Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 173331               December 11, 2013

FLORPINA BENAVIDEZ, Petitioner,
vs.
NESTOR SALVADOR, Respondent.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari assailing the November 22, 2005 Decision  and the June
1

8, 2006 Amended Decision  of the Court of Appeals (CA). in CA-G.R. CV No. 73487, which
2

affirmed and modified the June 1, 2001 Decision  of the Regional Trial Court. Branch 74, Anti
3

polo City (RTC-Antipolo) in Civil Case No. 00-5660.

The Facts:

Sometime in February 1998, pet1t1oner Florpina Benavidez (Benavidez) approached and asked

respondent Nestor Salvador (Salvador) for a loan that she would use to repurchase her property
in Tanay, Rizal which was foreclosed by the Farmers Savings and Loan Bank, Inc. (Farmers
Savings). After inspecting the said property, Salvador agreed to lend the money subject to
certain conditions. To secure the loan, Benavidez was required to execute a real estate
mortgage, a promissory note and a deed of sale. She was also required to submit a special
power of attorney (SPA) executed and signed by Benavidez’s daughter, Florence B.
Baning (Baning), whom she named as the vendee in the deed of absolute sale of the
repurchased property. In the SPA, Baning would authorize her mother to obtain a loan and to
constitute the said property as security of her indebtedness to Salvador.

Pursuant to the agreement, Salvador issued a manager’s check in favor of Benavidez in the
amount of One Million Pesos (₱1,000,000.00) and released Five Hundred Thousand Pesos
(₱500,000.00) in cash. For the loan obtained, Benavidez executed a promissory note, dated
March 11, 1998.

Benavidez, however, failed to deliver the required SPA. She also defaulted in her obligation
under the promissory note. All the postdated checks which she had issued to pay for the
interests were dishonored. This development prompted Salvador to send a demand letter with a
corresponding statement of account, dated January 11, 2000. Unfortunately, the demand fell on
deaf ears which constrained Salvador to file a complaint for sum of money with damages with
prayer for issuance of preliminary attachment.

On May 4, 2000, Benavidez filed a motion to dismiss on the ground of litis pendentia. She
averred that prior to the filing of the case before the RTC-Antipolo, she had filed a Complaint for
Collection for Sum of Money, Annulment of Contract and Checks with Prayer for Preliminary
Injunction and Temporary Restraining Order against Salvador; his counsel, Atty. Nepthalie
Segarra; Almar Danguilan; and Cris Marcelino, before the Regional Trial Court, Branch 80,
Morong, Rizal (RTC-Morong). The motion to dismiss, however, was denied by RTC-Antipolo on
July 31, 2000. On September 15, 2000, Benavidez filed her answer with counterclaim. A pre-trial
conference was scheduled on May 2, 2001 but she and her counsel failed to appear despite due
notice. Resultantly, upon motion, Salvador was allowed by the trial court to present evidence ex
parte.

On June 1, 2001, RTC-Antipolo decided the subject case for Salvador. It found that indeed
Benavidez obtained a loan from Salvador in the amount of ₱1,500,000.00. It also noted that up
to the time of the rendition of the judgment, she had failed to settle her obligation despite having
received oral and written demands from Salvador. Also, the trial court pointed out that the
evidence had shown that as of January 11, 2000, Benavidez’s obligation had already reached
the total amount of ₱4,810,703.21.  Thus, the fallo of the said decision reads:
4

WHEREFORE, in view of the foregoing premises, defendant is hereby directed to pay plaintiff the
following:

1. The amount of ₱4,810,703.21, covering the period from June 11, 1998 to January 11,
2000, exclusive of interest and penalty charges until the said amount is fully paid;

2. The amount of ₱50,000.00 as exemplary damages;

3. The sum of 25% of the total obligation as and by way of attorney’s fees; and,

4. Cost of suit.

SO ORDERED. 5

Benavidez filed a motion for reconsideration but unfortunately for her, RTC-Antipolo, in its August
10, 2001 Order,  denied her motion for lack of merit.
6

Frustrated, Benavidez appealed the June 1, 2001 Decision and the August 10, 2001 Order of
RTC-Antipolo to the CA. She argued, in chief, that early on, the trial court should have dismissed
the complaint for collection of sum of money filed by Salvador on grounds of litis pendentia and
erroneous certification against forum shopping. She claimed that prior to the filing of the said
complaint against her, she had already filed a complaint for the annulment of the promissory note
evidencing her obligation against Salvador. According to her, there was substantial identity in the
causes of action and any result of her complaint for annulment would necessarily affect the
complaint for collection of sum of money filed against her. She added that Salvador never
informed RTC-Antipolo about the pending case before RTC-Morong, rendering his certification
on forum shopping erroneous. 7

Benavidez also argued that RTC-Antipolo erred in refusing to re-open the case for pre-trial
conference and disallowing her to present evidence. She added that the absence of her counsel
on the scheduled pre-trial conference caused her substantial prejudice. Though she was not
unmindful of the general rule that a client was bound by the mistake or negligence of her
counsel, she insisted that since the incompetence or ignorance of her counsel was so great and
the error committed was so serious as it prejudiced her and denied her day in court, the litigation
should have been reopened to give her the opportunity to present her case. 8

The CA was not moved.

The CA reasoned out that RTC-Antipolo did not err in allowing Salvador to present his
evidence ex-parte in accordance with Section 5, Rule 18 of the 1997 Rules of Court.  Benavidez
9

and her counsel failed to show a valid reason for their non-appearance at the pre-trial and so
their absence was not excusable. Her counsel’s negligence, as Benavidez cited, was not among
the grounds for new trial or reconsideration as required under Section 1, Rule 37 of the Rules of
Civil Procedure. The CA emphasized that well-entrenched was the rule that negligence of
counsel bound his client. She was bound by the action of his counsel in the conduct of the trial.
The appellate court also took note that she herself was guilty of negligence because she was
also absent during the pre-trial despite due notice. Thus, Benavidez’s position that the trial court
should have reopened the case was untenable. 10

With regards to the grounds of litis pendentia and forum shopping cited by Benavidez, the CA
wrote that there was no identity of the rights asserted in the cases filed before RTC-Morong and
RTC-Antipolo. The reliefs prayed for in those cases were different. One case was for the
annulment of the promissory note while the other one was a complaint for sum of money. There
could be identity of the parties, but all the other requisites to warrant the dismissal of the case on
the ground of litis pendentia were wanting.  Thus, on November 22, 2005, the CA affirmed in
11

toto the decision of RTC-Antipolo. 12

Feeling aggrieved by the affirmance, Benavidez filed a motion for reconsideration on the ground
that the same was contrary to law and jurisprudence; that litis pendentia existed which resultantly
made his certification on non-forum shopping untruthful; and, that her absence during the pre-
trial was justified.

On June 08, 2006, the CA issued the Amended Decision, holding that the motion was partly
meritorious. Accordingly, it modified its earlier decision by deleting the award of exemplary
damages and attorney’s fees because the award thereof was not supported by any factual, legal
and equitable justification. Thus, the decretal portion of the Amended Decision reads:

WHEREFORE, the motion for reconsideration is PARTIALLY GRANTED. The Decision dated

November 22, 2005 is MODIFIED by DELETING the award of exemplary damages and
attorney’s fees.

SO ORDERED.  13

Still unsatisfied, Benavidez comes before the Court via a petition for review under Rule 45 of the
Rules of Court, raising the following issues: 14

1. Whether or not the present case is barred by Civil Case No. 00-05660 which is
pending before the RTC-Morong, Rizal.

2. Whether or not the case is dismissible because the certification against forum
shopping was defective.

3. Whether or not the executed promissory note is void for being unconscionable
and shocking to the conscience.

4. Whether or not the CA erred in holding that the order allowing respondent to
present evidence ex-parte and submitting the case for decision is valid despite the
fact that default judgment is looked upon with disfavor by this Court.

In fine, the core issue is whether or not the present case should have been dismissed on the
ground of litis pendentia.

Benavidez argues that the outcome of the case, before RTC-Morong, where the annulment of
the promissory note was sought, would have been determinative of the subject case before RTC-
Antipolo where the enforcement of the promissory note was sought. If RTC-Morong would rule
that the promissory note was null and void, then the case with RTC-Antipolo would have no more
leg to stand on. He concludes that the requisites of litis pendentia were indeed
present: first, both Benavidez and Salvador were parties to both complaints; second, both
complaints were concerned with the promissory note; and third, the judgment in either of the said
complaints would have been determinative of the other. 15
Benavidez further claims that the case should have been dismissed because the certification on
forum shopping which accompanied Salvador’s complaint was defective. He declared therein
that he was not aware of any pending case before any court similar to the one he was filing,
when in truth and in fact, there was one. This fact could not be denied because summons in the
case before RTC-Morong was served on him and he even filed his answer to the said
complaint. 16

Benavidez also pushes the argument that RTC-Antipolo committed an error of law when it
allowed Salvador to present evidence ex-parte and eventually decided the case without waiting
to hear her side. The trial court should have been more lenient. If there was any one to be
blamed for her predicament, it should have been his counsel, Atty. Rogelio
Jakosalem (Jakosalem). His counsel was negligent in his duties when he did not bother to file
the necessary pre-trial brief and did not even appear at the pre-trial conference. He did not assist
her either in filing a motion for reconsideration. Benavidez explains that Atty. Jakosalem did not
appear on the scheduled pre-trial conference because he got mad at her when she refused to
heed his advice to settle when the trial court granted Salvador’s motion for issuance of
preliminary attachment. Under the circumstances, she should have been exempted from the rule
that the negligence of counsel binds the client.17

For her part, she failed to appear because she was then suffering from illness. Contrary to the
finding of the CA, her medical certificate was not belatedly submitted. She submitted it within a
reasonable period after she received the order allowing Salvador to present evidence ex-
parte and considering the case for resolution thereafter. 18

The Court’s Ruling

In litis pendentia, there is no
hard and fast rule in
determining which of the two
actions should be abated

Litis pendentia is a Latin term, which literally means "a pending suit" and is variously referred to
in some decisions as lis pendens and auter action pendant. As a ground for the dismissal of a
civil action, it refers to the situation where two actions are pending between the same parties for
the same cause of action, so that one of them becomes unnecessary and vexatious. It is based
on the policy against multiplicity of suits.
19

Litis pendentia exists when the following requisites are present: identity of the parties in the two
actions; substantial identity in the causes of action and in the reliefs sought by the parties; and
the identity between the two actions should be such that any judgment that may be rendered in
one case, regardless of which party is successful, would amount to res judicata in the other. 20

On the other hand, forum shopping exists when, as a result of an adverse decision in one forum,
or in anticipation thereof, a party seeks a favorable opinion in another forum through means
other than appeal or certiorari. 21

There is forum shopping when the elements of litis pendentia are present or where a final
judgment in one case will amount to res judicata in another. 22

In the present controversy, the Court is of the view that litis pendentia exists. All the elements are
present: first, both Benavidez and Salvador are parties in both cases; second, both complaints
are concerned with the same promissory note; and third, the judgment in either case would be
determinative of the other.

With the foregoing, which case then should be dismissed? At first glance, it would seem that Civil
Case No. 00-5660 or the complaint filed with RTC-Antipolo should have been dismissed applying
the "priority-in-time rule." This rule, however, is not ironclad. The rule is not applied if the first
case was filed merely to pre-empt the later action or to anticipate its filing and lay the basis for its
dismissal. A crucial consideration is the good faith of the parties. In recent rulings, the more
appropriate case is preferred and survives. In Spouses Abines v. BPI,  it was written:
23

There is no hard and fast rule in determining which of the actions should be abated on the
ground of litis pendentia, but through time, the Supreme Court has endeavored to lay down
certain criteria to guide lower courts faced with this legal dilemma. As a rule, preference is given
to the first action filed to be retained. This is in accordance with the maxim Qui prior est tempore,
potior est jure. There are, however, limitations to this rule. Hence, the first action may be abated
if it was filed merely to pre-empt the later action or to anticipate its filing and lay the basis for its
dismissal. Thus, the bona fides or good faith of the parties is a crucial element. A later case shall
not be abated if not brought to harass or vex; and the first case can be abated if it is merely an
anticipatory action or, more appropriately, an anticipatory defense against an expected suit – a
clever move to steal the march from the aggrieved party.

Another exception to the priority in time rule is the criterion of the more appropriate action. Thus,
an action, although filed later, shall not be dismissed if it is the more appropriate vehicle for
litigating the issues between the parties. [Underscoring supplied]

In the relatively recent case of Dotmatrix Trading v. Legaspi,  the Court had the occasion to
24

extensively discuss the various rules and consideration in determining which case to dismiss in
such situations. It included its analysis of Abines. Thus:

Early on, we applied the principle of Qui prior est tempore, potior est jure (literally, he who is
before in time is better in right) in dismissing a case on the ground of litis pendentia. This was
exemplified in the relatively early case of Del Rosario v. Jacinto where two complaints for
reconveyance and/or recovery of the same parcel of land were filed by substantially the same
parties, with the second case only impleading more party-plaintiffs. The Court held that "parties
who base their contention upon the same rights as the litigants in a previous suit are bound by
the judgment in the latter case." Without expressly saying so in litis pendentia terms, the Court
gave priority to the suit filed earlier.

In Pampanga Bus Company, Inc. v. Ocfemia, complaints for damages arising from a collision of
a cargo truck and a bus were separately filed by the owners of the colliding vehicles. The
complaint of the owners of the cargo truck prevailed and the complaint of the owners of the bus
had to yield, as the cargo truck owners first filed their complaint. Notably, the first and prevailing
case was far advanced in development, with an answer with counterclaim and an answer to the
counterclaim having been already filed, thus fully joining the issues.

In Lamis Ents. v. Lagamon, the first case was a complaint for specific performance of obligations
under a Memorandum of Agreement, while the second case was a complaint for sums of money
arising from obligations under a promissory note and a chattel mortgage, and damages. We
dismissed the second case because the claims for sums of money therein arose from the
Memorandum of Agreement sued upon in the first case.

Ago Timber Corporation v. Ruiz offered an insightful reason after both parties had each pleaded
the pendency of another action between the same parties for the same cause. The Court ruled
that the second action should be dismissed, "not only as a matter of comity with a coordinate and
co-equal court (Laureta & Nolledo, Commentaries & Jurisprudence on Injunction, p. 79,
citing Harrison v. Littlefield, 57 Tex. Div. A. 617, 619, 124 SW 212), but also to prevent confusion
that might seriously hinder the administration of justice. (Cabigao, et al. v. Del Rosario, et al., 44
Phil. 182)."

In all these cases, we gave preference to the first action filed to be retained. The "priority-in-
time rule," however, is not absolute.
In the 1956 case of Teodoro v. Mirasol, we deviated from the "priority-in-time rule" and applied
the "more appropriate action test" and the "anticipatory test."

The "more appropriate action test" considers the real issue raised by the pleadings and
the ultimate objective of the parties; the more appropriate action is the one where the real
issues raised can be fully and completely settled. In Teodoro, the lessee filed an action for
declaratory relief to fix the period of the lease, but the lessor moved for its dismissal because he
had subsequently filed an action for ejectment against the lessee. We noted that the unlawful
detainer suit was the more appropriate action to resolve the real issue between the parties -
whether or not the lessee should be allowed to continue occupying the land under the terms of
the lease contract; this was the subject matter of the second suit for unlawful detainer, and was
also the main or principal purpose of the first suit for declaratory relief.

In the "anticipatory test," the bona fides or good faith of the parties is the critical element.  If
1âwphi1

the first suit is filed merely to preempt the later action or to anticipate its filing and lay the
basis for its dismissal, then the first suit should be dismissed. In Teodoro, we noted that the
first action, declaratory relief, was filed by the lessee to anticipate the filing of the second action,
unlawful detainer, considering the lessor's letter informing the lessee that the lease contract had
expired.

We also applied the "more appropriate action test" in Ramos v. Peralta. In this case, the lessee
filed an action for consignation of lease rentals against the new owner of the property, but the
new owner moved to dismiss the consignation case because of the quieting of title case he had
also filed against the lessee. Finding that the real issue between the parties involved the right to
occupy/possess the subject property, we ordered the dismissal of the consignation case, noting
that the quieting of title case is the more appropriate vehicle for the ventilation of the issues
between them; the consignation case raised the issue of the right to possession of the lessee
under the lease contract, an issue that was effectively covered by the quieting of title case which
raised the issue of the validity and effectivity of the same lease contract.

In University Physician Services, Inc. v. Court of Appeals, we applied both the "more appropriate
action test" and "anticipatory test." In this case, the new owner of an apartment sent a demand
letter to the lessee to vacate the leased apartment unit. When the lessee filed an action for
damages and injunction against the new owner, the new owner moved for the dismissal of the
action for damages on account of the action for ejectment it had also filed. We noted that
ejectment suit is the more appropriate action to resolve the issue of whether the lessee had the
right to occupy the apartment unit, where the question of possession is likewise the primary issue
for resolution. We also noted that the lessee, after her unjustified refusal to vacate the premises,
was aware that an ejectment case against her was forthcoming; the lessee's filing of the
complaint for damages and injunction was but a canny and preemptive maneuver intended to
block the new owner's action for ejectment.

We also applied the "more appropriate action test" in the 2003 case Panganiban v. Pilipinas
Shell Petroleum Corp., where the lessee filed a petition for declaratory relief on the issue of
renewal of the lease of a gasoline service station, while the lessor filed an unlawful detainer case
against the lessee. On the question of which action should be dismissed, we noted that the
interpretation of a provision in the lease contract as to when the lease would expire is the key
issue that would determine the lessee's right to possess the gasoline service station. The primary
issue – the physical possession of the gasoline station - is best settled in the ejectment suit that
directly confronted the physical possession issue, and not in any other case such as an action for
declaratory relief.

A more recent case - Abines v. Bank of the Philippine Islands in 2006 - saw the application of
both the "priority-in-time rule" and the "more appropriate action test." In this case, the respondent
filed a complaint for collection of sum of money against the petitioners to enforce its rights under
the promissory notes and real estate mortgages, while the petitioners subsequently filed a
complaint for reformation of the promissory notes and real estate mortgages. We held that the
first case, the collection case, should subsist because it is the first action filed and the more
appropriate vehicle for litigating all the issues in the controversy. We noted that in the second
case, the reformation case, the petitioners acknowledged their indebtedness to the respondent;
they merely contested the amounts of the principal, interest and the remaining balance. We
observed, too, that the petitioners' claims in the reformation case were in the nature of defenses
to the collection case and should be asserted in this latter case.

Under this established jurisprudence on litis pendentia, the following considerations predominate
in the ascending order of importance in determining which action should prevail: (1) the date of
filing, with preference generally given to the first action filed to be retained; (2) whether the action
sought to be dismissed was filed merely to preempt the later action or to anticipate its filing and
lay the basis for its dismissal; and (3) whether the action is the appropriate vehicle for litigating
the issues between the parties.  [Underscoring supplied]
25

In the complaint filed before RTC-Morong, Benavidez alleged, among others, that it was
defendant Atty. Nepthalie Segarra (Atty. Segarra) who arranged the loan in the amount of
₱1,500,000.00 for her at his own initiative; that he was the one who received the amount for her
on or about March 10, 1998 from defendant Salvador; that he paid Farmers Bank the amount of
₱1,049,266.12 leaving a balance of more than ₱450,000.00 in his possession; and that he made
her sign a promissory note. Benavidez prayed, among others, that Atty. Segarra be ordered to
give her the balance of the amount loaned and that the promissory note that Salvador allegedly
executed be declared null and void because she was just duped into signing the said document
through machinations and that the stipulated interest therein was shocking to the conscience.
Salvador, on the other hand, filed the subject case for the collection of a sum of money before
RTC-Antipolo to enforce his rights under the promissory note.

Considering the nature of the transaction between the parties, the Court believes that the case
for collection of sum of money filed before RTC-Antipolo should be upheld as the more
appropriate case because the judgment therein would eventually settle the issue in the
controversy - whether or not Benavidez should be made accountable for the subject loan. In the
complaint that she filed with RTC- Morong, Benavidez never denied that she contracted a loan
with Salvador. Under her second cause of action, she alleged:

SECOND CAUSE OF ACTION

11. Defendant Atty. Nepthalie Segarra arranged a loan in the amount of ONE MILLION
AND FIVE HUNDRED THOUSAND (₱1,500,000.00) PESOS for plaintiff at his own
initiative;

12. Defendant Atty. Nepthalie Segarra received the ₱1,500,000.00 on or about March 10,
1998 from defendant Nestor Salvador in behalf of and for delivery to plaintiff;

13. Defendant Atty. Nepthalie Segarra paid Farmers Bank the amount of ₱1,049,266.12
leaving a balance of more than ₱450,000.00 in his possession. A copy of the receipt
evidencing payment is herewith attached as Annex "A" and made an integral part hereof;

14. Defendant Atty. Nepthalie Segarra made plaintiff sign a Promissory Note evidencing
the loan of ₱1,500,000.00. A copy of said Promissory Note is herewith attached as
Annex "B" and made an integral part hereof;   [Underscoring supplied]
26

From the foregoing, it is clear that there was an amount of money borrowed from Salvador which
was used in the repurchase of her foreclosed property. Whether or not it was Atty. Segarra who
arranged the loan is immaterial. The fact stands that she borrowed from Salvador and she
benefited from it. Her insistence that the remaining balance of ₱450,000.00 of the money loaned
was never handed to her by Atty. Segarra is a matter between the two of them. As far as she and
Salvador are concerned, there is admittedly an obligation. Whether the promissory note was void
or not could have been proven by her during the trial but she forfeited her right to do so when
she and her lawyer failed to submit a pre-trial brief and to appear at the pre-trial as will be
discussed hereafter.

At this point, to dismiss Civil Case No. 00-5660 would only result in needless delay in the
resolution of the parties' dispute and bring them back to square one. This consequence will
defeat the public policy reasons behind litis pendentia which, like the rule on forum shopping,
aim to prevent the unnecessary burdening of our courts and undue taxing of the manpower and
financial resources of the Judiciary; to avoid the situation where co-equal courts issue conflicting
decisions over the same cause; and to preclude one party from harassing the other party through
the filing of an unnecessary or vexatious suit. 27

The failure of a party to file a

pre-trial brief or to appear at a
pre-trial conference shall be
cause to allow the other party
to present evidence ex parte.

Benavidez basically contends that she should not be made to suffer the irresponsibility of her
former counsel, Atty. Jakosalem, and that the trial court should have relaxed the application of
the Rules of Court, reopened the case and allowed her to present evidence in her favor.

The Court is not moved.

Section 4, Rule 18 of the Rules of Court provides that it is the duty of the parties and their
counsel to appear at the pre-trial conference. The effect of their failure to appear is provided by
Section 5 of the same rule where it states:

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]

Furthermore, Section 6 thereof provides:

Sec. 6. Pre-trial brief.-The parties shall file with the court and serve on the adverse party, in such
manner as shall ensure their receipt thereof at least three (3) days before the date of the pre-trial,
their respective pre-trial briefs which shall contain, among others:

xxx

Failure to file the pre-trial brief shall have the same effect as failure to appear at the pre-trial.

From the foregoing, it is clear that the failure of a party to appear at the pre-trial has 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 on the basis thereof. 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. 28

RTC-Antipolo then had the legal basis to allow Salvador to present evidence ex parte upon
motion. Benavidez and her counsel were not present at the scheduled pre-trial conference
despite due notice. They did not file the required pre-trial brief despite receipt of the Order. The
rule explicitly provides that both parties and their counsel are mandated to appear thereat except
for: (1) a valid excuse; and (2) appearance of a representative on behalf of a party who is 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 documents.  In this29

case, Benavidez’s lawyer was already negligent, but she compounded this by being negligent
herself. She was aware of the scheduled pre-trial conference, but she did not make any move to
prevent the prejudicial consequences of her absence or that of her counsel. If she knew that her
lawyer would not appear and could not because she was ill, she should have sent a
representative in court to inform the judge of her predicament.

Also, her failure to file the pre-trial brief warranted the same effect because the rules dictate that
failure to file a pre-trial brief shall have the same effect as failure to appear at the pre-trial. Settled
is the rule that the negligence of a counsel binds his clients.  Neither Benavidez nor her counsel
30

can now evade the effects of their misfeasance.

Stipulated interest should be

reduced for being iniquitous
and unconscionable.

This Court is not unmindful of the fact that parties to a loan contract have wide latitude to
stipulate on any interest rate in view of the Central Bank Circular No. 905 s. 1982 which
suspended the Usury Law ceiling on interest effective January I, 1983. It is, however, worth
stressing that interest rates whenever unconscionable may still be declared illegal. There is
nothing in said circular which grants lenders carte blanche authority to raise interest rates to
levels which will either enslave their borrowers or lead to a hemorrhaging of their
assets.  In Menchavez v. Bermudez,  the interest rate of 5% per month, which when summed up
31 32

would reach 60% per annum, is null and void for being excessive, iniquitous, unconscionable and
exorbitant, contrary to morals, and the law. 33

Accordingly, in this case, the Court considers the compounded interest rate of 5% per month as
iniquitous and unconscionable and void and inexistent from the beginning. The debt is to be
considered without the stipulation of the iniquitous and unconscionable interest rate.  In line with
34

the ruling in the recent case of Nacar v. Gallery Frames,  the legal interest of 6% per annum
35

must be imposed in lieu of the excessive interest stipulated in the agreement.

WHEREFORE, the petition is DENIED. The November 22, 2005 Decision and the June 8, 2006
Amended Decision of the Court of Appeals are AFFIRMED with MODIFICATION. The interest
rate of 5% per month which was the basis in computing Benavidez's obligation is reduced to 6%
per annum.

SO ORDERED.

JOSE CATRAL MENDOZA

Associate Justice

WE CONCUR:
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 181020               November 25, 2009

JAZMIN L. ESPIRITU and PORFIRIO LAZARO, JR., Petitioners,

vs.
VLADIMIR G. LAZARO, MA. CORAZON S. LAZARO, MA. ESPERENZA S. LAZARO, VLADI
MIGUEL S. LAZARO, CHINA BANKING CORPORATION, and WINIFRIDA B.
SISON, Respondents.

DECISION

NACHURA, J.:

This petition for review on certiorari assails the June 29, 2007 Decision 1 of the Court of Appeals
(CA), which affirmed the dismissal of the case for failure to prosecute. Likewise assailed in this
petition is its Resolution dated December 19, 2007, which denied the motion for reconsideration
of the said decision.

On June 29, 1998, petitioners Jazmin L. Espiritu and Porfirio Lazaro, Jr., together with a certain
Mariquit Lazaro, filed a complaint for recovery of personal property with damages and preliminary
attachment against respondents, Vladimir G. Lazaro, Ma. Corazon S. Lazaro, Ma. Esperanza S.
Lazaro, Vladi Miguel S. Lazaro, China Banking Corporation, and Winifrida B. Sison. Petitioners,
Mariquit Lazaro and respondent Vladimir Lazaro are the legitimate children and only surviving
heirs of the late Porfirio Lazaro, Sr. who died on March 13, 1998. Respondent Ma. Corazon
Lazaro is the wife of Vladimir Lazaro, while respondents Ma. Esperanza Lazaro and Vladi Miguel
Lazaro are their children.

The complaint alleged that (1) the deceased had two dollar time deposit accounts with
respondent China Banking Corporation in the amounts of US$117,859.99 and US$163,492.32;
(2) petitioners demanded from respondents Vladimir and Ma. Corazon Lazaro their share in the
said amounts but the latter told them that the deposits had already been transferred to their
children; (3) they requested respondent Winifrida Sison, branch manager of the bank, to freeze
the time deposit accounts in the names of said children; (4) respondent Sison subsequently
replied that there were no existing accounts under the children’s names; (5) petitioners then
requested respondent Sison to apprise them of the status of the two dollar time deposit accounts;
and (6) respondent Sison refused to comply, saying that, unless there is a court order, she may
not give out the details of the time deposit accounts because of the Bank Secrecy Law.
Petitioners prayed that respondents be ordered to pay them their three-fourths share in the time
deposit accounts or US$211,014.23, with interest, ₱1,000,000.00 as moral damages,
₱1,000,000.00 as exemplary damages, ₱300,000.00 as attorney’s fees and costs of the suit. 2

The trial court granted the prayer for preliminary attachment and the corresponding writ was
subsequently issued after petitioners posted a bond. Five real properties were levied
upon.3 Respondents Lazaro filed an urgent motion to set aside and discharge the
attachment,4 which was opposed by petitioners. They, likewise, filed a motion to dismiss 5 the
complaint for failure to state a cause of action. Respondent Sison also filed a motion to
dismiss6 on the same ground.

On February 12, 1999, the trial court denied the motion to discharge the attachment and the two
motions to dismiss and directed respondents to file their answer. Respondents Lazaro and Sison
filed their respective motions for reconsideration,7 which were again opposed by petitioners.8 In
an Omnibus Order dated January 20, 2000, the trial court partially granted respondents Lazaro’s
prayer for a partial discharge of their attached properties.

On March 31, 2000, respondent Sison filed her Answer with Counterclaim and Crossclaim. 9

Respondents Lazaro questioned the February 12, 1999 Order in a petition for certiorari filed with
the CA. When the latter did not rule favorably, they elevated the case to this Court. In a
Resolution dated January 21, 2002, this Court denied the petition. The Resolution became final
and executory on July 17, 2002.10

On July 19, 2002, respondents Lazaro filed a Cautionary Answer with Manifestation and a Motion
to File a Supplemental/Amended Answer. On August 5, 2002, petitioners received a copy of the
cautionary answer, pertinent portions of which are quoted as follows —

3. Undersigned counsel, on account of his heavy workload in equally important cases, would be
needing more time to file herein defendants’ Answer. In the meantime however, by way of a
Cautionary Answer, herein defendants hereby manifest that they are adopting subject to further
qualification part of co-defendant Sison’s Answer dated March 29, 2000, more
particularly, portions of sub-headings I. Denials and Admissions, II. Special and Affirmative
Defenses and III. Counterclaim which are personal, relevant and pertinent to their defense.

4. Nonetheless, herein defendants reserve their right to file a Supplemental/Amended Answer in

due time;

WHEREFORE, in view of the foregoing, it is respectfully prayed that the instant Cautionary
Answer with Manifestation be admitted and herein defendants given a twenty (20)-day period
within which to file a Supplemental/Amended Answer. 11

On July 24, 2003, the trial court dismissed the complaint due to petitioners’ failure to prosecute
for an unreasonable length of time. The court noted that despite the lapse of time since
respondents filed a cautionary answer, petitioners failed to file a motion to set the case for pre-
trial, which under Section 1, Rule 18 of the 1997 Rules of Civil Procedure is petitioners’ duty as
plaintiffs.12 The trial court denied petitioners’ Motion for Reconsideration of the said order. 13
1avvphi1

On June 29, 2007, the CA affirmed the dismissal of the case.14 Citing Olave v. Mistas,15 the CA
stressed that it is plaintiff’s duty to promptly set the case for pre-trial, and that failure to do so
may result in the dismissal of the case. According to the CA, petitioners should not have waited
for a supplemental answer or an order by the trial court and done nothing for more than 11
months from the receipt of the last pleading.

The CA also denied petitioners’ motion for reconsideration of the said decision; 16 hence, this
petition.

Petitioners assign the following errors to the CA:

A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE RULING

OF THE SUPREME COURT IN OLAVE vs. MISTAS [TO THE] CASE.
B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT RULING THAT THE
CASE WAS NOT YET RIPE FOR PRE-TRIAL.

C. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISMISSING THE APPEAL

BASED ON SECTION 3, RULE 17 OF THE RULES OF COURT.

D. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT TAKING

COGNIZANCE OF SECTION 1.2 OF A.M. NO. 03-1-09-SC, IN EFFECT SINCE AUGUST 16,
2004.17

On the grounds of equity, due process and fair play, petitioners urge the Court to set aside
technicalities and to allow the case to proceed and be resolved on the merits. They, likewise,
point out that, in accordance with the Court’s pronouncement in Olave v. Mistas, 18 dismissal of
their case is not warranted since no substantial prejudice was caused to respondents, and strong
and compelling reasons justify a liberal application of the rule. They explain that the reason why
they did not move to set the case for pre-trial was that the case was not yet ripe for it. They point
out that the trial court had not yet resolved respondents’ motion for extension to file a
supplemental answer and respondents had not yet filed their supplemental answer. Petitioners
stress that the delay was, therefore, not due to their inaction; hence, the dismissal of their case
was not justified.

Further, petitioners cite A.M. No. 03-1-09-SC (Guidelines to be Observed by Trial Court Judges
and Clerks of Court in the Conduct of Pre-Trial and Use of Deposition-Discovery Measures)
which allegedly provides that it is not solely the duty of the plaintiff to set the case for pre-trial as
the Clerk of Court is likewise directed to issue the notice of pre-trial should the plaintiff fail to do
so.

The petition has no merit.

In every action, the plaintiffs are duty-bound to prosecute their case with utmost diligence and
with reasonable dispatch to enable them to obtain the relief prayed for and, at the same time, to
minimize the clogging of the court dockets.19 Parallel to this is the defendants’ right to have a
speedy disposition of the case filed against them, essentially, to prevent their defenses from
being impaired.

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

Section 1 of Rule 18 of the Rules of Court imposes upon the plaintiff the duty to set the case for
pre-trial after the last pleading is served and filed. Under Section 3 of Rule 17, failure to comply
with the said duty makes the case susceptible to dismissal for failure to prosecute for an
unreasonable length of time or failure to comply with the rules.

Respondents Lazaro filed the Cautionary Answer with Manifestation and Motion to File a
Supplemental/Amended Answer on July 19, 2002, a copy of which was received by petitioners
on August 5, 2002. Believing that the pending motion had to be resolved first, petitioners waited
for the court to act on the motion to file a supplemental answer. Despite the lapse of almost one
year, petitioners kept on waiting, without doing anything to stir the court into action.

In any case, petitioners should not have waited for the court to act on the motion to file a
supplemental answer or for the defendants to file a supplemental answer. As previously stated,
the rule clearly states that the case must be set for pre-trial after the last pleading is served and
filed. Since respondents already filed a cautionary answer and [petitioners did not file any reply to
it] the case was already ripe for pre-trial.
It bears stressing that the sanction of dismissal may be imposed even absent any allegation and
proof of the plaintiff’s lack of interest to prosecute the action, or of any prejudice to the defendant
resulting from the failure of the plaintiff to comply with the rules.20 The failure of the plaintiff to
prosecute the action without any justifiable cause within a reasonable period of time will give rise
to the presumption that he is no longer interested in obtaining the relief prayed for. 21

In this case, there was no justifiable reason for petitioners’ failure to file a motion to set the case
for pre-trial. Petitioners’ stubborn insistence that the case was not yet ripe for pre-trial is
erroneous. Although petitioners state that there are strong and compelling reasons justifying a
liberal application of the rule, the Court finds none in this case. The burden to show that there are
compelling reasons that would make a dismissal of the case unjustified is on petitioners, and
they have not adduced any such compelling reason.

WHEREFORE, the petition is DENIED DUE COURSE. The Court of Appeals Decision dated
June 29, 2007 and Resolution dated December 19, 2007 are AFFIRMED.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

WE CONCUR:
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 199781               February 18, 2013

LICOMCEN, INC., Petitioner,
vs.
ENGR. SALVADOR ABAINZA, doing business under the name and style "ADS
INDUSTRIAL EQUIPMENT", Respondent.

DECISION

CARPIO, J.:

The Case

This petition for review1 assails the 21 September 2011 Decision 2 and the 6 December 2011
Resolution3 of the Court of Appeals in CA-G.R. CV No. 86296. The Court of Appeal affirmed the
7 November 2005 Decision4 of the Regional Trial Court, Branch 8, Legazpi City, in Civil Case No.
9919, which ordered petitioner LICOMCEN, Inc. (petitioner) to pay respondent Engr. Salvador
Abainza (respondent) the sum of P1,777,202.80 plus 12% interest per annum, P50,000
attorney’s fees, and P20,000 litigation and incidental expenses.

The Facts

Respondent filed an action for sum of money and damages against Liberty Commercial Center,
Inc. (Liberty). Respondent alleged that in 1997 and 1998, he was hired by Liberty to do various
projects in their commercial centers, mainly at the LCC Central Mall, Naga City, for the supply,
fabrication, and installation of air-conditioning ductworks. Respondent completed the project,
which included some changes and revisions of the original plan at the behest of Liberty.
However, despite several demands by respondent, Liberty failed to pay the remaining balance
due on the project in the sum of P1,777,202.80.

Liberty denied the material allegations of the complaint and countered that the collection suit was
not filed against the real party-in-interest. Thus, respondent amended his complaint to include
petitioner as defendant.5 The HRD Administrative Manager of Liberty testified that petitioner
LICOMCEN, Inc. is a sister company of Liberty and that the incorporators and directors of both
companies are the same.

The Ruling of the Trial Court

The trial court found that petitioner’s claim that it has fully paid respondent the total cost of the
project in the sum of P6,700,000 pertains only to the cost of the original plan of the project.
However, the additional costs of P1,777,202.80 incurred for labor, materials, and equipment on
the revised plan were not paid by petitioner.

As found by the trial court, petitioner (then defendant) ordered and approved the revisions in the
original plan, thus:

During the awarding of the work, defendants wanted the aircon duct[s] changed from rectangular
to round ducts because Ronald Tan, one of the LCC owners who came from abroad, suggested
round aircon ducts he saw abroad were preferable. Plaintiff prepared a plan corresponding to the
changes desired by the defendants (Exhibits "D", "D-1", "D-2").

The changing of the rectangular ducts to round ducts entailed additional cost in labor and
materials. Plaintiff had to remove the rectangular ducts installed, resize it to round ducts and re-
install again. More G.I. Sheets were needed and new fittings as well, because the fittings for the
rectangular ducts cannot be used in the round duct. There were movements of the equipment. In
the original plan, the air handling unit (AHU) was [o]n the ground floor. It was relocated to the
second floor. There were additional air ducting in the two big comfort rooms for customers, an
exhaust blower to the dondon and discaminos, fresh air blower and lock machine at the food
court were installed.

Because of the changes, defendants wanted the tonnage of the refrigeration (TR) to be
increased to cool up the space. The 855 tons capacity was increased to 900 [sic] tons. These
changes entailed additional expense for labor and materials in the sum of
Php1,805,355.62 (Exhibits "F" to "F-26").

Plaintiff’s work was being monitored by Es De Castro and Associates (ESCA), defendant’s
engineering consultant. Paper works for the approval of ESCA are signed by Michal Cruz, an
electrical engineer, and Jake Ozaeta, mechanical engineer, both employees of the defendants
and a certain Mr. Tan, a representative of defendants who actually supervises the construction.
Plaintiff presented the cost changes on the rework and change to 960 ton capacity. The total
balance payable to plaintiff by defendant is Php 1,777.202.80 (Exhibit "G-42"). Accomplishment
report had been submitted by plaintiff and approved by ESCA, project was turned over in 1988
but plaintiff was not paid the balance corresponding to the changed plan of work and additional
work performed by plaintiff. Series of communications demanding payment (Exhibits "G-3" to "G-
11", "G-13", "G-17" to "G-18", "G-23", "G- 24", "G-25", "G-26", "G-35 to 42") were made but
plaintiff [sic] refused to pay.6

On 7 November 2005, the trial court rendered its Decision, the dispositive portion of which reads:

WHEREFORE, PREMISES CONSIDERED, decision is hereby rendered in favor of the plaintiff

and against defendant LICOMCEN, Inc. ordering the latter to pay the plaintiff the sum of
Php1,777,202.80 as its principal obligation with interest at 12% per annum until the amount is
fully paid, the sum of Php50,000.00 as attorney’s fess [sic] and Php20,000.00 as litigation and
incidental expenses. Costs against defendant LICOMCEN, Inc.

The case against Liberty Commercial Center, Inc. is hereby ordered DISMISSED.

SO ORDERED.7

The Ruling of the Court of Appeals

Petitioner appealed the trial court’s Decision to the Court of Appeals, invoking Article 1724 of the
Civil Code which provides:
Art. 1724. The contractor who undertakes to build a structure or any other work for a stipulated
price, in conformity with plans and specifications agreed upon with the landowner, can neither
withdraw from the contract nor demand an increase in the price on account of the higher cost of
labor or materials, save when there has been a change in the plans and specifications, provided:

(1) Such change has been authorized by the proprietor in writing; and

(2) The additional price to be paid to the contractor has been determined in writing by
both parties.

The Court of Appeals stated that petitioner never raised Article 1724 of the Civil Code as a
defense in the trial court. Citing Section 1, Rule 9 of the Rules of Court 8 and the case of Bank of
the Philippine Islands v. Leobrera,9 the Court of Appeals ruled that petitioner cannot be allowed
to change its theory on appeal since the adverse party would then be deprived of the opportunity
to present further evidence on the new theory. Besides, the Court of Appeals held that Article
1724 of the Civil Code is not even applicable to the case because the Contract of Agreement
was never signed by the parties considering that there were substantial changes to the original
plan as the work progressed. Thus, the Court of Appeals affirmed the trial court’s Decision,
finding petitioner liable to respondent for the additional costs in labor and materials due to the
revisions in the original project.

Petitioner filed a Motion for Reconsideration, which the Court of Appeals denied in its Resolution
dated 6 December 2011. Hence, this petition.

The Issue

The issue in this case is whether petitioner is liable for the additional costs incurred for labor,
materials, and equipment on the revised project.

The Ruling of the Court

We find the petition without merit.

In this case, petitioner invoked Article 1724 of the Civil Code as a defense against respondent’s
claim. Petitioner alleged that respondent cannot recover additional costs since the agreement in
the change of plans and specifications of the project, the pricing and cost of materials and labor
was not in writing.

The Court of Appeals mistakenly stated that petitioner only raised Article 1724 of the Civil Code
as a defense on appeal. A perusal of the records reveals that, although petitioner did not invoke
Article 1724 of the Civil Code as a defense in its answer 10 or in its pre-trial brief,11 petitioner
belatedly asserted such defense in its Memorandum 12 filed before the trial court. Thus, from its
previous defense that it has fully paid its obligations to respondent, petitioner changed its theory
by adding that since the additional work done by respondent was not authorized in writing, then
respondent cannot recover additional costs. In effect, petitioner does not deny that additional
costs were incurred due to the change of plans in the original project, but justifies not paying for
such expense by invoking Article 1724 of the Civil Code.

Under Section 1, Rule 9 of the Rules of Court, defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived, with the following exceptions: (1) lack of
jurisdiction over the subject matter; (2) litis pendentia; (3) res judicata; and (4) prescription of the
action. Clearly, petitioner cannot change its defense after the termination of the period of
testimony and after the exhibits of both parties have already been admitted by the court. The
non-inclusion of this belated defense in the pre-trial order barred its consideration during the trial.
To rule otherwise would put the adverse party at a disadvantage since he could no longer offer
evidence to rebut the new theory. Indeed, parties are bound by the delimitation of issues during
the pre-trial.13 As held in Villanueva v. Court of Appeals:14

Pre-trial is primarily intended to insure that the parties properly raise all issues necessary to
dispose of a case. The parties must disclose during pre-trial all issues they intend to raise during
the trial, except those involving privileged or impeaching matters. Although a pre-trial order is not
meant to catalogue each issue that the parties may take up during the trial, issues not included in
the pre-trial order may be considered only if they are impliedly included in the issues raised or
inferable from the issues raised by necessary implication. The basis of the rule is simple.
Petitioners are bound by the delimitation of the issues during the pre-trial because they
themselves agreed to the same.15

Besides, Article 1724 of the Civil Code is not even applicable to this case.  It is evident from the
1âwphi1

records that the original contract agreement,16 submitted by respondent as evidence, which

stated a total contract price of P5,300,000, was never signed by the parties considering that
there were substantial changes in the plan imposed by petitioner in the course of the work on the
project.17 Petitioner admitted paying P6,700,000 to respondent which was allegedly the agreed
cost of the project. However, petitioner did not submit any written contract signed by both parties
which would substantiate its claim that the agreed cost of the project was only P6,700,000.
Clearly, petitioner cannot invoke Article 1724 of the Civil Code to avoid paying its obligation
considering that the alleged original contract was never even signed by both parties because of
the various changes imposed by petitioner on the original plan. The fact that petitioner paid
P1,400,00018 more than the amount stated in the unsigned contract agreement clearly indicates
that there were indeed additional costs during the course of the work on the project. It is just
unfortunate that petitioner is now invoking Article 1724 of the Civil Cide to avoid further payment
of the additional costs incurred on the project.

What was established in the trial court was that petitioner ordered the changes in the original
plan which entailed additional costs in labor and materials. The work done by respondent was
closely monitored and supervised by petitioner’s engineering consultant and all the paperworks
relating to the project were approved by petitioner through its representatives. We find no
justifiable reason to deviate from the findings and ruling of the trial court, which were also upheld
by the Court of Appeals. Thus, petitioner should be held liable for the additional costs incurred for
labor, materials, and equipment on the revised project.

WHEREFORE, we DENY the petition. We AFFIRM the 21 September 2011 Decision and the 6

December 2011 Resolution of the Court of Appeals in CA-G.R. CV No. 86296.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

WE CONCUR:

ARTURO D. BRION
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 170606               November 23, 2007

LCK INDUSTRIES INC., CHIKO LIM and ELIZABETH T. LIM, Petitioners,

vs.
PLANTERS DEVELOPMENT BANK, Respondent.

DECISION

CHICO-NAZARIO, J.:

Before this Court is the Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court filed by petitioners LCK Industries Inc. (LCK), Chiko Lim and Elizabeth Lim, seeking the
reversal and the setting aside of the Decision1 dated 1 April 2005 and the Resolution 2 dated 29
November 2005 of the Court of Appeals in CA-G.R. CV No. 73944. The appellate court, in its
assailed Decision and Resolution, reversed the Decision 3 of the Regional Trial Court (RTC) of
Quezon City, Branch 81, dated 3 September 2001, in Civil Case No. Q-98-33835, which found
respondent Planters Development Bank (respondent bank) liable for the amount of
₱1,856,416.67, representing overpayment.

Petitioner LCK is a domestic corporation duly organized and existing as such under Philippine
laws.4

Respondent bank is a banking institution duly authorized to engage in banking business under
Philippine laws.5

On 1 September 1995, petitioner LCK obtained a loan from the respondent bank in the amount of
₱3,000,000.00 as evidenced by two promissory notes. 6

As a security for the loan obligation, petitioners-spouses Chiko and Elizabeth Lim executed a
Real Estate Mortgage over a parcel of land covered by Transfer Certificate of Title (TCT) No. T-
138623, registered under their names and located at Quezon City, with an area of 68 square
meters (Quezon City property).7 Later on, to secure the same obligation, another Real Estate
Mortgage was executed over another parcel of land covered by TCT No. T-62773, also
registered under the names of the petitioner-spouses, with an area of 71 square meters located
at Baguio City (Baguio City property).8

Subsequently, petitioner LCK incurred default in its payment; thus, making the obligation due and
demandable. Several demands were thereafter made by the respondent bank to no avail. 9 On 13
October 1997, a final letter-demand was sent by respondent bank to petitioner LCK asking for
the payment of its obligation in the amount of ₱2,962,500.00. Such final demand
notwithstanding, petitioner LCK failed or refused to pay its obligation.
Consequently, respondent bank caused the extrajudicial foreclosure of the Baguio City property
which was sold at the public auction for ₱2,625,000.00 as shown in the Certificate of Sale 10 dated
29 January 1998. Since the proceeds of the foreclosed Baguio City property were not enough to
satisfy the entire loan obligation which amounted to ₱2,962,500.00, respondent bank further
caused the extrajudicial foreclosure of the Quezon City property. As evidenced by the Certificate
of Sale11 dated 18 March 1998, signed by Notary Public Atty. Allene Anigan (Atty. Anigan), the
foreclosed Quezon City property was sold at a public auction for ₱2,231,416.67. The respondent
bank was the highest bidder on both occasions.

Prior to the auction sale of the Quezon City property on 18 March 1998, petitioners, on 12 March
1998, filed with the RTC of Quezon City, Branch 81, an action for Annulment of the Foreclosure
of Mortgage and Auction Sale of the Quezon City property with Restraining Order/Preliminary
Injunction and with Damages against respondent bank and Atty. Anigan. 12 The case was
docketed as Civil Case No. Q-98-33835.

In their Complaint,13 petitioners alleged that respondent bank failed to comply with the posting
and publication requirements as well as with the filing of the Petition for the Extrajudicial
Foreclosure of the Real Estate Mortgage with the Clerk of Court as required by Act No.
3135.14 Petitioners prayed for the issuance of temporary restraining order (TRO) in order to enjoin
the respondent bank from conducting the auction sale, and in the alternative, to enjoin the
Registry of Deeds of Quezon City from transferring the ownership of the Quezon City property to
the purchaser at the auction sale.

In its Answer with the Opposition to the Prayer for the Issuance of Temporary Restraining Order
(TRO), respondent bank averred that it had fully observed the posting and publication
requirements of Act No. 3135. It insisted that the filing of the Petition for Extrajudicial Foreclosure
of the Mortgage Property with the Notary Public was sanctioned by the same statute.
Respondent bank thus prayed for the dismissal of petitioners’ complaint for lack of merit. 15

For failure of the counsels for both petitioners and respondent bank to appear in the scheduled
hearing for the issuance of temporary restraining order, the RTC, in an Order dated 15 May
1998, deemed the prayer for TRO abandoned. 16

Thereafter, the RTC conducted a pre-trial conference. In the Pre-Trial Order 17 dated 8 September
2000, the parties made the following admissions and stipulations:

(1) the real estate mortgage executed by the plaintiffs in favor of the defendant bank
covers the loan obligation in the total amount of ₱3,000,000.00;

(2) there were two promissory notes executed by the plaintiffs: one for ₱2,700,000.00
and another for ₱300,000.00;

(3) a demand letter dated 13 October 1997 was sent to petitioner LCK by respondent
bank stating that the remaining balance of petitioner LCK’s loan obligation was
₱2,962,500.00 as of 13 October 1997;

(4) a Notice of Auction Sale by Notary Public was made by the respondent bank in
foreclosing the Baguio City property, and in the Certificate of Sale issued by the Notary
Public, the respondent bank bid ₱2,625,000.00 for the property;

(5) the respondent bank also foreclosed the real estate mortgage over the petitioners’
Quezon City property on 18 March 1998 and said defendant bank bid ₱2,231,416.67 for
the property;

(6) the foreclosure of petitioners’ Quezon City property was made by a notary public;
 (7) the petition for foreclosure was not included in the raffle of judicial notice;

(8) the petitioners failed to fully pay their loan obligation as of 13 October 1997 in the
amount of ₱962,500.00; and

(9) despite the demands, petitioners failed to pay their due obligations.

The court further defined the issues as follows:

(1) whether or not the petition was filed with the Office of the Clerk of Court;

(2) whether or not the extra-judicial foreclosure of real estate mortgage by defendant
bank was made in accordance with the provisions of Act 3135, as amended; and

(3) whether or not the parties are entitled to their respective claims for attorney’s fees and
damages.18

The parties were given 15 days from receipt of the Pre-Trial Order to make amendments or
corrections thereon.

On 18 April 2001, the parties agreed to submit the case for the decision of the RTC based on the
stipulations and admissions made at the pre-trial conference. The parties further manifested that
they were waiving their respective claims for attorney’s fees. On the same day, the RTC required
the parties to submit their respective memoranda.19

In their Memorandum,20 petitioners, aside from reiterating issues previously raised in their

Complaint, further claimed that there was an overpayment of the loan obligation by
₱1,856,416.67. As shown in the letter-demand dated 13 October 1997 received by petitioner
LCK, its outstanding loan obligation amounted to ₱2,962,500.00. The Baguio City property was
purchased by respondent bank at the public auction for ₱2,625,000.00, while the Quezon City
property was purchased for ₱2,231,416.67.

For its part, respondent bank maintained in its Memorandum21 that the complaint filed by
petitioners is devoid of merit. It further asseverated that petitioners’ claim for overpayment was
not among the issues submitted for the resolution of the RTC. It is clear from the Pre-Trial Order
that the issues to be resolved are limited to whether the petition for the foreclosure of the real
estate mortgage was filed before the Clerk of Court and whether or not the extrajudicial
foreclosure of real estate mortgage was made by the respondent bank in accordance with the
provisions of Act No. 3135. For failure of petitioners to promptly raise the alleged overpayment,
the RTC is now barred from adjudicating this issue.

On 3 September 2001, the RTC rendered its Decision22 declaring the foreclosure and the auction
sale of the Quezon City property legal and valid, but ordered respondent bank to return the
overpayment made by petitioners in the amount of ₱1,856,416.67. The dispositive portion of the
RTC Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Declaring the extra-judicial foreclosure and auction sale of the Quezon City property of
plaintiffs LCK Industries, Inc., Chiko Lim and Elizabeth Lim subject of this case legal and
valid;

2. Ordering defendant Planters Development Bank to pay to plaintiffs the amount of

₱1,856,416.67 representing overpayment;
 3. Dismissing plaintiffs’ claim for attorney’s fees and other litigation expenses;

4. Dismissing the case against defendant Atty. Allene M. Anigan; and

5. Dismissing the counterclaims of defendants Planters Development Bank and Atty.

Arlene M. Anigan.23

For lack of merit, the Motion for Reconsideration filed by the respondent bank was denied by the
RTC in its Order dated 3 December 2001.24

Aggrieved, respondent bank elevated the matter to the Court of Appeals by assailing the portion
of the RTC Decision ordering it to pay petitioners the amount of ₱1,856,416.67 representing the
alleged overpayment. The respondent bank’s appeal was docketed as CA-G.R. CV No. 73944. 25

On 1 April 2005, the Court of Appeals granted the appeal of the respondent bank and partially
reversed the RTC Decision insofar as it ordered respondent bank to pay the overpaid amount of
₱1,856,416.67 to petitioners. In deleting the award of overpayment, the appellate court
emphasized that the primary purpose of pre-trial is to make certain that all issues necessary for
the disposition of the case are properly raised in order to prevent the element of surprise. Since
the alleged overpayment was only raised by the petitioners long after the pre-trial conference, the
court a quo cannot dispose of such issue without depriving the respondent bank of its right to
due process.26

The Motion for Reconsideration filed by petitioners was denied by the Court of Appeals in its
Resolution27 dated 29 November 2005.

Petitioners are now before this Court via a Petition for Review on Certiorari,28 under Rule 45 of
the Revised Rules of Court, assailing the Court of Appeals Decision and raising the following
issues as grounds:

I.

WHETHER OR NOT THE EXCESS AMOUNT OF ₱1,893,916.67 WHICH THE

RESPONDENT BANK ACQUIRED FROM THE AUCTION SALE OF THE
PETITIONERS’ PROPERTIES SHALL BE RETURNED TO THEM.

II.

WHETHER OR NOT THE ISSUE OF OVERPAYMENT WAS RAISED BY THE PARTIES

AND INCLUDED IN THE PRE-TRIAL ORDER.29

The petition centers on the claim propounded by petitioners that there was an overpayment of
the loan obligation in the amount of ₱1,856,416.67. Petitioners insist they are entitled to the
reimbursement of the overpaid amount invoking the elementary principle of in rem verso30 in
human relations and the rule on the disposition of the proceeds of the sale providing that the
balance or the residue after deducting the cost of the sale and the payment of the mortgage debt
due, shall be paid to the junior encumbrancers, and in the absence of junior encumbrancers, to
the mortgagor or his duly authorized representative. 31

On the other hand, respondent bank counters that the question of overpayment, not being
included in the issues stipulated in Pre-Trial Order dated 8 September 2000, and totally unrelated
therein, cannot be considered by the RTC. The belated ventilation of the alleged overpayment
precluded the RTC from ruling on the matter in consonance with the primordial purpose of the
pre-trial conference which is to delineate the issues necessary for the disposition of the case. 32
The conduct of pre-trial in civil actions has been mandatory as early as 1 January 1964 upon the
effectivity of the Revised Rules of Court.33 Pre-trial is a procedural device intended to clarify and
limit the basic issues between the parties 34 and to take the trial of cases out of the realm of
surprise and maneuvering.35

Pre-trial is an answer to the clarion call for the speedy disposition of cases. Hailed as the most
important procedural innovation in Anglo-Saxon justice in the nineteenth century, 36 pre-trial is a
device intended to clarify and limit the basic issues between the parties. 37 It thus paves the way
for a less cluttered trial and resolution of the case. 38 Pre-trial seeks to achieve the following:

(a) The possibility of an amicable settlement or of a submission to alternative modes of

dispute resolution;

(b) The simplification of the issues;

(c) The necessity or desirability of amendments to the pleadings;

(d) The possibility of obtaining stipulations or admissions of facts and of documents to

avoid unnecessary proof;

(e) The limitation of the number of witnesses;

(f) The advisability of a preliminary reference of issues to a commissioner;

(g) The propriety of rendering judgment on the pleadings, or summary judgment, or of

dismissing the action should a valid ground therefor be found to exist;

(h) The advisability or necessity of suspending the proceedings; and

(i) Such other matters as may aid in the prompt disposition of the action. 39

The purpose of entering into a stipulation of facts is to expedite trial and to relieve the parties and
the court as well of the costs of proving facts which will not be disputed on trial and the truth of
which can be ascertained by reasonable inquiry. Its main objective is to simplify, abbreviate and
expedite the trial, or totally dispense with it.40

The parties themselves or their representative with written authority from them are required to
attend in order to arrive at a possible amicable settlement, to submit to alternative modes of
dispute resolution, and to enter into stipulations or admissions of facts and documents. All of the
matters taken up during the pre-trial, including the stipulation of facts and the admissions made
by the parties, are required to be recorded in a pre-trial order. 41

Thus, Section 7, Rule 18 of the Revised Rules of Court provides:

SEC. 7. Record of pre-trial. – The proceedings in the pre-trial shall be recorded. Upon the
termination thereof, the court shall issue an order which shall recite in detail the matters taken up
in the conference, the action taken thereon, the amendments allowed to the pleadings, and the
agreements or admissions made by the parties as to any of the matters considered. Should the
action proceed to trial, the order shall explicitly define and limit the issues to be tried. The
contents of the order shall control the subsequent course of the action, unless modified before
trial to prevent manifest injustice.

In the Pre-Trial Order dated 8 September 2000, the RTC defined the issues as follows: (1)
whether or not the petition was filed with the Office of the Clerk of Court; (2) whether or not the
extrajudicial foreclosure of real estate mortgage by defendant bank was made in accordance with
the provisions of Act No. 3135; and (3) whether or not the parties are entitled to their respective
claims for attorney’s fees and damages.

Based on the admissions and stipulations during the pre-trial conference and the issues defined
by the court a quo as embodied in the Pre-Trial Order, the parties agreed to submit the case for
the resolution of the RTC. Both petitioners and respondent also manifested that they would
forego their respective claims for attorney’s fees, leaving solely the issue of the validity of the
foreclosure of mortgage and auction sale for the RTC’s disposition. However, in petitioners’
Memorandum filed after the case was submitted for resolution, petitioners raised the question of
overpayment, a new issue that was included neither in their Complaint nor in the issues defined
in the Pre-Trial Order issued by the RTC.

Generally, pre-trial is primarily intended to make certain that all issues necessary to the
disposition of a case are properly raised. Thus, to obviate the element of surprise, parties are
expected to disclose at the pre-trial conference all issues of law and fact they intend to raise at
the trial.42 However, in cases in which the issue may involve privileged or impeaching
matters,43 or if the issues are impliedly included therein or may be inferable therefrom by
necessary implication to be integral parts of the pre-trial order as much as those that are
expressly stipulated, the general rule will not apply. 44 Thus, in Velasco v. Apostol,45 this Court
highlighted the aforesaid exception and ruled in this wise:

A pre-trial order is not meant to be a detailed catalogue of each and every issue that is to be or
may be taken up during the trial. Issues that are impliedly included therein or may be inferable
therefrom by necessary implication are as much integral parts of the pre-trial order as those that
are expressly stipulated.

In fact, it would be absurd and inexplicable for the respondent company to knowingly disregard or
deliberately abandon the issue of non-payment of the premium on the policy considering that it is
the very core of its defense. Correspondingly, We cannot but perceive here an undesirable resort
to technicalities to evade an issue determinative of a defense duly averred. (Emphasis supplied).

The case at bar falls under this particular exception. Upon scrupulous examination of the Pre-
Trial Order dated 8 September 2000, it can be deduced that the parties stipulated that the
remaining sum of petitioner LCK’s obligation as of 13 October 1997 was ₱2,962,500.00. In the
same Pre-Trial Order, the parties likewise stipulated that the Baguio City property was sold at the
public auction for ₱2,625,000.00 and the Quezon City property for ₱2,231,416.67. On both
occasions, respondent bank emerged as the highest bidder. By applying simple mathematical
operation, the mortgaged properties were purchased by the respondent at the public auctions for
₱4,856,416.67; thus, after deducting therefrom the balance of petitioner LCK’s obligation in the
amount of ₱2,962,500.00, an excess in the sum of ₱1,893,916.67 remains.

Needless to say, the fact of overpayment, though not expressly included in the issues raised in
the Pre-Trial Order dated 8 September 2000, can be evidently inferred from the stipulations and
admissions made by the parties therein. Even only upon plain reading of the said Pre-Trial Order,
it can be readily discerned that there was an overpayment.

The pertinent provisions of the Revised Rules of Court on extrajudicial foreclosure sale provide:

Rule 39. SEC. 21. Judgment obligee as purchaser. – When the purchaser is the judgment
obligee, and no third-party claim has been filed, he need not pay the amount of the bid if it does
not exceed the amount of the judgment. If it does, he shall pay only the excess.

Rule 68. SEC. 4. Disposition of proceeds of sale.- The amount realized from the foreclosure sale
of the mortgaged property shall, after deducting the costs of the sale, be paid to the person
foreclosing the mortgage, and when there shall be any balance or residue, after paying off the
mortgage debt due, the same shall be paid to junior encumbrancers in the order of their priority,
to be ascertained by the court, or if there be no such encumbrancers or there be a balance or
residue after payment to them, then to the mortgagor or his duly authorized agent, or to the
person entitled to it. (Emphasis supplied.)

The renowned jurist Florenz Regalado, in Sulit v. Court of Appeals, 46 underscored the obligation
of the mortgagee with respect to the surplus money resulting from a foreclosure sale of the
mortgaged property:

The application of the proceeds from the sale of the mortgaged property to the mortgagor’s
obligation is an act of payment, not payment by dation; hence, it is the mortgagee’s duty to return
any surplus in the selling price to the mortgagor. Perforce, a mortgagee who exercises the power
of sale contained in a mortgage is considered a custodian of the fund, and, being bound to apply
it properly, is liable to the persons entitled thereto if he fails to do so. And even though the
mortgagee is not strictly considered a trustee in a purely equitable sense, but as far as concerns
the unconsumed balance, the mortgagee is deemed a trustee for the mortgagor or owner of the
equity of redemption. 1âwphi1

Commenting on the theory that a mortgagee, when he sells under a power, cannot be
considered otherwise than as a trustee, the vice-chancellor in Robertson v. Norris (1 Giff. 421)
observed: "That expression is to be understood in this sense: that with the power being given to
enable him to recover the mortgage money, the court requires that he shall exercise the power of
sale in a provident way, with a due regard to the rights and interests of the mortgagor in the
surplus money to be produced by the sale. (Emphasis supplied.)

Petitioner LCK’s obligation with the respondent bank was already fully satisfied after the
mortgaged properties were sold at the public auction for more than the amount of petitioner
LCK’s remaining debt with the respondent bank. As the custodian of the proceeds from the
foreclosure sale, respondent bank has no legal right whatsoever to retain the excess of the bid
price in the sum of ₱1,893,916.67, and is under clear obligation to return the same to petitioners.

In any case, this Court would not allow respondent bank to hide behind the cloak of procedural
technicalities in order to evade its obligation to return the excess of the bid price, for such an act
constitutes a violation of the elementary principle of unjust enrichment in human relations.

Under the principle of unjust enrichment - nemo cum alterius detrimento locupletari potest - no
person shall be allowed to enrich himself unjustly at the expense of others. 47 This principle of
equity has been enshrined in our Civil Code, Article 22 of which provides:

Art. 22. Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or legal
ground, shall return the same to him.

We have held that there is unjust enrichment when a person unjustly retains a benefit to the loss
of another, or when a person retains the money or property of another against the fundamental
principles of justice, equity and good conscience. 48

Equity, as the complement of legal jurisdiction, seeks to reach and complete justice where courts
of law, through the inflexibility of their rules and want of power to adapt their judgments to the
special circumstances of cases, are incompetent to do so. Equity regards the spirit and not the
letter, the intent and not the form, the substance rather than the circumstance, as it is variously
expressed by different courts.49

It is the policy of the Court to afford party-litigants the amplest opportunity to enable them to have
their cases justly determined, free from constraints of technicalities. Since the rules of
procedures are mere tools designed to facilitate the attainment of justice, it is well recognized
that this Court is empowered to suspend its operation, or except a particular case from its
operation, when the rigid application thereof tends to frustrate rather promote the ends of
justice.50

Court litigations are primarily for search of truth, and a liberal interpretation of the rules by which
both parties are given the fullest opportunity to adduce proofs is the best way to ferret such truth.
The dispensation of justice and vindication of legitimate grievances should not be barred by
technicalities.51

Given the foregoing discussion, this Court finds the respondent bank liable not only for retaining
the excess of the bid price or the surplus money in the sum of ₱1,893,916.67, but also for paying
the interest thereon at the rate of 6% per annum from the time of the filing of the complaint until
finality of judgment. Once the judgment becomes final and executory, the interest of 12% per
annum, should be imposed, to be computed from the time the judgment becomes final and
executory until fully satisfied. 52

WHEREFORE, premises considered, the instant Petition is GRANTED. The Court of Appeals
Decision dated 1 April 2005 and its Resolution dated 29 November 2005 in CA-G.R. CV No.
73944 are hereby REVERSED. Respondent Planters Development Bank is ORDERED to return
to the petitioners LCK Industries Inc., Chiko Lim and Elizabeth Lim, the sum of ₱1,893,916.67
with interest computed at 6% per annum from the time of the filing of the complaint until its full
payment before finality of judgment. Thereafter, if the amount adjudged remains unpaid, the
interest rate shall be 12% per annum computed from the time the judgment became final and
executory until fully satisfied. Costs against respondent Planters Development Bank.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 147377               August 10, 2007

DR. EMMANUEL VERA, Petitioner,

vs.
ERNESTO F. RIGOR and THE COURT OF APPEALS, Respondents.

DECISION

SANDOVAL-GUTIERREZ, J.:

It is mandatory for the trial court to conduct pre-trial in civil cases in order to realize the
paramount objective of simplifying, abbreviating, and expediting trial. In light of these objectives,
the parties are mandatorily required to submit their respective pre-trial briefs. Failure of the
parties to do so is a ground for dismissal of the action with prejudice, unless otherwise ordered
by the court.

On November 19, 1996, Ernesto Rigor, respondent, filed with the Regional Trial Court (RTC),
Branch 22, Malolos, Bulacan a complaint for sum of money with damages against Dr. Emmanuel
Vera, petitioner, docketed as Civil Case No. 852-M-96. Respondent alleged in his complaint that
petitioner purchased from him a brand new Ultrasound Scanner, Model HS 120, for ₱410,000.00.
Petitioner paid ₱120,000.00 as downpayment, leaving a balance of ₱290,000.00. Despite
respondent’s demand, petitioner failed to pay the same.

In his answer, petitioner claimed that he received the machine on a trial basis. However, when
tested, its "performance" was unsatisfactory. Moreover, the hospital where the machine was to
be installed has no funds. Respondent offered a new brand of Ultrasound Scanner but it turned
out to be an old model.

The trial court1 then set the pre-trial on January 21, 1997. During the pre-trial conference, the
parties failed to reach an amicable settlement, hence, the trial court terminated the pre-trial and
set the case for initial hearing on March 6, 1997 at nine o’clock in the morning. However, upon
motion of respondent’s counsel, the trial was reset to May 20, 1997, then to July 17, 1997.
During the hearing on this date, the trial court, upon manifestation of petitioner’s counsel,
realized that respondent failed to file a pre-trial brief.

On July 28, 1997, petitioner filed a motion to dismiss the complaint raising as ground
respondent’s failure to file a pre-trial brief.

On September 30, 1997, the trial court issued a Resolution granting the motion and dismissing
the complaint.

Respondent filed a motion for reconsideration but it was denied by the trial court in a Resolution
dated February 4, 1998.

Upon appeal by respondent, the Court of Appeals, on July 25, 2000, rendered a Decision 2 in his
favor, holding that:
There is no dispute about plaintiff-appellant’s failure to file his pre-trial brief. In this case,
however, pre-trial proceeded and took place on January 21, 1997 without the required pre-trial
brief having been submitted by the plaintiff-appellant. It is therefore safe to assume that this was
allowed by the trial court. For how else could the pre-trial have taken place even without the
requisite pre-trial brief of plaintiff-appellant if not upon permission of the trial court?

Likewise, there is no showing that defendant-appellee at that time manifested any opposition to
the plaintiff-appellant’s failure to file pre-trial brief. In fact, pre-trial was thereafter terminated. x x
x. Only on the next hearing did the defendant-appellee pointed out the non-filing of plaintiff-
appellant’s pre-trial brief. In other words, several events after the pre-trial had taken place before
the trial court decided to dismiss the case due to non-filing of pre-trial brief. Considering all the
above circumstances, we find that the trial court indeed erred in its order of dismissal.

xxx

WHEREFORE, premises considered, the appeal is GRANTED. The Order dated September 30,
1997 dismissing Civil Case No. 852-M-96 is SET ASIDE and the trial court is directed to
REINSTATE the Complaint and to proceed with the hearing of the case until its termination with
utmost dispatch.

Petitioner filed a motion for reconsideration but it was denied in a Resolution dated August 14,
2000.

Hence, this petition for certiorari filed under Rule 65 of the 1997 Rules of Civil Procedure, as
amended.

Petitioner alleged that the Court of Appeals acted with grave abuse of discretion tantamount to
lack of jurisdiction in giving due course to respondent’s appeal considering that it raises a pure
question of law cognizable only by this Court. The legal issue is whether the complaint in Civil
Case No. 852-M-96 is dismissible for respondent’s failure to file a pre-trial brief.

We hold that the issue raised before the Court of Appeals is both legal and factual as shown by
the following discussion.

Section 6, Rule 18 of the 1997 Rules of Civil Procedure, as amended, provides:

SEC. 6. Pre-trial Brief. – The parties shall file with the court and serve on the adverse party, in
such manner as shall ensure their receipt thereof at least three (3) days before the date of the
pre-trial, their respective pre-trial briefs which shall contain, among others:

(a) A statement of their willingness to enter into amicable settlement or alternative modes
of dispute resolution, indicating the desired terms thereof;

(b) A summary of admitted facts and proposed stipulation of facts;

(c) The issues to be tried or resolved;

(d) The documents or exhibits to be presented, stating the purpose thereof;

(e) A manifestation of their having availed or their intention to avail themselves of

discovery procedures or referral to commissioners; and

(f) The number and names of the witnesses, and the substance of their respective
testimonies.
Failure to file the pre-trial brief shall have the same effect as failure to appear at the pre-trial.

Corollarily, Section 5 of the same Rule states:

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. x x x

Section 7 likewise provides:

SEC. 7. Record of pre-trial. – The proceedings in the pre-trial shall be recorded. Upon the
termination thereof, the court shall issue an order which shall recite in detail the matters taken up
in the conference, the action taken thereon, the amendments allowed to the pleadings, and the
agreements or admissions made by the parties as to any of the matters considered. Should the
action proceed to trial, the order shall explicitly define and limit the issues to be tried. The
contents of the order shall control the subsequent course of the action, unless modified before
trial to prevent manifest injustice.

Clearly, the above Rule mandatorily requires the parties to seasonably file their briefs and failure
to do so shall be cause for the dismissal of the action.

As mentioned earlier, respondent did not file a pre-trial brief in violation of the above Rule. But
what surprised us is the fact that the trial court conducted the pre-trial conference on January 21,
1997 despite the lack of respondent’s pre-trial brief and thereafter terminated the same. It was
only on July 17, 1997 during the initial hearing (after two postponements) that the trial judge
came to know, after being apprised by petitioner’s counsel, that respondent did not file a pre-trial
brief.
1avvphi1

While the trial judge erroneously proceeded with the trial conference, the fact remains that
respondent did not file a pre-trial brief. Pursuant to Section 6, Rule 18 quoted above, such failure
is a cause for dismissal of the action. We have to emphasize that pre-trial and its governing rules
are not technicalities which the parties may ignore or trifle with.

Obviously, since respondent did not file a pre-trial brief, it follows that the trial judge failed to
conduct the pre-trial conference in accordance with Rule 18. In fact, he did not issue the required
pre-trial order stating the various matters which should have been included therein. Indeed, the
trial judge showed his ignorance of the Rules, specifically Rule 18. And by failing to take
appropriate steps to enable the parties reach an amicable settlement, the trial judge showed his
gross inefficiency.

In conclusion, we rule that the Court of Appeals did not commit grave abuse of discretion in
taking cognizance of respondent’s appeal. However, it erred in reversing the RTC judgment
dismissing respondent’s complaint for his failure to file a pre-trial brief.

WHEREFORE, we DISMISS the instant petition as well as respondent’s complaint in Civil Case
No. 852-M-96.

Judge Candido R. Belmonte of the RTC, Branch 22, Malolos, Bulacan is directed to explain in
writing within ten (10) days from notice why he should not be charged administratively for
ignorance of Rule 18, 1997 Rules of Civil Procedure, as amended, and gross inefficiency.

SO ORDERED.

ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
WE CONCUR:

Republic of the Philippines

SUPREME COURT
Baguio City

FIRST DIVISION

G.R. No. 171406               April 4, 2011

ASIAN TERMINALS, INC., Petitioner,

vs.
MALAYAN INSURANCE, CO., INC., Respondent.

DECISION

DEL CASTILLO, J.:

Once the insurer pays the insured, equity demands reimbursement as no one should benefit at
the expense of another.

This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the July 14,
2005 Decision2 and the February 14, 2006 Resolution3 of the Court of Appeals (CA) in CA G.R.
CV No. 61798.

Factual Antecedents

On November 14, 1995, Shandong Weifang Soda Ash Plant shipped on board the vessel MV
"Jinlian I" 60,000 plastic bags of soda ash dense (each bag weighing 50 kilograms) from China to
Manila.4 The shipment, with an invoice value of US$456,000.00, was insured with respondent
Malayan Insurance Company, Inc. under Marine Risk Note No. RN-0001-21430, and covered by
a Bill of Lading issued by Tianjin Navigation Company with Philippine Banking Corporation as the
consignee and Chemphil Albright and Wilson Corporation as the notify party. 5

On November 21, 1995, upon arrival of the vessel at Pier 9, South Harbor, Manila, 6 the
stevedores of petitioner Asian Terminals, Inc., a duly registered domestic corporation engaged in
providing arrastre and stevedoring services,7 unloaded the 60,000 bags of soda ash dense from
the vessel and brought them to the open storage area of petitioner for temporary storage and
safekeeping, pending clearance from the Bureau of Customs and delivery to the
consignee.8 When the unloading of the bags was completed on November 28, 1995, 2,702 bags
were found to be in bad order condition.9

On November 29, 1995, the stevedores of petitioner began loading the bags in the trucks of MEC
Customs Brokerage for transport and delivery to the consignee. 10 On December 28, 1995, after
all the bags were unloaded in the warehouses of the consignee, a total of 2,881 bags were in
bad order condition due to spillage, caking, and hardening of the contents. 11

On April 19, 1996, respondent, as insurer, paid the value of the lost/ damaged cargoes to the
consignee in the amount of ₱643,600.25.12

Ruling of the Regional Trial Court

On November 20, 1996, respondent, as subrogee of the consignee, filed before the Regional
Trial Court (RTC) of Manila, Branch 35, a Complaint 13 for damages against petitioner, the shipper
Inchcape Shipping Services, and the cargo broker MEC Customs Brokerage. 14
After the filing of the Answers,15 trial ensued.

On June 26, 1998, the RTC rendered a Decision16 finding petitioner liable for the damage/loss
sustained by the shipment but absolving the other defendants. The RTC found that the proximate
cause of the damage/loss was the negligence of petitioner’s stevedores who handled the
unloading of the cargoes from the vessel.17 The RTC emphasized that despite the admonitions of
Marine Cargo Surveyors Edgar Liceralde and Redentor Antonio not to use steel hooks in
retrieving and picking-up the bags, petitioner’s stevedores continued to use such tools, which
pierced the bags and caused the spillage. 18 The RTC, thus, ruled that petitioner, as employer, is
liable for the acts and omissions of its stevedores under Articles 2176 19 and 2180 paragraph
(4)20 of the Civil Code.21 Hence, the dispositive portion of the Decision reads:

WHEREFORE, judgment is rendered ordering defendant Asian Terminal, Inc. to pay plaintiff
Malayan Insurance Company, Inc. the sum of ₱643,600.25 plus interest thereon at legal rate
computed from November 20, 1996, the date the Complaint was filed, until the principal
obligation is fully paid, and the costs.

The complaint of the plaintiff against defendants Inchcape Shipping Services and MEC Customs
Brokerage, and the counterclaims of said defendants against the plaintiff are dismissed.

SO ORDERED.22

Ruling of the Court of Appeals

Aggrieved, petitioner appealed23 to the CA but the appeal was denied. In its July 14, 2005
Decision, the CA agreed with the RTC that the damage/loss was caused by the negligence of
petitioner’s stevedores in handling and storing the subject shipment. 24 The CA likewise rejected
petitioner’s assertion that it received the subject shipment in bad order condition as this was
belied by Marine Cargo Surveyors Redentor Antonio and Edgar Liceralde, who both testified that
the actual counting of bad order bags was done only after all the bags were unloaded from the
vessel and that the Turn Over Survey of Bad Order Cargoes (TOSBOC) upon which petitioner
anchors its defense was prepared only on November 28, 1995 or after the unloading of the bags
was completed.25 Thus, the CA disposed of the appeal as follows:

WHEREFORE, premises considered, the appeal is DENIED. The assailed Decision dated June
26, 1998 of the Regional Trial Court of Manila, Branch 35, in Civil Case No. 96-80945 is
hereby AFFIRMED in all respects.

SO ORDERED.26

Petitioner moved for reconsideration27 but the CA denied the same in a Resolution28 dated

February 14, 2006 for lack of merit.

Issues

Hence, the present recourse, petitioner contending that:

1. RESPONDENT-INSURER IS NOT ENTITLED TO THE RELIEF GRANTED AS IT

FAILED TO ESTABLISH ITS CAUSE OF ACTION AGAINST HEREIN PETITIONER
SINCE, AS THE ALLEGED SUBROGEE, IT NEVER PRESENTED ANY VALID,
EXISTING, ENFORCEABLE INSURANCE POLICY OR ANY COPY THEREOF IN
COURT.
 2. THE HONORABLE COURT OF APPEALS ERRED WHEN IT OVERLOOKED THE
FACT THAT THE TOSBOC & RESBOC WERE ADOPTED AS COMMON EXHIBITS BY
BOTH PETITIONER AND RESPONDENT.

3. CONTRARY TO TESTIMONIAL EVIDENCE ON RECORD, VARIOUS

DOCUMENTATIONS WOULD POINT TO THE VESSEL’S LIABILITY AS THERE IS, IN
THIS INSTANT CASE, AN OVERWHELMING DOCUMENTARY EVIDENCE TO PROVE
THAT THE DAMAGE IN QUESTION WERE SUSTAINED WHEN THE SHIPMENT WAS
IN THE CUSTODY OF THE VESSEL.

4. THE HONORABLE COURT OF APPEALS ERRED WHEN IT ADJUDGED HEREIN

DEFENDANT LIABLE DUE TO [THE] FACT THAT THE TURN OVER SURVEY OF BAD
ORDER CARGOES (TOSBOC) WAS PREPARED ONLY AFTER THE COMPLETION
OF THE DISCHARGING OPERATIONS OR ON NOVEMBER 28, 1995. THUS,
CONCLUDING THAT DAMAGE TO THE CARGOES WAS DUE TO THE IMPROPER
HANDLING THEREOF BY ATI STEVEDORES.

5. THE HONORABLE COURT OF APPEALS ERRED IN NOT TAKING JUDICIAL

NOTICE OF THE CONTRACT FOR CARGO HANDLING SERVICES BETWEEN PPA
AND ATI AND APPLYING THE PERTINENT PROVISIONS THEREOF AS REGARDS
ATI’S LIABILITY.29

In sum, the issues are: (1) whether the non-presentation of the insurance contract or
policy is fatal to respondent’s cause of action; (2) whether the proximate cause of the
damage/loss to the shipment was the negligence of petitioner’s stevedores; and (3)
whether the court can take judicial notice of the Management Contract between petitioner
and the Philippine Ports Authority (PPA) in determining petitioner’s liability.

Petitioner’s Arguments

Petitioner contends that respondent has no cause of action because it failed to present the
insurance contract or policy covering the subject shipment. 30 Petitioner argues that the
Subrogation Receipt presented by respondent is not sufficient to prove that the subject shipment
was insured and that respondent was validly subrogated to the rights of the consignee. 31 Thus,
petitioner submits that without proof of a valid subrogation, respondent is not entitled to any
reimbursement.32

Petitioner likewise puts in issue the finding of the RTC, which was affirmed by the CA, that the
proximate cause of the damage/loss to the shipment was the negligence of petitioner’s
stevedores.33 Petitioner avers that such finding is contrary to the documentary evidence, i.e., the
TOSBOC, the Request for Bad Order Survey (RESBOC) and the Report of Survey. 34 According
to petitioner, these documents prove that it received the subject shipment in bad order condition
and that no additional damage was sustained by the subject shipment under its
custody.35 Petitioner asserts that although the TOSBOC was prepared only after all the bags
were unloaded by petitioner’s stevedores, this does not mean that the damage/loss was caused
by its stevedores.36

Petitioner also claims that the amount of damages should not be more than ₱5,000.00, pursuant
to its Management Contract for cargo handling services with the PPA.37 Petitioner contends that
the CA should have taken judicial notice of the said contract since it is an official act of an
executive department subject to judicial cognizance. 38

Respondent’s Arguments

Respondent, on the other hand, argues that the non-presentation of the insurance contract or
policy was not raised in the trial court. Thus, it cannot be raised for the first time on
appeal.39 Respondent likewise contends that under prevailing jurisprudence, presentation of the
insurance policy is not indispensable.40 Moreover, with or without the insurance contract or policy,
respondent claims that it should be allowed to recover under Article 1236 41 of the Civil
Code.42 Respondent further avers that "the right of subrogation has its roots in equity - it is
designed to promote and to accomplish justice and is the mode which equity adopts to compel
the ultimate payment of a debt by one who in justice, equity and good conscience ought to pay." 43

Respondent likewise maintains that the RTC and the CA correctly found that the damage/loss
sustained by the subject shipment was caused by the negligent acts of petitioner’s
stevedores.44 Such factual findings of the RTC, affirmed by the CA, are conclusive and should no
longer be disturbed.45 In fact, under Section 146 of Rule 45 of the Rules of Court, only questions of
law may be raised in a petition for review on certiorari. 47

As to the Management Contract for cargo handling services, respondent contends that this is
outside the operation of judicial notice. 48 And even if it is not, petitioner’s liability cannot be limited
by it since it is a contract of adhesion. 49

Our Ruling

The petition is bereft of merit.

Non-presentation of the insurance contract or policy is not fatal in the instant case

Petitioner claims that respondent’s non-presentation of the insurance contract or policy between
the respondent and the consignee is fatal to its cause of action.

We do not agree.

First of all, this was never raised as an issue before the RTC. In fact, it is not among the issues
agreed upon by the parties to be resolved during the pre-trial. 50 As we have said, "the
determination of issues during the pre-trial conference bars the consideration of other questions,
whether during trial or on appeal."51 Thus, "[t]he parties must disclose during pre-trial all issues
they intend to raise during the trial, except those involving privileged or impeaching matters. x x x
The basis of the rule is simple. Petitioners are bound by the delimitation of the issues during the
pre-trial because they themselves agreed to the same." 52

Neither was this issue raised on appeal. 53 Basic is the rule that "issues or grounds not raised
below cannot be resolved on review by the Supreme Court, for to allow the parties to raise new
issues is antithetical to the sporting idea of fair play, justice and due process." 54

Besides, non-presentation of the insurance contract or policy is not

necessarily fatal.55 In Delsan Transport Lines, Inc. v. Court of Appeals, 56 we ruled that:

Anent the second issue, it is our view and so hold that the presentation in evidence of the marine
insurance policy is not indispensable in this case before the insurer may recover from the
common carrier the insured value of the lost cargo in the exercise of its subrogatory right. The
subrogation receipt, by itself, is sufficient to establish not only the relationship of herein private
respondent as insurer and Caltex, as the assured shipper of the lost cargo of industrial fuel oil,
but also the amount paid to settle the insurance claim. The right of subrogation accrues simply
upon payment by the insurance company of the insurance claim.

The presentation of the insurance policy was necessary in the case of Home Insurance
Corporation v. CA (a case cited by petitioner) because the shipment therein (hydraulic engines)
passed through several stages with different parties involved in each stage. First, from the
shipper to the port of departure; second, from the port of departure to the M/S Oriental
Statesman; third, from the M/S Oriental Statesman to the M/S Pacific Conveyor; fourth, from the
M/S Pacific Conveyor to the port of arrival; fifth, from the port of arrival to the arrastre operator;
sixth, from the arrastre operator to the hauler, Mabuhay Brokerage Co., Inc. (private respondent
therein); and lastly, from the hauler to the consignee. We emphasized in that case that in the
absence of proof of stipulations to the contrary, the hauler can be liable only for any damage that
occurred from the time it received the cargo until it finally delivered it to the consignee. Ordinarily,
it cannot be held responsible for the handling of the cargo before it actually received it. The
insurance contract, which was not presented in evidence in that case would have indicated the
scope of the insurer’s liability, if any, since no evidence was adduced indicating at what stage in
the handling process the damage to the cargo was sustained. 57 (Emphasis supplied.)

In International Container Terminal Services, Inc. v. FGU Insurance Corporation, 58 we used the
same line of reasoning in upholding the Decision of the CA finding the arrastre contractor liable
for the lost shipment despite the failure of the insurance company to offer in evidence the
insurance contract or policy. We explained:

Indeed, jurisprudence has it that the marine insurance policy needs to be presented in evidence
before the trial court or even belatedly before the appellate court. In Malayan Insurance Co., Inc.
v. Regis Brokerage Corp., the Court stated that the presentation of the marine insurance policy
was necessary, as the issues raised therein arose from the very existence of an insurance
contract between Malayan Insurance and its consignee, ABB Koppel, even prior to the loss of the
shipment. In Wallem Philippines Shipping, Inc. v. Prudential Guarantee and Assurance, Inc., the
Court ruled that the insurance contract must be presented in evidence in order to determine the
extent of the coverage. This was also the ruling of the Court in Home Insurance Corporation v.
Court of Appeals.

However, as in every general rule, there are admitted exceptions. In Delsan Transport Lines, Inc.
v. Court of Appeals, the Court stated that the presentation of the insurance policy was not fatal
because the loss of the cargo undoubtedly occurred while on board the petitioner’s vessel, unlike
in Home Insurance in which the cargo passed through several stages with different parties and it
could not be determined when the damage to the cargo occurred, such that the insurer should be
liable for it.

As in Delsan, there is no doubt that the loss of the cargo in the present case occurred while in
petitioner’s custody. Moreover, there is no issue as regards the provisions of Marine Open Policy
No. MOP-12763, such that the presentation of the contract itself is necessary for perusal, not to
mention that its existence was already admitted by petitioner in open court. And even though it
was not offered in evidence, it still can be considered by the court as long as they have been
properly identified by testimony duly recorded and they have themselves been incorporated in
the records of the case.59

Similarly, in this case, the presentation of the insurance contract or policy was not necessary.
Although petitioner objected to the admission of the Subrogation Receipt in its Comment to
respondent’s formal offer of evidence on the ground that respondent failed to present the
insurance contract or policy,60 a perusal of petitioner’s Answer61 and Pre-Trial Brief62 shows that
petitioner never questioned respondent’s right to subrogation, nor did it dispute the coverage of
the insurance contract or policy. Since there was no issue regarding the validity of the insurance
contract or policy, or any provision thereof, respondent had no reason to present the insurance
contract or policy as evidence during the trial.

Factual findings of the CA, affirming the RTC, are conclusive and binding

Petitioner’s attempt to absolve itself from liability must likewise fail.

Only questions of law are allowed in petitions for review on certiorari under Rule 45 of the Rules
of Court. Thus, it is not our duty "to review, examine, and evaluate or weigh all over again the
probative value of the evidence presented," 63 especially where the findings of both the trial court
and the appellate court coincide on the matter. 64 As we have often said, factual findings of the CA
affirming those of the RTC are conclusive and binding, except in the following cases: "(1) when
the inference made is manifestly mistaken, absurd or impossible; (2) when there is grave abuse
of discretion; (3) when the findings are grounded entirely on speculations, surmises or
conjectures; (4) when the judgment of the [CA] is based on misapprehension of facts; (5) when
the [CA], in making its findings, went beyond the issues of the case and the same is contrary to
the admissions of both appellant and appellee; (6) when the findings of fact are conclusions
without citation of specific evidence on which they are based; (7) when the [CA] manifestly
overlooked certain relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion; and (8) when the findings of fact of the [CA] are premised on
the absence of evidence and are contradicted by the evidence on record." 65 None of these are
availing in the present case.

Both the RTC and the CA found the negligence of petitioner’s stevedores to be the proximate
cause of the damage/loss to the shipment. In disregarding the contention of petitioner that such
finding is contrary to the documentary evidence, the CA had this to say:

ATI, however, contends that the finding of the trial court was contrary to the documentary
evidence of record, particularly, the Turn Over Survey of Bad Order Cargoes dated November
28, 1995, which was executed prior to the turn-over of the cargo by the carrier to the arrastre
operator ATI, and which showed that the shipment already contained 2,702 damaged bags.

We are not persuaded.

Contrary to ATI’s assertion, witness Redentor Antonio, marine cargo surveyor of Inchcape for
the vessel Jinlian I which arrived on November 21, 1995 and up to completion of discharging on
November 28, 1995, testified that it was only after all the bags were unloaded from the
vessel that the actual counting of bad order bags was made, thus:

xxxx

The above testimony of Redentor Antonio was corroborated by Edgar Liceralde, marine

cargo surveyor connected with SMS Average Surveyors and Adjusters, Inc., the company
requested by consignee Chemphil Albright and Wilson Corporation to provide superintendence,
report the condition and determine the final outturn of quantity/weight of the subject shipment. x x
x

xxxx

Defendant-appellant ATI, for its part, presented its claim officer as witness who testified that a
survey was conducted by the shipping company and ATI before the shipment was turned over to
the possession of ATI and that the Turn Over Survey of Bad Order Cargoes was prepared by
ATI’s Bad Order (BO) Inspector.

Considering that the shipment arrived on November 21, 1998 and the unloading operation
commenced on said date and was completed on November 26, 1998, while the Turn Over
Survey of Bad Order Cargoes, reflecting a figure of 2,702 damaged bags, was prepared
and signed on November 28, 1998 by ATI’s BO Inspector and co-signed by a representative of
the shipping company, the trial court’s finding that the damage to the cargoes was due to
the improper handling thereof by ATI’s stevedores cannot be said to be without
substantial support from the records.
We thus see no cogent reason to depart from the ruling of the trial court that ATI should be made
liable for the 2,702 bags of damaged shipment. Needless to state, it is hornbook doctrine that the
assessment of witnesses and their testimonies is a matter best undertaken by the trial court,
which had the opportunity to observe the demeanor, conduct or attitude of the witnesses. The
findings of the trial court on this point are accorded great respect and will not be reversed on
appeal, unless it overlooked substantial facts and circumstances which, if considered, would
materially affect the result of the case.

We also find ATI liable for the additional 179 damaged bags discovered upon delivery of the
shipment at the consignee’s warehouse in Pasig. The final Report of Survey executed by SMS
Average Surveyors & Adjusters, Inc., and independent surveyor hired by the consignee, shows
that the subject shipment incurred a total of 2881 damaged bags.

The Report states that the withdrawal and delivery of the shipment took about ninety-five (95)
trips from November 29, 1995 to December 28, 1995 and it was upon completion of the delivery
to consignee’s warehouse where the final count of 2881 damaged bags was made. The damage
consisted of torn/bad order condition of the bags due to spillages and caked/hardened portions.

We agree with the trial court that the damage to the shipment was caused by the negligence of
ATI’s stevedores and for which ATI is liable under Articles 2180 and 2176 of the Civil Code. The
proximate cause of the damage (i.e., torn bags, spillage of contents and caked/hardened
portions of the contents) was the improper handling of the cargoes by ATI’s stevedores, x x x

xxxx

ATI has not satisfactorily rebutted plaintiff-appellee’s evidence on the negligence of ATI’s
stevedores in the handling and safekeeping of the cargoes. x x x

xxxx

We find no reason to disagree with the trial court’s conclusion. Indeed, from the nature of the
[damage] caused to the shipment, i.e., torn bags, spillage of contents and hardened or caked
portions of the contents, it is not difficult to see that the damage caused was due to the
negligence of ATI’s stevedores who used steel hooks to retrieve the bags from the higher
portions of the piles thereby piercing the bags and spilling their contents, and who piled the bags
in the open storage area of ATI with insufficient cover thereby exposing them to the elements
and [causing] the contents to cake or harden.66

Clearly, the finding of negligence on the part of petitioner’s stevedores is supported by both
testimonial and documentary evidence. Hence, we see no reason to disturb the same.

Judicial notice does not apply

Finally, petitioner implores us to take judicial notice of Section 7.01, 67 Article VII of the
Management Contract for cargo handling services it entered with the PPA, which limits
petitioner’s liability to ₱5,000.00 per package.

Unfortunately for the petitioner, it cannot avail of judicial notice.

Sections 1 and 2 of Rule 129 of the Rules of Court provide that:

SECTION 1. Judicial notice, when mandatory. — A court shall take judicial notice, without the
introduction of evidence, of the existence and territorial extent of states, their political history,
forms of government and symbols of nationality, the law of nations, the admiralty and maritime
courts of the world and their seals, the political constitution and history of the Philippines, the
official acts of the legislative, executive and judicial departments of the Philippines, the laws of
nature, the measure of time, and the geographical divisions. 1avvphi1

SEC. 2. Judicial notice, when discretionary. — A court may take judicial notice of matters which
are of public knowledge, or are capable of unquestionable demonstration or ought to be known
to judges because of their judicial functions.

The Management Contract entered into by petitioner and the PPA is clearly not among the
matters which the courts can take judicial notice of. It cannot be considered an official act of the
executive department. The PPA, which was created by virtue of Presidential Decree No. 857, as
amended,68 is a government-owned and controlled corporation in charge of administering the
ports in the country.69 Obviously, the PPA was only performing a proprietary function when it
entered into a Management Contract with petitioner. As such, judicial notice cannot be applied.

WHEREFORE, the petition is hereby DENIED. The assailed July 14, 2005 Decision and the
February 14, 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 61798 are hereby
AFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

WE CONCUR:
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 186045               February 2, 2011

MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY, Petitioner,

vs.
Heirs of ESTANISLAO MIñOZA, namely: The Heirs of FILOMENO T. MIñOZA, represented
by LAUREANO M. MIñOZA; The Heirs of PEDRO T. MIñOZA; and The HEIRS of
FLORENCIA T. MIñOZA, represented by ANTONIO M. URBIZTONDO, Respondents.

DECISION

PERALTA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the Decision 1 dated
March 25, 2008 of the Court of Appeals (CA) in CA-G.R. CV No. 70429, and the
Resolution2 dated January 8, 2009 denying petitioner’s motion for reconsideration.

The procedural and factual antecedents, as found by the CA, are as follows:

On July 6, 1998, a Complaint3 for Reconveyance, Cancellation of Defendant’s Title, Issuance of

New Title to Plaintiffs and Damages was filed by Leila M. Hermosisima (Leila) for herself and on
behalf of the other heirs of the late Estanislao Miñoza. The complaint alleged that Leila’s late
great grandfather, Estanislao Miñoza, was the registered owner of Cadastral Lot Nos. 986 and
991-A, located at Banilad Estate, Cebu City, per TCT Nos. RT-6101 (T-10534) and RT-6102
(T10026). It was, likewise, alleged that the late Estanislao Miñoza had three children, namely,
Adriana, Patricio, and Santiago, all surnamed Miñoza. In the late 1940s, the National Airports
Corporation (NAC) embarked in an expansion project of the Lahug Airport. For said purpose, the
NAC acquired several properties which surrounded the airport either through negotiated sale or
through expropriation. Among the properties that were acquired by the NAC through a negotiated
sale were Lot Nos. 986 and 991-A.4

Leila claimed that their predecessors-in-interest, specifically, Adriana, Patricio, and Santiago
executed a Deed of Sale on February 15, 1950 conveying the subject lots to the NAC on the
assurance made by the latter that they (Leila’s predecessors-in-interest) can buy the properties
back if the lots are no longer needed. Consequently, they sold Lot No. 986 to the NAC for only
₱157.20 and Lot No. 991-A for ₱105.40. However, the expansion project did not push through.
More than forty years after the sale, plaintiffs informed the NAC’s successor-in-interest, the
Mactan-Cebu International Airport Authority (MCIAA), that they were exercising the buy-back
option of the agreement, but the MCIAA refused to allow the repurchase on the ground that the
sale was in fact unconditional.

The MCIAA, through the Office of the Solicitor General (OSG), filed an Answer with
Counterclaim.

After the parties filed their respective pleadings, trial ensued.

On November 16, 1999, before the MCIAA could present evidence in support of its case, a
Motion for Intervention,5 with an attached Complainant-in-Intervention, was filed before the
Regional Trial Court (RTC) of Cebu City, Branch 22, by the heirs of Filomeno T. Miñoza,
represented by Laureano M. Miñoza; the heirs of Pedro T, Miñoza, represented by Leoncio J.
Miñoza; and the Heirs of Florencia T. Miñoza, represented by Antonio M. Urbiztondo
(Intervenors), who claimed to be the true, legal, and legitimate heirs of the late Estanislao
Miñoza. The intervenors alleged in their complaint (1) that the plaintiffs in the main case are not
related to the late spouses Estanislao Miñoza and Inocencia Togono whose true and legitimate
children were: Filomeno, Pedro, and Florencia, all surnamed Miñoza; (2) that, on January 21,
1958, Adriana, Patricio, and Santiago, executed, in fraud of the intervenors, an Extrajudicial
Settlement of the Estate of the late spouses Estanislao Miñoza and Inocencia Togono and
adjudicated unto themselves the estate of the deceased spouses; and (3) that, on February 15,
1958, the same Adriana, Patricio, and Santiago, fraudulently, deceitfully, and in bad faith, sold
Lot Nos. 986 and 991-A to the NAC. The intervenors thus prayed for the following reliefs:

a. Declaring herein intervenors as the true, legal and legitimate heirs of the late spouses
Estanislao Miñoza and Inocencia Togono;

b. Declaring herein intervenors as the true, rightful and registered owners of Lots 986 and
991-A of the Banilad Friar Lands Estate;

c. Declaring the Extrajudicial Settlement executed on January 21, 1958 by the late
Adriana Miñoza and the late Patricio Miñoza and the late Santiago Miñoza that they are
the only heirs of the late spouses Estanislao Miñoza and Inocencia Togono, who died
intestate and without any debts or obligations and adjudicating among themselves the
estate of the deceased x x x as void ab initio;

d. Declaring the sale of Lots 986 and 991-A of the Banilad Friar Lands Estate executed
by the late Adriana Miñoza, the late Patricio Miñoza and the late Santiago Miñoza in
favor of the National Airport Corporation on February 15, 1958 x x x as void ab initio;

e. Ordering the cancellation of Transfer Certificate of Title Nos. 120370 and 120372 for
Lots 986 and 991-A in the name of the Mactan-Cebu International Airport Authority and
restoring Transfer Certificate of Title Nos. RT-6101 (T-10534) and RT-6102 (T-10026) to
be the true and valid torrens titles to Lots 986 and 991-[A].

f. Condemning plaintiffs Leila M. Hermosisima and Constancio Miñoza to pay

intervenors, who are the true, lawful and legitimate heirs of the late Spouses Estanislao
Miñoza and Inocencia Togono, the amounts of ₱300,000.00 and ₱100,000.00 as moral
and exemplary damages respectively;

g. Condemning plaintiffs to pay the cost of suit.6

On February 18, 2000, the RTC of Cebu City, Branch 22, issued an Order 7 denying the Motion
for Intervention.

In denying the motion, the trial court opined that the ownership of the subject lots was merely a
collateral issue in the action. The principal issue to be resolved was whether or not the heirs of
the late Estanislao Miñoza – whoever they may be – have a right to repurchase the said lots from
the MCIAA. Consequently, the rights being claimed by the intervenors should be asserted in and
would be fully protected by a separate proceeding. Moreover, if the motion was granted, it would
unduly delay the proceedings in the instant case. Finally, the complaint-in-intervention was
flawed, considering that it was not verified and does not contain the requisite certification of non-
forum shopping.
The intervenors filed a Motion for Reconsideration, 8 to which was attached a Complaint-in-
Intervention with the required Verification and Certificate of Non-Forum Shopping. 9 However, the
RTC denied the motion in its Order dated July 25, 2000.

Aggrieved, the intervenors sought recourse before the CA, docketed as CA-G.R. CV No. 70429,
on the following assignment of errors:

I.

the court a quo in its order dated February 18, 2000 gravely erred in dismissing the
above captioned complaint based on the ground that: 1). The rights claimed by movants-
intervernors (now intervenors-appellants) would more appropriately be asserted in, and
would be fully protected by, a separate proceeding; 2). It (the complaint-in-intervention)
will delay the proceedings of the instant case; and 3). That the complaint-in-intervention
is not verified and does not contain the requisite certification of non-forum shopping.

II.

The court a quo in its order dated July 25, 2000 gravely erred when it denied movants-
intervenors’ (now intervenors-appellants) motion for reconsideration dated March 20,
2000, again on the ground that to allow the intervenors to intervene in this case which is
already submitted for decision would only delay the disposal of this case and that
anyway, the intervernors have nothing to fear because their claims, if there is any, can be
well threshed out in another proceeding. 10

On March 25, 2008, the CA rendered the assailed Decision, the decretal portion of which
provides:

WHEREFORE, the appealed Orders dated February 18, 2000 and July 25, 2000 of the RTC of
Cebu City, in Civil Case No. 22290, are REVERSED and SET ASIDE. The RTC of Cebu City is
directed to resolve with deliberate dispatch Civil Case No. 22290 and to admit the complaint-in-
intervention filed by the intervenors-appellants.

SO ORDERED.11

In ruling for the intervenors, the CA ratiocinated that contrary to the findings of the trial court, the
determination of the true heirs of the late Estanislao Miñoza is not only a collateral, but the focal
issue of the case, for if the intervenors can prove that they are indeed the true heirs of Estanislao
Miñoza, there would be no more need to determine whether the right to buy back the subject lots
exists or not as the MCIAA would not have acquired rights to the subject lots in the first place. In
addition, to grant the motion for intervention would avoid multiplicity of suits. As to the lack of
verification and certification on non-forum shopping, the CA opined that the filing of the motion for
reconsideration with an appended complaint-in-intervention containing the required verification
and certificate of non-forum shopping amounted to substantial compliance of the Rules.

Petitioner then filed a motion for reconsideration, but it was denied in the Resolution dated
January 8, 2009.

Hence, the petition assigning the lone error that:

THE COURT OF APPEALS (CEBU CITY) GRAVELY ERRED IN ALLOWING RESPONDENTS

TO INTERVENE IN CIVIL CASE NO. CEB-22290.12

Petitioner argues that to allow the intervenors to intervene in the proceedings before the trial
court would not only unduly prolong and delay the resolution of the case, it would make the
proceedings unnecessarily complicated and change the nature of the proceedings. Furthermore,
contrary to the requirements for the allowance of a motion for intervention, their legal interest in
the subject properties appear to be merely contingent or expectant and not of direct or immediate
character. Petitioner also posits that the intervenors’ rights can be better protected in another
proceeding.

Anent the lack of verification and certification on non-forum shopping, petitioner maintains that
the trial court was correct in denying the motion on this ground. In addition, even if the complaint-
in-intervention with the required verification and certificate of non-forum shopping was appended
to the intervenors’ motion for reconsideration, the complaint-in-intervention was not verified by all
the interested parties or all the heirs of Filomeno Miñoza, which still warrants its dismissal.

The petition is meritorious.

At the outset, on the procedural aspect, contrary to petitioner’s contention, the initial lack of the
complaint-in-intervention of the requisite verification and certification on non-forum shopping was
cured when the intervenors, in their motion for reconsideration of the order denying the motion to
intervene, appended a complaint-in-intervention containing the required verification and
certificate of non-forum shopping.

In the case of Altres v. Empleo, 13 this Court clarified, among other things, that as to verification,
non-compliance therewith or a defect therein does not necessarily render the pleading fatally
defective. The court may order its submission or correction, or act on the pleading if the attending
circumstances are such that strict compliance with the Rule may be dispensed with in order that
the ends of justice may be served thereby. Further, a verification is deemed substantially
complied with when one who has ample knowledge to swear to the truth of the allegations in the
complaint or petition signs the verification, and when matters alleged in the petition have been
made in good faith or are true and correct.14

Moreover, as to the certification against forum shopping, non-compliance therewith or a defect

therein, unlike in verification, is generally not curable by its subsequent submission or correction
thereof, unless there is a need to relax the Rules on the ground of "substantial compliance" or
presence of "special circumstances or compelling reasons." Also, the certification against forum
shopping must be signed by all the plaintiffs or petitioners in a case; otherwise, those who did not
sign will be dropped as parties to the case. Under reasonable or justifiable circumstances,
however, as when all the plaintiffs or petitioners share a common interest and invoke a common
cause of action or defense, the signature of only one of them in the certification against forum
shopping substantially complies with the Rule.15

Thus, considering that the intervenors in their motion for reconsideration, appended a complaint-
in-intervention with the required verification and certificate of non-forum shopping, the
requirement of the Rule was substantially complied with.

Notwithstanding the intervenors’ compliance with the procedural requirements, their attempt to
intervene is doomed to fail.

Intervention is a remedy by which a third party, not originally impleaded in the proceedings,
becomes a litigant therein to enable him, her or it to protect or preserve a right or interest which
may be affected by such proceedings.16 It is a proceeding in a suit or action by which a third
person is permitted by the court to make himself a party, either joining plaintiff in claiming what is
sought by the complaint, or uniting with defendant in resisting the claims of plaintiff, or
demanding something adversely to both of them; the act or proceeding by which a third person
becomes a party in a suit pending between others; the admission, by leave of court, of a person
not an original party to pending legal proceedings, by which such person becomes a party
thereto for the protection of some right of interest alleged by him to be affected by such
proceedings.17
Section 1, Rule 19 of the Rules of Court states:

SECTION 1. Who may intervene. — A person who has a legal interest in the matter in litigation,
or in the success of either of the parties, or an interest against both, or is so situated as to be
adversely affected by a distribution or other disposition of property in the custody of the court or
of an officer thereof may, with leave of court, be allowed to intervene in the action. The court
shall consider whether or not the intervention will unduly delay or prejudice the adjudication of
the rights of the original parties, and whether or not the intervenor’s rights may be fully protected
in a separate proceeding.

Under this Rule, intervention shall be allowed when a person has (1) a legal interest in the matter
in litigation; (2) or in the success of any of the parties; (3) or an interest against the parties; (4) or
when he is so situated as to be adversely affected by a distribution or disposition of property in
the custody of the court or an officer thereof.18 Moreover, the court must take into consideration
whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the
original parties, and whether or not the intervenor’s right or interest can be adequately pursued
and protected in a separate proceeding.

In the case at bar, the intervenors are claiming that they are the legitimate heirs of Estanislao
Miñoza and Inocencia Togono and not the original plaintiffs represented by Leila Hermosisima.
True, if their allegations were later proven to be valid claims, the intervenors would surely have a
legal interest in the matter in litigation. Nonetheless, this Court has ruled that the interest
contemplated by law must be actual, substantial, material, direct and immediate, and not simply
contingent or expectant. It must be of such direct and immediate character that the intervenor will
either gain or lose by the direct legal operation and effect of the judgment. 19 Otherwise, if persons
not parties to the action were allowed to intervene, proceedings would become unnecessarily
complicated, expensive and interminable. 20

Moreover, the intervenors’ contentions that Leila’s predecessors-in-interest executed, in fraud of

the intervenors, an extra judicial settlement of the estate of the late spouses Estanislao Miñoza
and Inocencia Togono and adjudicated unto themselves the estate of the deceased spouses,
and that subsequently, her predecessors-in-interest fraudulently and deceitfully sold the subject
lots to the NAC, would unnecessarily complicate and change the nature of the proceedings. 1avvphi1

In addition to resolving who the true and legitimate heirs of Estanislao Miñoza and Inocencia
Togono are, the parties would also present additional evidence in support of this new allegation
of fraud, deceit, and bad faith and resolve issues of conflicting claims of ownership, authenticity
of certificates of titles, and regularity in their acquisition. Verily, this would definitely cause unjust
delay in the adjudication of the rights claimed by the original parties, which primarily hinges only
on the issue of whether or not the heirs represented by Leila have a right to repurchase the
subject properties from the MCIAA.

Verily, the allegation of fraud and deceit is an independent controversy between the original
parties and the intervenors. In general, an independent controversy cannot be injected into a suit
by intervention, hence, such intervention will not be allowed where it would enlarge the issues in
the action and expand the scope of the remedies. It is not proper where there are certain facts
giving the intervenor’s case an aspect peculiar to himself and differentiating it clearly from that of
the original parties; the proper course is for the would-be intervenor to litigate his claim in a
separate suit.21 Intervention is not intended to change the nature and character of the action
itself, or to stop or delay the placid operation of the machinery of the trial. The remedy of
intervention is not proper where it will have the effect of retarding the principal suit or delaying the
trial of the action.22

To be sure, not only will the intervenors’ rights be fully protected in a separate proceeding, it
would best determine the rights of the parties in relation to the subject properties and the issue of
who the legitimate heirs of Estanislao Miñoza and Inocencia Togono, would be laid to rest.
Furthermore, the allowance or disallowance of a motion for intervention rests on the sound
discretion of the court after consideration of the appropriate circumstances. 23 It is not an absolute
right. The statutory rules or conditions for the right of intervention must be shown. The procedure
to secure the right to intervene is to a great extent fixed by the statute or rule, and intervention
can, as a rule, be secured only in accordance with the terms of the applicable provision. 24

Consequently, the denial of the motion to intervene by the RTC was but just and proper. The
conclusion of the RTC is not bereft of rational bases. It denied the motion to intervene in the
exercise of its sound discretion and after taking into consideration the particular circumstances of
the case.

WHEREFORE, subject to the above disquisition, the petition is GRANTED. The Decision dated
March 25, 2008 and the Resolution dated January 8, 2009, of the Court of Appeals in CA-G.R.
CV No. 70429, are REVERSED and SET ASIDE. The Orders of the Regional Trial Court of Cebu
City, Branch 22, dated February 18, 2000 and July 25, 2000, are REINSTATED.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

ANTONIO EDUARDO B. NACHURA ROBERTO A. ABAD

Associate Justice Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO
Associate Justice
Second Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation,
I certify that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA
Chief Justice
 FIRST DIVISION

G.R. No. 162692, August 26, 2015

NILO V. CHIPONGIAN, Petitioner, v. VICTORIA BENITEZ-LIRIO, FEODOR

BENITEZ AGUILAR, AND THE COURT OF APPEALS, Respondents.

DECISION

BERSAMIN, J.:

This appeal seeks the review and reversal of the decision promulgated on October
30, 2002,1 whereby the Court of Appeals (CA) dismissed the petition
for certiorari  that the petitioner had instituted to annul the dismissal by the trial
court of his complaint-in-intervention in Special Proceedings No. SP-797 entitled In
the matter of the Intestate Estate of Vicente O. Benitez, Petition for Letters of
Administration. Victoria Benitez Lirio and Feodor Benitez Aguilar, Petitioners.

Antecedents

The late Vicente Benitez was married to Isabel Chipongian, the petitioner's sister.
Isabel had predeceased Vicente, who died on November 13, 1989. The couple had
no offspring.2 On July 20, 1982, after the death of Isabel, Vicente and the petitioner
had executed a deed of extrajudicial settlement respecting the estate of Isabel,
whereby the latter waived all his rights to the estate of Isabel in favor of
Vicente.3 According to the petitioner, however, Vicente executed an affidavit on the
same date whereby he affirmed that the waiver did not extend to the paraphernal
properties of Isabel.4

Upon the death of Vicente, Victoria Benitez Lirio (Victoria), a sister of Vicente, and
Feodor Benitez Aguilar (Feodor), a nephew of Vicente, initiated proceedings for the
settlement of the estate of Vicente in the Regional Trial Court on September 24,
1990 (RTC).5 In its order dated May 13, 1994,6 the RTC appointed Feodor the
administrator of Vicente's estate. On May 20, 1994,7 it issued the letters of
administration to Feodor.

The petitioner intervened in Special Proceedings No. SP-797.8 On May 27, 1994, he
sought the partial revocation of the May 13, 1994 order in order to exclude the
paraphernal properties of Isabel from inclusion in the estate of Vicente.9 He cited the
affidavit of Vicente in support of the partial revocation.

Feodor countered with the request that he be allowed to continue to administer all
the properties left by Vicente, including the paraphernal properties of Isabel.10

On June 8, 1994, the petitioner specifically moved for the exclusion of the
paraphernal properties of Isabel from Vicente's estate. However, he withdrew the
motion even before the RTC could rule on it. Instead, he filed a Motion for Leave to
Intervene and to Admit Complaint-in-Intervention.11
Respondents Victoria and Feodor opposed the complaint-in-intervention.12

The RTC granted the Motion for Leave to Intervene and to Admit Complaint-in-
Intervention, and admitted the complaint-in-intervention of the petitioner.13

Judgment of the RTC

On August 21, 1998, the RTC rendered judgment dismissing the complaint-in-
intervention, and ordering the costs of suit to be paid by the petitioner,14 pertinently
holding: cralawlawlibrary

There is no dispute that the estate of the late Isabel Chipongian was extra-judicially
settled on July 20, 1982 by and between Vicente O. Benitez and Nilo V. Chipongian
and was published in the BAYANIHAN Weekly News on August 16, 23, and 30, 1982.
The herein intervenor actively participated in the execution of the extra-judicial
settlement of his sister's estate. As a matter of fact the intervenor therein "agreed x
x x x x x to quitclaim and waive all my rights to the estate left by my declared sister
Isabel Chipongian and I hereby adjudicated them in favor of my brother-in-law
Vicente O. Benitez" (Exh. 23-B)

Section 4, Rule 74 of the Rules, provides for a limitation of 2 years after the
settlement and distribution of an estate in accordance with either Section 1 or
Section 2 of the same Rule, within which an heir or other person deprived of his
lawful participation in the estate may compel the settlement of the said estate in the
Courts for the purpose of satisfying such lawful participation (Tinatan v. Serilla, 54
O.G. p. 6080 9/15/58). The intervenor took part and had knowledge of the extra-
judicial settlement of the estate and is therefore bound thereby. If he was indeed
deprived of his lawful share or right in his sister's estate, it comes as a surprise why
it took him more than 12 years assert the purported affidavit allegedly executed in
his favor by Vicente O. Benitez.

Careful note was taken of the fact that the purported affidavit of Vicente O. Benitez
in favor of the herein intervenor was executed simultaneously with the deed of
extra-judicial settlement of Isabel Chipongian's estate which was published but the
affidavit was not. No reason was advanced by the intervenor why Vicente O.
Benitez's affidavit was not published and why it was only after 12 long years that
intervenor brought it out.

It is well-settled that the negligence or omission to assert a right within a reasonable

time warrants not only a presumption that the party entitled to assert it either had
abandoned it or declined to assert it but also casts doubt on the validity of the claim
of ownership. Such neglect to assert a right taken in conjunction with the lapse of
time more or less great and other circumstances causing prejudice to the adverse
party operates as a bar in a Court of equity (Guerrero v. CA, 126 SCRA 109).

WHEREFORE, on the foregoing premises, the complaint in intervention is hereby

dismissed with costs. The petitioner's counterclaim is also dismissed.

SO ORDERED.15
chanrobleslaw

The petitioner moved for the reconsideration of the judgment,16 but the RTC denied
the Motion for Reconsideration on March 8, 1999.17
Thus, on March 19, 1999, the petitioner filed a notice of appeal.18

On March 30, 1999, the RTC denied due course to the notice of appeal for having
been filed beyond the reglementary period.19

On April 19, 1999, the petitioner filed a Motion for Reconsideration vis-a-vis the
order denying due course to his notice of appeal.20

On July 5, 1999, the RTC issued its order whereby it conceded that the petitioner
had timely filed the notice of appeal, but still denied the Motion for
Reconsideration  on the ground that he had not perfected his appeal because of his
failure to pay the appellate court docket fees.21

On July 26, 1999, the petitioner brought his Motion to Set Aside  the July 5, 1999
order denying his Motion for Reconsideration.22

On August 13, 1999, the RTC denied the Motion to Set Aside.23

Decision of the CA

On October 26, 1999, the petitioner instituted his petition for certiorari in the
CA,24 alleging that the RTC had committed grave abuse of discretion amounting to
lack or excess of jurisdiction in dismissing his appeal, and denying his Motion for
Reconsideration. He averred that on March 19, 1999, he filed the notice of
appeal;25 that he paid the appellate court docket fees on March 31, 1999;26 that the
RTC denied due course to the notice of appeal on the ground that it had been filed
beyond the reglementary period; that he thus filed his Motion for Reconsideration
against the order denying due course;27 that on July 5, 1999, the RTC issued its
order whereby it conceded that the petitioner had timely filed the notice of appeal,
but still denied the Motion for Reconsideration on the ground that he had not
perfected his appeal because of his failure to pay the appellate court docket
fees;28 that he filed his Motion to Set Aside Order, appending thereto the copies of
the official receipts of the payment of the appellate court docket fees;29 that through
the order of August 13, 1999, the RTC still denied the Motion to Set Aside Order, a
copy of which order was received by his counsel on August 27, 1999;30 that his last
day to bring the special civil action for certiorari was on October 26 1999, the
60th day from such date; and that there was no appeal, or any plain, speedy and
adequate remedy in the ordinary course of law.31

On October 30, 2002, the CA dismissed the petition for certiorari,32 opining thusly: cralawlawlibrary

The Supreme Court has time and again stressed that the perfection of appeals in the
manner and within the period permitted by law is not only mandatory but
jurisdictional. The failure to perfect an appeal renders the decision of the trial court
final and executory. [Bank of America, NT & SA v. Gerochi, Jr., 230 SCRA 9 (1994)
citing Alto Sales Corp. v. IAC, 197 SCRA 618 (1991), Falcon Mfg. v. NLRC, 199 SCRA
814 (1991), Kabushin Kaisha Isetan v. IAC, 203 SCRA 583 (1991)]

This rule is founded upon the principle that the right to appeal is not part of due
process of law but is a mere statutory privilege to be exercised only in the manner
and in accordance with the provisions of the law. [Bello v. Fernando, 4 SCRA 135
(1962); Borre v. Court of Appeals, 158 SCRA 660 (1998); Pedrosa v. Hill, 257 SCRA
373 (1996); People v. Esparas, 260 SCRA 539 (1996)]
Petitioner paid the appeal fees only on March 31, 1999, but as admitted by him in
his Motion for Reconsideration (Rollo, p. 61), the last day to perfect his appeal was
on August 21, 1998. (Rollo, p. 68) In a long line of cases, the Supreme Court has
held that failure to comply with the requirement for payment on time of the appeal
fees renders the decision final. (Republic of the Philippines vs. Court of Appeals, 322
SCRA at 90; Pedrosa vs. Hill, 257 SCRA 373; Luna vs. NLRC, 270 SCRA 227) We see
no compelling reason to depart from this rule.

We find no further need to rule on the other assigned error. Suffice it to state that
the respondent court acted pursuant to law and established jurisprudence; hence,
did not commit any abuse of discretion.

WHEREFORE, for lack of merit, the petition is DISMISSED.

SO ORDERED.33
chanrobleslaw

On November 28, 2002, the petitioner sought reconsideration,34 but the CA denied

his Motion for Reconsideration on March 9, 2004.35

Issues

Hence, this appeal, whereby the petitioner contends that the CA gravely abused its
discretion in dismissing his petition for certiorari assailing the dismissal of his
complaint-in-intervention and the denial of due course to his notice of appeal by the
RTC on the ground of the late payment of the appellate court docket fees. He argues
that he should not be deprived of his right to appeal solely on the basis of the late
payment of the appellate court docket fees.36

In contrast, respondents Victoria and Feodor seek the denial of the petition for
review because the petitioner did not file a record on appeal,37 as mandated under
Section 2(a) Rule 41 of the Rules of Court.

In his reply to the respondents' comment,38 the petitioner submits: cralawlawlibrary

x x x It is to be noted that the appeal was from the decision of the trial court to
dismiss petitioner's complaint-in-intervention and not 'the final order or judgment
rendered in the case', obviously referring to the main case, that is, the intestate
estate case. Since the intervention was not an independent proceeding but only
ancillary or supplemental to the main case, the rule on multiple appeals does not
apply and the filing of a record on appeal is not a pre-requisite to the acceptance
and consideration of the appeal by the appellate court.
chanrobleslaw

Ruling of the Court

The appeal lacks merit.

Intervention is "a remedy by which a third party, not originally impleaded in the
proceedings, becomes a litigant therein to enable him, her or it to protect or
preserve a right or interest which may be affected by such proceedings."39 If an
intervention makes a third party a litigant in the main proceedings, his pleading-in-
intervention should form part of the main case.  Accordingly, when the petitioner
intervened in Special Proceedings No. SP-797, his complaint-in-intervention, once
admitted by the RTC, became part of the main case, rendering any final disposition
thereof subject to the rules specifically applicable to special proceedings, including
Rule 109 of the Rules of Court, which deals with appeals in special proceedings.

Section 1 of Rule 41 enunciates the final judgment  rule by providing that an appeal

"may be taken from a judgment or final order that completely disposes of the case,
or of a particular matter therein when declared by these Rules to be appealable." In
the context of the final judgment rule, Section 1 of Rule 109 does not limit the
appealable orders and judgments in special proceedings to the final order or
judgment rendered in the main case, but extends the remedy of appeal to other
orders or dispositions that completely determine a particular matter in the case, to
wit:cralawlawlibrary

Rule 109. - Appeals in Special Proceedings

Section 1. Orders or judgments from which appeals may be taken.  - An interested

person may appeal in special proceedings from an order or judgment rendered by a
Court of First Instance or a Juvenile and Domestic Relations Court, where such order
or judgment: chanRoblesvirtualLawlibrary

(a) Allows or disallows a will; ChanRoblesVirtualawlibrary

(b) Determines who are the lawful heirs of a deceased person, or the distributive
share of the estate to which such person is entitled; ChanRoblesVirtualawlibrary

(c) Allows or disallows, in whole or in part, any claim against the estate of a
deceased person, or any claim presented on behalf of the estate in offset to
a claim against it;

(d) Settles the account of an executor, administrator, trustee or guardian; ChanRoblesVirtualawlibrary

(e)  Constitutes, in proceedings relating to the settlement of the estate of a

deceased person, or the administration of a trustee or guardian, a final
determination in the lower court of the rights of the party appealing, except
that no appeal shall be allowed from the appointment of a special
administrator; and

(f) Is the final order or judgment rendered in the case, and affects the substantial
rights of the person appealing, unless it be an order granting or denying a motion
for a new trial or for reconsideration. chanrobleslaw

The dismissal of the petitioner's intervention constituted "a final determination in the
lower court of the rights of the party appealing," that is, his right in the paraphernal
properties of his deceased sister. As such, it fell under paragraph (c) of Section
1, supra, because it had the effect of disallowing his claim against the estate of
Vicente, as well as under paragraph (e) of Section 1, supra, because it was a final
determination in the trial court of his intervention. Conformably with either or both
paragraphs, which are boldly underscored above for easier reference, the dismissal
was the proper subject of an appeal in due course by virtue of its nature of
completely disposing of his intervention.

The proper mode of appealing a judgment or final order in special proceedings is by

notice of appeal and record on appeal. This is pursuant to Section 2(a), Rule 41 of
the Rules of Court, viz.:cralawlawlibrary

Section 2. Modes of appeal. -

(a) Ordinary appeal. - The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing
a notice of appeal with the court which rendered the judgment or final order
appealed from and serving a copy thereof upon the adverse party. No record on
appeal shall be required except in special proceedings and other cases of
multiple or separate appeals where the law or these Rules so require. In
such cases, the record on appeal shall be filed and served in like manner.

xxxx
chanrobleslaw

Under Section 3 of Rule 41, a party who wants to appeal a judgment or final order in
special proceedings has 30 days from notice of the judgment or final order within
which to perfect an appeal because he will be filing not only a notice of appeal but
also a record on appeal that will require the approval of the trial court with notice to
the adverse party, to wit: cralawlawlibrary

Section 3. Period of ordinary appeal. - The appeal shall be taken within fifteen (15)
days from notice of the judgment or final order appealed from. Where a record on
appeal is required, the appellant shall file a notice of appeal and a record on
appeal within thirty (30) days from notice of judgment or final
order. However, an appeal in habeas corpus cases shall be taken within forty-eight
(48) hours from notice of the judgment or fmal order appealed from.

The period of appeal shall be interrupted by a timely motion for new trial or
reconsideration. No motion for extension of time to file a motion for new trial or
reconsideration shall be allowed, (n) (bold emphasis supplied) chanrobleslaw

For the petitioner, therefore, the period for perfecting the appeal by record on
appeal was 30 days from notice of the final order dismissing the intervention. The
start of the period of 30 days happened on September 18, 1998, the date when his
counsel received the decision dismissing his intervention. However, the entire time
from the filing of his Motion for Reconsideration on October 2, 1998 until his receipt
of the denial of the Motion for Reconsideration  on March 18, 1999 should be
deducted from the reckoning of the period to perfect his appeal. He filed the notice
of appeal on March 19, 1999, and paid the appellate court docket fees on March 31,
1999.40 Initially, the RTC denied due course to the notice of appeal on the ground
that it had been filed beyond the reglementary period; hence, the petitioner filed
his Motion for Reconsideration against the order denying due course.41 On July 5,
1999, the RTC issued its order whereby it conceded that the petitioner had timely
filed the notice of appeal, but still denied the Motion for Reconsideration on the
ground that he had not perfected his appeal because of his failure to pay the
appellate court docket fees.42 Hence, he filed a Motion to Set Aside Order, to which
he appended the copies of the official receipts of the payment of the appellate court
docket fees.43 Nonetheless, on August 13, 1999, the RTC denied the Motion to Set
Aside Order, and a copy of the order of denial was received by his counsel on August
27, 1999.44
In Lebin v. Mirasol,45 the Court has discussed the justification for requiring the
record on appeal in appeals in special proceedings, viz.: cralawlawlibrary

The changes and clarifications recognize that appeal is neither a natural nor a
constitutional right, but merely statutory, and the implication of its statutory
character is that the party who intends to appeal must always comply with the
procedures and rules governing appeals, or else the right of appeal may be lost or
squandered.

As the foregoing rules further indicate, a judgment or final order in special

proceedings is appealed by record on appeal. A judgment or final order determining
and terminating a particular part is usually appealable, because it completely
disposes of a particular matter in the proceeding, unless otherwise declared by the
Rules of Court. The ostensible reason for requiring a record on appeal instead of only
a notice of appeal is the multipart nature of nearly all special proceedings, with each
part susceptible of being finally determined and terminated independently of the
other parts. An appeal by notice of appeal is a mode that envisions the elevation of
the original records to the appellate court as to thereby obstruct the trial court in its
further proceedings regarding the other parts of the case. In contrast, the record on
appeal enables the trial court to continue with the rest of the case because the
original records remain with the trial court even as it affords to the appellate court
the full opportunity to review and decide the appealed matter.

xxxx

The elimination of the record on appeal under Batas Pambansa Blg. 129  made
feasible the shortening of the period of appeal from the original 30 days to only 15
days from notice of the judgment or final order. Section 3, Rule 41 of the Rules of
Court, retains the original 30 days as the period for perfecting the appeal by record
on appeal to take into consideration the need for the trial court to approve the
record on appeal. Within that 30-day period a party aggrieved by a judgment or final
order issued in special proceedings should perfect an appeal by filing both a notice of
appeal and a record on appeal in the trial court, serving a copy of the notice of
appeal and a record on appeal upon the adverse party within the period; in addition,
the appealing party shall pay within the period for taking an appeal to the clerk of
court that rendered the appealed judgment or final order the full amount of the
appellate court docket and other lawful fees. A violation of these requirements for
the timely perfection of an appeal by record on appeal, or the non-payment of the
full amount of the appellate court docket and other lawful fees to the clerk of the
trial court may be a ground for the dismissal of the appeal.46 chanrobleslaw

Considering that the petitioner did not submit a record on appeal in accordance with
Section 3 of Rule 41, he did not perfect his appeal of the judgment dismissing his
intervention. As a result, the dismissal became final and immutable. He now has no
one to blame but himself. The right to appeal, being statutory in nature, required
strict compliance with the rules regulating the exercise of the right. As such, his
perfection of his appeal within the prescribed period was mandatory and
jurisdictional, and his failure to perfect the appeal within the prescribed time
rendered the judgment final and beyond review on appeal. Indeed, we have fittingly
pronounced in Lebin v. Mirasol: cralawlawlibrary

In like manner, the perfection of an appeal within the period laid down by law is
mandatory and jurisdictional, because the failure to perfect the appeal within the
time prescribed by the Rules of Court causes the judgment or final order to become
final as to preclude the appellate court from acquiring the jurisdiction to review the
judgment or final order. The failure of the petitioners and their counsel to file the
record on appeal on time rendered the orders of the RTC final and unappealable.
Thereby, the appellate court lost the jurisdiction to review the challenged orders,
and the petitioners were precluded from assailing the orders.47 chanrobleslaw

In view of the foregoing, the petitioner lost his right to appeal through his failure to
file the record on appeal, and rendered the dismissal of his intervention final and
immutable. With this outcome, we no longer need to dwell on the denial of due
course to his notice of appeal because of the late payment of the appellate court
docket fees.

WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals

promulgated on October 30, 2002 subject to the foregoing clarification on the
correct justification for the dismissal of the appeal being upon the petitioner's failure
to perfect his appeal in accordance with Section 2(a) and Section 3 of Rule 41 of
the Rules of Court; and ORDERS the petitioner to pay the costs of suit.

SO ORDERED. chanroblesvirtuallawlibrary

Sereno, C.J., Leonardo-De Castro, Perez, and Perlas-B

 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 160280               March 13, 2009

SOFIA ANIOSA SALANDANAN, Petitioner,

vs.
SPOUSES MA. ISABEL and BAYANI MENDEZ, Respondents.*

DECISION

AUSTRIA-MARTINEZ, J.:

This refers to the Petition for Review on Certiorari of the June 27, 2003 Decision1 of the Court of
Appeals (CA) and its September 3, 2003 Resolution2 in CA-G.R. SP No. 76336 denying the
petition for clarification and intervention filed by Sofia Aniosa Salandanan (petitioner) and
affirming in toto the March 6, 2003 Decision of the Regional Trial Court (RTC) of Manila, Branch
30 in Civil Case No. 02-104406 which affirmed the August 9, 2002 Decision of the Metropolitan
Trial Court (MeTC) of Manila, Branch 15 in Civil Case No. 172530 ordering Delfin
Fernandez3 and Carmen Fernandez (Spouses Fernandez) and all persons claiming rights under
them to vacate and surrender possession of a house and lot located at 1881 Antipolo St., corner
Vision St., Sta. Cruz, Manila (subject lot) to Spouses Bayani Mendez and Ma. Isabel S. Mendez
(respondents) and to pay the latter monthly rental of ₱5,000.00 from January 29, 2002 until they
vacate the property and ₱15,000.00 as attorney’s fees.

The case stemmed from a complaint for ejectment instituted by respondents against Spouses
Fernandez before the MeTC on April 18, 2002.

In their Complaint,4 respondents alleged that they are the owners of the subject property as
evidenced by Transfer Certificate of Title No. 246767 of the Registry of Deeds of Manila; that
they became the owners thereof by virtue of a deed of donation; that Spouses Fernandez and
their families were occupying the subject property for free through the generosity of respondent
Isabel’s father; that a letter of demand to vacate the subject property was sent to Spouses
Fernandez but they refused to vacate the same; that respondents brought the matter to
the Barangay Lupon for possible settlement but the same failed.

In their Answer,5 Spouses Fernandez denied the allegations of the complaint and averred that
Spouses Pablo and Sofia Salandanan (Spouses Salandanan) are the registered owners of the
subject property and the improvements therein; that respondent Isabel is not a daughter of
Spouses Salandanan; that Delfin Fernandez (Delfin) is the nearest of kin of Pablo Salandanan
being the nephew of the latter; that Delfin has continuously occupied the said property since time
immemorial with the permission of Spouses Salandanan; that they did not receive any notice to
vacate the subject property either from respondents or their counsel.

Further, Spouses Fernandez claimed that respondents were able to transfer the subject property
to their name through fraud; that sometime in November 1999, respondents went to the house of
Spouses Salandanan in Dasmariñas, Cavite and asked the latter to sign a special power of
attorney; that the supposed special power of attorney was in fact a deed of donation wherein
Spouses Salandanan was alleged to have donated in favor of respondents the subject property;
that said deed of donation was simulated and fictitious and that by virtue of the alleged deed of
donation, respondent Isabel was able to transfer the title of the subject property in her name; that
in fact, the subject property is the subject of a separate case filed on July 31, 2001 before the
RTC of Manila docketed as Civil Case No. 01101487 6 for annulment, revocation and
reconveyance of title. By way of counterclaim, Spouses Fernandez prayed for moral damages
and attorney’s fees.

On August 9, 2002 the MeTC rendered its decision in favor of respondents and against Spouses
Fernandez, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants,
ordering the latter and all persons claiming rights under them to peacefully vacate the premises
and surrender possession thereof to the plaintiffs and for the defendants to pay plaintiffs: 1)
₱5,000.00 a month beginning January 29, 2002 (when the demand letter was received by
defendants by registered mail) until they finally vacate the premises and 2) the amount of
₱15,000.00 as and for attorney’s fees.

The counterclaim of the defendants is dismissed for lack of merit.

SO ORDERED.7

Dissatisfied, Spouses Fernandez appealed to the RTC. Respondents then filed a Motion for
Execution Pending Appeal with the RTC. On December 9, 2002, the RTC issued an Order
directing the issuance of a writ of execution to place respondents in possession of the disputed
property on the ground that Spouses Fernandez failed to periodically deposit the monthly rentals
as they fell due. The Writ of Execution was issued on January 10, 2003. The Spouses Fernandez
moved for reconsideration of the Order for issuance of the writ of execution, but the same was
denied.

Thus, on February 20, 2003, the sheriff went to the subject premises to implement the writ of
execution but found the place padlocked. The sheriff also found the petitioner, an old woman, all
alone inside the house. Taking pity on the old woman, the sheriff was unable to implement the
writ. On the same day, respondents filed an Urgent Motion to Break Open, alleging that Spouses
Fernandez fetched petitioner earlier that day from her residence in Dasmariñas, Cavite and
purposely placed her inside the subject premises so the old woman could plead for mercy from
the executing sheriff.

On March 6, 2003, the RTC promulgated its Decision affirming the decision of the MeTC of
Manila,8 and on April 8, 2003, the RTC also issued an Order authorizing the sheriff "to employ
the necessary force to enable him to enter the subject premises and place the plaintiffs-appellees
in actual possession thereof." 9

Meanwhile, on April 4, 2003, Spouses Fernandez filed before the CA a petition for review with
prayer for a temporary restraining order seeking to stay the immediate execution pending
appeal.10 In a Resolution dated April 15, 2003, the CA granted the prayer for a Temporary
Restraining Order.

On June 27, 2003, the CA rendered its Decision affirming in toto the decision of the RTC and
ordered Spouses Fernandez and all persons claiming rights under them including petitioner to
vacate the premises, ruling thus:

Verily, the only issue to be resolved in the present ejectment case is who between petitioners
[Spouses Fernandez] and respondents has the better right to possess the disputed premises.
The issue as to who between Sofia Aniosa Salandanan and respondents is the real owner of
subject premises could be properly threshed out in a separate proceedings, which in this case is
already pending resolution in another court.

Interestingly, nowhere in any pleadings of petitioners submitted below could We find any
allegations to the effect that their possession of the disputed premises sprung from their claim of
ownership over the same nor, at the very least, that they are in possession of any document that
would support their entitlement to enjoy the disputed premises.

As between respondents' Torrens Title to the premises juxtaposed that of petitioners' barren
claim of ownership and absence of any document showing that they are entitled to possess the
same, the choice is not difficult. Simply put, petitioners plainly have no basis to insist that they
have a better right to possess the premises over respondents who have a Torrens Title over the
same. Hence, the MTC, as well as the RTC, correctly ordered petitioners to vacate the premises
since respondents have a better right to possess the same by virtue of the latter's Torrens
Title.11
1avvphi1

The dispositive portion of the CA Decision reads as follows:

WHEREFORE, the instant appeal is DISMISSED for lack of merit. The assailed Decision, dated
06 March 2003, of Hon. Judge Lucia Peña Purugganan of the Regional Trial Court of Manila,
Brach 50, affirming on appeal the Decision of the Metropolitan Trial Court of Manila (MTC for
brevity), Branch 15, is hereby AFFIRMED in toto. Accordingly, the Temporary Restraining Order
is hereby LIFTED. As a legal consequence, petitioners and all persons claiming rights
under them, including Sofia Aniosa Salandanan, are hereby ORDERED to vacate the
premises immediately upon receipt hereof. Costs against petitioners.

SO ORDERED.12 (Emphasis supplied)

On July 29, 2003, Spouses Fernandez filed their motion for reconsideration. 13

On even date, Sofia Salandanan (petitioner) filed a Motion for Clarification and Intervention 14 and
attached a Motion for Reconsideration.15 In her motion for clarification and intervention, she
alleged that she and her deceased spouse are the real owners of the subject property; that she
was not a party to the case for ejectment and did not receive any notice therefrom; and that by
virtue of the said decision, she was about to be evicted from her property without having
participated in the entire process of the ejectment proceeding.

Petitioner further claims that sometime in 1999, respondents went to their house and showed
certain papers purportedly copies of a special power of attorney but which turned out to be a
deed of donation involving the subject property; that by virtue of the said donation, respondents
were able to register the subject properties in their name and were issued Transfer Certificate of
Title No. 246767; that on July 31, 2001, Spouses Salandanan with the assistance of Delfin, filed
a civil case before the RTC of Manila for Revocation/Annulment of the said title and
Reconveyance; and that consequently, petitioner was forced to intervene in order to protect her
interests over the subject property. Petitioner prayed for (1) clarification of the CA’s decision
asking whether the said decision applies to her as a relative of Spouses Fernandez claiming right
under them or as possessor of the subject property in her right as owner of the subject property;
(2) that she be allowed to intervene in the appeal; and (3) that the attached motion for
reconsideration be admitted.

In a Resolution dated September 3, 2003, the CA denied the motion for reconsideration filed by
Spouses Fernandez and petitioner’s motion for clarification and intervention, for lack of
merit,16 thus:

We have carefully perused petitioner’s Motion and find the arguments raised therein a mere
rehash, if not a repetition, of the arguments raised in their petition, which have already been
thoroughly discussed and passed upon in our Decision.

Anent the movant Sofia Salandanan’s Motion for Clarification and Intervention, We hereby deny
the same on the ground that it is belatedly filed by virtue of the rendition of Our Decision on June
27, 2003.
Section 2, Rule 19 of 1997 Rules of Civil Procedure expressly provides:

Section 2. Time to Intervene. – The motion to intervene may be filed at any time before rendition
of judgment by the trial court. x x x

Moreover, it is undisputed that on 31 July 2001, movant Sofia Salandanan represented by

petitioner has already instituted a Civil Case for Revocation/ Annulment of T.C.T. 246767 and
Reconveyance before the Regional Trial Court of Manila, Branch 50 and docketed as Civil Case
No. 01101487. As such We find movant’s motion to be wanting of merit as her rights are already
fully protected in said separate proceeding.

WHEREFORE, the Motion for Reconsideration and Motion for Clarification and Intervention are
hereby DENIED for lack of merit.

SO ORDERED.17

Hence, herein petition anchored on the following assignment of errors:

1. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING

TO LACK OR EXCESS OF JURISDICTION WHEN IT INCLUDED PETITIONER IN ITS
ADVERSE JUDGMENT IN VIOLATION OF THE LATTER’S CONSTITUTIONAL RIGHT TO DUE
PROCESS DESPITE THE FACT THAT PETITIONER WAS NOT PRIVY TO THE INSTANT
CASE AND DOES NOT DERIVE HER RIGHT TO STAY IN THE CONTESTED PROPERTY
FROM THE SPOUSES DELFIN AND CARMEN FERNANDEZ.

2. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING

TO LACK OR EXCESS OF JURISDICTION WHEN IT DENIED THE MOTION FOR
INTERVENTION BY PETITIONER DESPITE THE FACT IT WAS ONLY BY VIRTUE OF ITS
DECISION DATED JUNE 27, 2003 THAT PETITIONER WAS INCLUDED IN THE EJECTMENT
PROCEEDINGS, AND THE EARLIEST OPPURTUNE TIME WHEN PETITIONER COULD
HAVE INTERVENED WAS AFTER THE COURT OF APPEALS RULED AGAINST HER.

3. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING

TO LACK OR EXCESS OF JURISDICTION WHEN IT DID NOT TAKE INTO ACCOUNT THE
ISSUE OF OWNERSHIP IN RESOLVING THE ISSUE OF WHO HAS BETTER POSSESSION.

4. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING

TO LACK OR EXCESS OF JURISDICTION WHEN IT DID NOT SUSPEND THE CASE
DESPITE THE EQUITABLE CIRCUMSTANCES PRESENT IN THE CASE AT BAR IN THE
LIGHT OF THE AMAGAN VS. MARAMAG CASE.18

Petitioner contends that the CA committed grave abuse of discretion when it included petitioner
in its decision despite the fact that she is not a party in the ejectment case, thus, violating her
right to due process; and considering that the court did not acquire jurisdiction over her person,
she cannot be bound by the Decision of the CA.

Petitioner also asserts that the CA committed grave abuse of discretion amounting to lack or
excess of jurisdiction when it denied petitioner’s motion for clarification and intervention.
According to her, she was constrained to file a motion for clarification and intervention because
the CA included her in its decision in spite of the fact that she was not impleaded as a party to
the unlawful detainer case.

Petitioner ascribes grave abuse of discretion when the CA failed to resolve the issue of
ownership in order to determine the party who has the better right to possess the subject
property. She asserts that the CA should have suspended the unlawful detainer case since the
ownership of the subject property is in issue.

Finally, petitioner maintains that she is the owner of the property by virtue of Transfer Certificate
of Title No. 9937 issued on October 2, 1947 by the Register of Deeds of Manila. Hence, as the
owner of the subject property, she has all the right to use, the right to allow others to use and the
right to exclude others from using the same. Petitioner further claims that respondents were able
to transfer the title of the subject property in their name through manipulation wherein
respondents asked her and her deceased husband to sign a special power of attorney but later
turned out to be a deed of donation. As a matter of fact, upon learning of the said transfer,
petitioner filed before the RTC of Manila a case for annulment and/or revocation of the title.

We find the petition unmeritorious.

Let us first tackle the issue of whether petitioner should have been allowed to intervene even
after the CA had promulgated its Decision.

Sections 1 and 2 of Rule 19 of the Rules of Court provide:

Section 1. Who may intervene. – A person who has a legal interest in the matter in litigation, or in
the success of either of the parties, or an interest against both, or is so situated as to be
adversely affected by a distribution or other disposition of property in the custody of the court or
of an officer thereof may, with leave of court, be allowed to intervene in the action. The court
shall consider whether or not the intervention will unduly delay or prejudice the
adjudication of the rights of the original parties, and whether or not the intervenor’s rights
may be fully protected in a separate proceeding.

Section 2. Time to intervene. – The motion to intervene may be filed at any time before rendition
of judgment by the trial court. A copy of the pleading-in-intervention shall be attached to the
motion and served on the original parties.

As a rule, intervention is allowed at any time before rendition of judgment by the trial court. After
the lapse of this period, it will not be warranted anymore because intervention is not an
independent action but is ancillary and supplemental to an existing litigation. 19 The permissive
tenor of the provision on intervention shows the intention of the Rules to give to the court the full
measure of discretion in permitting or disallowing the same, 20 but under Section 1, Rule 19 of the
Rules of Court, the courts are nevertheless mandated to consider several factors in determining
whether or not to allow intervention. The factors that should be reckoned are whether
intervention will unduly delay or prejudice the adjudication of the rights of the original parties
and whether the intervenor’s rights may be fully protected in a separate proceeding.

Keeping these factors in mind, the courts have to give much consideration to the fact that actions
for ejectment are designed to summarily restore physical possession to one who has been
illegally deprived of such possession.21 It is primarily a quieting process intended to provide an
expeditious manner for protecting possession or right to possession without involvement of the
title.22 In Five Star Marketing Co., Inc. v. Booc,23 the Court elucidated the purpose of actions for
ejectment in this wise:

Forcible entry and unlawful detainer cases are summary proceedings designed to provide for an
expeditious means of protecting actual possession or the right to the possession of the property
involved. It does not admit of a delay in the determination thereof. It is a "time procedure"
designed to remedy the situation. Stated in another way, the avowed objective of actions for
forcible entry and unlawful detainer, which have purposely been made summary in nature,
is to provide a peaceful, speedy and expeditious means of preventing an alleged illegal
possessor of property from unjustly continuing his possession for a long time, thereby
ensuring the maintenance of peace and order in the community; otherwise, the party
illegally deprived of possession might feel the despair of long waiting and decide as a measure of
self-protection to take the law into his hands and seize the same by force and violence. And
since the law discourages continued wrangling over possession of property for it involves
perturbation of social order which must be restored as promptly as possible, technicalities or
details of procedure which may cause unnecessary delays should accordingly and
carefully be avoided.24 (Emphasis supplied)

Thus, as stated above, ejectment cases must be resolved with great dispatch.

Moreover, petitioner's intervention in the ejectment case would not result in a complete
adjudication of her rights. The issue raised by petitioner is mainly that of ownership, claiming that
the property in dispute was registered and titled in the name of respondents through the use of
fraud. Such issue cannot even be properly threshed out in an action for ejectment, as Section 18,
Rule 70 provides that "[t]he judgment rendered in an action for forcible entry or detainer shall be
conclusive with respect to the possession only and shall in no wise bind the title or affect the
ownership of the land or building. x x x" In Malison v. Court of Appeals,25 the Court held thus:

Verily, in ejectment cases, the word "possession" means nothing more than actual physical
possession, not legal possession, in the sense contemplated in civil law. The only issue in such
cases is who is entitled to the physical or material possession of the property involved,
independently of any claim of ownership set forth by any of the party-litigants. It does not even
matter if the party's title to the property is questionable.26 (Emphasis supplied)

Hence, a just and complete determination of petitioner's rights could actually be had in the action
for annulment, revocation and reconveyance of title that she had previously filed, not in the
instant action for ejectment.

It is likewise for this reason that petitioner is not an indispensable party in the instant case. The
records bear out that the disputed property is in the possession of Spouses Fernandez. Even
petitioner does not allege that she was in the possession of subject premises prior to or during
the commencement of the ejectment proceedings. Since her claim of ownership cannot be
properly adjudicated in said action, she is, therefore, not an indispensable party therein.

It is also misleading for petitioner to say that the earliest opportune time when petitioner could
have intervened was after the CA ordered her to vacate the subject property in its Decision dated
June 27, 2003. As early as when the sheriff attempted to implement the writ of execution pending
appeal issued by the RTC, when she pleaded not to be evicted from the subject premises, she
already became aware that the RTC had ordered to place respondents in possession of the
subject property pending appeal with the RTC. That would have been the proper time for her to
intervene if she truly believed that her interests would be best protected by being a party to the
ejectment case.

Verily, allowing petitioner's intervention at this late stage of the ejectment proceedings would only
cause undue delay without affording petitioner the relief sought since the issue of ownership
cannot be determined with finality in the unlawful detainer case.

There is also no merit to petitioner's argument that it was grave abuse of discretion for the CA to
include her in its Decision because she is not a party to the ejectment case, and neither is she
claiming right to possession under the Spouses Fernandez, but as its alleged rightful owner.

Note that the MeTC, RTC, and the CA unanimously found that the disputed property is presently
registered under the Torrens System in the name of respondents. The lower courts then
concluded that respondents presented the best proof to establish the right to possess the same.
It should be borne in mind that unless the case falls under one of the recognized exceptions, to
wit:
(1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the
inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of
discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings
of fact are conflicting; (6) when in making its findings the Court of Appeals went beyond the
issues of the case, or its findings are contrary to the admissions of both the appellant and the
appellee; (7) when the findings are contrary to the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are based; (9) when the facts set
forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the
respondent; (10) when the findings of fact are premised on the supposed absence of evidence
and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the parties, which, if properly considered, would
justify a different conclusion. 27

factual findings of the trial court are conclusive on the parties and not reviewable by this Court,
more so when the CA affirms the factual findings of the trial court.28 This case does not fall under
any of the exceptions, thus, the factual finding of the lower courts, that the new registered owners
of the subject premises are respondents, must be respected and upheld by this Court.

In Malison, the Court emphasized that when property is registered under the Torrens system, the
registered owner's title to the property is presumed legal and cannot be collaterally attacked,
especially in a mere action for unlawful detainer.29 In this particular action where petitioner's
alleged ownership cannot be established, coupled with the presumption that respondents' title to
the property is legal, then the lower courts are correct in ruling that respondents are the ones
entitled to possession of the subject premises.

Petitioner's ownership not having been fully established in this case, she cannot, therefore, claim
that the lower court's decision divesting the Spouses Fernandez of possession should not apply
to her. In Stilgrove v. Sabas,30 the Court held that:

A judgment directing a party to deliver possession of a property to another is in personam. x x x

Any judgment therein is binding only upon the parties properly impleaded and duly heard or
given an opportunity to be heard. However, this rule admits of the exception, such that even
a non-party may be bound by the judgment in an ejectment suit where he is any of the
following: (a) trespasser, squatter or agent of the defendant fraudulently occupying the
property to frustrate the judgment; (b) guest or occupant of the premises with the permission
of the defendant; (c) transferee pendente lite; (d) sublessee; (e) co-lessee; or (f) member of the
family, relative or privy of the defendant.31 (Emphasis supplied)

Of particular significance is the fact that in Spouses Fernandez's Answer, they never alleged that
petitioner was in actual possession of the disputed property. In fact, in said Answer, they stated
that it was Delfin Fernandez, Jr. who has continuously occupied the premises since time
immemorial and that petitioner resides in her house in Dasmariñas, Cavite. Likewise worthy of
note is the fact that the Spouses Fernandez never refuted in their Opposition to Amended Motion
to Break Open the allegation of respondents that petitioner was merely fetched by the Spouses
Fernandez from her residence in Dasmariñas, Cavite on the day (February 20, 2003) that the
sheriff was to implement the writ of execution, and placed her inside the subject premises so the
old woman could plead for mercy from the executing sheriff. In the petition for review dated April
3, 2003 filed with the CA, Spouses Fernandez admitted that it was only after the RTC issued its
Order dated February 10, 2003, denying the motion for reconsideration of the Order for issuance
of the writ of execution, that petitioner took possession of the subject premises. 32

Taking the foregoing into account, it is clear that petitioner, even though a non-party, is bound by
the judgment because aside from being a relative of or privy to Spouses Fernandez, she is also
acting as their agent when she occupied the property after the RTC ordered execution pending
appeal in order to frustrate the judgment.
WHEREFORE, the petition for review on certiorari is DENIED. The assailed Decision of the
Court of Appeals dated June 27, 2003 affirming the decision of the Regional Trial Court and its
Resolution dated September 3, 2003 in CA-G.R. SP No. 76336, denying the petition for
clarification and intervention filed by Sofia Aniosa Salandanan, are AFFIRMED.

Cost against petitioner.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

WE CONCUR:
356 SCRA 411 (WALEY SA NET)
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-19550             June 19, 1967

HARRY S. STONEHILL, ROBERT P. BROOKS, JOHN J. BROOKS and KARL

BECK, petitioners,
vs.
HON. JOSE W. DIOKNO, in his capacity as SECRETARY OF JUSTICE; JOSE LUKBAN, in
his capacity as Acting Director, National Bureau of Investigation; SPECIAL
PROSECUTORS PEDRO D. CENZON, EFREN I. PLANA and MANUEL VILLAREAL, JR. and
ASST. FISCAL MANASES G. REYES; JUDGE AMADO ROAN, Municipal Court of Manila;
JUDGE ROMAN CANSINO, Municipal Court of Manila; JUDGE HERMOGENES CALUAG,
Court of First Instance of Rizal-Quezon City Branch, and JUDGE DAMIAN JIMENEZ,
Municipal Court of Quezon City, respondents.

Paredes, Poblador, Cruz and Nazareno and Meer, Meer and Meer and Juan T. David for
petitioners.
Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Pacifico P. de Castro,
Assistant Solicitor General Frine C. Zaballero, Solicitor Camilo D. Quiason and Solicitor C.
Padua for respondents.

CONCEPCION, C.J.:

Upon application of the officers of the government named on the margin 1 — hereinafter referred
to as Respondents-Prosecutors — several judges 2 — hereinafter referred to as Respondents-
Judges — issued, on different dates,3 a total of 42 search warrants against petitioners
herein4 and/or the corporations of which they were officers,5 directed to the any peace officer, to
search the persons above-named and/or the premises of their offices, warehouses and/or
residences, and to seize and take possession of the following personal property to wit:

Books of accounts, financial records, vouchers, correspondence, receipts, ledgers,

journals, portfolios, credit journals, typewriters, and other documents and/or papers
showing all business transactions including disbursements receipts, balance sheets and
profit and loss statements and Bobbins (cigarette wrappers).

as "the subject of the offense; stolen or embezzled and proceeds or fruits of the offense," or
"used or intended to be used as the means of committing the offense," which is described in the
applications adverted to above as "violation of Central Bank Laws, Tariff and Customs Laws,
Internal Revenue (Code) and the Revised Penal Code."

Alleging that the aforementioned search warrants are null and void, as contravening the
Constitution and the Rules of Court — because, inter alia: (1) they do not describe with
particularity the documents, books and things to be seized; (2) cash money, not mentioned in the
warrants, were actually seized; (3) the warrants were issued to fish evidence against the
aforementioned petitioners in deportation cases filed against them; (4) the searches and seizures
were made in an illegal manner; and (5) the documents, papers and cash money seized were not
delivered to the courts that issued the warrants, to be disposed of in accordance with law — on
March 20, 1962, said petitioners filed with the Supreme Court this original action for certiorari,
prohibition, mandamus and injunction, and prayed that, pending final disposition of the present
case, a writ of preliminary injunction be issued restraining Respondents-Prosecutors, their agents
and /or representatives from using the effects seized as aforementioned or any copies thereof, in
the deportation cases already adverted to, and that, in due course, thereafter, decision be
rendered quashing the contested search warrants and declaring the same null and void, and
commanding the respondents, their agents or representatives to return to petitioners herein, in
accordance with Section 3, Rule 67, of the Rules of Court, the documents, papers, things and
cash moneys seized or confiscated under the search warrants in question.

In their answer, respondents-prosecutors alleged, 6 (1) that the contested search warrants are
valid and have been issued in accordance with law; (2) that the defects of said warrants, if any,
were cured by petitioners' consent; and (3) that, in any event, the effects seized are admissible in
evidence against herein petitioners, regardless of the alleged illegality of the aforementioned
searches and seizures.

On March 22, 1962, this Court issued the writ of preliminary injunction prayed for in the petition.
However, by resolution dated June 29, 1962, the writ was partially lifted or dissolved, insofar as
the papers, documents and things seized from the offices of the corporations above mentioned
are concerned; but, the injunction was maintained as regards the papers, documents and things
found and seized in the residences of petitioners herein. 7

Thus, the documents, papers, and things seized under the alleged authority of the warrants in
question may be split into two (2) major groups, namely: (a) those found and seized in the offices
of the aforementioned corporations, and (b) those found and seized in the residences of
petitioners herein.

As regards the first group, we hold that petitioners herein have no cause of action to assail the
legality of the contested warrants and of the seizures made in pursuance thereof, for the simple
reason that said corporations have their respective personalities, separate and distinct from the
personality of herein petitioners, regardless of the amount of shares of stock or of the interest of
each of them in said corporations, and whatever the offices they hold therein may be. 8 Indeed, it
is well settled that the legality of a seizure can be contested only by the party whose rights have
been impaired thereby,9 and that the objection to an unlawful search and seizure is purely
personal and cannot be availed of by third parties. 10 Consequently, petitioners herein may not
validly object to the use in evidence against them of the documents, papers and things seized
from the offices and premises of the corporations adverted to above, since the right to object to
the admission of said papers in evidence belongs exclusively to the corporations, to whom the
seized effects belong, and may not be invoked by the corporate officers in proceedings against
them in their individual capacity. 11 Indeed, it has been held:

. . . that the Government's action in gaining possession of papers belonging to

the corporation did not relate to nor did it affect the personal defendants. If these papers
were unlawfully seized and thereby the constitutional rights of or any one were invaded,
they were the rights of the corporation and not the rights of the other defendants. Next, it
is clear that a question of the lawfulness of a seizure can be raised only by one whose
rights have been invaded. Certainly, such a seizure, if unlawful, could not affect the
constitutional rights of defendants whose property had not been seized or the privacy of
whose homes had not been disturbed; nor could they claim for themselves the benefits of
the Fourth Amendment, when its violation, if any, was with reference to the rights
of another. Remus vs. United States (C.C.A.)291 F. 501, 511. It follows, therefore, that
the question of the admissibility of the evidence based on an alleged unlawful search and
seizure does not extend to the personal defendants but
embraces only the corporation whose property was taken. . . . (A Guckenheimer & Bros.
Co. vs. United States, [1925] 3 F. 2d. 786, 789, Emphasis supplied.)

With respect to the documents, papers and things seized in the residences of petitioners herein,
the aforementioned resolution of June 29, 1962, lifted the writ of preliminary injunction previously
issued by this Court, 12 thereby, in effect, restraining herein Respondents-Prosecutors from using
them in evidence against petitioners herein.
In connection with said documents, papers and things, two (2) important questions need be
settled, namely: (1) whether the search warrants in question, and the searches and seizures
made under the authority thereof, are valid or not, and (2) if the answer to the preceding question
is in the negative, whether said documents, papers and things may be used in evidence against
petitioners herein.1äwphï1.ñët

Petitioners maintain that the aforementioned search warrants are in the nature of general
warrants and that accordingly, the seizures effected upon the authority there of are null and void.
In this connection, the Constitution 13 provides:

The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures shall not be violated, and no warrants shall issue
but upon probable cause, to be determined by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and particularly
describing the place to be searched, and the persons or things to be seized.

Two points must be stressed in connection with this constitutional mandate, namely: (1) that no
warrant shall issue but upon probable cause, to be determined by the judge in the manner set
forth in said provision; and (2) that the warrant shall particularly describe the things to be seized.

None of these requirements has been complied with in the contested warrants. Indeed, the same
were issued upon applications stating that the natural and juridical person therein named had
committed a "violation of Central Ban Laws, Tariff and Customs Laws, Internal Revenue (Code)
and Revised Penal Code." In other words, no specific offense had been alleged in said
applications. The averments thereof with respect to the offense committed were abstract. As a
consequence, it was impossible for the judges who issued the warrants to have found the
existence of probable cause, for the same presupposes the introduction of competent proof that
the party against whom it is sought has performed particular acts, or
committed specific omissions, violating a given provision of our criminal laws. As a matter of fact,
the applications involved in this case do not allege any specific acts performed by herein
petitioners. It would be the legal heresy, of the highest order, to convict anybody of a "violation of
Central Bank Laws, Tariff and Customs Laws, Internal Revenue (Code) and Revised Penal
Code," — as alleged in the aforementioned applications — without reference to any determinate
provision of said laws or

To uphold the validity of the warrants in question would be to wipe out completely one of the
most fundamental rights guaranteed in our Constitution, for it would place the sanctity of the
domicile and the privacy of communication and correspondence at the mercy of the whims
caprice or passion of peace officers. This is precisely the evil sought to be remedied by the
constitutional provision above quoted — to outlaw the so-called general warrants. It is not difficult
to imagine what would happen, in times of keen political strife, when the party in power feels that
the minority is likely to wrest it, even though by legal means.

Such is the seriousness of the irregularities committed in connection with the disputed search
warrants, that this Court deemed it fit to amend Section 3 of Rule 122 of the former Rules of
Court 14 by providing in its counterpart, under the Revised Rules of Court 15 that "a search warrant
shall not issue but upon probable cause in connection with one specific offense." Not satisfied
with this qualification, the Court added thereto a paragraph, directing that "no search warrant
shall issue for more than one specific offense."

The grave violation of the Constitution made in the application for the contested search warrants
was compounded by the description therein made of the effects to be searched for and seized, to
wit:

Books of accounts, financial records, vouchers, journals, correspondence, receipts,

ledgers, portfolios, credit journals, typewriters, and other documents and/or papers
 showing all business transactions including disbursement receipts, balance sheets and
related profit and loss statements.

Thus, the warrants authorized the search for and seizure of records pertaining to all business
transactions of petitioners herein, regardless of whether the transactions were legal or illegal.
The warrants sanctioned the seizure of all records of the petitioners and the aforementioned
corporations, whatever their nature, thus openly contravening the explicit command of our Bill of
Rights — that the things to be seized be particularly described — as well as tending to defeat its
major objective: the elimination of general warrants.

Relying upon Moncado vs. People's Court (80 Phil. 1), Respondents-Prosecutors maintain that,
even if the searches and seizures under consideration were unconstitutional, the documents,
papers and things thus seized are admissible in evidence against petitioners herein. Upon
mature deliberation, however, we are unanimously of the opinion that the position taken in the
Moncado case must be abandoned. Said position was in line with the American common law
rule, that the criminal should not be allowed to go free merely "because the constable has
blundered," 16 upon the theory that the constitutional prohibition against unreasonable searches
and seizures is protected by means other than the exclusion of evidence unlawfully
obtained, 17 such as the common-law action for damages against the searching officer, against
the party who procured the issuance of the search warrant and against those assisting in the
execution of an illegal search, their criminal punishment, resistance, without liability to an
unlawful seizure, and such other legal remedies as may be provided by other laws.

However, most common law jurisdictions have already given up this approach and eventually
adopted the exclusionary rule, realizing that this is the only practical means of enforcing the
constitutional injunction against unreasonable searches and seizures. In the language of Judge
Learned Hand:

As we understand it, the reason for the exclusion of evidence competent as such, which
has been unlawfully acquired, is that exclusion is the only practical way of enforcing the
constitutional privilege. In earlier times the action of trespass against the offending official
may have been protection enough; but that is true no longer. Only in case the
prosecution which itself controls the seizing officials, knows that it cannot profit by their
wrong will that wrong be repressed.18

In fact, over thirty (30) years before, the Federal Supreme Court had already declared:

If letters and private documents can thus be seized and held and used in evidence
against a citizen accused of an offense, the protection of the 4th Amendment, declaring
his rights to be secure against such searches and seizures, is of no value, and, so far as
those thus placed are concerned, might as well be stricken from the Constitution. The
efforts of the courts and their officials to bring the guilty to punishment, praiseworthy as
they are, are not to be aided by the sacrifice of those great principles established by
years of endeavor and suffering which have resulted in their embodiment in the
fundamental law of the land.19

This view was, not only reiterated, but, also, broadened in subsequent decisions on the same
Federal Court. 20 After reviewing previous decisions thereon, said Court held, in Mapp vs.
Ohio (supra.):

. . . Today we once again examine the Wolf's constitutional documentation of the right of
privacy free from unreasonable state intrusion, and after its dozen years on our books,
are led by it to close the only courtroom door remaining open to evidence secured by
official lawlessness in flagrant abuse of that basic right, reserved to all persons as a
specific guarantee against that very same unlawful conduct. We hold that all evidence
 obtained by searches and seizures in violation of the Constitution is, by that same
authority, inadmissible in a State.

Since the Fourth Amendment's right of privacy has been declared enforceable against
the States through the Due Process Clause of the Fourteenth, it is enforceable against
them by the same sanction of exclusion as it used against the Federal Government.
Were it otherwise, then just as without the Weeks rule the assurance against
unreasonable federal searches and seizures would be "a form of words," valueless and
underserving of mention in a perpetual charter of inestimable human liberties, so
too, without that rule the freedom from state invasions of privacy would be so ephemeral
and so neatly severed from its conceptual nexus with the freedom from all brutish means
of coercing evidence as not to permit this Court's high regard as a freedom "implicit in
the concept of ordered liberty." At the time that the Court held in Wolf that the
amendment was applicable to the States through the Due Process Clause, the cases of
this Court as we have seen, had steadfastly held that as to federal officers the Fourth
Amendment included the exclusion of the evidence seized in violation of its provisions.
Even Wolf "stoutly adhered" to that proposition. The right to when conceded operatively
enforceable against the States, was not susceptible of destruction by avulsion of the
sanction upon which its protection and enjoyment had always been deemed dependent
under the Boyd, Weeks and Silverthorne Cases. Therefore, in extending the substantive
protections of due process to all constitutionally unreasonable searches — state or
federal — it was logically and constitutionally necessarily that the exclusion doctrine —
an essential part of the right to privacy — be also insisted upon as an essential ingredient
of the right newly recognized by the Wolf Case. In short, the admission of the new
constitutional Right by Wolf could not tolerate denial of its most important constitutional
privilege, namely, the exclusion of the evidence which an accused had been forced to
give by reason of the unlawful seizure. To hold otherwise is to grant the right but in reality
to withhold its privilege and enjoyment. Only last year the Court itself recognized that the
purpose of the exclusionary rule to "is to deter — to compel respect for the constitutional
guaranty in the only effectively available way — by removing the incentive to disregard it"
....

The ignoble shortcut to conviction left open to the State tends to destroy the entire
system of constitutional restraints on which the liberties of the people rest. Having once
recognized that the right to privacy embodied in the Fourth Amendment is enforceable
against the States, and that the right to be secure against rude invasions of privacy by
state officers is, therefore constitutional in origin, we can no longer permit that right to
remain an empty promise. Because it is enforceable in the same manner and to like
effect as other basic rights secured by its Due Process Clause, we can no longer permit
it to be revocable at the whim of any police officer who, in the name of law enforcement
itself, chooses to suspend its enjoyment. Our decision, founded on reason and truth,
gives to the individual no more than that which the Constitution guarantees him to the
police officer no less than that to which honest law enforcement is entitled, and, to the
courts, that judicial integrity so necessary in the true administration of justice. (emphasis
ours.)

Indeed, the non-exclusionary rule is contrary, not only to the letter, but also, to the spirit of the
constitutional injunction against unreasonable searches and seizures. To be sure, if the applicant
for a search warrant has competent evidence to establish probable cause of the commission of a
given crime by the party against whom the warrant is intended, then there is no reason why the
applicant should not comply with the requirements of the fundamental law. Upon the other hand,
if he has no such competent evidence, then it is not possible for the Judge to find that there is
probable cause, and, hence, no justification for the issuance of the warrant. The only possible
explanation (not justification) for its issuance is the necessity of fishing evidence of the
commission of a crime. But, then, this fishing expedition is indicative of the absence of evidence
to establish a probable cause.
Moreover, the theory that the criminal prosecution of those who secure an illegal search warrant
and/or make unreasonable searches or seizures would suffice to protect the constitutional
guarantee under consideration, overlooks the fact that violations thereof are, in general,
committed By agents of the party in power, for, certainly, those belonging to the minority could
not possibly abuse a power they do not have. Regardless of the handicap under which the
minority usually — but, understandably — finds itself in prosecuting agents of the majority, one
must not lose sight of the fact that the psychological and moral effect of the possibility 21 of
securing their conviction, is watered down by the pardoning power of the party for whose benefit
the illegality had been committed.

In their Motion for Reconsideration and Amendment of the Resolution of this Court dated June
29, 1962, petitioners allege that Rooms Nos. 81 and 91 of Carmen Apartments, House No. 2008,
Dewey Boulevard, House No. 1436, Colorado Street, and Room No. 304 of the Army-Navy Club,
should be included among the premises considered in said Resolution as residences of herein
petitioners, Harry S. Stonehill, Robert P. Brook, John J. Brooks and Karl Beck, respectively, and
that, furthermore, the records, papers and other effects seized in the offices of the corporations
above referred to include personal belongings of said petitioners and other effects under their
exclusive possession and control, for the exclusion of which they have a standing under the
latest rulings of the federal courts of federal courts of the United States. 22

We note, however, that petitioners' theory, regarding their alleged possession of and control over
the aforementioned records, papers and effects, and the alleged "personal" nature thereof, has
Been Advanced, not in their petition or amended petition herein, but in the Motion for
Reconsideration and Amendment of the Resolution of June 29, 1962. In other words, said theory
would appear to be readjustment of that followed in said petitions, to suit the approach intimated
in the Resolution sought to be reconsidered and amended. Then, too, some of the affidavits or
copies of alleged affidavits attached to said motion for reconsideration, or submitted in support
thereof, contain either inconsistent allegations, or allegations inconsistent with the theory now
advanced by petitioners herein.

Upon the other hand, we are not satisfied that the allegations of said petitions said motion for
reconsideration, and the contents of the aforementioned affidavits and other papers submitted in
support of said motion, have sufficiently established the facts or conditions contemplated in the
cases relied upon by the petitioners; to warrant application of the views therein expressed,
should we agree thereto. At any rate, we do not deem it necessary to express our opinion
thereon, it being best to leave the matter open for determination in appropriate cases in the
future.

We hold, therefore, that the doctrine adopted in the Moncado case must be, as it is hereby,
abandoned; that the warrants for the search of three (3) residences of herein petitioners, as
specified in the Resolution of June 29, 1962, are null and void; that the searches and seizures
therein made are illegal; that the writ of preliminary injunction heretofore issued, in connection
with the documents, papers and other effects thus seized in said residences of herein petitioners
is hereby made permanent; that the writs prayed for are granted, insofar as the documents,
papers and other effects so seized in the aforementioned residences are concerned; that the
aforementioned motion for Reconsideration and Amendment should be, as it is hereby, denied;
and that the petition herein is dismissed and the writs prayed for denied, as regards the
documents, papers and other effects seized in the twenty-nine (29) places, offices and other
premises enumerated in the same Resolution, without special pronouncement as to costs.

It is so ordered.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 137136 November 3, 1999

NORTHWEST AIRLINES, INC., petitioner,

vs.
CAMILLE T. CRUZ and COURT OF APPEALS, respondents.

KAPUNAN, J.:

Before this Court is a petition for review on certiorari of the Decision of the Court of Appeals,
dated September 30, 1998; and, of its Resolution, dated January 11, 1999.

The antecedents facts are as follows:

On August 24, 1992, herein private respondents Camille T. Cruz, then a teenage girl who would
be travelling alone for the first time, purchased from petitioner Northwest Airlines a round-trip
ticket for a flight from Manila to Boston via Tokyo and back. The scheduled departure date from
Manila to Boston was August 27, 1992 at 8:40 a.m. in economy class while the scheduled return
flight from Boston to Manila in business class was on December 22, 1992 at 10:25 a.m.  1

On November 25, 1992, private respondents re-scheduled her return flight from Boston to Manila
to December 17, 1992 at 10:05 a.m. Accordingly, petitioner booked her on Northwest flight
NW005 C ("Flight 5") with route as follows: Boston to Chicago; Chicago to Tokyo; and, Tokyo to
Manila. 2

Petitioner reconfirmed the flight from Boston, U.S.A. to Manila scheduled on December 17, 1992
at least seventy-two (72) hours prior to the said scheduled flight. 3

However, barely a day before the scheduled date of departure, petitioner called private
respondent and informed her that instead of following her original itinerary of Boston to Chicago;
Chicago to Tokyo; and, Tokyo to Manila, private respondent should instead board the TWA flight
from Boston to Kennedy International Airport in New York. Private respondent was further
instructed by petitioner to proceed to the latter's counter at the Logan Airport in Boston before
boarding the TWA flight on the scheduled date of departure.  4

On December 17, 1992, upon petitioner's instructions, private respondent proceeded early to the
petitioner's counter at Logan Airport in Boston but was referred to the TWA counter where she
was informed that she may not be able to take the TWA flight. Notwithstanding this uncertainty,
private respondent was made to proceed to the International Gate where she was informed that
the TWA flight she was to take to Kennedy International Airport in New York was cancelled.  5

Due to the unexplained and belated cancellation of the TWA flight, private respondent had to
rush back from the International Gate to petitioner's counter in Logan Airport in Boston where
she was again told to proceed immediately to the Delta Airlines terminal to catch the Delta
Airlines flight to La Guardia Airport in New York and thence took the service car to Kennedy
Airport in New York. 6

In her haste to catch the said flight, private respondent tripped and fell down on her way from
petitioner's counter to the Delta Airlines counter in Logan Airport in Boston thereby suffering
slight physical injuries and embarrassment.  7

When private respondent reached La Guardia Airport in New York, she again had to rush to the
service car that would take her to Kennedy International Airport which is several miles away from
La Guardia. In her haste and anxiety to catch her flight, private respondent again tripped and fell
down thereby suffering more physical injuries, embarrassment and great inconvenience.  8

Private respondent's apprehension was further aggravated when she was informed at petitioner's
counter in Kennedy International Airport that she was issued the wrong ticket to Seoul instead of
Tokyo. Although the error was rectified by petitioner at Kennedy International Airport, private
respondent was by then extremely nervous, worried, stressed out, and exhausted.  9

To make matters worse, petitioner downgraded private respondent from business class to
economy class on two legs of her flight without notice nor apology. Neither did petitioner offer to
refund the excess fare private respondent paid for a business class seat.  10

Hence, on August 6, 1993, private respondent filed a complaint   against petitioner Northwest
11

Airlines, Inc. for breach of contract of carriage committed when petitioner changed private
respondent's original itinerary of Boston to Chicago, Chicago to Tokyo, Tokyo to Manila to a new
itinerary of Boston to New York, New York to Tokyo, Tokyo to Manila, thereby downgrading
private respondent on two legs of her return flight to Manila from business to economy class
(flights from Boston to New York, and from Tokyo to Manila). Private respondent claimed to have
suffered actual, moral and exemplary damages.  12

Petitioner filed its answer with compulsory counterclaim alleging therein that the flight on which
private respondent was originally booked was cancelled due to maintenance problems and bad
weather,   and that the airline had done its best to re-book private respondent on the next
13

available flights.

Trial progressed until 1995 when it was petitioner's turn to present its witness on three scheduled
dates. Two of the settings were cancelled when petitioner's counsel filed notice for oral
deposition of one Mario Garza, witness for petitioner, in New York. Private respondent filed her
opposition and suggested written interrogatories instead. However, in an Order dated July 26,
1995, the trial court denied private respondent's opposition, thus allowing the deposition to
proceed. The oral deposition took place in New York on July 24, 1995   or notably two days
14

before the issuance of the trial court's order allowing the deposition to proceed.

The records show that although it was the Honorable Consul Milagros R. Perez who swore in the
deponent,   she thereafter designated one "Attorney Gonzalez" as Deposition Officer.   After
15 16

stating his personal circumstances, Mr. Mario Garza, testified as follows:

x x x           x x x          x x x

ATTY. AUTEA

What is your present position?

MR. GARZA
I am currently a customer supervisor and instructor for Northwest
in Boston.

ATTY. AUTEA

In or about December 1992, what was your position?

MR. GARZA

I was a customer service supervisor and instructor.

ATTY. AUTEA

As a customer service supervisor and instructor what are the

duties which you discharged?

MR. GARZA

My responsibilities are in Boston field work to oversee the ground

staff and for the employees of Northwest who work at the counter,
gates, luggage service operations.

ATTY. AUTEA

Do you discharge any responsibilities in connection with canceled

flights?

MR. GARZA

Yes, I do. If a flight is canceled it is my responsibility amongst

many supervisor, to determine how we are gonna best serve our
customers with rebooking for protection some other main
customer services.

ATTY. AUTEA

Have you ever been come across the name of Camille T. Cruz in
connection with a canceled Northwest flight?

MR. GARZA

Yes, I have.

x x x           x x x          x x x

ATTY. AUTEA

Based on this passenger name record marked as Exhibit 2 and

the transcript marked as Exhibit 3, very briefly can you tell us
what was the original flight schedule of Camille T. Cruz on her
return flight from Boston to Manila on December 17, 1992?

MR. GARZA
It actually she goes back a little before that, she was booked
originally to return to Manila on the 22nd of December and she
was advised of the schedule change wherein Northwest Flight 3
to Northwest Flight 5 and then on the 14th of October the
reservation from, I can tell here for the customer was changed
from the 22nd of December to 17th of December, Boston to
Manila.

ATTY. AUTEA

Okay. You said that there was a change of flight from Northwest
Flight 3 to Northwest Flight 5, what brought about the change?

MR. GARZA

There was a schedule change and during schedule changes

sometime, anytime there's a change in departure time or change
in flight number and that's referred as a schedule change if there
is a phone contact we are advised to contact the customers so
they will know what flight they are supposed to be on.

ATTY. AUTEA

And and (sic) that does it show there as it is stated in the

complaint filed by the plaintiff that she requested for the change
from December 22 to December 17?

MR. GARZA

Yes.

ATTY. AUTEA

Now under this uh—new flight schedule Northwest Flight 5, what

was the itinerary of Camille T. Cruz?

MR. GARZA

Flight 5 is referred to as Direct Flight from Boston to Manila, uhh

—the routing for that flight goes Boston — Chicago, Tokyo-Manila
with a change of equipment and it is a change of aircraft type in
Chicago.

ATTY. AUTEA

Okay. What happened to that flight? Northwest Flight 5? The

originally first leg of which was Boston to Chicago?

MR. GARZA

On the 17th, Flight 5 from Boston to Chicago canceled due to

maintenance problem.

x x x           x x x          x x x
ATTY. AUTEA

Ahh. In other words Mr. Garza, the aircraft which the plaintiff in
this case was scheduled to take came from Washington D.C., is
that right?

MR. GARZA

That is correct.

ATTY. AUTEA

And from Washington DC that aircraft flew to Boston is that right?

MR. GARZA

Well it supposed to fly it is it didn't fly.

ATTY. AUTEA

It was supposed to fly but it didn't fly?

MR. GARZA

That is correct.

ATTY. AUTEA

What is the reason for the inability of the aircraft to fly from
Washington DC to Boston?

MR. GARZA

Based on this messages says "Emergency Lights INOP and

unable to repair."

x x x           x x x          x x x

ATTY. AUTEA

In other words Mr. Garza, when the original Northwest Flight

Number 5 of the passenger Camille T. Cruz was canceled due to
maintenance work she was given two options, is that right?

MR. GARZA

Yes.

ATTY. AUTEA

And the first option is that written in Item Number 8, is that right?

MR. GARZA
That is correct.

ATTY. AUTEA

The second option is that written in Item Number 9 of Exhibit 3, is

that right?

MR. GARZA

That is correct.

ATTY. AUTEA

And who made the decision for Camille T. Cruz as to which option
to take?

MR. GARZA

In this case to me it would be the customer, because we would

always have to go with the customer wants.

ATTY. AUTEA

When you say that it was the customer who made the decision
you are referring to Camille T. Cruz the plaintiff in this case?

MR. GARZA

That's correct.

ATTY. AUTEA

In other words Camille T. Cruz, the plaintiff was the one who
chose the alternate flight shown in Item Number 9 of Exhibit 3?

MR. GARZA

That's correct.

x x x           x x x          x x x

ATTY. AUTEA

Why in coach?

MR. GARZA

I would say because that was what all that was available, she is a
business class passenger and there is no business class on
domestic flights, we do upgrade our business class passenger to
first class domestically on a space available basis so they would
indicate to me that possibly from Detroit was probably already
sold out in first class but we would be able to confirm her in coach
but a smaller flight.
ATTY. AUTEA

Are you saying that because of the cancellation of the original

flight of Camille T. Cruz, Northwest tried to book the passenger on
the available flight but that the available flight which was then
available was this coach class Northwest 440?

MR. GARZA

That's correct, from Boston to Detroit.

x x x           x x x          x x x

ATTY. AUTEA

Okay. The second leg of this trip in Item Number 9 says "NW 017
F JFKNRT 17th December 1240 to 1700, what does that mean?

MR. GARZA

That means that we re-booked it from New York Kennedy to

Tokyo non-stop Narita Airport on Northwest Flight 17 in first class
as opposed to business class and that left Kennedy at 1240
arriving into Tokyo at 1700.

ATTY. AUTEA

Why was she booked in first class?

MR. GARZA

Again I would say that business class was already sold out on
that flight so since she already been inconvenience before we are
allowed at the airport under types of circumstances then to move
the business class passenger into first class.

x x x           x x x          x x x

ATTY. AUTEA

Now, the third leg of the trip under Item Number 9 of Exhibit 3
says "NW 005 Y NRT MNI, 18th December 1815 to 2155, "what
does that mean?

MR. GARZA

That means that upon arriving in Tokyo she would connect to

Flight 5 from Tokyo to Manila on the 18th departing at 1815 and
arriving at 2155 and that was booked in coach.

ATTY. AUTEA

Why was she booked in coach?

 MR. GARZA

I was again in uhh. Because first and business class would have
been sold out.  17

On November 9, 1995, at the hearing of the instant case, petitioner presented the deposition
record of its witness while private respondent reserved her right to cross-examine and present
rebuttal evidence.

Private respondent, likewise, questioned the conduct of the oral deposition as irregular and
moved for suppression of the same on the following grounds:

1. The deposition has been improperly and irregularly taken and returned in that:

(a) The deposition was taken on July 24, 1995 despite the fact
that this Honorable Court only ruled on the matter on July 26,
1995.

(b) There is no certification given by the officer taking the

deposition that the same is a true record of the testimony given by
the deponent in violation of Rule 24, Section 20 of the Rules of
Court.

(c) The deposition was not securely sealed in an envelope

indorsed with the title of the action and marked "Deposition of
(here insert the name of witness)" in violation of Rule 24, Section
20 of the Rules of Court.

(d) The officer taking the deposition did not give any notice to the
plaintiff of the filing of the deposition in violation of Rule 24,
Section 21 of the Rules of Court.

(e) The person designated as deposition officer is not among

those persons authorized to take deposition in foreign countries in
violation of Rule 24, Section 11 of the Rules of Court.

(f) There is no showing on record that the deponent read and

signed the deposition in violation of Rule 24, Section 19 of the
Rules of Court.

2. These irregularities or defects were discovered by the plaintiff during the

hearing on November 9, 1995 and plaintiff has acted with reasonable promptness
after having ascertained the existence of the aforesaid irregularities and
defects. 18

However, private respondent's motion was denied anew by the trial

court. 
19

In its Order, dated July 23, 1996, the trial court admitted petitioner's formal offer of evidence with
supplement thereto and gave private respondent three days from receipt within which to signify
her intention to present rebuttal evidence.

On August 2, 1996, private respondent filed a manifestation and motion stating that the court
failed to rule on its motion to suppress deposition and to grant her the right to cross-examine
petitioner's deponent. Private respondent also manifested her intention to present rebuttal
evidence.

In its Order, dated September 5, 1996, the trial court denied private respondent's manifestation
and motion. Said court, likewise, denied private respondent's motion for reconsideration of the
above order. Hence, private respondent filed a petition for certiorari with the Court of Appeals on
April 7, 1998. 20

On September 30, 1998, the appellate court rendered a Decision, the dispositive portion of which
reads:

WHEREFORE, the petition is GRANTED. The questioned rulings of the Regional

Trial Court are hereby SET ASIDE, and judgments is hereby rendered
ORDERING the court a quo to disallow the deposition and continue with the trial
of the case without prejudice to petitioner's right to cross examine defendant's
witness and to present rebuttal evidence.

SO ORDERED.  21

Petitioner Northwest, thereafter, filed this instant petition for review alleging that:

I. THE COURT OF APPEALS COMMITTED REVERSIBLE

ERROR IN NOT DISMISSING THE PETITION OUTRIGHT
SINCE THE REMEDY OF APPEAL IS AVAILABLE TO PRIVATE
RESPONDENT. BESIDES, THE PETITION WAS FILED OUT OF
TIME.

II. THE COURT OF APPEALS COMMITTED REVERSIBLE

ERROR IN FINDING THAT THE TRIAL COURT GRAVELY
ABUSED ITS DISCRETION BY ADMITTING INTO EVIDENCE
THE ORAL DEPOSITION.

III. THE COURT OF APPEALS COMMITTED REVERSIBLE

ERROR IN FINDING THAT PRIVATE RESPONDENT HAS NOT
WAIVED HER RIGHT TO CROSS-EXAMINE PETITIONER'S
WITNESS AND TO PRESENT REBUTTAL EVIDENCE.  22

Petitioner argues that the remedy of certiorari before respondent Court of Appeals was improper,
as private respondent has every opportunity to question on appeal the trial court's ruling
admitting the deposition.

According to petitioner, a careful analysis of the petition in the Court of Appeals shows that at the
heart of the issues raised is the correctness of the observed procedure by the trial court in
appreciating the admissibility of the transcript of the deposition of Mr. Mario Garza. Such being
the case, assuming without admitting that the trial court committed any error in issuing the
questioned orders, such error is only an error of judgment, and not an error of jurisdiction.

Petitioner further asserts that the trial court did not gravely abuse its discretion by admitting into
evidence the oral deposition. While as a general rule, Section 1, Rule 132 of the Rules of
Court   governs the conduct of trial, this rule admits of exceptions which this Court recognized in
23

the case of Dasmarinas Garments, Inc. vs. Reyes.   According to petitioner, one of the
24

exceptions is "when the witness is out of the Philippines." In this case, petitioner has the right to
take the deposition of its witness and offer it in evidence since Mr. Mario Garza reside and works
outside the Philippines. The deposition-taking at the Philippine Consulate in New York City falls
within the exceptions to the requirement that a witness give his testimony in open court pursuant
to Section 1, Rule 132 of the Rules.

Finally, petitioner alleges that private respondent must be deemed to have waived her right to
cross-examine petitioner's witness and her right to present rebuttal evidence by her failure to
attend the deposition-taking despite due notice thereof, or at the very least, to timely reserve her
right to serve written interrogatories.

Petitioner's arguments are untenable.

Sec. 16 of Rule 24 (now Rule 23 of he Rules of Civil Procedure of 1997) provides that after
notice is served for taking a deposition by oral examination, upon motion seasonably made by
any party or by the person to be examined and for good cause shown, the court in which the
action is pending may, among others, make an order that the deposition shall not be taken. The
rest of the same section allows the taking of the deposition subject to certain conditions specified
therein.

The provision explicitly vesting in the court the power to order that the deposition shall not be
taken connotes the authority to exercise discretion on the matter. However, the discretion
conferred by law is not unlimited. It must be exercised, not arbitrarily or oppresively, but in a
reasonable manner and in consonance with the spirit of he law. The courts should always see to
it that the safeguards for the protection of the parties and deponents are firmly maintained. As
aptly stated by Chief Justice Moran:

. . . . (T)his provision affords the adverse party, as well as the deponent, sufficient
protection against abuses that may be committed by a party in the exercise of his
unlimited right to discovery. As a writer said: "Any discovery involves a prying into
another person's affairs — prying that is quite justified if it is to be a legitimate aid
to litigation, but not justified if it is not to be such an aid." For this reason, courts
are given ample powers to forbid discovery which is intended not as an aid to
litigation, but merely to annoy, embarrass or oppress either the deponent or the
adverse party, or both.  25

Respondent court correctly observed that the deposition in this case was not used for discovery
purposes, as the examinee was the employee of petitioner, but rather to accommodate the
former who was in Massachusetts, U.S.A. Such being the case, the general rules on examination
of witnesses under Rule 132 of the Rules of Court requiring said examination to be done in court
following the order set therein, should be observed.

Respondent court also correctly noted that private respondent's objections to the oral deposition
had been made promptly and vehemently, as required by the Rules, but these were wrongly
disregarded as immaterial by the trial court.

We note with approval respondent court's ruling disallowing the depositions and upholding
private respondent's right to cross-examine:

. . . [The] deposition was not a mode of discovery but rather a direct testimony by
respondent's witness and there appears a strategy by respondent to exclude
petitioner's participation from the proceedings.

While a month's notice would ordinarily be sufficient, the circumstances in this

case are different. Two days of trial were cancelled and notice for oral deposition
was given in lieu of the third date. The locus of oral deposition is not easily within
reach of ordinary citizens for it requires time to get a travel visa to the United
States, book a flight in July to the United States, and more importantly substantial
travel fare is needed to obtain a round trip ticket by place (sic) from Manila to
New York and back to Manila.

As an international carrier, Northwest could very conveniently send its counsel to

New York. However, the ends of justice would have been better served if the
witness were instead brought to the Philippines. Written interrogatories was (sic)
requested to balance this inconvenience which was nonetheless also objected to
and denied for simply being time consuming. While time is a factor in deciding
cases, the more important principles would have been the thorough presentation
and deliberation of a case to ensure that the ends of justice are met since this is
the principal mission of a civilized judicial system.

The objections raised by petitioner [private respondent], in the light of the above
considerations, take on a greater weight. Section 11 of Rule 24 provides: "In a
foreign state or country, depositions shall be taken (a) on notice before a
secretary of embassy or legation, consul general, consul, vice-consul or consular
agent of the Republic of the Philippines, or (b) before such person or officer as
may be appointed by commission or under letters rogatory." The deposition
document clearly indicates that while the consul swore in the witness and the
stenographer, it was another officer in the Philippine Consulate who undertook
the entire proceedings thereafter. Respondent Northwest argues on the
presumption of regularity of official functions and even obtained a certification to
this effect plus an assertion that none of the participants in the Consulate were in
any way related to the respondent or their counsel. But presumptions should fail
when the record itself bears out the irregularity.

The Rules (Rules 24, Sec. 29) indicate that objections to the oral deposition will
be waived unless the objections are made with reasonable promptness. In this
case, the objections have been prompt and vehement, yet they were disregarded
as not material such that the deposition and the exhibits related thereto were
admitted. Moreover, a Supplemental Offer of Evidence pertaining to a certification
by the consul in New York which tends to correct the objections raised was also
admitted by the Court. Respondents argue that the rules were not exactly
mandatory but merely guides to ensure that the ends of justice are met. The
Court interpreted with leniency the objections despite the acknowledged
mandatory language of the rules.

There is clear language of the law and the same should not be modified in
practice. The separate certification of the FSO from the transcript proper was also
questioned as irregular by petitioner [private respondent]. In so doing, she was
merely being vigilant of her rights considering that she was not present then. No
other proof thereon is needed when the same is clear on the face of the
deposition material given.

Petitioner's [private respondent] right to cross examine and to present rebuttal

evidence, having been reserved earlier, needed no reiteration. Even then, this
was nevertheless manifested and even vehemently argued. As defendant's oral
deposition was admitted, despite substantial issues raised against it in the
interest of justice, similar consideration, aside from substantial and technical
basis, also dictates that petitioner's [private respondent] right to cross-examine
and present rebuttal evidence should be granted. An even handed treatment of
the parties would require the same attitude towards the acceptance of petitioner's
[private respondent's] right to cross-examine and present its rebuttal evidence on
the same.  26
In Fortune Corporation vs. Court of Appeals,   this Court set aside upon review by certiorari the
27

order of the trial court allowing deposition because the order did not conform to the essential
requirements of law and may reasonably cause material injury to the adverse party:

The rule is that certiorari will generally not lie to review a discretionary action of
any tribunal. Also, as a general proposition, a writ of certiorari is available only to
review final judgment or decrees, and will be refused where there has been no
final judgment or order and the proceedings for which the writ is sought is still
pending and undetermined in the lower tribunal. Pursuant to this rule, it has been
held that certiorari will not lie to review or correct discovery orders made prior to
trial. This is because, like other discovery orders, orders made under Section 16,
Rule 24 are interlocutory and not appealable considering that they of not finally
dispose of the proceeding or of any independent offshoot of it.

However, such rules are subject to the exception that discretionary acts will be
reviewed where the lower court or tribunal has acted without or in excess of its
jurisdiction, where an interlocutory order does not conform to essential
requirements of law and may reasonably cause material injury throughout the
subsequent proceedings for which the remedy of appeal will be inadequate, or
where there is a clear or serious abuse of discretion.

IN VIEW OF THE FOREGOING, the Court hereby DENIES the petition for failure of the petitioner
to sufficiently show that respondent Court of Appeals committed any reversible error.

SO ORDERED.
 SECOND DIVISION

June 15, 2016

G.R. No. 197122

INGRID SALA SANTAMARIA and ASTRID SALA BOZA, Petitioners,

vs.
THOMAS CLEARY, Respondent.

x-----------------------x

G.R. No. 197161

KATHRYN GO-PEREZ, Petitioner,
vs.
THOMAS CLEARY, Respondent.

DECISION

LEONEN, J.:

This case stems from a motion for court authorization to take deposition in Los Angeles by
respondent Thomas Cleary, an American citizen and Los Angeles resident who filed a civil suit
against petitioners Ingrid Sala Santamaria, Astrid Sala Boza, and Kathryn Go-Perez before the
Regional Trial Court of Cebu.

We resolve whether a foreigner plaintiff residing abroad who chose to file a civil suit in the
Philippines is allowed to take deposition abroad for his direct testimony on the ground that he is
"out of the Philippines" pursuant to Rule 23, Section 4(c)(2) of the Rules of Court.

These two separate Petitions  assail the Court of Appeals’ (1) August 10, 2010 Decision  that
1 2

granted Thomas Cleary’s (Cleary) Petition for Certiorari and reversed the trial court’s
Orders  denying Cleary’s Motion for Court Authorization to Take Deposition  before the
3 4

Consulate- General of the Philippines in Los Angeles; and (2) May 11, 2011 Resolution  that
5

denied reconsideration.

On January 10, 2002, Cleary, an American citizen with office address in California, filed a
Complaint  for specific performance and damages against Miranila Land Development
6
Corporation, Manuel S. Go, Ingrid Sala Santamaria (Santamaria), Astrid Sala Boza (Boza), and
Kathryn Go-Perez (Go-Perez) before the Regional Trial Court of Cebu.

The Complaint involved shares of stock of Miranila Land Development Corporation, for which
Cleary paid US$191,250.00.  Cleary sued in accordance with the Stock Purchase and Put
7

Agreement he entered into with Miranila Land Development Corporation, Manuel S. Go,
Santamaria, Boza, and Go-Perez. Paragraph 9.02 of the Agreement provides:

Any suit, action or proceeding with respect to this Agreement may be brought in (a) the courts of
the State of California, (b) the United States District Court for the Central District of California, or
(c) the courts of the country of Corporation’s incorporation, as Cleary may elect in his sole
discretion, and the Parties hereby submit to any such suit, action proceeding or judgment and
waives any other preferential jurisdiction by reason of domicile. 8

Cleary elected to file the case in Cebu.

Santamaria, Boza, and Go-Perez filed their respective Answers with Compulsory
Counterclaims.  The trial court then issued a notice of pre-trial conference dated July 4, 2007.
9 10

In his pre-trial brief, Cleary stipulated that he would testify "in support of the allegations of his
complaint, either on the witness stand or by oral deposition."  Moreover, he expressed his intent
11

in availing himself "of the modes of discovery under the rules." 12

On January 22, 2009, Cleary moved for court authorization to take deposition.  He prayed that
13

his deposition be taken before the Consulate-General of the Philippines in Los Angeles and be
used as his direct testimony. 14

Santamaria and Boza opposed  the Motion and argued that the right to take deposition is not
15

absolute.  They claimed that Cleary chose the Philippine system to file his suit, and yet he
16

deprived the court and the

parties the opportunity to observe his demeanor and directly propound questions on him. 17

Go-Perez filed a separate Opposition,  arguing that the oral deposition was not intended for
18

discovery purposes if Cleary deposed himself as plaintiff.  Since he elected to file suit in the
19

Philippines, he should submit himself to the procedures and testify before the Regional Trial
Court of Cebu.  Moreover, Go-Perez argued that oral deposition in the United States would
20

prejudice, vex, and oppress her and her co-petitioners who would need to incur costs to attend. 21

The trial court denied Cleary’s Motion for Court Authorization to Take Deposition in the
Order  dated June 5, 2009. It held that depositions are not meant to be a substitute for actual
22

testimony in open court. As a rule, a deponent must be presented for oral examination at trial as
required under Rule 132, Section 1 of the Rules of Court. "As the supposed deponent is the
plaintiff himself who is not suffering from any impairment, physical or otherwise, it would be best
for him to appear in court and testify under oath[.]"  The trial court also denied reconsideration.
23 24

Cleary elevated the case to the Court of Appeals.

On August 10, 2010, the Court of Appeals granted Cleary’s Petition for Certiorari and reversed
the trial court’s ruling.  It held that Rule 23, Section 1 of the Rules of Court allows the taking of
25

depositions, and that it is immaterial that Cleary is the plaintiff himself.  It likewise denied
26

reconsideration. 27

Hence, the present Petitions were filed.

Petitioners Ingrid Sala Santamaria and Astrid Sala Boza maintain in their appeal that the right of
a party to take the deposition of a witness is not absolute.  Rather, this right is subject to the
28

restrictions provided by Rule 23, Section 16  of the Rules of Court and jurisprudence.  They
29 30

cite Northwest Airlines v. Cruz,  in that absent any compelling or valid reason, the witness must
31

personally testify in open court according to the general rules on examination of witnesses under
Rule 132 of the Rules of Court. 32

Likewise, petitioners Santamaria and Boza submit that Cleary cannot, for his sole convenience,
substitute his open-court testimony by having his deposition taken in the United States.  This will 33

be very costly, time-consuming, disadvantageous, and extremely unfair to petitioners and their
counsels who are based in the Philippines. 34

Petitioners Santamaria and Boza argue that the proposed deposition in this case is not for
discovery purposes as Cleary is the plaintiff himself.  The Court of Appeals Decision gives
35

foreigners undue advantage over Filipino litigants in cases under similar circumstances, where
the parties and the presiding judge do not have the opportunity to personally examine and
observe the conduct of the testifying witness.  Thus, the court’s suggestion for written
36

interrogatories is also not proper as open-court testimony is different from mere serving of written
interrogatories. 37

Lastly, petitioners Santamaria and Boza claim that Cleary’s sole allegation that he is a resident
"out of the Philippines" does not warrant departure from open-court trial procedure under Rule
132, Section 1 of the Rules of Court. 38

In her Petition, petitioner Kathryn Go-Perez makes two (2) arguments. First, she contends that
granting a petition under Rule 65 involves a finding of grave abuse of discretion, but the Court of
Appeals only found "error" in the trial court orders.  She cites Triplex Enterprises v. PNB-
39

Republic Bank  and Yu v. Reyes-Carpio,  in that a writ of certiorari is restricted to extraordinary
40 41

cases where the act of the lower court is void.  It is designed to correct errors of jurisdiction and
42

not errors of judgment.  People v. Hubert Webb  has held that the use of discovery procedures
43 44

is directed to the sound discretion of the trial judge and certiorari will be issued only to correct
errors of jurisdiction.  It cannot correct errors of procedure or mistakes in the findings or
45

conclusions by the lower court. 46

Second, petitioner Go-Perez submits that the Court of Appeals erred in disregarding Rule 23,
Section 16 of the Rules of Court, which imposes limits on the right to take deposition.  Cleary’s 47

self-deposition in the United States, which is not for discovery purposes, is oppressive,
vexatious, and bordering on harassment.  The Court of Appeals also erred in ignoring applicable
48

jurisprudence such as Northwest, where this Court found that the deposition taken in the United
States was to accommodate the petitioner’s employee who was there, and not for discovery
purposes. Thus, the general rules on examination of witnesses under Rule 132 of the Rules of
Court should be observed. 49

Lastly, petitioner Go-Perez contends that the Court of Appeals ignored Rule 132, Section 1 of the
Rules of Court, which provides that a witness must testify in open court.  That Cleary is the 50

plaintiff himself is material as there is nothing for him to discover when he deposes himself. 51

On the other hand, respondent Thomas Cleary maintains that Rule 23, Section 4 of the Rules of
Court on the taking of deposition applies.  He is "out of the Philippines" as an American citizen
52

residing in the United States. This is true even when he entered the Stock Purchase and Put
Agreement with petitioners in 1999 and filed the case in 2009.  Cleary cites Dasmariñas 53

Garments v. Reyes  and San Luis v. Rojas.  The trial court even "previously scheduled the
54 55

hearing subject to the notice from the Department of Foreign Affairs for the taking of
deposition."  However, this was later disallowed upon petitioners’ opposition.
56 57
Respondent submits that the rules on depositions do not authorize nor contemplate any
intervention by the court in the process. All that is required under the rules is that "reasonable
notice" be given "in writing to every other party to the action[.]"  Thus, the trial court’s discretion
58

in ruling on whether a deposition may be taken is not unlimited. 59

Respondent adds that this Court has allowed the taking of testimonies through deposition in lieu
of their actual presence at trial.  He argues that with the new rules, depositions serve as both a
60

method of discovery and a method of presenting testimony.  That the court cannot observe a
61

deponent’s demeanor is insufficient justification to disallow deposition. Otherwise, no deposition

can ever be taken as this objection is common to all depositions. 62

Respondent contends that Northwest does not apply as the deposition in that case was found to
have been improperly and irregularly taken. 63

Lastly, respondent argues that the presiding judge of the trial court acted with grave abuse of
discretion in denying his Motion for Court Authorization to Take Deposition.  That he is an 64

American residing in the United States is undisputed. The trial court even issued the Order dated
January 13, 2009 directing him to inform the court of the "steps he . . . has taken and the
progress of his request for a deposition taking filed, if any, with the Department of Justice."  In 65

later disallowing the deposition as he is "not suffering from any impairment, physical or
otherwise," the presiding judge acted in an arbitrary manner amounting to lack of
jurisdiction.  The deposition sought is in accordance with the rules. The expenses in attending a
66

deposition proceeding in the United States cannot be considered as a substantial reason to

disallow deposition since petitioners may send cross-interrogatories.  67

These consolidated Petitions seek a review of the Court of Appeals Decision reversing the trial
court’s ruling and allowing Cleary to take his deposition in the United States. Thus, the issues for
resolution are:

First, whether the limitations for the taking of deposition under Rule 23, Section 16 of the Rules
of Court apply in this case; and

Second, whether the taking of deposition under Rule 23, Section 4(c)(2) of the Rules of Court
applies to a non-resident foreigner plaintiff’s direct testimony. 1âwphi1

Utmost freedom governs the taking of depositions to allow the widest scope in the gathering of
information by and for all parties in relation to their pending case.  The relevant section in Rule
68

23 of the Rules of Court provides:

RULE 23

DEPOSITIONS PENDING ACTION

SECTION 1. Depositions pending action, when may be taken. – By leave of court after
jurisdiction has been obtained over any defendant or over property which is the subject of the
action, or without such leave after an answer has been served, the testimony of any person,
whether a party or not, may be taken, at the instance of any party, by deposition upon oral
examination or written interrogatories. The attendance of witnesses may be compelled by the
use of a subpoena as provided in Rule 21. Depositions shall be taken only in accordance with
these Rules. The deposition of a person confined in prison may be taken only by leave of court
on such terms as the court prescribes. (Emphasis supplied)
As regards the taking of depositions, Rule 23, Section 1 is clear that the testimony of any person
may be taken by deposition upon oral examination or written interrogatories at the instance of
any party.

San Luis explained that this provision "does not make any distinction or restriction as to who can
avail of deposition."  Thus, this Court found it immaterial that the plaintiff was a non-resident
69

foreign corporation and that all its witnesses were Americans residing in the United States. 70

On the use of depositions taken, we refer to Rule 23, Section 4 of the Rules of Court. This Court
has held that "depositions may be used without the deponent being actually called to the witness
stand by the proponent, under certain conditions and for certain limited purposes."  These
71

exceptional cases are enumerated in Rule 23, Section 4(c) as follows:

SEC 4. Use of depositions. – At the trial or upon the hearing of a motion or an interlocutory
proceeding, any part or all of a deposition, so far as admissible under the rules of evidence, may
be used against any

party who was present or represented at the taking of the deposition or who had due notice
thereof, in accordance with any one of the following provisions:

....

(c) The deposition of a witness, whether or not a party, may be used by any party for any
purpose if the court finds: (1) that the witness is dead; or (2) that the witness resides at
distance more than one hundred (100) kilometers from the place of trial or hearing, or is
out of the Philippines, unless it appears that his absence was procured by the party
offering the deposition; or (3) that the witness is unable to attend or testify because of age,
sickness, infirmity, or imprisonment; or (4) that the party offering the deposition has been unable
to procure the attendance of the witness by subpoena; or (5) upon application and notice, that
such exceptional circumstances exist as to make it desirable, in the interest of justice and with
due regard to the importance of presenting the testimony of witnesses orally in open court, to
allow the deposition to be used[.] (Emphasis supplied)

The difference between the taking of depositions and the use of depositions taken is apparent in
Rule 23, which provides separate sections to govern them. Jurisprudence has also discussed the
importance of this distinction and its implications:

The availability of the proposed deponent to testify in court does not constitute "good cause" to
justify the court’s order that his deposition shall not be taken. That the witness is unable to attend
or testify is one of the grounds when the deposition of a witness may be used in court during the
trial. But the same reason cannot be successfully invoked to prohibit the taking of his deposition.

The right to take statements and the right to use them in court have been kept entirely
distinct. The utmost freedom is allowed in taking depositions; restrictions are imposed
upon their use. As a result, there is accorded the widest possible opportunity for
knowledge by both parties of all the facts before the trial. Such of this testimony as may be
appropriate for use as a substitute for viva voce examination may be introduced at the trial; the
remainder of the testimony, having served its purpose in revealing the facts to the parties before
trial, drops out of the judicial picture.

. . . [U]nder the concept adopted by the new Rules, the deposition serves the double function of a
method of discovery —with use on trial not necessarily contemplated — and a method of
presenting testimony. Accordingly, no limitations other than relevancy and privilege have been
placed on the taking of depositions, while the use at the trial is subject to circumscriptions looking
toward the use of oral testimony wherever practicable.  (Emphasis supplied)
72
The rules and jurisprudence support greater leeway in allowing the parties and their witnesses to
be deposed in the interest of collecting information for the speedy and complete disposition of
cases.

In opposing respondent’s Motion for Court Authorization to Take Deposition, petitioners contest
at the deposition-taking stage. They maintain that the right to take deposition is subject to the
restrictions found in Rule 23, Section 16 of the Rules of Court on orders for the protection of
parties and deponents. 73

II

Rule 23, Section 16 of the Rules of Court is on orders for the protection of parties and deponents
from annoyance, embarrassment, or oppression.  The provision reads:
1âwphi1

SEC. 16. Orders for the protection of parties and deponents. — After notice is served for taking a
deposition by oral examination, upon motion seasonably made by any party or by the person to
be examined and for good cause shown, the court in which the action is pending may make an
order that the deposition shall not be taken, or that it may be taken only at some designated
place other than that stated in the notice, or that it may be taken only on written interrogatories,
or that certain matters shall not be inquired into, or that the scope of the examination shall be
held with no one present except the parties to the action and their officers or counsel, or that
after being sealed the deposition shall be opened only by order of the court, or that secret
processes, developments, or research need not be disclosed, or that the parties shall
simultaneously file specified documents or information enclosed in sealed envelopes to be
opened as directed by the court or the court may make any other order which justice requires to
protect the party or witness from annoyance, embarrassment, or oppression. (Emphasis
supplied)

The provision includes a full range of protective orders, from designating the place of deposition,
limiting those in attendance, to imposing that it be taken through written interrogatories. At the
extreme end of this spectrum would be a court order that completely denies the right to take
deposition. This is what the trial court issued in this case.

While Section 16 grants the courts power to issue protective orders, this grant involves discretion
on the part of the court, which "must be exercised, not arbitrarily, capriciously or oppressively,
but in a reasonable manner and in consonance with the spirit of the law, to the end that its
purpose may be attained." 74

A plain reading of this provision shows that there are two (2) requisites before a court may issue
a protective order: (1) there must be notice; and (2) the order must be for good cause shown.
In Fortune Corporation v. Court of Appeals,  this Court discussed the concept of good cause as
75

used in the rules:

The matter of good cause is to be determined by the court in the exercise of judicial
discretion. Good cause means a substantial reason—one that affords a legal excuse.
Whether or not substantial reasons exist is for the court to determine, as there is no hard and fast
rule for determining the question as to what is meant by the term "for good cause shown."

The requirement, however, that good cause be shown for a protective order puts the burden on
the party seeking relief to show some plainly adequate reasons for the order. A particular
and specific demonstration of facts, as distinguished from conclusory statements, is required to
establish good cause for the issuance of a protective order. What constitutes good cause
furthermore depends upon the kind of protective order that is sought.

In light of the general philosophy of full discovery of relevant facts and the board statement of
scope in Rule 24, and in view of the power of the court under Sections 16 and 18 of said Rule to
control the details of time, place, scope, and financing for the protection of the deponents and
parties, it is fairly rare that it will be ordered that a deposition should not be taken at all. All
motions under these subparagraphs of the rule must be supported by "good cause" and a strong
showing is required before a party will be denied entirely the right to take a deposition. A mere
allegation, without proof, that the deposition is being taken in bad faith is not a sufficient ground
for such an order. Neither is an allegation that it will subject the party to a penalty or forfeiture.
The mere fact that the information sought by deposition has already been obtained through a bill
of particulars, interrogatories, or other depositions will not suffice, although if it is entirely
repetitious a deposition may be forbidden. The allegation that the deponent knows nothing about
the matters involved does not justify prohibiting the taking of a deposition, nor that whatever the
witness knows is protected by the "work product doctrine," nor that privileged information or trade
secrets will be sought in the course of the examination, nor that all the transactions were either
conducted or confirmed in writing.  (Emphasis supplied, citations omitted)
76

Thus, we consider the trial court’s explanation for its denial of respondent’s Motion for Court
Authorization to Take Deposition. The trial court’s Order was based on two (2) premises: first,
that respondent should submit himself to our court processes since he elected to seek judicial
relief with our courts; and second, that respondent is not suffering from any impairment and it is
best that he appear before our courts considering he is the plaintiff himself.77

III

On the first premise, apparent is the concern of the trial court in giving undue advantage to non-
resident foreigners who file suit before our courts but do not appear to testify. Petitioners support
this ruling. They contend that the open-court examination of witnesses is part of our judicial
system. Thus, there must be compelling reason to depart from this procedure in order to avoid
suits that harass Filipino litigants before our courts.  Moreover, they argue that it would be costly,
78

time-consuming, and disadvantageous for petitioners and their counsels to attend the deposition
to be taken in Los Angeles for the convenience of respondent. 79

In the Stock Purchase and Put Agreement, petitioners and respondent alike agreed that
respondent had the sole discretion to elect the venue for filing any action with respect to it.

Paragraph 9.02 of the Agreement is clear that the parties "waive any other preferential
jurisdiction by reason of domicile."  If respondent filed the suit in the United States—which he
80

had the option to do under the Agreement—this would have been even more costly, time-
consuming, and disadvantageous to petitioners who are all Filipinos residing in the Philippines.
There is no question that respondent can file the case before our courts. With respondent having
elected to file suit in Cebu, the bone of contention now is on whether he can have his deposition
taken in the United States. The trial court ruled that respondent should consequently submit
himself to the processes and procedures under the Rules of Court.

Respondent did avail himself of the processes and procedures under the Rules of Court when he
filed his Motion. He invoked Rule 23, Section 4(c)(2) of the Rules of Court and requested to have
his deposition taken in Los Angeles as he was "out of the Philippines."

Moreover, Rule 23, Section 1 of the Rules of Court no longer requires leave of court for the
taking of deposition after an answer has been served. According to respondent, he only sought a
court order when the Department of Foreign Affairs required one so that the deposition may be
taken before the Philippine Embassy or Consulate. 81

That neither the presiding judge nor the parties will be able to personally examine and observe
the conduct of a deponent does not justify denial of the right to take deposition. This objection is
common to all depositions.  Allowing this reason will render nugatory the provisions in the Rules
82

of Court that allow the taking of depositions.

As suggested by the Court of Appeals, the parties may also well agree to take deposition by
written interrogatories  to afford petitioners the opportunity to cross-examine without the need to
83

fly to the United States. 84

The second premise is also erroneous. That respondent is "not suffering from any impairment,
physical or otherwise" does not address the ground raised by respondent in his Motion.
Respondent referred to Rule 23, Section 4(c)(2) of the Rules of Court, in that he was "out of the
Philippines."  This Section does not qualify as to the condition of the deponent who is outside the
85

Philippines.

IV

Petitioners argue that the deposition sought by respondent is not for discovery purposes as he is
the plaintiff himself.  To support their contention, they cite Northwest, where this Court held that
86

Rule 132 of the Rules of Court—on the examination of witnesses in open court—should be
observed since the deposition was only to accommodate the petitioner’s employee who was in
the United States, and not for discovery purposes. 87

Jurisprudence has discussed how "[u]nder the concept adopted by the new Rules, the deposition
serves the double function of a method of discovery—with use on trial not necessarily
contemplated—and a method of presenting testimony."  The taking of depositions has been
88

allowed as a departure from open-court testimony. Jonathan Landoil International Co. Inc. v.

Spouses Mangundadatu  is instructive:
89

The Rules of Court and jurisprudence, however, do not restrict a deposition to the sole function
of being a mode of discovery before trial. Under certain conditions and for certain limited
purposes, it may be taken even after trial has commenced and may be used without the
deponent being actually called to the witness stand. In Dasmariñas Garments v. Reyes, we
allowed the taking of the witnesses’ testimonies through deposition, in lieu of their actual
presence at the trial.

Thus, "[d]epositions may be taken at any time after the institution of any action, whenever
necessary or convenient. There is no rule that limits deposition-taking only to the period of pre-
trial or before it; no prohibition against the taking of depositions after pre-trial." There can be no
valid objection to allowing them during the process of executing final and executory judgments,
when the material issues of fact have become numerous or complicated.

In keeping with the principle of promoting the just, speedy and inexpensive disposition of every
action and proceeding, depositions are allowed as a "departure from the accepted and
usual judicial proceedings of examining witnesses in open court where their demeanor
could be observed by the trial judge." Depositions are allowed, provided they are taken in
accordance with the provisions of the Rules of Court (that is, with leave of court if the
summons have been served, without leave of court if an answer has been submitted); and
provided, further, that a circumstance for their admissibility exists.

....

When a deposition does not conform to the essential requirements of law and may reasonably
cause material injury to the adverse party, its taking should not be allowed. This was the primary
concern in Northwest Airlines v. Cruz. In that case, the ends of justice would be better served if
the witness was to be brought to the trial court to testify. The locus of the oral deposition therein
was not within the reach of ordinary citizens, as there were time constraints; and the trip required
a travel visa, bookings, and a substantial travel fare. In People v. Webb, the taking of depositions
was unnecessary, since the trial court had already admitted the Exhibits on which the witnesses
would have testified. (Emphasis supplied) 90
Petitioners rely on Northwest in that absent any compelling or valid reason, the witness must
personally testify in open court.  They add that the more recent Republic v.
91

Sandiganbayan  reiterated the rulings in Northwest;  specifically, that Northwest emphasized

92 93

that the "court should always see to it that the safeguards for the protection of the parties and
deponents are firmly maintained."  Moreover, "[w]here the deposition is taken not for discovery
94

purposes, but to accommodate the deponent, then the deposition should be rejected in
evidence."  Northwest and Republic are not on all fours with this case.
95

Northwest involved a deposition in New York found to have been irregularly taken. The
deposition took place on July 24, 1995, two (2) days before the trial court issued the order
allowing deposition.  The Consul that swore in the witness and the stenographer was different
96

from the Consulate Officer who undertook the deposition proceedings.  In this case, on the other
97

hand, deposition taking was not allowed by the trial court to begin with.

In Northwest, respondent Camille Cruz’s opposition to the notice for oral deposition included a
suggestion for written interrogatories as an alternative.  This would have allowed cross-
98

interrogatories, which would afford her the opportunity to rebut matters raised in the deposition in
case she had contentions. However, this suggestion was denied by the trial court for being time-
consuming.  In this case, petitioners argued even against written interrogatories for being a mile
99

of difference from open-court testimony. 100

In Republic, the issue involved Rule 23, Section 4(c)(3) of the Rules of Court in relation to Rule
130, Section 47 on testimonies and depositions at a former proceeding.  The deposition of
101

Maurice Bane was taken in London for one case, and what the court disallowed was its use in
another case. 102

In sum, Rule 23, Section 1 of the Rules of Court gives utmost freedom in the taking of
depositions. Section 16 on protection orders, which include an order that deposition not be taken,
may only be issued after notice and for good cause shown. However, petitioners’ arguments in
support of the trial court’s Order denying the taking of deposition fails to convince as good cause
shown.

The civil suit was filed pursuant to an agreement that gave respondent the option of filing the
case before our courts or the courts of California. It would have been even more costly, time-
consuming, and disadvantageous to petitioners had respondent filed the case in the United
States.

Further, it is of no moment that respondent was not suffering from any impairment. Rule 23,
Section 4(c)(2) of the Rules of Court, which was invoked by respondent, governs the use of
depositions taken. This allows the use of a deposition taken when a witness is "out of the
Philippines."

In any case, Rule 23 of the Rules of Court still allows for objections to admissibility during trial.
The difference between admissibility of evidence and weight of evidence has long been laid
down in jurisprudence. These two are not to be equated. Admissibility considers factors such as
competence and relevance of submitted evidence. On the other hand, weight is concerned with
the persuasive tendency of admitted evidence. 103

The pertinent sections of Rule 23 on admissibility are:

SEC. 6. Objections to admissibility. – Subject to the provisions of section 29 of this Rule,

objection may be made at the trial or hearing to receiving in evidence any deposition or part
thereof for any reason which would require the exclusion of the evidence if the witness were then
present and testifying.

....
SEC. 29. Effect of errors and irregularities in depositions . . . .

....

(c) As to competency and relevancy of evidence. - Objections to the competency of a witness or

the competency, relevancy [sic], or materiality of testimony are not waived by failure to make
them before or during the taking of the deposition, unless the ground of the objection is one
which might have been obviated or removed if presented at that time[.]

As regards weight of evidence, "the admissibility of the deposition does not preclude the
determination of its probative value at the appropriate time."   In resorting to depositions,
104

respondent takes the risk of not being able to fully prove his case.

Thus, we agree with the Court of Appeals in granting the Petition for Certiorari and reversing the
trial court's denial of respondent's Motion for Court Authorization to Take Deposition.

WHEREFORE, the Petitions are DENIED for lack of merit.

SO ORDERED.
 FIRST DIVISION

G.R. No. 112710       May 30, 2001

REPUBLIC OF THE PHILIPPINES, petitioner,

vs.
SANDIGANBAYAN (Second Division) and LUCIO TAN, ESTATE OF FERDINAND E.
MARCOS (represented By IMELDA R. MARCOS, IMEE M. MANOTOC, IRENE M. ARANETA
and FERDINAND MARCOS, JR.), IMELDA R. MARCOS, CARMEN KHAO TAN, FLORENCIO
T. SANTOS, NATIVIDAD P. SANTOS, DOMINGO CHUA, TAN HUI NEE, MARIANO TAN ENG
LIAN, ESTATE OF BENITO TAN KEE HIONG (represented by TARCIANA C. TAN),
FLORENCIO N. SANTOS, JR., HARRY C. TAN, TAN ENG CHAN, CHUNG POE KEE,
MARIANO KHOO, MANUEL KHOO, MIGUEL KHOO, JAIME KHOO, ELIZABETH KHOO,
CELSO C. RANOLA, WILLIAM T. WONG, ERNESTO B. LIM, BENJAMIN T. ALBACITA, DON
FERRY, WILLY CO, FEDERICO MORENO, PANFILO O. DOMINGO, ESTATE/ HEIRS OF
GREGORIO LICAROS, CESAR ZALAMEA, SHAREHOLDINGS, INC., ALLIED BANKING
CORP., FOREMOST FARMS, INC., FORTUNE TOBACCO CORP. MARANAW HOTELS &
RESORT CORP., VIRGINIA TOBACCO REDRYING PLANT, NORTHERN TOBACCO
REDRYING PLANT, ASIA BREWERY, INC., SIPALAY TRADING CORP., HIMMEL
INDUSTRIES, GRANDSPAN DEVELOPMENT CORP., BASIC HOLDINGS CORP.,
PROGRESSIVE FARMS, INC., MANUFACTURING SERVICES AND TRADE CORP., ALLIED
LEASING & FINANCE CORPORATION, JEWEL HOLDINGS, INC., IRIS HOLDINGS AND
DEVELOPMENT CORP., VIRGO HOLDINGS AND DEVELOPMENT CORP., POLO
NOMINEES LTD., LIMITED SERVICES, LTD., RED SEAL LTD., COMMONS SEAL LTD.,
SPLENDID NOMINEES LTD., YOUNG TAI LTD., YOUNG JIN LTD., CO FINANCE NOMINEES
LTD., CORPORATE FINANCES (D.C.T.) LTD., HARRIS SECRETARIES, ALLIED PACIFIC
CORP., B & MCKAY NOMINEES LTD., ZANITH ESTABLISHMENT, ARINSI, S.A., COTTON
CORP. (B.V.I.) LTD., BARTONDALE LTD., HONGKONG, OCEANIC BANK, SAN
FRANCISCO, THE STERLING CARPET MAN LTD., THE STERLING CARPET SALES LTD.,
THE STERLING CARPET DISTRIBUTORS LTD., MERCURY DRUG STORES LTD.,
CALGARY, ALBERTA, MERCURY ENERGY RESOURCES LTD., respondents.

PUNO, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court to set aside the Resolutions
dated August 23, 1993 and October 22, 1993 of the Sandiganbayan in SB Civil Case No. 0005
denying petitioner's "Motion for Leave To Take the Deposition of Rolando C. Gapud Upon Oral
Examination In the Crown Colony of Hongkong."
On July 17, 1987, petitioner Republic of the Philippines, represented by the Philippine
Commission for Good Government, filed before the Sandiganbayan a complaint for "Reversion,
Reconveyance, Restitution, Accounting and Damages." The complaint, docketed as Civil Case
No. 0005, was filed against 26 individuals and was entitled "Republic of the Philippines, Plaintiff
v. Lucio C. Tan, Ferdinand E. Marcos, Imelda R. Marcos, Carmen Khao Tan, Florencio T.
Santos, Natividad P. Santos, Domingo Chua, Tan Hui Nee, Mariano Tan Eng Lian, Estate of
Benito Tan Kee Hiong (represented by Tarciana C. Tan), Florencio N. Santos, Jr., Harry C. Tan,
Tan Eng Chuan, Chung Poe Kee, Mariano Khoo, Manuel Khoo, Miguel Khoo, Jaime Khoo,
Elizabeth Khoo, Celso C. Ranola, William T. Wong, Ernesto B. Lim, Benjamin T. Albacita, Don
Ferry, Willy Co, Federico Moreno, Defendants."1 The complaint alleged that defendant Ferdinand
E. Marcos, former President of the Philippines, and his wife Imelda, in violation of the
Constitution and in fraud of the Filipino people, embarked on a systematic plan accumulating
wealth during their term as President and First Lady of the Republic; that part of this plan was an
agreement with herein private respondent Lucio C. Tan whereby Mr. Marcos would own sixty per
cent (60%) of Shareholdings, Inc., a holding company which beneficially held and controlled
substantial shares in corporations owned by Mr. Tan such as Fortune Tobacco, Asia Brewery,
Allied Banking Corporation and Foremost Farms; that in addition to this agreement, Mr. Tan,
from 1980 to 1986, paid Mr. Marcos sums of money as bribes and commissions in consideration
of the government's continued support for Mr. Tan's diversified business ventures; that to prevent
disclosure of these transactions, Mr. Marcos and Mr. Tan used the other defendants named in
the complaint as their incorporators, directors, board members and/or stockholders of
corporations held and/or controlled by the two; that Mr. Tan, without sufficient collateral and
consideration but through the assistance of then Central Bank Governor Gregorio Licaros,
acquired control of the General Bank and Trust Company which eventually became Allied
Banking Corporation; that the Marcos spouses and Mr. Tan caused losses in millions of pesos to
the Development Bank of the Philippines (DBP) by unlawfully selling DBP's controlling interest in
Century Park Sheraton Hotel Manila to a company grossly undercapitalized but beneficially held
and controlled by Mr. Tan, and that this transaction was facilitated by defendant Don Ferry, then
Vice-Chairman of DBP, and defendant Harry Tan. Petitioner prayed for reconveyance of all funds
and property or payment of the value of such funds and property, for accounting and damages. 2

In December 1987, petitioner filed a "Manifestation and Motion" praying for leave "to expand or
otherwise make more specific certain allegations in the Complaint." This was granted by the
Sandiganbayan in an order dated December 11, 1987. Petitioner filed an Expanded Complaint
on January 25, 1988.

In June 1988, herein respondent Don M. Ferry, one of the defendants therein, filed his answer. In
March 1990, herein respondent Lucio Tan filed his answer. A separate answer was filed by the
twenty-one (21) "defendants other than Ferdinand E. Marcos, Imelda Marcos, Don M. Ferry,
Federico Moreno and Lucio Tan."

On August 19, 1991, petitioner filed a "Motion for Leave to Amend and for Admission of Second
Amended Complaint" and attached thereto a "Second Amended Complaint." Petitioner sought to
substitute defendant Ferdinand Marcos with his estate, President Marcos having died pendente
lite, and include as additional defendants three (3) individuals who allegedly participated in the
Marcoses' accumulation of ill-gotten wealth, namely, Panfilo O. Domingo, then President of the
Philippine National Bank which, together with the Central Bank, assisted Mr. Tan's acquisition of
the General Bank and Trust Company; the Estate of Central Bank Governor Licaros, Governor
Licaros having likewise died pendente lite; and Cesar Zalamea, then Chairman of the Board of
the Development Bank of the Philippines, who recommended the approval of and facilitated the
acquisition by Mr. Tan of the DBP shares in Century Park Sheraton Hotel. 3 Also named as
additional defendants were forty-two (42) corporations believed to be beneficially owned or
controlled by the Lucio Tan group of business associates of the former President.

The Motion was duly opposed by herein respondent Tan and "defendants other than Ferdinand
E. Marcos, Imelda Marcos, Don Ferry and Federico Moreno."
On April 2, 1992, a Resolution was issued by the Sandiganbayan granting the "Motion for Leave
to Amend and for Admission of the Second Amended Complaint" and admitted the "Second
Amended Complaint." The court ordered the issuance of summonses to the newly-impleaded
defendants except the Estate of Ferdinand E. Marcos which merely substituted the deceased
Ferdinand E. Marcos, an original defendant. 4

On May 25, 1992, the 42 corporate defendants filed a "Motion for a More Definite Statement or
Bill of Particulars." This motion was adopted by the rest of the additional defendants in a motion
dated June 18, 1992.

Meanwhile, on May 8, 1992, respondent Panfilo Domingo received summons from respondent
court together with a copy of the Second Amended Complaint. On June 2, 1992, respondent
Domingo filed an "Omnibus Motion" praying for a copy of Annex "A" of the complaint, i.e., a list of
corporations allegedly held by Mr. Tan; the production of actionable documents, and submission
of a Bill of Particulars.

In June 1993, petitioner filed a "Motion for Leave To Take the Deposition of Rolando C. Gapud
Upon Oral Examination in the Crown Colony of Hongkong." Petitioner alleged that Mr. Rolando
C. Gapud, former financial adviser of President Marcos and his wife, was willing to testify on
matters relevant to the subject of the case; that Mr. Gapud executed three (3) sworn statements
in Hongkong in 1987 setting forth the various business activities of the former President, the
manner in which these businesses were conducted and managed, and identifying respondent
Lucio Tan and thirty (30) other principal business associates of the former President; that these
affidavits were used by petitioner in filing civil and criminal cases against the defendants; that Mr.
Gapud's testimony is indispensable to establish the intricate unlawful business activities of the
Marcoses and their principal business associates or cronies, including Mr. Tan; that in view of the
nature of his testimony and the personal risks Mr. Gapud was facing in assisting the government
in the recovery of ill-gotten wealth, his testimony would be given only by deposition upon oral
examination. Petitioner prayed that the court allow the taking of the testimony by deposition upon
oral examination of Mr. Gapud before the Philippine Consulate in Hongkong, or in any other
Philippine Foreign Office, and on such dates and time as may be agreed upon by the parties. 5

The individual defendants (except for the Estate of Ferdinand E. Marcos, Imelda R. Marcos, Don
Ferry, Federico Moreno, Panfilo O. Domingo, Estate/Heirs of Gregorio Licaros, and Cesar
Zalamea) filed their Opposition, to which petitioner replied.

In a Resolution dated August 23, 1993, respondent Sandiganbayan denied petitioner's "Motion
for Leave to Take Deposition of Rolando C. Gapud Upon Oral Examination in the Crown Colony
of Hongkong." Respondent court held that the taking of deposition is premature because not all
defendants have been summoned or have filed their answers to the complaint, and no special
circumstances existed that warranted the taking of the deposition before service of answers.
Reconsideration of the resolution was likewise denied on October 22, 1993. Hence this petition.

Petitioner claims that:

"A. Respondent Sandiganbayan seriously erred in denying the petitioner's Motion for
Leave to Take the Deposition of Rolando C. Gapud on the ground that summons have
not yet been served upon all the respondents and all the respondents have not yet filed
their answer to the complaint.

B. Respondent Sandiganbayan erred in declaring that there is no showing of any special

or unusual circumstances to warrant the necessity of taking the deposition of Rolando C.
Gapud.
 C. Respondent Sandiganbayan erred in stating that the petitioner (plaintiff-movant) did
not allege that Rolando C. Gapud will be unavailable as witness to testify during the
trial."6

Respondent Lucio Tan alleges that (1) the subject motion is premature because not all
defendants in SB Civil Case No. 0005 have been served with summons, the issues in the case
have not been joined, the allegations of the Second Amended Complaint are insufficient; (2) the
taking of the proposed deposition at this time would be highly prejudicial to the defendants; and
(3) petitioner has not shown "special circumstances" or "unusual circumstances" demonstrating a
necessity to take the deposition in question. 7

Respondent Panfilo Domingo, joined by respondent Cesar Zalamea, 8 alleges that: (1) the taking
of the deposition at this time is premature; (2) respondent Domingo was not given an opportunity
to oppose petitioner's Motion for Leave to Take Deposition; (3) petitioner failed to show the
existence of special circumstances warranting the taking of deposition at this time; (4)
respondent Sandiganbayan did not commit grave abuse of discretion when it denied the Motion
for Leave to Take Deposition.9

First of all, a "deposition," in its technical and appropriate sense, is the written testimony of a
witness given in the course of a judicial proceeding, in advance of the trial or hearing upon oral
examination or in response to written interrogatories and where an opportunity is given for cross-
examination.10 A deposition may be taken at any time after the institution of any action, whenever
necessary or convenient.11 Pending action, it is governed by Rule 24, Section 1 of the Rules of
Court which provides:

"Section 1. Depositions pending action, when may be taken.—By leave of court after
jurisdiction has been obtained over any defendant or over property which is the
subject of the action, or without such leave after an answer has been served, the
testimony of any person, whether a party or not, may be taken, at the instance of
any party, by deposition upon oral examination or written interrogatories. The
attendance of witnesses may be compelled by the use of a subpoena as provided in Rule
23. Depositions shall be taken only in accordance with these rules. The deposition of a
person confined in prison may be taken by leave of court on such terms as the court
prescribes."12

Depositions pending action may be conducted by oral examination or written interrogatories, and
may be taken at the instance of any party, with or without leave of court. Leave of court is not
necessary to take a deposition after an answer to the complaint has been served. It is only when
an answer has not yet been filed (but jurisdiction has been obtained over any defendant or over
property subject of the action) that prior leave of court is required. The reason for this is that
before filing of the answer, the issues are not yet joined and the disputed facts are not clear. 13

Petitioner does not dispute the fact that not all defendants have filed their respective answers to
the complaint. Petitioner claims, however, that the taking of Mr. Gapud's deposition does not
require prior leave of court because Section 1, Rule 24 states that a deposition may be taken
after jurisdiction has been obtained over ANY defendant. The provision does not state that
jurisdiction should first be acquired over ALL the defendants. And since summons has been
served on most of the defendants and some, particularly principal respondent Lucio Tan, have
already filed their answers to the complaint, jurisdiction has already been acquired by respondent
Sandiganbayan, and there is no need for leave to take Mr. Gapud's deposition.

The case at bar involves two (2) sets of defendants—the first set named in the original complaint
and the second set in the Second Amended Complaint. The first names individual defendants
while the second set includes both individual and corporate defendants. Defendants Lucio Tan,
Don Ferry and the 21 other individual defendants (except Ferdinand E. Marcos, Imelda Marcos
and Federico Moreno) filed answers to the original complaint. To the Second Amended
Complaint, no answer has been filed by the additional defendants, namely, the Estate of
Gregorio Licaros, Panfilo Domingo, Cesar Zalamea and the 42 corporations. Respondent court
ordered the issuance of summonses in the Resolution of April 2, 1992 admitting the Second
Amended Complaint.14 Respondent Panfilo Domingo received summons and a copy of the
Second Amended Complaint on May 8, 1992. 15 Respondent Lucio Tan has stated, without
dispute from petitioner, that only two (2) of the 29 individual defendants have filed their answers
to the Second Amended Complaint. And not all of the 42 corporate defendants have been served
with summons, this petitioner admits.16 Those corporate defendants who received summons
merely filed a "Motion for a More Definite Statement or Bill of Particulars," not an answer.

Petitioner argues that the 42 corporations are owned and controlled by Mr. Tan. Following the
ruling in Republic v. Sandiganbayan (First Division),17 the corporations are the res, the objects
in the action for the recovery of Mr. Tan's illegally acquired wealth, hence, there is no cause of
action against them and no ground to implead them as defendants. Their inclusion in the Second
Amended Complaint was unnecessary and superfluous. 18

Assuming that these corporations are merely the res in SB Civil Case No. 0005, they were not
the only defendants added in the Second Amended Complaint. Three (3) individual defendants,
herein respondents Panfilo Domingo, Estate of Gregorio Licaros and Cesar Zalamea, were
added as well. A careful reading of the Second Amended Complaint shows that the allegations
against these three individual defendants, although involving principal respondent Lucio Tan and
his companies, rest mainly on entirely different facts, were made on entirely different occasions
and are separate and distinct from the other. They are also different from the acts committed by
the 22 other individual defendants in the original complaint. The allegations against the additional
defendants do not arise from their having acted as dummies or alter-egos of the principal
respondents, but as government officials who facilitated Mr. Tan's acquisition of private
corporations despite non-compliance with legal requirements. It appears that the allegations in
the Second Amended Complaint against these three defendants are not clear for they have
adopted the corporate defendants' "Motion for a More Definite Statement or Bill of Particulars,"
and respondent Domingo prayed for a bill of particulars in his Omnibus Motion. The additional
defendants should, at the very least, be given the opportunity to respond to the allegations
against them and clarify the disputed facts before discovery procedures may be resorted to.

Petitioner claims, however, that despite nonjoinder of issues, there exist special circumstances
that warrant the taking of Mr. Gapud's deposition.

Rule 24 entitled "Depositions and Discovery" was taken almost verbatim from Section V, Rule 26
(a) of the Rules of Civil Procedure for the District Courts of the United States which has the same
heading.19 Rule 26 (a) is likewise contained in the Federal Rules of Civil Procedure of the United
States. Rule 26 (a) was however amended in 1948, 20 but prior to this amendment, the provision
read:

"(a) When Depositions May be Taken. By leave of court after jurisdiction has been
obtained over any defendant or over property which is the subject of the action or
without such leave after an answer has been served, the testimony of any person,
whether a party or not, may be taken at the instance of any party by deposition
upon oral examination or written interrogatories for the purpose of discovery or for
use as evidence in the action or for both purposes. The attendance of witnesses may
be compelled by the use of subpoena as provided in Rule 45. Depositions shall be taken
only in accordance with these rules. The deposition of a person confined in prison may
be taken only by leave of court on such terms as the court prescribes." 21

In Moore's Federal Practice, it is stated that:

"As originally promulgated, Rule 26 (a) provided (1) that depositions might be taken after
jurisdiction had been obtained over any defendant or over property which was the subject
 of the action and before an answer was served, only upon leave of court; and (2) that
after an answer had been served depositions might be taken without leave of court.

x x x.

The expression "an answer" in original Rule 26 (a) was used in its generic sense as
signifying a responsive pleading to a pleading asserting a claim for relief. This follows of
necessity from the principle upon which the rule was drafted, namely, that the parties
should be required to wait until the issues raised by a claim of relief had been settled by
the service of a responsive pleading to the claim of relief. Thus if the defendant served an
answer which contained a counterclaim against the plaintiff, both parties had to wait until
a reply containing an answer to the counterclaim had been served before they could
proceed to take depositions as of right with respect to the counterclaim. x x x" 22

Under the original Rule 26 (a) of the Federal Rules of Civil Procedure, any party desiring to take
depositions before answer was served was required to obtain leave of court. While the Rule did
not indicate in what situations the court should grant such leave, the applicable principles are
found in jurisprudence.23

The general rule is that a plaintiff may not be permitted to take depositions before answer is
served. Plaintiff must await joinder of issues because if the discovery is to deal with matters
relevant to the case, it is difficult to know exactly what is relevant until some progress has been
made toward developing the issues.24 Ordinarily, the issues are made up before the need for
discovery arises, hence, prior to the time of delineation of the issues, the matter is in the control
of the court.25

There are instances, however, when a deposition is allowed to be taken before service of answer
once jurisdiction has been acquired over the person or thing. Leave of court may be granted only
in "exceptional" or "unusual" cases,26 and the decision is entirely within the discretion of the
court.27 It should be granted only under "special circumstances" where conditions point to the
necessity of presenting a strong case for allowance of the motion. 28 There must be some
"necessity" or "good reason" for taking the testimony immediately 29 or that it would be prejudicial
to the party seeking the order to be compelled to await joinder of issue. 30 If the witness is aged or
infirm, or about to leave the court's jurisdiction, or is only temporarily in the jurisdiction, leave may
be granted.31 A general examination by deposition before answer however is premature and
ordinarily not allowed,32 neither is mere avoidance of delay a sufficient reason. 33

In the case at bar, petitioner alleges that the taking of Mr. Gapud's deposition in lieu of his
testimony is necessary because the allegations in the complaint are based mainly on his
disclosures regarding the business activities of President Marcos and Lucio Tan; that although
Mr. Gapud was granted immunity by President Aquino from criminal, civil and administrative
suits, he has been out of the country since 1987 and has no intention of returning, fearing for his
safety; that this fear arose from his damaging disclosures on the illicit activities of the cronies and
business associates of former President Marcos which therefore renders him unable to testify at
the trial.

Petitioner has not cited any fact other than Mr. Gapud's cooperation with the Philippine
government in the recovery of ill-gotten wealth that would support the deponent's claim of fear for
his safety. No proof, much less any allegation, has been presented to show that there exists a
real threat to Mr. Gapud's life once he returns to the Philippines and that adequate security
cannot be provided by petitioner for such a vital witness.

There is no question that the trial court has the power to direct, in its discretion, that a deposition
shall not be taken, if there are valid reasons for so ruling. 34 Petitioner's reasons do not amount to
an "exceptional" or "unusual" case for us to grant leave and reverse respondent court. Petitioner
has not sufficiently shown the necessity for taking Mr. Gapud's deposition at this point in
time before the other defendants, particularly the individual defendants, have served their
answers. Petitioner has not alleged that Mr. Gapud is old, sick or infirm as to necessitate the
taking of his deposition. Indeed, no urgency has been cited and no ground given that would
make it prejudicial for petitioner to await joinder of issues.
1âwphi1.nêt

Finally, the Court notes that petitioner waited all these years for a ruling on this case instead of
working for the rest of the defendants to be summoned and their answers be filed. Petitioner can,
as a matter of course, take Mr. Gapud's deposition after the individual defendants have at least
filed their answers.
1âwphi1.nêt

IN VIEW WHEREOF, the petition is DISMISSED, the Resolutions dated August 23, 1993 and
October 22, 1993 of respondent court in SB Civil Case No. 0005 are AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 159127             March 3, 2008

RAMON GERARDO B. SAN LUIS, petitioner,

vs.
HON. PABLITO M. ROJAS in his capacity as Presiding Judge, RTC. Br. 70, Pasig City and
BERDEX INTERNATIONAL INC., respondents*.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for certiorari under Rule 65 of the Rules of Court filed by Ramon Gerardo
B. San Luis (petitioner) seeking to set aside the Resolutions dated September 11, 2002 1 and May
20, 20032 of the Court of Appeals (CA) in CA -G.R. SP No. 72596.

The factual background of herein petition is as follows:

On July 12, 2001, Berdex International, Inc. (private respondent) filed with the Regional Trial
Court of Pasig City (RTC) a complaint 3 for a sum of money against petitioner, docketed as Civil
Case No. 68530 alleging that: it is a foreign corporation organized and existing under the laws of
the United States of America with principal office in San Francisco, California, U.S.A.; it is
maintaining the present action only to enforce its rights by virtue of an isolated transaction with
petitioner; in June 1997, petitioner received from it certain amounts of money which were meant
partly as advances or loan and partly for the purchase of 40% shares in both Seanet and
Seabest Corporations, however, not a single share in those corporations was transferred to
private respondent by petitioner and the shares were retained by the latter; the parties then
agreed to treat all the payments/advances made by private respondent to petitioner as the
latter's loan; petitioner proposed the payment of the loan within a period of three years, which
proposal was accepted by private respondent with the agreement that in case of non-payment of
any installment on their due dates, the entire amount shall become due and demandable;
petitioner later refused to sign a formal contract of loan; petitioner confirmed such loan to private
respondent's auditors on August 8, 2000; and he had only paid US$20,000.00 and no further
payment was made despite repeated demands. Private respondent prayed that petitioner be
ordered to pay the amount of US$150,335.75 plus interest until fully paid and attorney's fees.

Petitioner filed his Answer4 contending that: he is a businessman engaged in the trading of

seafoods; he received from private respondent the total amount of US$141,944.71 with
instructions that petitioner first deduct therefrom the amount of US$23,748.00 representing the
latter's commission from private respondent in their other transaction; the money was intended to
be used to buy 70% of the outstanding shares of Seanet Corporation on behalf of private
respondent and the balance as private respondent's advances as Seanet's stockholder, which he
complied with; in view, however, of subsequent substantial losses incurred by Seanet and
petitioner's desire to maintain good business with private respondent, petitioner offered that the
amounts he received from private respondent be paid by Fuegomar Traders, Inc. (Fuegomar), a
company which he subsequently put up and which he substantially owned and engaged in the
same line of business as Seanet; Fuegomar will purchase at cost the stock investment of private
respondent in Seanet; while the documentation of such agreement was being finalized, petitioner
then gave US$20,000.00 to private respondent on behalf of Fuegomar; however, private
respondent then claimed that its investment in Seanet was petitioner's personal loan and the
amount of US$20,000.00 paid on behalf of Fuegomar was maliciously interpreted as petitioner'
admission of personal liability.

The pre-trial conference was terminated on January 11, 2002 and the case was subsequently set
for trial.

On April 4, 2002, private respondent filed a MOTION (To Authorize Deposition-Taking Through
Written Interrogatories)5 alleging that initial presentation of its evidence is set on May 3, 2002;
that however, all of its witnesses are Americans who reside or hold office in the USA; that one of
the witnesses is already of advanced age and travel to the Philippines may be extremely difficult
if not dangerous; and there is a perceived danger to them in the aftermath of the terrorist attacks
on September 11, 2002;6 that written interrogatories are ideal in this case since the factual issues
are already very few; that such mode of deposition-taking will save precious judicial and
government time and will prevent needless delays in the case.

In his Opposition and Comment, 7 petitioner contends: If indeed there was an oral contract and
petitioner was liable to private respondent for the amount he received from the latter, the
documents attached to private respondent's complaint did not support its claim, but rather
supported his position. There is a very strict standard in proving an oral contract. Taking the
deposition through written interrogatories would deprive the court of the opportunity to observe
the general bearing and demeanor of witnesses. Petitioner's right to cross-examine the
witnesses will be prejudiced, since he will be limited to cross-interrogatories which will severely
limit not only the scope but the spontaneity of his cross-examination. It is doubtful whether the
witnesses will give their deposition under sanction of the penalties prescribed by Philippine law
for perjury. It will not necessarily save precious judicial and government time but may in fact
lengthen the trial, as both parties will have the right to review and to object to interrogatories
submitted by the other party. The claim that travel to the Philippines would be dangerous for the
witnesses who are all Americans is frivolous, since respondent has not presented evidence that
the US government has prohibited its citizens from traveling to the Philippines; and if ever there
was such prohibition, it was not binding on our own legal system. Old age was not a valid reason.

In an Order8 dated May 9, 2002, the RTC granted private respondent's Motion, as it found the
same appropriate and sanctioned by the rules on deposition-taking.

Petitioner's Motion for Reconsideration was denied in an Order 9 dated July 3, 2002.

Petitioner filed with the CA a petition for certiorari with prayer for the issuance of a temporary
restraining order and/or writ of preliminary injunction.

In a Resolution dated September 11, 2002, the CA dismissed the petition, thus:

A perusal of the petition and its annexes indicates that:

1. no affidavit of service is attached;

2. the following Annexes are blurred:

- Annex H

- Annex J
 3. the pleadings filed before the respondent court are not attached.

According to the last paragraph of Section 3, Rule 46 in relation to Section 1, Rule 65 of

the 1994 Rules of Civil Procedure, non-compliance with the requirements is a sufficient
ground for the dismissal of the petition.

WHEREFORE, let this case be, as it is hereby DISMISSED. 10

In a Resolution dated May 20, 2003, the CA denied petitioner's Motion for Reconsideration. In
denying the motion, the CA found that non-compliance with the requirements as a result of
misapprehension and unfamiliarity with the rules is not excusable; that in any case, SC
Administrative Circular No. 3-96 dated June 1, 1996 states that subsequent compliance with the
requirement shall not warrant a reconsideration.

Petitioner filed the instant petition for certiorari.

Petitioner raises the following issues:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE

ABUSE OF DISCRETION WHEN IT DISMISSED ON MERE TECHNICALITY THE
PETITION FOR CERTIORARI OF THE PETITIONER EVEN IF THERE WAS
SUBSTANTIAL COMPLIANCE WITH PROCEDURAL REQUIREMENTS.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE

ABUSE OF DISCRETION WHEN IT DISMISSED THE PETITION FOR CERTIORARI OF
THE PETITIONER DESPITE THE UNIQUENESS OF THE LEGAL ISSUE RAISED BY
THE PETITIONER AND THE GRAVE INJUSTICE THAT WILL BE VISITED UPON THE
PETITIONER IF THE PRIVATE RESPONDENT, A NON-RESIDENT FOREIGN
CORPORATION, WILL BE ALLOWED TO PROVE THE EXISTENCE OF AN ORAL
CONTRACT THROUGH DEPOSITION BY WRITTEN INTERROGATORIES OF ALL ITS
WITNESSES TAKEN OUTSIDE THE PHILIPPINES.11

Petitioner argues that the CA focused on technicality rather than substantial justice,
notwithstanding that he subsequently complied with all the requirements and attached them to
his Motion for Reconsideration; that his failure to attach an affidavit of service was due to his
belief that the affidavit can be dispensed with in case of personal service of the petition to the
parties who received the same; that Annex "H," a letter dated July 12, 2000 sent by private
respondent to Fuegomar and R.G. San Luis (herein petitioner) asking for confirmation of the note
held by the former regarding the latter's outstanding obligation to it, 12 which was attached to the
complaint filed with the RTC, was also blurred; that the blurred copy of Annex "J," the Seanet
Corporation Loan Amortization Schedule,13 was due to inadvertence during the reproduction of
the numerous annexes; and that he only attached pleadings to the petition filed in the CA which
he believed to be important and relevant to the issue submitted in his petition.

Petitioner further alleges that the CA failed to appreciate that grave injustice would be done to
him if private respondent, a non-resident foreign corporation, would have all its witnesses who
are foreigners give their testimonies through deposition upon written interrogatories which would
be taken outside of the Philippines and would seek to establish an oral contract not supported by
any documentary evidence; that to allow such deposition will prevent the RTC from testing the
credibility of the witnesses, and petitioner's right to cross-examine the witnesses would be
curtailed if not denied, as he would be limited to cross-interrogatories and re-cross interrogatories
based on written interrogatories.

Private respondent counters that petitioner resorted to a wrong remedy by filing a petition
for certiorari under Rule 65 instead of a petition for review under Rule 45; that petitioner can no
longer question the CA Resolutions, as certiorari under Rule 65 is not a substitute for an appeal
where the latter remedy is available; that the CA's dismissal of the petition was proper; that
Circular 19-91 is quite clear that any petition under Rule 65 may be denied outright if there is no
proof of service on the lower court; that no grave abuse of discretion was committed by the RTC
in allowing deposition-taking as the same was consistent with the rules.

The Court's Ruling

Preliminarily, we find petitioner's resort to a petition for certiorari under Rule 65 proper

considering that petitioner is assailing the Resolutions of the CA dismissing their petition
outright.14

In Donato v. Court of Appeals15, we held:

The proper recourse of an aggrieved party from a decision of the CA is a petition for
review on certiorari under Rule 45 of the Rules of Court. However, if the error, subject of
the recourse, is one of jurisdiction, or the act complained of was perpetrated by a court
with grave abuse of discretion amounting to lack or excess of jurisdiction, the proper
remedy available to the aggrieved party is a petition for certiorari under Rule 65 of the
said Rules. As enunciated by the Court in Fortich vs. Corona:

Anent the first issue, in order to determine whether the recourse of petitioners is
proper or not, it is necessary to draw a line between an error of judgment and an
error of jurisdiction. An error of judgment is one which the court may commit in
the exercise of its jurisdiction, and which error is reviewable only by an appeal.
On the other hand, an error of jurisdiction is one where the act complained of was
issued by the court, officer or a quasi-judicial body without or in excess of
jurisdiction, or with grave abuse of discretion which is tantamount to lack or in
excess of jurisdiction. This error is correctible only by the extraordinary writ
of certiorari.

Inasmuch as the present petition principally assails the dismissal of the petition
on ground of procedural flaws involving the jurisdiction of the court a quo to
entertain the petition, it falls within the ambit of a special civil action
for certiorari under Rule 65 of the Rules of Court.16

Anent petitioner's failure to attach the affidavit of service, we find the same not fatal to the
petition since it showed that copies of the petition were personally served on the RTC and private
respondent's counsel on September 3, 2002 as evidenced by the parties' official receiving
stamps appearing opposite their names. By analogy, we have held 17 that the non-attachment of
the affidavit of service is not fatal to the petition when the registry receipts attached to the petition
clearly show that respondents were served copies of the petition; that the demands of substantial
justice were satisfied by the actual receipt of the petition. 18

We likewise find satisfactory the explanation advanced by petitioner with respect to the blurred
copies of the annexes attached to the petition. Moreover, we find that Annexes "H" and "J" are
not necessary for the resolution of the issue brought before the CA, i.e., whether the RTC acted
with grave abuse of discretion in granting private respondent's MOTION (To Authorize
Deposition-Taking Through Written Interrogatories).

As to the non-attachment to the petition of the pleadings filed in the RTC, we find that the
documents attached to the petition -- to wit: private respondent's MOTION (To Authorize
Deposition-Taking Through Written Interrogatories), petitioner's opposition, petitioner's Motion for
Reconsideration and private respondent's opposition -- show that they contained the relevant
facts of the case and the respective arguments of the parties on which the CA could have based
its resolution on the merits of the issue brought before it. Thus, there was no need to attach all
other pleadings filed in the RTC. Nonetheless, petitioner had submitted all the pleadings when he
filed his motion for reconsideration.

The CA's reliance on Administrative Circular No. 3-96 dated June 1, 1996 in denying petitioner's
motion for reconsideration is misplaced. Although the Circular provides that subsequent
compliance with the requirement shall not warrant a reconsideration, it does not apply to the
petition filed by petitioner before the CA. The subject of the said Circular deals with copies of the
judgment or resolution sought to be reviewed and not to other pleadings filed in the RTC. The
Circular clarified the meaning of "duplicate original copy" and "certified true copy" of decisions,
judgments, resolutions or orders and not other documents to be attached.

As to the non-submission of the affidavit of service and other pleadings jurisprudence dictates
that the subsequent and substantial compliance of a petitioner may call for the relaxation of the
rules of procedure.19

While it is true that rules of procedure are intended to promote rather than frustrate the ends of
justice, and the swift unclogging of court dockets is a laudable objective, they nevertheless must
not be met at the expense of substantial justice.20 Time and again, this Court has reiterated the
doctrine that the rules of procedure are mere tools intended to facilitate the attainment of justice,
rather than frustrate it. A strict and rigid application of the rules must always be eschewed when it
would subvert the primary objective of the rules, that is, to enhance fair trials and expedite
justice. Technicalities should never be used to defeat the substantive rights of the other party.
Every party-litigant must be afforded the amplest opportunity for the proper and just
determination of his cause, free from the constraints of technicalities. 21 Thus, the CA committed
grave abuse of discretion in hastily dismissing the petition on procedural flaws.

While herein petitioner prays that the CA be ordered to give due course to the petition
for certiorari filed before it and to remand the case to the CA for proper disposition, the Court
opts to resolve the sole issue raised in the present petition which is a pure question of
law, i.e., whether Section 1, Rule 23 of the Rules of Court allows a non-resident foreign
corporation the privilege of having all its witnesses, all of whom are foreigners, to testify
through deposition upon written interrogatories taken outside the Philippines to prove an
oral contract, in order to avoid further delay.

Section 1, Rule 23 of the Rules of Court, which substantially reproduced Section 1, Rule 24 of
the old Rules, provides as follows:

SECTION 1. Depositions pending action, when may be taken. - By leave of court after
jurisdiction has been obtained over any defendant or over property which is the subject of
the action, or without such leave after an answer has been served, the testimony of any
person, whether a party or not, may be taken, at the instance of any party, by depositions
upon oral examination or written interrogatories.

Unequivocally, the rule does not make any distinction or restriction as to who can avail of
deposition. The fact that private respondent is a non-resident foreign corporation is immaterial.
The rule clearly provides that the testimony of any person may be taken by deposition upon oral
examination or written interrogatories, at the instance of any party. Depositions serve as a device
for ascertaining the facts relative to the issues of the case. The evident purpose is to enable the
parties, consistent with recognized privileges, to obtain the fullest possible knowledge of the
issues and facts before civil trials and thus prevent the said trials from being carried out in the
dark.22

In Dasmariñas Garments, Inc. v. Reyes23, where we upheld the right of plaintiff during the trial
stage of the case to present its evidence by deposition of its witnesses in a foreign jurisdiction in
lieu of their oral examination in court, we said:
Depositions are chiefly a mode of discovery. They are intended as a means to compel
disclosure of facts resting in the knowledge of a party or other person which are relevant
in some suit or proceeding in court. Depositions, and the other modes of discovery
(interrogatories to parties; requests for admission by adverse party; production or
inspection of documents or things; physical and mental examination of persons) are
meant to enable a party to learn all the material and relevant facts, not only known to him
and his witnesses but also those known to the adverse party and the latter's own
witnesses. In fine, the object of discovery is to make it possible for all the parties to a
case to learn all the material and relevant facts, from whoever may have knowledge
thereof, to the end that their pleadings or motions may not suffer from inadequacy of
factual foundation, and all the relevant facts may be clearly and completely laid before
the Court, without omission or suppression.

Depositions are principally made available by law to the parties as a means of informing
themselves of all the relevant facts; they are not therefore generally meant to be a
substitute for the actual testimony in open court of a party or witness. The deponent must
as a rule be presented for oral examination in open court at the trial or hearing. This is a
requirement of the rules of evidence. Section 1, Rule 132 of the Rules of Court provides:

"SECTION 1. Examination to be done in open court. — The examination of

witnesses presented in a trial or hearing shall be done in open court, and under
oath or affirmation. Unless the witness is incapacitated to speak, or the question
calls for a different mode of answer, the answers of the witness shall be given
orally."

Indeed, any deposition offered to prove the facts therein set out during a trial or hearing,
in lieu of the actual oral testimony of the deponent in open court, may be opposed and
excluded on the ground that it is hearsay: the party against whom it is offered has no
opportunity to cross-examine the deponent at the time that his testimony is offered. It
matters not that opportunity for cross-examination was afforded during the taking of the
deposition; for normally, the opportunity for cross-examination must be accorded a party
at the time that the testimonial evidence is actually presented against him during the trial
or hearing.

However, depositions may be used without the deponent being actually called to
the witness stand by the proponent, under certain conditions and for certain
limited purposes. These exceptional situations are governed by Section 4, Rule
2424 of the Rules of Court.

SEC 4. Use of depositions. — At the trial or upon the hearing of a motion of an

interlocutory proceeding, any part or all of a deposition, so far as admissible under the
rules of evidence, may be used against any party who was present or represented at the
taking of the deposition or who had due notice thereof, in accordance with any of the
following provisions:

(a) Any deposition may be used by any party for the purpose of contradicting or
impeaching the testimony of deponent as a witness;

(b) The deposition of a party or of any one who at the time of taking the
deposition was an officer, director, or managing agent of a public or private
corporation, partnership, or association which is a party may be used by an
adverse party for any purpose;

(c) The deposition of a witness, whether or not a party, may be used by any

party for any purpose if the court finds: (1) that the witness is dead; or (2) that
the witness if out of the province and at a greater distance than fifty25 (50)
 kilometers from the place of trial or hearing, or is out of the Philippines,
unless it appears that his absence was procured by the party offering the
deposition; or (3) that the witness is unable to attend to testify because of age,
sickness, infirmity, or imprisonment; or (4) that the party offering the deposition
has been unable to procure the attendance of the witness by subpoena; or (5)
upon application and notice, that such exceptional circumstances exist as to
make it desirable, in the interest of justice and with due regard to the importance
of presenting the testimony of witnesses orally in open court, to allow the
deposition to be used;

(d) If only part of a deposition is offered in evidence by a party, the adverse party
may require him to introduce all of it which is relevant to the party introduced, and
any party may introduce any other parts.

The principle conceding admissibility to a deposition when the deponent is dead, out of
the Philippines, or otherwise unable to come to court to testify, is consistent with another
rule of evidence, found in Section 47, Rule 132 of the Rules of Court.

SEC. 47. Testimony or deposition at a former proceeding. — The testimony or deposition

of a witness deceased or unable to testify, given in a former case or proceeding, judicial
or administrative, involving the same parties and subject matter, may be given in
evidence against the adverse party who had the opportunity to cross-examine him."

It is apparent then that the deposition of any person may be taken wherever he may be,
in the Philippines or abroad. If the party or witness is in the Philippines, his deposition
"shall be taken before any judge, municipal or notary public" (Sec. 10, Rule 24, Rules of
Court). If in a foreign state or country, the deposition "shall be taken: (a) on notice before
a secretary or embassy or legation, consul general, consul, vice-consul, or consular
agent of the Republic of the Philippines, or (b) before such person or officer as may be
appointed by commission or under letters rogatory" (Sec. 11, Rule 24).

Leave of court is not necessary where the deposition is to be taken before "a secretary or
embassy or legation, consul general, consul, vice-consul, or consular agent of the
Republic of the Philippines," and the defendant's answer has already been served (Sec.
1, Rule 24). After answer, whether the deposition-taking is to be accomplished within the
Philippines or outside, the law does not authorize or contemplate any intervention by the
court in the process, all that is required being that "reasonable notice" be given "in writing
to every other party to the action . . (stating) the time and place for taking the deposition
and the name and address of each person to be examined, if known, and if the name is
not known, a general description sufficient to identify him or the particular class or group
to which he belongs . . . "(Sec. 15, Rule 24). The court intervenes in the process only if a
party moves (1) to "enlarge or shorten the time" stated in the notice (id.), or (2) "upon
notice and for good cause shown," to prevent the deposition-taking, or impose conditions
therefor, e.g., that "certain matters shall not be inquired into" or that the taking be "held
with no one present except the parties to the action and their officers or counsel," etc.
(Sec. 16, Rule 24), or (3) to terminate the process on motion and upon a showing that "it
is being conducted in bad faith or in such manner as unreasonably to annoy, embarrass,
or oppress the deponent or party" (Sec 18, Rule 24). 26 (Emphasis supplied)

Thus, we find no grave abuse of discretion committed by the RTC in granting private
respondent's MOTION (To Allow Deposition-Taking Through Written Interrogatories) considering
private respondent's allegation in its MOTION that its witnesses are all Americans residing in the
U.S. This situation is one of the exceptions for its admissibility under Section 4(c)(2), Rule 23 of
the Rules of Court, i.e., that the witness resides at a distance of more than one hundred (100)
kilometers from the place of trial or hearing, or is out of the Philippines, unless it appears that his
absence was procured by the party offering the deposition.
Petitioner insists that Dasmariñas does not constitute a precedent in the instant case as the facts
are substantially different; to wit: (1) in Dasmariñas, plaintiff filed a motion to take deposition
through written interrogatories of two witnesses abroad after it had already presented its first
witness, while in the present case, private respondent will not present a single witness to testify
in court but only the witnesses' depositions; (2) in Dasmariñas, the existence of the contract
involved was not in issue at all, while in the present case, petitioner denied the existence of the
alleged contract of loan and private respondent has not presented any documentary evidence to
support its claim.

We do not agree.

The situation in Dasmariñas is the same as in the instant case since in both cases, it was already
during the trial stage that the deposition through written interrogatories was sought to be taken. It
does not matter whether one witness for the plaintiff had already testified since
the Dasmariñas ruling did not make such testimony in court a condition to grant the deposition of
the two other witnesses. Also, in Dasmariñas, the plaintiff sued defendant to recover a certain
sum of money which was the same as in the instant case as private respondent was suing
petitioner for collection of sum of money.

Petitioner claims that the right to take depositions upon written interrogatories in lieu of oral
testimony in open court would result in grave injustice to him, as private respondent is seeking to
establish the existence of an oral contract which requires stricter standard in proving the same.

We find such argument untenable.

While there are limitations to the rules of discovery, even when permitted to be undertaken
without leave and without judicial intervention,27 such limitations inevitably arise when it can be
shown that the examination is being conducted in bad faith; 28 or in such a manner as to annoy,
embarrass, or oppress the person subject to the inquiry; 29 or when the inquiry touches upon the
irrelevant or encroaches upon the recognized domains of privilege. 30

It has been repeatedly held that deposition discovery rules are to be accorded a broad and
liberal treatment31 and should not be unduly restricted if the matters inquired into are otherwise
relevant and not privileged, and the inquiry is made in good faith and within the bounds of law.
Otherwise, the advantage of a liberal discovery procedure in ascertaining the truth and
expediting the disposal of litigation would be defeated. 32 In fact, we find nothing in the rules on
deposition that limits their use in case of oral contract as alleged by petitioner.

In any event, the admissibility of the deposition does not preclude the determination of its
probative value at the appropriate time. The admissibility of evidence should not be equated with
weight of evidence. The admissibility of evidence depends on its relevance and competence
while the weight of evidence pertains to evidence already admitted and its tendency to convince
and persuade.33

Petitioner argues that to allow such deposition-taking will prevent the RTC from observing the
witnesses' demeanor and credibility; and that petitioner's right to cross-examine the witnesses
would be curtailed if not denied as he is limited to cross-interrogatories and re-cross
interrogatories based on written interrogatories.

We are not persuaded.

Depositions are allowed as a departure from the accepted and usual judicial proceedings of
examining witnesses in open court, where their demeanor could be observed by the trial judge;
and the procedure is not on that account rendered illegal nor is the deposition, thereby taken,
inadmissible.34 It precisely falls within one of the exceptions where the law permits such a
situation, i.e., the use of a deposition in lieu of the actual appearance and testimony of the
deponent in open court and without being subject to the prying eyes and probing questions of the
Judge.35 Depositions are consistent with the principle of promoting just, speedy and inexpensive
disposition of every action or proceeding.36 Depositions are allowed provided the deposition is
taken in accordance with the applicable provisions of the Rules of Court; that is, with leave of
court if the summons have been served, without leave of court if an answer has been submitted;
and provided, further, that a circumstance for their admissibility exists.37

We also find no merit in petitioner's claim that his right to cross-examine private respondent's
witnesses will be curtailed since petitioner is fully accorded the opportunity for cross-examination
under Section 25, Rule 23 of the Rules of Court, to wit:

SEC. 25. Depositions upon written interrogatories; service of notice and of

interrogatories. - A party desiring to take the deposition of any person upon written
interrogatories shall serve them upon every other party with a notice stating the name
and address of the person who is to answer them and the name or descriptive title and
address of the officer before whom the deposition is to be taken. Within ten (10) days
thereafter, a party so served may serve cross interrogatories upon the party proposing to
take the deposition. Within five (5) days thereafter, the latter may serve re-direct
interrogatories upon a party who has served cross interrogatories. Within three (3) days
after being served with re-direct interrogatories, a party may serve re-cross
interrogatories upon the party proposing to take the deposition.

Thus, petitioner may submit cross-interrogatories upon private respondent with sufficient fullness
and freedom.

Finally, petitioner contends that since private respondent will have the testimonies of its
witnesses in another jurisdiction, the sanction of penalty for perjury under our laws would not
apply to them; and petitioner may not be able to enforce its own claim against private
respondent, since it is domiciled in a foreign country and does not appear to have any assets in
the Philippines. We will not venture to make any determination on this matter, as it would be
premature, conjectural or anticipatory. We must only deal with an existing case or controversy
that is appropriate or ripe for judicial determination, not one that is conjectural or merely
anticipatory. 38

WHEREFORE, the petition is GRANTED. The Resolutions dated September 11, 2002 and May
20, 2003 of the Court of Appeals in CA-G.R. SP No. 72596 are REVERSED and SET ASIDE.
However, the Orders dated May 9, 2002 and July 3, 2002 issued by the Regional Trial Court of
Pasig City in Civil Case No. 68530 stand.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 163515               October 31, 2008

ISIDRO T. PAJARILLAGA, Petitioner,
vs.
COURT OF APPEALS and THOMAS T. KALANGEG, Respondents.

DECISION

QUISUMBING, Acting C.J.:

This is a petition for review on certiorari of the Decision1 dated January 26, 2004 and the
Resolution2 dated May 14, 2004 of the Court of Appeals in CA-G.R. SP No. 47526. The appellate
court affirmed the Orders3 dated January 29, 1998 and March 26, 1998 of the Regional Trial
Court (RTC) of Bontoc, Mt. Province, Branch 36, which had denied petitioner’s Motion for Leave
of Court to Take the Deposition of the Defendant Upon Written Interrogatories.

The antecedent facts are as follows:

On November 24, 1995, private respondent Thomas T. Kalangeg filed with the RTC of Bontoc,
Mt. Province, Branch 36, a complaint4 for a sum of money with damages against petitioner Isidro
T. Pajarillaga.

Since the parties failed to reach an amicable settlement, trial on the merits ensued. On March 10,
1997, private respondent presented his first witness. At the next scheduled hearing on August 8,
1997, neither petitioner nor his counsel appeared despite notice. Upon private respondent’s
motion, the trial court allowed him to present his remaining two witnesses subject to petitioner’s
cross-examination on the next scheduled hearing on September 2, 1997. But when the case was
called on that date, petitioner and his counsel were again absent. Upon private respondent’s
motion, the trial court declared petitioner to have waived his right of cross-examination and
allowed private respondent to make a formal offer of evidence.

In an Order dated October 8, 1997, the trial court admitted all the exhibits formally offered by
private respondent. It also scheduled petitioner’s presentation of evidence on October 28, 29 and
30, 1997.

Petitioner moved to reset the hearing to November 17, 1997. The trial court granted his motion
and reset the hearing to December 15, 1997.

On December 10, 1997, however, petitioner filed a Motion for Leave of Court to Take the
Deposition of the Defendant Upon Written Interrogatories 5 on the grounds that: (1) petitioner
resides in Manila which is more than four hundred (400) kilometers from Bontoc, Mt. Province;
and (2) petitioner is suffering from an illness which prohibits him from doing strenuous activities.

Private respondent opposed the motion. On December 15, 1997, neither petitioner nor his
counsel again appeared. Nonetheless, the trial court reset the case to January 12, 1998 for the
presentation of petitioner’s evidence. What transpired on said date, however, is not disclosed by
the records before this Court.
In an Order6 dated January 29, 1998, the trial court denied petitioner’s motion, in this wise:

Considering that the above-entitled case has been pending since November 24, 1995, and
hearings thereof have been delayed almost always at the instance of the defendant, the latter’s
motion for leave of Court to take said defendant’s deposition upon written interrogatories at this
late stage of the proceedings is hereby denied.

Wherefore, in the interest of justice defendant is granted one more chance to adduce his
evidence on February 18, 1998, at 8:30 o’clock in the morning. Otherwise, he shall be deemed to
have waived his right thereto.

SO ORDERED.

Petitioner moved for reconsideration which the trial court denied. It also reset the hearing to April
20, 1998.7

Petitioner elevated the case to the Court of Appeals via a petition for certiorari under Rule 65 of
the 1997 Rules of Court. In affirming the trial court’s orders, the appellate court ruled that: First,
the denial of petitioner’s motion was not tainted with grave abuse of discretion since the trial
court gave petitioner full opportunity to present his evidence. Second, petitioner’s motion came
much too late in the proceedings since private respondent has already rested his case. Third, the
medical certificate which petitioner submitted to validate his allegation of illness merely contained
a remark that the "patient is advised to avoid strenuous activity." It did not state that the travel
from Manila to Mt. Province for the scheduled hearings was too strenuous to endanger
petitioner’s health. Fourth, the threats to petitioner’s life by private respondent’s relatives were
belatedly alleged only in his motion for reconsideration.

Dissatisfied, petitioner appealed to this Court on the ground that the Court of Appeals erred in:

… DENYING PETITIONER’S PRAYER THAT HIS DEPOSITION BE TAKEN THROUGH

WRITTEN INTERROGATORIES IN CONNECTION WITH A CASE WHICH IS BEING HEARD
BY THE REGIONAL TRIAL COURT OF BONTOC, MT. PROVINCE THAT CAN BE REACHED
AFTER A GRUELLING SEVEN (7) HOUR RIDE TRAVERSING VERY ROUGH AND RUGGED
ROADS.8

Simply stated, the issue is whether the taking of petitioner’s deposition by written interrogatories
is proper under the circumstances obtaining in this case.

Petitioner asserts that the trial court should have allowed the taking of his deposition through
written interrogatories since: (1) this discovery measure may be availed of by a party as a matter
of right; (2) he has good reasons for invoking his right to this discovery measure, i.e., he resides
in Manila which is more than four hundred (400) kilometers from Bontoc, Mt. Province and he is
suffering from an illness which prohibits him from doing strenuous activities. Petitioner adds that
there are serious threats to his life by private respondent’s relatives.

Private respondent counters that petitioner could no longer avail of this discovery measure since
the trial court has already given him sufficient time to present his evidence and yet he failed to do
so. Private respondent adds that petitioner’s motion was made purposely to further delay the
resolution of the case as it was invoked during the late stage of the proceedings. Private
respondent also avers that the medical certificate submitted to show petitioner’s illness does not
contain any statement that he could not travel from Manila to Mt. Province for the scheduled
hearings. In fact, the medical certificate was not even notarized.

After considering the contentions and submissions of the parties, we are in agreement that the
petition lacks merit.
Deposition is chiefly a mode of discovery, the primary function of which is to supplement the
pleadings for the purpose of disclosing the real points of dispute between the parties and
affording an adequate factual basis during the preparation for trial. 9 It should be allowed absent
any showing that taking it would prejudice any party. It is accorded a broad and liberal treatment
and the liberty of a party to make discovery is well-nigh unrestricted if the matters inquired into
are otherwise relevant and not privileged, and the inquiry is made in good faith and within the
bounds of law. It is allowed as a departure from the accepted and usual judicial proceedings of
examining witnesses in open court where their demeanor could be observed by the trial judge,
consistent with the principle of promoting just, speedy and inexpensive disposition of every action
and proceeding; and provided it is taken in accordance with the provisions of the Rules of Court,
i.e., with leave of court if summons have been served, and without such leave if an answer has
been submitted; and provided further that a circumstance for its admissibility exists. 10

There is nothing in the Rules of Court or in jurisprudence which restricts a deposition to the sole
function of being a mode of discovery before trial. Under certain conditions and for certain limited
purposes, it may be taken even after trial has commenced and may be used without the
deponent being actually called to the witness stand. 11 There is no rule that limits deposition-taking
only to the period of pre-trial or before it; no prohibition exists against the taking of depositions
after pre-trial. There can be no valid objection to allowing them during the process of executing
final and executory judgments, when the material issues of fact have become numerous or
complicated.12

Such being the case, there is really nothing objectionable, per se, with petitioner availing of this
discovery measure after private respondent has rested his case and prior to petitioner’s
presentation of evidence. To reiterate, depositions may be taken at any time after the institution
of any action, whenever necessary or convenient.

But when viewed vis the several postponements made by petitioner for the initial presentation of
his evidence, we are of the view that his timing is, in fact, suspect. The records before us show
that petitioner stopped attending the hearings after private respondent presented his first witness.
Petitioner offered no excuse for his and his counsel’s absences. Moreover, the trial court has set
four (4) hearing dates for the initial presentation of his evidence. But he merely moved for its
resetting without invoking the grounds which he now presents before us.

Besides, even as we scrutinize petitioner’s arguments, we think that he has not sufficiently
shown an "exceptional" or "unusual" case for us to grant leave and reverse the trial and appellate
courts.

Under Section 4, Rule 23 of the Rules of Court, depositions may be used for the trial or for the
hearing of a motion or an interlocutory proceeding, under the following circumstances:

SEC. 4. Use of depositions. – …

xxxx

(c) The deposition of a witness, whether or not a party, may be used by any party for any
purpose if the court finds: (1) that the witness is dead; or (2) that the witness resides at a
distance more than one hundred (100) kilometers from the place of trial or hearing, or is out of
the Philippines, unless it appears that his absence was procured by the party offering the
deposition; or (3) that the witness is unable to attend or testify because of age, sickness,
infirmity, or imprisonment; or (4) that the party offering the deposition has been unable to procure
the attendance of the witness by subpoena; or (5) upon application and notice, that such
exceptional circumstances exist as to make it desirable, in the interest of justice and with due
regard to the importance of presenting the testimony of witnesses orally in open court, to allow
the deposition to be used; and
x x x x13

In this case, petitioner invokes distance and illness to avail of the discovery measure.  We agree
1avvphi1

with private respondent that the matter of distance could have been settled had petitioner
requested for a change of venue earlier in the proceedings. Petitioner has attended the pre-trial
and the hearing where private respondent presented his first witness. He need not await his turn
to present evidence before realizing the great inconvenience caused by the enormous distance
between his place of residence and the place of hearing.

Nor are we inclined to accept petitioner’s claim of illness. As aptly observed by the Court of
Appeals, the medical certificate submitted by petitioner merely contained a remark that the
"patient is advised to avoid strenuous activity." It was not alleged that the travel from Manila to
Mt. Province for the scheduled hearings was too strenuous to endanger petitioner’s health.

We also agree with the Court of Appeals that the threats to petitioner’s life by private
respondent’s relatives appear to be a mere afterthought since it was raised only in petitioner’s
motion for reconsideration of the trial court’s denial of his motion for leave. We also note that the
incident which gave rise to the alleged threats took place prior to the pre-trial. Surely, petitioner
could have informed the trial court of this incident had there been truth to, and serious implication
of, his allegation.

Finally, we must emphasize that while the rules on discovery are liberally constructed so as to
ascertain truth and to expedite the disposal of cases, the trial court may disallow a deposition if
there are valid reasons for so ruling. 14 Here, we find the protracted delay in the litigation at
petitioner’s instance coupled with the belated and unsubstantiated allegations of illness and
threats to petitioner’s life, more than sufficient reasons for the trial court to deny petitioner’s
motion.

WHEREFORE, the instant petition is DENIED for lack of merit. The Decision dated January 26,
2004 and the Resolution dated May 14, 2004 of the Court of Appeals in CA-G.R. SP No. 47526,
are AFFIRMED. Costs against petitioner.

SO ORDERED.
 SUPREME COURT
Manila

EN BANC

G.R. No. 152375               December 16, 2011

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
SANDIGANBAYAN (FOURTH DIVISION), JOSE L. AFRICA (substituted by his heirs),
MANUEL H. NIETO, JR., FERDINAND E. MARCOS (substituted by his heirs), IMELDA R.
MARCOS, FERDINAND R. MARCOS, JR., JUAN PONCE ENRILE, and POTENCIANO
ILUSORIO (substituted by his heirs), Respondents.

DECISION

BRION, J.:

Before us is the petition for certiorari1 filed by the Republic of the Philippines (petitioner) to set
aside the February 7, 2002 resolution (2002 resolution) 2 of the Sandiganbayan3 denying the
petitioner’s Motion to Admit Supplemental Offer of Evidence (Re: Deposition of Maurice V.
Bane) (3rd motion).

THE ANTECEDENTS

On July 22, 1987, the petitioner Republic of the Philippines, through the Presidential Commission
on Good Government (PCGG), filed a complaint (docketed as Civil Case No. 0009) against Jose
L. Africa, Manuel H. Nieto, Jr., Ferdinand E. Marcos, Imelda R. Marcos, Ferdinand R. Marcos,
Jr., Juan Ponce Enrile, and Potenciano Ilusorio (collectively, the respondents) for reconveyance,
reversion, accounting, restitution, and damages before the Sandiganbayan. The petitioner
alleged, inter alia, that the respondents illegally manipulated the purchase of the major
shareholdings of Cable and Wireless Limited in Eastern Telecommunications Philippines, Inc.
(ETPI), which shareholdings respondents Jose Africa and Manuel Nieto, Jr. held for themselves
and, through their holdings and the corporations they organized, beneficially for respondents
Ferdinand E. Marcos and Imelda R. Marcos.4

Civil Case No. 0009 is the main case subject of the present petition. Victor Africa (Africa), son of
the late Jose L. Africa, was not impleaded in and so is plainly not a party to Civil Case No. 0009. 5

Civil Case No. 0009 spawned numerous incidental cases,6 among them, Civil Case No.
0130.7 The present respondents were not made parties either in Civil Case No. 0130.

I. Civil Case No. 0130

In the August 7, 1991 PCGG-conducted ETPI stockholders meeting, a PCGG-controlled board of

directors was elected. Later, the registered ETPI stockholders convened a special stockholders
meeting wherein another set of board of directors was elected. As a result, two sets of ETPI
board and officers were elected. 8

Thereafter, Africa, as an ETPI stockholder, filed a petition for certiorari, with prayer for a
temporary restraining order/preliminary injunction with the Sandiganbayan (docketed as Civil
Case No. 0130), seeking to nullify the August 5, 1991 and August 9, 1991 Orders of the PCGG.
These Orders directed Africa:
[T]o account for his sequestered shares in ETPI and to cease and desist from exercising voting
rights on the sequestered shares in the special stockholders’ meeting to be held on August 12,
1991, from representing himself as a director, officer, employee or agent of ETPI, and from
participating, directly or indirectly[,] in the management of ETPI.9

During the pendency of Africa’s petition, Civil Case No. 0130, Africa filed a motion with the
Sandiganbayan, alleging that since January 29, 1988 the PCGG had been "illegally ‘exercising’
the rights of stockholders of ETPI,"10 especially in the election of the members of the board of
directors. Africa prayed for the issuance of an order for the "calling and holding of [ETPI] annual
stockholders meeting for 1992 under the [c]ourt’s control and supervision and prescribed
guidelines."11

In its November 13, 1992 resolution, the Sandiganbayan favored Africa’s motion in this wise:

WHEREFORE, it is ordered that an annual stockholders meeting of the [ETPI], for 1992 be held
on Friday, November 27, 1992, at 2:00 o’clock in the afternoon, at the ETPI Board Room,
Telecoms Plaza, 7th Floor, 316 Gil J. Puyat Avenue, Makati, Metro Manila. x x x The
stockholders meeting shall be conducted under the supervision and control of this Court, through
Mr. Justice Sabino R. de Leon, Jr. [O]nly the registered owners, their duly authorized
representatives or their proxies may vote their corresponding shares.

The following minimum safeguards must be set in place and carefully maintained until final
judicial resolution of the question of whether or not the sequestered shares of stock (or in a
proper case the underlying assets of the corporation concerned) constitute ill-gotten wealth[.] 12

The PCGG assailed this resolution before this Court via a petition for certiorari docketed as G.R.
No. 10778913 (PCGG’s petition), imputing grave abuse of discretion on the Sandiganbayan for
holding, inter alia, that the registered stockholders of ETPI had the right to vote. 14 In our
November 26, 1992 Resolution, we enjoined the Sandiganbayan from implementing its assailed
resolution.

In the meantime, in an April 12, 1993 resolution, the Sandiganbayan ordered the consolidation of
Civil Case No. 0130, among others, with Civil Case No. 0009, with the latter as the main case
and the former merely an incident.15

During the pendency of PCGG’s petition (G.R. No. 107789), the PCGG filed with this Court a
"Very Urgent Petition for Authority to Hold Special Stockholders’ Meeting for [the] Sole Purpose
of Increasing [ETPI’s] Authorized Capital Stock" (Urgent Petition). In our May 7, 1996 Resolution,
we referred this Urgent Petition to the Sandiganbayan for reception of evidence and immediate
resolution.16 The Sandiganbayan included the Urgent Petition in Civil Case No. 0130. 17

In the proceedings to resolve the Urgent Petition, the testimony of Mr. Maurice V. Bane (former
director and treasurer-in-trust of ETPI) was taken– at the petitioner’s instance and after serving
notice of the deposition-taking on the respondents 18 – on October 23 and 24, 1996 by way of
deposition upon oral examination (Bane deposition) before Consul General Ernesto Castro of the
Philippine Embassy in London, England.

Invoking Section 1, Rule 24 (of the old Rules of Court), purportedly allowing the petitioner to
depose Bane without leave of court, i.e., as a matter of right after the defendants have filed their
answer, the notice stated that "[t]he purpose of the deposition is for [Bane] to identify and testify
on the facts set forth in his affidavit19 x x x so as to prove the ownership issue in favor of [the
petitioner] and/or establish the prima facie factual foundation for sequestration of [ETPI’s] Class
A stock in support of the [Urgent Petition]."20 The notice also states that the petitioner shall use
the Bane deposition "in evidence… in the main case of Civil Case No. 0009." 21 On the scheduled
deposition date, only Africa was present and he cross-examined Bane.
On December 13, 1996, the Sandiganbayan resolved the Urgent Petition by granting authority to
the PCGG (i) "to cause the holding of a special stockholders’ meeting of ETPI for the sole
purpose of increasing ETPI’s authorized capital stock" and (ii) "to vote therein the sequestered
Class ‘A’ shares of stock."22 Thus, a special stockholders meeting was held, as previously
scheduled, on March 17, 1997 and the increase in ETPI’s authorized capital stock was
"unanimously approved."23 From this ruling, Africa went to this Court via a petition
for certiorari24 docketed as G.R. No. 147214 (Africa’s petition).

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

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

xxxx

WHEREFORE, this Court Resolved to REFER the petitions at bar to the Sandiganbayan for
reception of evidence to determine whether there is a prima facie evidence showing that the
sequestered shares in question are ill-gotten and there is an imminent danger of dissipation to
entitle the PCGG to vote them in a stockholders meeting to elect the ETPI Board of Directors and
to amend the ETPI Articles of Incorporation for the sole purpose of increasing the authorized
capital stock of ETPI.

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

II. Civil Case No. 0009

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

In its Pre-Trial Brief26 dated August 30, 1996, the petitioner offered to present the following
witnesses:

WITNESSES TO BE PRESENTED AND A BRIEF DESCRIPTION OF THEIR TESTIMONIES

(1) Maurice V. Bane – representative of Cable and Wireless Limited (C & W) at the time
ETPI was organized.

xxxx

(2) Mr. Manuel H. Nieto – x x x

(3) Ms. Evelyn Singson – x x x

(4) Mr. Severino P. Buan, Jr. – x x x

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

(6) Mr. Potenciano A. Roque – x x x

(7) Caesar Parlade - x x x

IIa. Motion to Admit the Bane Deposition

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

1. In the hearings of the incidents of [Civil Case No. 0009], i.e., Civil Case Nos. 0048,
0050, 0130, 014628 the following witnesses were presented therein:

a. Cesar O.V. Parlade

b. Maurice Bane

c. Evelyn Singson

d. Leonorio Martinez

e. Ricardo Castro; and

f. Rolando Gapud

2. [The petitioner] wishes to adopt in [Civil Case No. 0009] their testimonies and the
documentary exhibits presented and identified by them, since their testimonies and the
said documentary exhibits are very relevant to prove the case of the [petitioner] in [Civil
Case No. 0009].

3. The adverse parties in the aforementioned incidents had the opportunity to cross-
examine them.

The respondents filed their respective Oppositions to the 1st motion; 29 in turn, the petitioner filed
a Common Reply30 to these Oppositions.

On April 1, 1998, the Sandiganbayan 31 promulgated a resolution32 (1998 resolution) denying the

petitioner’s 1st motion, as follows:

Wherefore, the [petitioner’s] Motion x x x is –

1. partly denied insofar as [the petitioner] prays therein to adopt the testimonies on oral
deposition of Maurice V. Bane and Rolando Gapud as part of its evidence in Civil Case
No. 0009 for the reason that said deponents according to the [petitioner] are not
available for cross-examination in this Court by the [respondents]. (emphasis
added)

2. partly Granted, in the interest of speedy disposition of this long pending case, insofar
as plaintiff prays therein to adopt certain/particular testimonies of Cesar O. Parlade,
Evelyn Singson, Leoncio Martinez, and Ricardo Castro and documentary exhibits which
said witnesses have identified in incident Civil Case Nos. xxx 0130 xxx, subject to the
following conditions :

1. xxx

2. xxx

3. That the said witnesses be presented in this Court so that they can be cross-
examined on their particular testimonies in incident Civil Cases xxx [by the
respondents].
IIb. Urgent Motion and/or Request for Judicial Notice

The petitioner did not in any way question the 1998 resolution, and instead made its Formal Offer
of Evidence on December 14, 1999. 33 Significantly, the Bane deposition was not included as part
of its offered exhibits. Rectifying the omission, the petitioner filed an Urgent Motion and/or
Request for Judicial Notice34 (2nd motion) dated February 21, 2000, with the alternative prayer
that:

1. An order forthwith be issued re-opening the plaintiff’s case and setting the same for
trial any day in April 2000 for the sole purpose of introducing additional evidence and
limited only to the marking and offering of the [Bane deposition] which already forms part
of the records and used in Civil Case No. 0130 x x x;

2. In the alternative, x x x the [Sandiganbayan] to take judicial notice of the facts

established by the [Bane deposition], together with the marked exhibits appended
thereto. [emphasis ours]

On August 21, 2000, the Sandiganbayan promulgated a resolution 35 (2000 resolution) denying
the petitioner’s 2nd motion:

Judicial notice is found under Rule 129 which is titled "What Need Not Be Proved." Apparently,
this provision refers to the Court’s duty to consider admissions made by the parties in the
pleadings, or in the course of the trial or other proceedings in resolving cases before it. The duty
of the Court is mandatory and in those cases where it is discretionary, the initiative is upon the
Court. Such being the case, the Court finds the Urgent Motion and/or Request for Judicial Notice
as something which need not be acted upon as the same is considered redundant.

On the matter of the [Bane deposition], [its] admission is done through the ordinary formal offer of
exhibits wherein the defendant is given ample opportunity to raise objection on grounds provided
by law. Definitely, it is not under Article (sic) 129 on judicial notice. [Emphasis ours]

On November 6, 2000 and on several dates thereafter, the respondents separately filed their
respective demurrers to evidence.36 On the other hand, the petitioner moved for the
reconsideration of the 2000 resolution, but was rebuffed by the Sandiganbayan in its April 3,
2001 resolution37 (2001 resolution).

IIc. Motion to Admit Supplemental Offer of

Evidence (Re: Deposition of Maurice Bane)

On November 16, 2001, the petitioner filed its 3rd Motion, seeking once more the admission of
the Bane deposition.38 On February 7, 2002 (pending resolution of the respondents’ demurrers to
evidence),39 the Sandiganbayan promulgated the assailed 2002 resolution, 40 denying the
petitioner’s 3rd motion. The Sandiganbayan ruled:

But in the court’s view, it is not really a question of whether or not plaintiff has already rested its
case as to obviate the further presentation of evidence. It is not even a question of whether the
non-appearing defendants are deemed to have waived their right to cross-examine Bane as to
qualify the admission of the deposition sans such cross-examination. Indeed, We do not see any
need to dwell on these matters in view of this Court’s Resolution rendered on April 1, 1998 which
already denied the introduction in evidence of Bane’s deposition and which has become final in
view of plaintiff’s failure to file any motion for reconsideration or appeal within the 15-day
reglementary period. Rightly or wrongly, the resolution stands and for this court to grant
plaintiff’s motion at this point in time would in effect sanction plaintiff’s disregard for the rules of
procedure. Plaintiff has slept on its rights for almost two years and it was only in February of
2000 that it sought to rectify its ineptitude by filing a motion to reopen its case as to enable it to
introduce and offer Bane’s deposition as additional evidence, or in the alternative for the court to
take judicial notice of the allegations of the deposition. But how can such a motion be granted
when it has been resolved as early as 1998 that the deposition is inadmissible. Without plaintiff
having moved for reconsideration within the reglementary period, the resolution has attained
finality and its effect cannot be undone by the simple expedient of filing a motion, which though
purporting to be a novel motion, is in reality a motion for reconsideration of this court’s 1998
ruling. [emphases ours]

The resolution triggered the filing of the present petition.

THE PETITION

The petitioner filed the present petition claiming that the Sandiganbayan committed grave abuse
of discretion:

I.

x x x IN HOLDING THAT ITS INTERLOCUTORY ORDER IN 1998 HAD BECOME

FINAL.

II.

x x x IN x x x REFUSING TO ADMIT THE BANE DEPOSITION –WHICH WAS

ALREADY ADMITTED AS EVIDENCE IN AN INCIDENT CASE (CIVIL CASE NO. 0130)
– AS PART OF PETITIONER’S EVIDENCE IN THE MAIN x x x CASE (CIVIL CASE
NO. 0009).

III.

x x x IN REFUSING TO ADMIT A HIGHLY RELEVANT AND IMPORTANT PIECE OF

EVIDENCE FOR THE PETITIONER ON THE BASIS OF FLIMSY AND TENUOUS
TECHNICAL GROUNDS.

The petitioner41 argues that the 1998 resolution of the Sandiganbayan is merely an interlocutory
order; thus, the petitioner’s failure to question this 1998 resolution could not have given it a
character of "finality" so long as the main case remains pending. 42 On this basis, the petitioner
concludes that the Sandiganbayan’s denial of its 3rd motion was plainly tainted with grave abuse
of discretion.

On the issue of the Sandiganbayan’s refusal (in its 2002 resolution) either to take judicial notice
of or to admit the Bane deposition as part of its evidence, the petitioner asserts that Civil Case
No. 0130 (where the Bane deposition was originally taken, introduced and admitted in evidence)
is but a "child" of the "parent" case, Civil Case No. 0009; under this relationship, evidence offered
and admitted in any of the "children" cases should be considered as evidence in the "parent"
case.

Lastly, the petitioner claims that given the crucial importance of the Bane deposition, the
Sandiganbayan should not have denied its admission on "flimsy grounds," considering that:

1. It was also already stated in the notice (of the taking of the Bane deposition) that it
would be used as evidence in Civil Case No. 0009. Notices having been duly served on
all the parties concerned, they must accordingly be deemed to have waived their right to
cross-examine the witness when they failed to show up.
 2. The Bane deposition was a very vital cog in the case of the petitioner relative to its
allegation that the respondents’ interest in ETPI and related firms properly belongs to the
government.

3. The non-inclusion of the Bane deposition in the petitioner’s formal offer of evidence
was obviously excusable considering the period that had lapsed from the time the case
was filed and the voluminous records that the present case has generated. 43

THE RESPONDENTS’ COMMENTS

and THE PETITIONER’S REPLY

In the respondents’ Comments44 (filed in compliance with our Resolution of April 10, 200245 ), they
claim that the present petition was filed out of time - i.e., beyond the 60-day reglementary period
prescribed under Section 4, Rule 65 of the Rules of Court. 46 This assertion proceeds from the
view that the petitioner’s 3rd motion, being a mere rehash of similar motions earlier filed by the
petitioner, likewise simply assails the Sandiganbayan’s 1998 resolution. Along the same line,
they posit that the petitioner’s 3rd motion actually partakes of a proscribed third motion for
reconsideration of the Sandiganbayan’s 1998 resolution. 47 They likewise assert, on the
assumption that the 1998 resolution is interlocutory in character, that the petitioner’s failure to
contest the resolution by way of certiorari within the proper period gave the 1998 resolution a
character of "finality."

The respondents further claim that after a party has rested its case, the admission of a
supplemental offer of evidence requires the reopening of the case at the discretion of the trial
court; the Sandiganbayan simply exercised its sound discretion in refusing to reopen the case
since the evidence sought to be admitted was "within the knowledge of the [petitioner] and
available to [it] before [it] rested its case."48 The respondents also advert to the belated filing of
the petitioner’s 3rd motion – i.e., after the respondents had filed their respective demurrers to
evidence.

On the petitioner’s claim of waiver, the respondents assert that they have not waived their right to
cross-examine the deponent; the Sandiganbayan recognized this right in its 1998 resolution and
the petitioner never questioned this recognition. They also assert that the allegations in the Bane
deposition cannot be a proper subject of judicial notice under Rule 129 of the Rules of Court. The
respondents lastly submit that the Bane deposition is inadmissible in evidence because the
petitioner failed to comply with the requisites for admission under Section 47, Rule 130 of the
Rules of Court.

In its Reply,49 the petitioner defends the timeliness of the present petition by arguing that a party
may opt to wait out and collect a pattern of questionable acts before resorting to the
extraordinary remedy of certiorari. The petitioner stresses that it filed the 3rd motion precisely
because of the Sandiganbayan’s 2000 resolution, which held that the admission of the Bane
deposition should be done through the ordinary formal offer of evidence. Thus, the
Sandiganbayan seriously erred in considering the petitioner’s 3rd motion as a proscribed motion
for reconsideration. The petitioner generally submits that the dictates of substantial justice should
have guided the Sandiganbayan to rule otherwise.

The petitioner also clarifies that it has not yet rested its case although it has filed a formal offer of
evidence. A party normally rests his case only after the admission of the pieces of evidence he
formally offered; before then, he still has the opportunity to present further evidence to
substantiate his theory of the case should the court reject any piece of the offered evidence. 50

The petitioner further maintains that the mere reasonable opportunity to cross-examine the
deponent is sufficient for the admission of the Bane deposition considering that the deponent is
not an ordinary witness who can be easily summoned by our courts in light of his foreign
residence, his citizenship, and his advanced age. The petitioner asserts that Rule 24 (now Rule
23), and not Section 47, Rule 130, of the Rules of Court should apply to the present case, as
explicitly stated in the notice of the deposition-taking.

To date, respondents Imelda Marcos and the heirs of Potenciano Ilusorio have yet to file their
respective comments on the petition. Given the time that had lapsed since we required their
comments, we resolve to dispense with the filing of these comments and to consider this petition
submitted for decision.

THE ISSUES

On the basis of the pleadings, we summarize the pivotal issues for our resolution, as follows:

1. Whether the petition was filed within the required period.

2. Whether the Sandiganbayan committed grave abuse of discretion –

i. In holding that the 1998 resolution has already attained finality;

ii. In holding that the petitioner’s 3rd motion partakes of a prohibited motion for
reconsideration;

iii. In refusing to re-open the case given the critical importance of the Bane
deposition to the petitioner’s cause; and

iv. In refusing to admit the Bane deposition notwithstanding the prior

consolidation of Civil Case No. 0009 and Civil Case No. 0130.

3. Whether the Bane deposition is admissible under -

i. Rule 23, Section 4, par. (c) alone or in relation to Section 47, Rule 130 of the
Rules of Court; and

ii. The principle of judicial notice.

THE COURT’S RULING

We deny the petition for lack of merit.

I. Preliminary Considerations

I (a). The interlocutory nature of the Sandiganbayan’s 1998 resolution.

In determining the appropriate remedy or remedies available, a party aggrieved by a court order,
resolution or decision must first correctly identify the nature of the order, resolution or decision he
intends to assail.51 In this case, we must preliminarily determine whether the 1998 resolution is
"final" or "interlocutory" in nature.

Case law has conveniently demarcated the line between a final judgment or order and an
interlocutory one on the basis of the disposition made. 52 A judgment or order is considered final if
the order disposes of the action or proceeding completely, or terminates a particular stage of the
same action; in such case, the remedy available to an aggrieved party is appeal. If the order or
resolution, however, merely resolves incidental matters and leaves something more to be done
to resolve the merits of the case, the order is interlocutory 53 and the aggrieved party’s remedy is a
petition for certiorari under Rule 65. Jurisprudence pointedly holds that:
As distinguished from a final order which disposes of the subject matter in its entirety or
terminates a particular proceeding or action, leaving nothing else to be done but to enforce by
execution what has been determined by the court, an interlocutory order does not dispose of a
case completely, but leaves something more to be adjudicated upon. The term "final" judgment
or order signifies a judgment or an order which disposes of the case as to all the parties,
reserving no further questions or directions for future determination.

On the other hand, a court order is merely interlocutory in character if it leaves substantial
proceedings yet to be had in connection with the controversy. It does not end the task of the
court in adjudicating the parties’ contentions and determining their rights and liabilities as against
each other. In this sense, it is basically provisional in its application.54 (emphasis supplied)

Under these guidelines, we agree with the petitioner that the 1998 resolution is interlocutory. The
Sandiganbayan’s denial of the petitioner’s 1st motion through the 1998 Resolution came at a
time when the petitioner had not even concluded the presentation of its evidence. Plainly, the
denial of the motion did not resolve the merits of the case, as something still had to be done to
achieve this end.

We clarify, too, that an interlocutory order remains under the control of the court until the case is
finally resolved on the merits. The court may therefore modify or rescind the order upon sufficient
grounds shown at any time before final judgment. 55 In this light, the Sandiganbayan’s 1998
resolution – which merely denied the adoption of the Bane deposition as part of the evidence in
Civil Case No. 0009 – could not have attained finality (in the manner that a decision or final order
resolving the case on the merits does) despite the petitioner’s failure to move for its
reconsideration or to appeal. 56

I (b). The 3rd motion was not prohibited by the Rules.

We also agree with the petitioner that its 3rd motion cannot be considered as a proscribed third
(actually second) motion for reconsideration of the Sandiganbayan’s 1998 resolution. As Section
5, Rule 37 of the Rules of Court clearly provides, the proscription against a second motion for
reconsideration is directed against "a judgment or final order." Although a second motion for
reconsideration of an interlocutory order can be denied on the ground that it is a mere "rehash" of
the arguments already passed upon and resolved by the court, it cannot be rejected on the
ground that it is forbidden by the law or by the rules as a prohibited motion. 57

I (c). The 1998 resolution was not ripe for a petition for certiorari.

Under Section 1, Rule 41 of the Rules of Court, an aggrieved party may appeal from a judgment
or final order which completely disposes of a case or from an order that the Rules of Court
declares to be appealable. While this provision prohibits an appeal from an interlocutory order,
the aggrieved party is afforded the chance to question an interlocutory order through a special
civil action of certiorari under Rule 65; the petition must be filed within sixty days from notice of
the assailed judgment, order, resolution, or denial of a motion for reconsideration.

On the premise that the 1998 resolution is interlocutory in nature, the respondents insist that the
60-day period for filing a petition for certiorari should be reckoned from the petitioner’s notice of
the Sandiganbayan’s 1998 resolution. They argue that since this ruling had long been rendered
by the court, the petitioner’s subsequent filing of similar motions was actually a devious attempt
to resuscitate the long-denied admission of the Bane deposition.

We do not find the respondents’ submission meritorious. While the 1998 resolution is an
interlocutory order, as correctly argued by the petitioner and impliedly conceded by the
respondents, the claim that the 1998 resolution should have been immediately questioned by the
petitioner on certiorari is not totally correct as a petition for certiorari is not grounded solely on the
issuance of a disputed interlocutory ruling. 58 For a petition for certiorari to prosper, Section 1,
Rule 65 of the Rules of Court requires, among others, that neither an appeal nor any plain,
speedy and adequate remedy in the ordinary course of law is available to the aggrieved party.
As a matter of exception, the writ of certiorari may issue notwithstanding the existence of an
available alternative remedy, if such remedy is inadequate or insufficient in relieving the
aggrieved party of the injurious effects of the order complained of. 59

We note that at the time of its 1st motion in Civil Case No. 0009, the petitioner had not yet
concluded the presentation of its evidence, much less made any formal offer of evidence. At this
stage of the case, the prematurity of using the extraordinary remedy of certiorari to question the
admission of the Bane deposition is obvious. After the denial of the 1st motion, the plain remedy
available to the petitioner was to move for a reconsideration to assert and even clarify its position
on the admission of the Bane deposition. The petitioner could introduce 60 anew the Bane
deposition and include this as evidence in its formal offer 61 – as the petitioner presumably did in
Civil Case No. 0130.

Thus, at that point, the case was not yet ripe for the filing of a petition for certiorari, and the denial
of the 1st motion could not have been the reckoning point for the period of filing such a petition.

II. The Sandiganbayan’s ruling on the finality of its 1998 resolution was legally erroneous
but did not constitute grave abuse of discretion

In light of the above discussions and conclusions, the Sandiganbayan undoubtedly erred on a

question of law in its ruling, but this legal error did not necessarily amount to a grave abuse of
discretion in the absence of a clear showing that its action was a capricious and whimsical
exercise of judgment affecting its exercise of jurisdiction. 62 Without this showing, the
Sandiganbayan’s erroneous legal conclusion was only an error of judgment, or, at best,
an abuse of discretion but not a grave one. For this reason alone, the petition should be
dismissed.

Despite this conclusion, however, we opt not to immediately dismiss the petition in light of the
unique circumstances of this case where the petitioner cannot entirely be faulted for not availing
of the remedy at the opportune time, and where the case, by its nature, is undoubtedly endowed
with public interest and has become a matter of public concern. 63 In other words, we opt to
resolve the petition on the merits to lay the issues raised to rest and to avoid their recurrence in
the course of completely resolving the merits of Civil Case No. 0009.

Although the word "rested" nowhere appears in the Rules of Court, ordinary court procedure has
inferred it from an overview of trial sequence under Section 5, Rule 30 (which capsulizes the
order of presentation of a

party’s evidence during trial), read in relation to Rule 18 on Pre-Trial, 64 both of the Rules of Court.
Under Section 5, Rule 30, after a party has adduced his direct evidence in the course of
discharging the burden of proof,65 he is considered to have rested his case, and is thereafter
allowed to offer rebutting evidence only.66 Whether a party has rested his case in some measure
depends on his manifestation in court on whether he has concluded his presentation of
evidence.67

In its second and third motions, respectively, the petitioner expressly admitted that "due to
oversight, [the petitioner] closed and rested its case";68 and that it "had terminated the
presentation of its evidence in x x x Civil Case No. 0009."69 In the face of these
categorical judicial admissions,70 the petitioner cannot suddenly make an about-face and insist
on the introduction of evidence out of the usual order. Contrary to the petitioner’s assertion, the
resting of its case could not have been conditioned on the admission of the evidence it formally
offered. To begin with, the Bane deposition, which is the lone piece of evidence subject of this
present petition, was not among the pieces of evidence included in its formal offer of evidence
and thus could not have been admitted or rejected by the trial court.
The Court observes with interest that it was only in this present petition for certiorari that the
petitioner had firmly denied having rested its case.71 Before then, the petitioner never found it
appropriate to question on certiorari the Sandiganbayan’s denial of its 2nd motion which
prayed, inter alia, for the reopening of the case. This is a fatal defect in the petitioner’s case.

Although the denial of the petitioner’s first motion did not necessitate an immediate recourse to
the corrective writ of certiorari, the denial of the 2nd motion dictated a different course of action.
The petitioner’s non-observance of the proper procedure for the admission of the Bane
deposition, while seemingly innocuous, carried fatal implications for its case. Having been
rebuffed on its first attempt to have the Bane deposition adopted in Civil Case No. 0009, and
without seeking reconsideration of the denial, the petitioner presented its other pieces of
evidence and eventually rested its case. This time, the petitioner forgot about the Bane
deposition and so failed to include that piece of evidence in its formal offer of evidence.

More than two years later, the petitioner again tried to squeeze in the Bane deposition into its
case. In resolving the petitioner’s motion for reconsideration of the Sandiganbayan’s 2000
resolution, the Sandiganbayan held that the Bane deposition has "become part and parcel" of
Civil Case No. 0009. This pronouncement has obscured the real status of the Bane deposition as
evidence (considering that, earlier, the Sandiganbayan already denied the petitioner’s attempt to
adopt the Bane deposition as evidence in Civil Case No. 0009 for the deponent cannot be cross-
examined in court). Nevertheless, the Sandiganbayan ultimately denied the petitioner’s motion to
reopen the case. Having judicially admitted the resting of its case, the petitioner should have
already questioned the denial of its 2nd motion by way of certiorari, since the denial of its attempt
to reopen the case effectively foreclosed all avenues available to it for the consideration of the
Bane deposition. Instead of doing so, however, the petitioner allowed the 60-day
reglementary period, under Section 4, Rule 65 of the Rules of Court, to lapse, and
proceeded to file its 3rd motion.

Significantly, the petitioner changed its legal position in its 3rd motion by denying having rested
its case and insisting on the introduction of the Bane deposition. Rebuffed once more, the
petitioner filed the present petition, inviting our attention to the Sandiganbayan’s
resolutions,72 which allegedly gave it "mixed signals."73 By pointing to these resolutions, ironically,
even the petitioner impliedly recognized that they were then already ripe for review on certiorari.
What the petitioner should have realized was that its 2nd motion unequivocally aimed to reopen
the case for the introduction of further evidence consisting of the Bane deposition. Having
been ultimately denied by the court, the petitioner could not have been prevented from taking the
proper remedy notwithstanding any perceived ambiguity in the resolutions.

On the other end, though, there was nothing intrinsically objectionable in the petitioner’s motion
to reopen its case before the court ruled on its formal offer of evidence. The Rules of Court does
not prohibit a party from requesting the court to allow it to present additional evidence even after
it has rested its case. Any such opportunity, however, for the ultimate purpose of the admission
of additional evidence is already addressed to the sound discretion of the court. It is from the
prism of the exercise of this discretion that the Sandiganbayan’s refusal to reopen the case (for
the purpose of introducing, "marking and offering" additional evidence) should be viewed. We
can declare this Sandiganbayan action invalid if it had acted with grave abuse of discretion.

III. The Sandiganbayan gravely abused its discretion in ultimately refusing to reopen the
case for the purpose of introducing and admitting in evidence the Bane deposition

The basis for a motion to reopen a case to introduce further evidence is Section 5, Rule 30 of the
Rules of Court, which reads:

Sec. 5. Order of trial. – Subject to the provisions of section 2 of Rule 31, and unless the court for
special reasons otherwise directs, the trial shall be limited to the issues stated in the pre-trial
order and shall proceed as follows:
 xxxx

(f) The parties may then respectively adduce rebutting evidence only, unless the court, for good
reasons and in the furtherance of justice, permits them to adduce evidence upon their
original case[.] [emphases ours]

Under this rule, a party who has the burden of proof must introduce, at the first instance, all the
evidence he relies upon74 and such evidence cannot be given piecemeal.75 The obvious rationale
of the requirement is to avoid injurious surprises to the other party and the consequent delay in
the administration of justice.76

A party’s declaration of the completion of the presentation of his evidence prevents him from
introducing further evidence; 77 but where the evidence is rebuttal in character, whose necessity,
for instance, arose from the shifting of the burden of evidence from one party to the other; 78 or
where the evidence sought to be presented is in the nature of newly discovered evidence,79 the
party’s right to introduce further evidence must be recognized. Otherwise, the aggrieved
party may avail of the remedy of certiorari.

Largely, the exercise of the court’s discretion80 under the exception of Section 5(f), Rule 30 of the
Rules of Court depends on the attendant facts – i.e., on whether the evidence would qualify as
a "good reason" and be in furtherance of "the interest of justice." For a reviewing court to
properly interfere with the lower court’s exercise of discretion, the petitioner must show that the
lower court’s action was attended by grave abuse of discretion. Settled jurisprudence has defined
this term as the capricious and whimsical exercise of judgment, equivalent to lack of jurisdiction;
or, the exercise of power in an arbitrary manner by reason of passion, prejudice, or personal
hostility, so patent or so gross as to amount to an evasion of a positive duty, to a virtual refusal to
perform the mandated duty, or to act at all in contemplation of the law. 81 Grave abuse of
discretion goes beyond the bare and unsupported imputation of caprice, whimsicality or
arbitrariness, and beyond allegations that merely constitute errors of judgment 82 or mere abuse of
discretion.83

In Lopez v. Liboro,84 we had occasion to make the following pronouncement:

After the parties have produced their respective direct proofs, they are allowed to offer rebutting
evidence only, but, it has been held, the court, for good reasons, in the furtherance of justice,
may permit them to offer evidence upon their original case, and its ruling will not be disturbed in
the appellate court where no abuse of discretion appears. So, generally, additional evidence is
allowed when it is newly discovered, or where it has been omitted through inadvertence or
mistake, or where the purpose of the evidence is to correct evidence previously offered. The
omission to present evidence on the testator's knowledge of Spanish had not been deliberate. It
was due to a misapprehension or oversight. (citations omitted; emphases ours)

Likewise, in Director of Lands v. Roman Archbishop of Manila,85 we ruled:

The strict rule is that the plaintiff must try his case out when he commences. Nevertheless, a
relaxation of the rule is permitted in the sound discretion of the court. "The proper rule for the
exercise of this discretion," it has been said by an eminent author, "is, that material testimony
should not be excluded because offered by the plaintiff after the defendant has rested,
although not in rebuttal, unless it has been kept back by a trick, and for the purpose of
deceiving the defendant and affecting his case injuriously."

These principles find their echo in Philippine remedial law. While the general rule is rightly
recognized, the Code of Civil Procedure authorizes the judge "for special reasons," to change the
order of the trial, and "for good reason, in the furtherance of justice," to permit the parties "to offer
evidence upon their original case." These exceptions are made stronger when one considers the
character of registration proceedings and the fact that where so many parties are involved, and
action is taken quickly and abruptly, conformity with precise legal rules should not always be
expected. Even at the risk of violating legal formulæ, an opportunity should be given to
parties to submit additional corroborative evidence in support of their claims of title, if the
ends of justice so require. (emphases ours)

In his commentaries, Chief Justice Moran had this to say:

However, the court for good reasons, may, in the furtherance of justice, permit the parties to offer
evidence upon their original case, and its ruling will not be disturbed where no abuse of
discretion appears, Generally, additional evidence is allowed when x x x; but it may be
properly disallowed where it was withheld deliberately and without justification.86

The weight of the exception is also recognized in foreign jurisprudence. 87

Under these guidelines, we hold that the Sandiganbayan gravely abused its discretion in refusing
to reopen the case. Instead of squarely ruling on the petitioner’s 2nd motion to avoid any
uncertainty on the evidentiary status of the Bane deposition, the Sandiganbayan’s action actually
left the petitioner’s concern in limbo by considering the petitioner’s motion "redundant." This is
tantamount to a refusal to undertake a positive duty as mandated by the circumstances and is
equivalent to an act outside the contemplation of law.

It has not escaped our notice that at the time the petitioner moved to re-open its case, the
respondents had not yet even presented their evidence in chief. The respondents, therefore,
would not have been prejudiced by allowing the petitioner’s introduction of the Bane deposition,
which was concededly omitted "through oversight."88 The higher interest of substantial justice, of
course, is another consideration that cannot be taken lightly. 89

In light of these circumstances, the Sandiganbayan should not have perfunctorily applied Section
5, Rule 30 of the Rules of Court on the petitioner’s request to reopen the case for the submission
of the Bane deposition.

On the basis of this conclusion, a remand of this case should follow as a matter of course. The
state of the parties’ submissions and the delay that has already attended this aspect of Civil
Case No. 0009, however, dictate against this obvious course of action. At this point, the parties
have more than extensively argued for or against the admission of the Bane deposition. Civil
Case No. 0009 is a 25-year old sequestration case that is now crying out for complete resolution.
Admissibility, too, is an issue that would have again been raised on remand and would surely
stare us in the face after remand.90 We are thus left with no choice but to resolve the issue of
admissibility of the Bane deposition here and now.

IV. The admissibility of the Bane deposition

IV (a). The consolidation of Civil Case No. 0009 and Civil Case No. 0130 did not dispense
with the usual requisites of admissibility

In support of its 3rd motion, the petitioner argues that the Bane deposition can be admitted in
evidence without observing the provisions of Section 47, Rule 130 of the Rules of Court. 91 The
petitioner claims that in light of the prior consolidation of Civil Case No. 0009 and Civil Case No.
0130, among others,92 the "former case or proceeding" that Section 47, Rule 130 speaks of no
longer exists.

Rule 31 of the old Rules of Court93 – the rule in effect at the time Civil Case Nos. 0009 and 0130
were consolidated – provided that:
 Rule 31
Consolidation or Severance

Section 1. Consolidation. – When actions involving a common question of law or fact are pending
before the court, it may order a joint hearing or trial of any or all the matters in issue in the
actions; it may order all the actions consolidated; and it may make such orders concerning
proceedings therein as may tend to avoid unnecessary costs or delay. 94 (emphases ours)

Consolidation is a procedural device granted to the court as an aid in deciding how cases in its
docket are to be tried so that the business of the court may be dispatched expeditiously and with
economy while providing justice to the parties. To promote this end, the rule permits the
consolidation and a single trial of several cases in the court’s docket, or the consolidation of
issues within those cases.95

A reading of Rule 31 of the Rules of Court easily lends itself to two observations. First, Rule 31 is
completely silent on the effect/s of consolidation on the cases consolidated; on the parties and
the causes of action involved; and on the evidence presented in the consolidated cases. Second,
while Rule 31 gives the court the discretion either to order a joint hearing or trial, or to order the
actions consolidated, jurisprudence will show that the term "consolidation" is used generically
and even synonymously with joint hearing or trial of several causes.96 In fact, the title
"consolidation" of Rule 31 covers all the different senses of consolidation, as discussed below.

These observations are not without practical reason. Considering that consolidation is basically a
function given to the court, the latter is in the best position to determine for itself (given the nature
of the cases, the complexity of the issues involved, the parties affected, and the court’s capability
and resources vis-à-vis all the official business pending before it, among other things) what
"consolidation" will bring, bearing in mind the rights of the parties appearing before it.

To disregard the kind of consolidation effected by the Sandiganbayan on the simple and
convenient premise that the deposition-taking took place after the Sandiganbayan ordered the
consolidation is to beg the question. It is precisely the silence of our Rules of Procedure and the
dearth of applicable case law on the effect of "consolidation" that strongly compel this Court to
determine the kind of "consolidation" effected to directly resolve the very issue of admissibility in
this case.

In the context of legal procedure, the term "consolidation" is used in three different senses: 97

(1) Where all except one of several actions are stayed until one is tried, in which case the
judgment in the one trial is conclusive as to the others. This is not actually consolidation
but is referred to as such. (quasi-consolidation)98

(2) Where several actions are combined into one, lose their separate identity, and
become a single action in which a single judgment is rendered. This is illustrated by a
situation where several actions are pending between the same parties stating claims
which might have been set out originally in one complaint. (actual consolidation)99

(3) Where several actions are ordered to be tried together but each retains its separate
character and requires the entry of a separate judgment. This type of consolidation does
not merge the suits into a single action, or cause the parties to one action to be parties to
the other. (consolidation for trial)100

Considering that the Sandiganbayan’s order 101 to consolidate several incident cases does not at
all provide a hint on the extent of the court’s exercise of its discretion as to the effects of the
consolidation it ordered – in view of the function of this procedural device to principally aid the
court itself in dealing with its official business – we are compelled to look deeper into the
voluminous records of the proceedings conducted below. We note that there is nothing that
would even suggest that the Sandiganbayan in fact intended a merger of causes of action,
parties and evidence.102 To be sure, there would have been no need for a motion to adopt (which
did not remain unopposed) the testimonies in the incident cases had a merger actually resulted
from the order of consolidation, for in that case, the Sandiganbayan can already take judicial
notice of the same.

Significantly, even the petitioner itself viewed consolidation, at most, to be merely a consolidation
for trial.103 Accordingly, despite the consolidation in 1993, the petitioner acceded to the
Sandiganbayan’s 1998 Resolution (which denied the petitioner’s 1st Motion on the ground that
the witnesses, whose testimony in the incident cases is sought to be adopted, "are not available
for cross-examination in" the Sandiganbayan) by presenting these other witnesses again in the
main case, so that the respondents can cross-examine them.

These considerations run counter to the conclusion that the Sandiganbayan’s order of
consolidation had actually resulted in the complete merger of the incident cases with the main
case, in the sense of actual consolidation, and that the parties in these consolidated cases had
(at least constructively) been aware of and had allowed actual consolidation without objection. 104

Considering, too, that the consolidated actions were originally independent of one another and
the fact that in the present case the party respondents to Civil Case No. 0009 (an action for
reconveyance, accounting, restitution and damages) are not parties to Civil Case No. 0130 (a
special civil action filed by an ETPI stockholder involving a corporate squabble within ETPI), the
conclusion that the Sandiganbayan in fact intended an actual consolidation and, together with
the parties affected,105 acted towards that end - where the actions become fused and
unidentifiable from one another and where the evidence appreciated in one action is also
appreciated in another action – must find support in the proceedings held below. This is
particularly true in a case with the magnitude and complexity of the present case. Otherwise, to
impose upon the respondents the effects of an actual consolidation (which find no clear support
in the provisions of the Rules of Court, jurisprudence, 106 and even in the proceedings before the
Sandiganbayan itself and despite the aforementioned considerations) results in an outright
deprivation of the petitioner’s right to due process. We reach this conclusion especially where the
evidence sought to be admitted is not simply a testimony taken in one of the several cases, but a
deposition upon oral examination taken in another jurisdiction and whose admission is governed
by specific provisions on our rules on evidence.

We stress on this point, too, that while the Sandiganbayan ordered the consolidation in 1993
(that is, before the deposition was taken), neither does the Pre-Trial Order 107 issued by the
Sandiganbayan in 1997 in Civil Case No. 0009 contain any reference, formal or substantive, to
Civil Case No. 0130.108 Interestingly, in its Pre-Trial Brief dated August 30, 1996, 109 the petitioner
even made a representation to present Bane as one of its witnesses.

IV (b). Use of deposition under Section 4, Rule 23 and as a former testimony under
Section 47, Rule 130

Since the present consolidation did not affect Civil Case No. 0130 as an original, albeit incidental,
case, the admissibility of the Bane deposition cannot avoid being measured against the
requirements of Section 47, Rule 130 of the Rules of Court – the rule on the admissibility of
testimonies or deposition taken in a different proceeding. In this regard, the petitioner argues that
Section 4, Rule 23 of the Rules of Court (then Rule 24) 110 must, at any rate, prevail over Section
47, Rule 130111 of the same Rules.

At the outset, we note that when the petitioner’s motion to adopt the testimonies taken in the
incident cases drew individual oppositions from the respondents, the petitioner represented to
the Sandiganbayan its willingness to comply with the provisions of Section 47, Rule 130 of the
Rules of Court,112 and, in fact, again presented some of the witnesses. The petitioner’s about-face
two years thereafter even contributed to the Sandiganbayan’s own inconsistency on how to treat
the Bane deposition, in particular, as evidence.

Section 4, Rule 23 of the Rules of Court on "Deposition Pending Action" (deposition de bene
esse) provides for the circumstances when depositions may be used in the trial, or at the hearing
of a motion or an interlocutory proceeding.

SEC. 4. Use of depositions. — At the trial or upon the hearing of a motion or an interlocutory
proceeding, any part or all of a deposition, so far as admissible under the rules of evidence,
may be used against any party who was present or represented at the taking of the deposition or
who had due notice thereof, in accordance with any one of the following provisions:

xxxx

(c) The deposition of a witness, whether or not a party, may be used by any party for any
purpose if the court finds: (1) that the witness is dead; or (2) that the witness resides at a
distance more than one hundred (100) kilometers from the place of trial or hearing, or is out of
the Philippines, unless it appears that his absence was procured by the party offering the
deposition; or (3) that the witness is unable to attend or testify because of age, sickness,
infirmity, or imprisonment; or (4) that the party offering the deposition has been unable to procure
the attendance of the witness by subpoena; or (5) upon application and notice, that such
exceptional circumstances exist as to make it desirable, in the interest of justice and with due
regard to the importance of presenting the testimony of witnesses orally in open court, to allow
the deposition to be used[.] [emphasis ours]

On the other hand, Section 47, Rule 130 of the Rules of Court provides:

SEC. 47. Testimony or deposition at a former proceeding. – The testimony or deposition of a

witness deceased or unable to testify, given in a former case or proceeding, judicial or
administrative, involving the same parties and subject matter, may be given in evidence against
the adverse party who had the opportunity to cross-examine him.

A plain reading of Rule 23 of the Rules of Court readily rejects the petitioner’s position that the
Bane deposition can be admitted into evidence without observing the requirements of Section 47,
Rule 130 of the Rules of Court.

Before a party can make use of the deposition taken at the trial of a pending action, Section 4,
Rule 23 of the Rules of Court does not only require due observance of its sub-paragraphs (a) to
(d); it also requires, as a condition for admissibility, compliance with "the rules on evidence."
Thus, even Section 4, Rule 23 of the Rules of Court makes an implied reference to Section 47,
Rule 130 of the Rules of Court before the deposition may be used in evidence. By reading Rule
23 in isolation, the petitioner failed to recognize that the principle conceding admissibility to a
deposition under Rule 23 should be consistent with the rules on evidence under Section 47, Rule
130.113 In determining the admissibility of the Bane deposition, therefore, reliance cannot be given
on one provision to the exclusion of the other; both provisions must be considered. This is
particularly true in this case where the evidence in the prior proceeding does not simply refer to a
witness’ testimony in open court but to a deposition taken under another and farther jurisdiction.

A common thread that runs from Section 4, Rule 23 of the Rules of Court and Section 47, Rule
130 of the same Rules is their mutual reference to depositions.

A deposition is chiefly a mode of discovery whose primary function is to supplement the

pleadings for the purpose of disclosing the real points of dispute between the parties and
affording an adequate factual basis during the preparation for trial. 114 Since depositions are
principally made available to the parties as a means of informing themselves of all the relevant
facts, depositions are not meant as substitute for the actual testimony in open court of a party or
witness. Generally, the deponent must be presented for oral examination in open court at the trial
or hearing. This is a requirement of the rules on evidence under Section 1, Rule 132 of the Rules
of Court.115

Examination to be done in open court. — The examination of witnesses presented in a trial or

hearing shall be done in open court, and under oath or affirmation. Unless the witness is
incapacitated to speak, or the question calls for a different mode of answer, the answers of the
witness shall be given orally.

Indeed, any deposition offered to prove the facts set forth therein, in lieu of the actual oral
testimony of the deponent in open court, may be opposed by the adverse party and excluded
under the hearsay rule – i.e., that the adverse party had or has no opportunity to cross-examine
the deponent at the time that his testimony is offered. That opportunity for cross-examination was
afforded during the taking of the deposition alone is no argument, as the opportunity for cross-
examination must normally be accorded a party at the time that the testimonial evidence is
actually presented against him during the trial or hearing of a case. 116 However, under certain
conditions and for certain limited purposes laid down in Section 4, Rule 23 of the Rules of Court,
the deposition may be used without the deponent being actually called to the witness stand. 117

Section 47, Rule 130 of the Rules of Court is an entirely different provision. While a former
testimony or deposition appears under the Exceptions to the Hearsay Rule, the classification
of former testimony or deposition as an admissible hearsay is not universally conceded. 118 A
fundamental characteristic of hearsay evidence is the adverse party’s lack of opportunity to
cross-examine the out-of-court declarant. However, Section 47, Rule 130 explicitly requires, inter
alia, for the admissibility of a former testimony or deposition that the adverse party must have
had an opportunity to cross-examine the witness or the deponent in the prior proceeding.

This opportunity to cross-examine though is not the ordinary cross-examination 119 afforded an

adverse party in usual trials regarding "matters stated in the direct examination or connected
therewith." Section 47, Rule 130 of the Rules of Court contemplates a different kind of cross-
examination, whether actual or a mere opportunity, whose adequacy depends on the requisite
identity of issues in the former case or proceeding and in the present case where the former
testimony or deposition is sought to be introduced.

Section 47, Rule 130 requires that the issues involved in both cases must, at least, be
substantially the same; otherwise, there is no basis in saying that the former statement was - or
would have been - sufficiently tested by cross-examination or by an opportunity to do so. 120 (The
requirement of similarity though does not mean that all the issues in the two proceedings should
be the same.121 Although some issues may not be the same in the two actions, the admissibility
of a former testimony on an issue which is similar in both actions cannot be questioned. 122 )

These considerations, among others, make Section 47, Rule 130 a distinct rule on evidence and
therefore should not be confused with the general provisions on deposition under Rule 23 of the
Rules of Court. In other words, even if the petitioner complies with Rule 23 of the Rules of Court
on the use of depositions, the observance of Section 47, Rule 130 of the Rules of Court cannot
simply be avoided or disregarded.

Undisputably, the Sandiganbayan relied on the Bane deposition, taken in Civil Case No. 0130,
for purposes of this very same case. Thus, what the petitioner established and what the
Sandiganbayan found, for purposes of using the Bane deposition, refer only to the circumstances
laid down under Section 4(c), Rule 23 of the Rules of Court, not necessarily to those of Section
47, Rule 130 of the Rules of Court, as a distinct rule on evidence that imposes further
requirements in the use of depositions in a different case or proceeding. In other words, the prior
use of the deposition under Section 4(c), Rule 23 cannot be taken as compliance with Section
47, Rule 130 which considers the same deposition as hearsay, unless the requisites for its
admission under this rule are observed. The aching question is whether the petitioner complied
with the latter rule.

Section 47, Rule 130 of the Rules of Court lays down the following requisites for the admission of
a testimony or deposition given at a former case or proceeding.

1. The testimony or deposition of a witness deceased or otherwise unable to testify;

2. The testimony was given in a former case or proceeding, judicial or administrative;

3. Involving the same parties;

4. Relating to the same matter;

5. The adverse party having had the opportunity to cross-examine him. 123

The reasons for the admissibility of testimony or deposition taken at a former trial or proceeding
are the necessity for the testimony and its trustworthiness. 124 However, before the former
testimony or deposition can be introduced in evidence, the proponent must first lay the proper
predicate therefor,125 i.e., the party must establish the basis for the admission of the Bane
deposition in the realm of admissible evidence. This basis is the prior issue that we must now
examine and resolve.

IV (c). Unavailability of witness

For the admission of a former testimony or deposition, Section 47, Rule 130 of the Rules of Court
simply requires, inter alia, that the witness or deponent be "deceased or unable to testify." On the
other hand, in using a deposition that was taken during the pendency of an action, Section 4,
Rule 23 of the Rules of Court provides several grounds that will justify dispensing with the actual
testimony of the deponent in open court and specifies, inter alia, the circumstances of the
deponent’s inability to attend or testify, as follows:

(3) that the witness is unable to attend or testify because of age, sickness, infirmity, or
imprisonment[.] [emphases ours]126

The phrase "unable to testify" appearing in both Rule 23 and Rule 130 of the Rules of Court
refers to a physical inability to appear at the witness stand and to give a testimony. 127 Hence
notwithstanding the deletion of the phrase "out of the Philippines," which previously appeared in
Section 47, Rule 130 of the Rules of Court, absence from jurisdiction128 - the petitioner’s excuse
for the non-presentation of Bane in open court - may still constitute inability to testify under the
same rule. This is not to say, however, that resort to deposition on this instance of unavailability
will always be upheld. Where the deposition is taken not for discovery purposes, but to
accommodate the deponent, then the deposition should be rejected in evidence. 129

Although the testimony of a witness has been given in the course of a former proceeding
between the parties to a case on trial, this testimony alone is not a ground for its admission in
evidence. The witness himself, if available, must be produced in court as if he were testifying de
novo since his testimony given at the former trial is mere hearsay. 130 The deposition of a witness,
otherwise available, is also inadmissible for the same reason.

Indeed, the Sandiganbayan’s reliance on the Bane deposition in the other case (Civil Case No.
0130) is an argument in favor of the requisite unavailability of the witness. For purposes of
the present case (Civil Case No. 0009), however, the Sandiganbayan would have no basis to
presume, and neither can or should we, that the previous condition, which previously allowed the
use of the deposition, remains and would thereby justify the use of the same deposition
in another case or proceeding, even if the other case or proceeding is before the same court.
Since the basis for the admission of the Bane deposition, in principle, being necessity, 131 the
burden of establishing its existence rests on the party who seeks the admission of the evidence.
This burden cannot be supplanted by assuming the continuity of the previous condition or
conditions in light of the general rule against the non-presentation of the deponent in court. 132

IV (d). The requirement of opportunity of the adverse party to cross-examine; identity of

parties; and identity of subject matter

The function of cross-examination is to test the truthfulness of the statements of a witness made
on direct examination.133 The opportunity of cross-examination has been regarded as an essential
safeguard of the accuracy and completeness of a testimony. In civil cases, the right of cross-
examination is absolute, and is not a mere privilege of the party against whom a witness may be
called.134 This right is available, of course, at the taking of depositions, as well as on the
examination of witnesses at the trial. The principal justification for the general exclusion of
hearsay statements and for the admission, as an exception to the hearsay rule, of reported
testimony taken at a former hearing where the present adversary was afforded the opportunity to
cross-examine, is based on the premise that the opportunity of cross-examination is an essential
safeguard135 against falsehoods and frauds.

In resolving the question of whether the requirement of opportunity to cross-examine has been
satisfied, we have to consider first the required identity of parties as the present opponent to the
admission of the Bane deposition to whom the opportunity to cross-examine the deponent is
imputed may not after all be the same "adverse party" who actually had such opportunity.

To render the testimony of a witness admissible at a later trial or action, the parties to the first
proceeding must be the same as the parties to the later proceeding. Physical identity, however,
is not required; substantial identity136 or identity of interests137 suffices, as where the subsequent
proceeding is between persons who represent the parties to the prior proceeding by privity in
law, in blood, or in estate. The term "privity" denotes mutual or successive relationships to the
same rights of property.138

In the present case, the petitioner failed to impute, much less establish, the identity of interest or
privity between the then opponent, Africa, and the present opponents, the respondents. While
Africa is the son of the late respondent Jose Africa, at most, the deposition should be admissible
only against him as an ETPI stockholder who filed the certiorari petition docketed as Civil Case
No. 0130 (and, unavoidably, as successor-in-interest of the late respondent Jose Africa). While
Africa and the respondents are all ETPI stockholders, this commonality does not establish at all
any privity between them for purposes of binding the latter to the acts or omissions of the former
respecting the cross-examination of the deponent. The sequestration of their shares does not
result in the integration of their rights and obligations as stockholders which remain distinct and
personal to them, vis-a-vis other stockholders.139

IV (d1). The respondents’ notice of taking of Bane deposition is insufficient evidence of waiver

The petitioner staunchly asserts that the respondents have waived their right to cross-examine
the deponent for their failure to appear at the deposition-taking despite individual notices
previously sent to them.140

In its first Notice to Take Oral Deposition of Mr. Maurice V. Bane dated August 30, 1996, 141 the
petitioner originally intended to depose Mr. Bane on September 25-26 1996. Because it failed to
specify in the notice the purpose for taking Mr. Bane’s deposition, the petitioner sent a Second
Amended Notice to Take Deposition of Mr. Maurice V. Bane Upon Oral Examination where it
likewise moved the scheduled deposition-taking to October 23-26, 1996.
The records show that Africa moved several times for protective orders against the intended
deposition of Maurice Bane.142 On the other hand, among the respondents, only respondent
Enrile appears to have filed an Opposition143 to the petitioner’s first notice, where he squarely
raised the issue of reasonability of the petitioner’s nineteen-day first notice. While the
Sandiganbayan denied Africa’s motion for protective orders, 144 it strikes us that no ruling was ever
handed down on respondent Enrile’s Opposition. 145

It must be emphasized that even under Rule 23, the admission of the deposition upon oral
examination is not simply based on the fact of prior notice on the individual sought to be bound
thereby. In Northwest Airlines v. Cruz, 146 we ruled that -

The provision explicitly vesting in the court the power to order that the deposition shall not be
taken connotes the authority to exercise discretion on the matter. However, the discretion
conferred by law is not unlimited. It must be exercised, not arbitrarily or oppressively, but in a
reasonable manner and in consonance with the spirit of he law. The courts should always see to
it that the safeguards for the protection of the parties and deponents are firmly maintained. As
aptly stated by Chief Justice Moran:

. . . . (T)his provision affords the adverse party, as well as the deponent, sufficient protection
against abuses that may be committed by a party in the exercise of his unlimited right to
discovery. As a writer said: "Any discovery involves a prying into another person's affairs —
prying that is quite justified if it is to be a legitimate aid to litigation, but not justified if it is not to be
such an aid." For this reason, courts are given ample powers to forbid discovery which is
intended not as an aid to litigation, but merely to annoy, embarrass or oppress either the
deponent or the adverse party, or both. (emphasis ours)

In the present case, not only did the Sandiganbayan fail to rule on respondent Enrile’s
Opposition (which is equally applicable to his co-respondents), it also failed to provide even the
bare minimum "safeguards for the protection of," (more so) non-parties, 147 and to ensure that
these safeguards are firmly maintained. Instead, the Sandiganbayan simply bought the
petitioner’s assertion (that the taking of Bane deposition is a matter of right) and treated the
lingering concerns – e.g., reasonability of the notice; and the non-party status of the respondents
in Civil Case No. 0130 - at whose incident (docketed as G.R. No. 107789) the Bane deposition
was taken - rather perfunctorily to the prejudice of the respondents.

In conjunction with the order of consolidation, the petitioner’s reliance on the prior notice on the
respondents, as adequate opportunity for cross-examination, cannot override the non-party
status of the respondents in Civil Case No. 0130 – the effect of consolidation being merely for
trial. As non-parties, they cannot be bound by proceedings in that case. Specifically, they cannot
be bound by the taking of the Bane deposition without the consequent impairment of their right of
cross-examination.148 Opportunity for cross-examination, too, even assuming its presence, cannot
be singled out as basis for the admissibility of a former testimony or deposition since such
admissibility is also anchored on the requisite identity of parties. To reiterate, although the
Sandiganbayan considered the Bane deposition in resolving Civil Case No. 0130, its action was
premised on Africa’s status as a party in that case where the Bane deposition was taken.

Corollarily, the idea of privity also permeates Rule 23 of the Rules of Court through its Section 5
which provides:

Effect of substitution of parties. — Substitution of parties does not affect the right to use
depositions previously taken; and, when an action has been dismissed and another action
involving the same subject is afterward brought between the same parties or their
representatives or successors in interest, all depositions lawfully taken and duly filed in the
former action may be used in the latter as if originally taken therefor. [italics and underscoring
ours]
In light of these considerations, we reject the petitioner’s claim that the respondents waived their
right to cross-examination when they failed to attend the taking of the Bane deposition.
Incidentally, the respondents’ vigorous insistence on their right to cross-examine the deponent
speaks loudly that they never intended any waiver of this right.

Interestingly, the petitioner’s notice of the deposition-taking relied on Rule 23 of the Rules of
Court. Section 15 of this rule reads:

Deposition upon oral examination; notice; time and place. — A party desiring to take the
deposition of any person upon oral examination shall give reasonable notice in writing to every
other party to the action. The notice shall state the time and place for taking the deposition and
the name and address of each person to be examined, if known, and if the name is not known, a
general description sufficient to identify him or the particular class or group to which he belongs.
On motion of any party upon whom the notice is served, the court may for cause shown enlarge
or shorten the time.

Under this provision, we do not believe that the petitioner could reasonably expect that the
individual notices it sent to the respondents would be sufficient to bind them to the conduct of the
then opponent’s (Africa’s) cross-examination since, to begin with, they were not even parties to
the action. Additionally, we observe that in the notice of the deposition taking, conspicuously
absent was any indication sufficient to forewarn the notified persons that their inexcusable failure
to appear at the deposition taking would amount to a waiver of their right of cross-examination,
without prejudice to the right of the respondents to raise their objections at the appropriate
time.149 We would be treading on dangerous grounds indeed were we to hold that one not a
party to an action, and neither in privity nor in substantial identity of interest with any of
the parties in the same action, can be bound by the action or omission of the latter, by the
mere expedient of a notice. Thus, we cannot simply deduce a resultant waiver from the
respondents’ mere failure to attend the deposition-taking despite notice sent by the petitioner.

Lastly, we see no reason why the Bane deposition could not have been taken earlier in Civil
Case No. 0009 – the principal action where it was sought to be introduced – while Bane was still
here in the Philippines. We note in this regard that the Philippines was no longer under the
Marcos administration and had returned to normal democratic processes when Civil Case No.
0009 was filed. In fact, the petitioner’s notice itself states that the "purpose of the deposition is for
Mr. Maurice Bane to identify and testify on the facts set forth in his Affidavit," which Mr. Bane had
long executed in 1991 in Makati, Metro Manila.150 Clearly, a deposition could then have been
taken - without compromising the respondents’ right to cross-examine a witness against them -
considering that the principal purpose of the deposition is chiefly a mode of discovery. These, to
our mind, are avoidable omissions that, when added to the deficient handling of the present
matter, add up to the gross deficiencies of the petitioner in the handling of Civil Case No. 0009.

After failing to take Bane’s deposition in 1991 and in view of the peculiar circumstances of this
case, the least that the petitioner could have done was to move for the taking of the Bane
deposition and proceed with the deposition immediately upon securing a favorable ruling
thereon. On that occasion, where the respondents would have a chance to be heard, the
respondents cannot avoid a resultant waiver of their right of cross-examination if they still fail to
appear at the deposition-taking. Fundamental fairness dictates this course of action. It must be
stressed that not only were the respondents non-parties to Civil Case No. 0130, they likewise
have no interest in Africa’s certiorari petition asserting his right as an ETPI stockholder.

Setting aside the petitioner’s flip-flopping on its own representations, 151 this Court can only
express dismay on why the petitioner had to let Bane leave the Philippines before taking his
deposition despite having knowledge already of the substance of what he would testify on.
Considering that the testimony of Bane is allegedly a "vital cog" in the petitioner’s case against
the respondents, the Court is left to wonder why the petitioner had to take the deposition in an
incident case (instead of the main case) at a time when it became the technical right of the
petitioner to do so.

V. The petitioner cannot rely on principle of judicial notice

The petitioner also claims that since the Bane deposition had already been previously introduced
and admitted in Civil Case No. 0130, then the Sandiganbayan should have taken judicial notice
of the Bane deposition as part of its evidence.

Judicial notice is the cognizance of certain facts that judges may properly take and act on without
proof because these facts are already known to them. 152 Put differently, it is the assumption by a
court of a fact without need of further traditional evidentiary support. The principle is based on
convenience and expediency in securing and introducing evidence on matters which are not
ordinarily capable of dispute and are not bona fide disputed.153

The foundation for judicial notice may be traced to the civil and canon law maxim, manifesta (or
notoria) non indigent probatione.154 The taking of judicial notice means that the court will dispense
with the traditional form of presentation of evidence. In so doing, the court assumes that the
matter is so notorious that it would not be disputed.

The concept of judicial notice is embodied in Rule 129 of the Revised Rules on Evidence. Rule
129 either requires the court to take judicial notice, inter alia, of "the official acts of the x x x
judicial departments of the Philippines," 155 or gives the court the discretion to take judicial notice
of matters "ought to be known to judges because of their judicial functions." 156 On the other hand,
a party-litigant may ask the court to take judicial notice of any matter and the court may allow the
parties to be heard on the propriety of taking judicial notice of the matter involved. 157 In the
present case, after the petitioner filed its Urgent Motion and/or Request for Judicial Notice, the
respondents were also heard through their corresponding oppositions.

In adjudicating a case on trial, generally, courts are not authorized to take judicial notice of the
contents of the records of other cases, even when such cases have been tried or are pending in
the same court, and notwithstanding that both cases may have been tried or are actually pending
before the same judge.158 This rule though admits of exceptions.

As a matter of convenience to all the parties, a court may properly treat all or any part of the
original record of a case filed in its archives as read into the record of a case pending before it,
when, with the knowledge of, and absent an objection from, the adverse party, reference is
made to it for that purpose, by name and number or in some other manner by which it is
sufficiently designated; or when the original record of the former case or any part of it, is actually
withdrawn from the archives at the court's direction, at the request or with the consent of the
parties, and admitted as a part of the record of the case then pending.159

Courts must also take judicial notice of the records of another case or cases, where sufficient
basis exists in the records of the case before it, warranting the dismissal of the latter case. 160

The issue before us does not involve the applicability of the rule on mandatory taking of judicial
notice; neither is the applicability of the rule on discretionary taking of judicial notice seriously
pursued. Rather, the petitioner approaches the concept of judicial notice from a genealogical
perspective of treating whatever evidence offered in any of the "children" cases – Civil Case
0130 – as evidence in the "parent" case – Civil Case 0009 - or "of the whole family of
cases."161 To the petitioner, the supposed relationship of these cases warrants the taking of
judicial notice.

We strongly disagree. First, the supporting cases162 the petitioner cited are inapplicable either
because these cases involve only a single proceeding or an exception to the rule, which
proscribes the courts from taking judicial notice of the contents of the records of other
cases.163 Second, the petitioner’s proposition is obviously obnoxious to a system of orderly
procedure. The petitioner itself admits that the present case has generated a lot of cases, which,
in all likelihood, involve issues of varying complexity. If we follow the logic of the petitioner’s
argument, we would be espousing judicial confusion by indiscriminately allowing the admission of
evidence in one case, which was presumably found competent and relevant in another case,
simply based on the supposed lineage of the cases. It is the duty of the petitioner, as a party-
litigant, to properly lay before the court the evidence it relies upon in support of the relief it seeks,
instead of imposing that same duty on the court. We invite the petitioner’s attention to our
prefatory pronouncement in Lopez v. Sandiganbayan:164

Down the oft-trodden path in our judicial system, by common sense, tradition and the law, the
Judge in trying a case sees only with judicial eyes as he ought to know nothing about the facts of
the case, except those which have been adduced judicially in evidence. Thus, when the case is
up for trial, the judicial head is empty as to facts involved and it is incumbent upon the litigants to
the action to establish by evidence the facts upon which they rely. (emphasis ours)

We therefore refuse, in the strongest terms, to entertain the petitioner’s argument that we should
take judicial notice of the Bane deposition.

VI. Summation

To recapitulate, we hold that: (1) the Sandiganbayan’s denial of the petitioner’s 3rd motion –
the Motion to Admit Supplemental Offer of Evidence (Re: Deposition of Maurice Bane) – was a
legal error that did not amount to grave abuse of discretion; (2) the Sandiganbayan’s refusal to
reopen the case at the petitioner’s instance was tainted with grave abuse of discretion; and (3)
notwithstanding the grave abuse of discretion, the petition must ultimately fail as the Bane
deposition is not admissible under the rules of evidence. 165

VII. Refutation of Justice Carpio’s Last Minute Modified Dissent

At the last minute, Justice Carpio circulated a modified dissent, quoting the Bane deposition. His
covering note states:

I have revised my dissenting opinion to include the Bane deposition so that the Court and the
public will understand what the Bane deposition is all about. (underlining added)

In light of this thrust, a discussion refuting the modified dissent is in order.

First: Contents of the Bane deposition not an Issue. The dissent perfectly identified what is at
issue in this case – i.e., the admissibility of the Bane deposition. Admissibility is concerned with
the competence and relevance166 of the evidence, whose admission is sought. While the dissent
quoted at length the Bane deposition, it may not be amiss to point out that the relevance of the
Bane deposition (or, to adopt the dissent’s characterization, whether "Maurice V. Bane is a vital
witness") is not an issue here unless it can be established first that the Bane deposition is a
competent evidence.

Second: Misrepresentation of Cited Authority. The dissent insists that "in Philippine

Jurisprudence, the consolidation of cases merges the different actions into one and the rights of
the parties are adjudicated in a single judgment," citing Vicente J. Francisco. In our discussion on
consolidation, we footnoted the following in response to the dissent’s position, which we will
restate here for emphasis:

In the 1966 edition of Vicente J. Francisco’s Revised Rules of Court, Francisco wrote:
The effect of consolidation of actions is to unite and merge all of the different actions
consolidated into a single action, in the same manner as if the different causes of actions
involved had originally been joined in a single action, and the order of consolidation, if made by a
court of competent jurisdiction, is binding upon all the parties to the different actions until it is
vacated or set aside. After the consolidation there can be no further proceedings in the separate
actions, which are by virtue of the consolidation discontinued and superseded by a single action,
which should be entitled in such manner as the court may direct, and all subsequent proceedings
therein be conducted and the rights of the parties adjudicated in a single action (1 C.J.S., 113,
pp. 1371-1372).

At the very beginning of the discussion on consolidation of actions in the Corpus Juris
Secundum, the following caveat appears:

The term consolidation is used in three different senses. First, where several actions are
combined into one and lose their separate identity and become a single action in which a single
judgment is rendered; second, where all except one of several actions are stayed until one is
tried, in which case the judgment in the one is conclusive as to the others; third, where several
actions are ordered to be tried together but each retains its separate character and requires the
entry of a separate judgment. The failure to distinguish between these methods of procedure,
which are entirely distinct, the two latter, strictly speaking, not being consolidation, a fact which
has not always been noted, has caused some confusion and conflict in the cases. (1 C.J.S., 107,
pp. 1341-1342) (Emphasis added).

In defining the term "consolidation of actions," Francisco provided a colatilla that the term
"consolidation" is used in three different senses, citing 1 C.J.S. 1341 and 1 Am. Jur. 477
(Francisco, Revised Rules of Court, p. 348).

From the foregoing, it is clear that the dissent appears to have quoted Francisco’s statement out
of context. As it is, the issue of the effect of consolidation on evidence is at most an unsettled
matter that requires the approach we did in the majority’s discussion on consolidation. 167

Third: Misappreciation of the Purpose of Consolidation. The dissent then turns to the purpose of
consolidation – to "expeditiously settle the interwoven issues involved in the consolidated cases"
and "the simplification of the proceedings." It argues that this can only be achieved if the
repetition of the same evidence is dispensed with.

It is unfortunate that the dissent refuses to recognize the fact that since consolidation is primarily
addressed to the court concerned to aid it in dispatching its official business, it would be in
keeping with the orderly trial procedure if the court should have a say on what consolidation
would actually bring168 (especially where several cases are involved which have become
relatively complex). In the present case, there is nothing in the proceedings below that would
suggest that the Sandiganbayan or the parties themselves (the petitioner and the respondents)
had in mind a consolidation beyond joint hearing or trial. Why should this Court – which is not a
trial court – impose a purported effect that has no factual or legal grounds?

Fourth: The Due Process Consideration. The dissent argues that even if the consolidation only
resulted in a joint hearing or trial, the "respondents are still bound by the Bane deposition
considering that they were given notice of the deposition-taking." The issue here boils down to
one of due process – the fundamental reason why a hearsay statement (not subjected to the
rigor of cross-examination) is generally excluded in the realm of admissible evidence – especially
when read in light of the general rule that depositions are not meant as substitute for the actual
testimony, in open court, of a party or witness.

Respondent Enrile had a pending Opposition to the notice of deposition-taking (questioning the
reasonableness thereof – an issue applicable to the rest of the respondents) which the
Sandiganbayan failed to rule on. To make the Sandiganbayan’s omission worse, the
Sandiganbayan blindly relied on the petitioner’s assertion that the deposition-taking was a matter
of right and, thus, failed to address the consequences and/or issues that may arise from the
apparently innocuous statement of the petitioner (that it intends to use the Bane deposition in
Civil Case No. 0009, where only the respondents, and not Africa, are the parties). 169 There is
simply the absence of "due" in due process.

Fifth: Misstatement of the Sandiganbayan’s Action. The dissent repeatedly misstates that the
Sandiganbayan "granted" the request for the deposition-taking. For emphasis, the
Sandiganbayan did not "grant" the request since the petitioner staunchly asserted that the
deposition-taking was a matter of right. No one can deny the complexity of the issues that these
consolidated cases have reached. Considering the consolidation of cases of this nature, the most
minimum of fairness demands upon the petitioner to move for the taking of the Bane deposition
and for the Sandiganbayan to make a ruling thereon (including the opposition filed by respondent
Enrile which equally applies to his co-respondents). The burgeoning omission and failures that
have prevailed in this case cannot be cured by this Court without itself being guilty of violating the
constitutional guarantee of due process.

Sixth: Issues Posed and Resolved Go Beyond Technicalities. The above conclusions, contrary to
the petitioner’s claim, are not only matters of technicality. Admittedly, rules of procedure involve
technicality, to which we have applied the liberality that technical rules deserve. But the
resolution of the issues raised goes beyond pure or mere technicalities as the preceding
discussions show. They involve issues of due process and basic unfairness to the respondents,
particularly to respondent Enrile, who is portrayed in the Bane deposition to be acting in behalf of
the Marcoses so that these shares should be deemed to be those of the Marcoses. They
involved, too, principles upon which our rules of procedure are founded and which we cannot
disregard without flirting with the violation of guaranteed substantive rights and without risking the
disorder that these rules have sought to avert in the course of their evolution.

In the Court En Banc deliberations of December 6, 2011, the Court failed to arrive at a conclusive
decision because of a tie vote (7-7, with one Justice taking no part). The same vote resulted in
the re-voting of December 13, 2011. In this light, the ponencia is deemed sustained.

WHEREFORE, premises considered, we DISMISS the petition for lack of merit. No costs.

SO ORDERED.
 SECOND DIVISION

June 15, 2016

G.R. No. 197122

INGRID SALA SANTAMARIA and ASTRID SALA BOZA, Petitioners,

vs.
THOMAS CLEARY, Respondent.

x-----------------------x

G.R. No. 197161

KATHRYN GO-PEREZ, Petitioner,
vs.
THOMAS CLEARY, Respondent.

DECISION

LEONEN, J.:

This case stems from a motion for court authorization to take deposition in Los Angeles by
respondent Thomas Cleary, an American citizen and Los Angeles resident who filed a civil suit
against petitioners Ingrid Sala Santamaria, Astrid Sala Boza, and Kathryn Go-Perez before the
Regional Trial Court of Cebu.

We resolve whether a foreigner plaintiff residing abroad who chose to file a civil suit in the
Philippines is allowed to take deposition abroad for his direct testimony on the ground that he is
"out of the Philippines" pursuant to Rule 23, Section 4(c)(2) of the Rules of Court.

These two separate Petitions  assail the Court of Appeals’ (1) August 10, 2010 Decision  that
1 2

granted Thomas Cleary’s (Cleary) Petition for Certiorari and reversed the trial court’s
Orders  denying Cleary’s Motion for Court Authorization to Take Deposition  before the
3 4

Consulate- General of the Philippines in Los Angeles; and (2) May 11, 2011 Resolution  that
5

denied reconsideration.

On January 10, 2002, Cleary, an American citizen with office address in California, filed a
Complaint  for specific performance and damages against Miranila Land Development
6

Corporation, Manuel S. Go, Ingrid Sala Santamaria (Santamaria), Astrid Sala Boza (Boza), and
Kathryn Go-Perez (Go-Perez) before the Regional Trial Court of Cebu.

The Complaint involved shares of stock of Miranila Land Development Corporation, for which
Cleary paid US$191,250.00.  Cleary sued in accordance with the Stock Purchase and Put
7

Agreement he entered into with Miranila Land Development Corporation, Manuel S. Go,
Santamaria, Boza, and Go-Perez. Paragraph 9.02 of the Agreement provides:
Any suit, action or proceeding with respect to this Agreement may be brought in (a) the courts of
the State of California, (b) the United States District Court for the Central District of California, or
(c) the courts of the country of Corporation’s incorporation, as Cleary may elect in his sole
discretion, and the Parties hereby submit to any such suit, action proceeding or judgment and
waives any other preferential jurisdiction by reason of domicile. 8

Cleary elected to file the case in Cebu.

Santamaria, Boza, and Go-Perez filed their respective Answers with Compulsory
Counterclaims.  The trial court then issued a notice of pre-trial conference dated July 4, 2007.
9 10

In his pre-trial brief, Cleary stipulated that he would testify "in support of the allegations of his
complaint, either on the witness stand or by oral deposition."  Moreover, he expressed his intent
11

in availing himself "of the modes of discovery under the rules." 12

On January 22, 2009, Cleary moved for court authorization to take deposition.  He prayed that
13

his deposition be taken before the Consulate-General of the Philippines in Los Angeles and be
used as his direct testimony. 14

Santamaria and Boza opposed  the Motion and argued that the right to take deposition is not
15

absolute.  They claimed that Cleary chose the Philippine system to file his suit, and yet he
16

deprived the court and the

parties the opportunity to observe his demeanor and directly propound questions on him. 17

Go-Perez filed a separate Opposition,  arguing that the oral deposition was not intended for
18

discovery purposes if Cleary deposed himself as plaintiff.  Since he elected to file suit in the
19

Philippines, he should submit himself to the procedures and testify before the Regional Trial
Court of Cebu.  Moreover, Go-Perez argued that oral deposition in the United States would
20

prejudice, vex, and oppress her and her co-petitioners who would need to incur costs to attend. 21

The trial court denied Cleary’s Motion for Court Authorization to Take Deposition in the
Order  dated June 5, 2009. It held that depositions are not meant to be a substitute for actual
22

testimony in open court. As a rule, a deponent must be presented for oral examination at trial as
required under Rule 132, Section 1 of the Rules of Court. "As the supposed deponent is the
plaintiff himself who is not suffering from any impairment, physical or otherwise, it would be best
for him to appear in court and testify under oath[.]"  The trial court also denied reconsideration.
23 24

Cleary elevated the case to the Court of Appeals.

On August 10, 2010, the Court of Appeals granted Cleary’s Petition for Certiorari and reversed
the trial court’s ruling.  It held that Rule 23, Section 1 of the Rules of Court allows the taking of
25

depositions, and that it is immaterial that Cleary is the plaintiff himself.  It likewise denied
26

reconsideration. 27

Hence, the present Petitions were filed.

Petitioners Ingrid Sala Santamaria and Astrid Sala Boza maintain in their appeal that the right of
a party to take the deposition of a witness is not absolute.  Rather, this right is subject to the
28

restrictions provided by Rule 23, Section 16  of the Rules of Court and jurisprudence.  They
29 30

cite Northwest Airlines v. Cruz,  in that absent any compelling or valid reason, the witness must
31

personally testify in open court according to the general rules on examination of witnesses under
Rule 132 of the Rules of Court. 32
Likewise, petitioners Santamaria and Boza submit that Cleary cannot, for his sole convenience,
substitute his open-court testimony by having his deposition taken in the United States.  This will 33

be very costly, time-consuming, disadvantageous, and extremely unfair to petitioners and their
counsels who are based in the Philippines. 34

Petitioners Santamaria and Boza argue that the proposed deposition in this case is not for
discovery purposes as Cleary is the plaintiff himself.  The Court of Appeals Decision gives
35

foreigners undue advantage over Filipino litigants in cases under similar circumstances, where
the parties and the presiding judge do not have the opportunity to personally examine and
observe the conduct of the testifying witness.  Thus, the court’s suggestion for written
36

interrogatories is also not proper as open-court testimony is different from mere serving of written
interrogatories. 37

Lastly, petitioners Santamaria and Boza claim that Cleary’s sole allegation that he is a resident
"out of the Philippines" does not warrant departure from open-court trial procedure under Rule
132, Section 1 of the Rules of Court. 38

In her Petition, petitioner Kathryn Go-Perez makes two (2) arguments. First, she contends that
granting a petition under Rule 65 involves a finding of grave abuse of discretion, but the Court of
Appeals only found "error" in the trial court orders.  She cites Triplex Enterprises v. PNB-
39

Republic Bank  and Yu v. Reyes-Carpio,  in that a writ of certiorari is restricted to extraordinary
40 41

cases where the act of the lower court is void.  It is designed to correct errors of jurisdiction and
42

not errors of judgment.  People v. Hubert Webb  has held that the use of discovery procedures
43 44

is directed to the sound discretion of the trial judge and certiorari will be issued only to correct
errors of jurisdiction.  It cannot correct errors of procedure or mistakes in the findings or
45

conclusions by the lower court. 46

Second, petitioner Go-Perez submits that the Court of Appeals erred in disregarding Rule 23,
Section 16 of the Rules of Court, which imposes limits on the right to take deposition.  Cleary’s 47

self-deposition in the United States, which is not for discovery purposes, is oppressive,
vexatious, and bordering on harassment.  The Court of Appeals also erred in ignoring applicable
48

jurisprudence such as Northwest, where this Court found that the deposition taken in the United
States was to accommodate the petitioner’s employee who was there, and not for discovery
purposes. Thus, the general rules on examination of witnesses under Rule 132 of the Rules of
Court should be observed. 49

Lastly, petitioner Go-Perez contends that the Court of Appeals ignored Rule 132, Section 1 of the
Rules of Court, which provides that a witness must testify in open court.  That Cleary is the 50

plaintiff himself is material as there is nothing for him to discover when he deposes himself. 51

On the other hand, respondent Thomas Cleary maintains that Rule 23, Section 4 of the Rules of
Court on the taking of deposition applies.  He is "out of the Philippines" as an American citizen
52

residing in the United States. This is true even when he entered the Stock Purchase and Put
Agreement with petitioners in 1999 and filed the case in 2009.  Cleary cites Dasmariñas 53

Garments v. Reyes  and San Luis v. Rojas.  The trial court even "previously scheduled the
54 55

hearing subject to the notice from the Department of Foreign Affairs for the taking of
deposition."  However, this was later disallowed upon petitioners’ opposition.
56 57

Respondent submits that the rules on depositions do not authorize nor contemplate any
intervention by the court in the process. All that is required under the rules is that "reasonable
notice" be given "in writing to every other party to the action[.]"  Thus, the trial court’s discretion
58

in ruling on whether a deposition may be taken is not unlimited. 59

Respondent adds that this Court has allowed the taking of testimonies through deposition in lieu
of their actual presence at trial.  He argues that with the new rules, depositions serve as both a
60

method of discovery and a method of presenting testimony.  That the court cannot observe a
61
deponent’s demeanor is insufficient justification to disallow deposition. Otherwise, no deposition
can ever be taken as this objection is common to all depositions. 62

Respondent contends that Northwest does not apply as the deposition in that case was found to
have been improperly and irregularly taken. 63

Lastly, respondent argues that the presiding judge of the trial court acted with grave abuse of
discretion in denying his Motion for Court Authorization to Take Deposition.  That he is an
64

American residing in the United States is undisputed. The trial court even issued the Order dated
January 13, 2009 directing him to inform the court of the "steps he . . . has taken and the
progress of his request for a deposition taking filed, if any, with the Department of Justice."  In
65

later disallowing the deposition as he is "not suffering from any impairment, physical or
otherwise," the presiding judge acted in an arbitrary manner amounting to lack of
jurisdiction.  The deposition sought is in accordance with the rules. The expenses in attending a
66

deposition proceeding in the United States cannot be considered as a substantial reason to

disallow deposition since petitioners may send cross-interrogatories.  67

These consolidated Petitions seek a review of the Court of Appeals Decision reversing the trial
court’s ruling and allowing Cleary to take his deposition in the United States. Thus, the issues for
resolution are:

First, whether the limitations for the taking of deposition under Rule 23, Section 16 of the Rules
of Court apply in this case; and

Second, whether the taking of deposition under Rule 23, Section 4(c)(2) of the Rules of Court
applies to a non-resident foreigner plaintiff’s direct testimony.
1âwphi1

Utmost freedom governs the taking of depositions to allow the widest scope in the gathering of
information by and for all parties in relation to their pending case.  The relevant section in Rule
68

23 of the Rules of Court provides:

RULE 23

DEPOSITIONS PENDING ACTION

SECTION 1. Depositions pending action, when may be taken. – By leave of court after
jurisdiction has been obtained over any defendant or over property which is the subject of the
action, or without such leave after an answer has been served, the testimony of any person,
whether a party or not, may be taken, at the instance of any party, by deposition upon oral
examination or written interrogatories. The attendance of witnesses may be compelled by the
use of a subpoena as provided in Rule 21. Depositions shall be taken only in accordance with
these Rules. The deposition of a person confined in prison may be taken only by leave of court
on such terms as the court prescribes. (Emphasis supplied)

As regards the taking of depositions, Rule 23, Section 1 is clear that the testimony of any person
may be taken by deposition upon oral examination or written interrogatories at the instance of
any party.

San Luis explained that this provision "does not make any distinction or restriction as to who can
avail of deposition."  Thus, this Court found it immaterial that the plaintiff was a non-resident
69

foreign corporation and that all its witnesses were Americans residing in the United States. 70
On the use of depositions taken, we refer to Rule 23, Section 4 of the Rules of Court. This Court
has held that "depositions may be used without the deponent being actually called to the witness
stand by the proponent, under certain conditions and for certain limited purposes."  These
71

exceptional cases are enumerated in Rule 23, Section 4(c) as follows:

SEC 4. Use of depositions. – At the trial or upon the hearing of a motion or an interlocutory
proceeding, any part or all of a deposition, so far as admissible under the rules of evidence, may
be used against any

party who was present or represented at the taking of the deposition or who had due notice
thereof, in accordance with any one of the following provisions:

....

(c) The deposition of a witness, whether or not a party, may be used by any party for any
purpose if the court finds: (1) that the witness is dead; or (2) that the witness resides at
distance more than one hundred (100) kilometers from the place of trial or hearing, or is
out of the Philippines, unless it appears that his absence was procured by the party
offering the deposition; or (3) that the witness is unable to attend or testify because of age,
sickness, infirmity, or imprisonment; or (4) that the party offering the deposition has been unable
to procure the attendance of the witness by subpoena; or (5) upon application and notice, that
such exceptional circumstances exist as to make it desirable, in the interest of justice and with
due regard to the importance of presenting the testimony of witnesses orally in open court, to
allow the deposition to be used[.] (Emphasis supplied)

The difference between the taking of depositions and the use of depositions taken is apparent in
Rule 23, which provides separate sections to govern them. Jurisprudence has also discussed the
importance of this distinction and its implications:

The availability of the proposed deponent to testify in court does not constitute "good cause" to
justify the court’s order that his deposition shall not be taken. That the witness is unable to attend
or testify is one of the grounds when the deposition of a witness may be used in court during the
trial. But the same reason cannot be successfully invoked to prohibit the taking of his deposition.

The right to take statements and the right to use them in court have been kept entirely
distinct. The utmost freedom is allowed in taking depositions; restrictions are imposed
upon their use. As a result, there is accorded the widest possible opportunity for
knowledge by both parties of all the facts before the trial. Such of this testimony as may be
appropriate for use as a substitute for viva voce examination may be introduced at the trial; the
remainder of the testimony, having served its purpose in revealing the facts to the parties before
trial, drops out of the judicial picture.

. . . [U]nder the concept adopted by the new Rules, the deposition serves the double function of a
method of discovery —with use on trial not necessarily contemplated — and a method of
presenting testimony. Accordingly, no limitations other than relevancy and privilege have been
placed on the taking of depositions, while the use at the trial is subject to circumscriptions looking
toward the use of oral testimony wherever practicable.  (Emphasis supplied)
72

The rules and jurisprudence support greater leeway in allowing the parties and their witnesses to
be deposed in the interest of collecting information for the speedy and complete disposition of
cases.

In opposing respondent’s Motion for Court Authorization to Take Deposition, petitioners contest
at the deposition-taking stage. They maintain that the right to take deposition is subject to the
restrictions found in Rule 23, Section 16 of the Rules of Court on orders for the protection of
parties and deponents. 73
 II

Rule 23, Section 16 of the Rules of Court is on orders for the protection of parties and deponents
from annoyance, embarrassment, or oppression.  The provision reads:
1âwphi1

SEC. 16. Orders for the protection of parties and deponents. — After notice is served for taking a
deposition by oral examination, upon motion seasonably made by any party or by the person to
be examined and for good cause shown, the court in which the action is pending may make an
order that the deposition shall not be taken, or that it may be taken only at some designated
place other than that stated in the notice, or that it may be taken only on written interrogatories,
or that certain matters shall not be inquired into, or that the scope of the examination shall be
held with no one present except the parties to the action and their officers or counsel, or that
after being sealed the deposition shall be opened only by order of the court, or that secret
processes, developments, or research need not be disclosed, or that the parties shall
simultaneously file specified documents or information enclosed in sealed envelopes to be
opened as directed by the court or the court may make any other order which justice requires to
protect the party or witness from annoyance, embarrassment, or oppression. (Emphasis
supplied)

The provision includes a full range of protective orders, from designating the place of deposition,
limiting those in attendance, to imposing that it be taken through written interrogatories. At the
extreme end of this spectrum would be a court order that completely denies the right to take
deposition. This is what the trial court issued in this case.

While Section 16 grants the courts power to issue protective orders, this grant involves discretion
on the part of the court, which "must be exercised, not arbitrarily, capriciously or oppressively,
but in a reasonable manner and in consonance with the spirit of the law, to the end that its
purpose may be attained." 74

A plain reading of this provision shows that there are two (2) requisites before a court may issue
a protective order: (1) there must be notice; and (2) the order must be for good cause shown.
In Fortune Corporation v. Court of Appeals,  this Court discussed the concept of good cause as
75

used in the rules:

The matter of good cause is to be determined by the court in the exercise of judicial
discretion. Good cause means a substantial reason—one that affords a legal excuse.
Whether or not substantial reasons exist is for the court to determine, as there is no hard and fast
rule for determining the question as to what is meant by the term "for good cause shown."

The requirement, however, that good cause be shown for a protective order puts the burden on
the party seeking relief to show some plainly adequate reasons for the order. A particular
and specific demonstration of facts, as distinguished from conclusory statements, is required to
establish good cause for the issuance of a protective order. What constitutes good cause
furthermore depends upon the kind of protective order that is sought.

In light of the general philosophy of full discovery of relevant facts and the board statement of
scope in Rule 24, and in view of the power of the court under Sections 16 and 18 of said Rule to
control the details of time, place, scope, and financing for the protection of the deponents and
parties, it is fairly rare that it will be ordered that a deposition should not be taken at all. All
motions under these subparagraphs of the rule must be supported by "good cause" and a strong
showing is required before a party will be denied entirely the right to take a deposition. A mere
allegation, without proof, that the deposition is being taken in bad faith is not a sufficient ground
for such an order. Neither is an allegation that it will subject the party to a penalty or forfeiture.
The mere fact that the information sought by deposition has already been obtained through a bill
of particulars, interrogatories, or other depositions will not suffice, although if it is entirely
repetitious a deposition may be forbidden. The allegation that the deponent knows nothing about
the matters involved does not justify prohibiting the taking of a deposition, nor that whatever the
witness knows is protected by the "work product doctrine," nor that privileged information or trade
secrets will be sought in the course of the examination, nor that all the transactions were either
conducted or confirmed in writing.  (Emphasis supplied, citations omitted)
76

Thus, we consider the trial court’s explanation for its denial of respondent’s Motion for Court
Authorization to Take Deposition. The trial court’s Order was based on two (2) premises: first,
that respondent should submit himself to our court processes since he elected to seek judicial
relief with our courts; and second, that respondent is not suffering from any impairment and it is
best that he appear before our courts considering he is the plaintiff himself.77

III

On the first premise, apparent is the concern of the trial court in giving undue advantage to non-
resident foreigners who file suit before our courts but do not appear to testify. Petitioners support
this ruling. They contend that the open-court examination of witnesses is part of our judicial
system. Thus, there must be compelling reason to depart from this procedure in order to avoid
suits that harass Filipino litigants before our courts.  Moreover, they argue that it would be costly,
78

time-consuming, and disadvantageous for petitioners and their counsels to attend the deposition
to be taken in Los Angeles for the convenience of respondent. 79

In the Stock Purchase and Put Agreement, petitioners and respondent alike agreed that
respondent had the sole discretion to elect the venue for filing any action with respect to it.

Paragraph 9.02 of the Agreement is clear that the parties "waive any other preferential
jurisdiction by reason of domicile."  If respondent filed the suit in the United States—which he
80

had the option to do under the Agreement—this would have been even more costly, time-
consuming, and disadvantageous to petitioners who are all Filipinos residing in the Philippines.
There is no question that respondent can file the case before our courts. With respondent having
elected to file suit in Cebu, the bone of contention now is on whether he can have his deposition
taken in the United States. The trial court ruled that respondent should consequently submit
himself to the processes and procedures under the Rules of Court.

Respondent did avail himself of the processes and procedures under the Rules of Court when he
filed his Motion. He invoked Rule 23, Section 4(c)(2) of the Rules of Court and requested to have
his deposition taken in Los Angeles as he was "out of the Philippines."

Moreover, Rule 23, Section 1 of the Rules of Court no longer requires leave of court for the
taking of deposition after an answer has been served. According to respondent, he only sought a
court order when the Department of Foreign Affairs required one so that the deposition may be
taken before the Philippine Embassy or Consulate. 81

That neither the presiding judge nor the parties will be able to personally examine and observe
the conduct of a deponent does not justify denial of the right to take deposition. This objection is
common to all depositions.  Allowing this reason will render nugatory the provisions in the Rules
82

of Court that allow the taking of depositions.

As suggested by the Court of Appeals, the parties may also well agree to take deposition by
written interrogatories  to afford petitioners the opportunity to cross-examine without the need to
83

fly to the United States. 84

The second premise is also erroneous. That respondent is "not suffering from any impairment,
physical or otherwise" does not address the ground raised by respondent in his Motion.
Respondent referred to Rule 23, Section 4(c)(2) of the Rules of Court, in that he was "out of the
Philippines."  This Section does not qualify as to the condition of the deponent who is outside the
85

Philippines.
 IV

Petitioners argue that the deposition sought by respondent is not for discovery purposes as he is
the plaintiff himself.  To support their contention, they cite Northwest, where this Court held that
86

Rule 132 of the Rules of Court—on the examination of witnesses in open court—should be
observed since the deposition was only to accommodate the petitioner’s employee who was in
the United States, and not for discovery purposes. 87

Jurisprudence has discussed how "[u]nder the concept adopted by the new Rules, the deposition
serves the double function of a method of discovery—with use on trial not necessarily
contemplated—and a method of presenting testimony."  The taking of depositions has been
88

allowed as a departure from open-court testimony. Jonathan Landoil International Co. Inc. v.

Spouses Mangundadatu  is instructive:
89

The Rules of Court and jurisprudence, however, do not restrict a deposition to the sole function
of being a mode of discovery before trial. Under certain conditions and for certain limited
purposes, it may be taken even after trial has commenced and may be used without the
deponent being actually called to the witness stand. In Dasmariñas Garments v. Reyes, we
allowed the taking of the witnesses’ testimonies through deposition, in lieu of their actual
presence at the trial.

Thus, "[d]epositions may be taken at any time after the institution of any action, whenever
necessary or convenient. There is no rule that limits deposition-taking only to the period of pre-
trial or before it; no prohibition against the taking of depositions after pre-trial." There can be no
valid objection to allowing them during the process of executing final and executory judgments,
when the material issues of fact have become numerous or complicated.

In keeping with the principle of promoting the just, speedy and inexpensive disposition of every
action and proceeding, depositions are allowed as a "departure from the accepted and
usual judicial proceedings of examining witnesses in open court where their demeanor
could be observed by the trial judge." Depositions are allowed, provided they are taken in
accordance with the provisions of the Rules of Court (that is, with leave of court if the
summons have been served, without leave of court if an answer has been submitted); and
provided, further, that a circumstance for their admissibility exists.

....

When a deposition does not conform to the essential requirements of law and may reasonably
cause material injury to the adverse party, its taking should not be allowed. This was the primary
concern in Northwest Airlines v. Cruz. In that case, the ends of justice would be better served if
the witness was to be brought to the trial court to testify. The locus of the oral deposition therein
was not within the reach of ordinary citizens, as there were time constraints; and the trip required
a travel visa, bookings, and a substantial travel fare. In People v. Webb, the taking of depositions
was unnecessary, since the trial court had already admitted the Exhibits on which the witnesses
would have testified. (Emphasis supplied) 90

Petitioners rely on Northwest in that absent any compelling or valid reason, the witness must
personally testify in open court.  They add that the more recent Republic v.
91

Sandiganbayan  reiterated the rulings in Northwest;  specifically, that Northwest emphasized

92 93

that the "court should always see to it that the safeguards for the protection of the parties and
deponents are firmly maintained."  Moreover, "[w]here the deposition is taken not for discovery
94

purposes, but to accommodate the deponent, then the deposition should be rejected in
evidence."  Northwest and Republic are not on all fours with this case.
95

Northwest involved a deposition in New York found to have been irregularly taken. The
deposition took place on July 24, 1995, two (2) days before the trial court issued the order
allowing deposition.  The Consul that swore in the witness and the stenographer was different
96

from the Consulate Officer who undertook the deposition proceedings.  In this case, on the other
97

hand, deposition taking was not allowed by the trial court to begin with.

In Northwest, respondent Camille Cruz’s opposition to the notice for oral deposition included a
suggestion for written interrogatories as an alternative.  This would have allowed cross-
98

interrogatories, which would afford her the opportunity to rebut matters raised in the deposition in
case she had contentions. However, this suggestion was denied by the trial court for being time-
consuming.  In this case, petitioners argued even against written interrogatories for being a mile
99

of difference from open-court testimony. 100

In Republic, the issue involved Rule 23, Section 4(c)(3) of the Rules of Court in relation to Rule
130, Section 47 on testimonies and depositions at a former proceeding.  The deposition of
101

Maurice Bane was taken in London for one case, and what the court disallowed was its use in
another case. 102

In sum, Rule 23, Section 1 of the Rules of Court gives utmost freedom in the taking of
depositions. Section 16 on protection orders, which include an order that deposition not be taken,
may only be issued after notice and for good cause shown. However, petitioners’ arguments in
support of the trial court’s Order denying the taking of deposition fails to convince as good cause
shown.

The civil suit was filed pursuant to an agreement that gave respondent the option of filing the
case before our courts or the courts of California. It would have been even more costly, time-
consuming, and disadvantageous to petitioners had respondent filed the case in the United
States.

Further, it is of no moment that respondent was not suffering from any impairment. Rule 23,
Section 4(c)(2) of the Rules of Court, which was invoked by respondent, governs the use of
depositions taken. This allows the use of a deposition taken when a witness is "out of the
Philippines."

In any case, Rule 23 of the Rules of Court still allows for objections to admissibility during trial.
The difference between admissibility of evidence and weight of evidence has long been laid
down in jurisprudence. These two are not to be equated. Admissibility considers factors such as
competence and relevance of submitted evidence. On the other hand, weight is concerned with
the persuasive tendency of admitted evidence. 103

The pertinent sections of Rule 23 on admissibility are:

SEC. 6. Objections to admissibility. – Subject to the provisions of section 29 of this Rule,

objection may be made at the trial or hearing to receiving in evidence any deposition or part
thereof for any reason which would require the exclusion of the evidence if the witness were then
present and testifying.

....

SEC. 29. Effect of errors and irregularities in depositions . . . .

....

(c) As to competency and relevancy of evidence. - Objections to the competency of a witness or

the competency, relevancy [sic], or materiality of testimony are not waived by failure to make
them before or during the taking of the deposition, unless the ground of the objection is one
which might have been obviated or removed if presented at that time[.]
As regards weight of evidence, "the admissibility of the deposition does not preclude the
determination of its probative value at the appropriate time."   In resorting to depositions,
104

respondent takes the risk of not being able to fully prove his case.

Thus, we agree with the Court of Appeals in granting the Petition for Certiorari and reversing the
trial court's denial of respondent's Motion for Court Authorization to Take Deposition.

WHEREFORE, the Petitions are DENIED for lack of merit.

SO ORDERED.

MARVIC M.V.F. LEONEN

Associate Justice

WE CONCUR:
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 185145               February 5, 2014

SPOUSES VICENTE AFULUGENCIA and LETICIA AFULUGENCIA, Petitioners,

vs.
METROPOLITAN BANK & TRUST CO. and EMMANUEL L. ORTEGA, Clerk of Court,
Regional Trial Court and Ex-Officio Sheriff, Province of Bulacan, Respondents.

DECISION

DEL CASTILLO, J.:

Section 6,  Rule 25 of the Rules of Court (Rules) provides that "a party not served with written
1

interrogatories may not be compelled by the adverse party to give testimony in open court, or to
give a deposition pending appeal." The provision seeks to prevent fishing expeditions and
needless delays. Its goal is to maintain order and facilitate the conduct of trial.

Assailed in this Petition for Review on Certiorari  are the April 15, 2008 Decision  of the Court of
2 3

Appeals (CA) in CA-G.R. SP No. 99535 which dismissed petitioners' Petition for Certiorari for
lack of merit and its October 2, 2008 Resolution  denying petitioners' Motion for Reconsideration.
4 5

Factual Antecedents

Petitioners, spouses Vicente and Leticia Afulugencia, filed a Complaint  for nullification of
6

mortgage, foreclosure, auction sale, certificate of sale and other documents, with damages,
against respondents Metropolitan Bank & Trust Co. (Metrobank) and Emmanuel L. Ortega
(Ortega) before the Regional Trial Court (RTC) of Malolos City, where it was docketed as Civil
Case No. 336-M-2004 and assigned to Branch 7.

Metrobank is a domestic banking corporation existing under Philippine laws, while Ortega is the
Clerk of Court and Ex-Officio Sheriff of the Malolos RTC.

After the filing of the parties’ pleadings and with the conclusion of pre-trial, petitioners filed a
Motion for Issuance of Subpoena Duces Tecum Ad Testificandum  to require Metrobank’s
7

officers  to appear and testify as the petitioners’ initial witnesses during the August 31, 2006
8

hearing for the presentation of their evidence-in-chief, and to bring the documents relative to their
loan with Metrobank, as well as those covering the extrajudicial foreclosure and sale of
petitioners’ 200-square meter land in Meycauayan, Bulacan covered by Transfer Certificate of
Title No. 20411 (M). The Motion contained a notice of hearing written as follows:

NOTICE

The Branch Clerk of Court

Regional Trial Court
Branch 7, Malolos, Bulacan

Greetings:

Please submit the foregoing motion for the consideration and approval of the Hon. Court
immediately upon receipt hereof.
(signed)
Vicente C. Angeles 9

Metrobank filed an Opposition  arguing that for lack of a proper notice of hearing, the Motion
10

must be denied; that being a litigated motion, the failure of petitioners to set a date and time for
the hearing renders the Motion ineffective and pro forma; that pursuant to Sections 1 and 6  of 11

Rule 25 of the Rules, Metrobank’s officers – who are considered adverse parties – may not be
compelled to appear and testify in court for the petitioners since they were not initially served with
written interrogatories; that petitioners have not shown the materiality and relevance of the
documents sought to be produced in court; and that petitioners were merely fishing for evidence.

Petitioners submitted a Reply  to Metrobank’s Opposition, stating that the lack of a proper notice
12

of hearing was cured by the filing of Metrobank’s Opposition; that applying the principle of
liberality, the defect may be ignored; that leave of court is not necessary for the taking of
Metrobank’s officers’ depositions; that for their case, the issuance of a subpoena is not
unreasonable and oppressive, but instead favorable to Metrobank, since it will present the
testimony of these officers just the same during the presentation of its own evidence; that the
documents sought to be produced are relevant and will prove whether petitioners have paid their
obligations to Metrobank in full, and will settle the issue relative to the validity or invalidity of the
foreclosure proceedings; and that the Rules do not prohibit a party from presenting the adverse
party as its own witness.

Ruling of the Regional Trial Court

On October 19, 2006, the trial court issued an Order  denying petitioners’ Motion for Issuance of
13

Subpoena Duces Tecum Ad Testificandum, thus:

The motion lacks merit.

As pointed out by the defendant bank in its opposition, the motion under consideration is a mere
scrap of paper by reason of its failure to comply with the requirements for a valid notice of
hearing as specified in Sections 4 and 5 of Rule 15 of the Revised Rules of Court. Moreover, the
defendant bank and its officers are adverse parties who cannot be summoned to testify unless
written interrogatories are first served upon them, as provided in Sections 1 and 6, Rule 25 of the
Revised Rules of Court.

In view of the foregoing, and for lack of merit, the motion under consideration is hereby DENIED.

SO ORDERED. 14

Petitioners filed a Motion for Reconsideration  pleading for leniency in the application of the
15

Rules and claiming that the defective notice was cured by the filing of Metrobank’s Opposition,
which they claim is tantamount to notice. They further argued that Metrobank’s officers – who are
the subject of the subpoena – are not party-defendants, and thus do not comprise the adverse
party; they are individuals separate and distinct from Metrobank, the defendant corporation being
sued in the case.

In an Opposition  to the Motion for Reconsideration, Metrobank insisted on the procedural defect
16

of improper notice of hearing, arguing that the rule relative to motions and the requirement of a
valid notice of hearing are mandatory and must be strictly observed. It added that the same rigid
treatment must be accorded to Rule 25, in that none of its officers may be summoned to testify
for petitioners unless written interrogatories are first served upon them. Finally, it said that since
a corporation may act only through its officers and employees, they are to be considered as
adverse parties in a case against the corporation itself.
In another Order  dated April 17, 2007, the trial court denied petitioners’ Motion for
17

Reconsideration. The trial court held, thus:

Even if the motion is given consideration by relaxing Sections 4 and 5, Rule 15 of the Rules of
Court, no such laxity could be accorded to Sections 1 and 6 of Rule 25 of the Revised Rules of
Court which require prior service of written interrogatories to adverse parties before any material
and relevant facts may be elicited from them more so if the party is a private corporation who
could be represented by its officers as in this case. In other words, as the persons sought to be
subpoenaed by the plaintiffs-movants are officers of the defendant bank, they are in effect the
very persons who represent the interest of the latter and necessarily fall within the coverage of
Sections 1 and 6, Rule 25 of the Revised Rules of Court.

In view of the foregoing, the motion for reconsideration is hereby denied.

SO ORDERED. 18

Ruling of the Court of Appeals

Petitioners filed a Petition for Certiorari  with the CA asserting this time that their Motion for
19

Issuance of Subpoena Duces Tecum Ad Testificandum is not a litigated motion; it does not seek
relief, but aims for the issuance of a mere process. For these reasons, the Motion need not be
heard. They likewise insisted on liberality, and the disposition of the case on its merits and not on
mere technicalities.  They added that Rule 21  of the Rules requires prior notice and hearing
20 21

only with respect to the taking of depositions; since their Motion sought to require Metrobank’s
officers to appear and testify in court and not to obtain their depositions, the requirement of
notice and hearing may be dispensed with. Finally, petitioners claimed that the Rules –
particularly Section 10,  Rule 132 – do not prohibit a party from presenting the adverse party as
22

its own witness.

On April 15, 2008, the CA issued the questioned Decision, which contained the following decretal
portion:

WHEREFORE, the petition is DISMISSED for lack of merit. The assailed orders dated October
19, 2006 and April 17, 2007 in Civil Case No. 336-M-2004 issued by the RTC, Branch 7, Malolos
City, Bulacan, are AFFIRMED. Costs against petitioners.

SO ORDERED. 23

The CA held that the trial court did not commit grave abuse of discretion in issuing the assailed
Orders; petitioners’ Motion is a litigated motion, especially as it seeks to require the adverse
party, Metrobank’s officers, to appear and testify in court as petitioners’ witnesses. It held that a
proper notice of hearing, addressed to the parties and specifying the date and time of the
hearing, was required, consistent with Sections 4 and 5,  Rule 15 of the Rules.
24

The CA held further that the trial court did not err in denying petitioners’ Motion to secure a
subpoena duces tecum/ad testificandum, ratiocinating that Rule 25 is quite clear in providing that
the consequence of a party’s failure to serve written interrogatories upon the opposing party is
that the latter may not be compelled by the former to testify in court or to render a deposition
pending appeal. By failing to serve written interrogatories upon Metrobank, petitioners foreclosed
their right to present the bank’s officers as their witnesses.

The CA declared that the justification for the rule laid down in Section 6 is that by failing to seize
the opportunity to inquire upon the facts through means available under the Rules, petitioners
should not be allowed to later on burden Metrobank with court hearings or other processes.
Thus, it held:
x x x Where a party unjustifiedly refuses to elicit facts material and relevant to his case by
addressing written interrogatories to the adverse party to elicit those facts, the latter may not
thereafter be compelled to testify thereon in court or give a deposition pending appeal. The
justification for this is that the party in need of said facts having foregone the opportunity to
inquire into the same from the other party through means available to him, he should not
thereafter be permitted to unduly burden the latter with courtroom appearances or other
cumbersome processes. The sanction adopted by the Rules is not one of compulsion in the
sense that the party is being directly compelled to avail of the discovery mechanics, but one of
negation by depriving him of evidentiary sources which would otherwise have been accessible to
him.25

Petitioners filed their Motion for Reconsideration,  which the CA denied in its assailed October 2,
26

2008 Resolution. Hence, the present Petition.

Issues

Petitioners now raise the following issues for resolution:

THE COURT OF APPEALS COMMITTED REVERSIBLE ERRORS IN REQUIRING NOTICE

AND HEARING (SECS. 4 AND 5, RULE 15, RULES OF COURT) FOR A MERE MOTION FOR
SUBPOENA OF RESPONDENT BANK’S OFFICERS WHEN SUCH REQUIREMENTS APPLY
ONLY TO DEPOSITION UNDER SEC. 6, RULE 25, RULES OF COURT.

II

THE COURT OF APPEALS COMMITTED (REVERSIBLE) ERROR IN HOLDING THAT THE

PETITIONERS MUST FIRST SERVE WRITTEN INTERROGATORIES TO RESPONDENT
BANK’S OFFICERS BEFORE THEY CAN BE SUBPOENAED. 27

Petitioners’ Arguments

Praying that the assailed CA dispositions be set aside and that the Court allow the issuance of
the subpoena duces tecum/ad testificandum, petitioners assert that the questioned Motion is not
a litigated motion, since it seeks not a relief, but the issuance of process. They insist that a
motion which is subject to notice and hearing under Sections 4 and 5 of Rule 15 is an application
for relief other than a pleading; since no relief is sought but just the process of subpoena, the
hearing and notice requirements may be done away with. They cite the case of Adorio v. Hon.
Bersamin,  which held that –
28

Requests by a party for the issuance of subpoenas do not require notice to other parties to the
action.  No violation of due process results by such lack of notice since the other parties would
1âwphi1

have ample opportunity to examine the witnesses and documents subpoenaed once they are
presented in court. 29

Petitioners add that the Rules should have been liberally construed in their favor, and that
Metrobank’s filing of its Opposition be considered to have cured whatever defect the Motion
suffered from.

Petitioners likewise persist in the view that Metrobank’s officers – the subject of the Motion – do
not comprise the adverse party covered by the rule; they insist that these bank officers are mere
employees of the bank who may be called to testify for them.

Respondents’ Arguments
Metrobank essentially argues in its Comment  that the subject Motion for the issuance of a
30

subpoena duces tecum/ad testificandum is a litigated motion, especially as it is directed toward

its officers, whose testimony and documentary evidence would affect it as the adverse party in
the civil case. Thus, the lack of a proper notice of hearing renders it useless and a mere scrap of
paper. It adds that being its officers, the persons sought to be called to the stand are themselves
adverse parties who may not be compelled to testify in the absence of prior written
interrogatories; they are not ordinary witnesses whose presence in court may be required by
petitioners at any time and for any reason.

Finally, Metrobank insists on the correctness of the CA Decision, adding that since petitioners
failed up to this time to pay the witnesses’ fees and kilometrage as required by the Rules,  the 31

issuance of a subpoena should be denied.

Our Ruling

The Court denies the Petition.

On the procedural issue, it is quite clear that Metrobank was notified of the Motion for Issuance of
Subpoena Duces Tecum Ad Testificandum; in fact, it filed a timely Opposition thereto. The
technical defect of lack of notice of hearing was thus cured by the filing of the Opposition. 32

Nonetheless, contrary to petitioners’ submission, the case of Adorio cannot apply squarely to this
case. In Adorio, the request for subpoena duces tecum was sought against bank officials who
were not parties to the criminal case for violation of Batas Pambansa Blg. 22. The situation is
different here, as officers of the adverse party Metrobank are being compelled to testify as the
calling party’s main witnesses; likewise, they are tasked to bring with them documents which
shall comprise the petitioners’ principal evidence. This is not without significant consequences
that affect the interests of the adverse party, as will be shown below.

As a rule, in civil cases, the procedure of calling the adverse party to the witness stand is not
allowed, unless written interrogatories are first served upon the latter. This is embodied in
Section 6, Rule 25 of the Rules, which provides –

Sec. 6. Effect of failure to serve written interrogatories.

Unless thereafter allowed by the court for good cause shown and to prevent a failure of justice, a
party not served with written interrogatories may not be compelled by the adverse party to give
testimony in open court, or to give a deposition pending appeal.

One of the purposes of the above rule is to prevent fishing expeditions and needless delays; it is
there to maintain order and facilitate the conduct of trial. It will be presumed that a party who
does not serve written interrogatories on the adverse party beforehand will most likely be unable
to elicit facts useful to its case if it later opts to call the adverse party to the witness stand as its
witness. Instead, the process could be treated as a fishing expedition or an attempt at delaying
the proceedings; it produces no significant result that a prior written interrogatories might bring.

Besides, since the calling party is deemed bound by the adverse party’s testimony,  compelling
33

the adverse party to take the witness stand may result in the calling party damaging its own case.
Otherwise stated, if a party cannot elicit facts or information useful to its case through the facility
of written interrogatories or other mode of discovery, then the calling of the adverse party to the
witness stand could only serve to weaken its own case as a result of the calling party’s being
bound by the adverse party’s testimony, which may only be worthless and instead detrimental to
the calling party’s cause.
Another reason for the rule is that by requiring prior written interrogatories, the court may limit the
inquiry to what is relevant, and thus prevent the calling party from straying or harassing the
adverse party when it takes the latter to the stand.

Thus, the rule not only protects the adverse party from unwarranted surprises or harassment; it
likewise prevents the calling party from conducting a fishing expedition or bungling its own case.
Using its own judgment and discretion, the court can hold its own in resolving a dispute, and
need not bear witness to the parties perpetrating unfair court practices such as fishing for
evidence, badgering, or altogether ruining their own cases. Ultimately, such unnecessary
processes can only constitute a waste of the court’s precious time, if not pointless entertainment.

In the present case, petitioners seek to call Metrobank’s officers to the witness stand as their
initial and main witnesses, and to present documents in Metrobank’s possession as part of their
principal documentary evidence. This is improper. Petitioners may not be allowed, at the incipient
phase of the presentation of their evidence-in-chief at that, to present Metrobank’s officers – who
are considered adverse parties as well, based on the principle that corporations act only through
their officers and duly authorized agents  – as their main witnesses; nor may they be allowed to
34

gain access to Metrobank’s documentary evidence for the purpose of making it their own. This is
tantamount to building their whole case from the evidence of their opponent. The burden of proof
and evidence falls on petitioners, not on Metrobank; if petitioners cannot prove their claim using
their own evidence, then the adverse party Metrobank may not be pressured to hang itself from
its own defense.

It is true that under the Rules, a party may, for good cause shown and to prevent a failure of
justice, be compelled to give testimony in court by the adverse party who has not served written
interrogatories. But what petitioners seek goes against the very principles of justice and fair play;
they would want that Metrobank provide the very evidence with which to prosecute and build
their case from the start. This they may not be allowed to do.

Finally, the Court may not turn a blind eye to the possible consequences of such a move by
petitioners. As one of their causes of action in their Complaint, petitioners claim that they were
not furnished with specific documents relative to their loan agreement with Metrobank at the time
they obtained the loan and while it was outstanding. If Metrobank were to willingly provide
petitioners with these documents even before petitioners can present evidence to show that
indeed they were never furnished the same, any inferences generated from this would certainly
not be useful for Metrobank. One may be that by providing petitioners with these documents,
Metrobank would be admitting that indeed, it did not furnish petitioners with these documents
prior to the signing of the loan agreement, and while the loan was outstanding, in violation of the
law.

With the view taken of the case, the Court finds it unnecessary to further address the other
issues raised by the parties, which are irrelevant and would not materially alter the conclusions
arrived at.

WHEREFORE, the Petition is DENIED. The assailed April 15, 2008 Decision and October 2,
2008 Resolution of the Court of Appeals in CA-G.R. SP No. 99535 are AFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLO

 FIRST DIVISION

G.R. No. 125383            July 2, 2002

FORTUNATA N. DUQUE, petitioner,
vs.
COURT OF APPEALS, SPS. ENRICO BONIFACIO and DRA. EDNA
BONIFACIO, respondents.

x--------------------x

MARCOSA D. VALENZUELA, assisted by her husband, ABELARDO

VALENZUELA, petitioner,
vs.
COURT OF APPEALS, SPOUSES EDNA BONIFACIO and ENRICO
BONIFACIO, respondents.

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court which seeks to
reverse the Decision dated March 13, 1996 issued by the Court of Appeals in CA-G.R. CV No.
23991 and 23992, setting aside the Decision dated July 3, 1991 of the Regional Trial Court of
Valenzuela, Metro Manila and ordering the remand of the case to the said RTC for trial on the
merits.1âwphi1.nêt

The facts of this case are undisputed.

Petitioner Duque filed a complaint 1 before the RTC of Valenzuela alleging that: respondents
spouses Enrico and Edna Bonifacio negotiated with her certain checks in exchange for cash in
the total amount of Two Hundred Seventy Thousand Pesos (P270,000.00); respondents
represented themselves to be holders in due course and for value and claimed that the checks
were sufficiently funded; upon presentation of the checks on their respective dates of maturity,
the same were dishonored; petitioner Duque gave notice of dishonor to the respondents; and this
notwithstanding and despite repeated demands, respondents refused and continued to refuse to
honor said checks or replace it with cash.2

Petitioner Valenzuela alleged the same circumstances in her complaint, 3 except that with her, the
total amount involved is Four Hundred Thirty Two Thousand Pesos (P432,000.00).4

In their Answers, the respondents spouses denied: having personally negotiated with the
plaintiffs any of the checks annexed to the complaints; representing to both plaintiffs that they
were holders in due course and for value of said checks; representing that the same had
sufficient funds; having drawn or issued all the checks alluded to by plaintiffs; and refusing to
honor the checks or replace it with cash after being informed of the dishonor thereof.

Further, respondents contend that upon learning that the checks were returned to the petitioners,
they made arrangements for settlement but only for the checks duly issued by them. Finally,
respondents dispute the true amount of their total liability to the respective petitioners as alleged
in their separate complaints, claiming that "they do not owe that much" to either of them. 5

On June 28, 1988, the RTC issued a pre-trial order defining the principal issues, thus: "whether
or not the defendants owe the plaintiffs the amount of money as claimed in the complaint, and
whether or not defendants can be permitted to adduce evidence which would contradict the
genuineness and due execution of the actionable documents attached to the complaint"; and
setting the cases for trial on the merits.6

On November 22, 1988, petitioners filed a Request for Admission and furnished to counsel for
private respondents, specifically requesting that they admit that:

1) they negotiated with plaintiffs for valuable consideration the checks annexed to the
respective complaints;

2) defendant Edna M. Bonifacio signed separate promissory notes dated November 23,
1987, acknowledging that she is indebted to plaintiff Duque in the sum of Two Hundred
Seventy Thousand Pesos (P270,000.00) and to plaintiff Valenzuela Four Hundred Thirty
Two Thousand Pesos (P432,000.00), respectively; and

3) the plaintiffs in the two cases sent letters of demand to the defendants both dated
November 28, 1987 which the latter received on December 5, 1987. 7

For failure of the respondents spouses to respond to the aforementioned request, the RTC, citing
Sections 1 and 2, Rule 26 of the Rules of Court, issued an Order on December 27, 1988, which
reads in part:

"Defendants’ failure to deny under oath the matters of which an admission is requested
or setting forth in detail the reason why he cannot truthfully admit/deny those matters in
accordance with the cited provisions of the Rules of Court is an implied admission of the
matters of which admission is requested." 8

In the same Order, the RTC deemed the cases submitted for decision. 9

On February 1, 1989, the RTC of Valenzuela rendered a decision against the private
respondents, pertinent portions of which read:

"For failure of the defendants to make/submit sworn statement either denying specifically
the matters of which admission is requested or the reasons why they cannot truthfully
either admit or deny those matters as required in Sections 1 and 2 of Rule 26 of the
Rules of Court, upon motion of plaintiffs through counsel, the matters of which admission
is requested are considered admitted.

"Defendants deemed to have admitted that they negotiated with plaintiff Fortunata N.
Duque the certain checks enumerated in the request for admission and which are the
annexes in the complaint, that defendant Edna M. Bonifacio signed a promissory note
dated November 23, 1987 acknowledging her indebtedness to plaintiff Fortunata N.
Duque in the amount of P270,000.00 and have received the letter of demand of said
plaintiff on December 5, 1987. Defendants were also considered to have admitted that
they negotiated with plaintiff Marcosa D. Valenzuela the certain checks as annexes to the
complaint and enumerated in the Request for Admission, that defendant Edna M.
Bonifacio signed a promissory note dated November 23, 1987 acknowledging her
indebtedness to plaintiff Marcosa D. Valenzuela in the amount of P432,000.00 and have
received plaintiff’s letter of demand on December 5, 1987. With the admissions, plaintiffs
in both cases are entitled to a favorable judgment.
 xxx

"WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against the

defendants Spouses Enrico and Dra. Edna M. Bonifacio.

"Civil Case No. 2756-V-88

"Condemning defendants jointly and severally to pay the plaintiff Fortunata N. Duque the
principal amount of Two Hundred Seventy Thousand Pesos (P270,000.00) with legal rate
of interest from the filing of the complaint on January 12, 1988 until fully paid;

"Civil Case No. 2757-V-88

"Sentencing defendants jointly and severally to pay the plaintiff Marcosa D. Valenzuela
the principal amount of Four Hundred Thirty-Two Thousand Pesos (P432,000.00) with
legal rate of interest from the filing of the complaint on January 12, 1988 until the amount
is fully paid.

"SO ORDERED."10

Dissatisfied, the private respondents went to the Court of Appeals.

On March 13, 1996, the appellate court rendered a decision vacating and setting aside the
decision of the trial court, thus:

"WHEREFORE, the decision appealed from is hereby VACATED and SET ASIDE and
these cases remanded to the court of origin for trial on the merits. The trial judge is
enjoined to resolve the cases with dispatch.

"No costs.

"SO ORDERED."11

It reasoned that: the matters of which admission by the appellants is being sought in the
appellees’ separate requests for admission are, or pertain to those already denied by the former
in their respective Answers to the two Complaints filed against them; the lower court failed to
appreciate the fact that the requests for admission in question were filed in court and not served
directly on the appellants, as required in Section 1 of Rule 26; appellant’s counsel were served
copies of said requests but such is not compliance with the requirements of the rule as held by
the Supreme Court in Briboneria vs. Court of Appeals.12

Petitioner filed motion for reconsideration on April 2, 1996 13 but the same was denied by the
appellate court in a Resolution dated May 21, 1996. 14

Hence the petition for review, assigning the following errors:

THE RESPONDENT COURT ERRED IN NOT APPLYING SECS. 1 AND 2, RULE 26 OF

THE RULES OF COURT.

B
 THE RESPONDENT COURT ERRED IN HOLDING THAT THERE WAS NO SERVICE
OF THE REQUEST FOR ADMISSIONS TO PRIVATE RESPONDENTS.15

Otherwise stated, the issues of this case are as follows: (1) whether or not the failure of the
private respondents to respond to the request for admission by the petitioners is tantamount to
an implied admission under Sections 1 and 2, Rule 26 of the Rules of Court; and (2) whether or
not there was personal service of the request on private respondents.

As to the first issue, petitioners claim that the Court of Appeals erred when it totally disregarded
Sections 1 and 2, Rule 26 because the RTC correctly held that there was an implied admission
by the private respondents of the allegations in the request for admission upon their failure to
admit or deny the matters in the request;16 that respondents cannot ignore their request for
admission since it contained relevant evidentiary matters of facts for the purpose of establishing
their cause of action or defense;"17 and that the answer of respondents did not deny under oath
the truth and genuineness of the actionable documents attached to the complaint. 18

Anent the second issue, petitioners allege that the appellate court erred in holding that there was
no service of the request for admission on private respondents; that this allegation was never
raised by private respondents because it is false; and that granting arguendo that the request
was served on the lawyer and not on private respondents themselves, still this is sufficient and is
equivalent to service on the respondent according to PSFC Financial Corp. vs. Court of
Appeals.19

We find the petition devoid of merit.

The prevailing rule in 1988 at the time when the request for admission was made is Rule 26 of
the Revised Rules of Court, which provides:

"Sec. 1. Request for admission --- At any time after issues have been joined, a party may
serve upon any other party20 a written request for the admission by the latter of the
genuineness of any relevant documents described in and exhibited with the request or of
the truth of any relevant matters of fact set forth in the request. Copies of the documents
shall be delivered with the request unless copies have already been furnished.

"Sec. 2. Implied admission --- Each of the matters of which an admission is requested

shall be deemed admitted unless, within a period designated in the request, which shall
not be less than ten (10) days after service thereof, or within such further time as the
court may allow on motion and notice, the party to whom the request is directed serves
upon the party requesting the admission a sworn statement either denying specifically
the matters of which an admission is requested or setting forth in detail the reasons why
he cannot truthfully either admit or deny those matters.

"Objections on the ground of irrelevancy or impropriety of the matter requested shall be

promptly submitted to the court for resolution."

This particular Rule seeks to obtain admissions from the adverse party regarding the
genuineness of relevant documents or relevant matters of fact through requests for admissions
to enable a party to discover the evidence of the adverse side thereby facilitating an amicable
settlement of the case or expediting the trial of the same. 21 However, if the request for admission
only serves to delay the proceeding by abetting redundancy in the pleadings, the intended
purpose for the rule will certainly be defeated. 22

In the present case, petitioners requested the admission of three things: first, that respondents
negotiated with the plaintiffs for valuable consideration the checks annexed to the respective
complaints; second, that defendant Edna N. Bonifacio signed separate promissory notes, both
dated November 23, 1987 acknowledging that she is indebted to plaintiff Fortunata Duque in the
sum of Two Hundred Seventy Thousand Pesos (P270,000.00) and to plaintiff Marcosa
Valenzuela in the sum of Four Hundred Thirty Two Thousand Pesos (P432,000.00); and third,
that the plaintiffs in the two (2) cases sent letters of demand commonly dated November 28,
1987 which the latter received on December 5, 1987. 1âwphi1.nêt

The first matter sought to be admitted by the petitioners pertains to the checks supposedly
negotiated by the respondents to the plaintiffs. As correctly observed by the appellate court,
these are the same checks referred to and annexed in the Complaint, to wit:

"III

"The defendants, conspiring, confederating, aiding and helping each other, negotiated
with the plaintiff certain checks in exchange for cash, as shown in the schedule which is
hereto attached xxx and the checks as Annexes ‘B’, ‘B-1’ to ‘B-24’(in Civil Case No.
2756-V-88) and Annexes ‘B’, ‘B-1’ to ‘B-39’ (in Civil Case No. 2757-V-88) and made
integral parts hereof, making representations that they were holders in due course and
for value and the checks were sufficiently funded." 23

The corresponding denial thereof by the respondents in their Answer reads:

"That paragraph 3 is specifically denied for being devoid of the truth as defendants did
not personally negotiate with plaintiff any of the checks marked as Annexes ‘B’ to ‘B-24’
(in Civil Case No. 2756) and Annexes ‘B’ to ‘B-39’ (in Civil Case No. 2757); neither did
defendants represent that they are holder in due course and for value of said checks nor
did they claim that the same have sufficient funds, moreover, not all the checks alluded to
by plaintiff(s) were drawn or issued by defendants." 24

Clearly therefrom, to require an admission on this point even though it was already denied in the
Answer would be superfluous.

As expounded by this Court in Po vs. Court of Appeals: 25

"A party should not be compelled to admit matters of fact already admitted by his
pleading and concerning which there is no issue (Sherr vs. East, 71 A2d, 752, Terry 260,
cited in 27 C.J.S. 91), nor should he be required to make a second denial of those
already denied in his answer to the complaint. A request for admission is not intended to
merely reproduce or reiterate the allegations of the requesting party’s pleading but should
set forth relevant evidentiary matters of fact, or documents described in and exhibited
with the request, whose purpose is to establish said party’s cause of action or defense.
Unless it serves that purpose, it is, as correctly observed by the Court of Appeals,
‘pointless, useless’ and ‘a mere redundancy.’

On the second matter requested, petitioners sought the admission of respondents that Edna
Bonifacio executed promissory notes in favor of the petitioners acknowledging therein her
indebtedness to them in the amount of Two Hundred Seventy Thousand Pesos (P270,000.00)
and Four Hundred Thirty Two Thousand Pesos (P432,000.00). The appellate court held that the
allegation of the private respondents in their Answers that "they do not owe that much" is
sufficient and does not necessitate a reply to the admission. 26 To this we disagree. The request
for admission pertains to promissory notes while the allegation quoted by the appellate court
simply refers to the amount allegedly owed by the respondents, not to the promissory notes
which in the first place were not mentioned in the Complaint of petitioners.

However, we find no cogent reason to deviate from the observations of the Court of Appeals that
the request for admission regarding the alleged promissory notes is defective for failure of
petitioners to attach copies of said notes to the request for admission; and that private
respondents were not previously furnished copies of the same. Petitioner failed to comply with
the requirements under Section 1 of Rule 26 which provides that a party may serve upon any
other party a written request for the admission by the latter of the genuineness of any material
and relevant document described in and exhibited with the request; and that copies of the
documents should be delivered with the request unless copies have already been furnished.
Except for the bare allegation of the petitioners that they also furnished private respondents said
promissory notes, their requests do not show that there was indeed such previous or
simultaneous service of the said documents on the petitioners.

Also improper is the admission sought with respect to plaintiffs’ demand letters dated November
28, 1987 which the defendants allegedly received on December 5, 1987.

Paragraph V of the Complaint reads:

"Plaintiff gave notice of dishonor to the defendants, but this notwithstanding, and in spite
of repeated demands, the defendants refused and failed and continue to refuse and fail
to honor the said checks or replace them with cash. 27

Paragraph 4 of the Answer reads:

That paragraph 5 is specifically denied for being devoid of the truth as defendants after
having obtained knowledge that their checks were turned-over to the possession of
plaintiff and were dishonored, made arrangement for the settlement of the checks issued
by them.28

Thus, a denial by the respondents would be a surplusage in the light of the allegation in
paragraph 5 of the respective Complaints which speak of such a demand, and the denial of the
same allegation in appellants’ separate Answers to said complaints.

The second issue involves the question of sufficiency of service on a party of a request for
admission.

The petitioners claim that respondents were personally served requests for admission as
required by the Rules; and that granting that they were not, service on the counsel would be
sufficient.

Records show that only the counsel of the respondents, Atty. H.G. Domingo, Jr. was furnished
copies of the requests.29 This is not sufficient compliance with the Rules. As elucidated by the
Court in the Briboneria case:

"The general rule as provided for under Section 2 of Rule 27 (now Section 2, Rule 13) of
the Rules of Court is that all notices must be served upon counsel and not upon the
party. This is so because the attorney of a party is the agent of the party and is the one
responsible for the conduct of the case in all its procedural aspects; hence, notice to
counsel is notice to party. The purpose of the rule is obviously to maintain a uniform
procedure calculated to place in competent hands the orderly prosecution of a party’s
case (Chainani vs. Judge Tancinco, G.R. No. L-4782, Feb. 29, 1952; Capili v. Badelles,
G.R. No. L-17786, Sept. 29, 1962). However, the general rule cannot apply where the
law expressly provides that notice must be served upon a definite person. In such cases,
service must be made directly upon the person mentioned in the law and upon no other
in order that the notice be valid." 30

Consequently, the requests for admission made by the petitioners were not validly served and
therefore, private respondents cannot be deemed to have admitted the truth of the matters upon
which admissions were requested. Thus, the summary judgment rendered by the RTC has no
legal basis to support it.31
WHEREFORE, we DENY the petition and AFFIRM the decision of the Court of Appeals. No
costs.

SO ORDERED.
 THIRD DIVISION

G.R. No. 135874           January 25, 2000

SECURITY BANK CORPORATION, petitioner,

vs.
COURT OF APPEALS, SPOUSES AGUSTIN P. UY and PACITA TANG* SIOC TEN,
DOMINGO UY, and Hon. PRUDENCIO A. CASTILLO JR. in his capacity as presiding judge
of the Quezon City RTC (Branch 220), respondents.

PANGANIBAN, J.:

Litigation should not be carried on in the dark. Courts are given great latitude in enabling the
parties to inform themselves of all relevant facts, including those known only to their adversaries.
For this reason, the rules on discovery are accorded broad and liberal interpretation.

The Case

Before us is a Petition for Review on Certiorari assailing the July 8, 1998 Decision of the Court of
Appeals (CA), which affirmed the trial court's grant of the Motions, filed respectively by Domingo
1 

Uy and Spouses Agustin Uy and Pacita Tang Sioc Ten, for the production and inspection of
several documents.

Also assailed by petitioner is the October 7, 1998 CA Resolution, which denied petitioner's
Motion for Reconsideration. 2

The Facts

The facts are summarized by the Court of Appeals (CA) in this wise: 3

Petitioner Security Bank Corporation (SBC) is a domestic banking corporation duly

organized and existing under Philippine laws. It is one of the defendants in Civil Case No.
Q-97-30330 entitled [S]pouses Agustin P. Uy and Pacita Tang Sioc Ten versus Security
Bank Corporation, Domingo P. Uy and the Ex-Oficio City Sheriff of Quezon City, for
injunction and damages with an application for the issuance of a temporary restraining
order and preliminary injunction.

Plaintiffs Spouses Agustin P. Uy and Pacita Tang Sioc Ten sought to enjoin Security
Bank Corporation (SBC for brevity) and the Ex-Oficio Sheriff of Quezon City from
proceeding with the extra-judicial foreclosure of a mortgage over a piece of property
registered under the respondent spouses' names located at Cubao, Quezon City and
covered by TCT No. RI-8731 (281736).

On February 25, 1997, a temporary restraining order was issued by Hon. Pedro M.
Areola of the Regional Trial Court of Quezon City (Branch 85) where the case was
originally assigned. The temporary restraining order was lifted on April 8, 1997 when
Judge Areola resolved to deny the spouses' application for a preliminary injunction. This
denial prompted the said plaintiffs to file a motion for the inhibition of Judge Areola from
hearing the case, hence, the case was re-raffled to Branch 220 presided over by
respondent judge, Hon. Prudencio Altre Castillo, Jr.

On April 7, 1997, SBC filed its answer with compulsory counterclaim and cross-claim
while defendant Domingo P. Uy filed on April 18, 1997 his answer with compulsory
counterclaim and cross-claim. SBC filed its answer to defendant Domingo Uy's cross-
claim on April 28, 1997.

Before filing his answer to defendant SBC's cross-claim, defendant Domingo P. Uy filed
an Omnibus Motion (Production of Documents and Suspension and/or Extension of Time
to File Answer to Cross-Claim) on the ground that all documents, papers and instruments
made and executed by SBC on the evaluation, processing and approval of the loans of
Jackivi Trading Center, Inc., the real estate mortgages (REM) and the Special Power of
Attorney (SPA) themselves must first be produced before he [could] prepare and file the
answer to SBC's cross-claim. SBC filed its opposition to the aforesaid motion of Domingo
Uy. In return defendant Domingo Uy filed a motion to admit reply with the reply attached
and on June 3, 1997 SBC filed its rejoinder. 1âwphi1.nêt

Acting on defendant Uy's Omnibus Motion (Production of Documents and Suspension

and/or Extension of Time to File Answer to Cross-Claim) the trial court issued an Order
on June 25, 1997 denying the motion.

On July 16, 1997, Domingo P. Uy moved for the reconsideration of denial by filing an
Omnibus Motion (Motion for Reconsideration and/or Extension of Time to File Answer to
Cross-Claim).

On the other hand, plaintiffs also filed their Motion (For Production, Inspection and
Copying of Documents) praying for the issuance of an order directing SBC to produce
and allow them to inspect and copy the original and additional mortgage contracts
executed by Jackivi Trading Center, Inc. and/or Jose Tanyao. Defendant SBC opposed
the motion on July 25, 1997 by filing its Consolidated Opposition to the spouses' Motion
for Production, Inspection and Copying of Documents and Urgent Motion for a temporary
restraining order and a writ of preliminary injunction. Respondent spouses filed their reply
to the aforementioned consolidated opposition of SBC.

On August 3, 1997, SBC filed its opposition to respondent Domingo Uy's motion for
reconsideration of the Order dated June 25, 1997.

On October 2, 1997, the trial court issued the first assailed Order, the dispositive portion
of which states, thus:

WHEREFORE, premises considered, defendant Security Bank Corporation is

hereby ordered to produce and permit defendant Domingo P. Uy to inspect, copy
or photograph the documents, papers and instruments made and executed on
the evaluation, processing and approval of the loans of Jackivi Trading Center,
Inc., during usual business hours and day after at least three (3) days notice in
advance by defendant Domingo P. Uy to defendant Security Bank Corporation.
However, the filing of the answer to cross-claim need not await the production of
the documents. Defendant Uy is given, for the last time, ten (10) days from
receipt within which to file answer to the cross-claim of defendant Security Bank
Corporation, stating only the ultimate facts without including evidentiary matters.

Defendant Security Bank Corporation is hereby ordered to produce and permit

plaintiff[s] to inspect, copy or photograph the original and additional mortgage
 contracts executed by Jackivi Trading Center, Inc. and/or Mr. Jose Tanyao within
which (sic) usual business hours and day after at least three (3) days notice in
advance by plaintiff to defendant Security Bank Corporation.

The application for issuance of temporary restraining order is hereby DENIED. In

the meantime, set the case for hearing on the application for issuance of writ of
preliminary injunction on October 31, 1997, at 8:30 o'clock in the morning.

Furnish the parties and counsels with a copy of this Order.

SO ORDERED.

SBC filed a motion for partial reconsideration of the Order, claiming that said order [did]
not explain the basis for requiring it to produce the requested documents, and that there
was no good cause for their production, hence, it cannot be compelled to produce the
same.

Acting on the aforesaid motion, respondent judge issued the second assailed Order on
November 25, 1997 denying the Motion for Partial Reconsideration.

Ruling of the Court of Appeals

Affirming the trial court, the Court of Appeals held: 4

It will be noted that the only condition imposed by the Rules is that the production of the
documents must be for "good cause."

Contrary to the allegation of petitioner that respondent Domingo Uy ha[s] not shown good
cause for the production of such documents, said respondent has sufficiently shown the
good cause on which his motion is anchored [—] that of being able to intelligently prepare
his defenses against the cross-claim of petitioner SBC.

On the other hand, the motion for production filed by the respondents spouses Uy and
Pacita Tang Sioc Ten is likewise for good cause, it being necessary for a full
determination of the issues raised in Civil Case No. Q-97- 30330.

"Good cause" does not relate to the substance in the document but to the reason for
producing relevant or material matters therein; so that the enforcement of the rule entails
exercise of sound discretion. The burden is on the moving party to demonstrate the need
for the documents sought beyond the relevancy or materiality of the evidence therein.

Hence, this Petition. 5

The Issue

In its Memorandum, petitioner submits this lone issue for the consideration of the Court: 6

Whether or not the Honorable Court of Appeals committed grave abuse of

discretion when it sustained the Orders of the Respondent Regional Trial Court dated 02
7 

October 1997 and 25 November 1997 which granted the respective Motions [For
Production, Inspection and Copying of Documents] of Respondents Spouses Agustin P.
Uy and Pacita Tang Sioc Ten and Domingo Uy.

In the main, the Court is being asked to determine whether the appellate court erred in affirming
the grant of the two Motions for production and inspection of documents.
 The Court's Ruling

The Petition is bereft of merit.

Main Issue:

Grant of Motions for Production and Inspection of Documents

Petitioner Security Bank Corporation (SBC) maintains that, in sustaining the grant of the Motions
for production, inspection and copying of documents filed by private respondents, the CA grossly
misconstrued and misapplied Section 1, Rule 27 of the Rules of Court. Petitioner stresses that
the CA erred in focusing only on the requirement of "good cause" and in ignoring the prerequisite
of relevancy.

Moreover, petitioner contests the "good cause" invoked by the CA. Specifically, it contends that
the "good cause," which Respondent Domingo Uy relied upon to be able to prepare an answer to
the cross-claim against him, was negated by the rulings of both the trial court and the CA
requiring him to file such answer without awaiting the production of the documents sought.

We disagree with petitioner. Section 1, Rule 27 of the 1997 Rules of Court provides:

Sec. 1. Motion for production or inspection; order. — Upon motion of any party showing
good cause therefor, the court in which an action is pending may (a) order any party to
produce and permit the inspection and copying or photographing, by or on behalf of the
moving party, of any designated documents, papers, books, accounts, letters,
photographs, objects or tangible things not privileged, which constitute or contain
evidence material to any matter involved in the action and which are in his possession,
custody or control; or (b) order any party to permit entry upon designated land or other
property in his possession or control for the purpose of inspecting, measuring, surveying,
or photographing the property or any designated relevant object or operation thereon.
The order shall specify the time, place and manner of making the inspection and taking
copies and photographs, and may prescribe such terms and conditions as are just.

In Republic v. Sandiganbayan, the Court discussed exhaustively the significance of the various
8 

modes of discovery, an example of which is the aforecited provision. In sum, the Court held that
the said Rule aims to enable the parties to inform themselves, even before the trial, of all the
facts relevant to the action, including those known only to the other litigants. Through this
procedure, "civil trials should not be carried on in the dark." We quote:

. . . Indeed, it is the purpose and policy of the law that the parties — before the trial if not
indeed even before the pre-trial — should discover or inform themselves of all the facts
relevant to the action, not only those known to them individually, but also those known to
their adversaries; in other words, the desideratum is that civil trials should not be carried
on in the dark; and the Rules of Court make this ideal possible through the deposition-
discovery mechanism set forth in Rules 24 to 29. The experience in other jurisdictions
has been that ample discovery before trial, under proper regulation, accomplishes one of
the most necessary ends of modern procedure: it not only eliminates unessential issues
from trials thereby shortening them considerably, but also requires parties to play the
game with the cards on the table so that the possibility of fair settlement before trial is
measurably increased. . . .

As just intimated, the deposition-discovery procedure was designed to remedy the

conceded inadequacy and cumbersomeness of the pre-trial functions of notice-giving,
issue-formulation and fact revelation theretofore performed primarily by the pleadings.
 The various modes or instruments of discovery are meant to serve (1) as a device, along
with the pre-trial hearing under Rule 20, to narrow and clarify the basic issues between
the parties, and (2) as a device for ascertaining the facts relative to those issues. The
evident purpose is, to repeat, to enable the parties, consistent with recognized privileges,
to obtain the fullest possible knowledge of the issues and facts before civil trials and thus
prevent that said trials are carried on in the dark.

It is clear that courts are given wide latitude in granting motions for discovery in order to enable
parties to prepare for trial or otherwise to settle the controversy prior thereto. Thus, in the same
case, the Court further held:

What is chiefly contemplated is the discovery of every bit of information which may be
useful in the preparation for trial, such as the identity and location of persons having
knowledge of relevant facts; those relevant facts themselves; and the existence,
description, nature, custody, condition, and location of any books, documents, or other
tangible things. Hence, "the deposition-discovery rules are to be accorded a broad and
liberal treatment. No longer can the time-honored cry of 'fishing expedition' serve to
preclude a party from inquiring into the facts underlying his opponent's case. Mutual
knowledge of all the relevant facts gathered by both parties is essential to proper
litigation. To that end, either party may compel the other to disgorge whatever facts he
has in his possession. The deposition-discovery procedure simply advances the stage at
which the disclosure can be compelled from the time of trial to the period preceding it,
thus reducing the possibility, of surprise. . . .
9

In the present case, the CA did not err in affirming the trial court ruling that there was "good
cause" for the grant of the Motions for inspection of documents. The latter's holding that the
documents were not indispensable to the preparation of the answer of Uy to the cross-claim did
not militate against respondents' availment of this important mode of discovery. As he himself
averred in his Motion, the subject documents were "material and important to the issues raised in
the case in general, and as between defendant and SBC in particular." 10

Verily, the CA noted that the documents would enable Respondent Uy to "intelligently prepare
his defenses against the cross-claim of petitioner SBC," and not merely to formulate his answer.
11 

Likewise, we agree with the appellate court that the Motion of Spouses Agustin Uy and Pacita
Tang Sioc Ten was for a good cause, because the said documents were "necessary for a
determination of the issues raised in Civil Case No. Q-97-30330." 12

Indeed, litigation is essentially an abiding quest for truth undertaken not by the judge alone, nut
jointly with the parties. Litigants, therefore, must welcome every opportunity to achieve goal; they
must act in good faith to reveal documents, papers and other pieces of evidence material to the
controversy. In Alonzo v. Villamor, the Court ruled:
13 

A litigation is not a game of technicalities in which one, more deeply schooled and skilled
in the subtle art of movement and position, entraps and destroys the other. It is, rather a
contest in which each contending party fully and fairly lays before the court the facts in
issue and then, brushing aside as wholly trivial and indecisive all imperfections of form
and technicalities of procedure, asks that justice be done on the merits. Lawsuits, unlike
duels, are not to be won by a rapier's thrust. Technicality, when it deserts its proper office
as an aid to justice and becomes its great hindrance and chief enemy, deserves scant
consideration from courts. There should be no vested right in technicalities. . . .

Materiality of the Subject Documents

Petitioner points out that a party may be compelled to produce or allow the inspection of
documents if six procedural requisites are complied with, viz.:
 (a) The party must file a motion for the production or inspection of documents or things,
showing good cause therefor;

(b) Notice of the motion must be served to all other parties of the case;

(c) The motion must designate the documents, papers, books, accounts, letters,
photographs, objects or tangible things which the party wishes to be produced and
inspected;

(d) Such documents, etc. are not privileged;

(e) Such documents, etc. constitute or contain evidence material to any matter involved
in the action; and

(f) Such documents, etc. are in the possession, custody or control of the other party. 14

Petitioner contends that Requisite "e" has not been satisfied, arguing that respondents have not
shown the relevancy or materiality of the documents subject of the Motions. Specifically, it
maintains that the documents sought by Spouses Uy and Tang Sioc Ten — "the original and
additional mortgage contracts executed by Jackivi Trading Center, Inc. and/or Mr. Jose
15 

Tanyao" — were not relevant to Civil Case Q-97-30330, which was for the declaration of the
16 

nullify of the January 27, 1993 and August 16, 1995 Real Estate Mortgages between Jackivi and
petitioner. The existence or the absence of other mortgages executed by Jackivi, petitioner
insists, has absolutely no bearing on the said case, because it does not in any way determine the
validity or the invalidity of the subject Real Estate Mortgages.

Petitioner also argues that the documents sought by Respondent Domingo Uy — "all the
documents, papers and instruments made and executed by [Petitioner] SBC in the evaluation,
processing and approval of the loans to Jackivi . . . — were not relevant, because the trial court
17 

itself ruled that he could prepare his answer to the cross-claim without those documents.

These arguments are not persuasive. Section 1 of Rule 27 clearly provides that the documents
sought must be "material to any matter involved in the action." Respondents have shown that the
subject documents are indeed material to the present action.

Indeed, the factual backdrop of the case strengthens respondent's cause. The civil action
instituted by the Spouses Uy sought the annulment of two deeds of Real Estate Mortgage
between Jackivi and petitioner. They allegedly issued a Special Power of Attorney to Respondent
Uy to mortgage their property only for their benefit, not for that Jackivi. Because he mortgaged
the property as security for Jackivi's loan, they contend that he exceeded his authority and that
the contracts of real estate mortgage were consequently invalid. Petitioner, on the other hand,
filed a cross-claim against him, because it "relied on the representations and documents
submitted by [the latter] that he was duly authorized to mortgage the subject property."18

In this light, the relevance of the documents sought by Respondent Domingo Uy is readily
apparent. The papers executed by the petitioner bank in evaluating and processing the real
estate mortgage are manifestly useful in his defense against its cross-claim. The trial court's
ruling that he could file his answer without examining those documents does not prove that they
are immaterial to the present action. The CA has held that those documents would enable him to
"intelligently prepare his defenses against the cross-claim of Petitioner SBC.

So also, the additional mortgage contracts executed by Jackivi are material to the present action.
Because a witness of petitioner admitted in court that there was a third mortgage contract
between Jackivi and the bank, fair play demands that herein respondents must be given the
chance to examine such additional mortgage contracts. In so doing, they can determine why
petitioner was going after their property which was invalidly mortgaged by Respondent Uy, while
the properties of the actual borrower, Jackivi, have not been touched or foreclosed by the bank.

Indeed, the rule is that courts, in passing upon a motion for discovery, should be liberal in
determining whether the documents in question are relevant to the subject matter of the
action. To repeat, the rule on discovery "requires the parties to play the game with cards on the
19 

table so that the possibility of fair settlement before trial is measurably increased."
20

All in all, petitioner failed to show any reversible error on the party of the Court of Appeals. The
Motions of respondents were for a good cause, and the documents sought were material to the
action pending before the trial court.

WHEREFORE, the Petition is DENIED and the assailed Decision is AFFIRMED. Costs against
petitioner.

SO ORDERED. 1âwphi1.nêt
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 179786               July 24, 2013

JOSIELENE LARA CHAN, Petitioner,

vs.
JOHNNY T. CHAN, Respondent.

DECISION

ABAD, J.:

This case is about the propriety of issuing a subpoena duces tecum for the production and
submission in court of the respondent husband's hospital record in a case for declaration of
nullity of marriage where one of the issues is his mental fitness as a husband.

The Facts and the Case

On February 6, 2006 petitioner Josielene Lara Chan (Josielene) filed before the Regional Trial
Court (RTC) of Makati City, Branch 144 a petition for the declaration of nullity of her marriage to
respondent Johnny Chan (Johnny), the dissolution of their conjugal partnership of gains, and the
award of custody of their children to her. Josielene claimed that Johnny failed to care for and
support his family and that a psychiatrist diagnosed him as mentally deficient due to incessant
drinking and excessive use of prohibited drugs. Indeed, she had convinced him to undergo
hospital confinement for detoxification and rehabilitation.

Johnny resisted the action, claiming that it was Josielene who failed in her wifely duties. To save
their marriage, he agreed to marriage counseling but when he and Josielene got to the hospital,
two men forcibly held him by both arms while another gave him an injection. The marriage
relations got worse when the police temporarily detained Josielene for an unrelated crime and
released her only after the case against her ended. By then, their marriage relationship could no
longer be repaired.

During the pre-trial conference, Josielene pre-marked the Philhealth Claim Form 1 that Johnny
attached to his answer as proof that he was forcibly confined at the rehabilitation unit of a
hospital. The form carried a physician’s handwritten note that Johnny suffered from
"methamphetamine and alcohol abuse." Following up on this point, on August 22, 2006 Josielene
filed with the RTC a request for the issuance of a subpoena duces tecum addressed to Medical
City, covering Johnny’s medical records when he was there confined. The request was
accompanied by a motion to "be allowed to submit in evidence" the records sought by subpoena
duces tecum.2

Johnny opposed the motion, arguing that the medical records were covered by physician-patient
privilege. On September 13, 2006 the RTC sustained the opposition and denied Josielene’s
motion. It also denied her motion for reconsideration, prompting her to file a special civil action of
certiorari before the Court of Appeals (CA) in CA-G.R. SP 97913, imputing grave abuse of
discretion to the RTC.

On September 17, 2007 the CA3 denied Josielene’s petition. It ruled that, if courts were to allow
the production of medical records, then patients would be left with no assurance that whatever
relevant disclosures they may have made to their physicians would be kept confidential. The
prohibition covers not only testimonies, but also affidavits, certificates, and pertinent hospital
records. The CA added that, although Johnny can waive the privilege, he did not do so in this
case. He attached the Philhealth form to his answer for the limited purpose of showing his
alleged forcible confinement.

Question Presented

The central question presented in this case is:

Whether or not the CA erred in ruling that the trial court correctly denied the issuance of a
subpoena duces tecum covering Johnny’s hospital records on the ground that these are covered
by the privileged character of the physician-patient communication.

The Ruling of the Court

Josielene requested the issuance of a subpoena duces tecum covering the hospital records of
Johnny’s confinement, which records she wanted to present in court as evidence in support of
her action to have their marriage declared a nullity. Respondent Johnny resisted her request for
subpoena, however, invoking the privileged character of those records. He cites Section 24(c),
Rule 130 of the Rules of Evidence which reads:

SEC. 24. Disqualification by reason of privileged communication.— The following persons cannot
testify as to matters learned in confidence in the following cases:

xxxx

(c) A person authorized to practice medicine, surgery or obstetrics cannot in a civil case, without
the consent of the patient, be examined as to any advice or treatment given by him or any
information which he may have acquired in attending such patient in a professional capacity,
which information was necessary to enable him to act in that capacity, and which would blacken
the reputation of the patient.

The physician-patient privileged communication rule essentially means that a physician who gets
information while professionally attending a patient cannot in a civil case be examined without
the patient’s consent as to any facts which would blacken the latter’s reputation. This rule is
intended to encourage the patient to open up to the physician, relate to him the history of his
ailment, and give him access to his body, enabling the physician to make a correct diagnosis of
that ailment and provide the appropriate cure. Any fear that a physician could be compelled in
the future to come to court and narrate all that had transpired between him and the patient might
prompt the latter to clam up, thus putting his own health at great risk. 4

1. The case presents a procedural issue, given that the time to object to the admission of
evidence, such as the hospital records, would be at the time they are offered. The offer could be
made part of the physician’s testimony or as independent evidence that he had made entries in
those records that concern the patient’s health problems.

Section 36, Rule 132, states that objections to evidence must be made after the offer of such
evidence for admission in court. Thus:

SEC. 36. Objection.— Objection to evidence offered orally must be made immediately after the
offer is made.

Objection to a question propounded in the course of the oral examination of a witness shall be
made as soon as the grounds therefor shall become reasonably apparent.
An offer of evidence in writing shall be objected to within three (3) days after notice of the offer
unless a different period is allowed by the court.

In any case, the grounds for the objections must be specified.

Since the offer of evidence is made at the trial, Josielene’s request for subpoena duces tecum is
premature. She will have to wait for trial to begin before making a request for the issuance of a
subpoena duces tecum covering Johnny’s hospital records. It is when those records are
produced for examination at the trial, that Johnny may opt to object, not just to their admission in
evidence, but more so to their disclosure. Section 24(c), Rule 130 of the Rules of Evidence
quoted above is about non-disclosure of privileged matters.

2. It is of course possible to treat Josielene’s motion for the issuance of a subpoena duces tecum
covering the hospital records as a motion for production of documents, a discovery procedure
available to a litigant prior to trial. Section 1, Rule 27 of the Rules of Civil Procedure provides:

SEC. 1. Motion for production or inspection; order.— Upon motion of any party showing good
cause therefor, the court in which an action is pending may (a) order any party to produce and
permit the inspection and copying or photographing, by or on behalf of the moving party, of any
designated documents, papers, books, accounts, letters, photographs, objects or tangible things,
not privileged, which constitute or contain evidence material to any matter involved in the action
and which are in his possession, custody or control; or (b) order any party to permit entry upon
designated land or other property in his possession or control for the purpose of inspecting,
measuring, surveying, or photographing the property or any designated relevant object or
operation thereon. The order shall specify the time, place and manner of making the inspection
and taking copies and photographs, and may prescribe such terms and conditions as are just.
(Emphasis supplied)

But the above right to compel the production of documents has a limitation: the documents to be
disclosed are "not privileged."

Josielene of course claims that the hospital records subject of this case are not privileged since it
is the "testimonial" evidence of the physician that may be regarded as privileged. Section 24(c) of
Rule 130 states that the physician "cannot in a civil case, without the consent of the patient, be
examined" regarding their professional conversation. The privilege, says Josielene, does not
cover the hospital records, but only the examination of the physician at the trial.

To allow, however, the disclosure during discovery procedure of the hospital records—the results
of tests that the physician ordered, the diagnosis of the patient’s illness, and the advice or
treatment he gave him—would be to allow access to evidence that is inadmissible without the

patient’s consent. Physician memorializes all these information in the patient’s records.
Disclosing them would be the equivalent of compelling the physician to testify on privileged
matters he gained while dealing with the patient, without the latter’s prior consent.

3. Josielene argues that since Johnny admitted in his answer to the petition before the RTC that
he had been confined in a hospital against his will and in fact attached to his answer a Philhealth
claim form covering that confinement, he should be deemed to have waived the privileged
character of its records. Josielene invokes Section 17, Rule 132 of the Rules of Evidence that
provides:

SEC. 17. When part of transaction, writing or record given in evidence, the remainder admissible.
— When part of an act, declaration, conversation, writing or record is given in evidence by one
party, the whole of the same subject may be inquired into by the other, and when a detached act,
declaration, conversation, writing or record is given in evidence, any other act, declaration,
conversation, writing or record necessary to its understanding may also be given in evidence. 1âwphi1
But, trial in the case had not yet begun. Consequently, it cannot be said that Johnny had already
presented the Philhealth claim form in evidence, the act contemplated above which would justify
Josielene into requesting an inquiry into the details of his hospital confinement. Johnny was not
yet bound to adduce evidence in the case when he filed his answer. Any request for disclosure of
his hospital records would again be premature.

For all of the above reasons, the CA and the RTC were justified in denying Josielene her request
for the production in court of Johnny’s hospital records.

ACCORDINGLY, the Court DENIES the petition and AFFIRMS the Decision of the Court of
Appeals in CA-G.R. SP 97913 dated September 17, 2007.

SO ORDERED.

ROBERTO A. ABAD
Associate Justice

WE CONCUR:
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 152375               December 16, 2011

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
SANDIGANBAYAN (FOURTH DIVISION), JOSE L. AFRICA (substituted by his heirs),
MANUEL H. NIETO, JR., FERDINAND E. MARCOS (substituted by his heirs), IMELDA R.
MARCOS, FERDINAND R. MARCOS, JR., JUAN PONCE ENRILE, and POTENCIANO
ILUSORIO (substituted by his heirs), Respondents.

DECISION

BRION, J.:

Before us is the petition for certiorari1 filed by the Republic of the Philippines (petitioner) to set
aside the February 7, 2002 resolution (2002 resolution) 2 of the Sandiganbayan3 denying the
petitioner’s Motion to Admit Supplemental Offer of Evidence (Re: Deposition of Maurice V.
Bane) (3rd motion).

THE ANTECEDENTS

On July 22, 1987, the petitioner Republic of the Philippines, through the Presidential Commission
on Good Government (PCGG), filed a complaint (docketed as Civil Case No. 0009) against Jose
L. Africa, Manuel H. Nieto, Jr., Ferdinand E. Marcos, Imelda R. Marcos, Ferdinand R. Marcos,
Jr., Juan Ponce Enrile, and Potenciano Ilusorio (collectively, the respondents) for reconveyance,
reversion, accounting, restitution, and damages before the Sandiganbayan. The petitioner
alleged, inter alia, that the respondents illegally manipulated the purchase of the major
shareholdings of Cable and Wireless Limited in Eastern Telecommunications Philippines, Inc.
(ETPI), which shareholdings respondents Jose Africa and Manuel Nieto, Jr. held for themselves
and, through their holdings and the corporations they organized, beneficially for respondents
Ferdinand E. Marcos and Imelda R. Marcos.4

Civil Case No. 0009 is the main case subject of the present petition. Victor Africa (Africa), son of
the late Jose L. Africa, was not impleaded in and so is plainly not a party to Civil Case No. 0009. 5

Civil Case No. 0009 spawned numerous incidental cases,6 among them, Civil Case No.
0130.7 The present respondents were not made parties either in Civil Case No. 0130.

I. Civil Case No. 0130

In the August 7, 1991 PCGG-conducted ETPI stockholders meeting, a PCGG-controlled board of

directors was elected. Later, the registered ETPI stockholders convened a special stockholders
meeting wherein another set of board of directors was elected. As a result, two sets of ETPI
board and officers were elected. 8

Thereafter, Africa, as an ETPI stockholder, filed a petition for certiorari, with prayer for a
temporary restraining order/preliminary injunction with the Sandiganbayan (docketed as Civil
Case No. 0130), seeking to nullify the August 5, 1991 and August 9, 1991 Orders of the PCGG.
These Orders directed Africa:
[T]o account for his sequestered shares in ETPI and to cease and desist from exercising voting
rights on the sequestered shares in the special stockholders’ meeting to be held on August 12,
1991, from representing himself as a director, officer, employee or agent of ETPI, and from
participating, directly or indirectly[,] in the management of ETPI.9

During the pendency of Africa’s petition, Civil Case No. 0130, Africa filed a motion with the
Sandiganbayan, alleging that since January 29, 1988 the PCGG had been "illegally ‘exercising’
the rights of stockholders of ETPI,"10 especially in the election of the members of the board of
directors. Africa prayed for the issuance of an order for the "calling and holding of [ETPI] annual
stockholders meeting for 1992 under the [c]ourt’s control and supervision and prescribed
guidelines."11

In its November 13, 1992 resolution, the Sandiganbayan favored Africa’s motion in this wise:

WHEREFORE, it is ordered that an annual stockholders meeting of the [ETPI], for 1992 be held
on Friday, November 27, 1992, at 2:00 o’clock in the afternoon, at the ETPI Board Room,
Telecoms Plaza, 7th Floor, 316 Gil J. Puyat Avenue, Makati, Metro Manila. x x x The
stockholders meeting shall be conducted under the supervision and control of this Court, through
Mr. Justice Sabino R. de Leon, Jr. [O]nly the registered owners, their duly authorized
representatives or their proxies may vote their corresponding shares.

The following minimum safeguards must be set in place and carefully maintained until final
judicial resolution of the question of whether or not the sequestered shares of stock (or in a
proper case the underlying assets of the corporation concerned) constitute ill-gotten wealth[.] 12

The PCGG assailed this resolution before this Court via a petition for certiorari docketed as G.R.
No. 10778913 (PCGG’s petition), imputing grave abuse of discretion on the Sandiganbayan for
holding, inter alia, that the registered stockholders of ETPI had the right to vote. 14 In our
November 26, 1992 Resolution, we enjoined the Sandiganbayan from implementing its assailed
resolution.

In the meantime, in an April 12, 1993 resolution, the Sandiganbayan ordered the consolidation of
Civil Case No. 0130, among others, with Civil Case No. 0009, with the latter as the main case
and the former merely an incident.15

During the pendency of PCGG’s petition (G.R. No. 107789), the PCGG filed with this Court a
"Very Urgent Petition for Authority to Hold Special Stockholders’ Meeting for [the] Sole Purpose
of Increasing [ETPI’s] Authorized Capital Stock" (Urgent Petition). In our May 7, 1996 Resolution,
we referred this Urgent Petition to the Sandiganbayan for reception of evidence and immediate
resolution.16 The Sandiganbayan included the Urgent Petition in Civil Case No. 0130. 17

In the proceedings to resolve the Urgent Petition, the testimony of Mr. Maurice V. Bane (former
director and treasurer-in-trust of ETPI) was taken– at the petitioner’s instance and after serving
notice of the deposition-taking on the respondents 18 – on October 23 and 24, 1996 by way of
deposition upon oral examination (Bane deposition) before Consul General Ernesto Castro of the
Philippine Embassy in London, England.

Invoking Section 1, Rule 24 (of the old Rules of Court), purportedly allowing the petitioner to
depose Bane without leave of court, i.e., as a matter of right after the defendants have filed their
answer, the notice stated that "[t]he purpose of the deposition is for [Bane] to identify and testify
on the facts set forth in his affidavit19 x x x so as to prove the ownership issue in favor of [the
petitioner] and/or establish the prima facie factual foundation for sequestration of [ETPI’s] Class
A stock in support of the [Urgent Petition]."20 The notice also states that the petitioner shall use
the Bane deposition "in evidence… in the main case of Civil Case No. 0009." 21 On the scheduled
deposition date, only Africa was present and he cross-examined Bane.
On December 13, 1996, the Sandiganbayan resolved the Urgent Petition by granting authority to
the PCGG (i) "to cause the holding of a special stockholders’ meeting of ETPI for the sole
purpose of increasing ETPI’s authorized capital stock" and (ii) "to vote therein the sequestered
Class ‘A’ shares of stock."22 Thus, a special stockholders meeting was held, as previously
scheduled, on March 17, 1997 and the increase in ETPI’s authorized capital stock was
"unanimously approved."23 From this ruling, Africa went to this Court via a petition
for certiorari24 docketed as G.R. No. 147214 (Africa’s petition).

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

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

xxxx

WHEREFORE, this Court Resolved to REFER the petitions at bar to the Sandiganbayan for
reception of evidence to determine whether there is a prima facie evidence showing that the
sequestered shares in question are ill-gotten and there is an imminent danger of dissipation to
entitle the PCGG to vote them in a stockholders meeting to elect the ETPI Board of Directors and
to amend the ETPI Articles of Incorporation for the sole purpose of increasing the authorized
capital stock of ETPI.

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

II. Civil Case No. 0009

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

In its Pre-Trial Brief26 dated August 30, 1996, the petitioner offered to present the following
witnesses:

WITNESSES TO BE PRESENTED AND A BRIEF DESCRIPTION OF THEIR TESTIMONIES

(1) Maurice V. Bane – representative of Cable and Wireless Limited (C & W) at the time
ETPI was organized.

xxxx

(2) Mr. Manuel H. Nieto – x x x

(3) Ms. Evelyn Singson – x x x

(4) Mr. Severino P. Buan, Jr. – x x x

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

(6) Mr. Potenciano A. Roque – x x x

(7) Caesar Parlade - x x x

IIa. Motion to Admit the Bane Deposition

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

1. In the hearings of the incidents of [Civil Case No. 0009], i.e., Civil Case Nos. 0048,
0050, 0130, 014628 the following witnesses were presented therein:

a. Cesar O.V. Parlade

b. Maurice Bane

c. Evelyn Singson

d. Leonorio Martinez

e. Ricardo Castro; and

f. Rolando Gapud

2. [The petitioner] wishes to adopt in [Civil Case No. 0009] their testimonies and the
documentary exhibits presented and identified by them, since their testimonies and the
said documentary exhibits are very relevant to prove the case of the [petitioner] in [Civil
Case No. 0009].

3. The adverse parties in the aforementioned incidents had the opportunity to cross-
examine them.

The respondents filed their respective Oppositions to the 1st motion; 29 in turn, the petitioner filed
a Common Reply30 to these Oppositions.

On April 1, 1998, the Sandiganbayan 31 promulgated a resolution32 (1998 resolution) denying the

petitioner’s 1st motion, as follows:

Wherefore, the [petitioner’s] Motion x x x is –

1. partly denied insofar as [the petitioner] prays therein to adopt the testimonies on oral
deposition of Maurice V. Bane and Rolando Gapud as part of its evidence in Civil Case
No. 0009 for the reason that said deponents according to the [petitioner] are not
available for cross-examination in this Court by the [respondents]. (emphasis
added)

2. partly Granted, in the interest of speedy disposition of this long pending case, insofar
as plaintiff prays therein to adopt certain/particular testimonies of Cesar O. Parlade,
Evelyn Singson, Leoncio Martinez, and Ricardo Castro and documentary exhibits which
said witnesses have identified in incident Civil Case Nos. xxx 0130 xxx, subject to the
following conditions :

1. xxx

2. xxx

3. That the said witnesses be presented in this Court so that they can be cross-
examined on their particular testimonies in incident Civil Cases xxx [by the
respondents].
IIb. Urgent Motion and/or Request for Judicial Notice

The petitioner did not in any way question the 1998 resolution, and instead made its Formal Offer
of Evidence on December 14, 1999. 33 Significantly, the Bane deposition was not included as part
of its offered exhibits. Rectifying the omission, the petitioner filed an Urgent Motion and/or
Request for Judicial Notice34 (2nd motion) dated February 21, 2000, with the alternative prayer
that:

1. An order forthwith be issued re-opening the plaintiff’s case and setting the same for
trial any day in April 2000 for the sole purpose of introducing additional evidence and
limited only to the marking and offering of the [Bane deposition] which already forms part
of the records and used in Civil Case No. 0130 x x x;

2. In the alternative, x x x the [Sandiganbayan] to take judicial notice of the facts

established by the [Bane deposition], together with the marked exhibits appended
thereto. [emphasis ours]

On August 21, 2000, the Sandiganbayan promulgated a resolution 35 (2000 resolution) denying
the petitioner’s 2nd motion:

Judicial notice is found under Rule 129 which is titled "What Need Not Be Proved." Apparently,
this provision refers to the Court’s duty to consider admissions made by the parties in the
pleadings, or in the course of the trial or other proceedings in resolving cases before it. The duty
of the Court is mandatory and in those cases where it is discretionary, the initiative is upon the
Court. Such being the case, the Court finds the Urgent Motion and/or Request for Judicial Notice
as something which need not be acted upon as the same is considered redundant.

On the matter of the [Bane deposition], [its] admission is done through the ordinary formal offer of
exhibits wherein the defendant is given ample opportunity to raise objection on grounds provided
by law. Definitely, it is not under Article (sic) 129 on judicial notice. [Emphasis ours]

On November 6, 2000 and on several dates thereafter, the respondents separately filed their
respective demurrers to evidence.36 On the other hand, the petitioner moved for the
reconsideration of the 2000 resolution, but was rebuffed by the Sandiganbayan in its April 3,
2001 resolution37 (2001 resolution).

IIc. Motion to Admit Supplemental Offer of

Evidence (Re: Deposition of Maurice Bane)

On November 16, 2001, the petitioner filed its 3rd Motion, seeking once more the admission of
the Bane deposition.38 On February 7, 2002 (pending resolution of the respondents’ demurrers to
evidence),39 the Sandiganbayan promulgated the assailed 2002 resolution, 40 denying the
petitioner’s 3rd motion. The Sandiganbayan ruled:

But in the court’s view, it is not really a question of whether or not plaintiff has already rested its
case as to obviate the further presentation of evidence. It is not even a question of whether the
non-appearing defendants are deemed to have waived their right to cross-examine Bane as to
qualify the admission of the deposition sans such cross-examination. Indeed, We do not see any
need to dwell on these matters in view of this Court’s Resolution rendered on April 1, 1998 which
already denied the introduction in evidence of Bane’s deposition and which has become final in
view of plaintiff’s failure to file any motion for reconsideration or appeal within the 15-day
reglementary period. Rightly or wrongly, the resolution stands and for this court to grant
plaintiff’s motion at this point in time would in effect sanction plaintiff’s disregard for the rules of
procedure. Plaintiff has slept on its rights for almost two years and it was only in February of
2000 that it sought to rectify its ineptitude by filing a motion to reopen its case as to enable it to
introduce and offer Bane’s deposition as additional evidence, or in the alternative for the court to
take judicial notice of the allegations of the deposition. But how can such a motion be granted
when it has been resolved as early as 1998 that the deposition is inadmissible. Without plaintiff
having moved for reconsideration within the reglementary period, the resolution has attained
finality and its effect cannot be undone by the simple expedient of filing a motion, which though
purporting to be a novel motion, is in reality a motion for reconsideration of this court’s 1998
ruling. [emphases ours]

The resolution triggered the filing of the present petition.

THE PETITION

The petitioner filed the present petition claiming that the Sandiganbayan committed grave abuse
of discretion:

I.

x x x IN HOLDING THAT ITS INTERLOCUTORY ORDER IN 1998 HAD BECOME

FINAL.

II.

x x x IN x x x REFUSING TO ADMIT THE BANE DEPOSITION –WHICH WAS

ALREADY ADMITTED AS EVIDENCE IN AN INCIDENT CASE (CIVIL CASE NO. 0130)
– AS PART OF PETITIONER’S EVIDENCE IN THE MAIN x x x CASE (CIVIL CASE
NO. 0009).

III.

x x x IN REFUSING TO ADMIT A HIGHLY RELEVANT AND IMPORTANT PIECE OF

EVIDENCE FOR THE PETITIONER ON THE BASIS OF FLIMSY AND TENUOUS
TECHNICAL GROUNDS.

The petitioner41 argues that the 1998 resolution of the Sandiganbayan is merely an interlocutory
order; thus, the petitioner’s failure to question this 1998 resolution could not have given it a
character of "finality" so long as the main case remains pending. 42 On this basis, the petitioner
concludes that the Sandiganbayan’s denial of its 3rd motion was plainly tainted with grave abuse
of discretion.

On the issue of the Sandiganbayan’s refusal (in its 2002 resolution) either to take judicial notice
of or to admit the Bane deposition as part of its evidence, the petitioner asserts that Civil Case
No. 0130 (where the Bane deposition was originally taken, introduced and admitted in evidence)
is but a "child" of the "parent" case, Civil Case No. 0009; under this relationship, evidence offered
and admitted in any of the "children" cases should be considered as evidence in the "parent"
case.

Lastly, the petitioner claims that given the crucial importance of the Bane deposition, the
Sandiganbayan should not have denied its admission on "flimsy grounds," considering that:

1. It was also already stated in the notice (of the taking of the Bane deposition) that it
would be used as evidence in Civil Case No. 0009. Notices having been duly served on
all the parties concerned, they must accordingly be deemed to have waived their right to
cross-examine the witness when they failed to show up.
 2. The Bane deposition was a very vital cog in the case of the petitioner relative to its
allegation that the respondents’ interest in ETPI and related firms properly belongs to the
government.

3. The non-inclusion of the Bane deposition in the petitioner’s formal offer of evidence
was obviously excusable considering the period that had lapsed from the time the case
was filed and the voluminous records that the present case has generated. 43

THE RESPONDENTS’ COMMENTS

and THE PETITIONER’S REPLY

In the respondents’ Comments44 (filed in compliance with our Resolution of April 10, 200245 ), they
claim that the present petition was filed out of time - i.e., beyond the 60-day reglementary period
prescribed under Section 4, Rule 65 of the Rules of Court. 46 This assertion proceeds from the
view that the petitioner’s 3rd motion, being a mere rehash of similar motions earlier filed by the
petitioner, likewise simply assails the Sandiganbayan’s 1998 resolution. Along the same line,
they posit that the petitioner’s 3rd motion actually partakes of a proscribed third motion for
reconsideration of the Sandiganbayan’s 1998 resolution. 47 They likewise assert, on the
assumption that the 1998 resolution is interlocutory in character, that the petitioner’s failure to
contest the resolution by way of certiorari within the proper period gave the 1998 resolution a
character of "finality."

The respondents further claim that after a party has rested its case, the admission of a
supplemental offer of evidence requires the reopening of the case at the discretion of the trial
court; the Sandiganbayan simply exercised its sound discretion in refusing to reopen the case
since the evidence sought to be admitted was "within the knowledge of the [petitioner] and
available to [it] before [it] rested its case."48 The respondents also advert to the belated filing of
the petitioner’s 3rd motion – i.e., after the respondents had filed their respective demurrers to
evidence.

On the petitioner’s claim of waiver, the respondents assert that they have not waived their right to
cross-examine the deponent; the Sandiganbayan recognized this right in its 1998 resolution and
the petitioner never questioned this recognition. They also assert that the allegations in the Bane
deposition cannot be a proper subject of judicial notice under Rule 129 of the Rules of Court. The
respondents lastly submit that the Bane deposition is inadmissible in evidence because the
petitioner failed to comply with the requisites for admission under Section 47, Rule 130 of the
Rules of Court.

In its Reply,49 the petitioner defends the timeliness of the present petition by arguing that a party
may opt to wait out and collect a pattern of questionable acts before resorting to the
extraordinary remedy of certiorari. The petitioner stresses that it filed the 3rd motion precisely
because of the Sandiganbayan’s 2000 resolution, which held that the admission of the Bane
deposition should be done through the ordinary formal offer of evidence. Thus, the
Sandiganbayan seriously erred in considering the petitioner’s 3rd motion as a proscribed motion
for reconsideration. The petitioner generally submits that the dictates of substantial justice should
have guided the Sandiganbayan to rule otherwise.

The petitioner also clarifies that it has not yet rested its case although it has filed a formal offer of
evidence. A party normally rests his case only after the admission of the pieces of evidence he
formally offered; before then, he still has the opportunity to present further evidence to
substantiate his theory of the case should the court reject any piece of the offered evidence. 50

The petitioner further maintains that the mere reasonable opportunity to cross-examine the
deponent is sufficient for the admission of the Bane deposition considering that the deponent is
not an ordinary witness who can be easily summoned by our courts in light of his foreign
residence, his citizenship, and his advanced age. The petitioner asserts that Rule 24 (now Rule
23), and not Section 47, Rule 130, of the Rules of Court should apply to the present case, as
explicitly stated in the notice of the deposition-taking.

To date, respondents Imelda Marcos and the heirs of Potenciano Ilusorio have yet to file their
respective comments on the petition. Given the time that had lapsed since we required their
comments, we resolve to dispense with the filing of these comments and to consider this petition
submitted for decision.

THE ISSUES

On the basis of the pleadings, we summarize the pivotal issues for our resolution, as follows:

1. Whether the petition was filed within the required period.

2. Whether the Sandiganbayan committed grave abuse of discretion –

i. In holding that the 1998 resolution has already attained finality;

ii. In holding that the petitioner’s 3rd motion partakes of a prohibited motion for
reconsideration;

iii. In refusing to re-open the case given the critical importance of the Bane
deposition to the petitioner’s cause; and

iv. In refusing to admit the Bane deposition notwithstanding the prior

consolidation of Civil Case No. 0009 and Civil Case No. 0130.

3. Whether the Bane deposition is admissible under -

i. Rule 23, Section 4, par. (c) alone or in relation to Section 47, Rule 130 of the
Rules of Court; and

ii. The principle of judicial notice.

THE COURT’S RULING

We deny the petition for lack of merit.

I. Preliminary Considerations

I (a). The interlocutory nature of the Sandiganbayan’s 1998 resolution.

In determining the appropriate remedy or remedies available, a party aggrieved by a court order,
resolution or decision must first correctly identify the nature of the order, resolution or decision he
intends to assail.51 In this case, we must preliminarily determine whether the 1998 resolution is
"final" or "interlocutory" in nature.

Case law has conveniently demarcated the line between a final judgment or order and an
interlocutory one on the basis of the disposition made. 52 A judgment or order is considered final if
the order disposes of the action or proceeding completely, or terminates a particular stage of the
same action; in such case, the remedy available to an aggrieved party is appeal. If the order or
resolution, however, merely resolves incidental matters and leaves something more to be done
to resolve the merits of the case, the order is interlocutory 53 and the aggrieved party’s remedy is a
petition for certiorari under Rule 65. Jurisprudence pointedly holds that:
As distinguished from a final order which disposes of the subject matter in its entirety or
terminates a particular proceeding or action, leaving nothing else to be done but to enforce by
execution what has been determined by the court, an interlocutory order does not dispose of a
case completely, but leaves something more to be adjudicated upon. The term "final" judgment
or order signifies a judgment or an order which disposes of the case as to all the parties,
reserving no further questions or directions for future determination.

On the other hand, a court order is merely interlocutory in character if it leaves substantial
proceedings yet to be had in connection with the controversy. It does not end the task of the
court in adjudicating the parties’ contentions and determining their rights and liabilities as against
each other. In this sense, it is basically provisional in its application.54 (emphasis supplied)

Under these guidelines, we agree with the petitioner that the 1998 resolution is interlocutory. The
Sandiganbayan’s denial of the petitioner’s 1st motion through the 1998 Resolution came at a
time when the petitioner had not even concluded the presentation of its evidence. Plainly, the
denial of the motion did not resolve the merits of the case, as something still had to be done to
achieve this end.

We clarify, too, that an interlocutory order remains under the control of the court until the case is
finally resolved on the merits. The court may therefore modify or rescind the order upon sufficient
grounds shown at any time before final judgment. 55 In this light, the Sandiganbayan’s 1998
resolution – which merely denied the adoption of the Bane deposition as part of the evidence in
Civil Case No. 0009 – could not have attained finality (in the manner that a decision or final order
resolving the case on the merits does) despite the petitioner’s failure to move for its
reconsideration or to appeal. 56

I (b). The 3rd motion was not prohibited by the Rules.

We also agree with the petitioner that its 3rd motion cannot be considered as a proscribed third
(actually second) motion for reconsideration of the Sandiganbayan’s 1998 resolution. As Section
5, Rule 37 of the Rules of Court clearly provides, the proscription against a second motion for
reconsideration is directed against "a judgment or final order." Although a second motion for
reconsideration of an interlocutory order can be denied on the ground that it is a mere "rehash" of
the arguments already passed upon and resolved by the court, it cannot be rejected on the
ground that it is forbidden by the law or by the rules as a prohibited motion. 57

I (c). The 1998 resolution was not ripe for a petition for certiorari.

Under Section 1, Rule 41 of the Rules of Court, an aggrieved party may appeal from a judgment
or final order which completely disposes of a case or from an order that the Rules of Court
declares to be appealable. While this provision prohibits an appeal from an interlocutory order,
the aggrieved party is afforded the chance to question an interlocutory order through a special
civil action of certiorari under Rule 65; the petition must be filed within sixty days from notice of
the assailed judgment, order, resolution, or denial of a motion for reconsideration.

On the premise that the 1998 resolution is interlocutory in nature, the respondents insist that the
60-day period for filing a petition for certiorari should be reckoned from the petitioner’s notice of
the Sandiganbayan’s 1998 resolution. They argue that since this ruling had long been rendered
by the court, the petitioner’s subsequent filing of similar motions was actually a devious attempt
to resuscitate the long-denied admission of the Bane deposition.

We do not find the respondents’ submission meritorious. While the 1998 resolution is an
interlocutory order, as correctly argued by the petitioner and impliedly conceded by the
respondents, the claim that the 1998 resolution should have been immediately questioned by the
petitioner on certiorari is not totally correct as a petition for certiorari is not grounded solely on the
issuance of a disputed interlocutory ruling. 58 For a petition for certiorari to prosper, Section 1,
Rule 65 of the Rules of Court requires, among others, that neither an appeal nor any plain,
speedy and adequate remedy in the ordinary course of law is available to the aggrieved party.
As a matter of exception, the writ of certiorari may issue notwithstanding the existence of an
available alternative remedy, if such remedy is inadequate or insufficient in relieving the
aggrieved party of the injurious effects of the order complained of. 59

We note that at the time of its 1st motion in Civil Case No. 0009, the petitioner had not yet
concluded the presentation of its evidence, much less made any formal offer of evidence. At this
stage of the case, the prematurity of using the extraordinary remedy of certiorari to question the
admission of the Bane deposition is obvious. After the denial of the 1st motion, the plain remedy
available to the petitioner was to move for a reconsideration to assert and even clarify its position
on the admission of the Bane deposition. The petitioner could introduce 60 anew the Bane
deposition and include this as evidence in its formal offer 61 – as the petitioner presumably did in
Civil Case No. 0130.

Thus, at that point, the case was not yet ripe for the filing of a petition for certiorari, and the denial
of the 1st motion could not have been the reckoning point for the period of filing such a petition.

II. The Sandiganbayan’s ruling on the finality of its 1998 resolution was legally erroneous
but did not constitute grave abuse of discretion

In light of the above discussions and conclusions, the Sandiganbayan undoubtedly erred on a

question of law in its ruling, but this legal error did not necessarily amount to a grave abuse of
discretion in the absence of a clear showing that its action was a capricious and whimsical
exercise of judgment affecting its exercise of jurisdiction. 62 Without this showing, the
Sandiganbayan’s erroneous legal conclusion was only an error of judgment, or, at best,
an abuse of discretion but not a grave one. For this reason alone, the petition should be
dismissed.

Despite this conclusion, however, we opt not to immediately dismiss the petition in light of the
unique circumstances of this case where the petitioner cannot entirely be faulted for not availing
of the remedy at the opportune time, and where the case, by its nature, is undoubtedly endowed
with public interest and has become a matter of public concern. 63 In other words, we opt to
resolve the petition on the merits to lay the issues raised to rest and to avoid their recurrence in
the course of completely resolving the merits of Civil Case No. 0009.

Although the word "rested" nowhere appears in the Rules of Court, ordinary court procedure has
inferred it from an overview of trial sequence under Section 5, Rule 30 (which capsulizes the
order of presentation of a

party’s evidence during trial), read in relation to Rule 18 on Pre-Trial, 64 both of the Rules of Court.
Under Section 5, Rule 30, after a party has adduced his direct evidence in the course of
discharging the burden of proof,65 he is considered to have rested his case, and is thereafter
allowed to offer rebutting evidence only.66 Whether a party has rested his case in some measure
depends on his manifestation in court on whether he has concluded his presentation of
evidence.67

In its second and third motions, respectively, the petitioner expressly admitted that "due to
oversight, [the petitioner] closed and rested its case";68 and that it "had terminated the
presentation of its evidence in x x x Civil Case No. 0009."69 In the face of these
categorical judicial admissions,70 the petitioner cannot suddenly make an about-face and insist
on the introduction of evidence out of the usual order. Contrary to the petitioner’s assertion, the
resting of its case could not have been conditioned on the admission of the evidence it formally
offered. To begin with, the Bane deposition, which is the lone piece of evidence subject of this
present petition, was not among the pieces of evidence included in its formal offer of evidence
and thus could not have been admitted or rejected by the trial court.
The Court observes with interest that it was only in this present petition for certiorari that the
petitioner had firmly denied having rested its case.71 Before then, the petitioner never found it
appropriate to question on certiorari the Sandiganbayan’s denial of its 2nd motion which
prayed, inter alia, for the reopening of the case. This is a fatal defect in the petitioner’s case.

Although the denial of the petitioner’s first motion did not necessitate an immediate recourse to
the corrective writ of certiorari, the denial of the 2nd motion dictated a different course of action.
The petitioner’s non-observance of the proper procedure for the admission of the Bane
deposition, while seemingly innocuous, carried fatal implications for its case. Having been
rebuffed on its first attempt to have the Bane deposition adopted in Civil Case No. 0009, and
without seeking reconsideration of the denial, the petitioner presented its other pieces of
evidence and eventually rested its case. This time, the petitioner forgot about the Bane
deposition and so failed to include that piece of evidence in its formal offer of evidence.

More than two years later, the petitioner again tried to squeeze in the Bane deposition into its
case. In resolving the petitioner’s motion for reconsideration of the Sandiganbayan’s 2000
resolution, the Sandiganbayan held that the Bane deposition has "become part and parcel" of
Civil Case No. 0009. This pronouncement has obscured the real status of the Bane deposition as
evidence (considering that, earlier, the Sandiganbayan already denied the petitioner’s attempt to
adopt the Bane deposition as evidence in Civil Case No. 0009 for the deponent cannot be cross-
examined in court). Nevertheless, the Sandiganbayan ultimately denied the petitioner’s motion to
reopen the case. Having judicially admitted the resting of its case, the petitioner should have
already questioned the denial of its 2nd motion by way of certiorari, since the denial of its attempt
to reopen the case effectively foreclosed all avenues available to it for the consideration of the
Bane deposition. Instead of doing so, however, the petitioner allowed the 60-day
reglementary period, under Section 4, Rule 65 of the Rules of Court, to lapse, and
proceeded to file its 3rd motion.

Significantly, the petitioner changed its legal position in its 3rd motion by denying having rested
its case and insisting on the introduction of the Bane deposition. Rebuffed once more, the
petitioner filed the present petition, inviting our attention to the Sandiganbayan’s
resolutions,72 which allegedly gave it "mixed signals."73 By pointing to these resolutions, ironically,
even the petitioner impliedly recognized that they were then already ripe for review on certiorari.
What the petitioner should have realized was that its 2nd motion unequivocally aimed to reopen
the case for the introduction of further evidence consisting of the Bane deposition. Having
been ultimately denied by the court, the petitioner could not have been prevented from taking the
proper remedy notwithstanding any perceived ambiguity in the resolutions.

On the other end, though, there was nothing intrinsically objectionable in the petitioner’s motion
to reopen its case before the court ruled on its formal offer of evidence. The Rules of Court does
not prohibit a party from requesting the court to allow it to present additional evidence even after
it has rested its case. Any such opportunity, however, for the ultimate purpose of the admission
of additional evidence is already addressed to the sound discretion of the court. It is from the
prism of the exercise of this discretion that the Sandiganbayan’s refusal to reopen the case (for
the purpose of introducing, "marking and offering" additional evidence) should be viewed. We
can declare this Sandiganbayan action invalid if it had acted with grave abuse of discretion.

III. The Sandiganbayan gravely abused its discretion in ultimately refusing to reopen the
case for the purpose of introducing and admitting in evidence the Bane deposition

The basis for a motion to reopen a case to introduce further evidence is Section 5, Rule 30 of the
Rules of Court, which reads:

Sec. 5. Order of trial. – Subject to the provisions of section 2 of Rule 31, and unless the court for
special reasons otherwise directs, the trial shall be limited to the issues stated in the pre-trial
order and shall proceed as follows:
 xxxx

(f) The parties may then respectively adduce rebutting evidence only, unless the court, for good
reasons and in the furtherance of justice, permits them to adduce evidence upon their
original case[.] [emphases ours]

Under this rule, a party who has the burden of proof must introduce, at the first instance, all the
evidence he relies upon74 and such evidence cannot be given piecemeal.75 The obvious rationale
of the requirement is to avoid injurious surprises to the other party and the consequent delay in
the administration of justice.76

A party’s declaration of the completion of the presentation of his evidence prevents him from
introducing further evidence; 77 but where the evidence is rebuttal in character, whose necessity,
for instance, arose from the shifting of the burden of evidence from one party to the other; 78 or
where the evidence sought to be presented is in the nature of newly discovered evidence,79 the
party’s right to introduce further evidence must be recognized. Otherwise, the aggrieved
party may avail of the remedy of certiorari.

Largely, the exercise of the court’s discretion80 under the exception of Section 5(f), Rule 30 of the
Rules of Court depends on the attendant facts – i.e., on whether the evidence would qualify as
a "good reason" and be in furtherance of "the interest of justice." For a reviewing court to
properly interfere with the lower court’s exercise of discretion, the petitioner must show that the
lower court’s action was attended by grave abuse of discretion. Settled jurisprudence has defined
this term as the capricious and whimsical exercise of judgment, equivalent to lack of jurisdiction;
or, the exercise of power in an arbitrary manner by reason of passion, prejudice, or personal
hostility, so patent or so gross as to amount to an evasion of a positive duty, to a virtual refusal to
perform the mandated duty, or to act at all in contemplation of the law. 81 Grave abuse of
discretion goes beyond the bare and unsupported imputation of caprice, whimsicality or
arbitrariness, and beyond allegations that merely constitute errors of judgment 82 or mere abuse of
discretion.83

In Lopez v. Liboro,84 we had occasion to make the following pronouncement:

After the parties have produced their respective direct proofs, they are allowed to offer rebutting
evidence only, but, it has been held, the court, for good reasons, in the furtherance of justice,
may permit them to offer evidence upon their original case, and its ruling will not be disturbed in
the appellate court where no abuse of discretion appears. So, generally, additional evidence is
allowed when it is newly discovered, or where it has been omitted through inadvertence or
mistake, or where the purpose of the evidence is to correct evidence previously offered. The
omission to present evidence on the testator's knowledge of Spanish had not been deliberate. It
was due to a misapprehension or oversight. (citations omitted; emphases ours)

Likewise, in Director of Lands v. Roman Archbishop of Manila,85 we ruled:

The strict rule is that the plaintiff must try his case out when he commences. Nevertheless, a
relaxation of the rule is permitted in the sound discretion of the court. "The proper rule for the
exercise of this discretion," it has been said by an eminent author, "is, that material testimony
should not be excluded because offered by the plaintiff after the defendant has rested,
although not in rebuttal, unless it has been kept back by a trick, and for the purpose of
deceiving the defendant and affecting his case injuriously."

These principles find their echo in Philippine remedial law. While the general rule is rightly
recognized, the Code of Civil Procedure authorizes the judge "for special reasons," to change the
order of the trial, and "for good reason, in the furtherance of justice," to permit the parties "to offer
evidence upon their original case." These exceptions are made stronger when one considers the
character of registration proceedings and the fact that where so many parties are involved, and
action is taken quickly and abruptly, conformity with precise legal rules should not always be
expected. Even at the risk of violating legal formulæ, an opportunity should be given to
parties to submit additional corroborative evidence in support of their claims of title, if the
ends of justice so require. (emphases ours)

In his commentaries, Chief Justice Moran had this to say:

However, the court for good reasons, may, in the furtherance of justice, permit the parties to offer
evidence upon their original case, and its ruling will not be disturbed where no abuse of
discretion appears, Generally, additional evidence is allowed when x x x; but it may be
properly disallowed where it was withheld deliberately and without justification.86

The weight of the exception is also recognized in foreign jurisprudence. 87

Under these guidelines, we hold that the Sandiganbayan gravely abused its discretion in refusing
to reopen the case. Instead of squarely ruling on the petitioner’s 2nd motion to avoid any
uncertainty on the evidentiary status of the Bane deposition, the Sandiganbayan’s action actually
left the petitioner’s concern in limbo by considering the petitioner’s motion "redundant." This is
tantamount to a refusal to undertake a positive duty as mandated by the circumstances and is
equivalent to an act outside the contemplation of law.

It has not escaped our notice that at the time the petitioner moved to re-open its case, the
respondents had not yet even presented their evidence in chief. The respondents, therefore,
would not have been prejudiced by allowing the petitioner’s introduction of the Bane deposition,
which was concededly omitted "through oversight."88 The higher interest of substantial justice, of
course, is another consideration that cannot be taken lightly. 89

In light of these circumstances, the Sandiganbayan should not have perfunctorily applied Section
5, Rule 30 of the Rules of Court on the petitioner’s request to reopen the case for the submission
of the Bane deposition.

On the basis of this conclusion, a remand of this case should follow as a matter of course. The
state of the parties’ submissions and the delay that has already attended this aspect of Civil
Case No. 0009, however, dictate against this obvious course of action. At this point, the parties
have more than extensively argued for or against the admission of the Bane deposition. Civil
Case No. 0009 is a 25-year old sequestration case that is now crying out for complete resolution.
Admissibility, too, is an issue that would have again been raised on remand and would surely
stare us in the face after remand.90 We are thus left with no choice but to resolve the issue of
admissibility of the Bane deposition here and now.

IV. The admissibility of the Bane deposition

IV (a). The consolidation of Civil Case No. 0009 and Civil Case No. 0130 did not dispense
with the usual requisites of admissibility

In support of its 3rd motion, the petitioner argues that the Bane deposition can be admitted in
evidence without observing the provisions of Section 47, Rule 130 of the Rules of Court. 91 The
petitioner claims that in light of the prior consolidation of Civil Case No. 0009 and Civil Case No.
0130, among others,92 the "former case or proceeding" that Section 47, Rule 130 speaks of no
longer exists.

Rule 31 of the old Rules of Court93 – the rule in effect at the time Civil Case Nos. 0009 and 0130
were consolidated – provided that:
 Rule 31
Consolidation or Severance

Section 1. Consolidation. – When actions involving a common question of law or fact are pending
before the court, it may order a joint hearing or trial of any or all the matters in issue in the
actions; it may order all the actions consolidated; and it may make such orders concerning
proceedings therein as may tend to avoid unnecessary costs or delay. 94 (emphases ours)

Consolidation is a procedural device granted to the court as an aid in deciding how cases in its
docket are to be tried so that the business of the court may be dispatched expeditiously and with
economy while providing justice to the parties. To promote this end, the rule permits the
consolidation and a single trial of several cases in the court’s docket, or the consolidation of
issues within those cases.95

A reading of Rule 31 of the Rules of Court easily lends itself to two observations. First, Rule 31 is
completely silent on the effect/s of consolidation on the cases consolidated; on the parties and
the causes of action involved; and on the evidence presented in the consolidated cases. Second,
while Rule 31 gives the court the discretion either to order a joint hearing or trial, or to order the
actions consolidated, jurisprudence will show that the term "consolidation" is used generically
and even synonymously with joint hearing or trial of several causes.96 In fact, the title
"consolidation" of Rule 31 covers all the different senses of consolidation, as discussed below.

These observations are not without practical reason. Considering that consolidation is basically a
function given to the court, the latter is in the best position to determine for itself (given the nature
of the cases, the complexity of the issues involved, the parties affected, and the court’s capability
and resources vis-à-vis all the official business pending before it, among other things) what
"consolidation" will bring, bearing in mind the rights of the parties appearing before it.

To disregard the kind of consolidation effected by the Sandiganbayan on the simple and
convenient premise that the deposition-taking took place after the Sandiganbayan ordered the
consolidation is to beg the question. It is precisely the silence of our Rules of Procedure and the
dearth of applicable case law on the effect of "consolidation" that strongly compel this Court to
determine the kind of "consolidation" effected to directly resolve the very issue of admissibility in
this case.

In the context of legal procedure, the term "consolidation" is used in three different senses: 97

(1) Where all except one of several actions are stayed until one is tried, in which case the
judgment in the one trial is conclusive as to the others. This is not actually consolidation
but is referred to as such. (quasi-consolidation)98

(2) Where several actions are combined into one, lose their separate identity, and
become a single action in which a single judgment is rendered. This is illustrated by a
situation where several actions are pending between the same parties stating claims
which might have been set out originally in one complaint. (actual consolidation)99

(3) Where several actions are ordered to be tried together but each retains its separate
character and requires the entry of a separate judgment. This type of consolidation does
not merge the suits into a single action, or cause the parties to one action to be parties to
the other. (consolidation for trial)100

Considering that the Sandiganbayan’s order 101 to consolidate several incident cases does not at
all provide a hint on the extent of the court’s exercise of its discretion as to the effects of the
consolidation it ordered – in view of the function of this procedural device to principally aid the
court itself in dealing with its official business – we are compelled to look deeper into the
voluminous records of the proceedings conducted below. We note that there is nothing that
would even suggest that the Sandiganbayan in fact intended a merger of causes of action,
parties and evidence.102 To be sure, there would have been no need for a motion to adopt (which
did not remain unopposed) the testimonies in the incident cases had a merger actually resulted
from the order of consolidation, for in that case, the Sandiganbayan can already take judicial
notice of the same.

Significantly, even the petitioner itself viewed consolidation, at most, to be merely a consolidation
for trial.103 Accordingly, despite the consolidation in 1993, the petitioner acceded to the
Sandiganbayan’s 1998 Resolution (which denied the petitioner’s 1st Motion on the ground that
the witnesses, whose testimony in the incident cases is sought to be adopted, "are not available
for cross-examination in" the Sandiganbayan) by presenting these other witnesses again in the
main case, so that the respondents can cross-examine them.

These considerations run counter to the conclusion that the Sandiganbayan’s order of
consolidation had actually resulted in the complete merger of the incident cases with the main
case, in the sense of actual consolidation, and that the parties in these consolidated cases had
(at least constructively) been aware of and had allowed actual consolidation without objection. 104

Considering, too, that the consolidated actions were originally independent of one another and
the fact that in the present case the party respondents to Civil Case No. 0009 (an action for
reconveyance, accounting, restitution and damages) are not parties to Civil Case No. 0130 (a
special civil action filed by an ETPI stockholder involving a corporate squabble within ETPI), the
conclusion that the Sandiganbayan in fact intended an actual consolidation and, together with
the parties affected,105 acted towards that end - where the actions become fused and
unidentifiable from one another and where the evidence appreciated in one action is also
appreciated in another action – must find support in the proceedings held below. This is
particularly true in a case with the magnitude and complexity of the present case. Otherwise, to
impose upon the respondents the effects of an actual consolidation (which find no clear support
in the provisions of the Rules of Court, jurisprudence, 106 and even in the proceedings before the
Sandiganbayan itself and despite the aforementioned considerations) results in an outright
deprivation of the petitioner’s right to due process. We reach this conclusion especially where the
evidence sought to be admitted is not simply a testimony taken in one of the several cases, but a
deposition upon oral examination taken in another jurisdiction and whose admission is governed
by specific provisions on our rules on evidence.

We stress on this point, too, that while the Sandiganbayan ordered the consolidation in 1993
(that is, before the deposition was taken), neither does the Pre-Trial Order 107 issued by the
Sandiganbayan in 1997 in Civil Case No. 0009 contain any reference, formal or substantive, to
Civil Case No. 0130.108 Interestingly, in its Pre-Trial Brief dated August 30, 1996, 109 the petitioner
even made a representation to present Bane as one of its witnesses.

IV (b). Use of deposition under Section 4, Rule 23 and as a former testimony under
Section 47, Rule 130

Since the present consolidation did not affect Civil Case No. 0130 as an original, albeit incidental,
case, the admissibility of the Bane deposition cannot avoid being measured against the
requirements of Section 47, Rule 130 of the Rules of Court – the rule on the admissibility of
testimonies or deposition taken in a different proceeding. In this regard, the petitioner argues that
Section 4, Rule 23 of the Rules of Court (then Rule 24) 110 must, at any rate, prevail over Section
47, Rule 130111 of the same Rules.

At the outset, we note that when the petitioner’s motion to adopt the testimonies taken in the
incident cases drew individual oppositions from the respondents, the petitioner represented to
the Sandiganbayan its willingness to comply with the provisions of Section 47, Rule 130 of the
Rules of Court,112 and, in fact, again presented some of the witnesses. The petitioner’s about-face
two years thereafter even contributed to the Sandiganbayan’s own inconsistency on how to treat
the Bane deposition, in particular, as evidence.

Section 4, Rule 23 of the Rules of Court on "Deposition Pending Action" (deposition de bene
esse) provides for the circumstances when depositions may be used in the trial, or at the hearing
of a motion or an interlocutory proceeding.

SEC. 4. Use of depositions. — At the trial or upon the hearing of a motion or an interlocutory
proceeding, any part or all of a deposition, so far as admissible under the rules of evidence,
may be used against any party who was present or represented at the taking of the deposition or
who had due notice thereof, in accordance with any one of the following provisions:

xxxx

(c) The deposition of a witness, whether or not a party, may be used by any party for any
purpose if the court finds: (1) that the witness is dead; or (2) that the witness resides at a
distance more than one hundred (100) kilometers from the place of trial or hearing, or is out of
the Philippines, unless it appears that his absence was procured by the party offering the
deposition; or (3) that the witness is unable to attend or testify because of age, sickness,
infirmity, or imprisonment; or (4) that the party offering the deposition has been unable to procure
the attendance of the witness by subpoena; or (5) upon application and notice, that such
exceptional circumstances exist as to make it desirable, in the interest of justice and with due
regard to the importance of presenting the testimony of witnesses orally in open court, to allow
the deposition to be used[.] [emphasis ours]

On the other hand, Section 47, Rule 130 of the Rules of Court provides:

SEC. 47. Testimony or deposition at a former proceeding. – The testimony or deposition of a

witness deceased or unable to testify, given in a former case or proceeding, judicial or
administrative, involving the same parties and subject matter, may be given in evidence against
the adverse party who had the opportunity to cross-examine him.

A plain reading of Rule 23 of the Rules of Court readily rejects the petitioner’s position that the
Bane deposition can be admitted into evidence without observing the requirements of Section 47,
Rule 130 of the Rules of Court.

Before a party can make use of the deposition taken at the trial of a pending action, Section 4,
Rule 23 of the Rules of Court does not only require due observance of its sub-paragraphs (a) to
(d); it also requires, as a condition for admissibility, compliance with "the rules on evidence."
Thus, even Section 4, Rule 23 of the Rules of Court makes an implied reference to Section 47,
Rule 130 of the Rules of Court before the deposition may be used in evidence. By reading Rule
23 in isolation, the petitioner failed to recognize that the principle conceding admissibility to a
deposition under Rule 23 should be consistent with the rules on evidence under Section 47, Rule
130.113 In determining the admissibility of the Bane deposition, therefore, reliance cannot be given
on one provision to the exclusion of the other; both provisions must be considered. This is
particularly true in this case where the evidence in the prior proceeding does not simply refer to a
witness’ testimony in open court but to a deposition taken under another and farther jurisdiction.

A common thread that runs from Section 4, Rule 23 of the Rules of Court and Section 47, Rule
130 of the same Rules is their mutual reference to depositions.

A deposition is chiefly a mode of discovery whose primary function is to supplement the

pleadings for the purpose of disclosing the real points of dispute between the parties and
affording an adequate factual basis during the preparation for trial. 114 Since depositions are
principally made available to the parties as a means of informing themselves of all the relevant
facts, depositions are not meant as substitute for the actual testimony in open court of a party or
witness. Generally, the deponent must be presented for oral examination in open court at the trial
or hearing. This is a requirement of the rules on evidence under Section 1, Rule 132 of the Rules
of Court.115

Examination to be done in open court. — The examination of witnesses presented in a trial or

hearing shall be done in open court, and under oath or affirmation. Unless the witness is
incapacitated to speak, or the question calls for a different mode of answer, the answers of the
witness shall be given orally.

Indeed, any deposition offered to prove the facts set forth therein, in lieu of the actual oral
testimony of the deponent in open court, may be opposed by the adverse party and excluded
under the hearsay rule – i.e., that the adverse party had or has no opportunity to cross-examine
the deponent at the time that his testimony is offered. That opportunity for cross-examination was
afforded during the taking of the deposition alone is no argument, as the opportunity for cross-
examination must normally be accorded a party at the time that the testimonial evidence is
actually presented against him during the trial or hearing of a case. 116 However, under certain
conditions and for certain limited purposes laid down in Section 4, Rule 23 of the Rules of Court,
the deposition may be used without the deponent being actually called to the witness stand. 117

Section 47, Rule 130 of the Rules of Court is an entirely different provision. While a former
testimony or deposition appears under the Exceptions to the Hearsay Rule, the classification
of former testimony or deposition as an admissible hearsay is not universally conceded. 118 A
fundamental characteristic of hearsay evidence is the adverse party’s lack of opportunity to
cross-examine the out-of-court declarant. However, Section 47, Rule 130 explicitly requires, inter
alia, for the admissibility of a former testimony or deposition that the adverse party must have
had an opportunity to cross-examine the witness or the deponent in the prior proceeding.

This opportunity to cross-examine though is not the ordinary cross-examination 119 afforded an

adverse party in usual trials regarding "matters stated in the direct examination or connected
therewith." Section 47, Rule 130 of the Rules of Court contemplates a different kind of cross-
examination, whether actual or a mere opportunity, whose adequacy depends on the requisite
identity of issues in the former case or proceeding and in the present case where the former
testimony or deposition is sought to be introduced.

Section 47, Rule 130 requires that the issues involved in both cases must, at least, be
substantially the same; otherwise, there is no basis in saying that the former statement was - or
would have been - sufficiently tested by cross-examination or by an opportunity to do so. 120 (The
requirement of similarity though does not mean that all the issues in the two proceedings should
be the same.121 Although some issues may not be the same in the two actions, the admissibility
of a former testimony on an issue which is similar in both actions cannot be questioned. 122 )

These considerations, among others, make Section 47, Rule 130 a distinct rule on evidence and
therefore should not be confused with the general provisions on deposition under Rule 23 of the
Rules of Court. In other words, even if the petitioner complies with Rule 23 of the Rules of Court
on the use of depositions, the observance of Section 47, Rule 130 of the Rules of Court cannot
simply be avoided or disregarded.

Undisputably, the Sandiganbayan relied on the Bane deposition, taken in Civil Case No. 0130,
for purposes of this very same case. Thus, what the petitioner established and what the
Sandiganbayan found, for purposes of using the Bane deposition, refer only to the circumstances
laid down under Section 4(c), Rule 23 of the Rules of Court, not necessarily to those of Section
47, Rule 130 of the Rules of Court, as a distinct rule on evidence that imposes further
requirements in the use of depositions in a different case or proceeding. In other words, the prior
use of the deposition under Section 4(c), Rule 23 cannot be taken as compliance with Section
47, Rule 130 which considers the same deposition as hearsay, unless the requisites for its
admission under this rule are observed. The aching question is whether the petitioner complied
with the latter rule.

Section 47, Rule 130 of the Rules of Court lays down the following requisites for the admission of
a testimony or deposition given at a former case or proceeding.

1. The testimony or deposition of a witness deceased or otherwise unable to testify;

2. The testimony was given in a former case or proceeding, judicial or administrative;

3. Involving the same parties;

4. Relating to the same matter;

5. The adverse party having had the opportunity to cross-examine him. 123

The reasons for the admissibility of testimony or deposition taken at a former trial or proceeding
are the necessity for the testimony and its trustworthiness. 124 However, before the former
testimony or deposition can be introduced in evidence, the proponent must first lay the proper
predicate therefor,125 i.e., the party must establish the basis for the admission of the Bane
deposition in the realm of admissible evidence. This basis is the prior issue that we must now
examine and resolve.

IV (c). Unavailability of witness

For the admission of a former testimony or deposition, Section 47, Rule 130 of the Rules of Court
simply requires, inter alia, that the witness or deponent be "deceased or unable to testify." On the
other hand, in using a deposition that was taken during the pendency of an action, Section 4,
Rule 23 of the Rules of Court provides several grounds that will justify dispensing with the actual
testimony of the deponent in open court and specifies, inter alia, the circumstances of the
deponent’s inability to attend or testify, as follows:

(3) that the witness is unable to attend or testify because of age, sickness, infirmity, or
imprisonment[.] [emphases ours]126

The phrase "unable to testify" appearing in both Rule 23 and Rule 130 of the Rules of Court
refers to a physical inability to appear at the witness stand and to give a testimony. 127 Hence
notwithstanding the deletion of the phrase "out of the Philippines," which previously appeared in
Section 47, Rule 130 of the Rules of Court, absence from jurisdiction128 - the petitioner’s excuse
for the non-presentation of Bane in open court - may still constitute inability to testify under the
same rule. This is not to say, however, that resort to deposition on this instance of unavailability
will always be upheld. Where the deposition is taken not for discovery purposes, but to
accommodate the deponent, then the deposition should be rejected in evidence. 129

Although the testimony of a witness has been given in the course of a former proceeding
between the parties to a case on trial, this testimony alone is not a ground for its admission in
evidence. The witness himself, if available, must be produced in court as if he were testifying de
novo since his testimony given at the former trial is mere hearsay. 130 The deposition of a witness,
otherwise available, is also inadmissible for the same reason.

Indeed, the Sandiganbayan’s reliance on the Bane deposition in the other case (Civil Case No.
0130) is an argument in favor of the requisite unavailability of the witness. For purposes of
the present case (Civil Case No. 0009), however, the Sandiganbayan would have no basis to
presume, and neither can or should we, that the previous condition, which previously allowed the
use of the deposition, remains and would thereby justify the use of the same deposition
in another case or proceeding, even if the other case or proceeding is before the same court.
Since the basis for the admission of the Bane deposition, in principle, being necessity, 131 the
burden of establishing its existence rests on the party who seeks the admission of the evidence.
This burden cannot be supplanted by assuming the continuity of the previous condition or
conditions in light of the general rule against the non-presentation of the deponent in court. 132

IV (d). The requirement of opportunity of the adverse party to cross-examine; identity of

parties; and identity of subject matter

The function of cross-examination is to test the truthfulness of the statements of a witness made
on direct examination.133 The opportunity of cross-examination has been regarded as an essential
safeguard of the accuracy and completeness of a testimony. In civil cases, the right of cross-
examination is absolute, and is not a mere privilege of the party against whom a witness may be
called.134 This right is available, of course, at the taking of depositions, as well as on the
examination of witnesses at the trial. The principal justification for the general exclusion of
hearsay statements and for the admission, as an exception to the hearsay rule, of reported
testimony taken at a former hearing where the present adversary was afforded the opportunity to
cross-examine, is based on the premise that the opportunity of cross-examination is an essential
safeguard135 against falsehoods and frauds.

In resolving the question of whether the requirement of opportunity to cross-examine has been
satisfied, we have to consider first the required identity of parties as the present opponent to the
admission of the Bane deposition to whom the opportunity to cross-examine the deponent is
imputed may not after all be the same "adverse party" who actually had such opportunity.

To render the testimony of a witness admissible at a later trial or action, the parties to the first
proceeding must be the same as the parties to the later proceeding. Physical identity, however,
is not required; substantial identity136 or identity of interests137 suffices, as where the subsequent
proceeding is between persons who represent the parties to the prior proceeding by privity in
law, in blood, or in estate. The term "privity" denotes mutual or successive relationships to the
same rights of property.138

In the present case, the petitioner failed to impute, much less establish, the identity of interest or
privity between the then opponent, Africa, and the present opponents, the respondents. While
Africa is the son of the late respondent Jose Africa, at most, the deposition should be admissible
only against him as an ETPI stockholder who filed the certiorari petition docketed as Civil Case
No. 0130 (and, unavoidably, as successor-in-interest of the late respondent Jose Africa). While
Africa and the respondents are all ETPI stockholders, this commonality does not establish at all
any privity between them for purposes of binding the latter to the acts or omissions of the former
respecting the cross-examination of the deponent. The sequestration of their shares does not
result in the integration of their rights and obligations as stockholders which remain distinct and
personal to them, vis-a-vis other stockholders.139

IV (d1). The respondents’ notice of taking of Bane deposition is insufficient evidence of waiver

The petitioner staunchly asserts that the respondents have waived their right to cross-examine
the deponent for their failure to appear at the deposition-taking despite individual notices
previously sent to them.140

In its first Notice to Take Oral Deposition of Mr. Maurice V. Bane dated August 30, 1996, 141 the
petitioner originally intended to depose Mr. Bane on September 25-26 1996. Because it failed to
specify in the notice the purpose for taking Mr. Bane’s deposition, the petitioner sent a Second
Amended Notice to Take Deposition of Mr. Maurice V. Bane Upon Oral Examination where it
likewise moved the scheduled deposition-taking to October 23-26, 1996.
The records show that Africa moved several times for protective orders against the intended
deposition of Maurice Bane.142 On the other hand, among the respondents, only respondent
Enrile appears to have filed an Opposition143 to the petitioner’s first notice, where he squarely
raised the issue of reasonability of the petitioner’s nineteen-day first notice. While the
Sandiganbayan denied Africa’s motion for protective orders, 144 it strikes us that no ruling was ever
handed down on respondent Enrile’s Opposition. 145

It must be emphasized that even under Rule 23, the admission of the deposition upon oral
examination is not simply based on the fact of prior notice on the individual sought to be bound
thereby. In Northwest Airlines v. Cruz, 146 we ruled that -

The provision explicitly vesting in the court the power to order that the deposition shall not be
taken connotes the authority to exercise discretion on the matter. However, the discretion
conferred by law is not unlimited. It must be exercised, not arbitrarily or oppressively, but in a
reasonable manner and in consonance with the spirit of he law. The courts should always see to
it that the safeguards for the protection of the parties and deponents are firmly maintained. As
aptly stated by Chief Justice Moran:

. . . . (T)his provision affords the adverse party, as well as the deponent, sufficient protection
against abuses that may be committed by a party in the exercise of his unlimited right to
discovery. As a writer said: "Any discovery involves a prying into another person's affairs —
prying that is quite justified if it is to be a legitimate aid to litigation, but not justified if it is not to be
such an aid." For this reason, courts are given ample powers to forbid discovery which is
intended not as an aid to litigation, but merely to annoy, embarrass or oppress either the
deponent or the adverse party, or both. (emphasis ours)

In the present case, not only did the Sandiganbayan fail to rule on respondent Enrile’s
Opposition (which is equally applicable to his co-respondents), it also failed to provide even the
bare minimum "safeguards for the protection of," (more so) non-parties, 147 and to ensure that
these safeguards are firmly maintained. Instead, the Sandiganbayan simply bought the
petitioner’s assertion (that the taking of Bane deposition is a matter of right) and treated the
lingering concerns – e.g., reasonability of the notice; and the non-party status of the respondents
in Civil Case No. 0130 - at whose incident (docketed as G.R. No. 107789) the Bane deposition
was taken - rather perfunctorily to the prejudice of the respondents.

In conjunction with the order of consolidation, the petitioner’s reliance on the prior notice on the
respondents, as adequate opportunity for cross-examination, cannot override the non-party
status of the respondents in Civil Case No. 0130 – the effect of consolidation being merely for
trial. As non-parties, they cannot be bound by proceedings in that case. Specifically, they cannot
be bound by the taking of the Bane deposition without the consequent impairment of their right of
cross-examination.148 Opportunity for cross-examination, too, even assuming its presence, cannot
be singled out as basis for the admissibility of a former testimony or deposition since such
admissibility is also anchored on the requisite identity of parties. To reiterate, although the
Sandiganbayan considered the Bane deposition in resolving Civil Case No. 0130, its action was
premised on Africa’s status as a party in that case where the Bane deposition was taken.

Corollarily, the idea of privity also permeates Rule 23 of the Rules of Court through its Section 5
which provides:

Effect of substitution of parties. — Substitution of parties does not affect the right to use
depositions previously taken; and, when an action has been dismissed and another action
involving the same subject is afterward brought between the same parties or their
representatives or successors in interest, all depositions lawfully taken and duly filed in the
former action may be used in the latter as if originally taken therefor. [italics and underscoring
ours]
In light of these considerations, we reject the petitioner’s claim that the respondents waived their
right to cross-examination when they failed to attend the taking of the Bane deposition.
Incidentally, the respondents’ vigorous insistence on their right to cross-examine the deponent
speaks loudly that they never intended any waiver of this right.

Interestingly, the petitioner’s notice of the deposition-taking relied on Rule 23 of the Rules of
Court. Section 15 of this rule reads:

Deposition upon oral examination; notice; time and place. — A party desiring to take the
deposition of any person upon oral examination shall give reasonable notice in writing to every
other party to the action. The notice shall state the time and place for taking the deposition and
the name and address of each person to be examined, if known, and if the name is not known, a
general description sufficient to identify him or the particular class or group to which he belongs.
On motion of any party upon whom the notice is served, the court may for cause shown enlarge
or shorten the time.

Under this provision, we do not believe that the petitioner could reasonably expect that the
individual notices it sent to the respondents would be sufficient to bind them to the conduct of the
then opponent’s (Africa’s) cross-examination since, to begin with, they were not even parties to
the action. Additionally, we observe that in the notice of the deposition taking, conspicuously
absent was any indication sufficient to forewarn the notified persons that their inexcusable failure
to appear at the deposition taking would amount to a waiver of their right of cross-examination,
without prejudice to the right of the respondents to raise their objections at the appropriate
time.149 We would be treading on dangerous grounds indeed were we to hold that one not a
party to an action, and neither in privity nor in substantial identity of interest with any of
the parties in the same action, can be bound by the action or omission of the latter, by the
mere expedient of a notice. Thus, we cannot simply deduce a resultant waiver from the
respondents’ mere failure to attend the deposition-taking despite notice sent by the petitioner.

Lastly, we see no reason why the Bane deposition could not have been taken earlier in Civil
Case No. 0009 – the principal action where it was sought to be introduced – while Bane was still
here in the Philippines. We note in this regard that the Philippines was no longer under the
Marcos administration and had returned to normal democratic processes when Civil Case No.
0009 was filed. In fact, the petitioner’s notice itself states that the "purpose of the deposition is for
Mr. Maurice Bane to identify and testify on the facts set forth in his Affidavit," which Mr. Bane had
long executed in 1991 in Makati, Metro Manila.150 Clearly, a deposition could then have been
taken - without compromising the respondents’ right to cross-examine a witness against them -
considering that the principal purpose of the deposition is chiefly a mode of discovery. These, to
our mind, are avoidable omissions that, when added to the deficient handling of the present
matter, add up to the gross deficiencies of the petitioner in the handling of Civil Case No. 0009.

After failing to take Bane’s deposition in 1991 and in view of the peculiar circumstances of this
case, the least that the petitioner could have done was to move for the taking of the Bane
deposition and proceed with the deposition immediately upon securing a favorable ruling
thereon. On that occasion, where the respondents would have a chance to be heard, the
respondents cannot avoid a resultant waiver of their right of cross-examination if they still fail to
appear at the deposition-taking. Fundamental fairness dictates this course of action. It must be
stressed that not only were the respondents non-parties to Civil Case No. 0130, they likewise
have no interest in Africa’s certiorari petition asserting his right as an ETPI stockholder.

Setting aside the petitioner’s flip-flopping on its own representations, 151 this Court can only
express dismay on why the petitioner had to let Bane leave the Philippines before taking his
deposition despite having knowledge already of the substance of what he would testify on.
Considering that the testimony of Bane is allegedly a "vital cog" in the petitioner’s case against
the respondents, the Court is left to wonder why the petitioner had to take the deposition in an
incident case (instead of the main case) at a time when it became the technical right of the
petitioner to do so.

V. The petitioner cannot rely on principle of judicial notice

The petitioner also claims that since the Bane deposition had already been previously introduced
and admitted in Civil Case No. 0130, then the Sandiganbayan should have taken judicial notice
of the Bane deposition as part of its evidence.

Judicial notice is the cognizance of certain facts that judges may properly take and act on without
proof because these facts are already known to them. 152 Put differently, it is the assumption by a
court of a fact without need of further traditional evidentiary support. The principle is based on
convenience and expediency in securing and introducing evidence on matters which are not
ordinarily capable of dispute and are not bona fide disputed.153

The foundation for judicial notice may be traced to the civil and canon law maxim, manifesta (or
notoria) non indigent probatione.154 The taking of judicial notice means that the court will dispense
with the traditional form of presentation of evidence. In so doing, the court assumes that the
matter is so notorious that it would not be disputed.

The concept of judicial notice is embodied in Rule 129 of the Revised Rules on Evidence. Rule
129 either requires the court to take judicial notice, inter alia, of "the official acts of the x x x
judicial departments of the Philippines," 155 or gives the court the discretion to take judicial notice
of matters "ought to be known to judges because of their judicial functions." 156 On the other hand,
a party-litigant may ask the court to take judicial notice of any matter and the court may allow the
parties to be heard on the propriety of taking judicial notice of the matter involved. 157 In the
present case, after the petitioner filed its Urgent Motion and/or Request for Judicial Notice, the
respondents were also heard through their corresponding oppositions.

In adjudicating a case on trial, generally, courts are not authorized to take judicial notice of the
contents of the records of other cases, even when such cases have been tried or are pending in
the same court, and notwithstanding that both cases may have been tried or are actually pending
before the same judge.158 This rule though admits of exceptions.

As a matter of convenience to all the parties, a court may properly treat all or any part of the
original record of a case filed in its archives as read into the record of a case pending before it,
when, with the knowledge of, and absent an objection from, the adverse party, reference is
made to it for that purpose, by name and number or in some other manner by which it is
sufficiently designated; or when the original record of the former case or any part of it, is actually
withdrawn from the archives at the court's direction, at the request or with the consent of the
parties, and admitted as a part of the record of the case then pending.159

Courts must also take judicial notice of the records of another case or cases, where sufficient
basis exists in the records of the case before it, warranting the dismissal of the latter case. 160

The issue before us does not involve the applicability of the rule on mandatory taking of judicial
notice; neither is the applicability of the rule on discretionary taking of judicial notice seriously
pursued. Rather, the petitioner approaches the concept of judicial notice from a genealogical
perspective of treating whatever evidence offered in any of the "children" cases – Civil Case
0130 – as evidence in the "parent" case – Civil Case 0009 - or "of the whole family of
cases."161 To the petitioner, the supposed relationship of these cases warrants the taking of
judicial notice.

We strongly disagree. First, the supporting cases162 the petitioner cited are inapplicable either
because these cases involve only a single proceeding or an exception to the rule, which
proscribes the courts from taking judicial notice of the contents of the records of other
cases.163 Second, the petitioner’s proposition is obviously obnoxious to a system of orderly
procedure. The petitioner itself admits that the present case has generated a lot of cases, which,
in all likelihood, involve issues of varying complexity. If we follow the logic of the petitioner’s
argument, we would be espousing judicial confusion by indiscriminately allowing the admission of
evidence in one case, which was presumably found competent and relevant in another case,
simply based on the supposed lineage of the cases. It is the duty of the petitioner, as a party-
litigant, to properly lay before the court the evidence it relies upon in support of the relief it seeks,
instead of imposing that same duty on the court. We invite the petitioner’s attention to our
prefatory pronouncement in Lopez v. Sandiganbayan:164

Down the oft-trodden path in our judicial system, by common sense, tradition and the law, the
Judge in trying a case sees only with judicial eyes as he ought to know nothing about the facts of
the case, except those which have been adduced judicially in evidence. Thus, when the case is
up for trial, the judicial head is empty as to facts involved and it is incumbent upon the litigants to
the action to establish by evidence the facts upon which they rely. (emphasis ours)

We therefore refuse, in the strongest terms, to entertain the petitioner’s argument that we should
take judicial notice of the Bane deposition.

VI. Summation

To recapitulate, we hold that: (1) the Sandiganbayan’s denial of the petitioner’s 3rd motion –
the Motion to Admit Supplemental Offer of Evidence (Re: Deposition of Maurice Bane) – was a
legal error that did not amount to grave abuse of discretion; (2) the Sandiganbayan’s refusal to
reopen the case at the petitioner’s instance was tainted with grave abuse of discretion; and (3)
notwithstanding the grave abuse of discretion, the petition must ultimately fail as the Bane
deposition is not admissible under the rules of evidence. 165

VII. Refutation of Justice Carpio’s Last Minute Modified Dissent

At the last minute, Justice Carpio circulated a modified dissent, quoting the Bane deposition. His
covering note states:

I have revised my dissenting opinion to include the Bane deposition so that the Court and the
public will understand what the Bane deposition is all about. (underlining added)

In light of this thrust, a discussion refuting the modified dissent is in order.

First: Contents of the Bane deposition not an Issue. The dissent perfectly identified what is at
issue in this case – i.e., the admissibility of the Bane deposition. Admissibility is concerned with
the competence and relevance166 of the evidence, whose admission is sought. While the dissent
quoted at length the Bane deposition, it may not be amiss to point out that the relevance of the
Bane deposition (or, to adopt the dissent’s characterization, whether "Maurice V. Bane is a vital
witness") is not an issue here unless it can be established first that the Bane deposition is a
competent evidence.

Second: Misrepresentation of Cited Authority. The dissent insists that "in Philippine

Jurisprudence, the consolidation of cases merges the different actions into one and the rights of
the parties are adjudicated in a single judgment," citing Vicente J. Francisco. In our discussion on
consolidation, we footnoted the following in response to the dissent’s position, which we will
restate here for emphasis:

In the 1966 edition of Vicente J. Francisco’s Revised Rules of Court, Francisco wrote:
The effect of consolidation of actions is to unite and merge all of the different actions
consolidated into a single action, in the same manner as if the different causes of actions
involved had originally been joined in a single action, and the order of consolidation, if made by a
court of competent jurisdiction, is binding upon all the parties to the different actions until it is
vacated or set aside. After the consolidation there can be no further proceedings in the separate
actions, which are by virtue of the consolidation discontinued and superseded by a single action,
which should be entitled in such manner as the court may direct, and all subsequent proceedings
therein be conducted and the rights of the parties adjudicated in a single action (1 C.J.S., 113,
pp. 1371-1372).

At the very beginning of the discussion on consolidation of actions in the Corpus Juris
Secundum, the following caveat appears:

The term consolidation is used in three different senses. First, where several actions are
combined into one and lose their separate identity and become a single action in which a single
judgment is rendered; second, where all except one of several actions are stayed until one is
tried, in which case the judgment in the one is conclusive as to the others; third, where several
actions are ordered to be tried together but each retains its separate character and requires the
entry of a separate judgment. The failure to distinguish between these methods of procedure,
which are entirely distinct, the two latter, strictly speaking, not being consolidation, a fact which
has not always been noted, has caused some confusion and conflict in the cases. (1 C.J.S., 107,
pp. 1341-1342) (Emphasis added).

In defining the term "consolidation of actions," Francisco provided a colatilla that the term
"consolidation" is used in three different senses, citing 1 C.J.S. 1341 and 1 Am. Jur. 477
(Francisco, Revised Rules of Court, p. 348).

From the foregoing, it is clear that the dissent appears to have quoted Francisco’s statement out
of context. As it is, the issue of the effect of consolidation on evidence is at most an unsettled
matter that requires the approach we did in the majority’s discussion on consolidation. 167

Third: Misappreciation of the Purpose of Consolidation. The dissent then turns to the purpose of
consolidation – to "expeditiously settle the interwoven issues involved in the consolidated cases"
and "the simplification of the proceedings." It argues that this can only be achieved if the
repetition of the same evidence is dispensed with.

It is unfortunate that the dissent refuses to recognize the fact that since consolidation is primarily
addressed to the court concerned to aid it in dispatching its official business, it would be in
keeping with the orderly trial procedure if the court should have a say on what consolidation
would actually bring168 (especially where several cases are involved which have become
relatively complex). In the present case, there is nothing in the proceedings below that would
suggest that the Sandiganbayan or the parties themselves (the petitioner and the respondents)
had in mind a consolidation beyond joint hearing or trial. Why should this Court – which is not a
trial court – impose a purported effect that has no factual or legal grounds?

Fourth: The Due Process Consideration. The dissent argues that even if the consolidation only
resulted in a joint hearing or trial, the "respondents are still bound by the Bane deposition
considering that they were given notice of the deposition-taking." The issue here boils down to
one of due process – the fundamental reason why a hearsay statement (not subjected to the
rigor of cross-examination) is generally excluded in the realm of admissible evidence – especially
when read in light of the general rule that depositions are not meant as substitute for the actual
testimony, in open court, of a party or witness.

Respondent Enrile had a pending Opposition to the notice of deposition-taking (questioning the
reasonableness thereof – an issue applicable to the rest of the respondents) which the
Sandiganbayan failed to rule on. To make the Sandiganbayan’s omission worse, the
Sandiganbayan blindly relied on the petitioner’s assertion that the deposition-taking was a matter
of right and, thus, failed to address the consequences and/or issues that may arise from the
apparently innocuous statement of the petitioner (that it intends to use the Bane deposition in
Civil Case No. 0009, where only the respondents, and not Africa, are the parties). 169 There is
simply the absence of "due" in due process.

Fifth: Misstatement of the Sandiganbayan’s Action. The dissent repeatedly misstates that the
Sandiganbayan "granted" the request for the deposition-taking. For emphasis, the
Sandiganbayan did not "grant" the request since the petitioner staunchly asserted that the
deposition-taking was a matter of right. No one can deny the complexity of the issues that these
consolidated cases have reached. Considering the consolidation of cases of this nature, the most
minimum of fairness demands upon the petitioner to move for the taking of the Bane deposition
and for the Sandiganbayan to make a ruling thereon (including the opposition filed by respondent
Enrile which equally applies to his co-respondents). The burgeoning omission and failures that
have prevailed in this case cannot be cured by this Court without itself being guilty of violating the
constitutional guarantee of due process.

Sixth: Issues Posed and Resolved Go Beyond Technicalities. The above conclusions, contrary to
the petitioner’s claim, are not only matters of technicality. Admittedly, rules of procedure involve
technicality, to which we have applied the liberality that technical rules deserve. But the
resolution of the issues raised goes beyond pure or mere technicalities as the preceding
discussions show. They involve issues of due process and basic unfairness to the respondents,
particularly to respondent Enrile, who is portrayed in the Bane deposition to be acting in behalf of
the Marcoses so that these shares should be deemed to be those of the Marcoses. They
involved, too, principles upon which our rules of procedure are founded and which we cannot
disregard without flirting with the violation of guaranteed substantive rights and without risking the
disorder that these rules have sought to avert in the course of their evolution.

In the Court En Banc deliberations of December 6, 2011, the Court failed to arrive at a conclusive
decision because of a tie vote (7-7, with one Justice taking no part). The same vote resulted in
the re-voting of December 13, 2011. In this light, the ponencia is deemed sustained.

WHEREFORE, premises considered, we DISMISS the petition for lack of merit. No costs.

SO ORDERED.

ARTURO D. BRION
Associate Justice

WE CONCUR:
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 98376               August 16, 1991

PEOPLE OF THE PHILIPPINES, petitioners,

vs.
HON. BAYANI S. RIVERA, Judge, Branch 129 , Regional Trial Court of Kalookan City, and
WILFREDO L. EMBRANO, respondent.

The Solicitor General for petitioner.

Eduardo S. Rodriguez for private respondent.

NARVASA, J.:

The special civil action of certiorari at bar instituted in this Court to annul an order rendered by
the Regional Trial Court at Kalookan City, Branch 129, in a prosecution for arson docketed in that
Court as Criminal Case No. 28820 (87).

Accused in that case of arson is Wilfredo L. Sembrano. It is the prosecution's theory that he
wilfully caused the fire in the early morning of May 21, 1987 which totally burned and destroyed
the second and third floors of the "I Love You Restaurant and Sauna Bath" owned by Juanita L.
Tan, located at No. 2 L. Bustamante St. Kalookan City. 1

Among the witnesses presented by the Government to demonstrate Sembrano's culpability was
Benjamin Lee, a room boy of the restaurant and bath. Lee testified on direct examination at the
hearing of December 8, 1987. His testimony was essentially that Sembrano had run out of the
VIP room where the fire had started and refused to heed his (Lee's) call to stop. Lee took the
witness stand again on April 26, 1987 during which he was cross-examined by defense counsel,
gave additional evidence on redirect examination, was again questioned on recross-examination
by the same defense counsel, and thereafter allowed to step down. 2

The prosecution completed presentation of its evidence-in-chief in due course. But before it could
rest its case, and two (2) months or so after Benjamin Lee had completed his testimony, the
defendant's original counsel, Benjamin Formoso, withdrew his appearance and was substituted
by another attorney, Eduardo S. Rodriguez.  The latter then filed a motion on June 8, 1988 to
3

recall Benjamin Lee for further examination.  The ground relied upon by Atty. Rodriguez was
4

simply that after he had reviewed the record of Benjamin Lee's testimony, he came to the
conclusion that " there seems to be many points and questions that should have been asked but
were not profounded (sic) by the other defense counsel who conducted.. (the cross-
examination). It was on this averment, and counsel's reference to "the gravity of the offense
charge (sic)" and the need "to afford the accused full opportunity to defend himself," that Lee's
recall for further cross examination was sought to be justified. Over objections of the prosecution,
the Court  granted the motion.
5
Efforts were thereafter exerted to cause witness Benjamin Lee to again appear before the Court
for further cross-examination.  These efforts met with no success; and the trial had to be
1âwphi1

postponed several times. It appears that Lee had terminated his employment and moved
elsewhere without indicating his new address.

So, on October 1, 1990 the private prosecutor filed a "Manifestation and Motion" drawing
attention to the inability to procure the re-appearance of witness Lee for which "the prosecution
could not be held liable," and to the fact that "Lee has already been thoroughly examined by the
former defense counsel," and praying upon these premises "that the farther examination of
Benjamin Lee be dispensed with and ... the prosecution ... allowed to terminate the presentation
of its evidence."

By Order dated October 2, 1990,  the Trial Court denied the motion to dispense with the recall of
6

Benjamin Lee. In fact, it ordered the testimony of Benjamin Lee for the prosecution xx stricken off
the record for lack of complete cross-examination" because the witness could no longer be
found, and "the failure of counsel for the accused to further cross-examine the witness is not the
fault of the defense.
7

In the same order, the Court also set the "reception of further evidence for the prosecution, if
any, ... on October 23, 1990 xx as earlier scheduled." Subsequently, it denied the private
prosecutor's motion for reconsideration of the order.  Hence, the action at bar, instituted by the
8

Office of the Solicitor General.

The writ of certiorari prayed for will issue. The Trial Court acted with grave abuse of discretion in
authorizing the recall of witness Benjamin Lee over the objections of the prosecution, and in later
striking out said witness' testimony for want of further cross-examination.

There is no doubt that a Trial Court has discretion to grant leave for the recall of a witness. This
is clear from a reading of Section 9, Rule 132 of the Rules of Court, as amended,  viz.:
9

SEC. 9. Recalling witness.— After the examination of a witness by both sides has been
concluded, the witness cannot be recalled without leave of the court. The court will grant
or withhold leave in its discretion, as the interests of justice may require.

But obviously that discretion may not be exercised in a vacuum, as it were, entirely, isolated from
a particular set of attendant circumstances. The discretion to recall a witness is not properly
invoked or exercisable by an applicant's mere general statement that there is a need to recall a
witness "in the interest of justice," or "in order to afford a party full opportunity to present his
case," or that, as here, "there seems to be many points and questions that should have been
asked" in the earlier interrogation. To regard expressed generalities such as these as sufficient
ground for recall of witnesses would make the recall of witness no longer discretionary but
ministerial. Something more than the bare assertion of the need to propound additional questions
is essential before the Court's discretion may rightfully be exercised to grant or deny recall. There
must be a satisfactory showing of some concrete, substantial ground for the recall. There must
be a satisfactory showing on the movant's part, for instance, that particularly identified material
points were not covered in the cross-examination, or that particularly described vital documents
were not presented to the witness whose recall is prayed for, or that the cross-examination was
conducted in so inept a manner as to result in a virtual absence thereof. Absent such particulars,
to repeat, there would be no foundation for a trial court to authorize the recall of any witness.

In the case at bar, the respondent Trial Court granted the defendant's motion for recall on
nothing more than said movant's general claim that certain questions — unspecified, it must be
stressed — had to be asked. In doing so, it acted without basis, exercised power whimsically or
capriciously, and gravely abused its discretion.
So, too, the respondent Court acted whimsically, capriciously, and oppressively, in other words,
gravely abused its discretion, in ordering the striking out of the entire testimony of Benjamin Lee
after it appeared that he could no longer be found and produced for further examination. In the
first place, the Court acted unilaterally, without any motion to this effect by the defense and thus
without according the prosecution a prior opportunity to show why the striking out should not be
decreed. More importantly, the striking out was directed without any showing whatever by the
defense of the indispensability of further cross-examination, what it was that would have been
elicited by further cross-examination rendering valueless all that the witness had previously
stated. It should be stressed that Lee was subjected both to cross-examination and recross-
examination by former counsel of the accused Sembrano. Obviously the latter was satisfied that
there had been sufficient cross-examination of the witness. Absence of cross-examination may
not therefore be invoked as ground to strike out Lee's testimony (as being hearsay). And there is
no showing whatever in this case that it was the prosecution that placed the witness beyond the
reach of the Court, much less of the expected nature or tenor of his additional testimony which,
because not presented, would necessarily cause the evidence earlier given by Lee to become
hearsay or otherwise incompetent, and therefore, amenable to being stricken from the record.

WHEREFORE, the petition is GRANTED and the respondent Court's challenged Order dated
October 2, 1990 is NULLIFIED AND SET ASIDE, with costs against private respondent.

IT IS SO ORDERED.
 SECOND DIVISION

G.R. Nos. 138701-02             October 17, 2006

SPOUSES ROQUE YU, SR. and ASUNCION YU and LEYTE LUMBER YARD & HARDWARE
CO., INC., petitioners,
vs.
BASILIO G. MAGNO CONSTRUCTION AND DEVELOPMENT ENTERPRISES, INC. and THE
ESTATE OF BASILIO G. MAGNO, respondents.

DECISION

GARCIA, SR., J.:

In this petition for review under Rule 45 of the Rules of Court, the spouses Roque Yu, Sr. and
Asuncion Yu, with co-petitioner Leyte Lumber Yard & Hardware, Co., Inc., (Leyte Lumber) assail
and seek to set aside the consolidated Decision1 dated October 20, 1998 of the Court of Appeals
(CA) in CA-G.R. CV Nos. 43714 and 43715, as reiterated in its Resolution2 of May 11, 1999,
denying the petitioners’ motion for reconsideration. CA-G.R. CV No. 43714 is an appeal by the
spouses Roque Yu, Sr. and Asuncion Yu from the decision of the Regional Trial Court (RTC) of
Tacloban City in its Civil Case No. 5823, while CA-G.R. CV No. 43715 is an appeal taken by
Leyte Lumber Yard from the decision of the same RTC in its Civil Case No. 5822.

The assailed CA decision holds petitioner Leyte Lumber liable to the herein respondents in Civil
Case No. 5822 for the amount of P631,235.61 with interest, and, on the same breath, holds the
respondents liable to petitioner spouses Roque Yu, Sr. and Asuncion Yu in Civil Case No. 5823
in the amount of P625,000.00 with interest, and P50,000.00 as and by way of attorney's fees.

The facts:

The spouses Roque Yu, Sr. and Asuncion Yu are the controlling stockholders of Leyte Lumber, a
business enterprise engaged in the sale of lumber, building and electrical supplies and other
construction materials. During his lifetime, Engr. Basilio G. Magno (Magno) entered into a verbal
agreement with Leyte Lumber through Roque Yu, Sr., whereby the latter agreed to supply Magno
with building materials he may need in his construction business. The success of Magno's
business gave birth to the Basilio G. Magno Construction and Development Enterprises, Inc. (BG
Magno).
Owing to this fruitful relationship, the two (Roque Yu, Sr. and Magno) entered into a joint venture,
the Great Pacific Construction Company (GREPAC), with Yu as President and Magno as Vice
President.3

Magno, for what he obtained from Leyte Lumber, paid either in cash or by check. The
relationship between Yu and Magno began in 1975 and continued until Magno's death on August
21, 1978.4

By the time the business relationship between Yu and Magno was coming to an end, the
respondents allege that the parties have dealt with each other to the amount of at
least P7,068,000.00.5

On January 30, 1979, in the RTC of Tacloban City, the petitioners instituted two (2) separate
complaints for sums of money with damages and preliminary attachment against the
respondents. One was Civil Case No. 5822,6 raffled to Branch 8 of the court, instituted by Leyte
Lumber against BG Magno and the Estate of Basilio Magno, to collect on the principal amount
of P1,270,134.87 for construction materials claimed to have been obtained on credit by BG
Magno, and the other was Civil Case No. 5823,7 raffled to Branch 6, filed by the Yu spouses
against BG Magno and the Estate of Basilio Magno, to collect upon loans and advances
(P3,575,000.00) allegedly made by the spouses to BG Magno.

As defendants in Civil Case No. 5823, the respondents moved to dismiss the case on the ground
that the claims must be pursued against the estate of the deceased Magno. The motion was
denied, and eventually the estate of Magno was dropped as party-defendant.

On the other hand, in Civil Case No. 5822, during the pretrial conference, the petitioners, as
plaintiffs in that case, proposed that a commissioner be appointed. The respondents as
defendants in the case interposed no objections, and so Atty. Romulo Tiu was appointed and
tasked with the duty to examine and make a detailed report on the documents and books of
account of the parties to determine the nature and extent of their respective claims and
liabilities.8 Atty. Tiu was later replaced by Mr. Uldarico Quintana, and finally by Mr. Ernesto C.
Silvano, who is a lawyer and an accountant9 by profession.

The commissioner prepared a summary of account receivables 10 and submitted three reports: the
first, dated November 1, 1980; the second, dated February 19, 1981; and the third, dated March
29, 1982.11 To these reports the parties submitted their respective comments and objections.

During trial, the petitioners presented in Civil Case No. 5822 before Branch 8 three witnesses,
namely: petitioner Roque Yu, Sr., himself, Atty. Ernesto C. Silvano (the commissioner) and Yao
Ping Chan, cashier of Consolidated Bank and Trust Co., who testified merely on the
circumstances surrounding specific checks that were issued during the course of the transactions
between the parties. For their part, the respondents offered two witnesses: the widow Perpetua
Magno and commissioner Silvano.

As regards Civil Case No. 5823 before Branch 6, the petitioners presented three witnesses:
Roque Yu, Sr., Roque Yu, Jr., and senior bookkeeper Eduardo de Veyra of the Tacloban Branch
of the United Coconut Planters Bank. For their part, the respondents did not present a single
witness, but adopted their evidence presented in Civil Case No. 5822. They did not, however,
make a formal offer of their evidence in both cases.

On June 17, 1993, Branch 8 of the court rendered its decision 12 in Civil Case No. 5822, the
decretal portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the defendant and against the
plaintiff:
 1. Dismissing the complaint;

2. Declaring that defendant had made overpayment to the plaintiff in the sum of
P620,239.61;

3. Ordering the plaintiff to return to the defendant the amount of P620,239.61 with
interest of 12% per annum from the date hereof until fully paid;

4. Ordering the plaintiff to pay defendant the sum of P200,000.00 for exemplary
damages;

5. Ordering the plaintiff to pay defendant the sum of P50,000.00 for attorney's
fees and litigation expenses; and

6. Ordering plaintiff to pay the costs of this suit.

SO ORDERED.

Also, on the same date - June 17, 1993 - Branch 6 rendered its decision 13 in Civil Case No. 5823,
the fallo of which reads:

WHEREFORE, judgment is hereby rendered in favor of the defendant and against the
plaintiffs:

1. Dismissing the plaintiffs' complaint;

2. Declaring that defendant had made overpayments to the plaintiffs in the sum of
P1,602,625.52;

3. Ordering plaintiffs to return to defendant the sum of P1,602,625.52 with 12%

interest per annum from the date hereof until fully paid;

4. The Writ of Attachment is hereby ordered immediately dissolved;

5. Ordering the plaintiffs to pay defendant the sum of P200,000.00 moral and
exemplary damages;

6. Ordering the plaintiffs to pay defendant P100,000.00 attorney's fees and

litigation expenses;

7. Ordering plaintiffs to pay the costs of this suit.

SO ORDERED.

The two separate decisions of even date were penned by Judge Getulio M. Francisco, the
presiding judge of Branch 6 to which only Civil Case No. 5823 was raffled. In other words, Judge
Francisco of Branch 6 rendered the decision in Civil Case No. 5822 earlier raffled to and heard
by Branch 8 of which he was not the presiding judge. The parties did not move for a
reconsideration of the two decisions nor did they call the attention of Judge Francisco on the
absence of an order for consolidation of the two cases. Instead, they directly interposed their
respective appeals to the CA.

In the CA, the two cases on appeal, docketed as CA-G.R. CV Nos. 43714 (for Civil Case No.
5823) and 4371514 (for Civil Case No. 5822), were consolidated.
On October 20, 1998, the CA rendered its questioned consolidated decision 15 dispositively
reading, thus:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

In Civil Case No. 5822, the appealed decision is MODIFIED by declaring that defendant
B.G. Magno Construction and Development Enterprises, Inc., made an overpayment in
the amount of P631,235.61, instead of P620,239.61 as found by the court a quo, and
ordering plaintiff to return said amount to defendant, with interest of 12% per annum from
promulgation hereof until fully paid, and by DELETING the award of exemplary damages
in the sum of P200,000.00 in favor of defendant. Thus modified, the judgment below
is AFFIRMED in all other respects.

In Civil Case No. 5823, the appealed decision is REVERSED and SET ASIDE.

Accordingly, defendant B.G. Magno Construction and Development Enterprises, Inc. is
ordered to pay plaintiffs the sum of P625,000.00, with 12% interest per annum from
promulgation hereof until fully paid, and the further sum of P50,000.00 by way of
attorney's fees, plus costs of suit.

SO ORDERED.

With their motion for reconsideration having been denied by the CA through its Resolution of May
11, 1999, the petitioners are now with this Court via the present recourse, submitting the
following arguments for our consideration:

A. Re: C.A.-G.R. CV No. 43714: (Civil Case No. 5823)

1. THE COURT OF APPEALS COMMITTED GRAVE ERROR IN REFUSING TO

EXCLUDE EVIDENCE OFFERED TO RTC BRANCH 8, BUT NOT TO BRANCH
6, OF WHICH EVIDENCE RTC BRANCH 6 IMPROPERLY TOOK JUDICIAL
NOTICE.

2. ASSUMING FOR THE SAKE OF ARGUMENT THAT RTC BRANCH 6 COULD

TAKE JUDICIAL NOTICE OF EVIDENCE NOT OFFERED TO IT,
NONETHELESS, SUCH EVIDENCE SHOW THAT RESPONDENT B.G. MAGNO
IS LIABLE TO PETITIONERS FOR P3,675,000.00.

B. Re: C.A.-G.R. CV No. 43715: (Civil Case No. 5822)

1. THE COURT OF APPEALS COMMITTED GRAVE ERROR IN AFFIRMING

THE DECISION OF RTC BRANCH 6 BECAUSE THE LATTER HAD NO
JURISDICTION OVER CIVIL CASE NO. 5822 WHICH WAS TRIED IN ITS
ENTIRETY BY RTC BRANCH 8.

2. THE COURT OF APPEALS COMMITTED GRAVE ERROR IN AFFIRMING

THE DECISION OF RTC BRANCH 6 BECAUSE BASED ON EVIDENCE
PRESENTED TO RTC BRANCH 8, NO COURT COULD HAVE DECIDED IN
FAVOR OF RESPONDENTS.

In sum, the petitioners question, first, the propriety of the presiding judge of Branch 6 rendering a
decision in a case filed and heard in Branch 8. They claim that Branch 6 had no jurisdiction to
decide Civil Case No. 5822 pending in Branch 8 in the absence of a motion or order of
consolidation of the two cases; second, Branch 6 erred in considering the evidence presented in
Branch 8; and third, the preponderance of evidence in both cases warrants a resolution of the
cases in their favor.
The respondents, on the other hand, hold steadfast to the CA’s finding of overpayment on their
part, and that Branch 6 had jurisdiction to render a decision in Civil Case No. 5822 of Branch 8
since the circumstance that the judge who penned the decision in both cases did not hear the
other case in its entirety is not a compelling reason to jettison his findings and conclusions. 16

On the issue of Branch 6 taking judicial notice of the evidence presented in Branch 8, the
respondents argue that there was a previous agreement of the parties with respect to the same.

On the question of the propriety of Judge Francisco of Branch 6 formulating the decision in Civil
Case No. 5822 which was pending and tried in Branch 8, we declare that there was nothing
irregular in the procedure taken. The records show that there appears to have been a previous
agreement to either transfer or consolidate the two cases for decision by the presiding judge of
Branch 6. As found by the CA:

…although Civil Case No. 5822 was raffled to and tried in Branch 8…, the court a quo
issued joint orders dated February 16, 1993 and September 10, 1993 in Civil Case Nos.
5822 and 5823…Recognizing the apparent transfer of Civil Case No. 5822 to the court a
quo, appellants’ [petitioners’] counsel filed his formal appearance dated October 20, 1993

with Branch 6…There is therefore no basis to appellants’ contention that the court a quo is
devoid of authority to decide Civil Case No. 5822. 17

Indeed, when the respondents filed a Motion to Lift, Dissolve and Quash the Writs of
Attachment with Branch 6 on January 20, 1993, the caption thereof indicated the docket numbers
of both cases.18 Likewise, on October 29, 1993, when the petitioners' new counsel entered his
Formal Appearance, in the caption thereof was also written the docket numbers
of both cases.19 Petitioners' previous counsel of longstanding (whose representation dates back
to the filing of the two complaints in 1979) filed his Motion to Withdraw as Counsel on October
30, 1993, and the caption thereof similarly indicated the docket numbers
of both cases.20 Subsequent orders of the court which emanated from Branch 6 also bear, in the
caption thereof, the titles and docket numbers of both cases.21 In other words, as early as six
months prior to the promulgation of Judge Francisco’s decisions in the two (2) cases, there
appears to have been a transfer or consolidation of said cases in Branch 6 and the parties knew
of it, albeit the actual date when the two cases were consolidated or transferred does not appear
on record. Nonetheless, the fact remains that no opposition or objection in any manner was
registered by either of the parties to the same, thereby evincing their consent thereto. It is,
therefore, already too late in the day for the petitioners to question the competence of Judge
Francisco to render the separate decisions in the two cases. To reecho what this Court has said
before:

Petitioners may not now question the transfer or consolidation of the two cases on
appeal, for they knew of it and did not question the same in the court below. They may
not now make a total turn-around and adopt a contrary stance; more so when the
judgment issued is adverse to their cause.22

The next logical questions are: Is the consolidation of the two cases (Civil Case Nos. 5822 and
5823) a procedural step which the court a quo could have properly taken? Is it a remedy
available within the context of the surrounding circumstances?

We answer both questions in the affirmative. The two cases were filed just a few months
apart;23 they involve simple cases of collection of sums of money between identical parties and
no other; the respondents (as defendants therein) claim, in both cases, essentially the same
defense, which is overpayment; they cover the same period of transacting continuous business
that spans four years; they relate to simple issues of fact that are intimately related to each other;
they entailed the presentation of practically identical evidence and witnesses; in fact, a broad part
of the evidence and testimonies in one case was totally adopted or reproduced in the other by
either or both parties. And the trial court, being multi-sala courts, its Branches 6 and 8 possessed
jurisdiction to try either or both cases on their own.

A court may order several actions pending before it to be tried together where they arise
from the same act, event or transaction, involve the same or like issues, and depend
largely or substantially on the same evidence, provided that the court has jurisdiction
over the case to be consolidated and that a joint trial will not give one party an undue
advantage or prejudice the substantial rights of any of the parties (citing 1 CJS, 1347).
Consolidation of actions is expressly authorized under Section 1, Rule 31 of the Rules of
Court:

"Section 1. Consolidation. — When actions involving a common question of law

or fact are pending before the court, it may order a joint hearing or trial of any or
all the matters in issue in the actions; it may order all the actions consolidated;
and it may make such orders concerning proceedings therein as may tend to
avoid unnecessary costs or delay."

The obvious purpose of the above rule is to avoid multiplicity of suits, to guard against
oppression and abuse, to prevent delays, to clear congested dockets, to simplify the work
of the trial court; in short the attainment of justice with the least expense and vexation to
the parties litigants (citing 1 CJS 1342-1343).

Consolidation of actions is addressed to the sound discretion of the court, and its action
in consolidating will not be disturbed in the absence of manifest abuse of discretion. In
the instant case, respondent judge did not abuse his discretion in ordering the joint trial of
the two cases. There is no showing that such joint trial would prejudice any substantial
right of petitioner. Neither does the latter question the court's jurisdiction to try and decide
the two cases.24

Likewise, it became apparent that, after the commissioner filed his reports in court and the
parties their comments thereto, but before trial could commence, the claims and defenses of the
parties in Civil Case No. 5823 are covered by and may be threshed out by a consideration of the
evidence presented in Civil Case No. 5822 as well, which consisted mainly of the reports of the
commissioner. Based on the commissioner’s reports in the case pending in Branch 8 (Civil Case
No. 5822), the petitioners’ claims, including those in Branch 6, appear to have been paid; indeed,
this is in essence the defense of the respondents as set forth in their Answers to the two
complaints. Yet, despite all these, neither of the lawyers for the parties sought a consolidation of
the two cases, which would otherwise have been mandatory.

When two or more cases involve the same parties and affect closely related subject
matters, they must be consolidated and jointly tried, in order to serve the best
interests of the parties and to settle expeditiously the issues involved. Consolidation,
when appropriate, also contributes to the declogging of court dockets…

Inasmuch as the binding force of the Dealership Agreement was put in question, it would
be more practical and convenient to submit to the Iloilo court all the incidents and their
consequences. The issues in both civil cases pertain to the respective obligations of the
same parties under the Dealership Agreement. Thus, every transaction as well as liability
arising from it must be resolved in the judicial forum where it is put in issue.
The consolidation of the two cases then becomes imperative to a complete,
comprehensive and consistent determination of all these related issues.

Two cases involving the same parties and affecting closely related subject matters must
be ordered consolidated and jointly tried in court, where the earlier case was filed.
The consolidation of cases is proper when they involve the resolution of common
questions of law or facts.
 Indeed, upon the consolidation of the cases, the interests of both parties in the two civil
cases will best be served and the issues involved therein expeditiously settled. After all,
there is no question on the propriety of the venue in the Iloilo case. 25 (Emphasis supplied)

Consolidation of cases, when proper, results in the simplification of proceedings, which saves
time, the resources of the parties and the courts, and a possible major abbreviation of trial. It is a
desirable end to be achieved, within the context of the present state of affairs where court
dockets are full and individual and state finances are limited. It contributes to the swift
dispensation of justice, and is in accord with the aim of affording the parties a just, speedy, and
inexpensive determination of their cases before the courts. Another compelling argument that
weighs heavily in favor of consolidation is the avoidance of the possibility of conflicting decisions
being rendered by the courts in two or more cases which would otherwise require a single
judgment.26

In fine, we declare the consolidation of the two cases to have been made with regularity. To
quote what the Court has said in an earlier case:

The ordered consolidation of cases, to our mind, crystallizes into reality the thinking of
our predecessors that:

". . . The whole purpose and object of procedure is to make the powers of the
court fully and completely available for justice. The most perfect procedure that
can be devised is that which gives opportunity for the most complete and perfect
exercise of the powers of the court within the limitations set by natural justice. It is
that one which, in other words, gives the most perfect opportunity for the powers
of the court to transmute themselves into concrete acts of justice between the
parties before it. The purpose of such a procedure is not to restrict the jurisdiction
of the court over the subject matter, but to give it effective facility in righteous
action. It may be said in passing that the most salient objection which can be
urged against procedure today is that it so restricts the exercise of the court's
powers by technicalities that part of its authority effective for justice between the
parties is many times an inconsiderable portion of the whole. The purpose of
procedure is not to thwart justice. Its proper aim is to facilitate the application of
justice to the rival claims of contending parties. It was created not to hinder and
delay but to facilitate and promote the administration of justice. It does not
constitute the thing itself which courts are always striving to secure to litigants. It
is designed as the means best adapted to obtain that thing. In other words, it is a
means to an end. It is the means by which the powers of the court are made
effective in just judgments. When it loses the character of the one and takes on
that of the other the administration of justice becomes incomplete and
unsatisfactory and lays itself open to grave criticism." 27

Having given their assent to the consolidation of Civil Case Nos. 5822 and 5823, petitioners’
other assignment of errors must fail. The evidence in each case effectively became the evidence
for both, and there ceased to exist any need for the deciding judge to take judicial notice of the
evidence presented in each case.

On the issue relative to the pecuniary liabilities of the parties in respect of their corresponding
claims and defenses, suffice it to state that this Court is not a trier of facts. The findings of fact of
the CA, supported as they are by the evidence on record, bind this Court.

Prefatorily, we restate the time-honored principle that in petitions for review under Rule
45 of the Rules of Court, only questions of law may be raised. It is not our function to
analyze or weigh all over again evidence already considered in the proceedings below,
our jurisdiction being limited to reviewing only errors of law that may have been
committed by the lower court. The resolution of factual issues is the function of lower
 courts, whose findings on these matters are received with respect. A question of law
which we may pass upon must not involve an examination of the probative value of the
evidence presented by the litigants.28

We disagree, however, with the CA in holding the petitioners liable to the respondents in the
amount of P142,817.27 representing the unpaid account of GREPAC for filling materials
delivered to it by BG Magno. As it is, GREPAC possesses a distinct corporate personality
separate from Leyte Lumber whom BG Magno sought to be liable therefor. GREPAC’s own
liabilities may not be made chargeable against petitioner Leyte Lumber as the CA ruled after
piercing the corporate veil of GREPAC. To our mind, the situation does not call for a piercing of
GREPAC’s corporate veil since there is no clear and convincing evidence showing fraud and
illegality in the formation and operation of GREPAC. Quite the contrary, what has been proved
suggests that GREPAC was a product of the close business and personal ties that bound Roque
Yu, Sr., and Magno during better times. It was a bona fide joint venture between the two.

We cannot help but discern how the respondents were put to expense by the petitioners’
mishandling of the cases in the trial courts. First of all is the petitioners’ filing of two (2) separate
actions of simple collection cases which were ultimately found to revolve essentially around the
same factual milieu. And, as soon as it became apparent that the two cases were inexorably
linked, it became the duty of the petitioners to seek a consolidation of the cases a quo. Yet they
did not; instead, they took advantage of every perceived technicality, all the way to this Court, in
order to defeat the respondents’ case. They vigorously opposed the adoption by the respondents
of the latter’s evidence in the other branch of the court, thereby advancing misleading arguments
for consolidation that had already occurred with their visible consent. They attribute error to the
trial court’s "taking judicial notice" of the respondents’ evidence in the other court, when it no
longer was a proper argument in view of the resultant consolidation. We do not approve of the
practice of counsel employing subtlety, advancing gratuitous arguments that tend only to muddle
the issues, and seizing upon every opportunity to win the case for his client, when in the first
place the confusion in the proceedings was precipitated by his failure to act accordingly, as
counsel for the plaintiffs, in seeking the proper consolidation of the two cases. The result is a
simple collection case that has remained pending for twenty-seven years now.

Likewise, what the petitioners did in filing the two cases in different branches of the court may be
held to be tantamount to forum shopping which not only put the respondents to additional
unnecessary expense, but wasted the precious time of the courts as well.

Forum-shopping is a deplorable practice of litigants in resorting to two different fora for

the purpose of obtaining the same relief, to increase his or her chances of obtaining a
favorable judgment. What is pivotal to consider in determining whether forum shopping
exists or not is the vexation caused to courts and the parties-litigants by a person who
asks appellate courts and/or administrative entities to rule on the same related causes
and/or to grant the same or substantially the same relief, in the process creating the
possibility of conflicting decisions by the different courts or fora upon the same issues.29

Finally, we admonish RTC Branches 6 and 8 for the manner in which the case before each sala
was handled and conducted. We note the lack of an order of consolidation in the records of the
cases. As to Judge Francisco’s two separate decisions, we do not perceive any advantage or
benefit derived from promulgating two separate decisions on the same day in the two cases that
have already been consolidated into one. Although we recognize no ill intent or attribute no
deliberate irregularity to the same, such demeanor can only breed suspicion and promote distrust
for our judicial institutions. A judge should avoid every situation where the propriety of his
conduct would be placed in question. His official acts must at all times be above reproach, 30 and
they must be consistent with the proceedings taken in his court.

WHEREFORE, judgment is hereby rendered MODIFYING the assailed CA decision by SETTING

ASIDE and DELETING the award of the respondents’ counterclaim in the amount
of P142,817.27 in Civil Case No. 5822; REITERATING the P50,000.00 award of attorneys’ fees
and litigation expenses in favor of the respondents in Civil Case No. 5822; and DELETING the
award of attorneys’ fees to the petitioners in Civil Case No. 5823. In all other respects, the
assailed decision is AFFIRMED.

Costs against the petitioners.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 190462               November 17, 2010

STEEL CORPORATION OF THE PHILIPPINES, Petitioner,

vs.
EQUITABLE PCI BANK, INC., (now known as BDO UNIBANK, INC.), Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 190538

DEG - DEUTSCHE INVESTITIONS-UND ENTWICKLUNGSGESELLSCHAFT MBH, Petitioner,

vs.
EQUITABLE PCI BANK, INC., (now known as BDO UNIBANK, INC.) and STEEL
CORPORATION OF THE PHILIPPINES, Respondents.

DECISION

VELASCO, JR., J.:

Before us are two Petitions for Review on Certiorari under Rule 45, docketed as G.R. Nos.
190462 and 190538, assailing the July 3, 2008 Decision1 and December 3, 2009 Resolution2 of
the Court of Appeals (CA) in CA-G.R. SP No. 101881, entitled Equitable PCI Bank, Inc. (now
known as Banco de Oro-EPCI, Inc.) v. Steel Corporation of the Philippines. The CA set aside the
Decision3 dated December 3, 2007 of the Regional Trial Court (RTC) acting as a Rehabilitation
Court, and, in effect, the CA (1) set aside the Rehabilitation Court’s Decision approving the
Rehabilitation Plan; and (2) terminated the corporate rehabilitation of Steel Corporation of the
Philippines (SCP).

We consolidated G.R. No. 190462 with G.R. No. 190538 as they involve identical parties, arose
from the same facts, and assail the same CA Decision dated July 3, 2008. 4

The Facts

SCP is a domestic corporation incorporated and registered with the Securities and Exchange
Commission on October 3, 1994. It is engaged in the manufacturing and distribution of cold-
rolled and galvanized steel sheets and coils.

During its operations, SCP encountered and suffered from financial difficulties and temporary
illiquidity, aggravated by the 1997 Asian Financial Crisis. And shortage in working capital and
reduced operating capacity compounded its problem. As a result, SCP was unable to service its
principal payments for its liabilities.

In its Interim Financial Statement as of December 31, 2005, SCP’s total assets amounted to PhP
10,996,551,123, while its liabilities amounted to PhP 8,365,079,864.

Accordingly, on September 11, 2006, Equitable PCI Bank, Inc., now known as Banco de Oro-
EPCI, Inc. (BDO-EPCIB), which accounted for 27.45% of the total liabilities of SCP, filed a
creditor-initiated petition––to place the SCP under corporate rehabilitation pursuant to the
provisions of Section 1, Rule 4 of the Interim Rules of Procedure on Corporate Rehabilitation––
entitled In the Matter of the Petition to have Steel Corporation of the Philippines Placed under
Corporate Rehabilitation with Prayer for the Approval of the Proposed Rehabilitation Plan. BDO-
EPCIB included its proposed rehabilitation plan in the said petition.

Finding the petition to be sufficient in form and substance, the Rehabilitation Court issued an
Order dated September 12, 2006, directing, among others, the stay of enforcement of all claims,
whether for money or otherwise and whether such enforcement is by court action or otherwise,
against SCP, its guarantors, and sureties not solidarily liable with it. The Rehabilitation Court
likewise appointed Atty. Santiago T. Gabionza, Jr. as the Rehabilitation Receiver for SCP.

SCP did not oppose the petition but instead filed its own counter rehabilitation plan and
submitted it for the consideration of the Rehabilitation Court. Other creditors filed their respective
comments on the petition.

On November 23, 2006, the Rehabilitation Court issued an Order, giving due course to the
petition and directing Atty. Gabionza to evaluate the rehabilitation plan proposed by BDO-EPCIB
and the proposals of the other participating creditors, and to submit his recommendations. The
Rehabilitation Court also directed Atty. Gabionza to consider SCP’s counter rehabilitation plan in
drafting his recommended rehabilitation plan.

In a Compliance dated March 6, 2007, Atty. Gabionza submitted his recommended rehabilitation
plan. The said plan contained the salient features of the rehabilitation plans separately submitted
by SCP and BDO-EPCIB, as well as his own comments. The plan was summarized by the
Rehabilitation Court as follows:

Thus, after considering the comments of the other participating creditors and evaluating the
proposals of SCP and the petitioner, Atty. Gabionza recommended the following terms and
conditions for rehabilitation plan, to wit:

1. Fresh equity infusion of P3.5 Billion, out of which P3 Billion shall be used for debt
reduction, and the balance of P500 Million as additional working capital.

2. The P3 Billion allocated for debt repayment shall first service the secured credits and
excess thereafter will be applied to clean creditors and suppliers.

3. The remaining short term and long term debt balances after debt reduction will be
restructured over a period of 12 years inclusive of a 2 year grace period on principal
payments. There shall be 20 equal semi-annual payments of principal to commence at
the end of the grace period.

4. Interest rates for the restructure debt shall be 8% per annum fixed for the duration of
the loan and shall be payable quarterly in arrears. No grace period on interest payments.

5. To protect existing clean creditors, SCP may not secure additional secured credits
which will utilize the excess assets values after the P3.0 Billion debt reduction.

6. Any excess cash after the annual (normal) CAPEX and debt service requirements
shall be distributed as follows: 70% debt repayment and 30% to be retained by the
Company.

7. All existing suppliers credits (subject to final validation) shall have 2 options:

a. To be paid quarterly over a period of 5 years without interest, or

 b. To continuously supply the company on the pay-re-avail (Deliver same amount
paid) basis.

8. All loans, supplier’s credit and other SCP liabilities are subject to final verification once
the recommended rehabilitation plan is approved.

The rehabilitation plan recommended by Atty. Gabionza has three (3) phases in the
implementation of the proposed P3.5 Billion fresh equity infusion, thus:

Phase 1

SCP’s articles of incorporation and by laws shall be amended to accommodate the additional
equity of P3.5 Billion. The present stockholders of SCP shall be given sixty (60) days from
approval of the plan to keep their stockholdings SCP by raising/sourcing the P3.5 Billion fresh
equity required.

Phase 2

In the event the present stockholders fail to raise the P3.5 Billion fresh equity needed to keep
their stockholdings and save their company, Atty. Gabionza shall offer to acceptable investors,
through negotiated sale or bidding, 67% of SCP for the P3.5 Billion fresh equity required.

Phase 3

Should Phase 1 and 2 fail, there shall be a debt to equity conversion in the required amount of
P3.5 Billion.5

Although not required by the rules, several consultative meetings were thereafter conducted by
the Rehabilitation Court between and among the parties to discuss a viable rehabilitation plan for
SCP that is acceptable to all.

In compliance with the directives of the Rehabilitation Court to consider all the inputs and
observations made by the parties during the consultative meetings and to make the necessary
modification in his recommendations on the submitted rehabilitation plans, Atty. Gabionza
submitted a Modified Rehabilitation Plan as incorporated in his compliance dated June 27, 2007.
The modifications made were:

Phase 1 of the Recommended Rehabilitation Plan is retained under the Modified Rehabilitation
Plan. Phase 2, however, is amended to the effect that in the event the present stockholders fail
to raise the P3.5 Billion fresh equity needed to keep their stockholdings and save their company,
the same existing stockholders of SCP shall be afforded a period of 60 days from the expiration
of the period provided in Phase 1 to offer for sale to an acceptable investor at least 67%
stockholdings in SCP for an amount not less than P3.5 Billion.

Under Phase 3 thereof, there shall be a debt to equity conversion in the required amount of P3.5
Billion should Phase 1 and 2 fail. The adjusted book value of SCP under its 2005 Audited
Financial Statements is pegged at P1.129 Billion. Accordingly, P1.1.29 Billion of the existing debt
will initially be converted into common shares achieving an ownership structure where both
existing stockholders and the bank creditors will equally own SCP at 50% each. The balance of
P2.371 Billion will then be converted into non-interest bearing convertible notes. 6

On June 21, 2007, BDO-EPCIB, joined by creditors DEG, Planters Development Bank, China
Banking Corporation, Asiatrust Development Bank and GE Money Bank, Inc., altogether holding
more than 50% of SCP’s total liabilities, filed their Joint Manifestation and Motion declaring their
conformity with and support to Atty. Gabionza’s Recommended Rehabilitation Plan.
On July 30, 2007, SCP submitted its 2006 Audited Financial Statements in a Compliance with
Motion. Atty. Gabionza was ordered by the Rehabilitation Court to study the financial statements
and to submit a report on their effects on the Modified Rehabilitation Plan.

The parties then submitted their respective comments on the Modified Rehabilitation Plan and
Atty. Gabionza’s report on the effects of the 2006 Audited Financial Statements. Likewise, SCP
submitted its Updated Counter Rehabilitation Plan, attached to its Ad Abundante Cautelam
Motion to Admit Debtor SCP’s Updated Counter Rehabilitation Plan, which was subsequently
admitted by the Rehabilitation Court.

On December 3, 2007, the RTC promulgated a Decision approving the Modified Rehabilitation
Plan. The dispositive portion reads:

WHEREFORE, premises considered, the present petition is given due course. The parties are
mandated to comply strictly with the provisions of the approved rehabilitation plan.

The Rehabilitation Receiver is hereby directed to provide this Court with periodic reports on the
implementation of the approved Rehabilitation Plan.

The provisions of the approved Rehabilitation Plan shall be binding on all persons and parties
affected by it, whether or not such persons or parties have participated in the present
proceedings.

The concerned parties are further directed to submit to this Court their respective nominees for
the Management Committee not later than 60 days before the expiration of the period for the
application of Phases 1 and 2 of the foregoing rehabilitation plan. In case no nominee is
submitted by any party, this Court shall directly designate the corresponding members thereof.

SO ORDERED.7

Therefrom, several creditors went to the CA via separate Petitions for Review on Certiorari, to
wit: (1) SCP’s petition dated January 9, 2008, docketed as CA-G.R. SP No. 101732 and entitled
Steel Corporation of the Philippines v. Equitable PCI Bank, Inc.; (2) DEG’s petition dated January
6, 2008, docketed as CA-G.R. SP No. 101880 and entitled DEG – Deutsche Investitions-und
Entwicklungsgesselschaft mbH v. Steel Corporation of the Philippines; (3) BDO-EPCIB’s petition
dated January 8, 2008, docketed as CA-G.R. SP No. 101881 and entitled Equitable PCI Bank,
Inc. v. Steel Corporation of the Philippines; and (4) Investments 2234 Philippines Fund I, Inc.’s
(IPFI’s) petition dated January 10, 2008, docketed as CA-G.R. SP No. 101913 and entitled
Investments 2234 Philippines Fund I (SPV-AMC), Inc. v. Equitable PCI Bank, Inc.

The petitions of SCP and IPFI were eventually consolidated under CA-G.R. SP No. 101732.
However, the CA denied BDO-EPCIB’s motion to consolidate with CA-G.R. SP No. 101732. 8 As
to CA-G.R. SP No. 101881, the Court takes judicial notice of the fact that it has also been
consolidated with CA-G.R. SP No. 101732 in a Resolution issued by the CA dated March 22,
2010.

On July 3, 2008, the CA issued the assailed decision in CA-G.R. SP No. 101881, ordering the
termination of the rehabilitation proceedings. The dispositive portion reads:

WHEREFORE, premises considered, the Decision dated December 3, 2007 of the RTC, Branch
II, Batangas City, in SP No. 06-7993 is hereby SET ASIDE, and another one is hereby entered
declaring the rehabilitation proceedings TERMINATED, pursuant to Section 27, Rule 4 of the
Interim Rules of Procedure on Corporate Rehabilitation.

SO ORDERED.9
SCP then filed a Supplemental Petition for Review dated July 21, 2008 in CA-G.R. SP No.
101732, praying, among others, for the approval of its Revised Updated Counter Rehabilitation
Plan.

From the July 3, 2008 CA Decision, DEG, SCP, Landmark Glory Limited, and Liquigaz
Philippines Corporation interposed separate motions for reconsideration. However, on December
3, 2009, the CA denied all motions for reconsiderations.

Hence, these separate recourses are before us.

The Issues

In G.R. No. 190462, SCP raised the following arguments in support of its amended petition:

I.

The [CA] erred – when it did, it denied the petitioner its rights to both procedural and substantive
due process – when –

(a) It did not follow its own internal rules of procedure and thereafter justified its error on
the bases of misleading and false statements;

(b) It granted a relief which none of the parties sought for, nor were heard, nor given the
opportunity to be heard, thereon, and

(c) It substituted its judgment for that of the rehabilitation court, usurping in the process
the exclusive authority reposed in the said court.

II.

The [CA] erred – and when it did, it acted in a manner at war with orderly procedure – when it
declared the termination of the proceedings without passing upon nor giving the petitioner a
chance to be heard on the updated alternative rehabilitation plan submitted by it.

III.

The [CA] erred – and when it did, it failed to perform its duties and obligations as a court – when
it found, and thereafter declared termination of the rehabilitation proceedings because the case
had become litigious and did not try to allow the parties to adjust their differences so that
rehabilitation of the petitioner could go on.10

In G.R. No. 190538, DEG submits as follows:

I.

The [CA] had no jurisdiction or authority to terminate the rehabilitation proceedings.

II.

Assuming, arguendo, that the [CA] had the authority to terminate the rehabilitation proceedings,
such termination was premature. 11

The issues raised before the Court can be summarized into two:
 (1) Whether or not the CA erred in refusing to consolidate the cases pending before it;
and

(2) Whether or not the CA erred in granting a relief that was not prayed for by the parties,
i.e., the termination of the rehabilitation proceedings.

Consolidation of Cases Is Proper

Petitioner SCP argues that the CA deviated from its own Internal Rules when it failed to
consolidate the four (4) appeals arising from the same decision of the rehabilitation court. In fact,
it points out to the fact that CA-G.R. SP No. 101913 had already been consolidated with its own
appeal in CA-G.R. SP No. 101732. However, SCP says that the failure by the CA to consolidate
the remaining two appeals, namely CA-G.R. SP Nos. 101880 and 101881, with its own appeal
indicates not only a deviation from the rules but also a disobedience to their plain language and
obvious intent.

On the other hand, BDO-EPCIB refutes SCP’s arguments by saying that the consolidation of
cases is only discretionary, not mandatory, upon the court.

The Court agrees with SCP.

Consolidation of actions is expressly authorized under Sec. 1, Rule 31 of the Rules of Court:

Section 1. Consolidation. – When actions involving a common question of law or fact are pending
before the court, it may order a joint hearing or trial of any or all the matters in issue in the
actions; it may order all the actions consolidated; and it may make such orders concerning
proceedings therein as may tend to avoid unnecessary costs or delay.

Likewise, Rule 3, Sec. 3 of the 2002 Internal Rules of the CA12 adopts the same rule:

Sec. 3. Consolidation of Cases. – When related cases are assigned to different Justices, they
may be consolidated and assigned to one Justice.

(a) At the instance of a party with notice to the other party; or at the instance of the
Justice to whom the case is assigned, and with the conformity of the Justice to whom the
cases shall be consolidated, upon notice to the parties, consolidation may be allowed
when the cases involve the same parties and/or related questions of fact and/or law.

(b) Consolidated cases shall pertain to the Justice –

(1) To whom the case with the lowest docket number is assigned, if they are of
the same kind;

(2) To whom the criminal case with the lowest number is assigned, if two or more
of the cases are criminal and the others are civil or special;

(3) To whom the criminal case is assigned and the other are civil or special; and

(4) To whom the civil case is assigned, or to whom the civil case with the lowest
docket number is assigned, if the cases involved are civil and special.

(c) Notice of the consolidation and replacement shall be given to the Raffle Staff and the
Judicial Records Division.
It is a time-honored principle that when two or more cases involve the same parties and affect
closely related subject matters, they must be consolidated and jointly tried, in order to serve the
best interests of the parties and to settle expeditiously the issues involved. 13 In other words,
consolidation is proper wherever the subject matter involved and relief demanded in the different
suits make it expedient for the court to determine all of the issues involved and adjudicate the
rights of the parties by hearing the suits together. 14

The purpose of this rule is to avoid multiplicity of suits, guard against oppression and abuse,
prevent delays, clear congested dockets, and simplify the work of the trial court. In short,
consolidation aims to attain justice with the least expense and vexation to the parties-litigants. 15 It
contributes to the swift dispensation of justice, and is in accord with the aim of affording the
parties a just, speedy, and inexpensive determination of their cases before the courts. Further, it
results in the avoidance of the possibility of conflicting decisions being rendered by the courts in
two or more cases, which would otherwise require a single judgment. 16

In the instant case, all four (4) cases involve identical parties, subject matter, and issues. In fact,
all four (4) arose from the same decision rendered by the Rehabilitation Court. As such, it
became imperative upon the CA to consolidate the cases. Even though consolidation of actions
is addressed to the sound discretion of the court and normally, its action in consolidating will not
be disturbed in the absence of manifest abuse of discretion, 17 in this instance, we find that the CA
gravely erred in failing to order the consolidation of the cases.

By refusing to consolidate the cases, the CA, in effect, dispensed a form of piecemeal judgment
that has veritably resulted in the multiplicity of suits. Such action is not regarded with favor,
because consolidation should always be ordered whenever it is possible.

Relief Is Limited Only to Issues Raised

SCP further contends that the CA denied it its right to procedural and substantive due process,
because it granted a relief entirely different from those sought for by the parties and on which
they were neither heard nor given the opportunity to be heard.

Respondent BDO-EPCIB, on the other hand, maintains that the CA has the power to grant such
other appropriate relief as may be consistent with the allegations and proofs when a prayer for
general relief is added to the demand of specific relief. 18

SCP’s contention deserves merit.

Sec. 8, Rule 51 of the 1997 Rules of Civil Procedure expressly provides:

SEC. 8. Questions that may be decided. – No error which does not affect the jurisdiction over the
subject matter or the validity of the judgment appealed from or the proceedings therein will be
considered unless stated in the assignment of errors, or closely related to or dependent on an
assigned error and properly argued in the brief, save as the court pass upon plain errors and
clerical errors.

Essentially, the general rule provides that an assignment of error is essential to appellate review
and only those assigned will be considered,19 save for the following exceptions: (1) grounds not
assigned as errors but affecting jurisdiction over the subject matter; (2) matters not assigned as
errors on appeal but are evidently plain or clerical errors within the contemplation of the law; (3)
matters not assigned as errors on appeal but consideration of which is necessary in arriving at a
just decision and complete resolution of the case or to serve the interest of justice or to avoid
dispensing piecemeal justice; (4) matters not specifically assigned as errors on appeal but raised
in the trial court and are matters of record having some bearing on the issue submitted which the
parties failed to raise or which the lower court ignored; (5) matters not assigned as errors on
appeal but closely related to an error assigned; and (6) matters not assigned as errors on appeal
but which the determination of a question properly assigned is dependent. 20 None of these
exceptions exists in this case.

Notably, the prayer portion of the BDO-EPCIB petition in CA-G.R. SP No. 101881 only sought for
the following reliefs:

WHEREFORE, it is respectfully prayed of the Honorable Court that the Decision dated 03
December 2007 of the Court a quo, or the approved Rehabilitation Plan, be MODIFIED
accordingly, thus:

1. Under its Phase 1, the articles of incorporation and by laws of SCP be accordingly
amended to accommodate the additional equity of Php3.0 Billion.

2. Under Phase 2, the present stockholders and/or the Rehabilitation Receiver shall offer
for sale to acceptable investors SCP’s stocks, through negotiated sale or bidding for an
amount not less than Php3.0 Billion, which is equivalent to approximately 64% of SCP;
and

3. Under Phase 3, there shall be an immediate conversion of debt to common shares in

the required amount of Php3.0 Billion, which is equivalent to approximately 64% of SCP,
pursuant to the terms and conditions of the Recommended Rehabilitation Plan.

Other reliefs, just and equitable under the premises, are likewise prayed for. 21

It is very plain in the language of the prayers of BDO-EPCIB that it only requested the CA to
modify the existing rehabilitation plan. It never sought the termination of the rehabilitation
proceedings. Thus, given the factual backdrop of the case, it was inappropriate for the CA, motu
proprio, to terminate the proceedings. The appellate court should have proceeded to resolve
BDO-EPCIB’s appeal on its merits instead of terminating the proceedings, a result that has no
ground in its pleadings in the CA.

In Abedes v. Court of Appeals, this Court emphasized the difference of appeals in criminal cases
and in civil cases by saying, "Issues not raised in the pleadings, as opposed to ordinary appeal of
criminal cases where the whole case is opened for review, are deemed waived or
abandoned."22 Essentially, to warrant consideration on appeal, there must be discussion of the
error assigned, else, the error will be deemed abandoned or waived. 23

This Court even went further in Development Bank of the Philippines v. Teston, in which it held
that it is improper to enter an order which exceeds the scope of the relief sought by the
pleadings, to wit:

The Court of Appeals erred in ordering DBP to return to respondent "the P1,000,000.00" alleged
down payment, a matter not raised in respondent’s Petition for Review before it. In Jose Clavano,
Inc. v. Housing and Land Use Regulatory Board, this Court held:

"x x x It is elementary that a judgment must conform to, and be supported by, both the pleadings
and the evidence, and must be in accordance with the theory of the action on which the
pleadings are framed and the case was tried. The judgment must be secundum allegata et
probate." (Italics in original.)
1avvphi1

Due process considerations justify this requirement. It is improper to enter an order which
exceeds the scope of relief sought by the pleadings, absent notice which affords the opportunity
to be heard with respect to the proposed relief. The fundamental purpose of the requirement that
allegations of a complaint must provide the measure of recovery is to prevent surprise to the
defendant.24 (Emphasis supplied.)
Thus, this Court cannot sustain the ruling of the CA insofar as it granted a relief not prayed for by
the BDO-EPCIB.

WHEREFORE, the petition in G.R. No. 190462 is PARTIALLY GRANTED and the petition in
G.R. No. 190538 is GRANTED. The July 3, 2008 Decision and December 3, 2009 Resolution of
the CA in CA-G.R. SP No. 101881 are REVERSED and SET ASIDE.

Further, the Court hereby REMANDS these cases to the CA for consolidation with CA-G.R. SP
No. 101732. Likewise, CA-G.R. SP No. 101880 is also ordered to be consolidated with CA-G.R.
SP No. 101732.

No costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 169677               February 18, 2013

METROPOLITAN BANK AND TRUST COMPANY, as successor-in-interest of ASIAN BANK

CORPORATION, Petitioner,
vs.
HON. EDILBERTO G. SANDOVAL, HON. FRANCISCO H. VILLARUZ, JR. and HON.
RODOLFO A. PONFERRADA (in their capacities as Chairman and Members, respectively,
of the Second Division of SANDIGANBAYAN) and the REPUBLIC OF THE
PHILIPPINES, Respondents.

DECISION

BERSAMIN, J.:

The court, in furtherance of convenience or to avoid prejudice, may order a separate trial of any
claim, cross-claim, counterclaim, or third-party complaint, or of any separate issue or of any
number of claims, cross-claims, counterclaims, third-party complaints or issues. 1 But a separate
trial may be denied if a party is thereby deprived of his right to be heard upon an issue dealt with
and determined in the main trial.

Through this special civil action for certiorari, Metropolitan Bank and Trust Company (Metrobank)
hereby seeks to set aside and nullify the resolutions dated June 25, 2004 2 and July 13,
20053 issued in Civil Case No. 0004, whereby the Sandiganbayan granted the motion for
separate trial filed by the Republic of the Philippines (Republic), and upheld its jurisdiction over
the Republic’s claim against the petitioner as the successor-in-interest of Asian Bank Corporation
(Asian Bank).

Antecedents

On July 17, 1987, the Republic brought a complaint for reversion, reconveyance, restitution,
accounting and damages in the Sandiganbayan against Andres V. Genito, Jr., Ferdinand E.
Marcos, Imelda R. Marcos and other defendants. The action was obviously to recover allegedly
ill-gotten wealth of the Marcoses, their nominees, dummies and agents. Among the properties
subject of the action were two parcels of commercial land located in Tandang Sora (Old Balara),
Quezon City, covered by Transfer Certificate of Title (TCT) No. 266423 4 and TCT No. 2665885 of
the Registry of Deeds of Quezon City registered in the names of Spouses Andres V. Genito, Jr.
and Ludivina L. Genito.

On February 5, 2001, the Republic moved for the amendment of the complaint in order to
implead Asian Bank as an additional defendant. The Sandiganbayan granted the motion. 6 It
appears that Asian Bank claimed ownership of the two parcels of land as the registered owner by
virtue of TCT No. N-201383 and TCT No. N-201384 issued in its name by the Registry of Deeds
of Quezon City. Asian Bank was also in possession of the properties by virtue of the writ of
possession issued by the Regional Trial Court (RTC) in Quezon City.7

When the Republic was about to terminate its presentation of evidence against the original
defendants in Civil Case No. 0004, it moved to hold a separate trial against Asian Bank. 8
Commenting on the motion, Asian Bank sought the deferment of any action on the motion until it
was first given the opportunity to test and assail the testimonial and documentary evidence the
Republic had already presented against the original defendants, and contended that it would be
deprived of its day in court if a separate trial were to be held against it without having been
sufficiently apprised about the evidence the Republic had adduced before it was brought in as an
additional defendant.9

In its reply to Asian Bank’s comment, the Republic maintained that a separate trial for Asian
Bank was proper because its cause of action against Asian Bank was entirely distinct and
independent from its cause of action against the original defendants; and that the issue with
respect to Asian Bank was whether Asian Bank had actual or constructive knowledge at the time
of the issuance of the TCTs for the properties in its name that such properties were the subject of
the complaint in Civil Case No. 0004, while the issue as to the original defendants was whether
they had "committed the acts complained of as constituting illegal or unlawful accumulation of
wealth which would, as a consequence, justify forfeiture of the said properties or the satisfaction
from said properties of the judgement that may be rendered in favor of the Republic." 10

Asian Bank’s rejoinder to the Republic’s reply asserted that the issue concerning its supposed
actual or constructive knowledge of the properties being the subject of the complaint in Civil
Case No. 0004 was intimately related to the issue delving on the character of the properties as
the ill-gotten wealth of the original defendants; that it thus had a right to confront the evidence
presented by the Republic as to the character of the properties; and that the Sandiganbayan had
no jurisdiction to decide Asian Bank’s ownership of the properties because the Sandiganbayan,
being a special court with limited jurisdiction, could only determine the issue of whether or not the
properties were illegally acquired by the original defendants. 11

On June 25, 2004, the Sandiganbayan issued the first assailed resolution granting the Republic’s
motion for separate trial, giving its reasons as follows:

xxxx

A cursory reading of the comment filed by defendant Asian Bank to plaintiff’s request for a
separate trial would readily reveal that defendant is not actually opposing the conduct of a
separate trial insofar as the said bank is concerned. What it seeks is the opportunity to confront
the witnesses and whatever documentary exhibits that may have been earlier presented by
plaintiff in the case before the Court grants a separate trial. This being the situation, we find no
reason to deny the motion in light of plaintiff’s position that its claim as against Asian Bank is
entirely separate and distinct from its claims as against the original defendants, albeit dealing
with the same subject matter. In fact, as shown by the allegations of the Second Amended
Complaint where Asian Bank was impleaded as a party defendant, the action against the latter is
anchored on the claim that its acquisition of the subject properties was tainted with bad faith
because of its actual or constructive knowledge that the said properties are subject of the present
recovery suit at the time it acquired the certificates of title covering the said properties in its
name. Consequently, whether or not it is ultimately established that the properties are ill-gotten
wealth is of no actual significance to the incident pending consideration since the action against
defendant bank is predicated not on the claim that it had knowledge of the ill-gotten wealth
character of the properties in question but rather on whether or not it had knowledge, actual or
constructive, of the fact that the properties it registered in its name are the subject of the instant
recovery suit. Besides, plaintiff already admits that the evidence it had presented as against the
original defendants would not apply to defendant bank for the reason that there is no allegation in
the second amended complaint imputing responsibility or participation on the part of the said
bank insofar as the issue of accumulation of wealth by the original defendants are concerned.
Thus, there appears no basis for defendant bank’s apprehension that it would be deprived of its
right to due process if its not given the opportunity to cross-examine the witnesses presented
prior to its inclusion as party defendant in the case. To reiterate, the only issue insofar as
defendant bank is concerned is whether there is evidence to show that it acquired the titles to the
sequestered properties in bad faith.

Neither are we inclined to sustain defendant’s bank argument that the Court cannot grant a
separate trial in this case because it has no jurisdiction over the claim that defendant bank
acquired the properties in bad faith. Indeed, the issue of defendant bank’s acquisition of the
properties in bad faith is merely incidental to the main action which is for reversion,
reconveyance, restitution, accounting and damages. It is axiomatic that jurisdiction over the
subject matter of a case is conferred by law and is determined by the allegations in the complaint
and the character of the relief sought, irrespective of whether the plaintiff is entitled to all or some
of the claims asserted therein (Russell v. Vestil, 304 SCRA 738; Saura v. Saura, Jr., 313 SCRA
465).12

Asian Bank moved for the reconsideration of the resolution, but the Sandiganbayan denied its
motion through the second assailed resolution issued on July 13, 2005. 13

Hence, Metrobank commenced this special civil action for certiorari as the successor-in-interest
of Asian Bank and transferee of the properties.14

Issues

Metrobank contends that the Sandiganbayan committed grave abuse of discretion in ruling that:
(1) the Republic was entitled to a separate trial against Asian Bank; (2) the only issue as regards
Asian Bank was whether there was evidence that Asian Bank acquired the properties in bad
faith; and

(3) the Sandiganbayan had jurisdiction over the issue of Asian Bank’s alleged bad faith in
acquiring the properties.15

Anent the first issue, Metrobank states that the holding of a separate trial would deny it due
process, because Asian Bank was entitled to contest the evidence of the Republic against the
original defendants prior to Asian Bank’s inclusion as an additional defendant; that Asian Bank
(Metrobank) would be deprived of its day in court if a separate trial was held against it,
considering that the Republic had already presented such evidence prior to its being impleaded
as an additional defendant; that such evidence would be hearsay unless Asian Bank (Metrobank)
was afforded the opportunity to test and to object to the admissibility of the evidence; that
because Asian Bank disputed the allegedly ill-gotten character of the properties and denied any
involvement in their allegedly unlawful acquisition or any connivance with the original defendants
in their acquisition, Asian Bank should be given the opportunity to refute the Republic’s adverse
evidence on the allegedly illgotten nature of the properties. 16

With respect to the second issue, Metrobank submits thuswise:

8.02 x x x the Honorable Sandiganbayan failed to consider that Respondent Republic of the
Philippines’ claim for the recovery of the subject properties from Asian Bank Corporation is
anchored mainly on its allegations that: a) the subject properties constitute ill-gotten wealth of the
other defendants in the instant civil case; and, b) Asian Bank Corporation acquired the subject
properties in bad faith and with due notice of the pendency of the ill-gotten wealth case. In other
words, the determination of the character of the subject properties as "ill-gotten wealth" is equally
important and relevant for Asian Bank Corporation as it is for the other defendants considering
that the issue of its alleged acquisition in bad faith of the subject properties is premised on
Respondent Republic of the Philippines’ claim that the subject properties form part of the ill-
gotten wealth of the late President Marcos and his cronies. Such being the case, Asian Bank
Corporation is entitled as a matter of right to contest whatever evidence was presented by
Respondent Republic of the Philippines on these two (2) issues, specifically the character and
nature of the subject properties.
8.03 It must be stressed that the discretion of the court to order a separate trial of such issues
should only be exercised where the issue ordered to be separately tried is so independent of the
other issues that its trial will in no way involve the trial of the issues to be thereafter tried and
where the determination of that issues will satisfactorily and with practical certainty dispose of the
case, if decided for defendant. Considering that the issue on Asian Bank Corporation’s alleged
acquisition in bad faith of the subject properties is intimately related to the issue on the character
and nature of the subject properties as ill-gotten wealth of the other defendants in the instant civil
case, there is absolutely no legal or factual basis for the holding of a separate trial against Asian
Bank Corporation.17

As to the third issue, Metrobank posits that Asian Bank acquired the properties long after they
had been acquired by the original defendants supposedly through unlawful means; that the
Republic admitted that the evidence adduced against the original defendants would not apply to
Asian Bank because the amended complaint in Civil Case No. 0004 did not impute any
responsibility to Asian Bank for the accumulation of wealth by the original defendants, or did not
allege that Asian Bank had participated in such accumulation of wealth; that there was also no
allegation or proof that Asian Bank had been a business associate, dummy, nominee or agent of
the Marcoses; that the inclusion of Asian Bank was not warranted under the law; that Asian Bank
was a transferee in good faith and for valuable consideration; that the Sandiganbayan had no
jurisdiction over civil cases against innocent purchasers for value like Asian Bank that had no
notice of the allegedly ill-gotten nature of the properties; and that considering the admission of
the Republic that the issue on the accumulation of wealth by the original defendants did not at all
concern Asian Bank, it follows that the Sandiganbayan had no jurisdiction to pass judgment on
the validity of Asian Bank’s ownership of the properties. 18

In contrast, the Republic insists that the Rules of Court allowed separate trials if the issues or
claims against several defendants were entirely distinct and separate, notwithstanding that the
main claim against the original defendants and the issue against Asian Bank involved the same
properties; that the allegations in the case against Spouses Genito and the other original
defendants pertained to the Republic’s claim that the properties listed in Annex A of the original
complaint constituted ill-gotten wealth, resulting in the probable forfeiture of the listed properties
should the Republic establish in the end that such original defendants had illegally or unlawfully
acquired such properties; that although the Republic conceded that neither Asian Bank nor
Metrobank had any participation whatsoever in the commission of the illegal or unlawful acts, the
only issue relevant to Metrobank being whether it had knowledge that the properties had been in
custodia legis at the time of its acquisition of them to determine its allegation of being an
innocent purchaser for valuable consideration; that because the properties were situated in the
heart of Quezon City, whose land records had been destroyed by fire in 1998, resulting in the
rampant proliferation of fake land titles, Asian Bank should have acted with extra caution in
ascertaining the validity of the mortgagor’s certificates of title; and that the series of transactions
involving the properties was made under dubious circumstances. 19

The Republic posits that the Sandiganbayan had exclusive original jurisdiction over all cases
involving the recovery of ill-gotten wealth pursuant to Executive Orders No. 1, No. 2, No. 14 and
No. 14-A issued in 1986, laws encompassing the recovery of sequestered properties disposed of
by the original defendants while such properties remained in custodia legis and pending the final
resolution of the suit; and that the properties pertaining to Spouses Genito were among the
properties placed under the writs of sequestration issued by the Presidential Commission on
Good Government (PCGG), thereby effectively putting such properties in custodia legis and
rendering them beyond disposition except upon the prior approval of the Sandiganbayan. 20

Ruling

The petition for certiorari is partly meritorious.

The Sandiganbayan gravely abused its discretion in granting the Republic’s motion for separate
trial, but was correct in upholding its jurisdiction over the Republic’s claim against Asian Bank
(Metrobank).

First and Second Issues:

Separate Trials are Improper

The first and second issues, being interrelated, are jointly discussed and resolved.

The rule on separate trials in civil actions is found in Section 2, Rule 31 of the Rules of Court,
which reads:

Section 2. Separate trials. – The court, in furtherance of convenience or to avoid prejudice, may
order a separate trial of any claim, cross-claim, counterclaim, or third-party complaint, or of any
separate issue or of any number of claims, cross-claims, counterclaims, third-party complaints or
issues.

The text of the rule grants to the trial court the discretion to determine if a separate trial of any
claim, cross-claim, counterclaim, or third-party complaint, or of any separate issue or of any
number of claims, cross-claims, counterclaims, third-party complaints or issues should be held,
provided that the exercise of such discretion is in furtherance of convenience or to avoid
prejudice to any party.

The rule is almost identical with Rule 42(b) of the United States Federal Rules of Civil
Procedure (Federal Rules), a provision that governs separate trials in the United States Federal
Courts (US Federal Courts), viz:

Rule 42. Consolidation; Separate Trials.

xxxx

(b) Separate Trials. The court, in furtherance of convenience or to avoid prejudice, or when
separate trials will be conducive to expedition and economy, may order a separate trial of any
claim, crossclaim, counterclaim, or third-party claim, or of any separate issue or of any number of
claims, crossclaims, counterclaims, third-party claims, or issues, always preserving the inviolate
right of trial by jury as declared by the Seventh Amendment to the Constitution or as given by a
statute of the United States.

The US Federal Courts have applied Rule 42(b) by using several principles and parameters
whose application in this jurisdiction may be warranted because our rule on separate trials has
been patterned after the original version of Rule 42(b). 21 There is no obstacle to adopting such
principles and parameters as guides in the application of our own rule on separate trials. This is
because, generally speaking, the Court has randomly accepted the practices in the US Courts in
the elucidation and application of our own rules of procedure that have themselves originated
from or been inspired by the practice and procedure in the Federal Courts and the various US
State Courts.

In Bowers v. Navistar International Transport Corporation,22 we find the following explanation

made by the US District Court for the Southern District of New York on the objectives of having
separate trials, to wit:

The aim and purpose of the Rule is aptly summarized in C. Wright and A Miller’s Federal
Practice and Procedure:
The provision for separate trials in Rule 42 (b) is intended to further convenience, avoid delay
and prejudice, and serve the ends of justice. It is the interest of efficient judicial administration
that is to be controlling rather than the wishes of the parties. The piecemeal trial of separate
issues in a single suit is not to be the usual course. It should be resorted to only in the exercise of
informed discretion when the court believes that separation will achieve the purposes of the rule.

xxxx

As explained recently by the Second Circuit in United v. Alcan Aluminum Corp., Nos. 92-6158,
6160 1993 WL 100100, 1 (2d Cir., April 6, 1993), the purpose of separate trials under Rule 42
(b) is to "isolate issues to be resolved, avoid lengthy and perhaps needless litigation . . . and to
encourage settlement discussions and speed up remedial action." (citing, Amoco Oil v. Borden,
Inc., 889 F.2d 664, 668 (5th Cir. 1989); Katsaros v. Cody, 744 F.2d 270, 278 (2d Cir.), cert.
denied sub nom., 469 U.S. 1072, 105 S. Ct. 565, 83 L. Ed. 2d 506 (1984) (separate trials are
proper to further convenience or to avoid prejudice); Ismail v. Cohen, 706 F. Supp. 243, 251
(S.D.N.Y. 1989) (quoting, United States v. International Business Machines Corp., 60 F.R.D.
654, 657 (S.D.N.Y. 1973) (separate trials under Rule 42 (b) are appropriate, although not
mandatory, to "(1) avoid prejudice; (2) provide for convenience, or (3) expedite the proceedings
and be economical.") Separate trials, however, remain the exception rather than the rule. See,
e.g., Response of Carolina, Inc. v. Leasco Response, Inc., 537 F.2d 137 (5th Cir. 1976) xxx
(separation of issues is not the usual course under Rule 42 (b)). The moving party bears the
burden of establishing that separate trials are necessary to prevent prejudice or confusion and
serve the ends of justice. Buscemi v. Pepsico, Inc., 736 F. Supp. 1267, 1271 (S.D.N.Y. 1990).

In Divine Restoration Apostolic Church v. Nationwide Mutual Insurance Co.,23 the US District

Court for the Southern District of Texas, Houston Division specified that separate trials remained
the exception, and emphasized that the moving party had the burden to establish the necessity
for the separation of issues, viz:

Rule 42 (b) provides that a court has discretion to order separate trials of claims "in furtherance
of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and
economy." FED. R. CIV. P.42 (b). Thus, the two primary factors to be considered in determining
whether to order separate trials are efficient judicial administration and potential prejudice.
Separation of issues for separate trials is "not the usual course that should be
followed," McDaniel v. Anheuser-Bush, Inc., 987 F. 2d 298, 304 (5th Cir. 1993), and the burden
is on the party seeking separate trials to prove that separation is necessary. 9A CHARLES ALAN
WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE
2388 (3d ed. 2001).

xxxx

Still, in Corrigan v. Methodist Hospital,24 the US District Court for the Eastern District of
Pennsylvania has cautioned against the unfettered granting of separate trials, thusly:

Courts order separate trials only when "clearly necessary." Wetherill v. University of

Chicago, 565 F. Supp. 1553, 1566-67 (N.D. Ill. 1983) (citing 5 James William Moore, Moore’s
Federal Practice at pp. 42-37 to 42-38 & n.4 (1982)). This is because a "single trial will generally
lessen the delay, expense, and inconvenience to the parties and the courts." 5 James William
Moore, Moore’s Federal Practice P. 42-03[1], at p. 42-43 (1994); Laitram Corp. v. Hewlett-
Packard Co., 791 F. Supp. 113, 115 (E.D. La. 1992); Willemijn Houdstermaatschaapij BV. V.
Apollo Computer, 707 F. Supp. 1429, 1433 (D. Del. 1989). The movant has the burden to show
prejudice. Moore at p. 42-48.

x x x A Colorado District Court found three factors to weigh in determining whether to order
separate trials for separate defendants. These are 1) whether separate trials would further the
convenience of the parties; 2) whether separate trials would promote judicial economy; and 3)
whether separate trials would avoid substantial prejudice to the parties.

Tri-R Sys. V. Friedman & Son, 94 F.R.D. 726, 727 (D. Colo. 1982).

In Miller v. American Bonding Company,25 the US Supreme Court has delimited the holding of
separate trials to only the exceptional instances where there were special and persuasive
reasons for departing from the general practice of trying all issues in a case at only one time,
stating:

In actions at law, the general practice is to try all the issues in a case at one time; and it is only in
exceptional instances where there are special and persuasive reasons for departing from this
practice that distinct causes of action asserted in the same case may be made the subjects of
separate trials. Whether this reasonably may be done in any particular instance rests largely in
the court’s discretion.

Further, Corpus Juris Secundum26 makes clear that neither party had an absolute right to have a
separate trial of an issue; hence, the motion to that effect should be allowed only to avoid
prejudice, further convenience, promote justice, and give a fair trial to all parties, to wit:

Generally speaking, a lawsuit should not be tried piecemeal, or at least such a trial should be
undertaken only with great caution and sparingly. There should be one full and comprehensive
trial covering all disputed matters, and parties cannot, as of right, have a trial divided. It is the
policy of the law to limit the number of trials as far as possible, and

separate trials are granted only in exceptional cases. Even under a statute permitting trials of
separate issues, neither party has an absolute right to have a separate trial of an issue involved.
The trial of all issues together is especially appropriate in an action at law wherein the issues are
not complicated, x x x, or where the issues are basically the same x x x

x x x Separate trials of issues should be ordered where such separation will avoid prejudice,
further convenience, promote justice, and give a fair trial to all parties.

Bearing in mind the foregoing principles and parameters defined by the relevant US case law, we
conclude that the Sandiganbayan committed grave abuse of its discretion in ordering a separate
trial as to Asian Bank (Metrobank) on the ground that the issue against Asian Bank was distinct
and separate from that against the original defendants. Thereby, the Sandiganbayan veered
away from the general rule of having all the issues in every case tried at one time, unreasonably
shunting aside the dictum in Corrigan, supra, that a "single trial will generally lessen the delay,
expense, and inconvenience to the parties and the courts."27

Exceptions to the general rule are permitted only when there are extraordinary grounds for
conducting separate trials on different issues raised in the same case, or when separate trials of
the issues will avoid prejudice, or when separate trials of the issues will further convenience, or
when separate trials of the issues will promote justice, or when separate trials of the issues will
give a fair trial to all parties. Otherwise, the general rule must apply.

As we see it, however, the justification of the Sandiganbayan for allowing the separate trial did
not constitute a special or compelling reason like any of the exceptions. To begin with, the issue
relevant to Asian Bank was not complicated. In that context, the separate trial would not be in
furtherance of convenience. And, secondly, the cause of action against Asian Bank was
necessarily connected with the cause of action against the original defendants.  Should the
1âwphi1

Sandiganbayan resolve the issue against Spouses Genito in a separate trial on the basis of the
evidence adduced against the original defendants, the properties would be thereby adjudged as
ill-gotten and liable to forfeiture in favor of the Republic without Metrobank being given the
opportunity to rebut or explain its side. The outcome would surely be prejudicial towards
Metrobank.

The representation by the Republic in its comment to the petition of Metrobank, that the latter
"merely seeks to be afforded the opportunity to confront the witnesses and documentary
exhibits," and that it will "still be granted said right during the conduct of the separate trial, if
proper grounds are presented therefor," 28 unfairly dismisses the objective possibility of leaving
the opportunity to confront the witnesses and documentary exhibits to be given to Metrobank in
the separate trial as already too late. The properties, though already registered in the name of
Asian Bank, would be meanwhile declared liable to forfeiture in favor of the Republic, causing
Metrobank to suffer the deprivation of its properties without due process of law. Only a joint trial
with the original defendants could afford to Metrobank the equal and efficient opportunity to
confront and to contest all the evidence bearing on its ownership of the properties. Hence, the
disadvantages that a separate trial would cause to Metrobank would far outweigh any good or
benefit that the Republic would seemingly stand to gain from the separation of trials.

We must safeguard Metrobank’s right to be heard in the defense of its registered ownership of
the properties, for that is what our Constitution requires us to do. Hence, the grant by the
Sandiganbayan of the Republic’s motion for separate trial, not being in furtherance of
convenience or would not avoid prejudice to a party, and being even contrary to the Constitution,
the law and jurisprudence, was arbitrary, and, therefore, a grave abuse of discretion amounting
to lack or excess of jurisdiction on the part of the Sandiganbayan. 29

Third Issue:
Sandiganbayan has exclusive original jurisdiction
over the matter involving Metrobank

Presidential Decree No. 1606,30 as amended by Republic Act No. 7975 31 and Republic Act No.
8249,32 vests the Sandiganbayan with original exclusive jurisdiction over civil and criminal cases
instituted pursuant to and in connection with Executive Orders No. 1, No. 2, No. 14 and No. 14-A,
issued in 1986 by then President Corazon C. Aquino.

Executive Order No. 1 refers to cases of recovery and sequestration of ill-gotten wealth amassed
by the Marcoses their relatives, subordinates, and close associates, directly or through
nominees, by taking undue advantage of their public office and/or by using their powers,
authority, influence, connections or relationships. Executive Order No. 2 states that the ill-gotten
wealth includes assets and properties in the form of estates and real properties in the Philippines
and abroad. Executive Orders No. 14 and No. 14-A pertain to the Sandiganbayan’s jurisdiction
over criminal and civil cases relative to the ill-gotten wealth of the Marcoses and their cronies.

The amended complaint filed by the Republic to implead Asian Bank prays for reversion,
reconveyance, reconstitution, accounting and damages. In other words, the Republic would
recover ill-gotten wealth, by virtue of which the properties in question came under sequestration
and are now, for that reason, in custodia legis.33

Although the Republic has not imputed any responsibility to Asian Bank for the illegal
accumulation of wealth by the original defendants, or has not averred that Asian Bank was a
business associate, dummy, nominee, or agent of the Marcoses, the allegation in its amended
complaint in Civil Case No. 0004 that Asian Bank acted with bad faith for ignoring the
sequestration of the properties as ill-gotten wealth has made the cause of action against Asian
Bank incidental or necessarily connected to the cause of action against the original defendants.
Consequently, the Sandiganbayan has original exclusive jurisdiction over the claim against Asian
Bank, for the Court has ruled in Presidential Commission on Good Government v.
Sandiganbayan,34 that "the Sandiganbayan has original and exclusive jurisdiction not only over
principal causes of action involving recovery of ill-gotten wealth, but also over all incidents arising
from, incidental to, or related to such cases." The Court made a similar pronouncement
sustaining the jurisdiction of the Sandiganbayan in Republic of the Philippines (PCGG) v.
Sandiganbayan (First Division),35 to wit:

We cannot possibly sustain such a puerile stand. Peña itself already dealt with the matter when it
stated that under Section 2 of Executive Order No. 14, all cases of the Commission regarding
alleged illgotten properties of former President Marcos and his relatives, subordinates, cronies,
nominees and so forth, whether civil or criminal, are

lodged within the exclusive and original jurisdiction of the Sandiganbayan, "and all incidents
arising from, incidental to, or related to such cases necessarily fall likewise under the
Sandiganbayan’s exclusive and original jurisdiction, subject to review on certiorari exclusively by
the Supreme Court."

WHEREFORE, the Court PARTIALLY GRANTS the petition for certiorari.

Let the writ of certiorari issue: (a) ANNULLING AND SETTING ASIDE the Resolution dated
June 25, 2004 and the Resolution dated July 13, 2005 issued by the Sandiganbayan in Civil
Case No. 0004 granting the motion for separate trial of the Republic of the Philippines as to
Metropolitan Bank and Trust Company; and (b), DIRECTING the Sandiganbayan to hear Civil
Case No. 0004 against Metropolitan Bank and Trust Company in the same trial conducted
against the original defendants in Civil Case No. 0004.

The Court DECLARES that the Sandiganbayan has original exclusive jurisdiction over the
amended complaint in Civil Case No. 0004 as against Asian Bank Corporation/Metropolitan Bank
and Trust Company.

No pronouncements on costs of suit.

SO ORDERED.

LUCAS P. BERSAMIN
Associate Justice

WE CONCUR:

MARIA LOURDES P. A. SERENO

Chief Justice

TERESITA J. LEONARDO-DE CASTRO MARTIN S. VILLARAMA, JR.

Associate Justice Associate Justice

BIENVENIDO L. REYES
Associate Justice

CERTIFICATION

Pursuant to Section 13, Atiicle VIII of the Constitution, it is hereby certified that the conclusions in
the above Decision had been reached in consultation before the case was assigned to the writer
of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice
 FIRST DIVISION

G.R. No. 167724             June 27, 2006

BPI FAMILY SAVINGS BANK, INC., Petitioner,

vs.
MARGARITA VDA. DE COSCOLLUELA, Respondent.

DECISION

CALLEJO, SR., J.:

Assailed before this Court is a Petition for Review under Rule 45 of the Rules of Court of the
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 69732 granting respondent’s petition
for certiorari, and its resolution denying petitioner’s motion for reconsideration.

The Antecedents

Respondent Margarita Coscolluela and her husband Oscar Coscolluela obtained an agricultural
sugar crop loan from the Far East Bank & Trust Co. (FEBTC) Bacolod City Branch (later merged
with petitioner Bank of the Philippine Islands) for crop years 1997 and 1998. 2 However, in the
book of FEBTC, the loan account of the spouses was treated as a single account, 3 which
amounted to P13,592,492.00 as evidenced by 67 Promissory Notes4 executed on various dates,
from August 29, 1996 to January 23, 1998, to wit:
1avvphil.net

Amount
Promissory Note No. Date
(in Phil. Peso)

1. 02-052-960971 29 August 1996 148,000

2. 02-052-961095 23 September 1996 1,200,000

3. 02-052-961122 27 September 1996 550,000

4. 02-052-961205 11 October 1996 180,000

5. 02-052-961231 18 October 1996 155,000

6. 02-052-961252 24 October 1996 190,000

7. 02-052-961274 30 October 1996 115,000

8. 02-052-961310 8 November 1996 90,000

9. 02-052-961373 21 November 1996 125,000

10
02-052-961442 6 December 1996 650,000
.

11
02-052-961464 12 December 1996 240,000
.

12
02-052-961498 19 December 1996 164,000
.

13
02-052-961542 27 December 1996 200,000
.

14
02-052-970018 3 January 1997 120,000
.

15
02-052-970052 10 January 1997 185,000
.

16
02-052-970078 15 January 1997 80,000
.

17
02-052-970087 17 January 1997 170,000
.

18
02-052-970131 23 January 1997 180,000
.

19
02-052-970163 31 January 1997 220,000
.

20
02-052-970190 7 February 1997 110,000
.

21
02-052-970215 13 February 1997 170,000
.

22
02-052-970254 20 February 1997 140,000
.

23
02-052-970293 28 February 1997 130,000
.

24
02-052-970345 7 March 1997 90,000
.

25
02-052-970367 13 March 1997 50,000
.
26
02-052-970402 21 March 1997 160,000
.

27
02-052-970422 26 March 1997 190,000
.

28
02-052-970453 4 April 1997 82,000
.

29
02-052-970478 11 April 1997 150,000
.

30
02-052-970502 17 April 1997 80,000
.

31
02-052-970539 25 April 1997 145,000
.

32
02-052-970558 30 April 1997 135,000
.

33
02-052-970589 8 May 1997 54,000
.

34
02-052-970770 25 June 1997 646,492
.

35
02-052-970781 27 June 1997 160,000
.

36
02-052-970819 4 July 1997 250,000
.

37
02-052-970852 11 July 1997 350,000
.

38
02-052-970926 1 August 1997 170,000
.

39
02-052-970949 5 August 1997 200,000
.

40
02-052-970975 8 August 1997 120,000
.

41
02-052-970999 15 August 1997 150,000
.

42
02-052-971028 22 August 1997 110,000
.

43
02-052-971053 29 August 1997 130,000
.

44
02-052-971073 4 September 1997 90,000
.
45
02-052-971215 12 September 1997 160,000
.

46
02-052-971253 19 September 1997 190,000
.

47
02-052-971280 26 September 1997 140,000
.

48
02-052-971317 2 October 1997 115,000
.

49
02-052-971340 10 October 1997 115,000
.

50
02-052-971351 15 October 1997 700,000
.

51
02-052-971362 16 October 1997 90,000
.

52
02-052-971394 24 October 1997 185,000
.

53
02-052-971407 29 October 1997 170,000
.

54
02-052-971449 6 November 1997 105,000
.

55
02-052-971464 13 November 1997 170,000
.

56
02-052-971501 20 November 1997 150,000
.

57
02-052-971527 25 November 1997 620,000
.

58
02-052-971538 28 November 1997 130,000
.

59
02-052-971569 4 December 1997 140,000
.

60
02-052-971604 12 December 1997 220,000
.

61
02-052-971642 18 December 1997 185,000
.

62
02-052-971676 23 December 1997 117,000
.

63
02-052-971688 29 December 1997 100,000
.
 64
02-052-980019 7 January 1998 195,000
.

65
02-052-980032 8 January 1998 170,000
.

66
02-052-980064 15 January 1998 225,000
.

67
02-052-980079 23 January 1998 176,000
.

The promissory notes listed under Nos. 1 to 33 bear the maturity date of February 9, 1998, with a
30-day extension of up to March 11, 1998, while those listed under Nos. 34 to 67 bear December
28, 1998 as maturity date.

Meanwhile, on June 13, 1997, the spouses Coscolluela executed a real estate mortgage in favor
of FEBTC over their parcel of land located in Bacolod City covered by Transfer Certificate of Title
(TCT) No. T-109329 as security of loans on credit accommodation obtained by the spouses from
FEBTC and those that may be obtained by the mortgagees which was fixed at P7,000,000.00, as
well as those that may be extended by the mortgagor to the mortgagees. 5

Under the terms and conditions of the real estate mortgage, in the event of failure to pay the
mortgage obligation or any portion thereof when due, the entire principal, interest, penalties and
other charges then outstanding, shall become immediately due; upon such breach or violation of
the terms and conditions thereof, FEBTC may, at its absolute discretion foreclose the same
extrajudicially in accordance with the procedure prescribed by Act No. 3135, as amended, and
for the purpose appointed FEBTC as its attorney-in-fact with full power and authority to enter the
premises where the mortgaged property is located and to take actual possession and control
thereof without need of any order of any court, nor written permission from the spouses, and with
special power to sell the mortgaged property at a public or private sale at the option of the
mortgagee; and that the spouses expressly waived the term of 30 days or any other terms
granted by law as the period which must elapse before the mortgage agreement may be
foreclosed and, in any case, such period has already lapsed.

The mortgage was registered with the Registry of Deeds of Bacolod and was annotated in the
title of the land on June 20, 1997.6 Meantime, Oscar died intestate and was survived by his
widow, herein respondent.

For failure to settle the outstanding obligation on the maturity dates, FEBTC sent a final demand
letter7 to respondent on March 10, 1999 demanding payment, within five days from notice, of the
principal of the loan amounting to P13,481,498.68, with past due interests and penalties or in the
total amount of P19,482,168.31 as of March 9, 1999. 8 Respondent failed to settle her obligation.

On June 10, 1999, FEBTC filed a petition for the extrajudicial foreclosure of the mortgaged
property, significantly only for the total amount of P4,687,006.68 exclusive of balance, interest
and penalty, covered by promissory notes from 1 to 33, except nos. 2 and 10. 9

While the extrajudicial foreclosure proceeding was pending, petitioner FEBTC filed a
complaint10 with the Regional Trial Court (RTC) of Makati City, Branch 64, against respondent for
the collection of the principal amount of P8,794,492.00 plus interest and penalty, or the total
amount of P12,672,000.31, representing the amounts indicated in the rest of the promissory
notes, specifically Promissory Note Nos. 34 to 67, as well as those dated December 6, 1996 and
September 23, 1996:
PN No. Date Amount Annex

2-052-
January 02, 1998 176,000.00 A
980079

2-052-
January 15, 1998 225,000.00 B
980064

2-052-
January 08, 1998 170,000.00 C
980032

2-052-
January 07, 1998 195,000.00 D
980019

2-052-
December 29, 1997 100,000.00 E
971688

2-052-
December 23, 1997 117,000.00 F
971676

2-052-
December 18, 1997 185,000.00 G
971642

2-052-
December 12, 1997 220,000.00 H
971604

2-052-
December 04, 1997 140,000.00 I
971569

2-052-
November 28, 1997 130,000.00 J
971538

2-052-
November 25, 1997 620,000.00 K
971527

2-052-
November 20, 1997 150,000.00 L
971501

2-052-
November 13, 1997 170,000.00 M
971464

2-052-
November 06, 1997 105,000.00 N
971449

2-052-
October 29, 1997 170,000.00 O
971407

2-052-
October 24, 1997 185,000.00 P
971394

2-052-
October 16, 1997 90,000.00 Q
971362

2-052-
October 15, 1997 700,000.00 R
971351
 2-052-
October 15, 1997 115,000.00 S
971340

2-052-
October 02, 1997 115,000.00 T
971317

2-052-
September 26, 1997 140,000.00 U
971280

2-052-
September 19, 1997 190,000.00 V
971253

2-052-
September 12, 1997 160,000.00 W
971215

2-052-
September 04, 1997 90,000.00 X
971073

2-052-
August 29, 1997 130,000.00 Y
971053

2-052-
August 22, 1997 110,000.00 Z
971028

2-052-
August 15, 1997 150,000.00 AA
970999

2-052-
August 08, 1997 120,000.00 BB
970975

2-052-
August 05, 1997 200,000.00 CC
970949

2-052-
August 01, 1997 170,000.00 DD
970926

2-052-
July 11, 1997 350,000.00 EE
970852

2-052-
July 04, 1997 250,000.00 FF
970819

2-052-
June 27, 1997 160,000.00 GG
970781

2-052-
June 25, 1997 646,492.00 HH
970770

2-052-
December 06, 1996 650,000.00 II
961442

2-052-
September 23, 1996 1,200,000.00 JJ11
961095

Petitioner prayed that, after due proceedings, judgment be rendered in its favor, thus:
WHEREFORE, it is respectfully prayed that, after trial, judgment be rendered in its favor and
against defendants ordering them to pay the following:

a. The amount TWELVE MILLION SIX HUNDRED SEVENTY-TWO THOUSAND PESOS

and 31/100 (P12,672,000.31), with additional stipulated interest and penalty equivalent to
one (1%) percent of the amount due for every thirty (30) days or fraction thereof, until
fully paid;

b. Expense of litigation amounting to P50,000.00;

c. The amount of P500,000.00 as attorney’s fees.

Other reliefs just and equitable in the premises are similarly prayed for. 12

In her answer, respondent alleged, by way of special and affirmative defense, that the complaint
was barred by litis pendentia, specifically, the pending petition for the extrajudicial foreclosure of
the real estate mortgage, thus:

8) That plaintiff is guilty of forum shopping, in that some of the promissory notes attached
to plaintiff’s complaint are also the same promissory notes which were made the basis of
the plaintiff in their extrajudicial foreclosure of mortgage filed against the defendant-
spouses and also marked in evidence in support of their opposition to the issuance of the
preliminary injunction in Civil Case No. 99-10864;

9) That plaintiff-bank has not only charged but over charged the defendant-spouses with
excessive and exorbitant interest over and above those authorized by law. And in order
to add more injury to the defendants, plaintiff also included other charges not legally
collectible from the defendant-spouses;

10) That the act of the plaintiff-bank in seeking to collect twice on the same promissory
notes is not only unfair and unjust but also condemnable as plaintiff seek to unjustly
enrich itself at the expense of the defendants;

11) That there is another action pending between the same parties for the same cause;

12) That the claim or demand set forth in the plaintiff’s complaint has either been waived,
abandoned or otherwise extinguished.13

Petitioner presented Emmanuel Ganuelas, its loan officer in its Bacolod City Branch, as sole
witness. He testified that the spouses Coscolluela were granted an agricultural sugar loan which
is designed to finance the cultivation and plantation of sugar farms of the borrowers. 14 Borrowers
were allowed to make successive drawdowns or availments against the loan as their need arose.
Each drawdown is covered by a promissory note with uniform maturity dates. 15 The witness also
testified that the loan account of the spouses was a "single loan account." 16

After petitioner rested its case, respondent filed a demurrer to evidence 17 contending, among
others, that, with Ganuelas’ admission, there is only one loan account secured by the real estate
mortgage, that the promissory notes were executed as evidence of the loans. Plaintiff was thus
barred from instituting a personal action for collection of the drawdowns evidenced by
Promissory Note Nos. 2, 10, and 34 to 67 after instituting a petition for extrajudicial foreclosure of
the real estate mortgage for the amount covered by Promissory Note Nos. 1, 3 to 9, and 11 to
33. Respondent insisted that by filing a complaint for a sum of money, petitioner thereby split its
cause of action against her; hence, the complaint must perforce be dismissed on the ground of
litis pendentia.
Petitioner opposed the demurrer arguing that while the loans were considered as a single
account, each promissory note executed by respondent constituted a separate contract. It
reiterated that its petition for the extrajudicial and foreclosure of the real estate mortgage before
the Ex-Oficio Provincial Sheriff involves obligations different and separate from those in its action
for a sum of money before the court. Thus, petitioner could avail of the personal action for the
collection of the amount evidenced by the 36 promissory notes not subject of its petition for the
extrajudicial foreclosure of the real estate mortgage. Petitioner insists that the promissory notes
subject of its collection suit should be treated separately from the other set of obligations, that is,
the 31 promissory notes subject of its extrajudicial foreclosure petition. 18

In its Order19 dated January 10, 2002, the trial court denied the demurrer on the ground that the
promissory notes executed by respondent and her deceased husband contained different
amounts, and each note covered a loan distinct from the others. Thus, petitioner had the option
to file a petition for the extrajudicial foreclosure of the real estate mortgage covering 31 of the
promissory notes, and, as to the rest, to file an ordinary action for collection. Petitioner, thus,
merely opted to institute an action for collection of the debt on the 36 promissory notes, and
waived its action for the foreclosure of the security given on these notes.

Respondent filed a motion for reconsideration, 20 which the trial court denied in its February 19,
2002 Order,21 prompting her to file a certiorari petition22 under Rule 65 with the CA, assailing the
January 10, 2002 and February 19, 2002 Orders of the trial court. Respondent alleged that:

1. PUBLIC RESPONDENT GRAVELY ABUSED HER DISCRETION TANTAMOUNT TO

LACK AND/OR EXCESS OF JURISDICTION IN HOLDING THAT THE RESPONDENT
BANK CAN FILE SIMULTANEOUS ACTIONS FOR FORECLOSURE AND FOR
COLLECTION.

Meanwhile, on January 6, 2003, the parcel of land subject of the aforementioned real estate
mortgage was sold at public auction where petitioner emerged as the highest bidder. 23

On September 30, 2004, the CA rendered its Decision24 granting the petition, holding, under
prevailing jurisprudence, the remedies – either a real action to foreclose the mortgage or a
personal action to collect the debt – of a mortgage creditor are alternative and not cumulative.
Since respondent availed of the first one, it was deemed to have waived the second. Further, the
filing of both actions results in a splitting of a single cause of action. Thus, in denying her
Demurrer to Evidence, the RTC committed grave abuse of discretion as it overruled settled
judicial pronouncements. The dispositive part of the decision states:

WHEREFORE, the instant petition is GRANTED. The assailed Orders dated January 10, 2002
and February 19, 2002 are SET ASIDE.

SO ORDERED.

The CA cited the ruling of this Court in Bachrach Motor Co., Inc. v. Esteban Icarañgal and
Oriental Commercial Co., Inc.25

Aggrieved, petitioner filed a motion for reconsideration 26 on October 12, 2004. Respondent filed
her opposition27 to the motion on October 26, 2004. The CA thereafter denied the motion in a
resolution promulgated on April 6, 2005. 28

Petitioner filed the instant petition for review on certiorari, alleging that:

I.
THE COURT OF APPEALS ERRED IN GRANTING THE PETITION FOR CERTIORARI OF
RESPONDENT ON THE GROUND OF GRAVE ABUSE OF DISCRETION.

xxxx

The Trial Court did not commit grave abuse of discretion amounting to lack or excess of
jurisdiction in denying the Demurrer to Evidence filed by the respondents. Petitioner, in instituting
a petition for the Extra Judicial Foreclosure of the Mortgage of respondents based on 31
promissory notes executed by respondents and another action to collect on a separate set of 36
promissory notes, did not split their cause of action.

xxxx

The trial court did not commit grave abuse of discretion amounting to lack or excess of
jurisdiction when it denied respondents’ Demurrer to Evidence. In this wise, the Petition for
Certiorari filed by respondents should not have been granted. 29

During the pendency of this appeal, petitioner filed with this Court on December 2, 2005 a
manifestation and joint motion for substitution, informing the court that petitioner bank has
assigned to the Philippine Asset Investment, Inc. all its rights, title and interest over its non-
performing loan accounts pursuant to Republic Act No. 9182 entitled "The Special Purpose
Vehicle Act of 2002."

The issues raised in this case are (1) whether the petition for certiorari under Rule 65 of the
Rules of Court filed by respondent in the CA was the proper remedy to assail the January 10,
2002 Order of the trial court; (2) whether the appellate court issued its January 10, 2002 Order
with grave abuse of its discretion amounting to excess or lack of jurisdiction.

Petitioner avers that the January 10, 2002 Order of the RTC denying the Demurrer to Evidence
of respondent was interlocutory, and as such could not be the subject of a petition for
certiorari.30 The RTC did not commit a grave abuse of its discretion in issuing its January 10,
2002 Order. Petitioner maintains that respondent executed 67 separate loan obligations
evidenced by 67 separate promissory notes, with different amounts and maturity dates. It avers
that each of the loans, as evidenced by each of the promissory notes, may properly be the
subject of a separate action; thus, each promissory note is an actionable document. Moreover,
the real estate mortgage executed by the spouses secured an obligation only to a fixed amount
of P7,000,000.00 which is covered by Promissory Note Nos. 1 to 31, whereas the loans secured
by the spouses covered by the Promissory Note Nos. 32 to 67 for the total amount
of P12,672,000.31 were not secured by the real estate mortgage. Petitioner insists that it was
proper to file the petition for extrajudicial foreclosure of the real estate mortgage only for
respondent’s loan account covered by the 36 promissory notes for the amount of P7,755,733.64.
It was not barred from filing a separate action for the collection of the P12,672,000.31 against
respondent in the RTC for the drawdowns as evidenced by Promissory Note Nos. 34 to 67. What
should apply, petitioner asserts, is the ruling of this Court in Caltex Philippines, Inc. v.
Intermediate Appellate Court31 and Quiogue v. Bautista,32 and not the ruling of this Court in
Bachrach which involves only one promissory note.

Petitioner insists that, although respondent and her husband had a joint account with it, they had
separate loan obligations as evidenced by the promissory notes; hence, it had separate causes
of action for each and every drawdown evidenced by a promissory note.

For her part, respondent admits having executed the promissory notes. However, as testified to
by Ganuelas, the witness for petitioner, she and her husband only have one loan account with
petitioner, hence, the latter had only one cause of action against her either for the collection of
the entire loan account or for the extrajudicial foreclosure of the real estate mortgage, also for the
entire amount of the loan. Petitioner cannot split her single loan account by filing a simple
collection suit and a petition for extrajudicial foreclosure of the real estate mortgage without
violating the rule against splitting a single cause of action.

Respondent asserts that the real estate mortgage executed by respondent and her deceased
husband was a security not only of their loan account in the amount of P7,000,000.00 but for all
other loans that may have been extended to them in excess of that amount.

The petition is unmeritorious.

On the first issue, we agree with petitioner’s contention that the general rule is that an order
denying a motion to dismiss or demurrer to evidence is interlocutory and is not appealable.
Consequently, defendant must go to trial and adduce its evidence, and appeal, in due course,
from an adverse decision of the trial court. However, the rule admits of exceptions. Where the
denial by the trial court of a motion to dismiss or demurrer to evidence is tainted with grave
abuse of discretion amounting to excess or lack of jurisdiction, the aggrieved party may assail the
order of dismissal on a petition for certiorari under Rule 65 of the Rules of Court. A wide breadth
of discretion is granted in certiorari proceedings in the interest of substantial justice and to
prevent a substantial wrong. 33 As the Court held in Preferred Home Specialties, Inc. v. Court of
Appeals:34

It bears stressing that a writ of certiorari is of the highest utility and importance for curbing
excessive jurisdiction and correcting errors and most essential to the safety of the people and the
public welfare. Its scope has been broadened and extended, and is now one of the recognized
modes for the correction of errors by this Court. The cases in which it will lie cannot be defined.
To do so would be to destroy its comprehensiveness and limit its usefulness.

The appropriate function of a certiorari writ is to relieve aggrieved parties from the injustice
arising from errors of law committed in proceedings affecting justiciable rights when no other
means for an adequate and speedy relief is open. It is founded upon a sense of justice, to
release against wrongs otherwise irreconcilable, wrongs which go unredressed because of want
of adequate remedy which would be a grave reproach to any system of jurisprudence. 35

The aggrieved party is entitled to a writ of certiorari where the trial court commits a grave abuse
of discretion amounting to excess or lack of jurisdiction in denying a motion to dismiss a
complaint on the ground of litis pendentia. An appeal while available eventually is cumbersome
and inadequate for it requires the parties to undergo a useless and time-consuming and
expensive trial. The second case constitutes a rude if not debilitating imposition on the trial and
the docket of the judiciary.36

In the present case, we agree with the ruling of the CA that the RTC acted with grave abuse of
discretion amounting to excess or lack of jurisdiction when it denied the Demurrer to Evidence of
respondent and, in the process, ignored applicable rulings of this Court. Although respondent
had the right to appeal the decision of the trial court against her after trial, however, she, as
defendant, need not use up funds and undergo the tribulations of a trial and thereafter appeal
from an adverse decision.

Section 3, Rule 2 of the 1997 Rules of Civil Procedure provides that a party may not institute
more than one suit for a single cause of action and, if two or more suits are instituted on the
basis of the same cause of action, the filing of one on a judgment upon the merits in any one is
available as ground for the dismissal of the other or others. 37 A party will not be permitted to split
up a single cause of action and make it a basis for several suits. 38 A party seeking to enforce a
claim must present to the court by the pleadings or proofs or both, all the grounds upon which he
expects a judgment in his favor. He is not at liberty to split up his demands and prosecute it by
piecemeal, or present only a portion of the grounds upon which special relief is sought, and leave
the rest to be presented in a second suit if the first fails. 39 The law does not permit the owner of a
single or entire cause of action or an entire or indivisible demand to divide and split the cause or
demand so as to make it the subject of several actions. The whole cause must be determined in
one action.

Indeed, in Goldberg v. Eastern Brewing Co.,40 the New York Supreme Court emphasized that:

It was held in the case of Bendernagle v. Cocks, 19 Wend. 207 (32 Am.Dec. 448), that where a
party had several demands or existing causes of action growing out of the same contract or
resting in matter of account, which may be joined and sued for in the same action, they must be
joined; and if the demands or causes of action be split up, and a suit brought for part only, and
subsequently a second suit for the residue is brought, the first action may be pleaded in
abatement or in bar of the second action. x x x41

The rule against splitting causes of action is not altogether one of original legal right but is one of
interposition based upon principles of public policy and of equity to prevent the inconvenience
and hardship incident to repeated and unnecessary litigation. 42

It is not always easy to determine whether in a particular case under consideration, the cause of
action is single and entire or separate. The question must often be determined, not by the
general rules but by reference to the facts and circumstances of the particular case. Where
deeds arising out of contract are distinct and separate, they give rise to separate cause of action
for which separate action may be maintained; but it is also true that the same contract may give
rise to different causes of action either by reason of successive breaches thereof or by reason of
different stipulations or provisions of the contract. 43 The true rule which determines whether a
party has only a single and entire cause of action for all that is due him, and which must be sued
for in one action, or has a severable demand for which he may maintain separate suits, is
whether the entire amount arises from one and the same act or contract or the several parts
arise from distinct and different acts or contracts.44

Where there are entirely distinct and separate contracts, they give rise to separate causes of
action for which separate actions may be instituted and presented. When money is payable by
installments, a distinct cause of action assails upon the following due by each installment and
they may be recovered in successive action. On the other hand, where several claims payable at
different times arise out of the same transactions, separate actions may be brought as each
liability accounts. But where no action is brought until more than one is due, all that are due must
be included in one action; and that if an action is brought to recover upon one or more that are
due but not upon all that are due, a recovery in such action will be a bar to a several or other
actions brought to recover one or more claims of the other claims that were due at the time the
first action was brought.45

The weight of authority is that in the absence of special controlling circumstances, an open or
continuous running account between the same parties constitutes a single and indivisible
demand, the aggregate of all the items of the account constituting the amount due. But the rule is
otherwise where it affirmatively appears that the parties regarded the different items of the
account as separate transactions and not parts of an ordinary running account. And there may
also be, even between the same parties, distinct and separate actions upon which separate
actions may be maintained.46 In fine, what is decisive is that there be either an express contract,
or the circumstances must be such as to raise an implied contract embracing all the items to
make them, when they arise, at different times, a single or entire demand or cause of action. 47

Decisive of the principal issue is the ruling of this Court in Bachrach Motor Co., Inc. v. Esteban
Icarañgal and Oriental Commercial Co., Inc.48 in which it ruled that on the nonpayment of a note
secured by a mortgage, the creditor has a single cause of action against the debtor. The single
cause of action consists in the recovery of the credit with execution of the suit. In a mortgage
credit transaction, the credit gives rise to a personal action for collection of the money. The
mortgage is the guarantee which gives rise to a mortgage foreclosure suit to collect from the very
property that secured the debt. 49
The action of the creditor is anchored on one and the same cause: the nonpayment by the
debtor of the debt to the creditor-mortgagee. Though the debt may be covered by a promissory
note or several promissory notes and is covered by a real estate mortgage, the latter is
subsidiary to the former and both refer to one and the same obligation.

A mortgage creditor may institute two alternative remedies against the mortgage debtor, either a
personal action for the collection of debt, or a real action to foreclose the mortgage, but not both.
Each remedy is complete by itself. As explained by this Court:

We hold, therefore, that, in the absence of express statutory provisions, a mortgage creditor may
institute against the mortgage debtor either a personal action for debt or a real action to foreclose
the mortgage. In other words, he may pursue either of the two remedies, but not both. By such
election, his cause of action can by no means be impaired, for each of the two remedies is
complete in itself. Thus, an election to bring a personal action will leave open to him all the
properties of the debtor for attachment and execution, even including the mortgaged property
itself. And, if he waives such personal action and pursues his remedy against the mortgaged
property, an unsatisfied judgment thereon would still give him the right to sue for a deficiency
judgment, in which case, all the properties of the defendant, other than the mortgaged property,
are again open to him for the satisfaction of the deficiency. In either case, his remedy is
complete, his cause of action undiminished, and any advantages attendant to the pursuit of one
or the other remedy are purely accidental and are all under his right of election. On the other
hand, a rule that would authorize the plaintiff to bring a personal action against the debtor and
simultaneously or successively another action against the mortgaged property, would result not
only in multiplicity of suits so offensive to justice (Soriano v. Enriques, 24 Phil. 584) and
obnoxious to law and equity (Osorio v. San Agustin, 25 Phil. 404), but also in subjecting the
defendant to the vexation of being sued in the place of his residence or of the residence of the
plaintiff, and then again in the place where the property lies. 50

If the mortgagee opts to foreclose the real estate mortgage, he thereby waives the action for the
collection of the debt and vice versa.51 If the creditor is allowed to file its separate complaints
simultaneously or successively, one to recover his credit and another to foreclose his mortgage,
he will, in effect, be authorized plural redress for a single breach of contract at so much costs to
the court and with so much vexation and oppressiveness to the debtor. 52

In the present case, petitioner opted to file a petition for extrajudicial foreclosure of the real estate
mortgage but only for the principal amount of P4,687,006.08 or in the total amount
of P7,755,733.64 covering only 31 of the 67 promissory notes. By resorting to the extrajudicial
foreclosure of the real estate mortgage, petitioner thereby waived its personal action to recover
the amount covered not only by said promissory notes but also of the rest of the promissory
notes. This is so because when petitioner filed its petition before the Ex-Oficio Provincial Sheriff
on June 10, 1999, the entirety of the loan account of respondent under the 67 promissory notes
was already due. The obligation of respondent under Promissory Note Nos. 1 to 33 became due
on February 9, 1998 but was extended up to March 11, 1998, whereas, those covered by
Promissory Note Nos. 34 to 67 matured on December 28, 1998. Petitioner should have caused
the extrajudicial foreclosure of the real estate mortgage for the recovery of the entire obligation of
respondent, on all the promissory notes. By limiting the account for which the real estate
mortgage was being foreclosed to the principal amount of P4,687,006.68, exclusive of interest
and penalties, petitioner thereby waived recovery of the rest of respondent’s agricultural loan
account.

It must be stressed that the parties agreed in the Real Estate Mortgage that in the event that
respondent shall fail to pay the mortgage obligation "or any portion thereof when due, the entire
principal, interest, penalties and other charges then outstanding shall become immediately due,
payable and defaulted," thus:
 3. The terms and conditions of the Mortgage have been violated when the Mortgagors
failed and/or refused to pay, notwithstanding repeated demands, the installment and/or
maturity amount of the Mortgage obligation which became due and payable on the said
date;

4. Under the terms and conditions of the Mortgage Agreement, in the event the
Mortgagors fail and/or refuse to pay the Mortgage obligation or any portion thereof when
due, the entire principal, interest, penalties and other charges then outstanding, shall,
without need for demand, notice, or any other act or deed, become immediately due,
payable and defaulted;

5. The Mortgage Agreement provides that upon such breach or violation of the terms and
conditions thereof, the Mortgagee may, at its absolute discretion foreclose the same
extrajudicially in accordance with the procedure prescribed by Act No. 3135, as
amended, and for the purpose appointed the Mortgagee as its attorney-in-fact with full
power and authority to enter the premises where the Mortgaged property is located and
to take actual possession and control thereof without need of any order of any Court, nor
written permission from the Mortgagors, and with special power to sell the Mortgaged
Property at a public or private sale at the option of the Mortgagee. 53

Petitioner cannot split the loan account of respondent by filing a petition for the extrajudicial
foreclosure of the real estate mortgage for the principal amount of P4,687,006.68 covered by the
first set of promissory notes, and a personal action for the collection of the principal amount
of P12,672,000.31 covered by the second set of promissory notes without violating the
proscription against splitting a single cause of action against respondent.

The contention of petitioner that respondent’s loan account that was secured by the real estate
mortgage was limited only to those covered by the Promissory Note Nos. 1 to 33 or for the total
amount of P7,000,000.00 is belied by the real estate mortgage and by its own evidence.

Under the deed, the mortgage was to secure the payment of a credit accommodation already
obtained by respondent, the principal of all of which was fixed at P7,000,000.00, as well as any
other obligation that may be extended to respondent, including interest and expenses, to wit:

That for and in consideration of credit accommodation obtained from the MORTGAGEE, and to
secure the payment of the same and those that may hereafter be obtained, the principal of all of
which is hereby fixed at SEVEN MILLION PESOS ONLY (P7,000,000.00), Philippine Currency,
as well as those that the MORTGAGEE may extend to the MORTGAGOR, including interest and
expenses or any other obligation owing to the MORTGAGEE, whether direct or indirect, principal
or secondary, as appears in the accounts, books and records of the MORTGAGEE, the
MORTGAGOR does hereby transfer and convey by way of mortgage unto the MORTGAGEE, its
successors or assigns, the parcels of land which are described in the list inserted on the back of
this document and/or appended herein, together with all the buildings and improvements now
existing or which may hereafter be erected or constructed thereon, of which the MORTGAGOR
declares that he/it is the absolute owner free from all liens and encumbrances. However, if the
MORTGAGOR shall pay to the MORTGAGEE, its successors or assigns, the obligation secured
by this mortgage when due, together with interest, and shall keep and perform all and singular
the covenants and agreements herein contained for the MORTGAGOR to keep and perform,
then this mortgage shall be void, otherwise, it shall remain in full force and effect. 54 (Emphasis
supplied)

The testimony of Ganuelas in the RTC relative to the real estate mortgage follows:

Q The real estate mortgage states: "That for and in consideration of credit accommodation
obtained from the mortgagee." This simply means, Mr. Witness, that this mortgage is offered to
secure loans already obtained by the mortgagor from the mortgagee Far East Bank and Trust
Company. I am referring only to that phrase, obtained from the mortgagee, is that correct?

A Yes, Sir.

Q So from this phrase in the real estate mortgage, this mortgage was constituted to secure the
credit accommodation already obtained by the mortgagor, the defendant spouses, as of the time
of the execution of the real estate mortgage, is that correct?

A Yes, Sir.

Q Now since the loan secured by the defendants are evidenced by promissory notes, will you
agree with me, Mr. Witness, that this real estate mortgage was executed for promissory notes
already executed by the defendant spouses as of the time of the execution of the mortgage on
June 13, 1997, is that correct?

A Yes, Sir.

ATTY. MIRANO:

For purposes of identification, we respectfully request that this phrase: "that for and in
consideration of the credit accommodation obtained from the mortgagee" be bracketed and mark
as Exhibit 6-B. (Acting court interpreter marking said phrase as Exhibit 6-B.)

Q Now in accordance with the terms of this real estate mortgage, this real estate mortgage was
executed by the defendant spouses not only to secure the loan already obtained by the said
spouses as of the time of the execution of the mortgage on June 13, 1997 but also all other loans
that may be extended by Far East Bank and Trust Company to the defendant spouses after the
execution of the mortgage as stated in this portion of the real estate mortgage which we quote:
"to secure the payment as and those that may hereafter be obtained," is that correct?

A Yes, Sir.

Q So from your statement, Mr. Witness, this real estate mortgage was offered by the defendant
spouses as a security for the loans they already secured as of the time of the execution of the
mortgage but also for the loans that they will secure thereafter, is that correct?

A Yes, Sir.55 (Emphasis supplied)

As gleaned from the plain terms of the real estate mortgage, the real estate of respondent served
as continuing security liable for future advancements or obligations beyond the amount
of P7,000,000.00. The mortgage partakes of the nature of contract for future advancements. As
explained by this Court in the early case of Lim Julian v. Lutero: 56

The rule, of course, is well settled that an action to foreclose a mortgage must be limited to the
amount mentioned in the mortgage. The exact amount, however, for which the mortgage is given
need not always be specifically named. The amount for which the mortgage is given may be
stated in definite or general terms, as is frequently the case in mortgages to secure future
advancements. The amount named in the mortgage does not limit the amount for which it may
stand as security, if, from the four corners of the document, the intent to secure future
indebtedness or future advancements is apparent. Where the plain terms, of the mortgage,
evidence such an intent, they will control as against a contention of the mortgagor that it was the
understanding of the parties that the mortgage was security only for the specific amount named.
(Citizens’ Savings Bank v. Kock, 117 Mich. 225). In that case, the amount mentioned in the
mortgage was $7,000. The mortgage, however, contained a provision that "the mortgagors agree
to pay said mortgagee any sum of money which they may now or hereafter owe said
mortgagee." At the time the action of foreclosure was brought, the mortgagors owed the
mortgagee the sum of $21,522. The defendants contended that the amount to be recovered in
an action to foreclose should be limited to the amount named in the mortgage. The court held
that the amount named as consideration for the mortgage did not limit the amount for which the
mortgage stood as security, if, from the whole instrument the intent to secure future indebtedness
could be gathered. The court held that a mortgage to cover future advances is valid. (Michigan
Insurance Co. v. Brown, 11 Mich. 265; Jones on Mortgages, 1, sec. 373; Keyes v. Bump’s
Administrator, 59 Vt. 391; Fisher v. Otis, 3 Pin. 78; Brown v. Kiefer, 71 N.Y. 610; Douglas v.
Reynolds, 7 Peters [U.S.] 113; Shores v. Doherty, 65 Wis. 153)

Literal accuracy in describing the amount due, secured by a mortgage, is not required, but the
description of the debt must be correct and full enough to direct attention to the sources of
correct information in regard to it, and be such as not to mislead or deceive as to the amount of
it, by the language used. Reading the mortgage before us from its four corners, we find that the
description of the debt is full enough to give information concerning the amount due. The
mortgage recites that it is given to secure the sum of P12,000, interest, commissions, damages,
and all other amounts which may be found to be due at maturity. The terms of the contract are
sufficiently clear to put all parties who may have occasion to deal with the property mortgaged
upon inquiry. The parties themselves from the very terms of the mortgage could not be in
ignorance at any time of the amount of their obligation and the security held to guarantee the
payment.

When a mortgage is given for future advancements and the money is paid to the mortgagor "little
by little" and repayments are made from time to time, the advancements and the repayments
must be considered together for the purpose of ascertaining the amount due upon the mortgage
at maturity. Courts of equity will not permit the consideration of the repayments only for the
purpose of determining the balance due upon the mortgage. (Luengo & Martinez v. Moreno, 26
Phil. 111) The mere fact that, in contract of advancements, the repayments at any one time
exceeds the specific amount mentioned in the mortgage will not have the effect of discharging
the mortgage when the advancements at that particular time are greatly in excess of the
repayments; especially is this true when the contract of advancement or mortgage contains a
specific provision that the mortgage shall cover all "such other amounts as may be then due."
Such a provision is added to the contract of advancements or mortgage for the express purpose
of covering advancements in excess of the amount mentioned in the mortgage. (Luengo &
Martinez v. Moreno, supra)

The sum found to be owing by the debtor at the termination of the contract of advancements
between him and the mortgagee, during continuing credit, is still secured by the mortgage on the
debtor’s property, and the mortgagee is entitled to bring the proper action for the collection of the
amounts still due and to request the sale of the property covered by the mortgage. (Luengo &
Martinez v. Moreno, supra; Russell v. Davey, 7 Grant Ch. 13; Patterson First National Bank v.
Byard, 26 N.J. Equity 225)

Under a mortgage to secure the payment of future advancements, the mere fact that the
repayments on a particular day equal the amount of the mortgage will not discharge the
mortgage before maturity so long as advancements may be demanded and are being received.
(Luengo & Martinez v. Moreno, supra)57

Moreover, the series of loan advancements herein cannot be likened to the credit line discussed
in Caltex Philippines, Inc. v. Intermediate Appellate Court, 58 as petitioner posited in its reply59 filed
before this Court. In Caltex, unlike the instant case, the real estate mortgage executed did not
contain a "dragnet" clause60 that would subsume all past and future debts. The mortgage therein
specifically secured only the loans extended prior to the mortgage. Thus, in the said case, the
future debts were deemed as constituting a separate transaction from the past debts secured by
the mortgage.
The ruling of the Court in Quiogue v. Bautista 61 is likewise inapplicable. In that case, the Court
deemed the loan transactions as separate, considering that those were two separate loans
secured by two separate mortgages. In this case, however, there is only one mortgage securing
all 67 drawdowns made by respondent.

In fine, for the failure of respondent to pay her loan obligation, petitioner had only one cause of
action arising from such non-payment. This single cause of action consists in the recovery of the
credit with execution of the security.62 Petitioner is proscribed from splitting its single cause of
action by filing an extrajudicial foreclosure proceedings on June 10, 1999 with respect to the
amounts in the 31 promissory notes, and, during the pendency thereof, file a collection case on
June 23, 1999, with respect to the amounts in the remaining 36 promissory notes.

Considering, therefore, that, in the case at bar, petitioner had already instituted extrajudicial
foreclosure proceedings of the mortgaged property, it is now barred from availing itself of a
personal action for the collection of the indebtedness.

IN VIEW OF ALL THE FOREGOING, the instant petition is DISMISSED for lack of merit. Costs
against petitioner.

SO ORDERED.

ROMEO J. CALLEJO, SR.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 164800               July 22, 2009

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
ESTATE OF ALFONSO LIM, SR., ALFONSO LIM, JR., TEODORO Q. PENA, FERDINAND E.
MARCOS (now deceased and Represented by his Estate/Heirs), IMELDA R. MARCOS,
TAGGAT INDUSTRIES, INC., PAMPLONA REDWOOD VENEER, INC., SOUTHERN
PLYWOOD, WESTERN CAGAYAN LUMBER, ACME PLYWOOD, VETERAN WOODWORK,
INC., SIERRA MADRE WOOD INDUSTRIES, INC., and TROPICAL PHILIPPINES WOOD
INDUSTRIES, INC., Respondent.

DECISION

VELASCO, JR., J.:

In this Petition for Certiorari under Rule 65, the Republic of the Philippines assails and seeks to
nullify the Resolution1 dated March 28, 2003 of the Sandiganbayan, as effectively reiterated in
another resolution of June 18, 2004, which denied petitioner’s motion for the issuance of a writ of
preliminary attachment in Civil Case No. 0030, entitled Republic v. Alfonso Lim, et al.,2 a suit to
recover ill-gotten or unexplained wealth.

The Facts

On October 2, 1991, in Civil Case No. 0030, the Republic, represented by the Presidential
Commission on Good Government (PCGG), filed before the Sandiganbayan, Second Division,
an Amended Complaint for reconveyance, reversion, accounting, restitution, and damages. In it,
the Republic averred that Alfonso Lim, Sr. (now deceased) and Alfonso Lim, Jr., acting by
themselves and/or in unlawful collusion with Ferdinand E. Marcos and Imelda R. Marcos, and
taking undue advantage of their relationship, influence, and connection with the latter, embarked
upon devices and stratagems to unjustly enrich themselves at the expense of the Republic and
the Filipino people. Among other acts, the Lims were alleged to have:

(a) actively solicited and obtained, upon the personal behest of [the Marcoses], with the
active collaboration of Teodoro Q. Peña, who was then Minister of Natural Resources,
additional timber concession in favor of Taggat Industries, Inc. (TAGGAT) and Pamplona
Redwood Veneer, Inc. (PAMPLONA), corporations beneficially held and controlled by
Alfonso Lim and Alfonso Lim, Jr., which, in addition to other areas already awarded to
TAGGAT and PAMPLONA, resulted in their concession holdings in excess of the
allowable limits prescribed under Section 11, Article XIV of the 1973 Constitution;

(b) actively solicited and obtained, upon the personal behest of [the Marcoses], a
management contract in favor of TAGGAT to operate and manage the logging
concessions of Veterans Woodwork, Inc. (VETERANS), Sierra Madre Wood Industries,
Inc. (SIERRA MADRE), and Tropical Philippines Wood Industries, Inc. (TROPICAL) over
and above the objections of VETERANS;

(c) obtained a permit to cut down a certain number of Narra and Amaciga trees, and, on
the very same day, was likewise given an authorization by Ferdinand E. Marcos to export
the same, in violation of existing ban against cutting and export of the aforesaid trees;

(d) obtained, in favor of PAMPLONA, a syndicated loan in the amount of millions of US

dollars from a consortium of international banks, secured by the guarantee of the
National Investment and Development Corporation (NIDC), a subsidiary of the Philippine
National Bank; and in view of the default by PAMPLONA in the payment of its principal
and/or interest amortizations, the loan was converted, under the debt rescheduling
arrangement between Republic and its foreign creditor banks, into a public sector
obligation of Republic, to the grave and irreparable damage of the Republic and the
Filipino people.
The Republic also alleged that the foregoing acts, singly or collectively, constituted grave and
gross abuse of official position and authority, flagrant breach of public trust and fiduciary
obligations, brazen abuse of right and power, unjust enrichment, and violation of the Constitution
and laws of the Republic to the grave and irreparable damage to it and its citizens.

As its main prayer, the Republic asked for the reconveyance of all funds and property impressed
with constructive trust in favor of the Republic and the Filipino people, "as well as funds and
other property acquired with [respondents’] abuse of right and power and through unjust
enrichment, including but not limited to the properties listed in Annex "A" of the Complaint
together with the accruing income or increment from date of acquisition until final judgment."

The properties listed in the said Annex "A"3 consist––besides the Lims’ assets sequestered in
accordance wth Executive Order Nos. 1 and 2, Series of 1986––of the assets and other
properties of Lim, Sr., as follows:

1. a parcel of land with TCT No. 2981 (Lot A), located at Barrio Birinayan, Talisay,
Batangas;

2. a parcel of raw land with TCT No. 11750 (Lot 8-C-53) located at Muzon, San Isidro,
Angono, Rizal;

3. a parcel of raw land with TCT No. 11749 (Lot 8-C-51) located at Muzon, San Isidro,
Angono. Rizal;

4. a parcel of land with TCT No. 11728 (Lot 8-C-9) located at Muzon, San Isidro, Angono,
Rizal;

5. a parcel of land with TCT No. 11732 (Lot 8-C-17) located at Muzon, San Isidro,
Angono, Rizal;

6. a parcel of agricultural land with TCT No. 11728 (Lot 8-C-9) located at Muzon, San
Isidro, Angono, Rizal;

7. a parcel of agricultural land with TCT No. 11727 (Lot 8-C-7) located at Muzon, San
Isidro, Angono, Rizal;

8. a parcel of residential land with TCT No. 315 located at Maharlika, Tagaytay City;

9. a parcel of agricultural/residential land with TCT No. 157570 located at Berinayan,

Laurel, Batangas;

10. a parcel of land and building in the name of SIERRA MADRE as reported by Task
Force SEAFRONT, Nov. 20, 1986;

11. a parcel of land and building in the name of PAMPLONA as reported by Task Force
SEAFRONT, November 20, 1986;

12. Contigous [13] parcels of land located at Claveria, Cagayan in the name of TAGGAT
Industries, Inc. as reported by Task Force SEAFRONT, November 7, 1987:

xxxx

13. a parcel of agricultural land in the name of TAGGAT with OCT No. O-1108 (S) Lot
No. 1195;
 14. a parcel of commercial land in the name of TAGGAT with TCT No. 78732 located at
Romualdez Street, Paco, Manila;

15. buildings and improvements in the name of TAGGAT erected on OCT No. 0-1104, 0-
11017, 0-1109;

16. buildings in the name of TAGGAT erected on TCT No. 78732; Paco, Manila.

[OTHER PROPERTIES]

A. Shares of Stocks in:

1. Taggat Industries, Inc.

(TAGGAT)
2. Pamplona Redwood Veneer,
Inc. (PAMPLONA)
3. Sierra Madre Wood
Industries, Inc. (SIERRA
MADRE)
4. Veterans Woodworks, Inc.
(VETERANS)
5. Southern Plywood
Corporation (SPC)
6. Western Cagayan Lumber
(WCL)
1350, Romualdez Street, Paco, Manila
1350, Romualdez Street, Paco, Manila
79 Doña Hemady corner 13th St., New
Manila, Quezon City
79 Doña Hemady corner 13th St., New
Manila, Quezon City
5th Floor Jardine Davies Bldg., 222 Sen.
J. Puyat Avenue, Makati, Metro Manila
Jardine Davies Building, 222 Sen. J.
Puyat Avenue, Makati, Metro Manila

B. Property, Plant and Equipment

xxxx

C. Aircraft [2 units]

xxxx

D. Current Assets [as reported]

xxxx

E. Investments and Other Assets

1. Due from affiliated companies, TAGGAT, as reported

2. Investment in Stocks, TAGGAT, as reported

3. Deferred Charges and Other Assets, TAGGAT, as reported

F. Bank Accounts

1. PAMPLONA Accounts

a. The Consolidated Bank and Trust Co.

 b. Equitable Banking Corporation

2. TAGGAT Acccounts

a. The Consolidated Bank and Trust Co,

b. Philippine National Bank

c. Equitable Banking Corporation

d. Philippine Banking Corporation

e. Allied Banking Corporation

G. Other

1. Frozen Bank Accounts and Other Assets of Alfonso Lim, Sr., Alfonso Lim, Jr. and
Lawrence Lim

Meanwhile, Lim, Sr. passed away. On June 22, 1998, his estate filed a motion to lift the
sequestration4 over certain real properties5 contending that the PCGG impleaded him owing to
his alleged association with former Pres. Marcos. The estate would add, however, that Lim, Sr.
secured title over almost all of his real properties thus sequestered way back in 1948, long before
the Marcoses came to power.

To the motion to lift, the Republic interposed an opposition, alleging that the sequestered lots
and titles stand as security for the satisfaction of any judgment the Republic may obtain against
the estate of Lim, Sr., his family, or his group of companies.
1avvphi1

By Resolution6 dated March 17, 2001, the Sandiganbayan lifted the sequestration order in
question on the strength of the following pertinent premises, to wit:

The sequestration of some of the real properties of movant-defendant [estate of Lim, Sr.] is a
remedial measure resorted to in order to preserve these properties along with others alleged to
have taken illegally x x x, and "in order to prevent the same from disappearance, destruction,
loss or dissipation and /or to foil acts that may render moot and academic the efforts to recover
the aforesaid alleged "ill-gotten wealth". However, the pertinent provisions of Executive Order
Nos. 1, 2 and 14 are explicit in saying that the properties that are supposed to be "sequestered"
are those x x x amassed during the regime of the deposed President Ferdinand E. Marcos and
not before or later thereto. x x x

In time, the Republic sought but was later denied reconsideration of the sequestration-lifting
resolution of the Sandiganbayan. 7

Meanwhile, after presenting its evidence in the main case, the Republic filed its Formal Offer of
Evidence dated October 8, 2001. 8 On December 5, 2001, the Sandiganbayan issued a terse
order admitting all the documentary exhibits of the Republic consisting of Exhibits
"A" to "G," inclusive of their submarkings. 9

The following incidents/events then transpired:

(1) Sometime in January 2002, the estate of Lim, Sr., Ruthie Lim, and two others, as
defendants a quo, filed a Demurrer to Evidence10 dated January 14, 2002, on the ground
of either irrelevancy or immateriality of the Republic’s evidence. As argued, the same
evidence did not prove or disprove that the demurring defendants, on their own or in
 concert with the Marcoses, amassed ill-gotten wealth. Lim, Jr. later filed a
Manifestation11 adopting the demurrer to evidence of the estate of Lim, Sr., et al.

(2) On July 4, 2002, the Sandiganbayan denied the Republic’s motion for reconsideration
of the graft court’s resolution lifting the sequestration order. 12

(3) In an obvious bid to counter the effects of the lifting of the sequestration, the Republic,
on September 9, 2002, filed a Motion for the Issuance of a Writ of Preliminary
Attachment13 against respondents in the amount of its claim. The Republic alleged that
respondent Lims "were guilty of fraud in incurring various legal obligations which the
present action has been brought," by "taking undue advantage of their relationship,
influence and connection with the [Marcoses]" to unjustly enriched themselves to the
prejudice of the Republic.

Except for one, all the other respondents belonging to the Lim group filed their respective
comment or opposition to the Republic’s motion for a writ of attachment.

(4) On March 28, 2003, the Sandiganbayan, stating that bare allegations of the
commission of fraud by respondents in incurring the aforesaid obligations are not
sufficient for the granting of the writ of preliminary attachment, denied, via a
Resolution,14 the corresponding motion.

In due time, the Republic interposed a motion seeking reconsideration of the

Sandiganbayan’s March 28, 2003 denial action.15

(5) By Resolution dated July 17, 2003, the Sandiganbayan denied respondents’

demurrer to evidence.16

Forthwith, the estate of Lim, Sr., Taggat Industries, Inc. (TAGGAT), and Pamplona
Redwood Veneer, Inc. (PAMPLONA), followed later by Lim, Jr., respectfully moved for
reconsideration of the July 17, 2003 Resolution.

(6) On June 18, 2004, the Sandiganbayan resolved to affirm the denial of the
respondents’ demurrer to evidence. It also denied in its March 28, 2003 resolution the
Republic’s motion for the issuance of a writ of preliminary attachment. 17

Hence, this recourse is before us.

The Issues

The two interrelated issues petitioner Republic tenders boils down to: whether the
Sandiganbayan, in the light of the denial of respondents’ demurrer to evidence, acted with grave
abuse of discretion amounting to lack or excess of jurisdiction in not considering that the
evidence already on record support the issuance of a writ or preliminary attachment.

The Republic contends that the pieces of evidence offered before and admitted by the
Sandiganbayan provide sufficient basis for the issuance of a writ of preliminary attachment.
Thus, the graft court, as the Republic argues, committed grave abuse of discretion amounting to
excess of jurisdiction in denying the writ of preliminary injunction by not considering the evidence
already on record and in ruling contrary to its findings and conclusions when it denied
respondents’ demurrer to evidence.

Respondents, on the other hand, reiterate their position on the absence of evidence of fraud, as
required under Section 1(d), Rule 57 of the Rules of Court, which would justify the issuance of
the desired writ. In this regard, they reproduced what the Sandiganbayan said in its March 28,
2003 resolution on the matter of fraud, thus: "These are general averments devoid of the
particulars of time, persons, etc., in support of the serious allegation that [respondents] are guilty
of fraud in incurring these alleged legal obligation. Bare allegations that [respondents] have been
guilty of fraud in incurring the aforesaid obligations are not sufficient for the granting of the writ of
attachment."18

The Court’s Ruling

An assiduous review of the antecedent facts and factual findings and conclusions of the
Sandiganbayan relative to the denial of demurrer to evidence and the writ of preliminary
injunction compels this Court to grant the instant petition.

Nature of Preliminary Attachment

Attachment is an ancillary remedy applied for not for its own sake but to enable the attaching
party to realize upon relief sought and expected to be granted in the main or principal action; 19 it
is a measure auxiliary or incidental to the main action. As such, it is available during the
pendency of the action which may be resorted to by a litigant to preserve and protect certain
rights and interests therein pending rendition, and for purposes of the ultimate effects, of a final
judgment in the case. As a corollary proposition, an order granting an application for a writ of
preliminary attachment cannot, owing to the incidental or auxiliary nature of such order, be the
subject of an appeal independently of the main action. 20

The instant case is one of those mentioned in Sec. 1, Rule 57 of the Rules, specifically the
section’s paragraph "d," wherein a writ of preliminary attachment may be issued. It provides:

SECTION 1. Grounds upon which attachment may issue.––A plaintiff or any proper party may, at
the commencement of the action or at any time thereafter, have the property of the adverse party
attached as security for the satisfaction of any judgment that may be recovered in the following
cases:

xxxx

(d) In an action against a party who has been guilty of fraud in contracting the debt or incurring
the obligation upon which the action is brought, or in concealing or disposing of the property for
the taking, detention or conversion of which the action is brought;

For a writ of attachment to issue under the above-quoted rule, the applicant must sufficiently
show the factual circumstances of the alleged fraud.

Fraud may be defined as the voluntary execution of a wrongful act, or a willful omission, knowing
and intending the effects which naturally and necessarily arise from such act or omission. 21 In its
general sense, fraud is deemed to comprise anything calculated to deceive, including all acts and
omissions and concealment involving a breach of legal or equitable duty, trust, or confidence
justly reposed, resulting in damage to another, or by which an undue and unconscientious
advantage is taken of another.22 Fraud is also described as embracing all multifarious means
which human ingenuity can device, and which are resorted to by one individual to secure an
advantage over another by false suggestions or by suppression of truth and includes all surprise,
trick, cunning, dissembling, and any unfair way by which another is cheated. 23 Fraudulent, on the
other hand, connotes intentionally wrongful, dishonest, or unfair. 24

In the case at bar, the Republic has, to us, sufficiently discharged the burden of demonstrating
the commission of fraud committed by respondents Lims as a condition sine qua non for the
issuance of a writ of preliminary attachment. The main supporting proving document is the
Republic’s Exhibit "B" which the Sandiganbayan unqualifiedly admitted in evidence. And the
fraud or fraudulent scheme principally came in the form of Lim, Sr. holding and/or operating
logging concessions which far exceeded the allowable area prescribed under the 1973
Constitution.

A cursory evaluation of the Republic’s Exhibit "B"––the Decision dated November 20, 1986 of
then Minister Ernesto M. Maceda of the Ministry Natural Resources (MNR)25 in an unnumbered
MNR case entitled IN RE: VIOLATIONS OF VETERANS WOODWORKS, INC. AND ALFONSO
LIM, SR. AND TAGGAT INDUSTRIES, INC., canceling the logging concessions26 enjoyed by the
Lim Group––yields the following undisputed relevant data:

(1) Lim, Sr., through the seven (7) respondent corporations, had been
holding/operating/managing several timber concessions with a total area of 533,880
hectares, more or less, which was far in excess of the 100,000 hectares allowed in the
1973 Constitution;27

(2) Since a wide expanse of forest lands were in between the different Lim concessions,
the Lims had effectively access to a total of 633,880 hectares of forests; and

(3) Other violation of the constitutional prohibition applies also to three (3) corporations
(Acme Plywood Co., Inc., Western Cagayan Lumber Co., Inc., and Southern Plywood
Corporation).

As is made abundantly clear in the aforesaid Maceda decision, the MNR revoked or canceled the
concessions or timber license agreements (TLAs) of Lim, Sr. on the principal ground that the
timber award was made in utter violation of the Constitutional limitations on the granting of
logging concessions.28 The same decision also indicated that Lim, Sr.’s "influence, power and
strong connection with the past [i.e., Marcos] dispensation" 29 explained his receipt of special
privileges and concessions unfettered by constitutional constraints. So influential was Lim, Sr.
that he and TAGGAT and sister companies received certain timber-related benefits without the
knowledge, let alone approval, of MNR.30 Lim, Sr. doubtless utilized to the hilt his closeness to
the Marcoses to amass what may prima facie be considered as illegal wealth.

Scheme to Circumvent Constitutional Prohibition

Sec. 11 of Article XIV of the governing 1973 Constitution states that "no private corporation or
association may hold by lease, concession, license, or permit, timber or forest lands and
other timber or forest resources in excess of one hundred thousand hectares."
Complementing this provision was Chapter I, No. 3(e) of Forestry Administrative Order (FAO)
No. 11 prohibiting any individual, corporation, partnership, or association from acquiring a timber
license or license agreement covering an area in excess of 100,000 hectares. Likewise, Chapter
I, No. 3(d) of FAO No. 11 states that no individual corporation, partnership, or association who is
already a holder of an ordinary timber license or license agreement nor any member of the
family, incorporator, director, stockholder, or member of such individual, corporation, partnership,
or association shall be allowed to acquire a new timber license or license agreement or any
interest or participation in it.

The constitutional and statutory limitations on allowable area leases and concessions were
obviously meant to prevent the concentration of large tracts of public land in the hands of a single
individual. But as the Office of the Solicitor General aptly observed, citing the Maceda decision:
"For one Filipino out of 55 million to own, operate or in one form [or] another be financially
interested in more than 600,000 hectares out of a total forest land of 14 million hectares is
certainly unfair, unacceptable and unconstitutional by any standard."31

Lim, Sr., as earlier stated, had been holding/operating/managing several timber concessions
through the seven (7) logging companies for an aggregate area of 533,880 hectares, as follows:
 Name of Corporation TLA No. Concession Area
(1) Taggat Industries, Inc. 071 107,845 has.
(2) Pamplona Redwood Veneer Co., Inc. 074 118,315 has
(3) Southern Plywood Corp. (one share) 321 71,300 has.
(4) Western Cagayan Lumber Co., Inc. (one share) 073 69,675 has.
(5) Acme Plywood & Veneer Co,, Inc. (one share) 075 84,525 has.
(6) Veterans Woodworks, Inc.   63,179 has.
(7) Sierra Madre Wood Ind., Inc. 345 19,050 has.
  TOTAL 533,880 has.

The Maceda decision stressed that Lim, Sr. had one share each in the three corporations,
namely: (1) Acme Plywood and Veneer Co., Inc. (ACME); (2) Western Cagayan Lumber Co., Inc.
(WESTERN); and (3) Southern Plywood Corporation (SPC). These corporations, the decision
added, likewise violated the Constitution considering that Lim, Sr. had control over them as
owner-founder. To cover the constitutional violation, Lim, Jr. was used as a front and made to
appear as President of the mentioned three corporations. 32

There can be no quibbling that MNR correctly revoked/canceled all the timber concessions of
Lim, Sr., namely: TLA No. 071 (TAGGAT), TLA No. 074 (PAMPLONA), TLA No. 321 (SPC), TLA
No. 073 (WESTERN), and TLA No. 075 (ACME). As it were, the TLAs of TAGGAT and
PAMPLONA each exceeded the 100,000-hectare threshold prescribed by the 1973 Constitution.
Initially, the execution and granting of those timber license agreements were already tainted with
fraud. The Lims resorted to their close connection with the Marcoses for the approval of the
timber license agreements and the Lims were given access effectively to a total 633,880
hectares in violation of the 1973 Constitution and FAO No. 11.

Indeed, the Lims’ availment and enjoyment of logging concessions grossly in excess of
constitutional limits amount to a voluntary execution of a wrongful act, if not a serious breach of
legal duty. By their acts, the Lims veritably defrauded and cheated the Filipino people––the
ultimate beneficiaries of the country’s natural resources.

Denial of Demurrer to Evidence Indicative

of the Commission of Fraudulent Acts

The evidence that clearly supports the issuance of a writ of preliminary attachment sought by
Republic is already on record before the Sandiganbayan. As a matter of fact, the anti-graft court
already ruled and considered that the evidence so far presented by the Republic had been
sufficient to support a finding that respondents had committed illegal and fraudulent acts against
the Republic and the Filipino people. This was the tenor of the Sandiganbayan’s resolution
denying the respondents’ demurrer to evidence.

A demurrer to evidence is defined as "an objection by one of the parties in an action, to the effect
that the evidence which his adversary produced is insufficient in point of law, whether true or not,
to make out a case or sustain the issue."33 The party demurring challenges the sufficiency of the
whole evidence to sustain a verdict.34 In passing upon the sufficiency of the evidence raised in a
demurrer, the court is merely required to ascertain whether there is competent or sufficient proof
to sustain the indictment or to support a verdict of guilt. 35 And when the court denies the
demurrer, the defendant has to present countervailing evidence against the evidence adduced
by the plaintiff.36
In the case at bar, when the Sandiganbayan denied respondents’ demurrer to evidence, it in
effect ruled that the evidence presented by the prosecution is, absent a countervailing
evidence, prima facie sufficient to support an adverse verdict against them for amassing illegal
wealth. The Sandiganbayan, in its underlying resolution of July 17, 2003 denying the demurrer,
wrote:

The Demurrer is denied.

To support the charges, plaintiff introduced, among others, Exhibit "B", a decision dated
November 20, 1986 by then DENR Secretary Ernesto Maceda which, after hearing, revoked or
cancelled the respective Timber License Agreements (TLAs) of defendants Alfonso Lim, Sr.,
Taggat Industries, Inc., Pamplona Redwood Veneer, [etc.] after an investigation found that the
same entities held timber concessions in excess of what was allowed by the Constitution. The
same decision likewise made certain findings of facts that x x x Lim, Sr. enjoyed close
association with former President Ferdinand E. Marcos as a consequence of which the latter
granted x x x Lim, Sr. special privileges and concessions in gross violation of the Constitution. In
addition, Exhibit "E" indicates that x x x Taggat Industries, chiefly owned by defendant Lim Sr.,
using his close association with then President Marcos, acquired and controlled three (3) other
logging firms, namely Veteran Woodworks, Inc., Tropical Philippine Wood Industries, Inc., and
Sierra Madre Wood Industries, Inc. x x x. This resulted to the acquisition of defendant Lim Sr. of
excessive number of timber concessions.

Given the circumstances, this Court cannot simply brush aside the foregoing considering that
what the defendants-movants proffer are mere blanket denial of the charges. In demurrer to
evidence, the party demurring challenges the sufficiency of the whole evidence to sustain a
verdict. The court, in passing upon the sufficiency of the evidence raised in a demurrer, is merely
required to ascertain whether there is competent or sufficient evidence to sustain the indictment.
Applying the said ruling in the instant case, there exists prima facie evidence on record x x x to
support or sustain the charges against the defendants-movants. There is therefore a further need
on the part of the defendants-movants to submit the proof to the contrary other than their mere
simple disclaimer.37

Sandiganbayan Did Not Consider

Evidence in Denying Attachment

Given the foregoing pronouncement from the Sandiganbayan, the Court is completely at a loss to
understand the graft court’s denial of the Republic’s plea for the ancillary remedy of preliminary
attachment. The wrongful act––the fraud perpetuated by Lim Sr. and/or his corporations on the
Republic––is written over or easily deducible from the adverted Maceda decision and Exhibit
"E." While fraud cannot be presumed, it need not be proved by direct evidence and it can well be
inferred from attendant circumstances.38 Withal, we cannot but agree with the Republic’s
contention that the Sandiganbayan’s denial of its motion for a writ of preliminary attachment
constitutes grave and patent abuse of discretion amounting to lack or excess of jurisdiction.

A scrutiny of the above-quoted July 17, 2003 Resolution readily shows that the Sandiganbayan
indeed considered the evidence presented and offered by the Republic, specifically Exhibits
"B" and "E" which convincingly show the finding that respondents’ acts were tainted with fraud
in the acquisition of the logging concessions due to their close association with the Marcoses.

It is incongruous, therefore, for the Sandiganbayan to deny the writ of preliminary attachment
when the pieces of evidence on record which it used and based its findings and conclusions in
denying the demurrer to evidence were the same ones which demonstrate the propriety of the
writ of preliminary attachment. Clearly, the Republic has complied with and satisfied the legal
obligation to show the specific acts constitutive of the alleged fraud committed by respondents.
The denial of the prayed writ, thus, evidently constitutes grave abuse of discretion on the part of
Sandiganbayan. After all, "attachment is a mere provisional remedy to ensure the safety and
preservation of the thing attached until the plaintiff can, by appropriate proceedings, obtain a
judgment and have such property applied to its satisfaction." 39 Indeed, the properties of
respondents sought to be subjected to the ancillary writ of preliminary attachment are not only in
danger of being lost but should be placed under custodia legis to answer for any liabilities that
may be adjudged against them in the instant case.

WHEREFORE, the Sandiganbayan Resolutions dated March 28, 2003 and June 18, 2004 are
hereby REVERSED and SET ASIDE. Accordingly, the 2nd Division of Sandiganbayan is
hereby DIRECTED to ISSUE the Writ of Preliminary Attachment prayed for by the Republic. No
costs.

SO ORDERED.

PRESBITERO J. VELASCO, JR.

Associate Justice

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 172592               July 9, 2008

SPOUSES WILFREDO N. ONG and EDNA SHEILA PAGUIO-ONG, Petitioners,
vs.
ROBAN LENDING CORPORATION, Respondent.

AUSTRIA-MARTINEZ,*

DECISION

CARPIO MORALES, J.:

On different dates from July 14, 1999 to March 20, 2000, petitioner-spouses Wilfredo N. Ong and
Edna Sheila Paguio-Ong obtained several loans from Roban Lending Corporation (respondent)
in the total amount of ₱4,000,000.00. These loans were secured by a real estate mortgage on
petitioners’ parcels of land located in Binauganan, Tarlac City and covered by TCT No. 297840. 1

On February 12, 2001, petitioners and respondent executed an Amendment to Amended Real
Estate Mortgage2 consolidating their loans inclusive of charges thereon which totaled
₱5,916,117.50. On even date, the parties executed a Dacion in Payment Agreement 3 wherein
petitioners assigned the properties covered by TCT No. 297840 to respondent in settlement of
their total obligation, and a Memorandum of Agreement 4 reading:

That the FIRST PARTY [Roban Lending Corporation] and the SECOND PARTY [the petitioners]
agreed to consolidate and restructure all aforementioned loans, which have been all past due
and delinquent since April 19, 2000, and outstanding obligations totaling P5,916,117.50. The
SECOND PARTY hereby sign [sic] another promissory note in the amount of P5,916,117.50 (a
copy of which is hereto attached and forms xxx an integral part of this document), with a promise
to pay the FIRST PARTY in full within one year from the date of the consolidation and
restructuring, otherwise the SECOND PARTY agree to have their "DACION IN PAYMENT"
agreement, which they have executed and signed today in favor of the FIRST PARTY be
enforced[.]5

In April 2002 (the day is illegible), petitioners filed a Complaint, 6 docketed as Civil Case No. 9322,
before the Regional Trial Court (RTC) of Tarlac City, for declaration of mortgage contract as
abandoned, annulment of deeds, illegal exaction, unjust enrichment, accounting, and damages,
alleging that the Memorandum of Agreement and the Dacion in Payment executed are void for
being pactum commissorium.7

Petitioners alleged that the loans extended to them from July 14, 1999 to March 20, 2000 were
founded on several uniform promissory notes, which provided for 3.5% monthly interest rates,
5% penalty per month on the total amount due and demandable, and a further sum of 25%
attorney’s fees thereon,8 and in addition, respondent exacted certain sums denominated as
"EVAT/AR."9 Petitioners decried these additional charges as "illegal, iniquitous, unconscionable,
and revolting to the conscience as they hardly allow any borrower any chance of survival in case
of default."10

Petitioners further alleged that they had previously made payments on their loan accounts, but
because of the illegal exactions thereon, the total balance appears not to have moved at all,
hence, accounting was in order.11

Petitioners thus prayed for judgment:

a) Declaring the Real Estate Mortgage Contract and its amendments x x x as null and
void and without legal force and effect for having been renounced, abandoned, and given
up;
 b) Declaring the "Memorandum of Agreement" xxx and "Dacion in Payment" x x x as null
and void for being pactum commissorium;

c) Declaring the interests, penalties, Evat [sic] and attorney’s fees assessed and loaded
into the loan accounts of the plaintiffs with defendant as unjust, iniquitous,
unconscionable and illegal and therefore, stricken out or set aside;

d) Ordering an accounting on plaintiffs’ loan accounts to determine the true and correct
balances on their obligation against legal charges only; and

e) Ordering defendant to [pay] to the plaintiffs: --

e.1 Moral damages in an amount not less than P100,000.00 and exemplary
damages of P50,000.00;

e.2 Attorney’s fees in the amount of P50,000.00 plus P1,000.00 appearance fee
per hearing; and

e.3 The cost of suit.12

as well as other just and equitable reliefs.

In its Answer with Counterclaim,13 respondent maintained the legality of its transactions with
petitioners, alleging that:

xxxx

If the voluntary execution of the Memorandum of Agreement and Dacion in Payment Agreement
novated the Real Estate Mortgage then the allegation of Pactum Commissorium has no more
legal leg to stand on;

The Dacion in Payment Agreement is lawful and valid as it is recognized x x x under Art. 1245 of
the Civil Code as a special form of payment whereby the debtor-Plaintiffs alienates their property
to the creditor-Defendant in satisfaction of their monetary obligation;

The accumulated interest and other charges which were computed for more than two (2) years
would stand reasonable and valid taking into consideration [that] the principal loan is ₱4,000,000
and if indeed it became beyond the Plaintiffs’ capacity to pay then the fault is attributed to them
and not the Defendant[.]14

After pre-trial, the initial hearing of the case, originally set on December 11, 2002, was reset
several times due to, among other things, the parties’ efforts to settle the case amicably. 15
1avvphi1

During the scheduled initial hearing of May 7, 2003, the RTC issued the following order:

Considering that the plaintiff Wilfredo Ong is not around on the ground that he is in Manila and he
is attending to a very sick relative, without objection on the part of the defendant’s counsel, the
initial hearing of this case is reset to June 18, 2003 at 10:00 o’clock in the morning.

Just in case [plaintiff’s counsel] Atty. Concepcion cannot present his witness in the person of Mr.
Wilfredo Ong in the next scheduled hearing, the counsel manifested that he will submit the case
for summary judgment.16 (Underscoring supplied)

It appears that the June 18, 2003 setting was eventually rescheduled to February 11, 2004 at
which both counsels were present17 and the RTC issued the following order:
The counsel[s] agreed to reset this case on April 14, 2004, at 10:00 o’clock in the morning.
However, the counsels are directed to be ready with their memorand[a] together with all the
exhibits or evidence needed to support their respective positions which should be the basis for
the judgment on the pleadings if the parties fail to settle the case in the next scheduled setting.

x x x x18 (Underscoring supplied)

At the scheduled April 14, 2004 hearing, both counsels appeared but only the counsel of
respondent filed a memorandum. 19

By Decision of April 21, 2004, Branch 64 of the Tarlac City RTC, finding on the basis of the
pleadings that there was no pactum commissorium, dismissed the complaint.20

On appeal,21 the Court of Appeals22 noted that

x x x [W]hile the trial court in its decision stated that it was rendering judgment on the pleadings,
x x x what it actually rendered was a summary judgment. A judgment on the pleadings is proper
when the answer fails to tender an issue, or otherwise admits the material allegations of the
adverse party’s pleading. However, a judgment on the pleadings would not have been proper in
this case as the answer tendered an issue, i.e. the validity of the MOA and DPA. On the other
hand, a summary judgment may be rendered by the court if the pleadings, supporting affidavits,
and other documents show that, except as to the amount of damages, there is no genuine issue
as to any material fact.23

Nevertheless, finding the error in nomenclature "to be mere semantics with no bearing on the
merits of the case",24 the Court of Appeals upheld the RTC decision that there was no pactum
commissorium.25

Their Motion for Reconsideration26 having been denied,27 petitioners filed the instant Petition for
Review on Certiorari,28 faulting the Court of Appeals for having committed a clear and reversible
error

I. . . . WHEN IT FAILED AND REFUSED TO APPLY PROCEDURAL REQUISITES

WHICH WOULD WARRANT THE SETTING ASIDE OF THE SUMMARY JUDGMENT IN
VIOLATION OF APPELLANTS’ RIGHT TO DUE PROCESS;

II. . . . WHEN IT FAILED TO CONSIDER THAT TRIAL IN THIS CASE IS NECESSARY

BECAUSE THE FACTS ARE VERY MUCH IN DISPUTE;

III. . . . WHEN IT FAILED AND REFUSED TO HOLD THAT THE MEMORANDUM OF

AGREEMENT (MOA) AND THE DACION EN PAGO AGREEMENT (DPA) WERE
DESIGNED TO CIRCUMVENT THE LAW AGAINST PACTUM COMMISSORIUM; and

IV. . . . WHEN IT FAILED TO CONSIDER THAT THE MEMORANDUM OF

AGREEMENT (MOA) AND THE DACION EN PAGO (DPA) ARE NULL AND VOID FOR
BEING CONTRARY TO LAW AND PUBLIC POLICY. 29

The petition is meritorious.

Both parties admit the execution and contents of the Memorandum of Agreement and Dacion in
Payment. They differ, however, on whether both contracts constitute pactum
commissorium or dacion en pago.

This Court finds that the Memorandum of Agreement and Dacion in Payment constitute pactum
commissorium, which is prohibited under Article 2088 of the Civil Code which provides:
The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of
them. Any stipulation to the contrary is null and void."

The elements of pactum commissorium, which enables the mortgagee to acquire ownership of
the mortgaged property without the need of any foreclosure proceedings, 30 are: (1) there should
be a property mortgaged by way of security for the payment of the principal obligation, and (2)
there should be a stipulation for automatic appropriation by the creditor of the thing mortgaged in
case of non-payment of the principal obligation within the stipulated period. 31

In the case at bar, the Memorandum of Agreement and the Dacion in Payment contain no
provisions for foreclosure proceedings nor redemption. Under the Memorandum of Agreement,
the failure by the petitioners to pay their debt within the one-year period gives respondent the
right to enforce the Dacion in Payment transferring to it ownership of the properties covered by
TCT No. 297840. Respondent, in effect, automatically acquires ownership of the properties upon
petitioners’ failure to pay their debt within the stipulated period.

Respondent argues that the law recognizes dacion en pago as a special form of payment
whereby the debtor alienates property to the creditor in satisfaction of a monetary
obligation.32 This does not persuade. In a true dacion en pago, the assignment of the property
extinguishes the monetary debt.33 In the case at bar, the alienation of the properties was by way
of security, and not by way of satisfying the debt. 34 The Dacion in Payment did not extinguish
petitioners’ obligation to respondent. On the contrary, under the Memorandum of Agreement
executed on the same day as the Dacion in Payment, petitioners had to execute a promissory
note for ₱5,916,117.50 which they were to pay within one year. 35

Respondent cites Solid Homes, Inc. v. Court of Appeals36 where this Court upheld a

Memorandum of Agreement/Dacion en Pago.37 That case did not involve the issue of pactum
commissorium.38

That the questioned contracts were freely and voluntarily executed by petitioners and respondent
is of no moment, pactum commissorium being void for being prohibited by law.39

Respecting the charges on the loans, courts may reduce interest rates, penalty charges, and
attorney’s fees if they are iniquitous or unconscionable. 40

This Court, based on existing jurisprudence,41 finds the monthly interest rate of 3.5%, or 42% per
annum unconscionable and thus reduces it to 12% per annum. This Court finds too the penalty
fee at the monthly rate of 5% (60% per annum) of the total amount due and demandable –
principal plus interest, with interest not paid when due added to and becoming part of the
principal and likewise bearing interest at the same rate, compounded monthly 42 – unconscionable
and reduces it to a yearly rate of 12% of the amount due, to be computed from the time of
demand.43 This Court finds the attorney’s fees of 25% of the principal, interests and interests
thereon, and the penalty fees unconscionable, and thus reduces the attorney’s fees to 25% of
the principal amount only.44

The prayer for accounting in petitioners’ complaint requires presentation of evidence, they
claiming to have made partial payments on their loans, vis a vis respondent’s denial thereof. 45 A
remand of the case is thus in order.

Prescinding from the above disquisition, the trial court and the Court of Appeals erred in holding
that a summary judgment is proper. A summary judgment is permitted only if there is no genuine
issue as to any material fact and a moving party is entitled to a judgment as a matter of law. 46 A
summary judgment is proper if, while the pleadings on their face appear to raise issues, the
affidavits, depositions, and admissions presented by the moving party show that such issues are
not genuine.47 A genuine issue, as opposed to a fictitious or contrived one, is an issue of fact that
requires the presentation of evidence. 48 As mentioned above, petitioners’ prayer for accounting
requires the presentation of evidence on the issue of partial payment.

But neither is a judgment on the pleadings proper. A judgment on the pleadings may be rendered
only when an answer fails to tender an issue or otherwise admits the material allegations of the
adverse party’s pleadings.49 In the case at bar, respondent’s Answer with Counterclaim disputed
petitioners’ claims that the Memorandum of Agreement and Dation in Payment are illegal and
that the extra charges on the loans are unconscionable. 50 Respondent disputed too petitioners’
allegation of bad faith.51

WHEREFORE, the challenged Court of Appeals Decision is REVERSED and SET ASIDE. The
Memorandum of Agreement and the Dacion in Payment executed by petitioner- spouses
Wilfredo N. Ong and Edna Sheila Paguio-Ong and respondent Roban Lending Corporation on
February 12, 2001 are declared NULL AND VOID for being pactum commissorium.

In line with the foregoing findings, the following terms of the loan contracts between the parties
are MODIFIED as follows:

1. The monthly interest rate of 3.5%, or 42% per annum, is reduced to 12% per annum;

2. The monthly penalty fee of 5% of the total amount due and demandable is reduced to
12% per annum, to be computed from the time of demand; and

3. The attorney’s fees are reduced to 25% of the principal amount only.

Civil Case No. 9322 is REMANDED to the court of origin only for the purpose of receiving
evidence on petitioners’ prayer for accounting.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

WE CONCUR:

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 159788               December 23, 2009

SOTERO ROY LEONERO, RODOLFO LIM, ISIDORO A. PADILLA, JR., AMY ROSE FISMA,
and NORMA CABUYO, Petitioners,
vs.
SPOUSES MARCELINO B. BARBA and FORTUNA MARCOS-BARBA, represented by
IMELDA N. FORONDO, and REGISTER OF DEEDS OF QUEZON CITY, Respondents.

DECISION

PERALTA, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying
that the Decision1 of the Court of Appeals (CA) dated July 31, 2002 denying petitioner's appeal,
and its Resolution2 dated September 8, 2003 denying the motion for reconsideration, be reversed
and set aside.

The undisputed facts, as gathered from the records, are as follows.

Petitioners filed a complaint against respondents for Quieting of Title and Preliminary Injunction
before the Regional Trial Court (RTC) of Quezon City, Branch 216, docketed as Q-94-20097,
praying that Transfer Certificates of Title (TCT) Nos. 59721, 59725, 59726 and 59727, in the
name of respondents, be declared null and void for having emanated from Original Certificate of
Title (OCT) No. 614. Petitioners alleged that said OCT No. 614 had been declared void in a
Partial Decision on Defaulted Private Respondents in Civil Case No. Q-35672.

Respondents filed their Answer, maintaining that TCT Nos. 59721, 59725, 59726 and 59727, all
in their names, were all genuine titles duly issued by the Register of Deeds of Quezon City and
correctly plotted by the Land Registration Authority. They further argued that the Partial Decision
in Civil Case No. Q- 35672 could not possibly have any effect on them, as they were not parties
to said case. It was also pointed out that petitioners, as defendants in a separate ejectment case
filed against them by respondents, had been ordered by the Metropolitan Trial Court (MeTC),
Branch 36 to vacate the subject lots. A Writ of Execution had been issued on April 6, 1994 to
implement the order to vacate.

On May 6, 1994, the RTC issued an Order3 directing the parties to submit memoranda, "after
which, the case shall be deemed submitted for resolution whether or not they have filed their
respective memoranda."

Thereafter, on July 7, 1994, the RTC issued an Order 4 denying the prayer for a writ of preliminary
injunction and also dismissing the principal action for quieting of title. Petitioners moved for
reconsideration of said Order and moved for leave to amend the complaint. In an Order dated
July 29, 1994, the RTC denied the motion for reconsideration and, consequently, no longer acted
on the motion for leave to amend the complaint.

Aggrieved by the foregoing Orders of the RTC, petitioner appealed to the CA. In the assailed CA
Decision dated July 31, 2002, the dismissal of petitioners' complaint was affirmed. The CA ruled
that the RTC committed no error in dismissing petitioners' complaint even before conducting trial
on the merits, because the Partial Decision in Civil Case No. Q-35672 could not have any legal
effect on herein respondents, as they were not parties to the aforementioned action. Petitioners'
motion for reconsideration of the said CA Decision was denied per Resolution dated September
8, 2003.

Hence, this petition where the main issue is whether the CA erred in affirming the RTC's
dismissal of the complaint for quieting of title despite the lack of trial on the merits, hence,
allegedly depriving petitioners of the opportunity to prove their allegations that respondents'
aforementioned TCTs were null and void.
The petition is doomed to fail.

It is not correct to say that petitioners were deprived of their day in court when the RTC
dismissed the complaint even before conducting trial on the merits. As held in Luzon
Development Bank v. Conquilla,5 the court, motu proprio, may render judgment on the pleadings
based on the parties' admissions in their pleadings and even without introduction of evidence, if
and when these amply establish that there is insufficiency of factual basis for the action. 6

In this case, petitioners admit that they are mere possessors of the parcels of land in question
and have been ordered by the MeTC to vacate the same. The gist of their claim in the action for
quieting of title with preliminary injunction is that the MeTC Decision in the ejectment case
against them should not be implemented, because respondents' TCTs are spurious, having
emanated from OCT No. 614, which has been declared null and void in a Partial Decision
rendered in Civil Case No. Q-35672. Petitioners' main prayer is for the nullification of
respondents' TCTs.

From such allegations, it is already clear that petitioners' action cannot succeed. Firstly, Section
48 of the Property Registration Decree provides that a certificate of title cannot be subject to
collateral attack and can only be altered, modified or cancelled in a direct proceeding in
accordance with law. In Foster-Gallego v. Galang,7 the Court held that the issue of whether a title
was procured by falsification or fraud should be raised in an action expressly instituted for the
purpose, not in an action for quieting of title. 8 Again, in Vda. de Gualberto v. Go,9 the Court held
that the validity of a certificate of title cannot be assailed in an action for quieting of title; an action
for annulment of title is the more appropriate remedy to seek the cancellation of a certificate of
title.10 Hence, herein petitioners' action for quieting of title is a mere collateral attack against
respondents' TCT Nos. 59721, 59725, 59726 and 59727, and is proscribed by the law. 1avvphi1

Secondly, as early as 2001 in Pinlac v. Court of Appeals,11 the Court categorically struck down
the Partial Decision issued in Civil Case No. Q-35672, upon which herein petitioners base their
claim that respondents' TCTs are spurious. The Court ruled that said Partial Decision was null
and void. Thus, in Cañete v. Genuino Ice Company, Inc.,12 the Court emphasized that:

First, their initial claim that OCT 614 – of which all the other subject titles are derivatives – is null
and void, has been proven wrong. As held in Pinlac and other cases, OCT 614 did legally exist
and was previously issued in the name of the Philippine Government in 1910 under the
provisions of Act 496.

Second, the Ad Hoc Committee of the then Ministry of Natural Resources, which was specifically
tasked to investigate the historical background of the Piedad Estate, found that as early as the
period prior to the Second World War, all lots in the Piedad Estate had already been disposed of.

Third, the Piedad Estate has been placed under the Torrens system of land registration, which
means that all lots therein are titled.13

Clearly, petitioners' complaint is unfounded and the RTC acted properly in dismissing the same
for petitioners' failure to establish the factual basis for it.

WHEREFORE, the petition is DENIED for utter lack of merit.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 155680               July 2, 2012

FIRST LEVERAGE AND SERVICES GROUP, INC., Petitioner,

vs.
SOLID BUILDERS, INC., Respondent.
 DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking
to reverse and set aside the Decision and Resolution dated June 17, 2002 and October 21,
1  2 

2002, respectively, of the Court of Appeals (CA) in CA-G.R. SP No. 47218.

The instant petition arose from a Complaint for Annulment of Promise to Sell, Mandamus and
Prohibitory Injunction filed with the Regional Trial Court (RTC) of Manila by herein petitioner First
Leverage and Services Group, Inc. (First Leverage) against PNB Republic Bank (PNB Republic).

In its Amended Complaint, wherein it impleaded herein respondent Solid Builders, Inc. (Solid
3 

Builders) as additional defendant, dated April 11, 1996, First Leverage alleged the following:

x x x           x x x          x x x

2. [PNB] Republic is the owner of two (2) parcels of land situated in Kaybagal South,
Tagaytay City, covered by Transfer Certificate of Title No. T-4211 with an area of
1,906,710 square meters and Transfer Certificate of Title No. T-4050 with an area of
369,234 square meters. Both parcels of land are part of the acquired assets of
[PNB] Republic.

3. Sometime in the mid-1980's, [PNB] Republic put up the aforementioned parcels of land

for sale by public bidding. Two (2) public biddings were conducted but both were
considered failed public biddings for failure to meet certain requirements. Hence,
[PNB] Republic put up the two (2) parcels of land for negotiated sale.

4. [The total appraised value of the said parcels of land as of June 16, 1994 was
₱73,817,000.00]

5. On June 20, 1994, the Loan Recovery and Acquired Assets Division (LRAAD, for
brevity) of [PNB] Republic received a formal offer from Solid [Builders] for the purchase of
the parcel of land covered by TCT No. T-4050, for ₱12,500,000.00 with thirty percent
(30%) down payment and with the balance payable in five (5) years at nineteen percent
(19%) interest per annum.

6. On June 23, 1994, the LRAAD received another formal offer from Solid [Builders] for
the purchase of the parcel of land covered by TCT No. T-4211 for ₱47,000,000.00 with
twenty percent (20%) down and with the balance payable in five (5) years at nineteen
percent (19%) interest per annum.

7. In a letter dated July 7, 1994, Jeremias Dimla II, LRAAD's Senior Manager, informed
Solid [Builders] that the latter's offer of ₱47,000,000.00 for the parcel of land covered by
TCT No. 4211 was unacceptable but suggested that it improve its offer.

8. On August 2, 1994, LRAAD received a letter from Solid [Builders] proposing a package
price for the two (2) parcels of land x x x for ₱61,000,000.00 with ₱1,000,000.00
option/earnest money, twenty-five percent (25%) downpayment within ninety (90) days
from date of acceptance/approval and with the balance payable quarterly for three (3)
years at primary market interest rates.

9. On August 17, 1994, the LRAAD received a letter from [First Leverage] offering to
purchase the two (2) parcels x x x for ₱70,000,000.00 in cash. Although none of the
LRAAD employees admitted having received [First Leverage's] letter-offer, x x x Dimla
admitted having received a copy thereof on August 18, 1994. x x x

10. The reason given by Jeremias Dimla II as regards the non-official receipt of the letter-
offer of [First Leverage] was at the time the offer was made LRAAD had already received
Solid [Builders'] acceptance letter dated August 15, 1994, as regards the APPROVAL by
the LRAAD of Solid [Builder's] offer, contained in its letter dated August 2, 1994, subject
to certain terms and conditions. Allegedly, the APPROVAL was communicated to Solid
by a letter dated August 12, 1994, of the LRAAD through Jeremias Dimla II. Under this
package the price for the two (2) parcels of land was ₱67,000,000.00 payable as follows:
30% downpayment payable within 90 days from receipt of approval; the balance payable
within three (3) years by monthly amortization covered by postdated checks with interest
at prevailing non-prime rate. Accordingly, [PNB] Republic refused to receive petitioner's
letter-offer.

11. In a letter dated September 1, 1994, [First Leverage], through Atty. Ariel F. Aguirre,
reiterated [its] offer to buy the two (2) parcels of land for ₱70,000,000.00 in CASH. Atty.
Aguirre likewise demanded that Solid [Builders’] offer be rejected on the ground that Solid
[Builders'] offer as against that of [First Leverage] was: first, prejudicial to [PNB] Republic;
and secondly, would subject [PNB] Republic's officers to anti-graft charges. x x x

12. In reply to Atty. Aguirre's letter, [PNB] Republic x x x replied that [it] did not officially
receive [First Leverage's] letter-offer of August 17, 1994, since as of August 17, 1994,
[PNB] Republic had already contracted to sell the two (2) parcels of land to Solid
[Builders]. x x x

13. Notwithstanding said [PNB] Republic's reply letter dated September 6, 1994, Atty.

Aguirre persisted by forwarding another letter dated September 7, 1994, reiterating [First
Leverage's] offer to buy the two (2) parcels of land for ₱70,000,000.00 in CASH. Atty.
Aguirre, in addition, demanded that First Leverage be furnished copies of documents
relative to [PNB] Republic's transaction with Solid [Builders].

14. Because of [PNB] Republic's failure to properly respond to Atty. Aguirre's letter, Atty.

Aguirre forwarded a further letter dated September 14, 1994, again reiterating [First
Leverage's] offer to purchase the two (2) parcels of land for ₱70,000,000.00 in CASH. x x
x

15. On September 19, 1994, [PNB] Republic, despite the better offer of [First Leverage]
and through the ultra vires acts of its officers, executed with Solid [Builders] a Deed of
Promise to Sell covering the two (2) parcels of land. x x x

16. By reason of the threat of Atty. Aguirre of taking administrative, criminal and/or civil
action against Republic and its officers by refusing to accept [First Leverage's] offer and
[accepting] Solid [Builder's] offer, [PNB] Republic referred Atty. Aguirre's letter of
September 14, 1994, to the Office of the Government Corporate Counsel [OGCC] for
legal opinion.

17. The OGCC rendered an opinion, x x x, dated December 7, 1994, the thrust of which
is as follows:

a) The Loans and Assets Recovery Committee, (Committee for brevity) to which
LRAAD referred Solid [Builders'] offer for approval was not authorized to approve
said offer for under existing policies any sale or disposition of acquired assets
whose value exceeds ₱3,000,000.00 must be approved by
[PNB] Republic's Board of Directors.
 b) One of the essential requisites of a valid contract, insofar as
[PNB] Republic and Solid [Builders are concerned], is missing, namely consent
as provided for in Art. 1318 of the Civil Code.

x x x           x x x          x x x

18. There are no existing offers within the period of negotiation except those submitted
by [First Leverage] and Solid [Builders]. The period to negotiate the sale of the
aforedescribed two (2) parcels of land had already lapsed as clearly indicated by the
alleged (though invalid) acceptance of Solid [Builders'] offer.

19. By letter dated December 13, 1994, [First Leverage] demanded that its offer be
calendared for approval by [PNB] Republic's Board of Directors x x x. However, the
Board of Directors, without any justifiable, valid or lawful reason, refused to approve [First
Leverage's] valid, legal and subsisting offer which, as against Solid [Builders'] offers is
definitely more advantageous to [PNB] Republic in particular and to the Government in
general.

xxxx 4

In its Answer to the Amended Complaint, PNB Republic denied the material allegations in the
said Amended Complaint and contended that the Complaint states no cause of action; that the
sale of the subject properties to Solid Builders was validly approved or thereafter ratified and
confirmed by its board of directors; that PNB Republic was justified in selling the subject
properties to Solid Builders because at that time, the latter's offer was the highest and most
advantageous; at the time that First Leverage submitted its offer to buy the subject properties,
the offer of Solid Builders was already approved. 5

On the other hand, Solid Builders filed its Amended Answer asserting, in the same manner as
PNB Republic, that the Complaint states no cause of action; that several months before First
Leverage even thought of buying the disputed properties, Solid Builders and PNB Republic had
already been negotiating the sale thereof which later led to the execution of a Deed of Promise to
Sell the same; as of the time of execution of the said Deed, Republic had never known of any
intention on the part of First Leverage to offer to buy the litigated properties; that First Leverage
had not acquired any right over the said properties which can be protected; that the contract
between Solid Builders and PNB Republic was legal and not ultra vires, and in accordance with
the rules and regulations of the Bank. In its cross-claim against PNB Republic, Solid Builders
prays that, if the disputed Deed of Promise to Sell is declared null and void, it shall be given the
right to recover the amounts it had already paid to and received by PNB Republic, the value of
the improvements it introduced on the subject property as well as compensatory and exemplary
damages and attorney's fees. 6

After Pre-Trial Conference was concluded, First Leverage filed a Motion for Judgment on the
Pleadings and/or Resolution of Case Based on Admissions and Stipulations of Facts of the
Parties. Solid Builders opposed the said Motion.

On December 23, 1996, the RTC rendered Judgment, the dispositive portion of which reads as
follows:

WHEREFORE, in the interest of speedy and substantial justice, judgment is hereby rendered in
favor of the plaintiff and against the two (2) defendants PNB Republic Bank and Solid Builders,
Inc.:

(a) Granting the plaintiff's instant Motion for Judgment on the Pleadings, etc., dated
September 30, 1996;
 (b) Declaring null and void the alleged approval by the Loans and Assets Recovery
Board Committee (LARBC) of the defendant Solid's verbal offer supposedly made on
August 11, 1994 to buy the two (2) properties in question;

(c) Declaring null and void the Deed of Promise to Sell, dated September 19, 1994,
executed by and between the two (2) defendants;

(d) Ordering the issuance of a Writ of Mandamus commanding the defendant Bank, thru
its Board of Directors, to approve within a period of ten (10) days from receipt hereof, the
plaintiff's superior and written offer of August 17, 1994 to purchase the two (2) parcels of
land involved herein for the cash price of ₱70,000,000.00 over that of the alleged verbal
and inferior offer of the defendant Solid, payable in three (3) years on installment basis,
in order to protect the public interest.

(e) Ordering the defendants to pay the costs of suit.

SO ORDERED. 7

Solid Builders and PNB Republic filed their respective Motions for Reconsideration, but the RTC
denied them in its Order dated February 10, 1997.
8 

Aggrieved, PNB Republic filed a special civil action for certiorari with this Court which case was
referred to the CA. Subsequently, PNB Republic's petition for certiorari was subsequently denied
due course and dismissed by the appellate court on the ground that the petition was resorted to
as a substitute for a lost appeal.

Solid Builders, on the other hand, filed an appeal with the CA.

On June 17, 2002, the CA rendered its assailed Decision, which disposed as follows:

WHEREFORE, premises considered, as to defendant-appellant Solid Builders, the assailed

decision of the lower court is hereby ANNULLED and SET ASIDE. The case is REMANDED to
the lower court for further proceedings, and the lower court is (1) DIRECTED to SET for
preliminary hearing the special and affirmative defenses of Solid Builders as grounds for the
dismissal of the amended complaint of plaintiff-appellee First Leverage, (2) to RESOLVE with
dispatch this particular incident, and (3) to PROCEED to trial on the merits, if warranted.

No pronouncement as to costs.

SO ORDERED. 9

First Leverage filed a Motion for Reconsideration, but the same was denied by the CA in its
10 

Resolution dated October 21, 2002.

11 

Hence, the instant petition for review on certiorari where First Leverage advances the following
arguments:

I. THE LOWER COURT CORRECTLY RENDERED THE JUDGMENT DATED

DECEMBER 23, 1996 AS A SUMMARY JUDGMENT;

II. SINCE ONLY SOLID BUILDERS, INC. APPEALED FROM THE JUDGMENT DATED
DECEMBER 23, 1996, SAID JUDGMENT HAS BECOME FINAL AND EXECUTORY
INSOFAR AS PNB-REPUBLIC IS CONCERNED; and
 III. CONSEQUENTLY THE APPEAL OF SOLID BUILDERS HAS BECOME MOOT AND
ACADEMIC INSOFAR AS FIRST LEVERAGE AND SERVICES GROUP, INC. IS
CONCERNED. 12

In its first assigned error, First Leverage argues that, in the instant case, there is no genuine
issue as to any material or relevant fact which may proscribe a summary judgment; that the CA
erred in not upholding the decision of the RTC because the same is supported by established
facts, admissions and/or stipulations as well as documents admitted by the parties.

In its second and third assignments of error, First Leverage contends that since PNB Republic
did not appeal the judgment of the RTC, the same has become final and executory insofar as
PNB Republic is concerned. As such, First Leverage avers that it has already acquired vested
rights enforceable by a writ of execution as against PNB Republic. First Leverage concludes that
the appeal of Solid Builders with the CA, which in essence seeks to enforce its contract with PNB
Republic, is already rendered moot and academic, and that it has become functus officio insofar
as First Leverage is concerned, considering that the said contract was already awarded in favor
of the latter.

The Court finds the petition without merit.

At the outset, the Court stresses that First Leverage's first assigned error raises issues of fact.
Certainly the questions as to whether First Leverage's formal offer to buy the subject properties
was validly made within the negotiation period; whether its offer is more advantageous to PNB
Republic and to the Government than the offer of Solid Builders; whether Solid Builders did not
make any formal offer to buy the disputed properties; whether the Deed of Promise to Sell in
favor of Solid Builders was validly approved by the Loan and Assets Recovery Board Committee
and the Board of Directors of PNB Republic; and, whether the said Deed of Promise to Sell was
hastily executed in violation of law and contrary to public policy, are all questions which call for a
review of the evidence on record to determine if they have factual basis. However, it is settled
that under Rule 45 of the Rules of Court, only questions of law may be raised in a petition for
review on certiorari. This Court is not a trier of facts and it is not its function to analyze or weigh
13 

evidence. The jurisdiction of this Court over cases brought to it via petition for review
14 

on certiorari is limited to the review and rectification of errors allegedly committed by the lower
courts. These issues should be properly threshed out before the trial court.
15 

Coming to the merits of the case, First Leverage contends that during the pre-trial conference,
Solid Builders made admissions and entered into stipulation of facts, on the basis of which the
RTC validly rendered its judgment.

The Court reiterates the ruling of the CA that what has been rendered by the RTC is not a
judgment on the pleadings. Rather, it is a summary judgment.

Pertinent provisions of Section 1, Rule 34 of the Rules of Court state that:

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. x x x

On the other hand, Sections 1 and 3, Rule 35 of the same Rules provide:

Section 1. Summary judgment for claimant. – A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the pleading in
answer thereto has been served, move with supporting affidavits, depositions or admissions for a
summary judgment in his favor upon all or any part thereof.
Sec. 3. Motion and proceedings thereon. – The motion shall be served at least ten (10) days
before the time specified for the hearing. The adverse party may serve opposing affidavits,
depositions, or admissions at least three (3) days before the hearing. After the hearing, the
judgment sought shall be rendered forthwith if the pleadings show that, except as to the amount
of damages, there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.

Where a motion for judgment on the pleadings is filed, the essential question is whether there are
issues generated by the pleadings. In a proper case for judgment on the pleadings, there is no
16 

ostensible issue at all because of the failure of the defending party’s answer to raise an
issue. The answer would fail to tender an issue, of course, if it does not deny the material
17 

allegations in the complaint or admits said material allegations of the adverse party’s pleadings
by confessing the truthfulness thereof and/or omitting to deal with them at all. If an answer does
18 

in fact specifically deny the material averments of the complaint and/or asserts affirmative
defenses (allegations of new matter which, while admitting the material allegations of the
complaint expressly or impliedly, would nevertheless prevent or bar recovery by the plaintiff), a
judgment on the pleadings would naturally be improper. 19

In the case of a summary judgment, issues apparently exist ― i.e., facts are asserted in the complaint
regarding which there is as yet no admission, disavowal or qualification; or specific denials or affirmative
defenses are in truth set out in the answer ― but the issues thus arising from the pleadings are sham, fictitious or
not genuine, as shown by affidavits, depositions, or admissions. 20

In the present case, a perusal of the Amended Answer as well as the Pre-Trial Brief filed by Solid
Builders would readily show that it denied the material allegations in First Leverage's Complaint
and that defenses were raised to refute these allegations. Stated differently, Solid Builders'
pleadings tendered factual issues. Hence, the CA correctly held that the RTC rendered a
summary judgment and not a judgment on the pleadings.

The Court agrees with the CA, however, that even a summary judgment is not proper in the
instant case.

Summary judgment is a procedural device resorted to in order to avoid long drawn out litigations
and useless delays where the pleadings on file show that there are no genuine issues of fact to
be tried. A "genuine issue" is such issue of fact which requires the presentation of evidence as
21 

distinguished from a sham, fictitious, contrived or false claim. There can be no summary
22 

judgment where questions of fact are in issue or where material allegations of the pleadings are
in dispute. A party who moves for summary judgment has the burden of demonstrating clearly
23 

the absence of any genuine issue of fact, or that the issue posed in the complaint is so patently
unsubstantial as not to constitute a genuine issue for trial, and any doubt as to the existence of
such an issue is resolved against the movant. 24

It must be stressed that trial courts have limited authority to render summary judgments and may
do so only when there is clearly no genuine issue as to any material fact. As already stated, the
25 

burden of demonstrating clearly the absence of genuine issues of fact rests upon the movant, in
this case First Leverage, and not upon Solid Builders who opposed the motion for summary
judgment. Any doubt as to the propriety of the rendition of a summary judgment must thus be
resolved against First Leverage.

In the present case, the Court agrees with the CA that genuine issues exist which call for a full
blown trial.  The CA held as follows:
1âwphi1

First Leverage asserted in its amended complaint that there was no such valid perfected contract
to sell. PNB Republic, however, insisted in its answer that the LARBC, duly authorized by the
Bank's board of directors, validly approved the award of the properties to Solid Builders, and that
even assuming that the LARBC was not fully authorized to approve the sale, the said action of
LARBC was subsequently duly ratified and confirmed by the board of directors. Its co-defendant,
Solid Builders, maintained also in its answer that the perfection, approval and execution of the
deed of promise to sell in its favor were legal and not ultra vires. Thus, PNB Republic's and Solid
Builders' respective answers to the complaint tendered an issue. 26

Indeed, in its Amended Complaint, First Leverage contended that "[b]y [PNB] Republic's
execution of a Deed of Promise to Sell with Solid [Builders], [PNB] Republic is determined to
award the sale of the parcels of land covered by TCT No. 4050 and TCT No. 4211 to the damage
and prejudice of [First Leverage] as well as the Government, in spite of the illegality of the
approval of the offer of Solid [Builders] by the Loans and Assets Recovery Board Committee of
[PNB] Republic. There is a compelling necessity, therefore, for a declaration of the nullity of the
approval by said Committee of Solid [Builder's] offer to purchase the aforecited parcels of land." 27

On the other hand, in its Amended Answer, [Solid Builders] averred that "[PNB] Republic acts
through duly authorized officers and the perfection, approval and execution of the Deed of
Promise to Sell by [PNB] Republic in favor of Solid [Builders] was in accordance with the rules
and regulations of the bank pursuant to its corporate mandate. [PNB] Republic has always
maintained that the Deed of Promise to Sell the litigated property in favor of Solid [Builders] was
legal and not ultra vires and up to this very moment [PNB] Republic and Solid [Builders] have
been faithfully performing their respective obligations under the Deed of Promise to Sell the
litigated property." In the same manner, respondent, in its Pre-Trial Brief, contended that "[t]he
28 

perfected contract by and between Defendant Solid [Builders] and PNB [Republic] was made in
good faith and is not tainted by illegality, ultra vires act, nor infirmed by and for whatever reason,
but is perfectly valid, legal and in full force and effect."
29

Thus, the Court finds no cogent reason to deviate from the ruling of the CA that genuine issues
of fact were properly raised before the RTC, particularly with regard to the validity and existence
of a perfected contract to sell, and that these issues could only be resolved through a full-blown
hearing.

Anent the second and third assignment of errors, it is true that PNB Republic did not appeal the
judgment of the RTC. This Court has always recognized the general rule that in appellate
proceedings, the reversal of the judgment on appeal is binding only on the parties in the
appealed case and does not affect or inure to the benefit of those who did not join or were not
made parties to the appeal. An exception to the rule exists, however, where a judgment cannot
30 

be reversed as to the party appealing without affecting the rights of his co-debtor, or where the
rights and liabilities of the parties are so interwoven and dependent on each other as to be
inseparable, in which case a reversal as to one operates as a reversal as to all. This exception,
31 

which is based on a communality of interest of said parties, is recognized in this jurisdiction. In

32 

the instant case, the rights and liabilities of Solid Builders and PNB Republic are, no doubt,
intertwined and inseparable. The enforcement of the rights of Solid Builders under the contract it
entered into with PNB Republic is completely dependent upon the latter's performance of its
obligations thereunder. Assuming that Solid Builders' offer to purchase the disputed properties is
subsequently proven to be superior to that of First Leverage, PNB Republic shall be required to
proceed with its contract to sell the subject properties to Solid Builders. Thus, to allow the
execution of the RTC judgment, by requiring PNB Republic to sell the questioned lots to First
Leverage, without first determining with finality whether the latter's offer to buy the disputed
properties is indeed superior to Solid Builders' offer would not only result in the deprivation of
Solid Builders' right to due process but, more importantly, an unwarranted defeat or forfeiture of
its substantive rights.

WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals, dated June
17, 2002, as well as its Resolution of October 21, 2002 in CA-G.R. SP No. 47218,
are AFFIRMED.

SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice

WE CONCUR:

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 157862               April 16, 2009

PHILIPPINE COUNTRYSIDE RURAL BANK (LILOAN, CEBU), INC., Petitioner,

vs.
JOVENAL B. TORING, Respondent.
 DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review on certiorari1 assailing the Resolution2 dated 12 March
2003 of the Court of Appeals, which reversed its earlier Decision 3 dated 30 September 2002 in
CA-G.R. SP No. 68131 and affirmed the Summary Judgment dated 27 June 2000 of the
Regional Trial Court of Mandaue City, Branch 55, in Civil Case No. MAN-2647.

The Facts

Jovenal B. Toring, respondent, is the registered owner of a 13,890 square meter parcel of land
located in Barrio Basak, Lapu-Lapu City. The land, identified as Lot 2842 of the Cadastral Survey
of Opon, L.R.C. Record No. 1003, is covered by Transfer Certificate of Title (TCT) No. 26401. 4

On 8 July 1993, respondent secured a ₱2,000,000 loan from petitioner Philippine Countryside
Rural Bank (Liloan, Cebu), Inc. To secure the loan, respondent mortgaged to petitioner a portion
of the land consisting of 8,890 square meters. The remaining 5,000 square meters were
allegedly sold by respondent to Edwin Jumao-as as evidenced by a Deed of Absolute
Sale5 dated 25 May 1993. A month after, through a Deed of Donation, 6 Edwin Jumao-as
contributed a portion of the same land, consisting of 2,000 square meters, in favor of Barangay
Basak, Lapu-Lapu City. Petitioner allegedly only approved a loan amounting to ₱1,000,000 after
knowing that a portion of the land was sold to a third party.

However, in the Real Estate Mortgage contract7 executed between petitioner and respondent, the
entire land area of 13,890 square meters was mortgaged. Also, the appraised value of the land,
estimated at ₱2,000,000, was the amount included in the mortgage contract as the value of the
principal loan. Thereafter, respondent surrendered to petitioner the owner’s duplicate copy of
TCT No. 26401 and the actual physical possession of the land.

On 22 March 1996, due to non-payment of the mortgage debt, petitioner sent a demand letter to
respondent informing him of petitioner’s intention to foreclose the mortgage. 8 Respondent
reacted by filing a Complaint for Mandamus with Damages and with Prayer for Temporary
Restraining Order and a Writ of Preliminary Injunction against petitioner with the Regional Trial
Court (RTC) of Mandaue City, Branch 55, docketed as Civil Case No. MAN-2647. 9

In the complaint, respondent prayed to restrain petitioner from foreclosing the entire property
covered by the mortgage contract because only the remaining 8,890 square meters and not the
entire area of 13,890 square meters of the land was validly mortgaged by respondent to
petitioner. Respondent further requested the trial court to direct petitioner to lend the owner’s
duplicate copy of TCT No. 26401 for the purpose of annotating with the Register of Deeds of
Lapu-Lapu City the deed of sale made to Edwin Jumao-as and the deed of donation to Barangay
Basak in accordance with an order of a co-equal court, RTC of Lapu-Lapu City, Branch 53, in
Cadastral Case No. 19.

Earlier, the Register of Deeds of Lapu-Lapu City refused to register the deed of sale and the
deed of donation involving respondent’s title and to issue the corresponding transfer certificates
of title because of the non-submission of the pertinent subdivision plan and technical descriptions
approved by the Bureau of Land as required by Section 58 of Presidential Decree No. 1529
(PD1529).10 Thus, Barangay Basak filed with the RTC of Lapu-Lapu City, Branch 53, a Petition
for the Registration and/or Annotation of the Deed of Absolute Sale and Deed of Donation on
TCT No. 26401, docketed as Cadastral Case No. 19.
On 23 November 1993, the RTC of Lapu-Lapu City, Branch 53, granted the petition. 11 The RTC
ruled that Section 58 of PD 1529 allows the annotation of the deed of sale on TCT No. 26401,
which has the effect of showing the purchaser’s title to the portion conveyed to him. However,
with regard to the deed of donation, its annotation on the title must wait until the approved
subdivision plan and technical descriptions have been submitted to the Register of Deeds in
accordance with the same provision of law. The dispositive portion states:

WHEREFORE, the foregoing considered, this Court hereby directs the Register of Deeds of
Lapu-Lapu City to annotate on Transfer Certificate of Title No. 26401 the Deed of Absolute Sale
dated May 25, 1993 executed by Jovenal B. Toring in favor of Edwin T. Jumao-as, which was
acknowledged before Notary Public Rosario E. Mendoza. In this connection, Jovenal B. Toring,
who has expressed his conformity to the petition, is hereby ordered to make available his
owner’s duplicate of TCT No. 26401.

SO ORDERED.12

Respondent, in order to abide by the decision made by the trial court, allegedly made several
requests to petitioner to produce the owner’s duplicate copy of TCT No. 26401 so that it may be
presented to the Register of Deeds for titling. However, all his requests were supposedly ignored
by petitioner.

On 19 April 1996, the RTC of Mandaue City, Branch 55, issued a temporary restraining order to
prevent petitioner from foreclosing the entire property and from selling it in public auction. 13

On 3 May 1996, petitioner filed an Opposition 14 to respondent’s application for preliminary
injunction. Petitioner claimed that respondent never presented a copy of the deed of absolute
sale dated 25 May 1993 and that the RTC Order dated 23 November 1993 had already been
cancelled as annotated at the back of TCT No. 26401.

At the hearing held on 10 May 1996, the trial court ordered the parties to submit their respective
memoranda. Accordingly, respondent submitted his Memorandum in Support of the Application
for Writ of Preliminary Injunction dated 16 May 1996. Here, respondent cited the testimony given
by petitioner’s branch manager, Joshur Judd D. Lanete (Lanete) in another case, Civil Case No.
2893-L entitled "Barangay Basak, Lapu-Lapu City v. Romulo Jereza, Gerardo Petalinghug and
Galleon & Agra Realty Development Corporation" filed with the RTC of Lapu-Lapu City, Branch
27. In the testimony, Lanete admitted that petitioner had knowledge of the sale of the land to
Edwin Jumao-as and that petitioner approved the loan of respondent in the amount of
₱1,000,000.

On 13 June 1996, petitioner filed its Answer with Counterclaim. 15 Petitioner admitted that
respondent secured a loan with the bank; that the collateral given to secure the payment of the
loan involved the entire 13,890 square meter land covered by TCT No. 26401 which is owned by
respondent; and that petitioner threatened to foreclose the mortgage for non-payment of the debt
as it fell due.

However, petitioner denied knowledge that the 5,000 square meter portion of the land mortgaged
by respondent was sold to Edwin Jumao-as; that 2,000 square meters of the portion sold were
donated to Barangay Basak; and that respondent only mortgaged the remaining area of 8,890
square meters to petitioner. Petitioner alleged that the deed of sale executed was simulated and
that the mortgage contract clearly showed that the entire area of 13,890 square meter of land
had been included in the contract.

Further, petitioner denied knowledge of the filing of a petition in court by Barangay Basak and the
issuance by Lanete of the two certifications 16 dated 19 November 1993. The two certifications
indicated that petitioner had no objection to the donation made with the portion of the land
covered by TCT No. 26401 and that such portion was free from liens and encumbrances. The
certifications state:

CERTIFICATION

TO WHOM IT MAY CONCERN:

This is to certify that we have no objection to the noble purpose in the pursuit of public interest
regarding the donation of Mr. Edwin T. Jumao-as in favor of Barangay Basak of the 2,000 sq. m.
that will be annotated at the back of TCT No. 26401.

This certification is issued for whatever purpose it may serve.

Issued this 19th day of November, 1993.

xxxx

CERTIFICATION

TO WHOM IT MAY CONCERN:

This is to certify that Lot 2842-A subdivided by Engr. Vicente Concepcion, Geodetic Engineer
comprising an area of 2,000 sq. m. donated to Barangay Basak part of TCT No. 26401 is free
from liens & encumbrances.

This certification is issued for whatever purpose it may serve.

xxxx

In an Order17 dated 18 June 1996, the trial court favorably granted the issuance of a writ of
preliminary injunction.

On 19 February 1999, respondent filed a Motion for Leave to File Incorporated Amended
Complaint. In the amended complaint, respondent alleged that aside from the remaining 8,890
square meter land covered by TCT No. 26401, another property was also mortgaged to secure
the payment of the loan. This property was a condominium unit located in Natividad Centrum I,
Cebu City, covered by Condominium Certificate of Title (CCT) No. 209. 18 Respondent stated that
the loan had already been fully paid, as evidenced by the Cancellation and Discharge of
Mortgage on the condominium unit issued by petitioner on 11 October 1995. 19 The respondent
prayed for the return of TCT No. 26401, as the loan secured by the mortgage had already been
paid.

On 30 April 1999, petitioner filed a Motion to Declare Plaintiff in Contempt of Court with
Opposition to Amend the Complaint.20 Petitioner denied the claim that the mortgage over the
condominium unit was constituted to guarantee the same loan as that secured by the land
covered by TCT No. 26401. Petitioner cited that the mortgage over the condominium unit was a
totally different transaction executed a year after the mortgage on the land.

On 8 October 1999, respondent filed a Motion for Summary Judgment 21 under Rule 35 of the
1997 Rules of Civil Procedure based on respondent’s affidavit attached to the motion reiterating
the allegations in his complaint. Petitioner, in turn, filed its opposition to the motion 22 insisting that
summary judgment is proper only where there are no genuine issues as to any material fact.
However, all the material allegations in the complaint have been disputed by petitioner.
On 27 June 2000, the trial court granted the motion for summary judgment and decided the case
in favor of respondent.23 The dispositive portion of the decision states:

WHEREFORE, judgment is rendered in favor of plaintiff Jovenal B. Toring and against defendant
Philippine Countryside Rural Bank (Liloan, Cebu), ordering the bank to surrender the owner’s
duplicate copy of TCT No. 26401 for the purpose of annotating/registering with the Register of
Deeds of Lapu-Lapu City the Deed of Absolute Sale and the Deed of Donation above-mentioned
in accordance with the Order of the Regional Trail Court, Branch 53, Lapu-Lapu City in Cad.
Case No. 19. Likewise, the writ of injunction issued is ordered made permanent.

SO ORDERED.24

Petitioner filed an appeal with the Court of Appeals, docketed as CA-G.R. SP No. 68131.

The Ruling of the Court of Appeals

On 30 September 2002, the appellate court reversed the decision of the trial court and
recognized the authority of petitioner to foreclose the mortgage on the entire property covered by
TCT No. 26401.25 The relevant portions of the decision state:

A cursory examination of TCT No. 26401 reveals that the alleged Deed of Sale dated May 25,
1993 was never registered and annotated therein. What appears on the said title is a Deed of
Absolute Sale in favor of Edwin Jumao-as dated September 3, 1993. As such, the Deed of
Donation in favor of Barangay Basak is not valid since at the time of its execution, the alleged
donor Edwin Jumao-as has not yet acquired any portion of TCT No. 26401. As aptly put by
defendant-appellant, it would be putting the cart before the horse.

Defendant-appellant contended that the trial court erred in giving credence to the testimony of
the bank manager given in another case. We believe the trial court, indeed, erred in doing so.

It bears stressing that what was given weight by the trial court are the several pages of Transcript
of Stenographic Notes (TSN) relating to the testimony given by the bank manager of defendant-
appellant bank. The testimony deserves scant consideration for two obvious reasons: (1) It was
made in another entirely different case involving different parties and; (2) The bank manager was
not actually presented in court for cross-examination.

The actual presentation of the bank manager would have clarified the circumstances surrounding
the issuance of the aforesaid two (2) letters both dated November 19, 1993. The circumstances
surrounding the issuance of the said letters and the reasons for their issuance should have been
unearthed in a full-blown trial in view of the claim by defendant-appellant that it "suffered
damages out of and from the malicious maneuvers of the plaintiff in successfully winning the
feeling of defendant’s Branch Manager." Hence, in light of these doubts, plaintiff-appellant cannot
unduly benefit from the trial court's decision to grant his motion for summary judgment which
deprived defendant-appellant its right to cross-examine its own bank manager and squeeze the
entire truth from him.

xxxx

WHEREFORE, premises considered, plaintiff-appellant’s Appeal is hereby DENIED for lack of

merit while that of defendant-appellant is hereby given DUE COURSE. Consequently, the
appealed Order dated June 27, 2000 of the Regional Trial Court, Branch 55, Mandaue City, is
VACATED and SET ASIDE. Defendant-appellant’s authority to foreclose the mortgage over the
entire property covered by TCT No. 26401 is hereby recognized.

SO ORDERED.26
Respondent then filed a Motion for Reconsideration. In a Resolution 27 dated 12 March 2003, the
Court of Appeals granted the motion and set aside its original decision, thereby affirming the
decision of the trial court dated 27 June 2000. The appellate court ruled that petitioner should
return to respondent the owner’s duplicate copy of TCT No. 26401 for the proper annotation of
the deed of sale and deed of donation. It further stated that petitioner had no more reason to hold
the land’s title for two reasons: (1) the existence of a final and executory judgment in Cadastral
Case No. 19 of the RTC of Lapu-Lapu City, Branch 53; and (2) the full payment of respondent’s
real estate mortgage as shown by the Cancellation and Discharge of Mortgage of CCT No. 209
dated 11 October 1995 issued by petitioner. The appellate court observed that the release of the
security could only mean that the obligation of respondent to petitioner had been fully satisfied.
The relevant portions of the resolution state:

A cursory review of the records show that the pleadings, affidavits and exhibits in support of
plaintiff-appellant’s motion for summary judgment are sufficient to overcome the material
allegations in defendant-appellant’s answer. Herein plaintiff-appellant has proven the cause of
action and has shown that the defense merely interposed its objections solely for the purpose of
delay. Hence, the allowance of summary judgment by the trial court was proper.

As regards the Deed of Absolute Sale dated May 25, 1993 and the Deed of Donation dated June
15, 1993 as testified to by Mr. Joshur Jude B. Lanete, the findings and conclusion of the court a
quo in its Order dated June 27, 200[0], is very enlightening in the case at bench, to wit:

"Carefully evaluating the evidence, the court feels, and so holds, "that the subject property is
about to be foreclosed by the defendant bank knowing fully well from the start that only an area
of 8,890 square meters out of the 13,890 square meters was validly mortgaged to them and the
remaining 5,000 square meters was subject to a deed of sale executed by plaintiff for Mr. Edwin
Jumao-as and the latter even donated 2,000 square meters hereof to Barangay Basak of Lapu-
Lapu City." (par. 3, Order dated April 19, 1996).

This finding is supported by the testimony of defendant’s bank manager, Joshur Judd B. Lanete
given last December 13, 1993 in Civil Case No. 2893-L entitled Barangay Basak, Lapu-Lapu
City, plaintiff versus Romulo Jereza, Gerardo Patalinghug and Galleon Agro & Realty
Development Corp., defendants (TSN), Chavez, December 13, 1993 p.m., attached to Plaintiff's
Memorandum in Support Application for Writ of Preliminary Injunction) wherein he testified that
the defendant bank is aware that portion of subject consisting of 5,000 square meters sold by
plaintiff Toring to Edwin Jumao-as and that 2,000 square meters of the 5,000 square meters sold
to Mr. Jumao-as was donated by the latter to Barangay Basak, Lapu-Lapu City, that was why the
loan application of Toring in the amount of ₱2,000,000 was reduced to only ₱1,000,000 which
latter amount was approved by the defendant bank, pertinent portion of Lanete’s testimony is
reproduced hereunder:

xxxx

Mr. Lanete, therefore, in testifying before the court judicially admitted that defendant bank knew
that the mortgaged property is only 8,890 square meters and not the entire property covered by
TCT No. 26401 that was why the loan amount applied for by plaintiff was reduced and approved
by the defendant bank from ₱2,000,000 to ₱1,000,000.

xxxx

The doctrine of apparent authority is applicable in this case. "As laid out in Prudential Bank vs.
Court of Appeals (223 SCRA 350 (1993), where it was held: "Conformably, we have declared in
countless decisions that the principal is liable for representation yields to the principal’s true
representation and the contract is considered as entered into between the principal and the third
person (citing NFA vs. IAC, 184 SCRA 166.) x x x
The testimony of Mr. Lanete is considered a judicial admission and should be given great weight
in the appreciation of the factual circumstances of the case at bench. x x x

Defendant-appellant’s denial premised merely on the ground that the said testimony was given in
another case and the time to cross-examine was not accorded to it holds no water.

Being in the nature of a judicial admission, Mr. Lanete’s testimony is conclusive and need not be
held under cross-examination for no evidence may be presented to prove an agreement that has
been admitted.

xxxx

Perusal of the records at Bench reveals that there is truth as to the plaintiff-appellant’s contention
in his petition that the amount of his mortgage with the defendant bank has been fully satisfied as
shown by the Cancellation and Discharge of Mortgage dated October 11, 1995 issued by the
defendant-appellant bank (Rural Bank of Liloan (CEBU)) signed by its President and attested by
Jennifer C. Asingua and Joshur Judd B. Lanete. The release of the title of the condominium unit
as a security will only mean that the obligation of the plaintiff-appellant has been fully satisfied,
hence, the defendant bank should now also return the owner’s duplicate copy of TCT No. 26401.

xxxx

If defendant-appellant will not be enjoined and/or restrained from foreclosing the entire portion of
the aforementioned parcel of land, plaintiff-appellant will undoubtedly be susceptible to civil and
criminal actions.

xxxx

Without a doubt, plaintiff-appellant is entitled to a maintenance and preservation of status quo

ante, otherwise any judgment in court in the case at bench will be rendered nugatory. 28

Hence, the instant petition.

The Issue

The issue is whether the trial court correctly granted the motion for summary judgment based on
the pleadings, affidavits, and admissions submitted by respondent.

The Court’s Ruling

The petition has merit.

Petitioner insists that the Court of Appeals erred in affirming the summary judgment rendered by
the trial court. Petitioner contends that the case cannot be adjudicated based merely on the
affidavit attached by respondent to his motion for summary judgment reiterating his allegations in
the complaint, as what transpired in this case. There are genuine issues of fact that need to be
tried and resolved through a full blown trial on the merits.

Sections 1 and 3, Rule 35 of the Rules of Court state:

SECTION 1. Summary Judgment for Claimant. — A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the pleading in
answer thereto has been served, move with supporting affidavits, depositions or admissions for a
summary judgment in his favor upon all or any part thereof.
SEC. 3. Motion and Proceedings thereon. — The motion shall be served at least ten (10) days
before the time specified for the hearing. The adverse party may serve opposing affidavits,
depositions, or admissions at least three (3) days before the hearing. After the hearing, the
judgment sought shall be rendered forthwith if the pleadings, supporting affidavits, depositions,
and admissions on file, show that, except as to the amount of damages, there is no genuine
issue as to any material fact and that the moving party is entitled to a judgment as a matter of
law.

A summary judgment is a procedural technique designed to promptly dispose of cases where the
facts appear undisputed and certain from the pleadings, depositions, admissions, and affidavits
on record. Its purpose is to avoid long drawn out litigations and useless delays. When the
pleadings on file show that there are no genuine issues of fact to be tried, the Rules allow a party
to obtain immediate relief by way of summary judgment, that is, when the facts are not in dispute,
the court is allowed to decide the case summarily by applying the law to the material
facts.29 Conversely, where the pleadings tender a genuine issue, summary judgment is not
proper and the movant is not allowed to obtain immediate relief. A "genuine issue" is such issue
of fact which requires presentation of evidence as distinguished from a sham, fictitious, contrived,
or false claim.30

Section 3 of Rule 35 provides two requisites for summary judgment to be proper: (1) there must
be no genuine issue as to any material fact, except for the amount of damages; and (2) the party
presenting the motion for summary judgment must be entitled to a judgment as a matter of law. 31 1avvphi1

Applying these principles to the present case, we find that the Court of Appeals committed
reversible error in affirming the assailed summary judgment of the trial court. A perusal of the
parties’ respective pleadings shows that there are genuine issues of fact that necessitate the
presentation of evidence in a formal trial.

Petitioner, in response to the complaint and other motions filed by respondent, filed several
pleadings showing the existence of genuine issues: (1) Vigorous Opposition to Plaintiff’s
Application for Preliminary Injunction, where petitioner specifically denied having knowledge of
the alleged Deed of Absolute Sale dated 25 May 1993; (2) Answer with Counterclaim, where
petitioner attached a copy of the Real Estate Mortgage contract showing that respondent
mortgaged a total of 13,890 square meters and not just 8,890 square meters; (3) Vehement
Opposition to Plaintiff’s Motion for Reconsideration, where petitioner pointed out that the
testimony given by its branch manager, Lanete, in Civil Case No. 2893-L before RTC of Lapu-
Lapu City, Branch 27, was not a judicial admission because the latter was not a party to the case
and that his acts were not valid corporate acts, neither was he ever appointed as agent of
petitioner; and (4) Opposition to Amend the Complaint, where petitioner denied that the
obligation had been fully paid and that the mortgage over the condominium unit was constituted
to guarantee the same loan as that secured by the land covered by TCT No. 26401.

The main issue to be resolved revolves on who is entitled to the land covered by TCT No. 26401.
From this main issue, other relevant issues need to be decided on: (1) whether the Deed of
Absolute Sale dated 25 May 1993 pertaining to the 13,890 square meter land is a real or
simulated contract between respondent and Edwin Jumao-as; (2) whether such sale occurred
prior to the loan obtained by respondent from petitioner; (3) whether petitioner was aware of the
deed of sale to Edwin Jumao-as and deed of donation to Barangay Basak, Lapu-Lapu City, when
it approved the loan of respondent; (4) whether the real estate mortgage contract covered the
entire property covered by TCT No. 26401; (5) whether the loan approved by petitioner
amounted to ₱2,000,000 or ₱1,000,000; (6) whether the testimony of petitioner’s branch
manager may be considered as a judicial admission even if such was made in an entirely
different case and before a different court involving different parties; (7) whether petitioner was
aware of the Order dated 23 November 1993 of the RTC of Lapu-Lapu City, Branch 53, and if
steps had been taken to implement such Order; (8) whether the mortgage over the condominium
unit was used to secure the same obligation as that secured by the land covered by TCT No.
26401; and (9) whether the loan obligation of respondent to petitioner had been fully paid.

Since summary judgment is generally based on the facts proven summarily by affidavits,
depositions, pleadings, or admission of the parties, the party who moves for summary judgment
has the burden of demonstrating clearly the absence of any genuine issues of fact, or that the
issue posed in the complaint is patently not substantial as not to constitute a genuine issue for
trial.

Clearly, respondent did not overcome the burden. It can be seen from the allegations in the
parties’ respective pleadings that relevant genuine issues need to be resolved requiring a full
blown trial. Summary judgment cannot take the place of a trial since the facts as pleaded by the
parties are contested. Respondent then is not entitled to a judgment as a matter of law.

However, while the summary judgment of the RTC of Mandaue City, Branch 55, is not proper
under the circumstances stated above, Civil Case No. MAN-2647 should not be dismissed.
Instead, the case should be remanded to the trial court for further proceedings and proper
disposition in accordance with a regular trial on the merits.

WHEREFORE, we PARTLY GRANT the petition. We SET ASIDE the Resolution of the Court of

Appeals dated 30 September 2002 in CA-G.R. SP No. 68131 which affirmed the Summary
Judgment dated 27 June 2000 of the Regional Trial Court of Mandaue City, Branch 55, in Civil
Case No. MAN-2647. We REMAND the case to the Regional Trial Court of Mandaue City,
Branch 55, for further proceedings in accordance with this Decision.

No costs.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

WE CONCUR:

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 155680               July 2, 2012

FIRST LEVERAGE AND SERVICES GROUP, INC., Petitioner,
vs.
SOLID BUILDERS, INC., Respondent.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking
to reverse and set aside the Decision and Resolution dated June 17, 2002 and October 21,
1  2 

2002, respectively, of the Court of Appeals (CA) in CA-G.R. SP No. 47218.

The instant petition arose from a Complaint for Annulment of Promise to Sell, Mandamus and
Prohibitory Injunction filed with the Regional Trial Court (RTC) of Manila by herein petitioner First
Leverage and Services Group, Inc. (First Leverage) against PNB Republic Bank (PNB Republic).

In its Amended Complaint, wherein it impleaded herein respondent Solid Builders, Inc. (Solid
3 

Builders) as additional defendant, dated April 11, 1996, First Leverage alleged the following:

x x x           x x x          x x x

2. [PNB] Republic is the owner of two (2) parcels of land situated in Kaybagal South,
Tagaytay City, covered by Transfer Certificate of Title No. T-4211 with an area of
1,906,710 square meters and Transfer Certificate of Title No. T-4050 with an area of
369,234 square meters. Both parcels of land are part of the acquired assets of
[PNB] Republic.

3. Sometime in the mid-1980's, [PNB] Republic put up the aforementioned parcels of land

for sale by public bidding. Two (2) public biddings were conducted but both were
considered failed public biddings for failure to meet certain requirements. Hence,
[PNB] Republic put up the two (2) parcels of land for negotiated sale.

4. [The total appraised value of the said parcels of land as of June 16, 1994 was
₱73,817,000.00]

5. On June 20, 1994, the Loan Recovery and Acquired Assets Division (LRAAD, for
brevity) of [PNB] Republic received a formal offer from Solid [Builders] for the purchase of
the parcel of land covered by TCT No. T-4050, for ₱12,500,000.00 with thirty percent
(30%) down payment and with the balance payable in five (5) years at nineteen percent
(19%) interest per annum.

6. On June 23, 1994, the LRAAD received another formal offer from Solid [Builders] for
the purchase of the parcel of land covered by TCT No. T-4211 for ₱47,000,000.00 with
twenty percent (20%) down and with the balance payable in five (5) years at nineteen
percent (19%) interest per annum.

7. In a letter dated July 7, 1994, Jeremias Dimla II, LRAAD's Senior Manager, informed
Solid [Builders] that the latter's offer of ₱47,000,000.00 for the parcel of land covered by
TCT No. 4211 was unacceptable but suggested that it improve its offer.

8. On August 2, 1994, LRAAD received a letter from Solid [Builders] proposing a package
price for the two (2) parcels of land x x x for ₱61,000,000.00 with ₱1,000,000.00
option/earnest money, twenty-five percent (25%) downpayment within ninety (90) days
from date of acceptance/approval and with the balance payable quarterly for three (3)
years at primary market interest rates.
9. On August 17, 1994, the LRAAD received a letter from [First Leverage] offering to
purchase the two (2) parcels x x x for ₱70,000,000.00 in cash. Although none of the
LRAAD employees admitted having received [First Leverage's] letter-offer, x x x Dimla
admitted having received a copy thereof on August 18, 1994. x x x

10. The reason given by Jeremias Dimla II as regards the non-official receipt of the letter-
offer of [First Leverage] was at the time the offer was made LRAAD had already received
Solid [Builders'] acceptance letter dated August 15, 1994, as regards the APPROVAL by
the LRAAD of Solid [Builder's] offer, contained in its letter dated August 2, 1994, subject
to certain terms and conditions. Allegedly, the APPROVAL was communicated to Solid
by a letter dated August 12, 1994, of the LRAAD through Jeremias Dimla II. Under this
package the price for the two (2) parcels of land was ₱67,000,000.00 payable as follows:
30% downpayment payable within 90 days from receipt of approval; the balance payable
within three (3) years by monthly amortization covered by postdated checks with interest
at prevailing non-prime rate. Accordingly, [PNB] Republic refused to receive petitioner's
letter-offer.

11. In a letter dated September 1, 1994, [First Leverage], through Atty. Ariel F. Aguirre,
reiterated [its] offer to buy the two (2) parcels of land for ₱70,000,000.00 in CASH. Atty.
Aguirre likewise demanded that Solid [Builders’] offer be rejected on the ground that Solid
[Builders'] offer as against that of [First Leverage] was: first, prejudicial to [PNB] Republic;
and secondly, would subject [PNB] Republic's officers to anti-graft charges. x x x

12. In reply to Atty. Aguirre's letter, [PNB] Republic x x x replied that [it] did not officially
receive [First Leverage's] letter-offer of August 17, 1994, since as of August 17, 1994,
[PNB] Republic had already contracted to sell the two (2) parcels of land to Solid
[Builders]. x x x

13. Notwithstanding said [PNB] Republic's reply letter dated September 6, 1994, Atty.

Aguirre persisted by forwarding another letter dated September 7, 1994, reiterating [First
Leverage's] offer to buy the two (2) parcels of land for ₱70,000,000.00 in CASH. Atty.
Aguirre, in addition, demanded that First Leverage be furnished copies of documents
relative to [PNB] Republic's transaction with Solid [Builders].

14. Because of [PNB] Republic's failure to properly respond to Atty. Aguirre's letter, Atty.

Aguirre forwarded a further letter dated September 14, 1994, again reiterating [First
Leverage's] offer to purchase the two (2) parcels of land for ₱70,000,000.00 in CASH. x x
x

15. On September 19, 1994, [PNB] Republic, despite the better offer of [First Leverage]
and through the ultra vires acts of its officers, executed with Solid [Builders] a Deed of
Promise to Sell covering the two (2) parcels of land. x x x

16. By reason of the threat of Atty. Aguirre of taking administrative, criminal and/or civil
action against Republic and its officers by refusing to accept [First Leverage's] offer and
[accepting] Solid [Builder's] offer, [PNB] Republic referred Atty. Aguirre's letter of
September 14, 1994, to the Office of the Government Corporate Counsel [OGCC] for
legal opinion.

17. The OGCC rendered an opinion, x x x, dated December 7, 1994, the thrust of which
is as follows:

a) The Loans and Assets Recovery Committee, (Committee for brevity) to which
LRAAD referred Solid [Builders'] offer for approval was not authorized to approve
said offer for under existing policies any sale or disposition of acquired assets
 whose value exceeds ₱3,000,000.00 must be approved by
[PNB] Republic's Board of Directors.

b) One of the essential requisites of a valid contract, insofar as

[PNB] Republic and Solid [Builders are concerned], is missing, namely consent
as provided for in Art. 1318 of the Civil Code.

x x x           x x x          x x x

18. There are no existing offers within the period of negotiation except those submitted
by [First Leverage] and Solid [Builders]. The period to negotiate the sale of the
aforedescribed two (2) parcels of land had already lapsed as clearly indicated by the
alleged (though invalid) acceptance of Solid [Builders'] offer.

19. By letter dated December 13, 1994, [First Leverage] demanded that its offer be
calendared for approval by [PNB] Republic's Board of Directors x x x. However, the
Board of Directors, without any justifiable, valid or lawful reason, refused to approve [First
Leverage's] valid, legal and subsisting offer which, as against Solid [Builders'] offers is
definitely more advantageous to [PNB] Republic in particular and to the Government in
general.

xxxx 4

In its Answer to the Amended Complaint, PNB Republic denied the material allegations in the
said Amended Complaint and contended that the Complaint states no cause of action; that the
sale of the subject properties to Solid Builders was validly approved or thereafter ratified and
confirmed by its board of directors; that PNB Republic was justified in selling the subject
properties to Solid Builders because at that time, the latter's offer was the highest and most
advantageous; at the time that First Leverage submitted its offer to buy the subject properties,
the offer of Solid Builders was already approved. 5

On the other hand, Solid Builders filed its Amended Answer asserting, in the same manner as
PNB Republic, that the Complaint states no cause of action; that several months before First
Leverage even thought of buying the disputed properties, Solid Builders and PNB Republic had
already been negotiating the sale thereof which later led to the execution of a Deed of Promise to
Sell the same; as of the time of execution of the said Deed, Republic had never known of any
intention on the part of First Leverage to offer to buy the litigated properties; that First Leverage
had not acquired any right over the said properties which can be protected; that the contract
between Solid Builders and PNB Republic was legal and not ultra vires, and in accordance with
the rules and regulations of the Bank. In its cross-claim against PNB Republic, Solid Builders
prays that, if the disputed Deed of Promise to Sell is declared null and void, it shall be given the
right to recover the amounts it had already paid to and received by PNB Republic, the value of
the improvements it introduced on the subject property as well as compensatory and exemplary
damages and attorney's fees. 6

After Pre-Trial Conference was concluded, First Leverage filed a Motion for Judgment on the
Pleadings and/or Resolution of Case Based on Admissions and Stipulations of Facts of the
Parties. Solid Builders opposed the said Motion.

On December 23, 1996, the RTC rendered Judgment, the dispositive portion of which reads as
follows:

WHEREFORE, in the interest of speedy and substantial justice, judgment is hereby rendered in
favor of the plaintiff and against the two (2) defendants PNB Republic Bank and Solid Builders,
Inc.:
 (a) Granting the plaintiff's instant Motion for Judgment on the Pleadings, etc., dated
September 30, 1996;

(b) Declaring null and void the alleged approval by the Loans and Assets Recovery
Board Committee (LARBC) of the defendant Solid's verbal offer supposedly made on
August 11, 1994 to buy the two (2) properties in question;

(c) Declaring null and void the Deed of Promise to Sell, dated September 19, 1994,
executed by and between the two (2) defendants;

(d) Ordering the issuance of a Writ of Mandamus commanding the defendant Bank, thru
its Board of Directors, to approve within a period of ten (10) days from receipt hereof, the
plaintiff's superior and written offer of August 17, 1994 to purchase the two (2) parcels of
land involved herein for the cash price of ₱70,000,000.00 over that of the alleged verbal
and inferior offer of the defendant Solid, payable in three (3) years on installment basis,
in order to protect the public interest.

(e) Ordering the defendants to pay the costs of suit.

SO ORDERED. 7

Solid Builders and PNB Republic filed their respective Motions for Reconsideration, but the RTC
denied them in its Order dated February 10, 1997.
8 

Aggrieved, PNB Republic filed a special civil action for certiorari with this Court which case was
referred to the CA. Subsequently, PNB Republic's petition for certiorari was subsequently denied
due course and dismissed by the appellate court on the ground that the petition was resorted to
as a substitute for a lost appeal.

Solid Builders, on the other hand, filed an appeal with the CA.

On June 17, 2002, the CA rendered its assailed Decision, which disposed as follows:

WHEREFORE, premises considered, as to defendant-appellant Solid Builders, the assailed

decision of the lower court is hereby ANNULLED and SET ASIDE. The case is REMANDED to
the lower court for further proceedings, and the lower court is (1) DIRECTED to SET for
preliminary hearing the special and affirmative defenses of Solid Builders as grounds for the
dismissal of the amended complaint of plaintiff-appellee First Leverage, (2) to RESOLVE with
dispatch this particular incident, and (3) to PROCEED to trial on the merits, if warranted.

No pronouncement as to costs.

SO ORDERED. 9

First Leverage filed a Motion for Reconsideration, but the same was denied by the CA in its
10 

Resolution dated October 21, 2002.

11 

Hence, the instant petition for review on certiorari where First Leverage advances the following
arguments:

I. THE LOWER COURT CORRECTLY RENDERED THE JUDGMENT DATED

DECEMBER 23, 1996 AS A SUMMARY JUDGMENT;
 II. SINCE ONLY SOLID BUILDERS, INC. APPEALED FROM THE JUDGMENT DATED
DECEMBER 23, 1996, SAID JUDGMENT HAS BECOME FINAL AND EXECUTORY
INSOFAR AS PNB-REPUBLIC IS CONCERNED; and

III. CONSEQUENTLY THE APPEAL OF SOLID BUILDERS HAS BECOME MOOT AND
ACADEMIC INSOFAR AS FIRST LEVERAGE AND SERVICES GROUP, INC. IS
CONCERNED. 12

In its first assigned error, First Leverage argues that, in the instant case, there is no genuine
issue as to any material or relevant fact which may proscribe a summary judgment; that the CA
erred in not upholding the decision of the RTC because the same is supported by established
facts, admissions and/or stipulations as well as documents admitted by the parties.

In its second and third assignments of error, First Leverage contends that since PNB Republic
did not appeal the judgment of the RTC, the same has become final and executory insofar as
PNB Republic is concerned. As such, First Leverage avers that it has already acquired vested
rights enforceable by a writ of execution as against PNB Republic. First Leverage concludes that
the appeal of Solid Builders with the CA, which in essence seeks to enforce its contract with PNB
Republic, is already rendered moot and academic, and that it has become functus officio insofar
as First Leverage is concerned, considering that the said contract was already awarded in favor
of the latter.

The Court finds the petition without merit.

At the outset, the Court stresses that First Leverage's first assigned error raises issues of fact.
Certainly the questions as to whether First Leverage's formal offer to buy the subject properties
was validly made within the negotiation period; whether its offer is more advantageous to PNB
Republic and to the Government than the offer of Solid Builders; whether Solid Builders did not
make any formal offer to buy the disputed properties; whether the Deed of Promise to Sell in
favor of Solid Builders was validly approved by the Loan and Assets Recovery Board Committee
and the Board of Directors of PNB Republic; and, whether the said Deed of Promise to Sell was
hastily executed in violation of law and contrary to public policy, are all questions which call for a
review of the evidence on record to determine if they have factual basis. However, it is settled
that under Rule 45 of the Rules of Court, only questions of law may be raised in a petition for
review on certiorari. This Court is not a trier of facts and it is not its function to analyze or weigh
13 

evidence. The jurisdiction of this Court over cases brought to it via petition for review
14 

on certiorari is limited to the review and rectification of errors allegedly committed by the lower
courts. These issues should be properly threshed out before the trial court.
15 

Coming to the merits of the case, First Leverage contends that during the pre-trial conference,
Solid Builders made admissions and entered into stipulation of facts, on the basis of which the
RTC validly rendered its judgment.

The Court reiterates the ruling of the CA that what has been rendered by the RTC is not a
judgment on the pleadings. Rather, it is a summary judgment.

Pertinent provisions of Section 1, Rule 34 of the Rules of Court state that:

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. x x x

On the other hand, Sections 1 and 3, Rule 35 of the same Rules provide:
Section 1. Summary judgment for claimant. – A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the pleading in
answer thereto has been served, move with supporting affidavits, depositions or admissions for a
summary judgment in his favor upon all or any part thereof.

Sec. 3. Motion and proceedings thereon. – The motion shall be served at least ten (10) days
before the time specified for the hearing. The adverse party may serve opposing affidavits,
depositions, or admissions at least three (3) days before the hearing. After the hearing, the
judgment sought shall be rendered forthwith if the pleadings show that, except as to the amount
of damages, there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.

Where a motion for judgment on the pleadings is filed, the essential question is whether there are
issues generated by the pleadings. In a proper case for judgment on the pleadings, there is no
16 

ostensible issue at all because of the failure of the defending party’s answer to raise an
issue. The answer would fail to tender an issue, of course, if it does not deny the material
17 

allegations in the complaint or admits said material allegations of the adverse party’s pleadings
by confessing the truthfulness thereof and/or omitting to deal with them at all. If an answer does
18 

in fact specifically deny the material averments of the complaint and/or asserts affirmative
defenses (allegations of new matter which, while admitting the material allegations of the
complaint expressly or impliedly, would nevertheless prevent or bar recovery by the plaintiff), a
judgment on the pleadings would naturally be improper. 19

In the case of a summary judgment, issues apparently exist ― i.e., facts are asserted in the complaint
regarding which there is as yet no admission, disavowal or qualification; or specific denials or affirmative
defenses are in truth set out in the answer ― but the issues thus arising from the pleadings are sham, fictitious or
not genuine, as shown by affidavits, depositions, or admissions. 20

In the present case, a perusal of the Amended Answer as well as the Pre-Trial Brief filed by Solid
Builders would readily show that it denied the material allegations in First Leverage's Complaint
and that defenses were raised to refute these allegations. Stated differently, Solid Builders'
pleadings tendered factual issues. Hence, the CA correctly held that the RTC rendered a
summary judgment and not a judgment on the pleadings.

The Court agrees with the CA, however, that even a summary judgment is not proper in the
instant case.

Summary judgment is a procedural device resorted to in order to avoid long drawn out litigations
and useless delays where the pleadings on file show that there are no genuine issues of fact to
be tried. A "genuine issue" is such issue of fact which requires the presentation of evidence as
21 

distinguished from a sham, fictitious, contrived or false claim. There can be no summary
22 

judgment where questions of fact are in issue or where material allegations of the pleadings are
in dispute. A party who moves for summary judgment has the burden of demonstrating clearly
23 

the absence of any genuine issue of fact, or that the issue posed in the complaint is so patently
unsubstantial as not to constitute a genuine issue for trial, and any doubt as to the existence of
such an issue is resolved against the movant. 24

It must be stressed that trial courts have limited authority to render summary judgments and may
do so only when there is clearly no genuine issue as to any material fact. As already stated, the
25 

burden of demonstrating clearly the absence of genuine issues of fact rests upon the movant, in
this case First Leverage, and not upon Solid Builders who opposed the motion for summary
judgment. Any doubt as to the propriety of the rendition of a summary judgment must thus be
resolved against First Leverage.

In the present case, the Court agrees with the CA that genuine issues exist which call for a full
blown trial.  The CA held as follows:
1âwphi1
First Leverage asserted in its amended complaint that there was no such valid perfected contract
to sell. PNB Republic, however, insisted in its answer that the LARBC, duly authorized by the
Bank's board of directors, validly approved the award of the properties to Solid Builders, and that
even assuming that the LARBC was not fully authorized to approve the sale, the said action of
LARBC was subsequently duly ratified and confirmed by the board of directors. Its co-defendant,
Solid Builders, maintained also in its answer that the perfection, approval and execution of the
deed of promise to sell in its favor were legal and not ultra vires. Thus, PNB Republic's and Solid
Builders' respective answers to the complaint tendered an issue. 26

Indeed, in its Amended Complaint, First Leverage contended that "[b]y [PNB] Republic's
execution of a Deed of Promise to Sell with Solid [Builders], [PNB] Republic is determined to
award the sale of the parcels of land covered by TCT No. 4050 and TCT No. 4211 to the damage
and prejudice of [First Leverage] as well as the Government, in spite of the illegality of the
approval of the offer of Solid [Builders] by the Loans and Assets Recovery Board Committee of
[PNB] Republic. There is a compelling necessity, therefore, for a declaration of the nullity of the
approval by said Committee of Solid [Builder's] offer to purchase the aforecited parcels of land." 27

On the other hand, in its Amended Answer, [Solid Builders] averred that "[PNB] Republic acts
through duly authorized officers and the perfection, approval and execution of the Deed of
Promise to Sell by [PNB] Republic in favor of Solid [Builders] was in accordance with the rules
and regulations of the bank pursuant to its corporate mandate. [PNB] Republic has always
maintained that the Deed of Promise to Sell the litigated property in favor of Solid [Builders] was
legal and not ultra vires and up to this very moment [PNB] Republic and Solid [Builders] have
been faithfully performing their respective obligations under the Deed of Promise to Sell the
litigated property." In the same manner, respondent, in its Pre-Trial Brief, contended that "[t]he
28 

perfected contract by and between Defendant Solid [Builders] and PNB [Republic] was made in
good faith and is not tainted by illegality, ultra vires act, nor infirmed by and for whatever reason,
but is perfectly valid, legal and in full force and effect."
29

Thus, the Court finds no cogent reason to deviate from the ruling of the CA that genuine issues
of fact were properly raised before the RTC, particularly with regard to the validity and existence
of a perfected contract to sell, and that these issues could only be resolved through a full-blown
hearing.

Anent the second and third assignment of errors, it is true that PNB Republic did not appeal the
judgment of the RTC. This Court has always recognized the general rule that in appellate
proceedings, the reversal of the judgment on appeal is binding only on the parties in the
appealed case and does not affect or inure to the benefit of those who did not join or were not
made parties to the appeal. An exception to the rule exists, however, where a judgment cannot
30 

be reversed as to the party appealing without affecting the rights of his co-debtor, or where the
rights and liabilities of the parties are so interwoven and dependent on each other as to be
inseparable, in which case a reversal as to one operates as a reversal as to all. This exception,
31 

which is based on a communality of interest of said parties, is recognized in this jurisdiction. In

32 

the instant case, the rights and liabilities of Solid Builders and PNB Republic are, no doubt,
intertwined and inseparable. The enforcement of the rights of Solid Builders under the contract it
entered into with PNB Republic is completely dependent upon the latter's performance of its
obligations thereunder. Assuming that Solid Builders' offer to purchase the disputed properties is
subsequently proven to be superior to that of First Leverage, PNB Republic shall be required to
proceed with its contract to sell the subject properties to Solid Builders. Thus, to allow the
execution of the RTC judgment, by requiring PNB Republic to sell the questioned lots to First
Leverage, without first determining with finality whether the latter's offer to buy the disputed
properties is indeed superior to Solid Builders' offer would not only result in the deprivation of
Solid Builders' right to due process but, more importantly, an unwarranted defeat or forfeiture of
its substantive rights.
WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals, dated June
17, 2002, as well as its Resolution of October 21, 2002 in CA-G.R. SP No. 47218,
are AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 181970               August 3, 2010

BERNARDO DE LEON, Petitioner,
vs.
PUBLIC ESTATES AUTHORITY substituted by the CITY OF PARAÑAQUE, RAMON
ARELLANO, JR., RICARDO PENA and REYMUNDO ORPILLA, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 182678

PUBLIC ESTATES AUTHORITY (now PHILIPPINE RECLAMATION AUTHORITY),

substituted by the CITY OF PARAÑAQUE, Petitioner,
vs.
HON. SELMA PALACIO ALARAS, in her capacity as the Acting Presiding Judge of Branch
135, Regional Trial Court of Makati City, and BERNARDO DE LEON. Respondents.

DECISION

PERALTA, J.:

Before the Court are two consolidated petitions.

G.R. No. 181970 is a petition for review on certiorari under Rule 45 of the Rules of Court filed by
Bernardo de Leon seeking the reversal and setting aside of the Decision 1 of the Court of Appeals
(CA), dated November 21, 2007, in CA-G.R. SP No. 90328 which dismissed his petition for
certiorari. De Leon also assails the CA Resolution 2 dated March 4, 2008 denying his Motion for
Reconsideration.

On the other hand, G.R. No. 182678 is a petition for certiorari under Rule 65 of the Rules of
Court filed by the Public Estates Authority (PEA)3 seeking the nullification of the Orders dated
December 28, 2007 and March 4, 2008 of the Regional Trial Court (RTC) of Makati City, Branch
135 in Civil Case No. 93-143.

The pertinent factual and procedural antecedents of the case, as summarized by the CA, are as
follows:

On [January 15, 1993], petitioner Bernardo De Leon ("De Leon") filed a Complaint for Damages
with Prayer for Preliminary Injunction before the Regional Trial Court [RTC] of Makati City, raffled
to Branch 135, against respondent Public Estates Authority ("PEA"), a government-owned
corporation, as well as its officers, herein private respondents Ramon Arellano, Jr., Ricardo Pena
and Reymundo Orpilla. The suit for damages hinged on the alleged unlawful destruction of De
Leon’s fence and houses constructed on Lot 5155 containing an area of 11,997 square meters,
situated in San Dionisio, Parañaque, which De Leon claimed has been in the possession of his
family for more than 50 years. Essentially, De Leon prayed that – one, lawful possession of the
land in question be awarded to him; two, PEA be ordered to pay damages for demolishing the
improvements constructed on Lot 5155; and, three, an injunctive relief be issued to enjoin PEA
from committing acts which would violate his lawful and peaceful possession of the subject
premises.
The court a quo found merit in De Leon’s application for writ of preliminary injunction and thus
issued the Order dated 8 February 1993, pertinent portions of which read:

After a careful consideration of the evidence presented and without going into the actual merits of
the case, this Court finds that plaintiff (De Leon) has duly established by preponderance of
evidence that he has a legal right over the subject matter of the instant case and is entitled to the
injunctive relief demanded for and may suffer irreparable damage or injury if such right is not
protected by Law [Rules (sic) 58, Section 3 of the Revised (Rules of Court)].

Premises considered upon plaintiff’s (De Leon’s) filing of a bond in the amount of ₱500,000.00,
let a writ of preliminary injunction be issued against the defendants, their agents, representatives
and other persons (PEA and its officers) acting for and in their behalf are hereby enjoined from
disturbing the peaceful possession of plaintiff (De Leon) and his co-owners over Lot 5155 and
further, from destroying and/or removing whatever other improvements thereon constructed, until
further orders of this Court.

SO ORDERED. (Emphasis supplied)

PEA sought recourse before the Supreme Court through a Petition for Certiorari with Prayer for a
Restraining Order, ascribing grave abuse of discretion against the court a quo for issuing
injunctive relief. The Petition was later referred to this Court for proper determination and
disposition, and was docketed as CA-G.R. SP No. 30630.

On 30 September 1993, the Ninth Division of this Court rendered a Decision discerning that the
court a quo did not act in a capricious, arbitrary and whimsical exercise of power in issuing the
writ of preliminary injunction against PEA. The Ninth Division ruled that the court a quo was
precisely careful to state in its Order that it was "without going into the actual merits of the case"
and that the words "plaintiff (De Leon) and his co-owners" were used by the court a quo rather
"loosely and did not intend it to be an adjudication of ownership."

Unfazed, PEA appealed to the Supreme Court via a Petition for Certiorari insisting that Lot 5155
was a salvage zone until it was reclaimed through government efforts in 1982. The land was
previously under water on the coastline which reached nine to twenty meters deep. In 1989, PEA
started constructing R-1 Toll Expressway Road for the Manila-Cavite Coastal Road, which
project directly traversed Lot 5155. PEA argued that the documentary evidence presented by De
Leon to bolster his fallacious claim of possession and ownership were procured only in 1992,
thus negating his very own allegation that he and his predecessors-in-interest have been in
occupation since time immemorial.

Ruling squarely on the issue adduced before it, the Supreme Court declared that Lot 5155 was a
public land so that De Leon’s occupation thereof, no matter how long ago, could not confer
ownership or possessory rights. Prescinding therefrom, no writ of injunction may lie to protect De
Leon’s nebulous right of possession. Accordingly, in its Decision dated 20 November 2000, the
Supreme Court disposed of the controversy in this wise:

WHEREFORE, the Court REVERSES the decision of the Court of Appeals in CA-G.R. SP No.
30630, and DISMISSES the complaint in Civil Case No. 93-143 of the Regional Trial Court,
Makati.

No costs.

SO ORDERED.
The aforesaid Decision became final and executory as no motion for reconsideration was filed. In
due course, PEA moved for the issuance of a writ of execution praying that De Leon and persons
claiming rights under him be ordered to vacate and peaceably surrender possession of Lot 5155.

Acting on PEA’s motion, the court a quo issued the first assailed Order dated 15 September
2004, viz:

Acting on the "Motion For Issuance Of Writ of Execution" filed by defendant Public Estate[s]
Authority, and finding the same to be impressed with merit, the same is GRANTED.

Let a Writ of Execution issue directing plaintiff, his agents, principals, successors-in-interest and
all persons claiming rights under him to vacate and peaceably turn over possession of Lot 5155
to defendant Public Estate[s] Authority.

SO ORDERED.

As could well be expected, De Leon moved for reconsideration thereof and quashal of the writ of
execution. He adamantly insisted that the court a quo’s Order for the issuance of the writ of
execution completely deviated from the dispositive portion of the Supreme Court’s Decision
dated 20 November 2000 as it did not categorically direct him to surrender possession of Lot
5155 in favor of PEA.

However, both motions met the same fate as these were denied by the court a quo in the second
disputed Order dated 29 April 2005.4

Dissatisfied, De Leon filed another Motion for Reconsideration dated July 1, 2005, but the same
was denied by the RTC in an Order dated July 27, 2005.

De Leon then filed a special civil action for certiorari with the CA assailing the September 15,
2004 and April 29, 2005 Orders of the RTC of Makati City. This was docketed as CA-G.R. SP
No. 90328. In the same proceeding, De Leon filed an Urgent-Emergency Motion for Temporary
Restraining Order (TRO) and Issuance of Writ of Preliminary Injunction but the same was denied
by the CA in a Resolution dated April 24, 2006.

Subsequently, De Leon filed a second special civil action for certiorari with the CA seeking to
annul and set aside the same RTC Orders dated September 15, 2004 and April 29, 2005, as well
as the RTC Order of July 27, 2005. The case was docketed as CA-G.R. SP No. 90984.

On July 26, 2006, PEA filed a Very Urgent Motion for Issuance of Writ of Demolition 5 praying that
the RTC issue a Special Order directing De Leon and persons claiming under him to remove all
improvements erected inside the premises of the subject property and, in case of failure to
remove the said structures, that a Special Order and Writ of Demolition be issued directing the
sheriff to remove and demolish the said improvements.

On October 11, 2006, the RTC issued an Order 6 holding in abeyance the Resolution of PEA’s
Motion. PEA filed a Motion for Reconsideration, 7 but it was denied by the RTC in an Order8 dated
January 12, 2007.

On February 27, 2007, PEA filed an Omnibus Motion 9 to dismiss or, in the alternative, resolve the
petitions in CA-G.R. SP No. 90328 and CA-G.R. SP No. 90984.

In its Decision10 dated March 21, 2007, the CA dismissed De Leon’s petition in CA-G.R. SP No.
90984 on the ground of forum shopping.
Subsequently, on November 21, 2007, the CA also dismissed De Leon’s petition in CA-G.R. SP
No. 90328 holding that an earlier decision promulgated by the Supreme Court, finding the
subject property to be public and that De Leon has no title and no clear legal right over the
disputed lot, has already attained finality.11 De Leon filed a Motion for Reconsideration, but the
CA denied it via its Resolution12 dated March 4, 2008.

Thereafter, PEA filed an Urgent Motion to Resolve (Re: Very Urgent Motion for Issuance of Writ
of Demolition).13

On December 28, 2007, the RTC issued an Order 14 holding in abeyance the resolution of PEA’s
Motion pending receipt by the trial court of the entry of judgment pertaining to CA-G.R. SP No.
90328. PEA filed a Motion for Reconsideration. 15

In its Order dated March 4, 2008, the RTC issued an Order denying PEA’s Motion for
Reconsideration.

On April 23, 2008, De Leon filed the present petition for review on certiorari, docketed as G.R.
No. 181970, assailing the November 21, 2007 Decision of the CA.

Subsequently, on May 15, 2008, PEA, on the other hand, filed the instant special civil action for
certiorari, docketed as G.R. No. 182678, questioning the Orders of the RTC of Makati City, dated
December 28, 2007 and March 4, 2008.

In G.R. No. 181970, De Leon questions the Decision of the CA on the following grounds: (a) he
can only be removed from the subject land through ejectment proceedings; (b) the Decision of
this Court in G.R. No. 112172 merely ordered the dismissal of De Leon’s complaint for damages
in Civil Case No. 93-143; and (c) even though petitioner is not the owner and has no title to the
subject land, mere prior possession is only required for the establishment of his right.

In G.R. No. 182678, the sole issue raised is whether respondent judge committed grave abuse of
discretion in issuing the assailed Orders which held in abeyance the resolution of PEA’s Motion
for the Issuance of a Writ of Demolition.

On February 25, 2009, PEA and the City of Parañaque filed a Joint Motion for Substitution
stating that PEA had transferred its ownership and ceded its interests over the subject property
to the City of Parañaque as full payment for all of the former’s real property tax liabilities. As a
consequence, the movants prayed that PEA be substituted by the City of Parañaque as
petitioner in G.R. No. 182678 and respondent in G.R. No. 181970. 16

In a Resolution17 dated on October 14, 2009, this Court granted the Motion for Substitution filed
by PEA and the City of Parañaque.

The issues raised in the present petitions boil down to the question of whether PEA is really
entitled to possess the subject property and, if answered in the affirmative, whether the RTC
should proceed to hear PEA’s Motion for the Issuance of a Writ of Demolition.

The Court rules for PEA.

The question of ownership and rightful possession of the subject property had already been
settled and laid to rest in this Court’s Decision dated November 20, 2000 in G.R. No. 112172
entitled, Public Estates Authority v. Court of Appeals (PEA v. CA). 18 In the said case, the Court
ruled thus:
The issue raised is whether respondent and his brothers and sisters were lawful owners and
possessors of Lot 5155 by mere claim of ownership by possession for a period of at least fifty
(50) years.

The Court of Appeals ruled that respondent Bernardo de Leon and his brothers and sisters were
lawful owners and possessors of Lot 5155 entitled to protection by injunction against anyone
disturbing their peaceful possession of said Lot.

The ruling is erroneous. An applicant seeking to establish ownership of land must conclusively
show that he is the owner in fee simple, for the standing presumption is that all lands belong to
the public domain of the State, unless acquired from the Government either by purchase or by
grant, except lands possessed by an occupant and his predecessors since time immemorial, for
such possession would justify the presumption that the land had never been part of the public
domain, or that it had been private property even before the Spanish conquest.

In this case, the land in question is admittedly public. The respondent Bernardo de Leon has no
title thereto at all. His claim of ownership is based on mere possession by himself and his
predecessors-in-interests, who claim to have been in open, continuous, exclusive and notorious
possession of the land in question, under a bona fide claim of ownership for a period of at least
fifty (50) years. However, the survey plan for the land was approved only in 1992, and
respondent paid the realty taxes thereon on October 30, 1992, shortly before the filing of the suit
below for damages with injunction. Hence, respondent must be deemed to begin asserting his
adverse claim to Lot 5155 only in 1992. More, Lot 5155 was certified as alienable and disposable
on March 27, 1972, per certificate of the Department of Environment and Natural Resources. It is
obvious that respondent’s possession has not ripened into ownership.

xxxx

Consequently, respondent De Leon has no clear legal right to the lot in question, and a writ of
injunction will not lie to protect such nebulous right of possession. x x x 19

The Court does not subscribe to De Leon’s argument that the issues of ownership and
possession of the subject lot should not have been taken up by the court on the ground that his
complaint is only for damages. De Leon must be aware that his action for damages is anchored
on his claim that he owns and possesses the subject property. 20 On this basis, it would be
inevitable for the court to discuss the issues of whether he, in fact, owns the disputed property
and, as such, has the right to possess the same. Moreover, it is clear from this Court’s Decision
in PEA v. CA that the main issue resolved therein was "whether respondent [De Leon] and his
brothers and sisters were the lawful owners and possessors of Lot 5155 by mere claim of
ownership by possession for a period of at least fifty (50) years."

De Leon insists that what this Court did in PEA v. CA was to simply dismiss his complaint for
damages and nothing more, and that the RTC erred and committed grave abuse of discretion in
issuing a writ of execution placing PEA in possession of the disputed property. He insists that he
can only be removed from the disputed property through an ejectment proceeding.

The Court is not persuaded.

As a general rule, a writ of execution should conform to the dispositive portion of the decision to
be executed; an execution is void if it is in excess of and beyond the original judgment or
award.21 The settled general principle is that a writ of execution must conform strictly to every
essential particular of the judgment promulgated, and may not vary the terms of the judgment it
seeks to enforce, nor may it go beyond the terms of the judgment sought to be executed. 22

However, it is equally settled that possession is an essential attribute of ownership. 23 Where the
ownership of a parcel of land was decreed in the judgment, the delivery of the possession of the
land should be considered included in the decision, it appearing that the defeated party’s claim to
the possession thereof is based on his claim of ownership. 24 Furthermore, adjudication of
ownership would include the delivery of possession if the defeated party has not shown any right
to possess the land independently of his claim of ownership which was rejected. 25 This is
precisely what happened in the present case. This Court had already declared the disputed
property as owned by the State and that De Leon does not have any right to possess the land
independent of his claim of ownership.

In addition, a judgment for the delivery or restitution of property is essentially an order to place
the prevailing party in possession of the property. 26 If the defendant refuses to surrender
possession of the property to the prevailing party, the sheriff or other proper officer should oust
him.27 No express order to this effect needs to be stated in the decision; nor is a categorical
statement needed in the decision that in such event the sheriff or other proper officer shall have
the authority to remove the improvements on the property if the defendant fails to do so within a
reasonable period of time.28 The removal of the improvements on the land under these
circumstances is deemed read into the decision, subject only to the issuance of a special order
by the court for the removal of the improvements. 29

It bears stressing that a judgment is not confined to what appears upon the face of the decision,
but also those necessarily included therein or necessary thereto. 30 In the present case, it would
be redundant for PEA to go back to court and file an ejectment case simply to establish its right
to possess the subject property. Contrary to De Leon’s claims, the issuance of the writ of
execution by the trial court did not constitute an unwarranted modification of this Court’s decision
in PEA v. CA, but rather, was a necessary complement thereto. Such writ was but an essential
consequence of this Court’s ruling affirming the nature of the subject parcel of land as public and
at the same time dismissing De Leon’s claims of ownership and possession. To further require
PEA to file an ejectment suit to oust de Leon and his siblings from the disputed property would, in
effect, amount to encouraging multiplicity of suits.

De Leon also contends that there "was never any government infrastructure project in the subject
land, much less a Manila-Cavite Coastal Road traversing it, at any time ever since, until now"
and that "allegations of a government project in the subject land and of such Road traversing the
subject land have been downright falsities and lies and mere concoctions of respondent
PEA."31 However, this Court has already ruled in PEA v. CA that "it is not disputed that there is a
government infrastructure project in progress traversing Lot 5155, which has been enjoined by
the writ of injunction issued by the trial court."

In any case, De Leon’s argument that there was no government infrastructure project in the
subject property begs the issue of ownership and rightful possession. The subject lot was
properly identified. There is no dispute as to its exact location. Hence, whether or not there is a
government project existing within the premises or that which traverses it is not relevant to the
issue of whether petitioner is the owner of the disputed lot and, therefore, has legal possession
thereof.

As to whether or not the RTC committed grave abuse of discretion in holding in abeyance the
resolution of PEA’s Motion for the Issuance of a Writ of Demolition, Section 7, 32 Rule 65 of the
Rules of Court provides the general rule that the mere pendency of a special civil action for
certiorari commenced in relation to a case pending before a lower court or court of origin does
not stay the proceedings therein in the absence of a writ of preliminary injunction or temporary
restraining order. It is true that there are instances where, even if there is no writ of preliminary
injunction or temporary restraining order issued by a higher court, it would be proper for a lower
court or court of origin to suspend its proceedings on the precept of judicial courtesy. 33 The
principle of judicial courtesy, however, remains to be the exception rather than the rule. As held
by this Court in Go v. Abrogar, 34 the precept of judicial courtesy should not be applied
indiscriminately and haphazardly if we are to maintain the relevance of Section 7, Rule 65 of the
Rules of Court.
Indeed, in the amendments introduced by A.M. No. 07-7-12-SC, a new paragraph is now added
to Section 7, Rule 65, which provides as follows:

The public respondent shall proceed with the principal case within ten (10) days from the filing of
a petition for certiorari with a higher court or tribunal, absent a temporary restraining order or a
preliminary injunction, or upon its expiration. Failure of the public respondent to proceed with the
principal case may be a ground for an administrative charge. 1avvphi1

While the above quoted amendment may not be applied in the instant case, as A.M. No. 07-7-12-
SC was made effective only on December 27, 2007, the provisions of the amendatory rule clearly
underscores the urgency of proceeding with the principal case in the absence of a temporary
restraining order or a preliminary injunction.

This urgency is even more pronounced in the present case, considering that this Court’s
judgment in PEA v. CA, finding that De Leon does not own the subject property and is not
entitled to its possession, had long become final and executory. As a consequence, the writ of
execution, as well as the writ of demolition, should be issued as a matter of course, in the
absence of any order restraining their issuance. In fact, the writ of demolition is merely an
ancillary process to carry out the Order previously made by the RTC for the execution of this
Court’s decision in PEA v. CA. It is a logical consequence of the writ of execution earlier issued.

Neither can De Leon argue that he stands to sustain irreparable damage. The Court had already
determined with finality that he is not the owner of the disputed property and that he has no right
to possess the same independent of his claim of ownership.

Furthermore, the Order of the RTC holding in abeyance the resolution of PEA’s Motion for the
Issuance of a Writ of Demolition also appears to be a circumvention of the provisions of Section
5, Rule 58 of the Rules of Court, which limit the period of effectivity of restraining orders issued
by the courts. In fact, the assailed Orders of the RTC have even become more potent than a
TRO issued by the CA because, under the Rules of Court, a TRO issued by the CA is effective
only for sixty days. In the present case, even in the absence of a TRO issued by a higher court,
the RTC, in effect, directed the maintenance of the status quo by issuing its assailed Orders.
Worse, the effectivity of the said Orders was made to last for an indefinite period because the
resolution of PEA’s Motion for the Issuance of a Writ of Demolition was made to depend upon the
finality of the judgment in G.R. No. 181970. Based on the foregoing, the Court finds that the RTC
committed grave abuse of discretion in issuing the assailed Orders dated December 28, 2007
and March 4, 2008. 1avvphi1

Finally, the Court reminds the De Leon that it does not allow the piecemeal interpretation of its
Decisions as a means to advance his case. To get the true intent and meaning of a decision, no
specific portion thereof should be isolated and read in this context, but the same must be
considered in its entirety.35 Read in this manner, PEA’s right to possession of the subject
property, as well as the removal of the improvements or structures existing thereon, fully follows
after considering the entirety of the Court’s decision in PEA v. CA. This is consistent with the
provisions of Section 10, paragraphs (c) and (d), Rule 39 of the Rules of Court, which provide for
the procedure for execution of judgments for specific acts, to wit:

SECTION 10. Execution of judgments for specific act. -

xxxx

(c) Delivery or restitution of real property. - The officer shall demand of the person
against whom the judgment for the delivery or restitution of real property is rendered and
all persons claiming rights under him to peaceably vacate the property within the three
(3) working days, and restore possession thereof to the judgment obligee; otherwise, the
officer shall oust all such persons therefrom with the assistance, if necessary, of
 appropriate peace officers, and employing such means as may be reasonably necessary
to retake possession, and place the judgment obligee in possession of such property.
Any costs, damages, rents or profits awarded by the judgment shall be satisfied in the
same manner as a judgment for money.

(d) Removal of improvements on property subject of execution. - When the property

subject of execution contains improvements constructed or planted by the judgment
obligor or his agent, the officer shall not destroy, demolish or remove said improvements,
except upon special order of the court, issued upon motion of the judgment obligee after
due hearing and after the former has failed to remove the same within a reasonable time
fixed by the court.

As a final note, it bears to point out that this case has been dragging for more than 15 years and
the execution of this Court’s judgment in PEA v. CA has been delayed for almost ten years now
simply because De Leon filed a frivolous appeal against the RTC’s order of execution based on
arguments that cannot hold water. As a consequence, PEA is prevented from enjoying the fruits
of the final judgment in its favor. The Court agrees with the Office of the Solicitor General in its
contention that every litigation must come to an end once a judgment becomes final, executory
and unappealable. Just as a losing party has the right to file an appeal within the prescribed
period, the winning party also has the correlative right to enjoy the finality of the resolution of his
case by the execution and satisfaction of the judgment, which is the "life of the law." 36 To frustrate
it by dilatory schemes on the part of the losing party is to frustrate all the efforts, time and
expenditure of the courts.37 It is in the interest of justice that this Court should write finis to this
litigation.

WHEREFORE, the Court disposes and orders the following:

The petition for review on certiorari in G.R. No. 181970 is DENIED. The challenged Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 90328 dated November 21, 2007 and
March 4, 2008, respectively, are AFFIRMED.

The petition for certiorari in G.R. No. 182678 is GRANTED. The assailed Orders of the Regional
Trial Court of Makati City, Branch 135, dated December 28, 2007 and March 4, 2008, are
ANNULLED and SET ASIDE.

The Regional Trial Court of Makati is hereby DIRECTED to hear and resolve PEA’s Motion for
the Issuance of a Writ of Demolition with utmost dispatch. This Decision is IMMEDIATELY
EXECUTORY. The Clerk of Court is DIRECTED to remand the records of the case to the court of
origin.

SO ORDERED.

DIOSDADO M. PERALTA
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 181970               August 3, 2010

BERNARDO DE LEON, Petitioner,
vs.
PUBLIC ESTATES AUTHORITY substituted by the CITY OF PARAÑAQUE, RAMON
ARELLANO, JR., RICARDO PENA and REYMUNDO ORPILLA, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 182678

PUBLIC ESTATES AUTHORITY (now PHILIPPINE RECLAMATION AUTHORITY),

substituted by the CITY OF PARAÑAQUE, Petitioner,
vs.
HON. SELMA PALACIO ALARAS, in her capacity as the Acting Presiding Judge of Branch
135, Regional Trial Court of Makati City, and BERNARDO DE LEON. Respondents.

DECISION

PERALTA, J.:

Before the Court are two consolidated petitions.

G.R. No. 181970 is a petition for review on certiorari under Rule 45 of the Rules of Court filed by
Bernardo de Leon seeking the reversal and setting aside of the Decision 1 of the Court of Appeals
(CA), dated November 21, 2007, in CA-G.R. SP No. 90328 which dismissed his petition for
certiorari. De Leon also assails the CA Resolution 2 dated March 4, 2008 denying his Motion for
Reconsideration.

On the other hand, G.R. No. 182678 is a petition for certiorari under Rule 65 of the Rules of
Court filed by the Public Estates Authority (PEA)3 seeking the nullification of the Orders dated
December 28, 2007 and March 4, 2008 of the Regional Trial Court (RTC) of Makati City, Branch
135 in Civil Case No. 93-143.

The pertinent factual and procedural antecedents of the case, as summarized by the CA, are as
follows:

On [January 15, 1993], petitioner Bernardo De Leon ("De Leon") filed a Complaint for Damages
with Prayer for Preliminary Injunction before the Regional Trial Court [RTC] of Makati City, raffled
to Branch 135, against respondent Public Estates Authority ("PEA"), a government-owned
corporation, as well as its officers, herein private respondents Ramon Arellano, Jr., Ricardo Pena
and Reymundo Orpilla. The suit for damages hinged on the alleged unlawful destruction of De
Leon’s fence and houses constructed on Lot 5155 containing an area of 11,997 square meters,
situated in San Dionisio, Parañaque, which De Leon claimed has been in the possession of his
family for more than 50 years. Essentially, De Leon prayed that – one, lawful possession of the
land in question be awarded to him; two, PEA be ordered to pay damages for demolishing the
improvements constructed on Lot 5155; and, three, an injunctive relief be issued to enjoin PEA
from committing acts which would violate his lawful and peaceful possession of the subject
premises.

The court a quo found merit in De Leon’s application for writ of preliminary injunction and thus
issued the Order dated 8 February 1993, pertinent portions of which read:

After a careful consideration of the evidence presented and without going into the actual merits of
the case, this Court finds that plaintiff (De Leon) has duly established by preponderance of
evidence that he has a legal right over the subject matter of the instant case and is entitled to the
injunctive relief demanded for and may suffer irreparable damage or injury if such right is not
protected by Law [Rules (sic) 58, Section 3 of the Revised (Rules of Court)].

Premises considered upon plaintiff’s (De Leon’s) filing of a bond in the amount of ₱500,000.00,
let a writ of preliminary injunction be issued against the defendants, their agents, representatives
and other persons (PEA and its officers) acting for and in their behalf are hereby enjoined from
disturbing the peaceful possession of plaintiff (De Leon) and his co-owners over Lot 5155 and
further, from destroying and/or removing whatever other improvements thereon constructed, until
further orders of this Court.

SO ORDERED. (Emphasis supplied)

PEA sought recourse before the Supreme Court through a Petition for Certiorari with Prayer for a
Restraining Order, ascribing grave abuse of discretion against the court a quo for issuing
injunctive relief. The Petition was later referred to this Court for proper determination and
disposition, and was docketed as CA-G.R. SP No. 30630.

On 30 September 1993, the Ninth Division of this Court rendered a Decision discerning that the
court a quo did not act in a capricious, arbitrary and whimsical exercise of power in issuing the
writ of preliminary injunction against PEA. The Ninth Division ruled that the court a quo was
precisely careful to state in its Order that it was "without going into the actual merits of the case"
and that the words "plaintiff (De Leon) and his co-owners" were used by the court a quo rather
"loosely and did not intend it to be an adjudication of ownership."

Unfazed, PEA appealed to the Supreme Court via a Petition for Certiorari insisting that Lot 5155
was a salvage zone until it was reclaimed through government efforts in 1982. The land was
previously under water on the coastline which reached nine to twenty meters deep. In 1989, PEA
started constructing R-1 Toll Expressway Road for the Manila-Cavite Coastal Road, which
project directly traversed Lot 5155. PEA argued that the documentary evidence presented by De
Leon to bolster his fallacious claim of possession and ownership were procured only in 1992,
thus negating his very own allegation that he and his predecessors-in-interest have been in
occupation since time immemorial.

Ruling squarely on the issue adduced before it, the Supreme Court declared that Lot 5155 was a
public land so that De Leon’s occupation thereof, no matter how long ago, could not confer
ownership or possessory rights. Prescinding therefrom, no writ of injunction may lie to protect De
Leon’s nebulous right of possession. Accordingly, in its Decision dated 20 November 2000, the
Supreme Court disposed of the controversy in this wise:

WHEREFORE, the Court REVERSES the decision of the Court of Appeals in CA-G.R. SP No.
30630, and DISMISSES the complaint in Civil Case No. 93-143 of the Regional Trial Court,
Makati.
No costs.

SO ORDERED.

The aforesaid Decision became final and executory as no motion for reconsideration was filed. In
due course, PEA moved for the issuance of a writ of execution praying that De Leon and persons
claiming rights under him be ordered to vacate and peaceably surrender possession of Lot 5155.

Acting on PEA’s motion, the court a quo issued the first assailed Order dated 15 September
2004, viz:

Acting on the "Motion For Issuance Of Writ of Execution" filed by defendant Public Estate[s]
Authority, and finding the same to be impressed with merit, the same is GRANTED.

Let a Writ of Execution issue directing plaintiff, his agents, principals, successors-in-interest and
all persons claiming rights under him to vacate and peaceably turn over possession of Lot 5155
to defendant Public Estate[s] Authority.

SO ORDERED.

As could well be expected, De Leon moved for reconsideration thereof and quashal of the writ of
execution. He adamantly insisted that the court a quo’s Order for the issuance of the writ of
execution completely deviated from the dispositive portion of the Supreme Court’s Decision
dated 20 November 2000 as it did not categorically direct him to surrender possession of Lot
5155 in favor of PEA.

However, both motions met the same fate as these were denied by the court a quo in the second
disputed Order dated 29 April 2005.4

Dissatisfied, De Leon filed another Motion for Reconsideration dated July 1, 2005, but the same
was denied by the RTC in an Order dated July 27, 2005.

De Leon then filed a special civil action for certiorari with the CA assailing the September 15,
2004 and April 29, 2005 Orders of the RTC of Makati City. This was docketed as CA-G.R. SP
No. 90328. In the same proceeding, De Leon filed an Urgent-Emergency Motion for Temporary
Restraining Order (TRO) and Issuance of Writ of Preliminary Injunction but the same was denied
by the CA in a Resolution dated April 24, 2006.

Subsequently, De Leon filed a second special civil action for certiorari with the CA seeking to
annul and set aside the same RTC Orders dated September 15, 2004 and April 29, 2005, as well
as the RTC Order of July 27, 2005. The case was docketed as CA-G.R. SP No. 90984.

On July 26, 2006, PEA filed a Very Urgent Motion for Issuance of Writ of Demolition 5 praying that
the RTC issue a Special Order directing De Leon and persons claiming under him to remove all
improvements erected inside the premises of the subject property and, in case of failure to
remove the said structures, that a Special Order and Writ of Demolition be issued directing the
sheriff to remove and demolish the said improvements.

On October 11, 2006, the RTC issued an Order 6 holding in abeyance the Resolution of PEA’s
Motion. PEA filed a Motion for Reconsideration, 7 but it was denied by the RTC in an Order8 dated
January 12, 2007.

On February 27, 2007, PEA filed an Omnibus Motion 9 to dismiss or, in the alternative, resolve the
petitions in CA-G.R. SP No. 90328 and CA-G.R. SP No. 90984.
In its Decision10 dated March 21, 2007, the CA dismissed De Leon’s petition in CA-G.R. SP No.
90984 on the ground of forum shopping.

Subsequently, on November 21, 2007, the CA also dismissed De Leon’s petition in CA-G.R. SP
No. 90328 holding that an earlier decision promulgated by the Supreme Court, finding the
subject property to be public and that De Leon has no title and no clear legal right over the
disputed lot, has already attained finality.11 De Leon filed a Motion for Reconsideration, but the
CA denied it via its Resolution12 dated March 4, 2008.

Thereafter, PEA filed an Urgent Motion to Resolve (Re: Very Urgent Motion for Issuance of Writ
of Demolition).13

On December 28, 2007, the RTC issued an Order 14 holding in abeyance the resolution of PEA’s
Motion pending receipt by the trial court of the entry of judgment pertaining to CA-G.R. SP No.
90328. PEA filed a Motion for Reconsideration. 15

In its Order dated March 4, 2008, the RTC issued an Order denying PEA’s Motion for
Reconsideration.

On April 23, 2008, De Leon filed the present petition for review on certiorari, docketed as G.R.
No. 181970, assailing the November 21, 2007 Decision of the CA.

Subsequently, on May 15, 2008, PEA, on the other hand, filed the instant special civil action for
certiorari, docketed as G.R. No. 182678, questioning the Orders of the RTC of Makati City, dated
December 28, 2007 and March 4, 2008.

In G.R. No. 181970, De Leon questions the Decision of the CA on the following grounds: (a) he
can only be removed from the subject land through ejectment proceedings; (b) the Decision of
this Court in G.R. No. 112172 merely ordered the dismissal of De Leon’s complaint for damages
in Civil Case No. 93-143; and (c) even though petitioner is not the owner and has no title to the
subject land, mere prior possession is only required for the establishment of his right.

In G.R. No. 182678, the sole issue raised is whether respondent judge committed grave abuse of
discretion in issuing the assailed Orders which held in abeyance the resolution of PEA’s Motion
for the Issuance of a Writ of Demolition.

On February 25, 2009, PEA and the City of Parañaque filed a Joint Motion for Substitution
stating that PEA had transferred its ownership and ceded its interests over the subject property
to the City of Parañaque as full payment for all of the former’s real property tax liabilities. As a
consequence, the movants prayed that PEA be substituted by the City of Parañaque as
petitioner in G.R. No. 182678 and respondent in G.R. No. 181970. 16

In a Resolution17 dated on October 14, 2009, this Court granted the Motion for Substitution filed
by PEA and the City of Parañaque.

The issues raised in the present petitions boil down to the question of whether PEA is really
entitled to possess the subject property and, if answered in the affirmative, whether the RTC
should proceed to hear PEA’s Motion for the Issuance of a Writ of Demolition.

The Court rules for PEA.

The question of ownership and rightful possession of the subject property had already been
settled and laid to rest in this Court’s Decision dated November 20, 2000 in G.R. No. 112172
entitled, Public Estates Authority v. Court of Appeals (PEA v. CA). 18 In the said case, the Court
ruled thus:
The issue raised is whether respondent and his brothers and sisters were lawful owners and
possessors of Lot 5155 by mere claim of ownership by possession for a period of at least fifty
(50) years.

The Court of Appeals ruled that respondent Bernardo de Leon and his brothers and sisters were
lawful owners and possessors of Lot 5155 entitled to protection by injunction against anyone
disturbing their peaceful possession of said Lot.

The ruling is erroneous. An applicant seeking to establish ownership of land must conclusively
show that he is the owner in fee simple, for the standing presumption is that all lands belong to
the public domain of the State, unless acquired from the Government either by purchase or by
grant, except lands possessed by an occupant and his predecessors since time immemorial, for
such possession would justify the presumption that the land had never been part of the public
domain, or that it had been private property even before the Spanish conquest.

In this case, the land in question is admittedly public. The respondent Bernardo de Leon has no
title thereto at all. His claim of ownership is based on mere possession by himself and his
predecessors-in-interests, who claim to have been in open, continuous, exclusive and notorious
possession of the land in question, under a bona fide claim of ownership for a period of at least
fifty (50) years. However, the survey plan for the land was approved only in 1992, and
respondent paid the realty taxes thereon on October 30, 1992, shortly before the filing of the suit
below for damages with injunction. Hence, respondent must be deemed to begin asserting his
adverse claim to Lot 5155 only in 1992. More, Lot 5155 was certified as alienable and disposable
on March 27, 1972, per certificate of the Department of Environment and Natural Resources. It is
obvious that respondent’s possession has not ripened into ownership.

xxxx

Consequently, respondent De Leon has no clear legal right to the lot in question, and a writ of
injunction will not lie to protect such nebulous right of possession. x x x 19

The Court does not subscribe to De Leon’s argument that the issues of ownership and
possession of the subject lot should not have been taken up by the court on the ground that his
complaint is only for damages. De Leon must be aware that his action for damages is anchored
on his claim that he owns and possesses the subject property. 20 On this basis, it would be
inevitable for the court to discuss the issues of whether he, in fact, owns the disputed property
and, as such, has the right to possess the same. Moreover, it is clear from this Court’s Decision
in PEA v. CA that the main issue resolved therein was "whether respondent [De Leon] and his
brothers and sisters were the lawful owners and possessors of Lot 5155 by mere claim of
ownership by possession for a period of at least fifty (50) years."

De Leon insists that what this Court did in PEA v. CA was to simply dismiss his complaint for
damages and nothing more, and that the RTC erred and committed grave abuse of discretion in
issuing a writ of execution placing PEA in possession of the disputed property. He insists that he
can only be removed from the disputed property through an ejectment proceeding.

The Court is not persuaded.

As a general rule, a writ of execution should conform to the dispositive portion of the decision to
be executed; an execution is void if it is in excess of and beyond the original judgment or
award.21 The settled general principle is that a writ of execution must conform strictly to every
essential particular of the judgment promulgated, and may not vary the terms of the judgment it
seeks to enforce, nor may it go beyond the terms of the judgment sought to be executed. 22

However, it is equally settled that possession is an essential attribute of ownership. 23 Where the
ownership of a parcel of land was decreed in the judgment, the delivery of the possession of the
land should be considered included in the decision, it appearing that the defeated party’s claim to
the possession thereof is based on his claim of ownership. 24 Furthermore, adjudication of
ownership would include the delivery of possession if the defeated party has not shown any right
to possess the land independently of his claim of ownership which was rejected. 25 This is
precisely what happened in the present case. This Court had already declared the disputed
property as owned by the State and that De Leon does not have any right to possess the land
independent of his claim of ownership.

In addition, a judgment for the delivery or restitution of property is essentially an order to place
the prevailing party in possession of the property. 26 If the defendant refuses to surrender
possession of the property to the prevailing party, the sheriff or other proper officer should oust
him.27 No express order to this effect needs to be stated in the decision; nor is a categorical
statement needed in the decision that in such event the sheriff or other proper officer shall have
the authority to remove the improvements on the property if the defendant fails to do so within a
reasonable period of time.28 The removal of the improvements on the land under these
circumstances is deemed read into the decision, subject only to the issuance of a special order
by the court for the removal of the improvements. 29

It bears stressing that a judgment is not confined to what appears upon the face of the decision,
but also those necessarily included therein or necessary thereto. 30 In the present case, it would
be redundant for PEA to go back to court and file an ejectment case simply to establish its right
to possess the subject property. Contrary to De Leon’s claims, the issuance of the writ of
execution by the trial court did not constitute an unwarranted modification of this Court’s decision
in PEA v. CA, but rather, was a necessary complement thereto. Such writ was but an essential
consequence of this Court’s ruling affirming the nature of the subject parcel of land as public and
at the same time dismissing De Leon’s claims of ownership and possession. To further require
PEA to file an ejectment suit to oust de Leon and his siblings from the disputed property would, in
effect, amount to encouraging multiplicity of suits.

De Leon also contends that there "was never any government infrastructure project in the subject
land, much less a Manila-Cavite Coastal Road traversing it, at any time ever since, until now"
and that "allegations of a government project in the subject land and of such Road traversing the
subject land have been downright falsities and lies and mere concoctions of respondent
PEA."31 However, this Court has already ruled in PEA v. CA that "it is not disputed that there is a
government infrastructure project in progress traversing Lot 5155, which has been enjoined by
the writ of injunction issued by the trial court."

In any case, De Leon’s argument that there was no government infrastructure project in the
subject property begs the issue of ownership and rightful possession. The subject lot was
properly identified. There is no dispute as to its exact location. Hence, whether or not there is a
government project existing within the premises or that which traverses it is not relevant to the
issue of whether petitioner is the owner of the disputed lot and, therefore, has legal possession
thereof.

As to whether or not the RTC committed grave abuse of discretion in holding in abeyance the
resolution of PEA’s Motion for the Issuance of a Writ of Demolition, Section 7, 32 Rule 65 of the
Rules of Court provides the general rule that the mere pendency of a special civil action for
certiorari commenced in relation to a case pending before a lower court or court of origin does
not stay the proceedings therein in the absence of a writ of preliminary injunction or temporary
restraining order. It is true that there are instances where, even if there is no writ of preliminary
injunction or temporary restraining order issued by a higher court, it would be proper for a lower
court or court of origin to suspend its proceedings on the precept of judicial courtesy. 33 The
principle of judicial courtesy, however, remains to be the exception rather than the rule. As held
by this Court in Go v. Abrogar, 34 the precept of judicial courtesy should not be applied
indiscriminately and haphazardly if we are to maintain the relevance of Section 7, Rule 65 of the
Rules of Court.
Indeed, in the amendments introduced by A.M. No. 07-7-12-SC, a new paragraph is now added
to Section 7, Rule 65, which provides as follows:

The public respondent shall proceed with the principal case within ten (10) days from the filing of
a petition for certiorari with a higher court or tribunal, absent a temporary restraining order or a
preliminary injunction, or upon its expiration. Failure of the public respondent to proceed with the
principal case may be a ground for an administrative charge. 1avvphi1

While the above quoted amendment may not be applied in the instant case, as A.M. No. 07-7-12-
SC was made effective only on December 27, 2007, the provisions of the amendatory rule clearly
underscores the urgency of proceeding with the principal case in the absence of a temporary
restraining order or a preliminary injunction.

This urgency is even more pronounced in the present case, considering that this Court’s
judgment in PEA v. CA, finding that De Leon does not own the subject property and is not
entitled to its possession, had long become final and executory. As a consequence, the writ of
execution, as well as the writ of demolition, should be issued as a matter of course, in the
absence of any order restraining their issuance. In fact, the writ of demolition is merely an
ancillary process to carry out the Order previously made by the RTC for the execution of this
Court’s decision in PEA v. CA. It is a logical consequence of the writ of execution earlier issued.

Neither can De Leon argue that he stands to sustain irreparable damage. The Court had already
determined with finality that he is not the owner of the disputed property and that he has no right
to possess the same independent of his claim of ownership.

Furthermore, the Order of the RTC holding in abeyance the resolution of PEA’s Motion for the
Issuance of a Writ of Demolition also appears to be a circumvention of the provisions of Section
5, Rule 58 of the Rules of Court, which limit the period of effectivity of restraining orders issued
by the courts. In fact, the assailed Orders of the RTC have even become more potent than a
TRO issued by the CA because, under the Rules of Court, a TRO issued by the CA is effective
only for sixty days. In the present case, even in the absence of a TRO issued by a higher court,
the RTC, in effect, directed the maintenance of the status quo by issuing its assailed Orders.
Worse, the effectivity of the said Orders was made to last for an indefinite period because the
resolution of PEA’s Motion for the Issuance of a Writ of Demolition was made to depend upon the
finality of the judgment in G.R. No. 181970. Based on the foregoing, the Court finds that the RTC
committed grave abuse of discretion in issuing the assailed Orders dated December 28, 2007
and March 4, 2008. 1avvphi1

Finally, the Court reminds the De Leon that it does not allow the piecemeal interpretation of its
Decisions as a means to advance his case. To get the true intent and meaning of a decision, no
specific portion thereof should be isolated and read in this context, but the same must be
considered in its entirety.35 Read in this manner, PEA’s right to possession of the subject
property, as well as the removal of the improvements or structures existing thereon, fully follows
after considering the entirety of the Court’s decision in PEA v. CA. This is consistent with the
provisions of Section 10, paragraphs (c) and (d), Rule 39 of the Rules of Court, which provide for
the procedure for execution of judgments for specific acts, to wit:

SECTION 10. Execution of judgments for specific act. -

xxxx

(c) Delivery or restitution of real property. - The officer shall demand of the person
against whom the judgment for the delivery or restitution of real property is rendered and
all persons claiming rights under him to peaceably vacate the property within the three
(3) working days, and restore possession thereof to the judgment obligee; otherwise, the
officer shall oust all such persons therefrom with the assistance, if necessary, of
 appropriate peace officers, and employing such means as may be reasonably necessary
to retake possession, and place the judgment obligee in possession of such property.
Any costs, damages, rents or profits awarded by the judgment shall be satisfied in the
same manner as a judgment for money.

(d) Removal of improvements on property subject of execution. - When the property

subject of execution contains improvements constructed or planted by the judgment
obligor or his agent, the officer shall not destroy, demolish or remove said improvements,
except upon special order of the court, issued upon motion of the judgment obligee after
due hearing and after the former has failed to remove the same within a reasonable time
fixed by the court.

As a final note, it bears to point out that this case has been dragging for more than 15 years and
the execution of this Court’s judgment in PEA v. CA has been delayed for almost ten years now
simply because De Leon filed a frivolous appeal against the RTC’s order of execution based on
arguments that cannot hold water. As a consequence, PEA is prevented from enjoying the fruits
of the final judgment in its favor. The Court agrees with the Office of the Solicitor General in its
contention that every litigation must come to an end once a judgment becomes final, executory
and unappealable. Just as a losing party has the right to file an appeal within the prescribed
period, the winning party also has the correlative right to enjoy the finality of the resolution of his
case by the execution and satisfaction of the judgment, which is the "life of the law." 36 To frustrate
it by dilatory schemes on the part of the losing party is to frustrate all the efforts, time and
expenditure of the courts.37 It is in the interest of justice that this Court should write finis to this
litigation.

WHEREFORE, the Court disposes and orders the following:

The petition for review on certiorari in G.R. No. 181970 is DENIED. The challenged Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 90328 dated November 21, 2007 and
March 4, 2008, respectively, are AFFIRMED.

The petition for certiorari in G.R. No. 182678 is GRANTED. The assailed Orders of the Regional
Trial Court of Makati City, Branch 135, dated December 28, 2007 and March 4, 2008, are
ANNULLED and SET ASIDE.

The Regional Trial Court of Makati is hereby DIRECTED to hear and resolve PEA’s Motion for
the Issuance of a Writ of Demolition with utmost dispatch. This Decision is IMMEDIATELY
EXECUTORY. The Clerk of Court is DIRECTED to remand the records of the case to the court of
origin.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 180817               June 23, 2009

MULTI-TRANS AGENCY PHILS. INC., Petitioner,

vs.
ORIENTAL ASSURANCE CORP., Respondent.

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, which seeks
the reversal and setting aside of the Decision1 of the Court of Appeals dated 4 December 2006 in
CA-G.R. CV No. 67581 affirming with modification the decision 2 and order3 of the Regional Trial
Court (RTC) of Manila, Branch 13, in Civil Case No. 97-84259; and its Resolution 4 dated 10
December 2007 denying petitioner Multi-Trans Agency Phils., Inc.’s (Multi-Trans) Motion for
Reconsideration.

The instant case arose from a complaint for sum of money filed by respondent Oriental
Assurance Corporation (Oriental) against petitioner and Neptune Orient Lines, Ltd. (Neptune)
before the RTC of Manila on 22 July 1997. The case was raffled to Branch 13. The complaint
alleged, inter alia, that Multi-Trans was the operator/ship agent of the vessel "Tokyo Bay"
while Neptune was the operator/ship agent of the vessel "M/V Neptune Beryl." Oriental’s
predecessor-in-interest – Imrex Enterprises – imported from England seventy-two (72) boxes and
one (1) pal/box of various colors of Opacolor, contained in one container van which was
transported from Southampton to Manila on board the vessel "Tokyo Bay" as evidenced by Bill of
Lading No. MA-19943/02. The shipment was transshipped from Singapore on board the vessel
"M/V Neptune Beryl," which arrived and docked at the Manila International Port, Manila, on 29
August 1996. The shipment was insured by respondent against loss and/or damage for
₱1,078,012.16 under Marine Insurance Policy No. OAC-M-96/688.

The container van containing the shipment was unloaded from the carrying vessel and stripped
of its contents at the open Container Yard of the Manila North Harbor. Only 72 boxes were found,
while the one pal/box of Opacolor CC 22932 Yellow weighing 500 kilos was not delivered by the
carrying vessel, or was shortlanded, as evidenced by Good Order Cargo Receipt No. 1792
issued by Neptune. The 72 boxes were withdrawn from the Manila North Harbor and delivered to
the consignee’s (Imrex Enterprises’) warehouse at No. 7 Jose Cruz St., Barrio Ugong, Pasig City.

Respondent alleged that the non-delivery or shortlanding of one box of the shipment was due to
the negligence of petitioner and Neptune and/or the captain and crew of the vessels "Tokyo Bay"
and/or "MV Neptune Beryl" in loading, stowing, taking care of, handling and unloading the
shipment. By being negligent, petitioner and Neptune breached their contract of carriage in
failing to deliver one box of the shipment to Imrex Enterprises at the point of destination. Imrex
Enterprises filed a claim with respondent for the value of the one box that was shortlanded.
Pursuant to the terms and conditions of Marine Insurance Policy No. OAC-M-96/688, respondent
paid Imrex Enterprises the amount ₱256,937.03, for which reason, it claims that it is subrogated
into the rights of Imrex Enterprises to be indemnified by petitioner and Neptune.

Respondent made demands upon petitioner and Neptune to pay, but they refused to satisfy the
former’s claim. As a result, the complaint was filed and both petitioner and Neptune were sued,
because respondent was uncertain from whom it was entitled to relief. It prayed that either or
both petitioner and Neptune be ordered to pay (a) ₱256,937.03 with legal interest from the date
of the filing of the complaint; (b) ₱50,000.00 as attorney’s fees; and (c) costs of suit. 5

Neptune filed its Answer with Compulsory Counterclaim. 6 It alleged, among other things, that it
was a mere commercial agent of "M/V Neptune Beryl;" and that it had no knowledge of the
contents, quantity, quality, condition and value of the subject shipment, as it was carried on a
"Said to Contain" (or STC) and "Shipper’s Load and Count" basis. It claimed that the dorsal
portion of Bill of Lading No. MA-19943/02 was not produced. It added that the shipment was
discharged from the vessel complete and in good order, and that it exercised the diligence
required by law in the handling of and vigilance over the shipment. It also alleged that no
demand was made. It invoked the following defenses: the complaint stated no cause of action;
the plaintiff and subrogor had no privity of contract with Neptune; plaintiff and Neptune were not
the real parties-in-interest; the subject shipment was discharged at the Port of Manila complete
and in good order; its responsibility ceased upon the shipment’s discharge from the ship’s tackle;
the damages, losses and spillages, if any, were due to the inherent nature, vice or defect of the
goods; or the perils, dangers and accidents of the sea; pre-shipment loss or damage; or the
insufficiency of the packing thereof, for which it was not liable; the alleged payment made by
plaintiff to the alleged assured/consignee was not legally due and demandable, so there was
consequently no legal subrogation in favor of the plaintiff; its liability should not exceed the cost
insurance freight value of the loss or damaged shipment or the amount of $500 per package; or
in any event, said liability, if any, should not exceed the limitation of liability provided for in the Bill
of Lading; no invoice of loss/damage was made by the consignee within the time required by law,
the Bill of Lading, and the pertinent charter party; the complaint was barred by prescription and/or
laches; plaintiff’s claim was excessive and unreasonable; the terms and conditions of the
relevant Bill of Lading, Carriage of Goods by Sea Act and existing laws absolved it from any and
all liability for the alleged loss/damage; the damage, if any, to the shipment was due to the
negligent acts or omissions committed by the consignee or its representatives, or to causes for
which defendant is not responsible; the shipment was loaded on board the vessel subject to the
terms and conditions of the relevant Bill of Lading; the subject shipment was carried under
"weight, measure, marks and numbers, quality, contents and value unknown," indicating that the
carrier did not know the exact quantity, quality and weight of the shipment, as it was not given the
opportunity to inspect the same; and the Bill of Lading was issued based on the declaration
made by the shipper; and the vessel (M/V Neptune Beryl) acted as a special carrier, and
Neptune was a mere commercial agent of "M/V Neptune Beryl."

On the other hand, petitioner, through its counsel Jose Ma. Q. Austria, filed a Motion to
Dismiss7 on the ground that the complaint did not state a cause of action. It argued that the
complaint stated that petitioner Multi-Trans was the "operator/ship agent of the vessel "Tokyo
Bay." However, in the Bill of Lading attached to the complaint, petitioner was named agent of
Multimodal Transport Operator and not of the vessel "Tokyo Bay." Neither can it be the
operator of the said vessel, there being no allegation that said vessel was on a bareboat charter
to Transtainer Lines, the principal of petitioner. It maintains that the evidence presented by
plaintiff defeats its own allegations as to the participation of petitioner in the transaction.

On 8 October 1997, respondent opposed the motion to dismiss.8 On 23 October 1997,

respondent filed its answer to counterclaim.9

In an Order dated 25 October 1997, petitioner’s motion to dismiss was denied. 10

In an Order dated 20 February 1998, the trial court directed its personnel to transmit immediately
to counsel of petitioner a copy of the Order dated 25 October 1997 it appearing that Multi-Trans
was not sent a copy thereof. For this reason, it declared that petitioner’s period to file an answer
had not yet started to run.11

On 15 January 1999, the trial court archived the case, there being no movement in the case. 12
On 17 February 1999, respondent filed a motion to declare defendant Multi-Trans in default for
failure to file its answer to the complaint.13

In its order14 dated 26 February 1999, the trial court stated that the copy of the Order dated 25
October 1997 was sent to defendant Multi-Trans and not to its counsel. For this reason, the
period to file an Answer had not yet started to run. It directed that a copy of the 25 October 1997
Order be sent to defendant Multi-Trans’ counsel. A notice of the transmittal of the Order dated 25
October 1997 to Atty. Austria was shown to the trial court without any return.

Per Order dated 27 March 1999, petitioner Multi-Trans was declared in default, there being a
certification from the Post Office of Makati showing that counsel for petitioner received a copy of
the Order dated 25 October 1997 denying its motion to dismiss, and that it had not yet filed an
Answer.15

The trial court scheduled the pre-trial between respondent and Neptune and required them to
submit their pre-trial briefs.

On 14 April 1999, respondent reiterated its motion to declare petitioner Multi-Trans in

default.16 On 15 April 1999, the trial court reiterated its earlier Order of 27 March 1999 declaring
petitioner Multi-Trans in default.17

Respondent Oriental filed its pre-trial brief on 6 May 1999, 18 while Neptune filed its pre-trial brief
on 18 May 1999.19

In an Order dated 20 May 1999, respondent Oriental was allowed to present its evidence ex
parte for failure of Neptune and its counsel to appear at pre-trial despite notice. 20

On 17 June 1999, Oriental presented two witnesses: (1) Erlinda Espiritu and (2) Perfecto Mojica.
It formally offered in evidence Exhibits A to O, inclusive, 21 which the trial court admitted.22

On 30 August 1999, the trial court rendered its decision finding petitioner and Neptune solidarily
liable to respondent. The dispositive portion of the decision reads:

WHEREFORE, judgment is rendered ordering defendants Multi-Trans Agency Phils., Inc. and
Neptune Orient Lines Ltd. jointly and severally to pay the plaintiff Oriental Assurance Corporation
the sum of ₱256,937.03 with legal interest of 6 percent per annum from the date of filing of the
complaint until payment, plus reasonable attorney’s fees of ₱30,000, and costs. 23

On 10 September 1999, Atty. Jose Ma. Austria, with conformity of petitioner, filed a Notice of
Withdrawal of Appearance.24 The trial court ordered notices be furnished petitioner until a new
counsel appeared.25

On 27 September 1999, Melgar Tria & Associates entered its appearance for petitioner Multi-
Trans.26 Simultaneously with its entry of appearance, new counsel for petitioner filed a Motion for
New Trial and to Admit Attached Answer.27 Petitioner prayed that the judgment of the trial court
be set aside and a new trial be granted on the ground of its former counsel’s
negligence/incompetence constituting excusable neglect, and that its Answer to the Complaint be
admitted. The following are contained in the Affidavit of Merit executed by petitioner’s
Administration Manager:

4. That I was surprised considering that per last conversation with our lawyer Atty. Jose
Ma. Austria, he informed us that we have been declared in default and that they have
already filed a Motion to Lift Order of default;
 5. That upon verification of the records of the case, I found out that our lawyer Atty. Jose
Ma. Austria did not actually file any Motion to Lift Order of Default despite receipt of the
Order of the Court declaring us in default;

6. Furthermore, review of the records of the case, disclosed that the only action taken by
our counsel was to file in our behalf a Motion to Dismiss but the same was denied by this
Honorable Court on October 25, 1997 and received by Atty. Austria on February 25,
1998 as evidenced by the Certification coming from the Post Office of Makati City;

xxxx

9. As can be clearly seen, from the time he received the order of this Court dated
October 25, 1997 denying its Motion to Dismiss, up to the time he received plaintiff’s
motion to declare defendant in default until the time he received the Order of this Court
declaring us in default, our lawyer has not done nothing (sic) either by filing an answer or
a motion to lift the order of default (which he led us to believe that he indeed filed the
same) which is clearly a breach of trust that we have reposed in him;

10. By the negligence of our counsel, we were denied the opportunity to present
evidence and participate in the trial, and thus deprived us the chance to contest the suit
that has been filed against us by the plaintiff;

11. That we have a good and meritorious defense in that our company is just a mere
freight forwarding firm. Likewise our principal in London, John Goods & Sons (London)
Ltd. is also a freight forwarder. While Transtainer Systems (UK) Ltd., Multimodal
Operators (wherein John Goods & Sons Ltd. is the agent) is a non-operating vessel
cargo consolidator.

12. As can be shown, neither one of us is the owner/operator of the vessel "Tokyo Bay"
wherein the subject cargo was loaded and shipped nor have we any participation in the
filing up, packing, storing of the subject cargo in the container nor in the loading and
shipping of the same in the vessel; x x x.28

On 28 September 1999, Neptune filed a Motion for Reconsideration of the decision of the trial
court.29

Respondent filed its opposition to the motions for new trial and for reconsideration. 30

In its Order dated 29 November 1999, the trial court denied the motion for new trial. It declared:

In seeking new trial, defendant Multi-Trans Agency assails its former counsel Atty. Jose Ma.
Austria for not taking any action at all from the time that he received the denial of his motion to
dismiss until the decision was rendered. It cites rulings to the effect that negligence or
incompetence of counsel is a well-recognized ground for new trial. While this may be true in a
number of cases, the factual backdrop therein will reveal that the parties aggrieved by the
inaction of their counsels had not contributed to the situation in which they found themselves. A
party must truly be a victim of its counsel’s misconduct for it to claim new trial. This is not the
case here. Atty. Austria may have ignored the orders and other papers sent to him, but the
records will show that defendant was also furnished copies of the same papers. It cannot pretend
to be ignorant of what was going on. In particular, it had received copy of the Order of March 27,
1999 declaring it in default, but from the time it received this in April until the decision on August
30, 1999 – a period of four months – it did nothing to regain its standing. Defendant was already
alerted to the fact that its counsel was remiss in his duties. A normally prudent and careful
person would have taken pains to rectify the situation when there was still time to do so. In not
making a response until it was too late, defendant can no longer claim any relief. It is as
irresponsible as its lawyer and unworthy to invoke the higher right of equity to rescue it from the
consequences of its inaction. As provided in Section 1, Rule 37 of the Rules of Court, a party
may move to set aside the judgment and ask for new trial if it can show that its negligence was,
at the least, excusable.  The facts show otherwise.
1awphi1

The plaintiff has also presented enough evidence to establish the liability of defendant for the
loss of a part of the cargo. As stated in the decision, the bill of lading clearly points to the
defendant as the shipagent of the vessel in which the cargo was loaded. The loss of the cargo is
deducible from the quantity loaded at the point of shipment and the quantity discharged at the
point of delivery.31

The motion for reconsideration filed by Neptune was denied by the trial court in its Order dated 1
December 1999.32

Petitioner filed a notice of appeal informing the trial court that it was appealing from the decision
it had rendered and the Order denying the motion for new trial. 33 Neptune also filed a notice of
appeal.34 With notices of appeal having been filed, the trial court forwarded the records of the
case to the Court of Appeals. 35

On 4 December 2006, the Court of Appeals promulgated its decision denying the petitioner’s
appeal, while granting that of Orientals. It affirmed with modification the trial court’s decision
dated 30 August 1999 and Order dated 29 November 1999 ruling that it was only petitioner that
was liable to respondent.

Petitioner filed a Motion for Reconsideration. 36 Respondent filed a Partial Motion for
Reconsideration, praying that the Court of Appeals’ decision be reversed and set aside, and that
Neptune be held solidarily liable with petitioner. 37 On 10 December 2007, the Court of Appeals
denied both motions.38

Petitioner Multi-Trans Agency Phils. Inc. is now before us via a petition for review, praying that
the decision and Order of the Court of Appeals be set aside, and that its Motion for New Trial and
to Admit Answer be granted.39 Respondent Oriental Assurance Corporation filed its Comment on
the petition filed by Multi-Trans.40

Both petitioner and respondent filed their respective memoranda. 41

Petitioner makes the following assignment of errors:

FIRST

THE HONORABLE COURT OF APPEALS ERRED IN DISREGARDING THE SIGNIFICANT

AND UNCONTROVERTED ACTS OF PETITIONER’S FORMER COUNSEL AMOUNTING TO A
"BETRAYAL" OF HIS CLIENT’S INTEREST AND WHICH ARE SUFFICIENT REASONS FOR A
NEW TRIAL.

SECOND

THE HONORABLE COURT OF APPEALS ERRED WHEN IT AFFIRMED THE AWARD OF

DAMAGES DESPITE LACK/INSUFFICIENT EVIDENCE AND THE FACT THAT PETITIONER IS
NOT THE AGENT OF THE CARRIER.42

Petitioner argues that the Court of Appeals erred in holding that its former counsel’s failure to file
an answer and to act after receipt of the declaration of default merely constituted "simple
negligence" binding the petitioner and not entitling it to a new trial. In support of its position,
petitioner enumerates the significant and uncontroverted acts of its counsel amounting to a
"betrayal" of its interests. These are:
 1. He failed to file its Answer to the Complaint despite receipt of the Court’s Order
denying his motion to dismiss.

2. He failed to inform his client of the fact of his failure to file its Answer and of the Court
Order declaring them in default and allowing plaintiff to present evidence ex-parte.

3. He failed to file the Motion to Lift Order of Default to regain his client’s standing in
Court.

4. He misrepresented that he already filed the Motion to Lift Order of Default when
confronted by client when it learned of said Order of default.

5. He never bothered to verify what transpired at the ex-parte hearing and was not able
to file the necessary pleadings to lift order considering that the case was submitted for
decision without petitioner’s evidence.

6. He miserably failed to inform client of the adverse decision despite receipt and
practically did nothing to protect its client’s interest. 43

The foregoing acts, petitioner maintains, amply show that its former counsel misrepresented the
true status of the case. On account of these acts which amount to incompetence or negligence, it
has been unduly deprived of its rights to be heard and to present its defense and thus has been
deprived of its day in court, violating its right to due process of law through no fault of its own. It
explains that while it is settled that negligence of counsel binds the client, this rule is not without
exception. In cases where reckless or gross negligence of counsel, like in this case, deprives the
client of due process of law, or when the application would result in outright deprivation of the
client’s liberty or property, or where the interest of justice so requires, relief is accorded to the
client who suffered by reason of the lawyer’s gross or palpable mistake or negligence. Citing Tan
v. Court of Appeals,44 petitioner pleads that because it is similarly situated with the petitioner
therein, the ruling in said case – granting the motion for new trial after counsel failed to file an
answer and the client was declared in default – should be applied to the case at bar.

Petitioner further disputes the Court of Appeals’ ruling that there is no compelling reason to relax
the rules in its favor, because it is not entirely blameless and should have taken a more active
role in the proceedings of the case against it. It contends that it is not correct to state that it did
not do anything despite being alerted that it was already declared in default.

After going over the records of this case, we find the petition meritorious.

One of the grounds for the granting of a new trial under Section 1 of Rule 37 of the 1997 Revised
Rules of Civil Procedure is excusable negligence. 45 It is settled that the negligence of counsel
binds the client. This is based on the rule that any act performed by a counsel within the scope of
his general or implied authority is regarded as an act of his client. 46 Consequently, the mistake or
negligence of counsel may result in the rendition of an unfavorable judgment against the
client.47 We have, however, carved out exceptions to this rule; as where the reckless or gross
negligence of counsel deprives the client of due process of law; or where the application of the
rule will result in outright deprivation of the client’s liberty or property; or where the interests of
justice so requires and relief ought to be accorded to the client who suffered by reason of the
lawyer’s gross or palpable mistake or negligence. 48 In order to apply the exceptions rather than
the rule, the circumstances obtaining in each case must be looked into. In cases where one of
the exceptions is present, the courts must step in and accord relief to a client who suffered
thereby.49

Gross negligence has been defined as the want or absence of or failure to exercise slight care or
diligence, or the entire absence of care. It examines a thoughtless disregard of consequences
without exerting any effort to avoid them. 50
In the case before us, we find the negligence of petitioner’s former counsel to be so gross that it
was deprived of its day in court, thus denying it due process. The records show that petitioner
was declared in default for failure of its former counsel to file an answer to the complaint after the
motion to dismiss he filed was denied by the trial court. Atty. Austria did not do anything to
protect the interests of petitioner. He neither opposed the plaintiff’s motion to declare his client in
default despite due notice thereof; nor filed any motion to set aside the order declaring his client
in default, also after he was apprised of the adverse order. He failed to inform his client of the
fact that he failed to file an Answer and of the Court Order declaring it in default and allowing
plaintiff to present evidence ex parte. He even misrepresented that he already filed a Motion to
Lift Order of Default when confronted by his client after the latter learned of said Order of Default.
As a result of Atty. Austria’s inaction, respondent was allowed to present its evidence. Petitioner
failed to adduce any evidence to rebut the allegations contained in the complaint. It was deprived
of due process. The gross negligence of petitioner’s former counsel, coupled with its deprivation
of due process, will ultimately result in its deprivation of property.

For a claim of counsel’s negligence to prosper, nothing short of clear abandonment of the client’s
cause must be shown.51 In this case, the only pleading filed by petitioner’s former counsel was a
motion to dismiss. After the same had been denied, he did not file anything more until a decision
was rendered by the trial court. This is compounded by the fact that he misrepresented to
petitioner that he had filed the proper motion to set aside the order of default. These acts of
petitioner’s counsel amount to gross negligence.

The Court of Appeals said that petitioner was not entirely blameless, because it failed to take a
more active role in the proceedings. Quoting the trial court, it declared that "Defendant was
already alerted to the fact that its counsel was remiss in his duties. A normally prudent and
careful person would have taken pains to rectify the situation when there was still time to do so.
In not making a response until it was too late, defendant can no longer claim any relief. It is as
irresponsible as its lawyer and unworthy to invoke the higher right of equity to rescue it from the
consequences of its inaction."

Under the circumstances of the case, petitioner cannot be blamed for relying on the assurance of
its former counsel. Petitioner cannot be said to have utterly failed to do anything to regain its
standing after being declared in default. After being informed that it was declared in default, it
confronted Atty. Austria of the same and was assured by him that a motion to lift the order of
default had been filed. This, we know, was not true since petitioner never regained its standing,
and a decision was rendered by the trial court in favor of the plaintiff without petitioner having the
opportunity to present its evidence.

In Sarraga, Sr. v. Banco Filipino Savings and Mortgage Bank,52 we held:

A client may reasonably expect that his counsel will make good his representations and has the
right to expect that his lawyer will protect his interests during the trial of his case. For the general
employment of an attorney to prosecute or defend a case or proceeding ordinarily vests in a
plaintiff’s attorney the implied authority to take all steps or do all acts necessary or incidental to
the regular and orderly prosecution and management of the suit, and in a defendant’s attorney,
the power to take such steps as he deems necessary to defend the suit and protect the interests
of the defendant.

In Amil v. Court of Appeals,53 we ruled that trial courts should be liberal in setting aside orders of
default and granting motions for new trial if the defendant appears to have a meritorious defense.
Parties must be given every opportunity to present their side. The issuance of orders of default
should be the exception rather than the rule, to be allowed only in clear cases of obstinate refusal
by the defendant to comply with the orders of the trial court.

In the case under consideration, petitioner appears to have a defense that should be looked into
more closely. Petitioner insists that it is not the agent of the vessel "Tokyo Bay," the vessel that
carried the subject shipment. As can be seen from the International Bill of Lading 54 issued by
John Goods & Sons (London), and as admitted by petitioner, it is the local agent of John Goods
& Sons (London) that is, in turn, the agent of Transtainer Systems (UK) Ltd., Multimodal
Transport Operators. Looking at the complaint, 55 respondent alleges that petitioner is the
operator/shipagent of the vessel "Tokyo Bay." Both lower courts ruled that petitioner was liable
for being the agent of "Tokyo Bay," the vessel in which the cargo was loaded. There appears to
be some inconsistency between the allegation in the complaint and the decisions of the lower
courts that was not fully explained. In light of these, it would be in accord with justice and equity
to allow petitioner’s prayer for new trial, so that it can present its evidence; and for the trial court
to determine with certainty where the liability, if any, of petitioner arises – whether as agent of
"Tokyo Bay" or as agent of John Goods & Sons (London).

Our pronouncement in Apex Mining, Inc. v. Court of Appeals56 applies to this case:

If the incompetence, ignorance or inexperience of counsel is so great and the error committed as
a result thereof is so serious that the clients, who otherwise has a good cause, is prejudiced and
denied his day in court, the litigation may be reopened to give the client another chance to
present his case. Similarly, when an unsuccessful party has been prevented from fully and fairly
presenting his case as a result of his lawyer’s professional delinquency or infidelity the litigation
may be reopened to allow the party to present his side. Where counsel is guilty of gross
ignorance, negligence and dereliction of duty, which resulted in the client’s being held liable for
damages in a damage suit, the client is deprived of his day in court and the judgment may be set
aside on such ground.

In view of the foregoing circumstances, higher interests of justice and equity demand that
petitioners be allowed to present evidence on their defense. Petitioners may not be made to
suffer for the lawyer’s mistakes and should be afforded another opportunity, at least, to introduce
evidence on their behalf. To cling to the general rule in this case is only to condone rather than
rectify a serious injustice to a party whose only fault was to repose his faith and entrust his
innocence to his previous lawyers.

What should guide judicial action is that a party be given the fullest opportunity to establish the
merits of his action or defense rather than for him to lose life, liberty, honor or property on mere
technicalities. In cases involving gross or palpable negligence of counsel the courts must step in
and accord relief to a client who has suffered thereby. This Court will always be disposed to grant
relief to parties aggrieved by perfidy, fraud, reckless inattention and downright incompetence of
lawyers, which has the consequence of depriving their clients, of their day in court.

WHEREFORE, premises considered, the petition is GRANTED. The Decision of the Court of
Appeals dated 4 December 2006 in CA-G.R. CV No. 67581 is SET ASIDE.

The case is hereby REMANDED to the Regional Trial Court of Manila, Branch 13, for a new trial.
It is DIRECTED to admit the Answer of petitioner and to receive the latter’s evidence, and
rebuttal and sur-rebuttal evidence if warranted, and to dispose of the case with reasonable
dispatch.

The former counsel for petitioner, Jose Ma. Q. Austria, is hereby required to show cause within
ten (10) days from notice why he should not be held administratively liable for his acts and
omissions as aforementioned in this decision.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:
 Republic of the Philippines
SUPREME COURT
Baguio City

THIRD DIVISION

G.R. No. 192737               April 25, 2012

NEMIA CASTRO, Petitioner,
vs.
ROSALYN GUEVARRA AND JAMIR GUEVARRA, Respondents.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari with prayer for the issuance of a writ of preliminary
injunction and/or temporary restraining order, seeking to reverse and set aside the April 26, 2010
Decision of the Court of Appeals (CA) in CA-G.R. SP No. 99763 and its June 29, 2010
1 

Resolution, denying petitioner’s motion for reconsideration.

2 

The Facts

The case stems from a complaint for cancellation and/or discharge of check and
defamation/slander with damages filed by petitioner Nemia Castro (Castro) against respondents,
spouses Rosalyn and Jamir Guevarra (Spouses Guevarra), before the Regional Trial Court of
Dasmariñas, Cavite, Branch 90 (RTC–Br. 90), and docketed therein as Civil Case No. 2187-00.
Castro sought the cancellation of her undated Far East Bank and Trust Company (FEBTC)
Check No. 0133501 in the amount of ₱ 1,862,000.00, contending that the total obligation for
which said check was issued had already been fully paid. Moreover, she prayed that FEBTC
Check Nos. 0133574 and 0133575 be declared as without value; that Rosalyn Guevarra
(Rosalyn) be ordered to return her excess payments totaling ₱ 477,257.00, plus interest; and that
she (Castro) be awarded exemplary damages, moral damages and attorney’s fees.

In their answer with counterclaim, Spouses Guevarra claimed that there was no legal or factual
basis to merit the discharge and cancellation of FEBTC Check No. 0133501. They stressed that
the total partial payment made by Castro only amounted to ₱ 230,000.00, leaving an unpaid
balance of ₱ 1,632,000.00. 3

During the trial, Castro testified that pursuant to their rediscounting of check business
arrangement, Rosalyn lent her cash of ₱ 1,362,000.00, which amount, they agreed, was to earn
interest in the amount of ₱ 500,000.00. In turn, Castro issued to Rosalyn FEBTC Check No.
0133501 with a face value of ₱ 1,862,000.00. Later, Castro issued several postdated checks in
favor of Rosalyn, representing installment payments on the amount covered by the subject
check, which the latter subsequently encashed.

Sometime thereafter, Castro discovered that she had already settled the total obligation of ₱
1,862,000.00 in full and had, in fact, overpaid. For said reason, Castro wrote a letter to Rosalyn
informing the latter of her intention to order a "stop payment" of the postdated checks. On April
10, 2000, Castro instructed FEBTC to stop the payment of FEBTC Check No. 0133501. She later
learned from the bank that the subject check dated July 15, 2000 had been deposited on
September 19, 2000.
To substantiate her allegation of full payment, Castro presented as evidence FEBTC Check No.
0123739 encashed by Jamir Guevarra with the notation "Final Payment for Check No.
186A0133501" at the dorsal portion of the checks. On January 21, 2003, she made her formal
offer of evidence. The evidence offered was admitted by RTC-Br. 90 in an Order dated February
10, 2003.

After Castro rested her case, Spouses Guevarra started presenting their documentary evidence
to disprove the claim of full settlement of FEBTC Check No. 0133501. They also presented their
witnesses: Olivia F. Yambao, representative of the Bank of the Philippine Islands, Nueno Ave.,
Imus Branch (formerly FEBTC); and Nenita M. Florido.

Records show that in the course of the presentation of their evidence, Atty. Ernesto R.
Alejandro (Atty. Alejandro), counsel for the Spouses Guevarra, requested the issuance of a
subpoena duces tecum and ad testificandum requiring the bank manager of FEBTC, Nueno
Ave., Imus, Cavite Branch to produce the microfilm of FEBTC Check No. 186A0123739 and to
testify thereon. According to Atty. Alejandro, this piece of evidence would prove that the words
"Final Payment for Check No. 186A0133501" had been written at the dorsal portion of the check
only after its encashment. 4

Judge Dolores Español (Judge Español), then presiding judge of RTC- Br. 90, denied Atty.
Alejandro’s request in an order dated September 12, 2003, reasoning out that Castro had
already been extensively cross-examined by him on matters relative to FEBTC Check No.
0133501. Spouses Guevarra moved for reconsideration but their motion was denied by the trial
court in an order dated October 6, 2003. Spouses Guevarra, thus, filed a petition for certiorari
with prayer for temporary restraining order (TRO) and/or writ of injunction with the CA, which
case was docketed as CA-G.R. SP No. 80561. 5

Meanwhile, Spouses Guevarra moved for the resetting of the October 30, 2003 hearing to
another date. On November 6, 2003, RTC-Br. 90 issued an order denying this request and,
instead, declared Spouses Guevarra to have waived the further presentation of their evidence
and directed them to submit their formal offer of evidence. The respondent spouses moved for
the reconsideration of the November 6, 2003 Order. The said motion was denied in an order
dated November 28, 2003. In the same order, the case was deemed submitted for
decision. Spouses Guevarra filed their motion to defer action on December 15, 2003, but the
6 

same was likewise denied, considering that no TRO or preliminary injunction was issued by the
CA enjoining Judge Español from further proceeding with the case.

Thereafter, RTC-Br. 90 rendered its Decision dated December 22, 2003 in favor of Castro, the
dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff and

against defendants Rosalyn Guevarra and Jamir Guevarra ordering the discharge of Far East
Bank and Trust Co. (FEBTC) Check No. 0070789 and its replacement FEBTC Check No.
0133501, which, defendant subsequently affixed the date July 15, 2000 thereto, both in the
amount of ₱ 1,862,000.00, the same are hereby cancelled if not returned to the plaintiff. Further,
FEBTC Check Nos. 0133574 and 0133575 dated March 24, 2000 and March 30, 2000,
respectively, each in the amount of ₱ 10,000.00 are also hereby declared as without value.
Likewise, the defendants are ordered to return to the plaintiff the amount of ₱ 477,257.00
representing the excess payment made by plaintiff plus legal interest of 12% per annum, from
the filing of this complaint until fully paid. Further, defendants are ordered to pay plaintiff moral
damages of ₱ 400,000.00, exemplary damages of ₱ 100,000.00, attorney’s fees of ₱
200,000.00, and the costs of suit.

Furthermore, for lack of factual and legal basis, Criminal Case No. 8624-01, entitled People of
the Philippines vs. Nemia Castro, for Estafa under Article 315 (2-d), RPC in Relation to PD 818,
is hereby DISMISSED. Thus, the Clerk of Court is directed to furnish the Municipal Trial Court of
Imus, Cavite, with the copy of this Decision for its information and guidance with regard to the
Criminal Cases involving FEBTC Check Nos. 0133574 and 0133575 pending before the said
Court.

SO ORDERED. 7

On January 26, 2004, Spouses Guevarra filed a motion for reconsideration assailing the validity
8 

of the decision on the ground that it was promulgated after the retirement of Judge Español from
the service. They added that the decision was contrary to law and the facts of the case, and that
they were denied the right to present evidence.

On January 28, 2004, Spouses Guevarra filed their motion to re-raffle the case, which was
9 

granted on even date by Judge Norberto Quisumbing, Jr., Executive Judge of the RTC, Imus,
Cavite. Subsequently, Civil Case No. 2187-00 was raffled to RTC, Branch 22 (RTC- Br. 22),
10 

presided by Judge Cesar Mangrobang (Judge Mangrobang).

Meanwhile, on February 18, 2004, the CA issued its Resolution, in CA-G.R. SP No. 80561,
11 

denying the application of Spouses Guevarra for the issuance of a TRO.

Resolving the Motion to Defer Action and the Motion for Reconsideration of Spouses Guevarra,
RTC-Br. 22 issued its Omnibus Order dated December 15, 2004 granting the motion, thus,
12 

setting aside the RTC-Br. 90 December 22, 2003 Decision on the ground that it was
promulgated after Judge Español retired from the service, holding in abeyance the further
proceedings in the case. The decretal portion of the Omnibus Order states:

WHEREFORE, for being meritorious, defendants’ Motion for Reconsideration is hereby granted,
and the Court’s decision dated December 22, 2003 is hereby reconsidered and set aside.

Further, in order not to intricate matters in this case considering that a Petition for Certiorari had
been filed by the defendants before the Honorable Court of Appeals, let the proceedings of this
case be held in abeyance until after the Court of Appeals shall have ruled on the pending
petition.

SO ORDERED. 13

On July 20, 2006, the CA promulgated its Decision in CA-G.R. No. 80561, dismissing the
14 

petition for certiorari. The CA held that the issues raised therein had become moot and academic
because of the rendition by RTC- Br. 90 of its December 22, 2003 judgment in Civil Case No.
2187-00.

On October 20, 2006, Spouses Guevarra filed a motion before RTC- Br. 22, praying for the
15 

revival of the proceedings and/or new trial to enable them to complete their presentation of
evidence by submitting alleged newly discovered evidence which could disprove Castro’s claims.
On March 23, 2007, Judge Mangrobang issued the questioned Order and disposed of the
16 

incident in this wise:

WHEREFORE, premises considered, Defendants’ Motion to Revive Proceedings and/or New

Trial is hereby granted.

Hence, the new trial of this case is hereby set on April 27, 2007 at 8:30 in the morning.

SO ORDERED. 17

Aggrieved, Castro filed a petition for certiorari with prayer for TRO before the CA, assailing the
18 

March 23, 2007 Order of RTC-Br. 22 and collaterally attacking its December 15, 2006 Omnibus
Order. She argued that Judge Mangrobang committed grave abuse of discretion in declaring the
December 22, 2003 Decision as null and void and granting the motion of Spouses Guevarra for a
new trial in Civil Case No. 2187-00.

On April 26, 2010, the CA denied the above petition. It opined that the petition should have been
dismissed outright for failure of Castro to file a motion for reconsideration of the assailed Order.
The CA also held that the issuance of the March 23, 2007 Order was not tainted with grave
abuse of discretion, as Judge Mangrobang acted within the bounds of his authority and in the
exercise of his sound discretion. The fallo of said decision reads:

WHEREFORE, premises considered, the instant petition is DENIED. The assailed Order of the
RTC, Branch 22 of Imus, Cavite dated March 23, 2007 is AFFIRMED. 19

Castro’s motion for reconsideration was denied by the CA in its Resolution dated June 29, 2010.

ISSUES

Undaunted, Castro filed the present petition for review on certiorari before this Court and raised
the following issues:

a) Whether a Motion for Reconsideration is required before filing a Petition for Certiorari
under the circumstances of this case;

b) Whether the Court of Appeals committed grave abuse of discretion in denying the
Petition for Certiorari for lack of a Motion for Reconsideration of the December 15, 2004
Omnibus Order issued by the Presiding Judge, Branch 22, RTC, Imus, Cavite;

c) Whether the service or mailing of copies of a judgment to the parties in a case is

required in the promulgation of a judgment;

d) Whether the December 22, 2003 Decision of Branch 90, RTC, Dasmariñas, Cavite is a
void judgment;

e) Whether the Court of Appeals committed grave abuse of discretion in denying the
Petition for Certiorari in ruling that the Presiding Judge of Branch 22, RTC, Imus, Cavite
did not abuse his discretion amounting to lack or excess of jurisdiction in issuing the
March 23, 2007 Order. 20

On November 15, 2010, the Court issued a resolution denying Castro’s application for the
21 

issuance of a TRO and/or writ of preliminary injunction.

A careful perusal of the pleadings filed by the parties leads the Court to conclude that this case
revolves around the following core issues:

1) Whether RTC- Br. 22 had the authority to pass upon and resolve the motion for
reconsideration of the December 22, 2003 Decision of RTC- Br. 90 and all
subsequent matters submitted to it in Civil Case No. 2187-00;

2) Whether a motion for reconsideration is required before the filing of a petition

for certiorari under the circumstances of the case at bench; and

3) Whether RTC-Br. 22 erred in granting a new trial of the case.

In her petition, Castro takes exception to the general rule which requires a motion for
reconsideration prior to the institution of a petition for certiorari. She argues that the December
15, 2004 Omnibus Order and the March 23, 2007 Order were both patently void. She further
questions the authority of Judge Mangrobang to assume and take over Civil Case No. 2187-00
and to set aside the December 22, 2003 ponencia of Judge Español. She claims that such acts
constitute an encroachment on the adjudicatory prerogative of a co-equal court. She posits that
all subsequent proceedings and orders issued by Judge Mangrobang were void by reason of this
undue interference of one branch in another’s case. Lastly, she insists that the December 22,
2003 Decision of Judge Español was filed with the Clerk of Court before she retired and, thus,
was valid.

The Court’s Ruling

A case, once raffled to a branch, belongs to that branch unless re-raffled or otherwise transferred
to another branch in accordance with established procedure. The primary responsibility over the
22 

case belongs to the presiding judge of the branch to which it has been raffled/re-raffled or
assigned.

The records bear out that on January 26, 2004, Spouses Guevarra filed a motion for
reconsideration of the December 22, 2003 Decision and two days later, moved for a re-raffle of
Civil Case No. 2187-00, allegedly to ensure the early resolution of the motion as there was no
certainty as to when a new judge would be appointed to replace Judge Español. The motion to
re-raffle was granted by the Executive Judge on January 28, 2004. Civil Case No. 2187-00 was
later raffled to RTC-Br. 22, presided by Judge Mangrobang. In the absence of clear and
convincing proof that irregularity and manipulation attended the re-raffle of Civil Case No. 2187-
00, the Court holds that said civil case was properly assigned and transferred to RTC- Br. 22,
vesting Judge Mangrobang with the authority and competency to take cognizance, and to
dispose, of the case and all pending incidents, such as Spouses Guevarra’s motion for
reconsideration of the December 22, 2003 Decision.

It bears to stress that while the RTC is divided into several branches, each of the branches is not
a court distinct and separate from the others. Jurisdiction is vested in the court, not in the judge,
23 

so that when a complaint is filed before one branch or judge, jurisdiction does not attach to the
said branch of the judge alone, to the exclusion of others. Succinctly, jurisdiction over Civil Case
24 

No. 2187-00 does not pertain solely to Branch 90 but to all the branches of the RTC, Cavite,
including Branch 22 to where the case was subsequently re-raffled. The continuity of the court
and the efficacy of its proceedings are not affected by the death, retirement or cessation from
service of the judge presiding over it. Evidently, the argument, that the December 15, 2004
25 

Omnibus Order and all orders subsequently issued by Judge Mangrobang were invalid for want
of jurisdiction because of alleged undue interference by one branch over another, holds no
water.

At any rate, it is too late in the day for Castro to question the soundness and legality of the
December 15, 2004 Omnibus Order, which has already attained finality.

The Court notes that Castro never questioned the said Omnibus Order at the first opportunity by
filing a motion for reconsideration within fifteen (15) days from receipt of a copy thereof. Neither
did she elevate it to the CA via a petition for certiorari within sixty (60) days from notice of said
Order, pursuant to Section 4 of Rule 65 of the Rules of Court. Castro kept her silence on the
matter, indicating that she slept on her rights. Her failure to seasonably avail of these remedies
effectively closed the door for a possible reconsideration or reversal of the subject Omnibus
Order. Thus, if there was indeed error in the disposition of Spouses Guevarra’s motion for
reconsideration of the December 22, 2003 Decision, Castro was not entirely without blame.

Anent the issue of whether the non-filing by Castro of a motion for reconsideration of the March
23, 2007 Order is fatal to her petition for certiorari, the Court finds in the negative.
A motion for reconsideration is a condition precedent to the filing of a petition for certiorari.
However, the Court has recognized exceptions to the requirement, such as: (a) when it is
necessary to prevent irreparable damages and injury to a party; (b) where the trial judge
capriciously and whimsically exercised his judgment; (c) where there may be danger of a failure
of justice; (d) where an appeal would be slow, inadequate, and insufficient; (e) where the issue
raised is one purely of law; (f) where public interest is involved; and (g) in case of urgency. The
26 

circumstances obtaining in this case definitely placed Castro's recourse under most of the above
exceptions particularly because Judge Mangrobang ordered a new trial in the March 23, 2007
Order.27

The Court deems the grant of new trial without legal basis. Sections 1 and 6 of Rule 37 of the
Rules of Court read:

SECTION 1. Grounds of and period for filing motion for new trial. – Within the period for taking an
appeal, the aggrieved party may move the trial court to set aside the judgment or final order and
grant a new trial for one or more of the following causes materially affecting the substantial rights
of said party:

x x x           x x x          x x x

(b) Newly discovered evidence, which he could not, with reasonable diligence, have discovered
and produced at the trial and which if presented would probably alter the result.

x x x           x x x          x x x

SEC. 6. Effect of granting of motion for new trial. – If a new trial is granted in accordance with the
provisions of this Rule, the original judgment or final order shall be vacated, and the action shall
stand for trial de novo xxxx.

New trial is a remedy that seeks to temper the severity of a judgment or prevent the failure of
justice. The effect of an order granting a new trial is to wipe out the previous adjudication so that
28 

the case may be tried de novo for the purpose of rendering a judgment in accordance with law,
taking into consideration the evidence to be presented during the second trial. Consequently, a
motion for new trial is proper only after the rendition or promulgation of a judgment or issuance of
a final order. A motion for new trial is only available when relief is sought against a judgment and
the judgment is not yet final. Verily, in the case at bench, the filing by Spouses Guevarra of a
29 

motion for new trial was premature and uncalled for because a decision has yet to be rendered
by the trial court in Civil Case No. 2187-00. Let it be underscored that the December 22, 2003
Decision of Judge Español was effectively set aside by the December 15, 2004 Omnibus Order
of Judge Mangrobang. Hence, there is technically no judgment which can be the subject of a
motion for new trial.
1âwphi1

At any rate, in the interest of justice, the Court deems it fair and equitable to allow Spouses
Guevarra to adduce evidence in Civil Case No. 2187-00 before RTC- Br. 22. Note that what was
granted by the March 23, 2007 Order of the RTC was respondents’ motion which prayed, as
principal relief, the revival of the proceedings and the grant of new trial only as an alternative.
This is in consonance with the policy of the Court to afford party-litigants the amplest opportunity
to enable them to have their causes justly determined, free from the constraints of
technicalities. After all, it is but proper that the judge’s mind be satisfied as to any and all
30 

questions presented during the trial in order to serve the cause of justice.

WHEREFORE, the petition is DENIED. The Regional Trial Court of Imus, Cavite, Branch 22, is
ordered to proceed with the case and to allow the respondents, Rosalyn Guevarra and Jamir
Guevarra, to continue their presentation of evidence and thereafter make their formal offer. If no
rebuttal evidence will be presented, the trial court shall proceed to decide the case on the merits.
SO ORDERED.

JOSE CATRAL MENDOZA

Associate Justice
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 179955               April 24, 2009

JOSE SY BANG (deceased), ILUMINADA TAN, ZENAIDA SY, REYNALDO SY BANG, JOSE
SY BANG, JR., WILSON SY BANG, ROBERT SY BANG, ESTELITA SY, MA. THERESA SY,
MARY JANE SY, CARMELO SY BANG, BENEDICT SY BANG, EDWARD SY BANG,
ANTHONY SY BANG, EDWIN SY BANG AND MA. EMMA SY, Petitioners,
vs.
ROSAURO SY (deceased), ENRIQUE SY (deceased) and JULIET SY, Respondents.

DECISION

CHICO-NAZARIO, J.:

Assailed in this Petition for Review on Certiorari1 under Rule 45 of the Rules of Court are the
Decision2 dated 29 May 2007 and the Resolution 3 dated 19 September 2007 of the Court of
Appeals in CA-G.R. CV No. 82746. In its assailed Decision, the appellate court reversed and set
aside the Order4 dated 22 March 2004 of the Regional Trial Court (RTC) of Lucena City, Branch
57, in Civil Case No. 96-81, which granted the Petition for Relief of herein petitioners and ordered
the reinstatement of the previously dismissed Petition for Quieting of Title. The assailed
Resolution of the Court of Appeals denied the Motion for Reconsideration of its earlier Decision.

The instant case arose from a controversy over the estate of the deceased Sy Bang. Petitioner
Jose Sy Bang is one of the five children of the late Sy Bang with his first wife, Ba Nga. Petitioner
Iluminada Tan is the wife of Jose Sy Bang, while the rest of the petitioners are their children,
except for Anthony Sy Bang who is their nephew. Respondents Rosauro Sy, Enrique Sy and
Juliet Sy,5 on the other hand, are three of the eight children of the late Sy Bang with his second
wife, Rosita Ferrera Sy.

Complaint for Partition of Estate

In 1971, Sy Bang died intestate, leaving numerous properties and businesses. In 1980, the heirs
of Sy Bang from his second marriage filed a Complaint for Partition before the RTC against the
petitioner spouses Jose Sy Bang and Iluminada Tan, as well as the other heirs of Sy Bang. Said
case was docketed as Civil Case No. 8578. A notice of lis pendens was then annotated on
several certificates of title covering properties involved in the case. In the course of the partition
proceedings, the RTC rendered on 8 June 1982 a Third Partial Decision. The pertinent portion of
its fallo provided:

WHEREFORE, the Court hereby renders this Third Partial Decision:

(a) Declaring that all the properties, businesses, or assets, their income, produce, &
improvements, as well as all the rights, interests, or participations in the names of defendants
Jose Sy Bang & his wife Iluminada Tan and their children, defendants Zenaida & Ma. Emma,
both surnamed Sy, and defendants Julian Sy and his wife Rosa Tan, as belonging to the estate
of Sy Bang, including the properties in the names of said defendants which are enumerated in
the complaints in this case and all those properties, rights and interests which said defendants
may have concealed or fraudulently transferred in the names of other persons, their agents or
representatives; (Emphasis ours.)

The aforementioned Third Partial Decision of the RTC was appealed to the Court of Appeals,
docketed as CA-G.R. No. 17686. In a Resolution dated 6 May 1993, the appellate court affirmed
the said Third Partial Decision of the RTC. Petitioners’ appeal of the adverse Resolution of the
appellate court in CA-G.R. No. 17686 is docketed as G.R. No. 114217, still pending before this
Court.

In the meantime, it appears that the annotations of the notice of lis pendens on the certificates of
title covering the disputed properties in Civil Case No. 8578 were eventually cancelled by the
Register of Deeds of Lucena City.6 On the belief that petitioner Jose Sy Bang had been
transferring some of the properties subject of the partition proceedings, as well as purchasing
properties from the funds of Sy Bang’s estate, and had said properties registered in his own and
his children’s names, respondents wrote a letter to the Register of Deeds of Lucena City, asking
for the re-annotation of the notice of lis pendens on Transfer Certificates of Title (TCTs) No. T-
61067, No. T-61068, No. T-61069, No. T-66130, No. T-54805, No. T-60721, No. T-57809 and
No. T-47765. These TCTs were all in the names of the petitioner spouses Jose Sy Bang and
Iluminada Tan and their children. The Register of Deeds of Lucena City, however,
denied7 respondents’ request for re-annotation, ruling that the notice of lis pendens can only be
re-annotated on the titles upon order of the court on a petition filed for this purpose. This
prompted respondents to file an appeal before the Land Registration Authority (LRA) of the
unfavorable ruling of the Register of Deeds of Lucena City, docketed as Consulta No. 2471. In a
Resolution8 dated 3 February 1999, the LRA upheld the denial of respondent’s request for re-
annotation, considering that Section 108 of the Property Registration Decree 9 provides that any
error, mistake or omission committed in entering a certificate of title or of any memorandum
thereon may be corrected only upon order of the court. 10

Petition for Quieting of Titles

To forestall respondents’ attempts to interfere with their property rights, petitioners filed on 17
June 1996, a Petition for Quieting of Titles with Prayer for the Issuance of Writ of
Prohibition,11 docketed as Civil Case No. 96-81. Petitioners claimed therein that they were the
absolute owners of the parcels of land (subject lots) covered by TCTs No. T-61067, No. T-61068,
No. T-61069, No. T-66130, No. T-54805, No. T-60721, No. T-57809 and No. T-47765, which
were all acquired through their individual efforts and with the use of their personal resources.

On 19 July 1996, respondents filed a Motion to Dismiss12 the Petition in Civil Case No. 96-81. In
an Order13 dated 4 March 1997, the RTC denied said Motion to Dismiss after finding that the
grounds cited therein were not indubitable. Respondents’ Motion for Reconsideration of the 4
March 1997 Order was likewise denied by the RTC in another Order 14 dated 14 April 1997.
Respondents, thus, filed a Petition for Certiorari before the Court of Appeals, docketed as CA-
G.R. SP No. 44043. In a Decision15 dated 28 August 1997, the Court of Appeals dismissed
respondents’ Petition in CA-G.R. SP No. 44043 for lack of merit. Similarly ill-fated was
respondents’ Motion for Reconsideration which was denied by the appellate court in a Resolution
dated 5 May 1998. Respondents no longer appealed to this Court the dismissal of its Petition in
CA-G.R. SP No. 44043 by the Court of Appeals.

Thereafter, complying with the order of the RTC, respondents filed their Answer to the Petition in
Civil Case No. 96-81.16 The parties then submitted their respective pre-trial briefs, and the case
was set for trial. However, before the case was heard, petitioner Jose Sy Bang died on 11
September 2001.17 On 9 October 2001, the RTC ordered18 Atty. Eduardo Santos, counsel for
petitioners, to submit within ten days an authority from the heirs of Jose Sy Bang for them to be
substituted, as well as to secure the conformity of the other heirs who were yet to be impleaded
or substituted to be continuously represented by Atty. Eduardo Santos. This directive was then
reiterated in an Order19 dated 4 December 2001.
Without complying with the above orders, Atty. Eduardo Santos manifested 20 in open court, on 18
April 2002, that he intended to file a Motion to Withdraw the Petition for Quieting of Titles. The
next day, on 19 April 2002, Atty. Eduardo Santos filed a Manifestation, 21 signed only by himself,
which recited:

MANIFESTATION

COMES NOW [the] undersigned counsel for and in (sic) behalf of the [herein petitioners] and
before this Hon. Court most respectfully manifests, (sic) that:

1. Due to the death of his client Jose Sy Bang, his wife, [petitioner] Iluminada Tan and children
have decided to move for the dismissal of the above case, considering that the Resolution of the
Land Registration Authority as well as the judgment of the Court of Appeals in CA-G.R. No. (sic)
SP No. 44043 are enough legal protection of their rights and ownership over the realties in litis.

Wherefore, premises considered, he moves that the above case be dismissed pursuance (sic) to
the desire of the litigant (sic) Iluminada Tan and the heirs of the late Jose Sy Bang.

Lucena City

April 19, 2002

Respectfully submitted:

(SGD)Eduardo R. Santos
Counsel for the [petitioners]
(Emphasis ours.)

Atty. Eduardo Santos filed a second Manifestation 22 on 6 May 2002, which stated:

MANIFESTATION

COMES NOW [the] undersigned counsel for and [on] behalf of the [herein petitioners] and before
this Hon. Court most respectfully manifests, (sic) that:

1. Pursuance (sic) to his previous statement in open court that the [petitioners] have
already evinced no desire to prove damages they suffered due to the attempt of [herein
respondents] to cast shadow of doubts (sic) on their eight (8) certificates of titles (sic)
through a wrongful annotations (sic), he reiterates the same thru (sic) this manifestation.

2. After the ruling of the Land Registration Authority and supported by the final decision
of the Court of Appeals in CA-G.R. Sp. No. 44043, entitled Juliet Sy, et. (sic) al. vs.
Judge Federico Tanada, et. (sic) al., his clients find no more necessity to continue the
hearing of the above case.

WHEREFORE, premises considered, it is prayed that this manifestation be noted.

Lucena City, May 6, 2002

Respectfully submitted:

(signed)
(SGD)EDUARDO R. SANTOS
Counsel for the [petitioners]
xxxx

Conforme:

(signed)
ROBERT SY BANG

On even date, the RTC issued an Order,23 treating the first Manifestation filed by Atty. Eduardo
Santos on 19 April 2002 as a motion to dismiss Civil Case No. 96-81 and granted the same.
Subsequently, in an Order24 dated 18 June 2002, the RTC dismissed Civil Case No. 96-81
entirely, together with respondents’ counterclaims.

Petition for Relief

On 23 September 2002, petitioners, now represented by a new counsel, Atty. Vicente M. Joyas,
filed a Petition for Relief25 from the Order dated 6 May 2002 of the RTC in Civil Case No. 96-81.
Petitioners averred that contrary to the claim of Atty. Eduardo Santos, petitioners Iluminada Tan
and the other heirs of Jose Sy Bang were never consulted or informed of the manifestation that
sought the dismissal of their Petition for Quieting of Titles. Atty. Eduardo Santos was allegedly
able to secure the signature of petitioner Robert Sy Bang in the Manifestation dated 6 May 2002
by misrepresenting to the latter that the relief being sought in Civil Case No. 96-81 had been
satisfactorily granted by the Court of Appeals and the LRA, and that the only thing left to be
litigated was the amount of damages, which might as well be waived by signing the said
Manifestation. Atty. Eduardo Santos was also said to have collected full payment of his fees by
misrepresenting to petitioner Carmelo Sy Bang that petitioners had already won Civil Case No.
96-81, and that there was no more need to litigate the same on the merits.

Petitioners further claimed that Atty. Eduardo Santos continued misinforming them about their
case. On 21 June 2002, Atty. Eduardo Santos wrote petitioner Iluminada Tan a letter assuring
her that the 28 August 1997 Decision of the Court of Appeals in CA-G.R. SP No. 44043, which
recognized that the lots in question were the fruits of her family’s labor, could not be legally
questioned anymore as entry of judgment was already made in said case. Atty. Eduardo Santos
further stated in his letter to petitioner Iluminada Tan that he had also served petitioners’ interests
well in Civil Case No. 96-81, the Petition for Quieting of Titles, given the declaration by the
appellate court in CA-G.R. SP No. 44043 that the subject lots were the gains from petitioners’
labor, which foreclosed any future claim of a third party.

However, upon petitioners’ perusal of the Court of Appeals Decision dated 28 August 1997 in
CA-G.R. SP No. 44043, it was disclosed to them that none of Atty. Eduardo Santos’
representations concerning the same was actually contained therein. Petitioners lamented the
fact that the Order dated 6 May 2002 of the RTC, dismissing Civil Case No. 96-81 upon the
manifestation and motion of Atty. Eduardo Santos, had already become final and executory when
they first came to know of said Order on 29 July 2002.

In an Order26 dated 23 September 2002, the RTC found petitioners’ Petition for Relief to be
sufficient in form and substance and, thus, directed respondents to file their answer thereto.

Atty. Eduardo Santos filed on 7 October 2002 a Manifestation 27 before the RTC, wherein he
refuted petitioners’ allegation that he did not consult petitioners before he moved for the
dismissal of Civil Case No. 96-81. Atty. Eduardo Santos asserted that after the death of petitioner
Jose Sy Bang, he met with several of the remaining petitioners, particularly, brothers Jose Sy
Bang, Jr., Robert Sy Bang, and Carmelo Sy Bang (Sy Bang brothers), who were supposed to
testify on their family’s acquisition of the subject lots. Since the subject lots were purchased with
money loaned from various banks in Lucena City, petitioners Sy Bang brothers decided to
consult first with the managers of the creditor banks. Petitioners Sy Bang brothers then learned
that the banks had no more records of the loans extended to their father, the late petitioner Jose
Sy Bang. This prompted Atty. Eduardo Santos to advise them that their only alternative was to
move for the withdrawal of the Petition for Quieting of Titles, considering that the ruling of the
LRA in Consulta No. 2471 and the judgment of the Court of Appeals in CA-G.R. SP No. 44043
were adequate protection from any challenge to the titles to the subject lots in petitioners’ names.
Given the foregoing, petitioners could not claim that Atty. Eduardo Santos did not previously
advise them of his move to withdraw the Petition for Quieting of Titles in Civil Case No. 96-81.

On 17 October 2002, respondents filed a Motion to Dismiss28 petitioners’ Petition for Relief on the
ground that it was not accompanied by an affidavit of merit stating the alleged fraud committed
by Atty. Eduardo Santos, as well as the facts constituting petitioners’ good and substantial
causes of action. Respondents likewise objected to the fact that the Verification attached to the
Petition was signed by only one of the petitioners, Benedict Sy Bang. The Petition for Relief was
filed on behalf of several petitioners and the ground relied upon was fraud, which could have
been true for only one of the petitioners; so respondents insisted that the Verification of the
Petition should have been personally signed by all of the petitioners.

In an Order29 dated 11 November 2002, the RTC denied respondents’ Motion to Dismiss,

reasoning that the recitals in the Petition for Relief on how Atty. Eduardo Santos allegedly
committed fraud by having the Petition for Quieting of Titles dismissed without authorization from
petitioners, constituted the merits of the Petition for Relief. Given that the said recitals were
verified and under oath, they were equivalent to the required affidavit of merit. Lastly, applying a
liberal construction of the Rules of Court, the signing by only one of the petitioners of the
Verification attached to the Petition for Relief should already be considered substantial
compliance with said rules.

Thereafter, the Petition for Relief was set for hearing and trial thereon ensued.

Petitioner Benedict Sy Bang took the witness stand for the petitioners. According to petitioner
Benedict Sy Bang’s testimony, he and the other petitioners were not informed by Atty. Eduardo
Santos that he was going to seek the dismissal of petitioners’ Petition for Quieting of Titles in
Civil Case No. 96-81. Petitioners were also not given a copy of the first Manifestation prepared
by Atty. Eduardo Santos, asking for the dismissal of the Petition for Quieting of Titles, before it
was filed with the RTC on 19 April 2002.30 Although petitioners knew that an order was already
issued by the RTC in Civil Case No. 96-81, they thought that it was favorable to them, as Atty.
Eduardo Santos was demanding that he be paid his attorney’s fees after claiming that petitioners
already won the case. Upon verification, petitioners were surprised and dismayed to learn, only
around 29 July 2002, that their Petition for Quieting of Titles in Civil Case No. 96-81 was actually
dismissed by the RTC.31

Petitioners also intended to present petitioner Robert Sy Bang as a witness before the RTC to
testify on the following matters: that it was Atty. Eduardo Santos who caused him to sign the
second Manifestation that was filed with the RTC on 6 May 2002; that when the second
Manifestation was filed, the RTC had already issued an Order of Dismissal; and that the other
petitioners had no knowledge of the Manifestations made by Atty. Eduardo Santos, which
resulted in the dismissal of their Petition for Quieting of Titles. However, counsel for the
respondents declared that his clients were willing to admit petitioner Robert Sy Bang’s testimony
without need for him to actually testify.32 Petitioners then proceeded to mark, as documentary
evidence, the Manifestations filed by Atty. Eduardo Santos on 19 April 2002 and 6 May 2002,
respectively; as well as the Order of the RTC dated 6 May 2002, which dismissed the Petition for
Quieting of Titles in Civil Case No. 96-81. Thereafter, petitioners rested their case.

On 10 June 2003, respondents filed a Demurrer to Evidence. 33 Respondents maintained that, in

addition to the absence of an affidavit of merit and the improper verification of the Petition for
Relief, petitioners’ evidence failed to prove any mistake, fraud, accident, or excusable negligence
that would justify their Petition.
The RTC denied the Demurrer to Evidence in an Order 34 dated 11 August 2003, holding that
there was sufficient evidence based on the records – which included the testimonies of
petitioners Benedict Sy Bang and Robert Sy Bang – to establish the alleged fraud committed
upon the petitioners by Atty. Eduardo Santos. Thus, it directed respondents to present their
evidence to refute the same.

Respondents did not present any witnesses and, instead, filed their Formal Offer of Documentary
Evidence,35 which the RTC admitted in an Order36 dated 9 January 2003. Among the
documentary evidence respondents offered was the Manifestation filed by Atty. Eduardo Santos
on 7 October 2002 (marked as Exhibit 4) and paragraph 6 37 thereof (marked as Exhibit 4-A),
which stated that it was inaccurate for petitioners to assert that they were not informed of the
impending move for the dismissal of their Petition for Quieting of Titles.

On 22 March 2004, the RTC issued an Order finding that Atty. Eduardo Santos indeed
committed fraud against the petitioners. Relevant portions of said Order read:

In this case, the fraud refers to the unauthorized manifestation of Atty. Eduardo Santos dated
April 19, 2002. The fraud is highlighted by the fact that there was really no basis for Atty.
Eduardo Santos to represent that [herein petitioner] Iluminada Tan and her children had decided
to move for the dismissal of the quieting of title case due to the resolution of the Land
Registration Authority in the abovementioned Consulta and the cited judgment of the Court of
Appeals, CA-G.R. No. SP-44043. That Court of Appeals judgment did not touch on the merits of
the quieting of title case and the Land Registration Authority resolution of the Consulta was dated
way back February 3, 1999. If indeed these were valid reasons to move for the dismissal of the
case, Atty. Eduardo Santos could have easily suggested to his clients that the case be dismissed
upon their own motion as early as 1998 or 1999 when the said Court of Appeals decision and
Land Registration Authority Consulta were issued. But surprisingly, it was only when Atty.
Eduardo Santos brought up the issue of his attorney’s fees in 2002 when he decided to file the
unauthorized manifestation dated April 19, 2002. This lack of authority is supported by the fact
that after filing that April 19, 2002 manifestation, and after this Court had in fact dismissed the
quieting of title case on May 6, 2002, Atty. Eduardo Santos still filed another manifestation dated
May 6, 2002 stating that his clients find (sic) no more necessity to continue the hearings in this
case. On this manifestation, however, he decided to secure the conformity of one of the
[petitioners] namely (sic) Robert Sy Bang. In doing so, he prevented the [petitioners] from
presenting all of their case with the Court and thus, preventing a fair submission of the quieting of
title controversy.

While the court notes that Atty. Eduardo Santos also filed a manifestation with the court with
respect to the petition for relief which was marked as Exhibits-"4" and "4-A", (sic) the statements
therein with respect to Atty. Eduardo Santos (sic) allegations that he did in fact inform some of
the co-petitioners in this case of his intention to file a dismissal motion on the case, cannot be
given any credibility or weight by the Court. First of all, the Court believes that those matters are
privileged arising from an attorney-client relationship. Secondly, Atty. Eduardo Santos was never
put to the stand wherein he could have been cross-examined by petitioners’ counsel. Lastly, the
court (sic) believes that those allegations in Exhibits-"4" and "4-A" were made only by Atty.
Eduardo Santos after sensing that his twin manifestations of April 19, 2002 and May 6, 2002
were basically asking for the same result, that is, the dismissal of the case. The Court therefore
is of the belief that the final order dated May 6, 2002 dismissing the case, must be set aside. It is
true that clients are bound by the mistakes of the lawyers, but this was not just a simple mistake.
If in fact it was negligence on the part of Atty. Eduardo Santos, this amounted to gross
negligence bordering on fraud as petitioners herein were deprived of their opportunity to fully
present their evidence in the quieting of title controversy. (Emphasis ours.)

In the end, the RTC decreed:

WHEREFORE, premises considered, the petition for relief is granted and the order dismissing
the quieting of title case dated May 6, 2002 is set aside and cancelled. Therefore, the quieting of
title case is hereby reinstated and hearing on the same is set on APRIL 23, 2004 at 8:30 o’clock
in the morning.

Respondents filed an appeal of the afore-mentioned Order before the Court of Appeals,
docketed as CA-G.R. CV No. 82746.

On 29 May 2007, the Court of Appeals promulgated its assailed Decision, ruling in respondents’
favor based on the following ratiocination:

The sole issue to be resolved in this appeal is whether the trial court was correct in granting the
petition for relief from judgment filed by [herein petitioners].

We rule to reverse the Order dated March 22, 2004 of the trial court.

xxxx

Under Section 1, Rule 38 of the Rules of Court, the court may grant relief from judgment only
"[w]hen a judgment or final order is entered, or any other proceeding is taken against a party in
any court through fraud, accident, mistake, or excusable negligence." In their petition for relief
from judgment in the trial court, [petitioners] contended that judgment was entered against them
through "fraud" because they were allegedly told by their counsel that their case was already a
"won" case because of the decision of this Court in CA-G.R. SP No. 44043 and the LRA’s
Resolution in Consulta No. 2471 dated February 3, 1999. This is not the fraud contemplated
under Section 1. "Fraud" must be extrinsic or collateral, that is, the kind which prevented the
aggrieved party from having a trial or presenting his case to the court. x x x.

Furthermore, [petitioners] did not present evidence of fraud or deception employed on them by
[respondents] to deprive them of [the] opportunity to present their case to the court. They,
however, assert that the misrepresentation of their counsel that they had won the case amounts
to extrinsic fraud which would serve as basis for their petition for relief from judgment.

We disagree.

We hold that when a party retains the services of a lawyer, he is bound by his counsel’s actions
and decisions regarding the conduct of the case. This is true especially where [petitioners] do not
complain against the manner their counsel handles the suit. The Supreme Court stated in
PABLO T. TOLENTINO vs. HON. OSCAR LEVISTE,

Litigants represented by counsel should not expect that all they need to do is to sit back, relax
and await the outcome of their case. To agree with petitioner’s stance would enable every party
to render inutile any adverse order or decision through the simple expedient of alleging
negligence on the part of his counsel. The Court will not countenance such ill-informed argument
which contradicts long-settled doctrines of trial and procedure.

We reiterate the rule that a client is bound by the mistakes of his counsel except when the
negligence of his counsel is so gross, reckless and inexcusable that the client is deprived of his
day in court. Only when the application of the general rule would result in serious injustice should
the exception apply. We find no reason to apply the exception in this case.

By no means were [petitioners] deprived by [respondents] of their day in court.

xxxx
Under Section 1, the "negligence" must be excusable and generally imputable to the party
because if it is imputable to the counsel, it is binding on the client. To follow a contrary rule and
allow a party to disown his counsel’s conduct would render proceedings indefinite, tentative, and
subject to reopening by the mere subterfuge of replacing counsel. What the aggrieved litigant
should do is seek administrative sanctions against the erring counsel and not ask for the reversal
of the court’s ruling.

xxxx

Admittedly, this Court has relaxed the rule on the binding effect of counsel’s negligence and
allowed a litigant another chance to present his case "(1) where [the] reckless or gross
negligence of counsel deprives the client of due process of law; (2) when [the rule’s] application
will result in outright deprivation of the client’s liberty or property; or (3) where the interests of
justice so require."

None of these exceptions obtain here.

For a claim of counsel’s gross negligence to prosper, nothing short of clear abandonment of the
client’s cause must be shown.

Here the alleged fraud committed by [petitioners’] counsel was not duly proven. It was not proven
that the lawyer connived with the other party for his client’s defeat or corruptly sold out his clients’
interest.

xxxx

Since we ruled that there was no extrinsic fraud to justify the petition for relief, we find it
unnecessary to discuss the other issues. (Emphasis supplied.)

Hence, the dispositive portion of the Decision of the appellate court stated:

WHEREFORE, the appeal is hereby GRANTED. The Order dated March 22, 2004 of the
Regional Trial Court of Lucena City, Branch 57, [is] REVERSED and SET ASIDE.
ACCORDINGLY, the Civil Case No. 96-81 for Quieting of Title with Prayer for the Issuance of
Writ of Prohibition, is hereby DISMISSED.

Petitioners filed a Motion for Reconsideration,38 but it was denied by the Court of Appeals in its
assailed Resolution39 dated 19 September 2007.

Still undeterred, petitioners instituted before this Court the present Petition for Review, raising the
following issues:

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THERE
WAS EXTRINSIC FRAUD COMMITTED BY PETITIONERS’ FORMER COUNSEL WHICH
PREVENTED THE PETITIONERS FROM THE OPPORTUNITY (sic) TO FULLY PRESENT
THEIR EVIDENCE IN THE QUIETING OF TITLE CONTROVERSY.

II.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FAILING TO DULY RECOGNIZE

THAT ATTY. EDUARDO SANTOS, FORMER COUNSEL OF THE PETITIONERS, WAS
GUILTY OF GROSS NEGLIGENCE WHICH PREVENTED THE HEREIN PETITIONERS FROM
FULLY PRESENTING THEIR CASE. BY VIRTUE OF COUNSEL’S UNPROFESSIONAL
CONDUCT, PETITIONERS MUST NOT BE BOUND, MUCH MORE DAMAGED, BY SAID
GROSS NEGLIGENCE AND TECHNICAL FRAUD.

III.

WHETHER OR NOT THE COURT OF APPEALS OVERLOOKED TO CONSIDER CERTAIN

SUBSTANTIAL AND RELEVANT FACTS, WHICH, HAD THEY BEEN PROPERLY
CONSIDERED, WOULD HAVE JUSTIFIED A DIFFERENT CONCLUSION – ONE THAT
CONCURS WITH THE FINDINGS AND CONCLUSION OF THE REGIONAL TRIAL COURT.

Essentially, the issue which this Court is tasked to resolve in the Petition at bar is whether
petitioners’ Petition for Relief should be granted on the ground of extrinsic fraud.

Undoubtedly, the resolution of this issue would necessarily involve a factual review of the
respective evidence of the parties. Such a task is warranted under the circumstances given that
the findings of fact of the Court of Appeals are contrary to those of the RTC. 40

After a thorough examination of the evidence on record, the Court concludes that there is merit in
the present Petition.

Section 1 of Rule 38 of the Rules of Court provides that when a judgment or final order is
entered, or any other proceeding is thereafter taken against a party in any court through fraud,
accident, mistake, or excusable negligence, he may file a petition in such court and in the same
case praying that the judgment, order or proceeding be set aside.

Where fraud is the ground, the fraud must be extrinsic or collateral. 41 The extrinsic or collateral
fraud that invalidates a final judgment must be such that it prevented the unsuccessful party from
fully and fairly presenting his case or defense and the losing party from having an adversarial trial
of the issue. There is extrinsic fraud when a party is prevented from fully presenting his case to
the court as when the lawyer connives to defeat or corruptly sells out his client's
interest.42 Extrinsic fraud can be committed by a counsel against his client when the latter is
prevented from presenting his case to the court. 43

Petitioners base their Petition for Relief on the alleged extrinsic fraud committed by Atty. Eduardo
Santos who, without petitioners’ knowledge and consent, filed on 19 April 2002 the Manifestation
that induced the RTC to dismiss, in an Order dated 6 May 2002, petitioners’ Petition for Quieting
of Titles, thus, outrightly depriving petitioners of their day in court.

To recall, petitioners presented the testimonies of petitioners Benedict Sy Bang and Robert Sy
Bang to prove their averment of fraud on the part of Atty. Eduardo Santos. Petitioner Benedict Sy
Bang testified that petitioners had no knowledge of Atty. Eduardo Santos’ intention to have their
Petition for Quieting of Titles dismissed; and that Atty. Eduardo Santos misled petitioners into
believing that the RTC resolved said Petition in petitioners’ favor, so he could already collect his
attorney’s fees. It was only upon petitioners’ verification on 29 July 2002 that they discovered that
their Petition for Quieting of Titles was actually dismissed by the RTC. In petitioner Robert Sy
Bang’s testimony, he explained that Atty. Eduardo Santos caused him to sign the second
Manifestation seeking the dismissal of the Petition for Quieting of Titles. However, when the
second Manifestation, signed by petitioner Robert Sy Bang, was filed with the RTC on 6 May
2002, the same court had already issued on the same day an Order granting the dismissal of the
Petition for Quieting of Titles, apparently acting on the first Manifestation signed by Atty. Eduardo
Santos himself and submitted on 19 April 2002. Petitioner Robert Sy Bang further affirmed in his
testimony that the other petitioners were ignorant of the Manifestations filed by Atty. Eduardo
Santos with the RTC praying for the dismissal of their Petition for Quieting of Titles.

Respondents first filed a Demurrer to Evidence, but it was denied by the RTC, which ruled that
there was sufficient evidence based on the records to prima facie establish the alleged fraud
committed upon the petitioners by Atty. Eduardo Santos. The RTC, thus, ordered respondents to
present their evidence.

Respondents no longer presented any witnesses and, instead, filed a Formal Offer of
Documentary Evidence, which consisted of: (1) petitioners’ Petition for Quieting of Titles with
Prayer for the Issuance of Writ of Prohibition; (2) respondents’ letter to the Register of Deeds of
Lucena City, asking for the re-annotation of the notice of lis pendens on the TCTs covering the
properties in dispute; (3) the second Manifestation, signed by petitioner Robert Sy Bang, filed
before the RTC by Atty. Eduardo Santos on 6 May 2002, seeking the dismissal of the Petition for
Quieting of Titles; (4) page 20 of the Transcript of Stenographic Notes taken on 3 February 2003,
wherein petitioner Benedict Sy Bang stated that petitioners only came to know of the dismissal of
their Petition for Quieting of Titles in the latter part of July 2002; (5) page 21 of the Transcript of
Stenographic Notes taken on 3 February 2003, wherein petitioner Benedict Sy Bang narrated
that when Atty. Eduardo Santos demanded more attorney’s fees for having won Civil Case No.
96-81 for petitioners, petitioners verified and were able to secure a copy of the 6 May 2002 Order
of the RTC, which actually dismissed their Petition for Quieting of Titles; (6) petitioners’ Petition
for Relief from the RTC Order dated 6 May 2002 in Civil Case No. 96-81, which granted the
dismissal of their Petition for Quieting of Titles; and (7) the Manifestation filed on 7 October 2002
by Atty. Eduardo Santos before the RTC in the Petition for Relief.

The Court readily observes that, save for one, the documentary evidence submitted by
respondents does not exactly contradict, and is even consistent with, petitioners’ version of the
events. Only the Manifestation filed by Atty. Eduardo Santos before the RTC on 7 October 2002,
in response to the Petition for Relief filed by petitioners, is actually contrary to petitioners’
allegations and evidence in support of said Petition.

In his Manifestation of 7 October 2002, Atty. Eduardo Santos insisted that he consulted and
discussed in detail his move, together with three of the petitioners -- the petitioners Sy Bang
brothers, Jose Sy Bang, Jr., Robert Sy Bang, and Carmelo Sy Bang – to have the Petition for
Quieting of Titles dismissed. Respondents point out that the said Manifestation was not opposed
or rebutted by the petitioners; hence, it sufficiently negated petitioners’ claim of fraud committed
by their own counsel.

The Court is not convinced.

Atty. Eduardo Santos’ Manifestation, filed on 7 October 2002, only stated that after petitioners Sy
Bang brothers found out that the bank records, which could have proven that their father Jose Sy
Bang borrowed money to buy the disputed properties, could no longer be found, Atty. Eduardo
Santos advised the petitioners Sy Bang brothers that their only alternative was to have the
Petition for Quieting of Titles dismissed. Atty. Eduardo Santos even explicitly admitted in said
Manifestation his belief that the ruling of the LRA in Consulta No. 2471 and the judgment of the
Court of Appeals in CA-G.R. SP No. 44043 were already adequate protection against any
challenge to petitioners’ titles to the properties in question. Nowhere, however, in the
Manifestation could the Court find a clear and categorical statement that petitioners Sy Bang
brothers, in fact, agreed to adopt the advice of Atty. Eduardo Santos to have the Petition for
Quieting of Titles dismissed. Neither can it be gleaned from said Manifestation whether
petitioners Sy Bang brothers were aware of and amenable to the filing of the first Manifestation,
which Atty. Eduardo Santos signed by himself and filed with the RTC on 19 April 2002, seeking
the dismissal of the Petition for Quieting of Titles.

Even if, for the sake of argument, the Court concedes that the petitioners Sy Bang brothers
indeed gave their consent to Atty. Eduardo Santos to move for the dismissal of the Petition for
Quieting of Titles, there was utter lack of evidence to prove that said three petitioners were
authorized by the other 12 petitioners to act on their behalf, so that the consent of the petitioners
Sy Bang brothers would have bound the other petitioners. The other 12 petitioners stand to lose
substantial interest in the disputed properties by the dismissal of the Petition for Quieting of
Titles, and their conformity to such a move could not be merely assumed, but should be
established by competent evidence.

Likewise, although petitioner Robert Sy Bang may have come to know of the move to have the
Petition for Quieting of Titles dismissed when he signed the second Manifestation filed with the
RTC by Atty. Eduardo Santos on 6 May 2002, such knowledge by petitioner Robert Sy Bang
cannot be imputed to the rest of the petitioners. To reiterate, petitioner Robert Sy Bang was only
one of the 15 petitioners who filed the Petition for Quieting of Titles. It may also do well for
respondents to remember that part of petitioner Robert Sy Bang’s testimony, which respondents
readily admitted without subjecting to cross-examination, was that the other petitioners had no
knowledge of the two Manifestations submitted by Atty. Eduardo Santos to the RTC, both praying
for the dismissal of petitioners’ Petition for Quieting of Titles. More importantly, petitioner Robert
Sy Bang only signed the second Manifestation. On the same date that the second Manifestation
was filed with the RTC, i.e., 6 May 2002, the same court already issued an Order granting the
first Manifestation, which sought the dismissal of the Petition for Quieting of Titles. Again, there is
no showing that petitioner Robert Sy Bang was aware of the filing of the first Manifestation.

Furthermore, Atty. Eduardo Santos’ Manifestation, filed on 7 October 2002, in response to

petitioners’ Petition for Relief, is inconsistent with his Manifestation, which was earlier filed on 19
April 2002, praying for the dismissal of the Petition for Quieting of Titles. In his earlier
Manifestation, Atty. Eduardo Santos expressly claimed that it was the decision and the desire of
petitioner Iluminada Tan, spouse of the late petitioner Jose Sy Bang, and their children, to move
for the dismissal of the Petition for Quieting of Titles. Such statement was unqualified. In the later
Manifestation, however, Atty. Eduardo Santos averred that he consulted with and obtained the
consent of only three of the petitioners before he moved for the dismissal of the Petition for
Quieting of Titles. Evidently, Atty. Eduardo Santos made misleading statements and was less
than candid in his Manifestation, filed on 19 April 2002, about the purported consent of
petitioners to his move to have the Petition for Quieting of Titles dismissed.

To make matters worse, Atty. Eduardo Santos did not bother to inform petitioners of the 6 May
2002 Order of the RTC dismissing the Petition for Quieting of Titles. The testimony of petitioner
Benedict Sy Bang, that petitioners were led to believe they had already won the case and that
they only found out about the RTC Order dated 6 May 2002 on 29 July 2002, was unrefuted by
any of respondents’ evidence. If indeed the move for the dismissal of the Petition for Quieting of
Titles was with petitioners’ consent, there was no reason for Atty. Eduardo Santos to conceal
from petitioners the issuance of the 6 May 2002 Order of the RTC granting such dismissal. 1avvphi1

In petitioners’ favor is the fact that, within two months from finding out on 29 July 2002 about the
RTC Order dated 6 May 2002, dismissing their Petition for Quieting of Titles, petitioners secured
the services of another counsel and filed a Petition for Relief on 23 September 2002 to seek
remedy for the unfortunate situation they found themselves in. Said circumstances show that
petitioners were not at all neglectful in the pursuit of their case as respondents would have this
Court believe.

Preponderant evidence means that, as a whole, the evidence adduced by one side outweighs
that of the adverse party. In determining where the preponderance of evidence lies, a trial court
may consider all the facts and circumstances of the case, including the witnesses’ manner of
testifying, their intelligence, their means and opportunity of knowing the facts to which they are
testifying, the nature of the facts, the probability or improbability of their testimonies, their interest
or want thereof, and their personal credibility. Applying this rule, the RTC significantly and
convincingly held that the weight of evidence was in petitioners’ favor; and the Court affirms this
ruling.44

Petitioners were able to establish, by a preponderance of evidence, that Atty. Eduardo Santos
committed extrinsic fraud against them. By virtue of his Manifestation filed on 19 April 2002,
without petitioners’ knowledge and consent, thus inducing the RTC to dismiss the Petition for
Quieting of Titles, Atty. Eduardo Santos deprived petitioners of the opportunity to fully and fairly
present their case in court. Such is the very definition of extrinsic fraud, which entitles the
petitioners to the grant of their Petition for Relief from the Order dated 6 May 2002 of the RTC in
Civil Case No. 96-81.

WHEREFORE, premises considered, the Petition for Review under Rule 45 of the Rules of Court
is hereby GRANTED. The assailed Decision dated 29 May 2007 and the Resolution dated 19
September 2007 of the Court of Appeals in CA-G.R. CV No. 82746 are hereby REVERSED AND
SET ASIDE. The RTC of Lucena City, Branch 57, is hereby directed to proceed with reasonable
dispatch in setting the Civil Case No. 96-81 for Quieting of Title with Prayer for the Issuance of
Writ of Prohibition for further hearing. No costs.

SO ORDERED.

MINITA V. CHICO-NAZ
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 173379               December 1, 2010

ABUBAKAR A. AFDAL and FATIMA A. AFDAL, Petitioners,

vs.
ROMEO CARLOS, Respondent.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the 3 January 20052 and 16 June 20063 Orders of the Regional
Trial Court, Branch 25, Biñan, Laguna (RTC) in Civil Case No. B-6721. In its 3 January 2005
Order, the RTC ordered the dismissal of petitioners Abubakar A. Afdal and Fatima A. Afdal’s
(petitioners) petition for relief from judgment. In its 16 June 2006 Order, the RTC denied
petitioners’ motion for reconsideration.

The Facts

On 18 December 2003, respondent Romeo Carlos (respondent) filed a complaint for unlawful
detainer and damages against petitioners, Zenaida Guijabar (Guijabar), John Doe, Peter Doe,
Juana Doe, and all persons claiming rights under them docketed as Civil Case No. 3719 before
the Municipal Trial Court, Biñan, Laguna (MTC). Respondent alleged that petitioners, Guijabar,
and all other persons claiming rights under them were occupying, by mere tolerance, a parcel of
land in respondent’s name covered by Transfer Certificate of Title No. T-530139 4 in the Registry
of Deeds Calamba, Laguna. Respondent claimed that petitioner Abubakar Afdal (petitioner
Abubakar) sold the property to him but that he allowed petitioners to stay in the property. On 25
August 2003, respondent demanded that petitioners, Guijabar, and all persons claiming rights
under them turn over the property to him because he needed the property for his personal
use.5 Respondent further alleged that petitioners refused to heed his demand and he was
constrained to file a complaint before the Lupon ng Tagapamayapa (Lupon). According to
respondent, petitioners ignored the notices and the Lupon issued a "certificate to file
action."6 Then, respondent filed the complaint before the MTC.

According to the records, there were three attempts to serve the summons and complaint on
petitioners – 14 January, 3 and 18 February 2004. 7 However, petitioners failed to file an answer.

On 2 June 2004, respondent filed an ex-parte motion and compliance with position paper
submitting the case for decision based on the pleadings on record. 8

In its 23 August 2004 Decision,9 the MTC ruled in favor of respondent. The dispositive portion of
the 23 August 2004 Decision reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants as
follows:

1. Ordering defendants Abubakar Afdal, Zenaida Guijabar and all persons claiming rights
under them to vacate the subject property and peacefully turn-over possession of the
same to plaintiff;

2. Ordering defendants to pay plaintiff the amount of TEN THOUSAND PESOS

(₱10,000.00) as rental arrears from August 25, 2003 up to the date of decision;

3. Ordering defendants to pay plaintiff the amount of TEN THOUSAND PESOS

(₱10,000.00) a month thereafter, as reasonable compensation for the use of the subject
premises until they finally vacate the same;

4. Ordering defendants to pay plaintiff the amount of FIFTY THOUSAND PESOS

(₱50,000.00) as and for attorney’s fees plus ONE THOUSAND FIVE HUNDRED PESOS
(₱1,500.00) appearance fee;

5. Ordering defendants to pay the costs of suit.

SO ORDERED.10

On 1 October 2004, the MTC issued a writ of execution. 11

On 30 October 2004, petitioners filed a petition for relief from judgment with the
MTC.12 Respondent filed a motion to dismiss or strike out the petition for relief. 13 Subsequently,
petitioners manifested their intention to withdraw the petition for relief after realizing that it was a
prohibited pleading under the Revised Rule on Summary Procedure. On 10 November 2004, the
MTC granted petitioners’ request to withdraw the petition for relief. 14

On 6 December 2004, petitioners filed the petition for relief before the RTC. 15 Petitioners alleged
that they are the lawful owners of the property which they purchased from spouses Martha D.G.
Ubaldo and Francisco D. Ubaldo. Petitioners denied that they sold the property to respondent.
Petitioners added that on 15 December 2003, petitioner Abubakar filed with the Commission on
Elections his certificate of candidacy as mayor in the municipality of Labangan, Zamboanga del
Sur, for the 10 May 2004 elections. Petitioners said they only learned of the MTC’s 23 August
2004 Decision on 27 October 2004. Petitioners also pointed out that they never received
respondent’s demand letter nor were they informed of, much less participated in, the proceedings
before the Lupon. Moreover, petitioners said they were not served a copy of the summons and
the complaint.

On 3 January 2005, the RTC issued the assailed Order dismissing the petition for relief. The
RTC said it had no jurisdiction over the petition because the petition should have been filed
before the MTC in accordance with Section 1 of Rule 38 of the Rules of Court which provides
that a petition for relief should be filed "in such court and in the same case praying that the
judgment, order or proceeding be set aside."

Petitioners filed a motion for reconsideration. In its 16 June 2006 Order, the RTC denied
petitioners’ motion.

Hence, this petition.

The Issue
Petitioners raise the sole issue of whether the RTC erred in dismissing their petition for relief
from judgment.

The Ruling of the Court

Petitioners maintain that the RTC erred in dismissing their petition for relief. Petitioners argue
that they have no other recourse but to file the petition for relief with the RTC. Petitioners allege
the need to reconcile the apparent inconsistencies with respect to the filing of a petition for relief
from judgment under Rule 38 of the Rules of Court and the prohibition under the Revised Rule
on Summary Procedure. Petitioners suggest that petitions for relief from judgment in forcible
entry and unlawful detainer cases can be filed with the RTC provided that petitioners have
complied with all the legal requirements to entitle him to avail of such legal remedy.

Section 13(4) of Rule 70 of the Rules of Court provides:

SEC. 13. Prohibited pleadings and motions. - The following petitions, motions, or pleadings shall
not be allowed: x x x

4. Petition for relief from judgment; x x x

Section 19(d) of the Revised Rule on Summary Procedure also provides:

SEC. 19. Prohibited pleadings and motions. - The following pleadings, motions, or petitions shall
not be allowed in the cases covered by this Rule: x x x

(d) Petition for relief from judgment; x x x

Clearly, a petition for relief from judgment in forcible entry and unlawful detainer cases, as in the
present case, is a prohibited pleading. The reason for this is to achieve an expeditious and
inexpensive determination of the cases subject of summary procedure. 16

Moreover, Section 1, Rule 38 of the Rules of Court provides:

SEC. 1. Petition for relief from judgment, order or other proceedings. - When a judgment or final
order is entered, or any other proceeding is thereafter taken against a party in any court through
fraud, accident, mistake or excusable negligence, he may file a petition in such court and in
the same case praying that the judgment, order or proceeding be set aside. (Emphasis
supplied)

A petition for relief from judgment, if allowed by the Rules and not a prohibited pleading, should
be filed with and resolved by the court in the same case from which the petition arose. 17 1avvphi1

In the present case, petitioners cannot file the petition for relief with the MTC because it is a
prohibited pleading in an unlawful detainer case. Petitioners cannot also file the petition for relief
with the RTC because the RTC has no jurisdiction to entertain petitions for relief from judgments
of the MTC. Therefore, the RTC did not err in dismissing the petition for relief from judgment of
the MTC.

The remedy of petitioners in such a situation is to file a petition for certiorari with the RTC under
Rule 6518 of the Rules of Court on the ground of lack of jurisdiction of the MTC over the person of
petitioners in view of the absence of summons to petitioners. Here, we shall treat petitioners’
petition for relief from judgment as a petition for certiorari before the RTC.

An action for unlawful detainer or forcible entry is a real action and in personam because the
plaintiff seeks to enforce a personal obligation on the defendant for the latter to vacate the
property subject of the action, restore physical possession thereof to the plaintiff, and pay actual
damages by way of reasonable compensation for his use or occupation of the property. 19 In an
action in personam, jurisdiction over the person of the defendant is necessary for the court to
validly try and decide the case.20 Jurisdiction over the defendant is acquired either upon a valid
service of summons or the defendant’s voluntary appearance in court. 21 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:

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.

Any judgment of the court which has no jurisdiction over the person of the defendant is null and
void.22

The 23 August 2004 Decision of the MTC states:

Record shows that there were three attempts to serve the summons to the defendants. The first
was on January 14, 2004 where the same was unserved. The second was on February 3, 2004
where the same was served to one Gary Akob and the last was on February 18, 2004 where the
return was duly served but refused to sign.23

A closer look at the records of the case also reveals that the first indorsement dated 14 January
2004 carried the annotation that it was "unsatisfied/given address cannot be located." 24 The
second indorsement dated 3 February 2004 stated that the summons was "duly served as
evidenced by his signature of one Gary Acob25 (relative)."26 While the last indorsement dated 18
February 2004 carried the annotation that it was "duly served but refused to sign" without
specifying to whom it was served.27

Service of summons upon the defendant shall be by personal service first and only when the
defendant cannot be promptly served in person will substituted service be availed
of.28 In Samartino v. Raon,29 we said:

We have long 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 Officer’s Return; otherwise, the substituted service cannot be
upheld.30

In this case, the indorsements failed to state that prompt and personal service on petitioners was
rendered impossible. It failed to show the reason why personal service could not be made. It was
also not shown that efforts were made to find petitioners personally and that said efforts failed.
These requirements are indispensable because substituted service is in derogation of the usual
method of service. It is an extraordinary method since it seeks to bind the defendant to the
consequences of a suit even though notice of such action is served not upon him but upon
another whom the law could only presume would notify him of the pending proceedings. Failure
to faithfully, strictly, and fully comply with the statutory requirements of substituted service
renders such service ineffective.31
Likewise, nowhere in the return of summons or in the records of the case was it shown that Gary
Acob, the person on whom substituted service of summons was effected, was a person of
suitable age and discretion residing in petitioners’ residence. In Manotoc v. Court of
Appeals,32 we said:

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.33 (Emphasis supplied)

In this case, the process server failed to specify Gary Acob’s age, his relationship to petitioners
and to ascertain whether he comprehends the significance of the receipt of the summons and his
duty to deliver it to petitioners or at least notify them of said receipt of summons.

In sum, petitioners were not validly served with summons and the complaint in Civil Case No.
3719 by substituted service. Hence, the MTC failed to acquire jurisdiction over the person of the
petitioners and, thus, the MTC’s 23 August 2004 Decision is void. 34 Since the MTC’s 23 August
2004 Decision is void, it also never became final. 35

WHEREFORE, we GRANT the petition. We SET ASIDE the 3 January 2005 and 16 June 2006
Orders of the Regional Trial Court, Branch 25, Biñan, Laguna. The 23 August 2004 Decision and
the 1 October 2004 Writ of Execution, as well as all acts and deeds incidental to the judgment in
Civil Case No. 3719, are declared VOID. We REMAND the case to the Municipal Trial Court,
Biñan, Laguna, for consolidation with the unlawful detainer case in Civil Case No. 3719 and for
the said Municipal Trial Court to continue proceedings thereon by affording petitioners Abubakar
A. Afdal and Fatima A. Afdal a chance to file their answer and present evidence in their defense,
and thereafter to hear and decide the case.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

WE CONCUR: