Rule 10

Marcos-Araneta vs CA GR No 154096 August 22, 2008

 G.R. No. 154096             August 22, 2008

 IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, and JOSE G. RESLIN, petitioners,

vs.
COURT OF APPEALS, JULITA C. BENEDICTO, and FRANCISCA BENEDICTO-PAULINO, respondents.

 DECISION

 VELASCO, JR., J.:

 The Case

 This Petition for Review on Certiorari under Rule 45 assails and seeks to nullify the Decision1 dated October
17, 2001 of the Court of Appeals (CA) in CA-G.R. SP No. 64246 and its Resolution2 of June 20, 2002 denying
petitioners' motion for reconsideration. The assailed CA decision annulled and set aside the Orders dated
October 9, 2000, December 18, 2000, and March 15, 2001 of the Regional Trial Court (RTC), Branch 17 in
Batac, Ilocos Norte which admitted petitioners' amended complaint in Civil Case Nos. 3341-17 and 3342-17.

 The Facts

 Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now deceased, and his business associates
(Benedicto Group) organized Far East Managers and Investors, Inc. (FEMII) and Universal Equity Corporation
(UEC), respectively. As petitioner Irene Marcos-Araneta would later allege, both corporations were organized
pursuant to a contract or arrangement whereby Benedicto, as trustor, placed in his name and in the name of
his associates, as trustees, the shares of stocks of FEMII and UEC with the obligation to hold those shares
and their fruits in trust and for the benefit of Irene to the extent of 65% of such shares. Several years after,
Irene, through her trustee-husband, Gregorio Ma. Araneta III, demanded the reconveyance of said 65%
stockholdings, but the Benedicto Group refused to oblige.

 In March 2000, Irene thereupon instituted before the RTC two similar complaints for conveyance of shares of
stock, accounting and receivership against the Benedicto Group with prayer for the issuance of a temporary
restraining order (TRO). The first, docketed as Civil Case No. 3341-17, covered the UEC shares and named
Benedicto, his daughter, and at least 20 other individuals as defendants. The second, docketed as Civil Case
No. 3342-17, sought the recovery to the extent of 65% of FEMII shares held by Benedicto and the other
defendants named therein.

 Respondent Francisca Benedicto-Paulino,3 Benedicto's daughter, filed a Motion to Dismiss Civil Case No.
3341-17, followed later by an Amended Motion to Dismiss. Benedicto, on the other hand, moved to
dismiss4 Civil Case No. 3342-17, adopting in toto the five (5) grounds raised by Francisca in her amended
motion to dismiss. Among these were: (1) the cases involved an intra-corporate dispute over which the
Securities and Exchange Commission, not the RTC, has jurisdiction; (2) venue was improperly laid; and (3)
the complaint failed to state a cause of action, as there was no allegation therein that plaintiff, as beneficiary of
the purported trust, has accepted the trust created in her favor.

 To the motions to dismiss, Irene filed a Consolidated Opposition, which Benedicto and Francisca countered
with a Joint Reply to Opposition.

 Upon Benedicto's motion, both cases were consolidated.

 During the preliminary proceedings on their motions to dismiss, Benedicto and Francisca, by way of bolstering
their contentions on improper venue, presented the Joint Affidavit5 of Gilmia B. Valdez, Catalino A. Bactat, and
Conchita R. Rasco who all attested being employed as household staff at the Marcos' Mansion in Brgy.
Lacub, Batac, Ilocos Norte and that Irene did not maintain residence in said place as she in fact only visited
the mansion twice in 1999; that she did not vote in Batac in the 1998 national elections; and that she was
staying at her husband's house in Makati City.

 Against the aforesaid unrebutted joint affidavit, Irene presented her PhP 5 community tax certificate6 (CTC)
issued on "11/07/99" in Curimao, Ilocos Norte to support her claimed residency in Batac, Ilocos Norte.
 In the meantime, on May 15, 2000, Benedicto died and was substituted by his wife, Julita C. Benedicto, and
Francisca.

 On June 29, 2000, the RTC dismissed both complaints, stating that these partly constituted "real action," and
that Irene did not actually reside in Ilocos Norte, and, therefore, venue was improperly laid. In its dismissal
order,7 the court also declared "all the other issues raised in the different Motions to Dismiss x x x moot and
academic."

 From the above order, Irene interposed a Motion for Reconsideration8 which Julita and Francisca duly
opposed.

 Pending resolution of her motion for reconsideration, Irene filed on July 17, 2000 a Motion (to Admit Amended
Complaint),9 attaching therewith a copy of the Amended Complaint10 dated July 14, 2000 in which the names
of Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin appeared as additional plaintiffs. As stated in the
amended complaint, the added plaintiffs, all from Ilocos Norte, were Irene's new trustees. Parenthetically, the
amended complaint stated practically the same cause of action but, as couched, sought the reconveyance of
the FEMII shares only.

 During the August 25, 2000 hearing, the RTC dictated in open court an order denying Irene's motion for
reconsideration aforementioned, but deferred action on her motion to admit amended complaint and the
opposition thereto.11

 On October 9, 2000, the RTC issued an Order12 entertaining the amended complaint, dispositively stating:

 WHEREFORE, the admission of the Amended Complaint being tenable and legal, the same is GRANTED.

 Let copies of the Amended Complaint be served to the defendants who are ordered to answer within the
reglementary period provided by the rules.

 The RTC predicated its order on the following premises:

 (1) Pursuant to Section 2, Rule 10 of the Rules of Court,13 Irene may opt to file, as a matter of right, an
amended complaint.

 (2) The inclusion of additional plaintiffs, one of whom was a Batac, an Ilocos Norte resident, in the amended
complaint setting out the same cause of action cured the defect of improper venue.

 (3) Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4 allow the filing of the amended complaint in question
in the place of residence of any of Irene's co-plaintiffs.

 In time, Julita and Francisca moved to dismiss the amended complaint, but the RTC, by Order14 dated
December 18, 2000, denied the motion and reiterated its directive for the two to answer the amended
complaint.

 In said order, the RTC stood pat on its holding on the rule on amendments of pleadings. And scoffing at the
argument about there being no complaint to amend in the first place as of October 9, 2000 (when the RTC
granted the motion to amend) as the original complaints were dismissed with finality earlier, i.e., on August 25,
2000 when the court denied Irene's motion for reconsideration of the June 29, 2000 order dismissing the
original complaints, the court stated thusly: there was actually no need to act on Irene's motion to admit, it
being her right as plaintiff to amend her complaints absent any responsive pleading thereto. Pushing its point,
the RTC added the observation that the filing of the amended complaint on July 17, 2000 ipso
facto superseded the original complaints, the dismissal of which, per the June 29, 2000 Order, had not yet
become final at the time of the filing of the amended complaint.

 Following the denial on March 15, 2001 of their motion for the RTC to reconsider its December 18, 2000 order
aforestated, Julita and Francisca, in a bid to evade being declared in default, filed on April 10, 2001 their
Answer to the amended complaint.15 But on the same day, they went to the CA via a petition for certiorari,
docketed as CA-G.R. SP No. 64246, seeking to nullify the following RTC orders: the first, admitting the
amended complaint; the second, denying their motion to dismiss the amended complaint; and the third,
denying their motion for reconsideration of the second issuance.
 Inasmuch as the verification portion of the joint petition and the certification on non-forum shopping bore only
Francisca's signature, the CA required the joint petitioners "to submit x x x either the written authority of Julita
C. Benedicto to Francisca B. Paulino authorizing the latter to represent her in these proceedings, or a
supplemental verification and certification duly signed by x x x Julita C. Benedicto."16 Records show the
submission of the corresponding authorizing Affidavit17 executed by Julita in favor of Francisca.

 Later developments saw the CA issuing a TRO18 and then a writ of preliminary injunction19 enjoining the RTC
from conducting further proceedings on the subject civil cases.

 On October 17, 2001, the CA rendered a Decision, setting aside the assailed RTC orders and dismissing the
amended complaints in Civil Case Nos. 3341-17 and 3342-17. The fallo of the CA decision reads:

 WHEREFORE, based on the foregoing premises, the petition is hereby GRANTED. The assailed Orders
admitting the amended complaints are SET ASIDE for being null and void, and the amended complaints a
quo are, accordingly, DISMISSED.20

 Irene and her new trustees' motion for reconsideration of the assailed decision was denied through the equally
assailed June 20, 2002 CA Resolution. Hence, this petition for review is before us.

 The Issues

 Petitioners urge the setting aside and annulment of the assailed CA decision and resolution on the following
submissions that the appellate court erred in: (1) allowing the submission of an affidavit by Julita as sufficient
compliance with the requirement on verification and certification of non-forum shopping; (2) ruling on the
merits of the trust issue which involves factual and evidentiary determination, processes not proper in a
petition for certiorari under Rule 65 of the Rules of Court; (3) ruling that the amended complaints in the lower
court should be dismissed because, at the time it was filed, there was no more original complaint to amend;
(4) ruling that the respondents did not waive improper venue; and (5) ruling that petitioner Irene was not a
resident of Batac, Ilocos Norte and that none of the principal parties are residents of Ilocos Norte.21

 The Court's Ruling

 We affirm, but not for all the reasons set out in, the CA's decision.

 First Issue: Substantial Compliance with the Rule

on Verification and Certification of Non-Forum Shopping

 Petitioners tag private respondents' petition in CA-G.R. SP No. 64246 as defective for non-compliance with
the requirements of Secs. 422 and 523 of Rule 7 of the Rules of Court at least with regard to Julita, who failed to
sign the verification and certification of non-forum shopping. Petitioners thus fault the appellate court for
directing Julita's counsel to submit a written authority for Francisca to represent Julita in the certiorari
proceedings.

 We are not persuaded.

 Verification not Jurisdictional; May be Corrected

 Verification is, under the Rules, not a jurisdictional but merely a formal requirement which the court may motu
proprio direct a party to comply with or correct, as the case may be. As the Court articulated in Kimberly
Independent Labor Union for Solidarity, Activism and Nationalism (KILUSAN)-Organized Labor Associations
in Line Industries and Agriculture (OLALIA) v. Court of  Appeals:

 V]erification is a formal, not a jurisdictional requisite, as it is mainly intended to secure an assurance that the allegations therein made are done in good faith or are true and correct and not

mere speculation. The Court may order the correction of the pleading, if not verified, or act on the unverified pleading if the attending circumstances are such that a strict compliance with the
rule may be dispensed with in order that the ends of justice may be served.24

 Given this consideration, the CA acted within its sound discretion in ordering the submission of proof of
Francisca's authority to sign on Julita's behalf and represent her in the proceedings before the appellate court.

 Signature by Any of the Principal Petitioners is Substantial Compliance

 Regarding the certificate of non-forum shopping, the general rule is that all the petitioners or plaintiffs in a
case should sign it.25 However, the Court has time and again stressed that the rules on forum shopping, which
were designed to promote the orderly administration of justice, do not interdict substantial compliance with its
provisions under justifiable circumstances.26 As has been ruled by the Court, the signature of any of the
principal petitioners27 or principal parties,28 as Francisca is in this case, would constitute a substantial
compliance with the rule on verification and certification of non-forum shopping. It cannot be overemphasized
that Francisca herself was a principal party in Civil Case No. 3341-17 before the RTC and in the certiorari
proceedings before the CA. Besides being an heir of Benedicto, Francisca, with her mother, Julita, was
substituted for Benedicto in the instant case after his demise.

 And should there exist a commonality of interest among the parties, or where the parties filed the case as a
"collective," raising only one common cause of action or presenting a common defense, then the signature of
one of the petitioners or complainants, acting as representative, is sufficient compliance. We said so in Cavile
v. Heirs of Clarita Cavile.29 Like Thomas Cavile, Sr. and the other petitioners in Cavile, Francisca and Julita,
as petitioners before the CA, had filed their petition as a collective, sharing a common interest and having a
common single defense to protect their rights over the shares of stocks in question.

 Second Issue: Merits of the Case cannot be Resolved

on Certiorari under Rule 65

 Petitioners' posture on the second issue is correct. As they aptly pointed out, the CA, in the exercise of its
certiorari jurisdiction under Rule 65, is limited to reviewing and correcting errors of jurisdiction only. It cannot
validly delve into the issue of trust which, under the premises, cannot be judiciously resolved without first
establishing certain facts based on evidence.

 Whether a determinative question is one of law or of fact depends on the nature of the dispute. A question of
law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain
given set of facts; or when the issue does not call for an examination of the probative value of the evidence
presented, the truth or falsehood of facts being admitted. A question of fact obtains when the doubt or
difference arises as to the truth or falsehood of facts or when the query invites the 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
situation.30

 Clearly then, the CA overstepped its boundaries when, in disposing of private respondents' petition for
certiorari, it did not confine itself to determining whether or not lack of jurisdiction or grave abuse of discretion
tainted the issuance of the assailed RTC orders, but proceeded to pass on the factual issue of the existence
and enforceability of the asserted trust. In the process, the CA virtually resolved petitioner Irene's case for
reconveyance on its substantive merits even before evidence on the matter could be adduced. Civil Case
Nos. 3341-17 and 3342-17 in fact have not even reached the pre-trial stage. To stress, the nature of the trust
allegedly constituted in Irene's favor and its enforceability, being evidentiary in nature, are best determined by
the trial court. The original complaints and the amended complaint certainly do not even clearly indicate
whether the asserted trust is implied or express. To be sure, an express trust differs from the implied variety in
terms of the manner of proving its existence.31 Surely, the onus of factually determining whether the trust
allegedly established in favor of Irene, if one was indeed established, was implied or express properly
pertains, at the first instance, to the trial court and not to the appellate court in a special civil action for
certiorari, as here. In the absence of evidence to prove or disprove the constitution and necessarily the
existence of the trust agreement between Irene, on one hand, and the Benedicto Group, on the other, the
appellate court cannot intelligently pass upon the issue of trust. A pronouncement on said issue of trust rooted
on speculation and conjecture, if properly challenged, must be struck down. So it must be here.

 Third Issue: Admission of Amended Complaint Proper

 As may be recalled, the CA veritably declared as reversibly erroneous the admission of the amended
complaint. The flaw in the RTC's act of admitting the amended complaint lies, so the CA held, in the fact that
the filing of the amended complaint on July 17, 2000 came after the RTC had ordered with finality the
dismissal of the original complaints. According to petitioners, scoring the CA for its declaration adverted to and
debunking its posture on the finality of the said RTC order, the CA failed to take stock of their motion for
reconsideration of the said dismissal order.

 We agree with petitioners and turn to the governing Sec. 2 of Rule 10 of the Rules of Court which provides:
 SEC. 2. Amendments as a matter of right. -- A party may amend his pleading once as a matter of right at any
time before a responsive pleading is served or in the case of a reply, at any time within ten (10) days after it is
served.

 As the aforequoted provision makes it abundantly clear that the plaintiff may amend his complaint once as a
matter of right, i.e., without leave of court, before any responsive pleading is filed or served. Responsive
pleadings are those which seek affirmative relief and/or set up defenses,32 like an answer. A motion to dismiss
is not a responsive pleading for purposes of Sec. 2 of Rule 10.33 Assayed against the foregoing perspective,
the RTC did not err in admitting petitioners' amended complaint, Julita and Francisca not having yet answered
the original complaints when the amended complaint was filed. At that precise moment, Irene, by force of said
Sec. 2 of Rule 10, had, as a matter of right, the option of amending her underlying reconveyance complaints.
As aptly observed by the RTC, Irene's motion to admit amended complaint was not even necessary. The
Court notes though that the RTC has not offered an explanation why it saw fit to grant the motion to admit in
the first place.

 In Alpine Lending Investors v. Corpuz, the Court, expounding on the propriety of admitting an amended
complaint before a responsive pleading is filed, wrote:

 W]hat petitioner Alpine filed in Civil Case No. C-20124 was a motion to dismiss, not an answer. Settled is the rule that a motion to dismiss is not a responsive pleading for purposes of Section

2, Rule 10. As no responsive pleading had been filed, respondent could amend her complaint in Civil Case No. C-20124 as a matter of right. Following this Court's ruling in Breslin v. Luzon
Stevedoring Co. considering that respondent has the right to amend her complaint, it is the correlative duty of the trial court to accept the amended complaint; otherwise, mandamus would lie
against it. In other words, the trial court's duty to admit the amended complaint was purely ministerial. In fact, respondent should not have filed a motion to admit her amended complaint.34

 It may be argued that the original complaints had been dismissed through the June 29, 2000 RTC order. It
should be pointed out, however, that the finality of such dismissal order had not set in when Irene filed the
amended complaint on July 17, 2000, she having meanwhile seasonably sought reconsideration thereof.
Irene's motion for reconsideration was only resolved on August 25, 2000. Thus, when Irene filed the amended
complaint on July 17, 2000, the order of dismissal was not yet final, implying that there was strictly no legal
impediment to her amending her original complaints.35

 Fourth Issue: Private Respondents did not Waive Improper Venue

 Petitioners maintain that Julita and Francisca were effectively precluded from raising the matter of improper
venue by their subsequent acts of filing numerous pleadings. To petitioners, these pleadings, taken together,
signify a waiver of private respondents' initial objection to improper venue.

 This contention is without basis and, at best, tenuous. Venue essentially concerns a rule of procedure which,
in personal actions, is fixed for the greatest convenience possible of the plaintiff and his witnesses. The
ground of improperly laid venue must be raised seasonably, else it is deemed waived. Where the defendant
failed to either file a motion to dismiss on the ground of improper venue or include the same as an affirmative
defense, he is deemed to have waived his right to object to improper venue.36 In the case at bench, Benedicto
and Francisca raised at the earliest time possible, meaning "within the time for but before filing the answer to
the complaint,"37 the matter of improper venue. They would thereafter reiterate and pursue their objection on
venue, first, in their answer to the amended complaints and then in their petition for certiorari before the CA.
Any suggestion, therefore, that Francisca and Benedicto or his substitutes abandoned along the way improper
venue as ground to defeat Irene's claim before the RTC has to be rejected.

 Fifth Issue: The RTC Has No Jurisdiction

on the Ground of Improper Venue

 Subject Civil Cases are Personal Actions

 It is the posture of Julita and Francisca that the venue was in this case improperly laid since the suit in
question partakes of a real action involving real properties located outside the territorial jurisdiction of the RTC
in Batac.

 This contention is not well-taken. In a personal action, the plaintiff seeks the recovery of personal property, the
enforcement of a contract, or the recovery of damages.38 Real actions, on the other hand, are those affecting
title to or possession of real property, or interest therein. In accordance with the wordings of Sec. 1 of Rule 4,
the venue of real actions shall be the proper court which has territorial jurisdiction over the area wherein the
real property involved, or a portion thereof, is situated. The venue of personal actions is the court where the
plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants
resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff.39
 In the instant case, petitioners are basically asking Benedicto and his Group, as defendants a quo, to
acknowledge holding in trust Irene's purported 65% stockownership of UEC and FEMII, inclusive of the fruits
of the trust, and to execute in Irene's favor the necessary conveying deed over the said 65% shareholdings. In
other words, Irene seeks to compel recognition of the trust arrangement she has with the Benedicto Group.
The fact that FEMII's assets include real properties does not materially change the nature of the action, for the
ownership interest of a stockholder over corporate assets is only inchoate as the corporation, as a juridical
person, solely owns such assets. It is only upon the liquidation of the corporation that the stockholders,
depending on the type and nature of their stockownership, may have a real inchoate right over the corporate
assets, but then only to the extent of their stockownership.

 The amended complaint is an action in personam, it being a suit against Francisca and the late Benedicto
(now represented by Julita and Francisca), on the basis of their alleged personal liability to Irene upon an
alleged trust constituted in 1968 and/or 1972. They are not actions in rem where the actions are against the
real properties instead of against persons.40 We particularly note that possession or title to the real properties
of FEMII and UEC is not being disputed, albeit part of the assets of the corporation happens to be real
properties.

 Given the foregoing perspective, we now tackle the determinative question of venue in the light of the
inclusion of additional plaintiffs in the amended complaint.

 Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4

 We point out at the outset that Irene, as categorically and peremptorily found by the RTC after a hearing, is
not a resident of Batac, Ilocos Norte, as she claimed. The Court perceives no compelling reason to disturb, in
the confines of this case, the factual determination of the trial court and the premises holding it together.
Accordingly, Irene cannot, in a personal action, contextually opt for Batac as venue of her reconveyance
complaint. As to her, Batac, Ilocos Norte is not what Sec. 2, Rule 4 of the Rules of Court adverts to as the
place "where the plaintiff or any of the principal plaintiffs resides" at the time she filed her amended complaint.
That Irene holds CTC No. 1701945141 issued sometime in June 2000 in Batac, Ilocos Norte and in which she
indicated her address as Brgy. Lacub, Batac, Ilocos is really of no moment. Let alone the fact that one can
easily secure a basic residence certificate practically anytime in any Bureau of Internal Revenue or treasurer's
office and dictate whatever relevant data one desires entered, Irene procured CTC No. 17019451 and
appended the same to her motion for reconsideration following the RTC's pronouncement against her being a
resident of Batac.

 Petitioners, in an attempt to establish that the RTC in Batac, Ilocos Norte is the proper court venue,
asseverate that Batac, Ilocos Norte is where the principal parties reside.

 Pivotal to the resolution of the venue issue is a determination of the status of Irene's co-plaintiffs in the context
of Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4, which pertinently provide as follows:

 Rule 3
PARTIES TO CIVIL ACTIONS

 SEC. 2. Parties in interest. -- A real party in interest is the party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these
Rules, every action must be prosecuted or defended in the name of the real party in interest.

 SEC. 3. Representatives as parties. -- Where the action is allowed to be prosecuted or defended by a

representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the
case and shall be deemed to be the real party in interest. A representative may be a trustee of an express
trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An agent acting in
his own name and for the benefit of an undisclosed principal may sue or be sued without joining the principal
except when the contract involves things belonging to the principal.

 Rule 4
VENUE OF ACTIONS

 SEC. 2. Venue of personal actions. -- All other actions may be commenced and tried where the plaintiff or any
of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the
case of a non-resident defendant where he may be found, at the election of the plaintiff.

 Venue is Improperly Laid

 There can be no serious dispute that the real party-in-interest plaintiff is Irene. As self-styled beneficiary of the
disputed trust, she stands to be benefited or entitled to the avails of the present suit. It is undisputed too that
petitioners Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin, all from Ilocos Norte, were included as co-
plaintiffs in the amended complaint as Irene's new designated trustees. As trustees, they can only serve as
mere representatives of Irene.

 Upon the foregoing consideration, the resolution of the crucial issue of whether or not venue had properly
been laid should not be difficult.

 Sec. 2 of Rule 4 indicates quite clearly that when there is more than one plaintiff in a personal action case, the
residences of the principal parties should be the basis for determining proper venue. According to the late
Justice Jose Y. Feria, "the word 'principal' has been added [in the uniform procedure rule] in order to prevent
the plaintiff from choosing the residence of a minor plaintiff or defendant as the venue."42 Eliminate the
qualifying term "principal" and the purpose of the Rule would, to borrow from Justice Regalado, "be defeated
where a nominal or formal party is impleaded in the action since the latter would not have the degree of
interest in the subject of the action which would warrant and entail the desirably active participation expected
of litigants in a case."43

 Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene stands undisputedly as the principal
plaintiff, the real party-in-interest. Following Sec. 2 of Rule 4, the subject civil cases ought to be commenced
and prosecuted at the place where Irene resides.

 Principal Plaintiff not a Resident in Venue of Action

 As earlier stated, no less than the RTC in Batac declared Irene as not a resident of Batac, Ilocos Norte.
Withal, that court was an improper venue for her conveyance action.

 The Court can concede that Irene's three co-plaintiffs are all residents of Batac, Ilocos Norte. But it ought to
be stressed in this regard that not one of the three can be considered as principal party-plaintiffs in Civil Case
Nos. 3341-17 and 3342-17, included as they were in the amended complaint as trustees of the principal
plaintiff. As trustees, they may be accorded, by virtue of Sec. 3 of Rule 3, the right to prosecute a suit, but only
on behalf of the beneficiary who must be included in the title of the case and shall be deemed to be the real
party-in-interest. In the final analysis, the residences of Irene's co-plaintiffs cannot be made the basis in
determining the venue of the subject suit. This conclusion becomes all the more forceful considering that Irene
herself initiated and was actively prosecuting her claim against Benedicto, his heirs, assigns, or associates,
virtually rendering the impleading of the trustees unnecessary.

 And this brings us to the final point. Irene was a resident during the period material of Forbes Park, Makati
City. She was not a resident of Brgy. Lacub, Batac, Ilocos Norte, although jurisprudence44 has it that one can
have several residences, if such were the established fact. The Court will not speculate on the reason why
petitioner Irene, for all the inconvenience and expenses she and her adversaries would have to endure by a
Batac trial, preferred that her case be heard and decided by the RTC in Batac. On the heels of the dismissal
of the original complaints on the ground of improper venue, three new personalities were added to the
complaint doubtless to insure, but in vain as it turned out, that the case stays with the RTC in Batac.

 Litigants ought to bank on the righteousness of their causes, the superiority of their cases, and the
persuasiveness of arguments to secure a favorable verdict. It is high time that courts, judges, and those who
come to court for redress keep this ideal in mind.

 WHEREFORE, the instant petition is hereby DISMISSED. The Decision and Resolution dated October 17,
2001 and June 20, 2002, respectively, of the CA in CA-G.R. SP No. 64246, insofar as they nullified the
assailed orders of the RTC, Branch 17 in Batac, Ilocos Norte in Civil Case Nos. 3341-17 and 3342-17 on the
ground of lack of jurisdiction due to improper venue, are hereby AFFIRMED. The Orders dated October 9,
2000, December 18, 2000, and March 15, 2001 of the RTC in Civil Case Nos. 3341-17 and 3342-17 are
accordingly ANNULLED and SET ASIDE and said civil cases are DISMISSED.

 Costs against petitioners.

 SO ORDERED.

2. Cabrera vs Clarin November 28, 2016

 3.Republic v. Sandiganbayan
G.R. No. 195295, October 5, 2016

REPUBLIC OF THE PHILIPPINES, Petitioner, v. SANDIGANBAYAN, FOURTH DIVISION,

FERDINAND "BONGBONG" R. MARCOS, JR., MA. IMELDA "IMEE" R. MARCOS-MANOTOC,
GREGORIO MA. ARANETA III, AND IRENE R. MARCOS ARANETA, Respondents.

DECISION

LEONEN, J.:

This resolves a Petition1 for certiorari assailing the Sandiganbayan's cancellation of a notice of lis
pendens issued over property alleged to be ill-gotten wealth of Former President Ferdinand E.
Marcos (Former President Marcos) and his associates.

Respondents Ferdinand "Bongbong" R. Marcos, Jr. (Marcos, Jr.), Maria Imelda R. Marcos (Imee),
and Irene Marcos Araneta (Irene) appear to be the registered owners of a parcel of land located in
the Municipality of Cabuyao, Laguna (Cabuyao property) and covered by Transfer Certificate of
Title (TCT) No. T-85026.2

On July 16, 1987, petitioner Republic of the Philippines, through the Presidential Commission on
Good Government, filed before the Sandiganbayan a Complaint for reversion, reconveyance,
restitution, accounting, and damages against Former President Marcos, Imelda R. Marcos, their
children, Marcos, Jr., Imee, and Irene, and their sons-in-law, Tomas Manotoc and Gregorio Ma.
Araneta III.3 This case was docketed as Civil Case No. 0002 (Civil Case).4 The Complaint
principally sought to recover ill-gotten wealth acquired by the Marcoses during their incumbency
as public officers in active collaboration with their cronies, dummies, and close business
associates.5

On April 23, 1990, petitioner filed its Third Amended Complaint dated April 20, 1990, which was
admitted by the Sandiganbayan (admitted Complaint).6

On June 1, 1994, the Presidential Commission on Good Government caused the annotation of a
notice of lis pendens  on TCT No. T-85026 in relation to the Civil Case,7 which reads: chanRoblesvirtualLawlibrary

Entry No. 268288 - NOTICE OF LIS PENDENS - filed by Commissioner Herminio A. Mendoza for
and in behalf of the Republic of the Philippines, entitled Republic of the Philippines versus
Ferdinand E. Marcos et al., in Civil Case No. 0002 for Reconveyance, Reversion, Accounting,
Restitution and Damages of Office of the President, Presidential Commission on Good
Government, filed in Env. No. T-85026.
Date of Instrument - June 1, 1994
Date of Inscription-June 13, 1994 at 4:10 p.m.
chanrobleslaw

(signed)           
Dante A. Ariola    
Register of Deeds8
chanrobleslaw

On June 13, 1994, the Register of Deeds of Cabuyao, Laguna, annotated the notice of lis
pendens on TCT No. T-85026.9

Marcos, Jr. filed an Omnibus Motion10 dated June 5, 1997 praying for the cancellation of the notice
of lis pendens and pointing out that the Cabuyao property was not specifically mentioned in the
original and amended Complaints or their annexes. Marcos, Jr. also prayed that petitioner be
directed to immediately vacate the property, cease from further interfering with and exercising
ownership over it, and return it to him and the other registered owners.11

On July 15, 1997, petitioner filed a Motion for Leave to Admit Fourth Amended Complaint;12 with
an attached Fourth Amended Complaint.13 The Fourth Amended Complaint was substantially
identical to the admitted Complaint, but with the amended annex List of Assets and Other
Properties of Ferdinand E. Marcos, Imelda R. Marcos and Immediate Family.14 The list specifically
mentioned the Cabuyao property as one among the assets of the Marcoses.15

The Sandiganbayan denied the Motion to admit the Fourth Amended Complaint: chanRoblesvirtualLawlibrary

[F]or failure of the plaintiff-movant to comply with the provision of Section 7, Rule 12 of the 1997
Rules of Civil Procedure which provides: chanRoblesvirtualLawlibrary

"Section 7. Filing of amended pleadings. When any pleading is amended, a new copy of the entire
pleading, incorporating the amendments which shall be indicated by appropriate marks, shall be
filed."
chanrobleslaw

and for further reason that the original complaint in this case was filed with this Court on July 16,
1987 yet, or more than 11 years ago, and this case has not even reached the pre-trial stage
because not all of the defendants have been served with summons.16
chanrobleslaw

Marcos, Jr. filed an Urgent Motion to Resolve dated July 29, 2002 seeking the immediate
resolution of the Omnibus Motion.17 Petitioner filed a Comment/Opposition18 seeking an order of
preliminary attachment over the Cabuyao property. In the Resolution19 dated January 11, 2010,
the Sandiganbayan ordered the cancellation of the annotation of lis pendens on TCT No. T-85026.
It directed petitioner to immediately cease from further interfering with and exercising ownership
over the Cabuyao property and to return its possession and control to the Marcoses.20 It held that
because the admitted Complaint did not specifically mention the Cabuyao property, the Cabuyao
property was not involved in the Civil Case; therefore, petitioner has over the property no
actionable claim that needs to be protected via a notice oflis pendens.21

On the writ of preliminary attachment, the Sandiganbayan held that petitioner's allegations were
insufficient to support an application for a writ of attachment.22 The Cabuyao property was never
concealed, removed, or disposed of by the Marcoses.23 There was seemingly no particular
exigency warranting the attachment of the Cabuyao property, considering that the petitioner had
been in exclusive possession of the property for more than a decade and yet it did not promptly
move for the issuance of a writ of preliminary attachment.24

Petitioner's Motion for Reconsideration was denied in the Resolution25 dated December 1, 2010.
Hence, this Petition26 was filed.

In the Resolution27 dated February 21, 2011, this Court issued a temporary restraining order
enjoining respondents from implementing the assailed Sandiganbayan Resolutions in the Civil
Case, and directed respondents to comment.

Respondents Imelda R. Marcos,28 Marcos, Jr.,29 and Gregorio Ma. Araneta III and Irene30 filed their
respective Comments to the Petition. This Court dispensed with the filing of the comment of
respondent Imee.31 Petitioner filed its Replies32 to respondents' Comments.

Petitioner argues that the Cabuyao property forms part of the assets alleged to have been
unlawfully acquired by Former President Marcos and his family during the Marcos regime. It is
sought to be reconveyed in favor of petitioner in the Civil Case and was, thus, properly subject of
the notice of lis pendens. Petitioner further argues that the allegations in the admitted Complaint
relate to all properties, real or personal, acquired by Former President Marcos and his family
during the Marcos regime.33 The list of assets and properties specified as forming part of the ill-
gotten wealth of the Marcoses is preceded by the words "include but are not limited" to those
already enumerated:34 chanroblesvirtuallawlibrary

16. Among others, in furtherance of the plan and acting in the manner referred to above, in
unlawful concert with one another and with gross abuse of power and authority, Defendants
Ferdinand E. Marcos and Imelda Marcos: cralawlawlibrary

....
(f) extorted, demanded and received improper payments in the form of, among others,
commissions, bribes and kickbacks from persons and corporations entering into contracts with the
Government or its agencies or instrumentalities for themselves, or for third persons, permits,
licenses or concessions which were then required in order to engage in particular business
activities; ChanRoblesVirtualawlibrary
....

(i) engaged in other illegal and improper acts and practices designed to defraud Plaintiff and the
Filipino people, or otherwise misappropriated and converted to their own use, benefit and
enrichment the lawful patrimony and revenues of Plaintiff and the Filipino people.

....
chanrobleslaw

17. Among the assets acquired by Defendants in the manner above described and discovered by
the Commission in the exercise of its official responsibilities are funds and other property listed in
Annex "A" hereof and made an integral part of the complaint.

18 Defendants, with the active collaboration of third persons who are subject of separate suits,
after acquiring ill-gotten wealth consisting of funds and other property as mentioned above: cralawlawlibrary

....

19. As an integral element of their above mentioned scheme, acting upon the advice and retaining
the service of prominent lawyers, bankers, accountants and other persons, Defendants employed
numerous stratagems, schemes, artifices and devices to prevent disclosure, conceal and frustrate
recovery of their ill-gotten wealth or the manner by which it was acquired, including the use of (a)
code names or pseudonyms, (b) trustees, dummies, nominees or agents, (c) societies and
foundations organized in, among others, Liechtenstein, and/or (d) layers of offshore companies
and corporations in various places such as Netherlands, Antilles, Panama, Hongkong and the
Virgin Islands: cralawlawlibrary

20. The assets and other properties of defendants in the Philippines include, but are not limited to
the following: cralawlawlibrary

....
(b) Real Properties
chanrobleslaw

....

28. (a) The 1935 Constitution, as well as the 1973 Marcos-promulgated Constitution, provides
that the President shall not be entitled to any emolument in addition to a fixed salary which shall
be neither increased nor diminished during the period for which he shall have been elected.

(b) All income received by Defendant Ferdinand E. Marcos during his incumbency as President in
excess of his salary constitutes illegal income, having been acquired in violation of the provisions
of a Constitution which he himself caused to be ratified.

29. Defendants Imelda (Imee) R. Marcos-Manotoc, Tomas Manotoc, Irene R. Marcos Araneta,
Gregorio Ma. Araneta III, and Ferdinand R. Marcos, Jr., actively collaborated, with Defendants
Ferdinand E. Marcos and Imelda R. Marcos among others, in confiscating and/or unlawfully
appropriating funds and other property, and in concealing the same as described above. In
addition, each of said Defendants, either by taking undue advantage of their relationship with
Defendants Ferdinand E. Marcos and Imelda R. Marcos, or by reason of the above-described
active collaboration, unlawfully acquired or received property, shares of stocks in corporations,
illegal payments such as commissions, bribes or kick-backs, and other forms of improper
privileges, income, revenues and benefits[.]35
chanrobleslaw

Moreover, petitioner claims that the grounds for cancelling a notice of lis pendens are not
present.36

In any case, petitioner also insists that the amendment of the Complaint to specifically include the
Cabuyao property is a formal amendment that may be done at any time. The Sandiganbayan
should have been more liberal in resolving the Motion to admit the Fourth Amended
Complaint.37 Additionally, petitioner argues that the denial of a motion to admit an amended
complaint is an interlocutory one and cannot attain finality.38
As regards the entitlement to a writ of preliminary attachment, petitioner argues that it has
demonstrated entitlement to a writ of attachment over the Cabuyao property. Sequestration is
akin to preliminary attachment and is among the other provisional remedies available to the
Presidential Commission on Good Government, which was essentially founded on urgency and
necessity to preserve ill-gotten wealth amassed during the Marcos regime.39

The allegations in the admitted Complaint narrate in detail the manner by which the Cabuyao
property was amassed by the former dictator: chanRoblesvirtualLawlibrary

From the early years of his presidency, Defendant Ferdinand E. Marcos took advantage of his
powers as President all throughout the period from September 21, 1972 to February [25,] 1986,
he gravely abused his powers under martial law and ruled as Dictator under the 1973 Marcos-
promulgated Constitution. Defendant Ferdinand E. Marcos, together with other Defendants, acting
singly or collectively, in unlawful concert with one another, and with the active collaboration and
participation of third persons who are subject of separate suits, in flagrant breach of trust and of
their fiduciary obligations as public officers, with gross and scandalous abuse of right and power
and in brazen violation of the Constitution and laws of the Philippines, embarked on a systematic
plan to accumulate ill-gotten wealth [.]

....

. . . Defendants Imelda [Imee] R. Marcos-Manotoc, Tomas Manotoc, Irene R. [Marcos]-Araneta,

Gregorio Ma. Araneta III, and Ferdinand [R.] Marcos, Jr. actively collaborated with Defendants
Ferdinand E. Marcos and Imelda R. Marcos, among others, in confiscating and/or unlawfully
appropriating funds and other property, and in concealing the same as described above. . . .
[E]ach of the Defendants, either by taking undue advantage of their relationship with Defendants
Ferdinand E. Marcos and Imelda R. Marcos, or by reason of the above-described active
collaboration, unlawfully acquired or received property, shares of stocks hi corporations, illegal
payments such as commissions, bribes or kickbacks, and other forms of improper privileges,
income, revenues and benefits[.]40
chanrobleslaw

Petitioner asserts that the Cabuyao property covers a vast and valuable 25 hectares of prime lot.
It is among the assets and properties acquired by the Marcoses between 1972 and 1986. During
the registration of the property, respondents were minors who had no legitimate source of
income. The registration of the property in their names was obviously done to conceal the truth
that Former President Marcos was the true owner. Finally, the Cabuyao property had been under
the custody and administration of the Government since 1986. Thus, respondents are guilty of
laches for having accepted said custody and administration for a long time.41 cralawred

Respondents argue that the Petition should be dismissed outright for procedural defects.42 They
stress that the denial of the Motion to Admit the Fourth Amended Complaint has attained
finality.43 Further, the annotation of the notice of lis pendens  was improper as the Civil Case did
not affect the Cabuyao property.44 The properties involved in the Civil Case were enumerated in
the Complaint and made no mention of the Cabuyao property.45 That the property is not part of
the res in Civil Case No. 0002 is apparent from petitioner's failure to adduce any evidence
involving the Cabuyao property during the trial of the case.46

Additionally, respondents claim that the petitioner is not entitled to the preliminary remedy of
attachment, there being no factual allegations showing the ground relied upon exists.47

The Petition is granted.

Rule 13, Section 14 of the Rules of Court provides that a notice of lis pendens may be cancelled
only upon order of the court, after proper showing that the notice is to molest the adverse party,
or that it is not necessary to protect the right of the party who caused it to be recorded: chanRoblesvirtualLawlibrary

RULE 13
Service and Filing of Pleadings and Other Papers
....

SEC. 14. Notice of Lis Pendens. —  In an action affecting the title or the right of possession of real
property, the plaintiff and the defendant, when affirmative relief is claimed in his answer, may
record in the office of the registry of deeds of the province hi which the property is situated a
notice of the pendency of the action. Said notice shall contain the names of the parties and the
object of the action or defense, and a description of the property in that province affected
thereby. Only from the time of filing such notice for record shall a purchaser, or encumbrancer of
the property affected thereby, be deemed to have constructive notice of the pendency of the
action, and only of its pendency against the parties designated by their real names.

The notice of lis pendens hereinabove mentioned may he cancelled only upon order of the court,
after proper showing that the notice is for the purpose of molesting the adverse party, or that it is
not necessary to protect the rights of the party who caused it to be recorded. (Emphasis supplied)
chanrobleslaw

Although the Sandiganbayan found that the notice is not for the purpose of molesting the adverse
party, it cancelled the notice of lis pendens as it was not necessary to protect the right of
petitioner: chanRoblesvirtualLawlibrary

Significantly, while there may be nothing on record to show that the notice of lis pendens  was for
the purpose of molesting the defendants who are the registered owners of the subject property,
the record shows that plaintiff has no claim over the subject property that needs to be protected.
In fact, plaintiff does not have any actionable right over the subject property because the same is
not involved in the instant case. Accordingly, considering that the notice of lis pendens  was
erroneously annotated, its cancellation is in order.48
chanrobleslaw

The conclusion that the Cabuyao property is not involved in the Civil Case is based on the belief
that failure to specifically mention the property in the amended Complaint automatically renders it
beyond the scope of the Civil Case.

Executive Order No. 14, which defines the jurisdiction over cases involving the ill-gotten wealth of
Former President Marcos and his family, associates, dummies, agents, and nominees, specifically
states that the technical rules of procedure and evidence shall not be strictly applied to the civil
cases filed under it. Thus, this Court has emphasized this provision and pointed out that strict
adherence to technical rules will hamper the efforts of the Presidential Commission on Good
Government: chanRoblesvirtualLawlibrary

We note that the law governing the issues raised in this petition calls for the setting aside of
technical rules when necessary to achieve the purposes behind the PCGG's creation.

It is to be reiterated that paragraph 2 of Section 3, of Executive Order No. 14 reads: cralawlawlibrary

....
"The technical rules of procedure and evidence shall not be strictly applied to the civil cases filed
hereunder."

Section 7 thereof also provides: cralawlawlibrary

"SECTION 7. The provisions of this Executive Order shall prevail over any and all laws, or parts
thereof, as regards the investigation, prosecution, and trial of cases for violations of laws involving
the acquisition and accumulation of ill-gotten wealth as mentioned in Executive Order Nos. 1 and
2."
chanrobleslaw

A settled rule on construction is found in the case of Leveriza v. Intermediate Appellate Court:
". . . that another basic principle of statutory construction mandates that general legislation must
give way to special legislation on the same subject, and generally be so interpreted as to embrace
only cases in which the special provisions are not applicable, that a specific statute prevails over a
general statute and that where two statutes are of equal theoretical application to a particular
case, the one designed therefor specially should prevail. ["]
chanrobleslaw

On this score alone, the Sandiganbayan's rejection of the petitioner's motion on the ground that
dropping Campos, Jr. as defendant in the civil case would amount to a violation of the Rules of
Court is based on shaky ground.
The Sandiganbayan's objections will hamper PCGG efforts in this similar cases.49
chanrobleslaw

The admitted Complaint was filed to recover, for the Republic of the Philippines, all the properties
that were illegally acquired by the Marcoses during their incumbency as public officers and that
were manifestly out of proportion to their salaries, other lawful income, and income from
legitimately acquired property.50

The assailed Resolutions do not suggest that the Cabuyao property is not part of the property
illegally acquired by respondents. Thus, the conclusion that the Cabuyao property is not affected
by the Civil Case is based solely on an inference from a procedural detail.

The present issue could have been averted had the Sandiganbayan granted petitioner's Motion for
Leave to Admit Fourth Amended Complaint. Unfortunately, petitioner inexplicably neither filed a
motion for reconsideration to seek reversal of the Sandiganbayan's denial nor raised the issue in a
petition for certiorari. Nonetheless, an examination of the denial of the Motion to admit the
amended Complaint is necessary for a full and complete resolution of the issues raised in this
Petition.

The Sandiganbayan Resolution dated September 2, 1998 reads: chanRoblesvirtualLawlibrary

In Civil Case No. 0002 (Republic vs. Ferdinand E. Marcos, et al.), the Court resolved to deny the
Motion for Leave to Admit Fourth Amended Complaint, dated July 8, 1997, filed by plaintiff,
through counsel (with a copy of the Fourth Amended Complaint thereto attached) for failure of the
plaintiff-movant to comply with the provision of Section 7, Rule 12 of the 1997 Rules of Civil
Procedure which provides: chanRoblesvirtualLawlibrary

"Section 7. Filing of amended pleadings. When any pleading is amended, a new copy of the entire
pleading, incorporating the amendments which shall be indicated by appropriate marks, shall be
filed."
chanrobleslaw

and for further reason that the original complaint in this case was filed with this Court on July 16,
1987 yet, or more than 11 years ago, and this case has not even reached the pre-trial stage
because not all of the defendants have been served with summons.

Considering the constitutional rights of the parties to a speedy disposition of this case, and the
necessity to expedite the resolution of this case, the parties, through cou[n]sel, are ordered to
appear and attend a preliminary conference of this case to be held in this Court on September 28,
1998, at 10:45 in the morning.51 (Underscoring in the original)
chanrobleslaw

This Resolution is based on patent errors of both fact and law.

The Sandiganbayan's denial was primarily based on a purported failure to comply with a
requirement under Rule 10, Section 752 of the Rules of Court, that amendments in a pleading be
indicated by appropriate marks.

The procedural rule, which requires that amendments to a pleading be indicated with appropriate
marks, has for its purpose the convenience of the Court and the parties. It allows the reader to be
able to immediately see the modifications. However, failure to use the appropriate markings for
the deletions and intercalations will not affect any substantive right. Certainly, its absence cannot
cause the denial of any substantive right.53

The Sandiganbayan's view that a motion for leave to amend should be denied on the basis of the
rule on proper markings in an amended pleading displays an utter lack of understanding of the
function of this procedural rule.

More importantly, a reading of the Fourth Amended Complaint reveals that the Sandiganbayan's
observation was patently wrong. Petitioner did not fail to comply with Rule 10, Section 7 of the
Rules of Court. There were no portions in the body of the Fourth Amended Complaint itself that
needed to be underscored or marked, considering that the text was identical to the text of the
admitted Complaint. Annex A to the Fourth Amended Complaint, the List of Assets and Other
Properties of Ferdinand E. Marcos, Imelda R. Marcos and Immediate Family, reveals that it was
amended to include the Cabuyao property in the list of assets. That entry was underscored to
reflect the amendment.

This oversight is so palpable that it can reasonably be interpreted as grave and inexcusable
arbitrariness on the part of the Sandiganbayan. Had the Sandiganbayan simply read the proposed
amended pleading correctly, the inordinate time and resources expended by both parties in this
case would have been avoided. chanroblesvirtuallawlibrary

II

Rule 57, Section 1 of the Rules of Court allows for the attachment of the property of the adverse
party as security for any judgment that may be recovered in the following cases, among
others: chanRoblesvirtualLawlibrary

RULE 57
Attachment

SECTION 1. Grounds Upon Which Attachment May Issue.  — At the commencement of the action
or at any time before entry of judgment, a plaintiff or any proper party may have the property of
the adverse party attached as security for the satisfaction of any judgment that may be recovered
in the following cases: cralawlawlibrary

....

(b) In an action for money or property embezzled or fraudulently misapplied or converted to his
own use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent, or
clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or
for a wilful violation of duty; ChanRoblesVirtualawlibrary

(c) In an action to recover the possession of property unjustly or fraudulently taken, detained or
converted, when the property, or any part thereof, has been concealed, removed, or disposed of
to prevent its being found or taken by the applicant or an authorized person[.]
chanrobleslaw

The Sandiganbayan held that "the allegations in support of the grounds for the issuance of a writ
of preliminary attachment [were] couched in general terms and devoid of particulars upon which
[to] discern whether or not to issue a writ."54 In relation to Rule 57, Section l(b) of the Rules of
Court, the Sandiganbayan required specific allegations of circumstances as to how the money or
property was allegedly embezzled or fraudulently misapplied or converted to their own use by the
respondents.55 As regards Section 1(c), it held that the Cabuyao property was never concealed,
removed, or disposed of by respondents since it remains registered in their names up to the
present56, and petitioner "was easily able to identify and locate the property by the mere checking
of its title with the Registry of Deeds of the Province of Laguna."57

The Sandiganbayan is mistaken. The allegations in the admitted Complaint fall within Section 1(b)
and (c) of Rule 57. Given the peculiarities of the Marcos cases, the allegations of Former President
Marcos taking advantage of his powers as President, gravely abusing his powers under martial
law, and embarking on a systematic plan to accumulate ill-gotten wealth suffice to constitute the
case as one under Rule 57. The allegation that the Cabuyao property was registered under the
names of respondents—minors at the time of registration—is sufficient to allege that the Cabuyao
property was concealed, thus satisfying Rule 57, Section 1(c) of the Rules of Court.

The Sandiganbayan should have issued an order of preliminary attachment considering that the
requisites of the law—including that of Executive Order No. 14—have been substantially met, and
that there is factual basis for the issuance of the preliminary attachment. The Sandiganbayan
committed grave abuse of discretion in denying petitioner's Motion for issuance of a writ of
preliminary attachment.

Procedural rules are not mere technicalities that can be disregarded at whim by the parties or by
our courts. Neither should they be applied so mechanically without any appreciation of their
purpose and object.
Every part of our law—whether substantive or procedural—is the outcome of reasonable
deliberation. As the outcome of human agency, our laws are to be interpreted and applied with
meaning and purpose. The day that our courts cease to breathe life to this fundamental principle
is the day that we erode the public's confidence in the ability of the law to render justice.

WHEREFORE, the Petition for Certiorari is GRANTED. The assailed Resolutions dated January 11,
2010 and December 1, 2010, insofar as they direct the cancellation of the notice of lis
pendens, are ANNULLED and SET ASIDE. The Register of Deeds of Cabuyao, Laguna
is ORDERED to re-annotate the notice of lis pendens  on TCT No. T-85026.

SO ORDERED. ChanRoblesVirtualawlibrary

Del Castillo, (Acting Chairperson), and Mendoza, JJ., concur.

Velasco, Jr., J.,  * please see dissenting opinion.
Brion, J., on leave.

Rule 15
1.HDMF vs Sps GR No 170292 June 22, 2011

G.R. No. 170292               June 22, 2011

HOME DEVELOPMENT MUTUAL FUND (HDMF), Petitioner,

vs.
Spouses FIDEL and FLORINDA R. SEE and Sheriff MANUEL L. ARIMADO, Respondents.

DECISION

DEL CASTILLO, J.:

A party that loses its right to appeal by its own negligence cannot seek refuge in the remedy of a writ of
certiorari.

This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assailing the August 31, 2005
Decision,2 as well as the October 26, 2005 Resolution,3 of the Court of Appeals (CA) in CA-G.R. SP No. 70828.
The dispositive portion of the assailed CA Decision reads thus:

WHEREFORE, premises considered, the instant petition is DENIED DUE COURSE and is accordingly
DISMISSED. The assailed Decision of the Regional Trial Court, Branch 6, Legazpi City dated February 21, 2002
and its Order dated March 15, 2002 are AFFIRMED.

SO ORDERED.4

Factual Antecedents

Respondent-spouses Fidel and Florinda See (respondent-spouses) were the highest bidders in the extrajudicial
foreclosure sale of a property5 that was mortgaged to petitioner Home Development Mutual Fund or Pag-ibig
Fund (Pag-ibig). They paid the bid price of ₱272,000.00 in cash to respondent Sheriff Manuel L. Arimado (Sheriff
Arimado). In turn, respondent-spouses received a Certificate of Sale wherein Sheriff Arimado acknowledged
receipt of the purchase price, and an Official Receipt No. 11496038 dated January 28, 2000 from Atty. Jaime S.
Narvaez, the clerk of court with whom Sheriff Arimado deposited the respondent-spouses’ payment.6

Despite the expiration of the redemption period, Pag-ibig refused to surrender its certificate of title to the
respondent-spouses because it had yet to receive the respondent-spouses’ payment from Sheriff Arimado7 who
failed to remit the same despite repeated demands.8 It turned out that Sheriff Arimado withdrew from the clerk of
court the ₱272,000.00 paid by respondent-spouses, on the pretense that he was going to deliver the same to
Pag-ibig. The money never reached Pag-ibig and was spent by Sheriff Arimado for his personal use.9
Considering Pag-ibig’s refusal to recognize their payment, respondent-spouses filed a complaint for specific
performance with damages against Pag-ibig and Sheriff Arimado before Branch 3 of the Regional Trial Court
(RTC) of Legazpi City. The complaint alleged that the law on foreclosure authorized Sheriff Arimado to receive,
on behalf of Pag-ibig, the respondent-spouses’ payment. Accordingly, the payment made by respondent-
spouses to Pag-ibig’s authorized agent should be deemed as payment to Pag-ibig.10 It was prayed that Sheriff
Arimado be ordered to remit the amount of ₱ 272,000.00 to Pag-ibig and that the latter be ordered to release the
title to the auctioned property to respondent-spouses.11

Pag-ibig admitted the factual allegations of the complaint (i.e., the bid of respondent-spouses,12 their full payment
in cash to Sheriff Arimado,13 and the fact that Sheriff Arimado misappropriated the money14) but maintained that
respondent-spouses had no cause of action against it. Pag-ibig insisted that it has no duty to deliver the
certificate of title to respondent-spouses unless Pag-ibig actually receives the bid price. Pag-ibig denied that the
absconding sheriff was its agent for purposes of the foreclosure proceedings.15

When the case was called for pre-trial conference, the parties submitted their Compromise Agreement for the
court’s approval. The Compromise Agreement reads:

Undersigned parties, through their respective counsels[,] to this Honorable Court respectfully submit this
Compromise Agreement for their mutual interest and benefit that this case be amicably settled, the terms and
conditions of which are as follows:

1. [Respondent] Manuel L. Arimado, Sheriff IV RTC, Legazpi acknowledges his obligation to the Home
Development Mutual Fund (PAG-IBIG), Regional Office V, Legazpi City and/or to [respondent-spouses]
the amount of ₱300,000.00, representing payment for the bid price and other necessary expenses
incurred by the [respondent-spouses], the latter being the sole bidder of the property subject matter of
the Extrajudicial Foreclosure Sale conducted by Sheriff Arimado on January 14, 2000, at the Office of
the Clerk of Court, RTC, Legazpi;

xxxx

3. Respondent Manuel L. Arimado due to urgent financial need acknowledge[s] that he personally used
the money paid to him by [respondent-spouses] which represents the bid price of the above[-]mentioned
property subject of the foreclosure sale. The [money] should have been delivered/paid by Respondent
Arimado to Home Development Mutual Fund (PAG-IBIG) as payment and in satisfaction of its mortgage
claim.

4. Respondent Manuel L. Arimado obligates himself to pay in cash to [petitioner] Home Development
Mutual Fund (PAG-IBIG) the amount of ₱272,000.00 representing full payment of its claim on or before
October 31, 2001 [so] that the title to the property [could] be released by PAG-IBIG to [respondent-
spouses]. An additional amount of ₱28,000.00 shall likewise be paid by [respondent] Arimado to the
[respondent-spouses] as reimbursement for litigation expenses;

5. [Petitioner] Home Development Mutual Fund (PAG-IBIG) shall upon receipt of the ₱272,000.00 from
[respondent] Manuel L. Arimado release immediately within a period of three (3) days the certificate of
title of the property above-mentioned to [respondent-spouses] being the rightful buyer or owner of the
property;

6. In the event [respondent] Manuel L. Arimado fails to pay [petitioner] Home Development Mutual Fund
(PAG-IBIG), or, [respondent-spouses] the amount of ₱272,000.00 on or before October 31, 2001, the
[respondent-spouses] shall be entitled to an immediate writ of execution without further notice to
respondent Manuel L. Arimado and the issue as to whether [petitioner] Home Development Mutual Fund
(PAG-IBIG) shall be liable for the release of the title to [respondent spouses] under the circumstances or
allegations narrated in the complaint shall continue to be litigated upon in order that the Honorable Court
may resolve the legality of said issue;

7. In the event [respondent] Manuel L. Arimado complies with the payment as above-stated, the parties
mutually agree to withdraw all claims and counterclaim[s] they may have against each other arising out
of the above-entitled case.16

The trial court approved the compromise agreement and incorporated it in its Decision dated October 31, 2001.
The trial court stressed the implication of paragraph 6 of the approved compromise agreement:
Accordingly, the parties are enjoined to comply strictly with the terms and conditions of their Compromise
Agreement.

In the event that [respondent] Manuel L. Arimado fails to pay [petitioner] HDMF (Pag-ibig), or [respondent-
spouses] the amount of ₱272,000.00 on October 31, 2001, the Court, upon motion of [respondent-spouses],
may issue the necessary writ of execution.

In this connection, with respect to the issue as to whether or not [petitioner] HDMF (Pag-ibig) shall be liable for
the release of the title of the [respondent-spouses] under the circumstances narrated in the Complaint which
necessitates further litigation in court, let the hearing of the same be set on December 14, 2001 at 9:00 o’clock in
the morning.

SO ORDERED.17

None of the parties sought a reconsideration of the aforequoted Decision.

When Sheriff Arimado failed to meet his undertaking to pay on or before October 31, 2001, the trial court
proceeded to rule on the issue of whether Pag-ibig is liable to release the title to respondent-spouses despite
non-receipt of their payment.18

Ruling of the Regional Trial Court19

The trial court rendered its Decision dated February 21, 2002 in favor of respondent-spouses, reasoning as
follows: Under Article 1240 of the Civil Code, payment is valid when it is made to a person authorized by law to
receive the same. In foreclosure proceedings, the sheriff is authorized by Act No. 3135 and the Rules of Court to
receive payment of the bid price from the winning bidder. When Pag-ibig invoked the provisions of these laws by
applying for extrajudicial foreclosure, it likewise constituted the sheriff as its agent in conducting the foreclosure
and receiving the proceeds of the auction. Thus, when the respondent-spouses paid the purchase price to
Sheriff Arimado, a legally authorized representative of Pag-ibig, this payment effected a discharge of their
obligation to Pag-ibig.

The trial court thus ordered Pag-ibig to deliver the documents of ownership to the respondent-spouses. The
dispositive portion reads thus:

WHEREFORE, premises considered, decision is hereby rendered in favor of the [respondent-spouses] and
against the [petitioner] HDMF, ordering said [petitioner] to execute a Release and/or Discharge of Mortgage, and
to deliver the same to the [respondent-spouses] together with the documents of ownership and the owner’s copy
of Certificate of Title No. T-78070 covering the property sold [to respondent-spouses] in the auction sale within
ten (10) days from the finality of this decision.

Should [petitioner] HDMF fail to execute the Release and/or Discharge of Mortgage and to deliver the same
together with the documents of ownership and TCT No. T-78070 within ten (10) days from the finality of this
decision, the court shall order the Clerk of Court to execute the said Release and/or Discharge of Mortgage and
shall order the cancellation of TCT No. T-78070 and the issuance of a second owner’s copy thereof.

SO ORDERED.20

Pag-ibig filed a motion for reconsideration on the sole ground that "[Pag-ibig] should not be compelled to release
the title to x x x [respondent-spouses] See because Manuel Arimado [has] yet to deliver to [Pag-ibig] the sum of
₱272,000.00."21

The trial court denied the motion on March 15, 2002. It explained that the parties’ compromise agreement duly
authorized the court to rule on Pag-ibig’s liability to respondent-spouses despite Sheriff Arimado’s non-
remittance of the proceeds of the auction.22

Pag-ibig received the denial of its motion for reconsideration on March 22, 200223 but took no further action.
Hence, on April 23, 2002, the trial court issued a writ of execution of its February 21, 2002 Decision.24

On May 24, 2002,25 Pag-ibig filed before the CA a Petition for Certiorari under Rule 65 in order to annul and set
aside the February 21, 2002 Decision of the trial court. Pag-ibig argued that the February 21, 2002 Decision,
which ordered Pag-ibig to deliver the title to respondent-spouses despite its non-receipt of the proceeds of the
auction, is void because it modified the final and executory Decision dated October 31, 2001.26 It maintained that
the October 31, 2001 Decision already held that Pag-ibig will deliver its title to respondent-spouses only upon
receipt of the proceeds of the auction from Sheriff Arimado. Since Sheriff Arimado did not remit the said amount
to Pag-ibig, the latter has no obligation to deliver the title to the auctioned property to respondent-spouses.27

Further, Pag-ibig contended that the February 21, 2002 Decision was null and void because it was issued
without affording petitioner the right to trial.28

Ruling of the Court of Appeals29

The CA denied the petition due course. The CA noted that petitioner’s remedy was to appeal the February 21,
2002 Decision of the trial court and not a petition for certiorari under Rule 65. At the time the petition was filed,
the Decision of the trial court had already attained finality. The CA then held that the remedy of certiorari was not
a substitute for a lost appeal.30

The CA also ruled that petitioner’s case fails even on the merits. It held that the February 21, 2002 Decision did
not modify the October 31, 2001 Decision of the trial court. The latter Decision of the trial court expressly
declared that in case Sheriff Arimado fails to pay the ₱272,000.00 to Pag-ibig, the court will resolve the
remaining issue regarding Pag-ibig’s obligation to deliver the title to the respondent-spouses.31

As to the contention that petitioner was denied due process when no trial

was conducted for the reception of evidence, the CA held that there was no need for the trial court to conduct a
full-blown trial given that the facts of the case were already admitted by Pag-ibig and what was decided in the
February 21, 2002 Decision was only a legal issue.32

Petitioner filed a motion for reconsideration33 which was denied for lack of merit in the Resolution dated October
26, 2005.34

Issues

Petitioner then raises the following issues for the Court’s consideration:

1. Whether certiorari was the proper remedy;

2. Whether the February 21, 2002 Decision of the trial court modified its October 31, 2001 Decision
based on the compromise agreement;

3. Whether petitioner was entitled to a trial prior to the rendition of the February 21, 2002 Decision.

Our Ruling

Petitioner argues that the CA erred in denying due course to its petition for certiorari and maintains that the
remedy of certiorari is proper for two reasons: first, the trial court rendered its February 21, 2002 Decision
without the benefit of a trial; and second, the February 21, 2002 Decision modified the October 31, 2001
Decision, which has already attained finality. These are allegedly two recognized instances where certiorari lies
to annul the trial court’s Decision because of grave abuse of discretion amounting to lack of jurisdiction.35

The argument does not impress.

"[C]ertiorari is a limited form of review and is a remedy of last recourse."36 It is proper only when appeal is not
available to the aggrieved party.37 In the case at bar, the February 21, 2002 Decision of the trial court was
appealable under Rule 41 of the Rules of Court because it completely disposed of respondent-spouses’ case
against Pag-ibig. Pag-ibig does not explain why it did not resort to an appeal and allowed the trial court’s
decision to attain finality. In fact, the February 21, 2002 Decision was already at the stage of execution when
Pag-ibig belatedly resorted to a Rule 65 Petition for Certiorari. Clearly, Pag-ibig lost its right to appeal and tried
to remedy the situation by resorting to certiorari. It is settled, however, that certiorari is not a substitute for a lost
appeal, "especially if the [party’s] own negligence or error in [the] choice of remedy occasioned such loss or
lapse."38
Moreover, even assuming arguendo that a Rule 65 certiorari could still be resorted to, Pag-ibig’s petition would
still have to be dismissed for having been filed beyond the reglementary period of 60 days from notice of the
denial of the motion for reconsideration.39 Pag-ibig admitted receiving the trial court’s Order denying its Motion
for Reconsideration on March 22, 2002;40 it thus had until May 21, 2002 to file its petition for certiorari. However,
Pag-ibig filed its petition only on May 24, 2002,41 which was the 63rd day from its receipt of the trial court’s order
and obviously beyond the reglementary 60-day period.

Pag-ibig stated that its petition for certiorari was filed "within sixty (60) days from receipt of the copy of the writ of
execution by petitioner [Pag-ibig] on 07 May 2002," which writ sought to enforce the Decision assailed in the
petition.42 This submission is beside the point. Rule 65, Section 4 is very clear that the reglementary 60-day
period is counted "from notice of the judgment, order or resolution" being assailed, or "from notice of the denial
of the motion [for reconsideration]," and not from receipt of the writ of execution which seeks to enforce the
assailed judgment, order or resolution. The date of Pag-ibig’s receipt of the copy of the writ of execution is
therefore immaterial for purposes of computing the timeliness of the filing of the petition for certiorari. 1avvphi1

Since Pag-ibig’s petition for certiorari before the CA was an improper remedy and was filed late, it is not even
necessary to look into the other issues raised by Pag-ibig in assailing the February 21, 2002 Decision of the trial
court and the CA’s rulings sustaining the same. At any rate, Pag-ibig’s arguments on these other issues are
devoid of merit.

As to Pag-ibig’s argument that the February 21, 2002 Decision of the RTC is null and void for having been
issued without a trial, it is a mere afterthought which deserves scant consideration. The Court notes that Pag-ibig
did not object to the absence of a trial when it sought a reconsideration of the February 21, 2002 Decision.
Instead, Pag-ibig raised the following lone argument in their motion:

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

Under the Omnibus Motion Rule embodied in Section 8 of Rule 15 of the Rules of Court, all available objections
that are not included in a party’s motion shall be deemed waived.

Pag-ibig next argues that the February 21, 2002 Decision of the trial court, in ordering Pag-ibig to release the
title despite Sheriff Arimado’s failure to remit the ₱272,000.00 to Pag-ibig, "modified" the October 31, 2001
Decision. According to Pag-ibig, the October 31, 2001 Decision allegedly decreed that Pag-ibig would deliver the
title to respondent-spouses only after Sheriff Arimado has paid the ₱272,000.00.44 In other words, under its
theory, Pag-ibig cannot be ordered to release the title if Sheriff Arimado fails to pay the said amount.

The Court finds no merit in this argument. The October 31, 2001 Decision (as well as the Compromise
Agreement on which it is based) does not provide that Pag-ibig cannot be ordered to release the title if Sheriff
Arimado fails to pay. On the contrary, what the Order provides is that if Sheriff Arimado fails to pay, the trial court
shall litigate (and, necessarily, resolve) the issue of whether Pag-ibig is obliged to release the title. This is based
on paragraph 6 of the Compromise Agreement which states that in the event Sheriff Arimado fails to pay, "the
[respondent-spouses] shall be entitled to an immediate writ of execution without further notice to [Sheriff]
Arimado and the issue as to whether [Pag-ibig] shall be liable for the release of the title to [respondent spouses]
under the circumstances or allegations narrated in the complaint shall continue to be litigated upon in order that
the Honorable Court may resolve the legality of said issue." In fact, the trial court, in its October 31, 2001
Decision, already set the hearing of the same "on December 14, 2001 at 9:00 o’clock in the morning."45

It is thus clear from both the October 31, 2001 Decision and the Compromise Agreement that the trial court was
authorized to litigate and resolve the issue of whether Pag-ibig should release the title upon Sheriff Arimado’s
failure to pay the ₱272,000.00. As it turned out, the trial court eventually resolved the issue against Pag-ibig, i.e.,
it ruled that Pag-ibig is obliged to release the title. In so doing, the trial court simply exercised the authority
provided in the October 31, 2001 Decision (and stipulated in the Compromise Agreement). The trial court did not
thereby "modify" the October 31, 2001 Decision.

WHEREFORE, premises considered, the petition is DENIED. The assailed August 31, 2005 Decision, as well as
the October 26, 2005 Resolution, of the Court of Appeals in CA-G.R. SP No. 70828 are AFFIRMED.

SO ORDERED.
 2.Valderrama v. People
G.R. No. 220054 (Resolution), March 27, 2017

July 26, 2017

G.R. No. 197032

SECURITIES AND EXCHANGE COMMISSION, Petitioner

vs.
PRICE RICHARDSON CORPORATION, CONSUELO VELARDE-ALBERT, and GORDON RESNICK,
Respondents

DECISION

LEONEN, J.:

The determination of probable cause for purposes of filing an information is lodged with the public prosecutor. It
is not reviewable by courts unless it is attended by grave abuse of discretion.

This is a Petition for Review on Certiorari  under Rule 45 of the Rules of Court, praying that the Court of Appeals
1

Decision  dated May 26, 2011 and the Department of Justice Resolutions dated April 12, 2005  and July 5,
2 3

2006  be reversed and set aside.  The Court of Appeals affirmed the assailed Resolutions of the Department of
4 5

Justice, which denied the Petition for Review filed by the Securities and Exchange Commission
(petitioner).  Petitioner prays for the filing of an Information against Price Richardson Corporation, Consuelo
6

Velarde-Albert, and Gordon Resnick (respondents) for violating Sections 26.3 and 28 of the Securities
Regulation Code. 7

Respondent Price Richardson Corporation (Price Richardson) is a Philippine corporation duly incorporated
under Philippine laws on December 7, 2000.  Its primary purpose is "[t]o provide administrative services which
8

includes but is not limited to furnishing all necessary and incidental clerica], bookkeeping, mailing and billing
services." 9

On October 17, 2001, its former employee, Michelle S. Avelino, (Avelino) executed a sworn affidavit at the
National Bureau of Investigation's Interpol Division,  alleging that Price Richardson was "engaged in boiler room
10

operations, wherein the company sells non[-] existent stocks to investors using high pressure sales
tactics."  Whenever this activity was discovered, the company would close and emerge under a new company
11

name.  Pertinent portions of her sworn statement read:

12

Q03: State your reason why you are here at the NBI Interpol?

A: I am here to give a statement about the "boiler room" operation of PRICE RICHARDSON CORPORATION.

Q04: What do you mean by "boiler room"?

A: A boiler room is a company which sells non-existent stocks to investors by using high pressure sales tactics.
They had no intention of paying the duped investors and when their operation ha[s] been discovered this
company would close and would spring up under a new name. I know this for a fact because I used to work
before with New Millennium Market Research, Inc. which was shut down after the duped victims reported to
authorities [its] illegal activities. New Millennium Market Research, Inc. eventually became Price Richardson.
Boiler Room operation is an illegal activity considering that the company has no license from the Securities and
Exchange Commission to deal on securities or stocks.

Q05: Why do you know that Price Richardson is a "boiler room"?

A: I used to work there as a telemarketer from September 3, 2001 to October 15, 2001.

Q06: As telemarketer at Price Richardson what do you do?

A: Our supervisor would give "leads" for me to call. "Leads" are names of prospective investors. Upon
contracting a prospective investor, I would read a prepared "script" or presentation of the company's profile and
the services it offers. If the prospect is interested, I will write all the information about this person and would
forward the same to our supervisor JOVY AGUDO. All our leads or prospects are foreigners.

Q07: As a telemarketer, how many calls do you make in a day and how many investors do you qualify?

[A:] I average 100 calls a day and I can qualify an average of six (6) would[-]be investors daily.

....

Ql0: After you qualify a prospective investor, what happens next?

A: The company will send him a newsletter and then the salesman would contact him and [use] high-pressure
sales tactics to make a sale of non-existent stocks. The salesmen would use the data and information gathered
by the telemarketers and would make reference to the calls or initial contact made by telemarketers. If the
investor agreed, the salesman would give him instructions on how to send the money to the company. Usually,
the payment is made through telegraphic transfers. After the payment has been received, a confirmation receipt
would then be sen[t] by the courier to the investor indicating therein the name of the company where the alleged
investment was made, the number of shares, the amount per share, the tax and commissions paid. However, no
hard copy of the stocks or certificates will be issued for in truth and in fact there was no actual sale or transfer of
stocks or certificates for they are non-existent. In the event that the investor would then sell his certificates or
stocks, the salesman would try to convince the investor not to sell in order not to release the money. Eventually,
the company would disappear and would spring up under a new name.

Qll: Who are these salesmen?

A: The salesmen are all foreigners of various nationalities. They used also a prepared script to induce the
prospective client to invest.

....

Q13: Do you know if these salesmen are licensed stockbrokers duly authorized by the Securities and Exchange
Commission?

A: They are not licensed by the Securities and Exchange Commission. They are tourists here in the country and
they used aliases to hide their identities.
13

Janet C. Rillo corroborated Avelino's claims.  She was a former employee of Capital International Consultants,
14

Inc. (Capital International), acorporation that allegedly merged with Price Richardson.  She claimed that their
15

calls to prospective investors should be in Price Richardson's name.  Pertinent portions of her sworn statement
16

read:

07. Q: You said that CAPITAL INTERNATIONAL CONSULTANTS CORP. has just merged with Price
Richardson Inc., can you elaborate on this?

A: Yes, just this September, we have been informed of the [merge]. In fact we have been instructed to use the
name of Price Richardson in our calls starting September 2001.

....

09. Q: Can you describe the process in, as you said - "qualify clients as possible investors"?

A: I make overseas calls to individuals listed in our Client Leads. The "Client Leads" contains a list of the names
of the top-level personnel of international companies, it includes their address and telephone numbers. From
these leads, we select clients to call and offer them a free subscription of our "Financial News Letter".

....

11. Q: What does these "Financial News Letter" contain?

A: It contains the current status of the worldwide stock market.

12: Q: So what happens when a client agrees to subscribe in your news letter?

A: We then check from our list if the information we have regarding their address and telephone numbers [is]
correct. This is to check their mail preference - where they would like us to send the news letter.

13. Q: What happens after that?

A: Those who agree to receive the subscription are considered as qualified clients. We then fill out a "SALES
LEAD" card, which reflects the information of the client. We then forward these cards to the marketing
department, consisting of the encoders and other telemarketers. These people are the ones who send the
newsletters and transaction receipts to clients. Their office is located at the Price Richardson Office, 31st Floor
Citibank Tower, Paseo De Roxas, Makati. It is from these cards that our foreigner salesmen could get possible
investors. These possible investors would then be sold with non-existent stocks.

....

15. Q: So are you saying that CAPITAL INTERNATIONAL CONSULTANTS CORP and/or PRICE
RICHARDSON, Inc. is engaged in the illegal trading of stocks to clients?

A: Yes. When I applied for the job, I was briefed by ANNE BENWICK, the Operations Manager, about the nature
of their [b]usiness. She said that the company is engaged in trading stocks, and my job as a Telemarketer would
be to "qualify clients" who might become possible investors. I am also aware of the nature of their business since
I have been employed in a similar company. 17

Upon application of the National Bureau of Investigation Interpol Division  and the Securities and Exchange
18

Commission  on November 15, 2001, Branch 143, Regional Trial Court, Makati City issued three (3) search
19

warrants against Capital International and Price Richardson for violation of Section 28  of the Securities
20

Regulation Code.  The Regional Trial Court ordered the seizure of Price Richardson's and Capital International's
21

office equipment, documents, and other items that were connected with the alleged violation. 22

On November 16, 2001, the search warrants were served and Price Richardson's office equipment and
documents were seized. 23

On December 4, 2001, the Securities and Exchange Commission filed before the Department of Justice its
complaint against Price Richardson, Clara Arlene Baybay (Baybay), Armina A. La Torre (La Torre), Manuel Luis
Limpin (Limpin), Editha C. Rupido (Rupido ), Jose C. Taopo (Taopo ), Consuelo Velarde-Albert (Velarde-Albert),
and Gordon Resnick (Resnick) for violation of Article 315(1)(b)  of the Revised Penal Code and Sections
24

26.3  and 28 of the Securities Regulation Code.  Baybay, La Torre, Limpin, Rupido, and Taopo (the
25 26

incorporators and directors) were Price Richardson's incorporators and directors.  Velarde-Albert was its
27

Director for Operations and Resnick was its Associated Person. 28

The Securities and Exchange Commission alleged that Price Richardson was neither licensed nor registered "to
engage in the business of buying and selling securities within the Philippines or act as salesman, or an
associated person of any broker or dealer."  As shown by the seized documents and equipment, Price
29

Richardson engaged in seeking clients for the buying and selling of securities, thereby violating Sections 26.3
and 28 of the Securities Regulation Code. 30

The Securities and Exchange Commission claimed that Velarde-Albert and Resnick should be liable for acting
as brokers or salesmen despite not being registered.  Meanwhile, the incorporators and directors' liability was
31

based on being responsible "for the corporate management with the obligation to ensure that [Price Richardson]
operate[d] within the bounds of law."32

Price Richardson, Velarde-Albert, Resnick, and the incorporators and directors were also charged with Estafa
under Article 315(1)(b) of the Revised Penal Code. The Securities and Exchange Commission averred that they
obtained their investors' confidence by comporting themselves as legitimate stock brokers.  Thus, when they
33

failed to return the investments they received, their act "constitute[d] misappropriation with abuse of
confidence."34
In defense, the incorporators and directors denied knowing or agreeing to the offenses charged. They countered
that they already transferred their respective shares to various individuals in December 2000, as shown by their
registered Deeds of Absolute Sale of Shares of Stock.  Velarde-Albert denied the Securities and Exchange
35

Commission's allegations against her while Resnick did not submit any evidence refuting the charges. 36

On March 13, 2002, State Prosecutor Aristotle M. Reyes (State Prosecutor Reyes) issued a
Resolution,  dismissing the Securities and Exchange Commission's complaint "for lack of probable cause."  He
37 38

found that:

[C]omplainant SEC failed to adduce evidence showing respondent Price's alleged unauthorized trading. While it
is true that based on the certification issued by the SEC, respondent-corporation has no license to buy or sell
securities, it does not, however, follow, that said corporation had indeed engaged in such business. It is
imperative for complainant to prove the respondent-corporation's affirmative act of buying and selling securities
to constitute the offense charged. It cannot be established on the expedient reason that a corporation is not
license[d] or authorize[d] to trade securities. He who alleges a positive statement has the burden of proving the
same.

The various "confirmation of trade" receipts ... taken singly, does not prove violation of Sections 26.3 and 28 of
the Securities Regulation Code. Far from proving the offense charged, those confirmation of trade could very
well mean that indeed respondent Price was merely "providing administrative services of furnishing all necessary
and incidental clerical, bookkeeping, mailing and billing services" pursuant to its primary purpose as embodied in
its articles of incorporation. There is no evidence that indeed anyone transacted business much less purchased
or sold securities with any of the respondents acting as broker or dealer in securities. In other words, the burden
of proving that respondents made various offers to sell unregistered securities; that the offers were accepted;
and, that agreements of sale were reached and consummated, has not been dislodged by the complainant.
Independent proof of the various stages of a sale transaction is necessary to show violation of Sections 26.3 and
28 of the Securities Regulation Code. 39

State Prosecutor Reyes absolved the incorporators and directors from any liability considering that they already
relinquished their positions as directors of Price Richardson when they transferred their shares to third
parties.  He also found Velarde-Albert and Resnick not liable for lack of sufficient proof that they engaged in the
40

trading of securities.
41

On the allegation of conspiracy, State Prosecutor Reyes held that because the facts failed "to establish the
alleged unauthorized trading, or the fraudulent investments that constitute the crime charged, there can be no
basis in determining collective criminal responsibility."  Finally, State Prosecutor Reyes ruled that there was no
42

sufficient evidence to show that Price Richardson, Velarde-Albert, Resnick, and the incorporators and directors
deceived investors that would constitute the crime of estafa withabuse of confidence.  43

In the meantime, individuals claiming to have agreed to purchase

securities from Price Richardson and have been defrauded surfaced and executed sworn statements against
it.  They claimed that Price Richardson engaged in illegal trade of securities.  They filed complaints against
44 45

Price Richardson before the Department of Justice for violation of Article 315(1)(b) of the Revised Penal Code
and Sections 26.3 and 28 of the Securities Regulation Code. 46

The Securities and Exchange Commission moved for reconsideration  of the March 13, 2002 Resolution, which
47

was denied by State Prosecutor Reyes in a Resolution  dated May 31, 2002.
48

The Securities and Exchange Commission filed before the Department of Justice a Petition for Review  of State
49

Prosecutor Reyes' March 13, 2002 and May 31, 2002 Resolutions. This was denied in the April 12, 2005
Resolution  of Department of Justice Secretary Raul M. Gonzalez (Secretary Gonzalez). The Securities and
50

Exchange Commission filed a Motion for Reconsideration  of the April 12, 2005 Resolution but this was denied
51

by Secretary Gonzalez in his July 5, 2006 Resolution. 52

The Securities and Exchange Commission filed a Petition for Certiorari  against Secretary Gonzalez, Price
53

Richardson, Velarde-Albert, and Resnick before the Court of Appeals for the annulment of Secretary Gonzalez's
April 12, 2005 and July 5, 2006 Resolutions. 54
On May 26, 2011, the Court of Appeals promulgated a Decision  affirming the assailed Resolutions.  The Court
55 56

of Appeals held that there was no grave abuse of discretion on the part of Secretary Gonzalez when he affirmed
State Prosecutor Reyes' Resolutions, which found no probable cause to file an information. 57

The Court of Appeals found that the affidavits executed by Price Richardson's employees were merely
surmises.  They did not have personal knowledge of the security trading since their jobs were limited to
58

persuading people to get newsletter subscriptions.  Indeed, the documents seized from Price Richardson's office
59

showed a transaction between it and an investor.  However, "no clear and specific acts of buying or selling of
60

securities were alleged and substantiated by the SEC[.]" 61

The alleged investors' affidavits were not sufficient to find probable cause because the alleged transactions
transpired over the phone and while these investors were not in the Philippines.  Moreover, since the traded 62

stocks were not of domestic corporations or from corporations doing business in the Philippines, Philippine penal
laws could not be applied. 63

Lastly, there was no basis for the complaints against Velarde-Albert and Resnick because they were neither
board members nor stockholders of the corporation. The complaint did not allege any particular act that can be
interpreted as their direct participation in the purported illegal stock trading. 64

Hence, on July 26, 2011, the Securities and Exchange Commission filed a Petition for Review  before this Court 65

against Price Richardson, Velarde-Albert, and Resnick. It assailed the May 26, 2011 Decision of the Court of
Appeals and the April 12, 2005 and July 5, 2006 Resolutions of Secretary Gonzalez and prayed for the filing of
an information against respondents for violation of Sections 26.3 and 28 of the Securities Regulation Code. 66

Petitioner claims that Secretary Gonzalez committed grave abuse of discretion in not finding probable cause to
indict respondents.  The complainants who claimed to have been defrauded by respondents and the documents
67

and equipment seized show that respondent Price Richardson was engaged in buying and selling securities
without license or authority.  On the liability of respondents Velarde-Albert and Resnick, petitioner asserts that
68

the seized documents sufficiently show that they acted as salesmen or associated persons under Section 28 of
the Securities Regulation Code. 69

On December 7, 2011, respondent Price Richardson filed its Comment,  arguing that the determination of
70

probable cause is an executive function and is reviewable by courts only upon showing of grave abuse of
discretion.  The Department of Justice did not gravely abuse its discretion when it found that there was no
71

probable cause to indict respondents for violation of the Securities Regulation Code.  Respondent Price 72

Richardson's former employees' sworn statements contained factual claims that were outside their personal
knowledge or conclusions of law that were beyond their capacity to make. 73

Respondent Price Richardson insists that Section 28 of the Securities Regulation Code prohibits anyone from
engaging in the business of buying and selling securities without registration from the Securities and Exchange
Commission if those transactions are offered "to the public within the Philippines[.]"  This provision does not 74

apply in this case because the alleged buyers of securities were not citizens of or resided in the Philippines.
Additionally, the allegedly sold or offered securities were registered outside the Philippines, where the alleged
sales also transpired. Hence, these sales are not under the Philippine jurisdiction. 75

Respondent Resnick filed his Comment  on January 11, 2012 while respondent Velarde-Albert filed her
76

Comment  on April 23, 2013. Both respondents argue that the complaints did not allege any act attributable to
77

them or related to the alleged transactions involved.  Respondent Velarde Albert also contends that there was
78

no question of law raised in the Petition, which is required in a Rule 45 petition. 79

On November 4, 2013, petitioner filed its Consolidated Reply.  Petitioner posits that direct invocation of this
80

Court's original jurisdiction is allowed as its petition is an exception to the rule that only questions of law may be
raised in a Rule 45 petition.  Petitioner alleges that the Court of Appeals' grave abuse of discretion and its
81

Decision, which was based on a misapprehension of facts and was contradicted by evidence on record,  make 82

its Petition an exception to the rule. 83

On December 2, 2013, this Court issued a Resolution,  giving due course to the Petition and required the parties
84

to file their respective memoranda.

Petitioner filed its Memorandum  on March 21, 2014. Respondents Velarde-Albert, Resnick, and Price
85

Richardson submitted their Memoranda on February 24, 2014,  April 3, 2014,  and May 8, 2014,  respectively.
86 87 88
This Court resolves the following issues:

First, whether courts may pass upon the prosecutor's determination of probable cause; and

Finally, whether there is probable cause to indict respondents for violation of Sections 26.3 and 28 of the
Securities Regulation Code and Article 315(1)(b) of the Revised Penal Code

Courts may pass upon the prosecutor's determination of probable cause only upon a showing of grave abuse of
discretion.

Probable cause, in relation to the filing of an information, was explained by this Court in Villanueva v. Secretary
of Justice:  89

Probable cause, for purposes of filing a criminal information, has been defined as such facts as are sufficient to
engender a well-founded belief that a crime has been committed and that the private respondent is probably
guilty thereof. It is such a state of facts in the mind of the prosecutor as would lead a person of ordinary caution
and prudence to believe or entertain an honest or strong suspicion that a thing is so. The term does not mean
"actual or positive cause;" nor does it import absolute certainty. It is merely based on opinion and reasonable
belief. Thus, a finding of probable cause does not require an inquiry into whether there is sufficient evidence to
procure a conviction. It is enough that it is believed that the act or omission complained of constitutes the offense
charged. 90

The definition of probable cause was lifted from Rule 112, Section 1, paragraph 1 of the Revised Rules of
Criminal Procedure, which states:

RULE 112

Preliminary Investigation

Section 1. Preliminary Investigation Defined; When Required. - Preliminary investigation is an inquiry or

proceeding to determine whether there is sufficient ground to engender a well-founded belief that a crime has
been committed and the respondent is probably guilty thereof, and should be held for trial.

Under Rule 112, preliminary investigation must be conducted to determine the existence of probable
cause.  In Andres v. Justice Secretary Cuevas, this Court stressed that:
91 92

[Preliminary investigation] is not the occasion for the full and exhaustive display of their evidence. The presence
or absence of the elements of the crime is evidentiary in nature and is a matter of defense that may be passed
upon after a full-blown trial on the merits.

In fine, the validity and merits of a party's defense or accusation, as well as admissibility of testimonies and
evidence, are better ventilated during trial proper than at the preliminary investigation level.  (Citations omitted)
93

It has long been established that the determination of probable cause to charge a person of a crime is an
executive function,  which pertains to and lies within the discretion of the public prosecutor and the justice
94

secretary. 95

If the public prosecutor finds probable cause to charge a person with a crime, he or she causes the filing of an
information before the court.  The court may not pass upon or interfere with the prosecutor's determination of the
96

existence of probable cause to file an information regardless of its correctness.  It does not review the
97

determination of probable cause made by the prosecutor. It does not function as the prosecutor's appellate
court.  Thus, it is also the public prosecutor who decides "what constitutes sufficient evidence to establish
98

probable cause." 99

However, if the public prosecutor erred in its determination of probable cause, an appeal can be made before
the Department of Justice Secretary. Simultaneously, the accused may move for the suspension of proceedings
until resolution of the appeal. 100
Upon filing of the information before the court, judicial determination of probable cause is initiated. The court
shall make a personal evaluation of the prosecutor's resolution and its supporting evidence.  Unlike the
101

executive determination of probable cause, the purpose of judicial determination of probable cause is "to
ascertain whether a warrant of arrest should be issued against the accused."  This determination is independent
102

of the prosecutor's determination of probable cause and is a function of courts for purposes of issuance of a
warrant of arrest.

Judicial determination of probable cause is in consonance with Article III, Section 2 of the Constitution:

ARTICLE III

Bill of Rights

....

Section 2. The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable, and no search
warrant or warrant of arrest shall issue except upon probable cause to be determined personally by the
judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched and the persons or things to be seized. (Emphasis supplied)

Accordingly, a judge may immediately dismiss the case if he or she finds that there is no probable cause to issue
a warrant of arrest based on the records.  To protect the accused's right to liberty,  the trial court may dismiss
103 104

an information based on "its own independent finding of lack of probable cause"  when an information has
105

already been filed and the court is already set to determine probable cause to issue a warrant of arrest.

Thus, the general rule is that the determination of probable cause is an executive function which courts cannot
pass upon. As an exception, courts may interfere with the prosecutor's determination of probable cause only
when there is grave abuse of discretion.  Grave abuse of discretion constitutes "a refusal to act in contemplation
106

of law or a gross disregard of the Constitution, law, or existing jurisprudence, [accompanied by] a whimsical and
capricious exercise of judgment amounting to lack of jurisdiction." 107

A prosecutor gravely abuses his or her discretion in not finding probable cause by disregarding or overlooking
evidence that "are sufficient to form a reasonable ground to believe that the crime ... was committed and that the
respondent was its author."  Further, "what is material to a finding of probable cause is the commission of acts
108

constituting [the offense], the presence of all its elements and the reasonable belief, based on evidence, that the
respondent had committed it." 109

In this case, grave abuse of discretion exists, which warrants this Court's interference in the conduct of the
executive determination of probable cause.

II

Petitioner provided sufficient bases to form a belief that a crime was possibly committed by respondent Price
Richardson.

The complaint alleged that respondents committed violations of the following:

SECURITIES REGULATION CODE

Section 26. Fraudulent Transactions. - It shall be unlawful for any person, directly or indirectly, in connection with
the purchase or sale of any securities to:

....

26.3. Engage in any act, transaction, practice or course of business which operates or would operate as a fraud
or deceit upon any person.

....
Section 28. Registration of Brokers, Dealers, Salesmen and Associated Persons. - 28.1. No person shall engage
in the business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman, or an
associated person of any broker or dealer unless registered as such with the Commission.

REVISED PENAL CODE

ARTICLE 315. Swindling (Estafa). - Any person who shall defraud another by any of the means mentioned
hereinbelow shall be punished by:

....

4th. By arresto mayor in its medium and maximum periods, if such amount does not exceed 200 pesos,
provided that in the four cases mentioned, the fraud be committed by any of the following means:

1. With unfaithfulness or abuse of confidence, namely:

....

(b) By misappropriating or converting, to the prejudice of another, money, goods, or any other personal property
received by the offender in trust or on commission, or for administration, or under any other obligation involving
the duty to make delivery of or to return the same, even though such obligation be totally or partially guaranteed
by a bond; or by denying having received such money, goods, or other property.

An examination of the records reveals that probable cause exists to file an information against respondent Price
Richardson for violating the laws.

Based on the Certification  dated October 11, 2001 issued by the Market Regulation Department of the
110

Securities and Exchange Commission, respondent Price Richardson "has never been issued any secondary
license to act as broker/dealer in securities, investment house and dealer in government securities."  Petitioner
111

also certified that respondent Price Richardson "is not, under any circumstances, authorized or licensed to
engage and/or solicit investments from clients." 112

However, the documents seized from respondent Price Richardson's office show possible sales of securities.
These documents include:

a) A company brochure consisting of 8 pages which declares that it is a financial consultant geared towards
portfolio investment advice and other financial services to investors ...

b) Detailed Quotes of OWTNF Otis-Winston Ltd. shares downloaded from the Bloomberg.com website which
indicates its price, return, fundamentals and other matters ...

c) Confirmation of Trade issued by the respondent to its client MR. PETER VAN DER HAEGEN which indicates
that he bought on Oc[to]ber 16, 2001 750 Otis-[W]inston Ltd at $4.15 price per share for $3,112.50 ...

d) Confirmation of Trade issued by the respondent to MR. RENNY NAIR who bought 500 shares of Hugo
International (HGOI) at $5.75 per share for which he paid $2,932.50 ... and Telegraphic Transfer from Oman
U.A.E. Exchange Centre & Co. LLC made by Mr. Nair to PRICE RICHARDSON to the latter's bank account No.
103-719221-0 in China Banking Corporation in the amount of $2932.50 ...

e) Confirmation of Trade issued by the respondent to MR. JOHANNES DE KORTE who bought 500 shares of
Otis-Winston Ltd (OWTNF) at $5.05 per share for which he paid $2,575.50 ...

f) Confirmation of Trade issued by the respondent to MR. JUERGEN GEIGER who bought 2500 shares of Hugo
International at $4.65 per share for which he paid $11,857.50 ...

g) Confirmation of Trade issued by the respondent to MR. ZULKEPLI HAMID who bought 2000 shares of
OWTNF at $5.05 per share for which he paid $10,302 ...
h) Telegraphic Transfers issued by China Banking Corporation to Union Bank of California International NY with
Price Richardson as the Order Party and M.L. Vitale as the beneficiary in the amount of $2000 and Citibank
Belgium as the Beneficiary Bank ...

i) Confirmation of Trade issued by the respondent to MR. Junzo Watanabe who bought 2500 shares of OWTNF
at $3.90 per share and sold 1500 Geoalert (GEOA) shares for which he paid $3,525 ...

j) First Hawaiian Bank check issued by Junzo Watanabe payable to the Order of Price Richardson[.] 113

Petitioner further supports its charges by submitting the complaint-affidavits and letters of individuals who
transacted with Price Richardson:

The SEC has submitted the complaint of Mr. Don Sextus Nilantha, a citizen of Sri Lanka who clearly named
Price Richardson as selling him 1000 shares of Hugo Intl. Telecom, Inc. sometime in April 2001. At such time,
and until today, Price Richardson was not authorized to act as traders or brokers o[f] securities in the
Philippines.

Furthermore, there are other complainants against Price Richardson who deserve to have their complaints aired
and tried before the proper court.  Mr. Johannes Jacob Van Prooyen filed a complaint against Price Richardson
1âwphi1

with the National Bureau of Investigation ... In the said complaint, Mr. Van Prooyen clearly pointed to Price
Richardson as the ones who contacted him on June 12, 2001 to buy 2000 shares of Hugo Intl. Telecom, Inc. and
on July 10, 2001 to buy 2000 shares of GeoAlert. At no time at such relevant dates was Price Richardson
licensed to act as traders or brokers of securities in the Philippines.

Mr. Bjorn L. Nymann of Oslo, Norway wrote about Price Richardson to this very same Department of Justice,
which letter was received on July 9, 2002. In his letter Mr. Nymann admitted dealing with Price Richardson. He
admitted to having bought 3000 shares of Hugo Intl. Telecom, Inc .... Although Mr. Nymann is not a complaining
witness against Price Richardson, his letter is relevant as at no time at such relevant date was Price Richardson
licensed to act as traders or brokers of securities in the Philippines.
114

In addition, respondent Price Richardson stated in its Memorandum:

If this Honorable Court were to consider the set-up of Price Richardson, it was as if it engaged in outsourced
operations wherein persons located in the Philippines called up persons located in foreign locations to inform
them of certain securities available in certain locations, and to determine if they wanted to buy these securities
which are offered in a different country. 115

The evidence gathered by petitioner and the statement of respondent Price Richardson are facts sufficient
enough to support a reasonable belief that respondent is probably guilty of the offense charged.

III

However, respondents Velarde-Albert and Resnick cannot be indicted for violations of the Securities Regulation
Code and the Revised Penal Code.

Petitioner failed to allege the specific acts of respondents Velarde-Albert and Resnick that could be interpreted
as participation in the alleged violations.  There was also no showing, based on the complaints, that they were
1âwphi1

deemed responsible for Price Richardson's violations. As found byState Prosecutor Reyes in his March 13, 2002
Resolution:

[T]here is no sufficient evidence to substantiate SEC's allegation that individual respondents, Connie Albert and
Gordon Resnick, acted as broker, salesman or associated person without prior registration with the Commission.
The evidence at hand merely proves that the above-named respondents were not licensed to act as broker,
salesman or associated person. No further proof, however, was presented showing that said respondents have
indeed acted as such in trading securities. Although complainant SEC presented several confirmation of trade
receipts and documents intended to establish respondents Albert and Resnick illegal activities, the said
documents, standing alone as heretofore stated, could not warrant the indictment of the two respondents for the
offense charged. 116
A corporation's personality is separate and distinct from its officers, directors, and shareholders. To be held
criminally liable for the acts of a corporation, there must be a showing that its officers, directors, and
shareholders actively participated in or had the power to prevent the wrongful act. 117

WHEREFORE, premises considered, the Petition is PARTIALLY GRANTED. The Court of Appeals Decision

dated May 26, 2011 and Department of Justice Secretary Raul M. Gonzalez's Resolutions dated April 12, 2005
and July 5, 2006 are AFFIRMED in so far as they find no grave abuse of discretion in the dismissal of the
complaints for lack of probable cause against Consuelo Velarde-Albert and Gordon Resnick for: a) committing
Estafa under Article 315(1)(b) of the Revised Penal Code and b) violating Sections 26.3 and 28 of the Securities
Regulation Code.

This Court, however, finds that the dismissal of the complaint for lack of probable cause against Price
Richardson Corporation for violation of Sections 26.3 and 28 of the Securities Regulation Code was rendered
with grave abuse of discretion amounting to lack or excess of jurisdiction and is, thus, ANNULLED and SET
ASIDE.

SO ORDERED.

Rule 17
1.Blay vs Bana March 7, 2018
G.R. No. 175507, October 8, 2014

March 7, 2018

G.R. No. 232189

ALEX RAUL B. BLAY, Petitioner

vs.
CYNTHIA B. BANA, Respondent

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari  are the Decision  dated February 23, 2017 and the
1 2

Resolution  dated June 6, 2017 of the Court of Appeals (CA) in CA-G.R. SP No. 146138, which affirmed the
3

Orders dated May 29, 2015  and March 3, 2016  of the Regional Trial Court of Pasay City, Branch 109 (RTC) in
4 5

Civil Case No. R-PSY-14-17714-CV that: (a) granted petitioner Alex Raul B. Blay’s (petitioner) Motion to
Withdraw; and (b) declared respondent Cynthia B. Baña’s (respondent) Counterclaim for independent
adjudication.

The Facts

On September 17, 2014, petitioner filed before the RTC a Petition for Declaration of Nullity of Marriage,  seeking
6

that his marriage to respondent be declared null and void on account of his psychological incapacity pursuant to
Article 36 of the Family Code.  Subsequently, respondent filed her Answer with Compulsory Counterclaim  dated
7 8

December 5, 2014.

However, petitioner later lost interest over the case, and thus, filed a Motion to Withdraw  his petition. In her
9

comment/opposition  thereto, respondent invoked Section 2, Rule 17 of the Rules of Court (alternatively, Section
10

2, Rule 1 7), and prayed that her counterclaims be declared as remaining for the court's independent
adjudication.  In turn, petitioner filed his reply,  averring that respondent's counterclaims are barred from being
11 12

prosecuted in the same action due to her failure to file a manifestation therefor within fifteen (15) days from
notice of the Motion to Withdraw, which - according to petitioner - was required under the same Rules of Court
provision. In particular, petitioner alleged that respondent filed the required manifestation only on March 30,
2015. However, respondent's counsel received a copy of petitioner's Motion to Withdraw on March 11, 2015;
hence, respondent had only until March 26, 2015 to manifest before the trial court her desire to prosecute her
counterclaims in the same action. 13

The RTC Ruling

In an Order  dated May 29, 2015, the RTC granted petitioner’s Motion to Withdraw petition.  Further, it declared
14 15

respondent's counterclaim "as remaining for independent adjudication" and as such, gave petitioner fifteen (15)
days to file his answer thereto.16

Dissatisfied, petitioner filed a motion for reconsideration,  which was denied in an Order  dated March 3, 2016.
17 18

Thus, he elevated the matter to the CA via a petition for certiorari,   praying that the RTC Orders be set aside to
19

the extent that they allowed the counterclaim to remain for independent adjudication before the same trial court. 20

The CA Ruling

In a Decision  dated February 23, 2017, the CA dismissed the petition for lack of merit.  It found no grave abuse
21 22

of discretion on the part of the RTC, holding that under Section 2, Rule 17 of the Rules of Court, if a
counterclaim has been filed by the defendant before the service upon him of the petitioner’s motion for dismissal,
the dismissal shall be limited to the complaint.23

Aggrieved, petitioner moved for reconsideration,  which was denied in a Resolution  dated June 6, 2017; hence,
24 25

this petition.

The Issue Before the Court

The issue for the Court's resolution is whether or not the CA erred in upholding the RTC Orders declaring
respondent's counterclaim for independent adjudication before the same trial court.

The Court’s Ruling

The petition is meritorious.

Section 2, Rule 17 of the Rules of Court provides for the procedure relative to counterclaims in the event that a
complaint is dismissed by the court at the plaintiffs instance, viz. :

Section 2. Dismissal upon motion of plaintiff. - Except as provided in the preceding section, a complaint shall not
be dismissed at the plaintiffs instance save upon approval of the court and upon such terms and conditions as
the court deems proper. If a counterclaim has been pleaded by a defendant prior to the service upon him
of the plaintiff's motion for dismissal, the dismissal shall be limited to the complaint. The dismissal shall
be without prejudice to the right of the defendant to prosecute his counterclaim in a separate action
unless within fifteen (15) days from notice of the motion he manifests his preference to have his
counterclaim resolved in the same action. Unless otherwise specified in the order, a dismissal under this
paragraph shall be without prejudice. A class suit shall not be dismissed or compromised without the approval of
the court.
1âwphi1

As per the second sentence of the provision, if a counterclaim has been pleaded by the defendant prior to the
service upon him of the plaintiff's motion for the dismissal - as in this case - the rule is that the dismissal shall
be limited to the complaint. Commentaries on the subject elucidate that "[i]nstead of an ‘action’ shall not be
dismissed, the present rule uses the term ‘complaint’. A dismissal of an action is different from a mere dismissal
of the complaint. For this reason, since only the complaint and not the action is dismissed, the defendant inspite
of said dismissal may still prosecute his counterclaim in the same acton." 26

However, as stated in the third sentence of Section 2, Rule 17, if the defendant desires to prosecute his
counterclaim in the same action, he is required to file a manifestation within fifteen (15) days from notice of the
motion. Otherwise, his counterclaim may be prosecuted in a separate action. As explained by renowned
remedial law expert, former Associate Justice Florenz D. Regalado, in his treatise on the matter:

Under this revised section, where the plaintiff moves for the dismissal of the complaint to which a counterclaim
has been interpose, the dismissal shall be limited to the complaint. Such dismissal shall be without prejudice to
the right of the defendant to either prosecute his counterclaim in a separate action or to have the same resolved
in the same action. Should he opt for the first alternative, the court should render the corresponding
order granting and reserving his right to prosecute his claim in a separate complaint. Should he choose
to have his counterclaim disposed of in the same action wherein the complaint had been dismissed, he
must manifest within 15 days from notice to him of plaintiff's motion to dismiss. x x x 27

In this case, the CA confined the application of Section 2, Rule 17 to that portion of its second sentence which
states that the "dismissal shall be limited to the complaint." Evidently, the CA ignored the same provision's third
sentence, which provides for the alternatives available to the defendant who interposes a counterclaim prior to
the service upon him of the plaintiff's motion for dismissal. As may be clearly inferred therefrom, should the
defendant desire to prosecute his counterclaim, he is required to manifest his preference therefor within fifteen
(15) days from notice of the plaintiff's motion to dismiss. Failing in which, the counterclaim may be prosecuted
only in a separate action.

The rationale behind this rule is not difficult to discern: the passing of the fifteen (15)-day period triggers the
finality of the court's dismissal of the complaint and hence, bars the conduct of further proceedings, i.e., the
prosecution of respondent's counterclaim, in the same action. Thus, in order to obviate this finality, the
defendant is required to file the required manifestation within the aforesaid period; otherwise, the counterclaim
may be prosecuted only in a separate action.

It is hornbook doctrine in statutory construction that "[t]he whole and every part of the statute must be considered
in fixing the meaning of any of its parts and in order to produce a harmonious whole. A statute must be so
construed as to harmonize and give effect to all its provisions whenever possible. In short, every meaning to be
given to each word or phrase must be ascertained from the context of the body of the statute since a word or
phrase in a statute is always used in association with other words or phrases and its meaning may be modified
or restricted by the latter."
28

By narrowly reading Section 2, Rule 1 7 of the Rules of Court, the CA clearly violated the foregoing principle and
in so doing, erroneously sustained the assailed RTC Orders declaring respondent’s counterclaim "as remaining
for independent adjudication" despite the latter's failure to file the required manifestation within the prescribed
fifteen (15)-day period. As petitioner aptly points out:

[I]f the intention of the framers of the Rules of Court is a blanket dismissal of the complaint ALONE if a
counterclaim has been pleaded prior to the service of the notice of dismissal then there is NO EVIDENT
PURPOSE for the third (3rd) sentence of Sec. 2, Rule 17.

xxxx 29

[I]t is clearly an ABSURD conclusion if the said provision will direct the defendant to manifest within fifteen (15)
days from receipt of the notice of dismissal his preference to prosecute his counterclaim in the SAME
ACTION when the same AUTOMATICALLY REMAINS. If the automatic survival of the counterclaim and the
death of the complaint as being ruled by the Court of Appeals in its questioned Decision is indeed true, then the
third sentence should have required defendant to manifest that he will prosecute his counterclaim in
a SEPARATE [and not - as the provision reads - in the same] ACTION.  (Emphases and underscoring in the
30

original)

Petitioner's observations are logically on point. Consequently, the CA rulings, which affirmed the patently
erroneous R TC Orders, must be reversed. As it should be, the RTC should have only granted petitioner's
Motion to Withdraw and hence, dismissed his Petition for Declaration of Nullity of Marriage, without prejudice to,
among others, the prosecution of respondent's counterclaim in a separate action.

WHEREFORE, the petition is GRANTED. The Decision dated February 23, 2017 and the Resolution dated June
6, 2017 of the Court of Appeals in CA-G.R. SP No. 146138 are hereby REVERSED and SET ASIDE. A new one
is ENTERED solely granting petitioner Alex Raul B. Blay’s Motion to Withdraw his Petition for Declaration of
Nullity of Marriage in Civil Case No. R-PSY-14-17714-CV. The aforesaid dismissal is, among others, without
prejudice to the prosecution of respondent Cynthia B. Baña's counterclaim in a separate action.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice

WE CONCUR:
 2.Bank of the Philippine Islands v. Spouses Genuino
G.R. No. 208792, July 22, 2015

G.R. No. 208792               July 22, 2015

BANK OF THE PHILIPPINES, Petitioner,

vs.
SPOUSES ROBERTO AND TERESITA GENUINO, Respondents.

DECISION

LEONEN, J.:

A.M. No. 03-l-09-SC  does not remove the plaintiff's duty under Rule 18, Section 1 of the Rules of Court to
1

promptly move ex-parte to set his or her case for pre-trial after the last pleading has been served and filed.2
While pre-trial promotes efficiency in court proceedings and aids in decongesting dockets, A.M. No. 03-1-09-SC
did not give sole burden on the courts to set cases for pre-trial.

A.M. No. 03-1-09-SC, providing that "[w]ithin five (5) days from date of filing of the reply, the plaintiff must
promptly move ex parte that the case be set for pre-trial conference [and] [i}f the plaintiff fails to file said motion
within the given period, the Branch COC shall issue a notice of pre-trial,"  must be read together with Rule
3

17,Section 3 of the Rules of Court on dismissals due to plaintiff’s fault. Plaintiff should thus sufficiently show
justifiable cause for its failure to set the case for pre-trial; otherwise, the court can dismiss the complaint outright.

The trial court dismissed without prejudice the Bank of the Philippine Islands' Complaint against Spouses
Roberto and Teresita Genuino for failure to prosecute under Rule 17, Section 3 of the Rules of Court.  The Bank
4

of the Philippine Islands concedes that dismissal is justified under the Rules of Court, but submits that dismissal
for non-filing of a Motion to Set Case for Pre-trial Conference is no longer proper beginning August 16, 2004
when A.M. No. 03-1-09-SC was issued. 5

This Petition  assails the Court of Appeals February 26, 2013 Decision  that dismissed Bank of the Philippine
6 7

Islands’ Petition for Certiorari, and August 13, 2013 Resolution  that denied reconsideration.
8 9

On October 6, 2009, Bank of the Philippine Islands filed a Complaint for Sum of Money/Judgment on the
Deficiency against the Spouses Genuino before the Regional Trial Court of Makati. 10

The Complaint alleged that on May 27, 1997 and May 11, 1999, the Spouses Genuino executed a Deed of Real
Estate Mortgage over a 10,000-square-meter  parcel of land in General Trias, Cavite City, together with its
11

improvements, to secure loans and other credit accommodations obtained or to be obtained from the bank. 12

The Spouses Genuino availed themselves of this credit accommodation in the amount of ₱8,840,000.00 as
evidenced by various promissory notes. They defaulted in their installment payments, and their failure to pay
despite demand resulted in the entire outstanding balance of the loan, plus interests and other charges,
becoming due and demandable. 13

On April 18, 2004, Bank of the Philippine Islands foreclosed the mortgaged property after due notice and
publication, and sold it to the highest bidder at the public auction for ₱2,900,000.00. A deficiency of
₱27,744,762.49 remained after the tendered bid price had been deducted from the Spouses Genuino’s total
obligation of ₱30,644,762.49. The Spouses Genuino failed to pay the deficiency despite written demands by the
bank.14

Thus, Bank of the Philippine Islands filed the Complaint. It prayed for the reduced amount of 10,626,121.69,
waiving partly the stipulated interest, and waiving totally the late payment charges and attorney’s fees. 15

On November 25, 2009, the Spouses Genuino filed their Answer with Special and Affirmative Defenses. They
argued nullity of the auction sale for lack of notice or demand made to them before and after the alleged
foreclosure. Even assuming the auction sale was valid, they argued that Bank of the Philippine Islands waived
the remedy of collection when it chose to foreclose the security. The Spouses Genuino included a Compulsory
Counterclaim for moral damages, exemplary damages, and attorney’s fees. 16

On December 2, 2009, Bank of the Philippine Islands received a copy of the Answer and opted not to file any
Reply.17

The Regional Trial Court, in its Order  dated May 17, 2010, dismissed the case without prejudice for lack of
18

interest to prosecute under Rule 17, Section 3 of the Rules of Court. The Spouses Genuino’s counterclaim was
also dismissed without prejudice pursuant to Rule 17, Section 4 of the Rules of Court. 19

In its Motion for Reconsideration,  Bank of the Philippine Islands explained that the case folder was misplaced in
20

the office bodega together with the records of terminated cases. The assigned secretary of counsel had already
left the firm, and the bank could no longer seek an explanation for the misfiling of the case after it had been
unloaded by previous counsel. The bank argued for the application of A.M. No. 03-1-09-SC. The court denied
reconsideration. 21

The Court of Appeals, in its Decision dated February 26, 2013, denied due course and dismissed Bank of the
Philippine Islands’ Petition for Certiorari.  It found no grave abuse of discretion by the trial court in dismissing
22

without prejudice the bank’s Complaint. 23

Hence, Bank of the Philippine Islands filed this Petition.

The bank submits that with the issuance of A.M. No. 03-1-09-SC, "it is no longer proper to dismiss a case for
failure to prosecute starting August 16, 2004 due to the non-filing by the plaintiff of a Motion to Set Case for Pre
Trial Conference but instead the Clerk of Court should issue an Order setting the case for Pre Trial
Conference."  It quotes Espiritu, et al. v. Lazaro, et al.  that "clarified the application of [A.M.] No. 03-1-09[-SC]
24 25

to cases filed after its effectivity on August 16, 2004[.]"  Cases should also be resolved based on its merits and
26

not on mere technicalities. 27

The Spouses Genuino counter that "[w]hile the clerk of court has the duty to include a case in the trial calendar
after the issues are joined and to fix the date for trial as well as to notify the parties of the same, plaintiff may not
rely upon said duty of the clerk, nor is it relieved of its own duty to prosecute the case diligently, calling if
necessary the attention of the court to the need of putting the case back to its calendar if the court, because of
numerous cases, has neglected to attend thereto."  They cite Olave v. Mistas  where the trial court dismissed
28 29

the case with prejudice when plaintiff failed to move for pre-trial after more than three months. 30

The Spouses Genuino submit that "notwithstanding A.M. No. 03-1-09-SC . . . it is the duty of the plaintiff . . . to
prosecute its action within a reasonable length of time and the failure to do so would justify the dismissal of the
case."31

The issue for resolution is whether the trial court acted with grave abuse of discretion in dismissing the case
without prejudice on the ground of failure to prosecute when Bank of the Philippine Islands failed to file a motion
to set case for pre-trial conference.

We deny this Petition by Bank of the Philippine Islands.

The trial court dismissed the Complaint pursuant to Rule 17, Section 3 of the Rules of Court. This dismissal
operated as an adjudication on the merits:

SEC. 3. Dismissal due to fault of plaintiff. — If, for no justifiable cause, the plaintiff fails to appear on the date of
the presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length
of time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of
the defendant or upon the court’s own motion without prejudice to the right of the defendant to prosecute his
counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the
merits, unless otherwise declared by the court. (Emphasis supplied)

A.M. No. 03-1-09-SC entitled Re: Proposed Rule on Guidelines to be Observed by Trial Court Judges and
Clerks of Court in the Conduct of Pre-Trial and Use of Deposition-Discovery Measures took effect on August 16,
2004. This provides that:
 I. Pre-Trial

A. Civil Cases

1. . . .

....

Within five (5) days from date of filing of the reply, the plaintiff must promptly move ex parte that the case be set
for pre-trial conference.  If the plaintiff fails to file said motion within the given period, the Branch COC shall issue
1âwphi1

a notice of pre-trial.  (Emphasis supplied, citations omitted)

32

Respondents Spouses Genuino cannot rely on Olave v. Mistas as this involved a trial court Order dated October
20, 1997 dismissing the Complaint with prejudice.  The facts in Olavetook place before the effectivity of A.M. No.
33

03-1-09-SC on August 16, 2004.

Espiritu, et al. v. Lazaro, et al. quoted by petitioner Bank of the Philippine Islands "clarified the application of
[A.M.] No. 03-1-09[-SC] to cases filed after its effectivity on August 16, 2004": 34

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

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

Section 1 of Rule 18 of the Rules of Court imposes upon the plaintiff the duty to set the case for pre-trial after the
last pleading is served and filed. Under Section 3 of Rule 17, failure to comply with the said duty makes the case
susceptible to dismissal for failure to prosecute for an unreasonable length of time or failure to comply with the
rules.  (Emphasis supplied, citation omitted)
35

Nevertheless, nowhere in the text of A.M. No. 03-1-09-SC does it remove the plaintiff’s duty under Rule
18,Section 1 of the Rules of Court to set the case for pre-trial after the last pleading has been served and filed.
Nowhere does it repeal Rule 17, Section 3 of the Rules of Court that allows dismissals due to plaintiff’s fault,
including plaintiff’s failure to comply with the Rules for no justifiable cause. Nowhere does it impose a sole
burden on the trial court to set the case for pre-trial.

Reading A.M. No. 03-1-09-SC together with Rule 17, Section 3 and Rule 18, Section 1 of the Rules of Court
accommodates the outright dismissal of a complaint upon plaintiff’s failure to show justifiable reason for not
setting the case for pre-trial within the period provided by the Rules. Thus, trial courts must consider the facts of
each case

This court has allowed cases to proceed despite failure by the plaintiff to promptly move for pre-trial when it finds
that "the extreme sanction of dismissal of the complaint might not be warranted": 36

It must be stressed that even if the plaintiff fails to promptly move for pre-trial without any justifiable cause for
such delay, the extreme sanction of dismissal of the complaint might not be warranted if no substantial prejudice
would be caused to the defendant, and there are special and compelling reasons which would make the strict
application of the rule clearly unjustified.

....

While "heavy pressures of work" was not considered a persuasive reason to justify the failure to set the case for
pre-trial in Olave v. Mistas, however, unlike the respondents in the said case, herein respondent never failed to
comply with the Rules of Court or any order of the trial court at any other time. Failing to file a motion to set the
case for pre-trial was her first and only technical lapse during the entire proceedings. Neither has she manifested
an evident pattern or a scheme to delay the disposition of the case nor a wanton failure to observe the
mandatory requirement of the rules. Accordingly, the ends of justice and fairness would best be served if the
parties are given the full opportunity to litigate their claims and the real issues involved in the case are threshed
out in a full-blown trial. Besides, petitioners would not be prejudiced should the case proceed as they are not
stripped of any affirmative defenses nor deprived of due process of law. This is not to say that adherence to the
Rules could be dispensed with. However, exigencies and situations might occasionally demand flexibility in their
application. Indeed, on several occasions, the Court relaxed the rigid application of the rules of procedure to
afford the parties opportunity to fully ventilate the merits of their cases. This is in line with the time-honored
principle that cases should be decided only after giving all parties the chance to argue their causes and
defenses. Technicality and procedural imperfection should thus not serve as basis of decisions.

Finally, A.M. No. 03-1-09-SC or the new Guidelines To Be Observed By Trial Court Judges And Clerks Of Court
In The Conduct Of Pre-Trial And Use Of Deposition-Discovery Measures, which took effect on August 16, 2004,
aims to abbreviate court proceedings, ensure prompt disposition of cases and decongest court dockets, and to
further implement the pre-trial guidelines laid down in Administrative Circular No. 3-99 dated January 15, 1999.
A.M. No. 03-1-09-SC states that: "Within five (5) days from date of filing of the reply, the plaintiff must promptly
move ex-parte that the case be set for pre-trial conference. If the plaintiff fails to file said motion within the given
period, the Branch COC shall issue a notice of pre-trial." As such, the clerk of court of Branch 17 of the Regional
Trial Court of Malolos should issue a notice of pre-trial to the parties and set the case for pre-trial.  (Emphasis
37

supplied, citations omitted)

On the other hand, this court has sustained dismissals due to plaintiff’s fault after finding that plaintiff’s failure to
prosecute or comply with the rules was without justifiable reason. The Court of Appeals Decision cited Spouses
Zarate v. Maybank Philippines, Inc.  and Eloisa Merchandising, Inc. v. Banco de Oro Universal Bank  on the
38 39

need for vigilance in prosecuting one’s case, and Regner v. Logarta  on the right to speedy trial.
40 41

In Zarate, the trial court "dismiss[ed] the complaint for lack of interest to prosecute the case."  Pre-trial and
42

presentation of evidence-in-chief were reset several times due to plaintiff spouses’ and/or their counsel’s failure
to appear, without offering any explanation for most of their absences.  This court sustained the trial court’s
43

dismissal of the complaint after finding that "petitioners inexorably delayed the trial of the case without any
justifiable reasons[.]"
44

In Eloisa Merchandising, Inc., the case "had been at the pre-trial stage for more than two years and petitioners
have not shown special circumstances or compelling reasons to convince [this court] that the dismissal of their
complaint for failure to prosecute was unjustified."  The case remained at pre-trial stage when A.M. No. 03-1-09-
45

SC took effect.  The trial court already dismissed the complaint twice due to petitioners’ nonappearance at pre-
46

trial.  This court sustained the third dismissal since "despite the trial court’s leniency and admonition, petitioners
47

continued to exhibit laxity and inattention in attending to their case." 48

This court discussed that "[w]hile under the present Rules, it is now the duty of the clerk of court to set the case
for pre-trial if the plaintiff fails to do so within the prescribed period, this does not relieve the plaintiff of his own
duty to prosecute the case diligently." 49

Regner does not involve the non-filing of a motion to set case for pretrial, but the failure to serve summons on
respondents in a Complaint for declaration of nullity of deed of donation filed in June 1999. 50

Nevertheless, we can apply by analogy Regner’s ruling that "[a]lthough Section 1, Rule 14 of the Rules . . .
imposes upon the clerk of court the duty to serve summons, this does not relieve the petitioner of her own duty
as the plaintiff in a civil case to prosecute the case diligently[,] [and] [i]f the clerk had been negligent, it was
petitioner’s duty to call the court’s attention to that fact."  A plaintiff’s failure to vigilantly pursue his or her case
51

also affects respondent’s right to speedy trial. 52

The Court of Appeals Decision discussed that petitioner Bank of the Philippine Islands "cannot simply ‘fold its
hands’ and say that it was the duty of the clerk of court to set the case for pre-trial for the prompt disposition of
its case."53

Trial courts should be more proactive in ensuring the progression of cases to pre-trial considering the
significance of this stage in civil actions:

Pre-trial is an answer to the clarion call for the speedy disposition of cases. Although it was discretionary under
the 1940 Rules of Court, it was made mandatory under the 1964 Rules and the subsequent amendments in
1997. Hailed as "the most important procedural innovation in Anglo-Saxon justice in the nineteenth century," pre-
trial seeks to achieve the following:
 (a) The possibility of an amicable settlement or of a submission to alternative modes of dispute
resolution;

(b) The simplification of the issues;

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

(d) The possibility of obtaining stipulations or admissions of facts and of documents to avoid
unnecessary proof;

(e) The limitation of the number of witnesses;

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

(g) The propriety of rendering judgment on the pleadings, or summary judgment, or of dismissing the
action should a valid ground therefor be found to exist;

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

(i) Such other matters as may aid in the prompt disposition of the action. 54

Pre-trial promotes efficiency of case proceedings by allowing the parties to stipulate on facts and admissions
that no longer need proof, and to agree on key issues, among others. It protects the right to speedy trial without
compromising substantive justice.

A.M. No. 03-1-09-SC upholds this purpose in requiring the Clerk of Court to issue a notice of pre-trial "[i]f the
plaintiff fails to file [the] said motion [to set case for pre-trial] within the given period[.]"
55

However, petitioner Bank of the Philippine Islands also has the duty to set the case for pre-trial after the last
pleading has been served and filed,  and to diligently pursue its case and comply with the rules. Failure to do so
56

without justifiable cause warrants an outright dismissal of the Complaint. 57

Petitioner Bank of the Philippine Islands’ explanation of misfiling by previous counsel’s secretary of the case
records together with terminated cases in the office bodega cannot be considered as justifiable cause for its
failure to set the case for pre-trial. This court has held that "a counsel is required to inquire, from time to time,
and whenever necessary, about the status of handled cases, as well as motions filed for a client."  Also,
58

petitioner Bank of the Philippine Islands is one of the oldest and more established banks in the country. There is
reasonable expectation that it has the necessary organizational structures, system flows, and procedures to
address urgent matters and meet litigation deadlines.

Between the parties, petitioner Bank of the Philippine Islands is in a better position to bear the costs of a
procedural misstep of its own doing as compared with respondents Spouses Genuino. The bank may have had
its reasons to waive payment or the pursuit of its claims. For instance, it could have weighed that the costs of
pursuing its litigation against respondents Spouses Genuino outweigh the potential benefits. It could be that their
business with the bank was far more valuable than the incidental rupture in their relationship caused by this
transaction. In all these possible cases, respondents Spouses Genuino and other debtors have a right to rely on
the non-action of the plaintiff. In their view, the non-filing of the basic motion for setting of pre-trial would have
been, at best, a reasonable economic signal that the bank was no longer interested. At worse, it was clearly
negligence of an entity with enough institutional resources to maintain a large arsenal of in-house and external
counsel. The bank’s explanation for its own negligence is unavailing. While it is true that A.M. No. 03-1-09-SC
does provide that the Clerk of Court set the date of pre-trial,  plaintiff should not be rewarded for his or her
59

negligence.

WHEREFORE, the Petition is DENIED.

SO ORDERED.

MARVIC M.V.F. LEONEN

Associate Justice
WE CONCUR: