
registered owner's liability is not a distinct statutory provision, but
Here, respondent presented a copy of the Certificate of Registration
remains to be Articles 2176 and 2180 of the Civil Code:
of the van that hit Reyes. The Certificate attests to petitioner's
ownership of the van. Petitioner itself did not dispute its ownership

11
6
of the van. Consistent with the rule we have just stated, a
presumption that the requirements of Article 2180 have been
satisfied arises. It is now up to petitioner to establish that it incurred
no liability under Article 2180. This it can do by presenting proof
of any of the following: first, that it had no employment
relationship with Bautista; second, that Bautista acted
outside the scope of his assigned tasks; or third, that it
exercised the diligence of a good father of a family in the
selection and supervision of Bautista. (Emphasis supplied)
In the present case, it has been established that on the day of the
collision -or on February 25, 2003 - URC was the registered owner
of the URC van, although it appears that it was designated for use
by NURC, as it was officially assigned to the latter's Logistics
Manager, Florante Soro-Soro (Soro-Soro); that Bicomong was the
Operations Manager of NURC and assigned to the First Cavite
Industrial Estate; that there was no work as the day was declared a
national holiday; that Bicomong was on his way home to his family
in Quezon province; that the URC van was not assigned to Bicompng
as well, but solely for Soro-Soro's official use; that the company
service vehicle officially assigned to Bicomong was a Toyota Corolla,
which he left at the Cavite plant and instead, he used the URC van;
and that other than the Cavite plant, there is no other NURC plant
in the provinces of Quezon, Laguna or Bicol.
Applying the above pronouncement in the Caravan Travel and Tours
case, it must be said that when by evidence the ownership of the
van and Bicomong's employment were proved, the presumption of
negligence on respondents' part attached, as the registered owner
of the van. and as Bicomong's employer. Hie burden of proof then
shifted to respondents to show that no liability under Article 2180
arose. This may be done by proof of any of the following:
chanRoblesvirtualLawlibrary
1. That they had no employment relationship with Bicomong; or
2. That Bicomong acted outside the scope of his assigned tasks; or
3. That they exercised the diligence of a good father of a family in
the selection and supervision of Bicomong.
In denying liability, respondents claimed in their respective answers
the defense of absence of negligence on their part. During trial, they
presented evidence to the effect that on the day of the collision,
which was a declared national non-working holiday, Bicomong was
not perforating Ms work, but was on his way home to Quezon on a
personal undertaking, that is, to give money to his daughter and
spend the holiday with his family; and that the vehicle he was
driving was not an NURC vehicle, nor was it assigned to him, but
was registered to URC and assigned to its Logistics Manager, Soro-
Soro, Petitioners object to this, claiming that this defense was not
alleged in the respondents' respective answers. The Court
disagrees, The failure to allege these facts in the answers does not
preclude, respondents from proving them during trial; these facts
are precisely illustrative of their defense of absence of negligence.
Just the same, petitioners' failure to object to the respondents'
presentation of such evidence below is tantamount to a waiver;
Section 5, Rule 10 of the 1997 Rules - on amendments to conform
to or authorize presentation of evidence - will have to apply, but the
failure to amend the pleadings does not affect the result of the trial
of these issues.
The failure of a party to amend a pleading to conform to the
evidence adduced during trial does not preclude an adjudication by
the court on the basis of such evidence which may embody new
issues not raised in the pleadings, or serve as a basis for a higher
award of damages. Although the pleading may not have been
amended to conform to the evidence submitted during trial,
judgment may nonetheless be rendered, not simply on the basis of
the issues alleged but also on the basis of issues discussed and the
assertions of fact proved in the course of trial. The court may treat
the pleading as if it had been amended to conform to the evidence,
although it had not been actually so amended, x x x 30
Respondents succeeded in overcoming the presumption of
negligence, having shown that when the collision took place,
Bicomong was not in the performance of his work; that he was in
possession of a service vehicle that did not belong to his employer
NURC, but to URC, and which vehicle was not officially assigned to
him, but to another employee; that his use of the URC van was
unauthorized - even if he had used the same vehicle in furtherance
of a personal undertaking in the past,31 this does not amount to
11
7
implied permission; that the accident occurred on a holiday and
while Bicomong was on his way home to his family in Quezon
province; and that Bicomong had no official business whatsoever in
his hometown in Quezon, or in Laguna where the collision occurred,
his area of operations being limited to the Cavite area.
On the other hand, the evidence suggests that the collision could
have been avoided if Sayson exercised care and prudence, given the
circumstances and information that he had immediately prior to the
accident. From the trial court's findings and evidence on record, it
would appear that immediately prior to the collision, which took
place very early in the morning - or at around 6:50 a.m., Sayson
saw that the URC van was traveling fast Quezon-bound on the
shoulder of the opposite lane about 250 meters away from him; that
at this point, Sayson was driving the Greenstar bus Manila-bound at
60 kilometers per hour; that Sayson knew that the URC van was
traveling fast as it was creating dust clouds from traversing the
shoulder of the opposite lane; that Sayson saw the URC van get
back into its proper lane but directly toward him; that despite being
apprised of the foregoing information, Sayson, instead of slowing
down, maintained his speed and tried to swerve the Greenstar bus,
but found it difficult to do so at his speed; that the collision or point
of impact occurred right in the middle of the road;32 and that Sayson
absconded from the scene immediately after the collision.
From the foregoing facts, one might think that from the way he was
driving immediately before the collision took place, Bicomong could
have fallen asleep or ill at the wheel, which led him to gradually
steer the URC van toward the shoulder of the highway; and to get
back to the road after realizing his mistake, Bicomong must have
overreacted, thus overcompensating or oversteering to the left, or
toward the opposite lane and right into Sayson's bus. Given the
premise of dozing off or falling ill, this explanation is not far-fetched.
The collision occurred very early in the morning in Alaminos,
Laguna. Sayson himself testified that he found Bicomong driving on
the service road or shoulder of the highway 250 meters away, which
must have been unpaved, as it caused dust clouds to rise on the
heels of the URC van. And these dust clouds stole Sayson's
attention, leading him to conclude that the van was running at high
speed. At any rate, the evidence places the point of impact very
near the middle of the road or just within Sayson's lane. In other
words, the collision took place with Bicomong barely encroaching on
Sayson's lane. This means that prior to and at the time of collision,
Sayson did not take any defensive maneuver to prevent the accident
and minimize the impending damage to life and property, which
resulted in the collision in the middle of the highway, where a vehicle
would normally be traversing. If Sayson took defensive measures,
the point of impact should have occurred further inside his lane or
not at the front of the bus - but at its side, which should have shown
that Sayson either slowed down or swerved to the right to avoid a
collision.
Despite having seen Bicomong drive the URC van in a precarious
manner while the same was still a good 250 meters away from his
bus, Sayson did not take the necessary precautions, as by reducing
speed and adopting a defensive stance to avert any untoward
incident that may occur from Bicomong's manner of driving. This is
precisely his testimony during trial. When the van began to swerve
toward his bus, he did not reduce speed nor swerve his bus to avoid
collision. Instead, he maintained his current speed and course, and
for this reason., the inevitable took place: An experienced driver
who is. presented with the same facts would have adopted an
attitude consistent with a desire to preserve life and property; for
common carriers, the diligence demanded is of the highest degree.
The law exacts from common carriers (i.e., those persons,
corporations, firms, or associations engaged in the business of
carrying or transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services to the public)
the highest degree of diligence (i.e., extraordinary diligence) in
ensuring the safety of its passengers. Articles 1733 and 1755 of the
Civil Code state:ChanRoblesVirtualawlibrary
Art. 1733. Common carriers, from the nature of their business and
for reasons of public policy, are bound to observe extraordinary,
diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances
of each case.
Art. 1755. A common carrier is bound to carry the passengers safely
as far as human care arid foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the
circumstances.
In this relation, Article 1756 of the Civil Code provides that '[i]n case
of death of or injuries to passengers, common carriers are presumed
11
8
to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as prescribed in Articles
1733 and 1755. xxx'33chanroblesvirtuallawlibrary
However, Sayson took no defensive maneuver whatsoever in spite
of the fact that he saw Bicomong drive his van in a precarious
manner, as far as 250 meters away - or at a point in time and space
where Sayson had all the opportunity to prepare and avert a
possible collision. The collision was certainly foreseen and avoidable
but Sayson took no measures to avoid it. Rather than exhibit
concern for the welfare of his passengers and the driver of the
oncoming vehicle, who might have fallen asleep or suddenly fallen
ill at the wheel, Sayson coldly and uncaringly stood his ground^
closed his eyes, and left everything to fate, without due regard for
the consequences. Such a suicidal mindset cannot be tolerated, for
the grave danger it poses to the public and passengers availing of
petitioners' services. To add insult to injury, Sayson hastily fled the
scene of the collision instead of rendering assistance to the victims
- thus exhibiting a selfish, cold-blooded attitude and utter lack of
concern motivated by the self-centered desire to escape liability,
inconvenience, and possible detention by the authorities, rather
than secure the well-being of the victims of his own negligent act.
x x x The doctrine of last clear chance provides that where both
parties are negligent but the negligent act of one is appreciably later
in point of time than that of the other, or where it is impossible to
determine whose fault or negligence brought about the occurrence
of the incident, the one who had the last clear opportunity to avoid
the impending harm but failed to do so, is chargeable with the
consequences arising therefrom. Stated differently, the rule is that
the antecedent negligence of a person does not preclude recovery
of damages caused by the supervening negligence of the latter, who
had the last fair chance to prevent the impending harm by the
exercise of due diligence, x x x34
Petitioners might object to the treatment of their case in the
foregoing manner, what with the additional finding that Sayson was
negligent under the circumstances. But their Petition, "once
accepted by this Court, throws the entire case open to review, and
xxx this Court has the authority to review matters not specifically
raised or assigned as error by the parties, if their consideration is
necessary in arriving at a just resolution of the
case."35chanrobleslaw
WHEREFORE, the Petition is DENIED. The September 26, 2012
Decision and December 28, 2012 Resolution of the Court of Appeals
in CA-G.R. CV No. 96961 are AFFIRMED in toto.
G.R. No. 183370, August 17, 2015
NATION PETROLEUM GAS, INCORPORATED, NENA ANG,
MARIO ANG, ALISON A. SY, GUILLERMO G. SY, NELSON ANG,
LUISA ANG, RENATO C. ANG, PAULINE T. ANG, RICKY C.
ANG,1 AND MELINDA ANG, Petitioners, v. RIZAL COMMERCIAL
BANKING CORPORATION, SUBSTITUTED BY PHILIPPINE
ASSET GROWTH ONE, INC., Respondent.
DECISION
PERALTA, J.:
This petition for review on certiorari under Rule 45 of the 1997
Revised Rules of Civil Procedure (Rules) seeks to reverse and set
aside the December 12, 2007 Decision2 and June 17, 2008
Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 98787,
which affirmed the March 29, 2007 Order4 of the Regional Trial Court
(RTC), Branch 66, Makati City, in Civil Case No. 06-882, denying
petitioners' Special Appearance with Motion to Dismiss for alleged
improper service of summons.
On October 16, 2006, respondent Rizal Commercial Banking
Corporation filed against petitioner corporation and its
directors/officers a Complaint5 for civil damages arising from estafa
in relation to violations of the Trust Receipts Law. On October 26,
2006, after an ex parte hearing was conducted, respondent's prayer
for a writ of preliminary attachment was granted and the
corresponding writ was issued.6 Thereafter, Sheriff Leodel N. Roxas
served upon petitioners a copy of the summons, complaint,
application for attachment, respondent's affidavit and bond, and the
order and writ of attachment. The Sheriffs Report dated November
11
9
13, 2006 narrated:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
The undersigned sheriff respectfully submits the following report to
wit:LawlibraryofCRAlaw
On 26 October 2006, [a] copy of Writ of Attachment dated 26
October 2006, issued by the Court in the above-entitled case was
received by the undersigned for service and implementation.
On even date, the undersigned served the Summons, copy of [the]
Complaint, application for attachment, the plaintiffs affidavit and
bond, and the Order and Writ of Attachment, on the defendants
Nation Petroleum Gas et al, at BPI Building, Rizal Street, Candelaria,
Quezon. Said summons and all pertinent papers, upon telephone
instruction of defendant Melinda Ang, were received by Claudia
Abante, [defendants'] [Liaison] Officer, as evidenced by her
signature at the original copy of Summons and Writ. I also served
copies to other defendants at their given addresses, but they
refused to acknowledge receipt thereof.
On the same day, at the instance of the plaintiff's counsel and
representative, the undersigned levied the real properties of the
defendants at the Register of Deeds of Lucena City, Makati City,
Pasig City, Quezon City and the Register of Deeds of Manila. I also
levied a property (plant equipment) in NPGI plant in Sariaya,
Quezon. Copies of the notices of levy on attachment are hereto
attached.
WHEREFORE, the original copies of the Summonses, Order, Writ of
Attachment and all pertinent papers are hereby returned to the
Court of origin for record and information.7
Petitioners filed through counsel a Special Appearance with Motion
to Dismiss8 on November 15, 2006. They asserted that the trial
court did not acquire jurisdiction over the corporation since the
summons was improperly served upon Claudia Abante (Abante),
who is a mere liaison officer and not one of the corporate officers
specifically enumerated in Section 11, Rule 14 of the Rules.
Likewise, the individual petitioners argued that the sheriff and/or
process server did not personally approach them at their respective
address as stated in the Complaint. Neither did he resort to
substituted service of summons, and that, even if he did, there was
no strict compliance with Section 7, Rule 14 of the Rules. The Court's
pronouncements in Spouses Mason v. Court of Appeals,9E. B.
Villarosa & Partner Co., Ltd. v. Judge Benito,10Laus v. Court of
Appeals,11 and Samartino v. Raon12 were invoked in praying for the
dismissal of the complaint and the discharge of the writ of
attachment.
Respondent countered in its Opposition with Motion to Declare
Defendants in Default13 that there was valid service of summons
upon petitioners. With respect to the corporation, Abante received
the summons upon the express authority and instruction of the
corporate secretary, petitioner Melinda Ang (Ang). As regards the
individual petitioners, the Sheriffs Report reflects that they were
served "at their given addresses, but they refused to acknowledge
receipt thereof." Respondent stressed that said Report is prima facie
evidence of the facts stated therein and that the sheriff enjoys the
presumption of regularity in the performance of his official functions.
In any case, it averred that, according to Oaminal v.
Castillo,14 petitioners already voluntarily submitted to the court's
jurisdiction when they prayed for the discharge of the writ of
attachment, which is an affirmative relief apart from the dismissal
of the case.
A Reply with Comment/Opposition (to the motion to declare
defendants in default)15 was then filed by petitioners. In support of
their contention that the court lacks jurisdiction over their persons,
they submitted their Joint Affidavit16 and the Affidavit17 of Abante,
claiming, among others, that they neither personally met the sheriff
and/or the process server nor were handed a copy of the court
documents; that Ang did not give Abante telephone instructions to
receive the same; and that Abante did not receive any instruction
from Ang. Petitioners further held that Oaminal finds no application
in the instant case since they only filed one motion and that the
additional relief prayed for, which is the discharge of the writ, is
complementary to and a necessary consequence of a finding that
the court has no jurisdiction over their persons. Instead, Our ruling
in Avon Insurance PLC v. Court of Appeals18 was relied upon.
In its Rejoinder with Motion to Strike,19 respondent stood firm in
defending the court's jurisdiction. The denials of Ang and Abante
were viewed as self-serving and could not prevail over the
presumption of regularity which the sheriff enjoys as an officer of
12
0
the court. Even assuming that the Sheriffs Return does not state in II.
detail the fact that the summons was served upon the individual
petitioners through substituted service, respondent asserted that WHETHER OR NOT THE TRIAL COURT ACQUIRED JURISDICTION
this does not conclusively prove that such service is invalid because OVER THE PERSONS OF THE INDIVIDUAL DEFENDANTS BY
it may still be shown through extraneous evidence similar to the RESORTING TO SUBSTITUTED SERVICE OF SUMMONS DESPITE
case of BPI v. Spouses Evangelista.20redarclaw ABSENCE OF EARNEST EFFORTS ON THE PART OF THE SERVING
OFFICER TO SERVE SUMMONS PERSONALLY.23
On March 29, 2007, the RTC denied petitioners' motion to dismiss
We deny.
and respondent's motion to declare them in default. In upholding
the jurisdiction of the court over the persons of petitioners and
Summons is a writ by which the defendant is notified of the action
requiring them to file an Answer, the Order
brought against him or her.24 Its purpose is two-fold: to acquire
ratiocinated:LawlibraryofCRAlaw
jurisdiction over the person of the defendant and to notify the
ChanRoblesVirtualawlibrary
defendant that an action has been commenced so that he may be
The very essence of service of summons is for the defendants to be
given an opportunity to be heard on the claim against
aware of an existing suit against them and for them to file an answer
him.25 "[C]ompliance with the rules regarding the service of
or responsive pleading thereto. When corporate and individual
summons is as much an issue of due process as of jurisdiction. The
defendants were served with summons through the [liaison] officer
essence of due process is to be found in the reasonable opportunity
who received the same for and in their behalf as per instruction of
to be heard and submit any evidence one may have in support of
defendant Melinda Ang, and when defendants filed a responsive
his defense. It is elementary that before a person can be deprived
pleading in the form of a Motion to Dismiss, the essence of service
of his property, he should first be informed of the claim against him
of summons was met and defendants are deemed to have ultimately
and the theory on which such claim is premised."26redarclaw
received the summons despite their protestations. There is no
reason for the Court to doubt the regularity of the Sheriffs service
Service of summons on domestic corporation, partnership or other
of summons as in fact its regularity is presumed. It bears stressing
juridical entity is governed by Section 11, Rule 14 of the Rules,
that defendants did not per se deny having received summonses.
which states:LawlibraryofCRAlaw
Perforce, they are challenging the manner of service of the same.
ChanRoblesVirtualawlibrary
Having ultimately received the summonses upon them and
SECTION 11. Service upon domestic private juridical entity. - When
considering the rules on service of the same was substantially
the defendant is a corporation, partnership or association organized
complied with, the Court finds no reason to deny the instant Motion
under the laws of the Philippines with a juridical personality, service
to Dismiss.21
may be made on the president, managing partner, general
Petitioners elevated the jurisdictional issue to the CA via petition manager, corporate secretary, treasurer, or in-house counsel.
for certiorari and prohibition.22 As afore-stated, the appellate court
When the defendant is a domestic corporation like herein petitioner,
later dismissed the petition and denied the motion for
service of summons may be made only upon the persons
reconsideration; hence, this petition raising the following issues for
enumerated in Section 11, Rule 14 of the Rules.27 The enumeration
resolution:LawlibraryofCRAlaw
of persons to whom summons may be served is restricted, limited
ChanRoblesVirtualawlibrary
and exclusive following the rule on statutory construction expressio
I.
unios est exclusio alterius.28 Substantial compliance cannot be
invoked.29 Service of summons upon persons other than those
WHETHER OR NOT THE TRIAL COURT ACQUIRED JURISDICTION
officers specifically mentioned in Section 11, Rule 14 is void,
OVER THE PERSON OF THE DEFENDANT CORPORATION BY SERVICE
defective and not binding to said corporation.30
OF SUMMONS UPON ITS MERE EMPLOYEE.
ChanRoblesVirtualawlibrary

12
1
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. 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.31
As correctly argued by petitioners, Sps. Mason already resolved that
substantial compliance on service of summons upon a domestic
corporation is no longer an excuse. Thus:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
The question of whether the substantial compliance rule is still
applicable under Section 11, Rule 14 of the 1997 Rules of Civil
Procedure has been settled in Villarosa which applies squarely to the
instant case. In the said case, petitioner E.B. Villarosa & Partner Co.
Ltd. (hereafter Villarosa) with principal office address at 102 Juan
Luna St., Davao City and with branches at 2492 Bay View Drive,
Tambo, Parailaque, Metro Manila and Kolambog, Lapasan, Cagayan
de Oro City, entered into a sale with development agreement with
private respondent Imperial Development Corporation. As Villarosa
failed to comply with its contractual obligation, private respondent
initiated a suit for breach of contract and damages at the Regional
Trial Court of Makati. Summons, together with the complaint, was
served upon Villarosa through its branch manager at Kolambog,
Lapasan, Cagayan de Oro City. Villarosa filed a Special Appearance
with Motion to Dismiss on the ground of improper service of
summons and lack of jurisdiction. The trial court denied the motion
and ruled that there was substantial compliance with the rule, thus,
it acquired jurisdiction over Villarosa. The latter questioned the
denial before us in its petition for certiorari. We decided in Villarosa's
favor and declared the trial court without jurisdiction to take
cognizance of the case. We held that there was no valid service of
summons on Villarosa as service was made through a person not
included in the enumeration in Section 11, Rule 14 of the 1997 Rules
of Civil Procedure, which revised the Section 13, Rule 14 of the 1964
Rules of Court. We discarded the trial court's basis for denying the
motion to dismiss, namely, private respondent's substantial
compliance with the rule on service of summons, and fully agreed
with petitioner's assertions that the enumeration under the new rule
is restricted, limited and exclusive, following the rule in statutory
construction that expressio unios est exclusio alterius. Had the Rules
of Court Revision Committee intended to liberalize the rule on
service of summons, we said, it could have easily done so by clear
and concise language. Absent a manifest intent to liberalize the rule,
we stressed strict compliance with Section 11, Rule 14 of the 1997
Rules of Civil Procedure.
Neither can herein petitioners invoke our ruling in Millennium to
support their position for said case is not on all fours with the instant
case. We must stress that Millennium was decided when the 1964
Rules of Court were still in force and effect, unlike the instant case
which falls under the new rule. Hence, the cases cited by petitioners
where we upheld the doctrine of substantial compliance must be
deemed overturned by Villarosa, which is the later case.
At this juncture, it is worth emphasizing that notice to enable the
other party to be heard and to present evidence is not a mere
technicality or a trivial matter in any administrative or judicial
proceedings. The service of summons is a vital and indispensable
ingredient of due process. x x x32
The foregoing notwithstanding, We agree with the CA that there was
a valid and effective service of summons upon petitioner corporation
through its liaison officer who acted as the agent of the corporate
secretary. It ruled:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Petitioner corporation asserts that based on the said rule [Section
11, Rule 14 of the Rules], the service of summons made by the
sheriff upon its liaison officer, Claudia Abante, was defective for the
reason that a liaison officer is not one of the corporate officers
enumerated therein upon whom service of summons is authorized
to be made. It contends that there having been no valid service, the
trial court consequently did not acquire jurisdiction to hear the
complaint a quo.
The contention deserves full credence only if it is to be assumed that
Claudia Abante received the summons in her official capacity as
petitioner corporation's liaison officer. However, this is not true in
the instant case, since according to the sheriff, Abante proceeded to
receive the summons and accompanying documents only after
receiving instructions to do so from Melinda Ang, an individual
petitioner herein and the petitioner corporation's corporate
secretary. It is clear, therefore, that Abante, in so receiving the
12
2
summons, did so in representation of Ang who, as corporate inasmuch as these were decided before the advent of the 1997
secretary, is one of the officers competent under the Rules of Court Revised Rules of Civil Procedure, adding likewise that the cited cases
to receive summons on behalf of a private juridical person. Thus, and the instant case differ in their respective factual milieus. We are
while it may be true that there was no direct, physical handing of not persuaded. Under either the former or the present rules, it is
the summons to Ang, the latter could at least be charged with clear that Abante's denial that she received instructions from Ang is
having constructively received the same, which in Our view, evidence that would pale in comparison to the declaration of an
amounts to a valid service of summons. officer of the court indisputably performing his duty objectively and
free from any malicious and ill motives.33
Having herself instructed Abante to receive the summons, Ang, and
Petitioner corporation cannot conveniently rely on the sworn
for that matter, petitioner corporation, is thus now precluded from
statements of the individual petitioners and Abante. Upon
impugning the jurisdiction of the trial court on the ground of invalid
examination, Ang's denial of having spoken with any process server
service of summons. In point in this regard is the principle of
to give instruction to serve the summons and other pertinent papers
estoppel which, under our remedial laws, is an effective bar against
to Abante34 is not incompatible with the Sheriffs Report stating that
any claim of lack of jurisdiction. Under said doctrine, an admission
"[s]aid summons and all pertinent papers, upon telephone
or representation is rendered conclusive upon the person making it
instruction of defendant Melinda Ang, were received by Claudia
and cannot be denied or disproved as against the person relying
Abante, [defendants'] [Liaison] Officer, as evidenced by her
thereon.
signature at the original copy of Summons and Writ." While it may
be true that Ang had not talked to the sheriff or process server, it
Thus, despite the assertions of Ang and Abante that, as between
still does not rule out the possibility that she in fact spoke to Abante
them, no such instruction had been relayed and received, the
and instructed the latter to receive the documents in her behalf. As
sheriffs statement belying the allegations should be accorded
to the Affidavit of Abante, her disavowal of having spoken to Ang or
weight.
receiving telephone instructions from her is truly self-serving.
Evidence as simple as a telephone billing statement or an affidavit
The sheriffs report is further bolstered by the presumption of
of a disinterested third person, among others, could have been
regularity in the performance of public duty as the same is provided
presented to refute the sheriffs claim, but there was none. Likewise,
for in Rule 131 of the Rules of Court. The presumption applies so
no substantial proofs were credibly shown to support Abante's
long as it is shown that the officer, in performing his duties, is not
allegation that the sheriff insisted on having the court processes
inspired by any improper motive, a fact that is true with the sheriff
received and that she was "intimidated by the presence of a court
in the case at bar. And, if the presumption may be made to apply to
personnel who was quite earnest in accomplishing his
public officers in general, with more reason should its benefit be
task."35redarclaw
accorded to the sheriff, who is an officer of the court.
It is well to note that the certificate of service of the process server
True, the presumption is disputable, but to overcome the same,
is prima facie evidence of the facts as set out therein. This is fortified
more concrete evidence than the affidavit of Abante is required. As
by the presumption of the regularity of performance of official duty.
correctly pointed out by the respondent, in line with the ruling of the
To overcome the presumption of regularity of official functions in
Supreme Court in R. Transport Corporation vs. Court of Appeals and
favor of such sheriffs return, the evidence against it must be clear
Talsan Enterprises, Inc. vs. Baliwag, Abante's affidavit is self-
and convincing. Sans the requisite quantum of proof to the contrary,
serving in nature, and being so, is not sufficient to overturn the said
the presumption stands deserving of faith and credit.36redarclaw
presumption.

On this aspect, petitioners score the respondent, asserting that the

The same conclusion, however, could not be said with respect to the
two above-cited cases are not applicable to the case at hand
service of summons upon the individual petitioners.

12
3

Section 7, in relation to Section 6, Rule 14 of the Rules, provides for
substituted service of summons:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
Section 6. Service in person on defendant. - Whenever practicable,
the summons shall be served by handling a copy thereof to the
defendant in person, or, if he refuses to receive and sign for it, by
tendering it to him.
Section 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.
Sections 6 and 7 of the Rules cannot be construed to apply
simultaneously and do not provide for alternative modes of service
of summons which can either be resorted to on the mere basis of
convenience to the parties for, under our procedural rules, service
of summons in the persons of the defendants is generally preferred
over substituted service.37 Resort to the latter is permitted when the
summons cannot be promptly served on the defendant in person
and after stringent formal and substantive requirements have been
complied with.38 The failure to comply faithfully, strictly and fully
with all the requirements of substituted service renders the service
of summons ineffective.39redarclaw
Manotoc v. Court of Appeals40 painstakingly elucidated the
requirements of the Rules as follows:LawlibraryofCRAlaw
ChanRoblesVirtualawlibrary
We can break down this section into the following requirements to
effect a valid substituted service:LawlibraryofCRAlaw
(1) Impossibility of Prompt Personal Service
The party relying on substituted service or the sheriff must show
that defendant cannot be served promptly or there is impossibility
of prompt service. Section 8, Rule 14 provides that the plaintiff or
the sheriff is given a "reasonable time" to serve the summons to the
defendant in person, but no specific time frame is mentioned.
"Reasonable time" is defined as "so much time as is necessary under
the circumstances for a reasonably prudent and diligent man to do,
conveniently, what the contract or duty requires that should be
done, having a regard for the rights and possibility of loss, if any[,]
to the other party." Under the Rules, the service of summons has
no set period. However, when the court, clerk of court, or the
plaintiff asks the sheriff to make the return of the summons and the
latter submits the return of summons, then the validity of the
summons lapses. The plaintiff may then ask for an alias summons
if the service of summons has failed. What then is a reasonable time
for the sheriff to effect a personal service in order to demonstrate
impossibility of prompt service? To the plaintiff, "reasonable time"
means no more than seven (7) days since an expeditious processing
of a complaint is what a plaintiff wants. To the sheriff, "reasonable
time" means 15 to 30 days because at the end of the month, it is a
practice for the branch clerk of court to require the sheriff to submit
a return of the summons assigned to the sheriff for service. The
Sheriffs Return provides data to the Clerk of Court, which the clerk
uses in the Monthly Report of Cases to be submitted to the Office of
the Court Administrator within the first ten (10) days of the
succeeding month. Thus, one month from the issuance of summons
can be considered "reasonable time" with regard to personal service
on the defendant.
Sheriffs are asked to discharge their duties on the service of
summons with due care, utmost diligence, and reasonable
promptness and speed so as not to prejudice the expeditious
dispensation of justice. Thus, they are enjoined to try their best
efforts to accomplish personal service on defendant. On the other
hand, since the defendant is expected to try to avoid and evade
service of summons, the sheriff must be resourceful, persevering,
canny, and diligent in serving the process on the defendant. For
substituted service of summons to be available, there must be
several attempts by the sheriff to personally serve the summons
within a reasonable period [of one month] which eventually resulted
in failure to prove impossibility of prompt service. "Several
attempts" means at least three (3) tries, preferrably on at least two
different dates. In addition, the sheriff must cite why such efforts
were unsuccessful. It is only then that impossibility of service can
be confirmed or accepted.
(2) Specific Details in the Return
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4
The sheriff must describe in the Return of Summons the facts and Summons.
circumstances surrounding the attempted personal service. The
efforts made to find the defendant and the reasons behind the (4) A Competent Person in Charge
failure must be clearly narrated in detail in the Return. The date and
time of the attempts on personal service, the inquiries made to If the substituted service will be done at defendant's office or regular
locate the defendant, the name/s of the occupants of the alleged place of business, then it should be served on a competent person
residence or house of defendant and all other acts done, though in charge of the place. Thus, the person on whom the substituted
futile, to serve the summons on defendant must be specified in the service will be made must be the one managing the office or
Return to justify substituted service. The form on Sheriffs Return of business of defendant, such as the president or manager; and such
Summons on Substituted Service prescribed in the Handbook for individual must have sufficient knowledge to understand the
Sheriffs published by the Philippine Judicial Academy requires a obligation of the defendant in the summons, its importance, and the
narration of the efforts made to find the defendant personally and prejudicial effects arising from inaction on the summons. Again,
the fact of failure. Supreme Court Administrative Circular No. 5 these details must be contained in the Return.41
dated November 9, 1989 requires that "impossibility of prompt
In resorting to the substituted service, the sheriff in this case pithily
service should be shown by stating the efforts made to find the
declared in his Report that he "also served copies to other
defendant personally and the failure of such efforts," which should
defendants at their given addresses, but they refused to
be made in the proof of service.
acknowledge receipt thereof." Obviously, the Sheriffs Report dated
November 13, 2006 does not particularize why substituted service
(3) A Person of Suitable Age and Discretion
was resorted to and the precise manner by which the summons was
served upon the individual petitioners. The disputable presumption
If the substituted service will be effected at defendant's house or
that an official duty has been regularly performed will not apply
residence, it should be left with a person of "suitable age and
where it is patent from the sheriffs or server's return that it is
discretion then residing therein." A person of suitable age and
defective.42redarclaw
discretion is one who has attained the age of full legal capacity (18
years old) and is considered to have enough discernment to
To avail themselves of substituted service of summons, courts must
understand the importance of a summons. "Discretion" is defined as
rely on a detailed enumeration of the sheriffs actions and a showing
"the ability to make decisions which represent a responsible choice
that the defendant cannot be served despite diligent and reasonable
and for which an understanding of what is lawful, right or wise may
efforts.43 The Court requires that the Sheriffs Return clearly and
be presupposed". Thus, to be of sufficient discretion, such person
convincingly show the impracticability or hopelessness of personal
must know how to read and understand English to comprehend the
service.44 The impossibility of personal service justifying availment
import of the summons, and fully realize the need to deliver the
of substituted service should be explained in the proof of service;
summons and complaint to the defendant at the earliest possible
why efforts exerted towards personal service failed. The pertinent
time for the person to take appropriate action. Thus, the person
facts and circumstances attendant to the service of summons must
must have the "relation of confidence" to the defendant, ensuring
be stated in the proof of service or Officer's Return; otherwise, the
that the latter would receive or at least be notified of the receipt of
substituted service cannot be upheld.45redarclaw
the summons. The sheriff must therefore determine if the person
found in the alleged dwelling or residence of defendant is of legal
Under exceptional terms, the circumstances warranting substituted
age, what the recipient's relationship with the defendant is, and
service of summons may be proved by
whether said person comprehends the significance of the receipt of
evidence aliunde.46 Substituted service will still be considered as
the summons and his duty to immediately deliver it to the defendant
regular if other evidence of the efforts to serve summons was
or at least notify the defendant of said receipt of summons. These
presented.47BPI v. Spouses Evangelista48 teaches Us that a defect
matters must be clearly and specifically described in the Return of
in the service of summons, which is apparent on the face of the

12
5
return, does not necessarily constitute conclusive proof that the NPGI.
actual service has in fact been improperly made. In the interest of
speedy justice, the trial court has to immediately ascertain whether a.5. Considering that she claimed to be authorized by defendant
the patent defect is real and, if so, to fully determine whether prior Melinda Ang, who is the Corporate Secretary of defendant NPGI, to
attempts at personal service have in fact been done and resort to receive the summons on behalf of defendant NPGI, the Sheriff
the substituted service was justified. Should the returns not show entrusted the same to her, as well as the Complaint and the Writ of
compliance with the Rules on substituted service, actual and correct Attachment, among others, and Ms. Abante voluntarily signed the
service may still be proven by evidence extraneous to it. If receiving copy thereof.
substituted service is indeed improper, the trial court must issue
new summons and serve it in accordance with the Rules. a.6 the Sheriff did not intimidate Ms. Abante into receiving the
summons. In fact, she volunteered to receive the same.
In the present case, while no actual hearing was conducted to verify
b. Copies of the Complaint, summons and Writ of Attachment,
the validity of the grounds for substituted service of summons, the
among others, were likewise served to defendant NPGI at its office
parties exchanged pleadings in support of their respective positions.
located at 39th Floor, Yuchengco Tower, RCBC Plaza, 6819 Ayala
To justify, respondent contends:LawlibraryofCRAlaw
Avenue, corner Sen. Gil Puyat Avenue, Makati City, Metro Manila
ChanRoblesVirtualawlibrary
('RCBC Plaza Office').
34. In the instant case, representatives of the undersigned counsel
ChanRoblesVirtualawlibrary
and plaintiff RCBC personally observed the service of summons on
b.1. The personnel from said office also stated that all the defendant
the defendants. Based on their account, the following facts and
NPGI Directors were not around and were probably at home. As
circumstances transpired:LawlibraryofCRAlaw
such, a copy of the Complaint, summons and Writ of Attachment,
ChanRoblesVirtualawlibrary
among others, were left with said office.
a. On [October 26, 2006], the Sheriff served summons on defendant
NPGI at the G/F BPI Building, Rizal Street, Candelaria, Quezon, the c. Thereafter, summons on the individual defendants were served
reported office address of defendant NPGI in the latter's General at the following addresses:LawlibraryofCRAlaw
Information Sheet submitted with the Securities and Exchange ChanRoblesVirtualawlibrary
Commission. c. 1. Renato Ang, Nena Ang, Melinda Ang, Pauline Ang - 1348 Palm
ChanRoblesVirtualawlibrary Avenue, Dasmarinas Village, Makati City;
a. 1. In the said address, the Sheriff met a person who introduced
herself as Ms. Claudia Abante, the Liaison [Officer] of defendant c.2. Guillermo Sy and Alison Sy - 1320 Glorioso Streets, Dasmarinas
NPGI. Village, Makati City;

a.2. Upon inquiry, the Sheriff was informed that defendants NPGI c.3. Nelson Ang, Luisa Ang - 19 Swallow Drive, Greenmeadows,
Officers were all not around to receive the summons for defendant Quezon City;
NPGI considering that, according to Ms. Abante, the defendant NPGI
Directors do not hold office at said address. c.4. Mario Ang - Diamond Furniture, Cabunyag Street, Candelaria,
Quezon; and
a.3. However, Ms. Abante volunteered to call defendant Melinda Ang
on the phone to inform her that summons was beings served upon c.5. Ricky Ang - Rizal Street, Candelaria, Quezon.
defendant NPGI. d. Upon service of the summons upon them, it became apparent
that the individual defendants were evading service of summons
a.4. Subsequently, Ms. Abante informed the Sheriff that defendant considering that the sheriff was being given a run-around.
Melinda Ang authorized her to receive the summons for defendant ChanRoblesVirtualawlibrary

12
6
d.1. In their respective residences, their house helpers stated that Village, Makati
the individual defendants were not at home but in the RCBC Plaza City;chanRoblesvirtualLawlibrary
Office.
3. Nelson Ang, Luisa Ang - 19 Swallow
d.2. However, considering that the Sheriff had already been to the Drive, Greenmeadows, Quezon
RCBC Plaza Office and the personnel at said office previously stated City;chanRoblesvirtualLawlibrary
that all the defendants were not at said office, it became apparent
that all the defendants were trying to evade service of summons. 4. Mario Ang - Diamond Furniture,
Cabunyag Street, Candelaria,
d.3. Given the obvious attempt of defendants to evade service of Quezon; and
summons, it was futile for the Sheriff to go back to the RCBC Plaza
Office. 5. Ricky Ang - Rizal Street, Candelaria,
Quezon.
d.4. Hence, summons were served to the individual defendants
through substituted service by entrusting the same to their house
36.3. To require the sheriff to return several times at the residences
helpers residing at the respective addresses, all of whom are of
of the ten (10) defendants as suggested by the defendants, despite
suitable age and discretion.
the apparent intention of the defendants to evade service of
summons, and the considerable distances between all their
xxxx
residences (i.e., Makati City, Pasig City, City of Manila and Quezon
36. Indeed, in the instant case, contrary to the allegations contained Province), would clearly be unreasonable.49
in the Motion to Dismiss, the summons were properly served to the
individual defendants through substituted service considering that According to respondent's version, copies of the complaint,
there were justifiable causes existing which prevented personal summons and writ of attachment, among others, were served to
service upon all the individual defendants within a reasonable time. petitioner corporation at its offices in Candelaria, Quezon and RCBC
ChanRoblesVirtualawlibrary Plaza. In the Quezon office, the sheriff was informed that the
36.1. It should be noted that aside from defendant NPGI, there individual petitioners were all not around to receive the summons
are ten (10) other individual defendants in the instant case who for the corporation considering that they do not hold office at said
are residing in addresses which are far apart (i.e., Makati City, Pasig address. Likewise, a staff from the RCBC Plaza office stated that all
City, City of Manila and Quezon Province). them were not around and were probably at home. Thereafter,
summons was served on the individual petitioners at their respective
36.2. Summons were attempted to be served to all defendant NPGI addresses in Makati City, Quezon City, and Candelaria, Quezon.
Directors, Luisa Ang, Guillermo Sy and Pauline Ang on the following Their house helpers told that they were not at home but were in the
addresses:LawlibraryofCRAlaw RCBC Plaza office. Considering that the sheriff already went there
and its personnel said that they were not at said office, it became
1. Renato Ang, Nena Ang, Melinda apparent on the sheriff that the individual petitioners were trying to
Ang, Pauline Ang - 1348 Palm evade service of summons. Thus, given this predicament, it was
Avenue, Dasmarinas Village, Makati futile for him to go back to the RCBC Plaza office.
City;chanRoblesvirtualLawlibrary
It is argued that the summons was properly served to the individual
2. Guillermo Sy and Alison Sy - 1320 petitioners through substituted service because there were
Glorioso Streets, Dasmarinas justifiable causes existing which prevented personal service within

12
7
a reasonable period of time. Respondent asserts that requiring the
sheriff to return several times at the residences of the ten (10)
individual petitioners despite their intention to evade service of
summons and the considerable distances of their residences would
clearly be unreasonable.
Respondent's explanations do not suffice.
In the instant case, it appears that the sheriff hastily and
capriciously resorted to substituted service of summons without
actually exerting any genuine effort to locate the individual
petitioners. The "reasonable time" within which to personally serve
the summons - 7 days for the plaintiff or 15-30 days for the sheriff
as stated in Manotoc - has not yet elapsed at the time the
substituted service was opted to. Remarkably, based on the Sheriffs
Report and the narration of petitioners, the personal service of
summons upon the corporation and the individual petitioners as well
as the levy of their personal and real properties were all done in just
one day. Manotoc stresses that for substituted service of summons
to be available, there must be several attempts by the sheriff to
personally serve the summons within a reasonable period which
eventually resulted in failure in order to prove impossibility of
prompt service. To reiterate, "several attempts" means at least
three (3) tries, preferrably on at least two different dates.
Further, except for the Quezon Province, there is, in fact, no
considerable distance between the residences of the individual
petitioners since the cities of Makati and Quezon are part of the
National Capital Region; hence, accessible either by private or public
modes of transportation. Assuming that there is, the distance would
not have been insurmountable had respondent took its time and not
unnecessarily rushed to accomplish personal service in just a single
day.
Finally, respondent alleges that the summons was served to the
individual petitioners through substituted service by entrusting the
same to their house helpers, all of whom are of suitable age and
discretion. It did not, however, elaborate that these persons know
how to read and understand English to comprehend the import of
the summons, and fully realize the need to deliver the summons and
complaint to the individual petitioners at the earliest possible time
for them to take appropriate action. There is no way for Us to
conclusively ascertain that the sheriff ensured, among others, that
the persons found in the alleged dwelling or residence comprehend
the significance of the receipt of the summons and the duty to
immediately deliver it to the individual petitioners or at least notify
them of said receipt of summons.
The foregoing considered, it can be deduced that since there were
no actual efforts exerted and no positive steps undertaken to
earnestly locate the individual petitioners, there is no basis to
convincingly say that they evaded the personal service of summons
and merely gave the sheriff a run-around, thus, justifying
substituted service upon them.
Despite improper service of summons upon their persons, the
individual petitioners are deemed to have submitted to the
jurisdiction of the court through their voluntary appearance. The
second sentence of Section 20,50 Rule 14 of the Rules that "[t]he
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" clearly refers to affirmative defenses, not
affirmative reliefs.51redarclaw
In the present case, the individual petitioners prayed, among
others, for the following: (1) discharge of the writ of attachment on
their properties; (2) denial of the motion to declare them in default;
(3) admission of the Comment/Opposition (to the motion to declare
them in default) filed on December 19, 2006; and (4) denial of
respondent's motion to strike off from the records (their opposition
to the motion to declare them in default). By seeking affirmative
reliefs from the trial court, the individual petitioners are deemed to
have voluntarily submitted to the jurisdiction of said court. A party
cannot invoke the jurisdiction of a court to secure affirmative relief
against his opponent and after obtaining or failing to obtain such
relief, repudiate or question that same jurisdiction.52 Therefore, the
CA cannot be considered to have erred in affirming the trial court's
denial of the Special Appearance with Motion to Dismiss for alleged
improper service of summons.
WHEREFORE, premises considered, the petition is DENIED. The
December 12, 2007 Decision and June 17, 2008 Resolution of the
Court of Appeals in CA-G.R. SP No. 98787, which sustained the
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8
March 29, 2007 Order of the Regional Trial Court, Branch 66, Makati
City, in Civil Case No. 06-882, are hereby AFFIRMED.
G.R. No. 206653, February 25, 2015
YUK LING ONG, Petitioner, v. BENJAMIN T. CO, Respondent.
DECISION
MENDOZA, J.:
In court proceedings, there is no right more cherished than the right
of every litigant to be given an opportunity to be heard. This right
begins at the very moment that summons is served on the
defendant. The Rules of Court places utmost importance in ensuring
that the defendant personally grasp the weight of responsibility that
will befall him. Thus, it is only in exceptional circumstances that
constructive notification, or substituted service of summons, is
allowed. If the server falls short of the rigorous requirements for
substituted service of summons, then the Court has no other option
but to strike down a void judgment, regardless of the consequences.
This is a petition for review on certiorari seeking to reverse and set
aside the June 27, 2012 Decision1 and the March 26, 2013
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 106271,
which denied the petition for annulment of judgment.
The Facts
Petitioner Yuk Ling Ong (petitioner), a British-Hong Kong national,
and respondent Benjamin Co (respondent), a Filipino citizen, were
married on October 3, 1982 at Ellinwood-Malate
Church.3cralawlawlibrary
Sometime in November 2008, petitioner received a subpoena from
the Bureau of Immigration and Deportation (BID) directing her to
appear before the said agency because her permanent residence
visa was being subjected to cancellation proceedings. Reportedly,
her marriage with respondent was nullified by the court.
When petitioner appeared before the BID, she was furnished with
the copies of the following documents: (1) petition for declaration
of nullity of marriage filed as Civil Case No. CV-01-0177; (2) petition
for declaration of nullity of marriage docketed as Civil Case No. 02-
0306; (3) Decision,4 dated December 11, 2002, in Civil Case No.
02-0306 of the Regional Trial Court, Branch 260 (RTC), Parañaque
City, declaring the marriage between petitioner and respondent as
void ab initio; and (4) their marriage contract5 with the subject
decision annotated thereon. Petitioner was perplexed that her
marriage with respondent had been declared void ab initio.
The above documents showed that on April 26, 2001, respondent
filed a petition for declaration of nullity 6 on the ground of
psychological incapacity before the RTC, which was docketed as Civil
Case No. CV-01-0177. Respondent stated that petitioner’s address
was 600 Elcano St., Binondo, Manila. There was no showing of its
status, whether pending, withdrawn or terminated.
On July 19, 2002, respondent filed another petition for declaration
of nullity7 on the ground of psychological incapacity before the RTC,
docketed as Civil Case No. 02-0306. Respondent indicated that
petitioner’s address was 23 Sta. Rosa Street, Unit B-2 Manresa
Garden Homes, Quezon City. On July 29, 2002, the RTC issued
summons.8 In his Server’s Return,9 process server Rodolfo Torres,
Jr. stated that, on August 1, 2002, substituted service of summons
with the copy of the petition was effected after several futile
attempts to serve the same personally on petitioner. The said
documents were received by Mr. Roly Espinosa, a security officer.
On December 11, 2002, the RTC rendered a decision10 in Civil Case
No. 02-0306 finding respondent’s marriage with petitioner as
void ab initio on the ground of psychological incapacity under Article
36 of the Family Code. It stated that summons was served on
petitioner on August 1, 2002, but she failed to file her responsive
pleading within the reglementary period. The public prosecutor also
stated that there were no indicative facts to manifest collusion.
Thus, the RTC concluded that petitioner was psychologically
incapacitated to perform her essential marital obligations.
Consequently, petitioner filed a petition for annulment of
judgment11 under Rule 47 of the Rules of Court before the CA on
November 24, 2008, claiming that she was never notified of the
cases filed against her. She prayed that the RTC decision, dated
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9
December 11, 2002, in Civil Case No. 02-0306, be nullified on the
grounds of extrinsic fraud and lack of jurisdiction.
Petitioner alleged that first, respondent committed extrinsic fraud
because, as seen in Civil Case No. CV-01-0177, he deliberately
indicated a wrong address to prevent her from participating in the
trial; second, jurisdiction over her person was not acquired in Civil
Case No. 02-0306 because of an invalid substituted service of
summons as no sufficient explanation, showing impossibility of
personal service, was stated before resorting to substituted service
of summons; third, the alleged substituted service was made on a
security guard of their townhouse and not on a member of her
household; and fourth, she was not psychologically incapacitated to
perform her marital obligations.12cralawlawlibrary
Ruling of the Court of Appeals
On June 27, 2012, the CA rendered the assailed decision finding the
petition for annulment of judgment to be devoid of merit. It held
that there was no sufficient proof to establish that respondent
employed fraud to insure petitioner’s non-participation in the trial of
Civil Case No. CV-01-0177.
1. Whether or not the Trial Court in Civil Case No. 02-
0306 validly acquired jurisdiction over the person of
the petitioner.
2. Whether or not the facts proven by the petitioner
constitute extrinsic fraud within the purview of Rule
47 of the Rules of Court.15
Petitioner argues that there was an invalid substituted service of
summons. The process server’s return only contained a general
statement that substituted service was resorted to “after several
futile attempts to serve the same personally,” 16 without stating the
dates and reasons of the failed attempts. Petitioner also reiterates
her argument that extrinsic fraud was employed.
In his Comment,17 filed on July 9, 2014, respondent contended that
the server’s return satisfactorily stated the reason for the resort to
a substituted service of summons on August 1, 2002; and it was
improbable that petitioner failed to receive the summons because it
was sent to the same address which she declared in this present
petition.

Relying on Robinson v. Miralles,13the CA further ruled that the Petitioner filed her Reply18 on October 8, 2014 reiterating her
substituted service of summons in Civil Case No. 02-0306 was valid. previous arguments.
It found that there was a customary practice in petitioner’s
townhouse that the security guard would first entertain any visitors The Court’s Ruling
and receive any communication in behalf of the homeowners. With
this set-up, it was obviously impossible for the process server to The Court finds merit in the petition.
personally serve the summons upon petitioner. It also declared that
the process server’s return carries with it the presumption of Annulment of judgment is a recourse equitable in character, allowed
regularity in the discharge of a public officer’s duties and functions. only in exceptional cases as where there is no available or other
adequate remedy. Rule 47 of the 1997 Rules of Civil Procedure, as
Petitioner moved for reconsideration, but her motion was denied by amended, governs actions for annulment of judgments or final
the CA in its Resolution,14 dated March 26, 2013. orders and resolutions, and Section 2 thereof explicitly provides only
two grounds for annulment of judgment, that is, extrinsic fraud and
Hence, this petition, anchored on the following lack of jurisdiction.19 Annulment of judgment is an equitable
principle not because it allows a party-litigant another opportunity
ISSUES to reopen a judgment that has long lapsed into finality but because
it enables him to be discharged from the burden of being bound to
a judgment that is an absolute nullity to begin
with.20cralawlawlibrary

13
0

Petitioner raises two grounds to support her claim for annulment of
judgment: (1) extrinsic fraud and (2) lack of jurisdiction. Her
contention on the existence of extrinsic fraud, however, is too
unsubstantial to warrant consideration. The discussion shall then
focus on the ground of lack of jurisdiction.
Lack of jurisdiction on the part of the trial court in rendering the
judgment or final order is either lack of jurisdiction over the subject
matter or nature of the action, or lack of jurisdiction over the person
of the petitioner. The former is a matter of substantive law because
statutory law defines the jurisdiction of the courts over the subject
matter or nature of the action. The latter is a matter of procedural
law, for it involves the service of summons or other processes on
the petitioner.21cralawlawlibrary
In the present case, petitioner contends that there was lack of
jurisdiction over her person because there was an invalid substituted
service of summons. Jurisdiction over the defendant is acquired
either upon a valid service of summons or the defendant's voluntary
appearance in court.22 If the defendant does not voluntarily appear
in court, jurisdiction can be acquired by personal or substituted
service of summons as laid out under Sections 6 and 7 of Rule 14 of
the Rules of Court, which state:chanRoblesvirtualLawlibrary
Sec. 6. Service in person on defendant. - Whenever practicable, the
summons shall be served by handing a copy thereof to the
defendant in person, or, if he refuses to receive and sign for it, by
tendering it to him.
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.
The landmark case of Manotoc v. CA (Manotoc)23 thoroughly
discussed the rigorous requirements of a substituted service of
summons, to wit: xxx
(1) Impossibility of Prompt Personal Service
xxx
For substituted service of summons to be available, there must be
several attempts by the sheriff to personally serve the summons
within a reasonable period of one month which eventually resulted
in failure to prove impossibility of prompt service. "Several
attempts" means at least three (3) tries, preferably on at
least two different dates. In addition, the sheriff must cite
why such efforts were unsuccessful. It is only then that
impossibility of service can be confirmed or accepted.
(2) Specific Details in the Return
The sheriff must describe in the Return of Summons the facts and
circumstances surrounding the attempted personal service. The
efforts made to find the defendant and the reasons behind the
failure must be clearly narrated in detail in the Return. The date
and time of the attempts on personal service, the inquiries
made to locate the defendant, the name/s of the occupants
of the alleged residence or house of defendant and all other
acts done, though futile, to serve the summons on defendant
must be specified in the Return to justify substituted service.
(3) A Person of Suitable Age and Discretion
xxx
The sheriff must therefore determine if the person found in the
alleged dwelling or residence of defendant is of legal age, what the
recipient's relationship with the defendant is, and whether said
person comprehends the significance of the receipt of the summons
and his duty to immediately deliver it to the defendant or at least
notify the defendant of said receipt of summons. These matters
must be clearly and specifically described in the Return of
Summons. (Emphases and underscoring supplied)
The pronouncements of the Court in Manotoc have been applied to
several succeeding cases. In Pascual v. Pascual,24 the return of
summons did not show or indicate the actual exertion or positive
steps taken by the officer or process server in serving the summons
13
1
personally to the defendant. Similarly, in Spouses Afdal v.
Carlos,25 the process server’s indorsements therein failed to state (Emphasis supplied)
that the personal service on the defendants was rendered
impossible and that efforts were made to find them personally. In
The server’s return utterly lacks sufficient detail of the attempts
both those cases, the Court ruled that the meticulous requirements
undertaken by the process server to personally serve the summons
for substituted service of summons were not met.
on petitioner. The server simply made a general statement that
summons was effected after several futile attempts to serve the
There are cases, however, in which Manotoc was applied, but,
same personally. The server did not state the specific number of
nevertheless, it was ruled that there was no lack of jurisdiction over
attempts made to perform the personal service of summons; the
the person of the defendant. In Sagana v. Francisco,26 the diligent
dates and the corresponding time the attempts were made; and the
efforts exerted by the sheriff to locate the respondent were
underlying reason for each unsuccessful service. He did not explain
determined, not only based on the sheriff's return, but also on the
either if there were inquiries made to locate the petitioner, who was
process server's notation and case records. In the case of Wong v.
the defendant in the case. These important acts to serve the
Factor-Koyama,27 on the other hand, even if the sheriff performed
summons on petitioner, though futile, must be specified in the
an invalid substituted service of summons, jurisdiction over the
return to justify substituted service.
person of defendant was obtained because the latter had actively
participated in trial, amounting to a voluntary appearance under
The server’s return did not describe in detail the person who
Section 20 of Rule 14.28cralawlawlibrary
received the summons, on behalf of petitioner. It simply stated that
the summons was received “by Mr. Roly Espinosa of sufficient age
In the case at bench, the summons in Civil Case No. 02-030629 was
and discretion, the Security Officer thereat.” It did not expound on
issued on July 29, 2002. In his server’s return,30 the process server
the competence of the security officer to receive the summons.
resorted to substituted service of summons on August 1, 2002.
Surprisingly, the process server immediately opted for substituted
Also, aside from the server’s return, respondent failed to indicate
service of summons after only two (2) days from the issuance of the
any portion of the records which would describe the specific
summons. The server’s return stated the
attempts to personally serve the summons. Respondent did not
following:chanRoblesvirtualLawlibrary
even claim that petitioner made any voluntary appearance and
actively participated in Civil Case No. 02-0306.
SERVER’S RETURN
The case of Robinson v. Miralles, cited by the CA, is not applicable.
THIS IS TO CERTIFY THAT on August 1, 2002, substituted service In that case, the return described in thorough detail how the security
of summons with copy of petition, were effected to respondent, Yuk guard refused the sheriff’s entry despite several attempts. The
Ling H. Ong, at the Unit B-2, No. 23 Sta. Rosa St., Manresa Garden defendant in the said case specifically instructed the guard to
Homes, Manresa Garden City, Quezon City, after several futile prevent anybody to proceed to her residence. In the present case,
attempts to serve the same personally. The said documents the attempts made by the process server were stated in a broad and
were received by Mr. Roly Espinosa of sufficient age and discretion, ambiguous statement.
the Security Officer thereat.
The CA likewise erred in ruling that the presumption of regularity in
Therefore, respectfully returning to Court, original copy of the performance of official duty could be applied in the case at
summons, Duly Served, this 2nd day of August, 2002. bench. This presumption of regularity, however, was never intended
to be applied even in cases where there are no showing of
RODOLFO P. TORRES, JR. substantial compliance with the requirements of the rules of
Process Server procedure. Such presumption does not apply where it is patent that

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the sheriff’s or server’s return is defective.31 As earlier explained,
the server’s return did not comply with the stringent requirements
of substituted service of summons.
Given that the meticulous requirements in Manotoc were not met,
the Court is not inclined to uphold the CA’s denial of the petition for
annulment of judgment for lack of jurisdiction over the person of
petitioner because there was an invalid substituted service of
summons. Accordingly, the decision in Civil Case No. 02-0306 must
be declared null and void.
The stricter rule in substituted service of summons was meant to
address “[t]he numerous claims of irregularities in substituted
service which have spawned the filing of a great number of
unnecessary special civil actions of certiorari and appeals to higher
courts, resulting in prolonged litigation and wasteful legal
expenses.”32cralawlawlibrary
Although the decision in Civil Case No. 02-0306 was promulgated as
early as December 11, 2002, the Court must strike it down for lack
of jurisdiction over the person of petitioner. The favorable judgment
enjoyed by respondent cannot be categorized as a genuine victory
because it was fought against an adversary, who was ignorant of
the existing dispute. Whatever prize bestowed upon the victor in
such a void decision must also be undone. Respondent, if he wishes
to pursue, must start from scratch and institute his action for
declaration of nullity again; this time with petitioner fully aware and
ready for litigation.
WHEREFORE, the petition is GRANTED. The June 27, 2012
Decision and the March 26, 2013 Resolution of the Court of Appeals
in CA-G.R. SP No. 106271 are hereby REVERSED and SET ASIDE.
The December 11, 2002 Decision of the Regional Trial Court, Branch
260, Parañaque City is hereby declared VOID.
G.R. No. 213525
FORTUNE LIFE INSURANCE COMPANY, INC., Petitioner
vs.
COMMISSION ON AUDIT (COA) PROPER; COA REGIONAL
OFFICE NO. VIWESTERN VISAYAS; AUDIT GROUP LGS-B,
PROVINCE OF ANTIQUE; and PROVINCIAL GOVERNMENT OF
ANTIQUE, Respondents
RESOLUTION
BERSAMIN, J.:
A party and its counsel who make offensive and disrespectful
statements in their motion for reconsideration may be properly
sanctioned for indirect contempt of court.
We hereby resolve the following submissions of the petitioner,
namely: (a) Joint Explanation;1 (b) Manifestation with Motion for
Leave to File Second Motion for Reconsideration;2 and (c) Second
Motion for Reconsideration.3
To recall the antecedents, the Court issued a resolution on January
27, 2015 denying the petitioner's Motion for Reconsideration4 on the
following grounds, namely: (a) failure to comply with the rule on
proof of service; (b) late filing; (c) failure to file a verified declaration
under the Efficient Use of Paper Rule; and (d) failure to prove grave
abuse of discretion on the part of respondent Commission on Audit
(COA).
In the same resolution, however, the Court required the petitioner
and its counsel, Atty. Eduardo S. Fortaleza, to show cause why they
should not be punished for indirect contempt of court for using in
the petitioner's Motion for Reconsideration dated October 1, 2014
harsh and disrespectful language towards the Court; and further
required Atty. Fortaleza to explain why he should not be disbarred,
disposing thusly:
WHEREFORE, the Court DENIES the Motion for Reconsideration
for its lack of merit; ORDERS the petitioner and its counsel, Atty.
Eduardo S. Fortaleza, to show cause in writing within ten (10) days
from notice why they should not be punished for indirect contempt
of court; and FURTHER DIRECTS Atty. Fortaleza to show cause in
the same period why he should not be disbarred.
SO ORDERED.5
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In the Joint Explanation dated March 9, 2015, the petitioner and
Atty. Fortaleza, both now represented by former Senate President
Aquilino Q. Pimentel, Jr., have apologized for the statements made
in the Motion for Reconsideration, but have stated nonetheless that
they had been constrained to attach cut print-outs of registry receipt
numbers because the Makati City Central Post Office (MCPO)
stopped issuing registry receipts and had adopted an electronic
system instead;6 that they thought that the Court, in mentioning
proof of service, had been referring to the non-submission of the
affidavit of service;7 that Atty. Fortaleza had been only lacking in
finesse in the formulation of his submissions; that the petitioner
honestly believed that it had faithfully complied with the
requirements of the Rules of Court on the service of pleadings;8 and
that because of time constraints Atty. Fortaleza had not been able
to sufficiently go over the Motion for Reconsideration.9
Atty. Fortaleza has prayed that he be spared from disbarment,
stressing his not being some wayward member of the Integrated
Bar of the Philippines (IBP), but had in fact served the IBP by
handling pro bona cases in his home province of Antique.10
Additionally, the petitioner has filed its so-called Manifestation with
Motion for Leave to file Second Motion for Reconsideration, attaching
therewith its Second Motion for Reconsideration. It has contended
in the Second Motion for Reconsideration that the final
order referred to in Neypes v. Court of Appeals11 applied to the 30-
day period mentioned in Section 3, Rule 64 of the Rules of Court as
to make such period be reckoned from notice of the denial by the
COA of its Motion for Reconsideration; and that the reckoning of the
30-day period ought to be from July 14, 2014, the date when it
received the denial by the COA of its Motion for Reconsideration.12
On the substantive issue, the petitioner has maintained that
whether or not the Local Government Code (LGC) allowed provincial
governments to provide group insurance for barangay officials was
a question of law; that the interpretation of Atty. Pimentel as the
Senator who had authored the LGC had been unjustly ignored by
the COA;13 and that the COA had consequently gravely abused its
discretion in interpreting the LGC during the pre-audit.14
The petitioner has further maintained that it had complied with the
requirement of publication under the Government Procurement
Act; that it did not furnish the proof of publication of the notice to
bid to the COA because the term bidding documents in Republic Act
No. 9184 did not include the proof of publication;15 that the
insurance program had been a laudable initiative of former Gov.
Salvacion Zaldivar Perez that had been stopped by Auditor Yolanda
TM Venegas, a known ally of Gov. Exequiel B. Javier, the successor
of Gov. Zaldivar; and that the Province of Negros Occidental had
been implementing the same insurance program without any
issue.16
In its comment,17 the COA, through the Office of the Solicitor
General (OSG), has countered that the Second Motion for
Reconsideration, being a prohibited motion, should be denied;18 that
the Fresh Period Rule enunciated in Neypes did not apply to petitions
for certiorari filed under Rule 64 of the Rules of Court;19 that the
petitioner's interpretation of the term final order would contradict
and render meaningless the last sentence of Section 3 of Rule
64;20 that the distance between the petitioner's Makati office and its
counsel's office in the Province of Antique was not sufficient to
excuse the belated filing of the petition for certiorari;21 that the
petitioner did not submit proof of service of its petition
for certiorari and the verified declaration required by the Efficient
Use of Paper Rule;22 that the supposed adoption by the MCPO of an
electronic system in the processing of mail matter did not inspire
belief because the explanation came from the petitioner's own staff
who did not have personal knowledge of the supposed adoption of
the new system of the MCP0;23 that the Court affirmed the grounds
cited by the COA for disallowing the money claim;24 that the
unchallenged giving of insurance coverage by the Provincial
Government of Negros Occidental did not validate the petitioner's
claim because a violation of law could not be excused by any practice
to the contrary;25 and that the petitioner should have presented the
question of publication to the COA when it sought the
reconsideration.26
Ruling of the Court
I
13
4
Petitioner and Atty. Fortaleza were
guilty of indirect contempt of court
The concept and objective of the power to punish contempt of court
have been expounded in Lorenzo Shipping Corporation v.
Distribution Management Association of the Philippines,27 viz.:
Contempt of court has been defined as a willful disregard or
disobedience of a public authority. In its broad sense, contempt is a
disregard of, or disobedience to, the rules or orders of a legislative
or judicial body or an interruption of its proceedings by disorderly
behavior or insolent language in its presence or so near thereto as
to disturb its proceedings or to impair the respect due to such a
body. In its restricted and more usual sense, contempt
comprehends a despising of the authority, justice, or dignity of a
court. The phrase contempt of court is generic, embracing within its
legal signification a variety of different acts.
The power to punish for contempt is inherent in all courts, and need
not be specifically granted by statute. It lies at the core of the
administration of a judicial system. Indeed, there ought to be no
question that courts have the power by virtue of their very creation
to impose silence, respect, and decorum in their presence,
submission to their lawful mandates, and to preserve themselves
and their officers from the approach and insults of pollution. The
power to punish for contempt essentially exists for the preservation
of order in judicial proceedings and for the enforcement of
judgments, orders, and mandates of the courts, and, consequently,
for the due administration of justice. The reason behind the power
to punish for contempt is that respect of the courts guarantees the
stability of their institution; without such guarantee, the institution
of the courts would be resting on a very shaky foundation.28 (Bold
underscoring supplied for emphasis)
Bearing the foregoing exposition in mind, the Court felt impelled to
require the petitioner and Atty. Fortaleza to show cause why they
should not be punished for contempt of court for the offensive and
disrespectful statements contained in their Motion for
Reconsideration dated October 1, 2014,29 to wit:
xxxx
24. Second, with regard to the PROOF OF SERVICE required under
Section 2(c), Rule 56 in relation to Section 13, 1997 Rules of Civil
Procedures, as amended, even a perfunctory scrutiny of the present
PETITION and its annexes would have yielded the observation that
the last document attached to the PETITION is the AFFIDAVIT OF
SERVICE dated August 12, 2014, by Marcelino T. Pascua, Jr., xxx in
compliance with Sections 5, 6, 7, 8, 11, & 13, RULE 13 of the 1997
REVISED RULES OF CIVIL PROCEDURE. A copy of the AFFIDAVIT OF
SERVICE is attached hereto as ANNEX "B", and made an integral
part hereof;
25. Apparently, the staff of the Justice-in-charge failed to verify the
PETITION and its annexes up to its last page, thus, the erroneous
finding that there were non-submission of the proof of service;
26. In turn, the same omission was hoisted upon the other members
of this Honorable Court who took the observation from the office of
the Justice-in-charge, to be the obtaining fact, when in truth and in
fact, it is not;
27. There is therefore need for this Honorable Court to rectify its
foregoing finding;30 (Bold underscoring supplied for emphasis)
xxxx
The Court subsequently observed in the resolution promulgated on
January 27, 2015 as follows:
The petitioner and its counsel thereby exhibited their plain inability
to accept the ill consequences of their own shortcomings, and
instead showed an unabashed propensity to readily lay blame on
others like the Court and its Members. In doing so, they employed
harsh and disrespectful language that accused the Court and its
Members of ignorance and recklessness in the performance of their
function of adjudication.
We do not tolerate such harsh and disrespectful language being
uttered against the Court and its Members. We consider the
accusatory language particularly offensive because it was
unfounded and undeserved. As this resolution earlier clarifies, the
13
5
petition for certiorari did not contain a proper affidavit of service.
We do not need to rehash the clarification. Had the petitioner and
its counsel been humbler to accept their self-inflicted situation and
more contrite, they would have desisted from their harshness and
disrespect towards the Court and its Members. Although we are not
beyond error, we assure the petitioner and its counsel that our
resolutions and determinations are arrived at or reached with much
care and caution, aware that the lives, properties and rights of the
litigants are always at stake. If there be errors, they would be
unintended, and would be the result of human oversight. But in this
instance the Court and its Members committed no error. The petition
bore only cut reproductions of the supposed registry receipts, which
even a mere "perfunctory scrutiny" would not pass as the original
registry receipts required by the Rules of Court.31 (Bold
underscoring supplied for emphasis)
Although the petitioner and Atty. Fortaleza are now apologizing for
their offensive and disrespectful statements, they insist nonetheless
that the statements arose from their honest belief of having
complied with the rule on proof of service. They also attribute their
procedural error to the supposed adoption by the MCPO of an
electronic system in the processing of mail matter.
The Court finds and declares the petitioner and Atty. Fortaleza guilty
of indirect contempt of court.
The administration of justice is an important function of the State.
It is indispensable to the maintenance of order in the Society. It is
a duty lodged in this Court, and in all inferior courts. For the Court
and all other courts of the land to be able to administer and dispense
evenhanded justice, they should be free from harassment and
disrespect.
The statements of the petitioner and Atty. Fortaleza unquestionably
tended to attribute gross inefficiency and negligence to the Court
and its staff. It is worse because the statements were uncalled for
and unfounded. As such, the statements should be quickly deterred
and gravely sanctioned for actually harming and degrading the
administration of justice by the Court itself.32 The wrong the
statements wrought on the reputation and prestige of the Court and
its operating staff must by all means be vindicated, and even
undone if that was at all possible.
Moreover, we cannot but view and consider the attempt to shift the
blame to the postal system as the manifestation of the unwillingness
of the petitioner and Atty. Fortaleza to take personal responsibility
for their harsh and disrespectful statements. We must reject the
attempt, firstly, because it reflected their lack of remorse for a grave
contempt of court they committed, and, secondly, because their
shifting of blame was not even proved reliably. It appears, indeed,
that they were content on relying solely on the self-serving affidavit
of a member of the petitioner's own staff who could not at least
profess having the personal knowledge about the change in the
system byMCP0.33
The courts have inherent power to impose a penalty for contempt
that is reasonably commensurate with the gravity of the offense.
The degree of punishment lies within the sound discretion of the
courts.34 Ever mindful that the inherent power of contempt should
be exercised on the preservative, not on the vindictive,
principle,35 and that the penalty should be meted according to the
corrective, not the retaliatory, idea of punishment,36 the Court must
justly sanction the contempt of court committed by the petitioner
and its counsel. Under Section 7, Rule 71 of the Rules of Court, the
penalty of fine not exceeding ₱30,000.00, or imprisonment not
exceeding six months, or both fine and imprisonment, may be
meted as punishment for contemptuous conduct committed against
a Regional Trial Court or a court of equivalent or higher rank. Upon
considering all the circumstances, the Court imposes a fine of
₱15,000.00 on the petitioner and Atty. Fortaleza.
II
Second Motion for Reconsideration,
being a prohibited motion, is denied
Section 2, Rule 52 of the Rules of Court prohibits a second motion
for reconsideration by the same party. Section 3, Rule 15 of
the Internal Rules of the Supreme Court echoes the prohibition,
providing thusly:
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6
Section 3. Second motion for reconsideration. - The Court shall not
entertain a second motion for reconsideration, and any exception to
this rule can only be granted in the higher interest of justice by the
Court en bane upon a vote of at least two-thirds of its actual
membership. There is reconsideration "in the higher interest of
justice" when the assailed decision is not only legally erroneous, but
is likewise patently unjust and potentially capable of causing
unwarranted and irremediable injury or damage to the parties. A
second motion for reconsideration can only be entertained before
the ruling sought to be reconsidered becomes final by operation of
law or by the Court's declaration.
In the Division, a vote of three Members shall be required to elevate
a second motion for reconsideration to the Court En Banc.
A second motion for reconsideration, albeit prohibited, may be
entertained in the higher interest of justice, such as when the
assailed decision is not only legally erroneous but also patently
unjust and potentially capable of causing unwarranted and
irremediable injury or damage to the moving party.
The showing of exceptional merit to justify the acceptance of the
petitioner's Second Motion for Reconsideration was not made
herein.1âwphi1 Hence, we deny the Second Motion for
Reconsideration.
For sure, the petitioner's non-compliance with the rule on proof of
service and the petitioner's unjustified reliance on the Fresh Period
Rule as the basis to extend the period for filing of the special civil
actions for certiorari under Rule 64 of the Rules of Court were
already enough ground to dismiss the petition for certiorari. We
need not remind that the Fresh Period Rule applies only to appeals
in civil and criminal cases, and in special proceedings filed under
Rule 40, Rule 41, Rule 42, Rule 43, Rule 45,37 and Rule 122.38
Hence, liberality could not be extended to the petitioner. According
to Ginete v. Court of Appeals,39 only matters of life, liberty, honor
or property may warrant the suspension of the rules of the most
mandatory character. That is not the situation of the petitioner
herein. It is also true that other justifications may be considered,
like: (1) the existence of special or compelling circumstances; (2)
the merits of the case; (3) a cause not entirely attributable to the
fault or negligence of the party favored by the suspension of the
rules; (4) a lack of any showing that the review sought is merely
frivolous and dilatory; and (5) the other party will not be unjustly
prejudiced thereby.40 But, again, the petitioner has not shown the
attendance of any of such justifications for excepting its petition
for certiorari from the stricture of timeliness of filing.
As earlier pointed out, the petition for certiorari was dismissed upon
reasonable but still formidable grounds, namely: (a) noncompliance
with the rule on proof of service; (b) noncompliance with
the Efficient Use of Paper Rule; and (c) failure to establish the grave
abuse of discretion committed by the COA. The plea for liberality
was really unworthy of favorable consideration.
ACCORDINGLY, the Court:
(1) FINDS and PRONOUNCES the petitioner and its counsel, Atty.
Eduardo S. Fortaleza, GUILTY of INDIRECT CONTEMPT OF
COURT, and, accordingly, SENTENCES them to pay, JOINTLY
AND SEVERALLY, a fine of ₱15,000.00; and
(2) DENIES the Motion for Leave to File Second Motion for
Reconsideration and the Second Motion for Reconsideration.
PEDRO T. SANTOS, JR., VS. PNOC G.R. No. 170943
This is a petition for review1 of the September 22, 2005
decision2 and December 29, 2005 resolution3 of the Court of Appeals
in CA-G.R. SP No. 82482.
On December 23, 2002, respondent PNOC Exploration Corporation
filed a complaint for a sum of money against petitioner Pedro T.
Santos, Jr. in the Regional Trial Court of Pasig City, Branch 167. The
complaint, docketed as Civil Case No. 69262, sought to collect the
amount of P698,502.10 representing petitioner’s unpaid balance of
the car loan4 advanced to him by respondent when he was still a
member of its board of directors.
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Personal service of summons to petitioner failed because he could
not be located in his last known address despite earnest efforts to
do so. Subsequently, on respondent’s motion, the trial court allowed
service of summons by publication.
Respondent caused the publication of the summons in Remate, a
newspaper of general circulation in the Philippines, on May 20, 2003.
Thereafter, respondent submitted the affidavit of publication of the
advertising manager of Remate5 and an affidavit of service of
respondent’s employee6 to the effect that he sent a copy of the
summons by registered mail to petitioner’s last known address.
When petitioner failed to file his answer within the prescribed period,
respondent moved that the case be set for the reception of its
evidence ex parte. The trial court granted the motion in an order
dated September 11, 2003.
Respondent proceeded with the ex parte presentation and formal
offer of its evidence. Thereafter, the case was deemed submitted for
decision on October 15, 2003.
On October 28, 2003, petitioner filed an "Omnibus Motion for
Reconsideration and to Admit Attached Answer." He sought
reconsideration of the September 11, 2003 order, alleging that the
affidavit of service submitted by respondent failed to comply with
Section 19, Rule 14 of the Rules of Court as it was not executed by
the clerk of court. He also claimed that he was denied due process
as he was not notified of the September 11, 2003 order. He prayed
that respondent’s evidence ex parte be stricken off the records and
that his answer be admitted.
Respondent naturally opposed the motion. It insisted that it
complied with the rules on service by publication. Moreover,
pursuant to the September 11, 2003 order, petitioner was already
deemed in default for failure to file an answer within the prescribed
period.
In an order dated February 6, 2004, the trial court denied
petitioner’s motion for reconsideration of the September 11, 2003
order. It held that the rules did not require the affidavit of
complementary service by registered mail to be executed by the
clerk of court. It also ruled that due process was observed as a copy
of the September 11, 2003 order was actually mailed to petitioner
at his last known address. It also denied the motion to admit
petitioner’s answer because the same was filed way beyond the
reglementary period.
Aggrieved, petitioner assailed the September 11, 2003 and February
6, 2004 orders of the trial court in the Court of Appeals via a petition
for certiorari. He contended that the orders were issued with grave
abuse of discretion. He imputed the following errors to the trial
court: taking cognizance of the case despite lack of jurisdiction due
to improper service of summons; failing to furnish him with copies
of its orders and processes, particularly the September 11, 2003
order, and upholding technicality over equity and justice.
During the pendency of the petition in the Court of Appeals, the trial
court rendered its decision in Civil Case No. 69262. It ordered
petitioner to pay P698,502.10 plus legal interest and costs of suit.7
Meanwhile, on September 22, 2005, the Court of Appeals rendered
its decision8 sustaining the September 11, 2003 and February 6,
2004 orders of the trial court and dismissing the petition. It denied
reconsideration.9 Thus, this petition.
Petitioner essentially reiterates the grounds he raised in the Court
of Appeals, namely, lack of jurisdiction over his person due to
improper service of summons, failure of the trial court to furnish him
with copies of its orders and processes including the September 11,
2003 order and preference for technicality rather than justice and
equity. In particular, he claims that the rule on service by publication
under Section 14, Rule 14 of the Rules of Court applies only to
actions in rem, not actions in personam like a complaint for a sum
of money. He also contends that the affidavit of service of a copy of
the summons should have been prepared by the clerk of court, not
respondent’s messenger.
The petition lacks merit.
P r o p r i e t y O f Service By Publication
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Section 14, Rule 14 (on Summons) of the Rules of Court provides:
SEC. 14. Service upon defendant whose identity or whereabouts are
unknown. – In any action where the defendant is designated as an
unknown owner, or the like, or whenever his whereabouts are
unknown and cannot be ascertained by diligent inquiry,
service may, by leave of court, be effected upon him by
publication in a newspaper of general circulation and in such
places and for such times as the court may order. (emphasis
supplied)
Since petitioner could not be personally served with summons
despite diligent efforts to locate his whereabouts, respondent sought
and was granted leave of court to effect service of summons upon
him by publication in a newspaper of general circulation. Thus,
petitioner was properly served with summons by publication.
Petitioner invokes the distinction between an action in rem and an
action in personam and claims that substituted service may be
availed of only in an action in rem. Petitioner is wrong. The in rem/in
personam distinction was significant under the old rule because it
was silent as to the kind of action to which the rule was
applicable.10 Because of this silence, the Court limited the
application of the old rule to in rem actions only.11
This has been changed. The present rule expressly states that it
applies "[i]n any action where the defendant is designated as an
unknown owner, or the like, or whenever his whereabouts are
unknown and cannot be ascertained by diligent inquiry." Thus, it
now applies to any action, whether in personam, in rem or quasi in
rem.12
Regarding the matter of the affidavit of service, the relevant portion
of Section 19,13 Rule 14 of the Rules of Court simply speaks of the
following:
… an affidavit showing the deposit of a copy of the summons and
order for publication in the post office, postage prepaid, directed to
the defendant by registered mail to his last known address.
Service of summons by publication is proved by the affidavit of the
printer, his foreman or principal clerk, or of the editor, business or
advertising manager of the newspaper which published the
summons. The service of summons by publication is complemented
by service of summons by registered mail to the defendant’s last
known address. This complementary service is evidenced by an
affidavit "showing the deposit of a copy of the summons and order
for publication in the post office, postage prepaid, directed to the
defendant by registered mail to his last known address."
The rules, however, do not require that the affidavit of
complementary service be executed by the clerk of court. While the
trial court ordinarily does the mailing of copies of its orders and
processes, the duty to make the complementary service by
registered mail is imposed on the party who resorts to service by
publication.
Moreover, even assuming that the service of summons was
defective, the trial court acquired jurisdiction over the person
of petitioner by his own voluntary appearance in the
action against him. In this connection, Section 20, Rule 14 of the
Rules of Court states:
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. (emphasis supplied)
Petitioner voluntarily appeared in the action when he filed the
"Omnibus Motion for Reconsideration and to Admit Attached
Answer."14 This was equivalent to service of summons and vested
the trial court with jurisdiction over the person of petitioner.
E n t i t l e m e n t T o Notice Of Proceedings
The trial court allowed respondent to present its evidence ex
parte on account of petitioner’s failure to file his answer within the
prescribed period. Petitioner assails this action on the part of the
trial court as well as the said court’s failure to furnish him with copies
of orders and processes issued in the course of the proceedings.
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The effects of a defendant’s failure to file an answer within the time
allowed therefor are governed by Sections 3 and 4, Rule 9 (on Effect
of Failure to Plead) of the Rules of Court:
SEC. 3. Default; declaration of. – If the defending party fails to
answer within the time allowed therefor, the court shall,
upon motion of the claiming party with notice to the
defending party, and proof of such failure, declare the
defending party in default. Thereupon, the court shall proceed to
render judgment granting the claimant such relief as his pleading
may warrant, unless the court in its discretion requires the claimant
to submit evidence. Such reception of evidence may be delegated
to the clerk of court.
SEC. 4. Effect of order of default. – A party in default shall be
entitled to notice of subsequent proceedings but not to take
part in the trial. (emphasis supplied)
If the defendant fails to file his answer on time, he may be declared
in default upon motion of the plaintiff with notice to the said
defendant. In case he is declared in default, the court shall proceed
to render judgment granting the plaintiff such relief as his pleading
may warrant, unless the court in its discretion requires the plaintiff
to submit evidence. The defaulting defendant may not take part in
the trial but shall be entitled to notice of subsequent proceedings.
In this case, even petitioner himself does not dispute that he failed
to file his answer on time. That was in fact why he had to file an
"Omnibus Motion for Reconsideration and to Admit Attached
Answer." But respondent moved only for the ex parte presentation
of evidence, not for the declaration of petitioner in default. In its
February 6, 2004 order, the trial court stated:
The disputed Order of September 11, 2003 allowing the
presentation of evidence ex-parte precisely ordered that "despite
and notwithstanding service of summons by publication, no answer
has been filed with the Court within the required period and/or
forthcoming.["] Effectively[,] that was a finding that the
defendant [that is, herein petitioner] was in default for
failure to file an answer or any responsive pleading within
the period fixed in the publication as precisely the defendant
[could not] be found and for which reason, service of summons by
publication was ordered. It is simply illogical to notify the defendant
of the Order of September 11, 2003 simply on account of the reality
that he was no longer residing and/or found on his last known
address and his whereabouts unknown – thus the publication of the
summons. In other words, it was reasonable to expect that the
defendant will not receive any notice or order in his last known
address. Hence, [it was] impractical to send any notice or order to
him. Nonetheless, the record[s] will bear out that a copy of
the order of September 11, 2003 was mailed to the defendant
at his last known address but it was not claimed. (emphasis
supplied)
As is readily apparent, the September 11, 2003 order did not limit
itself to permitting respondent to present its evidence ex parte but
in effect issued an order of default. But the trial court could not
validly do that as an order of default can be made only upon motion
of the claiming party.15 Since no motion to declare petitioner in
default was filed, no default order should have been issued.
To pursue the matter to its logical conclusion, if a party declared in
default is entitled to notice of subsequent proceedings, all the more
should a party who has not been declared in default be entitled to
such notice. But what happens if the residence or whereabouts of
the defending party is not known or he cannot be located? In such
a case, there is obviously no way notice can be sent to him and the
notice requirement cannot apply to him. The law does not require
that the impossible be done.16 Nemo tenetur ad impossibile. The law
obliges no one to perform an impossibility.17 Laws and rules must
be interpreted in a way that they are in accordance with logic,
common sense, reason and practicality.18
Hence, even if petitioner was not validly declared in default, he could
not reasonably demand that copies of orders and processes be
furnished him. Be that as it may, a copy of the September 11, 2003
order was nonetheless still mailed to petitioner at his last known
address but it was unclaimed.
C o r r e c t n e s s O f Non-Admission Of Answer
14
0
Petitioner failed to file his answer within the required period. Indeed,
he would not have moved for the admission of his answer had he
filed it on time. Considering that the answer was belatedly filed, the
trial court did not abuse its discretion in denying its admission.
Petitioner’s plea for equity must fail in the face of the clear and
express language of the rules of procedure and of the September
11, 2003 order regarding the period for filing the answer. Equity is
available only in the absence of law, not as its replacement.19 Equity
may be applied only in the absence of rules of procedure, never in
contravention thereof.
WHEREFORE, the petition is hereby DENIED.
[G.R. NO. 168723 : July 9, 2008]
DOLE PHILIPPINES, INC. (TROPIFRESH
DIVISION), Petitioner, v. HON. REINATO G. QUILALA in his
capacity as pairing judge of Branch 150, RTC-Makati City, and
ALL SEASON FARM, CORP., Respondents.
DECISION
QUISUMBING, J.:
This Petition for Review assails the Decision1 dated May 20, 2005 of
the Court of Appeals in CA-G.R. SP No. 87723 and its
Resolution2 dated June 28, 2005, denying the motion for
reconsideration. The appellate court had affirmed the Order3 dated
February 6, 2004 of the Regional Trial Court (RTC) of Makati City,
Branch 150, in Civil Case No. 03-093 and its Order4 dated
September 16, 2004 denying the motion for partial reconsideration.
The factual antecedents of this case are as follows.
In a complaint filed with the RTC of Makati City, presided over by
Pairing Judge Reinato Quilala, private respondent All Season Farm
Corporation ("All Season") sought the recovery of a sum of money,
accounting and damages from petitioner Dole Philippines, Inc.
(Tropifresh Division) ("Dole") and several of its officers. According
to Dole, an alias summons was served upon it through a certain
Marifa Dela Cruz, a legal assistant employed by Dole Pacific General
Services, Ltd., which is an entity separate from Dole.
On May 20, 2003, Dole filed a motion to dismiss the complaint on
the following grounds: (a) the RTC lacked jurisdiction over the
person of Dole due to improper service of summons; (b) the
complaint failed to state a cause of action; (c) All Season was not
the real party in interest; and (d) the officers of Dole cannot be sued
in their personal capacities for alleged acts performed in their official
capacities as corporate officers of Dole.5 In its Order dated February
6, 2004, the RTC denied said motion. Dole moved for partial
reconsideration raising the same issues but its motion was denied.
Thereafter, Dole filed a petition for certiorari with the Court of
Appeals contending that the alias summons was not properly
served. The appellate court, however, ruled otherwise. It reasoned
that Dole's president had known of the service of the alias summons
although he did not personally receive and sign it. It also held that
in today's corporate setup, documents addressed to corporate
officers are received in their behalf by their staff.6 Dole sought
reconsideration, but its motion was likewise denied.
Hence, this petition where petitioner raises the lone issue:
WHETHER OR NOT THE COURT OF APPEALS COMMITTED AN ERROR
OF LAW WHEN IT ALLOWED SUBSTITUTED SERVICE ON A PRIVATE
CORPORATION WHEN IT HELD THAT DOLE WAS VALIDLY SERVED
WITH SUMMONS IN SPITE OF THE FACT THAT SUMMONS WAS NOT
SERVED ON ITS PRESIDENT, MANAGING PARTNER, GENERAL
MANAGER, CORPORATE SECRETARY, TREASURER OR IN-HOUSE
COUNSEL THEREBY IGNORING THE RULE ON SERVICE OF
SUMMONS ON PRIVATE DOMESTIC CORPORATIONS.7
Simply stated, the issue in this case is whether there was a valid
service of summons on petitioner for the trial court to acquire
jurisdiction over the person of the corporate defendant below, now
the petitioner herein.
14
1
Petitioner contends that for the court to validly acquire jurisdiction
over a domestic corporation, summons must be served only on the
corporate officers enumerated in Section 11,8 Rule 14 of the 1997
Rules of Civil Procedure. Petitioner maintains that the alias
summons was not validly served on it since the alias summons was
served on Marifa Dela Cruz, an employee of Dole Pacific General
Services, Ltd., which is an entity separate and distinct from
petitioner. It further avers that even if she were an employee of the
petitioner, she is not one of the officers enumerated under Section
11, Rule 14. Thus, the RTC, without proper service of summons,
lacks jurisdiction over petitioner as defendant below.
Private respondent All Season, for its part, contends that the trial
court had acquired jurisdiction over petitioner, since petitioner
received the alias summons through its president on April 23, 2003.
According to private respondent, there was full compliance with
Section 11, Rule 14, when Marifa Dela Cruz received the summons
upon instruction of petitioner's president as indicated in the Officer's
Return.9 More so, petitioner had admitted that it received the alias
summons in its Entry of Appearance with Motion for Time 10 filed on
May 5, 2003.
Well-settled is the rule that service of summons on a domestic
corporation is restricted, limited and exclusive to the persons
enumerated in Section 11, Rule 14 of the 1997 Rules of Civil
Procedure, following the rule in statutory construction that expressio
unios est exclusio alterius.11 Service must therefore be made on the
president, managing partner, general manager, corporate
secretary, treasurer, or in-house counsel.
In this case, it appears that on April 23, 2003, Marifa Dela Cruz, a
legal assistant, received the alias summons.12 Contrary to private
respondent's claim that it was received upon instruction of the
president of the corporation as indicated in the Officer's Return, such
fact does not appear in the receiving copy of the alias summons
which Marifa Dela Cruz signed. There was no evidence that she was
authorized to receive court processes in behalf of the president.
Considering that the service of summons was made on a legal
assistant, not employed by herein petitioner and who is not one of
the designated persons under Section 11, Rule 14, the trial court
did not validly acquire jurisdiction over petitioner.
However, under Section 20 of the same Rule, a defendant's
voluntary appearance in the action is equivalent to service of
summons.13 As held previously by this Court, 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. 14
Note that on May 5, 2003, petitioner filed an Entry of Appearance
with Motion for Time. It was not a conditional appearance entered
to question the regularity of the service of summons, but an
appearance submitting to the jurisdiction of the court by
acknowledging the receipt of the alias summons and praying for
additional time to file responsive pleading.15 Consequently,
petitioner having acknowledged the receipt of the summons and
also having invoked the jurisdiction of the RTC to secure affirmative
relief in its motion for additional time, petitioner effectively
submitted voluntarily to the jurisdiction of the RTC. It is estopped
now from asserting otherwise, even before this Court.16 The RTC
therefore properly took cognizance of the case against Dole
Philippines, Inc., and we agree that the trial and the appellate courts
committed no error of law when Dole's contentions were overruled.
WHEREFORE, the petition is DENIED for lack of merit. The
Decision dated May 20, 2005 of the Court of Appeals in CA-G.R. SP
No. 87723 and its Resolution dated June 28, 2005
are AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. 147369 : October 23, 2003
Spouses PATRICK JOSE and RAFAELA
JOSE, Petitioners, v. Spouses HELEN BOYON and ROMEO
BOYON, Respondents.
DECISION
PANGANIBAN, J.:
14
2
In general, substituted service can be availed of only after a clear
showing that personal service of summons was not legally possible.
Also, service by publication is applicable in actions in rem and quasi
in rem, but not in personal suits such as the present one which is
for specific performance.
The Case
Before the Court is a Petition for Review on Certiorari1 under Rule
45 of the Rules of Court, assailing the February 26, 2001 Decision2 of
the Court of Appeals (CA) in CA-GR SP No. 60888. The dispositive
portion of the CA Decision is worded as follows:
WHEREFORE, on the basis of what prescinds, the assailed resolution
and orders issued by the public respondent are perforce ANNULLED
and SET ASIDE. This pronouncement is nonetheless rendered
without prejudice to the refiling of the same case by the private
respondents with the court a quo.3
The Facts
The factual antecedents of the case are narrated by the CA in this
wise:
On July 2, 1998, [petitioners] Patrick and Rafaela Jose lodged a
complaint for specific performance against [respondents] Helen and
Romeo Boyon to compel them to facilitate the transfer of ownership
of a parcel of land subject of a controverted sale. The action was
lodged before the Regional Trial Court of Muntinlupa which is
presided by herein public respondent Judge N.C. Perello. On July 21,
1998, respondent judge, through the acting Branch Clerk of Court
of Branch 276 of the RTC of Muntinlupa City, issued summons to the
[respondents]. As per return of the summons, substituted service
was resorted to by the process server allegedly because efforts to
serve the summons personally to the [respondents] failed.
On December 9, 1998, [petitioners] filed before the trial court an
Ex-parte Motion for Leave of Court to Effect Summons by
Publication. On December 28, 1998, public respondent issued an
Order granting the Ex-parte Motion for Leave of Court to Effect
Summons by Publication. On July 30, 1999, the respondent judge,
sans a written motion, issued an Order declaring herein
[respondents] in default for failure to file their respective answers.
As a consequence of the declaration of default, [petitioners] were
allowed to submit their evidence ex-parte. Ultimately, on December
7, 1999, respondent judge issued the assailed resolution, the
dispositive portion of which reads as follows:
x x x Therefore, Spouses Helen and Romeo Boyon are directed to
execute the necessary document with the effect of withdrawing the
Affidavit of Loss they filed and annotated with the Register of Deeds
of Makati City so that title to the parcel of land subject of the Deed
of Absolute Sale in favor of the Plaintiffs be transferred in their
names. Thereafter the Register of Deeds of Makati City or
Muntinlupa City may cancel Transfer of Certificate of Title No.
149635 of the Defendants and issue another to Plaintiff under the
deed of sale, clean and free of any reported encumbrance.
Defendants are also directed to pay Plaintiffs actual expenses in the
amount of P20,000 and attorneys fees of P20,000 including costs of
this suit.
xxx
On January 5, 2000, [respondent] Helen Boyon, who was then
residing in the United States of America, was surprised to learn from
her sister Elizabeth Boyon, of the resolution issued by the
respondent court. On January 18, 2000, [respondents] filed an Ad
Cautelam motion questioning, among others, the validity of the
service of summons effected by the court a quo. On March 17, 2000,
the public respondent issued an Order denying the said motion on
the basis of the defaulted [respondents] supposed loss of standing
in court. On March 29, 2000, the [respondents] once again raised
the issue of jurisdiction of the trial court via a motion for
reconsideration. On June 22, 2000, however, an Order was issued
by the public respondent denying the said motion. The [petitioners]
moved for the execution of the controverted judgment which the
respondent judge ultimately granted.4cräläwvirtualibräry
Thereafter, respondents filed before the CA a Petition for certiorari
under Rule 65 of the Revised Rules of Civil Procedure, questioning
the jurisdiction of the regional trial court (RTC).
14
3
Ruling of the Court of Appeals
The CA held that the trial court had no authority to issue the
questioned Resolution and Orders. According to the appellate court,
the RTC never acquired jurisdiction over respondents because of the
invalid service of summons upon them. First, the sheriff failed to
comply with the requirements of substituted service of summons,
because he did not specify in the Return of Summons the prior
efforts he had made to locate them and the impossibility of promptly
serving the summons upon them by personal service. Second, the
subsequent summons by publication was equally infirm, because the
Complaint was a suit for specific performance and therefore an
action in personam. Consequently, the Resolution and the Orders
were null and void, since the RTC had never acquired jurisdiction
over respondents.
Hence, this Petition.5
Issues
In their Memorandum, petitioners raise the following issues for our
consideration:
A. The Honorable Court of Appeals erred in not holding that the
assailed Resolution dated December 7, 1999 was already final and
executory
B. The Honorable Court of Appeals erred in giving due course to the
Petition for Certiorari of private respondents despite the pendency
of an appeal earlier filed
C. The Honorable Court erred in not holding that the Petition for
Certiorari was time barred
D. The Honorable Court of Appeals erred in holding that the
proceedings in the lower court are null and void due to invalid and
defective service of summons and the court did not acquire
jurisdiction over the person of the respondents.6cräläwvirtualibräry
In sum, the main issue revolves around the validity of the service of
summons on respondents.
The Courts Ruling
The Petition has no merit.
Main Issue:
Validity of the Service of Summons
Petitioners aver that the CA erred in ruling that the service of
summons on respondents was invalid. They submit that although
the case filed before the trial court was denominated as an action
for specific performance, it was actually an action quasi in
rem, because it involved a piece of real property located in the
Philippines. They further argue that in actions quasi in rem involving
ownership of a parcel of land, it is sufficient that the trial court
acquire jurisdiction over the res. Thus, the summons by publication,
which they effected subsequent to the substituted service of
summons, was allegedly sufficient.
On the other hand, respondents maintain that the proceedings in
the trial court were null and void because of the invalid and defective
service of summons. According to them, the Return of Summons
issued by the process server of the RTC failed to state that he had
exerted earnest efforts to effect the service of summons. He
allegedly tried to serve it personally on them on July 22, 1998 at No.
32 Ariza Drive, Camella Homes, Alabang. He, however, resorted to
substituted service on that same day, supposedly because he could
not find respondents in the above address. They further allege that
the person to whom he gave the summons was not even a resident
of that address.
Respondents contend that when summons is served by substituted
service, the return must show that it was impossible to serve the
14
4
summons personally, and that efforts had been exerted toward that
end. They add that noncompliance with the rule on substituted
service renders invalid all proceedings relative thereto.
As to the summons by publication subsequently effected by
petitioners, respondents argue that the case filed before the trial
court was an action for specific performance and, therefore, an
action in personam. As such, the summons by publication was
insufficient to enable the trial court to acquire jurisdiction over the
persons of respondents.
Respondents conclude that even granting that the service of
summons by publication was permissible under the circumstances,
it would still be defective and invalid because of the failure of
petitioners to observe the requirements of law, like an Affidavit
attesting that the latter deposited in the post office a copy of the
summons and of the order of publication, paid the postage, and sent
the documents by registered mail to the formers last known
address.
We agree with respondents. In general, trial courts acquire
jurisdiction over the person of the defendant by the service of
summons. Where the action is in personam and the defendant is in
the Philippines, such service may be done by personal or substituted
service, following the procedures laid out in Sections 6 and 7 of Rule
14 of the Revised Rules of Court, which read:
Section 6. Service in person on defendant. - Whenever practicable,
the summons shall be served by handing a copy thereof to the
defendant in person, or, if he refuses to receive and sign for it, by
tendering it to him.
Section 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 defendants office or regular place of business with
some competent person in charge thereof.
As can be gleaned from the above-quoted Sections, personal service
of summons is preferred to substituted service. Only if the former
cannot be made promptly can the process server resort to the latter.
Moreover, the proof of service of summons must (a) indicate the
impossibility of service of summons within a reasonable time;
(b) specify the efforts exerted to locate the defendant; and (c) state
that the summons was served upon a person of sufficient age and
discretion who is residing in the address, or who is in charge of the
office or regular place of business, of the defendant.7 It is likewise
required that the pertinent facts proving these circumstances be
stated in the proof of service or in the officers return. The failure to
comply faithfully, strictly and fully with all the foregoing
requirements of substituted service renders the service of summons
ineffective.8
Defective Personal
Service of Summons
In the instant case, it appears that the process server hastily and
capriciously resorted to substituted service of summons without
actually exerting any genuine effort to locate respondents. A review
of the records9 reveals that the only effort he exerted was to go
to No. 32 Ariza Drive, Camella Homes, Alabang on July 22, 1998, to
try to serve the summons personally on respondents. While the
Return of Summons states that efforts to do so were ineffectual and
unavailing because Helen Boyon was in the United States and
Romeo Boyon was in Bicol, it did not mention exactly what efforts -
- if any -- were undertaken to find respondents. Furthermore, it did
not specify where or from whom the process server obtained the
information on their whereabouts. The pertinent portion of the
Return of Summons is reproduced as follows:
That efforts to serve the said Summons personally upon defendants
Sps. Helen and Romeo Boyon were made but the same were
ineffectual and unavailing for the reason that defendant Helen
Boyon is somewhere in the United States of America and defendant
Romeo Boyon is in Bicol thus substituted service was made in
accordance with Section 7, Rule 14, of the Revised Rules of
Court.10cräläwvirtualibräry
14
5
The Return of Summons shows that no effort was actually exerted
and no positive step taken by either the process server or petitioners
to locate and serve the summons personally on respondents. At
best, the Return merely states the alleged whereabouts of
respondents without indicating that such information was verified
from a person who had knowledge thereof. Certainly, without
specifying the details of the attendant circumstances or of the efforts
exerted to serve the summons, a general statement that such
efforts were made will not suffice for purposes of complying with the
rules of substituted service of summons.
The necessity of stating in the process servers Return or Proof of
Service the material facts and circumstances sustaining the validity
of substituted service was explained by this Court in Hamilton v.
Levy,11 from which we quote:
x x x The pertinent facts and circumstances attendant to the service
of summons must be stated in the proof of service or Officers
Return; otherwise, any substituted service made in lieu of personal
service cannot be upheld. This is necessary because substituted
service is in derogation of the usual method of service. It is a method
extraordinary in character and hence may be used only as
prescribed and in the circumstances authorized by statute. Here, no
such explanation was made. Failure to faithfully, strictly, and fully
comply with the requirements of substituted service renders said
service ineffective.12cräläwvirtualibräry
Moreover, the requirements of substituted service of summons and
the effect of noncompliance with the subsequent proceedings
therefor were discussed in Madrigal v. Court of Appeals13 as follows:
In a long line of cases, this Court held that the impossibility of
personal service justifying availment of substituted service should
be explained in the proof of service; why efforts exerted towards
personal service failed. The pertinent facts and circumstances
attendant to the service of summons must be stated in the proof of
service or Officers Return; otherwise, the substituted service cannot
be upheld. It bears stressing that since service of summons,
especially for actions in personam, is essential for the acquisition of
jurisdiction over the person of the defendant, the resort to a
substituted service must be duly justified. Failure to do so would
invalidate all subsequent proceedings on jurisdictional grounds.14
Summons by
Publication Improper
It must be noted that extraterritorial service of summons or
summons by publication applies only when the action is in
rem or quasi in rem. The first is an action against the thing itself
instead of against the defendants person; in the latter, an individual
is named as defendant, and the purpose is to subject that individuals
interest in a piece of property to the obligation or loan burdening
it.15
In the instant case, what was filed before the trial court was an
action for specific performance directed against respondents. While
the suit incidentally involved a piece of land, the ownership or
possession thereof was not put in issue, since they did not assert
any interest or right over it. Moreover, this Court has consistently
declared that an action for specific performance is an action in
personam.16cräläwvirtualibräry
Having failed to serve the summons on respondents properly, the
RTC did not validly acquire jurisdiction over their persons.
Consequently, due process demands that all the proceedings
conducted subsequent thereto should be deemed null and
void.17cräläwvirtualibräry
WHEREFORE, the Petition is DENIED and the assailed Decision and
Resolution AFFIRMED. Costs against petitioners.
G.R. No. 144662 : October 13, 2003
SPOUSES EFREN MASON and DIGNA MASON, petitioners, vs.
THE HONORABLE COURT OF APPEALS and COLUMBUS
PHILIPPINES BUS CORPORATION, Respondents.
DECISION
QUISUMBING, J.:
14
6
This petition for review assails the decision, 1 dated May 12, 2000,
of the Court of Appeals and its resolution2 dated August 25, 2000 in
CA-G.R. SP No. 54649 denying petitioners motion for
reconsideration. The decision set aside the decision3 of the Regional
Trial Court of Pasay City, Branch 112, in Civil Case No. 98-1567 and
directed said court to conduct further proceedings on the complaint
for rescission of lease contract.
The antecedent facts of the case, as found by the Court of Appeals,
are as follows:
Petitioners spouses Efren and Digna Mason owned two parcels of
land located along Epifanio delos Santos Avenue in Pasay City.
On March 30, 1993, petitioners and private respondent Columbus
Philippines Bus Corporation (hereafter Columbus) entered into a
lease contract, under which Columbus undertook to construct a
building worth ten million pesos (P10,000,000) at the end of the
third year of the lease. Because private respondent failed to comply
with this stipulation, the petitioners on November 13, 1998, filed a
complaint for rescission of contract with damages against private
respondent before the Regional Trial Court of Pasay City, docketed
as Civil Case No. 98-1567. Summons was served upon private
respondent through a certain Ayreen Rejalde. While the receiving
copy of the summons described Rejalde as a secretary of Columbus,
the sheriffs return described Rejalde as a secretary to the corporate
president, duly authorized to receive legal processes.
Private respondent failed to file its answer or other responsive
pleading, hence petitioners filed a motion to declare private
respondent in default. The motion was granted and petitioners were
allowed to present evidence ex-parte. Thereafter, the case was
submitted for decision.
On April 22, 1999, the trial court rendered its decision whose
dispositive portion reads:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of the plaintiffs and against defendant declaring the contract
of lease rescinded, terminated and cancelled, and ordering
defendant:
1. To pay plaintiffs the amount of P10 Million which is the value of
the building which defendant failed to construct on the leased
properties, as and by way [of] actual damages;
2. To pay plaintiffs the amount of P63,862.57 beginning November
1998 until defendant and the sub-lessee vacate the leased property
by way of reasonable compensation for the use of the properties;
3. and all other persons and entities claiming rights under it, to
surrender possession to plaintiffs and to vacate the leased premises;
4. to pay plaintiffs the amount of P300,000.00 as and by way of
moral damages;
5. to pay plaintiffs the amount of P100,000.00 as and by way of
exemplary damages;
6. to pay plaintiffs attorneys fees in the amount of P100,000.00;
and
7. to pay the cost of suit.
SO ORDERED.4cräläwvirtualibräry
That decision became final on May 12, 1999. The following day,
private respondent filed a motion to lift order of default, which was
opposed by petitioners. The trial court ordered the parties to submit
their respective memoranda. However, without waiting for the
same, the trial court on May 26, 1999, denied the motion to lift order
of default, thus:
It appearing that the decision rendered by this Court on April 27,
1999 became final and executory on May 12, 1999, defendants
Motion to Lift Order of Default is hereby DENIED. Concomitant
thereto, plaintiffs Motion for Execution is hereby GRANTED.
The Order of this Court on May 21, 1999 allowing the parties to file
their respective memoranda within ten (10) days from May 21, 1999
14
7
is hereby revoked and set aside, since the incidents can be resolved
based on the records.
WHEREFORE, let a writ of execution issue to enforce and implement
the final and executory decision rendered by this Court on April 27,
1999.
SO ORDERED.5cräläwvirtualibräry
Private respondent filed a motion for reconsideration, which was
denied. Undaunted, private respondent filed a manifestation and
motion to lift the writ of execution. It suffered the same fate as the
motion for reconsideration for being dilatory. The branch sheriff was
directed to proceed with the enforcement of the decision.
Private respondent appealed to the Court of Appeals, which ruled in
its favor, thus:
WHEREFORE, the petition is GRANTED; the decision in Civil Case No.
98-1567 and all the proceedings therein, including the order of
default and writ of execution, are SET ASIDE. The court a quo is
ORDERED to require petitioner to file its answer and thereafter to
conduct further appropriate proceedings with reasonable dispatch.
SO ORDERED.6cräläwvirtualibräry
The Court of Appeals held that the trial court erred when it denied
private respondents motion to lift order of default. The appellate
court pointed out that private respondent was not properly served
with summons, thus it cannot be faulted if it failed to file an Answer.
Section 11, [7 Rule 14 of the 1997 Rules of Civil Procedure requires
that service of summons upon domestic private juridical entity shall
be made through its president, managing partner, general manager,
corporate secretary, treasurer or in-house counsel. Since service
upon private respondent was made through a certain Ayreen
Rejalde, a mere filing clerk in private respondents office, as
evidenced by the latters employment record, such service cannot be
considered valid. Consequently, the subsequent proceedings,
including the order of default, judgment by default and its execution,
were also invalid because the trial court did not acquire jurisdiction
over private respondent. Besides, judgments by default are not
favored, especially so when there is a prima facie showing that the
defaulting party has a meritorious defense, which in this case was
grounded on the contract of lease sued upon, said the Court of
Appeals.
Petitioner filed a motion for reconsideration, but to no avail. Hence,
this petition for review averring that the Court of Appeals erred in:
I. HOLDING THAT THERE WAS NO VALID SERVICE OF SUMMONS
UPON PRIVATE RESPONDENT COLUMBUS PHILIPPINES BUS
CORPORATION
II. NOT HOLDING THAT THERE WAS VALID SERVICE OF SUMMONS
CONFORMABLY WITH THE SUBSTANTIAL COMPLIANCE RULE.
III. HOLDING THAT WITH THE ADOPTION OF SECTION 11, RULE 14
OF THE 1997 RULES OF CIVIL PROCEDURE, THE SUBSTANTIAL
COMPLIANCE RULE NO LONGER APPLIES.
IV. NOT HOLDING THAT JURISDICTION WAS ACQUIRED OVER
PRIVATE RESPONDENT COLUMBUS PHILIPPINES BUS
CORPORATION AND THAT ITS MOTION TO LIFT ORDER OF DEFAULT
LACKS MERIT.8cräläwvirtualibräry
The issues in this case may be succinctly stated as follows:
a. Whether there was valid service of summons on private
respondent for the trial court to acquire jurisdiction, and
b. Whether private respondents motion to lift order of default was
in order.
On the first issue, petitioners contend that while Section 11, Rule 14
of the 1997 Rules of Civil Procedure clearly specifies the persons
authorized to receive summons on behalf of a private juridical
entity, said provision did not abandon or render inapplicable the
substantial compliance rule. Petitioners cite Millenium Industrial
Commercial Corporation v. Tan,9 and maintain that this Court, by
referring to E.B Villarosa & Partner Co., Ltd. v. Judge
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Benito,10 effectively ruled that said provision is the statement of the
general rule on service of summons upon corporation and the
substantial compliance rule is the exception. Petitioners claim that
this Court, in an array of cases, upheld the substantial compliance
rule when it allowed the validity of the service of summons on the
corporations employee other than those mentioned in the Rule
where said summons and complaint were in fact seasonably
received by the corporation from said employee. Petitioners insist
that technicality must not defeat speedy justice.
Petitioners stress that even though the summons was received by a
mere filing clerk in private respondents corporation, there was
substantial compliance with Section 11, Rule 14 because the
summons actually reached private respondent. This can be gleaned
from private respondents motion to lift order of default where
private respondent did not question the validity of the service of
summons but explained in paragraph three thereof that its failure
to answer the complaint was due to its impression that the case
would not be pursued by petitioners because the corporation already
made payments to them.[11cräläwvirtualibräry
From said averment, according to petitioners, private respondent in
effect admitted that it received the summons. Notwithstanding this,
private respondent did not file its answer to the complaint, said the
petitioners. This is tantamount to negligence which the court cannot
tolerate, petitioners conclude. There being valid service of
summons, the Regional Trial Court acquired jurisdiction over private
respondent, according to petitioners.
Petitioners further contend that the Court of Appeals reliance on E.B
Villarosa & Partner Co., Ltd. v. Judge Benito,12 in denying their
motion for reconsideration was misplaced, because the factual
milieu in said case was different from that in the instant case.
In Villarosa, according to them, there was no showing of actual
receipt by the defendant corporation of the summons while in this
case, private respondent actually received the summons.
Private respondent counters that nowhere in the Millenium case did
this Court expressly state or remotely imply that we have not
abandoned the doctrine of substantial compliance. Private
respondent claims that petitioners misquoted the portion of
the Millenium decision where this Court cited the Villarosa case, to
make it appear that the Villarosa ruling, which provides an
interpretation of Section 11, Rule 14 of the 1997 Rules of Civil
Procedure, states the general rule on the service of summons upon
corporations where the substantial compliance rule is the exception.
Private respondent avers that what this Court discussed in
the Millenium case was the rule on service of summons under the
old Rules of Court prior to the promulgation and effectivity of the
1997 Rules of Civil Procedure. The Millenium case held that as a
general rule, service upon one who is not enumerated in Section
13,13 Rule 14 of the then Rules of Court is invalid, according to
private respondent. An exception is when the summons is actually
received by the corporation, which means that there was substantial
compliance with the rule. Private respondent stresses that since the
exception referred to the old rule, it cannot be made to apply to the
new rule, which clearly specifies and limits the persons authorized
to receive the summons in behalf of the corporation.
Neither can petitioners rely on Millenium to justify their theory, adds
private respondent, because at the time the complaint in this case
was filed with the trial court, the 1997 Rules of Civil Procedure were
already in effect. The case law applicable in the instant case,
contends private respondent, is Villarosa which squarely provides
for the proper interpretation of the new rule on the service of
summons upon domestic corporation, thus:
The designation of persons or officers who are authorized to accept
summons for a domestic corporation or partnership is now limited
and more clearly specified in Section 11, Rule 14 of the 1997 Rules
of Civil Procedure. The rule now states general manager instead of
only manager; corporate secretary instead of secretary; and
treasurer instead of cashier. The phrase agent, or any of its directors
is conspicuously deleted in the new rule.[14cräläwvirtualibräry
According to private respondent, service through Ayreen Rejalde, a
mere filing clerk of private respondent and not one of those
enumerated above, is invalid.
We find private respondents submission on this issue meritorious.
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The question of whether the substantial compliance rule is still
applicable under Section 11, Rule 14 of the 1997 Rules of Civil
Procedure has been settled in Villarosa which applies squarely to the
instant case. In the said case, petitioner E.B. Villarosa & Partner Co.
Ltd. (hereafter Villarosa) with principal office address at 102 Juan
Luna St., Davao City and with branches at 2492 Bay View Drive,
Tambo, Paraaque, Metro Manila and Kolambog, Lapasan, Cagayan
de Oro City, entered into a sale with development agreement with
private respondent Imperial Development Corporation. As Villarosa
failed to comply with its contractual obligation, private respondent
initiated a suit for breach of contract and damages at the Regional
Trial Court of Makati. Summons, together with the complaint, was
served upon Villarosa through its branch manager at Kolambog,
Lapasan, Cagayan de Oro City. Villarosa filed a Special Appearance
with Motion to Dismiss on the ground of improper service of
summons and lack of jurisdiction. The trial court denied the motion
and ruled that there was substantial compliance with the rule, thus,
it acquired jurisdiction over Villarosa. The latter questioned the
denial before us in its petition for certiorari. We decided in Villarosas
favor and declared the trial court without jurisdiction to take
cognizance of the case. We held that there was no valid service of
summons on Villarosa as service was made through a person not
included in the enumeration in Section 11, Rule 14 of the 1997 Rules
of Civil Procedure, which revised the Section 13, Rule 14 of the 1964
Rules of Court. We discarded the trial courts basis for denying the
motion to dismiss, namely, private respondents substantial
compliance with the rule on service of summons, and fully agreed
with petitioners assertions that the enumeration under the new rule
is restricted, limited and exclusive, following the rule in statutory
construction that expressio unios est exclusio alterius. Had the Rules
of Court Revision Committee intended to liberalize the rule on
service of summons, we said, it could have easily done so by clear
and concise language. Absent a manifest intent to liberalize the rule,
we stressed strict compliance with Section 11, Rule 14 of the 1997
Rules of Civil Procedure.
Neither can herein petitioners invoke our ruling in Millenium to
support their position for said case is not on all fours with the instant
case. We must stress that Millenium was decided when the 1964
Rules of Court were still in force and effect, unlike the instant case
which falls under the new rule. Hence, the cases15 cited by
petitioners where we upheld the doctrine of substantial compliance
must be deemed overturned by Villarosa, which is the later case.
At this juncture, it is worth emphasizing that notice to enable the
other party to be heard and to present evidence is not a mere
technicality or a trivial matter in any administrative or judicial
proceedings. The service of summons is a vital and indispensable
ingredient of due process.[16 We will deprive private respondent of
its right to present its defense in this multi-million peso suit, if we
disregard compliance with the rules on service of summons.
On the second issue, petitioners claim that private respondents
motion to lift order of default was not in order for it was filed late,
contrary to the provision in sub-paragraph (b), Section 3,[17 Rule
9 of the 1997 Rules of Civil Procedure, which requires filing of the
motion after notice but before judgment. Also, the motion was (a)
not under oath; (b) did not show the fraud, accident, mistake or
excusable neglect that caused private respondents failure to
answer; and (c) did not show private respondents meritorious
defense.
Private respondent, in turn, argues that since service upon it was
invalid, the trial court did not acquire jurisdiction over it. Hence, all
the subsequent proceedings in the trial court are null and void,
including the order of default. This renders the second issue now
moot and academic.
We find merit in private respondents submissions. Since we have
ruled that service of summons upon private respondent through its
filing clerk cannot be considered valid, it necessarily follows
therefore that the Regional Trial Court of Pasay City did not acquire
jurisdiction over private respondent.18 Consequently, all the
subsequent proceedings held before it, including the order of
default, are null and void.19 As private respondent points out, the
second issue has become moot and academic.
WHEREFORE, the instant petition is DENIED. The questioned
decision, as well as the resolution, of the Court of Appeals in CA-
G.R. SP No. 54649 are AFFIRMED. Costs against petitioners.
SO ORDERED.
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