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A.M. No. 99-7-250-RTC

April 5, 2000

CASES SUBMITTED FOR DECISION BEFORE RETIRED JUDGE MAXIMO A. SAVELLANO, JR. RTC-BRANCH 53, MANILA. RESOLUTION BUENA, J.: This administrative matter arose as a result of, among others, the nonresolution within the reglementary period of several criminal and civil cases before the Regional Trial Court of Manila, Branch 53 then presided by Executive Judge Maximo A. Savellano, Jr. As borne by the records, the antecedent of the instant administrative matter are as follows: On 14 March 1999, Judge Maximo A. Savellano, Jr. compulsorily retired from the judicial service. As required, Judge Savellano rendered Monthly Reports of Cases in Branch 53, the last of which was for the month of November 1998. In the Monthly Report, no entry was made in the space 1 reserved for cases submitted for decision. Subsequently, Lawyer Froilan S. Dayco, Clerk of Court of Branch 53, submitted to the Court Management Office, Office of the Court Administrator (OCA), a list of cases "reportedly long submitted for decision before Judge Savellano, but which were only recently decided by the latter." Additionally, Clerk of Court Dayco submitted a separate list of unresolved cases by Judge Savellano allegedly due to non-submission of the memoranda by the parties, as required by the court.1wphi1.nt On the basis of the status report submitted by Clerk of Court Froilan Dayco, the OCA, in a memorandum dated 09 July 1999, gathered the following observations, to wit: a) In six (6) cases , Judge Savellano issued subsequent orders near his retirement date extending the period given to the parties to submit memorandum although there was a marked non-compliance for an unreasonable period;
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b) There were four (4) cases which were left unresolved/undecided by Judge Savellano despite the lapse of an unreasonable length of time. c) There were ten (10) cases (Four criminal cases and six civil cases) which were decided by Judge Savellano after a lapse of the 90 day reglementary period to decide. Curiously, the 1998 Monthly Reports of Branch 53 (JanuaryNovember '98) made a scant mention of only six (6) of these cases: Criminal Case Nos. 90-82501-02; 94-132490 appeared in the January '98 Reports of Cases; Civil Case Nos. 94-70515; 9470807; 93-64694; 91-57048 reflected in the May '98 Report of Cases. In an En Banc Resolution dated 03 August 1999, this Court resolved among others to require Judge Savellano and Clerk of Court Froilan Dayco to 5 explain within ten (10) days the improper reporting of nine (9) civil cases 6 and ten (10) criminal cases in the Monthly Reports of Cases of RTC-Manila, Branch 53. Further, in the same resolution, this Court required Judge Savellano to explain his possible violation of Administrative Circular No. 28, dated 03 July 7 8 1989, as a result of the handling of certain civil and criminal cases and for 9 having decided several cases beyond the 90-day reglementary period provided by the Constitution. In an Explanation dated 14 August 1999, Judge Savellano invoking Article VII, Section 15 (2) of the Constitution, posited that the subject cases were not yet submitted for decision inasmuch as the parties had yet to submit their respective memoranda, as required and ordered by the court. According to Judge Savellano, he "awaited the filing of the required memoranda and even issued subsequent orders giving (the parties) additional time to do so in order to enlighten the court on issues to be raised and discussed by them, 10 but they failed to do so ." Moreover, Judge Savellano submitted that "every case has its own peculiar facts and circumstances necessitating clear and lucid discussions thereof in 11 the required memoranda.
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Notwithstanding, Judge Savellano averred that in many instances, he decided cases pending before his court even in the absence of the required memoranda based on "personal notes taken by him during the trial." Further, Judge Savellano explained that as an Executive Judge who concurrently handled a special criminal court, he was burdened with additional duties that affected the speedy disposition and resolution of cases before his court. In a Memorandum dated 24 January 2000, the OCA recommended that a fine of P15,000.00 be imposed on Judge Savellano, on the ground of undue delay in rendering decisions in the subject cases and for violation of Supreme Court rules, directives and circulars. Except for the amount of the fine which the Court finds too high, the recommendation of the OCA is well-taken. On this score, Administrative Circular No. 28, dated 03 July 1989 finds pertinence, thus: 1) As a general rule, the submission of memoranda is not mandatory or required as a matter of course but shall be left to the sound discretion of the court. A memo may not be filed unless require or allowed by the court. . . . . xxx xxx xxx

of judgement thereon, loses persuasion and fails to absolve him from administrative liability. Verily, judges should decide cases even if the parties fail to submit memoranda within the given periods. Non-submission of memoranda is not a part of the trial nor is the memorandum itself an essential, much less indispensable pleading before a case may be submitted for decision. As it is merely intended to aid the court in the rendition of the decision in accordance with law and evidence which even in its absence the court can do on the basis of the judge's personal notes and the records of the case non-submission thereof has invariably been considered a waiver of 12 the privilege. Rule 3.05 of Canon 3 of the Code of Judicial Conduct admonishes all judges to dispose of the court's business promptly and decide cases within the 13 periods fixed by law , that is three (3) months from the filing of the last 14 pleading, brief or memorandum. For delay in the disposition of cases erodes faith and confidence of our people in the judiciary, lowers its 15 standards and brings it into disrepute. Beyond this, Judge Savellano, in his Explanation admitted that in several instances, he resolved cases and rendered judgement thereon utilizing personal notes transcribed in the course of trial, regardless of the lack of required memoranda from the parties. In addition, although this Court is aware and considered the fact at the time of his retirement, Judge Savellano acted concurrently as an Executive Judge and a judge of a Special Criminal Court, we must reiterate nonetheless that the designation as an Executive Judge is a privilege and a form of recognition of his leadership qualities, and does not excuse him from complying with his constitutional duty to decide cases within ninety (90) days 16 from the time they were deemed submitted for decision. Analogously, in a recent pronouncement , we invariably held that being designated Acting Presiding Judge of two other salas is insufficient reason to justify delay in deciding a case since the judge could have asked for an extension of the period within which to decide it. The standing rule then is that the ninety-day period for deciding cases should be observed by all judges, unless they have been granted additional 18 time. Judges when burdened by heavy caseloads which prevent them from disposing their cases within the reglementary period may, with leave of this Court, ask for additional time.
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3) A case is considered submitted for decision upon the admission of the evidence of the parties at the termination of the trial. The ninety (90) day period for deciding the case shall commence to run from submission of the case for decision without memoranda; in case the Court requires or allows its filing, the case shall be considered submitted for decision upon the filing of the last memorandum or the expiration of the period to do so, whichever is earlier . . . . 4) The court may grant extension of time to file memoranda, but the ninety (90) day period for deciding the case shall not be interrupted thereby. In light of these clear provisions, the proffered explanation of Judge Savellano, as to the delay in the resolution of the subject cases and rendition

After all, it is not uncommon for the Supreme Court, upon proper application and in meritorious cases, especially when difficult questions of law or complex issues are involved, to grant judges of lower courts additional time 19 to decide beyond the ninety-day period. WHEREFORE, in view of the foregoing, the Court finds Judge Maximo A. Savellano, Jr., liable for undue delay in the rendition of judgement and for violating Supreme Court Administrative Circular No. 28 and Canon 3, Rule 3.05 of the Code of Judicial Conduct.1wphi1.nt ACCORDINGLY, this Court hereby imposes upon him a fine of P5,000.00 to be deducted from the amount of P30,000.00 already set aside from his retirement benefits, to answer for any liability for which he may be held accountable. THEREUPON, the Financial Management Office, OCA is hereby directed to release with dispatch the remaining P25,000.00 to Judge Savellano. SO ORDERED. Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Purisima, Pardo, Gonzaga-Reyes, YnaresSantiago and De Leon, Jr., JJ., concur.

Civil Case Nos. 93-64694; 96-77866; 91-570-48; 82-139-79; 9364357; 97967; 94-70515; 95-70807; 87-39671.
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Criminal Case Nos. 92-111825; 94-137045; 94-69609; 90-82501; 94-132490; 94-137350; 96-150718; 95-146046; 90-86036 and 95142174-5.
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Civil Case Nos. 93-64694; 96-77866 and 91-57048. Criminal Case Nos. 92-111825, 94-137245; 94-69609.

Criminal Case Nos. 96-150718; 95-146046; 90-86036; 95142174-5; Civil Case Nos. 82-139-79; 93-64357; 97967; 94-70515; 95-70807; 87-39671.
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Explanation of Judge Maximo Savellano, Jr., p. 2. Ibid., p 3. Salvador vs. Salamanca, 144 SCRA 276. Re: Report of Justice Felipe B. Kalalo, 282 SCRA 61. Abarquez vs. Rebosura, 285 SCRA 109. Ibid.

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Footnotes
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Memorandum of Court Administrator Alfredo L. Benipayo, dated 09 July 1999.

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Re: Report on the Judicial Audit, RTC, Branch 4 and 23, Manila 291 SCRA 10.
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Civil Case Nos. 93-64694; 96-77866; 91-57048; Criminal Case Nos. 92-111825; 94-137245; 94-69609.
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Re: Report on the Judicial Audit of Cases in the Regional Trial Court, Branch 35, Iriga City, 299 SCRA 382.
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Criminal Case Nos. 90-82501; 94-132490; 94-137350; 94137045.

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Sanchez vs. Vestil, 298 SCRA 1. Lambino vs. De Vera, 275 SCRA 60.

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Criminal Case Nos. 96-150718; 95-146046; 90-86036; 95142174-5; Civil Case Nos. 82-13979; 93-64357; 97967; 94-70515; 95-70807; 87-39671.

G.R. No. 130907

November 27, 2001

REPUBLIC OF THE PHILIPPINES, (represented by the Philippine Human Resources Development Center and Construction Manpower Development Foundation), petitioner, vs. HON. CESAR A. MANGROBANG, Presiding Judge of RTC-Cavite, Branch 22, Imus, PHILIPPINE WOMEN'S UNIVERSITY and HELENA Z. BENITEZ, respondents. QUISUMBING, J.: This petition for certiorari assails the Orders issued by Hon. Cesar A. Mangrobang, presiding judge of the Regional Trial Court of Imus, Cavite, Branch 22, in Civil Case No. 055-96. Petitioner seeks to annul and set aside 1 the order dated April 14, 1997, consolidating Civil Case No. 055-96 with Civil Case No. 1277-96, pending before the Regional Trial Court of Imus, 2 Cavite, Branch 20; and the order dated August 26, 1997 denying petitioner's motion for reconsideration. The factual antecedents to this petition are as follows: Private respondent Helena Z. Benitez, a former Senator, is the owner of two parcels of land located in Barangay Salawag, Dasmarias, Cavite, covered by TCT No. 14701, with an area of 483,331 square meters more or less. On March 30, 1983, petitioner Republic of the Philippines, through the Philippine Human Resources Development Center (PHRDC), signed a Memorandum of Agreement with Benitez whereby the latter undertook to lease her property in favor of PHRDC, for a period of 20 years and/or sell a portion thereof which shall be no less than ten hectares. PHRDC in turn agreed to lease within the same period and/or buy said property site. On September 22, 1983, private respondent Philippine Women's University (PWU) and Benitez granted a permit to PHRDC to occupy and use the land in question and to undertake land development, electrical and road network installations and other related works necessary to attain the latter's objectives. Pursuant thereto, the Construction Manpower Development 3 Foundation (CMDF) took possession of the property and erected buildings and other related facilities necessary for its operations.

A lease contract was thereafter signed by PWU and PHRDC on a ten hectare portion of the land-which stipulated, among others, a rental of P200,000.00 per annum for an initial term of four years, from January 1, 1984 to January 1, 1988, with an option granted to PHRDC to renew the lease upon agreement of both parties, for a further period of up to but not exceeding 20 years from the expiration of the initial term thereof. PWU's participation in the above transactions stemmed from its being a donee of the property involved, as embodied in a deed of donation, which deed was executed by Benitez in its favor only in December 1984. At the end of the initial four-year term of the lease, negotiations began for the purchase of a seven-hectare portion of the property. In a series of 4 letters, Benitez made the offer to sell the property at a price of P70.00 per square meter. In view of the on-going negotiations for the eventual sale of the lot, Benitez and PHRDC, through its General Manager Juvenal Catajoy, Jr., agreed that 5 the payment of rentals would cease effective July 1, 1989. Benitez however contends that no such agreement was entered into; in fact, she said petitioner simply failed to pay rentals from July 1, 1989 up to the present 6 despite repeated and friendly demands made by private respondents. PHRDC had by then already prepared a Deed of Absolute Sale, for the signature of Benitez as vendor, and PHRDC and CMDF as vendees. However, Benitez refused to sign the Deed of Absolute Sale since, according to her, there was never any perfected contract or agreement to 7 sell the property. In a letter dated August 15, 1995, Benitez and PWU demanded from PHRDC the payment of rentals and to vacate the premises within thirty days from notice. Thereafter, on December 14, 1995, Benitez and PWU filed an ejectment 8 case based on alleged unlawful detainer against PHRDC and CMDF before the Municipal Trial Court of Dasmarias, Cavite. In the meantime, petitioner, through the Department of Trade and Industry, to which the CMDF is attached, instituted a complaint for Eminent Domain, 9 pursuant to the provisions of Executive Order No. 1035, which case is now pending before the RTC, Branch 20 of Imus, Cavite and docketed as Civil Case No. 1277-96.

The MTC of Dasmarias rendered a decision dated September 2, 1996 in favor of PWU and Benitez, ordering the defendants therein to vacate the premises, pay arrearages in rentals, reasonable compensation for their continued stay in the premises and attorney's fees. The decision was appealed by PHRDC and CMDF to the RTC of Imus, Cavite, where it was docketed as Civil Case No. 055-96, raffled off and assigned to the RTC, Branch 22, which was presided over by respondent Judge Mangrobang. On October 24, 1996, PWU and Benitez filed a Petition for Consolidation of the appealed Civil Case No. 055-96 with Civil Case No. 1277-96. PHRDC 12 and CMDF opposed the petition. On April 14, 1997, respondent Judge issued the Order granting the petition for consolidation, the dispositive portion of which reads: WHEREFORE, let this case be, as it is hereby referred to Branch 20 of RTC, Imus, Cavite to be jointly tried/resolved together with Civil case No. 1277-96 entitled Republic of the Philippines (represented by the Department of Trade and Industry) vs. Helena Z. Benitez. SO ORDERED.
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before a Regional Trial Court can be consolidated with an original action for eminent domain pending before another branch of the RTC. The legal basis of an order for consolidation of two cases is Section 1, Rule 31 of the Rules of Civil Procedure, which states: SECTION 1. Consolidation. When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay. Petitioner argues against consolidation, contending that the ejectment case is an appealed case where the RTC exercises its appellate jurisdiction, while the case for eminent domain is an original action where the RTC exercises original and exclusive jurisdiction. Moreover, the issue in the ejectment case is only of possession while the expropriation case will involve the issue of ownership. In addition, petitioner contends that the trial stage of the ejectment case was already over in the MTC while the expropriation case has yet to begin trial before the RTC. Thus, petitioner contends that since the two cases are separate, distinct and independent from each other, whatever decision will be given in the appealed ejectment case will not affect proceedings in the eminent domain 17 case. In moving for consolidation, private respondents contend that there is no requirement found in the rules that both cases should be of the same nature and cause of action, nor that they should involve a similar exercise of 18 jurisdiction. Both parties submit that at the very least Rule 3 Section 1, requires that there be common questions of fact or law between the cases sought to be consolidated. Respondent Judge cites judicial economy, convenience of the parties, as well as the avoidance of the issuance of conflicting decisions by two (2) branches of the RTC as reasons for granting the motion for consolidation. According to him, consolidation would insure a more orderly proceeding and administration of justice. He states that both refer to a common or similar 19 issue, which is possession of the same property.

PHRDC and CMDF filed a Motion for Reconsideration of the above order. 16 Respondent Judge denied the same through an Order dated August 26, 1997. Petitioner is now before us with this petition on the ground that: RESPONDENT JUDGE ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN, WITHOUT ANY LEGAL AND FACTUAL BASIS, HE ORDERED THE CONSOLIDATION/JOINT TRIAL OF THE TWO (2) CASES, NOTWITHSTANDING THE FACT THAT THEY INVOLVED DIFFERENT CAUSES OF ACTION, ISSUES AND EXERCISE OF JURISDICTION. For resolution is whether or not an appealed case emanating from the decision of a Municipal Trial Court in an ejectment case and now pending

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In Presidential Commission on Good Government v. Sandiganbayan , declared:

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witnesses in one of the cases. Fairness and due process might be hampered rather than helped if these cases were consolidated. As a general proposition, the propriety of consolidation rests upon the sound discretion of the trial court judge. But in this instance, however, we are of the considered view that the exercise of such discretion in order to consolidate the ejectment case with the eminent domain case was less than judicious. We are constrained to agree with petitioner that, given the circumstances herein cited, public respondent's discretion has been gravely abused. WHEREFORE, the instant petition is GRANTED. The Orders dated April 14 and August 26, 1997, issued by public respondent are hereby SET ASIDE. Let the cases for ejectment and for eminent domain proceed independently and be resolved with despatch separately. No pronouncement as to costs. SO ORDERED. Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

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The main object of consolidation is to avoid multiplicity of suits, guard against oppression or abuse, prevent delay, clear congested dockets, simplify the work of the trial court and save unnecessary 21 costs and expense. While nothing in the rules expressly prohibits the consolidation of an appealed case with a case being heard originally, consolidation of the two cases involved herein would serve none of the purposes cited above. First, it would only delay the resolution of the two cases. Note that by itself ejectment is summary in nature for it involves "perturbation of social order 22 which must be restored as promptly as possible." Similarly, speedy action is essential in expropriation, hence the rule that the plaintiff in an expropriation case may already take or enter upon possession of the property after depositing with an authorized government depositary an 23 amount equivalent to the assessed value of the property. But consolidation of these two diverse cases would not necessarily expedite either of them. The ejectment case instituted by private respondents against PHRDC and CMDF was decided by the municipal trial court on September 2, 1996. Now the resolution of the appeal before the RTC remains pending notwithstanding the lapse of over five years. In regard to the case for eminent domain, we have already ruled on the propriety of the issuance of a writ of possession in favor of herein petitioner, in the case of Republic v. Tagle, decided in 1998. Three years have already passed despite the urgent nature of the case. To begin consolidation of the two cases at this time would only exacerbate the delay. Second, as pointed out by petitioner, the two cases raise dissimilar issues, though the facts are evidently intertwined. In the ejectment case, the issue is possession of the disputed property, while in the eminent domain case, the issue is the taking by the State of the property by virtue of its power of eminent domain. Note, however, that the decision in one will not necessarily affect the decision in the other. Third, it does not appear certain that consolidation is a wise step where one or both cases had already been partially heard. It might just complicate procedural requirements. The judge to whom the consolidated case will be assigned would not have had the opportunity to observe first hand the

Footnotes
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Rollo, p. 23. Id. at 25. An agency created by the PHRDC to implement its programs. Letters dated August 31, 1989 and February 4, 1991. Supra, note 1 at 9. Id. at 61. Id. at 9.

On grounds of expiration of lease period, non-payment of rentals and violation of the contract of lease. Records, Vol. I, p. 2.
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Entitled "Providing the Procedures and Guidelines for the Expeditious Acquisition by the Government of Private Real Properties or Rights Thereon for Infrastructure and Other Government Development Projects", effective June 25, 1985, 81 O.G. 3721 (August 26, 1985).
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Records, Vol. 1, pp. 159-163. Supra, note 1 at 27-28. Id. at 29-31. Id. at 23. Ibid. Id. at 32-37. Id. at 25. Id. At 35-36. Id. at 51. Id. at 23 and 25. G.R. Nos. 102370-71, 209 SCRA 844 (1992). Id., at 849-850.

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J Y. FERIA and M.C.S. NOCHE, Civil Procedure Annotated Vol. 2, p. 615 (2001 ed.).
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RULES OF COURT, Rule 67, Section 2. Supra, note 20 at 850.

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G.R. No. 101941

January 25, 1996

EDMUNDO QUEBRAL, petitioner, vs. COURT OF APPEALS and UNION REFINERY CORPORATION, respondents. DECISION PANGANIBAN, J.: The main question answered in this Decision is: what are the effects of a reversal by an appellate court of a trial courts order of dismissal based on a demurrer to evidence? Secondarily, when and how does the Supreme Court review factual findings of the Court of Appeals? This is a petition for review on certiorari under Rule 45 of the Revised Rules 1 of Court to reverse the Decision of the Court of Appeals promulgated on July 29, 1991, in CA-G.R. CV No. 24954, which ordered petitioner to pay private respondent various sums of money. This case was originally assigned to the First Division, but by a resolution dated November 13, 1995, it was transferred to the Third Division. After deliberating on the petition, comment, reply, and memoranda of the parties as well as the records of the case in both the Court of Appeals and in the Regional Trial Court, this Court assigned the writing of this Decision to the undersigned ponente. The Facts A complaint for a sum of money and damages with preliminary attachment was filed by private respondent Union Refinery Corporation against petitioner and Higidio B. Gay-ya, Jr. before the Regional Trial Court, Branch 2 172, Valenzuela, to collect the amount of P102,991.54, representing the unpaid oil products allegedly purchased by them from private respondent (Civil Case No. 2664-V-87). The complaint alleged that on August 6, 1984, private respondent, a corporation engaged in refining, sale and distribution of oil, gasoline and lubricants, approved the credit application filed by petitioner which would allow him to sell private respondents products in La Union, Ilocos Sur, Abra and Baguio City. Sometime in October, 1984, petitioner and Gay-ya, doing

business under the name Taurus Commercial, represented to private respondent that they had closed a sale to Susan Lo of Basic Shell Service Station in Mayumbo, Dagupan City of ten drums of "Uniplus" oil products for the amount of P34,201.54, which private respondent delivered as evidenced by Sales Invoice No. 4106 dated October 22, 1984. Petitioner and Gay-ya had also caused the delivery of twenty drums of "Uniplus" oil products costing P68,790.00, including freight charges allegedly to the service station of Joseph Li in Mangaldan, Pangasinan as evidenced by Sales Invoice No. 4060 dated October 8, 1984. The complaint further alleged that since demands for payment of the deliveries were unheeded by petitioner and Gay-ya, private respondent found out, upon inquiry, that the duo had "connived and conspired" with each other under the business name Taurus Commercial in defrauding private respondent because Susan Lo and Joseph Li never ordered any products of private respondent; rather, the said orders were actually sold by the petitioner and Gay-ya to third persons. Alleging further that petitioner and Gay-ya were intending to leave the country thereby exposing private respondent to irreparable damages, the same complaint prayed for the issuance of a writ of preliminary attachment. It also prayed that petitioner and Gay-ya be held jointly and severally liable in the amounts of P102,991.54 plus interest thereon, P100,000.00 as damages, and P50,000.00 as attorneys fees. After hearing, the trial court granted the prayer for a writ of preliminary attachment upon private respondents filing of a bond in the amount of P103,000.00. In compliance with the order of attachment duly issued by the court on December 28, 1987, a parcel of riceland and a house in Villa Quirino, San Esteban, Ilocos Sur, declared by petitioner and his wife as their own for tax purposes, were attached. Personal properties owned by Gay-ya were also attached. Contending that he was merely a sales agent of petitioner, Gay-ya filed a motion to dismiss the complaint and to lift the attachment of his proper-ties. Private respondent opposed the motion asserting that Gay-ya "x x x converted to his own use the proceeds of the oil products" amounting to P100,000.00. Annexed to the opposition was a copy of Gay-yas letter dated July 19, 1985 addressed to the Credit and Collection Manager of private respondent, referring to the "account of Mr. EDMUNDO V. QUEBRAL in the amount of P102,991.54" and admitting personal liability for the following:

"21 (I/200) Drums Uniplus at P3,500.00 per Drum Personal loan from E.V. Quebral Total accountability due URC &/or E.V. Quebral

In the promissory note dated July 19, 1985 appended to the aforesaid letter, Gay-ya obligated himself to pay the total amount of P91,904.73 to private respondent under a schedule of payments showing that the payments would be made between August 30, 1985 and May 30, 1986. Both the promissory note and the schedule of payments bore the signature of petitioner under the word "Conforme." On April 11, 1988, the trial court denied Gay-yas motion to dismiss and to lift the attachment. On April 19, 1988, private respondent moved that petitioner be declared in default but on April 26, 1988, petitioner filed an answer with counterclaim. In his answer, petitioner categorically denied that he was a business partner of Gay-ya but admitted that he was Gay-yas erstwhile co-employee at the Getty Oil Philippines. He averred that Gay-ya "transacted business" with private respondent without his knowledge and consent while using his "good name and credit standing" with private respondent. He asserted that he did not benefit from the business transactions between private respondent and Gay-ya and denied that he was leaving the country to abscond. He interposed a counterclaim against private respondent for the "malicious and groundless action" brought against him which allegedly caused him mental anguish. He therefore prayed for reasonable damages plus attorneys fees aside from the crossclaim for damages he filed against Gay-ya. Upon motion of private respondent, Gay-ya was declared in default in the order of June 17, 1988. In its order of September 23, 1988, the trial court granted petitioners motion to lift the order of attachment citing as reasons therefor private respondents failure to substantiate its claim that petitioner was leaving the country to abscond and to prove that there were no sufficient securities for the enforcement of its claims. The possibility of an amicable settlement between petitioner and private respondent being re-mote, the case was heard in due course. On June 15, 1989, after the private respondent had presented its evidence, petitioner

filed a demurrer to evidence contending that private respondent had failed to P73,500.00 present "material and competent evidence sufficient to hold (petitioner) civilly liable" for the claims against him. Petitioner averred that private respondents 18,404.73 evidence failed to prove that: (a) his credit application was duly approved; (b) granting that such application was approved by private respondent, the P91,904.73" deliveries, per the invoices presented in evidence, were outside of the named areas of coverage appearing in the application, and (c) he never signed any purchase order in relation to the subject of the claims. On June 26, 1989, the trial court rendered a decision holding that there was no evidence of petitioners participation in the transactions involved, as he had not received the goods and the deliveries were made in places outside of La Union, Ilocos Sur, Ilocos Norte, Abra and Baguio City. It also found that petitioners conformity to Gay-yas promissory note and schedule of payments did not make him liable because it merely showed his "conformity to the assumption by defendant Higidio Gay-ya, Jr. of such liability." It disposed of the case as follows: "WHEREFORE, in view of the foregoing, the case as against Edmundo Quebral is hereby dismissed. On the other hand, judgment is hereby rendered in favor of plaintiff and against defendant Higidio Gay-ya, Jr. ordering him to pay plaintiff: 1. The sum of P102,991.54 plus interest at legal rate from October 8, 1984 until the full amount is paid; 2. To pay plaintiff the sum of P20,000.00 by way of attorneys fees; 3. Declaring the writ of preliminary attachment against the property of defendant Higidio Gay-ya, Jr. permanent; and 4. Defendant to pay the costs of suit." Gist of Appellate Courts Decision Private respondent appealed to the Court of Appeals which, on July 29, 1991, rendered its Decision finding that, contrary to petitioners al legation in his demurrer to evidence, it was not necessary for private respondent to prove the approval of petitioners credit application because the fact of such approval was alleged in paragraph 3 of the complaint, and petitioner had admitted in paragraph 2 of his answer said paragraph of the complaint. The

10

appellate court ruled that by such judicial ad-mission, petitioner could no longer dispute the fact of the approval of his credit application. On petitioners denials that he was the business partner of Gay-ya and that he had not known about nor consented to Gay-yas transactions with private respondent, the Court of Appeals said: "Defendant Quebral, however, denied in his answer that the other defendant Higidio Gay-ya, Jr. was his business partner. This denial might be true, but in his credit application Exh. "B" or "1", he expressly named Gay-ya together with himself as the PERSONS AU-THORIZED TO RECEIVE GOODS/DELIVERIES from plaintiffappellant corporation; and in his letter to appellants official Efren Vargas Exh. K, defendant Quebral introduced Gay-ya to Vargas as my representative. Hence, although Gay-ya might not have been defendant Quebrals partner, he (Quebral), however, expressly made known to appellant corporation that Gay-ya was his duly authorized representative in his business, and he could not, therefore, blame appellant for regarding Gay-ya as such. "Defendant Quebral also denied in his answer knowledge of or consent to the transactions represented by the unpaid Sales Invoices Exhs. C and D dated October 8, and 22, 1984, respectively, claiming that it was only his defaulting co-defendant Higidio B. Gay-ya, Jr. who transacted said sales with plaintiffappellant corporation. And Quebral later claimed in his demurrer, which the lower court sustained, that plain-tiff-appellants evidence had failed to show that he knew of and was equally liable with Gayya for the value of the unpaid sales invoices. We are of the opinion, though, that contrary to defendant Quebrals claim and the ruling of the lower court in his favor, plaintiff-appellant corporation had sufficiently established by its evidence defendant Quebrals knowledge of and liability for the unpaid sales invoices in question, and as said defendant opted not to present evidence for himself and to rely solely on his demurrer to plaintiff-appellants evidence, then the latters evidence in this case stands uncontradicted and unrefuted and should, therefore, be taken as true." The Court of Appeals noted petitioners ad-mission to the sheriff of his liability. As reflected in the sheriffs return, upon receiving the order of attachment, petitioner "proposed an arrangement wherein he undertook to settle his obligation with the plaintiff corporation within reasonable time," for which reason the sheriff, in good faith, did not effect the attachment

immediately. As regards Gay-yas promissory note bearing petitioners conformity and signature, the Court of Appeals held that such "conforme to Gay-yas personal assumption of responsibility for P91,904.73 out of the P102,991.54 which the latter even referred to in his covering letter as the account of Mr. EDMUNDO V. QUEBRAL, only binds Gay-ya and himself but does not necessarily bind appellant corporation who does not appear to have agreed to Gay-yas promissory note assuming personal liability for P9 1,904.73 out of Quebrals account of P102,991.54 and his (Gay-yas) proposal to pay said amount on installment x x x." Therefore, the Court of Appeals concluded that petitioner is still liable to private respondent for the amount of P102,991.54 "inspite of Gay-yas promissory note, and especially as said promissory note also has remained unpaid." Furthermore, it was immaterial that the transactions involved were made in areas outside of the cover-age of the credit application for, as testified to by the private respondents comptroller, petitioner could also sell in nearby provinces. The Court of Appeals considered as the "most telling documentary evidence yet" against petitioner his own handwritten letter dated January 19, 1985 to Efren Vargas, an official of private respondent, which reads: "1-19, 1985 "MR. EFREN VARGAS UNIOIL Dear Mr. Vargas, Bearer is Mr. HB Gay-ya, Jr., my representative. He is accompanying Mr. DICK COSUE, operator of SHELL SS in Carmen, Rosales, Pang. He is the cousin of Mr. W. T. KHO. He is interested in buying 20 drums of PROCESS OIL 150. He is asking for 30 days term and will give you his personal check. His present terms with SHELL is M-30. If you can accomodate him, bill him directly at P3100.00/drum. You may send Mr. Gay-ya to the plant to insure correctness of invoicing. We are consolidating collection of the drums delivered to Joseph Li & Ms. Susan Lo. Mr. Gay-ya will explain to you further. By the way, 1 drum delivered to Ms. Lo is leaking. It was half the content already when I last visited her in Dagupan.

11

We will remit our collection soon. Thanks & Regards, Ed" On this piece of evidence, the Court of Ap-peals said: "Defendant Quebral did not deny, as he could not have denied, his foregoing personal letter to appellants official Efren Vargas who approved his credit application with said corporation. All he stated in his demurrer to plaintiff-appellants evidence with respect to said letter is that it is worthless and does not have probative value in relation to the purpose for which it is being offered considering that it was never duly established. The alleged addressee of the letter was never presented to properly identify the same. (p. 180, Rec.) We find this contention incorrect, however, since said letter which was addressed to appellants official Efren Vargas, was presented by appellant as its Exhs. K and K-I and identified by its witness Milagros Po during her direct and additional direct examination to have been received by their office from defendant Quebral by way of reply to their collection letter and telegram which they had sent to the latter (pp. 2-3, tsn. Jan. 10, 1989; pp. 16-17, tsn Feb. 21, 1989). There was no need for Efren Vargas then to identify said letter himself since it was written to him by Quebral not in his personal capacity but in his capacity as an officer of appellant corporation and in connection with its business dealings with Quebral, and especially as the very contents of said letter shows that it was personally delivered to Vargas by defendant Quebrals representative, the other defendant Higidio Gay-ya. In fact, appellant corporation would not have been able to present said letter of Quebral as evidence in this case if it did not receive the same from the latter in the ordinary course of business. As defendant Quebral had failed to present any contrary evidence to show that his said letter Exh. K had not been actually received by or delivered to appellant corporation, therefore, we believe and so hold that appellant corporation had sufficiently proved its receipt of said letter from Quebral." Interpreting petitioners letter, the Court of Appeals drew the following conclusions: petitioner had indeed ordered oil products which he sold to Joseph Li and Susan Lo, and he himself promised to collect from said

customers and to remit the collections to private respondent. Noting that in the letter, petitioner was introducing Gay-ya while in-voices involved were dated before the letter was sent, the Court of Appeals held that it could not have been possible for Gay-ya to make the particular orders manifested by the invoices. Thus, were it not for Gay-yas promissory note, petitioner should be held liable for the total amount of P102,991.54 because he acted upon the authority given him by the petitioner. Accordingly, the Court of Appeals disposed of the appeal as follows: "WHEREFORE, the judgment appealed from herein is REVERSED and SET ASIDE, and another judgment is entered herein: On appellants complaint: (1) Holding both defendants Edmundo Quebral and the defaulting defendant Higidio Gay-ya, Jr. liable to appellant corporation for the amount of P91,904.73, plus legal interests thereon until said amount is fully paid, with the right on the part of appellant corporation to collect said amount from either defendant Quebral or Gay-ya; (2) Ordering defendant Edmundo Quebral to pay appellant corporation the amount of P11,086.81, which is the difference between the amount of P91,904.73 covered by defendant Gay-yas promissory note of Exh. J-2 and the amount of P102,991.54, which is the aggregate value of the Sales Invoices Exhs. C and D; (3) Ordering defendant Quebral to pay appellant corporation 25% attorneys fees on the amount of P102,991.54, as stipulated in the Sales Invoices Exhs. C and D; and (4) Ordering both defendants Quebral and Gay-ya to pay the costs of this suit. On defendant Quebrals cross-claim: (1) Ordering defendant Gay-ya to pay his co-defendant Quebral whatever principal amount the latter would be compelled to pay appellant corporation, up to the amount

12

of P91,904.73, plus legal interests thereon until said amount is fully paid; and (2) Ordering defendant Gay-ya to pay one-half of the attorneys fees and costs that defendant Quebral would likewise be compelled to pay appellant corporation in this case." Alleged Errors of the Court of Appeals Raised by Petitioner Petitioner filed a motion for the reconsideration of the Court of Appeals decision but it was denied. Hence, the instant petition charging the Court of Appeals with "patent and manifest" error in: (a) admitting and considering Exhibit K as the basis for the finding that Gay-ya was petitioners representative; (b) finding that there were purchase orders made by petitioner; (c) finding that petitioner had sufficient knowledge of and liability for the unpaid sales invoices, and (d) relying upon and giving weight to the report/explanation of the deputy sheriff. The foregoing alleged errors are attacks on factual findings of the appellate court, which normally are not reviewable by this Court in petitions under Rule 45. However, since the factual findings of the respondent Court are at variance with those of the trial court, we decided to go over the records of the case both in the Court of Appeals and in the Regional Trial Court. Petitioner asserts that he "vigorously objected" to the admission of Exhibit K primarily because its original was not "produced and introduced in court nor was the supposed addressee presented as a witness to testify and be crossexamined on said exhibit." The Courts Ruling We find such assertion to be an attempt on the part of petitioner to foist a falsehood and to mislead this Court. The same attempt to mislead is repeated in petitioners blatant statement that "a careful scrutiny of the record of Civil Case No. 2664-V reveals that theres no indication that said original was ever produced in court." However, extant in the folder of Exhibits in Civil Case No. 2664-V-87, specifically page 7 thereof, is Exhibit K. It is the original letter itself, handwritten by petitioner on a piece of stationery the upper lefthand corner of which bears this printed identification: "From the desk of: E.V. Quebral," which was marked as Exh. "K-2".

Even if it were true that Exhibit K consisted of a mere photocopy and not the original of the petitioners letter, petitioner nevertheless failed to make timely objection thereto. As to when an objection to a document must be made, the 3 Court ruled in Interpacific Transit, Inc. v. Aviles: "Objection to the documentary evidence must be made at the time it is formally offered, not earlier. The identification of the document before it is marked as an exhibit does not constitute the formal offer of the document as evidence for the party presenting it. Objection to the identification and marking of the document is not equivalent to objection to the document when it is formally offered in evidence. What really matters is the objection to the document at the time it is formally offered as an exhibit." (Italics supplied) In the case at bench, no such timely objection was ever made. Consequently, the evidence not objected to became property of the case, and all parties to the case are considered amenable to any favorable or unfavorable effects resulting from the evidence. As it was, instead of objecting to said document, petitioner simply filed a demurrer to evidence, in 4 the manner described in his own words, as folIows: "Said EXH. K was never admitted in evidence as the record shows. When the court a quo directed defendant (herein petitioner) Edmundo Quebral to file a written comment on the exhibits submitted by plaintiff (respondent herein), before it could make any ruling on their admission, defendant Quebral filed instead a demurrer to evidence which the court sustained that led to the dismissal of the case insofar as herein petitioner Quebral is concerned." Contrary to petitioners claim, however, Exhibit K was in fact produced, introduced, and offered as evidence. This is reflected in the transcript of stenographic notes as follows: "ATTY. QUINONES: xxx xxx xxx "Q In your additional direct examination last time, you presented a letter from Mr. Edmundo Quebral, which was marked as Exhibit K. Kindly show it to the Court.. A (Witness producing..)

13

ATTY. QUINONES: Witness producing Exhibit K which is the letter addressed to Mr. Efren Vargas of UNIOIL, dated January 19, 1985 and the dorsal portion marked as Exh. K-I. May we be allowed to have this into the records COURT: Is that letter the subject of cross-examination? ATTY. QUEBRAL: No, your Honor, I have not touched on that. COURT: You cannot present that. It is not even in my notes. ATTY. QUINONES: May we have it recorded. COURT: You should have done that during the direct. Why dont you move for additional direct? ATTY. QUINONES: If the Court would only remember, during that time that we are presenting this letter, this representation was . COURT: It would only prolong the whole thing. Since the question is not the subject of cross-examination you cannot ask redirect on that. If you want to, ask permission that you want to ask additional direct. I just want this to be on procedure. ATTY. QUINONES:

Considering that we requested that we be furnished a copy, we did not touch that on cross-examination, your Honor. COURT: That is why I said you should ask for additional direct. ATTY. QUINONES: In that case, may we be allowed to ask additional direct, Your Honor. COURT: So this is additional direct.. ADDITIONAL DIRECT BY: ATTY. QUINONES: Q This letter that you have produced already marked as Exhibit K and the dorsal portion as Exh. K-I, there is a signature below the words Thanks and regards, Ed. Tell the Honorable Court who is this Ed mentioned in this letter? A Mr. Ed Quebral, that is his signature, because he suing (sic) his stationery. Q To whom was it addressed? A To Mr. Efren Vargas, sir. Q Not to you? A No, sir. ATTY. QUINONES:

I remember it was. COURT: Show it if it was the subject of cross-examination. ATTY. QUEBRAL: This is a stationery coming from the desk of E.V. Quebral, which for purposes of identification, we request to be marked as Exhibit K-2, your Honor.

14

COURT: Mark it. ATTY. QUINONES: And likewise, this portion which was identified by the witness, "Thanks and regards Ed" be bracketed and marked as Exh. K-3, your Honor. COURT: Mark it. ATTY. QUINONES: May I then go back to redirect examination, your Honor." Exhibit K was formally offered in evidence by private respondent on June 8, 1989 together with other exhibits. Asked by the lower court to comment on the exhibits offered, petitioner instead re-quested that he be formally furnished with copies of the documents and that he be given seven days to comment. The court, however, gave him only five days. As earlier stated, petitioner did not file the required comment - he opted to file a demurrer to evidence. Such move proved to be costly error. Section 1, Rule 35 of the Revised Rules of Court provides: "Section. 1. Effect of judgment on demurrer to evidence. - After plaintiff has completed the presentation of his evidence, the defendant without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. However, if the motion is granted and the order of dismissal is reversed on appeal, the movant loses his right to present evidence in his behalf." A demurrer to evidence abbreviates proceedings, it being an aid or instrument for the expeditious termination of an action, similar to a motion to 5 dismiss, which the court or tribunal may either grant or deny. However, 6 whoever avails of it gambles his right to adduce evidence. Pursuant to the aforequoted provisions of Rule 35, if the defendants motion for judgment on demurrer to evidence is granted and the order of dismissal is reversed on appeal, judgment is rendered in favor of the adverse party because the 7 movant loses his right to present evidence.

Petitioners contentions before this Court are premised on the erroneous appreciation by the Court of Appeals of private respondents evidence in the trial court. Since such appreciation and the appellate courts conclusions thereon, as mentioned earlier, are contradictory to that of the trial court, the case at bench falls under the exception to the general rule that factual 8 findings of the Court of Appeals are considered final and conclusive. Accordingly, the Court closely examined the records, only to find out that there is no reason to overturn the findings of the Court of Appeals which are amply supported by sufficient evidence. WHEREFORE, the instant petition for review is DENIED and the decision of the Court of Appeals is affirmed in toto. Costs against petitioner. SO ORDERED. Narvasa, C.J. (Chairman), Davide, Jr., Melo, and Francisco, JJ., concur.

Footnotes
1

Fourth Division, composed of J. Alicia V. Sempio Diy, ponente, JJ. Vicente V. Mendoza, chairman and Oscar M. Herrera, member; Rollo, pp. 15-28.
2

Presided over by Judge Teresita Dizon-Capulong. 186 SCRA 385 (June 6, 1990).

cf Reply to the comment on the petition, p. 4; rollo, pp. 72-77, at p. 75

5

Nepomuceno vs. Commission on Elections, 126 SCRA 472, 478 (December29, 1983).
6

Bagnas vs. Court of Appeals, 176 SCRA 159 (August 10,1989). Cruz vs. People, 144 SCRA 677, 680 (October 9, 1986). Calde vs. Court of Appeals, 233 SCRA 376 (June 27, 1994).

15

G.R. No. 121517

March 31, 2000

12167, Nordy P. Diploma, et al., petitioners, v. Hon. Anita Alfelor Alagaban, etc., et al., respondents. Based on reports that several crates of plywood were being hauled out of the premises of STA. CLARA by the Diplomas in violation of the temporary restraining order issued by this Court, Joseymour Ecobiza, Deputy Sheriff of RTC-Br. 13, Davao City, accompanied by Atty. Bernabe Alabastro, caused to be seized on 26 October 1987 eleven (11) crates of plywood allegedly being transported to Tefasco Wharf in Ilang, Davao City. These crates had the markings of STA. CLARA and Firmwood Development Corporation (FIRMWOOD for brevity). Deputy Sheriff Joseymour Ecobiza executed an affidavit that the seizure was effected pursuant to the temporary restraining 2 order issued by this Court against the Diplomas and STA. CLARA.

RAY U. VELASCO, JOSEYMOUR P. ECOBIZA, WILHELM BARLIS AND BERNABE ALABASTRO, petitioners,

vs. COURT OF APPEALS, FIRMWOOD DEVELOPMENT CORPORATION AND STA. CLARA HOUSING INDUSTRIES, INC., respondents. BELLOSILLO, J.: This is a petition for review on certiorari praying for the reversal of the 1 decision of the Court of Appeals which affirmed the orders of the trial court granting private respondents' separate motion for summary judgment with prayer for damages. A civil action was filed sometime in 1987 with the Regional Trial Court of Davao City, docketed as Civil Case No. 18567-87, by Naty Dy, Sencio Dy and Denver Builders Supply, Inc., against Nordy Diploma, Corazon Diploma, George Diploma and Sta. Clara Housing Industries, Inc. The complaint alleged that on 31 October 1987 Naty Dy of Denver Builders Supply (DENVER for brevity) and Nordy Diploma of Sta. Clara Housing Industries, Inc. (STA. CLARA for brevity) entered into a "joint partnership venture" agreement to operate the Sta. Clara plant in Davao City; that Naty Dy contributed a huge sum of money to the partnership which still owed her P13,623,265.69; that defendants unilaterally dissolved the partnership and started to dispose the goods and stocks thereof so that plaintiffs sought a judicial termination of the partnership as well as for accounting and damages. Plaintiffs also prayed for a temporary restraining order and writ of preliminary injunction against defendants including STA. CLARA, which was granted by the trial court in an order issued on 8 June 1987. The defendants and STA. CLARA questioned the order in a petition for certiorari with the Court of Appeals. The appellate court granted the petition and set aside the writ of preliminary injunction. Not satisfied with the decision of the Court of Appeals however, the Dy spouses and DENVER elevated the matter to this Court. The petition, docketed as G.R. No. 79586, elicited on 4 September 1987 a temporary restraining order against the Diplomas and STA. CLARA enjoining the latter, their agents, representatives and/or any person or persons acting upon their orders or in their place and stead from withdrawing and/or further disposing of the plywood inventory in Sta. Clara Housing Industries, Inc. plant or warehouse as litigated in CA-G.R. SP No.

On 18 November 1987 respondent FIRMWOOD filed with the Regional Trial Court of Davao City a complaint for delivery of personal property and damages as well as attorney's fees, docketed as Civil Case No. 18841-87, against herein petitioners Ray U. Velasco, ex-officio sheriff of the Regional Trial Court of Davao City, Joseymour Ecobiza, Deputy Sheriff of Davao City, Wilhelm Barlis, former Commanding Officer of the 439th Infantry Battalion in Toril, Davao City, and Atty. Bernabe Alabastro, counsel for plaintiffs Naty Dy and Sencio Dy in Civil Case No. 18567-87. FIRMWOOD alleged in its complaint that since it owned the eleven (11) crates of plywood seized by petitioners it had the right to the possession thereof or to the payment of the value of the plywood seized in case delivery could not be made. It also prayed for reimbursement of its expenses of P5,000.00, P50,000.00 for temperate damages, another P50,000.00 for exemplary damages and still another P50,000.00 for attorney's fees. On 11 January 1988 this Court set aside the temporary restraining order it issued on 4 September 1987 in G.R. No. 79586. On 28 February 1988 petitioners filed their answer with counterclaim in Civil Case No. 18841-87 alleging that respondent FIRMWOOD was not the owner of the eleven (11) crates of plywood they seized but respondent STA. CLARA, hence, FIRMWOOD was not entitled to the recovery thereof. Petitioners contended that they had the authority to seize the crates of plywood and put them under custodia legis by virtue of the temporary restraining order issued by this Court on 4 September 1987 in G.R. No. 79586.1wphi1.nt

16

On 26 May 1988 respondent STA. CLARA filed a complaint in intervention alleging that it had a legal interest in the matter in litigation it being answerable for damages arising from a warranty to deliver the goods to respondent FIRMWOOD; that the latter was the true and lawful owner of the eleven (11) crates of plywood which were milled for it by respondent STA. CLARA; and, that since the temporary restraining order issued by this Court had been lifted, respondent STA. CLARA continued to enjoy the conduct of its regular business without interference from any person, entity or even 3 court.

complaint, i.e., P390.00 for filing fee, another P390.00 for the Judiciary Development Fund, P25.00 for sheriff's fee, plus attorney's fees of P20,000.00 for respondent FIRMWOOD and P30,000.00 for respondent STA. CLARA. Petitioners appealed the two (2) orders of the trial court to the Court of Appeals which however dismissed the appeal and affirmed the questioned orders. The appellate court held that the pleadings, annexes and affidavits of private respondents in support of their respective motions for summary judgment were sufficient to overcome petitioners' opposition and to justify the finding that there was no legitimate defense to the action. It also held that the Court's resolution of 11 January 1988 lifting the temporary restraining order issued in G.R. No. 79586 had mooted whatever claim petitioners had over the seized property. The Court of Appeals also sustained the award of damages by the trial court to respondent FIRMWOOD whose property was wrongfully attached or seized under Rule 60, Sec. 7, of the Rules of Court, as amended. Petitioners now allege before us that the Court of Appeals erred in the appreciation of the facts of the case and in deciding the legal questions contrary to law and jurisprudence. In support thereof petitioners assert that respondent FIRMWOOD is not the true and lawful owner of the eleven (11) crates of plywood; hence its representations in its complaint for delivery of personal property before the trial court were false and made in bad faith. Petitioners also contend that the crates of plywood seized by petitioner Deputy Sheriff Joseymour Ecobiza pursuant to the temporary restraining order of this Court in G.R. No. 79586 were still in custodia legis and could not be the subject of an action for replevin; and, that the temporary restraining order issued by this Court was lifted only on 13 January 1988 or long after the complaint for replevin was instituted on 11 November 1987. Petitioners further contend that their admission that the owner of the plywood at that time was respondent STA. CLARA cannot be the basis for summary judgment because there are triable issues that need to be resolved, namely: (a) whether the seizure of the plywood by petitioner Ecobiza by virtue of this Court's temporary restraining order was lawful; (b) whether the subject plywood can be replevied even if it were in custodia legis; and, (c) whether respondent FIRMWOOD has any cause of action against petitioners. The crux of the controversy is whether the summary judgment rendered by the trial court in favor of private respondents was proper and, consequently, whether the award of damages to private respondents was correct.

Petitioners also filed their answer to the complaint in intervention denying ownership of respondent FIRMWOOD over the crates of plywood and asserting STA. CLARA's ownership thereof. On 30 August 1988 respondent FIRMWOOD filed a Motion for Summary Judgment alleging that aside from the amount of damages due it there was no genuine issue as to any material fact of the case, STA. CLARA having confirmed FIRMWOOD's ownership over the eleven (11) crates of plywood. On 12 September 1988 respondent STA. CLARA also filed a Motion for Summary Judgment alleging the same grounds raised by FIRMWOOD and further contending that petitioners did not have the authority to hold the property in custodia legis.

On 29 November 1988 the trial court granted private respondents' motions for summary judgment and ordered petitioners and their privies and agents to release from their possession and custody the eleven (11) crates of plywood and deliver the same to respondents FIRMWOOD and/or STA. CLARA, or in case of loss, to pay their declared value of P140,000.00 or such amount as may be proved during the hearing for the purpose only of determining their actual value as well as the total amount of damages private 4 respondents could prove against petitioners.

On 7 February 1989 the trial court issued another order directing petitioners to pay the amounts incurred by respondent FIRMWOOD in filing the

17

We find no cogent reason to sustain the petition. Rule 34 of the Rules of Court, now Rule 35 of the 1997 Rules of Civil Procedure as amended, which gives authority to trial courts to grant relief by summary judgment is intended to expedite or promptly dispose of cases where the facts appear undisputed and certain from the pleadings, admissions and affidavits. This rule does not vest in the court summary jurisdiction to try the issues on pleadings and affidavits but gives the court limited authority to enter summary judgment only if it clearly appears that there is no genuine issue of material fact. On a motion for summary judgment, the court is not pleadings and records before 5 the court create an issue of fact to be tried. It is impossible to state a general rule for determining whether a genuine issue of fact exists in a particular case. The determination will depend upon the particular circumstances of each case. Nevertheless, the language used by courts in making a determination in particular cases may serve to indicate the manner in which a court should approach the question to be determined. It is repeated often enough that the court is not authorized to try the issue of fact but to determine whether there is an issue to be tried. Where the motion is made by a claimant, the defending party must show that he has a plausible ground 6 of defense, something fairly arguable and of a substantial character. Applying these legal principles, we find that the trial court committed no error in rendering a summary judgment.1wphi1 The material averments of the complaint of respondent FIRMWOOD state that the latter is the owner of eleven (11) crates of plywood which were taken or seized by petitioners but the seizure was not for tax assessment or by virtue of execution or attachment. While the answer of petitioners alleged that the owner of the plywood was respondent STA. CLARA, and not FIRMWOOD, petitioners admitted that the goods contained the label and markings of 7 8 FIRMWOOD. STA. CLARA filed its complaint in intervention stating that it was joining FIRMWOOD in its suit to recover possession of the plywood seized and detained by petitioners; that FIRMWOOD was the true and lawful owner of the subject property as the same was milled by STA. CLARA for FIRMWOOD; that STA. CLARA had the right to the possession of the plywood in order that it could discharge its obligation under a warranty to deliver the goods to FIRMWOOD; and finally, that the temporary restraining order previously issued by this Court which was the basis of petitioners in seizing the goods had already been lifted. In their answer to the complaint in intervention, petitioners had deemed admitted the ownership and right of possession of STA. CLARA over the plywood taken by them and the fact that the temporary restraining order of this Court by virtue of which the seizure was effected had already been

lifted. Petitioners admitted in par. 17.2 of their answer to the complaint in intervention that if they were "not maliciously dragged into this unfounded suit, subject plywood would have been turned over to the Intervenor (Sta. 9 Clara) which is the owner . . . ."

The remaining issue raised by petitioners in objecting to the reliefs prayed for in the complaints of private respondents is whether petitioners possessed the authority to seize and hold under their custody the crates of plywood by virtue of the temporary restraining order of this Court which undisputedly had been lifted and of no more force and effect. 10There is therefore absent in this case any genuine issue of fact but a question purely of law. It has been held that even the existence of an important or complicated question of law where there is no issue as to the facts is not a bar to a summary judgment. 11 The trial court as well as the Court of Appeals found as undisputably settled based on the records that the right of possession of the eleven (11) crates of plywood belonged to respondents STA. CLARA and/or FIRMWOOD and the only disagreement of the parties was that the property could not be disposed of by respondent STA. CLARA because of the temporary restraining order issued by this Court on 4 September 1987 which allegedly gave authority to petitioner Deputy Sheriff Ecobiza to seize the crates of plywood necessary to protect the outcome of Civil Case No. 18567-87. In rendering summary judgment in favor of private respondents in the replevin case, the trial court found them to be entitled to the possession of the subject property wrongfully detained by petitioners as the temporary restraining order from which they derived their authority to seize the property had already been lifted and set aside. Petitioners allege that during the time they effected the seizure of the plywood they had the authority to do so as they were implementing the temporary restraining order which was then in full force and effect. This contention has no merit. It is a basic procedural postulate that a preliminary injunction which necessarily includes a temporary restraining order should never be used to transfer the possession or control of a thing to a party who did not have such possession or control at the inception of the case. 12The temporary restraining order issued by this Court on 4 September 1987 merely restrained respondent STA. CLARA and all its agents and representatives from withdrawing and disposing of the plywood inventory in STA. CLARA's plant or warehouse until further orders from this

18

Court. 13The order did not contain any directive whatsoever to any of the petitioners to seize property belonging to STA. CLARA or to keep the property seized in their possession. The petitioners, by what they did, took the law into their own hands without any specific order from this Court; hence, the seizure made by them on 26 October 1987 was void and illegal even if the intention of petitioners was to prevent the alleged violation of the temporary restraining order. Any violation of the injunction or temporary restraining order which is in full force or effect constitutes contempt of court and is punishable as such, and the remedy of the aggrieved party is to institute contempt proceedings where the court in appropriate cases may punish the violator for the purpose of preserving and enforcing the rights of the persons for whose protection the injunction or restraining order was granted. Clearly, with the subsequent lifting of the temporary restraining order the subject crates of plywood seized by petitioners devoid of legal authority were never placed at any time under custodia legis that would prevent private respondents from recovering their possession over the same. The amount of damages directed by the trial court to be paid to private respondents by petitioners arising from the wrongful taking of the property is a factual matter binding and conclusive upon this Court. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals of 31 January 1995 affirming the orders of the trial court is AFFIRMED. Petitioners are directed to deliver the possession of the eleven (11) crates of plywood to private respondents, or in case of loss or inability to restore possession thereof as required, to pay private respondents the declared value thereof in the amount of P140,000.00, and to pay private respondent Firmwood Development Corporation (FIRMWOOD) attorney's fees of P20,000.00 plus P805.00 for filing fee, Judiciary Development Fund and sheriff's fee, and also to respondent Sta. Clara Housing Industries, Inc. (STA. CLARA) attorney's fees of P30,000.00 as fixed by the trial court. Costs against petitioners.1wphi1.nt SO ORDERED. Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur. Footnotes

Records, pp. 78-79. Rollo, p. 111. Id., p. 341.

Francisco, Vicente J., The Revised Rules of Court in the Philippines, 1966 Ed., Vol. II, p. 419.
6

Id., p. 421, citing 3 Moore's Federal Practice, pp. 3184-3185. Rollo, p. 94. Id., p. 111. Id., p. 141. Id., Answer to Complaint-in-Intervention, p. 136. See Note 6.

10

11

12

Central Bank v. Dela Cruz, G.R. No. 59957, 12 November 1990, 191 SCRA 346.
13

Records, p. 73.

Decision penned by Presiding Justice Nathanael P. De Pano, Jr., concurred in by Associate Justices Artemon D. Luna and Ramon U. Mabutas, Jr.

19

G.R. No. 144291

April 20, 2001

EVADEL REALTY and DEVELOPMENT CORPORATION, petitioners, vs. SPOUSES ANTERO AND VIRGINIA SORIANO, respondents. KAPUNAN, J.: This is an appeal by certiorari under Rule 45 of the Rules of Court of the decision of the Court of Appeals dated August 3, 2000 in CA-G.R. CV No. 60292 affirming the summary judgment rendered by the Regional Trial Court, Branch 88, Cavite City, in the case for accion reinvidicatoria filed by herein respondents Antero and Virginia Soriano against petitioner Evadel Realty and Development Corporation. The pertinent facts from which the present petition proceeds are as follows: On April 12, 1996, the spouses Antero and Virginia Soriano (respondent spouses), as sellers, entered into a "Contract to Sell " with Evadel Realty and Development Corporation (petitioner), as buyer, over a parcel of land denominated as Lot 5536-C of the Subdivision Plan of Lot 5536 covered by Transfer Certificate of Title No. 125062 which was part of a huge tract of land known as the Imus Estate. The pertinent portions of the Contract read: xxx WHEREAS : It is the desire of Party "B" to purchase a portion of a parcel of land owned by Party "A" and which portion consist of 28,958 sq.m. and specifically described as lot 5536-C of the Subdivision Plan of Lot 5536 of Imus Estate as surveyed for Antero Q. Soriano and covered by TCT 125062 issued by the Register of Deeds of the Province of Cavite and which portion is shown in Annex "A" hereof. xxx I. SUBJECT

The subject of this agreement is the intended sale of 28,958 sq.m. which is a portion of TCT No. 125062 in the name of Party "A" to Party "B" and which portion is herewith shown in Annex "A" hereof. xxx III. Conditions to Govern "Contract to Sell" 1] The amount of Twenty Eight Million Nine Hundred Fifty Eight Thousand Pesos (P28,958,000.00) representing the first installment of the purchase price of the property shall be delivered by Party "B" to Party "A" upon the signing of this agreement. 2] The second and last installment of Twenty Eight Million Nine Hundred Fifty Eight Thousand Pesos (P28,958,000.00) shall be delivered by Party "B" to Party "A" simultaneously with the delivery of Party "A" to Party "B" of the Torrens Title to the lot specifically described as Lot No. 5536-C containing an area of 28,958 sq. m. and herewith shown in Annex "A" hereof; still in the name of Party "A" and the delivery of Party "A" to Party "B" of the "Deed of Absolute Sale" to the property in favor of Party "B". Responsibility of the transfer of the Torrens Title from the name of Party "A" to Party "B" shall be the sole responsibility of Party "B". Moreover, the balance in the amount of Twenty Eight Million Nine Hundred Fifty Eight Thousand Pesos(P28,958,000.00) shall be due and demandable immediately from the time Party "B", thru its President or Vice-President receives either verbal or written notice that the Torrens Title to the segregated property and the "Deed of Absolute Sale" are already available for delivery to Party "B". In the event of delay, however, Party "B" shall be charged with interest and penalty in the amount of 6% per month, compounded, for every month of delay or a fraction thereof in the event the delay does not exceed one month. xxx
1

Upon payment of the first installment, petitioner introduced improvements thereon and fenced off the property with concrete walls. Later, respondent spouses discovered that the area fenced off by petitioner exceeded the area subject of the contract to sell by 2,450 square meters. Upon verification by representatives of both parties, the area encroached upon was denominated as Lot 5536-D-1 of the subdivision plan of Lot 5536-D of Psd-04-092419 and

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was later on segregated from the mother title and issued a new transfer certificate of title, TCT No. 769166, in the name of respondent spouses. Respondent spouses successively sent demand letters to petitioner on February 14, March 7, and April 24, 1997, to vacate the encroached area. Petitioner admitted receiving the demand letters but refused to vacate the said area. Thus, on May 23, 1997, a complaint for accion reinvindicatoria was filed by respondent spouses against petitioner with the Regional Trial Court, Branch 88 of Cavite City. In its Answer, petitioner admitted the encroachment but claimed that it was a builder in good faith since it merely relied on the boundaries pointed out by the representatives of respondent spouses. Petitioner also argued that there was a novation of contract because of the encroachment made by the national road on the property subject of the contract by 1,647 square meters. On March 19, 1998, respondents filed a Motion for Summary Judgment, alleging that there existed no genuine issue as to the material facts of the case due to the admissions made by petitioner in its Answer. The trial court granted the motion on June 11, 1998 and rendered judgment in favor of respondent spouses, the dispositive portion of which reads: WHEREFORE, in the light of the foregoing, this court hereby orders the defendant to remove without right of indemnity and at its expense, any or all improvements that it has introduced on the parcel of land covered by TCT No. T-769166 issued by the Register of Deeds of the Province of Cavite with an area of 2,450 square meters, more or less, in the name of plaintiffs spouses and to return to the plaintiffs the physical possession of the above-described parcel of land. Plaintiffs' and defendants claim and counter-claim for damages and attorneys fees are dismissed. No pronouncement as to costs. SO ORDERED.
2

I. XXX, THE HON. COURT OF APPEALS COMMITTED AN ERROR OF LAW IN AFFIRMING THAT UNDER THE FACTUAL CIRCUMSTANCES, A SUMMARY JUDGMENT COULD BE RENDERED BY THE COURT A QUO. II. XXX, THE HON. COURT OF APPEALS COMMITTED AN ERROR OF LAW IN ITS APPLICATION OF THE JURISPRUDENCE LAID DOWN IN THE CASE OF TERNATE v. COURT OF APPEALS (241 SCRA 254) AND NATIONAL IRRIGATION ADMINISTRATION v. GAMIT (215 SCRA 436) UNDER THE FACTUAL CONTENT OF THE CASE AT BAR. III. XXX, THE HON. COURT OF APPEALS COMMITTED AN ERROR OF LAW IN ITS APPLICATION OF THE JURISPRUDENCE LAID DOWN IN THE CASE OF J.M. TUASON & CO. INC. v. VDA. DE LUMANLAN (23 SCRA 230) UNDER THE FACTUAL CONTENT OF THE CASE AT BAR. IV. XXX, THE HON. COURT OF APPEALS COMMITTED AN ERROR OF LAW IN ITS APPLICATION OF THE JURISPRUDENCE LAID DOWN IN THE CASES OF MANILA BAY CLUB CORPORATION v. COURT OF APPEALS (245 SCRA 715) AND THE MARINE CULTURE INC. v. COURT OF APPEALS (219 SCRA 148) UNDER THE FACTUAL CONTENT OF THE CASE AT BAR. V. XXX, THE HON. COURT OF APPEALS COMMITTED AN ERROR OF LAW IN AFFIRMING THE DECISION OF THE COURT A QUO, THUS DEPRIVING THE PETITIONER OF ITS DAY IN COURT AND ITS CONSTITUTIONAL RIGHT TO DUE PROCESS OF LAW. Summarizing the aforecited issues, the basic issue posed for resolution is whether or not the trial court was in error in rendering summary judgment on the case. Petitioner claims that a summary judgment cannot be rendered on the case as there are genuine issues of fact which have to be threshed out during trial. It is alleged that in the original and amended complaint, private respondent spouses sought recovery of two thousand four hundred sixty two (2,462) square meters of land. This was, however, changed to 2,450 square meters in the second amended complaint. It is also argued that when petitioner entered upon the property in 1996, it relied on the metes and

This prompted petitioner to appeal the matter to the Court of Appeals. On August 3, 2000, the Court of Appeals affirmed the order for summary judgment of the trial court. Hence, this petition ascribing the following errors:

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boundaries pointed out by respondents themselves and their surveyors. Moreover, title over the said area was obtained only after the commencement of the complaint so petitioner could not have possibly disputed such title earlier. Therefore, petitioner maintains, the question of the exact area of the land allegedly encroached, whether 2,462 or 2,450 square meters; and the determination of whether its possession of the subject property was in good or bad faith, are genuine triable issues. Respondent spouses, on the other hand, maintain that there are no genuine issues of fact in the present case in view of the admission by petitioner of (1) the existence of the title over the subject property in the name of respondent spouses; and (2) its encroachment on the northern side of sold Lot 5536-C which is the area in dispute. It is claimed that such admissions are tantamount to an admission that respondents have a rightful claim of ownership to the subject property warranting a summary judgment in their favor. Prompt and expeditious resolution of cases have always been an underlying policy of the Court. For this reason, certain rules under the Rules of Court are designed to shorten the procedure in order to allow the speedy disposition of a case. Some of these are Rule 33 on Demurrer to Evidence, Rule 34 on Judgment on the Pleadings and Rule 35 on Summary Judgments. In all these instances, full-blown trial of a case is dispensed with and judgment is rendered on the basis of the pleadings, supporting affidavits, depositions and admissions of the parties. Under Rule 35 of the 1997 Rules of Civil Procedure, except as to the amount of damages, when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law, summary judgment 3 may be allowed. Summary or accelerated judgment is a procedural technique aimed at weeding out sham claims or defenses at an early stage of the litigation thereby avoiding the expense and loss of time involved in a 4 trial. The law itself determines when a summary judgment is proper. Under the rules, summary judgment is appropriate when there are no genuine issues of fact which call for the presentation of evidence in a full-blown trial. Even if on their face the pleadings appear to raise issues, when the affidavits, depositions and admissions show that such issues are not genuine, then summary judgment as prescribed by the rules must ensue as a matter of law. What is crucial for determination, therefore, is the presence or absence 5 of a genuine issue as to any material fact.

A "genuine issue" is an issue of fact which require the presentation of evidence as distinguished from a sham, fictitious, contrived or false claim. When the facts as pleaded appear uncontested or undisputed, then there is no real or genuine issue or question as to the facts, and summary judgment is called for. The party who moves for summary judgment has the burden of demonstrating clearly the absence of any genuine issue of fact, or that the issue posed in the complaint is patently unsubstantial so as not to constitute 6 a genuine issue for trial. Trial courts have limited authority to render summary judgments and may do so only when there is clearly no genuine issue as to any material fact. When the facts as pleaded by the parties are disputed or contested, proceedings for summary judgment cannot take the 7 place of trial. Applying these principles to the present case, we hold that the CA did not commit any reversible error in affirming the summary judgment rendered by the trial court. Hence, the instant petition must be denied. The case at bar is one for accion reinvindicatoria which is an action to recover ownership over real property. Respondent spouses (plaintiffs below) seek to recover a certain portion of land with a total area of 2,450 square meters from petitioner which portion was allegedly in excess of the total area of the property actually sold by them to the latter. In a reinvindicatory action, the basic issue for resolution is that of ownership and in the present case, the determination of ownership of the subject property is hinged on the following questions of fact - first, what was the total area of the lot sold to petitioner by respondent spouses as agreed upon and embodied in the contract to sell; and second, whether or not the area being occupied by the petitioner is in excess of the land which it actually bought from respondent spouses under the said contract. In its Answer to the Amended Complaint, petitioner admitted the existence and due execution of the Contract to Sell which contained the specific description of the property it bought from respondent spouses, to wit: xxx WHEREAS : It is the desire of Party "B" to purchase a portion of a parcel of land owned by Party "A" and which portion consist of 28,958 sq.m. and specifically described as lot 5536-C of the Subdivision Plan of Lot 5536 of Imus Estate as surveyed for Antero Q. Soriano and covered by TCT 125062 issued by the Register of Deeds of the Province of Cavite and which portion is shown in Annex "A" hereof.

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xxx Equally significant is the fact that in the same Answer, petitioner likewise admitted that the relocation survey conducted by geodetic engineers of both parties disclosed that indeed there were two encroachments, i.e. 1) encroachment at the eastern frontage of Lot 5536-C by the national road; and 2) encroachment by defendant (petitioner) EVADEL on the northern 8 side of sold Lot 5536-C. and that the second area encroached upon was denominated as Lot 5536D-1 of the subdivision plan of Lot 5536-D of Psd-04-092419 and later on segregated from the mother title and issued a new transfer certificate of title, TCT No. 769166, during the pendency of the case before the trial court. With the foregoing admissions by petitioner, clearly, there is no genuine issue of fact as to ownership of the subject property because the said admissions made by petitioner in its Answer are tantamount to an admission that respondent spouses owned the property in question. The CA thus correctly affirmed the trial court as it summarily resolved the issue of ownership of the subject property in favor of respondent spouses. Petitioner, however, maintains that the issue of whether or not it was a builder in good faith should not have been peremptorily disposed of by the trial court. Petitioner decries the fact that it was not given an opportunity to submit evidence to establish good faith as regards the improvements it introduced on respondent spouses property. Petitioners contention is untenable. As correctly pointed out by the trial court and the CA, petitioner already admitted in its Amended Answer that the lot in dispute is covered by TCT No. T-769166 of respondent spouses. With this admission, petitioner can no longer claim that it was a builder in good faith. Good faith consists in the belief of the builder that the land he is building on 9 is his and his ignorance of any defect or flaw in his title. In this case, since petitioner, by its own admission, had knowledge of respondent spouses title over the subject lot, it was clearly in bad faith when it introduced improvements thereon. Further, the contract to sell between petitioner and respondent spouses, the genuineness and due execution thereof was admitted by petitioner,
10

clearly delineated the metes and bounds of the lot subject thereof. Attached to the said contract was a graphic illustration of the lot purchased by petitioner including a technical description thereof. Petitioner, as a real estate developer, is presumed to be experienced in its business and ought to have sufficient technical expertise to correctly determine the metes and bounds of the lands it acquires. Despite this, petitioner still introduced improvements on the lot not covered by the contract to sell. Petitioners bad faith had been duly established by the pleadings and there was thus no need to further conduct any trial on the matter. Our ruling in Congregation of the 11 Religious of the Virgin Mary vs. Court of Appeals is particularly instructive: x x x As discussed earlier, petitioner has no right whatsoever to possess and construct permanent structures on the questioned land owned by respondents-spouses. Petitioner admits in its answer to the complaint that it introduced improvements on the subject lot without the consent and knowledge of respondentsspouses. It is thus a builder in bad faith. Again, we find no reversible error in the following ruling of the respondent court: "Which leads us to a discussion of whether or not appellant was in bad faith in introducing improvements on the subject land. It cannot be denied that appellant never gained title to the subject land as it admits to not having purchased the said lot (TSN, p. 81, November 9, 1992). Neither has appellant successfully shown any right to introduce improvements on the said land (its claim of grant of perpetual use of the same as a road lot and its right to build on a right of way both having been rejected above). This being so, it follows that appellant was a builder in bad faith in that, knowing that the land did not belong to it and that it had no right to build thereon, it nevertheless caused 12 the improvements in question to be erected." Finally, petitioners claim that there was a novation of contract because there was a "second" agreement between the parties due to the encroachment made by the national road on the property subject of the contract by 1,647 square meters, is unavailing. Novation, one of the modes of extinguishing an obligation, requires the concurrence of the following: (1) there is a valid previous obligation; (2) the parties concerned agree to a new contract; (3) 13 the old contract is extinguished; and (4) there is valid new contract. Novation may be express or implied. In order that an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in unequivocal terms (express novation) or that the old and the

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new obligations be on every point incompatible with each other (implied 14 novation). In the instant case, there was no express novation because the "second" 15 agreement was not even put in writing. Neither was there implied novation since it was not shown that the two agreements were materially and substantially incompatible with each other. We quote with approval the following findings of the trial court: Since the alleged agreement between the plaintiffs [herein respondents] and defendant [herein petitioner] is not in writing and the alleged agreement pertains to the novation of the conditions of the contract to sell of the parcel of land subject of the instant litigation, ipso facto, novation is not applicable in this case since, as stated above, novation must be clearly proven by the proponent thereof and the defendant in this case is clearly barred by the 16 Statute of Frauds from proving its claim. In fine, the CA correctly affirmed the summary judgment rendered by the trial court. Considering the parties allegations and admissions in their respective pleadings filed with the court a quo, there existed no genuine issue as to any material fact so that respondent spouses as movants therein were entitled to a judgment as a matter of law. WHEREFORE, premises considered, the instant Petition is hereby DENIED for lack of merit. The assailed Decision, dated August 3, 2000, of the Court of Appeals is AFFIRMED in toto. SO ORDERED.

Tarnate vs. CA, 241 SCRA 254 (1975); Northwest Airlines vs.Court of Appeals, 284 SCRA 408 (1998).
4

Excelsa Industries, Inc. vs. CA, 247 SCRA 560 (1995). Go vs. CA, 252 SCRA 564 (1996). Ibid.

Concrete Aggregates Corp. vs. CA, 266 SCRA 88 (1997); Archipelago Builders vs. IAC, 194 SCRA 207 (1991).
8

Rollo, pp. 90-95.

Pleasantville Development Corp. vs. CA, 253 SCRA 10, 18 (1996).

10

Annexes "A," "A-1" to "A-4" to Amended Complaint. 291 SCRA 385 (1998). Id., at 394-395. Cruz vs. CA, 293 SCRA 239, 249-250 (1998). Id., at 250. See RTC Decision, p. 9; Rollo, p. 62. Id.

11

12

13

14

15

Davide, Jr., C.J., (Chairman), Puno, and Ynares-Santiago, JJ., concur. Pardo, J., on sick leave.

16

Footnotes
1

Rollo, pp. 63-65. Id., at 62.

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G.R. No. 111610

February 27, 2002

ROMEO P. NAZARENO, petitioner, vs. HON. COURT OF APPEALS, HON. ENRIQUE M. ALMARIO, in his capacity as Presiding Judge, RTC, Branch 15, Naic, Cavite, and PEOPLE OF THE PHILIPPINES, respondents. DECISION DE LEON, JR., J.: Before us is a petition for review on certiorari of the Decision of the Court of Appeals dated June 30, 1993 in CA-G.R. SP No. 30306 which found and declared that no grave abuse of discretion attended the issuance of the 2 Decision dated October 12, 1992 of Judge Enrique M. Almario of the Regional Trial Court of Naic, Cavite, Branch 15 in Criminal Case No. NC-564 dismissing, for having been filed out of time, petitioners appeal from a 3 judgment dated November 8, 1985, of conviction for serious physical injuries, rendered by the Municipal Trial Court of Naic, Cavite. It appears that in an Information dated December 1, 1983 petitioner Romeo Nazareno and his wife, Elisa Nazareno, were charged with Serious Physical Injuries in the Municipal Trial Court of Naic, Cavite and that upon arraignment, both pleaded "not guilty" to the offense charged. After trial on the merits, the said court set the promulgation of judgment for April 24, 1986, but the same was postponed due to petitioners filing of a motion to re-open the case on the ground of non-presentation of a vital 4 witness who could not be produced during the trial proper. Said motion was opposed by the prosecution. On November 27, 1987, after Presiding Judge Manuel C. Diosomito was suspended, Acting Municipal Trial Court Judge 5 Aurelio Icasiano, Jr. issued a resolution denying the motion to re-open. Petitioner brought the matter up to the Court of Appeals on certiorari with a prayer for a temporary restraining order/preliminary injunction, docketed as 6 CA-G.R. SP No. 14329. In the meantime, Acting Municipal Trial Court Judge Icasiano, Jr. set the promulgation of judgment on April 15, 1988. On April 15, 1988, Acting Municipal Trial Court Judge Icasiano, Jr. promulgated 7 the Decision dated November 8, 1985 of Judge Manuel C. Diosomito acquitting Elisa Nazareno but convicting the petitioner as charged. However, on the same date, the Court of Appeals in said CA-G.R. SP No. 14329
1

issued a temporary restraining order enjoining Judge Icasiano, Jr. from proceeding with the promulgation of said judgment since a copy of the same resolution containing the temporary restraining order was received by the Metropolitan Trial Court only after said date. Petitioner thereafter filed in the Court of Appeals a supplemental petition in said CA-G.R. SP No. 14329 to declare the nullity of judgment, on the ground that the decision, having been signed by Judge Diosomito, should have also 9 been promulgated by him, and not by Acting Judge Icasiano, Jr. Petitioner also alleged that the decision is void since at the time of the promulgation of the decision by Judge Icasiano, Jr., Judge Diosomito who signed the subject decision has already retired from office. Said supplemental petition, however, was denied by the Court of Appeals in its decision dated February 10 11, 1991. Reconsideration of the said decision of the appellate court was 11 denied in a Resolution promulgated on March 13, 1991. Petitioner interposed a petition for review on certiorari with the Supreme Court questioning the February 11, 1991 decision of the Court of Appeals but the same failed for having been filed out of time, more specifically twelve (12) days late. Petitioners motion for reconsideration was denied by the 12 Supreme Court in a Resolution dated September 18, 1991. On October 3, 1991, petitioner received a copy of the resolution denying his motion for reconsideration, and on the same date he filed his notice of appeal with the said Municipal Trial Court of Naic, appealing its decision to the Regional 13 Trial Court. On October 10, 1991, the records of the case were forwarded to the Regional Trial Court, Branch 15, Naic, Cavite, presided by the respondent Judge Enrique M. Almario who, in a decision dated October 12, 1992, 14 dismissed the appeal of petitioner for having been filed out of time. 15 Reconsideration was sought by petitioner but the same was denied by 16 respondent Judge Almario in his Order dated February 4, 1993. Undaunted, petitioner interposed a Petition for Mandamus and Certiorari with the Court of Appeals upon the premise that respondent Judge Almario, in dismissing the appeal, unlawfully neglected to perform a duty resulting from his office to give due course to petitioners appeal which was already 17 18 19 approved. The appellate court dismissed the petition. Petitioner sought 20 reconsideration of the decision but the same was denied in a Resolution promulgated on August 10, 1993. Hence, this petition, which raises four (4) issues for resolution, to wit:
21

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I THE APPEAL INTERPOSED BY PETITIONER AS ACCUSED IN CRIMINAL CASE NO. 2335 OF THE MUNICIPAL TRIAL COURT, PRESIDED BY THE RESPONDENT JUDGE WAS FILED ON TIME. II THE FILING OF A SUPPLEMENTAL PETITION, FOLLOWED BY A MOTION FOR RECONSIDERATION, IN CA-G.R. NO. 14329 (CRIMINAL CASE NO. 2335, MTC OF NAIC), AS WELL AS THE FILING OF A PETITION FOR REVIEW ON CERTIORARI WITH THE SUPREME COURT IN G.R. NO. 97812 AND FOLLOWED BY A MOTION FOR RECONSIDERATION INTERRUPTED THE RUNNING OF THE 15-DAY PERIOD WITHIN WHICH TO PERFECT PETITIONERS APPEAL FROM THE COURT DECISION OF THE MUNICIPAL TRIAL COURT OF NAIC IN CRIMINAL CASE NO. 2335. III THE RESPONDENT COURT AS WELL AS THE RESPONDENT JUDGE, CLEARLY COMMITTED OR EXCEEDED THEIR AUTHORITY OR ACTED IN EXCESS OF JURISDICTION WHEN THEY DISMISSED PETITIONERS APPEAL FROM THE DECISION OF THE MUNICIPAL TRIAL COURT OF NAIC IN CRIMINAL CASE NO. 2335 TO THE REGIONAL TRIAL COURT IN CRIMINAL CASE NO. NC-564, AS WELL AS THEIR MOTION FOR RECONSIDERATION FILED IN CRIM. CASE NO. NC-564 AND IN CA-G.R. NO. 14329 OF THE RESPONDENT JUDGE AND THE RESPONDENT COURT RESPECTIVELY. IV UNDER THE CIRCUMSTANCES OF THE CASE AND IN THE EXERCISE OF ITS SOUND DISCRETION IN ORDER TO DISPENSE JUSTICE TO PETITIONER, THIS HONORABLE TRIBUNAL MAY VALIDLY AND LEGALLY GIVE DUE COURSE TO THE PRESENT PETITION AND TO DECLARE THE DECISION OF THE LOWER COURT AS NULL AND VOID AS THE TRIAL JUDGE WHO PENNED THE DECISION HAD LONG RETIRED FROM THE SERVICE AT THE TIME OF THE PROMULGATION OF THE SAID JUDGMENT ON APRIL 15, 1988.

At the outset, we note that, apparently, the crucial argument raised by the petitioner is but a repetition of his main assertion in his prior petition for review in G.R No. 97812 before this Court which, unfortunately, was dismissed on a technicality - failure to file the petition within the prescribed period. Considering the transcendental importance of the issues herein raised which involve the precious liberty of a person and to finally settle this cycle of unsettled questions of law, justice dictates that this Court resolve this petition on the merits. There is one vital fact that renders the instant petition meritorious, which is petitioners last issue for consideration, namely, the error committed by the trial judge, Judge Icasiano, Jr., in promulgating a decision penned by another judge, Judge Diosomito, who has ceased to be a member of the judiciary at the time of the promulgation of the decision. A judgment promulgated after the judge who signed the decision has ceased 22 to hold office is not valid and binding. Such a doctrine goes back to a 1917 23 decision, Lino Luna v. Rodriguez and De los Angeles. We reiterated this 24 doctrine in the case of People v. Labao wherein we held that for a judgment to be valid, it must be duly signed and promulgated during the 25 incumbency of the judge who signed it. Thus, a decision penned by a judge after his retirement cannot be validly promulgated; it cannot acquire a 26 binding effect as it is null and void. Qoud ab initio non valet, in tractu 27 temporis non convalescit. In like manner, a decision penned by a judge during his incumbency cannot be validly promulgated after his retirement. When a judge retired all his authority to decide any case, i.e., to write, sign and promulgate the decision thereon also "retired" with him. In other words, he had lost entirely his power 28 and authority to act on all cases assigned to him prior to his retirement. In the instant case, therefore, Judge Icasiano, Jr. could not validly promulgate the decision of another judge, Judge Diosomito, who has long "retired" from 29 the service. The decision dated November 8, 1985 of Judge Diosomito, as promulgated by Judge Icasiano, Jr., in Criminal Case No. 2335 of the Municipal Trial Court of Naic, Cavite is a void judgment. A void judgment never acquires finality. Hence, while admittedly, the petitioner in the case at bar failed to appeal timely the aforementioned decision of the Municipal Trial Court of Naic, Cavite, it cannot be deemed to have become final and executory. In contemplation of law, that void decision is deemed nonexistent. Thus, there was no effective or operative judgment 31 to appeal from. In Metropolitan Waterworks & Sewerage System vs. Sison, this Court held that:
30

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"xxx [A] void judgment is not entitled to the respect accorded to a valid judgment, but may be entirely disregarded or declared inoperative by any tribunal in which effect is sought to be given to it. It is attended by none of the consequences of a valid adjudication. It has no legal or binding effect or efficacy for any purpose or at any place. It cannot affect, impair or create rights. It is not entitled to enforcement and is, ordinarily, no protection to those who seek to enforce. All proceedings founded on the void judgment are themselves regarded as invalid. In other words, a void judgment is regarded as a nullity, and the situation is the same as it would be if there were no judgment. It, accordingly, leaves the parties litigants in the same 32 position they were in before the trial." Thus, a void judgment is no judgment at all.1wphi1 It cannot be the source of any right nor of any obligation. All acts performed pursuant to it and all claims emanating from it have no legal effect. Hence, it can never become final and any writ of execution based on it is void: "x x x it may be said to be a lawless thing which can be treated as an outlaw and slain at sight, or 33 ignored wherever and whenever it exhibits its head." Admittedly, petitioner made possible the failure of the prior petition for review (G.R No. 97812) before this Court to proceed by reason of its late filing as well as his choices of remedial measures. However, oft-repeated is the dictum that courts should not place undue importance on technicalities, when by so doing, substantial justice is sacrificed. Rules of procedure are intended to promote, not defeat, substantial justice. It is within the power of this Court to temper rigid rules of procedure in favor of substantial justice. While it is desirable that the Rules of Court be faithfully observed, courts should not be so strict about procedural lapses that do not really impair the proper administration of justice. If the rules are intended to ensure the proper and orderly conduct of litigation, it is because of the higher objective they seek which is the attainment of justice and the protection of substantive rights of the parties. Thus, the relaxation of procedural rules, or saving a particular case from the operation of technicalities when substantial justice 34 requires it, as in the case at bar, should no longer be subject to cavil. WHEREFORE, in the interest of justice, the instant petition is hereby GRANTED. The assailed Decision of the Court of Appeals dated June 30, 1993 in CA-G.R. SP No. 30306 is REVERSED and SET ASIDE. The decision dated November 8, 1985 of retired Judge Manuel C. Diosomito as promulgated by Judge Aurelio Icasiano, Jr. in Criminal Case No. 2335 of the Municipal Trial Court of Naic, Cavite is hereby declared NULL and VOID. The said criminal case is Remanded to the court of origin, Municipal Trial Court of Naic, Cavite, Branch 15, for adjudication and promulgation of a new decision.

SO ORDERED. Bellosillo, (Chairman), Mendoza, Quisumbing, and Buena, JJ., concur.

Footnotes
1

Penned by Associate Justice Gloria C. Paras and concurred in by Associate Justices Cesar D. Francisco and Buenaventura J. Guerrero, Tenth Division, in CA-G.R. SP No. 30306, Rollo, pp. 9194.
2

CA Rollo, p. 38.

Penned by Judge Manuel C. Diosimito in Criminal Case No. 2335 entitled "People of the Philippines v. Romeo Nazareno and Elisa Nazareno" for Serious Physical Injuries, CA Rollo, p. 25.
4

Rollo, pp. 35-37. CA Rollo, p. 23. Rollo, pp. 41-50. Rollo, pp. 52-54. Rollo, p. 51. Rollo, pp. 55-59.

10

Penned by Associate Justice Eduardo R. Bengzon and concurred in by Associate Justices Nathanael P. De Pano, Jr. and Serafin V.C. Guingona, Eleventh Division, in CA-G.R. SP No. 14329, Rollo, pp. 60-65.
11

Rollo, p. 66. Rollo, p. 67.

12

27

13

Rollo, p. 68. Rollo, pp. 70-72. Rollo, pp. 73-76. Rollo, p. 77. Rollo, pp. 78-89.

28

Supra, Note No. 24, p. 103.

14

29

Judge Diosomito opted for early retirement effective January 31, 1987.
30

15

16

Heirs of Mayor Nemencio Galvez vs. CA, 255 SCRA 672, 690 [1996]; Gomez v. Concepcion, 47 Phil. 717, 722-723 [1925].
31

17

124 SCRA 394 [1983]. Id., p. 404 citing 31 Am Jur., 91-92.

18

32

Rollo, pp. 91-94.

33

19

Rollo, pp. 95-100. Rollo, p. 102. Rollo, pp. 171-172.

Arcelona v. Court of Appeals, 280 SCRA 20, 57 [1997]; Leonor v. Court of Appeals, 256 SCRA 69, 82 [1996].
34

20

21

Government Service Insurance System v. Court of Appeals, 266 SCRA 187, 198 [1997].

22

People v. Court of Appeals, 99 Phil. 787, 790 [1956]; See also Vera v. People, 31 SCRA 711 [1970].
23

37 Phil. 186, 190 [1917] citing Rose v. Himely, 4 Cranch 241 [1808]; Hickey v. Stewart, 3 Howard 750 [1845]; United States v. Ferreira, 13 Howard 40 [1851]; Ex parte Zeliner, 9 Wallace 244 [1969]; Pennoyer v. Neff, 95 US 714 [1877]; In re Sanborn, 148 US 222 [1892]; Scott v. McNeal, 154 US 34 [1893].
24

220 SCRA 100 [1993].

25

Id., p. 102 citing Lao v. To-Chip, 158 SCRA 243 [1988]; People v. So, 101 Phil. 1257 [1957]; Consolidated Bank and Trust Corporation v. Intermediate Appellate Court, 189 SCRA 433 [1990].
26

Ibid., citing Jandayan v. Ruiz, 95 SCRA 562 [1980]; Jimenez v. Republic, 22 SCRA 622 [1968]; Solis v. Court of Appeals, 38 SCRA 53 [1971].
27

That which is void originally does not by lapse of time become valid.

28

G.R. No. 138882 May 12, 2000 JOSE S. LIZARDO, SR., petitioner, vs. ATTY. CARMELITO A. MONTANO, respondent.

On October 24, 1985, the trial court issued a writ of execution of the judgment. In due course, the Deputy Sheriff of Kalookan City levied on a parcel of land, with an area of ten thousand square meters, registered in the names of spouses Edgardo H. Mirano and Adelina C. Ponce, situated in the municipality of Antipolo, province of Rizal, covered by Transfer Certificate of Title No. 357965. In the consequent execution sale at public auction of the property, the sheriff sold the land to petitioner Lizardo as the highest bidder. His bid was in the amount of P44,2392.47, the full amount of the judgment 1 debt of Eddie H. Mirano. On March 14, 1986, the trial court ordered the Register of Deeds of Marikina to consolidate the title to the property in petitioner's name, and on September 9, 1986, the Register of Deeds issued TCT No. 122925 in 2 petitioner Lizardo's name. On January 5, 1996, thirteen (13) years after the case had been decided, and more than ten years after the judgment was fully satisfied, respondent Atty. Carmelito A. Montano who was the lawyer for petitioner, filed with the trial court an omnibus motion for payment of his attorney's fees. Without hearing petitioner, on January 29, 1996, the trial court, at this time presided over by Judge Geronimo S. Mangay issued an order directing petitioner to pay respondent attorney "the agreed attorney's fees of 25% on the property and/or direct the Register of Deeds of Marikina to annotate the attorney's lien of 25% on TCT No. 122925 if plaintiff (herein petitioner) fails to pay the 3 equivalent value to which Atty. Carmelito A. Montano is entitled to." On July 30, 1997, petitioner elevated the case to the Court of Appeals, filing an action to nullify the lower court's order directing petitioner to pay 4 attorney's fees of respondent. On October 20, 1998, the Court of Appeals promulgated its decision 5 dismissing the petition. Hence, this appeal via petition for review on certiorari.
6

PARDO, J.: The case before the Court is an appeal from a decision of the Court of Appeals dismissing the petition instituted by petitioner for annulment of an order of execution requiring him to pay respondent attorney's fees of 25% on the property and/or to direct the Register of Deeds of Marikina to annotate the attorney's lien on the title, notwithstanding the obvious merit of the petition invoking the ground that the lower court had lost jurisdiction over the case as the judgment had become final and indeed, had been executed more than ten years prior to the order to pay attorney's fees and such order was a substantial variation of the final judgment. On April 08, 1983, the Regional Trial Court, Kalookan City, Branch 125 in Civil Case No. C-9009, instituted by petitioner Jose S. Lizardo, Sr. against one Eddie H. Mirano, for collection of a sum of money, rendered decision in favor of petitioner, the dispositive portion of which reads as follows: WHEREFORE, premises considered and pursuant to Sec. 1, Rule 19 of the Rules of Court, judgment is hereby rendered on the pleading and the defendant is ordered to pay the plaintiff as follows: (a) the sum of P19,893.95 as principal obligation plus 12% interest per annum from August 25, 1980 the date the obligation became due and demandable until fully paid; (b) the sum equivalent to 25% of the amount payable under paragraph (a) as attorney's fees; and (c) costs of suit. (Emphasis supplied) No appeal from the judgment was interposed in the case, and in time, the decision became final and executory.

The basic issue raised is whether the Court of Appeals erred, as a matter of law, in ruling that the trial court still had jurisdiction over the case in 1996, when the respondent judge ordered petitioner to pay attorney's fees to respondent which was even at variance with the terms of the final judgment. We resolve the issue in favor of petitioner. The lower court no longer had jurisdiction over the case when it issued its order of January 29, 1996.

29

Rewinding the facts, we note that: On April 08, 1983, the trial court rendered decision on, the decretal portion of which is quoted earlier in this decision. There was no appeal interposed by the parties. The decision became final and executory in 1983. In fact, it was executed and fully satisfied in 1985. On January 5, 1996 respondent Montano who was counsel for petitioner in the case below filed with the trial court an omnibus motion for payment of his attorney's fees. Without hearing, on January 29, 1996, the trial court, presided over by respondent Judge Mangay issued an order directing petitioner Lizardo to pay respondent Atty. Carmelito A. Montano "the agreed attorney's fees of 25% on the property and/or direct the Register of Deeds of Marikina Branch to annotate the attorney's lien of 25% on TCT No. 122925 if plaintiff fails to pay the equivalent value to which Atty. Carmelito A. Montano is entitled to. When respondent filed with the trial court an omnibus motion for payment of attorney's fees on January 5, 1996, the trial court no longer had jurisdiction over the case. More than thirteen (13) years had lapsed after finality of the judgment. It was even fully satisfied. Consequently, the case was long terminated and could no longer be revived. The decision has become stale. The order dated January 26, 1996 is void. The basic rule is that once a court acquires jurisdiction over a case, it retains 7 such jurisdiction until the final termination of the case. The court loses jurisdiction upon the finality of the decision, except to order 8 execution within its lifetime. A decision becomes final upon the expiration of 9 the period to appeal, which is uniformly fixed at fifteen (15) days from notice 10 11 to the parties, and no appeal is taken therefrom. What is more, an equally fundamental precept is that a final decision cannot be amended or corrected except for clerical errors, mistakes or misprisions.
12

In this case, the trial court favorably acted on respondent's motion filed in 1996, long after the court had lost its jurisdiction. The order even varied the terms of the judgment. The judgment ordered defendant Mirano to pay plaintiff the sum of P19,893.95 as principal plus 12% interest per annum from August 25, 1980 until fully paid and the sum equivalent to 25% of the amount payable as attorney's fees. Clearly, it was defendant Mirano who was sentenced to pay attorney's fees to petitioner. In the questioned order of January 29, 1996, the trial court ordered petitioner to pay attorney's fees to his counsel, respondent Montano. That is not decreed in the judgment. Such variance with the terms 1 of the judgment rendered the order void. If petitioner failed to pay his counsel attorney's fees, the lawyer may file an independent action against petitioner for collection. He cannot enforce his attorney's lien in the case terminated long ago. WHEREFORE, the Court GRANTS the petition for review on certiorari, and REVERSES the decision in CA-G. R. SP No. 44817 of the Court of Appeals. The Court declares void the order dated January 29, 1996 in Civil Case No. C-9009 of the trial court. No costs. SO ORDERED. Davide, Jr., C.J., Puno, Kapunan and Ynares-Santiago, JJ., concur. Footnotes
1

Petition, par. 3.2, Rollo, p. 37. Petition, par. 3.3, Rollo, p. 37.

Petition, par. 3.4, Annexes "E" and "F", pp. 37-38, 92-94, 98.
4

Docketed as CA-G.R. SP No. 44817. Petition, Annex "A", Rollo, pp. 50-56.

30

Filed on July 7, 1999, Rollo, pp. 34-49. On September 20, 1999, we gave due course to the petition, Rollo, pp. 111-112.
7

Fuentes vs. Bautista, 153 Phil. 171, 182 [1973]; Tuason vs. Court of Appeals, 241 SCRA 688 [1995].
8

Rule 39, Section 6, 1964 Revised Rules of Court, now Rule 39, Section 6, 1997 Rules of Civil Procedure; Bolanos vs. Intermediate Appellate Court, 138 SCRA 99 [1985]; Pfleider vs. Victoriano, 98 SCRA 491 [1980]; Yu vs. NLRC, 245 SCRA 134 [1995].
9

St. Dominic Corp. vs. Intermediate Appellate Court, 138 SCRA 242 [1985].
10

B.P. No. 129, Section 39. Bolanos vs. Intermediate Appellate Court, supra.

11

12

Yu vs. NLRC, supra; Henderson vs. Tan, 87 Phil. 466, 469 [1950].
13

Foremost Farms, Incorporated vs. Department of Labor and Employment, 251 SCRA 123 [1995].

31

G.R. Nos. 121576-78

June 16, 2000

BANCO DO BRASIL, petitioner, vs. THE COURT OF APPEALS, HON. ARSENIO M. GONONG, and CESAR S. URBINO, SR., respondents. DE LEON, JR., J.: Before us is a petition for review on certiorari of the Decision and the 2 3 Resolution of the Court of Appeals dated July 19, 1993 and August 15, 4 1995, respectively, which reinstated the entire Decision dated February 18, 1991 of the Regional Trial Court of Manila, Branch 8, holding, among others, petitioner Banco do Brasil liable to private respondent Cesar Urbino, Sr. for 5 damages amounting to $300,000.00. At the outset, let us state that this case should have been consolidated with the recently decided case of Vlason Enterprises Corporation v. Court of Appeals and Duraproof Services, represented by its General Manager, 6 Cesar Urbino Sr. , for these two (2) cases involved the same material antecedents, though the main issue proffered in the present petition vary with the Vlason case. The material antecedents, as quoted from the Vlason case, are: Poro Point Shipping Services, then acting as the local agent of Omega Sea Transport Company of Honduras & Panama, a Panamanian Company (hereafter referred to as Omega), requested permission for its vessel M/V Star Ace, which had engine trouble, to unload its cargo and to store it at the Philippine Ports Authority (PPA) compound in San Fernando, La Union while awaiting transhipment to Hongkong. The request was approved by the 8 Bureau of Customs. Despite the approval, the customs personnel boarded the vessel when it docked on January 7, 1989, on suspicion that it was the hijacked M/V Silver Med owned by Med Line Philippines Co., and that its cargo would be smuggled into the 9 country. The district customs collector seized said vessel and its cargo pursuant to Section 2301, Tariff and Customs Code. A notice of hearing of SFLU Seizure Identification No. 3-89 was served on its consignee, Singkong Trading Co. of Hongkong, and its shipper, Dusit International Co., Ltd. of Thailand.
7 1

While seizure proceedings were ongoing, La Union was hit by three typhoons, and the vessel ran aground and was abandoned. On June 8, 1989, its authorized representative, Frank Cadacio, entered into salvage agreement with private respondent to secure and repair the vessel at the agreed consideration of $1 million and "fifty percent (50%) [of] the cargo 10 after all expenses, cost and taxes." Finding that no fraud was committed, the District Collector of Customs, 11 Aurelio M. Quiray, lifted the warrant of seizure on July 1989. However, in a Second Indorsement dated November 11, 1989, then Customs Commissioner Salvador M. Mison declined to issue a clearance for Quiray's Decision; instead, he forfeited the vessel and its cargo in accordance with 12 Section 2530 of the Tariff and Customs Code. Accordingly, acting District Collector of Customs John S. Sy issued a Decision decreeing the forfeiture 13 and the sale of the cargo in favor of the government. To enforce its preferred salvor's lien, herein Private Respondent Duraproof Services filed with the Regional Trial Court of Manila a Petition for Certiorari, 14 Prohibition and Mandamus assailing the actions of Commissioner Mison and District Collector Sy. Also impleaded as respondents were PPA Representative Silverio Mangaoang and Med Line Philippines, Inc. On January 10, 1989, private respondent amended its Petition to include former District Collector Quiray; PPA Port Manager Adolfo Ll. Amor, Jr.; x Vlason Enterprises as represented by its president, Vicente Angliongto; Singkong Trading Company as represented by Atty. Eddie Tamondong; Banco Du Brasil; Dusit International Co.; Thai-Nan Enterprises Ltd., and 16 Thai-United Trading Co., Ltd. . . . Summonses for the amended Petition were served on Atty. Joseph Capuyan for Med Line Philippines: Anglionto (through his secretary, Betty Bebero), 17 Atty. Tamondong and Commissioner Mison. Upon motion of the private respondent, the trial court allowed summons by publication to be served upon defendants who were not residents and had no direct representative in 18 the country. On January 29, 1990, private respondent moved to declare respondents in default, but the trial court denied the motion in its February 23, 1990 Order 19 , because Mangaoang and Amor had jointly filed a Motion to Dismiss, while Mison and Med Line had moved separately for an extension to file a similar 20 motion. Later it rendered an Order dated July 2, 1990, giving due course to the motions to dismiss filed by Mangaoang and Amor on the ground of litis pendentia, and by the commissioner and district collector of customs on the
15

32

ground of lack of jurisdiction. In another Order, the trial court dismissed 22 the action against Med Line Philippines on the ground of litis pendentia. On two other occasions, private respondent again moved to declare the 23 following in default: [Vlason], Quiray, Sy and Mison on March 26, 1990; and Banco [do] Bra[s]il, Dusit International Co., Inc., Thai-Nan Enterprises 24 Ltd. and Thai-United Trading Co., Ltd. on August 24, 1990. There is no record, however, that the trial court acted upon the motions. On September 18, 1990, [private respondent] filed another Motion for leave to amend the 25 petition, alleging that its counsel failed to include "necessary and/or indispensable parties": Omega represented by Cadacio; and M/V Star Ace represented by Capt. Nahon Rada, relief captain. Aside from impleading these additional respondents, private respondent also alleged in the Second 26 (actually, third) Amended Petition that the owners of the vessel intended to transfer and alienate their rights and interest over the vessel and its cargo, to the detriment of the private respondent. The trial court granted leave to private respondent to amend its Petition, but 27 only to exclude the customs commissioner and the district collector. Instead, private respondent filed the "Second Amended Petition with Supplemental Petition" against Singkong Trading Company; and Omega and 28 29 M/V Star Ace, to which Cadacio and Rada filed a Joint Answer. Declared in default in an Order issued by the trial court on January 23, 1991, were the following: Singkong Trading Co., Commissioner Mison, M/V Star 30 Ace and Omega. Private respondent filed, and the trial court granted, an 31 ex parte Motion to present evidence against the defaulting respondents. Only private respondent, Atty. Tamondong, Commissioner Mison, Omega and M/V Star Ace appeared in the next pretrial hearing; thus, the trial court declared the other respondents in default and allowed private respondent to 32 present evidence against them. Cesar Urbino, general manager of private respondent, testified and adduced evidence against the other respondents, . 33 .. On December 29, 1990, private respondent and Rada, representing Omega, entered into a Memorandum of Agreement stipulating that Rada would write and notify Omega regarding the demand for salvage fees of private respondent; and that if Rada did not receive any instruction from his 34 principal, he would assign the vessel in favor of the salvor. On February 18, 1991, the trial court disposed as follows:

21

WHEREFORE, IN VIEW OF THE FOREGOING, based on the allegations, prayer and evidence adduced, both testimonial and documentary, the Court is convinced, that, indeed, defendants/respondents are liable to [private respondent] in the amount as prayed for in the petition for which it renders judgment as follows: 1. Respondent M/V Star Ace, represented by Capt. Nahum Rada, [r]elief [c]aptain of the vessel and Omega Sea Transport Company, Inc., represented by Frank Cadacio[,] is ordered to refrain from alienating or [transferring] the vessel M/V Star Ace to any third parties; 2. Singkong Trading Company to pay the following: a. Taxes due the government; b. Salvage fees on the vessel in the amount of $1,000,000.00 based on . . . Lloyd's Standard Form of Salvage Agreement; c. Preservation, securing and guarding fees on the vessel in the amount of $225,000.00; d. Maintenance fees in the amount of P2,685,000.00; e. Salaries of the crew from August 16, 1989 to December 1989 in the amount of $43,000.00 and unpaid salaries from January 1990 up to the present; f. Attorney's fees in the amount of P656,000.00; 3. [Vlason] Enterprises to pay [private respondent] in the amount of P3,000,000.00 for damages; 4. Banco [Du] Brasil to pay [private respondent] in the 35 amount of $300,000.00 in damages; and finally, 5. Costs of [s]uit.

33

Subsequently, upon the motion of Omega, Singkong Trading Co., and private respondent, the trial court approved a Compromise 36 Agreement among the movants, reducing by 20 percent the amounts adjudged. For their part, respondents-movants agreed not 37 to appeal the Decision. On March 8, 1991, private respondent moved for the execution of judgment, claiming that the trial court Decision had already become final and executory. The Motion was granted and a Writ of Execution was issued. To satisfy the Decision, Sheriffs Jorge Victorino, Amado Sevilla and Dionisio Camagon were deputized on March 13, 1991 to levy and to sell on execution the defendants vessel and personal property. xxx xxx xxx

respondent. The second petition sought to nullify the Order dated June 26, 1992 setting aside the Deputy Sheriff's return dated April 1, 1991 as well as the certificate of sale issued by Deputy Sheriff Camagon. The third 46 petition sought to nullify the Order dated October 5, 1992 of the Court of Tax Appeals directing the Commissioner of Customs to place Bureau of Customs and PNP officers and guards to secure the M/V Star Ace and its cargoes, make inventory of the goods stored in the premises as indicated to belong to the private respondent. Likewise challenged was the Order dated August 17, 1992 authorizing the sale of M/V Star Ace and its cargoes. These three (3) petitions were consolidated and on July 19, 1993, the 47 appellate court rendered its Decision granting private respondent's petitions, thereby nullifying and setting aside the disputed orders and effectively "giving way to the entire decision dated February 18, 1991 of the . . . Regional Trial Court of Manila, Branch 8, in Civil Case No. 89-51451 48 which remains valid, final and executory, if not yet wholly executed." Private respondent Urbino, Vlason Enterprises and petitioner Banco do Brasil filed separate motions for reconsideration. For its part, petitioner Banco do Brasil sought reconsideration, insofar as its liability for damages, on the ground that there was no valid service of summons as service was on the wrong party the ambassador of Brazil. Hence, it argued, the trial court 49 did not acquire jurisdiction over petitioner Banco do Brasil. Nonetheless, 50 the appellate court denied the motions for reconsideration in its Resolution dated August 15, 1995. Hence, the instant petition. Petitioner Banco do Brasil takes exception to the appellate court's 51 declaration that the suit below is in rem, not in personam, thus, service of summons by publication was sufficient for the court to acquire jurisdiction over the person of petitioner Banco do Brasil, and thereby liable to private respondent Cesar Urbino for damages claimed, amounting to $300,000.00. Petitioner further challenges the finding that the February 18, 1991 decision of the trial court was already final and thus, cannot be modified or assailed.
52

44

45

On March 18, 1991, the Bureau of Customs also filed an ex parte Motion to recall the execution, and to quash the notice of levy and the sale on execution. Despite this Motion, the auction sale was conducted on March 21, 1991 by Sheriff Camagon, with private respondent submitting the winning bid. The trial court ordered the deputy sheriffs to cease and desist from implementing the Writ of Execution and from levying on the personal property of the defendants. Nevertheless, Sheriff Camagon issued the corresponding Certificate of Sale on March 27, 1991. On April 10, 1991, petitioner Banco do Brasil filed, by special appearance, 38 an Urgent Motion to Vacate Judgement and to Dismiss Case on the ground that the February 18, 1991 Decision of the trial court is void with respect to it for having been rendered without validly acquiring jurisdiction over the person of Banco do Brasil. Petitioner subsequently amended its 39 petition to specifically aver that its special appearance is solely for the purpose of questioning the Court's exercise of personal jurisdiction. On May 20, 1991, the trial court issued an Order acting favorably on petitioner's motion and set aside as against petitioner the decision dated February 18, 1991 for having been rendered without jurisdiction over Banco 41 do Brasil's person. Private respondent sought reconsideration of the Order 42 dated May 20, 1991. However, the trial court in an Order dated June 21, 1991 denied said motion. Meanwhile, a certiorari petition was filed by private respondent before public respondent Court of Appeals seeking to nullify the cease and desist Order dated April 5, 1991 issued by Judge Arsenio M. Gonong. Two (2) more separate petitions for certiorari were subsequently filed by private
43 40

Petitioner avers that the action filed against it is an action for damages, as such it is an action in personam which requires personal service of summons be made upon it for the court to acquire jurisdiction over it. However, inasmuch as petitioner Banco do Brasil is a non-resident foreign corporation, not engaged in business in the Philippines, unless it has property located in the Philippines which may be attached to convert the

34

action into an action in rem, the court cannot acquire jurisdiction over it in respect of an action in personam. The petition bears merit, thus the same should be as it is hereby granted. First. When the defendant is a nonresident and he is not found in the country, summons may be served extraterritorially in accordance with Rule 53 14, Section 17 of the Rules of Court. Under this provision, there are only four (4) instances when extraterritorial service of summons is proper, namely: "(1) when the action affects the personal status of the plaintiffs; (2) when the action relates to, or the subject of which is property, within the Philippines, in which the defendant claims a lien or interest, actual or contingent; (3) when the relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4) when the defendant non-resident's property has been 54 attached within the Philippines." In these instances, service of summons may be effected by (a) personal service out of the country, with leave of court; (b) publication, also with leave of court; or (c) any other manner the 55 court may deem sufficient. Clear from the foregoing, extrajudicial service of summons apply only where the action is in rem, an action against the thing itself instead of against the person, or in an action quasi in rem, where an individual is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or loan burdening the property. This is so inasmuch as, in in rem and quasi in rem actions, jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the court provided that the court 56 acquires jurisdiction over the res. However, where the action is in personam, one brought against a person on the basis of his personal liability, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. When the defendant is a non-resident, personal service of summons within the 57 state is essential to the acquisition of jurisdiction over the person. This cannot be done, however, if the defendant is not physically present in the country, and thus, the court cannot acquire jurisdiction over his person and 58 therefore cannot validly try and decide the case against him. In the instant case, private respondent's suit against petitioner is premised on petitioner's being one of the claimants of the subject vessel M/V Star Ace. 59 Thus, it can be said that private respondent initially sought only to exclude petitioner from claiming interest over the subject vessel M/V Star Ace. However, private respondent testified during the presentation of evidence

that, for being a nuisance defendant, petitioner caused irreparable damage 60 to private respondent in the amount of $300,000.00. Therefore, while the action is in rem, by claiming damages, the relief demanded went beyond the res and sought a relief totally alien to the action. It must be stressed that any relief granted in rem or quasi in rem actions must be confined to the res, and the court cannot lawfully render a personal 61 judgment against the defendant. Clearly, the publication of summons effected by private respondent is invalid and ineffective for the trial court to acquire jurisdiction over the person of petitioner, since by seeking to recover damages from petitioner for the alleged commission of an injury to his 62 person or property caused by petitioner's being a nuisance defendant, private respondent's action became in personam. Bearing in mind the in personam nature of the action, personal or, if not possible, substituted service of summons on petitioner, and not extraterritorial service, is necessary to confer jurisdiction over the person of petitioner and validly hold it liable to private respondent for damages. Thus, the trial court had no jurisdiction to award damages amounting to $300,000.00 in favor of private respondent and as against herein petitioner.1awphil Second. We settled the issue of finality of the trial court's decision dated February 18, 1991 in the Vlason case, wherein we stated that, considering the admiralty case involved multiple defendants, "each defendant had a different period within which to appeal, depending on the date of receipt of 63 decision." Only upon the lapse of the reglementary period to appeal, with no appeal perfected within such period, does the decision become final and 64 executory. In the case of petitioner, its Motion to Vacate Judgment and to Dismiss Case was filed on April 10, 1991, only six (6) days after it learned of the existence of the case upon being informed by the Embassy of the Federative Republic of Brazil in the Philippines, on April 4, 1991, of the February 18, 1991 65 decision. Thus, in the absence of any evidence on the date of receipt of decision, other than the alleged April 4, 1991 date when petitioner learned of the decision, the February 18, 1991 decision of the trial court cannot be said to have attained finality as regards the petitioner. WHEREFORE, the subject petition is hereby GRANTED. The Decision and the Resolution of the Court of Appeals dated July 19, 1993 and August 15, 1995, respectively, in CA-G.R. SP Nos. 24669, 28387 and 29317 are hereby REVERSED and SET ASIDE insofar as they affect petitioner Banco do Brasil. The Order dated May 20, 1991 of the Regional Trial Court of Manila, Branch 8 in Civil Case No. 89-51451 is REINSTATED.

35

SO ORDERED.1wphi1.nt Bellosillo, Mendoza, Quisumbing and Buena, JJ., concur.

12

2nd Indorsement dated November 1989; Records, Vol. 1, pp. 7071.

13

Decision dated November 17, 1989, Records, Vol. 1, pp. 74-86.

14

Footnotes
1

Docketed as Civil Case No. 89-51451 and raffled to Branch 8; Records, Vol. 1, pp. 1-26.
15

Penned by Associate Justice Jainal D. Rasul and concurred in by Associate Justices Segundino G. Chua and Consuelo YnaresSantiago, now Associate Justice of the Supreme Court, in CA-G.R. S.P. Nos. 24669, 28387 & 29317, Rollo, pp. 33-47.
2

Ibid., pp. 122-145. Amended Petition, id., pp. 122 & 128-129. Sheriff's Return, id., pp. 160-164 & 171. Id., pp. 153-156. Id., pp. 214-215. Eventually, both separately filed their motions to dismiss. Records, Vol. 1, pp. 325-326. Order dated September 10, 1990; Records, Vol. 2, p. 359. Records, Vol. 1, pp. 237-238. Ibid., pp. 351-352. Records, Vol. 2, pp. 370-371.

16

17

Id., pp. 49-53.

18

Former Special Eighth Division.

19

Penned by Judge Arsenio M. Gonong, Civil Case No. 89-51451, Records, Vol. 2, pp. 517-528.
5

20

The Appellate Court erroneously declared in its decision that the amount of P300,000.00 was awarded by the trial court, Rollo, p. 36.
6

21

22

G.R. Nos. 121662-64, July 6, 1999, Third Division, penned by Associate Justice Artemio V. Panganiban and concurred in by Associate Justices Jose C. Vitug, Fidel P. Purisima, and Minerva P. Gonzaga-Reyes.
7

23

24

Decision in G.R. Nos. 121662-64, pp. 3-13.

25

Records, Vol. 1, pp. 27-31.

26

Records, Vol. 1, p. 32. Records, Vol. 1, pp. 36-39.

Motion for Leave to Admit Second Amended Petition and Supplemental Petition, ibid., p. 370; Second Amended Petition with Supplemental Petition, ibid., pp. 372-398.
27

10

Order dated September 28, 1990, Records, Vol. 2, p. 407. Records, Vol. 2, pp. 414-415. Ibid., pp. 425-288.

11

Decision dated July 17, 1989, in SFLU Seizure Identification No. 3-89; Records, Vol. 1, pp. 54-68.

28

29

36

30

Id., p. 506. Order dated December 10, 1990, id., p. 492.

46

Docketed as CA-G.R. SP No. 29317. See Note 1, supra. Rollo, p. 46. Rollo, pp. 107. See Note 2, supra. Rollo, pp. 19-21. Rollo, p. 22-23.

31

47

32

Order dated January 23, 1991, Records, Vol. 2, p. 506. The records (pp. 493-495), however, show that only Duraproof Service, Singkong Trading and M/V Star Ace were served summons.
33

48

49

RTC Decision, p. 7; Rollo, p. 92; penned by Judge Arsenio M. Gonong.

34

50

51

Memorandum of Agreement, id., pp. 511-512.

52

35

Emphasis supplied.
53

36

Records, Vol. 2, pp. 535-538.

37

Order dated March 6, 1991, ibid., pp. 539-541. Private respondent entered into two separate compromise agreements with Singkong Trading Co. (id., pp. 535-536) and another with Omega (id., pp. 537-538). Both agreements were dated March 4, 1991.
38

Rollo, pp. 67-73. Rollo, pp. 74-80. Rollo, pp. 81-82. Records, Vol. 3, pp. 103-105. Rollo, p. 83. Docketed as CA-G.R. SP No. 24669. Docketed as CA-G.R. SP No. 28387.

39

40

41

Sec. 17. Extraterritorial service When the defendant does not reside and is not found in the Philippines and the action affects the personal status of the plaintiff or relates to, or the subject of which, is property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the defendant has been attached in the Philippines, service may, by leave of court, be effected out of the Philippines by personal service as under section 7; or by publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within which the defendant must answer.
54

42

Ibid., now Sec. 15 of the 1997 Rules of Civil Procedure. Ibid.

43

55

44

56

45

Penned by Judge Bernardo P. Pardo, then Executive Judge, and now Associate Justice of the Supreme Court.

Asiavest Limited v. Court of Appeals, 296 SCRA 539, 552-554 [1998]; Valmonte v. Court of Appeals, 252 SCRA 92, 99-102 [1996].

37

57

The Dial Corporation v. Soriano, 161 SCRA 737, 743 [1988] citing Boudard v. Tait, 67 Phil 170, 174 [1939].
58

Asiavest Limited v. Court of Appeals, supra. at 554. Records, Vol. 1, pp. 128-129. Records, Vol. 2, p. 567. Villareal v. Court of Appeals, 295 SCRA 511, 525 [1998].

59

60

61

62

The Dial Corporation v. Soriano, supra. at 742 citing Hernandez v. Development Bank of the Phil., 71 SCRA 290, 292-293 [1976].
63

Decision in G.R. Nos. 121662-64, p. 27. Ibid. Rollo, pp. 67-80.

64

65

38

G.R. No. 135959 May 11, 2000 HEIRS OF ANDREA CRISTOBAL, represented by AMADO DE LEON, petitioners, vs. COURT OF APPEALS, ROSARIO LOPEZ and ALICIA SANTOS, respondents. BELLOSILLO, J.: This is a petition for review on certiorari which seeks to nullify and set aside 1 the 12 October 1998 Resolution of the Court of Appeals denying petitioners' motion for extension of time to file a motion to reconsider its Decision of 3 August 1998. On 28 April 1975 petitioners Heirs of Andrea Cristobal de Leon, represented by Amado de Leon, filed an application for registration of their ancestral land, docketed as LRC No. 258, covering two (2) parcels of land situated in Poblacion, Navotas, Metro Manila, with an aggregate area of 72,253 square meters. The location plan, Plan PSU-4870, was surveyed for the Heirs of Doa Andrea Cristobal de Leon on 14-15 March 1914. The Director of Lands approved the plan on 17 September 1914. On 13 November 1975 respondents Rosario Lopez and Alicia Santos filed separate oppositions to petitioners' application. Rosario Lopez claimed ownership of two (2) parcels of land included therein and described in Plan PSU-92376 and Plan PSU2 92429 covering 10,407 square meters and 774 square meters, respectively, while Alicia Santos asserted ownership to the extent of 2,499 square meters thereof. While LRC Case No. 258 was pending, Alicia Santos filed on 13 September 1976 an application for registration of the portion which she claimed to own. Her application was docketed as LRC Case No. 284. Thereafter the two (2) cases were consolidated as the parcel of land sought to be registered in LRC Case No. 284 was embraced within the parcel of land subject of the application in LRC Case No. 258. After trial the Regional Trial Court of Kalookan City, Br. 123, rendered a decision dated 15 July 1993 in favor of petitioners; hence, respondents Rosario Lopez and Alicia Santos appealed. On 31 August 1998 the Court of Appeals rendered the assailed Decision reversing and setting aside the judgment of the court a quo.

It is alleged in the instant petition that a day before the Decision of the appellate court was promulgated on 31 August 1998 petitioners' counsel, Atty. Lumen R. Policarpio, was confined at the Makati Medical Center until 5 September 1998 due to bilateral cerebral infarcts or second brain stroke; that prior to her confinement her office had already been closed until 12 September 1998 due to her ailment; that the Decision of the Court of Appeals in favor of private respondents was sent to counsel by registered mail and received on 9 September 1998 by a guard of the Puzon Building housing the law office of Atty. Policarpio; that since the law office was closed the judgment was forwarded to counsel's residence and was received by her nurse on 13 September 1998; that since she had just been released from the hospital, Atty. Policarpio filed a motion for extension of thirty (30) days from 25 September 1998 to submit a formal motion for reconsideration; and, that she subsequently filed her motion for reconsideration on 21 October 1998, which was within the period prayed for in the motion for extension if granted. However, on 12 October 1998 the appellate court denied the motion for extension; hence, the instant petition. Meanwhile, the motion for reconsideration remains unresolved by the Court of Appeals. Petitioners concede that the law prohibits the filing of a motion for extension to file a motion for reconsideration but plead that the instant case be made an exception since the failure to meet the prescribed period was due to the medical condition of their counsel and not a deliberate intent to delay. They argue that the rules of procedure ought not to be applied in a very rigid, technical sense since they are used to help secure, not override, substantial justice, otherwise the spirit of the rules would be defeated. Petitioners further submit that while a client indeed is bound by the mistake of his counsel, an exception should be made when adherence to the rule would result in the outright deprivation of property through technicality. Private respondents on the other hand argue that the Court of Appeals did not err in denying petitioners' motion for extension of time to file motion for reconsideration since they clearly violated Sec. 2, Rule 9, of the Revised Internal Rules of the Court of Appeals (RIRCA) prescribing a fifteen (15) day period for filing a motion for reconsideration. Failing to comply with this requirement, petitioners are barred by the mandatory injunction in Habaluyas 3 Enterprises Inc. v. Japson from filing a motion for extension of time to file a motion for reconsideration. Although petitioners' motion was accompanied by a medical certificate, it was not under oath and there was no affidavit of merit evidencing that the lapse could have been due to fraud, accident, mistake or excusable negligence. Private respondents further stress that petitioners were represented by the Office of Lumen Policarpio and

39

Associates, and if indeed Atty. Lumen Policarpio was indisposed, an associate from her law office could have acted in her stead. We agree with private respondents. Pursuant to Sec. 12 of the Judiciary 4 Reorganization Act of 1980, as amended, the Court of Appeals adopted and promulgated the RIRCA designed to govern the internal operating 5 procedures of the appellate court. Under Sec. 2, Rule 9, of the RIRCA, as amended, a party may file a motion for reconsideration of a decision or resolultion within fifteen (15) days from notice thereof, without any 6 extension. The records show that respondent Court of Appeals promulgated its Decision on 31 August 1998 and copy thereof was received by petitioners' counsel on 9 September 1998. As such, petitioners had until 24 September 1998 within which to file their motion for reconsideration. However, instead of filing the motion, petitioners filed on 17 September 1998 a motion for extension of time to file a motion for reconsideration, obviously in violation of the mandatory provision prohibiting the filing of a motion for extension of time to file a motion for reconsideration. Consequently, the appellate court correctly denied petitioners' motion. It should be stressed that this Court advocates strict adherence to the rule 7 laid down in Habaluyas Enterprises Inc. v. Japson that no motion for extension of time to file a motion for new trial or reconsideration may be filed with the Metropolitan or Municipal Trial Courts, the Regional Trial Courts, and the Intermediate Appellate Court (now Court of Appeals). Such a motion may be filed only in cases pending with the Supreme Court as a court of last resort which may in its sound discretion either grant or deny the extension requested. An exception therefore cannot be made despite the claim that the lapse was due to the illness of petitioners' counsel. It is claimed that Atty. Policarpio's law office was closed since July 1998 due to her illness. The interval of two (2) months before the promulgation of the Decision should have given her associates ample time to sort out her records, delegate her responsibilities among themselves, and forewarn her clients, specifically herein petitioners, about their counsel's unavailability or incapacity so that they may be given the option to seek another counsel elsewhere. A client is entitled to an effective representation. The lawyer should recognize his lack of competence or incapacity to handle a particular task and the disservice he would do his client if he undertakes or continues to undertake the task entrusted to him. If that situation occurs, he should either decline to act or obtain his client's instruction to retain, consult or collaborate with another lawyer to avoid any untoward event detrimental to his client's cause.

ACCORDINGLY, the petition is DENIED. The 12 October 1998 Resolution of the Court of Appeals denying petitioners' motion for extension of time to file a motion to reconsider its Decision of 3 August 1998 is AFFIRMED. Consequently, for failure of petitioners Heirs of Andrea Cristobal represented by Amado de Leon to timely file a motion for reconsideration, the 31 August 1998 Decision of the Court of Appeals in CA-G.R. CV No. 42393 which (a) reversed and set aside the 15 July 1993 decision of the trial court; (b) declared private respondent Rosario Lopez the absolute owner of the parcels of land described in Plan PSU-92376 and Plan PSU-92429 and private respondent Alicia Santos the absolute owner of the parcel of land described in Plan PSU-4876 known as Lot No. 4-2; and, (c) ordered registration thereof in their names, is considered final and executory. Costs against petitioners. SO ORDERED. Footnotes
1

Decision penned by Justice Demetrio G. Demetria, concurred in by Justice Jorge S. Imperial and Justice Ramon A. Barcelona, Court of Appeals, Third Division.
2

Alternatively referred to as Plan PSU-94249 in the decision of the Court of Appeals.

3

G.R. No. 70895, 30 May 1986, 142 SCRA 212. BP Blg. 129. RIRCA, as amended, took effect 18 August 1988.

Sec. 2. Time for filing. The motion for reconsideration shall be filed within fifteen (15) days from notice of the decision or resolution and a copy thereof shall be served on the adverse party. The period for filing a motion for reconsideration is non-extendible. (emphasis supplied).
7

Ibid.

40

G.R. No. 138571

July 13, 2000

MERCURY DRUG CORPORATION, petitioner vs. THE HONORABLE COURT OF APPEALS, and the SPOUSES EDUARDO AND CARMEN YEE, respondents. DECISION GONZAGA-REYES, J.: This Petition for Review on Certiorari seeks the reversal of the Decision of 1 the Court of Appeals in CA-G.R. SP No. 437765 entitled "SPOUSES EDUARDO AND CARMEN YEE versus HONORABLE ALEJANDRO VELEZ, RTC JUDGE, BRANCH 20, CAGAYAN DE ORO CITY and MERCURY DRUG CORPORATION". The following facts as found by the Court of Appeals are undisputed: "On 27 January, 1993, petitioners filed a complaint docketed as Civil Case No. 93-055 in the Regional Trial Court of Cagayan de Oro City against herein private respondent for annulment and/or reformation of contract of lease dated 31 March 1984 (Rollo, p. 26) covering (5) twos-storey units specified as door numbers 3, 4, 5, 6 and 7 of a commercial building owned by petitioners located in front of Carmen Market, Carmen, Cagayan de Oro City. The complaint prayed that the contract be either annulled or the rentals increased from P6,900,00 a month as originally stipulated therein to P50,000.00 a month based on paragraph no. 3 thereof which reads: 3.....In case of official devaluation of the Philippine pesos, the parties hereto shall by mutual consent make the necessary adjustment in the rate of rentals. Should they fail to agree on the rate of rentals, the same shall be submitted to a group of arbitrators composed of three (3) members, one to be appointed by LESSOR, another by LESSEE and a third one to be agreed upon by the two (2) arbitrators previously chosen and the parties hereto shall submit to the decision of the arbitrators; Petitioners demand for increase of rentals had been refused by private respondent lessee Mercury Drug Corporation on the ground that there was no official devaluation of the peso thus no basis for a rental increase. On 28 February 1995, the lower court rendered judgment as follows:

WHEREFORE, judgment is hereby rendered in favor of the defendant corporation and against the herein plaintiffs, dismissing the complaints and the claim for annulment and/or reformation of lease contract as well as the claim for damages for not being supported by the law and the pertinent jurisprudence on the matter, with costs against plaintiffs herein. However, in the spirit of equity and human justice as defendant has not shown any unwillingness to quiet the unease of the plaintiffs if the obligation is not every burdensome and onerous the defendant corporation, to maintain the good and harmonious relations between the parties herein, is hereby ordered to pay a relative increase in rent over the property in question, to the plaintiffs spouses, in the following manner: a)....an increase of fifteen (15) percent of the lease contract rental from August 1, 1992 up to the end of the second five years on May 31, 1994; b)....an increase of twenty (20) percent in rent from June 1, 1994 to May 31, 1999 which is the end of the third third five (5) years of the contract based on the new rate of the rental increase in the immediate preceding paragraph and c)....an increase of thirty (30) percent of rent from June 1, 1999 to May 31, 2004 based on the new rate of the rental increase in the immediate preceding paragraph as the computation, without interest. In view of the desire of the court to put an end to litigation and preserve the peace, no pronouncement shall be made by this court on the counterclaim. 'SO ORDERED. (Rollo, p. 39-40) based principally on the ruling was (sic) that there was no devaluation of the peso as a result of an extra-ordinary inflation. The former counsel for the petitioners Atty. Ralph Lou I. Willkom received a copy of the decision on 3 March 1995 but did not inform petitioners nor take any step to protect the interests of his clients by presenting a motion for reconsideration or taking an appeal. Petitioners learned of the judgment only on 24 March 1995 when they visited his office. The 15-day period within which to appeal lapsed. On 15 May 1995 petitioners filed thru their present

41

counsel a petition for relief from judgment under Rule 38 (Rollo, p. 43). The lower court denied the petition, ruling as follows: It is true that under Sec. 2, Rule 38 of the New Rules of Court the verified petition such as this must be filed within 60 days after petitioners learn of the judgment and nor (sic) more than six (6) months after such judgment or order was issued. The record shows that Atty. Ralph Lou I. Willkom, former coun sel of petitioners, did not inform the petitioners that he received the judgment in question on March 3, 1995. It was only on March 24, 1995 that petitioners learned of the judgment. These facts are admitted by petitioners on record in their pleadings so that there is no further need to discuss this matter. Even if counsel did not inform his client of the judgment for reasons only known to him still such failure is ruled by the Supreme Court as an act binding upon his clients and in this case the herein petitioners. (B. R. Sebastian Et Al.., Inc. vs. CA, 206 SCRA 28; Suarez vs. Ca, 220 SCRA 274; Ilasco vs. CA 228 SCRA 413) Since the judgment at bar was received on March 3, 1995 by petitioners counsel the sixty (60) days period will expire after May 3, 1995. The instant petition was filed on May 15, 1995 so much so that it was filed twelve (12) days after the 60 day period fixed by the Rules but certainly the petition was filed within six (6) months from the date it was issued on February 28, 1995. In several cases the Supreme court had uniformly ruled that both the 60 days from knowledge and the six (6) months from issuance must concur before a petition for relief from the judgment can be given due course, when the Supreme Court said this wise, to wit: Motion for relief from judgment is, subject to a fixed period inextendible, never interrupted and cannot be subjected to any condition or contingency. (Arcilla vs. Arcilla, Sept. 16, 1985) Considering the rule of notice to counsel as notice to client it becomes evidently clear that the requirements fixed by law and jurisprudence on petitioner for relief from judgment have not been met by the petitioners herein, ergo the petition must fall on its own dead weight. Besides, this court does not consider that there was negligence on the part of Atty. Ralph Willkom in not taking any appeal from the judgment of this court especially if one considers the character and the convictions of a person who adheres to his lawyers oath. Lawyers of known perceptions normally do not appeal from a judgment that had granted an award in equity even in the face of a

very palpably adverse ruling of the Supreme Court that beset his clients. The act of counsel in respecting the final judgment is one that led to a conflict of interest between attorney and client but certainly not an act of omission or neglect on his part. The other grounds raised like devaluation and reformation of contract does not merit any further discussion here because petitioners do not have any legal authority to declare their national devaluation thru the expedience of this petition. Parties never availed of the arbitration procedure as agreed in the contract hence, the matter of increase in rent by the avenues of the contract was totally foreclosed by the failure of the plaintiffs to exhaust all administrative remedies before going to court. WHEREFORE, except that portion which as in all good faith rectified by this court as far as the building in question is concerned as belonging to and having been built by the herein petitioners, for lack of merit and legal basis, the petition is hereby DISMISSED by reason of the foregoing premises, with costs against petitioners. (Rollo, pp. 59-60) Petitioners motion for reconsideration was likewise denied (Rollo, p. 61)."
3 2

Aggrieved by the Order of the RTC, the spouses Eduardo and Carmen Yee (YEES), the herein respondents, appealed to the Court of Appeals, which granted their Petition and set aside the order of the RTC the dispositive portion of the Decision reads: "WHEREFORE, the petition is hereby GRANTED. The assailed orders as well as the Decision dated February 28, 1995 are hereby SET ASIDE. This case is remanded to the court a quo for further proceedings and thereafter to render judgment accordingly. Without pronouncement as to costs." In reversing the RTC, the Court of Appeals held inapplicable the general rule that notice to counsel is notice to client. The Court of Appeals considered that it was precisely the inaction of the counsel of the YEES in not informing them of the decision which resulted in the lapse of the period to appeal forcing them to file their petition for relief through another lawyer. Their former counsel also failed to point out the erroneous finding of the lower court that it was MERCURY, which, constructed the building subject of the lease contract. Such finding, which was later corrected by the trial court, was the basis for said courts ruling that the YEES were bound to accept low rentals inasmuch as the building supposedly constructed by MERCURY would in the end be owned by the YEES after the expiration of the lease. These facts led the Court of Appeals to conclude that the YEES counsel

42

was grossly negligent and clearly demonstrates why the lower court ratiocinated as follows: "Under the foregoing circumstances, we hold inapplicable the commonly observed rule that notice to counsel be deemed notice to the client for to do otherwise would result in a grave miscarriage of justice. The rule that mistakes of counsel bind his client should not be applied, when as a result of counsels reckless and gross negligence, the client (would be) deprived of his property without due process of law (Legarda vs. Court of Appeals, 195 SCRA 418). Our courts are not only courts of justice but also of equity (Air Manila Inc. vs. Commissioner of Internal Revenue 83 SCRA 589). Procedural technicalities should not be made a bar to the vindication of a legitimate grievance (Peoples Homesite & Housing Corporation PHHC) vs. Tiongco, Nov. 28, 1964 (12 SCRA 471). In the foregoing case our Supreme Court allowed the late filing of a petition for relief from judgment arising from the mistake of counsel when as a result of counsels reckless and gross negligence, the client was deprived of due process of law. Thus, the period to file was computed from the date of receipt of the writ of execution by the client. There, as in this case, the very allegations in the petition for relief justify the setting aside of the assailed Decision and the remand of the case to the court a quo to hear and determine the case as if a timely motion for new trial or reconsideration has been granted by it (Rule 38 sec. 6, Rules of Civil 4 Procedure)." Motion for Reconsideration was denied. Hence this petition where the petitioner, Mercury Drug Corporation (MERCURY) raises the following issues: "A. Whether the Court of Appeals erred in not applying the law and jurisprudence providing that notice to counsel is likewise notice to the party; B. Whether the Court of Appeals erred in disregarding the rule that a party-litigant is bound by the mistakes of his counsel; C. Whether the Court of Appeals erred in reckoning the sixtyday period to file the Petition for Relief from judgment from the alleged date of actual receipt by Respondents of a copy of the
5

decision of the trial court and not from the date of receipt thereof by their counsel; D. Whether the Court of Appeals departed from the accepted and usual course of judicial proceedings when it decided the merits of Respondents Petition for Relief from Judgment notwithstanding that the only issue that should have been passed upon in the certiorari petition before it was whether the trial court gravely abused its discretion in dismissing the Petition for Relief from Judgment for having been filed out of time; and E. Whether the Court of Appeals erred in remanding the case to the trial court for further proceedings notwithstanding that the remedy of reformation of the Contract of Lease is clearly not available to any of the parties there being no mistake or 6 ambiguity in the instrument embodying the terms thereof." The petitioner contends that the respondents petition for relief from judgment failed to comply with the requirements of the Rules of Court inasmuch as the petition was filed more than sixty days from the receipt by their lawyer of the decision of the RTC. Petitioner argues that it is long established by jurisprudence that notice to the counsel is binding upon the client and that the client is bound by the mistakes of his lawyer. The failure of the YEES lawyer to inform them of the decision resulting in the failure to appeal therefrom is not the accident, mistake or excusable negligence referred to in the Rules that would warrant the granting of the petition for relief. The petitioner further argues that respondents counsel did not corroborate their allegation that they only learned of the judgment in Civil Case No. 93-055 against them on March 24, 1995. It should be presumed that their lawyer, Attorney Willkom, communicated to the respondents receipt by him of the judgment. MERCURY also maintains that the YEES cannot claim that they were denied due process considering that the YEES were given a chance to present and submit their evidence during the trial of the merits of the case. Their failure to appeal the decision against them cannot be considered a denial of due process for the right to appeal is purely statutory and must be prosecuted within the time and pursuant to the 7 procedure prescribed for it. The threshold issue to be resolved in this present petition is whether the YEES timely filed their petition for relief.

43

After a careful analysis of the issues presented for consideration, we rule in the negative and find the petition impressed with merit. A petition for relief from judgment is governed by Rule 38 "RELIEF FROM JUDGMENTS, ORDERS, OR OTHER PROCEEDINGS" - of the 1997 Rules 8 on Civil Procedure. Sections 1 and 3 of the aforementioned rule read: "Section 1. Petition for relief from judgment, order, or other proceedings . When a judgment or final order is entered, or any other proceeding is thereafter taken against a party in any court through fraud, accident, mistake, or excusable negligence, he may file a petition in such court and in the same case praying that the judgment, order or proceeding be set aside. Sec. 3. Time for filing petition; contents and verification. A petition provided for in either of the preceding sections of the Rule must be verified, filed within sixty (60) days after the petitioner learns of the judgment, final order, or other proceeding to be set aside, and not more than six (6) months after such judgment or final order was entered, or such proceeding was taken; and must be accompanied with affidavits showing the fraud, accident, mistake, or excusable negligence relied upon, and the facts constituting the petitioners good and substantial cause of action or defense, as the case may be." A petition for relief from judgment is an equitable remedy that is allowed only in exceptional cases when there is no other available or adequate remedy. When a party has another remedy available to him, which may be either a motion for new trial or appeal from an adverse decision of the trial court, and he was not prevented by fraud, accident, mistake or excusable negligence from filing such motion or taking such appeal, he cannot avail himself of this 9 petition. In order for a petition for relief to be entertained by the court, the petitioner must satisfactorily show that he has faithfully and strictly complied 10 with the provisions of Rule 38. It is also incumbent upon the petitioner to show that the said petition was filed within the reglementary period specified in Section 3, Rule 38 (within sixty (60) days after the petitioner learns of the judgment, final order, or other proceeding to be set aside, and not more than six (6) months after such judgment or final order was entered, or such 11 proceeding was taken). And the rule is that the reglementary period is reckoned from the time the partys counsel receives notice of the decision for notice to counsel of the decision is notice to the party for purposes of 12 Section 3 of Rule 38. In the present case, the YEES were served a copy of the judgment of the lower court through their counsel, Attorney Ralph Lou I. Willkom on March 3,

1995. Thus, the YEES are considered to have received notice on March 3, 1995 when their counsel was served notice and not on March 24, 1995 when they actually learned of the adverse decision. Consequently, their petition for relief, which was filed on May 15, 1995 or over sixty days from notice of their counsel, was filed out of time. This Court has consistently held that the failure of a partys counsel to notify him on time of the adverse judgment to enable him to appeal therefrom is negligence, which is not 13 excusable. However, notice sent to counsel of record is binding upon the client and the neglect or failure of counsel to inform him of an adverse judgment resulting in the loss of his right to appeal is not a ground for setting 14 aside a judgment valid and regular on its face. We find no basis for respondents insistence on the application of the 15 doctrines enunciated by this court in Legarda vs. Court of Appeals and 16 Peoples Homesite and Housing Corporation vs. Tiongco , where this Court departed from the established rule that notice to counsel is notice to the client considering that in said cases, the lawyers miserably failed in their duty to maintain their clients cause and that the lawyers inaction and wanton disregard of procedural rules were extremely reckless and grossly negligent and amounted to a deprivation of their clients property without due process of law. First, this Court reversed its ruling in Legarda on reconsideration in a 17 Resolution dated October 16, 1997 for the reason that the judgment sought to be annulled became final when the petitioner failed to avail of the remedies available to her such as filing a motion for reconsideration or appealing the case despite her claim that her lawyer never informed her of the decision against her. This Court emphasized the need to impose finality on judgments and that public policy and sound practice demand that, at the risk of occasional errors, judgments should become final at some definite date fixed by law. And when judgments of lower courts become final, not even the Supreme Court can in anyway review or modify them directly or 18 indirectly. This Court clearly recognized that the negligence of the petitioners counsel in failing to protect her interests was binding upon her despite counsels failure to inform her of the adverse deci sion of her case. Second, the case of Peoples Homesite is not squarely in point. In said case, we gave due course to a petition for relief from judgment despite the fact that it was filed out of time, the lawyer having failed to inform his clients of the scheduled hearing of the case which was heard in their absence.1wphi1 When judgment was rendered against them, their lawyer failed to take any steps to protect the interest of their clients. In giving due course to the petition for relief, this Court found that "there was something fishy with the actuations" of their lawyer which deprived the petitioners of their day in court.

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Consequently, we ruled that the client was denied due process and gave due course to their petition. The circumstances in the case at bar are different. We are not persuaded by the YEES claim that they were denied due process inasmuch as they were not denied their day in court. In fact, they were able to prosecute their action and actively participated through counsel in the proceedings before the lower court. Their failure to file an appeal from the decision rendering it final and executory is not a denial of due process. They may have lost their right to appeal but they were not denied their day in court. The right to appeal is not a natural right or a part of due process; it is merely a statutory privilege, and may be exercised only in the manner and in accordance with the 19 provisions of the law. In the same manner, the YEES failure to file their petition for relief within the period provided for under the Rules is not tantamount to a denial of due process. More important, no evidence was presented to support respondents bare and self-serving allegation that their lawyer did not inform them of the decision against them. It bears stress that we are not concerning ourselves with the lawyers duty to his client but with the timeliness of the filing of the petition for relief which cannot be given due course on the simple and expedient claim of a party that their lawyer failed to inform them of the decision in the case. Relief will not be granted to a party who seeks avoidance from the effects of the judgment when the loss of remedy at law was due to his own negligence; otherwise the petition for relief can be used to revive the right to appeal which had been lost+- though 20 inexcusable negligence. Parenthetically, it is noted that in its decision, the Court of Appeals stated that the finding of ownership was a pivotal consideration for the trial courts ruling to the effect that the YEES were bound to accept low rentals because the building which was supposed to be constructed by MERCURY would ultimately be owned by the YEES. However, a reading of the trial courts decision shows that the primary basis for its ruling was that there was no devaluation in currency, which would entitle the YEES to a reformation of their contract. On the contrary, the trial court, in granting the YEES an increase in the stipulated rentals contained in their contract with MERCURY based its ruling on the "meteoric boom" that the City of Cagayan de Oro was experiencing which equity and human justice could not ignore. Moreover, MERCURY did not show unwillingness to the said adjustments in order to maintain good and harmonious relations with the YEES. Thus, even assuming arguendo that the YEES petition for relief is given due course, the judgment of the trial court denying the YEES principal prayer to reform the contract on the ground of the devaluation of the currency is not affected for the reason that the finding of the trial court as to whether it is Mercury or the

YEES who built the building is irrelevant to the determination of whether there was indeed a devaluation in the currency. ACCORDINGLY, the instant petition is GRANTED and the decision of the Court of Appeals in CA-G.R. SP No. 43765 is REVERSED and SET ASIDE. The Order of the Regional Trial Court of Misamis Oriental, Branch 20 dated October 17, 1995 dismissing the respondents Petition for Relief from judgment is hereby AFFIRMED and REINSTATED. No pronouncement as to costs. SO ORDERED. Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.

Footnotes
1

Thirteenth Division composed of the ponente J. Portia AlioHormachuelos and the members: J. Buenaventura J. Guerrero (Chairman) and J. Candido V. Rivera concurring.
2

Decision, pp. 2-8; Roll o, pp. 39-45. Record; pp. 58-60. Decision, p. 13; Rollo, p. 49. Resolution dated May 4, 1999; Rollo, pp. 52-53. Petitioners Memorandum, pp. 8-9. Petitioners Memorandum; pp. 29.

The petition for relief was also governed by Rule 38 of the old rules of Civil Procedure.
9

Tuason vs. Court of Appeals, 256 SCRA 158 at p. 167 (1996)

45

10

Arcilla vs. Arcilla, 138 SCRA 560 at p. 566 (1985) Ibid. Francisco vs. Puno, 108 SCRA 427 at p. 433 (1981) Tuason vs. Court of Appeals, Supra at p. 166.

11

12

13

14

Ibid.; Palanca vs. American Food Manufacturing Co., 24 SCRA 819 at pp. 825-830 (1968)
15

195 SCRA 419 (1991) 12 SCRA 471 (1964) Legarda vs. Court of Appeals, 280 SCRA 642 (1997) Ibid., at p. 661. Ortiz vs. Court of Appeals, 299 SCRA 708 at p. 713 (1998) Tuason vs. Court of Appeals, Supra at p. 167.

16

17

18

19

20

46

G.R. No. 140486

February 6, 2001

PUBLIC ESTATES AUTHORITY, petitioner, vs. JESUS S. YUJUICO and AUGUSTO Y. CARPIO, respondents. VITUG, J.: The instant petition for review, with a prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction, seeks the reversal of th th the 13 September 1999 decision and 19 October 1999 resolution of the Court of Appeals, both issued in CA-G.R. SP No. 50855, entitled "Public Estates Authority vs. Hon. Raul E. De Leon, in his capacity as Presiding Judge, Regional Trial Court, National Capital Judicial Region, Branch 258, Paraaque City and Jesus S. Yujuico and Augusto Carpio." The relevant antecedents: On 24 July 1996, private respondents filed with the Regional Trial Court of Paraaque City, a complaint, docketed Civil Case No. 96-0317, for the "Removal of Cloud and Annulment of Title with Damages" against petitioner. Respondent Yujuico averred being the registered owner of Lot 1 of the subject area along Roxas Boulevard, Paraaque City, with an area of 10,000 square meters, covered by Transfer Certificate of Title (TCT) No. 446386, dated 07 June 1974, of the Registry of Deeds for the Province of Rizal. Respondent Carpio, in his case, himself maintained to be the registered owner of Lot 2 with an area of 7,343 square meters, covered by TCT No. 44265, dated 16 June 1976, of the same registry. The two lots were originally consolidated in one title registered in the name of one Fermina Castro under Original Certificate of Title (OCT) No. 10215, dated 31 May 1974, of the Registry of Deeds for the province. Sometime in 1989, petitioner Public Estates Authority (PEA) obtained ownership of various parcels of land along Manila Bay for the purpose of constructing the Manila-Cavite Coastal Road. It was issued OCT No. Sp 02 on 13 January 1989. Petitioner likewise acquired ownership of some other parcels of land along the Manila Bay Coast covered by TCT No. 7310 and TCT No. 19346 portions of which were by it to the Manila Bay Development Corporation ("MBDC"). The MBDC, in turn, leased portions of the aforesaid lots to Uniwide Holdings, Inc. Petitioner proceeded to carve out the path of the Coastal Road. Private respondents claimed that a subsequent verification survey commissioned by them showed that the coastal road directly overlapped their property and that a portion of the area sold by

petitioner to the MBDC was also owned by them (private respondents). Private respondents contended that the titles issued in the name of petitioner and the MBDC, being then invalid, ineffective, or voidable, should be nullified and set aside. In its answer, petitioner denied that the Coastal Road had overlapped the property of private respondents, stating that the area covered by the infrastructure was granted to it by the government through a Special Patent and that the title to the subject area was issued in its name on 13 January 1989 (for OCT No. SP 02) and on 04 April 1988 (for TCT No. 7310). Petitioner assailed the title of private respondents' predecessor-in-interest, Fermina Castro, claiming that the latter acquired her title to the subject land in 1974 when the same was yet under water and therefore still then part of the public domain. After the issues-were joined, and during the pendency of the proceedings, petitioner, through its former General Manager, Atty. Arsenio B. Yulo, Jr., asked the Office of the Government Corporate Counsel ("OGCC") to make an in-depth study on the validity of the titles of private respondents, the possible reversion of the property to the government, and the question of the correct position of Tie-Point T-12-A of the PEA property sold to MBDC shown in the PEA Survey Plan. In an opinion, dated 13 October 1997, the OGCC upheld the validity of the titles of private respondents and expressed that there was no legal ground for filing reversion proceedings. There was, according to the OGCC, a mispositioning of the PEA survey reference point by about 88 meters westward based on the documentary evidence submitted to the court, resulting in the overlap of the PEA and the Yujuico property. The OGCC recommended that petitioner should instead negotiate an amicable settlement with private respondents. Upon request of Atty. Yulo, the Office of the Solicitor General (OSG) also gave an opinion, dated 22 December 1997, to the effect that, premised on the matters on record, there was no sufficient basis for the government to institute an action to annul OCT No. 10215 in the name of Fermina Castro and the derivative titles of private respondents. Petitioner created a special committee of three PEA board directors composed of Atty. Nestor Kalaw, as Chairman, and Gregorio Fider and Edgardo de Leon, as members, to study the matter of a possible settlement of the case and to submit its recommendation. In due time, the committee recommended an amicable settlement of Civil Case No. 96-0317 and submitted a proposed compromise agreement which the PEA Board approved on 17 April 1998.

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Following a series of negotiations, a compromise agreement was concluded on 15 May 1998 by then PEA General Manager Atty. Arsenio B. Yulo, Jr., assisted by the OGCC, and by Benedicto Yujuico, attorney-in-fact of private respondents, assisted by counsel Atty. Angel Cruz. The compromise agreement contained, among other things, two major .provisions, i.e., (a) that because PEA is not in a position to settle by cash payment, it was agreed that private respondents' property with a combined area of 1.7343 hectares covered by TCT No. 446386 and TCT No. 44265 shall be exchanged with PEA property to be taken from PEA's property described as CBP-1A, shown on the Sketch Plan attached as Annex "A" of the Compromise Agreement, and that all taxes and registration expenses for the property to be conveyed under the exchange shall be for the account of the conveying party; and (b) that private respondents were given an Option to purchase an additional 7.6 hectares from said PEA property CBP-1A within a period of three years from the date of the approval by the Court of the Compromise Agreement at the price based on the market value as determined by PEA on the date of the exercise of the Option. The compromise was approved by the trial court in its resolution of 18 May 1998. On 17 June 1998, pursuant to the compromise, the parties executed a "Deed of Exchange of Real Property" with a sketch plan showing where the PEA property with an area of 1.4007 hectares to be conveyed to private respondents (in 3 Lots) would be taken in exchange for private respondents' property with a combined area of 1.7343 hectares. On 31 July 1998, the incumbent PEA General Manager, Carlos P. Doble, informed the Office of the Solicitor General that the new PEA board and management had reviewed the compromise agreement and decided to defer and hold in abeyance its implementation in view of the letter, dated 27 July 1998, of the former PEA General Manager, Atty. Arsenio Yulo, Jr., to the effect that the compromise agreement, which he signed did not reflect a condition required by the previous PEA Board, i.e., the approval by the Office of the President. On 14 September 1998, the new management of PEA filed a petition for relief from the resolution, dated 18 May 1998, of the trial court which approved the compromise agreement on the ground of mistake and

excusable negligence consisting of "inadvertence" on the part of former General Manager Yulo in the signing of the compromise agreement without the requisite approval of the Office of the President. Private respondents opposed the petition and prayed for its dismissal in that (a) it was filed beyond the reglementary period provided under Section 3, Rule 38, of the 1997 Rules of Civil Procedure, and (b) the allegation of mistake and excusable negligence was a sham because it was through and upon the recommendation of a special committee of three PEA directors and assisted by the OGCC, as well as guided by the legal opinions of both the OGCC and the OSG, that PEA entered into and approved the compromise agreement. The petition for relief was dismissed by the trial court on 06 November 1998 on the ground that it was filed out of time and that the allegation of mistake and excusable negligence had no valid basis. Petitioner filed a motion for th reconsideration of the 06 November 1998 order of the trial court but its motion was denied on 07 January 1999. Petitioner elevated the case to the Court of Appeals via a petition for certiorari but the petition was dismissed by the appellate court on 13 September 1999 for petitioner's failure to pay the required docket fees and for lack of merit. The appellate court agreed with the findings of the trial court that the alleged inadvertence on the part of former PEA General Manager in signing the compromise agreement on the belief that everything was in order could hardly be considered the mistake or excusable negligence contemplated by the rules of civil procedure sufficient to support a petition for relief from judgment. It further ruled that the petition for relief filed on 14 September 1998 came much too late considering that the resolution approving the compromise agreement was issued by the trial court on 18 May 1998 and Civil Case No. 96-0317 was dismissed on 03 July 1998. Petitioner's motion for reconsideration was denied by the Court of Appeals on 19 October 1999. Hence, the instant petition. Petitioner raises the following grounds for allowance of the petition: I. THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING THAT PETITIONER IS NOT EXEMPT FROM THE PAYMENT OF DOCKET AND OTHER LEGAL FEES IN THE INSTANT CASE DESPITE THE FACT THAT IT WAS SUED BY

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RESPONDENTS NOT FOR ANY PECUNIARY ACTIVITY BUT IN RELATION TO CERTAIN RECLAIMED PARCELS OF LAND REGISTERED AND OWNED BY PETITIONER UNDENIABLY FOR AND ON BEHALF OF THE NATIONAL GOVERNMENT. II. THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND ACTED WITH GRAVE ABUSE OF DISCRETION IN BARRING PETITIONER, THROUGH PROCEDURAL TECHNICALITIES, FROM SEEKING EQUITABLE AND JUDICIAL RELIEFS WHEN IT HELD THAT THE PETITION FOR RELIEF FILED A QUO, DESPITE THE PECULIAR CIRCUMSTANCES OF THE INSTANT CASE, WAS FILED OUT OF TIME. III. THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND ACTED WITH GRAVE ABUSE OF DISCRETION IN AVOIDING AND EVADING, BASED ON A TECHNICAL AND/OR PROCEDURAL GROUND, THE ISSUE OF FRAUD. Petitioner admits that it has been paying docket fees in filing court petitions but asserts that since it is being sued not in relation to any pecuniary activity but as a government entity holding reclaimed parcels of land for and on behalf of the National Government pursuant to the purpose and objective of its creation, it should be exempt from such fees conformably with Section 19, Rule 141, of the Revised Rules of Court. Petitioner claims that fraud has attended the execution of the compromise agreement, adding that the unexplained deletion of the condition of prior approval by the Office of the President constitutes extrinsic fraud which has prevented it from having a trial or from presenting its case in court. In refutation of the above assignment of errors private respondents contend that petitioner as an "incorporated agency" of the government is liable and not exempt from the payment of docket fees. Respondents argue that the distinction made by petitioner with respect to its being sued not in relation to any pecuniary activity but as a government entity owning reclaimed parcels of land for and on behalf of the National Government is frivolous as not being based on any provision of the PEA Charter. Respondents aver that petitioner, in fact, appears to concede that its petition for relief has been filed out of time. In any case, respondents submit, there is absolutely no extrinsic fraud perpetrated upon the petitioner and that the appellate court has

properly disregarded this allegation as having been raised for the first time on appeal. Petitioner has raised a valid point in its first assignment of error. In both original and appealed cases, the court can be tasked to take cognizance over such cases only upon the payment of the prescribed docket 1 fees. In this regard, Section 1 and Section 19, Rule 141, of the Revised Rules of Court provide: "Sec. 1. Payment of Fees. - Upon the filing of the pleading or other application which initiates an action or proceeding, the fees prescribed therefor shall be paid in full." "Sec. 19. Government Exempt. - The Republic of the Philippines, its agencies and instrumentalities, are exempt from paying the legal fees provided in this Rule. Local governments and governmentowned or controlled corporations with or without independent charters are not exempt from paying such fees." Section 2, paragraph 10, of the Administrative Code of 1987 defines instrumentality as an agency of the National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. The term, under the Code, includes regulatory agencies, chartered institutions and government-owned or controlled corporations. Petitioner is a creation of Presidential Decree No. 1084, dated 04 February 1977, as a government corporation wholly owned by the Government. It has been empowered to exercise the right of eminent domain in the name of the Republic of the Philippines. In the acquisition of real estate by condemnation proceedings, the title to such real estate is to be taken in the name of the Republic of the Philippines; thereupon, such real estate shall be entrusted to 2 the Authority as the agent of the Republic of the Philippines. Although vested with personality separate and distinct from the government, petitioner is not thereby divorced from its being an agent or instrumentality of the government within the purview of Section 19, Rule 141, of the Revised Rules of Court. Petitioner, in having been charged with the construction of the Manila-Cavite Coastal Road exercises a governmental function, as so distinguished from a mere proprietary interest, and it is in relation thereto 3 that it has here been sued. In Iron Steel Authority vs. Court of Appeals, the Court has observed that certain agencies or instrumentalities of the National

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Government are cast in corporate form, that is to say, incorporated agencies or instrumentalities, at times with and at other times without capital stock, and correspondingly vested with a juridical personality distinct from the personality of the Republic. At all events, while a court may refused to entertain a suit for non-payment of docket fees, such failure does not preclude it, however, from taking cognizance of the case as circumstances may so warrant or when the ends of justice would be best served if the case were to be given due course. Verily, the payment of fees is by no means a mere technicality of law or 4 5 procedure. It is also an indispensable step in the perfection of an appeal. While it is mandatory on the litigant, the court, however, is not necessarily left without any alternative but to dismiss the appeal for non-payment of docket fees. Thus, the failure to pay the appeal docketing fee confers a discretionary authority, not mandatory charge, on the part of the court to dismiss an appeal. This discretion must, of course, be exercised soundly, 6 wisely and prudently, and with great deal of circumspection in accordance with the tenets of fair play, never capriciously, and always with a view to 7 substance. Similarly, the Court has had occasions to suspend its own rules, or to except a particular case from its operation, whenever the purposes of justice require 8 it. Strong compelling reasons, such as serving the ends of justice and 9 preventing a miscarriage thereof, can warrant a suspension of the rules. While there is a crying need to unclog court dockets, on the one hand, there is, on the other hand, an incomparable demand for resolving disputes fairly 10 and equitably. The Court, in fine, holds that petitioner, as and when it sues or is sued in the exercise of a governmental function, could come within the category of an exempt agency of government under the Rules. The Court now addresses the issue of whether or not the petition for relief has been filed with the trial court within the reglementary period prescribed therefor. Section 3, Rule 38, of the 1997 Rules of Civil Procedure provides that a verified petition for relief must be filed within sixty (60) days after the petitioner learns of the judgment, final order, or other proceeding to be set aside and not more than six (6) months after such judgment or final order has been entered or such proceeding has been taken. It must be accompanied with affidavits showing the fraud, accident, mistake, or

excusable negligence relied upon, and the facts constituting petitioner's good and substantial cause of action or defense. In the instant case, the trial court issued the order approving the compromise agreement on 18 May 1998. Consequentially, two hearings were held in both of which instances petitioner was represented by counsel. The first was on 01 June 1998 when petitioner's co-defendant, Manila Bay Development Corporation ("MBDC"), through Atty. William Chua, openly manifested that it was no longer pursuing its counterclaim against private respondents and its cross-claim against petitioner because of the approval of the compromise agreement. On 17 June 1998, the parties executed a Deed of Exchange of Real Properties pursuant to the compromise. The second .hearing took place on 02 July 1998, where the counsel for private respondents similarly manifested that they were withdrawing all claims against Uniwide and MBDC. Thus, the trial court, in its order dated 03 July 1998, dismissed with prejudice all the claims by the plaintiffs and defendants against each other. This narration was neither denied nor refuted by petitioner. Surprisingly, petitioner, while reiterating in its own Memorandum the same sequence of events, would now argue, however, that its incumbentmanagement was not aware that prior to 15 July 1998, its previous counsel was already aware of the existence of the 18th May 1998 resolution of the trial court, indicating parenthetically, that indeed the petition for relief was filed beyond the sixty-day period allowed therefor. It would not be right to allow a mere change of management of PEA to defeat the operation of the Rules on reglementary period. Having thus concluded, the Court may not freely take on the third issued raised by petitioner. Significantly, one other substantive matter brought up during the oral argument of the case is that the property subject matter of the case was still 11 under water when titled, in the name of Fermina Castro and when it was thereafter conveyed to private respondents; however, this issue, yet unventilated and a subject beyond the limited coverage of PEA's charter, is not appropriate for consideration and determination, nor can it be peremptorily adjudged, by the Court in this instance. In resolving this petition, the Court does not thus foreclose the right of the Republic of the Philippines itself from pursuing any proper recourse in such separate proceedings as it may deem warranted.1wphi1.nt WHEREFORE, the instant petition is DENIED, and the temporary restraining order previously issued is accordingly lifted. No costs.

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SO ORDERED. Melo, Panganiban, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.

Going back to this property. This property is not part of the Coastal Road? ATTY. CRUZ:

Footnote
1

Manchester Development Corporation vs. Court of Appeals, 149 SCRA 562.

2

No, no, Your Honor, it has been there since the hearing of the case on the merits in 1974, they presented documents, the Bureau of Lands. JUSTICE ARTEMIO V. PANGANIBAN: Is this property already traversed by the Coastal Road? ATTY. CRUZ: Yeah, but they did not institute any expropriation proceeding and we discovered this only so from then on when they found out that this property was traversed by the Coastal Road, no expropriation proceedings has been filed. The plaintiffs made representation with the Bureau of Public Works, the PEA, the Department of Justice, the Solicitor General, no action was taken until the plaintiff were compelled to file this case on 21 July 1996 paying a filing fee of 5 Million and 50 pesos, they know that. JUSTICE ARTEMIO V. PANGANIBAN: Yes, not necessarily the 17 thousand square meters, it has already been used, ATTY. CRUZ: Yes, it was traversed by the Coastal Road directly. JUSTICE PANGANIBAN: It has already been used. xxx xxx xxx

Section 5, paragraph (n), Presidential Decree No. 1084. 249 SCRA 538. Acda vs. Minister of Labor, 119 SCRA 306.

Manchester Development Corporation vs. Court of Appeals, 149 SCRA 562; Rodillas vs. Commission on Elections, 245 SCRA 702; Pedrosa vs. Hill, 257 SCRA 373.
6

Cucio vs. Court of Appeals, 136 SCRA 669; Del Rosario & Sons Logging Enterprises, Inc. vs. NLRC, 136 SCRA 669; Manila Mandarin Employees Union vs. NLRC, 264 SCRA 320.
7

San Andres vs. Court of Appeals, 212 SCRA 1; Santos vs. Court of Appeals 253 SCRA 632.
8

Vda. De Ordoveza vs. Raymundo, 63 Phil. 275; Ronquillo vs. Marasigan, 5 SCRA 304.
9

PNB vs. Court of Appeals, 246 SCRA 304 citing Workmen's Insurance Co. vs. Augusto 40 SCRA 123. .
10

Santos vs. Court of Appeals, Supra.

11

The transcript of stenographic notes during the oral argument before the Court held on 06 September 2000 reads, in part, thusly: JUSTICE ARTEMIO V. PANGANIBAN:

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ASSISTANT SOLICITOR GENERAL DE LEON: Your honor, unfortunately it was the old management that agreed to have a compromise despite the many defects of the title and the admission comes now from counsel that the property lies under the Coastal Road. JUSTICE JOSE A. R. MELO: That was traversed, according to them. ATTY. CRUZ: Traversed. ASSISTANT SOLICITOR GENERAL DE LEON: The whole coastal road is reclaimed area. There is nothing there that was not reclaimed. That means when they got their title in 1974 there is no reclamation yet. So, what was that before, before, it is not yet land at that time, coming from them, traversed by the coastal road. JUSTICE JOSE A. R. MELO: Is it entirely reclaimed in the sense that it was reclaimed from the sea or, tinambakan lang ulit. ASSISTANT SOLICITOR GENERAL DE LEON: Yes, Your Honor, from the sea. I do not know because they were in charge with the project The fact is that the Coastal Road started 75 and just finished in 1985, it took 10 years to finish that reclamation because of the long road. So, if they admit now that they are traversed by the coastal road and they got the title in 1974, how could that be, how could they register a title to the property.

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