VICTORINA (VICTORIA) ALICE LIM LAZARO, G.R. No.

182779
Petitioner,  
  Present:
   
  CARPIO, J.,
- versus - Chairperson,
  NACHURA,
  PERALTA,
  ABAD, and
  MENDOZA, JJ.
BREWMASTER INTERNATIONAL, INC.,  
Respondent. Promulgated:
 
August 23, 2010
   
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RESOLUTION
 
NACHURA, J.:
Before the Court is a petition for review on certiorari of the Court of Appeals (CA) Decision [1] dated September 4, 2007 and Resolution dated January 31, 2008,
which awarded the amount sought by respondent in its Complaint. As held by the CA, to grant the relief prayed for by respondent is, in the words of Section 6
of the Revised Rule on Summary Procedure, the judgment warranted by the facts alleged in the complaint.

Respondent, Brewmaster International, Inc., is a marketing company engaged in selling and distributing beer and other products of Asia Brewery, Inc. On
November 9, 2005, it filed a Complaint for Sum of Money against Prescillo G. Lazaro (Prescillo) and petitioner, Victorina (also known as Victoria) Alice Lazaro,
with the Metropolitan Trial Court (MeTC) of Makati City. The complaint alleged as follows:
6. During the period from February 2002 to May 2002, defendants obtained on credit from plaintiff beer and other products in the total
amount of ONE HUNDRED THIRTY EIGHT THOUSAND FIVE HUNDRED TWO PESOS AND NINETY TWO CENTAVOS (Php
138,502.92), evidenced by sales invoices photocopies of which are hereto attached as Annexes A, A-1 to A-11,
7. Despite repeated demands, defendants have failed and refused, and up to now, still fail and refuse to pay their aforesaid obligation to
plaintiff in the amount of ONE HUNDRED THIRTY EIGHT THOUSAND FIVE HUNDRED TWO PESOS AND NINETY TWO CENTAVOS
(Php 138,502.92) as evidenced by the demand letters dated 21 April 2003, 12 May 2003, 5 August 2003 and 17 August 2005, photocopies
of which are hereto attached as Annexes B, C, C-1, D, D-1, D-2, and E, E-1,
8. Under the terms of the sales invoices, defendants agreed that in case of litigation, the venue shall only be at the proper courts
of Makati City and to pay 24% interest on all overdue accounts.
 
WHEREFORE, it is respectfully prayed that judgment be rendered in favor of plaintiff and against the defendants, ordering the latter to pay
the sum of Php138,502.92 representing plaintiffs claim and the sum of Php33,240.00 as interest.
 
Plaintiff prays for such other or further relief and remedies that are just and equitable in the premises. [2]
 
Annexes A, A-1 to A-11 are photocopies of sales invoices [3] indicating the amount of the goods purchased and showing that they were sold to TOTAL and
received by a certain Daniel Limuco.
 
Prescillo filed an answer with counterclaim, denying any knowledge of the obligation sued upon. According to Prescillo, he and petitioner had lived
separately since January 15, 2002 and he never authorized petitioner to purchase anything from respondent. He pointed out that the purchaser of the items,
as borne out by the sales invoices attached to the complaint, was Total, which should have been the one sued by respondent.[4]
 
Petitioner, in her own answer with counterclaims, likewise denied having transacted with respondent, and averred that the documents attached to the
complaint showed that it was Total which purchased goods from respondent. [5]
 
On June 14, 2006, during the scheduled preliminary conference, petitioner and her co-defendant did not appear. Hence, the MeTC declared the
case submitted for decision.[6]
On August 22, 2006, the MeTC dismissed the complaint, ratiocinating that respondent, as plaintiff, failed to meet the burden of proof required to
establish its claim by preponderance of evidence. The court a quo noted that the sales invoices attached to the complaint showed that the beer and the other
products were sold to Total and were received by a certain Daniel Limuco; they did not indicate, in any way, that the goods were received by petitioner or her
husband.[7]
 
 
Respondent elevated the case to the Regional Trial Court (RTC) through a notice of appeal. Attached to its Memorandum was additional evidence,
showing that it transacted with petitioner and her husband, who were then the operators and franchisees of the Total gasoline station and convenience store
where the subject goods were delivered, and that Daniel Limuco was their employee. [8]
 
Unmoved, the RTC found no reversible error in the assailed decision. It agreed with the MeTC that respondent failed to submit any evidence proving that
petitioner and her husband were liable for the obligation. The RTC disregarded the documents attached to the memorandum on the ground that admission of
such additional evidence would be offensive to the basic rule of fair play and would violate the other partys right to due process. Thus, the RTC affirmed the
assailed decision in toto.[9]
 
Respondent then went to the CA through a petition for review. There, it succeeded in obtaining a judgment in its favor. Applying Section 7 [10] of the Revised
Rule on Summary Procedure, in conjunction with Section 6 [11] thereof, the CA held that judgment should have been rendered as may be warranted by the facts
alleged in the complaint considering that both defendants failed to appear during the preliminary conference. The appellate court said that by instead referring
to the sales invoices and bypassing [the] ultimate facts [alleged in the complaint], the MeTC contravened the evident purposes of the [ Revised] Rule on
Summary Procedure directing that the judgment be based on the allegations of the complaint, which were, firstly, to avoid delay and, secondly, to consider the
non-appearance at the preliminary conference as an admission of the ultimate facts. The CA judiciously pronounced that:
  
In fact, evidentiary matters (like the sales invoices attached to the complaint) were not yet to be considered as of that early stage
of the proceedings known under the Rule on Summary Procedure as the preliminary conference. The evidentiary matters and facts are to
be required only upon the termination of the preliminary conference and only if further proceedings become necessary to establish factual
issues defined in the order issued by the court. (citing Section 9, Rule on Summary Procedure)
 
Thus, finding the amount claimed to be warranted by the allegations in the complaint, the CA, in its September 4, 2007 Decision, reversed the trial courts
decision and ordered petitioner and her husband to pay the said amount plus interests, thus:
WHEREFORE, the DECISION DATED MARCH 12, 2007 is REVERSED AND SET ASIDE.
 
The respondents are ORDERED to pay, jointly and severally, to the petitioner the amount of P138,502.92, plus interest of 6% per
annum from the filing of the complaint until this judgment becomes final and executory, and 12%  per annum upon finality of this judgment
until full payment.
 
The respondents are also ORDERED to pay the costs of suit.
 
SO ORDERED.[12]
 
 
Petitioner filed a motion for reconsideration of the said Decision but the same was denied by the CA in its January 31, 2008 Resolution. [13]
 
Petitioner submits the following issues to this Court for resolution:
 
Petitioner respectfully submits that the Honorable Court of Appeals erred in the interpretation of Section 6 of the Revised Rules of
Summary Procedure when it reversed the Decision of the RTC, Branch 162 of Makati in Civil Case [N]o. 06-944.
 
Petitioner further submits that the Court of Appeals erred in giving relief to the private respondent despite the lack of cause of action in its
complaint against the petitioner herein.[14]
 
Petitioner contends that the Revised Rule on Summary Procedure does not warrant the automatic grant of relief in favor of the plaintiff when the
complaint fails to state a cause of action. She avers that respondents complaint fails to state a cause of action; hence, no relief can be given to respondent.
Petitioner points out that the sales invoices formed part of the complaint and should be considered in determining whether respondent has a cause of action
against her. Consideration of the said sales invoices, she avers, would show that there is no contractual relationship between her and respondent; the invoices
did not indicate in any way that petitioner was liable for the amount stated therein.
 
Petitioner is correct in saying that no relief can be awarded to respondent if its complaint does not state a cause of action. Indeed, if the complaint
does not state a cause of action, then no relief can be granted to the plaintiff and it would necessarily follow that the allegations in the complaint would not
warrant a judgment favorable to the plaintiff.
 
The basic requirement under the rules of procedure is that a complaint must make a plain, concise, and direct statement of the ultimate facts on
which the plaintiff relies for his claim. [15] Ultimate facts mean the important and substantial facts which either directly form the basis of the plaintiffs primary right
and duty or directly make up the wrongful acts or omissions of the defendant. [16] They refer to the principal, determinative, constitutive facts upon the existence
of which the cause of action rests. The term does not refer to details of probative matter or particulars of evidence which establish the material elements. [17]
 
The test of sufficiency of the facts alleged in a complaint to constitute a cause of action is whether, admitting the facts alleged, the court could render
a valid judgment upon the same in accordance with the prayer of the petition or complaint. [18] To determine whether the complaint states a cause of action, all
documents attached thereto may, in fact, be considered, particularly when referred to in the complaint. [19] We emphasize, however, that the inquiry is into the
sufficiency, not the veracity of the material allegations in the complaint. [20] Thus, consideration of the annexed documents should only be taken in the context of
ascertaining the sufficiency of the allegations in the complaint.
 
Petitioner argues that the complaint fails to state a cause of action since reference to the sales invoices attached to and cited in paragraph six of
 
the Complaint shows that it was not her who purchased and received the goods from respondent.
 
Contrary to petitioners stance, we find that the Complaint sufficiently states a cause of action. The following allegations in the complaint adequately
make up a cause of action for collection of sum of money against petitioner: (1) that petitioner and her husband obtained beer and other products worth a total
of P138,502.92 on credit from respondent; and (2) that they refused to pay the said amount despite demand.
 
As correctly held by the CA, the sales invoices are not actionable documents. They were not the bases of respondents action for sum of money but
were attached to the Complaint only to provide details on the alleged transactions. They were evidentiary in nature and not even necessary to be stated or
cited in the Complaint.
 
At any rate, consideration of the attached sales invoices would not change our conclusion.  The sales invoices, naming Total as the purchaser of the
goods, do not absolutely foreclose the probability of petitioner being liable for the amounts reflected thereon.  An invoice is nothing more than a detailed
statement of the nature, quantity, and cost of the thing sold and has been considered not a bill of sale. [21] Had the case proceeded further, respondent could
have presented evidence linking these sales invoices to petitioner.
 
In Pea v. Court of Appeals,[22] petitioners therein likewise argued that the sales invoices did not show that they had any involvement in the
transactions covered by the same. What the Court said in reply to this argument bolsters our view in this petition:
 
Although it appears in the other sales invoices that the petitioners were the salespersons who brokered the sales of the products
covered by the said sales invoices to the vendees therein named, the said entries are not conclusive of the extent and the nature of the
involvement of the petitioners in the sales of the products under the said sales invoices which are not absolutely binding.   They may be
explained and put to silence by all the facts and circumstances characterizing the true import of the dealings to which they refer. The facts
contained in the said sales invoices may be contradicted by oral testimony. [23]
 
WHEREFORE, premises considered, the Court of Appeals Decision dated September 4, 2007 and Resolution dated January 31, 2008
are AFFIRMED.
  
SO ORDERED.

[G.R. No. 156474. August 16, 2005]

PESANE ANIMAS MONGAO, joined by her husband BENHUR MONGAO,  petitioners, vs. PRYCE PROPERTIES CORPORATION, respondent.

DECISION
TINGA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure assailing the Decision[1] of the Court of Appeals in CA-
G.R. CV No. 52753, which reversed the trial courts judgment on the pleadings and remanded the case thereto for trial on the merits, and
the Resolution[2]  denying petitioners motion for reconsideration.
The instant petition originated from a complaint for rescission and damages filed on February 14, 1995 by petitioners, Spouses Pesane Animas Mongao
(hereafter referred to as petitioner Mongao) and Benhur Mongao, against respondent Pryce Properties Corporation before the Regional Trial Court (RTC) in
General Santos City.[3] The complaint alleged that petitioner Mongao and respondent corporation executed a Memorandum of Agreement[4]  on December 20,
1993, wherein the former agreed to sell to the latter for the total price of Five Million Twenty-Eight Thousand Eight Hundred Pesos (P5,028,800.00) a parcel of
land in Polomolok, South Cotabato covered by Transfer Certificate of Title (TCT) No. T-22186 [5] registered in the name of petitioner Mongao only. In
accordance with the terms and conditions of the Memorandum of Agreement, respondent corporation allegedly paid petitioners the sum of Five Hundred Fifty
Thousand Pesos (P550,000.00) as earnest money considered as part of the purchase price. The complaint further alleged that after considerable delay,
respondent corporation offered to pay the balance of the purchase price by issuing a check payable to petitioner Mongao and her mother, Nellie Animas, which
the former rejected. Allegedly, respondent corporation continuously refused to heed petitioners written and oral demands to pay the balance solely to petitioner
Mongao.
The complaint also denied that petitioner Mongao executed a Deed of Absolute Sale dated November 15, 1994 in favor of respondent corporation, the
registration of which caused the cancellation of TCT No. T-22186 in the name of petitioner Mongao and the issuance of TCT No. T-62944. In addition to
petitioners prayer for the rescission of the Memorandum of Agreement and the Deed of Absolute Sale and the forfeiture of the earnest money paid by
respondent corporation, the complaint also asked for the award of moral and exemplary damages and attorneys fees.
Respondent corporation filed an answer and refuted petitioners allegations with a narration of the factual antecedents leading to the perfection of the
contract of sale.[6] It claimed that sometime in 1993, a certain Pedro Animas IV approached Sonito N. Mole, an officer of respondent corporation, and
negotiated the sale of properties belonging to the Animas family which were on the verge of being foreclosed by the bank. Respondent corporation further
claimed that the subject property was one of the two parcels of land it selected for purchase. Said property covered by TCT No. T-22186 allegedly belonged to
petitioner Mongaos parents but was registered in petitioner Mongaos name as a trustee thereof.
Respondent corporation averred that the true agreement between respondent corporation and the Animas family was for the former to purchase the two
parcels of land belonging to the late Pedro Animas, father of petitioner Mongao. It admitted the execution of the  Memorandum of Agreement but qualified that
respondent corporation did not pay the earnest money directly and solely to petitioner Mongao. Said earnest money was allegedly part of the amount directly
paid by respondent corporation to the Development Bank of the Philippines in order to redeem certain properties of the Animas family which were foreclosed
and sold at a public auction.
Respondent corporation averred that petitioner Mongao and Pedro Animas, Jr., the registered owners of the subject properties, executed simultaneously
the corresponding Deed of Sale and Memorandum of Agreement after respondent corporations representative delivered the checks to the bank as payment for
redemption of the properties. Controversy arose after respondent corporation had allegedly manifested its intent to complete payments but petitioner Mongao
demanded that payment be made to her alone to the exclusion of the rest of the Animas family. Respondent corporation admitted issuing a check in the
amount of Three Million Three Hundred Fifty-Seven Pesos and Eighty-Seven Centavos (P3,353,357.84) payable to the order of petitioner Mongao and her
mother, Nellie Animas, which was however refused by petitioner Mongao.
The answer also admitted that due to the demands of both petitioner Mongao and the Animas family, respondent corporation was constrained to deposit
the payment with the Clerk of Court of the RTC of Davao City. By way of a compulsory counterclaim, respondent corporation prayed that petitioners be
adjudged liable for attorneys fees for their hasty and unjustified institution of the case.
Petitioners moved for judgment on the pleadings on the ground that the answer admitted the material allegations of the complaint and, therefore, failed
to tender an issue.[7] In particular, the answer allegedly admitted the existence of the contract of sale and respondent corporations refusal to satisfy the unpaid
balance of the purchase price despite demand. Petitioners contended that respondent corporation cannot avoid rescission by raising the defense that it
contracted with the Animas family and not solely with petitioner Mongao. Petitioners belied respondent corporations claim for consignation by attaching a letter
from the Office of the Clerk of Court of the RTC of Davao City to the effect that the court could not act on petitioners motion to deny consignation because the
deposit was transmitted through a mere letter, hence, the case was not raffled to a particular branch of the court. [8]
Respondent corporation opposed petitioners motion for judgment on the pleadings, arguing that two material allegations in the complaint, namely: that
petitioner Mongao did not execute the Deed of Sale and that petitioner Mongao was the owner of the subject property, were disputed in the answer. [9]
The trial court granted petitioners motion for judgment on the pleadings and considered the case submitted for decision. The trial court rendered
a Decision[10] on November 13, 1995. The dispositive portion thereof reads:

WHEREFORE, premises considered, the Memorandum of Agreement dated 20 December 1993, as well as the Deed of Absolute Sale entered into between
plaintiff Pesane Animas Mongao and defendant Pryce Properties Corporation dated November 15, 1994, are hereby declared rescinded. As a consequence
thereof, Pryce Properties Corporation is directed to execute a Deed of Reconveyance of the property covered by TCT No. T-62944 in favor of Pesane Animas
and to pay attorneys fees in the amount of P50,000.00 as well as costs of suit, by way of damages.

On the other hand plaintiff Pesane Animas Mongao is likewise directed to return to the defendant Pryce Properties Corporation, what she had received by
virtue of the contract in the amount of P1,675,442.16, a portion of which may be compensated to the damages herein awarded pursuant to Article 1278 of the
New Civil Code.

SO ORDERED.[11]
 With the adverse decision, respondent corporation elevated the case to the Court of Appeals, which reversed the trial courts  Decision and remanded the
case for trial on the merits through its Decision promulgated on March 22, 2001. [12] On the main issue of whether or not judgment on the pleadings was proper,
the Court of Appeals ruled in the negative, finding that there were actual issues raised in the answer requiring the presentation and assessment of evidence.
The appellate court opined that aside from the amount of damages claimed by both parties, the following were also put in issue: (1) the genuineness of
the Deed of Sale purportedly executed by petitioner Mongao, and (2) the nature of petitioner Mongaos title to the subject property. The Court of Appeals also
ruled against the trial courts interference with the consignation case pending before the RTC of Davao City but did not find petitioners guilty of forum-shopping
in filing the action for rescission despite the pendency of the consignation case with the RTC of Davao City.
Petitioners moved for the reconsideration of the Court of Appeals Decision but the same was denied in a Resolution dated November 25, 2002. Hence,
this petition for review, raising the following issues:

A. WHETHER OR NOT THE MERE DEPOSIT OF A CHECK PAYABLE TO TWO PERSONS, ONE OF WHOM IS A THIRD PARTY AND/OR A STRANGER
TO THE TRANSACTION, AND THE RELEASE OF WHICH IS SUBJECT TO CERTAIN CONDITIONS CONSTITUTES CONSIGNATION.

B. WHETHER OR NOT JUDGMENT ON THE PLEADINGS IS PROPER IN THIS CASE. [13]

The main issue for this Courts resolution is the propriety of the trial courts judgment on the pleadings on the ground that respondent corporations
allegation did not tender an issue.
Judgment on the pleadings is governed by Section 1, Rule 34 of the 1997 Rules of Civil Procedure, essentially a restatement of Section 1, Rule 19 of the
1964 Rules of Court then applicable to the proceedings before the trial court. Section 1, Rule 19 of the Rules of Court provides that where an answer fails to
tender an issue, or otherwise admits the material allegations of the adverse party's pleading, the court may, on motion of that party, direct judgment on such
pleading. The answer would fail to tender an issue, of course, if it does not comply with the requirements for a specific denial set out in Section 10 [14] (or
Section 8)[15] of Rule 8; and it would admit the material allegations of the adverse party's pleadings not only where it expressly confesses the truthfulness
thereof but also if it omits to deal with them at all. [16]
Now, if an answer does in fact specifically deny the material averments of the complaint in the manner indicated by said Section 10 of Rule 8, 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) in accordance with Sections 4 [17] and 5[18] of Rule 6, a judgment on the pleadings would naturally not be
proper.[19]
Thus, there is joinder of issues when the answer makes a specific denial of the material allegations in the complaint or asserts affirmative defenses
which would bar recovery by the plaintiff. Where there is proper joinder of issues, the trial court is barred from rendering judgment based only on the pleadings
filed by the parties and must conduct proceedings for the reception of evidence. On the other hand, an answer fails to tender an issue where the allegations
admit the allegations in support of the plaintiffs cause of action or fail to address them at all. In either case, there is no genuine issue and judgment on the
pleadings is proper.
Petitioners action for rescission is mainly based on the alleged breach by respondent corporation of its contractual obligation under the  Memorandum of
Agreement when respondent refused to effect payment of the purchase price solely to petitioner Mongao. The complaint pertinently alleged the following:

4. Plaintiff Pesane Animas Mongao is the registered owner in fee simple of a parcel of land more particularly described as: . . . .

5. In a Memorandum of Agreement dated 20 December 1993 and entered in the Notarial Register of Atty. Rosalio C. Cario, as Document No. 75, Page No. 15,
Book No. II, Series of 1993; plaintiff Pesane Animas Mongao agreed to sell the aforesaid parcel of land to defendant (copy of the Memorandum of Agreement
is attached as Annex B);

6. As earnest money, defendant paid to plaintiff Pesane Animas Mongao, and in her sole name, the amount of P550,000.00;

. . . .[20]

On the other hand, nothing from the allegations in respondent corporations answer makes out a proper joinder of issues. Petitioners cause of action for
rescission is founded mainly on a perfected contract of sale allegedly entered into between petitioners and respondent corporation as embodied in
the Memorandum of Agreement attached to the complaint. First, the allegations in respondent corporations answer do not make out a specific denial that a
contract of sale was perfected between the parties. Second, respondent corporation does not contest the due execution and/or genuineness of
said Memorandum of Agreement. In fact, paragraph 1 of the answer categorically admits paragraph 5 of the complaint, thus:

1. Paragraphs 1, 2, 3, and 5 of the Complaint are admitted. [21]

Paragraph 5 of the complaint referred to above states:

5. In a Memorandum of Agreement dated 20 December 1993 and entered in the Notarial Register of Atty. Rosalio C. Cario, as Document No. 75, Page No. 15,
Book No. II, Series of 1993; plaintiff Pesane Animas Mongao agreed to sell the aforesaid parcel of land to defendant (copy of the Memorandum of Agreement
is attached as Annex B);[22]

As to how respondent corporation allegedly breached its contractual obligation under the Memorandum of Agreement is illustrated by the following
averments in the complaint:

7. Subsequent to the execution of the Memorandum of Agreement, defendant corporation after considerable delay offered to pay the balance of the purchase
price net of still undetermined and undisclosed deductions, this time in the name of both plaintiff Pesane Animas Mongao and that of her mother;

8. Plaintiff Pesane Animas Mongao justifiably refused to accept payment under the conditions unilaterally imposed by defendant corporation;

9. Several demands, both written and oral, were conveyed by plaintiffs to defendant corporation to pay the balance immediately, directly and solely to plaintiff
Pesane Animas Mongao, but defendant corporation, in patent breach of its contractual obligation, refused; [23]

The answer denied the aforequoted allegations and asserted that there was an earlier understanding between the parties, the substance of which was
not clearly expressed in the following averments:
4. Paragraph 7 of the Complaint is denied, the truth of the matter being those stated in the Special and Affirmative Defenses in this Answer.

5. Paragraph 8 of the Complaint is denied, the truth of the matter being that plaintiffs refusal to accept payment was not justified and was contrary to the earlier
understanding and agreement of the parties.

6. Paragraph 9 of the Complaint is admitted, except for the allegation that defendant was in patent breach of its contractual obligation, the truth of the matter
being that defendants refusal was in accordance with its contractual obligation. [24]

Respondent corporation offered the affirmative defense that the separate demands of petitioner Mongao and the Animas family compelled it to issue the
check payable to both petitioner Mongao and her mother, to wit:

16. That in so far as Pedro Animas, Jr., was concerned, he did not object to payment being made to his brother and/or mother, but with respect to plaintiff
Pesane Animas Mongao, it was then that the controversy began since plaintiff now demanded that payment be given to her alone to the exclusion of the rest
of the Animas family.

17. That in order to play safe, defendant issued the check in the amount of P3,353,357.84, payable to the order of plaintiff Pesane Animas Mongao and the
surviving matriarch of the Animas Family in the person of Nellie vda. de Animas. Plaintiff resented this arrangement and refused to accept payment unless the
check was made out to her alone.

18. That since defendant was now receiving demands from plaintiff and the rest of the Animas Family (through Nellie vda. de Animas), defendant became
confused on which was the proper party to receive payment and, on January 18, 1995, the amount of P3,353,357.84 was deposited by the defendant by way
consignment with the Clerk of Court of the Regional Court, 11 th Judicial Region.[25]

Effectively, the aforequoted averments imply an admission by respondent corporation that it effected payment contrary to the express terms of the
contract of sale. Nowhere in the terms of the Memorandum of Agreement does it state that the payment of the purchase price be tendered to any person other
than petitioner Mongao. The averment virtually admits petitioners allegation that respondent corporation committed a breach of its contractual obligation to
petitioners and supports their cause of action for rescission. Indeed, the drawing of the check payable to the order of petitioner Mongao  and Nellie Vda. de
Animas would deprive petitioner Mongao of the exclusive benefit of the payment, thereby sharply deviating from the terms of the contract of sale.
As earlier stated, an answer may allege affirmative defenses which may strike down the plaintiffs cause of action. An affirmative defense is one which is
not a denial of an essential ingredient in the plaintiffs cause of action, but one which, if established, will be a good defense i.e. an "avoidance" of the claim.
[26]
 Affirmative defenses include fraud, statute of limitations, release payment, illegality, statute of frauds, estoppel, former recovery, discharge in bankruptcy,
and any other matter by way of confession and avoidance. When the answer asserts affirmative defenses, there is proper joinder of issues which must be
ventilated in a full-blown trial on the merits and cannot be resolved by a mere judgment on the pleadings. Allegations presented in the answer as affirmative
defenses are not automatically characterized as such. Before an allegation qualifies as an affirmative defense, it must be of such nature as to bar the plaintiff
from claiming on his cause of action. For easy reference, respondent corporations affirmative defenses shall be laid out in full:

SPECIAL AND AFFIRMATIVE DEFENSES

9. That, sometime in the latter half of 1993, defendants officer, Sonito N. Mole, was approached by a real estate broker who introduced Pedro Animas IV who
disclosed that his family (referring to his mother, brothers and sisters) was on the verge of permanently losing to the Bank all of their family properties. The
Animas family desperately needed to sell some of the properties so that the rest could be saved. Thus, S.N. Mole, as representative of the defendant, and
Pedro Animas IV, as representative of the Animas Family, discussed and negotiated on what properties would be purchased and the terms of the purchase.

10. That defendant was shown a sketch plan of what was referred to therein as the ANIMAS SUBDIVISION situated at Matinao, Polomolok, South Cotabato
and its corresponding Development Permit No. 01835 issued on January 10, 1985, covering TCT Nos. T-22186 and T-22188, for a residential subdivision in
the name of applicant/owner PEDRO ANIMAS, the late father of the Complainant Pesane Animas Mongao. Because of their potential as residential
subdivision, these very same two (2) parcels of land at Matinao were the ones defendant chose to purchase.

11. That, sometime in December, 1993, the defendant, through S.N. Mole went to General Santos City, bringing with him the two (2) checks necessary to pay
the Bank in order to redeem the Animas family lands from the Bank, the written agreements outlining the terms of the purchase by defendant of the lands, and
the deeds of absolute sale for the lands that defendant intended to purchase.

12. That upon delivery of the checks to the Bank, plaintiff (and her husband), as well as Pedro Animas, Jr. (the registered owner of the other land purchased
by the defendant) signed the necessary memoranda of agreement, as well as the deeds of conveyances (deeds of absolute sale).

13. That, in the meantime, a Notice of Lis Pendens was annotated in TCT No. T-22186 regarding Civil Case No. 5195 FOR: PARTITION then pending . . . and
entitled PEDRO ANIMAS VI, Plaintiff, versus NELLIE ANIMAS, BALDOMERO ANIMAS, EDUARDO ANIMAS, PEDRO ANIMAS, JR., PEDRO ANIMAS IV,
PEDRO ANIMAS V, MARIVIC ANIMAS, MARINEL ANIMAS LIM and PESANE ANIMAS, Defendants and, on May 23, 1994, judgment was rendered approving
the Compromise Agreement, wherein the defendants will give plaintiff the amount of ONE HUNDRED THOUSAND (P100,000.00) PESOS upon the sale of
their Matinao properties in favor of PRYCE INC.

14. That in the middle of November, 1995 the lands subject of the purchase by the defendant were finally issued clearances for transfer of title in favor and in
the name of the defendant.

15. That in early December, 1995, plaintiff Pesane Animas Mongao and the rest of the Animas Family were advised that defendant was ready to complete
payments in accordance with their Memorandum of Agreement.

16. That in so far as Pedro Animas, Jr., was concerned, he did not object to payment being made to his brother and/or mother, but with respect to plaintiff
Pesane Animas Mongao, it was then that the controversy began since plaintiff now demanded that payment be given to her alone to the exclusion of the rest
of the Animas Family.

17. That in order to play safe, defendant issued the check in the amount of P3,353,357.84, payable to the order of plaintiff Pesane Animas Mongao and the
surviving matriarch of the Animas Family in the person of Nellie vda. de Animas. Plaintiff resented this arrangement and refused to accept payment unless the
check was made out to her alone.
18. That since defendant was now receiving demands from plaintiff and the rest of the Animas Family (through Nellie vda. de Animas), defendant became
confused on which was the proper party to receive payment and, on January 18, 1995, the amount of P3,353,357.84 was deposited by the defendant by way
consignment with the Clerk of Court of the Regional Court, 11 th Judicial Region.

19. The defendant is still ready and willing to cause the release of said consignment amount (less consignment fees of the court) to whomsoever that the Court
may adjudge to be the proper party entitled to the amount.

20. That since the start of the negotiations for the purchase of the lands, it was made clear to the defendant that the properties were part of the estate of the
deceased Judge Pedro Animas and his surviving wife Nellie vda. de Animas and that the registered owners (the children) were merely holding the same in
trust for the estate and Nellie vda. de Animas.

21. That no factual nor legal ground exists to support plaintiffs claim for rescission of contract.

22. That the complaint states no cause of action against the defendant.

23. That this suit actually involves conflicting claims among members of the same family. [27]

In essence, respondent corporation justifies its refusal to tender payment of the purchase price solely to petitioner Mongao by alleging that the latter was
a mere trustee and not the beneficial owner of the property subject of the sale and therefore not the proper party to receive payment. Such defense cannot
prevent petitioners from seeking the rescission of the contract of sale. The express terms of the Memorandum of Agreement, the genuineness and due
execution of which are not denied, clearly show that the contract of sale was executed only between petitioner Mongao and respondent corporation. Where
there is an apparent repudiation of the trust by petitioner Mongao, such claim or defense may properly be raised only by the parties for whose benefit the trust
was created. Respondent corporation cannot assert said defense in order to resist petitioners claim for rescission where it has been sufficiently shown by the
allegations of the complaint and answer that respondent corporation has breached its contractual obligation to petitioners. There being no material allegation in
the answer to resist petitioners claim, the trial court correctly rendered judgment based on the pleadings submitted by the parties.
The Court of Appeals enumerated certain factual controversies, which it believed can only be resolved after presentation of evidence, and these are: (1)
whether or not petitioner Mongao executed the Deed of Absolute Sale in favor of respondent corporation, and (2) whether or not petitioner Mongao is the sole
owner of the subject property.
The Court finds that the determination of these factual questions is immaterial to the resolution of the main issue of whether or not there is a valid cause
for rescission in light of respondents implied admissions of certain allegations and the weakness of the affirmative defenses in the answer. At the risk of being
repetitious, respondent corporations answer admitted that there was a perfected contract of sale between respondent and petitioner Mongao and that
respondent corporation refused to tender payment of the purchase price solely to petitioner Mongao. These admissions clearly make out a case for rescission
of contract.
On the peripheral issue of whether or not there was proper consignation of the purchase price with the RTC of Davao City, the Court adopts the trial
courts finding that respondent corporation did not follow the procedure required by law, to wit:

On the second issue, the mere consignment or deposit of the check to the Clerk of Court without observing the mandatory provisions of Articles 1256 to 1257
of the New Civil Code, does not produce the effect of payment in order that the obligor or the defendant herein shall be released from the obligation, hence, no
payment of the unpaid balance of P3,533,357.84 has actually been made. In fact it was noted by the Court that the deposit is even conditional, i.e. it should not
be released without a court order.[28]

The records reveal that respondent corporation did not file any formal complaint for consignation but merely deposited the check with the Clerk of Court.
A formal complaint must be commenced with the trial court to provide the proper venue for the determination if there is a valid tender of payment. Strictly
speaking, without the institution of an action for tender of payment and consignation, the trial court cannot rule on whether or not respondent was justified in
not effecting payment solely to petitioner Mongao.
WHEREFORE, the instant petition for review is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 52753 is REVERSED and SET
ASIDE and the Decision of the Regional Trial Court, Branch 35, General Santos City in Civil Case No. 5545 is hereby REINSATED. Costs against respondent.
SO ORDERED.
MANUEL C. BUNGCAYAO, SR., G.R. No. 170483
represented in this case by his
Attorney-in-fact ROMEL R. Present:
BUNGCAYAO,
Petitioner, CARPIO, J., Chairperson,
BRION,
DEL CASTILLO,
- versus - ABAD, and
PEREZ, JJ.
 
FORT ILOCANDIA
PROPERTY HOLDINGS,
AND DEVELOPMENT Promulgated:
CORPORATION,
Respondent. April 19, 2010
x - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
 
 
DECISION
 
 
CARPIO, J.:
 
The Case
 
Before the Court is a petition for review[1] assailing the 21 November 2005 Decision[2] of the Court of Appeals in CA-G.R. CV No. 82415.
 
The Antecedent Facts
 
Manuel C. Bungcayao, Sr. (petitioner) claimed to be one of the two entrepreneurs who introduced improvements on the foreshore area of Calayab Beach in
1978 when Fort Ilocandia Hotel started its construction in the area. Thereafter, other entrepreneurs began setting up their own stalls in the foreshore
area. They later formed themselves into the DSierto Beach Resort Owners Association, Inc. (DSierto).
 
In July 1980, six parcels of land in Barrio Balacad (now Calayad) were transferred, ceded, and conveyed to the Philippine Tourism Authority (PTA) pursuant to
Presidential Decree No. 1704. Fort Ilocandia Resort Hotel was erected on the area. In 1992, petitioner and other DSierto members applied for a foreshore
lease with the Community Environment and Natural Resources Office (CENRO) and was granted a provisional permit. On 31 January 2002, Fort Ilocandia
Property Holdings and Development Corporation (respondent) filed a foreshore application over a 14-hectare area abutting the Fort Ilocandia Property,
including the 5-hectare portion applied for by DSierto members. The foreshore applications became the subject matter of a conflict case, docketed Department
of Environment and Natural Resources (DENR) Case No. 5473, between respondent and DSierto members.  In an undated Order,[3] DENR Regional Executive
Director Victor J. Ancheta denied the foreshore lease applications of the DSierto members, including petitioner, on the ground that the subject area applied for
fell either within the titled property or within the foreshore areas applied for by respondent. The DSierto members appealed the denial of their applications. In a
Resolution[4] dated 21 August 2003, then DENR Secretary Elisea G. Gozun denied the appeal on the ground that the area applied for encroached on the titled
property of respondent based on the final verification plan.
 
In a letter dated 18 September 2003, [5] respondent, through its Public Relations Manager Arlene de Guzman, invited the DSierto members to a luncheon
meeting to discuss common details beneficial to all parties concerned. Atty. Liza Marcos (Atty. Marcos), wife of Governor Bongbong Marcos, was present as
she was asked by Fort Ilocandia hotel officials to mediate over the conflict among the parties.  Atty. Marcos offered P300,000 as financial settlement per
claimant in consideration of the improvements introduced, on the condition that they would vacate the area identified as respondents property.  A DSierto
member made a counter-offer of P400,000, to which the other DSierto members agreed.
 
Petitioner alleged that his son, Manuel Bungcayao, Jr., who attended the meeting, manifested that he still had to consult his parents about the offer but upon
the undue pressure exerted by Atty. Marcos, he accepted the payment and signed the Deed of Assignment, Release, Waiver and Quitclaim [6] in favor of
respondent.
 
Petitioner then filed an action for declaration of nullity of contract before the Regional Trial Court of Laoag, City, Branch 13 (trial court), docketed as Civil Case
Nos. 12891-13, against respondent. Petitioner alleged that his son had no authority to represent him and that the deed was void and not binding upon him.
 
Respondent countered that the area upon which petitioner and the other DSierto members constructed their improvements was part of its titled property under
Transfer Certificate of Title No. T-31182. Respondent alleged that petitioners sons, Manuel, Jr. and Romel, attended the luncheon meeting on their own
volition and they were able to talk to their parents through a cellular phone before they accepted respondents offer.  As a counterclaim, respondent prayed that
petitioner be required to return the amount of P400,000 from respondent, to vacate the portion of the respondents property he was occupying, and to pay
damages because his continued refusal to vacate the property caused tremendous delay in the planned implementation of Fort Ilocandias expansion projects.
 
In an Order[7] dated 6 November 2003, the trial court confirmed the agreement of the parties to cancel the Deed of Assignment, Release, Waiver and Quitclaim
and the return of P400,000 to respondent. Petitioners counsel, however, manifested that petitioner was still maintaining its claim for damages against
respondent.
 
Petitioner and respondent agreed to consider the case submitted for resolution on summary judgment. Thus, in its Order[8] dated 28 November 2003, the trial
court considered the case submitted for resolution. Petitioner filed a motion for reconsideration, alleging that he manifested in open court that he was
withdrawing his earlier manifestation submitting the case for resolution. Respondent filed a Motion for Summary Judgment.
 
The trial court rendered a Summary Judgment[9] dated 13 February 2004.
 
The Decision of the Trial Court
 
The trial court ruled that the only issue raised by petitioner was his claim for damages while respondents issue was only his claim for possession of the
property occupied by petitioner and damages. The trial court noted that the parties already stipulated on the issues and admissions had been made by both
parties. The trial court ruled that summary judgment could be rendered on the case.
 
 
The trial court ruled that the alleged pressure on petitioners sons could not constitute force, violence or intimidation that could vitiate consent.  As regards
respondents counterclaim, the trial court ruled that based on the pleadings and admissions made,  it was established that the property occupied by petitioner
was within the titled property of respondent. The dispositive portion of the trial courts decision reads:
 
WHEREFORE, the Court hereby renders judgment DISMISSING the claim of plaintiff for damages as it is found to be without legal basis,
and finding the counterclaim of the defendant for recovery of possession of the lot occupied by the plaintiff to be meritorious as it is hereby
GRANTED. Consequently, the plaintiff is hereby directed to immediately vacate the premises administratively adjudicated by the executive
department of the government in favor of the defendant and yield its possession unto the defendant.  No pronouncement is here made as
yet of the damages claimed by the defendant.
 
SO ORDERED.[10]
 
Petitioner appealed from the trial courts decision.
 
The Decision of the Court of Appeals
 
In its 21 November 2005 Decision, the Court of Appeals affirmed the trial courts decision in toto.
 
The Court of Appeals sustained the trial court in resorting to summary judgment as a valid procedural device for the prompt disposition of actions in which the
pleadings raise only a legal issue and not a genuine issue as to any material fact.  The Court of Appeals ruled that in this case, the facts are not in dispute and
the only issue to be resolved is whether the subject property was within the titled property of respondent.  Hence, summary judgment was properly rendered by
the trial court.
 
The Court of Appeals ruled that the counterclaims raised by respondent were compulsory in nature, as they arose out of or were connected with the
transaction or occurrence constituting the subject matter of the opposing partys claim and did not require for its adjudication the presence of third parties of
whom the court could not acquire jurisdiction.The Court of Appeals ruled that respondent was the rightful owner of the subject property and as such, it had the
right to recover its possession from any other person to whom the owner has not transmitted the property, including petitioner.
 
The dispositive portion of the Court of Appeals decision reads:
 
WHEREFORE, the assailed decision dated February 13, 2004 of the Regional Trial Court of Laoag City, Branch 13 is hereby
AFFIRMED in toto.
 
SO ORDERED.[11]
 
Thus, the petition before this Court.
 
The Issues
 
Petitioner raises the following issues in his Memorandum:[12]
 
1.                  Whether respondents counterclaim is compulsory; and
2.                  Whether summary judgment is appropriate in this case.
 
The Ruling of this Court
 
The petition has merit.
 
Compulsory Counterclaim
 
A compulsory counterclaim is any claim for money or any relief, which a defending party may have against an opposing party, which at the time of suit arises
out of, or is necessarily connected with, the same transaction or occurrence that is the subject matter of the plaintiffs complaint. [13] It is compulsory in the sense
that it is within the jurisdiction of the court, does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction,
and will be barred in the future if not set up in the answer to the complaint in the same case. [14] Any other counterclaim is permissive.[15]
 
The Court has ruled that the compelling test of compulsoriness characterizes a counterclaim as compulsory if there should exist a logical relationship between
the main claim and the counterclaim. [16] The Court further ruled that there exists such a relationship when conducting separate trials of the respective claims of
the parties would entail substantial duplication of time and effort by the parties and the court; when the multiple claims involve the same factual and legal
issues; or when the claims are offshoots of the same basic controversy between the parties. [17]
 
The criteria to determine whether the counterclaim is compulsory or permissive are as follows:
 
(a) Are issues of fact and law raised by the claim and by the counterclaim largely the same?
 
(b) Would res judicata bar a subsequent suit on defendants claim, absent the compulsory rule?
 
(c)             Will substantially the same evidence support or refute plaintiffs claim as well as defendants counterclaim?
 
(d)            Is there any logical relations between the claim and the counterclaim?
 
 
A positive answer to all four questions would indicate that the counterclaim is compulsory. [18]
 
In this case, the only issue in the complaint is whether Manuel, Jr. is authorized to sign the Deed of Assignment, Release, Waiver and Quitclaim in favor of
respondent without petitioners express approval and authority. In an Order dated 6 November 2003, the trial court confirmed the agreement of the parties to
cancel the Deed of Assignment, Release, Waiver and Quitclaim and the return of  P400,000 to respondent. The only claim that remained was the claim for
damages against respondent. The trial court resolved this issue by holding that any damage suffered by Manuel, Jr. was personal to him. The trial court ruled
that petitioner could not have suffered any damage even if Manuel, Jr. entered into an agreement with respondent since the agreement was null and void.
 
Respondent filed three counterclaims. The first was for recovery of the P400,000 given to Manuel, Jr.; the second was for recovery of possession of the
subject property; and the third was for damages. The first counterclaim was rendered moot with the issuance of the 6 November 2003 Order confirming the
agreement of the parties to cancel the Deed of Assignment, Release, Waiver and Quitclaim and to return the  P400,000 to respondent. Respondent waived
and renounced the third counterclaim for damages. [19] The only counterclaim that remained was for the recovery of possession of the subject property.  While
this counterclaim was an offshoot of the same basic controversy between the parties, it is very clear that it will not be barred  if not set up in the answer to the
complaint in the same case. Respondents second counterclaim, contrary to the findings of the trial court and the Court of Appeals, is only a permissive
counterclaim. It is not a compulsory counterclaim. It is capable of proceeding independently of the main case.
 
The rule in permissive counterclaim is that for the trial court to acquire jurisdiction, the counterclaimant is bound to pay the prescribed docket fees. [20] Any
decision rendered without jurisdiction is a total nullity and may be struck down at any time, even on appeal before this Court. [21] In this case, respondent did not
dispute the non-payment of docket fees. Respondent only insisted that its claims were all compulsory counterclaims. As such, the judgment by the trial court in
relation to the second counterclaim is considered null and void [22] without prejudice to a separate action which respondent may file against petitioner.
 
Summary Judgment
 
Section 1, Rule 35 of the 1997 Rules of Civil Procedure provides:
 
Section 1. Summary Judgment for claimant.  - A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a
declaratory relief may, at any time after the pleading in answer thereto has been served, move with supporting affidavits, depositions or
admissions for a summary judgment in his favor upon all or any part thereof.
 
Summary judgment has been explained as follows:
 
Summary judgment is a procedural device resorted to in order 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. Conversely, where the pleadings tender a genuine issue, summary judgment is not proper.  A genuine issue is such issue of fact
which requires the presentation of evidence as distinguished from a sham, fictitious, contrived or false claim. Section 3 of the said rule
provides two (2) 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.  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. 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. [23]
 
Since we have limited the issues to the damages claimed by the parties, summary judgment has been properly rendered in this case.
 
WHEREFORE, we MODIFY the 21 November 2005 Decision of the Court of Appeals in CA-G.R. CV No. 82415 which affirmed the 13 February 2004 Decision
of the Regional Trial Court of Laoag City, Branch 13, insofar as it ruled that respondents counterclaim for recovery of possession of the subject property is
compulsory in nature. We DISMISS respondents permissive counterclaim without prejudice to filing a separate action against petitioner.
 
SO ORDERED.
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), G.R. Nos. 158090
Petitioner, Present:
   
  VELASCO, JR.,*
- versus  - NACHURA,** J., Acting
  Chairperson,
  PERALTA,
  MENDOZA, and
HEIRS OF FERNANDO F. CABALLERO, represented by his SERENO,*** JJ.
daughter, JOCELYN G. CABALLERO,  
Respondents. Promulgated:
October 4, 2010

x-----------------------------------------------------------------------------------------x
 
 
DECISION
 
 
PERALTA, J.:
 
 
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to set aside the Decision [1] and the Resolution,[2] dated
December 17, 2002 and April 29, 2003, respectively, of the Court of Appeals (CA) in CA-G.R. CV. No. 49300.
 
The antecedents are as follows:
 
Respondent Fernando C. Caballero (Fernando) was the registered owner of a residential lot designated as Lot No. 3355, Ts-268, covered by TCT No. T-
16035 of the Register of Deeds of Cotabato, containing an area of 800 square meters and situated at Rizal Street, Mlang, Cotabato.  On the said lot,
respondent built a residential/commercial building consisting of two (2) stories.
 
On March 7, 1968, Fernando and his wife, Sylvia Caballero, secured a loan from petitioner Government Service Insurance System (GSIS) in the amount
of P20,000.00, as evidenced by a promissory note. Fernando and his wife likewise executed a real estate mortgage on the same date, mortgaging the afore-
stated property as security.
Fernando defaulted on the payment of his loan with the GSIS. Hence, on January 20, 1973, the mortgage covering the subject property was foreclosed, and
on March 26, 1973, the same was sold at a public auction where the petitioner was the only bidder in the amount of P36,283.00. For failure of Fernando to
redeem the said property within the designated period, petitioner executed an Affidavit of Consolidation of Ownership on September 5, 1975.  Consequently,
TCT No. T-16035 was cancelled and TCT No. T-45874 was issued in the name of petitioner.
On November 26, 1975, petitioner wrote a letter to Fernando, informing him of the consolidation of title in its favor, and requesting payment of monthly rental in
view of Fernando's continued occupancy of the subject property. In reply, Fernando requested that he be allowed to repurchase the same through partial
payments. Negotiation as to the repurchase by Fernando of the subject property went on for several years, but no agreement was reached between the
parties.
 
On January 16, 1989, petitioner scheduled the subject property for public bidding.  On the scheduled date of bidding, Fernando's daughter, Jocelyn Caballero,
submitted a bid in the amount of P350,000.00, while Carmelita Mercantile Trading Corporation (CMTC) submitted a bid in the amount of  P450,000.00. Since
CMTC was the highest bidder, it was awarded the subject property. On May 16, 1989, the Board of Trustees of the GSIS issued Resolution No. 199 confirming
the award of the subject property to CMTC for a total consideration of P450,000.00. Thereafter, a Deed of Absolute Sale was executed between petitioner and
CMTC on July 27, 1989, transferring the subject property to CMTC.Consequently, TCT No. T-45874 in the name of GSIS was cancelled, and TCT No. T-
76183 was issued in the name of CMTC.
 
Due to the foregoing, Fernando, represented by his daughter and attorney-in-fact, Jocelyn Caballero, filed with the Regional Trial Court (RTC) of Kabacan,
Cotabato a Complaint[3] against CMTC, the GSIS and its responsible officers, and the Register of Deeds of Kidapawan, Cotabato.  Fernando prayed, among
others, that judgment be rendered: declaring GSIS Board of Trustees Resolution No. 199, dated May 16, 1989, null and void; declaring the Deed of Absolute
Sale between petitioner and CMTC null and void ab initio; declaring TCT No. 76183 of the Register of Deeds of Kidapawan, Cotabato, likewise, null and
void ab initio; declaring the bid made by Fernando in the amount ofP350,000.00 for the repurchase of his property as the winning bid; and ordering petitioner to
execute the corresponding Deed of Sale of the subject property in favor of Fernando. He also prayed for payment of moral damages, exemplary damages,
attorney's fees and litigation expenses.
 
In his complaint, Fernando alleged that there were irregularities in the conduct of the bidding. CMTC misrepresented itself to be wholly owned by Filipino
citizens. It misrepresented its working capital. Its representative Carmelita Ang Hao had no prior authority from its board of directors in an appropriate board
resolution to participate in the bidding. The corporation is not authorized to acquire real estate or invest its funds for purposes other than its primary
purpose. Fernando further alleged that the GSIS allowed CMTC to bid despite knowledge that said corporation has no authority to do so.  The GSIS also
disregarded Fernando's prior right to buy back his family home and lot in violation of the laws. The Register of Deeds of Cotabato acted with abuse of power
and authority when it issued the TCT in favor of CMTC without requiring the CMTC to submit its supporting papers as required by the law.
 
Petitioner and its officers filed their Answer with Affirmative Defenses and Counterclaim. [4] The GSIS alleged that Fernando lost his right of redemption. He was
given the chance to repurchase the property; however, he did not avail of such option compelling the GSIS to dispose of the property by public bidding as
mandated by law. There is also no prior right to buy back that can be exercised by Fernando. Further, it averred that the articles of incorporation and other
papers of CMTC were all in order. In its counterclaim, petitioner alleged that Fernando owed petitioner the sum of P130,365.81, representing back rentals,
including additional interests from January 1973 to February 1987, and the additional amount of P249,800.00, excluding applicable interests, representing
rentals Fernando unlawfully collected from Carmelita Ang Hao from January 1973 to February 1988.
 
After trial, the RTC, in its Decision [5] dated September 27, 1994, ruled in favor of petitioner and dismissed the complaint. In the same decision, the trial court
granted petitioner's counterclaim and directed Fernando to pay petitioner the rentals paid by CMTC in the amount of P249,800.00. The foregoing amount was
collected by Fernando from the CMTC and represents payment which was not turned over to petitioner, which was entitled to receive the rent from the date of
the consolidation of its ownership over the subject property.
 
Fernando filed a motion for reconsideration, which was denied by the RTC in an Order dated March 27, 1995.
 
Aggrieved by the Decision, respondent filed a Notice of Appeal. [6] The CA, in its Decision dated December 17, 2002, affirmed the decision of the RTC with the
modification that the portion of the judgment ordering Fernando to pay rentals in the amount of P249,800.00, in favor of petitioner, be deleted. Petitioner filed a
motion for reconsideration, which the CA denied in a Resolution dated April 29, 2003. Hence, the instant petition.
 
An Ex Parte Motion for Substitution of Party, [7] dated July 18, 2003, was filed by the surviving heirs of Fernando, who died on February 12, 2002. They prayed
that they be allowed to be substituted for the deceased, as respondents in this case.
 
Petitioner enumerated the following grounds in support of its petition:
 
I
THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN HOLDING THAT GSIS' COUNTERCLAIM, AMONG
OTHERS, OF P249,800.00 REPRESENTING RENTALS COLLECTED BY PRIVATE RESPONDENT FROM CARMELITA MERCANTILE
TRADING CORPORATION IS IN THE NATURE OF A PERMISSIVE COUNTERCLAIM WHICH REQUIRED THE PAYMENT BY GSIS OF
DOCKET FEES BEFORE THE TRIAL COURT CAN ACQUIRE JURISDICTION OVER SAID COUNTERCLAIM.
 
 
 
II
THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN HOLDING THAT GSIS' DOCUMENTARY EVIDENCE
SUPPORTING ITS CLAIM OF P249,800.00 LACKS PROPER IDENTIFICATION.[8]
 
 
The petition of the GSIS seeks the review of the CA's Decision insofar as it deleted the trial court's award of  P249,800.00 in its favor representing rentals
collected by Fernando from the CMTC.
 
In their Memorandum, respondents claim that CMTC cannot purchase real estate or invest its funds in any purpose other than its primary purpose for which it
was organized in the absence of a corporate board resolution; the bid award, deed of absolute sale and TCT No. T-76183, issued in favor of the CMTC, should
be nullified; the trial court erred in concluding that GSIS personnel have regularly performed their official duty when they conducted the public bidding;
Fernando, as former owner of the subject property and former member of the GSIS, has the preemptive right to repurchase the foreclosed property.
 
These additional averments cannot be taken cognizance by the Court, because they were substantially respondents arguments in their petition for review
on certiorari earlier filed before Us and docketed as G.R. No. 156609. Records show that said petition was denied by the Court in a Resolution [9] dated April
23, 2003, for petitioners (respondents herein) failure to sufficiently show that the Court of Appeals committed any reversible error in the challenged decision as
to warrant the exercise by this Court of its discretionary appellate jurisdiction. [10] Said resolution became final and executory on June 9, 2003. [11] Respondents
attempt to re-litigate claims already passed upon and resolved with finality by the Court in G.R. No. 156609 cannot be allowed.
 
Going now to the first assigned error, petitioner submits that its counterclaim for the rentals collected by Fernando from the CMTC is in the nature of a
compulsory counterclaim in the original action of Fernando against petitioner for annulment of bid award, deed of absolute sale and TCT No. 76183.
Respondents, on the other hand, alleged that petitioner's counterclaim is permissive and its failure to pay the prescribed docket fees results into the dismissal
of its claim.
To determine whether a counterclaim is compulsory or not, the Court has devised the following tests: (a) Are the issues of fact and law raised by the claim and
by the counterclaim largely the same? (b) Would res judicata bar a subsequent suit on defendants claims, absent the compulsory counterclaim rule? (c) Will
substantially the same evidence support or refute plaintiffs claim as well as the defendants counterclaim? and (d) Is there any logical relation between the
claim and the counterclaim? A positive answer to all four questions would indicate that the counterclaim is compulsory. [12]
 
Tested against the above-mentioned criteria, this Court agrees with the CA's view that petitioner's counterclaim for the recovery of the amount representing
rentals collected by Fernando from the CMTC is permissive. The evidence needed by Fernando to cause the annulment of the bid award, deed of absolute
sale and TCT is different from that required to establish petitioner's claim for the recovery of rentals.
 
The issue in the main action, i.e., the nullity or validity of the bid award, deed of absolute sale and TCT in favor of CMTC, is entirely different from the issue in
the counterclaim,i.e., whether petitioner is entitled to receive the CMTC's rent payments over the subject property when petitioner became the owner of the
subject property by virtue of the consolidation of ownership of the property in its favor.
 
The rule in permissive counterclaims is that for the trial court to acquire jurisdiction, the counterclaimant is bound to pay the prescribed docket fees. [13] This,
petitioner did not do, because it asserted that its claim for the collection of rental payments was a compulsory counterclaim.  Since petitioner failed to pay the
docket fees, the RTC did not acquire jurisdiction over its permissive counterclaim. The judgment rendered by the RTC, insofar as it ordered Fernando to pay
petitioner the rentals which he collected from CMTC, is considered null and void. Any decision rendered without jurisdiction is a total nullity and may be struck
down at any time, even on appeal before this Court. [14]
 
Petitioner further argues that assuming that its counterclaim is permissive, the trial court has jurisdiction to try and decide the same, considering petitioner's
exemption from all kinds of fees.
 
In In Re: Petition for Recognition of the Exemption of the Government Service Insurance System from Payment of Legal Fees ,[15] the Court ruled that the
provision in the Charter of the GSIS, i.e., Section 39 of Republic Act No. 8291, which exempts it from all taxes, assessments, fees, charges or duties of all
kinds, cannot operate to exempt it from the payment of legal fees. This was because, unlike the 1935 and 1973 Constitutions, which empowered Congress to
repeal, alter or supplement the rules of the Supreme Court concerning pleading, practice and procedure, the 1987 Constitution removed this power from
Congress. Hence, the Supreme Court now has the sole authority to promulgate rules concerning pleading, practice and procedure in all courts.
 
In said case, the Court ruled that:
 
 
The separation of powers among the three co-equal branches of our government has erected an impregnable wall that keeps the
power to promulgate rules of pleading, practice and procedure within the sole province of this Court. The other branches trespass upon
this prerogative if they enact laws or issue orders that effectively repeal, alter or modify any of the procedural rules promulgated by this
Court. Viewed from this perspective, the claim of a legislative grant of exemption from the payment of legal fees under Section 39 of RA
8291 necessarily fails.
 
Congress could not have carved out an exemption for the GSIS from the payment of legal fees without transgressing another
equally important institutional safeguard of the Court's independence − fiscal autonomy. Fiscal autonomy recognizes the power and
authority of the Court to levy, assess and collect fees, including legal fees. Moreover, legal fees under Rule 141 have two basic
components, the Judiciary Development Fund (JDF) and the Special Allowance for the Judiciary Fund (SAJF). The laws which established
the JDF and the SAJF expressly declare the identical purpose of these funds to "guarantee the independence of the Judiciary as
mandated by the Constitution and public policy." Legal fees therefore do not only constitute a vital source of the Court's financial resources
but also comprise an essential element of the Court's fiscal independence. Any exemption from the payment of legal fees granted by
Congress to government-owned or controlled corporations and local government units will necessarily reduce the JDF and the SAJF.
Undoubtedly, such situation is constitutionally infirm for it impairs the Court's guaranteed fiscal autonomy and erodes its independence.
 
Petitioner also invoked our ruling in Sun Insurance Office, Ltd. v. Judge Asuncion ,[16] where the Court held that:
 
xxxx
 
3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed
filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for
determination by the court, the additional filing fee therefor shall constitute a lien on the judgment.  It shall be the responsibility of the Clerk
of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee.
In Ayala Corporation v. Madayag,[17] the Court, in interpreting the third rule laid down in Sun Insurance Office, Ltd. v. Judge Asuncion  regarding
awards of claims not specified in the pleading, held that the same refers only to damages arising after the filing of the complaint or similar pleading as to which
the additional filing fee therefor shall constitute a lien on the judgment.
 
The amount of any claim for damages, therefore, arising on or before the filing of the complaint or any pleading should be
specified. While it is true that the determination of certain damages as exemplary or corrective damages is left to the sound discretion of
the court, it is the duty of the parties claiming such damages to specify the amount sought on the basis of which the court may make a
proper determination, and for the proper assessment of the appropriate docket fees. The exception contemplated as to claims not specified
or to claims although specified are left for determination of the court is limited only to any damages that may arise after the filing  of the
complaint or similar pleading for then it will not be possible for the claimant to specify nor speculate as to the amount thereof. (Emphasis
supplied.)
 
 
Petitioner's claim for payment of rentals collected by Fernando from the CMTC did not arise after the filing of the complaint; hence, the rule laid down in  Sun
Insurance  finds no application in the present case.
Due to the non-payment of docket fees on petitioner's counterclaim, the trial court never acquired jurisdiction over it and, thus, there is no need to discuss the
second issue raised by petitioner.
WHEREFORE, the petition is DENIED. The Decision and the Resolution, dated December 17, 2002 and April 29, 2003, respectively, of the Court of Appeals in
CA-G.R. CV. No. 49300, are AFFIRMED.
 
SO ORDERED.

G.R. No. L-22485             March 13, 1968

CONSUELO V. CALO, doing business under the trade name CVC Lumber Industries, assisted by MARCOS M. CALO, plaintiffs-appellants, 
vs.
AJAX INTERNATIONAL, INCORPORATED, defendant-appellee.

Tranquilino O. Calo, Jr. for plaintiffs-appellants. 

Sergio P. Villareal for defendant-appellee.

BENGZON, J.P., J.:
          Sometime on May 7, 1959, plaintiff-appellant Calo ordered from defendant-appellee Ajax International, Inc., 1,200 ft. of John Shaw wire rope at P2.85
per foot. The transaction was evidenced by Charge Order No. 37071, for P3,420.00.

          According to plaintiff Calo, when the wire rope was delivered to Butuan City, the same was found short of 300 ft. Plaintiff then wrote two letters to
defendant asking for either completion of delivery or account adjustment of the alleged undelivered 300 ft. of wire rope.

          On November 20, 1961, a complaint docketed as Civil Case No. IV-93062 was filed in the Municipal Court of Manila by one Adolfo Benavides who
claimed to have acquired the outstanding credit account of Calo from defendant Ajax International, Inc. Charge Order No. 37071 was among those included in
the assigned account. Subsequently, a judgment by default was entered, and a writ of execution issued, against plaintiff Calo. The latter resorted to this Court
on a petition for certiorari, prohibition and mandamus.1 We set aside the judgment of default and writ of execution issued against plaintiff Calo and remanded
the case for further proceedings.

          On January 23, 1962, plaintiff Calo, assisted by her husband, Marcos Calo, filed in the Court of First Instance of Agusan a complaint against defendant
asking (1) that the latter either effect complete delivery of Charge Order No. 37071 or that she be relieved from paying P855.00 and (2) that the latter
indemnify her for P12,000 as attorney's fees, damages and expenses of litigation. 2 The case was docketed as Civil Case No. 860.

          Instead of filing an answer, defendant moved for the dismissal of Civil Case 860 on the ground, inter alia, that the subject thereof was involved and
intimately related to that in Civil Case No. IV-93062 of the Municipal Court of Manila. The court a quo sustained the motion and dismissed the case.

          Plaintiff-appellant moved for reconsideration and new trial. When this failed, she instituted the present appeal. 1äwphï1.ñët

          The dismissal of Civil Case No. 860 by the court a quo because of the pendency of Civil Case No. IV-93062 in the municipal court of Manila is
predicated on the supposition that plaintiff's claim is a compulsory counter-claim that should be filed in the latter case. There is no question that it arises out of
the same transaction which is the basis of the complaint in Civil Case No. IV-93062 and does not require the presence of third parties over whom the municipal
court of Manila could not acquire jurisdiction.

          However, plaintiff's claim is not a compulsory counterclaim in Civil Case No. IV-93062 for the simple reason that the amount thereof exceeds the
jurisdiction of the municipal court. The rule that a compulsory counterclaim not set up is barred, when applied to the municipal court, presupposes that the
amount involved is within the said court's jurisdiction. Otherwise, as this Court had already noted in Yu Lay v. Galmes  3 we would come to the absurd situation
where a claim must be filed with the municipal court which it is prohibited from taking cognizance of, being beyond its jurisdiction.

          Besides, the reason underlying the rule, which is to settle all related controversies in one sitting only, does not obtain. For, even if the counterclaim in
excess of the amount cognizable by the inferior court is set up, the defendant cannot obtain positive relief. The Rules allow this only for the defendant to
prevent plaintiff from recovering from him.4 This means that should the court find both plaintiff's complaint and defendant's counterclaim (for an amount
exceeding said court's jurisdiction) meritorious, it will simply dismiss the complaint on the ground that defendant has a bigger credit. Since defendant still has
to institute a separate action for the remaining balance of his counterclaim, the previous litigation did not really settle all related controversies.

          Plaintiff Calo's claim of P12,000.00 not being a compulsory counterclaim in Civil Case No. VI-93062, it need not be filed there. The pendency then of
said civil case could not be pleaded in abatement of Civil Case No. 860. Consequently, the lower court erred in dismissing plaintiff's complaint.

          WHEREFORE, the order of dismissal appealed from is hereby reversed and the case remanded for further proceedings. Costs against appellee Ajax
International, Inc. So ordered.

[G.R. No. 90530. October 7, 1992.]

INTERNATIONAL CONTAINER TERMINAL SERVICES, INC., Petitioner, v. THE HON. COURT OF APPEALS, HON. EDILBERTO G. SANDOVAL, Presiding
Judge of Branch IX, Regional Trial Court, National Capital Judicial Region, C.F. SHARP, INC. and FIRST INTEGRATED BONDING & INSURANCE CO.,
INC., Respondents.

Bautista, Picaso, Buyco, Tan & Fider for Petitioner.

Sinco, Valdez & Associates for C.P. Sharp, Inc.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; COMPULSORY COUNTERCLAIM; REQUIREMENTS. — We have consistently held that a counterclaim is
compulsory where: (1) it arises out of, or is necessarily connected with, the transaction or occurrence that is the subject matter of the opposing party’s claim;
(2) it does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction; and (3) the court has jurisdiction to
entertain the claim.

2. ID.; ID.; ID.; ID.; CASE AT BAR. — The Court notes that, to begin with, the petitioner itself joined the PPA in moving for the dismissal of the complaint; or
put passively, it did not object to the dismissal of the private respondent’s complaint. Secondly, the compulsory counterclaim was so interwined with the
complaint that it could not remain pending for independent adjudication by the court after the dismissal of the complaint which had provoked the counterclaim
in the first place. As a consequence, the dismissal of the complaint (on the petitioner’s own motion) operated to also dismiss the counterclaim questioning that
complaint. The petitioner is correct in contending that the claim for damages caused by the wrongful issuance of a preliminary injunction can be made in the
form of a counterclaim.

3. ID.; ID.; ID.; ID.; RESERVATION OF RIGHT TO PROSECUTE COUNTERCLAIM. — However, there is no glossing away the fact that it was the petitioner
itself that caused the dismissal of its counterclaim when it not only did not object to, but actually moved for, the dismissal of the complaint. The petitioner
cannot undo that act. If it wanted the counterclaim to subsist, it should have objected to the dismissal of the complaint or at least reserved its right to prosecute
it, assuming this would still be possible. It did neither of these. The petitioner now claims that there is no law requiring that reservation, but there is no law
presuming it either. The petitioner cannot simply say now that it intended all the time to preserve its counterclaim when it knew that under Rule 17, Sec. 2 "if a
counterclaim has been pleaded by a defendant prior to the service upon him of a motion to dismiss, the action shall not be dismissed against the defendant’s
objection unless the counterclaim can remain pending for independent adjudication by the Court."cralaw virtua1aw library
4. ID.; ID.; PERMISSIVE COUNTERCLAIM; NOT BARRED EVEN IF NOT SET UP IN ACTION. — A counterclaim is permissive if it does not arise out of nor is
it necessarily connected with the subject matter of the opposing party’s claim. It is not barred even if not set up in the action. The petitioner’s counterclaim was
within the jurisdiction of the trial court. Most importantly, it had no independent existence, being merely ancillary to the main action.

5. ID.; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; CLAIM FOR DAMAGES; RULES. — The rules governing the application for damages
against the surety bond posted in support of the application for a writ of preliminary attachment are also applicable by analogy to preliminary injunction. (Sec.
20 of Rule 57 of the Rules of Court.) A long line of cases has held that these rules are mandatory and failure to observe them deprives the aggrieved party of
the right to proceed against the surety bond.

6. ID.; ID.; ID.; ID.; NOTICE TO ADVERSE PARTY AND SURETY, INDISPENSABLE. — Due notice to the adverse party and its surety setting forth the facts
supporting the applicant’s right to damages and the amount thereof under the bond is indispensable. No judgment for damages may be entered and executed
against the surety without giving it an opportunity to be heard as to the reality or reasonableness of the damages resulting from the wrongful issuance of the
writ.

DECISION

CRUZ, J.:

What is the effect of the dismissal of a complaint ordered at the instance of the defendant upon a compulsory counterclaim duly raised in its answer?
chanrobles virtual lawlibrary

On February 10, 1988, Sharp, Inc., the herein private respondent filed a complaint for prohibition with prayer for preliminary injunction against the Secretary of
Transportation and Communications, the Philippine Ports Authority (PPA), E. Razon, Inc., and the International Container Terminal Services Inc., the herein
petitioner. The complaint was docketed as Civil Case No. 88-43616 in the Regional Trial Court of Manila, Branch 9.

On March 7, 1988, the trial court issued a writ of preliminary injunction upon the posting by Sharp of a bond issued by the Integrated Bonding and Insurance
Co. in the sum of P10,000,000.00.

On that same day, the petitioner filed an answer with a compulsory counterclaim against Sharp for its "unfounded and frivolous action." The petitioner claimed
that as a consequence of the complaint and the writ of preliminary injunction, it had suffered injuries which "if monetized (would) amount to more than
P100,000,000.00."cralaw virtua1aw library

On March 17, 1988, the writ of preliminary injunction was nullified by this Court in G.R. No. 82218. We held that Sharp was not a proper party to stop the
negotiation and awarding of the contract for the development, management and operation of the Container Terminal at the Port of Manila. Moreover, the
petition was premature because Sharp had not exhausted the administrative remedies open to it from "the PPA, the Bidding Committee, and the Office of the
President."cralaw virtua1aw library

On March 25, 1988, the PPA, taking its cue from this decision, filed a motion to dismiss Sharp’s complaint on the above-stated grounds. This motion was
adopted by petitioner CCTSI in a manifestation dated April 8, 1988.

On July 13, 1988, Judge Edilberto G. Sandoval dismissed the complaint as well as the counterclaim.

On August 13, 1988, CCTSI filed a motion for reconsideration of the order insofar as it dismissed its counterclaim. Meanwhile, it gave notice to the First
Integrated Bonding and Insurance Co., Inc. that it was claiming damages against Sharp for the revoked injunction.chanrobles virtual lawlibrary

On November 10, 1988, the motion for reconsideration was denied. The trial court declared in part:chanrob1es virtual 1aw library

. . . indeed a compulsory counterclaim by the nature of its nomenclature arises out of or is so intertwined with the transaction or occurrence that is the subject
matter of the complaint so that by the dismissal of the latter, the same has to be discarded, specially since the complaint was dismissed without any trial.

The dismissal of the counterclaim was appealed to the respondent court, which upheld the lower court on the following justifications:chanrob1es virtual 1aw
library

(1) Compulsory counterclaims for actual damages are not the claims recoverable against the bond.

(2) Petitioner’s manifestation adopting Philippine Ports Authority’s motion to dismiss did not contain any reservation. Hence, Sec. 2, Rule 17 of the Rules of
Court will not apply. The counterclaim for damages being compulsory in nature, for which no filing fee has been paid, was correctly dismissed.

(3) Sec. 20 of Rule 57 of the Rules of Court specifically provides that "such damages (recoverable against the bond) may be awarded only upon application
and after proper hearing, and shall be included in the final judgment. The application must be filed before the trial . . ., with due notice to the attaching creditor
and his surety or sureties, setting forth the facts showing his right to damages and the amount thereof.

The application contemplated in Sec. 20 is distinct and separate from the compulsory counterclaim asserted in the answer.

(4) The filing in court of claim against the injunction bond, with copy thereof being furnished the surety, was not sufficient notice to the latter of an application
against it under this bond.

CCTSI has filed the present petition for review alleging that the order of the trial court dismissing the counterclaim was issued with grave abuse of discretion.
Specifically, the petitioner contends that the respondent court erred in sustaining the said order because:chanrob1es virtual 1aw library

(1) Dismissal of the complaint upon defendant’s motion did not necessarily entail dismissal of defendant’s compulsory counterclaim.

(2) A claim for damages arising from a wrongfully obtained injunction may be made in a counterclaim.
(3) There is no rule requiring a particular form of notice to the surety of petitioner’s claim against the injunction bond.

For its part, the private respondent argues that the dismissal of the compulsory counterclaim should be sustained because:chanrob1es virtual 1aw library

(1) The dismissal of the complaint upon petitioner’s motion necessarily entailed the dismissal of the compulsory counterclaim.

(2) The compulsory counterclaim raised by petitioner in its answer did not partake of the nature of a claim for damages against the injunction bond.

(3) The notice given by the petitioner to the surety was fatally defective and did not comply with the requirements of the Rule of Court.

d. Appeal, not certiorari, was the proper remedy of petitioner.

The Court gave due course to this petition and required the parties to submit simultaneous memoranda. After studying their respective arguments and the
pertinent law and jurisprudence, we have come to the conclusion that the petition cannot prosper.

The counterclaim for damages alleged that the delay in the award of the MICT contract caused by Sharp’s complaint and writ of preliminary injunction
jeopardized the petitioner’s timetable to attain the projected volumes in its winning bid and, as well, caused it to incur litigation expenses, including attorney’s
fees.

We have consistently held that a counterclaim is compulsory where: (1) it arises out of, or is necessarily connected with, the transaction or occurrence that is
the subject matter of the opposing party’s claim; (2) it does not require for its adjudication the presence of third parties of whom the court cannot acquire
jurisdiction; and (3) the court has jurisdiction to entertain the claim. 1 

Tested by these requirements, the petitioner’s counterclaim was clearly compulsory. The petitioner itself so denominated it. There is no doubt that the same
evidence needed to sustain it would also refute the cause of action alleged in the private respondent’s complaint; in other words, the counterclaim would
succeed only if the complaint did not. It is obvious from the very nature of the counterclaim that it could not remain pending for independent adjudication, that
is, without adjudication by the court of the complaint itself on which the counterclaim was based.

Rule 17, Sec. 2 of the Rules of Court provides:chanrob1es virtual 1aw library

SECTION 2. Dismissal by order of the court. — Except as provided in the preceding section, an action shall not be dismissed at the plaintiff’s instance save
upon order of the court and upon such terms and conditions as the court may deem proper. If a counterclaim has been pleaded by a defendant prior to the
service upon him of the plaintiff’s motion to dismiss, the action shall not be dismissed against the defendant’s objection unless the counterclaim can remain
pending for independent adjudication by the court. Unless otherwise specified in the order, a dismissal under this paragraph shall be without prejudice.

The Court notes that, to begin with, the petitioner itself joined the PPA in moving for the dismissal of the complaint; or put passively, it did not object to the
dismissal of the private respondent’s complaint. Secondly, the compulsory counterclaim was so interwined with the complaint that it could not remain pending
for independent adjudication by the court after the dismissal of the complaint which had provoked the counterclaim in the first place. As a consequence, the
dismissal of the complaint (on the petitioner’s own motion) operated to also dismiss the counterclaim questioning that complaint.cralawnad

The petitioner is correct in contending that the claim for damages caused by the wrongful issuance of a preliminary injunction can be made in the form of a
counterclaim. As we held in Raymundo v. Carpio: 2 

It would seem that the proper practice to be followed in cases where it is desired to obtain damages by reason of the wrongful issuance of an attachment in
favor of plaintiff that an issue would be tendered on the subject by the defendant in his answer in the main case. Such a tender would present the question
squarely in that court, and the parties having offered their evidence on the subject, the trial court could dispose of it along with the principal action. It is not
necessary that the defendant wait until it is determined by a final decision in the main action that the plaintiff is not entitled to recover in order to present the
question of his right to damages. All questions which are material to the main action or which are incidental thereto but depending thereon should be presented
and litigated at the same time with the main action, so as to avoid the necessity of subsequent litigation and consequent loss of time and money.

However, there is no glossing away the fact that it was the petitioner itself that caused the dismissal of its counterclaim when it not only did not object to, but
actually moved for, the dismissal of the complaint. The petitioner cannot undo that act. If it wanted the counterclaim to subsist, it should have objected to the
dismissal of the complaint or at least reserved its right to prosecute it, assuming this would still be possible. It did neither of these. The petitioner now claims
that there is no law requiring that reservation, but there is no law presuming it either. The petitioner cannot simply say now that it intended all the time to
preserve its counterclaim when it knew that under Rule 17, Sec. 2 "if a counterclaim has been pleaded by a defendant prior to the service upon him of a motion
to dismiss, the action shall not be dismissed against the defendant’s objection unless the counterclaim can remain pending for independent adjudication by the
Court."cralaw virtua1aw library

The counterclaim was not permissive. A counterclaim is permissive if it does not arise out of nor is it necessarily connected with the subject matter of the
opposing party’s claim. It is not barred even if not set up in the action. 3 The petitioner’s counterclaim was within the jurisdiction of the trial court. Most
importantly, it had no independent existence, being merely ancillary to the main action. 4 The petitioner knew all this and did not object to the dismissal of the
complaint. On the contrary, it actually moved to dismiss that main action, and in so doing also moved, in effect, for the dismissal of its counterclaim.

The Court can stop at this point. For clarification of certain issues raised by the parties, however, the following reminders are made.

The rules governing the application for damages against the surety bond posted in support of the application for a writ of preliminary attachment are also
applicable by analogy to preliminary injunction. Sec. 20 of Rule 57 of the Rules of Court reads as follows:chanrob1es virtual 1aw library

Claim for damages on account of illegal attachment. — If the judgment on the action be in favor of the party against whom attachment was issued. he may
recover, upon the bond given or deposit made by the attaching creditor, any damages resulting from the attachment. Such damages may be awarded only
upon application and after proper hearing, and shall be included in the final judgment. The application must be filed before the trial or before appeal is
perfected or before the judgment becomes executory, with due notice to the attaching creditor and his surety or sureties, setting forth the facts showing his
right to damages and the amount thereof.chanrobles virtual lawlibrary

If the judgment of the appellate court be favorable to the party against whom the attachment was issued, he must claim damages sustained during the
pendency of the appeal by filing an application with notice to the party in whose favor the attachment was issued or his surety or sureties, before the judgment
of the appellate court becomes executory. The appellate court may allow the application to be heard and decided by the trial court.
Interpreting this rule, the Court has laid down the following principles:chanrob1es virtual 1aw library

(1) That damages resulting from preliminary attachment, preliminary injunction, the appointment of a receiver, or the seizure of personal property, the payment
of which is secured by judicial bond, must be claimed and ascertained in the same action with due notice to the surety:chanrob1es virtual 1aw library

(2) That if the surety is given such due notice, he is bound by the judgment that may be entered against the principal, and writ of execution may issue against
said surety to enforce the obligation of the bond; and

(3) That if no notice is given to the surety of the application for damages, the judgment that may be entered against the principal cannot be executed against
the surety without giving the latter an opportunity to be heard as to the reality or reasonableness of the alleged damages. In such case, upon application of the
prevailing party, the court must order the surety to show cause why the bond should not respond for the judgment for damages. If the surety should contest the
reality or reasonableness of the damages claimed by the prevailing party, the court must set the application and answer for hearing. The hearing will be
summary and will be limited to such new defense, not previously set up by the principal, as the surety may allege and offer to prove. 5 

A long line of cases has held that these rules are mandatory and failure to observe them deprives the aggrieved party of the right to proceed against the surety
bond. 6 

Due notice to the adverse party and its surety setting forth the facts supporting the applicant’s right to damages and the amount thereof under the bond is
indispensable. No judgment for damages may be entered and executed against the surety without giving it an opportunity to be heard as to the reality or
reasonableness of the damages resulting from the wrongful issuance of the writ.

The herein petitioner contends that it complied with the requirements when it served the bonding company with notice of its claim for damages on August 31,
1988. It is correct. No particular form for such notice is required. The rule also clearly says that the application for damages and the notice to the surety may be
made at any time before the judgment becomes final and executory. CCTSI served the notice on the surety during the pendency of the motion for
reconsideration, before the judgment dismissing the complaint and the counterclaim had become final and executory.chanrobles virtual lawlibrary

Had the counterclaim not been dismissed with the dismissal of the complaint, the petitioner could have introduced evidence to show that it was prejudiced by
the filing of the complaint and the obtention of the writ of preliminary injunction by Sharp. But the petitioner itself aborted that effort when it joined PPA in
moving for the dismissal of Sharp’s complaint, knowing that it was the basis of its own compulsory counterclaim. For failing to object when it should have, to
keep its counterclaim alive, and instead moving to dismiss the complaint from which the counterclaim derived its life, the petitioner must now bear the
consequences of its own negligence.

WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.

G.R. No. 76838               April 17, 1990

LUALHATI A. COJUANGCO, petitioner, 
vs.
PURIFICACION VILLEGAS and the PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH XVII, MALOLOS, BULACAN,respondents.

Eufracio S. Marquez for petitioner.

Carmelito M. Santoyo for private respondent.

FERNAN C.J.:

The instant petition for certiorari and prohibition raises the ultimate issue of whether or not the execution of a final judgment in an ejectment case may be
stayed by a co-equal court in order that the light of indemnification and retention of an alleged builder in good faith may not be rendered meaningless or
illusory in an independent civil action for specific performance.

Petitioner Lualhati Aldaba Cojuangco is the widow of Don Juan Cojuangco, the registered owner of the disputed parcel of residential land containing an area of
585 square meters and situated at San Agustin, Malolos, Bulacan.

Many years back (about sixty years, according to the municipal trial court) the parents of private respondent Purificacion Villegas, with the acquiescence of
Don Juan Cojuangco, constructed a residential house and later a structure housing a bakery on the aforesaid lot. It was understood that they could remain on
the land with his blessings and without paying rentals on condition that they would vacate the premises when needed by the owner.

After her parent's death, Villegas remained in the property, renovating the same and spending P300,000.00 in the process. She also leased out a portion of
the land to Siapno Appliances at P600.00 a month without the knowledge and consent of Don Juan Cojuangco This latter act apparently destroyed her
congenial relations with the landowner because soon thereafter, Don Juan Cojuangco, through his attorney in fact, demanded that she leave the property.
Despite his repeated written demands for her to surrender possession of the property, Villegas refused, prompting Cojuangco to institute ejectment
proceedings against her before the Municipal Trial Court (MTC) of Malolos, Bulacan, Branch I on August 23, 1978. 1

On February 5, 1979, Don Juan Cojuangco died intestate. In the trial court's order of October 22, 1979, his wife Lualhati, herein petitioner, together with
nephews and nieces, were sub-constituted as parties-plaintiffs. 2

In its decision dated June 30, 1983, the inferior court dismissed the action for ejectment for lack of jurisdiction. It cited the unassailable fact that Villegas and
her predecessors-in-interest had been in actual possession of the subject land for no less than sixty years and that in addition, Villegas asserted an adverse
claim of ownership, thus transforming the suit into an accion publiciana which is properly cognizable by courts of first instance (now regional trial courts).

On appeal to the then Court of First Instance (CFI) of Malolos, Branch XV, the inferior court was reversed insofar as it had erroneously denied jurisdiction over
the ejectment case.3 The trial court then ordered Villegas to vacate the premises and to surrender possession thereof to herein petitioner Cojuangco. 4
The case was elevated to the appellate court and to the Supreme Court and in both instances, herein petitioner Cojuangco's right of possession over the land
was upheld. After entry of judgment was made on November 20, 1985, herein petitioner went to the Regional Trial Court of Malolos, Branch XV, where she
filed a motion for execution of the judgment, which the court granted on June 30, 1986. On July 29, 1986, a writ of demolition was issued against Villegas, who
did not oppose the ordered demolition but instead asked the lower court to give her more time (forty days from August 7, 1986) to effect the transfer of her
personal properties and to remove the improvements on the subject lot to which motion the court acceded.

On September 16, 1986, before the lapse of the grace period, Villegas filed a separate civil action docketed as Civil Case No. 9094-M against petitioner
Cojuangco and the provincial sheriff "for specific performance with urgent prayer for issuance of a temporary restraining order and preliminary injunction." This
case, instead of being referred to Branch XV which had earlier issued the writ of demolition, was raffled to another Malolos branch of the Bulacan Trial Court,
specifically Branch XVII which issued on the same day, September 16, 1986, a temporary restraining order enjoining Cojuangco and particularly the sheriff
"from enforcing or implementing the Order of Demolition issued in Civil Case No. 7042-M . . . 5 This was followed by another order dated October 6, 1986
granting a writ of preliminary injunction. 6 The twin orders are now the subject of the instant petition for certiorari on the ground that they have been issued with
grave abuse of discretion amounting to lack of jurisdiction.

Petitioner Cojuangco contends that the assailed orders constituted an undue interference by the respondent court with a final and executory decision of a co-
equal court which is anathema in our judicial system.

The argument is impressed with merit. As early as 1922 in the case of Cabigao v. Del Rosario, this Court laid down the doctrine that "no court has power to
interfere by injunction with the judgments or decrees of a court of concurrent or coordinate jurisdiction having power to grant the relief sought by injunction." 7

The various branches of the court of first instance of a province or city, having as they have the same or equal authority and exercising as they do concurrent
and coordinate jurisdiction, should not, cannot and are not permitted to interfere with their respective cases, much less with their orders or judgments. A
contrary rule would obviously lead to confusion and seriously hamper the administration of justice. 8

Based on the foregoing, it is plainly evident that the injunction was improperly issued by the respondent court.

Petitioner Cojuangco has further raised the issue of whether Villegas can still legally institute a separate independent action against the adjudged owner of the
disputed lot on the ground that Villegas and her predecessors-in-interest are builders in good faith and are therefore entitled to recover the value of the
improvements they had introduced on the lot.

Rule 9, Section 4 of the Revised Rules of Court on compulsory counterclaim provides the answer. 1âwphi1 It states:

A counterclaim or cross-claim not set up shall be barred if it arises out of or is necessarily connected with, the transaction or occurrence that is the
subject-matter of the opposing party's or co-party's claim and does not require for its adjudication the presence of third parties of whom the court
cannot acquire jurisdiction.

Villegas' claim to recover compensation for improvements made on the land is essentially in the nature of a counterclaim since it is inter-woven with the fact of
possession. Said claim for compensation should have been presented as a counterclaim in the ejectment suit. It is deemed barred if not raised on time and the
party in error is precluded from setting it up in a subsequent litigation. 9 The rule on compulsory counter-claim is designed to enable the disposition of the entire
conflict at one time and in one action. The philosophy of the rule is to discourage multiplicity of suits. 10

According to Villegas, the reason why the counterclaim for indemnification was not made in the original action was because it became a "ripe issue" only after
the ejectment proceedings. Villegas contended that the estoppel of judgment could only extend to those facts and conditions existing at the time the judgment
was rendered and not to those which supervened before the second suit.

The argument is untenable. In her pleadings, Villegas repeatedly stressed that the residential house which her parents had constructed was already there on
the questioned lot for as long as she could remember, that she herself has lived there all her life and that in the honest belief that the land had been "donated"
to her parents by her "Aunt Tecla", she made various improvements and renovation thereon. Obviously, such declarations on the part of Villegas completely
negate her absurd claim that the factual basis for her subsequent action arose after the ejectment suit became final. 1âwphi1

Thus, Villegas should have set forth, simultaneously with the assertion that she was entitled to the parcel of land by right of inheritance, the alternative claim
that assuming she was not legally entitled to the disputed lot, at least as a builder in good faith, she has the right to the value of the buildings and
improvements which she and her parents had introduced on the land. 11 And while it may be argued that the defense of being a builder in good faith would
have been inconsistent with her claim of ownership, in the case of Castle Bros., Wolf and Sons v. Go-Juno  12 the Court held that a party may set forth as
many defenses and counterclaims as he may have, whatever be their nature. These may even be inconsistent with each other because what is sufficient is
that each is consistent with itself.

Since Villegas failed to set up such alternative defense ( i.e. a builder in good faith is entitled to recover the value of improvements) and instead relied on the
sole defense that she inherited the land from her parents, the rejection thereof was a complete resolution of the controversy between the parties which bars a
later case based upon the unpleaded defense. The adjudication of the issue joined by the parties in the earlier case constitutes res judicata,the theory being
that what is barred by prior judgment are not only the matters actually raised and litigated upon, but also such other matters as could have been raised but
were not. 13

It bears emphasizing that in ejectment cases, the rule is explicit that the judgment must be executed immediately when it is in favor of the plaintiff to prevent
further damages to him arising from the loss of possession. 14 The sense of urgency is more pronounced in the case at bar where the ejectment case in favor
of Cojuangco was decided in 1978 and subsequently appealed all the way to the Supreme Court. But the final victory continues to elude Cojuangco to this day
due to a large extent to the legal maneuvers utilized by Villegas to forestall the inevitable.

For its part, respondent trial court has attempted to justify its writ of injunction by stating that the impending demolition of Villegas' house and other buildings on
the disputed property would render inutile her right as a builder in good faith. We cannot agree. The loss to Villegas is not sufficient to warrant a blatant
disregard of established precedents especially when it is borne in mind that for more than half a century, Villegas and her family have enjoyed the fruits of the
land without paying a single centavo in return. Surely, the equities are more in favor of Cojuangco, the landowner.
In sum, the Court finds that in taking cognizance of the action for specific performance and in issuing the questioned orders which interfered with the final
judgment of a coordinate court, respondent trial court committed grave abuse of discretion amounting to lack of jurisdiction which is correctible by a writ
of certiorari.

WHEREFORE, the petition is granted. The respondent court is hereby ordered to DISMISS Civil Case No, 9094-M and all proceedings held therein are
declared null and void. The Regional Trial Court of Malolos, Bulacan, Branch XV is ordered to immediately execute the decision in the ejectment case. Civil
Case No. 7042-M. Costs against private respondent Villegas. This decision is immediately executory.

SO ORDERED.

PHILTRANCO SERVICE ENTERPRISES, INC., G.R. No. 161909

Petitioner,  
  Present:
   
  CORONA, C.J. Chairperson,
-versus- LEONARDO-DE CASTRO,
  BERSAMIN,
  DEL CASTILLO, and
  VILLARAMA, JR., JJ.
FELIX PARAS AND INLAND TRAILWAYS, INC., AND  
HON. COURT OF APPEALS, Promulgated:
Respondents. April 25, 2012
x-----------------------------------------------------------------------------------------x
 
DE CI S IO N

 
BERSAMIN, J.:
 
In an action for breach of contract of carriage commenced by a passenger against his common carrier, the plaintiff can recover damages from a
third-party defendant brought into the suit by the common carrier upon a claim based on tort or  quasi-delict. The liability of the third-party defendant is
independent from the liability of the common carrier to the passenger.
 
Philtranco Service Enterprises, Inc. (Philtranco) appeals the affirmance with modifications by the Court of Appeals (CA) of the decision of the
Regional Trial Court (RTC) awarding moral, actual and temperate damages, as well as attorneys fees and costs of suit, to respondent Felix Paras (Paras), and
temperate damages to respondent Inland Trailways, Inc. (Inland), respectively the plaintiff and the defendant/third-party plaintiff in this action for breach of
contract of carriage, upon a finding that the negligence of the petitioner and its driver had caused the serious physical injuries Paras sustained and the material
damage Inlands bus suffered in a vehicular accident.
 
Antecedents
 
The antecedent facts, as summarized by the CA, are as follows:
 
Plaintiff-appellant [respondent] Felix Paras (Paras for brevity), who hails from Cainta, Rizal is engaged in the buy and sell of fish
products. Sometime on 08 February 1987, on his way home to Manila from Bicol Region, he boarded a bus with Body No. 101 and Plate
No. EVE 508, owned and operated by Inland Trailways, Inc. (Inland for brevity) and driven by its driver Calvin Coner (Coner for brevity).
 
At approximately 3:50 oclock in the morning of 09 February 1987, while the said bus was travelling along Maharlika Highway,
Tiaong, Quezon, it was bumped at the rear by another bus with Plate No. EVB 259, owned and operated by Philtranco Service
Enterprises, Inc. (Philtranco for brevity). As a result of the strong and violent impact, the Inland bus was pushed forward and smashed into
a cargo truck parked along the outer right portion of the highway and the shoulder thereof.  Consequently, the said accident bought
considerable damage to the vehicles involved and caused physical injuries to the passengers and crew of the two buses, including the
death of Coner who was the driver of the Inland Bus at the time of the incident.
 
Paras was not spared from the pernicious effects of the accident. After an emergency treatment at the San
Pablo Medical Center, San Pablo City, Laguna, Paras was taken to the NationalOrthopedic Hospital. At the latter hospital, he was found
and diagnosed by Dr. Antonio Tanchuling, Jr. to be affected with the following injuries: a) contusion/hematoma; b) dislocation of hip upon
fracture of the fibula on the right leg; c) fractured small bone on the right leg; and d) close fracture on the tibial plateau of the left leg. (Exh.
A, p. 157, record)
 
On 04 March 1987 and 15 April 1987, Paras underwent two (2) operations affecting the fractured portions of his body. (Exhs. A-2
and A-3, pp. 159 and 160 respectively, record)
 
Unable to obtain sufficient financial assistance from Inland for the costs of his operations, hospitalization, doctors fees and other
miscellaneous expenses, on 31 July 1989, Paras filed a complaint for damages based on breach of contract of carriage against Inland.
 
In its answer, defendant Inland denied responsibility, by alleging, among others, that its driver Coner had observed an utmost
and extraordinary care and diligence to ensure the safety of its passengers. In support of its disclaimer of responsibility, Inland invoked the
Police Investigation Report which established the fact that the Philtranco bus driver of [sic] Apolinar Miralles was the one which violently
bumped the rear portion of the Inland bus, and therefore, the direct and proximate cause of Paras injuries.
 
On 02 March 1990, upon leave of court, Inland filed a third-party complaint against Philtranco and Apolinar Miralles (Third Party
defendants). In this third-party complaint, Inland, sought for exoneration of its liabilities to Paras, asserting that the latters cause of action
should be directed against Philtranco considering that the accident was caused by Miralles lack of care, negligence and reckless
imprudence. (pp. 50 to 56, records).
 
 
 After trial, the RTC (Branch 71) in Antipolo, Rizal rendered its judgment on July 18, 1997,[1] viz:
 
WHEREFORE, third-party defendant Philtranco and Apolinar Miralles are hereby ordered to pay plaintiff jointly and severally, the
following amounts:
 
1.P54,000.00 as actual damages;
 
2.P50,000.00 as moral damages;
 
3.P20,000.00 as attorneys fees and costs.
 
SO ORDERED.
 
All the parties appealed to the CA on different grounds.

 
On his part, Paras ascribed the following errors to the RTC, to wit:
 
1. THE TRIAL COURT ERRED IN HOLDING THAT ONLY THIRD-PARTY DEFENDANT-APPELLANT PHILTRANCO IS LIABLE FOR
THE DAMAGES SUFFERED BY APPELLANT PARAS.
 
II. THE TRIAL COURT ERRED IN NOT HOLDING APPELLANT INLAND TRAILWAYS INC. TO BE JOINTLY AND SEVERALLY LIABLE
FOR THE DAMAGES SUFFERED BY PARAS.
 
III. THE TRIAL COURT ERRED IN NOT AWARDING UNEARNED INCOME AS ADDITIONAL ACTUAL DAMAGES SUFFERED BY
APPELLANT PARAS AS HIS PHYSICAL DISABILITY IS PERMANENT IN NATURE.
 
IV. THE TRIAL COURT ERRED IN NOT AWARDING EXEMPLARY DAMAGES IN FAVOR OF APPELLANT PARAS.
 
 
On the other hand, Inland assigned the following errors to the RTC, namely:

 
THE TRIAL COURT ERRED WHEN IT FAILED TO AWARD DAMAGES UNTO THE THIRD PARTY PLAINTIFF NOTWITHSTANDING
CLEAR FINDING THAT:
 
It is clear from the evidence that the plaintiff sustained injuries because of the reckless, negligence, and lack of precaution
of third party defendant Apolinar Miralles, an employee of Philtranco.
 
AND, COMPLETELY DISREGARDED THE UNCONTROVERTED ORAL AND DOCUMENTARY EVIDENCES ESTABLISHING THE
EXTENT AND DEGREE OF DAMAGES SUSTAINED BY THE THIRD PARTY PLAINTIFF.
 
Lastly, Philtranco stated that the RTC erred thuswise:

 
I
THE COURT A QUO MISERABLY ERRED IN AWARDING ACTUAL DAMAGES GREATER THAN WHAT WAS ALLEGED IN THE
COMPLAINT ITSELF, AND EVEN MUCH MORE GREATER THAN WHAT WERE PROVED DURING THE TRIAL, HENCE,
PERPETUATING UNJUST ENRICHMENT.
 
II
THE COURT A QUO SERIOUSLY ERRED IN AWARDING MORAL DAMAGES TO A CAUSE OF ACTION OF CULPA-CONTRACTUAL
EVEN WITHOUT ANY EVIDENCE OF GROSS BAD FAITH; HENCE, CONTRARY TO THE ESTABLISHED DOCTRINE IN THE CASES
OF PHIL. RABBIT BUS LINES VS. ESGUERRA; SOBERANO VS. BENGUET AUTO LINE AND FLORES VS. MIRANDA.
 
III
THE COURT A QUO MISERABLY ERRED IN HOLDING THAT MIRALLES WAS THE ONE AT FAULT MERELY ON THE STRENGHT
OF THE TESTIMONY OF THE POLICE INVESTIGATOR WHICH IS IN TURN BASED ON THE STATEMENTS OF ALLEGED
WITNESSES WHO WERE NEVER PRESENTED ON THE WITNESS STAND.
 
IV
THE COURT A QUO COMMITTED A GRIEVOUS ERROR IN DISREGARDING THE TESTIMONY OF APPELLANTS WITNESSES WHO
TESTIFIED AS TO THE DEFENSE OF EXERCISE OF DUE DILIGENCE IN THE SELECTION AND SUPERVISION OF EMPLOYEES
PURSUANT TO ART. 2180, LAST PARAGRAPH, NEW CIVIL CODE.
 
On September 25, 2002, the CA promulgated its decision, [2] disposing:
 
WHEREFORE, in consideration of the foregoing premises, the assailed decision dated 18 July 19(9)7 is perforce affirmed with
the following modifications:
 
1. Third party defendants-appellants Philtranco and Apolinar Miralles are ordered to pay plaintiff-appellant Felix Paras jointly and
severally the following amounts:
 
a)            P1,397.95 as actual damages;
b)            P50,000.00 as temperate damages;
c)            P50,000.00 as moral damages; and
d)            P20,000.00 as attorneys fees and costs of suit.
 
 2. On the third party plaintiff-appellant Inlands claims, the third party defendant-appellants Philtranco and Apolinar Miralles are
hereby ordered to pay the former (Inland) jointly and severally the amount of P250,000.00 as and by way of temperate damages.
 
SO ORDERED.
 
 
The CA agreed with the RTCs finding that no trace of negligence at the time of the accident was attributable to Inlands driver, rendering Inland not
guilty of breach of contract of carriage; that faulty brakes had caused Philtrancos bus to forcefully bump Inlands bus from behind, making it hit the rear portion
of a parked cargo truck; that the impact had resulted in considerable material damage to the three vehicles; and that Paras and others had sustained various
physical injuries.
 
Accordingly, the CA: (a) sustained the award of moral damages of P50,000.00 in favor of Paras pursuant to Article 2219 of the Civil Code based
on quasi-delict committed by Philtranco and its driver; ( b) reduced the actual damages to be paid by Philtranco to Paras from P54,000.00 to P1,397.95
because only the latter amount had been duly supported by receipts; ( c) granted temperate damages of P50,000.00 (in lieu of actual damages in view of the
absence of competent proof of actual damages for his hospitalization and therapy) to be paid by Philtranco to Paras; and ( d) awarded temperate damages
of P250,000.00 under the same premise to be paid by Philtranco to Inland for the material damage caused to Inlands bus.
 
Philtranco moved for reconsideration,[3] but the CA denied its motion for reconsideration on January 21, 2004.[4]
 
Issues
 
Hence, this appeal, in which the petitioner submits that the CA committed grave abuse of discretion amounting to lack of jurisdiction in awarding
moral damages to Paras despite the fact that the complaint had been anchored on breach of contract of carriage; and that the CA committed a reversible error
in substituting its own judgment by motu proprio awarding temperate damages of P250,000.00 to Inland and P50,000.00 to Paras despite the clear fact that
temperate damages were not raised on appeal by Paras and Inland.
 
Ruling
 
The appeal lacks merit.
 
The Court does not disturb the unanimous findings by the CA and the RTC on the negligence of Philtranco and its driver being the direct cause of the physical
injuries of Paras and the material damage of Inland.
 
Nonetheless, we feel bound to pass upon the disparate results the CA and the RTC reached on the liabilities of Philtranco and its driver.
 
1.
Paras can recover moral damages
in this suit based on quasi-delict
Philtranco contends that Paras could not recover moral damages because his suit was based on breach of contract of carriage, pursuant to which
moral damages could be recovered only if he had died, or if the common carrier had been guilty of fraud or bad faith. It argues that Paras had suffered only
physical injuries; that he had not adduced evidence of fraud or bad faith on the part of the common carrier; and that, consequently, Paras could not recover
moral damages directly from it (Philtranco), considering that it was only being subrogated for Inland.
 
The Court cannot uphold the petitioners contention.
As a general rule, indeed, moral damages are not recoverable in an action predicated on a breach of contract. This is because such action is not
included in Article 2219 of the Civil Code[5]  as one of the actions in which moral damages may be recovered. By way of exception, moral damages are
recoverable in an action predicated on a breach of contract: ( a) where the mishap results in the death of a passenger, as provided in Article 1764, [6] in relation
to Article 2206, (3),[7] of the Civil Code; and (b) where the common carrier has been guilty of fraud or bad faith, [8] as provided in Article 2220[9] of the Civil Code.
Although this action does not fall under either of the exceptions, the award of moral damages to Paras was nonetheless proper and valid. There is no
question that Inland filed its third-party complaint against Philtranco and its driver in order to establish in this action that they, instead of Inland, should be
directly liable to Paras for the physical injuries he had sustained because of their negligence . To be precise, Philtranco and its driver were brought into the
action on the theory of liability that the proximate cause of the collision between Inlands bus and Philtrancos bus had been the negligent, reckless and
imprudent manner defendant Apolinar Miralles drove and operated his driven unit, the Philtranco Bus with Plate No. 259, owned and operated by third-party
defendant Philtranco Service Enterprises, Inc. [10] The apparent objective of Inland was not to merely subrogate the third-party defendants for itself, as
Philtranco appears to suggest,[11] but, rather, to obtain a different relief whereby the third-party defendants would be held directly, fully and solely liable to
Paras and Inland for whatever damages each had suffered from the negligence committed by Philtranco and its driver. In other words, Philtranco and its driver
were charged here as joint tortfeasors who would be jointly and severally be liable to Paras and Inland.
 
Impleading Philtranco and its driver through the third-party complaint filed on March 2, 1990 was correct. The device of the third-party action,  also known as
impleader, was in accord with Section 12, Rule 6 of the Revised Rules of Court, the rule then applicable, viz:
 
Section 12. Third-party complaint. A third-party complaint is a claim that a defending party may, with leave of court, file against a
person not a party to the action, called the third-party defendant, for contribution, indemnity, subrogation or any other relief, in respect of
his opponents claim.[12]
 
 
Explaining the application of Section 12, Rule 6, supra, the Court said in Balbastro v. Court of Appeals,[13]  to wit:
 
Section 12 of Rule 6 of the Revised Rules of Court authorizes a defendant to bring into a lawsuit any person not a party to the
action . . . for contribution, indemnity, subrogation or any other relief in respect of his opponent's claim. From its explicit language it does
not compel the defendant to bring the third-parties into the litigation, rather it simply permits the inclusion of anyone who meets the
standard set forth in the rule. The secondary or derivative liability of the third-party is central whether the basis is indemnity, subrogation,
contribution, express or implied warranty or some other theory. The impleader of new parties under this rule is proper only when a right to
relief exists under the applicable substantive law. This rule is merely a procedural mechanism, and cannot be utilized unless there is some
substantive basis under applicable law.
 
Apart from the requirement that the third-party complainant should assert a derivative or secondary claim for relief from the third-
party defendant there are other limitations on said partys ability to implead. The rule requires that the third-party defendant is not a party to
 the action for otherwise the proper procedure for asserting a claim against one who is already a party to the suit is by means of
counterclaim or cross-claim under sections 6 and 7 of Rule 6. In addition to the aforecited requirement, the claim against the third-party
defendant must be based upon plaintiff's claim against the original defendant (third-party claimant). The crucial characteristic of a claim
under section 12 of Rule 6, is that the original defendant is attempting to transfer to the third-party defendant the liability asserted against
him by the original plaintiff.
 
 
Accordingly, the requisites for a third-party action are, firstly, that the party to be impleaded must not yet be a party to the action; secondly, that the
claim against the third-party defendant must belong to the original defendant; thirdly, the claim of the original defendant against the third-party defendant must
be based upon the plaintiffs claim against the original defendant; and, fourthly, the defendant is attempting to transfer to the third-party defendant the liability
asserted against him by the original plaintiff.[14]
 
As the foregoing indicates, the claim that the third-party complaint asserts against the third-party defendant must be predicated on substantive law.
Here, the substantive law on which the right of Inland to seek such other relief through its third-party complaint rested were Article 2176 and Article 2180 of
the Civil Code, which read:
 
Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this chapter. (1902a)
 
Article 2180. The obligation imposed by article 2176 is demandable not only for ones own acts or omissions, but also for those of
persons for whom one is responsible.
xxx
Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned
tasks, even though the former are not engaged in any business or industry.
xxx
The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a
good father of a family to prevent damage. (1903a)
 
Paras cause of action against Inland (breach of contract of carriage) did not need to be the same as the cause of action of Inland against Philtranco and its
driver (tort or quasi-delict) in the impleader. It is settled that a defendant in a contract action may join as third-party defendants those who may be liable to him
in tort for the plaintiffs claim against him, or even directly to the plaintiff. [15] Indeed, Prof. Wright, et al., commenting on the provision of the Federal Rules of
Procedure  of the United States from which Section 12, supra, was derived, observed so, to wit:[16]
 
The third-party claim need not be based on the same theory as the main claim. For example, there are cases in which the third-
party claim is based on an express indemnity contract and the original complaint is framed in terms of negligence. Similarly, there need not
be any legal relationship between the third-party defendant and any of the other parties to the action. Impleader also is proper even though
the third partys liability is contingent, and technically does not come into existence until the original defendants liability has been
established. In addition, the words is or may be liable in Rule 14(a) make it clear that impleader is proper even though the third-party
defendants liability is not automatically established once the third-party plaintiffs liability to the original plaintiff has been determined.
 
Nor was it a pre-requisite for attachment of the liability to Philtranco and its driver that Inland be first declared and found liable to Paras for the breach
of its contract of carriage with him.[17] As the Court has cogently discoursed in Samala v. Judge Victor:[18]
 
Appellants argue that since plaintiffs filed a complaint for damages against the defendants on a breach of contract of carriage,
they cannot recover from the third-party defendants on a cause of action based on quasi-delict. The third party defendants, they allege, are
never parties liable with respect to plaintiff s claim although they are with respect to the defendants for indemnification, subrogation,
contribution or other reliefs. Consequently, they are not directly liable to the plaintiffs. Their liability commences only when the defendants
are adjudged liable and not when they are absolved from liability as in the case at bar.
 
Quite apparent from these arguments is the misconception entertained by appellants with respect to the nature and office of a
third party complaint.
 
Section 16, Rule 6 of the Revised Rules of Court defines a third party complaint as a claim that a defending party may, with leave
of court, file against a person not a party to the action, called the third-party defendant, for contribution, indemnification, subrogation, or any
other relief, in respect of his opponents claim. In the case of Viluan vs. Court of Appeals, et al.,  16 SCRA 742 [1966], this Court had
occasion to elucidate on the subjects covered by this Rule, thus:
 
... As explained in the Atlantic Coast Line R. Co. vs. U.S. Fidelity & Guaranty Co., 52 F. Supp. 177 (1943:)
 
From the sources of Rule 14 and the decisions herein cited, it is clear that this rule, like the admiralty rule,
covers two distinct subjects, the addition of parties defendant to the main cause of action, and the bringing in of a third
party for a defendants remedy over. xxx
 
If the third party complaint alleges facts showing a third partys direct liability to plaintiff on the claim set out in
plaintiffs petition, then third party shall make his defenses as provided in Rule 12 and his counterclaims against plaintiff
as provided in Rule 13. In the case of alleged direct liability, no amendment (to the complaint) is necessary or required.
The subject-matter of the claim is contained in plaintiff's complaint, the ground of third partys liability on that claim is
alleged in third party complaint, and third partys defense to set up in his answer to plaintiff's complaint. At that point
and without amendment, the plaintiff and third party are at issue as to their rights respecting the claim.
 
The provision in the rule that, The third-party defendant may assert any defense which the third-party plaintiff
may assert to the plaintiffs claim, applies to the other subject, namely, the alleged liability of third party defendant. The
next sentence in the rule, The third-party defendant is bound by the adjudication of the third party plaintiffs liability to
the plaintiff, as well as of his own to the plaintiff or to the third-party plaintiff applies to both subjects. If third party is
brought in as liable only to defendant and judgment is rendered adjudicating plaintiff's right to recover against
defendant and defendants rights to recover against third party, he is bound by both adjudications.That part of the
sentence refers to the second subject. If third party is brought in as liable to plaintiff, then third party is bound by the
 adjudication as between him and plaintiff. That refers to the first subject. If third party is brought in as liable to plaintiff
and also over to defendant, then third party is bound by both adjudications. xxx
 
Under this Rule, a person not a party to an action may be impleaded by the defendant either (a) on an allegation of liability to the
latter; (b) on the ground of direct liability to the plaintiff-; or, (c) both (a) and (b). The situation in (a) is covered by the phrase for
contribution, indemnity or subrogation; while (b) and (c) are subsumed under the catch all or any other relief, in respect of his opponents
claim.
 
The case at bar is one in which the third party defendants are brought into the action as directly liable to the plaintiffs upon the
allegation that the primary and immediate cause as shown by the police investigation of said vehicular collision between (sic) the above-
mentioned three vehicles was the recklessness and negligence and lack of imprudence (sic) of the third-party defendant Virgilio (should be
Leonardo) Esguerra y Ledesma then driver of the passenger bus. The effects are that plaintiff and third party are at issue as to their rights
respecting the claim and the third party is bound by the adjudication as between him and plaintiff. It is not indispensable in the premises
that the defendant be first adjudged liable to plaintiff before the third-party defendant may be held liable to the plaintiff, as precisely, the
theory of defendant is that it is the third party defendant, and not he, who is  directly liable  to plaintiff. The situation contemplated by
appellants would properly pertain to situation (a) above wherein the third party defendant is being sued for contribution, indemnity or
subrogation, or simply stated, for a defendant's remedy over. [19]
 
 
It is worth adding that allowing the recovery of damages by Paras based on quasi-delict, despite his complaint being upon contractual breach, served
the judicial policy of avoiding multiplicity of suits and circuity of actions by disposing of the entire subject matter in a single litigation. [20]
 
2.
Award of temperate damages was in order
 
 
Philtranco assails the award of temperate damages by the CA considering that, firstly, Paras and Inland had not raised the matter in the trial court and in their
respective appeals; secondly, the CA could not substitute the temperate damages granted to Paras if Paras could not properly establish his actual damages
despite evidence of his actual expenses being easily available to him; and, thirdly, the CA gravely abused its discretion in granting motu proprio the temperate
damages of P250,000.00 to Inland although Inland had not claimed temperate damages in its pleading or during trial and even on appeal.
 
The Court cannot side with Philtranco.
 
Actual damages, to be recoverable, must not only be capable of proof, but must actually be proved with a reasonable degree of certainty.  The reason is that
the court cannot simply rely on speculation, conjecture or guesswork in determining the fact and amount of damages, but there must be competent proof of the
actual amount of loss, credence can be given only to claims which are duly supported by receipts. [21]
 
The receipts formally submitted and offered by Paras were limited to the costs of medicines purchased on various times in the period from February
1987 to July 1989 (Exhibits E to E-35, inclusive) totaling only P1,397.95.[22] The receipts by no means included hospital and medical expenses, or the costs of
at least two surgeries as well as rehabilitative therapy. Consequently, the CA fixed actual damages only at that small sum of  P1,397.95. On its part, Inland
offered no definite proof on the repairs done on its vehicle, or the extent of the material damage except the testimony of its witness, Emerlinda  Maravilla, to the
effect that the bus had been damaged beyond economic repair. [23]The CA rejected Inlands showing of unrealized income worth P3,945,858.50 for 30 months
(based on alleged average weekly income of P239,143.02 multiplied by its guaranteed revenue amounting to 55% thereof, then spread over a period of 30
months, the equivalent to the remaining 40% of the vehicles un-depreciated or net book value), finding such showing arbitrary, uncertain and speculative.[24] As
a result, the CA allowed no compensation to Inland for unrealized income.
 
Nonetheless, the CA was convinced that Paras should not suffer from the lack of definite proof of his actual expenses for the surgeries and
rehabilitative therapy; and that Inland should not be deprived of recourse to recover its loss of the economic value of its damaged vehicle.  As the records
indicated, Paras was first rushed for emergency treatment to the San Pablo Medical Center in San Pablo City, Laguna, and was later brought to the National
Orthopedic Hospital in Quezon City where he was diagnosed to have suffered a dislocated hip, fracture of the fibula on the right leg, fracture of the small bone
of the right leg, and closed fracture on the tibial plateau of the left leg. He underwent surgeries on March 4, 1987 and April 15, 1987 to repair the fractures.
[25]
 Thus, the CA awarded to him temperate damages of P50,000.00 in the absence of definite proof of his actual expenses towards that end. As to Inland,
Maravillas testimony of the bus having been damaged beyond economic repair showed a definitely substantial pecuniary loss, for which the CA fixed
temperate damages of P250,000.00. We cannot disturb the CAs determination, for we are in no position today to judge its reasonableness on account of the
lapse of a long time from when the accident occurred. [26]
 
In awarding temperate damages in lieu of actual damages, the CA did not err, because Paras and Inland were definitely shown to have sustained
substantial pecuniary losses. It would really be a travesty of justice were the CA now to be held bereft of the discretion to calculate moderate or temperate
damages, and thereby leave Paras and Inland without redress from the wrongful act of Philtranco and its driver. [27] We are satisfied that the CA exerted effort
and practiced great care to ensure that the causal link between the physical injuries of Paras and the material loss of Inland, on the one hand, and the
negligence of Philtranco and its driver, on the other hand, existed in fact. It also rejected arbitrary or speculative proof of loss. Clearly, the costs of Paras
surgeries and consequential rehabilitation, as well as the fact that repairing Inlands vehicle would no longer be economical justly warranted the CA to calculate
temperate damages of P50,000.00 and P250,000.00 respectively for Paras and Inland.
 
There is no question that Article 2224 of the Civil Code  expressly authorizes the courts to award temperate damages despite the lack of certain proof
of actual damages, to wit:
 
Article 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be
recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved
with certainty.
 
The rationale for Article 2224 has been stated in Premiere Development Bank v. Court of Appeals[28] in the following manner:
 
Even if not recoverable as compensatory damages, Panacor may still be awarded damages in the concept of temperate or
moderate damages. When the court finds that some pecuniary loss has been suffered but the amount cannot, from the nature of the case,
be proved with certainty, temperate damages may be recovered. Temperate damages may be allowed in cases where from the nature of
the case, definite proof of pecuniary loss cannot be adduced, although the court is convinced that the aggrieved party suffered some
pecuniary loss.
  
The Code Commission, in explaining the concept of temperate damages under Article 2224, makes the following comment:
 
In some States of the American Union, temperate damages are allowed. There are cases where from the
nature of the case, definite proof of pecuniary loss cannot be offered, although the court is convinced that there has
been such loss. For instance, injury to ones commercial credit or to the goodwill of a business firm is often hard to
show with certainty in terms of money. Should damages be denied for that reason? The judge should be empowered to
calculate moderate damages in such cases, rather than that the plaintiff should suffer, without redress from the
defendants wrongful act.
 
3.
Paras loss of earning capacity
must be compensated
 
In the body of its decision, the CA concluded that considering that Paras had a minimum monthly income of P8,000.00 as a trader he was entitled to
recover compensation for unearned income during the 3-month period of his hospital confinement and the 6-month period of his recovery and rehabilitation;
and aggregated his unearned income for those periods to P72,000.00.[29] Yet, the CA omitted the unearned income from the dispositive portion.
 
The omission should be rectified, for there was credible proof of Paras loss of income during his disability. According to Article 2205, (1), of the  Civil
Code, damages may be recovered for loss or impairment of earning capacity in cases of temporary or permanent personal injury.  Indeed, indemnification for
damages comprehends not only the loss suffered (actual damages or damnum emergens) but also the claimants lost profits (compensatory damages
or lucrum cessans).[30] Even so, the formula that has gained acceptance over time has limited recovery to net earning capacity; hence, the entire amount
of P72,000.00 is not allowable. The premise is obviously that net earning capacity is the persons capacity to acquire money, less the necessary expense for
his own living.[31] To simplify the determination, therefore, the net earning capacity of Paras during the 9-month period of his confinement, surgeries and
consequential therapy is pegged at only half of his unearned monthly gross income of P8,000.00 as a trader, or a total of P36,000.00 for the 9-month period,
the other half being treated as the necessary expense for his own living in that period.
 
It is relevant to clarify that awarding the temperate damages (for the substantial pecuniary losses corresponding to Parass surgeries and
rehabilitation and for the irreparability of Inlands damaged bus) and the actual damages to compensate lost earnings and costs of medicines give rise to no
incompatibility. These damages cover distinct pecuniary losses suffered by Paras and Inland, [32] and do not infringe the statutory prohibition against recovering
damages twice for the same act or omission.[33]
 
4.
Increase in award of attorneys fees
 
 
Although it is a sound policy not to set a premium on the right to litigate, [34] we consider the grant to Paras and Inland of reasonable attorneys fees
warranted. Their entitlement to attorneys fees was by virtue of their having been compelled to litigate or to incur expenses to protect their interests, [35] as well
as by virtue of the Court now further deeming attorneys fees to be just and equitable.[36]
 
In view of the lapse of a long time in the prosecution of the claim, [37] the Court considers it reasonable and proper to grant attorneys fees to each of Paras and
Inland equivalent to 10% of the total amounts hereby awarded to them, in lieu of only P20,000.00 for that purpose granted to Paras.
 
5.
Legal interest on the amounts awarded
 
Pursuant to Eastern Shipping Lines, Inc. v. Court of Appeals, [38]  legal interest at the rate of 6% per annum accrues on the amounts adjudged reckoned from
July 18, 1997, the date when the RTC rendered its judgment; and legal interest at the rate of 12% per annum shall be imposed from the finality of the judgment
until its full satisfaction, the interim period being regarded as the equivalent of a forbearance of credit.
 
 
WHEREFORE, the Court AFFIRMS WITH MODIFICATION the decision of the Court of Appeals promulgated on September 25, 2002, by
ordering PHILTRANCO SERVICE ENTERPRISES, INC. and APOLINAR MIRALLES to pay, jointly and severally, as follows:
 
1.     To Felix Paras:
 
(a) P1,397.95, as reimbursement for the costs of medicines purchased between February 1987 and July 1989;
 
(b) P50,000.00 as temperate damages;
 
(c) P50,000.00 as moral damages;
 
(d) P36,000.00 for lost earnings;
 
(e) 10% of the total of items (a) to (d) hereof as attorneys fees; and
 
(f) Interest of 6% per annum from July 18, 1997 on the total of items ( a) to (d) hereof until finality of this decision, and 12% per
annum thereafter until full payment.
 
2. To Inland Trailways, Inc.:
 
(a)   P250,000.00 as temperate damages;
 
(b)   10% of item (a) hereof; and
 
(c)    Interest of 6% per annum on item (a) hereof from July 18, 1997 until finality of this decision, and 12% per annum thereafter until full
payment.
 
 3. The petitioner shall pay the costs of suit.
 
SO ORDERED.

G.R. No. 107356 March 31, 1995

SINGAPORE AIRLINES LIMITED, petitioner, 

vs.
THE COURT OF APPEALS and PHILIPPINE AIRLINES, respondents.

ROMERO, J.:

Sancho Rayos was an overseas contract worker who had a renewed contract with the Arabian American Oil Company (Aramco) for the period covering April
16, 1980, to April 15, 1981. As part of Aramco's policy, its employees returning to Dhahran, Saudi Arabia from Manila are allowed to claim reimbursement for
amounts paid for excess baggage of up to 50 kilograms, as long as it is properly supported by receipt. On April 1980, Rayos took a Singapore Airlines (SIA)
flight to report for his new assignment, with a 50-kilogram excess baggage for which he paid P4,147.50. Aramco reimbursed said. amount upon presentation of
the excess baggage ticket.

In December 1980, Rayos learned that he was one of several employees being investigated by Aramco for fraudulent claims. He immediately asked his wife
Beatriz in Manila to seek a written confirmation from SIA that he indeed paid for an excess baggage of 50 kilograms. On December 10, 1980, SIA's manager,
Johnny Khoo, notified Beatriz of their inability to issue the certification requested because their records showed that only three kilograms were entered as
excess and accordingly charged. SIA issued the certification requested by the spouses Rayos only on April 8, 1981, after its investigation of the anomaly and
after Beatriz, assisted by a lawyer, threatened it with a lawsuit. On April 14, 1981, Aramco gave Rayos his travel documents without a return visa. His
employment contract was not renewed.

On August 5, 1981, the spouses Rayos, convinced that SIA was responsible for the non-renewal of Rayos' employment contract with Aramco, sued it for
damages. SIA claimed that it was not liable to the Rayoses because the tampering was committed by its handling agent, Philippine Airlines (PAL). It then filed
a third-party complaint against PAL. PAL, in turn, countered that its personnel did not collect any charges for excess baggage; that it had no participation in the
tampering of any excess baggage ticket; and that if any tampering was made, it was done by SIA's personnel.

Judge Jesus O. Ibay of the Regional Trial Court of Manila, Branch 30, rendered judgment on September 9, 1988, in favor of the plaintiffs, the dispositive
portion of which reads thus:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant Singapore Airlines Limited, sentencing the
latter to pay the former the following:

1. The sum of Four Hundred Thirty Thousand Nine Hundred Pesos and Eighty Centavos (P430,900.80) as actual damages, with interest at
the legal rate from the date of the filing of the complaint until fully paid.

2. The sum of Four Thousand One Hundred Forty-Seven Pesos and Fifty Centavos (P4,147.50) as reimbursement for the amount
deducted from Mr. Rayos' salary, also with legal rate of interest from the filing of the complaint until paid in full;

3. The sum of Fifty Thousand Pesos (P50,000.00) as moral damages;

4. The sum equivalent to ten Per Cent (10th) of the total amount due as and for attorney's fees; and

5. The cost of suit.

The defendant's counterclaim is hereby dismissed.

ON THE THIRD PARTY COMPLAINT, the third-party defendant PAL is ordered to pay defendant and third-party plaintiff SIA whatever the
latter has paid the plaintiffs.

SO ORDERED.

In so ruling, the court a quo  concluded that the excess baggage ticket of Rayos was tampered with by the employees of PAL and that the fraud was the direct
and proximate cause of the non-renewal of Rayos' contract with Aramco.

All parties appealed to the Court of Appeals. SIA's appeal was dismissed for non-payment of docket fees, which dismissal was eventually sustained by this
Court. The Rayos spouses withdrew their appeal when SIA satisfied the judgment totaling P802,435.34.

In its appeal, PAL claimed that the spouses Rayos had no valid claim against SIA because it was the inefficiency of Rayos which led to the non-renewal of his
contract with Aramco, and not the alleged tampering of his excess bagged ticket On the other hand, SIA argued that the only issue in the said appeal is
whether or not it was entitled to reimbursement from PAL, citing
the case of Firestone Tire and Rubber Company of the Philippines v. Tempongko.1

The appellate court disagreed with SIA's contention that PAL could no longer raise the issue of SIA's liability to the Rayoses and opined "that SIA's answer to
the complaint should inure to the benefit of PAL, and the latter may challenge the lower court's findings against SIA in favor of plaintiffs-appellees (the Rayos
spouses) for the purpose of defeating SIA's claim against it, and not for the purpose of altering in any way the executed judgment against SIA." In its answer to
the main complaint, SIA set up the defense that the excess baggage ticket was indeed tampered with but it was committed by PAL's personnel. On September
21, 1992, the appellate court granted PAL's appeal and absolved it from any liability to SIA.
In this petition for review, SIA argues that PAL cannot validly assail for the first time on appeal the trial court's decision sustaining the validity of plaintiff's
complaint against SIA if PAL did not raise this issue in the lower court. It added that the appellate court should have restricted its ruling on the right of SIA to
seek reimbursement from PAL, as this was the only issue raised by SIA in its third-party complaint against PAL.

The instant appeal is impressed with merit.

The petitioner correctly pointed out that the case of Firestone  squarely applies to the case at bench. In said case, the Court expounded on the nature of a
third-party complaint and the effect of a judgment in favor of the plaintiff against the defendant and in favor of such defendant as third-party plaintiff against,
ultimately, the third-party defendant. Speaking through then Justice and later Chief Justice Claudio Teehankee, the Court stated:

The third-party complaint is, therefore, a procedural device whereby a "third party" who is neither a party nor privy to the act or deed
complained of by the plaintiff, may be brought into the case with leave of court, by the defendant, who acts as third-party plaintiff to enforce
against such third-party defendant a right for contribution, indemnity, subrogation or any other relief, in respect of the plaintiff's claim. The
third-party complaint is actually independent of and separate and distinct from the plaintiff's complaint. . . . When leave to file the third-party
complaint is properly granted, the Court renders in effect two judgments in the same case, one on the plaintiff's complaint and the other on
the third-party complaint. When he finds favorably on both complaints, as in this case, he renders judgment on the principal complaint in
favor of plaintiff against defendant and renders another judgment on the third-party complaint in favor of defendant as third-party plaintiff,
ordering the third-party defendant to reimburse the defendant whatever amount said defendant is ordered to pay plaintiff in the case.
Failure of any of said parties in such a case to appeal the judgment as against him makes such judgment final and executory. By the same
token, an appeal by one party from such judgment does not inure to the benefit of the other party who has not appealed nor can it be
deemed to be an appeal of such other party from the judgment against him.

It must be noted that in the proceedings below, PAL disclaimed any liability to the Rayoses and imputed the alleged tampering to SIA's personnel. On appeal,
however, PAL changed its theory and averred that the spouses Rayos had no valid claim against SIA on the around that the non-renewal of Sancho's contract
with Aramco was his unsatisfactory performance rather than the alleged tampering of his excess baggage ticket. In response to PAL's appeal, SIA argued that
it was improper for PAL to question SIA's liability to the plaintiff, since this was no longer an issue on account of the finality and, in fact, satisfaction of the
judgment.

Surprisingly, the appellate court ignored the Court's pronouncements in Firestone  and declared:

[T]here is nothing in the citation which would suggest that the appellant cannot avail of the defenses which would have been available to
the non-appealing party against the prevailing party which would be beneficial to the appellant. After all, PAL's liability here is premised on
the liability of SIA to plaintiffs-appellees, In its own defense, it should have the right to avail of defenses of SIA against plaintiffs-appellees
which would redound to its benefit. This is especially true here where SIA lost the capability to defend itself on the technicality of failure to
pay docket fee, rather than on the merits of its appeal. To hold otherwise would be to open the door to a possible collusion between the
plaintiff and defendant which would leave the third-party defendant holding the bag.

There is no question that a third-party defendant is allowed to set up in his answer the defenses which the third-party plaintiff (original defendant) has or may
have to the plaintiff's claim. There are, however, special circumstances present in this case which preclude third-party defendant PAL from benefiting from the
said principle.

One of the defenses available to SIA was that the plaintiffs had no cause of action, that is, it had no valid claim against SIA. SIA investigated the matter and
discovered that tampering was, indeed, committed, not by its personnel but by PAL's. This became its defense as well as its main cause of action in the third-
party complaint it filed against PAL. For its part, PAL could have used the defense that the plaintiffs had no valid claim against it or against SIA. This could be
done indirectly by adopting such a defense in its answer to the third-party complaint if only SIA had raised the same in its answer to the main complaint, or
directly by so stating in unequivocal terms in its answer to SIA's complaint that SIA and PAL were both blameless. Yet, PAL opted to deny any liability which it
imputed to SIA's personnel. It was only on appeal — in a complete turn around of theory — that PAL raised the issue of no valid claim by the plaintiff against
SIA. This simply cannot be allowed.

While the third-party defendant; would benefit from a victory by the third-party plaintiff against the plaintiff, this is true only when the third-party plaintiff and
third-party defendant have non-contradictory defenses. Here, the defendant and third-party defendant had no common defense against the plaintiffs'
complaint, and they were even blaming each other for the fiasco.

Fear of collusion between the third-party plaintiff and the plaintiffs aired by the appellate court is misplaced if not totally unfounded. The stand of SIA as against
the plaintiffs' claim was transparent from the beginning. PAL was aware of SIA's defense, and if it was convinced that SIA should have raised the defense of
no valid claim by the plaintiffs, it should have so stated in its answer as one of its defenses, instead of waiting for an adverse judgment and raising it for the first
time on appeal.

The judgment, therefore, as far as the Rayoses and SIA are concerned, has already gained finality. What remains to be resolved, as correctly pointed out by
petitioner, is whether it is entitled to reimbursement from PAL, considering that PAL appealed that part of the decision to the appellate court. This is where the
rule laid down in Firestone  becomes applicable.

The trial court's decision, although adverse to SIA as defendant, made PAL ultimately answerable for the judgment by ordering the latter to reimburse the
former for the entire monetary award. On appeal, PAL tried to exonerate itself by arguing that the Rayoses had no valid claim against SIA. From PAL's
viewpoint, this seemed to be the only way to extricate itself from a mess which the court a quo  ascribed to it. This cannot, however, be allowed because it was
neither raised by SIA in its answer to the main complaint nor by PAL in its answer to the third-party complaint. The prudent thing that PAL should have done
was to state in its answer to the third-party complaint filed by SIA against it everything that it may conceivably interpose by way of its defense, including
specific denials of allegations in the main complaint which implicated it along with SIA.

The appellate court was in error when it opined that SIA's answer inured to the benefit of PAL for the simple reason that the complaint and the third-party
complaint are actually two separate cases involving the same set of facts which is allowed by the court to be resolved in a single proceeding only to avoid a
multiplicity of actions. Such a proceeding obviates the need of trying two cases, receiving the same or similar evidence for both, and enforcing separate
judgments therefor. This situation is not, as claimed by the appellate court, analogous to a case where there are several defendants against whom a complaint
is filed stating a common cause of action, where the answer of some of the defendants inures to the benefit of those who did not file an answer. While such a
complaint speaks of a single suit, a third-party complaint involves an action separate and distinct from, although related to the main complaint. A third-party
defendant who feels aggrieved by some allegations in the main complaint should, aside from answering the third-party complaint, also answer the main
complaint.

We do not, however, agree with the petitioner that PAL is solely liable for the satisfaction of the judgment. While the trial court found, and this has not been
adequately rebutted by PAL, that the proximate cause of the non-renewal of Rayos' employment contract with Aramco was the tampering of his excess
baggage ticket by PAL's personnel, it failed to consider that the immediate cause of such non-renewal was SIA's delayed transmittal of the certification needed
by Rayos to prove his innocence to his employer.

SIA was informed of the anomaly in December 1980 but only issued the certification four months later or, more specifically, on April 8, 1981, a few days before
the expiration of Rayos' contract. Surely, the investigation conducted by SIA could not have lasted for four months as the information needed by the Rayoses
could easily be verified by comparing the duplicate excess baggage tickets which they and their handling agent, PAL, kept the record purposes. The fact that
the Rayos spouses had to be assisted by counsel who threatened to file a damage suit against SIA if the certification they urgently needed was not
immediately issued only strengthens the suspicion that SIA was not dealing with them in utmost good faith. The effect of SIA's mishandling of Beatriz Rayos'
request became instantly apparent when her husband's contract was not renewed in spite of his performance which was constantly "highly regarded" by the
manager of Aramco's equipment services department.

Former Chief Justice and noted remedial law expert Manuel V. Moran opined that "in an action upon a tort, the defendant may file a third-party complaint
against a joint tort-feasor for contribution."2

The non-renewal of Rayos employment contract was the natural and probable consequence of the separate tortious acts of SIA and PAL. Under mandate of
Article 2176 of the Civil Code, Rayos is entitled to be compensated for such damages. Inasmuch as the responsibility of two or more persons, or tort-feasors,
liable for a quasi-delict is joint and several,3 and the sharing as between such solidary debtors is pro-rata, 4 it is but logical, fair, and equitable to require PAL to
contribute to the amount awarded to the Rayos spouses and already paid by SIA, instead of totally indemnifying the latter.

WHEREFORE, the decision of the respondent Court of Appeals in CA-G.R. CV No. 20488 dated September 21, 1992, is hereby REVERSED and a new one is
entered ordering private respondent Philippine Airlines to pay, by way of contribution, petitioner Singapore Airlines one-half (1/2) of the amount it actually paid
to Sancho and Beatriz Rayos in satisfaction of the judgment in Civil Case No. 142252, dated September 9, 1988.

SO ORDERED.

G.R. No. 189532               June 11, 2014

VIRGINIA S. DIO and H.S. EQUITIES, LTD., Petitioners, 

vs.
SUBIC BAY MARINE EXPLORATORIUM, INC., represented by its Chairman and Chief Executive Officer, TIMOTHY DESMOND, Respondents.

DECISION

PEREZ, J.:

This is a Petition for Review on Certiorari1 pursuant to Rule 45 of the Revised Rules of Court, assailing the 3 April 2009 Order 2 of the Regional Trial Court
(RTC) of Balanga City, Bataan, on pure question of law. In its assailed Order, the RTC denied the motion filed by petitioners to set their counterclaims for
hearing on the ground that the main case was already dismissed with finality by the Court of Appeals in CA-G.R. CV No. 87117.

In an Order3 dated 26 August 2009, the RTC refused to reconsider its earlier disposition.

The Facts

Petitioner H.S. Equities, Ltd., (HSE) is a foreign corporation duly organized and existing under the laws of the British Virgin Islands, with registered address at
Akara Building, 24 De Castro Street, Wickhams Cay I, Road Town, Tortola, British Virgin Islands. It entered into an isolated transaction subject of the instant
case. It is represented in this action by petitioner Virginia S. Dio (Dio).

Respondent Subic Bay Marine Exploratorium, Inc. (SBME) is a domestic corporation, duly organized and existing under the Philippine laws and is represented
in this action by its Chief Executive Officer, respondent Timothy Desmond (Desmond).

In 2002, SBME decided to expand its business by operating a beach resort inside the property administered by the Subic Bay Metropolitan Authority (SBMA).
For the business venture to take off, SBME needed to solicit investors who are willing to infuse funds for the construction and operation of the beach resort
project. HSE (formerly known as Westdale Assets Limited) thru its authorized director, Dio, agreed to invest the amount of US$2,500,000.00 with SBME by
purchasing 750,000 common shares with a par value of ₱100 per share from the increase in its authorized capital stock. The agreement was reduced into
writing wherein HSE, in order to protect its interest in the company, was afforded minority protection rights such as the right to appoint a member of the board
of directors and the right to veto certain board resolutions. After HSE initially paid US$200,000.00 for its subscription, it refused to further lay out money for the
expansion project of the SBME due to the alleged mismanagement in the handling of corporate funds.

Consequently, SBME initiated an intra-corporate dispute before the RTC of Balanga City, Bataan against petitioners HSE and Dio. 4 Before petitioners could file
their answer to the complaint, respondents impleaded its Corporate Secretary, Atty. Winston Ginez, as additional defendant. In their Amended
Complaint5 docketed as Civil Case No. 7572, SBME essentially alleged that HSE unjustly refused to pay the balance of its unpaid subscription effectively
jeopardizing the company’s expansion project. Apart from their refusal to honor their obligation under the subscription contract, it was further alleged by SBME
that Dio tried to dissuade local investors and financial institutions from putting in capital to SBME by imputing defamatory acts against Desmond. To protect the
interest of the corporation and its stockholders, SBME sought that petitioners be enjoined from committing acts inimical to the interest of the company.

To refute the claims of respondents, petitioners maintained in their Answer with Compulsory Counterclaim 6 that it would be highly preposterous for them to
dissuade investors and banks from putting in money to SBME considering that HSE and Dio are stakeholders of the company with substantial investments
therein. In turn, petitioners countered that their reputation and good name in the business community were tarnished as a result of the filing of the instant
complaint, and thus prayed that they be indemnified in the amount of US$2,000,000.00 as moral damages. Constrained to litigate to protect their rights,
petitioners asked that they be indemnified in the amount of₱1,000,000.00 in litigation expenses. Petitioners likewise sought to recover their investment of
US$1,500,000.00 since they were purportedly inveigled by Desmond into putting in money to SBME under the pretext that they will be accorded with minority
protection rights. It was alleged that after the filing of the instant complaint, Desmond, in collusion with other Board of Directors of SBME, managed to unjustly
deny HSE and Dio their rights under the Subscription Agreement. To curb similar socially abhorrent actions, petitioners prayed that SBME and its Board of
Directors, namely, Desmond, John Corcoran, Gaile Laule and Gregorio Magdaraog, be jointly and severally held liable to pay exemplary damages in the
amount of US$2,000,000.00.

After petitioners filed their Answer with Compulsory Counterclaim, the RTC, instead of setting the case for pre-trial, issued an Order 7 dated 15 August 2005
motu proprio dismissing Civil Case No. 7572. The dismissal was grounded on the defective certificate of non-forum shopping which was signed by Desmond
without specific authority from the Board of Directors of SBME.

Armed with a board resolution specifically authorizing Desmond to sign the certificate of non-forum shopping on behalf of SBME, respondents moved that Civil
Case No. 7572 be reinstated and further proceedings thereon be conducted. A copy of such authority was attached by respondents to their Motion for
Reconsideration.

For lack of merit, RTC denied respondents’ motion and affirmed the dismissal in an Order 8 dated 22 September 2005. In refusing to reinstate respondents’
complaint, the court a quo ruled that the belated submission of a board resolution evidencing Desmond’s authority to bind the corporation did not cure the
initial defect in the complaint and declared that strict compliance with procedural rules is enjoined for the orderly administration of justice.

Aggrieved by the lower court’s refusal to reinstate their complaint, respondents elevated the matter before the Court of Appeals assailing the propriety of the
15 August 2005 and 22 September 2005 RTC Orders via Petition for Review which was docketed as CA-G.R. CV No. 87117.

For failure of the respondents to file their appellants’ brief, the appellate court proceeded to dismiss CA-G.R.CV No. 87117 and considered the case closed
and terminated in its Resolution9 dated 2 January 2007.

After respondents failed to seasonably move for the reconsideration of the aforementioned Resolution, the dismissal of CA-G.R. CV No. 87117 became final
and executory, as shown in the Entry of Judgment10 dated 3 May 2007.

The procedural incidents before the appellate court having been resolved with finality, petitioners went back to the RTC to file a motion to set their
counterclaims for hearing11 which was opposed by the respondents on the ground that the filing of the compulsory counterclaims was not accompanied by
payment of the required docket fees precluding the court from acquiring jurisdiction over the case. 12

Acting on the motions filed by the opposing parties, the RTC, in an Order 13 dated 3 April 2009 granted the motion of the respondents, thereby directing the
dismissal of petitioners’ counterclaims but not on the ground of non-payment of docket fees. In disallowing petitioners’ counterclaims to proceed independently
of respondents’ complaint, the lower court pointed out that in view of the dismissal of the main case, which has already been affirmed with finality by the
appellate court, it has already lost its jurisdiction to act on petitioners’ counterclaim, the compulsory counterclaim being merely ancillary to the principal
controversy.

In an Order14 dated 26 August 2009, the RTC refused to reconsider its earlier disposition. Petitioners filed this instant Petition for Review on Certiorari 15 on
pure question of law seeking the reversal of the 3 April 2009 and 26 August 2009 RTC Orders on the ground that:

THE TRIAL COURT COMMITTED AN ERROR OF LAW WHEN IT REFUSED TO SET [PETITIONERS’] COUNTERCLAIMS FOR HEARING ON THE
GROUND THATTHE CASE WAS DEEMED "CLOSED AND TERMINATED" BYTHE COURT OF APPEALS AFTER THE LATTER DISMISSED
RESPONDENTS’ APPEAL BECAUSE OF THEIR FAILURE TOFILE THEIR APPELLANTS’ BRIEF. 16

The Court’s Ruling

Petitioners argue that despite the dismissal of the main case, the counterclaim may still remain for independent adjudication under Section 6, Rule 16 of the
Revised Rules of Court.17 Petitioners pointed out that while the dismissal of respondents’ complaint is a confirmation of Desmonds’ lack of legal personality to
file the case, this does not, however, mean that they also do not have the qualification to pursue their counterclaim. To fault petitioners for the fatal infirmity in
the respondents’ complaint would not only work injustice to the former but would result to an absurd situation where the fate of their counterclaims is placed
entirely in the hands of the respondents.

For their part, respondents posit that, in directly assailing the adverse RTC Orders before the Court, petitioners erroneously availed themselves of an
erroneous remedy arguing that this petition should have been initially filed with the appellate court. By seeking relief directly from the Court, petitioners ignored
the judicial hierarchy warranting the peremptory dismissal of their petition. Unless special and important reasons were clearly and specifically set out in the
petition, and in this case it was not, a direct invocation of this Court’s original jurisdiction may not be allowed.

The established policy of strict observance of the judicial hierarchy of courts, as a rule, requires that recourse must first be made to the lower ranked court
exercising concurrent jurisdiction with a higher court. A regard for judicial hierarchy clearly indicates that petitions for the issuance of extraordinary writs
against first level courts should be filed in the RTC and those against the latter should be filed in the Court of Appeals. The rule is not iron-clad, however, as it
admits of certain exceptions.18

Thus, a strict application of the rule is unnecessary when cases brought before the appellate courts do not involve factual but purely legal questions. 19 In fact,
Rule 41, Section 2(c)20 of the Revised Rules of Court provides that a decision or order of the RTC may as it was done in the instant case, be appealed to the
Supreme Court by petition for review on certiorari under Rule 45, provided that such petition raises only questions of law.

A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does
not call for the examination of the probative value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact exists when the
doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of
the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability
of the whole situation.21 Thus, the test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same;
rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law;
otherwise it is a question of fact.22
Petitioners here raise the solitary issue of the propriety of the dismissal of their counterclaim on the basis of the reasoning of the lower court that the
counterclaim derives its jurisdictional support from the complaint which has already been dismissed. Petitioners maintain that the court a quo erred in arriving
at the legal conclusion that the counterclaim can no longer stand for independent adjudication after the main case was already dismissed with finality. In order
to resolve this issue, the Court need only to look into the pleadings, depositions, admissions, and affidavits submitted by the respective parties without going
into the truth or falsity of such documents. Consequently, the petitioners’ remedy for assailing the correctness of the dismissal of their counterclaims, involving
as it does a pure question of law, indeed lies with this Court. Now to the issue of the propriety of the dismissal of the counterclaim.

The dismissal of the complaint resulted from respondents’ failure to append to the complaint a copy of the board resolution authorizing Desmond to sign the
certificate of non-forum shopping on behalf of SBME. The subsequent dismissal of the counterclaim, in turn, erroneously proceeded from the ratio that since
the main action has already been dismissed with finality by the appellate court, the lower court has lost its jurisdiction to grant any relief under the
counterclaim.

In the significant case of Pinga v. Heirs of German Santiago, 23 this Court speaking through Justice Dante Tinga, resolved the nagging question as to whether
or not the dismissal of the complaint carries with it the dismissal of the counterclaim. Putting to rest the remaining confusion occasioned by Metals Engineering
Resources Corp. v. Court of Appeals24 and BA Finance Corporation v. Co,25 the Court articulated that, in light of the effectivity of the 1997 Rules of Civil
Procedure, the correct and prevailing doctrine is as follows:

To be certain, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended Rule17, those previous jural doctrines that were
inconsistent with the new rules incorporated in the 1997 Rules of Civil Procedure were implicitly abandoned insofar as incidents arising after the effectivity of
the new procedural rules on 1 July 1997. BA Finance, or even the doctrine that a counterclaim may be necessarily dismissed along with the complaint, clearly
conflicts with the 1997 Rules of Civil Procedure. The abandonment of BA Finance as doctrine extends as far back as 1997, when the Court adopted the new
Rules of Civil Procedure. If, since then, such abandonment has not been affirmed in jurisprudence, it is only because no proper case has arisen that would
warrant express confirmation of the new rule. That opportunity is here and now, and we thus rule that the dismissal of a complaint due to fault of the plaintiff is
without prejudice to the right of the defendant to prosecute any pending counterclaims of whatever nature in the same or separate action. We confirm that BA
Finance and all previous rulings of the Court that are inconsistent with this present holding are now abandoned.

xxxx

Thus, the present rule embodied in Sections 2 and 3 of Rule 17 ordains a more equitable disposition of the counterclaims by ensuring that any judgment
thereon is based on the merit of the counterclaim itself and not on the survival of the main complaint. Certainly, if the counterclaim is palpably without merit or
suffers jurisdictional flaws which stand independent of the complaint, the trial court is not precluded from dismissing it under the amended rules, provided that
the judgment or order dismissing the counterclaim is premised on those defects. At the same time, if the counterclaim is justified, the amended rules now
unequivocally protect such counterclaim from peremptory dismissal by reason of the dismissal of the complaint. 26 Reviewing the vacated position, in Metals
Engineering Resources Corp., severance of causes of action was not be permitted in order to prevent circuity of suits and to avert the possibility of inconsistent
rulings based on the same set of facts, viz:

For all intents and purposes, such proposition runs counter to the nature of a compulsory counterclaim in that it cannot remain pending for independent
adjudication by the court. This is because a compulsory counterclaim is auxiliary to the proceeding in the original suit and derives its jurisdictional support
therefrom, inasmuch as it arises out of or is necessarily connected with the transaction or occurrence that is the subject matter of the complaint. It follows that
if the court does not have jurisdiction to entertain the main action of the case and dismisses the same, then the compulsory counterclaim, being ancillary to the
principal controversy, must likewise be dismissed since no jurisdiction remained for any grant of relief under the counterclaim.

The aforementioned doctrine is in consonance with the primary objective of a counterclaim which is to avoid and prevent circuity of action by allowing the
entire controversy between the parties to be litigated and finally determined in one action, wherever this can be done with entire justice to all parties before the
court. The philosophy of the rule is to discourage multiplicity of suits. 1âwphi1 It will be observed that the order of the trial court allowing herein private
respondent to proceed with the presentation of his evidence in support of the latter's counterclaim is repugnant to the very purpose and intent of the rule on
counterclaims.27

In BA Finance Corporation, we likewise refused to entertain the compulsory counterclaim after the trial court lost its jurisdiction in the main case, thus:

The rule is that a compulsory counterclaim cannot "remain pending for independent adjudication by the court." This is because a compulsory counterclaim is
auxiliary to the proceeding in the original suit and merely derives its jurisdictional support therefrom.

Thus, it necessarily follows that if the trial court no longer possesses jurisdiction to entertain the main action of the case, as when it dismisses the same, then
the compulsory counterclaim being ancillary to the principal controversy, must likewise be similarly dismissed since no jurisdiction remains for the grant of any
relief under the counterclaim.28

As the rule now stands, the nature of the counterclaim notwithstanding, the dismissal of the complaint does not ipso jure result in the dismissal of the
counterclaim, and the latter may remain for independent adjudication of the court, provided that such counterclaim, states a sufficient cause of action and does
not labor under any infirmity that may warrant its outright dismissal. Stated differently, the jurisdiction of the court over the counterclaim that appears to be valid
on its face, including the grant of any relief thereunder, is not abated by the dismissal of the main action. The court’s authority to proceed with the disposition of
the counterclaim independent of the main action is premised on the fact that the counterclaim, on its own, raises a novel question which may be aptly
adjudicated by the court based on its own merits and evidentiary support.

In Perkin Elmer Singapore Pte Ltd. v. Dakila Trading Corporartion, 29 a case on all fours with the present one, we expounded our ruling in Pinga and pointed out
that the dismissal of the counterclaim due to the fault of the plaintiff is without prejudice to the right of the defendant to prosecute any pending counterclaims of
whatever nature in the same or separate action, thus: Based on the aforequoted ruling of the Court, if the dismissal of the complaint somehow eliminates the
cause of the counterclaim, then the counterclaim cannot survive. Conversely, if the counterclaim itself states sufficient cause of action then it should stand
independently of and survive the dismissal of the complaint. Now, having been directly confronted with the problem of whether the compulsory counterclaim by
reason of the unfounded suit may prosper even if the main complaint had been dismissed, we rule in the affirmative.

It bears to emphasize that petitioner's counterclaim against respondent is for damages and attorney's fees arising from the unfounded suit. While respondent's
Complaint against petitioner is already dismissed, petitioner may have very well already incurred damages and litigation expenses such as attorney's fees
since it was forced to engage legal representation in the Philippines to protect its rights and to assert lack of jurisdiction of the courts over its person by virtue
of the improper service of summons upon it. Hence, the cause of action of petitioner's counterclaim is not eliminated by the mere dismissal of respondent's
complaint.30 (Emphasis theirs).

Once more, we allow the counterclaim of the petitioners to proceed independently of the complaint of the respondents.

WHEREFORE, premises considered, the petition is GRANTED. The assailed R TC Orders dated 3 April 2009 and 26 August 2009 are hereby REVERSED
and SET ASIDE. The case is REMANDED to the Regional Trial Court of Balanga City, Bataan for further proceedings, on the matter of petitioners Virginia S.
Dio and H.S. Equities, Ltd. 's counterclaims. No pronouncement as to costs.

SO ORDERED.

G.R. No. 207376               August 6, 2014

AIDA PADILLA, Petitioner, 
vs.
GLOBE ASIATIQUE REALTY HOLDINGS CORPORATION, FILMAL REALTY CORPORATION, DELFIN S. LEE and DEXTER L. LEE, Respondents.

DECISION

VILLARAMA, JR., J.:

Assailed in this petition for review under Rule 45 are the Orders 1 dated November 12, 2012 denying the motion to set the counterclaim for pre-trial and May 8,
2013 denying petitioner's motion for reconsideration, issued by the Regional Trial Court (RTC) of Pasig City, Branch 155 in Civil Case No. 73132.

Factual Antecedents

From the years 2005 to 2008, Philippine National Bank (PNB) entered into several Contracts to Sell (CTS) Facility Agreements 2 with respondents Globe
Asiatique Realty Holdings Corporation (Globe Asiatique) and Filmal Realty Corporation (Filmal) represented by Delfin S. Lee and Dexter L. Lee, President and
Vice-President, respectively, of the two corporations. PNB thereby agreed to make available toGlobe Asiatique and Filmal CTS Facility in the amount not
exceeding Two Hundred Million Pesos (₱200,000,000.00) to finance the purchase of certain Accounts Receivables or the in-house installment receivables of
respondents arising from the sale of subdivision houses in their real estate/housing projects as evidenced by contracts to sell. These availments werelater
increased to a total amount of One Billion Two Hundred Million Pesos (₱1,200,000,000.00).3

Pursuant to and as a condition for the CTS Facility availments, respondents executed in favor of PNB several Deeds of Assignment 4 covering accounts
receivables in the aggregate amount of One Billion One Hundred Ninety-Five Million Nine Hundred Twenty-Six Thousand Three Hundred Ninety Pesos and
Seventy-two centavos (₱1,195,926,390.72). In the said instruments, respondents acknowledged the total amount of One Billion Three Hundred Ninety
FiveMillion Six Hundred Sixty-Five Thousand Five Hundred Sixty-FourPesos and Sixty-nine centavos (₱1,395,665,564.69) released to themby PNB in
consideration of the aforesaid accounts receivables. 5

Sometime in the first quarter of 2010, respondents defaulted in the payment of their outstanding balance and delivery to PNB of transfer certificates of title
corresponding to the assigned accounts receivables, for which PNB declared them in default under the CTS Facility Agreements. Subsequently, respondents
made partial payments and made proposals for paying in full its obligation to PNB as shown in the exchange of correspondence between respondents and
PNB.

In a letter dated August 5, 2010,6 PNB made a formal and final demand upon respondents to pay/settle the total amount of ₱974,377,159.10 representing their
outstanding obligation.In the course of credit monitoring and verification, PNB claimed it discovered 231 out of 240 Contracts to Sell to have either inexistent
addresses ofbuyers or the names of the buyers are non-existent or both.

Thereafter, PNB instituted Civil Case No. R-PSY-10-04228-CV (Philippine National Bank v. Globe Asiatique Realty Holdings Corporation, Filmal Realty
Corporation, Delfin S. Lee and Dexter L. Lee) for recovery of sum of money and damages with prayerfor writ of preliminary attachment before the RTC of
Pasay City.

In their complaint, PNB alleged in detail the fraudulent acts and misrepresentations committed by respondents in obtaining PNB’s conformity to the CTS
Facility Agreements and the release of various sums to respondents in the total amountof ₱974,377,159.10. PNB accused respondents of falsely representing
that they have valid and subsisting contracts to sell, which evidently showed they had no intention to pay their loan obligations. The Verification and
Certification of Non-Forum Shopping attached to the complaint was signed byPNB’s Senior Vice-president of the Remedial Management Group, Aida Padilla,
who likewise executed an "Affidavit in Support of the Application for the Issuance of the Writ of Preliminary Attachment."

Proceedings in the Pasay

City RTC (Civil Case No.
R-PSY-10-04228-CV)

On August 25, 2010, the Pasay City RTC issued an Order 7 granting PNB’s application for issuance of preliminary attachment after finding that defendants
Globe Asiatique and Filmal "through the active participation or connivance/conspiracy of defendants Delfin and Dexter Lee from the revealing evidence
presented by plaintiff are guilty of fraud in contracting their outstanding loan applications to plaintiff Philippine National Bank (PNB)." 8 The writ of preliminary
attachment was accordingly issued on August 27, 2010 after PNB complied withthe posting of attachment bond as ordered by the court. 9

Defendants Delfin Lee and DexterLee filed their Answer with Counterclaim with motion to dismiss,arguing that PNB has no cause of action against them as
there is nothing in the CTS Facility Agreements that suggest they are personally liable or serve as guarantors for Globe Asiatique and Filmal, and that they
were just sued as signatories of the CTS Facility Agreements. They likewise filed a motion to discharge preliminary attachment. 10

Defendants Globe Asiatique and Filmalalso filed their Answer with Counterclaim denying PNB’s allegationsof fraud and misrepresentation particularly after
PNB had accepted payments from the corporations. In their motion to discharge preliminary attachment, Globe Asiatique and Filmal asserted that the
allegations of fraud in the complaint are without basis and no proof was presented by plaintiff on the existence of preconceived fraud and lack of intention to
pay their obligations, citing their timely payments made to PNB. They further assailed the affidavit executed by Aida Padilla who they claimed has no personal
knowledge of the subject transactions and there being no allegation of threat or possibility that defendant corporations will dispose oftheir properties in fraud of
their creditors.11

In its Order12 dated April 29, 2011, the Pasay City RTC denied defendants’ motion to dismiss, motions to discharge preliminary attachment and to expunge or
suspend proceedings, as well as PNB’s motion to expunge.

In succession, the parties in Civil Case No. R-PSY-10-04228-CV filed the following motions:

1) Defendants’ Motion for Reconsideration of the Order dated April 29, 2011 filed on May 27, 2011;

2) Plaintiff’s Motion to Set Case for Pre-trial Conference filed on June 8, 2011;

3) Plaintiff’s Motion for Summary Judgment filed on June 28, 2011;

4) Defendants’ Motion for Leave to Admit Attached Amended Answer with Compulsory Counterclaim filed on July 12, 2011;

5) Defendants’ Omnibus Motion (a) to discharge the writ of attachment on the ground of newly discovered evidence; (b) set preliminary hearing on
affirmative defenses pleaded in the amended answer; (c) issue preliminary attachment against plaintiff on account of fraud in incurring the obligation
as alleged in the amended answer; and (d) render partial summary judgment on the compulsory counterclaim, filed on July 26, 2011;

6) Defendants’ Motion for Reconsideration of the Order dated July 29, 2011, with Motion to Continue with the Proceedings Involving Defendants’
Omnibus Motion, filed on August 31, 2011; 7) Defendants’ Motion to Set for Hearing their earlier motion to discharge the writ of attachment filed on
January 24, 2012; and

8) Plaintiff’s Motion to Expunge defendants’ Reply (on defendants’ motion to set hearing) filed on April 30, 2012.

Meanwhile, and before the Pasay City RTC could act upon the foregoing motions, defendants Globe Asiatique, Filmal, Delfin S. Lee and Dexter L. Lee filed on
August 10, 2011 a complaint13 for Damages in the RTC of Pasig City, Branch 155 docketed as Civil Case No. 73132.

On May 18, 2012, the Pasay City RTC issued an Order14 resolving the pending motions, as follows:

WHEREFORE, the motion for reconsideration of the Order dated 27 May 2011 is denied insofar as the prayer to reconsider denial of the motion to dismiss.
However, the prayer to expunge the Manifestation filed on 26 November 2010 is granted thus, the Manifestation is expunged.

The motion for leave and to admit amended answer is denied. The motion for reconsideration of the Order dated 29 July 2011 is likewise denied. The other
prayers in the omnibus motion to set preliminary hearing of affirmative defenses in the amended answer, issuance of preliminary attachment based thereon
and for partial summary judgment on the compulsory counterclaims in the amended answer are denied. Plaintiff’s motion to expunge defendants’ reply is
likewise denied.

Hearing on plaintiff’s motion for summary judgment is set on 19 June 2012 at 8:30 a.m., while hearing on defendants’ motion to discharge the writ of
preliminary attachmentis set on 26 June 2012 at 8:30 a.m.

Action on plaintiff’s motion to set the case for pre-trial is deferred until after resolution of the motion for summary judgment.

SO ORDERED.15

Pasig City RTC Case

(Civil Case No. 73132)

In their Complaint against Judge Pedro De Leon Gutierrez and Aida Padilla (both sued in their personal capacity), respondents claimed that Globe Asiatique
and Filmal are well-known and successful real estate developers whose projects were "being continuously supported by various banks and other financial
institutions prior to the malicious and devastating unfounded civil action" filed by AidaPadilla (petitioner) which wrought havoc to their businesses and lives. As
to the CTS Facility Agreements with PNB, respondents alleged that these were already novated by the parties who agreed upon a term loan starting May 31,
2010 and to expire on April 30, 2012. But despite her knowledge of such novation and that the obligation was not yet due and demandable, petitioner with
malice and evident bad faith still executed a "perjured" Affidavit in support of the application for writ of preliminary attachment before the Pasay City RTC.
Respondents likewise sought to hold Judge Gutierrez personally liable for issuing the writ of preliminary attachment in favor of PNB notwithstanding that the
obligation subject of PNB’s complaint was sufficiently secured by the value of realproperties sold to it by virtue of the CTS Facility Agreements and deeds
ofassignment of accounts receivables.

They further contended that Judge Gutierrez blindly approved the attachment bond offered by PNB’s sister company, PNB General Insurers Company, Inc.
despite the fact that from its submitted documents, said insurer’s authorized capital stock isonly ₱400 million while its paid-up capital is only ₱312.6 million,
which is way below the ₱974,377,159.10 attachment bond it issued.

Respondents thus prayed for a judgment ordering petitioner and Judge Gutierrez to pay moral damages, exemplary damages, litigation expenses, attorney’s
fees and cost of suit.

Judge Gutierrez moved to dismiss16 the complaint against him on the following grounds: (1) respondents haveno cause of action against him; and (2) the Pasig
City court has no jurisdiction over the case and his person, movant being of co-equal and concurrent jurisdiction.

Petitioner filed her Answer With Compulsory Counterclaims, 17 praying for the dismissal of respondents’ complaint on the following grounds: (1) submission of a
false certification of non-forum shopping by respondents and their blatant commission of willful, deliberate and contumacious forum shopping (respondents
failed to disclose a criminal complaint entitled "Tbram Cuyugan v. Aida Padilla and Members of the Board of Directors of PNB", docketed as I.S. No. XV-13-
INV-11-H-01208 pending before the office of the CityProsecutor of Pasay City); (2) litis pendentia; (3) respondents’ failure to attach the alleged actionable
document, i.e.the supposed "new term loan", inviolation of Section 7, Rule 8 of the Rules of Court; (4) failure to state a cause of action against petitioner; and
(5) petitioner cannot be held personally liable for her official acts done for and in behalf of PNB.

On January 5, 2012, petitioner filed a motion for preliminary hearing on affirmative defenses, contending that respondents are parroting the very same
arguments raised and relying on the same evidence they presented before the Pasay City RTC to establish the alleged novation and purported insufficiency of
the attachment bond,which issues are still pending in the said court. It was thus stressed that respondents are evidently guilty of forum shopping. 18

Respondents filed their Comment/Opposition,19 arguing that there is nothing in their complaint that would slightly suggest they are asking the Pasig City RTC
to issue any injunction or otherwise issue an order setting aside the writ of preliminary attachmentissued by the Pasay City RTC, and neither did they ask for a
ruling on whether said writ is illegal or whether Judge Gutierrez committed a grave abuse of discretion.They asserted that what they seek from the Pasig City
RTC is to allow them to recover damages from Judge De Leon for his tortious action in approving PNB’s attachment bond. They also insisted that forum
shopping and litis pendentiaare absent in this case, contrary to petitioner’s claims. Respondents likewise opposed 20 the motion to dismiss filed by Judge
Gutierrez, citing this Court’s ruling in J. King & Sons Company, Inc. v. JudgeAgapito L. Hontanosas, Jr. 21 in support of their position that the separate complaint
before another forum against the judge for his actionable wrong in a pending case before him can proceed independently without necessarily interfering with
the court’s jurisdiction, as what happened in the said case where the judge was merely penalized for gross misconduct and gross ignorance of the law without
actually invalidating the judge’s order approving the counter-bond without reviewing the documents presented.

In her Reply,22 petitioner reiterated her previous arguments and additionally contended that in any event, there is no basis for respondents’ claim for damages
arising from the issuance of the writ of preliminary attachment before the Pasay City RTC considering that PNBGEN Bond No. SU-JC14-HO-10-0000001-00 is
valid and sufficient to secure and answer for whatever damages respondents may have suffered by reason of such issuance should it be finally decided that
PNB was not entitled to the said bond.

On April 2, 2012, the RTC of Pasig City issued an Order 23 dismissing Civil Case No. 73132 for lack of jurisdiction.

On May 7, 2012, petitioner filed a Motion to Set Counterclaims for Pre-Trial Conference. 24

On October 22, 2012, the Pasig CityRTC denied respondents’ motion for reconsideration of the April 2, 2012 Order dismissing their complaint. 25 Respondents
filed a Notice of Appeal26 under Section 1(a), Rule 41 of the Rules of Court.

On November 12, 2012, the Pasig City RTC issued the first questioned Order, which reads:

xxxx

Records show that this Court, through then Acting Presiding Judge Amorfina Cerrado-Cezar, issued an Order dated April 2, 2012, dismissing the case on the
ground that issues involved in this case already impinge upon the validity of the Order dated August 25, 2010 and Writ of Attachment dated August 27, 2010
issued by the Regional Trial Court, Branch 119, Pasay City, a court of concurrent and coordinate jurisdiction, in Civil Case No. R-PSY-10-04228 entitled
"Philippine National Bank vs. Globe Asiatique Realty Holdings Corp. et al." The ruling in said Order dated April 2, 2012, was affirmed by this Court per its
Order dated October 22, 2012, whereby it reiterated that acting on the plaintiffs’ Complaint is a brazen violation of the principle of judicial stability, which
essentially states that the judgment or order of a court of competent jurisdiction may not be interfered with by any court of concurrent jurisdiction for the simple
reason that the power to open, modify or vacate the said order is not only possessed but is restricted to the court in which the judgment or order is rendered or
issued. (Cojuangco vs. Villegas, 184 SCRA 374)

The foregoing principles are equally applicable to the counterclaims of Aida Padilla. Indeed, to hear the counterclaims of defendant Aida Padilla will open the
door, so to speak, for the plaintiffs to interpose as ostensibledefenses its claims regarding the alleged illegality of the aforesaid orders and writ of attachment
issued by the RTC of Pasay City. In effect this Court will be forced to dwell upon issues involving the pending civil case in the RTC Branch 199, Pasay City,
thereby interfering, albeit indirectly, with said issues.This is precisely the very evil which the Court sought to avoid when it dismissed the plaintiffs’ complaint.
Therefore, upholding once more the principle of judicial stability, this Court is impelled to refuse to hear the counterclaims of defendant Padilla.

WHEREFORE, premises considered, the instant Motion filed by defendant Aida Padilla is DENIED without prejudice to the re-filing of defendant Aida Padilla’s
causes of action against herein plaintiffs after final resolution of Civil Case No. R-PSY-10-04228 entitled "Philippine National Bank vs. Globe Asiatique Realty
Holdings Corp, et al."

SO ORDERED. (Emphasis supplied.)

Petitioner’s motion for reconsideration was likewise denied under the second assailed Order 27 dated May 8, 2013, as follows:

xxxx

Defendant Padilla argues that this Court has jurisdictional competence and authority to resolve her counterclaims notwithstanding the dismissal of the
Complaint dated August 10, 2011 for violation of the principle of judicial stability. The resolution of her compulsory counterclaims will not require this Court to
look into or pass upon the validity of the acts of the Regional Trial Court of Pasay City, Branch 119 in issuing the Writ of Attachment dated August 27, 2010.
Defendant Padilla’s counterclaims arose directly from the malicious filing by the plaintiffs of the Complaint and are compulsory counterclaims which must be
raised and resolved in the same action as the Complaint.

The Court remains unpersuaded of the propriety of proceeding to hear defendant Padilla’s counterclaims.

As movant herself stated, the grant of her counterclaim calls for the determination of the issue of whether or not herein plaintiffs had maliciously filed the
above-entitled Complaint against defendants. Necessarily, the Court in threshing out such issue would be constrained to rule on whether the plaintiffs filed
their complaint with a sinister design knowing fully wellthat their cause of action was baseless. Thus, the Court would have to pass upon the veracity or
genuineness of plaintiffs’ claims thatthey were unjustly injured by the orders and processes issued by RTC Branch 119, Pasay City, in Civil Case No. R-PSY-
10-04228entitled "Philippine National Bank vs. Globe Asiatique Realty Holdings Corp. et al." Hence, whatever ruling this Court may arrive at on said issues
would inevitably impinge upon matters already pending before the RTC Branch 119, Pasay City.
Once more, under the principle of juridical stability, the Court is constrained to refuse to hear defendant Padilla’s counterclaims. Verily, this Court cannot allow
itself to interfere – either directly, as desired by plaintiff, or indirectly, as defendant Padilla would have it – with the acts of a co-equal court.

WHEREFORE, premises considered, the instant Motion for Reconsideration filed by defendant Aida Padilla is hereby DENIED without prejudice to the re-filing
of defendant Aida Padilla’s causes of action against herein plaintiffs after resolution of Civil Case No. R-PSY-10-04228 entitled "Philippine National Bank vs.
Globe Asiatique Realty Holdings Corp. et al."

SO ORDERED. (Emphasis supplied.)

The Petition

Petitioner came directly to this Court raising the primordial legal issue of whether or not a court can take cognizance of a compulsory counterclaim despite the
fact that the corresponding complaint was dismissed for lack of jurisdiction.

The present petition was de-consolidated from seven other petitions involving respondents and their transactions with Home Development Mutual Fund, as
well as the pending criminal complaints arising therefrom. 28

The Court’s Ruling

Before we resolve the legal question presented, we first address the issue of propriety of petitioner’s resort to Rule 45.

Respondents are incorrect in arguing that petitioner adopted the wrong mode of appeal, stating that the remedy from the dismissal of her counterclaims
without prejudice is a petition for certiorari under Rule 65 and not an appeal under Rule 45.

There is no dispute with respect to the fact that when an appeal raises only pure questions of law, this Court has jurisdiction to entertain the same. 29 Section 1,
Rule 45 of the 1997 Rules of Civil Procedure, as amended, provides:

SECTION 1. Filing of petition with Supreme Court. – A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of
Appeals,the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for
review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.

In Republic v. Sunvar Realty Development Corporation, 30 this Court held:

Respondent Sunvar argued that petitioners’ resort to a Rule 45 Petition for Review on Certioraribefore this Court is an improper mode of review of the assailed
RTC Decision. Allegedly, petitioners should have availed themselves of a Rule 65 Petition instead, since the RTC Decision was an order of dismissal of the
Complaint, from which no appeal can be taken except by a certiorari petition.

The Court is unconvinced of the arguments of respondent Sunvar and holds that the resortby petitioners to the present Rule 45 Petition is perfectly within the
bounds of our procedural rules.

As respondent Sunvar explained, noappeal may be taken from an order of the RTC dismissing an action without prejudice, but the aggrieved party may file a
certiorari petition under Rule 65. Nevertheless, the Rules do not prohibit any of the parties fromfiling a Rule 45 Petition with this Court, in case only questions
of law are raised or involved. This latter situation was one that petitioners found themselves in when they filed the instant Petition to raise only questions of
law. In Republic v. Malabanan, the Court clarified the three modes of appeal from decisions of the RTC, to wit: (1) by ordinary appeal or appeal by writ of error
under Rule 41, whereby judgment was rendered in a civil or criminal action by the RTC in the exercise of its original jurisdiction; (2) by a petition for review
under Rule 42, whereby judgment was rendered by the RTC in the exercise of its appellate jurisdiction; and (3) by a petition for review on certioraribefore the
Supreme Court under Rule 45. "The first mode of appeal istaken to the [Court of Appeals] on questions of fact or mixed questions of fact and law. The second
mode of appeal is brought to the CA on questions of fact, of law, or mixed questions of fact and law. The third mode of appeal is elevated to the Supreme
Court only on questions of law." (Emphasis supplied.)

There is a question of law when the issue does not call for an examination of the probative value of the evidence presented or of the truth or falsehood of the
facts being admitted, and the doubt concerns the correct application of law and jurisprudence on the matter. The resolution of the issue must rest solely on
what the law provides on the given set of circumstances.

In the instant case, petitioners raise only questions of law with respect to the jurisdiction of the RTC to entertain a certioraripetition filed against the
interlocutory order of the MeTC in an unlawful detainer suit. At issue in the present case is the correct application of the Rules on Summary Procedure; or,
more specifically, whether the RTC violated the Rules when it took cognizance and granted the certioraripetition against the denial by the MeTC of the Motion
to Dismiss filed by respondent Sunvar. This is clearly a question of law that involves the proper interpretation of the Rules on Summary Procedure. Therefore,
the instant Rule 45 Petition has been properly lodged with this Court.

In this case, petitioner raises the lone issue of whether the Pasig City RTC was correct in refusing to hear her counterclaims after the dismissal of respondents’
complaint for lack of jurisdiction. Said issue involves the proper interpretation of the 1997 Rules of Civil Procedure, as amended, specifically on whether the
dismissal of the complaint automatically results in the dismissal of counterclaims pleaded by the defendant. Since this is clearly a question of law, petitioner
appropriately filed in thisCourt a Rule 45 petition.

On the lone issue raised in the petition, we rule for the petitioner.

A counterclaim is any claim which a defending party may have against an opposing party. 31 It is in the nature of a cross-complaint; a distinct and independent
cause of action which, though alleged in the answer, is not part of the answer. 32

Counterclaims may be either compulsory or permissive. Section 7, Rule 6 of the 1997 Rules of Civil Procedure provides:

SEC. 7. Compulsory counterclaim.– A compulsory counterclaim is one which, being cognizable by the regular courts of justice, arises out of or is connected
with the transaction or occurrence constituting the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third
parties of whom the court cannot acquire jurisdiction. Such a counterclaim must be within the jurisdiction of the court both as to the amount and the nature
thereof, except that in an original action before the Regional Trial Court, the counterclaim may be considered compulsory regardless of the amount.

In this case, petitioner’s counterclaim for damages raised in her answer before the Pasig City RTC iscompulsory, alleging suffering and injury caused to her as
a consequence of the unwarranted filing of the baseless complaint filed byrespondents. Said court, however, dismissed her counterclaim upon the same
ground of lackof jurisdiction as its resolution supposedly would entail passing upon the validity of orders and processes still pending before the Pasay City
RTC. In Metals Engineering Resources Corp. v. Court of Appeals, 33 we reversed the trial court’s order allowing private respondent to proceed with the
presentation of his evidence in support of his counterclaim after the complaint was dismissed for not paying the correct docket fee and hence the trial court did
not acquire jurisdiction over the case. We held that if the court does not have jurisdiction to entertain the main action of the case and dismisses the same, then
the compulsorycounterclaim, being ancillary to the principal controversy, must likewise be dismissed since no jurisdiction remained for any grant of relief under
the counterclaim.34

Under the 1997 Rules of Civil Procedure, it is now explicitly provided that the dismissal of the complaint due tofailure of the plaintiff to prosecute his case is
"without prejudice to the rightof the defendant to prosecute his counterclaim in the same or in a separate action." 35 The effect of this amendment on previous
rulings on whether the dismissal of a complaint carries with it the dismissal of the counterclaims as well, was discussed in the case of Pinga v. The Heirs of
German Santiago,36 thus:

Similarly, Justice Feria notes that "the present rule reaffirms the right of the defendant to move for the dismissal of the complaint and to prosecute his
counterclaim, as stated in the separate opinion [of Justice Regalado in BA Finance.] Retired Court of Appeals Justice Herrera pronounces that the amendment
to Section 3, Rule 17 settles that "nagging question" whether the dismissal of the complaint carries with it the dismissal of the counterclaim, and opines that by
reason of the amendments, the rulings in Metals Engineering, International Container, and BA Finance"may be deemed abandoned." On the effect of
amendment to Section 3, Rule 17, the commentators are in general agreement, although there is less unanimity of views insofar as Section 2, Rule 17 is
concerned.

To be certain, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended Rule 17, those previous jural doctrines that were
inconsistent with the new rules incorporated in the 1997 Rules of Civil Procedure were implicitly abandoned insofar as incidents arising after the effectivity of
the new procedural rules on 1 July 1997. BA Finance, or even the doctrine that a counterclaim may be necessarily dismissed along with the complaint, clearly
conflicts with the 1997 Rules of Civil Procedure. The abandonment of BA Financeas doctrine extends as far back as 1997, when the Court adopted the new
Rules of Civil Procedure. … we thus rule that the dismissal of a complaint due to fault of the plaintiff is without prejudice to the right of the defendant to
prosecute any pending counterclaims ofwhatever nature in the same or separate action. We confirm that BA Financeand all previous rulings of the Court that
are inconsistent with this present holding are now abandoned. (Emphasis supplied.)

Subsequently, in Perkin Elmer Singapore Pte Ltd. v. Dakila Trading Corporation 37 this Court held that while the declaration in Pinga refers to instances covered
by Section 3, Rule 17 on dismissal of complaints due to the fault of plaintiff, it does not preclude the application of the same rule when the dismissal was upon
the instance of defendant who correctly argued lack of jurisdiction over its person.Further, in stark departure from Metals Engineering, we declared that the
court’s jurisdiction over respondent’s complaint is not to be confusedwith jurisdiction over petitioner’s counterclaim, viz:

….Petitioner seeks to recover damages and attorney’s fees as a consequence of the unfounded suitfiled by respondent against it. Thus, petitioner’s
compulsory counterclaim isonly consistent with its position that the respondent wrongfully filed a case against it and the RTC erroneously exercised jurisdiction
over its person.

Distinction must be made in Civil Case No. MC99-605 as to the jurisdiction of the RTC over respondent’s complaint and over petitioner’s counterclaim – while
it may have no jurisdiction over the former, it may exercise jurisdiction over the latter. The compulsory counterclaim attached to petitioner’s Answer ad
cautelamcan be treated as a separate action, wherein petitioner is the plaintiff while respondent is the defendant. Petitioner could have instituted a separate
action for the very same claims but, for the sake of expediency and to avoid multiplicity of suits, it chose to demand the samein Civil Case No. MC99-605.
Jurisdiction of the RTC over the subject matter and the parties in the counterclaim must thus be determined separately and independently from the jurisdiction
of the samecourt in the same case over the subject matter and the parties in respondent’s complaint. 38 (Emphasis supplied.)

Still anchored on the pronouncement in Pinga, we then categorically ruled that a counterclaim arising from the unfounded suit may proceed despite the
dismissal of the complaint for lack of jurisdiction over the person of defendant-counterclaimant, thus:

Also in the case of Pinga v. Heirs of German Santiago, the Court discussed the situation wherein the very filing of the complaint by the plaintiff against the
defendant caused the violation of the latter’s rights. As to whether the dismissal of such a complaint should also include the dismissal of the counterclaim, the
Court acknowledged that said matter is still debatable, viz:

Whatever the nature of the counterclaim, it bears the same integral characteristics as a complaint; namely a cause (or causes) of action constituting an act or
omission by which a party violates the right of another. The main difference lies in that the cause of action in the counterclaim is maintained bythe defendant
against the plaintiff, while the converse holds true with the complaint. Yet, as with a complaint, a counterclaim without a cause of action cannot survive.

x x x if the dismissal of the complaint somehow eliminates the cause(s) of the counterclaim, then the counterclaim cannot survive. Yet that hardly is the case,
especially as a general rule. More often than not, the allegations that form the counterclaim are rooted in an act or omission of the plaintiff other than the
plaintiff’s very act of filing the complaint. Moreover, such acts or omissions imputed to the plaintiff are often claimed to have occurred prior to the filing of the
complaint itself.The only apparent exception to thiscircumstance is if it is alleged in the counterclaim that the very act of the plaintiff in filing the complaint
precisely causes the violation of the defendant’s rights. Yet even in such an instance, it remains debatable whether the dismissal or withdrawal of the
complaint is sufficient to obviate the pending cause of action maintained by the defendant against the plaintiff.

Based on the aforequoted ruling of the Court, if the dismissal of the complaint somehow eliminates the cause of the counterclaim, then the counterclaim
cannot survive. Conversely, if the counterclaim itself states sufficient cause of action then it should stand independently of and survive the dismissal of the
complaint. Now, having been directly confronted with the problem of whether the compulsory counterclaim by reason of the unfounded suit may prosper even if
the maincomplaint had been dismissed, we rule in the affirmative.

It bears to emphasize that petitioner’s counterclaim against respondent is for damages and attorney’s fees arising from the unfounded suit. While respondent’s
Complaint against petitioner is already dismissed, petitioner may have very well already incurred damages and litigation expenses such as attorney’s fees
since it was forced to engage legal representation in the Philippines to protect its rights and to assert lack of jurisdiction of the courts over its person by virtue
of the improper service of summons upon it. Hence, the cause of action of petitioner’s counterclaim is not eliminated by the mere dismissal of respondent’s
complaint.

It may also do well to rememberthat it is this Court which mandated that claims for damages and attorney’s fees based on unfounded suit constitute
compulsory counterclaim which must be pleaded in the same action or, otherwise, it shall be barred. It will then be iniquitous and the height of injustice to
require the petitioner to make the counterclaim in the present action, under threat of losing his right to claim the same ever again in any other court, yet make
his right totally dependent on the fate of the respondent’s complaint.

If indeed the Court dismisses petitioner’s counterclaim solely on the basis of the dismissal of respondent’s Complaint, then what remedy is left for the
petitioner? It can be said that he can still file a separate action to recover the damages and attorney’s fees based on the unfounded suit for he cannot be
barred from doing so since he did file the compulsory counterclaim in the present action, only that it was dismissed when respondent’s Complaint was
dismissed. However, this reasoning is highly flawed and irrational considering that petitioner, already burdened by the damages and attorney’s fees itmay have
incurred in the present case, must again incur more damages and attorney’s fees in pursuing a separate action, when, in the first place, it should not have
been involved in any case at all.

Since petitioner’s counterclaim iscompulsory in nature and its cause of action survives that of the dismissal of respondent’s complaint, then it should be
resolved based on its own merits and evidentiary support. 39 (Additional emphasis supplied.)

The above ruling was applied in Rizal Commercial Banking Corporation v. Royal Cargo Corporation 40 where we granted petitioner’s prayer for attorney’s fees
under its Compulsory Counterclaim notwithstanding the dismissal of the complaint.

In the present case, the RTC of Pasig City should have allowed petitioner’s counterclaim to proceed notwithstanding the dismissal of respondents’ complaint,
the same being compulsory in nature and with its cause not eliminated by such dismissal.It bears stressing that petitioner was hailed to a separate court (Pasig
City RTC) even while the dispute between PNB and respondents was still being litigated, and she already incurred expenses defending herself, having
beensued by respondents in her personal capacity. The accusations hurled against her were serious (perjury and misrepresentation in executing the affidavit
in support of the application for writ of attachment before the Pasay City RTC) – with hints at possible criminal prosecution apart from that criminal complaint
already lodged in the Pasig City Prosecutor’s Office. The Pasig City RTC clearly erred in refusing to hear the counterclaims upon the same ground for
dismissal of the complaint, i.e.,lack of jurisdiction in strictobservance of the policy against interference with the proceedings of a co-equal court.

Respondents contend that if petitioner is allowed to prove her counterclaims before the Pasay City RTC, they have no choice but to justify their action in filing
their case beforethe Pasig City RTC by going back to the allegations in their complaint that they are merely vindicating themselves against the perjured
affidavit executed by petitioner which led to the issuance of the illegal orders of the Pasay City RTC that resulted to the damage and injury sustained by
respondents. Obviously, respondents are invoking the same principle of judicialstability which we find inapplicable insofar as petitioner’s counterclaim arising
from respondents’ unfounded suit. As petitioner set forth in her Compulsory Counterclaim, there is actually no necessity for the Pasig City RTC, in ruling on the
merits of the counterclaim, to pass upon the validity ofthe writ of attachment and related orders issued by the Pasay City RTC. Precisely, petitioner faulted the
respondents in prematurely, and in a contumacious act of forum shopping, filing a separate damage suit when there is no final judicial determination yet of any
irregularity in the attachment proceedings before the Pasay City RTC.

5.95. In this regard, it must be noted that in filing the present suit, plaintiffs’ goal is to have the Honorable Court reexamine and review the pronouncements
made by defendant JudgeGutierrez in the Pasay case.

With all due respect, the Honorable Court certainly has no such power over the Pasay Court which is a co-equal court. While the power to determine whether
or not a judgment or order is unjust is a judicial function, the hierarchy of courts should be respected:

"To belabor the obvious, the determination of whether or not a judgment or order is unjust – or was (or was not) rendered within the scope of the issuing
judge’s authority, or that the judge had exceeded his jurisdiction and powers or maliciously delayed the disposition of a case – is an essentially judicial
function, lodged by existing law and immemorial practice in a hierarchy of courts and ultimately in the highest court of the land. To repeat, no other entity or
official of the Government, not the prosecution or investigation service or any other branch, nor any functionary thereof, has competence to review a judicial
order or decision – whether final and executory or not – and pronounce it erroneous soas to lay the basis for a criminal or administrative complaint for
rendering an unjust judgment or order. That prerogative belongs to the courts alone." [Emphasis supplied]

5.96. Accordingly, since there is no "final judicial pronouncement" yet on whether the filing of the PNB Complaintand the issuance of the writ of preliminary
attachment violate any law, neither is there any basis for defendant Padilla to be held liable for damages on account of her official acts as Head of the
Remedial Management Group of PNB.1âwphi1

5.97. Clearly, the filing of this baseless, if not contemptuous, suit is nothing but a continuation of plaintiffs’ fraudulent attempt to evade the payment of
undeniably due and demandable obligations. Accordingly, the complaint against defendant Padilla should be dismissed for utter lack of merit. 41 (Emphasis
supplied.)

Ironically, while it is the respondents who erroneously and maliciously asked the Pasig City RTC to pass upon these issues still pending in a co-equal court, for
which reason the said court dismissed their complaint, petitioner was notallowed to prove her counterclaim by reason of the unfounded suit in the same case
aspurportedly it will entail verifying respondents’ claim that they were prejudiced by the orders and processes in the Pasay City RTC. This situation exemplifies
the rationale in Perkin Elmer Singapore Pte Ltd. 42 on requiring the petitioner to make the counterclaim in the present action, under threat of losing such right to
claim the same ever again any other court, yet make such right of the petitioner totally dependent on the fate of the respondents’ complaint.

As fittingly expressed by petitioner in her Reply:

Pertinently, it is relevant to note that respondents never denied in their Commentthat the institution of the case a quowas premature and violated the principle
of judicial stability. Stated otherwise, respondents admit that they are the ones who have invited the court a quo to interfere with the rulings of the Pasay Court,
which fortunately, the former refused to do so. To allow the respondents to cite their own unlawful actions as a shield against the harm that they have inflicted
upon petitioner Padilla would indubitably allow the respondents to profit from their own misdeeds. With due respect, this cannot be countenanced by the
Honorable Court.43 WHEREFORE, the petition is GRANTED. The Orders dated November 12, 2012 and May 8, 2013 of the Regional Trial Court of Pasig City,
Branch 155 in Civil Case No. 73132 are hereby REVERSED and SET ASIDE. Said court is hereby directed to proceed with the presentation of evidence in
support of the compulsory counterclaim of petitioner Aida Padilla.
SO ORDERED.

G.R. No. 197380, October 08, 2014

ELIZA ZUÑIGA-SANTOS,* REPRESENTED BY HER ATTORNEY-IN FACT, NYMPHA Z. SALES, Petitioners, v. MARIA DIVINA GRACIA SANTOS-
GRAN** AND REGISTER OF DEEDS OF MARIKINA CITY, Respondents.

DECISION

PERLAS-BERNABE, J.:

Before the Court is a petition for review on certiorari1 assailing the Decision2 dated January 10, 2011 and the Resolution3 dated June 22, 2011 of the Court of
Appeals (CA) in CA-G.R. CV No. 87849 which affirmed the Order 4 dated July 6, 2006 of the Regional Trial Court of San Mateo, Rizal, Branch 76 (RTC) in Civil
Case No. 2018-06, dismissing the Amended Complaint for annulment of sale and revocation of title on the ground of insufficiency of factual basis.

The Facts

On January 9, 2006, petitioner Eliza Zuñiga-Santos (petitioner), through her authorized representative, Nympha Z. Sales, 5 filed a Complaint6 for annulment of
sale and revocation of title against respondents Maria Divina Gracia Santos-Gran (Gran) and the Register of Deeds of Marikina City before the RTC, docketed
as Civil Case No. 2018-06. The said complaint was later amended 7 on March 10, 2006 (Amended Complaint).

In her Amended Complaint,8 petitioner alleged, among others, that: (a) she was the registered owner of three (3) parcels of land located in the Municipality of
Montalban, Province of Rizal, covered by Transfer Certificate of Title (TCT) Nos. N-5500, 9 224174,10   and N-423411 (subject properties) prior to their transfer in
the name of private respondent Gran; (b) she has a second husband by the name of Lamberto C. Santos (Lamberto), with whom she did not have any
children; (c) she was forced to take care of Lamberto’s alleged daughter, Gran, whose birth certificate was forged to make it appear that the latter was
petitioner’s daughter; (d) pursuant to void and voidable documents, i.e., a Deed of Sale, Lamberto succeeded in transferring the subject properties in favor of
and in the name of Gran; (e) despite diligent efforts, said Deed of Sale could not be located; and (f) she discovered that the subject properties were transferred
to Gran sometime in November 2005. Accordingly, petitioner prayed,  inter alia, that Gran surrender to her the subject properties and pay damages, including
costs of suit.12cralawlawlibrary

For her part, Gran filed a Motion to Dismiss,13 contending, inter alia, that (a) the action filed by petitioner had prescribed since an action upon a written contract
must be brought within ten (10) years from the time the cause of action accrues, or in this case, from the time of registration of the questioned documents
before the Registry of Deeds;14 and (b) the Amended Complaint failed to state a cause of action as the void and voidable documents sought to be nullified
were not properly identified nor the substance thereof set forth, thus, precluding the RTC from rendering a valid judgment in accordance with the prayer to
surrender the subject properties.15cralawlawlibrary

The RTC Ruling

In an Order16 dated July 6, 2006, the RTC granted Gran’s motion and dismissed the Amended Complaint for its failure to state a cause of action, considering
that the deed of sale sought to be nullified – an “essential and indispensable part of [petitioner’s] cause of action” 17 – was not attached. It likewise held that the
certificates of title covering the subject properties cannot be collaterally attacked and that since the action was based on a written contract, the same had
already prescribed under Article 1144 of the Civil Code. 18cralawlawlibrary

Dissatisfied, petitioner elevated the matter to the CA.

The CA Ruling

In a Decision19 dated January 10, 2011, the CA sustained the dismissal of petitioner’s Amended Complaint but on the ground of insufficiency of factual basis.

It disagreed with the RTC’s finding that the said pleading failed to state a cause of action since it had averred that: ( a) petitioner has a right over the subject
properties being the registered owner thereof prior to their transfer in the name of Gran; ( b) Lamberto succeeded in transferring the subject properties to his
daughter, Gran, through void and voidable documents; and ( c) the latter’s refusal and failure to surrender to her the subject properties despite demands
violated petitioner’s rights over them.20 The CA likewise ruled that the action has not yet prescribed since an action for nullity of void deeds of conveyance is
imprescriptible.21 Nonetheless, it held that since the Deed of Sale sought to be annulled was not attached to the Amended Complaint, it was impossible for the
court to determine whether petitioner’s signature therein was a forgery and thus, would have no basis to order the surrender or reconveyance of the subject
properties.22cralawlawlibrary

Aggrieved, petitioner moved for reconsideration23 and attached, for the first time, a copy of the questioned Deed of Sale 24 which she claimed to have recently
recovered, praying that the order of dismissal be set aside and the case be remanded to the RTC for further proceedings.

In a Resolution25 dated June 22, 2011, the CA denied petitioner’s motion and held that the admission of the contested Deed of Sale at this late stage would be
contrary to Gran’s right to due process.

Hence, the instant petition.

The Issue Before the Court

The primordial issue for the Court’s resolution is whether or not the dismissal of petitioner’s Amended Complaint should be sustained.

The Court’s Ruling

Failure to state a cause of action and lack of cause of action are distinct grounds to dismiss a particular action. The former refers to the insufficiency of the
allegations in the pleading, while the latter to the insufficiency of the factual basis for the action. Dismissal for failure to state a cause of action may be raised at
the earliest stages of the proceedings through a motion to dismiss under Rule 16 of the Rules of Court, while dismissal for lack of cause of action may be
raised any time after the questions of fact have been resolved on the basis of stipulations, admissions or evidence presented by the plaintiff. 26   In Macaslang
v. Zamora,27 the Court, citing the commentary of Justice Florenz D. Regalado, explained:chanRoblesvirtualLawlibrary
Justice Regalado, a recognized commentator on remedial law, has explained the distinction:chanroblesvirtuallawlibrary
x x x What is contemplated, therefore, is a failure to state  a cause of action which is provided in Sec. 1(g) of Rule 16. This is a matter of insufficiency of the
pleading. Sec. 5 of Rule 10, which was also included as the last mode for raising the issue to the court, refers to the situation where the evidence does not
prove  a cause of action. This is, therefore, a matter of insufficiency of evidence. Failure to state a cause of action is different from failure to prove a cause of
action. The remedy in the first is to move for dismissal of the pleading, while the remedy in the second is to demur to the evidence, hence reference to Sec. 5
of Rule 10 has been eliminated in this section. The procedure would consequently be to require the pleading to state a cause of action, by timely objection to
its deficiency; or, at the trial, to file a demurrer to evidence, if such motion is warranted. 28

In the case at bar, both the RTC and the CA were one in dismissing petitioner’s Amended Complaint, but varied on the grounds thereof – that is, the RTC held
that there was failure to state a cause of action while the CA ruled that there was insufficiency of factual basis.

At once, it is apparent that the CA based its dismissal on an incorrect ground. From the preceding discussion, it is clear that “insufficiency of factual basis” is
not a ground for a motion to dismiss. Rather, it is a ground which becomes available only after the questions of fact have been resolved on the basis of
stipulations, admissions or evidence presented by the plaintiff. The procedural recourse to raise such ground is a demurrer to evidence taken only after the
plaintiff’s presentation of evidence. This parameter is clear under Rule 33 of the Rules of Court:chanRoblesvirtualLawlibrary

RULE 33
Demurrer to Evidence

Section 1. Demurrer to evidence. — After the plaintiff has completed the presentation of his evidence, the defendant may move for dismissal on the ground
that upon the facts and the law the plaintiff has shown no right to relief. If his motion is denied he shall have the right to present evidence. If the motion is
granted but on appeal the order of dismissal is reversed he shall be deemed to have waived the right to present evidence.

At the preliminary stages of the proceedings, without any presentation of evidence even conducted, it is perceptibly impossible to assess the insufficiency of
the factual basis on which the plaintiff asserts his cause of action, as in this case. Therefore, that ground could not be the basis for the dismissal of the action.

However, the Amended Complaint is still dismissible but on the ground of failure to state a cause of action, as correctly held by the RTC. Said ground was
properly raised by Gran in a motion to dismiss pursuant to Section 1, Rule 16 of the Rules of Court:chanRoblesvirtualLawlibrary

RULE 16
Motion to Dismiss

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

xxxx

(g) That the pleading asserting the claim states no cause of action;

xxxx

A complaint states a cause of action if it sufficiently avers the existence of the three (3) essential elements of a cause of action, namely: ( a) a right in favor of
the plaintiff by whatever means and under whatever law it arises or is created; ( b) an obligation on the part of the named defendant to respect or not to violate
such right; and (c) an act or omission on the part of the named defendant violative of the right of the plaintiff or constituting a breach of the obligation of
defendant to the plaintiff for which the latter may maintain an action for recovery of damages. 29 If the allegations of the complaint do not state the concurrence
of these elements, the complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action. 30cralawlawlibrary

It is well to point out that the plaintiff’s cause of action should not merely be “stated” but, importantly, the statement thereof should be “sufficient.” This is why
the elementary test in a motion to dismiss on such ground is whether or not the complaint alleges facts which if true would justify the relief demanded. 31 As a
corollary, it has been held that only ultimate facts and not legal conclusions or evidentiary facts are considered for purposes of applying the test. 32 This is
consistent with Section 1, Rule 8 of the Rules of Court which states that the complaint need only allege the ultimate facts or the essential facts constituting the
plaintiff’s cause of action. A fact is essential if they cannot be stricken out without leaving the statement of the cause of action inadequate. 33 Since the inquiry is
into the sufficiency, not the veracity, of the material allegations, it follows that the analysis should be confined to the four corners of the complaint, and no
other.34cralawlawlibrary

A judicious examination of petitioner’s Amended Complaint readily shows its failure to sufficiently state a cause of action. Contrary to the findings of the CA,
the allegations therein do not proffer ultimate facts which would warrant an action for nullification of the sale and recovery of the properties in controversy,
hence, rendering the same dismissible.

While the Amended Complaint does allege that petitioner was the registered owner of the subject properties in dispute, nothing in the said pleading or its
annexes would show the basis of that assertion, either through statements/documents tracing the root of petitioner’s title or copies of previous certificates of
title registered in her name. Instead, the certificates of title covering the said properties that were attached to the Amended Complaint are in the name of Gran.
At best, the attached copies of TCT Nos. N-5500 and N-4234 only mention petitioner as the representative of Gran at the time of the covered property’s
registration when she was a minor. Nothing in the pleading, however, indicates that the former had become any of the properties’ owner. This leads to the
logical conclusion that her right to the properties in question – at least through the manner in which it was alleged in the Amended Complaint – remains
ostensibly unfounded. Indeed, while the facts alleged in the complaint are hypothetically admitted for purposes of the motion, it must, nevertheless, be
remembered that the hypothetical admission extends only to the relevant and material facts well pleaded in the complaint as well as to inferences fairly
deductible therefrom.35 Verily, the filing of the motion to dismiss assailing the sufficiency of the complaint does not hypothetically admit allegations of which the
court will take judicial notice of to be not true, nor does the rule of hypothetical admission apply to legally impossible facts, or to facts inadmissible in evidence,
or to facts that appear to be unfounded by record or document included in the pleadings. 36cralawlawlibrary

Aside from the insufficiency of petitioner’s allegations with respect to her right to the subject properties sought to be recovered, the ultimate facts supposedly
justifying the “annulment of sale,” by which the reconveyance of the subject properties is sought, were also insufficiently pleaded. The following averments in
the Amended Complaint betray no more than an insufficient narration of facts:chanRoblesvirtualLawlibrary
 6. That pursuant to a voidable [sic] and void documents, the second husband of the plaintiff succeed [ sic] in transferring the above TITLES in
the name of MARIA DIVINAGRACIA SANTOS, who is (sic) alleged daughter of LAMBERTO C. SANTOS in violation of Article 1409, Par. 2
of the Civil Code;

7. That the said properties [were] transferred to the said defendant by a Deed of Sale (DOS) to the said MARIA DIVINAGRACIA SANTOS
through a void documents [sic] considering that the seller is the alleged mother of defendant is also the buyer of the said properties in favor
of defendant;

8. x x x.

9. That the alleged sale and transfer of the said properties in favor of defendant was only discovered by [plaintiff’s]  daughter CYNTHIA
BELTRAN-LASMARIAS when [plaintiff] has been requesting for financial assistance, considering that the said mother of plaintiff [ sic]  has
so many properties which is now the subject of this complaint;

10. That plaintiff then return on [to] the Philippines sometime [in] November, 2005 and discovered that all [plaintiff’s] properties [had] been
transferred to defendant MARIA DIVINAGRACIA SANTOS who is not a daughter either by consanguinity or affinity to the plaintiff mother
[sic];

11. That the titles that [were] issued in the name of MARIA DIVINAGRACIA SANTOS by virtue of the said alleged voidable and void
documents, should be annulled and cancelled as the basis of the transfer is through void and voidable documents;

x x x x37

Clearly, the claim that the sale was effected through “voidable and void documents” partakes merely of a conclusion of law that is not supported by any
averment of circumstances that will show why or how such conclusion was arrived at. In fact, what these “voidable and void documents” are were not properly
stated and/or identified. In Abad v. Court of First Instance of Pangasinan, 38 the Court pronounced that:chanRoblesvirtualLawlibrary

A pleading should state the ultimate facts essential to the rights of action or defense asserted, as distinguished from mere conclusions of fact, or conclusions
of law. General allegations that a contract is valid or legal, or is just, fair, and reasonable, are mere conclusions of law. Likewise, allegations that a contract is
void, voidable,invalid, illegal, ultra vires, or against public policy, without stating facts showing its invalidity, are mere conclusions of law.39 (Emphases supplied)

Hence, by merely stating a legal conclusion, the Amended Complaint presented no sufficient allegation upon which the Court could grant the relief petitioner
prayed for. Thus, said pleading should be dismissed on the ground of failure to state cause of action, as correctly held by the RTC.

That a copy of the Deed of Sale adverted to in the Amended Complaint was subsequently submitted by petitioner does not warrant a different course of action.
The submission of that document was made, as it was purportedly “recently recovered,” only on reconsideration before the CA which, nonetheless, ruled
against the remand of the case. An examination of the present petition, however, reveals no counter-argument against the foregoing actions; hence, the Court
considers any objection thereto as waived.

In any event, the Court finds the Amended Complaint’s dismissal to be in order considering that petitioner’s cause of action had already prescribed.

It is evident that petitioner ultimately seeks for the reconveyance to her of the subject properties through the nullification of their supposed sale to Gran. An
action for reconveyance is one that seeks to transfer property, wrongfully registered by another, to its rightful and legal owner. 40 Having alleged the
commission of fraud by Gran in the transfer and registration of the subject properties in her name, there was, in effect, an implied trust created by operation of
law pursuant to Article 1456 of the Civil Code which provides:chanRoblesvirtualLawlibrary

Art. 1456.  If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of
the person from whom the property comes.

To determine when the prescriptive period commenced in an action for reconveyance, the plaintiff’s possession of the disputed property is material. If there is
an actual need to reconvey the property as when the plaintiff is not in possession, the action for reconveyance based on implied trust prescribes in ten (10)
years, the reference point being the date of registration of the deed or the issuance of the title.  On the other hand, if the real owner of the property remains in
possession of the property, the prescriptive period to recover title and possession of the property does not run against him and in such case, the action for
reconveyance would be in the nature of a suit for quieting of title which is imprescriptible. 41cralawlawlibrary

In the case at bar, a reading of the allegations of the Amended Complaint failed to show that petitioner remained in possession of the subject properties in
dispute.  On the contrary, it can be reasonably deduced that it was Gran who was in possession of the subject properties, there being an admission by the
petitioner that the property covered by TCT No. 224174 was being used by Gran’s mother-in-law. 42   In fact, petitioner’s relief in the Amended Complaint for the
“surrender” of three (3) properties to her bolsters such stance. 43 And since the new titles to the subject properties in the name of Gran were issued by the
Registry of Deeds of Marikina on the following dates: TCT No. 224174 on July 27, 1992, 44TCT No. N-5500 on January 29, 1976,45 and TCT No. N-4234 on
November 26, 1975,46 the filing of the petitioner’s complaint before the RTC on January 9, 2006 was obviously beyond the ten-year prescriptive period,
warranting the Amended Complaint’s dismissal all the same.

WHEREFORE, the petition is DENIED. The Decision dated January 10, 2011 and the Resolution dated June 22, 2011 of the Court of Appeals in CA-G.R. CV
No. 87849 are hereby AFFIRMED with MODIFICATION in that the Amended Complaint be dismissed on the grounds of (a) failure to state a cause of action,
and (b) prescription as herein discussed.

SO ORDERED.cralawred

April 19, 2016

G.R. No. 195728

PARAMOUNT LIFE & GENERAL INSURANCE CORPORATION, Petitioner, 
vs.
CHERRY T. CASTRO and GLENN ANTHONY T. CASTRO, Respondents.

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

G.R. No. 211329

CHERRY T. CASTRO and GLENN ANTHONY T. CASTRO, Petitioners, 

vs.
PARAMOUNT LIFE & GENERAL INSURANCE CORPORATION, Respondent

DECISION

SERENO, CJ:

These Petitions for Review on Certiorari under Rule 45 of the Rules of Court originate from a Complaint 1 for Declaration of Nullity of Individual Insurance
Contract (Civil Case No. 09-5992). The Complaint was instituted by Paramount Life and General Insurance Corporation (Paramount) against Cherry T. Castro
and Glenn Anthony T. Castro (Castro’s) and filed before the Regional Trial Court, Makati City, Branch 61 (RTC), on 2 July 2009.

The Petition3 docketed as G.R. No. 195728 assails the Court of Appeals (CA) Decision 4 dated 4 October 2010 and Resolution5 dated 21 February 2011 in CA-
G.R. SP No. 113972. The CA remanded the case to the RTC for the admission of the Castro's Third-Party Complaint against the Philippine Postal Savings
Bank, Incorporated (PPS BI). 6

On the other hand, the Petition 7 docketed as G.R. No. 211329 assails the Resolution 8 of the RTC in Civil Case No. 09-599 dated 11 February 2014. The trial
court ordered that the Motion to Dismiss filed by the defendants (the Castro’s) be deemed expunged from the records, as they had previously been declared to
be in default. Nonetheless, due to the protracted nature of the proceedings, the RTC allowed the plaintiff no more than two settings for the presentation of
evidence.9

These Petitions have been consolidated as they involve the same parties, arise from an identical set of facts, and raise interrelated issues. 10 The Court
resolves to dispose of these cases jointly.

FACTS OF THE CASE

In 2004, the PPSBI applied for and obtained insurance from Paramount, 11 which accordingly issued Group Master Policy No. G-086 12 effective 1 September
2004. Under Section 20, Article IV of the said policy, "all death benefits shall be payable to the creditor, PPSBI, as its interest may appeal." 13

Meanwhile, Virgilio J. Castro (Virgilio) - Cherry's husband and Glenn's father - obtained a housing loan from the PPSBI in the amount of Pl .5 million. 14 PPSBI
required Virgilio to apply for a mortgage redemption insurance (MRI) from Paramount to cover the loan. 15 In his application for the said insurance policy,
Virgilio named Cherry and Glenn as beneficiaries. 16 Paramount issued Certificate No. 041913 effective 12 March 2008 in his favor, subject to the terms and
conditions of Group Master Policy No. G-086. 17

On 26 February 2009, Virgilio died of septic shock. 18 Consequently, a claim was filed for death benefits under the individual insurance coverage issued under
the group policy. 19 Paramount however denied the claim, on the

ground of the failure of Virgilio to disclose material information, or material concealment or misrepresentation. 20 It said that when Virgilio submitted his
insurance application on 12 March 2008, he made some material misrepresentations by answering "no" to questions on whether he had any adverse health
history and whether he had sought medical advice or consultation concerning it. Paramount learned that in 2005, Virgilio had sought consultation in a private
hospital after complaining of a dull pain in his lumbosacral area. 21 Because of the alleged material concealment or misrepresentation, it declared Virgilio's
individual insurance certificate (No. 041913) rescinded, null, and absolutely void from the very beginning. 22

On 2 July 2009, Paramount filed a Complaint23 with the RTC docketed as Civil Case No. 09-599. It prayed that Application and Insurance Certificate No.
041913 covering the individual insurance of Virgilio be declared null and void by reason of material concealment and misrepresentation. It also prayed for
attorney's fees and exemplary damages.24

In their Answer with Counterclaim, 25 the Castro’s argued that Virgilio had not made any material misrepresentation. They contended that he had submitted the
necessary evidence of insurability to the satisfaction of

Paramount. They further argued that by approving Virgilio's application, Paramount was estopped from raising the supposed misrepresentations. 26 The
Castro’s made a counterclaim for actual and exemplary damages, as well

as attorney's fees, for the alleged breach of contract by Paramount arising from its refusal to honor its obligation as insurer of the Pl.5 million loan. 27

STATEMENT OF THE CASES

G.R. No. 195728

On 29 October 2009, the Castros filed a motion 28 to include the PPSBI as an indispensible party-defendant. The RTC thereafter denied the motion, reasoning
that Paramount's Complaint could be fully resolved without the PPSBI's participation. 29

Consequently, the Castro’s filed a Motion for Leave to File a Third Party-Complaint and to Admit Attached Third-Party Complaint. 30 They argued that due to the
death of Virgilio, and by virtue of Group Policy No. G-086 in· relation to Certificate No. 041913, PPSBI stepped into the shoes of Cherry and Glen under the
principle of "indemnity, subrogation, or any other reliefs" found in Section 22, Rule 6 of the Rules of Court. 31 This motion was likewise denied, on the ground
that "what the defendants herein want is the introduction of a controversy that is entirely foreign and distinct from the main cause." 32 The Castro’s Motion for
Reconsideration was again denied in a Resolution 33 dated 19 April 2010

On 13 May 2010, the Castro’s assailed the RTC Resolutions through a Petition for Certiorari filed with the CA. 34They likewise subsequently filed a Motion for
Leave of Court to File and to Admit Attached Supplemental Petition for Review. 35

In its Decision36 dated 4 October 2010, the CA partially granted the Petition by allowing a third-party complaint to be filed against the PPSBI. It ruled that the
Castro’s were freed from the obligation to pay the bank by virtue of subrogation, as the latter would collect the loan amount pursuant to the MRI issued by
Paramount in Virgilio's favor. 37 Paramount moved for reconsideration, but the CA denied the motion through a Resolution 38 dated 21 February 2011.

On 11 April 2011, Paramount filed a Petition for Review under Rule 45, arguing that the case could be fully appreciated and resolved without involving the
PPSBI as a third-party defendant in Civil Case No. 09-599. 39

G.R. No. 211329

Meanwhile, on 7 January 2014, the Castro’s filed a Motion to Dismiss 40 the Complaint on the ground of failure to prosecute for an unreasonable length of time
without justifiable cause and to present evidence ex parte  pursuant to a court order. In a Resolution41 dated 11 February 2014, the RTC denied the motion.
Owing to its previous Order dated 26 May 2010, which declared the Castro’s as in default for failure to attend the pretrial, the RTC treated the Motion to
Dismiss as a mere scrap of paper and expunged it from the records.

The Castro’s come straight to this Court via a Petition for Review 42 under Rule 45, assailing the RTC Resolution dated 11 February 2014.

THE ISSUES

1. Whether the CA erred in remanding the case to the R TC for the admission of the Third-Party Complaint against PPSBI

2. Whether the RTC erred in denying the Motion to Dismiss filed by the Castro’s

THE COURT'S RULING

G.R. No. 195728

The Castro’s sought to implead the PPSBI as a third-party defendant in the nullification case instituted by Paramount. They theorized that by virtue of the
death of Virgilio and the mandate of the group insurance policy in relation to his individual insurance policy, the PPSBI stepped into the shoes of Cherry and
Glenn. According to the Castro’s, upon Virgilio's death, the obligation to pay the third-party defendant (PPSBI) passed on to Paramount by virtue of the
Mortgage Redemption Insurance,43 and not to them as Virgilio's heirs.

In Great Pacific Life Assurance Corp. v. Court of Appeals,  44 we defined mortgage redemption insurance as a device for the protection of both the mortgagee
and the mortgagor:

On the part of the mortgagee, it has to enter into such form of contract so that in the event of the unexpected demise of the mortgagor during the subsistence
of the mortgage contract, the proceeds from such insurance will

be applied to the payment of the mortgage debt, thereby relieving the heirs of the mortgagor from paying the obligation. In a similar vein, ample protection is
given to the mortgagor under such a concept so that in the event of death, the mortgage obligation will be extinguished by the application of the insurance
proceeds to the mortgage indebtedness.45

In this case, the PPSBI, as the mortgagee-bank, required Virgilio to obtain an MRI from Paramount to cover his housing loan. The issuance of the MRI, as
evidenced by the Individual Insurance Certificate in Virgilio's favor, was derived from the group insurance policy issued by Paramount in favor of the PPSBI.
Paramount undertook to pay the PPSBI "the benefits in accordance with the Insurance Schedule, upon receipt and approval of due proof that the member has
incurred a loss for which benefits are payable."46

Paramount, in opposing the PPSBI's inclusion as a third-party defendant, reasons that it is only seeking the nullification of Virgilio's individual insurance
certificate, and not the group insurance policy forged between it and the PPSBI. It concludes that the nullification action it filed has nothing to do with the
PPSBI.

We disagree.

Should Paramount succeed in having the individual insurance certificate nullified, the PPSBI shall then proceed against the Castro’s. This would contradict the
provisions of the group insurance policy that ensure the direct payment by the insurer to the bank:

Notwithstanding the provision on Section 22 "No Assignment" of Article IV Benefit Provisions, and in accordance with provisions of Section 6 "Amendment of
this Policy" under Article II General Provisions of the Group Policy, it is hereby agreed that all death benefits shall be payable to the Creditor, Philippine Postal
Savings Bank as its interest may appeal.47 (Emphasis supplied.)

In allowing the inclusion of the PPSBI as a third-party defendant, the Court recognizes the inseparable interest of the bank (as policyholder of the group policy)
in the validity of the individual insurance certificates issued by Paramount. The PPSBI need not institute a separate case, considering that its cause of action is
intimately related to that of Paramount as against the Castro’s. The soundness of admitting a third-party complaint hinges on causal connection between the
claim of the plaintiff in his complaint and a claim for contribution, indemnity or other relief of the defendant against the third-party defendant. 48 In this case, the
Castro’s stand to incur a bad debt to the PPSBI - the exact event that is insured against by Group Master Policy No. G-086 - in the event that Paramount
succeeds in nullifying Virgilio's Individual Insurance Certificate.
Paramount further argues that the propriety of a third-party complaint rests on whether the possible third-party defendant (in this case PPSBI) can raise the
same defenses that the third-party plaintiffs (the Castro’s) have against the plaintiff. However, the Rules do not limit the third-party defendant's options to such
a condition. Thus:

Section 13. Answer to third (fourth, etc.)-party complaint.  – A third (fourth, etc.)-party defendant may allege in his answer his defenses, counterclaims or cross-
claims, including such defenses that the third (fourth, etc.)-party plaintiff may have against the original plaintiffs claim. In proper cases, he may also assert a
counterclaim against the original plaintiff in respect of the latter's claim against the third-party plaintiff. 49

As seen above, the same defenses the third-party plaintiff has against the original plaintiff are just some of the allegations a third-party defendant may raise in
its answer. Section 13 even gives the third-party defendant the prerogative to raise a counterclaim against the original plaintiff in respect of the latter's original
claim against the defendant/third-party plaintiff.

In Firestone Tire & Rubber Co. of the Phil. v. Tempongko,  50 We ruled that a defendant is permitted to bring in a third-party defendant to litigate a separate
cause of action in respect of the plaintiffs claim against a third party in the original and principal case. The objective is to avoid circuitry of action and
unnecessary proliferation of lawsuits, as well as to expeditiously dispose of the entire subject matter arising from one particular set of facts, in one litigation.

The CA correctly ruled that to admit the Castro’s Third-Party Complaint, in which they can assert against the PPSBI an independent claim they would
otherwise assert in another action, would prevent multiplicity of suits. 51Considering also that the original case from which these. Present Petitions arose has
not yet been resolved, the Court deems it proper to have all the parties air all their possible grievances in the original case still pending with the RTC.

Finally, the Court resolves the legal issues allegedly ignored by the CA, to wit: 1) whether legal grounds exist for the inhibition of Judge Ruiz (the presiding
judge); and 2) whether the defendants were properly declared

as in default for failure to appear at pretrial.

The first issue is unmeritorious. Counsel for the Castro’s postulates that since six rulings of the judge are being assailed for grave abuse of discretion, the
judge should inhibit himself.52 According to counsel, no judge shall sit in any case if the latter's ruling is subject to review. The Court reminds counsel that the
rule contemplates a scenario in which judges are tasked to review their own decisions on appeal, not when their decisions are being appealed to another
tribunal.

With regard to the second issue, counsel apparently confuses a declaration of default under Section 3 53 of Rule 9 with the effect of failure to appear under
Section 554 of Rule 18. Failure to file a responsive pleading within the reglementary period is the sole ground for an order of default under Rule 9. 55 On the
other hand, under Rule 18, failure of the defendant to appear at the pre-trial conference results in the plaintiff being allowed to present evidence ex parte.  The
difference is that a declaration of default under Rule 9 allows the Court to proceed to render judgment granting the claimant such relief as his pleading may
warrant; while the effect of default under Rule 18 allows the plaintiff to present evidence ex parte  and for the Court to render judgment on the basis thereof.
The lower com1 may have declared defendants therein as  in default; however, it did not issue an order of default, rather, it ordered the plaintiff to present
evidence ex parte  in accordance with the Rules. In any case, the Castro’s could have availed themselves of appropriate legal remedies when the CA failed to
resolve the issue, but they did not. They cannot now resurrect the issue through a Comment before this Court.

G.R. No. 211329

As regards G.R. No. 211329, this Court finds that outright denial of the Petition is warranted, pursuant to our ruling in Rayos v. City of Manila.56 In that case,
We ruled that an order denying a motion to dismiss is interlocutory and, hence, not appealable. 57 That ruling was based on Section 1 (b), Rule 41 of the Rules
of Court, as amended, which provides:

SECTION 1. Subject of appeal.  - An appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein
when declared by these Rules to be appealable.

No appeal may be taken from:

xxxx

(b) An interlocutory order;

xxxx

In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action under Rule 65.

In the present case, the RTC's denial of the Motion to Dismiss was an interlocutory order, as it did not finally dispose of the case. On the contrary; the denial
paved way for the case to proceed until final adjudication by the trial court.

Upon denial of their Motion to Dismiss, the Castro’s were not left without any recourse. In such a situation, the aggrieved party's remedy is to file a special civil
action for certiorari under Rule 65 of the Rules of Court. However, the aggrieved parties herein resorted to filing a Petition for Review under Rule 45 before this
Court. Even if the present Petition is treated as one for certiorari under Rule 65, it must still be dismissed for violation of the principle of hierarchy of courts.
This well-settled principle dictates that petitioners should have filed the Petition for Certiorari with the CA, and not directly with this Court.

WHEREFORE, premises considered, the Petitions in G.R. Nos. 195728 and 211329 are DENIED.

SO ORDERED.

G.R. No. L-31822 July 31, 1972

JOSE SALCEDO QUIMPO, petitioner, 
vs.
CATALINO DELA VICTORIA and FRANCISCA O. DELA VICTORIA, respondents.

Jose P. Arro for petitioner.

Garcilaso F. Vega for respondents.

REYES, J.B.L., J.:p

Petition to review the following orders of the Court Of First Instance of Davao, 16th Judicial District, Branch 11, in its Civil Case No. 6473, entitled Catalino
dela Victoria, et al. vs. Jose Salcedo Quimpo: order of 29 July 1969 denying defendant-petitioner's motion to dismiss the complaint for forcible-entry for lack of
merit, and granting the writ of immediate execution of the City Court decision of 16 January 1969 1 ; order of 16 August 1969, denying defendant-petitioner's
motion for reconsideration 
thereof2 ; and order of 12 November 1969 dismissing the defendant-petitioner's appeal from the aforesaid judgment of the City Court.

The facts which led to the issuance of the disputed orders follow:

On 2 May 1968, plaintiffs-respondents filed a complaint against defendant-petitioner with the Court of First Instance of Davao, Branch I, docketed therein as
Civil Case No. 6005, for quieting of title and recovery of possession with damages. 4

On 28 June 1968, plaintiffs-respondents filed another case against defendant-petitioner with the City Court of Davao City (Civil Case No. 1299-B) for forcible
entry over the same parcel of land, subject-matter of Civil Case No. 6005, supra. Plaintiffs-respondents prayed in the later case for the court to order
defendant-petitioner —

... to vacate the premises and deliver the possession thereof to the former, and ordering defendant to pay the plaintiffs the amount of
P500.00 a month as rental and the same to begin from the later part of March, 1968 until possession thereof shall be delivered to the
plaintiffs, and the amount of P500.00 as attorney's fees. ...

In a motion to dismiss dated 13 July 1968,6 defendant-petitioner sought the dismissal of the complaint for forcible entry alleging the pendency of Civil Case No.
6005; but the City Court, in its order of 29 November 1968, denied the said motion "for the reason that there is no identity of rights asserted and relief prayed
for and for the further reason that it does not appear that any judgment which would be rendered on the other action will amount to res adjudicatain the herein
case."7 The same court order set the case for hearing on 12 December 1968.

On 12 December 1968, defendant-petitioner was declared in default for failure to file his answer to the forcible entry case and the City Court set the reception
of plaintiffs-respondents' evidence for the following day. On 16 January 1969 the same court rendered its decision —

... ordering the defendant ... to vacate the premises in question and deliver possession thereof to the plaintiffs; to pay ... the sum of FIVE
HUNDRED PESOS (P500.00) a month as rental and the same to commence from March, 1968 until possession thereof shall be delivered
to the plaintiffs; and to pay the costs.

Defendant-petitioner then moved for the reconsideration of the aforesaid order of 29 November 1968 denying his motion to dismiss the complaint for forcible
entry, and also the decision of 16 January 1969. However, his motion was denied in the City Court order of 4 March 1969. 8

Defendant-petitioner appealed to the Court of First Instance and it was docketed therein as Civil Case No. 6470. In a motion dated 5 July 1969, defendant-
petitioner reiterated his arguments for the dismissal of the complaint for forcible entry as stated in his earlier motion in the City Court. In the meantime,
plaintiffs-respondents moved for the issuance of an order for the immediate execution of the City Court decision of 16 January 1969. On 29 July 1969, the
court a quo  denied the motion to dismiss of 5 July 1969 for lack of merit, and at the same time granted the immediate execution of the City Court judgment.
His motion for reconsideration having been denied, and his appeal dismissed, defendant filed the herein petition, claiming that the lower court —

1. Did not acquire jurisdiction over the action for forcible entry, the verification of the corresponding complaint being void;

2. Erred in not dismissing the complaint for forcible entry filed a month after an action for recovery of possession and quieting of title had
been filed by respondents against petitioner over the same cause of action, the same subject matter and the same parties;

3. Erred in granting the issuance of immediate execution before resolving the issue of the pendency of another action between the same
parties over the same subject matter.

4. Erred in awarding P500.00 monthly rental in the complaint for forcible entry without any evidence as against the claim of P300.00
monthly rental in the action for recovery of possession and quieting of title; and

5. Erred in dismissing the appeal of petitioner who has been declared in default, without considering that a legal issue on the ruling of the
inferior court denying the motion to dismiss is raised.

It is pointed out in the first assigned error that since the verification in the complaint for forcible entry does not comply with Section 6, Rule 7, of the Revised
Rules of Court, the complaint is void; hence, the City Court, and subsequently the court a quo, did not acquire jurisdiction over the said case.

The verification in question states:

xxx xxx xxx

 I, CATALINO DE LA VICTORIA, under oath, allege: that I am one of the plaintiffs in the above-entitled case; that I have read the
allegations thereof; that they are true and correct.

xxx xxx xxx

Section 6, Rule 7, Revised Rules of Court provides:

... Verification. — A pleading is verified only by an affidavit stating that the person verifying has read the pleading and that the allegations
thereof are true of his own knowledge.

Verification based on information and belief, or upon knowledge, information and belief shall be deemed insufficient.

Catalino dela Victoria, one of the plaintiffs (now respondents) clearly referred to the allegations in the complaint as having been read by him. However, while
he stated that "they are true and correct," he omitted to state that said conclusion was reached of his own knowledge. The latter detail, however, is logically
inferable since affiant was a party and it does not appear that he was verifying upon information and belief. If petitioner entertained doubt about the true
character of the verification, he should have asked that it be made more definite.

Moreover, even if We should find the verification insufficient, that insufficiency would not render the complaint for forcible entry, or the whole proceedings in the
court below, void. This Court already held in several decisions that the requirement regarding verification is not jurisdictional, but merely formal. Thus,
in Villasanta vs. Bautista, 
L-30874, 26 November 1970, 36 SCRA 160, 170-171, this Court ruled:

5. Finally a word on respondents' insistence on their contention, citing inapplicable appellate court decisions, that "a pleading which lacks
the required verification is fatal and does not confer jurisdiction." Respondents' contention that petitioner Villasanta's (the corporation's)
verification of the petition "that the allegations therein contained are true and correct" is "insufficient" for non-compliance with the Rule's
requirement that affiant state the allegations are "true of his own knowledge" is untenable. The Court has consistently held that the
reglementary phrase "true of his own knowledge" is not a talismanic formula, the use of which would insure the granting of a petition and
non-use whereof would result in a decree of dismissal. It has ruled absence of verification not to be fatally defective in meritorious cases'.
What is important is that the object of the Rule, to insure good faith and veracity in the material averments of the petition, be complied with,
so that the court may properly act on the case. Here, the petition has complied with the requirement in form and in substance. Villasanta in
effect certified of his own knowledge to the truth of the petition as a whole, but with reference to the averments in paragraph 8 of the
petition as to respondents' acts of intrusion and coercion at the concession area on 15 August 1969, specifically submitted with the petition
the affidavits of on-scene witnesses Cone and two other company officials attesting thereto of their own knowledge.

Thus, while it is true that Section 1, Rule 70, of the Revised Rules of Court requires the verification of the complaint for forcible entry, the insufficiency of the
same, or its being defective, is not fatal to the jurisdiction of the City Court or that of the court a quo to which the case was later appealed.

This Court went to hold further in Oshita vs. Republic,9 that —

... While the petition now before Us was not verified, it was, however, subscribed and sworn to by the petitioner, and We believe that the
lower court did not commit a reversible error when it denied the motion to dismiss the petition upon the ground of lack of jurisdictional . The
jurisdiction of the court was not affected by the absence of the proper verification of the petition. It may be stated here, though, that the
lower court should have required appellee to have her petition verified before setting the case for hearing, in order to have the petition
conform with the rule.10

It will also be noted that defendant-petitioner raises the question of jurisdiction for the first time in this appeal, hence, he is now barred by laches. This Court
ruled in Tijam vs. Sibonghanoy  11 that —

... a party can not invoke the jurisdiction of a court to secure affirmative relief against his opponent and, after obtaining or failing to obtain
such relief, repudiate or question that same jurisdiction  (Dean vs. Dean, 136 Or. 694, 86 A. L. R. 79).

In the case just cited, by way of explaining the rule, it was further said that the question whether the court had jurisdiction either of the
subject-matter of the action or of the parties is barred from such conduct not because the judgment or order of the court is valid and
conclusive as an adjudication, but for the reason that such a practice can not be tolerated — obviously for reasons of public policy.

Furthermore, it has also been held that after voluntarily submitting a cause and encountering an adverse decision on the merits, it is too
late for the loser to question the jurisdiction power of the court ... And in Littleton vs. Burgos, 16 Wyo, 58, the Court said that it is not right
for a party who has affirm and invoked the jurisdiction of a court in a particular matter to secure an affirmative relief, to afterwards deny that
same jurisdiction to escape a penalty. 12

Defendant-petitioner invoked the jurisdiction of the City Court when it sought to dismiss the complaint for forcible entry on the ground that the cause of action in
this case is the same as in Civil Case No. 6005, supra. After defendant-petitioner was declared in default, and the decision rendered against him, said party
again submitted to said jurisdiction by filing a motion for reconsideration of said decision. His motion having been denied, he appealed the case to the court  a
quo  where he also filed a motion, dismiss the forcible entry case on the same grounds stated in a similar motion before the City Court. Thus, defendant
petitioner voluntarily invoked and submitted himself to the jurisdiction of both courts. Having failed to obtain the relief sought from these courts, he can not now
question the jurisdiction invoked.

With respect to the second assignment of error, one the grounds for a motion to dismiss under Rule 16 of the Revised Rules of Court is the pendency of
another action between the same parties for the same cause. 13

In order that this ground may be availed of there must be, between the action under consideration and the other action, (1) identity of parties, or at least such
as representing the same interest in both actions; (2) identity rights asserted and relief prayed for, the relief being founded on the same facts; and (3) the
identity on the two preceeding particulars should be such that any judgment which may be rendered on the other action will regardless which party is
successful amount to res adjudicata  in the action under consideration. 14
While there may be identity of parties and subject matter in the forcible entry case and Civil Case No. 6005, for quieting of title, the rights asserted and the
relief prayed for in the said cases are not the same. In the former case, to the legal right claimed is possession, while in the latter case, the legal right asserted
is ownership.

We can not assent to the proposition that the motion to dismiss should have been granted by the Municipal Court of origin, and sustained on appeal by the
Court of First Instance, for the reason that the question of ownership was necessarily involved in the action for forcible entry (not for unlawful detainer), as is
proved by the admitted pendency of the prior suit for quieting of title in the Court of First Instance. While the fact that triggered both actions was appellant
Quimpo's forcible invasion of respondent's titled property in March of 1968, on the pretext that the part of respondent's land forcibly entered and occupied by
him was part of the area covered by his pasture permit from the Bureau of Forestry, still the causes of action in the two cases are distinct from each other. In
the action to quiet title the question involved is whether the pasture permit could include property for which O.C.T. No. P-2385 of the Registry of Deeds of
Davao province had been previously issued to appellees de la Victoria. But in the forcible entry  case, the issue is whether, assuming that Quimpo's pasture
permit were valid, he had the right to forcibly eject the prior occupants, who were appellees de la Victoria, even destroying their improvements. In other words,
in the quieting of title case, the Court must decide who had the better right. In the Municipal court, the issue was, in effect, whether an owner can take the law
in his own hands. That he can not do so seems incontestable: it is not so much a question of possession as it is one of law and order. To require appellees de
la Victoria to acquiesce to the high-handed conduct of appellant Quimpo, and to submit to his tour de force, until the superiority of their Torrens Title is finally
adjudged, after God knows how many years, is undoubtedly against all justice and equity.

It is contended in the next assigned error that immediate execution of the City Court decision in the forcible entry case should not have been granted pending a
resolution of the issue of the pendency of another action between the same parties over the same subject matter.

The contention is without merit. Section 8, Rule 70, of Revised Rules of Court not only authorizes but also requires the immediate execution of a judgment in
plaintiff's favor. The said provision, taken in relation to that of section 10 of the same Rules, is mandatory, 15 the only exception being when the delay is due to
fraud, accident, mistake, excusable negligence. 16 The purpose of the law is to prevent further damages to him caused by the loss of his
possession. 17 However, defendant may stay execution (a) by perfecting his appeal and filing a supersedeas bond; and (b) by depositing from time to time, with
the Court First Instance, during the pendency of the appeal, the amount or rents or the reasonable value of the use and occupation of the property as fixed by
the justice of peace or municipal court in its judgment. 18

While defendant-petitioner perfected the appeal, he did not file a supersedeas bond and deposit the monthly rentals of P500.00 monthly fixed by the City
Court. In the absent thereof, he can not be heard to complain against the immediate execution of the judgment which is legally sanctioned.

Defendant-petitioner likewise questions the amount P500.00 as monthly rental of the subject parcel of land fixed by the City Court.

The question of rental is a factual issue, and in the absence of proof to show that the said court abused its discretion in awarding the same, We are not
inclined to disturb said finding. This award, however, may be raised as a defense in Civil Case No. 6005 for quieting of title where rental is also prayed for by
plaintiffs-respondents for the possession of the land as incident to their claim of ownership.

The issues raised against the decision of the City Court of Davao being unmeritorious, as previously shown, it becomes irrelevant to discuss the final question
of whether defendant-petitioner can appeal the judgment of the inferior court which declared him in default.

WHEREFORE, finding no reversible error in the orders appealed from, the same are hereby affirmed, with costs against defendant-petitioner.

[G.R. NO. 152579 : August 4, 2009]

SAMEER OVERSEAS PLACEMENT AGENCY, INC., Petitioner, v. MILDRED R. SANTOS, in her official capacity as President of, and/or ASBT
INTERNATIONAL MANAGEMENT SERVICE, INC., LORD NELSON SANTOS, DANILO BALCITA, NICSON CRUZ, PEPITO MANGLICMOT, and ALLAN
ARANES, Respondents.

DECISION

NACHURA, J.:

This is a petition1 for review on certiorari under Rule 45 of the Rules of Court assailing the Decision 2dated December 10, 2001 and the Resolution3 dated
March 12, 2002 of the Court of Appeals in CA-G.R. SP No. 65068 entitled ASBT International Management Service Incorporated v. National Labor Relations
Commission, Sameer Overseas Placement Agency, Incorporated, Lord Nelson Santos, et al.

The antecedents are as follows:

On December 5, 1995, private respondents Lord Nelson Santos, Danilo Balcita, Nicson Cruz, Pepito Manglicmot, and Allan Aranes (Santos, et al.) were
recruited by petitioner Sameer Overseas Placement Agency, Inc. (Sameer) as aluminum products manufacturer operators for Ensure Company Ltd. of Taiwan
(Ensure), under a one-year employment contract with a basic monthly salary of NT$14,800.00.

Santos, et al. were deployed and were able to work for Ensure. However, they were repatriated even prior to the expiration of their contracts. Consequently, in
July and August 1996, Santos, et al. filed complaints against Sameer before the National Labor Relations Commission (NLRC) for illegal dismissal,
underpayment of salaries, and unauthorized salary deductions.

On November 3, 1997, Sameer filed a third party complaint against private respondent ASBT International Management Service, Inc. (ASBT). It claimed that
the latter should be liable for all the contractual obligations of Ensure since Sameer's accreditation was transferred to ASBT on June 9, 1997.

On December 29, 1999, the Labor Arbiter rendered a Decision, 4 disposing as follows'

WHEREFORE, premises considered, SAMEER is hereby ordered to pay the complainants:

1. The amount of NT$156,120.00 to LORD NELSON SANTOS covering the underpayment of monthly salaries for the period of five (5) months, salaries for the
unexpired portion of the contract and refund of the unauthorized salary deduction, Sixty Five Thousand (P65,000.00) Pesos as refund of the placement fee
and guaranty fee less Five Thousand (P5,000.00) Pesos, and Six Thousand (P6,000.00) Pesos as refund for the cost of his plane ticket;

2. The amount of NT$154,560.00 to DANILO BALCITA covering the underpayment of monthly salaries for the period of six (6) months, salaries for the
unexpired portion of the contract and refund of the unauthorized salary deduction, Sixty Five Thousand (P65,000.00) Pesos as refund of the placement fee
and guaranty fee less Five Thousand (P5,000.00) Pesos, and Six Thousand (P6,000.00) Pesos as refund for the cost of his plane ticket;

3. The amount of NT$174,048.00 to EMMANUEL DEMILLO covering the underpayment of monthly salaries for the period of four (4) months, salaries for the
unexpired portion of the contract and refund of the unauthorized salary deduction, Sixty Five Thousand (P65,000.00) Pesos as refund of the placement fee
and guaranty fee less Five Thousand (P5,000.00) Pesos, and Six Thousand (P6,000.00) Pesos as refund for the cost of his plane ticket;

4. The amount of NT$172,560.00 to NICZON CRUZ covering the underpayment of monthly salaries for the period of four (4) months, salaries for the unexpired
portion of the contract and refund of the unauthorized salary deduction, Sixty Five Thousand (P65,000.00) Pesos as refund for the placement fee and guaranty
fee less Five Thousand (P5,000.00) Pesos, and Six Thousand (P6,000.00) Pesos as refund for the cost of his plane ticket;

5. The amount of NT$152,560.00 to PEPITO MANGLICMOT covering the underpayment of monthly salaries for the period of four (4) months, salaries for the
unexpired portion of the contract and refund of the unauthorized salary deduction, Sixty Five Thousand (P65,000.00) Pesos as refund of the placement fee
and guaranty fee less Five Thousand (P5,000.00) Pesos, and Six Thousand (P6,000.00) Pesos as refund for the cost of his plane ticket;

6. The amount of NT$65,280.00 to DANIEL DUMLAO covering the underpayment of monthly salaries for the period of four (4) months, salaries for the
unexpired portion of the contract and refund of the unauthorized salary deduction, Sixty Five Thousand (P65,000.00) Pesos as refund of the placement fee
and guaranty fee less Five Thousand (P5,000.00) Pesos, and Six Thousand (P6,000.00) Pesos as refund for the cost of his plane ticket;

7. The amount of NT$156,120.00 to ALLAN ARANES covering the underpayment of monthly salaries for the period of four (4) months, salaries for the
unexpired portion of the contract and refund of the unauthorized salary deduction, Sixty Five Thousand (P65,000.00) Pesos as refund of the placement fee
and guaranty fee less Five Thousand (P5,000.00) Pesos, and Six Thousand (P6,000.00) Pesos as refund for the cost of his plane ticket;

8. The amount of Fifty Thousand (P50,000.00) Pesos each as moral damages;

9. Attorney's fees and litigation expenses equivalent to ten percent (10%) of the total monetary award.

SO ORDERED.5

Dissatisfied, Sameer appealed to the NLRC alleging, among others, that the Labor Arbiter committed grave abuse of discretion in failing to decide the third-
party complaint, to its damage and prejudice, insisting that it should have been absolved of any and all liabilities pertaining to the claims of Santos, et al.

On January 24, 2001, the NLRC promulgated its Decision, 6 the dispositive portion of which reads'

WHEREFORE, premises considered, the appealed decision is hereby SET ASIDE and a new one entered absolving SAMEER Overseas Placement Agency,
Inc. from its liabilities in view of the transfer of accreditation to ASBT Management Services, Inc. and ordering the latter to pay the following:

1. Danilo Balcita '

P44,640.00 - representing his salary for the unexpired portion of the contract

P19,880.00 - representing refund of his placement fee

2. Nicson Cruz

P44,640.00 - representing his salary for the unexpired portion of the contract

P19,880.00 - representing refund of his placement fee

3. Pepito Manglicmot

P44,640.00 - representing his salary for the unexpired portion of the contract

P19,980.00 - representing refund of his placement fee

4. Lord Nelson Santos

P44,640.00 - representing his salary for the unexpired portion of the contract

P19,880.00 - representing refund of his placement fee

All other claims are dismissed for want of legal and factual basis.

SO ORDERED.7

Aggrieved, ASBT moved for reconsideration. The NLRC denied the motion for lack of merit.
ASBT elevated the case to the Court of Appeals via a petition for certiorari under Rule 65 of the Rules of Court. However, in a Resolution 8 dated June 19,
2001, the Court of Appeals denied due course and dismissed ASBT's petition on the ground that the attached Verification and Certification of Non-Forum
Shopping was signed by Mildred R. Santos as President of ASBT without any proof of authority to sign for and bind ASBT in the proceedings.

ASBT filed a motion for reconsideration of the June 19, 2001 Resolution, submitting therewith the necessary board resolution authorizing corporate president
Mildred R. Santos to represent ASBT before the Court of Appeals. The appellate court granted the motion and reinstated the petition.

In its December 10, 2001 Decision, the Court of Appeals ruled in favor of ASBT. The decretal portion of the Decision reads'

WHEREFORE, premises considered, the petition is GRANTED. The assailed decision and resolution of the public respondent NLRC are SET ASIDE. Sameer
Overseas Placement Agency, Inc. is hereby ordered to pay the following to:

1. Danilo Balcita - a). P44,640.00, representing his salary for the unexpired portion of the contract; b). P19,880.00, representing refund of his placement.

2. Nicson Cruz - a). P44,640.00, representing his salary for the unexpired portion of the contract; b). P19,880.00, representing refund of his placement fee.

3. Pepito Manglicmot - a). P44,640.00, representing his salary for the unexpired portion of the contract; b). P19,880,00, representing refund of his placement
fee.

4. Lord Nelson Santos - a). P44,640.00, representing his salary for the unexpired portion of the contract; b). P19,880.00, representing refund of his placement
fee.

All other claims are DISMISSED for want of legal and factual basis.

SO ORDERED.9

In ruling against Sameer, the Court of Appeals considered the following factual circumstances: (1) Sameer admitted that it hired and deployed Santos, et al. for
and in behalf of Ensure for work in Taiwan; (2) Sameer received the placement fees for the processing of the documents of Santos, et al., without any showing
that said fees inured to the benefit of ASBT in any way; (3) Santos, et al. were repatriated in 1996, prior to the supposed transfer of Sameer's accreditation to
ASBT on June 9, 1997; (4) the August 1, 1997 letter from the Philippine Overseas Employment Administration (POEA) presented by Sameer pronouncing the
transfer of accreditation of Yuan Fu Co. Ltd. to ASBT, upon Sameer's representation that Yuan Fu Co. Ltd. and Ensure were one and the same entity,
indicated that such accreditation of ASBT had been cancelled; and (5) Sameer failed to present substantial proof that Ensure changed its business name to
Yuan Fu.

Sameer, thus, moved to reconsider the December 10, 2001 Decision; but the Court of Appeals denied the same in its March 12, 2002 Resolution. Hence, this
petition.

The petition should be denied for utter want of merit.

First. Sameer contends that both the June 6, 2001 Petition and the July 5, 2001 Motion for Reconsideration filed by ASBT before the Court of Appeals were
signed by Mildred Santos, as corporate president, who is not a member of the Bar. As such, Sameer argues that both the Petition and the Motion for
Reconsideration should be considered unsigned pleadings which produce no legal effect, pursuant to the last paragraph of Section 3, Rule 7 of the Rules of
Civil Procedure.

We disagree. Section 3, Rule 7 of the Rules of Civil Procedure provides'

SEC. 3. Signature and address. Every pleading must be signed by the party or counsel representing him, stating in either case his address which should not
be a post office box.

The signature of counsel constitutes a certificate by him that he has read the pleading; that to the best of his knowledge, information, and belief there is good
ground to support it; and that it is not interposed for delay.

An unsigned pleading produces no legal effect. However, the court ay, in its discretion, allow such deficiency to be remedied if it shall appear that the same
was due to mere inadvertence and not intended for delay. Counsel who deliberately files an unsigned pleading, or signs a pleading in violation of this Rule, or
alleges scandalous or indecent matter therein, or fails to promptly report to the court a change of his address, shall be subject to appropriate disciplinary
action. (Emphasis supplied.)

Obviously, the rule allows the pleadings to be signed by either the party to the case or the counsel representing that party. In this case, ASBT, as petitioner,
opted to sign its petition and its motion for reconsideration in its own behalf, through its corporate president, Mildred R. Santos, who was duly authorized by
ASBT's Board of Directors to represent the company in prosecuting this case. Therefore, the said pleadings cannot be considered unsigned and without any
legal effect.

Second. Sameer also submits that ASBT violated the prohibition against forum shopping.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

It claims that the transfer of CA-G.R. SP No. 65068 from the Seventh Division of the Court of Appeals'which initially denied due course and dismissed the
petition then reinstated the same (upon proof that Mildred R. Santos as duly authorized) in the Former Fourth Division, which gave due course to and granted
the petition was actually an act of forum shopping. Sameer posits that the grant of ASBT's July 5, 2001 motion for reconsideration by the Seventh Division,
which reinstated the dismissed petition, in effect gave rise to a new petition.

The argument is sadly misplaced. Forum shopping is defined as an act of a party, against whom an adverse judgment or order has been rendered in one
forum, of seeking and possibly getting a favorable opinion in another forum, other than by appeal or special civil action for certiorari . It may also be the
institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable
disposition.10 There is forum shopping where the elements of litis pendentia are present, namely: (a) there is identity of parties, or at least such parties as
represent the same interest in both actions; (b) there is identity of rights asserted and relief prayed for, the relief being founded on the same set of facts; and
(c) the identity of the two preceding particulars is such that any judgment rendered in the pending case, regardless of which party is successful, would amount
to res judicata in the other.11 It is expressly prohibited by this Court because it trifles with and abuses court processes, degrades the administration of justice,
and congests court dockets. A willful and deliberate violation of the rule against forum shopping is a ground for summary dismissal of the case, and may also
constitute direct contempt.12

In this case, there is clearly no forum shopping committed by ASBT. The July 5, 2001 motion it filed praying for reconsideration of the June 19, 2001
Resolution of the Court of Appeals, dismissing the petition on the technical ground of lack of proof of the authority of ASBT President Mildred R. Santos to bind
the corporation in its appeal, is simply what it is, a motion for reconsideration. Sameer cannot insist that it be treated as a new petition just to make it fit the
definition of forum shopping in an attempt to evade liability to pay the amounts awarded to Santos, et al. Nor was Sameer correct when it asseverated that the
Seventh Division, that initially dismissed then reinstated ASBT's petition, and the Former Fourth Division, that rendered the questioned Decision and
Resolution in favor of ASBT, can be considered as different fora within the ambit of the prohibition. They are mere divisions of one and the same Court of
Appeals. And as explained by the appellate court, what actually happened was that after the Seventh Division issued its June 19, 2001 Resolution dismissing
the case for failure of ASBT to show that Mildred R. Santos was authorized to sign and bind the corporation in the proceedings, ASBT complied and submitted
the requisite proof of authority. The Seventh Division then issued a Resolution on August 14, 2001 reinstating the petition. After an internal reorganization, it
was the Fourth Division which promulgated a decision on December 10, 2001. ASBT never filed a second petition.

WHEREFORE, the petition is DENIED for lack of merit. The assailed December 10, 2001 Decision and the March 12, 2002 Resolution of the Court of Appeals
are AFFIRMED. Costs against petitioner.

SO ORDERED.

G.R. No. 172590               January 7, 2013

MARY LOUISE R. ANDERSON, Petitioner, 

vs.
ENRIQUE HO, Respondent.

DECISION

DEL CASTILLO, J.:

As her petition for review was dismissed by the Court of Appeals (CA) on a technical ground, petitioner now invokes the liberal application of the rules of
procedure.

Assailed in this Petition for Review on Certiorari 1 is the July 14, 2005 Resolution2 of the CA in CA-G.R. SP No. 89793 which dismissed the petition for review of
petitioner Mary Louise R. Anderson (Anderson) because the certification against forum shopping attached thereto was signed by counsel on her behalf without
the proper authority. Likewise assailed is the CA’s May 4, 2006 Resolution 3 denying the motion for reconsideration thereof.

Factual Antecedents

On June 5, 2003, Anderson filed a Complaint4 for Ejectment against respondent Enrique Ho (Ho) before the Metropolitan Trial Court (MeTC) of Quezon
City.5 She alleged that through her mere tolerance, Ho is in possession of her parcel of land at Roosevelt Avenue, Quezon City covered by Transfer Certificate
of Title No. N-1933686(Roosevelt property). As she was already in need of the said property, Anderson served upon Ho a Demand Letter to Vacate but despite
receipt thereof, Ho refused. Because of this, Anderson prayed that the MeTC order Ho to vacate the Roosevelt property and pay her damages and attorney’s
fees.

In his Answer with Compulsory Counterclaim,7 Ho denied that his occupation of the Roosevelt property is through Anderson’s mere tolerance. He claimed that
since Anderson is an American citizen, he managed her affairs in the Philippines and administered her properties in Quezon City and Cebu. When Anderson
sought his assistance in ejecting her relatives from the Roosevelt property and in demolishing the St. Anthony de Padua Church built thereon, Ho (1) secured
the services of a lawyer to file an ejectment case against the occupants of the property; (2) dutifully appeared in court on Anderson’s behalf who was then in
the United States of America (U.S.A.); and (3) was able to secure a judgment from the court in favor of Anderson. For all these, Anderson did not pay Ho a
single centavo and instead executed a written document dated January 14, 1999 8 which states that as partial payment for Ho’s services, Anderson is
authorizing him "to make use of the Roosevelt property as his residence free of charge provided he vacates [it] if there is a buyer for the lot" and "that the
balance of Ho’s compensation shall consist of 10% of the proceeds of the sale of any or all of her properties located in Roosevelt Avenue, M.H. del Pilar Street
and Ana Maria Street, all in Quezon City; Cebu City; and Cebu province". In view of this, Ho averred that he possesses the property not through mere
tolerance but as part of his compensation for services rendered to Anderson. Hence, he is entitled to the continued possession thereof until such time that the
property is sold and he is paid the 10% of the proceeds of its sale.

Ruling of the Metropolitan Trial Court

On June 25, 2004, the MeTC rendered a Decision9 dismissing the case for lack of cause of action. It gave much weight to the written document executed by
Anderson wherein she gave her consent for Ho to occupy the Roosevelt property provided that the latter shall vacate the same if there is already a buyer for
the lot. There being no allegation that the said property already has a buyer, she could not eject Ho therefrom.

Ruling of the Regional Trial Court

On appeal, the Regional Trial Court (RTC) in its Decision 10 of January 21, 2005 ruled as follows:

The evidence of the parties thus stands upon an equipoise. With the equiponderance of evidence, the Court is inclined to consider the dismissal of the
complaint as without prejudice depending on the outcome of the determination in the proper forum whether or not the written document dated January 14,
1999 x x x was falsified.

WHEREFORE, the Court modifies the Decision dated June 25, 2004 of the Metropolitan Trial Court of Quezon City in Civil Case No. 30840 by dismissing the
complaint without prejudice.
SO ORDERED.11

Anderson moved for reconsideration,12 but the same was denied by the RTC in an Order 13 dated April 1, 2005, a copy of which was received by her counsel on
May 5, 2005.14

Ruling of the Court of Appeals

Intending to file with the CA a Petition for Review under Rule 42 of the Rules of Court, Anderson’s counsel, Atty. Rommel V. Oliva (Atty. Oliva), filed a Motion
for Extension of Time of 15 days from May 20, 2005 or until June 4, 2005 within which to file a petition 15 allegedly due to the revisions required in the initial
draft and on account of heavy pressure of work. This was granted by the CA in a Minute Resolution 16 dated May 31, 2005. Subsequently, said counsel sought
another extension of 15 days or until June 19, 2005, 17 this time claiming that the petition had already been finalized and sent to Anderson in Hawaii, U.S.A. for
her to read as well as sign the certification and verification portion thereof. However, as of the last day of the extended period on June 4, 2005, the petition has
not yet been sent back, hence, the additional extension being sought. In the interest of justice, the CA once again granted the said motion for extension. 18 On
June 20, 2005,19 Atty. Oliva was finally able to file the Petition for Review 20 but the certification against forum shopping attached thereto was signed by him on
Anderson’s behalf without any accompanying authority to do so. Hence, the CA issued a Resolution 21 on July 14, 2005, viz:

The Court resolves to DISMISS herein Petition for Review as the certification against forum shopping was executed not by the petitioner herself but by her
counsel without attaching therewith any special authority to sign on her behalf.

SO ORDERED.22

Anderson filed a Motion for Reconsideration.23 During its pendency, she also filed a Manifestation 24 to which was attached an Affidavit25 and a Special Power of
Attorney (SPA)26 authorizing her counsel to cause the preparation and filing of the Petition for Review and to sign and execute the verification and certification
against forum shopping on her behalf. She explained in the Affidavit that at the time the petition was filed, her health condition hindered her from going to the
proper authority to execute the necessary SPA so she just verbally instructed her lawyer to draft the petition and cause the filing of the same. Nevertheless,
upon learning of the dismissal of her case, she returned to the Philippines even against her doctor’s advice and executed an SPA in favor of her counsel. She
thus prayed that the subsequently submitted documents be considered in resolving her pending Motion for Reconsideration.

The CA, however, remained unswayed and denied the Motion for Reconsideration in a Resolution 27 dated May 4, 2006.

Hence, this Petition for Review on Certiorari.

The Parties’ Arguments

Anderson prays for the relaxation of the rules on certification against forum shopping and cites a number of jurisprudence wherein the Court considered the
subsequent submission or correction of a certificate of non-forum shopping as substantial compliance. One in particular is Donato v. Court of Appeals 28 which
she claims to be on all fours with the present case. Moreover, Anderson stresses that the merits of the case should at all times prevail over the rigid application
of technical rules. She then proceeds to discuss her arguments relating to the substantial merits of her petition.

On the other hand, Ho points out that despite the extensions granted by the CA within which to file the Petition for Review, Anderson still failed to sign the
certification against forum shopping. This, he avers, demonstrates Anderson’s brazen disregard of technical rules. Anent the argument of substantial
compliance, Ho cites Mendigorin v. Cabantog29 where the Court reiterated its earlier pronouncement that substantial compliance will not suffice in a matter
involving strict observance of the rule regarding a certificate of non-forum shopping. 30 At any rate, Ho insists that Anderson has no sufficient cause of action for
ejectment and damages against him.

Our Ruling

The petition has no merit.

No justifiable reason exists in this case

as to relax the rule on certification

against forum shopping.

The need to abide by the Rules of Court and the procedural requirements it imposes has been constantly underscored by this Court. One of these procedural
requirements is the certificate of non-forum shopping which, time and again, has been declared as basic, necessary and mandatory for procedural
orderliness.31

In Vda. De Formoso v. Philippine National Bank,32 the Court reiterated the guidelines respecting non-compliance with or submission of a defective certificate of
non-forum shopping, the relevant portions of which are as follows:

4) As to certification against forum shopping, non-compliance therewith or a defect therein, x x x, is generally not curable by its subsequent submission or
correction thereof, unless there is a need to relax the Rule on the ground of ‘substantial compliance’ or presence of ‘special circumstances or compelling
reasons’.

xxxx

6) Finally, the certification against forum shopping must be executed by the party-pleader, not by his counsel. If, however, for reasonable or justifiable reasons,
the party-pleader is unable to sign, he must execute a Special Power of Attorney designating his counsel of record to sign on his behalf. 33 (Emphasis supplied)

The requirement that it is the petitioner, not her counsel, who should sign the certificate of non-forum shopping is due to the fact that a "certification is a
peculiar personal representation on the part of the principal party, an assurance given to the court or other tribunal that there are no other pending cases
involving basically the same parties, issues and causes of action." 34 "Obviously, it is the petitioner, and not always the counsel whose professional services
have been retained for a particular case, who is in the best position to know whether sheactually filed or caused the filing of a petition in that case." 35 Per the
above guidelines, however, if a petitioner is unable to sign a certification for reasonable or justifiable reasons, she must execute an SPA designating her
counsel of record to sign on her behalf. "A certification which had been signed by counsel without the proper authorization is defective and constitutes a valid
cause for the dismissal of the petition."36

In this light, the Court finds that the CA correctly dismissed Anderson’s Petition for Review on the ground that the certificate of non-forum shopping attached
thereto was signed by Atty. Oliva on her behalf sans any authority to do so. While the Court notes that Anderson tried to correct this error by later submitting
an SPA and by explaining her failure to execute one prior to the filing of the petition, this does not automatically denote substantial compliance. It must be
remembered that a defective certification is generally not curable by its subsequent correction. And while it is true that in some cases the Court considered
such a belated submission as substantial compliance, it "did so only on sufficient and justifiable grounds that compelled a liberal approach while avoiding the
effective negation of the intent of the rule on non-forum shopping." 37

Unlike in Donato38 and the other cases cited by Anderson, no sufficient and justifiable grounds exist in this case as to relax the rules on certification against
forum shopping.

In Donato, the CA dismissed therein petitioner’s Petition for Review on the ground, among others, that the certification against forum shopping was signed by
his counsel. In filing a motion for reconsideration, petitioner submitted a certification duly signed by himself. However, the CA ruled that his subsequent
compliance did not cure the defect of the instant petition and denied his Motion for Reconsideration. When the case reached this Court, it was held, viz:

The petition for review filed before the CA contains a certification against forum shopping but said certification was signed by petitioner’s counsel. In submitting
the certification of non-forum shopping duly signed by himself in his motion for reconsideration, petitioner has aptly drawn the Court’s attention to the physical
impossibility of filing the petition for review within the 15-day reglementary period to appeal considering that he is a resident of 1125 South Jefferson Street,
Roanoke, Virginia, U.S.A. where he needs to personally accomplish and sign the verification.

We fully agree with petitioner that it was physically impossible for the petition to have been prepared and sent to the petitioner in the United States, for him to
travel from Virginia, U.S.A. to the nearest Philippine Consulate in Washington, D.C., U.S.A. in order to sign the certification before the Philippine Consul, and
for him to send back the petition to the Philippines within the 15-day reglementary period. Thus, we find that petitioner has adequately explained his failure to
personally sign the certification which justifies relaxation of the rule.

We have stressed that the rules on forum shopping, which were precisely designed to promote and facilitate the orderly administration of justice, should not be
interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective which is simply to prohibit and penalize the evils of forum-
shopping. The subsequent filing of the certification duly signed by the petitioner himself should thus be deemed substantial compliance, pro hac vice. 39

While at first blush Donato appears to be similar with the case at bench, a deeper and meticulous comparison of the two cases reveals essential differences. In
Donato, the Court held that it was impossible for the petition to have been prepared and sent to the therein petitioner in the USA; for him to travel from Virginia
to the nearest Philippine Consulate in Washington D.C.; and for the petition to be sent back to the Philippines within the 15-day reglementary period. The same
could not, however, be said in this case. It must be remembered that on top of the 15-day reglementary period to file the petition, Atty. Oliva sought and was
granted a total extension of 30 days to file the same. Hence, Anderson had a total of 45 days to comply with the requirements of a Petition for Review as
against the 15 days afforded to the petitioner in Donato. To this Court, the said period is more than enough time for Anderson to execute an SPA before the
nearest Philippine Consulate, which again unlike in Donato, was located in the same state where Anderson was (Hawaii), and thereafter to send it to the
Philippines. Anent her allegation that her health condition at that time hindered her from going to the proper authorities to execute an SPA, the same deserves
scant consideration as no medical certificate was submitted to support this. "Indeed, the age-old but familiar rule is that he who alleges must prove his
allegations."40

Moreover, simultaneous with the filing of a Motion for Reconsideration, the proper certificate of non-forum shopping was submitted by the petitioner in Donato.
Notably in this case, the SPA was submitted two months after the filing of Anderson’s Motion for Reconsideration. It took that long because instead of
executing an SPA before the proper authorities in Hawaii and sending the same to the Philippines, Anderson still waited until she came back to the country
and only then did she execute one. It thus puzzles the Court why Anderson opted not to immediately submit the SPA despite her awareness that the same
should have been submitted simultaneously with the Petition for Review. Hence, it cannot help but conclude that the delay in the submission of the SPA is
nothing but a product of Anderson’s sheer laxity and indifference in complying with the rules. It is well to stress that "rules are laid down for the benefit of all
and should not be made dependent upon a suitor’s sweet time and own bidding." 41 They should be faithfully complied with42 and may not simply be ignored to
suit the convenience of a party.43 Although they are liberally construed in some situations, there must, however, be a showing of justifiable reasons and at least
a reasonable attempt at compliance therewith,44 which unfortunately are not obtaining in this case.

In view of the foregoing, this Court affirms the CA’s dismissal of Anderson’s Petition for Review. 1âwphi1

As a final note, the Court reiterates that:

x x x procedural rules are designed to facilitate the adjudication of cases. Courts and litigants alike are enjoined to abide strictly by the rules. While in certain
instances, we allow a relaxation in the application of the rules, we never intend to forge a weapon for erring litigants to violate the rules with impunity. The
liberal interpretation and application of rules apply only in proper cases of demonstrable merit and under justifiable causes and circumstances. While it is true
that litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure to ensure an
orderly and speedy administration of justice. Party litigants and their counsels are well advised to abide by rather than flaunt, procedural rules for these rules
illumine the path of the law and rationalize the pursuit of justice. 45

WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed Resolution dated July 14, 2005 and May 4, 2006 of the Court of Appeals in CA-
G.R. SP No. 89793 are AFFIRMED.

SO ORDERED.

[G.R. No. L-75349. October 13, 1986.]

ROSALINA BUAN, RODOLFO TOLENTINO, TOMAS MERCADO, CECILIA MORALES, LIZA OCAMPO, Quiapo Church Vendors, for themselves and all
 others similarly situated as themselves, Petitioners, v. OFFICER-IN-CHARGE GEMILIANO C. LOPEZ, JR., OFFICE OF THE MAYOR OF
MANILA, Respondent.

DECISION

NARVASA, J.:

On August 5, 1986 petitioners instituted in this Court a special civil action for prohibition to the end that respondent Gemiliano C. Lopez, Jr., acting as Mayor of
the City of Manila, be "perpetually prohibited from arbitrarily, whimsically and capriciously revoking or cancelling . . . their licenses or permits (as hawkers or
street vendors) and threatening the physical demolition of their respective business stalls in the places specified in such licenses or permits. 1 They also
sought a temporary restraining order in view of Mayor Lopez’ actual threats of physical demolition of their respective small business establishment at 12:00
noon today." This the Court granted on the same day. 2 

Petitioners claim to be five of about 130 "licensed and duly authorized vendors of . . . religious articles, medicine herbs and plants around the Quiapo Church, .
. . Manila," bringing suit ‘for themselves and all others similarly situated as themselves." 3 They allege that their licenses "were revoked or cancelled (by
respondent Mayor) for reasons unknown to them which is tantamount to deprivation of property without due process of laws," written notice of such
cancellation having been served on them on or about May 30 (actually May 3), 1986; that the revocation of their licenses was beyond respondent Mayor’s
competence, since Section 171 (n) of the Local Government Code (B.P. Blg. 337) authorizes the same only "for violation of the law or ordinances or conditions
upon which they have been granted," and no such violation had been committed by them; 4 but this notwithstanding, respondent Mayor "bad given (them) an
ultimatum of 7:00 up to 12:00 o’clock in the afternoon" (of August 5, 1986) to vacate the premises where their respective stalls are situated or suffer physical
demolition thereof." 5 

In the light of the facts disclosed by the pleadings 6 and at the hearing of the case on August 13, 1986, the petition must be given short
shrift.chanroblesvirtualawlibrary

The action must in the first place be abated on the ground of lis pendens, or more correctly, auter action pendant; pendency of another action between the
same parties for the same cause. 7 

It appears that on July 7, 1986 there was filed in the Regional Trial Court of Manila, docketed as Civil Case No. 86-36563, a special civil action of "prohibition
with preliminary injunction" against Acting Manila City Mayor Gemiliano Lopez, Jr. 8 It was filed by Samahang Kapatiran Sa Hanapbuhay Ng Bagong Lipunan,
Inc." (hereafter, simply "Samahan") composed, according to the petition, of "some 300 individual owners and operators of separate business stalls . . . mostly
at the periphery immediately beyond the fence of the Quiapo Church." The president of the Samahan is Rosalina Buan and its Press Relations Officer, Liza
Ocampo. 9 Rosalina Buan and Liza Ocampo are two of the five petitioners in the case at bar, 10 described in the petition before this Court as suing "for
themselves and all others similarly situated as themselves" : i.e., vendors "around the Quiapo Church." 11 The three other petitioners also appear to be
Samahan members. 12 

The petition in Case No. 86-36563 is grounded on the same facts as those in the case at bar: the members of the Samahan had been legitimately engaged "in
their respective business of selling sundry merchandise, more particularly religious articles, flowers and ornamental plants, and medicinal herbs;" they had
been religiously paying "the corresponding license and permit fees imposed by prevailing ordinances of the City of Manila," but this notwithstanding they had
been given written notice dated May 3, 1986 emanating from the Mayor’s Office, advising of the cancellation of their permits and their possible relocation to
another site; and these acts "are unjust, illegal, arbitrary, oppressive and constitute grave abuse of discretion on the part of the Respondent."cralaw virtua1aw
library

There thus exists between the action before this Court and RTC Case No. 86-36563 identity of parties, or at least such parties as represent the same interests
in both actions, as well as identity of rights asserted and relief prayed for, the relief being founded on the same facts, and the identity on the two preceding
particulars is such that any judgment rendered in the other action, will regardless of which party is successful, amount to res adjudicata in the action under
consideration: all the requisites, in fine, of auter action pendant. 13 

Indeed, the petitioners in both actions, described in their petitions as vendors of religious articles, herbs and plants, and sundry merchandise around the
Quiapo Church or its "periphery," have incurred not only the sanction of dismissal of their case before this Court in accordance with Rule 16 of the Rules of
Court, but also the punitive measure of dismissal of both their actions, that in this Court and that in the Regional Trial Court as well. Quite recently, upon
substantially identical factual premises, the Court en banc had occasion to condemn and penalize the act of litigants of filing the same suit in different courts,
aptly described as "forum-shopping," viz:jgc:chanrobles.com.ph

"The acts of petitioners constitute a clear case of forum-shopping, an act of malpractice that is proscribed and condemned as trifling with the courts and
abusing their processes. It is improper conduct that tends to degrade the administration of justice. The rule has been formalized in Section 17 of the Interim
Rules and Guidelines issued by this Court on January 11, 1983 in connection with the implementation of the Judiciary Reorganization Act, specifically with the
grant in Section 9 of B.P. Blg. 129 of equal original jurisdiction to the Intermediate Appellate Court to issue writs of mandamus, prohibition, etc., and auxiliary
writs or processes, whether or not in aid of its appellate jurisdiction Thus, the cited Rule provides that no such petition may be filed in the Intermediate
Appellate Court ‘if another similar petition has been filed or is still pending in the Supreme Court’ and vice versa. The Rule orders that ‘A violation of the rule
shad constitute contempt of court and shall be a cause for the summary dismissal of both petitions, without prejudice to the taking of appropriate action against
the counsel or party concerned.’ The rule applies with equal force where the party having filed an action in the Supreme Court shops for the same remedy of
prohibition and a restraining order or injunction in the regional trial court . . . (or vice versa). . . ." 14 

As already observed, there is between the action at bar and RTC Case No. 86-36563, an identity as regards parties, or interests represented, rights asserted
and relief sought, as well as basis thereof, to a degree sufficient to give rise to the ground for dismissal known as auter action pendant or lis pendens. 15 That
same identity puts into operation the sanction of twin dismissals just mentioned. The application of this sanction will prevent any further delay in the settlement
of the controversy which might ensue from attempts to seek reconsideration of or to appeal from the Order of the Regional Trial Court in Civil Case No. 86-
36563 promulgated on July 15, 1986, which dismissed the petition upon grounds which appear persuasive. 16 

It would seem that after the filing by Rosalina Buan and Liza Ocampo (president and press relations officer, respectively, of the Quiapo Church vendors’
association known as the Samahan) of the petition in this case, "for themselves and all others similarly situated as themselves" (i.e., the members of the
Samahan, who are vendors in the area of Quiapo Church) they came to the belated realization that in view of the pendency of the identical action filed by them
in the Regional Trial Court (Case No. 86-36563), they were vulnerable to the accusation of "forum shopping," and thus amenable to its dire consequences.
This explains the filing in this Court by their lawyers of a "MANIFESTATION WITH AFFIDAVIT OF WITHDRAWAL" on August 11, 1986, 17 another
"MANIFESTATION AND MOTION" on August 29, 1986, and an "URGENT MANIFESTATION AND MOTION TO STRIKE-OUT THE NAME ROSALINA BUAN
AND LIZA OCAMPO" on September 13, 1986. In these manifestations the claim is made that the five (5) petitioners in the action before this Court who are
members of the Samahan, "were forcibly brainwashed and guarded by . . . (Atty. Reynaldo Aralar) and his associates to accede to the invitation of the said
counsel . . . to appear for them and file the case before the Honorable Court knowingly (sic) that he was furnished the status quo-order of the same case
pending before the Regional Trial Court Branch 45 of Manila," and/or said Atty. Aralar and his associates had perpetrated "piracy" of clients and "should be
condemned and suspended for committing act of ‘shopping for courts.’" The claim does not inspire belief It is so out of the ordinary as to require clear and
convincing evidence of its actuality, which is lacking in this case. It is also belied by the fact that Rosalina Buan and Liza Ocampo themselves were among
those who verified the petition at bar before a notary public. 18 And the claim is undermined by the misrepresentation in Buan’s and Ocampo’s "Joint Affidavit
of Withdrawal" that the status quo order in RTC Case No. 86-36563 was still subsisting and the case still pending trial 19 when in truth, the case had already
been dismissed and the restraining order lifted by Order of July 27, 1986.chanrobles law library : red

Yet another reason exists for the denial of the petition. Not one of the petitioners or the "others similarly situated as themselves" had a valid and subsisting
license or permit as of the date of the filing of their petition in this Court, August 5, 1986, all licenses and permits having expired prior thereto. 20 This is
confirmed by the few receipts submitted by petitioners 21 which all set out expiry dates before August 5, 1986. The petitioners thus have no basis whatever to
postulate a right to ply their trade in the Quiapo area or elsewhere. The argument that the non-renewal by the municipal authorities of their licenses was in
effect a cancellation or revocation thereof without cause is puerile.

Finally, the action for prohibition has become moot and academic by the occurrence of the acts sought to be inhibited. The petitioners’ permits and licenses
have all expired; hence, there can be no occasion whatsoever to speak of the inhibition of any revocation or cancellation thereof. And the "physical demolition
of their respective business stalls" has already been consummated.

WHEREFORE, the petition is denied for lack of merit, and the Regional Trial Court is commanded to dismiss Civil Case No. 86-36563 and to conduct no
further proceedings in connection therewith save in accordance with and in implementation of this Decision. Costs against petitioners.

SO ORDERED.

[G.R. No. 139396. August 15, 2000]

EFREN O. LOQUIAS, ANTONIO V. DIN, JR., ANGELITO L. MARTINEZ II, LOVELYN J. BIADOR, GREGORIO FACIOL, JR., petitioners, vs.
OFFICE OF THE OMBUDSMAN, and DR. JOSE PEPITO H. DALOGDOG, DR. AURORA BEATRIZ A. ROMANO, MA. TERESITA C. ABASTAR,
JESSICA S. ALLAN, MA. TERESA ANIVERSARIO, respondents.

RESOLUTION

GONZAGA-REYES, J.:

Before this Court is a petition for certiorari under Rule 65 assailing the Resolution dated June 29, 1998 charging herein petitioners for violation of
Section 3, paragraph e of R.A. No. 3019 (Anti-Graft and Corrupt Practices Act) which was issued by the Office of the Ombudsman for Mindanao and
approved by Ombudsman Aniano A. Desierto, and the Memorandum dated June 11, 1999 wherein Ombudsman Desierto disapproved the
recommendation of the Special Prosecutor dismissing Criminal Case No. 24852.

The antecedent facts are as follows: In a sworn complaint filed with the Office of the Ombudsman-Mindanao, private respondents Dr. Jose Pepito H.
Dalogdog, Dr. Aurora Beatriz A. Romano, Maria Teresita C. Abastar, Jessica S. Allan and Maria Teresa Aniversario charged herein petitioners Efren
O. Loquias, Antonio V. Din, Jr., Angelito I. Martinez II, Lovelyn J. Biador and Gregorio Faciol, Jr. with violation of Republic Act No. 3019 for their
alleged failure to give the salary increases and benefits provided in Section 20 of the Magna Carta of Public Health Workers (R.A. 7305) and Local
Budget Circulars Nos. 54, 54-A, 56, 60 and 64 for the health personnel of the local government of San Miguel, Zamboanga del Sur. Herein private
respondents were officers of the Association of Municipal Health Office Personnel of Zamboanga del Sur who instituted the said complaint in behalf
of the 490 members of the said Association. Petitioners Efren Loquias and Antonio Din, Jr. are the Mayor and Vice-Mayor, respectively, of San
Miguel, Zamboanga del Sur while petitioners Angelito Martinez II, Lovelyn Biador and Gregorio Faciol, Jr. are members of the Sangguniang Bayan of
the said municipality.

Docketed as Case No. OMB-MIN-98-0022, herein public respondent Ombudsman Aniano A. Desierto approved on September 4, 1999 the
Resolution dated June 29, 1998 of Graft Investigation Officer II Jovito A. Coresis, Jr. of the Office of the Ombudsman-Mindanao finding "probable
cause to conclude that the crime of violation of Section 3 (e) of RA 3019 has been committed by respondents Mayor, Vice-Mayor, members of the
Sangguniang Bayan and Budget Officer of San Miguel, Zamboanga del Sur" and that accordingly, the appropriate Information be filed with the
Sandiganbayan.[1] The case was docketed as Criminal Case No. 24852.

On March 15, 1999, petitioners filed a Motion for Reinvestigation with prayer to defer arraignment and pre-trial alleging that they recognize the salary
increases of the health personnel as a mandatory statutory obligation but the salary increases could not be implemented because of lack of funds
and the municipality had incurred overdrafts. They further argue that the failure to give salary increases and other Magna Carta benefits were due to
circumstances beyond their control and not due to any manifest partiality, evident bad faith or gross inexcusable negligence on their part. [2]

In the Memorandum dated June 11, 1999, Special Prosecution Officer I Jacqueline J. Ongpauco-Cortel recommended the dismissal of the case
which recommendation was approved by Deputy Special Prosecutor Robert E. Kallos and concurred in by Special Prosecutor Leonardo P. Tamayo.
This recommendation was, however, disapproved by Ombudsman Desierto on June 18, 1999 stating in his handwriting that "(T)he crime had
obviously been committed, per OMB Mindanao findings, long before the payment granting that the accused latters claim/allegation is true." [3]

Meanwhile, petitioners filed a Motion for Reconsideration dated June 14, 1999 of the Resolution of the Office of the Ombudsman-Mindanao dated
June 29, 1998 alleging that there is no probable cause in holding that they violated Section 3 (e) of the Anti-Graft and Corrupt Practices Act. They
allege that the joint affidavits of waiver executed by private complainants have made the case of the prosecution against the accused "too weak
which could not even create a probable cause."[4] Petitioners further allege that the order disapproving the dismissal of the case constitutes a denial
of their motion for reconsideration.[5]

Alleging that the order disapproving the dismissal of the case constituted denial of the motion for reconsideration, [6] petitioners filed the present
petition assailing the Resolution dated June 29, 1998 and the Memorandum dated June 11, 1999 raising the following assignment of errors:
 "I.

THE HONORABLE OMBUDSMAN WITH DUE RESPECT, COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF JURISDICTION IN APPROVING THE RESOLUTION CHARGING THE PETITIONERS FOR VIOLATION OF SECTION 3 PAR. (E) OF
R.A. 3019 ISSUED AND APPROVED BY OMBUDSMAN FOR MINDANAO.

II.

THE HONORABLE OMBUDSMAN WITH DUE RESPECT, COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF JURISDICTION IN DISAPPROVING THE MEMORANDUM RECOMMENDING THE DISMISSAL OF THE CRIMINAL CASE AGAINST
THE PETITIONER(S) ISSUED BY SPECIAL PROSECUTOR, CONCURRED BY SPECIAL PROSECUTOR BUT DISAPPROVED BY THE
OMBUDSMAN."

Petitioners contend that they recognize the salary increases of the health personnel as a mandatory statutory obligation but the same could not be
implemented due to lack of funds and the Municipality incurred an overdraft. They further argue that petitioners Loquias, Din, Martinez, Faciol and
Biador were not yet elected as local officials during the year 1994; hence, they cannot be held liable for non-payment of salary increases as
mandated by the local budget circular which took effect in the year 1994 before their election.

In its Comment,[7] the Office of the Ombudsman, through the Solicitor General, alleges that the petition does not comply with Section 5, Rule 7 as the
Verification and the Certification on Non-Forum Shopping were signed only by petitioner Antonio Din and not by all the petitioners and there is no
showing that petitioner Din was authorized by his co-petitioners to represent them in this case; that the petition raise factual issues; and that the
municipality had sufficient funds to grant the statutory salary increases and benefits.

In their Reply,[8] petitioners contend that there was substantial compliance with Section 5, Rule 7 notwithstanding the fact that only one of the
petitioners signed the verification and certification on forum shopping; and that the petition does not call for an examination of the probative value of
the evidence presented.

At the outset, it is noted that the Verification and Certification was signed by Antonio Din, Jr., one of the petitioners in the instant case. We agree with
the Solicitor General that the petition is defective. Section 5, Rule 7 expressly provides that it is the plaintiff or principal party who shall certify under
oath that he has not commenced any action involving the same issues in any court, etc. [9] Only petitioner Din, the Vice-Mayor of San Miguel,
Zamboanga del Sur, signed the certification. There is no showing that he was authorized by his co-petitioners to represent the latter and to sign the
certification. It cannot likewise be presumed that petitioner Din knew, to the best of his knowledge, whether his co-petitioners had the same or similar
actions or claims filed or pending. We find that substantial compliance will not suffice in a matter involving strict observance by the rules. The
attestation contained in the certification on non-forum shopping requires personal knowledge by the party who executed the same. Petitioners must
show reasonable cause for failure to personally sign the certification. Utter disregard of the rules cannot justly be rationalized by harking on the policy
of liberal construction.[10]

Moreover, petitioners question the act of the Ombudsman in disapproving the resolution recommending the dismissal of the criminal case. We have
ruled that this Court will not interfere with the Ombudsmans exercise of his constitutionally mandated investigatory and prosecutory powers.
Otherwise stated, it is beyond the ambit of this Court to review the exercise of discretion of the Ombudsman in prosecuting or dismissing a complaint
filed before it. Such initiative and independence are inherent in the Ombudsman who, beholden to no one, acts as the champion of the people and
preserver of the integrity of the public service.[11] In Venus vs. Desierto,[12] this Court stated that it ordinarily does not determine whether there exists
reasonable ground to believe that a crime has been committed and that the accused is probably guilty thereof and, thereafter, to file the
corresponding information with the appropriate courts. As held in the Ocampo case:

"x x x The rule is based not only upon respect for the investigatory and prosecutory powers granted by the Constitution to the Office of the
Ombudsman but upon practicality as well. Otherwise, the functions of the courts will be grievously hampered by innumerable petitions
assailing the dismissal of investigatory proceedings conducted by the Office of the Ombudsman with regard to complaints filed before it, in
much the same way that the courts would be extremely swamped if they could be compelled to review the exercise of discretion on the
part of the fiscals or prosecuting attorneys each time they decide to file an information in court or dismiss a complaint by a private
complainant."[13]

With respect to the joint affidavits of waiver allegedly executed by private complainants for the purpose of requesting the Special Prosecutor to move
for the dismissal of the criminal case,[14] this Court ruled in Alba vs. Nitorreda[15] that a joint affidavit of desistance is not binding on the Office of the
Ombudsman and cannot prevail over the provision of law which categorically allows the Office of the Ombudsman to investigate and prosecute on its
own any act or omission of a public officer or employee, office or agency which appears to be illegal, unjust, improper or inefficient.

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

SO ORDERED.

[G.R. No. 140153. March 28, 2001]

ANTONIO DOCENA and ALFREDA DOCENA, petitioners, vs. HON. RICARDO P. LAPESURA, in his capacity as Presiding Judge of the RTC, Branch III,
Guian, Eastern Samar; RUFINO M. GARADO, Sheriff IV; and CASIANO HOMBRIA, respondents.

DECISION
GONZAGA-REYES, J.:
 This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the nullification of the Court of Appeals [1] Resolutions dated June 18,
1999 and September 9, 1999 which dismissed the Petition for Certiorari and Prohibition [2] under Rule 65 and denied the corresponding motion for
reconsideration, respectively.
The antecedent facts are as follows:
On June 1, 1977, private respondent Casiano Hombria filed a Complaint for the recovery of a parcel of land against his lessees, petitioner-spouses
Antonio and Alfreda Docena.[3] The petitioners claimed ownership of the land based on occupation since time immemorial. [4] A certain Guillermo Abuda
intervened in the case. In a Decision dated November 24, 1989, the trial court ruled in favor of the petitioners and the intervenor Abuda. [5] On appeal, the Court
of Appeals reversed the judgment of the trial court and ordered the petitioners  to vacate the land they have leased from the plaintiff-appellant [private
respondent Casiano Hombria], excluding the portion which the petitioners reclaimed from the sea and forms part of the shore, as shown in the Commissioners
Report, and to pay the plaintiff-appellant the agreed rental of P1.00 per year from the date of the filing of the Complaint until they shall have actually vacated
the premises.[6] The Complaint in Intervention of Abuda was dismissed.[7]
On May 22, 1995, private respondent Hombria filed a Motion for Execution of the above decision which has already become final and executory. [8] The
motion was granted by the public respondent judge, and a Writ of Execution was issued therefor.  However, the public respondent sheriff subsequently filed a
Manifestation requesting that he be clarified in the determination of that particular portion which is sought to be excluded prior to the delivery of the land
adjudged in favor of plaintiff Casiano Hombria  in view of the defects in the Commissioners Report and the Sketches attached thereto. [9] After requiring the
parties to file their Comment on the sheriffs Manifestation, the public respondent judge, in a Resolution dated August 30, 1996, held that xxx  no attempt should
be made to alter or modify the decision of the Court of Appeals. What should be delivered therefore to the plaintiff xxx is that portion leased by the defendant-
appellees from the plaintiff-appellant excluding the portion that the defendant-appellee have reclaimed from the sea and forms part of the shore as shown in
the commissioners report xxx.[10]  Pursuant to the Resolution, the public respondent sheriff issued an a lias Writ of Demolition.The petitioners filed a Motion to
Set Aside or Defer the Implementation of Writ of Demolition. This motion was denied by the public respondent judge in an Order dated November 18, 1998, a
copy of which was received by the petitioners on December 29, 1998. [11] Also on December 29, 1998, the public respondent judge, in open court, granted the
petitioners until January 13, 1999 to file a Motion for Reconsideration. [12] On January 13, 1999, petitioners moved for an extension of the period to file a motion
for reconsideration until January 28, 1999. [13] The motion was finally filed by the petitioners on January 27, 1999, but was denied by the trial court in an Order
dated March 17, 1999.[14] A copy of the Order was received by the petitioners on May 4, 1999. [15]
A Petition for Certiorari and Prohibition was filed by the petitioners with the Court of Appeals, alleging grave abuse of discretion on the part of the trial
court judge in issuing the Orders dated November 18, 1998 and March 17, 1999, and of the sheriff in issuing the alias Writ of Demolition. In a Resolution dated
June 18, 1999, the Court of Appeals dismissed the petition on the grounds that the petition was filed beyond the 60-day period provided under Section 4 of
Rule 65 of the 1997 Revised Rules of Civil Procedure as amended by Bar Matter No. 803 effective September 1, 1998, and that the certification of non-forum
shopping attached thereto was signed by only one of the petitioners. [16] The Motion for Reconsideration filed by the petitioners was denied by the Court of
Appeals in a Resolution dated September 9, 1999.[17]
Hence this petition.
The sole issue in this case is whether or not the Court of Appeals erred in dismissing the Petition for Certiorari and Prohibition.
The petition is meritorious.
The Court of Appeals dismissed the Petition for Certiorari upon the following grounds,  viz: (1) the petition was filed beyond the 60-day period provided
under Sec. 4, Rule 65 of the 1997 Revised Rules of Civil Procedure as amended by Bar Matter No. 803 effective September 1, 1998; and (2) the certification
of non-forum shopping was signed by only one of the petitioners.
Upon the first ground, the Court of Appeals stated in its Resolution dated June 18, 1999 that:

xxx the 60-day period is counted not from the receipt of the Order denying their Motion for Reconsideration but from the date of receipt of the Order of
November 18, 1998 which was on December 29, 1998, interrupted by the filing of the Motion for Reconsideration on January 27, 1999. The Motion for
Reconsideration was denied in an Order dated March 17, 1999 received by the petitioners on May 4, 1999.Counting the remaining period, this petition should
have been filed on June 4, 1999 but it was filed only on June 14, 1999 or ten (10) days beyond the 60-day period computed in accordance with Bar Matter No.
803.

xxx xxx xxx[18]
The petitioners agree that the counting of the 60-day period should commence on December 29, 1998, the date of the receipt by the petitioners of  the
assailed trial court order, interrupted by the filing of a motion for reconsideration on January 27, 1999, and resume upon receipt by the petitioners of the denial
of the motion by the trial court on May 4, 1999; however, the petitioners contend that from December 29, 1998 up to January 27, 1999, only the 15-day period
allowed for the filing of a motion for reconsideration [19] should be deemed to have elapsed considering the grant by the trial court of an extension of the period
to file the motion until January 13, 1999. Hence, on May 4, 1999, the petitioners still had 45 days to file a petition for certiorari and/or prohibition, and the filing
made on June 14, 1999 was timely.
We hold that the Petition for Certiorari and Prohibition has been timely filed.
A.M. No. 00-2-03-SC, which took effect on September 1, 2000, amended Section 4 of Rule 65 of the 1997 Revised Rules of Civil Procedure [20] to provide
thus:

SEC. 4. When and where petition filed.-- The petition shall be filed not later than sixty (60) days from notice of the judgment, order or resolution. In case a
motion for reconsideration or new trial is timely filed, whether such motion is required or not, the sixty (60) day period shall be counted from notice of the denial
of said motion.

The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a corporation, board, officer or person, in the
Regional Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed in the Court of Appeals whether or not
the same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the acts or omissions of a quasi-
judicial agency, unless otherwise provided by law or these rules, the petition shall be filed in and cognizable only by the Court of Appeals.

No extension of time to file the petition shall be granted except for compelling reason and in no case exceeding fifteen (15) days. [Emphasis ours]

In the case of Systems Factors Corporation versus NLRC,[21] we held that the abovequoted Resolution, being procedural in nature, is applicable to
actions pending and undetermined at the time of their passage. The retroactive application of procedural laws such as this Resolution is not violative of any
right of a person who may feel adversely affected thereby, as no vested right may attach to nor arise from procedural laws. [22] The ruling in the Systems
Factors case was reiterated in the recent case of Unity Fishing Development Corporation, et. al. vs. Court of Appeals, et. al .[23] Applying the Resolution to the
case at bar, the 60-day period for the filing of a petition for certiorari and prohibition should be reckoned from the date of receipt of the order denying the
motion for reconsideration, i.e., May 4, 1999, and thus, the filing made on June 14, 1999 was well within the 60-day reglementary period.
Anent the ground that the certification of non-forum shopping was signed by only one of the petitioners, it is the contention of the petitioners that the
same is sufficient compliance with the requirements of Sections 1 and 2 of Rule 65 (Petition for Certiorari and Prohibition) in relation to Section 3 of Rule
46 (Original Cases Filed in the Court of Appeals). The petitioners argue that since they are spouses with joint or indivisible interest over the alleged conjugal
property subject of the original action which gave rise to the petition for certiorari and prohibition, the signing of the certificate of non-forum shopping by only
one of them would suffice, especially considering the long distance they had to travel just to sign the said certificate. [24] Moreover, there is substantial
compliance with the Rules of Court where the certification was signed by the husband who is the statutory administrator of the conjugal property. [25]
It has been our previous ruling that the certificate of non-forum shopping should be signed by all the petitioners or plaintiffs in a case, and that the
signing by only one of them is insufficient. In the case of Efren Loquias, et. al. vs. Office of the Ombudsman, et. al .,[26] we held that the signing of the
Verification and the Certification on Non-Forum Shopping by only one of the petitioners constitutes a defect in the petition. [27] The attestation contained in the
certification on non-forum shopping requires personal knowledge by the party executing the same, [28] and the lone signing petitioner cannot be presumed to
have personal knowledge of the filing or non-filing by his co-petitioners of any action or claim the same as or similar to the current petition.  To merit the Courts
consideration, petitioners must show reasonable cause for failure to personally sign the certification.
In the case at bar, however, we hold that the subject Certificate of Non-Forum Shopping signed by the petitioner Antonio Docena alone should be
deemed to constitute substantial compliance with the rules. [29] There are only two petitioners in this case and they are husband and wife. Their residence is the
subject property alleged to be conjugal in the instant verified petition. The Verification/Certification on Non-Forum Shopping [30] attached to the Petition for
Certiorari and Prohibition was signed only by the husband who certified, inter alia, that he and his wife have not commenced any other action or proceeding
involving the same issues raised in the petition in any court, tribunal or quasi-judicial agency; that to the best of their knowledge no such action is pending
therein; and that he and his wife undertake to inform the Court within five (5) days from notice of any similar action or proceeding which may have been filed.
The property subject of the original action for recovery is conjugal. Whether it is conjugal under the New Civil Code or the Family Code, a fact that cannot
be determined from the records before us, it is believed that the certificate on non-forum shopping filed in the Court of Appeals constitutes sufficient
compliance with the rules on forum-shopping.
Under the New Civil Code, the husband is the administrator of the conjugal partnership. [31] In fact, he is the sole administrator, and the wife is not entitled
as a matter of right to join him in this endeavor. [32] The husband may defend the conjugal partnership in a suit or action without being joined by the wife.
[33]
 Corollarily, the husband alone may execute the necessary certificate of non-forum shopping to accompany the pleading. The husband as the statutory
administrator of the conjugal property could have filed the petition for certiorari and prohibition [34] alone, without the concurrence of the wife. If suits to defend
an interest in the conjugal properties may be filed by the husband alone, with more reason, he may sign the certificate of non-forum shopping  to be attached to
the petition.
Under the Family Code, the administration of the conjugal property belongs to the husband and the wife jointly. [35] However, unlike an act of alienation or
encumbrance where the consent of both spouses is required, joint management or administration does not require that the husband and wife always act
together. Each spouse may validly exercise full power of management alone, subject to the intervention of the court in proper cases as provided under Article
124 of the Family Code. [36] It is believed that even under the provisions of the Family Code, the husband alone could have filed the petition for certiorari and
prohibition to contest the writs of demolition issued against the conjugal property with the Court of Appeals without being joined by his wife.  The signing of the
attached certificate of non-forum shopping only by the husband is not a fatal defect.
More important, the signing petitioner here made the certification in his behalf and that of his wife.  The husband may reasonably be presumed to have
personal knowledge of the filing or non-filing by his wife of any action or claim similar to the petition for certiorari and prohibition given the notices and legal
processes involved in a legal proceeding involving real property. We also see no justifiable reason why he may not lawfully undertake together with his wife to
inform the court of any similar action or proceeding which may be filed. If anybody may repudiate the certification or undertaking for having been incorrectly
made, it is the wife who may conceivably do so.
In view of the circumstances of this case, namely, the property involved is a conjugal property, the petition questioning the writ of demolition thereof
originated from an action for recovery brought against the spouses, and is clearly intended for the benefit of the conjugal partnership, and the wife, as pointed
out in the Motion for Reconsideration in respondent court, was in the province of Guian, Samar, whereas the petition was prepared in Metro Manila, a rigid
application of the rules on forum shopping that would disauthorize a husbands signing the certification in his behalf and that of his wife is too harsh and is
clearly uncalled for.
It bears stressing that the rules on forum shopping, which were designed to promote and facilitate the orderly administration of justice, should not be
interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective. [37]
The petitioners motion for the issuance of a temporary restraining order to put on hold the demolition of the subject property is principally anchored on
their alleged right to the nullification of the assailed orders and writs issued by the public respondents. [38] As the existence of the right being asserted by the
petitioners is a factual issue proper for determination by the Court of Appeals, the motion based thereon should likewise be addressed to the latter court.
WHEREFORE, premises considered, the petition is hereby GRANTED. The Court of Appeals Resolutions dated June 18, 1999 and September 9, 1999
are hereby SET ASIDE and the case is REMANDED to the Court of Appeals for further proceedings.
SO ORDERED.
ART FUENTEBELLA, Park-in-Charge, G.R. No. 150865
and ROLLING HILLS MEMORIAL
PARK, INC.,
Petitioners, Present:
 
PUNO, J., Chairperson,*
-         versus - SANDOVAL-GUTIERREZ,**
CORONA,
AZCUNA, and
GARCIA, JJ.
DARLICA CASTRO,
Respondent. Promulgated:
June 30, 2006
 
x ---------------------------------------------------------------------------------------- x
 
 
DECISION
 
AZCUNA, J.:
 
This is a petition for review[1] seeking the nullification of the resolutions, dated September 27, 2001 and November 20, 2001, of the Court of Appeals, in CA-
G.R. SP No. 66478 entitled Art Fuentebella, Park-in-Charge and Rolling Hills Memorial Park, Inc. v. Darlica Castro, which dismissed the petition of petitioners
assailing the orders issued by the Regional Trial Court (RTC) of Negros Occidental, dated January 3, 2000 and July 9, 2001, in Civil Case No. 99-10747
entitled Darlica Castro v. Art Fuentebella, Park-in-Charge and Rolling Hills Memorial Park, Inc.
The controversy primarily involves the application of Rule 7, Section 5 of the Rules of Court relating to the signature appearing on the certificate of non-forum
shopping, and the submission of a false certification.
 
As stated by the Court of Appeals, the facts alleged are as follows:
 
Respondent Darlica Castro is the widow of the late Freddie Castro who died on September 18, 1997 in Bacolod City, Negros Occidental. Respondent engaged
the funeral services of petitioner Rolling Hills Memorial Park, Inc. in Bacolod City for the interment of the remains of her husband on September 27,
1997 at three oclock in the afternoon.
During the burial, when the casket of her deceased husband was about to be lowered into the vault, it was discovered that the dimensions of the
vault did not correspond to the measurements of the casket. As a result, the casket was lifted and placed under the heat of the sun for about one hour in front
of all the mourners while the vault was being prepared. To make matters worse, the employees of petitioner corporation measured the casket by using a
spade.
Insulted by the events that transpired at the funeral, respondent, through counsel, wrote to the management of petitioner corporation demanding an
explanation for its negligence, but the latter did not respond nor attempt to apologize to the former. [2]
 
Consequently, on March 16, 1998, respondent filed a complaint for damages [3] against the corporation and its Park-in-Charge Art Fuentebella, jointly
and solidarily, before the Municipal Trial Court in Cities (MTCC) of Bacolod City asking for moral[4] and exemplary[5] damages, attorneys fees[6] and litigation
costs.
Petitioners filed a motion to dismiss on the ground that the MTCC has no jurisdiction to take cognizance of the case because the amount of damages
claimed is more than P200,000. Respondent subsequently filed a motion to withdraw the complaint, which was granted by the MTCC in its order dated  June
24, 1998.[7]
On April 15, 1999, respondent filed a similar complaint with the RTC of Negros Occidental. Attached in the complaint was the Verification and
Certification against Forum Shopping required under Section 5, Rule 7 of the Rules of Court, stating:
 
That I further certify that I have not commenced any other action or proceeding involving the same issues in the Supreme Court, Court of
Appeals, or any other tribunal or agency; that to the best of my knowledge, no such action or proceeding is pending in the Supreme Court,
Court of Appeals, or other tribunal or agency, and that if I should thereafter learn that a similar action or proceeding has been filed or is
pending before the Supreme Court, Court of Appeals, or any other tribunal or agency, I shall undertake to report that fact within five (5)
days to this Honorable Court.[8]
 
 
 
Petitioners filed a motion to dismiss on the ground that the certification is false because respondent had previously filed an identical complaint with the MTCC.
 
On January 3, 2000, the trial court issued the questioned order denying the motion to dismiss for lack of merit, to wit:
 
x x x, while the requirement as to the certificate of non-forum shopping is mandatory, nonetheless, the requirement is not to be interpreted
too literally and thus defeat the objective of preventing the undesirable practice of forum shopping (Bernardo v. NLRC, 255 SCRA 108).
 
PERFORCE, the motion to dismiss is DENIED for lack of merit.
 
SO ORDERED.[9]
A motion for reconsideration was filed by petitioners arguing that the motion to dismiss was not based on the ground that respondent had filed two similar
actions at the same time but rather on the submission by the latter of a false certification. The trial court denied said motion in its order, dated  July 9, 2001,
stating:
As can be readily seen from the said provision, the sanction provided by the said rule on the submission of a false certification is
not dismissal of the case but [the same] will be considered as an indirect contempt of Court, without prejudice to the corresponding
administrative and criminal action that may be filed against the party concerned.
 
WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit.
 
SO ORDERED.[10]
 
Petitioners filed with the Court of Appeals a petition for certiorari with preliminary injunction and/or restraining order. The petition, however, was dismissed by
the Court of Appeals in its resolution issued on September 27, 2001, thus:
 
A perusal of the records discloses that the verification and the certification against forum shopping was signed by a certain
Lourdes Pomperada without any showing or indication that she is duly authorized by the petitioners to sign for and in their behalf.
IN VIEW OF THE FOREGOING, this petition is DENIED DUE COURSE and is accordingly DISMISSED.
 
SO ORDERED.[11]
 
 
A motion for reconsideration of the above resolution was filed by petitioner Rolling Hills Memorial Park, Inc. attaching thereto a Secretarys Certificate signed
by Monico A. Puentevella, Jr., Corporate Secretary of petitioner corporation, affirming therein the authority of Lourdes A. Pomperada to file the aforementioned
petition.
Nonetheless, the Court of Appeals denied said motion in its challenged resolution, dated November 20, 2001, declaring that:
 
 Petitioners submitted a Secretarys Certificate showing the authorization of Mrs. Lourdes Pomperada to represent the petitioner
corporation. However, there is still no showing that the said Mrs. Lourdes Pomperada is duly authorized to act for and in behalf of the other
petitioner.
 
WHEREFORE, in view of the foregoing, petitioners Motion for Reconsideration cannot be favorably acted upon.
 
SO ORDERED.[12]
 
 
Hence, this petition raising the following issues:
 
I
THE HONORABLE COURT OF APPEALS ACTED ERRONEOUSLY IN DISMISSING OUTRIGHT THE PETITION FOR
CERTIORARI ON THE BASIS OF A NON-EXISTENT RULE; AND
 
II
THE REGIONAL TRIAL COURT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF, OR IN EXCESS
OF JURISDICTION, IN REFUSING TO ORDER THE DISMISSAL OF THE COMPLAINT ON THE GROUND OF A FALSE
CERTIFICATION.[13]
 
On the first issue, petitioners argue that: (a) a board resolution or a secretarys certificate is unnecessary to show proof that the one signing the petition or the
verification and certification against forum shopping has been duly authorized by petitioner company; and, (b)  where there are two or more petitioners, the one
signing the petition need not append his authority to sign on behalf of the other petitioners.
 
Contrary to petitioners assertion, it is obligatory that the one signing the verification and certification against forum shopping on behalf of the principal party or
the other petitioners has the authority to do the same.
 
Rule 7, Section 5 of the 1997 Revised Rules on Civil Procedure provides:
 
Sec. 5. Certification against forum shopping.  The plaintiff or principal party shall specify under oath in the complaint or other
initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has
not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to
the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete
statement of the present status thereof; and, (c) if he should thereafter learn that the same or similar action or claim has been filed or is
pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been
filed.
 
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but
shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. The submission
of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court, without prejudice
to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum
shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for
administrative sanctions.`
The above provision mandates that the petitioner or the principal party must execute the certification against forum shopping. The reason for this is
that the principal party has actual knowledge whether a petition has previously been filed involving the same case or substantially the same issues. If, for any
reason, the principal party cannot sign the petition, the one signing on his behalf must have been duly authorized. [14]
 
This requirement is intended to apply to both natural and juridical persons as Supreme Court Circular No. 28-91 and Section 5, Rule 7 of the Rules
of Court do not make a distinction between natural and juridical persons. [15] Where the petitioner is a corporation, the certification against forum shopping
should be signed by its duly authorized director or representative. [16] This was enunciated in Eslaban, Jr. v. Vda. de Onorio,[17] where the Court held that if the
real party-in-interest is a corporate body, an officer of the corporation can sign the certification against forum shopping so long as he has been duly authorized
by a resolution of its board of directors.
Likewise, where there are several petitioners, it is insufficient that only one of them executes the certification, absent a showing that he was so
authorized by the others. That certification requires personal knowledge and it cannot be presumed that the signatory knew that his co-petitioners had the
same or similar actions filed or pending.[18]
 
Hence, a certification which had been signed without the proper authorization is defective and constitutes a valid cause for the dismissal of the
petition.[19]
 
This holds true in the present case where the Court of Appeals accordingly dismissed the petition for lack of proper authorization of the one signing it
on behalf of petitioners. Lourdes Pomperada, the Administrative Manager of petitioner corporation, who signed the verification and certificate on non-forum
shopping, initially failed to submit a secretarys certificate or a board resolution confirming her authority to sign for the corporation, and a special power of
attorney to sign on behalf of co-petitioner Art Fuentebella, who was sued jointly and solidarily with the corporation in his capacity as officer of the latter.
 
Thus, in Pet Plans, Inc. v. Court of Appeals,[20]  the Court stated:
Where the President of the corporation was impleaded in his official capacity as such and no specific claim or charge against
him, in his personal capacity, was alleged in the complaint filed with the National Labor Relations Commission but the Labor Arbiters
decision made him jointly and solidarily liable with the corporation, he then became a realparty-in-interest whose stake have [sic] become
distinct from those of the corporation and, as such, it became inevitable for him to sign the verification and certificate of non-forum
shopping.
In the present case, a reading of the subject resolution issued by the Board of Directors of PET PLANS, shows that it
authorizes Espino to represent only PET PLANS, not its co-petitioner, Ocampo. Nothing in the records at hand indicates that Espino is
clothed with special authority to represent Ocampo. Hence, Espino does not represent Ocampo in the filing of CA-G.R. SP No. 62410. As
such, Ocampo, being a petitioner in his own right, should have also signed the verification and certificate of non-forum shopping attached
to the petition of CA-G.R. SP No. 62410. Ordinarily, Ocampo should have been considered nominal party as he was merely impleaded by
complainant in his capacity as the president of PET PLANS and no specific claim or charge against him, in his personal capacity, was
alleged in the complaint filed with the NLRC, Regional Arbitration Branch. However, considering that the Labor Arbiter made him jointly
and solidarily liable with PET PLANS, he has become a real party-in-interest whose stake, subsequent to the Labor Arbiters decision, have
 (sic) become distinct from those of petitioner corporation. As such, it becomes inevitable for him to sign the verification and certificate of
non-forum shopping.
 
Section 3, Rule 46 of the Rules of Court requires that the petitioner shall sign the certificate of non-forum shopping. In the case of
corporations, the physical act of signing may be performed in behalf of the corporate entity by specifically authorized individuals for the
simple reason that corporations, as artificial persons, cannot do the task themselves. However, in the case of natural persons, the Rule
requires the parties themselves to sign the certificate of non-forum shopping. The reason for such a requirement is that the petitioner
himself, or in [the] case of a corporation, its duly authorized representative, knows better than anyone else whether a separate case has
been filed or pending which involves substantially the same issues.
 
In the present case, it cannot be gainsaid with certainty that Ocampo has not filed before any court or tribunal a separate case
related to the present petition in CA-G.R. SP No. 62410. In Loquias v. Office of the Ombudsman,[21] we held that failure of one of the
petitioners to sign the verification and certificate against forum shopping constitutes a defect in the petition, which is a ground for
dismissing the same. While we have held in rulings subsequent to Loquias that this rule may be relaxed, petitioners must comply with two
conditions: first,  petitioners must show justifiable cause for their failure to personally sign the certification; and,  second, they must also be
able to prove that the outright dismissal of the petition would seriously impair the orderly administration of justice. In the present case, we
find that petitioners failed to prove the presence of these conditions. [22]
 
 
On the second issue, petitioners opine that respondents failure to disclose that a similar case was earlier filed by her before the MTCC but was later
withdrawn for lack of jurisdiction constituted false certification. They contend that the trial court committed grave abuse of discretion when it did not dismiss the
petition for this reason.
The Court disagrees.
An omission in the certificate of non-forum shopping about any event that would not constitute res judicata[23] and litis pendentia,  as in the present
case,  is not fatal as to merit the dismissal and nullification of the entire proceedings considering that the evils sought to be prevented by the said certificate are
not present.[24]
 
Hence, in any event, the trial court correctly held that the submission of a false certification shall constitute indirect contempt of court, without
prejudice to the corresponding administrative and criminal sanctions. This is in accordance with Section 5, Rule 7 of the Rules of Court.
 
WHEREFORE, the petition is DENIED. The Resolutions of the Court of Appeals, dated September 27, 2001 and November 20, 2001, in CA-G.R. SP
No. 66478 are AFFIRMED. Costs against petitioners.
 
SO ORDERED.
 

[G.R. No. 129718. August 17, 1998]

SANTO TOMAS UNIVERSITY HOSPITAL, petitioner vs.  CESAR ANTONIO Y. SURLA and EVANGELINE SURLA, respondents.

DECISION
VITUG, J.:

Can a compulsory counterclaim pleaded in an Answer be dismissed on the ground of a failure to accompany it with a certificate of non-forum
shopping? This question is the core issue presented for resolution in the instant petition.
First, a factual background.
On 26 December 1995, respondent spouses filed a complaint for damages against petitioner Santo Tomas University Hospital with the Regional Trial
Court of Quezon City predicated on an allegation by the spouses that their son, Emmanuel Cesar Surla, while confined at the said hospital for having been
born prematurely, had accidentally fallen from his incubator on 16 April 1995 possibly causing serious harm on the child. The case was raffled and assigned to
Branch 226 of the Regional Trial Court of Quezon City, presided over by the Hon. Leah S. Domingo-Regala, and there docketed Civil Case No. Q-95-25977.
On 28 February 1996, petitioner hospital filed its Answer with Compulsory Counterclaim asserting that respondents still owed to it the amount
of P82,632.10 representing hospital bills for Emmanuels confinement at the hospital and making a claim for moral and exemplary damages, plus attorneys
fees, by reason of the supposed unfounded and malicious suit filed against it.
On 21 March 1996, petitioner received a copy of respondents Reply to Counterclaim, dated 12 March 1996, that sought,  inter alia, the dismissal of
petitioners counterclaim for its non-compliance with Supreme Court Administrative Circular No. 04-94 requiring that a complaint and other initiatory pleadings,
such as a counterclaim, cross-claim, third (fourt, etc.) party complaint, be accompanied with a certificate of non-forum shopping.
In its Rejoinder to respondents Reply to Counterclaim, petitioner contended that the subject circular should be held to refer only to a permissive
counterclaim, an initiatory pleading not arising out of, nor necessarily connected with, the subject matter of the plaintiffs claim but not to a compulsory
counterclaim spawned by the filing of a complaint and so intertwined therewith and logically related thereto that it verily could not stand for independent
adjudication. Petitioner concluded that, since its counterclaim was compulsory in nature, the subject circular did not perforce apply to it. [1]
In its Order of 22 March 1996, the trial court dismissed petitioners counterclaim,it held:

Administrative Circular No. 04-94 provides; among others:

The complaint and other initiatory pleadings referred to and subject of this Circular are the original civil complaint, counterclaim, cross-claim, third (fourth, etc)
party complaint, or complaint-in-intervention, petition or application wherein a party asserts his claim on (sic) relief.
It will be noted that the counterclaim does not distinguish whether the same should be permissive or compulsory, hence this Court finds that the counterclaim
referred to in said Circular covers both kinds.

WHEREFORE, the counterclaim of defendant is hereby DISMISSED. Let the pre-trial of this case be set on May 14, 1996 at 2:00 oclock in the afternoon xxx [2]

On 16 April 1996, petitioner filed before the same court an Omnibus Motion seeking a clarification of the courts Order of 14 March 1996 denying
respondents Reply to Counterclaim and reconsideration of the 22 nd March 1996 Order dismissing the compulsory counterclaim. [3] On 22 April 1996, petitioner
received a copy of the courts Order, dated 16 April 1996, which pertinently read:

WHEREFORE, the Order dated March 14, 1996 is hereby clarified as follows:

x x x x x x x x x

The Reply to counterclaim filed by counsel for plaintiffs is hereby NOTED.

SO ORDERED.

"The Motion for Reconsideration of this Courts Order dated March 22, 1996 is hereby DENIED. The pre-trial conference set on May 14, 1996 will go on as
scheduled.[4]

Petitioner forthwith elevated the matter to the Court of Appeals by way of a special civil action for  certiorari under Rule 65, Revised Rules of Court,
asseverating grave abuse of discretion by public respondent in dismissing the compulsory counterclaim and in espousing the view that Administrative Circular
No. 04-94 should apply even to compulsory counterclaims.
The Court of Appeals, in its Decision promulgated on 12 March 1997, dismissed the petition for certiorari; it opined:

x x x the Supreme Court circular aforequoted requires without equivocation that to the original civil complaint, counterclaim, cross-claim, third (fourth,etc.) party
complainant, or complaint-in-intervention, petition, or application wherein a party asserts his claim for relief to be filed in all courts and agencies other than the
Supreme Court and the Court of Appeals must be annexed and simultaneously filed therewith the required certification under oath to avoid forum shopping or
multiple filing of petitions and complaints. Non-compliance therewith is a cause for the dismissal of the complainant, petition, application or other initiatory
pleading. Included in such initiatory pleading is the defendants counterclaim, permissive or compulsory.

A counterclaim partakes of the nature of a complaint and/or a cause of action against the plaintiff in a case x x x, only this time it is the original defendant who
becomes the plaintiff. It stands on the same footing and is tested by the same rules as if it were an independent action. [5]

In its present recourse, petitioner contends that

The Court of Appeals (has) committed serious, evident and palpable error in ruling that:

5.1 THE SPECIAL CIVIL ACTION OF CERTIORARI UNDER RULE 65 OF THE REVISED RULES OF COURT IS UNAVAILING. THE DISMISSAL OF THE
COMPULSORY COUNTERCLAIM BEING A FINAL ORDER, THE PETITIONER SHOULD HAVE TAKEN AN APPEAL THEREFROM; AND

5.2 ADMINISTRATIVE CIRCULAR NO. 04-94 OF THIS HONORABLE COURT LIKEWISE APPLIES TO BOTH KINDS OF COUNTERCLAIMS,
PERMISSIVE AND COMPULSORY.[6]

The petition is partly meritorious.

The appellate court ruled that the dismissal of the counterclaim, being a final order, petitioners remedy was to appeal therefrom and, such appeal being
then available, the special civil action for certiorari had been improperly filed.
The concept of a final judgment or order, distinguished form an interlocutory issuance, is that the former decisively puts to a close, or disposes of a case
or a disputed issue leaving nothing else to be done by the court in respect thereto. Once that judgment or order is rendered, the adjudicative task of the court
is likewise ended on the particular matter involved. [7] An order is interlocutory, upon the other hand, if its effects would only be provisional in character and
would still leave substantial proceedings to be further had by the issuing court in order to put the controversy to rest. [8]
The order of the trial court dismissing petitioners counterclaim was a final order since the dismissal, although based on a technicality, would require
nothing else to be done by the court with respect to the specific subject except only to await the possible filing during the reglementary period of a motion for
reconsideration or the taking of an appeal therefrom.
As a rule, errors of judgment, as well as of procedure, neither relating to the jurisdiction of the court nor involving grave abuse of discretion, are not
reviewable by the extraordinary remedy of certiorari.[9] As long as a court acts within its jurisdiction and does not gravely abuse its discretion in the exercise
thereof, any supposed error committed by it will amount to nothing more than an error of judgment reviewable by a timely appeal and not assailable by a
special civil action for certiorari.[10] This rule however, is not a rigid and inflexible technicality.This Court has not too infrequently given due course to a petition
for certiorari, even when the proper remedy would have been an appeal, where valid and compelling considerations could warrant such a recourse.
[11]
 Certiorari has been deemed to be justified, for instance, in order to prevent irreparable damage and injury to a party where the trial judge has capriciously
and whimsically exercised his judgment, or where an ordinary appeal would simply be inadequate to relieve a party from the injurious effects of the judgment
complained of.[12]
In the case at bar, an appeal from the dismissal of the counterclaim, although not totally unavailable, could have well been ineffective, if not futile, as far
as petitioner is concerned since no single piece of evidence has yet been presented by it, the opportunity having been foreclosed by the trial court, on the
dismissed counterclaim which could form part of the records to be reviewed by the appellate court. The object of procedural law is not to cause an undue
protraction of the litigation, but to facilitate the adjudication of conflicting claims and to serve, rather than to defeat, the ends of justice. [13]
 
The opinion of this Court on the next issue persuades it to accept, tested by the foregoing disquisition, the instant petition for its consideration.
The pertinent provisions of Administrative Circular No. 04-94 provide:
1 The plaintiff, petitioner, applicant or principal party seeking relief in the complaint, petition, application or other initiatory pleading shall certify under oath in
such original pleading, or in a sworn certification annexed thereto and simultaneously filed therewith, to the truth of the following facts and undertakings: (a) he
has not theretofore commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals, or any other tribunal or
agency; (b) to the best of his knowledge, no such action or proceeding is pending in the Supreme Court, the Court of Appeals, or any other tribunal or agency;
(c) if there is any such action or proceeding which is either pending or may have been terminated, he must state the status thereof; and (d) if he should
thereafter learn that a similar action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals or any other tribunal or agency,
he undertakes to report that fact within five (5) days therefrom to the court or agency wherein the original pleading and sworn certification contemplated here
have been filed.

The complaint and other initiatory pleadings referred to and subject of this Circular are the original civil complaint, counterclaim, cross-claim third (fourth, etc.)
party complaint or complaint-in-intervention, petition, or application wherein a party asserts his claim for relief. (Emphasis supplied)

It bears stressing, once again, that the real office of Administrative Circular No. 04-94, made effective on 01 April 1994, is to curb the malpractice
commonly referred to also as forum-shopping. It is an act of a party against whom an adverse judgment has been rendered in one forum of seeking and
possibly getting a favorable opinion in another forum, other than by appeal or the special civil action of certiorari, or the institution of two or more actions or
proceedings grounded on the same cause on the supposition tha tone or the other court would make a favorable disposition. [14] The language of the circular
distinctly suggests that it is primarily intended to cover an initiatory pleading or an incipient application of a party asserting a claim for relief. [15]
It should not be too difficult, the foregoing rationale of the circular aptly taken, to sustain the view that the circular in question has not, in fact, been
contemplated to include a kind of claim which, by its very nature as being auxiliary to the proceedings in the suit and as deriving its substantive and
jurisdictional support therefrom, can only be appropriately pleaded in the answer and not remain outstanding for independent resolution except by the court
where the main case pends. Prescinding from the foregoing, the provisio in the second paragraph of Section 5, Rule 8 of the 1997 Rules on Civil
Procedure, i.e., that the violation of the anti-forum shopping rule shall not be curable by mere amendment x x x but shall be cause for the dismissal of the case
without prejudice, being predicated on the applicability of the need for a certification against forum shopping, obviously does not include a claim which cannot
be independently set up.
Petitioner, nevertheless, is entitled to a mere partial relief. The so called counterclaim of petitioner really consists of two segregative parts: (1) for unpaid
hospital bills of respondents son, Emmanuel Surla, in the total amount of P82,632.10; and (2) for damages, moral and exemplary, plus attorneys fees by
reason of the alleged malicious and unfounded suit filed against it. [16] It is the second, not the first, claim that the Court here refers to as not being initiatory in
character and thereby not covered by the provisions of Administrative Circular No. 04-94.
WHEREFORE, the appealed decision is hereby modified in that the claim for moral, exemplary damages and attorneys fees in Civil Case No. Q-95-
25977 of petitioner is ordered reinstated. The temporary restraining order priorly issued by this Court is lifted. No costs.
SO ORDERED.
CAGAYAN VALLEY DRUG G.R. No. 151413
CORPORATION,
Petitioner, Present:
QUISUMBING, J., Chairperson,
CARPIO,
- versus - CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
COMMISSIONER OF INTERNAL Promulgated:
REVENUE,
Respondent. February 13, 2008
x-----------------------------------------------------------------------------------------x
 
DECISION
 
VELASCO, JR., J.:
The Case
 
This petition for review under Rule 45 of the Rules of Court seeks the recall of the August 31, 2000 Resolution [1] of the Court of Appeals (CA) in CA-
G.R. SP No. 59778, which dismissed petitioner Cagayan Valley Drug Corporations petition for review of the April 26, 2000 Decision [2] of the Court of Tax
Appeals (CTA) in C.T.A. Case No. 5581 on the ground of defective verification and certification against forum shopping.
 
The Facts
 
Petitioner, a corporation duly organized and existing under Philippine laws, is a duly licensed retailer of medicine and other pharmaceutical products.  It
operates two drugstores, one in Tuguegarao, Cagayan, and the other in Roxas, Isabela, under the name and style of Mercury Drug.
 
Petitioner alleged that in 1995, it granted 20% sales discounts to qualified senior citizens on purchases of medicine pursuant to Republic Act No. (RA)
7432[3] and its implementing rules and regulations.
 
In compliance with Revenue Regulation No. (RR) 2-94, petitioner treated the 20% sales discounts granted to qualified senior citizens in 1995 as deductions
from the gross sales in order to arrive at the net sales, instead of treating them as tax credit as provided by Section 4 of RA 7432.
 
On December 27, 1996, however, petitioner filed with the Bureau of Internal Revenue (BIR) a claim for tax refund/tax credit of the full amount of the 20% sales
discount it granted to senior citizens for the year 1995, allegedly totaling to PhP 123,083 in accordance with Sec. 4 of RA 7432.
 
The BIRs inaction on petitioners claim for refund/tax credit compelled petitioner to file on March 18, 1998 a petition for review before the CTA docketed as
C.T.A. Case No. 5581 in order to forestall the two-year prescriptive period provided under Sec. 230 [4] of the 1977 Tax Code, as amended. Thereafter,
on March 31, 2000, petitioner amended its petition for review.
 
The Ruling of the Court of Tax Appeals
 
On April 26, 2000, the CTA rendered a Decision dismissing the petition for review for lack of merit. [5]
 
The CTA sustained petitioners contention that pursuant to Sec. 4 of RA 7432, the 20% sales discounts petitioner extended to qualified senior citizens in 1995
should be treated as tax credit and not as deductions from the gross sales as erroneously interpreted in RR 2-94.  The CTA reiterated its consistent holdings
that RR 2-94 is an invalid administrative interpretation of the law it purports to implement as it contravenes and does not conform to the standards RA 7432
prescribes.
 
Notwithstanding petitioners entitlement to a tax credit from the 20% sales discounts it extended to qualified senior citizens in 1995, the CTA
nonetheless dismissed petitioners action for refund or tax credit on account of petitioners net loss in 1995.  First, the CTA rejected the refund as it is clear that
RA 7432 only grants the 20% sales discounts extended to qualified senior citizens as tax credit and not as tax refund.  Second, in rejecting the tax credit, the
CTA reasoned that while petitioner may be qualified for a tax credit, it cannot be so extended to petitioner on account of its net loss in 1995.
 
The CTA ratiocinated that on matters of tax credit claim, the government applies the amount determined to be reimbursable after proper verification
against any sum that may be due and collectible from the taxpayer. However, if no tax has been paid or if no amount is due and collectible from the taxpayer,
then a tax credit is unavailing. Moreover, it held that before allowing recovery for claims for a refund or tax credit, it must first be established that there was an
actual collection and receipt by the government of the tax sought to be recovered. In the instant case, the CTA found that petitioner did not pay any tax by
virtue of its net loss position in 1995.
 
Petitioners Motion for Reconsideration was likewise denied through the appellate tax courts June 30, 2000 Resolution. [6]
 
The Ruling of the Court of Appeals
 
Aggrieved, petitioner elevated the matter before the CA, docketed as CA-G.R. SP No. 59778.  On August 31, 2000, the CA issued the assailed
Resolution[7] dismissing the petition on procedural grounds. The CA held that the person who signed the verification and certification of absence of forum
shopping, a certain Jacinto J. Concepcion, President of petitioner, failed to adduce proof that he was duly authorized by the board of directors to do so.
 
As far as the CA was concerned, the main issue was whether or not the verification and certification of non-forum shopping signed by the President
of petitioner is sufficient compliance with Secs. 4 and 5, Rule 7 of the 1997 Rules of Civil Procedure.
 
The verification and certification in question reads:
 
 
I, JACINTO J. CONCEPCION, of legal age with office address at 2 nd Floor, Mercury Drug Corporation, No. 7 Mercury Ave,
Bagumbayan, Quezon City, under oath, hereby state that:
 
1. I am the President of Cagayan Valley Drug Corporation, Petitioner in the above-entitled case and am duly authorized to sign
this Verification and Certification of Absence of Forum Shopping by the Board of Director.
 
xxxx
 
 
 The CA found no sufficient proof to show that Concepcion was duly authorized by the Board of Directors of petitioner. The appellate court anchored
its disposition on our ruling in Premium Marble Resources, Inc. v. Court of Appeals  (Premium), that [i]n the absence of an authority from the Board of
Directors, no person, not even the officers of the corporation, can validly bind the corporation. [8]
 
Hence, we have this petition.
 
The Issues
 
Petitioner raises two issues: first, whether petitioners president can sign the subject verification and certification sans   the approval of its Board of
Directors. And second, whether the CTA committed reversible error in denying and dismissing petitioners action for refund or tax credit in C.T.A. Case No.
5581.
 
The Courts Ruling
 
The petition is meritorious.
 
Premium not applicable
 
As regards the first issue, we find the CA to have erroneously relied on  Premium. In said case, the issue tackled was not on whether the president of
Premium Marble Resources, Inc. was authorized to sign the verification and certification against forum shopping, but rather on which of the two sets of officers,
both claiming to be the legal board of directors of Premium, have the authority to file the suit for and in behalf of the company.  The factual antecedents and
issues in Premium are not on all fours with the instant case and is, therefore, not applicable.
 
With respect to an individual litigant, there is no question that litigants must sign the sworn verification and certification unless they execute a power
of attorney authorizing another person to sign it. With respect to a juridical person, Sec. 4, Rule 7 on verification and Sec. 5, Rule 7 on certification against
forum shopping are silent as to who the authorized signatory should be. Said rules do not indicate if the submission of a board resolution authorizing the officer
or representative is necessary.
 
Corporate powers exercised through board of directors
 
It must be borne in mind that Sec. 23, in relation to Sec. 25 of the Corporation Code, clearly enunciates that all corporate powers are exercised, all
business conducted, and all properties controlled by the board of directors. A corporation has a separate and distinct personality from its directors and officers
and can only exercise its corporate powers through the board of directors. Thus, it is clear that an individual corporate officer cannot solely exercise any
corporate power pertaining to the corporation without authority from the board of directors. This has been our constant holding in cases instituted by a
corporation.
 
In a slew of cases, however, we have recognized the authority of some corporate officers to sign the verification and certification against forum
shopping. In Mactan-Cebu International Airport Authority v. CA , we recognized the authority of a general manager or acting general manager to sign the
verification and certificate against forum shopping; [9] in Pfizer v. Galan, we upheld the validity of a verification signed by an employment specialist who had not
even presented any proof of her authority to represent the company; [10] in Novelty Philippines, Inc., v. CA , we ruled that a personnel officer who signed the
petition but did not attach the authority from the company is authorized to sign the verification and non-forum shopping certificate; [11] and in Lepanto
Consolidated Mining Company v. WMC Resources International Pty. Ltd.  (Lepanto), we ruled that the Chairperson of the Board and President of the Company
can sign the verification and certificate against non-forum shopping even without the submission of the boards authorization. [12]
 
In sum, we have held that the following officials or employees of the company can sign the verification and certification without need of a board
resolution: (1) the Chairperson of the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel
Officer, and (5) an Employment Specialist in a labor case.
 
While the above cases do not provide a complete listing of authorized signatories to the verification and certification required by the rules, the
determination of the sufficiency of the authority was done on a case to case basis. The rationale applied in the foregoing cases is to justify the authority of
corporate officers or representatives of the corporation to sign the verification or certificate against forum shopping, being in a position to verify the truthfulness
and correctness of the allegations in the petition. [13]
 
Authority from board of directors required
 
In Philippine Airlines v. Flight Attendants and Stewards Association of the Philippines , we ruled that only individuals vested with authority by a valid
board resolution may sign the certificate of non-forum shopping on behalf of a corporation. The action can be dismissed if the certification was submitted
unaccompanied by proof of the signatorys authority. [14] We believe that appending the board resolution to the complaint or petition is the better procedure to
obviate any question on the authority of the signatory to the verification and certification. The required submission of the board resolution is grounded on the
basic precept that corporate powers are exercised by the board of directors, [15]and not solely by an officer of the corporation. Hence, the power to sue and be
sued in any court or quasi-judicial tribunal is necessarily lodged with the said board.
 
There is substantial compliance with Rule 7, Secs. 4 and 5
 
In the case at bar, we so hold that petitioner substantially complied with Secs. 4 and 5, Rule 7 of the 1997 Revised Rules on Civil Procedure.  First,
the requisite board resolution has been submitted albeit belatedly by petitioner. Second, we apply our ruling in Lepanto with the rationale that the President of
petitioner is in a position to verify the truthfulness and correctness of the allegations in the petition.  Third, the President of petitioner has signed the complaint
before the CTA at the inception of this judicial claim for refund or tax credit.
 
Consequently, the petition in CA-G.R. SP No. 59778 ought to be reinstated. However, in view of the enactment of RA 9282 which made the
decisions of the CTA appealable to this Court, we will directly resolve the second issue which is a purely legal one.
 
Petitioner entitled to tax credit
 
The pith of the dispute between petitioner and respondent is whether petitioner is entitled to a tax refund or tax credit of 20% sales discount granted
to senior citizens under RA 7432 or whether the discount should be treated as a deduction from gross income.
 
This issue is not new, as the Court has resolved several cases involving the very same issue. In Commissioner of Internal Revenue v. Central Luzon
Drug Corporation  (Central Luzon),[16]  we held that private drug companies are entitled to a tax credit for the 20% sales discounts they granted to qualified
senior citizens under RA 7432 and nullified Secs. 2.i and 4 of RR 2-94.  In Bicolandia Drug Corporation (formerly Elmas Drug Corporation) v. Commissioner of
Internal Revenue,[17]  we ruled that petitioner therein is entitled to a tax credit of the cost or the full 20% sales discounts it granted pursuant to RA 7432.  In the
related case of Commissioner of Internal Revenue v. Bicolandia Drug Corporation ,[18]  we likewise ruled that respondent drug company was entitled to a tax
credit, and we struck down RR 2-94 to be null and void for failing to conform with the law it sought to implement.
 
A perusal of the April 26, 2000 CTA Decision shows that the appellate tax court correctly ruled that the 20% sales discounts petitioner granted to
qualified senior citizens should be deducted from petitioners income tax due and not from petitioners gross sales as erroneously provided in RR 2-
94. However, the CTA erred in denying the tax credit to petitioner on the ground that petitioner had suffered net loss in 1995, and ruling that the tax credit is
unavailing.
Net loss in a taxable year does not preclude grant of tax credit
 
It is true that petitioner did not pay any tax in 1995 since it suffered a net loss for that taxable year.  This fact, however, without more, does not preclude
petitioner from availing of its statutory right to a tax credit for the 20% sales discounts it granted to qualified senior citizens.  The law then applicable on this
point is clear and without any qualification. Sec. 4 (a) of RA 7432 pertinently provides:
 
Sec. 4. Privileges for the Senior citizens.The senior citizens shall be entitled to the following:
a)                  the grant of twenty percent (20%) discount from all establishments relative to utilization of transportation services, hotels and
similar lodging establishments, restaurants and recreation centers and purchase of medicines anywhere in the
country: Provided, That private establishments may claim the cost as tax credit. (Emphasis ours.)
 
 
The fact that petitioner suffered a net loss in 1995 will not make the tax credit due to petitioner unavailable.  This is the core issue resolved in Central
Luzon, where we ruled that the net loss for a taxable year does not bar the grant of the tax credit to a taxpayer pursuant to RA 7432 and that prior tax
payments are not required for such grant. We explained:
 
Although this tax credit benefit is available, it need not be used by losing ventures, since there is no tax liability that calls for its
application.  Neither can it be reduced to nil by the quick yet callow stroke of an administrative pen, simply because no reduction of taxes
can instantly be effected.  By its nature, the tax credit may still be deducted from a future, not a present, tax liability, without which it does
not have any use. x x x
 
x x x x
 
While a tax liability is essential to the availment or use of any tax credit, prior tax payments are not.  On the contrary, for
the existence or grant solely of such credit, neither a tax liability nor a prior tax payment is needed.   The Tax Code is in fact replete with
provisions granting or allowing tax credits, even though no taxes have been previously paid. [19]
 
 It is thus clear that petitioner is entitled to a tax credit for the full 20% sales discounts it extended to qualified senior citizens for taxable year
1995. Considering that the CTA has not disallowed the PhP 123,083 sales discounts petitioner claimed before the BIR and CTA, we are constrained to grant
them as tax credit in favor of petitioner.
 
Consequently, petitioners appeal before the CA in CA-G.R. SP No. 59778 must be granted, and, necessarily, the April 26, 2000 CTA Decision in
C.T.A. Case No. 5581 reversed and set aside.
 
WHEREFORE, the petition is GRANTED. The August 31, 2000 CA Resolution in CA-G.R. SP No. 59778 is ANNULLED and SET ASIDE. The April 26, 2000
CTA Decision in C.T.A. Case No. 5581 dismissing petitioners claim for tax credit is accordingly  REVERSED AND SET ASIDE. The Commissioner of Internal
Revenue is ORDERED to issue a Tax Credit Certificate in the name of petitioner in the amount of PhP 123,083. No costs.
 
SO ORDERED.
FIDEL O. CHUA and FILIDEN REALTY AND   G . R. No. 1 82 31 1
DEVELOPMENT CORPORATION,  
 
Petitioners, Present:
   
  CORONA, J.,*
CARPIO MORALES,**
- versus - CHICO-NAZARIO,***
Acting Chairperson,
  VELASCO, JR., and
NACHURA, JJ.
 
 
METROPOLITAN BANK & TRUST COMPANY, ATTY.
ROMUALDO CELESTRA, ATTY. ANTONIO V. VIRAY,  
ATTY. RAMON MIRANDA and ATTY. POMPEYO
MAYNIGO, Promulgated:

Re spo nd e nt s.  
August 19, 2009
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
 
 
DECISION
 
 
CHICO-NAZARIO, J.:
 
 
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision, [1] dated 31 January 2008, later upheld in a
Resolution[2] dated 28 March 2008, both rendered by the Court of Appeals in CA-G.R. CV No. 88087. The Court of Appeals, in its assailed Decision, affirmed
the Order[3] dated 3 July 2006 of Branch 258 of the Regional Trial Court of Paraaque City (RTC-Branch 258), dismissing the action for damages, docketed
as Civil Case No. CV-05-0402, filed by petitioners Fidel O. Chua (Chua) and Filiden Realty and Development Corporation (Filiden), on the ground of forum
shopping.
 
Petitioner Chua is president of co-petitioner Filiden, a domestic corporation, engaged in the realty business. [4] Respondent Metropolitan Bank and
Trust Co. (respondent Metrobank) is a domestic corporation and a duly licensed banking institution. [5]
 
Sometime in 1988, petitioners obtained from respondent Metrobank a loan of P4,000,000.00, which was secured by a real estate mortgage (REM)
on parcels of land covered by Transfer Certificates of Title (TCTs) No. (108020)1148, No. 93919, and No. 125185, registered in petitioner Chuas name
(subject properties).[6] Since the value of the collateral was more than the loan, petitioners were given an open credit line for future loans. On  18 September
1995, 17 January 1996, 31 July 1996, 21 January 1997, and 12 October 1998, petitioners obtained other loans from respondent Metrobank, and the real
estate mortgages were repeatedly amended in accordance with the increase in petitioners liabilities. [7]
 
Having failed to fully pay their obligations, petitioners entered into a Debt Settlement Agreement [8] with respondent Metrobank on 13 January 2000,
whereby the loan obligations of the former were restructured. The debt consisted of a total principal amount of P79,650,000.00, plus unpaid interest
of P7,898,309.02, and penalty charges of P552,784.96. Amortization payments were to be made in accordance with the schedule attached to the agreement.
 
 In a letter[9] dated 28 February 2001, the lawyers of respondent Metrobank demanded that petitioners fully pay and settle their liabilities, including
interest and penalties, in the total amount of P103,450,391 as of 16 January 2001, as well as the stipulated attorneys fees, within three days from receipt of
said letter.
 
When petitioners still failed to pay their loans, respondent Metrobank sought to extra-judicially foreclose the REM constituted on the subject
properties. Upon a verified Petition for Foreclosure filed by respondent Metrobank on 25 April 2001, respondent Atty. Romualdo Celestra (Atty. Celestra)
issued a Notice of Sale dated 26 April 2001, wherein the mortgage debt was set at P88,101,093.98, excluding unpaid interest and penalties (to be computed
from 14 September 1999), attorneys fees, legal fees, and other expenses for the foreclosure and sale. The auction sale was scheduled on 31 May 2001.
[10]
 On 4 May 2001, petitioners received a copy of the Notice of Sale. [11]
 
On 28 May 2001, petitioner Chua, in his personal capacity and acting on behalf of petitioner Filiden, filed before Branch 257 of the Regional Trial
Court of Paraaque (RTC-Branch 257), a Complaint for Injunction with Prayer for Issuance of Temporary Restraining Order (TRO), Preliminary Injunction and
Damages,[12] against respondents Atty. Celestra, docketed as Civil Case No. CV-01-0207. Upon the motion of petitioners, RTC-Branch 257 issued a TRO
enjoining respondents Metrobank and Atty. Celestra from conducting the auction sale of the mortgaged properties on 31 May 2001.[13]
After the expiration of the TRO on 18 June 2001, and no injunction having been issued by RTC-Branch 257, respondent Atty. Celestra reset the
auction sale on 8 November 2001. On 8 November 2001, the rescheduled date of the auction sale, RTC-Branch 257 issued an Order directing that the said
sale be reset anew after 8 November 2001. The Order was served on 8 November 2001, on respondent Atty. Celestras daughter, Arlene Celestra, at a coffee
shop owned by the formers other daughter, Grace Celestra Aguirre. The auction sale, however, proceeded on 8 November 2001, and a Certificate of Sale was
accordingly issued to respondent Metrobank as the highest bidder of the foreclosed properties. [14]
 
On 13 February 2002, petitioners filed with RTC-Branch 257 a Motion to Admit Amended Complaint [15] in Civil Case No. CV-01-0207. The Amended
Verified Complaint,[16] attached to the said Motion, impleaded as additional defendant the incumbent Register of Deeds of Paraaque City. Petitioners alleged
that the Certificate of Sale was a falsified document since there was no actual sale that took place on 8 November 2001. And, even if an auction sale was
conducted, the Certificate of Sale would still be void because the auction sale was done in disobedience to a lawful order of RTC-Branch 257. Relevant
portions of the Amended Complaint of petitioners read:
 
12-E. There was actually no auction sale conducted by [herein respondent] Atty. Celestra on November 8, 2001 and the CERTIFICATE OF
SALE (Annex K-2) is therefore a FALSIFIED DOCUMENT and for which the appropriate criminal complaint for falsification of official/public
document will be filed against the said [respondent] Celestra and the responsible officers of [herein respondent] Metrobank, in due time;
 
12-F. But even granting that an auction sale was actually conducted and that the said Certificate of Sale is not a falsified document, the same
document is a NULLITY simply because the auction sale was done in disobedience to a lawful order of this Court and that therefore the
auction sale proceeding is NULL AND VOID AB INITIO.[17]
 
 
Petitioners additionally prayed in their Amended Complaint for the award of damages given the abuse of power of respondent Metrobank in the
preparation, execution, and implementation of the Debt Settlement Agreement with petitioners; the bad faith of respondent Metrobank in offering the subject
properties at a price much lower than its assessed fair market value; and the gross violation by respondents Metrobank and Atty. Celestra of the injunction.
 
Petitioners also sought, in their Amended Complaint, the issuance of a TRO or a writ of preliminary injunction to enjoin respondent Atty. Celestra and
all other persons from proceeding with the foreclosure sale, on the premise that no auction sale was actually held on 8 November 2001.
 
In an Order dated 6 March 2002, RTC-Branch 257 denied petitioners application for injunction on the ground that the sale of the foreclosed
properties rendered the same moot and academic. The auction sale, which was conducted by respondents Metrobank and Atty. Celestra, after the expiration
of the TRO, and without knowledge of the Order dated 8 November 2001 of RTC-Branch 257, was considered as proper and valid. [18]
 
Petitioners filed a Motion for Reconsideration of the 6 March 2002 Order of RTC-Branch 257. When RTC-Branch 257 failed to take any action on
said Motion, petitioners filed with the Court of Appeals a Petition for Certiorari, docketed as CA-G.R. No. 70208. In a Decision dated 26 July 2002, the Court of
Appeals reversed the 6 March 2002Order of RTC-Branch 257 and remanded the case for further proceedings. The Supreme Court dismissed the appeal of
respondents with finality. Thus, on 27 September 2005, RTC-Branch 257 set the hearing for the presentation of evidence by respondent Metrobank for the
application for preliminary injunction on 9 November 2005.[19]
 
On 2 November 2005, petitioners sought the inhibition of Acting Executive Judge Rolando How of RTC-Branch 257, who presided over Civil Case
No. CV-01-0207. Their motion was granted and the case was re-raffled to RTC-Branch 258. [20]
 
On 28 October 2005, petitioners filed with Branch 195 of the Regional Trial Court of Paraaque (RTC-Branch 195) a Verified Complaint for Damages
against respondents Metrobank, Atty. Celestra, and three Metrobank lawyers, namely, Atty. Antonio Viray, Atty. Ramon Miranda and Atty. Pompeyo
Maynigo. The Complaint was docketed as Civil Case No. CV-05-0402. Petitioners sought in their Complaint the award of actual, moral, and exemplary
damages against the respondents for making it appear that an auction sale of the subject properties took place, as a result of which, the prospective buyers of
the said properties lost their interest and petitioner Chua was prevented from realizing a profit of P70,000,000.00 from the intended sale.[21]
 
 Petitioners filed with RTC-Branch 195 a Motion to Consolidate [22] dated 27 December 2005, seeking the consolidation of Civil Case No. CV-05-0402,
the action for damages pending before said court, with Civil Case No. CV-01-0207, the injunction case that was being heard before RTC-Branch 258, based
on the following grounds:
 
2. The above-captioned case is a complaint for damages as a result of the [herein respondents] conspiracy to make it appear as if
there was an auction sale conducted on November 8, 2001 when in fact there was none.  The properties subject of the said auction sale are
the same properties subject of Civil Case No. 01-0207.
 
3. Since the subject matter of both cases are the same properties and the parties of both cases are almost the same, and both
cases have the same central issue of whether there was an auction sale, then necessarily, both cases should be consolidated.
 
 
On 3 January 2006, respondents filed with RTC-Branch 195 an Opposition to Motion to Consolidate with Prayer for Sanctions, praying for the
dismissal of the Complaint for Damages in Civil Case No. CV-05-0402, on the ground of forum shopping. [23]
 
In an Order dated 23 January 2006, RTC-Branch 195 granted the Motion to Consolidate, and ordered that Civil Case No. CV-05-0402 be transferred
to RTC-Branch 258, which was hearing Civil Case No. 01-0207. [24]
 
After the two cases were consolidated, respondents filed two motions before RTC-Branch 258: (1) Motion for Reconsideration of the Order dated  23
January 2006 of RTC-Branch 195, which granted the Motion to Consolidate of petitioners; and (2) Manifestation and Motion raising the ground of forum
shopping, among the affirmative defenses of respondents. [25] RTC-Branch 258 issued an Order on 3 July 2006, granting the first Motion of respondents, thus,
dismissing Civil Case No. CV-05-0402 on the ground of forum shopping, [26] and consequently, rendering the second Motion of respondents moot. RTC-Branch
258 declared that the facts or claims submitted by petitioners, the rights asserted, and the principal parties in the two cases were the same. RTC-Branch 258
held in its 3 July 2006 Order[27] that:
 
It is, therefore, the honest belief of the Court that since there is identity of parties and the rights asserted, the allegations of the
defendant are found meritorious and with legal basis, hence, the motion is GRANTED and this case is DISMISSED due to forum shopping.
 
As regards the second motion, the same has already been mooted by the dismissal of this case.
 
WHEREFORE, premises considered, the Motion for Reconsideration filed by the defendants whereby this case is DISMISSED due
to forum shopping and the Manifestation and Motion likewise filed by the defendants has already been MOOTED by the said dismissal.
 
 
From the foregoing Order of RTC-Branch 258, petitioners filed a Petition for Review on Certiorari with the Court of Appeals, docketed as CA-G.R. CV
No. 88087.
 
In a Decision dated 31 January 2008, the Court of Appeals affirmed the 3 July 2006 Order of RTC-Branch 258. The appellate court observed that
although the defendants in the two cases were not identical, they represented a community of interest.  It also declared that the cause of action of the two
cases, upon which the recovery of damages was based, was the same, i.e., the feigned auction sale, such that the nullification of the foreclosure of the subject
properties, which petitioners sought in Civil Case No. CV-01-0207, would render proper the award for damages, claimed by petitioners in Civil Case No. CV-
05-0402. Thus, judgment in either case would result in res judicata. The Court of Appeals additionally noted that petitioners admitted in their Motion for
Consolidation that Civil Case No. CV-01-0207 and Civil Case No. CV-05-0402 involved the same parties, central issue, and subject properties. [28] In its
Decision,[29] the appellate court decreed:
 
All told, the dismissal by the RTC-Br. 258 of the second case, Civil Case No. CV-05-0402, on the ground of forum shopping
should be upheld as it is supported by law and jurisprudence.
WHEREFORE, the assailed order is AFFIRMED. Costs against the [herein petitioners].
 
 
Petitioners filed a Motion for Reconsideration of the afore-mentioned Decision, which the Court of Appeals denied in a Resolution dated 28 March
2008.[30]
 
Hence, the present Petition, in which the following issues are raised[31]:
 
I
  
WHETHER OR NOT THE FIRST AND THE SECOND CASES HAVE THE SAME ULTIMATE OBJECTIVE, I.E., TO HAVE THE
AUCTION SALE BE DECLARED AS NULL AND VOID.
 
II
 
WHETHER OR NOT THE OUTCOME OF THE FIRST CASE WOULD AFFECT THE SECOND CASE.
 
 
The only issue that needs to be determined in this case is whether or not successively filing Civil Case No. CV-01-0207 and Civil Case No. CV-05-
0402 amounts to forum shopping.
 
The Court answers in the affirmative.
 
The proscription against forum shopping is found in Section 5, Rule 7 of the 1997 Rules of Court, which provides that:
 
SEC. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory
pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not
theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best
of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of
the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall
report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.
 
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory
pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. The
submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court, without
prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitutes willful and
deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a
cause for administrative sanctions.
 
 
Forum shopping exists when a party repeatedly avails himself of several judicial remedies in different courts, simultaneously or successively, all
substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending in
or already resolved adversely by some other court.[32]
 
Ultimately, what is truly important in determining whether forum shopping exists or not is the vexation caused the courts and party-litigant by a party
who asks different courts to rule on the same or related causes and/or to grant the same or substantially the same reliefs, in the process creating the possibility
of conflicting decisions being rendered by the different fora upon the same issue. [33]
 
Forum shopping can be committed in three ways: (1) filing multiple cases based on the same cause of action and with the same prayer, the previous
case not having been resolved yet (where the ground for dismissal is litis pendentia); (2) filing multiple cases based on the same cause of action and the same
prayer, the previous case having been finally resolved (where the ground for dismissal is res judicata); and (3) filing multiple cases based on the same cause
of action, but with different prayers (splitting of causes of action, where the ground for dismissal is also either litis pendentia or res judicata).[34]
 
In the present case, there is no dispute that petitioners failed to state in the Certificate of Non-Forum Shopping, attached to their Verified Complaint
in Civil Case No. CV-05-0402 before RTC-Branch 195, the existence of Civil Case No. CV-01-0207 pending before RTC-Branch 258. Nevertheless, petitioners
insist that they are not guilty of forum shopping, since (1) the two cases do not have the same ultimate objective  Civil Case No. CV-01-0207 seeks the
annulment of the 8 November 2001 public auction and certificate of sale issued therein, while Civil Case No. CV-05-0402 prays for the award of actual and
compensatory damages for respondents tortuous act of making it appear that an auction sale actually took place on  8 November 2001; and (2) the judgment in
Civil Case No. CV-01-0207, on the annulment of the foreclosure sale, would not affect the outcome of  Civil Case No. CV-05-0402, on the entitlement of
petitioners to damages. The Court, however, finds these arguments refuted by the allegations made by petitioners themselves in their Complaints in both
cases.
 
Petitioners committed forum shopping by filing multiple cases based on the same cause of action, although with different prayers.
 
Sections 3 and 4, Rule 2 of the Rules of Court proscribe the splitting of a single cause of action:
 
 Section 3. A party may not institute more than one suit for a single cause of action.
 
Section 4. Splitting a single cause of action; effect of.If two or more suits are instituted on the basis of the same cause of action, the
filing of one or a judgment upon the merits in any one is available as a ground for the dismissal of the others.
 
 
Forum shopping occurs although the actions seem to be different, when it can be seen that there is a splitting of a cause of action.  [35] A cause of
action is understood to be the delict or wrongful act or omission committed by the defendant in violation of the primary rights of the plaintiff. It is true that a
single act or omission can violate various rights at the same time, as when the act constitutes juridically a violation of several separate and distinct legal
obligations. However, where there is only one delict or wrong, there is but a single cause of action regardless of the number of rights that may have been
violated belonging to one person.[36]
 
Petitioners would like to make it appear that Civil Case No. CV-01-0207 was solely concerned with the nullification of the auction sale and
certification of sale, while Civil Case No. CV-05-0402 was a totally separate claim for damages. Yet, a review of the records reveals that petitioners also
included an explicit claim for damages in their Amended Complaint [37] in Civil Case No. CV-01-0207, to wit:
 
20-A. The abovementioned acts of [herein respondents] Metrobank and Atty. Celestra are in gross violation of the injunction made
under Article 19 of the Civil Code, thereby entitling the [herein petitioners] to recover damages from the said [respondents] in such amount as
may be awarded by the Court. (Emphasis ours.)
 
 
The abovementioned acts on which petitioners anchored their claim to recover damages were described in the immediately preceding paragraph in the same
Amended Complaint, as follows [38]:
 
20. To reiterate, the [herein respondent] is fully aware that the assessed fair market value of the real properties they seek to
foreclose and sell at public auction yet they have knowingly offered the said properties for sale at the amount of EIGHTY EIGHT MILLION
ONE HUNDRED ONE THOUSAND NINETY THREE PESOS AND 98/100 (PhP88,101,093.98), obviously because they know that the
[petitioners] or any other third person would not be able to seasonably raise the said amount and that said [respondent] Bank would be the
winner by default at the said sale at public auction.
 
 
Petitioners averred in their Amended Complaint in Civil Case No. CV-01-0207 that the assessed fair market value of the subject properties
was P176,117,000.00.[39]
 
The Court observes that the damages being claimed by petitioners in their Complaint in Civil Case No. CV-05-0402 were also occasioned by the
supposedly fictitious 8 November 2001 foreclosure sale, thus [40]:
 
24. The acts of [herein respondents] in making it appear that there was an auction sale conducted on 8 November 2001 and the subsequent
execution of the fictitious Certificate of Sale is TORTIOUS, which entitles the [herein petitioners] to file this instant action under the
principles of Human Relations, more particularly Articles 19, 20 and 21 of the Civil Code which provide that:
 
xxxx
 
25.  As a result of the aforesaid acts of the [respondents], [petitioners] buyers of the mortgaged properties had lost their interest anymore (sic)
in buying the said mortgaged properties for not less than P175,000,000.00 as per appraisal report of the Philippine Appraisal Co., Inc., a
copy of which is hereto attached as Annex R and made an integral part hereof;
 
26.  The aborted sale of the [petitioners] mortgaged properties for the said amount of not less than  P175,000,000.00 could have paid off
[petitioners] loan obligation with [respondent] Metrobank for the principal amount of P79,650,000.00 or even the contested restructured
amount of P103,450,391.84 (as stated in the petition for foreclosure), which would have thus enabled the plaintiff to realize a net amount
of not less than SEVENTY MILLION PESOS, more or less;
 
27.  By reason of the aforesaid acts of [respondents], [petitioners] suffered and will continue to suffer actual or compensatory, moral and
exemplary or corrective damages, the nature, extent and amount of compensation of which will (sic) proven during the trial but not less
than SEVENTY MILLION PESOS.
 
 
 There is no question that the claims of petitioners for damages in Civil Case No. CV-01-0207 and Civil Case No. CV-05-0402 are premised on the
same cause of action, i.e., the purportedly wrongful conduct of respondents in connection with the foreclosure sale of the subject properties.
 
At first glance, said claims for damages may appear different. In Civil Case No. CV-01-0207, the damages purportedly arose from the bad faith of
respondents in offering the subject properties at the auction sale at a price much lower than the assessed fair market value of the said properties, said to
be P176,117,000.00. On the other hand, the damages in Civil Case No. CV-05-0402, allegedly resulted from the backing out of prospective buyers, who had
initially offered to buy the subject properties for not less than P175,000,000.00, because respondents made it appear that the said properties were already sold
at the auction sale. Yet, it is worthy to note that petitioners quoted closely similar values for the subject properties in both cases, against which they measured
the damages they supposedly suffered. Evidently, this is due to the fact that petitioners actually based the said values on the single appraisal report of the
Philippine Appraisal Company on the subject properties. Even though petitioners did not specify in their Amended Complaint in Civil Case No. CV-01-0207 the
exact amount of damages they were seeking to recover, leaving the same to the determination of the trial court, and petitioners expressly prayed that they be
awarded damages of not less than P70,000,000.00 in their Complaint in Civil Case No. CV-05-0402, petitioners cannot deny that all their claims for damages
arose from what they averred was a fictitious public auction sale of the subject properties.
 
Petitioners contention that the outcome of Civil Case No. CV-01-0207 will not determine that of Civil Case No. CV-05-0402 does not justify the filing
of separate cases.Even if it were assumed that the two cases contain two separate remedies that are both available to petitioners, these two remedies that
arose from one wrongful act cannot be pursued in two different cases. The rule against splitting a cause of action is intended to prevent repeated litigation
between the same parties in regard to the same subject of controversy, to protect the defendant from unnecessary vexation; and to avoid the costs and
expenses incident to numerous suits. It comes from the old maxim nemo debet bis vexari, pro una et eadem causa  (no man shall be twice vexed for one and
the same cause).[41]
 
Moreover, petitioners admitted in their Motion to Consolidate [42] dated 27 December 2005 before RTC-Branch 195 that both cases shared the same
parties, the same central issue, and the same subject property, viz:
 
2. The above-captioned case is a complaint for damages as a result of the [herein respondents] conspiracy to make it appear as if
there was an auction sale conducted on November 8, 2001 when in fact there was none.  The properties subject of the said auction sale are
the same properties subject of Civil Case No. 01-0207.
 
3. Since the subject matter of both cases are the same properties and the parties of both cases are almost the same, and both
cases have the same central issue of whether there was an auction sale, then necessarily, both cases should be consolidated.
 
 
If the forum shopping is not considered willful and deliberate, the subsequent case shall be dismissed without prejudice, on the ground of either litis
pendentia or res judicata. However, if the forum shopping is willful and deliberate, both (or all, if there are more than two) actions shall be dismissed  with
prejudice..[43] In this case, petitioners did not deliberately file Civil Case No. CV-05-0402 for the purpose of seeking a favorable decision in another
forum. Otherwise, they would not have moved for the consolidation of both cases. Thus, only Civil Case No. CV-05-0402 is dismissed and the hearing of Civil
Case No. CV-01-0207 before RTC-Branch 258 will be continued.
IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The Decision dated 31 January 2008 and Resolution dated 28 March 2008 of the
Court of Appeals in CA-G.R. CV No. 88087, affirming the Order dated 3 July 2006 of Branch 258 of the Regional Trial Court of Paraaque City, dismissing Civil
Case No. CV-05-0402, is AFFIRMED, without prejudice to the proceedings in Civil Case No. CV-01-0207. Costs against petitioners.
 
SO ORDERED.

G.R. No.197530               July 9, 2014

ABOITIZ EQUITY VENTURES, INC., Petitioner, 

vs.
VICTOR S. CHIONGBIAN, BENJAMIN D. GOTHONG, and CARLOS A. GOTHONG LINES, INC. (CAGLI),Respondents.

DECISION

LEONEN, J.:

This is a petition for review on certiorari with an application for the issuance of a temporary restraining order and/or writ of preliminary injunction under Rule 45
of the Rules of Court. This petition prays that the assailed orders dated May 5, 2011 1 and June 24, 20112 of the Regional Trial Court, Cebu City, Branch 10 in
Civil Case No. CEB-37004 be nullified and set aside and that judgment be rendered dismissing with prejudice the complaint 3 dated July 20, 2010 filed by
respondents Carlos A. Gothong Lines, Inc. ("CAGLI") and Benjamin D. Gothong. On January 8, 1996, Aboitiz Shipping Corporation ("ASC"), principally owned
by the Aboitiz family, CAGLI, principally owned by the Gothong family, and William Lines, Inc.("WLI"), principally owned by the Chiongbian family, entered into
anagreement (the "Agreement"),4 whereby ASC and CAGLI would transfer their shipping assets to WLI in exchange for WLI’s shares of stock. 5 WLI, in turn,
would run their merged shipping businesses and, henceforth, be known as WG&A, Inc. ("WG&A"). 6

Sec. 11.06 of the Agreement required all disputes arising out of or in connection with the Agreement tobe settled by arbitration:

11.06 Arbitration
All disputes arising out of or in connection with this Agreement including any issue as to this Agreement’s validity or enforceability, which cannot be settled
amicably among the parties, shall be finally settled by arbitration in accordance with the Arbitration Law (Republic Act No. 876) by an arbitration tribunal
composed of four (4) arbitrators. Each of the parties shall appoint one (1) arbitrator, the three (3) to appoint the fourth arbitrator who shall act as Chairman.
Any award by the arbitration tribunal shall be final and binding upon the parties and shall be enforced by judgment of the Courts of Cebu or Metro Manila. 7

Among the attachments to the Agreement was Annex SL-V. 8 This was a letter dated January 8,1996, from WLI, through its President (herein respondent)
Victor S. Chiongbian addressed to CAGLI, through its Chief Executive Officer Bob D. Gothong and Executive Vice President for Engineering (herein
respondent) Benjamin D. Gothong. On its second page, Annex SL-V bore the signatures ofBob D. Gothong and respondent Benjamin D. Gothong by way of a
conforme on behalf of CAGLI.

Annex SL-V confirmed WLI’s commitment to acquire certain inventories of CAGLI. These inventories would havea total aggregate value of, at most, ₱400
million, "as determinedafter a special examination of the [i]nventories." 9Annex SL-V also specificallystated that such acquisition was "pursuant to the
Agreement."10

The entirety of Annex SL-V’s substantive portion reads:

We refer to the Agreement dated January 8, 1996 (the "Agreement") among William Lines, Inc. ("Company C"), Aboitiz Shipping Corporation ("Company A")
and Carlos A. Gothong Lines, Inc. ("Company B") regarding the transfer of various assets of Company A and Company B to Company C in exchangefor
shares of capital stock of Company C. Terms defined in the Agreement are used herein as therein defined.

This will confirm our commitment to acquire certain spare parts and materials inventory (the "Inventories") of Company B pursuant to the Agreement.

The total aggregate value of the Inventories to be acquired shall not exceed ₱400 Million as determined after a special examination of the Inventories as
performed by SGV & Co. to be completed on or before the Closing Date under the agreed procedures determined by the parties.

Subject to documentation acceptable to both parties, the Inventories to be acquired shall be determined not later than thirty (30) days after the Closing Date
and the payments shall be made in equal quarterly instalments over a period of two years with the first payment due on March 31, 1996. 11

Pursuant to Annex SL-V, inventories were transferred from CAGLI to WLI. These inventories were assessed to have a value of 514 million, which was later
adjusted to 558.89 million.12 Of the total amount of 558.89 million, "CAGLIwas paid the amount of 400 Million." 13 In addition to the payment of 400
million,petitioner Aboitiz Equity Ventures ("AEV") noted that WG&A shares with a book value of 38.5 million were transferred to CAGLI. 14

As there was still a balance, in2001, CAGLI sent WG&A (the renamed WLI) demand letters "for the return of or the payment for the excess
[i]nventories."15 AEV alleged that to satisfy CAGLI’s demand, WLI/WG&A returned inventories amounting to 120.04 million. 16 As proof of this, AEV attached
copies of delivery receipts signed by CAGLI’s representatives as Annex "K" of the present petition. 17

Sometime in 2002, the Chiongbian and Gothong families decided to leave the WG&A enterprise and sell their interest in WG&A to the Aboitiz family. As such,
a share purchase agreement18 ("SPA") was entered into by petitioner AEV and the respective shareholders groups of the Chiongbians and Gothongs. In the
SPA, AEV agreedto purchase the Chiongbian group's 40.61% share and the Gothong group's 20.66% share in WG&A’s issued and outstanding stock. 19

Section 6.5 of the SPA provided for arbitration as the mode of settling any dispute arising from the SPA. It reads:

6.5 Arbitration. Should there be any dispute arising between the parties relating to this Agreement including the interpretation or performance hereof which
cannot beresolved by agreement of the parties within fifteen (15) days after written notice by a party to another, such matter shall then be finally settled by
arbitration in Cebu City in accordance with the Philippine Arbitration Law. Substantive aspects of the dispute shall be settled by applying the laws of the
Philippines. The decision of the arbitrators shall be final and binding upon the parties hereto and the expense of arbitration (including without limitation the
award of attorney’s fees to the prevailing party) shall be paid as the arbitrators shall determine. 20

Section 6.8 of the SPA further provided that the Agreement (of January 8, 1996) shall be deemed terminated except its Annex SL-V. It reads:

6.8 Termination of Shareholders Agreement. The Buyer and the Sellers hereby agree that on Closing, the Agreement among Aboitiz Shipping Corporation,
Carlos A. Gothong Lines, Inc. and William Lines, Inc. dated January 8, 1996, as the same has been amended from time to time (the "Shareholders’
Agreement") shall all be considered terminated, except with respect to such rights and obligations that the parties to the Shareholders’ Agreement have under
a letter dated January 8, 1996 (otherwise known as "SL-V") from William Lines, Inc. to Carlos A. Gothong Lines, Inc. regarding certain spare parts and
materials inventory, which rights and obligations shall survive through the date prescribed by the applicable statute of limitations. 21

As part of the SPA, the parties entered into an Escrow Agreement 22 whereby ING Bank N.V.-Manila Branch was to take custody of the shares subject of the
SPA.23 Section 14.7 of the Escrow Agreement provided that all disputes arising from it shall be settled through arbitration:

14.7 All disputes, controversies or differences which may arise by and among the parties hereto out of, or in relation to, or in connection with this Agreement,
orfor the breach thereof shall be finally settled by arbitration in Cebu City in accordance with the Philippine Arbitration Law. The award rendered by the
arbitrator(s) shall be final and binding upon the parties concerned. However, notwithstanding the foregoing provision, the parties reserve the right to seek
redress before the regular court and avail of any provisional remedies in the event of any misconduct, negligence, fraud or tortuous acts which arise from any
extra-contractual conduct that affects the ability ofa party to comply with his obligations and responsibilities under this Agreement. 24

As a result of the SPA, AEV became a stockholder of WG&A. Subsequently, WG&A was renamed Aboitiz Transport Shipping Corporation ("ATSC"). 25

Petitioner AEV alleged that in2008, CAGLI resumed making demands despite having already received 120.04 million worth of excess inventories. 26 CAGLI
initially made its demand to ATSC (the renamed WLI/WG&A) through a letter 27 dated February 14, 2008. As alleged by AEV, however, CAGLI subsequently
resorted to a "shotgun approach"28 and directed its subsequent demand letters to AEV 29 as well as to FCLC30 (a company related to respondent Chiongbian).

AEV responded to CAGLI’s demands through several letters. 31 In these letters, AEV rebuffed CAGLI's demands noting that: (1) CAGLI already received the
excess inventories;(2) it was not a party to CAGLI's claim as it had a personality distinct from WLI/WG&A/ATSC; and (3) CAGLI's claim was already barred by
prescription.
In a reply-letter32 dated May 5, 2008, CAGLI claimed that it was unaware of the delivery to it of the excess inventories and asked for copies of the
corresponding delivery receipts.33 CAGLI threatened that unless it received proof of payment or return ofexcess inventories having been made on or before
March 31, 1996, it would pursue arbitration.34

In letters written for AEV (the first dated October 16, 2008 by Aboitiz and Company, Inc.’s Associate General Counsel Maria Cristina G. Gabutina 35 and the
second dated October 27, 2008 by SyCip Salazar Hernandez and Gatmaitan 36), it was noted that the excess inventories were delivered to GT Ferry
Warehouse.37 Attached to these letters were a listing and/or samples 38 of the corresponding delivery receipts. In these letters it was also noted that the amount
of excess inventories delivered (120.04 million) was actually in excess of the value of the supposedly unreturned inventories (119.89 million). 39 Thus, it was
pointed out that it was CAGLI which was liable to return the difference between 120.04 million and 119.89 million. 40 Its claims not having been satisfied, CAGLI
filed on November 6, 2008 the first of two applications for arbitration ("first complaint") 41 against respondent Chiongbian, ATSC, ASC, and petitioner AEV,
before the Cebu City Regional Trial Court, Branch 20. The first complaint was docketed as Civil Case No. CEB-34951.

In response, AEV filed a motion to dismiss 42 dated February 5, 2009. AEV argued that CAGLI failed to state a cause of action as there was no agreement to
arbitrate between CAGLI and AEV.43 Specifically, AEV pointed out that: (1) AEV was never a party to the January 8, 1996 Agreement or to its Annex SL-
V;44 (2) while AEV is a party to the SPA and Escrow Agreement, CAGLI's claim had no connection to either agreement; (3) the unsigned and unexecuted SPA
attached to the complaint cannot be a source of any right to arbitrate; 45 and (4) CAGLI did not say how WLI/WG&A/ATSC's obligation to return the excess
inventories can be charged to AEV.

On December 4, 2009, the Cebu City Regional Trial Court, Branch 20 issued an order 46 dismissing the first complaint with respect to AEV. It sustained AEV’s
assertion that there was no agreement binding AEV and CAGLI to arbitrate CAGLI’s claim. 47 Whether by motion for reconsideration, appeal or other means,
CAGLI did not contest this dismissal.

On February 26, 2010, the Cebu CityRegional Trial Court, Branch 20 issued an order 48 directing the parties remaining in the first complaint (after the discharge
of AEV) to proceed with arbitration.

The February 26, 2010 order notwithstanding, CAGLI filed a notice of dismissal 49 dated July 8, 2010, withdrawing the first complaint. In an order 50 dated August
13, 2010, the Cebu City Regional Trial Court, Branch 20 allowed this withdrawal.

ATSC (the renamed WLI/WG&A) filed a motion for reconsideration 51 dated September 20, 2010 to the allowance of CAGLI's notice of dismissal. This motion
was denied in an order52 dated April 15, 2011.

On September 1, 2010, while the first complaint was still pending (n.b., it was only on April 15, 2011 that the Cebu City Regional Trial Court, Branch 20 denied
ATSC’s motion for reconsideration assailing the allowance of CAGLI’s notice of disallowance), CAGLI, now joined by respondent Benjamin D. Gothong, filed a
second application for arbitration ("second complaint") 53 before the Cebu City Regional Trial Court, Branch 10. The second complaint was docketed as Civil
Case No. CEB-37004 and was also in view of the return of the same excess inventories subject of the first complaint.

On October 28, 2010, AEV filed a motion to dismiss 54 the second complaint on the following grounds:55 (1) forum shopping; (2) failure to state a cause of
action; (3) res judicata; and (4) litis pendentia.

In the first of the two (2) assailed orders dated May 5, 2011, 56 the Cebu City Regional Trial Court, Branch 10 denied AEV's motion to dismiss.

On the matter of litis pendentia, the Regional Trial Court, Branch 10 noted that the first complaint was dismissed with respect to AEV on December 4, 2009,
while the second complaint was filed on September 1, 2010. As such, the first complaint was no longer pending at the time of the filing of the second
complaint.57 On the matter of res judicata, the trial court noted that the dismissal without prejudice of the first complaint "[left] the parties free to litigate the
matter in a subsequent action, as though the dismiss[ed] action had not been commenced." 58 It added that since litis pendentia and res judicata did not exist,
CAGLI could not be charged with forum shopping.59 On the matter of an agreement to arbitrate, the Regional Trial Court, Branch 10 pointed to the SPA as
"clearly express[ing] the intention of the parties to bring to arbitration process all disputes, if amicable settlement fails." 60 It further dismissed AEV’s claim that it
was not a party to the SPA, as "already touching on the merits of the case" 61 and therefore beyond its duty "to determine if they should proceed to arbitration or
not."62

In the second assailed order63 dated June 24, 2011, the Cebu City Regional Trial Court, Branch 10 deniedAEV's motion for reconsideration.

Aggrieved, AEV filed the present petition.64 AEV asserts that the second complaint is barred by res judicata and litis pendentia and that CAGLI engaged in
blatant forum shopping.65 It insists that it is not bound by an agreement to arbitrate with CAGLI and that, even assuming that it may be required to arbitrate, it is
being ordered to do so under terms that are "manifestly contrary to the . . . agreements on which CAGLI based its demand for arbitration." 66

For resolution are the following issues:

I. Whether the complaint in Civil Case No. CEB-37004 constitutes forum shopping and/or is barred by res judicata and/or litis pendentia

II. Whether petitioner, Aboitiz Equity Ventures, Inc., is bound by an agreement to arbitrate with Carlos A. Gothong Lines, Inc., with respect to the latter’s claims
for unreturned inventories delivered to William Lines, Inc./WG&A, Inc./Aboitiz Transport System Corporation

AEV availed of the wrong

remedy in seeking relief from
this court

Before addressing the specific mattersraised by the present petition, we emphasize that AEV is in error inseeking relief from this court via a petition for review
on certiorari under Rule45 of the Rules of Court. As such, we are well in a position to dismiss the present petition outright. Nevertheless, as the actions of the
Cebu City Regional Trial Court, Branch 10 are tainted with grave abuse of discretion amounting to lack or excess of jurisdiction, this court treats the present
Rule 45 petition as a Rule 65 petition and gives it due course.

A petition for review on certiorari under Rule 45 is a mode of appeal. This is eminently clear from the very title and from the first section of Rule 45 (as
amended by A.M. No. 07-7-12-SC):
 Rule 45
APPEAL BY CERTIORARITO THE SUPREME COURT

SECTION 1. Filing of petition with Supreme Court. A party desiring to appeal by certiorarifrom a judgment, final order or resolution of the Court of Appeals, the
Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court or other courts, whenever authorized by law, may file with the Supreme Court a verified
petition for review on certiorari. The petition may include an application for a writ of preliminary injunction or other provisional remedies and shall raise only
questions of law, which must be distinctly set forth. The petitioner may seek the same provisional remedies by verified motion filed inthe same action or
proceeding at any time during its pendency. (Emphasis supplied)

Further, it is elementary that anappeal may only be taken from a judgment or final order that completely disposes of the case. 67 As such, no appeal may be
taken from an interlocutory order68 (i.e., "one which refers to something between the commencement and end of the suit which decides some point or matter
but it is not the final decision of the whole controversy" 69). As explained in Sime Darby Employees Association v. NLRC, 70 "[a]n interlocutory order is not
appealable until after the rendition of the judgment on the merits for a contrary rule would delay the administration of justice and unduly burden the courts." 71

An order denying a motion to dismiss is interlocutory in character. Hence, it may not be the subject of an appeal. The interlocutory nature of an order denying a
motion to dismiss and the remedies for assailing such an order were discussed in Douglas Lu Ym v. Nabua: 72

An order denying a motion to dismiss is an interlocutory order which neither terminates nor finally disposes of a case, as it leaves something to be done by the
court before the case is finally decided on the merits. As such, the general rule is that the denial of a motion to dismiss cannot be questioned in a special civil
action for certiorariwhich is a remedy designed to correct errors ofjurisdiction and not errors of judgment. Neither can a denial of a motion todismiss be the
subject of an appeal unless and until a final judgment or order is rendered.In order to justify the grant of the extraordinary remedy of certiorari, the denial of the
motion to dismiss must have been tainted with grave abuse of discretion amounting to lack or excess of jurisdiction. 73 (Emphasis supplied)

Thus, where a motion to dismiss is denied, the proper recourse is for the movant to file an answer. 74 Nevertheless, where the order denying the motion to
dismiss is tainted with grave abuse of discretion amounting to lack or excess of jurisdiction, the movant may assail such order via a Rule 65 (i.e., certiorari,
prohibition, and/or mandamus) petition. This is expressly recognized in the third paragraph of Rule 41, Section 1 of the Rules of Court. 75 Following the
enumeration in the second paragraph of Rule 41, Section 1 of the instances when an appeal may not be taken, the third paragraph specifies that "[in] any of
the foregoing circumstances, the aggrieved party may file an appropriate special civil action as provided in Rule 65." 76

Per these rules, AEV is in error for having filed what it itself calls a "Petition for Review on Certiorari [Appeal by Certiorari under Rule 45 of the Rules of
Court]."77 Since AEV availed of the improper remedy, this court is well in a position to dismiss the present petition.

Nevertheless, there have been instances when a petition for review on certiorari under Rule 45 was treated by this court as a petition for certiorari under Rule
65. As explained in China Banking Corporation v. Asian Construction and Development Corporation: 78

[I]n many instances, the Court has treated a petition for review on certiorariunder Rule 45 as a petition for certiorari under Rule 65 of the Rules of Court, such
as in cases where the subject of the recourse was 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.79

In this case, the May 5, 2011 and June 24, 2011 orders of the Cebu City Regional Trial Court, Branch 10 in Civil Case No. CEB-37004 are assailed for having
denied AEV’s motion todismiss despite: first, the second complaint having been filed in a manner constituting forum shopping; second, the prior judgment on
the merits made in Civil Case No. CEB-34951, thereby violating the principle ofres judicata; and third, the (then) pendency of Civil Case No. CEB-34951 with
respect to the parties that, unlike AEV, were not discharged from the case, thereby violating the principle of litis pendentia. The same orders are assailed for
having allowed CAGLI’s application for arbitration to continue despite supposedly clear and unmistakable evidence that AEV is not bound by an agreement to
arbitrate with CAGLI.

As such, the Cebu City, Regional Trial Court, Branch 10’s orders are assailed for having been made with grave abuse of discretion amounting to lack or
excess of jurisdiction in that the Cebu City Regional Trial Court, Branch 10 chose to continue taking cognizance of the second complaint, despite there being
compelling reasons for its dismissal and the Cebu City, Regional Trial Court Branch 20’s desistance. Conformably, we treat the present petition as a petition
for certiorari under Rule 65 of the Rules of Court and give it due course.

The complaint in Civil Case

No. CEB-37004 constitutes
forum shopping and is barred
by res judicata

The concept of and rationale against forum shopping were explained by this court in Top Rate Construction & General Services, Inc. v. Paxton Development
Corporation:80

FORUM SHOPPING is committed by a party who institutes two or more suits in different courts, either simultaneously or successively, in order to ask the
courts to rule on the same or related causes or to grant the same or substantially the same reliefs, on the supposition that one or the other court would make a
favorabledisposition or increase a party's chances of obtaining a favorable decision or action. It is an act of malpractice for it trifles with the courts, abuses their
processes, degrades the administration of justice and adds to the already congested court dockets. What is critical is the vexation brought upon the courts and
the litigants by a party who asks different courts to rule on the same or related causes and grant the same or substantially the same reliefs and in the process
creates the possibility of conflicting decisions being rendered by the different fora upon the same issues, regardless of whether the court in which one of the
suits was brought has no jurisdiction over the action.81

Equally settled is the test for determining forum shopping. As this court explained in Yap v. Chua: 82

To determine whether a party violated the rule against forum shopping, the most important factor toask is whether the elements of litis pendentiaare present, or
whether a final judgment in one case will amount to res judicatain another; otherwise stated, the test for determining forum shopping is whether in the two (or
more) cases pending, there is identity of parties, rights or causes of action, and reliefs sought. 83

Litis pendentia "refers to that situation wherein another action is pending between the same parties for the same cause ofaction, such that the second action
becomes unnecessary and vexatious."84 It requires the concurrence of three (3) requisites: "(1)the identity of parties, or at least such as representing the same
interests in both actions; (2) the identity of rights asserted and relief prayed for,the relief being founded on the same facts; and (3) the identity of the two cases
such that judgment in one, regardless of which party issuccessful, would amount tores judicatain the other." 85

In turn, prior judgment or res judicata bars a subsequent case when the following requisites concur: "(1) the former judgment is final; (2) it is rendered by a
court having jurisdiction over the subject matter and the parties; (3) it is a judgment or an order on the merits; (4) there is — between the first and the second
actions — identityof parties, of subject matter, and of causes of action." 86

Applying the cited concepts and requisites, we find that the complaint in Civil Case No. CEB-37004 is barred byres judicata and constitutes forum shopping.

First, between the first and second complaints, there is identity of parties. The first complaint was brought by CAGLI as the sole plaintiff against Victor S.
Chiongbian, ATSC, and AEV as defendants. In the second complaint, CAGLI was joined by Benjamin D. Gothong as (co-)plaintiff. As to the defendants, ATSC
was deleted while Chiongbian and AEV were retained.

While it is true that the parties to the first and second complaints are not absolutely identical, this court has clarified that, for purposes of forum shopping,
"[a]bsolute identity of parties is not required [and that it] is enough that there is substantial identity of parties." 87

Even as the second complaint alleges that Benjamin D. Gothong "is . . . suing in his personal capacity," 88 Gothong failed to show any personal interest in the
reliefs sought by the second complaint. Ultimately, what is at stake in the second complaint is the extent to which CAGLI may compel AEV and Chiongbian to
arbitrate in order that CAGLI may then recover the value of its alleged unreturned inventories. This claim for recovery is pursuant to the agreement evinced in
Annex SL-V. Annex SL-V was entered into by CAGLI and not by Benjamin D. Gothong. While it is true that Benjamin D. Gothong, along with Bob D. Gothong,
signed Annex SL-V, he did so only in a representative, and not in a personal, capacity. As such, Benjamin D. Gothong cannot claim any right that personally
accrues to him on account of Annex SL-V. From this, it follows that Benjamin D. Gothong is not a real party in interest — "one who stands to be benefitted or
injured by the judgment in the suit or the party entitled to the avails of the suit" 89 — and that his inclusion in the second complaint is an unnecessary superfluity.

Second, there is identity in subject matter and cause of action. There is identity in subject matter as both complaints are applications for the same relief. There
is identity in cause ofaction as both complaints are grounded on the right to be paid for or to receive the value of excess inventories (and the supposed
corresponding breach thereof) as spelled out in Annex SL-V.

The first and second complaints are both applications for arbitration and are founded on the same instrument — Annex SL-V. Moreover, the intended
arbitrations in both complaintscater to the sameultimate purpose, i.e., that CAGLI may recover the value of its supposedly unreturned inventories earlier
delivered to WLI/WG&A/ATSC.

In both complaints, the supposedpropriety of compelling the defendants to submit themselves to arbitration are anchored on the same bases: (1) Section 6.8 of
the SPA, which provides that the January 8, 1996 Agreement shall be deemed terminatedbut that the rights and obligations arising from Annex SL-V shall
continue to subsist;90 (2) Section 6.5 of the SPA, which requires arbitration as the mode for settling disputes relating to the SPA; 91 and, (3) defendants’ refusal
to submit themselves to arbitration vis-a-vis Republic Act No. 876, which provides that "[a] party aggrieved by the failure, neglect or refusal of another to
perform under an agreement in writing providing for arbitration may petition the court for an order directing that such arbitration proceed in the manner
provided for in such agreement."92

Both complaints also rely on the same factual averments: 93

1. that ASC, CAGLI, and WLI entered into an agreement on January 8, 1996;

2. that under Annex SL-V of the Agreement, WLI/WG&A "committed to acquire certain [inventories], the total aggregate value of which shall not
exceed ₱400 Million";94

3. that after examination, it was ascertained that the value of the transferred inventories exceeded ₱400 million;

4. that pursuant to Annex SL-V, WG&A paid CAGLI ₱400 million but that the former failed to return or pay for spare parts representing a value in
excess of ₱400 million;

5. "[t]hat on August 31, 2001, [CAGLI] wrote the WG&A through its AVP Materials Management, Ms. Concepcion M. Magat, asking for the return of
the excess spare parts";95

6. that on September 5, 2001, WG&A’s Ms. Magat replied that the matter is beyond her authority level and that she must elevate it to higher
management;

7. that several communications demanding the return of the excess spare parts were sent to WG&Abut these did not elicit any response; and

8. "[t]hat the issue of excess spare parts, was taken over by events, when on July 31, 2002," 96 the Chiongbians and Gothongs entered into an
Escrow Agreement with AEV.

Third, the order dated December 4, 2009 of the Cebu City Regional Trial Court, Branch 20, which dismissed the first complaint with respect to AEV, attained
finality when CAGLI did not file a motion for reconsideration, appealed, or, in any other manner, questioned the order.

Fourth, the parties did not dispute that the December 4, 2009 order was issued by a court having jurisdiction over the subject matter and the parties.
Specifically as to jurisdiction over the parties,jurisdiction was acquired over CAGLI as plaintiff when it filed the first complaint and sought relief from the Cebu
City Regional Trial Court, Branch 20; jurisdiction over defendants AEV, ATSC, and Victor S.Chiongbian was acquired with the service of summons upon them.
Fifth, the dismissal of the first complaint with respect to AEV was a judgment on the merits. As explained in Cabreza, Jr. v. Cabreza: 97

A judgment may be considered as one rendered on the merits "when it determines the rights and liabilities of the parties based on the disclosed facts,
irrespective of formal, technical or dilatoryobjections"; or when the judgment is rendered "aftera determination of which party is right, as distinguished from a
judgment rendered upon some preliminary or formal or merely technical point." 98
Further, as this court clarified in Mendiola v. Court of Appeals, 99 "[i]t is not necessary . . . that there [be] a trial" 100 in order that a judgment be considered as one
on the merits.

Prior to issuing the December 4, 2009 order dismissing the first complaint with respect to AEV, the Cebu City Regional Trial Court, Branch 20 allowed the
parties the full opportunity to establish the facts and to ventilate their arguments relevant to the complaint. Specifically, the Cebu City Regional Trial Court,
Branch 20 admitted: 1) AEV’s motion to dismiss;101 2) CAGLI’s opposition to the motion to dismiss;102 3) AEV’s reply and opposition;103 4) CAGLI’s
rejoinder;104 and 5) AEV’s surrejoinder.105

Following these, the Cebu City Regional Trial Court, Branch 20 arrived at the following findings and made a definitive determination that CAGLI had no right to
compel AEV to subject itself to arbitration with respect to CAGLI’s claims under Annex SL-V:

After going over carefully the contentions and arguments of both parties, the court has found that no contract or document exists binding CAGLI and AEV to
arbitrate the former’s claim. The WLI Letter upon which the claim is based confirms only the commitment of William Lines, Inc. (WLI) to purchase certain
material inventories from CAGLI. It does not involve AEV. The court has searched in vain for any agreement or document showing that said commitment was
passed on to and assumed by AEV. Such agreement or document, if one exists, being an actionable document, should have been attached to the complaint.
While the Agreement of January 8, 1996 and the Share Purchase Agreement provide for arbitration of disputes, they refer to disputes arising from or in
connection with the Agreements themselves. No reference is made, as included therein, to the aforesaid commitment of WLI or to any claim that CAGLI may
pursue based thereon or relative thereto. Section 6.8 of the Share Purchase Agreement, cited by plaintiff CAGLI, does not incorporate therein, expressly or
impliedly, the WLI commitment above-mentioned. It only declares that the rights and obligations of the parties under the WLI Letter shall survive even after the
termination of the Shareholder’s Agreement. It does not speak of arbitration. Finally, the complaint does not allege the existence of a contract obliging CAGLI
and AEV to arbitrate CAGLI’s claim under the WLI Letter. Consequently, there is no legal or factual basis for the present complaint for application for
arbitration.106 (Emphasis supplied)

In the assailed order dated May 5, 2011, the Cebu City Regional Trial Court, Branch 10 made much of the Cebu City Regional Trial Court, Branch 20’s
pronouncement in the latter’s December 4, 2009 order that "the [first] complaint fails to state a cause of action." 107 Based on this, the Cebu City Regional Trial
Court, Branch 10 concluded that the dismissal of the first complaint was one made without prejudice, thereby "leav[ing] the parties free to litigate the matter ina
subsequent action, as though the dismissal [sic] action had not been commenced." 108

The Cebu City Regional Trial Court, Branch 10 is in serious error. In holding that the second complaint was not barred by res judicata, the Cebu City Regional
Trial Court, Branch 10 ignored established jurisprudence.

Referring to the earlier cases of Manalo v. Court of Appeals 109 and Mendiola v. Court of Appeals,110 this court emphasized in Luzon Development Bank v.
Conquilla111 that dismissal for failure to state a cause of action may very well be considered a judgment on the merits and, thereby, operate as res judicata on
a subsequent case:

[E]ven a dismissal on the ground of "failure to state a cause of action" may operate as res judicata on a subsequent case involving the same parties, subject
matter, and causes of action, provided that the order of dismissalactually ruled on the issues raised.What appears to be essential to a judgment on the merits
is that it be a reasoned decision, which clearly states the facts and the law on which it is based. 112 (Emphasis supplied)

To reiterate, the Cebu City Regional Trial Court, Branch 20 made a definitive determination that CAGLI had no right to compel AEV to subject itself to
arbitrationvis-a-vis CAGLI’s claims under Annex SL-V. This determination was arrived at after due consideration of the facts established and the arguments
advancedby the parties. Accordingly, the Cebu City Regional Trial Court, Branch 20’s December 4, 2009 order constituted a judgment on the merits and
operated as res judicata on the second complaint.

In sum, the requisites for res judicata have been satisfied and the second complaint should, thus, have been dismissed. From this, it follows that CAGLI
committed an act of forum shopping in filing the second complaint. CAGLI instituted two suits in two regional trial court branches, albeit successively and not
simultaneously. It asked both branches to rule on the exact same cause and to grant the exact same relief. CAGLI did so after it had obtained an unfavorable
decision (at least with respect to AEV) from the Cebu City Regional Trial Court, Branch 20. These circumstances afford the reasonable inference that the
second complaint was filed in the hopes of a more favorable ruling.

Notwithstanding our pronouncements sustaining AEV’s allegations that CAGLI engaged in forum shopping and that the second complaint was barred by res
judicata, we find that at the time of the filing of the second complaint, AEV had already been discharged from the proceedings relating to the first complaint.
Thus, asbetween AEV and CAGLI, the first complaint was no longer pending at the time of the filing of the second complaint. Accordingly, the second
complaint could not have been barred by litis pendentia.

There is no agreement
binding AEV to arbitrate
with CAGLI on the latter’s
claims arising from Annex SL-V

For arbitration to be proper, it is imperative thatit be grounded on an agreement between the parties. This was adequately explained in Ormoc Sugarcane
Planters’ Association,Inc. v. Court of Appeals:113

Section 2 of R.A. No. 876 (the Arbitration Law) pertinently provides:

Sec. 2. Persons and matterssubject to arbitration. – Two or more persons or parties may submit to the arbitration of one or more arbitrators any controversy
existing between them at the time of the submission and which may be the subject of an action, or the parties to any contract may in such contract agree to
settle by arbitration a controversy thereafter arising between them. Such submission or contract shall be valid, enforceable and irrevocable, save upon such
grounds as exist at law for the revocation of any contract. . . . (Emphasis ours)

The foregoing provision speaks of two modes of arbitration: (a) an agreement to submit to arbitration somefuture dispute, usually stipulated upon in a civil
contract between the parties, and known as an agreement to submit to arbitration, and (b) an agreement submitting an existing matter of difference to
arbitrators, termed the submission agreement. Article XX of the milling contract is an agreement to submit to arbitrationbecause it was made in anticipation of a
dispute that might arise between the parties after the contract’s execution.
Except where a compulsory arbitration is provided by statute, the first step toward the settlement of a difference by arbitration is the entry by the parties into a
valid agreement to arbitrate.An agreement to arbitrate is a contract, the relation ofthe parties is contractual, and the rights and liabilities of the parties are
controlled by the law of contracts. In an agreement for arbitration, the ordinary elements of a valid contract must appear, including an agreement toarbitrate
some specific thing, and an agreement to abide by the award, either in express language or by implication. 114 (Emphasis supplied)

In this petition, not one of the parties — AEV, CAGLI, Victor S. Chiongbian, and Benjamin D. Gothong — has alleged and/or shown that the controversy is
properly the subject of "compulsory arbitration [as] provided by statute." 115 Thus, the propriety of compelling AEV to submit itself to arbitration must
necessarilybe founded on contract.

Four (4) distinct contracts have been cited in the present petition:

1. The January 8, 1996 Agreement in which ASC, CAGLI, and WLI merged their shipping enterprises, with WLI (subsequently renamed WG&A) as
the surviving entity. Section 11.06 of this Agreement provided for arbitration as the mechanism for settling all disputes arising out of or in connection
with the Agreement.

2. Annex SL-V of the Agreement between CAGLI and WLI (and excluded ASC and any other Aboitiz-controlled entity), and which confirmed WLI’s
commitment to acquire certain inventories, worth not more than 400 million, of CAGLI. Annex SL-V stated that the acquisition was "pursuant to the
Agreement."116 It did not contain an arbitration clause.

3. The September 23, 2003 Share Purchase Agreement or SPA in which AEV agreed to purchasethe Chiongbian and Gothong groups' shares in
WG&A’s issued and outstanding stock. Section 6.5 of the SPA provided for arbitration as the mode of settling any dispute arising from the SPA.
Section 6.8 of the SPA further provided that the Agreement of January 8, 1996 shall be deemed terminatedexcept its Annex SL-V.

4. The Escrow Agreement whereby ING Bank N.V.-Manila Branch was to take custody of the shares subject of the SPA. Section 14.7 of the Escrow
Agreement provided that all disputes arising from it shall be settled via arbitration.

The obligation for WLI to acquire certain inventories of CAGLI and which is the subject of the present petition was contained in Annex SL-V. It is therefore this
agreement which deserves foremost consideration. As to this particular agreement, these points must be underscored: first, that it has no arbitration clause;
second, Annex SL-V is only between WLI and CAGLI.

On the first point, it is clear, pursuant to this court’s pronouncements in Ormoc Sugarcane Planters’ Association, that neither WLI nor CAGLI can compel
arbitration under Annex SL-V. Plainly, there is no agreement to arbitrate.

It is of no moment that Annex SL-Vstates that it was made "pursuant to the Agreement" or that Section 11.06 of the January 8, 1996 Agreement provides for
arbitration as the mode of settling disputes arising out of or in connection with the Agreement.

For one, to say that Annex SL-V was made"pursuant to the Agreement" is merely to acknowledge: (1) the factual context in which Annex SL-V was executed
and (2) that it was that context that facilitated the agreement embodied in it. Absentany other clear or unequivocal pronouncement integrating Annex SL-V into
the January 8, 1996 Agreement, it would be too much of a conjecture to jump to the conclusion that Annex SL-V is governed by the exact same stipulations
which govern the January 8, 1996 Agreement.

Likewise, a reading of the Agreement’s arbitration clause will reveal that it does not contemplate disputes arising from Annex SL-V.

Section 11.06 of the January 8, 1996 Agreement requires the formation of an arbitration tribunal composed of four (4) arbitrators. Each of the parties — WLI,
CAGLI, and ASC — shall appoint one (1) arbitrator, and the fourth arbitrator, who shall actas chairman, shall be appointed by the three (3) arbitrators
appointed by the parties. From the manner by which the arbitration tribunal is to be constituted, the necessary implication is that the arbitration clause is
applicable tothree-party disputes — as will arise from the tripartite January 8, 1996 Agreement — and not to two-party disputesas will arise from the two-party
Annex SL-V.

From the second point — that Annex SL-V is only between WLI and CAGLI — it necessarily follows that none but WLI/WG&A/ATSC and CAGLI are bound by
the terms of Annex SL-V. It is elementary that contracts are characterized by relativity or privity, that is, that "[c]ontracts take effect only between the parties,
their assigns and heirs."117 As such, one who is not a party to a contract may not seek relief for such contract’s breach. Likewise, one who is not a party to a
contract may not be held liable for breach of any its terms.

While the principle of privity or relativity of contracts acknowledges that contractual obligations are transmissible to a party’s assigns and heirs, AEV is not
WLI’s successor-in-interest. In the period relevant to this petition, the transferee of the inventories transferred by CAGLI pursuant to Annex SL-V assumed
three (3) names: (1) WLI, the original name of the entity that survived the merger under the January 8, 1996 Agreement; (2) WG&A, the name taken by WLI in
the wake of the Agreement; and (3) ATSC, the name taken by WLI/WG&A inthe wake of the SPA. As such, it is now ATSC that is liable under Annex SL-V.

Pursuant to the January 8, 1996 Agreement, the Aboitiz group (via ASC) and the Gothong group (viaCAGLI) became stockholders of WLI/WG&A, along with
the Chiongbiangroup (which initially controlled WLI). This continued until, pursuant to the SPA, the Gothong group and the Chiongbian group transferred their
shares to AEV. With the SPA, AEV became a stockholder of WLI/WG&A, which was subsequently renamed ATSC. Nonetheless, AEV’s status asATSC’s
stockholder does not subject it to ATSC’s obligations

It is basic that a corporation has a personality separate and distinct from that of its individual stockholders. Thus, a stockholder does not automatically assume
the liabilities of the corporation of which he is a stockholder. As explained in Philippine National Bankv. Hydro Resources Contractors Corporation: 118

A corporation is an artificial entitycreated by operation of law. It possesses the right of succession and such powers, attributes, and properties expressly
authorized by law or incident to its existence. It has a personality separate and distinct from that of its stockholders and from that of other corporations to which
it may be connected. As a consequence of its status as a distinct legal entityand as a result of a conscious policy decision to promote capital formation, a
corporation incurs its own liabilities and is legally responsible for payment of its obligations. In other words, by virtue of the separate juridical personality ofa
corporation, the corporate debt or credit is not the debt or credit of the stockholder. This protection from liability for shareholders is the principle of limited
liability.119
In fact, even the ownership by a single stockholder of all or nearly all the capital stock of a corporation is not, in and of itself, a ground for disregarding a
corporation’s separate personality. As explained in Secosa v. Heirs of Francisco: 120

It is a settled precept in this jurisdiction that a corporation is invested by law with a personality separate from thatof its stockholders or members. It has a
personality separate and distinct from those of the persons composing it as well as from that of any other entity to which it may be related. Mere ownership by
a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not in itself sufficient ground for disregarding the
separate corporate personality.A corporation’s authority to act and its liability for its actions are separate and apart from the individuals who own it.

The so-called veil of corporation fiction treats as separate and distinct the affairs of a corporation and its officers and stockholders. As a general rule, a
corporation will be looked upon as a legal entity, unless and until sufficient reason to the contrary appears. When the notion of legal entity is used to defeat
public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of persons. Also, the corporate entity
may be disregarded in the interest of justice in such cases asfraud that may work inequities among members of the corporation internally, involving no rights of
the public or third persons. In both instances, there must have been fraud and proof of it. For the separate juridical personality of a corporation to be
disregarded, the wrongdoing must be clearly and convincingly established. It cannot be presumed. 121 (Emphasis supplied)

AEV’s status as ATSC’s stockholder is, in and of itself, insufficient to make AEV liable for ATSC’s obligations. Moreover, the SPA does not contain any
stipulation which makes AEV assume ATSC’s obligations. It is true that Section 6.8 of the SPA stipulates that the rights and obligations arising from Annex SL-
V are not terminated. But all that Section 6.8 does is recognize that the obligations under Annex SL-V subsist despite the termination of the January 8, 1996
Agreement. At no point does the text of Section 6.8 support the position that AEV steps into the shoes of the obligor under Annex SL-V and assumes its
obligations.

Neither does Section 6.5 of the SPAsuffice to compel AEV to submit itself to arbitration. While it is true that Section 6.5 mandates arbitration as the mode for
settling disputes between the parties to the SPA, Section 6.5 does not indiscriminatelycover any and all disputes which may arise between the parties to the
SPA. Rather, Section 6.5 is limited to "dispute[s] arising between the parties relating tothis Agreement [i.e., the SPA]." 122 To belabor the point, the obligation
which is subject of the present dispute pertains to Annex SL-V, not to the SPA. That the SPA, in Section 6.8, recognizes the subsistence of Annex SL-Vis
merely a factual recognition. It does not create new obligations and does not alter or modify the obligations spelled out in Annex SL-V.

AEV was drawn into the present controversy on account of its having entered into the SPA. This SPA made AEV a stockholder of WLI/WG&A/ATSC. Even
then, AEV retained a personality separate and distinct from WLI/WG&A/ATSC. The SPA did not render AEV personally liable for the obligations of the
corporation whose stocks it held.

The obligation animating CAGLI’s desire to arbitrate is rooted in Annex SL-V. Annex SL-V is a contractentirely different from the SPA. It created distinct
obligations for distinctparties. AEV was never a party to Annex SL-V. Rather than pertaining to AEV, Annex SL-V pertained to a different entity: WLI (renamed
WG&A then renamed ATSC). AEV is, thus, not bound by Annex SL-V.

On one hand, Annex SL-V does not stipulate that disputes arising from it are to be settled via arbitration.On the other hand, the SPA requires arbitration as the
mode for settling disputes relating to it and recognizes the subsistence of the obligations under Annex SL-V. But as a separate contract, the mere mention of
Annex SL-V in the SPA does not suffice to place Annex SL-V under the ambit of the SPA or to render it subject to the SPA’s terms, such as the requirement to
arbitrate.

WHEREFORE, the petition is GRANTED. The assailed orders dated May 5, 2011 and June 24,2011 of the Regional Trial Court, Cebu City, Branch 10 in Civil
Case No. CEB-37004 are declared VOID. The Regional Trial Court, Cebu City, Branch 10 is ordered to DISMISSCivil Case No. CEB-37004.

SO ORDERED.

G.R. No. 191225, October 13, 2014

ZARSONA MEDICAL CLINIC, Petitioner, v. PHILIPPINE HEALTH INSURANCE CORPORATION, Respondent.

DECISION

PEREZ, J.:

Before the Court is a petition for review on certiorari  under Rule 45 of the Rules of Court, questioning the 28 January 2009 1 and 7 December
20092 Resolutions of the Court of Appeals in CA-G.R. SP No. 02489-MIN.

A complaint was filed against petitioner Zarsona Medical Clinic (ZMC) for violation of Section 149 of the Revised Implementing Rules and Regulations of
Republic Act No. 7875 or the National Health Insurance Act of 1995.  Section 149 penalizes any health care provider that increases the period of actual
confinement of any patient with revocation of accreditation.

ZMC filed a claim with the Philippine Health Insurance Corporation (Philhealth) on the confinement of National Health Insurance Program (NHIP) member
Lorna M. Alestre (Alestre) on 10-12 August 2003.  Said claim was denied on the ground of “extended confinement.”  It was stated on the claim form that
Alestre was admitted to ZMC on 6 August 2003 and was discharged on 12 August 2003.  It was also revealed in her Salaysay 3 dated 12 January 2004 that
Alestre’s actual confinement at ZMC was on 10-11 August 2003.  Alestre, who is a teacher at Rizal Elementary School, was found to have reported for work on
12 August 2003.

In defense of ZMC, Dr. Sylvia Bragat (Dr. Bragat), its Medical Director, stated that ZMC’s Midwife/Clerk Jennifer R. Acuram (Acuram) committed an honest
mistake when she wrote 6-12 August 2003 as the confinement period in the claim form.  Dr. Bragat asserted that the hospital had in fact claimed only for two
(2) days.  Acuram acknowledged her mistake in her Affidavit of Explanation. 4cralawlawlibrary

ZMC also presented an Affidavit of Explanation 5 dated 21 January 2005 from Alestre recanting her previous Salaysay.  Alestre explained that the previous
statement she gave does not reflect the truth because she was protecting herself when she logged-in at the school’s time record on 12 August 2003 when she
was supposedly still confined at ZMC.  Alestre narrated that she and her son were admitted at ZMC on 10 August 2003 at around 1:30 p.m. and was
discharged on 12 August 2003.  In the morning of 12 August 2003, after her attending physician went to check on her, she managed to slip out of the hospital. 
She proceeded to the school, which was a mere ten minute drive away from ZMC.  She reported for work and came back to the hospital at noon to take her
medicines and look after her child.  Thereafter, she again went back to the school and at about 1:30 p.m., she asked permission from the school principal that
she needed to go back to the hospital.  She then went back to ZMC to attend to her child and process her discharge papers. At around 2:00 p.m., she finally
came back to the school.

Dr. Ariel dela Cruz, attending physician of Alestre, confirmed that he ordered Alestre’s discharge in the morning of 12 August 2003. 6cralawlawlibrary

On 12 December 2007, ZMC was found liable for the charge of “Extending Period of Confinement” in violation of Section 149 of the Revised Rules and
Regulations of Republic Act No. 7875 and was meted the penalty of suspension from participating in the NHIP for a period of three (3) months and a fine of
P10,000.00.

While Health Insurance Arbiter Michael Troy Polintan considered the admission date of 6 August 2003 reflected in Alestre’s clinical record as a mere clerical
error, he refused to  believe Alestre’s claim that she was discharged only on 12 August 2003 but on that day, she was travelling back and forth from hospital to
the school where she teaches.  The Philhealth Arbiter gave more evidentiary weight to the signature of Alestre in the school’s attendance logbook which
established the fact that she reported for work on 12 August 2003.

ZMC appealed but on 24 July 2008, the Philhealth Board of Directors (the Board) issued Philhealth Board Resolution No. 1151, Series of 2008 dismissing the
appeal and affirming the 12 December 2007 Decision of the Philhealth Arbiter.

The Board ruled that the contents of the Affidavit of Explanation dated 3 May 2005 executed by Alestre is “too good to be true” because “in the first place, she
has stated in detail all her acts from 7:17 a.m. to 8:15 [a.m.], 9:30 [a.m.], 9:50 [a.m.], 12:00 [noon]; 12:55 p.m., 1:30 p.m., 1:50 p.m., 2:15 p.m. and 2:30 p.m.  
The recollection of all these times after 22 months is not only fantastic but likewise incredible.” 7   Moreover, the Board also noted that Alestre could not possibly
be in ZMC and in the school at the same time on 12 August 2003 while her son was still confined at the hospital.

ZMC filed a petition for review with the Court of Appeals putting in the forefront of its arguments Alestre’s Affidavit of Explanation.  ZMC admitted to Alestre’s
recantation but in its defense, ZMC emphasized that the Affidavit, being notarized and executed under oath, should weigh more than the Salaysay, which was
not so.  ZMC added that Alestre’s retraction rang true because she was willing to incriminate herself in exchange for telling the truth.

Acting on the petition, the Court of Appeals issued the 4 September 2008 Resolution, which reads:chanRoblesvirtualLawlibrary

In the greater interest of substantial justice, petitioner is directed to RECTIFY within five (5) days from notice, the following deficiencies in its petition: (1) failure
to attach the Special Power of Attorney executed by the petitioner Zarsona Medical Clinic in favor of Ma. Irene M. Hao, authorizing the latter to execute the
verification and certification of non-forum shopping; (2) failure of the petitioner to attach the certified true copy of the assailed decision of the Board of Directors
of the Philippine Health Insurance Corporation as required under Rule 43, Section 6(c) of the Revised Rules of Court; (3) failure of the petitioner’s counsel,
Atty. John Tracy F. Cagas, to indicate the dates and places of issuance of his IBP and PTR Receipts as well as his Roll of Attorneys Number.

Further action on the petition is held in abeyance pending the petitioner’s compliance on these matters. 8chanrobleslaw

On 30 October 2008, ZMC filed its Compliance, attaching thereto the plain copies of the Official Receipts of Atty. John Tracy F. Cagas’ Integrated Bar of the
Philippines dues and Professional Tax Receipts showing the dates and places of issuance thereof, his roll number, a certified true copy of the assailed
Decision dated 24 July 2008, and a Special Power of Attorney (SPA) dated 5 February 2001 executed by Dr. Leandro Zarsona, Jr. (Dr. Zarsona) in favor of Dr.
Bragat and William Bragat.

On 28 January 2009, the Court of Appeals dismissed the petition for failure on the part of ZMC to attach a valid SPA.  The appellate court found the SPA
defective on the ground that it does not explicitly authorize Dr. Bragat to sign and execute the required verification and certification of non-forum shopping in
this case.  The appellate court noted that the powers granted to Dr. Bragat pertain only to her administrative functions as Medical Director of ZMC.

ZMC moved for reconsideration but it was denied for lack of merit on 7 December 2009.  In his Dissent, Court of Appeals Associate Justice Ruben Ayson
believed that ZMC should be given the opportunity to rectify any defect or infirmity in the petition pursuant to the preference on liberal construction of the Rules
of Court over strict construction.9cralawlawlibrary

Hence, this petition for review with the following assignment of errors:chanRoblesvirtualLawlibrary

1. THE COURT OF APPEALS ERRED IN RULING THAT THE SPECIAL POWER OF ATTORNEY (SPA) EXECUTED IN FAVOR OF DR.
SYLVIA P. BRAGAT WAS INSUFFICIENT TO COVER THE AUTHORITY GRANTED UPON HER TO SIGN THE VERIFICATION AND
CERTIFICATION OF NON-FORUM SHOPPING OF THIS INSTANT CASE.

2. THE COURT OF APPEALS ERRED IN DISMISSING THIS INSTANT CASE BY DISREGARDING THE MERITS THEREOF. 10

ZMC insists that the SPA provided that the Attorney-in-fact can make, execute and sign any contract, documents or all other writing of whatever kind and
nature which are necessary to the power granted to it which is to represent, process, follow-up, transact and facilitate claims in Philhealth.  This also covers the
execution of verification and certification of non-forum shopping.  ZMC then asserts that it will not gain anything in extending the period of confinement and
reiterates that its clerk committed a mistake in entering the exact period of confinement.

At the outset, the issues revolve on the sufficiency of the SPA authorizing Dr. Bragat to sign the verification and certification of non-forum shopping in the
petition filed before the Court of Appeals.

Verification of a pleading is a formal, not jurisdictional, requirement intended to secure the assurance that the matters alleged in a pleading are true and
correct.  Thus, the court may simply order the correction of unverified pleadings or act on them and waive strict compliance with the rules.  It 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. 11cralawlawlibrary

As to 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 Rule on the ground of “substantial compliance” or presence of “special circumstances or
compelling reasons.”12   Rule 7, Section 5 of the Rules of the Court, requires that the certification should be signed by the “petitioner or principal party” himself. 
The rationale  behind this is “because only the petitioner himself has actual knowledge of whether or not he has initiated similar actions or proceedings in
different courts or agencies.”13cralawlawlibrary
In Lim v. The Court of Appeals, Mindanao Station,14 we reiterated that the requirements of verification and certification against forum shopping are not
jurisdictional.  Verification is required to secure an assurance that the allegations in the petition have been made in good faith or are true and correct, and not
merely speculative.  Non-compliance with the verification requirement does not necessarily render the pleading fatally defective, and is substantially complied
with when signed by one who has ample knowledge of the truth of the allegations in the complaint or petition, and when matters alleged in the petition have
been made in good faith or are true and correct.  On the other hand, the certification against forum shopping is required based on the principle that a party-
litigant should not be allowed to pursue simultaneous remedies in different  fora.  While the certification requirement is obligatory, non-compliance or a defect in
the certificate could be cured by its subsequent correction or submission under special circumstances or compelling reasons, or on the ground of “substantial
compliance.”15cralawlawlibrary

In both cases, the submission of an SPA authorizing an attorney-in-fact to sign the verification and certification against forum-shopping in behalf of the
principal party is considered as substantial compliance with the Rules.

In this case, Philhealth found the SPA defective.

The SPA granted by Dr. Zarsona to his attorneys-in-fact, Dr. Bragat and William Bragat, authorizes the latter to do the following:chanRoblesvirtualLawlibrary

A) To represent(,) process, follow up, transact and facilitate all claims, benefits and privileges belonging to or owing to Zarsona Medical Clinic in the
Philippine Health Insurance Corporation, Department of Health and in other agencies, may it be private or government;
B) To receive, withdraw, and encash any check or checks belonging to or in the name of Zarsona Medical Clinic;
C) To make, execute, and sign any contract, documents or all other writings of whatever kind and nature which are necessary to the foregoing powers. 16

Indeed, a reading of the SPA reveals that the powers conferred by Dr. Zarsona to his attorneys-in-fact pertain to administrative matters.  The phrase “claims,
benefits and privileges belonging to or owing to Zarsona Medical Clinic” clearly does not include the filing of cases before the courts or any quasi-judicial
agencies.  The term “claims” in particular refers to those claims for payment of services rendered by the hospital during a Philhealth member’s confinement. 
These claims are filed by the hospital with Philhealth.  Furthermore, the SPA makes no mention of any court, judicial or quasi-judicial bodies.  The enumeration
of agencies in the first paragraph of the SPA, such as Philhealth and Department of Health, refers to those agencies which are health-related.

There is no explicit authorization for Dr. Bragat to sign and execute the requirement verification and certification in this case.  At the very least, the SPA should
have granted the attorneys-in-fact the power and authority to institute civil and criminal actions which would necessarily include the signing of the verification
and certification against forum-shopping.

The defects in the SPA notwithstanding, we rule in favor of ZMC.  We agree with the Dissent registered by Associate Justice Ruben Ayson when he suggested
that ZMC should be given the opportunity to rectify the defects in the petition.  We are aware that the Court of Appeals in its Resolution dated 28 January 2009
had directed ZMC to submit an SPA.  ZMC had in good faith complied by submitting an SPA which it thought was sufficient and encompasses the filing of the
instant suit.  Time and again, we had espoused the doctrine that provisions of the Rules of Court should be liberally construed in order to promote their
objective of securing a just, speedy and inexpensive disposition of every action and proceeding.  Otherwise put, the rule requiring a certification of forum
shopping to accompany every initiatory pleading, or the verification for that matter “should not be interpreted with such absolute literalness as to subvert its
own ultimate and legitimate objective or the goal of all rules of procedure – which is to achieve substantial justice as expeditiously as possible.” 17   While it is
true that the rules of procedure are intended to promote rather than frustrate the ends of justice, and the swift unclogging of court docket is a laudable
objective, it nevertheless must not be met at the expense of substantial justice.  This Court has time and again reiterated the doctrine that the rules of
procedure are mere tools aimed at facilitating the attainment of justice, rather than its frustration.  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.18cralawlawlibrary

We choose to apply liberality because of the substantial merit of the petition.

The petition was dismissed by the Court of Appeals purely on a procedural ground.  Ordinarily, procedure dictates that the Court of Appeals should be tasked
with properly disposing the petition, a second time around, on the merits.  However, when there is enough basis on which a proper evaluation of the merits of
petitioner’s case may be had, the Court may dispense with the time-consuming procedure of remand in order to prevent further delays in the disposition of the
case.  Clearly, a remand of the instant case to the Court of Appeals would only unnecessarily prolong its resolution which had been pending for a decade.  It is
already an accepted rule of procedure for us to strive to settle the entire controversy in a single proceeding, leaving no root or branch to bear the seeds of
future litigation. If, based on the records, the pleadings, and other evidence, the dispute can be resolved by us, we will do so to serve the ends of justice
instead of remanding the case to the lower court for further proceedings. 19cralawlawlibrary

Thus, we find the petition meritorious.

ZMC was charged with extending the period of confinement punishable under Section 149 of the Revised Implementing Rules and Regulations of Republic Act
No. 7875, which provides:chanRoblesvirtualLawlibrary

Section 149. Extending Period of Confinement. — This is committed by any health care provider who, for the purpose of claiming payment from the NHIP, files
a claim with extended period of confinement by:chanRoblesvirtualLawlibrary

a. Increasing the actual confinement of any patient;

b. Continuously charting entries in the Doctor's Order, Nurse's Notes and Observation despite actual discharge or absence of the patients;

c. Using such other machinations that would result in the unnecessary extension of confinement.

The foregoing offenses shall be penalized by revocation of accreditation. In addition, a recommendation shall be submitted to the DOH for cancellation of its
license, or accreditation, or clearance to operate, as appropriate.

The Philhealth Arbiter and the Board did not give weight to the Affidavit of Explanation submitted by the patient herself recanting her previous statement and
categorically stating that she was discharged only on 12 August 2003.

It is an oft-repeated rule that findings of administrative agencies are generally accorded not only respect but also finality when the decision and order are not
tainted with unfairness or arbitrariness that would amount to abuse of discretion or lack of jurisdiction.  The findings of facts must be respected, so long as they
are supported by substantial evidence even if not overwhelming or preponderant. 20cralawlawlibrary

After an exhaustive review of the records, we find that this case warrants a departure from said rule.

We are inclined to give more credence to Alestre’s Affidavit, which is essentially a recantation of her previous Salaysay, for the following reasons:  First,
Alestre has fully explained to our satisfaction why she initially misdeclared her dates of confinement in ZMC.  In her desire to report and be compensated for
one day of work, Alestre hied back and forth between school and the hospital.  It is difficult to believe that she would risk her reputation as a public school
teacher, as well as prosecution for violation of civil service rules, to be an abettor of ZMC.  Second, Alestre truly cannot be in two places at the same time.  But
her narration clearly accounts for her whereabouts on 12 August 2003.  She travelled at least 3 times to and from the hospital and school.  She admitted that
the school was a mere ten-minute drive away from the hospital so she can easily traverse between the two locations.  Third, ZMC had in fact admitted to its
error in indicating the dates of Alestre’s confinement so there is no reason for ZMC to further conceal the actual days of Alestre’s confinement.  Fourth, the
Salaysay is not notarized.  While recantation is frowned upon  and hardly given much weight in the determination of a case, the affidavit is still a notarized
document which carries in its favor the presumption of regularity with respect to its due execution, and that there must be clear, convincing and more than
merely preponderant evidence to contradict the same.21cralawlawlibrary

Based on the foregoing, we reverse the finding of Philhealth and hold that ZMC is not guilty of extending the period of confinement.

WHEREFORE, the petition is GRANTED.  The Resolution of the Court of Appeals in CA-G.R. SP No. 02489-MIN dismissing the petition
is REVERSED and SET ASIDE.  Philhealth Board Resolution No. 1151, Series of 2008 is SET ASIDE.

SO ORDERED.cralawred
METROPOLITAN BANK & TRUST COMPANY, G.R. No. 157867
Petitioner,  
  Present:
   
  CARPIO, J., Chairperson,
  LEONARDO-DE CASTRO,
  BRION,
-      versus - DEL CASTILLO, and
  ABAD, JJ.
   
   
  Promulgated:
HON. SALVADOR ABAD SANTOS, Presiding Judge, RTC,  
Br. 65, Makati City and MANFRED JACOB DE KONING,
December 15, 2009
Respondents.
 
 
x--------------------------------------------------------------------------------------x
 
D E C I S I O N
 
BRION, J.:
 
This petition for review on certiorari,[1] seeks to reverse and set aside the decision dated November 21, 2002 and subsequent ruling on motion for
reconsideration of the Court of Appeals ( CA) in CA-G.R. SP No. 62325.[2] The CA decision affirmed the order of the Regional Trial Court ( RTC) of Makati City,
Branch 65,[3] dismissing the petition filed by Metropolitan Bank & Trust Company ( Metrobank) for the issuance of a writ of possession of a condominium unit it
had previously foreclosed. This dismissal was based on the finding that the petition contained a false certification against forum shopping.
FACTUAL ANTECEDENTS
 
Respondent Manfred Jacob De Koning ( De Koning) obtained a loan from Metrobank in the principal amount of Two Million, Nineteen Thousand Pesos
(P2,019,000.00), evidenced by promissory note No. TLS/97-039/382599 dated July 24, 1997. To secure the payment of this loan, De Koning executed a real
estate mortgage (REM) in favor of Metrobank dated July 22, 1996 over a condominium unit and all its improvements. The  unit is located at Unit 1703 Cityland
10 Tower 1, H.V. Dela Costa Street, Makati City, and is covered by Condominium Certificate of Title No. 10681.
 
When De Koning failed to pay his loan despite demand, Metrobank instituted extrajudicial foreclosure proceedings against the REM. Metrobank was the
highest bidder at the public auction of the condominium unit held on November 24, 1998 and  a Certificate of Sale was issued in the bank's favor. Metrobank
duly registered this Certificate of Sale with the Registry of Deeds for Makati City on January 18, 2000.
 
The redemption period lapsed without De Koning redeeming the property. Thus, Metrobank demanded that he turn over possession of the condominium unit.
When De Koning refused, Metrobank filed on July 28, 2000 with the RTC Makati, Branch 65,  an ex parte petition for a writ of possession over the foreclosed
property, pursuant to Act No. 3135, as amended.
 
On August 1, 2000, the lower court issued an order setting the ex parte hearing of Metrobanks petition and directing that a copy of the order be given
to De Koning to inform him of the existence of the proceedings.
 
During the scheduled ex parte hearing on August 18, 2000, De Konings counsel appeared and manifested that he filed a motion to dismiss on the ground that
Metrobanks petition violated Section 5, Rule 7 of the Rules of Court ( Rules)[4] which requires the attachment of a certification against forum shopping to a
complaint or other initiatory pleading .  According to  De Koning, Metrobanks petition for the issuance of a writ of possession involved the same parties, the
same issues and the same subject matter as the case he had filed on October 30, 1998 with the RTC of Makati, [5] to question Metrobanks right to foreclose the
mortgage. De Koning also had a pending petition for certiorari with the CA,[6] which arose from the RTC case he filed. When Metrobank failed to disclose the
existence of these two pending cases in the certification attached to its petition, it failed to comply with the mandatory requirements of the Rules so that  its
petition should be dismissed.
 
The RTC agreed with De Koning and dismissed Metrobanks petition in its September 18, 2000 order on the ground De Koning cited, i.e.,for having a
false certification of non-forum shopping. The lower court denied Metrobanks motion for reconsideration. Metrobank thus elevated the matter to the CA on a
petition for certiorari on January 5, 2001.
 
The CA affirmed the dismissal of Metrobanks petition. It explained that Section 5, Rule 7 of the Rules is not limited to actions, but covers
any initiatory pleading that asserts a claim for relief. Since Metrobanks petition for writ of possession is an initiatory pleading, it must perforce be  covered by
this rule. Thus, Metrobanks failure to disclosein the verification and certification the existence of the two cases filed by De Koning, involving the issue of
Metrobanks right to foreclose on the property, rendered the petition dismissible.
 
The CA denied Metrobanks subsequent motion for reconsideration. Hence, this petition for review on certiorari, raising the following issues:
 
ISSUES
 
I.
THE COURT OF APPEALS AND THE LOWER COURT, CONTRARY TO THE APPLICABLE DECISIONS OF THIS HONORABLE
COURT, RULED THAT THE EX PARTE PETITION FOR THE ISSUANCE OF A WRIT OF POSSESSION IS AN INITIATORY PLEADING
ASSERTING A CLAIM.
 
II.
THE COURT OF APPEALS, IN UPHOLDING THE RULING OF THE LOWER COURT, DELIBERATELY IGNORED THE FACT THAT THE
PETITION FOR THE ISSUANCE OF A WRIT OF POSSESSION IS EX PARTE IN NATURE.
 
III.
THE COURT OF APPEALS COMMITTED A MISAPPREHENSION OF FACTS.
 
 
Metrobank claims that an ex parte petition for the issuance of a writ of possession is not an initiatory pleading asserting a claim. Rather, it is a mere
incident in the transfer of title over the real property which was acquired by Metrobank through an extrajudicial foreclosure sale, in accordance with Section 7
of Act No. 3135, as amended. Thus, the petition is not covered by Section 5, Rule 7 of the Rules and a certification against forum shopping is not required.
 
Metrobank further argues that considering the ex parte nature of the proceedings, De Koning was not even entitled to be notified of the resulting
proceedings, and the lower court and the CA should have disregarded De Konings motion to dismiss.
 
Lastly, Metrobank posits that the CA misapprehended the facts of the case when it affirmed the lower courts finding that Metrobanks petition and the
two cases filed by De Koning involved the same parties. There could be no identity of parties in these cases for the simple reason that, unlike the two cases
filed by De Koning, Metrobanks petition is a proceeding ex parte which did not involve De Koning as a party. Nor could there be an identity in issues or subject
matter since the only issue involved in Metrobanks petition is its entitlement to possess the property foreclosed, whereas De Konings civil case involved the
validity of the terms and conditions of the loan documents. Furthermore, the extra-judicial foreclosure of the mortgaged property and De Konings petition
for certiorari with the CA involved the issue of whether the presiding judge in the civil case acted with grave abuse of discretion when  he denied De Konings
motion to set for hearing the application for preliminary injunction.
 
De Koning, in opposition, maintains that Metrobanks petition was fatally defective for violating the strict requirements of Section 5, Rule 7 of the
Rules. As noted by both the lower court and the CA's ruling that Metrobank failed to disclose the two pending cases he previously filed  before the RTC and the
CA, which both involved the banks right to foreclose and, ultimately, the banks right to a writ of possession by virtue of foreclosure.
 
 De Koning also asserts that Metrobank should have appealed the lower courts decision and not filed a special civil action for  certiorari since the
order being questioned is one of dismissal and not an interlocutory order. According to De Koning, since the filing of a petition for  certiorari cannot be a
substitute for a lost appeal and does not stop the running of the period of appeal, the questioned RTC order has now become final and executory and the
present petition is moot and academic.
 
THE COURTS RULING
 
We find Metrobanks petition meritorious.
 
Procedural Issue
 
Section 1, Rule 65 of the Rules, clearly provides that a petition for certiorari is available only when there is no appeal, or any plain, speedy and
adequate remedy in the ordinary course of law . A petition for certiorari cannot coexist with an appeal or any other adequate remedy. The existence and the
availability of the right to appeal are antithetical to the availment of the special civil action for  certiorari. As we have long held, these two remedies are mutually
exclusive.[7]
 
Admittedly, Metrobanks petition for certiorari before the CA assails the dismissal order of the RTC and, under normal circumstances, Metrobank
should have filed an appeal.
 
However, where the exigencies of the case are such that the ordinary methods of appeal may not prove adequate -- either in point of promptness or
completeness, so that a partial if not a total failure of justice could result - a writ of certiorari may still be issued.[8] Other exceptions, Justice Florenz D.
Regalado listed are as follows:
 
(1) where the appeal does not constitute a speedy and adequate remedy (Salvadades vs. Pajarillo, et al., 78 Phil. 77),  as where 33
appeals were involved from orders issued in a single proceeding which will inevitably result in a proliferation of more appeals ( PCIB vs.
Escolin, et al.,  L-27860 and 27896, Mar. 29, 1974 );  (2) where the orders were also issued either in excess of or without
jurisdiction (Aguilar vs. Tan, L-23600, Jun 30, 1970, Cf. Bautista, et al. vs. Sarmiento, et al., L-45137, Sept. 231985);   (3) for certain special
consideration, as public welfare or public policy (See Jose vs. Zulueta, et al. -16598, May 31, 1961  and the cases cited therein); (4) where
in criminal actions, the court rejects rebuttal evidence for the prosecution as, in case of acquittal, there could be no remedy  (People vs.
Abalos, L029039, Nov. 28, 1968);  (5) where the order is a patent nullity (Marcelo vs. De Guzman, et al., L-29077, June 29, 1982);  and (6)
where the decision in the certiorari case will avoid future litigations ( St. Peter Memorial Park, Inc. vs. Campos, et al., L-38280, Mar. 21,
1975).[9] [Emphasis supplied.]
 
Grave abuse of discretion may arise when a lower court or tribunal violates or contravenes the Constitution, the law or existing jurisprudence. [10] As will be
discussed in greater detail below, the RTC decision dismissing Metrobanks petition was patently erroneous and clearly contravened existing jurisprudence. For
this reason, we cannot fault Metrobank for resorting to the filing of a petition for certiorari with the CA to remedy a patent legal error in the hope of obtaining a
speedy and adequate remedy.
 
Nature of a petition for a writ of possession
A writ of possession is defined as " a writ of execution employed to enforce a judgment to recover the possession of land. It commands the sheriff to enter the
land and give its possession to the person entitled under the judgment."[11]
 
There are three instances when a writ of possession may be issued: (a) in land registration proceedings under Section 17 of Act No. 496; (b) in judicial
foreclosure, provided the debtor is in possession of the mortgaged realty and no third person, not a party to the foreclosure suit, had intervened; and (c) in
extrajudicial foreclosure of a real estate mortgage under Section 7 of Act No. 3135, as amended by Act No. 4118. [12] The present case falls under the third
instance.
 
The procedure for obtaining a writ of possession in extrajudicial foreclosure cases is found in Section 7 of Act No. 3135, as amended by Act No. 4118, which
states:
 
Section 7.    In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or
place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an
amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was
made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and
filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the
case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any
other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law,
and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one
hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six,
and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the
property is situated, who shall execute said order immediately.  
 
 
 Based on this provision, a writ of possession may issue either (1) within the one year redemption period, upon the filing of a bond, or (2) after the
lapse of the redemption period, without need of a bond. [13] In order to obtain a writ of possession, the purchaser in a foreclosure sale must file a petition, in the
form of an ex parte  motion, in the registration or cadastral proceedings of the registered property. The reason why this pleading, although denominated as a
petition, is actually considered a motion is best explained in Sps. Arquiza v. CA,[14] where we said:
 
The certification against forum shopping is required only in a complaint or other initiatory pleading. The ex parte petition for the
issuance of a writ of possession filed by the respondent is not an initiatory pleading.  Although the private respondent denominated its
pleading as a petition, it is, nonetheless, a motion.  What distinguishes a motion from a petition or other pleading is not its form or the title
given by the party executing it, but rather its purpose. The office of a motion is not to initiate new litigation, but to bring a material but
incidental matter arising in the progress of the case in which the motion is filed. A motion is not an independent right or remedy, but is
confined to incidental matters in the progress of a cause. It relates to some question that is collateral to the main object of the action and is
connected with and dependent upon the principal remedy. An application for a writ of possession is a mere incident in the registration
proceeding. Hence, although it was denominated as a petition, it was in substance merely a motion. Thus, the CA correctly made the
following observations:
Such petition for the issuance of a writ of possession is filed in the form of an ex parte motion, inter alia, in
the registration or cadastral proceedings if the property is registered. Apropos, as an incident or consequence of the
original registration or cadastral proceedings, the motion or petition for the issuance of a writ of possession, not being
an initiatory pleading, dispels the requirement of a forum-shopping certification. Axiomatic is that the petitioner need
not file a certification of non-forum shopping since his claims are not initiatory in character ( Ponciano vs. Parentela,
Jr., 331 SCRA 605 [2000]) [Emphasis supplied.]
 
The right to possess a property merely follows the right of ownership. Thus, after the consolidation of title in the buyers name for failure of the
mortgagor to redeem, the writ of possession becomes a matter of right and its issuance to a purchaser in an extrajudicial foreclosure is merely a ministerial
function.[15] Sps. Arquiza v. CA  further tells us:[16]
 
Indeed, it is well-settled that an ordinary action to acquire possession in favor of the purchaser at an extrajudicial foreclosure of
real property is not necessary. There is no law in this jurisdiction whereby the purchaser at a sheriffs sale of real property is obliged to
bring a separate and independent suit for possession after the one-year period for redemption has expired and after he has obtained the
sheriffs final certificate of sale. The basis of this right to possession is the purchasers ownership of the property. The mere filing of an ex
parte motion for the issuance of the writ of possession would suffice, and no bond is required. [Emphasis supplied.]
 
Since a petition for a writ of possession under Section 7 of Act No. 3135, as amended, is neither a complaint nor an initiatory pleading, a certificate against
non-forum shopping is not required. The certificate that Metrobank attached to its petition is thus a superfluity that the lower court should have disregarded.
 
No intervention allowed in ex parte proceedings
 
We also find merit in Metrobanks contention that the lower court should not have allowed De Koning to intervene in the proceedings.
 
A judicial proceeding, order, injunction, etc., is ex parte when it is taken or granted at the instance and for the benefit of one party only, and without
notice to, or contestation by, any person adversely interested. [17]
 
Given that the proceeding for a writ of possession, by the terms of Section 7 of Act No. 3135, is undoubtedly ex parte in nature, the lower court
clearly erred not only when it notified De Koning of Metrobanks ex parte petition for the writ of possession, but also when it allowed De Koning to participate in
the proceedings and when it took cognizance and upheld De Konings motion to dismiss.
 
As we held in Ancheta v. Metropolitan Bank and Trust Company, Inc. :[18]
In GSIS v. Court of Appeals, this Court discussed the inappropriateness of intervening in a summary proceeding under Section 7
of Act No. 3135:
The proceedings in which respondent Knecht sought to intervene is an ex parte  proceeding pursuant to Sec.
7 of Act No. 3135, and, as pointed out by petitioner, is a judicial proceeding brought for the benefit of one party only,
and without notice to, or consent by any person adversely interested (Stella vs. Mosele, 19 N.E., 2d. 433, 435, 299 III
App. 53; Imbrought v. Parker, 83 N.E. 2d 42, 43, 336 III App. 124; City Nat. Bank & Trust Co. v. Aavis Hotel
Corporation, 280 III App. 247), x x x or a proceeding wherein relief is granted without an opportunity for the person
against whom the relief is sought to be heard (Restatement, Torts, S 674, p. 365, Rollo).
xxx
Intervention  is defined as 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 (33 C.J., 477, cited in Eulalio Garcia, et al. vs.
Sinforoso David, et al., 67 Phil. 279, at p. 282).
 Action, under Rule 2, Sec. 1, is defined as an ordinary suit in a court of justice, by which one
party  prosecutes another for the enforcement or protection of a right, or the prevention or redress of a wrong.
From the aforesaid definitions, it is clear that intervention contemplates a suit, and is therefore exercisable
during a trial and, as pointed out by petitioner is one which envisions the introduction of evidence by the parties,
leading to the rendition of the decision in the case (p. 363, Rollo).  Very clearly, this concept is not that contemplated
by Sec. 7 of Act No. 3135, whereby, under settled jurisprudence, the Judge has to order the immediate issuance of a
writ of possession 1) upon the filing of the proper motion and 2) the approval of the corresponding bond .  The rationale
for the mandate is to allow the purchaser to have possession of the foreclosed property without delay, such possession
being founded on his right of ownership.  A trial which entails delay is obviously out of the question. [Emphasis
supplied.]
 
 
 
WHEREFORE, premises considered, we GRANT the petition. The Decision of the Court of Appeals in CA-G.R. SP No. 62325 dated November 21,
2002, as well as the orders of the Regional Trial Court of Makati City, Branch 65 in LRC Case No. M-4068 dated September 18, 2000 and October 23, 2000,
is REVERSED and SET ASIDE. LRC Case No. M-4068 is ordered remanded to the Regional Trial Court of Makati City, Branch 65, for further proceedings and
proper disposition. Costs against respondent Manfred Jacob De Koning.
 
SO ORDERED.

October 10, 2017

G.R. No. 229781

SENATOR LEILA M. DE LIMA, Petitioner 

vs.
HON. JUANITA GUERRERO, in her capacity as Presiding Judge, Regional Trial Court of Muntinlupa City, Branch 204, PEOPLE OF THE PHILIPPINES,
P/DIR. GEN. RONALD M. DELA ROSA, in his capacity as Chief of the Philippine National Police, PSUPT. PHILIP GIL M. PHILIPPS, in his capacity as
Director, Headquarters Support Service, SUPT. ARNEL JAMANDRON APUD, in his capacity as Chief, PNP Custodial Service Unit, and ALL PERSONS
ACTING UNDER THEIR CONTROL, SUPERVISION, INSTRUCTION OR DIRECTION IN RELATION TO THE ORDERS THAT MAY BE ISSUED BY THE
COURT, Respondents

DECISION

VELASCO, JR., J.:

For consideration is the Petition for Certiorari and Prohibition with Application for a Writ of Preliminary Injunction, and Urgent Prayer for Temporary Restraining
Order and Status Quo Ante Order1 under Rule 65 of the Rules of Court filed by petitioner Senator Leila De Lima. In it, petitioner assails the following orders
and warrant issued by respondent judge Hon. Juanita Guerrero of the Regional Trial Court (RTC) of Muntinlupa City, Branch 204, in Criminal Case No. 17-
165, entitled "People vs. Leila De Lima, et al.:" (1) the Order dated February 23, 2017 finding probable cause for the issuance of warrant of arrest against
petitioner De Lima; (2) the Warrant of Arrest against De Lima also dated February 23, 2017; (3) the Order dated February 24, 2017 committing the petitioner to
the custody of the PNP Custodial Center; and finally, (4) the supposed omission of the respondent judge to act on petitioner's Motion to Quash, through which
she questioned the jurisdiction of the RTC.2

Antecedents

The facts are undisputed. The Senate and the House of Representatives conducted several inquiries on the proliferation of dangerous drugs syndicated at the
New Bilibid Prison (NBP), inviting inmates who executed affidavits in support of their testimonies. 3 These legislative inquiries led to the filing of the following
complaints with the Department of Justice:

a) NPS No. XVI-INV-16J-00313, entitled "Volunteers against Crime and Corruption (VACC), represented by Dante Jimenez vs. Senator Leila M. De
Lima, et al.;"

b) NPS No. XVI-INV-16J-00315, entitled "Reynaldo Esmeralda and Ruel Lasala vs. Senator Leila De Lima, et al.;"

c) NPS No. XVI-INV-16K-00331, entitled "Jaybee Nifio Sebastian, represented by his wife Roxanne Sebastian, vs. Senator Leila M De Lima, et
al.;" and

d) NPS No. XVI-INV-16K-00336, entitled "National Bureau of Investigation (NBI) vs. Senator Leila M. De Lima, et al.  "4

Pursuant to DOJ Department Order No. 790, the four cases were consolidated and the DOJ Panel of Prosecutors (DOJ Panel), 5 headed by Senior Assistant
State Prosecutor Peter Ong, was directed to conduct the requisite preliminary investigation. 6

The DOJ Panel conducted a preliminary hearing on December 2, 2016, 7 wherein the petitioner, through her counsel, filed an Omnibus Motion to Immediately
Endorse the Cases to the Office of the Ombudsman and for the Inhibition of the Panel of Prosecutors and the Secretary of Justice ("Omnibus Motion"). 8 In the
main, the petitioner argued that the Office of the Ombudsman has the exclusive authority and jurisdiction to hear the four complaints against her. Further,
alleging evident partiality on the part of the DOJ Panel, the petitioner contended that the DOJ prosecutors should inhibit themselves and refer the complaints to
the Office of the Ombudsman.

A hearing on the Omnibus Motion was conducted on December 9, 2016,9 wherein the complainants, YACC, Reynaldo Esmeralda (Esmeralda) and Ruel
Lasala (Lasala), filed a Joint Comment/Opposition to the Omnibus Motion. 10
On December 12, 2016, petitioner, in turn, interposed a Reply to the Joint Comment/Opposition filed by complainants VACC, Esmeralda and Lasala. In
addition, petitioner submitted a Manifestation with Motion to First Resolve Pending Incident and to Defer Further Proceedings.  11

During the hearing conducted on December 21, 2016, petitioner manifested that she has decided not to submit her counter-affidavit citing the pendency of her
two motions.12 The DOJ Panel, however, ruled that it will not entertain belatedly filed counter-affidavits, and declared all pending incidents and the cases as
submitted for resolution. Petitioner moved for but was denied reconsideration by the DOJ Panel. 13

On January 13, 2017, petitioner filed before the Court of Appeals a Petition for Prohibition and Certiorari 14assailing the jurisdiction of the DOJ Panel over the
complaints against her. The petitions, docketed as CA-G.R. No. 149097 and CA-G.R. No. SP No. 149385, are currently pending with the Special 6th Division
of the appellate court.15Meanwhile, in the absence of a restraining order issued by the Court of Appeals, the DOJ Panel proceeded with the conduct of the
preliminary investigation16 and, in its Joint Resolution dated February 14, 2017, 17 recommended the filing of Informations against petitioner De Lima.
Accordingly, on February 17, 2017, three Informations were filed against petitioner De Lima and several co-accused before the RTC ofMuntinlupa City. One of
the Infonnations was docketed as Criminal Case No. 17-165 18 and raffled off to Branch 204, presided by respondent judge. This Information charging petitioner
for violation of Section 5 in relation to Section (jj), Section 26(b), and Section 28 of Republic Act No. (RA) 9165, contained the following averments:

That within the period from November 2012 to March 2013, in the City of Muntinlupa, Philippines, and within the jurisdiction of this Honorable Court, accused
Leila M. De Lima, being then the Secretary of the Department of Justice, and accused Rafael Marcos Z. Rages, being then the Officer-in-Charge of the Bureau
of Corrections, by taking advantage of their public office, conspiring and confederating with accused Ronnie P. Dayan, being then an employee of the
Department of Justice detailed to De Lima, all of them having moral ascendancy or influence over inmates in the New Bilibid Prison, did then and there commit
illegal drug trading, in the following manner: De Lima and Ragos, with the use of their power, position, and authority, demand, solicit and extort money from the
high profile inmates in the New Bilibid Prison to support the senatorial bid of De Lima in the May 2016 election; by reason of which, the inmates, not being
lawfully authorized by law and through the use of mobile phones and other electronic devices, did then and there willfully and unlawfully trade and traffic
dangerous drugs, and thereafter give and deliver to De Lima, through Ragos and Dayan, the proceeds of illegal drug trading amounting to Five Million
(₱5,000,000.00) Pesos on 24 November 2012, Five Million (₱5,000,000.00) Pesos on 15 December 2012, and One Hundred Thousand (₱100,000.00) Pesos
weekly "tara" each from the high profile inmates in the New Bilibid Prison. 19

On February 20, 2017, petitioner filed a Motion to Quash,20mainly raising the following: the RTC lacks jurisdiction over the offense charged against petitioner;
the DOJ Panel lacks authority to file the Information; the Information charges more than one offense; the allegations and the recitals of facts do not allege
the corpus delicti of the charge; the Information is based on testimonies of witnesses who are not qualified to be discharged as state witnesses; and the
testimonies of these witnesses are hearsay.21

On February 23, 2017, respondent judge issued the presently assailed Order 22finding probable cause for the issuance of warrants of arrest against De Lima
and her co-accused. The Order stated, viz.:

After a careful evaluation of the herein Information and all the evidence presented during the preliminary investigation conducted in this case by the
Department of Justice, Manila, the Court finds sufficient probable cause for the issuance of Warrants of Arrest against all the accused LEILA M. DE LIMA,
RAFAEL MARCOS Z. RAGOS and RONNIE P ALISOC DAYAN.

WHEREFORE, let Warrants of Arrest be issued against the abovementioned accused.

SO ORDERED.23

Accordingly, the questioned Warrant of Arrest dated February 23, 2017 ,24 which contained no recommendation for bail, was issued against petitioner.

On February 24, 2017, the PNP Investigation and Detection Group served the Warrant of Arrest on petitioner and the respondent judge issued the assailed
February 24, 2017 Order,25 committing petitioner to the custody of the PNP Custodial Center.

On February 27, 2017, petitioner repaired to this court via the present petition, praying for the following reliefs:

a. Granting a writ of certiorari annulling and setting aside the Order dated 23 February 2017, the Warrant of Arrest dated the same date, and the Order dated
24 February 2017 of the Regional Trial Court - Branch 204, Muntinlupa City, in Criminal Case No. 17-165 entitled People of the Philippines versus Leila M De
Lima, et al.;

b. Granting a writ of prohibition enjoining and prohibiting respondent judge from conducting further proceedings until and unless the Motion to Quash is
resolved with finality;

c. Issuing an order granting the application for the issuance of temporary restraining order (TRO) and a writ of preliminary injunction to the proceedings; and

d. Issuing a Status Quo Ante Order restoring the parties to the status prior to the issuance of the Order and Warrant of Arrest, both dated February 23, 201 7,
thereby recalling both processes and restoring petitioner to her liberty and freedom. 26

On March 9, 2017, the Office of the Solicitor General (OSG), on behalf of the respondents, interposed its Comment to the petition. 27 The OSG argued that the
petition should be dismissed as De Lima failed to show that she has no other plain, speedy, and adequate remedy. Further, the OSG posited that the petitioner
did not observe the hierarchy of courts and violated the rule against forum shopping. On substantive grounds, the OSG asserted inter alia that the RTC has
jurisdiction over the offense charged against the petitioner, that the respondent judge observed the constitutional and procedural rules, and so did not commit
grave abuse of discretion, in the issuance of the assailed orders and warrant. 28

On petitioner's motion, the Court directed the holding of oral arguments on the significant issues raised. The Court then heard the parties in oral arguments on
March 14, 21, and 28, 2017.29

In the meantime, the OSG filed a Manifestation dated March 13, 2017, 30 claiming that petitioner falsified the juratsappearing in the: (1) Verification and
Certification against Forum Shopping page of her petition; and (2) Affidavit of Merit in support of her prayer for injunctive relief. The OSG alleged that while
the advertedjurats appeared to be notarized by a certain Atty. Maria Cecille C. Tresvalles-Cabalo on February 24, 2017, the guest logbook 31 in the PNP
Custodial Center Unit in Camp Crame for February 24, 2017 does not bear the name of Atty. Tresvalles-Cabalo. Thus, so the OSG maintained, petitioner De
Lima did not actually appear and swear before the notary public on such date in Quezon City, contrary to the allegations in the jurats. For the OSG, the petition
should therefore be dismissed outright for the falsity committed by petitioner De Lima.

In compliance with an Order of this Court, petitioner filed the Affidavit of Atty. Maria Cecille C. Tresvalles-Cabalo dated March 20, 2017 32 to shed light on the
allegations of falsity in petitioner'sjurats.

The parties simultaneously filed their respective Memoranda on April 17, 2017. 33

The Issues

From the pleadings and as delineated in this Court's Advisory dated March 10, 2017 34 and discussed by the parties during the oral arguments, the issues for
resolution by this Court are:

Procedural Issues:
A Whether or not petitioner is excused from compliance with the doctrine on hierarchy of courts considering that the petition should first be filed with the Court
of Appeals.

B. Whether or not the pendency of the Motion to Quash the Information before the trial court renders the instant petition premature.

C. Whether or not petitioner, in filing the present petition, violated the rule against forum shopping given the pendency of the Motion to Quash the Information
before the Regional Trial Court of Muntinlupa City in Criminal Case No. 17-165 and the Petition for Certiorari filed before the Court of Appeals in C.A. G.R. SP
No. 149097, assailing the preliminary investigation conducted by the DOJ Panel.

Substantive Issues:
A. Whether the Regional Trial Court or the Sandiganbayan has the jurisdiction over the violation of Republic Act No. 9165 averred in the assailed Information.

B. Whether or not the respondent gravely abused her discretion in finding probable cause to issue the Warrant of Arrest against petitioner.

C. Whether or not petitioner is entitled to a Temporary Restraining Order and/or Status Quo Ante Order in the interim until the instant petition is resolved or
until the trial court rules on the Motion to Quash.

OUR RULING

Before proceeding to a discussion on the outlined issues, We shall first confront the issue of the alleged falsification committed by petitioner in the jurats of her
Verification and Certification against Forum Shopping and Affidavit of Merit in support of her prayer for injunctive relief.

In her Affidavit, Atty. Tresvalles-Cabalo disproves the OSG's allegation that she did not notarize the petitioner's Verification and Certification against Forum
Shopping and Affidavit of Merit in this wise:

4. On February 24, 2017 at or around nine in the morning (9:00 AM), I went to PNP, CIDG, Camp Crame, Quezon City to notarize the Petition as discussed
the previous night.

5. I met Senator De Lima when she was brought to the CIDG at Camp Crame and I was informed that the Petition was already signed and ready for
notarization.

6. I was then provided the Petition by her staff. I examined the signature of Senator De Lima and confirmed that it was signed by her. I have known the
signature of the senator given our personal relationship. Nonetheless, I still requested from her staff a photocopy of any of her government-issued valid
Identification Cards (ID) bearing her signature. A photocopy of her passport was presented to me. I compared the signatures on the Petition and the Passport
and I was able to verify that the Petition was in fact signed by her. Afterwards, I attached the photocopy of her Passport to the Petition which I appended to my
Notarial Report/Record.

7. Since I already know that Sen. De Lima caused the preparation of the Petition and that it was her who signed the same, I stamped and signed the same.

8. To confirm with Senator De Lima that I have already notarized the Petition, I sought entry to the detention facility at or around three in the afternoon (3:00
PM). x x x

xxxx

11. Since I was never cleared after hours of waiting, I was not able to talk again to Senator De Lima to confirm the notarization of the Petition. I then decided to
leave Camp Crame.35

At first glance, it is curious that Atty. Tresvalles-Cabalo who claims to have "stamped and signed the [Verification and Certification and Affidavit of Merit]" inside
Camp Crame, presumably in De Lima's presence, still found it necessary to, hours later, "confirm with Senator De Lima that [she had] already notarized the
Petition." Nonetheless, assuming the veracity of the allegations narrated in the Affidavit, it is immediately clear that petitioner De Lima did not sign the
Verification and Certification against Forum Shopping and Affidavit of Merit in front of the notary public. This is contrary to the jurats (i.e., the certifications of
the notary public at the end of the instruments) signed by Atty. Tresvalles-Cabalo that the documents were "SUBSCRIBED AND SWORN to before me."

Such clear breach of notarial protocol is highly censurable 36 as Section 6, Rule II of the 2004 Rules on Notarial Practice requires the affiant, petitioner De Lima
in this case, to sign the instrument or document in the presence of the notary, viz.:

SECTION 6. Jurat. - "Jurat" refers to an act in which an individual on a single occasion:

(a) appears in person before the notary public and presents an instrument or document;
(b) is personally known to the notary public or identified by the notary public through competent evidence of identity as defined by these Rules;

(c) signs the instrument or document in the presence of the notary; and

(d) takes an oath or affirmation before the notary public as to such instrument or document.(Emphasis and underscoring supplied.)

While there is jurisprudence to the effect that "an irregular notarization merely reduces the evidentiary value of a document to that of a private document, which
requires /roof of its due execution and authenticity to be admissible as evidence," 37 the same cannot be considered controlling in determining compliance with
the requirements of Sections 1 and 2, Rule 65 of the Rules of Court. Both Sections 1 and 2 of Rule 65 38 require that the petitions for certiorari and prohibition
must be verified and accompanied by a "sworn certificate of non-forum shopping."

In this regard, Section 4, Rule 7 of the Rules of Civil Procedure states that "[a] pleading is verified by an affidavit that the affiant has read the pleading and that
the allegations therein are true and correct of his personal knowledge or based on authentic records." "A pleading required to be verified which x x x lacks a
proper verification, shall be treated as an unsigned pleading." Meanwhile, Section 5, Rule 7 of the Rules of Civil Procedure provides that "[t]he plaintiff or
principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or
quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a
complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he
shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed." "Failure to comply with the
foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case
without prejudice, unless otherwise provided x x x."

In this case, when petitioner De Lima failed to sign the Verification and Certification against Forum Shopping in the presence of the notary, she has likewise
failed to properly swear under oath the contents thereof, thereby rendering false and null the jurat and invalidating the Verification and Certification against
Forum Shopping. The significance of a proper jurat and the effect of its invalidity was elucidated in William Go Que Construction v. Court of Appeals,39where
this Court held that:

In .this case, it is undisputed that the Verification/Certification against Forum Shopping attached to the petition for certiorari in CA-G.R. SP No. 109427 was not
accompanied with a valid affidavit/properly certified under oath. This was because the jurat thereof was defective in that it did not indicate the pertinent details
regarding the affiants' (i.e., private respondents) competent evidence of identities.

Under Section 6, Rule II of AM. No. 02-8-13-SC 63 dated July 6, 2004, entitled the "2004 Rules on Notarial Practice" (2004 Rules on Notarial
Practice), ajurat refers to an act in which an individual on a single occasion:

xxxx

In Fernandez v. Villegas (Fernandez), the Court pronounced that noncompliance with the verification requirement 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." "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." Here, there was no substantial compliance with the verification requirement as it cannot be
ascertained that any of the private respondents actually swore to the truth of the allegations in the petition for certiorari in CA-G.R. SP No. 109427 given the
lack of competent evidence of any of their identities. Because of this, the fact that even one of the private respondents swore that the allegations in the
pleading are true and correct of his knowledge and belief is shrouded in doubt.

For the same reason, neither was there substantial compliance with the certification against forum shopping requirement. In Fernandez, the Court explained
that "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 Rule on the ground of 'substantial compliance' or presence of 'special circumstances or compelling reasons."' Here, the CA did not
mention - nor does there exist - any perceivable special circumstance or compelling reason which justifies the rules' relaxation. At all events, it is uncertain if
any of the private respondents certified under oath that no similar action has been filed or is pending in another forum.

xxxx

Case law states that "[v]erification is required to secure an assurance that the allegations in the petition have been made in good faith or are true and correct,
and not merely speculative." On the other hand, "[t]he certification against forum shopping is required based on the principle that a party-litigant should not be
allowed to pursue simultaneous remedies in different fora." The important purposes behind these requirements cannot be simply brushed aside absent any
sustainable explanation justifying their relaxation. In this case, proper justification is especially called for in light of the serious allegations of forgery as to the
signatures of the remaining private respondents, i.e., Lominiqui and Andales. Thus, by simply treating the insufficient submissions before it as compliance with
its Resolution dated August 13, 2009 requiring anew the submission of a proper verification/certification against forum shopping, the CA patently and grossly
ignored settled procedural rules and, hence, gravely abused its discretion. All things considered, the proper course of action was for it to dismiss the
petition.40 (Emphasis and underscoring supplied.)

Without the presence of the notary upon the signing of the Verification and Certification against Forum Shopping, there is no assurance that the petitioner
swore under oath that the allegations in the petition have been made in good faith or are true and correct, and not merely speculative. It must be noted that
verification is not an empty ritual or a meaningless formality. Its import must never be sacrificed in the name of mere expedience or sheer caprice, 41as what
apparently happened in the present case. Similarly, the absence of the notary public when petitioner allegedly affixed her signature also negates a proper
attestation that forum shopping has not been committed by the filing of the petition. Thus, the petition is, for all intents and purposes, an unsigned pleading that
does not deserve the cognizance of this Court.42 In Salum bides, Jr. v. Office of the Ombudsman,43the Court held thus:

The Court has distinguished the effects of non-compliance with the requirement of verification and that of certification against forum shopping. A defective
verification shall be treated as an unsigned pleading and thus produces no legal effect, subject to the discretion of the court to allow the deficiency to be
remedied, while the failure to certifv against forum shopping shall be cause for dismissal without prejudice, unless otherwise provided, and is not curable by
amendment of the initiatory pleading. (Emphasis and italicization from the original.)
Notably, petitioner has not proffered any reason to justify her failure to sign the Verification and Certification Against Forum Shopping in the presence of the
notary. There is, therefore, no justification to relax the rules and excuse the petitioner's non-compliance therewith. This Court had reminded parties seeking the
ultimate relief of certiorari to observe the rules, since nonobservance thereof cannot be brushed aside as a "mere technicality." 44 Procedural rules are not to be
belittled or simply disregarded, for these prescribed procedures ensure an orderly and speedy administration of justice. 45 Thus, as in William Go Que
Construction, the proper course of action is to dismiss outright the present petition.

Even if We set aside this procedural infirmity, the petition just the same merits denial on several other grounds.

PETITIONER DISREGARDED THE HIERARCHY OF COURTS

Trifling with the rule on hierarchy of courts is looked upon with disfavor by this Court. 46 It will not entertain direct resort to it when relief can be obtained in the
lower courts.47 The Court has repeatedly emphasized that the rule on hierarchy of courts is an important component of the orderly administration of justice and
not imposed merely for whimsical and arbitrary reasons.48 In The Diocese of Bacolod v. Commission on Elections,49the Court explained the reason for the
doctrine thusly:

The Court must enjoin the observance of the policy on the hierarchy of courts, and now affirms that the policy is not to be ignored without serious
consequences. The strictness of the policy is designed to shield the Court from having to deal with causes that are also well within the competence of the
lower courts, and thus leave time for the Court to deal with the more fundamental and more essential tasks that the Constitution has assigned to it. The Court
may act on petitions for the extraordinary writs of certiorari, prohibition and mandamus only when absolutely necessary or when serious and important reasons
exist to justify an exception to the policy.

xxxx

The doctrine that requires respect for the hierarchy of courts was created by this court to ensure that every level of the judiciary performs its designated roles
in an effective and efficient manner. Trial courts do not only determine the facts from the evaluation of the evidence presented before them. They are likewise
competent to determine issues of law which may include the validity of an ordinance, statute, or even an executive issuance in relation to the Constitution. To
effectively perform these functions, they are territorially organized into regions and then into branches. Their writs generally reach within those territorial
boundaries. Necessarily, they mostly perform the all-important task of inferring the facts from the evidence as these are physically presented before them. In
many instances, the facts occur within their territorial jurisdiction, which properly present the "actual case" that makes ripe a determination of the
constitutionality of such action. The consequences, of course, would be national in scope. There are, however, some cases where resort to courts at their level
would not be practical considering their decisions could still be appealed before the higher courts, such as the Court of Appeals.

The Court of Appeals is primarily designed as an appellate court that reviews the determination of facts and law made by the trial courts. It is collegiate in
nature. This nature ensures more standpoints in the review of the actions of the trial court. But the Court of Appeals also has original jurisdiction over most
special civil actions. Unlike the trial courts, its writs can have a nationwide scope. It is competent to determine facts and, ideally, should act on constitutional
issues that may not necessarily be novel unless there are factual questions to determine.

This court, on the other hand, leads the judiciary by breaking new ground or further reiterating - in the light of new circumstances or in the light of some
confusion of bench or bar - existing precedents. Rather than a court of first instance or as a repetition of the actions of the Court of Appeals, this court
promulgates these doctrinal devices in order that it truly performs that role. 50 (Emphasis supplied.)

Nonetheless, there are recognized exceptions to this rule and direct resort to this Court were allowed in some instances. These exceptions were summarized
in a case of recent vintage, Aala v. Uy, as follows:

In a fairly recent case, we summarized other well-defined exceptions to the doctrine on hierarchy of courts. Immediate resort to this Court may be allowed
when any of the following grounds are present: (1) when genuine issues of constitutionality are raised that must be addressed immediately; (2) when the case
involves transcendental importance; (3) when the case is novel; (4) when the constitutional issues raised are better decided by this Court; (5) when time is of
the essence; (6) when the subject of review involves acts of a constitutional organ; (7) when there is no other plain, speedy, adequate remedy in the ordinary
course of law; (8) when the petition includes questions that may affect public welfare, public policy, or demanded by the broader interest of justice; (9) when
the order complained of was a patent nullity; and (10) when the appeal was considered as an inappropriate remedy. 51

Unfortunately, none of these exceptions were sufficiently established in the present petition so as to convince this court to brush aside the rules on the
hierarchy of courts.

Petitioner's allegation that her case has sparked national and international interest is obviously not covered by the exceptions to the rules on hierarchy of
courts. The notoriety of a case, without more, is not and will not be a reason for this Court's decisions. Neither will this Court be swayed to relax its rules on the
bare fact that the petitioner belongs to the minority party in the present administration. A primary hallmark of an independent judiciary is its political neutrality.
This Court is thus loath to perceive and consider the issues before it through the warped prisms of political partisanships.

That the petitioner is a senator of the republic does not also merit a special treatment of her case. The right to equal treatment before the law accorded to
every Filipino also forbids the elevation of petitioner's cause on account of her position and status in the government.

Further, contrary to her position, the matter presented before the Court is not of first impression. Petitioner is not the first public official accused of violating RA
9165 nor is she the first defendant to question the finding of probable cause for her arrest. In fact, stripped of all political complexions, the controversy involves
run-of-the mill matters that could have been resolved with ease by the lower court had it been given a chance to do so in the first place.

In like manner, petitioner's argument that the rule on the hierarchy of court should be disregarded as her case involves pure questions of law does not obtain.
One of the grounds upon which petitioner anchors her case is that the respondent judge erred and committed grave abuse of discretion in finding probable
cause to issue her arrest. By itself, this ground removes the case from the ambit of cases involving pure questions of law. It is established that the issue of
whether or not probable cause exists for the issuance of warrants for the arrest of the accused is a question of fact, determinable as it is from a review of the
allegations in the Information, the Resolution of the Investigating Prosecutor, including other documents and/ or evidence appended to the Information. 52 This
matter, therefore, should have first been brought before the appellate court, which is in the better position to review and determine factual matters.

Yet, petitioner harps on the supposed judicial efficiency and economy of abandoning the rule on the hierarchy of courts in the present case. Indeed, the Court
has considered the practical aspects of the administration of justice in deciding to apply the exceptions rather than the rule. However, it is all the more for these
practical considerations that the Court must insist on the application of the rule and not the exceptions in this case. As petitioner herself alleges, with the
President having declared the fight against illegal drugs and corruption as central to his platform of government, there will be a spike of cases brought before
the courts involving drugs and public officers.53 As it now stands, there are 232,557 criminal cases involving drugs, and around 260,796 criminal cases
involving other offenses pending before the R TCs.54 This Court cannot thus allow a precedent allowing public officers assailing the finding of probable cause
for the issuance of arrest warrants to be brought directly to this Court, bypassing the appellate court, without any compelling reason.

THE PRESENT PETITION IS PREMATURE

The prematurity of the present petition is at once betrayed in the reliefs sought by petitioner's Prayer, which to restate for added emphasis, provides:

WHEREFORE, premises considered, and in the interest of substantial justice and fair play, Petitioner respectfully prays the Honorable Court that judgment be
rendered:

a. Granting a writ of certiorari annulling and setting aside the Order dated 23 February 2017, the Warrant of Arrest dated the same date, and the Order dated
24 February 2017 of the Regional Trial CourtBranch 204, Muntinlupa City, in Criminal Case No. 17-165 entitled People of the Philippines versus Leila M De
Lima et al.;

b. Granting a writ of prohibition enjoining and prohibiting respondent judge from conducting further proceedings until and unless the Motion to Quash is
resolved with finality;

c. Issuing an order granting the application for the issuance of temporary restraining order (TRO) and a writ of preliminary injunction to the proceedings; and

d. Issuing a Status Quo Ante Order restoring the parties to the status prior to the issuance of the Order and Warrant of Arrest, both dated February 23, 201 7,
thereby recalling both processes and restoring petitioner to her liberty and freedom. 55 (Emphasis supplied)

Under paragraph (a), petitioner asks for a writ of certiorari annulling the Order dated February 23, 2017 finding probable cause, the warrant of arrest and the
Order dated February 24, 2017 committing petitioner to the custody of the PNP Custodial Center. Clearly petitioner seeks the recall of said orders to effectuate
her release from detention and restore her liberty. She did not ask for the dismissal of the subject criminal case.

More importantly, her request for the issuance of a writ of prohibition under paragraph (b) of the prayer "until and unless the Motion to Quash is resolved with
finality," is an unmistakable admission that the RTC has yet to rule on her Motion to Quash and the existence of the RTC's authority to rule on the said motion.
This admission against interest binds the petitioner; an admission against interest being the best evidence that affords the greatest certainty of the facts in
dispute.56 It is based on the presumption that "no man would declare anything against himself unless such declaration is true. " 57 It can be presumed then that
the declaration corresponds with the truth, and it is her fault if it does not. 58

Moreover, petitioner under paragraphs (c) and (d) prayed for a TRO and writ of preliminary injunction and a status quo ante order which easily reveal her real
motive in filing the instant petition-to restore to "petitioner her liberty and freedom."

Nowhere in the prayer did petitioner explicitly ask for the dismissal of Criminal Case No. 17-165. What is clear is she merely asked the respondent judge to
rule on her Motion to Quash before issuing the warrant of arrest.

In view of the foregoing, there is no other course of action to take than to dismiss the petition on the ground of prematurity and allow respondent Judge to rule
on the Motion to Quash according to the desire of petitioner.

This Court, in Solid Builders Inc. v. China Banking Corp., explained why a party should not pre-empt the action of a trial court:

Even Article 1229 of the Civil Code, which SBI and MFII invoke, works against them. Under that provision, the equitable reduction of the penalty stipulated by
the parties in their contract will be based on a finding by the court that such penalty is iniquitous or unconscionable. Here, the trial court has not yet made a
ruling as to whether the penalty agreed upon by CBC with SBI and MFII is unconscionable. Such finding will be made by the trial court only after it has heard
both parties and weighed their respective evidence in light of all relevant circumstances. Hence, for SBI and MFII to claim any right or benefit under that
provision at this point is premature.59 (Emphasis supplied)

In State of Investment House, Inc. v. Court of Appeals, 60the Court likewise held that a petition for certiorari can be resorted to only after the court a quo has
already and actually rendered its decision. It held, viz.:

We note, however, that the appellate court never actually ruled on whether or not petitioner's right had prescribed. It merely declared that it was in a position to
so rule and thereafter required the parties to submit memoranda. In making such a declaration, did the CA commit grave abuse of discretion amounting to lack
of jurisdiction? It did not.

xxxx

All things considered, this petition is premature. The CA has decided nothing and whatever petitioner's vehement objections may be (to any eventual ruling on
the issue of prescription) should be raised only after such ruling shall have actually been promulgated.

The situation evidently does not yet call for a recourse to a petition for  certiorari under Rule 65.61(Italicization from the original. Emphasis supplied.)

An analogous ruling was made by this Court in Diaz v. Nora, where it ruled in this wise:

x x x In the case of the respondent labor arbiter, he has not denied the motion for execution filed by the petitioner. He merely did not act on the same. Neither
had petitioner urged the immediate resolution of his motion for execution by said arbiter. In the case of the respondent NLRC, it was not even given the
opportunity to pass upon the question raised by petitioner as to whether or not it has jurisdiction over the appeal, so the records of the case can be remanded
to the respondent labor arbiter for execution of the decision.
Obviously, petitioner had a plain, speedy and adequate remedy to seek relief from public respondents but he failed to avail himself of the same before coming
to this Court. To say the least, the petition is premature and must be struck down. 62 (Emphasis supplied.)

The dissents would deny the applicability of the foregoing on the ground that these were not criminal cases that involved a pending motion to quash. However,
it should be obvious from the afore-quoted excerpts that the nature of the cases had nothing to do with this Court's finding of prematurity in those cases.
Instead, what was stressed therein was that the lower courts had not yet made, nor was not given the opportunity to make, a ruling before the parties came
before this forum.

Indeed, the prematurity of the present petition cannot be over-emphasized considering that petitioner is actually asking the Court to rule on some of the
grounds subject of her Motion to Quash. The Court, if it rules positively in favor of petitioner regarding the grounds of the Motion to Quash, will be preempting
the respondent Judge from doing her duty to resolve the said motion and even prejudge the case. This is clearly outside of the ambit of orderly and expeditious
rules of procedure. This, without a doubt, causes an inevitable delay in the proceedings in the trial court, as the latter abstains from resolving the incidents until
this Court rules with finality on the instant petition.

Without such order, the present petition cannot satisfy the requirements set before this Court can exercise its review powers. Section 5 (2)(C) of Article VIII of
the 1987 Constitution explicitly requires the existence of "final judgments and orders of lower courts" before the Court can exercise its power to "review, revise,
reverse, modify, or affirm on appeal or certiorari" in "all cases in which the jurisdiction of any lower court is in issue," viz.:

SECTION 5. The Supreme Court shall have the following powers:

(1) Exercise original jurisdiction over cases affecting ambassadors, other public ministers and consuls, and over petitions for certiorari, prohibition, mandamus,
quo warranto, and habeas corpus.

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

(a) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order,
instruction, ordinance, or regulation is in question.

(b) All cases involving the legality of any tax, impost, assessment, or toll, or any penalty imposed in relation thereto.

(c) All cases in which the jurisdiction of any lower court is in issue.

(d) All criminal cases in which the penalty imposed is reclusion perpetua or higher.

(e) All cases in which only an error or question of law is involved. (Emphasis supplied.)

In the palpable absence of a ruling on the Motion to Quash -- which puts the jurisdiction of the lower court in issue -- there is no controversy for this Court to
resolve; there is simply no final judgment or order of the lower court to review, revise, reverse, modify, or affirm. As per the block letter provision of the
Constitution, this Court cannot exercise its jurisdiction in a vacuum nor issue a definitive ruling on mere suppositions.

Succinctly, the present petition is immediately dismissible for this Court lacks jurisdiction to review a non-existent court action. It can only act to protect a party
from a real and actual ruling by a lower tribunal. Surely, it is not for this Court to negate "uncertain contingent future event that may not occur as anticipated, or
indeed may not occur at all," as the lower court's feared denial of the subject Motion to Quash. 63

The established rule is that courts of justice will take cognizance only of controversies "wherein actual and not merely hypothetical issues are involved." 64 The
reason underlying the rule is "to prevent the courts through avoidance of premature adjudication from entangling themselves in abstract disagreements, and
for us to be satisfied that the case does not present a hypothetical injury or a claim contingent upon some event that has not and indeed may never
transpire."65

Even granting arguendo that what is invoked is the original jurisdiction of this Court under Section 5 (1) of Article VIII, the petition nonetheless falls short of the
Constitutional requirements and of Rule 65 of the Rules of Court. In the absence of a final judgment, order, or ruling on the Motion to Quash challenging the
jurisdiction of the lower court, there is no occasion for this Court to issue the extraordinary writ of certiorari. Without a judgment or ruling, there is nothing for
this Court to declare as having been issued without jurisdiction or in grave abuse of discretion.

Furthermore, it is a basic requirement under Rule 65 that there be "[no] other plain, speedy and adequate remedy found in law." 66 Thus, the failure to exhaust
all other remedies, as will be later discussed, before a premature resort to this Court is fatal to the petitioner's cause of action.

Petitioner even failed to move for the reconsideration of the February 23 and 24, 2017 Orders she is currently assailing in this Petition. As this Court held
in Estrada v. Office of the Ombudsman, "[a] motion for reconsideration allows the public respondent an opportunity to correct its factual and legal errors x x x
[it] is mandatory before the filing of a petition for certiorari."67The reasons proffered by petitioner fail to justify her present premature recourse.

Various policies and rules have been issued to curb the tendencies of litigants to disregard, nay violate, the rule enunciated in Section 5 of Article VIII of the
Constitution to allow the Court to devote its time and attention to matters within its jurisdiction and prevent the overcrowding of its docket. There is no reason to
consider the proceedings at bar as an exception.

PETITIONER VIOLATED THE RULE AGAINST FORUM SHOPPING

It is settled that forum shopping exists when a party repetitively avails himself of several judicial remedies in different courts, simultaneously or successively, all
substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending
in, or already resolved adversely by, some other court. It is considered an act of malpractice as it trifles with the courts and abuses their processes. 68 Thus, as
elucidated in Luzon Iron Development Group Corporation v. Bridgestone Mining and Development Corporation, 69forum shopping warrants the immediate
dismissal of the suits filed:
Forum shopping is the act of litigants who repetitively avail themselves of multiple judicial remedies in different fora, simultaneously or successively, all
substantially founded on the same transactions and the same essential facts and circumstances; and raising substantially similar issues either pending in or
already resolved adversely by some other court; or for the purpose of increasing their chances of obtaining a favorable decision, if not in one court, then in
another. The rationale against forum-shopping is that a party should not be allowed to pursue simultaneous remedies in two different courts, for to do so would
constitute abuse of court processes which tends to degrade the administration of justice, wreaks havoc upon orderly judicial procedure, and adds to the
congestion of the heavily burdened dockets of the courts.

xxxx

What is essential in determining the existence of forum-shopping is the vexation caused the courts and litigants by a party who asks different courts and/or
administrative agencies to rule on similar or related causes and/or grant the same or substantially similar reliefs, in the process creating the possibility of
conflicting decisions being rendered upon the same issues.

xxxx

We emphasize that the grave evil sought to be avoided by the rule against forum-shopping is the rendition by two competent tribunals of two separate and
contradictory decisions. To avoid any confusion, this Court adheres strictly to the rules against forum shopping, and any violation of these rules results in the
dismissal of a case. The acts committed and described herein can possibly constitute direct contempt. 70

This policy echoes the last sentence of Section 5, Rule 7 of the Rules of Court, which states that "[i]f the acts of the party or his counsel clearly constitute willful
and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt as well as a cause for
administrative sanctions."

The test to determine the existence of forum shopping is whether the elements of litis pendentia, or whether a final judgment in one case amounts to res
judicata in the other. Forum shopping therefore exists when the following elements are present: (a) identity of parties, or at least such parties representing the
same interests in both actions; (b) identity of rights asserted and reliefs prayed for, the relief being founded on the same facts; and (c) the identity of the two
preceding particulars, such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action
under consideration.71

Anent the first requisite, there is an identity of parties when the parties in both actions are the same, or there is privity between them, or they are successors-
in-interest by title subsequent to the commencement of the action litigating for the same thing and under the same title and in the same capacity. 72

Meanwhile, the second and third requisites obtain where the same evidence necessary to sustain the second cause of action is sufficient to authorize a
recovery in the first, even if the forms or the nature of the two (2) actions are different from each other. If the same facts or evidence would sustain both, the
two (2) actions are considered the same within the rule that the judgment in the former is a bar to the subsequent action; otherwise, it is not. 73

All these requisites are present in this case.

The presence of the first requisite is at once apparent. The petitioner is an accused in the criminal case below, while the respondents in this case, all
represented by the Solicitor General, have substantial identity with the complainant in the criminal case still pending before the trial court.

As for the second requisite, even a cursory reading of the petition and the Motion to Quash will reveal that the arguments and the reliefs prayed for are
essentially the same. In both, petitioner advances the RTC's supposed lack of jurisdiction over the offense, the alleged multiplicity of offenses included in the
Information; the purported lack of the corpus delicti of the charge, and, basically, the non-existence of probable cause to indict her. And, removed of all non-
essentials, she essentially prays for the same thing in both the present petition and the Motion to Quash: the nullification of the Information and her restoration
to liberty and freedom. Thus, our ruling in Jent v. Tullet Prebon (Philippines), Inc. 74 does not apply in the present case as the petition at bar and the motion to
quash pending before the court a quo involve similar if not the same reliefs. What is more, while Justice Caguioa highlights our pronouncement
in Jent excepting an "appeal or special civil action for certiorari" from the rule against the violation of forum shopping, the good justice overlooks that the
phrase had been used with respect to forum shopping committed through successive actions by a "party, against whom an adverse judgment or order has
[already] been rendered in one forum." 75 The exception with respect to an "appeal or special civil action for certiorari" does not apply where the forum shopping
is committed by simultaneous actions where no judgment or order has yet been rendered by either forum. To restate for emphasis, the RTC has yet to rule on
the Motion to Quash. Thus, the present petition and the motion to quash before the R TC are simultaneous actions that do not exempt petitions
for certiorari from the rule against forum shopping.

With the presence of the first two requisites, the third one necessarily obtains in the present case. Should we grant the petition and declare the RTC without
jurisdiction over the offense, the RTC is bound to grant De Lima's Motion to Quash in deference to this Court's authority. In the alternative, if the trial court
rules on the Motion to Quash in the interim, the instant petition will be rendered moot and academic.

In situations like the factual milieu of this instant petition, while nobody can restrain a party to a case before the trial court to institute a petition
for certiorari under Rule 65 of the Rules of Court, still such petition must be rejected outright because petitions that cover simultaneous actions are anathema
to the orderly and expeditious processing and adjudication of cases.

On the ground of forum shopping alone, the petition merits immediate dismissal.

THE REGIONAL TRIAL COURT HAS JURISDICTION

Even discounting the petitioner's procedural lapses, this Court is still wont to deny the instant petition on substantive grounds.

Petitioner argues that, based on the allegations of the Information in Criminal Case No. 17-165, the Sandiganbayan has the jurisdiction to try and hear the
case against her. She posits that the Information charges her not with violation of RA 9165 but with Direct Bribery-a felony within the exclusive jurisdiction of
the Sandiganbayan given her rank as the former Secretary of Justice with Salary Grade 31. For the petitioner, even assuming that the crime described in the
Information is a violation of RA 9165, the Sandiganbayan still has the exclusive jurisdiction to try the case considering that the acts described in the Information
were intimately related to her position as the Secretary of Justice. Some justices of this Court would even adopt the petitioner's view, declaring that the
Information charged against the petitioner is Direct Bribery.
The respondents, on the other hand, maintain that the R TC has exclusive jurisdiction to try violations of RA 9165, including the acts described in the
Information against the petitioner. The Sandiganbayan, so the respondents contend, was specifically created as an anti-graft court. It was never conferred with
the power to try drug-related cases even those committed by public officials. In fact, respondents point out that the history of the laws enabling and governing
the Sandiganbayan will reveal that its jurisdiction was streamlined to address specific cases of graft and corruption, plunder, and acquisition of ill-gotten
wealth.

Before discussing the issue on jurisdiction over the subject matter, it is necessary to clarify the crime with which the petitioner is being charged. For ease of
reference, the Information filed with the R TC is restated below:

PEOPLE OF THE PHILIPPINES,  

Plaintiff,

Versus Criminal Case No. 17-165

LEILA M. DE LIMA (NPS No. XVI-INV-16J-00315 and NPS No. XVl-INV-16K-

00336) For: Violation of the Comprehensive Dangerous
Drugs Act of 2002,Section 5, in relation to Section 3(jj),
(66 Laguna de Bay corner Subic Bay Drive, South Bay Section 26 (b), and Section 28, Republic Act No.
Village, Paraiiaque City and/or Room 502, GSIS Building, 9165 (lllegal Drug Trading)
Financial Center, Roxas Boulevard, Pasay City), RAFAEL
MARCOS Z. RAGOS (c/o National Bureau of
Investigation, Taft Avenue, Manila) and RONNIE P
ALISOC DAY AN, (Barangay Galarin, Urbiztondo,
Pangasinan), Accused

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

INFORMATION

The undersigned Prosecutors, constituted as a Panel pursuant to Department Orders 706 and 790 dated October 14, 2016 and November 11, 2016,
respectively, accuse LEILA M. DE LIMA, RAFAEL MARCOS Z. RAGOS and RONNIE P ALISOC DAY AN, for violation of Section 5, in relation to Section 3 (jj),
Section 26 (b) and Section 28, Republic Act No. 9165, otherwise known as the Comprehensive Dangerous Act of 2002, committed as follows:

That within the period from November 2012 to March 2013, in the City of Muntinlupa, Philippines, and within the jurisdiction of this Honorable Court, accused
Leila M. De Lima, being then the Secretary of the Department of Justice, and accused Rafael Marcos Z. Ragos, being then the Officer-in-Charge of the Bureau
of Corrections, by taking advantage of their public office, conspiring and confederating with accused Ronnie P. Dayan, being then the employee of the
Department of Justice detailed to De Lima, all of them having moral ascendancy or influence over inmates in the New Bilibid Prison, did then and there commit
illegal drug trading, in the following manner: De Lima and Ragos, with the use of their power, position, and authority demand, solicit and extort money from the
high profile inmates in the New Bilibid Prison to support the Senatorial bid of De Lima in the May 2016 election; by reason of which, the inmates, not being
lawfully authorized by law and through the use of mobile phones and other electronic devices, did then and there willfully and unlawfully trade and traffic
dangerous drugs, and thereafter give and deliver to De Lima, through Ragos and Dayan, the proceeds of illegal drug trading amounting to Five Million
(₱5,000,000.00) Pesos on 24 November 2012, Five Million (₱5,000,000.00) Pesos on 15 December 2012, and One Hundred Thousand (₱l00,000.00) Pesos
weekly "tara" each from the high profile inmates in the New Bilibid Prison.

CONTRARY TO LAW.76

Notably, the designation, the prefatory statements and the accusatory portions of the Information repeatedly provide that the petitioner is charged with
"Violation of the Comprehensive Dangerous Drugs Act of 2002, Section 5, in relation to Section 3(jj), Section 26(b), and Section 28, Republic Act No. 9165."
From the very designation of the crime in the Information itself, it should be plain that the crime with which the petitioner is charged is a violation of RA 9165.
As this Court clarified in Quimvel v. People, 77 the designation of the offense in the Information is a critical element required under Section 6, Rule 110 of the
Rules of Court in apprising the accused of the offense being charged, viz.:

The offense charged can also be elucidated by consulting the designation of the offense as appearing in the Information. The designation of the offense is a
critical element required under Sec. 6, Rule 110 of the Rules of Court for it assists in apprising the accused of the offense being charged. Its inclusion in the
Information is imperative to avoid surprise on the accused and to afford him of the opportunity to prepare his defense accordingly. Its import is underscored in
this case where the preamble states that the crime charged is of "Acts of Lasciviousness in relation to Section 5(b) of R.A.  No.7610."78(Emphasis supplied.)

Further, a reading of the provisions of RA 9165 under which the petitioner is prosecuted would convey that De Lima is being charged as a conspirator in the
crime of Illegal Drug Trading. The pertinent provisions of RA 9165 read:

SECTION 3. Definitions. - As used in this Act, the following terms shall mean:

xxxx

(jj) Trading. - Transactions involving the illegal trafficking of dangerous drugs and/or controlled precursors and essential chemicals using electronic devices
such as, but not limited to, text messages, e-mail, mobile or landlines, two-way radios, internet, instant messengers and chat rooms or acting as a broker in
any of such transactions whether for money or any other consideration in violation of this Act.

xxxx

SECTION 5. Sale, Trading, Administration, Dispensation, Delivery, Distribution and Transportation of Dangerous Drugs and/or Controlled Precursors and
Essential Chemicals. - The penalty of life imprisonment to death and a fine ranging from Five hundred thousand pesos (₱500,000.00) to Ten million pesos
(₱10,000,000.00) shall be imposed upon any person, who, unless authorized by law, shall sell, trade, administer, dispense, deliver, give away to another,
distribute, dispatch in transit or transport any dangerous drug, including any and all species of opium poppy regardless of the quantity and purity involved, or
shall act as a broker in any of such transactions.

xxxx

SECTION 26. Attempt or Conspiracy. - Any attempt or conspiracy to commit the following unlawful acts shall be penalized by the same penalty prescribed for
the commission of the same as provided under this Act:

xxxx

(b) Sale, trading, administration, dispensation, delivery, distribution and transportation of any dangerous drug and/or controlled precursor and essential
chemical;

xxxx

SECTION 28. Criminal Liability of Government Officials and Employees. - The maximum penalties of the unlawful acts provided for in this Act shall be
imposed, in addition to absolute perpetual disqualification from any public office, if those found guilty of such unlawful acts are government officials and
employees.

While it may be argued that some facts may be taken as constitutive of some elements of Direct Bribery under the Revised Penal Code (RPC), these facts
taken together with the other allegations in the Information portray a much bigger picture, Illegal Drug Trading. The latter crime, described by the United
Nations Office on Drugs and Crime (UNODC) as "a global illicit trade involving the cultivation, manufacture, distribution and sale of substances," 79necessarily
involves various component crimes, not the least of which is the bribery and corruption of government officials. An example would be reports of recent vintage
regarding billions of pesos' worth of illegal drugs allowed to enter Philippine ports without the scrutiny of Customs officials. Any money and bribery that may
have changed hands to allow the importation of the confiscated drugs are certainly but trivial contributions in the furtherance of the transnational illegal drug
trading - the offense for which the persons involved should be penalized.

Read as a whole, and not picked apart with each word or phrase construed separately, the Information against De Lima goes beyond an indictment for Direct
Bribery under Article 210 of the RPC.80 As Justice Martires articulately explained, the averments on solicitation of money in the Information, which may be
taken as constitutive of bribery, form "part of the description on how illegal drug trading took place at the NBP." The averments on how petitioner asked for and
received money from the NBP inmates simply complete the links of conspiracy between her, Ragos, Dayan and the NBP inmates in willfully and unlawfully
trading dangerous drugs through the use of mobile phones and other electronic devices under Section 5, in relation to Section 3(jj), Section 26(b), and Section
28, of RA 9165.

On this score, that it has not been alleged that petitioner actually participated in the actual trafficking of dangerous drugs and had simply allowed the NBP
inmates to do so is non sequitur given that the allegation of conspiracymakes her liable for the acts of her co-conspirators. As this Court elucidated, it is not
indispensable for a co-conspirator to take a direct part in every act of the crime. A conspirator need not even know of all the parts which the others have to
perform,81 as conspiracy is the common design to commit a felony; it is not participation in all the details of the execution of the crime. 82 As long as the
accused, in one way or another, helped and cooperated in the consummation of a felony, she is liable as a co-principal. 83 As the Information provides, De
Lima's participation and cooperation was instrumental in the trading of dangerous drugs by the NBP inmates. The minute details of this participation and
cooperation are matters of evidence that need not be specified in the Information but presented and threshed out during trial.

Yet, some justices remain adamant in their position that the Information fails to allege the necessary elements of Illegal Drug Trading. Justice Carpio, in
particular, would cite cases supposedly enumerating the elements necessary for a valid Information for Illegal Drug Trading. However, it should be noted that
the subject of these cases was "Illegal Sale" of dangerous drugs -- a crime separate and distinct from "Illegal Trading" averred in the Information against De
Lima. The elements of "Illegal Sale" will necessary differ from the elements of Illegal Trading under Section 5, in relation to Section 3(jj), of RA 9165. The
definitions of these two separate acts are reproduced below for easy reference:

SECTION 3. Definitions. - As used in this Act, the following terms shall mean:

xxxx

(ii) Sell. - Any act of giving away any dangerous drug and/or controlled precursor and essential chemical whether for money or any other consideration.

(jj) Trading. - Transactions involving the illegal trafficking of dangerous drugs and/or controlled precursors and essential chemicals using electronic devices
such as, but not limited to, text messages, e-mail, mobile or landlines, two-way radios, internet, instant messengers and chat rooms or acting as a broker in
any of such transactions whether for money or any other consideration in violation of this Act.

It is obvious from the foregoing that the crime of illegal trading has been written in strokes much broader than that for illegal sale. In fact, an illegal sale of
drugs may be considered as only one of the possible component acts of illegal trading which may be committed through two modes: (1) illegal trafficking using
electronic devices; or (2) acting as a broker in any transactions involved in the illegal trafficking of dangerous drugs.

On this score, the crime of "illegal trafficking" embraces various other offenses punishable by RA 9165. Section 3(r) of RA 9165 provides:

(r) Illegal Trafficking. - The illegal cultivation, culture, delivery, administration, dispensation, manufacture, sale, trading, transportation, distribution, importation,
exportation and possession of any dangerous drug and/or controlled precursor and essential chemical.

In turn, the crimes included in the definition of Illegal Trafficking of drugs are defined as follows:

(a) Administer. - Any act of introducing any dangerous drug into the body of any person, with or without his/her knowledge, by injection, inhalation, ingestion or
other means, or of committing any act of indispensable assistance to a person in administering a dangerous drug to himself/herself unless administered by a
duly licensed practitioner for purposes of medication.

xxxx
(d) Chemical Diversion. - The sale, distribution, supply or transport of legitimately imported, in-transit, manufactured or procured controlled precursors and
essential chemicals, in diluted, mixtures or in concentrated form, to any person or entity engaged in the manufacture of any dangerous drug, and shall include
packaging, repackaging, labeling, relabeling or concealment of such transaction through fraud, destruction of documents, fraudulent use of permits,
misdeclaration, use of front companies or mail fraud.

xxxx

(i) Cultivate or Culture. - Any act of knowingly planting, growing, raising, or permitting the planting, growing or raising of any plant which is the source of a
dangerous drug.

xxxx

(k) Deliver. - Any act of knowingly passing a dangerous drug to another, personally or otherwise, and by any means, with or without consideration.

xxxx

(m) Dispense. - Any act of giving away, selling or distributing medicine or any dangerous drug with or without the use of prescription.

xxxx

(u) Manufacture. - The production, preparation, compounding or processing of any dangerous drug and/or controlled precursor and essential chemical, either
directly or indirectly or by extraction from substances of natural origin, or independently by means of chemical synthesis or by a combination of extraction and
chemical synthesis, and shall include any packaging or repackaging of such substances, design or configuration of its form, or labeling or relabeling of its
container; except that such terms do not include the preparation, compounding, packaging or labeling of a drug or other substances by a duly authorized
practitioner as an incident to his/her administration or dispensation of such drug or substance in the course of his/her professional practice including research,
teaching and chemical analysis of dangerous drugs or such substances that are not intended for sale or for any other purpose.

xxxx

(kk) Use. - Any act of injecting, intravenously or intramuscularly, of consuming, either by chewing, smoking, sniffing, eating, swallowing, drinking or otherwise
introducing into the physiological system of the body, any of the dangerous drugs.

With the complexity of the operations involved in Illegal Trading of drugs, as recognized and defined in RA 9165, it will be quite myopic and restrictive to
require the elements of Illegal Sale-a mere component act-in the prosecution for Illegal Trading.

More so, that which qualifies the crime of Illegal Trafficking to Illegal Trading may make it impossible to provide the details of the elements of Illegal Sale. By
"using electronic devices such as, but not limited to, text messages, email, mobile or landlines, two-way radios, internet, instant messengers and chat rooms,"
the Illegal Trading can be remotely perpetrated away from where the drugs are actually being sold; away from the subject of the illegal sale. With the
proliferation of digital technology coupled with ride sharing and delivery services, Illegal Trading under RA 9165 can be committed without getting one's hand
on the substances or knowing and meeting the seller or buyer. To require the elements of Illegal Sale (the identities of the buyer, seller, the object and
consideration, in Illegal Trade) would be impractical.

The same may be said of the second mode for committing Illegal Trading, or trading by "acting as a broker" in transactions involved in Illegal Trafficking. In this
instance, the accused may neither have physical possession of the drugs nor meet the buyer and seller and yet violate RA 9165. As pointed out by Justice
Perlas-Bernabe, as early as 1916, jurisprudence has defined a broker as one who is simply a middleman, negotiating contracts relative to property with which
he has no custody, viz.:

A broker is generally defined as one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has
no concern; the negotiator between other parties, never acting in his own name, but in the name of those who employed him; he is strictly a middleman and for
some purposes the agent of both parties.84 (Emphasis and underscoring supplied.)

In some cases, this Court even acknowledged persons as brokers even "where they actually took no part in the negotiations, never saw the customer." 85 For
the Court, the primary occupation of a broker is simply bringing "the buyer and the seller together, even if no sale is eventually made. "86 Hence, in indictments
for Illegal Trading, it is illogical to require the elements of Illegal Sale of drugs, such as the identities of the buyer and the seller, the object and
consideration.87 For the prosecution of Illegal Trading of drugs to prosper, proof that the accused "act[ed] as a broker" or brought together the buyer and seller
of illegal drugs "using electronic devices such as, but not limited to, text messages, e-mail, mobile or landlines, two-way radios, internet, instant messengers
and chat rooms" is sufficient.

The DOJ' s designation of the charge as one for Illegal Drug Trading thus holds sway. After all, the prosecution is vested with a wide range of discretion-
including the discretion of whether, what, and whom to charge. 88 The exercise of this discretion depends on a smorgasboard of factors, which are best
appreciated by the prosecutors.89

As such, with the designation of the offense, the recital of facts in the Information, there can be no other conclusion than that petitioner is being charged not
with Direct Bribery but with violation of RA 9165.

Granting without conceding that the information contains averments which constitute the elements of Direct Bribery or that more than one offence is charged or
as ill this case, possibly bribery and violation of RA 9165, still the prosecution has the authority to amend the information at any time before arraignment. Since
petitioner has not yet been arraigned, then the information subject of Criminal Case No. 17-165 can still be amended pursuant to Section 14, Rule 110 of the
Rules of Court which reads:

SECTION 14. Amendment or Substitution. - A complaint or information may be amended, in form or in substance, without leave of court, at any time before the
accused enters his plea. After the plea and during the trial, a formal amendment may only be made with leave of court and when it can be done without
causing prejudice to the rights of the accused.
Now the question that irresistibly demands an answer is whether it is the Sandiganbayan or the RTC that has jurisdiction over the subject matter of Criminal
Case No. 17-165, i.e., violation of RA 9165.

It is basic that jurisdiction over the subject matter in a criminal case is given only by law in the manner and form prescribed by law. 90 It is determined by the
statute in force at the time of the commencement of the action. 91 Indeed, Congress has the plenary power to define, prescribe and apportion the jurisdiction of
various courts. It follows then that Congress may also, by law, provide that a certain class of cases should be exclusively heard and determined by one court.
Such would be a special law that is construed as an exception to the general law on jurisdiction of courts. 92

The pertinent special law governing drug-related cases is RA 9165, which updated the rules provided in RA 6425, otherwise known as the Dangerous Drugs
Act of 1972. A plain reading of RA 9165, as of RA 6425, will reveal that jurisdiction over drug-related cases is exclusively vested with the Regional Trial Court
and no other. The designation of the RTC as the court with the exclusive jurisdiction over drug-related cases is apparent in the following provisions where it
was expressly mentioned and recognized as the only court with the authority to hear drug-related cases:

Section 20. Confiscation and Forfeiture of the Proceeds or Instruments of the Unlawful Act, Including the Properties or Proceeds Derived from the Illegal
Trafficking of Dangerous Drugs and/or Precursors and Essential Chemicals.  - x x x x

After conviction in the Regional Trial Court in the appropriate criminal case filed, the Court shall immediately schedule a hearing for the confiscation and
forfeiture of all the proceeds of the offense and all the assets and properties of the accused either owned or held by him or in the name of some other persons
if the same shall be found to be manifestly out of proportion to his/her lawful income:

xxxx

During the pendency of the case in the Regional Trial Court, no property, or income derived therefrom, which may be confiscated and forfeited, shall be
disposed, alienated or transferred and the same shall be in custodia legis and no bond shall be admitted for the release of the same.

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Section 61. Compulsory Confinement of a Drug Dependent Who Refuses to Apply Under the Voluntary Submission Program.  - x x x

A petition for the confinement of a person alleged to be dependent on dangerous drugs to a Center may be filed by any person authorized by the Board with
the Regional Trial Court of the province or city where such person is found.

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Section 62. Compulsory Submission of a Drug Dependent Charged with an Offense to Treatment and Rehabilitation.  - If a person charged with an offense
where the imposable penalty is imprisonment of less than six (6) years and one (1) day, and is found by the prosecutor or by the court, at any stage of the
proceedings, to be a drug dependent, the prosecutor or the court as the case may be, shall suspend all further proceedings and transmit copies of the record
of the case to the Board.

In the event the Board determines, after medical examination, that public interest requires that such drug dependent be committed to a center for treatment
and rehabilitation, it shall file a petition for his/her commitment with the regional trial court of the province or city where he/she is being investigated or tried: x x
x

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Section 90. Jurisdiction. - The Supreme Court shall designate special courts from among the existing Regional Trial Courts in each judicial region to
exclusively try and hear cases involving violations of this Act. The number of courts designated in each judicial region shall be based on the population and the
number of cases pending in their respective jurisdiction.

The DOJ shall designate special prosecutors to exclusively handle cases involving violations of this Act.

Notably, no other trial court was mentioned in RA 9165 as having the authority to take cognizance of drug-related cases. Thus, in Morales v. Court of
Appeals,93this Court categorically named the RTC as the court with jurisdiction over drug related-cases, as follows:

Applying by analogy the ruling in People v. Simon, People v. De Lara, People v. Santos,  and Ordonez v. Vinarao, the imposable penalty in this case which
involves 0.4587 grams of shabu should not exceed prision correccional. We say by analogy because these cases involved marijuana, not methamphetamine
hydrochloride (shabu). In Section 20 of RA. No. 6425, as amended by Section 17 of RA No. 7659, the maximum quantities of marijuana and
methamphetamine hydrochloride for purposes of imposing the maximum penalties are not the same. For the latter, if the quantity involved is 200 grams or
more, the penalty of reclusion perpetua to death and a fine ranging from ₱500,000 to PIO million shall be imposed. Accordingly, if the quantity involved is
below 200 grams, the imposable penalties should be as follows:

xxxx

Clearly, the penalty which may be imposed for the offense charged in Criminal Case No. 96-8443 would at most be only prision correccional duration is from
six (6) months and one (1) day to six (6) years. Does it follow then that, as the petitioner insists, the RTC has no jurisdiction thereon in view of the amendment
of Section 32 of B.P. Big. 129 by R.A. No. 7691, which vested upon Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts
exclusive original jurisdiction over all offenses punishable with imprisonment not exceeding six (6) years irrespective of the amount of fine and regardless of
other imposable accessory or other penalties? This Section 32 as thus amended now reads:

xxxx

The exception in the opening sentence is of special significance which we cannot disregard. x xx The aforementioned exception refers not only to Section 20
of B.P. Blg. 129 providing for the jurisdiction of Regional Trial Courts in criminal cases, but also to other laws which specifically lodge in Regional Trial Courts
exclusive jurisdiction over specific criminal cases, e. g., (a) Article 360 of the Revised Penal Code, as amended by R.A. Nos. 1289 and 4363 on written
defamation or libel; (b) Decree on Intellectual Property (P. D. No. 49, as amended), which vests upon Courts of First Instance exclusive jurisdiction over the
cases therein mentioned regardless of the imposable penalty; and (c) more appropriately for the case at bar, Section 39 of RA No. 6425, as amended by P.D.
No. 44, which vests on Courts of First Instance, Circuit Criminal Courts, and the Juvenile and Domestic Relations Courts concurrent exclusive original
jurisdiction over all cases involving violations of said Act.

xxxx

That Congress indeed did not intend to repeal these special laws vesting exclusive jurisdiction in the Regional Trial Courts over certain cases is clearly evident
from the exception provided for in the opening sentence of Section 32 of B.P. Blg. 129, as amended by RA No. 7691. These special laws are not, therefore,
covered by the repealing clause (Section 6) of RA No. 7691.

Neither can it be successfully argued that Section 39 of RA. No. 6425, as amended by P.D. No. 44, is no longer operative because Section 44 of B.P. Big. 129
abolished the Courts of First Instance, Circuit Criminal Courts, and Juvenile and Domestic Relations Courts. While, indeed, Section 44 provides that these
courts were to be "deemed automatically abolished" upon the declaration by the President that the reorganization provided in B.P. Blg. 129 had been
completed, this Court should not lose sight of the fact that the Regional Trial Courts merely replaced the Courts of First Instance as clearly borne out by the
last two sentences of Section 44, to wit:

xxxx

Consequently, it is not accurate to state that the "abolition" of the Courts of First Instance carried with it the abolition of their exclusive original jurisdiction in
drug cases vested by Section 39 of R.A. No. 6425, as amended by P. D. No. 44. If that were so, then so must it be with respect to Article 360 of the Revised
Penal Code and Section 57 of the Decree on Intellectual Property. On the contrary, in the resolution of 19 June 1996 in Caro v. Court of Appeals and in the
resolution of 26 February 1997 in Villalon v. Ba/dado, this Court expressly ruled that Regional Trial Courts have the exclusive original jurisdiction over libel
cases pursuant to Article 360 of the Revised Penal Code. In Administrative Order No. 104-96 this Court mandates that:

xxxx

The same Administrative Order recognizes that violations of RA. No. 6425, as amended, regardless of the quantity involved, are to be tried and decided by the
Regional Trial Courts therein designated as special courts. 94 (Emphasis and underscoring supplied)

Yet, much has been made of the terminology used in Section 90 of RA 9165. The dissents would highlight the provision's departure from Section 39 of RA
6425 - the erstwhile drugs law, which provides:

SECTION 39. Jurisdiction of the Circuit Criminal Court. - The Circuit Criminal Court shall have exclusive original jurisdiction over all cases involving offenses
punishable under this Act.

For those in the dissent, the failure to reproduce the phrase "exclusive original jurisdiction" is a clear indication that no court, least of all the RTC, has been
vested with such "exclusive original jurisdiction" so that even the Sandiganbayan can take cognizance and resolve a criminal prosecution for violation of RA
9165.

As thoroughly discussed by Justice Peralta in his Concurring Opinion, such deduction is unwarranted given the clear intent of the legislature not only to retain
the "exclusive original jurisdiction" of the RTCs over violations of the drugs law but to segregate from among the several RTCs of each judicial region some
RTCs that will "exclusively try and hear cases involving violations of [RA 9165)." If at all, the change introduced by the new phraseology of Section 90, RA
9165 is not the deprivation of the RTCs' "exclusive original jurisdiction" but the further restriction of this "exclusive original jurisdiction" to select RTCs of each
judicial region. This intent can be clearly gleaned from the interpellation on House Bill No. 4433, entitled "An Act Instituting the Dangerous Drugs Act of 2002,
repealing Republic Act No. 6425, as amended:"

Initially, Rep. Dilangalen referred to the fact sheet attached to the Bill which states that the measure will undertake a comprehensive amendment to the
existing law on dangerous drugs -- RA No. 6425, as amended. Adverting to Section 64 of the Bill on the repealing clause, he then asked whether the
Committee is in effect amending or repealing the aforecited law. Rep. Cuenco replied that any provision of law which is in conflict with the provisions of the Bill
is repealed and/or modified accordingly.

In this regard, Rep. Dilangalen suggested that if the Committee's intention was only to amend RA No. 6425, then the wording used should be "to amend" and
not "to repeal" with regard to the provisions that are contrary to the provisions of the Bill.

Adverting to Article VIII, Section 60, on Jurisdiction Over Dangerous Drugs Case, which provides that "the Supreme Court shall designate regional trial courts
to have original jurisdiction over all offenses punishable by this Act," Rep. Dilangalen inquired whether it is the Committee's intention that certain RTC salas will
be designated by the Supreme Court to try drug-related offenses, although all RTCs have original jurisdiction over those offenses.

Rep. Cuenco replied in the affirmative. He pointed that at present, the Supreme Court's assignment of drug cases to certain judges is not exclusive because
the latter can still handle cases other than drug-related cases. He added that the Committee's intention is to assign drug-related cases to judges who will
handle exclusively these cases assigned to them.

In this regard, Rep. Dilangalen stated that, at the appropriate time, he would like to propose the following amendment; "The Supreme Court shall designate
specific salas of the RTC to try exclusively offenses related to drugs."

Rep. Cuenca agreed therewith, adding that the Body is proposing the creation of exclusive drug courts because at present, almost all of the judges are
besieged by a lot of drug cases some of which have been pending for almost 20 years. 95 (Emphasis and underscoring supplied.)

Per the "Records of the Bilateral Conference Committee on the Disagreeing Provisions of Senate Bill No. 1858 and House Bill No. 4433," the term
"designation" of R TCs that will exclusively handle drug-related offenses was used to skirt the budgetary requirements that might accrue by the "creation" of
exclusive drugs courts. It was never intended to divest the R TCs of their exclusive original jurisdiction over drug-related cases. The Records are clear:
THE CHAIRMAN (REP. CUENCO). x x x [W]e would like to propose the creation of drug courts to handle exclusively drug cases; the imposition of a 60-day
deadline on courts within which to decide drug cases; and No. 3, provide penalties on officers of the law and government prosecutors for mishandling and
delaying drugs cases.

We will address these concerns one by one.

1. The possible creation of drugs courts to handle exclusively drug cases. Any comments?

xxxx

THE CHAIRMAN (SEN. BARBERS). We have no objection to this proposal, Mr. Chairman. As a matter of fact, this is one of the areas where we come into an
agreement when we were in Japan. However, I just would like to add a paragraph after the word "Act" in Section 86 of the Senate versions, Mr. Chairman. And
this is in connection with the designation of special courts by "The Supreme Court shall designate special courts from among the existing Regional Trial Courts
in each judicial region to exclusively try and hear cases involving violations of this Act. The number of court designated in each judicial region shall be based
on the population and the number of pending cases in their respective jurisdiction." That is my proposal, Mr. Chairman.

THE CHAIRMAN (REP. CUENCO). We adopt the same proposal.

xxxx

THE CHAIRMAN (SEN. BARBERS). I have no problem with that, Mr. Chairman, but I'd like to call your attention to the fact that my proposal is only
for designation because if it is for a creation that would entail another budget, Mr. Chairman. And almost always, the Department of Budget would tell us at the
budget hearing that we lack funds, we do not have money. So that might delay the very purpose why we want the RTC or the municipal courts to handle
exclusively the drug cases. That's why my proposal is designation not creation.

THE CHAIRMAN (REP. CUENCO). Areglado. No problem, designation. Approved. 96

The exclusive original jurisdiction over violations of RA 9165 is not transferred to the Sandiganbayan whenever the accused occupies a position classified as
Grade 27 or higher, regardless of whether the violation is alleged as committed in relation to office. The power of the Sandiganbayan to sit in judgment of high-
ranking government officials is not omnipotent. The Sandiganbayan's jurisdiction is circumscribed by law and its limits are currently defined and prescribed by
RA 10660,97 which amended Presidential Decree No. (PD) 1606.98 As it now stands, the Sandiganbayan has jurisdiction over the following:

SEC. 4. Jurisdiction. - The Sandiganbayan shall exercise exclusive original jurisdiction in all cases involving:

a. Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, and Chapter II,
Section 2, Title VII, Book II of the Revised Penal Code, where one or more of the accused are officials occupying the following positions in the government,
whether in a permanent, acting or interim capacity, at the time of the commission of the offense:

(1) Officials of the executive branch occupying the positions of regional director and higher, otherwise classified as Grade '27' and higher, of the Compensation
and Position Classification Act of 1989 (Republic Act No. 6758), specifically including:

xxxx

(2) Members of Congress and officials thereof classified as Grade '27' and higher under the Compensation and Position Classification Act of 1989;

(3) Members of the judiciary without prejudice to the provisions of the Constitution;

(4) Chairmen and members of the Constitutional Commissions, without prejudice to the provisions of the Constitution; and

(5) All other national and local officials classified as Grade '27' and higher under the Compensation and Position Classification Act of 1989.

b. Other offenses or felonies whether simple or complexed with other crimes committed by the public officials and employees mentioned in subsection a. of
this section in relation to their office.

c. Civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986. Provided, That the Regional Trial
Court shall have exclusive original jurisdiction where the information: (a) does not allege any damage to the government or any bribery; or (b) alleges damage
to the government or bribery arising from the same or closely related transactions or acts in an amount not exceeding One Million pesos (₱l,000,000.00).

The foregoing immediately betrays that the Sandiganbayan primarily sits as a special anti-graft court pursuant to a specific injunction in the 1973
Constitution.99 Its characterization and continuation as such was expressly given a constitutional fiat under Section 4, Article XI of the 1987 Constitution, which
states:

SECTION 4. The present anti-graft court known as the Sandiganbayan shall continue to function and exercise its jurisdiction as now or hereafter may be
provided by law.

It should occasion no surprise, therefore, that the Sandiganbayan is without jurisdiction to hear drug-related cases. Even Section 4(b) of PD 1606, as amended
by RA 10660, touted by the petitioner and the dissents as a catchall provision, does not operate to strip the R TCs of its exclusive original jurisdiction over
violations of RA 9165. As pointed out by Justices Tijam and Martires, a perusal of the drugs law will reveal that public officials were never considered excluded
from its scope. Hence, Section 27 of RA 9165 punishes government officials found to have benefited from the trafficking of dangerous drugs, while Section 28
of the law imposes the maximum penalty on such government officials and employees. The adverted sections read:

SECTION 27. Criminal Liability of a Public Officer or Employee for Misappropriation, Misapplication or Failure to Account for the Confiscated, Seized and/or
Surrendered Dangerous Drugs, Plant Sources of Dangerous Drugs, Controlled Precursors and Essential Chemicals, Instruments/Paraphernalia and/or
Laborat01y Equipment Including the Proceeds or Properties Obtained from the Unlawful Act Committed  - The penalty of life imprisonment to death and a fine
ranging from Five hundred thousand pesos (P500,000.00) to Ten million pesos (Pl0,000,000.00), in addition to absolute perpetual disqualification from any
public office, shall be imposed upon any public officer or employee who misappropriates, misapplies or fails to account for confiscated, seized or surrendered
dangerous drugs, plant sources of dangerous drugs, controlled precursors and essential chemicals, instruments/paraphernalia and/or laboratory equipment
including the proceeds or properties obtained from the unlawful acts as provided for in this Act.

Any elective local or national official found to have benefited from the proceeds of the trafficking of dangerous drugs as prescribed in this Act, or have received
any financial or material contributions or donations from natural or juridical persons found guilty of trafficking dangerous drugs as prescribed in this Act, shall
be removed from office and perpetually disqualified from holding any elective or appointive positions in the government, its divisions, subdivisions, and
intermediaries, including government-owned or -controlled corporations.

SECTION 28. Criminal Liability of Government Officials and Employees.  - The maximum penalties of the unlawful acts provided for in this Act shall be
imposed, in addition to absolute perpetual disqualification from any public office, if those found guilty of such unlawful acts are government officials and
employees. (Emphasis supplied)

Section 4(b) of PD 1606, as amended by RA 10660, provides but the general rule, couched in a "broad and general phraseology. " 100 Exceptions abound.
Besides the jurisdiction on written defamations and libel, as illustrated in Morales 101and People v. Benipayo, 102 the RTC is likewise given "exclusive original
jurisdiction to try and decide any criminal action or proceedings for violation of the Omnibus Election Code," 103 regardless of whether such violation was
committed by public officers occupying positions classified as Grade 27 or higher in relation to their offices. In fact, offenses committed by members of the
Armed Forces in relation to their office, i.e., in the words of RA 7055,104"service-connected crimes or offenses," are not cognizable by the Sandiganbayan but
by court-martial.

Certainly, jurisdiction over offenses and felonies committed by public officers is not determined solely by the pay scale or by the fact that they were committed
"in relation to their office." In determining the forum vested with the jurisdiction to try and decide criminal actions, the laws governing the subject matter of the
criminal prosecution must likewise be considered.

In this case, RA 9165 specifies the RTC as the court with the jurisdiction to "exclusively try and hear cases involving violations of [RA 9165)." This is an
exception, couched in the special law on dangerous drugs, to the general rule under Section 4(b) of PD 1606, as amended by RA 10660. It is a canon of
statutory construction that a special law prevails over a general law and the latter is to be considered as an exception to the general. 105

Parenthetically, it has been advanced that RA 10660 has repealed Section 90 of RA 9165. However, a closer look at the repealing clause of RA 10660 will
show that there is no express repeal of Section 90 of RA 9165 and well-entrenched is the rule that an implied repeal is disfavored. It is only accepted upon the
clearest proof of inconsistency so repugnant that the two laws cannot be enforced. 106 The presumption against implied repeal is stronger when of two laws
involved one is special and the other general.107 The mentioned rule in statutory construction that a special law prevails over a general law applies regardless
of the laws' respective dates of passage. Thus, this Court ruled:

x x x [I]t is a canon of statutory construction that a special law prevails over a general law - regardless of their dates of passage - and the special is to be
considered as remaining an exception to the general.

So also, every effort must be exerted to avoid a conflict between statutes. If reasonable construction is possible, the laws must be reconciled in that manner.

Repeals of laws by implication moreover are not favored, and the mere repugnancy between two statutes should be very clear to warrant the court in holding
that the later in time repeals the other.108

To reiterate for emphasis, Section 4(b) of PD 1606, as amended by RA 10660, is the general law on jurisdiction of the Sandiganbayan over crimes and
offenses committed by high-ranking public officers in relation to their office; Section 90, RA 9165 is the special law excluding from the Sandiganbayan's
jurisdiction violations of RA 9165 committed by such public officers. In the latter case, jurisdiction is vested upon the RTCs designated by the Supreme Court
as drugs court, regardless of whether the violation of RA 9165 was committed in relation to the public officials' office.

The exceptional rule provided under Section 90, RA 9165 relegating original exclusive jurisdiction to RTCs specially designated by the Supreme Court logically
follows given the technical aspect of drug-related cases. With the proliferation of cases involving violation of RA 9165, it is easy to dismiss them as common
and untechnical. However, narcotic substances possess unique characteristics that render them not readily identifiable. 109 In fact, they must first be subjected
to scientific analysis by forensic chemists to determine their composition and nature. 110Thus, judges presiding over designated drugs courts are specially
trained by the Philippine Judicial Academy (PhilJa) and given scientific instructions to equip them with the proper tools to appreciate pharmacological evidence
and give analytical insight upon this esoteric subject. After all, the primary consideration of RA 9165 is the fact that the substances involved are, in fact,
dangerous drugs, their plant sources, or their controlled precursors and essential chemicals. Without a doubt, not one of the Sandiganbayan justices were
provided with knowledge and technical expertise on matters relating to prohibited substances.

Hard figures likewise support the original and exclusive jurisdiction of the RTCs over violations of RA 9165. As previously stated, as of June 30, 2017, there
are 232,557 drugs cases pending before the RTCs. On the other hand, not even a single case filed before the Sandiganbayan from February 1979 to June 30,
2017 dealt with violations of the drugs law. Instead, true to its designation as an anti-graft court, the bulk of the cases filed before the Sandiganbayan involve
violations of RA 3019, entitled the "Anti-Graft and Corrupt Practices Act" and malversation. 111 With these, it would not only be unwise but reckless to allow the
tribunal uninstructed and inexperienced with the intricacies of drugs cases to hear and decide violations of RA 9165 solely on account of the pay scale of the
accused.

Likewise of special significance is the proviso introduced by RA 10660 which, to reiterate for emphasis, states:

Provided, That the Regional Trial Court shall have exclusive original jurisdiction where the information: (a) does not allege any damage to the government or
any bribery; or (b) alleges damage to the government or bribery arising from the same or closely related transactions or acts in an amount not exceeding One
million pesos (₱l,000,000.00).

The clear import of the new paragraph introduced by RA 10660 is to streamline the cases handled by the Sandiganbayan by delegating to the RTCs some
cases involving high-ranking public officials. With the dissents' proposition, opening the Sandiganbayan to the influx of drug-related cases, RA 10660 which
was intended to unclog the dockets of the Sandiganbayan would all be for naught. Hence, sustaining the RTC's jurisdiction over drug-related cases despite the
accused's high-ranking position, as in this case, is all the more proper.
Even granting arguendo that the Court declares the Sandiganbayan has jurisdiction over the information subject of Criminal Case No. 17-165, still it will not
automatically result in the release from detention and restore the liberty and freedom of petitioner. The R TC has several options if it dismisses the criminal
case based on the grounds raised by petitioner in her Motion to Quash.

Under Rule 117 of the Rules of Court, the trial court has three (3) possible alternative actions when confronted with a Motion to Quash:

1. Order the amendment of the Infonnation;

2. Sustain the Motion to Quash; or

3. Deny the Motion to Quash.

The first two options are available to the trial court where the motion to quash is meritorious. Specifically, as to the first option, this court had held that should
the Information be deficient or lacking in any material allegation, the trial court can order the amendment of the Information under Section 4, Rule 117 of the
Rules of Court, which states:

SECTION 4. Amendment of Complaint or Information. - If the motion to quash is based on an alleged defect of the complaint or information which can be
cured by amendment, the court shall order that an amendment be made.

If it is based on the ground that the facts charged do not constitute an offense, the prosecution shall be given by the court an opportunity to correct the defect
by amendment. The motion shall be granted if the prosecution fails to make the amendment, or the complaint or information still suffers from the same defect
despite the amendment.

The failure of the trial court to order the correction of a defect in the Information curable by an amendment amounts to an arbitrary exercise of power. So, this
Court held in Dio v. People:

This Court has held that failure to provide the prosecution with the opportunity to amend is an arbitrary exercise of power. In People v. Sandiganbayan (Fourth
Division): When a motion to quash is filed challenging the validity and sufficiency of an Information, and the defect may be cured by amendment, courts must
deny the motion to quash and order the prosecution to file an amended Information. Generally, a defect pertaining to the failure of an Information to charge
facts constituting an offense is one that may be corrected by an amendment. In such instances, courts are mandated not to automatically quash the
Information; rather, it should grant the prosecution the opportunity to cure the defect through an amendment. This rule allows a case to proceed without undue
delay. By allowing the defect to be cured by simple amendment, unnecessary appeals based on technical grounds, which only result to prolonging the
proceedings, are avoided.

More than this practical consideration, however, is the due process underpinnings of this rule. As explained by this Court in People v. Andrade, the State, just
like any other litigant, is entitled to its day in court. Thus, a court's refusal to grant the prosecution the opportunity to amend an Information, where such right is
expressly granted under the Rules of Court and affirmed time and again in a string of Supreme Court decisions, effectively curtails the State's right to due
process.112

Notably, the defect involved in Dio was the Information's failure to establish the venue - a matter of jurisdiction in criminal cases. Thus, in the case at bar where
petitioner has not yet been arraigned, the court a quo has the power to order the amendment of the February 17, 2017 Information filed against the petitioner.
This power to order the amendment is not reposed with this Court in the exercise of its certiorari powers.

Nevertheless, should the trial court sustain the motion by actually ordering the quashal of the Infonnation, the prosecution is not precluded from filing another
information. An order sustaining the motion to quash the information would neither bar another prosecution 113 or require the release of the accused from
custody. Instead, under Section 5, Rule 117 of the Rules of Court, the trial court can simply order that another complaint or information be filed without
discharging the accused from custody. Section 5, Rule 117 states, thus:

Section 5. Effect of sustaining the motion to quash. - If the motion to quash is sustained, the court may order that another complaint or information be filed
except as provided in Section 6 of this rule. If the order is made, the accused, if in custody, shall not be discharged unless admitted to bail. If no order is made
or if having been made, no new information is filed within the time specified in the order or within such further time as the court may allow for good cause, the
accused, if in custody, shall be discharged unless he is also in custody for another charge.

Section 6, Rule 117, adverted to in the foregoing provision, prevents the re-filing of an information on only two grounds: that the criminal action or liability has
already been extinguished, and that of double jeopardy. Neither was invoked in petitioner's Motion to Quash filed before the court a quo.

The third option available to the trial court is the denial of the motion to quash. Even granting, for the nonce, the petitioner's position that the trial court's
issuance of the warrant for her arrest is an implied denial of her Motion to Quash, the proper remedy against this court action is to proceed to trial, not to file
the present petition for certiorari. This Court in Galzote v. Briones reiterated this established doctrine:

A preliminary consideration in this case relates to the propriety of the chosen legal remedies availed of by the petitioner in the lower courts to question the
denial of his motion to quash. In the usual course of procedure, a denial of a motion to quash filed by the accused results in the continuation of the trial and the
determination of the guilt or innocence of the accused. If a judgment of conviction is rendered and the lower court's decision of conviction is appealed, the
accused can then raise the denial of his motion to quash not only as an error committed by the trial court but as an added ground to overturn the latter's ruling.

In this case, the petitioner did not proceed to trial but opted to immediately question the denial of his motion to quash via a special civil action
for certiorari under Rule 65 of the Rules of Court.

As a rule, the denial of a motion to quash is an interlocutory order and is not appealable; an appeal from an interlocutory order is not allowed under Section 1
(b), Rule 41 of the Rules of Court. Neither can it be a proper subject of a petition for certiorari which can be used only in the absence of an appeal or any other
adequate, plain and speedy remedy. The plain and speedy remedy upon denial of an interlocutory order is to proceed to trial as discussed
above.114 (Emphasis and underscoring supplied)
At this juncture, it must be stressed yet again that the trial court has been denied the opportunity to act and rule on petitioner's motion when the latter jumped
the gun and prematurely repaired posthaste to this Court, thereby immobilizing the trial court in its tracks. Verily, De Lima should have waited for the decision
on her motion to quash instead of prematurely filing the instant recourse.

In the light of the foregoing, the best course of action for the Court to take is to dismiss the petition and direct the trial court to rule on the Motion to Quash and
undertake all the necessary proceedings to expedite the adjudication of the subject criminal case.

RESPONDENT JUDGE DID NOT ABUSE HER DISCRETION IN FINDING PROBABLE CAUSE TO ORDER THE PETITIONER'S ARREST

The basis for petitioner's contention that respondent judge committed grave abuse of discretion in issuing the February 23, 2017 Order 115 finding probable
cause to arrest the petitioner is two-pronged: respondent judge should have first resolved the pending Motion to Quash before ordering the petitioner's arrest;
and there is no probable cause to justify the petitioner's arrest.

Grave abuse of discretion is the capricious and whimsical exercise of judgment equivalent to an evasion of positive duty or a virtual refusal to act at all in
contemplation of the law.116

In the present case, the respondent judge had no positive duty to first resolve the Motion to Quash before issuing a warrant of arrest. There is no rule of
procedure, statute, or jurisprudence to support the petitioner's claim. Rather, Sec.5(a), Rule 112 of the Rules of Court 117 required the respondent judge to
evaluate the prosecutor's resolution and its supporting evidence within a limited period of only ten (10) days, viz.:

SEC. 5. When warrant of arrest may issue. -

(a) By the Regional Trial Court. - Within ten (10) days from the filing of the complaint or information, the judge shall personally evaluate the resolution of the
prosecutor and its supporting evidence. He may immediately dismiss the case if the evidence on record clearly fails to establish probable cause. If he finds
probable cause, he shall issue a warrant of arrest, or a commitment order when the complaint or information was filed pursuant to Section 6 of this Rule. In
case of doubt on the existence of probable cause, the judge may order the prosecutor to present additional evidence within five (5) days from notice and the
issue must be resolved by the court within thirty (30) days from the filing of the complaint or information.

It is not far-fetched to conclude, therefore, that had the respondent judge waited longer and first attended to the petitioner's Motion to Quash, she would have
exposed herself to a possible administrative liability for failure to observe Sec. 5(a), Rule 112 of the Rules of Court. Her exercise of discretion was sound and
in conformity with the provisions of the Rules of Court considering that a Motion to Quash may be filed and, thus resolved by a trial court judge, at any time
before the accused petitioner enters her plea.118 What is more, it is in accord with this Court's ruling in Marcos v. Cabrera-Faller119that "[a]s the presiding judge,
it was her task, upon the filing of the Information, to first and foremost determine the existence or non-existence of probable cause for the arrest of the
accused."

This Court's ruling in Miranda v. Tuliao 120does not support the petitioner's position. Miranda does not prevent a trial court from ordering the arrest of an
accused even pending a motion to quash the infonnation. At most, it simply explains that an accused can seek judicial relief even if he has not yet been taken
in the custody of law.

Undoubtedly, contrary to petitioner's postulation, there is no rule or basic principle requiring a trial judge to first resolve a motion to quash, whether grounded
on lack of jurisdiction or not, before issuing a warrant of arrest. As such, respondent judge committed no grave abuse of discretion in issuing the assailed
February 23, 2017 Order even before resolving petitioner's Motion to Quash. There is certainly no indication that respondent judge deviated from the usual
procedure in finding probable cause to issue the petitioner's arrest.

And yet, petitioner further contends that the language of the February 23, 2017 Order violated her constitutional rights and is contrary to the doctrine in Soliven
v. Makasiar. 121Petitioner maintains that respondent judge failed to personally determine the probable cause for the issuance of the warrant of arrest since, as
stated in the assailed Order, respondent judge based her findings on the evidence presented during the preliminary investigation and not on the report and
supporting documents submitted by the prosecutor.122 This hardly deserves serious consideration.

Personal determination of the existence of probable cause by the judge is required before a warrant of arrest may issue. The Constitution 123 and the Revised
Rules of Criminal Procedure124 command the judge "to refrain from making a mindless acquiescence to the prosecutor's findings and to conduct his own
examination of the facts and circumstances presented by both parties. " 125 This much is clear from this Court's n1ling in Soliven cited by the petitioner, viz.:

What the Constitution underscores is the exclusive and personal responsibility of the issuing judge to satisfy himself the existence of probable cause. In
satisfying himself of the existence of probable cause for the issuance of a warrant of arrest, the judge is not required to personally examine the complainant
and his witnesses. Following established doctrine and procedure, he shall: (1) personally evaluate the report and the supporting documents submitted by the
fiscal regarding the existence of probable cause and, on the basis thereof, issue a warrant of arrest; or (2) if on the basis thereof he finds no probable cause,
he may disregard the fiscal's report and require the submission of supporting affidavits of witnesses to aid him in arriving at a conclusion as to the existence of
probable cause.126

It must be emphasized, however, that in determining the probable cause to issue the warrant of arrest against the petitioner, respondent judge evaluated the
Information and "all the evidence presented during the preliminary investigation conducted in this case." The assailed February 23, 2017 Order is here restated
for easy reference and provides, thusly:

After a careful evaluation of the herein Information and all the evidence presented during the preliminary investigation conducted in this case by the
Department of Justice, Manila, the Court finds sufficient probable cause for the issuance of Warrants of Arrest against all the accused LEILA M. DE LIMA x x
x.127 (Emphasis supplied.)

As the prosecutor's report/resolution precisely finds support from the evidence presented during the preliminary investigation, this Court cannot consider the
respondent judge to have evaded her duty or refused to perform her obligation to satisfy herself that substantial basis exists for the petitioner's arrest. "All the
evidence presented during the preliminary investigation" encompasses a broader category than the "supporting evidence" required to be evaluated
in Soliven. It may perhaps even be stated that respondent judge performed her duty in a manner that far exceeds what is required of her by the rules when she
reviewed all the evidence, not just the supporting documents. At the very least, she certainly discharged a judge's duty in finding probable cause for the
issuance of a warrant, as described in Ho v. People:
The above rulings in Soliven, Inting and Lim, Sr. were iterated in Allado v. Diokno, where we explained again what probable cause means. Probable cause for
the issuance of a warrant of arrest is the existence of such facts and circumstances that would lead a reasonably discreet and prudent person to believe that
an offense has been committed by the person sought to be arrested. Hence, the judge, before issuing a warrant of arrest, 'must satisfy himself that based on
the evidence submitted, there is sufficient proof that a crime has been committed and that the person to be arrested is probably guilty thereof' At this stage of
the criminal proceeding, the judge is not yet tasked to review in detail the evidence submitted during the preliminary investigation. It is sufficient that he
personally evaluates such evidence in determining probable cause. In Webb v. De Leon we stressed that the judge merely determines the probability, not the
certainty, of guilt of the accused and, in doing so, he need not conduct a de novo hearing. He simply personally reviews the prosecutor's initial determination
finding probable cause to see if it is supported by substantial evidence."

xxxx

x x x [T]he judge cannot rely solely on the report of the prosecutor in finding probable cause to justify the issuance of a warrant of arrest. Obviously and
understandably, the contents of the prosecutor's report will support his own conclusion that there is reason to charge the accused for an offense and hold him
for trial. However, the judge must decide independently. Hence, he must have supporting evidence, other than the prosecutor's bare report, upon which to
legally sustain his own findings on the existence (or non-existence) of probable cause to issue an arrest order. This responsibility of determining personally
and independently the existence or nonexistence of probable cause is lodged in him by no less than the most basic law of the land. Parenthetically, the
prosecutor could ease the burden of the judge and speed up the litigation process by forwarding to the latter not only the information and his bare resolution
finding probable cause, but also so much of the records and the evidence on hand as to enable His Honor to make his personal and separate judicial finding
on whether to issue a warrant of arrest.

Lastly, it is not required that the complete or entire records of the case during the preliminary investigation be submitted to and examined by the judge. We do
not intend to unduly burden trial courts by obliging them to examine the complete records of every case all the time simply for the purpose of ordering the
arrest of an accused. What is required, rather, is that the judge must have sufficient supporting documents (such as the complaint, affidavits, counter-affidavits,
sworn statements of witnesses or transcript of stenographic notes, if any) upon which to make his independent judgment or, at the very least, upon which to
verify the findings of the prosecutor as to the existence of probable cause. The point is: he cannot rely solely and entirely on the prosecutor's recommendation,
as Respondent Court did in this case. Although the prosecutor enjoys the legal presumption of regularity in the performance of his official duties and functions,
which in turn gives his report the presumption of accuracy, the Constitution, we repeat, commands the judge to personally determine probable cause in the
issuance of warrants of arrest. This Court has consistently held that a judge fails in his bounden duty if he relies merely on the certification or the report of the
investigating officer.128 (Emphasis supplied.)

Notably, for purposes of determining the propriety of the issuance of a warrant of arrest, the judge is tasked to merely determine the probability, not the
certainty, of the guilt of the accused.129 She is given wide latitude of discretion in the determination of probable cause for the issuance of warrants of arrest. 130 A
finding of probable cause to order the accused's arrest does not require an inquiry into whether there is sufficient evidence to procure a conviction. 131 It is
enough that it is believed that the act or omission complained of constitutes the offense charged. 132

Again, per the February 23, 2017 Order, respondent judge evaluated all the evidence presented during the preliminary investigation and on the basis thereof
found probable cause to issue the warrant of arrest against the petitioner. This is not surprising given that the only evidence available on record are those
provided by the complainants and the petitioner, in fact, did not present any counter-affidavit or evidence to controvert this. Thus, there is nothing to disprove
the following preliminary findings of the DOJ prosecutors relative to the allegations in the Information filed in Criminal Case No. 17-165:

Thus, from November 2012 to March 2013, De Lima[,] Ragos and Dayan should be indicted for violation of Section 5, in relation to Section 3Gj), Section 26(b)
and Section 28, of R.A. 9165, owing to the delivery of PS million in two (2) occasions, on 24 November 2012 and 15 December 2012, to Dayan and De Lima.
The monies came inmate Peter Co [were] proceeds from illicit drug trade, which were given to support the senatorial bid of De Lima.

Also in the same period, Dayan demanded from Ragos money to support the senatorial bid of De Lima. Ragos demanded and received ₱100,000 tara from
each of the high-profile inmates in exchange for privileges, including their illicit drug trade. Ablen collected the money for Ragos who, in turn, delivered them to
Dayan at De Lima's residence.133

The foregoing findings of the DOJ find support in the affidavits and testimonies of several persons. For instance, in his Affidavit dated September 3, 2016, NBI
agent Jovencio P. Ablen, Jr. narrated, viz.:

21. On the morning of 24 November 2012, I received a call from Dep. Dir. Ragos asking where I was. I told him I was at home. He replied that he will fetch me
to accompany him on a very important task.

22. Approximately an hour later, he arrived at my house. I boarded his vehicle, a Hyundai Tucson, with plate no. RGU910. He then told me that he will deliver
something to the then Secretary of Justice, Sen. Leila De Lima. He continued and said "Nior confidential 'to. Tayong dalawa lang ang nakakaalam nito.
Dadalhin natin yung quota kay Lola. SM 'yang nasa bag. Tingnan mo."

23. The black bag he was referring to was in front of my feet. It [was a] black handbag. When I opened the bag, I saw bundles of One Thousand Peso
bills.1âwphi1

24. At about 10 o'clock in the morning, we arrived at the house located at Laguna Bay corner Subic Bay Drive, South Bay Village, Paranaque City.

25. Dep. Dir. Ragos parked his vehicle in front of the house. We both alighted the vehicle but he told me to stay. He then proceeded to the house.

26. From our parked vehicle, I saw Mr. Ronnie Dayan open the gate. Dep. Dir. Ragos then handed the black handbag containing bundles of one thousand
peso bills to Mr. Dayan.

27. At that time, I also saw the then DOJ Sec. De Lima at the main door of the house. She was wearing plain clothes which is commonly known referred to
as "duster."

28. The house was elevated from the road and the fence was not high that is why I was able to clearly see the person at the main door, that is, Sen. De Lima.

29. When Dep. Dir. Ragos and Mr. Dayan reached the main door, I saw Mr. Dayan hand the black handbag to Sen. De Lima, which she received. The three of
them then entered the house.
30. After about thirty (30) minutes, Dep. Dir. Ragos went out of the house. He no longer has the black handbag with him.

31. We then drove to the BuCor Director's Quarters in Muntinlupa City. While cruising, Dep. Dir. Ragos told me "Nior 'wag kang maingay kahit kanino at wala
kang nakita ha," to which I replied "Sabi mo e. e di wala akong nakita."

32. On the morning of 15 December 2012, Dep. Dir. Ragos again fetched me from my house and we proceeded to the same house located at Laguna Bay
comer Subic Bay Drive, South Bay Village, Paranaque City.

33. That time, I saw a plastic bag in front of my feet. I asked Dep. Dir. Ragos "Quota na naman Sir?"Dep. Dir. Ragos replied "Ano pa nga ba, 'tang ina sila lang
meron. "134

Petitioner's co-accused, Rafael Ragos, recounted in his own Affidavit dated September 26, 2016 a similar scenario:

8. One morning on the latter part of November 2012, I saw a black handbag containing a huge sum of money on my bed inside the Director's Quarters of the
BuCor. I looked inside the black handbag and saw that it contains bundles of one thousand peso bills.

9. I then received a call asking me to deliver the black handbag to Mr. Ronnie Dayan. The caller said the black handbag came from Peter Co and it
contains "Limang Manoi<' which means Five Million Pesos (Php5,000,000.00) as a "manoR' refers to One Million Pesos (Php 1,000,000.00) in the vernacular
inside the New Bilibid Prison.

10. As I personally know Mr. Dayan and knows that he stays in the house of the then DOJ Sec. Leila M. De Lima located at Laguna Bay corner Subic Bay
Drive, South Bay Village, Paranaque City, I knew I had to deliver the black handbag to Sen. De Lima at the said address.

11. Before proceeding to the house of Sen. De Lima at the above[-]mentioned address, I called Mr. Ablen to accompany me in delivering the money. I told him
we were going to do an important task.

12. Mr. Ablen agreed to accompany me so I fetched him from his house and we proceeded to the house of Sen. De Lima at the above-mentioned address.

13. While we were in the car, I told Mr. Ablen that the important task we will do is deliver Five Million Pesos (Php5,000,000.00) "Quota" to Sen. De Lima. I also
told him that the money was in the black handbag that was on the floor of the passenger seat (in front of him) and he could check it, to which Mr. Ablen
complied.

14. Before noon, we arrived at the house of Sen. De Lima located at Laguna Bay corner Subic Bay Drive, South Bay Village, Paranaque City.

15. I parked my vehicle in front of the house. Both Mr. Ablen and I alighted from the vehicle but I went to the gate alone carrying the black handbag containing
the Five Million Pesos (Php5,000,000.00).

16. At the gate, Mr. Ronnie Dayan greeted me and opened the gate for me. I then handed the handbag containing the money to Mr. Dayan.

17. We then proceeded to the main door of the house where Sen. De Lima was waiting for us. At the main door, Mr. Dayan handed the black handbag to Sen.
De Lima, who received the same. We then entered the house.

18. About thirty minutes after, I went out of the house and proceeded to my quarters at the BuCor, Muntinlupa City.

19. One morning in the middle part of December 2012, I received a call to again deliver the plastic bag containing money from Peter Co to Mr. Ronnie Dayan.
This time the money was packed in a plastic bag left on my bed inside my quarters at the BuCor, Muntinlupa City. From the outside of the bag, I could easily
perceive that it contains money because the bag is translucent.

20. Just like before, I fetched Mr. Ablen from his house before proceeding to the house of Sen. De Lima located at Laguna Bay corner Subic Bay Drive, South
Bay Village, Paranaque City, where I know I could find Mr. Dayan.

21. In the car, Mr. Ablen asked me if we are going to deliver "quota." I answered yes.

22. We arrived at the house of Sen. De Lima at the above[-]mentioned address at noontime. I again parked in front of the house.

23. I carried the plastic bag containing money to the house. At the gate, I was greeted by Mr. Ronnie Dayan. At that point, I handed the bag to Mr. Dayan. He
received the bag and we proceeded inside the house. 135

The source of the monies delivered to petitioner De Lima was expressly bared by several felons incarcerated inside the NBP. Among them is Peter Co, who
testified in the following manner:

6. Noong huling bahagi ng 2012, sinabi sa akin ni Hans Tanna nanghihingi ng kontribusyon sa mga Chinese sa Maximum Security Compound ng NBP si
dating DOJ Sec. De Lima para sa kanyang planong pagtakbo sa senado sa 2013 Elections. Dalawang beses akong nagbigay ng tig-P5 Million para tugunan
ang hiling ni Sen. De Lima, na dating DOJ Secretary;

7. Binigay ko ang mga halagang ito kay Hans Tan para maibigay kay Sen. Leila De Lima na datingDOJ Secretary. Sa parehong pagkakataon, sinabihan na
lang ako ni Hans Tan na naibigay na ang pera kay Ronnie Dayan na siyang tumatanggap ng pera para kay dating DOJ Sec. De Lima Sinabi rin niHans
Tanna ang nagdeliver ng pera ay si dating OIC ng BuCor na si Rafael Ragos.

8. Sa kabuuan, nakapagbigay ang mga Chinese sa loob ng Maximum ng PIO Million sa mga huling bahagi ng taong 2012 kay dating DOJ Sec. De Lima para
sa kanyang planong pagtakbo sa senado sa2013 Elections. Ang mga perang ito ay mula sa pinagbentahan ng illegal na droga. 136
All these, at least preliminarily, outline a case for illegal drug trading committed in conspiracy by the petitioner and her co-accused. Thus, the Court cannot
sustain the allegation that respondent judge committed grave abuse of discretion in issuing the assailed Order for petitioner's arrest.

Petitioner would later confine herself to the contention that the prosecution's evidence is inadmissible, provided as they were by petitioner's co-accused who
are convicted felons and whose testimonies are but hearsay evidence.

Nowhere in Ramos v. Sandiganbayan 137 - the case relied upon by petitioner - did this Court rule that testimonies given by a co-accused are of no value. The
Court simply held that said testimonies should be received with great caution, but not that they would not be considered. The testimony of Ramos' co-accused
was, in fact, admitted in the cited case. Furthermore, this Court explicitly ruled in Estrada v. Office of the Ombudsman138that hearsay evidence is admissible
during preliminary investigation. The Court held thusly:

Thus, probable cause can be established with hearsay evidence, as long as there is substantial basis for crediting the hearsay. Hearsay evidence is
admissible in determining probable cause in a preliminary investigation because such investigation is merely preliminary, and does not finally adjudicate rights
and obligations of parties.139 (Emphasis supplied.)

Verily, the admissibility of evidence,140 their evidentiary weight, probative value, and the credibility of the witness are matters that are best left to be resolved in
a full-blown trial,141 not during a preliminary investigation where the technical rules of evidence are not applied 142 nor at the stage of the determination of
probable cause for the issuance of a warrant of arrest. Thus, the better alternative is to proceed to the conduct of trial on the merits for the petitioner and the
prosecution to present their respective evidence in support of their allegations.

With the foregoing disquisitions, the provisional reliefs prayed for, as a consequence, have to be rejected.

WHEREFORE, the instant petition for prohibition and certiorari is DISMISSED for lack of merit. The Regional Trial Court of Muntinlupa City, Branch 204 is
ordered to proceed with dispatch with Criminal Case N6.17-165.

SO ORDERED.