FIRST DIVISION [G.R. No. 124110. April 20, 2001] UNITED AIRLINES, INC., petitioner, vs.

COURT OF APPEALS, ANICETO FONTANILLA, in his personal capacity and in behalf of his minor son MYCHAL ANDREW FONTANILLA respondents. DECISION KAPUNAN, J.: On March 1, 1989, private respondent Aniceto Fontanilla purchased from petitioner United Airlines, through the Philippine Travel Bureau in Manila, three (3) Visit the U.S.A. tickets for himself, his wife and his minor son Mychal for the following routes: (a) San Francisco to Washington (15 April 1989); (b) Washington to Chicago (25 April 1989); (c) Chicago to Los Angeles (29 April 1989); (d) Los Angeles to San Francisco (01 May 1989 for petitioners wife and 05 May 1989 for petitioner and his son).[1] All flights had been confirmed previously by United Airlines.[2] The Fontanillas proceeded to the United States as planned, where they used the first coupon from San Francisco to Washington. On April 24, 1989, Aniceto Fontanilla bought two (2) additional coupons each for himself, his wife and his son from petitioner at its office in Washington Dulles Airport. After paying the penalty for rewriting their tickets, the Fontanillas were issued tickets with corresponding boarding passes with the words CHECK-IN REQUIRED, for United Airlines Flight No. 1108, set to leave from Los Angeles to San Francisco at 10:30 a.m. on May 5, 1989.[3] The cause of the non-boarding of the Fontanillas on United Airlines Flight No. 1108 makes up the bone of contention of this controversy. Private respondents' version is as follows: Aniceto Fontanilla and his son Mychal claim that on May 5, 1989, upon their arrival at the Los Angeles Airport for their flight, they proceeded to United Airlines counter where they were attended by an employee wearing a nameplate bearing the name LINDA. Linda examined their tickets, punched something into her computer and then told them that boarding would be in fifteen minutes.[4] When the flight was called, the Fontanillas proceeded to the plane. To their surprise, the stewardess at the gate did not allow them to board the plane, as they had no assigned seat numbers. They were then directed to go back to the check-in counter where Linda subsequently informed them that the flight had been overbooked and asked them to wait.[5] The Fontanillas tried to explain to Linda the special circumstances of their visit. However, Linda told them in arrogant manner, So what, I can not do anything about it.[6] Subsequently, three other passengers with Caucasian features were graciously allowed to board, after the Fontanillas were told that the flight had been overbooked. [7] The plane then took off with the Fontanillas baggage in tow, leaving them behind.[8]

The Fontanillas then complained to Linda, who in turn gave them an ugly stare and rudely uttered, Its not my fault. Its the fault of the company. Just sit down and wait.[9] When Mr. Fontanilla reminded Linda of the inconvenience being caused to them, she bluntly retorted, Who do you think you are? You lousy Flips are good for nothing beggars. You always ask for American aid. After which she remarked Dont worry about your baggage. Anyway there is

nothing in there. What are you doing here anyway? I will report you to immigration. You Filipinos should go home.[10] Such rude statements were
made in front of other people in the airport causing the Fontanillas to suffer shame, humiliation and embarrassment. The chastening situation even caused the younger Fontanilla to break into tears.[11] After some time, Linda, without any explanation, offered the Fontanillas $50.00 each. She simply said Take it or leave it. This, the Fontanillas declined.[12] The Fontanillas then proceeded to the United Airlines customer service counter to plead their case. The male employee at the counter reacted by shouting that he was ready for it and left without saying anything.[13] The Fontanillas were not booked on the next flight, which departed for San Francisco at 11:00 a.m. It was only at 12:00 noon that they were able to leave Los Angeles on United Airlines Flight No. 803. Petitioner United Airlines has a different version of what occurred at the Los Angeles Airport on May 5, 1989. According to United Airlines, the Fontanillas did not initially go to the check-in counter to get their seat assignments for UA Flight 1108. They instead proceeded to join the queue boarding the aircraft without first securing their seat assignments as required in their ticket and boarding passes. Having no seat assignments, the stewardess at the door of the plane instructed them to go to the check-in counter. When the Fontanillas proceeded to the check-in counter, Linda Allen, the United Airlines Customer Representative at the counter informed them that the flight was overbooked. She booked them on the next available flight and offered them denied boarding compensation. Allen vehemently denies uttering the derogatory and racist words attributed to her by the Fontanillas. [14] The incident prompted the Fontanillas to file Civil Case No. 89-4268 for damages before the Regional Trial Court of Makati. After trial on the merits, the trial court rendered a decision, the dispositive portion of which reads as follows: WHEREFORE, judgment is rendered dismissing the complaint. The counterclaim is likewise dismissed as it appears that plaintiffs were not actuated by legal malice when they filed the instant complaint.[15] On appeal, the Court of Appeals ruled in favor of the Fontanillas. The appellate court found that there was an admission on the part of United Airlines that the Fontanillas did in fact observe the check-in requirement. It ruled further that even assuming there was a failure to observe the check-in requirement, United Airlines failed to comply with the procedure laid down in cases where a passenger is denied boarding. The appellate court likewise gave credence to the claim of Aniceto Fontanilla that the employees of United Airlines were discourteous and arbitrary and, worse, discriminatory. In light of such treatment, the Fontanillas were entitled to moral damages. The dispositive

portion of the decision of the respondent Court of Appeals dated 29 September 1995, states as follows: WHEREFORE, in view of the foregoing, judgment appealed herefrom is hereby REVERSED and SET ASIDE, and a new judgment is entered ordering defendantappellee to pay plaintiff-appellant the following: a) P200,000.00 as moral damages; b) P200,000.00 as exemplary damages; c) P50, 000.00 as attorneys fees. No pronouncement as to costs. SO ORDERED.[16]

Petitioner United Airlines now comes to this Court raising the following assignment of errors: I RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE TRIAL COURT WAS WRONG IN FAILING TO CONSIDER THE ALLEGED ADMISSION THAT PRIVATE RESPONDENT OBSERVED THE CHECK-IN REQUIREMENT. II RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT PRIVATE RESPONDENTS FAILURE TO CHECK-IN WILL NOT DEFEAT HIS CLAIMS BECAUSE THE DENIED BOARDING RULES WERE NOT COMPLIED WITH. III RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT PRIVATE RESPONDENT IS ENTITLED TO MORAL DAMAGES OF P200, 000. IV RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT PRIVATE RESPONDENT IS ENTITLED TO EXEMPLARY DAMAGES OF P200,000. V RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT PRIVATE RESPONDENT IS ENTITLED TO ATTORNEYS FEES OF P50, 000.[17] On the first issue raised by the petitioner, the respondent Court of Appeals ruled that when Rule 9, Section 1 of the Rules of Court,[18] there was an implied admission in petitioner's answer in the allegations in the complaint that private respondent and his son observed the check-in requirement at the Los Angeles Airport. Thus: A perusal of the above pleadings filed before the trial court disclosed that there exists a blatant admission on the part of the defendant-appellee that the

plaintiffs-appellants indeed observed the check-in requirement at the Los Angeles Airport on May 5, 1989. In view of defendant-appellees admission of plaintiffs-appellants material averment in the complaint, We find no reason why the trial court should rule against such admission.[19] We disagree with the above conclusion reached by respondent Court of Appeals. Paragraph 7 of private respondents' complaint states: 7. On May 5, 1989 at 9:45 a.m., plaintiff and his son checked in at defendants designated counter at the airport in Los Angeles for their scheduled flight to San Francisco on defendants Flight No. 1108.[20] Responding to the above allegations, petitioner averred in paragraph 4 of its answer, thus: 4. Admits the allegation set forth in paragraph 7 of the complaint except to deny that plaintiff and his son checked in at 9:45 a.m., for lack of knowledge or information at this point in time as to the truth thereof.[21] The rule authorizing an answer that the defendant has no knowledge or information sufficient to form a belief as to the truth of an averment and giving such answer the effect of a denial, does not apply where the fact as to which want of knowledge is asserted is so plainly and necessarily within the defendant's knowledge that his averment of ignorance must be palpably untrue.[22] Whether or not private respondents checked in at petitioner's designated counter at the airport at 9:45 a.m. on May 5, 1989 must necessarily be within petitioner's knowledge. While there was no specific denial as to the fact of compliance with the check-in requirement by private respondents, petitioner presented evidence to support its contention that there indeed was no compliance. Private respondents then are said to have waived the rule on admission. It not only presented evidence to support its contention that there was compliance with the check-in requirement, it even allowed petitioner to present rebuttal evidence. In the case of Yu Chuck vs. "Kong Li Po," we ruled that: The object of the rule is to relieve a party of the trouble and expense in proving in the first instance an alleged fact, the existence or non-existence of which is necessarily within the knowledge of the adverse party, and of the necessity (to his opponents case) of establishing which such adverse party is notified by his opponents pleadings. The plaintiff may, of course, waive the rule and that is what must be considered to have done (sic) by introducing evidence as to the execution of the document and failing to object to the defendants evidence in refutation; all this evidence is now competent and the case must be decided thereupon.[23] The determination of the other issues raised is dependent on whether or not there was a breach of contract in bad faith on the part of the petitioner in not allowing the Fontanillas to board United Airlines Flight 1108. It must be remembered that the general rule in civil cases is that the party having the burden of proof of an essential fact must produce a preponderance of evidence thereon.[24] Although the evidence adduced by the plaintiff is stronger than that presented by the defendant, a judgment cannot be entered in favor of

the former, if his evidence is not sufficient to sustain his cause of action. The plaintiff must rely on the strength of his own evidence and not upon the weakness of the defendants.[25] Proceeding from this, and considering the contradictory findings of facts by the Regional Trial Court and the Court of Appeals, the question before this Court is whether or not private respondents were able to prove with adequate evidence his allegations of breach of contract in bad faith. We rule in the negative. Time and again, the Court has pronounced that appellate courts should not, unless for strong and cogent reasons, reverse the findings of facts of trial courts. This is so because trial judges are in a better position to examine real evidence and at a vantage point to observe the actuation and the demeanor of the witnesses.[26] While not the sole indicator of the credibility of a witness, it is of such weight that it has been said to be the touchstone of credibility.[27] Aniceto Fontanillas assertion that upon arrival at the airport at 9:45 a.m., he immediately proceeded to the check-in counter, and that Linda Allen punched in something into the computer is specious and not supported by the evidence on record. In support of their allegations, private respondents submitted a copy of the boarding pass. Explicitly printed on the boarding pass are the words Check-In Required. Curiously, the said pass did not indicate any seat number. If indeed the Fontanillas checked in at the designated time as they claimed, why then were they not assigned seat numbers? Absent any showing that Linda was so motivated, we do not buy into private respondents' claim that Linda intentionally deceived him, and made him the laughing stock among the passengers.[28] Hence, as correctly observed by the trial court: Plaintiffs fail to realize that their failure to check in, as expressly required in their boarding passes, is the very reason why they were not given their respective seat numbers, which resulted in their being denied boarding.[29] Neither do we agree with the conclusion reached by the appellate court that private respondents' failure to comply with the check-in requirement will not defeat his claim as the denied boarding rules were not complied with. Notably, the appellate court relied on the Code of Federal Regulation Part on Oversales, which states: 250.6 Exceptions to eligibility for denied boarding compensation. A passenger denied board involuntarily from an oversold flight shall not be eligible for denied board compensation if: (a) The passenger does not comply with the carriers contract of carriage or tariff provisions regarding ticketing, reconfirmation, check-in, and acceptability for transformation. The appellate court, however, erred in applying the laws of the United States as, in the case at bar, Philippine law is the applicable law. Although, the contract of carriage was to be performed in the United States, the tickets were purchased through petitioners agent in Manila. It is true that the tickets were rewritten in Washington, D.C. However, such fact did not change the nature of the original contract of carriage entered into by the parties in Manila.

In the case of Zalamea vs. Court of Appeals,[30] this Court applied the doctrine of lex loci contractus. According to the doctrine, as a general rule, the law of the place where a contract is made or entered into governs with respect to its nature and validity, obligation and interpretation. This has been said to be the rule even though the place where the contract was made is different from the place where it is to be performed, and particularly so, if the place of the making and the place of performance are the same. Hence, the court should apply the law of the place where the airline ticket was issued, when the passengers are residents and nationals of the forum and the ticket is issued in such State by the defendant airline. The law of the forum on the subject matter is Economic Regulations No. 7 as amended by Boarding Priority and Denied Boarding Compensation of the Civil Aeronautics Board, which provides that the check-in requirement be complied with before a passenger may claim against a carrier for being denied boarding: SEC. 5. Amount of Denied Boarding Compensation Subject to the exceptions provided hereinafter under Section 6, carriers shall pay to passengers holding confirmed reserved space and who have presented themselves at the proper place and time and fully complied with the carriers check -in and reconfirmation procedures and who are acceptable for carriage under the Carriers tariffs but who have been denied boarding for lack of space, a compensation at the rate of: xx Private respondents' narration that they were subjected to harsh and derogatory remarks seems incredulous. However, this Court will not attempt to surmise what really happened. Suffice to say, private respondent was not able to prove his cause of action, for as the trial court correctly observed: xxx plaintiffs claim to have been discriminated against and insulted in the presence of several people. Unfortunately, plaintiffs limited their evidence to the testimony [of] Aniceto Fontanilla, without any corroboration by the people who saw or heard the discriminatory remarks and insults; while such limited testimony could possibly be true, it does not enable the Court to reach the conclusion that plaintiffs have, by a preponderance of evidence, proven that they are entitled to P1,650,000.00 damages from defendant.[31] As to the award of moral and exemplary damages, we find error in the award of such by the Court of Appeals. For the plaintiff to be entitled to an award of moral damages arising from a breach of contract of carriage, the carrier must have acted with fraud or bad faith. The appellate court predicated its award on our pronouncement in the case of Zalamea vs. Court of Appeals, supra, where we stated: Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling passengers concerned to an award of moral damages. In Alitalia Airways v. Court of Appeals, where passengers with confirmed booking were refused carriage on the last minute, this Court held that when an airline issues a ticket to a passenger confirmed on a particular flight, on a certain date, a contract of carriage arises, and the passenger has every right to expect that he would fly on that flight and on that date. If he does not, then the carrier opens

itself to a suit for breach of contract of carriage. Where an airline had deliberately overbooked, it took the risk of having to deprive some passengers of their seats in case all of them would show up for check in. For the indignity and inconvenience of being refused a confirmed seat on the last minute, said passenger is entitled to moral damages. (Emphasis supplied.) However, the Courts ruling in said case should be read in consonance with existing laws, particularly, Economic Regulations No. 7, as amended, of the Civil Aeronautics Board: Sec 3. Scope. This regulation shall apply to every Philippine and foreign air carrier with respect to its operation of flights or portions of flights originating from or terminating at, or serving a point within the territory of the Republic of the Philippines insofar as it denies boarding to a passenger on a flight, or portion of a flight inside or outside the Philippines, for which he holds confirmed reserved space. Furthermore, this Regulation is designed to cover only honest mistakes on the part of the carriers and excludes deliberate and willful acts of non-accommodation. Provided, however, that overbooking not exceeding 10% of the seating capacity of the aircraft shall not be considered as a deliberate and willful act of non-accommodation. What this Court considers as bad faith is the willful and deliberate overbooking on the part of the airline carrier. The above-mentioned law clearly states that when the overbooking does not exceed ten percent (10%), it is not considered as deliberate and therefore does not amount to bad faith. While there may have been overbooking in this case, private respondents were not able to prove that the overbooking on United Airlines Flight 1108 exceeded ten percent. As earlier stated, the Court is of the opinion that the private respondents were not able to prove that they were subjected to coarse and harsh treatment by the ground crew of United Airlines. Neither were they able to show that there was bad faith on part of the carrier airline. Hence, the award of moral and exemplary damages by the Court of Appeals is improper. Corollarily, the award of attorney's fees is, likewise, denied for lack of any legal and factual basis. WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R. CV No. 37044 is hereby REVERSED and SET ASIDE. The decision of the Regional Trial Court of Makati City in Civil Case No. 89-4268 dated April 8, 1991 is hereby REINSTATED. SO ORDERED. Davide, Jr., C.J. (Chairman), Puno, and Ynares-Santiago, JJ., concur. Pardo, J., on sick leave.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 108292 September 10, 1993 REPUBLIC OF THE PHILIPPINES (Presidential Commission on Good Government [PCGG]), petitioner, vs. SANDIGANBAYAN, JOSE L. AFRICA, MANUEL H. NIETO, JR., FERDINAND E. MARCOS, IMELDA R. MARCOS, FERDINAND R. MARCOS, JR., ROBERTO S. BENEDICTO, JUAN PONCE ENRILE, and POTENCIANO ILUSORIO, respondents. G. R. No. 108368 September 10, 1993 REPUBLIC OF THE PHILIPPINES, petitioner, vs. SANDIGANBAYAN, ROBERTO S. BENEDICTO, ET AL., respondents. G. R. Nos. 108548-49 September 10, 1993 JOSE MA. B. MONTINOLA, ROMEO G. GUANZON, HORTENSIA STARKE, VICENTE LOPEZ, JR., MANUEL ESCALANTE, ROMAN M. MIRASOL, JESUS T. TALEON, JESUS S. MONTERO, RODOLFO T. TIONGSON, JR., PABLO G. LIM, JULIO LEDESMA, CENTRAL AZUCARERA DON PEDRO, SAN CARLOS MILLING, CO., INC.,petitioners, vs. SANDIGANBAYAN and ROBERTO S. BENEDICTO, respondents. G. R. No. 108550 September 10, 1993 JOSE MA. B. MONTINOLA, ROMEO G. GUANZON, HORTENSIA STARKE, VICENTE LOPEZ, JR., MANUEL ESCALANTE, ROMAN M. MIRASOL, JESUS T. TALEON, JESUS S. MONTERO, RODOLFO T. TIONGSON, JR., PABLO G. LIM, JULIO LEDESMA, CENTRAL AZUCARERA DON PEDRO, SAN CARLOS, MILLING, CO., INC.,petitioners, vs. THE SANDIGANBAYAN and ROBERTO S. BENEDICTO, respondents.

Custodio O. Parlade & Emerito G. Bagabaldo for petitioners in G.R. No. 108368. Alampay, del Castillo & Maronilla Law Office for P. Sabido, et al. in G.R. Nos. 108548-49 & 108550.

MELO, J.: The four (4) herein consolidated petitions have as their common prayer the nullification of the already approved and partially implemented compromise agreement dated November 3, 1990 executed between Roberto S. Benedicto and the Presidential Commission on Good Government (PCGG) represented by its then Chairman, David M. Castro, and the setting aside of the Sandiganbayan decision dated October 2, 1992 approving the compromise agreement and

rendering judgment in accordance with its terms. G.R. No. 108548-49 and 108550 were filed by eleven (11) sugar cane planters and two (2) corporations engaged in the milling of sugar cane who additionally ask for permission to intervene and to be admitted as parties to Civil Cases No. 0024 and No. 0028 before the Sandiganbayan. The subject matters of the disputed compromise agreement are Sandiganbayan Civil Case No. 0009, Civil Case No. 00234, Civil Case No. 0034, the Phil-Asia case before the Tanodbayan and PCGG I.S. No. 1. The cases arose from complaints for reconveyance, reversion, accounting, restitution, and damages against former President Ferdinand E. Marcos, members of his family, and alleged cronies, one of whom is said to be respondent Roberto S. Benedicto. The compromise agreement involved in these petitions is the third one in a series of global settlements effected between the Republic and respondent Benedicto. In March, 1990 the cases brought by the Republic against Benedicto in the United States were settled through a plea bargaining agreement approved by the New York Court and a "Settlement and Partial Release of Claims" approved by the California Court of Los Angeles. On July 20 and 23, 1990, the cases in Switzerland involving Benedicto's bank deposits in that country were settled by another agreement between the Republic and Benedicto. In fact, as early as December, 1986, the PCGG and Benedicto had already entered into temporary arrangements covering the management and operations of Benedicto's media business BBC Channel 2, IBC Channel 13, Sining Makulay (CATV), and the Daily Express. No questions have been raised against the first two settlements. The management issue at Broadcast City was decided by this Court in Benedicto vs. Board of Administrators of Television Stations RPN, and IBC (207 SCRA 659 [1992]) Under the compromise agreement, Benedicto and his group-controlled corporations ceded to the government certain pieces of property listed in Annex A of the agreement and assigned or transferred whatever rights he may have, if any, to the government over all corporate assets listed in Annex B of the agreement (pp. 115-125, Rollo in G.R. No. 108292). The PCGG in turn, lifted the sequestrations over the property listed in Annex C (p. 125, Rollo) as well as other assets mentioned in the agreement. The Government also extended absolute immunity to Benedicto, members of his family, and officers and employees of the listed corporations such that there would be no criminal investigation or prosecution for acts or ommissions prior to February 25, 1986 that may be alleged to have violated penal laws, including Act No. 3019, in relation to the acquisition of the assets under the agreement. The government agreed to recognize the constitutional right to travel of Mr. and Mrs. Benedicto and to interpose no objections to the issuance or restoration of their passports by the government office concerned. According to the PCGG in G.R. No. 108292 and G.R. No. 108368, respondent court committed grave abuse of discretion in approving an agreement containing provisions contrary to law, morals, good customs, public policy, and public order.

The PCGG contends that its consent was obtained through fraud and misrepresentation; that it is not in estoppel to question the validity of the agreement; and that the respondent court was wrong in passing upon the PCGG's inability to return what was ceded to it should the agreement be disapproved. The authority of the PCGG to enter into compromise agreements in civil cases and to grant immunity, under certain circumstances, in criminal cases is now settled and established. In Republic of the Philippines and Jose O.Campos, Jr. vs. Sandiganbayan, et al. (173 SCRA 72, [1989]), this Court categorically stated that amicable settlements and compromises are not only allowed but actually encouraged in civil cases. A specific grant of immunity from criminal prosecutions was also sustained. In Benedicto vs. Board of Administrators of Television Stations RPN, BBC, and IBC (207 SCRA 659 [1992]), the Court ruled that the authority of the PCGG to validly enter into compromise agreement for the purpose of avoiding litigation or putting an end to one already commenced was indisputable. The court took cognizance of the fact that the compromise agreement which is now the subject of the present petitions was pending before the Sandiganbayan for determination and approval and, therefore, dismissed the petition directed against the agreement's implementation and enforcement. Since this Court specifically ordered the Sandiganbayan to act on the compromise agreement between the PCGG and Benedicto, what remains to be done is to ascertain the propriety of the action of the Sandiganbayan in approving the agreement, and the validity of the agreement itself. The Sandiganbayan stated in its decision that the contract on its face does not appear to be contrary to law, morals, or public policy and that it was entered into freely and voluntarily by the parties (p. 79, Rollo in G.R. No. 108292). There is no intimidation of vitiated consent on the part of the PCGG. On its finding that the compromise agreement was entered into by the parties freely, voluntarily, and with full understanding of its consequences, respondent court stated that the agreement is conclusive and binding upon it. We agree with the following observations of the Sandiganbayan: A party that availed himself of and complied with the provisions of a judicial compromise is under estoppel to question its validity. (Serrano vs. Miave, 13 SCRA 461). In the regime of law and order, repudiation of an agreement validly entered into cannot be made without any ground or reason in law or in fact for such repudiation. (Rodriguez vs. Alikpala, 57 SCRA 455). It is in consequences of this that the Supreme Court in Mayuga vs. Court of Appeals, 154 SCRA 309, held that a compromise upon its perfection became

binding upon the parties and has the effect and authority of res judicata even if not judicially approved. (Emphasis supplied)

In this connection, therefore, We hold that plaintiff is in estoppel to question the validity of the herein Compromise Agreement since it had already received benefits thereunder, such as: 1. Full take over and control of Oriental Petroleum shares of stocks owned by Piedras Mining and the excercise by the latter company of the pre-emptive rights

granted by Oriental Petroleum. Said shares have a total value now of P1,094,816,379.00 (P.0675 and P.0775/per A and B shares, respectively. 2. Full take over, control and management of Broadcast City, (Channel 13) inspite of Supreme Court decision in G.R. No. L-87710 that the Board of Administration, created under Executive Order No. 11, continued management is no longer legally possible, upon formal representation and that Benedicto will comply fully with the terms and conditions of the Compromise Agreement. Said assets have a total estimated value of P450 million. 3. Complete turnover of California Overseas Bank, with capital account of US$18 Million (P406 million), to the Philippine Government which was in turn sold by the Philippine Government to the PNB. 4. Receipt of US$16.271 million (P386.0 million P23.71/$1.00). The total value of the aforesaid assets transferred to the Philippine Government amount to P2.336 Billion. In Katipunan Labor Union vs. Caltex, 101 Phils. 1224, the Supreme Court, through Justice J. B. L. Reyes, stated in effect that a compromise is governed by the basic principle that the obligations arising therefrom have the force of law between the parties (citing Article 1159, New Civil Code),which means that neither party may unilaterally and upon his own exclusive volition escape his obligation under the contract . xxx xxx xxx Since a compromise has, upon the parties and their successors-in-interest, the effect of res judicata, it can only be rescinded on the ground of vitiated consent, and, this is true even if the compromise turns out to be unsatisfactory to either of the parties (Castro vs. Castro, 97 Phils. 705). By merely asking for a renegotiation of the agreement, the PCGG herein has impliedly admitted that the agreement is not contrary to law, public policy or morals nor was there any circumstance which had vitiated or does now vitiate consent. (Decision, pp. 26-27; pp. 104-105, Rollo in G.R. No. 108292) In fact, the Court has consistently ruled that a party to a compromise cannot ask for a rescission after it has enjoyed its benefits. Thus in Barairo vs. Mendoza (G. R. No. 82545, May 15, 1989 Resolution), re-echoing 5Ruling Case Law, 883 (1914) it was held: Compromises are to be favored, without regard to the nature of the controversy compromised. They cannot be set aside because the event shows all the gain to have been on one side, and all the sacrifice on the other, if the parties have acted in good faith and with a belief of the actual existence of a settlement be made, free from fraud or mistake, whereby there is a surrender or satisfaction, in whole or in part, of a claim upon one side in exchange for or in consideration of a surrender of value, upon the other, however baseless may be the claim upon either side or harsh the terms as to either of the parties, the other cannot successfully impeach the agreement in a court of justice which re-echoed 5 Ruling Case Laws 883 (1914).

And in Pasay City Government vs. CFI of Manila (132 SCRA 156 [1984]), was most emphatic in ruling that a party to a compromise agreement cannot ask its rescission after it has enjoyed its benefits. Then Justice, later Chief Justice Makasiar had this to say: [I]t is obvious that the respondent-appellee did not only succeed in enforcing the compromise but said plaintiff-appellee likewise wants to rescind the said compromise. It is clear from the language of thelaw, specifically Article 2041 of the New Civil Code that one of the parties to a compromise has two options: 1) to enforce the compromise; or 2) to rescind the same and insist upon his original demand. The respondent-appellee in the case herein before Us wants to avail of both of these options. This can not be done. The respondent-appellee cannot ask for rescission of the compromise agreement after it has already enjoyed the first option of enforcing the compromise by asking for a writ of execution resulting thereby in the garnishment of the Pasay City funds deposited with the Philippine National Bank which eventually was delivered to the respondent-appellee. (at p. 168) It is equally puerile for the PCGG to contend that the agreement is congenitally defective from the mere happenstance that the agreement was not authenticated before the consular officials abroad and without the participation of witnesses and of the Solicitor General. While the rule of lex loci celebrationis generally governs forms and solemnities of contracts under Article 17 of the Civil Code (Vitug, Compendium of Civil Law and Jurisprudence, 1986 First ed., p. 11), the principle of lex rei sitae generally applies with respect to formalities for the acquisition, encumbrance, and alienation of real and personal property (1 Paras, Civil Code of the Philippines annotated, 1989 12th ed., p. 107). And relative to this precept on lex situs, Philippine substantive law is certainly clear on the matter that contracts are obligatory, in whatever form they may have been entered into, subject to the existence of all the essential requisites for their validity (Article 1356, New Civil Code). The fact that the compromise agreement was not authenticated before the consular officers abroad, as well as the absence of witnesses, cannot be of much legal significance under Philippine law inasmuch as the requirement under Article 1358(a) of the Civil Code, that a contract intended to extinguish or transmit real rights over the immovables must be in a public document is merely designed for greater efficacy or convenience (4 Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, 1991 ed., p. 546). Neither does the absence of the Solicitor General's participation render the agreement invalid since under both Executive Order No. 2 and Executive Order No. 14-A, it is the PCGG which has been "primarily charged" with the responsibility of recovering illegally acquired or misappropriated assets. It should perhaps be recalled at this juncture that it was during this period that the OSG withdrew as counsel in PCGG cases, compelling the latter to hire high-priced and supposedly competent lawyers of its own. Indeed, these events were the backdrop of the widely acclaimed and erudite decision penned by Justice Flerida Ruth P. Romero wherein the OSG was advised of its duties, the scope of its authority, the mandate of its office, and thence ordered to re-enter its

appearance in PCGG cases. In fine, the OSG is the least qualified agency to raise the argument that it had no participation in the agreement. The PCGG submits the notion that Benedicto can renege on his undertaking because the compromise does not have a clause for breach of warranty. Again, we must point out that the insinuation (p. 30, Petition, p. 35, Rollo in G.R. No. 108292), along this line is uncalled for due to the language of paragraph 4: IV. Cooperation in Preservation/Recovery Efforts. The parties herein hereby undertake to cooperate with each other in the preservation or recovery of sequestered properties and business, including joint action or defense in the enforcement or resistance as the case may be, or claims affecting the sequestered properties and businesses involved in this Agreement. as well of Paragraph 6 of the Compromise Agreement: VI. Further Acts/Documents. Each party to this Agreement agrees to perform such other and further acts and authorizations, including the execution and delivery of such other and further documents as may be reasonably necessary to carry out the provisions of this Agreement. which serve as built-in safeguards against amnesia, so to speak, and possible repudiation. At any rate, and assuming in gratia argumenti that a breach occurs, the remedy of the PCGG it clearly set forth in Article 2041 of the Civil Code: Art. 2041. If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand. It is advocated by the PCGG that respondent Benedicto retaining a portion of the assets is anathema to, and incongruous with, the zero-retention policy of the government in the pursuit for recovery of all ill-gotten wealth pursuant to Section 2(a) of Executive Order No. 1. While full recovery is ideal, the PCGG is not precluded from entering into a compromise agreement which entails reciprocal concessions if only to expedite recovery so that the remaining "funds, assets and other properties may be used to hasten national economic recovery" (3rd WHEREAS clause, Executive Order No. 14-A). To be sure, the so-called zero retention mentioned in Section 2(a) of Executive Order No. 1 had been modified to read: WHEREAS, the Presidential Commission on Good Government was created on February 28, 1986 by Executive Order No. 1 to assist the President in the recovery of ill-gotten wealth accumulated by former President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates; which undoubtedly suggests a departure from the former goal of total restitution. Contrary to the PCGG's observation that the value of the assets ceded by Benedicto should have been reflected in the contract, Section 5 of Executive Order No. 14-A does not seem to impose such an element as a condition sine qua non to the validity of a projected settlement. Information as to net worth of Benedicto's assets need to be stated in the four corners of the agreement since his duty to disclose all his property is supposed to be made before the PCGG or to the Sandiganbayan when called upon to testify as a vital witness on other ill-

gotten wealth cases under Section 5 of EO 14-A. It is needless to stress that the series of negotiations which culminated in the signing of the agreement on November 3, 1990 afforded every opportunity for Benedicto to reveal his assets for the PCGG's evaluation in conjunction with its general function to collate evidence relative to ill-gotten wealth (Bataan Shipyard and Engineering Co., Inc. vs. PCGG (150 SCRA 181 [1987]). The fact that certain details peculiar in other compromise agreements, such as those found in the Fonacier, Razon and Floirendo deals, are not reflected in the Benedicto agreement does not mean that the settlement is susceptible to challenge, especially so when the PCGG itself concedes that any future agreement need not follow the pattern fixed in previous contracts (p. 33, Petition; p. 38, Rollo in G. R. No. 108292). To support the thesis that the agreement per se is contrary to law, the PCGG shifts discussion to the salient portions of Republic Act No. 3019, the Anti Graft and Corrupt Practices Act, particularly those with respect to acts allegedly causing undue injury to the government, resulting into a manifestly disadvantageous contract and leading to unwarranted priveleges (p. 35, Petition; p. 40, Rollo in G. R. No. 108292). But these assumptions remain mere verisimilitudes, unsupported by evidence that indeed the contract was entered into under circumstances which would invite reasonable suspicion of bad faith on the part of those privy thereto. To backtrack from the effects of the settlement, the PCGG relies on the principle that the State is never estopped by acts of its agents, as applied in cases which require no citation, and as affirmed by Section 15, Article 11 of the 1987 Constitution: The right of the State to recover properties unlawfully acquired by public officials or employees, from them or from their nominees or transferees, shall not be barred by prescription, laches or estoppel. We agree with the statement that the State is immune from estoppel but this concept is understood to refer to acts and mistakes of its officials especially those which are irregular (Sharp International Marketing vs. Court of Appeals, 201 SCRA 299; 306 [1991]; Republic vs. Aquino, 120 SCRA 186 [1983], which peculiar circumstances are absent in the case at bar. Although the State's right of action to recover ill-gotten wealth is not vulnerable to estoppel, it is non sequitur to suggest that a contract, freely and in good faith executed between the parties thereto is susceptible to disturbance ad infinitum. A different interpretation will lead to the absurd scenario of permitting a party to unilaterally jettison a compromise agreement which is supposed to have authority of res judicata (Article 2037, New Civil Code), and like any other contract, has the force of law between privies thereto (Article 1159, New Civil Code; Hernaez vs. Kao, 17 SCRA 296 [1966]; 6 Padilla, Civil Code annotated, 7th ed., 1987. p. 711; 3 Aquino, Civil Code, 1990 ed., p. 463) Thus, as emphazised by Justice Escareal in Civil Case No. 0034: Viewed against the backdrop of the foregoing factual antecedents and legal principles, We are of the considered opinion that new PCGG Chairman

Magtanggol C. Gunigundo lacks the legal and moral authority to overturn and set aside a previous valid and authorized contract/transaction entered into by his predecessor in behalf of the Republic. To rule otherwise is to sanction an unlawful betrayal by one party of the trust and confidence reposed by the other. It must be noted that the parties to the Agreement are plaintiff Republic of the Philippines, as represented by the PCGG, and defendant Roberto S. Benedicto, not anybody else. With this basic premise, it logically follows that after the due execution of the Agreement by and between PCGG, as representative of plaintiff Republic of the Philippines, and defendant Benedicto, the same has acquired a binding and res judicata effect as against the parties thereto. Perforce, any change in the administrative structure and/or personalities within the PCGG cannot defeat the validity and binding effect thereof between the parties. A ruling to the contrary is not only illogical and irrational, but inequitable and pernicious as well, for it may open the door for capricious adventurism on the part of the policy-makers of the land, and disregard for the majesty of the law, which could ultimately bring about the citizenry's loss of faith and confidence in the sincerity of the government in its dealings with the governed.(p. 115-116, G.R. No. 108368) Within the context of the Civil Code, the principle of estoppel under Article 1431 is only of suppletory application insofar as they are not in direct friction with other provisions of the Code, such as the binding effect of a compromise agreement under Article 2037, the Code of Commerce, the Rules of Court and special laws (Article 1432, New Civil Code; 4 Paras, Civil Code Annotated, 12th ed., 1989, p. 172). The real office of the equitable norm of estoppel is limited to supply deficiency in the law it should not supplant positive law. Furthermore, this Court will reject a settlement only if it contravenes Article 2035 of the Civil Code (prohibiting compromises on the civil status of persons, the validity of marriage or a legal separation, or any ground for such separation, future support, the jurisdiction of courts, and future legitime) or if the stipulations thereof are repugnant to law, morals, good customs, public order, or public policy (First Philippine Holdings Corp. vs. Sandiganbayan, 202 SCRA 212 [1991]). The Sandiganbayan stated in its questioned decision that "the essence of compromise being mutual concessions by the parties to avoid or end litigation, it is to be expected that neither will be able to maintain his initial demands wholly unaltered" (Periquet vs. Reyes, 21 SCRA 1503 [1967]). As succinctly stated by Justice Cipriano A. del Rosario in his concurring opinion, any compromise has at its very essence reciprocal concessions; that "One must give if one must take. If only one takes all, then one must first win. But in a compromise, all win by taking some and giving some" (p. 108, Rollo in G.R. No. 108292). The arguments that the compromise is too one-sided in favor of Benedicto and that undue injury has been caused to the Government while unwarranted benefits and advantages have been given to Mr. Benedicto, his family, and employees contrary to Republic Act No. 3019, have no merit. The compromise agreement was the result of a long drawn out process of negotiations with each party trying to come out as best as it could. There can be

no question of its being freely and voluntarily entered into by the then PCGG Chairman with full authority from the Commission itself. The Sandiganbayan had ample opportunity to examine the validity of the compromise agreement and to look into any iniquitous or illegal features, express, implied, or hidden. Two years elapsed from the time the agreement was executed up to the time it was judicially approved. The joint motion to approve the compromise agreement filed by the PCGG and Benedicto dated November 22, 1990 was followed seven days later by an opposition from Solicitor General Frank Chavez. Comments, replies, various motions, a temporary restraining order of the Court in Guingona vs. PCGG and our decision in that case 207 SCRA 659 (1992), memoranda, hearings set for August 11, 1992, September 1, 1992, and September 17, 1992, oppositions, manifestations, and the September 17, 1992 resolution of the Sandiganbayan preceded its now questioned October 2, 1992 decision. Every question regarding the legality and propriety of the compromise agreement was fully threshed out before the Sandiganbayan by the parties. We are not dealing with the usual compromise agreement perfunctorily submitted to a court and approved as a matter of course. The PCGG-Benedicto agreement was throughly and, at times, disputatiously discussed before the respondent court. There could be no deception or misrepresentation foisted on either the PCGG or the Sandiganbayan. In Araneta vs. Perez (7 SCRA 923 [1963]), we ruled that a compromise once approved by final orders of the court has the force of res judicata between the parties and should not be disturbed except for vices of consent or forgery. It is a long established doctrine that the law does nor relieve a party from the effects of an unwise, foolish, or disastrous constract, entered into with all the required formalities and with full awareness of what he was doing (Tanda vs. Aldaya, 89 Phil. 497 [1951]). Courts have no power to relieve parties from obligations voluntarily assumed, simply because their contracts turned out to be disastrous deals or unwise investments (Villacorte vs. Mariano, 89 Phil. 341 [1951]). In the case at bar, the compromise agreement, as stated by Sandiganbayan, was signed and executed by the parties "with their eyes wide open" (Decision, p. 23; p. 101, Rollo in G.R. No. 108292). The PCGG knew the strength of the evidence in its hands, the advantages of immediate recovery, the projected income if forthwith privatized, and other benefits to the Government. The Sandiganbayan itself in two years of proceedings and deliberations rejected the allegations of fraud, deception, illegality, and contrariness to morals, good customs, public policy and public order now raised again before us. There is another aspect of these petitions presented by petitioners which appears inconsistent and infeasible. The original prayer of the new PCGG Chairman was to "renegotiate a more just, fair and equitable agreement" (Annex G of Petition in G.R. No. 108292, p. 191, Rollo). At the risk of being redundant, we once again must emphasize that the government has already taken over everything ceded to it by Benedicto. In fact, it is already selling if it has not yet sold various ceded property under the privatization program. In other words, the agreement has not only been executed, it has been implemented. Even as the

PCGG seeks to nullify and declare void the compromise agreement, it has no intention of returning any of the pieces of property which it received under the agreement. It states that the rules on the question of "restitution" are not those on rescissible contracts but those on void and inexistent contracts in the Civil Code. The PCGG seemingly forgets that the ownership of the ceded property has been vested in the government not because it won its cases in the courts and the true ownership or illegal acquisition has been definitely established. It cannot assume that its allegations have been sustained by the Sandiganbayan. Ownership has been transferred because of the compromise agreement, not because of any evidence presented in court by either side on the merits or demerits of the reconveyance and reversion cases. The Compromise Agreement itself declares: WHEREAS, following the termination of the United States and Swiss cases, and also without admitting the merits of their respective claims and counterclaims presently involved in uncertain, protracted, and expensive litigation, the Republic of the Philippines, solely motivated by the desire for immediate accomplishment of its recovery mission and Mr. Benedicto, being interested to lead a peaceful and normal pursuit of his endeavors, the parties have decided to withdraw and/or dismiss their mutual claims and counterclaims under the cases pending in the Philippines earlier referred to; In other words, the Government wanted to recover as much as it could and as fast as possible while Benedicto wanted to buy peace without admitting guilt. If the PCGG wants to nullify the agreement it entered into freely and voluntarily, it must be willing to return all the property ceded to it because of the Agreement and recover them by proving its cases in the course of judicial proceedings. This is an essential first step. It cannot renege on the agreement while holding on to property which it received as a result of said agreement. More than any person or institution, the government should honor its solemn commitments. It would set a bad precedent and result in public disenchantment with government if every new head of a government agency is allowed to freely disown the legitimate agreements of his predecessors, especially those bearing court approval and, even as everything is already final and implemented, insist on further rounds of negotiations. Under the PCGG's theory, there would be nothing to prevent any of its future Chairman from repudiating and revoking acts of his predecessors. The vital element of trust, honor, and stability in dealing with the government would be lost. The petitioners in G.R. Nos. 108548-49 and 108550 filed their petitions to set aside the denial of their motion to intervene. They raise essentially the same grounds as the PCGG in the two other cases in their bid to set aside the compromise agreement. According to said petitioners, they are intervening because Benedicto should compensate them and the sugar industry for the systematic plunder of the industry. We agree with the Sandiganbayan that their rights can be fully protected in a separate proceeding.

There is no doubt that interested parties who claim ownership of some assets embraced in the settlement can participate in pending litigations involving illgotten wealth before the Sandiganbayan as held in Republic vs.Sandiganbayan (184 SCRA 382 [1990]) with reference to incidents arising from, incidental to, or interwoven with, cases falling within respondent court's exclusive and original jurisdiction (PCGG vs. Pea, 159 SCRA 556 [1988]). But inasmuch as the petitioners in G.R. No. 108548-50 filed their motion for leave to intervene and to admit memorandum in intervention on November 13, 1992 (p. 7, Petition; p. 8, Rollo in G.R. No. 108548-49; p. 7, Petition; p. 7, Rollo in G.R. No. 108550) or after promulgation of the impugned decision on October 2, 1992, it cannot be gainsaid that the intended intrusion was not seasonably raised before or during the trial spoken of by Section 2, Rule 12 of the Revised Rules of Court, to wit: Sec. 2 Intervention A person may, before or during a trial, be permitted by the court, in its discretion to intervene in an action, if he has legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or when he is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof. At any rate, availability of a separate proceeding for petitioners as third persons to the compromise agreement before the Sandiganbayan, in accordance with the ruling of this Court in Republic vs. Sandiganbayan (184 SCRA 382 [1990]) and in PCGG vs. Pea (159 SCRA 556 [1988]), proscribes intervention under Section 2(b), Rule 12 of the Revised Rules of Court: Sec. 2(b) Discretion of court In allowing or disallowing a motion for intervention, the court, in the excercise of discretion, shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties and whether or not the intervenor's rights may be fully protected in a separate proceeding. WHEREFORE, the petitions in G.R. Nos. 108292, 108368, 108548-49, and 108550 are hereby dismissed. The restraining orders issued in the respective cases dated March 10, 1993, March 23, 1993, and March 24, 1993, are hereby lifted and the parties to the compromise agreement are ordered to comply strictly with the terms thereof. SO ORDERED.

Narvasa, C.J., Cruz, Padilla, Bidin, Grio-Aquino, Regalado, Davide, Jr., Romero, Nocon, Bellosillo and Puno, JJ., concur. Feliciano, J., is on leave. Quiason, J., took no part.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-35113 March 25, 1975 EUGENIO CUARESMA, petitioner, vs. MARCELO DAQUIS, PHHC, CESAR NAVARRO, NICANOR GUEVARRA, Sheriff of Quezon City or his Deputy and JUDGE PACIFICO P. DE CASTRO, respondents. ATTORNEY MACARIO O. DIRECTO, respondent. RESOLUTION FERNANDO, J.:+.wph!1 The predicament in which respondent Macario O. Directo, a member of the Philippine bar, now finds himself is one of his own making. In a petition for certiorari filed with this Court on behalf of one Eugenio Cuaresma, he included the following categorical allegations: "4. That your petitioner has no knowledge of the existence of said case (Civil Case No. 12176, CFI of Rizal, Quezon City Branch) aforecited between the respondents Marcelo Daquis, PHHC, and Cesar Navarro, and wherein the respondent Judge, [gave] due course to the complaint, and the subject matter in litigation; 5. That on May 26, 1972, the respondent Judge issued an order of demolition, ordering the respondent Sheriff of Quezon City or his deputy to demolish the house of your petitioner etc., and on the same day May 26, 1972, the Sheriff of Quezon City through his deputy [gave] three (3) days to your petitioner to remove his house or face demolition, ... ;6 ... 7. That your petitioner was not given a day in court to present his side of the case, in violation of law, and of the dictum of due process of the constitution, ... " 1 Thereafter, after receipt of the comments of respondents, it turned out, as set forth in a resolution of this Court of August 4, 1972, "that petitioner was fully aware of the existence of said civil case because on December 14, 1971 Atty. Macario Directo, as counsel of petitioner, addressed to respondent Marcelo Daquis a letter which indicates that both counsel and petitioner were aware of the existence of the case. It also appears that, before respondents Marcelo Daquis and Cesar Navarro filed a motion for a writ of Possession in Civil Case No. Q-12176, petitioner Eugenio Cuaresma, along with the other occupants of the lot in question, was given thirty (30) days notice to vacate the premises which period was even extended for another thirty (30) days, but that, despite that notice, petitioner Eugenio Cuaresma refused to vacate the lot involved in the case. It further appears that on May 3, 1972, Atty. Macario Directo, as counsel for petitioner, filed a motion for intervention in the aforementioned Civil Case No. Q-12176; and on May 13, 1972, same counsel filed a motion to quash or recall the writ of execution, and an opposition to the issuance of a writ of demolition. On May 22, 1972, respondent Judge Pacifico de Castro issued an order denying the motion to intervene as well as the motion to quash or recall the writ of execution." 2 It was then set forth in such resolution that there was no truth to

the allegation that on May 27, 1972, the date of the filing of the petition for certiorari in the present case, petitioner had no knowledge of the existence of Civil Case No. 12176. Respondent Macario O. Directo was then given ten days to show cause why no disciplinary action should be taken against him for deliberately making false allegations in such petition. Thereafter, on August 16, 1972, came a pleading which he entitled Compliance. This is his explanation: "What your petitioner honestly meant when he alleged that he [has] no knowledge of the existence of said Civil Case No. 12176, CFI of Rizal, Quezon City Branch, was from the time the plaintiff Marcelo Daquis instituted the said case in June 1968 up to and after the time the Court issued the decision in the year 1970. The plaintiff Marcelo Daquis entered into a conditional contract of sale of the lot involved in said Civil Case No. 12176 with the PHHC. There were four (4) purchasers, the plaintiff, two others, and your petitioner. Because of the requirement of the PHHC that only one of them should enter into the contract, Marcelo Daquis was chosen by the others to enter into the same. Since this was a sale on installment basis, by agreement of all the purchasers, duly acknowledged by the PHHC, the monthly dues of the petitioner and the two others, were remitted to Marcelo Daquis, who in turn remits the same to the PHHC. In June 1968 plaintiff Marcelo Daquis instituted Civil Case No. 12176 in the CFI of Quezon City. From June 1968 up to the time and after the decision was issued by the court, plaintiff Marcelo Daquis never informed your petitioner of the said case." 3 He reiterated in a later paragraph that all he wanted to convey was that his knowledge of the aforesaid civil case came only after the decision was issued. He closed his Compliance with the plea that if there were any mistake committed, "it had been an honest one, and would say in all sincerity that there was no deliberate attempt and intent on his part of misleading this Honorable Court, honestly and totally unaware of any false allegation in the petition." 4 The above explanation lends itself to the suspicion that it was a mere afterthought. It could very well be that after his attention was called to the misstatements in his petition, he decided on such a version as a way out. That is more than a bare possibility. There is the assumption though of good faith. That is in his favor. Moreover, judging from the awkwardly worded petition and even his compliance quite indicative of either carelessness or lack of proficiency in the handling of the English language, it is not unreasonable to assume that his deficiency in the mode of expression contributed to the inaccuracy of his statements. While a mere disclaimer of intent certainly cannot exculpate him, still, in the spirit of charity and forbearance, a penalty of reprimand would suffice. At least, it would serve to impress on respondent that in the future he should be much more careful in the preparation of his pleadings so that the least doubt as to his intellectual honesty cannot be entertained. Every member of the bar should realize that candor in the dealings with the Court is of the very essence of honorable membership in the profession. WHEREFORE, Attorney Macario O. Directo is reprimanded. Let a copy of this resolution be spread on his record.

Barredo, Antonio, Fernandez and Aquino, JJ., concur.1wph1.

SECOND DIVISION [G.R. No. 142316. November 22, 2001] FRANCISCO A.G. DE LIANO, ALBERTO O. VILLA-ABRILLE, JR., and SAN MIGUEL CORPORATION, petitioners, vs. HON. COURT OF APPEALS and BENJAMIN A. TANGO, respondents. DECISION DE LEON, JR., J.: Before us is a petition for review on certiorari praying for the reversal of the Resolution[1] dated June 4, 1999 issued by the former Fourteenth Division of the Court of Appeals in CA-G.R. CV No. 60460, which dismissed the appeal of herein petitioners on procedural grounds as well as its Resolution of February 23, 2000 which denied their motion for reconsideration. The relevant facts are: On March 30, 1998, the Regional Trial Court of Quezon City, Branch 227 issued a Decision[2] in Civil Case No. Q-95-24332,[3] the dispositive portion of which is hereunder quoted: WHEREFORE, premises considered, defendant San Miguel Corporation is hereby ordered 1. To release to the plaintiff the owners duplicate copy of TCT No. 299551 in the same [sic] of Benjamin A. Tango; 2. To release to plaintiff the originals of the REM contracts dated December 4, 1990 and February 17, 1992 and to cause the cancellation of the annotation of the same on plaintiffs [sic] TCT No. 299551; 3. To pay the plaintiff the following sums: 3.1. P100,000.00 as and by way of moral damages; 3.2. P50,000.00 as and by way of attorneys fees; 3.3. costs of suit.

SO ORDERED. In brief, the case involved the cancellation of two (2) real estate mortgages in favor of petitioner San Miguel Corporation (SMC) executed by private respondent Benjamin A. Tango over his house and lot in Quezon City. The mortgages were third party or accommodation mortgages on behalf of the spouses Bernardino and Carmelita Ibarra who were dealers of SMC products in Aparri, Cagayan. Other defendants in the case were Francisco A.G. De Liano and Alberto O. Villa-Abrille, Jr., who are senior executives of petitioner SMC. SMC, De Liano and Abrille appealed the aforesaid decision to the Court of Appeals. In due time, their counsel, Atty. Edgar B. Afable, filed an Appellants Brief[4] which failed to comply with Section 13, Rule 44 of the Rules of Court. The appellee (herein private respondent) was quick to notice these deficiencies, and accordingly filed a Motion to Dismiss Appeal[5] dated March 8, 1999. Required to comment,[6] the appellants averred that their brief had substantially complied with the contents as set forth in the rules. They proffered the excuse that the omissions were only the result of oversight or inadvertence and as such could be considered harmless errors. They prayed for liberality in the application of technical rules, adding that they have a meritorious defense. On June 4, 1999, the appellate court issued the first assailed resolution[7] dismissing the appeal. The Court of Appeals held, as follows: xxx xxx x xx As pointed out by plaintiff-appellee, the Brief does not contain a Subject Index nor a Table of Cases and Authorities, with page references. Moreover, the Statement of the Case, Statement of Facts, and Arguments in the Brief has no page reference to the record. These procedural lapses justify the dismissal of the appeal, pursuant to Section 1 (f), Rule 50 of the 1997 Rules of Civil Procedure, as amended, which reads: SECTION 1. Grounds for dismissal of appeal. An appeal may be dismissed by the Court of Appeals, on its own motion, or on that of the appellee, on the following grounds: xxx xxx x xx (f) Absence of specific assignment of errors in the appellants brief, or of page references to the record as required in section 13, paragraphs (a), (c), (d) and (f) of Rule 44; xxx xxx x xx Finally, defendants-appellants, despite having been notified of such defects, still failed to amend their Brief to conform to the Rules, and instead, argues that these are mere harmless errors. In the case of Del Rosario v. Court of Appeals, G.R. No. 113890, February 22, 1996, 241 SCRA 553 [1996], the Supreme Court, in sustaining the dismissal of the petitioners appeal for non compliance with the rule on the contents of the Appellants Brief, ruled that:

Long ingrained in our jurisprudence is the rule that the right to appeal is a statutory right and a party who seeks to avail of the right must faithfully comply with the rules. x x x These rules are designed to facilitate the orderly disposition of appealed cases. In an age where courts are bedeviled by clogged dockets, these rules need to be followed by appellants with greater fidelity. Their observance cannot be left to the whims and caprices of appellants. x x x Having ruled as such, the Court need not resolve plaintiff-appellees contention that the issues raised in the appeal are mere questions of law. The appellants (herein petitioners) sought to have the foregoing resolution reconsidered. Simultaneously, through the same counsel, they filed a Motion to Admit Amended Defendants-Appellants Brief.[8] Theappellate court denied the consolidated motions in its Resolution[9] of February 23, 2000. From the denial of their motion for reconsideration, only petitioner SMC interposed the instant petition.[10] As grounds for allowance, petitioner contends that: A THE COURT OF APPEALS ERRED IN DISMISSING SMCs APPEAL ON THE BASIS OF PURE TECHNICALITIES AND EVEN AFTER SMC HAS CORRECTED THE TECHNICAL DEFECT OF ITS APPEAL. B THE COURT OF APPEALS ERRED IN DISMISSING SMCs APPEAL WITHOUT CONSIDERING ITS MERITS. 1. There are valid grounds to reverse the RTCs award of damages in favor of Tango. The award of damages has no basis in fact or in law. 2. The appeal involves a question of substance which should have been resolved by the Court of Appeals, to wit: whether a third party mortgagor can unilaterally withdraw the mortgage without the consent of the debtor and creditor. The petition has no merit. The premise that underlies all appeals is that they are merely rights which arise from statute; therefore, they must be exercised in the manner prescribed by law. It is to this end that rules governing pleadings and practice before appellate courts were imposed. These rules were designed to assist the appellate court in the accomplishment of its tasks, and overall, to enhance the orderly administration of justice. In his definition of a brief, Justice Malcolm explained thus: xxx[L]et it be recalled that the word brief is derived from the Latin brevis, and the French briefe, and literally means a short or condensed statement. The purpose of the brief, as all law students and lawyers know, is to present to the court in concise form the points and questions in controversy, and by fair argument on the facts and law of the case to assist the court in arriving at a just and proper conclusion. The brief should be so prepared as to minimize the labor

of the court in the examination of the record upon which the appeal is heard and determined.[11] [italics supplied]

Relative thereto, Section 13, Rule 44 of the Revised Rules of Court governs the format to be followed by the appellant in drafting his brief, as follows: Contents of appellants brief.The appellants brief shall contain, in the order herein indicated, the following: (a) A subject index of the matter in the brief with a digest of the arguments and page references, and a table of cases alphabetically arranged, textbooks and statutes cited with references to the pages where they are cited; (b) An assignment of errors intended to be urged, which errors shall be separately, distinctly and concisely stated without repetition and numbered consecutively; (c) Under the heading Statement of the Case, a clear and concise statement of the nature of the action, a summary of the proceedings, the appealed rulings and orders of the court, the nature of the judgment and any other matters necessary to an understanding of the nature of the controversy, with page references to the record; (d) Under the heading Statement of Facts, a clear and concise statement in a narrative form of the facts admitted by both parties and of those in controversy, together with the substance of the proof relating thereto in sufficient detail to make it clearly intelligible, with page references to the record; (e) A clear and concise statement of the issues of fact or law to be submitted to the court for its judgment; (f) Under the heading Argument, the appellants arguments on each assignment of error with page references to the record. The authorities relied upon shall be cited by the page of the report at which the case begins and the page of the report on which the citation is found; (g) Under the heading Relief, a specification of the order or judgment which the appellant seeks; and (h) In cases not brought up by record on appeal, the appellants brief shall contain, as an appendix, a copy of the judgment or final order appealed from. This particular rule was instituted with reason, and most certainly, it was not intended to become a custom more honored in the breach than in the observance. It has its logic, which is to present to the appellate court in the most helpful light, the factual and legal antecedents of a case on appeal. The first requirement of an appellants brief is a subject index. The index is intended to facilitate the review of appeals by providing ready reference, functioning much like a table of contents. Unlike in other jurisdictions, there is no limit on the length of appeal briefs or appeal memoranda filed before appellate courts. The danger of this is the very real possibility that the reviewing tribunal will be swamped with voluminous documents. This occurs even though the rules consistently urge the parties to be brief or concise in the drafting of

pleadings, briefs, and other papers to be filed in court. The subject index makes readily available at ones fingertips the subject of the contents of the brief so that the need to thumb through the brief p age after page to locate a partys arguments, or a particular citation, or whatever else needs to be found and considered, is obviated. An assignment of errors follows the subject index. It is defined in this wise: An assignment of errors in appellate procedure is an enumeration by appellant or plaintiff in error of the errors alleged to have been committed by the court below in the trial of the case upon which he seeks to obtain a reversal of the judgment or decree; it is in the nature of a pleading, and performs in the appellate court the same office as a declaration or complaint in a court of original jurisdiction. Such an assignment is appellants complaint, or pleading, in the appellate court, and takes the place of a declaration or bill; an appeal without an assignment of errors would be similar to a suit without a complaint, bill, or declaration. The assignment is appellants declaration or complaint against the trial judge, charging harmful error, and proof vel non of assignment is within the record on appeal. xxx xxx x xx The object of such pleadings is to point out the specific errors claimed to have been committed by the court below, in order to enable the reviewing court and the opposing party to see on what points appellant or plaintiff in error intends to ask a reversal of the judgment or decree, and to limit discussion to those points. The office of an assignment of errors is not to point out legal contentions, but only to inform the appellate court that appellant assigns as erroneous certain named rulings; the function of the assignment is to group and bring forward such of the exceptions previously noted in the case on appeal as appellant desires to preserve and present to the appellant.[12] It has been held that a general assignment of errors is unacceptable under the rules. Thus, a statement of the following tenor: that the Court of First Instance of this City incurred error in rendering the judgment appealed from, for it is contrary to law and the weight of the evidence, was deemed insufficient.[13] The appellant has to specify in what aspect of the law or the facts that the trial court erred. The conclusion, therefore, is that the appellant must carefully formulate his assignment of errors. Its importance cannot be underestimated, as Section 8, Rule 51 of the Rules of Court will attest: Questions that may be decided.No error which does not affect the jurisdiction over the subject matter or the validity of the judgment appealed from or the proceedings therein will be considered unless stated in the assignment of errors, or closely related to or dependent on an assigned error and properly argued in the brief, save as the court may pass upon plain errors and clerical errors. The rules then require that an appellants brief must contain both a statement of the case and a statement of facts. A statement of the case gives the appellate tribunal an overview of the judicial antecedents of the case,

providing material information regarding the nature of the controversy, the proceedings before the trial court, the orders and rulings elevated on appeal, and the judgment itself. These data enable the appellate court to have a better grasp of the matter entrusted to it for its appraisal. In turn, the statement of f acts comprises the very heart of the appellants brief. The facts constitute the backbone of a legal argument; they are determinative of the law and jurisprudence applicable to the case, and consequently, will govern the appropriate relief. Appellants should remember that the Court of Appeals is empowered to review both questions of law and of facts. Otherwise, where only a pure question of law is involved, appeal would pertain to this Court. An appellant, therefore, should take care to state the facts accurately though it is permissible to present them in a manner favorable to one party. The brief must state the facts admitted by the parties, as well as the facts in controversy. To laymen, the distinction may appear insubstantial, but the difference is clear to the practitioner and the student of law. Facts which are admitted require no further proof, whereas facts in dispute must be backed by evidence. Relative thereto, the rule specifically requires that ones statement of facts should be supported by page references to the record. Indeed, disobedience therewith has been punished by dismissal of the appeal. [14] Page references to the record are not an empty requirement. If a statement of fact is unaccompanied by a page reference to the record, it may be presumed to be without support in the record and may be stricken or disregarded altogether. [15] When the appellant has given an account of the case and of the facts, he is required to state the issues to be considered by the appellate court. The statement of issues is not to be confused with the assignment of errors: they are not one and the same, for otherwise, the rules would not require a separate statement for each. The statement of issues puts forth the questions of fact or law to be resolved by the appellate court. What constitutes a question of fact or one of law should be clear by now: At this point, the distinction between a question of fact and a question of law must be clear. As distinguished from a question of law which exists when the doubt or difference arises as to what the law is on certain state of factsthere is a question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts; or when the query necessarily invites calibration of the whole evidence considering mainly the credibility of witnesses, existence and relevancy of specific surrounding circumstances, their relation to each other and to the whole and the probabilities of the situation.[16] Thereafter, the appellant is required to present his arguments on each assigned error. An appellants arguments go hand in hand with his assignment of errors, for the former provide the justification supporting his contentions, and in so doing resolves the issues. It will not do to impute error on the part of the trial court without substantiation. The mere elevation on appeal of a judgment does not create a presumption that it was rendered in error. The appellant has to show that he is entitled to the reversal of the judgment appealed, and he

cannot do this unless he provides satisfactory reasons for doing so. It is therefore essential that xxx [A]s far as possible, the errors and reasons assigned should be supported by a citation of authorities. The failure to do so has been said to be inexcusable; and, although a point made in the brief is before the court even though no authorities are cited and may be considered and will be where a proposition of well established law is stated, the court is not required to search out authorities, but may presume that counsel has found no case after diligent search or that the point has been waived or abandoned, and need not consider the unsupported errors assigned, and ordinarily will not give consideration to such errors and reasons unless it is apparent without further research that the assignments of errors presented are well taken.[17] In this regard, the rules require that authorities should be cited by the page of the report at which the case begins, as well as the page of the report where the citation is found. This rule is imposed for the convenience of the appellate court, for obvious reasons: since authorities relied upon by the parties are checked for accuracy and aptness, they are located more easily as the appellate court is not bound to peruse volume upon volume, and page after page, of reports. Lastly, the appellant is required to state, under the appropriate heading, the reliefs prayed for. In so doing, the appellate court is left in no doubt as to the result desired by the appellant, and act as the circumstances may warrant. Some may argue that adherence to these formal requirements serves but a meaningless purpose, that these may be ignored with little risk in the smug certainty that liberality in the application of procedural rules can always be relied upon to remedy the infirmities. This misses the point. We are not martinets; in appropriate instances, we are prepared to listen to reason, and to give relief as the circumstances may warrant. However, when the error relates to something so elementary as to be inexcusable, our discretion becomes nothing more than an exercise in frustration. It comes as an unpleasant shock to us that the contents of an appellants brief should still be raised as an issue now. There is nothing arcane or novel about the provisions of Section 13, Rule 44. The rule governing the contents of appellants briefs has existed since the old Rules of Court,[18] which took effect on July 1, 1940, as well as the Revised Rules of Court,[19] which took effect on January 1, 1964, until they were superseded by the present 1997 Rules of Civil Procedure. The provisions were substantially preserved, with few revisions. An additional circumstance impels us to deny the reinstatement of petitioners appeal. We observed that petitioner submitted an Amended Appellants Brief to cure the infirmities of the one first filed on its behalf by its lawyer. All things being equal, we would have been inclined to grant the petition until we realized that the attempt at compliance was, at most, only a cosmetic procedure. On closer scrutiny, the amended brief was as defective as the first. Where the first brief lacked an assignment of errors but included a statement of issues, the amended brief suffered a complete reversal: it had an

assignment of errors but no statement of issues. The statement of facts lacked page references to the record, a deficiency symptomatic of the first. Authorities were cited in an improper manner, that is, the exact page of the report where the citation was lifted went unspecified.[20] The amended brief did not even follow the prescribed order: the assignment of errors came after the statement of the case and the statement of facts. No one could be expected to ignore such glaring errors, as in the case at bar. The half-hearted attempt at submitting a supposedly amended brief only serves to harden our resolve to demand a strict observance of the rules. We remind members of the bar that their first duty is to comply with the rules, not to seek exceptions. As was expressed more recently in Del Rosario v. Court of Appeals,[21] which was rightfully quoted by the appellate court, we ruled that: Petitioners plea for liberality in applying these rules in preparing Appellants Brief does not deserve any sympathy. Long ingrained in our jurisprudence is the rule that the right to appeal is a statutory right and a party who seeks to avail of the right must faithfully comply with the rules. In People v. Marong, we held that deviations from the rules cannot be tolerated. The rationale for this strict attitude is not difficult to appreciate. These rules are designed to facilitate the orderly disposition of appealed cases. In an age where courts are bedeviled by

clogged dockets, these rules need to be followed by appellants with greater fidelity. Their observance cannot be left to the whims and caprices of appellants. In the case at bar, counsel for petitioners had all the opportunity to comply with the above rules. He remained obstinate in his non-observance even when he sought reconsideration of the ruling of the respondent court dismissing his clients appeal. Such obstinacy is incongruous with his late plea for liberality in construing the rules on appeal. [italics supplied]

Anent the second issue, it may prove useful to elucidate on the processing of appeals in the Court of Appeals. In so doing, it will help to explain why the former Fourteenth Division of the appellate court could not look into the merits of the appeal, as petitioner corporation is urging us to do now. The Rules of Court prescribe two (2) modes of appeal from decisions of the Regional Trial Courts to the Court of Appeals. When the trial court decides a case in the exercise of its original jurisdiction, the mode of review is by an ordinary appeal in accordance with Section 2(a) of Rule 41.[22] In contrast, where the assailed decision was rendered by the trial court in the exercise of its appellate jurisdiction, the mode of appeal is via a petition for review pursuant to Rule 42.[23] We are more concerned here about the first mode since the case at bar involves a decision rendered by the Regional Trial Court exercising its original jurisdiction. Cases elevated to the Court of Appeals are treated differently depending upon their classification into one of three (3) categories: appealed civil cases, appealed criminal cases, and special cases.[24] Be it noted that all cases are under the supervision and control of the members of the Court of Appeals in all stages, from the time of filing until the remand of the cases to the courts or

agencies of origin.[25] Ordinary appealed civil cases undergo two (2) stages. The first stage consists of completion of the records. The second stage is for study and report, which follows when an appealed case is deemed submitted for decision, thus: When case deemed submitted for judgment.A case shall be deemed submitted for judgment: A. In ordinary appeals.1) Where no hearing on the merits of the main case is held, upon the filing of the last pleading, brief, or memorandum required by the Rules or by the court itself, or the expiration of the period for its filing; 2) Where such a hearing is held, upon its termination or upon the filing of the last pleading or memorandum as may be required or permitted to be filed by the court, or the expiration of the period for its filing.[26] xxx xxx x xx At each stage, a separate raffle is held. Thus, a preliminary raffle is held at which time an appealed case is assigned to a Justice for completion. After completion, when the case is deemed ripe for judgment, a second raffle is conducted to determine the Justice to whom the case will be assigned for study and report.[27] Each stage is distinct; it may happen that the Justice to whom the case was initially raffled for completion may not be the same Justice who will write the decision thereon. The aforesaid distinction has a bearing on the case at bar. It becomes apparent that the merits of the appeal can only be looked into during the second stage. The Justice in-charge of completion exceeds his province should he examine the merits of the case since his function is to oversee completion only. The prerogative of determining the merits of an appeal pertains properly to the Justice to whom the case is raffled for study and report. The case at bar did not reach the second stage; it was dismissed during completion stage pursuant to Section 1(f) of Rule 50. Consequently, petitioners contention that the appellate court should have considered the substance of the appeal prior to dismissing it due to technicalities does not gain our favor. Generally, the negligence of counsel binds his client. Actually, Atty. Afable is also an employee of petitioner San Miguel Corporation. [28] Yet even this detail will not operate in petitioners favor. A corporation, it should be recalled, is an artificial being whose juridical personality is only a fiction created by law. It can only exercise its powers and transact its business through the instrumentalities of its board of directors, and through its officers and agents, when authorized by resolution or its by-laws. xxx Moreover, x x x a corporate officer or agent may represent and bind the corporation in transactions with third persons to the extent that authority to do so has been conferred upon him, and this includes powers which have been intentionally conferred, and also such powers as, in the usual course of the

particular business, are incidental to, or may be implied from, the powers intentionally conferred, powers added by custom and usage, as usually pertaining to the particular officer or agent, and such apparent powers as the corporation has caused persons dealing with the officer or agent to believe that it has conferred.[29] That Atty. Afable was clothed with sufficient authority to bind petitioner SMC is undisputable. Petitioner SMCs board resolution of May 5, 1999 attests to that. Coupled with the provision of law that a lawyer has authority to bind his client in taking appeals and in all matters of ordinary judicial procedure, [30] a fortiori then, petitioner SMC must be held bound by the actuations of its counsel of record, Atty. Afable. WHEREFORE, the instant petition is hereby DENIED for lack of merit, with cost against petitioner San Miguel Corporation. SO ORDERED. Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.

SECOND DIVISION [G.R. No. 138884. June 6, 2002] RODOLFO DE LEON, petitioner, vs. COURT OF APPEALS and SPOUSES ESTELITA and AVELINO BATUNGBACAL, respondents. DECISION QUISUMBING, J.: Before us is a special civil action for certiorari and prohibition under Rule 65 of the Rules of Court. It seeks to annul and set aside the resolution[1] dated January 13, 1999 of the Court of Appeals, in CA-G.R. CV No. 57989, denying petitioners motion (a) to dismiss the appeals of private respondents, and (b) to suspend the period to file appellees brief. Also assailed is the CA resolution[2] dated April 19, 1999, denying petitioners motion for reconsideration. The antecedent facts are as follows: On March 11, 1996, petitioner Rodolfo de Leon filed with the Regional Trial Court of Bataan, Branch 3, a complaint[3] for a sum of money plus damages, with a prayer for preliminary attachment, against herein private respondents Avelino and Estelita Batungbacal. The complaint averred that private respondent Estelita Batungbacal executed a promissory note[4] in favor of herein petitioner for her P500,000 loan with stipulated interest at 5 percent monthly. The loan and interest remained unpaid allegedly because the check issued by Estelita was dishonored. Private respondents filed an answer with counterclaim. Estelita admitted the loan obligation, but Avelino denied liability on the ground that his wife was not the designated administrator and therefore had no authority to bind the conjugal partnership. Avelino further averred that his wife contracted the debt without his knowledge and consent. Based on Estelitas admission, petitioner filed a motion for partial judgmen t against Estelita, which the trial court granted in an order[5] dated May 14, 1996: WHEREFORE, the Motion for Partial Judgment on the Pleadings is hereby granted in accordance with Sec. 4 of Rule 36, Rules of Court. As prayed for, judgment is hereby rendered against Estelita Q. Batungbacal, ordering her to pay plaintiff Rodolfo de Leon the principal amount of the loan obligation of P500,000.00 plus the stipulated interest which has accrued thereon at 5% per month since May 1995 until now, plus interest at the legal rate on said accrued interest from date of judicial demand until the obligation is fully paid. SO ORDERED. Counsel for private respondent spouses received a copy of the partial judgment on May 21, 1996, but no appeal was taken therefrom. Thus, petitioner filed a motion for execution of said judgment on June 6, 1996. Counsel for private respondents was furnished a copy of the motion on the same date. As private respondents interposed no objection, a writ of execution was correspondingly issued. The sheriff then proceeded to execute the writ and partially satisfied the judgment award against the paraphernal property of Estelita and the conjugal properties of the private respondents with due notice to the latter and their counsel. Again, private respondents interposed no objection.

Pre-trial was held and trial proceeded on two main issues: (1) whether the loan was secured with the knowledge and consent of the husband and whether the same redounded to the benefit of the conjugal partnership; and (2) whether the capital of the husband would be liable if the conjugal assets or the paraphernal property of the wife were insufficient to satisfy the loan obligation. On June 2, 1997, the trial court rendered judgment [6]ordering private respondent Avelino Batungbacal to pay the amount of the loan plus interest and other amounts in accordance with Article 121 of the Family Code. Counsel for private respondent spouses received a copy of the decision on June 6, 1997. Avelino through counsel, filed a notice of appeal[7] on June 19, 1997. In a notice of appearance[8] dated June 25, 1997 bearing the conformity solely of Estelita, a new counsel appeared in collaboration with the counsel of record for the private respondents. On the same date, Estelita through said new counsel, served a notice that she is appealing both decisions promulgated on May 14, 1996, and June 2, 1997, to the Court of Appeals. However, the trial court, in an order[9] dated July 7, 1997 denied the notice of appeal[10] filed by Estelita on the ground that said notice was filed beyond the reglementary period to appeal. Private respondents appeal was docketed with the respondent Court of Appeals as CA-G.R. CV No. 57989. Petitioner then filed with the Court of Appeals a Motion to Dismiss the Appeal with Motion to Suspend period to file Appellees Brief[11] on October 21, 1998. Petitioner based his motion to dismiss on the following grounds: (1) that the statement of the case as well as the statement of the facts in the appellants brief do not have page references to the record, and that the authorities relied upon in the arguments are not cited by the page of the report at which the case begins and the page of the report on which the citation is found; (2) that no copy of the appealed decision of the lower court was attached to the appellants brief, in violation of the Internal Rules of the Court of Appeals; (3) that private respondents furnished only one copy of the appellants brief to the petitioner, also in violation of the Rules of Court; (4) that the decision promulgated against Estelita on May 14, 1996 is no longer appealable; and (5) that the notice of appeal filed on June 25, 1996 by Estelita concerning the decision of the trial court against Avelino was filed beyond the reglementary period to appeal.[12] The motion also prayed that the period for filing the appellees brief be suspended in view of the pendency of the motion to dismiss.[13] Private respondents, in their opposition,[14] insisted that the statements of the case as well as the statement of facts in their brief contained page references to the record, and that Estelita had seasonably filed her appeal. Private respondent spouses also stated that they had filed an Amended Appellants Brief[15] on November 27, 1998 and that two copies thereof had been served on petitioner together with copies of the trial courts decisions. On January 13, 1999, the Court of Appeals issued the assailed resolution[16] denying petitioners motion to dismiss and virtually admitting the Amended Appellants Brief as follows:

As submitted by appellants, they adopted pertinent portions of the appealed Decision in the Statement of the Case, indicated specific pages in the appealed decision where the quoted portions are found. In the bottom of page 2 of the brief, is the quoted portions of the decision, referring to pages 1 and 2 thereof. On page 3 of the brief is the dispositive portion, taken on page 11 of the decision. The rest of the narration in the Statement of the Case are the specific dates of the pleadings, orders, and portions of the decision citing the page references where they are found. Two (2) copies of the Amended Brief were served upon appellee with the appealed Decision attached as Annex A, and B. Appellant Estellita Batungbacal explained that her appeal was filed on time. She cited Guevarra, et. al. vs. Court of Appeals, et. al., L-49017 and 49024, that a partial judgment may be appealed only together with the judgment in the main case. She personally received a copy of the main Decision, dated June 2, 1997 on June 10, 1997, and filed her notice of appeal dated June 25, 1995 (sic) sent by registered mail on even date, per Registry Receipt No. 2618, attached as Annex C hereof, thereby showing that the notice of appeal was filed within 15 days from receipt of the Decision appealed from. At any rate, the merit of appellees contention that appellant Estellita Batungbacal can no longer app eal from the decision may be resolved after the case is considered ready for study and report. WHEREFORE, the motion to dismiss is hereby DENIED, and appellee is required to file his appellees brief within forty-five (45) days from receipt hereof. SO ORDERED. On January 22, 1999, petitioner filed a Motion for Reconsideration [17] of the aforesaid resolution but said motion was denied by the Court of Appeals in a resolution[18] dated April 19, 1999, the pertinent portion of which reads as follows: The resolution promulgated on January 13, 1999 required appellee to file his appellees brief within forty-five (45) days from receipt of that resolution, or up to March 4, 1999. Up to this date no appellees brief has been submitted. WHEREFORE, the appeal by appellants is deemed submitted for decision without the benefit of appellees brief, and the records of this case is hereby transmitted to the Raffle Committee, for re-raffle, for study and report. SO ORDERED. Hence, this Petition for Certiorari and Prohibition[19] wherein petitioner contends that respondent Court of Appeals acted: (1) WITHOUT JURISDICTION IN ENTERTAINING THE APPEAL OF PRIVATE RESPONDENT ESTELITA BATUNGBACAL; (2) WITH GRAVE ABUSE OF DISCRETION AND IN DISREGARD OF THE EXPRESS MANDATORY REQUIREMENTS OF THE RULES AS WELL AS AGAINST SETTLED JURISPRUDENCE WHEN IT DENIED THE PETITIONERS MOTION TO DISMISS THE APPEAL OF THE PRIVATE RESPONDENT SPOUSES;

(3) WITH GRAVE ABUSE OF DISCRETION AND IN GRAVE VIOLATION OF DUE PROCESS OF LAW IN ADMITTING THE AMENDED APPELLANTS BRIEF FILED BY PRIVATE RESPONDENTS AND IN REQUIRING THE PETITIONER AS APPELLEE TO FILE HIS APPELLEES BRIEF; (4) WITHOUT DUE PROCESS OF LAW WHEN IT RESOLVED TO HAVE THE APPEAL OF THE APPELLANT PRIVATE RESPONDENTS DEEMED SUBMITTED FOR DECISION WITHOUT BENEFIT OF APPELLEES BRIEF.[20] Simply put, the following are the issues presented before this Court for resolution: (1) whether or not the appellate court erred in taking cognizance of the appeal; and (2) whether or not the appellate court erred or committed grave abuse of discretion when it considered the appeal as submitted for decision without petitioners brief. On the first issue, petitioner contends that the decisions of the trial court in Civil Case No. 6480 promulgated on May 14, 1996 and June 2, 1997 had become final and executory as to private respondent Estelita Batungbacal. This is because Estelita never appealed the partial judgment promulgated on May 14, 1996. In fact, there has been a partial execution of said judgment with notice to and without objection from private respondent spouses. As regards the decision dated June 2, 1997, petitioner contends that the same had become final for failure to file the notice of appeal within 15 days, counted from the time counsel of record for private respondent spouses received a copy on June 6, 1997 and not from the time Estelita received a copy on June 10, 1997. Petitioner points to Section 2 of Rule 13 of the Rules of Court and argues that since the trial court never ordered that service of the judgment be made upon Estelita, she was not entitled to service of the judgment. The fact that she received a copy of the judgment separately from her counsel cannot prejudice the legal consequences arising out of prior receipt of copy of the decision by her counsel. It was thus clear error for the Court of Appeals to accept Estelitas argument that the reglementary period commenced not from receipt of a copy of the decision by counsel of record but from the time she received a copy of the decision. The appeal having been filed out of time, the Court of Appeals did not have jurisdiction to entertain the appeal of Estelita. Petitioner also assails the appellants brief for certain formal defects. As pointed out in his motion to dismiss filed before the public respondent, there are no page references to the record in the statements of the case and of the facts in the appellants brief submitted by private respondents. Petitioner asserts that while there are many pleadings and orders mentioned in said statements, only the decision dated June 2, 1997 is cited, and the citation is limited only to the particular page or pages in said decision where the citation or quotation is taken, without any reference to the pages in the record where the decision can be found. Neither is there reference to the pages in the record where the particular cited or quoted portions of the decision can be found. Petitioner likewise alleges that the authorities relied upon in the appellants brief of private respondents are also not cited by the page on which the citation

is found, as required in Sec. 13 (f) of Rule 44 of the Rules of Court. Page references to the record are also required in Section 13, paragraphs (c), (d) and (f) of Rule 44 and absence thereof is a ground for dismissal of the appeal, pursuant to Sec. 1 (f) of Rule 50 of the Rules of Court. Petitioner also harps on the failure of private respondents to furnish petitioner with two copies of the original appellants brief, to submit proof of service of two copies of the brief on the appellee, and to furnish the petitioner with two copies of the amended appellants brief as required by the Rules of Court. Additionally, petitioner asserts that the failure of private respondents to append copies of the appealed decisions to their appellants brief constitutes a violation of t he Internal Rules of the Court of Appeals and is likewise a ground for dismissal under Section 1 of Rule 50 of the Rules of Court. Lastly, petitioner contends that the virtual admission into the record by the respondent court of the amended appellants brief of the private respondents under the resolution dated January 13, 1999 and its corresponding action to require the petitioner to respond thereto, constitute grave abuse of discretion and blatant disregard of due process of law because the amended brief was filed without leave of court. Private respondents, for their part, argue that the resolutions being assailed by petitioner are interlocutory in character because the Court of Appeals still has to decide the appeal on the merits; hence, certiorari does not lie in his favor. Private respondents allege that petitioner has another adequate and speedy remedy, i.e., to file his brief raising all issues before the Court of Appeals. Once the appeal is resolved on the merits, all proper issues may be elevated to the Supreme Court. An order denying a motion to dismiss being merely interlocutory, it cannot be the basis of a petition for certiorari. The proper remedy is to appeal in due course after the case is decided on the merits. We find the petition devoid of merit. On the first issue, we find that the Court of Appeals did not act without jurisdiction in entertaining the appeal filed by private respondent Estelita Batungbacal. Contrary to petitioners apparent position, the judgments rendered by the trial court in this case are not several judgments under the Rules of Court so that there would be multiple periods of finality. A several judgment is proper only when the liability of each party is clearly separable and distinct from that of his co-parties, such that the claims against each of them could have been the subject of separate suits, and judgment for or against one of them will not necessarily affect the other. [21] Where a common cause of action exists against the defendants, as in actions against solidary debtors, a several judgment is not proper. In this case, private respondents are sued together under a common cause of action and are sought to be held liable as solidary debtors for a loan contracted by Estelita. This is the clear import of the allegation in the complaint that the proceeds of the loan benefited the conjugal partnership. Thus, between the two judgments rendered by the trial court, there could only be one judgment that finally disposes of the case on the merits. Receipt of

notice of this final judgment marks the point when the reglementary period is to begin running. In this case, that judgment is the decision [22] rendered by the trial court on June 2, 1997 and it is only from the date of notice of this decision that the reglementary period began to run. The partial judgment dated May 14, 1996 was rendered only with respect to one issue in the case and is not the final and appealable order or judgment that finally disposes of the case on the merits.[23] It must, therefore, only be appealed together with the decision dated June 2, 1997. A final order is that which gives an end to the litigation. [24] When the order or judgment does not dispose of the case completely but leaves something to be done upon the merits, it is merely interlocutory.[25] Quite obviously, the partial judgment ordering Estelita to pay petitioner is an interlocutory order because it leaves other things for the trial court to do and does not decide with finality the rights and obligations of the parties. Specifically, at the time the partial judgment was rendered, there remained other issues including whether the husband Avelino had any liability under Article 121 of the Family Code. However, as the partial judgment disposed of one of the issues involved in the case, it is to be taken in conjunction with the decision dated June 2, 1997. Together, these two issuances form one integrated decision. The question now is when the period to appeal should actually commence, from June 6, 1997, as petitioner contends; or from June 10, 1997, as private respondent Estelita Batungbacal claims? We hold that the period began to run on June 6, 1997 when counsel for private respondents received a copy of the decision dated June 2, 1997. When a party is represented by counsel of record, service of orders and notices must be made upon said attorney and notice to the client and to any other lawyer, not the counsel of record, is not notice in law.[26] The exception to this rule is when service upon the party himself has been ordered by the court.[27]In this case, it does not appear that there was any substitution of counsel or that service upon private respondent Estelita Batungbacal had been specifically ordered by the trial court; hence, the counsel of record for the private respondents is presumed to be their counsel on appeal and the only one authorized to receive court processes. Notice of the judgment upon such counsel, therefore, was notice to the clients for all legal intents and purposes. Private respondents appeal had been taken within the reglementary period since Avelino Batungbacal had filed a notice of appeal on June 19, 1997 or 13 days from their counsels receipt of the decision on June 6, 1997. Respondent spouses having been jointly sued under a common cause of action, an appeal made by the husband inures to the benefit of the wife. The notice of appeal filed by Estelita was a superfluity, the appeal having been perfected earlier by her husband. We come now to petitioners contention that the appellants brief suffers from fatal defects. Worth stressing, the grounds for dismissal of an appeal under Section 1 of Rule 50[28] of the Rules of Court are discretionary upon the Court of Appeals. This can be seen from the very wording of the Rules which uses the

word may instead of shall. This Court has held in Philippine National Bank vs. Philippine Milling Co., Inc.[29] that Rule 50, Section 1 which provides specific grounds for dismissal of appeal manifestly confers a power and does not impose a duty. What is more, it is directory, not mandatory. [30] With the exception of Sec. 1(b), the grounds for the dismissal of an appeal are directory and not mandatory, and it is not the ministerial duty of the court to dismiss the appeal.[31] The discretion, however, must be a sound one to be exercised in accordance with the tenets of justice and fair play having in mind the circumstances obtaining in each case.[32] The Court of Appeals rightly exercised its discretion when, in denying petitioners motion to dismiss, it ruled that the citations contained in the appellants brief were in substantial compliance with the rules. Where the citations found in the appellants brief could sufficiently enable the appellate court to locate expeditiously the portions of the record referred to, there is substantial compliance with the requirements of Section 13(c) and (d), Rule 46 of the Rules of Court. Such determination was properly within the appellate courts discretion. Nothing in the records indicate that it was exercised capriciously, whimsically, or with a view of permitting injury upon a party litigant. For the same reasons, we hold that the respondent Court of Appeals also did not err when it did not dismiss the appeal based on the allegation that appellants brief failed to comply with the internal rules of said court. However, the Court of Appeals erred in requiring petitioner to file the appellees brief in response to the amended appellants brief. Note that the amended brief was filed without the proper motion for leave to do so and corresponding order from the respondent court. Even more significant, it was filed beyond the extensions of time granted to appellants. The discretion in accepting late briefs conferred upon respondent court which this Court applied in the cases of Maqui vs. CA[33] and Vda. de Haberer vs. CA,[34] finds no application under the present circumstances because, unlike in these two cases, here no valid reason was advanced for the late filing of the amended brief. While the amended brief[35] might contain no substantial and prejudicial changes, it was error for the respondent court to accept the amended brief as filed and then require petitioner to file appellees brief because admittedly the amended brief was filed beyond August 31, 1998, the last period of extension granted to private respondents. On the second issue, we hold that the Court of Appeals did not commit grave abuse of discretion in considering the appeal submitted for decision. The proper remedy in case of denial of the motion to dismiss is to file the appellees brief and proceed with the appeal. Instead, petitioner opted to file a motion for reconsideration which, unfortunately, was pro forma. All the grounds raised therein have been discussed in the first resolution of the respondent Court of Appeals. There is no new ground raised that might warrant reversal of the resolution. A cursory perusal of the motion would readily show that it was a near verbatim repetition of the grounds stated in the motion to dismiss; hence, the filing of the motion for reconsideration did not suspend the period for filing

the appellees brief. Petitioner was therefore properly deemed to have waived his right to file appellees brief. WHEREFORE, the petition is DENIED. The resolutions dated January 13, 1999 and April 19, 1999 of the Court of Appeals in CA-G.R. CV No. 57989 are AFFIRMED, and the Court of Appeals is ordered to proceed with the appeal and decide the case with dispatch. No pronouncement as to costs.SO ORDERED. FIRST DIVISION ALFONSO T. YUCHENGCO, G.R. No. 165793 Petitioner, Present: Panganiban, C.J. (Chairperson), - versus Ynares-Santiago, Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ. COURT OF APPEALS, THE MANILA CHRONICLE PUBLISHING CORPORATION, RAUL VALINO, NEAL CRUZ, ERNESTO TOLENTINO, NOEL CABRERA, THELMA SAN JUAN, GERRY ZARAGOZA, DONNA GATDULA, RODNEY P. DIOLA and Promulgated: ROBERT COYIUTO, JR., Respondents. October 27, 2006 x ---------------------------------------------------------------------------------------- x

DECISION
YNARES-SANTIAGO, J.: This Petition for Certiorari[1] assails the July 27, 2004[2] and October 25, 2004 Resolutions of the Court of Appeals in CA-G.R. CV No. 76995 denying petitioners motion to dismiss and motion for reconsideration.
[3]

In his complaint filed before the Regional Trial Court of Makati City, Branch 136, docketed as Civil Case No. 94-1114, petitioner Alfonso T. Yuchengco alleged that in the last quarter of 1994, respondents published in the Manila Chronicle a series of defamatory articles against him, to wit: (1) that he was a Marcos crony or a Marcos-Romualdez crony, which term according to him is commonly understood to describe an individual who received special and undeserving favors from former President Ferdinand E. Marcos and/or his brother-in-law Benjamin Kokoy Romualdez, thereby allowing him to engage in

illegal and dishonorable business activities; (2) that he engaged in unsound and immoralbusiness practices by taking control of Oriental Petroleum Mineral Corporation in order to divert its resources to rescue the debt-ridden Benguet Corporation; (3) that he was an unfair and uncaring employer; (4) that he induced Rizal Commercial Banking Corporation to violate the provisions of the General Banking Act on DOSRI loans; (5) that he induced others to disobey the lawful orders of the Securities and Exchange Commission; and (6) that he was a corporate raider, or one who seeks to profit for something he did not work for.[4] On November 8, 2002, the trial court rendered a Decision, [5] the dispositive portion of which provides: WHEREFORE, in view of the foregoing, judgment is herby rendered as follows: 1. On the First Cause of Action, ordering defendants Chronicle Publishing, Neil H. Cruz, Ernesto Tolentino, Noel Cabrera, Thelma San Juan, Gerry Zaragoza, Donna Gatdula, Raul Valino and Rodney Diola to pay plaintiff Yuchengco, jointly and severally: a. the amount of Ten Million Pesos (P10,000,000.00) as moral damages; and b. the amount of Ten Million Pesos (P10,000,000.00) as exemplary damages. 2. On the Second Cause of Action, ordering defendants Robert Coyiuto, Jr. and Chronicle Publishing to pay plaintiff Yuchengco, jointly and severally: a. the amount of Fifty Million Pesos (P50,000,000.00) as moral damages; and b. the amount of Thirty Million Pesos (P30,000,000.00) as exemplary damages. 3. On the Third Cause of Action, ordering all defendants to pay plaintiff Yuchengco, jointly and severally, the amount of One Million Pesos (P1,000,000.00) as attorneys fees and legal costs. SO ORDERED.[6] After the trial court promulgated its decision, respondents appealed the same to the Court of Appeals where it was docketed as CA-G.R. CV No. 76995. Thereafter, the Court of Appeals in a notice dated October 3, 2003 required respondents to file their appellants brief. Respondents Cruz and Tolentino filed their appellants brief on February 4, 2004 while respondents The Manila Chronicle Publishing Corporation, Noel

Cabrera, Thelma San Juan, Gerry Zaragosa, Donna Gatdula, Rodney Viola, Raul Valino, and Robert Coyiuto filed their appellants brief on March 3, 2004. Thereafter, petitioner filed a Motion to Dismiss alleging that the appellants briefs submitted by respondents were not in the prescribed size and did not have page references. The Court of Appeals denied the motion to dismiss holding that although procedural rules are required to be followed as a general rule, they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of his noncompliance with the procedure required. Petitioners Motion for Reconsideration was denied. Hence, this petition on the sole issue of whether or not the Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction in not ordering the dismissal of private respondents appeal. Petitioner alleges that respondents appellants briefs were not in the prescribed size and did not have page references as required by Section 13 (c) and (d) of Rule 44 of the Rules of Court which is a ground to dismiss the appeal under Section 1 (f) of Rule 50. Likewise, petitioner avers that he was not served two copies of respondents Coyiuto, et al.s brief as required by Section 7 of Rule 44 which constitutes another ground to dismiss the appeal under Section 1 (e) of Rule 50. Respondents aver that the Court of Appeals may have committed errors of procedures but it does not constitute grave abuse of discretion. Petitioners claim that the appellants briefs did not contain a citation of authorities is misleading because they cited authorities and made references to specific pages in the TSNs. They argue that if the appellants briefs suffered from any infirmity, the same is inconsequential and would not justify the dismissal of their appeal, more so considering that the primordial issue at hand is whether or not giving due course to the appeal would serve substantial justice. The petition lacks merit. Indeed, Section 7 of Rule 44 requires the appellants to serve two copies of the appellants brief to the appellee. However, the failure to serve the required number of copies does not automatically result in the dismissal of the appeal. The Court of Appeals has the discretion whether to dismiss or not to dismiss the appeal. Thus, we held in Philippine National Bank v. Philippine Milling Co., Inc.[7] that: [P]ursuant to Section 1 of Rule 50 of the Rules of Court, an appeal may be dismissed by the Court of Appeals, on its own motion

or on that of the appellee upon the ground, among others, of failure of the appellant . . . to serve and file the required number of copies of his brief, within the reglementary period. Manifestly, this provision confers a power and does not impose a duty. What is more, it is directory, not mandatory. Contrary to petitioners assertion that, on November 22, 1966, it became its (Court of Appeals) ministerial duty to dismiss the appeal and remand the case for execution to the Court of origin, the Court of Appeals had, under said provision of the Rules of Court, discretion to dismiss or not to dismiss respondents appeal. Although said discretion must be a sound one, to be exercised in accordance with the tenets of justice and fair play, having in mind the circumstances obtaining in each case, the presumption is that it has been so exercised. It was incumbent upon herein petitioners, as actors in the case at bar, to offset this presumption. Yet, the record before us does not satisfactorily show that the Court of Appeals has abused its discretion much less gravely. Petitioners assertion of abuse of discretion is predicated solely upon the alleged ministerial duty of said Court to dismiss the appeal therein, which is devoid of legal foundation. It is inconsistent with our views in Viuda de Ordoveza v. Raymundo and Alquiza v. Alquiza. (Emphasis supplied) Likewise, Section 13 (c) & (d) requires that the appellants brief should contain a clear statement of the case and facts with page references to the record. The absence of page reference is a ground for dismissal of the appeal, however, the same is not mandatory but directory on the part of the Court of Appeals. Thus, we held in De Leon v. Court of Appeals[8] that: The Court of Appeals rightly exercised its discretion when, in denying petitioners motion to dismiss, it ruled that the citations contained in the appellants brief were in substantial compliance with the rules. Where the citations found in the appellants brief could sufficiently enable the appellate court to locate expeditiously the portions of the record referred to, there is substantial compliance with the requirements of Section 13 (c) and (d), Rule 46 of the Rules of Court. Such determination was properly within the appellate courts discretion. Nothing in the records indicate that it was exercised capriciously, whimsically, or with a view of permitting injury upon a party litigant. For the same reasons, we hold that the respondent Court of Appeals also did not err when it did not dismiss the appeal based on the allegation that appellants brief failed to comply with the internal rules of said court. (Emphasis supplied) In the instant case, the Appellants Brief contained a statement of facts with references to Exhibits and TSNs and attachments. The Appellants Brief

may not have referred to the exact pages of the records, however, the same is not fatal to their cause since the references they made enabled the appellate court to expeditiously locate the portions of the record referred to. Consequently, respondents substantially complied with the requirements of Section 13 (c) and (d) of Rule 44. Grave abuse of discretion is defined as such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be grave as where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act at all in contemplation of law. [9] The Court of Appeals did not gravely abuse its discretion when it denied petitioners motion to dismiss. Moreover, the Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of justice, but not to bind and chain the hand that dispenses it, for otherwise, courts will be mere slaves to or robots of technical rules, shorn of judicial discretion. That is precisely why courts, in rendering justice, have always been, as they in fact ought to be, conscientiously guided by the norm that on the balance, technicalities take a backseat to substantive rights, and not the other way around.[10] Circumspect leniency will give the appellant the fullest opportunity to establish the merits of his complaint rather than to lose life, liberty, honor or property on technicalities. [11] The rules of procedure should be viewed as mere tools designed to aid the courts in the speedy, just and inexpensive determination of the cases before them. Liberal construction of the rules and the pleadings is the controlling principle to effect substantial justice.[12] WHEREFORE, in light of the foregoing, the petition is DISMISSED. The Resolutions dated July 27, 2004 and October 25, 2004 of the Court of Appeals in CA-G.R.CV No. 76995 denying petitioners motion to dismiss and motion for reconsideration, are AFFIRMED. SO ORDERED. Republic of the Philippines Supreme Court Manila THIRD DIVISION MERCURY DRUG CORPORATION and AURMELA GANZON, Petitioners, SANTIAGO, J.,Chairperson, G.R. No. 165622 Present: YNARES-

- versus and REYES, JJ.

Promulgated: RAUL DE LEON, Respondent.

AUSTRIA-MARTINEZ, CHICO-NAZARIO,NACHURA,

October 17, 2008

De Leon returned to the same Mercury Drug branch, with his left eye still red and teary.[17] When he confronted Ganzon why he was given ear drops, instead of the prescribed eye drops,[18] she did not apologize and instead brazenly replied that she was unable to fully read the prescription. [19] In fact, it was her supervisor who apologized and informed De Leon that they do not have stock of the needed Cortisporin Opthalmic.[20] De Leon wrote Mercury Drug, through its president, Ms. Vivian K. Askuna, about the days incident.[21] It did not merit any response.[22] Instead, two sales persons went to his office and informed him that their supervisor was busy with other matters.[23] Having been denied his simple desire for a written apology and explanation,[24] DeLeon filed a complaint for damages against Mercury Drug.[25] Mercury Drug denied that it was negligent and therefore liable for damages.[26] It pointed out that the proximate cause of De Leons unfortunate experience was his own negligence.[27] He should have first read and checked to see if he had the right eye solution before he used any on his eye. [28] He could have also requested his sheriff to do the same before the latter applied the medicine on such a delicate part of his body.[29] Also, Mercury Drug explained that there is no available medicine known as Cortisporin Opthalmic in the Philippine market.[30] Furthermore, what was written on the piece of paper De Leon presented to Ganzon was Cortisporin Solution.[31] Accordingly, she gave him the only available Cortisporin Solution in the market. Moreover, even the piece of paper De Leon presented upon buying the medicine can not be considered as proper prescription. [32] It lacked the required information concerning the at tending doctors name and license number.[33] According to Ganzon, she entertained De Leons purchase request only because he was a regular customer of their branch.[34] RTC Disposition On April 30, 2003, the RTC rendered judgment in favor of respondent, the dispositive portion of which reads: WHEREFORE, the court finds for the plaintiff. For pecuniary loss suffered, Mercury Drug Store is to pay ONE HUNDRED FIFTY-THREE PESOS AND TWENTYFIVE CENTAVOS (Php 153.25), the value of the medicine. As moral damages defendants is (sic) ordered to pay ONE HUNDRED THOUSAND PESOS (Php 100,000.00). To serve as a warning to those in the field of dispensing medicinal drugs discretion of the highest degree is expected of them, Mercury Drug Store and defendant Aurmila (sic) Ganzon are ordered to pay plaintiff the amount of THREE HUNDRED THOUSAND PESOS (Php 300,000.00) as exemplary damages.

x--------------------------------------------------x DECISION REYES, R.T., J.: IN REALITY, for the druggist, mistake is negligence and care is no defense.[1] Sa isang parmasyutika, ang pagkakamali ay kapabayaan at ang pagkalinga ay hindi angkop na dipensa. This is a petition for review on certiorari[2] of two Resolutions[3] of the Court of Appeals (CA). The first Resolution granted respondents motion to dismiss while the second denied petitioners motion for reconsideration. The Facts Respondent Raul T. De Leon was the presiding judge of Branch 258, Regional Trial Court (RTC) in Paraaque.[4] On October 17, 1999, he noticed that his left eye was reddish. He also had difficulty reading.[5] On the same evening, he met a friend for dinner at the Foohyui Restaurant. The same friend happened to be a doctor, Dr. Charles Milla, and had just arrived from abroad. [6] Aside from exchanging pleasantries, De Leon consulted Dr. Milla about his irritated left eye.[7] The latter prescribed the drugs Cortisporin Opthalmic and Ceftin to relieve his eye problems.[8] Before heading to work the following morning, De Leon went to the Betterliving, Paraaque, branch of Mercury Drug Store Corporation to buy the prescribed medicines.[9] He showed his prescription to petitioner Aurmela Ganzon, a pharmacist assistant.[10] Subsequently, he paid for and took the medicine handed over by Ganzon.[11] At his chambers, De Leon requested his sheriff to assist him in using the eye drops.[12] As instructed, the sheriff applied 2-3 drops on respondents left eye.[13] Instead of relieving his irritation, respondent felt searing pain. [14] He immediately rinsed the affected eye with water, but the pain did not subside.[15] Only then did he discover that he was given the wrong medicine, Cortisporin Otic Solution.[16]

Due to defendants callous reaction to the mistake done by their employee which forced plaintiff to litigate, Defendant ( sic) Mercury Drug Store is to pay plaintiff attorneys fees of P50,000.00 plus litigation expenses. SO ORDERED.[35] In ruling in favor of De Leon, the RTC ratiocinated: The proximate cause of the ill fate of plaintiff was defendant Aurmila (sic) Ganzons negligent exercise of said discretion. She gave a prescription drug to a customer who did not have the proper form of prescription, she did not take a good look at said prescription, she merely presumed plaintiff was looking for Cortisporin Otic Solution because it was the only one available in the market and she further presumed that by merely putting the drug by the counter wherein plaintiff looked at it, paid and took the drug without any objection meant he understood what he was buying.[36] The RTC ruled that although De Leon may have been negligent by failing to read the medicines label or to instruct his sheriff to do so, Mercury Drug was first to be negligent.[37] Ganzon dispensed a drug without the requisite prescription.[38] Moreover, she did so without fully reading what medicine was exactly being bought.[39] In fact, she presumed that since what was available was the drug Cortisporin Otic Solution, it was what De Leon was attempting to buy.[40] Said the court: When the injury is caused by the negligence of a servant or employee, there instantly arises a presumption of law that there was negligence on the part of the employer or employer either in the selection of the servant or employee, or in the supervision over him after the selection or both. xxxx The theory bases the responsibility of the master ultimately on his own negligence and not on that of his servant.[41] Dissatisfied with the RTC ruling, Mercury Drug and Ganzon elevated the matter to the CA. Accordingly, they filed their respective briefs. Raising technical grounds, DeLeon moved for the appeals dismissal. CA Disposition On July 4, 2008, the CA issued a resolution which granted De Leons motion and dismissed the appeal. Said the appellate court:

As pointed out by the plaintiff-appellee, the Statement of Facts, Statement of the Case, Assignment of Errors/issues, Arguments/ Discussions in the Brief make no references to the pages of the records. We find this procedural lapse justify the dismissal of the appeal, pursuant to Section 1(f), Rule 50 of the 1997 Rules of Civil Procedure x x x.[42] xxxx The premise that underlies all appeals is that they are merely rights which arise form a statute; therefore, they must be exercised in the manner prescribed by law. It is to this end that rules governing pleadings and practice before the appellate court were imposed. These rules were designed to assist the appellate court in the accomplishment of its tasks, and overall, to enhance the orderly administration of justice. xxxx x x x If the statement of fact is unaccompanied by a page reference to the record, it may be stricken or disregarded all together.[43] On October 5, 2004, the CA denied Mercury Drugs and Ganzons joint motion for reconsideration. Although mindful that litigation is not a game of technicalities,[44] the CA found no persuasive reasons to relax procedural rules in favor of Mercury Drug and Ganzon.[45] The CA opined: In the case under consideration, We find no faithful compliance on the part of the movants that will call for the liberal application of the Rules. Section 1(f) of Rule 50 of the 1997 Rules of Civil Procedure explicitly provides that an appeal may be dismissed by the Court of Appeals, on its own motion or on that of the appellee, for want of page references to the records as required in Section 13 of Rule 44 of the same rules[46] Issues Petitioner has resorted to the present recourse and assigns to the CA the following errors: I THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING PETITIONERS APPEAL BASED ON THE CASES OF DE LIANA VS. CA (370 SCRA 349) AND HEIRS OF PALOMINIQUE VS. CA (134 SCRA 331). II

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN DISMISSING PETITIONERS APPEAL DESPITE SUBSTANTIAL COMPLIANCE WITH SECTION 1(F), RULE 60 AND SECTION 13, RULE 44 OF THE RULES OF COURT. III THE HONORABLE COURT OF APPEALS ERRED WHEN IT FAVORED MERE TECHNICALITY OVER SUBSTANTIAL JUSTICE WHICH WILL CERTAINLY CAUSE GRAVE INJUSTICE AND GREAT PREJUDICE TO PETITIONER CONSIDERING THAT THE ASSAILED DECISION ON APPEAL IS CLUSTERED WITH ERRORS AND IN CONTRAST WITH THE DECISIONS OF THIS HONORABLE SUPREME COURT.[47] (Underscoring supplied) Our Ruling The appeal succeeds in part. Dismissal of an appeal under Rule 50 is discretionary. In several cases,[48] this Court stressed that the grounds for dismissal of an appeal under Section 1 of Rule 50 [49] are discretionary upon the appellate court. The very wording of the rule uses the word may instead of shall. This indicates that it is only directory and not mandatory.[50] Sound discretion must be exercised in consonance with the tenets of justice and fair play, keeping in mind the circumstances obtaining in each case.[51] The importance of an appellants brief cannot be gainsaid. Its purpose is twofold: (1) to present to the court in coherent and concise form the point and questions in controversy; and (2) to assist the court in arriving at a just and proper conclusion.[52] It is considered a vehicle of counsel to convey to the court the essential facts of a clients case, a statement of the questions of law involved, the law to be applied, and the application one desires of it by the court.[53] The absence of page reference to the record is a ground for dismissal. It is a requirement intended to ultimately aid the appellate court in arriving at a just and proper conclusion of the case.[54] However, as earlier discussed, such dismissal is not mandatory, but discretionary on the part of the appellate court. This Court has held that the failure to properly cite reference to the original records is not a fatal procedural lapse.[55] When citations found in the appellants brief enable the court to expeditiously locate the portions of the record referred to, there is substantial compliance with the requirements of Section 13(c), (d), and (f) of Rule 44.[56]

In De Leon v. CA,[57] this Court ruled that the citations contained in the appellants brief sufficiently enabled the appellate court to expeditiously locate the portions of the record referred to. They were in substantial compliance with the rules. The Court said: Nothing in the records indicate that it was exercised capriciously, whimsically, or with a view of permitting injury upon a party litigant. For the same reasons, we hold that the respondent Court of Appeals did not err when it did not dismiss the appeal based on the allegation that appellants brief failed to comply with the internal rules of said court.[58] Similar to the instant case, the appellants brief in Yuchengco v. Court of Appeals[59] contained references to Exhibits and Transcript of Stenographic Notes and attachments. These were found to have substantially complied with the requirements of Section 13(c) and (d) of Rule 44. x x x The Appellants brief may not have referred to the exact pages of the records, however, the same is not fatal to their cause since the references they made enabled the appellate court to expeditiously locate the portions referred to. x x x[60] It is true that in De Liano v. Court of Appeals,[61] this Court held that a statement of facts unaccompanied by a page reference to the record may be presumed to be without support in the record and may be stricken or disregarded altogether. However, the instant case is not on all fours with De Liano. In De Liano, the appellants brief lacked a Subject Index and a Table of Cases and Authorities.[62] Moreover, the Statement of the Case, Statements of Facts, and Statements of Arguments had no page references to the record.[63] When notified of such defects, defendants-appellants failed to amend their brief to conform to the rules.[64] Instead, they continued to argue that their errors were harmless.[65] All these omissions and non-compliance justified the dismissal of the appeal by the CA.[66] In the case under review, although there were no page references to the records, Mercury Drug and Ganzon referred to the exhibits, TSN, and attachments of the case. Despite its deficiencies, the brief is sufficient in form and substance as to apprise the appellate court of the essential facts, nature of the case, the issues raised, and the laws necessary for the disposition of the same.Reliance on Heirs of Palomique v. Court of Appeals[67] is likewise misplaced. In Heirs of Palomique, the appellants brief did not at all contain a separate statement of facts.[68] This critical omission, together with the failure to make page references to the record to support the factual allegations, justified the dismissal of the appeal.[69]Rules of procedure are intended to promote, not to defeat, substantial justice. They should not be applied in a very rigid and technical sense.[70] For reasons of justice and equity, this Court has allowed

exceptions to the stringent rules governing appeals.[71] It has, in the past, refused to sacrifice justice for technicality.[72] However, brushing aside technicalities, petitioners are still liable. Mercury Drug and Ganzon failed to exercise the highest degree of diligence expected of them. Denying that they were negligent, Mercury Drug and Ganzon pointed out that De Leons own negligence was the proxim ate cause of his injury. They argued that any injury would have been averted had De Leon exercised due diligence before applying the medicine on his eye. Had he cautiously read the medicine bottle label, he would have known that he had the wrong medicine. Mercury Drug and Ganzon can not exculpate themselves from any liability. As active players in the field of dispensing medicines to the public, the highest degree of care and diligence is expected of them.[73] Likewise, numerous decisions, both here and abroad, have laid salutary rules for the protection of human life and human health.[74] In theUnited States case of Tombari v. Conners,[75] it was ruled that the profession of pharmacy demands care and skill, and druggists must exercise care of a specially high degree, the highest degree of care known to practical men. In other words, druggists must exercise the highest practicable degree of prudence and vigilance, and the most exact and reliable safeguards consistent with the reasonable conduct of the business, so that human life may not constantly be exposed to the danger flowing from the substitution of deadly poisons for harmless medicines.[76] In Fleet v. Hollenkemp,[77] the US Supreme Court ruled that a druggist that sells to a purchaser or sends to a patient one drug for another or even one innocent drug, calculated to produce a certain effect, in place of another sent for and designed to produce a different effect, cannot escape responsibility, upon the alleged pretext that it was an accidental or innocent mistake. His mistake, under the most favorable aspect for himself, is negligence. And such mistake cannot be countenanced or tolerated, as it is a mistake of the gravest kind and of the most disastrous effect.[78] as competent to handle drugs, having rightful access to them, and relied upon by those dealing with him to exercise that high degree of caution and care called for by the peculiarly dangerous nature of the business, cannot be heard to say that his mistake by which he furnishes a customer the most deadly of drugs for those comparatively harmless, is not in itself gross negligence.[80] In our own jurisdiction, United States v. Pineda[81] and Mercury Drug Corporation v. Baking are illustrative.[82] In Pineda, the potassium chlorate demanded by complainant had been intended for his race horses. When complainant mixed with water what he thought and believed was potassium chlorate, but which turned out to be the potently deadly barium chlorate, his race horses died of poisoning only a few hours after.

The wisdom of such a decision is unquestionable. If the victims had been human beings instead of horses, the damage and loss would have been irreparable.[83] In the more recent Mercury Drug, involving no less than the same petitioner corporation, Sebastian Baking went to the Alabang branch of Mercury Drug[84] and presented his prescription for Diamicron, which the pharmacist misread as Dormicum.[85] Baking was given a potent sleeping tablet, instead of medicines to stabilize his blood sugar.[86] On the third day of taking the wrong medicine, Baking figured in a vehicular accident.[87] He fell asleep while driving.[88] This Court held that the proximate cause of the accident was the gross negligence of the pharmacist who gave the wrong medicine to Baking. The Court said: x x x Considering that a fatal mistake could be a matter of life and death for a buying patient, the said employee should have been very cautious in dispensing medicines. She should have verified whether the medicine she gave respondent was indeed the one prescribed by his physician. The care required must be commensurate with the danger involved, and the skill employed must correspond with the superior knowledge of the business which the law demands.[89] This Court once more reiterated that the profession of pharmacy demands great care and skill. It reminded druggists to exercise the highest degree of care known to practical men. In cases where an injury is caused by the negligence of an employee, there instantly arises a presumption of law that there has been negligence on the part of the employer, either in the selection or supervision of ones employees. This presumption may be rebutted by a clear showing that the employer has exercised the care and diligence of a good father of the family.[90] Mercury Drug failed to overcome such presumption.[91] Petitioners Mercury Drug and Ganzon have similarly failed to live up to high standard of diligence expected of them as pharmacy professionals. They were grossly negligent in dispensing ear drops instead of the prescribed eye drops to De Leon. Worse, they have once again attempted to shift the blame to their victim by underscoring his own failure to read the label. As a buyer, De Leon relied on the expertise and experience of Mercury Drug and its employees in dispensing to him the right medicine.[92] This Court has ruled that in the purchase and sale of drugs, the buyer and seller do not stand at arms length.[93] There exists an imperative duty on the seller or the druggist to take precaution to prevent death or injury to any person who relies on ones absolute honesty and peculiar learning.[94] The Court emphasized:

Smiths Admrx v. Middelton[79] teaches Us that one holding himself out

x x x The nature of drugs is such that examination would not avail the purchaser anything. It would be idle mockery for the customer to make an examination of a compound of which he can know nothing. Consequently, it must be that the druggist warrants that he will deliver the drug called for.[95] Mercury Drug and Ganzons defense that the latter gave the only available Cortisporin solution in the market deserves scant consideration. Ganzon could have easily verified whether the medicine she gave De Leon was, indeed, the prescribed one or, at the very least, consulted her supervisor. Absent the required certainty in the dispensation of the medicine, she could have refused De Leons purchase of the drug. The award of damages is proper and shall only be reduced considering the peculiar facts of the case. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of defendants wrongful act or omission. [96] Moral damages are not intended to impose a penalty to the wrongdoer or to enrich the claimant at the expense of defendant.[97] There is no hard and fast rule in determining what would be a fair and reasonable amount of moral damages since each case must be governed by its peculiar circumstances. [98] However, the award of damages must be commensurate to the loss or injury suffered. [99] Taking into consideration the attending facts of the case under review, We find the amount awarded by the trial court to be excessive. Following the precedent case ofMercury Drug, We reduce the amount from P100,000.00 to P50,000.00 only.[100] In addition, We also deem it necessary to reduce the award of exemplary damages from the exorbitant amount of P300,000.00 to P25,000.00 only. This Court explained the propriety of awarding exemplary damages in the earlier Mercury Drug case: x x x Article 2229 allows the grant of exemplary damages by way of example or correction for the public good. As mentioned earlier, the drugstore business is affected by public interest. Petitioner should have exerted utmost diligence in the selection and supervision of its employees. On the part of the employee concerned, she should have been extremely cautious in dispensing pharmaceutical products. Due to the sensitive nature of its business, petitioner must at all times maintain a high level of meticulousness. Therefore, an award of exemplary damages in the amount of P25,000.00 is in order.[101] (Emphasis supplied) It is generally recognized that the drugstore business is imbued with public interest. This can not be more real for Mercury Drug, the countrys biggest drugstore chain. This Court can not tolerate any form of negligence which can jeopardize the health and safety of its loyal patrons. Moreover, this Court will not

countenance the cavalier manner it treated De Leon. Not only does a pharmacy owe a customer the duty of reasonable care, but it is also duty-bound to accord one with respect. WHEREFORE, the petition is PARTIALLY GRANTED. The Decisions of the CA and the RTC in Paraaque City are AFFIRMED WITH MODIFICATION, in that the award of moral and exemplary damages is reduced to P50,000.00 and P25,000.00, respectively. SO ORDERED. THIRD DIVISION ALFREDO TAGLE, Petitioner, G.R. No. 172299 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CHICONAZARIO, NACHURA, and REYES, JJ. Promulgated:

versus -

EQUITABLE PCI BANK (Formerly Philippine Commercial International Bank) and the HONORABLE HERMINIA V. PASAMBA, Acting Presiding Judge, Regional Trial Court-Branch 82, City of Malolos, Bulacan, Respondents.

April 22, 2008 x-----------------------------------------------x DECISION CHICO-NAZARIO, J.: This Petition for Certiorari under Rule 65 of the Revised Rules of Court filed by petitioner Alfredo Tagle (petitioner Alfredo) stemmed from the following Resolutions promulgated by the Court of Appeals: (1) the 6 September 2005 Resolution[1] dismissing the Petition for Certiorari filed by petitioner Alfredo, docketed as CA-G.R. SP No. 90461, assailing the 4 April 2005 Order of the Regional Trial Court (RTC), Branch 82, City of Malolos, Bulacan, in LRC Case No. P-71-2004[2]; (2) the 16 February 2006 Resolution[3] denying petitioner Alfredos

Motion for Reconsideration; and (3) the 11 April 2006 Resolution[4] denying petitioner Alfredos Second Motion for Reconsideration.[5] Petitioner Alfredo urges this Court to set aside, on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction, the 4 April 2005 Order[6] of the RTC in LRC Case No. P-71-2004, which denied petitioner Alfredos Motion to Stop Writ of Possession . He prays that this Court certify for review with prayer for preliminary injunction to stop the writ of possession [of] the property located at Concepcion Subdivision, Baliuag, Bulacan and embraced in Transfer Certificate of Title No. T-143715 of theRegistry of Deeds for the Province of Bulacan [subject property] and after due hearing, let judgment be rendered annulling or modifying the proceedings of the Honorable Regional Trial Court Branch 82, [City of Malolos, Bulacan,] and the Court of Appeals as the law requires with costs.[7] According to petitioner Alfredo, the subject property is registered in his name and was constituted as a Family Home in accordance with the provisions of the Family Code. He and his wife Arsenia Bautista Tagle (Arsenia) never mortgaged the subject property to respondent Equitable PCI Bank (respondent E-PCI) whether before or after the subject property was constituted as their Family Home. It was Josefino Tagle (Josefino), who was not the owner of the subject property, who mortgaged the same with respondent E-PCI. Josefino was religiously paying the installments on his mortgage obligation and had paid more than half thereof. Josefino, however, passed away. Petitioner Alfredo was then forced to assume Josefinos outstanding mortgage obligation. Even as petitioner Alfredo was already paying Josefinos mortgage obligation in installments, respondent E-PCI still foreclosed the mortgage on the subject property. [8] On the other hand, respondent E-PCI recounts that the subject property was formerly registered in the name of petitioner Alfredo. It was mortgaged, pursuant to a SpecialPower of Attorney executed by petitioner Alfredo, to secure the obligation of the spouses Josefino and Emma Tagle with respondent E-PCI. Respondent E-PCI foreclosed the mortgage on the subject property upon default in payment by spouses Josefino and Emma, and upon the expiration of the period of redemption, caused the consolidation and transfer of the title to the subject property in its name. Consequently, respondent E-PCI filed with the RTC a Petition for Issuance of Writ of Possession of the subject property, which was docketed as LRC Case No. P-71-2004. Petitioner Alfredo, however, filed a Motion to Stop Writ of Possession on the ground that the subject property is a Family Home which is exempt from execution, forced sale or attachment. [9] On 4 April 2005, the RTC issued the assailed Order denying petitioner Alfredos Motion, the dispositive part of which reads: WHEREFORE, premises considered, the Motion to Stop Writ of Possession is hereby DENIED. In denying the motion, the RTC held that:

In the case at bar, the mortgage transaction happened on May 9, 1997 (Exhibit D), after the effectivity of the Family Code. With Article 155 in application, it is crystal clear that this instant case does not fall under the exemptions from execution provided in the Family Code, as the case stemmed from the mortgage transaction entered into between the [herein respondent E-PCI] and [herein petitioner Alfredo and his spouse Arsenia] dating back in (sic) 1997. This fact will militate against the so-called exemption by sheer force of exclusion embodied in said article. Hence, the laws protective mantle cannot be availed of by [petitioner Tagle and his spouse Arsenia].[10] Petitioner Alfredo and his spouse Arsenia filed with the RTC a Motion for Reconsideration of its foregoing order. However, it was likewise denied by the RTC in anotherOrder[11] dated 21 June 2005. Thereafter, petitioner Alfredo[12] elevated the case to the Court of Appeals on a Petition for Certiorari [and Prohibition] under Rule 65 of the Revised Rules of Court, docketed as CA-G.R. SP No. 90461, assailing and seeking the nullification and the setting aside of the denial of his Motion to Stop Writ of Possession. In a Resolution dated 6 September 2005, the appellate court resolved to dismiss the petition, stating thus: The instant petition is not accompanied by (i) the order denying petitioners motion to exempt from foreclosure of mortgage; and (ii) a relevant and pertinent document, i.e., motion to exempt from foreclosure of mortgage (Sec. 1, Rule 65, in relation to Sec. 3, Rule 46, 1997 Rules of Civil Procedure). WHEREFORE, the petition is DISMISSED outright.[13] In due time, petitioner Alfredo moved for the reconsideration of the aforequoted Resolution. On 16 February 2006, the Court of Appeals promulgated a Resolution denying petitioner Alfredos motion for reconsideration, decreeing that: Petitioner [Alfredo] seeks reconsideration of Our resolution dated September 6, 2005 dismissing the petition for not being accompanied by the order dated April 4, 2005 (denying his motion to exempt from foreclosure mortgage) and motion to exempt from foreclosure of mortgage. Instead of the aforesaid order and motion, however, petitioner submitted certified true copies of the order dated June 21, 2005 (which was already attached to the petition) and motion to stop writ of possession. WHEREFORE, for lack of merit, the motion for reconsideration is DENIED.[14] Undaunted still, petitioner Alfredo once more filed a Motion for Reconsideration of the appellate courts 16 February 2006 Resolution.

On 11 April 2006, the Court of Appeals promulgated the last of its Resolutions, denying, as expected, petitioner Alfredo s Second Motion for Reconsideration, stated in full below: For consideration is petitioners [Alfredos] motion for reconsideration of Our February 16, 2006 resolution denying its (sic) motion for reconsideration of Our resolution dated September 6, 2005dismissing the petition. Appellant has not cured the formal defects of the petition noted in Our resolution dated September 6, 2005. And, more importantly, a second motion for reconsideration of a final order is not allowed (Sec. 5, Rule 37, 1997 Rules of Civil Procedure; Obando vs. Court of Appeals, 366 SCRA 673). WHEREFORE, the subject motion for reconsideration is DENIED.[15] Hence, this Petition for Certiorari with Prohibition filed under Rule 65 of the Revised Rules of Court. Petitioner Alfredo filed the instant petition designating it in both the caption and the body as one for certiorari under Rule 65 of the Revised Rules of Court. He anchors the present petition on the sole issue of whether or not the subject property subject of the mortgage being a family home is exempt from foreclosure of mortgage.[16] He argues: That from the records of the mortgage, the same was not constituted before or after the constitution of the family home by the petitioner and as such the Honorable Court of Appeals has acted without or in excess of its or his jurisdiction or with grave abuse of discretion in the proceedings complained of.[17] He thus prays for this Court to issue a preliminary injunction to stop the implementation of the writ of possession of the subject property, and after due hearing, render a judgment annulling or modifying the proceedings before the RTC and the Court of Appeals, with costs.[18] On the other hand, respondent E-PCI counters that the petition at bar must be dismissed on the following grounds: First, petitioner Alfredos Petition for Certiorari with this Court failed to comply with the technical requirements of the Rules of Court[19] for petitions for certiorari in that (a) the present petition was filed out of time considering that the 60-day period within which to file the same was reckoned from receipt of the 11 April 2006 Resolutiondenying petitioner Alfredos second Motion for Reconsideration, instead of the 16 February 2006 Resolution denying his first Motion for Reconsideration;[20] (b) petitioner Alfredo did not allege in the present petition that the Court of Appeals acted without or in excess of its or his jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction[21] when it dismissed his petition in CA-G.R. SP No. 90461 for failure to attach thereto certified true copies of the 4 April 2005 RTC Order denying

hisMotion to Stop Writ of Possession , as well as the very motion subject of the assailed order; (c) the present petition lacks the proper verification and is considered an unsigned pleading which produces no effect whatsoever;[22] and (d) the present petition requested for the issuance of an injunction without stating the grounds therefor.[23]

Second, petitioner Alfredos second Motion for Reconsideration filed with the

Court of Appeals is prohibited by law,[24] as a second motion for reconsideration of a judgment or final resolution is clearly disallowed by Sec. 2, Rule 52 of the Rules of Court, as amended.

And third, granting arguendo that the petition at bar was properly filed by
petitioner Alfredo with this Court, the Court of Appeals did not err in dismissing the Petition forCertiorari in CA-G.R. SP No. 90461 for failure of petitioner Alfredo to submit the required documents.[25]

Respondent E-PCI then concludes that the present Petition for Certiorari was filed not to question the jurisdiction of the Court of Appeals but as a vain hope of appealing the Order dated April 4, 2005 issued by the Regional Trial Court x x x.[26] In reply to the foregoing counter-arguments, petitioner Alfredo contends: 1. That Rule 52 Sec. 2 of the 1997 Rules of Procedure is not applicable to the present case because what is applicable is a Second Motion for Reconsideration in the Supreme Court; 2. That the 60 day period within which petitioner [Alfredo] may file subject Petition for Certiorari has been reckoned from April 11, 2006 denying the petitioners [Alfredos] Second Motion for Reconsideration and the Rules of Court does not distinguished (sic) whether the denial is first or second; xxxx 4. That the issue of whether or not the mortgage was executed before or after the constitution of the Family Home is a necessary question in a Petition for Certiorari under Rule 65; and 5. That the verification based on personal knowledge is proper because the Rules of Court did not distinguish whether the facts is based on personal knowledge or an (sic) authentic records; [27] For its substantive as well as procedural infirmities, the instant petition must be dismissed.

Given the above-stated arguments raised by both parties, the threshold question that must be initially resolved is whether or not the present Petition for Certiorari filed under Rule 65 of the Revised Rules of Court is the proper remedy for petitioner Alfredo to avail of in seeking the reversal of the three Resolutions of the Court of Appeals dated 6 September 2005, 16 February 2006 and 11 April 2006. A petition for certiorari is governed by Rule 65 of the Revised Rules of Court, which reads: Section 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of [its or his] jurisdiction, or with grave abuse of discretion amounting to lack or excess of its or his jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require. The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as provided in the third paragraph of Section 3, Rule 46. A special civil action for Certiorari, or simply a Petition for Certiorari, under Rule 65 of the Revised Rules of Court is intended for the correction of errors of jurisdiction only or grave abuse of discretion amounting to lack or excess of jurisdiction. Its principal office is only to keep the inferior court within the parameters of its jurisdiction or to prevent it from committing such a grave abuse of discretion amounting to lack or excess of jurisdiction.[28] A writ of certiorari may be issued only for the correction of errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction. Such cannot be used for any other purpose, as its function is limited to keeping the inferior court within the bounds of its jurisdiction. [29] For a petition for certiorari to prosper, the essential requisites that have to concur are: (1) the writ is directed against a tribunal, a board or any officer exercising judicial or quasi-judicial functions; (2) such tribunal, board or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law.[30]

The phrase "without jurisdiction" means that the court acted with absolute lack of authority[31] or want of legal power, right or authority to hear and determine a cause or causes, considered either in general or with reference to a particular matter. It means lack of power to exercise authority.[32] "Excess of jurisdiction" occurs when the court transcends its power or acts without any statutory authority;[33] or results when an act, though within the general power of a tribunal, board or officer (to do) is not authorized, and invalid with respect to the particular proceeding, because the conditions which alone authorize the exercise of the general power in respect of it are wanting.[34] While that of"grave abuse of discretion" implies such capricious and whimsical exercise of judgment as to be equivalent to lack or excess of jurisdiction; simply put, power is exercised in an arbitrary or despotic manner by reason of passion, prejudice, or personal hostility; and such exercise is so patent or so gross as to amount to an evasion of a positive duty or to a virtual refusal either to perform the duty enjoined or to act at all in contemplation of law. [35] In the present case, there is no question that the 6 September 2005 Resolution of the Court of Appeals dismissing petitioner Alfredos petition in CA -G.R. SP No. 90461 is already a disposition on the merits. Therefore, said Resolution, as well as the Resolutions dated 16 February 2006 and 11 April 2006 denying reconsideration thereof, issued by the Court of Appeals, are in the nature of a final disposition of CA-G.R. SP No. 90461 by the appellate court, and which, under Rule 45 of the Revised Rules of Court, are appealable to this Court via a Petition for Review on Certiorari, viz: SECTION 1. Filing of petition with Supreme Court. A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth. (Emphasis supplied.) From the words of Rule 45, it is crystal that decisions (judgments), final orders or resolutions of the Court of Appeals in any case, i.e., regardless of the nature of the action or proceedings involved, may be appealed to this Court by filing a petition for review, which would be but a continuation of the appellate process over the original case.[36] In the case at bar, the assailed Resolutions of the Court of Appeals dismissing petitioner Alfredos petition in CA-G.R. SP No. 90461 were final orders.[37] They were not interlocutory because the proceedings were terminated; and left nothing more to be done by the appellate court. There were no remaining issues to be resolved in CA-G.R. SP No. 90461. Consequently, the

proper remedy available to petitioner Alfredo then was to file before this Court a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court of the assailed Resolutions of the Court of Appeals, and not a special civil action for certiorari. From the foregoing discussion, it is fairly obvious that the third requisite for a petition for certiorari is wanting, that is, there must be no appeal or any plain, speedy, and adequate remedy in the ordinary course of law . The availability to petitioner Alfredo of the remedy of a petition for review on certiorari from the assailed Resolutions of the Court of Appeals effectively barred his right to resort to a petition for certiorari. Basic is the rule that a writ of certiorari will not issue where the remedy of appeal is available to an aggrieved party. A remedy is considered "plain, speedy and adequate" if it will promptly relieve the petitioner from the injurious effects of the judgment and the acts of the lower court or agency. [38] In this case, appeal was not only available but also a speedy and adequate remedy.[39] Moreover, petitioner Alfredo failed to show circumstances that would justify a deviation from the general rule as to make available to him a petition for certiorari in lieu of making an appeal. Petitioner Alfredo failed to show any valid reason why the issue raised in his petition for certiorari could not have been raised on ordinary appeal by certiorari. He simply argued that the appellate court gravely abuse its discretion which amounted to lack or excess of jurisdiction in dismissing his petition in CA-G.R. SP No. 90461 and not finding that the subject property covered by the Writ of Possession was a Family Home, hence, exempt from execution or forced sale. He did not give a single explanation as to why the errors committed by the Court of Appeals cannot possibly be cured by ordinary appeal under Rule 45 of the Revised Rules of Court. The remedies of appeal in the ordinary course of law and that of certiorari under Rule 65 of the Revised Rules of Court are mutually exclusive and not alternative or cumulative.[40] Time and again this Court has reminded members of the bench and bar that the special civil action of Certiorari cannot be used as a substitute for a lost appeal[41] where the latter remedy is available; especially if such loss or lapse was occasioned by ones own negligence or error in the choice of remedies.[42] To be sure, once again, we take this opportunity to distinguish between a Petition for Review on Certiorari (an appeal by certiorari) and a Petition for Certiorari (a special civil action/an original action for Certiorari), under Rules 45 and 65, respectively, of the Revised Rules of Court. Madrigal Transport Inc. v. Lapanday Holdings Corporation,[43] summarizes the distinctions between these two remedies, to wit:

As to the Purpose. Certiorari is a remedy designed for the correction of errors of jurisdiction, not errors of judgment. In Pure Foods Corporation v. NLRC, we explained the simple reason for the rule in this light: When a court exercises its jurisdiction, an error committed while so engaged does not deprive it of the jurisdiction being exercised when the error is committed. If it did, every error committed by a court would deprive it of its jurisdiction and every erroneous judgment would be a void judgment. This cannot be allowed. The administration of justice would not survive such a rule. Consequently, an error of judgment that the court may commit in the exercise of its jurisdiction is not correct[a]ble through the original civil action of certiorari. The supervisory jurisdiction of a court over the issuance of a writ of certiorari cannot be exercised for the purpose of reviewing the intrinsic correctness of a judgment of the lower court -- on the basis either of the law or the facts of the case, or of the wisdom or legal soundness of the decision. Even if the findings of the court are incorrect, as long as it has jurisdiction over the case, such correction is normally beyond the province of certiorari. Where the error is not one of jurisdiction, but of an error of law or fact -- a mistake of judgment -- appeal is the remedy. As to the Manner of Filing. Over an appeal, the CA exercises its appellate jurisdiction and power of review. Over a certiorari, the higher court uses its original jurisdiction in accordance with its power of control and supervision over the proceedings of lower courts. An appeal is thus a continuation of the original suit, while a petition for certiorari is an original and independent action that was not part of the trial that had resulted in the rendition of the judgment or order complained of. The parties to an appeal are the original parties to the action. In contrast, the parties to a petition for certiorari are the aggrieved party (who thereby becomes the petitioner) against the lower court or quasijudicial agency, and the prevailing parties (the public and the private respondents, respectively). As to the Subject Matter. Only judgments or final orders and those that the Rules of Court so declared are appealable. Since the issue is jurisdiction, an original action for certiorari may be directed against an interlocutory order of the lower court prior to an appeal from the judgment; or where there is no appeal or any plain, speedy or adequate remedy.

As to the Period of Filing. Ordinary appeals should be filed within fifteen days from the notice of judgment or final order appealed from. Where a record on appeal is required, the appellant must file a notice of appeal and a record on appeal within thirty days from the said notice of judgment or final order. A petition for review should be filed and served within fifteen days from the notice of denial of the decision, or of the petitioners timely filed motion for new trial or motion for reconsideration. In an appeal by certiorari, the petition should be filed also within fifteen days from the notice of judgment or final order, or of the denial of the petitioners motion for new trial or motion for reconsideration. On the other hand, a petition for certiorari should be filed not later than sixty days from the notice of judgment, order, or resolution. If a motion for new trial or motion for reconsideration was timely filed, the period shall be counted from the denial of the motion. As to the Need for a Motion for Reconsideration. A motion for reconsideration is generally required prior to the filing of a petition for certiorari, in order to afford the tribunal an opportunity to correct the alleged errors. Note also that this motion is a plain and adequate remedy expressly available under the law. Such motion is not required before appealing a judgment or final order. Evidently, therefore, petitioner Alfredo erred in filing a Petition for Certiorari instead of an ordinary appeal by certiorari, already a sufficient justification for dismissing the instant petition. But even if his present petition is given due course, we still find it bereft of merit. When the Court of Appeals resolved to dismiss the petition in CA-G.R. SP No. 90461, it did so on the ground that petitioner Alfredo failed to attach certified true copies of the following: (1) the 4 April 2005 Order of the RTC in LRC Case No. P-71-2004 denying petitioner Alfredos Motion to Stop Writ of Possession; and (2) petitioner AlfredosMotion to Stop Writ of Possession submitted to the RTC. Suitably, therefore, the proper issue which petitioner Alfredo should raise before this Court in his instant Petition for Certiorari should be whether or not the Court of Appeals gravely abused its discretion in dismissing his petition in CA-G.R. SP No. 90461 for failure to attach thereto the pertinent documents. In dismissing the petition in CA-G.R. SP No. 90461, the appellate court relied on Sec. 1, Rule 65, in relation to Sec. 3, Rule 46, of the Revised Rules of Court. Sec. 1 of Rule 65[44] reads: SECTION 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of [its or his] jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary

course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.

The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn
certification of non-forum shopping as provided in the third paragraph of Section 3, Rule 46. (Emphasis supplied.) And Sec. 3 of Rule 46[45] provides:

SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. The petition shall contain the full names and actual addresses of all the petitioners and respondents, a concise statement of the matters involved, the factual background of the case, and the grounds relied upon for the relief prayed for. In actions filed under Rule 65, the petition shall further indicate the material dates showing when notice of the judgment or final order or resolution subject thereof was received, when a motion for new trial or reconsideration, if any, was filed and when notice of the denial thereof was received. It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the respondent with the original copy intended for the court indicated as such by the petitioner and shall be accompanied

by a clearly legible duplicate original or certified true copy of the judgment, order, resolution, or ruling subject thereof, such material portions of the record as are referred to therein, and other documents relevant or pertinent thereto. The certification shall be accomplished by
the proper clerk of court or by his duly-authorized representative, or by the proper officer of the court, tribunal, agency or office involved or by his duly authorized representative. The other requisite number of copies of the petition shall be accompanied by clearly legible plain copies of all documents attached to the original. xxxx

The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the dismissal of the petition .
(Emphasis supplied.) The afore-quoted provisions are plain and unmistakable. Failure to comply with the requirement that the petition be accompanied by a duplicate original or certified true copy of the judgment, order, resolution or ruling being challenged is sufficient ground for the dismissal of said petition. Consequently, it cannot be said that the

Court of Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing the petition in CA-G.R. SP No. 90461 for non-compliance with Sec. 1, Rule 65, in relation to Sec. 3, Rule 46, of the Revised Rules of Court. It is true that in accordance with the liberal spirit pervading the Rules of Court and in the interest of substantial justice,[46] this Court has, before,[47] treated a petition forcertiorari as a petition for review on certiorari, particularly (1) if the petition for certiorari was filed within the reglementary period within which to file a petition for review oncertiorari;[48] (2) when errors of judgment are averred; [49] and (3) when there is sufficient reason to justify the relaxation of the rules.[50] But these exceptions are not applicable to the present factual milieu. Pursuant to Sec. 2, Rule 45 of the Revised Rules of Court: SEC. 2. Time for filing; extension. The petition shall be filed within fifteen (15) days from notice of the judgment or final order or resolution appealed from, or of the denial of the petitioners motion for new trial or reconsideration filed in due time after notice of the judgment. x x x. In the case at bar, the Court of Appeals dismissed the petition of petitioner Alfredo in CA-G.R. SP No. 90461 by virtue of a Resolution dated 6 September 2005. Petitioner Alfredos Motion for Reconsideration of the dismissal of his petition was denied by the appellate court in its Resolution dated 16 February 2006. Petitioner Alfredo thus had 15 days from receipt of the 16 February 2006 Resolution of the Court of Appeals within which to file a petition for review. The reckoning date from which the 15-day period to appeal shall be computed is the date of receipt by petitioner Alfredo of the 16 February 2006 Resolution of the Court of Appeals, and not of its 11 April 2006 Resolutiondenying petitioner Alfredos second motion for reconsideration, since the second paragraph of Sec. 5, Rule 37 of the Revised Rules of Court is explicit that a second motion for reconsideration shall not be allowed. And since a second motion for reconsideration is not allowed, then unavoidably, its filing did not toll the running of the period to file an appeal by certiorari. Petitioner Alfredo made a critical mistake in waiting for the Court of Appeals to resolve his second motion for reconsideration before pursuing an appeal. Another elementary rule of procedure is that perfection of an appeal within the reglementary period is not only mandatory but also jurisdictional. For this reason, petitioner Alfredos failure to file this petition within 15 days from receipt of the 16 February 2006 Resolution of the Court of Appeals denying his first Motion for Reconsideration, rendered the same final and executory, and deprived us of jurisdiction to entertain an appeal thereof.

The relaxation of procedural rules may be allowed only when there are exceptional circumstances to justify the same. Try as we might, however, we fail to find the existence of such exceptional circumstances in this case, and neither did petitioner Alfredo endeavour to prove the existence of any. In fact, there is total lack of effort on petitioner Alfredos part to at least explain his inability to comply with the clear requisites of the Revised Rules of Court. Worth noting is the observation of respondent E-PCI that, essentially, petitioner Alfredo is using the present Petition for Certiorari, to seek the reversal and setting aside of the 4 April 2005 Order of the RTC, and not to assail the three Resolutions of the Court of Appeals. This he cannot validly do for it is an apparent disregard of the proper exercise of jurisdiction by the appellate court. We cannot overlook the ruling of the Court of Appeals and proceed right away to a review of the RTC order, absent any error of judgment or jurisdiction committed by the former. All told, a perusal of the challenged Resolutions of the Court of Appeals fail to illustrate any reversible error, much less, a showing of any iota of grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the appellate court, to warrant the exercise by this Court of its discretionary appellate jurisdiction in the case at bar. Considering the allegations, issues and arguments adduced and our disquisition above, without need of further delving deeper into the facts and issues raised by petitioner Alfredo in this Petition for Certiorari with prayer for preliminary injunction, we hereby dismiss the instant petition for being the wrong remedy under the Revised Rules of Court, as well as his failure to sufficiently show that the challenged Resolutions of the Court of Appeals were rendered in grave abuse of discretion amounting to lack or excess of jurisdiction. WHEREFORE, premises considered, the instant Petition for Certiorari is DISMISSED for lack of merit. The three Resolutions of the Court of Appeals dated 6 September 2005, 16 February 2006 and 11 April 2006, respectively, in CA-G.R. SP No. 90461, are hereby AFFIRMED in toto. With costs against petitioner Alfredo Tagle. SO ORDERED